New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-09-04
[. c. c. Prescribes. Rules
for Keeping Accounts,
Which Give Ample Ma
ierial for Main Facts

relation Of total expenses to total
revenues. Railroad operating expenses
are OF two entirely distinct classes
The expenses Of operation of the plant
ana the expenses of maintenance OF
the plant. The more cheaply the
pleased the stockholders should be.
Maintenance is a different question
A reduction in the amounts spent for
maintenance may indicate either econ
omicat maintenance or inadequate
| maintenance.
This is the thing that should be
watched in this years monthly rail-
road operating expenses most closely.
Inc railroads were undermaintained
during the period of government oper-
atoms, in my opinion. During the six
months. April to July inclusive, of
1920, while the roads were being
operated under guaranty. some roads
made up a large part of the main
tenance that had been deferred by
the government. Others did not. In
comparing the monthly figures for
earnings and expenses in 1921 with
the corresponding figures in 1920, it
Is only to be expected that those com
panies which took up deferred main
tcnance in 1920 will show lower main
tenance costs in 1921. But il the
company did not clean up its deferred
maintenance in 1920 and, notwithstand-
ing this, still shows a large decrease
IN maintenance expenses in 1921, eau
ton suggests that the operating ratio
De viewed with some doubt,
Some railroads report t6 stockhold
ers the costs of maintenance Of way
and structures per mile of road and
others leave this figure to be worked
cut by the reader Of the report from
the statistics given. 1t is simple
enough figure to arrive at. The total
cost OF maintenance of way and struc-
lures which is shown in the income
account may be divided by the aver
age mileage operated by the company,
which is almost invariably shown in
the report. If stakeholder of Atchi-
son, Topeka & Santa F6 is making a
study of his compsnys showing, he
can get check on it by comparing
the present cost per mile of road for
maintenance of way on the Atchison
with that of the Southern Pacific. The
comparison, however, to have any sig
nlflcance. must be between two roads
OF similar physical characteristics.
10 Judge of the adequacy of the
maintenance of equipment the cost of
repairs of LOGON olives, of freight cars
and OF passenger cars should be stated.
for locomotives on per LOGON olive
basis and for freight cars on a per
freight car mileage basis. The reason
tor this difference in base is that loco
motives are comparatively seldom run
OF their own line, whereas repairs are
given to freight cars of other lines and
other lines give repairs to our freight
therefore, is more accurate one, in
my opinion.
Besides the actual expenses of main
tenance of the property and operation
OF IT., there are certain expenses which
the Interstate Commerce Commission
defines as additions and bette nts.
The stockholder should total up for
himself the amount that has been spent
year by year by his company for adj
ditions and betterments over series
of at least ten years. Normally, if
his management has shown good judg-
ment, the expenditures made for addi-
tons and betterments for the. past ten
years should be reflected in increa sed
earnings both gross and net, or in any
case, in increasing net equal to at least
6 per cent on the total amount spent
for additions and betterments. Only
very few railroad arrangements can,
however, make this showing. In other
words, the railroads have been steadily
heading down hill, and the stakeholder
can only base his judgment on a COM
parison Of the showing made by his
management in respect to earning in
terest on the new investment with that
of other railroad homogeneous.
At best summary such as this can
only give railroad investor a method
of approach to the study of an annual
report. In 1900, long before Professor
Henry Adams had laid out plan for
prescribed form of report to the In
terstate Commerce Commission,
Thomas F, Woodlock had written
little booklet of 121 pages, which to-
day is the best guide to a study of an
nual reports that know Of
Even without a knowledge Of rail-
road accounting, however, you can read
remarkably vivid human inside story
in railroad company's annual report.