GREATER
WESTERN NORTH CAROLINA
ASSOCIATION

Brevard N.C. Aug. 9th. 1913

To the Council of State,
Raleigh, N.C.,

Gentlemen:-

Owing to a situation which is fully explained later on in this letter I am taking the liberty of trespassing on your time by asking that you read this letter as in it I try to write exactly what I would say if I were present in person.

I am writing in regard to the present condition of the South Atlantic and Western Railroad and will say that what I am going to write are plain facts stated in a truthful manner and that I do not attempt to advise you as to what your action should be in connection herewith, but I will state the situation truthfully and then you gentlemen will have to form your own opinions and make your decision accordingly.

I will first state what my position is so that there will be no misunderstanding or misconception of what my relation to this enterprise is;

I am the Assistant General Counsel of the South Atlantic and Western Railroad and I have no contract or understanding of any kind whatsoever as to any remuneration for my seven years of service already given to said road, I am relying solely on the action of the Directors of said road when the same is financed to make me such an allowance as to them may seem proper, ever since my connection with this enterprise I have never received one cent from the railroad and only about seven or eight hundred dollars, (although I can not state the exact amount, it may be more) from the N.C. Construction Company after it made its contract with the S.A.W.R.R. to pay my expenses, so up to the present time I have spent many times the amount I have received to say nothing of my time and labor, I wil also say that I have no contract or agreement with any construction company for any remuneration, I have, however, certain rights of way that I think I can sell to either the Railroad Company or the Construction Company, but if this enterprise should fail I believe that I could sell said rights of way just as well and perhaps more quickly to other parties than to this road, I explain this so that you will understand what selfish or pecuniary motives I have in making these statements to you gentlemen, I want you to know all the facts and the motives actuating me in stating them to you. I am hoping that I will be retained as Counsel for the R.R. when it is financed and that I will receive a satisfactory salary, therefore if the road fails I will lose that and will only have my rights of way left out of which to pay myself for seven years of hard and faithful work given to this enterprise.

The present status of our railroad is as follows;

During the year 1910 certain negotiations were begun relative to contracting with a construction company to build the road and in 1911 a contract was made and entered into between this road and the N.C. Transcontinental Construction Company, said Construction Co. causing this company to believe that it had sufficient funds on hand or contracted for to build the road, after the death of the president and also the death of the general manager of said Construction Co. we found that it could not perform its contract with us, so we cancelled said contract and some of the men composing said construction Company organized another construction company, I was one of the incorporators and was made the President of the Company at its preliminary organization, the name of this Company was the SAW Construction Co., I will state that my connection was only nominal as I was informed that it was to be capitalized and officered by New York and English men and that my position was only a temporary one and for the purpose of organization only.

Immediately after the cancellation of our contract with the N.C. Cons. Co. we entered into a tentative contract with the SAW. Co. and we believed that it was in position to carry on the construction of our road according to specifications and contract, to our surprise we found out, during the last sixty days, that this construction company was also unable to carry out its contract and we immediately gave its due and proper notice and at a meeting of our Directors held in Asheville on last Saturday, Aug. 2nd. we cancelled the alleged contract with the SAW Co. and we assumed control of the work of the convicts.

You gentlemen well understand the difficulty of securing the neccessary twelve millions of dollars we need to build our road and it has taken us many years and may take some time yet, but I will call to your attention the number of years that the present Southern Road, then the W.N.C.R.R. stopped at Old Fort before even with the State behind it, that it was built on to Asheville, I will also call your attention to the number of years that the A. and S. R.R. stopped at Hendersonville before it was built twenty miles, over a easy country, into Asheville, so in respect to length of time our road is not different from others roads built in this section.

As soon as I decided that the SAW Co. was unable to construct our road I went to Asheville and consulted with Gen. T. F. Davidson, our General Counsel, and we decided that I had better go to New York and see what the true condition was, I therefore went and upon close investigation found that it would be necessary for the SAW Co. to be completely reorganized or that a new construction company be formed.

I was informed personally by Judge Chas. Mayer, who is representing Linton, Clarke and Co. of London, and have also received letters from W. H. Stayton, telling me that commitments have been made or contracted for with said Linton, Clarke and Co. and their continental associates, to underwrite the securities of our road to the extent of twelve millions of dollars.

Judge Mayer represents himself to be the agent of Linton, Clarke and Co. and came here, so he states, prepared to have the issue made in London of our securities, but when he discovered the true condition of the SAW Co. he refused to advise the issue of said securities and he did advise the formation of a new construction company along sound business lines, one of his requirements being that said construction company give a bond for the construction of the road according to specifications and our charter.

I will here state that Linton, Clarke and Co. ar one of the best and largest houses of issue in England and stand very high, this information I have from the National Park Bank of New York as well as from other reliable sources.

It is but right, therefore, that Linton, Clarke and Co. should require that the construction comapny with which they do business be a safe and reliable concern as they could not afford to underwrite the securities of a railroad company which was not a first class security, hence Mayer's determination to require the organization of such a company is but right and although it will delay matters temporarily, it is the safest and best in the end.

And you gentlemen wil also remember that our securities bear but five per cent interest and owing to the present condition of the money market it is impossible to sell any securities bearing so low a rate of interest, I will call your attention to the fact that the State of Tennessee had to pay over seven per cent interest on her two year note for ten millions of dollars, in fact the price of money has advanced along with other values and investors are demanding higher interest. I fear that if we hadnot made this underwriting contract with Linton, Clarke and Co. some 18 months ago that we could not make it now unless we raised the rate of interest our bonds will bear. It is therefore neccessary for us not to give Linton, Clarke and Co. any possible excuse or reason to get out of or refuse to underwrite and issue our securities for while they will perform their contracts to the letter even if they lose heavily, still if they could get out of a bad trade, or rather a now unprofitable trade, by reason of our failure to perform our part of the contract, I believe that they would do so and would either let the matter drop intirely or make us pay heavily for the sale of our securities.

We have represented to Linton, Clarke and Co. that we had a contract with the State for certain convicts at a certain price and that is one of the considerations of the contract, they have considered that to be one of the assets of the Railroad Co. and if the convicts were now taken away from us it would furnish a reason whereby Linton, Clarke and Co. could withdraw from their contract by reason of our failure to perform or keep one of the essential parts of the contract.

I also believe that if the present negotiations should fail that this enterprise is dead and the State, as well as the other stockholders would lose every cent they have in the road.

It would also be useless for the State to allow us to retain the convicts unles a suitable construction company was formed and I will now state what has been done in regards to that;

After ascertaining the condition of the SAW Co. and knowing the condition precedent which Linton, Clarke and Co. required, namely a solvent construction company, I immediately went to work to organise such a company and I went to see T. Coleman DuPont, the head of the DuPont Powder Co. and a man of large means and with his aid and the aid of R. W. Jones of 55 Wall St. and of Jas. G. Shaw of the Upper Hudson Stone Co. whose offices are in the Havemeyer Building I succeeded in securing the following preliminary organization.

DuPont and Jones suggested the names of several men who would take stock in said Construction Co., DuPont agreeing to personally take one fifth of the capital up to Two Millions of Dollars and he also put down the names of Cornelius Vanderbilt and Jas. B. Duke, he said that he would be responsible for their going in to the company and that they would each take a good sized block of the stock, Mr. Jones said that W. A. Barber, ex-Attorney General of S.C. and now the General Counsel for the Empire Trust Co. of New York City and one of the most prominent men of that city, and Asa Candler of Coca-Cola fame, would also go into the Company, Mr. Shaw stated that he would secure four hundred thousand dollars of stock in forty eight hours and said that W. B. Duncan Jr. and R. M. Thompson would also go into the company, H. Content will also go into the new company and if these men do as they say they will do, I can assure you gentlemen that there will be no more solvent or reputable organization in the U.S. than this new company.

I prepared a charter for the new company and DuPont submitted same to his friends and lawyers and accepted same and now all that is lacking in having the company legally organized is the incorporation thereof, which will be done in the State of Delaware.

Nothing, however, wil be done along this line until the return from England of W. H. Stayton Esqr. who has had charge of the negotiations with Linton Clarke and Co. and who is a lawyer of ability and high standing in New York, he is a retired naval officer, his office is at 149 Broadway and his residence in Smyrna, Del.

I found that it would be imperative for Stayton to be present before said new construction company would or could be organized, so I cabled him, or rather had Shaw cable him to come here at once and I am informed that he cabled that he would be in New York on the 11th. inst. and I leave here tomorrow to meet him there on that date and proceed to either form the new company or to pay off the debts and re-organize the SAW Co., I am, however, in favor of forming the new company.

It is useles to form a new construction company, from my present understanding of the situation, unless we are to have the convicts and it is equally true that it is useless to have the convicts unless we have a solvent construction company and one with whom Linton, Clarke and Co. will trade.

After six weeks examination of the affairs and after consultation for the same length of time with the men above mentioned, I am of the opinion that if matters are left in status quo, namely, if the S.A. and W. R.R. is allowed to keep the few convicts we now have, that we can organize the required construction company and proceed to build this railroad which is so badly needed by our State, and which in the increased tax values alone wil more than repay to this State the costs of the convict labor many times over, and this is not taking into consideration the influence it will have in reducing the freight and passenger rates.

If you gentlemen will allow the convicts to remain as they now are for a short time longer, then we can proceed and finance our road, if you take them away at this juncture, we wil lose all our work and the State will lose the building of an independant line of railroad through it, in fact our being an independent line has caused us much trouble, for all the trusts fought us and it was only by using the fact that the Sate of North Carolina was behind us as indicated by the use of the convicts that we were able to get the ear of reputable financiers and enlist their aid, now if you take your support from us we will go down to defeat, and that at the hands of those we are helping to make money and to relieve them of the burden of a railroad monopoly such as exists in this part of the State.

For nearly eight years I have been intimately connected with this enterprise, I have passed through periods of hope and depression, we have met many disappointments but after each defeat we have emerged therefrom with greater knowledge and experience and each contract we have made has brough us closer to the building of the road and I now believe that we are closer to the consumation of our hopes and plans than ever before and that if no untoward incident occurs that we will soon realise the full fruition of our plans.

I wil therefore most urgently request that you allow us to retain the convicts for the present, I will assure you that the instant that I find that there is no chance of financing the road that I will so notify you and I will also state that the railroad company is ready and will them deliver over to you the convicts.

It is not our intention to cause the State the loss of one cent and the minute that I see that the proposition is dead, then I will notify the Governor.

What I ask is, in a nut shell, that you let some other men kill an enterprise that means so much to our State and that you do not strike the fatal blow yourselves by taking away the convicts now.

This letter is long, but this is a large subject and requires considerable explanation, I ask your pardon for requiring you to listen to so long an epistle, but I am actuated by the same principles that excite your interest in this enterprise, namely the upbuilding and protection of our State, what selfish interest I have I stated to you and I am willing to leave what ever remuneration I receive for my years of labor to you gentlemen or any other fairminded men, I will state, however that I have tried to judge and act without being biased by my personal profit, if any such I ever receive. I make this statement because it has been said that we were trying to speculate on these few convicts and at the expense of the State, I am ready and wiling to give up any claim tat I may have if by so doing I could cause this road to be built.

Assuring you of my trust in your sound judgment as to what will be the best course for the State to pursue through you gentlemen and with no resentment towards you for your action whatever it may be, I am,

Respectfully.

W. E. Breese Jr.
Asst. Gen. Counsel S.A.&W.R.R.