the official mind, and had better be made in the tables themselves. And here we must pause to say with emphasis that nothing is more important to a private individual, or to a corporation, than a sharp, in PROPERTY and INCOME, DEBT and EXPENSES. Of what use is such a report? Only to mislead and to conceal the facts. It may not be so intended, but no other purpose does it really serve. The last place to which to go for information is the place which professes to furnish it. 3. The MIXTURE ordinarily made in the self-cisive, clear-cut distinction between same column of property with expenses, and so, also, of debt with income, in the same column, causes complete and hopeless confusion to the common mind unacquainted with technical book-keeping. Such a reader finds among the assets of the company the expenses included. Queer assets, they seem to him. And so the gross earnings of the year seem to be strangely located among the liabilities. Plain as this may be to the experienced book-keeper, it is confusion worse confounded to the common, untechnical mind. For the sake of the average stockholder, the average citizen desiring to buy stock or understand the condition of the company-nay, of the average director-these elements should be disentangled, and presented in One should understand all the while what his capital is yielding, and exactly how his income and expenses are related. different columns. Thus, too, will they appear in more intelligible form even to experts-to the officers themselves; for thus the permanent and the temporary are kept separate-the property and the business. The analysis must take place in As EACH of these sources of error is confusing -COMBINED, they are usually inextricable; and a man of plain common sense, perfectly capable of understanding the condition of a railroad company, if properly presented, finds it utterly unintelligible, as actually presented. The facts, indeed, are not incorporated in the report—they are not there. There is no mere failure to present them clearly; the lumping item does not present the needful facts, at all; the neglect of the profit and loss account makes the facts past, and not present; and the mixture of items makes a mixture, indeed, of the whole matter. Whatever other sources of error may or may not exist, we have endeavored in the proposed system of forms to remedy these three chief and leading sources. The following Blank Forms of Reports to be made by the railroads to the Commission have been prepared; each form for one company, if operated as a whole; if operated in divisions, a form for each division, and an additional form for the consolidated report of the company: TITLE. REPORT of the EXPLANATIONS AND INSTRUCTIONS. The present system of forms opens with what we have designated a Company Table," giving the titles, dates, addresses, organizations, etc., of the company, with a brief sketch of its history; furnishing important preliminary information concerning the general subject of the report. EXPLANATION OF THE GENERAL SCOPE OF THE The tables are presented in two great divisions: one set showing the FINANCIAL CONDITION of the company; the other the PHYSICAL CONDITION AND CHARACTERISTICS of the road and its business. The clew to the system is easily learned-the Tables follow the order of a Tree: first the Trunk, then the Branches, Limbs, etc., in due order and proportion. TRUNK TABLE. The General Exhibit, or Trunk Table, exhibits the Financial Condition of the company as a whole. As already said, it is all comprehensive, giving a birds-eye view of the entire condition and operations of the company, its Property, Liabilities and Business. These are presented in close connection, yet in separate columns, such separation being all-important to clearness. details. Every other table is represented in the trunk, as a limb of the trunk, or a limb of a limb; each limb being capable of indefinite expansion to any degree of detail, even to separate original transactions. BRANCH TABLES, OR LIMBS. The first of these is the Property Table,which itself has three great limbs-(1) Construction, (2) Equipment and (3) All Other Propertyeach exhibited first as a whole and then in de tail. This table also gives information of value as well as cost-of the present as well as the past-and is capable of indefinite expansion. The second great limb is the Table of Liabilities, which divides naturally into two subordinate limbs (1) of Liabilities to Stockholders and (2) Liabilities to Creditors-or Stock and Debt. The Stock limb subdivides into Common Stock, Preferred Stock and what is ordinarily called Surplus Fund, or, what unfortunately may take its place, Deficit. The Debt limb shows Bonds or Funded Debt, Unfunded or Floating Debt, Contingent Debt, etc. A special or important feature is that of showing on what account the bond is issued or the debt incurred; whether for construction, equipment or the like, or for subscription to some other enterprise, and what. Obviously this limb suggests, as do the others, all necessary details. The Table of Liabilities answers the question "to what is cost, DEBTOR?", The third great limb or branch consists of the Business tables, dividing readily into three limbs, viz: Gross Earnings, Working Expenses and Net Earnings, with the use made of them. These business tables, after all, furnish the chief practical information for the guidance at once of the Officers of the road, and the Railroad The Trunk Table presenting everything in a Commissioners. Great pains have been taken condensed form-the succeeding tables give the to make them comprehensive and particular. These suggestions give perhaps a sufficient | clew to the general scope and object of the financial tables. PHYSICAL CONDITION, OR DESCRIPTIVE TABLES. These follow much the same order as the Financial tables-the one set, indeed, emptying naturally into the other. For example: The Description of Property follows exactly the same order as the Financial Table of Property, giving description of items (1) in Construction Account, (2) Equipment Account and (3) All Other Property. So the tables descriptive of business follow the same order, giving mileage, tonnage, etc., of the business by which earnings were made, expenses incurred, etc. The two sets of tables are well nigh exhaustive, and yet, without confusion, as one may study just where and what he pleases and know all the time exactly where he is in the progress of the study. The objects contemplated by the Legislature are to enable the Commission "to procure the necessary information to make reasonable and just rates of freight and passenger tariffs, and to ascertain if such rules and regulations are observed or violated." Such tables are essential to these purposes. INSTRUCTIONS HOW TO USE THE BLANKS. The blanks usually explain themselves sufficiently. When the answer is numerical, fill the blanks with the proper figures, taking care to make them legible and to keep units under units, etc. When the answer is not numerical, it should be as concise as is consistent with clearness. When the space for the answer is insufficient, cross references should be made, viz: refer in the blank to the proper page in the end of the book, and on this page make also a back reference to the particular question answered, by its page and number. The methods of computing the value of the road, referred to on page 7, are as follows: 1. Add the market value of the Stock to the Debt of the company. 2. Compute the capital necessary to yield the average income for five years, thus: Suppose average income $100,000. Legal interest in Georgia being 7 per cent., the principal, $100,000, is 14 2-7 times the interest. So the capital represented would be 14 2-7 times $100,000— $1,428,571. 3. Compute the capital necessary to yield the income of the year preceding the report in same way. 4. Estimate the value from all the data in possession of the company, including the past favorable, stating what they are. business, and any new factors, favorable or un The first report may involve some difficulties, and some of the questions the railroads may not, with the information in their possession, be able to answer. After one or two reports, howcases only changes will need to be reported, ever, answers will be much easier, and in many with an occasional full report to date when required. None of the questions, it is believed, are immaterial in themselves or unimportant to the railroads or the Commission. At the close of the book, blank pages are left, and extra ruled blanks are also sent where we suppose them necessary; and others will be furnished on application. These should be numbered, and references back and forth by page and number should be made. NOTE. The following suggestions of the convention of Railroad Commissioners are approved. Liabilities are to be entered when incurred. The date when due to be given also if known. Expenses to be charged when material, etc., used. Increase of cost only, not mere renewal, to be charged in Property Accounts. Mileage to be reported only between stations. Switching, computed at eight miles per hour, to be kept separate. JAMES M. SMITH, Railroad Commissioners. R. A. BACON, Secretary. -referring, NOTE.-A letter which accompanied Form 10 is republished on page amongst other points, to the most important questions, when all cannot be answered. CONTENTS OF FORM 10. Explanations and Instructions. COMPANY TABLE-Titles, Organization, etc. FINANCIAL CONDITION OF THE COMPANY. Trunk Table, or General Exhibit of Property, Liabilities and Business. Annual Expenses-Percentages, etc. Net Earnings and Uses. Comparative Table of Miles, Per Cents., etc. Historical Table---Summary for Each Year-1866 to 188 . Demand and Supply Table, or Early Payments and Quick Assets Agents' Instructions. Forms of Accounts. SUPPLEMENT. |