thorized to subscribe for an additional 5,000 shares. At the following session the Gen-
eral Assembly again changed the mode of control over the state's investment in public
improvements, enacting a law that directed the governor, with the consent of the
Council, to appoint three persons to represent the state, as a stockholder, at annual
stockholders' meetings.23
The legislature opened the state's coffers again in 1833. Recognizing the financial
problems involved in building the Washington Branch, the General Assembly au-
thorized the treasurer of the Western Shore, after being satisfied that $1 million had
been subscribed toward the venture, to subscribe for the state $5 million for the line.
The subscription was to be paid in cash or in twenty-five-year 4 1/2 percent stock of
the state. The statute provided that the stock subscribed by the state should "be con-
sidered as a separate and distinct stock forever." It set a $2.50 minimum charge for
passengers, of which the state arrogated to itself one-fifth or in no event less than 25
cents per passenger per trip. Individual subscribers to the Washington Branch stock
(including, presumably, the turnpike companies and probably the city as well) would
continue to vote their stock as before. The state, however, was authorized to appoint
two additional directors.24
At the 1835 session of the General Assembly three bills pertaining to the B & O
were enacted, each dealing, in part, with the financial problems faced by the company
in building the road to the Ohio River. One extended the time required for completing
the road as set forth in the charter. The second authorized Baltimore City to subscribe
to $3 million in B & 0 stock and entitled it to elect one additional director for each
5,000 shares ($500,000) subscribed, in addition to the two directors to which it was
entitled by virtue of the stock already held.25
The third act attempted to resolve jurisdictional conflicts between the B & 0 and
C & 0. A dispute had arisen between the two companies almost immediately after
construction of the Ohio line commenced, giving rise to the first in a series of litigations
between them. The dispute concerned primarily the desire of each company to prevent
the other from locating in certain areas of the state where it intended to operate but
where, because of the topography of the land, they could not both operate. The Court
of Appeals decided the question in favor of the canal company, holding that it had
prior rights to the route.26
By chapter 395 of the Acts of 1835 the General Assembly attempted to settle the
dispute by means of arbitration, offering a subscription of $3 million to each company
if they both assented to the terms of the act. The act also included inducements for
the Eastern Shore Railroad Company, the Annapolis and Potomac Canal Company,
and the Maryland Canal Company, to which, subject to certain contingencies, sub-
scriptions of $1 million, $500,000, and $500,000 respectively were pledged. Altogether
an $8 million loan was authorized by the act, and the governor was empowered to
appoint three "discreet, competent and suitable persons" to proceed to Europe to ne-
gotiate the loan.
The bonds authorized by this act were to bear interest at 6 percent and were to
be sold at no less than 20 percent above par, net to the state. Unfortunately the
commissioners were unable to negotiate the loan on those terms, and $6 million of
the bonds were sold instead to the C & O and the B & O, with each taking $3 million.
When some question about the legality of the transaction arose, the next legislature
23. Acts of 1831, ch. 330; 1832, ch. 318.
24. Acts of 1832, ch. 175. The $2.50 minimum fare could be reduced with the consent of the General Assembly,
but the state's minimum share was fixed. Even if the fare were reduced below $1.25 it appears that the
state would still have received its minimum share of 25 cents.
25. Acts of 1835, chs. 245, 127.
26. Acts of 1835, ch. 395; Canal Company v. Rail Road Co., 4 G & J 1 (1832).
