Financing a Railroad: “Looking Back”

Reprinted here by special permission of the author, Cindy Beckman, a retired Conway High School history teacher who writes local history.

Conway Station, as it was originally called, was established along the railroad that still runs through downtown. Building a railroad was very expensive and it took great effort to complete it. This is the first of three articles that will examine the financing and building of the railroad as well as the development of Conway Station.

The origins of the railroad can be traced back to the 1850s. In January 1853, the Cairo & Fulton Railroad was chartered in Arkansas. The plan was to construct a railroad from Cairo, Illinois, through Little Rock to the town of Fulton, on the bank of the Red River (near Texarkana).

Soon thereafter, Cairo & Fulton promoters filed an application seeking approval for a connecting rail line extending from Little Rock to Fort Smith. A charter for this line, officially known as the Little Rock & Ft. Smith Branch of the Cairo & Fulton Railroad, was approved by Governor Elias N. Conway in November 1853.

The economic motivation of the railroad promoters was greatly enhanced when Congress passed the Cairo & Fulton Act in February 1853. This legislation granted sections of federal land to the railroad as a means of promoting and financing railroad construction. The government wisely realized that these land grants would be an excellent investment in the future.

By encouraging the construction of the railroad, the value of the surrounding government land would be greatly enhanced, and the development which followed the railroad would create an increasing demand for these remaining lands.

A meeting of the Cairo and Fulton directors was held in Van Buren in January 1854, and Captain Joshua Barney was employed to begin a preliminary survey of the Little Rock & Ft. Smith route. After a year of examining various routes, the survey was completed in May 1854.

Northwest from Little Rock, the route took a roundabout and circuitous course to reduce the difficulty of crossing Palarm Hill and Cadron Ridge. The surveyed route crossed Cadron Creek 1 1/4 miles above the Military Road, passed two miles north of the town of Lewisburg (now Morrilton), and continued to a point near what is now Russellville. It then continued north of the river through Dover, Clarksville, and near Ozark enroute to Van Buren.

The Little Rock to Fort Smith route was clearly of secondary concern to the promoters of the Cairo & Fulton Railroad. After promoters of the Ft. Smith route grew impatient with the Cairo & Fulton, a new company, the Little Rock and Ft. Smith Railroad, was incorporated in January 1855. Backed by a new slate of stockholders and directors, it was able to begin some grade preparation of the roadbed at various points along the survey during 1857.

The earlier land grants for railroad construction were reaffirmed in January 1858, by Thomas A. Hendricks, the U.S. Land Commissioner. Approximately 550,525 acres of federal homestead land had been granted to the State of Arkansas for the Little Rock to Ft. Smith railroad. The land was to be transferred from state ownership to the railroad upon the completion of segments of trackage along the route.

Despite the availability of the land grants, the backers of the Little Rock & Ft. Smith Railroad were unable to secure additional financing because of the turmoil and unrest preceding the Civil War. No more progress would be made until after the Civil War.

About a year after the war ended, Jesse Turner, the president of the railroad, called a board meeting in his home town of Van Buren. Even though the State of Arkansas was financially ravished from the war, with the agriculture-based economy at a standstill, the decision was made to resume construction of the Little Rock & Ft. Smith Railroad.

In September 1866, Congress renewed the previous land grants and added an additional 396,000 acres. Following the lead of Washington, Arkansas’ Reconstruction government granted an additional 163,475 acres to make a total of 1,110,000 acres of land available to the Little Rock & Ft. Smith Railroad in the form of land grants.

The Little Rock & Ft. Smith Railroad received additional funding assistance through $1 million in bonds issued by the Arkansas Railroad Commission in 1869. Although this was a sizable bond issue, the railroad bond market was in such turmoil that the bonds could be sold only at a greatly discounted price. The proceeds of this bond issue, although small, did allow the railroad to resume construction of the line.

Note:The information for this article was found in Faulkner County: Its Land and People (1986)

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.