Mahone was finally successful, and in 1870, the Atlantic, Mississippi & Ohio Railroad (AM&O) was organized as a new line comprising the three railroads he headed, extending 428 miles in Virginia from Norfolk to Bristol. The former general and his wife
Otelia (a character in her own right) moved to Lynchburg, where the AM&O established headquarters and shops. The letters A, M and O were said to stand for "All Mine and Otelia's." Instead of utilizing northern financial interests, in addition to the state's investment, Mahone obtained the needed funded through bonded indebtedness from across the ocean through a British financial agent. The AM&O did well for several years. The three former railroads initially each became divisions, and the former South Side Railroad was later consolidated with the former N&P into a single division. Unfortunately for Mahone's dreams, before much expansion could take place, the AM&O fell on hard times in the financial
Panic of 1873 which negatively impacted almost all of the railroads. After several years of operating under receiverships, Mahone had a falling out with his agent, who claimed a breach of integrity. There are some historical indications that this may have resulted from miscommunication, interference by Mahone's many enemies, or both. In any event, the foreign bondholders requested other receivers be appointed, and one of his lieutenants, Henry Fink, was named. In early 1881, the AM&O was sold at
public auction. Mahone forces had gathered what he thought would be sufficient funds to place a winning bid, but they were outbid by a surprise entry of a principal of a Philadelphia-based financial company, a previously unidentified competitor. The new owners renamed it
Norfolk and Western, possibly utilizing an earlier name proposed by citizens of Norfolk in the pre-war efforts to secure rail service. Mahone was able to arrange for a portion of the State's proceeds of the AM&O sale to help found a school to prepare teachers to help educate black children and former
slaves. The Virginia Normal and Collegiate Institute near
Petersburg was forerunner of Virginia State College, which expanded to become
Virginia State University. A leader of the
Readjuster Party, after leaving the railroad business, he became even more active in Virginia's politics and served as a Senator in the
U.S. Congress from 1881 to 1887. == What became of the former AM&O ==