prompting him to take their side of the county; promising support if he did, and threatening opposition if he did not; dictating the course to be followed through their domains, and hinting that a good price would be expected; we are simply told of the special modes in which certain private interests show them selves. If we hear of an extensive landowner using his influence as chairman of a board of directors, to project a branch running for many miles through his own estate, and putting his company to the cost of a parliamentary contest to carry this line; we hear only of that which was likely to occur under such circumstances." Remembering all this, and remembering that those who were successful are not likely to have forgotten their cunning, but rather to have yearly exercised and increased it, we may naturally expect to find railway lawyers among the most influential of the many parties conspiring to urge railway proprietaries into disastrous undertakings; and we shall not be deceived. To a great extent they are in league with engineers. From the proposal to the completion of a new line, the lawyer and the engineer work together; and their interests are throughout identical. While the one makes the survey, the other prepares the book of ref erence." "Gentlemen are now in some cases elected on boards, simply because they are members of Parliament." The reverse process also occurs; a gentleman becomes a member of Parliament because already a member or attorney of a board. "Shareholders occasionally find that their directors have given to Parliament pledges of extension much exceeding what they were authorized to give; and they are then persuaded that they are bound to endorse the promises made for them by their agents." "In pursuit of their ends, directors will from time to time go directly in the teeth of established regulations." "Proxies are obtained mostly from proprietors scattered every where throughout the kingdom, who are very generally weak enough to sign the first document sent to them. Then, of those present when the question is brought to an issue, not many dare attempt a speech; of those who dare, but few are clear-headed enough to see the full bearings of the measure they are about to vote upon; and such as can see them are often prevented by nervousness from doing justice to the views they hold." "The tactics of the aggressive party are commonly as skilful as those of their antagonists are bungling." "Finally, consider that the classes interested in carrying out new schemes, are in constant communication, and have every facility for combined action." "This belief in the identity of directorial and proprietary interests, is the fatal error commonly made by shareholders. It is this which, in spite of many bitter experiences, leads them to be so careless and so trustful." Such was the picture of affairs in England years ago, sketched by a master hand. It has been matched in all its details in parts of our own country. The expressions look hard, but the expressions are moderate-the facts it is which are hard How is all this to be remedied? It cannot all be remedied; but the best method to deal with it, and cure what is curable, is to make the showings of the directors real, not nominal. A good honest showing-a real exhibit of the affairs of the company true and intelligibleis the best security for good management. Fraud loves darkness, and flees from the light; a city well lighted at night, is already half policed. This leads us from the unpleasant subject of corporate abuses, to the more attractive one of the remedies-the chief of which and most important by far is BOOK-KEEPING. Perhaps all our readers will, without argument, concur in the view that good book-keeping underlies the whole railroad problem. A man's individual success in his own limited affairs depends on his understanding his business. Ordinarily, his own private business is not too big for him; yet even the ordinary lawyer, physician, etc., needs to keep books-much more the merchant. Certainly not less important is it to the success of a railroad that the business should be understood; but to understand it properly is a thousand times harder to do. When a business passes beyond a certain degree of complexity, the whole of it becomes confused-the manager becomes dizzy, and dazed; is lost in the wilderness of details, and perfectly bewildered. When we consider the thousands of bookkeepers engaged in the railroad service, we see at once the importance of their working to the best advantage. The solution is equally Nearly all joint stock companies are too big | public, with the fairest and best intentions, we for an ordinary mind, and need men of unusual must also be struck with the power of dishonest talent, system and clear headedness to manage officials to hide, evade and conceal the truth, them. In England, the number of stockholders or to pervert it to their own gain and the loss in corporations is usually small; and each of stockholders and the public. stockholder has a larger portion of his whole property invested, and has a particular department of the business under his immediate personal superintendence; so that the management is not by agents, but by the actual parties in interest, and not with a mere nominal interest at that, but a real interest, bearing a large proportion to the whole means of the stockholder. to the railroads, managers, stockholders and He is in the best attitude, not only for attending creditors to the general public, the Commisto his part of the business, but for seeing sion, the courts, the Legislature, and the State whether the other partners are attending faith- at large, which for want of this has lost hunfully and honestly to theirs. It is really but dreds of thousands of dollars in taxation. It an enlarged partnership, in management as is injurious only to those to whom ignorance well as ownership. and darkness are desirable. Uniformity of methods is also of much importance, so that mastery of one system is mastery of all. In America the state of affairs is quite different; the stockholders are numerous, and their interest in the particular enterprise frequently bears a small proportion to the entire property. Hence the small stockholders have little influence or importance. The whole system is vicious and slack-twisted. Really, the owner has no hold of the reins, and no control over the driver. IMPORTANT TO ALL INTERESTS In accordance with its importance has been the study of the subject, by railroad men, by the commissions of States, and the State and Federal authorities—the latter being interested especially in the Pacific Railroad reports. Many of the railroads have most elaborate and valuable systems; the Convention of the Railroad Commissioners of eighteen States recom RAILROADS COMPARED WITH BANKS AND mends a particular form. We cannot say, OTHER CORPORATIONS AS TO BOOK-KEEP- after all, that a satisfactory solution has yet been reached. The field covered by railroad If other corporations need a good system-a accounts is like that of a census. Could one forteori-railroads need such a system, imperatively; for the difficulties are peculiarly great. office, accumulated and dusty, and then comsee the piles of folios in one great railroad A factory, or a bank is all in one spot, and all pute the number of roads, he would be struck capable of supervision from the same stand- with the immensity of the labor involved. And point. But the operations of a railroad are yet, after all, the view afforded of railroad openumerous and scattered, there is a great mass rations is often as different from a real repoit, of facts to be recorded, and re-recorded, coveras is a pile of brick from a house. Many years ing hundreds of miles of space, the business being as varied as all the productions of the ago the Astor House started a new era in hotels, with its various parts all corresponding, country, occupying hundreds, sometimes thou- with broad halls, consecutive stairways, story sands of employees, dealing with many thouover story alike, and all easily understood. A sands of customers, having millions of transac-like improvement is needed in railroad tabulations, and extending over long periods of time. The proper record of such a huge mass of material is no small task, and the proper exhibition of them is still more difficult. Nor are the advantages less than the difficulties. It is yet more important to understand a big business than a small, and the evils of failure are more aggravated and less remediable. tion. It is easy to err, and hard to make clear. We may be met here with the objection that to require such reports of the railroads is inquisitorial, and wrong. But not so; the railroads are NOT ENTITLED TO SECRECY, no more so than the banks, which are required When we see the difficulties that beset the by law to publish statements, semi-annually. Are these considerations of practical use? Why they lie at the very bottom of all sound knowledge of the affairs of a company. Aside from the profit and loss account no company, however absolutely broken and una Not so much so, indeed, as the banks; for the public regulation of the roads is even more essential. Indeed publicity to the stockholders themselves is usually incompatible with secrecy to the public; they are so numerous that reports need to be in print. If but few, the pub-ble to pay a cent on the dollar, shows by its lic is in the greater danger. The bank state- books that it is broken. On the contrary, by ments, also, like those of the railroads, seldom the very principles of book-keeping (this acfurnish the exact information needed. count neglected) THE STOCKHOLDERS ARE ENTITLED TO INFOR INFORMATION. The book-keeping forms are not intelligible to the stockholders; no, not to the average director-dot even to the average book-keeper. IT CANNOT BREAK ON THE BOOKS, were it to break a score of times in fact. Its accounts always balance to a quarter of a cent. The note of any pauper shows as high on the books, as personal gilt edge secured by bonds. Oh! the heartbreakings that would have been, and may hereafter be, saved, by honest showings on the part of corporations. We talk and write of it easily, coolly; but the hard earnings of many a poor workieg man, the savings of the widow, the bread of the orphan, have fallen through the gaps which bad bookkeeping left open. Really, TABULATION needs to be as carefully studied as book-keeping-the mode of exhibiting results as that of recording them. Tabulation is a science just begun, not yet solved. The whole work of the census department is to develop the best system of tabulation; that is, the best method of presenting results to the mind; and this must ever be done through the eye, the It is the chief trick of the knave, the heartquickest and most varied of the senses. With-less speculator on the ignorance and misfortune out proper tabulation, the facts gathered into of others. The facts that could be told, the immense volumes, in the census department, history of suffering and distress, the hidden or the railroad office are almost as inaccessible meaning involved in the expression--the Glasas if still scattered in nature. The facts exist gow bank has broken the railroad comanyhow; to express them readily is the thing to pany has gone into the hands of a receiver, (we be accomplished. need not go out of Georgia for illustration), would make one shudder and pray for some remedy by which such pitfalls should not lie hidden in the dark, but a beacon light be placed by each trap. Whether as a corruption fund, or to buy steel rails; to bribe a commissioner or a legislature; to build a bridge, or to give a dinner, or pay the coupons of another concern-(such things have all been known)-the showing is important in either case, and interesting reading, besides If the fact exists, it ought to be known-and if known, reported. There should be ONE ALL-COMPREHENSIVE TABLE, embracing the whole, and exhibiting it at one view, and suggesting all the other tables- a Trunk table, whose limbs and ramifications reach out by successive stages to the original transactions. To do this, all the resources of book-keeping and tabulation are necessary; but these resources, properly applied, are adequate to the exigency. Reference should be had in the in-gathering of facts, to the object in view, of setting them out again in proper form. They are all to be uttered (out-ered), and the in-nering process should have reference to this result. We would not disparage the efforts made to avoid these evils; but we do mean to say that huge evils still exist, and that many reports are but shams as to any showing of actual condition, and serve as convenient hiding places for poor or corrupt management, And yet the Railway Age remarks: "When the railway accountant can be found who will concede that the system of book-keeping of any other accountant is superior to his own, the millenium will have set in." It very properly adds: "Most men, however expert in any branch of science, can learn something from those similarly engaged." There are many good tables here and there to be found. In the reports of the Georgia Railroad and Banking Company, for example, for a number of years past, are to be found two unusually complete tables-one showing the busi ness of the road, from its opening to the date of THE LOUISVILLE AND NASHVILLE ROAD for the admirable improvements inaugurated by Col. Fink, and continued and improved from time to time by Col. DeFuniak and others connected with the management of that road. We desire, also, to express our great indebtedness to the system of Col. Talcott, of the Richmond and Danville Road, and to his admirable analy The reports of the United States Commissioner upon the Pacific Railroad, the forms prepared by the Wisconsin Commissioner especially, and by the Ohio Commission, and those of the eighteen Railroad Commissioners in conIn 1859 there was a valuable estimate of the vention, have all furnished valuable suggesannual cost of renewal of road, equipment, etc. tions. Finally, while making acknowledgThe more recent reports incorporate a num- ments, we must refer to the class tonnage, furber of additional improvements of great value.nished by Mr. Carlton Hillyer, as perhaps the In the report of 1879, the very full statement of most valuable of any single report received. ers. NET INCOME AND ITS APPLICATION, Page 1, gives real information to the stockholdOn page 20 is another valuable table, showing what interest is to be paid before dividends can be reached, and also what outside sources of revenue are to be relied upon, aside from road profits. A comparison of five years business, on page 21, is also very instructive. A comparison of bank profits (page 49) for ten years furnishes also the best sort of data for estimating the probable future. The use of the Profit and Loss account, on which we lay so much necessary stress, is exemplified well on page 52, by which many worthless assets are relegated to the oblivion to which they belong In the Central Railroad reports, also, especially the reports for 1870, and some years thereafter, we find much to commend, although still incomplete. A fresh start is occasionally taken, and a new broom sweeps clean. After a time, the familiarity of the officers with the condition of affairs has a tendency to interfere with the completeness of the reports, these seeming almost unnecessary to them, yet not being at all unnecessary to the public and the stockholders. The late reports do not come fully up to the standard of those of the years above referred to. The reports of the Savannah, Florida and Western Railroad, especially as to expenses, are to be commended for clearness and fullness. The whole country and the whole railroad interest are indebted to Scarcely less valuable are the passenger analyses. The forms of the Western and Atlantic Railroad are also excellent in many respects. After the careful study and comparison of all these forms, however, we have been satisfied that there are missing elements still in the material recorded-and yet more essential omissions in the manner of tabulation-which, to the general public, is the important matter. The want of a clew to the whole system is usually fatal. PROPER RELATIONS AND PROPORTIONS. To suppose that we have been entirely successful in this would be presumptuous, but we hope to have contributed something towards the solution. The exact methods suggested will be found in the appendix, being of too technical a character to interest the general reader, who, however, is greatly interested in the results, if not in the means. The public has no use for a report that does not report; an exhibit that does not exhibit. Worse still is a report which substitutes error for mere ignorance, and stands like an index at| the forks of the road, pointing the wrong way. Knowledge we must have, and pay the price for it, whatever it costs; it is cheaper than ignorance and error. THE BOOKS MUST CHANGE WITH THE FACTS. Books are but a dead thing, after all; the men it is who are alive. Books are but instruments; they rapidly lapse into empty forms Men must use them, and keep both themselves and the books alive. It is easier, of course, to show to the stockholders when they meet the same old showing made last year, but of what use is it? These showings are just like the hands of a clock which does not run, and so is useless as a time piece; such a report and such a clock are equally worthless. Is it too much trouble to keep the clock running? Then a change of management is already necessary. Let us have the present tense! the present tense! in each report. Unless the facts are unaltered-let the expression be altered to correspond. What sense is there in a system which makes exactly the same showing of a solvent concern and an insolvent? Day and night, white and black, yes and no, are not more contrary; and yet the report is the same! It is all important that the showings of the corporations should be true to date, and known to be true. Bottom should be felt. If we have contributed anything to the correction of this evil, we have hit the nail on the head Every day exhibits-in a melancholy way—the absolute need of corporate showings at once true and intelligible. Only perjury should be between the public and the needful information; no mere sham of form. THE DEBT OF GRATITUDE ARGUMENT. It is well, however, to let the thanks and consideration go to whom they belong. They are very liable to take the wrong direction. To whom are they really due? Partly, to the inventors of the road, the improvers of the rail, of the power, etc., the cheapeners of processes, etc. The inventing public are entitled to large credit. Again: The original stockholders are usually entitled to these collateral considerations, as public benefactors. They often contribute more than their due share, and the selfish and indifferent reap the collateral results along with them. The original stockholders in all corporations often, indeed usually, break, and a new set comes in, who buy both the property and the experience at low rates. To a third class the public is perhaps indebted in a somewhat different sense; viz., to the managers who have pushed new enterprises on the stockholders, rather against their will, certainly beyond their interests and knowledge. Not always wisely, but no small proportion of the railroad system has been thus built. Not public spirit, but private interest, has often dictated such enlargements, and the debt of the stockholders to such managers is naught; and that of the public small. A fourth class is the most forward to press the claim of gratitude, who are entitled to the reverse, viz., the stock-jobbing class, who have gobbled up roads, and whose claim consists in having ruined the real benefactors of the pub lic, with selfish ends in view. No other classes are half so loud as the last two- (3 and 4), No. 4 scoop up the road, as the transaction is signifi cantly called, putting in nothing but a net, and drawing out the fish. They get blocks of stock, form syndicates, etc., etc. So it happens that much of the sympathy and consideration is wasted. To pension off those who broke in public service were per It has been said, and with the utmost truth, haps the better way. At all events, to protect them from sharpers, that the railroads have bestowed immense and unspeakable benefits on the country at large; have helped human progress; have benefited all outside interests, etc., and indeed that the collateral advantages surpass those pertaining to the stockholders themselves. It were difficult to over-estimate these collateral advantages, and certainly the public should be considerate in subjecting the donors to any disadvantage. THE TRUE WAY to pay the debt of gratitude is to prevent the shocking abuses to which they are frequently subjected. THE MISSING LINK in political economy is knowledge. If real supply and demand, and supposed supply and demand, were the same, its problems would be greatly |