been carried much too far. While, during the last six years, first-class roads in other parts of the country have wholly replaced their iron with steel, removing every defective rail from their tracks, the Union Pacific has thus renewed but 290 miles out of 1,036. This comparatively small portion of its track is fairly up to standard, but the remainder can hardly be ranked as even of the second class. In it are not seldom to be found sections of track where there are rails of different pattern and of varying lengths, with joints even or broken, as the case may be,―resting on chairs or spliced with plates,-on the ties, or suspended between the ties;-rails which have been cut and turned and handled, and which are low at both joints and crushed in the center. Nor, unfortunately, are these very exceptional. The rule is understood to be that no rails having service in them, of over 16 feet in length, are to be removed from the track, and during their inspection the directors not infrequently saw them of 12 feet in length and even less. That portions of the road can, under such circumstances, safely go into the winter must be due to the fortunate freedom of the soil from frost. It could not be done in the East.

In explanation of this very noticeable state of facts, it was suggested to the directors that the rails which have been referred to were a portion of the original iron of the road, which was of such a singular toughness and strength that, in spite of its battered appearance, it was still kept in the tracks for the simple reason that, even in its present condition, it was found to outlast new iron. It would hardly, however, be suggested that this original iron is, in its present lamentable state, superior to steel; and it is with steel that first-class roads are now equipped. The Union Pacific, moreover, as respects its iron, continues. the practice, long since abandoned by solvent companies, of putting down in front of its stations the poorer rails taken up among those still having service left in them, upon the ground that, as the trains run at slow speed before the stations, this description of rails can be used there without danger. Judged by any standards now in use on the first-class roads of this country, no rail which is not safe to run over at speed, is thought safe to keep in a main track anywhere. Certainly the careful collection of such rails in the tracks before stations indicates an utter disregard of appearances and absence of pride which should not be found in those managing a great continental thoroughfare. The directors feel that in this respect the condition of the road is open to sharp criticism, and that they would be failing in duty if they refrained from expressing it.

In conclusion, their examination has led the directors to believe that the policy now pursued by the company in regard to the material condition of the property, while careful and sufficiently safe, is by no means liberal. The impression given to an inspector is that the principles of economy are very rigidly impressed by a distant board of direction on the local management. The percentage of operating expenses to gross earnings is very closely watched. However it might be if the road were completed and brought throughout up to a first-class standard, it is obvious that the percentage of operating expenses is now smaller than it should be; and the reason that it is smaller is made plainly apparent by any close inspection. The policy of the company in this respect has not been such as the country had a right to expect or the government to insist upon.

The relations of the Union Pacific with the public generally, with the community it was built to serve, with the country and its inhabitants

along its line, and with the connecting roads, remain to be considered. This subject is, however, one far more difficult to deal with than the mere material condition of the property. It is possible to go over the road, even without any great familiarity with it, and to report on the state of the permanent way, the stations and the rolling-stock, and to feel in so doing a reasonable assurance against any considerable error in judgment. It is far otherwise with a business policy. To pass with any weight of authority upon that, calls for an acquaintance with facts which cannot be speedily acquired, much less improvised. For it is to be borne in mind that the business policy of the Union Pacific necessarily affects, and is itself affected by the requirements and facilities of a region, sparsely inhabited, it is true, but more than equal in area to all the countries of Europe west of Russia. Not only is the road itself more than a thousand miles in length, but the form which its tariff's take is directly influenced by the course of traffic on the upper Missouri, over the Isthmus of Panama, and about Cape Horn. Besides being the great artery of commerce across the continent, it supplies the local needs of wholly separate communities, engaged in industries as varied as agriculture, the raising of cattle, and mining. Under these circumstances, it would be pure assumption in any body of men, with no better opportunities than the present directors have yet had, to pretend to speak absolutely on this subject. Certain impressions undoubtedly have been received, and a few conclusions reached, but what the directors say in this portion of their report, they say with hesitation, and subject to limitations almost sure to result from a larger and more intimate knowledge.

Upon one point, however, they are clear. As respects its business policy no less than as respects its material condition, the Union Pacific occupies a peculiar position. It is both a national and a continental thoroughfare, built in a large degree by contributions from the public purse. In view of these facts, those who own and control it have incurred a responsibility which they should cheerfully recognize, and which they should not be permitted to ignore. The policy of the company should be a public-spirited policy. The community has a right to expect that in its commercial relations strict business principles should be tempered with liberality. It would not seem, therefore, unreasonable to ask that the development of the country, and the easy and even economical exchange of traffic should be considered by those invested with the management, as well as the strict business view of the largest profit. In any event, it is clearly the mission of those representing the national government in the Union Pacific direction-if, indeed, they have any mission-to develop this principle of public responsibility, and to keep it continually in the minds of those more immediately intrusted with the management. Not that it is either expected or desired that the Union Pacific should be operated without regard to profit. On the contrary, the interest of the corporation and of the government, as its largest creditor, are in that respect the same. What is desired, and should be insisted upon, is obviously something of a wholly different character; it is that the business policy of the corporation should be large and liberal-minded, a policy looking not only to the immediate returns of the present month or year, but which gives full weight also to those remote results which may be made to follow the development of the country; above all, a policy which seeks, so far as circumstances will permit, to avoid all discriminations, and to deal reasonably and equitably both with other roads and with differently circumstanced individuals and communities.

Measured by this standard, it would be occasion for surprise if the course of the Union Pacific was not found open to much adverse criticism. It unquestionably is. This criticism, however, it may be stated in the outset, should not partake of the character of sweeping denunciation. There is, on the contrary, much to be said, both generally and in detail, in defense of the course which the company has recently pursued in the conduct of its business. All things considered, its tariffs, though high in comparison with those in use on some of the trunk lines of the East, are lower than the average, and in no respect, at once practical and material, appear to be extortionate. The rate on through traffic during the year 1877-278 appears to have averaged 1.62 cents per ton per mile; while that on local traffic, exclusive of coal which the company carried on its own account, averaged 2.54 cents. Any inference as to the reasonableness or otherwise of these rates drawn from comparing them with similar averages reached from the statistics of more eastern roads would, however, be extremely fallacious, unless full allowance is made for the different conditions under which the business is done. A very high average rate on local business upon one road may, for instance, be a very low rate upon another. The whole question turns upon the cost of doing the business, and that again depends on its volume, the length of haul, and the frequency and expense of handling. As respects volume of local business the advantages would probably be with the roads of the East; but it would be immensely the other way as respects length of haul and cost of handling. So with through business. The average rate returned by the Union Pacific, if used for purposes of comparison, is merely deceptive; for it would naturally be inferred that it represents the amount charged the shipper by this company for the service, as the similar average in the case of the more eastern road represents the amount charged by it. The one is thus compared with the other, and an inference is drawn. In neither case, however, does the rate returned really represent the charge made. The charge was for the entire service, and represented transportation over a given number of miles. It is divided, however, among those performing the service, not in proportion to miles of carriage done by each, but upon an agreed arbitrary basis, the Union Pacific receiving more than its proportionate share. Thus, though the whole rate paid by the shipper may have been perfectly reasonable, and even low, considering the service, through the process of division it may be made to appear as an actually extortionate charge in the returns of the one road, and as a merely nominal charge in the returns of the other.

The conclusions of the directors as to the generally reasonable character of the Union Pacific tariffs are not therefore based upon the average rates reported by the company. The fact would seem to be that the commonly entertained idea as to the position this road occupies in respect to its local business is essentially erroneous. According to that idea, if the directors correctly understand it, the Union Pacific enjoys a monopoly; practically, from end to end of its line, it is free from competition and at liberty to regulate its system of charges as it sees fit. This, however, is in reality the case to a rather unusually small extent. It is true that the company is exposed at but few points only to the intense pressure of competition with which the railroads farther east are familiar, but almost nowhere is it wholly exempt from competition of some sort. For instance, in Eastern Nebraska it meets it from rival railroad lines. The cattle interest is almost the only one of which Western Nebraska admits, and cattle can always be driven from one competing line of railroad to another in search of better rates.

and use. Large and expensive renewals in this respect should already have been made, and cannot much longer be deferred.

The general repair-shops of the company at Omaha may originally have been laid out upon a convenient plan; but, if so, it was one which unfortunately did not admit of extension. Accordingly, as the requirements of the company have increased, these shops have become inconvenient, and their reconstruction on a large scale would seem to be a mere question of time. The division shops, on the other hand, as well as the rolling-mills at Laramie, seem to have been well designed, and are amply sufficient for all requirements, both present and future. Judging by a very superficial examination, and the results as seen through the returns, the shops seem to be well and skillfully managed and open to no criticism.

The road seems to be liberally equipped with rolling-stock, which is apparently kept in very good order. There is a great abundance of excellent motive power, though the locomotives are of a number of different patterns. Indeed, this department of the company's service, perhaps more than any other, reflects credit upon it.

As respects itsbridges, the company seems to be pursuing a systematic and sufficiently liberal policy of renewals. The original structures have lasted remarkably well. The larger wooden truss-bridges are now being replaced by iron, and the trestle and pile bridging, where it could not be gotten rid of by embankments, seems to be kept in thorough repair. For reasons which have already been referred to, the substitution of mason-work for piling in the smaller bridges and culverts does not form a part of the company's policy of renewals.

The road-bed is, as a whole, not yet brought up to the proper standard, as it is in many places light, narrow, and low. It is, however, being rapidly lifted and improved, and it is safe to say that the work of renewal in this respect will more than keep pace with the renewals of iron. If the principle, as respects curves, cuts, embankments, and undulations, upon which the road is now being operated should prove permanent as well as correct, the bringing the road-bed up to a condition of standard excellence, including the important item of ballasting, will be a simple and inexpensive matter.

The lack of standard and system which has been remarked upon in other respects is peculiarly noticeable in the matter of ties. The road is as a whole very well provided with them; indeed, not infrequently they exceed the regulation number of 2,640 to the mile, and are so close together that there does not seem to have been sufficient space left between them to enable the section men to freely work the ballast. Little attention seems anywhere to have been given to the careful spacing of the ties, and if any rule in this respect was ever laid down, a rigid compliance with it on the part of the road-masters has obviously not been insisted upon. This is the more noticeable as the character of the soil and absence of heavy ballasting would seem to make a careful observance of some rule in the matter peculiarly desirable. It would, however, seem that great numbers of ties have from time to time been put in the track, with very little regard to their size, while none have been taken out until they were thoroughly rotted through. The spiking is not less slovenly, and there is thus an absence of symmetry and disregard of appearance about the track, when examined in detail, which is not suggestive of a first-class railroad.

It is in the character of its rails, however, that the Union Pacific is most deficient. Considering the large income of the company and the recent low price of steel, the economy of renewals in this respect has

been carried much too far. While, during the last six years, first-class roads in other parts of the country have wholly replaced their iron with steel, removing every defective rail from their tracks, the Union Pacific has thus renewed but 290 miles out of 1,036. This comparatively small portion of its track is fairly up to standard, but the remainder can hardly be ranked as even of the second class. In it are not seldom to be found sections of track where there are rails of different pattern and of varying lengths, with joints even or broken, as the case may be,-resting on chairs or spliced with plates,-on the ties, or suspended between the ties;-rails which have been cut and turned and handled, and which are low at both joints and crushed in the center. Nor, unfortunately, are these very exceptional. The rule is understood to be that no rails having service in them, of over 16 feet in length, are to be removed from the track, and during their inspection the directors not infrequently saw them of 12 feet in length and even less. That portions of the road can, under such circumstances, safely go into the winter must be due to the fortunate freedom of the soil from frost. It could not be done in the East.

In explanation of this very noticeable state of facts, it was suggested to the directors that the rails which have been referred to were a portion of the original iron of the road, which was of such a singular toughness and strength that, in spite of its battered appearance, it was still kept in the tracks for the simple reason that, even in its present condition, it was found to outlast new iron. It would hardly, however, be suggested that this original iron is, in its present lamentable state, superior to steel; and it is with steel that first-class roads are now equipped. The Union Pacific, moreover, as respects its iron, continues. the practice, long since abandoned by solvent companies, of putting down in front of its stations the poorer rails taken up among those still having service left in them, upon the ground that, as the trains run at slow speed before the stations, this description of rails can be used there without danger. Judged by any standards now in use on the first-class roads of this country, no rail which is not safe to run over at speed, is thought safe to keep in a main track anywhere. Certainly the careful collection of such rails in the tracks before stations indicates an utter disregard of appearances and absence of pride which should not be found in those managing a great continental thoroughfare. The directors feel that in this respect the condition of the road is open to sharp criticism, and that they would be failing in duty if they refrained from expressing it.

In conclusion, their examination has led the directors to believe that the policy now pursued by the company in regard to the material condition of the property, while careful and sufficiently safe, is by no means liberal. The impression given to an inspector is that the principles of economy are very rigidly impressed by a distant board of direction on the local management. The percentage of operating expenses to gross earnings is very closely watched. However it might be if the road. were completed and brought throughout up to a first-class standard, it is obvious that the percentage of operating expenses is now smaller than it should be; and the reason that it is smaller is made plainly apparent by any close inspection. The policy of the company in this respect has not been such as the country had a right to expect or the government to insist upon.

The relations of the Union Pacific with the public generally, with the community it was built to serve, with the country and its inhabitants