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of 1915. Therefore, in 1917, 1918, and 1919 the segregation of operating expenses between freight and passenger services was confined to those expenses which were solely related to one or the other of the two classes of service.17

The Commission proposed, on October 18, 1919, to divide common road track expenses according to relative expense for fuel as shown in accounts 394 to 396, inclusive. Reasons and views for rejecting gross train weight were that some consideration should be given to greater specd and increased: maintenance for right-of-way of passenger trains and the greater proportion: of engine weight per car in those trains. The reason for rejecting the locomotive ton-mile basis was that locomotive weight was an index of potential rather than actual horsepower exerted. The Commission indicated that it was desirable to have a method that was the most plausible in theory and practical in application, even if not free from all objections.

The Director General of Railroads appointed a committee of engineers to study and report on a use factor to be utilized in financial settlements between the United States Government and the Railroads. The following conclusions of the committee, made in December 1919, are pertinent:

"The fuel consumption basis, a recently suggested
method, was investigated as a measure of the 'dif-
ference in use'. This may have, under certain cir-
cumstances, more advantages than any other single
recorded transportation unit. This unit appears
to be a better basis for allocating common mainte-
nance expenses as between freight and passenger
service for the same interval of time, than any
one unit (that) has been offered.

"In the interval between the Test Period and the
years of Federal Control there were radical changes
such as would seriously affect the accuracy of the
fuel method, and in some cases they would lead to
obviously negative results. There have been cases
of important changes in the quality of the coal in
that interval. There has also been an increasing
utilization of locomotives equipped with superheaters
and other efficiency devices. A campaign for increased
fuel supervision during Federal Control has materially
affected fuel consumption, so that it would be an un-
reliable measure of the 'difference in use'. We have,

1/ I.C.C., Bureau of Statistics, Statistics of Railways in the United States, 1917, p. 43; 1918, p.66; and 1919, p. 65.

hovever, made use of the fuel method in approximately
checking the results of our equation methods....

Approximately 33 percent of the total maintenance

of way and structures expenses are affected by traffic.

Effective January 1, 1920, the Commission revived its order requiring railroads to apportion expenses common to freight and passenger services. The Commission also prescribed rules resulting in a definite basis for dividing certain common expenses which, in the first edition (1915) of rules were left undivided. This order resulted in what may be called the beginning of today's series of statistics based upon apportioned separation of all operating expenses.

The Railway Accounting Officers' Association, always a "cooperating opponent" of apportiorment, at a meeting held February 6-8, 1924, adopted a resolution recommending that rules for separation of operating expenses be made optional, effective January 1, 1924. Correspondence involving the Railway Accounting Officers' Association, the Commission, and railway officers indicated that the majority of the railroads would not make the separation of operating expenses between freight and passenger services if the requirement was made optional, although a considerable number of the rail officials regarded such statistics as very useful and stated their railroad would continue to make the separation. On April 29, 1924, the Commission, by Division 4, decided that it was inadvisable to make separation optional. The Commission said that the expense involved was not burdensome and that data resulting from the separation of expenses was informative.

The rules for separating expenses between freight and passenger services were revised on November 11, 1935. The new rules were the result of a long period of close study and cooperation between members of the Commission's Bureau of Statistics, officials of the American Association of Railroads, and railroad accounting officers. Principal changes in the revised rules for separation of freight and passenger expenses were: (1) The providing of formulae for separation of locomotive repair expenses; (2) assignment of expenses resulting from the operation of mixed trains according to predominant character of the train instead of according to freight and passenger car-miles; (3) carrying the separation through taxes and rents for equipment and joint facilities so as to permit the showing of net railway operating income in each service; and (4) requiring a threefold classification of tracks before apportionment of the track expenses

1/ "Rules Governing the Separation of Operating Expenses, Railway Taxes, Equipment Rents, and Joint Facility Rents between Freight Service and Passenger Service on Large Steam Railways".

2/ Now the Bureau of Transport Economics and Statistics (since 1942).

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and substituting the gross-ton-mile basis (including weight of locomotive) for the fuel consumption basis for dividing maintenance expenses of tracks used in common by the two classes of trains.

It was pointed out by the Bureau of Statistics that the use of the gross-ton-mile basis would not radically change the final operating ratios. As an example, the application of the old and new rules to the separation of maintenance and way and structures common expenses for 1933 resulted in the following operating ratios:

The changes were justified by the Director of the Bureau of Statistics on the grounds that the fuel expense basis is an indirect measure of the use of the tracks whereas the gross-ton-mile basis directly measures the movement of locomotives and cars; that the fuel basis is affected by changes in the economy of fuel consumption which might affect freight service more than passenger service; that the fuel basis gives improper results where, as on the Long Island Rail Road, steam was used for freight service and electricity for passenger service; that the speed of freight trains between terminals was often comparable with that of passenger trains; and that the availability of a figure for gross ton-miles in all train services would be an advantage in showing the trend of operating costs and labor productivity.

In addition to the changes printed in the revised rules effective January 1, 1936, the Director of the Bureau of Statistics notified the Vice President of the Association of American Railroads on December 24, 1935, that carriers would be satisfying the intent of the Commission's order if they distributed track maintenance expenses in accordance with the equating formula proposed on page 862 of American Railway Engineering Association proceedings for 1933 instead of keeping separate the expenses of maintaining yard tracks and road tracks. Under the formula, one mile of main line track would be considered equal to the following mileages of other tracks.

This formula was justified on the theory that the ratio of actual maintenance expenses for yard tracks to total track expenses may differ widely from year to year and because of the ease of estimating track maintenance expense for any particular piece of track. This was the only feature of the A.R.E.A. formula to be used. The Commission did not intend to adopt grouping of "line" and "other", and the formula was to be limited

to any one of those accounts. The reasons given by the Bureau of Statistics for this method of handling these accounts were that (1) the application of formula would be very simple, (2) separations could be made without added cost, (3) its adoption would result in more accurate separation of expenses between different kinds of tracks, (4) there would be a more accurate separation of expenses between "line" and "other" tracks, and (5) it would result in a more accurate separation of expenses between freight service and passenger service.

On January 1, 1936, all of the revised rules for separation of expenses became effective.

In November 1952, attention was again focused on the rules for separation of operating expenses. Major changes, approved by the Commission on November 18, 1952, were made. They consisted mainly of (1) a general conversion of permissive to positive terms of the instructions, (2) elimination of alternatives where possible, (3) amplification of details and application of more definite rules in many places, and (4) modernization to conform numbers and titles of accounts with the current Uniform System of Accounts. The Commission gave three reasons for the changes: (1) Lack of uniformity among roads in methods used to develop some information; (2) the Cost Section desired modifications to facilitate cost finding work; and (3) some of the roads were not following the more accurate methods prescribed by the Commission. These reasons developed as a result of a great deal of experience with, and investigation and analysis of, operating expense statistics. All of the proposed changes in these rules were subjected to the best thoughts available by both the railroad industry and the Commission. What finally emerged was sometimes a compromise in which both groups concurred although neither was entirely satisfied. In general, this method has resulted in gradual improvement of the Commission's statistical records.

On January 1, 1953, the present rules for the separation of operating expenses became effective for all class I railroads except class I switching and terminal companies. The switching and terminal companies were not required to comply with the rules by order of the Commission dated February 26, 1954. The Commission said that the resulting information did not appear to justify the cost to the switching and terminal companies. Later that year, it was found that the Commission had need for the information; therefore, class I switching and terminal railroad companies were included in terms of the rules effective June 30, 1954.

In the process of revision of accounts 249 Signals and Interlockers, Operation, and 405 Crossing Protection, in 1952, it was decided to change the basis of apportionment of common expenses from train-hours, including train-switching hours, to total locomotive-miles (road and yard) plus trainmiles without locomotives (motor car propelled trains) but excluding helper

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locomotive-miles. This change became effective with the rules of January 1, 1953. After one year, the Commission received a protest from the New York Central Railroad to the effect that this formula change resulted in an in-. crease in the New York Central's passenger deficit of $2 million for the year 1953 compared with what it would have been had the old 1936 formula been in effect. Other railroads confirmed the New York Central's experience and urged return to the 1936 basis, with the addition of yard switching locomotive-hours. The Bureau of Accounts, Cost Finding and Valuation estimated the increase in passenger expenses on all roads due to the 1953 change to be $8.4 million annually. Consequently, effective December 1, 1954, the basis of apportionment for these accounts was changed to total train-hours (including train-switching hours) and yard-switching locomotive-hours.1

1/I.C.C. order, Division 1, December 3, 1954.