actually worth. That left the board up in the air. Left them to resort to some other means of investigation, which they did, to find out what the value of that stock was. But now then, let us carry this application of this principle to the road that I started with, of one thousand miles that returned its physical property to be worth $20,000 a mile. It said the stocks were not worth par, and the board took them at their own value, not $200,000,000 as they had outstanding, but $175,000,000, what the board itself said it was worth, or about 82 cents on the dollar. If you take the mileage of that road at their own figure, take the bonds at par, and they were above par, and you have a stock and bond valuation on that road of over $100,000 to the mile, a property whoșe physical return value was only $20,000. This is the second test of stocks and bonds according to this law. Now there comes the third proposition. The legislature was not satisfied to have the board investigate the value of a railroad two ways, but it said you must do it three ways, and they made a command upon every railroad operating in this state to make a sworn return to the state board of the amount of its earnings, gross and net. My friend said that he thought that this test was a pretty fair test. If you capitalize the net earnings which they say was $1,000 a mile at 4 per cent, that would give the value of the road. His argument was--and the courts agree with him-that the fair rate to capitalize earnings is six per cent. But I have yet to find a reason why the per cent should be that high. Here is a plant which pays four per cent dividends; it is a four per cent institution; its bonds all draw four per cent and some four and one-half and five per cent. Will you tell me why they should be capitalized at six per cent when they are a four per cent plant? But we will take the court's view of it and give the roads the benefit of capitalization at six per cent, and what is the result as to this company I have been talking about? Its net earnings average the system over, more than $4,000 a mile. What is the net earning of a railroad? It is what is left after every item of expense in the operation has been paid. You have maintained your road and kept it in repair. Not only that, you have paid your taxes; and whatever is left, that goes into your pocket; after all these expenses are paid, the rest is net earnings. The state board in 1904 was not satisfied to have a return made as to the net earnings of this railroad on its entire system; the board thought the system was earning more money in Nebraska than in the other states, and it asked for a return showing net earnings in Nebraska; and while the returns showed that the whole system over every mile had averaged over $4,000 net earnings, in Nebraska it averaged $5,500 per mile net. That is a great earning power. You capitalize this and you have at least $90,000 per mile on an average in this state. Now, then, we have applied the three tests that the law authorizes, and this road, worth by the physical property test $20,000; by stock and bond test about $92,000, and the net earning test something less than that, and you have an average valuation of beyond $65,000 per mile, $10,000 per mile more than it is assessed. Do you wonder the courts sustained that assessment? When you come to the final assessment of railroad property in Nebraska, as in every other state, you have got to depend upon the integrity of your state assessors in fixing the property and its valuation, because it is their judgment that does the business. The law is here, and it is their judgment that must do the rest. There are two ways to beat a law. First, never to pass it. That is one way. Second, after you have passed it, get some one in office who will not enforce it. That is the second way. I don't care what kind of law you put on the statute books, unless you will put an assessor there who will carry it out, you will never get an equitable assessment. My friends, I have talked longer than I expected. I thank you. [Applause.] THE WORK OF THE UNION PACIFIC IN NEBRASKA. BY E. L. LOMAX. A description of the growth and progress of Nebraska, without mention of the Union Pacific, would be like the play of Hamlet without the Prince of Denmark. The construction of the road, its rise and triumphs, are a part of the history of the state, and the prosperity of the road has increased the advancement and wealth of Nebraska which has accompanied it. The Union Pacific was the first road to enter Nebraska. In 1863 the work was begun and forty miles of road were completed by 1865. Within five more years, 705 miles of road were constructed and operated in the state, and this increase continued until now, in 1902, there are over fourteen thou sand miles of rail and water lines directly controlled by the Union Pacific R. R. A reference to this is necessary to show what part the road has taken in enabling the commonwealth to double and quadruple, as it has done. The mileage of the Nebraska division of the Union Pacific is as follows: Eastern District-Council Bluffs to Grand 159.95 39.40 22.06 Loup City Branch-St. Paul to Loup City. Total Nebraska Division... 65.79 .1,052.40 Throughout the state there is already one mile of railroad to every fourteen square miles. Vast regions of fertile country have thus been opened up to settlers, and great areas of land brought by rail into contact with metropolitan centers. Prosperous cities have sprung up in every section traversed by this line. The state in thirty-nine years has grown from 122,000 to 1,068,901 inhabitants, with a proportionate increase in material and other property. Take the following as an example of the surprising growth of Nebraska: The population in 1855 was. The population in 1860 was. The population in 1875 was. In 1860 there was 1 person to 3 square miles. The assessed valuation of the state is over $170,000,000; there are 120,000 farms under cultivation. It has now nearly 5,600 miles of railways, which is greater than those of Siberia and Japan combined. It is first in intelligence of its citizenship; second in health; third in corn growing and sugar beets; fourth in oats; fifth in wheat; and sixth in hay. Its cattle products in 1900 were 2,206,792; sheep 322,057; hogs about 1,500,000. In 1900 its smelting work products were $28,000,000; beet sugar, $520,301. The estimated value of South Omaha products alone in 1901 is $14,000,000 greater than that of the whole state in 1890. Its true wealth is estimated in 1900 at $1,282,246,800, as against $385,000,000 in 1880, an increase of 233 per cent. Its surplus products in 1900 are valued at $225,555,160.89. The beginning of all this, the phenomenal growth, dates from the commencement of the Union Pacific R. R. In a brief outline of this character it would be impossible as well as unnecessary to describe the early history of this great railroad. It is now a part of the history of the United States, and everybody knows something of it, but in order to appreciate what the Union Pacific has done, it is well to remember that the expanse of territory now called Nebraska was in what our forefathers called "The Great American Desert," which spread its arid, lifeless mantle of land over thousands of square miles of the great western basin of the Mississippi. In latitude north and south; and in longitude east and west, the awful barrenness extended without limit. Civilization had hardly approached it on any side. The idea of ever crossing this expanse was regarded as well-nigh impossible. In the midst of this seeming hopeless sterility, Nebraska has sprung up—a state of magnificent extent, seventyseven thousand square miles, or 49,000,000 acres in area! It could be spread over all New England, and yet have 11,000 square miles to spare. In this stupendous transformation, the Union Pacific has been a mighty factor. Let me cite merely a few of the things this great railroad has done for Nebraska. Take, for instance, the economic importance of irrigation. The distribution of water by artificial methods, better known as irrigation, has received such an impetus during the past few years that it has at last resolved itself into a national proposition. All western and some of the southern states have established state departments of irrigation, Nebraska along with the othNot that this state could not produce crops without resorting to artificial methods, for the volume of rainfall has increased and continues to increase of late years, but the soil |