the operating expenses, taxes, and interest on the mortgage. If there is nothing left after paying the other items mentioned above, the stockholders receive nothing, so that there is a certain risk connected with an investment in railroad stock that does not apply to railway or Government bonds. For a number of years the Burlington Company has paid 8 per cent dividends to its stockholders. It has earned more than that, as the annual reports show, and the Directors might legally and properly have paid larger dividends, but they did not, and all the money earned in excess of 8 per cent on the stock has been spent for betterments, new equipment, etc. This policy, pursued through a long period of years, as it has been, explains how it is that the Burlington is in such good physical condition as it is today, and with such a low capitalization. With this explanation, you will understand, I am sure, that with an increase per year in wages alone of $3,000,000.00, together with other increases due to legislation, such as $325,000.00 per year because of the nine-hour law for operators, and a smaller income because of rates reduced (freight and passenger) in many states, the surplus, if any, after paying dividends would be much less than formerly, and if any new work was undertaken it would be necessary to keep its cost within such surplus as might be available, or else borrow the money with which to pay for such work. I hope I have now made clear why it was that we became worried about the Budget in January, 1907, and why for the last two years we have been trying, so to speak, to get our house in order. It will perhaps be said that we could have borrowed money for new extensions, betterments, etc., and that is actually what we were compelled to do, in order to complete the Budget plans above referred to; but what prudent man would want to borrow beyond his forced necessities, at a time when the future seemed so uncertain, and when the interest on the money so borrowed would add that much more to his existing burdens? The same sound principles should and do underlie railroad operations that you should and do apply to your own personal affairs. The items are larger in the case of the railroad--that is all. I will now repeat the question--What will bring about a resumption of business on railroads? And if I have succeeded in making clear what I sought to explain, I think you can answer the question just as well as 1 can, but I will give you my views, and you will now be in position to judge whether they seem sound or otherwise.