The total earnings of the road lying within the state, for 1873, were over $6,000,000. [See printed report of company. Also Mr. Cary's speech before the Wisconsin legislature, 1874.] With not much more than one-half the debt, the Wisconsin lines earned more than two-thirds the income- the gross earnings of the entire road for 1873, being $9,046,123. The net income of the Wisconsin lines, as shown by the last printed report of the General Manager, was over $1,800,000-sufficient to pay about seven per cent. interest on all the bonds, preferred stock and common stock on the Wisconsin portion of the road, at the rate of $37,480 per mile, and leaving remainder of nearly $200,000. This sum would also pay a reasonable interest on the whole investment within the state, as reported by the company, without including net earnings expended for new construction.

It is impossible at the date of making this report to give the details of business on the Chicago, Milwaukee and St. Paul lines for the year ending December 31, 1874. The gross earnings of the company for the year are given by the General Manager at $8,953,017.11, and the operating expenses for the eleven months ending November 30, 1874, at $5,416,809.48. [See page 33, this report.] The net earnings for 1874 probably equal or exceed the net earnings for 1873.

CHICAGO AND NORTHWESTERN RAILWAY.

Miles of road in operation May 31, 1873 (not including the Iowa Midland, the Winona and St. Peter, and the La Crosse, Trempealeau and Prescott roads), 1,459 52–100.

The stock, scrip and bonds of the company for the year ending May 31, 1873, are given in the annual report of the company for that year, as follows:

The cost of the road is represented as follows: road and equipment at consolidation in 1864, $39,979,262.62. New construction and equipment since that time, $22,106,835.98.

The stock and debt thus stated by the company, averages about $42,113 per mile.

Gross earnings for year ending May 31, 1873, $12,736,606.75, an amount over 20 per cent. of the total stock and funded debt.

The operating expenses for the year ending May 31, 1873, were $7,776,168.13, or about 61 per cent. of gross earnings, and over 12 per cent. on total stock and funded debt.

Adding an additional amount to operating expenses, for taxes paid by the company, and for renewals and expenses occasioned by the Chicago fire, of $402,068.58, and we still have a balance left for net earnings of $4,558,370.04, or nearly 7 per cent. on total stock and bonds. After deducting interest on bonds ($1,356,884.80), we have an excess of $3,201,495 24.

From this excess (after payment of all interest on bonds),

a dividend of 7 per cent. was paid on the preferred stock, and a further dividend of 31⁄2 per cent. on the common stock (amounting to $2,019,640.00), leåving a remainder from net earnings of ...

From which remainder was paid

For sinking funds.

Dividends on Chicago and Milwaukee stock ..
Rent of leased roads, Iowa

Total......

Still leaving a surplus for the year of

$1,181,845 24

$88.120 00

The earnings and expenses of the following "proprietary" roads, owned by the Chicago and Northwestern Company, are not included in the foregoing statement of the earnings and expenses of the Northwestern proper, except as hereinafter explained, viz:

Winona and St. Peter,

La Crosse, Trempealeau and Prescott,

Winona, Mankato and New Ulm,

Iowa Midland.

The accounts of these proprietary roads are kept separately, the parent road, or Chicago and Northwestern proper, paying any deficiencies and receiving any surplus arising from their operation, extension or repairs.

The cost of the Winona and St. Peter road alone, represented by capital stock, bonds and unfunded debt, was reported by the Minnesota commissioners, Aug. 31, 1873, at $10,604,878.74. This road received a land grant estimated to include 1,500,000 acres― much of which was sold at $6.47 per acre. The Winona and St. Peter Company purchased 105 miles of this road of Danford N. Barney and others, and assumed a first lot of bonds equal to $20,000 per mile; issued bonds to the parties of the first part to the

amount of $12,000 more, issued stock to the parties of the first part also, to the amount of $400,000 more, and released to the same parties the title to all the lands accrued-making a rate of about $36,000 per mile received by Barney and others, besides the land. The whole road is 3264 miles in length, and its present officers and directors are officers and directors of the Chicago and Northwestern Company. [See Appendix for copy of agreement.]

The operating expenses, taxes and interest for the four proprietary roads, enumerated as not included in the report of the C. and N. W. Company, exceeded the gross earnings for the year ending May 31, 1873, by the sum of $315,287.01-a deficiency necessarily made up from the net earnings derived principally from Wisconsin and Illinois. The only road of the four lying within the boundaries of Wisconsin, is the La Crosse, Trempealeau and Prescott, and that road is self-sustaining-thus showing that the deficiency named arose wholly from the operation of that portion of these roads outside the state.

Among the payments made from the net earnings of the Chicago and Northwestern Company for the year ending May 31, 1873, was the item we have heretofore given, of $928,423.09 for "rent of leased roads, Iowa." This rent was paid for the "Chicago, Iowa and Nebraska line,” ($398,407.50) from Clinton to Cedar Rapids, and for the "Cedar Rapids and Missouri River Railroad" ($530,815.58) from Cedar Rapids to the Missouri River, opposite Omaha. These two roads are over 350 miles in length.

The earnings and expenses of these two lines for the year ending May 31, 1873, are nowhere separately reported by the companyeither in the annual printed report of the company, or in any report heretofore made to this state or to the state of Illinois. The report of the company for the year ending May 31, 1872, however, shows that the earnings of both these lines, together with the earnings of the Iowa Midland, above operating expenses, did not aggregate a sufficient amount to pay the rental on the two roads-the Chicago, Iowa and Nebraska and the Cedar Rapids and Missouri River-the deficiency being $223,193.91.

The stock and bonds of the Cedar Rapids and Missouri River road are reported by Poor's Railroad Manual for 1874-5 to equal the sum of $41,000 per mile the aggregate amount being $11,234,000. This road has also received from government a donation of land, already converted to possession, of 1,121,276 acres,

which, at an estimated value of $5.00 per acre, would increase the first cost of the road to about $60,000 per mile.

The Chicago and Northwestern Company leased this road, furnishes all the rolling stock, and for the year ending May 31, 1873, as hereinbefore stated, paid a rental of $530,015.59. The road is about 272 miles long.

The report of the Chicago and Northwestern Company for the year ending May 31, 1874, furnishes a still more palpable evidence of the disproportionate expenditure of the income of the company proper, upon its "proprietary" lines. For further particulars we refer to the statistics on pages 101-111. The net earnings of the parent company for the year last named exceeded the sum of $5,000,000, while the net earnings of the combined system of roads were about half that sum only. As the report of the company shows, the amount paid for rentals on Iowa roads the past year, was $1,049,649.31; for expenses, interest, etc., of the proprietary roads, during the year, $556,671.63, and for new construction and equipment of the proprietary roads, $1,065,278.92. The statement of the general income account of the company for the same year shows a previous payment of advances to the same lines of $865,702.93 from the income of the preceding year.

The fair inference from these premises is, that if the earnings of the Chicago and Northwestern Comwany were not disproportionately applied to the support of comparatively unprofitable purchases and rentals west of the Mississippi river, the surplus of the company for the fiscal year ending May 31, 1873. and also for the year ending May 31, 1874, would have been very largely in excess of the sum reported for net profits under existing circumstances.

The number of miles of road operated by the Chicago and Northwestern Company in the state of Wisconsin for the year ending December 31, 1873-exclusive of the La Crosse, Trempealeau and Prescott is given by the company in its report to the Secretary of State, at 473 54-100, and for the year ending May 31, 1874, at 565.68 miles. We have no present means of ascertaining the separate cost and earnings of this portion of the road from the company self. In its report to the state of Illinois for the year ending June 30, 1873, the company says:

"The line of road operated by this company extends into five different states; over these lines its equipment is run in common, or transferred from place to place as the changes in business may temporarily require. The ser

vices of its officers and employés are distributed in like manner. As the business of a given number of miles maintains no uniform relation to that of any other given number of miles, it will be seen that no just proportion of the cost, or result of operating can be given as belonging to the state of Illinois."

The facts stated have an equal bearing as to proportion of cost and result of operating in Wisconsin.

We call attention to the fact that a portion of the bonded debt of the Chicago and Northwestern company in Wisconsin, consists of a first mortgage upon the Northwestern Union Road, from Milwaukee to Fond du Lac-a distance of 63,3 miles-amounting to $3,500,000. The bonds secured by this mortgage are sinking fund gold bonds-(at the rate of about $55,000 per mile)-the payment of which has been assumed by the Chicago and Northwestern Company. [See Bill in Chancery-W. F. Pick et al. vs. Railroad Commissioners-page xxx.] It is understood that this issue of bonds was made partially to cover the cost of the Lodi branch, no portion of which is yet constructed.

ORIGINAL SUBSCRIPTIONS TO STOCK.

In its report to Illinois for 1873, the officers of the Chicago and Northwestern Company say:

"This company has no record of subscriptions made to other companies now consolidated with this, but it is believed that the entire stock has been subscribed and paid in, amounting to $36,477,073.82.”

PASSENGER EARNINGS OF CHICAGO AND NORTHWESTERN.

The report of the Chicago and Northwestern Company for the year ending May 31, 1873, presents valuable facts in connection with the subject of passenger earnings. The gain on passenger earnings for that year over the previous year, was 74 per cent., while the rate per passenger per mile for 1872, was against a rate for 1873 of 3.16 cents-a decrease of 36

64

100

3.28 cents,

per cent.,

The rate per passenger per mile under the present Wisconsin law, applicable only to passengers to and from points within the state, is 3 cents-a decrease of of a cent per passenger from average rates charged by the road for the year ending May 31, 1873, and of .114 of a cent from rates charged by the road for the year ending Dec. 31, 1873.