month, added together, agree with the aggregate column, the fact of such agreement is evidence of the correctness of the whole.*

By the use of the side cash book I have described, only the total amount of cash remitted by an agent or conductor need be entered on the side ledger in which his account is kept. If the ledger does not agree with the balance claimed by the agent, the remittances as entered in detail upon the side cash book may be referred to and compared with the returns of the agent or conductor and the difference located.

The agents' and conductors' cash book will be found to greatly reduce the expenses of a company.

When more convenient, separate cash books may be used for agents and conductors.

The general cash book of a company embraces the particulars of receipts and disbursements.t From this book and the journals referred to elsewhere all matter embraced in the general ledger is drawn.‡

It is of the utmost importance that accuracy and perspicuous clearness should be observed in

*At the close of each day the amounts entered in the column for that day are added and the total inserted. This total is carried to the general cash book, on which the cash receipts from all sources are shown.

+ See Form No. 16, Appendix B.

Subsidiary ledgers are posted from the general cash book, the general ledger journal and the side journals.

entering transactions on the cash book. It is a clearing house of vast importance.

The general cash book may, for convenience and in order to economize space and labor, be arranged so as to afford columns for various kinds of information, say, for entering folio of ledger, name of the account, numbers of remittances, explanatory or descriptive column, amount,* and finally, a column for the total amount.

On the credit side of the cash book columns may be provided for inserting the folio of the ledger, name of the account, treasurer's number,† audit or register number, nature of disbursement and amount.

The difference between the footings on each side of the cash book constitutes the balance. This should agree with the balance as shown upon the general ledger.§

*Several columns may be used for amounts, thus one for entering amounts received from agents, one for conductors, railroad companies, individuals, land agents, and so on.

This number is entered on each cash voucher and affords a convenient means of tracing the latter afterward.

Separate columns may be provided for inserting payments, say a column for vouchers, railroad companies, drafts of agents, pay rolls and so on; finally, a column for inserting the total amount paid.

On large roads, owing to the great number of vouchers which are paid daily, it will be found convenient to have a subsidiary cash book in which to record payment of vouchers. This added facility affords ample time to the bookkeepers for posting to the side ledgers the cash receipts and payments, which otherwise they would not have, as the general cash book is in constant use. This subsidiary cash book, called the audited accounts cash book (see Form No. 18, Appendix B),

The general cash book is closed and balanced with the cash on hand at the end of each day. No exception should be made to this practice.

should give information in detail concerning vouchers paid. The total of the vouchers paid each day as shown on the audited accounts cash book is carried to the general cash book. The audited accounts cash book bears the same relation to the general cash book in respect to vouchers paid as does the agents' and conductors' cash book in regard to moneys received from agents and conductors.

CHAPTER XIX.

VALUE OF THE CLASSIFICATION OF OPERATING

EXPENSES.

The management of a road is enlightened and the property benefited by an accurate classification of disbursements. Great diversity existed in the early days of railroads in America in reference to the classification of operating expenses. No two managers or accounting officers agreed as to details. Each advocated that which adapted itself most readily to his understanding or the needs, real or supposed, of his company. In some instances the differences were not based on anything except the fancy of the officer introducing them. But in many cases they arose from inherent differences in properties. Thus an expense account of great importance upon one line, like keeping the track clear of snow and ice, was unknown upon another, and so on. When differences are of this character, provision must adapt itself thereto.

Now and then the division of operating expenses was microscopical; extended beyond the horizon of ordinary conception. This is a weakness of statisticians; to elaborate unduly. In such cases the inquisitive owner, very likely,

realized everything he wanted to know except cash dividends. His money was wasted in explaining why his property did not have any net earnings. He knew to the utmost farthing where every cent had gone, but for his own subsistence he had only elaborate tables and statistical formulas. This is statistics run riot.

The bulk of railroad companies, however, were satisfied with a very simple division of operating expenses. Upon many lines it only embraced what may be called the natural divisions. Quite a number of companies sought to sum up their accounts and apportion their expenses as between the passenger and freight traffic. The manner in which this was done, and the lack of value of the work when completed, I refer to elsewhere.

In reference to the classification of railroad expenses, it is not putting it too strongly to say that a classification adapted to the uses of governments is not generally adapted to the practical wants of railroads. The managers of the latter require such minute subdivision of accounts as may be necessary to enable them to judge, by comparison and otherwise, the economy that has been exercised. Government returns are valuable for purposes of exhibiting results. From the government standpoint it is not material whether a particular account is relatively great or small, for the reason that to make such information of value the local circumstances surrounding the expenditure must be known and recited. This is manifestly impossible.