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REPORT
Of
A COMMITTEE OF THE STOCKHOLDERS
P.
■Ot THE
CHESAPEAKE AND OHIO CANAL COMPANY,
APPOINTED
TO INVESTIGATE THE SUBJECT
GF RAISING FUNDS
t
TO COMPLETE THE CANAL TO CUMBERLAND.
PRESENTED DECEMBER 3S 1342.
WASHINGTON:
PRINTED BY ORDER OF THE STOCKHOLDERS,
1842.
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Office Chesapeake and Ohio Canal Company,
Frederick, Saturday, December 3, 1842.
Pursuant to adjournment, on the 17th lilt., a general meeting of the
stockholders in the Chesapeake and Ohio Canal Company was held this day,
at the office of said company, in the city of Frederick, Maryland. ' ,
On motion of General Tilghman, Governor S. Sprigg took the chair.
Present: The State of Maryland, by
Gov. S. Sprigg,
Gen. T. Tilghman,
John Van Lear, and
A. Bowie Davis, Esqs.
The United States, by
Lewis Johnson, Esq.
The Corporation of Washington, by
Lewis Johnson, Esq., and
Dr. W. B. Magruder.
The Corporation of Georgetown, by
E. Lyons, Esq.
Also, several private stockholders.
General Tilghman, in conformity with the resolution adopted by the
stockholders on the 4th day of August last, in the following words : "Re¬
solved, That General T. Tilghman be appointed a committee to investigate
the subject of raising funds to complete the canal to Cumberland, and to
report at the next general meeting of the stockholders," submitted the fol«
lowing
REPORT;
To the Stockholders of the Chesapeake
and Ohio Canal Company:
By an order of the stockholders of the Chesapeake and Ohio Canal
Company, passed at a general meeting held in the city of Frederick, on the
4th day of August, 1842, the undersigned was directed " to investigate the
subject of raising funds to complete the Chesapeake and Ohio canal to
Cumberland, and to report at the next general meeting of the stockholders."
The shortness of the time allowed for this investigation has necessarily
prevented as full an inquiry into the merits of the question as the magni¬
tude of the subject demanded^
Aware, however, of the great importance of procuring the desired in¬
formation at the earliest practicable moment, in order that it might be sub¬
mitted to the company in time for their action before the commencement
of the approaching session of the Legislature of Maryland, the under¬
signed has made every effort to carry out what he believed to be the wishes
of the stockholders in this respect, and flatters himself that his exertions
have not been entirely without success.
Before proceeding, however, to report the information which he has ob¬
tained, the undersigned desires to make a brief reference to the motives
which induced him to propose the investigation, in order that they may
be properly understood by those stockholders who were not present on
that occasion, as well as by all others whose interests may be affected by
any action of the stockholders, of which this proposition may be regarded
as the germe.
The immense benefits which must result from the development of the
finest mineral region in the world, even to those enterprising individuals and
companies who have invested their capital in preparations for the produc¬
tion of coal and iron, and to the still larger portion of the community who
are to become the purchasers and consumers of these useful articles, would
seem alone to constitute a sufficient incentive to the completion of the canal
to Cumberland.
To the stockholders, its accomplishment is of paramount importance, as
the only step by which their interest can ever be rendered available; and
especially so to the State of Maryland, who not only holds by far the larg¬
est portion of the stock, but has to provide means for the regular payment
of the interest on the loans with which this stock was purchased.
The full weight of this latter consideration can only be appreciated when
it is recollected that the means of paying this interest must be drawn from
the people by direct taxation, and that, too, at a season of unusual distress
and embarrassment.
. But, heavy as the burden must be acknowledged to be, it is as dust in
the balance when compared with another calamity which threatens the cit¬
izens of this devoted Commonwealth, and oppresses, as with a mountain's
weight, the heart of every patriot within her borders.
The spirit of repudiation has raised its voice, even within her legislative
halls ; and demagogues are every where to be found, who, whilst profess¬
ing the most sacred regard for their private obligations, are yet ready to
appeal to the feelings of a suffering people, and to attempt to deceive them
by the miserable sophistry, that repudiation in a State is less culpable than
in an individual.
Let it not be supposed, however, that Maryland is in immediate danger
of being overwhelmed by such a disaster. She is not yet on the black fist
of repudiating States; and both the journals of her Legislature and the re¬
sult of the recent elections afford conclusive evidence of the fact that thus
far this doctrine has found little favor either with the Legislature or the
people of the State.
But the most violent diseases are often, also, the most contagious. The
first symptom of such a disease in the body politic should be the signal to
every good citizen to resist its extension ; and the desire to lend his aid in
preventing so dire a calamity was the real motive which induced the un¬
dersigned to propose that the investigation should be made at this time.
As long as the pecuniary embarrassments of the State continue, so long
will she be subject to the danger which now threatens her; and there is no
mode by which she can now be relieved from her financial difficulties, un¬
less it be by the completion of the Chesapeake and Ohio canal to Cumber^
land.
It is unnecessary here to refer to the recent legislation of the State of
Maryland on this subject, further than to observe that she evinces a strong
indisposition to embark in any measure which would subject the people to
the risk of further taxation. The wisdom of this course the undersigned
most heartily approves.
5
In prosecuting the investigation, therefore, which he was ordered to
make, lie has confined himself entirely to the consideration of the question,
"whether the amount required to complete the canal to Cumberland can
be raised by the company alone, without the aid of the State."
To enable the company to effect this object in the most economical way,
viz: by a loan obtained on the faith of the company, it may be assumed
as an indispensable condition, that the State should first suspend its priori¬
ty of lien upon the tolls and revenues of the canal, and thus place it in the
power of the company to offer to capitalists the only security on which it
is probable the loan could be procured.
The willingness of the Legislature to acquiesce in this measure may be
inferred from the fact, that an act containing a provision for the suspension
of the State's right of .priority upon the tolls of the canal actually passed
one House at the last session of the Legislature, and from the further fact
that this section was not objected to by the other House, in which the bill
was finally lost.
Regarding this difficulty as settled, it remains to be ascertained whether
a loan can be effected by the company, at this time, by giving an undoubt¬
ed lien on the proceeds of the whole canal, to meet interest, and the event¬
ual payment of principal, on the amount requisite to complete the canal to
Cumberland.
To this question a definite reply cannot now be given. Before doing so,
it would be necessary to extend the investigation into the European mar¬
ket ; and to afford a reasonable prospect of success in such a negotiation, it
would probably be advisable to have it conducted, in person, by an agent
sent out for that purpose. The undersigned has taken measures, however,
to ascertain the opinions of several of the most eminent capitalists and dis¬
tinguished financiers in this country, as to the probable result of such an
attempt; and they all concur in the belief that the money might be obtain¬
ed, and without much difficulty, from the present holders of the State bonds
in Europe.
If sufficient security could be offered them, they would have the strongest
inducement to make the loan, as the surest means of preventing the heavy
losses to which they may be subjected by the still greater depreciation of
the bonds which they now hold.
There is another mode of raising the required amount, which, although
perhaps iess economical, is certainly more feasible than the one above men¬
tioned. With regard to this, the undersigned is happy to have it in his
power to present to your consideration information of a more definite
character.
The mode referred to is simply this: To issue the bonds of the company
to the amount of $2,000,000, to be given to any responsible party who shall
contract to complete the canal to Cumberland for that sum; the payment
of the said bonds being secured by a mortgage on the tolls and revenues of
the work, in the manner hereinbefore mentioned.
. The completion of the canal is to be made an indispensable condition,
and to constitute the very foundation of the proposed plan; and it is hoped
that this feature will go far to recommend it to the favorable consideration
of the stockholders, provided that parties can be found who are willing to
undertake it, and who are certainly able to fulfil their part of the contract.
It does not propose to limit the issue of bonds to the specific amount for
which it is estimated that the canal can be completed to Cumberland, for
6
the estimates have always heretofore fallen short of the actual cost of the
work, and a large allowance must be made for discount in any sale which
might be made of the bonds ; but it proposes to contract for the completion
of the whole work for a named sum, (viz: $2,000,000,) whether that sum be
found to exceed the actual cost of the construction or not; and thus to se¬
cure the attainment of the object which all former efforts have proved in¬
sufficient to effect.
The estimated cost of the work to be done is about $1,600,000; and it is
undoubtedly true that the capitalists who might give this amount for the
$2,000,000 worth of bonds would make (if the work should prove as profit¬
able as it is supposed it will) about $400,000 by the operation. But when
it is remembered that the State of Maryland alone is losing more than this
amount every year in interest on the stock which she already holds in the
canal, can there be a doubt as to the policy of adopting this course, at least
if, upon a full investigation, it should prove to be the only mode by which
the funds can be raised at this time ?
Believing that a proposition of this nature would receive the favorable
consideration of the stockholders, and at the same time prove more acceptable
than any other, both to.the Legislature and the people of the State of Mary¬
land, the undersigned has devoted particular attention to this branch of the
inquiry. On this point he is prepared to speak positively. He has not only
received the most confident assurances that the required amount can be
raised on the bonds of the company, but he is actually authorized, by parties
who are generally believed to be responsible for the performance of what¬
ever they may undertake in this respect, to say, that they are ready to con¬
tract to complete the canal to Cumberland for $2,000,000, to be paid in the
bonds of the company, at their par value, provided the Legislature will
place it in the power of the company to give the necessary security for the
payment of these bonds by constituting them a prior lien on the nett reve¬
nues of the canal between Georgetown and Cumberland. With the an¬
nouncement of this fact it would perhaps be proper to conclude this report.
The undersigned desires, however,.to express the hope that he has not ex¬
ceeded his authority in procuring the most efficient aid in conducting this
investigation which the circumstances of the case permitted him to obtain.
For this purpose he solicited the co-operation of Major General William
Gibbs McNeill, a gentleman of the highest reputation in his profession, and
who stands unrivalled for his success in the prosecution of similar enter¬
prises, where the skill and talents of the diplomatist and financier were re¬
quired in as great a degree as the scientific attainments and practical ability
of the engineer.
To the instrumentality of this gentleman the undersigned acknowledges
himself to be greatly indebted for the information which he has now the
pleasure to communicate ; and, for the further satisfaction of the stock¬
holders, he has obtained from him a written communication, in which his
views are given in a more extended form on this interesting subject, and
which he has the honor to present to their consideration herewith, to¬
gether with the copy of a law referred to in the said communication.
In conclusion, the undersigned begs leave to call the attention of the
stockholders in general, but more particularly that of the agents of the
state of Maryland, to the moral effect which may be anticipated from the .
successful adoption of the measure which is now proposed. If they can
but hold out to the people of the State some definite prospect of the eom-
i
7
pletion of this great work, distrust and despondency will be banished, with
all their blighting influences, and hope and confidence will be once more
re-established amongst us. The taxes which are now grudgingly paid by
those who cannot reasonably hope to receive any benefit in return for
them, will then be freely loaned to sustain the State in her temporary diffi¬
culties. The credit of the State, which is now languishing, will then be
rapidly resuscitated: and it may not be going too far to hazard the predic¬
tion, " that when the canal shall have been completed to Cumberland, the
State will once more be enabled to obtain a loan on favorable terms, for
the purpose of paying off the debt of $2,000,000 which may have been
contracted by the company in completing the work."
In this event, the tolls would at once be rendered available for the pay¬
ment of the interest on the State debt, and the people would be speedily
relieved from the oppressive burdens under which they are now so meri¬
toriously struggling.
All which is respectfully submitted.
TENCH TILGHMAN.
December 3, 1842.
The report having been read, on motion,
Ordered, That the same be laid upon the table, and that 250 copies thereof
be printed, in pamphlet form, under the direction and superintendence of
General Tilghman.
Extract from the journal of proceedings of the stockholders :
THOMAS TURNER, Secretary.