this Company's operations. This investment is showing a good
income which is partially included in the report of your own
business under the head " Income from investments." It is
expected in 1896 to make such reorganization and development
of these companies as will add to your Company's income from
investments in their securities.

At the time of the last annual report, your Directors were
giving their attention to the formulation of a comprehensive
financial scheme to provide for the profitable extension of your
Company's plant, from year to year, in accordance with legiti¬
mate business requirements. As a result, a special meeting of
the stockholders was called for May ist, 1895, and, prior thereto,
a circular embodying the views of the Directors was issued.
The following is an extract therefrom :

During the past years the Company has been necessarily extend¬
ing its plant to embrace the most profitable sections of the City.
This work has now been largely accomplished, and it is not ex¬
pected that in the early future the Company will find advantage in
extending beyond present territorial limits, but it is more and more
evident to your Directors that valuable opportunities exist for
further development within these limits, and that, in the future, as
in the past, and even in more marked degree, such development
will yield a steadily augmenting ratio of return on the capital in¬
vested.

Since the last annual report, your Board of Directors have given
careful consideration to the question of future development and it
seems to them that a point has now been reached where the Com¬
pany should adopt some comprehensive financial scheme which,
while surrounded with every safeguard, shall provide for the legiti¬
mate requirements of the Company for a series of years to come,
and, at the same time, leave the largest po.ssible margin of profit
for the capital stock.

The result of these deliberations is that the Directors have deter¬
mined to ask the stockholders, in accordance with the enclosed
notice, to authorize the creation of a mortgage under which bonds
can be issued from time to time, possibly in connection with future
issues of stock, as the needs of the Company may require.

The law under which your Company is organized provides that
the bonded indebtedness of the Company shall not exceed the
amount of its outstanding, paid-up capital stock, or an amount
equalling two-thirds of the value of the Company's property in the
event of such two-thirds exceeding the Company's capital stock.
This just requirement would prevent, in any case, an inmiediate
issue of any unduly large amount of bonds, but it has been thought
desirable, in arranging for a new mortgage, to make the amount
named iu the mortgage large enough to provide for future contin¬
gencies. It is, therefore, proposed that the mortgage shall be for
the sum of ^15,000,000.