Digest of Decisions of the Courts and Interstate Commerce Commission Under the Act to Regulate Commerce from 1887 to 1908

[THIRD REVISED ISSUE.]

To that end it is held that while the operating expenses of a carrier should include charges on account of

(a) Repairs incident to operation,

(b) Premature retirement of equipment, and

they should also include, under an appropriate account, a proper charge for wear and tear of another company's equipment while in use on the lines of the carrier company. At the same time the carrier's operating expenses should receive credit through [13 an appropriate account for a proper proportion of wear and tear on its equipment while in service on the lines of other companies, and these debits and credits should be made against the rents paid and received for the use of such equipment.

The chief difficulty in arriving at an accurate measure of wear and tear of equip ment under the foregoing conditions arises from the fact that shop accounts do not readily furnish the necessary information for an accurate division. Until a more accurate measure of this class of repairs can be determined from the experience of carriers, it is necessary to lay down an arbitrary rule for that measure, and, for the current year, in the case of freight cars interchanged, 12 cents per car per day will be charged and credited to operating expenses under "Maintenance of Equipment,' and the remainder of the rental charge will be carried to the income account through an appropriate clearing account as representing approximately the measure of net rental paid or received.

To the end that the payments made and the revenue earned on account of interchanged equipment may be properly taken care of through the income account, and that operating expenses may finally include a proper proportion of the wear and tear on equipment owned by other carriers, companies, or individuals, and used upon the line of a particular carrier, from July 1, 1907, carriers will be required to open a clearing account, to be designated as

Clearing Account-Hire of Equipment.

To this account should be charged monthly:

(1) The gross accruals for the use of equipment of all classes belonging to another carrier or company on a basis of Per Diem, Mileage, or Rental. [14 To it should be credited monthly:

(2) The gross accruals for the use of a carrier's equipment while on the lines of other carriers, companies, or individuals ("car service" excepted), either on a basis of Per Diem, Mileage, or Rental.

To it should also be charged monthly:

(3a) An amount equal to 12 cents per car per day for the number of car-days a carrier's freight-train cars are on the lines of other carriers or in use by other companies or individuals.

(3b) A percentage proportion of the depreciation charge for each class of equipment other than freight train cars, based upon the equipment-days a carrier's equipment of that class is on the lines of other carriers or in use by other companies or individuals.

Note. These two debits should invariably equal the monthly credit to Maintenance of Equipment under the primary account "Equipment Loaned-Cr." To it should also be credited monthly:

(4) An amount equal to 12 cents per car per day for the number of car-days freight-train cars of other carriers, companies, or individuals are on the line of the carrier company.

Note. This credit should invariably equal the debit to Maintenance of Equipment under the primary account "Equipment Borrowed-Dr.''

This account should be balanced at the close of each fiscal year, or periodically, at the option of the carrier, and the balance thereof carried as a debit or a credit, as the case may be, to Income Account as "Hire of Equipment.

Attention is called to the fact that by means of the adjustment of per diem [15 and mileage payments between carriers herewith prescribed, operating expenses are made to serve the double purpose of disclosing the true measure of the cost of traffic,

notwithstanding the fact that one road owns more and another road owns fewer cars than it operates, and, further, of disclosing the full cost of maintaining equipment, whether such equipment is used by its owner or by another carrier.

To the end that uniformity of operating accounts may be maintained from year to year, carriers will be required to submit all questions of doubtful interpretation to this office for consideration and decision.

Henry C. Adams,

In charge of Statistics and Accounts. [16