Part 32
═════╤═════════╤═══════╤════════╤════════╤═════════╤═════════╤═════════ Year.│ No. of │ Five │ Ten │Fifteen │ Twenty │ Twenty- │ Thirty │ Roads │ tons │ tons. │ tons. │ tons. │ five │ tons. │Reporting│ and │ │ │ │ tons. │ │ (see │under. │ │ │ │ │ │ note). │ │ │ │ │ │ ─────┼─────────┼───────┼────────┼────────┼─────────┼─────────┼───────── 1880 │A-7 │ 38,399│ 131,988│ 447,270│ 89,420│ │ │ 7 │ 38,399│ 131,988│ 447,270│ 89,420│ │ ─────┼─────────┼───────┼────────┼────────┼─────────┼─────────┼───────── 1890 │A-7 │ 16,450│ 71,982│ 182,175│ 651,740│ 441,475│ 548,670 │B-13 │ 16,450│ 72,082│ 240,900│ 933,040│ 624,125│ 638,100 ─────┼─────────┼───────┼────────┼────────┼─────────┼─────────┼───────── 1893 │A-7 │ 1,145│ 34,088│ 144,795│ 629,780│ 734,350│ 842,640 │C-13 │ 1,145│ 34,238│ 255,795│ 993,840│ 947,500│1,112,070 ─────┼─────────┼───────┼────────┼────────┼─────────┼─────────┼───────── 1895 │A-7 │ 355│ 13,978│ 120,435│ 589,140│ 743,975│1,011,030 │D-15 │ 355│ 20,863│ 245,709│1,186,320│1,103,100│1,493,700 ─────┼─────────┼───────┼────────┼────────┼─────────┼─────────┼───────── 1897 │A-7 │ 20│ 6,462│ 92,585│ 555,980│ 761,150│1,224,030 │E-16 │ 20│ 9,407│ 163,189│1,029,756│1,089,300│1,822,530 ─────┼─────────┼───────┼────────┼────────┼─────────┼─────────┼───────── 1898 │A-7 │ │ 1,540│ 94,275│ 523,080│ 721,425│1,314,840 │F-27 │ 63,565│ 9,491│ 418,551│2,190,360│1,654,850│4,831,170 ═════╧═════════╧═══════╧════════╧════════╧═════════╧═════════╧═════════
═════╤═════════╤═══════╤══════╤══════╤═══════╤═══════╤═════════╤═══════ Year.│ No. of │Thirty-│Forty │Forty-│ Fifty │ Total │ Total │ Aver- │ Roads │ five │tons. │ five │ tons │number │capacity,│ age │Reporting│ tons. │ │tons. │ and │ of │in tons. │capac- │ (see │ │ │ │ over. │ cars. │ │ity, in │ note). │ │ │ │ │ │ │ tons. ─────┼─────────┼───────┼──────┼──────┼───────┼───────┼─────────┼─────── 1880 │A-7 │ │ │ │ │ 53,733│ 707,077│ 13.2 │ 7 │ │ │ │ │ 53,733│ 707,077│ 13.2 ─────┼─────────┼───────┼──────┼──────┼───────┼───────┼─────────┼─────── 1890 │A-7 │ │ 4,000│ │ 50│ 91,281│1,916,492│ 21.0 │B-13 │ │ 4,000│ │ 50│119,513│2,528,747│ 21.2 ─────┼─────────┼───────┼──────┼──────┼───────┼───────┼─────────┼─────── 1893 │A-7 │ │ 4,000│ │ │103,315│2,390,798│ 23.4 │C-13 │ │ 4,000│ │ │145,440│3,848,588│ 23.0 ─────┼─────────┼───────┼──────┼──────┼───────┼───────┼─────────┼─────── 1895 │A-7 │ 70,000│ 4,000│ │ 50│104,496│2,652,963│ 24.4 │D-15 │ 70,000│ 4,000│ │ 50│171,307│4,074,217│ 23.8 ─────┼─────────┼───────┼──────┼──────┼───────┼───────┼─────────┼─────── 1897 │A-7 │ 74,865│ 4,400│ 450│ 150│108,118│2,720,042│ 25.2 │E-16 │183,190│ 4,400│ 450│ 150│174,315│4,322,432│ 24.8 ─────┼─────────┼───────┼──────┼──────┼───────┼───────┼─────────┼─────── 1898 │A-7 │ 75,320│ 4,480│ 270│ 50,950│108,559│2,786,180│ 25.7 │F-27 │ 88,515│ 8,840│ 270│104,700│385,765│9,409,918│ 24.4 ═════╧═════════╧═══════╧══════╧══════╧═══════╧═══════╧═════════╧═══════
Note:—A—Figures cover only these roads:
Reporting for 1880 and all other years, viz.: Allegheny Valley
B. & M. R.
C. of G.
G. R. & I.
Penn. Lines W.
Phila. & Reading
Wis. Cent.
B—Includes roads under "A," also: Ches. & Ohio
C. G. W.
M. K. & T.
N. D. & C.
Phg. & Western
Vandalia
C—Includes roads under "A," also: Ches. & Ohio
C. G. W.
Mich. Cent.
M. K. & T.
N. D. & C.
Phg. & Western
D—Includes roads under "A" and "B," also: Mich. Cent.
Southern Ry.
E—Includes roads under "A" and "C," also: C. R. I. & P.
Seaboard Air Line
Southern Ry.
F—Includes roads under "A" and "B," also: Ann Arbor
B. & M.
C. R. I. & P.
C. St. P. M.& O.
Grand Trunk
Lehigh Valley
Mich. Cent.
O. R. R. & Nav.
Penn. R. R.
P. B. & L. E.
Seaboard Air Line
So. Pacific
Southern Ry.
TABLE 13.—STATEMENT OF RETURN ON INVESTMENT IN ROAD, EQUIPMENT, ETC., FOR ROADS IN THE OFFICIAL CLASSIFICATION TERRITORY, FOR ELEVEN YEARS ENDED JUNE 30TH, 1909, ALSO FOR THE YEAR 1890.
╒═══════╤════════════════╤═══════════════╤══════════════╤═════════════╕ │ Year. │ Cost of road. │ Cost of │ General │Material and │ │ │ │ equipment. │expenditures. │ supplies. │ ├───────┼────────────────┼───────────────┼──────────────┼─────────────┤ │1909 │ $4,357,455,101│ $686,116,206│ $50,586,812│ $75,550,135│ │1908 │ 4,306,902,038│ 669,751,320│ 51,324,157│ 86,201,748│ │1907 │ 4,438,582,438│ 587,637,733│ │ 91,923,338│ │1906 │ 4,269,066,800│ 513,028,004│ │ 80,479,333│ │1905 │ 4,110,883,904│ 492,498,488│ │ 65,875,071│ │1904 │ 3,906,766,459│ 461,941,677│ │ 72,240,521│ │1903 │ 3,830,580,776│ 426,822,318│ │ 64,458,257│ │1902 │ 3,744,205,552│ 389,909,755│ │ 50,565,290│ │1901 │ 3,682,894,343│ 378,545,580│ │ 47,746,178│ │1900 │ 3,620,630,187│ 377,156,700│ │ 49,940,838│ │1989 │ 3,566,223,557│ 351,902,957│ │ 31,162,907│ ├───────┼────────────────┼───────────────┼──────────────┼─────────────┤ │Total │ $43,834,194,155│ $5,335,310,738│ $101,910,969│ $716,143,616│ │ 11 │ │ │ │ │ │ years│ │ │ │ │ │Average│ 3,984,926,469│ 485,028,249│ 9,264,634│ 65,103,965│ │ 11 │ │ │ │ │ │ years│ │ │ │ │ ├───────┼────────────────┼───────────────┼──────────────┼─────────────┤ │1890 │ $2,927,221,233│ $283,407,139│ │ $35,262,205│ ├───────┼────────────────┼───────────────┼──────────────┼─────────────┤ │Total │ $46,761,412,388│ $5,618,717,877│ $101,910,969│ $751,405,821│ │ 12 │ │ │ │ │ │ years│ │ │ │ │ │Average│ 3,896,784,365│ 468,226,489│ 8,492,581│ 62,617,152│ │ 12 │ │ │ │ │ │ years│ │ │ │ │ ╘═══════╧════════════════╧═══════════════╧══════════════╧═════════════╛
TABLE 13. (_Continued._)
╒═══════╤═══════════════╤═══════════════╤══════════════╤══════════════╕ │ Year. │ Total. │ Operating │ Operating │Net Operating │ │ │ │ Revenues. │ Expenses. │ Revenue. │ ├───────┼───────────────┼───────────────┼──────────────┼──────────────┤ │1909 │ $5,169,708,254│ $1,032,285,890│ $700,694,007│ $331,591,883│ │1908 │ 5,114,179,263│ 1,049,545,984│ 746,575,094│ 302,970,890│ │1907 │ 5,118,143,509│ 1,141,324,116│ 794,998,803│ 346,225,313│ │1906 │ 4,862,574,137│ 1,044,552,909│ 714,461,452│ 330,091,457│ │1905 │ 4,669,257,463│ 944,805,659│ 658,337,498│ 286,468,161│ │1904 │ 4,440,948,657│ 899,868,519│ 636,217,217│ 263,651,302│ │1903 │ 4,321,861,351│ 871,697,611│ 601,864,284│ 269,833,327│ │1902 │ 4,184,680,597│ 782,975,559│ 528,681,892│ 254,293,667│ │1901 │ 4,109,186,101│ 730,590,144│ 491,657,899│ 238,932,245│ │1900 │ 4,047,727,725│ 698,368,829│ 467,462,093│ 230,906,736│ │1899 │ 3,949,289,421│ 610,724,301│ 413,390,359│ 197,333,942│ ├───────┼───────────────┼───────────────┼──────────────┼──────────────┤ │Total │$49,987,556,478│ $9,806,639,521│$6,754,340,598│$3,052,298,923│ │ 11 │ │ │ │ │ │ years│ │ │ │ │ │Average│ 4,544,323,317│ 891,512,684│ 614,030,963│ 277,481,721│ │ 11 │ │ │ │ │ │ years│ │ │ │ │ ├───────┼───────────────┼───────────────┼──────────────┼──────────────┤ │1890 │ $3,245,890,577│ $524,767,906│ $348,388,268│ $176,379,638│ ├───────┼───────────────┼───────────────┼──────────────┼──────────────┤ │Total │$53,233,447,055│$10,331,407,427│$7,102,728,866│$3,228,678,561│ │ 12 │ │ │ │ │ │ years│ │ │ │ │ │Average│ 1,436,120,588│ 860,950,619│ 591,894,072│ 269,056,547│ │ 12 │ │ │ │ │ │ years│ │ │ │ │ ╘═══════╧═══════════════╧═══════════════╧══════════════╧══════════════╛
TABLE 13. (_Continued._)
╒═══════╤══════════════╤═══════════════╤══════════════╤═══════════════╕ │ Year. │ Net revenue │ Total Net │ Taxes. │ Operating │ │ │ from outside │ Revenue. │ │ Income. │ │ │ operations. │ │ │ │ ├───────┼──────────────┼───────────────┼──────────────┼───────────────┤ │1909 │ $2,425,726│ $334,017,609│ $37,397,973│ $296,619,636│ │1908 │ 3,446,600│ 306,417,490│ 36,021,974│ 270,395,516│ │1907 │ │ 346,225,313│ 35,876,148│ 310,349,165│ │1906 │ │ 330,091,457│ 34,863,314│ 295,228,143│ │1905 │ │ 286,468,161│ 27,675,211│ 258,792,950│ │1904 │ │ 263,651,302│ 28,091,468│ 235,559,834│ │1903 │ │ 269,833,327│ 26,537,954│ 243,295,373│ │1902 │ │ 254,293,667│ 25,297,465│ 228,996,202│ │1901 │ │ 238,932,245│ 28,797,264│ 215,134,981│ │1900 │ │ 230,906,736│ 22,616,893│ 208,289,843│ │1899 │ │ 197,333,942│ 21,692,694│ 175,641,248│ ├───────┼──────────────┼───────────────┼──────────────┼───────────────┤ │Total │ $5,872,326│ $3,058,171,249│ $319,868,358│ $2,738,302,891│ │ 11 │ │ │ │ │ │ years│ │ │ │ │ │Average│ 533,847│ 278,015,568│ 29,078,941│ 248,936,627│ │ 11 │ │ │ │ │ │ years│ │ │ │ │ ├───────┼──────────────┼───────────────┼──────────────┼───────────────┤ │1890 │ │ $176,379,638│ $14,753,550│ $161,626,088│ ├───────┼──────────────┼───────────────┼──────────────┼───────────────┤ │Total │ $5,872,326│ $3,234,550,887│ $334,621,908│ $2,899,928,979│ │ 12 │ │ │ │ │ │ years│ │ │ │ │ │Average│ 489,360│ 269,545,907│ 27,885,159│ 241,660,748│ │ 12 │ │ │ │ │ │ years│ │ │ │ │ ╘═══════╧══════════════╧═══════════════╧══════════════╧═══════════════╛
TABLE 13. (_Continued._)
╒═══════╤═══════════════════╤════════════════════╤════════════════════╕ │ Year. │ Operating ratio. │ Percentage to cost │ Mileage of line │ │ │ │ of road, cost of │ owned. │ │ │ │equipment, material,│ │ │ │ │ and supplies │ │ ├───────┼───────────────────┼────────────────────┼────────────────────┤ │1909 │ 67.88│ 5.738%│ 56,563.41│ │1908 │ 71.13│ 5.287%│ 56,328.79│ │1907 │ 69.66│ 6.063%│ 56,415.25│ │1906 │ 68.40│ 6.071%│ 55,990.12│ │1905 │ 69.68│ 5.542%│ 54,963.20│ │1904 │ 70.70│ 5.304%│ 54,643.50│ │1903 │ 69.04│ 5.630%│ 53,873.11│ │1902 │ 67.52│ 5.472%│ 52,980.70│ │1901 │ 67.30│ 5.235%│ 52,911.46│ │1900 │ 66.94│ 5.146%│ 52,495.25│ │1899 │ 67.69│ 4.447%│ 52,009.93│ ├───────┼───────────────────┼────────────────────┼────────────────────┤ │Total │ 68.88│ 5.478%│ 599,174.72│ │ 11 │ │ │ │ │ years│ │ │ │ │Average│ 68.88│ │ 54,470.45│ │ 11 │ │ │ │ │ years│ │ │ │ ├───────┼───────────────────┼────────────────────┼────────────────────┤ │1890 │ 66.39│ 4.980%│ 43,094.73│ ├───────┼───────────────────┼────────────────────┼────────────────────┤ │Total │ 68.75│ 5.448%│ 642,269.45│ │ 12 │ │ │ │ │ years│ │ │ │ │Average│ 68.75│ │ 53,522.45│ │ 12 │ │ │ │ │ years│ │ │ │ ╘═══════╧═══════════════════╧════════════════════╧════════════════════╛
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.
No attempt was made to assign depreciation, as regards the rails; this was determined afterward, from the age of the steel in the track. It was necessary, however, to make quite a thorough inspection of the ties, and to note their condition, as they were replaced year by year singly as they wore out. Almost every conceivable kind of timber had been used for ties at one time or another. Treated and untreated ties lay side by side; and thus there was great difficulty in classifying them with regard to the kind of timber. With bridge ties and timbers of frame and pile bridges, there was not so much difficulty, as they were open to inspection, and had been inspected twice yearly by the Division Engineer and the Superintendent of Bridges and Buildings, and accurate records of their condition and renewals had been kept. The depth and condition of the ballast also varied very widely.
In a very short time all the men on the survey became well acquainted with the character of the work they had to do, and, as the work went on, the progress of the party day by day was very much more rapid. At the beginning of the survey, a progress of 6 or 7 miles of single track was considered a very good day's work; at the end of the survey, the parties were making from 12 to 15 miles per day.
There was considerable difficulty in setting proper values on the hundreds of buildings, large and small, owned by the railroad. Most of these buildings had never been constructed from plans, and it was difficult to calculate what they had cost originally, and what it would have cost to build them at the time of the survey. However, time books were searched, and the contents of the buildings in board feet were calculated, and, while in many cases their age was not known from any records, it was nearly always possible to find out from somebody just when they were erected.
As intimated before, the railway company derived much actual benefit from the work, outside of the accurate knowledge obtained as to the value of the property itself. Steel charts, bridge records, etc., were established, and profiles, stationing, continuous bench-levels, etc., were all re-run or re-established; thus making the engineering work of the future more consistent and uniform, and enabling more work to be done with a smaller force. New maps of all the station grounds and terminals were obtained, and all the records were put in better shape than they had ever been before.
Examination of some of the old terminals brought to light many strange and out-of-date conditions. Old wrought-iron rails of antiquated pattern, old cast-iron frogs, etc., of a pattern which had not been in general use for fifty years, were found in the track. On some of the little-used sidings, the old wrought-iron rails were so worn that the tread of the rail was entirely gone, only the web remaining to carry the traffic, and such rails were still in use.
In such a valuation, also, many items, some of considerable magnitude, were found which were extremely difficult to classify and assign to their proper place. Such a one, for instance, as a soft, sand rock deposit beside the track, which for many years had furnished engine sand. Many thousand cubic yards of this material had been excavated, but it had not gone into the roadbed as ballast, or to make fills, or to widen embankments. It would hardly have been proper to classify such excavation as grading, for it was an item of engine maintenance and train operation. This is only one of numerous problems which had to be solved.
After all the survey had been made, most of the work of compilation had to be done. Some of it had already been done in the office by the small office force, but the great mass had to be done by the men who did the work in the field. This task was of almost incomprehensible magnitude. There were thousands and thousands of items, and such a great mass of figures that the ordinary man would become lost in the maze. The data had to be checked and re-checked by men who were not accountants, and sometimes most ludicrous mistakes were discovered. However, it was at last accomplished, and the writer's recollection of the "Present Value" of the Chicago and Northwestern property in Minnesota is that it was somewhat more than $23,000,000 for the entire mileage (about 625 miles), or an average of about $37,000 per mile of track. Hardly any of the mileage would be called high-class or trunk-line track, but most of it might be classed as second-class or important branch-line railway.