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Subject:  Local Aid to Railroads in Missouri Date:  7/17/2020  4:12 PM
Author:  pauleckler Number:  902 of 1034

“Local Aid to Railroads in Missouri,” by Ewin L. Lopata, Arno Press reprint, 1981, of Parnassus Press, 1937 edition. This 153-page hardback is a study of city and county aid to railroad construction in Missouri. Missouri became interested in railroads as early as 1836. Railroads were chartered but funds to build were not available.

Lopata defines the railroad network proposed in 1850 as the state’s “trunk” lines. They consisted of the Pacific Railroad (later Missouri Pacific, now Union Pacific) from St. Louis through Jefferson City, the state capital, to Kansas City; the Southwest Branch of the Pacific Railroad (later Frisco, now BNSF) from St. Louis to Oklahoma via Rolla, Springfield, and Joplin); the North Missouri (later Wabash, now Norfolk Southern) following the ridgeline between the Missouri and Mississippi Rivers from St. Charles through Mexico, Moberly, and Macon extending to the Iowa state line; The Iron Mountain Line from St. Louis south to Pilot Knob; and the Cairo & Fulton, from Cairo, IL to the Arkansas state line. All lines were designed to bring traffic to St. Louis. Then they added the Hannibal & St. Joseph, the first railroad to reach the Missouri River in the west.

These railroads were financed by federal land grants and railroad bonds issued by the state. The railroads also sold stock to cities and counties served along their routes. Lopata examined court house records. Usually the counties issued bonds to pay for the stock and then collected taxes to repay the bonds. The railroads in turn sold the county bonds to third parties often at deep discounts to obtain cash. Sometimes special railroad taxes were collected. Sometimes those who paid railroad taxes received stock certificates.

All of the trunk railroads failed. The Hannibal & St. Joseph survived longest. It received funding from the Forbes family of Boston and was connected with the Joy railroad interests through Chicago. It was associated with the Chicago, Burlington, & Quincy, but for years the relationship was informal.

Stock of the trunk lines became worthless, but some counties recovered some funds by selling. The state claimed title to railroads that failed to make interest payments. They were promptly sold to private interests in 1866, yielding the state partial return of its funds. The Pacific and North Missouri negotiated partial loan forgiveness by agreeing to complete construction. Lopata indicates the state issued $31.7 MM in bonds and received $6.1MM in return at a net cost of $25.6MM for its railroad network. The state retired its railroad bonds only in 1896.

The state legislature authorized it all–railroad charters, issuing bonds, and authorizing sales to local government. Over time the requirements became increasingly stringent until eventually government units were forbidden to issue railroad bonds.

Lopata defines three periods in Missouri’s railroad construction. In the first period, 1850 to 1866, the trunk lines were built. In the second, 1866-1875, connecting local lines were added. Finally after 1875, the railroads began to consolidate. Railroads financed in the second period included the Chicago and Alton (later Gulf, Mobile & Ohio, now Kansas City Southern), The Chicago, Rock Island & Pacific (southern route St. Louis to Kansas City, mostly abandoned, likely to become a trail), and the Missouri, Kansas & Texas (abandoned, now mostly the Katy Trail).

The North Missouri intersected with the Hannibal & St. Joseph at Macon, but had difficulty arranging connections. In 1865, the North Missouri undertook construction of its western branch from Moberly to Kansas City.

A state auditors report compared land prices along the North Missouri RR before and after construction, 1853 vs 1856. In St. Louis and St. Charles Counties, values increased by 250%. In Warren County from $4 to $15/acre; in Montgomery from $2.50 to $12; in western counties from $1.50 to $10.

The Hannibal & St. Joseph published brochures to promote sale of its land grant lands. Friedrich Muench of Dutzow, MO was hired to write pamphlets in German, which were widely distributed in 1859 and 1866. The North Missouri published similar brochures often asking for trade skills: barber, tinman, minister. A land boom began in 1867. The state population grew from 1.18MM in 1860 to 1.72MM in 1870.

Railroad construction was delayed by the Panic of 1857 and slowed during the Civil War, but resumed in 1866. Railroads secured $17MM in aid from counties and cities between 1866 and 1873. The state’s railroad mileage in the period increased from 925 to 2880 miles.

After the war, Missouri adopted a strict constitution. Led by Radical Republicans, it required a loyalty oath to vote. In some counties, only 20% of residents could vote. Voters had to approve the purchase of railroad stock. Disenfranchised voters became a basis for lawsuits claiming the purchases were not properly authorized. After the Panic of 1873, the state adopted a third constitution which made further aid illegal. The high county taxes needed to pay railroad debt was cited as a reason not to settle in some counties. The combination of high taxes and high railroad rates made railroads the scapegoat of the Granger Movement in the 70s.

Lopata focuses on finance and reports little of Missouri’s railroad history. He says the Pacific Railroad reached Jefferson City in 1857. He does not mention the Gasconade Railroad Bridge Disaster of November 1, 1855. A temporary bridge over the Gasconade River near Hermann collapsed under an excursion train carrying hundreds to Jefferson City to celebrate the Pacific Railroad’s completion to that city killing 43 and injuring over 136. On September 3, 1861, bushwhackers attacked the wooden Platte River Bridge on the Hannibal & St. Joseph Railroad near St. Joseph. They burned the lower timbers causing a passenger train to crash killing 17 to 20 and injuring 100.

In the Centralia Massacre, on September 27, 1864, bushwhackers led by Bloody Bill Anderson executed 23 unarmed Union Soldiers taken from a North Missouri passenger train. Jesse James robbed an Iron Mountain RR train on January 31, 1874, near Gads Hill, MO. The gang telegraphed the St. Louis Dispatch to claim credit for the robbery and correct reporting errors. Robber baron Jay Gould controlled most of Missouri’s railroads from 1879 until his death in 1892. Missouri Pacific was his signature road. He merged the North Missouri and part of the MKT into the Wabash creating the main line connecting Kansas City with Ft. Wayne and points east. He built Union Station in St. Louis and the tunnel connecting it with Eads Bridge.

The bottom line is Missouri paid dearly for its system of railroads with tax payers footing the bill at both state and county levels. Taxpayers did benefit from their railroads.

This is a detailed study of the complexities of railroad financing in the nineteenth century. Appendix. References.
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