Commission, and that the question whether the | must be dissolved, and it will be so ordered. rates prescribed by the Legislature, either di- Robert Falligant, Solicitor for Complainant. rectly or indirectly, are just and reasonable, is Chisholm & Erwin, Solicitors for the Savannah, a question which, under the Constitution, the Florida and Western Railway Company. Legislature may determine for itself. Mynatt & Howell, Solicitors for Railroad Com

It results from these conclusions that the mo- missioners. R. Roombs and Clifford Anderson, tion for injunction pendente lite must be denied, Attorney-General, Solicitors for the State of and the restraining order heretofore allowed' Georgia.

incurred.

NOTE. The next subject of discussion, ac- | or ought to be, shown on the books of the gencording to the order set forth on page 51, was eral office; and the account on which they were the Condition and Operation of the Railroads of the State. Delays in the returns made by the railroads make necessary a change of the proposed order, so that we shall treat next of the action of the Commission.

1. What it is; what it cost; and a far more important point, what it is NOW WORTH.

2. What it owES.

3. What it does; (its WORK); what it earns thereby (GROSS EARNINGS); what it costs to earn it, (OPERATING EXPENSES); what is left, after paying expenses, (NET EARNINGS); and the use of net earnings, (DIVIDENDS, INTEREST,

ETC.

The first set of questions show its Property; the second, its Liabilities; the third, its Busi

ness.

The books are intended to preserve a RECORD of all the material transactions of the company; and to condense and exhibit them in an intelligible form.

Now, the ORIGINAL TRANSACTIONS, which are to be recorded, are scattered over a wide surface. Some of them are first entered by station agents, some by conductors, etc. They are all to be reported to one general office, and consolidated in one set of books.

In the books of the general office appear all transactions whatsoever concerning the company-its relations and business. Here are entered all property accounts, showing original construction, new construction, renewal, etc. The reports of engineers as to location and cost, etc., are all brought together here.

So the business records are here concentrated also, showing the work done the earnings, expenses, and the net income and its uses. From all parts of the road these accounts come up from conductors, agents, pay-masters, superintendents of shops, etc.

First in importance is it to get the facts all in; with nothing omitted.

If they are all in, the proper basis is laid, and a skilful book-keeper cen do all the rest; he can concentrate and group; analyse and unfold them, at his pleasure.

them all together; all in one place; to make a The facts being all in, the next step is to get

unit of them.

Getting them IN secures the DETAILS; getting them UNIFIED secures COMPREHENSION.

This marshalling of the facts in due order, is Tabulation; the object of which is to render them easily intelligible; and in doing this, be it ever remembered, METHOD IS SUPREME, and

THE BEST METHOD IS THE TREE FORM, which shows all the parts-and the proportions and relations of the parts-to one another and to the whole. No other form so exhibits the whole - each part-and all relations-as does this familiar form of a Tree and its Branches, and systematic Ramifications-nature's own arrangement.

All the facts must be concentrated in one Table, on which are exhibited the principal limbs or branches, which usually are three, viz : Property, Liabilities, and Year's Business. Each of these Branches may become the trunk of a separate tree, with its subordinate limbs.

Thus a clew is given to all the facts, marshalled in their proper and natural order. The great things and small can be studied without confusion; the tables, indeed, give conscious mastery of the whole business.

To give this conscious mastery, the system should be largely self-evidencing. One should see clearly that all its parts make a whole; and

So also the liabilities of the company all are, that he understands just where he is at this present

moment of time, in the investigation in which | foregoing lumping item of $256,317 might be

he is engaged.

Many reports are so loosely put together as to be like the pages of an unbound book; while hunting for the next in order, the whole connection is gone, and instead of finding what you are loking for, you get lost yourself.

EVILS AND REMEDIES.

After this general view of the objects to be accomplished, let us next consider the evils and failures of ordinary methods, with reference to their remedy. There are THREE great leading

sources of error:

1. Lumping items.

2. The failure to use the Profit and Loss account, so that the showing made is of the past, not of the present; and—

found upon criticism to read thus:
Discounted notes-good.
Doubtful.

Bad, and charged off as lost.

Now, the proper use of the profit and loss account is not a mere clerical work for the bookkeeper—a part of a technical process of which any one, who has spent a few weeks in a commercial college, is capable--but involves the highest talent and sagacity of the highest officers of the company.

Unless this severance is made, the $31,000

3. The mixture of property with expenses, will go on-on-on-as assets, deceiving the and debt with income.

student of the affairs of the company all the

These three errors are all pernicious and all while. Another six months may reveal the

common.

1. As to LUMPING ITEMS-the objection is not to having in one condensed statement the sum of a number of items, but it is to doing this only, and furnishing no statement of what these several particulars consist.

The report should supply or suggest the means of passing from the condensed to the more expanded forms, step by step, to the very original transactions.

hopelessness of $50,000 more out of the $100,000 of doubtful assets; and these, too, should be charged off.

This explanation illustrates but one of the uses of the profit and loss account; but its useɛ are constant. It is the only means of reconciling on the books the present with the past-of showing, not what the road once was, but what it now is, as to value. Now, present value is the chief thing to know. All these are book-keeping truisms, it may be said. Admitted; but of all the dangerous things, neglected truisms are the most dangerous. And these are neglected, day by day and year by year, till nearly every report is utterly deceptive, and full of old and effete assets, not worth the ink it takes to print them.

To illustrate by a bank report: It is all right to express the sum of discounted notes by an aggregate-say $256,317.00; but the directors should see also the statement of each and every note embraced in that sum, and criticise it separately. Some of these notes may be good; some doubtful; some bad and utterly worthless. Now, in the foregoing expression, these are all classed as of equal value, when really the result of criticism might be to reject two-thirds of them as bad. What proportion is good, what doubtful, etc., can never be estimated ex-account. cept by a detailed examination.

2. This leads naturally to the second head of trouble, viz: the failure to use the PROFIT

AND LOSS account.

Indeed, the very first item in most reports violates both truisms. It is (1) a lumping item, with no means of arriving at the particulars which compose it; and (2) with no application from year to year of the profit and loss

This first item will read, through all the fluctuations of value-when the stock is at 30, and when the stock is at 130-all the same, viz: the road and its outfit, so much—say $2,500,000

varied from $750,000 to $3,250,000. But if any one knows this, he knows it aliunde, and not by what the report tells him.

In the criticism of note after note, above sug--when the real value, within that period, has gested, the use of the profit and loss account would be to reject and entirely cast out the worthless paper, and charge it to the loss side of the profit and loss account.

Doubtful assets, not hopeless, and so not yet charged as lost, should also be specified. The

Of what use is such a report? Only to mislead and to conceal the facts. It may not be so intended, but no other purpose does it really

PROPERTY as distinct from INCOME, and
DEBT from EXPENSES,

so that he understands all the while what his
capital is yielding, and exactly how his income
and expenses are related.

serve. The last place to which to go for information is the place which professes to furnish it. 3. The MIXTURE ordinarily made in the selfsame column of property with expenses, and so, also, of debt with income, in the same column, causes complete and hopeless confusion to the As EACH of these sources of error is confusing common mind unacquainted with technical-COMBINED, they are usually inextricable; and book-keeping. Such a reader finds among the a man of plain common sense, perfectly capable assets of the company the expenses included. Queer assets, they seem to him. And so the gross earnings of the year seem to be strangely located among the liabilities. Plain as this may be to the experienced book-keeper, it is confusion worse confounded to the common, untechnical mind. For the sake of the average stockholder, the average citizen desiring to buy stock or understand the condition of the company-nay, of the average director-these elements should be disentangled, and presented in different columns.

Thus, too, will they appear in more intelligible form even to experts-to the officers themselves; for thus the permanent and the temporary are kept separate-the property and the business. The analysis must take place in the official mind, and had better be made in the tables themselves.

And here we must pause to say with emphasis that nothing is more important to a private individual, or to a corporation, than a sharp, incisive, clear-cut distinction between

of understanding the condition of a railroad company, if properly presented, finds it utterly unintelligible, as actually presented. The facts, indeed, are not incorporated in the report—they are not there. There is no mere failure to present them clearly; the lumping item does not present the needful facts, at all; the neglect of the profit and loss account makes the facts past, and not present; and the mixture of items makes a mixture, indeed, of the whole matter.

Whatever other sources of error may or may not exist, we have endeavored in the proposed system of forms to remedy these three chief and leading sources.

Blank forms of reports to be made by the railroads to the Commission have been prepared; each form for one company, if operated as a whole; if operated in divisions, a form for each division, and an additional form for the consolidated report of the company.

The system adopted after prolonged study (numbered Form 10) is as follows:

To be Used in Reports to the Commission.

itself has three great limbs-(1) Construction, (2) Equipment and (3) All Other Propertyeach exhibited first as a whole and then in detail. This table also gives information of value as well as cost of the present as well as the past-and is capable of indefinite expansion.

The second great limb is the Table of Liabilities, which divides naturally into two subordinate limbs (1) of Liabilities to Stockholders and (2) Liabilities to Creditors-or Stock and Debt. The Stock limb subdivides into Common Stock, Preferred Stock and what is ordinarily called Surplus Fund, or, what unfortunately may take its place, Deficit. The Debt limb shows Bonds or Funded Debt, Unfunded or Floating Debt,

EXPLANATION OF THE GENERAL SCOPE OF THE Contingent Debt, etc. A special or important

TABLES AND THEIR MUTUAL RELATIONS.

The tables are presented in two great divisions: one set showing the FINANCIAL CONDITION of the company; the other the PHYSICAL CONDITION AND CHARACTERISTICS of the road and its business.

The clew to the system is easily learned-the Tables follow the order of a Tree: first the Trunk, then the Branches, Limbs, etc., in due order and proportion.

TRUNK TABLE.

The General Exhibit, or Trunk Table, exhibits the Financial Condition of the company as a whole. As already said, it is all comprehensive, giving a birds-eye view of the entire condition and operations of the company, its Property, Liabilities and Business. These are presented in close connection, yet in separate columns, such separation being all-important to clearness.

The Trunk Table presenting everything in a condensed form-the succeeding tables give the

details. Every other table is represented in the trunk, as a limb of the trunk, or a limb of a limb; each limb being capable of indefinite expansion to any degree of detail, even to separate original transactions.

feature is that of showing on what account the bond is issued or the debt incurred; whether for construction, equipment or the like, or for subecription to some other enterprise, and what.

Obviously this limb suggests, as do the others. all necessary details. The Table of Liabilities answers the question "to what is COST, DEBTOR?" The third great limb or branch consists of the Business tables, dividing readily into three limbs, viz: Gross Earnings, Working Expenses and Net Earnings, with the use made of them. These Business tables, after all, furnish the chief practical information for the guidance at once of the Officers of the road, and the Railroad Commissioners. Great pains have been taken to make them comprehensive and particular.

These suggestions give perhaps a sufficient clew to the general scope and object of the financial tables.

PHYSICAL CONDITION, OR DESCRIPTIVE TABLES.

These follow much the same order as the

Financial tables—the one set, indeed, emptying naturally into the other. For example: The Description of Property follows exactly the same order as the Financial Table of Property, giving description of items (1) in Construction Account, (2) Equipment Account and (3) All Other Property. So the tables descriptive of The first of these is the Property Table, which business follow the same order, giving mileage,

BRANCH TABLES, OR LIMBS.