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however, that no two companies will recognize it in exactly the same manner. Some companies will take from 20 to 25 per cent of the gross earnings; other companies will take a certain percentage of the valuation of their property; other com-, panies will neglect it entirely. If we put this depreciation item in our operating expenses, and attempt to compare the operating expenses of different companies, we shall have one company with the depreciation item taken into consideration and another company without such item taken into consideration, and all we shall get as a general basis of comparison will be the gross earnings, the operating expenses and the fixed charges. It seems to me that, inasmuch as all the companies are not going to consider this item uniformly, it ought to be a deduction from the net earnings from operation rather than an additional item in the operating account.

MR. GARDINER: If I understand the report correctly, the kilowatt-hour of output or of sales was adopted as a unit recognizing the fact that it is an incomplete unit. While I hesitate very much in offering an alternative (if a unit we must have), it seems to me that it would be correct to adopt, not the kilowatthour of output, but the kilowatt of capacity, as the unit. I prefer this for the reason that those of us who analyze our costs on a demand basis find that the preparation costs, readiness-to-serve costs, costs depending on the size of the plant, far exceed in amount, usually, the costs varying with the output. The public has the idea that our costs vary essentially with the number of kilowatt-hours taken from us. That is not the fact. Our costs vary primarily with the maximum momentary demand, the general preparation cost, the size of our plant, the costs we are under to meet the demand, the output costs being much less in amount; that is, with a plant running on 25 to 35-per cent loadfactor our costs varying with output are apt to be less than 30 per cent of the total costs. If we had a plant running on 75 or 80-per cent load-factor, then the output costs would be very much larger and would perhaps equal, or possibly exceed, the preparation costs, the readiness-to-serve costs; therefore, under those circumstances, if the load-factor were 75 per cent the output might be as sound as the capacity for a factor. That is the first suggestion I would offer.

The next is of a different nature. I recently had occasion

to review in detail a bill for the appointment of a commission in a western state. In it was specified that all the accounts of all the public utilities coming under the commission-and I think every public utility came under this commission, railroad, traction, electric lighting, gas and telephone; I think the telegraph and express companies were left out-it was specified that all accounts should be kept on a standard form on blanks provided by the commission, and no other accounts of any kind whatsoever should be kept. I think that is pretty far-reaching. I was asked to criticize that bill, and one of my criticisms was that the commission might specify whatever accounts they wanted kept and the company should keep them accordingly, but that the company should be free to keep any other accounts and the commission might have access to them. If the trend of thought in that bill as it existed at the time it was submitted to me becomes prevalent, you can see the extremely vital phase that this uniformaccounting movement may take on. If companies are to be prohibited from keeping any accounts whatever except the standard accounts, it will stop progress in accounting, stop progress in cost-finding.

I thoroughly approve the suggestion offered by one of the speakers, to the effect that in this uniform-accounting work there should be the closest co-operation between the several branches. of the public-service business. Last February, Dr. Humphreys, president of Stevens Institute, read a very interesting paper, which some of you may have seen, on the present necessity for a uniform system of accounting. That resulted in the appointment of a committee to bring the matter before the American Gas Institute, and it is understood that the matter of depreciation will be especially taken up. On behalf of that committee, of which I am. chairman, I should most heartily welcome any movement for co-operation and the uniform working out of this question of uniform accounting.

MR. J. H. GULICK (Chicago): I think we practically all agree that we may be compelled to make reports either to state or to federal government. In case this comes to pass the adoption of a uniform system of accounts, it seems to me, would influence the Government in the matter of following our classification, as I think it has had some influence in other classifications that have been adopted by the Government. The system

of classification adopted by the Street Railway Accountants has been followed by several of the state commissions. I agree in the basic principle of the committee's report presented to us, but there are a lot of details that I think some companies could not or would not keep; but these details can be eradicated from the report when used by companies that do not wish to follow them. I should like to see a uniform system of accounting for lighting companies; the details are small matters, and can be worked out satisfactorily. CHAIRMAN EDWARDS: The committee itself is in want of information as to what to recommend.

MR. STANLEY BAKER (Wilmington, Del.): There is one item under operating expenses that, it seems to me, will bear analyzing, namely, Section II, under which all costs of advertising, soliciting business, wiring, and all expense in connection with securing business, are included. I assume that this classification is intended to apply only to operating companies that have completed their plants and reached their maximum, so that any expense of advertising, soliciting business, wiring, and so on, that may be necessary to maintain that maximum should be charged to operation. It surely can not be meant to apply to companies whose plants are in course of construction. For example, I have in mind a telephone company that had to show 5000 bona fide telephone contracts before it could obtain a franchise; and I assume that we are all familiar with electric companies that before they could finance found it absolutely essential to show business in hand. It would strike me that this is a legitimate charge to construction.

As to the details of the classification: In a large plant, with a large force and a large margin of profit, economies can doubtless be effected by having a classification in great detail; but in a small plant with a small force I am of the opinion that less time spent on details and more time spent in hustling for business promises better results for the company.

MR. W. H. COUGHLIN (Worcester, Mass.): The trouble with uniform accounts, as I look at it, is that the commissioners in every state have an idea of accounts themselves. They send you a form, and you have to comply with it. The gentlemen who spoke about a railroad and an electric light company being run by one corporation--the railroad company in some states comes under

the railroad commission and the electric light part of it comes under the gas and electric light commission. Each one of them sends out a form for accounts which you must keep. You may keep more accounts if you wish, but you must keep these accounts that they prescribe, and they have the right at any time to come and examine your books; they also have the right to say whether or not you can issue stock or bonds, in some states. How can you agree on a uniform system of accounting with that power vested in a commission? As the commissions in the different states have varied ideas, it is going to be a very difficult thing to accomplish, and before the National Electric Light Association can get a system of uniform accounting we have got to get these commissioners together and see if they will agree with us, because we have got to agree with them-because they are a power above us. We are the creatures of these commissions, and we have to bow to them. I am unfortunate enough to be in a state where you can not issue either stock or bonds without going before a commission. The commission will make the price, and you must issue the stock or bonds at that price. If the stockholders will not take the stock or bonds at that price you must put them on the market and sell them. That has been done within sixty days. You have to sell them at public auction if the stockholders do not take them at the price set. The commission made a price of $215, par value $100. They could not sell at that price. We must get these people to make uniform accounts, and if they will do so we shall be glad to co-operate with them. New York has one system, Massachusetts another, and almost every state that has a commission has a system of its own, and it will be a difficult thing for us to start on a system of uniform accounting until we get these various commissioners to agree on these accounts.

CHAIRMAN EDWARDS: Let me say on this public aspect of the question that I do not know that any of the public commissions, with the exception of that in Massachusetts, has yet definitely and ultimately adopted a classification of accounts. I believe that if this association adopts a classification of accounts and lays it down as its expression as to how these electric light accounts should be kept, it will have great weight with all these public bodies when they come to consider the question. [Applause.] We are not working out a new scheme, gentlemen. The street railway men have met this proposition, and they

have won out, and to-day nearly every railway commission in this country has adopted the standard classification of accounts adopted by the American Street Railway Association. There are gentlemen here to-night who were on that classification committee, whom I shall ask to tell you about it before the discussion closes.

MR. Dow: I am best known, I have no doubt, as manager of a somewhat large property; much less well known as being responsible, as executive, for several much smaller properties, in towns of 8000 or 10,000 population. With the knowledge gained from the operation of these smaller plants, I can speak with appreciation of the objection made by a recent speaker as to the apparent complexity of the classification. I have found it desirable to compare, item for item, certain costs of the small plants with those of the large one. I found that the cost of keeping the full analysis in the smaller plants was prohibitive; but I found that a general classification might be made absolutely identical, and that an application of the work-order system to any special case would give me the cost of the special case with the minimum of clerical work. I should say that the only difference between the complete analysis as proposed here, which is suitable for the very large metropolitan companies, the less complete analysis that I find satisfactory in a town of 350,000, and the still less complete analysis for a town of 8000 and 10.000 and upward-the difference is entirely in the consolidation of several minor items under a major head, and that the general classification with which this report opens is almost of itself a minimum analysis. It is not necessary, for instance, in a small town, where the steam-plant force is very small or the waterpower force is a minimum, that there should be any such complete assortment of costs as is indicated in the detail operating accounts. It is quite proper that the total costs of generation should be bunched under the main index No. 1, No. 2, or No. 3. as the case may be. It is not even improper in such a plant that general items No. 4, transmission, and No. 6, distribution, should be consolidated. But as it stands, the showing on page 152 is to all intents and purposes a minimum analysis of operating accounts; and it is positively within the ability of a single bookkeeper, who can attend to a good many other duties at the same time. If detail is required, the work-order system

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