RAILROAD ACCOUNTING UNDER GOVERN MENT SUPERVISION. ADDRESS BY MR. M. P. BLAUVELT. Mr. President and Gentlemen: When the President of our Association asked me to read a paper before you, he stated that this year he would like an address on a subject which has been of great importance to us all during the last two years and suggested the title, "Railroad Accounting Under Government Supervision." To supervise means more than to merely oversee; it means to oversee with authority to direct or regulate, and having this in view I should prefer to confine my remarks, to a considerable extent, to the advisory work which has been performed by your Committee on Corporate, Fiscal and General Accounts, as well as by the Association in its entirety, and leave practically altogether out of consideration many points concerning which there has been much said and written on the subject of the advisability of government supervision, the scope of such supervision, the question as to whether government supervision retards railroad progress and many other kindred subjects, and deal only with our work under government supervision. It does not, however, prevent me from giving a brief history of how your Committee on Corporate, Fiscal and General Accounts came to be appointed and the work which it has done, particularly in view of the criticisms that have been made on this subject. My understanding of the matter is, that just prior to the meeting of this Association at Bluff Point, in June, 1906, the Interstate Commerce Act (as amended), popularly known as the "Hepburn Bill," was passed by both Houses of Congress, and the bill seemed certain to be signed by the President-in fact, was approved on June 29, 1906, the last day of our meeting. As one of our members had received an intimation from officials of the federal government that in working out the provisions of the twentieth section of the act the suggestions of the accounting officials of the various railroads of the country would be given due consideration, it was deemed advisable to designate a committee for the purpose of conferring not only with the representatives of the Interstate Commerce Commission, but to deal generally with state legislation as far as it directely affected railroad accounting features. For some time prior to the passage of the act there had been under consideration the question of appointing a committee to deal with so-called higher branches of accounting. In order that the interests of all the railroads should be protected, a committee of twenty-five was appointed, representing railroads from all sections of the country, thus bringing into existence your Committee on Corporate, Fiscal and General Accounts, and when assistance was solicited of the Association in connection with the twentieth section of the Hepburn Act, this was the committee asked to undertake the task. Only a few days elapsed when a call was issued for a meeting of the special committee and pursuant to that call the first meeting was held at the Hotel Astor, New York City, on August 16, 1906, at which time the committee organized, was addressed by Mr. Henry C. Adams, who had been designated by the Interstate Commerce Commission to consider for the Commission the matter of accounts, records and memoranda to be kept by carriers subject to the provisions of the Interstate Commerce Act, and appointed a sub-committee to promptly begin the formulation of disbursement ac counts. It is, of course, understood by all that the work which has been done by any of your committees in connection with the formulation of a new system of accounts, has been merely in an advisory capacity with Mr. Adams and a number of the most important innovations in our new system of accounts were originated by Mr. Adams. The first work of your committee has in practically all cases been undertaken by a subcommittee, which during the first year of its work consisted of seven members, but during the last year has been composed of nine members. The work of the subcommittee has unquestionably been very burdensome and has required a greater portion of the time of the members of that committee than they could conveniently spare from the duties of the corporations which they represented. The various matters proposed by this subcommittee were submitted to the committee of twenty-five, and the final work of that committee, so far as it has gone up to the present time, has been before you. If there is a thought in the mind of any member of this association that it is an easy matter to adopt a "uniform system of accounts" for railroad companies and have such uniform system exactly meet the views of everyone, I am certain such member is not on the committee named nor has he ever attended one of their meetings. Members of this association know how frequently a comparatively unimportant question in relation to the proper account to which an expenditure should be charged has caused a long discussion in the association, and so it has constantly been at the meetings of your committee, particularly so when principles which have stood for many years have been changed; and let me here state that, while there have been many instances in which Mr. Adams has changed his views to conform to the suggestions of your committee, there have also been many cases in which, while the members of your committee have been practically agreed, after much debate on certain wording or definitions their recommendations have been either completely changed or materially altered to meet the views of Mr. Adams, but in a great majority of such instances Mr. Adams while expressing his opinion has said-in fact, his practically uniform statement has been -that while he was willing to express his views, he did not desire to influence the committee in the matter. The first work undertaken was the Classification of Operating Expenses. To the end that a more clear cut and accurate statement of the cost of conducting business as a common carrier could be shown, it was thought that all outside interests such as stock yards, elevators, boat lines and other kindred operations should be stated separately and apart from the operations of the railroad so that in one clear statement there would be shown the cost of maintaining and operating the railroad as used |