rights granted to the original companies by operation of law, and is entitled to exercise them. The sad spectacle is now presented of this great state attempting to violate its plighted faith and repudiate its solemn agreement; after the roads have been built, and the money of the stockholders expended, after the improvement has been made, and the state received all the benefits expected.

I cannot believe that the people of this state desire to be placed in any such position, and am satisfied that the action of the legislature in enacting this law will be repudiated by them, as soon as its real character is understood. That it has effectually destroyed all future railroad enterprises, no one who is acquainted with its effect in money centers will for a moment doubt. That, however, I do not care to discuss at this time, as the state has an undoubted right to prevent a further extension of its railroad system if it chooses, although, as a citizen, I deeply regret such short sighted policy. But as the representative of the Chicago, Milwaukee and St. Paul Railway Company, a part of whose system of roads is in this state, and who have expended over $25,000,000 in permanent improvements therein, on the faith and credit of the charters granted, all of which is directly and seriously affected by the law in question, and must be ultimately ruined and destroyed, if this policy is persisted in and successfully enforced, I am compelled not only to protest against such unjust legislation and violation of plighted faith, but also to inform you, and through you, the people of the state, what its effect, if submitted to, will be, not only upon the company that I represent, but upon the whole railroad system of the state, and the business interests of the whole community. The entire road of the Chicago, Milwaukee and St. Paul Railway Company, as now constructed and equipped, has cost about $36,000 per mile. The portion in Wisconsin, including all our valuable grounds and improvements at Milwaukee and other points, cost about $28,000 per mile. It is capitalized at those sums respectively, in bonds and stock. The stock has never been watered, and it is believed that the road could not be produced in its present condition for a sum less than its cost or present capitalization at this time. All agree that the company is entitled to a fair return on the captal invested.

The railroads already constructed have added many millions to the wealth of the state, and perhaps no class have derived so great a benefit as the farmer. Many of the farms and much of the farming land of Wisconsin, now worth from $50 to $100 per acre, without railroads would not be worth to exceed $10 to $20. Other branches of business and other industries of the state have experienced a similar benefit from the construction and operation of those roads. Yet every one familiar with railroading in Wisconsin, is aware that no dividends were paid for the first twelve or fifteen years that the roads were in operation, and that they were unable to pay the interest on their bonds, and nearly all passed through the process of foreclosure. It is only within the last ten years that any dividends have been paid on the stock of any of the roads. The bonded debt of the companies, generally, bears only 7 per cent. interest, and amounts to but little more than half the actual cost of the roads with their equipments. During the last ten years this interest has been paid and represents an income of seven per cent. on a trifle over one-half of the cost of the property. Since the organization of the Chicago, Milwaukee and St. Paul Railway Company, in May, 1863, there has been paid in cash dividends on its stock, which represents nearly one-half of the actual cost of the property, $3,813,257 72-100, which amounts to twenty-four per cent. only for the whole time, ten and half years, and is equivalent to a dividend of only 2 28-100 per cent. per annum on the stock of the company. All the balance of the earnings over and above these dividends and payment of the interest on the bonded debt, has been consumed, in operating expenses and improve. ments of the road and rolling stock, and bringing the property to its present state and condition, and were necessary for that purpose. We have then, as the results of the last ten and a half years existence of the Chicago, Milwau kee and St. Paul Railway Company, one-half of the cost of the road capital. ized in bonds which has received seven per cent. per annum; the other half, capitalized in stock, preferred and common, which has received 2 28-100 per cent. per annum in cash, and taking stock and bonds together, the acutual return to the investors has been 4 46-100 per cent. per annum on the actual cost

of the prrperty from May. 1863, to January, 1874. In addition to this amount, a small amount in stock has been distributed in dividends to represent that portion of the net earnings used in completing the construction of and improving the property. These stock dividends amount to 2 8-10 per cent. per annum. With these stock dividends added to the cash dividends above named, at their nominal value, and the whole amount received on the investment for interest and cash and stock dividends, amounts to only six per cent. per annum of the actual cost of the property. I submit to your Excellency, and through you to the people of the state, whether this is more than a fair and reasonable return for the capital invested in these improvements. Is it not far below such reasonable amount? The best and most careful economists admit that not less than ten per cent. per annum should be allowed on such investments. Yet less than one-half that amount has been received in cash, by this company, and the legislature now attempts to assume the regulation of our income and reduce it to a point barely above operating expenses. The company is now engaged in re-laying its road with steel rails, and when that and other improvements shall have been completed, it is hoped that moderate and reasonable dividends may be made on the actual cost of the road, and that our increased facilities may enable us to reduce the rates charged for passengers and freight.

The directors of this company have at all times had a due regard to the interests of the public and a desire to furnish transportation at the lowest possible figure, and although not receiving a fair and reasonable return on their investments, they have, for the last four years prior to 1873, steadily reduced their rates of freight and passengers, from year to year, as will be seen from the following table, showing the charge for freight per mile, and average per mile for passengers, for each year, from 1867 to 1873, inclusive:

The law in question proposes to reduce our passenger rates 25 per cent., and our freight rates about the same, thus deducting from our present tariff about 25 per cent. of our gross earnings. The same legislature also imposed upon us an additional tax of one per cent. of our gross earnings, which is equivalent to taking three per cent of our net earnings.

It is not pretended that we are now running too many trains or too great a rate of speed to accommodate the public, or that any less attention and expense can be bestowed upon our road bed and track or rolling stock, consistent with the safe operation of our road. Hence it is impossible for us to decrease the expense of operation and repair, and those expenses must remain as before the passage of the law, provided we continue to operate the road as a first class road and so as to accommodate the public. The entire reduction in our rates made by this act is, therefore, a reduction from our net earnings. The average expenses of operation are not less than two-thirds of our entire gross earnings, leaving a net of about one-third.

This act, as we have seen, proposes to take from us twenty-five per cent. of our passenger and freight earnings, and the additional tax of one per cent. of our gross earnings, all of which is equivalent to taking from us twenty-six per cent. of our gross earnings. Therefore, deducting this amount, equal to twenty-six per cent. of our entire gross earnings, from thirty-three per cent., our average net earnings on business would leave us only seven per cent. of our gross earnings, as the entire net earnings of the road, out of which must

be paid the interest on our bonds and the dividends to our stockholders. It is therefore manifest that this law will take from us over three-fourths of the net income received under our present tariff, and yet the total net income of last year was not sufficient to pay six per cent. on the actual cost of the property. Comment is unnecessary upon a law which proposes thus to deprive capital, permanently invested under the sacred promise and pledge of a great state, of a suitable and reasonable return.

Can it be that such a law, and passed under such circumstances, is constitutional and binding? Can the sacred obligation of the state to us be thus impaired? And can our property, invested on the faith and credit of the state, pledged in our charter, be thus confiscated? I do not believe it, and shall not, until compelled to do so by the decision of the highest cours authorized to pass upon it.

The board of directors have caused this act to be carefully examined and considered by our own counsel, and by some of the most eminent jurists in the land, and after such examination they are unanimous in their opinion that it is unconstitutional and void. The board of directors are trustees of this property, and are bound faithfully to discharge their trust, and to the best of their ability protect it from spoliation and ruin. They have sought the advice of able counsel and after mature consideration, believe it their duty to disregard so much of said law as attempts arbitrarily to fix rates of compensation for freight and passengers.

I regret the necessity that compels the company to take this course, but it is the only one left to preserve the property, and properly test the question raised by the act. An unconstitutional act is void-a law that contravenes the constitution is of no effect. It is no law. The decision of the court only ascertains and declares that it is void. It is none the less unconstitutional and void, before it is so declared, than it is afterwards. Hence, such a law has no more binding force before than after the decision of the court. It is no justification for any act done or omitted at any time. The only difference is that parties obeying or disregarding it, before the courts decide upon it, are, in either case, acting upon their peril. Should we obey this law, and by so doing allow the property committed to our trust to suffer waste, the law would be no legal justification of our conduct should it afterward be adjudged unconstitutional, and so if we disobey it, our act will be justified or not, according as the court may finally determine. Being placed therefore in a position where we are compelled to act, we have determined to act in accordance with the advice of our counsel, as we are fully satisfied that it is only by so doing that we can protect and guard the important interests committed to our charge. It is from no disrespect to your Excellency or the constituted authorities of the state, that the board of directors have determined on this course. They are fully aware that they are not able to contend with the state, or defy its laws, and were it not for the fact that they are fully convinced of the unconstitutionality of this act, would not adopt a course of action which would seem, even, to contravene a law of the state. But being fully conscious that the enforcement of the law will ruin the property of this company, and feeling assured of the correctness of the opinions of the eminent counsel who have examined the question, the directors feel compelled to disregard the provisions of the law, so far as it fixes a tariff of rates for the company, until the courts shall have finally passed upon the question of its validity.

Respectfully yours, etc.,

ALEX. MITCHELL, President.

LETTER OF ALBERT KEEP,

President Chicago and Northwestern Railway Company.

His Excellency the Hon. WM. R. TAYLOR, Governor of the State of Wisconsin.

DEAR SIR: The directors of the Chicago and Northwestern Railroad Company, having carefully considered the provisions of the two acts in relation to railroads, approved on the 11th and 12th of March last, desire to state the reasons why the roads they represent cannot be operated under the schedule named in the said acts.

The rates prescribed therein average 30 per cent. less than those made by this company. To operate the Wisconsin lines has hitherto cost us 70 per cent. of the gross earnings. The recent addition of the Madison Extension will carry the percentage still higher. Impose a reduction, then, of 30 per cent. in our earnings, and the working expenses could hardly be met; while the interest on the bonded debt, irrespective of any surplus for dividends, would be wholly unprovided for. This, in effect, would be a confiscation of the property.

This company operates 566 miles of railway in Wisconsin. It was constructed at a cost of $28,074,317.35. The actual cost of the 129 miles from Madison north to Winona Junction, without equipment, was $5,261,134.41, or $40,783.98 per mile. The line known and operated as the Wisconsin and Kenosha Divisions, between the Illinois and Michigan state lines, cost $13,521,601.47. The means for this vast outlay were advanced mainly by nonresidents and foreigners. They were induced to make the investment on the assurance that the people who invited it, and whom it most benefited, would never render it precarious, nor deny the owners a voice in the management of their own property.

The singular good feeling which has hitherto existed between the people of Wisconsin and this company has been to us a source of constant gratifica. tion. We have striven to maintain these harmonious relations, and have been extremely anxious to remove every just cause of complaint. The occurrence of a difference, however slight, is to us, then, especially, a matter of deep regret. And, were it possible to avoid it by a sacrifice even more than ordinary, we should not scruple to make it. But, when the concession involves our certain ruin, no alternative is left.

The officers of this company have at all times been willing to accord any information regarding the operations of their road in Wisconsin. It might reasonably have been expected that, when so grave a measure as the arbitrary reduction of the company's tariff, without rule or reason, was contemplated, the parties most interested would have been requested to state what it cost them to do their business. Without that knowledge, it is manifestly impossible for any authority to fix an equitable tariff. This company would gladly have given the information had it been desired. They had ample reason to know precisely what their expenses were. They had laid, and arranged to lay, in their track, where traffic was heaviest and most constant, two hundred and fifty miles of steel rails-a more extensive improvement in that line than projected by any other company in the west. This one expenditure of about $3,000,000, necessitated a special increase in the bonded debt of the company. Having no coal mines on this line of road, they were obliged to pay more than double price paid by Illinois companies for fuel. They had purchased fifty new locomotives from the best manufactories-among them six of the most powerful Mogul engines, for special service on the Tunnel Division, of the company's Madison Extension, where two of the largest engines are required to haul one-half the load an ordinary locomotive can easily handle upon a comparatively level line. The 30 miles embraced in this Tunnel Division cost the company more to construct, and will cost it more to operate, than any 75 or 100 miles of the company's other property. Yet the tariff named in the act allows us no higher rates upon this division than upon the most favorably located line in the state. If enforced, they would compel us to operate that division at a positive loss. The same legislature which would ruinously decrease our revenue, increased the taxes levied upon the company one-third.

It will be evident to your Excellency that something beyond the bare working expenses of a road must be secured. The interest upon its bonds must be met. The tariff named in the act, applied to our business, would not yield the requisite sum after paying operating expenses. Can the latter be reduced? The company employs several thousand men in Wisconsin, none of whom are extravagantly paid. Were we to enforce a reduction in their wages corresponding to that attempted to be made in our tariff, a general strike would immediately ensue, and the public would justify the men. Clearly, then, expenses cannot be reduced in that way. The next item of magnitude is the cost of renewing and maintaining the track, building and equipment. We are obliged to furnish the best appointment known to the service, otherwise the courts mulct us in heavy damages for neglect. Therefore no opportunity for a reduction in this respect is afforded.

In proof of the company's willingness to reduce its tariff as rapidly and consistently as possible, the following statement of the rate charged for the past seven years is presented; to which we may add that the dividends paid stockholders have never been increased proportionally to the reductions made in the tariff, nor have they ever exceeded the rate of interest allowed by your state law:

This constant reduction grew out of the enlarged and improved facilities of the company for moving trains and transacting business,― the benefits from which were invariably given to the public, and not reserved for the stockholders.

Should Your Excellency be desirous of confirming the correctness of these statements, every facilty will be afforded the person or persons whom you may designate for that purpose. We court this investigation, in the assurance that, were the people possessed of all the tacts in the case, they would demand the immediate repeal of the statutes which premeditate such gross injustice. For we cannot believe that, in the full light of all the circumstances, the intelligent citizens of Wisconsin would perpetrate a wrong which, if enforced, would virtually confiscate a property that has contributed as much, perhaps more, than any other enterprise, to the growth and prosperity of their state.

The fact that this railroad cannot be operated upon the schedule of rates contained in the acts referred to, without incurring heavy loss, as well as rendering it impossible to pay the interest upon its bonded debt, or dividends to its stockholders, places its managers in a very embarrassing position. Had the power to afford relief been vested in the commissioners, whom Your Excellency is to appoint, we should have waited and presented our case to them; but, that discretion being withheld from them, we have thought it proper to lay before Your Excellency a statement of the facts known to us, and which, we believe, were not fully known to, nor appreciated by, the Legislature when the acts referred to were passed.

Very respectfully,

ALBERT KEEP, President.

*The records for 1869 were destroyed in the Chicago fire, and cannot be reproduced.