1857 was a terrible year, as I have said. The rich were humbled and the poor left destitute, and as the new year of 1858 dawned it seemed that it would be no better. As an example of how the mighty were fallen, let me speak of other railroad men. Some, including Hudson and Brunel, had done well even in these catastrophic times. For my own part my fortune was much reduced - our stock had plunged from a realistic appraisal of $77 per share to a frightening $27 per share - but I was not much indebted, and counted myself well enough to do. My finance men told me I had suffered a loss of some one and a half millions of dollars and was now worth only four and a half millions of dollars! But in comparison to those about me I felt I had suffered little.
The railroads of the Mid-West seemed to have suffered the most. Thomas Scott of the Cincinnati & Dayton had been a millionaire in 1856. He lost over four millions of dollars in the crash, ended a quarter-million in debt, and never recovered. JP Morgan, the banker and financier, had dabbled in railroads with the construction of the Cleveland Central. When it plunged he also lost four millions of dollars. With his other interests and investments he was not so terribly hurt as you might suppose, but he never again invested in that railroad. Philip Thomas only lost two millions of dollars, but as it was all he had I do not think he took any comfort from it. The Richmond Eastern's Charles Crocker saw three millions vanish from his portfolio in a single month; he went West then, and joined on with the Central Pacific, and made a second fortune to dwarf the one he had lost in Virginia. Cornelius Vanderbilt came through relatively well, as the Greensboro Eastern was a profitable road in good times; he lost two and a half millions, but never complained.
Vanderbilt was a shrewd, hard man, a good man to make a deal and a bad one to cross. I had always avoided wars over freight rates, preferring to give reasonable contracts to other companies who used our rails. Vanderbilt tried once to beat us in a rate war, and we served him up the same medicine, adding charges and fees for all manner of patently absurd services. I got one cable, one letter and one visit from him; we discussed the matter frankly, shook hands on a deal and he never deviated from his word. In return I was scrupulously correct in my dealings with him, and though we never became friends in any sense of the word I think we did business together very well.
The Great Southern was able to continue to operate and we were never in danger of insolvency, even with the interest on our six millions of dollars in bonds and the premiums paid to stockholders. Nevertheless we were in no sense liquid, and with the drag from the ironworks, the rifle and gunpowder mills, we barely turned a profit. One item the Board pressed upon me with urgency was the reduction in wages. I agreed to cut my own and fought hard to keep good wages for our skilled labor, the surveyors, engineers, dispatchers and the like. Had we not paid well those men could have gone North and made as much or better, and we suffered so cruelly from a lack of intelligent, capable men that I would not risk losing them.
So it was that our most notable accomplishment in 1858 was the purchase and improvement of a big timber-framed hotel in Nashville. We did construct a branch line from Montgomery, Alabama, up along the Tallapoosa River and north and west into the coal fields. It was not much of a line and I cannot say it ever made much of a return on its investment. Unlike the railroads of the North, who reaped great fortunes from mining and transporting coal, we had neither enough coal nor any great demand, most Southern homes being committed to burning readily-available wood. But the Great Southern did desperately need the coal, and so ate up the cost of procuring it. Without this coal - the only developed fields in the South - our ironworks and locomotives would have come to a complete halt.
Our locomotive works struggled with the production of the heavier, faster American type, but with some patience and some purchases from outside suppliers, we replaced another ten of our aging 0-6-0's with new 4-4-0's. This seemed to give our creditors some heart; they would not despair of their investment while we methodically continued to plan for the future.
New routes were set up, as I have said, to service the coal fields and to haul cast iron items and wrought iron stock to our manufactories. Any iron not required by our railroad and industries might be sold on the open market, but for the moment I was determined our factories should not sit idle for lack of material.
Through the summer of 1858 the debates in Illinois between Stephen Douglas and Abraham Lincoln were much in the newspapers and were a lively topic of conversation in the South. Douglas had been seen as a good Democrat, solid on slavery, but of late he had begun to twist and turn in an attempt to please everyone he encountered, and his star was no longer ascendant here. Lincoln was not taken seriously except by men who closely read accounts of his speeches. I am proud to number myself in that company. His eventual defeat for the senate seat was taken as another sign the North was unwilling to fight over slavery.
Much of Senator Douglas' discomfiture was due to the Dred Scott decision, of which I shall speak later.
In August of 1858, matters unforeseen had come to a head, and the scandal redoubled our woes. The matter came to pass in this wise:
For several years I had been attempting to drum up support for an extension of the Great Southern, west of New Orleans into Texas and eventually on to the Pacific in California. The land for such a road was already in American possession, courtesy of the Mexican War and Gadsden Purchase. I could however find no men of vision in the South willing, or able, to produce the necessary funds, and in dismay had turned to lobbying Congress.
Congress found itself desperate for a trans-continental railroad, which everyone agreed was essential to the security of the Great West, California and Oregon. Congress also found itself hopelessly divided between men who refused to endorse a Southern route, which would promote settlement of new slave-holding states, and men who refused to vote for a more Northerly route as it did not promote slavery. In my naivete I believed a presentation of the facts would induce enough Congressmen to support land grants for a Southern railroad.
I retained the services of surveyors, engineers and specialists in the costs and benefits of the proposed road, only to find they were unable to get even a hearing. For that entrée I turned to a number of men, including Coles Bashford of Wisconsin, but my chief agent was Simon Cameron of Pennsylvania. He had experience with railroads, having constructed several and merged them into the Northern Central. He had experience with the potential of the West, having served as commissioner to the Winnebago Indian Tribe. He was a former Senator, sitting out a term as a result of some obscure political deal in Pennsylvania, which made him available for the task. I found him engaging, interested and eager.
To assist him in his work I gave him a modest block of stock in the newly chartered Gulf & Pacific Company, intending that this stock should be evidence the company was no fanciful sham but a serious enterprise. Cameron, to my surprise and horror, proceeded to distribute stock amongst his former fellows of Congress at rates far below par - even in some instances for free. All this was uncovered by a new generation of reporters, plastered across the newspapers and then investigated by Congress. As the scandal touched upon men then seated in that body it was all quickly whitewashed, not least because the story broke in the dead of summer and no Congressman would remain in Washington in that season for any reason. Fortunately I had letters in my possession confirming my instructions to Cameron, and it was clear from those that he had grossly exceeded his brief, but my enemies used the scandal as ammunition at every opportunity.
The immediate effect was to depress our stock price and make credit impossible to obtain, and so injure our finances as to cause a suspension of the stock dividend in September. With great regret I folded the Gulf & Pacific and put away my plans for a Pacific Railroad on the southern route until a better time, a time - alas - that has never come.
We shook hands then and he left in not much better humor than he had arrived. Miraculously the legal tangle dissolved, the commodities were delivered and all was set aright. The years before the War saw DuPont give us a wide latitude, and if they did not conduct themselves scrupulously they did at least observe some limits.