DOC. No. LXII.
REPORT
OF THE
OUNTT OOMIMIITTEJES
ON THE AFFAIRS OF THE
JAMES RIEER & KAMWRA CO.
1853-4
Doc. No. 62. 3
REPORT.
»
The committee of the senate and house of delegates, appointed under the joint
resolution passed the 12th day of January 1854, to make enquiry into the affairs
of the James river and Kanawha company, have made the investigation, and
ask leave to submit the following report :
The written answers of the president of the company, with the documents
and oral explanations furnished by him, greatly facilitated their investigation,
and enabled the committee to give distinct answers to the interrogatories sub¬
mitted to them in the joint resolutions under which they have acted.
The members of . the committee entertain opinions very different from many
held by the company, as expressed in the answers of its president, and mani¬
fested in the policy pursued by the officers who have heretofore had charge of its
interests.
It is but just, in consideration of the great public and private interests in¬
volved, that a full exposition of the views of its rights and interests entertained
by this corporation, and of the policy it desires to pursue, should be made pub¬
lic ; and the committee ask that the answers of its president, to the enquiries
propounded, presented with this report, be published with it, as they present a
fair exposition of the condition of the company, and offer an able defence of
acts, which the committee condemn. These answers give a full and satisfactory
explanation of the redemption of the scrip issued by the company, and furnish
evidence, in regard to the bargains existing or heretofore entered into between
the company and the proprietors of the packet boats employed on the canal,
proving that neither the community nor the company have received any damage
therefrom ; and the committee is satisfied that, in respect to both subjects of
enquiry, the conduct of the company is subject to no just censure or objection.
They have also examined into the cost at which the affairs of the company
are administered, with a desire to see whether the number of officers and agents
in its service might not be diminished, and their salaries and wages reduced. It
is difficult to form, and somewhat hazardous to express, a decided opinion on a
subject, a full knowledge of whicli would require an examination into the details
of management and construction of a line of works extending over a distance of
nearly five hundred miles. And when it is considered that this company is
charged with the control of several turnpike roads, and the navigation of the
Kanawha, in addition to the works along the James river, the legislature will
doubtless agree with the committee, that unless very strong evidence of mis¬
management exist, it will be best to leave this matter to the care of the stock¬
holders and directory, whose interest and duty will prompt them to manage this
4
Doc. No. 62.
portion of thoir affairs judiciously and economically. It is proper to add, that
after as minute and extensive an examination as could be made under the cir¬
cumstances, the committee could suggest no mode by which the nurnber of
agents employed by the company could be diminished, a due regard being had
to its interests; and that the salaries and wages paid to persons in its service
appeared to correspond with the rates paid for similar services throughout the
state. ' >
In his answer to the first enquiry contained in the joint resolutions, the presi¬
dent admits that the funds, placed at the disposal of the company by the Board
of public works, under the authority of the act of March 2, 1853, had been ap¬
plied temporarily to purposes not specified in that act, and urges, in defence of
this misapplication of those funds, that it was mostradvantageous to the interests
of the company ; that the state received no damage therefrom ; and that such
diversions had been made by those who preceded him in the office he now holds ;
and although annually communicated to the legislature for a series of years, had
been suffered to pass uncensured by all preceding legislatures. The diversion of
the particular funds referred to in' his answer, was commenced under the ad¬
ministration of his immediate predecessor, and continued under his authority, re¬
ceiving the sanction of the late board of directors, of the stockholders at their last
annual meeting, and of the state herself, as then represented by her proxies. In
his consideration of the propriety of enforcing the liens held by the state on the
effects of this corporation, an effort is made to deduce from the action of the
legislature at the session of 1852, additional authority or excuse for this assump¬
tion of power. The committee consider the company as entitled to all the ad¬
vantage to be obtained from precedents established by its own officers and
agents, and to what it can derive from the silent acquiescence of the legislature
up to the last session of the general assembly ; but it deems these and all other
defences as utterly insufficient to justify or excuse such an exercise of authority.
The proceedings of the last legislature may be cited as conclusive against any
reliance on precedents established by its predecessors. When the bill to autho- ~
rize a loan to the comp'any of $ 180,000 to pay the interest on its guaranteed
bonds to become due in January 1853, was brought into the house of delegates,
it was defeated in that body on the 22d of December 1852, for want of a consti¬
tutional majority. The resources of the company being exhausted, the semi¬
annual interest was not paid when due. Some time in January 1853, the state
having become bound for the interest by the default of the company, another
effort was made to pass this bill, and it was unsuccessful ; and it was only after
repeated efforts, and when the bill had been amended by a substitute, so as to
require one of the state officers to pay the money directly to the creditors, that
the legislature consented to pay the interest. This change in the mode of pay¬
ing the interest was made after and in consequence of a mature consideration of
the practice of diverting funds granted to the company from the purposes to
which they should have been applied. And for a like reason the legislature re¬
jected an amendment to provide for the payment of interest to become due in
July last.
A brief reference to the acts, under which funds were provided for the further
prosecution of the works, passed at a subsequent period of the session, will show
that the legislature did not abandon its determination to deny the company any
Doc. No. 62.
discretion in the application pf these funds. , The corporation being engaged in
■works of construction on portions of its line near two hundred miles apart, asked
for assistance to prosecute therp, and it was granted ; but to guard against all
misapprehension, two bills were passed for the purpose : oue granting a loan to
the company of $70,000, to be applied to the tide water connection exclusively;
another authorizing a loan to it of $640,000, to be applied to the completion of
the tide water connection and to the extension of the company's water line from
Buchanan westward ; and it is distinctly provided, that of this last sum $60,000.
shall be applied to the works between the basin and tide water, and the remain¬
der to be advanced to the company, iiot in gross, but in monthly installments of
fifty thousand dollars, for the extension of its line west of Buchanan. The whole
sum granted by both bills, to be placed at the company's disposal, only when it
should have executed mortgages on ail its property, and devoted the whole of its
«' net revenues, after defraying the costs of repairs of the company's canal and
other works, and of administration," to the annual payment of a sum sufficient
to pay six per cent, interest on and to extinguish the whoje debt in thirty-four
years from the date at which it was contracted. The mere recital of these acts
negatives the idea that,the legislature ever intended to invest the company with
the powers it now claims and has exercised ; and the committee is fully warranted
by the support of these and other facts, in asserting that these bills never would
have received the assent of the legislature, if it had been supposed that the funds
could have been used by the company for general and not for specific purposes.
And it is believed that this determination of the last general assembly was wise,
and demanded by the great interests of the commonwealth, and that any depar¬
ture from it by its successors will produce evils of the mdst serious and extensive
character.
The corporations are numerous which have received loans fröm the state, and
their acknowledged and legitimate powers large. Under the most stringent and
rigorous enforcement of legal authority by the state, they still have power greatly
to embarrass their own and the finances of the commonwealth. They have, with
the asseut of the state proxies and directors, full authority to make contracts, ap¬
point all officers and agents, increase their number, fix and enlarge their salaries,
and expend all moneys necessary in the administration of their affairs, and the
railroad companies have power to construct lateral roads, to build depots, pur¬
chase lots, and equip their roads—all limited only by the discretion of those '
whom they may select to guard and foster their own peculiar interests. With
such power to make wasteful expenditures, and large inducements to embark in
schemes never contemplated by the legislature which made the loan, should they
be invested with the more dangerous power to disregard the provisions of laws
under which they receive their funds, no wisdom or virtue in the legislature could
guard the interests or maintain the credit of the state. It would doubtless be of
great advantage to all the interests involved, if this and other great works of
improvement in the state could be speedily advanced to their completion, but
the public credit is heavily taxed to supply the means required for their gradual
and slow prosecution. The public finances are certainly in no condition to allow
these corporations to expend funds supplied for the construction of their works,
to pay creditors less indulgent than the state, or in vain efforts to sustain their
impaired credit. Should they be entrusted with a discretion so wide, it requires
6 , Doc. No. 62.
no sagacity to foretell that the cost of the works will be abundantly enlarged,
and the period of their completion postponed to a very distant day. In this case,
the funds thus misapplied have been honestly and scrupulously devoted to pur¬
poses of essential importance to the interests of the, company; but it piay be far
different when the exigency which palliates this assumption of «lithority shall
have passed away, and the naked aud unguarded power sanctioned by so dan¬
gerous a precedent shall remain. This corporation has, by the execution of
several mortgages, in addition to those referred to in this report, conveyed away
all its right to control the net revenues produced by any property or privileges it
possesses. Under these contracts, the state had acquired an interest in the com¬
pany, as creditor and security, on the 30th of September 1853, of $5,101,558.
The net receipts of the company, from all sources applicable to the payment of
its interest and annuity debt, for the year ending the 30th of September 1853,
amounted to $223,068, a sum insufficient to pay six per cent, interest on the
principal sums for which the state held her liens, by about $ 83,000. It is but
just however to add that the gross receipts had been subjected to a heavy charge
for -extraordinary repairs, and that a large increase of revenue may be antici¬
pated for the next year, from the opening of the canal between the basin at Rich¬
mond and tide water, and from the general increase of trade along the main line,
and at its western extremity ; and the cost of administration will be considerably
diminished when the force employed on the ship lock and dock shall be dis¬
charged. But the company will be charged with an interest of seven per cent,
upon $ 390,000, in addition to the foregoing appropriated by the legislature at its
last session, and upon whatever sums may be advanced at its present session for
the extension of the line westward. It will not be unreasonable to estimate its
increased expenditures, with its present deficit, as equivalent to its revenues
augmented from the sources above mentioned ; at least for two or three years—
thus leaving the corporation, during that time, liable to all the embarrassment and
difficulty it has heretofore experienced in keeping its works in repair and dis¬
charging the annual interest on its debt.
With what justice, then, to the people of the state can the legislature allow this
company to divert its revenues from the purposes to which they are pledged, to
loans, to sections and divisions of its own works, which will not yield revenue
when completed, and to which it will not directly appropriate money, and thus to
force it to abandon its policy, and to meet unexpected drafts upon the state trea¬
sury. Yet this has been done recently, and is defended, because it has been long
practiced. With what result this policy has been heretofore pursued, the condition
of the company furnishes the best evidence. An enterprise of vast importance to
the public and private interests of the state, placed under the control of men of
deserved reputation for integrity and ability, and enjoying the privilege of trans¬
porting passengers and a great amount of tonnage over a long water line, it has
been involved in embarrassments and difficulties from its organization to this day,
and has unhappily provoked the hostility and incurred the distrust of large num¬
bers—perhaps a majority of the people and public men of the state.
A farther prosecution of this practice of exercising powers not granted by law,
and diverting funds from the purposes to which the legislature have directed their
application, must produce still greater embarrassment in its disordered finances,
heavier drafts upon its resources, and, finally, constrain the legislature to enforce
Doc. No. 62.
7
its liens as the only means of securing the payment of the interest on its debts,
and indemnifying the public for the heavy burdens it has borne to advance the
fortunes of the corporation. Regard for the interests of the company as well as
justice to the tax payers of the state, requires that a practice, honestly resorted to
for temporary purposes, but so liable to abuse, and so certain to result in injury to
both parties, should be abandoned; and the committee recommend the passage
of a general law applying to all cases in which a loan or appropriation shall be
granted to any corporation for specific purposes, imposing fine or other penalty
on the company if it shall apply the money loaned to any other objects than those
prescribed in the bill authorizing the loan or appropriation.
Were there no other reasons, the financial condition of the commonwealth would
induce the committee to return a negative answer to the enquiries with regard to the
foreclosure of the mortgages held on the effects of the company, and purchasing the
private stock. The views presented by the president of the company require some
notice from the committee. His answers to these interrogatories are courageous and
elaborate efforts to vindicate the past policy of the company, and present, in a clear
and tangible form, the views entertained by this corporation, of its own rights and
interests, and the relations it bears to the state. The frank and explicit declara¬
tions, made by its organ, are in exact accordance with the facts presented in its
past history, and leave no room to doubt, that it holds itself but little indebted to
the state for past legislation in its behalf, and will consider any effort to enforce
the legal rights acquired by the state through the violation of its laws, and the
breach of contracts, made by the corporatiou, as a harsh and unjust exercise of
authority. It is necessary that such opinions should be met and removed, if the
state ever intends to relieve her embarrassed finances, by recalling the principal
sums, or exacting the interest on the large advances it has made to the various
corporate bodies within her limits. The past legislation of the state in behalf of
this company, entitles her to all the rights, legal and equitable, of a generous and
indulgent creditor, and certainly it is difficult to see what sacrifices or services the
private subscribers can advance to debar her from the exercise of those rights
secured by special contracts and purchased at a price ço dear. A cursory view
of the history of the legislative aid afforded the company, will suffice to show how
little reason if has to complain of neglect or injustice received from the state legis¬
lature, and how much gratitude it owes for large pecuniary aid granted, and great
forbearance exhibited, under circumstances well calculated to prevent any farther
legislative action in its favor. It is urged that the state, in its original subscription
of three-fifths of the capital of this corporation, put in the stock of the old James
river company at $ 1,000,000, and taxed the present company with an annuity of
$21,000, as compensation for the sum of $349,709 57, which the old works had
cost beyond the sum thus put in as capital by the commonwealth.
It is further stated by the president in his answer, that it was found necessary
to alter and reconstruct the old works thus conveyed, at a cost nearly if not quite
as large as that incurred in their original construction ; and the subscription of
this excess of one-fifth of capital stock, beyond the private subscription, if not
considered as a wrong done to the new company, is certainly estimated as a gift
of little value. These works yielded during the six years from 1835 to 1841,
before they were thoroughly incorporated with the new company, an annual
income of more than $ 56,000, after deducting all disbursements made on their
8
Doc. No. 62.
account, and since their reconstruction and incorporation with the new companj',
have doubtless yielded a revenue much exceeding this sum. The property thus
conveyed was the old canal from Richmond to Maiden's Adventure, the Kanawha
road, the Blue Ridge canal, and that held by the. company under its charter, in
the improvement on the Kanawha river. The rights and privileges attached to
this old stock consisted of a right of, way to the Ohio from tide water, a right Of
navigation along James river from tide water to Covington, with the right of
charging for all supplies of water sold or rented to various companies in and
about Richmond. It is not hazarding much to assert that the property and privi¬
leges thus conveyed, separated from the present company, are worth more than
the whole public and private stock In the new company would sell for in its pre¬
sent embarrassed condition. It should be recollected, that from the period at
which the original subscription and the funds arising from the sale of the guaran¬
teed bonds were exhausted, the whole cost of prosecuting this great work has
fallen upon the state. As creditor and security, she has supplied the company
with more than $ 5,000,000. It is also stated that the policy of prosecuting this
work with borrovved capital was reluctantly adopted by the company at the sug¬
gestion and under the requisition of the general assembly, and that the company
would have preferred and might have availed itself of the use of other means for
that purpose. It may well be questioned whether the sum of $1,500,000, autho¬
rized to be raised by the sale of guaranteed bonds. Could have been obtained by
an increase of capital stock, in which private persons were to take two-fifths:
the fact, that of the original stock, a large portion was taken by the banks under
instructions from the general assembly and by corporate towns, and that these
bonds, clothed with a security so valuable, could only find purchasers in foreign
markets, clearly indicate that neither the original subscribers, nor any other capi¬
talists in America, were willing to invést money in further efforts to prosecute this
work. The only résource on which the company could rely to supply the enor¬
mous outlay necessary to achieve its great objects, was in the treasury or credit
of the state. Applications for aid from this source have been met by advances of
money far exceeding the amount which private enterprise would have supplied.
And whether the resources of the company were exhausted or not when the
guaranteed bonds Were sold, it has had none since to apply to any purpose, nor
have its condition or prospects presented any inducements to private capitalists
to conae to its aid, either by loan or subscription to its stock.
it is not the design or desire of this committee to depreciate the value of this
improvement. It is the most important in the commonwealth to the interests of
its citizens. But donbt as to the possibility of prosecuting it to the Ohio, and
the difficulties and delays attending its past operations, with other causes, have
excited distrust and prejudice, which diminish the value of its stock, and effec¬
tually prevent any capitalist, save one as deeply interested as the state of Virginia,
from risking any means in advancing its fortune. Under management which
the present president approves, this improvement has cost the state, in the various
relations it holds to the company, more than $ 8,000,000, and the private subscri¬
bers $ 2,000,000, while it still requires $ 1,500,000 to complete its construction to
Covington, a point near two hundred miles short of its final destination. The
difficulties in which the company has been involved, may in some measure be due
to the inability or unwillingness of the legislature to make advances in the form
Doc. No. 62.
9
and to the amount its necessities required. But that unwillingness was produced
by the policy pursued by those who had charge of the interests of the corpora¬
tion. By this departure from the course prescribed by law, by their diversion of
revenue, devoted by their own contracts to meet their interest and annuity debt,
to other purposes, and by every effort they have made to substitute their judg¬
ment itt place of the authority of the legislature, they have deprived this great
work of all the advantages which the magnitude of the interests dependent on its
success gave to its application for legislative aid. With whatever reluctance
they may have adopted the policy of selling the company's bonds, they have been
constant and earnest applicants for loans from the state.. The terms on which
these loans have been made, have been deliberately assented to, the money re¬
ceived and used, the conditions of the contract in some instances violated, and
the forfeiture incurred. Under these circumstances, when the state has become
heavily burdened with debt, has engaged in an extensive and costly system of im.-
provements, and is dependent upon the sale of her credit for funds to meet her
engagements, it is absolutely necessary that her resources should be entirely under
her control, that the public revenue should be subjected to no unexpected demands,
and its collection impeded by no sudden interruptions. It will be necessary to
make an annual addition to the present state debt, for many successive years, un¬
less the public works now under construction are abandoned. The constitution
requiring the legislature to meet each increase of debt by a corresponding aug¬
mentation of the taxes, and the credit of the state depending upon the mainte¬
nance of this ratio between the debt and the revenue, the very existence of this
internal improvement system demands that no discretion should be allowed to any
body of men or corporation, to reduce the receipts or misapply the funds of the
commonwealth, over which they may have control. Should this practice of di¬
verting funds, advanced for specific purposes to objects not contemplated by the
legislature which made the loan, and impoáfes the tax for its ultimate redemption,
be pursued, the general assembly would not only be justified, but constrained, to
take the control of the company, thus defeating its action, and embarrassing the
finances of the commonwealth.
An idea seems to prevail with these corporations and their friends, that the
state cannot enforce its liens on the effects of the company, without doing some
injustice to the private stockholders. It would be difficult to show in what the
prosecution and exercise of a right acquired by the advance of large sums of
money and secured by special contracts with parties authorized to act by the
property holders diflfers from the ordinary prosecution of rights held by creditors
against their debtors. If it differ at all, the right of the commonwealth is more
clear, the duty of the legislature to enforce the public claim more imperative,
and the hardship to the defaulting debtor less severe than in most sales of
property under mortgages. The tax payers of the state are the largest losers in
these corporations. They are induced to embark capital in the stock and
advance money in loans, on representations contained in petitions and memorials
originating with the private subscribers. The legislature should act as a judicious
trustee, and never suffer the loan thus obtained to be lost, or its chance of collec¬
tion seriously impaired. In the case of the James river and Kanawha company,
the private subscribers paid in their original subscriptions and then stopped their
pecuniary contributions ; but they have written memorials and petitions con-
10 Doc. No. 62.
Btantly, to ask aid from the legislature. They have done more : they have
authorized and sanctioned the diversions of funds made by their officers and
agents, and thus become parties to the violation of their own contracts with the
state. In the mean time the state has been burdened with the cost of this work,
her property has home the increased taxation, her credit the weight, her finances
the embarrassment incurred in behalf of this company. With what force, then,
can any private owner of its stock make objection, if, after nineteen years of
continued taxation, and the unrequited expenditure of millions, the legislature
should decide that justice to the tax payers, the public creditor, and other great
interests in the state, demands that the public claim on this private property
should be enforced and rendered available, as part of the public resources.
There can be no rational objection to such a course, when the public interest shall
demand it, unless these liens were intended to delude and defraud the constituent
body, to be rendered effective only with the assent of the private stockholders,
or when it was deemed proper to make a mock sale and real release of the
state's interest, by converting the loan into stock, and thus making the common¬
wealth a larger partner in an unprofitable enterprise.
This it was deemed necessary to state, to disabuse the holders of private stock
in corporations indebted to the state and the public of the idea that the legislature
has any objection to enforcing any lien held by the state on this or any other
corporation in her limits, when the public interest shall justify or require it.
At this time, no good end would be attained by such a proceeding against the
James river and Kanawha company. As the state has the power to take posses¬
sion of its works and extinguish its existence, it would be a useless expenditure
of money to purchase its stock, which must for years continue unprofitable.
And the committee consider the legislature will only be justified in destroying an
element so essential to the corporation as the large private interest invested in it,
when it shall be convinced that great public benefits will be secured by the prose¬
cution of its rights, or that great mischiefs will result from a failure to exercise
them. It would be as cruel and mischievous to make a needless assault upon a
corporation so important, contending with such difficulties, and cheered by hopes
of the ultimate achievment of a great object, as it would be unwise to forbear to
correct the errors and cure the abuses into which adverse fortune, or an exclu¬
sive devotion to its own interests may have seduced it.
All of which is respectfully submitted.
C. R. HARRIS,
WILLIAM OLD, Jr.
Of the Senate.
JAMES L. KEMPER,
SAM. DOWNING,
House of Delegates.
Doc. No. 62. 11
' ANSWERS
OF
THOMAS H. ELLIS,
President of the James River and Kanawha Company,
TO
I aw T E n H. O G--A. T O n IE! S
Propounded to him by a Joint Committee of the General Assembly of
Virginia, appointed to enquire and report upon the same.
First—Whether the appropriation made to the James river and Kanawha
company, by an act passed March 2d, 1853, has been applied bona fide in the
manner specifically directed in the said act, so far as the same has been paid over
to the said company by the Board of public vrorks 1
Second—What funds have been set apart or applied to the payment of the
January interest due from the said company?
Third—^IVhether the said company have redeemed an amount of scrip greater
than that issued by them ; and if so, what amount ?
Fourth—What bargain exists between the proprietors of the canal packet
boats and the said company, as to the transportStion of freights and travelers;
what amount of freights, other than the baggage of travelers, is carried upon the
packets, and what compensation the company receive therefor?
Fifth—Whether the number of the officers and agents employed by the said
company may be judiciously diminished, and their salaries reduced?
Sixth—Whether or not the interests of the commonwealth require the fore¬
closure of the mortgages held by the state upon the property of the said com¬
pany ?
Seventh—Whether or not the interests of the commonwealth require that the
Board of public works shall be authorized to purchase all interests in said com¬
pany, other than that held by the state ?
Doc. No. 62.
13
QUESTIONS AND ANSWERS,
>' 1st—Whether the appropriation made to the James river and Kanawha
company, by an act passed March 2d, 1853, has been applied, bona fide, in tho
manner specifically directed in the said act, so far as the same has been paid over
to the said company by the Board of public works ?"
>'2d—What funds have been set apart or applied to the payment of the
January interest due from the said company?"
' Answer—The act of the 2d of March 1853 authorized a loan of $ 640,000 to
the James river and Kanawha company, for the purpose of extending the com¬
pany's water line to some point at or near Covington or Clifton Forge, and to
complete the tide water connection. This amount was to be advanced to the
company by the Board of public works, in sums of $ 50,000 monthly. The sum
of $ 60,000, part thereof, was to be applied by the company to the tide water
connection, and the remainder to the 3d division, being that portion of the water
line between Buchanan and Covington. Of the amount appropriated there has
been received :
■ For the tide water connection, - - , -
For the 3d division, -
Total, ...
Which has been expended as follows :
For work on the tide water connection, - 50000 00
For work on the line between Buchanan and Co¬
vington, - - - - 155956 47
Interest paid to the commonwealth on the 1st inst. 72964 83
Interest paid to holders of bonds for which the
commonwealth is liable, since the 1st instant, - 62359 50
135324 33
Balance expended in completing works on the 2d
division and south side connections, - . $ gyjg 20
So it appears that the installment received by the company for the tide
water connection has been expended on that work alone, while of the install¬
ments received for the 3d division, $155,956 47 has been expended on that
50000 00
300000 00
350000 00
205956 47
144043 53
I
14 Doc. No. 62.
division ; $ 135,324 35 has been expended in paying interest to the common¬
wealth, and to others to whom she was liable for it; and the balance, $ 8,719 20,
has been expended in completing unfinished works on the company's line east of
Suchanan. ,
The contracts for work on the 3d division, which are to be paid for out of this
appropriation, require the work to be completed in two years from the 1st of
January 1854; and payments under the contracts are to be made monthly, upon
estimates, according to the amount of work executed. As these payments fall
due, it is anticipated they will be met out of the accruing revenues of the com¬
pany, so that the whole amount due to the appropriation will have been repaid
within the year. And it is not doubted that every dollar of the appropriation
authorized by the act of the 2d of March 1853, will be thus in effect expended
for the purposes intended by the legislature, and that the company will be able
to meet promptly every liability as it becomes due under the existing contracts.
In the mean time, the commonwealth receives interest on the installments from
the respective dates of their advance to the company.
This course of borrowing from one fund, temporarily, to meet the urgent en¬
gagements of the company in another respect, while looking to the main intent
of the legislature, and endeavoring to promote the best interests of both tha
company and the state, was deemed by the company more judicious and eco¬
nomical than to incur an additional interest paying debt, burdened as it is already
with a most onerous debt of similar character.
N I
Of the ability of the company to refund the amount from the accruing reve¬
nue, there can be no reasonable doubt. The receipts for the year 1853 amounted
to $ 330,614 75. There is just reason to expect, for the year 1854, a considera¬
ble increase of this amount, from various causes, but more especially from the
opening of the dock connection, which will be completed, in all probability, by
the 1st of May.
Estimates of this character were submitted to the stockholders at their annual
meeting in October last, by my immediate predecessor in office. So far as I am
informed, no objection was made to them. The manner of meeting the interest
due on the 1st instant, which has since been pursued, was then anticipated ; nor
was it supposed to be a violation of faith or a departure from the spirit of the
act making the appropriations referred to. On the contrary, the stockholders
adopted the following resolution :
" Resolved, that it is not necessary to ask of the next legislature any aid in
respect to the payment of the company's semi-annual interest and annuity debt."
Upon this statement of facts, I respectfully submit that the company have pur¬
sued a course intended and calculated to render their important works produc¬
tive : in which the state herself is interested to the extent of more than eight
millions of dollars, as stockholder, creditor and surety.
The balance of $ 8,719 20, above stated as transferred from one head of ex¬
penditure to another, is a part of the sum of $ 40,525 37 reported to the stock¬
holders at their annual meeting in October as the amount by which the excess of
disbursements over receipts had been increased during the year'ending on the
Doc. No. 62.
15
30th September 1853. The application of $ 135,324 33 to the payment of in¬
terest due to the state and upon obligations for which the state was responsible,
I was induced to consent to by the view, that even if it amounted to a diversion
of the fund from the destination prescribed by law, the state, by whom the money
was advanced, got the benefit of it ; moreover, because I was convinced that
before the money would be required for its specific object, the company would be
in a condition to replace it; and I found that the act had its sanction in the
former usages of the company, and in the concurrence as I presumed, of the
legislature, as for fifteen years in succession, extending from 1839 to 1853, both
inclusive, similar transfers of funds appropriated, sometimes for the payment of
interest, and sometimes for the completion of unfinished works, had been com¬
municated to the legislature, and no dissatisfaction therewith had ever been
declared.
It is proper to say that the application of the fund to the payment of interest
due on the 1st instant, was made, as had been done in all previous cases of like
character, without an order of the board of directors, but was understood by
myself to be in accordance with the action of the stockholders.
• •
" 3d—Whether the said company have redeemed an amount of scrip greater
than that issued by them ; and if so, what amount?"
Answer—I should be justified by the facts in answering this interrogatory briefly
in the negative. But presuming that it has reference to the misconduct of a for¬
mer officer of the company, I deem it better to state minutely facts as they have
been ascertained to exist.
In February 1849, William B. Chittenden, then the president of the company,
confessed, a short time before his death, that he was a defaulter to the company.
After his death, the fact was made known to the directors in the manner and un¬
der the circumstances stated by the president in his report to the stockholders, of
the 9th of May 1849. Mr. Chittenden, not only by this confession, but by written
obligations also, left behind him evidence in part of his indebtedness, and of his
intention to refund to the company the moneys applied to his own use.
The amount of the defalcation was afterwards ascertained to be $11,162 69.
This amount was arrived at after the most careful and laborious investigations :
First, by the board of directors; secondly, by a bookkeeper employed for the
purpose ; and thirdly, by a committee of the stockholders ; and was believed, at
the time, to be precisely accurate. The same amount was afterwards judicially
determined, and judgment therefor awarded in favor of the company.
Of the amount in default, $ 5,212 69 was evidenced by his bonds executed and
filed in the company's office after his election to the presidency, and was stated
by him to be the proceeds arising from the sale of post notes reissued by himself
after they had been once redeemed by the company; but no entry was made of
the reissue, and therefore the post note account did not properly represent the
amount outstanding and unredeemed. As these notes were subsequently pre¬
sented and redeemed, it would of course appear that the company had redeemed
a larger amount than it had issued. Accordingly, the secretary's statements, pub¬
lished with the annual reports, will show an excess of redemption, each year,
16
Doc. No. 62.
during the years 1849, '50, '51 and '52, amounting, in the aggregate, on the 30th
of September 1852, to $1,990. On that day the post note account stood as
follows :
Whole amount issued, - - - . 1,870,376 67
Whole amount redeemed, ... 1,872,366 67
Excess of redemption, • - - - $1,990 00
The greater part of the sum due by Mr. Chittenden's estate having been paid
during the past year, the proper entries were then for the first time made ; so
that the account stood, on the 30th of September 1853, as follows :
Amount issued, as above, - - - 1,870,376 67
Add amount reissued by Mr. Chittenden, - - 5,212 69
1,875,589 36
Amount redeemed, as above, ... 1,872,366 67
Amount outstanding, ... $3,222 69
As reported by the secretary in his published statement accompanying the last
annual report.
Since the 30th of September last, no post notes have been issued or redeemed;
indeed none have been issued since February 1849, and none are permitted to be
redeemed without being first laid before the president and directors. The prac¬
tice is to destroy, by burning, after suitable registry, the notes redeemed, in the
presence of a committee of directors.
The balance above reported as still outstanding and unredeemed, is believed
by the president and directors to correspond very nearly with the exact state of
the case ; for, while some of the notes are known to be held by parties litigant,
subject to the orders of court, it is fair to presume that in the circulation of so
large a number of such notes, some of them have been lost or destroyed.
It is proper to add that the misconduct of Mr. Chittenden was not known or
suspected by the directory until after his death, and that upon coming to a know¬
ledge of it, they did not delay to invoke a general meeting of the stockholders,
and to make known the unhappy discovery.
" 4th—What bargain exists between the proprietors of the canal packet boats
and the said company, as to the transportation of freights and travelers ; what
amount of freights, other than the baggage of travelers, is carried upon the pack¬
ets, and what compensation the company receive therefor."
Answer—The James river and Kanawha canal is a free highway, open to all who
choose to navigate it, whether for the transportation of freight or passengers, in
any manner they may prefer, subject only to the regulations of the company, and
to the payment of certain established rates of toll.
A line of packet boats, belonging to Messrs. Boyd, Edmond & Davenport, is
the only one regularly engaged in the transportation of passengers.
Doc. No. 62.
17
No bargain exists with them, exclusively, in reference to the transportation of
passengers ; but the following order was adopted at a meeting of the president and
directors, on the 16th of December 1848, to wit : ^
» An application of this date, from Boyd, Edmond & Davenport, the owners of
the line of packet boats on the canal, was submitted to the board, stating that they
will carry passengers at the rate of $ 3 50 per passenger, from Richmond to Lynch¬
burg, and the way fare in proportion, charging extra for meals, provided the com¬
pany will reduce the rate of toll to two mills per mile. ^ ^
" On consideration—Resolved, that from and after the first of January next, the
toll on passengers carried on the canal be reduced to two mills per mile in favor
of any boat, the owner or owners of which shall have furnished satisfactory evi¬
dence, at the office of the company, that such boat carries passengers at a rate not
exceeding $3 50 per passenger, exclusive of meals, from Richmond to Lynchburg,
and vice versa, and in that proportion for the way travel along the line of the
canal."
And at another meeting, held on the 31st of March 1849, the following resolu¬
tion was adopted, to wit :
"Resolved, that in the interpretation of the resolution concerning the reduction
of tolls on passengers, the former discrimination be made for children and ser¬
vants."
The discrimination intended is, that children under twelve years of age and
servants pay one-half of the toll charged on white persons twelve years old and
upwards. ^
Prior to the order of the 16th of December 1848, the fare by the packet boats
from Richmond to Lynchburg for grown persons, including meals, was $7 50, and
the tolls one cent per mile.
It has been found in practice difficult to ascertain the amount of freights, other
than the baggage of travelers, carried upon the packet boats, and therefore diffi¬
cult to determine what compensation the company should receive therefor.
At a meeting of the president and directors, in March 1850, a committee of
directors was appointed to enquire and report upon this subject :
The committee called upon Messrs. Boyd, Edmond & Davenport, who freely
exhibited to them their books and way bills, containing the items and aggregate
of their receipts derived from this source. The fact was admitted that they
were in the habit of carrying trunks, packages and bundles not passed as bag¬
gage, but that the aggregate tonnage of such articles was inconsiderable. They
stated that it was far more an accommodation to the people along the line, to be
permitted to receive these articles by the packets, than it was to the owners of
the packets to receive the freights paid on them, because of the detentions and
trouble necessarily attendant upon receiving and delivering them ; and that if re¬
quired to weigh and make report of such articles, as wäö suggested by the com¬
mittee, with a view to the payment of tolls, they would unhesitatingly refuse to
carry them.
The committee then proposed, that in consideration of the tolls to which the
3
18
Doc. No. 62.
company would be entitled on such articles, the owners of the packet boats, in
addition to the free passage of the superintendents of repairs on the canal, which
they had of their own accord previously given, should transport free of charge
the president and chief engineer of the company, whose traveling expenses are
chargeable to the company, when on official business.
The president and directors, upon the information before them, deeming this a
fair equivalent, and disposed to accommodate the community along the line of
their improvement, so far as it could be done without prejudice to the general
interests committed to their care, acceded to the proposed arrangement, with the
understanding that it might be terminated at the pleasure of either party.
It is but just to say in conclusion, that Messrs. Boyd, Edmond & Davenport
declare their belief that the company receive, in the free passage given und'er this
arrangement to the president, principal engineers, superintendents of repairs,
(and overseers when necessary, either in case of emergency or in transfer from
one point to another along the canal,) more than double the amount they would
receive in tolls, if every package of the description referred to, transported on
their packet boats, was accounted for as tonnage.
" 5th—Whether the number of the officers and agents employed by the said
company may be judiciously diminished, and their salaries reduced?"
Answer—In replying to this interrogatory, I, deem it proper to refer to the
several works of the company. These are:
I. The tide water connection—connecting the canal, or basin at Richmond,
with the tide water of James river through the Richmond dock.
II. The canal—completed from Richmond to Buchanan, a distance of 196i
miles, and in course of construction .from Buchanan to Covington, a distance of
44 miles, making a total distance of 2404 miles.
III. The south side connections—consisting of bridges over James river at
New Canton, Hardwicksville and Bent creek, and a dam, with a river lock and
lateral canal, at Carters ville.
IV. The Rivanna connection—connecting the improvement of the Rivanna
river with the canal at Columbia.
V. The Blue Ridge turnpike and ferry—extending from the mouth of North
river, over the Blue Ridge, crossing James river by a ferry, and passing down
the south side of the river—ten miles in length.
VI. The Kanawha turnpike road—extending from Covington to the mouth of
Big Sandy river, a distance of 200 miles, with a branch from Barboursville to
Guyandotte—eight miles long.
VII. The Kanawha river—furnishing steamboat navigation from Point Pleasant
to Charleston, a distance of 60 miles, and for coal barges from Charleston to Loup
creek shoal, a distance of 26 miles farther.
Doc. No. 62.
19
The ofBcers employed on these works, with their salaries attached, are as
follow :
The salaries of the president and secretary are fixed by the stockholders. The
secretary gives bond, with security, in the penalty of $20,000, conditioned for the
faithful performance of his duties.
The pay and mileage of the directors are fixed by act of the general assembly.
They receive four dollars per diem, for each day's attendance at the board, and
fifteen cents for every mile they necessarily travel to and from the meetings of the
board. The aggregate of pay varies from year to year, according to the number
of meetings, the place of meeting, and the distance traveled. During the year
1853, the average pay of each director was $187 07 ; and the average mileage of
each $194 22. Total pay and mileage, say for one year, $ 381 29 each—
making the amount above stated, for five directors, $1906 46 per annum. The
salaries of all the other officers and agents of the company are fixed by the presi¬
dent and directors.
The principal works now in course of construction are more than 200 miles
apart, each requiring the constant supervision of a competent engineer. The
board of directors, influenced in part by this consideration, have deemed it expe¬
dient, since the resignation of the late chief engineer, to appoint two division
engineers instead of one chief engineer, attaching to each, however, the duties and
responsibilities of a chief engineer. The line of the improvement has been, with
this view, divided. One division, called the eastern division, extends from Rich¬
mond to the crossing of James river at the head of the Joshua falls pond, a dis¬
tance of 136 miles, and embraces the tide water, south side and Rivanna connec¬
tions ; the other, called the western division, extends from that point westwardly,
embracing all the works to the Ohio.
The engineer of the eastern division has under him one assistant, who, in addi¬
tion to the ordinary duties of an assistant engineer, performs the duties of book
keeper and accountant necessarily connected with the employment of a large
force on company account, such as is now engaged upon the tide water con¬
nection.
General Administration.
1 president,
5 directors,
1 secretary,
2 clerks.
3000 00
1906 46
2000 00
1400 00
Nine officers—Total pay per annum.
$8306 46
Engineer Corps.
The engineer of the western division has under him two assistant engineers,
and each of these assistants has under him a rodman. The works in course of
construction between Buchanan and the Marshall tunnel, consisting of three
20 Dpc. No. 02.
aqueducts, five locks, and the tunnel itself, nineteen hundred feet in length, are
represented to be as many as one assistant engineer can properly attend to ; while
those between the tunnel and the mouth of Craig's creek, consisting of two dams,
two locks and one towing, path bridge, and the duties yet to be performed in
completing the location of the water line from Craig's creek to Clifton's Forge,
will afford ample employaient for the other assistant.
The engineer corps, thus explained, consists of
2 division engineers, - - - - 5000 00
3 assistant engineers, - - 3600 00
2 rodmen, .... 730 00
Seven officers—Total pay per annum, - - $ 9330 00
Toll Gatherers.
1 at Richmond, .... 1800 00
1 at Lynchburg, - - - - 800 00
1 at Buchanan, .... 600 00
1 at Charleston, - - - - 1000 00
4200 00
Toll Gatherers' Clerks.
2 at Richmond, - - - 1500 00
2 at Lynchburg, ... 1000 00
— 2500 00
Eight officers—Total pay per annum, - - $ 6700 00
The Vrhole revenue of the canal passes through the hands of the toll gatherers
at Richmond, Lynchburg and Buchanah, whilst that of the Kanawha river passes
through the hands of the collector at Charleston. These officers respectively
give bond with approved security, conditioned for the faithful performance of
their duties, a particular description of which will be found on pages 37, 38 and
39 of the amended regulations for the canal.
Superintendents of Repairs.
1 on the Ist division, extending from Richmond to the head of the
Joshua falls pond, .... 1500 00
1 on the 2d division, extending from the head of the Joshua falls
pond to Buchanan, - - - - 1200 00
1 on the Blue Ridge turnpike and ferry, - - 450 00
1 on the Kanawha road and river, ... 1200 00
Four officers—Total pay per annum, - - $ 4350 00
For the duties of these officers I respectfully refer to the amended regulations
of the company, pages 34, 35 and 36. They ^ive bond, with approved security,
Doc. No. 62.
21
conditioned for the faithful performance of their duties. The superintendent of
repairs on the 2d division, in addition to those prescribed by the regulations, per¬
forms the important duties of a law agent, by collecting evidence, summoning
witnesses, and otherwise preparing the cases in which the company is interested,
for the company's counsel, in the courts adjacent to his division.
Inspectors.
1 at Richmond, - - - - ^ 1000 00
1 at Scottsville, . - - - 600 00
1 at Point Cabell, - - - - 400 00
Three officers—Total pay per annum, - - $ 2000 00
Upon these officers depend in a great degree the proper collection of tolls on
the canal. For a description of their duties, see amended regulations, page 39.
The inspector at Richmond has to hire an able bodied assistant, whose compen¬
sation is paid out of his own salary. The inspector at Point Cabell performs the
duties also of an inspector of cement manufactured at that point.
Lock Keepers. ^
10800 00
600 00
900 00
500 00
240 00
225 00
800 00
Eighty-four officers—Total pay per annum, - - $14065 00
72
at $150,
1
at 600,
3
at 300,
2
at 250,
1
at 240,
1
at 225,
4
at 200,
Those who receive $ 150 keep only a single lock. The keeper of locks Nos.
1 and 2, nearest to Richmond, receives $600, and pays out of this sum the hire
of two able bodied white men as his assistants. He or his assistants are engaged
in passing boats almost incessantly, night and day. The keeper of lock No. 3,
in addition to the usual salary for a single lock, receives $75 for keeping the
river lock which leads into Reins' pond. Through this lock Richmond is
furnished almost entirely with sand and paving stone. For similar reasons, the
keeper of lock No. 4 is allowed an addition of $ 50 for keeping guard lock No.
4, communicating with Bosher's pond, through which large quantities of coal
pass, from the south side of James river, as well as the guns, shot and shells
cast at the Bellona foundry. The keeper of locks Nos. 5 and 6 has to hire an
able bodied white man, and is therefore allowed $250. Guard lock No. 7,
communicating with Maiden's Adventure pond, is both a toll and clearance lock.
The keeper, who must be a man of good education, is allowed $240. The
keeper of lock No. 8 and lock No, 7, the outlet from Maiden's Adventure pond, has
to hire a negro man as an assistant, and is allowed $ 200. At lock No. 12, which
is a clearance lock and the outlet into the pond at Cartersville, the keeper has to
hire an assistant, and is allowed $ 250. The keeping of locks 46 and 47, at the
22
Doc. No. 62.
head of the Joshua falls pond, includes the ferry at that place, and requires the
assistance nf an experienced ferryman ; $ 300 is allowed as the compensation for
both. Lock No. 51, the first below Lynchburg, is a clearance lock, very impor¬
tant in its character, and a salary of $300 is allowed. The same salary, for
similar reasons, is allowed at the guard lock and river lock, first above Lynch¬
burg, leading into the water works pond. For the duties of lock keepers, see
pages 36 and 37 of amended regulations.
Patrol on the Lower Level.
1 at Richmond, - . , . - $ 320 00
This officer has been found indispensable to a proper regulation of the water
in the level of the canal adjacent to Richmond, upon which so many large manu¬
facturing establishments depend for the supply of their water power. He is also
charged with the police of the basin and first level of the canal.
Ferrymen.
1 at New Canton, . . - . 275 00
1 at New Market, - - - - 150 00
Two officers—Total pay per annum, - - $ 425 00
These ferrymen, the first named crossing James river, and the second Tye
river, furnish their own boats.
Master Carpenters.
1 at - , -
1 at
1 at
1 at
Master Masons.
1 at
1 at - -
2 at $750, - ' -
1 at
1 at - . . -
1 at - '
1 at
Enginemen.
840 00
675 00
650 00
600 00
2765 00
1000 00
900 00
1500 00
720 00
700 00
675 00
450 00
5945 00
1 at
1 at
600 00
450 00
1050 00
Doc. No. 62.
23
Overseers.
1 at
2 àt $ 375,
8 at $ 300,
500 00
750 00
2400 00
3650 00
Twenty-five officers—Total pay per annum.
$13410 00
After many difficulties, disappointments and delays in constructing the ship
lock of the tide water connection, through the agency of a contractor, the con¬
tract was declared abandoned in July 1852, and that work is now in progress of
construction on company account. Its importance to the trade of the canal, the
revenue of the company, and the accommodation of the agricultural community,
has been long felt and acknowledged by the board of directors. No efforts on
their part have been spared to advance it in ,a satisfactory manner. Four hun¬
dred and fifty-seven men are at this time engaged upon it, or upon works im¬
mediately connected with it. Hence, principally, the employment of so many
master carpenters, masons, enginemen and overseers, as above stated. Since
this work, however, is now rapidly approaching completion, the force of laborers
will soon be disbanded, and with them such of their present superintendents as
the company may not desire to retain permanently in its service.
In the original construction of the locks on the canal between Richmond and
Lynchburg, for reasons deemed satisfactory at the time, it was determined to
construct certain of them of a temporary character, to be substituted by more
durable structures at a future day. That day has now come, rendering necessary
the employment of officers competent to the particular work in question. During
the present year, it is in contemplation to repair five locks, upon the plan which
has been pursued for the last three years by the superintendent of repairs. Be¬
sides these, work of an important character remains to be done on the south side
connections. At Cartersville, the tow path of the lateral canal from the main
canal to the river has to be raised and strengthened ; stop gates put to the river
lock; and the dam possibly tightened. At New Canton, two spans of the bridge
are incomplete ; and the whole is to be fioored, weatherboarded and covered, and
a road made from the river to the canal. At Hardwicksville, the bridge has to be
roofed and weatherboarded, and another thickness of flooring laid. Gates to the
bridges and toll-houses are to be built at each of the three bridges. Should the
board of directors determine, as is claimed by the Rivanna navigation company,
that it is the duty of this company, at least for the present, to maintain the
works of the Rivanna connection, it will probably be necessary to raise the ma¬
sonry on the dam at Stillman's mill about three feet, and to convert the present
guard lock at Columbia into a lift lock. At Maiden's Adventure dam, about
three hundred and eighty-four linear feet of the dam and the southern abutment
are yet to be built. The entire dam is then to be filled in behind with quarry
spalls, and the upper end of the guard lock on the north side of the river to be
raised about three feet, in order to protect the adjoining low grounds. These
works being completed, the company will at once dispense'with a force of offi¬
cers and laborers rendered necessary only by them.
24
Doc. No. 62.
But I trust I need not assure the committee of the anxious desire of the presi¬
dent and directors to administer the affairs of this company with economy and
prudence. The board have very recently considered the subject embraced by this
interrogatory, and have found it impossible to reduce the number of officers until
the tide water connection is completed. In arriving at a conclusion as to any
supposed extravagance in the rate of salaries paid, it will be just to take into
consideration all the circumstances of each case—such as the requisite qualifica¬
tion of the officer, the importance and responsibility of his duties, the demand for
similar services, his locality, and the present expense of living. Tested by such
principles, I believe every appointment of the James river and Kanawha compa¬
ny will appear just and expedient in respect to the amount of compensation
allowed.
The only officers remaining to be spoken of are twelve gate keepers, on the
Kanawha road, who receive as compensation for their services, a commission of
nine per cent, on the amount collected by them. For the year 1853, the aggre¬
gate of commission thus paid amounted to $731, being an average of $60 91 to
each keeper.
RECAPITULATION,
Showing the whole number of Officers and the whole amount of Salaries.
9
General administration.
8306 46
7
Engineer corps.
9330 00
8
Toll-gatherers and clerks.
6700 00
4
Superintendents of repairs.
4350 00
3
Inspectors,
2000 00
84
Lock keepers.
14065 00
1
Patrol on lower level.
320 00
2
Ferrymen,
425 00
4
Master carpenters,
2765 00
8
Master masons.
5945 00
2
Engine men.
1050 00
11
Overseers,
3050 00
12
Gate keepers.
731 00
155
Total,
$59637 46
" 6th—Whether or not the interests of the commonwealth require the fore¬
closure of the mortgages held by the state upon the property of the said com¬
pany ?"
Answer—In presenting my views upon the subject of this enquiry, 1 shall not
be so unjust to the general assembly as to presume that the interests of the com¬
monwealth, in the opinion of that body, are to be estimated by a simple calcula¬
tion of pecuniary gain. It is only in that enlarged sense, which comprehends
the honor of the state and a respect for the rights of others, that the interests of
the commonwealth can ever be viewed by the general assembly. The honor of
Virginia is dearer to the humblest of her citizens than her wealth; and to do
justice is the duty, as to receive it is the right, of all men.
Doc. No. 62.
25
As it becomes nie to be brief in presenting my views to the committee, I shall
content myself with a simple reference to facts which may be found in the
printed documents of the general assembly and of the James river and Kanawha
company; holding myself ready to produce the authority upon which my state¬
ments are made, whenever it shall be the pleasure of any member of the com¬
mittee to call for it.
If we are to consider the question before the committee, with reference to the
propriety of the action proposed, having regard to the rights and interests of all
the parties to be affected by it, it is necessary that we should look to the previous
action of the general assembly and of the James river and Kanawha company.
We all know that when the company was organized, its capital was $ 5,000,000,
with a power to increase it, and that the state was a subscriber for three-fifths of
this capital.' And we know, too, that she put in, in part satisfaction of her sub¬
scription, the works of the James river company, at $1,000,000. These works
had cost the state $1,349,709 57. But in thus estimating them at $1,000,600,
the state did not relinquish the excess. On the contrary, she required the com¬
pany to pay the annuity of $21,000 to the stockholders of the old James river
company, which, as a stock of six per cent., the legal rate" of interest on money,
is equal to $ 350,000. And thus she sold to the company these works at more
than the full cost of their construction.
Between 1832, when the charter of the James river and Kanawha company
was granted, and 1835, when the company was organized, enquiry and investiga¬
tion had satisfied the friends of the improvement that to compete successfully for
the trade of the great west, it was necessary to increase the size of the canal
much beyond that which then existed between Richmond and Maiden's Adven¬
ture in Goochland ; and at the first meeting of the stockholders it was determined
to fix it at a width of fifty, and a depth of five feet ; and this was heartily con¬
curred in by the then proxy of the state, the late Chapman Johnson, Esq. To
enlarge the old canal to the limits fixed for the work, experience has proved to be
as expensive as to have constructed it anew ; and the price at which the old
canal and that through the Blue Ridge were transferred to the company, was a
total loss ; for whilst they did not diminish the cost of the improvement, the com¬
pany has been saddled with the payment of the annuity of $ 21,000 to the stock¬
holders of the old James river company, the state herself being the largest of
them.
Having thus secured no benefit from these two works, the first of which cost
$640,143 12, and the second $368,506 64, the capital of the company, really
available for the execution of their great work, was but $4,000,000. Commenc¬
ing with that amount of capital, it cannot surprise any reflecting man that: it
should have been exhausted before the canal was completed to Lynchburg. Such
certainly was the fact, and in the winter of 1838-9, the company applied to the
general assembly for an increase of capital and for a subscription of three-fifths
of the proposed increase by the state. It was in answer to this application that
the general assembly determined to aid the company, not by a subscription, but
by authorizing the company to borrow money to carry on its work, and by gua¬
ranteeing its bonds. And thus it will be seen that the policy of executing this
great work by means of borrowed money, was the policy, not of the company,
4
26
Doc. No. 62.
but of the general assembly; and it was a policy most reluctantly assented to by
the company. By the act of March 23d, 1839, the company was authorized to
borrow the sum of $1,500,000 upon the guarantee of the state, payable either in
this country or in Europe. For this guarantee no security was then required;
and we may well believe that if such a security as has since been required had
been then demanded, the company would have declined the guarantee. Being
authorized by the act to negotiate this loan in Europe, a large amount of the
bonds of the company guaranteed by the state was placed in the hands of Gen.
Hamilton of South Carolina, than whom, in the estimation of all men at that
time, no man could have been selected better qualified for the office or more con¬
fidently to be relied on both for integrity and capacity. Subsequent events
proved that the confidence was misplaced. General Hamilton hypothecated with
certain houses in Europe, for his own purposes, a large amount of the bonds of
the company; and it became necessary that application should be made to the
general assembly for aid to enable the company to redeem these bonds. Accord¬
ingly, at the session of 1841-2, the company applied to the general assembly for
a loan of $250,000, to enable it to redeem its bonds; and that body, by its act of
March 25th, 1842, authorized a loan of the sum asked, but coupled that loan with
the condition that the company should execute a mortgage upon all its property
and income, to secure the payment of the semi-annual interest and the redemp¬
tion of the principal, not only of the $250,000 then borrowed, but of the $1,500,000
of guaranteed bonds issued under the act of 1839, and also of the annuity of
$21,000 to the stockholders of the old James river company. And by this same
act, the company was prohibited from entering into any new contract for work to
be done upon the line of its improvement.
This act of the 25th of March 1842 has been the great source of the difficulties
which have since that time beset the James river and Kanawha company. By the
act of 1839, the general assembly had determined that this improvement was to be
carried on, not by subscriptions to the stock of the company, but by borrowed
money. And by the act of 1842, incumbering the whole property and income of
the company for the indemnity of the state, to the amount of $ 126,000 of annual
interest, and a principal sum of $1,750,000, the ability of the company to bor¬
row money from any other quarter than the state was utterly destroyed ; an'd
from that time the general assembly must have contemplated the necessity of
itself supplying the means for carrying on this work. By this act, too, the com¬
pany was prohibited from proceeding further with its works for the time ; and as a
consequence of this prohibition, the large sum of $ 482,428 57, which had been
previously expended between Lynchburg and the mouth of North river, has been
nearly all lost to the company, whilst the interest upon it is still a charge upon its
income.
By an act passed March 1st, 1847, the general assembly provided for a further
loan of $ 1,236,000 to the James river and Kanawha company, in annual pay¬
ments, extending from 1847 to 1850, inclusive, for the purpose of extending the
improvement to Buchanan, and again required, as a security for the loan, a mort¬
gage on the property and income of the company. This act further required per¬
sonal security, in the penalty of $250,000, that the gross amount of tolls upon the
whole line of the canal, between Richmond and Buchanan, for five years, com-
Doc. No. 62.
27
mencing three months after the company's canal should be completed and put in
actual operation from Lynchburg to Buchanan, should not fall below the average
amount of $ 260,000 per annum. And this requisition was met by private indi¬
viduals living in the Valley of Virginia and in the city of Richmond. The gene¬
ral assembly, by this provision, indicated the measure of business on the canal
which would be satisfactory to that body for the first five years of its operations
between those places. The work was completed and put in operation up to
Buchanan, in November 1851, and in the year ending the 30th of September
1852, the receipts from tolls between Richmond and Buchanan amounted to
$ 269,210 81, while for the year ending the 30th September 1853, they amounted
to $283,998 60: thus exceeding, in each year of its operations, the average
amoirat for five years stipulated for by the general assembly.
Further loans have been made by the general assembly for continuing the work
to the neighborhood of Covington, which it is unnecessary to notice particularly.
They only evince the continued purpose of the general assembly to aid the com¬
pany in carrying on its great work; and assuredly gave the stockholders no
reason to apprehend, that at the moment when their hopes, so long delayed, pro¬
mised soon to ripen into fruition, it would be gravely proposed in the general
assembly to foreclose the mortgages, which had been executed by the company
for the indemnity of the state ; and thereby appropriate to the state, in effect,
without fair equivalent,.the whole property of the private stockholders invested
in the company : for if these mortgages are to be foreclosed, the state must be the
purchaser without a competitor.
I would respectfully ask what has the James river and Kanawha company done,
or neglected to do, in relation to her engagements to the commonwealth, which
requires such a measure of rigor towards the private stockholders ? The company
commenced its operations in 1835, and has been progressing for nearly nineteen
years. In that time there have been disbursed by the company about twelve
millions of dollars ; of which there has been paid', for interest, the sum of
$2,310,653 83. In this long period, whilst her works were unfinished, and there
was necessarily a great expenditure before there could be any returns for it, the
company has occasionally asked the aid of the state in the payment of the in¬
terest upon her debt—a debt contracted under a policy not of her own devising,
but adopted at the suggestion of the legislature of the state. The sum of
$ 326,204 69, thus advanced by the state, for the payment of the interest due
from the company, has been secured by mortg;^age8 on the property of the
company, and interest thereon has been paid to the state from the day it was
advanced up to the present time, with the exception of the semi-annual interest
due on the 1st January 1853.
The acts of the general assembly, authorizing the guarantees of the company's
bonds, and the loans to the company, for which the mortgages were executed,
provide that the revenues of the company shall constitute a fund—first, for
keeping the improvements in repair and paying the ordinary expenses of ad¬
ministration ; and secondly, for paying the semi-annual interest on the loans
guaranteed by the state, and loans made by the state, including the annuity to
the stockholders of the old James river company. The mortgages were executed
in pursuance of these acts of the general assembly.
28
Doc. No. 62.
The revenues of the company were always taken care of, and disbursed ac¬
cording to the provisions of the mortgages and of the acts under which the
mortgages were executed, until the year 1852. And for many years past they
have been sufficient, with such temporary aid as the president and directors were
always able to obtain on the credit of the company in an emergency, to defray
the expenses of repair and administration, and pay the semi-annual interest olt
the company's debt as it accrued.
In the progress of the company's operations in 1851, in completing the second
division of the canal, and advancing towards completion the south side and
Rivanna connections, it was ascertained that the loans made and guaranteed by
the state for these objects would not be adequate, and that the company could
not supply the deficiencies from its own resources and also pay the semi-annual
interest aceruing'on its debt.
In this state of things, the stockholders assembled in November 1851, and the
president submitted to them his annual report. In this report, (page 200,) re¬
ferring to the deficiencies then existing and anticipated to exist, the president
says :
" Auother mode of relief for the company, is to ask of the legislature to loan
the company three hundred thousand dollars of state bonds, or to pay the semi¬
annual interest accruing on the company's bond debts, until the 1st of July 1853;
and with its prospects of revenue, when all its works now in process of construc¬
tion shall have been completed, the company will be justified in undertaking to
repay into the treasury the amounts so to be paid within five years, 1 recommend
that application be made for aid in this form. The state is already bound for the
payment of this interest, and it cannot be the policy of the legislature, by a re¬
fusal of aid, to compel the company to make default to its creditors."
The president's report, with this and other subjects embraced in it, requiring
action on the part of the stockholders, was referred to a committee of thirteen,
in which number were included the three proxies who represented the state.
The committee, in their report, set forth the fact of the deficiencies in appropria¬
tions, as well as a small deficiency, past and prospective, of revenue to meet dis¬
bursements; and state, that the sum of $300,000 will, in their judgment, be
sufficient to supply all these deficiencies, and conelude as follows:
"In relation to this subject, the committee recommend that the stockholders
adopt the following resolutions :
"2. Resolved, that the president and directors, on behalf of the company, ap¬
ply to the legislature for aid in relation to the existing and anticipated defi¬
ciencies in their revenue, so as to enable the company punctually to pay their
semi-annual interest."
Two other resolutions were reported under this head—one appointing a com¬
mittee of stockholders to aid, by their efforts, in giving effect to that application
to the legislature, and the other asking the legislature to convert the bond debts
of the company into stock.
These resolutions were adopted by the stockholders.
. It will be observed that the committee in their report treat the revenues of the
company as a resource from which the company is to pay, or make up, the defi¬
ciencies of appropriation, as well as pay interest; and looking to the application
Doc. No. 62. , 29
of it—first, to supplying the deficiencies of appropriation, confine their resolu¬
tion, quoted above, to the single object of obtaining aid from the legislature for
- the punctual payment of the semi-annual interest. It is manifest, therefore, that
the committee, although they did not so express themselves in terms, approved,
and intended the adoption by the stockholders of their report and resolutions to
be an approval by them, of the alternative recommendation of the president, to
supply the deficiencies of appropriation from the revenue, and obtain a loan from
the legislature for the payment of interest.
The president, for himself and the board, in behalf of the company, prepared
and had presented to the legislature a petition in pursuance of the resolution of
the stockholders ; and the printed proceedings of the stockholders at their annual
meeting, with the president's report, were placed upon the tables of the mem¬
bers, according to custom, as well as referred to in the petition.
On the 29th of May 1852, a bill was reported from the committee of finance,
by a unanimous vote of the committee, after full explanations from the president,
authorizing a loan of $300,000, in pursuance of the prayer of the petition. It
provided that $150,000 was to be paid in time to meet the interest due on the
1st of July 1852, and $150,000 in time to meet the interest due on the 1st of
January 1853.
\
After the bill was reported, the chairman of the committee of finance had a
conference with the president of the company; and learning from him that
$120,000 would be sufficient for the immediate purposes of the company, pro¬
posed, for reasons connected with the new tax bill, then untried, to reduce the
amount reported in the bill to $120,000—but with the understanding, that as the
legislature would adjourn to meet again in November or December, the balance
of the sum reported, to wit, $180,000, would be appropriated in time to pay the
interest falling due on the 1st of January 1853.
A motion was accordingly made by the chairman of the committee of finance,
in the house, to reduce the appropriation to $120,000, and, as 1 believe, expla¬
nations of the character above stated were made by him to the house at the
time.
The bill was then passed, by a vote of 82 to 3—was sent to the senate, and
there, after reference to a special committee, was unanimously passed on the
same day.
After the legislature met iu November 1852, a bill for $180,000 was reported.
It is believed there was a majority of the legislature in favor of passing it, but
opposition delayed action, and that, combined with the absence of members
during the Christmas holidays, defeated its passage before the 1st of January.
The company then having expended its revenues to supply the deficiencies of
appropriations, had no alternative but to make default.
Had it not been for the well grounded belief that the legislature would grant
the means to pay the semi-annual interest, the president and directors would not
have permitted the revenues of the company to be diverted from that object in
the early part of the year. This belief was based upon the proceedings of the
stockholders, in which the three state proxies concurred—the fact that the legis-
30 Doc. No. 62.
•
lature never refused to supply a deficit of means to complete unfinished work on
any improvement in which the state was largely interested, and on which a large
amount had already been expended—and the consideration that the.loan of the
money for the payment of the interest, instead of an immediate loan and sale of
the bonds to supply the deficit, would be to the advantage of the state, as well
as to the advantage of the company ; and upon the further fact, that so far as
the sentiments of the members of the legislature could be ascertained during the
session of 1852, it did not appear probable that there would be any serious oppo¬
sition to the loan for the purposes indicated : as was afterwards abundantly
manifested by their vote upon the bill making the appropriation of $ 120,000.
After the default had been committed, the general assembly, by its aet of the
7th of January 1853, authorized the Board of public works to pay the interest on
the guaranteed bonds of the company, due on the 1st day of the same month;
which interest has been paid to the amount of $67,627'50; and this, with the
interest due to the comrnonwealth for herself and for the stockholders of the old
James river company, on the same day, amounting to $58,380, is the only sum
for which, upon any grounds of law even, a forfeiture of the mortgages of the
company could be authorized.
This subject was investigated by a committee of the house of delegates at the
last session of the general assembly—and the committee, while expressing their
disapprobation as well of the policy that asked, as of the policy that granted the
loan of $120,000 for the purposes avowed, nevertheless declared their belief that
the president and directors of the company and the legislature were prompted by
the same desire to promote the best interests of the company and the state.
In coming to a conclusion on the interrogatory propounded by the committee,
I respectfully submit that it is proper to take into consideration the facts herein
before referred to, to wit :
First—That the state holds stock in the company to the amount of one million'
of dollars, for which she has given property, that however much it may have
cost her, has been of no value to the company.
Second—That she not only holds this amount of stock, for which the company
has received no value, but she has been in addition relieved from the payment
of a perpetual annuity of twenty-one thousand dollars, which has been imposed
upon the company; and in fact she herself receives the greater part thereof:
and that she has thus, in this shape, received from the company a very large
portion of the interest which she has been required to pay for it.
Third—That the policy of carrying on this work by means of borrowed money,
is the policy of the state, imposed by her upon the company, and reluctantly
adopted by it.
Fourth—That the state having required and taken from the company mort¬
gages upon all its property for her indemnity and security, thereby rendered it
impossible for the company to borrow money from any other person or body but
herself; so that whilst she required the works to be carried on by means of
borrowed money, she alone could be expected to lend it.
Fifth—That the act of the state, in putting a stop to the improvement above
Doc. No. 62. 31
•
Lyuchburg in 1842, caused a loss to the company of nearly $482,428 57, which
sum had been borrowed from the state and expended upon the works prior to
their suspension;-
Sixth—That the state having authorized the company to resume the work in
1847, and lent it the sum of $1,236,000 for the purpose of carrying it on to
Buchanan ; and having since lent the company other large sums for the purpose
of carrying on and completing the work, after she had paid for the company
interest to the amount of $ 326,204 69 ; and having funded that debt and taken a
mortgage for it and received interest upon it, she thereby expressly and impliedly
waived any forfeiture of the mortgages arising oui of the failure of the company
to pay that interest.
Seventh—That the pijlicy of the general assembly and its past action authorized
the company to expect her aid in the payment of its interest whenever the con¬
dition and the circumstances of the company rendered that aid necessary, without
rigidly exacting the forfeiture of the mortgages.
Eighth—That the company regularly paid its interest from 1847 until 1852;
and that the difficulty in making the payments then, arose from the fact that the
whole cost of constructing the canal from the mouth of North river to Buchanan
had been incurred without any return therefor in profits ; that there had been
large expenditures upon the dock connection, and the south side and Rivanna
connections, which were still unfinished, and therefore producing nothing to the
company.
Ninth—That the passage of the bill for the siira of $120,000, in June 1852,
with the facts that transpired in connection with it, and,which were communi¬
cated to the board by the president of the company, gave the arrangement the
character of an assurance, and almost of a positive contract on the part of the
legislature, that if the company would allow its revenues to be applied to supply
the deficiencies of appropriations, the legislature would provide the sum of
$180,000 to pay interest on or before the 1st day of January 1853, and that the
president and directors were therefore justified in allowing the revenues to be so
applied.
Tenth—That the causes of embarrassment which existed in 1852 were tem¬
porary. The canal to Buchanan is now in operation, and accomplishing even
more than was promised. The Rivanna and three of the south side connections
are so far completed as to be used, and are beginning to make some returns ; and
the dock will be completed within a few months, when, without doubt, it will add
immediately a large amount to the revenues of the company.
Eleventh—That the money advanced by the state to pay interest for the com¬
pany has home and made interest from the time of its advance, and in fact and
substance, whatever it may be in name, is a loan to the company for the comple¬
tion of its works; as much as any one of the loans for that object, expressly so
called.
Twelfth—That the difference between the mode in which this work has heen
conducted, and the mode of conducting work on state account, or by subscrip¬
tion for stock, is that the state receives interest upon her outlay from the time
32 Doc. No. 62.
•
she made the advance to this work, whilst in the others she must lie out of her
money without remuneration until the work, or at least a part of it, is completed
and put into operation. And in this case, she has in effect received $ 1,030,428 74
for interest, when, if the work had been done by the state or by subscription,
she must have completed one of the large sections of the work before shg^ could
have received any return upon her investment; and for eighteen years she has
been receiving interest upon her advances, whilst the private stockholders have
received nothing.
I have thus, at the instance of the committee, endeavored to present my views
upon the enquiry which they were instructed by the general assembly to make.
I have done so cheerfully, because I wished the committee and the general as¬
sembly to be satisfied that there is neither justice nor propriety in the proposition.
At the same time, I may be permitted to add, that I have entertained no appre¬
hension that the mortgages would or could be foreclosed so long as the facts
hearing upon the question remain as they now are. For it is not to be presumed
that the holders of $ 2,000,000 of stock in a company; possessing so many of the
elements of substantial wealth and prosperity as this company does, would permit
the whole to be forfeited and lost for the comparatively small sum of $ 126,007
50 cents.
"7th. Whether or not the interests of the commonwealth require that the Board
of public works shall be authorized to purchase all interests in said company,
other than those held by the state?"
Answer—Upon this subject of enquiry also, it may be useful to look to the past
history of the James river improvement.
In 1819, the state made an arrangement with the old James river company, and
took upon herself the construction of this work. For a few years it was carried
on under the superintendence of her agents, and a canal forty feet wide and three
feet deep, was completed from Richmond to Maiden's Adventure, a distance of
twenty-seven and a half miles, at a cost of $640,143 12. The progress and suc¬
cess of this work under the management and control of the state was so unsatis¬
factory to the general assembly, that it was arrested in 1823; and though four
distinct and earnest efforts were made by the friends of the improvement, between
that time and 1832, to induce the general assembly to resume its construction, yet
such had been the experience of that body of the management of its agents, that
every effort failed of success; and it was after the fourth failure in the winter of
1831-2, that the present scheme of an independent company, with a subscription
by the state, was gotten up.
It is only necessary to refer to the action of the general assembly from 1832 to
1835, whilst the effort was making to obtain the subscription to the stock of the
company, to be deeply impressed with the great concern felt and manifested by
that body that the effort should be successful, and that the execution of this
work should be confided to an independent company. I may mention the
acts passed authorizing subscriptions to the stock by the city of Richmond, the
town of Lynchburg, Washington college and the Farmers Bank and Bank of
Virginia ; the subscription of this last bank having been carried by the vote of
the treasurer of the state, acting under instructions from the general assembly.
Doc, No. 62. 33
And what is still more strongly indicative of the interest which the general assem¬
bly felt in the success of the scheme is the fact, that to remove an objection made
to it on account of the controlling influence which the state would have in the
company by the vote allowed to her by the act of 1832, the act of 1834 was
passed reducing that vote—a fact which has few parallels in the action of legisla¬
tive bodies.
It is-also a well known fact that, though the charter contained a provision for
the forfeiture of the franchise if the work was not completed within twelve years
from the organization of the company, this provision of the charter was only in¬
tended to meet an extreme case, and that no forfeiture was ever expected or ih-
tended to be enforced, unless the company should be guilty of gross malfeasance
or neglect and failure in the execution of the work which they were about to
undertake. This was the view publicly, orally and in print, urged upon all per¬
sons from whom subscriptions were asked, and was fully authorized by the re¬
peated refusal of the general assembly to undertake the work on state account,
and by the concern which that body evinced and the facilities it afforded for the
procuring of subscriptions to the stock and the organization of the company. It
was upon this conviction of their secure reliance upon the magnanimity and jus¬
tice of the general assembly, that the large private subscription of $2,000,01X1
was obtained ; and it is in the same confidence that these stockholders have pa¬
tiently waited for years for the realization of the hopes which prompted their
subscriptions. Nor have they yet had any reason, in the past action of the gene¬
ral assembly, to believe that their confidence has been misplaced. On the con¬
trary, by the act of March 1st, 1847, the time limited by the act of 1832, for the
completion of the works of the company, was extended to the 25th of May
1859—thus at the same time evincing the unchanged policy and the justice of
that honorable body.
Seeing, then, that up to 1847, and indeed up to the present day, the general
assembly have adhered to the policy of prosecuting this work by an independent
company; that the improvement has been completed to within a few miles of
the point to which in all probability it will be limited for several years ; that a
large part of the unfinished portion of the work is in process of execution under
contracts madl with the company, and under its superintendence ; that at most but
twenty-nine miles of the improvement are open for the present, to the exercise of
any superior wisdom or skill which might be brought from any other source to its
management ; that the hour so long hoped for by the stockholders, so long de¬
layed, must now be near at hand—I would respectfully ask if it is consistent with
the former liberality of the general assembly, or with justice to the private stock¬
holders, at this late day to disappoint their hopes, and deprive them of their re¬
ward for the sacrifices which they have so long and so patiently borne? Surely,
it is too late now to propose a change in the policy so uniformly pursued by the
general assembly in relation to this improvement, even if a better policy could be
devised. For twenty-twO years has it been adhered to under all the vicissitudes
which have marked the progress of the work. Under it two hundred miles of
canal have been completed at a cost which, under the circumstances, and looking
to the magnitude and character of the improvement, will challenge a comparison
with any work of the kind in the United States. The tide water connection is
Ô
34
Doc. No. 62.
uow nearly ready for use; fifteen miles of canal west of Buchanan are in part
completed and under contract ; and the few miles that remain between that point
and Covington are surely not of sufficient consequence to provoke from the pre¬
sent general assembly at once a sentence of condemnation upon the wisdom of
all their predecessors since 1832, and upon the capacity or fidelity of the com¬
pany to which these predecessors have confided this trust.
I shall not enter into the question whether it is the wiser policy to construct
public improvements, such as the James river and Kunawha canal, through the
instrumentality of public agents or by a union of public and private interests,
and of a public and private supervision. As I have already said, I think it is too
late to make that question with reference to this improvement. But this I may
say, with all respect for the gentlemen who constitute the Board of public works,
that at least it is not unreasonable to expect that men who have but a single
work to attend to and control, will be able to give to it as much attention, and
will feel as much concern for its success and prosperity, as men who have the
supervision and control of many, in all of which they must be presumed'to have
the same interest. And certainly it is neither opposed to our consciousness nor
our experience to believe, that men who are attending to their own affairs and
spending their own money will be as dilligent in their attention and as econo¬
mical in their expenditure, as men who are attending to the business of others
and spending the money of the people. And although I know it may be said
that the James river and Kanawha company is spending the money of the
people, I know also that the company spends it as her own ; for she has borrowed
it; she has given security to return it, and she pays interest upon it.
1 shall not reply at length to the charges which have been so frequently made
against the James river and Kanawha company for extravagance and misma¬
nagement of its affairs. General charges are easily made, and it is difficult—
sometimes it may be impossible—to refute them. But I challenge boldly and
confidently a review of the history of the company. From various causes there
have never been wantiug men who are willing and ready to bring these charges
against the directory of the company. The first president, with all his virtue,
ability and devotion to the interests of the company, could not prevent them.
But he met them once and again, in 1842-'3 and 1844-'5, by a triumphant
vindication of himself and his colaborers. There have been under his successors
investigations into the affairs and management of the company, by committees
of the general assembly, the last of which took place at the last session of that
body ; and to the reports of these committees I refer with an undoubting confi¬
dence for a refutation of all the charges of any moment that have ever been
"brought against the directory. For the condition of its office, its system of
accounts, its mode of enforcing accountability, the security of its funds, the
economy and justness of its administration—and I will add the general fidelity of
its officers—the company have nothing to fear from comparison or investigation.
In the sentiments I have herein expressed to the committee, under the enquiry to
which this answer refers, I but express the settled and repeated opinions of the
stockholders of the James river and Kanawha company. The question of selling
the interest of the private stockholders to the state, was presented at the general
meeting in 1842, when it was referred to a committee which reported that it was
not expedient then to take further action upon the subject. And it was again
Doc. No. 62.
35
before the stockholders in 1843. At the called meeting in April last it was again
under consideration—and then postponed; and at the annual meeting in October
last, was rejected. In the present month there has been a called meeting of the
stockholders, formally to consider the same proposition; when it was rejected by
a vote of 4856 to 707—the private stockholders alone voting. Of their wishes,
therefore, on this subject, there is no room for doubt. Of the reasons which ope¬
rated upon them it is not for me to speak. With some, unquestionably, it was
the belief that they were about to reap a rich reward for the sacrifices they had
made. With others we may well suppose that they were unwilling to surrender
all influence and control in the management of a work for which they had so
dearly paid, and upon which their prosperity so essentially depends. With all,
there was the honor of prosecuting to a successful completion a most important
state enterprise. And with all, too, there was an abiding confidence that they
might follow their own wishes, and rest secure in the liberality and the justice of
the general assembly.
Before concluding this answer, it is perhaps proper that I should say a word
upon the mode of completing the canal to Covington. The state has heretofore
lent to the company upwards of $ 900,000, to be expended in constructing the
work west of Buchanan. It is, therefore, without doubt the purpose of the
general assembly that this work shall be extended to some point at or near
Covington. It is estimated that to do this, it will require an additional sum of
$1,500,000. If this sum he lent to the company by the general assembly, it will
bear interest from the time it is advanced. But if the whole work is to be taken
into the hands of the state, and is to be completed by her, then she must lose the
interest upon these advances until the work is finished, and she receives satisfac¬
tion from the tolls. But, in addition : If the state buy out the private stock¬
holders, then she is to advance not only what is necessary to complete the canal,
hut what she shall have to pay for their stock—a sum which will add very sensi¬
bly to the debt of the state, and which is not to be lightly assumed at this day,
when there are so many and such large demands upon the treasury.
In conclusion, I would most respectfully,, hut with all earnestness, ask the
committee and the general assembly to permit the company to proceed to the
completion of the work ; to grant us the assistance which we need, in the mode
in which we ask it, and in which the general assembly have been accustomed to
grant it ; and to relieve us from any forfeiture for failing to carry the work
through to the Ohio river in the time prescribed—still looking to that end ulti¬
mately : and when the work is completed to Covington, then to consider and
determine whether you will still hold towards us the relation you at present sus¬
tain, .ef a creditor and surety, or whether you will become a stockholder for the
amount you have lent, and for which you are bound, and share the large profits^
of this great work, which promises to augment, in so remarkable a degree, the
trade, commerce and revenues of the state.
All which is most respectfully submitted.
THOMAS H. ELLIS,
Pres't of the James River and Kanawha Co.
Richmond, January 30, 1854. '
I