Document Type
Article
Publication Date
1921
Abstract
First, our rule is that in fixing the maximum amounts to be included in operating expenses for maintenance under the guaranty of section 209 of the Transportation Act, 1920, we will, as far as practicable, under the accounting test established by the proviso of section 5 of the standard contract, fix such amounts as would have resulted during the guaranty period in the same amount, character and durability of physical reparation as was applied to the respective carrier properties, during an average six months of the test period, three years ending June 30, 1917, making due allowance for differences in the amount and use of the properties involved. Second, in making the adjustments for changes in cost of labor consideration will be given to all changes of any character which affect in any way the labor cost of material in place, and will include not only changes in price of labor per payroll hour or other unit paid for, but also the relation of time paid for to effective time of work, differences in the efficiency and cost of labor due to changed personnel, and any other elements affecting the aggregate cost of labor necessary to effect the standard of maintenance observed by the carriers respectively during the test period. Third, in fixing the maximum maintenance allowance for the properties during the guaranty period, all charges representing depreciation and repairs will be computed upon the same bases for the guaranty period as were used in the test period. Fourth, and this fourth item now has reference to the accounting test; as I stated to the Committee on General Accounts about a year ago, and as was indicated by Commissioner Meyer yesterday, the adjustments provided in Section 209 are adjustments of limitation. It is as though we had a tunnel gauge, and you passed the load through the tunnel gauge. If the load is too small, or smaller than may go through, we don't expand it, but if it does not pass through the gauge we must bring it down. If the adjustments were not provided for, it is obvious to all of us that what appears on the books of the carriers under the accounting rules of the Commission would determine what is the railway operating income. When the adjustment is put through this tunnel gauge these accounts must pass, and therefore we can not allow and we can not consider, or we should not attempt to think of adjustments or settlements of the guaranty except in relation to the books of the carrier. The adjustment is made of the accounts as they stand upon the books of the carrier. The settlement is made upon those accounts with the limitations which Congress has prescribed. If the limitations had not been prescribed those accounts would stand as written. With the limitations which Congress has prescribed, they stand as the maximum, and there is another maximum prescribed, which is this tunnel gauge of adjustment.
Relational Format
article
Recommended Citation
Colston, W. A., "Tentative basis for proposing final settlements under section 209 of the Transportation Act, 1920; Tentative basis for proposing settlements under section 209 of the Transportation Act, 1920" (1921). Individual and Corporate Publications. 105.
https://egrove.olemiss.edu/acct_corp/105
Comments
Address delivered at the 33d annual meeting of the Railway Accounting Officers Association, Atlantic City, June 8-10, 1921