Ohio History Journal

DAVID G. TAYLOR

Hocking Valley Railroad

Promotion in the 1870's: The

Atlantic and Lake Erie Railway

Industrialization had begun in Ohio before the Civil War, and, after a war-imposed

delay, promised to accelerate rapidly thereafter. The Panic of 1873, however, stalled

the process substantially and destroyed many small industrialists and businessmen.

With the elimination of the financially weaker businessmen, the way was paved for

reorganization of the state's railroad, coal mining, and iron industries in the 1880's

by larger, stronger, and sometimes out-of-state or national corporations which ac-

quired at relatively small cost the remains of the shattered enterprises that had been

initiated by the small-scale operators. Using their superior financial resources and

organizational skill, the larger companies succeeded where the smaller firms had

failed. But even though they failed, the efforts of the small industrialists are worthy

of attenion.¹

Ohio was generously endowed with the coal and iron ore necessary to produce

power and finished products. Bituminous coal underlaid about twelve thousand

square miles, and iron underlaid about eight thousand square miles. Almost all of

these resources were located east of the Scioto River. One of the most richly en-

dowed regions in the state was the Hocking River and its tributaries, the Sunday and

Monday Creeks, in south central Ohio. Coal and iron were located in close prox-

imity in this general area, and made it "the most promising center of iron production

in the state" in 1880.2

The development of Ohio's coal and iron resources began in the 1820's, and by

1840 Ohio ranked second to Pennsylvania in the production of pig iron. Through-

out the antebellum period, however, mines and foundries remained relatively small

enterprises producing for a local, agriculturally-oriented market. In 1850 only three

of Cincinnati's forty-four foundries were capitalized at over $150,000, and only one

employed over 200 men. In 1860 the state produced fifty million bushels of coal

1. Philip D. Jordan, Ohio Comes of Age, 1873-1900 (Carl Wittke, ed., The History of the

State of Ohio, V, Columbus, 1943), 220-252.

2. Tenth Census of the United States, 1880: Report on the Mining Industries of the United

States (Washington, 1886), 621.

Mr. Taylor is Assistant Professor of History, Mankato State College, Mankato, Minnesota.

264                                                              OHIO HISTORY

and 105,000 tons of iron.³

By the end of the Civil War enough geological exploration and development had

taken place to indicate that the eastern part of Ohio had immense industrial poten-

tialities. This fact whet the appetites of entrepreneurs, and in the late 1860's Ohio

became the scene of a multitude of projects and promotions, chiefly in the interde-

pendent fields of coal mining, iron manufacturing, and railroads. Railroads not

only contributed to the demand for coal and iron, but were a necessary factor in

the opening of many veins of coal and iron, and for the transport of the ore to pro-

cessing points.⁴

In 1870 an elderly lawyer described with enthusiasm the industrial transformation

taking place in Lancaster, in the northern part of the Hocking Valley:

Our staid sober old town is in a paroxism of improvement. The famous stone Court

house will be under roof this fall. The Columbus R. R. is doing a large business both

in freight and passengers, and what shows a sudden and high advance in civilization is a

formidable strike among the Nelsonville Coal miners.... The R. R. construction trains

run to Chauncey, and it will be open to passengers and freight in a few days.... So you

see how we go. Nothing is talked of but coal and iron and R. R.s--and Engineers and

Geologists are our only aristocracy.⁵

Changes were rapidly taking place, but in 1870 the Hocking Valley was not yet

a major mining region.⁶ Before it could be such, its rich coal lands had to be con-

nected to markets and foundries by railroads--a task requiring substantial capital.

In the late 1860's and early 1870's there was a frantic scramble by Hocking Valley

businessmen to acquire mineral rights, open mines, and project railroads through

the coal fields. The pace of development is revealed by the fact that employment

of miners in the Hocking Valley rose from 600 in 1870 to 2,000 in 1874, and pro-

duction of coal increased almost tenfold, to 1,000,000 tons, in the same period.⁷ In

1870 the only railroad tapping the region was the Columbus and Hocking Valley,

a coal carrier which began operations in 1869. Its success revealed the immense

profits that awaited those who would lead in the industrial development of the valley.

Throughout the 1870's the Columbus and Hocking Valley paid generous dividends,

and even in 1876, when the depression caused many railroads to flounder, it re-

ported "net earnings" of $378,782.90, which was 43.2 percent over declared ex-

penses, and paid dividends of 8 percent.⁸

3. Harry N. Scheiber, Ohio Canal Era: A Case Study of Government and the Economy,

1820-1861 (Athens, 0., 1969), 339-342; Peter Temin, Iron and Steel in Nineteenth-Century

America; An Economic Inquiry (Cambridge, 1964), 199; Carl M. Becker, "Miles Greenwood,"

in Kenneth W. Wheeler, ed., For the Union: Ohio Leaders in the Civil War (Columbus, 1968),

268-269. Before the Civil War when hardwood forests were plentiful, Ohio iron masters com-

monly used charcoal rather than coke as their source of heat, making a type of pig iron suitable

for the region's manufacturing purposes. The foundries thus did not greatly contribute to the

demand for coal.

4. Temin, Iron and Steel, 79-80.

5. Thomas Ewing, Sr., to Hugh Ewing, June 19, 1870. Ewing Family Papers, Library of

Congress.

6. In 1870 only 105,000 tons of coal were extracted from the Hocking Valley region.

7. Herbert G. Gutman, "Reconstruction in Ohio: Negroes in the Hocking Valley Coal Mines

in 1873 and 1874," Labor History, III (Fall 1962), 244-245.

8. Tenth Annual Report of the Commissioner of Railroads and Telegraphs, for the Year 1876

(Columbus, 1877), 278-285; J. J. Janney to Thomas Ewing, Jr., June 14, 1872, Thomas Ewing

Family Papers, microfilm edition, Notre Dame University Archives.

266                                                           OHIO HISTORY

the lands, and founded company towns (Moxahala, Shawnee, Ferrara, Ewing, Car-

bon Hill) which they hoped would grow as mines opened in the region. Also, on

June 21, 1869, this same group had organized the Atlantic and Lake Erie Railway

Company which was projected to run through these lands, connecting with port cities

on Lake Erie and the Ohio River. In an attempt at industrial integration, which

was unusual in the Hocking Valley at this time, the group combined speculation,

mining, railroad building, and town site promotion to create an industrial complex

designed to achieve economies of scale and to insure that success in any one sector

would act to increase the value of the others.11

Ewing was the most important man in the enterprise, contributing in addition to

his modest fortune his talents as a lawyer, a name well known and respected in Ohio,

acquaintanceships with some of the nation's most important business and political

leaders, and experience in making these acquaintanceships profitable. Essentially

a promoter, Ewing had the ability to digest a large number of geological, geograph-

ical, and statistical facts related to his business and present them both orally and

in writing in an imaginative fashion that appealed to the vision or greed of eastern

capitalists, and attracted their investments. This was no easy task in an era when

an incredible number of persons, many of them war heroes or European aristocrats,

were promoting railroad and mining schemes in the East and in Europe.¹²

From 1869 through 1872 the Ewing-Taylor group formed at least eight mining

companies: Ohio Great Vein, Carbon Hill, Moxahala, Dover, Perry County, Atlantic

and Lake Erie, Briar Ridge, and Sunday Creek Valley. The companies were orga-

nized on the basis of each share of the stock representing a certain amount of land-

holdings by the companies. The Ohio Great Vein and Perry County companies

were capitalized at $1,000,000 each, while the others were capitalized for only

$100,000 to $150,000. Ninety percent of the Ohio Great Vein stock was water,

and the same situation probably held true for the other companies. The first land-

holdings were acquired by the issuance of stock in the companies sold to local

farmers and land owners, some of whom were speculating in coal lands, who were

persuaded that they would benefit from the industrial development of the area. All

of the coal mining companies had uncertain futures and depended for their success

upon acquisition of transportation facilities and a favorable price structure.¹³

The same men served as the directors of all of the mining companies. Lands

acquired by the group were assigned to one company or another in almost haphazard

fashion, although an effort was made to keep each company's lands in close prox-

imity. Options for the purchase of coal lands were being acquired by many small-

scale entrepreneurs and speculators, as well as by large operators such as a Pitts-

burgh syndicate which included Thomas Scott, William Thaw, and other executives

of the Pennsylvania Railroad Company. Some of these men also had railroad inter-

11. Thomas Ewing, Jr., to Van Doren and Havens, July 29, September 21, 1871, February 2,

1872; to W. A. Gilliam, June 10, 1872; to Rathborn and Chapman, December 25, 1872; to

Thacher and Sharp, February 21, April 10, 1873, Ewing Papers, LC.

12. Clark C. Spence, British Investments and the American Mining Frontier, 1860-1901

(Ithaca, 1958), 236.

13. Cincinnati Enquirer, February 29, 1872; Memorandum entitled "To Sec'y of the Sunday

Creek Valley Mining Co.," June 27, 1874; John F. Parsons to Ewing, Jr., November 1872;

William McCracken, October 30, 1874; Ewing, Jr., to Hugh Ewing, December 11, 1872. Ewing

Papers, LC.

Hocking Valley Railroads                                              267

ests for which they were trying to raise subscriptions from local farmers and towns-

men.¹⁴

There was danger that there would be so many people promoting pet schemes

that it would be impossible for any to attract enough capital to succeed. Ewing and

Taylor, nevertheless, persuaded various small promoters and some farmer-specu-

lators to donate their lands and options to their mining companies in exchange for

stock. The promoters intended for the mining companies to subscribe to the stock

of the Atlantic and Lake Erie Railway.¹⁵ This railroad, as proposed, was to be two

hundred thirty-seven miles in length and to run from Toledo on the north through

the eastern part of the Hocking Valley south to the town of Pomeroy at the Ohio

River. This route would give their mining companies access to the markets in Cin-

cinnati and Pittsburgh, via the Ohio River, and to Chicago via Toledo by rail. Rob-

ert E. Huston was chosen president, James Taylor, secretary, and D. W. Swigart of

Crawford County, provisional superintendent, with J. P. Weethee of Athens County

as assistant superintendent. The group then began seeking subscriptions to the

company's stock in the towns along the proposed line, and received a pledge of a

$100,000 stock subscription from the city of Toledo. On September 8, 1869, the

first stockholders meeting was held in Newark, by which time $719,700 of A & LE

stock had been subscribed. A seven-man board was elected, including a wealthy

mine operator and an important Republican politico from Meigs County, Valentine

B. Horton; Swigart was elected president.¹⁶

Thomas Ewing, Jr., joined the board of directors of the A & LE in 1872, as did

Charles Foster, an influential Republican politician who had extensive investments

in real estate around his home of Fostoria in the northern part of the state. Little

was accomplished under the presidency of D. W. Swigart, chiefly because of his

inability to secure further financing. Swigart unwisely chose not to attempt to collect

immediately on the stock subscriptions and instead tried to secure a loan by the sale

of the company's bonds. R. W. Jones, sometimes editor of the Athens Journal, was

retained as an agent to go to London and attempt to sell the company's five million

dollars worth of bonds. He arrived in England in 1872, and for more than a year sent

letters to the directors which invariably were optimistic, cheerily reporting that he

was about to complete the sale of the bonds and needed only a little more time.

Meanwhile, the directors became restless and suspicious of Jones, and opposition

mounted in several quarters to the course pursued by President Swigart.¹⁷

The opposition to Swigart was led by James Taylor, who served as the spokesman

of the mining interests. Taylor accused Swigart of acting in arbitrary fashion and

refusing to consult with and consider the interests of the mine promoters--who had

subscribed to much of the A & LE stock. The mine owners were especially irritated

by Swigart's insistence upon the sale of the bonds in one block because they realized

that this would wrest management of the company completely from them. Further-

more, the man whom Swigart had appointed chief engineer aroused Taylor's ire

because he had recklessly promised local people that construction of the Chauncey-

14. Cleveland Leader, March 22, 1869. A "free railroad" bill passed by the Ohio legislature

in March 1869 paved the way for entry of out-of-state railroad companies into the coal field

by allowing them to lease in-state railways, a practice which had previously been illegal.

15. James Taylor to Ewing, Jr., December 3, 1873, Ewing Papers, LC.

16. Edward Vernon, ed. and comp., American Railroad Manual (New York, 1873), 412-413;

Minutes of the Atlantic and Lake Erie Railroad, Ewing, Sr., to Hugh Ewing, June 19, 1870,

Ewing, Jr., to unknown, December 10, 1872, Ewing Papers, LC; Cleveland Leader, July 25, 1871.

17. R. W. Jones to Ewing, Jr., May 15, 1873, Ewing Papers, LC.

Hocking Valley Railroads                                                269

bonds to McDanald, stipulating in turn that the proceeds be used to build the seg-

ment through the coal lands.²¹ The construction company refused to do any work

until it had the coal company and the A & LE bonds-it clearly lacked the resources

to do otherwise. This meant there were spurts of activity, as bonds were delivered

and used, and then costly delays until more became available.

The A & LE was unable to arrange for the payment of its bonds until September

25, 1874, when it signed a mortgage agreement with a director of the Cincinnati

and Muskingum Valley Railroad. The latter was a line controlled by the Pennsyl-

vania Company, ran in an east-west direction north of the coal lands through Perry

County, and would intersect with the A & LE near New Lexington. Under this

agreement the A & LE secured $1,500,000 of seven percent bonds, payable January

1, 1880, by the mortgage of its property. These bonds, however, did little to finance

the railway. In spite of numerous attempts by various directors who traveled to

New York in attempts to negotiate the bonds, and on the part of agents overseas,

the A & LE was unable to sell the bonds or use them to pay for construction mate-

rials.22

By the end of 1874 the company faced the critical decision of whether to continue

attempts to build the road or to retrench; i.e., attempt to manage its floating debt

and wait for better times. If the first decision were made, means had to be found to

accomplish the task. At the end of 1874 the railway was "almost graded" from the

coal field to Lake Erie, seven miles of track were laid from New Lexington to Moxa-

hala, and the means were available to complete the grade through the coal field. The

company had $331,000 due from unpaid subscriptions, but at least one-half of this

could not be collected. The company's floating debt, including balances due con-

tractors, was about $250,000. Enough had been accomplished to have enabled

the company to negotiate its bonds under normal conditions, but in the midst of

the depression this was impossible.²³

After Swigart's resignation, Thomas Ewing, Jr., V. B. Horton, and Charles Foster

formed a triumvirate which was largely responsible for the decisions made by the

A & LE. For a time, at least, Ewing enjoyed the confidence of the various factions

within the company, all of which confided in him, sought his support, and were

encouraged by him to believe they had his trust also. Even so, the enterprise suf-

fered, especially from April 1873 to May 1874, since Ewing neglected business to

devote his time to work as a delegate to the Ohio Constitutional Convention and to

the advancement of his political career. Ewing's absence partially accounted for

McDanald's delays, as his assistance was necessary for the execution of the coal

companies' bonds.²⁴

The coal mine promoters, led by Ewing, emerged in 1874 as the strongest advo-

cates of the policy of pushing the railway ahead to completion, even in the face of

21. "Sunday Creek Valley Mining Company... Plaintiff vs. B. B. McDanald... and the Ohio

Central Railway Company," in the Court of Common Pleas, Bucyrus, Ohio, copy in Ewing

Papers, LC.

22. J. B. Gormley to Ewing, Jr., December 17, 1874; mortgage agreement between the A &

LE and James Buckingham, September 25, 1874; G. B. Johnson to Ewing, Jr., May 7, 1874;

W. C. Lemert to Ewing, Jr., July 30, 1874; Ewing, Jr., to J. R. Clymer, February 10, 1875,

Ewing Papers, LC. The last letter was written for publication and circulation among stock-

holders and contains much history of the events of 1874. The Pennsylvania Company was a

holding company formed by the Pennsylvania Railroad Company in 1872. By 1880 it controlled

many railroads in Ohio.

23. Ewing, Jr., to Clymer, February 10, 1875, Ewing Papers, LC.

24. Jordan, Ohio Comes of Age, 17-19; Lemert to Ewing, Jr., May 18, 1874, Ewing Papers, LC.

270                                                           OHIO HISTORY

adversity. Their investments in land were threatened by the depression, which

reached its trough nationally in 1875. As one of the most important industrial states

in the nation, Ohio experienced severe distress. Railroad mileage, which had in-

creased at the rate of 9.52 and 9.93 percent in 1872 and 1873 respectively (from

3,786.61 to 4,162.97 miles), dropped to 5.08 percent in 1874, 1.98 in 1875, and

minus 0.04 percent in 1876. Industrial activity slumped rapidly after 1873 in Ohio's

mining regions and in its manufacturing cities along the Ohio River. At the same time

national production of bituminous coal had increased dramatically from 20,471,000

short tons in 1870 to 31,601,000 short tons in 1873 and remained at this level for

the next few years. This high production accompanied by reduced national indus-

trial activity in related fields in the mid-1870's, sharply decreased the prices of Hock-

ing Valley coal and iron. Thousands of men lost their jobs as scores of Ohio fur-

naces and mines shut down; other owners cut wages and precipitated strikes by

their employees. Coal lands valued at ten million dollars in 1872 were worth only

six million dollars in 1877.25 Caught in the midst of this economic crisis, Ewing's

group realized that the probability of failure was great if they tried to push the

A & LE to completion, but it was also believed that inaction would certainly lead

to disaster. Money was still owed for lands or mineral rights which had been pur-

chased, and the A & LE had a floating debt of nearly a quarter of a million dollars.

"If the Company stop[s] where it is, and wait[s] for better times," Ewing warned

in 1875, "it will be overwhelmed with its floating debt. The Stockholders will then

lose all they have invested, and may be called on to contribute more."²⁶

In 1875 there was little chance of getting any more financial aid from the stock-

holders. They had been disappointed before, and construction was proceeding much

too slowly to arouse their enthusiasm now. In Ewing's opinion, the best way to

continue the work was to contract for the completion of the line with another con-

struction company which had access to "a considerable amount of ready money

to put into the work, and who will take pay exclusively in stock, bonds, and such

new subscriptions as may be obtained." The search for such a company began in

the fall of 1874, when it became apparent that McDanald was unable to construct

the entire line. Negotiations with a construction firm headed by James Taylor, styled

the Ohio Construction Company, led to an agreement by the latter to construct,

finish, and equip a first-class railway on all sections of the A & LE except those

remaining under contract to McDanald. The A & LE reserved the right to suspend

or annul the contract as it applied to the line between New Lexington and Bremen,

and intended to do so if it could arrange for the use of the Cincinnati and Muskingum

Valley Railroad. A fairly rigid construction schedule was established, with work

to begin by May 15, 1875, and to be totally completed by January 1, 1878.27

Before the contract could take effect, the Ohio Construction Company demanded

25. Rendigs Fels, "American Business Cycles, 1865-79" The American Economic Review,

XLI (June 1951), 344, fn. 55; Annual Report of the Commissioner of Railroads and Telegraphs,

for the Year 1881 (Columbus, 1882), 7; U. S. Department of Commerce, Bureau of the Census,

Historical Statistics of the United States, Colonial Times to 1957 (Washington, D.C., 1961), 357;

John James, "The Miners' Strike in the Hocking Valley," Cooper's New Monthly, I (July 1874);

Gutman, "Reconstruction in Ohio," 248; Irwin Ungar, "Business and Currency in the Ohio

Gubernatorial Campaign of 1875," Mid-America, XLI (January 1959), 28.

26. Ewing, Jr., to Clymer, February 10, 1875, Ewing Papers, LC.

27. Ibid.: contract between the A & LE and the Ohio Railroad Construction Company, Jan-

uary 30, 1875, Ewing Papers, LC.

Hocking Valley Railroads                                               271

that the A & LE stockholders approve a large increase in the company's stocks and

bonds in order to cover anticipated construction costs. This was a crucial decision

for the company. Since the market for securities was very weak, if placed at all,

the new securities would have to be negotiated at far below par. Northern investors

such as Charles Foster were cautious and opposed increasing the company's debt,

even if this meant some financial loss. The mining interests, however, wanted to

gamble on being able to complete the railway in hopes of avoiding losses entirely

and of placing in operation what promised to be a lucrative enterprise. The later

position ultimately prevailed at a board meeting on January 25, 1875, when a motion

to increase the A & LE's capital stock was adopted unanimously. Directors Lemert

and Foster did not attend the meeting and expressed misgivings about the policy.²⁸

The proposal to increase the capital stock and to execute a new mortgage to secure

$7,500,000 of permanent bonds met opposition from some of the stockholders who

feared the action would plunge the company hopelessly into debt and destroy its

equity. In an attempt to muster support, the proponents of the stock increase pub-

lished letters in newspapers along the line in which it was declared that an Ohio law

of 1873 allowed a company to issue bonds up to two-thirds of its authorized stock.

Furthermore, the stock increase was to the benefit rather than the detriment of the

current stockholders. If the company failed, current stockholders would lose their

entire investment, while these individuals' liabilities would in no way be affected

by the stock increase. This was also the predominant sentiment prevailing at the

general stockholders meeting held on March 17, and motions were passed author-

izing the stock increase and the execution of a mortgage to secure new bonds.²⁹

General Ewing was unanimously elected president of the A & LE by the board

on March 18, 1875. In his effort to build the railway, he faced several formidable

problems. As had the previous presidents, Ewing had to deal with regional jealousy

and bickering. The northern interests justly feared that the mine owners in the south

would arrange for an outlet for their coal with one of the east-west lines that the

A & LE crossed at New Lexington or Athens, and that once they had gained access

to markets they would adandon the rest of the line. In spite of Ewing's assurance

that even if an outlet were secured at Columbus or elsewhere, he intended "to stand

by the road until it is built, with all the influence I can muster." His actions were

given close scrutiny by the northern people who believed that his ownership of about

six thousand acres of coal lands as well as his position as a director of many of the

mining companies constituted a potential conflict of interest.³⁰

Ewing's major problems, however, were more general, and to a large extent be-

yond his control. In addition to the general deflationary conditions caused by the

depression of 1873, investments in railroads were discouraged by acute rate wars,

which reached their height in 1876, and by crippling and sometimes violent strikes

which occurred in the Hocking Valley in 1874 (and would again in 1877). As a

result, federal, state, and local governments were no longer inclined to aid railway

companies financially. Nationally, from 1872 to 1877 the prices of railroad stock

28. "Resolution of Board of Directors of A. & L. E. Ry Co. as to increase of capital stock,"

Ewing Papers, LC. Board members present were Ewing, S. L. Johnson, H. Pratt, J. S. Trimble,

W. Weethee, and V. B. Horton. All but Pratt are known to have had investments in coal lands.

29. Ewing, Jr., to Clymer, February 10, 1875; "Proceedings of Stockholders Meeting Author-

izing increase of Capital Stock," Ewing Papers, LC.

30. Ewing, Jr., to Charles Foster, June 19, 1876, Ewing Papers, LC.

272                                                             OHIO HISTORY

dropped from fifty to sixty percent, and in 1875 almost 800 million dollars of rail-

road bonds were in default.³¹ In this critical situation it was impossible for the

A & LE to negotiate its bonds for cash, either in the United States or abroad, in spite

of vigorous efforts to do so. This point was plainly stated by Daniel J. Morrell,

the wealthy owner of the massive Cambria Iron Works at Johnstown, Pennsylvania,

whom Ewing had persuaded to invest in the A & LE and in some of his mining

companies--provided he found suitable co-investors:

I find it a very difficult matter just now to interest business men in any enterprise, however

promising it may seem. Almost every one of means who had ventured anything in min-

ing or manufacturing operations during the last 4 or 5 years finds his property either lost,

or so depreciated in value as to be almost worthless, & hence [is] over cautious now.

Others who have invested in R. R. securities--especially the coal roads--are sadly

crippled and have no means to invest in anything. I had a long talk with our friends

the Crocker Brothers, and with several other good friends of mine, I found it much

harder to get them interested than I expected. They . .. want to see that the prices are down

to hard pan & that the chances for profit are sure.³²

Ewing's strategy for dealing with the depression had several components. First,

in an attempt to cut costs, arrangements were sought for the joint use of segments

of other railways which were operating, or in the process of construction, through

the region. Ewing was especially anxious to come to terms with the Cincinnati and

Muskingum Valley Railroad because it was threatening to build a branch line into

the coal field that would compete directly with the A & LE. Negotiations between

the two companies began in April 1875, and in June 1876 resulted in an agreement

in which the A & LE was to have use of the track between Bremen and New Lexing-

ton, at an annual rate of four percent of its appraised value plus a proportion of the

cost of maintenance based upon the respective mileage over the segments by the two

companies involved.³³ One reason that a year was required to reach agreement was

that Ewing had to overcome opposition to the scheme by northern interests in the

A & LE. Thus by the spring of 1876 the A & LE began operating seven and one-

third miles of line from New Lexington to Moxahala, while to the north an additional

150 miles was graded but not laid with rails.³⁴ The completed line combined with

the C & MV to provide facilities--albeit somewhat inconvenient ones requiring

transfers at short intervals--to mine operators in the Moxahala region. This opened

"for development an extensive and excellent coal field ... where mines were opened

sufficient to supply a large tonnage of first class coal...." Ewing argued that the

arrangement with the C & MV would not only add to the value of his coal interests

but to that of the railway as well. Once part of the line was operating and actually

moving coal, it would be easier to place the company's bonds. This position was

31. Fels, "American Business Cycles, 1865-79," 347-348; Lee Benson, Merchants, Farmers

and Railroads: Railroad Regulation and New York Politics, 1850-1887 (Cambridge, 1955);

Ewing, Jr., to unknown, August 11, 1877, Ewing Papers, LC; Samuel Rezneck, "Distress, Relief,

and Discontent in the United States during the Depression of 1873-78," Journal of Political

Economy, LXXXVIII (December 1950), 495-496; 0. V. Wells, "The Depression of 1873-79,"

Agricultural History, XI (July 1937), 240.

32. D. J. Morrell to Ewing, Jr., June 18, 1877, Ewing Papers, LC.

33. Ewing, Jr., to William Thaw, March 23, April 21, 1875, April 15, 1876; Thaw to Ewing,

Jr., April 17, 21, 23, 1875; Minutes of the A & LE Board, Columbus, June 17, 1876, Ewing

Papers, LC.

34. Annual Report, 1876, pp. 396-397.

Hocking Valley Railroads                                               273

sharply questioned by W. C. Lemert and Charles Foster, who feared that once

this line through the coal field was in operation efforts to complete the A & LE in the

north would be dropped.³⁵ In spite of opposition Ewing continued to make financial

arrangements to keep the enterprise alive, but the A & LE discovered it was nearly

impossible to generate interest in the railroad and gather stock subscriptions--and

it was even harder to collect on the few subscriptions made. In fact from June 30,

1875, to June 30, 1876, the A & LE was able to collect only $16,823.18 in addition

to the million one hundred thousand dollars worth of stock already collected.³⁶

By 1875 both the McDanald and Ohio construction companies were in serious

trouble because they were unable to sell A & LE or coal company bonds, acquire

material and equipment, or pay workmen. Since all of the A & LE's assets were

mortgaged, the construction companies were unwilling to take a lien on any part

of the railway. It was impossible to secure bank loans, as western banks were "dry

as capons" and had no funds to invest even had they desired to do so. One hundred

eighty thousand dollars cash was "purloined by Lake Div." and hence lost to

McDanald, by "bloodsucking parasites" who won a law suit against the A & LE in

Toledo. Thus, mounting debts, pressing obligations, threatening law suits, and the

total inability to raise capital forced the construction companies to surrender their

contracts late in 1875.³⁷

After this, Ewing emphasized efforts to complete the line through the coal field,

believing that if this part could be placed in operation it would facilitate the capital-

ization of the rest. In October 1875, it appeared that in spite of the many problems

confronting the A & LE, the portion through the coal field might still be completed

because the strong New York construction company of Vibbard, Platt, and Ball

took the project in hand. Chauncey Vibbard, the senior partner, was an important

figure in nineteenth century railroad industry. An imaginative, able organizer, Vib-

bard helped Erastus Corning effect the consolidation of New York railways into

the New York Central, of which Vibbard was general superintendent from 1853

to 1865. After resigning from the New York Central in 1865 Vibbard engaged in

a variety of businesses, including railroad construction and sales of railroad supplies.

A second partner, Thomas C. Platt, in 1874 a first-term Republican United States

congressman from New York with most of an important political career ahead of

him, enjoyed a solid business reputation as a druggist, lumberman, and banker. On

October 29, 1875, the proposal of the firm of Vibbard, Platt, and Ball conditionally

contracted to build the northern section of the A & LE line from Chauncey to To-

ledo, a distance of 194 miles, which it estimated could be completed in eighteen

months. The A & LE agreed to furnish all necessary supplies and to issue $25,000

of mortgage bonds to the construction company for every mile completed.³⁸

Ewing, on the other hand, wanted Vibbard, Platt, and Ball to give the highest

35. Ewing, Jr., to Thaw, March 23, 1875; to Foster, June 19, 1876; to T. C. Platt, June 18,

1876, Ewing Papers, LC.

36. One method used by Ewing to raise money was to sell the heavily watered stock of the

coal companies, and the directors then invested this money in A & LE securities. Also payment

dates were set when any stock was sold. J. R. Straughan to Ewing, Jr., September 28, 1875,

Ewing Papers, LC; Annual Report, 1876, p. 396.

37. Lemert to Ewing, Jr., October 21, 1874; Ewing, Jr., to H. P. Clough, February 12, 1876,

Ewing Papers, LC.

38. John F. Parsons to Ewing, Jr., September 30, 1874, January 22, 1875; contract between

the A & LE and Vibbard, Platt, and Ball, October 29, 1875; Minutes of the A & LE Board,

October 5, 1875, Ewing Papers, LC. The contract would be effective only upon sale of the

A & LE bonds.

274                                                           OHIO HISTORY

priority to the completion of the southern section of the railway through the coal

field, and he offered to negotiate a supplemental contract, granting the construction

company an interest in the coal lands, if it would vigorously pursue this objective.

He wrote:

Think of this. It is important to fully develop the coal field as early as practicable....

If the mineral section be promptly built & mines opened it will be vastly to the advantage

of the northern part of the line when constructed.... The construction from Moxahala

to Chauncey will probably cost $150,000 cash.³⁹

On November 23, 1875, Vibbard, Platt, and Ball responded to Ewing by proposing

to contract absolutely for the thirty miles of line between Moxahala and Chauncey,

to be completed within one year from the execution of the contract. The A & LE

agreed to furnish "as fast as required" all rights-of-way, ties, fences, a construction

train, and to pay in cash any cost of the substructure over $150,000. In addition,

the construction firm was to be paid $20,000 a mile in mortgage bonds, $20,000 in

cash, and $30,000 in monthly installments as the work progressed between Moxa-

hala and Ferrara. The A & LE was also to give the construction company $300,000

of full paid stock when the line between Moxahala and Chauncey was completed,

and the mining companies had to then convey to the construction firm 3,000 acres

of mineral lands, or the equivalent in stock plus fifty dollars an acre in mortgage

bonds.⁴⁰

The hope was that the firm of Vibbard, Platt, and Ball could finance its opera-

tions by the sale of A & LE bonds. Efforts to market the bonds overseas were inten-

sified as new agents were hired and the promotional literature was revised. Pres-

ident Ewing prepared a prospectus which probably conformed to the tenets sug-

gested to him by one agent:

If the bonds are sold abroad, the buyers are about as ignorant of the country as you are

of central or south Africa, and they will want to know every thing, & will ask more ques-

tions than a child. Puff your directors--tell them who and what they are, and how

they stand--brag of your large subscriptions . . boast of your minerals, of your mar-

kets, of the splendid district of country the road passes through--tell them how much

has been spent and what has been done on the line, & a thousand other things that will

occur to you. But stick to the truth, as the chances are the purchasers of the bonds will

look closely into your statements.... 41

The most active agent for the A & LE at this time was Dr. W. Ernest Friguet,

who became the center of controversy between the construction company of Vib-

bard, Platt, and Ball and the A & LE. He was a resident of Paris, with stockjobbing

offices there and in London. On October 28, 1875, the A & LE contracted with

Friguet for his services in selling $6,250,000 of bonds in Europe. Friguet delivered

many optimistic reports to the company, but as the months rolled on one effort

after another to arrange the loan failed. In the meantime the construction company

exhausted its resources and work ground to a halt. Chauncey Vibbard, who may

well have had better judgment in the matter than Ewing, wanted to fire Friguet and

39. Ewing, Jr., to Vibbard & Ball, November 9, 1875, Ewing Papers, LC.

40. C. Vibbard, A. H. Ball, and T. C. Platt to the President and Board of Directors of the

Atlantic and Lake Erie Railway, November 23, 1875; to Ewing, Jr., November 23, 1875, Ewing

Papers, LC.

41. R. W. Jones to Ewing, Jr., May 9, 1875, Ewing Papers, LC.

Hocking Valley Railroads                                           275

hire someone else because he considered the Frenchman "one of the most damnable

scoundrels in Europe" who had "never succeeded in anything but in getting parties

to make advances upon his agreement to negotiate securities, which he never ac-

complishes."42

Ewing continued to hold confidence in Friguet, however, and he was following

the latter's advice in the spring of 1876 when he successfully proposed that the com-

pany's name be changed from the "Atlantic and Lake Erie" to the "Ohio Central."

As Ewing explained, "the Atlantic & Lake Erie contained two names of rather bad

repute in Europe--the 'Atlantic & Great Western' & the 'Erie.'" He [Friguet]

suggested "'the Ohio Central' for a like reason--to wit, that the Centrals were

generally of excellent repute--the Penna Central, New York, New Jersey,

Illinois.... "43

Ewing's various promotional efforts were, ultimately, all in vain as Ohio Central

bonds also proved to be impossible to sell. By the summer of 1876 the company

was clearly on the verge of failure. The report the A & LE (now Ohio Central)

filed with the Ohio Commissioner of Railroads and Telegraphs in June 1876 revealed

how little had been accomplished in 1875 and 1876. Of the projected 237 miles

of line from Toledo to Pomeroy, 150 miles was graded but not laid with rails. From

January to June 1876 only nineteen miles of main track were graded, three and

one-half miles ballasted, and 808 feet of trestles built. The company had author-

ized $12,000,000 of stock, of which $1,510,783 was subscribed, and $1,122,430

collected, mostly during the first years of the company's existence. The Ohio Central

listed assets of $1,466,623, most of which ($1,372,066) was in the form of real

estate and equipment. It is unclear how the figure was derived, and, considering the

depressed condition of Ohio coal lands in 1875-1876, probably was exaggerated.

Unfortunately, if the company's assets were in part artificial, its debts were real. The

company had spent $1,372,066 on construction, most of which ($784,255) was for

grading and masonry. Its net unfunded debt was $224,967 and its funded debt--

secured with seven percent mortgage bonds--had risen $44,600 in 1875. The

company was only operating a segment of 7.3 miles from New Lexington to Moxa-

hala. Nothing was going well for the Ohio Central at this time, and the operation

of carrying 15,423 tons of coal and a few passengers resulted in a net loss to the

company of $352.95 for the fiscal year of 1875.⁴⁴

When the A & LE was unable to place its bonds, the Vibbard, Platt, and Ball

Company was released from its contract for the Moxahala-Chauncey line and given

an extension to complete a shorter Bremen-Granville section. The original contract,

providing for the construction of two hundred miles of railroad in the north had

already expired because of the time limitation. When more construction delays oc-

curred and it appeared that even the Bremen-Granville line could not be completed

on schedule, one of the partners, Vibbard, abandoned the project completely.

Thomas C. Platt and August Ball retained an interest in the railway and worked

closely with General Ewing in an attempt to salvage the enterprise. They still faced

a variety of problems, which in combination ultimately proved insurmountable.

Throughout most of 1876 Ewing, Platt, and Ball hoped to be able to finance con-

42. Ewing, Jr., to Hugh Ewing, May 25, 1875; Chauncey Vibbard to Ewing, Jr., June 12,

1876, Ewing Papers, LC.

43. Ewing, Jr., to Thaw, May 2, 1876, Ewing Papers, LC.

44. Annual Report, 1876, pp. 396-399.

276                                                           OHIO HISTORY

struction and at the same time maintain control of the Ohio Central. This objective,

however, required financial manipulation. Somehow more water had to be pumped

into the Ohio Central through new issues of stocks and/or bonds. The company's

debts already were far in excess of assets, and such a move was therefore opposed

by the company's many creditors.⁴⁵

The efforts to manipulate the financial affairs of the Ohio Central were successfully

thwarted by creditors and northern opponents, who bombarded the company with

law suits in 1876 and 1877. This situation made it impossible for the company to

withdraw bonds previously issued, or otherwise place a new mortgage on the com-

pany. In January 1877, for instance, one creditor forced the sheriff of Fairfield

County to auction $117,000 of Ohio Central bonds, and soon thereafter the com-

pany's dock property in Toledo--valued at over $20,000--was foreclosed by

another. The law suits had a snowballing effect and threatened to destroy the com-

pany as all creditors tried to get something before all of the assets were swal-

lowed up.46

The law suits and harassment by creditors sharpened the conflict of interest

between President Ewing's Ohio Central and mineral land enterprises. He decided

to try to salvage the mineral lands, and thereby engendered hostile opposition from

most of the railroad's directors. Because of this and also because he had been elected

to the national House of Representatives in the fall of 1876 and would not be able

to devote himself fully to railroad promotion, he indicated on June 12, 1877, that

he intended to resign from the presidency of the Ohio Central. However, on July 9,

1877, before Ewing formally resigned, a Crawford County judge appointed a re-

ceiver for the company in response to a plea by McDanald and Company. Ewing

admitted that the action was justified, and advised his colleagues against fighting it.

"The co is in fact insolvent & unable to earn anything," Ewing informed Platt, "and

is in fact in such condition on our showing our hand the Court... will not vacate

the order."⁴⁷

At the time of the receivership action assets of the Ohio Central consisted of a

roadbed and right-of-way between Toledo and Pomeroy (about 230 miles); nearly

eight miles of completed line in Perry County which was in operation; about twenty-

seven miles of roadbed laid with iron but not ballasted from Bremen in Fairfield

County, north into Licking County; and one locomotive and twenty gondola cars.

None of these assets produced the income necessary for the Ohio Central to meet

the interest payments due on its bonds and other current obligations. In fact, the

primary reason that McDanald forced the Ohio Central into receivership was its

inability to pay interest on its bonds, of which McDanald held a quantity with a par

value of $33,800 (with $4,085.29 interest due). The receivership petition made

several other complaints, all more or less justified. The Ohio Central was getting

deeper and deeper in debt, and seemed incapable of doing anything to get out. Its

floating debt was increasing at a rate of about $50,000 a year, without any increase

in assets or in the value of the property. The floating debt totaled $314,564.43 at

the time a receiver was appointed, and the bonded debt stood at $1,113,789.91, in-

cluding both principal and interest.48

45. Ball to Ewing, Jr., April 12, 23, 28, 1877, Ewing Papers, LC.

46. H. D. V. Pratt to Ewing, Jr., May 1, 1877, Ewing Papers, LC.

47. Copy of letter of "T. E. to members of B. of Directors, June 12, '77"; Ewing, Jr., to Edward

Pechin, July 16, 1877; "Order of Court in Appointment of Receiver, July 9, 1877"; Ewing, Jr.,

to Platt, July 17, 1877, Ewing Papers, LC.

48. "Referee's Report on Receivership of Ohio Central, Bucyrus, Ohio, January 22, 1878,"

Ewing Papers, LC.

278                                                           OHIO HISTORY

to several technical errors that cost the company time and money, such as the accep-

tance of estimates on the costs of tunneling which proved far too low, or the pur-

chase of iron rather than steel rails. Also Thomas Ewing, Jr., underestimated the

severity of the depression of the 1870's and the financial problems it presented.

Unwilling to lose some of his coal lands by retrenchment, Ewing was able to make

his views prevail within the company. Hocking Valley enterprise of all kinds was

frought with risks, and, considering the economic conditions of the 1870's, it is far

from certain that different management or different policies would have led to suc-

cess; but it is clear, in retrospect, that Ewing's decisions were unwise.

Although the small-scale Ohio industrialists who founded the A & LE railway

lost control of the enterprise in 1877 and were ostensibly failures, their efforts did

contribute to the emergence of the Hocking Valley as one of the most important coal

producing sections of the country in the 1880's. Their work blazed the trail that

other, more realistic, men would continue. Ewing's integrated approach toward

industrial development served as a model for a syndicate headed by Samuel Thomas

of Columbus. Included were executives of the New York Central Railroad Com-

pany, who acquired most of the A & LE properties in 1877. This company, com-

bined with others to form the Columbus and Hocking Coal and Iron Company,

emerged in the early 1880's as the dominant firm in the eastern half of the Hocking

Valley. In an era when many mining companies had assets of around one hundred

thousand dollars in value, the Columbus and Hocking Coal and Iron Company op-

erated eighteen mines, owned over 12,500 acres of coal lands, 570 houses, a few

furnaces, and had an appraised value of $4,494,367 in 1883.⁵¹ The firm achieved

in fact the economies of scale envisioned by the earlier promoters of the A & LE.

The Thomas syndicate also acquired the remains of the Ohio Central Railway.

Construction of the railroad resumed in 1879, was completed in November 1880,

and the name was changed to Ohio Central Railroad Company. By June 30, 1881,

the Ohio Central was operating 213.3 miles of track, stretching from Toledo through

the Hocking Valley coal field. The company reported "earnings" of $126,399.08,

or 37 percent over operating expenses for the fiscal year 1881. In 1886 the Ohio

Central was partitioned, and passed out of existence. The northern line became part

of the lucrative Toledo and Ohio Railroad Company, while the section south of New

Lexington was absorbed by the Kanawha and Ohio Central. The integration of

mines, railroad facilities, and company towns forced the re-organization of the entire

mining industry in the Hocking Valley in the mid 1880's, as independent operators

formed the Ohio Coal Exchange in an attempt to compete with the Columbus and

Hocking Valley Coal and Iron Company.⁵² This suggests that in the 1870's the

promoters of the A & LE Railway Company had vision and imagination, but suffered

from a combination of bad luck and the absence of the entrepreneurial skill neces-

sary to translate dreams into reality.

51. Ewing, Jr., to Samuel Thomas, March 9, May 14, 1877; to H. D. Whitcomb, February 3,

1883, Ewing Papers, LC; John W. Lozier, "The Hocking Valley Coal Miners' Strike, 1884-1885"

(unpublished M.A. thesis, The Ohio State University, 1963), 36.

52. Tenth Census of the United States, 1880: Report on Agencies of Transportation in the

United States (Washington, 1883), 336-337; Annual Report, 1881, pp. 1145-55; Eleventh Census

of the United States, 1890: Report on Transportation Business in the United States (Washington,

1895), Part I, 76-77; Lozier, "The Hocking Valley Coal Miners' Strike, 1884-1885," 37-38.