1

In 1880 there was no such thing as Pocahontas coal, and in 1883 but little more than 100,000 tons were mined; in 1887 more than 1,300,000 tons were brought to the surface, in 1891 nearly 3,300,000; and if the iron industry is in fair condition the output is expected to reach 4,000,000 tons during the present year. Moreover, the Ohio extension will give access to Western markets, so that the output will go on increasing year after year for a long time to come. The rates charged for carrying these coals to their destination are so low that on the N. and W. the average freight rate per ton per mile amounts to less than on any other road, with the sole exception of the Chesapeake and Ohio, namely 0.548 cents; at the same time the cost of transportation has been cut down to such a degree that the company still makes a profit of 0.187 cents per ton per mile a figure higher than on most American roads, and chiefly due to the technical perfection which the management has imparted to the property. Indeed, the N. and W. is looked upon as an example of what a shrewd and enlightened management can do for a railroad. Undoubtedly Mr. Kimball applied his recognised abilities under exceptionally favourable conditions. In the first place all coals are carried down grade, the Flat Top being situated at the highest elevation reached by the N. and W. It does not matter whether the freight is to be carried to Norton, Norfolk, or the Ohio: the trains always run along a decline, and transportation of coals being profitable anyhow, it can cause little wonder that under such circumstances the experiment succeeded, especially as the cost of mining, owing to the peculiar formation of the Flat Top Mountain is very low; in some places the trains run directly into the mines. Nevertheless he deserves great credit for the able manner in which he made the most of natural advantages. How highly the management of the Norfolk and

1 While the proofs of this chapter were being correctsd a report was current to the effect that the N. and W. had entered into a contract with the Hocking Valley RR., which its Ohio extension meets in Columbus, for the daily shipment of 3,000 tons of coal to Cleveland, 0.

Western and its beneficial influence upon this young but vigourous industry is spoken of may be inferred from the fact that a recent U. S. Census Bulletin (No. 200) says:

"To the energy and push of the officials of the Norfolk and Western railroad is due the rapid development of this great coal field."

The foregoing shows that the conditions surrounding the Norfolk and Western RR. have changed to a considerable extent. Originally a line from Norfolk to Bristol, where it connected with the East Tennessee and Virginia, the road has by degrees developed into one of the principal mineral carriers of the country whose principal aim is the transportation of Pocahontas coals to Norton, Bristol, Norfolk, Washington and Columbus, and in addition the system has become a through line between the Central States and the seaboard, and part of one of the leading routes between the East and the South. This rapid conversion involved other changes of the greatest importance. The necessity of new extensions and the expediency of absorbing other lines in order to secure connections caused a considerable increase of mileage, and in addition a perfect roadbed was essential to enable the company to carry freight at carry freight at low rates and yet at a profit. Both wants were provided for; the absorption of the Shenandoah Valley, Roanoke and Southern, and Lynchburg and Durham Railroads, and the construction of the Washington, Ohio and Clinch Valley extensions gave a number of desirable connections; the gradual perfection of roadbed and rolling stock, carried out with a thoroughness that rendered the Norfolk and Western a model freight road, enabled the company to secure the permanent growth of the Pocahontas and Pulaski mines; and with the support of great natural advantages the management succeeded in converting a formerly insignificant property into one of the most prominent, most prosperous, and most promising systems of the entire South. For, however fast the growth of the system was, it never equalled the expansion of its

business. Between 1885 and 1891 its mileage was more than doubled, but its gross revenue rose from $2.77 to $9.19 millions, and its net receipts from traffic from $1 065 to $3.18 millions.

Norfolk & Western RR.-Traffic Statistics.

Norfolk and Western RR. Revenue and Expenditure per mile.

This constant extension and the carrying out of betterments on an elaborate scale necessitated frequent and considerable additions to capital. Between 1885 and 1891 the preferred stock was increased from $18,000,000 to $40,000,000, the common from $7,000,000 to $9,500,000, the bonded debt from $17,309,600 to $50,943,200, and the total capital and debt if we disregard a diminution of $1,000,000 in car trusts therefore grew from $42,309,600 to $100,443,200, an increase which is a trifle greater than the

expansion of the system during the same period, but considerably below the proportionate growth in earning power; for whereas the capital employed rose from $84,114 in 1885 to $92,065 per mile of road in 1891, net earnings increased from $2,230 per mile to $2,913, the last figure relating, moreover, to a very bad year; in the company's best year-1889 it was as high as $3,576. The issue of new capital, therefore, offers no scope for adverse criticism, the more because the rise. of $8,000 per mile is abundantly offset by the superior condition of the road, the almost absolute perfection of its rolling stock, and the remarkable increase of its business. In addition it should be remembered that we do not take a favourable year for our comparison, for both 1891 and 1892 were characterised by business depression in the South; and being in a transitory state the company had expenses inseparable from active construction, such as those caused by delay, increase of company's freight, freight,' etc., matters which tend to enhance operating expenditure to a considerable extent. Yet in 1891 the property had an available revenue of $3,469,920; out of this sum $2,266,130 were paid for interest on bonds, leaving $1,203,789 available for dividends; and the usual distribution of 3 p.c. upon the preferred stock being made while in addition $129,575 were disbursed to meet extraordinary charges there remained a clear surplus for the year of $1,714, so that it was not necessary to touch the surpluses from previous years, which aggregated $1,455,262. Since the last report was issued some more changes have taken place. A further issue of $10,000,000 preferred stock, to be offered in two annual blocks of $5,000,000 each, was authorised, and postponement of the issue of the first block being advisable, a syndicate advanced $2,000,000, (to be repaid when the stock is issued) upon collateral and bearing interest at 6 p.c. Further, $1,660,000 of 5 p.c. 100 yr. gold bonds were issued; the Lynchburg and Durham RR. was leased at a rental of 35 p.c. of gross earnings; the Roanoke and Southern was also leased against net earnings,

the N. and W., moreover guaranteeing the interest on its bonds. In addition to these changes there is the opening of the Ohio extension and the prospective completion of the Washington branch, and as a result the finances of the company are in a condition which renders a clear survey of its immediate prospects extremely difficult. There are higher charges and higher earnings; in how far the latter will offset the former it is impossible to predict. Some people anticipate a serious diminution of the surplus available for dividends in 1892; but even if this forecast proves correct there will be no cause for apprehension. There can be no doubt whatever that the system possesses such inherent strength and such brilliant prospects that it will resume its prosperous career as soon as it emerges from the state of suspense its affairs have been in since the commencement of work on the Ohio extension.

Subjoined are additional tables: