The Accounting System Prescribed for Railroads By the Interstate Commerce Commission

• Author: William E. Hooper
• DOI: 10.1177/000271621606300120
• Published date: 01 January 1916
• Date: 01 January 1916
• Subject Matter: Articles

222

THE

ACCOUNTING

SYSTEM

PRESCRIBED

FOR

RAILROADS

BY

THE

INTERSTATE

COMMERCE

COMMISSION

BY

WILLIAM

E.

HOOPER,

Associate

Editor

of

the

Railway

Age

Gazette.

The

origin

of

the

system

of

accounts

which

is

now

prescribed

for

all

railroad

companies

reporting

to

the

Interstate

Commerce

Commission

was

a

system

of

accounts

which

Thomas

D.

Messler

introduced

shortly

after

1862

on

the

Pittsburg,

Fort

Wayne

&

Chicago-the

northwest

system

of

the

Pennsylvania

Lines

West.

The

theory

on

which

this

system

was

based

is

that

the

accounts

of

the

railroad

should

be

a

&dquo;pen

picture&dquo;

of

the

results

of

operation

for

the

fiscal

period

and

of

the

financial

condition

of

the

company’s

affairs.

The

system

which

is

now

prescribed

by

the

Interstate

Commerce

Commission

rests

on

the

theory

that

the

accounts

should

show

the

cost

of

the

assets

of

the

corporation

and

the

cost

of

performing

the

service

of

transportation

and

incidental

services

connected

therewith.

The

commission

and

its

former

statistician,

Professor

Henry

C.

Adams,

originated

nothing

of

importance

in

the

present

system,

their

contribution

to

it

being

in

the

nature

of

elaboration.

Previous

to

the

introduction

of

the

Messler

system

on

the

Pennsylvania

Lines

West,

each

department

or

division

of

a

rail-

road

company

had

its

own

set

of

bookkeepers

who

evidenced

the

transactions

of

that

department

or

division.

These

records

were

combined

and

audited

by

the

auditor

or

treasurer

who

drew

up

the

balance

sheet,

based

on

the

summarized

and

audited

records.

The

Messler

system

combined

the

bookkeeping

and

auditing

func-

tions

in

a

single

department-the

accounting

department.

The

Messler

system

accomplished

four

important

changes:

(1)

The

accounting

officer

was

made

responsible

for

the

collection

of

all

accounts

due

the

company

and

for

the

making

of

settlements

with

other

companies;

(2)

There

was

established

the

forwarded

basis

for

the

settlement

of

interline

freight

accounts

and

the

balance

of

station

accounts

between

the

forwarding

and

receiving

stations;