quotations were obtainable for the three years' term only, and the values for five and seven years' terms are computed by applying the ratio of decrease shown by the total values of the first four roads.

The value for the remaining 38 roads is ascertained by first capitalizing their average income from operation for the five year term ending June 30th, 1902, as shown by the reports to the Railroad Commissioner. The income value thus found is then taken as the market value for the three year term in the above tables, and the value for five and seven year terms is .computed by using the ratios of decrease shown by the total values for the several terms of the first four roads. The following table will show the value of the roads as thus computed for the three, five and seven year periods.

Market Value of Roads of First Division — Wisconsin. (Deduction on account of unsold lands and on account of bonds of C. & N. W. Ry. Co.)

Estimated according to ratio of decrease shown by footings of first four roads above. 2 Estimated according to ratio of decrease between 3 and 5 years' terms, same road.

AMOUNT OF STOCKS AND BONDS.

On June 30, 1901, the amount of stocks and bonds of railways of the United States outstanding was $10,855,377,815. Of the aggregate amount of stocks and bonds outstanding, $2,205,497,909 were owned by railways in their corporate capacity, leaving $8,649,879,906 in the hands of investors other than railways. The amount of stock outstanding was $5,806,566,204, and the balance of the $8,649,879,906 consists of bonds.

The amount of outstanding stocks and bonds not owned by railways is held by investors in this country and abroad. The proportion in this country is not known even approximately, but it is very large. The surplus wealth of the United States is heavily invested in the stocks and bonds of railways and other industrial corporations. No public records exist or are required by law to show the individual ownership. The books of the corporations may show the names of the owners of stocks and bonds, but not necessarily so. The shares of stock can be transferred by endorsement from hand to hand without entry on the books, unless the holders desire to vote at a meeting of the stockholders of the corporation.

The cou

Bonds are in two forms, registered and coupon. pon bonds after their issue can be sold and delivered by one person to another without entry on the books and the individual owners are as a rule unknown even to the officers of the corporation issuing the bonds.

The assessors are without information as to the owners of stocks and bonds within the state, and the books of the corporation are usually outside of the jurisdiction of the state. The taxing officers are entirely powerless to reach these securities for assessment.

If all the property of railways were taxed to the corporation at the true value and the stocks and bonds were again invariably taxed to the owners at full value, the amount of duplication would be immense.

The practical immunity of these securities from taxation is being taken advantage of by intelligent and shrewd investors

to abandon the loaning of money on real estate mortgages, and the conversion of such investments into the bonds of railway corporations, at a low rate of interest but having a long time to run before maturing. The only efficient and proper method of reaching this source of wealth for taxation is by the assessment and taxation of railway properties at their true value.

STATISTICS OF EARNINGS.

Capitalization.

Earnings constitute one of the chief factors in determining the value of railway property, and this is comprehended with other elements in the estimate of financiers in fixing the market price of stocks and bonds.

The gross earnings, operating expenses and income from operation of the railways of Wisconsin for five years have been tabulated for each company from its reports to the Railroad Commissioner, and the average for five years made as follows:the gross earnings of a road for five years are added together and the total is divided by five, which gives the average gross earnings for five years. The same method was observed in obtaining the average amount of operating expenses and income from operation. When a less number of years than five is reported the average for the years given is taken and is shown in

the tables.

The following is the table for the railways of the first division, and on pages 208 and 209 the table for those in the second division.

The facts shown in the tables present a summary of operation of roads in Wisconsin for five years and present many interesting features in the conduct of their business and the policy of the management. The statistics contained in the tables can be analyzed and comparison made by those interested in the study of railway earnings. A complete analysis of the gross earnings, operating expenses and income from operation for each would require more space than can be devoted to the subject in this report.

The Eastern Railway of Minnesota is controlled by and is virtually a part of the Great Northern system, making the road in earnings essentially one of the first class. The Duluth, Superior and Western Terminal is understood to be a terminal freight line road, and its earnings are large.

The striking feature of the tables is the wide variation in the percentage of operating expenses to gross earnings, especially in the smaller roads.

The percentage of operating expenses to gross earnings for railways of the first division ranges from 49 to 78. The Chicago, Milwaukee and St. Paul Railway Company shows 58.23 per cent.; the Chicago and Northwestern Railway Company 61.76; and the Chicago, Burlington & Quincy Railway Company 57.00. These are more nearly the usual percentages of the trunk line railways of the country than the other roads in the first division.

The large operating expenses of the Chicago, St. Paul, Minneapolis & Omaha Railway Company in Wisconsin, reduce the income from operation to an extent that the capitalization of that road is greatly below the market price of its shares of stocks and bonds. The average percentage of operating expenses for the entire road obtained from the reports of the company to the railroad commissioner for the five years mentioned is 61.07. From the same reports it appears that the amount of gross earnings in Wisconsin is 37.53 per cent. of the gross earnings of the system. If the percentage of operating expenses in Wisconsin was 37.53 of the operating expenses of the entire line, the income from operation in Wisconsin would be the sum of $1,529,848.74, which capitalized at 6 per cent,