OR, Series 4, Vol. 2, Page 139

Engineer Bureau
Richmond, Va., October 22, 1862
 
Capt. L. P. Grant
Corps of Engineers, Provisional Army, C. S., Atlanta, Ga.
 
Captain,
  Herewith I inclose a copy of an act to enable the President of the Confederate States to provide the means of military transportation by the construction of a railroad between Blue Mountain, in the State of Alabama, and Rome, in the State of Georgia.
  By the terms of this act the President is empowered to enter into contracts for a speedy completion of the proposed link of railroad "with the several railroad companies whose charters extend over said line."
  To accomplish the object contemplated the sum of $1,122,480.92 in the bonds of the Confederate States has been appropriated by the Congress, and it is proposed by the War Department to make a loan of this amount to a railroad company on such terms as will insure a prompt execution of the work and the repayment to the Government of the money advanced.
  The duty of making such contract is assigned to you, subject to the approval of the Secretary of War, and in the following conditions, to wit:
  First. That the loan made by the Government to the contracting railroad company shall be in bonds of the Confederate States of America, bearing 8 per centum interest per annum.
  Second. That a mortgage be given to the Government on the proposed link of railroad and its appurtenances for the payment of the money loaned, with interest at 8 per centum per annum.
  Third. The company to complete the link of railroad in six to ten months from date of contract, and in case of failure the Secretary of War to have the power to foreclose the mortgage and order the sale of the road to other parties.
  Fourth. The War Department reserving to the Government the preference in all transportation over the road during the existing war.
  Fifth. That the amount loaned be refunded in installments of from $50,000 to $100,000 per annum, beginning at the end of twelve months after the day named in the contract for the completion of the road.
  Sixth. The right be reserved to the Government of having the work on the road inspected from time to time to determine its character, progress, etc.
  Seventh. That the Confederate bonds, constituting the loan to the company, be furnished in proportion to the progress of the work--that is, the War Department must have satisfactory evidence through the inspecting engineer of proper arrangements for a vigorous prosecution of the construction before advancing any portion of the loan, and like evidence before making subsequent advances.
  Eighth. The bonds to bear interest from the date of delivery to the company, and the interest (to be paid to the Government on the amounts loaned) to commence at the same dates.
  Ninth. The contract to be signed in quadruplicate, one copy for the company, one for the inspecting engineer, one for the files of the War Department, and one for the auditing officer of the Confederate Treasury.
  Tenth. The Government not to be bound by the contract until approved by the Secretary of War, to be so stated in the contract.
  You are authorized to employ on reasonable terms a lawyer to aid you in drawing up the contract when the terms have been agreed upon between the company and yourself. As there will probably be competition among the several railroad companies for the contract proposed, you will consider well the ability of the respective competitors to comply with the obligations they propose to incur. You will not be limited to the most favorable terms offered unless the party or parties have undoubted ability to execute the work in the time named.
  Make, however, the best terms you can, subject to the above considerations as regards time of construction and payment of installments.
  You will please to enter at once upon the duty assigned you, and keep this office informed of your proceedings and your address.
Very respectfully, yours
J. F. Gilmer
Colonel and Chief of Bureau
 
Approved.
Geo. W. Randolph
Secretary of War

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