Though 1920 was bad enough, 1921 excelled it in horror. In reviewing the results of this year, the United States railroad authorities have called it the worst year in the history of the United States. “The decline of both freight and passenger traffic was the greatest, absolutely and relatively, that ever occurred in the country,” the Railway Age said. The Canadian railways experienced practically similar conditions to those existing in the United States. But the Canadian National System, unlike many other lines, finished the year with its physical property in better condition than ever before. We drastically reduced operating and maintenance forces, because the deferred maintenance work had practically been completed; and because, due to the previous two years’ work, operating conditions were improved. Though our traffic, in common with that of other railways, fell away, the year closed with gross earnings practically the same as in 1920. We were able to effect such economies in every department that we reduced our operating expenses by $21,250,000. Misery loves company. Sometimes, when you are in trouble, it is a consoling thought that you have not monopolised the chastening rod. Our handicaps considered, we were not as badly off as some American railways which, in dividend-earning power, had been regarded as surest among the sure--the Pennsylvania, for instance. This line had an operating loss of over $23,000,000 in 1920, or a total loss of $48,250,000, including taxes and fixed charges, as against net earnings of over $89,500,000 only four years before--in effect, and comparatively, a deficit of $112,500,000. The Canadian Pacific in 1916 had a surplus of $15,500,000, after paying all fixed charges, and dividends. But in 1920 with an increase of $87,000,000 in gross revenue over 1916, the C.P.R. not only lost the advantage of the increased earnings, but advancing expenses exhausted so great a proportion of their gross that the surplus in 1920 was only $450,000, after providing for fixed charges and dividends. In the spectacular declines of such railways as the Pennsylvania there was no branch-line factor such as affected our situation. It is axiomatic in railway practice that most branch lines, of themselves, do not pay, and that, without the branch lines that do not pay, the main lines can’t pay--at least their prosperity would be heavily reduced. In a sense, of course, if you do not build a line into a prairie region where settlement has already taken place, you will get business, for the remote farmer will haul his grain to the station, and his supplies must be hauled a longer distance than would be the case if he were closer to the steel. But settlement will remain sparse, and farmers will not grow as much grain, if they have to haul it twenty, forty or sixty miles to market.