13: Accounting

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The process of accounting for railway revenues and expenditures has evolved over almost the whole life of railways everywhere in the world, each country demanding variations according to local government needs. This makes railway accounting a very political fact of life.

Complexities of railway accounting

This end result stems from two external aspects of railway structure.

The first is that in the early days, there were no viable competitive transportation systems. Before the railways came, transportation by land was on horseback, or in wagons hauled by horses over rough roads or mud. Inland, water transportation was in freight canoes, and later in barges on canals, also hauled by horses. At sea, the steamship had not arrived, so ocean transport was by sailing ship, at the speed of the wind. So when the railways came, they offered faster transportation over long distances, reliably in spite of weather and road conditions. The railway management held a monopoly, and they set commodity rates accordingly. The citizens cried "Foul", and the Governments of the time progressively specified more and more elaborate forms of public accounting, so that they could at least see what was going on.

The second is that the total railway infrastructure comprises one whole unit. Tracks, bridges, locomotives, depots, management and personnel, even the land on which the tracks are laid, all serve a common purpose, to allow the railway to run. Only the passenger stations and cars are clearly a cost to the passenger service, as the freight cars and the freight yards are to the freight service. The passenger cars may be in intercity service one day and in commuter service the next. The freight cars may be common users, handling many different commodities from one loading to the next. It is a difficult and thankless task to try to break down railway costs to allocate them to various services and commodities. So there arose a complex set of railway statistics, attempting to compare one railway with another. Then the interpretation of statistics became an exercise in frustration, trying to understand what were the differences between railways that would explain the differences in the statistical reports.

One Vice-President of Research, newly joined on the railway staff from outside the Company, made a speech to a group of his peers. He said that, before he joined the railway, he simply could not understand why railway costing was so much a can of worms. Surely it should be a simple matter to dip into the can, pull out each worm in turn, and assign costs accordingly! Now that he was on the inside, he found that every time he dipped into the can, it was the same old octopus that he pulled out!

Shared trackage

In the early days of railways, there was extreme competition during construction, as each company tried to capture the most territory, and to exclude the other companies. This was economically unsound, since there was not enough traffic to share between them, and many companies went bankrupt because of it.

So the next practice was for an owning railway to allow a competing railway to have rights to operate on the same tracks, so that the costs of infrastructure could be shared. This met the same problems of allocating costs, and lead to an agreed method of sharing the costs according to a standard formula, in territory identified as "Joint trackage". Each railway operated its own trains, for crews, fuel, and equipment maintenance. But all capital charges, regular or special maintenance, policing, taxes and dispatching costs for the joint facility were assiduously accounted month by month by the owning railway, and then divided between the two on a basis of "Wheelage".

Wheelage was a count of all vehicles moved on the joint section, also month by month. Then each railway accepted into its own accounts, their own portion of the charges, split under the wheelage formula, and paid these sums to the owning railway.

This was the best system available, but it brought many problems with it.

Arguments arose, when the owning railway needed to make expensive maintenance expenditures or new capital investments, and the other user did not agree to the need. Priorities for dispatching were always arguable. Trains scheduled for a fast run required a long space of open track ahead of them, to allow them the clear space they needed. Slow trains occupied the track longer than the average trains. Problems with equipment or service delays were not reflected in the wheelage formula. Yet intensive railway operations on joint trackage were successful for many years.

Another problem with Joint Facility Accounting is that the monthly accounting of the costs cannot be done until each month is finished, and all the labour and materials charges reach the hands of the accountants. There can be bills coming in from contractors a long time after the event, so revisions and new claims may develop years after the initial settlement of accounts. The operating railways do not have final costs of their operations for a long time after the event.

Commuter trains on joint trackage

The tracks between a junction at Mimico, known a "Canpa", and another junction near Burlington, were owned by CN, but operated as joint trackage with the Canadian Pacific Railway. Both railways operated passenger and freight trains on these tracks, each in its own name. At the time the plans for GO-Transit were announced, CP was no longer moving passenger trains on the joint facility, but CN moved all types of train, long-haul freight, transfers, switchers, intercity passengers, and the Hamilton commuters.

The passenger facilities at Toronto Union Station also were a joint facility, although used almost exclusively by trains in the name of CN. Still there was a requirement for joint facility accounting when another railway brought a train in.

The decision that CN would operate a new commuter service in the name of the Government of Ontario created a new situation for accounting processes. It was understood that the Government would remunerate CN for all costs associated with it. There were long discussions to define what costs would be valid, and how the costing and billing for the service would be handled. Since the Government was not itself a railway, it did not fit in as another railway on the joint facility.

The situation was resolved by the decision, that for joint facility accounting, the GO-Transit trains would be considered to be CN trains, then a second joint facility accounting process would be set up to divide these costs between CN and the Government.

The need within the Commuter Group was to recruit new accounting staff, to create these accounts and bill for the GO-Transit operation. The need would be to satisfy not only the railway accounts, but also the accounting used within the Government. This was the charge that Reggie Corrigan found waiting her, when she moved into the Commuter group's offices.

GO-Transit accounting

Reggie Corrigan was no stranger to railway accounting, but she had another qualification for this responsibility. She had been pursuing a course of accounting outside the railway, so she had a wide knowledge of the differences she would meet, in working to meet the needs of both the Government and the railway systems. I was able to meet with Reggie twice, when I began contacting the people who had worked on the project, First, I was able to visit her in a pleasant setting at her summer cottage on the shores of Lake Scuggog. We talked about the whole task and about the four people who came together to form her group, then we had another meeting when I invited the whole group together for a meal and discussion at a hotel in Toronto.

So I asked Reggie how she came to me in the first place. Jack George was already in the Commuter Group. Before that, he had come up through the accounting departments in various positions. He already knew Reggie and how she had gone about to widen her skills beyond railway accounting. She had been supervisor of Accounts Payable on the Region at the time when the whole operation was being mechanized. In this job, she had a lot of young staff, new people and new things to do. She had experience working with young people, and got a big kick out of giving them enough scope, then letting them work things out, with guidance only as needed. Then the operation was transferred to CN Headquarters in Montreal, and that department went down to being just a small office under her.

By the time Jack was needing to recruit someone to supervise our group, Reggie had been promoted to be Assistant Manager in the General Accounting department, in charge of capital expenditures and accounts, and material supplies for the Region. Jack had seen her in action in Accounts Payable, so that may be why he talked to her about coming to the Commuter Group. Jack spoke to her boss, John MacDonald, the Manager of the Department. This was typical of Jack, and it was only a matter of a very few days. When she told me that, of course my reaction was immediate, “Nothing took long. There was no time!” It was Jack’s responsibility, and he concluded it all.

Reggie said she was already excited about the commuter project, even before she became personally involved. She couldn’t remember when she first heard about it, but she knew about the Commuter Group’s existence well before.

“Can you remember about finding out what you had to do?”

“That was interesting, too. Jack had been working with the Commuter Group from the start, on all the things the Group was into, as well as his concerns about the administration and staffing of the commuter stations. While he was working on the coloured tickets, the transit fares, and so on, he used to enlist my opinions, so we sort of grew together on it. An early problem was how we were going to assess the sharing of costs of running over the Joint Sections. That involved long hours visiting with the department responsible for Joint Section accounting. Doug Young and Rusty Gould came in with a costing process for the Willowbrook Depot, that would be 100% chargeable, and Dick Babb, about the Spadina roundhouse, and coachyard, that would be shared costs. From the viewpoint of CN, I would be working as an Account Receivable, so I had to produce statistics that would support it to CN Management. But also I had to produce what the Government needed, as an information package, or an accounting package, so it had to be stated in a different format. Basically, we had to design our own system that would be setting a precedent for the future. The Government designated Rod Slater to work with me on this.”

Unfortunately, we were just a few years ahead of having computers available for smaller work packages, so it all had to be worked out in our own accounting forms, to jive with the major computer systems that the railway was using, and withstand auditing by the Government Auditors.

So Reggie moved into the Commuter Group in December 1966, and she only had till May 1967, to get the accounting in hand. I asked her what was her most exciting memory of those years. Her answer was simple and to the point: it was the task of recruiting the staff she needed. There was a real pressure of time. The date for inauguration had been set, and the structure of the system of accounts was only broadly outlined. She would have to decide what staff she would need, and how to recruit them. They would need to create the accounting structure and the forms to record the figures as they came in, and for passing on to the other departments, and the Government. She had to work within the terms of a labour agreement, that had thousands of employees in scope. It gave priority to length of service, otherwise referred to as “Seniority”. So there were a lot of employees who were senior enough that they would be entitled to claim the jobs that the Commuter group would be filling. Most of these were career people, who had lived in the special railway accounting processes, and had limited or no knowledge of the broader fields of accounting, to be able to do the work that Reggie knew to be ahead of them. She needed accounting people, who knew more than just railway accounting.

So the four new jobs were posted, and the bids came in. Now they all had to be interviewed, and the requirements of the job explained to them. Then Reggie would ask what was the knowledge they would bring to the work, and determine whether they had the necessary qualifications to take the job. She had to interview 22 people to find the four that she selected, in the end. When so many of the applicants were rejected, it caused quite a stir in the Company. This was unprecedented, and Reggie had to defend her actions both up and down the line. Management believed she was doing the right thing, and in general, we gave her the support she needed.

That was not all. Fourteen of the candidates who were rejected filed grievances under the labour agreement, so now it fell to Reggie to support her decisions by demonstrating that the grievers did not have the qualifications needed. She had satisfied the terms of the labour agreement in rejecting them. One of the grievers was the local chairman of the brotherhood. All her cases were accepted, so from then on, the real work could start. When the selected staff finally got into the work, most of the grievers admitted that they could not have handled it, so it all ended amicably. It was a challenge while it lasted and a satisfaction to Reggie when it was over.

The team she selected comprised four people. Marg Mulligan was Senior Accounting clerk. Then Marg Buchan was Accounting Clerk, responsible for extracting the costs for the joint section on the Toronto-Hamilton side, and Irene Kennedy did the same for the Kingston subdivision on the east side. For the shops and stores, Betty McLaughlan was the Accounting Clerk there. There came a moment when accumulation of statistics became even too much for this group, and a retired Comptometer Operator named Rose Mitchel was brought in on a temporary basis to help out. We were doing everything manually, on mechanical calculators.

After I had this meeting with Reggie Corrigan, it seemed better if I could meet with her staff, to hear what had been their experiences, so with Reggie’s help, we invited them to meet with us for lunch in a hotel in Toronto. They were all able to be present, and Marg Buchan brought her husband, Al Norton, so now she was Marg Norton. Al made a different contribution to this story, that is included in Chapter 2, “Setting the Scene.” It was fair that Al should be at this reunion, because at the time this work was being done, Al was Joint Facilities Examiner, so much of the liaison with joint facility accounting was done through him. Marg was walking out with him already, so that was another reason for him being deeply involved in setting up the accounting for the Commuter Group.

It was a grand reunion when they all came together round the table, so we didn’t start straight away on my questions. I explained that I was hoping to hear what they could remember of getting into the job and setting the system up. That was when I ran into a little difficulty. The whole group had remained involved in the commuter accounting long after the service was inaugurated, and their memories were somewhat coloured by their later experiences, so there was a lot of give-and-take. When the commuter group first came together, Al had already advanced through many different responsibilities, and was in a position of clerk in the Accounting Department. Although not directly involved then in the joint facility accounting for the group, he had a lot of joint facility experience behind him. So he could be very helpful, when any of the Commuter group, and Marg Buchan in particular, came to him for advice, or explanations in the existing procedures. Later, he really appreciated having been involved in setting it all up, because as time went on, he moved up to positions where the commuter accounting became fully one of his responsibilities.

It was natural for me next to ask the same question of Marg Mulligan, who was next at the table. Marg had continued to be involved in the commuter accounting long after the service started, but she had no problem telling us her biggest memory. It was that we had recognised the work she had done in attending night class at Ryerson, where she had earned an accounting degree. She knew that her date in the seniority list would not have entitled her to stand for this position, so she got a lot of satisfaction knowing the this was the qualification that Reggie was prepared to fight for, to get her as Senior Clerk.

Just across the table from Marg Mulligan, there was Marg Buchan, now Mrs. Norton. She said her memories did not run in the same vein at all. Her strongest recollection was of the sudden and great acceptance of the new commuter service by the outside world, how they loved GO-Transit. She had been with us only a couple of months before we inaugurated. It was the best thing that happened for anyone that was traveling.

How did that come to you? What did you know about acceptance by the public?

When I played bridge, the folks who came in from outside, miles away . . . . .

So you got to talking while you were at bridge? Where did you play bridge then?

Oh, yes, we played anywhere, but mostly in Willowdale.

But GO-Transit had not reached Willowdale at that time!

Not at all, but they knew all about it from their neighbours. They were always asking whether I was with GO-Transit. They thought it was a wonderful way to travel. They were always saying how people loved to travel by GO-Transit. I had lots of feedback.

So I asked what work she was doing before Reggie called her in. It turned out to be practically the same as Marg Mulligan, in Materials and Supplies. “I was working for Harold Wardman, in the same office on the Toronto Area.”

Next along the table, I asked the same of Betty McLaughlan. Betty said she had been through so many things since then, she couldn’t call up any of these kinds of memories, even as she was hearing all these other comments. She remembered the job going up on the board, being interviewed and finally chosen for it. She found satisfaction in that. She had been in the same department as the others.

So when Reggie reached in to grab you, she was robbing the office?

There were so many people applying, Reggie had to go through a qualification and selection process. But we had been going to Ryerson together for training, so we had the qualifications needed.

Then I turned to Irene Kennedy, who was sitting squeezed in between Betty and Reggie. Irene remembered how she felt so strongly that the women were finally getting a break. That was the main thing that hit her. Up to that time, her experience gave her to think that women didn’t rate when it came to competition for advancement, so this was a new development for her, when she got the chance. Reggie was the one who had advised them all to go to Ryerson. For that advice alone, it was the first time anyone in the railway had advised them how to go about seeking advancement. More than that, they were all in the same department together, so they effectively stripped his department. Do you know, he actually cried!

Irene said she had just an ordinary education, up to what would now be 12th grade. But it was the higher education that counted. It took them two years at night school to qualify for their diplomas.

It was only two months before the date for inauguration that the group moved in together. So I asked what did they remember of those first few days or weeks, trying to identify what they would be starting into. They remembered making up forms that would be needed for submission to Government. These had to meet the Government’s needs, as well as satisfy CN’s routines, so that each would know what was being accounted for. They did not have samples from the Government, so they had to get input from everybody, then type them up for discussion. It was not the structure of the form itself mattered, but that it had to carry the information needed by each, in a layout that each could interpret.

The contacts in the Government had said what they would be looking for, then Rod Slater came into the picture, and helped in finalising the forms that were adopted in the end. The situation was complicated, because the whole operation was still building up to inauguration, so it was not yet an on-going operation, and many details were evolving even as they worked. Reggie reminded us that Jack George had been with the Commuter Group, even before the government decision, so he had come a long way in understanding what would be asked for on both sides.

So I asked if they could think of anything more of interest that should be mentioned in the book: any new thoughts, or ground we had not already covered. Margaret answered, saying: “I think it was a whole change in railway operations. You took us out on a trip along the line, to let us see what we were working on. We made a vast difference, in the style of everything. One thing is that nobody interfered with the Commuter Group. They hadn’t a clue what we were doing!” Then Al added: “It was a really good thing. When you went on board a train, you took your ticket with you. When you went through the gates, you dropped your ticket in. The manner of selling tickets was different, too. That helped.” Reggie added: “That was the ‘on-ground ticket control’. We would never have got that thing going, without that kind of system. I’m sure Jack George enjoyed it too. He loved the most, the tickets and the colours.”

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