Traffic and Earnings of the New York, Pennsylvania and Ohio Railroad for three years ending 1891. The strained relations of the company with the lessee are chiefly caused by the former's inability to bring its road and equipment up to the requirements of the time. Taking into account the financial condition of the New York, Pennsylvania and Ohio, one cannot attribute its failure to effect such improvements to unwillingness, and the small annual appropriation for improvements serves little or no purpose. The following extracts from the last reports of the companies show the pros. and cons. of this dispute. The Erie report says: "Nothing has yet been done by the New York, Pennsylvania and Ohio Company in the direction of the suggestions made in the last annual report, as follows: One of the great difficulties to be overcome in the successful operation of this property is its lack of facilities. Being a single-track road, with inadequate sidings, heavy grades, and insufficient equipment, it has to compete with similar connections of the other trunk lines, notably the Lake Shore and Fort Wayne roads, upon which large sums have been expended in improvements in the last few years. It is hoped that the N. Y., P. & O. management will appreciate the changed conditions of railroad traffic and provide the necessary capital to bring their line up to the standard of like connections of other trunk lines, as the lease provides they should do. Unless this can be accomplished it will be almost impossible for your company, owing to the great increase in its own business, to forward over the N. Y., P. & O. line the percentages of traffic specified in the lease. These percentages were fixed at a time when the condition of business was very different; and it is plain that now they should either be altered or the facilities of the N. Y., P. & O. road should be increased to an extent that will enable it to meet the requirements of the changed situation." The attention of the officers of the New York, Pennsylvania and Ohio company has again been called to this important subject, and at the date of this report it is under negotiation. It is absolutely requisite that the heavy grades on that road be reduced. The traffic of your company has constantly grown in much greater proportions than that of the New York, Pennsylvania and Ohio Company. The business of the Chicago & Erie is also increasing, and the New York, Pennsylvania and Ohio road, situated as it is between the two roads, is frequently unable to take forward the business as promptly as received. Constant improvements are also being made by the Erie and the Chicago & Erie Companies. "Out of a total distance of 374 miles of the main line of N. Y., P. & O., 78 are of adverse grades, some as high as 66 feet to the mile eastward and as high as 75 feet to the mile westward, being much higher than the grades on the Erie road proper. The maximum grade of the Chicago & Erie in both directions never exceeds 26 feet per mile, and 96 per cent. of its entire length is absolutely straight. Before the close of the next fiscal year it is expected that the Chicago & Erie will be in perfect condition, and unless the high grades on the New York, Pennsylvania and Ohio road are reduced and a large addition of double track and passing sidings are laid, that road will be at a marked disadvantage as compared with the Chicago & Erie, and will be an inefficient link in the great system between New York and Chicago." To this the report of the New York, Pensylvania and Ohio RR. replies: "Since the amendment of the lease in 1890 there has been far less friction between the lessor and lessee companies than formerly. During the past year the arbitration between our company and the lessee company, with regard to the stock of the Sharon Railway issued to us as an equivalent for the betterments placed on that road through the medium of our betterment fund, and the ownership of which was claimed by the lessee company, has been heard and decided in our favour. There is but one arbitration now pending, viz., a claim by us for pay for our engines used by the Chicago and Erie Company while reconstructing its road; and our president reports that "there are now but comparatively few differences between us and the lessee, and these are generally adjusted by mutual conference." There is one point of difference, however, between the lessor and lessee companies which keeps from time to time cropping up, and on which the Erie management have, it is thought, somewhat unduly animadverted in two succes. sive annual reports, viz., the fact that there exist heavy adverse grades (some as much as 75 feet to the mile) on the main line of the New York, Pennsylvania and Ohio road, and that these, coupled with the fact that the New York, Pennsylvania and Ohio is a single-track road, render it impossible for the Erie company to carry the heavy through traffic over that road as economically or as advantageously as such traffic can be carried over the Lake Shore or the Chicago and Erie roads with their very light grades. It is true that not only are the working expenses considerably increased by such grades, since an engine can haul over them but little more than half the number of loaded cars the same engine could haul over the other two roads specified, but also considerable delay is caused by the necessity of breaking up and remaking the trains in transit; and as shippers now require the higher classes of freight to be carried forward at a much greater speed than formerly, there can be no doubt that the Erie Company is to some considerable extent placed at a disadvantage in competing for the higher and more lucrative classes of through business owing to these grades, and that it would be a material benefit to that company, and to a considerable extent to this company also, if these grades were cut down and certain portions of the main track of the New York, Pennsylvania and Ohio double-tracked. Moreover, the increased net revenue arising out of the increase of business and the curtailment of expenses caused by such improvements would in all probability in a few years' time more than pay the interest on their cost. When the lease of the New York, Pennsylvania and Ohio road was drawn, it was specified that $100,000 of the net revenue of this company should be annually devoted to the improvement of that road, which has been regularly done; but it was even then recognised that such an amount would not suffice to effect such larger improvements of the line as might in the future be found necessary, and to meet this a special clause was inserted in the lease (Clause 14) by which power was given to the lessee company to make such improvements at its own expense, to charge the interest on their cost at an agreed rate to the N. Y., P. & O., and to constitute the cost of such improvements a lien on the road. The New York, Pennsylvania and Ohio Company having no funds whatever available to effect improvements on capital account, except the said sum of $100,000 from its annual revenue, it is clear that if such improvements are to be effected at all, prior to 1895, they must be effected under this clause in the Erie lease; and in answer to the reiterated complaints of the lessees, it has been pointed out to them again and again that the remedy was in their own hands, under Clause 14 of the lease. They, however, for some reason have never been willing to advance the funds necessary to remove the difficulties of which they have so persistently complained. The Erie itself greatly needs a double track from Hornellsville to Carrollton, a distance of 76 miles, and our own road would be much improved by a double track in several of its sections and a reduction of grade in various places to enable the traffic between New York and the West to be carried over the joint roads to the best advantage, both as regards economy, speed, and safety; it can, however, serve no useful purpose to be constantly referring to these matters in a spirit of complaint so long as the New York, Pennsylvania and Ohio Company is unwilling to provide the necessary funds to carry out these improvements. Moreover, the Trustees would call attention to the fact that the adverse grades complained of are no new matter, and that the Erie Company were well aware of all the disadvantageous circumstances connected with the location of the New York, Pennsylvania and Ohio road at the time the lease was made and amended, also that they were duly taken into consideration in determining the percentage of the gross revenue that should be paid as rental by the Erie Company. In other words, had these disadvantages not existed, the Erie Company would have had to pay a higher rental for the property." The subjoined table shows the interest paid in cash and warrants, and the warrants issued since 1885. CHAPTER XXVIII. THE OHIO AND MISSISSIPPI RR. The Ohio and Mississippi Railroad is one of the oldest in the Central States, the original line having been projected before 1850, although the present corporation only dates from the reorganisation of 1867. The system has a length of 636 miles and practically consists of two parts, the main line from Cincinnati to East St. Louis, and the line from Beardstown, Ill., on the Illinois river, to Shawneetown, Ill., on the Ohio river; to these a few branches have been added, that from North Vernon to Jeffersonville, opposite Louisville, being the most important. The following is a summary of the lines operated by the company and now controlled by the Baltimore and Ohio: Main line, Cincinnati to East St. Louis . Louisville branch, North Vernon to Jeffersonville Total. 339 miles. 53 229 15 " The Ohio and Mississippi is principally a connection between Cincinnati and St. Louis, and as such it enjoys unusual advantages, being not only the shortest, but also the only direct route between the two towns, although the Vanderbilt and Pennsylvania lines to the North and the Louisville and Nashville to the South form communications between its |