regulation of railway management, and is deemed of sufficient importance to demand your special notice.

PUBLICITY OF RATES OF FARE AND FREIGHT,

dwelt upon at some length on pages 112 to 114 of our last report is again brought to the attention of your honorable body, as being one of the best correctives of that reprehensible system of private special rates, rebates and drawbacks so almost universal upon the railways of this country.

We have just endeavored to show that discriminations may be just to the public, and are even necessary to the successful working of any railway. But we have also insisted that offers of special rates should be "openly made," so that all persons capable, in general terms, of fulfilling the conditions prescribed would be able to avail themselves of the privileges to be accorded,

As a means to this end, not only the rates regularly charged, but all propositions of special rates should be so published, by public posting or otherwise, as to afford all interested parties equal opportunities.

GREATER STABILITY OF RATES AND TIME-TABLES

should, if practicable, be enforced by the State. Where all companies are perfectly free to do as they like in this matter, unwarrantable advantage is liable to be taken of the license on the part of some, and this may virtually compel others better disposed towards the public convenience to make changes also.

The changes of the seasons and the exigencies of business suggest the propriety, if not practical necessity, of changes in the time arrangements of passenger trains and in the rates of transportation; but, as a fact, changes are much more frequent than would be necessary if due foresight were practiced by those in charge of these departments. Certainly changes every few days, such as are sometimes noticed, are an unfavorable comment on the capacity and fidelity of managers, besides being a serious disturbance to

commercial transactions.

TIMELY NOTICE OF CHANGES OF RATES AND OF TIME-CARDS

is also again insisted on. Publicity will be of but little value unless publication is timely. Many railway companies show a repre

hensible carelessness in these particulars. The traveler finds too frequently the most carefully prepared monthly railway guide provokingly misleading, and the shipper too often finds himself unable to fulfil his contracts without loss, if not utter ruin, because of sudden and unexpected changes in the schedule of rates.

Notice in advance of changes proposed should be scrupulously made, and when the new tariff has taken effect the company should be held to it a reasonable length of time.

"GREATER UNIFORMITY AND COMPLETENESS OF ACCOUNTS."

Under the head of railway accounts your Commissioners used the following language in their report:

"It is, of course, out of the question for either the State or the public to know with certainty how the affairs of a railway are managed unless the accounts of the company are so kept as to make an intelligible exhibit, and to command the entire confidence of those who have a right to know all about the receipts and disbursements. To this end it is important that the following conditions should be fulfilled:

"(1) They must be kept on correct principles, all receipts being honestly credited to their real sources, and all expenditures charged to the proper account, care being taken, where there is room for doubt, that the capital account, especially, be not unduly increased.

"(2) They should be kept so as to be separable for the different lines, where more than one line is operated by one company. This especially where, as in this State at present, the companies pay a State tax proportioned to the earnings of lines within the State. It is also important as enabling the State and the public to know to what extent new lines-sometimes lying in other States-are a burden upon the old ones; and also enabling the managers themselves so know what the interests of the company demand.

"(3) The freight account should be so kept as to make a full showing of every shipment of freight, with the class to which it belongs, weight in pounds, stations from which and to which shipped, and the amount actually received and charged to the company thereon; the freight account of each station showing for itself, and the accounts at the general freight office showing the exact business and freight receipts at all the stations on each and every line. Such keeping of accounts is essential to the proper

management of the roads, and to the State important as furnishing correct data for a full undestanding of the company's condition.

"(4) The accounts kept by all the railway companies of the state should be uniform as to method, in order that the working of different roads may be compared, and that uniform reports may also be possible.

"(5) They should be closed and accessible to the stockholders both before and after the regular meetings at which they are presented for approval, and should be published in full abstract, with balance sheet, for the use of the stockholders and the state authorities."

To this we add that the observations and inquiries since made by us have so strongly impressed the importance of this subject that we feel constrained to urge it with increased emphasis.

As was remarked in the early portion of this report, the books and accounts of different corporations are so variously kept and many of them so imperfectly kept, that when called on to make the annual returns reasonably demanded the officers declare themselves utterly wanting in the data. The result is, these reports are almost useless, whether for the purposes of a comparison with other companies, or as a means of getting a correct knowledge of the companies independently.

Among the more important faults and deficiencies of railway accounts we notice, briefly these:

1. Want of logical system.

The proper objects to be observed in the keeping of railway accounts are (1), to show the actual transactions of the companythe business done in transportation during the year, the receipts from all sources and the expenditures for all purposes, with perfect exactness of detail, and the financial status of the company as to debt, funded and unfunded, and the company's relation to its stockholders; (2), to illustrate the skill with which the general affairs of the company are managed, and especially the economy of practical management.

This last named object appears in a great measure to be lost sight of. Extensive intercourse with railroad managers, and a careful examination of reports, has satisfied us of the fact that the instances are rare in which the officers of a road can tell from their accounts what has been the cost of operating their different lines, the cost in

detail of the different branches of the business on a given line, the exact economy with which their several stations have been managed and trains run, or the loss sustained by the handling of dead weight; much less make a fair approximation to the cost per ton per mile of each class of freight carried.

So far as we have learned, there is scarcely more than one road in the country whose accounts are so classified and kept that the superintendent can know at the end of the year exactly what business has been done and just what each important item of it has cost the company. A visit, during the past summer, to Mr. Fink who has inaugurated such a system of accounts, and a careful examination of his principles, method and practice, resulted in a still deeper impression of the imperative necessity there is, in order to better railroad management and a healthy growth of railway enterprise, for the perfection and uniform adoption of a scientific system of railway accounts.

So deeply convinced is Mr. Fink of the necessity for accurate knowledge of the details above-mentioned that he employs additional force at the expense of $10,000 per annum for the purpose of providing himself with the requisite data for his calculations, and declares that he would not consent to hold his position as manager of the road, if compelled to work his several lines as he would otherwise have to-in the dark.

In answer to the question, What is the proper course to pursue in ascertaining whether a railroad is operated economically or not? he says:

"To this the answer must be given that the only mode of ascertaining this fact thoroughly is to make an examination of each item of expenditure incurred in the operation of a railroad, and see whether this has been reduced to a minimum, and the service rendered for it to a maximum. To make this investigation requires of course a thorough and practical knowledge of railroad operations, of the cost of material and labor, of the quality of the same, and of the best results that can be obtained therefrom. But even that knowledge would be of little avail unless the accounts of the operating expenditures of railroads are kept in such a manner as to exhibit in detail not only the expenditures but also the amount of work performed for each item of expenditure."

2. There is want of rigid adherence to principles when once adopted. In the matter of operating expenses, for example, we not only

find that there is no rule of classification followed, as there should be, by all companies, but that even the same company does not inflexibly adhere to any principle of practice.

Manifestly, such expenses as are fixed, remaining the same, or substantially so, should be separated from those which rise or fall as the volume of business increases or diminishes. Accounts kept without regard to this principle are practically useless for the purpose of ascertaining the actual and the minimum cost of transportation in detail.

So it is with the matter of separation between actual operating expenses and expenditures for construction. There is no proper and well-defined line drawn between them, and yet with the stockholders and public it makes a good deal of difference whether receipts that should go to the account of net earnings, for the payment of dividends and the gradual extinction of debt, are so referred, or whether, being actually applied to new construction, they are reported as operating expenses and charged against the public, who besides paying for the use of the road are also steadily paying for the road itself, although the ownership is to remain permanently in others.

RAILWAY REPORTS.

We have dwelt at some length on the subject of accounts because they lie at the very foundation of economical railway management, and are at the same time the only means of furnishing the public with correct knowledge of the need of legislative interference when it really exists, and also a correct knowledge of when it is safe to let the corporations alone.

We do not deem it necessary that the State should dictate either directly or through the Commission the manner of keeping railway accounts; this may be managed by the companies in their own way. But the State has a right to such facts, capable of being furnished, as are necessary to a full knowledge of the companies' transactions, including the data for a comparative showing of the skill, fidelity, and economy with which their roads are managed respectively. And this implies the right to command reports that will supply all needed facts. Authority to require such reports and to enforce their prompt delivery in time for the Commissioners' use, is a necessity.

Indeed,