History of the British Guiana Railway  System– Georgetown to Mahaica

(Part 3)

By Shammane Joseph
This is the third instalment in a series of articles which gives a brief overview of the History of the British Guiana railway with particular reference to the Georgetown-Mahaica link. The second article dealt with the actions which were taken by the Provisional Committee in British Guiana and the Sub-Committee in England to commence the building of the railway in British Guiana. This article will deal with the early problems encountered by the Demerara Railway Committee throughout the completion of the British Guiana Railway.

It was significant that Ordinance No. 2 of 1846 fixed the capital of the company at £250,000 in 10,000 shares at £25 each, instead of £200,000 in 20000 shares at £10 each, as was decided during the previous year.  No traces were discovered for the reason for this alteration, which ultimately proved to be a bad thing for the company. Had the larger number of shares at a smaller value been retained, it would have been extremely probable that the capital liability would have spread over a greater number of individuals, and the necessity to reduce the share capital through the failure of shareholders to pay, might never had arisen .

The line was opened to general traffic from Georgetown to Plaisance on 3rd November 1848. Two inward and two outward trains ran each day. The fares were 40 cents first class and 20 cents second class.  The next 4 1/2 miles of track took two years to build and the extension to Buxton was opened on the 14th of March l850. From there it took seven months to proceed to Enmore. Seven weeks after the opening of the Enmore Station the line to Belfield was opened, but because of financing difficulties the next 1 ¼ mile stretch to Two Friends took nearly two years to complete. Further, financial difficulties began dogging the Company. From the onset the Directors found themselves short of capital. The fact is that the great majority of the shareholders had failed to pay up for their shares. By 1858 overdue shares amounted to nearly $170,000 and because most of the shareholders were West Indian proprietors and merchants the depression prevailing in the sugar market offered little prospect of collecting this amount. With an appropriately reduced share capital, the amount subscribed as shares represented a greater proportion of the total, and this enabled the company to borrow money on the security of the railway.

The Directors accordingly increased the share capital from $120,000 to $840,000, and the value of the shares from $120 to $84. Even so, they found it difficult to raise a loan and by the time the railway had reached Two Friends no capital was available for its completion to Mahaica. The Directors therefore concentrated their efforts to Mahaica with government funding.

On the 10th May 1858, Ordinance No. 14 was passed and became law. It empowered the Demerara Railway Company to raise £175,000 and gave a Government guarantee of interest at 6% for 45 years. Among the various enactments of this Ordinance, was the provision of an appointment for a Government Member on the local committee. R.W. lmlach was appointed Government Director, and his honorarium fixed at 300 pounds sterling a year, payable from railway funds

In 1859, His Excellency the Governor informed the Combined Court, that the invoices for the two locomotives ordered by the Government had reached the colony. He pointed out that the government was in no better position as regards obtaining security from the railway Company than some months earlier when delivery of the 40 goods wagons had been refused. Nevertheless, he was of the opinion that under all the circumstances, it was better to lend both the engines and the wagons to the Company. He obtained an acknowledgment of the loan from the local directors, and this course was agreed to.

Press references to the railway at this time described it as a concern evidently brought into existence on an unlucky day, and cursed with ill luck. Everyone who came into connection with it had burnt his fingers, and in the management and control, everyone who had any reputation to lose had lost it. One article in the “Royal Gazette” concluded as follows: “We would not wish our worst enemy greater evil than to be made sole proprietor of the Demerara Railway Company with an obligation to work it for a term years.”

No action appeared to have been taken by the London Directors to raise money under the provisions of Ordinance 14 of l858. At the time this Bill was passed, it was understood that both the local and London Directors were in agreement with its terms. However, this was not the case, as objections were subsequently raised, and the meaning of certain of the clauses stated to be obscure. In order to remove any doubt that might have existed, a declaratory Ordinance to give effect to the arrangement previously entered into was passed early in 1859 (No.4 of 1859), but this encountered serious opposition from the London Board, and the Ordinance never became law, as it was eventually disallowed.

In September 1859, the Attorney General introduced in the Court of Policy a further Bill providing for the abolition of the post of Government Director on the Railway Board. He pointed out that, by Ordinance 14 of 1858, the government had undertaken to guarantee interest for 45 years on a £175,000. The sum was to be raised within o\of the passing of the Ordinance. A year elapsed and the money had not yet been raised, consequently it was unfair to retain a Government Nominee on the board. The Bill was passed through all its stages and made law the same day Ordinance 19 of 1859 came into being.

Two months later a further Ordinance was passed (No. 23 of 1859) afforded the Demerara Railway Company the following measures of relief:

The line from Georgetown to Belfield must be kept in a proper state of repair, and an adequate supply of rolling stock, including locomotives maintained. No demand for payment of any part of the principal money due in     respect of the mortgage for the £50,000 loan, and if the company raised and expended upon the line, including its completion to Mahaica, a sum of not less than 30,000 the mortgage would be forthwith cancelled.

The amount standing at the credit of the Sinking Fund provided for in Ordinance 14 of 1858 and invested in     consolidated 3% annuities amounting to £5002 to be withdrawn and handed back to the company for improvements and repairs to the existing line. Hereafter the company should not be liable to pay any amounts in respect of this Sinking Fund.  Claims by the colony for the locomotives and goods wagons lent to the company and various sums of money advanced for repairs to the line amounting to 8,864 pounds sterling, with interest thereon were given up, released and abandoned. Provided, however, that the Governor and Court of Policy should have the right to revise and approve tariffs, and that; a local committee of three Directors resident in the colony should always be in office, with power to the Governor to temporarily fill all vacancies occurring.

The Ordinance provided, further, for the retention by Government of all its legal rights under previous Ordinances to recover from the railway all liabilities incurred in the past and enumerated above in the event of the company not carrying out the terms of this Ordinance as interpreted by Government. This last provision amounted merely to safeguard the interest of the Government. During the passage of this Bill through the Legislature, a storm of protest was raised and public indignation meetings held, but it was eventually passed, and became law on the 4th November 1859.

At a general meeting of the stakeholders held in England shortly after, a resolution was passed accepting the terms laid down in the Ordinance and thanking the Governor and Legislature for the manner in which the Railway Company’s interests had been recognised. In July, 1860, an extraordinary general meeting of the shareholders of the Demerara Railway Company was held at Liverpool when they passed their own resolutions.

The Liverpool Directors, evidently perturbed at the manner in which the Demerara resolutions had been passed against their wishes, and in preparation for a consequent meeting at which this policy was reviewed, issued  a printed circular to the Demerara shareholders on 20th August 1860. On the 15th September 1860, the Chairman and Secretary sent another circular to the shareholders requesting a review of the resolutions.

At the annual general meeting held on 30th April 1861, a deputation of London shareholders armed with proxies attended with the object of insisting on the Directors pledging themselves to devise prompt measures for the completion of the line to Mahaica, and converting the bonds into 7% stock for this purpose. The Liverpool Directors made every effort at this meeting to carry their policy but in the end the Directors’ report was “referred back in order that it might contain an assurance that the resolutions passed at the extraordinary meeting of 20th June, 1860, would be carried out.”

Press comments on the working of the railway at this time revealed that at last a measure of satisfaction was being afforded the public. The Manager and Chief Engineer Mr. W I Martin was referred to as untiring in his efforts to supply a good service, and while break-downs were not infrequent, allowances are made in the press, and the public reminded that the locomotives were past efficient service. Later in that year two new locomotives arrived in the Colony, they cost £1,425 each and were named “Georgetown” and “Mahaica”.