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ACCOMPANYING THE MEMORIAL, 
 
 OF THE 
 
 President of the Wilmington and Raleigh 
 Rail Road Company, 
 
 FOR 
 
 Jin extension of credit on the Bonds endorsed 
 
 iby the State. 
 
 RALEIGH: 
 
 W. R. GALES — Press of the Raleigh Register. 
 
 1840. 
 
Digitized by the Internet Archive 
 
 in 2012 with funding from 
 
 University of North Carolina at Chapel Hil 
 
 http://www.archive.org/details/planaccompanyingOOwilm 
 
<< 
 
 WILMINGTON AND RALEIGH 
 
 RAIL ROAD COMPANY, 
 
 The Debt to which the State is security at present, 
 $250,000, viz : 
 
 Due to the Public Treasury, $50,000 
 
 " Literary Board, 50,000 
 
 4t Individuals, 150,000 
 
 $250,000 
 
 Is there any scheme by which the State may be re- 
 lieved, and yet enjoy the reasonable prospects of reali- 
 zing something from the 6000 shares of Stock held in the 
 Company ? 
 
 ANSWER. 
 
 The Income of the Company is more than sufficient to 
 pay the interest upon this debt. It has been sufficient 
 for several years, to pay not only the interest on this 
 debt, but upon their other debts also, and still leave a 
 surplus to apply in part to the extinguishment of the 
 principal of their other debts. Hereafter, this may be 
 done with more certainty and system, if it be true that 
 their floating debt has been paid off, and now the whole 
 debt of the corporation is a permanent one ; the princi- 
 
pal of which is not demanclable for many years, and the 
 interest paid by the profits of the Road. 
 
 The Mortgage of the Road is ample security for this 
 debt, and always will be so, for a much larger amount. 
 If the Road were stopped and the corporation dissolved, 
 the property and materials alone would pay the debt : 
 so that a foreclosure of the Mortgage and sale of the 
 Road, would either pass the Road to a few capitalists for 
 a small part of its value, and destroy the Stock owned 
 in it by the State, or the State would have to buy it by 
 bidding more than the debt, which is against public opin- 
 ion, if not against the public weal. Besides, if the State 
 bought the Road the debt would remain, and North Car- 
 olina would have to borrow the amount of her purchase. 
 
 There are two capital mistakes in the Acts heretofore 
 passed for lending the credit of the State to this and 
 other corporations : 1st. No part of the loan was laid 
 aside for accumulation to sink the principal debt. 2nd. 
 No provision was introduced in the Mortgage for selling 
 without a suit, nor for foreclosing, until after the debt 
 had become due to the creditors, and the State had been 
 obliged to provide ways and means to pay the debt. 
 Fortunatety, it is practicable to correct this with the cor- 
 poration, by extending the credit upon new terms ; and 
 the debt is so much below the value of the Road, as to 
 make it desirable to do that simply as a relief to the 
 State finances. It will not be considered an objection to 
 new Legislation, that the State, by adding fresh indem- 
 nity for the public interest, happens to benefit her citi- 
 zens also. Thus i In substitution of the above loan of 
 $250,000, (at this time outstanding) let the Company be 
 empowered to make a new loan, guaranteed by the State, 
 (or let the State make the loan and charge it to the Com- 
 pany) for the sum of $350,000, redeemable after Janua- 
 ry, 1867, bearing interest as heretofore, at 6 per cent, per 
 annum: Provided, that $250.000, part thereof, be paid to 
 the aforesaid outstanding debt, whereof the $50,000 paid 
 into the Treasury, shall be used by the Treasurer to ex- 
 
tinguish the Bank Debt ; and provided also, that the re- 
 maining 8100.000 be paid into the hands of a State Com- 
 missioner, to accumulate as a sinking fund to pay off the 
 Principal of the said Loan of $350,000 in 1867, or after 
 it. The Rail Road Company will in that case, pay out 
 of the profits of the Road semi-annually, the interest, 
 (i. e. $21,000 per year) and this it can do to a reasona- 
 ble certainty. The sinking fund would accumulate be- 
 fore January, 1867, to $321,128 SI. If the loan is extend- 
 ed to 1869, the $100,000 would sink the whole debt, and 
 some $80,000 over. [See calculations on last page.] 
 
 This does not increase the liability of the State for 
 the Company. The additional $100,000 is to be paid to 
 a, State Commissioner, to sink the principal ; and in fact, 
 it will be obliging the Company to use their present cre- 
 dit to provide a fund to discharge this debt. There is 
 no better way of using a part of the income of a Rail 
 Road to discharge a debt, than this — none so safe to the 
 guarantor, provided he himself is to keep the sinking 
 fund. These results are as certain as mathematics. 
 
 2d. The mortgage taken upon this loan to secure the 
 State, must authorize a foreclosure and sale for the pay- 
 ment of the whole debt into the Public Treasury — not 
 merely upon default in paying said debt or interest, but 
 at any time when the General Assembly shall direct it, 
 provided the Company shall have a year's notice. But 
 upon a declared pledge that the General Assembly will 
 not order the foreclosure, unless there should be in their 
 opinion a reasonable probability of default, or unless 
 there has been a failure in the Company to pay the in- 
 terest on said debt of $350,000 ; and in this latter case, 
 no notice should be required, and no suit required to fore- 
 close and sell. 
 
 3d. Declare by the law, that the equity of redemption 
 in said Road shall not be liable to sale by execution at 
 law, so as to prevent posterior creditors from imposing 
 embarrassments upon the State ; and because North 
 Carolina should never permit property wherein the State 
 
is a share-holder, to be sold without applying to the Le- 
 gislature as well as the Courts. It were not a difficult 
 thing to show that this is very necessary to protect the 
 State interest in this Company : and this change alone 
 would be worth more than the additional risque of the 
 guaranty under the present scheme. 
 
 It is true, that all this would be some aid and relief 
 to the Company ; but independent of that, it is wise in 
 the State, merely as a share-holder of 2-5ths of the stock. 
 What will be its operation ? The stock is now without 
 a price, and would not sell at all. But once let the Com- 
 pany be in a condition to make a dividend, and the ef- 
 fect will be magical. Even a small dividend of one per 
 cent, would be doing a great deal to revive the credit 
 of this enterprize, and add $6,000 per year to the reve- 
 nues of the State. It is confidently believed by the man- 
 agers of the Road, that this would be the effect in a sin- 
 gle year, and that after that year a larger dividend would 
 be from 1 to 2, and thence to 3, 4 and 5 per cent. 
 
 Perhaps it might be a wise precaution to amend the 
 charter of this Rail Road Company, so as to tax each 
 share of stock therein 12^ cents per year, until said debt 
 is paid off, and let that tax go into the State Commis- 
 sioner's hand, to increase the sinking fund. This would 
 be a certain means of sinking the debt. By computa- 
 tion, such a tax would, by being allowed to accumulate 
 with the sinking fund, increase it about $70,000 in Janu- 
 ary 1867. And if there should be a dividend of only 25 
 cents on the share, or i of one per cent, it would pay 
 the tax. The existence of such a tax would stimulate 
 the Company to practice economy, in order to pay this 
 tax out of the profits of the Rail Road, or in other words, 
 to save a dividend every year. 
 
 Remarks. In order to ascertain how far it is probable 
 the Company may or may not be able to prosper under 
 this arrangement, look at their income and see what it 
 is. If it will suffice to pay $21,000, (the interest on the 
 $350,000,) the State will be secure, and the debt will be 
 
extinguished by the sinking fund itself, and without a sale 
 of the Road. If it will suffice to pay the $21,000, 
 and also the interest that will accrue upon their other 
 Debts, the operation will be still more secure, as it must 
 enhance the State Stock more than the whole sum of 
 $350,000 — perhaps a half milion of dollars. If it will 
 suffice to do all this and pay a dividend, the credit of the 
 enterprize will be at once re-established T and the State, 
 by this extension of credit, will be realizing thousands 
 and hundreds of thousands, both to the Public Treasury 
 and her own citizens, by increased value of stock, without 
 the cost of a dollar and without adding to her present lia- 
 bilities for the Company. Indeed, it is believed, this plan 
 (if accepted by the corporation) will increase the State's 
 security for indemnity, without adding a cent to her res- 
 ponsibilities. 
 
 This is not a question, whether the State shall go into 
 these liabilities. They are already incurred. The true 
 question is how shall they be managed. Were it a mat- 
 ter of business between two individuals, where one had 
 high credit and the other had not, (associated with this 
 Road as the State is by form or legislation,) a prudent 
 man would not hesitate to modify the existing liabilities, 
 &c. after the manner of the foregoing suggestions os 
 something like it, and if he did, the whole world would 
 pronounce him penny wise and pound foolish. 
 
 The State owns 2-5 of the Road, and does not wish to 
 get the ownership of more nor to loose the $600,000 a]* 
 ready invested in it. If without any increase of her lia- 
 bilities, she can secure the probability of adding some in* 
 creased value to the Stock, it ought to be done without 
 regard to the individual Stockholders, and refusing to do 
 it would be a neglect of duty by the Legislature. The 
 proposed modification of her present suretyship for the 
 $250,000, will be no addition to the State's risque, for altho' 
 the Company borrow $100,000 more, the whole of it is to 
 go into the hands of the State, as a sacred fund, to accu- 
 mulate and pay off the $350,000. 2d. In the meanwhile, 
 
8 
 
 the Compan} r pays the Interest, so that the debt cannot 
 increase 3d. Instead of being obliged to pay the debt 
 and foreclose the mortgage afterwards, as the present 
 contract is, the Legislature will hereafter be empowered 
 upon 12 months notice, or upon a default to pay the In- 
 terest, to proceed upon the mortgage. 4th. Instead of 
 leaving the public interest of $600,000 in the stock liable 
 (as it is now.) to be divested by a sale under execution 
 for 1000 dollars, through process against the equity of 
 redemption, it will, by this arrangement, no longer be 
 liable to sale and sacrifice, &c. &c. ; and before poste- 
 rior creditors can thus embarrass the public interest, the 
 Legislature will have to be consulted, and such proceed- 
 ings in the particular case can be authorized as may be 
 consistent with individual right, but without an aban- 
 donment of the property or rights of the State. These 
 topics might be enlarged upon and explained, but it will 
 be sufficient to allude to them for the present. 
 
 A Rail Road richly worth one million of dollars, and 
 yielding a clear income, sufficient to pay 6 per cent, may, 
 under our law, be insolvent and sacrificed for a debt of 
 $200,000, so long as the law remains unchanged. It 
 ought not to be so. Undeniably, the State Legislature 
 should not suffer it to be so, when she owns Stock in it. 
 It is easy to provide in such cases, for the rights of the 
 creditor, without abandoning the interest of the public, 
 to the cupidity or necessity, or fraudulent combination of 
 individual creditors. 
 
 For Example : Suppose an execution were issued 
 against the Rail Road for 8500, and the equity of re- 
 demption sold and purchased by a private company, (it 
 might be the private or individual stockholders,) the 
 purchasers would hold the Road, &c. and need only to 
 pay off the mortgage debt of $250,000 to become owners 
 free of all the other creditors, whose debts are not due 
 and payable until a future day, and the whole stock of the 
 State would be lost. So long as the State is a stock- 
 holder, the Legislature ought to forbid any such sales 
 
9 
 
 by execution. State property ought not to be liable to 
 sale, without the express direction of the people's repre- 
 sentatives ; and waiving all enquiry into the facility of 
 preventing such a law, so as to throw the loss on the 
 State alone, by any fraudulent or unfair arrangements, 
 it is enough to remark, that so long as matters remain 
 in their present position, and this law remains unalter- 
 ed, a few capitalists might associate themselves together 
 and buy the equity of redemption in this Road, and upon 
 tendering the $250,000 in satisfaction of the State's mort- 
 gage, (it is understood.) that they would become owners 
 of the whole property, discharged of all other debts and 
 of all claim by the State or individuals as stockholders. 
 There are not to be found any where a like number of 
 individuals, who would be less apt to do an unfair or 
 dishonorable act, than the proprietors of stock in this 
 Road would for the purposes of gain. But suppose the 
 State refuses to lend reasonable assistance towards pro- 
 tecting her own interest as a stockholder, and the Rail 
 Road is sold, simply because North Carolina will not 
 agree to postpone the time of paying this debt for which 
 the State is already a surety — will not individual pro- 
 prietors thereby be driven to the necessity of forming 
 another association for the purchase of the Road, sooner 
 than lose the stock held by them as co-partners with the 
 State ? Does not such a policy compel them in self de- 
 fence to resort to such plans as may be lawful for the 
 protection of their interest ? And would it be wise to 
 sell this road for the debt of $250,000, when it is worth 
 so much more, and when the income is so much greater 
 than the interest, whilst the State is unwilling to buy it 
 at its full value, and borrow the money to pay for it ? 
 
 It is believed that there is not a Rail Road in the 
 United States, and certainly there is not one in the 
 Southern States, which would not be sold and sacri- 
 ficed, if the creditors pursued this harsh course towards 
 them. They preserve their credit by paying the interest 
 of their debt, and uphold the value of the stock by mak- 
 
 2 
 
10 
 
 ing dividends. In time, they will be able by degrees to 
 satisfy the principal of their debts also. But withdraw 
 their credit from them, and a debt of one-tenth of the 
 value of the Road will force it into market, and the 
 stockholders become forthwith divested of millions, and 
 the more indulgent creditors will lose their demand. 
 
 Nothing has been said about the debt due the Literary 
 Fund, as it has been understood from the President of 
 the Board, that it was considered a desirable investment 
 — that if the money was paid in, it would have to be in- 
 vested elsewhere — provided the Legislature should be 
 satisfied the security was sufficient, which consists in a 
 mortgage of all the property of the Company, the value 
 of which has been already shewn to be ample. But if 
 the Legislature should think otherwise, now is the time 
 to provide for it. 
 
 It may be asked, why have the Bonds endorsed by the 
 State been suffered to lie over and thrown on the State 
 for payment ? It may be answered with perfect sinceri- 
 ty, that the Company, apprehensive of such a result, if 
 their application could not be granted by the Legisla- 
 ture, which was for an endorsement of $400,000, the a- 
 mount of the indebtedness of the Company at that time, 
 not provided for, on long credit. The Legislature deem- 
 ed it proper, however, to grant only $300,000, on short 
 credit ; and the Company was compelled to accept what 
 the Legislature was pleased to grant, and do the best 
 they could — the time of payment commencing with the 
 following January, which left debts unprovided for to 
 the amount cf $100,000, due to contractors and others, 
 generally pushed themselves, and were consequently 
 compelled to press the Company. The Company was 
 sued in many directions, and executions obtained by the 
 time the Bonds which became due first, in the year they 
 were issued, and before the work was completed. Yet, 
 with great exertions and strong solicitations tb many 
 persons who held these executions for delay, these Bonds 
 were paid in preference. The necessities of the people 
 
11 
 
 were so great, that the executions in the next year were 
 pressed for payment so pertinaciously, that the Company 
 was compelled to pay them, or suffer the redemptionary 
 interest sold, which was frequently threatened, and pro- 
 bably advertised. The payment of these debts disabled 
 the Company from meeting the Bonds which became due 
 in the next year, and by a succession of losses, and great 
 prostration of the business of the Country, they have 
 not been able to pay any of these Bonds since, except by 
 renewal. The time of payment of these renewed bonds 
 were made so short, that the Company, in all probabili- 
 ty, will not be enabled to pay them, and therefore pro- 
 pose the foregoing scheme of a sinking fund for that pur- 
 pose. 
 
 Fifty thousand dollars are due on the first day of Jan- 
 uary next, ensuing, which render it necessary to obtain 
 the aid of the Legislature as early as possible, to afford 
 time for printing the Bonds and making sale thereof. 
 
 I have adverted to the losses of the Company, which 
 consist in the sinking a Steam Boat at sea, by coming in 
 contact with another ; and by the fire of 1843, by which 
 the Company was deprived of property indispensable, 
 and has been replaced, to the amount of $170,000 to 
 $180,000 ; and in the mean time, they have paid off the 
 principal of their debt, nearly $100,000, and all the in- 
 terest, which has placed the Company in the situation to 
 be within the power of the Legislature to let them sink 
 or swim. 
 
 Microfilmed 
 SOLINET/ASERit PROJECT 
 
12 
 
 $100 COMPOUNDED. 
 
 January 1848, 
 
 
 1849, 
 
 106 
 
 1850, 
 
 112 36 
 
 1851, 
 
 119 09 
 
 1852, 
 
 126 23 
 
 1853, 
 
 133 80 
 
 1854, 
 
 141 82 
 
 1855, 
 
 150 32 
 
 1856, 
 
 159 34 
 
 1857, 
 
 168 89 
 
 1858, 
 
 179 02 
 
 1S59, 
 
 189 76 
 
 1860, 
 
 201 14 
 
 1861, 
 
 213 20 
 
 1862, 
 
 225 99 
 
 1863, 
 
 239 55 
 
 1864, 
 
 253 92 
 
 1865, 
 
 269 15 
 
 1866, 
 
 2S5 29 
 
 1S67, 
 
 302 40 
 
 1S6S, 
 
 320 52 
 
 1869, 
 
 339 75 
 
 1870, 
 
 360 13 
 
 $100 
 
 Of course $100,000 will be in 1870, $360,630. 
 
 in 1866, 285,290. 
 in 1867, 302,400. 
 
00042072112 
 
 FOR USE ONLY IN 
 THE NORTH CAROLINA COLLECTION 
 
 THIS TITLE HAS BEEN MICROFILMED 
 
 •Vo. A-36S 
 

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