an interest upon the amount now charged to that account. The chief motive, however, in incurring this expenditure was, as already mentioned, the advantage it afforded to this Company in securing the freight and travel to and from the Southwest, for which we had previously no independent connection. The line is now in full operation, and in this respect has met our expectation, gaining for the traveller a saving of several hours in his journey from Philadelphia and New York to Cincinnati, over any other route.

"The Philadelphia and Erie Railroad Company, under the lease, is obliged to furnish the money to meet the expenditures for this object, but as it is without means or available credit, it devolves upon this Company to supply the deficiency or continue an unprofitable arrangement. As neither the public advantage nor the permanent interest of this Company will justify the latter alternative, the Board, with a view to apply the expenditures mentioned in a manner that will best promote the objects in view, has purchased and converted obligations that have accrued against that Company, into its capital stock to the extent of thirty-one thousand six hundred and thirty-six shares of Common, and forty-eight thousand of Preferred, amounting in all, at par, to nearly four million of dollarssufficient to determine the future mode of managing the affairs of the Company.

"This line and the Pennsylvania Railroad occupy the only routes within this Commonwealth upon which a railway for through business can be built, and yield a reasonable return upon the capital that may be expended in its construction. Upon all other routes, several additional mountain summits will be encountered, besides the increased cost hereafter of constructing such a work. With this knowledge we may safely make outlays for the development of their traffic. The extent to which this can be

done by a judicious enlargement of the field of operations of the Philadelphia and Erie line may be appreciated by referring to the history of our own railroad, which was only opened as a continuous railway in connection with the State road, between Philadelphia and Columbia, on the 15th of February, 1854-at which date the Eastern and Western Divisions of what was originally the Pennsylvania Railroad were united, avoiding the ten inclined planes, operated by stationary power, which had previously lifted the traffic over the Alleghanies. The revenues of this Company, from the whole line, from Philadelphia to Pittsburg, during 1854, the first year of its operation as a continuous line, were three million five hundred and twelve thousand two hundred and ninety-five dollars. In 1867, between the same points—with addition of the local business of the State railroad-they were sixteen million five hundred and eighty-three thousand dollars, an increase of nearly fivefold in money and much larger in tonnage.

"It is true the Pennsylvania Railroad traversed a country that had been partially developed by the State improvements, and a large local traffic became immediately available, but at that time the through business was of inconsiderable extent. It has since vastly increased by the rapid growth of the West, both in population and wealth, and is capable of still greater development by the introduction of rates of freight that will successfully compete with those charged upon the lakes and the New York canals.

"A line possessing a large mixed traffic, such as commanded by the Pennsylvania Railroad, cannot fully meet this requirement without the construction of a third track throughout its length, by which trains can be moved at a low rate of speed without serious interruption to the traffic that will pay for the cost of a more rapid movement.

Instead of a third track upon the Pennsylvania Railroad to meet this demand, as originally suggested, it has been proposed that the line of the Philadelphia and Erie Railroad, as far as practicable, be taken for such a thoroughfare. This line will cross the summit between the eastern and western waters where the elevation is fourteen hundred and fifty feet above tide, which may be overcome by gradients not exceeding a rise of a half of a foot in one hundred feet, passing through a region abounding in the best bituminous coal for fuel.

"A road built to accommodate the object contemplated must be located and constructed with a view to secure the lowest possible cost of movement of trains, and its locomotives and cars adapted to the business they are intended to move and the speed they will travel. Instead of changing locomotives at the end of each day's service as at present, the trains under this system will be provided with double crews, alternating their time upon duty until their destination is completed and the return trip accomplished. The speed of the freight trains should not exceed an average of six miles per hour.

"As through travel and general merchandise will seek lines where the movement is more rapid, a railway operated upon this principle can only be introduced with advantage to the community and profit to its shareholders, where the traffic that it will command is very large. The profits upon the capital invested in such a line must be realized from a small margin over cost upon a very large tonnage to be moved. But few, if any, locations at present afford a business sufficient to justify the construction of a railway specially operated upon this principle, and one between the East and West will be sufficient to meet the

public demand for many years. In New York the Erie Canal fulfils the objects of such a work not only for that

State but for through tonnage between the East and the West. No route in Pennsylvania or elsewhere between the seaboard and the West affords equal facilities for the introduction of this system as the line occupied by the Eastern portion of the Philadelphia and Erie Railroad, where a basis for it may be laid with confidence as to its affording favorable results. A railroad operated upon this plan will ultimately be extended to the Mississippi River across the table lands of Ohio, Indiana, and Illinois, south of the great lakes, which, when the tonnage is sufficient to justify its construction, will afford a medium of transportation at all seasons of the year, as cheap and more expeditious than via the lakes and Erie Canal, without materially interfering with the profits of existing lines. The general introduction of this system of railways to supersede the present lines can only end in a disastrous failure wherever tried."

NOTE C.-NORTHERN CENTRAL RAILROAD.

THE earnings of the road for the year 1867 were three million six hundred and ninety thousand eight hundred and sixty-eight dollars. The operating expenses were two million four hundred and seventy-eight thousand seven hundred and nine dollars; making the net revenue one million two hundred and twelve thousand one hundred and fifty-eight dollars.

The annual report of J. D. Cameron, Esq., President of the Company, made Feb. 20, 1868, for the year 1867, says:

"Our business has grown so rapidly within a short space of time, and so much expenditure has been necessary to perfect the track, extend sidings and furnish equipment, that we have delayed, as far as we could, the building of

shops for the repair of engines and cars. Additional shops have now become an urgent necessity, and we propose to erect suitable buildings for that purpose at Sunbury. During this year we have added to the equipment seven locomotives, two passenger cars, two baggage cars, twenty-five box cars, twenty-nine gondolas, thirty-four lime cars, and three hundred and seventy-seven coal cars, at a cost of two hundred and sixty-five thousand one hundred and thirty-four dollars and forty-one cents, and we have already contracted to have delivered in the early part of this year ten locomotives, one hundred stock cars, and five hundred coal cars.

"We have purchased and put into the track some additional steel rails. Our experience so far with steel rails has been satisfactory, and we regret that we have not the ability to use them exclusively in the renewal of the track. As the tires on the locomotives have worn out they have been replaced by steel tires, and the change has been found to be an economical one. The operations of the leased roads have been much more satisfactory than during the preceding year. The increase of tonnage from them has added materially to the business of the main line, and the arrangements lately consummated for securing additional trade from the West and Northwest are such that we feel the time is not far distant when we will be benefited, not only by the trade which they add to the main line, but that the increase will make them self-sustaining, and they will become a source of direct profit, as the Shamokin division has been since the commencement of its lease by this company.

"As the receipts incident to the inflation of trade produced by the war are no longer perceptible in our business, a comparison of the business of this road for the year just