In spite of this important relief, the years 1882, 1883, 1884, and 1885 were still years of considerable difficulty. Although the mileage of the system now increased but slowly, the revenue per mile declined. Thus the Central Pacific earned $9,449 per mile of line in 1881, $8,437 in 1882, $8,253 in 1883, and $7,496 in 1884. In three years gross earnings per mile dropped 21 per cent. This decline was due to a number of causes. The Central Pacific suffered greatly, for one thing, from the falling off in the tonnage supplied by the Nevada mines. Roads like the Eureka and Palisade, the Nevada Central, the Nevada and California, and the Virginia and Truckee railroads, which were at one time lucrative feeders to the Central Pacific main line, all showed a considerable decline in earnings and business between 1875 and 1885 because of the failure of the mines. The freight received at Palisade, the terminus of the Eureka and Palisade Railroad, declined 74 per cent between 1875 and 1888. The freight received at Battle Mountain, the terminus of the Nevada Central, fell off 78 per cent, while that arriving at Virginia City over the Virginia and Truckee Railroad dropped 86 per cent.
It was estimated that the shrinkage of traffic between 1876 and 1885 was not less than $2,000,000 per annum as compared with the period of highest prosperity of the Nevada country. The decrease was due in the first instance to the working out of the ore deposits, not only of the Comstock lode but of nearly all other camps within the states of Nevada and Utah west of Ogden which were tributary to the Central Pacific line. Following this, there was a large falling off in traffic, consisting of mining machinery and all kinds of supplies previously required by the miners at the mining camps, and also a large falling off in passenger travel as compared with the first and prosperous years of operation.[512]
Besides the loss of the Nevada mining traffic in the late seventies and early eighties, the Central Pacific also had to reckon with a certain loss of business by reason of the opening of transcontinental competing routes such as the Santa Fé in 1881 and the Northern Pacific in 1883. In the early part of the period the decline in business seems to have been due mainly to local conditions; in 1884, however, as was to be expected, a serious decrease in the earnings from through business occurred.
Later Earnings
As a contrast to the unsatisfactory character of the returns for the years 1883, 1884, and 1885, the reports of the companies show that, taking the Central Pacific-Southern Pacific system as a whole, the total earnings from 1885 to 1891 steadily increased, both in the aggregate and per mile of line. If we compare the condition of the system in 1891 with its condition in 1885, we find a progress which may be summarized as follows:
Comparative Statement of Mileage, Capitalization, Earnings, and Expenses of the Southern Pacific System, 1885,(*) 1886, and 1891
| Item | 1885 | 1886 | 1891 |
| Mileage operated | 4,698 | 4,847 | 6,376 |
| Capital stock | $171,036,160 | $198,668,170 | $264,375,066 |
| Funded debt | 158,970,716 | 181,041,680 | 205,621,373 |
| Gross earnings | 25,006,106 | 31,797,882 | 50,449,816 |
| Operating expenses | 12,149,824 | 18,514,656 | 31,163,612 |
| Net earnings | 12,856,282 | 13,283,226 | 19,286,214 |
(*) The figures of earnings for 1885 represent the results of from nine to ten months’
operation only.
This was a satisfactory showing. The total mileage operated by the Southern Pacific Company and by the Southern Pacific Railroad, Northern Division, increased between 1885 and 1891 from 4,698 miles to 6,376 miles, not including the mileage of the steamship routes between New Orleans and Galveston and New York. The principal elements of new mileage added were certain lines in Oregon, including the property of the Oregon and California Railroad from Portland to the California state line (650 miles); a second road down the San Joaquin Valley on the west bank of the river (190 miles); and additional construction on the Coast Division (150 miles). Comparatively little was added during these years to the Central Pacific main line, or to the properties east of El Paso.
While the mileage operated thus increased by 1,678 miles, or 36 per cent, gross earnings became greater by the sum of $25,000,000, or approximately 100 per cent, and net earnings by $6,429,921, or about 50 per cent. This was accomplished with an increase in bonded indebtedness of only 30 per cent. The increase in stock outstanding was greater, it is true, than the increase in the funded debt, but the new stock issue did not increase the fixed charges of the road, and therefore in no way imperiled its solvency. In none of the figures cited are the so-called subsidy bonds issued by the United States government or the accrued interest upon the same included.