However, conservative sentiment, strict constructionist theories, sectional jealousies, and the knowledge of the sad experience of the state in other public enterprises[1638] operated against state aid to internal improvements, and before the $500,000 bonds were issued the act appropriating them was repealed, thus putting an end to the last attempt at direct state aid before the war.[1639]

In 1850 Senator Douglas of Illinois began the policy of Federal aid to railroads by securing the passage of a bill in aid of the Illinois Central Railroad. The Alabama delegation was then opposed to such a measure, but Douglas visited Alabama, conferred with the directors of the Mobile Railroad, and promised to include that road in his bill in return for the support of the Representatives and Senators from Alabama and Mississippi. The directors then brought influence to bear, and the two state legislatures instructed their congressmen to support the measure, which was passed.

Thus began the Federal policy of granting alternate sections of public land along a road to the state for the corporation. Later, the grants were made directly to the corporation. Before 1857, land to the extent of 307,373 acres had been granted to Alabama railroads,[1640] and liberal aid had also been given for improving the river system of the state.[1641] By the act of admission to the Union in 1819, Alabama was entitled to 5 per cent of the proceeds from the sales of public lands, to be used for internal improvements. Three per cent was to be expended by the legislature, and 2 per cent by Congress. In 1841 Congress relinquished the “two per cent fund” to the state to aid railroads and other public enterprises from “east to west” and from “north to south.” The State Bank failed and the “three per cent fund” was lost, but the legislature assumed it as a debt and issued state bonds to the railroads to the amount of $858,498. The “two per cent fund” was loaned before the war as follows:—

To east and west roads $256,438.85
To north and south roads 202,551.02
Balance 52,246.23
Total $511,236.10[1642]

In 1850 there were two railroads in the state with a total of 132.5 miles of track, which cost $1,946,209. In 1860, there were eleven roads, 743 miles long, costing $17,591,188.[1643] During the Civil War the roads received much aid from the state and Confederate governments, though during this time only a few miles of track were built and some grading done. At the end of the war all were completely worn out or had been destroyed. The want of railroad communication with the armies and between the various sections of the state caused much suffering among soldiers and civilians, and after the war the people were more than ever anxious to have roads built. For two years the railway companies were busy repairing the old roads, but by 1867 popular opinion demanded new roads.

General Legislation in Aid of Railroads

The provisional legislature, on February 19, 1867, passed an act which served as a basis for all later legislation. The governor was authorized to indorse its first mortgage bonds to the extent of $12,000 per mile, when 20 miles of a new road should have been completed, and to continue the indorsement at that rate as the road was built. No indorsed bonds were to be sold by the road for less than 90 cents on the dollar, and the proceeds were to be used only for construction and equipment. The state was to have two directors, appointed by the governor, on the board of each road receiving state aid.[1644] The Reconstruction Acts of Congress were passed a few days later, however, and there was no opportunity for this law to go into effect.

The first Reconstruction legislature[1645] increased the endowment to $16,000 a mile, authorized the indorsement of bonds in five-mile blocks instead of twenty-mile blocks, as before, and to the roads that proposed to extend outside of the state it promised aid for 20 miles beyond the boundaries of the state.[1646] The next session Governor Smith, in a message to the legislature, stated that the indorsement law was defective; that he was in favor of lending the credit of the state, but objected to a general statute requiring indorsement of any road; that there was danger that the roads would depend entirely upon indorsement and would have no paid-up capital; moreover, taking advantage of the railroad fever, roads would be built where they were not needed; that aid should be given only to those capitalists whose enterprises promised success. Finally, he advised that the law be repealed and aid be given only in specific cases.[1647]

The legislature responded to the Governor’s message by another general law, practically reënacting the former laws. By its provisions proof was required that the five-mile block had been built and that the road-bed, rails, bridges, and cross-ties were in good order, before the first issue of the bonds was made. The company was to show what use was made of the bonds. The indorsement was to constitute a first lien in favor of the state, and in case of default of interest by the road, the governor was to seize and sell the road if necessary.[1648] A few days later a sweeping measure was passed, declaring that all acts and “things done in the state” for railroad purposes were ratified and made legal.[1649] This was the last general legislation enacted while the railroad boom continued. Governor Lindsay and the pseudo-Democratic lower house stood out against railroad legislation, and the indorsed roads were in bad condition when the next scalawag governor was elected. Under Governor Lewis, in 1873, an act was passed to relieve the state of some of its obligations. Roads entitled to an indorsement might take instead a loan of $4,000 per mile in state bonds, and roads already indorsed might exchange indorsed bonds for state bonds at the rate of four for one. But no state bonds were to be given for fraudulent issues of indorsed bonds, and when exchanges were made the road was released from all obligations to the state.[1650] Had the roads accepted this offer, the state would have suffered only a loss of $482,000 in interest each year. However, from this time on the state authorities were busy trying to extricate the state from the bankruptcy caused by indorsing the railroad bonds.

The Alabama and Chattanooga Railroad