THE SEPARATION OF FREIGHT
AND PASSENGER EXPENSES.
A STUDY IN THE COST THEORY OF RAILROAD RATES.

A Dissertation submitted
in partial fulfillment of
the requirements for the degree
of Doctor of Philosophy, in
the University of Michigan.

By
ALBERT BRADLEY.
May 1, 1917.
---
PRIFACE.
The increasing emphasis placed by industrial leaders upon
cost data as a guide to an economical administration of large businesses
has in recent years found a counterpart in the railway field. This
thesis purports to analyze railroad operations and costs with a view
to the presentation of problems pertinent to the separation of railroad
expenses as between the freight service and the passenger service; and,
wherever possible, to suggest solutions for these problems.
The account ing records of the Michigan Central Railroad
Company furnished the primary materials of this study. The Writer
first gained a familiarity with these records during the summer of
1916, when, in the employe of E; C, Taylor, Special Investigator, he
was placed in charge of an analysis of the carrier's acco unting records,
made with a view to the determination of the cost of operating the
Detroit Terminals.
In addition to his teachers, to whom he is indebted not
only for the training which enabled him to undertake this study, but also
for constructive criticism during its pursuit, the writer must
acknowledge his indebtedness to E. C. Taylor, Statistician, his
assistants, C. M. Bradley and E. C. Adams; to W. C. Apel, Accountant
in the office of the Auditor of Disbursemegt s; to G. H. Harris,
Engineer of Maintenance of Way, and his assistant, G. Riddle. The
writer 1. *we: to Henry Russel, Vice-President & General Counsel,
for permission to report findings made available only by an intimate
association with the carrier's accounting and operating records.
In presenting for illustrative purposes data pertaining to
the Michigan Central Railroad, however, it must be definitely stated
II.
that in no instance is there expressed the opinion of the Michigan
Central Railroad, or of any of its officers in any official capacity
whatsoever; but that the findings are simply those of a student to
whom was accorded the use of a railroad as his research laboratory.
TABLE OF CONTENTS
I INTRODUCTION. A SUMMARY OF RAILROAD RATE THEORIES.
- Page
1. The Social Theory. - 1.
2. The Value of Service. Theory.
3. The Cost of Service Theory.
II ouTLINE OF PROGRAM.
Chapter I A Theory of Cost Segregation. A 10
III EXPERIMENTAL.
Chapter II The Cost of Maintaining a Right-of-Way. 20
III. The cost of Maintaining a Right-of-way, cont'd. 45

IW Maintenance of Equipment Expenses. 58
V Traffic Expenses. 71
WI Transportation - Rail Line. 73
WII Transportation - Rail Line, Cont"dº 81
WIII Miscellaneous Operations. 95
IX general ºpen * at- tº sº - 97
X The Distribution of Plant Burden. 99
5 ºvn war of º \ –
XI Conclusion. - - 107

INTRODUCTION
A SUMMARY OF RAILROAD RATE THEORIES.
^
It is an axiom of Political Economy that only in fields of industrial
activity in which competition of both producers and consumers is free and
unrestricted does the interplay of the forces of Demand and Supply serve as a
*} i., Ajº.
- | A flººr-t
\ AAAA* * v
regulator of the prices of goods and services; and that where competition is not
/
*. the State must exercise the price-regulative function. As a corollary
of this axiom, competition cannot be relied upon to regulate the price of railway
transport because of the essentially monopolistic nature of the industry. The
State then must exercise its right to regulate railroad rates in order: (1) to
protect the public from the exploitation that, in the absence of competition might
arise from the sale of transportation service at a price which would yield monopoly
profits; and (2) to protect the public from the discrimination which naturally
results from the peculiar character of railway competition where competition does
exist.
To admit the necessity of governmental regulation is to admit the equal
necessity of a regulative program. What policy of railroad rate regulation will to
the alier. extent harmonize the interests of tº consumer of transportation
ſ service, the American public, and the privately-owned and operated carriers which
produce the service? The various theories as to what policy should guide the
government in the regulation of railway rates have one point in common: that since
these agencies are privately-owned, total return for total service rendered must
cover the total cost of production. Discussions of particular rates, however,
while not mutually exclusive as to principles advocated, come to a focus in three
distinct positions when common sistents are excluded. The three distinct theories



which emerge as deserving of attention may be designated, respectively: (l) The
Social Theory; (2) The Value of Service Theory; (3) The Cost of Service Theory.
l. The SOCIAL THEORY:
The essence of the Social Theory of railroad rates consist in the utiliza-
tion of transportation tariffs as the keystone of a system of national control over
the industrial and social structure, designed to realize certain social ideals.
Following the example of Germany, a national policy or concerted program of
industrial development is to be made effectual through an intimate relationship of
government and industry. An integral part of this relationship is an adjustment
of transportation rates to foster sectional and national development. The objective
goal of such a control over railway transporteus. - aside from military considera-
tions - is the decentralization of population and of industry, and the attainment
of the highest possible degree of coordination between public and private interests.
The gist of the Social Theory, then, is that railway transport is not an economic
good or service to be sold on a quid ºr as basis, at a price that would tend to
obtain in consequence of the automatic working of economic forces in a freely
competitive market; but by its very nature transportation - like instruction in
the public schools - is but a link in a chain of conscious national development
designed to realize certain ideals of economic and social justice.
The advocacy of seas Theory in the United States is the product of two
factors: (i) a assastestion that has naturally arisen from the lack of any
scientific foundation for the existing railroad rate structure; and (2) an assump-
tion that control of transportation rates affords a most effectual tool by which
certain social ends may be attained. It would seem that the successful administra-
tion of such a rate policy could be achieved only through the medium of an efficient
and bureaucratic government, which must have at hand: (1) railway cost data and
definite information pertaining to our social and economic resources, since other-
wise needless transportation service must be produced; and (2) an articulated
expression of our social ends.
With this very brief mention, the Social Theory is dismissed in order
that consideration may be given to the Value of Service and the Cost of Service
theories, which, at this time, are guiding the Courts and Commissions in the
-*
regulation of railroad rates.
( 2. The VALUE OF SERVICE THEORY:
The gist of the Walue of Service Theory is the determination of railroad
rates with reference to the ability of traffic to pay for transportation service,
rather than on the basis of cost of production. Total revenue from all trattle,
f
must, of course, be at least equal to total cost. But a particular rate is /
justifiable, provided it is not so high that it effects an actual reduction in
the volume of existing traffic, or discourages potential traffic from offering
it self for transportation; and provided also that the charge is not less than the
small ** Of "out-of-pocket" expense that the advocates of this theory concede
may be allocated to the particular item or class of traffic.
An underlying assumption of this theory is that railroad costs are
"p reponderantly joint." "The investment in the railroad plant, the great mass of
operating expenses, are costs incurred for the traffic as a whole, and cannot
therefore be allocated to any particular item or class of traffic.” As in the
case of any good produced under conditions of joint-coet, the total selling price
of railway transport must cover the total cost, or the service will not continue
to be produced; but particular rates, since costs are not ascertainable, must be
determined with reference to the ability of the traffic to "stand" transportation
charges. The relationship between railway outgo and railway products, then, is
so remote that only in the case of total return for total service do they admit
of identification.
* * * * * sº e- - sº sº ºn an e- - - - an e- ºr- - - - - - - - - - - - - - - - * * * * * * * *-
* F. W. Taussig, "Railway Rates and Joint Cost," Quarterly. Journal of Economics,
Vol. XXVII, p. 537, 687, 690.
*





3. - THE COST OF SERVICE THEORY:
The essence of the Cost of Service Theory is the determination
of railroad rates on the basis of cost of production of the particular item
or class of service. Cost of production, in this instance, is analogous
to real cost (wages, materials, interest, profits) of goods produced for
sale in a competitive market. A railroad rate must cover: (1) all items
of expense which may directly be allocated to the particular service; and
(2) a portion of all other expenses, including interest and profits, not
related exclusively to the particular traffic in aestion. The rate
question, then, be comes a problem in cost accounting.
It is not contended that cost of service has been definitely
accepted as the guiding principle of railroad rate regulation; (l) but
recent tendencies in what appear to be ºntrolling cases support the
statement that increasing emphasis is being placed upon the cost factor aş
a basis of rate-making.
* - e - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
* A smary of the analysis of decisions of the Interstate Commerce
Commission in Professor Hammond's Railway Rate Theories of the
Interstate Commerce Commission, is as follows:
Controlling Principle No. of Cases
Walue of Service, 35
Cost of Service, 22
Distance , 13
Natural Advantages of Location, 13
Competition, of markets, carriers,
and producers, 37
Class and sectional interests, 5
Fair return on investment, 14
Total - 139
That is, from the time of its inception in 1887, to the passage
of the Hepburn Act in 1906, the Interstate Commerce Commission
based 22 decisions on Cost of Service, and in 27 other cases
factors closely akin to cost of service (distance, and fair return
on investment) were the controlling conditions.
5.
Permission to increase rates, for example, has been denied,
and carriers have been criticized, because briefs did not present cost
figures. (l) On the other hand, permission to increase rates has been
granted carriers in answer to arguments supported by cost figures.”
In short, there is an increasing tendency in railroad rate cases for
decisions to be based upon evidence prepared by cost accountants.
--------------------------------
f
* (1) Western Maryland Fruit Rate Decision, I.C. C. Docket T.& S.
No. 91, Vol. XXIV, p. 164, June 9, 1912.
Wharton Steel Co. v. D.L. & W. RR. Co. et al., I.C.C. Docket
I.& S. No. 4334, Vol. XXV, p. 308, Nov. 12, 1912.
Detroit Switching Charges. I. C. C. Docket I. & S. No- 225,
Wol. XXVIII, p. 494, Nov. 4, 1913.
V (2) Lower Iron ore Investigation. Before the I.C.C. Docket
No- 6210.
Milwaukee Switching Rates. Before the I.C.C. Docket No. 5370.
(
s
}
The cost of Service Theory demands immediate attention, first,
because of its legal strength; and secondly, because of the generally
-
accepted principle of Political Economy that, except in rare instances,
prices of goods and services should conform to cost of production. The
º
legal strength of the Cost of Service Theory lies in the Fifth and
Fourteenth Amendments of the Federal Constitution, which provide that no
(l)
person shall be deprived of property without "due process of law”.
In what circumstances is a railroad deprived of its property without
"due process of law"? Under a regime of private ownership, no matter
what the controlling regulative principle, the carrier's property would
be confiscated provided total return was less than total cost of production.
The conclusion of a strict application of the Walue of Service Theory,
however, would be that the carrier is deprived of its property without
"due process of law" only in the event that total revenue from transportation
- T--
- - - - - - - - - - - ------------ - - - - - - -
(l) The Fifth Amendment (adopted in 1791), which relates to the
powers of the Federal Government, declares that "no person
shall be deprived of life, liberty, or property without
due process of law".
The Fourteenth Amendment (adopted in 1868) provides that no
State shall "deprive any person of life, liberty, or
property without due process of law".
It is interesting to note that these amendment 8, the
genesis of the "doctrine of confiscation" as developed by the
courts in railroad rate cases, were passed in contemplation of
matters quite foreign to railroad legislation. The Fifth
Amendment, for instance, was passed thirty-nine years before
George Stephenson made his first trip in the Northumbrian over
the Manchester and Liverpool Railway (September 30, 1830).
The Fourteenth Amendment was passed at the close of the Civil
War in order to protect negroes from an infringement of their
newly-won property rights.
However, it would seem to be the natural course of
events, that railroads, in the attempt to nullify enactments
of State Legislatures or of Commissions ordering reductions in
rates, should make use of this Constitutional weapon offered
them, and contend before the Courts that the proposed rates are
confiscatory, - will deprive them of their property without
"due process of law".
service is insufficient to cover total cost of production. The scope
of judicial review would be limited to a consideration of this question.
The conclusion of a strict application of the Cost of Service. Theory,
*** would be that the carrier is deprived of its property without
"due process of law" provided it can demonstrate that the revenue from
any particular item or class of traffic is insufficient to cover the total
cost of production of that particular service. The present position of
the Courts and Commissions seems to be about midway between these two
limits, with a movement in the direction of cost of service. Freight
and passenger rates, state and interstate, rates for terminal switching,
for example, are discussed in and of themselves. ()
* * * * * * * - - - - - - - - - - - - - - -
(l) The decisions of the Supeeme Court in the West Virginia Passenger
Case (Norfolk & Western Ry Co. vs. WF Virginia, 236 U.S. , 605),
and in the North Dakota Lignite Coal Case (236 U.S., 584),
would seem to point conclusively in the direction of an
assumption of cost of service, as applied to particular classes
of traffic, as a basis of rates.

The application of a cost of service principle can proceed
only on the hypothesis that it is possible to isolate the costs of
performing different classes of service. The underlying assumption
of the value of service theory is that railroad service is produced
under conditions of joint cost. Since these two premises are mutually
exclusive, the question arises as to just what are the facts of the case.
It is the purpose of this thesis to answer, a 9. reference to the freight
service and passenger service as totalities, the question: To what extent
are the freight and passenger services produced under conditions of
joint cost? The position taken by the writer is that the facts of the
case do not support the statement that "railroad costs are preponderantly
joint"; but that , giving due consideration to all complications, it is
not only possible, but practicable, to determine the cost of performing
the freight and passenger services; and that there is a strong presumption
that progress can be made toward determining the cost of performing certain
classes of service, substantially homogeneous in character, within those
major divisions.
The scope of this thesis, then, is limited to an analysis of
railroad costs with a view to the isolation of passenger service costs
and freight service costs. Since the study is or nich purports to
demonstrate the existence of an intimate relationship between railway
costs, and railway products - the freight and passenger services -
definite conclusions must be supported by concrete examples of railroad
operations and railroad costs. Actual figures, moreover, are particu-
larly needful to convey a sense of the relative importance of the various
problems encountered. The arguments submitted in the following pages
* -º-º- f
º
are therefore supported by facts revealed by a study of the acco unting
records and operating organization of the Michigan Central Railroad, *
-----------------------------
* The Michigan Central may fairly be taken as typical
in a study of railroad costs. For one year 1916, its
operating revenues were $41,884,593.12, operating expenses
$27,845,934.99. Operating conditions are sufficiently
diverse to afford illustrations of all problems pertinent
to a railroad cost analysis. The 500 miles of main line -
double track - from Buffalo (Suspension Bridge) to Chicago
(Kensington), traverse portions of the United States and
Canada; This division has a high density of through
traffic, in both the passenger and freight services. The
1300 miles of branch line - 32 distinct operating branches
and divisions - located in the States of Michigan, Ohio,
Indiana and Illinois, and in the Province of Ontario,
illustrate railroad operations conducted under conditions
of lower traffic density, and with a large percentage of
local traffic. The Michigan Central has a normal propor-
tion of passenger and freight traffic (64% freight, 27%
passenger in 1914, as compared with 69% freight, and 23%
passenger for all Class I Roads). Moreover, a portion
of the road is electrified (Windsor, Ontario, to Detroit,
Michigan). It will be accepted without question that a
road doing an annual business of $40,000,000., with 738
locomotives, 560 passenger coaches, 30,469 freight cars, with
main and branch lines, single and double track, electric and
steam motive power, will afford ample illustrative material
for all questions pertinent to a railroad cost analysis.
10.
Chapter I.
A Theory ºf Cost segregation.
The criterion of the accuracy of a cost analysis is of necessity the
degree of definiteness of the relationship established between costs incurred and
products sold. It must be admitted at the outset, however, that the tests of
º yº 7. O
absolute precision that are available in the natural sciences find no counterpart
— _--------- -j-
in cost accounting. A modern business is a complex organization of interacting
and cooperating forces. The relationship between cost and product cannot be
measured in vacuo. Disturbing factors are always present. It is not possible,
for example, to confirm a statement that the cost of manufacture of a particular
pair of shoes is a certain number of cents, with the supporting evidence that
- manufacturing costs would have been decreased by precisely that number of cents
if the particular pair of shoes had not been manufactured; and that, if an
additional pair be made, manufacturing costs will increase by #xactly the same
number of cents. It is not possible to isolate the cost of a particular bushel
of wheat, or quart of milk. Similarly, in a railroad cost analysis, it will not
be possible to demonstrate with scientific precision that the cost of transporting
a'sses of eggs, or a box of soap, from A to B, or of a passenger from C to D, is a
definite number of cents.
To admit that cost accounting cannot avail itself of the rigid standards
of measurement, the tests of absolute precision, that are the everyday tools of -
º, J





research in the natural sciences, is by no means to imply that standards are
lacking, that the procedure is unscientific, or that the results are not trust-
Worthy. Productive processes must be analyzed into primary operations. Costs
must be examined critically with a view to locating their fundamental points of ,
incidence, in order that they may be grouped about primary operations. Wherever
possible, expenses must be directly allocated. If expenses are not incident to a
single operation, they must be apportioned to the operations which necessitate
them on the basis of measuring units which, in view of all pertinent facts, seem
most nearly to express the truth. If the costs of primary operations are
determinable, it is possible, by division, to determine unit costs of primary
operations; and by addition to determine unit cost of all possible combinations
or assemblages of unit costs, that is, of products sold. As in the natural
sciences, progress in a study of cost is made by analysis and synthesis, and
each is ancillary to the other. The distinction lies in the fact that in a
cost study final results are confirmed or disproved, not by laboratory test,
but by a judgment based upon a common-sense interpretation of statistical evidence.
A railroad is an industrial establishment engaged in the manufacture and
sale of products which are considered in this study to be two in number; the . ( c.
freight and the passenger transportation services. The analysis of productive
processes into primary operations need be carried no further than is indicated by
the captions of the General Accounts in the glassification of Operating Expenses
of the Interstate Commerce Commission.* If the freight and passenger proportions
of the expenses included in each of these general accounts, together with the
associated interest charges included in the Income Account, can be determined with
approximate accuracy, it will be possible, by addition, to determine the manufact ur-

ing and selling costs of the products, the freight and passenger services.
º

- - - º
(, In the analysis of costs, recourse is made to the following processes in .
| `the establishment of a chain of sequence between costs incurred and products sold:

-
- - - -- - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - -

+ I. Maintenance of Way and Structures
II. Maintenance of Equipment
III. Traffic
IW, Transportation - Rail Line
W. Transportation - Water Line (omitted)
VI. Miscellaneous Operations
WII. General
I • THE LOCATION and ALLOCATION OF DIRECT COSCŞ. (70.8%)
Supporting, primary records, such as daily time cards, records of
materials used, are examined to locate costs which bertain directly and exclusively(*)
to either the freight service or the pessenger “race. These labor and material
costs are the "prime costs" of economic writings; and when discussed with reference
to the freight service or the passenger service as a totality, these costs are
"out-of-pocket” expenses. Since these costs are incident to a single type of
service, the accuracy of their allocation to the freight and passenger services
cannot be questioned.
Illustrations of direct freight costs are: Cost of repairs to tracks
in freight classification yards, stock yards; wages of freight train crews,
freight handlers; coal consumed by freight locomotives.
Illustrations of direct passenger costs are: Cost of repairs to tracks
in passenger stations, in passenger seen yards; wages of passenger train crews,
ticket sellers, gatemen.

11. THE DETERMINATION OF THE FREIGHT and PASSENGER PROFORTIONS OF ALL EXPENSES
NOT RELATED LºgLUSIVELY TO A SINGLE TYPE OF SERVICE. (29.2%)
It is the accuracy of the determination of the freight and passenger
proportions of these common costs which controls the accuracy of the final result.
Various methods, of varying degrees of accuracy, are used in obtaining a quantitative
- -- - - - - - - - - - --- - - - - - - - cº- - - - - e- - - - - --- - - - - - - - - - - -
** It so happens that railways transport in freight trains company materials for use
in both the freight and passenger services; and that both freight and passenger
employees are transported gratis on passenger trains. Railroads also delay freight
trains at sidings in order to give precedence to passenger trains in the use of
main tracks, a policy which imposes e-buºden on the freight service; a burden of
expense partially assignable to the passenger service. In consequence of these
practices, there results a commingling of expenses that is not revealed by account-
ing records. Railroad accounts therefore present the anomaly that the evidence of
primary records may not be conclusive. To focus attention on controlling factors,
the terms "freight service" and "passenger service" throughout the earlier part of
the discussion, include all operations which partake of the nature of these
respective services, regardless of the accrual of revenue. Fassenger service,
moreover, includes the transportation of baggage, mail, and express, in addition
to the transportation of persons. The possibility of making adjusting entries to

eliminate the disturbing factors indicated is discussed as a Specific problem in
a later chapter. - --
13.
expression of the extent to which these costs are imposed by the freight and
passenger services:

A. The Location and Apportionment of Expenses Associated with a
Homogeneous Product (1.7%) -Ey.
It is found that there are certain expenses which vary in
direct proportion to a quantity of homogeneous units of work.
For example, the cost of fuel consumed by a locomotive which
performs both passenger and freight switching varies in direct
proportion to the time spent in switching service, a measure of
which is Yard Switching Locomotive Miles. (*) This expense is
therefore apportioned on the basis of Yard Switching Locomotive
Miles made in the freight and passenger services.
The cost of fuel consumed by locomotives in Mixed Train
Service is apportioned according to the respective freight and
passenger proportions of total car miles produced in mixed trains.
- The cost of operating a fuel station, which delivers tons of
coal to freight and passenger locomotives, is assigned according
to the respective freight and passenger proportions º Of
+G+H fuel delivered.
It is perhaps needless to add that, if these expenses vary in direct
proportion to • quantity of homogeneous units of work, not only is their assign-
ment to the freight and passenger services quite as accurate as though a direct
allocation were made, but in essence these labor and material costs are essen-
tially "prime costs" or "out-of-pocket" expenses when discussed with reference
to the freight or passenger business as a totality. These units of work in all
instances must be subjected to critical examination. Tº
- - - - --- - - -----> - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
by switch engines multiplied by six.

B. The Location and Apportionment of Supplementary Costs, Related
to Costs Previously Located. (7.7%)
It is found that there are various supplementary costs, like -
shop expenses and costs of supervision, (*) that are associated with
direct labor or material costs already assigned to the freight and
passenger services. It is assumed that the freight and passenger
services benefit by these costs in the same proportion as they
benefit by the related labor and material costs, already located
and assigned. This procedure admits neither of verification nor of
- - - - - - - - - - - - -- - - - - - - - - - - - - - - - -- -- - - - - - - - - - - -
(*) The operating and accounting organization of the carrier permits the ready
identification of supplementary costs with definite operations. The Michigan
Central follows the departmental plan of organization of its foster parent,
the New York Central. The departments are the following:
l. Executive 6. Operating
2. Secretarial 7. Traffic
3. Financial 8. Roadway and Structures
4. Law 9. Mechanical
5. Accounting (a) Locomotive
(b) Car
10. Purchasing and Stores
zº
From the point of view of work performed, the Operating, Traffic, Engineering,
Locomotive, Car, and Purchasing Departments are separate and distinct entities .
or "production centers." Each of these departments perform a limited number ſ
of functions, keeps its own accounts, bills other departments for Work done.
The Accounting Department is the clearing house which assembles departmental
records to obtain system costs. The expenses of the Executive, Secretarial,
Financial, Law, and Accounting Departments, amounting to but two per cent. of
total operating expenses, represent costs incurred in coordinating the work
of these other distinct business entities, expenses of bringing into a high
degree of systematic co-operation the work of these other departments; of
costs of fusing a number of heterogeneous "production centers" into an
organic whole.
The functions of the Engineering, Mechanical, Operating, Traffic, and
Purchasing and Stores Departments may be summarized as follows:
l. Engineering Department.
The function of this department is to repair the right
of way and all structures. The work of the department is
further specialized by a subdivision into a Track, Bridge,
Signal and Building Department.
2. Mechanical Department.
This department is subdivided into a Locomotive Depart-
ment and a Car Department. The Locomotive Department repairs
and operates the motive power. The Car Department repairs
rolling stock (passenger coaches and freight cars).


15.
disproof. If the controlling labor and material costs are accurately assigned,
the apportionment of these supplementary costs may be accepted as reasonably
correct, provided their amount is small in comparison with the basic charges,
and provided also the work to which they pertain is of a substantially homogeneous
character. Illustrations of these costs are the following:
The cost of handling company stores, amounting to 3% of the invoice cost
of materials handled through the storehouse, is essentially an additional cost of
materials. It is assumed that this expense is imposed by materials handled through
- - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - tºm - - - - - -
(Foot-note continued)
3. Operating Department.
It is the function of the Operating Department to direct
the transportation of passengers and freight from place to
place over a roadway maintained by the Engineering Depart-
ment, in conveyances repaired by the Car Department and
propelled by a motive force repaired and operated by the
Locomotive Department, at tariffs arranged by the Traffic
Department.
4. Traffic Department.
The function of the Traffic Department is that of a
salesman. It solicits traffic, prepares and distributes
tariff's governing traffic.
(5. Purchasing and Stores Department.
It is the Tfunction of this department to keep records
of materials purchased and issued to other departments.
The cost of handling company stores, amounting to three
per cent, of the invoice cost of materials handled, is
included in primary accounts as an additional cost of

materials.
It will be noted that the departmental organization of the Michigan
Central, and in consequence the costs of work done by each of these depart-
meats, intermeshes with the Interstate Commerce Commission's Classification of
Operating Expenses. The costs incurred by the Engineering Department are
charged to primary accounts in General Account I, Maintenance of Way and
Structures. The Mechanical Department makes charges to General Account II,
Maintenance of Equipment, and in the case of the operation of locomotives,
to General Account IV, Transportation-Rail Line. The expenses incurred
by the Traffic Department are all charged to General Account III, Traffic,
and of the Operating Department to General Account IV, Transportation-Rail
Line.
16.
the store house in proportion to their value. It follows from this assumption.
that the expense is imposed by the passenger and freight services in the same
proportion as they impose material costs. Storehouse expense, therefore, is
charged pro rat a to primary accounts in proportion to the value of company stores
chargeable to the respective accounts.
- Various costs of supervision vary in direct proportion to the amount of
work done by the particular department concerned. Since the work of the Building
Department, for example, pertains exclusively to repairs to buildings, its office
expenses are also related exclusively to building repairs. An accurate record is
kept of the direct labor and material cost of each job done, and since the work is
of a homogeneous character, it is assumed that the office expense and cost of
supervision is imposed by the freight and passenger services in the same proportion
as these services impose the labor and material costs. This expense, then, may be
prorated over the related labor and material costs, and the expense by particular
buildings apportioned according to the use of the building.
The intimacy of the relationship between these supplementary costs and
...their associated labor and material costs is of varying degrees. In the case of
Repairs to Steam Locomotives, the shop expense, amounting to but 3% of the direct
labor and material costs, is related only to expenses included in a single account
(No. 308, Steam Locomotives-Repairs). The relationship is perfectly definite.
The cost of Superintendence charged to Account No. 30l., representing the cost of
supervising the work of an entire department, is less intimately associated with
any particular item of expense over which it must be distributed. Experiges of
general officers, included in General Expenses, pertain to the operation of the
property as a whole, rather than to any specific portion thereof. Their relation-
ship to any particular item of expense chargeable to the freight or passenger
service is the refore not immediate.
l'7.

9. The Location of Costs. Coºgaragle with Analºgous Costs of Other
---
Railrºads, and Their Appºnent on the basis of Comparative
Unit Costs as determined by an Application of the Mathematical
Theory of 99 prelation. (14.0%)
A study of the principal maintenance of way costs (ties, rails, and
other materials used in track maintenance, together with the labor cost of
distributing and applying these materials) and traffic statistics of all railroads
in the country (Class I) for a three-year period reveals the existence of a
definite relationship between the proportion of passenger (or freight) tonnage
and cost of maintenance of way per gross ton-mile of transportation produced.
This relationship is measured numerically by an application of the mathematical
theory of correlation, and distinct unit track maintenance costs for the freight
and passenger services are established. It is demonstrated that, for all rail-
roads in the country, the normal tendency is for the gross ton mile in passenger
service to necessitate repairs to track in the ratio of 4.3%:l as compared with
the gross ton mile in, freight service. (*) Passenger gross ton miles are therefore
weighted 4.39, and an apportionment made on the basis of the freight and passenger
proportions of equivalent freight gross ton miles.
This process of mathematical reasoning is subject to the criticism that
it is not demonstrated that the ratio of unit track maintenance costs in the
freight and passenger services in the case of a particular railroad is identical
with the general ratio for all railroads. The break in causal relationship may
be described as follows:
A normal tendency is established, and is measured quantitatively. It is
demonstrated that the conditions which control the normal tendency exist qualitative-
ly in the particular case. It is not demonstrated that in the particular case all
disturbing factors are eliminated, although a study fails to reveal the existence
- * - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(*) This method of procedure is discussed at length in Chapter II.
18.
of disturbing factors. Further than the establishment of the normal tendency,
and the existence in the particular case of conditions which control that tendency,
the proof is negative in nature.

D. The Apportionment of the Residuum of Common Costs on the basis of
Arbitrarily Selected Units of Work. (5.8%)
These expenses represent the weakest link in the chain of sequence
between railway costs and railway products. Cost of repairs to bridges, right of
way fences; cost of removing snow and ice from the right of way, are illustrations
of operating expenses included in this group. With a given railroad plant, the
amount of these costs is a direct function of weather, not train movement. But
£he expense, hºwever, is essential to the production of both the freight service
and the passenger service. The measure selected as most nearly representing the
use of these facilities is the number of trains passing each facility. The
expense is therefore apportioned on the basis of the freight and passenger
proportions of total trains passing each facility; or for the system, on the
basis of transportation train miles.
To recapitulate, the processes used in the determination of the freight
and passenger costs (operating expenses, interest and taxes):
I: Expenses are allocated directly where ºver possible.
II : Common expenses are apportioned by four different methods:
A. Expenses related to a homogeneous product are
apportioned according to the freight and passenger
proportions of the total product. The test of
accuracy is the homogeneity of the product.
B. Supplementary expenses are apportioned according
to the freight and passenger proportions of related

labor and material charges previously located. The
probability of error is slight, provided controlling
expenses are correctly assigned, and provided also
the supplementary costs are small in proportion to
the related "prime costs" of labor and materials.
19.
C. The principal maintenance of way costs are apportioned
on the basis of relative unit track maintenance costs
established by an application of the theory of correlation.
It is not proved that the ratio of these unit costs in the
case of the carrier is identical with the ratio in the
general case, but no disturbing factors are discovered.

D. The residuum, consisting of expenses which bear but a
slight immediate relationship to any particular class of
transportation service produced, is apportioned on the
basis of arbitrarily selected units of work which seem
most closely to approximate a measure of use.
Although the amount of material is somewhat voluminous, the process is
essentially a simple one when taken a step at a time. A tabular summary of
findings, with reference to each expense account, and the method of separation,
is given at the end of each chapter. A recapitulation of all findings (page loé)

º -
presents in summary form the final result. In but one instance is recourse made ſ
to methods that are not simple and direct, and in general use. The exception is
an application of the theory of correlation in the determination of the freight
and passenger proportions of maintenance of way expense, the most difficult
problem encountered, a proposed solution of which is the subject of the next
chapter.

20.
Chapter ii.
The Cost of Maintaining a Right of Way.
A discussion of the assignment of railroad maintenance of way expense
to the freight and passenger services must first give consideration to an
essential distinction between cost accounting in the railway field and its
counterpart in the field of private industry. The increasing emphasis upon the
cost factor in railroad rate-making has brought the cost accountant into contact
with virgin soil. Cost accounting has been evolved - so far as any evolution or
development has taken place - as a guide to industrial leaders selling goods or
services in a competitive market. In the field of private industry, cost data and
"managerial statistics" are synonomous terms. These statistics are the eyes of
the manager. They help him detect wastes within the shop, and guide him in an
intelligent participation in a market in which prices of products are determined
in the large by the spontaneous working of the economic forces of competition.
In this broad field of industry, cost statistics go no farther than the general
manager; their relationship to price of product is no more intimate than a
directive influence exercised upon particular productive processes.
With public service industries the case is quite different. The function
of cost figures is the converse of their function in private industry. In this
sian of industries *, *, * of the essentially monopolistic character
of the business, it has not been found expedient to rºy upon the force of competi-
tion to regulate prices charged for services rendered. To protect the public from
extortion by the carriers, to protect the carriers from exploitation by the public,

and also to protect the carriers from themselves, rates - that is, prices charged
for services rendered - come for approval or rejection before public tribunals,
º
2ls
the legislative commissions, and the courts. The cost figures submitted in
these cases are not synonomous with managerial statistics”; they are not
assembled with a view to the elimination of wastes within the manufacturing
plant. On the other hand, they do bear an intimate relationship to the price
of the commodity or service sold. They do go beyond the general manager, for
they are often the controlling factor in fixing the price of railway service.
The railroad is already in the market, and expects to stay in *-*. /
Cost figures are submitted by railroads in the hope of obtaining an increased
revenue for service rendered without conflict with the disturbing influence
of competition with other producers. And conversely, state, Legislatures and º,
Commissions are not unaware of the fact that passengers within their particular
jurisdiction will be able to purchase transportation at two cents per passenger
mile, without competing with other consumers, provided the legality of this
rate can be established. -
An inevitable consequence of this intimate relationship between cost
statistics and price of service in the railway industry, conjoined with and
supplemented by a lack of definite standards of cost measurement, has been that
the end in view, a rate increase or the annulment of an order for a rate decrease
from the point of view of the railroad, and the converse from the point of view
of State Commissions, has given color to the methods employed in the preparation
of cost exhibits, and to their discussion. Accounting statements have been
submissive to the patron's will, with resulting confusion and conflict. In a
railway cost analysis, therefore, there arise not only the perplexing questions

that confront the cost accountant in all lines of industrial activity - and these
V : Managerial statistics in the railway industry pertain largely to engine and
train performance, e.g.:
Records of engine crews showing fuel consumption per mile in
similar classes of service.
Train load figures - per cent . of actual load to maximum load obtainable.
Empty car mileage, by divisions, and its percent age of total car mileage.
Car miles per train mile, train miles per train hour, etc.
22,
are particularly abstruse in railway operations - but also the quite distinct
public problem that grows out of the intimate relationship of cost exhibits to
railway revenues,
The assignment of maintenance of way expense to the freight and
passenger services, in consequence of the lack of a standard of measurement,
* only tº frequently been discussed with reference to the purpose in hand.
In passenger rate cases, testimony of experts has often rallied to the support
of the train mile, which fulfills the condition of assigning to the passenger
(l)
service about half of the maintenance of way expense. In freight rate cases,
the gross ton mile has not lacked support, impo Bing as it does on the freight
service 78% of maintenance of way costs, and on the passenger service but 22%.
(2)
Latterly, a compromise unit, the locomotive t on-mile, has come into favor as a
conservative basis for the as signment of maintenance of way costs about midway
between the extremes of charges to the freight and passenger services as
determined by the gross ton mile and the train mile, respectively.
An application of these various units of apportionment to the
maintenance of way costs of the Boston & Maine Railroad gives the
(3)
following divergent results:
- * * * * *s tº ex a gº as as ex ºs e as an as ºn as ºn tº a -º a ºne sº - ºne ºn sº es - as as a gº as we gº º me * * * * * * * * * * * * * > a.º. cº ºn tº a tº - are sº tº eve tº sº me ºut ºne as a m at tº we
(1) For the year 1914 the ratio of freight train miles to passenger train miles
is 590: 580. Statistics of Railways, 1914, p. 49.
(2) Advocated in the General Brief Upon Common Questions on Behalf of All
Plaintiffs in the Oklahoma Case, submitted in the District Court
of the U. S. for the Western District of Oklahoma, Docket Nos. 471, 472,
473, 566, 567. The Plaintiffs were the following Railroads:- -
Missouri, Kansas & Texas; Atchison, fogeka & Santa Fe; Gulf, . Colorado
f Southern; Chicago, Rock Island & Pacific; St. Louis & San Francisco.
séº ember 30, iólē)
(3) W. J. Cunningham, Quarterly Journal of Economics, February, 1917, p. 238.
}

":
j
Maintenance of Way Expense
Basis of Apportionment Chargeable to Passenger Service
-4- Amount
Revenue train miles 60.7 #4, 320,991.
Road locomotive miles 57.1 4,064,722.
Revenue road locomotive miles 53.0 3,772,859.
Direct charges; transportation costs only 46.8 3,331, 506.
Revenue train miles and car miles 40.6 2,890, 152.
Fuel consumption; road and switch locomotives 40,0 2,847,441.
Direct charges; transportation and equipment 39.6 2,818,966.
Operating revenues 39.3 2,818,966.
Gross revenue train tons (estimated) 33-3 2, 370, 494.
Revenue car miles 20.6 l, 466,432.
Since these units are supported by opinions rather than
by facts, and since there is no unanimity in the opinions expressed by
experts, in a rate case the door is open for the introduction of
testimony in support o: a unit of apportionment which will
produce cost figures in harmony with the end in view. It is to be noted
that the charge to passenger service on the basis of revenue train miles
is three times the amount so charged on the basis of revenue car miles. *
Whether a particular transportation service is performed at a profit or at
a loss might well depend upon the choice of one or the other of these
units of apportionment.
In this article, Professor Cunningham assumes sponsorship for
fuel consumption (tons of fuel consumed by road and switch locomotives) as a
"more scientific” basis for the assignment of maintenance of way expenses to
the freight and passenger services, and advances the following argument s :
(1) Fuel consumption is in a large degree proportional to the horse-power
cºlorea. (2) Horse-power developed is directly proportional to the speed
of the train. (3) Therefore, fuel consumption inci'Bases somewhat in proportion
to speed of train, but not directly.
An examination of pertinent fact, 3 leads to the conclusion that
the fuel consumption basis will produce results that are viciously inaccurate.
In the first place, any accurate measure of horse-power, a unit
of work, is depend - f: -
2 pendent upon the existence of a constant opposing force, such as
is exerted b
gravi * a
y ty in opposition to masses projected vertically. Horizontal
movements encounter no such constant opposing force. A locomotive simply over-
comes a combination of various kinds of friction (cylinder, journal, rolling, etc. )
and air resistance. The former are not constants; the latter varies not only
ath wind velocity, but as the cube of the speed of the train. The relationship
of these variables to fuel consumption is by no means a constant.
A second and even more important disturbing factor arises from the wide
variation in fuel consumption per unit of work even among engines of the same
class used contemporaneously in the same type of service on the same operating
division; variations that result from differences in (l) efficiency of firemen,
(2) condition of engines. The Chicago, Milwaukee & St. Paul keeps an accurate
record of fuel consumption and tonnage handled by engines and engine crews, and
posts monthly in the roundhouses a tabular record by engine numbers, by engineers,
and by firemen, for each division, showing tons of fuel consumed and gross ton
miles of tratrºnanned, with the average fuel in consumption in pounds per
thousand gross ton miles of traffic handled. The best performance by class of
engine in each type of service on the same division is in each case taken as
100%, and all men and engines are graded accordingly (men and engines running
less than 400 miles are excluded). The firemen's record for April, 1916, shows
that for engines of the same class, on the same division, (Chicago & Milwaukee
Division) in the same kind of service, fuel consumption per thousand gross ton
miles of transportation work done, varied in passenger service from 24% pounds
to 378 pounds, with engines of the same class; and from 415 pounds to 1564
pounds, with engines of another class; that is, the range in passenger service
for engines of different class, but on the same division, is from 249 pounds
to lj64 pounds per thousand gross ton miles of traffic.
In time, stock, and dead freight service, fuel consumption per thousand
sº ton miles of traffic on this division, by classes of engines, varied from
7l-88 pounds, ll3-249 pounds; and in way, patrol, and mixed-freight service
from 178-597 pounds.
In short, as between different classes of engines in different types
of service, but on the same operating division, the fuel consumption per thousand
gross ton miles of traffic hauled varies from 71 pounds to lj64 pounds, or about
two thousand per sº."####, perceive tº. these records of engine perform-
ce any tendency for fuel consumption to equate speed and weight of train. And
again, be it *** -- ~~ *** relationship between speed
and weight of train - or any combination thereof - and damage to track, even in
the ideal case.
Furthermore, even if a definite relationship between fuel consumption
and track maintenance cost could be established for the ideal case, under actual
railroad operating conditions, two other tendencies must be measured and adjust-
ments made before fuel consumption or any unit of apportionment can be confirmed
by science.
l. In order to insure the comfort and safety of passengers, railroads
keep their right of way at a higher standard of maintenance than
is necessitated by the performance of freight service.
2. Freight trains are sidetracked in order to give passenger trains
the track, thus expediting passenger train movement and delaying
freight train movement, a policy which results in a higher fuel
charge to the freight service than would be necessitated by the
performance of the freight service alone. -
A good example of the higher standard of track maintenance imposed by
the passenger service is near at hand. Parallel to the main line, between Jackson
and Niles, a distance of 104.30 miles, the Michigan Central operates an Air Line.
The Air Line - single track - has the highest traffic density of any track on the
system. In August, 1915, for example, there were hauled over the Air Line 22, 400
cars (all loads), over the main line parallel to it (both Eastbound and Westbound
tracks together) a total of 19,500 cars, loads and empties. The Air Line is used
almost **** by fast Eastbound "symbol" freight trains (the so-called "fast
stuff" moving on regular schedules in through service). After and year. of
service, rail is taken out of the Main Line and new rail is laid. The "rail up"
is taken to the ran saw, a foot is sawed off each end, and as second class
material is then put into track on the Air Line Division, where it may be used
tor nine or ten years more in the freight service. In other words, material
unfit for use in the main track because of passenger train movement is still
fit for the highest type of freight service, the movement of the fastest freight
trains over a division with traffic density on a single track higher than the
traffic density on both eastbound and westbound tracks of the Main Line.
The second disturbing factor, the policy of delaying freight trains in
order to expedite passenger train **, +------ even more serious, and as is
completely destructive of the fuel consumption basis of assigning track maintenance
costs to the passenger and freight services. As a general rule, passenger train
schedules are based on ideal train performance, and make no time allowance for
delays between stations. On the other hand, freight train schedules do allow for
delays between stations and at stations in order to give to passenger trains
resins. in use of the track. A few illustrations are illuminating:
The Michigan Central operates both "Symbol" or through freight trains
as well as local freight trains between Detroit and Jackson. These through freight
trains make no stops what ever to switch, deliver, or pick up cars, between Detroit
and Jackson. They are given precedence over all other freight trains; but
passenger trains are given precedence over them. Any delays, therefore, are
occasioned by the passenger service.* The distance between Junction Yards at
Detroit, where these trains are made up, and Jackson, is 69 miles. If given a
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --- - - - -
* Excluding, of course, accidents and other unforseen delays, not peculiar to
either the freight or the passenger service.
f
clear track, this run can be made well within 24 hours (the time of passenger
trains between these stations, making 4 additional stops, and traveling five
miles farther, -the distance between the Detroit Terminal Station and Junction
Yards - is a -a-. The average time of the 94 symbol freight trains moving - ſº
between Detroit and Jackson during the month of April, 1916, instead of being
24 hours, was 7 hours 31 minutes. One hour is a generous allowance of time
for the engine to hook onto the train and pump up the air. Even during this
hour, be it noted, the engine is consuming coal, although no train movement
takes place; no damage to track ensues. The remaining 4 hours, out of a total
of 7% hours, are spent by these trains standing around the terminal waiting
for permission to go, or at sidings waiting for passenger trains to go by them.
In short, the locomotive is under steam, is burning coal, for 7% hours, although
to send this train over the road would take but 24 hours, if placed on terms of
equality with passenger trains. Yet on the basis of 7% hours of fuel consump-
tion Professor Cunningham's unit will burden the freight service with track
maintenance costs.
º A similar difficulty arises when comparing through freight trains and
local freight trains, fast freight trains and the so-called "dead freight" trains,
hauling coal, sand, gravel, and the like. In the Denver Live Stock Case, the
Chicago, Milwaukee & St. Paul undertook to discover by what amount the fuel cost
per to n mile of traffic handled in fast freight service - live stock in this
case, relatively small number of tons per train, and moving at high rates of
speed - exceeded the fuel cost in other types of freight service - "dead freight"
service, etc., commodities moving in heavy train loads at relatively slow rate

of speed, conditions making for the highest economy in fuel consumption. The
1 - * , -
humilating discovery was that the fuel cost per ton-mile in fast preferred freight
/*
service - small train loads - was less than for slow freight service and heavy
train loads... And the reason was the same as indicated above. An even greater
proportion of the time of engines under steam, burning coal, of engines in slow
service, was spent standing around terminals and sidings, waiting for permission
to take the track.
In short, the greater the tendency to side-track freight trains, to
hold them at terminals, in order to expedite passenger train movement, the
greater the fuel cost in freight service, the Smaller the fuel cost in
passenger service. On the fuel basis, therefore, the slower the freight
service, the faster the passenger ***, * greater the maintenance of way V
costs assigned to the freight series, tº eater the maintenance of way - ſ
costs assigned to the passenger “race,; 3. conclusion contradicted by all
railroad experience.
It is of course a very simple task to suggest difficulties in the way
of an assignment of track maintenance costs to the freight and passenger
services. Studies limited in scope to individual railroads have indeed shed
but little light upon the track maintenance costs imposed by the passenger
service and by the freight service. Is then the problem one which does not
admit of solution? Or is it possible, by the study of data pertaining to a
large number of railroads, so to describe, test, and measure these facts, and
so to formulate the sequences, that a general law of the relationship between
passenger and freight traffic and maintenance of way costs may be discovered?
is sohn, a tä 4
The latter +-submit to be the case.*
It can at least be taken for granted that damage to a right of way,
imposing upon a railroad the burden of maintenance costs, is the consequence
of the operation of two forces:
l. The movement of trains, resulting in wear.
2. The action of weather, resulting in erosion of roadway,
corrosion of rails, rotting of ties.
* For the statistical study which follows I am indebted to Mr. E. C. Taylor, who,
when Statistician of the Chicago, Milwaukee & St. Paul Railway, directed its
preparation; and to Mr. G. J. Bunting, General Auditor of the "Milwaukee,"
for permission to use the exhibits.

The action of the second force, weather, resulting in erosion of the
roadway, corrosion of rails, rotting of ties, is contemporaneous with the
action of the first force, train movement.
Owing to the dissimilarity in operating conditions in the freight and
passenger services, units like the ton-mile, train mile, locomotive mile, even
though quantitatively identical, are not qualitatively identical as between the
two types of service, and their * therefore would sin against one of the most
fundamental cannons of scientific procedure. Moreover, the damage to tree. due º
to weather action is not measured by these units.
The very fact that the track maintenance cost imposed by the freight
gross to n mile and that imposed by the passenger gross ton mile may not be
identical, suggests the direction a comparative study must take. Since railroads
differ in relative proportions of passenger and freight traffic, do they differ z
in maintenance of way costs per unit of traffic? If so, it may be possible by
the study of data pertaining to a large number of railroads to establish a
chain of sequence between traffic conditions and track maintenance costs, and
to eliminate weather as a disturbing condition.
The basic data upon which a comparative study of transportation move-
ments and track maintenance costs is to proceed must be congºus items. The v
total gross tons moved one mile, the product of the physical factors, weight and
distance, for all movements over the rails - whether freight, passenger or r\O 11-
revenue - measures quantitatively the amount of transportation work performed.
The statistics of the Interstate Commerce Commission do not give the figures
for weights of equipment, so that average weights must be introduced into the
30.
computation at this time.* Any qualitative difference between the gross ton
mile in passenger service and the gross ton mile in freight service must be kept
alive, a condition that is satisfied by expressing simultaneously the total
transportation work done and the proportion that is performed in the passenger
(or freight) service.
* * * * * * * * * * * * * * * * * * * * * * - - - - - - - - - - - - - - - - - - -
was made to get returns from all railroads, but many lacked accurate data. The
gross ton mile figures for each road are obtained as follows:
IN PASSENGER SERVICE
Product of Passenger Locomotive Miles x l?0 tons
Product of # Mixed Locomotive Miles x l20 tons
Product of ...}. Non-Revenue Loco. Miles x 75 tons
Product of ...? Switching Loco. Miles x 100 tons
Product of Passenger Car Miles x 35 tons
Product of ..}. Non-Revenue Car Miles x 15 tons plus average tons of freight
per loaded freight car mile.
IN FREIGHT SERVICE

Product of Freight Locomotive Miles x 140 tons
Product of # Mixed Locomotive Miles x 120 tons
Product of ...? Non-Revenue Loco. Miles x 75 tons
Product of ...?. Switching Loco. Miles x 100 tons
Product of Loaded Freight Car Miles x 15 tons plus average tons of freight
- per loaded freight car mile.
Product of Empty Freight Car Miles x 15 tons
Product of ..? Non-Revenue Car Miles x 15 tons plus average tons of freight
per loaded freight car mile.

For all railroads with earnings less than 50% passenger, 95% of Switching Mileage
is said to be freight and 5% passenger. For roads with earnings more than 50%
passenger, 85% of the switching mileage is said to be freight and 15% passenger.
These figures are approximately accurate. The per cent. of Non-Revenue Locomotive
and Car Miles assigned to the freight and passenger services should be the same as
the percent age of maintenance of way expenses assignable to each of these services.
The earnings basis was used as the closest approximation available. Information
Since made available indicates that the earnings basis does not assign a sufficient-
ly large proportion of expense to the passenger service. The mileages thus assign-
ed, however, are practically negligible (less than one-half of one per cent),
compared with the directly assignable items, so that a slight inaccuracy in this
arbitrary division cannot materially affect the conclusions.
The average weight of a passenger coach, 35 tons, may at first glance appear
low. Passenger coaches vary in weight from 21 tons (excursion, cars, suburban cars)
to 90 tons (all steel buffet cars). It should be borne in mine that this study º
pertains to all equipment used by all railroads in the country (Class I roads),
and for the years 1911, 1912, 1913; and that approximately 50% of all passenger
equipment is at least 20 years old. -
The locomotive weights include the tender with a load of coal.
These figures à for average weights were decided upon only after a very careful
analysis of data pertaining to 75 railroads. Without data pertaining to locomotive
mileage by classes of locomotives, and of passenger car mileage by classes of cars,
for a similarly large number of roads, I should therefore not be willing to
concede any inaccuracy, in the average weights used to measure the normal tendency.

31.
In expressing the cost of track maintenance, only those costs related
directly and exclusively to maintenance of way, and which vary in the same
direction as the amount of train movement, can be used. These items of expense,
which are common to all railroads, are the cost of ties, rails, ballast, other
track material, and the labor cost of distributing and applying these materials
charged to roadway and track; that is, accounts 2-6 inclusive of the old
classification.” The cost of Superintendence is excluded for the reason that
it includes costs pertaining to structures as well as right of way. Similarly,
costs of repairs to Bridges, Trestles and Culverts, of Tunnels and Subways,
which vary widely between different roads according to topographical conditions,
are not introduced. Moreover, expense items like repairs to Right of Way Fences,
Crossings and Signs, Removal of Snow, Ice and Sand are excluded from the
computation, because they bear but a slight immediate relationship to the
quantity of transportation produced. The items of expense introduced into the
computation, however, represent about 85% of total cost of repairs to track.
The figures are taken from the published reports of the Interstate Commerce
Commission, and have a uniform basis in the rules prescribed by the Commission
in its Classification of Operating Expenses for Steam Roads. The accuracy of
these cost figures cannot be questioned.
The accompanying chart illustrates graphically the relationship between
traffic conditions and track maintenance costs for the 193 Class I railroads in
the United States for the three-year period 1911-1913 inclusive.; The traffic
and maintenance figures are plotted as follows:
* * * * * * * * * * * * - - - - - - - - - - - - - - - - - - - - - - - - - - - - --- -
** Ballast
Ties
Rails
Other Track Material
Roadway and Track. - # 00 Th ad
- r it.} ting revenues in excess of $1,000,000 per annum. e S 9 º'o aſ 13
# *::::::::::::::::::*:##, 3?"ii., ºr 32% of the entire *ašiºiea: i: #.


country (245,634.55). The operating revenues of these roads, $2,969,898,838
.*** 51% of the total revenues of all roads in the country, ($3,647, hi5,908).
(Statistics of Railways, I. C. C., 1914, p. 58).
32.
A pair of coordinate axes is constructed, the X-axis representing the
percentage of total gross ton miles of traffic that are performed in the passenger
service, the Y-axis the cost in dollars for track maintenance per million gross
ton miles of transportation movement (accounts 2-8 of the old Classification) for
the years l?ll-l913 inclusive. With reference to these axes there is located the
position of each railroad, the abscissa - horizontal distance on the X-axis -
representing the road's percentage of total gross ton miles that are made in the
passenger service, and the ordinate - vertical distance on the Y-axis - the road's
track maintenance cost per million gross ton miles of traffic moved. About each
of these points as a center there is drawn a circle to represent the railroad.
The size of the circle represents the size of the road.
A glance at this chart indicates the existence of a definite tendency
for railroads with a high percentage of passenger tonnage to have a greater unit
track maintenance cost than do railroads with a high percentage of freight
traffic (low percentage of passenger traffic). An increase or decrease of one
quantity, percentage of passenger gross ton miles to tota gross ton miles, as
accompanied with an increase or decrease of the other quantity - track maintenance
cost per million gross ton miles. The degree of causal relationship between the
two sets of factsplotted may be expressed numerically, as may also the relative
unit track maintenance costs in passenger service and in freight service, by an
application of the theory of correlation. A simple illustration of the principle
involved is the following:
In the year 1896, the total transportation operations of the Senora
Railway consisted in the movement of one million tons of traffic one mile. Two
hundred thousand gross ton miles - 20% of the total units of transportation work -
were produced in the passenger service, and eight hundred thousand gross ton miles
~ 80% - were produced in the freight service. Total track maintenance costs were

$250. Twenty years later, in 1916, total transportation operations of the
33.
Senora still consist in the movement of one million tons of traffic one mile,
but three hundred thousand gross ton miles - 30% of the total - are now
produced in passenger service, and seven hundred thousand gross ton miles - 70%
- in freight service. Track maintenance costs have increased to $300. Assuming
for purposes of illustration that weights and kinds of equipment, material costs,
and operating conditions have remained constant throughout these two decades,
the variable factors are but two in number:
l. An increase in the percentage of total transportation work
that is performed in passenger service.
2. An increase in cost of maintenance of way per unit of
transportation work done (gross ton mile).
By recourse to the most simple algebraic process, the solving of a pair of
simultaneous equations, it is possible to determine the maintenance cost imposed
by the passenger service and that imposed by the freight service with an accuracy
quite as absolute as though the two types of service were performed on different
tracks.
Cost in dollars for Maintenance of Way per l,000,000 gross
ton miles in passenger service.
Let x
y = Cost in dollars for Maintenance of Way per l,000,000 gross
ton miles in freight service.
.2 x plus .8 y = 250 (year l896)
.3 x plus .7 y = 300 (year 1916)
x = 650
y = 150
The ratio of track maintenance cost per gross ton mile in the passenger
service to the gross ton mile in freight service is the refore 650;150, or 4.33:1.
In this simple hypothetical case, therefore, passenger gross ton miles would be
weighted 4.33 as compared with freight gross tor. miles in an assignment of common
maintenance of way costs to the two types of service.
It is of course quite impossible to obtain data of the character used
in this simple hypothetical case; that is, data pertaining to one railroad over a
34.
a series of years, with static conditions throughout the period of operating
technique, of prices of labor and materials, with the only variable factors the
relative proportions of freight and passenger traffic and cost of maintenance
of way. Difficulties arise not only from changes in prices of labor and
materials, but in operating conditions and in maintenance standards as well.
Moreover, the relative proportions of passenger and freight traffic on a
particular railroad tend to remain constant.
The data substituted, however, will give results which are trustworthy,
although not so precise as those indicated in the simple illustration. Instead
of solving a pair of simultaneous equations representing changes in the propor-
tion of passenger (and freight) traffic and in track maintenance costs of a
single railroad over a period of years, facts are used that pertain to a large
number of railroads contemporaneously. Each road has a different proportion
of passenger traffic and each road has a different track maintenance cost per
unit of transportation work. The variable factors, as in the simple hypothetical
case, are two in number:
l. A change in the percentage of passenger gross ton
miles to total gross ton mile 3.
2. A change in the cost of maintenance of way per gross
ton mile (million gross ton miles).
In a study based upon track maintenance and traffic data pertaining to
practically all the railroads operating throughout the entire territory of the
United States for a period of three years, disturbing factors like unusual local
º * * º º
conditions of maintenance, weather, or operation,- operative no doubt - could
introduce only compensating errors. By the law of algebraic probability, these
influences tend to offset each other and their effect to become negligible as

º
the number of cases studied grows larger. -AAd-Hºhéº-e? No cumulative errors are
35.
introduced which might vitiate the conclusions drawn. *
For any two railroads, a pair of equations may be written similar to
those in the illustration, and their solution will give unit values of "x" and "y"
which will satisfy the equations of tonnage and maintenance costs of the two
railroads selected. If, however, a third equation for a third railroad be
introduced, the unit values of "x" and "y" determined for the first two equations
will not satisfy it, unless by the merest coincidence. Thousands of values of "x"
and "y" may thus be found by solving the equations of all possible pairs of
*
Y
railroads in the country. The mean"values of "x" and "y" would then most probably
represent the unit track maintenance costs in passenger and in freight service.
Recourse to the theory of correlation (#) and the use of a graph make
it possible to obtain in the simplest way these most probable values of "x" and "y".
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
". With regard to the effect of traffic density on track maintenance cost per
gross ton mile, this may be said: A study similar to the one under discussion
was made to discover a possible chain of sequence between traffic density and
track maintenance cost. In this graph, the X-axis represented traffic density -
ton miles per mile of road - and the Y-axis represented cost of maintenance of
way per million gross ton miles. No correlation was found to exist. (The
coefficient of correlation was less than .lo).

Similarly, no correlation was found to exist between percentage of passenger
(or freight) tonnage and traffic density.
This lack of any definite relationship between traffic density and track main-
tenance cost in my opinion not only destroys any objection on that score, but
may be used to affirm the alternative proposition, that it is the relative
proportion of passenger traffic that influences track maintenance cost.
# A few words in explanation of the theory of correlation may be pertinent at this
juncture. Briefly, in the words of King, "Correlation means that between two
series or groups of data there exists some causal connection."
(W. I. King, Elements of Statistical Method, p. 197).

More fully, according to Bowley:
"When two quantities are so related that the fluctuations in the one are in
sympathy with the fluctuations in the other, so that an increase or decrease
in one is found with an increase or decrease (or inversely) of the other, and
the greater the magnitude of the changes in the one, the greater the magnitude
of the changes in the other, the qualities are said to be correlated."
(A. L. Bowley, Elements of Statistics, p. 316). sº-
36.
The value of "r" , the coefficient of correlation, is found to
*"...ºnes. The probable error of "r" is .0319. The value of "x",
track maintenance cost in dollars per million gross ton miles of traffic
in freight service is lºl. 34; the value of "y", track maintenance
cost in dollars per million gross ton miles in passenger service, is
664. 24. For the United States as a whole, then, the track maintenance
º -
"cost assignable to the passenger and freight services may be
- -- * . . . . . . * - - 664. 24
determined by weighting passenger gro 55 ton miles I51.34 or 4.3% as
compared with freight gross ton Iniles. /
- The value of "r" - 0.58103 - is unusually high. King states NZ
ſº ve º O º, -----
that * * * be less than 0.30, and that if it is greater than .50 tº
"there is decided correlation." (1) King also states that "if "r" is
more than six times the size of the probable error of 'r', the existence
of correlation is a practical certainty." (2) Bowley makes the same state-
ment. (3). In this demonstration the coefficient of correlation (.sº
is eighteen times the size of the probable error (.0319), convincing
proof that the number of samples studied is sufficiently large for
local disturbing factors to have offset each other and to render their
effect, £n the result negligible. - 9.

* * * * * * * * * me as we was a mm se -e ºs º are are as * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ****
# For calculation of "r", "x" and "y"2tee Statistic all Exhibit s.
Probable error of "r" =0.67 9– 10.0319
V-II-
m = 193
r = ). 5816.3

(1) King, Elements of Statistical Method, p. 215 (2) ibid. p. 215
(3) Bowley, Elements of Statistics, p. 320
37.
Although the chart indicates that there is a definite tendency for
railroads with a high percentage of passenger tonnage to have a greater average
track maintenance cost per million gross ton miles than do railroads with a
high percent age of freight traffic (low percentage of passenger traffic),
that fluctuations in the one quantity - percentage of passenger tonnage - are º-
nº
-
-
in sympathy with fluctuations in the other quantity - track maintenance cost
as measu red in gross ton miles + there are of course exceptions to the general
rule of normal track maintenance cost per ſaillion gross ton miles. *
The wide deviations from the normal curve of normal track maintenance º
º
-- - - -
º
costs are the small railroads. These roads feel local operating conditions most
severely. The exceptions, moreover, are known to exist only in track mainten-
ance cost per million gross ton miles of total traffic, not in the ratio of \ſ
track maintenance costs per million gross toº miles imposed by the two distinct
types of transportation service. There may be exceptions of this latter nature,
but we have no proof that they exist. The steadiness of the rise towards the
right of the large ast, representing the means of the railroads by groups,
affords a view of the situation with local conditions removed. The following
data pertaining to railroads with widely divergent percentages of passenger
tonnage will give concreteness to this relationship between percentage of
JK
passenger tonnage and track maintenance cost. In each instance the road
* * * * * * * - m. m. em. s. m. - - - - - - - - - - - * * * * * * * * * * * * * * *
* The line of the equation of the 193 railroads indicates the nomal track
maintenance cost for railroads with all possible percentages of passenger
(and freight) tonnage. The normal track maintenance cost per million
gross ton miles for any railroad is of course indicated by the point of
intersection of a perpendicular to the X-axis at a point representing
the road's percentage of passenger tonnage and BY the line of the
equation. The ordinate (vertical distance along the Y-axis) of this
point of intersection is the normal figure for track maintenance cost
for the given road. For example, the normal figure for the Southern
Pacific (#105) a road with 37.66% of total gross ton miles performed
in passenger service is $345. The actual figure is $330.14.


38.
selected is the largest £ailroad in the United States with the percentage of
passenger tonnage cited.
Per cent. of Track maintenance
gross ton miles in cost per l,000,000
- Passenger gross ton
Road No. N a m e. Service. miles.
24 New York, Chicago & St. Louis 8.90 $ 157. 16
ll Lehigh Valley ll.5l 193.45
l Pennsylvania 17.57 2ll.90
6 Lake Shore & Michigan Southern 20. 43 231.96
2 New York Central & Hudson River 25.2l 233.89
4 New York, New Haven & Hartford 40.22 303. 43
25 Long Island 72.8% 383.0l
In every case, be it noted, cost of maintenance of way per million gross
ton miles increases or decreases with an increase or decrease in the proportion of
*r tonnage; that is, the two quantities, percentage of total units of trans-
portation work performed in the passenger (or freight) service, and track mainten-
ance cost per unit of work, are so related that fluctuations in the one are in
sympathy with fluctuations in the other, and the greater the magnitude of the
changes in the one, the greater the magnitude of the changes in the other.
This statistical demonstration measures numerically the ratio of the
track maintenance cost per million gross ton miles in passenger service to the
track maintenance cost per million gross ton miles in freight service, and
establishes distinct unit track maintenance costs in the passenger and freight
services. In this study of traffic data, and track maintenance costs, for a
three-year period, and pertaining to railroads operating practically all the - 9
mileage throughout the entire United States - operating nearly half the railroad
mileage in the world, and doing more business than the entire railway systems of
the United Kingdom, France, Russia, Austria, Hungary, Belgium and Germany (*),
* * * * * * * * * * * * * * * * * * - - - - - - - - - - - - - - - - - - - - - -

* Figures for 1912: Miles of Line Revenues
Austria 14,409 $230 373 loi.
Belgium 2,932 63 939 007.
France 25, 237 ; 656 433.
Germany 37, 74% 46 35l 025.
Hungary 13,332 ll 5 680 768.
Russia 40,360 499 094 246.
United Kingdom —23.4ll —625 606. 204.
- Total 121,439 $ 2 747 700 784.
United States, Class I Roads; 247,981.21 # 2 842 695 382.


Comparative Railway Statistics, Bureau of Railway Economics, p. ll
39,
the unusually high value of the coefficient of correlation (.531.63), and the
small value of the probable error (.0319), establish beyond question the
proposition that within the limits of accuracy of the tonnage data computed,
the normal tendency for a gross ton mile of passenger traffic is to necessitate
repairs to track in the ratio of 4.39:l, as compared with a gross ton mile in
freight service.
It is a perilous journey from a general law to the application of that
law in a particular case. To what extent may the weighted gross ton mile be
relied upon in the detennination of the track maintenance costs imposed by the
passenger service and by the freight service in the case of a particular railroad?
In the first place, there must be established normality in the relation
of train operation to track maintenance:
l. Operation of passenger trains at higher speed than freight trains.
2. A higher standard of track maintenance imposed by the passenger service.
\ Secondly, the track maintenance cost per million gross ton miles for the
particular road must be compared with the normal cost for a road with the given
percentage of passenger (or freight) traffic. Two corrections may be introduced
in testing normality, which will not destroy the ratio of unit track maintenance
costs in the passenger and freight services:
l. A correction for abnormally high or low prices of track
labor and track materials.
2. A correction for abnormal maintenance conditions, whether due
to soil, weather, or other agents not related to train movement.
If these corrections result in bringing the position of the road onto the normal
curve, then normality in the ratio of track maintenance cost per million gross
ton miles in passenger service to the track maintenance cost per million gross
ton miles in freight service is established.
In concluding this argument in support of an assignment of maintenance
of way costs to the freight and passenger services on the basis of the weighted
sweaed 242 2-cº º






gross ton mile, 4–wish—to mention, a further refinement in method that the avail-
ability of data now in the hands of the Interstate Commerce Commission makes
40,
possible. For the fiscal year ending June 30, 1916, Class I roads recorded
separately, so far as seemed practicable, operating expenses related solely to
-
either the freight or the passenger service. The Commission therefore has in
its hands a subdivision of maintenance of way expenses into freight, passenger,
and common costs. Hsuggest—that—the éxpenses and tonnage figures pertaining
slowed
to tracks used exclusively in a single type of service, be segregated, and the

theory or correlation applied in the determination of the relative proportions
of common track maintenance costs (upkeep of main tracks, amounting to about
10% of total operating expenses) imposed by the freight and passenger services. *
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
* With regard to the treatment of work train service and mixed train service:
Work train service (non-revenue train movement) bears the same relationship
to track repair costs as does freight train movement. The distinction between
these two services is not one of operation, but simply the fact that in the case
of work train service company material is transported. The figure for gross ton
miles produced in freight service that is introduced into the calculation of
percent age of passenger (or freight) gross ton miles to total gross ton miles
should, therefore, be the sum of gross ton miles produced in freight (revenue)
service and work train (non-revenue) service. A figure which includes the cost
of all movements in the nature of freight service will then result from an appli-
cation of the unit cost as determined by a solution of the correlation formula.
This figure, multiplied by the ratio of non-revenue gross ton miles to the sum
of gross ton miles in freight (and non-revenue) service will give the track
maintenance cost imposed by movements in work train service. By subtracting the
costs imposed by work train service from the cost of freight and non-revenue
services, it is possible to express the track maintenance costs imposed by (l)
freight train movement; (2) passenger train movement; (3) work train movement
(non-revenue service). -
The costs imposed by work trains in maintenance of way service should of
course be assigned to the §§§ht and passenger services according to the
respective proportions of £ºsiº maintenance repair costs imposed by these two
types of service. An illustration would be the following:
The Senora Railway produced 630,000 gross ton miles in freight service,
70,000 gross ton miles in non-revenue service (work train service), and 300,000
gross ton miles in passenger service. The road's proportion of gross ton miles
that partake of the nature of passenger service is { # §) or 30%; the freight
proportion is 630,000 + 70,000 or 70%. The Senora;&#3 as a railroad with
30% passenger gross' ton’miies. It is found, by an application of the unit cost
in freight service as determined by a solution of the correlation equation, that
$500 is chargeable to operations that partake of the nature of freight service
(freight and non-revenue movements), and $400 to transportation operations in
passenger service. One-tenth 70,000 of $500, or $50, of the cost of
freight and non-revenue movements represents the track maintenance cost imposed
by work train service, and is assignable to the freight and passenger services
according to the net costs imposed by these two types of service. The net
charges are $450 freight, $400 passenger, $50 work train. In this instance,
42.
- º
To the amounts as signable directly to the freight and passenger services
should then be added the respective proportions of the main track expense
as determined by an application of the weighted gross ton miles
This study may be summarized as follows: The general tendency
established satisfies the requirements of mathematical statistics, and º
º -
- º - -
º
conforms to accepted railroad operating truths. There is a logical gap
between the acceptance of the general ten ency and its use in a particular
case. The factors which control the general tendency exist qualitatively
in the particular case. No disturbing factors are known to exist, *#)
it is not demonstrated positively that disturbing factors are absent.
- - - - - --> mºa---------- ****** ***** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ******
(continuation of foot-note from preceding page)
400 . . -
# x #50, or $26.47 is chargeable to freight service, and 355 * $50 or $23.53
to passenger service. The final charge is, therefore, $450 + $26.47, or $476.47
to freight service, $400 + $23.53 or #423.53 to passenger service.
Mixed train service should be included in the freight tonnage, and a
similar adjustment made for the passenger proportion according to the
respective passenger and freight proportions of gross t on miles in mixed train
Bervice,
- tº-- - - - - -
(1) The quariative measurement of the ratio of track maintenance cost
imposed by a gross ton mile in passenger service to the cost imposed by
a gross ton mile in freight service for the country as a whole, is a
definite step in advance. Units like the train mile, car-mile, or
locomotive ton mile, can make no such claim. It is interesting to note
that as assignment of track maintenance expenses on the basis of
weighted gross ton miles makes a charge to the passenger service slightly
higher than on the train mile basis (8% in the case of the Michigan
Central). Arguments in support of these other units designed to produce
results more favorable to the passenger service are automatically

destroyed, the testimony of expert 3 notwithstanding.

June 30, 1916, are as follows:
* NOTE:
TONNAGE FIGURES
In Passenger Service
Passenger Locomotive Miles
Mixed
Locomotive Miles
Non-Revenue Locomotive Miles
Switching Locomotive Miles
Work
Equivalent Freight Gross Tom Miles (2,805,820 x
Freight
Mixed
Passenger Car Miles
Car Miles
It.
Locomotive Miles
Locomotive Miles
Non-Revenue Locomotive Miles
Switching Locomotive Miles
Loaded Freight Car Miles
Empty Freight Car Miles
Non-Revenue
Car Miles
(actual) 6,902,969
( 19% ) 100,886
( 50% ) 226, 229
(actual) 398,654
(actual) 53,847,246
( 50. ) (15,814
Freight Service
(actual) 7,006,734
( 81% ) 430,092
( 50% ) 226,229
(actual) 6, 289,373
(actual) 211,544,428
(actual)
( 50% )
91,227,394
715,814
The tonnage figures of the Michigan Central for the year ending
Gross Tor,
Miles
(thousand.)
x 120 tons 828,356
x 120 tons 12,106
x 75 tons l6,967
x 100 tons 39,865
x 35 tons l,884,654
x 33.35 tons 23,812
2,805,829
4.39) l2,318,000
x lá0 tors 980,943
x 120 tons 51,621
x 75 tons l6,967
x 100 tons 628,937
x 33.35 tons 7,055,007
x 15 tons l,368,4ll
x 33.35 tons 23,812
10,123,758
Average tons of freight per loaded car mile = 18.35 (actual)
Total equivalent freight gross ton miles (millions) 22,444
Freight Proportion
Passenger Proportion
10,126
22,444 =
12,318
ZZ TAZ = 55%
45%
44.
Summary of Principal
To Passerger Service - 55% of $3,662,893.52 *
* The weighted gross ton mile figures include movements
exclusively in a single type of service. The direct
for suggested refinement in method).
º tº º . ſº
-
-
-- º º -
---
º-
freight costs cannot be excluded at this time.
º
TRACK MAINTENANCE EXPENSES
Freight Passenger
Account Total Direct. Direct. Common
Roadway Maintenance # 443,172.08 # 113,270.21 # 3,662.33 # 326,239.54
Ties l, 268,875.08 158,498.12 5,113.65 l, 105,263.31
Rails 204,731.18 28,182.64 970.37 75,578.17
Other Track Material 319,160.27 98,485.41 4,276.ll 216,398.75
Ballast 6l,643.63 718.99 - me - e--- 60,924.64
Track Laying
and Surfacing l, 365,311.28 271,192.18 12,469.6% l,081,649.41
$3,662,833.32 * @10,341-22 & 26.432.1% $2,366,053.82
To Freight Service 45% of $3,662,893.52 * = $1,657,821.75
$2,003,911. Ll
*éºé
over tracks used
passenger and
(See p. 40: supra,
- º
- - ºf
º tº
4 º' º cº
ſ -to º -
- -



45.
CHAPTER III.
The Cost of Maintaining a Right of Way
(Continued)
The scope of the preceding chapter was limited to a discussion of
costs which pertain directly and exclusively to track maintenance, and which
bear a close relationship to the amount of transportation work done. In
maintaining its right of way in a condition that permits the operation of
trains, however, a railroad incurs other expenses/ equally essential to /
train movement,f the amount of which bears a less intimate relationship to V
quantity transpºrtraor service produced; expenses which vary widely as
*
between different railroads, and should not, therefore, be introduced into
a statistical study designed to measure a definite tendency. With a given
railroad plant, for example, the cost of removing snow from the right of
way is dependent upon weather rather than upon quantity of train movement.
The cost of removing snow will be the same if one train or a dozen trains
per day use the tracks. Moreover, this expense varies widely between
different roads according to their geographical location. A southern road,
like the Alabama Great Southern, or the Florida East Coast, incurs no expense |
--
for the removal of snow and ice from the right of way. * On the other hand,
a northern road, like the Duluth, South Shore & Atlantic," a road which does W
a smaller business than either the Alabama Great Southern or the Florida East
Coast + spent in 1914 for the removal of snow and ice from the right of way Z
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
* Statistics of Railways, 1914, p. 134.

$332,089, or 42% of the total cost of maintenance of way and structures.*
Similarly, expenses pertaining to tunnels and subways, bridges,
trestles and culverts, depend very largely upon the topography of the territory
served by particular railroads, and their amount does not vary directly with
the quantity of transportation produced.
A third group of track maintenance expenses not included in the
computation of the weighted gross ton mile consists in expenses charged to
primary accounts, to which are charged also items of expense that do not
pertain to the upkeep of the track. For example, to account #20l., Superin-
tendence, is charged the cost of supervision of repairs to structures as well
as roadway.
It is the special purpose of this chapter, then, to discuss the
residuum of costs pertaining to the mainterence of the right of way charged
to primary accounts under General Account l, Maintenance of Way and Structures.
At the outset it may be stated that these trouble some items are relatively
small.
201 - SUPERINTENDENCE:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
#241,985.24 - * - tº ºn cº- ºn tº - - - - ---- $241,985.24
To this primary account is charged the "pay of officers directly in
charge of, or engaged in the maintenance of way and structures." The expenses
may be grouped under the following headings:
* Statistics of Reilways, 1914, p. 278.
Removal of Snow, Ice and Sand, #332,089.

Total charges to Maintenance of
Way and Structures, 795,084.
47.
% of Total Expense
(l) General Office Building l. 2
(2) Proportion of Salaries of General Manager
and Joint Officials ll.9
(3) Chief Engineer and Assistant Chief Engineer l9.7
(4) Bridge Engineer 10. O
(5) Signal Engineer 6.5
(6) Superintendent of Buildings 5.7
(7) Division Engineers and Roadmasters - 45. O
100.0
These expenses result from perfectly definite and distinct operations,
and may be distributed on the basis of use or cause, as follows:
(l) general Office Building:
This item represents a proportion (*) of the expense of maintaining
the general office building, assigned to this account on the basis of office
floor space occupied by the chief Engineer, Assistant Chief Engineer, Bridge
Engineer, Signal Engineer, Detroit Division Engineer, and their office forces,
to total floor space in the building. On the same basis of use the expense
chargeable to each of these offices is ascertainable and should be added to
the related direct expense items. This item will therefore deliquesce,
increasing the size of the other items discussed under this caption.
(2) general Manager and Joint Officials:
These officials supervise employees engaged in repairs to roadway and
to structures. This cost, then, of bringing into the highest degree of
co-ordination, co-operation, and standardization the work of the engineering
Department - and amounting to but lºſ. of the direct labor and material costs
over which these officers have supervision - should be spread * neverhead"
basis—to the direct labor and material charges included in the other primary
accounts under Maintenance of Way and Structures.
(3) Chief Engineer and Assistant Chief Engineer:
Discussion same as preceding item.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
|
* 14%
(4) Bridge Engineer:
This cost of supervising the work done by the Bridge Department should
be distributed according to work done, that is, overhead to the direct
labor, and material charges of this department, charged to accounts:
208 - Bridges, Trestles and culverts
225 - Crossings and Signs.
(3) signal Engineers
Overhead to the direct labor, and material costs charged to the
following accounts:
204 - Underground Power Tubes
206 - Tunnels and Subways
225 - Crossings and Signs
249 - Signals and Interlockers
379 - Yard Switch and Signal Tenders
397 - Water for Train Locomotives
404 - Signal and Interlocker Operation
406 - Drawbridge Operation.
(6) Superintendent of Buildings:
Overhead to the direct labor and material costs of repairing particular
buildings, or structures, and charged to accounts:
208 - Bridges, Trestles and Culverts
225 - Crossings and Signs -
227 - Stations and Cffice Buildings
229 - Roadway Buildings
231 - Water Stations
233 - Fuel Stations
235 - Shops and Engine Houses
237 - Grain Elevators
241 - Wharves and Docks
249 - Signals and Interlockers
253 - Power Plant Buildings.
(7) Division Engineers and Raediasters:
The salaries and office expenses of division engineers and their road-
masters - the largest item charged to this account - are items of expense
which pertain directly and exclusively to the maintenance of the right of
way, and vary in direct proportion to the amount of track maintenance work
done. This expense should therefore be assigned on the * basis as the

related track maintenance accounts, that is, on the basis of weighted gross
49.
- / º
ton miles. If data for all roads had been available, this
part of the cost of roadway repairs would have been introduced
in the computation of ton mile costs upon which is based the
determination of the relative unit track maintenance cost in
the freight and passenger services.
It is assumed that the cost of superintendence is imposed by
the freight and passenger services in the same proportion as these
services impose a related labor and material costs. The probability
of error is small provided the related labor and material costs are
correctly assigned, since the supplementary costs amount to but 5%
of the related labor and material costs, and since the work of each
department is of a substantially homogeneous character.
º


206 - TUNNELS and subways:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 12,107.23 ---- -- - - : ----- -- - - § 12,107.23
To this account is charged the cost of "repairing, ventilating, lighting,
and watching" the Detroit River Tunnel, the connecting link between the Main Line
in Canada (Suspension Bridge to Windsor) and the Main Line in the United States,
(Detroit to Kensington). The electric locomotives used in Tunnel service are used
interchangeably in the freight and passenger services. The speed of trains in the
Tunnel is practically constant.
- The use by a train of the eastbound or westbound tunnel track is an
exclusive use, so that an apportionment on *. of time * spent in the tunnel
by passenger trains, and by freight trains, would seem to approximate a quantita-
tive measure of the use of the tunnel: (62.1% freight, 37.9% passenger).
208 - BRIDGES, TRESTLES and CULVERTS:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$138,986.6% # 6,642.06 $ 140.58 $132,204.05
From the primary records of repairs made (work orders, time cards, records
of materials used) the direct labor and material costs of repairs to each facility
may be ascertained. Over these amounts should then be distributed the cost of
* The track maintenance expense is not, of course, under discussion.
# The mileage of electric locomotives in the tunnel was as follows:
£reight Passenge?”
Principal Tº - #:
Helper 47, 243 l, 20%
Light 28.94 1.343
IZETTT (77.3%) 37,715 (22.7%)
Use of the tunnel is computed as follows: -
Distance, Detroit Freight Yard to Windsor yard 3.8 miles

Distance, Detroit Passenger Station to Windsor Station 2.8 "

24,421;&#1
Tunnel trips in Freight Service 3. = $2137
22,163 t-L3:
Tunnel trips in Passenger Service 2. = 1304
2
42.1 - 62.1%
Freight proportion 344l
1304
Passenger proportion 344l 37.9%
supervision (charged to 20i, Superintendence) and a small amount of "common
expense" (bridge, shop and inspection expenses, amounting to less than 5% of the
direct charges). the senat, of these costs may be maintained, or they may be
assembled by operating sections or divisions, according to the degree of
accuracy desired. The various items of expense should then be assigned to the
total tratae are use of each facility (or group of facilities).
The immediate occasion of repairs to these structures is the action
of weather, rather than wear by the movement of trains, so that the amount of
expense in each instance does not bear an intimate relationship to the weighted
gross ton mile. The number of trains using each facility, however, is a
quantitative expression of the use of the facility, and an apportionment should
be made on this basis.
A close approximation, when applied to an entire system, is obtained
by apportioning the expense on the basis of transportation train miles.

221 - Right of Way Fences: (a)
223 - Snow and Sand Fences; (b)
225 - Crossings and Signs; (c)
272 - Removing Snow, Ice and Sand: (d)
- Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
(a) # 48,663.30 # 968.44 # 203.15 $ 47,491.7l
(b) 319. 11 14.06 - 305.05
(c) 62,210.03 lj,527.67 l,187.4l 48,494.95
(d) 72,566.03 27,239.00 2,115.68 43.12.22
Total #186,758.47 $43,749.17 $3,566.24 --- -- $139,443.06
Discussion-same as 208.
It will be noted that 25% of the sum of these expenses is directly
allocated to the freight and passenger services (23% freight, 2% passenger).
The remainder represents but 2.8% of charges to Maintenance of Way and
Structures.
52.
229 - ROADWAY BUILDINGS:
- Freight. Passenger Apportioned Apportioned
Total Direct Direct, Freight Passenger Undivided
§ 10,569.57 $ 304.30 ; 0.51 - - $ 10,264.76
This account includes the cost of repairs to roadway buildings used by
the track department, bridge department, signal department, and building depart-
ment.
Track Department:
The track department charges are for repairs to handcar-
houses that shelter handcars usad by roadmasters and their
section forces in repairs to track; and repairs to old car-
bodies used by these section forces. These expenses bear a
direct relationship to track maintenance work, and should be
distributed on the same basis as the related roadway expense
accounts, that is, on the basis of weighted gross to a miles.
Bridge Department:
This item of shop repair expense should be spread over
the direct labor and material charges of the Bridge Depart-
ment charged to:
208 - Bridges, Trestles and Culverts
225 - Crossings and Signs.
Signal Department:
This item of shop repair expense should be spread over
the direct labor and material charges of the Signal Depart-
ment charged to:
204
206
225
24%
Building Department:
--
-
Underground Power Tubes
Tunnels and Subways
Crossings and Signs
Signals and Interlockers
This item of shop repair expense should be spread over
the direct labor and material charges of the Building Depart-
ment charged to particular structures under accounts:
208
Bridges, Trestles and Culverts
225 - Crossings and Signs
ºf.
4.
231
233
235
237
24l
249
253
Stations and Office Buildings
Water Stations
Fuel Stations
Shops and Engine Houses
Grain Elevators
Wharves and Docks
Signals and Interlockers
Power Plant Buildings
26? – ROADWAY MACHINES:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
# 15,476.02 # 30.1% $ 0.42 - - § 15,445. 4.1
The discussion is similar to that given under No 229, Roadway Buildings.
271 - SMALL TOOLS and SUPPLIES:
Freight Passenger Apportioned Apportioned
Total Direct, Direct Freight Passenger Undivided
§ 44,209.42 # 486.03 ; 10.4% - - - # 43,712.88
The discussion is similar to that given under No 229, Roadway Buildings.
249 - SIGNALS and INTERLOCKERS:
Freight Passenger Apportioned Apportioned
Total Direct Direct, Freight Passenger Undivided
§ll3,379.55 32,188.23 # 104.93 $57,127.33 $ 59,459.0% --- --
The basis of apportionment prescribed by the Interstate Commerce
Commission is Transportation Train Miles (4% freight, 51% passenger). Discussion
of this unit, of apportionment is more naturally given under No 404, Signal and
Interlocker Operation.*
273 - ASSESSMENTS FOR PUBLIC IMPROVEMENTS:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
# 2,811.65 ---- ------ - - - - ---- $ 2,811.65
This expense represents the carrier's proportion of the cost of repairs
to public improvements, like "sewers, curbs, gutters, pavement and sidewalks".;
.*
As a matter of fact, for the fiscal year 1916 all of these items were repairs to
sidewalks which cross the railroad tracks. The particular sidewalks repaired may

be grouped by sections or divisions, and the expense distributed over the traffic
using the particular streets. Although in the report to the Commission the expense
* p.86infra-
# Classification of Operating Expenses, p. No.
54.
/
, -º
}
was recorded as "not ºpera ºnes"; an analysis of vouchers indicates that 25% of
the expense pertains to tracks used exclusively in freight service (yard and
industry tracks).
In assigning this expense to the freight and passenger services, then,
the repairs occasioned by tracks used exclusively in freight service should first
be segregated. The remainder taay be assigned to the freight and passenger services
according to the facts in each instance, or on the basis of transportation train
miles. *
274 - 1 Julius Ig Pºisºls:
Freight Passenger Apportioned Apportioned
Total Direct, Direct Freight Passenger Undivided
$ 10,009.ll ---- -- - - -- - - ------ § 10,009.ll
To this account are charged the fees of physicians attending employees
whose wages are chargeable to maintenance of way and structures. The individual
items are small, ranging in general from $3.00 to $6.00.
These items of expense are of course assignable to the freight and
passenger services according to the wage distribution of the men injured. These
men are the employees of *… Department, Bridge Department, Signal Depart-
ment, and Building Department. The expenses should the refore first be grouped
by departments, and a distribution made according to the distribution of the
direct labor and material charges covering work done by these respective
departments. A discussion of these groups of charges is found under Roadway
Buildings (No 229):
* - stationsh; and Biºg:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 7,634.37 ---- ----- - - - - ---- $ 7,634.87
This account is complementary to No 201, Superintendence, and, similarly,
*-* = * * * * * * * * * * * * * * * * * * * * * * * * * * * * - * * * * * * - - - -
Trestles and Culverts, p. 29 sºpra.
# 9. 92 eurº
55.
is related to the maintenance of structures as well as right of way. The expenses
may be grouped by departments, and distributed according to the work done by those
departments.
(l) Office of Chief Engineer, and a proportion of the expense
of the office of the General Manager.
(2) Track Department (offices of Division Engineers).
(3) Bridge Engineer.
(4) Signal Engineer.
(5) Superintendent of Buildings.
A discussion of similar groups of expenses charged to No 201,
Superintendence, is found in p. 47 supra-
$
C 277 - OTHER EXPENSES:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 89.37 ---- ------ - - - - ---- $ 89.37
This account includes the residuum of expenses related to Maintenance of
Way and Structures "not provided for elsewhere". The relatively insignificant
amount of expense for the year 1916 represents the cost of mounting blue prints
indicating positions on the right of way where t respassers were killed during the
year; and incidental expenses incurred by employees of the Engineering Department
in attendance at Safety First Meetings.
Charges to this account for the fiscal year eras: June 30, 1917, will
be much larger. The pay of employees whose wages are ordinarily assignable to
Maintenance of Way and Structures, but who ##tre+e−eºry belonged to the Michigan
National Guard, and are performing their duties on the Texas Border, is being
charged to this account.
The pay of soldiers should be assigned according to their wage distribu-
tion at times when they are mere railroad men. The cost of mounting blue prints \ſ
showing trespassers killed should be assigned to the traight and passenger service
according to the nuaber of trespassers killed by trains in these two types of

service.
5%.

278 - MAINTAINING JOINT TRACKS, YARDS and OTHER FACILITIES. Dr. :
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$237,663.87 %ll 9,984.03 $91,220.22 $ 15,031.90 # 11,432.72 ft ----
\To this account are charged "amounts accruing against the carrier for
its proportion of the cost of maintaining tracks, yards, and other roadway and
structure facilities maintained by others, and in the joint use of which the
carrier participates." + The accruals against the Michigan Central are for the
joint use of yards, terminals, switches, gates, interlockers, crossing diamoč.
As indicated, 93% of the expense is related directly and exclusively to either
the freight or the passenger service. A proportion of the cost of maintaining
Gibson Yards, in Chicago, is an example of the freight costs.; Similarly, a
proportion of the cost of maintaining the Illinois Central Terminal Station
(passenger) in Chicago is an example of a passenger cost.
From the point of view of a cost analysis, the joint use of facilities
by several carriers introduces no new questions. Discussion of the cost of
maintaining these facilities is given under other primary accounts. Accounts
No 278 and No 279 are accounts which have for their sole purpose the adjustment
of charges as between different roads. The sum of Accounts No 278 and No 279
for all roads is zero. In each case, therefore, the passenger and freight
proportions of the cost of mintaining these facilities may be ascertained by
the reporting road (carrier maintaining the particular facilities).
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

* Maintained by the Indiana Harbor Belt Railroad Company.
# The apportionment of common expense in the report to the Commission is according
to the direct charges to this account (58.6% freight, 43.2% passenger).
57.
:* 279 - MAINTAINING JOINT YARDS, TRACKS and OTHER FACILITIES, Cr. :
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$147,987.90 #117,168.31 # 16,412.20 $12,635.28 # 1,722.ll. § ----
This account is simply the converse of account No 273, and includes
"ano unts accruing in favor of the carrier and against others for their propor-
tions of the cost of maintaining tracks, yards, and other roadway and structure
facilities maintained by the carrier and in the joint use of which others
participate", * Discussion is the same as that given under the preceding
account.}
* Classification of Operating Expenses, p. 58.
# The common expense is apportioned on the basis of the direct charges in this
instance (87.7% freight, 12.3% passenger).

SUMMARY OF MAINTENANCE OF WAY EXPENSES
- Freight Passenger -
Name of Account Account Mb. Total | Direct Direct lºw Common
Superintendence 2O1 241,985. 24 , , , 241,985.24
Roadway Maintenance 202 443,172.08 113, 270.21 3,662. 33 326, 239.54
Tunnels & Subways 206 12,107.23 12, 107.23
Bridges, Trestles & Culverts | 208 138,986.69 6,642.06 140.58 132,204.05
Ties 212 l, 268,875.08 158,498.12 5,113.65 1,105,263.31
Rails 214 204,731.18: 28, 182.64 970. 37. 175,578.17
Other Track Material 216 3.19, 160. 27 98’, 485.41 4, 276.11 216,398.75
Ballast 218 6l,643.63 718.99 60,924.64
Track 1,aying & Surfacing 220 l, 365, 311.28 271,192.18 l2, 469.6% l,081,649.4l
Right of Way Fences 221 48,663. 30 968. 44 203.15 47,491.71 &
Snow & Sand Fences 223 3.19. ll 14,06 - 305.05
Crossings & Signs 225 65, 210.03 15, 527.67 1, 187. 41 48, 494.9
Roadway Buildings 229 10, 569. 57 304. 30 .51 10, 264.76
Signals & Interlockers 249 118,879.55 2,188.23 104.93 116, 586,39
Roadway Machines - 269 15,476.02 30.19 .42 15,445. 41
Small Tools & Supplies 271 44, 209.42 486.68 10.46 43,712.88
Asses ſºments for Public -
Improvements 273 2,811.65 2,811.65
In juries to Persons 274 10,009. ll 10,009.ll
Stationery & Printing 276 7,634.87 7,634.87
Other Expenses º 277 89.37 89.37
Removing Snow, Ice & Sand 272 72, 566.03 27, 23%.00 2,175.68 43,151.35
Total 4, 452, 410.71 723,747.58 30, 315.29 3,698,347.84
Maintaining Joint Tracks,
Yards & Other Facilities, Dr. 278 237,668.87 119,984.03 91, 220. 22 26, 464.62
Maintaining Joint Tracks,
Yards and Other Facilities, (r. 279 147,987.90 117,168.31 16, 412s20 14,407 - 39
Grand Total - 4, 542,091.68 | 26, 563. 30 105,123.31 3,710, 405.07
E==




APPORTIONMENT OF COMMON MAINTENANCE OF WAY EXPENSES
Expenses apportioned by the Method of Correlation Apportioned Apportioned
to Freight to Passenger
Roadway Maintenance | # 326, 239.54
Ties l, 105,263.31
Rails 175,578.17
Other Track Material 216,398.75
Ballast 60,924.64
Track Taying and Surfacing 1,081,649. 41 * º
2,966,053.82
(1) Debit Adjustment 696,839.70
-- Tot, all 3,662,893. 52 $ 1,648,302.08 || $ 2,014,591.44
| - Credit Adjustment 996,839. To £10,341.55. 26, 492, 15
Net Total 2,966,053.82 $ 977,954.53 || $1,988,099.29
2. Expenses apportioned in proportion to Located Charges
Superintendence 241,985.24
Roadway Buildings 10, 264.76
Roadway Machine 15, 445. 41
SIHall Tools & Supplies 43, 712.88
In juries to Persons 10,009, ll
Stationery & Printing 7,634.87
Other Expenses 89.37 |
- Total 329, 141.64 (2) 164,570.82 164,750.82
º Maintaining Joint Tracks, -
Yards and Other Facilities, Dr. 26, 464,62 y lj,031.90 ll, 432. 72
Maintaining Joint Tracks, ||
Yards and Other Facilities, Cr. 14,407, 39 12,635.28 1,772.11
Total Joint Facilitieſ 12,057.23 2,398.82 9,660.6l
3. Expenses apportioned in proportion to Arbitrarily
Selected Units of Work
Tunnels, & Subways " . 12,167. 23 7, 518.59 4, 588.64
Bridges, Trestles & Culverts 132,204.05 64, 779.98 67, 424. nº
Right of Way Fences 47,491. 71 23,270.94 24, 220.77
Snowy & Sand Fences 305.05 149, 47 155.58
Crossings & Signs 48,494.95 23, 762.53 24, 732. 42
Signals & Interlockers 116,586.39 57,127.33 59, 459.66
Removing Snow, Ice & Sand 43,151.35 21, 144. 16 22,067. 19
As Bessments for Public 2,811.65 1,377.71 l, 433.94
Improvements - - -
Total 403,152.38 199,130.71 204, 021.67
(l) The tonnage figures of the carrier include movements over track; used in a single type of service.
The adjustinent i s made to avoid an error that would result from the assignment of cost figures
for a portion of total tracks on the basis of tonnage made on all tracks.
(2) Here apportioned 50% Freight, and 50% Passenger. -
RECAPITULATION OF MAINTENANCE OF WAY Expºses
Method of Assignment Freight Passenger Total Per Cent of Total
- Operating Expenses
Direct Allocation $726,563.30 + 105,123.31 & 831,686.61 3.s0
Correlation 977,954. 53 1,988,699.29 2,966,053.82 10.7
In Proportion to Located Charges 166,967. 44 174,231.43 341,198.87 1.2
- In Proportion to Arbitrarily -
|- Selected Units of Work 199.130.71 - 204,021.67 4(3,152.38 l.4
Grand Total $2,070,615.98 2,471.475. To 4, 542,097.68 16.3
-
--




















58.
Chapter IV.
Maintenance of Equipment Expenses.
-
The use of distinct types of equipment in the freight and passenger
services makes possible a direct allocation of a major portion of expenses
pertaining to maintenance of equipment. There is a sharp line of demarcation,
for example, between freight car repair costs and passenger coach repair costs.
Similarly, freight locomotives (Mallets, Moguls, Consolidations, Mikadoes, etc.)
are units sharply differentiated from passenger locomotives (rasities, Atlantics,
etc.), and repair costs pertaining to each unit are a matter of record. -
A. MOTIVE POWER
Accepting a broad definition of motive power as the force used in
propelling the vehicle (rolling stock) over the right of way, then maintenance
costs include not only the costs of repairs to steam locomotives and electric
locomotives, but also costs pertaining to the maintenance of stationary power
generating plants, their transmission and distribution systems (overhead and
third rail) insofar as these are "readiness to serve" costs associated with
equipment, in contrast with costs of actual operation of equipment.
|--
308 - STEAM LOCOMOTIVE-REPAIRS:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$1,717,584.49 $547,593.26 $ 25,288.84
$1,067,877.ll $ 76,825.28 $ ----
The above figures show that 94% of the cost of labor and materials is
expended on locomotives used exclusively in either the freight service or the
passenger service, and is allocated directly from original records (work orders,
time cards) to those services. The Motive Power Department keeps an accurate
record of repairs to each locomotive, together with mileage made.
59.
The remainder may be assigned to the freight and passenger services as
follows:

1. Repairs to Locomotives used in Mixed Train Service
This expense should be apportioned according to work
dome, i.e., car miles in mixed trains (81% freight, 19%
passenger).
2. Repairs to Locomotives not used exclusively in a
Single Type of Service
This should be apportioned according to the facts in
each instance (miles made in each type of service).

3. Common Expenses (Shop Expenses")
This expense should be assigned to the freight and
passenger services according to the freight and passenger
proportions of other expenses, including mixed and common
switch engine costs (67.7% freight, 32.3% passenger).
In view of the fact that the existence of distinct types of locomotives
makes possible a direct allocation to the freight and passenger services of 94%
of the cost of steam locomotive repairs; and in view also of the possibility of
apportioning the small amount of common expense in proportion as the passenger
services benefit thereby, the accuracy of the distribution of this expense cannot
be questioned.
309 - STEAM 10000TIVES-DEFRELATION
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$273,299.36 $168,079. 12 $94,231.58 $ 6,075.70 $ 1,425.17 § 3,487.7%
Ninety-six per cent. of the expense charged to this account represents
depreciation of locomotives used exclusively in either passenger or freight
service. The depreciation of locomotives used in mixed-train service is

- - - - - - - - - - - - - - - - - - - - - * * * * * * * * * * * * * * * * * * * *
** The "Shop Expenses" Clearing Account is apportioned on the basis of directly
distributable labor charges, as follows: s
Shop Machinery 3.6%
Steam Locomotives-Repairs 61.4%
Engine House Expenses-Yard 6.1%
Engine House Expenses-Train 28.3%
60.
apportioned on the basis of car-miles in mixed train service (81% freight,
19% passenger).
The unapportioned expense, láž of the total, representing depreciation
of engines used in work service, should be assigned to the freight and passenger
services on the same basis as the related track maintenance costs - weighted
gross ton miles (45% freight, 55% passenger).
310 - STEAM LOCOMOTIVES-RETIREMENTS
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$60,243.23 # 31,131.64 $3,116.5% tº cº -> --> ---- $ 25,995.00
The smaller proportion of direct expense (52%) allocated to freight and
passenger service than is the case in account 308, Steam Locomotives-Repairs, is
explained by *i.e. of accurate service records of old locomotives now being
scrapped. A "Consolidation" engine of course will have been used exclusively in
freight service; a "Pacific" and a good many of the old "Atlantics" exclusively
in passenger service. The old 10-wheeled engines (4-6-0), however, have been
used interchangeably in the freight and passenger service. If accurate service
resora. were available, this expense could be apportioned on the basis of miles
made by these locomotives in each branch of service.
An accurate financial and service history of each unit of equipment,
showing original cost, repairs, mileage by classes of service, depreciation
charged off and credited to reserve for accrued depreciation, is now being kept.
In view of the present tendency to use quite distinct types of locomotives in
the freight and passenger services, a direct allocation of 95% of this expense
will be possible; and the remainder, covering retirements of locomotives used in
mixed-train service, work-service, or engines used interchangeably in the freight
and passenger services, will be apportioned according to the facts.
Lacking this service and financial history, the common expense should


be apportioned on the basis of the freight and passenger proportions of No 308,
Steam Locomotives-Repairs.
61

311 - 9THER LOCOMOTIVES-REPAIRS
- Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 6,868.15 -et-tº- tº- --> --> $ 5,006.88 $ l,861.27 --> -->
. This expense represents the cost of repairs to the electric locomotives
used exclusively in the Detroit River Tunnel and Tunnel Yard. These motors are
used interchangeably in both freight and passenger service. The electric loco-
motive mile in this case (*) is a constant unit of work, so that an apportionment
on this basis (72.9% freight, 27.1% passenger) may be taken as accurate.
312 - OTHER LOCOMOTIVES-DEPRECIATION
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$14,208.00 - cº- - - - * * * $10,357.63 $ 3,850.37 tº sº tºe º
Discussion - same as No 3 ll.
The following maintenance costs pertain to motive power, for they

represent costs of maintaining the power transmission and distribution system
(overhead trolley and third rail) in the Detroit River Tunnel Electric Zone.

255 - POWER SJBSTATION BUILDINGS (a)
257 - POWER TRANSMISSION SYSTEMS (b)
259 - POWER DISTRIBUTION.SYSTEMS (c)
261 - POWERLINE FOLE5 and FIXTURES (d)
263 - UNDERGROUND CONDUITS (e)
306 - POWER SEBSTATION APPARATUS (f)
307 - POWER SUBSTATIONAPPARATUS-DEPRECIATION (g)
TFreight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
(a) $ 25.58 # 1.78% .66 # ll.04 $ 6.22 $ 5.88
(b) 304.93 - - - - tº sº. -- l45.45 82.03 77. 45
(c) 7,184.10 2,072.31 735.27 2,087.60 l,177.28 l, lll. 64
(d) 516.69 88.87 e---> --> 204.07 ll.9.08 108.67
(e) 96.04 18.49 4.00 35.08 19.78 l8.69
(f) 2,258.88 -- -- -- -- 1,077.48. 607,64 573.7%
(g) 7,410.00 ----> -º- - - 3,534.57 1,993.29 l,882.14
The Michigan Central's apportionment of these common expenses, on the
basis of use of electric current that is generated at Power Plant Buildings,
* = * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* The ten electric locomotives are all of the 0-4-4-0 type.
62.
(47.7% freight, 26.9% passenger, 25.4% common) is quite incorrect. The above
items pertain to the electric zone only, and bear no relationship whatsoever to
power generated and used at various locomotive and car repair shops.
The raw
power for the electric zone is purchased of the Detroit Edison Company, is
metered and billed on a kilowatt-hour basis.
The apportionment of the above
expenses should therefore follow the power consumption indicated by the freight
and passenger proportions of the sum of accounts No 383, Yard Switching Power
Produced, and No 395, Train Power Produced (86.3% freight, 13.7% passenger). *
B. ROLLING STOCK

314 * FREIGHT TRAIN_CARS-REPAIRS
A
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$2,411,883.35 tº Gº tº º - Gº - º
$2,4ll,883.35 - tº - sº º - - -º
315 - FREIGHT TRAIN_CARS-DEPRECIATION
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 468,235.94 - tº sº tº - - - -
$ 468,235.94 e- - - - e- tº--> -->
316 - FREIGHT TRAIN CARS-RETIREMENTS
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 430,749.15 $430,749.17 ---- sm- Ge. - amo - º - - - ----
317 - PASSENGER TRAIN CARS-REPAIRS
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 314,896.05 ---- $314,896.05 cº-- - - t-- - - - - - -




* * * * * * * * * * * tº ºn - use º - - - - - - - - -> --> -º ºre - tº ºn tº - - a- - - - - - - -

* A relatively small amount of current, used for lighting, is metered and charged
to the primary accounts benefited. To obviate the necessity of discussing
problems pertinent to electric power plant, rather than railroad; operations and
costs, I give this item no consideration in this connection.
My opinion is that the power consumed by electric locomotives should be charged
to accounts No 384, Yard Switching Power Purchased, and No 396, Train Power
Purchased, instead of No 383 and No 395, since the power is not generated.
raw power is merely transformed and distributed.
The

318 - PASSENGER TRAIN_CARS-DEPRECIATION
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
# 98,687.30 ---- $98,687.30 -- - --> e - vº-º-º: tº- - - -

319 - PASSENGER TRAIN_CARS-RETIREMENTS
-------
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 4,978.80 ---- $ 4,978.80 - tº e sº - Gºº G- - -> -- sº-
326 - WORK EQUIPMENT-REPAIRS
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 47,005.23 - e- sº tº - - - - - G- - - - - - - $ 47,005.23
This account includes the cost of repairing equipment used by the
engineering department in maintaining both way and structures. Approximately
60% of the repair work is done by the car department, 40% by the locomotive
department. Illustrations of charges to this account are repairs to pile
drivers, steam derricks, ditchers, log loaders, side levelers; also a portion
of the cost of converting a dining car into a private car for the Chief Engineer
(roadway and structures). These repairs are made by the departments best
equipped to do the work, e.g., the car and locomotive departments, but this
equipment is used in track maintenance.
The cost of repairs to work equipment may readily be apportioned on
the basis of use of the equipment. Repairs to a pile driver, for instance,
should be distributed as overhead to the direct labor and material costs incurred
in operating the pile driver (charged to No 208); repairs to work equipment used
in track maintenance (ballast cars, boarding cars) should be apportioned to the

passenger and freight services on the same basis as the related track maintenance
costs; that is, weighted gross ton-miles (45% freight, 55% passenger).

327 - IOR&_ESUIPMENT-DEPRECIATION
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 23,174.72 - - - e. e- - - - - - - - ----> $ 23,174.72
Discussion, same as No 326.
64.

328 - MoR, KIPMENT-RETIRaiºrs
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 42,427.72 - - - - G-- - - - - - - -- - - $ 42,427.72
Discussion, same as No 326.
C. MOTIVE POWER and ROLLING STOCK
301 - SPERINTENDENCE
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$175,831.4% $ 196.25 $ 3,962.14 $135,604.58 # 31,845.36 $ 4,223.16
This account includes the "pay of officers directly in charge of, or
*
engaged in the maintenance of equipment"(*) together with associated office
expenses. These costs pertain to both locomotives and rolling stock, (freight
cars, passenger coaches, and work equipment).
1- CAR DEPARTMENT 47.2%
Salaries and Office Expenses of Rolling
Stock Officials; Proportion of Salary and
Incidental Expenses of General Manager.
2. LOCOMOTIVE DEPARTMENT 51.1%
Salaries and Office Expenses of Motive
Power Officials; Proportion of Salary and
Incidental Expenses of General Manager.
3. CAB and LOCOMOTIVE DEPARTMENTS l.7%
Proportion of General Office Building
Expense.
The latter item represents a portion (6%) of the General Office
Building Expense charged to Maintenance of Equipment on the basis of floor space
used by the offices of the superintendent of Motive Power and the Superintendent
of Rolling Stock. An apportionment may be made between these two separate
departments on the same basis (0.8% Locomotive, 0.9% Car).
The car Department Expense (47.2% + 0.9%) should then be spread on

the "overhead” basis to the associated direct labor and material repair costs
charged to No 314, Freight Train Cars-Repairs; No 317, Passenger Train Cars-
* classification of operating Expenses, p. 58
Repairs; and No 326, Work Equipment-Repairs.
The Locomotive Department expense (51.1% # 0.8%) should be apportioned
according to the freight and passenger proportions of accounts No 308, Steam
Locomotives-Repairs; and No 311, Other Locomotives-Repairs.
The supervision costs thus apportioned amount to but 3% of the direct
labor and material costs. *
302 - SHOP MACHINERY
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger sº
- \, doi.12.
$79,488.70 - - - - ---- $ 61,389.12 # 16,191.85 # 2,376,61
To this account is charged the "cost of repairing machinery and other
apparatus, including special foundations, in shops and engine houses".; The
expense pertains to the maintenance of both motive power and rolling stock:
l. Locomotive Department
Locomotive Repair Shops 79.5%
2. Car Department
Car Shops 20.5%
100.5%
The discussion of kindred charges to account No 301 is pertinent here.
The Locomotive Department costs should be apportioned according to No 308 and
No 311; the Car Department costs according to Nos. 314, 317 and 326. (%)
* = e º sº as a m = a- as * * * * * * * * * * * * * * * * * * * * * * * * * * *
* The carrier's distribution is according to the freight and passenger proportions
of the aggregate of primary Maintenance of Equipment accounts, other than the
accounts designated for apportionment on the basis of No 30l., (freight 78.99%,
passenger 18.55%, undivided 2.46%). Interstate Commerce Commission, Rules
governing the separation of Operating Expensee, p. 9.
# glassification of Operating Expenses, p. 59.
(%) The Carrier's distribution is according to the freight and passenger proportions
of No. 301, (freight 77.23%, passengår 20.37%, undivided 2.40%).


66.

332 - INJURIES TO PERSONS
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$19,679.80 -- - - ---- # 15,198.70 $ 4,008.78 # 472.32
This account includes "expenses on account of injuries to persons which
occur directly in connection with repairs to equipment". * The apportionment
indicated above is on the basis of account No 30l.
A careful study of the expenses charged to this account during the month
of July, 1916, shows that this expense may directly be assigned to Car Department
costs and Locomotive Department costs, and to freight service and passenger service.
Original records, e.g., work orders, time sheets, and the reports of injuries,
identify these costs as related to employees of the Locomotive Department or Car
Department, (41.5% car, 58.5% locomotive), and indicate also whether the injured
employee was repairing freight or passenger equipment. For example, an audit
voucher shows that Dr. Blank was paid $3.00 for treating John Jones for an injured /
-
thumb on July 3. Jones' time card for this date indicates that he was on Job. V
No 32,334, repairing the door of M. C. #373,400, a wooden box car. By recourse
to supporting records, a direct assignment of a major portion of this expense to
the two branches of service is possible.
An alternative method, giving a reasonably accurate result, is to appor-
tion the Car Department costs on the wa's the freight and passenger proportions
of the sum of Accounts No 314, Freight-Train Cars, Repairs, and No 317, Passenger-
Train cars, Repairs, and No 326, Work Equipment, Repairs; and the Locomotive
Department costs according to the passenger and freight proportions of Account No
308, Steam Locomotives, Repairs and No 3il, Other Locomotives, Repairs.
W
* Classification of Operating Bºpeases. P. 68.
67.
333 - INSURANCE *
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 8,435.9% $2,900.55 # 801.07 $ 3,656.35 # 964.39 & 113.63
This account includes the cost of premiums for insuring the carrier
against losses that would be chargeable to Maintenance of Equipment; for example,
machinery in car shops, locomotive shops. The above apportionment is the one
suggested by the Interstate Commerce Commission, viz: according to Account No 30l.
An analysis of insurance premiums gives the following distribution of
expense between Car and Locomotive Departments:

CAR DEPARTMENT
(T) Freight-Train Car Repair Shops 7.8%
(2) Passenger-Train Car Repair Shops 3.5%
(3) Freight, Caboose and Way Cars 8.7% 20.0%
LOCOMOTIVE DEPARTMENT
l) Locomotive Repair Shops 17.3%
(2) Patterns for Locomotives 2.3% 22.6%
COMMON T0 LOCOMOTIVE and CAR DEPARTMENTS
(l) Machine Shops 46.4%
ll.0%

(2) Storehouses
7.4%
100.
The last item, storehouse expense, is distributable between the Car and
-
Locomotive Departments, passenger and freight service, on the basis of materials
used. The insurance on machinery in shops making repairs to locomotives and cars
should be distributed according to the work done, indicated by the direct charges
to Accounts 308, 311, 314, 317 and 326.
The cost of insuring the structures, used in Maintenance of Equipment,
charged to account No 275, should be handled in the same manner.

334 - STATIONERY and PRINTING
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$12,929.14 § 180.92 # 19.30 $ 9,830.54 $ 2,592.88 # 305.50%
As in the two previous accounts, original records make possible a direct
* - - - e - - - - - - - - - - - - e. e - - - - - - - - - - - - - - - - - - - - - -
* The carrier's distribution is according to account No 30l.
# The carrier's distribution is according to account No 30l.
68.
distribution of a large portion of the expense. The remainder should be distributed
according to the freight and passenger proportions of the related direct charges,
i.e., Accounts Nos. 308, 311, 314, 317 and 326 (80% freight, 20% passenger).
The apportionment indicated above is that suggested by the Interstate
Commerce Commission, i.e., on the basis of Account No 30l.
335 - OTHER EXPENSES
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 2,774.25 # 88.22 $ 16.42 $ 2,061.74 $ 543.80 $ 64.07 &
This account includes items of expense related to the maintenance of
equipment not chargeable to any other account. The above item of expense represents
the wages of maintenance of equipment employees, members of the Michigan National
Guard, who were called to the Texas Border for service. The expense is related to
both motive power and rolling stock, and should be distributed according to the
freight and passenger proportions of Accounts Nos. 308, 3ll, 314, 317 and 326
(80% freight, 20% passenger). An alternative distribution would be to allocate
it he wages of these men according to their employment when in active railroad
service.

336 - #AINTAINING JOINT EQUIPMENTAT TERMINALS, Dr.
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
# 12,673.82 $8,122.62 + 3,918.8l $ 488.3% $ 128.82 $ 15.18 #
To this account are charged accruals against the railroad representing
"the carrier's proportion of expenses incurred by others in maintaining equipment
used for the operation of joint “rare.....” As indicated above, 95% of the
total expense pertains directly and exclusively to either passenger service or
freight service. Examples of trººm cert. are: equipment used exclusively in
the freight yards at North Toledo, Gibson Yards in Chicago. An illustration of
* The carrier's distribution is according to Account No 30l.
# The carrier's distribution is according to Account No 30l.
69,
a passenger cost is the use by the Michigan Central of New York Central passenger
equipment along the Niagara Frontier.
The remaining 5% of the expense should be apportioned according to the
facts as reported by the accounting road.
In a study of the costs incurred by a particular railroad, Accounts Nos.
336 and 337 will of course be excluded, as the primary accounts indicate the
operating results, Nos. 336 and 337 representing merely financial adjustments of
expenses between different roads.
D. RELATED ACCOUNTS
235 - SHOPS and ENGINE HOUSES
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$72,128.85 42,753.4% + 1,701.ll # 36,391.66 $ ll,422.63 $19,859.96
The distribution of this expense is as follows:
LGCOMOTIVE DEPARTMENT
T Engine Houses 23.0%
Locomotive Shops 30.0%
Master Mechanic's Office 3.0% 56.0%
CAR DEPARTMENT
Freight Car Shops 31.0%
Passenger Car Shops 7.0%
Passenger and Freight Car
Shops 1.0% 39.0%
common Locomotive and Freight Car Shops 3.0%
Bridge Shop 2.04
o
Töß
The bridge shop expense should of course be distributed as overhead to
the direct charges for labor and materials of the Bridge Department, charged to
Accounts Nos. 208 and 225. Similarly, the expense related to maintenance of
motive power - the items listed above, amounting to 56% of the total charges to
this account - should be apportioned according to the freight and passenger
W
* The carrier's distribution is according to Account No 30l.
\
º
º


proportions of Accounts Nos. 308 and 311. The item "common Locomotive and freight
car shops" should be apportioned to the work done, as indicated by charges to
Accounts Nos. 308, 311, 314 and 326.
253 - POWER PLANT BUILDINGS (a)

304 - POWER PLANT MACHINERY (b)
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
(a) $ 1,609.74 - - - - ---- $ 767.85 # 433.02 $ 408.87(+)
(b) 4,121.83 ---- - - - - 1,966.ll. 1,108.7 l,046.95(*)
The distribution of this expense on the basis of power furnished is as
follows:
Freight Car Department 2%
Building Department 4%
Operating Coal Chutes 2.5%
Station Supplies (passenger) 19.0%
Steam Locomotives, Repairs 72.5%. 100.0%

These items of expense readily distributable on the basis of use:
Freight Car Department: Overhead to Nos. 314 and 326
Building Department Shop: Overhead to direct charges of this
department (208, 225, 227, 229,
231, 233, 235, 237, 241, 249 and 253).
Coal Chutes: Overhead to No. 233
Station Supplies: 376 direct.
Steam Locomotives, Repairs: Overhead to No 308.
265 - MISCELLANEOUS STRUCTURES
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$3,459.76 #3,106.00 ---- - - - - ---- $ 353.76(#)
The expense recorded as "undivided" is for repairs to a machine shop used
for a variety of purposes. A close approximation of the benefit accruing to the
freight and passenger services is represented by the freight and passenger propor-
tions of the sum of Accounts 308, 311, 314, 317 and 326 (80% freight, 20% passenger).
- en - en - - - - - - - e- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
is as follows:
Freight $1.1%
Passenger 26.9% 4.
f Undivided 25.4% loo.0%
(#) Only the expense recorded as "undivided" pertains to equipment. The expense
recorded as "freight direct" is discussed under "Miscellaneous Operations".
SUMMARY OF MAINTENANCE
OF EOTTTPMENT EXPENSFS
N.
Acct, Freight Passenger -
Name of Account NOe Total Direct Direct Common
Superintendence 301 || $ 175,831.49 $ 196.25 $ 3,962.14 |# 171,673.10
Shop Machinery 302 79,488.70 - 79,488.70
Power Substation Apparatus 306 2,258.88 2,258.88
º * App. Depreciation 307 7,410.00 7,410.00
Steam Locomotives - Repairs 308 l, 717, 584. 49 || 1,067,877.11 547, 593.26 102,114. 12
tº n Depreciation 309 273,299.36 168,079. 12 94, 231.58 10,988.66
º º Retirements 310 60,243. 23 31, 131.64 3, 1.16.59 25,995.00
Other Locomotives-Repairs 311 6,868. 15 6,868.15
º tº Depreciation 312 14, 208.00 14, 208.00
Freight Train Cars-Kepairs 314 2,411,883.35. 2, 411,883.35
º º "Depreciation 315 468,235.94 468.235.94 º
º 00 " Retirements 316 430,749. 15 430, 749. 15 -
Passenger Train Cars-Repairs 317 314,896.05 314,896.05
º º " Depreciation | 318. 98,687.30 98,687.30
tº º " Retirement s 31 4,978.80 4,978,80
Work Equipment - Repairs 326 47,005. 23 47,005. 23
º " Depreciation 327 23, 174.02 23, 174.02
º " Retirements 328 42, 427. 72 42, 427.72
Injuries to Persons 332 19,679.80 \ 19,679.80
Insurance 333 8, 435.99 2,900. 55 801.07 4,734,37
Stationery & Printing 334 12,929. 14 180.92 19. 30 12,728.92
Other Expenses - 335 2,774. 25 88. 22 16.42 2,669.61
Maintaining Joint Equipment
at Terminals, Dr. 336 12,673.82 8, 122.62 3,918.81 632. 39
Total $ 6, 235,722.86| 4, 589, 444.87 1,072, 221.32 574,056.67,
Related Account B
Shops & Engine Houses 235 72, 128.85 2,753. 49 1,701. 11 67,674.25
Power Plant Buildings 253 1,609.74 4 1,609.74
º " Machinery 304 4,121.83 - - 4,121.83
Power Substation Buildings 255 25.58 1.78 .66. 23.14
Power Transmission Systems 257 304.93 304,93
Power Distribution Systems 259 7, 184.10 2,072. 31 735.27 4,376.52
Power Line Poles & Fixture 261 516.69 88.87 427.82
Underground Conduits 263 96.04 18. 49 4.00 73.55
Total 8.5, 987.76 4,934.94 2, 441.04 78,611.78
Grand Total # 6,321.710.62|4, 594,319.81 l,074, 66.236 || 652,668.45
º




APPORTIONMENT OF COMMON MAINTENANCE OF EQUIPMENT EXPENSES
-
-
1. Expense apportioned in proportion to Units of Output
Amount of
Name of Account Common Expenses Freight Passenger
Steam Locomotives-Repairs $ 57,849.79 $ 46,858.33 || 10,991.46
Steam Locomotives-Depreciation 10,988.66 7,439. 32 3,549.34
Steam Locomotives-Retirements 25,995.00 17,598.62 8,396.38.
Other Locomotives-Repairs 6,868. 15 5,000.88 1,861. 27
i. º Depreciation 14, 208.00 10,357.63 3,850.37
Total #115,909.60 87, 260.78 28,648.82
2. Expenses apportioned in proportion to Located Charges
Superintendence 171,673.10 | 137,338.48 34,334.62
Shpp Machiisery 79,488.70 || 63,590.96 || 15,897.74
Steam Locomotives-Repairs 44, 264.33 29,966.95 14, 297.38
(1) Injuries to Persons 19,679.80 15,743.84 3,935.96
Insurance 4, 734, 37 3,787.50 946.87
Stationery & Printing 12,728.92 10, 183.14 2, 545.78
Other Expenses 2,669. 61 2, 135.69 533.92
(2) Maintaining Joint Equipment at Terminals 632. 39 423.70 | 208.69
(3) Shops & Engine Houses 67,674.25 54, 139.40 13,534.85
(3)Miscellaneous Structures 353.76 283. Ol 70.75
(3) Power Plant Buildings l,609.74 1, 287.79 321.95
(3) Power Plant Machinery 4,121.83 3,297. 46 824.37
(4) Power Substation Building 23. 14 19.97 3.17
(4) " º Apparatus 2,258.88 l, 949. 41 309.47
(4) " tº Depreciation 7, 410.00 6,394.83 1,015.17
(4) " Transmission Systems 304.93 263.15 41.78
(4) " Distribution º 4,376 .52 3,776.94 || || 599.58
(4) " Line Poles & Fixtures 427.82 369. 21 58.6l
— (4) Underground Conduits 73. 55 63.47 10.08
t Total 424,505.64 || 327,320.88 || 97,184.78
3. Expenses apportioned by the method of Correlation
Work Equipment & Repairs 47,005. 23 21, 152.35 25,852.88
in º Depreciation 23, 174.02 10, 428.31 12,745.71
jø ſº Retirements 42, 427.72 19,092.47 23,335.25
Total 112,606.97 || 50,673.13 || $1,933.84
=ll-
(1) Should be direct. Here apportioned
according to the freight and passenger
proportions of the sum of accounts
308,311,314,317,326 (80% Frt.- 20% Pass.)
Should be according to the facts
Here apportioned according to
direct 6 Apenses in this
account ( 6.7% Freight, 33% Passenger)
Here apportioned according to the
freight and passenger proportions
of the sum of accounts 308,311,314,
317,326 (80% Freight 20% Pass.)
Here apportioned according to the
power consumption in the freight and
passenger services indicated by the
sum of accounts 383, and 395 (86.3%
Freight - 13.77% Passenger)
- .
RECAPITULATION OF MAINTENANCE OF EQUIPMENT OPERATING EXPENSES
Method of Assignment
Direct Allocation
In Proportion to Units of Output
In proportion to Located Charges
Correlation
Grand Total
Freight
Passenger
Total
$1,074,662.3% $ 5,669,042.17
$ 4, 594,379.81
87,260.78
327, 320.88
50, 673Al3
28,648.82 115,909.60
97, 184.76 424, 505. 64
61,933.84. ll.2, 600. 97
$ 5,059,634.60
$1,262,429.18 sº,322,084.38
Per Cent of Total
Operating Expenses
—




71.
Chapter W .
TRAFFIC EXPENSEs
To this general account are charged "expenses incurred for advertising,
Boliciting, and securing traffic for the carrier's lines, and for preparing and
distributing tariff's governing such traffic."(*) In the case of the Michigan
Central, traffic employees are engaged exclusively in either the freight or the
passenger services. The freight employees, for example, consist of a freight
traffic manager, two assistant freight traffic managers, general freight agent,
chief of tariff bureau, general coal and ore agent, four division freight agents,
a live stock agent, traveling freight agent, and various commercial agents.
Similarly, the passenger employees include a passenger traffic manager, general
passenger agent, two assistant general passenger agents, various traveling
passenger agents, district passenger agents, and city passenger agents.
Furthermore, the Michigan Central subdivides primary accounts Nos. 35l,
352, 354 and 358 into freight and passenger accounts. The following tabulation,
showing a direct allocation of all traffic expenses to the freight and passenger
services, establishes beyond question the proposition that, so far as traffic
expenses are concerned, the railroad affords no evidence of being a joint-cost
industry.
- - - - - - - - - - - - - - - - * * * * * * * * *
- - -- - - - - - - - - - - - - -
(*) Classification of operating Expenses, P. 70.



Summary of
TRAFFIC EXPENSES
35la - SUPERINTENDENCE-FREIGHT:
35lb - SUPERINTENDENCE-PASSENGER:
352a - QUESIDE AGENCIES-FREIGHT:
352b - QUTSIDEAGENCIES-PASSENGER:
353 - ADVERTISING:
354a – TRAFFIC ASSOCIATIONS-FREIGHT:
354b - TRAFFIC ASSOCIATIONS-PASSENGER:
355 - FAST FREIGHT LINES:
356 - INDUSTRIAL & ITIGRATION BUREAUš:
351 - INSURANCE:
358a – STATIONERY & PRINTING-FREIGHT:
358b - STATIONERY & PRINTING-PASSENGER:
359a - OTHER EXPENSES-FREIGHT:
359b - OTHER EXPENSES-PASSENGER:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
35la - $153,789.4% $153,789.49 ----- ----- ---- ----
35lb - 68,789.20 ---- $ 68,789.20 ---- ---- ----
352a – llo, 283.22 llo, 283.22 ----- ----- ---- -----
352b - lll, 471.96 ----- llo,283.22 ---- ---- ----
353 - 46,362.67 ----- 46,362.67 ---- • * * * , ----
354a - 13,735.95 13,735.95 ----- ---- ---- ----
354b - 10,704. 16 ---- 10,704.ló ---- ---- ----
355 - 131,753.10 l?l,753.10 ----- ---- ----- ----
356 - 774.29 774.29 ----- ---- ---- ----
357 - 249.48 83.50 165.98 ---- ---- -----
358a - 91,355.99 91,355.9% ----- ---- ---- ----
358b - 19,190.79 ----- 19,190.79 ---- ---- - - - -
359a - 124. 44 l24.44 ----- ---- ---- ----
359b - 137.31 ----> 137.31 ~~~~ ----- ----
$753,722.65 $501,899.98 $256,322.67 - - - - - - - - - - - -
Per Cent, 100.00 66.l 33.9 ----- - - - - ----
R e c a p i t u l a tºi o m
of
TRAFFIC EXPENSES
Per Cent. of
º T 0 t a l
To To Bperating
Method of Assignment Freight Passenger T o t a l Expenses.


Direct Allocation $501,899.98 #256,822.67 $758,722.65 2.7
73.
Chapter VI.
TRANSPORTATION - RAIL LINE
A determination of the transportation movement cost sº that are imposed
by the passenger service and the freight service, is asolities by the existence
of distinct types of service furnished. Exclusive of a small amount of mixed-
train service, the freight train and the passenger train are sharply differentiated
units. In consequence the costs imposed by freight train operation, (e.g., wages
of freight train employees, the fuel consumed by freight locomotives, ) are quite
distinct from corresponding items in the passenger service. The existence of this
sharp line of demarcation between the two types of service made it possible for the
Michigan Central, in compliance with the first request of the Interstate Commerce
Commission, to report for the year ended June 30, 1916 a direct allocation to the
freight and passenger services of 86.5% of the total costs included in General
Account IV, Transportation-Rail Line, (66.3% triºt, 20.2% passenger). The
remainder, 13.5% of transportation expenses, was assigned to the two branches of
service on the basis of units of apportionment approved by the Commission, leaving
no residuum of unapportioned expenses.
A. MOTIVE POWER
380 - YARD ENGINEMEN: -
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 809,922.60 $763,016.25 $46,906.35 ---- ---- -- - -
Yard engineers and firemen are engaged almost exclusively in either
freight service or passenger service. The pay of men not engaged exclusively in
* To the primary accounts included in General Account IV, Transportation-Rail Line,
are charged "expenses incurred for transporting persons and the property of
others, including the expenses of station, train, yard, and terminal service;
also the expense of transporting company material in transportation service
trains.”
Interstate Commerce Commission, Classification of Operating Expenses, p. 73
74.
a single type of switching service is assigned to the freight and passenger
services according to the time spent in each type of service (indicated by the
daily time cards of these men). For example, Engineer Jones is paid 422 an
hour in yard service. His regular duties consist in making the "auto run". On
July 6 he spends nine hours delivering cars to the automobile plants, and one
hour dragging empty passenger coaches from the coach yard to the car shops.
His wages for the day are allocated as follows: to freight service, 9 x 42g or
$3.78; to passenger service, l x 42%, or $0.42. *The distribution of this
expense, then, is 100% direct.
381 - YARD MOTORMEN:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 4,652.7l $4,008.86 $ 643.85 - - - - -- - - - - - -
The discussion under the preceding account is pertinent to this account .

382 - FUEL FOR YARD LOCOMOTIVES:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$793,203.36 #667,544.73 $32,918.65 #87,175.58 $ 5,564.40 ----
The Fuel Agent's records of fuel delivered to individual locomotives show
that 88% of the fuel delivered to yard locomotives is used by engines engaged
exclusively in either freight switching or passenger switching service. The
apportionment of the remaining 12% of the fuel cost is on the basis of yard
switching locomotive miles (94% freight, 6% passenger). The figure for yard
switching locomotive miles is the number of hours worked multiplied by six. There
is of course an accurate record of time spent by each engine in each type of
switching. The fuel consumption per hour by engines of the same class in yard
service is a constant quantity, so that an apportionment of fuel consumed by
engines performing both types of switching, based fundamentally on number of
hours worked in freight and passenger service (and made necessary by the fact that
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
* Since modified by the Adamson Eight Hour Law.
75.
less than 1% of total time worked must be apportioned to the passenger service)
is substantially correct.
an interesting confirmation of the accuracy of the fuel distribution is
to compare the total charges to this fuel account to freight service and passenger
(95% freight, 5% passenger), and the preceding labor account, (94.5% freight, 5.5%
passenger). Account No. 382 is kept by the Fuel Agent; Account No 381 by the
Superintendent of Motive Power. The wages of yard enginemen are allocated directly
(100%) to the wo branches of service. The Fuel Agent's records allocate 88% of
the cost direct, 12% on the basis of yard switching locomotive miles.
383 - YARD switching power PRODUCED:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 5,610.93 $4,841.02 # 769.91 ----- ----- ----
The distribution of this expense as reported to the Commission was 100%
direct. The assignment in reality is according to yard switching locomotive miles
made by electric locomotives in the passenger and freight services. The power
consumed per hour is a constant wantity in the two services, as the engines are
of the same class and operate in a single yard. An apportionment based fundamentally
on running time in each branch of service is ther-tor, it as accurate as would
be a direct payment for power as measured by meters, The "raw power" is purchased
from the Detroit Edison Company, and is transformed at a sub-station owned by the

Carrier. Payment is by the Kilowatt hour. This expense, therefore, is one which (e.
varies in direct proportion to a quantity *** units of work (yard switching
locomotive miles).

385 - WATER FOR YARD LOCOMOTIVES: -
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 34,898.45 #1,300.25 # 457.20 # 31,152.54 $ 1,988.46 ----
Water consumption of yard locomotives varies in direct proportion with
the fuel consumption. The cost of water, then, should be apportioned according to
the fuel consumption of Yard Locomotives as indicated by Account No 382 (95%
76.
freight, 5% passenger).
The above distribution, partly direct and partly on the basis of yard
switching locomotive miles, (94% freight, 6% passenger), charges 93% to freight
service, 7% to passenger service. -
386 - LUBRICANTS FOR YARD LOCOMOTIVES: -
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 12,840.86 $12,956.67 $1,462.48 # 1,483.59 ± 94.70 ----
As in the case of the Fuel Account, practically all of the expense may
be allocated to the freight and passenger services. The distribution for the
fiscal year is complicated by a stock adjustment entry. For the month of July,
1916, 94% of the expense pertained to locomotives used exclusively in one type
of service. The common expense is apportioned on the basis of Yard Switching
Locomotive Miles (94% freight, 6% passenger).


387 - OTHER SUPPLIES FOR YARD LOCOMOTIVES:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 10,894.23 $ 8,862.60 $1,489.31 $ 509.78 $ 32.54 ----
Discussion - same as Nos. 383 and 386. In this instance the direct
expense is 95% of the total, and the residuum, 5%, is apportioned on the basis
of Yard switching Locomotive Miles (94% freight, 6% passenger).

388 - ENGINEHOUSE EXPENSES-YARD; -
- Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$139,706.05 #106,292.40 $15,069.84 & 17,243.18 #1,100.63 ----
An accurate distribution of this expense on the basis of work done in
the two services is possible. As indicated above, 87% of the total expense
pertains to locomotives used exclusively in freight service or in passenger
service. The common expense was apportioned to the basis of Yard Switching
Locomotive Miles (94% freight, 6% passenger).
A record of arrivals and departures at each enginehouse now being kept
will make possible an assignment of the common expense according to the facts in
77.
each instance. For example, during the month of July, 1916, the following
engines were given service at the West Detroit district roundhouse:
~
Class of Engine
Switching
Passenger Train
Freight Train
. Number given
engine service.
71.l
709
l, 16l
Per Cent.
27.55
27.47
44.98
The expense incurred at this roundhouse was $2,502.93. The assignment of
expense on the basis of engine service is as follows:
* Class of Engines
(l) Switching
(2) Passenger Train
(3) Freight Train
.2755 x $2,502.93
.2747 x $2,502.93
.4498 x $2,502.93
Cost
$ 689.56
687.55
1,125.82 #2,502.93
Owing to the fact that a couple of switch engines handle passenger
coaches in the terminal station, 6% of Item l, or $41.37, is chargeable to
passenger service. The assignment of enginehouse expense between the two
types of service is, therefore, the following:

Class of Engine
(l) Switching
(2) Passenger Train
(3) Freight Train
Freight
# 648.19
Total $1,774. Ol
Passenger
# 41.37
687.55
$ 728.92
That this distribution is reasonably accurate cannot be questioned.
In view, them, of the large proportion of direct expense - 87% - and the
possibility of assigning the remaining 13% on the basis of work done, the
assignment of enginehouse expense to the two types of service may be accepted
as accurate.
392 - TRAIN ENGINEMEN:

Freight Passenger Apportioned Apportioned
Total Direct
$1,379, 645.68
$835,243.18
Direct Freight
$493,598.86
$41,150.95
Passenger Undivided
$ 9,653.69
Of the wages charged to this account, 96% represents payments made to
engineers and firemen engaged in the operation of either freight or passenger

78.
trains (60.5% freight, 35.5% passenger). The pay of enginemen in mixed train
service, 4% of the total, is apportioned on the basis of car miles in mixed
trains, (31% freight, 19% passenger).
(tº
393 - TRAIN MOTORIEN:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$27,660.3% $23,970.97 $ 3,689.42 ---- - ---- -------
The total expense is allocated directly to the two branches of service.
(See discussion under No. 380).
394 - FUEL FOR TRAIN LOCOMOTIVES:
Freight Passenger Apportioned Apportioned
Total Direct, Direct Freight Passenger Undivided

2,295,361.10 $802,584.08 #ll,692.56
sº $1,431,443.83 $ 49,847.23 -----
The expense for fuel charged to this account, (exceeded in amount only
by No. 314, Freight Train Cars-Repairs, and No. 373, Station Employees) may be
assigned to the passenger and freight services with accuracy, for 97.5% of the
total expense may directly be allocated to the two types of service, and the
remainder, 2.5% of the total expense, representing the fuel consumed by loco-
motives in mixed train service, may be apportioned on the basis of car miles in
mixed trains (8.1% freight, 19% passenger).

395 - TRAIN POWER PRODUCED:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$29,143.33 $ 25,148.87 % 3,994.51 ----- ---- -----
The discussion under Account No. 383 is also pertinent to this account.
The items should be listed as apportioned to the freight and passenger services.
The power is consumed by electric motors hauling cars through the Detroit River
79.
- - º
Tunnel, and is apportioned on the basis of miles made in each branch of service.
The mileage is simply the product of number of trips and 1.6, the distance in miles
between Detroit and Windsor. Operating conditions are identical in both branches
of service on the Tunnel Division, so that the trip or mile is an ::::::…
or measure of power consumed. This apportionment is therefore guite as accurate as
would be a direct payment for power as measured by meters.
397 - WATER FOR TRAIN LOCOMOTIVES:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
# 104,907.74 $1,767.96 $ 78.87 $66,576.03 $ 36,642.62 - - - -
The cost of water consumed by train locomotives is very properly
apportioned on the basis of fuel consumed by train locomotives, as indicated by
Account No 394, (64.5% freight, 35.5% passenger). The discussion under Account
No. 385 is pertinent to this account.
398 - LUBRICANTS FOR TRAIN LOCOMOTIVES:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 50,273.07 $35,133.76 $21,309.92 #3,721.64 # 2,448.97 ----
The common expense, with the exception of 3% of the cost of lubricants
charged to mixed trains (distributed on the basis of car miles in mixed trains,
81% freight, 19% passenger) is a credit adjustment apportioned on the basis of
the direct charges (62.2% freight, 37.8% passenger).
399 - QTHER SUPPLIES FOR TRAIN LOCOMOTIVES:



Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 29,948.52 #16,779.25 $10,552.88 # 1,899.88 # 716.5l ----
As indicated in the above distribution, 91% of the expense may directly
be allocated to either the freight or the passenger service. The remainder
consists of -
(1) A few small items of common expense, i.e., materials and supplies
used in preparing sand for the use of both passenger and freight
locomotives, and locomotives in mixed train service - e.g., wheel-
barrows, shovels and sand screens - apportioned on the basis of
the direct charges (including mixed-train) to this account
(62.2% freight, 37.8% passenger).
(2) Supplies for locomotives in mixed train service, apportioned
on the basis of car miles in mixed train service, (81% freight,
19% passenger).
400 - ENGINEHOUSE EXPENSES-TRAIN:
- Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 416, ll3.35 #137,318.44 # 17,959.69
$215,563.75 # 45,271.47 ----
As indicated in this distribution, 85% of the expense is allocated
directly to the freight and passenger services. The remaining 15% of the total,
as in the preceding account, consists of two items:
(l) Common expense, apportioned according to the direct charges
(including mixed, 60.9% freight, 38.7% passenger).
(2) Expenses chargeable to locomotives used in mixed train service,
apportioned on the basis of car miles in mixed train service
(8.1% freight, 19% passenger).
A suggested method of apportioning common expense according to the facts
is found under Account No 388, Enginehouse Expenses-Yard.
RELATED ACCOUNTS
231 - WATER STATIONS:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 40,471.30 $1,277.5l # 52.94 # 28,337.98 # 10,802.87 -----
The common expense is apportioned according to the freight and passenger
proportion of Fuel for Yard and Road Locomotives taken together (72.4% freight,
27.6% passenger).
233 - FUEL STATIONS: -
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 11,690.57 $2,409.4% $ 85.75 $ 6,657.41 $ 2,537.92 ----
The common expense is apportioned according to the freight and passenger
proportions of Fuel for Yard and Road Locomotives taken together (72.4% freight,
27.6% passenger).

81.
|ol
Chapter VII.
TRANSPORTATION-RAIL, LINE
Continued
B. Oſh;R TRANSPORTATION EXPENSES.
371 " SUPERINTENDENCE:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$361,306.83 & 4,135.49 $ 591.81 # 264,225.43 # 92,354.10 -- - -
To this account is charged the "pay of officers directly in charge of,
or engaged in conducting transportation", the pay of their clerks and attendants,
together with office and other expenses. * A subdivision of this cost of
Supervision is as follows:
OPERATING DEPARTMENT
(#)Payrolls and Office Expenses of Division Superintendents 53%
Payrolls and Office Expenses of Superintendent of Car Service 21%
Payrolls and Office Expenses of General Superintendent 10%
Payrolls and Office Expenses of Supervisor of Air Brakes –l4 85%
LOCOMOTIVE DEPARTMENT
Salaries and Expenses of Traveling Firemen
Salaries and Expenses of Road Foreman of Engines
Salaries and Expenses of Supervisor of Air Brakes
:
8%
Proportion of Salary and Office Expenses of General Manager
Total . . . . . . . 100%
—lſ.
-º-
---.
--
The cost of Superintendence, amounting to but 2.5% of the associated
labor and material charges, should be apportioned according to the freight and
passenger proportions of these other located costs:
l, LOCOMOTIVE DEPARTMENT
This expense should be pro-rated over the following accounts:
380 - Yard Enginemen
381 - Yard Motormen
392 - Train Enginemen
393 - Train Motormen
* - - - - - - - - - - - - - - - - - - - - - --- - - - - - - - - - - - - - - - - -
w
(#) The duties of Division Superintendents pertain exclusively to conducting
transportation on the Michigan Central.


82.
2. OPERATING DEPARTMENT
This expense should be pro-rated over the following accounts:
372 - Dispatching Trains
373 - Station Employees
377 - Yardmasters and Yard Clerks
378 - Yard Conductors and Brakemen
379 - Yard Switch and Signal Tenders
401 - Trainmen
402 - Train Supplies and Expenses
404 - Signal and Interlocker Operation
405 - Crossing Protection
3. PROPORTION OF SALARY AND OFFICE EXPENSE OF GENERAL MANAGER
This expense should be pro-rated over all other
transportation expenses.
372 - DISPATCHING TRAINS
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
# 131,130.48 ---- ---- $ 64,253.92 4 66,876.5% - - - -
The work of the train dispatcher consists in the production of train-
miles. The train is, of course, the unit dispatched, and its movement is directed
by a dispatcher for a certain number of miles. The duration of time in which the
movement of a particular train a given distance is directed by a dispatcher varies
inversely as the speed of the train. The dispatching of a passenger train a given
number of miles requires a smaller amount of time than will the production of the
same number of train miles in freight service, owing to the greater speed of
passenger trains.
However, a not inconsiderable portion of the time consumed by a freight
train between terminals results from the holding of freight trains on sidings in
order to give the main track to passenger trains. An apportionment of the cost of
dispatching trains to the two types of service on the basis prescribed by the
Commission (transportation train miles) imputes to the expedited passenger service
3. portion of the cost of dispatching freight trains, as measured in time spent on
tracks between terminals.
The transportation train mile as a unit of apportionment of the cost of
dispatching trains is therefore subject to the criticism that it measures quantita-
ively but not qualitatively the work of the train dispatcher, His work is a

83.
product of three factors, trains, distance and speed. Total train miles (revenue
and non-revenue) would express quantitatively the product of the first two factors,
number of trains and distance. The factor speed enters as a disturbing element,
because of the existence of two operating conditions:
(l) There is a frequently simultaneous demand for the right of way,
a single track, by both passenger and freight trains.
(2) Passenger trains are usually given precedence over freight
trains in order to expedite passenger train movement, thus
\ increasing the average speed of passenger trains and decreas-
º ing the average speed of freight trains.
The transportation train mile, therefore, lacks scientific confirmation as an
accurate unit of apportionment of cost of dispatching trains. It cannot be
inaccurate to any large extent, for it accomplishes the purpose of assigning to
passenger service a portion of the burden imposed upon a delayed freight service
by an expedited passenger service. The general subject of time consumed by trains
on tracks, expedited and delayed services, and its relation, not merely to cost of
dispatching trains, but particularly to the distribution to the freight and
passenger services of the interest burden incident to the ownership of a railroad
right of way, is a field of research that needs to be explored.
373 - STATION EMPLOYEES:
- Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$2,315,998.66 $302,390.7% $ 56,820.02
$1,792,514.95 $164,272.90 ---- (*)
The total expense included in this important primary account may
accurately be assigned to the passenger and freight services. As indicated above,
90% of the expense pertains directly to one service or the other. The wages of
ticket agents, gatemen, stationmasters, are illustrations of expenses pertaining
exclusively to passenger service. The wages of freight handlers, car sealers, and
billing clerks illustrates costs imposed exclusively by the freight service.
(*) The carrier's distribution of common expense is according to No. 371, (74.5%
freight, 25.7% passenger).

'84.
&
a analysis of the duties of employees at joint agency stations will make
possible a distribution of the remaining 10% of this expense on the basis of work
done. -
There is, then, no reason why the total expense charged to station
Employees, the largest primary account in General Account IW, cannot be assigned
to the passenger and freight services with an accuracy quite as absolute as though
the two services were performed by different railroads, for 90% of the expense
represents the wages of employees in one type of service to the exclusion of the
other, and the remaining 10% may be apportioned according to the facts in each
instance.
374 - WEIGHING, INSPECTION and DEMURRAGE BUREAUS;
Freight Passenger Apportioned Apportioned
Total Direct, Direct Freight Passenger Undivided
$ 35,118.05 #35, ll&.05 ---- - - - - - - - - -- - -
376 – STATION SUPPLIES and EXPENSES:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$178,308.80 $67,942.50 $ 6,534.44
$68,208.6l $ 35,623.25 - - - -
The discussion under Account No.373 is pertinent to this account. The
direct expense in this instance is 76% of the total. The common expense is here
apportioned according to the passenger and freight proportions of Account No. 373,
(84.5% freight, 15.5% passenger).
377 - YARDMASTERS and YARD CLERKS:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$356,112.96 $ 6,505.32 $ 3,357.12
$293,655.71 $ 52,594.8l - - - -
º An assignment of the wages of yardmasters and their clerks, men engaged
solely in yard service, presents no difficulty, for 84% of the total expense
represents the wages of men working in yards used exclusively in either the freight
or the passenger service, and the remainder may be apportioned according to the
facts - yard switching locomotive miles in the freight and passenger services -

85.
in each yard.
The distribution of the common expense made by the carrier on the basis
of total switching locomotive miles for the system (94% freight, 6% passenger),
a figure which includes a preponderance of the mileage made in freight yards, -
burdens the freight service with 97.2% of the total cost, and the passenger
service with but 2.8%, instead of approximately 94% and 6%, respectively. -í-have
therefere-made An adjusting entry #e corrects this charge in the summary at the end
of the chapter.
378 - YARD CONDUCTORS AND BRAKEMEN:
Freight Passenger Apportioned Apportioned

Total Direct Direct Freight Passenger Undivided
$1,248,541.00 # 53,883.04 - - - -
$1,194,657.96 - - - - - - - -
A direct allocation of the total expense to the freight and passenger
services, (96% freight, 4% passenger) is made possible by reference to the daily
time cards of these employees.
-

37.9% - YARD SWITCH and SIGNAL TENDERS:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
96,492.73 $50,774.35 # 4,262.08 $38,968.92 # 2,487.38 ----
The common expense, as in Account No. 377, is apportioned on the basis
of the unit of work in yard service, yard switching locomotive miles (94% freight,
6% passenger).

389 - YARD SUPPLIES and EXPENSES: -
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 33,974.72 #25,871.4% + 1,974.70 € 5,490.82 + 637-71 ----
of this, charges for miscellaneous supplies - e.g., lights and telephones-
used in yard service (except locomotive supplies) 80% of the total is related
exclusively to either the freight or the passenger service. The remainder is
apportioned on the basis of yard switching locomotive miles (94% freight, 6%
passenger).
86.
* TRAINMEN:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 1,564,635.65 #535,270.90 $ 16,382.16
$969,072.98 $ 43,909.6l ----
Practically all (96%) of this important item of expense, the wages of
traininen, may directly be allocated to the freight and passenger services. The
remaining 4% of the total consists of two classes of experise:
(a) Expense common to both services, apportioned on the basis of
the direct charges (60.9% freight, 39.1% passenger).
(b) Wages of trainmen in mixed train service, apportioned on the
- basis of car miles in mixed train service (81% freight,
19% passenger).
402 - TRAIN SUPPLIES and EXPENSES:
Freight Passenger Apportioned Apportioned
* I Total Direct Direct Freight Passenger Undivided
$ 394,934.30 $158,441.46 $ 51,260.87
$137,620.00 $ 47,6ll.97 ----
Of this expense, 75% is directly allocated to the freight and passenger
services. The common expense, (e.g., loss on employees' lunch rooms, expenses of
the purchasing agent torpedoes, train lamps, lanterns, flags, etcetra) is
apportioned on the wa. of the direct charges (46.7% freight, 53.3% passenger);
the cost of supplies for mixed trains is apportioned on the basis of car miles in
mixed train service (81% freight, 19% passenger).
404 - SIGNAL and INTERLOCKER OPERATION:
— Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
# 160,499.66 $ 1,782.30 $ 109.74 $ 77,717.73 # 80,889.8% -- - -
Since a train is the unit interlocked by the towerman, an apportionment
on the basis of trains interlocked -- or what is approximately the same *
transportation train miles (49% freight, 51% passenger) is reasonably accurate.

87 •

405 " CROSSING PROTECTION:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$129,294.0% $13,843.9l 4, 34.75 + 56,553.5% $ 58,861.87 - - - -
Discussion - same as No. 404.
406 - DRAWBRIDGE OPERATION:
- Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$ 13,746.76 # 1,494.30 ---- # 9,103.58 $ 3,148.88 --e--
As in the two previous accounts, the operating unit of work is the train.
This expense should be apportioned according to the number of trains using each
drawbridge. The apportionment indicated above is according to No. 371,
Superintendence (74.3% freight, 25.7% passenger).
497 - TELEGRAPH and TELEPHONE OPERATION:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$105,366.4l $ 32.ll # 614.72 # 77,806.65 # 26,912.93 ----
An accurate assignment of this expense would be on the basis of messages
sent. If such a distribution is not feasible, because of the expense involved, a
distribution on the basis of other transportation expenses may be used.
The apportionment indicated above is according to No 371, Superintendence
(74.3% freight, 25.7% passenger).
410 - STATIONERY and PRINTING:
! - Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$162,128.74 $93,717.27 $15,291.83 $ 39,467.90 $ 13,651.74 -- - -
The expense that may directly be allocated to the freight and passenger




services is 67.5% of the total. The common expense is less than one-half of one
per cent. of the direct transportation expenses according to which it should be
apportioned. (See No 371, supra.)
88.
4llº - other EXPENSES:
- Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$45,471.31 + 36,829.16 ºz,190.53 + 4,193.10 € 1,637.92 ----
The cost 3 related exclusively to either the passenger or the freight
service - 86% of total charges to this account - include items of the following
nature; relief of charges against freight and passenger agents on account of
lost records, cash shortages; payments to other railroads for cleaning cars,
"penalty switching".
The remainder, 14% of the total, representing costs not directly assigned
to one type of service or the other, consists of two items:
(1) An assessment made by the National Conference Committee in
connection with wage disputes of Transportation Depart-
ment Employees.
(2) "Military Payrolls" - the pay of transportation department
employees in government service along the Texas border.

The first item pertains solely to the wage controversy between the railroads and
their train service employees (engineers, firemen, conductors and trairmen), and
should be distributed on the overhead basis to the respective payrolls, - charged
to Accounts Nos. 378, 380, 381, 392, 393, 401 and 402.
The second item, Military Payrolls, may properly be assigned according to the
wage distribution of these men when performing their regular duties in the railroad
service.
The actual distribution of common expense indicated is according to
No. 371, (74.3% freight, 25.7% passenger).
44 - INSJRANCE:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided

# 7,209.9l $ 5,132.93 $1,053.86 $ 760.18 # 262.94 -- - -
\\ The above distribution of expense indicates that 85% of the total is
allocated directly to the freight and passenger services. Even this figure does
not indicate the fullest extent to which a direct allocation of insurance costs
89.
chargeable to conducting Transportation may be made. An analysis of the insurance
schedule for the month of July, 1916, for example, made possible a direct allocation
st 99% of the expense chargeable to this Account. By far the major portion of this
expense is the cost of insuring the contents of freight cars and of freight houses.
Items of common expense may be apportioned according to directly assign-
able items to which they bear an immediate relation.
The distribution of the 15% of common expense indicated above was on the
basis of No. 371, Superintendence, (74.3% freight, 25.7% passenger).
415 - CLEARING WRECKS:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$43,430.6% $37,177.18 # 1,642.52 # 3,425.94 $ l,185.02 -----
The allocation of the direct expense - 90% of the total - is according to
the service in which the wreck occurred. The remaining 10% of the total expense,
covering the rental paid for a signal system, should be apportioned according to the
directly assignable items charged to this account. The distribution of common
expense as reported to the Commission was on the basis of No. 371 (74.3% freight,
25.7% passenger).

416 - DAMAGE TO PROPERTY:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$15,676.46 # 8,340.90 $ 3,870.23 # 2,574.74 3 890.59 -----
The allocation of direct expense - 78% of the total - as in the preceding
account, is according to the service causing the damage. The residuum, expense not
incident to a single type of service, but imposed by train movements in both the
freight and passenger services, may arbitrarily be apportioned on the basis of
transportation train miles.
The distribution of the trifling amount of common expense indicated above
is on the basis of No. 371, (74.3% freight, 25.7% passenger).
90.

417 - DAMAGE TO LIVE STOCK ON RIGHT OF WAY:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$6,287.74 $ 3,175.86 $2,478.30 $ 470.75 $ l62.83 - - - -
Discussion - same as Account No 416. In this instance the direct
expense is 90% of the total.
418 - Loss AND DAMAGE FREIGHT:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$401,176.9l $401,176.91 ---- ---- - - - - - - - -
*19. " LOSS AND DAMAGE BACGAGE:
- - Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$º 3,293.45 ---- $3,293.45 - - - - - - - - - - - -
7
420, - INJURIES TO PERSONS:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$183,165.76 $54,015.28 #21,950.48 # 79,650.00 $ 27,550.00 tº ---
The allocation of direct expense, 41.5% of the total, does not represent
the extent to which these charges are directly assignable to the freight and
passenger services. An analysis of all charges to this account for the month of
July, 1916 shows that 99% of the expense could be allocated directly to freight or
passenger service (91% freight, 8% passenger). The small amount of common expense,
assuming a direct allocation of expenses to the fullest extent, representing items
like contributions to railroad hospitals, incidental payments for legal service ,
wages of claim agents, expenses of employees attending meetings of claim agents,
should then be apportioned on the basis of the direct charges to this account.
The apportionment of common expense indicated above was on the basis of
No. 371, (74.3% freight, 25.7% passenger).
390 - OPERATING JOINT YARDS AND TERMINALS, Dr.







Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$449,619.56 $260,867.58 $10,636.24
#171,400.85 $ 6,714.8% -- - -
This account includes accruals against the carrier "for its proportion
of the cost of operating yards and terminals operated by others, and in the joint
use of which the carrier participates." (*) As indicated above, 96% of the
expense any area, be allocated to freight service or passenger service.
Examples of items pertaining exclusively to the freight service are: ºw-ent. to
the New York Central for "handling freight, Suspension Bridge", to the Indiana
Harbor Belt Line for the operation of the Gibson Yards Transfer House. An item
of expense pertaining exclusively to the passenger service is a payment to the
Illinois Central for the operation of the Central Station, Chicago.
The common expense, 4% of the total, represents a proportion of the cost
of operating interlockers, crossings, etc., and may be apportioned according to
the facts in each instance (trains interlocked, etc.). The above distribution of
common expense is on the basis of the direct charges (60.3% freight, 39.7%
passenger).
391 - OPERATING joint ARDs and TERMINALs, gr.
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$96,522.60 $ 58,964.45 %ll,840.83 $21,422.53 $ 4,294.79 ------
This account is simply the converse of the preceding account, and the

same discussion is pertinent.

412 - OPERATING JOINT TRACKS and FACILITIES, Dr.;
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$97,041.53 # 37,605.6% $44,999.28 $10,726.36 $ 3,710.20 ----
The above distribution of expense indicates that 85% of the total expense
pertains exclusively to the passenger service or the freight service. The remainder
is arbitrarily assigned on the basis of Account No 371, (74.3% freight, 25.7%
passenger). -
/ º
\\\ A more accurate distribution of this common expense would be to group
the expense items first by particular facilities (interlockers, signals, crossings,
gatehouses) and make an apportionment according to the facts (number of trains) in
* Classification of Operating Expenses, p. 81.
92.
each instance.

*13 - 9PERATING JOINT TRACKS and FACILITIES, Gre:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$68,984.5% # 14,939.08 # 10,305.40 # 32,498.90 $ 11,241.21 * ----
Discussion - Same as No. 412.
Accounts Nos. 412 and 413 are included for completeness only. The
separation of costs into passenger and freight items as described in primary
accounts, other than joint facility accounts, includes all possible cases. The
joint facility accounts, of course, simply are for adjustments between railroads.
º
The expenses pertaining to operation and maintenance are included in other primary
accounts.
G. RELATED ACCOUNTS:

227 – STATIONS and OFFICE BUILDINGS:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
$158,371.07 $77,498.03 $ 51,586.35 ---- - - - - $ 29,286.6%
There should be added to the preceding costs the cost of repairs to
structures (included in No. 227) used in the production of terminal services.
The cost of repairs to a building should be distributed according to the
use of the building. With regard to office buildings, a good working rule, in the
railroad field at least, where the work done is of a routine nature, and the
employees in particular offices constitute a homogenous group - is to assign
building repairs according to the payroll labor distribution; that is, according
to the duties of the employees using these facilities.
By far the major proportion of the wages of employees stationed in
structures, repairs to which are included in this account, is included in Account
No. 373, Station Employees, (see page 83 supra). As in Account No. 373, a large
ºut of the expense - 31% - may directly be allocated to the freight and passenger
services. Repairs to freight offices, freight cranes and derricks, auto loading
93.
platforms, and track scales, are examples of expenses pertaining exclusively to
the freight service; repairs to passenger stations, passenger platforms and sheds,
illustrate items related exclusively to the passenger service. The distribution
of common expenses, e.g., repairs to general office building, or joint agency
stations - 19% of the total charges - should be made according to the facts. An
apportionment of the cost of heating the general office building(>) all illustrate
the general method. This expense is distributed as follows, on the basis of floor
space:
Percent.
Maintenance of Way & Structures, Superintendence lA
Maintenance of Equipment, Superintendence 6
Traffic, Superintendence (Freight) 5
Traffic, - Superintendence (Passenger) 3
Transportation, Superintendence ll
Dispatching Trains 2
Station Supplies and Expenses 7
Train Supplies and Expenses 2
Telegraph and Telephone Operation l
General Office Supplies & Expenses 39
Law Expenses 3
Engineering Department 4.
Material - Purchasing Agent l
Material - Fuel Agent l
Dining Service Department l
100
241 - HARVES and DOCKS: ,
- Freight Passenger Apportioned Apportioned
Total Direct, Direct Freight Passenger C oim mºd n
$8,259.05 42,660.70 ---- ----- ---- $ 5,598.35



Lacking an accurate measure of the use of docks, used in both freight
and passenger service, the common expense may arbitrarily be assigned on the basis
of transportation train miles (49% freight, 51% passenger).
- - - - - - - - - - - - - - - - - - -
- - - - - - - -
- - - - - - - - - - - - - - -
* Not charged to Account No. 227, of course.

94.
247? - TELEGRAPH and TELEPHONE LINES: -
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
# 35,682.4% $ 86.97 $ 3.27 & 17,525.43 $ 18,240.76 ------
The cost of maintaining telephone and telegraph lines should of course
- be apportioned on the same basis as the cost of operating these lines; that is,
on the basis of the use made of these facilities (see discussion of Account No.
407, Telegraph and Telephone Operation, p. 87 supra).
The apportionment indicated above is on the basis of transportation
train miles (49% freight, 51% passenger).
275 - INSURANCE:
Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger Undivided
§ 18,836.82 # 7,741.51 ± 1,640.88 ----e. ---- $ 9,454.43
This account includes the cost of insuring the carrier against loss through
damage or destruction of property. The structures insured are used for a variety of
purposes, but the largest items of expense are related to transportation operations
(insurance on freight houses, passenger stations - facilities operated by employees
whose wages are charged to primary accounts under Transportation).
l. Structures used by Track Maintenance Forces:
These expenses should be apportioned according to the
work done by the respective departments (discussed in
detail under Account 201, Superintendence).
2. Structures used by Maintenance of Equipment Forces:
Kindred expenses (Machine Shops, Locomotive Shops,
Car Shops) are discussed under Account 30l., Superintendence).
3. Structures used by Transportation Employees:
DIRECT:
Passenger stations and freight houses are illustrations
of these costs, which are assignable according to the facts
in each instance. (See Accounts Nos. 227 and 373).
INDIRECT:
Insurance on Water Stations, Fuel Stations, Signals and
Interlockers, should be assigned to the freight and passenger
services according to the payroll distribution of employees
operating these facilities, (discussed under Accounts Nos.
231, 233, 247, etc.).
Summary of
TRANSPORTATION EXPENSES
MOTIVE POWER
- Acct . Freight. Passenger Common
Name of Account No. Total Direct, Direct
Yard Enginemen 380 # 809,922.60 $763,016.25 $46,906.35
Yard Motormen 381 4,652.71 " 4,008.8% 643.85
Fuel for Yard Locomotives 382 793, 203.36 667, 544.73 2,918.65 # 92,739.98
Yard Switching Power produced 383 5,610.93 5,610.93
Water for Yard Locomotives 385 34,898. 45 1,300. 25 457. 20 33,141.00
Tubricants for Yard " 386 12,840.86 12,956.67 1, 462.48 1,578.29
Other supplies for Yard Locos. 387 10,894. 23 8,862.60 l, 489.31 542.32
Engine House Expenses -Yard 388 139,706.05 106, 292.40 15,069.84 18, 343.81
Train Enginemen 392 l, 379, 645.68 835,243.18 493, 598.86 50,803.64
Train Motorſmen 393 27,660,39 23,970.97 3,689.42
Fuel for Train Locomotives 394. 2, 295, 567. 70 l, 431,443.83 802, 58.4.08 6l, 539.79
Train Power Produced 395 29, 143.38 29,143.38
Water for Train Locomotives 397 104,907. 74 1,767.96 78.87 103,218.65
Lubricants for Train Locos. 398 50, 273.07 35,133.76 21, 309.92 6,170.61
Other Supplies for Train Locos. 399 29,948.52 16,779.25 10, 552.98 2,616. 39
Engine House Expenses-Train 400 416, 113.35 215, 563.75 137,318.44 63,231.16
Total 6, 144,939.02 4,123,884. 46 1, 567,922, 41 453,182.15
Related Accounts
Water Stations 231 40, 471.30 1,277. 51 52.94 39,140.85
Fuel Stations 233 11,690. 57 2, 409. 49 85.75 9, 195.33
Total - 52, 161.87 3,687.00 138.69 48. 336.18
Grand Total STSTIBOIE) ATZT, 57TTETTI, 56E,TET. Tº —ºTR. 33


TRANSPORTATION EXPENSES(CONTINUED)
Acct. Freight Passenger
Name of Account No. Total Direct. Direct | Common
Superintendence 371 $ 361, 306.83 $ 4, 135.49 # 591.81 | #356,579.53
Despatching Trains 372 131, 130.48 131,130.48
Station Employees 373 2, 315,998.66 l, 792, 514.95 302,390s 79 221,092.92
Weighing, Inspection & -
Demurrage Bureaus - || 374 35, 118.05 35, 118.05
Station Supplies & Expenses 376 l?8, 308.80 68, 208.61 67, 942, 50 42, 157.6
Yardmasters & Yard Clerks 377 356, 112.96 293,655.71 § ; :::::::::
Yard Conductors & Brakemen 37.8 1,248,541.00 l, 194,657.96 53.3%. 6. ? -
Yard Switch & Signal Tenders 379 96, 492.73 50, 77.4.35 4,263.63 41, 456.30
Yard Supplies Expenses 389 33,974. 72 25,871.49 1.97%. To 6.3.3
Trainmen - 401 | 1,564,635.65 969,072.9% 535,370.9% 65.25.1;
Train Supplies & Expenses 402 394,934.30 137,620.00 156,441.4% 95.313.8%
Signal & Interlocker Operation | 404 160, 499.66 l, 782.30 'Yº. 133,667.é
Crossing Protection 405 129, 294.09 13,843.91 34.7; iºn :
Drawbridge Operation 406 13, 746, 76 1,494.30 ...J T * 1%. 15. ;
Telegraph & Telephone Operation | 407 105,366.41 32.il 614.72 1.É:
Stationery & Printing 410 162,218.74 93,717.27 15,291.83 *::::::::
Other Expenses 411 45, 471.31 36,829.76 3,166.5% - 3.45.0%
Insurance 4.14 7, 209.91 5,132.93 1,053.8% i.o.23.2
Clearing Wrecks #: §§: 37, 177.18 1,642. 52 4.6i5.6%
Damage to Property 4. 15,676.46 8,340.90 3.376. " ...":
Damage to Live Stock on 9 3,870.23 3,465.33
Right of Way 417 6, 287.74 3,175.86 2, 478.30 6
Loss & Damage- Freight 418 40l., 176.91 40i, ii. , 478.3 33.58
Loss & Damage - Baggage 419 3, 293.45 3, 293.45
In juries to Persons 420 183, 165.76 54,015. 28 21,950. 48 107, 200.00
Total * 7,993,302.04 | # 5,228,348.30 |* 1,183,193.01 ki,581,160.73
Operating Joint Yards and
Terminals- Dre 390 449,619.5% 260,867.58 171,400.85 17,351.13
Operating Joint Yards and - - * * -
Terminals-Cr. 391 96, 522.60 58,964. 4.5 11,840.83 25,717.32
Operating Joint Tracks &
Facilities-Dr. 412 97,041.53 37,605,69 44,999.28 14,436.56
Operating Joint Tracks & - - - - ----' . . -
Facilities-Cr. 413 68,984. 59 14,939.08 10, 305. 40 43, 740. ll
Total Joint Facilities 381,153.90 224, 569. 74 194,253.90 37,669.74
Related Accounts - -
Stations Office Buildings 227 158,371.07 77,498.03 51,586.35 29,286.69
Wharves & Docks 241 8, 259.05 2,660.76 2,743. 19 2,855.16
Telegraph & Telephone Times 247 35,682.49 86.97 3.27 35,766.19
Insurance 275 18,836.82 7,741.51 1,640.88 9, 454.43
- 221, 149,43 £1,513.27 55,973.69 TL 362.47
Total Bºgº 5,540,731.31 l, 434,020,60 1,620.853.46
Brought Forward 6, 197, 150.89 4, 127, 571.46 l, 568,061.10 501, 518.33
Grand Total $14,792, 756.26 $9,668,302.77 $2,122,371.7%
$3,002,081.70



APPORTIONMENT OF COMMON TRANSPORTATIONEXPENSEs
ls Expenses apportioned in proportion to Units of Output
º Amount of
Common Expense Freig Passenger
º
- Fuel for Yard Locomotives $ 92,739.98 $87,175.58 5,564, 40
L-T Yard Switch Power Produced 5,610.93 4,841.02 769.91
Water for Yard Locomotives 33, 141.00 31, 152.5 1,988.46
| Tubricants for Yard Locomotives 1,578. 29 1,483.5; 94.70
- Other Supplies for Yard Locomotives 542. 32 5°9.78 32.54
º (1) Engine House Expenses- Yard 18, 343.81 17, 243.18 1,160.63
Train Enginemen 50,803.64 41, 150,95. 9,652.69
Fuel for Train Locomotives 61, 539.79 49,847.2 11,692.56
Train Power Produced 29, 143.38 25, 148.87 3,994. 51
Lubricants for Train Locomotives 6, 170.61 3,721.64 2,448,97
Other Supplies for " " 2,616.3% 1,899.88. 716.51
(1) Engine House Expenses Train 63,231. 16 45, 271.47 17,959.69
Yardmasters & Yard Clerks 55,951.93 52, 594,81 3,357. 12
Yard Switch. & Signal Tenders 41,456.30 38,968.92 2,487.38
| Yard Supply & Expense 6,128.53 5,490.82 637.71
Total 453,500. 26 396,039.82 57,410.44
2. Expenses apportioned in Prpportion to Located Charges
TWater TſorTTrain Locomotives 103, 218.65 66,576.03 36,642,62
Water Stations 39, 140.85 28,337.98 10,802.87
Fuel Stations 9, 195. 33 6,657.41 2,537.92
Superintendence 356, 579 - 53 264,225.43 92, 354.10
Station Employees 221,092.92 *::::::::: 56,820.02
º Station Supplies & Expenses 42, 157.69 35,623.25. 6, 534, 44
Telegraph & Telephone Operations 104,719.58 lſº - 26,912.93
Stationery & Printing - 53,119.64 39,467.90 13,651. 74
Other Expenses 6, 451.02 4,793.1Q 1,657.92
Insurance (414) 1,023,12 760.18 262.94
Clearing Wrecks 4,610,96 3,425,34. 1,185.02
Damage to Property 3, 465.33 2, 574.74. 890.59
- Damage to Live Stock 633.58 470.75 162.83
(2) In juries to Persons 107, 200.00 79,650.00 27, 550.00
(l) Trainmen 60,291.77 43,309.61. 16,382.16
Train Supplies & Expense 98,872.84 47,611.97 51,260.87
(3) Stations & Office Buildings 29, 286.6% 17,572.01 11,714.68
(3) Insurance (275) 9,454.43 5,672.6% 3,781.77
Øperating Joint Yards & Terminals-DR. 17, 351,13 10,636.24 6, 714.89
º º º º º CR. 25,717.32 21,422.53 4, 294.79
º º " Tracks & Facilities FDR. 14,436.56 10,726.36 3, 710, 20
º º º º gº CR. 43, 740.1.1 32,498.90 11,241.21
Total 1, 212,844.1% 856,849.68 355,994. 51
3. Expenses apportioned in Proporti on to Arbitrarily Selected Units of Work
Despatching Trains 131, 130.48 64, 253.92 66,876. 56
Signal & Interlocker. Operation 158,607.62 77,717.73 80,889,89
Crossing Protection 115,415.43 56, 553.56 58,861.87
Drawbridge Operation 12, 252.46 9,103.58 3,148.88
Telegraph & Telephone Lines 35, 766. 19 17, 525. 43 18,240.76
Wharves & Docks 2,855.ló l, 399,03 l, 456.13
(4) Adjusting Entry 11,504. 34 ll, 504. 34
Total 456,027. 34 215,048.91 240,978. 43
(1) Partly on overhead basis and partly on basis of Unitſ of Work (mixed train service)
(2) Should be direct.
(3) Here apportioned according to the freight and passenger proportions of direct charges included in #227
Stations & Office Buildings (60% Freight-40%. Passenger) -
(4) To correct freight and passenger proportions of common expenses under #377.
(Continued)












APPORTIONMENT OF
COMMON TRANSPORTATION EXPENSES (Continued)
Recapitulation of Transportation Operating Expenses
Per Cent of Total
Method of Assignment Freight Passenger Total Operating Expenses
Direct Allocation $9,668,302.77 $3,002,081.70 || $12,670,384.47 45.5 T
In Proportion to Units of Output. 396,089.82 57. ,410.44 453,500.26 1.6
in Proportion to Located Charges 856,849.68 335,994.5, l, 1,212,844.1% 4. 4
In Proportion to Arbitrarily Selected 215,048.91 240,978.43 456,027.34 1.6
Uniºg of Wor:
Total ll, 136; 291.18 3,656,465.08 || 14,792.756.26 53.1





95.
*
nº Chapter VIII.
MISCELLANEOUS OPERATIONS
To this general account are charged expenses of miscellaneous operations
of the carrier "involving the use of such facilities as hotels, restaurants. . .
when the facilities used are distinct from those used by the carrier in the service
of transportation, or in the maintenance of facilities used in transportation
service, and the operations are not incident to such service. (*) Although these
operations are quite distinct from transportation operations, the particular
expenses bear a relationship to a single type of service. A mere enumeration of
the accounts and the expense distribution will satisfy the requirements imposed
by a study of railroad costs.
441 - DINING and BUFFET SERVICE: (e)
442 - HOTELS and RESTAURANTS; (b)
443 – GRAIN FLEVATORS: (c)
444 - STOCKYARDS: (d) -
--- Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger
(a) #354,422.17 ---- #354,422.17 ---- ----
(b) 71,982.64 ---- 71,982.64 - - - - - - - -
(c) 61,361.90 $61,361.90 ---- ----- ----
(d) 139,033.12 lºº,039.13 —2: ---- —-
| Total.....#626,806.50 $426,404.8l ----
$ 200,401.69 ----
(3-0
RELATED ACCOUNTS
237 - GRAIN ELEWATORS: -
--tº-tº Freight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger
$ 5,427.94 $ 5,427.94 ---- ---- ----
265 - MISCELLANEOUS STRUCTURES;
Treight Passenger Apportioned Apportioned
Total Direct Direct Freight Passenger
$ 3,459.76 # 3,106.00 ---- ---- ----
Undivided
----
----
----
-----
Undivided
Undivided
$ 353.76(#)
The expense recorded as "freight direct" represents the cost of repairs
* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- -
(, Classification of Operating Expenses, 9, 19.
# The expense recorded as "undivided" does not pertain to Miscellaneous Operations,
and is discussed in Chapter IV, Maintenance of Equipment.

96.
to facilities afforded a special type of freight service, the transportation of
live stock. Repairs to cattle sheds, hog sheds, hog slushers, sheep watering
troughs, are the specific items.
R e c a p i t u l a t i o n
Of
MISCELLANEOUS OPERATIONS EXPENSES
Per Cent, of
TQ To T 0 t a l
Freight Passenger Operating
lethod of Assignment Service Service T o t al. Expenses,
Direct Allocation $203,935.63 # 426,404.81 $635,340.44 2, 3
- - - - -- -





97.
| |
/d Chapter IX.
GENERAL EXPENSES -
Svin Mary of Operafi Vºg ºpenses
The expenses charged to this general account - “those for general
administration and accounting, and those of the financial, law, real estate, tax
and claim departments"(*) are the following:
8.
451 - SALARIES and EXPENSES OF GENERAL OFFICERS:
452 - SALARIES and ºSES OF SIER&S ANDATTENDANTS:
453 - GENERAL OFFICE SUPPLIES AND EXPENSES:
454 - LAW EXPENSES:
455 - INSURANCE:
457 - FENSIONS:
458 – STATIONERY and PRINTING:
*39 - VALUATION EXPENSES:
460 - OTHEREXPENSES: -
461 - GNERAL EJOINT EAGILITIES, Dr.;
- Freight Passenger Apportioned Apportioned
)
Total Direct Direct Freight Passenger Undivided
(a) $107,472.14 $ ll, 312.64 $ 5,253.48 ---- ---- $ 90,906.02
(b) 330,140.91 loz,630.23 43,494.65 ---- ---- l24,016.03
(c) 38,407.99 4,316.46 580.03 ---- ---- 33,511.50
(d) ll.9,434.49 4,921.19 5,269.ll ---- ---- 109,244.19
(e) 912.93 59.58 73.58 ---- ---- 926.93
(f) 71,599.64 16,812.45 21,317. 19 ---- ---- 33,470.00
(g) 44,472.14 20,196.89 2,981.67 ---- * - - - - 21,293.58
(h) 52,818.09 - - - --> isogo ---- - - - - :::::::::
(i) 29,522.7% #: 2. 150. - - - - ---- º
Total $794,781.0% $223,627.16 $78,973.35 ---- ---- $752, TS0.53
(j) l?8.49 178.49 ---- - - - - - - - - - - - -
G r a n d
| Total...#794,959.58 $223,305.65 #78,973.35 ---- - - - - $ 492,180.53
* The undivided expense indicated above, representing items of expense of
a general administrative mature pertaining to the operation of the property as a
whole rather than to any specific portion thereof, and amounting to but l.77% of
total operating expenses - less than 2% of labor and material costs already
-
'located;-may be assigned to the freight and passenger services in proportion to .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - -
(*) Classification of Operating Expenses, p. 100.
98.
their respective proportions of operating expenses, other than General Expenses.
The work of these general officers consists very largely in the control of
expenses, so that an apportionment on that basis may be accepted as reasonably
correct, (70.2% freight, 29.8% passenger).
R e c a p i t u l a t i o n
of
GENERAL EXPENSES
Per Cent, of
To To T 9 t a l
lethod of Freight Passenger Operating
Assignment Service Service. 1 * * al- Expenses.
Direct Allocation $223,305.65 $ 78,973.35 $ 302,779.00 l, l
Located Charges 345,510.77 146,669.8l 492,180.58 1.8
---
T o t a l . . . . . . . . $569,316.42..... $225,643,16 . . . . . $ 794,959.53 . . . . . . . 2-3

Method of Assignment
1. DIRECT ALLOCATION
2. CORRELATTON
3. IN PROPORTION TO
UNITS OF OUTPUT
4, IN PROPORTION TO
LOCATED CHARGES
5, IN PROPORTION TO
ARBITRART1, Y SETECTED
UNITS OF WORK
RECAPITULATION OF OF ERATING EXPENSES
General Accounts
-
Maintenance of Way
Maintenance of Equipment
Traffic
Transportation
Miscellaneous Operations
General
Total
Maintenance of Way
Maintenance of Equipment
Total
Maintenance of Equipment
Transportation
Total
- F-
Maintenance of Way
Maintenance of Equipment
lºwertra.
General
Total
Maintenance of Way
Transportation
Total
Grand Total
Per Gent. of
Total Opera-
Per Cent. of
Charges to
Freight Passenger Total ting Expenses Account
$726,563.30 $105,123.31 $831,686.6l 3.0 18.3
4, 594,379.81 1,074,662.36 5,669,042.17 20.3 89.7
501,899.98 256,822.67 758, 722.65 2.7 100,0
9,668,302.77 3,002.081.70 12,670,384.47 45.5 85.6
2, 208,935.63 426,404.8i 635,340.44 2, 3 100,0
223,805.65 78,973.35 302, 779.00 1 - 1. 38.0
15,923,887.14 4,944.068.20 20,867,955.34 74.9
977,954. 53 1,988,099.29 2,966,053.82 10.7 65.3
50,673.13 61,933.84 112,606.97 o.4 1.8
1,028,627.66 2,050,033.13 3,078,660.7% l]...s.l.
87,260.78 28,648.82 115,909.60 0.5 1.8
396,089.82 57, 410.44 453,500.26 l.6 3.1
483,350.60 86,059.26 569, 409.86 2.1
166,967.44 174, 231, 43 341.1%.87 7.5
327,320.88 97,184.1° 424,305.9, 1.5 6, 7
856,849.68 355,994.5l 1, 212,844.1% 4.4 8.2
345,510.77 146, 669.81 492, 180.58 l.8 62.0
1,696,648.77 774,080. 51 2, 470,729.28 8.9
199,130.71 204,021.67 403,152.38 1.4 8.9
215,048.91 240,978.43 456,627.34 1.6 3.1
414, 179.62 445,000. 10 859,179.72 3.0
$19,543.93.79 E. 299,247.20 T-27,525,954.95 Too.7
---
Per Cent of Total
Operating Expenses
70, 2
29.8


99.
Chapter X.
THE PISTRIBUTION OF FLANT BURDEN.
SUMMARY OF FIND ING S.
-----
In addition to the costs of labor and materials consumed during
the accounting period in the production of the freight and passenger services,
including any dissipation of capital assets - "expired capital outlay" -
whether due to wear, obsolescence, or other cause - there must be added
the cost of capital, together with a reward for risk-taking, in order to
determine a figure which represents the total financial disability necess-
itated by the production of the freight and passenger services.
The following items are taken from the carrier's balance sheet
as indicative of its capital assets:
MICHIGAN CENTRAL RAILROAD
Investment to June 30, 1907, $49,429,400.36
Investment July 1, 1907 to June 30, 1914, 24, llé,003.03
Investment since June 30, 1914, 2,522,568.3%
Total -- $76,065,972.35
DETROIT RIVER TUNNEL CO=
Construction Account ------------- 21,963,000.00
Total MC RR and DRT C&= ----------------- $97,128,900.00
yº
The figure which represents the total cost to the carrier of
borrowed capital (pure interest, plus compensation for risk-taking) is
the sum of the following items:
Rent for Leased Roads, $ 3,459,622.04
Interest or. Funded Debt, l,512,774. 53
Interest on Unfunded Debt, 230,457.77
Amortization of Discount on Funded Debt, ll, 352.00
Dividend Appropriations of Income, 143,436.00
-- - Total -- $ 5,963,762.34

100.
The sum of these amounts paid as compensation for borrowed
capital amounts to 6.1% of the figure taken as indicative of the value
of the carrier's property.
To arrive at a figure which represents the total overhead
burden, there must be added the taxes for the fiscal year, which amounted
to º,633,935.9%. The sum of capital costs and taxes, 47,597,698.30, -
amounts to 7.8% of the figure for investment in Road and Equipment.
Eight (8%) per cent. of the cost of property was the refore taken as the
overhead burden. (l)
A Distribution of the carrier's capital investment by kinds
of property must at this time be based partly on estimate, since neither
a current physical valuation nor accurate construction records previous
to 1907 are available. The following methods were used in computing
the values of the various unite of property:
STHISTURE.8.
The carrier insures its structures at 50% of cost. Each item listed
in the Insurance Schèdule (there are some 1,100 of these items) was
multiplied by two in order to obtain original cost. Twenty (20%) per
cent. was then deducted for accrued depreciation. The single exceptions
to this method were the Detroit Terminal Passenger Station and the
General Office Building. In these instances the cost of construction
figures were used.
LOCOMOTIVES:
The cost of each locomotive was determined by reference to the account-
ºf a
ing records. From the sum of these it ems there was deducted 25% for
accrued depreciation.
------------------------------------------------------------------------------
(1) objections may be raised against including taxes in the distribution
of Operating Expenses, against adding the figure to the
interest charge. The carrier's tax burden is computed very
largely on assessed property values, so that an apportionment
on that basis seems the less objectionable method of procedure.
lol.
ERſ.1951. CAHS:
The cost of each series of cars was determined by reference to the
accounting records. From the sum of these costs twenty (20%) per cent.
was deducted for accrued depreciation. A smaller amount was deducted
for depreciation than in the case of passenger cars or locomotives
because bf the preponderance of new freight cars. For example, 10,000
all steel automobile cars were purchased within the last two years.
PASSENGER COACHES:
The invoice cost of each car was obtained by reference to the accounting
records. From the sum of these items was deducted 30Å for accrued
depreciation.
Ość Fºulº.
The invoice cost of each unit of work equipment was determined by
reference to the accounting records. From the sum of the se it ems 20%
was deducted for accrued depreciation.
TUNNELS AND SUBWAYS:
The single item in this category is the Detroit River Tunnel. The

construction cost was obtained from the account ing records.

The sum of the items located was $59,895,200., leaving a residºm
of $37,233,700. for the various roadway items. The published valuations
of the Interstate Commerce Commission (e.g. the Kansas City Southern) are
for railroads not comparable with the Michigan Central. Recourse was
the ºas, for comparative purposes, to the Minnesota valuation of the
Northern Pacific in the Minnesota Rate cases (Senate Document No. 54,
63rd Congress, 1st Session, p.40). By applying the Northern Pacific's
102.
roadway value per mile of track outside of terminals, to the Michigan
Central's mileage, and using for the value of the Michigan Central's
terminal lands the corresponding item of the Northern Pacific,” figure
of $37,000.000. was obtaired. Since a figure of $37,223,700. was
desired, the various roadway and track items, together with termi ral
land values, were divided by two. A few small items, like Wharves
and Docks, grade Crossings, were estimated by applying the ratio of
repair costs (MC to NP) to the respective property it ans of the Northern
Pacific. The residum, $5,121,000. was arbitrarily taken as the
figure for grading.
The working hypothesis in the case of the distribution of
overhead burden, as well as operating expenses, is that items should
be located directly wherever possible, and that items which are not
related to a single type of service should be apportioned according to
a measure of use which seems most in harmory with the facts.
The following problems in addition to those under related
operating expense items, demand attention:
1. Burden directly allocated. (56%).
The figure is smaller than for directly located operating
expenses. (74.9%).
2. Burder. Assigned on the Basis of correlation. (24.6%).
Two additioneTCETEEITs arise:T
(l) The correlation units are based on wear, and do not
take cognizance of land values.
(2) The correlation units do not take cognizance of the
policy of giving passenger service precedence in
use of track.
The preponderance of land values in termirals (82% of the total
in the case of the Notherb Pacific), coupled with the fact that value
(l) There are as many miles of industry tracks in the Detroit Switching
District as there are industry tracks of the Northern Pacific in the
entire state of Minnesota. There is no reason to believe that
St-Paul, Minneapolis and Duluth real estate is more valuable than
real estate in Detroit. If the cost of reproduction method were
used in making a valuation of the Michigan Central, the probability
is that the figure would be $50,000,000. in excess of the balance
sheet record. -

103.
of land is small in comparison with the cost of ties, rails, grading,
etc., indicates that any error that might arise from the possibility
that the ratio of in values to track repairs (outside of terminals)
is not a constant, is negligibly small.
The failure of the theory of correlation to take into account
- the cost of delaying freight trains in order to expedite passenger
service presents a possibility of a serious error. The operating
expense figure as determined by correlation takes into account the -
"

higher standard of track maintenance imposed by the passenger service,
and are a measure of wear. No alternative method is available on
which to measure these two factors.
ADJUSTMENTS (all expenses)
The preceding cost discussion has been limited to a discussion
of the total cost of production of the freight service and the passenger
service as sharply distinct products. There is, however, a commingling
of expense that results from the policy of transporting in freight
trains company materials for use in passenger as well as freight service;
and of transporting on passenger trains, freight employes; for no revenue
accrues for these services. These practices introduce no new problems of
cost analysis, but they do demand accounting adjustments.
The following method of adjustment is suggested.” Add ton
miles of company coal and other company material transported to obtain
|
a figure for total non-revenue freight *ras. The passenger propor-
tion of fuel may be determined by reference to the fuel records. An
º
approximation of the passenger proportion of materials used in maintenance
of way is indicated by the correlation units. The passenger proportion
of stores may be taken from the Stores records. From the sum of these
-- - - - - - - - - -----------------------------------------------------
(1) Financial Statement, sheet No. 20,- CM&StP in Western Rate case.

104.
respective items the per cert. of passenger materials transported to
total freight transportation, may be determined (4.2% in the case of
the CM&StP). similarly the proportion of freight-employe-passenger-
miles to total passenger miles may be determined, and the freight service
charged with this proportion of passenger service costs. The net
adjustment in the case of the CM&StJ was a transfer of 3.2% of freight tº ºº
- º
* - º º º -- - º
expenses to passenger. º º
- º - º º
ºº


PROBABLE ERRORS (all expenses) º º
The possibilities of errors of a magnitude sufficiently
great as appreciably to modify the final conclusions are incident to 9.
the use of the right of way by both freight and passenger trains.
Maintenance of Way Operating Expense.
In the case of the Michigan Central no disturbing factors
incident to the process used in the determination of the freight and
passenger proportions of maintenance of way expenses are known to exist.
Ownership Cost of Right of Way.
In the process of apportioning the interest burden incident
to the ownership of the right of way, (3.3% of total costs) two
disturbing fact or s are known to exist:
(40 l. Passenger trains are given precedence over freight
trains in use of track.
2. Owing to differences in speed, the ratio of time of track
occupation - a measure of use of track - to track maintenance costs
imposed, even in the ideal case is greater in freight service than in
passenger service.
Although these factors are opposing forces and introduce
compensating errors, the absence of a measure of their respective
magnitudes precludes a statement that their operation results in
equilibrium. It may be stated, however, that since these are
105.
opposing forces, and since they are incident to but 3.3% of total
costs, their operati on can introduce no serious error.
Transportation Operating Expenses.
The policy of giving passenger trains precedence over freight
trains in use of right of way introduces a cumulative error:
1. Freight train expenses which are a function of time, (e. g.
wages of train crews, fuel consumption of locomotives) are increased to a
figure in excess of the cost of producing freight service independent
of passenger service.
2. In view of delays to freight trains, the quantity of
units of equipment necessary to the production of a given number of ton-
miles of service within a stated period is increased. The capital
investment, and consequently the interest burden, is thereby
increased. Repair costs are not increased, since these costs are
a function of miles, not of time. in ºther words, the interest
burden is increased by a lengthening of the time consumed by a unit
of equipment in giving off all of its productive services.
3. The apportionment of supplementary transportation expenses
in proporti on to the located charges introduces an additional errors
These complications do not arise frºm the fact that railroad costs are
joint in the sense that different services are the product of a single
operatiºn, but because these services are not simultaneously produced.
A limited number of trains only can use the tracks. It is theoreti cally
possible that all track services should be consumed by a single type of
trattie. As the limit of track capacity is approached, the time use of
main tracks by trains approximates a measure of service rendered. The
following method is suggested for the correction of transportation charges:
106,
Construct as ideal schedule for freight trains, similar to the
schedule of passenger trains. Compute the delays incident to each
type of service. The freight and passenger proportions of total time on ... air-
tracks (based on ideal schedules) is a measure of their effective
demands for time use of track. Delay costs are necessitated by
a simultaneous demand for two services at a time when but a single
service is available; to the fact that two trains instead of one are desirous
of using a single track. Divide these delay costs equally between the
competing services. The adjustment will be a transfer of a portion of
freight transportati on expenses to passenger service.
+

Burden Assignable on the
basis of
l, DIRECT ALLOCATION
2, CORRELATION
3.” UNITS OF OUTPUT
4 * LOCATED CHARGES
5. ARBITRARY UNITS
OF WORK
It em
ſfreight Car S
Machinery in
Freight House
Grain Elevato
Stock Yards
Hotels, Etc.
Detroit Pass.
Locomotives (
Locomotives (
Freight Cars
Track Dept. B
Work Cars
PROPERTY WATUR'S ACTUALſ, Y LOCATED
hops
Car Shops
8
*S
Passenger Stations
Stations
Freight)
Passenger)
Passenger Coaches
uildings
Other Work Equipment
Weter Station
Fuel Stations
Ice Houses
Round Houses
Car Shops
Machine Shops
Shop Machiner
Power Plant B
º º
Tot
General Offic
Other Offices
Storehouses
Depots (Frt.
Officials Car
|-- Tot,
Signals & Int
{ Detroit River
Snow Plows
Gr
Total of Prop
Property Values not Located on Basis of Records-
§
ſlocomotive Shops
y
uildings
Machinery
al (Group 1)
e Building.
& Pass.)
Wrecking Créºé
8
al(Group 2)
erlockers
Tunnel
and Total of
Located Walues
erty Account
Walue
$117,120
111,500
844,100
86,000
75,000
124,240
644,470
5, 601,702
7,576,000
2, 108,000
3, 287,000
22, 274,000
§ 131,100
515,000
99,000
$203,400
220,900
234,500
$112,500
348,800
82,600
96,600
477, 400
149,400
15,000
$1,574,000
94, 300
44,700
125,600
70,000
61,600
233, 500
12,062,100
34, 100
Total
$42,849,100
$ 745,100
658,800
*1,342,300
$1,970,200
$12,329, 700
$59,895, 200
$97, 128,900
37,233, 700






RECAPITULATION OF ESTIMATED PROPERTY VALUES.
Apportionment of
Group III - MISCELLANEOUS MAINTENANCE OF WAY ITEMS. Total Freight Passenger Common Common
... Direct. Direct Direct - Freight Passenger
Protection work, $810,000. (1) $148,000. (5) $130,000. $18,000. = $662,000.
B.T. & C. 675,000. (2) 33,000. (6) 32,000. 1,000. 642,000.
Grade Crossings, Fences, 590,000. (3) 152,000. (7) 141,000. ll,000. 438,000.
Wharves & Docks, 323,000. (4) 103,000. (8) 103,000. 220,000.
Teleg. & Telephone Lines, $21,000. (1) 621,000.
TOTAL- $3,019,000 $436,000. $406,000. $30,000. $2,583,000. $1,266,000. $1,317,000.
Group IV - PRINCIPAL MAINTENANCE OF WAY ITEMS.
Ties, Rails, Ballast,
Track Laying, Surfacing
and Grading, $21,356, 200
Lands, Outside Terminals, 4,050,000.
Terminal Lands, 8,658,000.
Track Scales, 84,000.
Track Tools, - 66,500.
TOTAL == 34,214,700.
(1) - Computed by an application of the ratio track miles outside of terminals, Michigan Central and Northern Pacific, to corresponding
items in Northern Pacific valuation((218.74) of N.P.), Minnesota Rate Cases; Senate Document No. 54, 63rd Congress p.40.
(2) - Ratio of Operating Expense account #9, B.T. & C., applied to corresponding item in N. P. valuation (188.7 of N.P.)- ICG Statistics
of Railways, 1914, p. p. 96, 222. -
(3) - Ratio of Operating Expense account #11, Grade Crossings applied to corresponding item in N. P. valuation (125.7, of N.P.)
(4) - " " ſº º * #17, Wharves & Docks, " 00 60 º 00 º (42.7% of N.P.),
(5) - Proportion of direct to total Operating Expenses, included in M. G. accounts 202,212,214,216,218,220 (18.3% Direct; Frt ié.0%; Passgr. 2.3%)
(6) - Ditto on basis of Account 208, B T & C, (4.9% Direct; Freight 4.8%; Passenger 0.1%) -
(7) - " " tº 90 * 225, Crossings & Signs (25.6% Direct; Freight 23.8%; Passenger 1.8%)
(8) - " " tº gº " .241, Wharves & Docke, (32.0% Direct; Freight 32.0%)
(9) - Common so apportioned (33% freight; 67% passenger) that total, including direct, will be identical with apportionment on basis
- - of correlation units (45% Freight; 55% Passenger).
(1))- Estimated 75% Freight; 25% Passenger. -
(11)- Actual. -
(12)- Repairs to tracks in terminals for year are 67% Freight; 33%. Common, on basis of totals by sections. Terminal land value was
multiplied by 0.67.
$3,900,000. (5) $3,420,000. $480,000. $17,456,200. (9) $5,760,500.
$11,695,700.
4,050,000. (9) 1,340,000. 2,710,000.
7,075,000. 5,800,000. 1,275,000. (11) 1,583,000. (10) 1,190,000. 393,000.
84,000. 84,000. - * -
...” 10,600. 1,600. 54,300. (9) 17,900. 36,400.
11,071, 200. 9,314,600. 1,756,600. 23, 143,500. 8,308,400. 14,835,100.
RECAPITULATION OF VALUE OF PROPERTY
Method of Assignment
Item Freight Passenger Total
Locomotives #7, 576,000 $2,108,000 # 9,684,000
Freight Cars 22, 274,000 22, 274,000
Passenger Coaches 3, 287,000 3,287,000
Car Shops 117,120 117,120
Machinery lll, 500 111,500
Freight Houses 844, 100 844,100
Grain Elevators 86,000 86,000
l. DIRECT ALLOCATION 4 stock yards 75,000 75,000
Miscellaneous Operation
Structures l24, 240 124, 240.
Passenger Stations 644,470 644,470
Detroit Passenger Stat. 5,601, 702 5,601, 702
Miscelleneous Maintenance -
of Way Items (Group III) 406,000 30,000 436,000
Principal Maintenance 9,314,600 l, 756,600 11,071,266.
of Way Items (Group IV)
Total 40,804,300 13,552,000 54,356, 300
w Frincipal Maintenance -
2. CORRELATION of Way Items(Group IV) 8,308,400 14,835,100 23, 143,500
Track Dept. Bldgs. 59,000 72,100 ljl, 100
Work Cars 231,800 283, 200 515,000
Other Work Equipment , , 44,600 54,400 99,000
Total 8, 643,800 15, 244,800 23,888,600
3. IN PROPORTION TO Water Stations 146, 400 57,000 203, 400
UNITS OF OUTPUT Fuel Stations 231,000 89,900 320,900
Ice Houses (Eita.) 134, 500 100,000 234, 500
º -
º- Total 411,900 246,900 658,800
- - Meintenance of Equipment 1,073,800 268,500 1, 342, 300
4, IN PROPORTION TO Shops (Group I) * -
LOCATED (SHARGES General Office Bldg.,
- other offices & - -
Misc. (Group II) 1, 182,100 788,100 1,970, 200
Total 2, 255,900 1,056,600 3, 312,500
Tetroit River runnel 7,478,500 4,583,600 12,062,100
5. IN PROPORTION ro Signals & Interlockers 113,400 120,100 233, 500
ARBITRARII,Y SE- Snowy Plows 16,700 17,400 34,100
LECTED UNITS Misc. M. of W. It emist -
OF WORK (Group III) l, 266,000 l, 317,000 2,583,000
Total 8,874,600 6,038,100 14,912, 700 N
Grand Total 60,990,500 36,138,400 97,128,900









DISTRIBUTION OF OVERHEAD BURDEN (INTEREST & TAXES)
****** * * * * * = * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
4– - - -:
Method of Assignment
Freight Passenger Total Per Cent. Per Cent. of
of Total Operating Expenses
Burden Assigned by Method
- t - -º-º: Indicated.
* - - - w
1. Direct Allocation $3,264,344 $1,084, 160 $4,348,504 56.0 - 74.9
2 - Correlation - 691.504 1,219,584 1,911,088 24.6 ll. 1
3. In Proportion to Units of Output 32,952 19,752 52,704 0.7 2.1
4. In Proportion to Located Gharges 180,472 84,528 265,000 3.4 --- 8.9
5. In Proportion to Arbitrarily Selected - -
Units of Work 709,968 483,048 - 1,133,016 13.3 3.0
TOTAL BURDEN- $4,879,240 #2,891,072 $7,770,312 100.0 100.0
Per cent. of Total Burden- 62.7 37.3
RECAPITULATION OF OPERATING EXPENSES AND BURDEN.
Freight Passenger Total Per Cent: . of
Total Expenses.
1. Direct. Allocation $19,188,231.14 $ 6,208,228.20 $25,216,459.34 70.8
2. Correlation l,720,131.66 3,269,617.13 4,989,748.79 14.0
3. In Proportion to Unite of Output 516,302.60 105,811.26 622,113.86 1.7
4. In Proportion tº Located Charges 1,877,120.77 - 858,608.5l. 2,735,729.28 7.7
5. In Proportion to Arbitrarily Selected
Units of Work, 1,124,147.62 928,048.10 2,052,195.72 —3.8–
GRAND TOTAL -- tº------- - $24,425,933.79 $11,190,313.20 #35,616,246.99 100.0
Three (3%) per Cent. of Freight Costs Chargeable to Passenger, $732,778.01
Cost of Freight Service, º, 23.693,155.18
Cost of Passenger Service, $11,923,091.21




107,
Chapter XI.
CONCLUSION.
The findings of this study may be summarized as follows:
1. Political Econoº.
The direct allocation of 70.8% of all expenses, in combina-
tion with the possibility of apportioning 23.4% of expenses by processes
based upon an established relationship between quantity of product and
cost of service, leaving a residuum of 5.8% to be arbitrarily assigned,
points to the conclusion that railroad costs are not joint to the extent
that has been assumed. The benefit which accrues from the residuum
of costs, moreover, is shared by both freight and passenger service;
the difficulty lies only in the fact that the ratio of amount of expense
to quantity of product, is not a *. In this respect, these
costs are not essentially different from a considerable portion of the
costs incurred by other industries.
The discovery (Chapter II) that maintenance of way expense
per gross ton mile of traffic fluctuates in sympathy with the quantity
and kind of transportation service produced, and not in sympathy with
traffic density, indicates that maintenance of way expense does not
decrease per unit of *... If, however, the necessity
for delays to freight trains be obviated by the construction of
additional tracks, the presumption is that economies in fuel consump-

tion and in labor costs incident to train operation would tend to
offset the capital cost of additional facilities.

2. THE RELATIONSHIP BETWEEN THE CARRIER AND THE PUBLIC.
This study discloses the fact that 70.8% of total costs may
be directly allocated to either the freight or the passenger service

108.
(79% in the case of freight service, 54% in the case of passenger
service). In any railroad cost analysis, therefore, 30% of all expenses
must be apportioned. Since in railway rate cases costs are a measure
of the equities of both the public and the carrier, it is essential that
costs be measured with accuracy, and that where working hypotheses must
be substituted for definite facts, that these working hypothese s be
standardized. In this vein, the application of the theory of
correlation as outlined in Chapter II is suggested as a measure of the
extent to which track maintenance costs are imposed by the passenger
and freight services.


CHICAGO,
MILWAURRE *s
statistical pepartment.
º
Ohiº a
-- issiºns sºlº case -
rable of RAILRoaps used in Detsäurning Easts ºr sºpºtion of track warnTºnance accounts For
- The Fiscal reans June 3 ºn, 1911 tº 1913, INCLUSIVs. -
Gross ſºng
Millions of
Nº. Nagić ºf Carriºr One Milº.
l Pennsylvania R. R. Co. - 173,365
2 New York Central & Hunds on Rivº R. R. Cº. 118,545
3 Baltimore & Ohio Railroad Co. *::::::
4. New York, New Haven & Hartford Railroad Co. 8,601
g Pennsylvania Company, 3,437
Lake Shore & Michigan Southerº ºy. Co. $3%
§ Erie Railroad Company, 4,984
Philadelphia & Reading Railway Co. 43,521
9 Bostºn & Maizie Railroad, 37,518
Pittsburgh, C3 nº innati, Chicagº & St. Louis Ry. Co. 47,137
Lehigh Valley Railroad Co. 43,007
138 laware, Lackawanna & Western R. R. Co. 34,268
Michigan Central Railroad Co. 37,059
Cleveland, Cincinnati, Chicago & St. Lºuis Ry. Cº. 39, 531
Wabash Railroad Co. - Receivers, 33, 657
Central Railway Company of New Jersey, 20,771
Delaware & Hudson Company, - 22,973
Philadelphia, Baltimore & Washingtºn R. R. 36. 17, Gl
Pittsburgh & Lake Erie Railroad Co. 13,816
Pere Marquette R. R. Co. - Receivers, #3:373 -
Chicago & Eastern Illinois R. R. Co., - 17.77
Elgin, Joliet & Eastern Ry. Cº. ------ 9, 534
| Nºrthern Central Ry. Co. 14,404.
New York, Chicagº & St. Louis R. R. Co. 17,915
Long Island Railroad Cºmpºy, 3.3%
Maine Central Railroad Cºmpany, , 673.
Wańdalia Railrºad Cºmpany, 11,904
Buffalo, Rochester & Pittsburgh Ry. Co. 13, 303
29, Cincinnati, Hamilton & Dayton Ry. Co. 13,623
iv/New York, Ontario & Western Ry. Cº. 8,863
ºri Besseſſier & Lake Erie R.R. Cº. 10,946
32 Wheeling & Lake Erie R. R. C3. 8,483
Hocking Valley Ry. Co. - , 460
Western Maryland Ry. Co. , 424
Grand Trunk Western Ry. Co. 9, 176
Chicago, Indianapolis & Louisvillº Ry. Co. , 2.71.
West Jersey & Seashºre Re R. Cº. 3%;
Lake Erie & Westºry, R. R. 33. ,761
| Toledo & Ohiº Centfall. Ry. Co., 7, 532
Grand Rapids & Indiana Ry. Cº- ,452.
Chicagº & Erie R. R. Co. , 543
Chicago, Indiana & Southern R. R. Cº. , 231.
| Toledo, St. Lºuis & Western H. R. Co. 5,731
Central Verºnt Ry. Cº. 4, 131.
New York, Philadelphia & Norfolk R. R. Co., 3,081
Central New England Ry. Cº. 2,606
Rutland Railrºad Cº. 3,735
Peoria & Eastern Ry. Cº. 3,972
Cumberland Valley R. R. Cºs 3,661
Banger & Arºost sº. R. R. Cº. - 2,75%
| New Yºrk, Susquehanna & Western R. R. 33. 1,961
Detrºit, Grand Haven & Milwaukee Rye Cº. *::::
Atlantic City R. R. Cº. #3;
Ann Arbor Railroad Cº. 2,600
Pittsburgh, Shawmut & Northern R. R. Ge. - Receivers, 2, 122
Chicago, ferre Haute & Sºuth Rastern Ry. Cº. 1,667
Lehigh & Hudson River Ry. Cº. 2,256
Buffalº & Susquehanna R. R. Cº. – Receiver,
Buffalº & Susquehºnha Kailrºad Cº. 2,254
Lehigh & New England R. R. Cº. 387
Atlant iº & St. Lºfeng & R. R. Cº. 1,922
Menºngahela Railrºad Cº. #3;
Detrºit, Tºledº & Irºntºn Ry. Cº. - Receiver, 2,83.
Port Reading Railrºad Cº. 586
64 Canadian Pacific Lines in Maine, 1,794
-A- –
Milliºns of Per Cent. Track.
Grøgg ºns ºf Maintenangº
One Milº Track Gross Tong per
in Häintenance One Mile, in l,000,000
Passenger Acºunts Passenger Gross Tonº
service. 2 to 6 Serviçº Qºş Mile, Gºº,
31,441 32,919,239 17. 211.90 &
35%; |%:3# 6 | #3. #:#; 6
16,672 24,018,335 14.94 215.25 §
*::::::: 14,712.801. 43.22 303. 43
19,297 16,427,022 16.23 258.9 4.
#3%; 20.43 #3:2; 5
,474,7 17.9% lºº, ſº #
$3:33 14, 23 l §: 3.
Al, 249,512 32.0 222.Égy 7
12,657,283 1923 255.79 4.
ºść, 11.51 193.45 3.
8,588,369 21, 17 255.62
,937,235 21.87 2.4.18 5
º::::::: 20, 00 #:33 5.
7, 165,53. 22, 43 212. 5
4,822,076 19.3% 232.1 #
3,078, 114 12.0% 133.9 §
4,757,064 40 sº. 273.64
† 4,098,547 §: 296.65 2.
| 4,740,882 18.72 248.72 tº
3, 112,257 16.92 #3.3% 4.
2,108,45. . 31. 218.8% 2.
23:4::::: 16.21 229.6% 4.
i 2,815.586 3.90 *::::: º
*:::::::: 72. 383 - 01. 9
3,564,931 30.90 4ll. 13 7
3,992.353 *3:33 252.25
2,600,00i. , 29 199.95 º
# 2,043,284 18.83 192.35 4.
1,945, 608 *:: ô 219.37 *
i 1.973,228 ... 32 180.27 2
1,962,725 9.64 231.37 2
1,956.68% 7.97 256.84
*::: ,826 *:::: 246.18
1, 188, 0 ! 22.1 *::::: - º
* , 921, 25. 3.11.3 º
*:::::3% - ź #3:33 3
# 2, 188,799 15.4 323.73 *
1,685.99. 9.96 223.72 3
1,296,644 29.77 237.43 6
1,356, 168 14.46 158.74 3
1, 293, 197 *::: 297.54 º
958,043 11.86 167.57 3.
903,994 24.96 218.83 5
531,467 11.26 172.50 3.
1,094,377 *:::: 419.95 &
901, 51. 38.62 241.37 3.
1,631,264 ić.74 259.63 &
828,772 16.69 230.15 &
1, 977, 527 23, 20 390. 54 5
634,973 34.67 334.32 7.
º: 22. 52 353.62 º
$41, 50l. 71 - 1 547. 14 9
- *::::::: 20.3 240, 4 5
51 º 10.68 243. 61 3
504,161. 12, Öğ 302.44 3.
382,965 3 - 10 169.75 l
778,724 5. 24 45.48 2
ić6,846 *:::: :::::: *
528,802 20.71 275, 13 5
518, 590 7.95 5.5% 2
772,314 9.79 268.57 2.
195,414 - 17 333. 47 l
480,271 19.45 267.70 4.
Financial statement, sheet No. 21













- westwan Rare alwance case -
---
used in Derekwining BASIS OF SEPARATION OF TRACK HAINTENANCE ACCOUNTS FOR
TABLE OF RAILROADS -
--- THE FISCAL YEARS JUNE 30th, 1911 to 1913, INCLUSIVE.
(continued)
---T T - ---
{ Per Gºrº e -
Millions of of Track
Gros & Tºns Gross Tºnº Maintenance
One Mile One Mile per |
Millions of in Track in 1,000,000
Gross Tons Passenger Maintenance Passenger Gross Tons
One Mile, Service Accounts 2-6 Service | One Mile | Group
6 Cincinnati Northern Railroad Co. 244 #93; 15.46 #:é. 4.
6 Detrºit, & Toledº Shoré Libº Railroad Cº. - 137,988 .09 151.8% |
6 Detroit & Mackinac Railway Co. - 304 395,338 27.26 354.38 6
6 Ulster & Delawarº Railroad Co. 316 #3:#; 34.25 379.7 7
69 Southern Railway Co. 14,569 16,376.86 25.24 293.9 | 6
70 Illinois Central Railroad Co. 13,924 15,747.01.0 19.47 220, 19 4.
71 Louisville & Nashville Railroad Co. 15,384 18,275,575 17.82 #3: 4.
Norfolk & Western Ry. Co. 3:3: , 420 3:33 158.1. 2
Atlantic Coast Line Railroad Co. 3,555,785 28.84 285.47 6
Chesapeake & Ohio Ry. Co. 8,325, 274 10.43 169.42 :
Seaboard Air Line Ry. 5,893, 140 26.4%. §3.3% $
Central of Georgia Ry. Co. - 3, 664,211 28.20 393.87 &
Nashville, Chattanooga & St. Louis Ry. 4,417.452 23.5l. 568.4% 5
* 7 Mobile & Ohio Railroad Co. 2, 549, 14 12. 12 i81.70 3
º Yazoo & Mississippi Valley Railroad Co. 4, 6 3:33 - 20.15 419.67 5
º Cincinnati, New Orleans & Texas Pacific Ry. Co. 2, 185,888 17,45 221 - 04. 4.
º Virginian Railway Company l, 117,271. 7.65 176.29 2.
3 Alabama Great Southern R. R. Co. 1,209,760 2i. 89 246.53 º
º Florida East Coast. Ry. Co. ----- 1,280,95 . 41.29 364.52 3
New Orleans & North Eastern R. R. Co. 745,67 14.77 iſºl.26 3.
3: Norfolk Southern Railroad Co. #3:3# 33: 5 356.87 §
3 Kanawha & Michigan Ry. Co. 77,82 .97 207,23 2
87 Atlanta, Birmingham & Atlantic RR Co. - Receivers, 937,24 22.6l 258.6% 3
38 Georgia R. R. - Lessee Organization, 757, 30. 24.94 #3:3: | 3.
89 Richmond, Frédericksburg & Potomac RR Co. 0,870 35.97 285.44 2
90 Georgia Southern & Florida Ry. Co. 567,767 38.6% 243.47 3
91. New Orleans, Mobile & Chicago R. R. Go - 577,21 24.96 327.40 º,
92 Carolina, Clinchfield & Ohio Ry. º 366,498 .61 155.22 2
_ 93 Gulf & Ship Island R. R. Cºe º 521,696 23,01. 436.20 6
F 94. Charleston & Western Carolina Ry. Co. \ 765,233 21.34 442.57 Ž
9 Alabama & Wicksburg Ry. Cº. | 50i. 365 28.24. 357.6l.
9 Virginia & Southwestern Ry. Co. 418,593 10.23 295.05 3
97 New Orleans Great Northern R. R. Co. 451, §ii 33.67 456.6 7
98 Tennesses Central Railroad Co. 473.81 34.5% 397, i. º
- 99 Western Ry. of Alabama, - 521,41. 36.36 564.30
* 156 washington southern sy.ce. 399,163 | 37.34 374.44 8
ºf Atlanta & West Point R. R. Co. 303, #34. 43.37 375, 62 9
| Louisville, Henderson & St. Louis Ry. Co. 547,406 25. iś 442, 17 6
Southern Ry. in Mississippi, 583,741 38.32 *649.99 8
Atchison, Topeka & Santa Fe Ry. Co. 22. :::::::::: 28.33. 359. 6
Southern Pacific Co. º 23,483, 629 37.86 333.3% 8
Chicago, Burlington & Quincy R. Rs 39. 25, 123,902 23s 70 293. :
| Chicago & North Western Railway Co. ** 8. #3:37; 28.09 259.5
lº, Milwaukee & St. Paul Ry. Co. 17, 18,465,449. 20.3.7 212.95 5
Great Northern Railway Co. 13, 21,346,325 22.22 355-33. :
Northern Pacific Ry. Co. . 13, 19, 144,982 #3:3: 352.64
Chicago, Rock Island & Pacific Ry. Co. ºg 16,456,762 28.96 | 262.65 6
Union Pacific Railroad 36. - : 14,4 *::::::::: 27.66 | 268.97 6
St. Louis & San Franciscº Railroad Co. : ºf 9,998,806 27.29 | 282.8% - 6
# St. Louis, Iron Mountain & Southern Ry. Cºs i 5 9,703,331 29. 57 - #3: ! :
Missouri, Kºngºs & 783&º Line is, i º | *::: ,422 28.79 338.84
Minneapolis, St. Paul & Sault Ste Marie Ry. Co. i 5,644 3:? 0,32? 20.67 *263. 5
Missouri Pacific Railway Co. 5, 183 33.3% 23.40 321.77 5
Denver & Rio Grande Railroad Co. - 4,867 7,002, 3. 27.01 388.57 -
Oregon Short Line Railrºad Co. 3,852 5,136.30 29.96 387.5% 6
Oregon, Washington R. R. & Navigation Co. 3:#; 3.346,735 34.11 #::::: 7
Texas & Pacific Ry. Co. 3,583 4,522,300 22.76 387.25 £º
Chicago, St. Paul, Minneapolis & Omaha Ry, 80. 4,477 3,789.70% 23.82 #3;
Chicago & Alton Railroad Co. 3,686 4, 179, 199 23.8 ić • 59
Chicago Great Western Railroad Cº. 3, 159 2,629,400 22.81. 139.87
Gulf, Coloradº & 8 anta Fe Railway Cº. 2,524. 4,266,296 23,03 389.26 5
Galveston, Harrisburg & San Antonio Ry. Co. 2,410 2,743, 180 23.54 267.89 5
º Chicago, Milwaukee & Puget Sºund Ry. Co. -
12 International & Great Northern Ry. CQ. 3:33 2,702,731 22.78 3.14.89 5
129 Kansas City Southern Ry. Co. 1,5 2, 156,254 17.46 237.42 4.
130 San Pedro, Los Angeles & 3alt Lake R.R. 39. 2,523 *:::3% Ö 37.70 - 74, 16 8
32. Minneapolis & St. Louis Railroad Co. :::33 1,862, 548 23.21. 252.17 5
*32 Colorado & Southern Ry. Co. 1,148 2, 191, 117 16, 5 315.54 | 4
133 ºl. Paso & South Western Co. 1,297 2, 173,716 17. 4. 314.71 4.
134 St. Louis- 80 uthwestern Ry. Co., *::: *::::::::: 18.26 273.41 4.
135 Duluth, Missabº & Northern Ry. Co. 35 1,933,9 5.82 | 316.32 2













* Fiscar ºne "º 39%.
CHIGAgo, MILº:
statistical --- nt.
(cont nº
- - * - ---
T iſ º I
| Per Cºnt -
| Millions of ºf Totº.
Groß & ºptºs Groß Tºris Mainterianº
one Mile Track ºriº ºilº per
Millions of in Mainteriancé in 1,000, 500
Gross tons passenger! Accounts Passenger Grºss Tong,
Nanºº of Carriºr One Milº service 2 to Serºics Öne Milº Group
Duluth & Iron Range Railrºad Co. 4,731 || 308 *::::::::: 6.44 239.54 2
Houston & Texas Central Railroad Co. 4,782 1,416 *:::2:3: 29, 61 #3:33 6
Western Pacific Railway Co. 4,245 1,985 1966,840 25, 55 237.3. 6
Spokane, Portland & Seattle Ry. Co. # 1.28% 1,293,579 36. 3 372.47 8
Fort Worth & Denver City. Ry. Co. 4,389 986 1945, º 22.4 239.2% g
San Antonio & Aransas Pass Ry. Co. | 3, 146 799 1,815,881 25.3% 577.21. -
St. Louis -Sºuthwestern Ry. Co. ºf Texas, - 3,527 324 1,957, 648 25.39 544.24 6
Morgan's Louisiana & Texas R. R. & Steamship Co. 3,237 850 1, 5 3.33: 25.85 481.8 6
Texas & New Orleans R. R. Co. - , 29. § 1,528,330 24.32 469.9 5
Northº stºry, Pacific ºilrºad Cº. º | 1,653,162 61.2% 747 98 9 |
Buluth, South Shore & Atlantic Ry. Cº. 8 1,233, tºll. 27.45 395. §
Chicago, Rock Island & Gulf Ry. Cº. 760 º: 29.73 56 i. 44 §
St. Lºuis, Brºwnsville & Mexicº. Ry. Cº. 674 828,80 33.73 4.14.82 7
Trinity and Brazos Valley Ry. Cº. 513 807, 54. 23.7 74.04 º
Arizºna & ºtériº R. R. Cº. 23? 662, gº 28.66 tº .33 §
Pecºs & Northern feº By. Cº. 369 *:::::: 16.3% 239.25 #
ºis; ºriº ºsteº R. º.º. 51.3 534,794 30.04 13.1% 7 :
Louisiana ºys & Navigatiºn Co. - 32? 23 sº 23.93 43?.35 g
Cºlºrado Midland Railway Co. º 446 Žiš. 27.8% 3%:
Wicksburg, Shreveport & Pacific Ry. Co., - 475,386 31, 11. ºić º 7
Chicago, Peoris & St. Louie Ry. Cº. of ºil inois, 3,602 15.84 251.04 4.
Lºuisiana & Arkº Ry. Cº. - 49,044 22.5% 515 . . . 5
Nºrºds & Northern Kyºtº, 94,448 *:::: 513.6% 4.
St. Joseph & Grand Island Ry. Cº. 19,746 #3:3: 448.1% 7
ºn Orleans, Texas & Mexicº R. R. Cº. 378,224 22. * - 334.71. 5
St. Lºuis, San Franciscº & ººzºs Ry. Cº., 217,815 33.3 199.09 º
| Midland Valley Railrºad to . 3:23; 38.0 --- 515.9% º
Sºuthern Kansas Ry, Cº. ºf Texas, 40, 5 # 12. º i23.5%
Houston East and West Texas Ry, 38. 88,328 26.35 683 g 3. .
Tºlede, Peoria and Western Ry. Co. º, 40. º 5: º, ºf º
Duluth, Winnipeg & Pacific Ry. 36,207 7.06 253.84 2 :
Butte, Anaconda & Pacific Ry. Co. - º6,916 7.2% 378.26 2
Missºuri & North Arkansas R. R. Co. - Receivers, 78,386 35.02. 915.73 8
ºnce & Cripple Creek Ry. Co. 6,369 º #: 8
Denver & Salt Lake R. R. Go. º 36,974 22.38 584, 42 5
Denver, Nºrthwesterº & Pacific Ry. Co. – Receivers, ---
ºnver, ºrthwestern & Pacific Ry. Co. 297,582. 19.16 401.59 #
Spokanº internatiºnal Ry. Cº. - 2%. 22. º 6
Biºghºº & Gºrfield ºy. Cº. 8. 47,233 3.04. 332.6% º
Missºuri, Oklahoº & Gulf Ry. Co. 77 143,538 *:::: 379.9% *
Arizona & New Mexicº. Ry. Cº. . 20 109.54% 18, 28 9. 3: 3 *
Canadian ºffic ºy, Cº. 25,481 Bº: 24.47 3.18.44 5
175. Canadian Nºrthers, ºy. Cº. 3,229 6,241, tº 17, 14 333.3% &
º: ºahu Ry, and and Cº. - ". 72 - 73,214 53.8% 542.33 3
º Syrº-cºse, Biºgºpton & New Yºrk R. R. Gº. 53? 214. 239,249 33.58 375-52 7
18%. Clevelanº Akron & Cincinnati Ry. Cº. - 146 22.3.72% *:::: 354.3% 5
182 Chºsºe & Ohiº Ry. Co. ºf iºnº, 135 *::::: 18, 14 31?-95 *
18: ºilº & ºre Haºte #. R. Cº. 23 㺠º 30.74 374.32 7.
18. Cleveland, Akron & Columbus Ry. Cº. 19 312,798 2.98 359.87 5
18; sºuthern Indiana Ry. Co. - 39 68.25% 14.32 243.2% 3.
186 Chicagº southern Ry. Co. 1 18,511. - 86.50 1.
18? Indianapolis southern R. R. 39. 77 139,756 16.4% º: 4.
18 Sufinº R. R. Cº. - lº 50,418 10.53 522.65 §
18% Santa Fe, Prescott & Phºenix Ry. Co. 11.5 208,286 º, 23 838.6% ---
1% Øregon Railrºad & Navigatiº ºp. 493 713, 147 3} .22 451.3% 7
191. Ivº Central. Ry. Cº. - 249 *::::::: º,62 202.2% 3
192 Kansas City, Mexicº & ºrient. Ry. Co. 1.6 188,794 22.89 #3:3: :
193 Spokane & Inland ºpire R. 8-89. 20? 101,844 71.04. 348.7 9
All Roads in Group #1, - 80 3,010, 185 .57 215.22
All Rºads in Grºup 2, - ... *ſ, * 14, 264 5.987,224 7.9% 229 - ??
Ain Roads in Grºup 3, *** * 2,174 2,139,948 º *}} - 192.6%
All Roads in Grºup ſº º º i 156,635,562 17.8% 232.4%
A Roads in ºup º - º 79 º º º 2.1% 36. 455 22. 24 - 22* º º
ºads in Group £5, 702,328 9,375 207,536,124 | 27, 15. 283.78
All Roads in º, ſº 79,385 2.849 33.3 9, 128 º 332.1%
rºads in group 3, 48.222 263 5,243.93% 38.33 3.25.5%
All Roads in grºup #9, 12,592 924 5,590,00 70.3% 443.93
• - --- º --- º: º º
º 769,338,738 21.72 262.7%
paneºcº statement, sheet gº

















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in the formulae used below the mºning of the variº
º
º
º
a
ºy -
ºyº *
* *
Ax.
A.
º
º:
º:
º
º
º
Yº ".
Ratio of ºn tº gº is is tº 66.
column 1
column 2
Cºlumns 3
Column
5
Column 6
Column 7
Columns 8 & 9, show, respectively, the plus and mini
column in
column in
column is
standard deviation for percentage of sº
ºn of items in column 6.
Number of items in table.
coefficient of corelation.
ºverage percentage of gross ton mid
Ay - r + A* = 262.74 -
ºy.
-
ºsmººn nanº
-
ºrros or position of ºn tº rºck ºn cººr.
º
-
-
-
-
-
standard deviation for cost of tº tºns
handled one mile.
sun of items ºn ºlumn ll
º is in passenger service
Average cost of track maintenance in ºre per million gross tons handled one mile
ºtenance in dºllars per million gross tºns handled
neer service and all of the tonnage is in passenger
Ars, respectively, the cost ºf track maiº
ºn none of the tonnage is in pass
service. - -
º
1.
º
º
º
º
º
3.
3.
- * -
º
sºlº sº, sigs.
lºº A
* 151,34
-
* - r * * 664. 24.
1991 - 262.74 (21.72 - loo)
-
Explºmation of calculations sº ºn accompanying shºre.
shows the gross traffic ºvement in tº ºne of ten ºnes
* Shows the percentage ºf gross ton miles that is in passenger service.
* 4, Show, respectively, the plus and minº deviation of column 2 from the average
percentage of gross ton miles that in passenger service for all railroads.
- Is the square of cºlumns or 4.
- re column 1 multiplied by colºn 5.
shows cost of track saintenance in ºrs per million gross ºns handled
- - - seviation of column * from the average
ºst ºf track maintenance in dollars per million gross tons handled one mile
for all railroads.
* Is the square ºr column 8 or 9.
* Is column 1 multiplied by column 10.
- is column i multiplied by column 3 a.
Financial statement, sheet












































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