TABLE 13. (Continued.)
| Year. | Net Operating Revenue. | Net revenue from outside operations. | Total Net Revenue. | Taxes. | Operating Income. | Operating ratio. | Percentage to cost of road, cost of equipment, material, and supplies | Mileage of line owned. |
|---|---|---|---|---|---|---|---|---|
| 1909 | $331,591,883 | $2,425,726 | $334,017,609 | $37,397,973 | $296,619,636 | 67.88 | 5.738% | 56,563.41 |
| 1908 | 302,970,890 | 3,446,600 | 306,417,490 | 36,021,974 | 270,395,516 | 71.13 | 5.287% | 56,328.79 |
| 1907 | 346,225,313 | 346,225,313 | 35,876,148 | 310,349,165 | 69.66 | 6.063% | 56,415.25 | |
| 1906 | 330,091,457 | 330,091,457 | 34,863,314 | 295,228,143 | 68.40 | 6.071% | 55,990.12 | |
| 1905 | 286,468,161 | 286,468,161 | 27,675,211 | 258,792,950 | 69.68 | 5.542% | 54,963.20 | |
| 1904 | 263,651,302 | 263,651,302 | 28,091,468 | 235,559,834 | 70.70 | 5.304% | 54,643.50 | |
| 1903 | 269,833,327 | 269,833,327 | 26,537,954 | 243,295,373 | 69.04 | 5.630% | 53,873.11 | |
| 1902 | 254,293,667 | 254,293,667 | 25,297,465 | 228,996,202 | 67.52 | 5.472% | 52,980.70 | |
| 1901 | 238,932,245 | 238,932,245 | 28,797,264 | 215,134,981 | 67.30 | 5.235% | 52,911.46 | |
| 1900 | 230,906,736 | 230,906,736 | 22,616,893 | 208,289,843 | 66.94 | 5.146% | 52,495.25 | |
| 1899 | 197,333,942 | 197,333,942 | 21,692,694 | 175,641,248 | 67.69 | 4.447% | 52,009.93 | |
| Total 11 years | $3,052,298,923 | $5,872,326 | $3,058,171,249 | $319,868,358 | $2,738,302,891 | 68.88 | 5.478% | 599,174.72 |
| Average 11 years | 277,481,721 | 533,847 | 278,015,568 | 29,078,941 | 248,936,627 | 68.88 | 54,470.45 | |
| 1890 | $176,379,638 | $176,379,638 | $14,753,550 | $161,626,088 | 66.39 | 4.980% | 43,094.73 | |
| Total 12 years | $3,228,678,561 | $5,872,326 | $3,234,550,887 | $334,621,908 | $2,899,928,979 | 68.75 | 5.448% | 642,269.45 |
| Average 12 years | 269,056,547 | 489,360 | 269,545,907 | 27,885,159 | 241,660,748 | 68.75 | 53,522.45 |
If there were not abundant evidence that the railway industry is not excessively profitable, there would be more reason on the side of those who continually put forward new schemes of restriction; but, not only is such evidence ample, but there is no evidence of any sort tending to establish the contrary. Limiting the inquiry to the region east of the Mississippi and north of the Ohio and Potomac Rivers, commonly known as Official Classification Territory, the statement in Table 13, based on the book cost of railways, with their equipment, supplies, and materials on hand, is instructive. The data are from the reports of the Interstate Commerce Commission.
The amounts shown in Table 13 as "operating income" are, as should be remembered, those earned, and not those distributed as interest on bonds and dividends on shares, which were necessarily much smaller. Bearing this in mind, it is significant that the percentage of such operating income to cost of property has not but once in the last twelve years, the most prosperous duo-decade in the Nation's history, exceeded 6%, and then only by a very small fraction; and that the average for the whole period is less than 5½ per cent. Every one knows that the real value and the actual cost of the railway property in this region greatly exceeds its book cost, so that these percentages are undoubtedly much in excess of the real rates of net earnings to value or cost of property.
P. E. Green, Assoc. M. AM. Soc. C. E. (by letter).—It is not often that there is presented to the Society a paper which shows such thoroughness of understanding of a difficult problem, and as much real experience in its solution, as is manifested therein; and the author is certainly to be congratulated on such a logical and forcible presentation of the subject. There may be some points on which engineers who have been engaged in such work cannot agree with him; but certainly it cannot be said that he has not argued very clearly and logically on nearly all the debatable questions.
Those who have not had actual experience in making a valuation of a railway company's property cannot have any idea of the enormous amount of detail and labor necessary to make such a compilation of any real value. It simply means that every detail of every structure of whatever kind must be investigated, together with the various considerations covering "intangible values," which the author has so ably discussed.
The writer was fortunate enough to be employed on the valuation of the Chicago and Northwestern Railway property in Minnesota in 1906, and possibly some details of the manner in which the actual field work of the survey was done may be of interest.
The work consisted of making a compilation from records, or from actual surveys when necessary, of about 625 miles of railway property, including several important terminals. The property had been built between 1860 and 1901, mostly in the early part of this period. The portions which had been constructed during the latter part of the period, say from 1890 to 1906, presented no difficulties, as the records were very clear and complete, but the portions constructed in the Sixties had practically no records. Some had been built by small independent companies, which were acquired later by the Northwestern System. On these old lines the records were practically nil, and those in existence were soon found to be of absolutely no use. Even on the newer lines it was found that many changes had been made within a few years after their construction, and that it was sometimes more economical, as regards time at least, to make a new survey of the property than to use the records.
After examining all the old records very thoroughly, and endeavoring to get some order and information out of them, it was decided that the only way to do the work properly was to make a complete survey and valuation of all the physical property. Several field parties were organized and also an office force, about twenty men being put on the work. The parties ran levels for profile purposes, cross-sectioned cuts where necessary, noted evidences of clearing and grubbing, of the character of the cuts, and the disposal of the material, examined the ballast for depth and character, examined the rails for age, weight, and condition, and noted the kind and condition of the fences, gates, farm crossings, planking, whistle and highway-crossing posts, culverts, bridges, and in fact every detail of construction. Advantage was also taken of the survey to re-station the lines, to paint such stations on the rails, and to set permanent posts, so that afterward the stationing could be picked up at any time with little trouble.
In this way there was accomplished much work of value to the railway company, for which there had been a demand by the division officials for years, but which had not been done because of lack of men and money.