I have the honor to submit the following exhibit as to the earnings of our road and also the progress made in its extensions for the quarter ending Decr 31st 1878.

The report of Mr. G. P. Erwin Treasurer shows that notwithstanding the great distress financially from which every branch of industry is suffering our receipts have materially increased. Taking for comparison the months of Oct. Nov. and Decr. we find the repts for

For a detailed statement I respectfully ask a careful examination of the report of the Treasurer accompanying this.

The grading under the immediate supervision of Mr. Ephraim Clayton has been pushed forward as rapidly as circumstances will permit. The unusual fall of snow and rain during the winter has caused immense slides, in one place amounting to six acres which has of course retarded us greatly. This trouble we will be able to overcome in a few days by turning into the cut a mountain stream with a fall of 80 feet and by this means with water will accomplish what it would have taken a large force at least twelve months to do. Only four rock cuts now obstruct the laying of track to the Swannanoa Gap, to which point we feel sure of having the cars running in June. I have purchased for this six miles 534 tons of steel rail, at a cost of $42.15 per ton, about one half the price formerly paid for iron. A 30 ton engine of the Baldwin make has been purchased at a cost of $7500 to be used exclusively on the Mountain Division. 

The amount of work done by the convicts for the last quarter at a fair price for such work is estimated as follows.