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Reprinted by permission from The Annals of the American Academy of Political and Social Science, Philadelphia,
November, 1919. Publication No. 1342.
THE ACCOMPLISHMENTS OF THE UNITED STATES RAILROAD ADMINISTRATION IN UNIFYING AND STANDARDIZING THE STATISTICS
By WILLIAM J. CUNNINGHAM
Assistant Director of Operation, United States Railroad
HE standardization of statistics of operation, brought about by the centralized
control of the United States Railroad Administration, was intended primarily to aid the Director General and his staff, the Regional Directors, and the Federal Managers of the individual railroads, in keeping closer check on the efficiency of operation, as measured by units of transportation, equipment utilization and operating costs. Railroad officers, as a whole, now know more than they knew before about the details of the operation of their own properties, and they now know very much more than they knew before about their relative performance in comparison with neighboring roads. The publication of the monthly summaries by roads and by regions makes possible easy comparison of the results on one road with those of other roads operating under similar conditions, and enables each Regional Director to measure the efficiency of his region with that of neighboring regions without uncertainty or qualification as to bases and methods.
* Professor of Transportation, Harvard University, on leave of absence.
The value of the information made available by the new plan is not confined to railroad managers. The published summaries have opened up to the public regulating authorities, economists, investors and other students of transportation, a wealth of data which heretofore have not been available in comprehensive form or on uniform bases. This phase of the subject is of interest to the readers of The Annals, and it will be largely from this viewpoint that the following description of the plan, and the discussion of its underlying principles, will be undertaken.
STATISTICAL REQUIREMENTS OF THE INTERSTATE COMMERCE
At this point it is important to draw attention to the fact that the Interstate Commerce Commission in its classifications of revenues and expenses has made very little provision for statistics of operation. The emphasis throughout all of the classifications, and in the data required in the annual report, has been placed upon the features of finance and public service. By combinations of the statistics of transportation production, (tonmiles and passenger-miles) with statistics of train-, locomotive-, and car-mileage, it is possible to derive a few statistical units, such as the average net freight train-load, the passengers per train-mile, the tons per loaded freight car-mile, and the passengers per passenger car-mile. It is possible also to derive a few unit costs for the transportation service as a whole, but, generally speaking, the annual report form of the Commission does not provide sufficient data for the purposes of the analyst of operating efficiency.
This comment is not intended as a criticism. The standardization of railroad accounting is one of the noteworthy achievements of the Interstate Commerce Commission. It meets the requirements of the original Act to Regulate Commerce, and of its amendments. Section 20 of that Act, as amended, instructs the Commission to provide for “a uniform system of accounts and the manner in which such accounts shall be kept” and especially refers to capital stock issued, the amounts paid therefor, and the manner of payment for the same; the dividends paid, the surplus fund, if any, and the number of stockholders; the funded and floating debts and the interest paid thereon; the cost and value of the carrier's property, franchises, and equipments; the number of employees and the salaries paid each class; the accidents to passengers, employees, and other persons, and the causes thereof; the amounts expended for improvements each year, how expended, and the character of such improvements; the earnings and receipts from each branch of business; the balances of profit and loss; and a complete exhibit of the financial operations of the carrier each year, including an annual balance sheet. Such reports shall also contain such information in relation to rates or regulations concerning fares or freights, or agreements, arrangements, or contracts affecting the same as the Commission may require
The absence of any reference to statistics which reflect the degree of operating efficiency is apparent. The viewpoint is that of protection of those who pay the freight, those who travel, and those who invest their money in railroad securities. The uniform system of accounts, therefore, does not include within its scope any standards of cost accounting nor any indices (in detail) of managerial efficiency, except those which are reflected by the totals of the income account, the balance sheet, and the profit and loss account.
In the absence of required standards, the railroads continued and developed their own statistical systems individually, and there grew to be wide divergencies in practise, ranging from an almost entire absence of statistics other than those required by the Commission, to elaborate cost accounting and efficiency data. There was no uniformity, either as to the general scope of operating statistics or as to the methods or bases. Each railroad evolved its own statistical standards according to its own conception of what was necessary or desirable, and in each case the system, to a large extent, was a reflex of the interest taken personally in the figures by those in managerial authority. It was, therefore, extremely difficult for one road to compare its operating statistics with those of its neighbors, as there was seldom any assurance that the units bearing the same title really meant the same thing. For example, in the important feature of freight car utilization, Road A would compute its “Average miles per car day” by including every freight car on its lines; Road B would exclude cars stored; Road C would exclude cars held under repairs or awaiting repairs as well as those stored. Some roads took count of the cars on the line once every month and used that as the divisor. Others took the average of two or four counts per month. Others took the daily average. In practically every unit of performance there were variations in practise which prevented comparisons without qualifications of some kind.
Under pre-war conditions, when each road or system was operated as an independent unit, this lack of standardization was not highly important. When, however, the roads were taken over by the Government, and operation was begun as a single system under centralized management, this lack of statistical standardization was extremely embarrassing. For the purposes of intelligent control, centrally and by regions, a standardized plan was vital.
STANDARDIZATION BY UNITED STATES RAILROAD
The Operating Statistics Section of the United States Railroad Administration was created on May 6, 1918, as a part of the Division of Operation, and instructed to "arrange for, and supervise, the making of standardized reports and statistics pertaining to the maintenance and operation of railroads under federal control, and to make such compilations of statistics as may be required.
The first work of the section was to design the standard forms. The aim was to continue the best