ated, is also worthy a particular notice, and ought not to escape the attention of the stockholders.

The gross receipts from the business of the main stem, independent of its connexion with the Washington road, amount to the sum of $1,101,936-58, and the expenses of working and management, of all kinds, to the sum of $590,828.98, little more than 50 per cent. of the gross receipts, and leaving a balance of net earnings, over all expenses of working, of $511,107.60, being more than seven and one quarter per cent. upon the capital. Without reference to the detailed statements and observations in the report of the chief engineer, and to the subsequent remarks in this report, or to the working of other similar roads, this result would establish the general economy in the administration of this work, and show that the cost and expenses of transportation bear a reasonable and economical proportion to the entire receipts from the trade and travel. If, therefore, there were no other objects to which the Board were under an obligation to apply the above stated net receipts, the dividend for the present year, under the present system of management, might not have been less than seven per cent., and the necessity of applying them to other objects, however it might be regretted, has been altogether unavoidable.

The stockholders were informed in the last annual report, that engagements made prior to the month of September, 1846, for reconstruction of thirty miles of the old track. for new locomotive engines, for new burthen cars, and for improvements at the several depots, stated in that report at $325,000, would be chargeable upon the receipts of the year just closed; and that by the interest upon the bonds then authorized to be issued, and the instalment payable during the year to Messrs. Baring, Brothers & Co., the amount so chargeable. would be swelled to an aggregate of not less than $418,000.

It is now to be observed that the payments during the year on account of all the foregoing items, have actually amounted to the sum of $403,662.63, and that from the receipts of the year there has also been paid, on account of surveys west of Harper's Ferry, for interest on temporary loans, rendered necessary to meet the engagements of the previous year in anticipation of the accruing revenue, and for additional burthen cars, indispensable to comply with the more pressing demands of the increasing trade, the further sum of $37,534.10.

Of the net earnings, as shown above, not expended on account of capital, and which it is in the power of the Board to replace by the sale of their six per cent. bonds, the Board have declared a dividend of three dollars upon each share, and applied the further sum of $20,000 to the sinking fund-provided, as stated in former reports, for the reimbursement of the loan of $1,000,000 on account of the Washington road, leaving a surplus to be reimbursed from the cost of reconstruction by the sale of bonds, of $23,916.50.

It ought also to be observed that while, from the causes already explained, the dividend to the city and individual stockholders does not exceed three dollars per share, the State of Maryland has derived much greater advantages from her connexion with this enterprise. The subscription of $3,000,000 made by the State, in 1836, with the

distinct understanding that both the city and State should at the time contribute an equal sum, was paid in five per cent. sterling bonds; and that, although the subscription by the city has been fully realized and applied to the construction of the road to Cumberland, yet, that in consequence of the depreciated credit of the State, the sterling bonds received from the Treasurer have remained for the most part unavailable. Of the entire sum of the $3,000,000, an amount not exceeding 5000 pounds sterling has been disposed of, and while the Company has continued regularly to pay the interest upon that amount to the bondholder, the State, during the whole period, has annually received larger sums from the Company than any other stockholder.

During the past year, including the bonus, the State has received from the earnings of the Washington road, an amount equal to ten per cent. upon her subscription to that road-and with the dividend from the earnings of the main stem, has actually received a sum equal to seven per cent. upon her investment in both roads.

Of the revenue heretofore applied to reconstruction, the Board have replaced, during the year, the sum of $49,105-12 by the sale of their six per cent. bonds, at prices averaging about their par value: and it may be added, that, by the consent of the city authorities to receive the present dividend, payable to the city in the same securities, the Board will be enabled to make a further sale of the same description of bonds to the amount of $105,000, at their par value.

It is proper also to state, that during the past year the Board have entered into contracts, within the estimates of the engineer, for the further reconstruction of 31 miles of the old track, payable partly in the Company's notes at long credits, and partly in the six per cent. bonds alluded to in the last annual report, at par; and that they have also entered into contracts in the further amount of $152,872, being about $46,000 less than the cost estimated by the chief engineer, for indispensable alterations in certain parts of the old track, payable altogether in similar six per cent. bonds of the Company at their par value. For so much of the foregoing engagements as are payable in the notes of the Company, the Board must look to the sale of their six per cent. bonds, or to loans in another form; and, until one of these can be effected upon favorable terms, the current receipts must be used. The effect, therefore, upon the dividend of the current year must depend upon the success of one of the first resources.

A proper regard to the increasing trade and travel upon the road, and to its economical working, and, what is of even greater importance, to the safety of the public, would not permit a thorough reconstruction of the old and imperfect track to be longer delayed. By some, or all of the resources at the command of the Board, these objects must be accomplished with the utmost possible despatch; and the duty of the Board will only be discharged by accomplishing them according to their best judgment, with all the means at their command, and in a manner the least onerous to the stockholders.

Up to this time, it is not doubted, that an impartial examination of the subject will satisfy the stockholders, that in the discharge of the

arduous and multifarious duties devolved upon the Directors, the Board have practised a due economy and carefully guarded the interests entrusted to them.

The exhibition they are now enabled to make of a net earning of more than seven and one quarter per cent. upon the capital, over and above all the current expenses of working and management, including extraordinary repairs of the road way, bridges, and machinery of all kinds, is not only a conclusive evidence of the economy with which their duty has been performed, but ought to afford substantial evidence of the future profits of the work, and of the stability of the Company's credit. This part of the subject, however, cannot be properly understood or appreciated, nor will the stockholders be able to do justice to the present condition or future prospects of their own enterprise, nor properly sustain its credit, without bearing in mind that their work is, and for some time must remain, in an unfinished state— unfinished, not so much in regard to the termination to which it is designed ultimately to extend it, but, what is equally important, and to this occasion more pertinent, unfinished in regard to its capacity and power of operation throughout the present line. It would be a grave error, leading to serious and perpetual misapprehension, to conclude that a railroad, actually constructed between two given termini, was thereby finished and requiring no farther expenditure from the application of its resources to the purposes of capital. A railroad can be said, in no sense, to be finished until it is not only constructed and open for trade between two given points-the road must be considered as unfinished until it can be supplied with all the power and machinery of every description necessary to accommodate the public, and effectively and economically to conduct its daily operations. In all railroad companies in all countries, this obvious view of the subject is universally conceded and acted upon, and everywhere the cost of a road, and of all other objects comprehending its capital, is understood to include, not only the actual construction of the road way, but the supply of all the stations, depot buildings, engines, cars, and machinery of all kinds necessary to its effective operation. Until, therefore, a railroad is not only actually constructed, but provided with all that is necessary for its effective working, it must remain unfinished; and, while it is the duty of the company to proceed to finish the work in their charge with all proper energy, the only means by which it can attain that object, is an increase of its capital by new subscriptions, or by some form of loan, for the reimbursement of which, both principal and interest, the annual receipts are the only resource. The stockholders will scarcely need to be informed, that not only the present road from Baltimore to Harper's Ferry, in consequence of the radical imperfection and defectiveness of the original construction, is yet unfinished, requiring a large annual expenditure to complete it; but that in regard to the necessary stations, depot buildings, and cars, and machinery of every description, the whole work is yet unfinished, and on this account annually absorbing a considerable portion of the receipts to supply the defects. It must, then, be apparent that any unfavorable disproportion between the rate of the dividends and the

amount of the net earnings, can in no degree be attributable to improper expenditure in the working, but arises wholly from an unavoidable necessity of applying so large a proportion of the receipts to put the road in a finished state, to adapt it to the just demands of the trade, and to render it ultimately profitable to the stockholders. It is seen that during the past year, under the present economy, if the defectiveness of the road and inadequacy of the machinery had not required such a heavy expenditure, the net earnings of the year would have justified a dividend to the stockholders of seven and a quarter per cent.; and yet, that in consequence of the necessity of such an expenditure, the Board have been compelled to confine the dividend to three per cent., and temporarily to apply at least four per cent. of the net earnings towards completing the work.

It may not be out of place, in this connexion, and for better illustration of this part of the subject, to state, that from the opening of the road to the year 1837, inclusive, (a period of eight years.) the gross receipts amounted to $1,439,151, the expenses to $1,038,818, the dividends to $144,138, and the expenditure, on account of capital only, to $247,195. From the close of the year 1837 to the end of 1847, the gross receipts have been $5,979,097, the expenses $3,332,783, the dividends, $735,000, and the expenditure on account of capital $1,911,314. So that, from the opening of the road to the present time, the stockholders have received of its earnings $879,138, and the expenditure for general objects of capital has been $2,158,509. The ratio of expenses to receipts prior to 1837 was 727 per cent., and from 1837 to 1847, the ratio has been 557, while the excess of current receipts over current expenditure, prior to 1837, was $391,333, and subsequent to 1837 it has been $2,158,509.

In yielding to the necessity which has thus been explained, the Board have only followed the example of all others engaged in the management of similar works, practising, as they believe, not less economy than any other administration of railways that they might be required to imitate; and while it may be expected of the public at large to be satisfied with so liberal a provision for the accommodation of the business, the stockholders, in view of the ultimate benefits to flow from it, will, it may be hoped, be content with a policy dictated no less by the necessity of the case, than their own duty and true interest.

The result of this policy, and the economy with which it has been carried out, as well as the beneficial effects upon the interest of the stockholders, may be seen in the progressive improvements in their own enterprise, and in its present condition and future advantages.

The influence of the administration of the present Board cannot be traced to an earlier period than the middle or close of the year 1837. In that year, the length of the road being 82 miles, only 157,102 passengers, and 66,703 tons were carried in the cars, and the machinery imperfectly adapted to that amount of business: in the present year, upon a road of 178 miles, there have been transported 288,674 passengers, and 263,334 tons; and, unless from sudden accumulation at unexpected and temporary periods, there has been no deficiency of

power or means. Anterior to the year 1837, and up to the year 1835, there had been only five small dividends, varying from 37 cents to $1.124 per share, and from 1835 to 1840, no dividend had been declared.

In 1837, the outstanding current obligations of the Company were not less than $130,000, and the aggregate expenses of working the road only, was at least ninety-five cents in the dollar! As might have been expected from this result, the power and machinery of the Company were inadequate even to the inconsiderable business of that period; and only seven hundred and fifty thousand dollars of the original subscription remained unpaid, which, in a few years only, must have been needed for the payment of debts, and for the augmentation of machinery, leaving other objects of expense swelling beyond any resources at the command of the Company. How long, under a continuance of such causes, the road could have been kept in operation, it would now be needless to conjecture. At the end of the year 1840, a period of two years, the remaining capital had been called in, punctually paid, and applied to the reduction of the inclined planes at Parr's ridge, to the removal of other sources of perpetual and wasting expense, and to the augmentation of machinery of all kinds. During the same time, an improved system of repairs of roadway and machinery was adopted-the outstanding obligations of the Company were fully discharged, and a dividend of $2 per share was paid to the stockholders out of the net earnings. During those two years, the construction of the road west of Harper's Ferry was commenced, under circumstances in many respects unpropitious, and as early as the month of November, 1842, from the proceeds of the city subscription of $3,000,000, and the application of a considerable portion of the annual receipts, was completed as far as Cumberland, a distance of 96 miles, at a cost not less than $3,623,606-28.

During the period subsequent to 1840, a dividend to the stockholders was intermitted for a single year only, the earnings of the year 1842 having been applied to the extension of the road from Harper's Ferry to Cumberland. In 1841 and 1843, the dividend was $2 per share; in 1844, $2.50 per share; and in 1845 and 1846, $3 per share.

The comparative progressive improvement in other respects, during the same period, subsequent to 1837, is not less striking. In that year, the Company owned only fourteen locomotive engines, and these of the fourth, or smallest class, of which some were actually unfit for use, and the whole, more or less, in an imperfect condition. From that time to the present, the motive power of the Company has been increased, by purchase or otherwise, of thirteen of the largest class, two of the second, twelve of the third, and eleven of the fourth class, in all thirty-eight, and in actual capacity equal to seventy-two of the class of those employed in 1837. The augmentation and improvement in the number and condition of the cars and other machinery may be taken to be in the same proportion.

In 1837, the cost of repairs of road and bridges, the latter being comparatively few in number, was not less than at the rate of $1203 per mile of road, and at the end of 1846, before the occurrence of the