History of the Louisville & Nashville Railroad

5 Combinations and Complications, 1865-73

5 Combinations and Complications, 1865-73 The dialogue over postwar policy began in earnest at the annual stockholders meeting in October, 1866. In the Annual Report for that year Fink advanced his first detailed plea for a new policy based upon expansion and an increased emphasis upon through business. His report led to a lengthy debate in which expansion policy won a partial and temporary victory. Nevertheless, the opposing camps on the matter formed early and endured for years, injecting an element of discord into the L & N's management. A contemporary observer characterized the split in these quaint terms: . . . the parties viewed this question from different standpoints. The one party said, "Let well enough alone, and pay us annually our accustomed dividends." The other party saw in the future, by extension, the greatest railroad in the South, and perhaps in the United States.1 Even in the early debates the crux of the matter lay in the unknown dimensions of through traffic. In 1866 the L & N possessed top credit ranking. A combination of additional financial obligations and less prosperous times might injure that status irreparably. Since the importance of revenue from through traffic had not yet been established, conservative directors hesitated to gamble large commitments on uncertain returns. To gain their point, the expansionists within the company had to fight 8o HISTORY OF THE LOUISVILLE & NASHVILLE RAILROAD every battle on its own merits" and hope for a continuation of prosperity. But, of course, the merits of each issue varied considerably, and the weaker projects required no little ingenuity by the expansionists to sustain them. The Road to Memphis The postwar interruption of through service to Memphis ended on August 13, 1866, but the two Tennessee companies remained in wretched shape. Neither the Clarksville nor the Memphis & Ohio had the resources to effect more than a primitive rehabilitation of their lines, and prospects for improvement looked grim without financial aid from either the L & N or the State of Tennessee. The L & N was eager to help. As long as the link to Memphis remained tenuous, the company endangered not only that market but also any reliable connections to New Orleans, Mobile , and the Southwest. The board agreed that the situation had to be stabilized as quickly as possible. Accordingly it made similar proposals to both Tennessee companies: the L & N would operate their roads, advance funds to repair them, furnish rolling stock, pay interest on the state bonds, and apply all net earnings toward refunding the debt that would arise in the process. The stockholders of the roads could reclaim the management of their property at any time simply by repaying the advances made by the L & N. In purely economic terms the offer was a fair and even generous one, yet it met vehement resistance. Some Memphis merchants continued to fear that L & N domination would result in commercial discrimination against their city. Goaded mainly by a public clamor over this anxiety, the Clarksville rejected every L & N overture and vowed to operate the road free of outside control. While this stance met with popular approval, it led to financial disaster. The Clarksville lacked any resources to rehabilitate its line, and earnings failed even to pay operating expenses. In July of 1865, the company defaulted on its Tennessee bonds, and the state promptly put the road in the hands of a receiver. The effect of this action was to increase the road's indebtedness without changing its basic situation. The course of events in Tennessee baffled the L & N management. It had helped nurture both Memphis roads from their inception with the understanding that eventually the three lines would be integrated under one management. The L & N assumed that the common interests of the three companies were so obvious as to squelch any charges of discrimination . Now that very charge had arisen and threatened to destroy any COMBINATIONS AND COMPLICATIONS, 1 8 6 5 - 7 3 8 l chance of an efficient through line to Memphis. Fink hastened to reassure opponents of L & N intervention: Can there be any real ground for such opposition? It seems altogether to be based on the fear that the Louisville and Nashville Railroad might discriminate against the people of Tennessee in arranging the freight tariff. Certainly those who entertain such fears are altogether ignorant of the principles upon which railroads conduct their business; and they do not . . . appear to appreciate the fact that the Louisville & Nashville Railroad Company, controlling as it does the northern outlet...