One of the most notable facts brought out by these inquiries, is the great difference in the reported cost and estimated value of the roads, as compared with official statements when portions of them were in course of construction. [See especially pages 78-82, 101 and 227.] Another is the marked difference in the present cash valuation and cost of the roads as reported by the companies; the range being from $19,121 to $62,308 per mile.

Between the average cost per mile of the Chicago and Northwestern proper and the valuation of the Chicago, Milwaukee and St. Paul-roads not very unequal in apparent cost-the difference amounts to $19,267 per mile; a little more than the total reported cost per mile of the Green Bay and Minnesota Railroad.

While there is good reason to believe that the cost of our roads has, with but few exceptions, been greater than it ought to have been, it is no more than just that it be pointed out as a fact that, in respect of reported cost, we have not outdone the other states, nor very nearly approached the average for the whole United States, which is lower than that of any other country in the world except Greece and Turkey. [See page 279.]

The reports of the companies owning lines both inside and outside the state generally fail to give separate statistics as to that portion of their lines inside the state, except as to gross earnings. The gross earnings of five companies in 1873 are thus divided:

Inasmuch as the income to the state from railroads is directly affected by this apportionment, the accuracy of the return becomes a matter of special importance. The brief time allowed the commission has rendered it impracticable to pursue this branch of the investigation to that extent which the interests of the state demand. The correctness of all past apportionment made by the Chicago and Northwestern Company depends entirely upon the faith of the company. That of the Chicago, Milwaukee and St. Paul Company is based upon detailed statements of the earnings of the several branches of the road lying within this state, and accords with the gross receipts of the lines as given in the printed reports of the president and directors to the stockholders of the company, and entered upon the books of the company, with the exception that the report of gross earnings to the state is a certain sum less than the sum of gross earnings of the company in the state, as shown by the books of the company for the same year. This difference is substantially the difference between the earnings of the road proper inside the state, and the earnings of the company inside the state including the earnings from Milwaukee elevators and those credited to ferriage across the Mississippi river at Prairie du Chien.

PAYMENTS FOR DIVIDENDS, INTEREST AND NEW CONSTRUCTION.

The following facts of general importance appear from the reports of the companies for the year 1873:

1. Two roads only-the Chicago, Milwaukee and St. Paul, and and the Chicago and Northwestern-actually paid, or were able to pay, dividends on stock.

2. The aggregate amount paid from earnings for interest on debt, by all the roads, was $4,608.839.29-an average of less than 5 per cent. on the total debt.

3. The whole amount paid and reported as cost of new construction during the year 1873, amounted to $4,962,770.16, which whole sum was paid on account of the Chicago, Milwaukee and St. Paul, and the Chicago and Northwestern, or for road operated by them, except the sum of $302,222 reported by the Green Bay and Minnesota Company, and the sum of $142,710.31, reported by the West Wisconsin Company.

Accepting the reports of the companies as authority, these facts clearly demonstrate that with the exception of the two main rail

way organizations of the state, no railroad company in Wisconsin earned an adequate compensation on its assumed capital during the year 1873. We have already incidentally expressed our conviction. of this fact in another portion of this report; and we here add, that in the opinion of the commissioners, the assertion made as to these roads for the year 1873, is equally applicable to all previous years, and also to the year 1874.

EXCEPTIONS TO THE RULE.

The operations of the Chicago, Milwaukee and St. Paul and of the Chicago and Northwestern companies are possible exceptions, and in order to determine the extent of restrictive legislation in respect to these companies, the statistics reported demand a closer scrutiny. For this purpose, we do not propose any reference to facts other than those given in the certified reports of the companies themselves, or otherwise obtained from reliable sources.

GROSS EARNINGS OF CHICAGO, MILWAUKEE AND ST. PAUL RAILWAY.

On the 31st day of December, 1873, the total length of this road according to the printed report of the company, was 1,399 miles, and length in Wisconsin 622 miles. The cost of the whole property at that date was represented as follows:

Mortgage Bonds.

Preferred Stock

Common Stock

Total.....

Less cost of Western Union

Company's stated cost of 1,399 miles

Or about $37,480 per mile.

$26,262,500 12, 274, 483 15,399,261

$53,936,244 1,500, 750 $52,435,494

The gross earnings of the same year were $9,046,123, or an amount exceeding 17 per cent. of stated cost.

The operating expenses of 1873 are given at $6,594,560, or over 12 per cent. of stated cost, and about 73 per cent. of gross earnings.

The net earnings, thus ascertained, were $2,451,563 or 4.67 per cent. of total cost.

From these net earnings were paid the interest on bonds, amounting to $1,839,643, or over 7 per cent. on the total amount of bonds, and leaving an excess of $611,920-or about 2.21 per cent. on the total amount of preferred and common stock.

No one will assume that the net earnings, as stated, were excessively large. The only question to be determined is, whether the sum named and set apart as net earnings, represents the whole amount that should be properly assigned to that account.

It appears from the accounts of the company that of the total earnings of the company for 1873, amounting, as above stated, to $9,046,123, the sum of $6,594,560 was paid for operating expenses on a line 1,399 miles in length, while the whole cost of operating the same road the previous year for a line averaging 1,289 miles in length, was but $4, 695,616-the increase of road over 1872 being about 8 1-2 per cent., and the increase in operating expenses over 187% being about 40 1-2 per cent. It also appears from the report of the General Manager of the company for the year 1873, that the increase in the operating expenses for that year, was "due to the improvement made in the condition of the track during the year, by the purchase and use of 5,834 tons new iron rails and 6,103 tons steel rails; the cost of which, together with the expense of new ties, ballasting, etc., was charged wholly to operating expenses."

Referring to the manager's statement of operating expenses for 1873, we find that the expenditures for repair of track, bridges, fences, buildings, locomotives, cars, tools and machinery, make the sum of $2,024,495.80; that the expenditures for management and general office, foreign agency and advertising, station service, conductors, brakemen, engineers, firemen, wipers, train and station supplies, fuel consumed, oil and waste, personal injuries, damage to property, other loss and damage, legal expenses, New York office, taxes, insurance and miscellaneous purposes make the sum of $2,970,012.50; that the expenditures for stock-yard, Mississippi river ferry, rent of locomotives, rent of cars and expenses of elevators, make the sum of $82,220.41, and that a still further expenditure was charged to operating expenses, as follows:

Obviously, a portion of this last sum of $1,517,831.62 should have been included in the cost of new construction and in the statement of net earnings. Certainly, the cost of new steel rail, whether laid upon new line, or substituted for old iron rail upon old line,

does not wholly belong to operating expenses; and when such rail is pid for from the earnings of the company, any part of the amount paid therefor in excess of the cost of replacement or repairs, is as much a portion of the net earnings, as the amount paid for interest or dividends. Precisely how much the apportionment of these expenditures to the proper account would add to the net earnings of the company for the year, it is unnecessary for the commissioners to estimate, under existing circumstances. It is believed, however, that had such an apportionment been accurately made for the year named, the net earnings would have quite or nearly sufficed for the payment of all interest on bonds, all operating expenses, and a small dividend on all the stock of the company. The directors of the company practically accomplished the same purpose, except as to the payment of a dividend on the common stock. That is to say, instead of setting apart the whole of the net earnings for interest and dividends, they expended a portion of those earnings for new construction, and paid a dividend of seven per cent. on the preferred stock in new consolidated bonds, thus indirectly adding the cost of new construction to the debt. The difference in the method of disposing of the net earnings adopted by the company, and the direct application of all the net earnings to the payment of interest and dividends, is, that by the method adopted by the company, the owners of the common stock run the risk of being compelled to contribute their share of the net earnings wholly to the capital for the general benefit.

DEBT AND EARNINGS FOR WISCONSIN.

In treating of net earnings on this road thus far, we have had reference to all the lines owned by the company. The comparative facts as to that portion of the lines within the state, and that portion of the lines without the state, during the year 1873, are worthy of special consideration.

The funded debt of the Chicago, Milwaukee and St. Paul Railway Company is now consolidated. The total of this debt and stock for 1873, (exclusive of cost of Western Union Road), amounted to $52,435,494. If apportioned upon the basis of length of road, the amount imposed upon lines within the state of Wisconsin, is about $37,480 per mile, or an aggregate of about $23,313,000. The aggregate amount of debt and stock charged by the company to the Wisconsin portion of its road in 1873 was $27,161,630.