The general nature of each of these above named groups is roughly expressed by its title. Under the first, Maintenance of Way, are segregated those outlays which have to do with the up-keep of the roadway and permanent structures in proper shape for the moving of trains. It includes, besides such obvious items as ballast, rails, ties and the wages of track men, every outlay on permanent structures, such as bridges and tunnels, stations, grain elevators, stock pens, gas, oil and water tanks, and even scrap bins and eating houses. To these are added scores of other minor items, such as maintenance of telegraph lines, fences and cattle guards, signal plants and docks and wharves. Every kind of tool or appliance used, and all wages paid in connection with the maintenance of this part of the property are included. Insurance and even the legal costs and damages incurred in connection with accidents, are all assigned to the appropriate property. The second group, Maintenance of Equipment expenses, includes, as the name implies, the proper care and preservation of all the rolling stock in good working order. Repairs and renewals of all locomotives, cars and vessels, form the largest single items. But all shop machinery and power plants are included, with specification in detail of every appliance needed in connection with the work, as, for example, over one hundred and fifty possible items from "adze handles, ammonia and auger bits" down to "wire brushes, wrenches and zincs." Conducting Transportation expenses, the third group, are supposed to provide for the actual movement of traffic. The two former classes of expenditure having put the fixed plant and rolling stock in condition, it remains to operate the property. Under this head is chargeable all costs of coal and supplies, wages of train hands from enginemen to car porters, yard, station, switch and signalmen and telegraph operators. To these are added such items as "purchased power," "cleaning cars," "clearing wrecks," and "losses and damages"; in short, every conceivable item of expenditure which can be assigned to the service as distinct from the mere property.
A fourth group of expenditures remains, denominated General Expenses. This includes all salaries of principal administrative officers from the president or receiver down to the real estate and tax agents, together with all their allowances for expenses, special cars or trains and the like. All clerical salaries in the general offices naturally belong here, as well as most of the legal expenses, outlay for pensions, relief departments and the like.
A distinct improvement in the matter of principle has been made in the revised classification of operating expenses under the new law of 1906, by the segregation of a fifth group, denominated Traffic Expenses.[30] These cover all the work of soliciting business, making rates and accounting for freight and passenger traffic. Such outlays were formerly grouped in the main under conducting transportation, but, as is quite evident, they are distinct in their nature from the expenses incidental to the actual handling of trains. Administrative railroad organization has long recognized the peculiar and important nature of this work by constituting it a separate department, usually headed by one of the vice-presidents of the road. The main items under this special head are salaries and expenses of a large staff of officers and clerks, such as general passenger and freight managers, agents and travelling solicitors; rents and care of offices at home or abroad; advertising, membership in traffic associations, immigration and industrial bureaus, expenses for experimental farms, field demonstrators, donations to expositions, fairs and stock shows—everything, in brief, which tends to create or keep business, to be afterward actually handled by the transportation departments. In future the detailed official statistics will segregate these expenses; but at the present writing and in statistics down to 1906 they must be bulked in with conducting transportation. An important modification in accounting under the new law of 1906 has also been made in respect to depreciation charges. Heretofore the practice of companies varied widely, as will hereafter be shown. Under the new rulings a definite and uniform system of charging off for depreciation has to be provided, the details of which, however, need not concern us at this time.[31]
The following table based upon the returns for 1905 shows the relative importance of the principal items under railroad expenditures grouped under the proper headings:
| Per cent. of operating expenses | Per cent. of total expenditures | ||
|---|---|---|---|
| Maintenance of way and structures | 19.78 | 14.39 | |
| Repairs of roadway | 10.39 | — | |
| Renewals of rails | 1.3 | — | |
| Renewals of ties | 2.66 | — | |
| Repairs, etc., of bridges, etc. | 2.32 | — | |
| Repairs, etc., of buildings, etc. | 2.11 | — | |
| Maintenance of equipment | 20.76 | 15.09 | |
| Repairs & renewals of locomotives | 8.29 | — | |
| Repairs & renewals passenger cars | 1.97 | — | |
| Repairs & renewals freight cars | 8.20 | — | |
| Conducting transportation | 55.49 | 40.36 | |
| Engine and roundhouse men | 9.4 | — | |
| Fuel for locomotives | 11.28 | — | |
| Train service (wages) | 6.54 | — | |
| Switchmen, flagmen, etc. | 4.34 | — | |
| Station service | 6.44 | — | |
| General expenses | 3.96 | 2.90 | |
| Total operating expenses | 100 | ||
| Fixed charges | 27.23 | ||
| Total—all expenditures | 100 | ||
DISPOSITION OF REVENUES AND INCOME FOR THE FISCAL YEAR ENDING JUNE 30, 1909. (OPERATING ROADS)
| 11.64% | MAINTENANCE OF WAY AND STRUCTURES |
| 13.62% | MAINTENANCE OF EQUIPMENT |
| 1.85% | TRAFFIC EXPENSES |
| 80.46% | TRANSPORTATION EXPENSES |
| 2.38% | GENERAL EXPENSES |
| 1.89% | OUTSIDE OPERATIONS |
| 3.19% | TAXES |
| 13.25% | INTEREST |
| 4.50% | RENTS |
| 6.54% | OTHER DEDUCTIONS |
| 8.72% | DIVIDENDS FROM CURRENT INCOME |
| .89% | ADDITIONS AND BETTERMENTS |
| .77% | RESERVES |
| .40% | PROFIT AND LOSS |
