property, franchises, and equipment?" The papers giving evidence respecting these facts may have been destroyed, or in the fierce struggle of rival managements for control of territory by means of the absorption of lines already built the records of the original companies may have been lost, the consolidated companies caring nothing for records except such as prove their right to the property absorbed. But of greater significance is the fact that in many instances the books of railway corporations do not go beyond settlements with construction companies; that is to say, the investigation demanded by Congress is pushed back into the realm of vest-pocket book-keeping and a conveniently failing memory.

There seems, then, some plausible ground for saying that satisfactory and conclusive information respecting the cost of railways in the United States cannot be obtained. But it may always be assumed in interpreting a law that the law-makers did not design to impose tasks which from the nature of the case are impossible, and when the text of the law seems to require duties too difficult, it is right to ask respecting the purposes of the law, so as to conform to the intention of the act, if not to its letter. And in this instance it was manifestly the desire of Congress to obtain a trustworthy estimate of the relation existing between the present worth of railroad property and its cost to those who are proprietors of it. It was felt that the estimate of social agitators on the one hand, and of men interested in the present status on the other, might be far from the truth. It was also felt that no investigation which published conclusions only, without disclosing the methods by which those conclusions were obtained, could ever gain the confidence of the public or serve the basis of further legislation. Under such circumstances the need of an estimate by competent authority, free from outside influences and clothed with ample power for the investigation, was recognized as imperative. Such, without doubt, was the purpose of Congress in demanding information respecting the "cost and value of the carrier's property, franchises, and equipment."

It does not seem appropriate to enter very far at this time into a discussion of the proper method for making inquiry into the "cost and value" of railway property; but of one point there can be no question. As preliminary to such an investigation it will be necessary to enter upon a somewhat extended study of the corporate history of railways in the United States. The steps by which great corporations have arisen to their present power must be made clear. The process of consolida tion and the contracts entered into to consummate consolidation must be disclosed. Every charter for the construction of new lines, every law for the authority of which action has been taken, every court decree respecting insolvent roads must be made to contribute all pertinent information.

The work thus outlined is indeed a prodigious one, and must, if satis factorily performed, be the result of the joint labor of all who have to do, in any official capacity, with railway affairs. Here is an opportunity for co-operative work between the railway commissions of the various States and the Interstate Commerce Commission.

EXPLANATION OF STATISTICAL TABLES AND PRESENTATION OF THEIR SUMMARIES.

The present report on railway statistics comprises six tables which undertake to give information on the subjects indicated in their titles. These titles are as follows:

Table I. Classification of Railways and Mileage for the Year ending June 30, 1888.

Table II. Amount of Railway Capital at the Close of the Year ending June 30, 1888.

Table III. Earnings and Income for the Year ending June 30, 1888: A. Earnings from Operation.

B. Income from Property Owned but not Operated.

Table IV. General Expenditures for the Year ending June 30, 1888: A. Operating Expenses.

B. Fixed Charges.

C. Summary of Operating Expenses and Fixed Charges. Table V. Payments on Railway Capital during the Year ending June 30, 1888.

Table VI. Cash Statement of Financial Operations for the Year ending June 30, 1888.

It requires but a glance at these headings to perceive that the purpose of the tables is to present in logical sequence a defiuite set of facts. In the first table there is attempted a classification of railway corporations and a description of the legal relations in which they stand to each other. This is followed by a statement of the mileage operated, including trackage, and of the mileage owned by operating or by subsidiary companies. In this there is presented the physical basis and the legal basis of internal commerce in the United States.

The second table shows the amount of capital invested in the railway industry, counting as railway capital all forms of property which draw earnings from this business. Here will be found the amount of stock outstanding at the date of the report, all forms of funded debt for the security of which railway plant or railway income is mortgaged, and the floating capital necessary to keep fixed investments in a profitable state of activity. From this table one may learn the amount invested in the business of inland traffic, or what may be termed the property basis of the railway industry.

The third table explains itself. It shows (A) earnings from operation, and (B) earnings from property owned but not directly operated. The most important item under this second beading is the income to lessors paid by lessees, the lessee usually being the operating corporation But it also includes the income to operating corporations from stocks and bonds of other corporations of which they may be the owners, from sub leases or grants of trackage rights, and from other property inci dentally profitable. It is thus seen that this table is intended to exhibit the total income to railway corporations, with the single exception of income which springs from the sale of securities or arising from the decrease of assets.

The fourth table shows general expenditures incidental to the operation of the railway industry. It follows the usual method of classification, assigning expenditures to operating expenses or to fixed charges. This is called the usual method of classification, and it is such in all discussions on questions of rates or railway economy, but it is worthy of note that a few of the reports filed in this office include interest, rentals, and taxes in operating expenses, leaving practically nothing assignable to fixed charges. Possibly in certain cases there may be adequate reasons for thus uniting these two items, but it is certainly in the interest of railway statistics as a whole that operating expenses and fixed charges be kept separate, and it is sincerely hoped that future reports from the carriers will conform to the plan here indicated. Under the summary, with which this table concludes, will be found certain deductions which, when compared with the deductions printed in Table III, are both interesting and instructive. These will receive attention when those tables are considered in detail.

The fifth table, which exhibits payments on railway capital, is the only one that brings into prominence the relations of the operating company to the individual owning the property. It shows the dividends on stock and the interest on bonds. The facts disclosed are most interesting when taken in connection with the second table, which shows the proportion of railway capital existing as stocks and bonds.

Table VI is designed to afford an exhibit of the net income to railway corporations and a statement of the manner in which that income is used. Its purpose is to show the financial operations of the roads. The importance of this table will be readily recognized, and consequently calls for no remark in this connection.

From this rapid summary one may see the nature and scope of the present report. It is confined to the second class of facts mentioned above, that is to say, the facts "bearing on the financial standing of railway corporations." The other lines of inquiry will claim attention in subsequent reports. It may be well to consider these tables a little more in detail.

TABLE I.—CLASSIFICATION OF RAILWAYS AND MILeage for the YEAR ENDING JUNE

30, 1838.

This table embraces six columns, with beadings as follows:

1. Name of carrier.

2. Abbreviated name of road.

3. Date of filing report. (Operating or Financial.)

4. How operated.

5. Length of line operated.

6. Length of line owned.

The two facts of interest presented in this table are the corporate relations of the railway companies and the length of lines operated and owned. Thus, in the first column is found a classified list of all the railways in the United States. The names given are intended to be the legal names of the corporations. All roads standing as the principal in an operating system, or which operate on their own account, appear in their alphabetical order, while all subsidiary roads, whether they return operating accounts or not, are grouped under the roads to which they. are leased or by which they are otherwise controlled.

It is not always easy to describe in a few words the relation that exists between a subsidiary road and the road in connection with which it is operated; but this is attempted in the fourth column of the table, which is designed to show in a general way the manner in which oper ations are conducted. The third column, also, which gives the date at which carriers filed their reports in this office, throws some light on the question of the position occupied by each road in the railway system as at present organized. The letter "O" indicates that the corporation making the report is an operating company and has made an operating report, while the letter "F" alone shows the road to be a subordinate line, probably a leased line, the operations of which are included in the operating report of the principal company. For the most part the roads filing financial reports maintain their corporate existence merely for the purpose of receiving and disbursing rentals paid by lessee roads. Most of these were once operating roads, and it is possible, by glancing at the list of carriers whose names appear in Table I, to appreciate the degree of concentration in railway management that has taken place in the American railway system.

The second class of facts presented in this table pertain to railway mileage, and are set down in columns 5 and 6. The former gives the "length of line operated," and the latter the "length of line owned." The total railway mileage in the United States must, of course, be equal to the sum of the items appearing in columu 6, and not in column 5, because under the heading "length of line operated" there will be duplication of mileage whenever the same track is used by more than one

operating company. The total of railway mileage in the United States on June 30, 1888, was 149,901.72. The mileage returned in the preliminary report for the same date was 152,781. How is this discrepancy explained, and which is the correct mileage?

As stated in the preliminary report, the total mileage submitted was an estimate based upon the returns of certain private statisticians. This was the best that could be done at the time the report appeared, on account of the many difficulties attending the use of our own figures during the period in which the statistical work of the department was being organized. The items of which the total mileage now given is made up have been closely scrutinized, and may be accepted as trustworthy. In case of roads failing to file reports, figures from other sources, chiefly the reports of State Railway Commissions, have been used; but in every instance such figures are clearly designated.

But it may be asked, what is the source of overestimation in railway mileage? There are four sources of overestimation in railway mileage against which the statistician must be on his guard. First, mileage may be easily multiplied in case a line, or part of a line, is used jointly, or owned jointly, by two or more operating companies. Second, roadways lying partly out of the country, in Canada or Mexico, may be returned as roadway within the country. Third, lines once operated but abandoned, as lumber roads, quarry roads, etc., may continue to be counted after they have ceased to form part of the country's railway system. Fourth, street railways operated in connection with steam railways may be included in total mileage. The errors, according to the experience of this office, are always on the side of an excess of mileage. It is not claimed that the total mileage submitted in this report is absolutely correct. It is possible that abandoned roadways have not been entirely eliminated. But the figure is more nearly correct than the estimate presented in the preliminary report, and errs, if at all, in being too large rather than too small.'

A peculiar interest attaches to the territorial distribution of railway mileage, and it is the purpose of the following summary to show the length of line existing in each of the States and Territories on June 30, 1888. It will be noticed that the summary gives in the second and third columns "official" and "unofficial" figures, respectively. The former are taken from the reports of the carriers to this office, the latter, for the most part, from the reports of the State Railway Commissioners. So far as the official figures are concerned, it is intended to include only such lines as are operated. Abandoned roads have been excluded from the figures.

In the paper printed as an appendix to this report will be found a discussion of the difficulties encountered in this office in connection with the question of mileage. Cf. pages 345 and 346.