Univ.of in. 
 5 $ 
 
 m* * 
 
 Library 
 
 UmIVuKoI I I Ul iE.L.l'iU 
 
 REPORT 
 
 UPON THE 
 
 FINANCIAL AND BUSINESS AFFAIRS 
 
 OF THE 
 
 OREGON IMPROVEMENT COMPANY. 
 
 TABLE OF CONTENTS. 
 
 PAGES 
 
 Description of Properties. 1 to 4 
 
 Table of Earnings by Departments. 5 “ 6 
 
 Report upon these Departments: 
 
 Port Townsend Southern R. R. 7 “ 8 
 
 Seattle and Northern R. R . 8 “ 9 
 
 Pacific Coast S. S. Co. 9 “ 19 
 
 Columbia and Puget Sound R. R. .... 19 “ 21 
 
 Oregon Improvement (Coal Department).22 “ 80 
 
 Pacific Coast Railway.. . ... 30 “ 31 
 
 Valuations upon the Properties. 31 “ 33 
 
 Capital Account. 33 “ 34 
 
 Income Account. 34 
 
 Cash Requirements. 34 “ 35 
 
 Business Conditions. . . . . 35 “ 37 
 
 System of Management. ... 37 “ 38 
 
 Probabilities.. 38 “ 39 
 
Digitized by the Internet Archive 
 in 2017 with funding from 
 
 University of Illinois Urbana-Champaign Alternates 
 
 https://archive.org/details/reportuponfinancOOgree 
 
UNIVERSITY 
 
 OF 1LLINOI 
 
 Office of 
 
 THOMAS L. GREENE, 
 
 Room 1008, 
 
 26 Cortlandt Street. 
 
 New York, March 9, 1896. 
 
 John I. Waterbury, Esq., 
 
 Chairman Reorganization Committee 
 
 of the Oregon Improvement Co. 
 
 Dear Sir: 
 
 According to your instructions I left New York City 
 the middle of January and proceeded to the Pacific Coast 
 to make an investigation into the accounts and business 
 affairs of the Oregon Improvement Company, with par¬ 
 ticular reference to their present business condition and 
 the future probabilities. 
 
 The Oregon Improvement Company itself owns in fee 
 some steamships and coal lands. The principal proper¬ 
 ties, however, embraced in its system are railroads and 
 steamship lines; the entire capital stocks of these latter 
 properties, except enough to qualif}^ directors for these 
 subsidiary corporations, are owned by the Oregon Improve¬ 
 ment Company. These subsidiary companies have sep¬ 
 arate charters and organizations, while the Oregon 
 Improvement Company has no legal relation with them, 
 except as the owner of their capital stocks, though it 
 acts as treasurer for them all. Thus it forms a sort of 
 clearing house for all the corporations embraced within 
 its ownership. Besides the Oregon Improvement Com¬ 
 pany, these subsidiary corporations are as follows: 
 
 Pacific Coast Steamship Company. 
 
 Pacific Coast Railway Company. 
 
 Seattle and Northern Railway Company. 
 
 Port Townsend Southern Railroad Company. 
 
 Columbia and Puget Sound Railroad Company. 
 
 The properties owned by these corporations are as below: 
 
 The Oregon Improvement Company owns in fee nine 
 steamships, now being operated by the Pacific Coast Steam- 
 
 !103656 
 
Q 
 
 ship Company; 3,210 acres of coal lands in the Franklin Dis¬ 
 trict of King County, Washington; 1,920 acres of coal 
 lands in the New Castle District of King County, Washing¬ 
 ton, with mines, mine machinery, stores and real estate 
 belonging thereto; 2,240 acres of agricultural land in 
 Columbia County, Washington; 2,280 acres in Whitman 
 County, Washington; 63 acres in Walla Walla County, 
 Washington; 36 acres in Baker County, Oregon; 800 
 acres in Union County, Oregon; 167 town lots in the Town¬ 
 ship of Prescott, Washington; 20 miles of flumes, with 
 telephone line and wagon road, in Dayton County, Wash¬ 
 ington; 12 grain warehouses on the line of the Pacific 
 Coast Railway in Southern California; coal dock property 
 in San Francisco, with live stock and vehicles, buildings 
 on coal docks in Oakland, Portland and Astoria, together 
 with the shares of certain coal selling associations in San 
 Francisco and Sacramento. The Oregon Improvement 
 Company has on hand material, and supplies necessary for 
 its current requirements and also owns stocks of coal at 
 various points in Washington, Oregon and California, 
 together with coal accounts and bills receivable, being 
 money due for coal sold at wholesale and retail. 
 
 The Pacific Coast Steamship Company owns twelve 
 steamers of varying degrees of value, ocean landings and 
 wharves along the Pacific Coast, either in whole or in part, 
 material and supplies in San Francisco and elsewhere, to¬ 
 gether with current accounts receivable, as well as certain 
 equities and rights to the use of steamship wharves in 
 San Francisco and elsewhere. The capital stock of this 
 Company consists of 20,000 shares of $100 each, owned 
 by the Oregon Improvement Company. 
 
 The Pacific Coast Railway Company is the owner of 
 a narrow gauge railway running from Port Harford, in 
 San Luis Obispo County, in southern California, to Los 
 Olivos in the same county, being seventy-seven miles of 
 line with sidings and equipment, together with wharves 
 and buildings at Port Harford and current materials and 
 supplies on hand. The Pacific Coast Railway Company 
 
3 
 
 has issued 13,704 shares of stock at $100 each and 1,370 
 bonds at $1,000 each, the entire issue of both being owned 
 by the Oregon Improvement Company. 
 
 The Seattle and Northern Railway Company owns 
 thirty six miles of standard gauge line with sidings, run¬ 
 ning from Anacortes, Skagit County, Washington, east¬ 
 ward, crossing the line of the Seattle, Lake Shore and 
 Eastern Railway Company, the latter being the Canadian 
 Pacific connection to and from Puget Sound. The Seattle 
 and Northern owns equipment and also wharves and 
 buildings at Anacortes; it owns the stock of the Anacortes 
 Water Company, 3,240 town lots in Anacortes and 1,390 
 acres adjacent to that town. The Seattle and Northern 
 Railway Company has issued 50,000 shares of stock at $100 
 each, all of which is the property of the Oregon Improve¬ 
 ment Company. 
 
 The Port Townsend Southern Railroad Company 
 owns two lines, one running south from Port Townsend, 
 Washington, to Quilicene, and one line running from 
 Olympia to Chehalis, Washington, a total of forty-three 
 miles of standard gauge line. The company also owns 
 equipment, wharves and buildings in Port Townsend, 10 
 acres of land near Port Townsend, the Port Townsend 
 Hotel and 64 town lots in Quilicene, Washington. The 
 Port Townsend Southern has issued 30,000 shares of stock 
 at $100 and one bond for $912,000, all of which is the 
 property of the Oregon Improvement Company. 
 
 The Columbia and Puget Sound Railroad Company 
 owns 54 miles of narrow gauge main line, with sidings, 
 running from near the boundary of the City of Seattle to 
 the New Castle and Franklin coal mines of the Oregon 
 Improvement Company in King County. It also carries 
 coal, lumber and clay for other mines and camps situated 
 on the road as well as general merchandise and passengers; 
 it has equipment now nearly worn out, material and sup¬ 
 plies and current accounts receivable. The company owns 
 2,072 acres adjacent to the City of Seattle in King County, 
 Washington, and 605 lots in the City of Seattle. Subject 
 
4 
 
 to the trackage rights of the Northern Pacific it owns the 
 roadbed used by both railroads ten miles from Black River 
 Junction to the city boundary. Within the city limits it 
 owns the freight houses and tracks which the Northern 
 Pacific uses for its freight purposes and for its main line 
 under an agreement dated in 1893, by which the Northern 
 Pacific lias the privilege of purchase of one-half interest 
 in fifteen years at a valuation then to be fixed by appraisal, 
 the Northern Pacific meanwhile paying no rental. 
 
 The Columbia and Puget Sound Company owns two of 
 the best ocean wharves with buildings in the City of 
 Seattle with tracks connecting therewith, together with 
 coal bunkers extending out into the Sound, round house, 
 shops and other terminal property. A railroad right of 
 way along the water front was granted by the City of 
 Seattle to the Columbia and Puget Sound and the Puget 
 Sound Shore Railway jointly, the latter being now a 
 branch line of the Northern Pacific connecting with the 
 main line near Tacoma, and over which all the Seattle 
 traffic of the Northern Pacific is carried. This right of 
 way common to both roads is called the Ram’s Horn, and 
 forms a valuable line along the water front. Owing to the 
 nature of its traffic, the Columbia and Puget Sound uses 
 this line but little for freight and not at all for passengers, 
 thus giving to the Northern Pacific its passenger terminals 
 in the City of Seattle without the disturbance of conflict¬ 
 ing train service on the joint track. It will be seen from 
 this brief description that the relationships between the 
 Northern Pacific and Columbia and Puget Sound are very 
 close and difficult of separation, though by force of circum¬ 
 stances the Columbia and Puget Sound derives no direct 
 revenue from the different terminals described above as 
 used in whole or in part by the Northern Pacific Railroad. 
 A few years ago the State of Washington decided to claim 
 State ownership for all tide-water lands on Puget Sound, 
 and to sell the same for a nominal consideration to those 
 parties who should show the best right thereto. Under 
 its ownership of the terminal property already referred to 
 and also from ownership of certain city lots and the 
 
5 
 
 riparian rights belonging thereto, the Columbia and Puget 
 Sound has been adjudged to be the rightful purchaser of 
 tide-water lands along the city front of Seattle amounting 
 in all to about fifty-eight acres, subject to certain small 
 claims not yet decided. Under local complications a small 
 part of these lands is being filled in, the remainder is 
 covered by water and will probably remain so until act¬ 
 ually needed for commercial purposes. In the cash re¬ 
 quirements $110,000 is included for full payment to the 
 State for these lands and for the expense of filling as 
 agreed upon. These tide-water lands are at the moment 
 unsalable, but no doubt are of future value, for any ex¬ 
 tension of the business of the City of Seattle will require 
 the use of these lands for commercial purposes and for 
 wharves. 
 
 Below are given tables showing the gross earnings, op¬ 
 erating expenses and net earnings of each of the depart¬ 
 ments for 1895, compared with the results for 1894. 
 
 GROSS EARN¬ 
 INGS. 
 
 1895 . 
 
 1894 . 
 
 Increase. 
 
 Decrease. 
 
 Pacific Coast Steam¬ 
 
 
 
 
 
 ship Company .. . 
 
 $2,237,579 36 
 
 $2,478,936 02 
 
 
 $241,356 66 
 
 Pacific Coast Rail¬ 
 
 
 
 
 
 way Company.... 
 
 127,266 10 
 
 118,147 24 
 
 $9,119 46 
 
 
 Columbia and Puget 
 
 
 
 
 
 Sound Railroad 
 
 
 
 
 
 Company. 
 
 263,053 79 
 
 324,837 22 
 
 
 61,783 43 
 
 Seattle and North¬ 
 
 
 ern Railway Com- 
 
 
 
 
 
 nanv . 
 
 39,136 55 
 
 40,260 98 
 
 
 1,124 43 
 
 Port Townsend 
 
 
 Southern Rail- 
 
 
 
 
 
 road, Port Town¬ 
 
 
 
 
 
 send Division .... 
 
 7,409 70 
 
 7,825 03 
 
 
 416 33 
 
 Port Townsend 
 
 
 
 
 
 Southern Rail- 
 
 
 
 
 
 road, Olympia Di¬ 
 
 
 
 
 
 vision . 
 
 7,616 43 
 
 3,286 16 
 
 4,330 27 
 
 
 Steamers. 
 
 68,795 23 
 
 102,327 32 
 
 
 33,532 09 
 
 Land and Flume De¬ 
 
 
 partment. 
 
 1,527 10 
 
 4,521 37 
 
 
 2,994 27 
 
 Coal Department .. 
 
 506,118 89 
 
 677,261 26 
 
 
 172,142 37 
 
 Total Earnings 
 
 $3,258,503 75 
 
 $3,758,402 60 
 
 $13,449 73 
 
 $513,349 58 
 
6 
 
 OPERATING EX¬ 
 PENSES. 
 
 1895 . 
 
 1894 . 
 
 Increase. 
 
 Decrease. 
 
 Pacific Coast Slearn- 
 
 
 
 
 
 ship Company ... 
 
 $2,070,457 63 
 
 $2,075,093 25 
 
 
 $4,635 62 
 
 Pacific Coast Rail- 
 
 
 
 
 
 way Company ... 
 
 102,468 65 
 
 93,376 01 
 
 $9,092 64 
 
 
 Columbia and Puget 
 
 
 
 
 
 Sound Railroad 
 
 
 
 
 
 Company. 
 
 130,776 69 
 
 173,716 04 
 
 
 42,939 35 
 
 Seattle and North- 
 
 
 ern Railway Com¬ 
 
 
 
 
 
 pany . 
 
 27,559 96 
 
 35,048 68 
 
 
 7,488 82 
 
 Port Townsend 
 
 
 
 
 
 Southern Rail- 
 
 
 
 
 
 road, Port Town¬ 
 
 
 
 
 
 send Division.... 
 
 12,476 41 
 
 11,882 20 
 
 594 21 
 
 
 Port Townsend 
 
 
 
 
 
 Southern Rail¬ 
 
 
 
 
 
 road, Olympia Di¬ 
 
 
 
 
 
 vision .. 
 
 11,866 96 
 
 10,117 48 
 
 1,749 48 
 
 
 Steamers . 
 
 65,132 30 
 
 77,668 33 
 
 
 12,536 03 
 
 Land and Flume De¬ 
 
 
 partment . 
 
 3,469 15 
 
 7,201 72 
 
 
 3,732 57 
 
 
 
 
 Coal Department... 
 
 394,265 85 
 
 516,151 64 
 
 
 121,885 79 
 
 General Expenses 
 
 
 
 
 
 and Taxes. 
 
 50,113 01 
 
 60,692 71 
 
 
 10,579 70 
 
 
 $2,868,586 51 
 
 $3,060,948 06 
 
 $11,436 33 
 
 $203,797 88 
 
 NET EARNINGS. 
 
 1895 . 
 
 1894 . 
 
 Increase. 
 
 Decrease. 
 
 Pacific Coast Steam¬ 
 
 
 
 
 
 ship Company.... 
 
 $167,121 73 
 
 $403,842 77 
 
 
 $236,721 04 
 
 Pacific Coast Rail¬ 
 
 
 
 
 
 way Company. .. 
 
 24,798 05 
 
 24,771 23 
 
 $26 82 
 
 
 Columbia and Puget 
 
 
 
 
 
 Sound Railroad 
 
 
 
 
 
 dnmpany ...... 
 
 132,277 10 
 
 151,121 18 
 
 
 18,844 08 
 
 Seattle and North¬ 
 
 
 
 ern Railway Com- 
 
 
 
 
 
 pany. 
 
 11,576 69 
 
 5,212 30 
 
 6,364 39 
 
 
 Port Townsend 
 
 
 
 
 
 Southern Rail- 
 
 
 
 
 
 road, Port Town¬ 
 
 
 
 
 
 send Division.... 
 
 5,066 71 
 
 4,057 17 
 
 
 1,009 64 
 
 Port Townsend 
 
 
 
 
 
 Southern Rail¬ 
 
 
 
 
 
 road, Olympia Di¬ 
 
 
 
 
 
 vision . 
 
 4,950 53 
 
 6,831 32 
 
 2,580 79 
 
 
 StAamprK . . . 
 
 3,662 93 
 
 24,658 99 
 
 
 20,996 06 
 
 Land and Flume De¬ 
 
 
 partment . 
 
 1,942 05 
 
 2,680 35 
 
 738 30 
 
 
 Coal Department... 
 
 111,853 04 
 
 162,109 62 
 
 
 50,256 58 
 
 General Expenses 
 
 
 
 
 
 and Taxes. 
 
 50,113 01 
 
 60,692 71 
 
 10,579 70 
 
 
 Total Net. 
 
 $389,917 24 
 
 $697,454 54 
 
 $20,290 00 
 
 $327,827 30 
 
 Italic figures indicate losses. 
 
In order that the above figures may be understood and 
 so a clearer idea of the general situation be obtained, I 
 give below a statement of the affairs and earning capacity 
 for each department of the Oregon Improvement Com¬ 
 pany. 
 
 The Port Townsend Southern Railroad. 
 
 The Port Townsend Southern Railroad consists of two 
 divisions, the longer running south from Port Townsend 
 to Quilicene, Washington, and the shorter from Olympia 
 to Chehalis, Washington. These two lines were purchased 
 by the Oregon Improvement Company some ten years 
 ago, upon the theory that it would be wise to build a line 
 of railroad from Port Townsend around Puget Sound to 
 connect with some transcontinental line. It was for this 
 purpose that grants of land were made to the Company, 
 and subscriptions offered for bonuses. The project was a 
 wild scheme without any business foundation, but it was 
 conceived and entered into at a time when everything was 
 booming on the Pacific Coast, when even conservative 
 men believed visionary schemes to be practicable. 
 A hotel was built at Port Townsend to help along 
 the sale of land at that place. These two lines stand 
 upon the books of the Company at $1,353,504, after al¬ 
 lowing for all moneys received in cash or from sales of 
 land. In spite of great care the Port Townsend Southern 
 Railroad has never paid operating expenses. The deficit 
 in 1895 amounted to $9,003. The actual loss to the Com¬ 
 pany for operating these lines is, however, slightly less 
 than these figures, since a part of the general expenses of 
 the Seattle office amounting in 1895 to $3,200 was charged 
 to that Company. 
 
 The train service has been cut down as much as pos¬ 
 sible, and the roadbed is kept only in a condition above 
 the danger point. Some of the right of way is not owned, 
 and a part of that which is owned is but 24 and 50 feet 
 wide. There is about 10,000 feet of trestle on the road, 
 
8 
 
 which in the course of a few years will require some work 
 upon it. It will be a question for the Company to decide 
 whether this unprofitable line shall continue to be oper¬ 
 ated or be abandoned. In favor of continuing operation 
 is the possibility that when active prosperity returns 
 again, some use may be found for these lines of the Port 
 Townsend Southern with a further possibility of its sale 
 at that time to some other Company. For the immediate 
 future there is no reason to expect that the Port Town¬ 
 send Southern Railroad, if operated, will earn its running 
 expenses. 
 
 The Seattle and Northern Railroad. 
 
 The Seattle and Northern Railroad was built to afford 
 a railroad connection with the town of Anacortes, in 
 Skagit County, Washington, where there was a land boom 
 in progress. The road itself, as well as individuals, was 
 concerned with this land speculation in Anacortes. To 
 help the sale of the land owned by itself and its friends, 
 it established a water company in the town, which is now 
 operated at a loss. It built wharves and buildings for the 
 business of the supposed port. The principal traffic of 
 the road is the carrying of lumber, at so much a car, 
 which is mostly delivered to the connecting rail line, the 
 Seattle, Lake Shore and Eastern, The road is not expensive 
 to operate, and will not require more than ordinary re¬ 
 pairs for the present. It has always earned a small amount 
 of net income. It stands upon the books of the Com¬ 
 pany at $1,230,390. It is not recommended that the road 
 be abandoned, because it yields a small amount of profit, 
 but there is no immediate prospect of any improvement; 
 and so far as any one can see, there is no probability of 
 its becoming of any great value. These two companies, 
 The Port Townsend Southern and the Seattle and 
 Northern, it will be noticed, comprise three short 
 lines of railroad, which are separated from the rest 
 
9 
 
 of the system and have no business relation with the 
 other departments. Together they cost the Company 
 over $2,500,000, upon which, as a whole, no income has 
 been received. They w T ere paid for by the issue of con¬ 
 solidated bonds at a heavy discount, and are projects 
 which seem to have been entered upon wholly as matters 
 of speculation, and not as business enterprises, which 
 might be joined with the other departments, and made 
 to form an income earning whole. 
 
 The Pacific Coast Steamship Company. 
 
 The Pacific Coast Steamship Company was started some 
 fifteen or more years ago by Messrs. Goodall, Perkins & 
 Company, of San Francisco, who were then, as they are 
 now, the leading steamship men of the Pacific Coast. 
 When plans were forming for controlling the transporta¬ 
 tion interests of the Pacific Northwest, and the Northern 
 Pacific, the Puget Sound Shore Railroad, the Oregon 
 Railway and Navigation Company and the Oregon Im¬ 
 provement Company were organized, there was friction 
 between the steamers of the Pacific Coast Steamship 
 Company and those of the Oregon Railway and Navigation 
 Company. To avoid this, the Pacific Coast Steamship 
 Company was purchased from Goodall, Perkins & Com¬ 
 pany, and at the same time—about 1883—a contract to 
 manage all the steamships of the different properties was 
 made with that firm, subject, however, to an active 
 interference on the part of the owners. In 1889 this 
 contract on behalf of the Pacific Coast Steamship Com¬ 
 pany was renewed with Goodall, Perkins & Company, 
 but so modified as to give control entirely to them, sub¬ 
 ject only to the supervision of the owners. This latter 
 contract was renewed February, 1894, for five years. 
 This agreement provides that Goodall, Perkins & Com¬ 
 pany shall bear all the expenses of their own office, re- 
 
10 
 
 ceive and disburse all moneys, and manage the affairs of 
 the Company generally to the best of their ability, and as 
 compensation shall receive two per cent, of the gross 
 earnings. The cost of legal, traveling and ticket office 
 expenses and their other disbursements, except those be¬ 
 longing strictly to the general office, shall be borne by the 
 Company. The gross earnings of the Pacific Coast Steam¬ 
 ship Company have in the past averaged about $2,500,000 
 per year, yielding to Goodall, Perkins & Company about 
 $50,000 annually. The net earnings of the Company for 
 the few years previous to 1895 were about $400,000 
 annually; but for 1895 they decreased to $167,000. 
 
 The steamers owned by the Pacific Coast Steamship 
 Company comprise the smaller and poorer boats in the 
 fleet. The best ships are owned by the Oregon Improve¬ 
 ment Company and are leased to the Pacific Coast Steam¬ 
 ship Company for their net earnings. The Pacific Coast 
 Steamship Company covers the coast trade of the Pacific 
 from Alaska to Mexico, and with the exception of one 
 steamer belonging to the Oregon Railway and Navigation 
 Company, which runs alternately with one steamer of 
 the Pacific Coast Steamship Company between Portland 
 and San Francisco, the Company has no rival for the Pa¬ 
 cific coast trade possessing vessels of equal size and accom¬ 
 modations. 
 
 Below is a table showing the earnings, gross and net, of 
 the Company by routes for five years: 
 
11 
 
 
 1895 . 
 
 1894 . 
 
 1893 . 
 
 1892 . 
 
 1891 . 
 
 ALASKA. 
 
 Earnings. 
 
 $267,847 
 
 265,992 
 
 $291,991 
 
 202,600 
 
 $323,640 
 
 236,127 
 
 $386 575 
 327,904 
 
 $419,574 
 
 292,526 
 
 Net. 
 
 $11,855 
 
 $89,391 
 
 $87,613 
 
 $58,671 
 
 $127,526 
 
 PUGET SOUND. 
 
 $693,564 
 
 631,233 
 
 $826,370 
 
 728,881 
 
 $786,489 
 
 646,419 
 
 $775,648 
 
 650,315 
 
 $932,005 
 
 747,656 
 
 
 Net. 
 
 $62,330 
 
 $97,488 
 
 $140,070 
 
 $25,333 
 
 $183,349 
 
 OREGON (Portland 
 and San Francisco). 
 
 $228,352 
 
 226,336 
 
 $265,737 
 
 231,866 
 
 $214,578 
 
 233,629 
 
 $219,122 
 
 202,249 
 
 $264,390 
 
 211,479 
 
 
 Net. 
 
 $2,015 
 
 $33,872 
 
 $ IQ , 05 1 
 
 $16,873 
 
 $52 911 
 
 CALIFORNIA, North, 
 
 $105,465 
 
 115,718 
 
 $95,962 
 
 88,756 
 
 $112,561 
 
 97,951 
 
 $115,039 
 
 103,333 
 
 $124,347 
 
 112,016 
 
 Expenses . 
 
 Net. 
 
 $ 10,253 
 
 $7,206 
 
 $14,610 
 
 $11,706 
 
 $12,331 
 
 CALIFORNIA, South. 
 Gross. 
 
 $830,678 
 
 701,038 
 
 $870,335 
 
 679,839 
 
 $980,854 
 
 753,549 
 
 $960,360 
 
 746,432 
 
 $903,651 
 
 763,163 
 
 Expenses. 
 
 Net. 
 
 $129,640 
 
 $172,496 
 
 $227,304 
 
 $213,938 
 
 $140,487 
 
 MEXICAN. 
 
 Gross. 
 
 $109,639 
 
 90,096 
 
 $115,134 
 
 95,853 
 
 $110,569 
 
 103,301 
 
 $128,464 
 
 95,300 
 
 1 
 
 Mexican and Mis¬ 
 cellaneous routes 
 combined in 1891. 
 
 Expenses. 
 
 MISCELLANEOUS. 
 Gross . 
 
 $19,543 
 
 $19,281 
 
 $7,268 
 
 $33,164 
 
 
 $2,035 
 
 50,045 
 
 $13,407 
 
 29,297 
 
 $7,650 
 
 27,101 
 
 $113 
 
 37,821 
 
 $181,874 
 
 191,065 
 
 ■ Expenses. 
 
 Loss. 
 
 $48,ooq 
 
 $ 15,8Q i 
 
 $i9>45i 
 
 $37*934 
 
 $ 9,19 T 
 
 TOTAL. 
 
 Gross . 
 
 Expenses. 
 
 Net. 
 
 $2,237,579 
 
 2,070,458 
 
 $2,478,936 
 
 2,075,093 
 
 $2,536,341 
 
 2,098,078 
 
 $2,585,105 
 
 2,163,354 
 
 $2,981,345 
 
 2,318,906 
 
 $167,122 
 
 $403,843 
 
 $438,263 
 
 $421,751 
 
 $506,934 
 
 
 Italic figures indicate losses. 
 
 library 
 
 UNIVERSITY of ILLINOIS 
 
12 
 
 The losses on “ Miscellaneous ” cover principally the 
 idle steamers. 
 
 It will be noticed that the net earnings of this Company 
 have seriously declined for the year 1895. They will make 
 even a less favorable showing for 1896. At the date of 
 this report there is a war of rates between Portland and 
 San Francisco inaugurated by the Southern Pacific Com¬ 
 pany, who demand fifty per cent, of all the passenger 
 travel to'and from San Francisco and Portland and Puget 
 Sound cities. To force a settlement the Southern Pacific 
 Company is now running special trains on the boat days 
 at less than half the usual fare; and because of the crowds 
 attracted to their trains on those days, claim to be losing 
 no more money than before, when their trains ran partly 
 empty. Because of these low rates, however, the steam¬ 
 ships are losing money every trip. The war of rates 
 affects not only the earnings out of Portland, but also out 
 of Seattle. The freight earnings of the Pacific Coast 
 Steamship Company are, however, very seriously affected 
 for another reason. Owing to the business depression 
 there are a large number of sailing vessels and steam 
 schooners which were formerly employed in carrying 
 lumber at high rates from the ports of Washington and 
 Oregon southward. At that time the profit was so great 
 that these coastwise vessels carried nothing but lumber, 
 hurrying back to secure further loads. At present the 
 volume of the lumber traffic is reduced somewhat, 
 and the carrying rates much more, so that these 
 steam schooners find it profitable to attempt to secure 
 the traffic of the old established routes. They make it 
 a point to call for and secure at merely nominal rates 
 all the merchandise, grain and like traffic which 
 they can secure from southern ports and wharves 
 to San Francisco, and general supplies from San Fran¬ 
 cisco to all places northward, wdiere heretofore the Pacific 
 Coast Steamship Company have had matters ail their own 
 way. In like manner, the revival of the mining excite- 
 
13 
 
 menfc in Alaska, which is attracting passengers and mining 
 supplies, would prove a profitable business for the Pacific 
 Coast Steamship Company were it not for the fact that 
 here again the old established traffic is being actively com¬ 
 peted for by small steamers and schooners, which began 
 by offering rates just enough below the Pacific Coast 
 Steamship Company’s schedule to get the traffic. The 
 Pacific Coast Steamship Company have been obliged to 
 meet this competition squarely all along the coast from 
 Mexico northwards, by reducing their rates to about the 
 level of competing smaller vessels. This, of course, has 
 had the effect of stimulating shipments, so that more tons 
 were carried in 1895 than in 1894, but in consequence of 
 the volume of business the expenses were nearly as large 
 as the year before, so that the loss in the net earnings was 
 about the same as the decrease in gross. It is not to be 
 expected that this condition of things will find an imme¬ 
 diate remedy. Business is depressed upon the Pacific 
 Coast, and opinions differ as to the time when it may be 
 expected to mend. Until that time comes, however, it is 
 reasonable to suppose that there will be more or less se¬ 
 vere, and what one may call illegitimate, competition 
 with steamers of the Pacific Coast Company. 
 
 Meanwhile closer attention than has heretofore been pos¬ 
 sible should be given to the details of the business. On cer¬ 
 tain parts of the Coast the competition of these steam 
 schooners might be to a certain extent checked by a practi¬ 
 cal control of wharves which at many of the minor ports 
 may be the only docks and at which both lumber schooners 
 and the fine boats of the Pacific Coast Company now 
 stand on an equal footing. 
 
 Another matter involving the question of the economy 
 of operation is the fact that owing to the pressure to pay 
 interest upon the second mortgage bonds there has never 
 been any sum set aside either for depreciation or for extra¬ 
 ordinary repairs or for such improvements to vessels as 
 would make the workings of the ships more economical, 
 
14 
 
 or for the purchase of new vessels as the older and smaller 
 ships become worn out or practically worthless for the 
 purpose of the Company. 
 
 Of all the various kinds of corporation property, steam¬ 
 ships are the most perishable, and liberal sums should 
 have been deducted from the income account and set 
 aside in actual cash if it was intended that the Pacific 
 Coast Steamship Company should be well and economi¬ 
 cally operated. While no wholesale destruction of 
 the old fashioned boats should he attempted, a large 
 sum of money should be provided for repairs ab¬ 
 solutely needed in the next few years, and a fur¬ 
 ther sum annually set aside from the earnings for 
 depreciation and for the making of such minor improve¬ 
 ments as will reduce the running cost and thus add to the 
 net earnings of the future. 
 
 The ships of the Company are 15 years or more old, and 
 were built before the discovery of the triple expansion 
 engines and other marine inventions which have so 
 greatly modified ship architecture on the Atlantic Coast. 
 It is not contended that the practice of Atlantic Coast 
 steamship lines should be applied at once to the Pacific 
 Coast, because general trade conditions are not yet in 
 conformity with our Eastern methods; but that the evo¬ 
 lution of business on the Pacific Coast will undoubtedly 
 tend more and more toward Eastern conditions is a truth 
 which the reorganized Company must take into account. 
 Perhaps it would be well to give, as an instance of what 
 is meant, a table showing the actual results of operating 
 the Queen , which is considered the best ship in the fleet, 
 and the one used to accommodate the Alaska tourist travel 
 during the summer months. Below is the statement for 
 this steamship, covering thirteen years of service: 
 
15 
 
 Statement of Steamer “Queen.” 
 
 
 1883 . 
 
 1884 . 
 
 1885 . 
 
 1886 . 
 
 Gross Earnings. 
 
 . . . $375,546 
 
 $250,945 
 
 $248,778 
 
 $249,522 
 
 Operating Expenses. 
 
 273,012 
 
 217,335 
 
 186,625 
 
 200,611 
 
 Net Earnings. 
 
 ... $102,534 
 
 $33,610 
 
 $62,153 
 
 $48,911 
 
 
 1887 . 
 
 1888 . 
 
 1889 . 
 
 1890 . 
 
 Gross Earnings.. 
 
 .. . $393,908 
 
 $189,410 
 
 $258,270 
 
 $235,148 
 
 Operating Expenses. 
 
 251,951 
 
 188,600 
 
 249,953 
 
 207,847 
 
 Net Earnings. 
 
 . .. $141,957 
 
 $809 
 
 $8,316 
 
 $27,302 
 
 
 1891 . 
 
 1892 . 
 
 1893 . 
 
 1894 . 
 
 Gross Earnings. 
 
 . .. $190,256 
 
 $144,713 
 
 $184,84 S 
 
 $152,797 
 
 Operating Expenses. 
 
 
 134,741 
 
 182,290 
 
 164,405 
 
 Net Earnings. 
 
 $42,606 
 
 $9,971 
 
 $2,558 
 
 $11,608 loss. 
 
 1895 . 
 
 Gross Earnings. 
 
 
 
 
 $149,596 
 
 Operating Expenses. 
 
 
 
 
 149,387 
 
 Net .. 
 
 
 
 
 $208 
 
 For the eight years beginning with 1888 it will be 
 noticed that the average annual revenue accruing to the 
 Oregon Improvement Company was about $10,000. This 
 ship stands on the books of the Company to-day at its 
 original cost value of $493,000. If we estimate on 5 per 
 cent, upon this valuation, it will he seen that there has 
 been an average annual loss of nearly $15,000, to say 
 nothing of the depreciation which should have been 
 taken from the ship’s account and credited to its book 
 value each year. This vessel, the Queen, the Company 
 has contracted to put into dry dock next fall for the 
 renewal of her boilers and machinery at an expense of 
 $190,000. The reason for this surprising unprofitableness 
 as given by Messrs. Goodall, Perkins & Company is that 
 the steamer was built some fifteen years ago for speed, and 
 the modern inventions being then unknown, that end was 
 sought to be obtained by making the machinery so heavy 
 
16 
 
 and strong that the ship could be propelled through the 
 water by main force as it were. The result has been that 
 for fifteen years the ship has been a very difficult and 
 costly one to operate. After the Alaska season the ship 
 could not profitably be put upon any of the other routes. 
 Messrs. Goodall, Perkins & Company further state that 
 they have time and again called the attention of the offi¬ 
 cers of the Company to this state of things, not only as 
 regards the Queen , but also about other ships of the fleet 
 which were affected similarly, though not to the same ex¬ 
 tent, but that the replies have always been that the Com¬ 
 pany could not spare the money to make any such changes 
 as were suggested. The firm also state that after receiv¬ 
 ing the new boilers and machinery next autumn the 
 Queen will be available for extra service and will make 
 a better showing. It is also to be remarked that the 
 effect of the Alaska competition already has been that 
 of reducing the price of the first class cabin passage 
 about one-third, which of course has affected the results 
 of the last year or more. On the other hand 
 some of the good ships on the Southern California 
 route have made money. The Santa Rosa is an example. 
 Her yearly net earnings have averaged from $50,000 to 
 $60,000. This vessel is about 350 feet long and is hand¬ 
 somely fitted up; she stands on the books of the Company 
 at $600,000, and was built by John Roach in 1883. In 
 from three to five years this vessel will require new en¬ 
 gine and boilers at an expense of about $160,000. Some 
 of the smaller and older wooden boats of the Company are 
 still used for freight carriage or for extra service, but they 
 are very uneconomical, showing sometimes a loss and 
 sometimes small earnings. In the cash requirements 
 money is provided for one new vessel now for the freight 
 traffic in Southern California. 
 
 It is essential in any calculations for the future that 
 certain sums should be provided yearly from the earnings 
 for depreciations of these steamships on account of age, 
 and also for such extraordinary repairs and renewals 
 
(particularly of the boilers and engines) as may be re¬ 
 quired from time to time. It is a very difficult matter 
 to estimate theoretically what this annual provision 
 should be. Steamers differ greatly as to the rapidity with 
 which they wear out, and in actual steamship service the 
 only proper way .is to have the fleet appraised by prac¬ 
 tical seamen, say once in three years, and then rigorously 
 to take from the income of each year for the next 
 three years one-third of the depreciation as thus shown. 
 These deductions from the annual income should be in 
 cash, and should be put in some trust company and car¬ 
 ried on the books as a special fund. To this fund should 
 be charged these extraordinary repairs as they arise, and 
 also an occasional new vessel to take the place of those 
 actually worn out or that have become unserviceable. In 
 order, however, for the purpose of the reorganization that 
 the income of the Steamship Company for 1895 may be 
 approximately stated, including this depreciation, after a 
 careful investigation the sum of $150,000 has been de¬ 
 termined upon as the proper deduction to be made for this 
 purpose from the net earnings for 1895, stated in the 
 Receiver’s report. This deduction roughly covers an 
 estimated expenditure of $100,000 per year for boilers and 
 engines and $50,000 per year for such depreciation as 
 requires an occasional new vessel. There is already be¬ 
 ginning to be heard on the Pacific Coast expressions of 
 opinion that the Pacific Coast Steamship Company should 
 enlarge its operations somewhat; thus, for example, while 
 the Santa Rosa is a good vessel for the trade between San 
 Francisco, Santa Barbara and Los Angeles, ships running 
 on the same route with her, such as the Mexico , are not 
 such as to commend themselves to first-class travel. In Los 
 Angeles I was told that it was probable that there would 
 shortly be a demand for a fast line of express steamers be¬ 
 tween the ports of that city and San Francisco. A promi¬ 
 nent railroad man told me that the local—city to city—travel 
 between San Francisco and Los Angeles was about 200 
 passengers per day. During nine months of the year the 
 journey over the Southern Pacific between these cities is 
 
18 
 
 hot, dusty and very disagreeable; owing to mountain 
 grades, the Southern Pacific trains take about twenty 
 hours to run this distance of 482 miles; one train, the 
 Sunset Limited, by fast running, making the trip in six¬ 
 teen hours. The distance by water from the ports of Los 
 Angeles is about the same as by land; steamships making 
 about the same time as the Southern Pacific trains would 
 require a speed of, say, eighteen knots an hour, or some¬ 
 thing like that of the Sandy Hook boats in New York 
 Bay. Such ships would be expensive to build and expen¬ 
 sive to operate. This railroad man thought that the 
 Pacific Coast Steamship Company ought to consider the 
 question of putting on such a line of fast steamships, but 
 I do not think that as yet such a line would pay, or that 
 it would be advisable now seriously to consider such a 
 question. The matter is mentioned here as setting forth 
 the suggestion that the Oregon Improvement Company 
 will in time be compelled to improve its service with the 
 growth of business, particularly in Southern California. 
 Such a line of fast steamers certainly would not pay unless 
 the Company could secure a portion of the tourist travel¬ 
 ers wTio now hold their tickets from the East to and from 
 San Francisco by way of Southern California via the 
 Southern Pacific. In time some arrangement to this end 
 might be made with the Southern Pacific Company. At 
 present the Atchison system is forbidden by contract to 
 ticket passengers north of Mojave by any other route 
 than the Southern Pacific lines. 
 
 It is my general opinion that the Pacific Coast Steam¬ 
 ship Company, although not at the moment profitable to 
 its owners, has yet a good future,-provided its affairs are 
 conducted under careful supervision and with some ex¬ 
 penditure of money, and assuming also that in time busi¬ 
 ness on the Coast will again become active and prosperous. 
 
 I recommend, therefore, to the new Company that they 
 should by all means continue running the steamships, 
 even though a considerable sum of money is needed, and 
 so stated in the cash requirements for repairs and im¬ 
 provements, in some cases too long neglected. These ini- 
 
19 
 
 provements, as stated before, should have been provided 
 against by regular charges against the annual income. It 
 is also believed that the Pacific Coast Steamship Company 
 should claim the control of the Coast trade from Alaska 
 to Mexico, and should take steps to hold it against all 
 comers, whether the trade be competed for by steamships 
 as good as their own, or by steam schooners or sailing 
 vessels. 
 
 It will be noticed by the statement of earnings pub¬ 
 lished above, that while there has been a falling off in 
 the gross receipts of the Pacific Steamship Company in 
 1895 as compared with 1894, there has been but little re¬ 
 duction in running expenses. Upon this point it should 
 be recollected that the expenses of steamships cannot be 
 cut down when business falls off, nor can service be re¬ 
 duced as easily as can trains upon a railroad be discontin¬ 
 ued; the steamship must often run under a temporary 
 loss with a full complement of officers and men. More¬ 
 over, the average expenses for business of all kinds is 
 high upon the Pacific Coast for reasons which will be 
 more fully discussed in a later portion of this report. It 
 is enough now to state that each class of labor employed 
 upon or about steamships on the Pacific Coast has its 
 own trade union, and these trade unions are stronger and 
 more assertive than the corresponding associations upon 
 the Atlantic seaboard. Not only are the wages consider¬ 
 ably higher, but the rules of these unions require that 
 only a certain amount of work shall be done per day (as 
 in cases of caulkers), or that a certain number, more than 
 is really necessary, shall be employed to man a ship, as in 
 the case of steamships’ engineers and firemen. Time and 
 no little diplomacy on the part of the new Company will 
 be required to meet this difficulty. 
 
 The Columbia and Puget Sound Railroad. 
 
 Although the Columbia and Puget Sound Railroad 
 carries coal, lumber, clay and general merchandize for 
 other parties than the Oregon Improvement Company, 
 
20 
 
 yet it is as a transporter of coal from the mines of the latter 
 that its chief importance in the present connection comes. 
 The freight rates on coal are fixed high enough to yield a 
 fair profit, and the same charges are made on the coal of 
 the Oregon Improvement Company as on that of the 
 Black Diamond Company or any other shipper over the 
 road. Adding in the income received from the two ocean 
 wharves in Seattle owned by the Company, the Columbia 
 and Puget Sound has been able to earn an annual net return 
 for its owners varying from $125,000 to $150,000 per year; 
 yet manifestly the amount of these annual earnings de¬ 
 pends to an important extent upon the quantity of the 
 coal mined by the Oregon Improvement Company, and 
 the market for it winch that company is able to find. 
 The Company is doing its railroad work with some old 
 locomotives which will shortly have to be replaced. Its 
 coal cars, with some exceptions, are growing old rapidly 
 also. Additional equipment will therefore be necessary 
 in the immediate future, and as this additional equip¬ 
 ment can as w T ell be purchased for a standard gauge 
 line, it would be a matter of economy to change the whole 
 road to a standard guage this year if possible. For this 
 purpose a sum is included in the cash requirements. 
 Aside from the fact that a good part of this amount will 
 have to be spent in equipment in any case, it is further 
 true that if the road were made of the same gauge as that 
 of other connecting roads in Seattle, it would be possible 
 to extend the sales of Oregon Improvement coal, since the 
 cost of transfer and the breaking of the coal, arising from 
 transshipment, deprive the Oregon Improvement Company 
 of certain markets along connecting roads which they 
 might otherwise reach. The railroad line of 54 miles 
 has a great deal of trestle w T ork, one long trestle across a 
 marsh being one mile in length. Until a few years ago 
 these trestles were allowed to fall into decay, but during 
 the last few years a considerable portion of such work 
 has been filled with earth, while other parts of the line 
 have received proper care, so that the railroad of the 
 Columbia and Puget Sound Company is now in as good 
 
21 
 
 condition as the character of the traffic requires. This 
 may be inferred from the fact that the expenditures for 
 maintenance of way have amounted to $900 per mile per 
 year, an average somewhat larger than the average cost 
 of maintenance upon the whole system of either the 
 Chicago, Burlington and Quincy, or the Chicago, Milwau¬ 
 kee and St. Paul. 
 
 The Company’s wharf at Seattle, it is thought, could 
 be improved, and its hold upon the ocean traffic strength¬ 
 ened by the erection of a bonded warehouse to be built of 
 brick. This warehouse could easily be made self sustaining 
 by storage charges and could also be planned so as to afford 
 rooms for the general officers in Seattle, who now rent 
 offices in one of the prominent buildings of the city at a 
 cost of $2,640 per year. The reorganized Company might 
 cause an examination to be made into the legal and com¬ 
 mercial relations between the Columbia and Puget Sound 
 and the Puget Sound Shore railways (already referred to),in 
 order to see whether the property of the Oregon Improve¬ 
 ment Company is receiving all the benefit to which it is 
 entitled. Among the cash requirements is a sum for the 
 extension of the Columbia and Puget Sound to a junction 
 with the Northern Pacific main line. Such a line would 
 shorten the distance on the Northern Pacific, between 
 Seattle and the points east, some twenty-five miles, but 
 the expense need not be incurred until the Northern 
 Pacific are either willing to use the Columbia and Puget 
 Sound Railway for their Seattle connection or until the 
 advantage of the extension is otherwise clearly apparent, 
 such for example as the opening up of a new and large 
 market for coal. 
 
 The tide lands and the unused terminals of the Colum¬ 
 bia and Puget Sound Railroad in the City of Seattle, al¬ 
 though at present of only an estimated value, may be ex¬ 
 pected to become in the future either salable at good 
 prices or may be made to produce a corresponding in¬ 
 come. Of the city lots in the City of Seattle and the acre 
 land near by, the same may be said when the business 
 activities of Puget Sound shall revive. 
 
 i 
 
qq 
 
 The Oregon Improvement Company. 
 
 The nine steamships owned by the Oregon Improve¬ 
 ment Company have already been discussed when treat¬ 
 ing of the affairs of the Pacific Coast Steamship Com¬ 
 pany. The small amount of agricultural land in the 
 States of Oregon and Washington are at present unsal¬ 
 able, but will no doubt be of some value in the future. 
 The coal lands and mines of the company require, how¬ 
 ever, fuller treatment. 
 
 The Franklin coal field consists of 1,920 acres. The 
 coal is a steam coal and has been pronounced by good 
 judges to be the best steam coal found in the State of 
 Washington. The coals found in Washington are all lig- 
 nitic, being better than the pure lignite such as is 
 found in the State of Dakota. The Black Diamond Coal 
 Company, whose mines are situated on the Columbia and 
 Puget Sound Railroad, are mining from the same field of 
 coal as the Franklin. The vein which has been 
 worked at the Franklin mines is called the McKay, and is 
 four feet thick, with a top vein of two feet six inches. A 
 calculation of the operation of that part of the field, 
 which has been worked, gives the original contents as 
 312,000,000 cubic feet; at twenty-seveu cubic feet to a ton 
 of coal, and estimating that 40 per cent, of the contents 
 may be won, there appears to be an available quantity of 
 
 4.457.143 tons. Since the coal already mined or spoiled 
 may be estimated at 1,200,000 tons, there remains in the 
 ground an available output for the present mines of 
 
 3.257.143 tons, a quantity which, at 150,000 tons per year, 
 would take twenty years to exhaust. Since, however, 
 this vein in the Franklin field is shaped like a horseshoe, 
 a new opening has recently been sunk on the opposite side 
 of the hill from the old operations, this new opening sup¬ 
 plying the coal which is now being sent to market. 
 Owing to a fire in the mine, the old shafts have been idle, 
 but by pumping and other work it is hoped that the supply 
 of coal tributary to the old shafts will soon become avail¬ 
 able again. Owing to the difficulties of mining, and also, 
 
to an important extent, to the mistakes made a dozen 
 years ago by those who first began mining operations in 
 the field, the Franklin mines have so far proved very ex¬ 
 pensive to operate, the cost per ton on the cars averaging 
 $2.50. The expenditure of some thousands of dollars 
 would enable some part of this cost to be reduced by as¬ 
 sembling the different parts of the now scattered surface 
 machinery, so it is expected that this average cost per 
 ton can in time be reduced; but the mine will always 
 be an expensive one. The coal has a certain market as 
 a steam-producing fuel, and is sold under compulsion 
 to the Pacific Coast Steamship Company at a fair profit, 
 but its sales will always be handicapped by the cost of 
 production, and by the further fact that eighty miles 
 away, in British Columbia, as good or better steam-pro¬ 
 ducing bituminous coal is mined and sold in large quan¬ 
 tities all along the coast, in which markets the 40 cents per 
 ton custom duty offers no obstacle. For these reasons no 
 special stress is laid in this report upon the Franklin field 
 so far as regards the expected increase of profits of the re¬ 
 organized company in future years; nevertheless it may 
 be that reasonable quantities of this coal may yet be sold 
 to steam coal consumers at a profit, thus giving transpor¬ 
 tation to the Columbia and Puget Sound Railroad. 
 
 The Newcastle field, in the same county, is nearer 
 Seattle, being separated from that city mainly by a large 
 inland lake, called Lake Washington. This field comprises 
 1,920 acres. Four veins of coal are mined with an aggregate 
 thickness of 24 feet. On the same basis as before, that 27 
 cubic feet will yield one ton of coal, and that of the coal 
 in the ground 40 per cent, can be won, there remains 
 25,000,000 tons of minable coal yet in the ground, 
 enough to last one hundred years. The old mine 
 having been destroyed by fire, the Company has just 
 opened another shaft running into the same part of the 
 field. This mine now in operation has about 1,000,000 
 tons of workable coal in sight, which it is estimated 
 will be exhausted in about five years. It will be necessary 
 before this particular mine is exhausted to open another 
 
24 
 
 shaft upon the main field several miles away, and $75,000 
 is provided in the cash requirements for this purpose. 
 The cost of the present five-year mine was charged to 
 operating expenses, although to equalize matters in the 
 theoretical income account, to be given later, four years’ 
 proportion of this cost has been allowed as a credit to the 
 income of 1895. The veins of the Newcastle coal are in¬ 
 clined at an angle of 45 degrees, and the pitch on the 
 untouched part of the Newcastle field is such that it 
 would be cheaper, according to the mining superintend¬ 
 ent, to purchase some adjoining land, and begin sinking 
 the shaft upon that land, than to attempt to open the 
 mine upon the property already owned by the Company. 
 For these reasons, $35,000 has been put in the cash re¬ 
 quirements for the purchase of this adjoining coal land. 
 The expense of opening a new shaft will be somew T hat re¬ 
 duced by the removal to it, and the use of some heavy 
 hoisting machinery, which at a cost of about $75,000 was 
 placed about ten years ago at the mouth of one of the 
 Franklin shafts, but which has never been used. 
 
 The Newcastle coal is lignitic, but is well adapted for 
 domestic use; it makes a quick, bright fire, somewhat 
 like cannel coal, but burns away rapidly. In the semi- 
 tropical climate of California where, in many households, 
 it is the custom to cook meals and then to let the fire 
 go out, it has been the favorite coal of its kind for many 
 years. In the City of Seattle also the Company has a 
 large trade. I have been told by a number of persons in 
 Seattle that they prefer it for domestic use to any other 
 coal, even to that of British Columbia. Last year the old 
 Newcastle mine, which had been producing about 150,000 
 tons a year, was accidently set on fire and totally de¬ 
 stroyed; the fire was of course an accident, but the de¬ 
 struction it caused was owing to the bad methods under 
 which the mining had been planned and had been carried 
 on. Indeed, it may be said that if the Company had at 
 the outset employed a first-class mining engineer with a 
 high salary it would have saved in the end a great deal of 
 money. These mistakes, it is expected, will be avoided 
 
25 
 
 in the engineering of the new Newcastle mine, which 
 must be opened within a few years. 
 
 The principal market for all British Columbia and 
 Washington coals outside of the local sales is San Fran¬ 
 cisco, and it is to the consumption in that city that the 
 Company must mainly look for the disposal of any in¬ 
 crease in the output of Newcastle or Franklin coal. Since 
 the continued mining of the coal is absolutely essential 
 to any plans for the increase of the net earnings of 
 the whole system for the future, and since the output 
 of the mines furnishes transportation profits to 
 the Columbia and Puget Sound Railroad, and partly 
 to the Pacific Coast Steamship Company, it is im¬ 
 portant that space be given to a consideration of the 
 general coal situation in San Francisco. Outside of a few 
 lignite mines nearby either opened or proposed to be 
 opened, there is no coal in California, the City of San 
 Francisco depending on other countries and other States 
 for its supply. Roughly we may say that the city con¬ 
 sumes 1,500,000 tons of all kinds of coal per year; one- 
 third of this comes from British Columbia, and about one- 
 third more from mines in the State of Washington, the 
 other third being received from Australia and Scotland 
 and Wales, principally. The coals from Wales are at 
 present taking the lead in the San Francisco market, these 
 and similar coals being used principally for steam-producing 
 purposes. There are few factories in San Francisco, but 
 considerable quantities of coal are required by the United 
 States Navy, the electric and cable railroads and other con¬ 
 sumers of coal for power. It is estimated that of the 
 total of 1,500,000 annually received at San Francisco about 
 600,000 tons are used for domestic purposes, of which 
 500,000 tons, by far the greater part, come from British 
 Columbia, principally from the Island of Vancouver. 
 These British Columbia coals are now selling at wholesale, 
 “clean,” at $8 per ton; Newcastle coal, ‘‘clean,” selling 
 at $5 per ton wholesale. In spite of this large differ¬ 
 ence, the British Columbia coals dominate the domestic 
 market; as the people grow more fastidious, they are the 
 
more inclined to use the better class of coal, even though 
 it may cost them $3 a ton more. Nevertheless Seattle 
 coal is of long established reputation and can be sold, I 
 am convinced, in reasonable quantities when the mines 
 are ready to furnish a steady supply at a cost a little 
 lower than at present and of a reasonably good quality. 
 A more severe competition with Seattle coal (that is New¬ 
 castle coal) in San Francisco comes from other lignite 
 coals which are fiercely disputing the limited market for 
 that kind of fuel. One of these rivals is lignitic coal 
 mined by the Seattle Coal and Iron Company, called Gil¬ 
 man or Bryant coal. Another is the Coos Bay coal, which is 
 mined, brought to San Francisco and pressed upon domestic 
 consumers by Messrs. Goodall, Perkins & Company. 
 Claus Spreckels has recently opened a lignite mine on the 
 coast at the same point, Coos Bay, and has lately secured 
 a wharf and land in San Francisco for the further devel¬ 
 opment of his business. Although these coals can be 
 transported to San Francisco at less cost than Newcastle 
 coal, yet the better quality of the latter gives it an even 
 standing in the market. Nevertheless the Oregon Im¬ 
 provement Company should spare no pains to cheapen the 
 cost of mining and of transportation in order to regain 
 and hold the domestic market for lignitic coal in San 
 Francisco. 
 
 The Oregon Improvement Company has an office for the 
 sale of coal in San Francisco; also owns a valuable piece 
 of land near the wharves, part of which is rented to a 
 lumber firm, the larger part having a coal-hoisting and 
 storing plant. The Company also has the privilege of 
 renting some dock space, which it uses to load and unload 
 vessels. It should be explained that the State of Cali¬ 
 fornia owns all the wharves in the City of San Francisco, 
 a Board of Commissioners deciding which companies shall 
 have the privilege of using certain docks at a specified 
 rental. It is under this plan that the Oregon Improve¬ 
 ment Company controls its dock, and the Pacific Coast 
 Steamship Company its docks. For the purpose of ex¬ 
 plaining the situation of the Oregon Improvement Com- 
 
pany in San Francisco, a table is given below showing 
 the total number of sales by the Company for five years, 
 the sales of Franklin coal, small in amount, being omitted: 
 
 Seattle coal 
 Foreign... 
 
 Seattle. 
 
 Foreign 
 
 1891 . 
 
 1892 . 
 
 Tons Sold. Gross Profit. Tons Sold. Gross Profit. 
 83,391 $31,133 66,224 $32,818 
 
 147,126 $33,002 154,396 $65,131 
 
 1893 . 
 
 1894 . 
 
 Tons Sold. Gross Profit. 
 44,868 $12,440 
 
 164,492 $57,986 
 
 Tons Sold. Gross Profit. 
 44,873 $34,225 
 
 172,549 $38,761 
 
 1895 . 
 
 Tons Sold. Gross Profit. 
 
 Seattle.. 23,216 $9,514 
 
 Foreign. 202,501 $90,244 
 
 It will be noticed that, owing to the disasters at the 
 mine in 1895, the sales of the Seattle or Newcastle coal 
 were but a third or a fourth of the tons sold in 1891 and 
 1892. Under this shortage of supply from their own 
 mines, the Oregon Improvement Company, it will be 
 noticed, sold an unusual number of tons of foreign coal, 
 and realized for the Company last year the good profit of 
 $90,000. Circumstances seem thus to have forced upon 
 the company the necessity of selling the foreign coal, if 
 the Oregon Improvement Company was to continue in 
 business in San Francisco. The profit on foreign coal in 
 1895 justifies the reputation which the manager bears in 
 San Francisco of being the best coal merchant in thexuty. 
 Nevertheless, it is believed that the future policy of the 
 Company should be different from that lately pursued 
 under force of circumstances. A glance at the table 
 above will show that in some years almost as much 
 profit was made from the small sales of the Seattle coal as 
 from the larger sales of foreign coal, and it is not open 
 to doubt, if a large quantity, say 100,000 or 150,000 tons, 
 of Newcastle coal could be mined and transported cheaply 
 
28 
 
 to San Francisco and there sold at anything like the profits 
 ruling in previous years, that the Oregon Improvement 
 Company would make more actual money at its San Fran¬ 
 cisco office than it does now, while at the same time, 
 affording a profit to the other departments of the Com¬ 
 pany. In looking at these figures, it should be remembered 
 that by the system of accounting adopted, the mines are 
 only credited with their expenses, thus putting the whole 
 profit into the San Francisco office. 
 
 There are certain coals which may be described as non¬ 
 competitive, which it is advisable should continue to be 
 sold by the San Francisco office, such coals as the cannel, 
 anthracite, Scotch, splint, blacksmith and other fancy 
 coals. The selling prices of these coals are fixed so as to 
 yield a gross profit per ton varying from 50 cents to $1.50. 
 It is also believed by the San Francisco office that it is good 
 policy to keep on friendly terms with the British Columbia 
 operators and to sell their coal when called for by cus¬ 
 tomers of the Company. But by far the largest part of 
 the foreign coal sold by the Oregon Improvement Com¬ 
 pany consists of Welsh and Australian coal, mostly used 
 for steam-producing purposes. It is customary to contract 
 to deliver a certain number of tons of these latter coals 
 during the year at a certain price. In estimating on the 
 price at which such contract should be made, the prices 
 of coal in Swansea and Australia being known, a careful 
 estimate is made of the prospects of the wheat crop on 
 the Pacific Coast, for the more wheat the more vessels 
 may be expected to come to port for it. These vessels will 
 bring the coal into San Francisco for very little, as it 
 obviates the necessity of carrying ballast. The rates which 
 these vessels may be expected to charge on coal are thus 
 in inverse proportion to the prospects of the wheat crop. 
 When this calculation is carefully made a gross profit of 
 about twenty-five cents per ton is added, the competition 
 in San Francisco limiting the gross profit per ton which 
 can thus be made. 
 
 It is my belief that the value to the Oregon Improve¬ 
 ment Company of this foreign trade has been somewhat 
 
29 
 
 overrated, in spite of the success which is apparent from 
 the table above. The following theoretical calculation has 
 an interest in this connection; the figures being all taken 
 from the accounts for the year 1895: 
 
 Value of all coal on hand in stock at San Fran¬ 
 
 cisco and Oakland at cost, Nov. 30th- $71,147 
 
 All coal bills receivable Nov. 30th_ 289,350 
 
 Value of wharf and plant used by Company. 400,000 
 Live stock and vehicles..-. 6,915 
 
 $767,412 
 
 Annual interest on this amount at 5 % -. $38,370 
 
 Excess of expense over wharf receipts, for 
 
 year..... 11,338 
 
 Bad debts, 1895...... 1,035 
 
 $50,743 
 
 Number of tons sold at San Francisco, all 
 
 kinds, in 1895, including Franklin coal. 237,030 tons 
 Being a cost per ton of.- .... 210 
 
 This calculation would leave to the Oregon Improve¬ 
 ment Company a real profit of but 4 cents per ton on such 
 foreign coal as was sold on a margin of the gross profit 
 of 25 cents per ton, after charging expenses of all kinds, in¬ 
 cluding interest on the capital invested in the business. 
 It should also be added that the business of dealing in 
 competitive foreign coal is somewhat speculative in char¬ 
 acter, although the manager’s ability has been such that 
 a profit has been obtained each year. Nevertheless it par¬ 
 takes of the nature of a brokerage business, and some one 
 of marked ability in that particular line must be secured 
 to manage it. It does not seem to have as good a busi¬ 
 ness foundation for the investment of money of a corpora¬ 
 tion as the other departments of the Company. As 
 
30 
 
 stated before, these remarks are not made in criticism of 
 the San Francisco office, but rather as showing how the 
 net earnings of the future can be increased by a better 
 working together of all the departments of the Company. 
 The coal office in San Francisco and the mining office in 
 Seattle have been independent of each other, each report¬ 
 ing to the President in New York City. 
 
 The Pacific Coast Railway Company. 
 
 This narrow-gauge railroad was built as a feeder for the 
 Pacific Coast Steamship Company, with which it connects 
 at Pt. Harford. The valleys through which this railroad 
 runs are very fertile and capable of yielding large crops 
 when the rainfall is normal. For the past two years, how¬ 
 ever, there has been a shortage in the rainfall and a corre¬ 
 sponding decrease in the yield. Nevertheless, the net 
 earnings of the railroad have averaged over $20,000 per 
 year, in addition to the earnings of the Steamship Com¬ 
 pany from business interchanged with it. From Pt. Har¬ 
 ford on the ocean, the road runs eastward for about ten 
 miles to San Luis Obispo, the principal town of that sec¬ 
 tion of the country. In connection with a land com¬ 
 pany, the Railroad Company built here a good hotel 
 which does not pay more than running expenses. The 
 coast line of the Southern Pacific Company, running 
 southwards from San Francisco through the Santa Clara 
 Valley, was finally carried over the intervening moun¬ 
 tains, at a large expense, into the town of San Luis Obispo; 
 thence the road was extended along the coast until it 
 is now within sixty miles of a connection with the 
 Southern Pacific line from Santa Barbara to Los 
 Angeles. The best information I could obtain on the 
 Pacific Coast was that these sixty miles were not 
 likely to be built for some time to come. When, how¬ 
 ever, this gap is filled, the Southern Pacific will have a 
 line from San Francisco to Los Angeles, rather shorter 
 than its old line through the San Joaquin Valley and one 
 
31 
 
 forming a far pleasanter passenger journey. It looks on 
 the map as though this line had paralleled the Pacific 
 Coast Railway for its whole length, hut a trip over the 
 road shows that there are fair sized hills between the two 
 railroads, which should give the Narrow Gauge road the 
 advantage of its own valleys. Furthermore, to reduce 
 the rates very materially would compel the Southern 
 Pacific to readjust all their local tariffs in California; it 
 is not probable, therefore, that this will be done. The 
 Narrow Gauge road will undoubtedly lose a certain amount 
 of business to the Southern Pacific Company, but its case 
 is not nearly as bad as I supposed before going over the 
 ground. The road ought to make traffic agreements with 
 the Southern Pacific for such passengers and freight as it 
 cannot easily deliver to the steamships. To favor the 
 land company already mentioned, the terminus of the 
 road was fixed at Los Olivos. This was a mistake; the 
 road should be extended about five miles further to 
 the Santa Inez Valley, a fertile valley, whose traffic 
 is worth holding, and which can now be reached by the 
 Southern Pacific by a few miles of teaming or by a branch 
 road in the future. The roadbed and equipment are fairly 
 good, the only expenditure at present needed being for 
 the replacing of a few miles of old iron rails, now worn 
 out and getting dangerous, by steel rails, which the Com¬ 
 pany already owns. Messrs. Goodall, Perkins & Co. are 
 paid two per cent, upon the gross earnings of the Pacific 
 Coast Railway, as a part of the steamship system. 
 
 Valuations. 
 
 In order to give a clearer view of the situation, the 
 accompanying table has been prepared which gives in one 
 column the names of the different companies, next the 
 book value of each as carried on the accounts of the 
 Oregon Improvement Company, then a column giving the 
 estimated value of such assets of each of these companies 
 as are in active use, then finally a column giving an ap- 
 
32 
 
 praisement of those assets of these companies which are 
 not in active use, but which have a future or contingent 
 valuation. 
 
 Statement of Book Values and Valuations. 
 
 Companies. 
 
 Book Value. 
 
 Estimated value 
 of assets in' 
 active use. 
 
 Appraisement of 
 assets not in 
 act i v e use 
 having a 
 future or con¬ 
 tingent valua¬ 
 tion. 
 
 Or. Imp. Co. 
 
 $10,628,895 
 
 2,262,590 
 
 1,671,602 
 
 1,230,390 
 
 1,353,504 
 
 1,006,704 
 
 $3,149,058 
 1,339,176 
 800,000 
 200 000 
 
 $395,965 
 
 Pac. Coast S.S. Co... 
 
 Pao. Coast Ry. Co. 
 
 
 Seattle and No. 
 
 81,760 
 
 1,646,000 
 
 Pt. Townsend So. (2 lines)_ 
 
 Col. and Puget Sound. ... 
 
 2,975,000 
 
 
 
 $18,153,685 
 
 $8,463,234 
 
 $2,123,725 
 
 Of the amount carried as the book value of the Oregon 
 Improvement Company—$10,628,895—it should be noted 
 that the $5,000,000 stand in the accounts as “ Bonds, 5,000, 
 at $1,000 each”; the explanation of which is said to be 
 that $5,000,000 of stock of the Company was sold at par 
 and an equal amount of the Company’s bonds given to 
 stockholders as a bonus. It will be noted that the Seattle 
 and Northern and the Port Townsend Southern lines 
 stand upon the books at $2,500,000, for which consolidated 
 bonds were issued at a discount. These two investments 
 combined are yielding the Company no income. Aside from 
 its value as a carrier of coal for the Improvement Company 
 and for other mining companies, the Columbia and Puget 
 Sound owns agricultural land, city lots in Seattle and tide 
 water rights which are put down in the table at a valua¬ 
 tion of $1,646,000. In the majority of instances I have 
 taken the assessor’s valuations for these properties; the 
 same remark being true of the other two items in the 
 column of contingent valuations. These properties, be- 
 
33 
 
 cause of the business depression, cannot now be sold, but 
 it is not impossible when business revives that they may 
 become salable at at least twice the assessed valuations 
 above recorded. 
 
 The steamships belonging in part to the Improvement 
 Company and in part to the Pacific Coast Steamship Com¬ 
 pany, which are now being operated by the latter com¬ 
 pany, were appraised by three separate individuals; in 
 the above table the average of these appraisements has 
 been taken. Regarding the railroad properties the valua¬ 
 tion has been estimated on the basis of their earning 
 capacity for several years, capitalized at five per cent. 
 While there may be some slight difference of opinion as 
 to the values which may be put upon certain of the items 
 in this table, the importance of the statement consists in 
 showing approximately the financial condition of the 
 properties without cross-bookkeeping, and approximately 
 also the impairment of capital. 
 
 Capital Account. 
 
 The capital account of the Company on November 30, 
 
 1895, was as follows: 
 
 First mortgage 6 % bonds issued. ... $4,071,000 
 
 Consol. “ 5 % “ “ 6,757,000 
 
 Preferred stock “ 322,000 
 
 Common “ “ 7,000,000 
 
 Total. $18,150,000 
 
 Upon this capitalization the annual fixed charges were as 
 follows: 
 
 Annual interest on 1st mortgage bonds. $244,260 
 
 Payments from income to sinking fund_ 103,760 
 
 Total for 1st mortgage- $348,020 
 
 Annual interest on Consol, bonds - . 337,850 
 
 Total fixed charges on bonds issued_ $685,870 
 
34 
 
 Income Account. 
 
 The following is the approximate statement of earnings 
 for the year 1895: 
 
 Net earnings as reported after deducting 
 
 operating expenses and taxes_ $390,000 
 
 Add proportion of cost of opening new 
 shafts at mines, which cost should be 
 distributed over five years.. 50,000 
 
 Income from operation... $440,000 
 
 From these earnings from operation there should have 
 been deducted the sum of $150,000 for depreciation and 
 improvement of steamships. The amount which should 
 have been thus deducted has been arrived at by a careful 
 computation of the average amount necessary for renew¬ 
 als and extraordinary repairs to boilers and machinery of 
 the steamships. This depreciation has never been taken 
 into account, and this failure to set aside any money from 
 income for this purpose is the reason why it is now neces¬ 
 sary to raise money for these purposes in any reorganiza¬ 
 tion. 
 
 Cash Requirements. 
 
 The following is an estimate of the cash needed by the 
 Company for immediate requirements: 
 
 Rebuilding steamship Queen ___ $200,000 
 
 New steamship, equipment and amount neces¬ 
 sary for the rehabilitation of the steam¬ 
 ship and other business of the Company, 
 details of which I prefer to explain per¬ 
 
 sonally to your Committee_ 700,000 
 
 Standard gauging, equipping and extending 
 
 the Columbia and Puget Sound R. R. 250,000 
 
 Due for tide lands under contract with the 
 
 State.. 110,000 
 
 Developing coal lands and purchasing addi¬ 
 tional coal property.. 115,000 
 
 New warehouse. 35,000 
 
 Receivership expenses as estimated by Re¬ 
 ceiver.:_ 90,000 
 
 $1,500,000 
 
35 
 
 Contingent Requirements. 
 
 There should be appropriated from the net earnings a 
 sufficient sum annually for depreciation, extraordinary 
 repairs to steamships and for minor improvements, such 
 as electric lights and winches. If this sum is not set 
 aside annually from net earnings it will have to be pro¬ 
 vided for from other sources. 
 
 *%■&*** 
 
 It would be advisable also for the Company to provide 
 the sum of $500,000 as a separate fund, so that the Com¬ 
 pany may conduct its own marine and fire insurance. 
 The saving in the annual cost of this insurance by means 
 of such a fund would be important, besides the greater 
 security over previous methods of insurance. 
 
 General Business Conditions. 
 
 No good estimate of the future of the Oregon Improve* 
 ment Company can be made without taking into account 
 the general business conditions ruling on the Pacific Coast. 
 Until about three years ago the part of the United States 
 west of the Rocky Mountains enjoyed a high degree of 
 prosperity, partly because of natural conditions and partly 
 through booms. While these good times were present 
 the business men there did not need to make a close study 
 of their circumstances. Fancy prices were obtained for 
 everything, and no matter what the expenses may have 
 been, there was always a large margin of profit. Aside 
 from the collapse of the booms, which would probably 
 have come in any event, the Pacific Coast has felt 
 the business depression which began in Wall Street 
 and slowly spread throughout the country. Roughly 
 speaking, they are now experiencing the dullness of busi¬ 
 ness which was the marked characteristic of the Atlantic 
 Coast a year ago. There is very little profit in the major¬ 
 ity of lines of business on the Pacific Coast. The citizens 
 are looking forward hopefully to the time when the 
 
36 
 
 clouds will lift and trade become again active and prosper¬ 
 ous. Some of the more enthusiastic think that this day of 
 prosperity is not far away, and they are rather inclined to 
 doubt the judgment of an Eastern man who does not 
 strictly agree with them, and they add, with some meas¬ 
 ure of justice, that the Eastern man is hardly in a condi¬ 
 tion to appreciate how easily and quickly values advance 
 on the Pacific Coast when once the tide turns. Neverthe¬ 
 less, there are some considerations which lead one to the 
 opinion that recovery upon the Pacific Slope will be 
 slower than its merchants believe. The reason for this 
 opinion lies principally in the fact that the people of the 
 Pacific Coast do not seem to be able or willing to approach 
 the problem in the right way. They are all expecting the 
 wished-for prosperity to come through an advance in 
 ' prices. It would be better if at least a part of their energy 
 were directed to cheapening the cost of production. 
 
 This remark is applicable to a greater or less extent to 
 almost every industry upon the Pacific Coast. It seems to 
 me to be a more reasonable theory to hold that the recov¬ 
 ery in business will come partly through an advance in 
 prices, no doubt, but largely through a reduction in the 
 cost of production. One of the important elements in this 
 matter of cost is the wages paid for all forms of labor. 
 Wages on the Pacific Coast are about twenty-five per 
 cent, higher than on the Atlantic seaboard, and not only 
 so, but, as before remarked, the trade unions, which are 
 very strong, limit the amount of work to be done and 
 often increase the number of men required to perform a 
 certain work. California particularly is a cheap country 
 to live in, and there is no economic reason why wages 
 should be higher there than upon the Atlantic Coast 
 except upon the theory that the laboring men should 
 share in the large margin of profits heretofore ruling. It 
 may be said that the employers of labor are, in their way, 
 making the same mistake as the laboring men. Many of 
 the old merchants on the Pacific Coast are unwilling to 
 sell goods except on the old-time percentage of profit. It 
 
37 
 
 seems to me, therefore, that considerable time will elapse 
 before that portion of general prosperity which arises from 
 the study of cheap production and a small margin of profit 
 will come to the States of the Pacific seaboard.- No trav¬ 
 eler, however, can help being impressed with the possibili¬ 
 ties for commercial, mining and agricultural success in 
 that section of our country when once this lesson is 
 learned. 
 
 These remarks apply as well to the properties of the 
 Oregon Improvement Company as to the other business 
 interests of that Coast. There has not been the occasion 
 for the careful study of details such as the managers of 
 eastern corporations have been compelled to undertake. 
 It is my judgment, therefore, that one of the needs of 
 the times is that the management of the Oregon Improve¬ 
 ment Company in all its departments should be so 
 organized as to undertake this more careful study of all 
 details of the business. Without this, any reorganization 
 will, I am persuaded, fail of its real object. 
 
 System of Management. 
 
 To arrange for the carrying out of this better study of all 
 the different departments, it is essential that the system 
 of management should be so organized as to render such 
 a study possible and effective. The method in use up to 
 the date of the Receivership is not such as to meet the 
 requirements of the present situation. The mining de¬ 
 partment and the railroad department in Washington, 
 and the selling department in San Francisco, have been 
 independent of each other, each looking for instruc¬ 
 tions from a President three thousand miles away. 
 So, too, the Pacific Coast Steamship Company, 
 under the contract with Goodall, Perkins & Co., 
 have been subject to the Oregon Improvement Company 
 only as to general supervision, and this, again, has been 
 attempted to be supplied from New York City. One re¬ 
 sult of this system has been that the Company has four 
 general, or quasi-general, offices (five, if we include a 
 
38 
 
 small office in Portland), involving an expenditure of 
 about $150,000 per year. The minor employees are not paid 
 too much, but, on the contrary, in some instances not 
 enough, the cost coming rather from a duplication of 
 work and of positions. At present there is no one office 
 where all information can be obtained. A concentra¬ 
 tion of management such as is herein proposed would 
 save a good part of this sum. But the benefits of such a 
 saving in general office expenses would be slight com¬ 
 pared with the effect upon the Company’s earnings as a 
 whole. There should be a President (or Vice-President) 
 who should also be the general manager, and whose office 
 should be at some central point upon the Pacific Coast, 
 preferably San Francisco. Such an officer should be held 
 responsible for the workings of all the departments and 
 should be controlled only by the Executive Committee in 
 New York. There should be in New York City a Presi¬ 
 dent (or Vice-President) holding a nominal position, and a 
 Treasurer, who should be the active man and authorized 
 by the Executive Committee to require all necessary infor¬ 
 mation from the main office, so that the Eastern bond and 
 stockholders may be thoroughly informed about the 
 workings of their property and so that the General Man¬ 
 ager on the Pacific Coast may be held responsible as to his 
 policy, though not as to details, to the New York office and 
 Board of Directors. All the subordinate companies should 
 be leased to the Oregon Improvement Company for their 
 net earnings, saving bookkeeping and permitting concen¬ 
 tration. The various departments on the Pacific seaboard 
 should be made strictly subordinate, both as to positions 
 and salaries, to the General Manager. This officer should 
 be selected with great care, for I know of no corporation 
 whose future is more dependent upon the personality of its 
 chief officer than the Oregon Improvement Company. 
 ****** 
 
39 
 
 Probabilities. 
 
 Owing to strong competition with the Pacific Coast 
 Steamship Company on nearly all its routes and because 
 of the general dullness of business, it is probable that the 
 net earnings of the year 1896 under the above estimate 
 will not exceed, if they do not fall beloTv, the earn¬ 
 ings already given for 1895. With the cash require¬ 
 ments of the Company satisfied, so that the various 
 departments shall be in a better position to conduct their 
 business economically, and with the more concentrated 
 management already advocated, by which the various 
 properties shall be operated so as to support each other 
 effectively, there is good reason to expect an increase in 
 the earning capacity of the Company within three or four 
 years, an increase which w T ill no doubt be accelerated 
 when general business upon the Pacific Coast becomes 
 more active and prosperous. If the policy above outlined 
 is systematically and vigorously carried out, there is rea¬ 
 son to expect that the Company should then be able to 
 earn, say, $500,000 per year, applicable to fixed charges 
 and dividends. 
 
 I am, yours very truly, 
 
 (Signed) THOMAS L. GREENE. 
 
 [1083N] 
 

 
 
 
 
 
 
 
 
 4