CHAPTER XXI. APPORTIONMENT OF OPERATING EXPENSES AS BETWEEN PASSENGER AND FREIGHT BUSINESS. The relation of expenses common to passengers and freight to the whole cost of operating a railroad, varies on different roads according to the property and the nature of the traffic. Taking the railway system as a whole, it is probable that fully sixty per cent. of the gross operating expenses relate, in common, to both classes of business. The difficulty of apportioning expenses between divisions, noticed elsewhere, is greatly magnified when we seek to apportion them between different classes of traffic. The property of a railroad is used in common for every class of business, as convenience and profit suggest. Many officers and employes are concerned uninterruptedly with the affairs of all the departments. Those connected with one branch serve others when the interests of the property can be advanced thereby. This cooperation is much more general than is supposed. Thus, employes of the freight department, in their intercourse with shippers, lose no opportunity to advance the interests of the passenger department. No charge is made against the latter for this service. But the equity of such a charge can no more be questioned than the value of the service. The efforts of the freight department to increase passenger traffic are reciprocated by those connected with the latter branch of the service. The especial aim of everyone is the advancement of the particular department to which he is assigned, but he is also expected to serve his employer elsewhere when opportunity offers. The interest of employes in the property and their esprit de corps would lead them to do this even if it were not expected. The distinctions that exist between different departments of railroads are generally not so great as is supposed, and, in many cases, are merely nominal. But while, in the actual conduct of business, the interest of every department is advanced by all, as occasion permits, yet in the preparation of accounts those connected with the passenger department are, as a rule, charged wholly to passenger business and those connected with the freight department to freight business, and so on. It would not be possible to do otherwise in the case of petty items without the direct intervention of the accounting officer and the presence of assistants in the different departments. The rivalry between the two traffic departments is great, and however correctly the apportionment might be kept (if it were possible to separate the service, which it is not in many cases) each department would think it was charged too much; and it would be right in many instances, for in every case of doubt employes would give the benefit of any doubt there might be to the particular department with which they were connected. The interlapping expenses of passengers and freight agents are the first obstacles that lie in the way of a division of expense as between the passenger and freight business. However, they are simple and unimportant compared to others. In dividing expenses those that appertain exclusively to the passenger and freight departments are thus charged, but where expenses are common to both, they are oftentimes so interwoven that the most painstaking accounting cannot separate them. A division, therefore, based on the relative operations of the two departments will result, it is probable, in as nearly a correct apportionment of cost as a more elaborate basis. It will be a guess merely in either case. Such basis is the relative mileage of passenger and freight locomotives; mileage of passenger and freight cars; passenger and freight earnings. There is no other, unless it be an arbitrary one founded upon particular features of traffic. If we base apportionments on the relative mileage of passenger and freight locomotives, there is no trouble in arriving at a conclusion from that point of view, but, as a matter of fact, there is a large mileage made by locomotives not engaged directly in the service of either of these departments, but in work affecting both. The relation of this to each class of business is not known. It must, consequently, be assigned arbitrarily. But as such basis would be speculative, it follows that results derived therefrom would also be speculative. What is true of locomotive mileage is also true of mileage of passenger and freight cars. There is a large number of cars that does not belong to any particular department, such as business cars and cars used in work trains. The mileage of such equipment comprises a large percentage of the whole. Upon what equitable basis can we divide such expenses between passengers and freight? There is no such basis. There can be none. Or, if it could be found in the case of one property, the basis would not apply to another, nor would it apply to the same enterprise for two successive years or months. In attempting to divide expenses on the basis of passenger and freight earnings, we must necessarily include, under one head or the other, income from express, mail, and miscellaneous. In such a classification we might properly embrace express and mail as passenger business because carried on passenger trains, and we may observe this rule in regard to all business carried on passenger and freight trains, respectively. But how are we to apportion earnings derived from rent of buildings, lands and other neutral sources? All collateral earnings may, indeed, be omitted in dividing the expenses as between passenger and freight, but that would only complicate the situation. If we left out express, mail and miscellaneous earnings, we should also have to leave out the expenses incident to them. This would be impossible owing to the difficulties surrounding such a separation. So that while it strains the situation to merge these earnings under the general head of passenger or freight, yet it is better to do so than to attempt to determine the cost they severally involve. Hence, in any attempted division of expenses, the earnings of collateral departments must be merged under one or the other of the great heads, passenger or freight. The bulk of expenses are incurred directly on account of these two great departments of the service. They are the great factors; the axis on which everything revolves. The attempt to apportion expenses between passengers and freight is interesting in its obstacles and the disputations it excites. Not only is the work largely dependent upon the judgment of the compiler, but like all other things that enter into the operations of railroads, the conditions are never the same upon any two railroads, nor probably for two successive months upon any particular road. Receipts and expenses are like a kaleidoscope, that cannot, by any possible manipulation, be made to present the same surface twice always changing; always different; always having the same general coloring, but grouped differently. These changes are never unimportant, never mere hallucinations; they |