The Sun.
London, England, 1867-03-11 00:00:00

RAILWAY INTELLIGENCE.

TWENTIETH ANNUAL REPORT 'OF THE PENN-
SYLVANIA RAILROAD COMPANY.

The following are extracts from the report issued
to the stockholders of this line, dated Philadelphia,
Feb. 19, 1867 :
The shareholders will perceive by comparing
with previous reports that, in addition to the pay-
ment of dividends upon your original investment,
equal to 46 per cent. above legal interest, the cost
of your road from Philadelphia to Columbia has
been reduced $900,000, and from Harrisburg to
Pittsburg $6,426,855 from the surplus profits of
the company ; and the equipment of the line, which
has cost $10,603,559 55, is now represented at
$3,371,214 93.

The sinking fund, which cost $1,996,367 68, it
is believed is ample, with its accruing income, to
take up at maturity the debt of the Harrisburg and
Lancaster Railroad Company ($760,000), the
second mortgage bonds of this company,
and still leave in it all the stocks that
it is important that this company should retain
for the security of its traffic. This conser-
vative policy has been pursued in view of the ad-
ventitious character of the traffic of the line during
the past five years, and for the purpose of giving
to the company a financial strength which will
render the continuance of its dividends certain, in-
dependent of the action or policy of rival lines.
The company has been placed in this strong posi-
tion, while it has, at the same time, to a larger ex-
tent than any other corporation of the kind, pro-
moted the development of the interior of the
commonwealth by aiding the completion and ex-
tension of other railroads where private capital
would not incur the risks of such investments.
The Pennsylvania Railroad was commenced
under the sanguine hope that it could be completed
and equipped without incurring a debt. The efforts
of the company in this direction, in view of thegreat
abuse that had attended the financial operations of
the earlier corporations of this State, were emi-
nently wise and worthy of an earnest effort to carry
them into effect. But after some years of persistent
labour it became evident that the enterprise was too
great for the local capital of this city without sub-
mitting to a delay in its completion, which neither
the commercial prosperity of Philadelphia, nor the
interest of the shareholders of the company would
justify. This policy was therefore abandoned for
one which limited the mortgage indebtedness of the
company to its capital stock.
At the commencement of its work, the views of
the company extended only to the construction of a
railway between Harrisburgh and Pittsburgh. Bat
in operating such a line, in connection with the un-
certain and frequently adverse management of the
Philadelphia and Columbia Railroad, under the
State authorities, it became evident that it must fail
to meet thejust expectations of its projectors, unless
an independent connection could be made with its
commercial depot, or a lease or purchase of the
existing lines effected. After many abortive efforts
this object was accomplished by a lease of the
Harrisburg and Lancaster Railroad, and the pur-
chase of the State improvements at a high price,
but upon a satisfactory credit. The great point,
however, of securing harmonious action throughout
the line, from Philadelphia to Pittsburgh, was
accomplished, which at once imparted new life and
vigour to the enterprise, and insured its prosperity.
It was early foreseen that a trunk line, intended
to accommodate the traffic between the East and
West, would fail in its object if wholly dependent
upon the uncertain navigation of the Ohio River as
a feeder. The earlier commencement of the other
trunk lines had already diverted the routes of the
railroads in progress from the commercial centres of
the West towards the East to their works. To
overcome this disadvantage, it became essential
that other lines connecting your road with these
trade centres of the West should be commenced,
and, to effect this, direct and efficient aid by this
company towards their construction was necessary.
So fully impressed were the shareholders of this
company at the time, of the importance of this move-
ment that in voting such aid they exceeded the views
of the directors. The three principal lines selected for
such aid were one to Cincinnati, a second to the centre
of Ohio, at Columbus, and a third towards Chicago.
The connection with Cincinnati via Marietta was
adopted, and failed from the inadequate means pro-
vided to construct a line over what proved to be an
unexpectedly rugged country. The line to Chicago
was only saved as an investment, after the failure of
the credit of that company, by much labour arid
large additional outlays by this company to secure
its completion. These efforts were crowned with
entire success, and the enterprise, both financially
and as a feeder of your main line, has met our most
sanguine expectations.
The line to Columbus—which also afforded an
equally good connection with Cincinnati as that via
Marietta, though leaving a large district of country
tributary to another railway, after long delays,
growing mainly out of a failure to procure adequate
legislation in Virginia, has recently been brought
into efficient use, and promises satisfactory results.
The Pennsylvania Railroad Company will own as
a preferred shareholder more than half of the capi-
tal stock of this line.

The Marietta line, which had enlisted the warmest
support from the shareholders and the merchants of
this city, of either of the lines mentioned, became
so hopelessly involved that the funds advanced by
this company, for the construction of that part of
the road between Marietta and Wheeling were
taken without our assent, to meet its debts incurred
upou the line west of that point. In consequence

of this misapplication of the means furnished by this
company, and the immense sums that would have
been absorbed in carrying out the original plan, it
was not deemed prudent to make any attempt to
save the amount invested in the enterprise, under
your instructions. This amount was accordingly
charged to profit and loss, and its stock no longer
appears among your assets.

The interest of the company in the Chicago line
has nearly all been disposed of, at a profit to this
company fully equal to its loss upon the Marietta
line. But for the timely aid afforded by this com-
pany it would have proved, as an investment, nearly
as unproductive.

The sharehulders will perceive, from this restun6
of the operations of the company, the extent of
means required, and the labour and responsibility
incurred to save the original investments made
under your instructions, to build up lines to con-
nect yours with the trade centres of the West—
expenditures that were necessary to the success of
your own work, but which a few years earlier
commencement of it would have rendered unneces-
sary, as the tendency of the Western lines would
probably then have been towards Pittsburgh.
We have thus presented to you the extent and
the causes for the unusually heavy expenditures
made by this company on account of its tributaries.
Their magnitude has made it necessary, not only
to protect the investments made in them, but also
to secure the control of other lines important to
their success. This policy has eventuated in a
system which includes the Philadelphia and Erie
and Northern Central Railroads, by which the com-
pany's cars find their way over continuous and un-
broken lines, under one control, from Columbus,
Erie, and Pittsburgh, to Philadelphia and Bal-
timore.

The responsibilities assumed by this company,
through the endorsement of the bonds of other
railroad corporations, are confined to the first
mortgages of the Philadelphia and Erie Railroad
Company, amounting to five millions of dollars, the
Western Pennsylvania Railroad Company for eight
hundred thousand dollars, and the Connecting
Railway Company for one million of dollars. In
the two last-named companies the Pennsylvania
Railroad Company is also the owner of nearly all
their share capital, and upon the first it has a lease
for 999 years.

The directore have given to the subject of esta-
blishing a line of steamships between this port and
Europe, committed to them at your last annual
meeting, all the consideration which its importance
required ; but they have not yet arrived at a satis-
factory conclusion as to the best means of effecting
this desirable object. Proposals have been asked
until the Ist of May next, by public advertisement,
of those engaged in this business to establish such
a line, under concessions, and a subsidy to be paid
by this company during the continuance of the
contract.

The bonds of these railroad companies, with the
exception of $1,200,000 of those of the Philadelphia
and Erie Railroad Company, were endorsed after
their purchase by this company, and were so en-
dorsed to secure a better market price for this com-
pany when sold by it.
The propriety of selling the bonds of this line
aided by this company, either with or without its
endorsement, is questionable, inasmuch as better
results can be obtained by the use of the direct
credit of the company. Hitherto, however, there
has been no alternative, as the powers of the com-
pany have been too circumscribed to act upon such
a policy.
The earnings and expenses of the Pennsylvania
Railroad, and the roads worked by it, except the
Philadelphia and Erie Railroad, were for 1866 as
follows :

EARNINGS.
From Passengers, Ist elass 53,245,800 06
„ Emigrants

3,385,521 31
„ United States Troops ~.. 560,945 44
77 77 11 Mails 82,730 00
„ Express matter
„ General freights 11,709,293 59
„ Miscellaneous sources 471,023 28

$16,583,882 84