The Montgomery and Eufaula road obtained something over $30,000 of the “three per cent fund” from the state, and in 1868 the governor was authorized by the legislature to indorse the road, notwithstanding this debt to the state, which was considered simply as an indorsement.[1694] Under this act the road was indorsed for $1,280,000, and in addition state direct bonds to the amount of $300,000 were issued to the company in 1870. For this loan there was no security. Lewis Owen, a former president, refused to answer when it was charged that bribery had been used to secure the passage of the bill. At this time the road was valued at $825,289. In 1873 capitalists offered to lease the road for enough to pay the interest on its bonds, provided the state would release the road from all claims and give to it the $330,000 already loaned. This was done. Later it was seized by the state and eventually sold for sufficient money to cover losses caused by the indorsement.[1695]
The Mobile and Montgomery road secured $2,500,000 by special act of the legislature.[1696] The road was valued at $2,516,250[1697] and was already built, hence the indorsement was safe.
The total indorsement was about $17,000,000.
Value of all Railroads in the State (from the Auditor’s Reports)
| 1871, 1496 miles | $25,943,052.59 | |
| 1872, 1629 miles | 29,580,737.64 | |
| 1873, 1793 miles | 25,408,110.76 | |
| 1874, —— miles | 22,747,444.00 | |
| 1875, —— miles | 12,033,763.39 | |
| 1875, (returns from railroad officials) | 9,654,684.99 |
Summary
| Name of Road | Length | Value per Mile | Indorsement per Mile | Value of Road | Indorsement of Road | Present Road | Remarks |
| Alabama and Chattanooga | 295 | $15,000 | $16,000 | $4,018,388.00 | $5,300,000[1698] | Ala. Great Southern | Seized by state. Completed. |
| E. Alabama and Cincinnati | 25 | 10,000 | 16,000 | 264,150.00 | 400,000 | —— | Never completed. |
| Mobile and Alabama G.T. | 50 | 12,000 | 16,000 | 704,225.00 | 880,000[1699] | Mobile and Birm’gh’m | —— |
| Montgomery and Eufaula | 60 | 13,000 | 16,000 | 1,157,071.60 | 1,280,000[1700] | Central of Georgia | Seized and leased by the state. |
| Mobile and Montgomery | 10,600 | 16,000 | 2,516,250.00 | 2,500,000[1701] | L’sville and Nashville | —— | |
| Savannah and Memphis | 40 | 10,000 | 16,000 | 498,810.00 | 640,000 | —— | Did not default; never completed. |
| Selma and Gulf | 40 | 10,000 | 16,000 | 424,900.00 | 640,000[1702] | —— | Never completed. |
| Selma, Marion, and Memphis | 45 | 14,000 | 16,000 | 738,400.00 | 765,000[1703] | —— | Never completed. |
| New Orleans and Selma | 20 | 12,000 | 16,000 | 225,350.00 | 320,000 | B’ham, Selma & N.O. | Never completed. |
| South and North Alabama | 100 | 15,000 | 22,000 | 2,877,730.00 | 4,026,000[1704] | L’sville and Nashville | —— |
County and Town Aid to Railroads
An act of December 31, 1868, authorized the counties, towns, and cities to subscribe to railroad stock. The road corporation was to be voted on by the people. If “no subscription” was voted, a new election might be ordered within twelve months, and if again voted down, the matter was to be considered as settled. If a subscription was voted, an extra tax was to be levied to pay the interest on the bonds; the taxpayer was to be presented with a tax receipt which was good for its face value in the county or city railroad stock.[1705] Several of the counties and towns issued bonds and incurred heavy debts which have burdened them for years. No one seems to have profited by the issues except the promoters.[1706] The counties that suffered worst from Reconstruction bond issues were Randolph, Chambers, Lee, Tallapoosa, and Pickens. These were hopelessly burdened with debt and became known as the “strangulated” counties. There was, after the Democrats came into power, much legislation for their relief. The state gave them the state taxes to assist in paying off the debt and also loaned money to them. Several cities and towns, notably Mobile, Selma, and Opelika, were so deeply in debt that they were unable to pay interest on their debts. They lost their charters, ceased to be cities, and became districts under the direct control of the governor. There are still several such districts in the state. The constitution of 1875 forbade state, counties, or towns to engage in works of internal improvement, or to lend money or credit to such, or to any private or corporate enterprise.