ALBANY, January 2, 1895.

-To the Honorable the Legislature of the State of New York: Pursuant to the requirements of the Railroad Law, the Board of Railroad. Commissioners submits its twelfth annual report.

General Situation.

In discussing the general situation in the report of last year the Board declared the railroads to be struggling for existence. This condition, it was pointed out, was not peculiar to them nor to any class of enterprises, but was common to a great mass of associations, institutions and individuals. The business history of the past twelve months has verified this view beyond the belief of the Board at the time of its publication. During that period, excluding persons receiving salaries, wages or similar forms of remuneration, it is not to be questioned that the vast majority of the citizens of this State, and of the whole Union, has subsisted, consciously or unconsciously, out of capital or of previously accumulated wealth. The income of the people has been curtailed almost beyond precedent. It has been a period of expedients, of hope deferred and of protracted trial. It is not yet possible to see the end. The continuous recurrence of a deficiency in national finances, with no sure promise that the conditions producing it are to be reversed in the near future, is typical of the situation in many quarters of the business field. Unprecedentedly low prices discourage and cripple producers. Unprecedentedly small shipments from

producers discourage and cripple carriers. Manufacturers, traders and middlemen find little or no margin of profit on which to exercise their activities. The pressure of such a season, when too greatly prolonged, deadens the coöperative spirit, without which the mechanism of society ceases to be efficient.

The community thus becomes nervous, impatient, destructive, tending to resolve itself into discordant units rather than to act in harmony and in union. Gusts of passion, vociferous utterances of false doctrine sweep from their moorings thousands of minds which in ordinary days could not thus be controlled or captivated. Hence, in other parts of the Union we have seen the almost portentous rise of a political organization professing a strange and demented creed.

We have witnessed rioting, conflagration and bloodshed in place of order, industry and peace. If the menace to society involved in all that has happened within the past year has not weakened institutions or vested interests, it must be conceded that their inherent strength is most gratifying. The railroads of the country met the assault delivered against them during the past summer by relying upon a specific and admitted relation between themselves and the federal government. Such a relation is of necessity reciprocal. Its assertion on one occasion, to protect, may be balanced in due time by a like assertion for some very different purpose. The best to be hoped is, that thus a practicable and wholesome principle of general policy may be developed where social war was possible.

The most serious symptom of the hour is not the shrinkage of material values, although that has been vast and overwhelming, but rather the ease with which doctrines possessing no merit beyond that of superficial novelty, eat out the heart of intelligent, earnest and patriotic effort.

If we were forced to lock upon such conditions as lasting, the national character would seem in some parts of the Union

to have reached a painfully low plane: Fortunately such a view is not the only nor the best explanation of present history. Philosophy as well as patriotism bids us to regard the experiences of the year as part of the process of growth and revolution by which a great community passes on toward the equilibrium of maturity. Adjustment to changed relations must be the object of present effort. The foundations upon which such adjustment must rest have by no means given way. Neither does the task of conforming to new industrial conditions come at a peculiarly unhappy time. In this respect the history of the panic and depression of 1893 and 1894 is exceptional. There has been no actual physical destruction of wealth. Other panics have often been preceded, and in part caused, by pestilence, famine, conflagration or war. The thirteen years preceding 1893 were years of productiveness and prosperity. They contrast most strikingly with the thirteen years preceding the panic of 1873. For this reason the people do not struggle under any such weight of taxes for debt and interest as oppressed them twenty years ago.

The railroads of this State have suffered from loss of business, but not in as great a degree as those of the West. The perils and violence that assailed many other railroads did not visit this State. It can not, however, be doubted that any form of business disaster, public disorder or popular sentiment which concerns one part of the country must concern all other parts. It is evident, therefore, that the present is not a time to urge special progress in directions involving large outlay. Three questions before the Board call for the expenditure of great amounts of money by the companies. Two of these, the adoption of automatic couplers upon all freight cars and of air-brakes upon all such cars, are well under way. The third, the grade-crossing question, is

not yet embodied in legislation. On all of these questions the general attitude of the companies toward the public and toward the Board in recent years has been one of attention and coöperation rather than of hostility or even of reluctance. At the same time it has been made clear to the members of the Board that the combined burden which may be laid upon the companies in carrying out the several propositions is of such gravity as to entitle them at such a season as the present to extreme consideration. For these reasons such discussion and recommendations as are here submitted upon the grade-crossing question are intended to promote a final and just solution, but not to enforce an immediate or burdensome method of solution.

Summary of Business of the Year.

The annual report of this Board for the year ending June 30, 1893, included in its summary the operations of the entire Philadelphia and Reading system. This corporation has ceased operating any of the railroads of this State, and the report for the year ending June 30, 1894, contains only so much of what was included in last year's report of the Philadelphia and Reading system as relates to the lines of this State that were part of that system. To make the comparison between the aggregates of the two years of any value, it has been necessary, therefore, to eliminate from the summary of the year ending June 30, 1893, that portion of the Philadelphia and Reading report not included in this year's figures. This comparison shows a loss in gross earnings from operation, based upon the corrected figures in 1893, of $10,399,511.83, or about 5 per cent. The operating expenses have, however, been decreased $6,035,340.45, leaving a loss in net earnings from operation of $4,364,171.38, showing that reduced earnings have been more than half provided for by economy in operation. Capital stock shows an increase this of $21,746,854.20, and the percentage of dividends declared


remains the same as in 1893, viz., 2.69. The increase in funded and floating debt has been $36,095,439.60; increase in cost of road and equipment, $32,012,323.18, and increase in length of road in this State, main line, 99.39 miles.

The decrease in tons of freight carried one mile was 2,442,338,047, and the increase in number of passengers carried one mile was 712,623,522. The average earnings per passenger per mile have decreased 0.27, and the average earnings per ton of freight per mile have increased 0.015.

In making these comparisons with the year ending June 30, 1893, it must be borne in mind, first, that in the early part of that year many railroads in the State increased operating expenses for the purpose of taking care of anticipated increase in business on account of the World's Fair. The increase did not meet expectations, and until this was realized, no effort was made to cut down expenses. Retrenchment, therefore, was not begun until well along in the summer of 1893. The year 1894 is charged, therefore, with a larger expense on account of operation than would otherwise have been borne. The loss in gross earnings from operation this year, amounting to less than 5 per cent. on over $200,000,000 of business, would seem to indicate that the railroads of the east have not suffered as much from depression in business as those of the west, and that, in fact, they have succeeded in doing a very fair amount of business, considering the condition of the country, and would have made a much better financial showing had their western connections been as prosperous, comparatively, as the roads of the east. Of course, the loss in business, as soon as the various corporations realized the situation, was made up as far as possible by reduction in operating expenses, and the figures show that there were over 6,000 less employes on the pay rolls of the companies operating in this State at the close of the year, on June 30, 1894, than there were at the close of the previous year. The loss, therefore, first fell upon the stockholders; it is now, taking the quarter ending

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