Union Cypress Company's Line, 492 Utah Light & Railway Company, 655 Vancouver, Victoria & Eastern, 710 Virginia & Eastern Carolina, 1288 Wabash, 81, 229, 272 Washington & Great Falls Railway & Power Washington Electric, 492 Washington, Potomac & Chesapeake, 815 Washington, Westminster & Gettysburg, 185 Waterloo, Cedar Falls & Northern (Electric), 1064 Waycross & Western, 655, 1064 West Tennessee Traction, 1288 Argentine Central, 82, 454 Arizona Eastern, 974, 1118 Atchison, Topeka & Santa Fe, 454 Atlanta, Birmingham & Atlantic, 272 Atlantic & Danville, 1236 Atlantic Coast Line, 776, 1065 Baltimore & Ohio, 230, 560, 1065 Beaumont & Great Northern, 776 Bellingham & Northern, 862 Belt Railway of Chicago, 367, 1118 Birmingham & Gulf Railway & Navigation, 1118 Boston & Albany, 186, 907, 1015 Boston & Lowell, 974, 1288 Boston & Maine, 144, 601, 776, 907, 1065, 1236 Boston & Providence, 186, 656 Boston Elevated, 493, 974 Bowden Lithia Springs Short Line, 1065 Bridgeton & Saco River, 186 Brooklyn Rapid Transit, 656 Brownwood North & South. 367 Buffalo & Susquehanna, 330 Buffalo, Rochester & Pittsburgh, 272, 330, 601 Burr's Ferry, Browndel & Chester, 493 Carolina Railroad, 1288 Central of Georgia, 82, 816 Central Railway of Canada, 230 Central Pacific, 38 Chesapeake & Ohio of Indiana, 38, 82, 186 Chicago & Alton, 38, 601, 656 Chicago & Eastern Illinois, 144, 601, 862 Chicago & Western Indiana, 330, 367, 601, 974, 1118 Chicago, Burlington & Quincy, 144 Chicago, Memphis & Gulf, 38 Chicago, Milwaukee & St. Paul, 1288 Chicago, Milwaukee & Puget Sound, 862. 1288 Chicago, Peoria & St. Louis, 711, 816, 1065 Chicago, Rock Island & Pacific, 776, 1236 Chicago, Terre Haute & Southeastern, 367 Chicago Union Transfer. 367, 1118 Cincinnati, Bluffton & Chicago, 230 Cincinnati. Hamilton & Dayton, 656 Cincinnati, New Orleans & Texas Pacific, 974 Cleveland, Cincinnati, Chicago & St. Louis, 410, 656, 816, 974. 1065. 1163 Colorado & Southern. 656. 1163 Colorado Midland, 144, 1065, 1163, 1236, 1288 Columbus Connecting & Terminal, 410 Connecticut River Railroad, 560 Connellsville State Line, 38 Cumberland Corporation, 330, 367 Delaware, Lackawanna & Western, 368, 1288 Denver, Laramie & Northwestern, 144, 862, 1163 Denver. Northwestern & Pacific. 186, 330, 368, 493. 560, 601, 711. 816, 1236, 1288 Denver Railway Securities Company, 1015, 1236 Des Plaines Valley, 1065 Detroit, Bay City & Western, 974 Detroit. Toledo & Ironton, 144, 974. 1236 Duluth, South Shore & Atlantic, 656 Halite & Northern, 272 Huntington, Richmond & Hamilton, 230 Interborough Rapid Transit, 1065 International & Great Northern, 82, 974, 1163 Interoceanic Railway of Mexico, 1065 Interstate Railroad, 1288 Iowa Central, 656 Iowa Central & Western, 656 601 Mississippi River & Bonne Terre, 230 Nashville. Chattanooga & St. Louis, 144, 907, 1288 National Railways of Mexico, 493, 656 New York Central & Hudson River, 82, 230, 493. 776, 907, 1015. 1236 New York Central Lines, 1065 New York Consolidated Railroad. 1118 New York Municipal Railway Corporation, 656 New York, New Haven & Hartford, 82, 186, Norwood & St. Lawrence, 1118 Ohio River Railroad, 230 Oneida Railway, 230 Ottawa Terminal Railway, 1065 Overton County Railroad, 656 Paris & Mount Pleasant. 330 Parkersburg Branch Railroad, 230 Pere Marquette, 38, 82, 410, 907 Pittsburgh & Susquehanna, 1288 Pittsburgh, Fort Wayne & Chicago, 230 Quebec Central, 493, 862 Reading Company, 1236 Rio Grande, 1118 Rock Island & Dardanelle, 776 Rock Island Southern, 454 Roscoe. Snyder & Pacific, 1288 Rutland, 82, 493, 1236 St. Joseph & Grand Island, 368, 560, 862 144, 186, 601 St. Louis, Rocky Mountain & Pacific, 272, 1065 St. Mary's & Western Ontario, 368, 711 Seaboard Air Line, 82, 230, 656, 816, 1065 Sibley, Bistenau & Southern, 601 Southern Pacific, 82, 230, 493, 1118 Southern Railway, 560. 711, 1236 Stephenville North & South Texas, 1118 Stuttgart & Rice Belt, 776 Sullivan County Railroad. 560 Syracuse, Binghamton & New York, 368 Tampa Northern, 82, 230 Tennessee Central, 816 Tennessee, Kentucky & Northern, 656, 862 Tennessee Northeastern, 410. 493 Toledo Terminal Railroad, 38 Tonopah & Goldfield, 656 Toronto, Hamilton & Buffalo, 816 Union Pacific, 862, 1236 Subscriptions, including 52 regular weekly issues and special daily editions published from time to time in New York, or in places other than New York, payable in advance and postage free: MA NUMBER 1. 2 3 4 6 9 17 20 22 12 14 18 21 22 24 .8. 16, 17, 19 25 ANY railway officers have been under the impression that the adoption of powerful Mallet locomotives would cause considerable trouble by break-in-twos and the resulting damage to the freight cars in starting long trains. Inquiry as to this has been made of a number of roads which have had more or less experience with the large locomotives, and if there is any trouble of this sort it does not appear to be at all serious. Everything depends on the proper handling of the locomotives. An officer of one road, whose engineers are men of limited experience, very few of them having run an engine more than four years, says that it is surprising to find how quickly the engineers will learn to handle trains of from 5,000 to 6,000 tons without breaking them in two, if the cars are what they ought to be. Some trouble was experienced with 40-ton steel underframe cars from a neighboring road, which were equipped with weak draft gear and poor couplers, but this was materially reduced by getting the owners of the cars to pay more attention to the condition of these parts. Another road reports that the Mallet locomotives lose less time in starting and handling trains than the simple locomotives, because the two units of the type of Mallet which it is using do not slip simultaneously, and this is true whether the engine is working compound or simple. If one unit does slip the other is not affected, and the strain on the train is continuous. The usual practice on this same road is to double head with two 4-8-0 locomotives, the combined weight of which is from 10 to 15 per cent. heavier than a single Mallet; they haul more tonnage than the Mallet, but the records show that this is accomplished without any more damage to the cars than when a single engine is used. A western road, which also uses Mallets in road service, reports that when these locomotives are loaded to their capacity they will start the trains easier than is possible with consolidation locomotives. This, because of the fact that the Mallet can be operated simple when starting the train, thus greatly increasing the tractive effort and allowing the locomotive to move off easily. WE E publish on another page two letters, one entitled "The Operation of a Division" and the other "Clogging the Wheels with Explanations and Reports," which deal with practically the same subject in much the same way, although they come from railway men in two quite widely separated sections of the country. Both voice the complaint that under modern conditions and methods of railway operation the superintendent of a division often has not the opportunity to superintend it. He is kept busy today, they say, explaining the things that happened yesterday, and the consequence is the happening today of things which he will have to explain tomorrow. While his subordinates run the division the superintendent is elevated or depressed to the rank of the official explainer. Anyone who will inquire among the superintendents will be told that there is a good deal of truth in all this. Of course, no one questions that the higher operating officers should keep in close touch with the operation of each division and demand explanations of important events or conditions the reasons for which are not clear. But the more time, thought and energy the superintendent must give to explanation and justification the less he will be able to give to doing his proper work, that of operating his division, and, in consequence, the more things there will be for him to explain and justify. It is a defect of some men that after they have delegated certain duties to their subordinates they do not supervise and check them up enough to make sure that they are doing their work properly. It is an even worse defect, however, for a superior to supervise, criticise and demand explanations until he deprives his subordinates of opportunity and inclination freely to exercise initiative and enterprise. The job of a superintendent is to superintend. If he is not big enough for his job, the best thing to do is to get somebody who will be. If he is big enough for the job, he is big enough to be given a pretty free hand in determining both what he shall do and what he shall explain. If it is necessary to have an official explainer to satisfy the curiosity of superior officers and their chief clerks, might it not be a good plan to designate some particular assistant superintendent or other subordinate officer to spill the ink of explanation, and let the superintendent go out on the line, perform each day his proper function of superintending the operations of that day, and thereby reduce the necessity of explanation to a minimum? THE 'HE Chicago freight handlers, who have been on strike since May 4, agreed on June 27 to an unconditional surrender, by which the railways will take back into service, by July 31, 1,800 out of the 5.865 employees who left their work. The places of the others have been filled, and many of those who took part in the walkout have lost their pension rights. That the strike of the shop employees of the Harriman Lines, the Illinois Central and the Missouri, Kansas & Texas last fall has been a complete failure from the standpoint of the strikers is demonstrated by the efforts they are now making to secure a sympathetic walkout on the other western lines. Both the shop employees' and the freight handlers' strikes have caused inconvenience to the public and have cost the railways large amounts of money, but the results to the roads of their having the courage not to yield should be well worth the cost. The present, from the standpoint of employees, is a bad time to strike. In the case of the freight handlers' strike the settlement was effected by the intercession of the shippers, as represented by the Chicago Association of Commerce. When times were good and traffic heavy the railways were perhaps too prone to submit to the demands of the walking delegates and grant high wages to avoid the reductions of earnings that strikes would cause. When traffic and earnings fell off, the high wages remained and operating expenses could not be reduced in proportion to the decline in earnings. Apparently some of the labor leaders had become so flushed with their successes in obtaining wage advances in good times, on the simple argument of the increased cost of living to the employees, and regardless of the effect of the same cause on the railways, that they thought they could continue to get higher wages and more favorable conditions of work in bad times. But they now find the railways more disposed to fight and public sentiment less inclined to support every demand of labor. The settlement of the freight handlers' strike will enable the railways to establish at Chicago a plan of compensation based on the tonnage of freight handled instead of on hours worked. The result doubtless will be that the employees will receive higher average wages, while the railways will get a given amount of freight handled at a reduced cost instead of at an increased cost, which would have been the result if the strike had been successful. OVERNOR STUBBS, of Kansas, who formerly made a lot of money as a railway contractor and is now a progressive statesman, devoting a good deal of his time to calling the railways and other corporations names, testified in a famous rate case that he could reproduce the railways of Kansas for $25,000 a mile-we believe that was the figure O. C. Barber, chairman of the Diamond Match Company, who got rich from the profits of a concern that used to get its share of railway rebates, and who now spends his leisure in writing magazine articles and making speeches attacking the railways for having once given rebates, recently declared that the "upset cost" of railway construction under modern conditions is $50,000 a mile; argued that the railways of the United States, whose outstanding securities amount to less than $63,000 a mile, are over-capitalized; and made an argument for government ownership. In view of such utterances as these the figures given in an article on another page regarding the cost of reconstruction of the Panama Railroad are instructive. This road is owned by the government of the United States, and the reconstruction is in charge of United States army engineers. The cost of labor and materials has been high, the work very heavy, and the standards of reconstruction high. On the other hand, it has not been necessary to buy right of way, which, of course, the government already owned. Up to the time that the hearing before the house committee on interstate and foreign commerce was held, at which the facts that we give elsewhere were presented by officials of the line, the expenditures on reconstruction had been $167,000 per mile, and it was estimated by the witnesses that when the work was finished the cost would be $226,190 a mile. The Railway Age Gazette has not the slightest intention to imply that there has been any dishonesty or waste. On the contrary, doubtless the work has been done honestly, economically and skillfully. In any event, however, men like Mr. Stubbs and Mr. Barber will hardly give these figures to show how cheaply railways can be built, how much those of the United States are overcapitalized, and how much more economical construction and operation would be under government ownership. They are just as unlikely to cite them in their arguments as they are to cite the fact that the average rate per ton per mile charged commercial freight on the Panama Railroad under government ownership is 4.14 cents, as compared with 7.53 mills on the railways of the United States. If the reconstruction of the Panama Railroad is being economically done, the figures show how much railway construction and reconstruction cost under difficult conditions such as often have been encountered in the United States as well as in Panama; and if the work is not being economically done, it is an argument against government ownership, for with army engineers in charge and the location of the line far from the political influences of Washington, the conditions were as favorable for economy as they ever could be under government ownership. NEW ACCOUNTING RULES PRESCRIBED BY THE COMMISSION. THE 'HE Interstate Commerce Commission has issued its form for income account and profit and loss statements, for railways, and its classification of revenues and expenses of sleeping car operations, of auxiliary operations and of other properties, for sleeping car companies. Both orders become effective July 1. Both orders carry out in general the theories of accounting which the commission has already committed itself to in its other orders in regard to railway accounting. The income account form and the profit and loss form- are the two connecting links between the classification of revenues and expenses, the rules for which the commission has already had in effect since 1907, and the general balance sheet statement, rules for which the commission has had in effect since 1910. Since the commission has already prescribed forms for revenues, operating expenses, additions and betterments, etc., the income account and the profit and loss account, as now prescribed, contain no surprises. The commission defines the income account as the account which brings together those accounts that show the total amount of money that a company received, or has become entitled to receive, from its transportation and other operations during a given fiscal period; the return accrued during the period upon investments; the disbursements and obligations incurred that affect the amounts so received or accrued, and the disposition or allocation of the net income accrued. The net balance shown by the income account is carried to profit and loss. The income account prescribed by the commission is on the basis of accruals. Regardless of whether or not bills contracted in a given fiscal period are paid in that period or the money earned in that period is received, the income account for that period under the I. C. C. rules should show the transaction completely. The income statement is divided into four primary accounts: railway operating income, other income, deductions from gross income, disposition of net income. These four accounts are divided into thirty-six other accounts. The principal facts about the income account, that would not have been already suggested by the various accounting orders of the commission, are the segregation of appropriations of income to sinking and other reserve funds, and the treating of the receipts and disbursements for reserve funds and sinking funds entirely in this separate account. To illustrate, the dividends received on stocks of other companies, held in sinking or reserve funds, are not included in the account "dividend income," but are credited to "income from sinking and other reserve funds." Companies are allowed to use their own wn discretion as to whether to appropriate money for additions and betterments from income, or from profit and loss. The same is true as to dividends. In a note defining "interest deduction for funded debt." the commission says that when a funded debt is incurred for new lines or extensions the interest that accrues on the funded debt after the lines are open for operation should be included in this account and should not be charged to road and equipment account and interest and commissions, but to "interest deduction for funded debt." There was a chance here for the commission to have been much more definite than this. There still seems to be considerable confusion of ideas as to when a road is in operation. Trains were being run, for instance, over the Western Pacific for more than a year before the company began making monthly reports to the Interstate Commerce Commission, and presumably the W. P. did not consider itself a road in operation. It would seem a good opportunity for the commission to clear up an important point that is still left in a vague state by defining in its new accounting orders what is meant by roads being in operation. The profit and loss statement is divided into fifteen accounts, four of which are credits and the remainder debits. The form of this statement differs little from that now used by roads which have accepted the principle of the formation of the general balance sheet, as prescribed by the Interstate Commerce Commission. The form prescribed provides for appropriations for dividends, for additions and betterments, for new lines through surplus and for loss on abandoned road and equipment. This apparently indicates that the commission has not changed its views on the way of charging abandoned property which is replaced. It will be recalled that the commission's rule is to charge the cost of such property which is replaced to operating expenses, and there is at present in the courts a case brought by the Kansas City Southern to have this rule of the commission declared confiscatory. The classification of revenues and expenses for sleeping car companies is logical, and some such classification is absolutely necessary if the commission is to intelligently and adequately regulate the operation of sleeping cars and parlor cars. By sleeping car companies, apparently the commission means companies which operate sleeping cars, private passenger cars, parlor cars, etc. These companies are required to separate their revenues and expenses from operation from their revenues from auxiliary operations, which means such operations as dining cars, buffet cars, selling cigars and liquors on sleeping cars, etc., and their revenue and expenses from other properties, which means manufacturing plants. Revenues of sleeping car operations are divided into 21 kinds. The division has been made apparently with the primary object of getting accounts which will show quite definitely the sources of revenue and expenses so as to give the commission a basis on which to issue orders reducing or sustaining particular rates. The revenue from standard sleeping cars, for instance, is divided as between berth revenue and seat revenue, and as between charter per diem rates-charter berth rates and car mileage revenue. Tourist sleepers are separated from standard sleepers and chair cars. Expenses of sleeping car operations are divided as between maintenance, conducting car operations and general expenses. Maintenance is divided into 26 accounts; conducting car operations into 14, and general expenses into 9. Under maintenance the same policy of charging for depreciation is adhered to as in the case of maintenance of railway passenger and freight equipment. It is unnecessary to comment at any length on the form of the accounts which the commission has just issued, since most of the comments that have been made heretofore in these columns on the general system of accounts prescribed by the commission apply equally to those orders just made. There should be a full system of accounts for sleeping car companies. It has been pointed out before in these columns that the relations of railways with private car companies are a possible source of evil, and anything that will tend to give publicity to these relations and put them beyond suspicion of graft in any way is to be welcomed. THERE has been a marked change in the attitude of business men, economists and statesmen toward industrial and railway competition within recent years. Formerly competition was regarded as the specific for all transportation, industrial and commercial ills. It was considered the sovereign stimulator of industrial efficiency and the only effectual preventive of excessive rates and prices. This theory found expression in the enactment of the Sherman law. Under the common law only unreasonable agreements in restraint of trade-in other words, unreasonable agreements to limit competition-were unlawful; and the framers of the Sherman law meant only to enact into a federal law what had been understood to be the common law. In its earlier decisions, however, the Supreme Court held that the law prohibited agreements in restraint of competition, whether reasonable or unreasonable, and it applied this interpretation especially in railway cases. The legal opinion of the country revolted against this interpretation, and the economic and business opinion of the country revolted against the law as interpreted. The legal revolt finally triumphed in the decisions in the Standard Oil and American Tobacco Company cases, in which the Supreme Court reversed its earlier decisions, and held that the law prohibited only unreasonable restraint of trade. The revolt of business men and economists against it has been manifested by repeated attempts to secure legislation which would more clearly define unreasonable combinations, would specifically authorize reasonable combinations and would provide governmental machinery for separating the sheep from the goats. S. P. Bush, president of the Buckeye Steel Castings Company, and Allen Ripley Foote, chairman of the executive committee of the Ohio State Board of Commerce, recently have advocated in testimony before committees of Congress, and also in pamphlets, legislation which would permit persons and corporations engaged in similar lines of business to enter publicly into reasonable agreements to prevent destructive competition. Mr. Bush, in his pamphlet entitled, "The Sherman Act and Trade Agreements." has indicated his views in the following language: "If the law would permit those in any industry to agree not to sell below average cost, including 6 per cent. on the capital actually engaged, and preferably a small profit, say, 6 per cent., would it not be ethically and economically sound and wise? Is it economically sound to sell at or below cost, or without a small profit? Would anyone be injured? Would it not be an advantage to labor, to capital and to the people at large to stop selling at or below cost? "If a scientific basis, or set of rules, approved by the government, for determining cost could be generally used, would it not be a vast economic advantage? Such a cost determination could be a requisite for such a trade agreement. It would necessarily have to cover a sufficient period of time to furnish a fair average, for it should include the cost during lean times as well as good. The agreement would be based on the average of all those who would be parties thereto, so that those who by efficiency could produce below the average would obtain their just reward and those who were inefficient would in time drop out or become efficient, a natural and fair result." Mr. Foote has drafted for the consideration of Congress a bill to permit reasonable agreements between competitors to maintain prices under the provisions of which the question of whether an agreement was reasonable would be submitted to the determination of a commission of business men, especially organized to pass on the particular agreement. He believes that business men could determine better than any other class what is fair and beneficial, and what otherwise, in business methods. Every intelligent and fair-minded man concedes that it is not every agreement in restraint of competition that is unreasonable and injurious. Agreements to maintain exorbitant prices are wrong and harmful to the public, but, on the other hand, competition carried to such an extreme that it prevents all of the competitors, or even most of them, from earning a reasonable profit, is destructive to industry, and, by tending to eliminate |