EXPENSES, RECEIPTS, PROFITS.
EXPENSES.
405. American railroad reports as a general thing do not analyze the cost of working. The gross expense is given, and in some cases is primarily divided. Besides the retrospective use of a minute division of expenses, which enables us to see what system is the most economical, there is a prospective use, namely, the formation of estimates for future operations and a correct base for establishing tariffs. If the circumstances of the traffic remain the same, an estimate of what the cost will be at any time is easy; but if they change, the data for the estimate change also. That we may at all times possess these data, we should know every year just the cost of working each article of traffic. It is not enough that the gross receipt exceeds the whole expense; even then the road may be working unprofitably. Unless each item of transport pays for itself, we are taxing unjustly some other item, (except, indeed, in such cases as adopting low rates in order to fill trains running in one direction which would otherwise run empty). An analysis of cost will also show whether or not it is best to attract an increased amount of business by a reduction of rates.
406. The whole cost of operating and of maintaining a railroad may be generally and specially divided as follows:—
| {Cost of Road-bed. | ||||
| {Cost of Superstructure. | ||||
| (A) Interest on construction and equipment capital. | {Cost of Buildings. | |||
| {Cost of Engines. | ||||
| {Cost of Cars. | ||||
| {Fixed machinery. | ||||
| {Road-bed. | {Material. | |||
| { | {Labor. | |||
| { | ||||
| (B) Maintenance of way and works. | {Buildings. | {Material. | ||
| { | {Labor. | |||
| { | ||||
| {Superstructure. | {Material. | |||
| { | {Labor. | |||
| { | { | {Working. | {Fuel, oil, and waste. | |
| { | { | { | {Salaries. | |
| { | {Passenger. | { | ||
| { | { | {Maintaining. | {Material. | |
| { | { | { | {Labor. | |
| {Locomotives. | { | |||
| { | { | {Working. | {Fuel, oil, and waste. | |
| { | { | { | {Salaries. | |
| { | {Freight. | { | ||
| { | { | {Maintaining. | {Material. | |
| { | { | { | {Labor. | |
| (C) Maintenance of the fixed and rolling stock. | { | |||
| { | { | {Working. | {Warming, lighting, and cleaning. | |
| { | { | { | {Oil and waste. | |
| { | {Passenger. | { | ||
| {Cars. | { | {Maintaining. | {Material and labor. | |
| { | { | |||
| { | {Freight. | {Working. | {Oil and waste. | |
| { | { | {Maintaining. | {Material and labor. | |
| { | ||||
| {Fixed machinery. | {In shops. | {Machinery. | {Oil and waste. | |
| { | {On road. | {Tanks and tables. | {Materials and labor. | |
| { | {Conductors. | |||
| { | {Ticket Sellers. | |||
| {Passenger. | {Clerks. | |||
| { | {Brakemen. | |||
| (D) Salaries of hands employed in and about trains. | { | {Porters. | ||
| { | ||||
| { | {Conductors. | |||
| {Freight. | {Station agents. | |||
| { | {Brakemen. | |||
| { | {Weighers and gaugers. | |||
| {Passenger. | {Warming and lighting. | |||
| { | {Police. | |||
| (E) Station expenses. | { | |||
| {Freight. | {Warming and lighting. | |||
| { | {Police. | |||
| {Salaries. | ||||
| {Travelling expenses. | ||||
| (F) General superintendence. | {Office expenses. | |||
| {Stationery. | ||||
| {Advertising, &c., &c. | ||||
The actual general division of the operating expenses upon the New York State system of roads was, for 1854, as follows. (See State Engineer’s Report).
| Way and works, | 1,123 | dollars per mile of road. |
| Machinery, | 2,072 | dollars per mile of road. |
| Salaries on and about trains, | 640 | dollars per mile of road. |
| Stations, | 30 | dollars per mile of road. |
| General superintendence, | 333 | dollars per mile of road. |
| Total, | 4,198 | dollars per mile of road. |
That the detailed expenses may be charged to the proper departments, and that we may be able to take out the exact cost of working any one class of trains, or of carrying any article of transport, the following form should be filled.
| 407. TABLE SHOWING THE GENERAL AND DETAILED EXPENSES OF WORKING AND MAINTAINING THE RAILROADS OF NEW YORK STATE, FOR 1854, AND THE NEW YORK AND ERIE RAILROAD FOR THE YEAR ENDING SEPTEMBER 30, 1855. | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| WAY AND WORKS. | LOCOMOTIVE ENGINES, CARS, AND FIXED MACHINERY. | Station expenses. | Salaries of employees in and about trains. | General superintendence. | Grand Total. | |||||||||||||||||||||||||
| Nature of the item is shown in horizontal columns. | Road-bed. | Superstructure. | Buildings. | Total. | LOCOMOTIVE ENGINES. | CARS. | FIXED MACHINERY. | Whole cost of machinery oiling on the road. | Repairs and material. Warming and lighting. | Conductors. Brakemen. Weighing. Loading. Porters. Watchmen. | Stationery. Salaries. Offices. Travelling. Advertising. Agencies. | Cost per passenger or per ton, per mile run, or cost per mile of road. | ||||||||||||||||||
| Passenger Locomotives. | Freight Locomotives. | Total cost. | Passenger cars. | Freight Cars. | Total cost of cars. | Repairs, oil and waste, labor, and machinery. | ||||||||||||||||||||||||
| Name of railroad. | Fuel. | Oil and waste. | Salaries | Whole. | Repairs. | Total. | Fuel. | Oil and waste. | Salaries. | Whole. | Repairs. | Total. | Operating. | Maintaining. | Total. | Operating. | Maintaining. | Total. | ||||||||||||
| _ | ||||||||||||||||||||||||||||||
| Cost, in dollars, per mile, upon N. Y. State Railroads | 351 | 140 | 22 | F. 513 | 44 F. | 841 | 371 | 180 | 1905 | |||||||||||||||||||||
| 453 | 88 | 27 | P. 568 | 395 | 50 | 140 | 585 | 237 | 822 | 202 | 31 | 122 | 355 | 191 | 546 | 1368 | 50 | 145 | 195 | 45 | 206 | 251 | 446 | 55 P. | 1072 | 246 | 170 | 2056 | ||
| Cost in cents, per ton, or per passenger per mile run, N. Y. and Erie Railroad. | .020 | .161 | .010 | F. .191 | .015 F. | .466 | .023 | .240 | .045 | .965 | ||||||||||||||||||||
| .157 | .021 | .107 | .285 | .109 | .394 | .205 | .018 | .080 | .303 | .081 | .384 | .778 | .020 | .079 | .099 | .022 | .045 | .067 | .166 | |||||||||||
| .035 | .207 | .011 | P. .253 | .018 P. | .511 | .026 | .159 | .053 | 1.002 | |||||||||||||||||||||
| NOTES. | RECAPITULATION. | SUMMARY. | DEDUCTIONS. | |||||||||||||||||||||||||||
408. The following general measures are recommended by Lardner in his Railway Economy, as being the means of obtaining increased economy in the working of railroads.
1st. So to manage the traffic as to cause the cars to carry more complete loads.
2d. To encourage the transport to long distances.
3d. To regulate the tariff so as to give the largest possible number of cars to each engine.
4th. To adjust the tariffs where the business is chiefly in one direction, so as to attract return traffic, that the cars may not run without a load.
5th. Not to increase the number of trains beyond a reasonable accommodation of traffic.
6th. To diminish as far as possible express trains, if it be not practicable to abolish them altogether.
RECEIPTS AND PROFITS.
409. The distribution of expenses, as we have seen, is somewhat complicated, and is systematically done upon a very few roads. The classification of receipts is, however, very easy, and is properly detailed in nearly all railroad reports. Upon the New York State railroads, the following was the division for the year 1854.
Average receipts per mile of road,
| Passengers, | $4,074.16 |
| Freight, | 3,776.72 |
| Extras, | 427.28 |
| Whole, | $8,278.16 |
| Whole expense, | $4,710.14 |
or fifty-seven per cent. of the receipts.
Receipts per mile run by trains,
| Passengers, | $1.32 |
| Freight, | 2.02 |
| Extras, | 1.67 |
| Whole, | $5.01 |
| Average, | 1.67 |
| Whole expense per mile run by train, | $0.97 |
Average receipts per passenger and per ton, per mile,
| Passenger, | 1.95 | cents, |
| Ton, | 2.79 | cents, |
| Average of passenger or ton, | 2.37 | cents, |
| Average expense of passenger or ton, | 1.38 | cents, |
410. Upon the New York and Erie Railroad for the year ending September 30, 1856.
Receipts per mile of road,
| Passengers, | $3,397.34 |
| Freight, | 7,143.42 |
| Express and mail, | 397.84 |
| Whole, | $10,938.60 |
| Whole expense per mile of road, | 5,263.00 |
or forty-eight per cent, of the receipts.
Receipts per mile run by trains,
| Passengers, | $1.16 |
| Freight, | 2.13 |
Average receipts per passenger and per ton, per mile,
| Passenger, | 2.02 cents, |
| Ton, | 2.37 cents. |
411. Upon the New York State roads,
| Average number of passengers per mile run, | 57.4 | ||
| Average distance travelled by passengers, | 81.4 | ||
| Average tons per mile run, | 90.0 | ||
| Average distance, whole number of tons carried, | 177.0 | ||
| Length, | 496 miles, | ||
| Freight tonnage, | 150,673,997 miles, | ||
| Passenger, | 84,069,398 miles. | ||
412. It is of course an object on every railroad to make the gross receipts overbalance the gross expense by the largest possible amount. The elements which determine the gross receipts are,
The charge per mile, for transport,
The number of units transported,
The distance carried,
of which the company’s directors can control the first only, except as adjustment of rates may attract business.
Reduction of tariff, to a certain degree, has the effect of increasing the receipts by augmenting the number of fares; but the reduction may be carried too far. So, also, for a certain distance, increased rates will increase the whole receipts; but in this case, also, the extreme must be avoided. The point to be arrived at is, evidently, that at which the difference of expense and receipt is the greatest, and this is not necessarily when receipts are the greatest.
We can make the receipts nothing either by making the charges so large that nothing can bear them, or so small as to vanish. Even when the receipts are 0, we still have the expense of moving the empties.
By forming a table in which one column shall show the different charges, and the second the corresponding amounts transferred, with the consequent receipts and cost of working, we shall find which rate of charge will give the greatest difference between expense and receipt.