accounts of many railroads are manipulated with the results above indicated can not be doubted. This matter is receiving the attention of the Commission and steps will be taken to compel the carriers that are delinquent in this respect to establish and use rates of depreciation which will conform to the requirements. It may be stated, in passing, that the accounting regulations of the Commission have recently been sustained in the only court proceeding in which they have been tested, namely, Kansas City Southern Ry. Co. v. United States, decided by the Supreme Court of the United States, December 1, 1913, upon appeal by the railway company from the decision in the Commerce Court. .

The accounting rules prescribed by the Commission for the use of carriers give the titles of the accounts that must be used in rendering statistical reports to the Commission, and describe as fully as practicable the classes of items that must be grouped under each account. The Commission has not, however, undertaken to prescribe the forms of entries which the carriers make in their own books. In some cases which have come to the attention of the Commission, it has been found that the records of transactions, as entered in the carriers' books of account, were unnecessarily involved, inadequate, or misleading, concealing rather than disclosing their true nature. So great is the variety of the transactions that must be entered in the books of carriers that it has not been considered practicable to prescribe the forms of entry. It is possible, however, to lay down a general rule applying to all entries, and the Commission has now in contemplation action which will insure a greater degree of order and clarity in the books of carriers.

In the last report to Congress attention was called to the increasing utilization of the accounting examiners in the work of special investigations in cases brought before the Commission. This use of the examiners has further increased during the past year. Among the special investigations in which the examiners have been employed during the year may be mentioned:

The investigation of the financial history of the New York, New Haven & Hartford Railroad Co., in connection with the so-called "New England Investigation." (Docket 4845.)

Investigation of the practices of carriers in connection with applications for advances in rates in official classification territory. (Docket 3400.)

Investigation of the rules and practices of carriers in the matter of the substitution of tonnage at transit points. (Docket 3002.) Investigation in the matter of rates, practices, rules, and regulations governing the transportation of anthracite coal. (Docket 4914.)

Investigation in the matter of allowances to short lines of railroad serving industries. (Docket 4181.)

Investigation in the matter of the issuance and use of passes and franks. (Docket 4662.)

Investigation in the matter of private cars. (Docket 4906.)

Investigation into the relations of interstate carriers in Illinois to coal and the transportation thereof, in accordance with the resolution of Congress dated March 7, 1907.

Investigation of the purchase of the Chicago & Eastern Illinois Railroad by the St. Louis & San Francisco Railroad Co., and the subsequent receiverships of both roads, undertaken in accordance with Senate resolution No. 105, adopted June 5, 1913.

Further progress has been made during the past year in the development of uniform systems of accounts for the different classes of carriers under the jurisdiction of the Commission. A general revision of the classifications for steam roads is in progress, with a view to making the revised classifications effective July 1, 1914. This revision is in the general direction of completeness and clearness rather than of change in principle, its desirability having been indicated by the several years of experience under the original classifications.

Since the last report the following accounting regulations for carriers by water have been issued: A "Classification of Expenditures for Real Property and Equipment," effective January 1, 1913; a "Form of General Balance Sheet Statement," effective January 1, 1913; and a "Classification of Income and Profit and Loss Accounts," effective July 1, 1913.

There has also been issued a "Uniform System of Accounts for Telephone Companies," effective January 1, 1913, embodying classifications of capital expenditures, operating revenues, operating expenses, and balance sheet, income, and profit and loss statements. These rules are prescribed for the use of telephone companies having operating revenues of more than $50,000 per annum. It is expected that the needs of smaller companies will later be met by prescribing a simpler system for their use.

A system of accounts for telegraph and cable companies has been completed and will be made effective January 1, 1914. The remaining classifications to complete the systems of accounts for electric railways, express companies, and sleeping car companies are still in preparation, substantial progress having been made during the year. A list of the accounting classifications of the Commission, so far as completed at that time, was given in the last report, and it is considered unnecessary to repeat the information here.

The act to regulate commerce prohibits the destruction of any accounts, records, or memoranda of carriers, except upon specific

orders of the Commission naming the records that may be destroyed and prescribing the length of time such records shall be preserved before their destruction. Prior to July 1, 1912, such orders had been issued applying to steam roads, express companies, and sleeping car companies. During the past year similar orders have been issued applying to electric lines and water carriers. There are also in preparation orders for telephone, telegraph, and cable companies. It has been found advisable to revise and reissue the order affecting steam roads, and it is expected that the revised order will be issued in time to be made effective January 1, 1914.

CLAIMS AGAINST CARRIERS.

The general question of freight claims was briefly mentioned in our twenty-fifth annual report, and little need be added here except to state that the Commission during the past year has been in further conference with the carriers represented by the Freight Claim Association with the purpose of bringing about an improvement in the methods and procedure of carriers for investigating and settling claims. As previously stated, the rules now in effect were formulated primarily to provide a basis for the settlement of claims as between the carriers themselves; but as they have no binding force and the association is without power to enforce their application there has been reason to think that the rules are not so beneficial as they might be. In the belief that some uniformity in the carrier's methods and rules of procedure in handling claims would be of value, not only to carriers but to shippers, and would give the Commission a wider assurance of the correct application of the law in the adjustment of claims, the Commission has asked and received the cordial cooperation of the Freight Claims Association. Much consideration has also been given to the principles underlying the rules with a view to determining how far, if at all, they may be inconsistent with the act to regulate commerce. It is hoped that the final results of our joint deliberations will be a set of rules and forms for the investigation and settlement of claims in harmony with the requirements of the act and which will result not only in a more prompt settling of the claims of shippers against carriers but in minimizing improper payments to shippers through claim channels.

DIVISION OF STATISTICS.

The work of the Division of Statistics has been substantially similar in character to the work of that division in prior years. It consists of the preparation of report forms, the receipt, analysis, and correction of annual and other statistical reports from railways and other common carriers engaged in interstate commerce, and the

compilation and publication of such matters therefrom as seem of general public interest.

Criticism is occasionally heard because of delay in the publication of these statistical reports, but the Commission has always considered it inadvisable to make publication of statistical matters in permanent form until after the reports on which such publications are based have had the benefit of careful scrutiny and correction of errors. The demand for prompt publication seems to be sufficiently met by frequent publication of bulletins of revenues and expenses of carriers. As of July 1, 1907, the Commission ordered steam railway carriers to file monthly reports of revenues and expenses. These were required to be made in conformity with the Commission's orders governing accounting, and to be submitted on forms prescribed by the Commission. From the reports thus collected monthly bulletins have been compiled and published. The series of bulletins thus constructed gives a satisfactory picture of the monthly fluctuations in railway earnings and expenses during the past six years.

Recently there was instituted in this division practically a daily bulletin issued for the benefit of the press and showing earnings and expenses of railways as reported for the latest month, for which reports are being currently received. The Commission's rules require that reports for a particular month be mailed on or before the last day of the following month. It thus happens that about the 25th day of the month reports relating to the preceding month begin to come in. As soon as sufficient reports are on hand to make the compilation of significance, a daily bulletin showing comparative figures for the particular month this year and last year and for the period from July 1 to the close of the month this year and last year is compiled, and copies of it are placed on the press table in the Commission's office for the use of newspapers. Similar bulletins incorporating the figures from preceding bulletins and those from reports subsequently received are prepared from day to day until the collection of figures for the particular month is substantially completed.

The preparation of the Preliminary Abstract of Statistics of Common Carriers for the year ended June 30, 1912, was substantially completed at the time the Commission's preceding annual report was rendered, and its publication was effected as soon thereafter as practicable. A similar publication for the year ended June 30, 1913, will be made at the earliest practicable date. It should be noted that this publication is based on the carriers' reports as rendered, and that it is thus purely preliminary and is subject to revision. For revised figures relating to railways, reference should be made to the Commission's annual volume issued under the title "Statistics of Railways in the United States." The volume issued this year under that title appears in a form somewhat different from its predecessors.

It has been thought advisable to classify the carriers with respect to the financial importance of their operations and give much more detail with respect to the more important companies. In order to show this greater amount of detail in form convenient for examination, the material has been so arranged as to bring into a substantially continuous presentation the particulars compiled from the report of a given carrier, thus enabling a person desiring to inform himself respecting a given corporation to obtain much more readily the information which he seeks. Further, to facilitate reference, the page has been doubled in size.

Much attention has been given during the present year to the matter of revising the forms on which the Commission receives the annual reports of railway companies. On October 27 the Commission held a hearing on this subject and received the suggestions of State railway commissioners, representatives of carriers, representatives of railway employees, and others regarding matters proper to be called for in such reports. The work of revising these forms will probably be completed at an early date. Forms are also in course of preparation for use in receiving the reports of carriers by water and those of telephone companies. Reports based on the standard schemes of accounts prescribed by the Commission will be required to be filed by these two classes of companies.

In accordance with custom, there are presented herewith various figures compiled from annual and other periodic reports of corporations recently filed with the Commission. With the exception of those pertaining to accidents, the figures for railway companies do not include returns for switching and terminal companies. No particular comment on these figures appears to be necessary at this time further than to say that in some instances the 1912 figures shown in this report differ somewhat from those shown in last year's report because of reclassifications, corrections, etc.