New-York tribune., 1921-05-22

The most elaborate set faccounts
an ne fslsifed. This is equally tsNe
!. snv large business. This, however,
!. not ouite what the shippers and now
4. labor leadsrs assert. They hardly
ofar as to accuse railway exeeu-
=. of actually falsifying their ac-
.nnts The claim is rather that the
..eousts are so jockeyed that tney do
~ show true picture of the situa-
.iop In my opinion, it is impossible
= "a Jockey the accounts that they can
Tat be analyzed and the true state of
fssts discovered.
The commissions accounting rules
Syide railroad expense accounts into
II. maintenance of way and struc-
,ares; f2) maintenance of equipment;
IN traffic; ~ transportation; (5)
sther expenses; (6) general expenses;
m uncolleetabie revenue.
Resides expenses there are expendi-
trres for additienals and betterments
A. extensions. There are called capi-
ii exueditures and the Interstate
Commerce Commission makes 3 care
nj distinction between the two classes
instance. II Idll mas lO De re-
,ewed the cost of laying new rail of
the same weight as the old rail is
charged to expenses of maintenance
II way. II however, the new rail is
"a mounds heavier yard than the old
ali the cost of the additional 20
nounds of steel is charged to additions
and betterments; that is, to capital,
and the cost of the weight of the
original rail is charged to expenses.
This distinction holds good all down
through long list of primary &C
counts.
1t is possible, of course, to use some
Judgment as to what shall be charged
for expenses and what to capital ac-
.ouni. even with such elaborate rules
IS the commission has devised. If &
bridge is to be rebuilt, part of it con-
crete and part steel, replacing an old
steel structure, it is possible for a
clever engineering accountant to get a
little more into operating expenses or
into capital account than q conscien-
iious, disinterested accountant would
get, but the sum total of such manipu-
latien is quite small.
The accusation of the labor leaders
Is two-edge sword or q self contra
ietory argument, whichever way you
may care to view it. The labor men
say that on the one hand the railroads
are padding their expense account to
make worse showing than the facts
Justify, and on the other that the roads
are inefficiently managed, and that
therefore the transportation expenses
sre higher than they need to be. On
the other hand, the labor men assert
hat the railroads are spending less
than their accounts would lead one to
believe and on the other hand that the
railroads are spending more than is
necessary. 1t was asserted during the
six months wherein the railroad man
ayers were in charge OF the roads re-
porting to their corporation president,
but during which time the government
guaranteed a minimum amount of net
operating income, that the roads spent
more on maintenance of way than they
should have to keep the property in as
good condition as it was in the three
years of the test period. This is called
eTermaiHtenance, or charging expendj-
lures that are really additions and bet
sments to expenses.
LabOr's assertions
The labor leaders maintain also that
repairs of cars, etc, were given out on
contract and that even repairs of
tracks were contracted for at an un-
necessariiy high price and limited that
nslaers could make money by so doing.
n my opinion, without actual falsifica-
ton, it would be impossible to con-
'sct for repairs to equipment or for
upkeep of roadway at prices that would
allow any material amount of graft.
for instance, under maintenance of
Eay and structures, the cost of rails
I shown separately, the cost of ties is
@own separately, the cost of labor of
putting in ties and rails is shown
separately, etc. There are thirty-four
er more primary accounts under main
Naahce OF way alone.
ihe original vouchers are open to
Inspection by the Interstate Commerce
commission and the charge made by
contractor for any given piece of
sVfk Is shown separately and clearly.
~ accountant employed by the Inter
sase Commerce Commission, if he had
good knowledge of prices ond condi-
u0hs, would be able to catch serious
s'ereharges without difficulty. There
.Ote, when a company shows certain
amount spent for maintenance of way
spa structures it is safe to assume
mal TINS is approximately the actual
sslOuht spent on that account, slthough
Nls may represent under or over
Malatenance of the property.
VI tne seven general accounts the
eur important ones are maintenance
', way and maintenance of equipment,
siich represent the cost of keeping the
5siiopefty and rolling stock in good con-
s'eoa' transportation expenses, which
,spfesent the t-of-pocket cost of
moving freight and passenger business,
sI sau trafiic expenses, which represent
se cost Of soliciting freight and pas
singer business.
!, "ltnout dishonesty or Justification, it
guite possible TO charge SO much to
,srsanlsehance expenses that actually the
y.opetty Is being improved year by
s;na, a,, instead of deteriorating. Fake a
my gie instance A management may as
sue life of only ten years for rails
H.. she man track, and at the end of
t.s period take them out of the main
Inv ahd put them onto the branch
~ NJ track, and later onto sidetrack.
~ acconnts cannot show the condition
sne ran that is relaid in sidetracks
~ p1fsheh lines; it shows only the orig
ws;. gsa weight. 1t may be that the rail
,sa aieh mas been on the main line only
r Z" years ls but slightly worn, whereas
,se a. tsli OF originally the same weight,
epiaced on branch lines is SO worn
srssS 9 oe possibly dangerous at higher
bons bra 'hsn twenty or thirty miles an
"oad Being Improved