Some of the information which it has been the custom of intelligently managed corporations to tabulate and make public is of especial value to their own officials and subordinates in securing the economical working of their lines, and in adjusting transportation charges; and the importance of statistics of this character is many times increased by an opportunity for comparison between results obtained upon different lines in the same or in different sections of the country. The report of the Senate select committee above referred to also recognized the importance of reliable and accurate information for the use of investors in railroad securities; a class of the community whose almost sole dependence in the past has been the unofficial though painstaking annual compilation by private enterprise of a manual the great circulation of which demonstrates the necessity for its existence.

The first step, therefore, was to obtain by correspondence the largest possible number of blanks and forms as prepared by the various railroad commissions above referred to, and as in use by railroad accountants throughout the land. The statistics obtainable in other countries were also examined so far as possible, and the best attainable publications upon the subject were consulted.

In October, 1887, a circular was issued to all carriers, as well as to the various State commissions and other persons supposed to be interested in the general question, directing attention to the subject and announcing that it would be considered at a public session of the Commission, to be held in Washington on October 26, at which time all persons were invited to appear and be heard, or to furnish any written or • printed suggestions that might occur to them. This circular elicited considerable correspondence, and a large number of State and railroad officials were in attendance at the time announced. A free interchange of views was had in respect to the general scope of the reports to be required, and, more particularly, in respect to the date which should be taken as a common period for their compilation. Upon this subject a great diversity of opinion was manifested, arising from existing methods under which it had been customary to close the books in different States and on different lines at different periods throughout the year. The conclusion reached by this Commission upon this point was announced in the following language:

It is essential that a uniform date be adopted for the annual closing of the books and striking of the balances of all the carriers throughout the country. A careful consideration of this subject has led the Commission to the belief that the date most useful in itself, and most likely to be generally accepted, is the 30th day of June. It is not possible to state all the reasons which have led to this result, but among the more important are the following: That date is the end of the fiscal year of the United States. The books of all the departments of Government and its accounting officers are settled as of June 30. These reports are required for transmission to Congress, which meets annually on December 1. If they are filed with the Commission by September 1 (or possibly 15), the remaining time will be necessary to enable useful work to be done in the way of compilation and of deductions, to be properly laid before Congress at the opening of its session, with as much of freshness in the information so obtained as seems reasonably practicable.

The same thing is true of the reports to the various State legislatures. Some change in the legislation of some of the States will probably be required to effect the adop tion of a uniform date, but it is obvious that the date proposed will involve less change than any other that can be named. More of the State reports are now made as of June 30 than at any other period, although some are required to December 31 and some to September 30. By far the greater number of the State legislatures meet in January, and the considerations above stated as adding to the value of a June 30 report for the information of Congress apply as well to the State legislatures. It is, moreover, the belief of the Commission that the date stated will involve less change in corporate methods of book-keeping than any other, and that the result will be

generally satisfactory for the purposes of the corporations themselves. At present the whole matter is confused and burdensome. It seems best that this Commission should take the initiative and endeavor to bring about order and uniformity. It is not proposed to act arbitrarily or unreasonably in so doing, but to find the most feasible and convenient standing ground for all.

The preparation of a form was then entered upon, and a proposed or experimental set of blanks was printed in January, 1888, which was distributed to State boards, railroad accountants, and other persons interested. In that connection it was explained that these blanks were circulated for examination and criticism in order to obtain the fullest possible comparison of views before a form should be definitely adopted; it was also explained that no very radical departure from existing methods was proposed; that the forms required by State commissions were made the basis of the draught; that a very substantial benefit would result from the passage of the act if the plan which the Commission should finally adopt might be made the basis of a form to be brought into general use for all reports, and therefore that a prominent object had been to prepare blanks which should contain all the more important information usually to be found in railroad reports, and at the same time be susceptible of expansion in detail to meet the requirements of State statutes and of exacting accountants and boards of directors. Some further explanations were made and the subject was thrown open for suggestions from any and all persons interested.

Much correspondence was elicited in response to this invitation, and on March 28, 1888, a meeting of railway accounting officers was held in Washington to consider said proposed form of annual report. This meeting was attended by the representatives of more than 70,000 miles of railroad, and the blanks under consideration were taken up and discussed in detail. Many suggestions were made which were obvious improvements and were incorporated in the final form. Conferences. were had with State and railroad officials in New York City and elsewhere, and the vast amount of matter accumulated was carefully examined and digested. The form ultimately determined upon was the result of great consideration and a sincere effort to harmonize all the requirements of the situation so far as practicable. The necessary blanks were printed and distributed to the carriers in the month of June. It was known that considerable time would be required after the termination of the fiscal year for the closing of accounts and the compilation of statistical matter, in order to enable the carriers to satisfactorily respond to the requirements of the blanks; it was believed that a period of two months and a half would perhaps be adequate for that purpose, and September 15 was named as the date for filing the returns. Many carriers, however, found themselves compelled to ask for further time. In view of the radical changes in the system of accounting necessary on the part of many roads, and of the fact that many topics were embraced upon which current records had not been kept during the year by the carriers, of the further fact that each carrier has had its own methods of book-keeping and its own time for striking its annual balances, and in view of the magnitude of the work involved in many ways, the Commission felt disposed to treat the subject of the time of filing the first reports liberally, believing that after the procedure under the law shall get fairly under way future reports will be prepared with very much less difficulty. The time of filing the reports for this year has therefore been extended. In many cases a full compliance with all the details of the blanks has not in every instance been insisted upon, especially where the existing records of the carriers have not been so kept as to afford the necessary information,

The names of the carriers from which reports have been received for the year ending June 30, 1888, are shown in Appendix H, as well as those which have not as yet filed returns. It is proper to add that many of the companies in the latter category state that their reports are nearly complete and will be soon sent forward.

After fixing the date on which the reports should be made the next important question under the law was in relation to what carriers should be called upon to make reports. Many of the shorter roads, situated wholly within the boundaries of a single State, were inclined to entertain the view that they were not subject to this section of the interstate-commerce law. Other carriers similarly situated, including some very important lines, entered heartily into the plan of a universal system of reporting. The position taken by the Commission upon this question was announced in a circular issued June 1, as follows:

The act applies to all common carriers engaged in such transportation of passengers or property as is described in its first section. Very many railroads which are located wholly within one State are, nevertheless, very largely engaged in interstate commerce. In fact, under the present methods of conducting joint traffic, nearly every road, however short its line, unites in making through rates, under which it issues and receives tickets or bills of lading, in connection with roads in other States, upon which passengers and freight are transported across State boundaries; the revenues of every such road are derived, to a greater or less extent, from the traffic which is regulated by the provisions of the interstate-commerce law.

The information which this law authorizes the Commission to require is very general in its nature and scope. It is apparent that it was the purpose of Congress to inaugurate an annual collection of statistics, which should faithfully present the entire transactions of every railroad in the United States for the preceding year, and that the information so obtained should be authoritative and trustworthy.

Such returns, when arranged upon a uniform system and presented under official sanction, can not fail to be of great interest and value to all carriers, as well as to Congress and the public.

As to many of the matters enumerated, the value will be greatly lessened if the statistics are incomplete. If the efforts of this Commission shall be seconded by the railroad companies and by the various State railroad commissioners, it is entirely feasible to speedily bring all railroad accounts throughout the United States upon a uniform basis, and to present them annually to the country and to the world in a manner worthy of the importance of the subject.

The blank about to be issued is believed to be the closest approach to a universally satisfactory system which has yet been made in this country. It is also confidently believed that there is no information asked which the carriers can not readily furnish and will not cheerfully give, and it is hoped that every detail of inquiry has a permanent value.

The Commission, therefore, without ruling definitely upon the question of what railroad companies may or may not be required by the act to file the returns in question, will furnish blanks to every railroad company in the United States, whatever its situation or relative importance, in the belief that every carrier will cheerfully and promptly contribute its share towards the attainment of a complete and trustworthy annual exhibit of the entire railroad system of our country.

The form issued is published in Appendix G, together with the answers returned by one carrier, which may be taken as representative of all. For this purpose the return of the Northern Pacific Railroad Company has been selected. It is manifestly impossible at the present time to reproduce all of the returns on file, but by reference to the return of this company the extent and value of the information accumulated can be better understood, and the reasons operative in the preparation of the form, in some important particulars, can be more clearly explained..

The first great difficulty met in devising a universal blank was found in the fact that a large proportion of the companies upon which franchises as common carriers have been bestowed by the various States

and Territories, and by the General Government, are not now in their own corporate capacity actually conducting transportation. The tendency has been and is to consolidate and combine the control of large systems in a single management. This has been effected at times by consolidation or by purchase, but more usually by leases, or through proprietary control resulting from the acquisition of the title to stocks, bonds, and other securities. The act requires that the annual reports filed shall show in detail the amount of capital stock issued, with the dividends thereon, the number of stockholders, the funded and floating debts and the interest paid thereon, the cost and value of the carrier's property, franchise and equipment, and other matters; and it clearly contemplates obtaining a complete exhibit of the financial condition and operations of the entire railroad system of the country.

It therefore became necessary at the outset to establish a general division of carriers between those actually operating transportation lines and those not so engaged. This distinction lies at the foundation of the blanks, the operating carriers being required to make a complete report in their own behalf of their financial situation and of all the operations which they conduct, while the leased and proprietary carriers are required to make a financial report only, showing their organization and capitalization, together with the income received by way of rentals or otherwise, and the disposition made thereof. The blanks are so framed that they can be applied to either class of corporation.

It was a matter of great difficulty to obtain an accurate list of the railroad corporations of the land, divided as above required; the situation was complicated by the fact that in many cases roads have been built and immediately leased to other roads, which in turn have been leased with all their subordinate roads to a third, and at times the process has been carried even further than this; moreover, there is a class of operating companies which control and manage many very important systems, which of themselves are not owners of any road whatever, but have taken leases or otherwise acquired the possession of lines of road legally belonging still to the subsidiary corporations, frequently different forms of title appearing under the same general management; many roads also are carried on by receivers, or by trustees for bondholders into whose hands the stockholders have surrendered their present control; in other cases corporations organized originally for other purposes have been granted powers for the operation of railroads in connection with other business, so that their capitalization does not represent railroad property solely, but frequently is founded upon large ownership of coal or other mines, of canals, and even of banks; many cases are found in which large grants of the public domain have been bestowed upon carriers, which treat the proceeds of the sale of the lands as part of their general assets, and which issue securities based upon their ownership of real estate generally as well as of railroad property. In the formulation of the blanks it was necessary to keep all of these diversified and incongruous conditions in view and endeavor to provide for all the varied circumstances which might be found to exist.

The plan of report was intended to be sufficiently comprehensive and particular to satisfy fully all the requirements of the statute in respect to every common carrier to which it applies, notwithstanding the dif ferences that exist among them. To what extent the result aimed at has been attained, the returns made will furnish the best evidence. It is presumed that some modifications may be found desirable, under the light of experience obtained from the results of this first attempt to establish a system of universal application.

The information called for has been divided into the following topics, which are presented upon different pages of the form :

1. History.

2. Organization.

3. Officers.

4. Property operated.

5. Capital stock.

6. Funded debt.

7. Floating debt and current liabilities. 8. Permanent improvements for the year. 9. Cost of road and equipment.

10. Income account.

11. Income account (for roads under lease only).

12. Earnings from operations.

13. Bonds owned.

14. Stock owned; miscellaneous income. 15. Operating expenses.

16. Operating expenses-continued. 17. Rentals paid.

18. General balance-sheet.

19. Financial operations for the year. 20. Important changes during the year. 21. Contracts, agreements, etc.

22. Security for funded debt (page 6). 23. Employés and salaries.

24. Passenger, freight, and train mileage. 25. Freight-traffic movement (company's material excluded).

26. Description of equipment.

27. Mileage of road operated. Renewals of rails and ties.

28. Consumption of fuel by locomotives. Accidents.

29. Characteristics of road.

30. Characteristics of road-continued. 31. Oath.

The various interrogatories under each of the above topics are intended to be self-explanatory. It is proper, however, to particularly mention some of the questions raised.

As the inquiries are directed to the entire railroad system of the land, it is obvious at the outset that many details will be found important upon some roads which do not exist upon others, so that some of the inquiries are not necessarily to be answered by all of the lines. This point is more fully elaborated in the Book of Instructions, a copy of which is also annexed.

Upon page 4 of the report a subdivision is made calling (1) for the "name of every railroad the operations of which are included in the revenue account," with a description of the same; and (2) for the "name of all coal, bridge, canal, or other properties, the profit or loss only from which is included in the general balance-sheet." It is intended under the last caption to provide for a general statement of properties owned which are not strictly railroad properties, and the operations of which therefore need not be stated in detail, but which nevertheless aid to produce the general financial result shown upon the ultimate balance of the corporation books.

On page 5, Capital Stock, inquiries appear which are intended to answer the requirements of section 20 of the act in reference to ascertaining amounts paid for capital stock, and the manner of payment for the same. This opens the subject of over-capitalization, or of the watering of stock, so called, which was discussed in the report of the Senate Select Committee on Interstate Commerce. It is believed that cases are now comparatively rare in which the capital stock of our railroad companies, as the same now exists, was actually issued for cash to bona fide investors in the same. In many cases roads have been built by the issuance of stock to the contractors or construction companies; frequently by the creation of bonds to an amount nearly or quite sufficient to cover the actual construction cost, the stock issued being in the nature of a bonus or profit, or being employed as compensation for services or expenses collaterally attending the construction of the road. In a vast number of instances the original mortgage bonds have been foreclosed, thus legally extinguishing the title of the original stockholders. In such cases stock has at times been issued by a new corporation organized among the bondholders, and at other times a general reorganization has been effected, under which stock of various classes