| A Statement of the Financial Condition and Affairs of
the Vicksburg, Shreveport & Texas R. R. Company, Submitted to the
Stockholders by the President |
| March, 1861 |
| |
| Directors: |
| Chas. G. Young, of Ouachita |
| John Ray, of Ouachita |
| C. H. Dabbs, of Ouachita |
| C. H. Morrison, of Ouachita |
| Henry M. Bry, of Ouachita |
| F. P. Stubbs, of Ouachita |
| Jas. H. Stevens, of Ouachita |
| J. C. Cummings, of Ouachita |
| David Faulk, of Ouachita |
| C. A. Manlove, of Vicksburg |
| D. M. Pugh, of Madison |
| J. W. Webb, of Morehouse |
| Sack P. Gee, of Claiborne |
| W. M. Burns, of Boissier |
| L. M. Nutt, of Caddo |
| On the part of the State: |
| John L. Lewis, of Claiborne |
| Jos. P. Crosley, of Ouachita |
| J. T. Simmons, of Caldwell |
| |
| Officers: |
| Chas. G. Young, President |
| O. D. Stillman, Secretary |
| Jos. F. McGuire, Treasurer |
| Wm. M. Wadley, Gen'l Sup't |
| J. W. Green, Chief Engineer |
| |
| Statement |
| Office of the Vicksburg, Shreveport & Texas R. R.
Company |
| Monroe, La., March, 1861 |
| |
| To the Stockholders: |
| |
| Gentlemen, |
| The following Statement of the condition
of this Company, is made up and respectfully submitted to you and the
public, with a twofold view. Since our last annual report was laid
before you, an important point has been gained in the construction of
the road, by the completion of the Eastern Division to Monroe,
connecting the Ouachita river with the Mississippi; and a material
change has been made in the policy of the Company, of which we think
it proper to advise you fully without waiting your annual meeting.
Another object had in view, is that we intend to offer $300,000 of our
First Mortgage Bonds for sale, so soon as a returning confidence may
justify us in doing so, and we desire in advance to place those, who
are looking around for some safe and good investment, in possession of
a full and clear statement of our affairs, so that they may be enabled
to form a correct judgment of the value of the securities, pledged for
the payment of the interest and the redemption at maturity of the
principal of the Bonds. |
| The contract with Fannin, Grant, &
Co., for building the Eastern and Middle Divisions of your road,
contemplated its completion by the 1st of January, 1864, until which
time they were entitled to its revenues, as a part of their
compensation. Upon the completion of the Eastern Division, we owed
them, besides the Stock and Bonds they had earned, a large amount in
money, which we found ourselves unable at the present moment to pay.
The continuance of their contract would, moreover, have involved both
Companies in heavy liabilities, which, it was feared, might, in the
uncertainties of the future, prove to be mutually embarrassing. It was
thought best, therefore, under all the circumstances, to make a final
settlement with them, which was done in the following manner:
They had earned $440,000 in Stock, which was issued to them, and
guaranteed to pay eight per cent. dividends for ten years; to be paid
semi-annually, i. e. four per cent. on the first of March and
September of each year. They had also earned $88,000 in Bonds, and we
owed them about $120,000 in cash, all of which was paid them in our
First Mortgage Bonds at par. For the revenues of the road, to which
they were entitled, we relieved them from their obligation to go on
with their contract, and allowed them $152,000 which were also paid to
them in our Bonds at par. The contract with them was annulled in this
settlement, and on the first day of this month we took possession of
the road, and are now operating it on our own account. Subsequently to
this settlement, we purchased from them ninety-two slaves, for which
we paid $135,350 in our Bonds at the rates we have been realizing in
cash. |
| For the information of those who may not
chance to know, we will here state, that the Vicksburg, Shreveport
& Texas Railroad Company was incorporated by a special act of the
Legislature of the State of Louisiana, with a capital stock of
$4,000,000. The charter granted to it, is perpetual and exceedingly
liberal. It confers the powers to construct and operate a railroad
opposite Vicksburg to the Texas State line; imposes no restrictions or
limitations upon the tariff of charges, and expressly exempts the
Stock from taxation forever; and also exempts the property of the
Company from taxation during the progress of building the road, and
for ten years from and after its completion. |
| After granting the charter, the State by a
special act of Legislation subscribed $800,000 of the capital Stock of
the Company. |
| The entire length of the road is one
hundred and ninety miles, and presents three natural Divisions, which
are also recognized by the charter. |
| The Eastern Division extends from
Vicksburg to Monroe, a distance of seventy-five miles, reaching across
the Mississippi bottom and passing the entire distance through a body
of cotton lands of unsurpassed fertility. This Division is finished
and in successful operation. At a moderate calculation, its net
revenues are estimated at $125,000 for the first year, after which we
think it safe to calculate on its paying $150,000. |
| The Western Division extends across the
parish of Caddo, from Red river, at Shreveport, to the Texas State
line. This division is twenty miles in length and is far advanced
toward completion. The removal of 30,000 cubic yards of earth will
complete the grading; five miles of track have already been laid; and
enough iron has been purchased to finish it. |
| The Middle Division is ninety-five miles
long and extends from Monroe to Shreveport. |
| The Rolling Stock on the road consists of
six Locomotives; twenty-five Box Cars; forty Platform Cars; one First
Class Passenger Car, and one Second Class and Baggage Car; and
materials for six Box and sixteen Platform Cars on hand. |
| At Vicksburg the road connects with the
Southern Railroad, and, through it, with the New Orleans, Jackson
& Great Northern Railroad; the Mississippi Central and the Mobile
& Ohio; and through these with the entire system of Railroads on
the North American continent, East of the Mississippi river. At its
Western terminus it will form a direct connection with the Southern
Pacific Railroad, and by branch with the Memphis & El Paso Road,
and through these with all the Roads in Texas. It crosses Louisiana on
the most direct and practicable line for a Railroad to the Pacific
ocean. The parishes along the line of the road in which the Company's
lands are situated, have a population of one hundred and twenty
thousand; contain $73,000,000 of taxable property; produce two hundred
and fifty thousand bales of cotton, and five million bushels of corn;
and, under the stimulating influence of our road, are increasing in
wealth and population, with a rapidity hitherto unknown in our State. |
| Omitting fractions, the entire amount
expended by the Company, for all purposes, including the iron
purchased to complete the Western Division, but not yet delivered on
the line of the road, is $2,322,774. This sum has been derived from
the following sources: |
| Payment made upon subscription to capital stock |
$1,426,050 |
| Sale of 744 First Mortgage Bonds |
744,000 |
| Paid upon Stock cancelled and sales of Land |
67,724 |
| Amount of floating debt |
85,000 |
|
$2,322,774 |
|
| To provide for the interest at eight per
cent. on $744,000 of Bonds, and $440,000 of guaranteed Stock,
amounting to $94,720, annually, payable however semi-annually, the
Company relies chiefly upon the revenues of the finished road,
increased by the amount of a fair hire for its own slaves. That is to
say, the net resources of the road for the first year being estimated
at $125,000, supposing the road to pay hire for all the hands employed
upon it, we add to this the sum of $27,000 for the hire of ninety
hands, owned by the Company and employed in operating and maintaining
it, which is as little as they could be hired for, if we did not own
them. Thus by owning so many hands ourselves, the net income of the
road will be increased, according tour estimate, to one hundred and
fifty-two thousand dollars the first year, after which we think it
will be considerably more. It seems to us, therefore, that the margin
is quite sufficient, and that our interest account is adequately
provided for at present, by the appropriations of the revenues of the
road, now finished; and it will be the fixed policy of the Company
not, on any account, nor at any time, to increase its liabilities for
interest, unless it shall appear clear, upon a safe calculation, that
by doing so the revenues of the road will be so largely increased
thereby as to make it certain beyond doubt, that the interest will
continue to be paid promptly as it matures. |
| We see no reason why the credit of a
Railroad Company should not be as good as that of a bank or a
commercial firm. Heretofore we have been as careful to protect our
obligations, an any merchant in New Orleans, and in this respect the
policy of the Company will not be changed. |
| To pay its floating debt, and prosecute
the work of construction, the Company relies upon the amounts owing
upon subscriptions already made; its cash Assets and Bills Receivable;
and the sale of its unsold Stock and Bonds. |
| There are owing to the Company by Stockholders,
private and municipal, the payment of which is reliable |
$250,000 |
|
| Upon the payment of this the State will pay on
its subscription |
62,000 |
|
| The Treasurer holds in Bills Receivable, being
mostly Mortgage notes for lands sold |
27,408 |
|
| Cash |
12,380 |
351,788 |
| Add 1216 First Mortgage Bonds |
|
1,216,000 |
| Capital Stock unsold |
|
2,261,950 |
|
|
$3,829,738 |
|
| In this calculation four hundred and forty
thousand dollars of the State's subscription are treated as if not
made, because it is conditioned, that the payment thereon shall be
made only for an amount equal to one fourth of the amount actually
paid to the Company by its other Stockholders. It follows, that the
future payments of the State, upon its subscription beyond the amount
included in the above calculation, depend upon the sale to other
parties of capital stock still held by the Company and the payments
made upon it, unless the Legislature shall change the terms of payment
of the State's subscription. This change would no doubt have been made
before now, if the Legislature had had the power, for, as things now
stand, the end had in view in making the subscription, is in a great
measure defeated. This end was to aid in building the road, for the
purpose of developing the wealth, population, and resources of the
Northern part of the State, and events have already justified the
wisdom of the policy. Already the population of the parishes along the
line of the road, in which our lands are situated, has been doubled,
and thirty million dollars have been added to the taxable property,
upon which the State is deriving an annual revenue greater than the
interest upon the entire amount of her subscription to the road, if it
were all paid. This remains true after making due allowance for the
operation of other causes of increase. Moreover, by the recent changes
in our political relations, the State has become the owner of the
public domain, and has, therefore, the interest of a large landed
proprietor in the extension of this road, in common with others in
which she is now a stockholder. Viewing the subject in this light, the
Convention, now in session, passed an ordnance authorizing the
Legislation to change the terms of payment of its subscription, so as
to make if effectual in the progress of the road; and there can be no
doubt the change will be made at the next session of the Legislature,
so as to pay up the State's subscription, as the additional road is
graded, in the proportion of six thousand dollars per mile of graded
road, to enable the Company to procure the iron. This change will make
available the residue of the State's subscription, facilitate very
much the progress of the road, bring into market a large quantity of
public lands, and strengthen beyond measure our military defenses. It
will add four hundred and forty-seven thousand dollars to the above
estimate of our available resources, but as the change has not yet
been made, (the ordinance having been passed by the Convention after
the Legislature had adjourned,) we make our calculations conform to
the present state of things. The above resources would be much greater
than required to finish the road, if they were all available. But no
reliance is placed upon the sale of stock, in the present state of the
country except to those who may be induced to subscribe in order to
facilitate the extension of the road. The amount now owed to the
Company, however, on stock already subscribed, together with the cash
assets and Bills Receivable, will be amply sufficient to pay off its
floating debt, complete the Western Division, and leave a considerable
amount to be appropriated to the work on the Middle Division. And we
think that our Bonds are so well secured, and pay so good an interest,
that we shall be able to sell a portion of them, from time to time, as
the road progresses, so as to enable us to go on with the work. This
brings us to the consideration of these Bonds. |
| On the first day of September, 1857, the
Board of Directors, acting through their President, issued two
thousand Bonds for one thousand dollars each, amounting to two
millions. These Bonds are mae to run twenty years, and bear eight per
cent. interest, with Coupons attached, payable on the first of March
and first of September of each year. To secure the payment of the
interest warrants and the Bonds at maturity, a first and only mortgage
was duly executed, in accordance with the charter of the Company and
the laws of the State, upon the entire road, embracing the unfinished
as well as the finished portions, together with all the property
rights, and franchises, and the land grated to the Company by the
United States and the State of Louisiana, to aid in building the road.
The Mortgage was prepared with great care, under the advise of eminent
lawyers, and every precaution has been taken to protect the Bondholder
against possibility of loss. The revenues of the road are also, as
already stated, set apart to pay the interest. |
| The following Assets are covered by the
Mortgage to secure the payment of these Bonds and the interest
warrants thereon. And here we may observe, that under the laws of
Louisiana the act of Mortgage imports a confession of judgment, so
that, in case of failure to pay the interest warrants at maturity, it
would not be necessary to bring suit, but upon application to the
Judge of the Court in Chambers, he would issue an order of seizure and
sale of the property mortgaged to satisfy the debt. |
|
Assets: |
| Eighty miles of finished road, including Rolling
Stock, Depot Buildings, &c., and fifteen additional miles
graded at cost |
$2,322,774 |
| Ninety-two Slaves valued at cash prices |
135,350 |
| Three hundred and fifty thousand acres of Land
at $7 per acre |
2,450,000 |
| Due on Stock, &c., less amount of floating
debt |
266,788 |
|
$5,174,912 |
|
| Of the entire issue, $744,000 have been
sold, and $40,000 have been cancelled for lands sold, leaving
$1,216,000 still in the hands of the Company. When the residue of the
Bonds are sold, the proceeds will be invested in the extension of the
road, and will of course add that much to its value. If sold at eighty
cents on the dollar, the proceeds would amount to $972,800, which put
into construction account would swell the above amount to $6,147,712,
and before the entire issue of Bonds is disposed of, the value of the
Assets will exceed this amount in the sum of any additional
subscriptions to Stock and further aid from the State. Add to this the
revenues of the road, and we think that no better security can be
desired. |
| The Lands belonging to the Company, lie
along on either side of the road, reaching across the State from East
to West in the center of the Cotton zone. They are all valuable, and a
portion of them are among the best Cotton lands in the world. The
minimum price set on the lands is five dollars per acre, and a few
tracts have been sold at twenty dollars per acre. About six thousand
acres have been sold at an average price of seven dollars and thirty
five cents per acre, and, although the value of the lands continues to
advance, as the road is extended, we think it fair to assume this as
the basis of our estimates. Here then is a real, solid, and
substantial basis of security for the payment of these Bonds,
sufficient of itself, without the Mortgage upon the road. On the other
hand the Mortgage upon the road, without the land, would be ample
security for the payment of the Bonds, as the bonded debt can never
exceed $10,000 per mile. But both being included, in addition to the
slaves and all other property now owned by the Company, or which it
may hereafter acquire, makes "assurance doubly sure." |
| By reference to the Act of Mortgage, (see
Appendix) it will be seen, that the Company has retained the right to
sell the lands, but when a sale is made, Bonds equal to the amount
paid for the lands, must be cancelled, and filed in the office of the
Parish Recorder upon which he releases the Mortgage upon the
particular tract sold. In no other way can the purchaser get a clear
title. He is therefore a deeply interested party to protect the
interest of the absent Bondholder, since to protect his own title, he
must see the record properly cleared. All the transactions are of
public record, open to inspection, and the Recorder is a sworn officer
of the State, and bound by bond security for his fidelity in office. |
| Let us now consider the effect this plan
must have upon the value of the security, and the future price of the
Bonds. When lands are sold, while any portion of the issue remains in
the hands of the Company, Bonds to the amount of the purchase price
will be cancelled, and the issue will be diminished in the sum of the
sales, and, as this sum will be put into construction account, the
security afforded by the road will be proportionably increased. Forty
thousand dollars of the Bonds have already been cancelled in this way,
leaving at present $1,960,000. Suppose that previously to the sale of
the Bonds now in the hands of the Company, we should sell 100,000
acres of land at $7 per acre, this would require the cancelling of
$700,000 of Bonds and would reduce the issue to $1,260,000, at the
same time that $700,000 would be put into the extension of the road
adding that much to the value of the security which the road affords,
and increasing also the price of the remaining 245,000 acres of land.
Thus the amount of the Bonds will be constantly diminished, and the
value of the security at the same time increased. And when the Bonds
shall have been disposed of, and have passed out of the hands of the
Company, a demand will spring up for them commensurate with the demand
for our valuable cotton lands, as nothing but the Bonds can purchase a
clear title to the land, This demand will increase the price of the
Bonds until it reaches par, and may even go above par; for one who
wants to purchase a good tract of land, the price of which is ten
dollars per acre, will be willing to pay as much more than par for the
Bonds as he may be willing to pay more than ten dollars for the land.
Everybody at all acquainted with the Stock market, knows how readily
Stocks and Bonds advance upon any slight demand for them. The proceeds
of the sales of these lands, are thus made a real sinking fund for the
redemption of the Bonds, with the best possible guarantee for their
faithful application, and are more than adequate to pay the entire
issue before maturity. |
| The affairs of the road are managed with
the strictest regard to economy, and its management watched by quite a
large number of Stock and Bond holders who are among the most
experienced Railroad men in the Southern States. |
| We have secured the services of Mr. Wm. W.
Wadley, as General Superintendent, a fact which is mentioned here,
because it cannot fail to inspire confidence throughout the entire
country, in the success of the road, and especially, when we add, as
an evidence of his confidence in it, that he has a very large amount
invested both in the Stock and Bonds of the Company. |
| The interest account of the Company at
present is amply provided for, as we have shown, in the revenues of
the finished road, and no future liability for interest will be
incurred, unless when certain that the revenues of the road shall be
increased by the expenditure sufficiently to meet the interest,
allowing a large margin. Adhering to this policy, we estimated that a
bridge across the Ouachita river, which can be built for forty
thousand dollars, will increase the business of the road fifteen
thousand dollars. The interest upon the cost of the bridge, if paid
for in Bonds at eighty cents on the dollar, is four thousand dollars.
We have therefore determined to sell a sufficient number of Bonds to
build it immediately. |
| These views were laid before some of our
largest Stock and Bond holders who were personally cognizant of the
facts upon which our estimates were based, and so well satisfied were
they, that our calculations would be realized, that they promptly made
up the required amount among themselves, took the Bonds at eighty
cents on the dollar, upon which the contracts were immediately let,
and the work has already been commenced. |
| Now, the sale of $300,000 of Bonds will
enable us to complete the Western Division and extend the road fifteen
miles from Monroe West. To make these points will add certainly more
than $100,000 to our net revenues, and the interest upon the Bonds
will only amount to $24,000. The investment is therefore so safe for
both the road and the Bondholders, that we have determined to offer
this amount of our Bonds for sale at the same price, viz: eighty cents
on the dollar. At this rate the Bonds pay ten per cent per annum
interest, semi-annually, and give the holder the chances of their rise
in price, or if held until maturity, he will receive one thousand
dollars for eight hundred invested, making the investment about equal
to eleven per cent. interest. |
| Very Respectfully, |
| C. G. Young, President |
| |
| {Found at University of Virginia Library} |
|