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with amounts paid for fares refunded ; tickets redeemed ; also amounts
paid for transferring passengers and baggage between stations or depots,
except in cases where the transfer of both passengers and baggage is pro-
vided in the division of the through rate.

NOTE* A. Cash fare penalty collections made by conductors and the propor-
tion of amounts collected on sale of mileage tickets and mileage credentials
subject to refund should not be credited to Passenger Revenue.

NOTE B. Passenger Revenue should be credited with interchangeable mileage
tickets only as the mileage therefrom is honored for transportation. Receipts
from interchangeable mileage books when sold should be credited to an open
account, which account should be charged and Passenger Revenue credited as
the mileage is honored.

NOTE C. When a lessee company transports passengers over the tracks of
another carrier on the basis of a proportion of revenues, it should include the
entire compensation in its revenues and statistics, charging the appropriate joint
facilities expense and rental accounts with the amount paid the lessor company,
and the lessor company should credit the same accounts.



CLASSIFICATION OF OPERATING REVENUES 247

3. EXCESS BAGGAGE KEVENUE

This account includes amounts earned by a carrier for the transporta-
tion of baggage in excess of free authorized allowances; also packages,
articles, dogs, etc., usually transported in baggage cars, for which a charge
is made. To this account should be charged all baggage refunds.

4. PAELOE AND CHAIE CAE EEVENUE

This account includes amounts earned by a carrier in fares collected
from passengers for seats in parlor, observation, chair and other special
passenger cars operated by railway companies when the expenses of operat-
ing such cars are not separable from the expenses of operating trains.
To this account should be charged authorized refunds and tickets redeemed.

NOTE. When the expenses of operating cars of the above classes are separ-
able from the expenses of operating trains, the operation of such cars should
be treated as an " Outside Operation."

5. MAIL EEVENUE

This account includes amounts earned by a carrier for the transporta-
tion of mails and for the use of railway post-office cars, special facilities,
and bonuses for special mail transportation. To this account should be
charged fines and penalties imposed by the Government when not collected
from agents or employees.

6. EXPEESS EEVENUE

This account includes amounts earned by a carrier for transportation
and for facilities on trains and at stations incident to the transportation
of express matter, not including the separate rents of offices at stations.
(See account No. 18, " Eents of Buildings and Other Property. ")

When a railway company transacts an express business through its
regular railway organization, the earnings therefrom should be credited to
this account.

7. MILK EEVENUE (ON PASSENGEE TEAINS)

This account includes amounts earned by a carrier for the transportation
of milk and cream on passenger trains. To this account should be charged
refunds and overcharges on milk and cream so carried.

8. OTHEE PASSENGEE-TEAIN EEVENUE

To this account should be credited all amounts earned by a carrier inci-
dent to the operation of passenger trains not otherwise provided for.



248 RAILROAD EXPENSES

9. SWITCHING BEVENUE

This account includes amounts earned by a carrier for switching ser-
vice performed on the basis of tariffs. To it should be charged all over-
charges on such switching.

10. SPECIAL SEEVICE TEAIN BEVENUE

This account includes amounts earned by a carrier for running char-
tered trains, either on a basis of a rate per mile or a lump sum for the
train; for handling circus or theatrical company trains under contract when
specific amounts are charged for transportation between designated stations;
for running chartered trains for the Federal or State governments carrying
troops, munitions of war, camp outfits, etc. To this account should be
charged refunds and overcollections on such business.

11. MISCELLANEOUS TBANSPOBTATION BEVENUE

To this account should be credited all amounts earned by a carrier
from transportation not otherwise provided for.



II. REVENUE FROM OPERATIONS OTHER THAN
TRANSPORTATION.

12. STATION AND TBAIN PBIVILEGES

This account includes a carrier 's revenues from weighing, vending, and
other automatic machines located at stations; from advertising at stations
and on trains; from news companies or others for the privilege of operat-
ing news stands at stations and selling papers, periodicals, fruit, etc., on
trains; from telephone companies for the privilege of installing and operat-
ing commercial telephones at stations; and from other similar sources.

13. PABCEL-EOOM BECEIPTS

This account includes a carrier's revenues from the operation of parcel
rooms, the expenses of which are included in operating expenses.

14. STOBAGE FBEIGHT

This account includes a carrier's revenues for storage of freight. To it
should be charged authorized refunds.

15. STOBAGE BAGGAGE

This account includes a carrier 'a revenues ,f or storage of baggage. To
it should be charged authorized refunds.



CLASSIFICATION OF. OPERATING REVENUES 249

16. CAB SEEVICE

This account includes amounts accruing as penalties for delay in load-
ing or unloading cars (demurrage). To it should be charged authorized
refunds.

17. TELEGRAPH SERVICE

This account includes a carrier's revenues from commercial telegraph
business transacted by it when the expense of transacting such business can-
not be separated from the expense of conducting the railway telegraph
service ; amounts received from telegraph companies, whether proportion of
earnings or otherwise, for the privilege of transacting a commercial tele-
graph business in offices along the carrier's lines, when the carrier furnishes
some service of its employees whose wages are included in operating
expenses.

NOTE. When a telegraph company rents the telegraph line of a carrier and
.pays all expenses incident to its maintenance and operation, the rent received
should be treated as Income.

18. RENTS OF BUILDINGS AND OTHER PROPERTY

This account includes a carrier's revenues from rents of buildings, land,
and other property, such as depot and station grounds and buildings, union
depots, general and other offices, rooms rented at stations, docks, wharves,
ferry landings, elevators, stock yards, fuel yards, repair shops, section and
other houses, etc., when such property is used in connection with operations
and the expense of maintaining and operating it can not be separated from
the expense of that portion used by the carrier.

19. MISCELLANEOUS

This account includes a carrier's revenues from operation not other-
wise provided for; also collections from individuals and companies for the
privilege of handling freight and passengers over a carrier's wharves and
docks ; amounts received from others for mooring and anchoring boats at
such wharves and docks, and for water furnished them when the water
plant is operated by the carrier; receipts from coal and ore docks, stock
yards, and grain elevators when not treated as ll Outside Operations " ;
amounts received as trackage for detouring trains; collections for the use of
a carrier's bridge by pedestrians, street -car lines, vehicles, etc., when th^
expense of maintaining and operating such property can not be separated
from the expense of that portion used by the carrier.

NOTE. When a bridge of one carrier is used by another carrier and sxich
use is paid for either on the basis of a flat rent or a charge per train mile, or
a toll per passenger, per ton, or per car, the revenue therefrom should be
credited to appropriate accounts.



CLASSIFICATION OF OPERATING EXPENSES.

INTRODUCTORY LETTER.

INTERSTATE COMMERCE COMMISSION,

DIVISION OF STATISTICS AND ACCOUNTS,

Washington, June 3, 1907.

To CARRIERS:

The first revised issue of the Classification of Operating Expenses took
effect July 1, 1894, and the second revised issue became effective July 1,
1901. The Classification herewith submitted will become effective July 1,
1907, and is issued in accordance with an order of the Interstate Commerce
Commission, a copy of which will be found immediately preceding this
letter.

It is eminently appropriate that public acknowledgment should be made
to the Association of American Railway Accounting Officers, and to the
standing and special committees appointed by that association, for their
hearty co-operation in working out the details of this Classification. In
no other way would it have been possible for the Commission to avail itself
of that special knowledge and expert experience necessary for the successful
accomplishment of the task undertaken. With one exception, the Classifica-
tion of Operating Expenses herewith promulgated conforms to the recom-
mendations of that association. This exception refers to the treatment of
per diem and mileage payments between carriers on interchanged or loaned
equipment, and, in view of the great variety of opinions expressed by rail-
way accounting officers, as well as by certified accountants and others, rela-
tive to this point, it seems proper to submit an explanation of the reasons
for the rules here promulgated. Before submitting that explanation, how-
ever, it may be proper to say a word relative to a new feature of this
Classification," namely, the establishment of formal depreciation charges.

CONSIDERATION CF DEPRECIATION:

A number of points have been raised by correspondents relative to depre-
ciation that call for the following general statements, all of which bear
upon the manner in which depreciation accounts should be treated:

1. The question of depreciation is fundamentally a question of values,
and not a question of maintaining the original capacity, or a standard of
operating efficiency, or of keeping full the numbers in equipment series.

250



CLASSIFICATION OF OPERATING EXPENSES 251

2. The depreciation rules may be worked either on the basis of the value
of individual cars and locomotives, or on the basis of the value of series of
cars and locomotives. On this point, accounting officers are at liberty, until
advised to the contrary, to follow whichever method seems to them the
more appropriate.

3. The basis of accumulation that is to say, the amount to which the
percentage rate is applied ought, in strict theory, to be the original cost.
For the current year, however, accounting officers are at liberty to accept
original cost (estimated, if not known), record value, or purchase price.
The term ' ' record value ' ' should not be interpreted to mean the value of
the equipment as it stands in the capital account (unless that account repre-
sents the original value of the equipment on hand), but the actual cost or
value of all equipment, regardless of where charged when purchased; and
in case purchase price be accepted as the basis of the percentage charge
to depreciation, the percentage rate should be limited to the rate required
to replace the price paid. A second-hand locomotive, for example, is not
called upon to provide for its replacement, when abandoned, by a new loco-
motive. As stated above, it is values and not locomotives with which
depreciation charges deal.

4. The application of depreciation charges for the current year and
subsequent years must not be influenced by the practice of years past. In
case property has been appreciated by excessive charges to operating
expenses in years past, the value thus placed in the property must be
regarded as a permanent undivided asset to the stockholders. On the other
hand, in case property has depreciated on account of insufficient charges to
operating expenses in years past, this fact must not be permitted to
influence the determination of the depreciation rate for the current year.

5. The monthly charges to operating expenses for ' ' depreciation ' ' on
the several classes of equipment, will, of necessity, create or require cor-
responding liability accounts to which such depreciation may be credited.
To that end, carriers will be required, beginning July 1, 1907, to set up an
appropriate liability depreciation account for each of the several classes of
equipment upon which depreciation is charged. These accounts should be
designated as follows:

(a) Locomotives Replacement ; *

(&) Passenger-Train Cars Replacement;

(c) Freight-Train Cars Replacement;

(d) Electric Equipment of Cars Replacement;

(e) Floating Equipment Replacement;
(/) Work Equipment Replacement. t

To these replacement accounts should be credited monthly the amount

* Including both steam and electric.
t Except locomotives.



252 RAILROAD EXPENSES

of accrued depreciation on each class of equipment, respectively. Such
credits should invariably equal the gross charges to maintenance for depre-
ciation.

To these several replacement accounts under their appropriate heads
should be charged, at cost, all equipment purchased, built, or otherwise
acquired for the purpose of maintaining the value of a carrier's equipment.

The monthly charges to operating expenses for ' ' renewals ' ' of the
several classes of equipment will be similarly treated.

It is not intended that these accounts should be restricted to individual
cars or locomotives, or that carriers are not at liberty to renew or replace
equipment upon which depreciation has accrued prior to the retirement of
such equipment. On the other hand, the several amounts standing to the
credit of those replacement accounts should be available to carriers for the
purpose of replacement of equipment to the extent of such credits; how-
ever, all replacements in excess of such credits must be considered as
Betterments or Additions, and charged either to Income or to Capital.

[The paragraphs treating of "Per Diem and Mileage Payments
Between Carriers, ' ' have been omitted in accordance with the Commission ? s
instructions in the Supplement to the Third Revised Issue, Classification of
Operating Expenses, p. 11. "Hereafter such payments will be handled
through the Income Account."]

To the end that uniformity of operating accounts may be maintained
from year to year, carrier"- will be required to submit all questions of
doubtful interpretation to this oirice for consideration and decision.



CONTENTS



GENERAL ACCOUNTS.

ACCOUNT PAGE

I. MAINTENANCE OF WAY AND STRUCTURES 257

II. MAINTENANCE OF EQUIPMENT 272

III. TRAFFIC EXPENSES 290

IV. TRANSPORTATION EXPENSES 293

V. GENERAL EXPENSES 312

PRIMARY ACCOUNTS

I. MAINTENANCE OF WAY AND STRUCTURES

1 . Superintendence 257

2. Ballast 258

3. Ties 259

4. Rails 259

5. Other Track Material 260

6. Roadway and Track 260

7. Removal of Snow, Sand, and Ice 262

8. Tunnels 262

9. Bridges, Trestles, and Culverts 262

10. Over and Under Grade Crossings 263

11. Grade Crossings, Fences, Cattle Guards, and Signs 263

12. Snow and Sand Fences and Snowsheds 264

13. Signals and Interlocking Plants 264

14. Telegraph and Telephone Lines 265

15. Electric Power Transmission 265

16. Buildings, Fixtures, and Grounds 266

17. Docks and Wharves 268

18. Roadway Tools and Supplies 269

19. Injuries to Persons 27C

20. Stationery and Printing 270

21. Other Expenses 271

22. Maintaining Joint Tracks, Yards, and Other Facilities Dr. . 271

23. Maintaining Joint Tracks, Yards, and Other Facilities Cr. . 271

253



254 KAILROAD EXPENSES

II. MAINTENANCE OF EQUIPMENT PAOB

24. Superintendence 272

25. Steam Locomotives Repairs 273

26. Steam Locomotives Renewals 273

27. Steam Locomotives Depreciation 274

28. Electric Locomotives Repairs 274

29. Electric Locomotives Renewals 275

30. Electric Locomotives Depreciation 275

31. Passenger-Train Cars Repairs 275

32. Passenger-Train Cars Renewals 277

33. Passenger-Train Cars Depreciation 277

34. Freight-Train Cars Repairs 278

35. Freight-Train Cars Renewals 279

36. Freight-Train Cars Depreciation 279

37. Electric Equipment of Cars Repairs 279

38. Electric Equipment of Cars Renewals 280

39. Electric Equipment of Ca *s Depreciation 280

40. Floating Equipment Repairs 281

41. Floating Equipment Renewals /. 282

42. Floating Equipment Depreciation 282

43. Work Equipment Repairs 283

44. Work Equipment Renewals 284

45. Work Equipment Depreciation 284

46. Shop Machinery and Tools 285

47. Power Plant Equipment 286

48. Injuries to Persons 286

49. Stationery and Printing 287

50. Other Expenses 287

51. Maintaining Joint Equipment at Terminals Dr 290

52. Maintaining Joint Equipment at Terminals Cr 290

III. TRAFFIC EXPENSES

53. Superintendence 290

54. Outside Agencies 291

55. Advertising 291

56. Traffic Associations 291

57. Fast Freight Lines 291

58. Industrial and Immigration Bureaus 292

59. Stationery and Printing 292

60. Other Expenses 293

IV. TRANSPORTATION EXPENSES

61. Superintendence 293

62. Dispatching Trains 294

63. Station Employees 294



CONTENTS 255



64. Weighing and Car-Service Associations 295

65. Coal and Ore Docks 295

66. Station Supplies and Expenses 295

67. Yardmasters and their Clerks 296

68. Yard Conductors and Brakemen 297

69. Yard Switch and Signal Tenders 297

70. Yard Supplies and Expenses 297

71. Yard Enginemen 297

72. Enginehouse Expenses Yard 297

73. Fuel for Yard Locomotives 298

74. Water for Yard Locomotives 298

75. Lubricants for Yard Locomotives 299

76. Other Supplies for Yard Locomotives 299

77. Operating Joint Yards and Terminals Dr 299

78. Operating Joint Yards and Terminals Cr 299

79. Motormen 300

80. Road Enginemen 300

81. Enginehouse Expenses Road 300

82. Fuel for Road Locomotives 301

83. Water for Road Locomotives 301

84. Lubricants for Road Locomotives 302

85. Other Supplies for Road Locomotives 302

86. Operating Power Plants 302

87. Purchased Power 303

88. Road Trainmen 303

89. Train Supplies and Expenses 303

90. Inteiiockers, Block and Other Signals Operation 305

91. Crossing Flagmen and Gatemen 305

92. Drawbridge Operation 305

93. Clearing Wrecks 306

94. Telegraph and Telephone Operation 306

95. Operating Floating Equipment 307

96. Express Service 308

97. Stationery and Printing 308

98. Other Expenses -. 309

99. Loss and Damage Freight 309

100. Loss and Damage Baggage 310

101. Damage to Property 310

102. Damage to Stock on Right of Way 311

103. Injuries to Persons 311

104. Operating Joint Tracks Dr 311

105. Operating Joint Tracks Cr , . 311



256 RAILROAD EXPENSES

V. GENERAL EXPENSES PAGB

106. Salaries and Expenses of General Officers 312

107. Salaries and Expenses of Clerks and Attendants 312

108. General Office Supplies and Expenses 313

109. Law Expenses 313

110. Insurance 313

111. Relief Department Expenses 314

112. Pensions 314

113. Stationery and Printing 314

114. Other Expenses 315

115. General Administration Joint Tracks, Yards, and Terminals

Dr 315

116. General Administration Joint Tracks, Yards, and Terminals

Cr .315



NOTE. The amended text of the I. C. C. bulletin "Classification of Operating Ex-
penses" has been indicated in the following reprint by differences in type. Eliminations
are designated by italics, the word or phrase so indicated being enclosed in brackets.
Additions are designated by black face type. Case numbers follow the same usage as else-
where in this book. Ordinary type signifies that the case referred to may be found in
Accounting Bulletin No. 4 (Decisions upon Questions Raised under the Classification Pre-
scribed by the I. C. C.). Italicized case numbers indicate that the cases appear in either
one of the two supplementary bulletins, circulars 12c and 12d.



TEXT OF CLASSIFICATION OF OPERATING
EXPENSES



I. MAINTENANCE OF WAY AND STRUCTURES
I. SUPERINTENDENCE

This account includes:

PAY OF OFFICERS. Pay of vice-president or assistant when directly in
charge of maintenance of way and structures, chief engineer, assistant chief
engineer, chief engineer maintenance of way, engineer maintenance of way,
assistant engineer maintenance of way, engineer of bridges and buildings,
principal assistant engineer, engineer right of way, architect, division engi-
neer, assistant engineer, assistant division engineer, roadmaster, assistant
roadmaster, master carpenter, assistant master carpenter, supervisor, assistant
supervisor, fire and sanitary inspector, pay of fire chiefs and other officials
engaged in the maintenance-of-way-and-structures department.

PAY OF CLERKS AND ATTENDANTS. Pay of chief and other clerks, drafts-
men, rodmen, transitmen, and chainmen, and attendants in offices and on
special cars of officers whose pay is charged to this account.

OFFICE AND OTHER EXPENSES. Rent and cost of repairing rented offices,
rent and cost of telephone service, telegraph messages, heat, light, ice, water,
furniture, and supplies for offices of officers whose pay is charged to this
account; incidental office and traveling expenses of such officers and their
clerks; cost of provisions for and expenses of special cars when used by them,
and cost of running special trains for officials mentioned; premiums on
fidelity bonds of such officers and their assistants; expenses of photographing
buildings and structures.

Cost of drafting and engineering instruments and expenses of repairing
same and cost of supplies (except stationery and printing) used by officers
and employees whose pay is charged to this account; subscriptions to news-
papers and periodicals.

257



2.-)8 RAILROAD EXPENSES

The following is a list of the more important articles chargeable to this
account :

Atlases, Levels, Slide rules,

Barometers, Magnets, Stakes

Books, scientific and refer- Magnifiers, Straightedges,

ence, Oilstones, Tacks for drawing boards,

Boxes for blueprints, Pantographs, Tally registers,

Boxes for drawing instru- Parallel rulers, Tapelines,

ments, Periodicals, Tee squares,

Cameras, and supplies for, Plane tables, Telescopes,

Chains, Planimeters, Thermometers,

Compasses, Plummets, Tin boxes for tracings and

Curves, Protractors, prints,

Directories, Ranging poles, Transits,

Drawing boards, Reading glasses, Traverse tables,

Drawing instruments, Rods, Triangles,

Field glasses, Scales, Tripods,

Keel, Section liners, Verniers.

Level rods, Sextants,

NOTE A. When employees enumerated above are engaged in work not chargeable to
"Maintenance of Way and Structures," their pay and expenses should be charged to the
specific work on which engaged.

NOTE B. When officers and others above enumerated have supervision over other
departments also, their salaries and expenses should be apportioned equally between the
departments over which they have jurisdiction.

See Cases 37, 246, 262, 330, 534.

2 BALLAST

This account includes all expenses incident to the purchase and pro-
duction of ballast, as follows: Purchase price of gravel, stone, slag, cinders,
sand, and other material used for ballast, including freight charges, if any
and cost of first unloading; payments for gravel and quarry rights and privi-
leges; expenses of sinking test holes; expenses of locomotives and work
trains while engaged in delivering ballast at points where used.

When a gravel pit or quarry is to be opened, the operations of which are
likely to extend over a long period, an account should be opened designated

"Operations of Gravel Pit at ," or "Operations of Quarry at ,"

as the case may be.

To such account should be charged:

(a) The excess cost of the land over its estimated value after the gravel
or stone has been removed. (Such estimated value being charged
to an appropriate capital account.) Also amounts paid for the right
to enter upon and remove ballast from lands not owned by carrier.
(6) The expenses for clearing, stripping, draining, and ditching the land
and of moving and changing fences and buildings preparatory to
opening.

(c) The cost of rails and fastenings in excess of their estimated scrap

value, used in constructing tracks to and in the gravel pit or quarry.
(Such estimated scrap value to be carried in an appropriate material
account.)

(d) The total cost of ties and other material and of labor expended on

such tracks.



TEXT OF CLASSIFICATION OF OPERATING EXPENSES 259

(e) Cost of labor and train service (see account "Roadway and Track")
employed in producing, quarrying, and loading ballast, including
operations of stationary engines, steam shovels, stone crushers, etc.,
and watchmen.

(/) Repairs of stationary engines, steam shovels, stone crushers, and other



Online LibraryJames Shirley EatonHandbook of railroad expenses → online text (page 22 of 52)