RAILWAY MAIL PAY

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* ^. HEARING
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* JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS
T MAIL MATTER AND COMPENSATION FOR
THE TRANSPORTATION OF MAILS)
SIXTY-SECOND CONGRESS
THIRD SESSION
*=======s===s**E=º.
JANUARY 28 AND 29, FEBRUARY 7, 12, AND 17, 1913
*===
N O. 1
Printed for the use of the Joint Committee
WASHINGTON
GOVERNMENT PRINTING OFFICE
1913
Transportatio"
Library
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER
AND COMPENSATION FOR THE TRANSPORTATION OF MAIL.
CoNGRESS of THE UNITED STATEs.
Senators: Representatives:
JONATHAN BOURNE, JR., Chairman. JAMES T. LLOYD.
HARRY A. RICHARDSON. WILLIAM E. TUTTLE, JR.
JOEIN H. BAN KEIEAD. JOHN W. WIEEES.
$ Robert H. TURNER, Secretary.
RICHARD B. NIXON, Disbursing Officer.
II
TABLE OF CONTENTS.
Page.
Albright, P. R., assistant general manager, Atlantic Coast Line Railroad. . . . . . 251
Anderson, Alfred W., general manager, Charleston & Western Carolina Rail-
Way--------------------------------------------------------------------- 195
Baldwin, W. W., vice president, Chicago, Burlington & Quincy Railroad. . . . . . 13]
Bowman, John Hall, special accountant for the New York, New Haven &
Hartford Railroad. -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - * - - - - - - - - - - - - - - - - - - 277
Brown, John W., president, American Electric Railway Co., president Mary-
land & Pennsylvania R. R. Co- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 171
Buckland, Edward G., vice president, New York, New Haven & Hartford Rail-
road------------------------------------------------------------------- 257,298
Ham, W. F., vice president and comptroller, Washington Railway & Electric Co. 169
Hamilton, F. C., accountant for Chicago railways- - - - - - - - - - - - - - - - - - - - - - - - - - - 166
Lyons, Henry S., Secretary, Boston Elevated Railway Co- - - - - - - - - - - - - - - - - - - 140
Mack, H. E., manager mail traffic, Missouri Pacific Railway. - - - - - - - - - - - - - - 210, 301.
Neal, J. Henry, general auditor, Boston Elevated Railway Co. - - - - - - - - - - - - - - - 141
Peters, Ralph, president, Long Island Railroad Co., and chairman committee
on railway mail pay of the American Railway Association. - - - - - - - - - - - - - - - 42, 177
Piper, Alexander R., general freight agent of the South Brooklyn Railroad. . . . . 153
Safford, W. W., general mail and express agent, Seaboard Air Line Railway. - 135
Scott, S. C., assistant to first vice president, Pennsylvania lines west of Pitts-
UT8D- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 222
Stewart, John, superintendent and traffic manager, Marcellus & Otisco Lake
Railway----------------------------------------------------------------- IQ0
Stewart, Joseph, Second Assistant Postmaster General- - - - - - - - - - - - - - - - - - - - - - - 3
Taylor, Grant W., general Superintendent of transportation, Southern Railway
System------------------------------------------------------------------ 3.14.
Wade, H. M., agent of mail traffic and general baggage agent, Erie Railroad. . 243
III
RAITWAY MAIL PAY.
TUESDAY, JANUARY 28, 1913.
CoMMITTEE ON SECOND-CLASS MAIL MATTER,
Washington, D. C.
The joint committee met at 3 o'clock p. m.
Present: Senator Jonathan Bourne, jr. (chairman), Senator John
H. Bankhead, Representative James T. Lloyd, and Representative
William E. Tuttle, jr.
TESTIMONY OF MR. JosepH STEwART, SECOND ASSISTANT
s POSTMASTER GENERAL.
The CHAIRMAN. General Stewart, it will be necessary for you to be
SWOTOl.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you please state your age, residence, official
position in the Government, and the length of time you have been in
the Government employ?
Mr. STEwART. My name is Joseph Stewart. I am Second Assistant
Postmaster General. I am 53 years old. I have been in the Govern-
ment service about 25 years altogether.
The CHAIRMAN. Have you been in the Post Office service all of that
time 3
Mr. STEwART. Most of the time.
The CHAIRMAN. Will you explain, General, for the information of
the committee, the initiation of the inquiry resulting in the report
known as Document No. 105, which the committee has before it, and
give a history of the reasons leading up to that document and briefly
a description of what it purports to contain?
Mr. STEwART. I think it was in the year 1907, while Mr. Cortelyou
was Postmaster General, the question came up on inquiry as to what
action had been taken by the Post Office Department in compliance
with the act of March 3, 1879, which reads as follows:
The Postmaster General shall request all railroad companies transporting the mails
to furnish, under seal, such data ji: to the operating, receipts, and expenditures
of such roads as may, in his judgment, i.e. deemed necessary to enable him to ascer-
tain the cost of mail transportation and the proper compensation to be paid for the
same; and he shall, in his annual report to Congress, make such recommendations,
founded on the information obtained under this section, as shall, in his opinion, be
just and equitable. -
The transportation of the mails is assigned by the Postmaster
General to #. jurisdiction of the Second Assistant Postmaster Gen-
eral, and therefore it was incumbent on the Second Assistant Post-
master General to advise Mr. Cortelyou upon that question. He
was advised that soon after the passage of that statute of 1879 an
3
4 RAILWAY MAIL PAY.
effort had been made to secure the information required, but that
these reports of the companies were so meager and unsatisfactory
that they were practically worthless for any purposes such as those
required by the statute. I think it was the general opinion that at
the time the railroad companies did not have their accounts in such
shape as to enable them to make the reports which the department
needed for the purpose. It was also stated that it had been believed
by the department that the spirit of the law of 1879 had been sub-
stantially complied with by the several postal commissions, depart-
mental and congressional, that had taken up the matter in the
meantime and reported from time to time.
The CHAIRMAN. That is, from the date of the passage of the law
up until 1907 ? 3.
Mr. STEwART. Yes. But that if the Postmaster General desired
an inquiry made along the lines of that statute, it was believed that
the railroad companies at that time had their accounts in such form
as would enable them to respond to the necessary inquiries, and that
if he desired an effort made it would be undertaken. He indicated
his desire that it should be made; consequently the then Second
Assistant Postmaster General directed that the inquiries be prepared.
The CHAIRMAN. Who was Second Assistant Postmaster General at
that time
Mr. STEwART. Hon. W. S. Shallenberger. I had immediate charge
of the matter under Mr. Shallenberger, and it fell to my lot to attempt
to prepare the necessary forms and inquiries. I afterwards became
superintendent of railway adjustments, in whose division the matter
would naturally rest, under the direction of the Second Assistant
Postmaster General. With the assistance of others in the department
I prepared forms and instructions which were intended to bring out
from the railroad companies the necessary information with respect
to the operation of passenger-train service, the amount of car space
devoted to the several classes of service which are known as passenger
services, that is, passenger service proper, express service, and mail
service, and designed further to bring out the operating expenses as
rescribed by the schedule of the Interstate Commerce Commission—
*. one hundred and sixteen items for the larger systems. You
will observe that the inquiry was started along the line of space as a
gº for ascertaining cost. & 4 iº *
The CHAIRMAN. Did you start your inquiry, with the impression
that the substitution of space for weight was desirable, or was your
recommendation of that substitution based upon the results of your
inquiry 7
Mr. STEwART. The inquiry was not started with any specific idea
that space would be substituted for weight, but space was adopted
as apparently the only gauge by which we could measure the cost of
the service. I endeavored to avail myself of every possible source
of information as to the practicability of the plan and as to
whether it would elicit information which would bring about the
result desired, that is, the ascertainment of cost. In the early stages
of preparation I took my plans and instructions to the Interstate
Commerce Commission, and consulted with their statistician, Prof.
Adams. Prof. Adams very kindly went over the whole matter with
me for a number of days, advised me upon them, and expressed
opinions as to what ones were practicable and what were not prac-
RAILWAY MAIL PAY. 5
ticable, and, as a result of that conference, I made changes in those
that I had prepared. In order to cooperate with the railroad com-
panies, or rather to have them cooperate with us to the fullest extent,
the Second Assistant Postmaster General invited the representatives
of the railroad companies, practically all the large systems and repre-
sentative systems otherwise, to meet with me and other officers of
the department to go over our forms and discuss with us their
practicability.
The CHAIRMAN. Was this in 1907 or 1908%
Mr. STEwART. No; this was some time after 1907.
The CHAIRMAN. Probably in the year 1908%
Mr. STEwART. Yes; 1908. The task of preparing these forms and
instructions and determining their practicability was, a large and
difficult one because we were practically in a new field pursuing
a new line of inquiry and in a new way. In the meantime the
Postmaster General changed and Postmaster General Meyer, who
succeeded Mr. Cortelyou, directed that the inquiry be continued. The
railroad companies met with us and we had a number of conferences
going over the forms and instructions. They suggested features that
they thought were practicable and indicated others which they
thought impracticable, and, so far as those were concerned, we
deferred to their judgment.
The CHAIRMAN. As specialists?
Mr. STEwART. Yes, sir. We did not desire to ask anything which
was impossible or impracticable of accomplishment, but at the same
time we desired to bring out all the information which we thought
was necessary to comply with the statute. The result of those con-
ferences was the final completion of the forms. Thereafter the tables
and letters of instruction set forth in Document No. 105 were prepared.
The CHAIRMAN. With practical concurrence, so far as you know,
on the part of the railroad representatives as to the forms adopted
for the purpose of obtaining the information ?
Mr. STEwART. Yes. I do not recall any material objections that
we had from the railroad companies. It then became a question of
getting them out at the earliest practicable moment and receiving
the returns. The month of November, 1909, I believe, was the
earliest practicable time at that period for securing statistics, and
accordingly these forms and instructions were sent out to all the
º companies to return us the information requested for that
month.
The CHAIRMAN. The selection of that month being for what reason 3
Mr. STEwART. We thought it was a fair average for the year.
Congress, at our request, granted us $10,000 to defray the expenses
of the tabulation of these returns. We organized a j force
of as expert people as the Civil Service Commission could supply
us under the supervision of a trained departmental force for re-
ceiving and checking up the returns and making the computations
necessary. Later we º for $10,000 additional, which was granted,
to complete the statistics. Before the work was finished the
present Postmaster General, Mr. Hitchcock, came into office and
authorized the continuance of the work and its completion, and
it has been under his administration that the main part of the work
in connection with the preparation of Document No. 105 has been
done in the department.
6 RAILWAY MAIL PAY.
The CHAIRMAN. The two appropriations of $10,000 each were
expended in the compilation and tabulation of the information sub-
mitted by the railroads to you in answer to the forms submitted by
you to them?
Mr. STEwART. The larger part of them. We did not expend the
whole amount. re -
The CHAIRMAN. How much was expended ? *
Mr. STEwART. The exact amount expended was $19,423.20. These
forms required the return from the railroad companies of quite exact
information with reference to their train operations and the amount
of space for these three classes of service devoted to each respectively
in the passenger trains operated. We checked up all those reports
very carefully with their official time-tables to see that they were
correct so far as train operation was concerned. Then we checked
up the amount of space devoted to the mail service as reported by the
railroad companies with our official records, allowing as a charge against
the mail service the space occupied by closed-pouch, apartment-car,
and for all railway post-office car service, as set forth on pages 101 and
102 of this document “Railway Mail Pay.” The railroad companies
furnished us also very complete returns with reference to their operat-
ing expenses under the several items prescribed by the Interstate Com-
merce Commission. The details of these and the manner in which
they were used in making an apportionment of expenditures between
the freight and passenger services and then apportioning the passenger
service to the passenger, express, and mail services are fully set forth
in Document No. 105. The purpose of the inquiry, you will observe,
was to comply with the statute of 1879 to ascertain the cost of the
service and to afford a basis for recommendation to Congress as pro-
vided by law. This ascertainment, therefore, of Document No. 105
is an ascertainment of the cost to the railroad companies of carrying
the mail based upon the service performed and a }. and equitable
*Pºº of the operating expenses chargeable to the mailservice.
he CHAIRMAN. Was there a commission formed in the depart-
ment for the purpose of making this study ? If so, at what time; and
of whom did that commission consist!
Mr. STEwART. After the work of compiling the statistics and mak-
ing the computations had been done, as shown in the main body
of the report, Document No. 105, the Postmaster General on November
4, 1910, appointed a committee to consider the results of the infor-
mation secured and to report to him thereupon with such recom-
mendations regarding railway mail pay and railway post office car
pay as might be deemed proper. That committee, consisting of the
Second Assistant Postmaster General; R. S. Sharp, Chief Inspector;
Theodore Ingalls, General Superintendent Railway Mail Service; G. F.
Stone, Assistant General Superintendent Railway Mail Service; C. B.
Keen, post office inspector in charge; and C. H. McBride, Superin-
tendent of the Division of Railway Adjustments. They made a report
to the Postmaster General under date of July 25, 1911, and that report
is set forth in Document No. 105. *
The CHAIRMAN. You were the chairman of the committee ?
Mr. STEwART. I was chairman of the committee.
The CHAIRMAN. That report was submitted to the Postmaster
General July 25, 1911. I see your letter to the Postmaster General
here in Document No. 105, dated July 24, 1911. -
RAILWAY MAIL PAY. 7
Mr. STEwART. The submission of the results of the inquiry to the
Postmaster General, and the report of the committee, was done
practically at the same time.
The CHAIRMAN. That was July 24, 1911?
Mr. STEwART. Yes, sir.
The CHAIRMAN. And the Postmaster General submitted that infor-
mation to the Speaker of the House on August 12, 1911?
Mr. STEwART. Yes, sir; that is right.
The CHAIRMAN. In next to the last paragraph of your report to
the Postmaster General, as expressed in your letter of July 24, 1911,
you say, “The result indicates that the companies represented in the
computation would receive annually, under such method of pay-
ment, about $9,000,000 less than at present.” Do you mean to
imply from that statement that, in your opinion, based upon the
information received and the deductions º by you in your study
of this question, the railroads have been overpaid $9,000,000 annually
for the transportation of mail?
Mr. STEwART. No; there is no purpose to make a statement of that
kind. The statement which you have read is a statement which is
made solely upon the basis of the statistics furnished and the ascer-
tainment made upon those statistics, namely, that having consid-
ered the data and considered the computations made by the depart-
ment, the cost of the service upon that basis $9,000,000 less than
the amount which was being paid to the railroads for the transpor-
tation charge.
The CHAIRMAN. That is, by the substitution of your plan of space
for weight and an allowance of 6 per cent profit on the annual cost of
hauling the mail, the Government would pay $9,000,000 less than
they pay under the present system 7, Is that it? -
Mr. STEwART. Yes, sir; that is it. Furthermore, it should be
borne in mind that I made no recommendation that the railway mail
}. should be adjusted upon the ascertainment of Document No. 105.
hose statistics were the first statistics ever attempted in an exhaust-
ive manner along those lines. The results were the first results ever
worked out by the department, and I think by anyone else upon such
basis. While I think they are approximately correct, it was not a
result º which I was willing to recommend the readjustment of
pay. If a plan such as we suggested to the Postmaster General and
which he sent to Congress should be adopted
The CHAIRMAN. Which plan do you refer to ? We have two
plans before us.
Mr. STEwART. The plan recommended by the Postmaster General
on the adjustment on the basis of space, on the ascertainment of
cost, etc.
The guaranas. You mean the bill that was introduced at the last
SéSSIOIl
Mr. STEwART. Yes; or its modification—either one. If either one
were adopted, or, we will say, if the modification were adopted, the
department would proceed to make this ascertainment in the best
possible manner, mainly along the general and broad lines indicated
in Document No. 105. -
The CHAIRMAN. Would there not be a vast difference in the esti-
mated saving, or, if you please, the amount paid the railroads as
between the enactment of the original bill as suggested by the depart-
8 BAILWAY MAIL PAY.
ment and the supplemental bill as recently suggested, modifying
somewhat the terms, especially the one of allowing a percentage on
capital employed in the service rendered instead of the sole allow-
ance being 6 per cent on the cost of the operation?
Mr. STEwART. There would be a difference in two respects. The
first one is with reference to the amount of space which would be
credited to the railroad companies, or rather charged against the
mail service. There would be some more car space charged to the
mail service, I think, in the case of apartment cars in cases where the
railroad companies might be entitled to a larger credit than they
received for space in cars on the return movement. Such credit in
regard to full car lines was substantially given as indicated on pages
101 and 102 of the document “Railway Mail Pay.”
The second point of difference would be in this: The Postmaster
General has stated that in addition to the operating expenses and
taxes apportionable to the mail service, and 6 per cent thereof, com-
panies should be allowed such additional amounts, if any be necessary,
as shall render the whole a proper proportion of a fair and reasonable
return on the value of the property necessarily employed in connec-
tion with the mail service. f
In the preparation of Document No. 105 we did not have before us
information which would have led to a safe conclusion in regard to
that item. If the railroad companies are to be allowed credit for
what would be a fair return on the value of the property employed in
performing the service it would increase the amount considerably.
The CHAIRMAN. Have you any idea as to what the increase
would be 3
Mr. STEwART. I have no definite idea, because of the difficulty of
arriving at a physical valuation of the property employed.
The CHAIRMAN. Have you an impression ? In other words, what
change would the last suggested bill, printed on page 109 of this blue
pamphlet, make on the $9,000,000 estimated difference in payment
to the railroads, as indicated in Document No. 105? How much, if
any, would it decrease that $9,000,000 difference in pay ?
Mr. STEwART. Stating from a general impression of the subject—
and that is all I have—I should say that it would eliminate the
$9,000,000, that is, if a fair return were allowed the railroad compa-
nies upon a fair valuation of the property employed in performing the
mail service in addition to the cost of performing it and 6 per cent.
The aggregate amount paid the †iº companies now is probably
not in excess of what that aggregate amount would be.
The CHAIRMAN. So that, in the adoption of the suggested plan of
substitution of space for weight, an allowance of a fair amount on the
capital with no duplication of credit, such as the 6 per cent, the actual
operating expenses for handling the mail, there would be no reduction,
in your opinion, of the gross amount now paid under the present
system to the railroads'.
Mr. STEwART. That is my judgment on the best information I have.
The CHAIRMAN. As I understood, in 1907, when you started on this
study at the request of the then Postmaster General, Mr. Cortelyou,
your impression was that it was desirable to subsitute space for
weight. How did you get that impression as to the desirability of
space rather than weight before making any study of the problem?
RAILWAY MAIL PAY. 9
Mr. STEwART. You misunderstood me. I did not start in the
inquiry with the idea of substituting space for weight as a basis for
paying the railroads. I took space as the only gauge for determining
the cost; that seems to be the only gauge for ascertaining the cost
of the mail service. Here you have the total cost of all the passen-
ger service, and you have certain elements which represent approxi-
mately the service performed for each of the three classes that con-
stitute the passenger service—that is, you have your passenger cars,
you have your express cars, and you have the mail cars.
The CHAIRMAN. Then your goal was the determination of the actual
cost of operation on the part of the railroads and then the develop-
ment of a fair plan for compensation to the railroads for that activity?
Mr. STEwART. Yes; that was it.
The CHAIRMAN. Why did the department modify its views pre-
sented in document 105, and expressed in the suggested bill, which
was introduced in Congress, in order to get a concrete plan before the
country and the parties in interest—the Government and the trans-
portation companies—which modifications are shown by the draft of
a bill recently received by the commission from the department,
giving certain modifications, especially the one of an allowance of a
reasonable compensation on capital charges }
Mr. STEwART. Because, Senator, upon a further and more careful
consideration of the subject we were convinced that the railroad
companies were entitled to consideration for this additional element.
We are not prepared to say what that should be. It is a very diffi-
cult question, and it involves the physical valuation or ascertainment
of capitalization and then the ascertainment of a fair proportion of
that devoted to the mail service, and, furthermore, after you ascer-
tain that, a determination of what rate per cent return thereon is
due the companies for performing a public function for the United
States. It is a difficult question, but we believe that that is an
element which should enter into compensation to some extent, and
having come to that conclusion, we submitted this amendment to
our original plan. - -
The CHAIRMAN. Why did the department modify its views as
shown by its suggested substitution of the Interstate Commerce
Commission for the Postmaster General to make the separation of
operating expenses between passenger and freight service
Mr. STEwART. Because after the submission of our plan to Con-
#. it was pointed out that the plan devolved upon the Postmaster
eneral or the Post Office Department the necessity for making a
separation of the operating expenses between the passenger and the
freight service in order to get a basis for a further separation for
the mail service. That is a necessary step in the procedure, but it
is a step in which the Post Office Department is not primarily inter-
ested, and, furthermore, it has been represented—and I think very
properly by the railroad companies—that the Post Office Depart-
ment, not being primarily interested in that, should not have the
great power of making such separation, which separation might
become the basis for the fixing of rates for other classes of service
in which we are not interested at all; as, for instance, freight and
passenger service. . Furthermore, the Post Office Department has
no interest in making this separation except to obtain a basis for
10 RAILWAY MAIL PAY.
our further separation to the mail service, and, taking it from these
points of view, we suggested that this separation should devolve
upon some independent tribunal; as, for instance, the Interstate
Commerce Commission, and I have made that suggestion and modified
the original plan of the proposed law. -
The CHAIRMAN. If I understand, should Congress see fit to enact
legislation as presented by your modified plan it is your opinion
that the net result in dollars to the Government would be practi-
cally the same, or possibly we would pay the transportation com-
panies even more than they are now paid under the present method,
90 per cent of the mail transportation being paid for according to
weight and 10 per cent according to space, as represented in the
R. P. O. cars. Am I correct in that statement 7
Mr. STEwART. That is substantially correct.
The CHAIRMAN. Now, what would be the benefit that the people
of the United States would receive? Would the efficiency of the
service be improved by congressional adoption of the modified
suggested plan coming from the departmentº
Mr. STEwART. In the first place, the plan would settle the question
as to the correctness of the rates. You would then have rates based
upon an ascertainment which could not be disputed and which every-
body would have to concede were correct rates, so far as adequacy or
inadequacy is concerned. You would put an end to the controversy
that has been going on for many years as to whether or not the Gov-
ernment is paying too much for railroad transportation. The further
advantage in the plan is that it pays every railroad company for the
performance of the service which the department receives from it.
Under the present plan, as has been shown by the results of Document
No. 105, it is conceded that some roads are inadequately paid.
Furthermore, the plan, if it is practicable, seems to be scientific in
its basis; you ascertain the cost of the service and then you pay that
cost plus a fair return on the value of the property employed. That
seems to be reasonable and seems to commend itself to the mind.
The CHAIRMAN. Has the cost of the transportation service been
satisfactorily ascertained 3 *
Mr. STEwART. Prior to the issuance of this document or including
this?
The CHAIRMAN. Including that. Has the cost of the service been
ascertained in a satisfactory manner } In other words, has a method
of determination as to segregation of the different costs to all parties
in interest been satisfactorily determined and adopted 3
Mr. STEwART. No; it has not been. Really, I think the only ascer-
tainment of cost that has ever been made, that I know of, is Document
No. 105. There have been otherinquiries as to the adequacy of railroad
rates, but, as I understand it, there has been no actual ascertainment
of the cost by any commission. Now, so far as Document No. 105 is
concerned, the method employed by the department in making an ap-
portionment of expenditures and in computing car foot miles is more
or less disputed by the railroad companies interested.
The CHAIRMAN. That is the point I wanted to bring out. As I
understand, the railroads claim from the information submitted to
you that they receive from the mail 3.23 mills per car-foot mile; they
receive from other service 4.35 mills per car-foot mile. Now, on the
RAILWAY MAIL PAY. . 11
same information submitted by them you draw the deduction that
the railroads receive for revenue from mail service 4.14 mills per
car-foot mile and a revenue from other service of 4.16 mills per car-
foot mile. It would seem as though you were a long way apart in
the deductions that you draw from dº same figures, and it would
look to me as though it would at least be difficult for you to get to-
ether in a satisfactory determination of a º if you please,
y which to measure the amount to be paid by the Government to
the transportation companies. -
Mr. STEwART. That would be entirely true, Senator, with the first
effort, as, for instance, is shown in document 105, but the plan which
we have suggested includes this, that where the railroad companies
dispute any method employed they have the right of appeal to the
Interstate Commerce Commission. That question, then, would go
before the Interstate Commerce Commission and would be settled,
so that, after one or two ascertainments of cost practically all the
questions involved would be settled by precedent, and after that there
would be very little ground for dispute between the department and
the railroad companies. The question as to how much space should
be allowed the companies where the companies run larger cars than
those which are authorized by the department—and they claim in
all cases that they should have credit for the entire length of the
car—would be settled once for all after an appeal had gone to the
Interstate Commerce Commission and both sides had their hearing.
If the Interstate Commerce Commission decided that the companies
were right in their contention with respect to that, the department,
of course, would acquiesce; it would have no recourse otherwise and
would have no interest to do anything else but acquiesce with the
ruling. On the other hand, if the commission decided the depart-
ment's plan was right no doubt the companies would acquiesce with
just as much grace. 4
The CHAIRMAN. You think the Interstate Commerce Commission
could determine that ?
Mr. STEwART. I think so.
The CHAIRMAN. Under date of January 3, 1913, I addressed a
letter to the chairman of the Interstate Commerce Commission, in
which letter I asked, among other things, the following:
In order, therefore, to aid the joint committee in the inquiry about to be undertaken,
I shall be pleased if your commission will have an analysis made showing the relative
returns to the railroad companies for the different classes of traffic they handle; namely,
passenger, freight, express, and mail, approximating as nearly as possible the expense
to the railroads for handling such respective classes of traffic as compared with the
earnings received by the railroads from such traffic.
Then followed the inquiry in reference to the R. P. O. cars. Under
º; January 7 Mr. Prouty, chairman of the commission, replied
àS IOILOWS :
Further replying to your letter of January 3, 1913, in reference to cost of handling
mail matter in comparison with other passenger-train service. Having laid the matter
before my associates, I am instructed to say:
First. The commission now has no figures from which the information asked for by
ou could be compiled. In one or two cases this matter has been incidentally gone
into, but in so fragmentary and unsatisfactory a manner that we could not, upon the
strength of what was there developed, experess an opinion.
Second. The commission has no knowledge and no means of knowing the expense
of maintaining postal cars. Some time ago we sent to Congress some information as
to the relative cost of maintaining steel and wood cars.
12 RAILWAY MAIL PAY.
Third. The commission could by means of an investigation to be instituted by it.
probably give you information on both these points, certainly on the first point which
would be reliable, but such a proceeding would require several months, possibly a
year and would be somewhat expensive. * -
So that practically all there would be at the present time would be
the result of your several years' study, as presented in Document 105.
That is true, is it not ? : -
Mr. STEwART. Yes. But so far as the relevancy of what you have
said is concerned, what I was proposing you should bear in mind was
that that reply of the commission is made upon their present informa-
tion, and an appeal under this proposed law to the Interstate Com-
merce Commission would send up all of our ascertained facts upon
those points, and the commission would not be without the means of
deciding. I can realize how they must necessarily answer as they
did at this time, but the questions which we would submit to them
on an appeal from the railroad companies would be with reference,
for instance, to a specific case, as to how much space should be charged
the mail service under specific conditions, naming all the facts and
circumstances and data submitted by the railroad companies and
checked by us and which would be certified to the commission.
They would have it all before them.
The CHAIRMAN. Then vou think the commission could determine
whether the yardstick that you take, namely, that the railroads
receive 4.14 mills per car-foot mile for the postal service and 4.16
mills per car-foot mile for other service is correct, or whether the
railroads’ conclusions as quoted above are correct 3
Mr. STEwART. Yes, sir; because we would certify all the facts to
them, having ascertained them, and they would determine whether
our methods were the right ones or whether the railroads' methods
were the right ones; but most of those appeals would go up on specific
questions, such as the one I mentioned—what charge should be made
against the mail Service for running a 60-foot car in both directions
where we authorize only 50 feet of space in it; should the company
receive credit for the entire length of the car because they have
to run it as an operating proposition in connection with the mail
service which we authorize, or should they receive credit for only
the 50 feet which we authorize and in connection with which they
have to run 10 feet more ? That is the kind of question that would
go before the commission.
The CHAIRMAN. Let me see if I understand your position. You
recommend the enactment of the suggested legislation, not with the
expectation of saving the Government anything in dollars paid to
the railroads as compared with what is now paid under the present
system, but purely for the reason that, in your opinion, it is more
scientific, will be more equitable, and less provocative of irritation or
dispute between the governmental representatives and the trans-
portation companies. Does that sum it up 3 -
Mr. STEWART. Yes.
The CHAIRMAN. Are there any other features 3
Mr. STEwART. One strong feature in regard to the propositionis
this, which I mention incidentally: That it guarantees a proper return
to every railroad company for the service they perform.
The CHAIRMAN. That is covered in the question of the more equi.
table payment to the transportation companies' -
RAILWAY MAIL FAY. 13
Mr. STEwART. Yes; it is not free from difficulties, however, as we
have informally discussed. &
The CHAIRMAN. Would it be more expensive in administration?
Mr. STEwART. I do not think it would be. We have now our field
force thoroughly organized; they are competent and sufficient to re-
port . the question of space that would be adequate. You must
remember that, while we pay only for car space now about one-tenth
of the total charge, practically the whole question of cars pace, which
covers a very large per cent of the mail service, is a matter now of
ascertainment, report, and authorization. That is to say, we ascertain
now and practically authorize the space in apartment cars for which
we pay no specific charge. We pay a specific charge for the regu-
lar railway post office cars. So that our field force now is sufficiently
organized to make the proper reports on what space is necessary.
The additional space ...; we do not now report upon and spe-
cifically authorize would be the space for the closed-pouch service,
and that would have to be ascertained by a weighing of the mails at
the period specified in the act.
†. CHAIRMAN. Representing less than 10 per cent of the mail?
Mr. STEWART. Yes.
The CHAIRMAN. On the substitution of space for weight would you
not have to keep an account of every car?
Mr. STEwART. We would make an authorization of space of what
would be required in every line of cars, whether full cars or apartment
G8,I’S.
The CHAIRMAN. Would you not, under that plan, have to keep a
separate account on each authorization?
. STEwART. No. The authorization would be made and record
kept on our books. When the statistics were taken and reported by
the companies they would be checked up with our authorizations.
The CHAIRMAN. But in your opinion, under the proposed system
and the present system of weights, there is no opportunity for any
ºns of mails or cheating the Government or anything of that
Mr. STEwART. No, sir; I think not.
The CHAIRMAN. And there is no irritation now, because when it
has been found that mistakes have been made, they are adjusted
satisfactorily by the departmentº
Mr. STEwART. Yes.
The CHAIRMAN. So that you have to-day, under the present method,
the least possible degree of irritation ? *
Mr. STEwART. Yes. I think that can be fairly said, especially
where you have two bases of pay, as we now have, both weight and
Space.
The CHAIRMAN. It is your judgment that by the substitution of
space for weight you diº weight entirely, except on pouch
matter, representing 10 per cent of the mail?
Mr. STEwART. Yes.
The CHAIRMAN. So you would just reverse your present position.
Under the existing condition of ascertainment by weight, approxi-
mately 90 per cent of the mail pay is ascertained by weight?
Mr. STEwART. Yes. --
The CHAIRMAN. And 10 per cent ascertained on space represented
# y the R. P. O. car? -
14 RAILWAY MAIL PAY.
Mr. STEWART. Yes. * -
The CHAIRMAN. And now you propose to reverse that and have 90
per cent represented by space and 10 per cent by weight; that is, the
pouch mail? s
Mr. STEwART. That is substantially correct. º
The CHAIRMAN. So you substantially have the two systems which
you have to-day, but transfer the percentages?
Mr. STEwART. There would not be two systems in this sense: That
we simply weigh closed-pouch mail to ascertain a proper space charge.
The CHAIRMAN. You determine the proper charge for the space used
on the weight itself? -
Mr. STEwART. Yes, sir; the weight of the closed-pouch mail during
that period. -
The CHAIRMAN. It would cost the Government less by the adoption
of your method, substituting space for weight, than the present sys-
tem of quadrennial weighing?
Mr. STEwART. The adoption of the method of space for weight
would be a saving. 0
The CHAIRMAN. Would be a saving of what % -
Mr. STEwART. That is very difficult to say accurately. I think at
one time we made some estimate, but I do not recall the result. I do
know that the result was less than the cost of weighing.
The CHAIRMAN. The cost of weighing for the four years was prac-
tically $1,600,000?
Mr. STEwART. Yes. Of course, in addition to the work in the
field we would perhaps have to have an additional force employed
during the 30 days of the statistical period.
The CHAIRMAN. That would be required every year under the sup-
plemental plan submitted by the department'
Mr. STEwART. Yes. But it j not be very expensive because
our present force would be almost ample. In addition to that, when
the reports came in to the department we would have to have the
means for handling them, 㺠them up, and for making compu-
tations. In this respect there would be considerable expense. €
now have a division called the Railway Adjustment Division, whose
work is devoted to the adjustment under the present plan. The
work of that division could be adapted very i:; to the new work,
but it would require an additional force. ;
The CHAIRMAN. You have made no estimate as to what the cost
would be
Mr. STEWART. No.
The CHAIRMAN. Have you any idea that you think would be of
value on that ? -
Mr. STEwART. Yes. You can get an idea from what we did on
Document 105. It cost us $20,000 to complete that work.
The CHAIRMAN. But that was compilation and tabulation?
Mr. STEwART. Yes, sir.
The CHAIRMAN. Under this other method you have to get your
ascertainment. The railroads are not . give you that infor-
mation, but you have to get it yourselves through your own organi-
zation, as to what the space is, as to what amount you will need and
what amount you authorize, and it seems to me it would cost you
more than the mere compilation and tabulation?
f BAILWAY MAIL PAY. 15
Mr. STEwART. No. The information is required to be furnished
by the railroad companies. You will notice the first paragraph of
the proposed statute but it would be checked by the Department as
far as practicable. -
The CHAIRMAN. Are you going to let the railroads determine what
space you will take?
Mr. STEwART. No. We authorize that from time. to time. We
set the standard of what we need. The railroad companies furnish
us the information as to the operation of their trains and the space
devoted to these three classes of service during those 30 days. The
work that I referred to in the department would be the work of
checking up those returns with our authorizations, just as we did in
ºng ocument 105, so as to verify their report of service per-
OTIOleCl.
The CHAIRMAN. But you would have a number of activities under
this plan that are not represented in Document 105. In the first
place, you would have to get the information as to the space you
require. In the second place, you would have to notify the rail-
roads what space you authorize and then get information as to the
space that you use, and you would have to keep an account with
each activity, it seems to me, which you do not have to do under the
weight yardstick.
Mr. STEwART. We do not have to do that with reference merely
to weight now, but we do with reference to full post-office railroad
cars. We do not with reference to apartment cars.
The CHAIRMAN. You do not on the storage cars?
Mr. STEwART. No, sir.
Mr. LLOYD. Under this section do you not have to make an ascer-
tainment on the apartment cars 7
Mr. STEwART. Yes, sir. •
Mr. LLOYD. What would you do on the blue-tag mails?
Mr. STEwART. The blue-tag mails would be handled just as they
are now, on fast freight trains.
Mr. LLOYD. You make no suggestion of charging with reference
to that %
Mr. STEwART. No, sir. In regard to that we recommend that
they be continued; that the Postmaster General be authorized to con-
tinue those shipments at reasonable freight rates on fast freight trains.
Mr. LLOYD. º want to ask what your objection is to the ascertain-
ment that is made by the railroad companies º As I understand it
they take the net investment in road and equipment which is given
by the Interstate Commerce Commission in the statistics of railways
in the United States in the last ascertainment that was made in 1910
as $14,387,816,099. Then the railroad company takes that as a
basis and uses the percentage that is received in revenue from the
mails as compared with other sources of revenue, which is 1.78 per
cent, according to that authority, and make a computation which
shows that the capitalization which would be authorized to be charged
against the mails would be about $250,000,000. Then, on that
basis of $250,000,000 they take 6 per cent, which would be about
$15,000,000. Now, that is the statement which they make, and they
claim that Óught to be charged up to expenses and be paid by the
Government. What is your objection to that statement'.

75904—No. 1–13—2
16 * RAILWAY MAIL PAY.
Mr. STEwART, My criticism of the statement would be in these .
particulars. The $14,000,000,000 is assumed to represent the proper
capitalization of the road. Is it the bonded indebtedness?
Mr. LLOYD. The statement is given by the Interstate Commerce
Commission under the head of “Assets.” “Net investment in road
and equipment.” Then it has other items “Book value, system of
securities permanently held, other permanent investments, workin
assets and acérued interest not due, sinking and redemption fund, aſ
other deferred debit items.”. These amount to nearly $7,000,000,000,
these other items making the total assets of the railroad companies
a little over $21,000,000,000. Then in the liabilities they charge
stock a little over $8,000,000, mortgaged, bonded, and secured debt
a little over $10,000,000 working liabilities, accrued liabilities not due
$1,000,000,000, deferred credit items $161,000,000, property surplus
$331,000,000, profit and loss $1,039,000,000. Those are the two sides.
of the account. - .*
Mr. STEwART. If the $14,000,000,000 represented substantially
the final valuation of the property, there would be no criticism against
that item as such. The 1.78 per cent which they charge to the mail
service is subject to this criticism: That it is ascertained on the basis
of mail revenue, which seems to me to beg the question in this respect,
that it employs as a basis for apportionment the item in controversy,
namely, compensation º the companies. .
Mr. LLOYD. Is not the assumption equally good as against the
other items of revenue & Here is the freight revenue, the passenger
revenue, the mail revenue, the express revenue, and the different
items. The total revenues received for that year were $2,750,670,435.
This makes a total of 100 per cent, of which amount of receipts the
mail was 1.78 per cent.
Mr. STEwART. Yes. Its correctness would further depend also upon
whether there was a necessary connection between the revenues and
the facilities which are furnished by the railroad companies through
which those revenues are derived. One of the largest questions, to
my mind, in dealing with the physical value of property is the deter-
mination of what facilities the railroad companies employ which are
used in connection with the mail service sufficiently to constitute a
charge against it.
Mr. LLOYD, What expense used in strictly passenger service is not
found in mail service? •
Mr. STEwART. Take, for instance, the great station at New York.
The Pennsylvania Railroad Co. is one of the best examples. There
is a station costing nearly $100,000,000, the larger part of which
might be admitted by everybody to be a passenger facility, in which
the mails are not interested at all. They have provided us with
splendid mail facilities, and yet only a small part of the cost of the
entire service should be charged to the mail service. The same is true
of the Union Station at Washington. There is a magnificent edifice
largely devoted to passenger service with facilities of every kind,
elaborate, in fact, to take care of the passengers. The mail service is
not directly or even indirectly interested in any of that. They
furnish us, however, all the facilities we need for the mail service.
Mr. LLOYD. Take the other side, what is there that is furnished the
mail service that is not furnished in passenger facilities?
RAILWAY MAIL PAY. 17
Mr. STEwART. These special services which these gentlemen have
mentioned informally. -
Mr. LLOYD. We are not supposed to know that they said anything
informally. --
Mr. STEwART. Well, the fast mail trains, for instance. “
The CHAIRMAN. Representing how much, in dollars?
Mr. STEwART. I could not tell you that because really the railroad
companies furnish us this fast mail service without any additional
specific compensation.
The CHAIRMAN. But it is an additional expense to them :
Mr. STEwART. An additional expense, but at the same time it is an
additional advantage to them, because they thereby attract to them-
selves large weights which they otherwise would not get, as a rule.
It is not a one-sided proposition at all. They furnish a magnificent
service, but they get some return in these respects for furnishing it.
Mr. LLOYD. Is there anything else in the facilities they must
furnish that is not furnished the passenger service?
Mr. STEwART. They furnish side service between the station and
the post office. Where the distance is 80 rods or less and they have an
agent or representative they are required to carry the mails between
the station and the post office. They also perform terminal service;
that is, they carry the mails between the station at the end of the
route and the post office in cases where the department does not
provide otherwise.
The CHAIRMAN. What does the side service represent, in your
opinion ? - N
Mr. STEwART. Something over $4,000,000 a year, if the depart-
ment was compelled to provide it. -. -
Senator BANKHEAD. Why should the railroad companies be re-
quired to deliver the mails between the station and the post office?
Mr. STEwART. The railroad service grew up as a contract service
in connection with the old star route service, and under the old
stage or star route contracts the stage had to deliver the mails into
every post office along the route. The contracts were made with
railroad companies first right along with the star routes; they were
handled by the same people in the department; the same clerks
handled both classes of service. When the law of 1873 was passed
the same general requirements which had applied to all contract
service were simply continued in operation, and when the question
came up in court years afterwards, upon a suit to recover for
payment for this side service, the Court of Claims held that Congress
took that service into consideration when they established the rates
of 1873. Therefore, we have practically a duty to continue that
requirement.
Senator BANKHEAD. Is there anything in the law that would indi-
cate that Congress did take that into consideration when they estab-
lished the rates ?
Mr. STEwART. Only the history of the matter.
Senator BANKHEAD. Then you continue it because it is ancient
Mr. STEWART. Not only because it is ancient but because the court
* said that Congress must have had that in view when they fixed
the rates. &
*:
18 RAILWAY MAIL PAY.
The CHAIRMAN. I do not think the department has any alternative,
under the existing law. -
Senator BANKHEAD. I would like to pursue that a little later on.
Mr. STEwART. I have not finished all I was going to say about the
question asked by Mr. Lloyd. If we assume that the 1.78 per cent
of this $14,000,000,000, based upon the proportion of the mail reve-
nue to the whole revenue, is a proper segregation to the mail service,
then it becomes a further question as to whether the United States
should pay 6 per cent upon it. s
Mr. LLOYD. If they paid 6 per cent it would be about $15,000,000,
but suppose they paid 4 per cent ' That would be $10,000,000.
Mr. §º. ſº you say 6 per cent, that is virtually putting the
United States on the same basis as a passenger or a shipper of freight,
and it raises this very interesting question as to whether the relations
between the United States and the railroad companies carrying the
mails for the Untied States are the same with respect to compensa-
tion that they are between the passenger or the shipper of freight
and the railroads. *
# Mr. LLOYD. Is not this true: If you consider that phase of it, that
either the mail ought to be carried at its cost by the railroads as a
gratuity, or the railroad company ought to have the same compen-
sation as an individual would pay for the same kind of service?
Mr. STEwART. Well, that is a question.
Mr. LLOYD. Is not that really the question?
Mr. STEWART. Yes.
Mr. LLOYD. If there is a patriotic influence that must assert itself
by the railroads, ought it not to prompt them to do this service
without compensation, just simply at cost; but if no patriotic con-
sideration is to be observed, then would it not be right for the rail-
road companies to be paid just the same as an individual would pay
if the Government were an individual?
Mr. STEwART. I do not know whether you could push that con-
sideration of patriotism as far as you suggest; that is, that they should
perform services only at cost. On the other hand, the Supreme
Court has recently held that a railroad company in carrying the
mails is performing a governmental function and they are not in the
same relation to the Government that they are to the ordinary
individual. :
Mr. LLOYD. That is due to the fact that the Gövernment requires
them to do some things that an individual could not require. For
instance, you require them to carry the mail on the fastest trains
and you make the specifications by which they shall be governed in
carrying the mails. You designate the kind of car and you desig-
nate everything connected with the equipment, while the individual
shipper could not make that kind of a designation. The designation
to the individual shipper must necessarily come, and does come, from
the railroad companies. * -
Mr. STEwART. In other words, you construe that dictum to mean
this: That the obligations a railroad company owes to the United
States are different in their essentials than in its obligations it owes
to the passengers? & *
Mr. LLOYD. The obligation is greater because we make it so by
law.
Mr. STEwART. I see your point.
RAILWAY MAIL PAY. - • 19
w sº
The CHAIRMAN. And the requirements are greater.
Mr. LLOYD. If they carry, the mail at all they have to carry it as
the Government directs them. -
Mr. STEwART. Yes, sir. That is what is held by the court.
Mr. LLOYD. While on the other hand the individual is not placed
... on the same basis at all. The railroad companies say to him, “We
will carry this for so much money.” He takes it or not, as he pleases.
Mr. STEwART. The individual goes to the railroad company as
going to a common carrier? -
Mr. LLoyd. That is right; and the railroad company dictates the
terms. The United States goes to the railroad company and the
Government dictates the terms.
Mr. STEwART. That is the main distinction, although in the case
of the common carrier, of course, the rates must be reasonable.
Mr. LLOYD. Certainly. Yes.
Mr. TUTTLE. Has it not always been the policy of the Government
to pay a profit to these railroads, or have they not contemplated that
the railroads were earning a profit in carrying the mails?
Mr. STEwART. Oh, yes, sir.
Mr. TUTTLE. They have never estimated that the mails were car-
ried at cost and never expected them to be 3
Mr. STEwART. No, sir.
Mr. TUTTLE. And they never subsidized the railroads by paying
them more than they were entitled to ?
Mr. STEwART. In some cases they have been subsidized somewhat,
as, for instance, in what was called the special-facility trains from
New York to New Orleans. In that case there was an appropriation
carried for a number of years for a fast through mail train from New
York to New Orleans. Then there was a train from Kansas City to
Newton, Kans, carried for a few years at a special rate of compensa-
tion provided by Congress in addition to the ordinary compensation.
Mr. LLOYD. Those were discontinued some years ago?
Mr. STEwART. Those were discontinued some years ago; yes.
The CHAIRMAN. General, as I understand your position in reference
to special mail trains, and the expense to the railroads incident to
putting them on, while there is no direct compensation to the rail-
roads for that extra cost to them for the improved facility, there is
an indirect compensation to them because of the increased business
that they get incident to the adoption of that improved facility. Is
that right?
Mr. STEwART. Yes, sir. -
Senator BANKHEAD. What amount of penalty does the Post Office
Department receive innually from what is known as a failure to
deliver the mail on schedule time? Haven’t you a penalty attached
for that failure? º
Mr. STEwART. No, sir; not at this time.
Senator BANKHEAD. You used to have
Mr. STEwART. We used to have, by special direction of Congress,
and that was carried, I think, for two years, and we assessed fines
against the railroad company for failure to keep their schedule time.
Senator BANKHEAD. I know that was in practice at one time not
very long ago. -
Mr. STEwART. Yes. But that was discontinued for this reason—
that all the fines we would assess for this purpose did not accomplish
20 RAILWAY MAIL PAY.
anything in the way of improving their schedules. . It simply caused
irritation, and took the money of the road instead of allowing it to
go toward improved service. º
Senator BANKHEAD. I supposed the same rule was in vogue now.
Mr. STEwART. No. Upon our representation to Congress of those
facts Congress dropped that out of the appropriation bill.
Senator BANKHEAD. You spoke awhile ago of subsidizing trains
from New York to New Orleans. You finally decided you did not
want them any more because it was an additional expense to them,
and the additional pay they received would not justify them in the
schedules they were required to make, and in the end all the addi-
tional pay they received was taken in fines, because they failed to
make a schedule, and I think the Post Office Department made the
schedules for them and said when they should leave and when they
should arrive at a certain destination ? * : -
Mr. STEwART. Yes, in order to make connections we would have
to do that. In the case of a train like that, if they did not make their
schedule we would fine them. -
Senator BANKHEAD. Yes. That is what I had in mind. -
Mr. LLOYD. Let me sum up. If the $14,000,000,000 can be taken
as a correct estimate of the capitalization of the railroads and 1.78
per cent can properly be taken as the share that goes to the railway
mail pay, and 6 per cent on that capitalization be taken as a fair com-
pensation on account of capital, then is it not true that the railroad
companies ought to receive $15,000,000 annually more than they
now receive. :
Mr. STEwART. That is true, granting those premises.
Mr. LLOYD, Yes. Granting those premises. t
Mr. STEwART. That would be reduced by the subtraction of the
$9,000,000, so that it would be an aggregate increase of the difference
between $9,000,000 and $15,000,000%
Mr. LLOYD. Yes. But I mean, your original asttement was, if you
took the $9,000,000 into account it would add $15,000,000 to the
other side, and taking the $9,000,000 would leave $6,000,000 that
might, under the present system, be received by the railroads that
ought not be received 3 w
Mr. STEwART. That is correct.
The CHAIRMAN. In a report of Mr. Wm. F. Vilas, Postmaster Gen-
eral, in the year 1887, in the discussion of R. P. O. cars, the following
appears: *-
It is within bounds to affirm that all these might be to-day purchased or their dupli-
cates manufactured for $1,600,000; add for cleaning, etc., as above, at $720 per year
each for 342 in use, $246,240, the total is reached of but $1,846,240. Yet simply for
the use of these cars for the last year, including cleaning, etc., the department was
under the annual rate of charge by the existing system of $1,881,580, and the estimate
deemed necessary to submit in prudent provision for the coming fiscal year, on the
same basis, is $2,000,000.
Reference to special instances in the annexed table of the longer lines discovers
eater disparity than the average. . In illustration, $59,037.75 is annually paid on one
ine for the use of four cars that might be built and fully #º in the best modern
style for less than $17,500; and this in addition to the full-weight pay for transporta-
tion, amounting in the case mentioned to $504,573.69.
Instead, then, of appropriating $2,000,000 to rent the use of these cars for the coming
year why should not the appropriation be of a Smaller sum to buy them and of another,
say, $250,000 for their keeping, the two together not aggregating the proposed rent?
The department will thereafter gain at least $1,500,000 per year while sustaining the
cost of casualties. -
BAILWAY MAIL PAY. 21
If Mr. Vilas was sound in his inferential recommendation made in
1887, why is it that the department has taken no action on the line
of the recommendation as set forth in the quotation from the report
just read
Mr. STEwART. I do not want to criticize or say anything in the
way of criticism of so great an authority as Postmaster General Vilas,
nor can I say specifically why the department has not taken definite
action to change the law with respect to car pay.
The CHAIRMAN. The department could not change the law, but the
department could make suggestions and recommendations as it has
done in document 105.
Mr. STEwART. That is what I meant to say, Senator. However, I
§. the fact that the views expressed by Postmaster General
ilas have never been largely held by the departmental officers would
account for the reason that there was no recommendation to change
the laws in that respect. The fallacy of the statement of Mr. Vilas,
it seems to me, lies in this: That there is no account taken of the cost
of operating the cars. The payment that we make to the railroad
companies for cars may soon equal their cost, but there is nothing to
be argued from that as to the adequacy or the inadequacy of that pay,
because that leaves out of consideration entirely the cost of operat-
ing or hauling the cars.
The CHAIRMAN. How many R. P. O. cars are now used by the
railroads 3 -
Mr. STEwART. On June 30, 1912, there were 1,388 in use and in re-
serve. In connection with this question, Mr. Chairman, I would like
to submit as a part of my reply the letter of Postmaster General.
Hitchcock to Hon. John W. Weeks, chairman of the Committee on
Post Offices and Post Roads, House of Representatives, dated March
2, 1910, in specific reply to the question raised by Postmaster General
Vilas in the report to which you have referred.
OFFICE of THE PostMASTER GENERAL,
- Washington, D. C., March 2, 1910.
Hon. JoBN W. WEEKs,
Chairman Committee on Post Offices and Post Roads, House of Representatives.
MY DEAR SIR: In response to your inquiry made of the Second Assistant Postmaster
General in regard to the cost of maintaining and operating railway post-office cars and
its relation to the compensation received by railroad companies for the same and your
reference to the speech delivered by Senator Vilas on the subject in the United States
Senate February 13, 1895, I have the honor to advise you as follows:
The department has not at this time sufficient information upon this point to give
from its own records a reliable estimate. As you are aware, we have recently asked
railroad companies to submit answers to inquiries with reference to the cost of operating
the mail service, and it is believed that when these shall have been received we will
be in a position to furnish such information. Inasmuch, however, as it may be of
importance to you to have estimates made from time to time by others and such incom-
plete information as we have at present, I submit the following:
The cost of operating a railway post-office car has been variously estimated (but not
officially by the department) as from 15 to 30 cents a car-mile. The average run per
day of such a car is about 300 miles. Estimating the cost at 18 cents a car-mile, the
total cost of operating such car for one year would be $19,710.
The specific items which constitute this total cost are not definitely known to the
department. However, as to the cost of lighting, cleaning, repairs, etc., the General
Superintendent of Railway Mail Service furnished the following estimates before the
commission to investigate the postal service in 1899, viz: Lighting, $276; heating,
$365; cleaning, water, ice, oil, etc., $365; repairs, $350; proportion of original cost of
car (estimating the life of a car at 15 years and the original cost at $6,000), $400; total,
$1,756. Recent inquiry gives the following as the approximate cost of maintaining
a car at the present time: Lighting (electric), $444; heating, $150; cleaning, $360;
22 RAILWAY MAIL PAY.
repairs, $300; oil and brasses, $120; interest on cost of car (at $7,500), $300; annual de-
terioration (estimating the life of a car at 20 years), $375; total, $2,049. These figures
give the cost of a car built according to the department’s standard specifications.
The cost of modern steel cars being built by some of the railroad companies is from
$14,000 to $15,000. -
The compensation received by a railroad company for operating a car and carrying
the mails in it would be approximately as follows:
The pay for a 60-foot car at $40 a track mile per annum for a track mileage of 150
miles would be $6,000. The average load of a 60-foot car, according to statistics
obtained recently, is 2.83 tons. The rate per ton of an average daily weight of 50,000
pounds carried over the route is $25.06. At this rate the company would receive
$10,637.97 per annum for the average load of mail hauled in the car. This sum added
to the specific rate for the railway post-office car ($6,000) makes the total pay for the
car and its average load $16,637.97 per annum. -
Senator Vilas's argument was based upon the theory that the rates fixed for rail-
road transportation alone, based on the weights of the mails carried, are adequate
compensation for all services rendered, including the operation of railway post-office
cars, and that therefore the railroad companies would be required to operate postal
cars owned by the Post Office Department for the compensation allowed by law for
the weight of mails alone, including apartment-car space and facilities. Such theory
is not justified by the facts, as will appear from the following:
A careful perusal of the debates in both Houses of Congress which led to the enact-
ment of the present law fixing the rate of pay for railroad transportation of the mails
and for railway post-office cars clearly indicates that the additional compensation for
railway post-office cars was intended to cover the additional expense imposed upon
the railroad companies for building, maintaining, and hauling such cars. The com-
panies at that time insisted that these cars, which were practically traveling post
offices, did not carry a remunerative load, and that therefore the amount of pay,
based on weight, did not compensate them for their operation. This led to the spe-
cific appropriation for railway post-office cars. In this connection it should be borne
in mind that the purpose of the railway post-office car is to furnish ample space and
facilities for the handling and distribution of mails en route. Therefore the space
º is much greater than would be required for merely hauling the same weight
OI IO 2,11S.
In regard to any proposal for Government ownership of postal cars, other facts as
well as the above should be given consideration. Such cars must be overhauled,
cleaned, and inspected daily. It would be necessary to either arrange with the railway
companies for this service or for the department to employ its own inspectors, repair
men, and car cleaners at a large number of places throughout the country, which would
probably be more expensive than the cost to the railway companies in that respect at
present. . It would hardly be feasible to establish a Government repair shop. There-
fore the department would be compelled to use the shops of the several railway com-
panies throughout the country. Without the closest Supervision and attention of the
Government’s inspectors it could scarcely be ºf that our cars would receive
the same consideration in railroad shops as those owned by the railway companies.
These shops are frequently congested, and it is probable that the railroad work would
be given the preference.
Yours, very truly, FRANK H. HITCHCOCK,
Postmaster General.
The CHAIRMAN. What is the average cost of the R. P. O. cars 2
Mr. Stewart. I do not know. The companies are now building
steel cars and the cost of a steel car is very much greater than the
cost of a wooden car. I think the steel car might be built for about
$12,000. Under the present law, Mr. Chairman, all the cars, which
shall be used in the service, excepting those which are now of steel
and steel underframe, must be replaced by steel cars before the 30th
of June, 1917. - -
The CHAIRMAN. At the rate of 25 per cent a year 2
Mr. STEwART. Twenty-five per cent a year, beginning with the
fiscal year 1914.
The CHAIRMAN. Is it true, according to your knowledge, that under
a determination of the Interstate Commerce Commission the Govern-
ment now pays to the railroad companies 25 cents a mile for hauling
the car of the Bureau of Fisheries?
*
RAILWAY MAIL PAY. 23
Mr. STEwART. I have no personal knowledge of that. I have been
informed that it is correct.
The CHAIRMAN. Is the mileage that the R. P. O. cars are hauled
easily ascertainable? Have you that information in your office so
that it could be easily determined without any great expense to the
Government 7 -
Mr. STEwART. Not very readily. We are not required to keep those
statistics because we pay#. mile of routes per annum. It would
require checking up the official schedules.
The CHAIRMAN. Do you know whether the railroads have such
information?
Mr. STEwART. I do not know whether they have.
The CHAIRMAN. Could you readily prepare and submit to the
commission a statement showing the number of R. P. O. cars, esti-
mated average cost, estimated cost of cleaning, operating, maintain-
ing, and then a statement as to the cost of transportation; that is, the
amount that would have to be paid to the railroads for hauling same,
providing the Government owned them? In other words, could you
present a statement from the dollar standpoint demonstrating the
advisability of the Government's owning and operating the R. P. O.
cars or continuing the present system of rental, or would that be
difficult and expensive of ascertainment'
Mr. STEwART. It would be difficult for the reason that we have
not the statistics which would enable us to reach a determination of
cost for those particular cars. We could give you the miles of service
a year; we could compile that, but we have not the data to make an
estimate as to the cost of operation. i
The CHAIRMAN. How long would it take to compile and tabulate
data showing the mileage per year, and the cost to the Government
on a basis of 25 cents a mile for the 60 or 65 foot cars 2 That as I
understand is the length of the car owned by the Bureau of Fisheries :
Mr. STEwART. I think a few days.
The mileage of full railway post-office cars of all sizes made in the
performance of service during the fiscal year of 1912 was 126,798,405.
The cost at 25 cents a car mile would be $31,699,601.25.
The CHAIRMAN. In any of your studies of computation have you
ever determined the number of postal employees which the railroad
companies carry without any additional compensation than the com-
pensation rendered to them in the payment of railway mail service,
supposed to cover the cost of the employees as passengers?
Thereupon (at 4.45 o'clock p. m.) the committee took a recess until
8 o’clock p. m. -
AFTER RECESS.
The joint commission reconvened at 8 o’clock p. m., according to
adjournment.
Present: Senator Jonathan Hºw: (chairman), Representative
John W. Weeks, and Representative William E. Tuttle, jr.
TESTIMONY OF MR. JOSEPH STEWART-Continued.
Mr. STEwART. The railroad companies carry, without specific com-
pensation other than that paid for the transportation of mails, the
24 RAILWAY MAIL FAY.
railway postal clerks who are engaged in the distribution of the mails
en route. In my annual report for 1911, it is stated that during that
fiscal year there were a total of 1,657 lines of all kinds manned by
15,575 clerks, representing the working force of the lines. In addition
to these men there are also mentioned 30 officials and 130 chief clerks
who would travel when necessary. The transfer clerks who are also
mentioned would, as a rule, not travel on the trains. In addition to
these persons the railroad companies carry under the same conditions
the post-office inspectors when traveling on official business for the
department, and . the officers of the Post Office Department when
traveling on official business and under the orders of the Postmaster
General. -
The CHAIRMAN. Have you any idea what the average miles traveled
would be for these 16,000 governmental employees who practically
travel free, except so far as the railway-mail pay is supposed to com-
pensate the railroads for the passenger service rendered to the
governmental employees
Mr. STEwART. No ; I have not.
.The CHAIRMAN. Is that easily ascertained ?
Mr. STEwART. Not easily. -
Mr. LLOYD. Do you know how many miles are traveled ?
Mr. STEwART. I think we know how many car miles are traveled
by the lines in the performance of service, but how many clerks are
on those lines I do not know that I could tell you, nor what the aver-
age number of clerks per line would be, with any certainly. :
The CHAIRMAN. Have you ever made an estimate in the depart-
ment as to what proportion of the railway-mail pay was in lieu of
passenger pay for governmental employees?
Mr. STEwART. No ; I never have, but in compiling the statistics
furnished us by the railroad companies in connection with the other
data, which forms the basis for document 105, the railroads made
statements with reference to persons in the Government service
carried during that period. I think we have some statistics on that
point, but we did not use them, because we had no adequate means
of checking the data, and we had no information with respect to the
passenger service for the same period.
The CHAIRMAN. Do you think that information would be of value
to the commission in the study it now has before it 3
Mr. STEwART. If it were reliable and could be depended upon it
would be useful.
The CHAIRMAN. You would not doubt the correctness of your own
figures and your own deductions Ž
Mr. STEwART. No; but these are not our own. They were re-
ported and we had no means of checking them. ' s
The CHAIRMAN. You know the number of employees you have in
the postal service?
. STEwART. Yes, sir. + : e
The CHAIRMAN. You know the number that travel on cars. It is
ascertainable from the mileage or the per diem that is paid these
employees? *
Mr. STEwART. We could take statistics for a short period upon
which we could make an estimate.
The CHAIRMAN. On the doctrine of averages?
Mr. STEwART. Yes.
RAILWAY MAIL PAY. 25
The CHAIRMAN. And it is easily ascertainable what the passenger
rate per mile is over the United States? *
Mr. STEWART. Yes.
The CHAIRMAN. And a computation could then be readily made 3
Mr. STEWART. Yes.
The CHAIRMAN. Would not that be a factor entering into this study.
Mr. STEwART. It would be worth considering. But it should be
borne in mind that the Government pays what you might call a rental
for the carin which they travel and the department has always insisted
that in paying for the rental of that car we have the right to put
anything in it we please. Consequently the very interesting ques-
tion is raised as to whether the railroad companies are entitled to a
fare from these men, or any part of a fare from them or from the Gov-
ernment representing them.
The CHAIRMAN. Would it not have a bearing on the segregation of
revenues and cost in the passenger traffic of the transportation com-
panies and the apportionment of the percentage from both stand-
points, on the railway mail?
Mr. STEwART. It might, if the whole matter were reduced to a
Question of space.
The CHAIRMAN. That is what you suggest, is it not ?
Mr. STEWART. Yes.
The CHAIRMAN. So it would have a bearing on your suggestion?
Mr. STEwART. And yet, if we are going to go to the space basis,
ou must bear in mind that the amount of mail carried in the space
is not material.
The CHAIRMAN. In the calculations on which you base your space
determination, do you figure any space occupied by the Government
employees in the cars themselves? 4.
Mr. STEwART. Only so far as it is necessary to handle the mails.
Of course that is taken into consideration to some extent.
The CHAIRMAN. Do all the employees ride in the postal cars?
Mr. STEwART. Not always; they do when they are on duty distrib-
uting the mails. Under some conditions they are allowed to ride in
the coach, but as a rule they ride in the cars. When they are dis-
tributing mails they are always in the cars.
The CHAIRMAN. From , a governmental and an administrative
standpoint, do you think it would be better to have whatever method
of pay was determined upon cover the employees as well as the actual
mail or to make a segregation ? -
Mr. Stewart. I would have the rate of pay cover all the service
furnished without a segregation. - -
The CHAIRMAN. It would minimize the possibility of dispute and
irritation ?
Mr. STEwART. Very much.
Mr. LLOYD. Have you any method of determining or have you
attempted to determine how much mail clerks and postal employees
use the passenger coaches and Pullman cars?
Mr. STEwART. I think we could give you approximate figures on
that. I think the occasions on which they use the coaches are very
I’8,I’é. - -
Mr. LLOYD. Have you ever used or recommended a different kind
of a card or any kind of a statement by the railroad company to
indicate that the person was a postal employee traveling in a coach'
26 RAILWAY MAIL PAY.
Mr. STEwART. Yes, sir.
Mr. LLOYD. Have you had any returns from that ?
Mr. STEwART. You mean for the purpose of getting statistics?
Mr. LLOYD. Yes.
Mr. STEWART. No; I think not. What I supposed you meant was
whether we recognized the right of the railway company to have
issued a special card to the employees which would entitle them to
ride in a coach.
Mr. LLOYD. Yes; that is what I meant. Have you ever suggested
the requiring of two kinds of cards, one which the railway-mail clerks
would carry who work in a car and one which would be presented by
the railway-mail clerks when they were not working in a car but rode
in the passenger coaches
Mr. STEwART. I think on some lines that is in operation now,
although I am not entirely advised on that. The commission of
the clerk, of course, entitles him to ride in a car always, and I think
there are some lines that require us to issue a special card to be
presented when they ride in a coach.
Mr. LLOYD. Have you made any investigation to ascertain whether
the complaint that is sometimes made that clerks take advantage
of this car privilege to ride in coaches when they are not engaged
in the business of the Government is well founded ?
Mr. STEwART. I have heard very, very few complaints of that kind.
I do not think there is any abuse of º now. We are very strict
ourselves and of course the Interstate Commerce Commission for-
bids it and everybody understands that is a violation of law and I
think there would be very little disposition to take any chance on it.
Mr. LLOYD. Could you put in the record something of a compari-
son as to the travel on business and travel in the mail cars?
Mr. STEwART. I will see what I can do along that line. I would
like the record to show that we regard this travel in the coach as
on duty—that is, they are traveling under the orders of the depart-
ment. The department regards a postal clerk as being on duty
when he is traveling to or from his home in connection with his
work on a line—that is to say, when he leaves his home to take up
his run at the head of the route, he is regarded as being on duty
and traveling under the orders of the department. Likewise, when
he finishes his tour of duty and returns to his home, using the rail-
road, he is regarded as being on duty and being under the orders
of the department.
Mr. LLOYD. You have never made a sufficient investigation to
ascertain what the railroad companies would receive if every employee
in the postal department was required to pay a 2-cent fare, have you?
Mr. STEwART. Not outside of this data which I referred to as having
been submitted by the companies during the month of November,
1909. I think we made an estimate on that. \
Mr. LLOYD. But you do not now remember what the amount was ?
Mr. STEwART. No. I can supply the record with that if it is avail-
able. *
RAILWAY MAIL PAY. 27
The data reported by the companies as to the personal transportation of the Post
Office Department employees for the month of November, 1909, was tabulated, and the
result shows as follows:
Miles traveled by departmental officials, inspectors, and railway postal
clerks not actually in charge of the mails.... --------------. . . miles. . 4, 882, 545. 14
Value of Same--------------------------------------------------- $97,650. 89
Miles traveled by departmental employees actually in charge of the
mails------------------------------------------------------ miles. . 6, 915, 448. 80
Value of Same--------------------------------------------------- $138,308.97
The department undertook to check the data reported by the companies in So far as it
embraced the travel of officials and employees not actually in charge of mails for the
same month, but as the information as regards railway postal clerks was secured in the
summer of 1910 it is believed that it is not accurate in sofar as they are concerned. The
total of the miles traveled by officials and clerks for the month was 3,948,188.41.
Mr. LLOYD. I would like to get that in the record, because I think
that question is very material.
Mr. STEwART. I will look up our figures on that.
Mr. TUTTLE. The privilege of using the passenger coaches has been
withdrawn from a lot of clerks rºi. has it not, by reason of those
employed in the terminal offices
Mr. STEwART. Yes, sir. That matter came about in this way:
The practice has long been, in assigning railway postal clerks to posi-
tions in transfer offices and also in the offices of the superintendent
at their several headquarters, to appoint them to a line. Under the
old law there was no other way of appointing a clerk, he had to be
appointed to some railway post-office line and he was generally
appointed to a line which ran into his station. That gave him the
right of transportation to his home under the general practice of the
department. He might live in the suburbs a short distance and the
railroads would carry him in to and carry him out from his place of
duty. Under the reclassification act, the law requires us to appoint
these men to the offices, either a transfer office or to the division
superintendent's office. We do not now appoint them to a line, so
that, by reason of that change and the change in the department's
practice, the appointment of these men to such offices no longer
entitles them to transportation.
Mr. TUTTLE. That affects a large number of clerks 7
Mr. STEwART. It affects a good many clerks who are in the division
headquarters and also in the transfer offices in the large cities.
Mr. TUTTLE. You could not give an estimate of the number 2
Mr. STEwART. I can place it in the record. There are about
1,500 clerks detailed to office duty as transfer clerks and as clerks
in terminal post offices. . Consequently, with the beginning of
January of this year, all those commissions were withdrawn. We
could not ask the railroad companies to carry these men any longer.
The CHAIRMAN. In your study, as presented in Document 105, rec-
ommending the substitution of space for weight, do you make any
credit or allowance for these sixteen thousand and odd employees
carried ?.
Mr. STEwART. Not specifically.
The CHAIRMAN. Wii. how do you allow for space in your compu-
tation when your specific statement is to the effect that by the adop-
tion of the plan suggested the pay to the railroads would be $9,000,000
less than the present pay ?
Mr. STEWART. In that estimate no consideration was given to the
item of the carriage of the Government employees specifically. If it
28 BAILWAY MAIL PAY.
could be said to be included, it would be covered on the basis of
Space, the same as the transportation of the mails.
The CHAIRMAN. What space did you allot in your computation to
an individual? -
Mr. STEWART. The space that was necessary for the working of
mail in a postal car. W. allowed the full space in working cars; the
authorized space for the distribution of the mails. That space covers
not only the mails that are in a car, but the clerk who works the
mails, so that in that case it seems to me that the space for the
clerk is allowed in the same manner that the space for the mails is
allowed. t
The CHAIRMAN. I agree that it is immaterial, whether it is mail
or clerks that occupies the space, from your viewpoint, but I simply
wanted to know whether that entered into your calculations in your
conclusions and recommendations?
Mr. STEwART. No; it did not, specifically. ^
The CHAIRMAN. Then, I do not see how you are justified in making
the statement that there is a $9,000,000 difference in cost if, in your
calculations on which that statement is based, you do not figure the
space occupied by the individual.
Mr. STEwART. Well, I think you misunderstood my last answer.
I do estimate his value as occupying space, but not as a passenger—
not his value as a mere passenger, aside from the other considerations.
Mr. LLOYD. Is it the law that the postal employees shall be carried
by the railroad companies, or is it regulation ?
Mr. STEwART. It is the law that the companies shall carry the
mails and the persons in charge of them.
Mr. LLOYD. Is an inspector in charge of the mails?
Mr. STEwART. I am speaking now of the railway postal clerks.
The inspector travels under a regulation of the department.
Mr. LLOYD. That is what I was getting at. The clerk travels under
the law and the postal employee jº, than the clerk under regulation?
Mr. STEwART. Travels by virtue of the authority of a regulation
and the order of the Postmaster General.
Mr. LLOYD. Did you, during the afternoon, give all the reasons that
you think might be presented in favor of the space basis in the cor-
roboration of Document No. 105?
Mr. STEwART. I think I did, substantially. They are, very
briefly, that the space basis seems to present a definite and scientific
gauge of measuring the service and paying for the service rendered
and received. It furnishes a means of definitely settling the question
of the adequacy of the rates paid and putting an end to the endless
controversy that is going on and always will go on, in my judgment,
to the annoyance of the department, Congress, and the railroad com-
panies themselves. It furnishes a sure means of properly and
equitably distributing the railway mail pay so that every company
will be properly paid for the service it renders, and no company will
furnish a service for less than the cost of carrying the mails. Those
are the general points I have in mind. I notice since I was speaking
this afternoon my attention has been called to a memorandum
which I made in 1907 when the matter came up in the department.
This memorandum is addressed to the Second Assistant Postmaster
General, signed by myself as superintendent of the Division of Rail-
way Adjustments, and contains excerpts from the reports of previous
RAILWAY MAIL PAY. 29
commissions who have studied the question and all of whom have
reported in favor of a space basis, and one recommends the basis for
ay the same as it is recommended in document 105, a fact of which
- }. not consciously aware. That is, they believed the pay to the
railroads should be the cost of the service and a fair per cent of
that cost. They did not take into consideration this question of
capitalization at all and I do not notice that any of these commis-
sfons have taken that into consideration. -
The CHAIRMAN. Would you like to put that into the record &
Mr. STEwART. I think for the information of the commission I
should like to append these excerpts as an exhibit; not that the
department indorses everything in them, but I think it is valuable
information. These commissions to whom I referred have analyzed
the subject quite carefully, and they give many reasons for the space
basis. (These excerpts are printed at the end of Mr. Stewart's
testimony.) -
The CHAIRMAN. Will you be kind enough to state what, in your
judgment, are the obstacles or reasonable objections that may be
urged to the space basis 3
Mr. STEwART. The principal obstacles that occur to me now, since
the submission of document 105, and since our concession that it
would be proper to consider capitalization in some form to some ex-
tent, are the physical valuation of the property; the ascertainment
of the reasonable part of the capitalization which should be consid—
ered as associated with the mail service which should, form the basis
º which to compute a fair return; and the ascertainment of
what is a fair return, considering the fact that the railroads are
performing a service for the Government and that they do receive
intangible benefits from being in that relationship. Other obstacles
are the administrative difficulties which would arise in the ascertain-
ment of space, the authorization of it, the careful supervision and
checking up to see that too much space was not authorized, and,
of course, to do entire justice to the railroad companies. It can be
depended upon that the railroad companies will look after their
interest very sharply, of course, and the departmental officers would
have to be faithful and careful and look after the interests of the
Government. There of course will be continual controversy, but not
to such an extent that the controversies can not be determined
properly, I think, and I should say that honest, courageous, and fair
officers of the department would not find those difficulties insuperable.
I think in a general way those are the difficulties.
Mr. TUTTLE: Are the railroads compelled to accept the compensa-
tion fixed by Congress, by law, and by department regulations :
Mr. Stewart. The courts have decided, wherever controversies
have come before them involving the question of pay, that the
relations between the railroad companies, other than the land-grant
companies, and the United States, are relations of contract only.
I think they have decided that mainly only because contract cases
have been submitted to them. However, those are the decisions
that are now on the books, and the effect of that is simply this:
That a railroad company is not obliged to carry the mails unless it
contracts to do so, but the courts have gone still further and said if
they do carry the mails they are obliged to carry them on the terms
named by the Post Office Department. The terms must not be in
30 , RAILWAY MAIL PAY.
contravention of law, but the Postmaster General can make lower
rates than the maximum provided by the law. -
Mr. TUTTLE. Would the Government be justified in asking the
railroads to carry the mails at cost, or at a loss? *
Mr. STEwART. I do not think it would be justified in asking them
to carry them at a loss, nor at cost. We have conceded that the
other elements should be taken into consideration.
The CHAIRMAN. Have you any question in your mind as to the
constitutional right of Congress to compel the railroads to carry the
mails, providing the rates are not confiscatory 3 r
Mr. STEWAR.T. Yes; stated just as you have given it. For instance,
I do not think that Congress has the right to compel the railroads
to perform a service if the railroads do not choose to do it, but I think
Congress has ample power under the Constitution to regulate and
establish post offices and post roads, and to provide for the carriage
of mail on any railroad. -
The CHAIRMAN. At rates provided by Congress, provided those
rates are not confiscatory
Mr. STEwART. Yes. But as to the right to compel a nonaided
or nonland-grant railroad to perform a specific act, I doubt that.
Congress has already made all railroads post roads. We make them
post routes when we authorize the carriage of the mails over them.
Congress has exercised Federal jurisdiction over the railroads, and it
can provide for the carriage of mails on them by the agents, officers,
or employees, of the United States independently of the railroad
companies, but I do not think it has the power to compel a railroad
company to specifically perform mail service. However, if a rail-
road has received a grant of lands or other rights from the Federal
Government on condition that it shall carry the mails, a refusal to
carry would in my opinion, lead to action to compel performance.
The CHAIRMAN. How did you determine 6 per cent profit in your
T}ocument 105 as a fair profit on the cost of the activity of the rail-
road 7 * -
Mr. STEwART. That was suggested and adopted by the Post-
master General as representing the usual fair return on investment.
The CHAIRMAN. And yet, as I remember the testimony you have
submitted, you thought one of the problems for determination and
difficulty would be the arrival at what would be a fair compensa-
tion for the capital charge. Why should one be more difficult of
determination than the other ? I do not mean that I concur indi-
vidually as to whether 6 per cent would be the right basis if the plan
was adopted or not, but I was trying to get your line of mental pro-
cedure in coming to that conclusion and why the difficulty would
present itself in one case and not in the other. *
Mr. STEwART. There would seem to be a distinction between the
two cases. If a man lays out $100,000 in actual expenditure, he is
certainly entitled to the current rate of interest; but if you are con-
sidering the furnishing of a facility, as, for instance, a part of the
capitalization of the road, you must take into consideration all the
other conditions of the employment and relationship in estimating
what rate of per cent should be allowed; for instance, it is quite an
advantage to a railroad company to carry the United States mail.
That is an intangible asset of great advantage.
RAILWAY MAIL PAY. 31
The CHAIRMAN. Does not that apply to the cost of the activity
as well as to the capital cost 7
Mr. STEwART. I hardly think so.
The CHAIRMAN. You would make a distinction ? -
Mr. STEwART. Yes; they are entitled to get their cost back—
surely, with a fair rate of interest on that.
The CHAIRMAN. Your explanation that you just gave applies
with equal force to the capital charge as well as to the cost charge.
# original bill allowed 6 per cent on the cost of the operation
itself.
Mr. STEwART. Well, I make that distinction between the actual
cost and the consideration of the capital charge.
The CHAIRMAN. We are very much obliged, Mr. Stewart.
[Extract from the “Minority report of the special commission on railroad mail transportation.” 45th
Cong., 1st sess., S. Misc. Doc. No. 14. Dec. 14, 1877.]
THE BASIS OF COMPENSATION.
The weight of mail is ascertained by weighing it for 30 days in succession, and the
daily average is used as the basis for º the compensation for the next four
years. The weigher appointed by the Post Office Department weighs the mails at
the beginning of the route; at each station he deducts and adds the weights of the
mails delivered and received, and at the end of the trip forwards the weights to the
department, where the average weight for the whole trip is calculated.
This method is not only difficult, expensive, and complicated, but Sometimes
unjust, as the season selected for the weighing may be when the mails are the lightest
or when they are the heaviest. Moreover, the mails are frequently changed from one
route to another, and as the mail increases about 8 per cent a year, an average of 16
per cent more is carried than is paid for. The railroad is required to furnish maximum
accommodation and is only paid for average weight, while the mails are invariably
much heavier one way than the other, except upon the route between Boston and
Washington. The outward bound mail from New York west is nearly seven times
heavier than the return mail. This is caused by the additional weight of daily and
weekly newspapers, periodicals, and merchandise sent from the eastern cities to all
parts of the country. On many local roads the mail matter filling a car at starting
will be almost all delivered before reaching the terminus, and will leave on the return
trip with a º mail, gradually increasing to the starting place. If the mails were
carried in bulk, and the railroad companies were required to furnish space for maxi-
mum . the whole trip, the average weight is not a fair basis upon which to
estimate the compensation.
The evidence annexed to this report proves that the mails are rarely carried in bulk;
that one-quarter of the space occupied in the postal car would be sufficient for the
same mail if carried in bulk; and therefore when the railroad companies are required
to furnish and run a distributing office, space becomes essential to the department,
and should be paid for.
Weight is the proper basis for charges on freight trains, for each train usually carries
one way as much freight and as many cars as the engine can draw. The weight of the
paying and dead load are about equal; therefore, the average weight carried the train-
mile and the expense being ascertained, the charges are based upon weight. Space is
the proper basis for charges in passenger trains. Every passenger train could carry
twice as many passengers as there are seats, and nearly five times the average actually
carried. The paying load has therefore little relation to the dead weight. Therefore,
the average number of passengers per train-mile, the length of the train, and the
expense being ascertained, the charges should be based upon the linear feet occupied.
If the mail was carried in bulk it would be necessary to ascertain the value of the
space occupied by a given weight before the cost of carrying it could be determined;
but when space is required for distributing as well as for carrying the mail, the cost
can be fairly determined only by reference to the space required.
On the Pennsylvania Railroad, where the mail in a single train will frequently
weigh as much as the passengers and baggage, the mail could be carried in one car,
while the passengers and baggage would require at least six cars; if the expenses
were apportioned according to weight, the mail would pay as much as the passengers;
if according to space, one-sixth as much as the passengers.

75904—No. 1–13 3
32 RAILWAY MAIL PAY.
The railroad companies require, for the Safety of their passengers, that the maximum
weight for a car shall be determined by them. The department required that no more
space shall be used than is necessary for working the mail.
The tables furnished by the department, following page 171 of the first part of the
report of evidence, show that on some routes more space is used than is required. On
one route, 28,952 linear feet per mile per annum are in use, while the same table shows
that only 15,024 feet are necessary. On another route in the same State 46,637 feet
are in use, where only 31,300 are necessary. On another, 32,082 feet are in use, and
only 11,268 necessary.
The same table also shows that on other routes more space is required than is in use.
On the route from Cincinnati to Indianapolis and Terre Haute 56,027 are now in use,
where 81,380 are required. The space required on the same route is sometimes
reduced, and again greatly increased, by transferring mails from one route to another;
where a quick and fine distribution is made five or six clerks are required, while on
another route one clerk would work the same amount of mail. It is therefore impos-
sible to prescribe by law how much space should be allowed for a given weight of mail.
The proper basis of compensation was considered by the Select Committee of the
Senate on Transportation. In June, 1874, they recommended it to be based on space,
the space required to be determined by the average weight of the mail.
The basis for determining the cost of railway mail service has never been determined
either by the cost or the value of the service rendered, and no equitable or satisfactory
adjustment of the differences between the department and the railroads can be made
until the cost of the service is ascertained upon principles regarded as just and equitable.
We therefore recommend that space should be taken as the basis of compensation,
the amount of space required to be regulated by the Postmaster General from time to
time.
RECAPITULATION,
The principal duty of the commission was to decide the basis of compensation for
the transportation of the mails by railroads and the compensation.
On the transfer of the mails to the railroads, in 1837, they received the same com-
pensation that has been paid to stagecoaches. The routes were classified according
to the importance of the service, and the rates then established remained unchanged
for over 30 years. The railroads were at first greatly overpaid, but by the increase
of the mails in weight and bulk, and the space required by route agents on the trunk-
lines the cost was increased until, about 1867, the trunk roads were as much under-
paid as they were formerly overpaid. At their request the mails were weighed, a
readjustment of the compensation was made in 1873, which increased the compen-
sation to many roads. -
When the mail was carried in bulk, a gross sum for a given weight of mail carried
each mile of road was a proper method for compensation. When a traveling post
office was introduced, and the mail distributed in transit, another method was re-
quired, but no change was made. The increase of the space used for the mail service
on some of the roads has been very rapid. On one, where, in 1868, 32 feet a day was
sufficient, ten times as many are now required. Since the introduction of postal cars
there has never existed perfect harmony between the railroads and the department.
The readjustment in 1873 would have satisfied the roads temporarily if the distribu-
tion of newspapers in the postal cars had not commenced at that time, requiring a
large amount of additional space, so that their compensation for each linear foot used
was scarcely increased.
The commission have endeavored to ascertain the cost of a linear foot of space per
passenger-train-mile. They have obtained returns from representative roads of
each section of the country, transacting three-quarters of all the railroad business of
the country, and from these returns the commission have calculated the cost of an
average passenger train per mile. These returns show that there are other elements
affecting the cost more important than speed. r
They recommend that the basis for determining the compensation shall be space;
that the railroads shall receive the mails at the stations, transport, and deliver them at
stations, and for this service shall be paid the cost and a fair profit thereon.
That to give a fair compensation 13 per cent should be deducted for station and other
expenses, and to the remainder 45 per cent should be added to the expenses for profit.
These sums will yield on the average 6.2 mills per linear foot, or nearly the same com-
pensation, according to the cost of service, that the railroadsreceive from the remaining
business on the passenger trains.
That the Postmaster General shall from time to time ascertain the cost on the plan.
recommended, and what percentage should be added to give a fair profit. If any road
RAILWAY MAIL PAY. 33
is overpaid, the Postmaster General shall refer the question to a tribunal to be ap--
pointed, and any railroad may apply to the same tribunal if aggrieved by any act of
the Postmaster General.
Such tribunal shall have power to adjust the compensation in such cases and to
award payment out of the appropriations annually made by Congress for the trans-
portation of the mails. *
That the Postmaster General shall determine what space is required for a given
amount of mail matter.
The commission were required to report such rates of compensation as will enable
the department to perform the postal service for the best interest of the public. This,
they believe, can not be done by reducing appropriations and making the department
self-sustaining, as has been proposed. Cheap postage in 1851 reduced the cost to the
public, and greatly increased the volume of correspondence, while, at the same time,
it reduced the revenue and increased the expenditures of the department. When the
department was self-sustaining, a pound of mail matter, transported on an average
120 miles, cost 56.6 cents while the cost to the public was $1.17. Now it costs the de-
department 16% cents to transport a pound on an average of 813 miles and the public 24
cents. Then the cost of transportation and office expenses was 93.6 cents per pound;
now 29.4 cents.
The fast mails which were in operation 10 months from September, 1875, proved
to be of great value, not only to the terminal cities and the places on the line of the
roads, but also to cities beyond the two termini. It makes little difference to the
correspondent at Chicago or St. Louis whether he receives his letters at 8 or 10 o’clock
in the morning, but by the same delay the connections of the mail for the Western
States will be delayed from 12 to 24 hours. The establishment of limited mail trains
between the East and the West is therefore recommended, with an extension and
increase in the efficiency of the Railway Mail Service. Two-thirds of the letters
and newspapers pass through postal cars, and are there distributed by the railway
mail clerk.
The introduction of postal cars and every improvement in and extension of the
postal mail service is the result of cheap postage. For the present the expense of
the department is increased by the additional facilities offered, and by the carriage of
most pieces of the second and third class at less than cost, the volume of correspond-
ence is increased. In this way “the best interests of the public” can be maintained,
and when the whole country becomes as populous as New England, New York, and
Pennsylvania the department will become once more self-sustaining.
Some examination has been made in regard to the carriage of the mails on inland
waters and the ocean and also of the star service. Data has been collected in regard
to the river and the ocean service.
Considerable thought has been given to the star service, and inquiries made of
many different parties, but on account of the magnitude of the interests involved
and the want of time to thoroughly consider the subject, they are unable to say when
any report will be made. The whole contract system has come frequently before
Congress and the department; many abuses have been corrected, to be followed by
others worse, if anything, than the first. Large discretionary power is left to the
Postmaster General and his subordinates, and although the department is at present
wisely and economically administered and is a safe custodian of the funds placed in
its charge, it is believed some plan should be devised for the reorganization of the
star Service and rules and regulations for its management established by Congress.
RULES AND REGULATIONS.
The following rules and regulations are recommended for the transportation of the
mails on railroad routes: -
1. That the basis for determining the compensation to railroads for transportation
# the ºils shall be space used, limited by the average weight of mails carried over
the roads.
2. That the Postmaster General shall, from time to time, decide what space is
required for the transportation of the average weight of mail upon any railroad route.
3. That the compensation for a car, or part of a car, used for the Railway Mail
Service shall be a fixed sum for each linear foot used. Where the mails are carried
in baggage cars, the linear feet of space actually occupied shall be paid for: Provided,
however, That in no case shall less than 10 linear feet be paid for on any route; but
this compensation shall cover the use of the car for a double daily service, where not
more than 10 linear feet a day are required.
34 RAILWAY MAIL PAY.
4. That the Postmaster General shall, once in every four years, or oftener, ascertain
the average cost of running a linear foot of passenger train on the plan herein recom-
mended and what percentage should be added thereto to give a fair profit to the
railroads. Until the cost shall be ascertained by the Postmaster General the com-
pensation for each linear foot of car used for railway mail purposes running between
terminals at a speed of—
Mills.
23 miles per hour and under shall be . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - 5. 82
24 miles per hour shall be. ---------------------------. . . . . . . . . . . . . . . . . . . . . . . 5. 87
25 miles per hour shall be. -------------------. . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - 5. 92
26 miles per hour shall be...------------------------------------------------ 5. 97
27 miles per hour shall be. -------------------------------------- . . . . . . . . . . . . 6. 07
28 miles per hour shall be. -------------------------------------------------- 6, 17
29 miles per hour shall be. -------------------------------------------------- 6. 27
30 miles per hour shall be. -------------------------------------------------- 6. 37
31 miles per hour shall be---------------------------------. . . . . . . . . . . . . . . . . . 6. 52
32 miles per hour shall be. --------------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 67
33 miles per hour shall be. ------------------------------- - - - - - - - - - - - - - - - - - - - 6.82
34 miles per hour shall be. -------------------------------------------------. 6. 97
35 miles per hour shall be-------------------------------------- - - - - - - - - - - - - - 7. 12
5. That no postal car shall be loaded with more than 15,000 pounds of mail if ob-
jected to by the carrying company.
6. That the department shall deliver the mails to the railroads and receive them at
the stations or pay the railroads a reasonable compensation for such service. The
railroads shall transport the mails and deliver them to connecting roads when required
by the department: Provided, however, That when the mails are carried in baggage
cars they shall be in charge of the railroad company until delivered to the connecting
roads, or to such persons as may be duly authorized by the department to receive them.
7. That the railroad companies performing the mail service shall be paid in the same
manner as are all other creditors of the Government. * *
8. That the same compensation shall include the transportation of superintendents
and officers of the Railway Mail Service, special agents of the department, and all
railway mail employees, while engaged in their official duty or going to or returning
from it.
9. That all cars used for the Railway Mail Service shall be of such style, length, and
character and furnished in such manner as shall be required by the Postmaster General,
and shall be fitted up, maintained, heated, and lighted by the railroad company.
10. That in all cases where there shall be any disagreement between the Postmaster
General and the railroad company, in relation to the transportation of the mails, either
party may have the matter referred to a commission to be appointed as Congress may
determine. Said commission shall have the power to adjust the compensation of
the railroad cases so referred and to award, payment thereof out of the appropriations
annually made for the transportation of the mails; and such awards shall be binding
for the term of four years, unless the service shall be increased or diminished during
said period.
11. That the Postmaster General shall deduct from the pay of the railroad com-
panies for every failure to deliver a mail within its schedule time not less than the
price of the trip, and where the trip is not performed not less than the price of two
trips, and not exceeding, in either case, the price of three trips: Provided, however,
That if the failure is caused by a connecting road, then only the connecting road shall
be fined. And where such failure is caused by unavoidable casualty the Postmaster
General may remit the fine. And he may make deductions and impose fines for
other delinquencies. ^
12. That the Postmaster General shall have the power to decide upon what trains
the mail shall be carried, and shall have power to direct the running of limited or
special mail trains; and in such cases to prescribe when the trains shall start and
arrive, and what connection they shall make. - e
13. That railway-mail employees be divided into five classes, with compensation
varying with the amount of work required and length of time in the service.
\
RAILWAY MAIL PAY. 35
[Extract from the “Report of the committee appointed to devise a more complete system of gauging the
rates of pay for carrying the mails on railroad routes,” Dec. 3, 1883.]
THE BASIS OF COMPENSATION.
Taking up the subject in the order indicated in the letter put forth by the com-
#. we come first to the basis on which the rate of compensation should be deter-
Iſll'IlêOl. -
The changed conditions of the service compel a different basis on which to estimate
the rate of pay. The present system is cumbrous, and is gauged chiefly by the weight
of the mails, which is not the only element to be considered.
Since weight no longer enters as the chief factor in the determination of the require-
ments of the service-space being the chief thing—weight becomes a modifying
element only as it helps to determine what space will be required, fixing a definite
limit to the amount of space to be used and paid for on all roads.
The problem is therefore to determine approximately the amount of space required
in every instance, and the value of it, applying to this required space the rate allowed,
as deduced from some average space value, modified by the allowance for the rate
of speed at which the mails are conveyed, Whilst the reasonableness of shifting the
basis from wº to space is apparent, still a word of explanation may be necessary
as to the part that weight is to play in the new scheme proposed by the committee.
WEIGHT GAUGE.
While it is proposed to pay for space, yet the amount of space and consequent
expenditure on any railroad must be restricted by Some method which in its operation
will lie outside of the discretion of executive officers. Without some such restrictive
gauge there would be no limit to the expenditures for transportation by railroads,
save such as might be fixed at the will of an officer of the Post Office Department.
Under such a condition of affairs it is evident that space itself would be an arbitrary
basis of compensation, unsafe both for the railroads and for the Post Office Depart-
ment. The gauge prescribed by the committee, resting upon the weight of mails,
modified by the room necessary in which to assort and distribute the same, and the
speed with which they are conveyed, removes all possibility of improper or arbitrary
allowances in determining the space and pay on any particular railroad.
SPACE WALUE.
It is evident that any scheme which bases pay on the amount of space used, esti-
mating by linear feet, ought in fixing the rate per linear foot to be supported by some
facts and figures showing the approximate value of car space in linear feet.
The committee found some difficulty in obtaining information as accurate and widely
distributed as they desired, but beg to present herewith tables showing the earnings
per train-mile on almost all the railroads in the United States; also showing, as gathered
from official reports of the roads and from the reports of the railroad commissioners
of the several States, so far as they could be obtained, the yield per car-mile on all
passenger traffic, including express, extra baggage, and mails.
These tables will be found to furnish the data from which to estimate approximately
the value of car space per linear foot per mile run.
One statement shows the average yield per car per mile in six important States,
as deduced from the commissioners’ reports, to be 26.6 cents. This statement, in-
volving a car service of over 600,000,000 miles, is full of significance in this connection.
In the State of Pennsylvania there are 30 roads earning less than 26 cents per car-
mile, and there are 20 roads earning more than 26 cents per car-mile. In the State
of Michigan there are 9 roads earning less than 26 cents per car-mile, and 13 roads
earning more than 26 cents per car-mile. In Ohio there are 38 roads earning less than
26 cents per car-mile, and 9 roads earning more than 26 cents per car-mile. In Massa-
chusetts there are 10 roads earning less than 26 cents per car-mile, and 12 roads earning
more than 26 cents per car-mile.
On comparing statistics gathered from every quarter it will be found that the range
of receipts from the running of passenger trains is between a minimum of 50 cents
and a maximum of $3 per train-mile.
An examination of the tables submitted will also reveal the fact that the wide
difference apparently between the earnings per train-mile on the Several roads prac-
tically disappears when the receipts per car-mile are compared. And for this reason,
that where the earnings per passenger-train mile are shown to reach toward the
maximum, there the number of cars run in each train is correspondingly great, thus
$36 RAILWAY MAIL PAY.
bringing down the average earnings per car per mile run to nearly the same point in-
dicated for each car on trains where the number of cars in each train is at the minimum,
and the receipts per train-mile correspondingly small.
The smaller earnings per train-mile will thus be seeen to correspond to the fewer
* in each train, the higher rate of earnings following an increase in the number of
the Cars.
Thus it will be evident that the range of the earnings from the passenger cars per
mile run must be between much narrower limits.
The most careful estimates have been made, covering a wide field of statistics,
applying to every railroad in the United States. As a result of this study of the whole
field the committee are convinced that the average yield per passenger car (as ascer-
tained by such a multiplicity of methods, each confirmatory of the other) can not be
very far from 26 cents per car per mile run, the great majority of railroads yielding
under 26 cents per car per mile. -
This careful analysis of the returns of all the railroads in the United States points
to the conclusion that as the average yield per car per mile is about 26 cents, if the
roads receive 5 mills per linear foot per mile run, or at the rate of 25 cents for a 50-foot
car, at the ordinary speed of 20 miles per hour, they will be getting a rate corresponding
closely to the returns from all passenger traffic combined, which on the face of it would
seem to be both just and reasonable. And the committee feel constrained to make
this further qualification, that the regularity and frequency of the service, the free-
dom of the railroads from liability, the certainty of the compensation, the exemption
of the carrier from those expenses ordinarily attending passenger traffic, all combine
to strengthen the conviction in the minds of the committee that the rate herein rec-
ommended is both just and reasonable. -
In the annexed correspondence will be found letters from the leading car builders
showing that the minimum length of passenger cars is 45 feet, the maximum 54 feet; the
sleeping and drawing-room cars reaching from 60 to 70. The express and baggage cars
are built from 40 to 50 feet in length. The committee have ascertained that six of the
principal States in which complete official returns are available show on passenger
trains a car mileage of 646,348,821 miles, representing 180 companies, of which 41 com-
panies performed 508,000,000 miles of the car service, or one-fifth of the companies doing
four-fifths of the Service, showing that the greater part of the Service is performed on
the great lines on which the longer cars are used. Upon this data the committee have
accepted 50 feet as being a fair average of the length of the cars of all description on
passenger trains.
SPEED.
On the general question of speed as a modifying element in making up the rate of
pay, the committee would say that there has been no attempt to determine the rate of
increase in cost to the railroads because of increased speed, since this is practically
impossible. -
Yet it is absolutely certain that an increase of speed must be at an increase of cost
to the road. By a well-known law in mechanics the increase in the amount of energy
required, and the wear and tear resulting, is not directly proportional to the rate of
increase in speed, but multiplies rapidly as the speed arises. This renders any nice
adjustment on the score of speed very difficult.
The chief thing to be º: into consideration in connection with speed is the
greatly enhanced value of the service to the public. If one mail is carried 15 miles
er hour and another mail is carried at the rate of 35 miles per hour, there ought to
#. a difference in the rate of pay, both because of the difference in the cost of the
service to the roads, as well as the difference in the value of the service to the public.
If the higher rates of speed were run only for the postal service, it would be desir-
able to fix an exact rate, closely graduating pay to speed. But the demands of travel
and competitions of traffic compel these higher rates of speed apart from the postal
Serv ICe.
While not attempting, therefore, to closely estimate the value of speed in the service,
the committee felt that any just and reasonable rate must include speed as a factor,
and they further believe that the result of their recommendations, if they shall be
adopted, will be to gradually inprove the service, the value of which as a whole
depends to so great a degree upon the regularity and speed of each particular road.
In fixing upon the amount to be allowed for different rates, as set forth fully in the
final recommendations of the committee, they have been guided by several consider-
ations, such as the previous experience of the department, the opinions of those
speaking for the railroads, the testimony of experts, and the prompt recognition on
the part of press and public of every attempt hitherto made to increase the value of
the postal service through increased facilities.
RAILWAY MAIL PAY. 37
It was deemed best that no notice be taken of speed as a factor modifying the rate
of pay under 20 miles per hour, since all service under this rate of speed, however
valuable it might be in itself, could not lay claim to special value on account of its
speed. ...” -
P; committee would add one-tenth of a mill to the ordinary rate of 5 mills per
linear foot per mile run on all railway post-office service for each 2 miles increase in
speed between 20 and 30 miles per hour; and above 30 miles per hour one-tenth of a
mill for each additional mile. This increase is not to apply to closed or pouch mails;
and speed in every case is to be estimated by the running time between terminals.
SPECIAL TRAINS. !
The letter herewith submitted from the British post office explains one method of
enhancing the value of the postal service, which in some of its phases might be appli-
cable to the railway service in the United States. -
By act of Parliament the postmaster general of Great Britain has power to call upon
any railway company to carry mails by trains run at such hours as he may direct, and
at a speed not exceeding the speed of the company’s first-class passenger trains, the
stopping places and the duration of the stoppages being also under his control. For
services of this class, where the hours of departure and arrival, places of stoppage and
speed, are placed under the control of the postmaster general, high rates of payment
are almost inevitable.
The mails now going out of the great cities are of such volume and weight that it
might be desirable to arrange for a similar service upon our lines between the great
centers, where the postal facilities should be of the highest order. The weight at this
time is so great as to make it a cumbersome element in the composition of passenger
trains, and yet is hardly sufficient to warrant the payment for trains run exclusively
for its transportation.
The day is not far distant when such trains will be fully justified and actually
necessary. At present the practicable thing is for the postal service, in connection
with other items of transportation, to contribute its share in maintaining trains
approaching as nearly as possible the same character of service.
THE LAW OF COMPETITION.
Since the railway postal service by the very nature of it is debarred from those
advantageous rates of which it might avail itself if competition were possible, it would
seem but fair and natural that the laws which obtain in competition should also hold
here, at least in part.
One well-known authority on transportation, writing of governmental regulation of
railroad tariffs, says in reply to the question whether a railroad shall carry its freight
and passengers for the same that other lines charge, or not carry them at all—
“All that has to be known by the railroad manager to answer this question is the
minimum cost at which the service can be performed. If the obtainable rate exceeds
cost, no matter how little, it becomes his interest to accept the terms offered.” "
The application of this well-known principle in the operation of railroads, so far as
the mails are concerned, would be, not to argue, in the absence of competition, that the
mails should be carried as if under competition, at the smallest margin above cost,
or at the minimum of profit, but rather to argue that the scheme of the committee
should not be open to fatal objection simply because it did not reach the maximum
of profit on comparison with other items of passenger traffic; in other words, as the
Government could not, in justice, demand the railroads to carry the mails at rates so
low as to be practically unremunerative, so neither could the railroads fairly demand
the highest possible rate of compensation. -
The rate recommended by the committee would seem to be both just and reasonable,
inasmuch as it is a mean between these extremes of an unremunerative and an extrava-
gant rate of compensation.
SIDE SERVICE.
The committee think that the universal objection of the railroad companies to
carrying the mails between stations and post offices is well grounded. The whole
System is a relic of stagecoach methods, and justice to the roads, as well as perfection
in the mail service, requires that the duty of the railroads with respect to the mails
should cease on their delivery to some responsible person at the railway station.
* Vide. Albert Fink's pamphlet on “Cost of Railroad Transportation, Railroad Accounts, and Govern-
mental Regulation of Railroad Tariffs.”
38 RAILWAY MAIL PAY.
What provision shall be made for this service so as to relieve the railroads of it is a
matter of detail for the department, not within the purview of this committee.
We therefore unanimously recommend that this side service, which is no part of the
legitimate work of the railroads, is prejudicial to the dignity and best interests of the
service, leaving the mails frequently for an interval in the hands of trainmen whose
first duty is elsewhere, abridging the facilities of the public, be no longer demanded of
the railroads, unless specific compensation be given to them for performing it, although
in the judgment of the committee this would not be the most economical method of
º: this service.
The committee beg to submit herewith such statistical tables and statements pre-
pared and used by them in reaching their conclusions as bear directly upon the text of
the report, together with the correspondence in full.
A statement in detail of the cost and service on railroad routes is not given in this
report for the reason that these items are given in full in the annual report of the Post-
master General.
RECOMMENDATIONS.
The committee would, in conclusion, respectfully recommend as follows:
(1) That the compensation to the railroads for carrying the mails shall be deter-
mined upon the basis of the space used and the frequency and speed with which the
mails are conveyed.
(2) That the space factor shall be determined by the Postmaster General, in view of
the needs of the service, modified by the weight and frequency of the mails; that the
speed factor shall be determined by the schedules of the various railroads, in connec-
tion with the official reports of the Railway Mail Service.
(3) That the pay for all mail transportation shall hereafter be at a fixed rate per linear
foot of car per mile run. This rate to cover the entire cost of the service, furniture, and
fixtures in the car, transportation of postal clerks, etc.
(4) That the Postmaster General may at any time order an increase or a reduction
in the amount of space to be paid for if after a weighing it be found that there has been
a sufficient increase or diminution in the amount of mails transported on any railroad
to require the same.
(5) The closed or pouch mails, now carried in express or baggage car, without
postal clerks accompanying them, requiring no space for distribution en route, shall
be paid for on the following basis, viz: The aggregate weight of the closed or pouch
mails carried on any road on all trains for 24 hours shall be made the basis of pay,
and this aggregate weight reduced to an equivalent in linear feet of car space in the
following proportions:
Two hundred pounds of mail or less shall be rated as the equivalent of 6 linear
inches, to be paid for at the rate of 5 mills per linear foot per mile run.
Five hundred pounds of mail shall be rated as 1 linear foot, and for each additional
500 pounds 1 linear foot of car space shall be allowed, with the proviso that the pay
for transportation of mails upon any railroad route for six round trips per week shall
not be less than $35 per mile per annum. f
(6) That the side service be discontinued.
(7) That the pay for railway post offices, at a speed of 20 or less miles per hour
between termini, be 5 mills per linear foot, inside measurement, of car space per
mile run, and for each increase of speed amounting to 2 miles per hour up to and
including 30 miles per hour, one-tenth of a mill; i.e., 22 miles per hour, 5.1 mills;
24 miles per hour, 5.2 mills; 26 miles per hour, 5.3 mills; 28 miles per hour, 5.4 mills;
30 miles per hour, 5.5 mills; and for each additional mile per hour, one-tenth of a
mill.
And it is further recommended that in the adjustment of space by linear feet for
railway post offices a daily average of 500 pounds of mail or less shall be entitled to pay
for space not to exceed 13 feet. From 500 to 1,000 pounds, space not to exceed 15 feet.
From 1,000 to 2,000 pounds, space not to exceed 25 feet. From 2,000 to 4,000 pounds,
space not to exceed 40 feet. And we recommend that no change in the allotment of
space shall be made until the average weight reaches 6,000 pounds. For 6,000 pounds,
50 feet; for 8,000 pounds, 60 feet—the weight to be ascertained by a weighing of not
less than 30 consecutive days; and no additional space shall be paid for unless it is
found to be necessary. *.
In all railway post offices the load should not exceed double the greatest weight
specified for the respective lengths, and for any gross weight carried on two or more
trains daily the space may be subdivided upon the gradients of space for lower weights,
as the nature of the service may require, with the further provision that the Postmaster
General may increase the compensation upon any railroad route not to exceed 50 per
RAILWAY MAIL PAY. 39
cent per annum for special mail trains performing service upon schedules fixed by him.
In all these estimates the minimum car width should be fixed at 8 feet 6 inches, inside.
measurement.
Respectfully submitted.
RICH'D A. ELMER,
W. B. THOMPson,
ISAAC C. SLATER,
Committee. ,
[Extract from the report of the joint commission to investigate the postal service, 1901, 56th Cong.,
2d sess., H. R. Rept. No. 2284.]
SPACE As THE BASIS OF COMPENSATION.
The commission has heard much testimony and suggestion as to whether the ad-
justment of the compensation by weight (excluding for the moment railway post-
office car compensation) is the fairest method. Many of those who have appeared
before the commission strenuously contended that “space” occupied would be a
very much better gauge by which to fix the compensation; that by this standard the
service rendered would be more accurately ascertained and a schedule of rates fixed
which would be fairer, to the railroads on the one hand and to the Government on
the other, than is possible under the present system of adjusting the rates according
to weight. (Printed testimony, Pt. I, pp. 217, 245, 252, 349, 403, 404, 496, 498, 530,
560, 607, 644, 672; Pt. II, pp. 27, 148, 160, 411.)
The commission, while recognizing that the question of “space” must be con-
sidered as having strong influence upon the question of the reasonableness of the
present railway-mail pay, feels unwilling to recommend it as the controlling stand-
ard by which the rates of compensation for the transportation of the mails shall be
fixed, because of the impossibility, with the evidence before the commission, of
*Pºº the “space” basis of payment to the carriage of the mails.
thers have contended that “space” and “speed” combined should be made the
basis of compensation, and others still that the basis of compensation should be
“services rendered,” so that the many services and facilities which are now furnished
by the railroads incidentally and without pay should receive their due proportion
of compensation.
Some idea of the value and amount of these incidental services may be obtained
from a single item appearing in the testimony of the Second Assistant Postmaster
General (printed testimony, Pt. I, p. 401), where it is shown that out of 27,000 sta-
tions supplied by messenger service 7,000 of them are supplied by the Post Office
Department at a cost of between $1,000,000 and $1,100,000 per annum, leaving the
other 20,000 stations to be supplied by and at the expense of the railroads. Attention
is called especially to this item because it is so frequently referred to by witnesses,
and also because the Post Office Department, through the reports of its chief officials,
has so repeatedly disapproved of requiring the railroads to perform this service and
recommended that they be relieved therefrom. (See also printed testimony, Pt. I,
pp. 357, 399, 401, 611, 612.)
* *
%. * * + w +
RAILWAY POST-OFFICE CARS.
Until a comparatively short time prior to 1873 the distribution of the mails in
transit was unknown. Prior to the late sixties the railroads simply transported the
mails, which were delivered at the post offices and there distributed. Accordingly,
“weight,” as the basis of compensation, was at the time of its adoption and long there-
after entirely adequate. -
For a few years, however, prior to 1873 the distribution of the mails in transit had
been practiced to a sufficient extent to satisfy the Post Office Department and Con-
ſº that it was a desirable innovation and a branch of the postal service that should
e very much enlarged; but it was recognized that if the railroads were not only to
transport the mail itself but also to supply, equip, and haul post offices for the distribu-
tion of the mails the compensation upon weight basis that had obtained up to that
time was not entirely adequate and just, and therefore the law of 1873, as already indi-
cated, contained a provision allowing additional compensation for railway post-office
cars. At first these cars were mostly not exceeding 40 or 45 feet in length and of light
construction similar to baggage and express cars.
From the policy of the department, however, of constantly demanding better and
better facilities from the railroads and the introduction of every improvement that
could be discovered, it has come to pass that to-day the railroad post-office cars, with
40 RAILWAY MAIL PAY.
the exception of a few obsolete ones that are being discontinued as rapidly as prac-
ticable, are elaborate structures, weighing between 90,000 and 100,000 pounds (printed
testimony, Pt. I, pp. 566, 601, 652); built as strongly and fitted up, so far as suitable
to the purpose for which it is intended, as expensively as the best Pullman and parlor
cars, costing from $5,200 to $6,500 (printed testimony, Pt. I, pp. 312, 370, 380, 674;
Pt. II, pp. 72, 87); maintained at a cost of $2,000 per year (printed testimony, fi. I,
pp. 312, 370, 374, 602, 608–609); traveling on an average of 100,000 miles per annum
(printed testimony, Pt. I, pp. 107,242, 311, 370); provided with the very best appli-
ances for light, heat, water, and other comforts and conveniences; placed in position
for the use of the postal authorities from two and a half to seven hours before the
departure of the train upon which they are to be hauled (printed testimony, Pt. I,
pp. 611-612), and owing to the small space allowed in them for the actual transporta-
tion of the mails, accompanied on the denser lines by storage cars for which no addi-
tional compensation is paid by the Government (printed testimony, Pt. I, pp. 275, 612)
and that on the less dense lines the larger bulk of mails is carried in the baggage cars
without additional compensation for the car.
These cars are constructed and fitted up by the railroads in accordance with plans
and specifications furnished by the department, and the amount of mail transported
therein is determined exclusively by the postal authorities. From these two facts
it results that the railroad must haul 100,000 pounds of car when the weight of the mail
actually carried therein is only 3,500 to 5,000 pounds—often very much less and
occasionally somewhat more. (Printed testimony, Pt. I, pp. 87, 317, 319; Pt. II,
79.)
p Taking in view all these facts, as disclosed by the testimony filed herewith, we are
of opinion that the “prices paid “ ” * as compensation for the postal car serv-
ice” are not excessive, and recommend that no reduction be made therein so long as
the methods, conditions, and requirements of the postal service continue the same a
at Oresent. .
W. are confirmed in this conclusion by the testimony beating upon the question as
to whether or not it is advisable for the Government to construct, maintain, and own
the railway post-office cars. Without commenting at large upon the testimony intro-
duced upon this subject, it suffices for the purposes of this report to say that, so far as
the testimony discloses, it is highly improbable that the present compensation to the
railroads for railway post-office cars exceeds in amount what the Government would
have to pay under the new arrangements, and, furthermore, the expense to the Gov-
ernment for the construction and maintenance of its own railway post-office cars would
be very considerable, and the Post Office Department would be under the necessity
of materially enlarging its present force and the scope of its operations.
We do not, however, think that the evidence now before us is sufficient to warrant
us in making any recommendation as to Government ownership of the railway post-
office cars. -
The main report was signed by Hon. Edward O. Wolcott, chairman, and Hon. W.
B. Allison.
Hon. Thomas S. Martin concurred in the report with the exception of that which
refers to “Special facilities.”
Hon. E. F. Loud concurred in the report so far as it relates to pay upon space. The
subject of space as a basis he reports upon separately as follows:
Space, in my opinion, should be the basis of pay, and I reach this conclusion from .
the fact, which must be apparent to everyone who has made a careful study of this
question, that space is the principal and therefore should be the controlling factor.
The testimony shows that the average weight of mail carried compared with the
carrying capacity of the space used is as 1 to 20 and over, which of course renders the
ratio of unknown factors or uncertainties to known factors or certainties as 1 to 20
and over.
The carrying capacity of a given amount of space is easily ascertainable, and when
obtained it would seem to be not a difficult task to find the carrying capacity of similar
space either upon freight or passenger trains or both; or, to express myself in another
way, on the basis of weight the unknown factors are as 20 to 1, while on the basis of
space the known and unknown would seem to balance and the result more nearly
scientific and mathematically more accurate.
It may be urged, and it is the testimony of some, that under the space basis the
tendency would be unduly to increase the space, hence increase the rate of pay beyond
what would be fair and just. To admit this would, to my mind, be a conclusion that
our executive officials are incompetent or corrupt and almost a conclusion that our
form of government is a failure. Experience has taught me that our officials are
honest, careful, and painstaking and competent. I believe that a larger degree of
personal responsibility placed upon the officials would result in a more efficient and
RAILWAY MAIL PAY. 41
economical administration, especially of this branch of our governmental affairs,
which is a business branch wholly. And if this basis be adopted, Congress then as
now would hold the purse strings and could appropriate for only so much space as it
saw fit, after a careful investigation of the recommendations of the department and in
their opinion the demands of the service required.
Under the present system railway post-office cars, which I denominate space, are
so small a factor of consideration in the total of mail pay that there is not the incentive
to curtail space that there would naturally be where space was the whole or at least
the controlling factor. Under the present system, especially on the light routes
using railway post-office cars, each increasing pound of weight means increased com-
pensation. On the basis of space no increase in compensation would result from any
increase of weight until at least the maximum carrying capacity of the car had been
reached. Or, to express it another way, it would require substantially the same
space to distribute 4,000 pounds as 8,000 pounds of mail. It would remove the expen-
sive and aggravating system of weighing which is now had upon each system once in
four years. It would simplify the now complex mail system so that the average mind
could comprehend the subject.
There will be urged as one of the objections to this system that Some of our Service
is pouch service and the space to be occupied is difficult of measurement. That is
true, but payment for such service could easily be made upon the basis of average num-
ber carried for a period of 30 days to fix the rate for 1 year.
The law compelling railroad companies to deliver mail within the limit of 80 rods
of station should be repealed, and the transportation of mails should be the simple
question of transportation upon railroads.
There is not sufficient testimony before the commission, in my opinion, to recom-
mend what rate should be paid for given space, but the lack of such testimony results
from the fact that the system of space payment was regarded generally by the com-
mission as impracticable, and a proper investigation in that direction was not pursued.
The report of Hon. W. H. Moody, in so far as it may relate to space, is as follows:
Applying to these facts the fundamental law of transportation, that the cost per unit
of transportation decreases as the density of the traffic increases, Mr. Adams declares
that they indicate that there should have been decidedly greater fall of mail than in
passenger or freight rates. He is led at once to the inquiry whether the rates upon
the routes where there is the greatest concentration of mail are not excessive. The
rule of transportation invoked is based upon the assumption that the increase of
traffic permits the introduction of increased economy, notably the economy which
results in so loading cars that the ratio of dead weight to paying freight is decreased.
Yet this economy is precisely what our method of transporting mail denies to the
railroads. Instead of permitting the mail cars, whether apartment or full postal cars,
to be loaded to their full capacity, the Government demands that the cars shall be
lightly loaded so that there may be ample space for sorting and distribution of mail
en route. In other words, instead of a freight car, we exact a traveling post office.
The modern 60-foot postal car weight from 80,000 to 100,000 pounds. It is clear that
if but 2 tons of mail are carried upon it all the economies which result from density of
traffic upon the route are lost. This is true, although the extra pay for running the
postal car is about equal to the pay for a ton of mail.
Mr. Adams recognizes clearly the effect of these facts working against the normal
Operation of the fundamental law of transportation under consideration. He is
apparently of the opinion that if the facts are as they are claimed to be, namely,
that on an average but 2 tons of mail are loaded on a postal car, and apartment
cars are loaded in like proportion, the pay ought not to be reduced. Nevertheless,
with this concession, he recommends a reduction of pay on the dense routes by extend-
ing the principle of the existing law, so that all routes carrying in excess of 5,000
pounds per day shall be subjected to a progressive reduction of from 1 to 12 per cent.
his would effect a saving of something over a million dollars per annum. It has
been suggested that there is an inconsistency between the opinion and the recom-
mendation. I am anxious not to misrepresent Mr. Adams's views and conscious that
I may do so... But as I understand them there is no inconsistency. He makes the
recommendation in spite of the opinion, because he is unwilling to accept without
further inquiry the hypothesis in respect to the loading of cars which has been pressed
.P. us. He is also unwilling to accept without further inquiry the present method
of loading as a finality.
In both these respects I agree with him, and join in his opinion, so many times
expressed, that further investigation is demanded. . We all agree that the loading
of the cars is the “principal question,” to use Mr. Adams's expression. It is the one
point of agreement between the representatives of the railroads, the post-office officials,
42 , RAILWAY MAIL PAY.
the members of the commission, and its expert. Yet it is the one question upon which
there is no evidence beyond mere assertion. *
As a result of our deliberations over the voluminous evidence, I have arrived at
the following conclusions: f
(1) The railway mail pay is not grossly excessive.
(2) If the mail is loaded in the proportion of paying freight to dead weight, which is
claimed, then it is not excessive at all.
(3) There is an uncertainty as to the proportion of paying freight to dead weight,
which should be removed by investigation.
(4) An effort should be made to modify existing methods so that savings may be
made without injustice to the carrier. -
These are some facts which tend to show that an effort to modify existing methods
of transportation deserves a more minute consideration than a commission constituted
as this can profitably give.
º T. C. Catchings concurred in Mr. Moody’s report so far as the above is con-
CerneCl.
Hon. William H. Fleming made a separate report, but does not specifically dis-
cuss space as a basis of compensation excepting in his general treatment of the subject
of railway post-office car pay.
STATEMENT OF MIR, RALPH PETERS,
The CHAIRMAN. Mr. Peters, it will be necessary for you to be
SWOI"I). -
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you kindly state your age, residence, and
occupation.” -
Mr. PETERs. Age, 59; residence, Garden City, N. Y.; occupation,
president of the Long Island Railroad Co.
The CHAIRMAN, Will you kindly explain for the information of the
committee the official position that you occupy in reference to the
association which you gentlemen represent in appearing before the
committee this evening 3
Mr. PETERs. I am also chairman of the committee on railway
mail pay, which was appointed to collate information and look after
the matter of the question of railway mail pay. At an informal
meeting before one of the regular meetings of the American Railway
Association in Chicago, the representatives of the railroads, got to-
gether and a statement was made in regard to the investigation that
was taking place as to the cost of the handling of mails, and it was
thought wise to appoint this committee. -
The CHAIRMAN. They represent practically what mileage 3
Mr. PETERs. There are 214,275 miles of road operated by 268
companies, represented by the committee. -
The CHAIRMAN: What is the total railroad mileage, in round
numbers, in the United States?
Mr. PETERs. About 250,000 miles, or a little under that. The
appointment of this committee resulted from the general dissatis-
faction on the part of the railroads following the reductions in pay
made in 1907, under the act of Congress making a general reduction
in the rate of pay. . At the same time a change in the divisor was
made, making a double reduction. At that time the department had
initiated the inquiry into the general subject of mail pay. Blanks
had been sent out calling for elaborate data, and some railroad
representatives who had heard of it and noted from the reports of
the Postmaster General that an investigation was to take place,
requested that they be given an opportunity to confer about it.
RAILWAY MAIL PAY. 43
These representatives developed the fact that the data required
could not be furnished in the manner proposed with any degree of
accuracy and would be valueless, and on their advice the blanks
were changed and the instructions changed and different blanks were
sent out. That practically concurs with what General Stewart stated.
That occurred in 1907, 1908, and the early part of 1909, prior to the
time I was connected with the committee. -
The CHAIRMAN. You are familiar with the attitude of the depart-
ment in the two suggested bills that have been submitted to the
committee here, are you not %
Mr. PETERs. With the first one; yes. I have only glanced over
the second one and have not had time to study it to the extent that I
should say I was familiar with it. I am familiar with the general
scope of the bill.
he CHAIRMAN. Assuming, for the sake of information before the
committee, that the committee advocates the substitution of space
for weight as the method of determination of railway mail pay and
its apportionment among the different railroads of the country, will
you kindly state for the information of the committee your views rel-
ative to that suggested change and the views of the organizations that
you officially represent here before the committee 7
Mr. PETERs. As General Stewart stated, the space basis for the pay-
ment for the mails is not new. There were bills introduced in Con-
gress in 1874 and 1876 by Senator Mitchell and Representative Stone
providing for a system of pay on the basis of space. The Hubbard
Commission, in 1878, likewise reported on the space basis and recom-
mended it, but to be in proportion to the weight. The Elmer, Thomp-
son, and Slater Commission, in 1883, recommended a space basis, but
the space to be regulated by a gauge of weight or weight gauge. I
believe the Wolcott and Loud committee, in 1901, reported on a space
basis, but made no recommendation in regard to it. What we object
to chiefly in the proposed bills is the plan to pay for the mails on the
basis of cost and not so much space, space being used merely as a meas-
ure for apportioning the cost between the different elements on the
passenger trains.
The CHAIRMAN. You think space would be just as good a yardstick
as weight 7
Mr. PETERs. No; space is a useful measure for determining the
relative distribution of service on passenger trains between the
passenger, the express, and the isit traffic. By this measure of
service a fairly reasonable comparison of the cost of a passenger
train and its distribution between the passenger, the express, and
the mail can be made, but for purposes of comparison only. This
measure, however, does not represent all the service that is per-
formed in º the transportation for which each class of
service pays. The passenger loads and unloads himself, but expen-
sive station buildings, ticket offices, platforms, and other conven-
iences and safeguards must be furnished for the passenger before
the expense of movement on the train begins. -
In the case of express, other service has to be performed, but it is
done by the express companies, except that the terminal tracks and
stations are provided for the express traffic, separata as a rule from
the great passenger terminals and ticket offices required for the
passenger. -
44 RAILWAY MAIL PAY.
In the case of the mail, the distributing post offices must be fur-
nished several hours in advance of their departure at the terminal
stations for the mails to be worked. At junction and terminal points
labor must be furnished for transferring the mails; at local stations
messenger service must be provided for taking the mails to and from
the post offices; mail cranes or catchers must be furnished and the
mails placed upon same for the exchanges.
In the case of special mail trains special schedules must be made
for the departure of trains at hours that will best suit the forwarding
of mails that have been gathered up in the great cities during the
afternoon and evening. Track facilities, signals, and all other safe-
guards must be provided to give these special mail trains quick and
safe movement in preference over all other classes of traffic. Responsi-
bility for the safety of the postal clerks and free transportation for
inspectors and officers of the department can not be accurately meas-
ured by space.
In the case of special R. P. O. cars, or moving post offices, type of
construction must conform to the requirements of the department by
a special act of Congress providing special features and facilities for
the safe and prompt assortment or distribution of the mails en route.
All of these are points of service which can not be measured by
space. In the same way we can consider the forwarding of single
pouches or lock pouches on intermediate trains, constituting frequency
of service, as another special feature that can not be measured by
space, and yet is not fully covered by the measure of weight. On
certain given trains the space can be, with reasonable accuracy, dis-
tributed between the three kinds of service, but in the majority of
cases the space fluctuates and varies with every train. This fluctua-
tion makes it unsafe to adopt space as a measure for fixing the pay.
Constant friction will arise over the disputes as regarding the space
furnished, or the space used, or the space allotted for each train. Where
such conditions exist there will be the possibility of manipulating the
space, either in favor of or against the railroads or the Government,
as the case may be.
Granting that these difficulties might be overcome by some fixed
rules of measurement, the rate of pay for the space must be made
large enough to cover all the special facilities furnished outside of the
train service proper.
This rate for the space can not be based on cost, as it would result
in practically 795 rates of pay for the 795 railroads with which the
department now has contracts, making discriminations and varia-
tions in the pay for a service that is universal, under universal regu-
lations and conditions, making more opportunities for manipulation
and unfair dealings between the department and the railroads.
These varying rates would make it still more difficult for Congress to
supervise with any degree of accuracy the expenditures for railway
mail pay, and, above all, would make most difficult the preparation
of the estimates for the appropriations necessary to cover the service.
The fixed rate paid per annum for each mile of road, for the average
weight carried per mile, with special compensation for the special
facilities furnished, has for more than 40 years proven to be a fairly
safe method of pay. Improve this by providing for an annual weigh-
ing and providing payment for the apartment cars furnished as travel-
ing post offices, as well as pay for the full R. P. O. cars, with relief
RAILWAY MAIL PAY. 45
from the station messenger service, or proper payment therefor, will
provide the safest and more nearly accurate basis for ascertainin
the value as well as the measure of service. If space were adopte
as the measure of service, the value being determined in some arbi-
trary way, the cost of accurately measuring and checking up the space
for 30 days each year would probably equal the cost of weighing and
checking up the weights for the same length of time, each year. It
certainly would be necessary to take the weight of a large portion of
mail in order to properly measure the space and to adjust the differ-
ences in regard to the space furnished. . . It will certainly be necessary
to check and measure the space provided at least once a year. It
would not be fair to the Government nor to the railroads to put such
power in the hands of any executive officer as the arbitrary allot-
ment, in advance, of the space to be used on each train in each mail
route during each year, thus determining in advance the amount he
will pay for the fluctuating service. No fair comparison can be made
with rates for other service on a basis of pay that is fixed by cost on
the space measure.
The CHAIRMAN. In practical railroad operations do the railroads
in any case use space as a measure of service'
Mr. PETERs. I do not know of any.
The CHAIRMAN. Is weight a measure ?
Mr. PETERs. Weight is the measure, and yet in the classification by
which the rates are fixed for different classes of freight the bulky
articles are given a different rate or a different class, so that space
may be said to be considered in articles of that kind. Carloads of
buggies knocked down and crated would take a lower rate than a
carload of buggies that were all set up on wheels or not altogether
taken apart.
The CHAIRMAN. But even where your space is the measure, weight
is the determining factor as to the space used, is it not ?
Mr. PETERs. Yes, as to the space used.
The CHAIRMAN. That is universal, is it, in transportation ?
Mr. PETERs. That is universal, to the best of my knowledge and
belief. I am not an expert on freight tariffs or classification.
The CHAIRMAN. Do you concur in General Stewart's opinion, as
expressed, that the substitution of space for weight as the measure of
service rendered is more scientific 3
: PETERs. I do not, for the reason of the objection I have just
stated.
The CHAIRMAN. And is not in use in any transportation, so far as
you are aware?
Mr. PETERs. I do not know of any case, so far as I am aware.
The CHAIRMAN. Where are the possibilities for favoritism or
º by the substitution of space for weight, according to your
IOIIlCl
Mr. PETERS. Employees of the department will be zealous in
making a record and without the knowledge or any information on
the part of heads of departments, will endeavor to economize in the
space. They will endeavor to report that only so much space can be
used, or that so much space is necessary. There will be differences of
opinion between the railroad officers reporting the space and those of
the department. As I take it, in this case, the department through
46 RAILWAY MAIL PAY.
its representatives is to assign that space themselves without confer-
ence or consultation with the railroads.
The CHAIRMAN. Necessarily the department's representative would
hº º determine what amount of space would be required, would
e not * -
Mr. PETERS. That would depend on the amount of mail that was
given for each run. That varies. There are days when we would have
every foot of space and more taken up. There would be other days
when there would not be 20 per cent of the load. Sunday, for
instance, is a light mail day, and Monday; while Fridays and Satur-
days are very heavy days. We have to provide extra space and
extra facilities.
The CHAIRMAN. Do you not have to do that under the present
modus operandiº
Mr. PETERS. We do now. f
The CHAIRMAN. So that the same objection would lie. But it is
absolutely necessary, is it not, in the movement of the mails?
Mr. PETERs. It is necessary in the movement of the mails to take
care of them. ... I think the chief objection lies in the fact that
you make a different rate of pay for each railroad, depending on its
cost. The two or three railroads lying alongside of each other would
have varying rates of pay, yet each road is entitled to have just as
much compensation as any other for carrying the mails for the Gov-
ernment. If one road is so fortunate, by its careful construction or
careful management, or its good location, as to show a low cost of
operation, it has to carry the mail at a very much lower rate than
another road in the same territory that has a higher cost because of
its bad location or its poor management. Each road is performing
practically the same universal service and is entitled to the same gen-
eral basis of pay.
The CHAIRMAN. The present method is general, is it 3
Mr. PETERs. The present method, as I understand it, is general.
I think sometimes, in parallel routes or competing routes, there are
adjustments made by the department that the longer route takes the
same pay as the shorter route. -
The CHAIRMAN. But in practice, you have a universal rate }
Mr. PETERs. We have a universal rate in practice. -
The CHAIRMAN. And it is your contention that under the substitu-
tion of space for weight it will be absolutely necessary to have a sep-
arate rate for each one of the 795 railroads?
Mr. PETERs. On the basis recommended by the department.
The CHAIRMAN. Do the modified views of the department, as pre-
sented in the bill suggested by the department to the committee,
in which an allowance would be made on capital charges, modify your
views at all in reference to your position to the substitution of space
for weight, or is your opposition a fundamental one that the measure
of space is impracticable and unfair? -
Nº. PETERs. Practically all of the members of our committee have
opposed the space basis. They are all confident that it will make more
difficulty and trouble than they have ever had before. The hardest
part of Document 105 has been removed by the explanations of
General Stewart. What we resented in that document and what
made us feel so bitterly opposed to it was the fact that we
were represented to the public as being overpaid for a service
RAILWAY MAIL PAY. 47
where the compensation has been constantly reduced and more
and more work placed upon the railroads. There has been
nothing but reductions in pay for a number of years past, and
we welcomed this investigation when it was started as presenting
an opportunity to show that we were not overpaid. Consequently
when the document came out with the statement that we were over-
paid $9,000,000 it was very uncomfortable and very disappointing to
everyone, although we knew positively that we were not overpaid.
The difference as we make it i. the allotment of space as used and
not as allotted by the department from the records taken in 1909
makes a difference in favor of the railroads of something like
$9,600,000 a year. The difference in the method of accounting would
make a difference of approximately $5,000,000, although I have not
those figures here, as we eliminated them from our final pamphlet for
the reason that we did not want to go into too deep a discussion of the
methods of cost assignment while the Interstate Commerce Commis-
sion was investigating the question, but in a rough estimate it amounted
to $5,000,000. Interest at 4 per cent on 1.78 per cent of the net capital
investment of all the railroads would amount to $10,209,000. Thesefig-
ures added together would show a difference in our favor of $24,809,000
per annum. Deduct from that the excess as assumed by the depart-
ment in Document No. 105, $9,000,000; that would leave a net amount
Of ilºsº which we feel the railroads are actually underpaid
to-day.
#. CHAIRMAN. You mean under the present system 7
Mr. PETERs. Under the present system of four years weighing and
no allowance for the apartment cars and no allowance for the very
heavy station work and terminal work that we have to perform.
That is the case to-day when we have taken on the parcel post with -
out any provision whatever being made for giving us additional
compensation.
The CHAIRMAN. How could a provision be made before a determi-
nation was reached as to what additional compensation you are
entitled to ?
Mr. PETERs. It might have been cared for by a provision for the
annual weighing until you had reached a final determination of the
question, and also with compensation for the apartment car.
The CHAIRMAN. What has the parcel-post extension or the in-
crease in your activity in fourth-class mail matter to do with pay on
apartment cars, for which I understand your contention is you are
underpaid, or not paid at all, as traveling post offices 7
Mr. PETERs. There is a greater demand for apartment cars to-day
than there was before.
The CHAIRMAN. It is an accentuation ?
Mr. PETERS. An accentuation of the case, because they are required
just as much, or even greater, for the parcels in the local territory
as before.
The CHAIRMAN. Let me ask you in that connection, if you had a
special weighing early in the fall to determine what increased business
was brought upon the transportation companies by the enlargement
of the fourth-class mail matter through increase in weight limit and
decrease in cost, would not that remedy the matter? .
Mr. PETERs. Only partly so. We would be carrying the parcels,
or the increased weight, from the 1st of January until that time of
75904—No. 1–13—4
48 RAILWAY MAIL PAY.
weighing, unless you do, as we have suggested—adjust back from the
1st of July on the weights ascertained in October. You can give us
a reasonable compensation for this increased weight adjusted from
the 1st of July, with another weighing each following year, until you
have finally settled the matter. I believe, after your final study of
the question, that you will have a weighing over the entire ..".
every year for about 30 or 35 days. I do not think the cost wi
exceed the cost of the long quadrennial weighing in each of the four
weighing sections. I do not believe, after you have adjusted the
matter of bringing all the roads to a change each year, that the annual
increase will be very much more than the increase that now takes
p: as the result of bringing up the roads in each section every
our years. I would like very much, if possible, to enter in the record
merely as an exhibit a copy of our preliminary report on the inves-
tigation of railway mail pay which gives that table showing the rela-
tive revenue per 1,000 foot-miles.
The CHAIRMAN. We will be very glad to have it inserted.
EXHIBIT A.
PRELIMINARY REPORT OF THE INVESTIGATION AND RECOMMENDATIONS OF THE
CoMMITTEE ON RAILWAY MAIL PAY.
HISTORICAL.
JANUARY 6, 1911.
To the railways:
The history of the handling of mail by railroads may be briefly summarized as
follows:
On July 7, 1838, Congress enacted the first law regulating the pay for carrying mail
on railroads. This law provided that the pay should not exceed 25 per cent more
than similar service would cost in stage coaches. *
By an act of January 25, 1839, the pay was limited to $300 per mile per annum.
The Government was slow to make general use of the limited mileage of the times,
and, as late as 1842, only 3,091 miles of the 4,026 miles of railroad in existence were
utilized for mail service.
By an act of March 3, 1845, the rates for mail pay were divided into three classes,
paying, respectively, $300, $100, and $50 per mile per annum, and these rates, as fixed
by the act of 1845, continued in effect until June 30, 1873.
The developments leading up to the present high stage of efficiency in the Railway
Mail Service are in the following order: e
The single pouch, with the carrier stopping at each post office to permit the post-
master to remove mail addressed to his station, and to deposit mail to be dispatched.
The distributing post office, where central offices were established for accumulating
the mail from surrounding stations, sorting, and classifying it for other distributing
centers for final distribution. While this method served for many years, the delays
incident to the distribution and the cost of the service resulted in an investigation
being instituted in 1853, looking to some improvement in method. It was about
this time the “distributing office on wheels,” or the railway post-office car, was first
suggested.
Traveling agents.—In 1857 agents were dispatched with the mail to attend to its
transfer from one route to another. This practice proved successful and resulted in
a large reduction in the number of distributing offices.
Distributing on trains.—Prior to 1862 no attempt had been made to distribute
through mail en route. The postmaster at a large distributing and transfer point,
desiring to distribute the mail in advance of its arrival at his station, sent clerks out
on the line a short distance, who sorted the mail in an ordinary baggage or box car,
performing the service previously performed after the arrival of the pouches at the
distributing station. Later the railroad provided suitable accommodations in its
cars and the service was made regular. From this Small beginning grew the extensive
Railway Mail Service as it is known to-day.
Establishment of a graded schedule for transporting mails and post-office cars.—By the
act of March 3, 1873, Congress fixed a schedule of mail pay based on weight, together
with additional rates, based on space, for the movement of specially equipped cars
BAILWAY MAIL PAY. 49
used for the distribution of mail en route. This same act provided for the weighing
; mails as a basis of payment, weighings to be not less frequent than once in each
our years. tº sº tº
The Post Office Department has chosen to direct that the weighing shall be done
every four years, thus adopting the maximum time allowed by law.
REDUCTIONS IN PAY.
The schedule adopted by the act of March 3, 1873, has not been changed since,
except to reduce the pay as follows:
(1) The act of July 12, 1876, reduced the rate of pay 10 per cent.
2) The act of June 17, 1878, made a further reduction of 5 per cent.
3) The act of March 2, 1907, further reduced the pay 5 per cent on all routes moving
more than 5,000 pounds and not exceeding 48,000 pounds per day, and 10 per cent
on all weights above 48,000 pounds per day, and also reduced the pay for space in
railway post-office cars 16 per cent. -
These acts, together with the regulations of the Post Office Department, govern the
payment for the service rendered by the railroads at the present time.
Schedule of rates for mail transportation by railroads.
The maximum compensation for general railroad mail service and for service over
land-grant railroads is shown in the following table:" --
Pay per mile per annum.
Intermediate
weight war-
Rates allow- º *.
Average weight of mails per day carried over Rates allow- able to land- a.º. º
whole length of route. Rates allow- able under grant rail- the law of 1873
able under | acts of July, roads under | “... the cºst
act of Mar. 3, 12, 1876, and acts of July
tom of the de-
1873. June 17, 12, 1876, and partment, sub-
1878. Jº", ject to acts of
ë * July 12, 1876,
and June 17,
1878
Pou'nds
200 pounds. --------------------------------- $50.00 $42. 75 $34.20 - - - - - - - - - - - - - - - -
200 to 500 pounds----------------------------|--------------|--------------|-------------- 12
500 pounds...------------------------------- 75, 00 64. 12 51.30 ----------------
500 to 1,000 pounds. -------------------------|--------------|--------------|-------------- 20
1,000 pounds--------------------------------- 100.00 85.50 68.40 ----------------
1,000 to 1,500 pounds-------------------------|--------------|--------------|-------------- 20
1,500 pounds--------------------------------- 125.00 106. 87 85.50 ---------------
1,500 to 2,000 pounds---------------------------------------|--------------|-------------- 20
2,000 pounds--------------------------------- 150.00 128, 25 102.60 ----------------
2,000 to 3,500 pounds-------------------------|--------------|--------------|-------------- 60
3,500 pounds--------------------------------- 175. 00 149.62 119.70 ----------------
3,500 to 5,000 pounds---------------------------------------|--------------|-------------- 60
5,000 pounds.-------------------------------- - 200.00 171. 00 136.80 - - - - - - - - - - - - - - - -
In excess of 5,000 pounds by act of Mar. 2, 1907, and act of May 12, 1910. See note.”
1 From information issued by the Second Assistant Postmaster General, 1909.
2 NoTE.—For weight in excess of 5,000 pounds and less than 48,000 pounds the following rates: For each
2,000 §: $25 less 10 per cent and 5 per cent and 5 per cent, or $20.30, and for each additional 80
pounds $1 less 10 per cent and 5 per cent and 5 per cent, or $0.81, for nonland-grant routes: and on land-
grant roads for each additional 2,000 pounds $25 less 10 per cent and 20 per cent and 5 per cent and 5 per
Cent, º; ºd for each additional 80 pounds $1 less 10 per cent and 20 per cent and 5 per cent and 5
per cent, or $0.64.
on routes carrying more than 48,000 pounds: For the first 5,000 pounds at same rate as stated above,
namely, $171; for the next 43,000 pounds the same rate as above provided, namely, $436. 17; for each addi-
tional 2,000 pounds at the rate of $19.24, and for each additional 103.96 pounds $1: and on land-grant
roads for the first 5,000 pounds the same rate as stated above, namely, $136.80, for the next 43,000 pounds
the same rate as above provided, namely, $348.94; and for each additional 2,000 pounds at the rate of
$15.39, and for each addtional 129.95 pounds $1.
50 RAILWAY MAIL PAY,
Railway post office car pay.
Prior to
J #" Subsequent to July 1, 1907.
Cars 40 feet in length-------------------------------------------. $25.00 $25 per mile per annum.
Cars 45 feet in length.------------------------------------------- 30.00 $27.50 per mile per annum.
Cars 50 feet in length.------------------------------------------- 40.00 $32.50 per mile per annum.
Cars 55 feet or more in length ----------------------------------- 50.00 || $40 per mile per annum.
No pro rata compensation authorized for cars which are less than 40 feet in length.
A full understanding of the pay schedules included in the act of 1873 is of vital
importance in any consideration of the subject of mail pay, since the item of railway
post office car pay recognized for the first time the factor of space as well as weight
in determining the value of the service. Although this schedule has been in opera-
tion for 37 years, during which period the service has been extended to cover prac-
tically the entire railroad mileage of the country, nothing has been done to make this
recognition adequate either by extending the payment to apartment cars or other-
WISe. * -
THE CORTELYOU ORDER.
In addition to the reductions caused by the several acts above mentioned, the Post
º: Department, under date of March 2, 1907, issued Order No. 165, reading as
ollows:
“That when the weight of mail is taken on railroad routes the whole number of
days the mails are weighed shall be used as a divisor for obtaining the average weight
per day.”
º order was superseded by Order No. 412, under date of June 7, 1907, reading
as follows:
“That when the weight of mail is taken on railroad routes the whole number of
days included in the weighing period shall be used as a divisor for obtaining the aver-
age weight per day.” *
This arbitrary “change of divisor” further reduced the pay about 12 per cent.
OTHER FACTS AND COMPARISON S.
The department has also secured, through the cooperation of the railroads, many
concessions under which the same Service is given for less money or better and more
expensive Service for the same money.
Starting as a mere incident, the handling of mails by the railroads has developed
into a vast business. The improvement of the service, by the adoption of train sched-
ules, which greatly expedite the mails, by the construction of stronger and more
expensive railway post office cars, containing greatly enlarged facilities for assortment
and distribution in transit, and equipped with modern lighting and heating arrange-
ments, and the application of various improved devices for gathering and dispatching
mails, etc., have been the result of the cooperation of the railroads with the Post
Office Department. In return for this cooperation, the rate of compensation has been
reduced approximately 33 per cent during the period of development, and at the
present time the railroads are burdened with a business for which they are inade-
quately compensated: ~.
In 1907 the railroads received $49,757,960 for the transportation of the mails, and,
as a result of the reductions adopted in 1907, the pay for 1908 was $48,155,378, a de-
crease of $1,602,582, notwithstanding the fact that the increased volume of the mails
for 1908, as shown by the department's report, produced an increased revenue for 1908,
over 1907, of $7,893,658.
The report of the Postmaster General shows that the revenue of the department (and
consequently the volume of mail handled) in 1910 increased $40,543,652 over that of
1907, and during the same period the increased cost of handling by the Post Office
Department was $39,737,936, divided as follows:
Salaries of post-office clerks increased over. . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,000,000
Rural delivery service increased over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000
City delivery service increased over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000,000
Railway postal clerks increased over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000,000
Postmasters' Salaries increased about. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
Miscellaneous increased about. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,700,000
RAILWAY MAIL PAY. + 51
But not one cent of increase in payments to the railroads for the hauling and fur-
nishing cars for the distribution of the vast increase in amount of mail carried, viz,
over 22 per cent, and producing, as stated, over forty millions of revenue; in fact, the
railroads were actually paid $352,760 less in 1910 than in 1907. g
Further analysis of º Postmaster General’s report shows that in the last 10 years
there was an increase of postal revenue of over 118 pcr cent, or $121,774,078. The
proportion, however, of expenditures for railway mail pay in 1900 was 34 pºr cent,
but was only 21 percent in 1910, a decrease of 13 per cent.
A feature not generally known or recognized is that the mere delivery of mail in
cities and by rural carriers costs more than the entire transportation of mails by rail-
roads, as shown by the following figures taken from the report of the Postmastºr Gen-
eral (p. 42) for the year ended June 30, 1910:
Transportation of mail on railroads. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $44,654, 515.97
Railway postal car service. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4,686, 122. 27
Total pay to railroads. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 49, 340,638. 24
Rural delivery-------------------------------------------------- 36,844, 968. 61
City delivery---------------------------------------------------- 31, 683, 639.42
Total for delivery. - - - - - - - - - - - - - - - - - - - - - - ---~~~~ 68, 528,608. 03
Excess cost of delivery- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 19, 187,969. 79
ORGANIZATION OF COMMITTEE ON RAILWAY MAIL PAY.
The general dissatisfaction on the part of the railroads following the reductions in
pay made in 1907 resulted in the Post Office Department initiating an inquiry into
the general subject of railway mail. This inquiry was started in March, 1907, and
blanks, calling for elaborate data, were prepared by the department and conferences
with the railroads’ representatives developed the fact that the data required could
not be furnished with any degree of accuracy and would prove valueless to the
department. -
†. further consideration the inquiry was resumed by the department, and on
September 28, 1909, other blanks were sent to certain railroads, requesting informa-
tion covering certain routes. The data requested covered the service performed
during November, 1909, on the basis of space occupied by the mails in cars of the
railroad companies; the receipts and expenditures in detail; comparative statements
of station expenses incurred on account of mail and express service, and the number
and cost of the railway post office cars and apartment cars.
For the purpose of securing uniformity in the basis of compilation, and to prevent
misunderstanding relative to the method to be used, the committee on railway mail
pay, representing 282 railroads, with 208,526 miles of line (see Exhibit A), was
appointed October 12, 1909. -
After the committee was formed it called upon the Postmaster General to explain
its object and to offer its cooperation with the department in securing the necessary
information, and, among other things, suggested to the department that all railroads,
instead of a few, be requested to furnish information for all mail routes, which sug-
gestion was accepted. t
The committee on railway mail pay has carefully checked the information gathered
for the Post Office Department, and from this and other information has compiled
statistics which show that the railroads are carrying the mails for the Government
on a lower basis of revenue per car foot-mile of space on passenger trains than is
received for performing either passenger or express service.
CoMPARATIVE STATEMENTs.
The final results of the tabulation and compilation of the statistics for the month
of November, 1909, in condensed form, are as follows:
Summary of replies to Post Office Department’s forms; 187 roads, 2,411 routes,
178,709.96 miles operated
52 RAILWAY MAIL PAY.

Mail. Passenger. Express. Total.
Car foot-miles. -----------------------. 1,153,110,245 9,902,370,150 1,320, 108,589 | 12,375,588,984
Percentage---------------------------- 9.32 80.01 10.67 100.00
Revenue------------------------------ $3,721,796.04 || $43,738,722.85 $5,075,221. 53 || $52,535,740.42
Percentage---------------------------- 7.08 83. 26 9.66 100.00
Average revenue per car foot-mile...... $0.003228 $0.004417 $0.003855 $0.004245
Average revenue per 1,000 foot-mile. . . . $3.23 $4.42 $3.86 $4.25
Ratio of foot-mile revenue. - - - - - - - - - - - - 100% 137% 1.19% ----------------
DEDUCTIONS FROM STATISTICS.
This table represents 77 per cent of the railway mileage of the country, and shows
that, on the space basis suggested by the Post Office Department, and for an equal
space, or the same number of car foot-miles, for each class of Service, the railroads are
receiving from express companies 19 per cent more ($8,485,695 per annum) for carrying
express matter than the Government pays them for carrying the mails, while the trans-
portation of express is a much inferior and less expensive service; it also shows that
railroads receive 37 per cent more ($16,524,744 per annum) for carrying passengers than
the Government is paying them for carrying the mails. In other words, the railroads
receive for carrying the mails, on the space basis selected by the Department only 84
per cent of what they receive for an equal amount of space used for express, and only
73 per cent of what they receive from passenger service on the same basis of space.
Passenger Service paid at the rate of 4.24 mills per car foot-mile. The average
receipts for everything carried on passenger trains, except mails, are at the rate of 4.35
mills per car foot-mile. If the Government were to pay for the handling of mail on
passenger trains the average rate of 4.35 mills per car foot-mile it would in the month
of November, 1909, have paid over $5,000,000, instead of $3,721,796, or $60,000,000 per
annum, instead of $44,660,000 to the roads reporting as above.
The inadequacy of railway mail pay illustrated by the foregoing statement is based
upon train transportation service alone, but the railroads are required to do more than
this, viz, to carry the mail between post office and stations at about six-sevenths of
the offices adjacent to railway stations, rendering an extra Service, which is not a
proper transportation function, which, as estimated by a Postmaster General, would
cost the Post Office Department $4,393,000 annually if the Government employed
contractors to do this work. *.
The statistics here presented, on the basis adopted by the Post Office Department,
showing the relative space occupied by mail and express, the revenue car foot-miles,
etc., fully answer all criticism made in regard to the receipts for hauling express as
compared with the receipts for hauling mail. On the car foot-mile basis, the railroads
receive more from express than from the mails, and there is absolutely no similarity
between the two kinds of traffic except that they are both hauled on passenger trains.
The statements showing the car foot-mile revenue from express embrace only the
railroad companies’ receipts from the transportation of the express, and do not include
the portion of revenue accruing to the express companies (except in the case of one or
two railroads operating their own express service), and still the revenue per car foot-
mile of express space pays more than the mail.

OTHER BT.JRD ENS PLACED ON THE RAILROADS.
There are many details of service in connection with the handling of the mails for
which the railroad companies feel that they are not adequately compensated, among
which may be stated briefly the following: i --
All postal clerks when on duty in railway post-office cars and mail apartment cars
are carried free in accordance with the law, which reads as follows: -
“Every railway company carrying the mail shall carry on any train which may run
over its road, and without extra charge therefor, all mailable matter directed to be
earried, thereon, with the person in charge of Same.”
In addition, however, the postal clerks are transported free between the ends of their
runs and their homes on the line of the railroad and the commissions which are issued
by the Post Office Department to officers and special agents of the department, post-
office inspectors, officers of the Railway. Mail Service, etc., are honored transportation
by the railroads; and this transportation, outside of the requirements of the law,
amounts to over $1,000,000 per annum.
As it has been frequently decided that they have the same status as passengers,
the railroads are therefore under legal obligation to these post-office employees in case
RAILWAY MAIL PAY. 53
of accident in the operation or management of their trains, and they receive no com-
pensation whatever as an offset against this liability. The express companies assume
such liability for their employees.
Under the laws an allowance is made at a low rate for the handling of about 1,400
railway post-office cars, which are equipped with conveniences for assorting and
handling the mails. There are, besides these cars, about 3,800 mail apartment cars
with apartments similarly fitted with conveniences for the assorting and handling of
mails for which absolutely no payment is made to the railroads further than the
allowance for the weight of mail actually carried.
The railroads therefore receive no more for a ton of mail carried in a specially
arranged apartment occupying one-half of a car than they do when a similar amount
of mail is loaded in a small space in one end of a regular baggage car.
No allowance is made for frequency of service by railroads. A railroad carrying a
ton of mail on one train receives exactly the same compensation as a road which dis-
tributes a ton of mail by a considerable number of trains.
No allowance is made for speed, the rate paid for mail being the same whether it
is 10 or 20 hours in transit between given points.
The railroads are also from time to time required to introduce new and expensive
º: for exchanging mails at local stations and to reconstruct their railway post-
OIII Ce CarS. - ->
Under the system of weighing mail once in four years, as previously mentioned,
and which weighing constitutes the basis of payment for the following four years, the
railroads receive absolutely no pay whatever for the increased weight per year through-
out the four-year period. With an estimated increase of 6 per cent per year, the
railroads are carrying this increased weight of mail at their own expense, thus fur-
nishing to the Government nearly $3,000,000 worth of service per annum without
compensation. .*
In order to provide some measure of relief, legislation should be enacted for the
payment for apartment cars at the rate now applying to full railway post-office cars.
The Post Office Department in selecting the space basis in its requests for informa-
tion from the railroads has disclosed the fact that the space furnished for carrying
and handling the mails is of as great importance as the actual weight of mail, and
should be given consideration in the adjustment of the railway mail pay.
While 90 per cent of the pay to the railways is for the weight of mail and only 10
per cent is for space, the actual necessities of the postal service, as met by the railway
post-office cars and apartment cars, with the station service, including tracks, drive-
ways, and other conveniences, place a burden upon the railroads very much greater
than the actual cost of transporting the actual weight of mail carried.
It has been estimated that about 85 per cent of the mails is now being carried in
railway post office cars, or apartment cars; and in as much as the average weight carried
in a full railway post office car is less than 6,000 pounds, it is obvious that the space
furnished is used for the assorting and not for the mere transportation of mail matter.
A case aptly illustrating this point has been noted where 58 railway post-office
and storage cars (42 railway post office cars and 16 storage cars) are ji. daily
between two large and important cities, and carry only 192 tons of mail matter, an
average of 3.4 tons per car, yet the necessities of the department and the postal
service demand this excessive space. The payment for this service on a weight
basis can not possibly be compensatory. On the other hand, the Government would
not be able to give the public its present service without such space for distributing
the mails in transit.
Weight is not the only thing to be considered; space must also be taken into
account.
The railroads should be relieved of the expense of handling mail between stations
and post offices on short line routes.
The mails should be weighed annually and the pay should be adjusted annually
by the Postmaster General, who now has full authority to do so.
REPORT OF THE WOLCOTT COMMISSION.
The question of compensation to the railroads for carrying the mails has been
under review before Congress at different times during the past 12 years. The sub-
ject was exhaustively investigated by a joint commission of the Senate and House
of Representatives in 1898 and 1899, which reached the following conclusions after
full consideration and taking of a mass of testimony on all sides of the question:
“Upon a careful consideration of all evidence and the statements and arguments
submitted, and in view of all the services rendered by the railroads, we are of the
opinion that the prices now paid to the railroad companies for the transportation of
54 RAILWAY MAIL PAY.
the mails are not excessive, and recommend that no reduction thereof be made at
this time.” (See Rept. 2284, House of Representatives, 56th Cong., 2d sess.)
This commission also concluded as to the pay for railway post-office cars:
“Taking in view all these facts as disclosed by the testimony filed herewith, we are
of the opinion that the prices paid as compensation for the postal-car service are not
excessive, and recommend that no reduction be made therein so long as the methods,
conditions, and requirements of the postal service continue the same as at present.”
Notwithstanding these recommendations, great injustice has since been done the
railroads by the many reductions made, both by acts of Congress and by the action of
the department, without hearing or investigation and notwithstanding the very prompt
cooperation of the railroads in extending the facilities of the service. |
TECOMMENDATIONS.
The committee therefore urgently recommend and request: x.
(1) That authority be given the Postmaster General to allow compensation for apart-
ment CarS.
(2) That relief be given for performing messenger service between the railroad sta-
tions and the post offices on short-line routes. .-
(3) That adjustment be made annually of the weight of mail carried per day and,
payments made accordingly. *
Respectfully submitted.
The committee on railway mail pay, J. Kruttschnitt, chairman, director of
maintenance and operation, Union and Southern Pacific systems;
Ralph Peters, vice chairman, president and general manager Long
Island Railroad; Charles A. Wickersham, president and general man-
ager, Western Railway of Alabama; W. W. Baldwin, vice president,
Chicago, Burlington & Quincy Railroad; Frank Barr, vice president
and general manager, Boston & Maine Railroad; W. W. Atterbury,
fifth vice president, Pennsylvania Railroad; C. E. Schaff, vice presi-
dent, New York Central lines; C. R. Gray, senior vice president, St.
Louis & San Francisco Railroad.
[Exhibit A.]
List of railroads supporting the committee on railway mail pay.
Mileage
Alabama Great Southern R. R. ------------------------------------------ 309
Arizona Eastern R. R.---------------------------------------------------- 347
Arkansas Central R. R.-------------------------------------------------- 42
Arkansas, Louisiana & Gulf Ry------------------------------------------ 62
Atchison, Topeka & Santa Fe Ry. . . . . . . . . . . . . . . . . . . . . . . * * * * * * * * * * * * * * * * * 5, 564
Atchison, Topeka & Santa Fe Ry.—Coast lines. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,974
Grand Canyon Ry.
Atlantic Coast Line R. R.------------------------------------------------- 4, 554
Charleston & Western Carolina Ry.
Conway Coast & Western R. R.
Baltimore & Ohio R. R.-------------------------------------------------. 3,450
Baltimore & Ohio Southwestern R. R.------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . sº 985
Bangor & Aroostook R. R... . . . . . . . . . . . . . e º sº tº dº sº º dº º & & E & º ºs º $ tº ſº tº gº º sº tº # * ſº tº º ſº º º 628
Bellefonte Central R. R.----------------------------------------------- .* * * 27
Bessemer & Lake Erie R. R.----------------------------------------------- 209
Boston & Albany R. R.-------------------------------------------------- 392
Boston & Maine R. R. --------------------------------. ----------------- 2,294
Buffalo, Rochester & Pittsburgh Ry---------------........... . . . . . . . . . . . . 573
Carolina & Northwestern Ry... . . . . . . . . . . . . . . . . . . . . . . -------------------- 134
Carolina, Clinchfield & Ohio Ry------------------------------------------ 249
Cedar Rapids & Iowa City Ry------------------------------------------- 28
Central Indiana Ry------------------------------------------------------ 127
Central of Georgia Ry----------------------------------- ----------------- 1,916
Central R. R. of New Jersey--------------------------------------------- 598
Central R. R. of Pennsylvania. . . . . . . . . . . . . . • * * * * * * - - - - * e = < * * * * * * * * * * * * * * 31
Central Vermont Ry--------------------------- * * * * * .e. e. e. • * * * * * * * * * * * * * * * * * 586
Chesapeake & Ohio Ry-------------------------------------------------- 1,703
Chesapeake & Ohio Ry. of Indiana.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
RAILWAY MAIL PAY. 55
- . Mileage
Chester, Perryville & Ste. Genevieve Ry........ . . . . . . . ------------------- 99
Cape Girardeau & Chester R. R. . -
Cape Girardeau & Thebes Bridge Terminal R. R.
Saline Valley R. R. 1 * ~ * *
Chicago & Alton R. R.--------------------------------------------------- 981
Chicago & Eastern Illinois R. R.----. . . . . . . . . . ---------------------------. 966
Chicago & North Western Ry--------... - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7, 942
Pierre, Rapid City & Northwestern Ry.
Wyoming & Northwestern Ry. - --
Chicago & Western Indiana R. R.----------------------------------------. 50
Belt Ry. of Chicago.
Chicago, Burlington & Quincy R. R.--------------------------------------- 8,966
Chicago Great Western R. R.---------------------------------------------. 1,496
Chicago, Indiana & Southern R. R.--------------------------------------. 459
Indiana Harbor Belt R. R.
Chicago, Indianapolis & Louisville Ry--------------- , - - - - - - - - - - - - - - - - - - - - - - 578
Chicago, Milwaukee & St. Paul Ry---------------------------------------- 7,481
Chicago, Peoria & St. Louis Ry. of Illinois. --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - 235
Chicago, Rock Island & Gulf Ry-----------------------------------------. 471
Chicago, Rock Island & Pacific Ry---------------------------------------- 7, 549
Cincinnati & Muskingum Valley R. R. -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 149
Cincinnati, Hamilton & Dayton Ry-------------------------------------.. 1,036
Cincinnati, New Orleans & Texas Pacific Ry. --- - - - - - - - - - - - - - - - - - - - - - - - ... 358
Harriman & Northeastern R. R. -
Cincinnati Northern R. R. ---------------------------------------------. 205.
Cleveland, Akron & Columbus Ry------------------------------------------ 194
Cleveland, Cincinnati, Chicago & St. Louis Ry----------------. . . . . . . . . . . . 1, 848
Coal & Coke RV-----------.... . . . * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 198
Colorado Midland Ry----------------------------------------------------. 338
Copper Range R. R.-------------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - I25
Cornwall & Lebanon R. R.------ * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 26
Cumberland & Pennsylvania. R. R.-------------------------------. . . . . . . . . 53
Cumberland Valley R. R.------------------------------------------------. 162
Delaware & Hudson Co--------------------------------------------------. 780
Delaware, Lackawanna & Western R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 957
Denver & Rio Grande R. R.--------------------------------------------- 2,778
Rio Grande Southern R. R.
Denver, Northwestern & Pacific Ry.....----------------. . . . . . . . . . . . . . . . . . 214
. Duluth & Iron Range R. R.----------------------------------------------. 169
Duluth, Missabe & Northern Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298
Durham & Southern Ry-------------------------------------------------- 61
Eastern Ry. of New Mexico.... . . . . . . . . . .• * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 559
Southern Kansas Ry. of Texas.
El Paso & Southwestern system------------------------------------------- 843
Erie R. R.------------------------------------------------------ - - - - - - - - - 2,400
Bath & Hammondsport R. R.
New Jersey & New York R. R.
+ New York, Susquehanna & Western R. R.
Evansville & Terre Haute R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
Evansville & Indianapolis R. R. -
Farmers Grain & Shipping Co.'s R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.
Fitzgerald, Ocilla & Broxton R. R. . . . . . . . . . . . . . . ------------------------ 40
Flint River & Northeastern R. R........................... . . . . . . . . . . . . . . . 25
Florida Central R. R.------------.... . . . . . . . . . . . . . . . . . * - - - - - - - - - - - - - - - - - - 48
Florida East Coast Ry. . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 583
Fort Smith & Western R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
St. Louis, El Reno & Western Ry. -
Fort Worth & Denver City Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710
Wichita Valley Ry.
Galveston, Houston & Henderson R. R............. . . . . . . . . . . . . . . . . . . . . . . . 50
Georgia & Florida Ry--------------------------------------------------- 297
Georgia R. R.------------------------------------------------------------ 303
Georgia Northern Ry. of Georgia.---------------------------------........ 68
Georgia Southern & Florida Ry---------------------------------.......... 395
Grand Rapids & Indiana Ry----------------------------------------..... ** 588
Grand Trunk Ry........... * * * * * * * * * * * * * * * * * * * ! • * * * * * * * * * * * * * * * * * * * * - - - - - - 1, 159
Great Northern Ry------------------------------------------............. 7, 274
56 RAILWAY MAIL PAY.
Mileage.
Greenwich & Johnsonville Ry. . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - 31
Gulf & Ship Island R. R. ----------------------------------------------- 307
Gulf, Colorado & Santa Fe Ry------------------------------------------- 1, 518
Hocking Valley Ry. . . . . . . . . . . . . . . . . . . . . . ... • * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 342
Huntington & Broad Top Mountain R. R........... . . . . . . . . . . . . . . . . . . . . . . . 71
Illinois Central R. R. --------------------------------------------------- 6, 142
Indianapolis Southern R. R. :
Yazoo & Mississippi Valley R. R.
International & Great Northern R. R. . . . . . . . . . * = * * * * * * * * * * * * * * * = • * * * * * * * * * 1, 106
Iowa Central Ry--------------------------------------------------------- 583
Albia & Centerville Ry. .
Jamestown, Chautauqua & Lake Erie Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Kanawha & Michigan Ry------------------------------------------------- 158
Kansas City, Clinton & Springfield Ry...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Kansas City, Mexico & Orient Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510
Kansas City, Mexico & Orient Ry. of Texas. *
Kansas City Southern Ry------------------------------------------------ 865
Arkansas Western Ry.
Texarkana & Fort Smith Ry. -
Kansas Southwestern Ry------------------------------------------------- 61
Lake Shore & Michigan Southern Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 643
Dunkirk, Allegheny Valley & Pittsburgh R. R.
Fort Wayne, Cincinnati & Louisville R. R.
Lake Erie & Western R. R.
Lake Erie, Alliance & Wheeling R. R.
Northern Ohio Ry.
Laramie, Hahns Peak & Pacific Ry.............. . . . . . . . . . . . . . . . . . . . . . . . . . 55
Las Vegas & Tonopah R. R.---------------------------------------------- 197
Lehigh & Hudson River Ry----------------------------------------------- 99
Lehigh & New England R. R........... . . . . . . ... • - e < * * * * * * * * * * * * * * * * * * * * * * * 135
Lehigh Valley R. R.----------------------------------------------------- 1,385
Lexington & Eastern Ry------------------------------------------------- 94
Long Island R. R.-:---------------------------------------------------- 392
Louisville & Nashville R. R. -------------------------------------------- 4,590
Macon, Dublin & Savannah R. R.----------------------------------------- 92
Maine Central R. R. ---------------------------------------------------- 932
Manistee & Grand Rapids R. R. ----------------------------------------- 72
Michigan Central R. R.--------------------------------------------------- 1,792
Minneapolis & St. Louis R. R.-------------------------------------------- 1,027.
Minneapolis, Red Lake & Manitoba. Ry.... . . . . . . . . . . . . . . . . . . . . . . . . . . . * * * * 34
Minneapolis, St. Paul & Saulte Ste. Marie Ry.............................. 3,765
Mississippi Central R. R.------------------------------------------------- 164
Missouri & North Arkansas R. R.---------------------------- - - - - - - - - - - - - - - - 335
Missouri, Kansas & Texas Ry. . . . . . . . . . . . _- - - - - - - - - - - - - - - * * * * * * * * * * * * * * * * * 2,852
Missouri, Kansas & Texas Ry. of Texas. Aº
1Missouri Pacific Ry....... ------------------------------------------ * tº e º ſº wº 7,236
St. Louis, Iron Mountain & Southern Ry.
Mobile & Ohio R. R.-------------------------------------------------- ... - 1,206
Southern Railway in Mississippi.
Montana, Wyoming & Southern R. R. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. 31
Montour R. R.----------------------------------------------------------- - 18
Pittsburgh & Moon Run R. R.
Morgantown & Kingwood R. R.-------------------------------------------- 48
Munising Ry---------------°- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 160
Lake Superior & Ishpeming Ry.
Marquette & Southeastern Ry. i |
Muscatine North & South Ry-------------------------------------------- 42
Nashville, Chattanooga & St. Louis Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,230
Rome R. R.
Western & Atlantic R. R.
Natchez, Columbia & Mobile R. R. . . . . . . . . . . . . . . . . . --------------------. 29
New Orleans & Northeastern R. R................................. * * * * * * * * 509
Alabama & Y;
Wicksburg, Shreveport & Pacific Ry.
New Orleans Great Northern R. R....................... ... * * * * * * * * * * * * * * * * * * * 233
New Orleans, Mobile & Chicago R. R............... . . . . . . . . . . . . . . . . . . . . . . . 404
rºAILWAY MAIL PAY.
57
New Orleans, Texas & Mexico R. R.… sº e s is as sº º ºs º ºr
Beaumont, Sour Lake & Western Ry.
Orange & Northwestern R. R.
New York & Ottawa Ry----------------------------------------
New York, Auburn & Lansing R. R.-- - - - - - - - - - - - - - - - - - - - - - - - - - - -
New York & Hudson River R. R. . . . . . . . . . . . . . . . . . . . . "- - - - - - - - - - - -
Fulton Chain Ry.
Little Falls & Dolgeville R. R.
Raquette Lake Ry.
St. Lawrence & Adirondack Ry.
Wallkill Valley R. R.
West Shore R. R.
New York, Chicago & St. Louis R. R.-----------------------------
New York, Ontario & Western Ry. --- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Norfolk & Western Ry------------------------------- - - - - - - - - - - - -
Norfolk Southern R. R. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Northampton & Bath R. R. --------------------------------- * * * * *
Northern Pacific Ry.--------------------------------------------
Minnesota & International Ry.
Northwestern Pacific R. R. --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Oregon Electric Ry------------------------------ - - - - - - - - - - - - - -
Oregon, Washington R. R. & Navigation Co......................
Oregon Short Line R. R.-----------------------------------------
Otsego & Herkimer R. R.----------------------------------------
Pacific & Idaho Northern Ry-------------------. . . . . . . . . . . . . . . . .
Pennsylvania Lines West of Pittsburgh. . . . . . . . . . . . . . . . . . . . . . . . . . .
Pennsylvania Co.
Pitts., Cin., Chicago & St. Louis Ry.
Pennsylvania R. R.---------------------------------------------
Northern Central Ry,
Phila., Balt. & Washington R. R.
West Jersey & Seashore R. R.
Peoria & Eastern Ry. . . . . . . . . . . . . . . . -------------. * * * * * * * * * * * * *
Pere Marquette R. R. -------------------------------------------
Philadelphia & Reading Ry--------------------------------------
Atlantic City R. R.
Gettysburg & Harrisburg Ry.
Perkiomen R. R.
Phila., Newton & New York R. R.
Stony Creek R. R.
Williams Valley R. R.
Pittsburgh & Lake Erie R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pittsburgh, Shawmut & Northern R. R. . . . . . . . . . . . . . . . . . . . . . . . . .
Prescott & Northwestern R. R. . . . . . . . . . . . . ., - - - - - - - - - - - - - - - - - - - - -
Quincy, Omaha & Kansas City R. R................ . . . . . . . . . . . . . .
Iowa & St. Louis Ry.
Richmond, Fredericksburg & Potomac R. R. . . . . . . . . . . . . . . . . . . . .
Washington Southern Ry.
Rutland R. R.-------------------------------------------------
St. Joseph & Grand Island Ry---------------------------------.
St. Louis & Hannibal Ry---------------------------------------
St. Louis & San Francisco R. R... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fort Worth & Rio Grande Ry.
Paris & Great Northern R. R.
St. Louis, San Francisco & Texas Ry.
St. Louis, Brownsville & Mexico Ry................ . . . . . . . . . . . . . .
St. Louis, Rocky Mountain & Pacific Ry. . . . . . . . . . . . . . . . . . . . . . . .
St. Louis Southwestern Ry---------....... . . . . . . . . . . . . . . . . . . . .
Eastern Texas R. R.
Paragould Southeastern Ry.
Pine Bluff Arkansas River Ry.
St. Louis Southwestern Ry. of Texas.
San Antonio & Aransas Pass Ry-----------. . . . . . . . . " * * * * * * * * * * * * * *
San Pedro, Los Angeles & Salt Lake R. R. . . . . . . . . . . . . . . . . . . . . . .
Sante Fe, Prescott & Phoenix Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seaboard Air Line Ry------------------------------------------
Mileage.
305
128
3, 295
338
2,328
1 490
191
240
105
309
120
415
268
5,080
456
106
1,415
58 RAILW.AY MAIL PAY.
Mileage.
Sierra Ry, of California.................................................. 76.
Somerset Ry-----------------------------------------------------------. 94
Southern Indiana Ry-----------------------------------. * - - - - - - - - - - - - - - - - 320
Chicago Southern Ry. *
Southern Pacific Co---------------------------------------------------- . 6, 240
Sunset R. R.
Sunset Western Ry. sº
Southern Ry------------------------------------------------------------- 7, 235
Augusta Southern R. R.
Knoxville & Augusta R. R.
Enoxville & Bristol Ry.
Northern Alabama. Ry.
Tennessee & Carolina Southern Ry. ; : * *
South Georgia-West Coast Ry. . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - ... 77
Spokane & Inland Empire R. R.-----. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 184
Spokane, Portland & Seattle Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516
Astoria & Columbia River R. R. -
Staten Island Rapid Transit Ry..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Sunset Central Lines---------------------------------------------------- 3,384
Galveston, Harrisburg & San Antonio Ry.
Houston & Shreveport R. R.
Houston & Texas Central R. R.
Houston, East & West Texas Ry.
Iberia & Vermillion R. R.
Louisiana, Western R. R.
Morgan’s Louisiana & Texas R. R.
Texas & New Orleans R. R.
Tennessee Central R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294 .
Texas & Pacific Ry. -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - '* * * * * * * * * * * * * * * * * * * * 1, 885
Toledo & Ohio Central Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * 482
Zanesville & Western Ry.
Toledo, Peoria & Western Ry. . . . . . --------------------------------------- 248
Toledo, St. Louis & Western R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451
Tonopah & Goldfield R. R. ------------------------------. . . . . . . . . . . . . . . . 107
Trinity & Brazos Valley Ry--------------------------. . . . . . . . . . . . . . . . . . . . 459
Ulster & Delaware R. R.----------------------------------. . . . . . . . . . . . . . . . 129
Union Pacific R. R.----------------------------------------------------. 3, 473
Vandalia R. R.--------------------------------------------------------- 827
Virginia & Southwestern Ry. . . . . . . . . . . . . . . . . . . . . . * - - - - - - - - - - - - - - - - - - - - - - - 242
Virginian Ry------------------------------------------------------------ 474
Wabash, Chester & Western R. R. . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - 65
Wabash R. R.----------------------------------------------------------- 2, 515
Wadley Southern Ry--------------------------------------------------. 90
Washington County R. R. . . . . . . . . . . . . . . . . . . . '- - - - - - - - - - - - - - - - - - - - - - - - - - - - 139
Western Alleghany R. R. ------------------------------------------------ 44
Western Maryland Ry. . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 576
George's Creek & Cumberland R. R.
Western Ry. of Alabama. . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 225
Atlanta & West Point R. R. -
Wheeling & Lake Erie R. R.-----------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543
Wabash Pittsburgh Terminal Ry.
West Side Belt R. R.
Williamsport & North Branch R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Eagles Mere R. R.
Wisconsin Northern R. R. . . . . . . . . . . . . . . . . ------------------------------ 43
Total (282 roads).-------------------------------------------------- 208,526
Mr. PETERs. You already have our published pamphlet on the
railways being underpaid, and that is in the record. I have here now
our principal brief, that goes more into detail in the discussion of all
these matters. I would like also to add this as a matter of record.
The CHAIRMAN. We will be very glad to put it in the record.
RAILWAY MAIL PAY. 59
ExHIBIT B.
AN ExAMINATION AND ANALysis of THE PostMASTER GENERAL's PROPOSALs CoN-
CERNING RAILWAY MAIL PAY, PREPARED UNDER THE SUPERVISION OF THE COM-
MITTEE on RAILwAY MAIL PAY, BY H. T. NEwcomb, STATISTICIAN.
COMMITTEE ON RAILWAY MAIL PAY.
November, 1909.
J. Kruttschnitt (chairman), vice president and director of maintenance and opera-
tion, Union and Southern Pacific Systems.
Lucius Tuttle, president Boston & Maine Railroad.
Ralph Peters, president and general manager, Long Island Railroad.
C. A. Wickersham, president and general manager, Atlanta & West Point Railroad
and Western Railway of Alabama.
W. W. Baldwin, vice president, Chicago, Burlington & Quincy Railroad.
W. F. Allen, secretary. -
December, 1912.
Ralph Peters (chairman), president, Long Island Railroad.
C. A. Wickersham, president and general manager, Atlanta & West Point Railroad
and Western Railway of Alabama.
W. W. Baldwin, vice president, Chicago, Burlington & Quincy Railroad.
W. W. Atterbury, vice president, Pennsylvania Railroad.
Geo. T. Nicholson, vice president, Atchison, Topeka & Santa Fe Railway.
E. J. Pearson, first vice president, Missouri Pacific Railway.
E. G. Buckland, vice president, New York, New Haven & Hartford Railroad.
C. F. Daly, vice president, New York Central Lines.
W. A. Worthington, assistant director of maintenance and operation, Union and
Southern Pacific Systems.
W. F. Allen, secretary.
Subcommittee of mail experts.
E. T. Postlethwaite, assistant to president, Pennsylvania Railroad.
b S. § Scott, assistant to the first vice president, Pennsylvania Lines West of Pitts-
:0l.II'gil.
º H. Rowan, assistant to the vice president, traffic department, New York Central
i_l116°S. e
H. P. Thrall, mail traffic manager, Union Pacific Railroad.
J. P. Lindsay, manager mail traffic, Santa Fe System.
H. E. Mack, manager mail traffic, Missouri Pacific Railway.
W. J. Bradley, general supervisor mail traffic, Pennsylvania Railroad.
W. W. Safford, general mail and express agent, Seaboard Air Line Railway.
H. M. Wade, supervisor of mails, Erie Railroad.
THE MODIFIED EDITION OF DOCUMENT NO. 105.
There are now extant two editions of Document No. 105. All the figures in the pam-
phlet to which these pages are annexed are from the first and all references are to the
same edition. The second or modified edition, published since this pamphlet was
put in type, changes many of the figures in the original edition, but contains no ref-
erence to the fact that it is a second edition or any intimation that any of the data have
been modified. It is known, however, that the modifications were made necessary
§ attention which had been directed to numerous and serious errors in the first
edition.
The appearance and paging of both editions are identical, and the only way to dis-
tinguish one from the other, except by comparing the figures, is to note that on the
unnumbered page opposite the table of contents the first edition contains the seal of
the Government Printing Office, while in the second edition the corresponding space
is occupied by a copy of the resolution of the House of Representatives of March 26,
1912, authorizing the printing of 2,000 copies for the use of the House Committee on
the Post Office and Post Roads.
In order to avoid confusion, on account of the dissimilar figures in these publications
which bear the same title and an appearance of identity, it is necessary to call atten-
tion to some of the more important changes and to their effect up on the calculations
in the annexed pamphlet. w
60 RAILWAY MAIL PAY.
As fully demonstrated in this pamphlet, the controlling figure in the Postmaster
General's calculations is that representing the percentage of the total car-foot mileage
of passenger trains which he credited to the mail service. In the first edition this was
stated as 7.16 per cent (Doc. No. 105, p. 59); in the same place in the modified edition
7.18 per cent appears. Other changes on page 59 of Document No. 105 are as follows:
Car-foot mileage.
Service. z
First edition. Second edition. Increase.
Mail. ---------------------------------------------- 926, 164,458.83 932,371,285.37 6,206,826.54
Express------------------------------------------- 1,379,315,759.65 1,379,396,873.05 81,113.
Passengers----------------------------------------- 10,634,749, 746.71 10,676,112,464.36 || 41,362,717.65
Total.--------------------------------------- 12,940,229,965. 19 12,987,880,622.78 || 47,650,657.59

Examining the details of the table the totals of which were changed as above in-
dicated (Table 3, pp. 38–59) it is found that the changes relate to #. two systems
and that the addition of 6,206,826.54 to car-foot mileage made in the mail service is
the sum of 500,749.20 car-foot miles added to the Atchison, Topeka & Santa Fe System
Doc. No. 105, p. 39) and of 5,706,077.34 miles added to the Pennsylvania System
Doc. No. 105, pp. 51–53). The latter item includes additions to the car-foot mileage
of four of the lines of the system, as follows: Pennsylvania, Co., 1,075,046.85;
Philadelphia, Baltimore & Washington, 58,512.60; Pittsburgh, Cincinnati, Chicago
& St. Louis, 3,170,586.08; Vandalia, 1,401,931.81.
The following changes, among others, appear in the totals of Table 7 (Doc. No. 105,
pp. 280–281).

Expenses for November, 1909. First edition. Second edition. Increase.
Taxes---------------------------------------------------------- $7, 198,452.91 $7,206,270. 16 || $7,817.25
Operating expenses charged to mail Service... . . . . . . . . . . . . . . . . . . 2,676,503.75 2,682,797.92 || 6,294.17
• —
The further scrutiny of this table (Doc. No. 105, pp. 27 ; shows that the addition
in taxes was to the amount stated for the Louisville & Nashville Railroad (p. 274) and
that the changes in the expenses assigned to the mail service included the effect of this
addition and of the changes in the car-foot mileage of the Atchison, Topeka & Santa
Fe (p. 272) and of the various companies of the Pennsylvania System (p. 276).
Whoever wishes to check all the changes made by the new edition will be able to
do so by referring to the pages indicated below:
Changes affecting— Pages (both editions).
Atchison, Topeka & Santa Fe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 39, 60, 177, 263, 272, 273.
Louisville & Nashville---------------------------------------- 374,375.
Pennsylvania Co---------------------------------------------- 50, 51, 63, 191, 260, 261, 276, 277.
Pennsylvania R. R.------------------------------------------- 191, 259, 276, 277.
Philadelphia, Baltimore & Yºgº * * * * * * * * * * * * * * * * * * * * * * * 52, 53, 63, 191, 259, 276, 277.
Pittsburgh, Čincinnati, Chicago & St. Louis. . . . . . . . . . . . . . . . . . . 52, 53, 63, 191, 193,261, 276, 277.
Vandalia------------------------------------------------ > - - - - - 52, 53, 63, 193, 263, 276, 277.
Totals and averages. ------------------------------------------ * 65, 196, 197, 266, 267, 269, 270, 280,
The fact that the important changes which have thus necessitated a revision of
document No. 105 relate to only three systems suggests that an equally careful check-
ing of the data reported for all other systems would require still more numerous and
radical modifications in the Postmaster General’s figures. This is especially evident
when it is understood that the changes so far made have been in recognition of errors
brought to the attention of the Post Office Department by the railways directly
affected. Few railways have attempted the arduous task of examining the long and
complicated computations of the department. In order to detect specific errors.
As already noted, the figures and quotations from Document No. 105 in this pamphlet
are from the first edition Some changes would be necessary in order to substitute the
BAILWAY MAIL PAY.
61
figures of the new edition, and the result would not be wholly satisfactory, as both
editions are in circulation, and, there being no Fº distin
whoever uses a copy of either is likely to regar
The following table indicates the more important changes that would be nec-
pamphlet upon the second, instead of the first, edition of
issue.
essary to base the annexed
Document No. 105:
ishing mark on either,
it as the authoritative and definitive
#: agree º
º Column e second edi-
Line (if - - - tion of Docu-
Page. in text) # Instead of jºs. i.,
$ * there should
be—
9------------------------------------------------- 10, 13 ---------- $2,676,503.75 $2,682,797.92
9------------------------------------------------- 13–14 l.......... $2,837,093.98 $2,843,765.80
9------------------------------------------------- 14, 19 |---------- 21.36 21. 18
20------------------------------------------------- 3 |---------- $2,676,503.75 $2,682,797.92
20. ------------------------------------------------ 6 l---------- 14.99 14.95
29-------------------------------------------------|---------- 2 10,634,749, 747 10,676, 112,464
29----------------------------------------------------------- 2 1,379,315,759 1,379,396,873
29. ----------------------------------** * * * * * * * * * * * * * | * * * * * * * * * * 2 926, 164,459 932,371,285
29-------------------------------------------------|---------- 2 12,940,229,965 12,987,880,622
29-------------------------------------------------|---------- 3 82. 18 82. 20
29-------------------------------------------------|---------- 3 10. 66 10. 62
29----------------------------------------------------------- 3 7. 16 7. 18
29------------------------------ * * * * * * * * * * * * * * * * * * = i < * * * * * * * * * 6 732,379,597 773,742,314
29-------------------------------------------------|---------- 6 59,207, 170 59,288,284
29-------------------------------------------------|---------- 6 564,640,981 612,291,638
29-------------------------------------------------|---------- 7 6. 89 7.25
29-------------------- * * * * * * * * * * * * * * * * * * * * * * * * * * * * * : * * * * * * * * * * 7 4.29 4.30
29-------------------------------------------------|---------- 7 $4.36 $4.71
29----------------------------------------------------------- 8 226,945,786 220, 738,960
29-------------------------------------------------|---------- 9 24.50 23.67
30-------------------------------------------------|---------- 2 54, 544 54,755
30-------------------------------------------------|---------- 2 7,074 7,075
30----------------------------------------------------------- 2 4,750 4,782
30----------------------------------------------------------- 2 66,368 66,612
30-------------------------------------------------|---------- 4 866 655
30-------------------------------------------------|---------- 4 313 312
30----------------------------------------------------------- 4 1,703 1,671
30-------------------------------------------------|---------- 4 2,882 2,638
30-------------------------------------------------|---------- 5 1.59 1. 20
30-------------------------------------------------|---------- 5 4.42 4. 41
30------------------------------------------------- 8,21 5 35.85 34.94
30-------------------------------------------------|---------- 5 4. 34 .96
31-------------------------------------------------|---------- 3 550,727,960 585,923,233
31-------------------------------------------------|---------- 3 14,966,609 15,317, 133
31----------------------------------------------------------- 3 565,694,569 601,240,367
31-------------------------------------------------|---------- 3 17,494,235 17,994,984
31-------------------------------------------------|---------- 3 35,261,514 35,762,263
31-------------------------------------------------|---------- 3 681,670, 711 717,717,258
31----------------------------------------------------------- 6 15,789,764 15,289,015
31-------------------------------------------------|---------- 6 20,223,126 19,722,367
31----------------------------------------------------------- 6 46,011,932 9,965,385
31-------------------------------------------------|---------- 7 47. 44 45.94
31-------------------------------------------------|---------- 7 36.45 35. 55
31----------------------------------------------------------- 7 6. 32 1.37
31----------------------------------------------------------- 9 80. 79 81. 64
31-------------------------------------------------|---------- 9 2. 20 2. 13.
31-------------------------------------------------|---------- 9 82.99 83. 77
31-------------------- -----------------------------|---------- 9 11.84 11.25
31----------------------------------------------------------- 9 5, 17 4.98.
32-------------------------------------------------- 12 ---------- 210,326,652 204,679,088
32. ---------------- * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 13 l---------- 2 20. 71
32A------------------------------------------------|---------- 3 23,288,845.22 24,363,892. 07
32A.------------------------------------------------|---------- 3 || 24,054,604. 27 27, 225, 190.35
32A.------------------------------------------------|---------- 3 10,908,799. 55 12,310,731.36
32A.------------------------------------------------|---------- 3 778,197,633.71 783,845,198.45
32A------------------------------------------------|---------- 4 5,458,291.78 4,383,244.93.
32A---------------------------------------------------------- 4 8,328,919.73 5, 158,333.65
32A------------------------------------------------|---------- 4 3,918,612. 45 2,516,680.64
32A------------------------------------------------|---------- 4 210,326,652.31 204,679,087. 57
32A.------------------------------------------------|---------- 5 18.99 15. 25
32A------------------------------------------------|---------- 5 25.7 15.93.
32A.-----------------------------------------------|---------- 5 26.43 16, 97
32A------------------------------------------------|---------- 5 21. 28 20, 71
36------------------------------------------------- 24, 33 |.. -------- $97,186.52 $93,614.87
36------------------------------------------------- 29,30,31 ||-- - - - - - - - - 5.17 4. 98.
36------------------------------------------------- 36 ---------- $62,380. 54 $65,952.19
38---------------------- * * * * * * * * * * * * * * * * * * * * * * * * * * * * 30 ---------- $2,673,503.75 $2,682,797.92
38------------------------------------------------- 33 l- - - - - - - - - - $3,878,431. 75 $3,887,725.92
47------------------------------------------------- 2, 18 ||---------- $2,676,503.75 $2,682,797.92
47------------------------------------------------- 19 ---------- $1,189,705.92 $1,192,503.67
62 IRAILWAY MAIL PAY.

To agree with
Line (if Column º iº. edi-
II].8 * * * , tion. Of DOCUl-
Page. in text). # Instead of— ºś,
* there should
be—
47-------------------------------------------------- 19 ---------- $3,866,209.67 '83,875,301.59
47------------------------------------------------- 19 |---------- $258,436.54 $267,528.46
47------------------------------------------------- 20 l. --------. $3,101,238.48 $3,210,341.52
80-------------------------------------------------|---------- 2 7. 16 || 7.18
80------------------------------------------------- 16,25,27 2 $7. 16 $7.18
81------------------------------------------------- | 8 |---------- . 76 . 78
81------------------------------------------------- 8 |---------- $5,812,277.49 || $5,965,232.16
83-------------------------------------------------|---------- 2 430,944,968. 10 431,210,671.03
83----------------------------------------------------------- 2 364,633,119.64 || 364,370,259.64
83------------------------------------------------------------ 2 795,578,087.74 795,580,930.67
83------------------------------------------------- 11, 16 ||---------- 84. 61 '84. 50
83------------------------------------------------- 17 ---------- $4,008, 643.06 || $4,003,431.49
\
AN EXAMINATION AND ANALYSIS OF THE POSTMASTER GENERAL's PROPOSALs CoN-
CERNING RAILWAY MAIL PAY.
INTRODUCTION.
This examination and analysis of the recommendation and argument concerning
railway-mail pay made by the Postmaster General and printed as Document No. 105
of the Sixty-sécond Congress, first session, deals with a proposal to reduce the annual
revenues of the railways by the sum of $9,000,000, which (capitalized at 5 per cent)
would equal a reduction of $180,000,000 in the value of their property. This reduc-
tion the Postmaster General proposes to accomplish by a diminution of mail pay
without any compensatory reduction in the services and facilities demanded by the
Post Office Department, and in a manner not enabling railway economies in any
degree offsetting the loss of gross receipts.
The extent and nature of this proposed reduction and the exceedingly large num-
ber of errors and omissions in Document No. 105 to which it will be necessary to call
attention are deemed fully to warrant the length of the paper.
Especial attention is invited to the following errors which, among others, are found
in Document No. 105:
First. All the Postmaster General’s calculations and conclusions rest upon data
for the single month of November, 1909, a month in which passenger traffic and ex-
penses were relatively very light and freight traffic and expenses were relatively
very heavy. (See pp. 43–50.)
Second. The Postmaster General wholly ignored the necessity (industrial as well
as constitutional) of a reasonable return upon railway investments, equitably pro-
portioned to the fair value of railway property, and that this is an inevitable part of
the cost of railway transportation, confining his attention, to operating expenses and
taxes, which make up only a part of the real cost.
(See pp. 35–43.)
Third. The Postmaster General apportioned joint expenses between the passenger
and freight services in accordance with a method that does not give the full, real cost
of the passenger-train Services.
(See pp. 33–35.)
Fourth. The Postmaster General ignored important services and facilities rendered
and supplied by the railways, such as station facilities and terminal Services and the
transportation of postal employees not accompanying the mails, and ignored the
actual and direct expenditures of the railways for these purposes.
(See pp. 9–18.)
Fifth. The Postmaster General misconceived the nature of working space and
temporarily unused space in cars carrying mail and not only refused to regard such
º as required by the postal Service, but actually added it to the passenger space.
( -
ee pp. 19–33.)
All the º: errors and many others demonstrated and discussed in the follow-
ing pages ha
the effect, separately and cumulatively, of making the Postmaster
General’s estimates of the cost to the railways of the mail services and facilities they
supply too low.
RAILWAY MAIL PAY. - 63
I. THE POSTMASTER GENERAL's RECOMMENDATION BRIEFLY STATED.
The Postmaster General’s letter to the Speaker of the House of Representatives,
printed under date of August 12, 1911, but not received by the representative of any
affected railway until December 8, 1911, with the accompanying reports and tabula-
, tions contained in House Document No. 105 of the first session of the Sixty-second
Congress, comprises: -
First. A recommendation for a revision of the basis of payment for the railway
facilities and services required in connection with the postal service, and, *.
Second. A series of reports and tabulations apparently intended to illustrate the
results which would follow the application of the revised basis of payment that is
recommended.
The system of railway mail pay which the Postmaster General thus seeks to have
Substituted for that now in force may, perhaps, be best stated by means of quotations
from the “tentative draft of proposed law for regulation of railway mail pay ” which
º on the fourth and fifth pages of Document No. 105. Thus stated, it is pro-
OSéCl . -
p First. (As to railways the construction of which was not aided by congressional
grants of land). “The Postmaster General is authorized and directed to readjust the
pay to companies operating railroads for the transportation and handling of the mails
and furnishing facilities in connection therewith, not less frequently than once in
each fiscal year, * * * at a rate of compensation per annum not exceeding the
cost to the railroad companies of carrying the mails as ascertained by him, and 6 per
cent of such cost: Provided, That when such ascertained cost and 6 per cent does not
equal tºpe mile per annum, he may, in his discretion, allow not exceeding such
rate,” and,
Second. (As to land-grant railways.) “Railroad companies whose railroads were
constructed in whole or in part by a land grant made by Congress, on the condition
that the mails should be transported over their roads at such price as Congress should
by law direct, shall receive not exceeding the cost to them of performing the service.”
The “tentative draft” contains no definition of the manner in which the cost of
carrying the mails would be or could be ascertained nor as to the elements of cost to
be considered. Much less does it contain any language suggesting the exclusion from
consideration of any element of cost. As, upon any fair and reasonable basis of ascer-
tainment, the cost of the postal facilities and services supplied by the railways ex-
ceeds the sums now paid therefor by the Government they could have no very prac-
tical objection to the proposed system if it would, in fact, although abandoning the
proper and customary standards of compensation, increase their mail revenues to an
amount really in excess of the actual cost. But it is necessary to interpret the Post-
master General’s recommendations in the light of the whole report in which they are
contained and especially in the light of the following claims which he makes:
First. That the investigation reported in Document No. 105 discloses the real cost
to the railways of carrying the mails, and,
Second. That the enactment of his recommendations would effect a reduction of
$9,000,000 from present railway-mail pay.
In his annual report to Congress, dated December 1, 1911, the Postmaster General
said, concerning this document:
“During the year the department completed the investigation begun early in the
administration with the object of determining what it costs the railways to perform
this service, and the report of the inquiry was submitted to Congress on the 12th of
August last. The statistics obtained during the course of the investigation disclosed
for the first time the cost of carrying mail in comparison with the revenue derived by
the railways from this service. * * * If Congress gives the recommendation of
the department in this regard its favorable consideration and authorizes a readjustment
of railway-mail pay in the manner suggested, it is believed that the resulting saving
to the Government will amount annually to about $9,000,000.” (Annual Report of
the Postmaster General, H. Doc. No. 559, 62d Cong., 2d sess., pp. 19–20.)
Those portions of Document No. 105 which consist of reports and investigations
apparently intended to illustrate the results that would follow the adoption of the
new basis of payment exclude from consideration, as will more fully appear herein-
after, all services and facilities except the service of transportation on trains and the
facility of space in cars occupied while such movement is in actual progress and all
elements of cost save those of operation and taxes; that is to say, they exclude all the
primary costs incident to securing the capital necessary to create the property operated.
Therefore, the Postmaster General's recommendation, if it is not to be regarded as
wholly inconsistent with the argument that he submits in its support, which is unthink-
able, is to be held and considered to be a recommendation to reduce railway-mail pay
75904—No. 1–13—5
64 RAILWAY MAIL PAY.
below the cost of the facilities and services supplied by ignoring some services and,
facilities and making payment equal the sum of a part of the elements of cost (that is
to say, the sum of operating and taxation costs, but not including interest cost) of
transportation services and train facilities.
The Postmaster General calls this proposed reduction a “readjustment of railway
mail pay on the basis of cost with 6 per cent profit” (Doc. 105, p. 3) and estimates,
as has been seen, that the resultant diminution of mail pay would amount to approxi-
mately $9,000,000 annually (Doc. 105, p. 3). As the aggregate sum paid for the
facilities supplied by the railways during the fiscal year 1911 was $50,099,537.02,"
it is evident that the proposed reduction amounts to about 18 per cent of the gross
revenue which the railways now derive from this source. The detailed figures of
Document No. 105, however, indicate that it would be higher. They show (pp. 280,
281) that during the month of November of the year 1909, the railways included
received $3,607,773.13 for the postal facilities and services they supplied, while, for
the same period, the Postmaster General estimates that the train space they furnished
cost them, in operating expenses and taxes alone, $2,676,503.75. As he does not
propose to make a return for any other items of cost and proposes to add only 6 per
cent to the total of these items, it is evident that if his *ś had been in
effect they would have received 106 per cent of $2,676,503.75, or $2,837,093.98. The
last-named sum is 21.36 per cent less than $3,607,773.13, the sum these railways were
paid, and this percentage, of course, approximates the reduction. In this calculation
no allowance is made for the fact that some railways, that is, land-grant roads, would
be denied the additional 6 per cent, so that the actual reduction would be somewhat
more than 21.36 per cent.
This brief statement discloses the fact that the Postmaster General’s recommenda-
tion really rests upon certain almost obviously incorrect and misleading conclusions
which are, in part, as follows:
First. He erroneously assumes that the train space occupied by the mails is a fair
measure of the services and facilities supplied by the railways, whereas, in fact, they
perform important terminal and delivery services, supply a vast aggregate of personal
transportation, furnish extraordinary station facilities, and Supply many and costly
additional services and facilities of which he takes no account.
Second. He erroneously assumes that expenses in the operation of a railway and
taxes exacted from it constitute all the cost of the services it renders, thus overlook-
ing and ignoring the fact that property has to exist before it can be operated and
that its existence is evidence of the investment of capital, a reasonable return on
which is a necessary and legitimate element of the cost of transportation, and that
ºnent in the case of railways amounts to a very considerable fraction of the
total COSt.
The foregoing misconceptions of fact are fundamental in character and importance
and their destructive effect upon the argument of Document No. 105 will be further
discussed herein. Attention is directed to them at this stage merely because any
statement of the Postmaster General's plan which failed to note that it rests upon
these basic inaccuracies would be seriously incomplete. It should also be noted
at the outset that the second of these misconceptions leads to a rejection of that
essential principle of fair treatment of the railway carriers of mail proclaimed by the
J ºmision to Investigate the Postal Service, which reported in 1901, in part,
as follows:
“We are of opinion that the true basis for payment to railroads for mail trans-
portation should be such sums as will afford the railroads a fair compensation for the
services rendered.” (Fifty-sixth Cong., S. Doc. No. 89, p. 9.)
And the Joint Postal Commission continued:
“It seems to the commission that not only justice and good conscience, but also
the efficiency of the postal service and the best interests of the country demand that
the railway mail pay shall be so clearly fair and reasonable that while, on the one
__. The sum reported by the Postmaster General (Postmaster General’s Annual Report for 1911, H. Doc.
No. 559, 62d Cong., p. 49), as the cost of “transportation of domestic mail º railroads,” is $50,583,122.96,
but not all of this sum was paid to railways. The sum so paid was actually $483,585.94 less. The cost,
as reported, includes the cost of the quadrennial weighing of the mails in one of the four weighing sections
of tabulating the results of this weighing, and perhaps other expenditures. The railways actually receive
only $50,099,537.02. This fact was stated by the honorable Second Assistant Postmaster General in a
letter dated on June 7, 1912, addressed to H. T. Newcomb, statistician to the Committee on Railway Mail
Pay, which letter is as follows: “In reply to your letter of the 22d ultimo, asking for further information
relative to the amount actually paid to the railroad companies during the fiscal year ended June 30, 1911,
I have to advise you that out of the total of $50,583,122.96 there was expended a total of $483,585.94 for pur-
poses other than railroad transportation.” The average annual cost of weighing the mails for the purpose
of readjusting railway mail pay iſ stated in Document No. 105 (p. 15) as $400,000. At least this sum should,
therefore, be deducted from the reported annual cost of railroad services, previous to 1911, in order to
ascertain the annual aggregates actually received by the railways.
RAILWAY MAIL PAY. 65
hand, the Government shall receive a full quid pro quo for its expenditures and the
Public Treasury be not subjected to an improper drain upon its funds, yet, on the
other hand, the Railway Mail Service shall bear its due proportion of the expenses
incurred by the railroads in the maintenance of their organization and business as
well as in the operations of their mail trains.
“The transaction between the Government and the railroads should be, and in the
opinion of the commission is, a relation of contract; but it is a contract between the
sovereign and a subject as to which the latter has practically no choice but to accept
the terms formulated and demanded by the former; and therefore it is incumbent
upon the sovereign to see that it takes no undue advantage of the subject, nor imposes
upon it an unrighteous burden, nor ‘drives a hard bargain’ with it.” (Ibid., p. 10.)
It is submitted that these extracts but express considerations that are obviously
and fundamentally correct and that must prevail wherever justice is respected and
maintained. But there can be no just compensation when a reasonable return upon
invested capital is refused and the Postmaster General has confessedly considered
none of the expenses necessarily incurred in order to procure capital, but only those
of operation and for taxes.
II. DETAILED ANALYSIS OF THE POSTMASTER GENERAL'S REPORT.
Although the argument for a reduction in railway mail pay made by the Postmaster
General (62d Cong., H. Doc. No. 105) is addressed to the Speaker of the House of
Representatives under date as of August 12, 1911, and the congressional order for
printing was entered on August 15, 1911, the Postmaster General caused its publica-
tion to be suspended, for the purpose, as it is stated, of making repeated changes and
corrections, and it was not until December 8, 1911, that the committee on railway
mail pay, or any of the railways which would be affected by the adoption of the
recommendations of the report, were able to obtain copies or were advised of its con-
tents. Soon after obtaining copies of the report, with the accompanying documents
and tabular statements, and having given consideration to the whole document, the
committee, by Mr. Kruttschnitt, its chairman, on December 20, 1911, addressed a
letter to the Speaker, which was, in full, as follows:
“To the honorable the Speaker of the House of Representatives, Washington, D. C.:
“MY DEAR SIR: Your attention is respectfully invited to the recently published
letter from the Postmaster General to the Speaker of the House of Representatives
(H. Doc. No. 105), submitting a report of his inquiry as to the operations, receipts,
and expenditures of the railroad companies transporting the mails, and recommend-
ing legislation concerning their compensation therefor.
“This report has been so recently made public that there has not been sufficient
time for its detailed examination and analysis, but such scrutiny as has already been
possible, discloses that the data submitted are incomplete, the figures distorted, the
presentation unfair, and the conclusions illogical and unwarranted. Among other
things, it is grossly unjust to the railroads in that:
“1, Data submitted by the railroads at the request of the Post Office Department,
which are essential to a complete understanding of the subject, have been withheld
and suppressed.
“2. The Postmaster General has arbitrarily transferred to the passenger service
much of the so-called ‘dead’ space in mail cars, although this space could not be
utilized as passenger space, thus improperly increasing the apparent car-foot miles
of passenger service, and correspondingly decreasing the car-foot miles of mail service.
“3. The Postmaster General has apportioned expenses incurred for the joint pur-
poses of the passenger and freight services between these Services in accordance with
a method never accepted by any one with practical experience in railway accounting
Or #. and condemned by the courts in at least two important cases. In one
of these cases the opinion of the court states that “It was conceded that the method
could be made to produce any desired result.”
“4. The Postmaster General has wholly overlooked the fact that a large part of the
cost incurred by the railways in carrying the mails, consists of interest on the capital
they employ. By ignoring all capital expenses, confining his attention to mere
operating costs, and proposing to return to the railways only the amount of these oper-
ating costs, plus 6 per cent, he urges a method which, if applied generally to all
their business, would render every railroad at once bankrupt.
“In consideration of the foregoing and other errors and omissions in the report, we
respectfully ask, for the railroad companies, a suspension of judgment and action
until they have had time to present a complete and satisfactory analysis of the report,
66 RAILWAY MAIL PAY.
and of all material and relevant facts. Preparation of such a presentation has been
undertaken and we request that, when completed, we be given an opportunity to
place our conclusions before Congress in a suitable manner.
Very respectfully, yours, -
“THE COMMITTEE ON RAILwAY MAIL PAY,
“By J. KRUTTschNITT, Chairman.”
The next purpose of this report will be to present detailed and convincing evidence
of each and every assertion in the foregoing letter, and they will be taken up in order.
First. Data submitted by the railroads at the request-of the Post Office Department
which are essential to a complete understanding of the subject, have been withheld
and suppressed.
(A) STATION AND TERMINAL EXPEN SES DIRECTLY IN CURRED ON ACCOUNT OF MAIL.
That the facilities and services supplied by the railways in connection with the
postal service go far beyond the ordinary incidents of transportation is generally
understood, but the fact is substantially ignored in the Postmaster General’s report.
Some of these extraordinary services, being in the nature of terminal and station
services, are covered by the following extracts from the Postal Laws and Regulations:
Railroad companies, at stations where transfer clerks are employed, will provide
suitable and sufficient rooms for handling and storing the mails, and without specific
charge therefor. These rooms will be lighted, heated, furnished, supplied with ice
water, and kept in order by the railroad company. (Sec. 1186, second paragraph.
The specific requirements of the service as to * * * space required “ . * *
at stations, fixtures, furniture, etc., will at all times be determined by the Post Office
Department and made known through the General Superintendent of Railway Mail
Service. (Sec. 1186, third paragraph.)
Railroad companies will require their employees who handle the mails to keep a
record of all pouches due to be received or dispatched by them, and to check the
pouches at the time they are received or dispatched, except that no record need be
kept of a single pouch from a train or station to the post office or from the post office
to a train or station which, in regular course, is the only pouch in the custody of the
company’s employees at that point while it is being handled by them. This is not
to be construed as relieving railroad companies from having employees on trains keep
and properly check a record of all closed pouches handled by them, without excep-
tion. (Sec. 1187, first paragraph.) -
In case of failure to receive any pouch due, a shortage slip should be made out,
explaining cause of failure, and forwarded in lieu of the missing pouch. Specific
instructions in regard to the use of shortage slips will be given by the general superin-
tendent of Railway Mail Service. (Sec. 1187, Second paragraph.)
Every irregularity in the receipt and dispatch of mail should be reported by the
employee to his superintendent promptly, and if a probable loss of or damage to mail
is involved, or if the cause of failure to receive a pouch is not known, the report should
be made by wire, and the superintendent will notify the division superintendent of
Railway Mail Service without delay. A copy of the employee's report should be
attached to and become a part of the permanent pouch record. (Sec. 1187, third
paragraph.)
Train pouch records will be kept on file at the headquarters of division superin-
tendents of railroad companies for at least one year immediately following the date
the mail covered by them was handled, and shall be accessible there to post-office
inspectors and other agents of the Post Office Department. Station pouch records
will be kept on file at the station to which they apply for at least one year immediately
following the date the mail covered by them was handled, and shall be accessible
there to post-office inspectors and other agents of the Post Office Department. (Sec.
1187, fourth paragraph.)
Railroad companies will require their employees to submit pouch records for exam-
ination to post-office inspectors and other duly accredited agents of the Post Office
Department upon their request and exhibition of credentials to such employees.
(Sec. 1187, fifth paragraph.) r
Every railroad company is required to take the mails from and deliver them into
all terminal post offices, whatever may be the distance between the station and post
office, except in cities where other provision for such service is made by the Post
Office Department. In all cases where the Department has not made other provision,
the distance between terminal post office and nearest station is computed in and paid
for as part of the route. (Sec. 1191, first paragraph.)
The railroad company must also take the mails from and deliver them into all inter-
mediate post offices and postal stations located not more than 80 rods from the nearest
RAILWAY MAIL PAY. 67
railroad station at which the company has an agent or other representative employed,
and the company shall not be relieved of such duty on account of the discontinuance
of an agency without 30 days’ notice to the department. (Sec. 1191, second paragraph.)
At connecting points where railroad stations are not over 80 rods apart a company
having mails on its train to be forwarded by the connecting train will be required to
transfer such mails and deliver them into the connecting train, or, if the connection
is not immediate, to deliver them to the agent of the company to be properly dis-
patched by the trains of said company. (Sec. 1192.) & *
At places where railroad companies are required to take the mails from and deliver
them into post offices or postal stations or to transfer them to connecting railroads the
persons employed to perform such service are agents of the company and not employees
of the postal service, and need not be sworn; but such persons must be more than 16
years 3. and of suitable intelligence and character. Postmasters will promptly re-
port any violation of this requirement. (Sec. 1193.)
Where it is desirable to have mails taken from the post office or postal station to train
at a terminal point where terminal service devolves upon the company, in advance
of the regular time of closing the mails, the company will be required to make such
* delivery as, becomes necessary by the requirements of the service. (Sec.
1194.
When a messenger employed by the Post Office Department can not wait for a de-
layed train without missing other mails, the railroad company will be required to
take charge of and dispatch the mails for the delayed trains, and will be responsible
for the inward mail until delivered to the messenger or other authorized representa-
tive of the department. (Sec. 1195.) -
Whenever the mail on any railroad route arrives at a late hour of the night the rail-
road company must retain custody thereof by placing the same in a secure and safe
room or apartment of the depot or station until the following morning, when it must
be delivered to the post office or to the mail messenger employed by the Post Office
Fººt at as early an hour as the necessities of the post office may require. (Sec.
1196.
When a train departs from a railroad station in the nighttime later than 9 o'clock,
and it is deemed necessary to have the mail dispatched by such train, the division
Superintendent of Railway Mail Service will, where mail is taken from and delivered
into the post office by the railroad company, request the company, or where a mail
messenger or carrier is employed by the Post Office Department will direct him, to
take the mail to the railroad station at such time as will best serve the interest of the
mail Service. Such mail will be taken charge of by the agent or other representative
of the railroad company, who will be required to keep it in some secure place until
the ºn arrives, and then see that it is properly dispatched. (Sec. 1197, first para-
graph.
#. division Superintendent of Railway Mail Service will give reasonable advance
notice to the proper officer of the railroad company, in order that the agent or repre-
sentatives of the company may be properly instructed. (Sec. 1197, second paragraph.)
Railroad companies will be expected to place their mail cars at points accessible
to mail messengers or contractors for wagon service. If cars are not so placed the
companies will be required to receive the mails from and deliver them to the
messengers or contractors at points accessible to the wagon of the messenger or con-
tractor. (Sec. 1198.)
A mail train must not pull out and leave mails which are in process of being loaded
on the car or which the conductor or trainman has information are being trucked from
wagons or some part of the station to the cars. (Sec. 1199.)
At all points at which trains do not stop where the Post Office Department deems
the exchange of mails necessary a device for the receipt and delivery of mails satis-
. to the department must be erected and maintained; and pending the erection
of such device the speed of trains must be slackened so as to permit the exchange to
be made with safety. (Sec. 1200, first paragraph.)
In all cases where the department deems it necessary to the safe exchange of the mails
the railroad company will be required to reduce the speed or stop the train. (Sec.
1200, second paragraph.)
When night mails are caught from a crane the railroad company must furnish the
lantern or light to be attached to the crane and keep the same in proper condition,
regularly placed and lighted; but if the company has no agent or employee at such
station, the company must furnish the light, and the care and placing of same will
devolve upon the department's carrier. (Sec. 1200, third paragraph.)
The engineer of a train shall give timely notice, by whistle or other signal, of its
*Pººl, to a mail crane. (Sec. 1200, fourth pººl.
he foregoing extracts, all the requirements of which are enforced by fines and
deductions, disclose the fact that many extraordinary and exacting services, involving
68 RAILWAY MAIL PAY.
responsibility and expense, are required of railway mail carriers in addition to the
mere transportation of the mails. To transfer mail from stations to post offices railways
are obliged to employ messengers and to supply vehicles; to furnish rooms for “hand-
ling and storing the mails,” they are obliged to enlarge their stations and to encroach
upon space needed for yard purposes, and other extraordinary Services obviously
entail considerable expenditures, as well as interference with the orderly routine of the
other business of the carrying companies. There are also certain requirements of the
department which are not to be found in the regulations, although no railway feels at
liberty to oppose or disregard them, such as the common demand that postal cars be
placed for advance distribution and supplied with heat and light while so used. The
existence of important elements of cost of this character was not overlooked by the
Postmaster General at the time the investigation which culminated in his report was
begun. On the contrary, one of the original set of blanks on which the railways were
asked to report (Form 2602, see copy reprinted at pages 28 and 29 of H. Doc. No. 105)
was so entitled as to indicate that it was intended to show the cost of supplying “Station
service” and “Station and terminal facilities” in connection with the mail. Among
other things, this form called for the following facts, to be reported separately as to each
station, which were ignored and excluded in the Postmaster General's estimates of the
cost of rendering the service required by the Post Office Department:
1. Amount of wages paid to messengers and porters employed exclusively in han-
dling mails.
2. Portion properly chargeable to mail service, prorated on basis of actual time
employed, of wages paid to station employees a part of whose time is employed in
handling mails.
3. Amount expended for maintenance of horses and wagons and for ferriage, and so
forth, in connection with mail service.
4. Rental value, plus average monthly cost of light and heat, of room or rooms set
apart for the exclusive use of the mail service.
5. Rental value of tracks occupied daily for advance distribution of the mail.
6. Average monthly cost of light and heat for postal cars placed daily for advance
distribution of mail.
7. Interest at the legal rate upon the value of cranes, catchers, and trucks required
for mail service.
8. Total of the previously enumerated items of cost of rendering mail service.
Over the propriety of including every one of these items as elements in the cost of
mail service, controversy is impossible. The Postmaster General recognized this
fact by asking for data under all these heads, statements of all these facts were ren-
dered by the railways in compliance with his request and the expenditure so reported
were substantial in their amounts, but it seems subsequently to have been decided
that the suppression of these data was not inconsistent with a purpose to present an
accurate and truthful statement of the expenses directly incurred by the railways in
serving the Post Office Department and all recognition of these expenses was denied
in the tabulation of the data collected. There is not a figure derived from or rep-
resenting these data in all of the 270 pages of tabulated statistics of the report. In
the 18 pages of textual matter there is neither a total nor a conclusion based upon
them. The summary statement signed by Second Assistant Postmaster General
Stewart does, however, contain the following:
“The data reported by the companies on form 2602 as to expenditures for station
service and station and terminal facilities furnished were carefully considered, and
in view of the fact that it was found impossible to ascertain the totals of the accounts
from which the amounts directly charged on this form should be deducted, and of
the fact that such data were found to be unreliable in many instances, and of the further
fact that it was determined that the mail service should participate in all of the station
expenses upon a basis of car-foot miles, it was decided not to make use of such informa-
tion in connection with the cost ascertainment.” (H. Doc. No. 105, p. 6.)
The foregoing states, in effect, that the Post Office Department preferred arbitrarily
to assume that station expenses for mail bear the same relation to total station expenses
that the car-foot mileage made in mail service bears to the total car-foot mileage of
passenger trains, rather than to accept data which it had collected that showed a
different result. The well-founded claim of the railways, a claim that no one acquainted
with the methods and exactions of the postal service will dispute, is precisely
to the contrary. Station service and facilities required for mail are greatly in excess
of those which have been allowed for by the arbitrary method adopted by the Post-
master General. The facts that the totals of the accounts from which these items
were deducted were unknown to the department is attributable solely to the fact that
it did not ask to have these facts reported, they could readily have been obtained
by means of a Supplementary inquiry as other facts were obtained, and the omission
of the officers conducting the inquiry to ask for information certainly ought not to be
RAILWAY MAIL PAY. 69
regarded as a sufficient reason for their failure to tabulate the facts they did obtain.
The further suggestion that some of these data were “found to be unreliable,” is
without specification and it is unjust to the railways which at considerable expense
to themselves, supplied the figures asked for.
The original reports in the possession of the committee on railway mail pay make it
possible, in part, to remedy this omission of the Postmaster General and to that end
the data in these reports have been most carefully and accurately tabulated. ... The
committee, dependent upon the voluntary cooperation of numerous tailway officers
located in many and widely separated cities, was naturally unable to obtain copies
of all the reports sent to the Postmaster General and its results are, therefore, neces-
sarily and obviously incomplete. The following aggregates are submitted with
the observation that they disclose portions only of the expenditures under these
heads which were incurred by the railways on account of the mails. The reports
available to the committee on railway-mail pay show that the railways complying
with its request for copies expended the following sums and reported them to the
Post Office Department on its Form No. 2602:
Item. f Amount.
Amount of wages paid to messengers and porters employed exclusively in handling mails----| $79,980. 84
Portion properly chargeable to mail service, prorated on basis of actual time employed, of
wages paid to station employees a part of whose time is employed in handling mails. . . . . . . 198,927.01
Amount expended for maintenance of horses and wagons and for ferriage, etc., in connection
with mail service. . . . . . . . . . .* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - * * * * * * ~ * * * * * * * * - - - - 5, (40.98
Rental value, plus average monthly cost of light and heat, of room or rooms set apart for the
exclusive use of the mail Service----------------------------------------------------------- 37,258.93
Rental value of tracks occupied daily for advance distribution of the mail . . . . . . . . . . . . . . . . . . . 47,029. 12
Average monthly cost of light and heat for postal cars placed daily for advance distribution of 18, 400
mail--------------------------------------------------------------------------------------- 8, 400. 57
Interest at the legal rate upon the value of cranes, catchers, and trucks required for mail service- 3, S95. 36
Total---------------------------------------------------------------------------------- 1 401, 126.00
This total includes $9,993.19 reported by four companies which gave totals for these items, but did not
report the items separately.
The Postmaster General reported the mail expenses of the railways included in
Document No. 105, for the month of November, 1909, as $2,676,503.75. It appears,
therefore, that the omitted expenditures of these railways, for the seven items just
enumerated, which constitute only a part of the items, he arbitrarily omitted from his
tabulations, was not less than $401,126 during that month, or 14.99 per cent of the total
he reported. As this total of $401,126 covers less than 92 per cent of the mail-route
mileage represented in Document No. 105, it is evident that the true percentage of
omission is still higher.
(B) PERSONAL TRANSPORTATION.
The law enacted by Congress requires railways carrying mails to carry the persons
in charge thereof without any additional compensation, but by a regulation, which the
department assumes to have the force of law, the requirement has been extended to
cover personal transportation for officers, agents, and representatives of the postal serv-
ice, whether in charge of mails or otherwise.
“Railroad companies are required to convey upon any train, without specific charge
therefor, all mail bags, post-office blanks, stationery, supplies, and all duly accredited
agents of the Post Office Department and post-office inspectors upon the exhibition of
their credentials.” (Postal Laws and Regulations, sec. 1184.)
As this personal transportation bears no definite relation to the volume of mail car-
ried on any particular route, and, whether paid for in any sense or otherwise, its
amount neither increases nor diminishes the expenses of the Post Office Department.
As it is, to the persons receiving it, actually free transportation, it is not surprising that
liberal use of these privileges is made. This travel is particularly extensive on cer-
tain routes on which the through travel of the representatives and agents of the depart-
ment is naturally in some degree concentrated, and on such routes it loses all relation
or proportion to the volume of mail carried or to the amount of mail pay. Further, the
department demands for postal employees, in both quantity and quality, free trans-
portation far beyond that accorded to railway employees, and the former, although
carried free, are in the same class, as regards responsibility for accidental injuries, as
are paying passengers, a class involving much greater pecuniary liability than that to
either railway or express employees.
70 RAILWAY MAIL PAY.
In the case of express employees the principal liability is assumed by the express
companies as a part of their contracts with the railways. That, in many instances,
this privilege of free transportation is so enforced as to deprive the railways of fares,
both for through travel and for suburban transportation to which they are justly en-
titled, is beyond denial, That the burden of supplying this extensive volume of
personal transportation is an important element in the cost of rendering the services
for which the railways are paid was fully admitted by the Postmaster General when
he addressed his inquiries to the railways. Form 2602 (see H. Doc. No. 105, p. 28)
requested the following facts as to each railway:
1. Number of miles traveled by department officials, inspectors, etc., and railway
postal clerks not actually in charge of mails.
2. Value of above, at passenger rates not exceeding 2 cents a mile.
These questions were answered by the railways and the data asked for are in the
possession of the Post Office Department, but the report contains no evidence of that
fact; no use has been made of these data; they have not been compiled, aggregated, or
compared for the information of Congress; whatever light they would throw upon the
activities of the postal service or the conditions under which it is aided by the railways
has been withheld. The only allusion to this information in the report is as follows:
“The information concerning the personal transportation of railway postal clerks
and agents of the department when in charge of the mails and when not actually in
charge of the mails “ ” * was not used. It was found impracticable to satisfac-
torily and fully verify it. However, no similar information was given regarding
travel of officials and employees of the passenger service, and it is believed that the
omission of these items with respect to the three classes of service has not materially
affected the results, because there was no specific expenditure for the personal trans-
portation involved and the mail service participated in the apportioned expenses of
the passenger service on the car-foot mile basis.” (H. Doc. No. 105, p. 6.)
These figures emanated from sources identical with those from which came all the
data used by the department and possesses precisely equal reliability. The depart-
ment has had no more opportunity to check the other figures than it has to check these.
Moreover, the suggestion that this omission is immaterial because the expenses of the
passenger service have been apportioned on a car-foot mile basis is self-contradictory,
as the apportionment which was made rests upon considering only the space actually
occupied by mail as chargeable to mail service and charges all other space, including
that occupied by officers and agents of the Post Office Department traveling without
charge under this requirement, to the other services rendered by passenger trains.
Surely, if the cost of mail service is to be determined by the space which it requires
and, in addition to space Occupied by mail pouches and postal clerks the department
also demands and receives space in passenger coaches, dining cars, and Pullman
sleepers and parlor cars for its officers and agents who pay no passenger fares, space
which otherwise might be occupied by paying passengers, this space ought to be con-
sidered as a part of the space chargeable to the mail service. The Postmaster General
has suppressed the figures as to this travel, although before they were collected he
obviously believed it to be an element of importance and arranged to ascertain the
facts. With no intention to reflect discredit upon the purposes of the department it
is asserted that it was, in fact, unfair to suppress these facts, that it would have been
unfair not to add the space occupied in travel of this sort to the space occupied by the
mails, but that the report is even more unfair than this, in that it not merely fails to
include this space in the estimates of car-foot miles made in the mail service, it not
merely ignores this travel, but it has actually added the space required for such travel
to the space Occupied by paying passengers. In this manner the free transportation
accorded to the agents of the mail service has become a means of reducing the estimates
of the cost of carrying the mails. In other words, this method leads to the absurd
result that the larger the volume of free travel demanded by the agents of the Post
Office Department and the more space required by them, the higher would be the pro-
portion of the total passenger train space which would be assigned to passenger service
and hence the smaller the portion of the total train cost which would be apportioned
to the mails. , The annual value of this personal transportation not required by law,
but demanded by the department, exceeds $1,000,000.
(c) RELATIVE RECEIPTS FROM PASSENGER, EXPRESS, AND MAIL TRAFFIC.
Although the passenger train services are not proportionately profitable, any just
comparison of the receipts of the railways from mail traffic with the returns from any
other passenger train traffic which they carry will show that the mail service falls
farther below the level of reasonable remuneration than any other among the services
rendered on such trains. In order to make clear the fact that such a showing would be
the natural consequence of a comparison made upon the basis chosen by the Postmaster
RAILWAY MAIL PAY.
71
General, that of relative car-foot mileage, the committee on railway mail pay has care-
fully tabulated data reported to the department in response to his requests, having
been supplied for that purpose by many railways with duplicate copies of the reports,
with the results shown by the table on page 20. * g
The totals and averages on page 20 have been derived from a painstaking and accu-
rate tabulation of returns made by 187 railways, operating 2,411 mail routes and
178,709.96 miles of line, to the Post Office Department in compliance with its request
and on the forms by its officers prepared. They doubtless epitomize the results which
would appear from a complete tabulation of all the data received by the department.
That information as to the relative returns resulting from the different services Sup-
lied by the railways is essential to sound judgment as to the reasonableness of charges
is elementary and fundamental and it is respectfully submitted that Congress, in con-
nection with any report concerning railway mail pay is entitled to all the pertinent
information in the possession of the officer or department making the report. These
omitted facts were in the possession of the Post Office Department, it had been con-
sidered worth while to collect them, but again facts of primary significance were with-
held. These suppressed data were collected on the Postmaster General’s inquiry
blank designated as Form 2604, which is printed on page 30 of House Document No.
105. No explanation of the reasons for this withholding of available, relevant, and
important facts is to be found anywhere in the report.
Second. The Postmaster General has arbitrarily transferred to the passenger service
much of the so-called “dead” space in mail cars, although this space could not be
utilized as passenger space, thus improperly increasing the apparent car-foot miles
of passenger service, and correspondingly decreasing the car-foot miles of mail service.
(A) CAR-FOOT MILEAGE DEFINED.
As will more fully appear later in this report (see p. 32 et seq.) the Postmaster Generał
has made the relative “car-foot mileage” devoted, respectively, to passengers, to
express, and to mail, the basis of apportioning operating cost and taxes, and has also
used the same data as a means of comparing both the present gross receipts and his
estimates as to net receipts from these different services. Before setting forth the
manner in which his methods have unjustly diminished the assignment of space to the
mails and correspondingly increased the assignment to passengers, it is desirable to
explain clearly the meaning of a “car-foot” and a “car-foot mile,” as those units are
used in the report. Measuring the inside length of a car from end to end and stating the
Iength in feet gives the number of “car-feet” for that car. Ascertaining the car-feet
of each car in a train and aggregating them produces a total which is the number of car-
feet for the train. In other words, each linear foot of space available for traffic or for
the handling or service of traffic in a car or train is a “car-foot.” A car-foot combined
with motive power and moved a mile becomes a “car-foot mile;” multiply the num-
ber of car-feet in a train by a number equal to the number of miles traversed by the
train and the product thus obtained measures the movement in terms of car-foot miles.
Space is ordinarily measured in square feet, and it should be understood that the car-
foot differs from a square foot in a car in that while the latter consists of 144 square
inches the former is a linear foot measured clear across the car and, therefore, assuming
the inside width of the car to be 9 feet, would contain 9 square feet, or 1,296 square
inches. It should also be clearly understood that the concept of the “car-foot,” as
used by the Postmaster General and in this report, is confined exclusively to those
portions of the car or train which are required for the occupation or accommodation of
traffic while the train is in motion and excludes engine and tender lengths as well
as vestibule and platform space. Another fundamental characteristic of this method
of admeasurement is that it includes aislo space in passenger coaches, sleepers, and
parlor cars, as well as Smoking rooms, lavatories, toilet rooms, dining cars, and club
and lounging cars or compartments.
Item. Mail. Express. Passenger. Total.
Car-ſoot miles. . . . . . . . . . . . . . . . . . . . . . . . . 1,153,110,245 1,320, 108,589 9,902,370, 150 | 12,375, 588,984
Per cent of total..... * * * * * * * * * * * = * * * 9. 32 10. 67 70. 01 100.00
Receipts.-----------------------------. $3,721,796.04 || $5,075,221. 53 || $43,738,722.85 $52,535,740.42
Per cent of total. . . . . . . . . . . . . . . . . . . 7. 0.8 9. (56 S3. 26 100.00
Average receipts per car-foot mile,
mills-------------------------------- 3. 228 3. 855 4. 417 4. 245
Average receipts per 1,000 car-foot miles. $3.23 $3.86 $4.42 $4.25
Per cent of average receipts per car-foot
mile to average from mail..... . . . . . . . 100 119 137 132
72 - RAILWAY MAIL PAY.
(B) “DEAD SPACE’’ DEFINED.
The term “dead space ’’ as used by the Postmaster General, is seriously misleading.
An analysis of the transportation conditions which are involved readily discloses the
fact that the space which he so designates belongs invariably to one of two classes.
It is either (a) working space required for the accommodation of the persons or traffic
actually in process of transportation, or (b) unused space necessarily provided in
order to accommodate persons or traffic which may presently seek transportation and
in such case must be cared for. The aisles of a passenger car, used for the ingress and
egress of passengers, the lavatories, the smoking rooms, all dining-car space, etc., con-
stitute working space, but this space is not properly designated as “dead” space
unless that term is understood to express neither absence of utility nor of productivity.
Such space is an absolute necessity of the service. Trains in suburban passenger
service leave the citics which they serve with the seats nearly all filled, unused space
accumulates as, at each successive station, more passengers debark than are taken
up; but this unused space is a necessity of the service and its cost ought unquestion-
ably to be met by the receipts from this branch of the service. All such space is
“dead space,” as the term has been applied by the Postmaster General, but it is not
in any sense useless or unnecessary space, much less is it space which can be provided
without cost to the railways or that ought to go unrecompensed by their revenues.
The obstacle to clear thinking involved in this misleading nomenclature having
been removed, it is pertinent to observe that, using the term in the sense in which it is
used in Document No. 105, “dead space,” as well as “dead weight,” is a universal
incident of transportation upon almost any scale and by almost any means. The
laborer with his wheelbarrow carries his load in but one direction; the weight of his
wheelbarrow is “dead weight,” the space occupied by the load during one-half of his
found trip is “dead space” during the other half. The milk wagon making its morning
rounds accumulates “dead space” as it distributes its “paying load.” The grain-
carrying trans-Atlantic steamers, being unable usually to obtain westbound cargoes
equal in bulk to the foodstuffs which they carry eastward, have much “dead space”
on their westward trips. Railway traffic affords no exception to the general rule.
Although the genius of rate-making officers has for more than a generation been
largely devoted to efforts to develop equality of loading in different directions, there
is no considerable route over which the empty-car movement and the partially
loaded car movement are not matters of continuing concern. More than this, it is
not uncommon to have seasonal variations in volume of traffic so that a heavy empty-
car movement in one direction is unavoidable at one season although during the
balance of the year there is an equally heavy movement of unloaded cars in the
Feverse direction. “Dead space” is also of importance where, for any reason, the
Hoad is wholly or partially distributed while the train or car is en route, as, for example,
in local less-than-car-lot movement of freight and, as already noted, in suburban
passenger Service.
In the mail service so-called “dead space” of both varieties is unavoidable and
important in its extent and cost. Closed mail pouches may occupy but a small amount
of floor space in the end of a baggage car, but this is only a fraction of the space that
must be provided in their service. In order that pouches may be taken on and put
off at each mail station there must be “working space” in the car, aisles leading to
the doors must be kept free and open, and no impediment to prompt and efficient
handling can be permitted. Rarely, if ever, on any route is the volume of mail
equal in both directions, and the delivery of mail at intermediate stations is seldom
equaled by the mail taken up at the same stations. There are many cases in which
iarger postal cars, or apartment cars, or more storage cars are required in one direction
than in the other. Obviously these cars must be returned or the service could not
be maintained; it is equally obvious that the “dead space” in baggage cars carrying
closed pouches of mail must equal the difference between the loading with mail at
any particular time or point en route and the maximum quantity of mail at any time
or point. Such temporarily unused space is palpably necessary.
(c) RELATION OF “DEAD SPACE’’ To cost OF ANY SERVICE.
It is perfectly plain that if a car of part of a car must be returned empty or if it must
be carried during any part of its necessary movement empty, the paying load which
it has in the other direction or during the balance of the journey ought to bear the
expenses of the empty movement. The justice of this principle is self-evident—it
requires neither elaboration nor discussion, . As a consequence of the foregoing there
are, in practice, two ways in which it would be reasonable to treat the -dead space in
passenger-train service if it should be considered practicable to ascertain the total
cost of such Service and to apportion that total among passengers, express, and mail
RAILWAY MAIL PAY. 73
in proportion to the space required. No criticism of the treatment of “dead space”
would have been made herein had the Postmaster General adopted either of the
following plans: v.
First. Added the “dead space” incident to each branch of Service to the paying
space of that service, or,
Second. Ignored “dead space” made in all services and made the apportionment
on the basis of paying space only.
(D) whAT THE POSTMASTER GENERAL DID.
The Postmaster General adopted neither of the foregoing plans. On the contrary,
he unjustly deducted from the mail service much of the dead space necessarily inci-
dent to that service and added it to the space attributed to the passenger traffic, although
before the addition was made passenger space had included all the dead space actually
incident to the transportation of persons. He insisted on the assignment to passengers
of “working space” necessary for the mails in baggage cars, although if such space
were taken away they could not be handled, he refused to regard as mail space reserve
space where larger cars or compartments than were presently asked for by the de-
partment were supplied, although the extra space was indispensable in the working
of the mails, and he transferred to the passenger service unused space when the
maximum mail movement in one direction exceeded that in the other or such maxi-
mum was not reached during the period covered by his investigation.
It may be noted, parenthetically, that even in the reports rendered by the railways
the space occupied by officers, agents, and representatives of the Post Office Depart-
ment not in charge of mails, who are furnished with transportation as an incident of the
carriage of the mails and without any other compensation therefor, had been included
in the space apportioned to passenger travel—plainly it ought to be considered as
space assigned to mail service. Express space was made to include all “dead space”
incident thereto, so that the mail service alone was singled out for exceptional treat-
ment and in such a way as seriously to understate the demands which it makes upon
passenger-train service and greatly to reduce the portion of the cost of such train service
assigned to the mails. These modifications of the data correctly reported, not sus-
ceptible of justification upon any sound transportation principle, were carried so far
in the tabulations of the Post Office Department that its results, which are stated for
railway routes having a total length of 194,977.55 miles (Doc. No. 105, p. 58), show a
Smaller car-foot mileage made in the mail service than was actually reported by the
railways concerned for routes having a length of 178,709.96 miles. The table on page
25 compares the department's total figures for 194,977:55 route miles with the totals of
reports which it received covering 178,709.96 route miles.
As the difference between the route miles covered by the department’s aggregate
and by those of the routes whose reports were made available to the committee on
railway mail pay amounts to 8.34 per cent of the former it would appear that the excess
of the department's figures of car-foot miles ought, in every case, roughly to approximate
the same percentage. But the foregoing shows that while the figures of the department
as to car-foot miles made in the passenger and express service are able to support this
test of their accuracy the same test demonstrates the inaccuracy of the department’s
figures as to car-foot miles made in the mail service. This may be shown in another
way. *

Differences.
Post Office Depart- Reported by rail-
ment, 194,977.55 route ways, 178,709.96 route
miles.l miles. Excess of depart- Excess of railway’s
ment’s figures. figures.
Service.
p P Per f Per
er er Cent O cent of
Car-foot miles.| cent of Car-foot miles, cent of º depart- ºt depart-
total. total. * ment’s S. ment'S
figures. figures.
Passengers...|10,634,749,747 || 82.18 9,902,370,150 80.01 || 732,379, 597 6.89 |- - - - - - - - - - - - - - - - - - - - -
Express. - - - | 1,379,315,759 10.66 1,320, 108,589 10.67 || 59,207, 170 4.29 ----. . . . . . . . . . . . . . . . .
Mail... . . . . . 926, 164,459 7. 16 1, 153,110,245 9.32 -------------|-------. 226,945, 7 S6 24. 50
Total...|12,940,229,965 100.00 il2,375,588,984 || 100.00 564,640,981 4, 36 ------------- - - - - - - - - k

l Doc, No. 105, pp. 58–59.
74 RAILWAY MAIL PAY.
|
In the following table the average number of car-foot miles per mile of mail routes
for each service, as reported by the Post Office Department, is compared with the
averages resulting from the data reported to the department by the railways.

Average number of Excess of aver-
car-foot miles per ages from rail-
mail route mile. Way reports.
Service. :a ºf Per -
porte ate º
by POSt. from ; # *
\ffice reports nº. [...;
Depart- of rail- fi €S
ment. ways. gures.
Passenger--------------------------------------------------------- 54,544 55,410. 866 1.59
Express----------------------------------------------------------- 7,074 7,387 313 4.42
Mail--------------------------------------------------------------- 4,750 6,453 1,703 35.85
Total.------------------------------------------------------- 66,368 69,250 2,882 4. 34
The foregoing shows that the extensive modifications of the data showing car-foot
miles made in the mail service, reported by the railways, have resulted in an average
for that service, P. mile of the mail routes covered, that must be increased by 35.85
per cent to equal the real average discoverable from the reports rendered by railways
constituting 92.66 per cent of the mileage covered by the department's report. This
percentage of difference is more than eight times the percentage resulting from compar-
ing the department’s figures for the express service with those compiled by the com-
mittee on railway mail pay and more than twenty-two times the difference as to the
passenger service. It is no doubt true that the omissions in the figures available to
the committee on railway mail pay are principally those representing mail routes
having a volume of traffic, in all Services, more or less below the averages resulting from
its tabulations, but while this is freely admitted it is plain that the omitted routes
could not so greatly offset the average for the mail service as to overcome even a major
fraction of the enormous difference of 35.85 per cent in the average of car-foot mileage
for mail service. The omissions may, however, and probably do, account for the
divergencies as to the other services. The manner in which the data reported by
particular roads were modified in the Post Office Department in order to obtain the
results presented in the last two of the foregoing tables is illustrated by the compari-
sons on page 27 between the figures reported to the department by the Atchison,
Topeka & Santa Fe Railway system and those presented in document No. 105 (pp.
38–39, 60) as representing the same system. -
These comparisons show that the department, without giving any explanation for
its action, reduced the reports of car-foot mileage of the Atchison, Topeka & Santa Fe
Railway made in the mail service 36.45 per cent, while making no material change
in the data for the other services.
RAILWAY MAIL PAY.
75

. Car-foot miles. *.
Per cent of
total space.
As stated by Post Office Department.
Item. AS
* 4. Increase. Decrease. #: sº
* - po
*P*Y. amount. by the é.
-- -*. com. De-
Per Per | Pany. part-
Amount. c.t. Amount. c. ment.
Passenger service:
Space utilized. - - - - - - - - - - - - - - - - - - 550, 727,960 ---------|-------|------------|-------|-------- 80. 79
Dead Space---------|------------- 14,966,609 ||---------|-------|------------|-------|-------. 2. 20
Total.------------- 592,065,162 565,694,569 |. . . . . . . . . . . . . . . . 26,370, 593 || 4.45 81.36 | 82.99
Express service space - - || 80,132,841 80,714,628 581,787 0.73 . . . . . . . . . . . . . . . . . . . 11.01 11.84
Mail service: -
Postal CarS Space . . . 33,283,999 || 17,494,235 | . . . . . . . . . . . . . . . . . 15,789, 764 47.44 4.58 2.57
Apartment cars
Space- - - - - - - - - - - - - 16,227, 758 16,315,089 87,331 54 ------------------- 2.23 2.39
Closed pouch space..] 5, 190,173 1,390,237 - - - - - - - - - - - - - - - - 3,799,936 | 73.21 . 71 . 20
Storage space....... 782,710 3 * ~ I - - - - - - - - - - - - - - - - 720,757 92.08 . 11 . 01
Total............. 55,484, 640 || 35,261, 514 |- - - - - - - - - - - - - - - - 20,223,126 36.45 7.63 5, 17
Grand total. . . . . . . 727,682,643 | 681,670,711 . . . . . . . . . . . . . . . . 46,011,932 || 6.32 100.00 || 100.00
Other changes by the Post Office Department in the car-foot mileage made

in the
mail service, reported in response to its request, are disclosed by the following table:
Name.
Car-foot miles made in mail service, including dead space.
As reported by
Company.
As reported by
Postmaster
General.
Deducted by Postmaster
Atlantic Coast Line...... --------------------
Baltimore & Ohio. --------------------------
Bessemer & Lake Erie....... . . . . . . . . . . . . . . . .
Boston & Maine. . . . . . . . - - - - - - - - - - - - - - - - - - - - -
Central of º* * * * * * * * * * * * * * * * * * * * * * * * * * *
Central R. R. of New Jersey. . . . . . . . . . . . . . . . .
Central Vermont. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chicago & Northwestern....................
Chicago, Burlington & Quincy.............. -
Chicago, Milwaukee & St. Paul. . . . . . . . . . . . . .
Chicago, Rock Island & Gulf. . . . . . . . . . . . . . . .
Chicago, Rock Island & Pacific. . . . . . . . . . . . . .
Cleveland, Cincinnati, Chicago & St. Louis. .
Colorado Midland -
Delaware, Lackawanna & Western... . . . . . . .
Denver & Rio Grande.......................
El Paso & Southwestern. . . . . . . . . . . . . . . . . . . .
Brie-----------------------------------------
Fort Worth & Denver City. . . . . . . . . . . . . . . . . .
Georgia, Southern & Florida. . . . . . . . . . . . . . . .
Grand Rapids & Indiana- - - - - - - - - - - - - - - - - - - -
Grand Tr
Great Northern.-----------------------------
Illinois Central.-----------------------------
International & Great Northern . . . . . . . . . . . . .
Lake Erie & Western... . . . . . . . . . . . . . . . . . . . . .
Lake Shore & Michigan Southern. --- . . . . . . . .
Lehigh Valley. ------------------------------
Long Island.-------------------------------.
Louisville & Nashville. . . . . . . . . . . . . . . . . . . . . .
Maine Central.------------------------------
Michigan Central
Minneapolis, St. Paul & Sault Ste. Marie....
* * tº e º ºs º º ºs º º is tº sº sº º ºs º º ºs e º sº tº wº e ºn
= * * * * * * * * * * * = s = e s = * * * * * * * * * * * * * =
gº º 'º º sº tº * * * * * * * * * * * * * * * * * * * * * *
16,800, 427.66
14,826,915.00
6,030,349.00
2,162,350.00
3. te
1,218,058.00
38,651,162.00
21,950,549.00
387,863.00
3,833,876.00
4,731,725.00
5,836,923.00
37,537,435.00
4,601,135.00
2,457,460.00
20,770,314.00
5,081,903.00
8,586,016.00
12,484, 886,00
13,659,616.79
25,391,705.45
300,775.09
11,371,921.93
5,245,036.62
1,530,359.74
1,907,204.00
32,249,574.98
50,760, 723.99
35, 471,925.00
1,098,873.96
30,188,296.09
17,610,438. 37
294,482.91
2,270, 541.27
4,387,502.00
4,710,380.45
1,854,584.86
10,333,747.00
1,644,222.00
1,277,000. 56
2,272,776.53
4,821,869.70
30,889,628.00
25,683,865.00
3,694,491.90
1, 465,023.42
9,286,840.71
General.
Amount. Per cent.
3, 140,810.87 18. 69
7,742,310. 55 23. 37
123,965.91 29. 19
3,448,993. 07 23, 27
785,312.38 13.02
631,990.26 29. 23
357,980.00 15. 80
6,371,395.82 16. 50
11,485,406.01 1S. 45
10,854,312.00 23.43
119, 184.04 9. 78
8,462,865.91 21.90
4,340,110.63 19.77
93,380.09 24.08
1,563,334.73 40.78
344,223. 7, 28
1,126,542. 55 19. 30
1,032,049, 54 35, 75
1,113,945.00 9. 73
134,522.42 7. 56
755, 508.44 37.17
435,680.47 16. 09
950, 181.01 16. 46
12,567,363.00 28.92
11,853,560.00 31.58
906,643, 10 19. 70
992,436.58 40. 38
2,608,814.84 6. 00
1,658,954. 75 29,04
257,408.13 21. 26
2,579,091.38 12.42
09,655.00 12, 00
1,409, 595. 64 16.42
3, 198,045.29 | 25.62

76
RAILWAY MAIL PAY.

Car-foot miles made in mail service, including dead space.
Deducted by Postmaster
Name.
As reported by Aºy General.
company. General,
Amount. Per cent.
Missouri Pacific. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,395,240.00 | 16,887,104.88 4,508,135. 12 21. 07
Nashville, Chattanooga & St. Louis. . . . . . . . . 8, 160,447. 69 6,105,558. 37 2,054,889.32 25.18
New York Central & Hudson River. . . . . . . . . 54,095,823.00 49,076,804.00 5,019,019.00 9.28
New York, Chicago & St. Louis. . . . . . . . . . . . . 893,792.00 837,040.38 56,751.62 6.35
New York, Ontario & Western . . . . . . . . . . . . . . 1,087,251.00 982,820.94 104,430.06 9. 60
Forfolk & Western........I.I.I.I.I.I. 8,707, 177.30 7,291, 608. 89 1,415,568.41 16. 26
Northern Central. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,894,693.00 2,606,273.64 88,419.36 9.96
Northern Pacific. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,073,240.40 | 19,814,226.98 9,259,013.42 31.85
Oregon Railroad & Navigation. . . . . . . . . . . . . . 8,411,872. 60 5,636,912.25 2,774,960.35 32.99
Oregon Short Line. . . . . . . . . . . . . . . . . . . . . . . . . . 11,588, 199.00 7,635,493.00 3,952,706.00 34. 11
Pennsylvania Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,747,137.00 23,288,845.22 5,458,291.78 18.99
Pennsylvania Railroad. . . . . . . . . . . . . . . . . . . . . . 57,819,519.00 46,974,972.68 10,844,546.32 | 18. 76
Peoria & Eastern... . . . . . . . . . . . . . . . . . . . . . . . . . 1,814,670.00 1,381,441. 10 433,228.90 23.87
Philadelphia & Reading and allied lines. . . . . 5,226,386.04 3,270,478. 16 1,955,907.88 37.42
Philadelphia, Baltimore & Washington... . . . 8,336,728.00 7,439,833.23 896,894.77 10. 76
Pittsburgh & Lake Erie. . . . . . . . . . . . . . . . . . . . . 765,207.00 674,064.79 91,142.21 11.91
Pittsburgh, Cincinnati, Chicago & St. Louis. . 32,383,524.00 24,054,604. 27 8,328,919.73 25. 72
St. Louis, Iron Mountain & Southern. . . . . . . 15,109,450.00 | 12,382,363.83 2,727,086.17 18.05
St. Louis Southwestern. - - - - - - - - - - . . . . . . . . . . 2,041,895.00 1,611,046.90 430,848.10 21. 10
San Antonio & Aransas Pass. . . . . . . . . . . . . . . . 1,286,542.00 1,155,679.86 130,862. 14 10. 17
San Pedro, Los Angeles & Salt Lake. . . . . . . . 2,962,260.00 1,878,241.20 1,084,018.80 36.59
Seaboard Air Line. . . . . . . . . . . . . . . . . . . . . . . . . . 12,914, 121.00 10,403,436.76 2,510,684.24 19.44
Southern------------------------------------ 37, 191,602.00 28,983,910.68 8,207,691. 32 22. 07
Southern Pacific---------------. . . . . . . . . . . . . 39,376,418.00 || 31,010,229.97 8,366,188.03 21, 25
Texas & Pacific------------------------..... 7,429,705.00 6,271,189. 34 1,158, 515. 66 15.59
Toledo, Peoria & Western..... . . . . . . . . . . . . . . 1,139,212.00 527,598.44 611,613.56 53. 69
Union Pacific------------------------------- 37,228,978.00 23,458,659.00 | 13,770,319.00 36.99
Vandalia------------------------------------ 14,827,412.00. 10,908,799. 55 3,918, 6.12.45 26.43
Virginian----------------------------------- ,599.00 430,671. 19 113. 927. 81 20. 92
Wabash---------------------------------. ... 21,132,209.00 | 16,232,004.31 4,900,204. 69 23. 19
West Jersey & Seashore. . . . . . . . . . . . . . . . . . . . . 1,132,387.00 693,987.04 438,399.96 38. 71
Wheeling & Lake Erie. . . . . . . . . . . . . . . . . . . . . . 811,313.00 577,055.62 234,257. 38 28. 87
Wichita Valley. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550,015.00 324,988.66 225,026.34 .40.91
Total.--------------------------------- 988, 524,286.02 778, 197,633.71 210,326,652, 31 21.28

Nowhere in the Postmaster General's report is there any explanation of the rea-
sons for these very extensive changes in the basic data utilized in his calculations,
nor indeed, is there any intimation that any modifications of importance were made.
There is no admission that any changes at all, arbitrary or otherwise, were made save
in the bare statement on page 6 that discrepancies and inaccuracies were cor-
rected. It is submitted that this acknowledgment is utterly inadequate recogni-
tion of changes which, as shown by the statement above, covering only the roads
Inamed, aggregate 210,326,652 car foot-miles, or an average of 21.28 per cent. Appar-
ently it was thought to be proper that Congress should be left to understand that,
barring minor and relatively unimportant corrections, the data reported had been
obtained from the railways and were, therefore, presumably º by them as
truthful statements of facts. Nothing could be more contrary to the real situation.
As has been seen, the statements made by the railways were radically reduced in
nearly every instance; the carriers assert and are prepared to sustain the essential
accuracy of their reports. The units of the department's calculations are necessary
if its results are to be satisfactorily checked and corrected and the Postmaster Gen-
eral should be required to transmit the original data to Congress and thus to afford
an opportunity to trace in detail the changes which he has felt authorized to make
and for testing the validity of these changes and of the resulting averages and aggre-
gates. By no other means can the true figures be established with certainty nor can
the railways otherwise be accorded a fair opportunity to demonstrate the complete
accuracy of their original returns. It can be demonstrated that scrutiny of these
original data and computations would disclose numerous and serious clerical errors
and omissions by the department, resulting in a further unjust reduction in the train
space credited to the mails. Such errors have since been conceded by the depart-
ment in the case of individual roads, the aggregate of the conceded corrections in
the case of one system being about 19,000,000 car foot-miles, and these concessions
by the department go far to discredit the entire value of Document No. 105.
RAILWAY. MAIL PAY.
77
2'
(E) FURTHER PRoof of ARBITRARY TREATMENT OF SPACE.
The absence of any uniform or rational relation between the car foot-mileage for
mail service reported in Document No. 105 and the services demanded by and Sup-
plied to the Post Office Department is made fully apparent by an examination of
the figures given for some of the smaller routes and comparing them with the services
rendered on those routes. The table on page 30, prepared from the Postmaster Gen-
eral's Table 8A (Doc. No. 105, pp. 282-283), supplemented, as to the figures of one
column only, by reference to the annual reports of the Second Assistant Postmaster
General for the years 1908 to 1911, inclusive, amply demonstrates the truth of this
8tateIment. -

Num-
Aver- ber ; º sº Cº. º sº
Length, d; Sing e les IIl es es eS €S
- ly tri during during during per per
Route number. mi.s. weight, dºg Novem- ||Novem-| Novem- car- Cºſ-
wº in ovem-| ber, ber, ber, foot foot
pounds # 1909 1909. 1909, . miles. miles.
13907?-------------------------- 15.23 148 50 62,621 762 1,134.90 55 0.67
168021-------------------------- 6.41 94 60 | 18,076 385 | 194. 06 93 1.98
168023-------------------------- 20.30 52 60 31,668 1,218 1,010.94 31 1. 20
118051-------------------------- 9.62 74 100 21,356 962 || 488. 44 1.97
i i; ºw tº º tº * * * * * * * * * * * * * * * * * * * * * * 17. ; 113 50 58, ; ; º ; ; 1.16
* * * * * * * * * * * * * * * * * * * * * * * * * * 9. 65 100 17, 56 1 || 449. 3 2.01
126041-------------------------- 25.38 136 ióð 77,636 || 2,638 1,753.30 44 | 1.16
149050-------------------------- 29. 64 82 60 | 72,914 1,778 1,593.60 46 1. 12
# * * * * * * * * * * * * * * * * * * * * * * * * * * 8. º 14 #: 124. ; 2 ; 00 8 1.94
* * * * * * * * * * * * * * * * * * * * * * * * * * 42.4 98 l 656 || 4, 452 2.280.44 55 1.95
11407?-------------------------- 16.46 7; ióð 38.5ić 1,646 "333.00 46 1.98
§ s sº sº º º 'º - a • * * * * * * * * * * * * * * * * * 26. # 37 7 ; § | *; 1,...}}. 25 1.70
is ºn tº e º as m - - * * * * * * * * * * * * * * * * * 13. 1 94 50 7, 083 658 604. 24 61 1.09
#: * * * * * * * * * * * * * * * * * * - - we e s tº e = #; #: 150 33.7iº | 1,554 #; 82 1.99
166-------------------------- 10. 175 100 56,910 | 1,084 || 749. 76 1.45
176115-------------------------- 36.03 152 iół 164,397 || 3,747 2,830.8; 58 1. 32
137030-------------------------- 61.29 85 50 156,289 3,064 2,632.76 59 l. 16
137128-------------------------- 50.68 53 73 || 80,581 3,700 2,319.52 35 1. 60
147028-------------------------- 23, 22 93 60 64,784 1,393 | 1,142.42 57 1.22
147039-------------------------- 39.81 130 60 | 155,259 2,389 4,867.20 32 .49
114008-------------------------- 19.77 42 50 24,910 988 || 783, 36 32 1.26
126088-------------------------- 20.09 67 75 40,381 | 1,057 786.50 51 1. 92
107.182-------------------------- 21. 19 133 100 84,548 2, 119 1,544.00 55 1.37
107064-------------------------- 7. 66 169 100 || 38,836 766 | S19. S5 47 .93
#:::::::::::::::::::::::::: ##| #| || $; ºf ; ; ; ;
OU'ſ 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - f £). -
169019.-------------------------- 12.00 177 60 | 63,730 | 720 $80.70 | 167 | 1.3%
|1997-------------------------- 17.11 96 50 49,277 856 582.40 85 1.47
176064-------------------------- 36. 14 136 50 || 147,451 | 1,807 || 3,246. 48 45 . 56
168020-------------------------- 35. 37 192 60 | 203,731 2,122 1,810. 19 113 1. 17
127048-------------------------- 20.09 54 50 32,546 | 1,004 || 726. 18 45 1. 38
114030-------------------------- 5.26 148 170 23,354 894 443. 70 53 2.01
114071-------------------------- 12.62 26 50 9,844 631 || 327.00 30 1.93
12005?-------------------------- 6. 28 88 110 | 16,579 (91 || $14.60 32 1.34
!!9914-------------------------- 3. 58 140 100 15,036 358 || 179.56 84 1.99
116021-------------------------- 11.02 112 100 37,027 | 1,102 || 540.80 68 2.04
145082-------------------------- 23.60 120 58 | 84,960 | 1,369 | 1,013.40 84 1.35
NOTE:-Columns 2, 3, and 7 are from Document No. 105, Table SA; column 4 is based on annual reports
of the Second Assistant Postmaster General for 1908–1911; column 5=2X3X30 days; column 6=column
2X4; column 8= column 5-3-7; column 9=column 6+7.
The foregoing table includes every route having closed-pouch service only and for
which the data contained in the second, third, and seventh columns are given, rep-
resented in Table 8A of the report. The figures in the second, third, and seventh
columns are taken from that report, and those in the fourth are based upon facts
shown in successive annual reports of the Second Assistant Postmaster General. The
figures in the fifth column, headed “Pound miles during November, 1909,” are the
product of those in the second and third columns multiplied by 30; those in the sixth
column, headed “Service miles during November, 1909,” are the product of those
in the second and fourth columns; those in the eighth are quotients of those in the
fifth divided by those in the seventh; and those in the ninth are quotients of those
in the sixth divided by the same divisors. The wide range in the relations disclosed
by the figures in the last two columns of this table points plainly to the unreliability
78 RAILWAY MAIL PAY.
of the method adopted in assigning car-foot miles, and it is clear that if such incon-
sistent results are found as to these Smaller routes divergencies from the facts at least
equal in proportions must vitiate the more elaborate and difficult calculations neces-
sary in connection with the more important mail routes. It is startling, therefore,to
find that the Postmaster General has assigned a car-foot mile to every 8 pound miles
in one instance § No. 110224), while in another the proportion is one car-foot
mile to 167 pound miles (route No. 169,019). Equally surprising is the variation in
the relation between service miles and car-foot miles, the range shown by the table
being * 0.49 service miles (route No. 147039) per car-foot mile to 2.04 (route No.
116021).
A particularly strange contrast appears in the Postmaster General's Table 8A be-
tween route 176064, operated between Plumas Junction and Clio, Cal., by the Sierra
Valleys Railway, and the route immediately following in the table, which is 168020,
operated by the Arizona & Colorado Railroad, of the Southern Pacific Co.'s system,
between Cochise and Gleason, Ariz. These routes are 36.14 and 35.37 miles in length,
respectively, thus showing a difference in length of only three-quarters of a mile, or
2.13 per cent. Both routes have closed-pouch service only. Both are now paid at
the minimum per mile rate, the difference in length giving a difference in annual
compensation of $32.92. Reference to page 256 of the Annual Report of the Post
Office Department for the year 1910 shows that on route 176064 the service is six
times per week in both directions, while page 238 of the same report shows that on
route 168020 the service is seven times per week. The average daily weight of mails
given in Document No. 105 for these routes is 136 and 192 pounds, respectively.
Here, then, are two routes that present no wide or marked difference of any sort; they
carry about the same distance very similar quantities of mail, in the same manner,
and with little difference in frequency of service. It would be reasonable to suppose
that the car-foot mileage assigned to these routes would not vary more than these
controlling conditions of service, but such is not the case. The route carrying only
136 pounds of mail daily (176064) has been assigned 3,246.48 car-foot miles, and the
route carrying 192 pounds has been assigned only 1,810.19 car-foot miles. Thus an
excess of 79.34 per cent in the car-foot miles assigned to route 176064 over those
assigned to route 168020 rests upon no more substantial basis than 16.67 per cent more
frequent service and 2.13 per cent greater length of haul and is, despite an excess of
average daily weight, on the latter route of 41.18 per cent. Curiously enough, the
vagaries of the methods followed by the department provide an offset for this assign-
ment of 80 per cent more car-foot miles to one route than to the other, and Table 8A
further shows that the Postmaster General estimates the cost incurred in its mail
service of the route which, he says, made 3,246.48 car-foot miles as $15.25 and that
of the route which made 1,810.19 car-foot miles as $20.71. These figures give an
average car-foot mile cost of 11,441 mills for the Arizona & Colorado, which is a part
of a great system, as compared with an average of 4.69 mills for the Sierra Valleys
Railway, a difference of 243.94 per cent of the smaller average.
The following statement demonstrates still more vividly the inequalities resulting
from the application of the Postmaster General's method of assigning space:

º }.
Average miles Of Càr-IOO
Route Length daily made ..º. miles
No. in miles. weight, in closed er da reported
pouch p y. by
Service.1 railway.
107,074 12.64 291 2,679 10 4,790
110,024 12. 25 989 2,521 10 6, 734
1 Reported in Document No. 105.
These two routes have only closed pouch service and are about the same length,
have the same number of trains carrying mail and similar conditions in every way,
except No. 110,024 carries about three and one-half times as much mail as 107,074,
nevertheless the Postmaster General credits 107,074 with 158 car-foot miles in excess
of the number credited to No. 110,024. Such inconsistencies as these counteract
any superficial plausibility that the report might otherwise possess and destroy all
confidence in the accuracy of its conclusions as to space or cost of service.
EAILWAY MAIL PAY. 79
(F) THE EFFECT OF THESE ARBITRARY METHODS.
Under the methods applied by the Postmaster General, and by reason of the recom-
mendation which he bases upon these figures, the facts as to relative space devoted,
respectively, to passengers, express, and mail become of the first importance. They
are the facts which control the estimates of cost, and, therefore, the recommendation
as to compensation. By arbitrarily reducing the car-foot mileage made in the mail
service of any company the Postmaster General reduced the estimate of cost of carry-
ing the mail for that company because by his method cost is largely a derivative of car-
foot miles, and he also reduced his proposal as to its compensation, for he asks to be
authorized to base payment upon his alleged costs. Using the data as to the Atchison,
Topeka & Santa Fe system, in the table on page 27, it is possible to ascertain just how
much the changes affected the results claimed by the Postmaster General as represent-
ing the mail operations of that system. Turning, first, to pages 272 and 273 of the report
it appears that in his table 7 the Postmaster General reports the “operating expenses
and taxes chargeable to passenger traffic” of the Atchison, Topeka & Santa Fe as
$1,964,620.10, that no part of this was directly charged to mail, and that $97,186.52
was apportioned to mail. A simple arithmetical calculation supplies the omitted
element in this statement and discloses the fact that $84,803.47 of the $1,964,620.10
was directly charged to passengers and express and that the balance, $1,879,816.63,
was apportioned on the car-foot mileage basis.
As the department had allowed only 5.17 per cent of passenger-train space to the
mails it assigned only 5.17 per cent of this total expense to the mails. But the com-
pany reported 7:63 per cent of its passenger-train space as devoted to mail and not
5.17 per cent, the figure used by the Postmaster General. If the latter had used the
company’s figure the cost apportioned to mail by his method would have been
$143,430.01 instead of $97,186.52, as stated in Table 7. The revenue from mail of
this system is given in the same table as $159,567.06, so that if the department had
used the accurate figures reported by the company it would have found a moderate
surplus over operating cost and taxes of but $16,137.05 instead of the surplus of
$62,380.54, which it claimed to find. And this result would have been inevitable,
except for the arbitrary changes in the data as to space, in spite of the fact that the
reported operating cost of the whole passenger-train service is very much too low.
at is true as to the effect of these changes with respect to the Atchison, Topeka &
Santa Fe's figures is true as to substantially every company included in the report.
(G) concLUSION NECESSARY FROM THESE FACTs.
The inevitable conclusion from these necessarily destructive criticisms drawn
from the figures of the report and the public records of the postal service is that all
the elaborate tables prepared in the Post Office Department, so far as they purport
to show car-foot mileage made in the mail service, are based upon radical modifica-
, tions of the data reported at its request and upon arbitrary and undisclosed estimates,
with the result that they throw no light whatever upon the real or relative extent or
cost of the services and facilities supplied by the railways. On the contrary, they
destroy the value of every calculation in which they are an element, and as they
enter into the most fundamental computations which document No. 105 contains
they deprive the whole report of whatever value it might otherwise possess. Until
these data are carefully checked and fully corrected and the modifications which
these corrections would entail extended to the figures that are dependent upon or
result from the use of car-foot mileage the use of document No. 105 as a basis or guide
in the formulation of legislation would be unfair, unwise, and indefensible.
Third. The Postmaster General has apportioned expenses incurred for the joint
purposes of the passenger and freight services between these services in accordance
with a method never accepted by anyone with practical experience in railway account-
ing Ör operation.
he fairness of railway mail pay can be tested by apportioning operating expenses
between passenger and freight traffic, and then making a secondary apportionment of
the passenger expenses between mail and other kinds of traffic carried on passenger
trains. This method involves charging directly to each kind of traffic all expenses
pertaining exclusively thereto and the apportionment on some fair basis of those
expenses which are common to more than one kind of traffic.
In accordance with the request of the Postmaster General the railways estimated
the cost of conducting the mail service in the manner just explained and reported
the results to the Postmaster General. After first charging to each service the ex-
75904—No. 1–13—6
80 RAILWAY MAIL PAY.
penses wholly due to it they apportioned the common expenses between the passen-
ger and freight services, following (with inconsequential exceptions) the method most
generally employed for that purpose, namely, the apportionment of these expenses
in the proportions of the revenue train mileage of each service. Having estimated
in this way the operating expenses attributable to passenger trains the railways assigned
to the mails the portion of this aggregate indicated by the proportion of the total
passenger-train space required for the mails. Using this method 186 railways, oper-
ating 2,370 mail routes, with a total length of 176,716 miles, ascertained and reported
that for November, 1909, the operating expenses (not including taxes) for conducting
the mail service were $4,009,184. The Postmaster General states (Doc. 105, p. 281)
that all the railways represented in the foregoing, and enough others to increase the
mileage represented to 194,978 miles, were paid for the same month only $3,607,773.13.
It thus appears that the pay was far below the operating expenses, without making
any allowance for taxes or for a return upon the fair value of the property employed.
While different methods are in use for ascertaining the cost of passenger-train service
and the results produced by such methods may show considerable variation, yet the
mail pay is so far below reasonable compensation, from the standpoint of the cost of
the service and a return upon the value of the property, that no method can be reason-
ably urged, which would not demonstrate the noncompensatory character of the
present mail pay. This is illustrated by the method which the Postmaster General
himself employed, as the character of that method is such that it necessarily produces
the very lowest estimate of cost for the passenger-train service.
The Postmaster General, by his method of apportionment, arrived at a
cost of. -------------------------------------------------------- $2,676, 503. 75
But this must be increased on account of his erroneous apportionment
of car space by------------------------------------------------- 800, 802.00
And also on account of his refusal to assign expenses directly incurred
in the mail service (p. 15)---------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 401, 126.00
Total, according to the Postmaster General’s method of apportioning
costs between passenger and freight traffic. . . . . . . . . . . . . . . . . . . . . . . 3, 878, 431. 75
Thus even the Postmaster General’s method of apportioning costs between freight
and passenger traffic produces an operating cost in excess return upon the fair value
of the property or necessary but nonincome of the total pay received by the railroads,
leaving nothing whatever for producing improvements. --
There is no allowance in any of these estimates of cost for the large volume of free
transportation supplied to officers and agents of the Post Office Department when not
in charge of mail, although this amounts to over 50,000,000 passenger miles annually,
and at the low average rate of 2 cents per mile would cost the Post Office Department
more than $1,000,000 per year.
Fourth. The Postmaster General has wholly overlooked the fact that a large part
of the costs incurred by the railways in carrying the mails consists of interest on the
capital they employ. By ignoring all capital expenses, confining his attention to
mere operating costs, and proposing to return to the railways only the amount of
these operating costs, plus 6 per cent, he urges a method which, if applied generally
to all their business, would render every railroad at once bankrupt.
(A) POSTMASTER GENERAL ADMITS THAT SOME ITEMS OF EXPENSE WERE OMITTED.
Attention has already been called herein to the admissions in Document No. 105
that neither the expenditures on account of station services and terminal facilities
(see pp. 9–16) nor the cost of personal transportation furnished without special charge
therefor to the officers and agents of the postal service (see pp. 16–18) were included
in its estimates of cost. Attention has also been directed to the specific admission
ºnly two kinds of cost were considered, which admission was made in the following
WOTCIS:
“It is shown that, upon this basis of calculation, the information furnished and the
assignment of operating expenses and taxes (the factors of expense considered), the
performance of mail service at the present rates is profitable to many companies and
unprofitable to others * * *.” (Doc. No. 105, p. 14.)
1 There may be some duplication in this item, but to eliminate it would require an elaborate computa-
tion, which in view of the broad margin of expenses over receipts, is wholly superfluous. Whatever
duplication exists must be small in comparison with this margin.
RAILWAY MAIL PAY. 81
(B) THE PostMASTER GENERAL IGNORES THE FACT AFTER HIS ADMISSION.
Yet after this admission the report, curiously and inconsistently enough, proceeds
to assert that the figures show the relation between actual cost to the railways and their
present mail pay. The sentence last above quoted continues, in the very next words,
as follows: “But that the net result shows that the Government is paying more for
the service than it costs the railroad companies to perform it; furthermore, that this
excess over cost and 6 per cent profit is about $9,000,000 a year; that in cases where rail-
road companies are carrying the mails at a profit the per cent of profit over the cost
of performing the service varies in almost every instance, ranging from a low to a high
rate, and that in cases where railroad companies are carrying the mails at a loss the
per cent of loss compared with the cost of performing the service varies in the same
manner.” (Doc. No. 105, pp. 14–15.)
Referring, over his own signature, to the foregoing, the Postmaster General says:
“The committee estimates that through a readjustment of railway mail pay on the
basis of cost with 6 per cent profit a saving to the Government could be made of about
$9,000,000.” (Doc. No. 105, p. 3.)
And in his annual report to the President, dated December 1, 1911:
“The statistics obtained during the course of the investigation disclosed for the first
time the cost of carrying mail in comparison with the revenue derived by the railways
from this service. * * * If Congress gives the recommendation of the department
in this regard its favorable consideration and authorizes a readjustment of railway mail
pay in the manner suggested, it is believed that the resulting Saving to the Govern-
ment will amount annually to about $9,000,000.” (Annual Report of the Postmaster
General for the fiscal year 1911, pp. 19–20.)
The Second Assistant Postmaster General makes substantially the same statement,
but in words which point definitely to a source which discloses the incomplete nature
of the estimates of alleged cost. He says:
“A computation has been made, based on Table 7, of the amount of revenue the
companies or systems reporting would receive if their compensation for mail service
were based on the cost of carrying the mails and 6 per cent of such cost. The results
indicate that the companies represented in the computation would receive annually
under º method of payment about $9,000,000 less than at present.” (Doc. No.
105, p. 7. W
Turning to Table 7 (Doc. No. 105, pp. 272-281) there is no difficulty in verifying the
facts already stated as to the factors of cost included and as to those ignored. The
truth is disclosed by the table headings. Thus, as to the Abbottsford & Northeastern
Railroad, the first company shown, the table headings and the entries under them, on
page 272, are as follows:
Table heading. Entry.
Total operating expenses (passenger and freight)- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $1,522. 10
Taxes----------------------------------------------------------------------------------------- 90.
Total operating expenses and taxes-----------------------------------------------------------. 1,612.59
Total operating expenses and taxes chargeable to passenger traffic ............................. 268. 19
Passenger traffic, operating expenses, and taxes chargeable to mail service: Apportioned... . . . . 5.20
Total.----------------------------------------------------------------------------------- 5.20
It will, of course, be noted that the items of expenses shown in the foregoing are
those of operation and taxation only. All other expenses are absolutely ignored.
Yet the next page shows that this obviously incomplete item of $5.20 was compared
with the company’s mail pay receipts for the month, $54.25, and the whole excess,
$49.05, shown as “gain from mail service.” That the company had any other ex-
penses than those enumerated is wholly ignored. And the same is true as to every
other company and as to the whole of the Postmaster General's report.
(c) THE FACTORs IN COST OF PRODUCTION.
The science of political economy may be almost said to begin with the classification
of the factors of production under the three heads of labor, land, and capital, and the
explicit recognition that each of these factors entails a distinct element of cost of
production. Thus labor receives wages, which constitute an element of cost of
production; land receives rent, which is another element; and capital receives interest,
which is a third element. The term “interest” as thus used is the exact equivalent,
in economic nomenclature, of the term “reasonable return on investment,” as used
82 RAILWAY MAIL PAY.
in ordinary parlance to denote the cost directly and properly occasioned by the use
of capital. Where a Government is supported in whole or in part by taxes on pro-
duction the sums so paid may not improperly be treated as an additional element in
cost of production and, under modern conditions, in which the whole process of pro-
duction is rarely under unified control, the cost of materials is also in the nature of an
item of such cost, at least from the point of view of any separate enterprise or estab-
lishment. Every one of these items of cost must be satisfied or there is loss; until they
are all fully met there can be no such thing as profit. Railways have capitalized the
rents of their rights of way and other land holdings, and it is sufficient therefore to
. of the cost of production of the services they supply as including only the four
elements of (a) reasonable return on investment or interest, (b) wages, (c) cost of mate-
rials, and (d) taxes. Operating expenses include wages and cost of materials (i. e.,
fuel, rails for replacement, etc.). So the Postmaster General has actually included
three of the four factors and excluded the other; that is to say, he has ignored the rec-
ognized right of investors to a fair return upon the fair value of the property necessarily
employed to render the services. -
To speak of “6 per cent profit,” as the Postmaster General has (Doc. No. 105, p. 3),
when there has been no allowance for any return to investors, an essential and inevita-
ble part of the cost of production, is a gross and misleading misuse of terms that have
definite and established meanings. Railways are much less able to ignore the rights
of investors to proper and regular returns than some other undertakings, because, with
very few exceptions, their entire property holdings are pledged by mortgages given
to secure interest payments. To be unable to pay interest therefore spells bank-
ruptcy. From the point of view of the traveling and shipping public a reasonable
recognition of the right of the owners of railway property to receive returns upon their
investments reasonably proportioned to its fair value is equally important. The
rapidly growing industries of the United States continually require the services of
more and better railway facilities and their urgent demands can be met only by the
annual addition of very large sums to the capital invested in American railways.
This needed capital can not be obtained unless the promise of reasonable returns
thereon is supported by evidence that capital already invested, under competent
management, is able to earn fair returns. If Congress should now adopt the attitude
of the Postmaster General, as developed in Document No. 105, and ignore all capital
expenses in fixing rates of payment for the mail facilities and services supplied by the
railways, it would be notice to all potential investors in railway property that the
policy of the Federal Government had been so formulated as to deny their right to
reasonable compensation for the use of their capital. #
(D) RAILWAY IN VESTORS ARE CONSTITUTIONALLY PROTECTED IN THE RIGHT TO
REASONABLE RETURNS.
The Postmaster General appears to have overlooked the fact that the Constitution
of the United States protects the owners of railway property against such a congres-
sional confiscation of the right to use their property as he proposes. In recommending
a plan of payment which excludes any return whatever upon the value of the property
used in rendering the services required by the Post Office Department he has proposed
a plan that would be absolutely repugnant to the following well-known provisions
contained in Article V of the amendments:
“No person shall *, * * be deprived of .” ”, * property, without due
process of law; nor shall private property be taken for public use, without just
compensation.” .
It is not proposed or in any way necessary to enter upon an elaborate constitu-
tional argument, for everyone knows that the foregoing and the similar prohibition
contained in the fourteenth amendment have repeatedly been applied to prevent
action similar in character, albeit much less drastic, to that now proposed by the
Postmaster General. One citation, and that from a decision of the Supreme Court
of the United States, will suffice:
“The corporation may not be required to use its property for the benefit of the
public without receiving just compensation for the services rendered by it. . . * * *
“We hold, however, that the basis of all calculations as to the reasonableness of
rates to be charged by a corporation maintaining a highway under legislative sanc-
tion must be the fair value of the property being used by it for the convenience of
the public. * * * What the company is entitled to ask is a fair return upon the
value of that which it employs for the public convenience.” (Smyth v. Ames, 169
U. S., 466, 546–547; 42 L. Ed., 819, 849.
In the case from which the foregoing is quoted the Supreme Court affirmed a
decision preventing the enforcement of a schedule of maximum rates enacted by the
RAILWAY MAIL PAY. 83
Legislature of Nebraska as to two companies (among others) with regard to which the
court had found that they would have earned, in the years under consideration,
more than their operating expenses, because, as said in the opinion:
“The receipts or gains, above operating expenses, would have been too small to
affect the general conclusion that the act, if enforced, would have deprived each of the
railroad companies involved in these suits of the just compensation secured to them
by the Constitution.” (Smyth v. Ames, 169 U. S., 466, 547; 42 L. Ed., 819, 849.)
Although the fourteenth amendment in particular has repeatedly been invoked to
prevent the enforcement of rates prescribed under legislative authority which the
courts have held would amount to a confiscation of the use of railway property by
depriving its owners of a return on its fair value, that is to say, of interest, no ".
lature has ever yet acknowledged an intention to fix rates so low as to have that
result. Until the Postmaster General made the recommendation embodied in
Document No. 105 no public officer had ever avowed a purpose to refuse to any
railway carrier a fair return on the fair value of any property used to render any
service, no legislature had ever enacted a law which it admitted would have that
effect, no State or national railroad commission had ever claimed that power exists
to ignore the right of property to a reasonable return, and, therefore, no court has
ever yet been required to pass upon the validity of law-made rates in the light of a
frank admission that they would do no more than provide for operating expenses and
taxes, leaving nothing, or substantially nothing, to the owners of the property. That
such a contention will ever be made in any court is beyond belief.
(E) AMOUNTS OF EXPENSES IGNORED BY THE POSTMASTER GENERAL.
The Interstate Commerce Commission has just published the report of its statistician
for the year which ended with June 30, 1910, from which it appears (p. 70) that the
gross receipts of the railways, amounting to $3,005,112,836 (this sum includes operating
revenues, $2,750,667,435; net revenue from outside operations, $2,225,455; and other
income, $252,219,946, and thus obviously represents duplications in such instances
as the payment of rent for leased railway out of operating revenues when all or part
of the amount so paid becomes, in turn, “other income” through receipt of interest
or dividends on securities of the leased lines held by the lessee. These duplications
are unavoidable, however, if on the expense side are properly to be set up such inter-
corporate payments as those of rentals of leased railways) during that year were dis-
posed of as shown by the table on page 41.

Omitting all expenses, included in the foregoing table, that are not absolutely
necessary to avoid bankruptcies and the disruption of operating systems, the expenses
shown in the table at the top of page 42, in addition to those allowed for by the Post-
master General, at the very least, must be provided for out of earnings:
Per cent
º: total
o1 oper-
Item. Amount. º . ating
expenses
and
taxes.
Operating expenses------------------------------------------------ $1,822, 630,433 60. 65 94.90
8X6S-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 98,034,593 3.26 , 5.10
Deductions from gross corporate receipts:
Rents for lease of other roads- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 133,881, 409 4.45 6. 97
Hire of equipment, debit balances--- - - - - - - - - - - - - - - - - - - - - - - - - - - - 27,625,077 . 92 1.44
Paid for use of joint facilities. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 28, 811, 031 .96 1.50
Miscellaneous rents.-------------------------------------------. 2,933,067 . 10 . 15
LOSS on account of separately operated properties.... . . . . . . . . . . . 1,466, 897 .05 .08
Interest on funded debt-----------------------------------. . . . . I 349,092, 709 11. 62 18, 17
Other interest.------------------------------------------------- 13, 207,243 . 44 . 69
Sinking and redemption funds chargeable to income... . . . . . . . . . 5, 355, 416 , 18 . 28
Other deductions----------------------------------------------- 5, 480. 239 . 1S . 28
Dividends:--------------------------------------------------------- 1283,411,828 9.43 14.76
Appropriations for additions and betterments and for new lines and
extensions------------------------------- - - - - - - - - - - - - - - - - - - - - - - - - - 55,061,675 1.83 2. S7
Appropriations for reserves.---------------------------------------. 2,640,893 . 09 . 13
Credit to profit and loss-------------------------------------------. 175,480, 326 5.84 9. 14
Total.-------------------------------------- ---------------- 3,005, 112,836 100.00 156. 46
* These items do not include payments made under these heads by leased lines, as such payments are made
out of the proceeds of the item entitled “Rents for lease of other roads.”
84 RAILWAY MAIL PAY.
* Omitted expenses.
Per cent
Item. ofex .
COInSICIeſe
Amount. by Post-
Imaster
General.
Rents for lease of other roads..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $133,881,409 6.97
Hire of equipment, debit balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,625,077 1.44
Payments for joint facilities. . . . . . . . ... -----------------------------------------. 28,811,031 1.50
Miscellaneous rents------------------------------------------------------------- 2,933,067 . 15
Interest on funded debt... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,- - - - - - - - - - - - - - - - - - - 349,092,709. 18. 17
Other interest.------------------------------------------------------------------ y ~~ * x .69
Sinking and redemption funds. . . . . . . . . . . . . ------------------------------------. 5,355,416 . 28
Total.--------------------------------------------------------------------- 560,905,952 29.20

The Postmaster General’s plan, however, if applied to all railway traffic, would
allow the railways to receive for the services they render only the amount of their
operating expenses and taxes; that is, $1,920,665,026, plus 6 per cent of that amount,
which is $115,239,922. Thus, instead of the $560,905,952 absolutely necessary, as
has been seen, to maintain their systems and keep them out of the hands of receivers
they would have only $115,239,922, or 20.55 per cent, about one-fifth of the necessary
amount. Of course, every reasonable person realizes also that the item of “dividends,”
as well as most of the other items in the table next but one above, is a necessary item
and must be met if the railways are to be fairly treated—if they are to be protected
in their constitutional right to receive just compensation for their services and if they
are to be enabled to render proper and adequate services as common carriers. The fact
that the Postmaster General’s plan could not be generally applied without destructive
effect should deprive it of any support whatever. There is nothing in the character
of the mail traffic which suggests that it ought to be treated exceptionally or carried
for so low a figure as to require rates on other transportation to be kept at a higher
level in order to prevent the insolvency of the carriers. Such treatment would make
the mail service a tax on every other service rendered by the railways.
(F) EVEN ON THE BASIS OF THE UNIFAIRLY LOW ESTIMATES OF OPERATING COSTS MADE
BY THE POSTMASTER GENERAL, ALLOWANCE FOR THE OMITTED EXPENSEs woulD
MAKE THE MAIL PAY HIGHER THAN IT IS NOW.
The following figures are deduced from those contained in Table 7, Document No.
105, pages 280–281:
Railway mail pay for November, 1909. . . . . . . . . . . . . . . . . . . . . . . . . . . $3, 607,773. 13
Operating expenses and taxes, Same month. . . . . . . . . . . . . . . . . . . . . . 2, 676, 503. 75
By reference to page 41 of this statement, it will be seen that the
gross receipts of all railways for the year ended June 30, 1910, as
reported by the Interstate Commerce Commission were . . . . . . . . . . 3,005, 112,836.00
Deducting therefrom— -
Operating expenses and taxes. . . . . . . . . . . . . $1,920, 665.026.00
Appropriations to additions and betterments
and for new lines and extensions. . . . . . . . 55,061, 675.00
Credit to profit and loss. . . . . . . . . . . . . . . . . . . 175,480, 326.00
2, 151, 207,027.00
There remains-------------------------------------------- 853, 905, 809.00
Equals 44.45 per cent, which must be provided for before a proper return on invest-
ment shall have been Secured. -
If you add to the operating expenses and taxes, as shown by the Postmaster Gen-
eral, $2,676,503.75, for November, 1909, 44.45 per cent, or $1,189,705.92, it will give a
total of $3,866,209.67, or $258,436.54 (equivalent to $3,101,238.48 per annum), more
than document No. 105 shows was paid for mail service in November, 1909, and
consequently, even on the basis of the unfairly low estimates of operating costs made
by the Postmaster General, an allowance for the omitted expenses, which must be met
would make the railway mail pay higher than it is at present.
RAILWAY MAIL PAY. ar 85
Fifth. In confining his investigation to the month of November, the Postmaster
General selected a month that is not a fair average or typical portion of the year but,
in connection with the methods he employed, greatly reduced the apparent cost of
the passenger train services, resulting from his calculations.
There can be no'contradiction of the assertion that, if in every other respect the basis
of railway pay proposed by the Postmaster General were reasonable and fair, the validity
of his calculations would depend upon whether the period selected for his investigation
could be considered fairly typical of an entire year. All his computations are based
upon data obtained by him which represent only the single month of November in
the year 1909. If that month was areasonably typical month, particularly with respect
to passenger train traffic and expenses calculations based upon these data would be
entitled to all the weight which the methods of computation employed would warrant.
But, however accurate these calculations and methods, the results could rise no higher
than their source, and the most perfect system of computation most accurately applied
would be wholly vitiated if the basic data can not be regarded as fairly typical and rep-
resentative. If the month of November varies from the whole period of the year from
which it was selected, and particularly of the differences are such as unfairly to dimin-
ish the apparent cost of the passenger train services, results based only on date for that
month must be inconclusive and worthless. Now, this is precisely the case.
It may fairly be questioned whether the year contains any single month that could

be properly denominated an average, typical, or representative month, but if there
is such a month it is certainly not the month of November. The Interstate Commerce
Commission has published the receipts and expenditures of the railways of the United
States for each month of the fiscal year that ended with June 30, 1910, and includes
the month of November, 1909, and these data conclusively prove that that month was
very far from a representative one and that the seasonal and other variations to which
it was subject were such as to render the results of any calculations based upon it
exceedingly unfair to the passenger train services." The figures in the second and
fifth columns of the table on page 45 are from that bulletin, the figures in the other
columns have been derived from them.
Gross operating receipts per mile of line.
- Per cent of
* passenger
Passengers. Freight. receipts to
Month. receipts
*. from both
Daily lº Daily ..." |pº
ally O y ally O y ht.
Total. average. average Total. average. average and freight
for year. for year.
1909, July------------- $251. 66 $8. 12 112.15 $608.67 $19.63 88, 46 29.25
1909, August. - - - - - - - - - 269. 70 8. 70 120. 17 653.97 21. 10 95.00 29. 20
1909, September....... 254.95 8. 50 117. 40 704. 51 23.48 105. 81 26. 57
1909, October.......... 231.80 7.48 103.31 781.91 25. 22 113. 65 22.87
1909, November. . . . . . . 206. 69 6. 89 95. 17 752. 69 25. 09 113. 07 21, 54
1909, December........ 211. 55 6.82 94.20 640. 59 20.66 93.11 24.83
1910, January. . . . . . . . . 187. 42 6.05 83.56 618.06 19.94 89. 86 23.27
1910, February........ 171. 92 6. 14 84.81 603. 76 21.56 97. 16 22. 16
1910, Margh. ---------- 202.61 6. 54 90, 33 716.76 23. 12 104.19 22.04
1910, April. . . . . . . ----. 203. 84 6.79 93.78 658.93 21.96 98.26 23.63
1910, May - - - - - - - - - - - - - 218.47 7.05 97.38 682.96 22. 03 99.28 24.24
1910, June. -- - - - - - - - - - - 233.25 7.78 107.46 674. 97 22, 50 101. 40 25.68
Total.---------- 32,643.86 7.24"| 100.00 28,097.78 22. 19 100.00 24.61
1 Interstate Commerce Commission, Bureau of Statistics and Accounts, Bulletin of Revenues and
Expenses of Steam Roads in the United States, compiled from monthly reports covering the years ending
June 30, 1910 and 1909. , &
2 The totals stated differ very slightly from those stated by the commission, as they are the exact sums of
the averages given, while the commission’s totals include also small unclassified receipts.
86
RAILWAY MAIL PAY.
GRoss RECEIFTs PER MILE PER DAY
FER CENT DEVIA Tion FROM Av ERAGE
SEPT (909
OCT Goe
NOV 1909
DEcooe
JAN. 19|O
FEB. leol
NMAF.19|O
APRIL19|O
MAY |9|O
JUNEleo
ABOVE AVEIRAGE.
PER CENT
EELOW AVERAGE
[6
26
It If I
|
| º
* Passences
D FREight

BAILWAY MAIL PAY. 87
The most accurate comparisons permitted by the data on page 45 are those between
the per diem averages in the third and sixth columns, as such comparisons are not
affected by the varying numbers of days in the different months. These compari-
sons show that the average gross receipts per mile of line from the passenger service
during the month of November, 1909, amounted to but 95.17 per cent of the daily
average for the year, while the average gross receipts from freight service amounted
to 113.07 per cent of the daily average for the year. In the whole year there were but
four months that showed smaller gross receipts from passengers than the month selected
by the Postmaster General, while there was but one month in the entire year which
showed as high receipts from freight service. More conclusive still is the fact, shown
by the last column in the table, that of all the months in the year the percentage of
gross passenger . to receipts from both passengers and freight was absolutely
the lowest in November. In that month the passenger service earned, in gross, but
$21.54 in each $100 of receipts from both the passenger and freight services, while the
average for the year was $24.61, and in one month it was as high as $29.25. It is
perfectly obvious that if any direct charges to the different services are warranted
the amounts of the accounts so chargeable must fluctuate, if not in exact proportion
to the respective volume of traffic in the passenger and freight services, at least with
some relation to such volume. And it is undeniable that the fluctuations in average
gross receipts per mile of line roughly measure fluctuations in volume of traffic. Hence
it is plain that in selecting the month of November, and making it the exclusive
basis of all his calculations and estimates, the Postmaster General shows, unwittingly,
it is believed, the one month in the year that, if the balance of his case were sound,
would appear to sustain the largest possible reduction in railway mail pay and that
is actually the most unfavorable to the railways. He assigned directly $34.40 in
each $100 of operating expenses, and every apportionment so made to the passenger-
train services was diminished by the selection of a month in which freight movement
is much heavier and passenger movement much lower than the average for an entire
year, he assigned $36 in each $100 of operating expenses in the proportions of the
accounts he had charged directly and thus extended the error to these unlocated or
joint expenses; he assigned $13.60 in each $100 in proportion to locomotive mileage
and $9.80 in each $100 in proportion to revenue train mileage, and as these apportion-
ments were made on the basis of a month in which passenger traffic was very light
and freight traffic very heavy these apportionments also were unduly to the disad-
vantage of the passenger-train services. And these apportionments account for 93.80
per cent, or $93.80 in each $100 of all operating expenses.
In the wide range of climatic conditions in the United States it happens that the
month of November is, throughout a large section and as to many railways, a month
in which substantially winter conditions prevail and characterized by much more than
the average difficulty of operation. Under such conditions it becomes necessary to
Suspend certain repairs, renewals, and replacements, which entail expenditures
chargeable to the operating accounts while the cost of moving trains is enhanced.
The results of these facts are shown by the table on page 48.
Fiscal year 1910.
& º Average per mile of &
Class. Average per mile of line. line per day. Per cent of total.
No- Other NO- Other No- || Other
vember eleven Total. ven-i eleven |Total.] verm- eleven |Total.
‘l months. ber. Inonths. ber. months.
Maintenance of way and
Structures----------. . . . . . $124.04 $1,438. 84 $1,562, 88 $4.13 $4.30| $4.28. 19.31 20, 36; 20. 27
Maintenance of equipment. 148. 48] 1,597.56] 1,746.00. 4.95 4. 77| 4. 78] 23, 11 22. (30; 22. 64
Traffic expenses............ 18. 85 201, 76 220. 61 63 . 60} . 61; 2.94 2. S5 2. S6
Transportation expenses...| 327.78 3,565.93| 3,893, 71 10.93 10. 64| 10. 67| 51.04 50. 45 50. 50
General expenses........... 23. 10 264, 61: . 287. 71} . 77 . 79| . T9| 3. 60 3. 74 3.73
Total. . . . .----------- 642.21 7,068.70 7,710.91| 21.41 21. 10; 21. 13|100.00 100.00; 100.00

88 RAILWAY. MAIL PAY.
OPERATING EXPENSES
per mile of line per dau
8 8a. $6 $ § o
TRANSPORTATION ExPENSE
MANTENANCE OF EduPMENT
MAINTENANCE OFWAY AND
STRUCTURE *.
GENERAL ExPENSE *
TRAFFIC ExPENSE s
NovembER
[T]oTHER 1ſ MONTHS


RAILWAY MAIL PAY. * 89
The figures in the table on page 48 fully corroborate the conclusions inevitably to be
drawn from the one next preceding. Thus it appears that while the average daily
operating expenses of November are, in the º: a little higher than those of the
balance of the year, their distribution among the various accounts is very different from
the average distribution. The maintenance of way and structures expenses, which do
not fluctuate with traffic fluctuations, averaged but $4.13 per mile of line per day during
the period selected by the Postmaster General, while during the balance of the year
these expenses averaged $4.30 per mile per day. But expenses for other purposes
averaged $17.28 per mile per day during the former period and only $16.80 during the
latter. These differences result from the fact that the severe weather conditions of
November render necessary the suspension of much of the ordinary maintenance work
upon roadbed and structures and, at the same time, tend to enhance the operating
expenses that do fluctuate with the volume of traffic. Consequently, as all the traffic
fluctuations that find expression in November tend to diminish the total expense
apportioned, by the Postmaster General’s method, to the passenger-train services, the
fact that the expenses that do vary with traffic are relatively heavier in the month he
selected had a further and strong tendency to reduce the apparent cost of the passenger-
train services resulting from his computations. It follows, as Surely as the night fol-
lows the day, that, if every other feature of Document No. 105 were utterly beyond
criticism, the fact that it rests wholly upon the single month of November would render
its results illusory, misleading, and grossly unjust to the railways.
III. RECENT REDUCTIONS IN RAILWAY-MAIL PAY.
A. PRELIMINARY SURVEY AND COMPARISON S.
No consideration of the reduction proposed in Document No. 105 would be adequate
which did not make appropriate allowance for the fact that during the period of
advancing railway expenses subsequent to June 30, 1907, the mail revenues of the
railways fiave been subjected to repeated and drastic decreases brought about by
legislative action and by administrative orders.
The volume of the American mails, the revenue of the American postal Service, and
its demands upon the railways for services and facilities are constantly increasing.
The costs of supplying railway transportation are also increasing. Capital costs
(interest) have increased through the higher standards of service demanded and the
higher value of real estate required for extended and necessary terminal plants, labor
costs have grown by means of repeated advances in the rates of wages paid to employees
in every grade, other operating expenses have increased as prices of materials and
supplies have mounted upward, taxes have increased with the growing exactions of
State and local governments which have been rapidly augmenting their expenditures
and forcing an increasing share of the total burden upon railway carriers and by the
creation of an entirely new Federal corporation tax. But the tºº railway-mail
§. has remained substantially stationary for several years and has not at any recent
ate advanced in proportion to the increased facilities and services required, the
increased profit on the use of these facilities and services made by the Post Office
Department or the increased expense to the railways. The pay per unit of service
rendered has been greatly reduced. The table on page 52 shows some of these facts.
90 RAILWAY MAIL PAY.
Postal expenditures.
All purposes.” Railway mail pay.3 Other expenses.”
- Postal re-
Fiscal year. ceipts." -
|Per $100 Per $100 - Per $100
Amount. of re- Amount. of re- Amount. of re-
ceipts. ceipts. *: . ceipts.
1901------------------- $111,631, 193 $115,554,921 |$103.51 $38,158,969 $34.18 $77,395,952 $69.33
1902------------------- 121,848,047 | 124,785,697 || 102.41 39,518,817 32.43 85,266,880 69.98
1903------------------- 134,224,443 || 138,784,487 | 103.40 || 41,377,184 || 30.83 97,407,303 | 72.57
1904. -- - - - - - - - - - - - - - - - - 143,582,624 152,362,116 || 106.11 43,971,848 || 30.62 108,390,268 75.49
1905------------------- 152,826,585 167,399,169 || 109. 54 || 45,040,564 29.47 122,358,605 80. 07
1906------------------- 167,932,782 178,449,778 106.26 46,953,439 27.96 || 131,496,339 78.30
1907------------------- 183,585,005 || 190,238,288 || 103.62 49,758,071 27.10 || 140,480,217 76. 52
1908------------------- 191,478,663 208,351,886 108.81 || 48,458,255 25.31 159,893,631 83. 50
1909------------------- 203,562,383 221,004,102 || 108.57 49,869,375 24.50 171,134,727 84. 07
1910------------------- 224,128,657 229,977,224 || 102.61 49,405,311 22.04 || 180,571,913 || 80.57
1911------------------- 237,879,823 238,507,669 100.26 50,583,123 21.26 187,924,546 79.00


Postmaster General's Annual Report for 1911 (H. Doc. No. 559, 62d Cong., p. 47).
2. The amounts given are those º by the Postmaster General (Annual Report for 1911, H. Doc. 559,
62d Cong., pp. 48–49) except that for the year 1911 the total expenditures are stated as shown by the later
and corrected figures reported by the Committee on the Post Office and Post Roads of the House of Represent-
atives (H. Rept, No. 388, 62d Cong, 2d sess., p. 2), but they are too low. The report of the Commission
on Second Class Mail Matter .#. Hon. Charles E. Hughes, Associate Justice of the Supreme Court
of the United States; Dr. A. £awrence owell, President of Harvard University; and Mr. Harry A.Wheeler,
President of the Association of Commerce of Chicago (published in the document already cited, which
also contains the Postmaster General’s Annual Report for 1911); shows that the accounting methods of the
Post Office Department are misleading in that they exclude actual expenses of the postal service that are
considerable in the aggregate. Figures given in the commission's report (p. 77) show that for the fiscal
year 1908 the expenses (given in this table as $208,351,886) do not include the following: “Amount expended
under legislative act for the Post Office Department, $1,622,564.24; amount appropriated under legislative
act for the office of the Auditor of the Post Office Department, $824,870; amount expended under legislative
act for the office of the Assistant Attorney General for the Post Office Department, $5,000; transportation
accounts certified to the Secretary of the Treasury for credit of aided Pacific roads not charged to postal
revenues, $761,099.69?”; total, $3,203,533.93. The item on account of bond-aided roads has ceased to exist
(Postmaster General’s Annual Report for 1911, p. 49), but the other omissions still impair the accuracy of
of the accounts. Assuming that these other itéms were the same in 1911 as in 1908, it follows that the actual
cost of the postal service in the later year was $240,960,103 instead of $238,507,669, and that instead of a surplus
of $219,118.12 in postal receipts over expenditures (Annual Report of the Postmaster General for 1911, p. 15)
there was actually a deficit of $3,080,280. The statements of cost of the postal service supplied by the Post-
master General are also defective, in that they contain no allowance for rental of buildings owned by the
Federal Government and occupied by the department, as post offices or otherwise, or for interest or depre-
ciation on any capital or property owned and utilized in the postal service. See also House Report No. 388,
Sixty-second Congress, second session, being a report of the Committee on the Post Office and Post Roads of
the House of Representatives, which shows that items chargeable to the fiscal year 1911, but audited after
its close, more than offset the small surplus claimed by the Postmaster General and leave an actual deficit
of $627,845.94 for that year—this, exclusive of the omitted items to which attention was directed by the
Commission on Second Class Mail Matter.
3 These figures represent cost of railway transportation but are approximately 1 per cent too high. . They
#. not sº as the exact data necessary are not available. See footnote on page 5 (page 64 of these
earlingS).
RAILWAY MAIL PAY.
91
Post AL RECEPTs AND EXPENDITURES
MILL_IONS OF DOLLAFS

2O 40 eo
80 100 120 f40
leG 180 200 220 240
pºsºmºs
1901
1902
1905
1904
|905
|906
1907
|908
1909
|9|O
19||
FosſaL RECEIFTs
Fosta.L ExPENDITUREs
F-
%Railway Mau Far
DALL OTHER ExPE NSEs
92
RAILWAY MAIL PAY.
Reduced to percentages, the figures in the table on page 52 show the following
increases for the last 10, 5, and 2 years, respectively:
Ten Fivo Two
years years years
Item. igoi to food to igos to
1911. 1911. 1911.
Postal receipts, per cent increase. ---------------------------------------- 113.09 41.65 16.86
Postal expenditures:
All purposes, per cent increase--------------------------------------- 106. 40 33.66 7. 92
Railway mail pay, per cent increase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.56 7. 73 1.43
All other expenditures, per cent increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142.81 42.91 9. 81
These percentages disclose what has happened too plainly to admit of much com-
ment. It appears that for either the 10 or 5 year periods just closed the postal
expenses exclusive of railway mail pay have grown much more rapidly than postal
business, as fairly measured by receipts, while railway mail pay increased during
the longer period less than one-fourth as fast as other expenses, and during the 5-year
period less than one-fifth as fast. The 2-year period covered by the percentages
in the last column covers the administration of the present Postmaster General,
and although during that period the enormous increase in postal business (amounting
to $34,317,440 in revenue, or nearly one-third as much as the entire postal receipts
of the year 1901) has outstripped the growth of expenditures and the real postal deficit
has been greatly reduced, expenses other than for railway facilities have increased
9.81 per cent, while railway mail pay has grown but 1.43 per cent, or about one-Seventh
as rapidly as other expenditures and about one-twelfth as rapidly as postal receipts."
The averages in the table under discussion are even more significant than the aggre-
gates. They show that between 1901 and 1911 the cost of the postal service, reported
by the Postmaster General, per $100 of receipts therefrom, declined from $103.51 to
$100.26, while the cost for railway mail pay declined from $34.18 to $21.26, and that
for other purposes increased from $69.33 to $79. That is to say, the net decrease of
$3.25 per $100 of revenue is the difference between a saving in railway mail pay
of $12.92 and an increase in other expenses of $9.67. In other words, not only is the
whole reduction in postal expenses attributable to the reductions in railway mail pay,
but an additional reduction in this item has been absorbed by increases in other items.
Effective illustrations of the relation of railway mail pay to other postal expenses
are found in the table on page 55, which shows the annual increment of revenue for
each year of the last decade and the cost per $100 at which it has been earned, the cost
of railway mail pay and the expenses for other purposes being stated Separately. .
The table on page 55 shows that while the additional cost of earning the portion
of total postal revenue added since 1901 has been, for railway facilities, $9.84 per $100
of receipts, the cost for other purposes has been $87.55 per $100 of added receipts.
Thus the revenue added since 1901, which exceeds the entire revenue for that year,
has cost, for railway mail pay, but 28.79 per cent of the average of 1901; it has cost,
for other purposes, 126.28 per cent of the average at the beginning of the period. These
figures give additional emphasis to the conclusion that much more than the entire
decrease in postal expenses has been taken from the revenues of the railways which
transport the mails. The fact that the yearly averages show that each yearly incre-
ment of postal business has been taken up at a cost, for railway facilities, lower than
the average cost therefor in 1901, while in 6 of the 10 years the cost for other pur-
i. has exceeded the average of 1901, in one year being more than three and one-
alf times that average, is most significant. These data again demonstrate the truth
of the assertion that for a decade at least reductions in railway mail pay have consti-
tuted the solitary Source of Savings in postal expenditures.
1. It may, of course, be suggested that the fact that nearly the whole recent saving in expense appears to
be in railway mail pay is attributable to the increase in the cost of rural free delivery, but this explanation
would be inaccurate. The cost of rural free delivery reported by the Postmaster General for the fiscal year
1909 was $35,586,780; for 1910, $37,073,733; and for 1911, $37,145,757. These figures give a percentage increase
for the two years of the present administration of 4.38, which is much lower than the percentage increase
of all expenses other than railway mail pay. Excluding the reported cost of rural free delivery and the
payments for railway facilities, the increase in all other postal expenditures was from $135,547,947 in 1909
to $150,778,789 in 1911, or 11.24 per cent. Expenditures for rural free delivery are not, however, wholly for
an additional service, as might superficially be conceived. In part they represent, the substitution of a new
method of delivery for delivery through the post offices, which has permitted a decrease in the number of
post offices, and therefore the expenses which would have been necessary to maintain the abandoned offices
should be deducted from the apparent cost of rural free delivery before calculating its real cost. At the
close of the fiscal year 1901 there were 76,945 post offices in the United States; at the corresponding date in
1906 there were 65,600; in 1909, 60,144; and in 1911, 59,237. The number of fourth-class post offices in 1901
was 72,479; in 1906, 59,690; in 1909, 52,944; and in 1911, 51,260. From 1901 to 1911 the reduction in the number
of post offices of all classes amounted to 23.0i per cent and that in fourth-class post offices to 29.28 per cent.
j
§
Postal expenditures.
*. All purposes. Railway mail pay." Other expenses.
Period. r: tº: l * - - - - -
.* Per $100 - Per $100 | Per $100
Amount. of re- Amount. of re- Amount. of re-
ceipts. ceipts. , , ceipts.
#; year ended June 30, 1901. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $111,631,193 || $115,554,921 || $103.51 $38,158,969 $34, 18 $77,395,952 $69.33
IIICTCàSé w +
July 1, 1901, to June 30, 1902. ----------------........................................ 10,216,854 9,230,776 90.35 1,359,848 13.31 7,870,928 77.04
July 1, 1902, to June 30, 1903. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,376,396 || 13,998,790 113.11 1,858,367 15.02 | 12,140,423 98.09
July 1, 1903, to June 30, 1904. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,358, 181 13,577,629 145.09 2,594,664 - 27.73 10,982,965 117.36,
July 1, 1904, to June 30, 1905. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,243,961 15,037,053 | 162.67 1,068,716 11.56 || 13,968,337 151. 11
July 1, 1905, to June 30, 1906. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 106, 197 11,050,609 73, 15 1,912,875 12, 66 9, 137,734 60, 49
July 1, 1906, to June 30, 1907. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * * * * * * * * * * * * * * * * * s a = * 15,652,223 11,788,510 75, 32 2,804,632 17, 92 8,933,878 57, 40
July 1, 1907, to June 30, 1908. ----------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,893,658 18, 113,508 229, 47 2) (4) 19,413,414 245.94
July 1, 1908, to June 30, 1909.--------................................................ 12,083,720 12,652,216 || 104.70 1,411, 120 11.68 11,241,096 93.02
July 1, 1909, to June 30, 1910. ----------------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,566,274 8,973,122 43.63 8) (5) 9,437, 186" 45.89
July 1, 1910, to June 30, 1911. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,751,166 8,530,445 62,03 1, 177,812 8. 56 7,352,633 , 53.47
Total increase, July 1, 1901, to June 30, 1911........................................ 126,248,630 | 122,952,748 97.39 12,424, 154 9.84 110,528,594 87. 55
During year ended June 30, 1911. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237,870,823 238,507,669 100.26 50,583,123 21.26 187,924,546 79.00
* As reported by the Postmaster General and the Committee on the Post Oſfices and Post Roads of the House of Representatives and, therefore,
referred to in the second footnote on page 52 (page 90 of these Hearings). ~.
2 Decrease of $1,299,816.
8 Decrease of $464,064.
4 Iless than nothing; the decrease amounted to $16.47 per $100 of increased revenue.
6 Less than nothing; the decrease amounted to $2.26 per $100 of increased revenue.
• Subject to the corrections stated in footnotes on page 5 and page 52 (pages 64 and 90 of these Hearings).
omitting those expenses
A

94 RAILWAY MAIL PAY.
Looking at the problem from the point of view of railways revenues it is not sur-
prising, in view of the foregoing, to find that the transportation of the mails constitutes
the single exception to the rule that their gross receipts from different elements of
traffic have increased, albeit not in full proportion to the augmented volume of work
they have done, at least, with some rapidity. , Comparing the years 1909 and 1911,
and º express receipts for which official figures are not yet available, the figures
are as follows:

x q # Increase
Railway receipts from— * 1909 1911 (per
- $ cent). S
Freight"----------------------------------------------------- $1,677,614,678 $1,929,335,457 15.00
Passenger"---------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 563,609,342 658,772,786 16, 88
Mail”-------------------------------------------------------- 49,869,375 50,583,123 1.43
1 Data compiled by Interstate Commerce Commission.
2 As reported by the Postmaster General.
During the two years covered by the foregoing the receipts of the Post Office De-
partment increased, as already shown, 16.86 per cent and the operating expenses of
the railways of the United States increased from $1,599,443,410 to $1,935,511,581, or
21.01 per cent. y
The successive reports of the statistician to the Interstate Commerce Commission
show that the receipts of interstate railways from freight, passengers, express, and mail,
respectively, have been during each year from 1901 to 1911, inclusive, as shown on
page 57:
|
::
|
Freight. Passengers, Express. - Mail. … "
Year. - | Population. P / P Pé . Fer.
* er * - ©r - Of annº. 2 ºvºi."
- Amount. Capita. Amount. capita. Amount. capita. Amount.” capita.
1901---------------------------------------------------------- 77,612,569 $1,118,543,014 $14.41 $351,356,265. $4. 53 $31,121,613 $0.40 $38,453,602 * $0.50
1902---------------------------------------------------------- 79,230,563 1,207,228,845 15.24 || 392,963,248. 4.96 34,253,459 .43 39,835,844 , 50
1908--------------------- * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 80,848,557 | 1,338,020,026 16.55 421,704, 592 5. 22 38,331,964 .47 41,709,396 | . . . 52
1904-------------------------------- * * * * * * * * * * * * * * * * * * * * * * * * * * * 82,466, 551 | 1,379,002,693 16.72 || 444,326,991 |. 5. 39 41,875,636 .5l 44,499,732. .54
1905---------------------------------------------------------- 84,084,545 1,450,772,838 17.25 || 472,694,732 5, 62 45, 149, 155 .54 45,426, 125 .54
1906---------------------------------------------------------- 85,702,539 1,640,386,655 19. 14 || 510,032,583 5.95 51,010,930 , 60 47,371,453 .55
1907------------------------------------- - - - - - - - - - - - - - - - - - - - - - 87,320,533 | 1,823,651,998 20.88 564,606,343 6. 47 57,332,931 . 66 50,378,964 58
1908°-------------------------------------------------------- 88,938,527 | 1,655,419, 108 18.61 566,832,746 6,37 58,692,091 . 66 48,517,563 .55
1909°-------------------------------------------------------- 90,556,521 | 1,677,614,678 18, 53 || 563,609,342 6, 22 59,647,022 , 66 49,380,783 .55
1910°-------------------------------------------------------- 92,174,515 1,925,553,036 20.89 || 628,992,473 6.82 67,190,922 . 73 48,913,888 .53
1911 *-------------------------------------------------------- 93,792,509 | 1,929,335,457 20.57 || 658,772,786 7.02 --------------|----------|--------------|----------
\
1 Intercensal years estimated by the Census Office.
* The differences between these figures and those reported by the Postmaster Ceneral are due to the fact that the commission’s reports include interstate railways only.
* Switching and terminal companies not included.
96 RAILWAY MAIL PAY.
That the relatively slow expansion of mail receipts shown by these tables is the
result of reductions in the rates of pay and not of a slower rate of growth of mail busi-
ness is apparent from the following:

Increase
1901 1911 (per cent).
Freight, tons carried 1 mile: - '.
Number 1. . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 147,077, 136,040 255,016,910,451 73.39
Per capita of Pºon * * * * * * * * * * * * * * * * * * * * * * * * * * * 1,895 2,767 46.02
Passengers carried 1 mile: :
Number 1. - - - - - |----------- , me as a s = e s is sº sº as a º e s sº tº º ºs º ºs e º sº º 17,353,588,444 32,338,496,329 86.35
M fe Capita of population.--------------------------- 224 351 56.70
3.11. f
Pieces handled.------------------------------------- 27,424,390,329 || 8 16,900,552,138 || 127.64
Per capita of population. -------------------------- 96 161 67.71
I ºterstate Commerce Commission, Twenty-third Annual (1910) Report on the Statistics of Railways,
5 f
P. *Annual Report of the Postmaster General for the fiscal year 1910, p. 47.
3 Statistics published by the Third Assistant Postmaster General.
Figures showing the volume of express business in 1901 and 1911 are not available,
but as the amounts paid to the railways for the facilities with which they furnish
the express companies are proportioned to the receipts of the latter it . be con-
cluded that the growth in the railways’ revenues from express at least roughly meas-
ures the growth of this traffic. The last foregoing table shows that of the three services
included, the business of the mails has grown with far the greatest rapidity, yet by
the other tables it has been shown that the railways’ revenues from mail have increased
most slowly. -
Various elements have combined to produce this decline in the mail pay of the
railways, but in this statement reference will be made only to the more important
reductions that have taken place within the past five years. These are:
First. The natural operation of the law of 1873 by which the basis of mail pay is
fixed.
Second. The action of the Post Office Department in stimulating competition for
mail where its power to divert part of the movement from any route or routes could
be exercised for that purpose.
Third. The statutory reductions provided for in the appropriation act of March 2,
1907. -
Fourth. The reduction accomplished by including Sundays in the divisor used to
establish the average daily weight of the mails, in accordance with the executive
order known as Postmaster General’s Order No. 412 of June 7, 1907. n
Fifth. The withdrawal of all payments for special facilities, and,
Sixth. The withdrawal from the mails of stamped envelopes, postal cards, mail
bags, and postal equipment.
(B) REDUCTIONs DUE TO NATURAL OPERATION OF THE LAW OF 1873.
Pay for the services and facilities supplied by railways is now fixed by the law of
March 3, 1873 (17 Stat., 558), subject to the deductions provided for by the acts of
July 12, 1876 (19 Stat., 78); June 17, 1878 (20 Stat., 140); March 2, 1907 (34 Stat., 1212);
and May 12, 1910 (36 Stat., 362). The act of 1876 effected a reduction to 90 per cent
of the sums that would have been paid under the unmodified statute of 1873, and the
act of 1878 made a further reduction of 5 per cent. The reduction effected by the act
of 1907, as modified by that of 1910, will be discussed in a subsequent paragraph.
The constant reduction due to the normal operation of the law from 1873 to 1898 was
shown as one of the results of the investigations undertaken for the Joint Postal Com-
mission by Prof. Henry C. Adams. The figures show in ton-miles rate in the following
table are from his report.” 4.
1 Fifty-sixth Cong., Sen. Doc. No. 89, pt. 2, p. 253.
RAILWAY MAIL PAY. 97.
Railway mail Railway mail Railway mail
- pay perton per pay perton per pay per ton per
mile. mile. mile. ... **
Year. Year. Year. -
Per f . f . f
cent O CôIlt, O CéIlt, OH !
In cents. rate in In cents. rate in In cents. rate in a
1873. 1873. 1873.
1873------------------------- 26,420 100 || 1882. -- 17,886 68 || 1891...] 14,787 56
1874------------------------- 23,732 90 || 1883. -- 17,828 67 || 1892...] 14,453 55
1875------------------------- 23,866 90 || 1884...] 17,670 67 || 1893... 13,973 53
1876------------------------- 23,979 91 || 1885...] 17, 182 65 || 1894... 13,323 50
1877------------------------- 23,960 91 || 1886. . . 16,487 62 || 1895...] 13, 109 50
1878------------------------- 23, 167 88 || 1887...] 16,567 63 || 1896... 12,964 49
1879------------------------- 21,522 81 || 1888...] 16,268 62 || 1897. - 12,665 48
1880------------------------- 20,596 78 || 1889. . . 15,656 59 || 1898. --| 12,567
1881------------------------- 18,969 72 || 1890...] 14,968 57
Considerably less than one-third of the reduction of 52 per cent shown in the fore-
going table is to be attributed to the statutory changes of 1876 and 1878, the entire.
balance is attributable to the natural operation of the law. From -1879 to 1898, 19
years, during which there were no changes in the law, the average rate per ton per
mile declined from 21.522 cents to 12.567 cents or 41.61 per cent. This diminishing
effect of the law of 1873 upon the rates of railway mail pay is due to the fact that it
fixes the rates on a sliding scale by which they automatically decrease as the volume
of the mail increases and so, on every route, constantly approach toward the statutory.
minimum. The Post Office Department has unfortunately failed to continue the
tabulations showing the rates paid per ton per mile for railway mail facilities, begun
by the Joint Postal Commission, and it may still be said, as was said by Prof. Adams
in 1900:
“The Post Office Department has been at considerable expense and trouble to
determine the aggregate tonnage of mail matter, but has never thought it of advan-
tage to compute the ton mileage of mail carried. ... This is a little strange, because not
only isºton mileage the only true measure of traffic, but it is the unit of traffic made.
the basis of compensation under the law of 1873.” (Prof. Henry C. Adams, Report
to the Joint Postal Commission, 56th Cong., S. Doc. No. 89, pt. 2, p. 208.) s
Although statistics measuring the reduction since 1898 due to this automatic action
of the law fixing railway mail pay do not exist, there can be no intelligent denial
of the fact that the law still operates and will continue, as long as it stands unrepealed,
to º; in this way. Had there been no other changes its operation would un-
doubtedly have produced a material reduction in the average rate of payment per
ton per mile from 1898 to the present time and such a reduction has actually taken:
place and is a part of the notable decline already evidenced herein. -
(c) EFFECT OF COMPETITION STIMULATED BY POST OFFICE DEPARTMENT.
Although the rates of pay fixed by the present law are in many instances far below
the level of just compensation and there are few, if any, separate routes on which
they are fully remunerative, the method of calculation provided in the statute so
operates that wherever a railway mail route exists and carries any mail it becomes
desirable for the railway operating it, from the point of view of its mail revenue, to
Secure for that route the greatest possible volume of mail. During recent years the
Post Office Department has seized upon the potential advantage springing from this.
condition and has pressed it vigorously and effectively in its negotiations with the
railways. The existence and nature of this advantage were concisely stated by Post-
master General von Meyer in his annual report for the year 1907, as follows:
“Where through mails are concerned, the department often has the choice of com-
peting routes. A competing route may be shorter than another, it may be more
economical by reason of being a land-grant route, or it may perform important ter-
minal or transfer functions which must otherwise be provided for by the department.
* * * Where the department has the opportunity of dispatching mails by com-
peting routes, one of which is shorter or otherwise less expensive than the other, it:
appears to be but just, to the Government, when such mails are allowed to remain
with the longer or more expensive route, to reduce the compensation paid therefor
by the amount which the Government would save if the mails in question were dis-
patched by the shorter or less expensive route.
98.
RAILWAY MAIL PAY,
“Accordingly the policy has been inaugurated of effecting such a saving in cases
of this character arising at the beginning of a contract term, and has been applied in
some prominent instances in the readjustments in the third contract section.” (Post-
master General’s Annual Report for 1907, p. 24.)
This º to which no exception is here taken, has been continued and the extent
in which it has been effective, up to the present time, in reducing railway mail pay
Imay be traced, at least in part, in the successive annual reports of the department.
The annual reports of the §: Assistant Postmaster General for 1908, 1909, 1910,
and 1911 contain figures which show that the reduction in annual railway mail pay
accomplished by this means amounts, at present, to not less than $174,544.51. It is
not probable that this policy of the department will be abandoned or that its possi-
bilities have been wholly exhausted.
(D) REDUCTIONS MADE BY THE ACT of MARCH 2, 1907.
The postal appropriation act of March 2, 1907, provided for a reduction, beginning
with July 1, 1907, of 5 per cent in the pay for all railway routes on which the average
daily weight ascertained at the weighing period was over 5,000 and not to exceed
48,000 pounds and on the excess over 5,000 pounds up to 48,000 pounds on routes
having more than 48,000 pounds average daily weight. For the excess over 48,000
pounds the act provided that land-grant roads should be paid at the rate of $17.10 per
mile for each 2,000 pounds of such excess and other roads at the rate of $19.24 per mile.
By a subsequent act (approved May 12, 1910, 36 Stat. 362), the rate of $17.10 for land-
nt roads, was further reduced, the reduction to take effect on July 1, 1910, to $15.39
reach 2,000 pounds in excess of 48,000 pounds. The rates thus specified are 90 per
cent of those previously in force and hence the reduction on this portion of the weight
carried on the heavy routes was at the rate of 10 per cent. The act of March 2, 1907,
also reduced the rates of payment per mile per annum for postal cars 45 feet long or
longer (cars or compartments less than 40 feet long are not paid for) as follows:
Reduc-
Former | Reduced ; , ;
Length of Car. rate. rate. tion (per
cent).
45 feet-------------------------------------------------------------------- $30.00 $27.50 8, 33
50 feet-------------------------------------------------------------------- 40.00 32.50 |. 18, 75
55 feet or longer---------------------------------------------------------- 50.00 40, 00 20.00
The Post Office Department has stated the annual amount of these reductions, not
including the change made by the amendment of May 12, 1910, affecting the land-
; routes, and on the basis of the weighings of the years 1904–1907, inclusive, as

ollows:
[Annual Report of the Second Assistant Postmaster General for 1907, p. 140; same for 1908, p. 154.]
Reduction Red º ti
In pay com- (201tiCl, IOIl º
Weighing section. puted on in pay for Totº ºue
weight of postal cars, *
mails.
First.-------------------------------------------------------- $547,909.01 || $239,670.49 || $787,579.50
Second------------------------------------------------------. 70, 192.45 85, 196.86 155,389.31
hird-------------------------------------------------------- 759, 145.88 442,755.76 1,201,901. 64
Fourth------------------------------------------------------- 363,247.29 168,350.98 531,598.27
Total.------------------------------------------------- 1, 740,494.63 935,974.09 2,676,468. 72
Doubtless the foregoing figures are smaller, as to each section and as to the aggre-
gate, than those which would represent the effect of the same law calculated upon
the weighings of the years 1908–1911 and representing the rates of payment now In
force, but the Post Office Department has either failed to make these calculations
1 For all the information on this subject that has been made public see the Annual Reports of the Second
*. rºaster General as follows: 1907, p. 143; 1908, p. 156; 1909, p. 141; 1910, p. 131; 1911 (pamphlet
print), pp. 9-11.
TAILWAY MAIL PAY. 99
or has seen fit not to make their results public. It has stated, however, that the
amendment of May 12, 1910, to the act of March 2, 1907, when applied to the weigh-
ings in force on July 1, 1910, when it became effective, resulted in a further reduc-
tion of $47,190.18.1. Adding the last-named sum to the,total of $1,740,494.63, repre-
senting the reduction in transportation pay, as distinguished from pay for railway
post office cars shown in the table, gives $1,787,684.81, which, in the absence of later
and more complete information, and with the observation that it is unquestionably
too low, must be accepted as the nearest approximation of the actual reduction in
transportation pay alone effected by the act of March 2, 1907, as amended on May 12,
1910, which has the sanction of officially published figures. Railway mail pay for
transportation in 1911 was fixed, subject to certain deductions, at the annual rate of
$46,172,472.93. The reduction of $1,787,684.81, now under consideration, amounted,
therefore, to 3.87 per cent of the annual rate of pay computed on average daily weight
of the mails. The annual rate of pay for postal cars at the close of the fiscal year
1911 was $4,737,788.75 and on this basis the department's statement of the reduction
in postal-car pay, $935,974.09, amounts to 19.76 per cent.
(E) REDUCTION BY ADMINISTRATIVE ORDER.
It is well known that the réduction imposed by the act of March 2, 1907, was adopted
as a substitute for the reduction which would have resulted had Congress, by its
statutory enactment, required the whole number of days of the weighing period
(including Sundays), instead of the number of week days or “working days’ in that
; to be used as the divisor in determining the average daily weight fixing the
asis of payment for each railway route. . Both proposals were submitted to Congress,
both were fully considered, and throughout this consideration they were regarded
as alternatives; it was never by any one contemplated or suggested that more than
one of them should be adopted. After full consideration Congress adopted the former
alternative and rejected #. latter. Notwithstanding this decision of Congress, the
Postmaster General then in office, on the very day that the alternative reduction
received the signature of the President—that is to say, on March 2, 1907—but not until
the legislative act had passed beyond the control of Congress, entered an order, known
as “Order No. 165,” which read as follows:
“That when the weight of mail is taken on railroad routes, the whole number of
ºthe mails are weighed shall be used as a divisor for obtaining the average weight
er day.”
p #. months later, another Postmaster General having come into office, the fore-
going was rescinded and the following substituted:
“That when the weight of mail is taken on railroad routes the whole number of
days included in the weighing period shall be used as a divisor for obtaining the
average weight per day.” -
Explaining his action in substituting order No. 412 for order No. 165, Postmaster
General Meyer said of the earlier order:
“Its enforcement according to its terms would have worked an injustice to those
mail routes which afford the most efficient Service; that is to say, those lines which
carry the mails seven days in every week should receive less compensation for trans-
porting the same amount of mail than would those which give a service of only six
days in each week. In order to correct this defect, I issued order No. 412, dated
June 7, 1907, * * *” (Postmaster General’s Annual Report for 1907, p. 28.)
The difference between order No. 165 and order No. 412 is that the former would
have reduced the mail pay of those routes only which had seven-day service, while
the latter reduces the pay of all routes whether they have service seven days per week,
or six days, or a still smaller number of days each week. It is a little difficult to com-
prehend how an injustice to some routes arising from a reduction in their pay could be
remedied by reducing the pay on some other routes, and the difficulty is enhanced
when it is realized that in many cases both seven-day and six-day (or less) routes are
operated by the same railways and the pay for facilities on those of both classes goes
in effect into the same pocket.
This is not the place in which to discuss the propriety, the legality, or the wisdom
of the change effected in 1907 by Executive order, but attention may properly be di-
rected at this time to the indisputable fact that had Congress been advised of the pur-
pose of the Postmaster General to issue an order increasing the number of days taken
as the divisor, the statutory reductions of March 2, 1907, would not have been adopted:
But reversing the declared purpose of Congress, the administrative order changing
the divisor was issued and has been enforced, and this report is concerned with it no

i Annual Report of the Second Assistant Postmaster General for 1910, p. 131.
100 RAILWAY MAIL PAY.
further at present than to ascertain, as nearly as may be, how much it has reduced
the mail revenues of the railways. The following official estimates are from the
Annual Report of the Second Assistant Postmaster General for the year 1910:
—t—
—w

Date Order ** i
MYai crlai * K.º- || Reduction
Weighing section. dańe fººt. in annual
ive rate of pay.
*irst.----------------------------------------------------- ------------------ July 1, 1909 $1,100,951.44
Second---------------------------------------------------. * * * * * * * * * * * * * * * * * * July 1, 1908 434,730.82
Third----------------------------------------------------------------------- July 1, 1907 | 1,787,378.10
Fourth.--------------------------------------. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - July 1, 1910 | 1,618,879.98
Total.------------------------------------------------------------------------------ ..] 4,941,940.34
There has been a later weighing than that represented above in one section, the
third, and it is probable that, as the normal increase in weights from weighing to
weighing tends to increase the amount representing any such change, the figures as to
that section are, at present, somewhat too low, but data for their correction are not
available.
Thus both, instead of one, of these heavy reductions were made, and instead of the
congressional determination to reduce the railway pay only $2,723,658.90, as com-
pared with $4,941,940.34, had the effect of combining both and reducing the pay
$7,665,599.24 or nearly three times the amount which Congress determined was an
adequate reduction, or based upon the total of transportation and railway post-office
car pay for 1911, $50,099,537.02, 15.30 per cent.
(F) WITHDRAWAL OF PAYMENTS FOR SPECIAL FACILITIES.
From a date Soon after the 10 per cent statutory reduction in the rates of mail pay
effected by the act of July 12, 1876 (19 Stat., 78), the Post Office Department, under
authority obtained from Congress, instituted a system of special additional payments
for extra or expedited train service upon railway routes on which the statutory pay-
ments would have been insufficient to secure the quality of service regarded as desirable
by the Postmaster General. By the year 1901 the number of routes to which extra
Fº of this character were accorded, as well as the annual sum so expended,
ad been considerably reduced and on July 1, 1907, the last of these allowances was
discontinued. The additional facilities and expedited services obtained in considera-
tion of these payments have not, however, been withdrawn or diminished. The an-
...i. of payment of this character for the fiscal years 1901 to 1907, inclusive, were
3.S TOIIOWS. -
*. *
|Fiscal year— sº i.
way facilities.
1901--------------------------------------------------------------------------------------- $195,682.50
1902--------------------------------------------------------------------------------------- 195,636.25
1903--------------------------------------------------------------------------------------- 167, 175.00
1904--------------------------------------------------------------------------------------- 167,175.00
1905--------------------------------------------------------------------------------------- 167, 175.00
1906----------------------------------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 167,005.00
1907--------------------------------------------------------------------------------- ------ 167,005.00
... The rate for 1907 will be accepted, for the purposes of this report, as measuring
the present reduction due to the cessation of these payments. • -
(G) WITHDRAWAL OF ENVELOPES, POSTAL CARDS, AND MAIL EQUIPMENT FROM MAILS.

Congress has, by legislation on successive appropriation acts, provided the Post-
master General with funds for the payment of freight or express charges on postal
cards, stamped envelopes, newspaper wrappers, empty mail bags, furniture, equip-
ment, and other mail supplies for the postal service, except postage stamps, and has
directed the withdrawal of such articles from the mails, wherever practicable, dur-
ing and after the weighing period. This withdrawal has, of course, decreased the
RAILWAY MAIL PAY. 101
weight at the successive weighing periods and, therefore, diminished the pay for
mail transportation. It was completed for the whole country with the weighing
in 1910 in the fourth weighing section. Unlike all the other reductions herein
referred to, this one does involve a reduction in service as well as in payments. The
Second Assistant Postmaster General has stated that it is impossible accurately to
estimate the reduction in railway-mail pay due to these withdrawals,” and for the
purposes of this brief there will be substituted for such an estimate the sum which
the department has asked to have appropriated to pay, during the fiscal year 1913,
freight and expressage on the articles so withdrawn. This sum is $525,000,” and
to use it is to place the reduction at the lowest conceivable minimum.
(H) ForwarDING PERIODICALS BY FREIGHT.
Incidentally mention may be made of the recent action of the Postmaster General
in withdrawing certain periodicals from the mails and substituting freight Service
for that formerly given on passenger trains.” This action has resulted in a large
reduction in gross revenue to the railways with little or no opportunity for reduction
in the cost of their operations.
(1) sum MARY OF RECENT REDUCTIONS.
This report has now reached the point at which a summary of the recent reductions
should be presented. No attempt has been made or will be made to estimate in
dollars and cents the effect of the natural decrease of the rate per ton per mile for
the services rendered which, as has been shown, must result from the normal opera-
tion of the system of payment inaugurated by the law of 1873. Approximations of
the effect of the other changes, all of them doubtless too low, have been given and
are repeated, as follows:
* Amount of
Cause of reduction. reduction.
Natural operation of law of 1873. -------------............................................. No estimate.
Competition stimulated by Post Office Department. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $174,544.51
Act of Mar. 2, 1907, and amendment of May 12, 1910. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,723,658.90
fostmaster Generg's divisor order................I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I. 4,941,940.34
Withdrawal of pay for special facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .---------- 3 ****
Withdrawal of mail supplies from mails. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525,000.00
Total (With no allowance for the first item above). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 532,148.75
Therefore, with no allowance for the natural downward tendency due to the slid-
ing scale of payment so wisely provided for in 1873, the mail pay of the railways in
1911 was at least $8,532,148.75 less than it would have been #: the laws and prac-
tices in vogue prior to 1907. Compared with transportation pay of $46,172,472.93,
this reduction amounts to 18.48 per cent, and on the basis of $50,099,537.02, the sum
which includes both the transportation pay and railway post office car pay of 1911,
it amounts to 17.03 per cent.
A method of estimating the contribution of the railways to the reduction of the
postal deficit which is at once more simple and more comprehensive and more ade-
quate is by ascertaining what the railway mail pay of 1911 would have been had it
continued to absorb, as it did in 1901—that is but I0 years earlier—$34.18 per $100 of
postal receipts (see table on p. 52). Postal receipts in 1901 aggregated $237,879,823,
and, as already shown, even with the enormous increase in business of the decade
1901–1911, expenses for other purposes than railway mail pay increased proportion-
ately faster than receipts, so that in 1911 these expenses consumed $79 for each $100
of receipts, as against but $69.33 in 1901. Fortunately for the Post Office Department,
railway mail pay moved in the opposite direction. Had it merely remained station-
ary in its relation to receipts, the mail pay of 1911 would have been $81,307,323, or
$30,724,200 more than it actually was. The postal deficit never amounted to more
than twenty-one or twenty-two millions, and the Post Office Department never admit-
ted as much as eighteen millions.
1 Annual Report of the Second Assistant Postmaster General for 1910, p. 145.
2 Annual Report for 1910, p. 130.
* Annual Report of the Second Assistant Postmaster General for 1911, p. 6.
* This change is described by the Postmaster General in his Report for 1911 (H. Doc. No. 559, 62d Cong.,
É. º and, more fully, by the Second Assistant Postmaster General on pp. 21 to 23 of his Annual Report
or the same year.
102 \ RAILWAY MAIL PAY.
The table next to follow merits more than ordinary attention. It serves, at once
to illustrate with marked clearness, first, the reductions in railway mail pay, exclusive
of payments on account of postal cars, due to (a) the change in the divisor and (b)
the statutory reductions of March 2, 1907, and May 12, 1910, and, second, the reduc-
tions which, without any changes in the law or in the method of its application, result
from the progressively decreasing sliding scale of payment. This natural downward
movement is illustrated both with reference to the old divisor and rates and with
regard to the rates and the divisor now in force. In considering the table it is neces-
sary to remember that the principle of adjustment crystallized in the law of 1873
has never been modified although the rates have been several times reduced, the
application of the sliding scale of payment has been extended, and the method of
applying the law has been changed so as to produce a further reduction. This principle
of progressive reduction with augmented volume of service was applied at the outset,
.# is still applied, by means of naming a series of specific rates for a series of specific
services, º successive rate showing a lower average per unit of service than the rate
named for the next lower volume of service that is specified. After the maximum
service so specified is attained the law further specifies a still lower rate to be applied
to each additional 2,000 pounds in the average weight carried daily over the entire
route. It is obvious that under this plan increasing service produces a progressive
lowering of the average rate and that the limit of this downward movement is fixed
by the rate applied to the final increment. Originally this final rate was applied to
each 2,000 pounds in excess of 5,000 pounds of average daily weight but since July
1, 1907, under the law of March 2, of that year, a further reduction has been applied
to the excess over 48,000 pounds of daily weight. . Beginning in 1876 (act of July 12,
1876), routes or parts of routes, the construction of which was aided by congressional
grants of land, have received but 80 per cent of the amounts paid for the same services
when rendered by other routes. Prior to July 1, 1907, the rate for each 2,000 pounds
in excess of 5,000 pounds was $21.37 per mile per annum, or 6.827 cents per ton per
mile for other than land-grant routes and $17.10 per mile per annum or 5.463 cents
per ton per mile for land-grant routes.
The present rates on the excess over 5,000 pounds, up to a total of 48,000 pounds,
are 5 per cent lower; that is to say, $20.30 per mile per annum or 5.562 cents per ton
per mile for other than land-grant routes or $16.24 per mile per annum or 4.451 per
ton per mile for land-grant routes. Beyond 48,000 pounds the act of March 2, 1907,
now in force, provides rates of $19.24 per mile per annum or 5.271 cents per ton per
mile for each increment of 2,000 pounds for other than land-grant routes and, as
modified by the amendment of May 12, 1910, $15.39 per mile per annum or 4.216
cents per ton per mile for land-grant routes. In calculating the averages per ton
per mile stated in this paragraph proper allowance has been made for the fact that
under the Postmaster General's Order No. 412, the divisor order, a route has annually
to carry an average of 365 tons per mile of its length to obtain an average daily weight
of 2,000 pounds while prior to 1907 the same average daily weight represented an aver-
age annual Service of 313 tons per mile of route. The reduction thus applied to.the
excess over 48,000 pounds average daily weight, as indicated by these average rates
per ton per mile, amounts to 22.79 per cent for other than land-grant routes and to
22.83 per cent for land-grant routes.
RAILWAY MAIL PAY.
103
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RAILWAY MAIL PAY. 105
An important consequence of this scheme of payment is that of itself it should
enable the Post Office Department to show a decreasing ratio of expenses to receipts
resulting from the progressive expansion in the volume of the mails. Postage rates
have not been diminished as postal business has increased, and hence the average
receipts of the postal service per unit of business have remained constant, while the
plan of payment for railway transportation, as has been seen, º: a steadily de-
creasing expense per unit for the element of cost represented by railway facilities
and services.
An understanding of the manner in which the rates are applied is also necessary to
a complete comprehension of the table. Thus the minimum rates nominally applica-
ble to an average daily weight of 200 pounds are in practice applied whenever the
average is 211 pounds or less, because no account is taken of an increment of weight
that would not have been sufficient before the reductions of 1876 and 1878 to warrant
an additional payment of $1. At present this minimum rate (for other than land-
grant routes) is $42.75, and the additional sum of 85.5 cents is paid for each 12 pounds
above 200 pounds of average daily weight up to 500 pounds, when another rate is
applied, but nothing is paid for any fraction of 12 pounds. Under this system the
rate for 211 pounds average daily weight is $42.75, while for 212 pounds it is $43.60.
In the same manner the 500 pounds rate is extended to apply to 519 pounds, the
1,000 pounds rate to 1,019 pounds, the 1,500 pounds rate to 1,519 pounds, the 2,000
pounds rate to 2,059 pounds, the 3,500 pounds räte to 3,559 pounds, the 5,000 pounds
rate to 5,079 pounds, the 48,000 pounds rate to 48,103.95 pounds. It is this plan of
applying the rates which produces the notable fluctuations in the percentages of
reductions as disclosed in the upper half of the last column.
The headings in the table referred to indicate, the significance of the figures it con-
tains, but they deserve all the emphasis that can be given. Each horizontal line in
the table represents the results accruing, or that formerly would have accrued, to a
railway route for an actual service measured, so far as these postal services can be
measured in terms of weight and distance, by the figure at the extreme left of that
line in the first column. Thus, the last line represents an annual service equivalent
to carrying 86,075 tons over each mile of a particular route. Prior to July 1, 1907,
the effective date of Postmaster General’s Order No. 412, this volume of service would
have resulted in stating the average daily weight on which payment is calculated as
550,000 pounds; now it 5. an average daily weight one-seventh less, or 471,429
pounds. This change in the method of applying the statute alone and had there been
no other change adverse to the railways affected would have reduced the pay of a
route having this volume of service no less than $839.61 for each mile of its length.
But there have been additional reductions, so that it appears that if this volume of
mail is now carried on other than a land-grant route the annual pay per mile is $4,679.81,
or $1,315.45 less than $5,995.26, which would have been the rate prior to July 1, 1907.
This is a reduction of 21.94 per cent, as stated in the last column at the right of this
line. Similarly, if the route were a land-grant route its pay would have been $4,796.20
per mile prior to July 1, 1907, and now would be $3,743.03 per mile, also a reduction
of 21.94 per cent, Prior to July 1, 1907, the pay of this route, if not a land-grant
route, would have been at the rate of 6.965 cents per ton per mile; it would now be ät
the rate of 5.437 cents per ton per mile. The corresponding ton-mile rates for land-
grant routes are 5.572 cents and 4.349 cents, respectively.

106
RAILWAY MAIL PAY.
NUMBER of Tons
CARRIED ONE NALE
AVERAGE RATE PER TON PER MILE IN CENTs
PER NAll E OF ROUT E.

j/.5
53.02,
38,499
46s.5 °
62.6
78.25
8/334
939.
S4682
, O955
/ 232
/ 4085
f j65
/ 59,546
/ 88025
/ S5625
25475
257.65
273875
2775
3/ 5
Jº22
S7585
39ſ 25
4695Q.
54775
556895
6.25
64S788
78.25
794864
927.4/S
93S
1 O955
f 252
/ 408.5
/565.
25475
5/56.
39/25
4695,
5,4775
626O.
7O425
7528/2
7825.
878276
// 7375
/5650
/ S5625
*J473
J / SOO.
JS/25
4695O.
54775
626.O.O.
70423.
78.25 O.
86O75.
2O * - C º
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-
RAILWAY MAIL PAY. 107
These average ton-mile rates deserve especial attention. Considering the fifth
column from the right, which contains the standard rates now in force, it shows that for
the lowest weight stated the rate is considerably over $1 per ton per mile and that the
subsequent decrease in the average is very rapid until it approaches the lower end
of the column when, although the decrease continues, the rate of decrease is more
moderate. Of course, the highest rates are in recognition of the character and cost of
service on routes having very small quantities of mail and represent a small aggregate
of railway mail pay and a relatively meager portion of the total paid to the railways for
mail services and facilities. The average daily weight tends on all routes, or at least
on nearly all routes, to become greater as an incident to the development of the country,
its growth in population, industry, and wealth, and the progressive increase in the
utilization of postal facilities. Hence, in the normal course, every route tends to
pass from a class having higher pay per ton mile to a class having lower pay and to
continue downward, each route thus constantly approaching the minimum, although
the rate of approach varies greatly with different routes. Commenting upon this
fact in his report to the joint postal commission in 1900, Prof. Henry C. Adams as-
signed it as ground for the assertion that “the law of 1873 is drawn in harmony with the
fundamental law of transportation” which, he declared, is that “a reduction in rates
is a normal result of an extension of traffic” and, he said, “justifies a relatively more
rapid reduction in the rate per ton jº. mile for a route whose traffic increases, let us
say, from 50 pounds to 1,000 pounds daily, than for a route whose traffic increases
from 5,000 pounds to 10,000, or 50,000 to 100,000 pounds.” " ©º
The percentages of reduction in the last column of the table are very significant.
Those corresponding to annual service of less than to 939 tons per average mile of route
represent reductions effected by means of Order No. 412, only, for below this volume
of service the statutory change of 1907 had no effect. The curious fluctuations in
the percentages of the reductions so produced, ranging from 3.85 per cent to 10 per
cent, and the highest º representing a smaller volume of service than the
lowest percentage, indicate the complicated nature of the change, apparently so
simple, brought about by, that order. Beyond 939 tons the percentages, progress
steadily until they reach the maximum, 21.94 per cent, in the last line, which rep-
resents the heaviest mail movement.
The figures in the last foregoing table are general in their significance. The table
which follows shows precisely what has happened to particular routes, taking for
illustrative purposes, those routes, with a few exceptions, on which mail was weighed
in the years 1910 or 1911 and having, under the present mode of calculation, an average
daily weight in excess of 20,000 pounds. All routes of this class are included except
a few having lap Service or in which other extraordinary conditions might have been
thought to impair the value of the comparisons.
| Fifty-sixth Cong., Doc. No. 89, pt. 2, pp. 204–205.
|-4.
.
º
—7–
- Transportation -
Average daily * Transportation pay for route per
pay per mile per
weight. 3IIIlúIſl. , 311D1UIII.1.
Length As h #
Route & is º ength, WOUI WO -
No. Termini. Railroad. in .#. have have As it would | Re-
Under been Now been * have been duc-
Order | prior to in prior to Now in force. prior to July 1, tion
^ No. 412. July 1, force. July 1, 1907, for same per
1907, for 1907, for Service. Cent
* SøIſle S3LT16 *
Service. Service,
176022 || Davis; Tehama, Cal.................. Southern Pacific Co... . . . . . . . . . . . . . . . . 111.83 20,465 23,876 |$327.76 $371.92 $36,653. 40 $41,591.81 11.87
145018 Burlington, Iowa; St. Louis, Mo..... Chicago, Burlington & Quincy R. R. . . 216.91 20,921 24,408 || 332.63 377.91 72, 150.77 81,972.46 11.98
131023 Toledo; Cincinnati, Ohio.... --------. Cincinnati, Hamilton & Dayton Ry---| 202.30 21,095 24,611 || 334.26 380. 47 67,620.79 76,969.08 || 12.15
131024 Hamilton, Ohio; Indianapolis, Ind. . . . . . . . do--------------- - - - - - - - - - - - - - - - - - 98.99 21,135 | 24,657 334.26 380. 47 33,088.39 37,662.73 || 12.15
163014 || Miles City, Mont.; Spokane, Wash...] Northern Pacific Ry. . . . . . . . . . . . . . . . . . 762. 32 21, 505 25,089 270.65 308. 48 206,321.90 . 235,160.47 | 12.25
173001 || Portland; Ashland, Oreg. ...... ------ Southern Pacific Co. . . . . . . . . . . . . . . . . . . 342.71 21,735. 25,357 340.71 388. 17 116,764.72 133,029.74 12.23
131005 || Cleveland, Ohio; Leavittsburg, Ohio. Erie R. R. . . . . . . . . . . * - - - - - - - - - - - - - - - - 49.39 21,758 5,384 340.76 388. 17 16,830. 13 19, 171.72 12.21
131047 | Chicago, Öhio, Chicago, Ill. - - - - - - - - - - Baltimore & Ohio R. R. . . . . . . . . . . . . . . 278. 61 21,821 25,458 || 341. 57 389.02 95, 164.81 108,384.86 || 12.20
155001 || Kansas City, Mo.; Denver, Colo. . . . . . Union Pacific R. R. . . . . . . . . . . . . . . . . . . 639.76 21,920 25, 573 || 342.38 390. 73 219,041.02 249,973. 12. 37
141058 St. Paul, Minn.; Hankinson, N. Dak. Mºgº, St. Paul & Sault Ste. 217.09 21,950 25,608 || 336.05 390. 73 72,952.22 84, 823 14.00
arle Ry. -
171010 || Blaine; Seattle, Wash. . . . . . . . . . . . . . . . Great Northern Ry. . . . . . . . . . . . . . . . . . . 119.51 23,123 26,977 || 354.56 405.27 42,373.46 48,433.82 | 12.51
135.136 || Bernice; Colehour, Ill............. --. Pennsylvania Co--------------------.. 9. 16 23,831 27,803 || 361.87 414.67 3,314.72 3,798.38 12.73
131028 Fºsburg, W. Va.; Cincinnati, Baltimore & Ohio Southwestern R. R. 195.25 24,854 28,996 || 372.43 426.64 72,716.95 83,301.46 12.71
O. - -
133038 Indianapolis; Monon, Ind - - - - - - - - - - - - Chicago, Indianapolis & Louisville Ry. 95.34 24,915 29,067 || 372.43 427, 50 35,507.47 40,757.85 12.88
131045 || Toledo, Ohio; Elkhart, Ind. . . . . . . . . . Lake Shore & Michigan Southern Ry. - 142.44 25, 122 29,309 || 374.87 430.06 53,396.48 61.257.75 12.83
150007 || Longview; San Antonio, Tex.......... International & Great Northern R. R. 342.06 27,344 31,901 || 397.61 458. 28 136,006.47 156,759.26 || 13.24
176053 Barstow; Los Angeles, Čai. : - - - - - - - - tohison, Topeka & Santa Fe Ry. . . . . 141.23 27,494 32,076 399.24 459.99 56,384.66 64,964.39 13.21
176014 || Los Angeles, Cal.; Yuma, Ariz. . . . . . . Southern Pacific Co. -- - - - - - - - - - - - - - - - - 251.68 28, 120 32,807 324.59 374. 14 81,692.81 94, 163.56 || 13.24
161013 | Fargo, N. Dak.; Miles City, Mont----- Northern Pacific Co- - - - - - -... - - - - - - - - - - - - 495.33 28,831 33,636 || 329.79 380.98 163,354.88 188,710.82 | 13.44
135010 || Galesburg; Quincy, Ill. ... . . . . . . . . . . . Chicago, Burlington & Quincy R. R... 99.76 29,568 34,496 || 420.36 485. 41,935. 11 48,447.45 13.44
150009 || Texarkana, Ark.; Fort Worth, Tex - - -] Texas & Pacific Ry. . . . . . ..- - - - - - - - - - - - 246. 10 29,935 34,924 .423.60 490.77 104,247.96 120,778.50 13.69
157002 || Omaha, Nebr.; Denver, Colo. . . . . . . . . Chicago, Burlington & Quincy R. R...] 537.37 30,252 35,294 || 426.85 494. 19 229,376.38 265, 562. 13.63
167014 | El Paso, Tex.;_Carrizozo, N. Mex..... El Paso & Southwestern Co. . . . . . . . . . . 145.43 30,918 36,071 430.79 502. 74 62,649.17 73, 113.48 14.31
168001 | Yuma, Ariz.: El Paso, Tex----------- Southern Pacific Co. . . . . -------------- 564. 29 31, 183 36,380 || 434.04 506. 16 244,922.67 285,621.03 || 14.25
133010 | Cincinnati, Ohio; East St. Louis, Ill...] Baltimore & Ohio Southwestern R. R. 335.66 31,357 36, 583 || 438.23 507. 87 147,096.28 170,471.64 13.71
167021 | Santa Rosa; Carrizozo, N. Mex........ El Paso & Southwestern Co. ". . . . . . . . . 128.48 31, 738 37,028 439.72 513.00 56,494.71 65,910.24 || 14.29
167029 | Tucumcari; Santa Rosa, N. Mex.----. Chicago, Rock Island & El Paso Ry... 59. 37 32,287 37,668 445.30 519.84 26,437.66 30,862.90 14.34
176042 | Barstow: Needles, Cal.......: .... ... - Atchison, Topeka & Santa Fe Ry..... 169. 07 32,444 37,851 || 359.68 417.24 60,811.09 0,542.77 13.80
131016 || Galion, Ohio; Granite City, Ill. . . . . . . . Cºg Cincinnati, Chicago & St. 448.05 32, 502 37,919 || 449.60 522.40 201,443.28 234,061.32 13.94
OulS E&y. . . . . .
133012 Pºlº º: & N. Depot); Terre | Chicago & Eastern Illinois R. R....... 110.94 32,844 38,318 453.66 526.68 50,329.04 58,429.88
aute, - * - -


#
16703
1500.95
1350.17
173003
165006
135042
145004
0002 |Pocatello, Idaho; Hunti
, Toledo, Ohio; Granite C
Chicago,
17
131019
131013
1630.30
161001
176001
131014
131011
145043
157001
141013
131015
139002
131002
133002
135007
135035
131095
Isleta, N. Mex; Needles, Cal....... s
Texhoma, Okla.; State line between
Texas and New Mexico.
Chicago; East St. Louis, Ill.----------
Huntington; Portland, Oreg. . . . . . . . .
La Junta, Colo.; Albuquerque, N.
Mex.
Chicago, Ill.; Terre Haute; Ind........
St. Louis; Kansas City, Mo...........
On, Oreg...
ty, Ill.......
Ill.; Milwaukee, Wis. . . . . . . .
Granger, Wyo.; Pocatello, Idaho. . . . .
Spokane; Everett, Wash. . . . . . . . . . . . .
Chicago, Ill.; Kansas City, Mo........
Chicago, Ill.; Davenport
Fargo, N. Dak.; Havre,
Willows; Madison Tower, Ill. . . . . . . . .
Cº (Park Row Station); Carbon-
dale, Ill.
Cleveland; Cincinnati, Ohio..........
Havre, Mont.; Spokane, Wash. . . . . . .
Casselton; Devils Lake, N. Dak. . . . . .
San Francisco (Ferry Station), Cal.;
Ogden, Utah.
Columbus; Cincinnati, Ohio..........
Xenia; New Paris, Ohio. . . . . . . . . . . . . .
St. Louis (Union Station), Mo.; Gran-
ite City, Ill.
º,Pacífic Transfer, Iowa; Ogden,
tah.
Minneapolis, Minn.; La Crosse, Wis. .
Columbus, Öhio, Indianapolis, Ind...
Milwaukee; La Crosse, Wis... . . . . . . . .
Pittsburgh, Pa.; Chicago, Ill.........
Indianapolis, Ind., East St. Louis, Ill.
Chicago, Ill.; Burlington, Iowa. . . . . . .
Chicago, Ill.; Milwaukee, Wis........
Buffalo, N. Y. Chicago, Ill...........
Atchison, § & Santa Fe Ry.....
Chicago, Rock Island & Gulf Ry......
Chicago & Alton R. R................
Oregon R. R. & Navigation Co.........
Atchison, Topeka & Santa Fe Ry......
* * * * * * *s s = - - - - - - - - - - - - - sº º is
• as as sº as a s e s = * * * * * * * * * * * * * * *
s = * - - - - - - - - - - - - * * * *
Atchison, Topeka & Santa Fe Ry......
Chicago, Rock Island & Pacific Ry....
Great Northern Ry------------------.
Vandalia R. R. . . . . . . . . . . . . . . . . . . . . . . .
Illinois Central R. R. . . . . . . . . . . . . . . . . .
Cleveland, Cincinnati, Chicago & St.
Louis Ry.
Great Northern Ry. . . . . . . . . . . . . . . . . . .
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Pittsburgh, Cincinnati, Chicago & St.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Chicago, Milwaukee & St. Paul Ry..
Pittsburgh, Cincinnati, Chicago & §.
Louis Ry,
Chicago, Milwaukee & St. Paul Ry..
Pennsylvania Co......................
Vandalia Ry-----....................
Chicago, Burlington & Quincy Ry..
Chicago, Milwaukee & St. Paul Ry..
Lake Shore & Michigan Southern Ry..
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
565.17 | 33,327 | 38,881 | 366.82 || 426.13 ſ 207,315.65 240,835.89 || 13.92.
92.35 | 33,708. 39,326 459.30 537.79 42,416.70 49,664.91 || 14.59
280.68 || 36,055 42,064 486.15 566.86 136,452.58 159,106.26 || 14.24
401.91 36,771 42,899 || 493.46 575. 41 198,326.50 231,263.03 14.24
348.37 || 38,960 45,453 515.39 || 602.77 179,546.41 209,986.98 || 14.50
177.80 || 41,680 || 48,627 543.01 || 636.97 96,547.17 113,253.27 | 14.75
276.49 || 41,812 || 48,781 540.67 8. 149,489.36 176,588.63 15.35
326.88 || 42,880 50,027 555. 19 651.51 181,480.50 212,965.59 || 14.78
428.31 43,487 50,735 | 559.68 659.20 239,717.32 282,341.95 15.10
85.00 44, 170 51,532 568. 19 | 667.75 48,296.15 56,758.75 14.91
214.70 || 47,498 || 55,414 || 602.30 || 709.65 129,313.81 152,361.85 15.13
305.98 || 50, 133 58,488 627.41 742. 14 191, 974.91 227,080.00 | 15.46
454.00 53,948 || 62,939 663.65 790.02 301,297. 10 358,669.08 || 16.00
182.84 54,371 63,433 | 667.89 || 795. 15 122,117.00 145,385.23 16.00
711.99 || 56,457 || 65,866 | 688. 13 820.80 489,941.67 584,401.39 16. 16
3.37 59,015 | 68,851 || 712.37 || 853.29 2,400.68 2,875.59 | 16.52
306.86 59,806 || 69,774 575,69 || 690, 15 176,656.23 211,779.43 16,58.
263. 18 59,824 69,795 | 720.37 862. 69 189,586.97 227,042.75 | 16.50
531.67 61,099 || 71,282 | 732.61 878.94 389,506.75 467,306.03 | 16.65
126.47 || 71,421 83,324 || 831.81 | 1,008.04 105,199,01 127,486.82 | 17.48
783.77 93,613 109,215 1,045.45 1,284.21 819,392,34 1,006, 525.27 | 18.59
119.74 94,626 110,397 |1,055.69 1,297.03 126,408.32 155,306, 37 | 18.61
52. 12. 130,978 || 152,808 |1,405.01 | 1,750, 18 73,229. 12 91,219.38 19.72
9.68 || 144,375 168,437 |1,530.72 1,916.91 || 14,817.36 18,555.69 20.15
993.78 || 147,216 171,752 |1,560.93 1,952.82 1,551,221.01 | 1,940,673.46 20.07
140.80 | 180,205 || 210,239 |1,737.83 || 2,364. 07 244,687.09 332,861.06 || 26.49
187. 99 || 164,037 || 191,376 |1,723.09| 2, 162.29 323,923.68 y 20.31
197.60 | 201,244 234,785 |1,929.53 2,626. 56 381,274.77 519,008. 26: 26.54
468.43 211,644 246,918 2,180.61 2,755.66 | 1,021,463, 14 1,290,833.81 20.87
238.22 215,585 251,516 |2,219.09 || 2,805.25 528,631.61 668,266.66 20.90
205.57 226,784 264,581 |2,315.71 2,944.62 476,041. 16 605,325.53 21.36
85.39 233,903 || 272,887 |$2,244.333,033, 5 4 || $191,643. 15 $259,033.98 || 26.02
522. 18 428,633 500,072 4,096.68||5, 46 1.74 2, 139,206.22 2,852,011.39 24.99
17,645.72 |..........}.......... 809.07 | 1,001. 43 14,276,600.84 17,617,952.44 | 18.97
º


110 RAILWAY MAIL PAY.
The table just indicated represents 63 routes on which mail was weighed during the
years 1910 and 1911, with a total length of 17,645.72 miles. Although this represents
but 7.88 per cent in length of the railway mailroutes of the country, these routes receive,
under present adjustments, $14,276,600.84 per annum of railway mail pay, exclusive
of any pay for postal cars which they may receive, or 30.92 per cent of the total trans-
portation pay of all the railway routes. Their present proportion of the transportation
pay of the third and fourth weighing sections, in which weighing took place in 1910 and ,
1911, is 41.99. Other routes weighed in those years and having average daily weights
of 20,000 pounds or more, but excluded from the table because, for one reason or another,
they might have been thought to impair the accuracy of the comparisons, receive,
under the adjustments of those years, $4,552,414.49 per annum. Adding this sum to
the total of present transportation pay of the routes in the table gives $18,829,015.33,
which is 55.38 per cent of the transportation pay of the third and fourth weighing
Sections. These data serve to demonstrate the importance of the fact, disclosed by
the table, that the average reduction in transportation pay alone for these 63 heavy
routes, since the close of the first half of the calendar year 1907, is 18.97 per cent. A
ºn of the postal car pay for these routes would show a still greater rate of re-
uction.
J.-CONCLUSION DRAWN FROM THESE REDUCTIONS.
This report does not assume to base any final conclusion as to the wisdom or justice
of a further reduction upon the fact that within less than five years railway mail pay
has been thus heavily reduced. Such a record as that disclosed in the foregoing pages
does, however, create a presumption that is strongly adverse to any plan which would
immediately require further large sacrifices of revenue on the part of the railway
instrumentalities of the postal service. When this presumption has been supple-
mented by proof, which will presently be adduced (see pp. 74–75), that the railways
were not overpaid prior to July 1, 1907, the gross injustice of adding to the series of
reductions begun on that date and still in progress must be conceded. It is now
generally recognized that present railway revenues are, at the most, but barely
adequate to provide for the requirements of increased wages, higher prices of materials
and supplies, progressively augmented Standards of service, and the reasonable return
upon investments that is necessary to attract the capital needed for improvements and
extensions. There is no valid reason for singling out the mail service and making it
the especial subject of reductions that ought not to be and can not be extended to other
kinds of traffic. All the economies of the postal service certainly ought not to be at
the expense of the railways. It is fair to inquire whetherit has become a habit of postal
administration to look to decreases in the item of railway mail pay as the sole means
of accomplishing an equation between postal receipts and postal expenditures and, if
such seems to be the case, to inquire, further, whether it is reasonably consistent with
Fº policy to insist that this item of postal expense shall continue to be diminished
y the force of public authority, even if such exercise of this authority is not repugnant
to the guaranties of the Federal Constitution, in order that expenses for other purposes
may be progressively increased. It is reasonable that the railways should ask that
the recommendations of the Postmaster General, contained in Document No. 105, be
considered in the light of a complete understanding of the heavy and rapid reductions
inposed upon them during recent years.
IV. REDUCED RAILWAY MAIL PAY Is Now BELow THE LEVEL OF JUST COM-
PENSATION.
(A) POINTS ALRIEADY DEMONSTRATED IN THIS REPORT.
The following facts are believed to have been fully established in this report:
First. That the Postmaster General's argument in favor of the reduction he now
recommends is based upon such fundamental misconceptions of principles and facts,
upon such incomplete and erroneous computations, and upon such fragmentary data
and incorrect and misleading figures as to be totally unreliable and unworthy of seri-
ous consideration by the Congress. #
Second. That (a) the Postmaster General neither fully nor correctly tabulated nor
forwarded to Congress the original reports which he obtained from the railroads, and
(b) in so far as comparisons can be made with the figures which he did submit, they
do not warrant but are destructive to the conclusions and recommendations which he
makes and tend strongly to demonstrate the inadequacy of the present payments for
railway-mail facilities and services. -
Third. That the Postmaster General's present recommendation of a further reduc-
tion of approximately $9,000,000 in annual railway mail pay follows a series of re-
RAILWAY MAIL PAY. '. 111
ductions brought about by legislation or by departmental orders that have in less
than five years diminished railway mail pay $8,532,148.75.
The committee on railway mail pay having therefore demonstrated that there is
before Congress no showing entitled to serious consideration in favor of the further
reduction recommended by the Postmaster General asserts that he should be required
to make a complete disclosure of the facts in his possession and that the railways are
entitled to demand, as of right, that before going further an at least plausible and
prima facie case should be presented by the Post Office Department or that its unsup-
ported proposal should be withdrawn or ignored.
The railways welcomed the inquiry into this commonly misunderstood subject and
cooperated in obtaining the data sought because they believed, and still believe, that
any investigation, conducted wisely and fairly, with due recognition of the established
principles of transportation economics and with reasonable regard for the just guar-
antees of the Federal Constitution would leave no vestige of doubt that within the
past five years the process of reduction in railway mail pay has been forced so far as to
constitute an injustice to an industry upon which almost one-fifth of the population
of the country is directly or indirectly dependent, and in the successful operation of
which the entire country is concerned. -
In the subsequent pages of this report the committee will seek to demonstrate the
just right of the railways to receive from the Government that fair and reasonable
relief which they had hoped it would be the pleasure of the Postmaster General to
recommend and initiate.
(B) RAILWAY MAIL PAY NOT EXCESSIVE BEFORE RECENT SERIES OF REDUCTIONS BEGAN,
Having described, defined, and measured the extensive series of reductions to
which the Postmaster General now seeks to add a still further reduction, it follows that
the fact that these reductions have taken place is proof that the present railway mail
pay is too low:
First. Unless such pay was too high before the reductions were effected, or,
Second. Unless the whole series and aggregate amount of these reductions were
fully justified by changes in conditions that occurred during the period in which
they took place.
The congressional Joint Commission to Investigate the Postal Service, which
reported on January 14, 1901, is sufficient authority for the fact that on that date rail-
way mail pay was not excessive. The late Senator William B. Allison, of Iowa; the
late Senator Edward O. Wolcott, of Colorado; Senator Thomas S. Martin, of Virginia;
the late Representative Eugene F. Loud, of California; former Representative W. H.
Moody, of Massachusetts; and former Representative T. C. Catchings, of Mississippi,
six of the eight members of the commission, united in the following:
“Upon a careful consideration of all the evidence and the statements and arguments
submitted, and in view of all the services rendered by the railroads, we are of opinion
that ‘the prices now paid to the railroad companies for the transportation of the mails’
are not excessive, and recommend that no reduction thereof be made at this time.”
(56th Cong., 2d sess., S. Doc. No. 89, pp. 19, 22, 25, 29.)
This expression was the result of prolonged, patient, and intelligent investigation
by men whose patriotism, fidelity, and capacity has never been questioned. Their
conclusions were sanctioned by the Congress to which they reported and the authority
of their judgment has not been and can not now be impaired or diminished.
(C) CHANGED CONDITIONS SINCE 1901 would JUSTIFY INCREASED RATHER THAN
REDUCED RAILWAY MAIL PAY,
No one will for one moment contend that there has been any net reduction in the
cost of *ś railway mail services and facilities since the year in which the
report of the Joint Commission to Investigate the Postal Service was rendered. In
fact all changes, save possibly those in efficiency of organization and management
have been in the opposite direction and it is well known that the economies effected
by this means extend in but the smallest degree to the mail service. Consider, for
example, that the large proportion of railway gross receipts from operation which
goes to railway labor. Every item of cost of that character has greatly increased
since the year 1901: . In 1901 the railways reporting to the Interstate Commerce
Commission received in gross from their operating sources the sum of $1,588,526,037
and expended in wages and salaries the sum of $610,713,701; in 1910 the corresponding
totals were $2,750,667,435 and $1,143,725,306. Computations from these totals show
that in i901 the railways expended in wages and salaries-$38.45 out of each $100 of
gross operating receipts, while in 1910 the proportion had increased to $41.58, a differ-
75904—No. 1—13—8
112 t RAILWAY MAIL PAY.
'ence of $3.13 in each $100 of gross receipts. This difference does not seem small, but
it is hardly realized, except when the calculation is made, that on the basis of the
gross receipts of 1910 it could amount, as it does, to an additional expense of $86,095,-
890.72. It is to be borne in mind that this largely increased payment to labor is in
spite of the fact that a part of the increase in wage rates has been offset by higher
efficiency in methods and facilities, Comparisons of rates of wages, from the annual
statistical reports of the Interstate Commerce Commission, follow:
Average wages per day—
Class of employees. I
InCI'é2Sé
1901 1910 (percent).
General office Clerks------------------------------------------------------ $2.19 $2.45 11. 87
Station agents.----------------------------------------------------------- 1.77 2. 14 20. 90
Other station men------------------------------------------------------- 1.59 1.91 20. 13.
Enginemen-------------------------------------------------------------- 3. 78 4. 34 14.81
Firemen----------------------------------------------------------------- 2. 16 2. 57 18.98
Conductors-------------------------------------------------------------- 3.17 3. 73 17. 67
Other trainmen---------------------------------------------------------- 2.00 2. 72 36.00
Machinists--------------------------------------------------------------- 2. 32 3.03 30.60.
Carpenters--------------------------------------------------------------- 2.06 2. 39 16. 02
Other Shopmen---------------------------------------------------------- 1. 75 2. 20 25. 71
Section foremen---------------------------------------------------------- 1. 71 1.99 16. 37
Other trackmen. . . . . . . . . . . . . .-------------------------------------------- 1.23 1, 57 27.64
Telegraph operators and dispatchers - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1.98 2. 16 9.09
Employees, account floating equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.97 2, 10 6. 60
All other employees and laborers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.69 1.96 15.98

Figures like the foregoing require no comment—they plainly show that in their
relations with labor the railways could find evidence supporting a contention for higher
railway mail pay, that this large element of cost supplies no justification whatever
for any reduction.
During the year 1901 the railways reporting to the Interstate Commerce Commis-
sion expended $104,926,568 for locomotive fuel, in 1910 their expenditures for the same
purpose aggregated $217,780,953. Comparing these figures with gross receipts from
operation it is found that the cost in locomotive fuel of each $100 of gross receipts was
$6.61 in 1901 and $7.92 in 1910, an additional cost of supplying railway services amount-
ing, on the basis of the receipts of 1910, to $36,033,743.40. A further analysis of the
supplies that must be purchased in order that railways may be maintained and oper-
ated would show that in the great majority of instances, and those affecting the largest
º; of expenses, the upward tendency in prices has been as marked as in the case
of fuel for locomotives. It is apparent, therefore, that in the matter of the cost of neces-
sary materials and supplies, no justification for the recent reductions in railway mail
pay, but rather reasons for a movement in the other direction, can be found.
If there are any facts in the transportation or industrial events of the last decade
that have warranted reductions in railway mail pay below the reasonable level that
existed in the year 1901, those facts have not, it is respectively submitted, been
brought to the attention of Congress by the Postmaster General or in any other way,
nor are they matters of public or general notoriety. No such facts are within the
knowledge of the committee on railway mail pay nor have the members of that commit-
tee been informed that there is any claim that such facts do exist.
(D) TEIE PASSENGER-TRAIN SERVICES ARE NOT REASONABLY REMUNERATIVE.
Railway managers have long realized that their passenger services are not directly
productive in most cases of returns equal to their cost. In order to arrive at this con-
clusion as to the railways of the United States as a whole it is not necessary to resort
to any plan of problematical accuracy for the apportionment of joint expenses. On
the contrary, the discrepancies between average train-mile expenses for all classes of
revenue-producing trains and the aggregate of the average train-mile receipts from all
of the passenger-train services is so vast that it is at once apparent that it can not be
§ by any conceivable difference between the respective train-mile expenses
of passenger and freight trains. The annual statistical report of the Interstate Com-
merce Commission for the fiscal year 1910 shows (p. 60) that the average receipts per
FAILWAY MAIL PAY. 113
train-mile from all of the passenger-train services rendered during that year amounted
to $1.30, while the average cost for operating expenses alone of running trains of all
classes was $1.49 per mile. The latter average includes nothing whatever for taxes
or for any return to investors. The available data indicate that reasonable allowances
for these #. would raise the average cost to approximately $2.25 per train-mile.
These figures must satisfy any candid inquirer that whatever difference a complete
and detailed investigation might prove to exist between the cost of running the differ-
ent classes of trains over equal distances, that difference can not equal the difference
between the average train-mile cost of all trains and the average train-mile receipts
of passenger trains. The averages thus amount to a demonstration of the truth that
the passenger-train services as a whole are relatively unprofitable. It will presently
be shown that of the three passenger-train services those rendered on behalf of the
mails fall farthest below the standard of reasonable remuneration.
Document No. 105, however, itself contains convincing evidence of the unprofit-
ableness of the passenger-train services as a whole. It is only necessary to supplement
the Postmaster General’s estimates of passenger-train expenses for operation and taxes,
incomplete, inadequate, and far below the truth as they are, by figures showing the
receipts from those services and the receipts and expenses of all railway services in
order to demonstrate this fact. An accurate computation representing the month of
November, 1909, made up wholly from Document No. 105 and the official reports
of the Interstate Commerce Commission covering every railway for which the former
shows an estimated operating and taxation cost of handling the mails of $10,000 or
more (except the Grand Trunk system, for which the Interstate Commerce Commis-
sion does not report comparable data, and the Atchison, Topeka & Santa Fe, for which
the Postmaster General used figures for January, 1910, instead of November, 1909,
and also used different mileage from that covered by the reports of the Interstate
Commerce Commission) affords this demonstration. The details of this computation
are shown in Appendix A; the following are the results: -
The foregoing aggregates are simply the totals of official figures including under
that designation the Postmaster General’s estimates of the amounts of operating
expenses and taxes chargeable to the passenger-train services. Those in the column
headed “All services” are the totals of figures found in Bulletin of Revenues and
Expenses No. 10 issued by the Interstate Commerce Commission and No. 18 of the
Same Series. The aggregate given for gross receipts of the passenger-train services is
the total of the receipts from passengers reported by the Interstate Commerce Com-
mission in the same bulletins plus the mail revenues of the same railways reported by
the Postmaster General in Document No. 105 (Table 7, pp. 272-281) and plus one-
twelfth of the express revenues of the same railways for the fiscal year containing the
month of November, 1909, as reported by the Interstate Commerce Commission in its
statistical report for 1910. The aggregate cost for operation and taxes for the passen-
ger-train services is the total of the Postmaster General’s estimate for these railways
as shown by his table 7 (Document No. 105, pp. 272-281). The significance of these
aggregates will be appreciated when it is noted that the railways which they repre-
Sented earned, according to the Postmaster General’s statement, in the month of
November, 1909, $3,109,160.32 of mail pay, or 86.18 per cent of $3,607,773.13, the total
represented in Document No. 105. As has been demonstrated herein, the Postmaster
General’s plan of apportioning expenses tends most strongly to understate the cost of
the passenger-train services, yet even the misleading and inadequate estimates which
he put forth in Document Nó. 105, when compared with the receipts, show that these
services are so excessively costly that, if any allowance whatever is made for interest
on the investment, they are unmistakably productive of much less than the fair
average return necessary for the adequate remuneration of railway employees and a
reasonable return upon railway investments.

* Passenger-
Item. All services. train services.
gross receipts....---------------------------------------------------- $170,042,915.51 || $43,719,689.67
Operating expenses and taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $109,960, 722.73 $32,300,818.98
Percentage of gross receipts required to meet operating expenses and
taxes--------------------------------------------------------------- 64.67 - 73. 88
114 RAILWAY MAIL PAY,
If the Postmaster General’s method of apportionment had assigned its full and
#. cost to the passenger department, the percentage of expense to receipts would
ave been much higher than 73.88 and the difference between such higher percentage
and 64.67 per cent, which expresses the ratio of all expenses to all receipts, .
have measured with accuracy the extent of the losses of the passenger-train services.
..With this qualification in mind, it is sufficient to repeat that the totals for the 46
railways represented disclose the fact that total operating expenses and taxes con-
sumed 64.67 per cent of the gross receipts from all services, while 73.88 º cent of the
aggregate receipts from all the passenger-train receipts only equals the inadequate
ortion of operating expenses and taxes assigned to those services by the Postmaster
eneral. As the usual requirement for an aggregate sufficient to afford a reasonable
rate of return on railway investments is approximately one-half of the total operating
expenses, it is evident that where it is admitted that 73.88 of receipts is required to
meet operating expenses and taxes there must be a very heavy total loss.
The situation which exists, under which the passenger business of almost all rail-
ways is conducted without adequate compensation, is not one with which the railways
are satisfied nor has it arisen through their volition. It will certainly be admitted
that they are warranted in asking that they be not required to accept relatively less
for mail transportation than they receive from the other services rendered on their
passenger trains.
{E) RAILWAY GROSS RECEIPTS FROM MAIL TRANSPORTATION LOWER THAN FROM ANY
OTHER PASSENGER-TRAIN SERVICES.
By adopting the car-foot mileage basis, which is substantially a space basis, for the
apportionment of such passenger train expenses as he has seen fit to consider, the
Postmaster General has, in effect, argued that car-foot mileage made in the mail
service ought justly to produce as much revenue per unit thereof as the average unit
of car-foot mileage made in the other passenger services. Present mail pay is seen
to be inadequate when it is subjected to this test. Even the grossly reduced figures
of car-foot mileage made in the mail service contained in Document No. 105, figures
obtained, as hereinbefore fully shown, only after ignoring a great deal of space actually
required for the mails and transferring a large quantity of other space so required to the
passenger service, reveal this fact. Thus in Document No. 105, on page 59, all of the
following figures are to be found:
Car-foot mileage made in all passenger train Services, total. . . . . . . 12, 940, 229,965. 19
Car-foot mileage made in the mail service, total. . . . . . . . . . . . . . . . . . 926, 164,458.83
Proportion of car-foot mileage made in the mail service to car-foot
mileage made in all passenger-train Services, percentage. . . . . . . . 7. 16
Therefore, upon the Postmaster General’s own showing, unless the railways earn
$7.16 out of each $100 earned by their passenger trains by carrying the mails, their mail
ay is too low. For the facts it is necessary to turn to the statistical reports of the
nterstate Commerce Commission. The latest of these contain figures for the fiscal
year 1910, and is appropriate for the purpose because that year includes the month
covered by the Postmaster General's inquiry. On page 510 of this report it appears that
the gross receipts from passenger-train services of the railways reporting to the com-
mission for the fiscal year that ended with June 30, 1910, were as follows:
Per cent
Item. Amount. of total.
From the mails----------------------------------------------------------------- $48,946,052 6. 40
From other passenger-train Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715,827,302 93. 60
Total.-------------------------------------------------------------------- 764,773,354 100, 00
Thus, while the Postmaster General admits that 7.16 per cent of the car-foot mileage
of passenger trains is required for the mail, and by inference that they ought to get
7.16 per cent of their passenger-train revenue from the same source, the official sta-
tistics, compiled by the great Federal agency that is especially charged with the
duties of railway supervision, show that º derive only 6.40 per cent of their passen-
ger-train revenues from the mails. The difference in these percentages may seem
inconsequential, but it is not so to the railways which invariably find differences
RAILWAY MAIL PAY. * 115
between reasonable returns to their owners and actual losses expressed in the smallest
ratios. In dollars and cents, based on the actual gross passenger-train receipts shown
above, this difference of little more than three-quarters of 1 per cent (actually 0.76 per
cent) amounts to $5,812,277.49, and it would have required an increase in the mail pay
of 1910 of that amount to place the mail service on a parity with the other passenger-
train services. And this figure results from using the much too low estimates of car-
foot mileage made in the mail service adopted by the Postmaster General. The less
complete but far more accurate figures compiled from the copies of the reports to the
Postmaster General which are in the possession of the committee on railway mail pay
and previously given in this report (see p. 20) compare with the Interstate Commerce
Commission’s figures as to gross receipts as follows:

Percentages.
Service.
Car-foot | Gross
mileage. receipts.
Passenger--------------------------------------------------------------------------- 80.01 84.81
TeSS- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10.67 8.79
Mail-------------------------------------------------------------------------------- 9.32 6.40
Total.------------- ----------------------------------------------------------- 100.00 | 100.00
The same compilation (see p. 20) also shows that during the month covered by the
Postmaster General’s investigation each 1,000 car-foot mile made in the mail service
produced, on the average, $3.23 in gross receipts; each 1,000 in express service, $3.86;
and in the transportation of passengers, $4.42. These data absolutely establish the fact
that the mail services rendered by the railways are the lowest paid of all their passenger-
train services, and passenger-train services as a whole have already been shown to be
commonly rendered without adequate return. It is fully believed that any candid
consideration of the foregoing must lead to conviction that not only is the Postmaster
General’s recommendation of a further reduction in railway-mail pay unwarranted,
and that any further reduction would be a gross injustice but also that reasonably
fair treatment of the railways, their employees and owners, and the traveling and ship-
ping public demands an increase in the total pay until it shall be somewhat com-
mensurate with the pay for other and similar services.
(F) RAILWAYS SHOULD BE PAID FOR APARTMENT CARs.
The system of railway-mail pay provided by law recognizes that railways ought not
to be required to supply train space for distribution of mails en route without special
compensation. It is obviously quite a different thing to provide a traveling post office,
in which postal clerks are supplied with facilities for their duties identical with those
performed in important distributing offices, from carrying the same bulk and weight
of mail in closed and locked pouches. Yet while this difference is recognized in the law
it is but imperfectly and inadequately recognized, for an arbitrary distinction is made
between those traveling post offices which are 40 feet or more in length and those which
are shorter, the former being specifically paid for and the latter being required to be
supplied without special compensation. This injustice is admitted by the Postmaster
General in Document No. 105, as follows:
“The laws now in force relative to railway mail pay provide * * * that an
additional amount may be allowed for railway post-office cars when the space for dis-
tribution purposes occupies 40 feet or more of the car length. No additional com-
pensation is allowed for space for distribution purposes occupying less than 40 feet
of the car length. This distinction is a purely arbitrary one and without any logical
reason for its existence.” (Doc. No. 105, p. 3.)
The annual report of the Second Assistant Postmaster General for the fiscal year 1911
shows (p. 43) that on June 30, 1911, the railways, under this plan, were supplying
1,464 full postal cars, which were paid for, and 3,819 apartment cars, which were not
, paid for. Of the former 1,213 and of the latter 3,204 were in constant daily use, the
remainder constituting the necessary reserve. Together these classes of cars were the
working places of 15,461 postal clerks, and while being so used during the fiscal year
II6 RAILWAY MAIL PAY.
they traveled in the aggregate 313,383,045 miles. The following shows the distribu-
tion of this mileage between the different classes of cars, the payments on account of
the class of cars paid for, and the average rate per mile of payment:
Payment to railways.
Kind of car. Miles run. i.
per mile .
Amount. run, in
centS.
Full postal cars-----------------------------------------------. 94,010,689 || $4,737,788.75 5.04
Apartment cars------------------------------------------------ 219,372,356 None. None.
The foregoing shows that the railways receive for the use of a car, which in every
‘relation is to them the full equivalent at least of a standard passenger coach, only
about the fares of two and one-half passengers at the low rate of 2 cents per mile. But
even if they were paid one-third as much per mile run by apartment cars as they are
per mile run by full postal cars, the 219,372,356 miles run by the former, for which
they now receive nothing, would have produced $3,685,455.58 gross revenue in 1911.
In Document No. 105 (Table 4, p. 65) the Postmaster General gives the following figures
of car-foot mileage, which are exclusive of all spaces that he defines as “storage space”
and “deadhead” space.
Car-foot miles
Rind of car. * * during Novem-
ber, 1909.
Apartment cars-------------------------------------------------------------------------- 430,944,968. 10
Postal cars------------------------------------------------------------------------------ 364,633,119.64
Total.------------------------------------------------------------------------------ 795,578,087.74
It has already been shown (see pp. 19–33) that these figures are too low, but, leaving
that fact aside, they show that the space utilized in apartment cars amounted to
84.61 per cent of the space utilized in full postal cars. There can be no valid reason
why the railways ought not to be paid as much for a car-foot mile, placed at the dis-
posal of and utilized for the postal Service, in an apartment car as for similar space
in a full postal car. If they were so paid they would receive for apartment cars, on
the basis of the Postmaster General’s figures, 84.61 per cent of $4,737,788.75, their
postal-car pay, or $4,008,643.06. Neither of these figures is offered as indicating
the precise rate of payment for apartment cars which would be reasonable and just,
but both serve approximately to suggest the lowest possible limit of the minimum
payment which substantial justice would permit.
In this connection it must not be overlooked that the furnishing of traveling post
offices is not a natural function of railway carriers nor one that is undertaken by them
without reluctance. These cars, whether full postal cars or apartment cars, are not
essential to the transportation service which is the normal purpose for which railways
exist, but they are required by the Post Office Department in order that the labor
of distribution may be performed, while the mails are undergoing transportation.
This is an obligation not assumed with relation to any other element of railway traffic.
If the department could evolve a different method of serving the public the railways
would welcome relief from the requirement to supply traveling post offices of any
sort; would willingly surrender the meager compensation now received for the fraction
of these offices which is paid for and would gladly confine their mail services to those
of transportation only. But if such cars are necessary in order that the public may
receive the service which it demands, the railways ought to be adequately and fairly
paid for all of them.
RAILWAY MAIL PAY. 117.
(g) THE were HT BASIs of RAILWAY MAIL PAY SHOULD BE ASCERTAINED ANNUALLY.
There is no º under the present system, that the railways are paid for all
the mails which they carry. The weight basis is ascertained only once in four years
and the weight resulting from these weighings of one year becomes the basis of payment
for a period of four years beginning with the fiscal year which commences next.
after the year of the weighing. But the weight of mail carried never remains sta-
tionary; it is the exception that on any important route it does not increase during
the whole four-year period. This is shown by the following table, which compares
the results of the weighings of 1907 and 1911 on the first 40 routes shown in the reports.
for those years of the Second Assistant Postmaster General, for which comparable
data are given:

Average daily weight, in pounds.
- Length,
Number of route. in miles Increase. Decrease.
1907 1911
Pounds. | Per cent. | Pounds. | Per cent.
131001------------------------- 190. 07 12,584 11,802 ----------|---------- 782 6.21
131002------------------------- 468.43 155,503 ,644 56,141. 36. 10 !--------------------
131003------------------------- 46.99 1,721 1,483 ||----------|---------- 238 13.83
131004------------------------- 144.59 2,655 4,776 2,121 79.89 ----------|----------
131005------------------------- 49.35 18,623 21,758 3, 135 16.83 ----------|----------
131006------------------------- 148.38 9,784 12,448 2,664 27.23 ----------|----------
131007------------------------- 80. 10 4,681 5,497 816 17.43 |----------|----------
131008------------------------- 32. 26 57 437 ----------|---------- 140 24, 26
131009------------------------- 116. 57 1,287 1,641 354 27. 51 1--------------------
131010------------------------- 28.85 881 584 |----------|---------- 297 33.70
131012------------------------- 131.00 3,009 4,283 1,274 42.34 |----------|----------
131013------------------------- 263. 34 50,893 59,824 8,931 17.55 ----------|----------
131014------------------------- 119.74 , 754 94,626 28,872 43.91 ----------|----------
131015------------------------- 188.06 133,211 164,037 30, 826 23.14 ----------|----------
131016------------------------- 448.59 34,763 32, 502 |- - - - - - - - - - - - - - - - - - - - 2,261 6.50
131017------------------------- 21.91 1, 158 1,057 ----------|---------- 101 8. 72
131019------------------------- 428.32 43,694 43,407 |- - - - - - - - - - - - - - - - - - - - 287 . 66
131020------------------------- 415. 49 1,261 ,479 218 17.29 ----------|----------
131021------------------------- 15.45 117 129 12 10.26 ----------|----------
131022------------------------- 47.08 1,286 1,982 696 54.12 |----------|----------
131023------------------------- 202.89 21,708 21,095 ----------|---------- 613 2.82.
131024------------------------- 99. 26,046 21, 135 |----------|---------- 4,911 18. 86
131025------------------------- 300. 87 16,821 20,029 3,208 19.07 ----------|----------
131027------------------------- 19. 20 1,012 5,876 4,864 480.63 - - - - - - - - - - - - - - - - - - - -
131028------------------------- 195.35 | 30, 631 24,854 |- - - - - - - - - - - - - - - - - - - - 5,777 18.86
131029------------------------- 148, 80 1,310 1,208 |----------|---------- 102 7.79
131030------------------------- 331. 17 574 474 1-------------------- 100 17.42
131031------------------------- 22. 14 169 54 ----------|---------- 15 8. 88
181032------------------------- 190.92 217,029 295,564 7S, 535 36. 19 |----------|----------
131033------------------------- 18.04 388 397 9 2.32 ----------|----------
131084------------------------- 316. 18 11,574 12,048 474 4.10 ----------|----------
131035------------------------- 30.14 57 11 23.91 ----------|----------
131036------------------------- 76. 82 3,628 3,801 173 4.77 ----------|----------
131037------------------------- 33.95 946 404 ----------|---------- 542 57.29
131038------------------------- 44.04 634 952 318 50.16 ||----------|----------
131039------------------------- 95. 59 545 642 97 17.80 ----------|----------
131040------------------------- 110. 89 1, 345 1,240 ----------|---------- 105 7.81
131041------------------------- 162.41 2, 159 1,918 ||----------|---------- 241 11. 16
131042------------------------- 50.00 528 586 58 10.98 ||----------|---------.
131043------------------------- 84. 77 8, 256 13, 729 5,473 66.29 |----------|----------
N

It should be noted that the routes illustrated in this table are 40 of the first 43 routes
shown in the annual report for 1907, it having been necessary to omit routes 131011,
131018, and 131026, as the termini of 131011 and 131018 were changed between 1907
and 1911 and 131026 was vacant in the earlier year. Of the 40 routes shown, 24, or a
little more than half, show increases and 16 show decreases. But from July 1, 1907,
to June 30, 1911, inclusive, all payments were adjusted upon the basis of the weights
118 FAILWAY MAIL PAY.
of 1907, so that during the entire period of four years whatever weights may have been
carried there was no change in compensation. If there is a decrease in volume during
the quadrennial period this system is unfair to the Government; if there is an increase
it is unfair to the railways; but owing to the increase in national wealth, in business
activity, and in population, it has always happened that the balance of unfairness has
operated to produce a loss to the railways. The only rectification of this situation
reconcilable with justice is to provide for more frequent—that is to say, for annual—
weighings and readjustments of pay. No common carrier would be required or even
permitted to contract to transport the entire output of any private enterprise during
a four-year period for a fixed annual sum regardless of diminution or expansion in its
Volume. A contract covering so long a period at an unchanging aggregate payment
is ºnsible from every point of view and unjust alike to the public and to the
rallways.
(H) TERMINAL SERVICES ON LIGHT ROUTES SHOULD BE PAID FOR.
Two or three generations ago, when mail transportation was principally by stages,
and railways were in their early infancy, it was not considered a hardship that, where
the stage terminal was within 80 rods of a post office, the stage should be asked to make
a sufficient extra journey or detour to take up and deliver the mail pouches at the post.
office. It is a curious consequence of the feeble beginnings of the railway industry
that when the mails began to be carried over tracks of iron, in vehicles which could
not deviate from their rights of way, this requirement was extended and the railway
required to receive and deliver mails at all post offices located within 80 rods of any
station. And it is irresistible proof of the persistent force with which the Post Office
Department has continually imposed its will upon the railways that the practice still
continues, although in many instances, on the lighter routes, the cost of performing
this service exceeds the entire mail pay for the route. This abuse is most frequent
on those railways which are the least adequately paid, and it would be but reasonable
to ask that they either be relieved of this burden or that the compensation of the lighter
routes be readjusted on a basis enough higher than that now in force to eliminate these
heavy losses.
W. ConCLUSION.
This report of the committee on railway mail pay has discussed, as fully as a proper
regard for the time of its members and the extraordinary importance of the subject
warrant, the conditions under which the railways serve as auxiliaries to the postal
service and their compensation for the indispensable services and facilities which
they render. ->
It has been shown that the recommendations of the Postmaster General contained
in Document No. 105 are not founded in justice or based upon accurate statements
of fact or sound transportation principles.
It has been shown that, in the course of the investigation reported in that document,
the Postmaster General collected illuminative data which he finally withheld from
Congress as to (a) cost to the railways of supplying extraordinary station services and
terminal facilities for the mails (see pp. §§ (b) cost of furnishing a large volume
of personal transportation, not in postal cars, to officers and representatives of the
Post Office Department (see pp. 69–70); and (c) relative returns from passenger,
express, and mail traffic (see pp. 70–71). •
It has been shown that the most fundamental data as to train space occupied re-
spectively by the mails and by passengers, accurately reported by the railways, were
arbitrarily 㺠and modified for the report so as greatly to diminish the former
and to augment the latter and that these changes operated so as to diminish the esti-
mated cost of the mail service (see pp. 71–80).
Further, it has been shown that the data used as the basis of Document No. 105,
relating to the single month of November, represent a month in which passenger
expenses are actually far below the average or normal level and are abnormally low
as compared with freight expenses (see }. 85–89).
And still further, it has been shown that railway mail pay has been reduced fully
20 per cent within the period of about 10 years which began with the declaration of
the Joint Commission to Investigate the Postal Service that it was not excessive, while
during, the same period substantially all the expenses of rendering these postal Serv-
ices have greatly increased per unit of such services (see pp. 89–110).
./
RAILWAY MAIL PAY. 119

Finally, that railway mail pay is plainly and demonstrably inadequate at the present
time (see pp. 110–115). -- w -
And reasonable measures for providing more adequate and reasonable compensation
have been pointed out (see pp. 115–118). f
As a final word, the committee on railway mail pay urges that, in justice to the great
interests which it represents, in justice to millions of railway employees whose arduous
and responsible services are not overpaid, in justice to hundreds of thousands of de-
positors in savings banks and owners of policies of insurance and frugal investors
everywhere, in justice to millions of workers in thousands of industrial enterprises
whose prosperity depends upon services which only solvent railways can suitably
render, that, if any doubt remains, as to the propriety of the relief herein recommended
an effort be made to have the voluminous data in the possession of the Postmaster Gen-
eral laid before Congress, to the end that the facts herein set forth may be fully substan-
tiated. When those data are completely, accurately, and fully tabulated, with such
other facts as may be necessary to illuminate and explain them, no scintilla of doubt
as to the urgent necessity of substantial relief can remain.
All of which is respectfully submitted. '

§
|

APPENDIx’A.
* Percentage g
ſº grOSS recelp
Gross receipts. Operating expenses and taxes. rºs
expº. and
X0S.
Railway.
Passenger train services. All Services. Passen-
Passenger All ger
All services.] Express Operati train serv. ºry. tº
& is- perating IC0S. 1C0S, serv-
t Passenger | Mail lºº, Total. j | Taxes." Total. ICôS.
Atlantic Coast Line. . . . . . . . . . . . . . . . . . . . $2,746,291.85 || $550,023.99 || $50,759.95 $87,504.17 || $688,288.11 |$1,553,292.95 || $95,500.00 ($1,648,792.95 || $595,343.33 60.04 || 86.50
IBaltimore & Ohio. . . . . . . . . . * - - - - - - - - - - - 7,351,675.33 |1,079,854.92 || 98,015.98 || 184, 180.00 1,362,050.90 || 4,907,585.60 | 190,399.28 5,097,984.88 991,910.95 || 69.34 || 72.82
Boston & Maine. . . . . . . . . . . . . . . . . : - - - - - - 3,746,625.98 |1,121,090.39 36,768.08 || 140,496.42 1,298,354.89 || 2,542,320.45 | 181,926.79 || 2,724,247.24 || 940,695.71 || 72.71 | 72.45
Central of Georgia- - - - - - - - - - - - - . . . . . . . . . 1,117,426.72 | 277,236.97 | 19,497.36 27,244.50 323,978.83 694,757.56 55,200.00 || || 749,957.56 || 261,590.01 || 67.11 || 80.74
Chesapeake & Ohio. . . . . . . . . . . . . . . . . . . . . 2,657,437.78 || 384,030.56 30,094.49 || 53,865.92 || 467,990.97 | 1,575,411.37 67,500.00 | 1,642,911.37 || 287, 179.32 61.82 61.36
Chicago & North Western. . . . . . . . . . . . . . 6,586,681.66 |1,523,824.64 125,284.69 262,996.08 |1,912,105.41 4,526,768.73 228,000.00 || 4,754,768.73 |1,604,881.83 || 72.19 || 83.93
Chicago, Burlington & Quincy. . . . . . . . . 7,952,241.38 1,812,338. 67 | 194,737.01 || 238,022.84 |2,245,098.52 5,452,830.37 215,587.31 5,668,417.68 |1,642,878.81 71.28 73. 18
Chicago, Indianapolis & Louisville. . . . . 509,224.10 || 113,855.33 15, 110.47 | 16,904.67 145,870.47 311,043.57 20,500.00 331,543.57 108,704.63 65. 11 74.52
Chicago, Milwaukee & St. Paul. . . . . . . . . 5,956,752.24 1,048,180.63 || 141,439.42 | 183,781.08 |1,373,401. 13 || 3,871,360.09 | 206,636.73 4,077,996.82 |1,242,158.59 | 68.46 90.44
Chicago, Rock Island & Pacific... . . . . . . 5,467,794.47 1,494,286.72 | 111,982.68 175,205.50 1,781,474.90 3,935,332.18 222, 117.85 4,157,450.03 |1,200,583.25 | 76.04 || 67.39
§:jº ;: oº: 1,427,236.73 || 370,688.40 22,873.56 44,979.17 | 438,541.13 836,298.76 || 53,007.84 889,306.60 | 296,222.44 62.31 67. 55
eve , CInclinnatl, Cago fº
Louis-------------------------------- 2,584,503.85 567,050.39 60,719.79 || 88,140.92 || 715,911.10 | 1,753,029.97 || 74,000.00 | 1,827,029.97 || 633,556.41 70.69 88.50
Colorado & Southern... . . . . . . . . . . . . . . . . 901,747.65 | 115,711.29 6,791.03 16,620.25 | 139,122.57 546,992.11, 21,625.00 | 568,617.11 132,725.23 63.06 95.40
Delaware, Lackawanna & Western. . . . . 3,232,599.29 || 539,948.09 16,719.82 | 131,716.33 688,384.24 | 1,605,175.09 | 151,600.00 | 1,756,775.09 || 609,139.82 54.35 88.49
Denver & Rio Grande. . . . . . . . . . . . . . . . . . 2,117,055.67 || 437,027.75 25,481.90 || 36,698.67 499,208.32 1,429,691.51 || 71,000.00 | 1,500,691.51 || 410,708.68 70.89 82.27
rie------------------------------------ 4,240,370. 51 693,459.23 36,037.32 || 179,844.17 | 909,340.72 2,545,297.61 | 108,929.81 2,654,227.42 || 867,693.82 62.59 95.42
Great Northern. . . . . . . . . . . - - - - - -, - - - - - - - 6,135,464.96 |1,151,914.24 121,514.98 || 101,592.75 |1,375,021.97 || 2,975,897. 19 318,650.07 || 3,294,547.26 1,049,938.59 || 53.70 || 76.36
Illinois Central 4. . . . . . . . . . . . . . . . . . . . . . . . 6,247,758.24 |1,212,311.83 90,932.45 186,196.83 |1,489,441.11 || 4,188,565.17 | 246,547.53 || 4,435,112.70 || 968,704.31 70.99 || 65.04
International & Great Northern. -- . . . . . 875,667.60 172,982.51 18,231.82 | 15,637.92 206,852.25 640,305.90 22,000.00 662,305.90 | 199,448.19 || 75.63 96.42
Lake Shore & Michigan Southern... . . . . . 4,092,945.97 770,375.68 177,198.22 185,091:25 1,132,665.15 2,457,643.72 125,000.00 2,582,643.72 | 684,567. 63. 10 || 60.44
#;º: s º as as as s = * * * * * * * * * * * * * * * * * * 3,302,219.81 || 308,898.77 | 16,205.74 47,757.17 || 372,861.68 1,836,042.20 | 94,600.00 | 1,930,642.20 334,421.46 58.47 | 89.69
Louisville & Nashville- - - - - - - - - - - - - - - - - 4,540,696.51 | 857,273.50 | 71,802.43 136,531.92 |1,065,607.85 2,702,231.44 | 125,445.00 2,827,676.44 || 598,416. 17 | 62.27 56. 16
Maine Central- - - - - - - - - - - - - - - - - - - * - - - - - - 755,177.28 221,213.44 15,489.10 || 20,679.17 || 257,381.71 490,253.17 | 39,141.09 || 529,394.26 || 179,082. 12 || 70.10 || 69.58
Michigan Central---------------...------. 2,526,762.00 || 518,316. 10 30,230.48 128,968.25 677,514.83 1,604,688.83 94,000.00 | 1,698,688.83 || 483,429.79 67.23 71.35
Minneapolis, St. Paul & Sault Ste. Marie. 1,589,796.34 295,446.75 39,098.94 || 47,202.17 | 381,747.86 692,877.57 | 80,683.30 | . TT3,560.87 || 385,204.67 || 48.66 100.91
Missouri Pacific-----------------------. 2,238,279.37 364,784.01 || 63,118.37 || 49,353.58 477,255.96 || 1,679,671.99 || 80,401.00 | 1,760,072.99 || 456,351.46 78.64 95.62
Nashville, Chattanooga & St. Louis. - - -] 989,554.23 y - xv. 21,342.35 || 25,312.08 || 251,397.66 702,540.14 || 20,500.00 723,040. 14 || 202,173.22 || 73.07 80.42
New York Central... . . . . . . . . . . . . . * - - - - - - 8,441,637.63 |2,200,319.12 212,003.25 || 418,342.84 |2,830,665.21 5,638,422.85 434,592.01 || 6,073,014.86 (2,096,398.21 71.94 74.06
New York, New Haven & Hartford. . . .] 5,161,870.05 |2,054,786.92 53,180.84 289,537.75 (2,397,505.51 3,218,818.37 || 330,000.00 ( 3,548,818.37 |1,599,439.85 | 68.75 | 66.71


§

Norfolk & Western. . . . . . . . * * * * * * * * * * * * *
Northern Pacific. . . . . . . . . . . . . . . . . . . . . . .
Oregon Railroad & Navigation Co . . . . . .
Oregon Short Line. . . . . . . . . . . . . . . . . . . . .
Pennsylvania Co - . . . . . . . . . . . . . . . . . . . . . .
Pennsylvania Railroad. . . . . . . . . . . . . . . . .
Pere Marquette. - - - - -------------------
Philadelphia & Reading. . . . . . . . . . . . . . . .
Philadelphia, Baltimore & Washington.
Pittsburgh, Cincinnati, Chicago & St.
Louis--------------------------------
St. Louis, Iron Mountain & Southern...
Seaboard Air Li
Southern Pacific - - - - - - - . . . . . . . . . . . . . . . .
Texas & Pacific. . . . . . . . . . . . . . . . . . . . . . . .
Union Pacific. . . . . . . . . . . . . . . . . . . . . . . . . .
Vandalia
* * * = * * * * * * is as ºr * * * * * * * = sº sº º sº, s sº º ºr sº as
373,711.97
283,374.25
2,990,353. 41 || 301,604.26 28, 262.38 || 43,845.33 1,696,813.58 | 84,000.00 | 1,780,813.58 74.25 59.55 75.83
6,696,435.53 |1,533,032.60 36,316.3i 157,051.17 1,333,066.58 3,861,081.14 254,337.jó | 4,055,313.14 |1,327,401.96 || 60.61 | 72.41
1,311,040.03 || 329,427.17 24,351.14 || 27,517.67 '381,295.98 || | 739,321.15 92,190.15 831,511.30 313,078.49 || 63.42 82.11
1,906,918.48 402,758.23 34,205.47 38,766.92 || 475,730.62 756,796.80 50,000.00 806,796.80 300,295.15 42.31 63-12
4,742,466.38 || 564,052.36 | 84,043.34 || 149,686.50 || 797,782.20 2,841,621.49 150,280.00 2,991,901.49 || 513,350.50 63.09 64.35
14,157,551.76 |2,531,694.80 203,126.54 || 461,307.67 |3,196,129.01 || 8,682,285.27 197,526.18 || 8,879,811:45 2,056,327.76 || 32.72 || $4.3%
1,390,746.52 | "288,483.16 20,437.61 40,487.08 349,497.85 944,300.28 47,372.37 991,672.35 | 257,734. 71-31 || 73.63
3,953,650.18 538,466.95 || 11,797.66 80,793.25 | 631,057.86 2,349,535.05 || 73,385.80 2,422,920.85 632,222.1Q || 31-28 || 109.9
1,501,350.28 586,008.12 30,239.04 || 104,572.75 | 720,819.91 | 1,063,510.37 || 35,771.59 | 1,099,281.96 469,729.03 || 73.22 65.17
3,406,473.63 560,176.40 98,434.79 131,669.33 799,280.52 2,125,005. 14 || 105,017.99 || 2,230,023.14 $25,545.13 85.4% $5.75
3,435,793. Aſ ſoft;5.54 56,773.25 | 53.731.67 || $20,315.46 | 1.377,773.73 || 65,866.00 | 1.447,633.78 || 386,702.58 || 59.80 || 74.32
1,734,707.44 344,239.20 || 39,098.03 || 61,304.42 || 444,641.65 1,107,362.51 59,418.00 1,166,780. 51 || 365,049.21 67.26 82.1Q
8,385,436.25 |2,407,610.61 | 161,861, 70 220,627.92 |2,790,100.23 || 4,362,017.01 || 240,062.62 4,602,079.63 |2,032,926.66 54.88 || 72.85
1,599,683.71 319,801.22 26,430.05 || 35,815.58 || 382,046.85 969,314.56 || 77,761.95 || 1,047,076.51 259,211.28 65.46 || 67.85
4,993,899.51 909,113.67 || 172,638.78 113,865.75 |1, 195,618.20 2,186,435.63 142,174.98 || 2,323,610.6l 829,330.47 || 48.3 3.3,
834,500.62 | 164,253.65 43,209.69 y =vo • 231,931.84 606,633.06 24,086.06 || 630,719.06 144,261.49 || 75.58 || 62.20
2,529,408.11 549,735.21 64,666.52 || 77,316.25 691,717.98 1,693,034. 64,494.92 | 1,757,529.20 || 470,680.69 || 69.48 || 68.05
170,042,915.51 |35,267,247.22 |3,109,160.32 |5,343,282.13 43,719,689.67 104,217,987.56 |5,742,735.17 109,960,722.73 |32,300,818.99 || 64.67 | 73.88
1. As reported by the Interstate Commerce Commission in Bulletin of Revenues and Expenses of Steam Roads No. 10 and No. 18.
* As stated by the Postmaster General in Document No. 105.
* One-twelfth of the total receipts from express, excess baggage, milk carried on passenger trains, parlor and chair car receipts, and miscellaneous passenger receipts during the
terstate Commerce Commission.
fiscal #: 1910 as reported by the
ncluding, also, Indianapolis Southern and Yazoo & Mississippi Valley.
EXPLANATION.—This table contains data for 46 railways, being all that #; in Postmaster General's Table 7 (Document 105, pp. 272-281) for which that table states opera-
ting expenses and taxes chargeable to the mails, during November, 1909, of $1
fººtº by the Interstate Commerce Commission, an
000 or more, with the exception of the Grand Trunk system, for which tº: data are not
the Atchison, Topeka & Santa Fe, for which the figures used by the Postmaster General are those of the month of January,
0. It represents $3,109,160.32 out of $3,607,773.13 of mail revenue included in that table, or 86.18 per cent. Its purpose is to show that even using the extremely low and erroneous
estimates of operating expenses and taxes chargeable to the mail service made by the Postmaster General, the
isparity between the ratio of these expenses to revenues, for the
passenger services is so great as to leave no room for the belief that (with any reasonable allowance for a return to investors upon the fair value of the property used in the service of
the public) the passenger-train services as a whole are adequately remunerative.
Of the 46 railways included, 2 show a ratio of operating expenses and taxes apportioned to the passenger-train services by the Postmaster General of over 100 per cent, 5 over
90 per cent, 10 over 80 per cent, 12 over 70 per cent, 16 over 60 per cent, and only 1 under the latter percentage. The ratio for all the railways in the table is 73.88 per cent.

122 RAILWAY MAIL PAY.
Mr. PETERs. You will find some very valuable information in that
brief. Our committee, in closing that brief, as a final word urges:
That in justice to the great interests which it represents, in justice to millions of
railway employees whose arduous and responsible services are not overpaid, in jus-
tice to hundreds of thousands of depositors in Savings banks and owners of policies of
insurance and frugal investors everywhere, in justice to millions of workers in thou-
sands of industrial enterprises whose jº depends upon services which only
Solvent railways can suitably render, that if any doubt remains as to the propriety of
the relief herein recommended, an effort be made to have the voluminous data in the
oSession of the Postmaster General laid before Congress, to the end that the facts
erein set forth may be fully substantiated.
The CHAIRMAN. You want that in the record in addition to what
we already have 3 • ,
Mr. PETERs. Yes; that is in addition. *
The CHAIRMAN. Could you furnish for the information of the com-
mission your data and your method of deduction on which you make
your statement on page 11 that the car-foot mile return from mail is
3.21 mills and from other service 4.35 mills.
Mr. PETERs. That is set forth here in our preliminary report.
(Exhibit A.)
The CHAIRMAN. All the data and information on which you draw
that deduction is not contained in this preliminary report 2
Mr. PETERs. No; it was taken from the reports that went to the
Post Office Department.
The CHAIRMAN. Have you copies of those ?
Mr. PETERs. Only part of them. They are with the department,
and I have no doubt most of that information was tabulated and
could readily be worked out. You asked for some information as to
the relative pay received by the railroads for the transportation and
hauling of express matter as compared with hauling and transporta-
tion of the mail per ton-mile. I had that worked out by Mr. Bradley,
and I would like to read his letter, which was addressed to me. I
have not addressed it to you, but I can do so.
ToN-MILE RATE FOR EXPRESS AND UNITED STATES MAIL.
THE PENNSYLVANIA RAILROAD Co.,
GENERAL OFFICE, BROAD STREET STATION,
Philadelphia, January 25, 1913.
Mr. RALPH PETERs, -
Chairman Committee on Railway Mail Pay,
Pennsylvania Station, New York, N. Y.
DEAR SIR: At our recent interview in Washington, Senator Bourne requested a
statement showing the pay received by the railroad companies per ton-mile for the
transportation of express matter as compared with the rate per ton-mile for the trans-
portation of the United States mail in connection, with my verbal statement that the
two rates were not materially different. I have assembled some facts and references
in regard to the matter and submit them herewith:
Fæpress traffic, ton-mile rate.—The First Annual Report of the Interstate Commerce
Commission on the Statistics of Express Companies for the year ending June 30, 1909,
contains a table on page 19 which shows that the average tonnage revenue per pound
received by the railroad companies from the express companies is 0.74 cents, or about
three-fourths of a cent. This rate per pound is equivalent to::$14.80 per ton carried
the average distance. It is only necessary to divide this by the average haul of ex-
press matter to get the rate per ton-mile.
In the Interstate Commerce Commission’s report, opinion 1967, In, re. Express
Rates, Practices, Accounts and Revenues, page 429, third paragraph, it is stated,
“the average distance which a package of any size is now haulēd by the express
company is about 200 miles.” Dividing $14.80 by 200 we obtain the rate of 7.4 cents
per ton-mile. The Bureau of Railway Economics in its study of the parcel post
quoted the results of calculations as 7.7, and 7.5 cents per ton-mile, but I do not
RAILWAY MAIL PAY. 123
know what data, they used. However, all three rates quoted above, 7.4, 7.7, and 7.5
cents per ton-mile are not materially different. -
United States mail, rate per ton-mile.—I am informed that the Post Office Depart-
ment reported to the Hughes Commission for the Investigation of Second Glass Post-
age Rates that the ton-mileage of the mails carried on the railroads as of July 1, 1908,
was 489,150,814 ton-miles. The average rate of expenditure for the transportation
of the mails on railways on that date, as given in the report of the Post Office Depart-
ment, was $44,718,948.26, or 9.1 cents per ton-mile. About the same time Mr.
Fruttséhnitt had the mail ton-mileage on railways computed for use in his pamphlet
on railway mail pay and published the figures as 484,683,135 ton-miles as of June 30,
1908. The annual rate for railway mail transportation on June 30 was $44,722,985.47,
thus giving a rate of 9.22 cents per ton-mile.
These rates per ton-mile for mail can be computed as of June 30, 1912, by using the
ratios of the year 1907 in relation to the weight of paid second-class mail matter which
is published by the department in the annual report.
bserving that the ton-mileage of all the mails carried by the railroads on July 1,
1908, was 489,150,814 and that the weight of paid second-class matter for the year
ended June 30, 1908, was 347,432 tons, it is evident that the ratio was 1,408 ton-miles
for all mail and equipment to each ton of second-class matter mailed. Applying this
ratio to the weight of paid second-class matter for the fiscal year 1912, which was
469,957 tons, we obtain a ton-mileage for all mail and equipment of 661,000,000 ton-
miles. Dividing this last amount into the railroad pay for the transportation of the
mails which on June 30, 1912, was at the rate of $46,336,293.86, we arrive at a rate of
7.01 cents per ton-mile.
Further, if the ton-mileage had been based upon a simultaneous weighing in 1912
of the mails all over the United States instead of upon four Sectional weighings in
§. of the country from 1909 to 1912, inclusive, the ton-mileage would naturally
e higher and the rate per ton-mile lower than the figures just quoted. . .
During the last investigation of railway mail pay by a joint commission of Congress
in 1900, Prof. Adams shows (vol. 2, p. 253) that the rate per ton-mile for mail transpor-
tation on railroads declined from 20.195 cents in the year 1880 to 11.254 cents in 1898.
The above illustrations show that the reduction has continued in accordance with the
automatic downward scale prescribed in the law. *
The legal rate of pay to a railroad carrying above 5,000 pounds average daily weight
is $20.30 per ton per mile per year, or 5.561 cents per ton-mile. After the weight
becomes 48,000 pounds the ton rate per mile per year for additional weights is $19.24,
which is equivalent to 5.271 cents per ton-mile. The automatic reduction in the
scale of rates as prescribed in the existing law brings the current rate constantly
toward these minima accordingly as the tonnage increases.
Assembling for close comparison the rates alluded to above, we have the following:
3 * Transportation rate per ton-mile.
United States mails for the year— Cents.
1880----------------------------------------------------------------- 20. 1
1898----------------------------------------------------------------- 11.2
1908------------------------------------------------------------ * - - - - 9. I
1912----------------------------------------------------------------- 7
United States mails, legal minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 27
Express traffic, 1909. . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7.4
Congressman Lewis frequently quotes the rate paid the railroads for transporting the
mails as 13.2 cents per ton-mile excluding the weight of equipment, and matches this
against the rate for express traffic of 7.4 cents per ton-mile, which he says also excludes
the weight of the equipment. Possibly he does not understand that in the case of the
mails the term “equipment” means the pouches and sacks which inclose the mail in
transit and which not only protect the mail against abrasion and from exposure to the
weather, but also (and most important) preserve the identity of the separations and
sortations that have been made at a heavy cost for expert clerical labor of post-office
clerks and railway postal clerks. The mail bags are, therefore, a necessary and com-
ponent part of the mail traffic, just as are the postage stamps on the letters or the strings
that tie up the package of letters or any other auxiliaries that might be considered as
“equipment.” The mail bags compose about 35 per cent of the total weight of mail
traffic carried by the railroads according to estimates of the Second Assistant Postmaster
General, but are an essential and indispensable part of the weight to be transported.
In the express traffic the situation is entirely different. The equipment may be
said to consist of only a few trunks and safes, which are used to inclose very small
packages and valuable packages. Those who are familiar with the express traffic
124 RAILWAY MAIL PAY.
estimate that the relative weight of these trunks and safes to the total tonnage of
*E. matter transported would be much less than 1 per cent.
onsequently, the comparisons above made are in substantial conformity with the
weights carried by the railroad companies, both for mail and express, while the
method used by Congressman Lewis reaches a result by excluding a large item neces-
sarily associated with the mail Service and matching it with a similar item in the
express service which does not exist in anything like the same proportion.
Mr. LLOYD. Does not that mean this, that in a matter of the
mail the pouch is to be returned as an empty. In the matter of
express, that which incloses the thing transported is not returned,
if it is in a box or a crate, but it is retained by the individual. It
is true that he has paid for it in transit but the Government has also
; for the mail sacks in transit, but it has to pay for the transit
ack because it is empty equipment?
Mr. PETERs. That is right.
Mr. STEwART. You must not overlook the fact that we are sending
the empties back by freight.
Mr. LLOYD. I understand, but I think the distinction Mr. Bradley
is undertaking to make is the fact that with the express you do not
return the case in which the goods are shipped, while in the case of
the mail you do return the sack in which it is forwarded.
Mr. STEwART. I assumed that you estimated that the mails
increased in the same ratio between 1908 and 1912%
Mr. BRADLEY. I tested that by reference to the ratios in previous
years, and while I haven’t that in there it was thoroughly depend-
able. I think if the postal car is added it would add not quite 1
cent; I think about eight-tenths or nine-tenths of a cent.
Mr. STEwART. I think you would find it a little more than that.
For instance, our figures for 1908 were made on both bases, and my
recollection is that adding the postal-car pay brought it up to nearly
11 cents—10 and some fraction of a cent.
Mr. BRADLEY. I do not think it would be as much as that.
Mr. PETERs. I attached to that letter of Mr. Bradley’s a chart
showing the rate per ton per mile in cents showing automatically
how it goes down with the increased weight. On the small roads
with 300 pounds it is about $1.50 per ton-mile, and it goes down to
around 7 cents per ton-mile on the very heavy weights. That is fully
set forth in our principal brief. The last paragraph of the letter is
as follows:
The data quoted above would be serviceable, I think, in enabling the Interstate
Commerce Commission in conjunction with the Post Office Department to certify to
the approximate rate per ton-mile obtained by the railroad from express or mail
traffic transported. -
Yours, truly, W. J. BRADLEY.
Mr. STEWART. I would like to call attention to the further fact that
the figures for 1912 include the cheap rate for freight shipments.
Mr. PETERS. That was merely to reach a basis for a calculation.
The CHAIRMAN. You were present before we took a recess when
an extract was read from Postmaster General Vilas's report of 1887
in reference to the R. P. O. cars, and I requested you to present a
statement so that the committee might have such information as
would have a bearing upon that particular subject. Would you be
able to prepare such a statement and file it with the committee in
order that we might insert it in the record by to-morrow morning?
RAILWAY MAIL BAY. * 125
Mr. BRADLEY. I think we can have it for you by to-morrow morning.
I will do my best to have that.
Thereupon, at 10.05 o'clock p. m., the commission adjourned until
11 o'clock a. m. Wednesday, January 29, 1913. -
WEDNESDAY, JANUARY 29, 1913.
Joint COMMITTEE ON SECOND-CLAss MAIL MATTER,
Washington, D. C.
The joint committee met, pursuant to adjournment, at 11 o'clock
à. DOl.
Present: Senator Jonathan Bourne, jr. (chairman), Senator Harry
A. Richardson, Senator John A. Bankhead, Representative James W.
Lloyd, Representative William E. Tuttle, jr., and Representative
John W. Weeks.
STATEMENT OF MIR. RALPH PETERS–Continued.
The CHAIRMAN. Mr. Peters, yesterday we requested that as soon
as practicable you prepare a statement to file with the commission
in reference to your comments on the extracts read and included in
the hearing from ex-Postmaster General Vilas's report of 1887. How
soon do you think you will be able to have that statement prepared
and submitted to the committee'
Mr. PETERs. It will take at least two weeks.
The CHAIRMAN. That will be satisfactory to the members of the
commission, I take it. Now, to sum up your views, and, as I under-
stand, not only your own but the views of your associates, represent-
ing practically 214,000 out of 250,000 miles of railway in the United
States, you are greatly opposed to the enactment of either of the bills
suggested by the department, the effect of which would be to sub-
sºle space for weight as the basis of the service rendered, are you
not
Mr. PETERs. Our committee is practically united on that. The
R.". of the railways in regard to the space basis is united. The
ew England roads were willing to take a space basis, or some basis
that would give them full compensation for the service performed, so
that they would get back a little more than a dollar for every dollar
that they spent in the service. They felt that their loss was $1,000,000
a year, and they were unable to figure out on the weight and space
combined, or the space alone, how #. would get that full return, but
they wanted to consider those points. The authorities in the rail-
roads who have studied this question most carefully for the past 30
years all agree that weight must be the gauge and space merely an
incidental.
Mr. WEEKs. Do you think the position taken by the New England
railroads from their standpoint is sound 8
Mr. PETERs. I think they are sound in wanting to be fully com-
pensated. The question is how to get that, and that is the case with
all of us. We only want what is fairly compensatory for the service
126 RAILWAY MAIL PAY.
rendered and the weight may not always bring it. The difficulty
seems to be in this point that it is a universal service under universal
conditions, alike everywhere. Every contractor must be paid as
fairly as every other. You can not make a different rate #. each
different road in the country, as is proposed under this space basis,
Out of cost rates.
Mr. WEEKs. Will you point out how the conditions which relate to
the New England road differ from those of other roads?
Mr. PETERs. Relating to our own roads?
Mr. WEEKS. Yes.
Mr. PETERs. Or to the small roads?
Mr. WEEKS. Yes.
Mr. PETERs. The very large roads have a concentrated or heavy
load of mail and may get a fairly reasonable compensation for the
volume that they have and the ability to carry the mail in con-
centrated quantities. A road like the Long Island, with 250 trains
carrying more or less mail every day, has its energies so scattered
that it is hard to fix any basis that will fairly compensate it. The
New England roads are very much like the Long Island, or like the
West Jersey & Seashore, or your other roads in dense population
where you have frequency of service. It is very doubtful if the .
space basis could be fixed or arranged so as to give them the complete
compensation there, but you have to take the country as a whole in
this and take the railroads as a whole to fix a basis that can not be
manipulated and left entirely in one man's power.
Mr. WEEKs. Would it be possible in a segregated section like
Long Island or New England to have a separate arrangement or
different arrangement from that which obtains in other parts of the
country? The Long Island Railroad is the only railroad on Long
Island, is it not ?
Mr. PETERs. Yes; barring a few rapid transit trolley lines, but our
case can probably be cared for under the rate for electric railroads,
or at least portions of it can be.
Mr. WEEKs. That can be done in New England, in your opinion?
Mr. PETERs. As they electrify their railroads they can to a certain
extent; but I do not think it could cover all the rates. The difficulty
is when you get to making different rates for each section, you have
more complications in the matter, and you have to legislate for each
Fº section in establishing rates for those sections, and the
ave to be carefully worked out. I know we have not studied that
point. We feel that we should not be absolutely in the power of a
Government officer. Under the space basis law, as is proposed, the
Government officer allots the space, he makes the regulations, and those
regulations are most burdensome, and they are the instrumentalities
that make so much difficulty in all relations with the Government in
the handling of the mails. He makes a regulation as to the carriage
of his postal clerks to and from their homes, and for the free trans-
portation of the postal inspectors and he makes various regulations,
as shown in our testimony, which we have submitted. Under the
space basis he will fix the space and then he will fix the rate at which
that space is to be paid for, as based on cost. The power is taken
from Congress, the railroads have no recourse except an appeal, indi-
rectly to the Commission through the Postmaster General. The
thought in our minds is that it should not be the province of the de-
RAILWAY MAIL PAY. *, 127
Fº to force a maximum service for a minimum pay, but get the
est service for the Government in the handling of the mails at a
reasonably fair compensation to its contractors.
Our committee have offered its services to this commission to go
into the very bottom of this thing, to study it in all its light, and if
we can get something better than the weight and space basis, to do
it, but from our experience in the past 40 years, and from the experi-
ence of all those who have studied the matter, we feel that the weight
and space basis with relief from the side service, together with annual
weighing and pay for the apartment cars is the best and fairest basis.
President McCrea, of the Pennsylvania Railroad, made a very thorough
study of this matter and appeared before one of the commissions
some 16 years ago. His conclusion then was that the weight, with
additional compensation for the space, like a post-office car, would
be the proper basis. In talking to him a short time ago he said he had
seen no reason to change his views. Mr. Krutschnitt, who appeared
before the commission about 10 years ago, reached the same con-
clusion. All of the gentlemen who are associated with me have been
either in the Government employ or the railroad employ for the last 20
years in connection with the handling of the mails, and they all have
the same view.
Mr. LLOYD. Your objection to the space basis is not so much
directed to that as a means of determining compensation as it is to
the administrative methods by which the amount of space is deter-
mined. In other words, you do not wish to place yourselves in the
position that the Government itself will absolutely control the amount
of your compensation.
Mr. PETERs. Not only that, but we object to being loaded down
with double the amount of service in a limited space. There is the
whole object of this bill.
Mr. LLOYD. Suppose that the law was so fixed as to protect you
from the department's regulations and at the same time furnish you
with reasonable compensation. You would not then object to the
space basis, would you ?
Mr. PETERs. I think we certainly would object to it because we
can see no possible way of having our revenues grow with the growth
of the business.
Mr. LLOYD. Under the space system would not your compensation
grow with your business?
Mr. PETERs. Very, very slowly.
Mr. LLOYD. You would get twice as much for carrying two cars as
you would for carrying one º -
Mr. PETERs. Perhaps.
Mr. LLOYD. And five times as much for carrying five cars as you
would for carrying one 3 At the present time you do not get that,
under the weight basis
Mr. PETERs. But if you concentrate your loads into your cars and
reduce your space
Mr. LLOYD, No. Here is the problem I am trying to disabuse you
of. If the objectionable features of the space basis were removed and
you were assured of fair treatment, then you would not object to the
space basis, would you? The thing, as I understand it, with all your
views, is that you fear you are not going to be fairly treated by the
Government; that the Government is going to require too little space
75904—No. 1–13—9
128 RAILWAY MAIL PAY.
for the accomplishment of that which must be done. In other words,
they are going to compress the business into too small a space,thereb
saving expense to the Government and causing you just as .
trouble if they did not press it into so small a space.
Mr. PETERs. We handle all other business, except the passenger
business, on a weight basis. Everything that the Government sends
through the mail or parcel post is on a weight basis.
Mr. LLOYD. I appreciate that, but, on the other hand, that is not
an answer to the space basis, because the mail is a different proposi-
tion from anything else. You would not want to say that freight
should be carried exactly like a letter?
Mr. PETERs. No; we do not say that. We do say that the weight
is the gauge of the service; that we must be compensated for the
weight we haul. We are hauling the weight in addition to hauling
the space. &
Mr. LLOYD. After all, Mr. Peters, it is not the weight of the mail for
which you really receive compensation, for you furnish a great big car
and you only have two or three tons in a great big car, which would
have the capacity otherwise of carrying possibly 20 tons, and you
have only two or three tons of mail.
Mr. PETERs. But we have a storage car alongside of it with the
other 20 tons.
Mr. LLOYD. That is a separate car'
Mr. PETERs. That is a separate car, but they run together, so that
the mail is sorted from one car to the other and handled.
Mr. LLOYD. That is true only on trunk-line railroads.
Mr. PETERs. On trunk-line roads. That is true on the heavy mail
routes, and the storage cars will increase as the parcel-post business
increases, the same way that the apartment cars are increasing.
The CHAIRMAN. Ten-elevenths of your compensation now comes
purely from your weight and one-tenth from R. P. O. cars?
Mr. PETERs. Yes; practically so. g
Mr. LLOYD. And the more the storage cars carry the more benefit
it is to you, looking at it from the standpoint of the railroad com—
anies?
p Mr. PETERs. If they are loaded, yes; but we count the weight in
those cars. It is the weight that goes with them. º
Mr. LLOYD. No. You get paid now for the weight, but if you got
the same pay on the space basis
Mr. PETERs. We do not see how you can put a space factor there
that you can rely upon, like you can on weight, that will fully protect
the railroads in that matter.
Mr. LLOYD. There would not be any trouble in determining that on
a full º; The trouble in determining that is in the apartment car,
is it not t
Mr. PETERs. It is not only in the apartment car and the full
R. P. O. car, but also in the storage car, and likewise in the ordinary
baggage or combined car, for closed pouches.
Mr. LLOYD. The objection that you urge does not apply to the
storage car, nor to the full R. P. O. car, does it? It only applies to
the apartment car and the car in which you carry small pouch mail?
Mr. PETERs. It applies to all of those. That is right. . We have felt
that a joint inspection should be made by the commission and repre-
sentatives of the department and of the railroads going to some main-
RAILWAY MAIL PAY. 129
line roads and to some branch-line roads, and to some main-terminal
post offices, so that you may see exactly what service is performed by
the railroads. In St. Louis I think there are from 60 to 65 porters
employed specially to meet these mail trains to make the transfer
from one road to the connection. In Kansas City I think there are
85. In Chicago there are from 60 to 65 in one station alone. There
is this immense force employed for handling these mails from the cars
on one line to the connecting lines. There is that same sort of condi-
tion at every one of the trunk-line junction points, and there is a large
force at intermediate points. We have a main transfer station just
out of Brooklyn and New York called Jamaica, where all of our trains
from three terminals concentrate and then disseminate at that point.
We employ a force there in handling the mails from one train to
another—some 250 trains a day. Records are kept of those mail
pouches. There are all sorts of services being performed by the rail-
roads that only a personal inspection of the commission, with those
who are able to point out these things, will determine. :
The CHAIRMAN. As I sum up your views, as represented in corre-
spondence, conferences, and in the hearings, the desideratum from
your viewpoint is the adoption of a plan that will be universal. *
Mr. PETERs. I think it has to be. It is a universal service.
The CHAIRMAN. Your contention is that space could not be made
universal but under the substitution of space for weight it would be
necessary to have separate contracts with the 795 railroads with
whom the Government now has mail contracts :
Mr. PETERS. Separate rates of pay. &
The CHAIRMAN. Separate rates of pay. That is fundamental. It
is also fundamental #. no transportation company has yet evolved
a yardstick that will remain the same in its measuring capacity, that
will be applicable to all the railroads, always, as the measure of the
service rendered, that fundamentally all rates of railroads are based
primarily on the weight measure of the service rendered.
Mr. PETERs. Right.
The CHAIRMAN. Your second objection is, as I glean it, you feel
that you would be left to the personal equation of the individual who
happened to be Postmaster General at the time, as to the determina-
tion of the space used.
Mr. PETERs. Yes.
The CHAIRMAN. Which you believe is eliminated by using weight
primarily as the measure of the service rendered.
Your third objection is that the Government, in dollars, would
make no saving by the substitution of space for weight, but on the
contrary, under the figures you have presented and in accordance
with the last bill suggested by the Postmaster General, you would,
on a 4 per cent basis, probably receive $10,000,000 more compensa-
tion than was worked out by the department in its original bill. In
other words, that the $9,000,000 apparent saving, with a 4 per cent
interest on the capital invested, would result in the Government
paying a million dollars more than they now pay under the existing
conditions?
Mr. PETERS. Yes.
The CHAIRMAN. On a 6 per cent basis that the Government would
pay $6,000,000 more than they now pay. You feel that under the
existing system there are certain injustices done the transportation
130 RAILWAY MAIL PAY.
companies, first, that you should be relieved of the burden of the side
service, which, as I understand under your calculations, would rep-
resent four million and odd dollars? -
Mr. PETERs. A little more than $4,000,000.
The CHAIRMAN. Second, that you should have compensation for
all space in the apartment cars. - -
. PETERS. ere there are postal clerks.
The CHAIRMAN. Where postal clerks are carried, which would rep-
resent an additional compensation to you over what you now receive
of practically four and one-half million dollars?
Mr. PETERS. Yes. -
The CHAIRMAN. Third, that you are entitled to annual weighing
for the reason that now, under the quadrennial weighing, you get no
compensation for any increased weight or service rendered for a
period of four years?
Mr. PETERs. That is correct.
The CHAIRMAN. That, according to your calculations, it is your
opinion that you are thus º of a compensation which, from
your viewpoint, you are entitled to of how many millions annually 3
Mr. PETERs. I have no exact figures on that. There have been
estimates varying from one and a half millions a year to four million
and a half. It might be between two and three millions. I do not
know whether Mr. McBride or Mr. Stewart ever figured that point.
The CHAIRMAN. That you are entitled to a special weighing, in view
of the enlargement of the fourth-class mail matter going into operation
the 1st of last January, in order that you may get compensation for the
increased business incident to that increased activity on the part of the
Government 7 t
Mr. PETERs. That is right; and that an adjustment under those new
weights should be made at the beginning of the fiscal year July 1, 1913,
and that we should have a weighing each year thereafter until this
matter is finally adjusted. .
The CHAIRMAN. That practically covers it, does it 8
Mr. PETERs. The position of the railroads; yes. ...You have stated
it so clearly that I have nothing more to say, Mr. Chairman.
Mr. WEEKs. I want to refer to the suggestion I made yesterday and
ask Mr. Peters why he and those associated with him do not draw a
bill embodying their views and reasons for each item in the bill, so
that we may have that before us? x
Mr. PETERs. We have drawn four or five, which went to the waste-
basket; all coming back to the conclusion that the present basis of
weight and coupled with the extra compensation for the space [like
the post-office car] was , the only reliable accurate gauge for the
service. We would be glad to try that again and see if we can not
draw one.
Mr. WEEKs. How do you expect us to do it if you can not %
Mr. PETERs. That is just the point; but, we say, let the º
of the present law stand. Everybody who has investigated this
question, and every commission that has gone through it, says that
you get nearer to making a fair basis of pay under the present law,
provided you will give the relief that we ask for—for an annual
weighing, pay for the apartment post office, and relief from this
terminal and messenger service.
The CHAIRMAN. I thank you, on behalf of the committee, for pre-
senting your views to us.
RAILWAY MAIL, PAY. 131.
STATEMENT OF MIR. W. W. BALDWIN. .
The CHAIRMAN. Mr. Baldwin, it will be necessary that you be
SWOI’Il.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Kindly state your age, residence, and occupation.
Mr. BALDw1N. I am 67 years of age. I live in Burlington, Iowa,
and I am vice president of the Burlington road.
The CHAIRMAN. How long have you been in the railroad service?
Mr. BALDw1N. Since 1879, for the Burlington Co.
The CHAIRMAN. You are connected with these gentlemen who
have been before this committee in reference to the readjustment of
railway mail pay, and your roads with which you are identified are
in the association of which Mr. Peters is the chairman, representing
some 214,000 out of 250,000 miles of railroad in the United States,
are vou ? -
Mr. BALDw1N. Yes, sir.
The CHAIRMAN. You concur in the views expressed by Mr. Peters
in reference to the attitude of the railroads in that association, do
you ?
y Mr. BALDWIN. I do; and I especially concur in the statement or
the summary brought out as just expressed by yourself.
The CHAIRMAN. Has any bill of recent date been introduced in
Congress representing the railroad views, in the adoption of which,
in your opinion, justice would be done the transportation companies
of this country?
Mr. BALDw1N. I think for several years the railroads have felt that
they were very unjustly treated by the operation of the divisor and the
reductions that have taken place in the rates of pay in recent years,
partly on account of that and partly on account of the regulations of
the department. They have been very much impressed with the
complaints which have been made by the short-line roads, specifically,
and they have felt that some sort of reimbursement of their loss.
should be made. They have cooperated with the short-line roads in
the presentation of what is called the Talbott bill as furnishing a sub-
stantial measure of relief to the New England roads, and roads like
the Long Island Co., and the short-line roads. They have believed
under the present, conditions that that is probably, as much in the
way of relief as they could get, and that it ...a go far toward
doing justice, especially to the short-line roads and to such roads as
the Long Island and the New England roads, with a measure of
justice to the roads that carry the bulk of the mails, also, because we
ave a great many branch roads upon which there is apartment-car.
service which would be affected by it. *
The CHAIRMAN. Particularly the allowance for apartment cars;
that would be a relief ?
Mr. BALDWIN. There is an element of great injustice of paying the
railroads upon the weight that they carried four years ago. There
ought to be an annual weighing. Those two things would be sub-
stantial measures of justice which they are entitled to. It seems to
us, particularly in view of the fact i. probably based upon the
investigations of the Post Office Department and the concessions
which the department itself has just made, it would appear that the
132 RAILWAY MAIL PAY.
roads are underpaid quite as much as they would be reimbursed by
the operation p the Talbott bill. *
The CHAIRMAN. Instead of “concession,” I would say “modi-
fication.” - -
Mr. BALDw1N. I will use the word “modification.” s
The CHAIRMAN. I would use that word, because the department
can not do other than simply submit its views. It can not 5.
Mr. BALDWIN. No.
The CHAIRMAN. Do you concur, according to your experience in
railroading, with the statement that, so far as you are aware, no
transportation company has ever used space as the basic principle
on which your rate charges are founded as the measure of the service
rendered 2
Mr. BALDw1N. So far as I know.
The CHAIRMAN. In the systems with which you are identified and
have been connected, weight is the basic measure ?
Mr. BALDw1N. It is. *.
The CHAIRMAN. And all your calculations are based upon that ?
Mr. BALDw1N. Except for passengers. The express companies
charge on a basis of weight and we receive our compensation for car-
rying express matter through them.
Mr. WEEKs. If the time of weighing the mail were modified so
that the mails were weighed every year, do you think it would be fair
for the railroads to pay three-fourths of the expense—that is, leaving
it so that the expense which the Government would pay would not
be any greater than it is now % -
Mr. BALDw1N. Well, I have no authority to represent the roads
in a matter of that importance. Our impression, Mr. Weeks, has
been that the weighing every year, for 35 days, properly organized,
will cost very little more than weighing jºi. for 105 days.
I think the railroads ought to be willing, speaking for myself, to share
in any increased expense.
The CHAIRMAN. You certainly would be willing to pay $300,000
for the privilege of getting from one million and a half to four millions
a year, I should think?
Mr. BALDWIN. That is undoubtedly good financing.
Mr. WEEKs. Do the trunk lines make large profits from the trans-
portation of mails?
Mr. BALDw1N. They do not.
Mr. WEEKs. Do you know any railroad that makes a large profit?
Mr. BALDw1N. In the carriage of the mails?
Mr. WEEKs. Yes.
Mr. BALDw1N. I do not, as compared with any other business that
they perform. º
Mr. WEEKs. Do you know any railroad that makes a larger profit
in carrying the mails that it makes in carrying express %
Mr. BALDWIN. I do not.
Mr. WEEKs. Do you think there are such 3
Mr. BALDw1N. There are a good many railroads in the country and
I would not want to say that there is no road that has only a small
amount of express and a larger amount of mail. That question of
volume would affect the question of the total returns. |
Mr. WEEKs. I do not mean volume, but I mean per ton per mile.
RAILWAY MAIL PAY. 133
. Mr. BALDw1N. I can not say that I do know of any such road.
That is the only way I would be able to answer that.
Senator BANKHEAD. You said just now that you got compensation
for carrying the express, from the express companies.
Mr. BALDw1N. Yes, sir.
Senator BANKHEAD. Now, if it should turn out that the parcel
post is going to reduce the receipts of the express companies mate-
rially, as everybody supposes it will, it will reduce your revenues to
that extent 3 • -
Mr. BALDw1N. It will to the extent of 57 per cent.
Senator BANKHEAD. At the same time it will increase your burden
by putting more weight into the mail service
Mr. BALDWIN. That is true.
Senator BANKHEAD. And for that increased weight in the mail
service you get no pay, unless there is an annual weighing or unless
there is a weighing at the latter part of this year?
Mr. BALDw1N. We get no pay until there is a weighing.
Senator BANKHEAD. And therefore you contend they are cutting
you at both ends? †
Mr. BALDw1N. They certainly are, in that respect.
The CHAIRMAN. Will you elucidate a little more on the 57 per cent
proposition which you just stated ?
Mr. BALDw1N. All I meant was that the express companies pay us
57 per cent of their earnings from the business which they transmit
Over our roads.
Senator BANKHEAD. They pay that for hauling their cars?
Mr. BALDw1N. That is our compensation for conducting that
business. -
The CHAIRMAN. Is it possible to evolve any system in rate making
in the transportation business that will be absolutely equitable to all
lines, trunk and short lines as well? In other words, will not the trunk
lines always have the advantage of doing a wholesale business as
against a retail business performed by the short or branch lines?
Mr. BALDWIN. In the case of the mails where concentration takes
place, you will recall that the rate goes down tremendously; it goes
down to where it is not more than one-twentieth of the rate on the
very small routes. Another thing, where the greatest concentration
of the mails occur, you have special train service, special fast mail
trains, which are very expensive, and that element comes in and has
to be considered in determining not only the value of the service to
the Government, but the expense of the service to the company that
performs it.
The CHAIRMAN. Is this not true: That under your existing rates
as your volume of business increases your revenue per pound de-
creases, but your net revenue as a whole increases on the activity of
the service rendered 3
Mr. BALDw1N. It depends on how much it costs to perform the
business. In the case of the Great Northern they recently put on a
special service to the Pacific coast. That is an unusually expensive
service on account of the peculiar condition of snow on the mountains,
etc., and the deductions that are made on account of delays and all
that. To show that they get adequately compensated because of
the increase in weight is something, that has to be studied pretty
carefully.
134 RAILWAY MAIL PAY.
The CHAIRMAN. If there are three railroads running to a com-
petitive point, say, for instance, “A,” “B,” and “C,” if “A” chooses
to put on extra service in order to get the contract, believing that the
possession of the contract is an advantage in its competition with “B”
and “C,” is there any reason why the Government should pay the
cost of a loss that “A” makes in his transaction ?
Mr. BALDWIN. I should say not, if such a condition exists any-
where.
Mr. WEEKs. How many competitive lines are there running solid
mail trains between Chicago and San Francisco º
Mr. BALDw1N. We run two trains weekly from Chicago to Omaha.
Just what the mail service is on the Union Pacific or the Santa Fe I do
not know. .
Mr. WEEKs. For instance, between Chicago and Omaha, how much
competition is there in solid trains 7
Mr. BALDWIN. In solid trains we have what is called the fast-mail
service from Chicago to Omaha on the Burlington. Just what serv-
ice is put on by the Illinois Central and by the Great Western, the
Rock Island, and the Northwestern, and the Milwaukee, I am not
prepared to state.
Mr. WEEKS. Could that service be segregated from the other mail
service if the department asked for bids to conduct the service as it
would a star-route service—that is, as a result of competition ?
Mr. BALDWIN. I would not be able to answer that question. I do
not know. I know that if the mail as now concentrated upon the
fast-mail route from Chicago to Omaha was divided up among all the
roads there would be no fast-mail service, because there would not
be enough of it to justify it.
Mr. WEEKS. I do not mean to divide it up, but I mean one road
conduct all the service under conditions that would be imposed by
the department, only do that as a result of bids for two or three
€8,I’S -
y Mr. BALDWIN. That is purely a theoretical question which I would
not be able to answer.
Mr. WEEKs. It has not been considered by anyone?
Mr. BALDWIN. It has never been considered by us.
Mr. WEEKs. Would it be possible, in your opinion, to do that to
the advantage of the Government and perhaps to the advantage of
the railroads, too ! \ -
Mr. BALDw1N. My opinion upon that subject would be purely theo-
retical and of no value.
Mr. WEEKs. Would not that leave the rest of the service which the
Burlington road, for instance, performs similar to the service per-
formed by any railroad—that is, a short-line railroad'. -
Mr. BALDwiN. You mean if we lost the fast mail?
Mr. WEEKs. Yes. .
Mr. BALDw1N. I presume it would.
Mr. WEEKs. It is an entirely distinct service from the rest of the
service which you perform 3 -
Mr. BALDw1N. It is, and a very expensive service in many ways.
Mr. WEEKs. If the cost were arrived at, as a result of competition,
would that be unfair?
Mr. BALDw1N. I do not see how my answer to a question of that
kind would be of any consequence. -
RAILWAY MAIL PAY. § 135.
Mr. WEEKs. The reason I am asking the question is because it.
seems to me the greatest difficulty to be met with in this whole mat-
ter is preparing a general proposition which will not do injustice to
somebody or pay somebody more than they should be paid. The
service is so dissimilar in different sections of the country and even
on the same road. -
Mr. BALDw1N. Mr. Scott had some figures here yesterday with
regard to earnings between Chicago and St. Louis upon their con-
centrated service which I thought were quite impressive. They
were not put into the record. . We are entirely willing to have that
question investigated as to whether or not we are being paid too
much or too little for the service that we are rendering. I mean by
the company as a whole on its route from Chicago to Omaha.
Mr. WEEKs. Do you run a solid train beyond Omaha ,
Mr. BALDWIN. No, sir.
Mr. WEEKs. Who takes the mail at Omaha now Ż
Mr. BALDWIN. The Union Pacific.
Mr. WEEKs. Mr. Chairman, I would suggest that those figures
which Mr. Scott had yesterday which have been referred to several
times be put in the record in some form as relating to the detailed
cost of service on the roads with which he is familiar.
The CHAIRMAN. I think that is a most excellent suggestion. Mr.
Scott, will you prepare a statement and file it with the committee 7
Mr. Scott. I will do that, Mr. Chairman.
Mr. BALDWIN. In answer to Mr. Weeks’s question as to whether we
would submit a bill, I will answer that we will be very glad to submit
such a bill. -
The CHAIRMAN. How soon, in your opinion, could such a bill be
prepared and submitted to the committee ?
Mr. BALDw1N. We will say within two weeks' time.
The CHAIRMAN. I wish you would kindly do so.
Mr. WEEKs. I want to suggest that these gentlemen consider that
proposition which I have been inquiring about, the possibility of
segregating through-train service from the rest of the mail service as
a question of compensation. I do not know whether it is possible—I
have never given it any serious consideration—but it seems to me to
be a distinct service, in a way, that might be handled in a different
way from the way the rest of the service throughout the country is
handled, and it would possibly make it easier getting together a bill
which would apply to all kinds of roads and all forms of service other
than that. There may be something in it, but I would like for you
gentlemen to consider that.
The CHAIRMAN. Mr. Baldwin, I want to thank you very much on
behalf of the committee for giving us your views on this matter.
STATEMENT OF WILLIAM WALTER SAFFORD,
The CHAIRMAN. Mr. Safford, it will be necessary that you be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you kindly state your full name, residence,
occupation, and official position? -
Mr. SAFFORD, William Walter Safford, general mail and express
agent, Seaboard Air Line Railway, Norfolk, Va.
136 & RAILWAY MAIL PAY.
The CHAIRMAN. Have you any further information to offer to the
committee bearing on the subject we have under discussion other
than that presented in the letter of Mr. Capps, vice president of your
road, under date of October 1, 1912, addressed to me?
Mr. SAFFORD. The matter that I was interested in particularl
was the suggestion that the rates be based upon cost, and if you .#
refer to our letter, paragraph 2, at the top of page 84 in this docu-
ment Railway-mail pay, you will see that we object to that plan
in our letter. In that connection I might say, gentlemen, that the
cost is only incidental in rate making. It never has been used to
my knowledge, except in cases where rates have been attacked. In
connection with the present express rate case now under considera–
tion by the Interstate Commerce Commission, we were called upon
a very short time ago, and in a hurried way, to make computations
showing the comparative cost and revenue of the service, with
º segregated to the express service, for the year 1912. This
call was made by a committee of railroad and express officials hav-
ing the matter in charge, and they suggested four methods of appor-
tionment of unassigned—and some people think tº €—
expense. The first was the Buell i.e. which is also known as
the Wisconsin method, and which was used in modified form by the
Postmaster General.
The CHAIRMAN. In document 105?
Mr. SAFFORD. In document 105; yes, sir. The second was the
method used by the Postmaster General. The third was the method
proposed by the express companies and the fourth was a selective
method by the company which it might think best suited to its own
conditions.
The CHAIRMAN. All the railroads having any interest in express
companies were asked to perform the same service in these different
computations that your company was 3
Mr. SAFFORD. I presume so. I have no knowledge as to that,
except as to my own company.
The CHAIRMAN. What was the result of your computations
Mr. SAFFORD. These figures are not actual, they are simply com-
parative; that is to say, they are actual as to individual calculations,
but they are not actual as to the relative mail revenue at this time,
because I did not have any car-foot-mile figures for the year 1912,
but for the purpose of illustration the calculations are just as accurate
as though they represented actual figures because the same elements
were used. -
The CHAIRMAN. You take hypothetical figures and they are the
same in all of your computations? > -
Mr. SAFFORD. Every one of them, and to be exact about it, I took
the car-foot miles made in mail service which we reported to the
Post Office Department for November, 1909, and I took the car-foot
miles as ascertained by the Post Office Department at the same time
and applied them to our revenue for the year 1912. The computa-
tion will produce the same relative results as to these different
methods of apportionment. I found from that that the variations ran
from a profit to us of $48,117,78 under the Buell method, as under-
stood and used by our accounting department, to a loss of $289,147.84
on the basis of apportionment prescribed by the express companies.
I deduce from that result that when you undertake to adjust any
RAILWAY MAIL PAY. 137
matter of this kind on a basis of cost, it makes just as much difference
what method of apportionment for unassigned expenses you, use as
almost any other factor that would be employed in the case. For
instance, if you start out to accomplish a given result, you can adopt
a method of apportionment that will most nearly bring about the
result you started for. - -
The CHAIRMAN. You mean the result most favorable to you ?
Mr. SAFFORD. The result most favorable to the end in view. Yes,
sir. There is no generally accepted method of apportionment at the
present time. I think there is a committee of accounting officers
working to that end now, probably in connection with the Interstate
Commerce Commission officers, but as yet no definite, ascertained,
and accepted method has been arrived at. e
The CHAIRMAN. There is no universal method that has yet been
evolved 3
Mr. SAFFORD. No.
l By permission, Mr. Peters asked a question of Mr. Safford as fol-
OWS : :
Mr. PETERs. Has not the revenue train mileage been used by all the
railroads throughout the country generally in comparing their
their expenses?
Mr. SAFFORD. It has been and it is generally accepted by railroads
as the best and most acceptable method, but it is not accepted by
accounting officers as an j. roposition, and it is in question
now, as between the methods .# by the Postmaster General and
the methods used by the railroads in order to have a uniform method
and to present uniform figures to the Postmaster General, so that
there might not be a great many different opinions about this thing.
The railroads already, in making their segregation of expenses, use
the revenue train-mile basis in their assignment of expenses to pas-
senger-train service, and that has been most frequently used and
perhaps is the best because it represents more nearly the use of the
Pºłº,
The CHAIRMAN. In the request received from these gentlemen rep-
resenting certain railroads and express companies to make these
computations, did the request contain an outline of the four compu-
tations to be made, or were the selections made by you ?
Mr. SAFFORD.- They contained an outline of the form to be used in
each method designated.
The CHAIRMAN. Designating specifically the four methods?
Mr. SAFFORD. Yes, sir; and explaining and describing them.
The CHAIRMAN. And the limitations on the same figures on the
results obtained were from a gain of $48,000 on one side to a loss
of two hundred and eighty-nine thousand and odd dollars on the
other. Those were the limits 3
Mr. SAFFORD. Yes, sir.
Mr. LLOYD. Can you give the four right together?
The CHAIRMAN, Will you leave with the committee this table of
ºtions which you made, in order that we may insert it in the
TeCOI’Oi º
Mr. SAFFORD. Yes, sir; with the understanding that it is an ex-
hibit and not an actual situation.
138 RAILWAY MAIL PAY.
SEABOARD AIR LINE RAILWAY.
Comparative cost and revenue for mail service for the year 1912 by various methods of
apportionment.
Cost of mail service, Buell method, on basis of car-foot miles reported
by company------------------------------------------------------. $515, 185. 44.
Revenue for mail service---------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467,522, 26
Loss, Buell method.-------------------. . . . . . . . . . . . . . . . . . . . . . . . 47,663. 18
Cost of mail service, Buell method, on basis of car-foot miles as stated - -
by department---------------------------------. . . . . . . . . sº tº e º 's sº tº º sº gº 419,404.48
Revenue---------------------------------------------. * * * * * * * * *..... 467,522, 26.
*-
Gain, Buell method, on basis of car-foot miles stated by department 48, 117.78
Cost of mail service, Postmaster General's method, on basis of car-foot -
miles reported by company------------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598,015. 61
Revenue-----------------------------------------------------------. 467, 522. 26
Loss--------------------------------------------- * . . . . . . . . . . . . 130,493. 35
Cost of mail service, Postmaster General's method, on basis of car-foot
miles stated by department. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486, 835. 24
Revenue------------------------------------------------------------ 467, 522. 26
Loss. . . . . . . . . . .(- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 19, 302.98
Cost, express company method, on basis of car-foot miles reported by
COImpany - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 756,670. 10
Revenue----------------------------------------------------------- 467,522.26
Loss--------------* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2 89, 147.84
Cost, express company method, on basis of car-foot miles stated by
department ------------------------------------------------------- 615,993. 40
Revenue------------------------------------------------------------ 467, 522, 26
Loss----------------------------------------------------------- 148,471. 14
Cost, Seaboard Air Line method, on basis of car-foot miles reported by
COIDP&ſly - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 638,079. 81
Revenue------------------------------------------------------------ 467, 522. 26
Loss----------------------------------------------------------- 170,557. 55
Cost, Seaboard Air Line method, on basis of car-foot miles stated by —
department-------------------------------------------------------- 519,450. 89
Revenue--------. . . . . . . . , - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - * * * * * * * * 467,522, 26
los..… sºs s as º ºr 51,928.63
The CHAIRMAN. I think your explanation is in the record that the
figures were hypothetical, but your deductions are illustrative of the
expert, given certain figures, of arriving at the same deduction by
different individuals, except where one general plan of computation
is in vogue. Is that right?
Mr. SAFFORD. That is right.
. By permission, Mr. Peters asked a question of Mr. Safford, as
follows: .
Mr. PETERs. Is it not a fact that the railway accounting officers’
association is now cooperating with the representatives of the Inter-
g- RAILWAY MAIL PAY. 139
state Commerce Commission in endeavoring to work out a uniform
method of assigning cost
Mr. SAFFORD. I stated that in my testimony, Mr. Peters.
... Mr. PETERs. They are engaged in that now %
Mr. SAFFORD. Yes, sir. #. that in my testimony.
Mr. LLOYD. In your judgment, which of these four methods is the
most equitable hº I am not asking you as a railroad man,
but I am asking you now which is the most equitable method, as it
affects the country at large 3
Mr. SAFFORD. Well, the most equitable method to my mind is the
revenue train-mile method.
Mr. LLOYD. Why?
Mr. SAFFORD. Because that more nearly represents the use of all
the elements that enter into these unassignable expenses.
Mr. LLOYD. What is the objection to the department's method 2
Mr. SAFFORD. Well, it has a good many elements of direct charge
in it—items that have not necessarily any relation to each other, as
I understand. -
Mr. LLOYD. Can you mention some of those charges 3
Mr. SAFFORD. Not from memory; no, sir. I furthermore want to
state that I am not an expert accountant. I am deducing these
things from figures that I get from expert accountants and I would
not like to go into the question of railroad accounting, because there
are men so very much more competent to do that than I.
Mr. LLOYD. I am very anxious that you people who object to the
department's method of accounting shall show the objections to that
method and show why some other method is better.
Mr. SAFFORD. That I think would be best ascertained from the
expert accountants who handle these figures.
r. LLOYD. Then for the commission to get the information it
ought to have, it should have these expert accountants?
Mr. SAFFORD. I think so, sir. I think they are more competent
than anyone else to give you that. We rely upon them and I think
they should be the people for the commission to rely upon.
Mr. LLOYD. Then you would not wish to criticize, if I may use that
expression without offense, the method of the department?
. SAFFORD. No, sir. I am not sufficiently statistical to do
that. I will say this for the department. . The modification of the
Buell system which they used in part was favorable to the railroads.
They seem to have been trying to get at something fair from their
point of view.
The CHAIRMAN. By “favorable,” you mean fair to the railroads?
Mr. SAFFORD. Yes, sir. I do not mean to suggest any favoritism,
but I mean to say the results were more equitable to the railroad
than they would have been if the Buell system had been used pure
and simple, as understood by our accounting department.
The CHAIRMAN. The Buell system is a system well known, is it,
in the accounting world in this country, at least 3
Mr. SAFFORD. I do not think it was ever used except in the Wis-
consin rate case.
The CHAIRMAN. It originated, did it, in Wisconsin &
Mr. SAFFORD. I think it did.
The CHAIRMAN. But it is something that is well known now in the
railroad world distinctively as the Buell system
140 RAILWAY MAIL PAY.
Mr. SAFFORD. I presume it is well known now since this commis-
sion has taken it up as one of the bases for arriving at the information
they wanted.
The CHAIRMAN. I want to thank you very much, Mr. Safford, for
your views. -
Thereupon, at 12.45 o'clock p. m., the hearing adjourned until
Friday, February 7, 1913, at 11 o'clock a. m.
FRIDAY, FEBRUARY 7, 1913.
JOINT COMMITTEE ON SECOND-CLASS MAIL MATTER.
- Washington, D. C.
The hearing was resumed, according to adjournment, at 11 o'clock
a. Ill.
Present: Senator Jonathan Bourne, jr. (chairman), Representative
James T. Lloyd, Representative William E. Tuttle, jr., and Repre-
sentative John W. Weeks. -
STATEMENT OF MR. HENRY S. LYONs.
The CHAIRMAN. Mr. Lyons, it will be necessary for you to be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Kindly state your name, age, residence, and occu-
ation ? -
p Mr. LYONs. Henry S. Lyons, secretary of the Boston Elevated
Railway Co., Boston, Mass.
The CHAIRMAN. How long have you been connected with the
Boston Elevated Electric Railway Co. 3
Mr. LYONs. I have been secretary for about three years.
The CHAIRMAN. You appear before the committee this morning,
as a number of other gentlemen do, representing the electric lines of
New England and of the West ? -
Mr. LYONs. Yes; and of New York State. A committee appointed
by the American Electric Railway Association will appear before this
committee.
The CHAIRMAN. Does that association represent practically the
bulk of the electric lines in the country':
Mr. LYONs. It does.
The CHAIRMAN. All of them "
Mr. LYONs. Practically all of them; yes.
The CHAIRMAN. You are familiar with the bill suggested by the
Postmaster General proposing the substitution of space for weight as
the determining factor in arriving at compensation for transporta-
tion of the mailsº -
Mr. LYONs. I am not. We have some gentlemen here who are
familiar with it.
The CHAIRMAN. Will you give the committee your views relative
to railway mail pay ?
Mr. LYONs. I prefer to have that given to the committee by those
gentlemen who have been appointed as a committee of the associa-
tion. They are familiar with that subject.
The CHAIRMAN. Will you give me the name of the first gentleman'
RAILWAY MAIL PAY. * 141
Mr. LYONs. The first gentleman who will furnish you with infor-
mation will be Mr. J. H. Neal. & +
The CHAIRMAN. Have you any information or viewpoints that you
are able to submit to the committee which would be of benefit in our
study of this question ?
Mr. LYONs. I have not. We have gentlemen here with us who are
experts on the subject under investigation and I do not wish to take
up their time.
STATEMENT OF MIR. J. HENRY NEAL.
The CHAIRMAN. Mr. Neal, it will be necessary for you to be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you please state your name, age, residence,
and occupation? .
Mr. NEAL. J. Henry Neal; residence, Boston; age 40; I am general
auditor of the Boston Elevated Railway Co.
The CHAIRMAN. How long have you been connected with the
Boston Elevated Railway Co. 7
Mr. NEAL. About 25 years.
The CHAIRMAN. How long have you been auditor :
Mr. NEAL. Nearly five years.
Mr. LLOYD. Do you represent any railways, except the elevated
railways of Boston Ž
Mr. NEAL. Yes; I am chairman of the committee appointed by
the American Electric Railway Association to take this matter up
with this committee.
Mr. LLOYD. What kind of railways does that committee include :
Mr. NEAL. It includes electric railways operated in cities and also
interurban lines.
Mr. LLOYD. Whether they are elevated, subway, or surface 3
Mr. NEAL. Yes, sir. The Boston road in itself is composed of
elevated, subway, and surface combined.
Mr. LLOYD. Does it carry mail in the subway ?
Mr. NEAL. Not that I am aware of. I think we usually run the
mail cars on the surface lines, but we may, if we please, run them in
the subway.
The CHAIRMAN. You are familiar, are you, with the bill prepared
and suggested to Congress by the Post Office Department substitut-
ing space for weight as the basis of compensation for the service
rendered, in the adjustment of railway mail pay ?
Mr. NEAL. No; because thus far the compensation which we have
received has been on a different basis. We have been paid 1 cent
per linear foot for each car mile that a car ran. That is to say, if a
car was 15 feet 6 inches long we would be paid at the rate of 1 cent
W. foot for each linear foot the car was long for every mile it ran.
i also have the pouch service, for which we are paid so much per
Iſllie.
The CHAIRMAN. Then, what is the purpose of he request of you
#. representing the electric lines of the United States, for a
earing before the committee
Mr. NEAL. Mr. Chairman, we have been operating on our road
cars which we call 16-foot box cars, but which measure a little less
142 * RAILWAY MAIL PAY.
than 16 feet on the inside and we have been receiving 15.58 cents per
car-mile for the work that we have been doing for the Government.
º CHAIRMAN. That is on the basis of 1 cent per linear foot per
JYılle ;
Mr. NEAL. Yes, sir. For years it has been well known, I think, to
various committees and to various postmasters, and certainly to all
the railways, that this rate of compensation was absolutely inade-
quate, and for years the railways have been pointing it out in various
ways, but up to the present time they have not been able to do so so
that they have been able to get any increased compensation. It
may be that the matter has not been presented sufficiently in detail,
but it is a very easy matter for us to show, without any question
whatsoever, that this is causing a loss to my road alone of $18,000 a
€8,I’.
The CHAIRMAN. The $18,000 loss you claim your road suffers from
the present rate is what per cent of the total amount of compensa-
tion that you receive from the Government for mail service'
Mr. NEAL. On this particular kind of service it is a matter of about
50 per cent. g
The CHAIRMAN. Answer my question, kindly. What is the total
amount you receive in compensation from the Government for this
particular line of service on which you say you can demonstrate that
you make an $18,000 loss?
Mr. NEAL. Substantially $30,000 to $35,000 a year. &
The CHAIRMAN, And you can demonstrate that you lose $18,000.
Are you obliged to carry this mail?
Mr. NEAL. No, sir; we are not.
The CHAIRMAN. Why do you assume a burden by which, according
to your own statement, you can demonstrate an $18,000 loss out of
$35,000 gross receipts?
Mr. NEAL. sºng for the American Electric Railway Associa-
tion, their executive committee made this statement:
It may be asked why the electric roads undertook to perform the service at rates
which were not remunerative. The answer is:
First. Many roads undertook to carry United States mail at unremunerative rates
with the mistaken idea that it would help them in cases of labor trouble to keep their
cars running.
Second. Operating expenses formerly were less than they are at present, but the
carriers have continued from year to year in the hope that the Government would
recognize the value of the services rendered and increase the rates to an equitable
basis. The electric carriers now realize that the business is unprofitable and unde-
sirable at the present rates, and ask that the Government equalize the existing rates
paid for the different classes of mail transportation so that the electric lines can con-
pºly obtain a reasonable proportion of the business on a fairly remunerative
3SIS.
That was their vote. As far as my own road is concerned (the
Boston Elevated), our feeling has been that we, without doubt,
would be able, eventually, to get an increased *. We
have taken the matter up year after year, hoping it would be granted,
and we have felt that it would perhaps be inflicting some hardship to
withdraw the service, and we hoped that whatever it was that inter-
posed between existing conditions and our getting proper compensa-
tion, would be overcome, but I think it has now reached a point
where we should not be asked to carry the burden any further, a
burden as great as this. *
RAILWAY MAIL PAY. 143
Mr. LLOYD. Have any of your number examined, and are they
able to speak on the pending bill, the Post Office bill, or the pending
recommendation of the Post Office Department with reference to
yav Ž ,
p r. NEAL. The only bill we supposed we had any interest in was
the one which limited the compensation to 1 cent. --
The CHAIRMAN. That is before the Post Office Committee. That
is not before this general committee. - n
Mr. LLOYD. The general committee are investigating railway mail
pay. If we find that we can put the steam and electric railroads on
the same basis of pay, that would make simplicity in payment which
might be useful to you and useful to the Government as well. We
supposed that you had examined the particular bill. At the present
time the steam railroads are paid by weight. Now the proposition
of the Government is that the railroads should be paid by space,
and we are especially considering the question as to whether we shall
ºute the space basis for a weight basis. You have the space
8,SIS 6
Mr. NEAL. Yes; substantially a space basis.
Mr. LLOYD. If you take the figures that are proposed in the pending
bill, you might find the substantial relief that you are claiming, and
it seems to me that you would do well to carefully examine that
subject before you leave here and put yourelves in position of saying
whether this bill would be beneficial to you or whether it would be
practicable for you, and urge what objections you may want to urge
against the º space basis system. This committee now has
to investigate the whole subject. We are not wedded to anything,
but our purpose is to investigate and find out if something better
can not be done than that which is now done, some better system
which might be adopted than the present one.
Mr. NEAL. I think the practice of the past would show that if the
compensation were increased to 13 cents, instead of 1 cent, that you
would meet the conditions, so far as the street railroads themselves
are concerned.
Mr. LLOYD. That is not the question which we have under consid-
eration and that would only answer this question, that it would pro-
vide you a sufficient compensation under the present system. The
question we are investigating is to find out whether some other sys-
tem of accounting could not be adopted, a uniform system so far as
the steam railways and the electric railways are both concerned.
We have one system for the steam railways and one for the electric at
the present time. Why should we have one for each of the different
kinds of railways?
Mr. NEAL. That phase of the question would require some further
study on our part, without a doubt.
The CHAIRMAN. You have a prepared statement, have you?
Mr. NEAL. Yes, sir. A
The CHAIRMAN. Do you care to make any remarks elaborating the
statement you have? We would be glad to file your statement and
insert it in the record.
. Mr. NEAL. I might say at the present I think it would be almost
impossible to compare the carrying of mails in city service with
steam railroad practice.
75904—No. 1–13—10
144 RAILWAY MAIL PAY.
The CHAIRMAN. For what reason?
Mr. NEAL. Because the difference between train operation and
individual car operation is so great and there are no precedents, that
I know of, that Fº base any statements on to permit me to make
a comparison that we would dare to stand on to make a contract.
On the other hand, this practice of paying according to the length of
a car which has been in use for years and years, gives a greater com—
pensation for a long car and a lesser compensation for a short one,
and involves, in that way, the fº. by space. As a matter of
practice it is shown that if we had received 50 per cent more com-
pensation, it would have been just to the company, therefore it
seems to me that we are in position to state to your committee that
there is a basis for payment for the city service which would be satis-
factory and which is perhaps the best all around.
The CHAIRMAN. Then, as I understand, you are perfectly satisfied
with space being the determining factor as to the compensation for
the service rendered, but you are dissatisfied with the rate that you
receive for the space? -*
Mr. NEAL. Yes, with one modification: That we would add, if we
were paid a cent and a half per linear foot, that we should be granted
not less than 30,000 miles for a car.
The CHAIRMAN. Regardless of the mileage you actually travel?
Mr. NEAL. Yes, sir. Because if the Government says that we
must set aside a certain number of cars, the fixed charges, the crews,
and other incidentals are putting the roads to a considerable expense.
Our road last year averaged something like 25,000 miles percar.
The CHAIRMAN. Let me ask you, in that connection, in your con-
sideration of the advisability of the extension of any of your electric
lines, do you take into consideration the returns you are to receive
from the Government for the carriage of the mail?
Mr. NEAL. Only indirectly.
The CHAIRMAN. How indirectly, if under the present rate you are
assuming a loss of 50 per cent on the return ?
Mr. NEAL. If I understood your question correctly, it is that if we
are contemplating an extension into one of our suburbs, would we,
in figuring the possible revenue on it, include anything for mail cars?
The CHAIRMAN. Would mail pay be one of the factors, from the
financial standpoint, determining the advisability of going to the
expense of making that extension?
Mr. NEAL. Yes and no. Yes, if there were post offices in that
neighborhood, and no, if it appeared to be away from any post-office
district or any place where we could handle the mail.
The CHAIRMAN. Then the mail pay is really a by-product in electric
line operation?
Mr. NEAL. Yes, sir.
The CHAIRMAN. Whatever you get is just so much found 3
Mr. NEAL. Well, no; I should not say that, because electric rail-
way operations to-day involve the carrying of mail, newspapers,
passengers, and express.
The CHAIRMAN. But you would not extend any electric lines for
the purpose of carrying the mail under the mail, contracts at the
present rate of 1 cent per linear foot per mile. That would not be
any consideration in your calculations as to the advisability of the
extension. , -
RAILWAY MAIL PAY. 145
Mr. NEAL. When we calculate an extension we take the probable
#. revenue into consideration and, of course, in that way, it would
affect it. -
Mr. WEEKs. That is not especially a practical question as applied
to Massachusetts, because in that State railroad extension is hedged
around by so many obligations that most people do not want to put
money into extensions, and we are not making them.
The CHAIRMAN. The point, of course, is well taken, but what I
want to draw out is that no railway extensions are made on account
of mail contracts—that the mail contracts is a º; if you
please. It is not that I am personally or individually putting myself
in a position or attitude of saying that the transportation companies
are not entitled to compensation for the service rendered, but it is
simply that I want to get this viewpoint in the record.
ºf. LLOYD. I do not believe I understand Mr. Neal. If you are
going to extend a road and pass two or three little post offices, you
would figure what you would probably receive from passenger
receipts, you would figure what you would probably receive from
trolley freight service, you would figure what you would receive
from the mails and from the express, would you not ?
Mr. NEAL. Yes; we would try to calculate the revenue from all
SOUII*CéS. *
Mr. LLOYD. Then, did you not answer incorrectly a while ago when
you said “No” in reply to the question of the chairman Ż
Mr. NEAL. I said, “Yes and no,” because, unless I knew that there
were post offices on a particular extension, I could not tell.
Mr. LLOYD. You would know.
Mr. NEAL. If the extension was in a district where there were no
ost offices, then I say no. It may be either one way or the other,
ut as a matter of fact, we would include all the other incidentals
that go with the street railway service.
Mr. LLOYD. If you are going to have to do something you are going
to figure on that ? You take the receipts that will come from it and
you will figure off on the other side the expense on account of it 2
Mr. NEAL. The matter is so small in proportion to the whole that
it would be very difficult to use the mail as a calculation on extension.
For instance, with our gross revenue—as it probably will be this
year—of sixteen and one-half million of dollars, the money which
we will receive from the Government for carrying the mails will
probably be about $36,000, and the percentage is so small it would
not be noted one way or the other.
Mr. LLOYD. That corroborates fully the statement of the chairman
that it is an inconsequential matter either way?
Mr. NEAL. No; it is an inconsequential percentage, but this $15,000
a year is not an inconsequential matter.
The CHAIRMAN. Inconsequential as a determining factor as to the
advisability of the expenditure. That is the point I wanted to make.
Mr. WEEKs. As a matter of fact, how long has it been since the
Boston Elevated Railway has extended its mileage even a mile %
... Mr. NEAL. We are all the time making little alterations involving
slight changes, but it has been about three years since we made any
extension, other than the Cambridge subway, which was authorized
prior to that time, and the East Cambridge viaduct.
146 RAILWAY MAIL PAY.
The CHAIRMAN. In your statement, in which you think you demon-
strate that you are carrying mail at a loss of 50 per cent, have you a
clear presentation as to what your apportionment of expense is .
Mr. NEAL. Yes, sir. I have divided it up into many parts, show-
ing exactly what it costs us for each subdivision; for instance, the
investment in a car, maintenance of the car, the wages of the
men who operate it, the cost of the power, and various elements
that go to make up this cost.
The CHAIRMAN. And of your total operating expenses what per-
eentage do you charge to the carriage of mail? -
Mr. NEAL. We charge to the carriage of mail?
The CHAIRMAN. Have you worked it down to a percentage, or a
fractional part of a certain per cent 3
Mr. NEAL. No. We keep accounts on a basis similar to that pre-
scribed by the Interstate Commerce Commission, which requires
cost of power to be kept in one account, track repairs in another
account, etc. In this statement we have taken parts of accounts
that apply to mail cars.
Mr. WEEKs. Does it take the same amount of power to operate a
mail car as it does a passenger car'
Mr. NEAL. No ; I do not think it does.
Mr. WEEKs. You do not figure the same 3
Mr. NEAL. I took the actual power the mail cars were using. We
had a meter put on the cars and found they were using 16 kilowatts.
Mr. WEEKs. And how much does a passenger car take 7
Mr. NEAL. According to their speed and size. They vary from 56
kilowatts down to, say, 24.
Mr. WEEKs. How about the cost of the equipment? Do you put
in the actual cost, the average cost of all kinds of cars 7
Mr. NEAL. If I were granted time enough I could explain just how
I made up this statement, so you can understand each item.
Mr. TUTTLE. Is this mail carried in special cars? -
Mr. NEAL. Yes, sir. We carry mail in pouches besides, but the
point of issue at present is that we are operating independent cars
at a loss of 50 per cent. *
Mr. TUTTLE. Is the mail which is in pouches carried on passenger
cars?
Mr. NEAL. Yes, sir. ſº
* CHAIRMAN. What do you figure your net compensation on
that Ž - -
Mr. NEAL. I do not remember, Mr. Chairman. The gentlemen
from the other roads have that, but I have not from my road, because
I was confining myself to this particular case. Would it be taking
too much of your time if I should explain the items, provided I go
over them rapidly 7 t
Mr. TUTTLE. Is this system similar to the systems in other large
cities, like Chicago, New York, and others?
Mr. NEAL. It is generally applicable. The other cities would
vary in different items of expense, according to the real estate and
various differences in cost of labor and one thing and another, but
in the main this would be representative.
The CHAIRMAN. Go ahead with your statement.
The statement is as follows:
RAILWAY MAIL PAY.
147
Statement giving estimated cost of operation ofÄ. type of United States mail cars on,
• * system of the Boston Elevated Ry. Co.
Type and number of cars now used, nine 16-foot box."
Mileage operated year ending June 30, 1912, 225,695 miles.
. Car investment, taxes, interest, depreciation, and insurance.......
. Car-house storage, taxes, interest, depreciation, and insurance... . .
Tower station, taxes, interest, depreciation, and insurance. . . . . . . .
. Power transmission, taxes, interest, depreciation, and insurance...
Track investment.....:-----------------------------------------
. Cost of power used.--------------------------------------------
Wages on car crews.----- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
. Maintenance of car bodies... . . . . . . . . . . . . . . . . -------------------
I. Maintenance of car trucks----------------------------------------
J. Cost of maintenance of track. . . . . . . . . . . . . . . . . . . . . . . . . . * * * * * * * * * *
K. Wages of other transportation and car service employees and other
eXpenSes. . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
L. Maintenance of line equipment, buildings, and electric equipment
A. Car investment:
Original car body. . . . . . . . . . ------------------------------
Rebuilding car body. . . . . . . . -----------------------------
Heaters without wiring. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Harrison racks--------------------------------------------
Wire guards. . . . . . . . . . . ----------------------------------
Fire extinguishers. . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - -
Electric equipment and equipping. ... . . . . . . . . . . . . . . . . . . . . . .
K-2 controllers. ------------------------------------------
G 58 motors (2 at $455). . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - -
Peckham truck. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Westibuling. . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Investment per car. . . . . . . -------------------------------
For nine cars. -------------------------------------------- -
Taxes and insurance, $9.25 per $1,000 (assuming capital be com-
posed of one-half stock and one-half bonds). . . . . . . . . . . . . . . . . . .
Interest, at 5 per cent (the average amount paid on W. E. and B.
E. capital is 5.09 per cent). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, 6 per cent. . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - -
Investment charges per mile (on mileage operated year ending
June 30, 1912), 1.338 cents.
B. Car house investment:
Length of car from bunter to bunter, 25 feet; 300 square feet
required for housing, at $1.75 for land and buildings......
For nine cars---------------------------------------------
Taxes and insurance, at $9.25 per 1,000 (as above) tº a • * * * * * * * *
Interest, 5 per cent. --------------------------------......
Depreciation, 3 per cent... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per car mile (on mileage operated year ending June 30, 1912),
0.187 cent. -
Cents per car-mile,
1. 338
. 18.7
1.229
. I98
2.441
1. 350
8. 422
. 482
.200
1. 506
1. 686)
L. 326)
2. 7969
23. 137
15, 58
$500.00
640. 13
23. 00
25. 00
28. 12
14. 50
117. 96
168.00
910. 00
220. 00
167.75
2, 814. 46.
25, 330. 14
234. 30
1, 266. 51
1, 519. 81
3,020.62
525. 00
4,725.00
43. 71
236.25
141. 75
421. 71
“Not including one 25-foot box.
f48 RAILWAY MAIL PAY.
C. Power investment.
Power station investment, 16 kilowatts per car, at $175 per
kilowatt-----------------------. , s = e s = e s = * * * * * * * * * * * * * * * * * $2,800.00
For nine cars--------------------------------------------- 25, 200.00
Building (30 per cent), $7,560; interest at 5 per cent. . . . . . . 378. 00
Building (30 per cent); depreciation 3 per cent... . . . . . . . . . . . 226.80
Equipment (70 per cent), $17,640; interest, 5 per cent. . . . . . 882. 00
Depreciation of equipment... -----------------............ 1,058.40
Taxes and insurance, $9.25 per $1,000 (as above). . . . . . . . . . . . 233. 10
2,778. 30
Per mile (on mileage operated year ending June 30, 1912),
1.229 cents. .
D. Power transmission lines:
16 kilowatts per car, at $45 per kilowatt—
For 1 car---------------------------------------------- 720. 00
For 9 cars.----------------------- - - - - - - - - - - - - - - - - - - - - - - 6,480.00
Interest, 5 per cent----------------------------------------. 324.00
Depreciation, 1 per cent-------. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.80
Taxes, $8.98 per 1,000 (assuming our capital to be composed
of one-half stock and one-half bonds)............ . . . . . . . . . . 58. 19
- 446.99
Per car-mile (on mileage year ending June 30, 1912), 0.198 -
Cent. - • ,
B. Track investment:
Charges taken at the average cost per mile for the entire sur-
face system— • - -
Investment-------------------- * * * * * * * * * * * * * * * * * * * * * * * * 9, 300,000.00
Car mileage--------------------------------. ---------- 45,427,857.00
Interest, at 5 per cent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,000.00
Depreciation, 6 per cent... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558,000.00
Taxes, $9.25...----------------------------- - - - - - - - - - - - - - - - 86,025.00
* - 1, 109,025.00
Per car-mile (on mileage year ending June 30, 1912), 2.441
Cent8. - -
F. Cost of power used:
Cost of power taken, at 0.0075 kilowatt hour.
Car uses 1.8 kilowatt hours per mile.
Cost per mile, 1.350 cents.
G. Wages of car crews:
Year ending June 30, 1912-----------------. . . . . . . . . . . . . . . . . 18,032.29
Add for effect of 9-hour law (figures which are not yet ob-
tainable)---------------------------------------- * * * * * * * * 1,000.00
19,032.29
Mail-car mileage, 225,695 miles.
Cost per car mile, 8.422 cents.
H. Cost of maintenance of mail-car bodies: *
33 months, .# June 30, 1912. -------------------------- 2,244.35
Add proportion of cost of painting to be done later........... 750, 00
.** - 2,994, 35
Average cost for 1 year--------------------------------...-- 1,088.88
Cost per car mile, 0.482 cent. -
I. Maintenance of car trucks, including wheels and axles, brake shoes
etc., taken at the average cost of 4 years for the type of trucks used CentS.
on mail cars, per car-mile-----------------......., * * * * * * * * * * * * * * 0.2
J. Cost of maintenance of tracks per car-mile, estimated by Mr. Hile.. 1. 500
RAILWAY MAIL PAY. 149
K. Wages of other transportation and car service employees and ex-
penses (taken at the average cost per car-mile for about 46,000,000
car miles on the entire surface system):
Superintendence of transportation, including division clerks, Cents.
starters, street inspectors, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 0. 55
Switchmen---------------------------------------------- . 12
Lamps, lubricants, waste, etc. -- . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Car-house employees and expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 53
Wrecking expenses. ------------------------------------- . 01
Miscellaneous car-service expenses. . . . . . . . . . . . . . . . . . . . . . . . . 07
Labor, cleaning, and Sanding track... . . . . . . . . . . . . . . . . . . . . . . 15
Oil, grease, sand, etc.---------------------------------------- . 01
Snow expenses------------------------------------------ . 09
1.68
-- *
H. Maintenance of line equipment, building and electrical equipment
of cars (taken at the average cost per car-mile for about 46,000,000
car-miles on the entire surface system):
Maintenance of line equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Maintenance of buildings. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . 22
• * Maintenance of electrical equipment of cars. . . . . . . . . . . . . . . . . 60
Superintendence of equipment... . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1. 32
M. General expenses (taken at the average cost per car-mile for about
46,000,000 miles on the entire surface system, and about 8,600,000
miles on the entire elevated system):
Salaries, office, and general expenses. . . . . . . . . . . . . . . . . . . . . . . . 53
Law expenses.----------------------------- - - - - - - - - - - - - - - - . 23
Pensions and gratuities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 04
Miscellaneous expenses... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Injuries and damages.------------------------------------- 1. 43
Stationery and printing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Rent of tracks, terminals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01
2. 79
Mr. NEAL. In trying to find out what the service costs, I first looked
to see how many cars we had, and I found we had 10, one of which
was a 25-foot box car, as we call it. The other 9 cars were 16-
foot cars; so in order to make this statement plain I eliminated the
25-foot box car. For the nine 16-foot box cars I found the invest-
ment to be $2,814.46 per car. These figures I can show on the books
of the Boston Elevated Railway Co. They are the orignal and abso-
lute figures. The 9 cars made an investment of $25,330.14. In fig-
uring the taxes I did not put on the full tax rate on the whole $25,000,
because bonds are not taxable; and I assumed, because we have half
of our capital in bonds and half in stock, that it was only fair to apply
one-half of the tax rate, so I put down $9.25. Then, the interest is
figured at 5 per cent. The Boston Elevated and the West End Street
Railway Co.'s have been very fortunate in their financing, and the
basis on which they are financed stands at 5.09 per cent. . That is all
we pay to our stockholders and bondholders. I do not think you can.
find many other roads that can afford to do business on that basis.
We are not asking for profit, but only ask that we get this particular
rate of interest, because that is what we are paying our stockholders
and bondholders. That interest was $1,266.51, as indicated here.
Then, I fix the item of depreciation at 6 per cent, and that is assum-
ing on those cars a life of 163 years. We will grant, if you please, that
the bodies of those cars will last longer than that; but, of course, as
150 RAILWAY MAIL PAY.
you know, the motors will not last as long. There are very few motors
in operation to-day that will last more than 10 years. Some parts of
the cars may last only 8 or 10 years, so the average 163 years for the
total life, we believe to be perfectly fair. That shows on the car
investment interest, taxes, and depreciation, 1.338 cents per mile.
The question of housing a car comes up next. The car-house
investment on our road costs us per car, $525; that is, for a car
requiring the number of square feet that these do.
The CHAIRMAN. On your car-mile basis, on your estimate of June
30, 1912, those 9 cars traveled an aggregate of 225,695 miles?
Mr. NEAL. Yes; a person carefully analyzing this statement might
challenge the fact that I included both land and buildings when I put
on a depreciation of 3 per cent, but I was well aware of the fact that
the land was included. I might have put on a slightly different per
cent on the building alone. I know exactly how much the land cost,
on the average, and this 3 per cent applied to the value of both the
land and buildings together gives us the proper rate of depreciation
to apply to buildings alone.
The CHAIRMAN. Do you allow for depreciation of the land in the
depreciation of the tº
Mr. NEAL. I have reviewed our figures for many years and find
that depreciation on the buildings happens to equal about 3 per cent
on the value of land and buildings taken together. I found that that
was the easier way to get at it, and that makes an item of 0.187 cent
per car mile.
With regard to the power investment, as I have said, we measured
the amount of power these cars were using and we found that to be 16
kilowatts per car mile. That requires an investment in power stations
of 16 kilowatts per car. Our power station investments have cost us
from $187 up to $227 per kilowatt; and in order to be perfectly con-
servative, recognizing the fact that some of our stations are not
right up to date, we have taken the figure of $175, which is less than
the very latest power station we built—a big turbine power station in
South Boston, which has just been constructed by Stone & Wester.
We have taken the taxes and the depreciation on power stations on
the same basis as I have mentioned. &
The power transmission lines are the overhead feeders and the
underground feeders and we have allowed, per car, $45 per kilowatt,
which is a conventional figure used by most railroad men in estimating
the cost of power.
For the track investment we have taken the total number of
car-miles run on the whole system last year, all the surface miles.
We took the value of the track at $9,300,000 and we figured the
interest at 5 per cent. We took the depreciation at 6 per cent and
the taxes at one-half the State rate, again assuming that one half
was bought with bonds and the other half of it stock. So far as
the depreciation of the track is concerned, I know from actually
checking up our accounts that all of the track which we have taken
up for the hº 10 years has averaged 12.4 years; that is, the life of
the track has been 12.4 years. Yet, I am assuming a life of 163 years,
on the theory that the track which we have been putting in within
the last 10 years will last still longer. In other words, every figure
is as conservative as we know how to make it, and yet it shows this
loss of over $15,000 a year.
RAILWAY MAIL PAY. k 151
. On the cost of the power used, we have taken the cost of the power
at 0.0075 cent per kilowatt, and that will stand by comparison with
any other electric-light or power rate in the country where used for
similar purposes.
The cost of wages of car crews is absolute. We have crews set aside
for this purpose and we know positively what wages we pay. It cost
us, last year, 8.422 cents per mile.
The cost of maintenance of mail-car bodies I have taken the
absolute amount we have spent in 33 months and have allowed $750
for painting which is about to be done. That shows 0.482 cent per
car-mile. The cost of the maintenance of the car trucks we simply
took from our regular account. -
The cost of maintenance of tracks per car-mile we estimated, for
the reason that we felt that it was not right to charge as much for the
maintenance of tracks where these mail cars are so light and so small
as we would have to charge for an ordinary passenger car. We have
some very heavy passenger cars in Boston, as well as light ones.
The CHAIRMAN. What do you charge for the heavy passenger cars?
Mr. NEAL. Last year the cost of maintenance of track was a little
over 2 cents and we took three-fourths of that as being a fair amount
for the lighter car.
On the matter of miscellaneous transportation, car-service em-
ployees and expenses, I have enumerated there the items which are
put in. It goes without saying the cars use lamps, lubricants, waste;
they have the use of switchmen, car-house employees in shifting
cars, cleaning them, greasing, sanding tracks and removal of snow,
and I have shown just exactly what it is per car-mile. Taking all of
those items in a group, they amount to 1.68 cents per car-mile.
We distribute the expense according to the number of miles that
each car ran; that is, we ran 46,000,000 service miles last year.
The CHAIRMAN. The total 3
Mr. NEAL. Yes.
The CHAIRMAN. Then your percentage is worked down on 225,695–
forty-six millionth of that amount 7
Mr. NEAL. Yes. Of course, they may use more or less switchmen,
}. we have taken this as the average, which is the best that can be
ound.
With regard to our general expenses, salaries, stationery, printing,
and miscellaneous expenses, we put them at 2.79 cents.
The CHAIRMAN. Why do you allow that—on the same system :
Mr. NEAL. Yes. That shows a cost to us of 23.137 cents per car
mile and we are receiving 15.58. If these figures were compared
with those of the Postmaster General there would be apparently a
slight difference because I have thrown out the 25-foot box car.
The CHAIRMAN. His figures would be more in your favor than those
figures, according to your own judgment'
Mr. NEAL. Its depends on how he figured them. It would make
very little difference, but for the 25-foot car they are allowing us 20
cents per mile, because it is a large car and if that mileage is added
to this other mileage it would appear we were getting 16.1 cents per
car mile, whereas, as a matter of fact, we are not for cars of the
standard size.
152 RAILWAY MAIL FAY.
The CHAIRMAN. As I understand, under the law applicable to lines
of Yºr nature, there is a maximum of 1 cent per linear foot per car
mile 3
Mr. NEAL. Yes, sir.
The CHAIRMAN. Do you receive the maximum all the way through?
Mr. NEAL. We do not on the 25-foot car, but we do on those others.
The CHAIRMAN. On the nine 16-foot cars? - -
Mr. NEAL. Yes.
The CHAIRMAN. Under the plan under which the electric lines are
operating space is the determinate factor as to the measure of the
service rendered 3
Mr. NEAL. Yes; it is.
The CHAIRMAN. Have you any suggestions to make for the infor-
mation of the committee as to how that measure could be improved 3
I am º of the rate, but I am speaking of the yard stick,
as you might say.
Mr. NEAL. I would not suppose offhand that the factor of weight
would be the base in this case for the reason that a car may be half
filled, and it is expensive business running cars in a large city, and
where the distances are short it makes a very marked difference in
the compensation. For instance, you might cut down compensation
one-half on all the evening mail, or any light mails, because the mails
only weigh half as much, whereas the company would be put to sub-
stantially the same expense whether the car was filled or half filled.
While I have not studied that phase of the question, I should say for
such service you ought to pay by space.
Mr. LLOYD. Do you understand the present system of compensa-
tion by weight for carrying the mail on steam railroads?
Mr. NEAL. I do not; no, sir,
tº LLOYD. It is a complex system unless you know something
about it.
Mr. NEAL. Well, I do not, but I do know you can substantially
measure the space of a street railroad car by taking its length, for the
reason that the gauges are pretty nearly alike in most cities; there
may be some narrow-gauge roads I do not know anything about, but
you do not find them in the big city service we are talking about.
Therefore, if you pay for the length of a car for every mile it runs
ou have a reasonable basis on which to make the payment, and that
it is possible to determine a fair rate is indicated by this paper, as I
have analyzed the different elements that enter into it.
The CHAIRMAN. What percentage of your total mail business is
handled by these full cars, the nine 16-foot cars and the one 25-foot
car 3 -
Mr. NEAL. I think that was a question that came up a few minutes
ago. The actual mileage, or amount that we should have received
from the Government, if accounts for the year had been adjusted,
should be $36,312.53 for car service and $536.34 for pouch service.
The CHAIRMAN. About 1% per cent for your pouch service, or a
little less than 2 per cent' *
Mr. NEAL. Yes. -
The CHAIRMAN. How do you determine the compensation you
receive on your pouch service'
Mr. NEAL. We have so far taken what has been given to us. There
is another matter that the American Electric Railway Association
RAILWAY MAIL PAY. 153
had already taken up before the Committee on Post Offices and Post
Roads, when they had the hearings back in May sometime. That
* however, is not the one j they are trying to bring up
to-day. - -
i. CHAIRMAN. You say you take what is given you by the depart-
ment. . Do you know how the department determines what they
shall give you for your pouch service?
Mr. NEAL. No. But I know that the American Electric Railway
Association states the present rate to be, for 2,000 miles or less, $150
per annum, for closed-pouch service; for more than 2,000 miles and
not more than 3,500 miles, $175 per annum; for 3,500 and up to 5,000
miles, $200. *
The CHAIRMAN. The point I want to bring out is whether the
compensation you do receive is determined by weight or by space 3
Mr. NEAL. They do not seem to base it on either. It seems to be
according to mileage and does not say anything about the size of the
pouch or the space it occupies, or how much it weighs.
The CHAIRMAN. Is that all you have to present to the committee,
Mr. Neal 7
Mr. NEAL. I think that is all; yes, sir.
The CHAIRMAN. We thank you very much for your views.
STATEMENT OF ALEXANDER R. PIPER.
The CHAIRMAN. Mr. Piper, it will be necessary for you to be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you kindly state your name, residence, and
occupation ?
Mr. PIPER. Alexander R. Piper, general freight agent of the South
Brooklyn Railroad, in charge of mail of the Brooklyn Heights Rail-
road Co. My age is 47; residence 7522 Second Avenue, Brooklyn.
|ºthe CHAIRMAN. How long have you been connected with the
Brooklyn Railroad?
Mr. PIPER. Nine years, sir. -
The CHAIRMAN. In your present official capacity ?
Mr. PIPER. Five years.
"The CHAIRMAN. Are you also a member of the association of the
electric lines? ~
Mr. PIPER. I am a member of the American Railway Association.
The CHAIRMAN. Representing practically all of the electric and
elevated lines of the United States? -
Mr. PIPER. Yes, sir; city and interurban.
The CHAIRMAN. Have you an official position with that association
or committee º Has it made an organization?
Mr. PIPER. I am a member of the committee on compensation for
the carrying of the United States mail.
The CHAIRMAN. For this association?
| Mr. PIPER. Yes, sir. -
The CHAIRMAN. Will you favor the committee with such views as
you have to suggest relative to that service' -
Mr. PIPER. The Brooklyn Rapid Transit System has for a number
of * been carrying both pouch mail and operating independent
Iſla,II C8, I’S.
154 RAILWAY MAIL PAY.
mile.
The CHAIRMAN. How many independent mail cars?
Mr. PIPER. Eleven independent mail cars.
. The CHAIRMAN. Their length? - -
Mr. PIPER. There are two sizes—15% feet and 19.58 feet. That is
the inside dimension of the cars. & f *
º CHAIRMAN. What do you get for the 153-foot cars per car-
IYA110 g ~ * , • * .
Mr. PIPER. Fifteen and one-half cents per car-mile.
. The CHAIRMAN. What for the other? k
Mr. PIPER. Nineteen and fifty-eight one-hundredths cents per car-
The CHAIRMAN. You get a maximum in both cases allowed under
the law Ż
Mr. PIPER. Yes. I believe Mr. Neal did not state, under the Post
Office Regulations, in connection with the appropriation, they can
not pay for over 20 feet on an independent car. That is the reason
§ he is operating a 25-foot car and is paid only at the rate of
20 feet. - -
The CHAIRMAN. Are there any other cases you know of in the elec-
tric service where they operate over a 20-foot car?
Mr. PIPER. I know of one case in Philadelphia of a new car that has
just been built at the request of the Post Office Department. That
is 25 feet in size. -
The CHAIRMAN. And all the compensation they can receive is for
a 20-foot carº
Mr. PIPER. Twenty cents per car-mile; yes, sir.
The CHAIRMAN. And this car was built at the request of the Post-
master General, was it 2 i
Mr. PIPER. Yes, sir.
The CHAIRMAN. Will you kindly continue !
Mr. PIPER. To explain the pouch service, which was asked Mr. Neal;
that is based upon the shipment over a route, regardless of the number
of pouches or the weight of the pouches. It is simply a number of
pº placed upon the front of a passenger car. The shipments may
e from a railroad station or from a main post office to a number of
substations along this line. There may be a number of throw-offs
and take-ons in that route, but the compensation is based only upon
the total run from one end of the route to the other; i. e., between
the post offices at the ends of the line. -
The CHAIRMAN. Is the measure an assumed average weight for the
pouch, if loaded, and that taken as the determining factor on the
number of pouches 2
Mr. PIPER. No, sir. The number of pouches or the weight of the
pouch is not taken into consideration at all. It is simply 3 cents per
mile for the distance traveled between the post offices.
The CHAIRMAN. Regardless of the number of pouches carried ?
Mr. PIPER. Yes, sir.
The CHAIRMAN. It is just a lump sum ?
Mr. PIPER. Yes, sir. -
The CHAIRMAN. Determined how % On the average of business? .
Mr. PIPER. I do not know how that was originally determined.
We have some cases in which we will receive one pouch to carry the
entire distance and in other cases we will have from 14 to 15 pouches
to Carr V.
RAILWAY MAIL PAY. 155
Mr. LLOYD. You receive the same for carrying one pouch as you.
do for carrying 15%
Mr. PIPER. Absolutely.
Mr. TUTTLE: What is the average?
Mr. PIPER. From five to six. That will depend a good deal on the
route and the number of substations on the route.
Mr. TUTTLE. You never have more than you can throw on the front
platform of a car? }
Mr. PIPER. We had an instance a short time ago in which the sub-
station attempted to put 14 pouches on the front of the car and the
motor man refused to receive them. He was notified that he would
have to receive them, and he said he would not because he could not
operate his car with that amount of mail. He stopped and held the
car until an inspector came, but he was told by the inspector he had
to take what was given him, regardless of the number of pouches, and
he took them. On the strength of that we discontinued the carryin
of pouch mail. Yesterday was the last day we carried pouch mail, an
We #. the Post Office Department 60 days' notice.
T
e CHAIRMAN. The 60 days expired yesterday ?
Mr. PIPER. Yes, sir.
The CHAIRMAN. How was this 3 cents per car-mile determined ?
Have you any knowledge of that ?
Mr. PIPER. No, sir; I do not know.
The CHAIRMAN. You were simply notified that that allowance
would be granted you by the Government?
Mr. PIPER. Yes, sir. * º tº
Mr. TUTTLE: Is that a special compensation for your line? . .
Mr. PIPER. No, sir. I think you will find in the bill authorizing
the compensation for mail an allowance of 3 cents per mile. Then
there is, I think, $25,000 extra allowed in the appropriation to pay
for extra service at the rate of 4 cents per mile, where the amount
of service is very great and the number of throw-offs very great.
Mr. WEEKs. Your charter, I suppose, authorizes you to carry pas-
sengers, freight, mail, and express?
Mr. PIPER. Yes, sir,
Mr. WEEKs. Do you think under that charter you can refuse to
carry mail?
Mr. PIPER. Our attorneys believe so. I do not believe I am com-
petent to speak on that.
Mr. WEEKs. Do you think you could refuse to carry a passenger?
Mr. PIPER. No, sir.
Mr. LLOYD. Could you refuse to carry freight?
Mr. PIPER. We never have. I doubt if we could refuse to carry it,
as we are under the Interstate Commerce Commission.
Mr. LLOYD. Why could you not refuse to carry passengers and not
refuse to carry freight and refuse to carry mail?
Mr. PIPER. We ji. to carry it at the compensation given us.
Mr. LLOYD. Could you not decline to carry a passenger at the
compensation? -
Mr. PIPER. I do not think so, because the compensation is duly
fixed by the public-service commission.
Mr. LLOYD. ..º. the public-service commission would fix a
rate that you would say was not compensatory. Do you think you
could refuse to carry passengers?
156 RAILWAY MAIL PAY.
Mr. PIPER. No, sir.
Mr. LLOYD, Why did you refuse to carry mail if it is not com-
pensatory &
Mr. PIPER. The only reason is because the principal business of
these trolley lines is the carriage of passengers and any interference
with that should be avoided as far as possible.
Mr. LLOYD. Anything that interferes with the Government ought
to be avoided, as far as possible, ought it not %
Mr. PIPER. I agree with you thoroughly on that. --
Mr. LLOYD. Then you think that private individuals have rights
that the Government has not ? y
Mr. PIPER. I think that the primary duty of the trolley service is
to accommodate the public they are carrying.
Mr. LLOYD. If the public is benefited by the carriage of mails, can
you refuse that ?
Mr. PIPER. I believe, if I may not answer directly yes or no—
Mr. LLOYD. I should not press you on that because you say you
have acted under advice of counsel and you are simply giving your
own opinion.
Mr. PIPER. It would simply be my own opinion.
* TUTTLE. Did the Government contest your right to carry this
mail?
Mr. PIPER. No, sir; they merely asked for additional time until
they could make the proper wagon or automobile arrangements for
the service.
Mr. TUTTLE. They did not claim they could compel you to carry
the mail?
Mr. PIPER. No, sir.
By permission Mr. Neal asked a question as follows:
Mr. NEAL. Did not your contract specify you had a right to
terminate the carrying of the mail upon the giving of certain notice,
and is not that the basis on which you discontinued it?
Mr. PIPER. That is the basis on which we discontinued it. We
entered into a contract for that matter.
The CHAIRMAN. Suppose the Government should to-morrow stop
carrying any mail. W. would be the effect on all the business of
the country?
Mr. PIPER. I am afraid it would be very disastrous. There is no
uestion about that. To show that we do not want to interfere with
the Government, we gave the Government 30 days' notice, as required
by the agreement, and a representative of Mr. Stewart's office came
to us and asked if we could not extend that time until they found they
could put in automobile service, and I said “Yes,” and I further
extended it six days after that because they had some trouble in
putting the proper racks on the wagons. We did not want to interfere
with the mail, but we did not want to interfere with the passenger
business.
The CHAIRMAN. Do you feel that the advantages incident to the
mail service are such that the transportation of mail should be figured
from an entirely different viewpoint from what you would ordinarily
take in the transportation of general business—freight and passengers?
Mr. PIPER. Yes; because it is a special service. *

RAILWAY MAIL, PAY. 157
The CHAIRMAN. Then your opinion is that the Government should
not pay as high a rate for mail transportation as you would expect
from the citizen in ordinary business?
Mr. PIPER. You mean as to the transportation of freight or pas-
sengers?
The CHAIRMAN. Both combined; the general transportation busi-
ness. In other words, that mail transportation is an advantage on
account of the benefits the railways receive due to the extension of
business incident to the mail facilities?
Mr. PIPER. I should say it is a special service and it should be paid
for on the basis of special service, just exactly as we give special
service in the carrying of passengers.
The CHAIRMAN. Then you deal with the mail as you do with ordi-
nary business and make no allowance for indirect benefit incident to
mail facilities?
Mr. PIPER. No, sir; I do not say that. I say that, while it is a
special service, I do not think we could expect to receive as much for
it as we would either for the express, freight, or passenger service,
nor do we.
The CHAIRMAN. But you do feel you are certainly entitled to com-
pensation that will at least remunerate you for the cost of the service 2
Mr. PIPER. That is precisely our position.
Mr. LLOYD. I think probably the record would be misleading as to
your answer to Senator Weeks’s question. The reason that you said
a while ago that you are not required to carry the mail was because of
the contract which the Government had entered into with you, and
it was not because of the general º which governs in the
carriage of passengers, carriage of mail, and carriage of express?
Mr. PIPER. That is correct. We have a contract with the Govern-
ment.
Mr. º And you º have º º with reference to
carrying the passengers and carrying the freight 3
ºš.P. O, . In that : W6 . under the control of
the public service commission as to what we shall charge.
º LLOYD. You are not liable in the other case because of the
contract 3 *
Mr. PIPER. No, sir.
Mr. LLOYD. You simply had to carry out the provisions of the
contract, and your contract provided that 30 days' notice should be
given to terminate it?
Mr. PIPER. Yes, sir.
Mr. LLOYD. And all you had to do to carry out the contract was to
give 30 days' notice?
Mr. PIPER. Yes. } -.
Mr. LLOYD. But that does not apply to the general proposition
with reference to your liability to carry mail?
Mr. PIPER. No, sir.
Mr. LLOYD. If it was insisted, you would carry it? -
Mr. PIPER. Yes, sir. . If the question were brought up by the
Government as to whether we would have to carry the mail or not,
my opinion is that we would have to carry it. Then we would
simply have to appeal to Congress to adjust the rate so that we would
not be carrying it at a loss.
158 RAILWAY MAIL PAY.
Mr. LLOYD. I am glad to hear you say that, because it is different
from what you said a while ago.
The CHAIRMAN. Under the contract, you were required to give 30
days' notice As a matter of fact, you gave the Government 60 days'
notice'.
Mr. PIPER. Sixty-six days.
The CHAIRMAN. At the request of the department for an extension
of time • *
Mr. PIPER. Yes. - :
Mr. WEEKs. What would you say to this proposition: Suppose we
rescinded all of the law applying to the rates which you should
receive and you made your contracts direct with the department for
carrying this mail. Would you be satisfied with the rate which the
department was willing to pay, or would you rather have it left with
the Interstate Commerce Commission ?
Mr. PIPER. I would be willing, as far as I am concerned, to leave it .
with the Interstate Commerce Commission, because the deals I have
º with the Interstate Commerce Commission I have thought just
and fair.
Mr. WEEKs. Do you think that would be a judicious way, from the
ºpoint of the Government, to handle this question on trolley
ines :
Mr. PIPER. Yes, sir.
Mr. WEEKs. Are the conditions such on different lines that differ-
ent rates would necessarily have to be paid, or do you think a general
rate could apply §
Mr. PIPER. I think a general rate would apply, sir. .
Mr. LLOYD. You would not have that apply to interstate roads
only, would you ?
Mr. PIPER. I was going to bring up the question. I do not know
that the Interstate Commerce Commission would have power in a
great many of those cases; in fact, in most cases they would not
have. I was addressing the general question.
Mr. WEEKs. I am not assuming that they have the power but
Congress could give them the power in such cases if it saw fit to do so.
Mr. PIPER. The carriage of mail, apparently, is an interstate
business. -
The CHAIRMAN. So far as the electric lines of the country are con-
cerned, according to your understanding would they be satisfied to
carry the mail at cost to them :
Mr. PIPER. Apparently not, from the answers that I have had.
I have communicated with practically every road in the United
States on the question of compensation, and the replies received
from them all indicated that they expected to be paid the cost plus
some percentage as a profit.
The CHAIRMAN. What percentage as a profit and how would that
percentage of profit be ascertained 2
Mr. PIPER. That I could not answer. They have simply given
me bulk figures. I tried to ascertain what figure would be
satisfactory.
The CHAIRMAN. My question was based on the result of informa-
tion submitted by Mr. Neal, who preceded you, in which, if I under-
stood him correctly, he took the position dº at the rate of 1 cent
RAILWAY MAIL PAY. - 159
…”
per linear foot-mile they were losing 50 per cent in actual cost of
the service on the system that he is connected with and that he
hoped that Congress would increase that rate from 1 cent to 1% cents,
in which event, in his opinion, his company would receive from the
Government what the actual cost to the company was for the activity.
Mr. WEEKs. Have you examined these figures to analyze them :
Mr. PIPER. Not very carefully; no, sir.
Mr. WEEKs. You do not know whether they would be applicable
to your road, do you ? -
Mr. PIPER. I had them given to our auditor and he said they
were substantially in accordance with the figures that he had. There
were some slight differences. -
Mr. WEEKs. Did he mention any particular difference?
Mr. PIPER. No, sir; but I have a statement from our own road
as to the operations for the year ending June 30, 1912, but it is not
given in detail as Mr. Neal's here. I can procure it if you desire it
in that form.
The CHAIRMAN. Is there a general form among the electric lines
of the country followed in the way of apportionment of operating
expenses 3
r. PIPER. Yes, sir; as prescribed by the public service commis-
sions, and they are practically the same throughout.
The CHAIRMAN. So that if you tried to work out on your line the
information worked out by Mr. Neal’s statement you would probably
adopt the same system in coming to your conclusions 3
Mr. PIPER. Yes, sir; except i. all auditors would have differ-
ent ideas as to the valuation of property and the percentages which
should be given to certain classes of property, and the way in which
to divide it, so that there might be a slight difference in that way,
but I think the general figures would turn out very close to what
Mr. Neal has.
The CHAIRMAN. You heard Mr. Neal’s presentation and explana-
tion of the figures that he submitted .
Mr. PIPER. Yes, sir.
The CHAIRMAN. Is it your opinion, with your technical and prac-
tical experience, that that is a fair presentation, dealing fairly with
both ; es, namely, the Government and the transportation com-
8.IlléS 6 - -
p Mr. PIPER. Yes, sir; I think it is more than conservative.
The CHAIRMAN. By “conservative” you mean that it is rather
against the transportation companies? -
Mr. PIPER. Yes, sir. -
The CHAIRMAN. It would be giving the Government the benefit of
all doubt 3
Mr. PIPER. The benefit of all doubt. Our figures show 24.88 cents
per car mile as our operating cost for the mail cars.
Mr. WEEKs. You cars are a little larger ?
Mr. PIPER. They are a little larger and I do not think that we
have made, as I recollect it, the allowance for the difference in the
size of the cars as to the amount of power used. I noted Mr. Neal
has not taken the average I have taken. '•
The CHAIRMAN. Have you any statement to present to be inserted
in the record?
75904—No. 1–13—ll
160 RAILWAY MAIL PAY.
Mr. PIPER. Yes, sir; I would like to hand you this letter from our
auditor:
- BRooKLYN, N. Y., February 4, 1913.
Capt. A. R. PIPER,
85 Clinton Street, Brooklyn, N. Y.
DEAR SIR: In answer to your inquiry as to cost of operating mail service, fiscal
year ending June 30, 1912, the actual operating results for the year are shown in the
accompanying statement. -
Of course, you are aware that this exhibit, if anything, understates the operating
expenses, for the reason that we have never attempted to burden this division with
items of a general administration character, including with the general expenses for
the mail division only such items as are directly connected therewith. To attempt
to give you the taxes and fixed charges applicable to mail Service, as such, would
involve too many arbitrary conclusions, and I think it preferable and much more
equitable to give you the unit of taxes and fixed charges per car-mile for the entire
Brooklyn Rapid Transit system for the period in question. These are: Taxes, 0.021;
fixed charges, 0.065 per car-mile. *
Reducing the expenses shown on the accompanying exhibit to a mileage basis,
the actual expense, exclusive of taxes and fixed charges, is 0.1628 per car-mile, and
inclusive, 0.2488 per car-mile. Taking the Government's allowance for the small car,
viz, 0.155, there is an apparent loss of 0.0938 per car-mile, and on the larger car, on
which the Government's allowance is 0.1958, the apparent loss is 0.0530 per car-mile.
Yours, very truly,
HowARD ABEL, Comptroller.
Brooklyn rapid transit system—Actual result of operating United States mail cars, year
ending June 30, 1912.
Revenue from transportation, freight revenue. . . . . . . . . . . . . . . $40,441. 23
Total street railway operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $40,441. 23
Operating expenses: -
Maintenance of way and structures. . . . . . . . . . . . . . . . . . . . . . 5, 159.02
Maintenance of equipment--------------.. . . . . . . . . . . . . . . 3, 757.85
Transportation expenses.......... . . . . . . . . . . . . . . . . . . . . . . 28, 273.41
General and miscellaneous-----------. . . . . . . . . . . . . . . . . . . 1, 134.86
Total operating expenses-------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 325. 14
Net revenue from operation...................... . . . . . . . . . . . . . . . . 2, 116.09
Mileage, 235,393.
Expenses per car-mile, $0.1628.
Correct: - HowARD ABEL,
- - Comptroller.
FEBRUARY 4, 1913.
The CHAIRMAN. You have no statement on the line of that pre-
pared by Mr. Neal?
Mr. PIPER. No, sir; I have not, but I would be very glad to have it
gotten up, if you desire it, in that form. - •
The CHAIRMAN. Would it be much trouble and expense ?
Mr. PIPER. No, sir; it can be very readily gotten out. -
The CHAIRMAN. I think it will be interesting to show the similarity
and I will be glad if you will, at your convenience, send it to us.
(This statement will be found at the close of Mr. Piper's testimony.)
Mr. WEEKs. Did you say the Public Service Commission of New
York prescribes this form of preparing the cost 7
Mr. PIPER. Yes, sir. -
Mr. WEEKs. Does a railroad commission or a similar commission
in other States prescribe the same form -
Mr. PIPER. I think their statement is based upon the Interstate
Commerce Commission's statement.
RAILWAY MAIL PAY. 161
Mr. WEEKs. I would like to ask Mr. Neal if the form he has used
in the statement he submitted is a form which is approved by State
railroad commissions, the Interstate Commerce Commission, or of
public service commissions? º
Mr. NEAL. No. It is no special form. It just happens to be the
way in which I made that statement, but it is possible from the
account prescribed by the commission to make up the statement in
that way. *
Mr. WEEKs. Substantially that would be the form that would be
required by the Interstate Commission ?
r. NEAL. They never have a reason to ask a question in this form;
that is, as to how much it would cost to perform the mail car service.
They simply have an account for the maintenance of equipment;
under the head of that there will be an item that treats of mail cars,
surface cars, etc.; they do not ask for it specifically in this way. I
have lifted it out from a mass of certain information and condensed
it into this form in my own way, but it is possible for any other road,
because of the way in which the accounts are kept, to make a state-
ment in just that form. -
The CHAIRMAN. There is a general form then, standardized by
the approval of different public-service commissions and the Inter-
state Commerce Commission, and you have simply elaborated your
statement upon that form and made it specifically applicable to
pouch and mail transportation on your line?
Mr. NEAL. Yes.
The CHAIRMAN. Is the general standard form an elaborate lot of
Questions, or is it merely made up of a few general heads 3
Mr. NEAL. It is quite a voluminous affair, and it does not specially
mention mail cars, except here and there. For instance, out of 88
operating expenses there are some 24 that are subdivisions of the
maintenance of track, account No. 1, ballast and account No. 2,
ties, etc. * -
The CHAIRMAN. How many items in the standard form would
there be? -
Mr. NEAL. There are 88 operating accounts. Then there are several
revenue accounts of which only one is mail-car earnings. Then there
are fixed charges, taxes, and things of that sort. In order to arrive
* those taxes we have to value the cars and take the tax rate on
them.
The CHAIRMAN. The particular point I want is whether it would
be worth while to take this standard form approved generally by
the public-service commissions and the Interstate Commerce Com-
mission and put it into the record here in this connection ?
Mr. NEAL. I think not. -
M, LLOYD. Mr. Piper, what was your total compensation last
Wear .
Mr. PIPER. $40,271.
Mr. LLOYD. What was the expense?
Mr. PIPER. About $58,000. -
Mr. LLOYD. That would make about 43 or 44 per cent'
Mr. PIPER. Yes, sir. In that $40,271 there is about $2,300 for
pouch service. - g
The CHAIRMAN. You received $40,271 %
162 RAILWAY MAIL PAY.
Mr. PIPER. Yes, sir. 3.
The CHAIRMAN. You estimate that your expense for the service
was $58,000 %
Mr. PIPER. About $58,000; yes sir.
The CHAIRMAN. Do you think if you carried no mail whatever
that your cost of operation would have been $58,000 less than your
ºi cost 7 -
Mr. PIPER. No, sir.
The CHAIRMAN. How much less % g .
Mr. PIPER. That is a pretty hard thing to figure, Senator. You can
sometimes, under your organization, put in additional divisions, as,
for instance, putting in a small amount of freight or a small amount
of mail, and practically operate under the same operating officers and
supervision that you had before. Therefore you might remove this
without being able to materially decrease the amount of your operat-
ing expenses. The exact amount of that would be pretty hard to
state. There is a certain amount that would come out immediately
upon the taking out of the mail service.
The CHAIRMAN. Based upon your experience and familiarity with
the operation and accounting of your line, what, in your judgment,
would have been the decrease in operating expenses of your line in
dollars if it carried no mail whatever, as against the $58,000 which
you think carrying the mail cost you? I realize the difficulty, but
I do not know but what you might give some information that would
be illuminating on that particular point.
Mr. PIPER. I should say, roughly speaking, in the neighborhood
of $45,000. I would have to check that pretty closely to make that
statement positively.
The CHAIRMAN. In your computations you made no allowance for
loss of efficiency of service, so far as schedules were concerned, any
accidents, or anything of that kind 2
Mr. PIPER. No, sir; that is not taken into consideration at all.
There is one other thing I would like to have stated in the record in
regard to the mail carriage. . We are paid from post office to post
º regardless of the additional mileage we may have to make to
get a cross-over to run back on our line or to house our cars. This
dead mileage amounts to considerable and also in the schedules that
are sometimes put up to us by the Post Office Department requiring
unnecessary delays. So far as we are concerned, often our men are
standing idle, for which we are getting no compensation, but we
must pay them. Often a schedule will be so arranged that a man
will stand idle for two hours before he goes out on a run. In those
cases we have tried to get the department to help us and they have
have tried to help us, but they have to take into consideration the
way the mail comes to them, how they pouch it. I would like to
further state, in reference to those independent cars, it is not merely
the carriage of the mail that the Government gets out of. The cars
are all racked and they carry the clerk who racks the mail and puts
it up in packages while he is en route and has it ready to go directly
into the pouches at the terminal when he arrives. g
The CHAIRMAN. The racking and fitting up of the cars you do at
your own expense? .
Mr. PIPER. Yes, sir.
RAILWAY MAIL PAY. 163
The CHAIRMAN. Under directions or specifications supplied by the
department 3 }
Mr. PIPER. Under their directions, and we are required to submit
plans for their inspection and approval.
Mr. WEEKS. º. kind of employees do you use on the mail cars 2
Mr. PIPER. We select the best motormen in the service.
Mr. WEEKs. How about the conductors?
Mr. PIPER. We use a cheaper man, what we call a trolley holder.
. do not call him a conductor. He is a cheaper man than a con-
uctOr. -
Mr. WEEKs. Are they not, practically, pensioned men & --
Mr. PIPER. No; we use young boys. Pensioned men can not
handle that. The mail service is faster than the passenger service on
the same line because they start out and catch up on the schedule
ahead of them, so our mail service all over Brooklyn is faster than the
passenger service on the same line. .
The CHAIRMAN. Do you know of any general plan by which you
could improve the present method of ascertainment of your compen-
sation ? Your criticism is that the amount of compensation received
is insufficient to repay you for the cost of the activity. Could the
present system of calculation by space be improved upon :
Mr. PIPER. I do not think so. I think the only thing to be taken
into consideration is, if you mean by your measure of space linear foot
mile, then if you are basing your linear foot upon the width of a steam
car, which is wider than the surface or tolley car——
The CHAIRMAN. My question refers sºil, to the electric lines
and the elevated lines.
Mr. PIPER. The clearance is practically the same in both instances.
The CHAIRMAN. So there can be no improvement on the measure
of the service.
Mr. PIPER. No, sir; I think that is the best method.
The CHAIRMAN. Has there been any irritation or difference of
opinion between the department and yourselves as to the number of
feet used ?
Mr. PIPER. No, sir; that is absolute. That is fixed by the inside
measure from post to post.
Mr. LLOYD. Do you agree with the gentleman who preceded you,
Mr. Neal, that there ought to be a fixed charge as a basis on which to
start' . In other words, that you ought to have so much per car-foot
mile, whether you render the service or not.
Mr. PIPER. You mean that there should be a minimum of mileage
per car?
Mr. LLOYD. Yes.
Mr. PIPER. Yes, sir; because your investment must stand, and you
must be ready for the service.
Mr. LLOYD. Then you agree with Mr. Neal in that ?
Mr. PIPER. Yes.
Mr. LLOYD. Then you make that exception in the statement'
Mr. PIPER. Yes, sir; I did not understand that that was not con-
sidered.
Mr. LLOYD. Can you think of anything else that might be done to
better the service and equalize the pay ?
Mr. PIPER. No, sir.
164 - RAILWAY MAIL PAY.
The CHAIRMAN. We are very much obliged, Mr. Piper, for the
information submitted. *
Brooklyn Heights R. R. Co.—Statement giving estimated cost of operation of mail cars.
11 mail cars now owned, 9 in actual commission.
Mileage operated year ending June 30, 1912, 235.393 miles.
Cents per car-mile.
A. Car investment, taxes, interest, and insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 1. 122
B. Car house and shop facilities, taxes, interest, and insurance. . . . . . . . . . . . . .386
C. Power station investment, taxes, interest, and insurance. . . . . . . . . . . . . . . . . 000
D. Power transmission investment, taxes, interest, and insurance...... . . . . . . 1. 132
E. Track investment, taxes, interest, and insurance. . . . . . . . . . . . . . . . . . . . . . . . 2. 714
E1. Overhead investment------------------------------------------------- . 433
F. Cost of power, including interest on power station investment "... . . . . . . . . 2. 580
G. Wages of car crew. --------------------------------------------------- 6. 040
H. Maintenance of car bodies-------------------- - - - - - - - - - - - - - - - - - - - - - - - - - . 560
I. Maintenance of car trucks.---------------------------------------------- ‘. 400
J. Maintenance of track--------------------------------------------------- 1, 840
K. Wages of other transportation and car service employees and other expenses 1. 870
L. Maintenance of line equipment, buildings, and electrical equipment of cars 1.690
M. General expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.410
N. Taxes, other than property taxes included in items “A” to “E”. . . . . . . . 1. 397
Total.-------------------------------------------------------------- 24. 574
NoTE.—These figures are exclusive of any charge for theoretical º super-
cession, or obsolescence, or any element of profit beyond the legal rate of interest.
Approved.
HowARD ABEL, Comptroller.
FEBRUARY 14, 1913. -
A. Car investment:
Car body, including cost of equipping...... . . . . . . . . . . . . . . . . . $1,469.00
Vestibuling------------------------------------------------ 123. 28
2 W. H. No. 68 motors, at $375. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750. 00
2 K–11 controllers, at $130----------. . . . . . . . . . . . . . . . . . . . . . . . 260. 00
1 Dupont truck. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300. 00
* 2,902. 28
For ll cars.----------------------------------------------- 31, 925.08
Taxes, at $18.70 per $1,000................................. 597. 00
Insurance, at $4 per $1,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127. 70
6 per cent on investment--------. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,915. 50
2, 640. 20
Investment charges per mile (on mileage operated year ending
June 30, 1912), 1.122 cents. ... -
B. Car house investment and shop facilities:
$1,000 per car. - - - - - - - - - - - - - - -: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11,000.00
Interest at 6 per cent-------------- - - - - - - - - - - - - - - - - - - - - - - - - - 660. 00
Taxes, at $18.70 per $1,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . f 205. 70
Insurance, at $4 per $1,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44. 00
909, 70
Per car-mile (on mileage operated year ending June, 30, 1912),
0.386 cent. & -
C. Power station investment (included in cost of power).
1 Power purchased at switchboard of producer.
RAILWAY MAIL PAY. 165
D. Power transmission lines:
Cost-------------------------------------------------- . . . . $7,095, 300.00
Mileage surface lines, $49,322,535.
Interests at 6 per cent------------------------------------- 425,718.00
Taxes, ºf $18.70 per $1,000.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132,682. 11
- 558,400. 11
Per car-mile (on mileage operated year ending June 30, 1912),
1.132 cents.
E. Track investment:
Charges taken at the average cost per mile for the entire surface
system—
542.602 miles, at $31,352 per mile. . . . . . . . . . . . . . . . . . . . . . . . . . 17, 011, 657. 90
Mileage surface lines, $49,322,535.
Interest, at 6 per cent. . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - 1,020, 699.47
Taxes, at $18.70 per $1,000-----. . . . . . . . . . . . . . . . . . . . . . . . . . . . 318, 118.00
s 1, 338,817.47
Per car-mile (on mileage operated year ending June 30, 1912),
2.714 cents.
E1. Overhead investment:
Charges taken at the average cost per mile for the entire surface
system—
542.602 miles, at $5,000 per mile------. . . . . . . . . . . . . . . . . . . . . . 2,713,010.00
Mileage surface lines, $49,322,535. *s
Interest, at 6 per cent------------------------------------- 162,780. 60
Taxes, at $18.70 per $1,000. --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 50, 733. 29
- 213, 513. 89
Per car-mile (on mileage operated year ending June 30, 1912),
0.433 cent.
F. Cost of power used, 2.58 cents.
G. Wages of car crews:
Year ending June 30, 1912------------ - - - - - - - - - - - - - - - - - - - - - - - - - $14,217. 74
Mail-car mileage, 235,393.
Cost per car-mile, 6.04. -
H. Cost of maintenance of mail-car bodies------. . . . . . . . . . . . . . . . . . . . . . . . 1, 318. 20
Mail-car mileage, 235,393.
Cost per ear-mile, 0.56. #
I. Cost of maintenance of car trucks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 941. 57
Mail-car mileage, 235,393.
Cost per car-mile, 0.40.
J. Cost of maintenance of tracks---------------------------------------- 4, 331.23
Mail-car mileage, 235,393.
Cost per car-mile, 1.84.
K. Wages of other transportation and car-service employees and expenses: CentS.
* Superintendence of transportation------------------------------ 0.84
Switchmen, couplers, flagmen, etc.------- - - - - - - - - - - - - - - - - - - - - - - - . 35
Car supplies-------------------------------------------------- . 21
Car-house employees and expense---------- - - - - - - - - - - - - - - - - - - - - . 27
"Wrecking expenses------------------------------- * * * * * * * * * * * * * -01
Cleaning and Sanding track. ---------------------------------- . 08
Removal of snow, ice, and Sand--------------------------------- . 06
Operation of signal and interlocking systems........ . . . . . . . . . . . , - . 03
Operation of telephone and telegraph systems.----------. . . . . . . . . 02
166 FAILWAY MAIL PAY.
L. Maintenance of line equipment, buildings, and electrical equipment
of cars, and miscellaneous equipment: CentS
Maintenance of line equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0. 28
Maintenance of buildings-------------------------------------- 13
Maintenance of electrical equipment of cars. . . . . . . . . . . . . . . . . . . . . . 83
Superintendence of equipment.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05
Miscellaneous equipment-------------------------------------- . 40
1. 69
M. General expenses: t
Salaries, office and general expenses. . . . . . . . . . . . . . . . . . . . * - - - - - . 44
Law expenses------------------------------------------------ ... 10
Pensions and gratuities.--------------------------------------- . 04
Miscellaneous expenses--------------------------------------- . 25
Injuries and damages---------------------------------------- - 1. 54
Stationery and printing---------------------------------------- . 04
2.41
N. Taxes: :
Special franchise. ----------------------------------* ---------- $200, 930.33
Bridge tolls--------------------------------------------------- 60, 731.48
State tax on earnings.---------------------------------------- 79,444. 16
Federal tax--------------------------------------------------- 40, 427.49
381, 533.46
The Brooklyn Heights R. R. Co., total car-revenue miles, 27,301,459.
Cost of taxes per car-mile, 1.3975.
Mail-car miles, 235,393. , ,
235,393 miles, at 1.3975 cents . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - $3,289.62
STATEMENT OF ME. F. C. HAMILTON.
The CHAIRMAN. Mr. Hamilton, it will be necessary for you to be
SWOI’I).
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you please state your full name, residence,
age, and occupation ? *. -
Mr. HAMILTON. F. C. Hamilton, Chicago, Ill.; age, 29; occupation,
statistician, Chicago railways. • º
The CHAIRMAN. How long have you been with the Chicago rail-
ways.
Mr. HAMILTON. One year. -
The CHAIRMAN. Occupying the same position that you do now %
Mr. HAMILTON. Yes, sir.
The CHAIRMAN. You have had other experience, have you, in the
railroad business similar to the Chicago railways? --
Mr. HAMILTON. Only as an accountant. *
The CHAIRMAN. How long experience have you had as an account-
ant'.
Mr. HAMILTON. Five wears. -
The CHAIRMAN. You have, heard the testimony of Mr. Neal and
Mr. Piper ?
Mr. HAMILTON. Yes, sir. *
The CHAIRMAN. Have you any viewpoints or comments to make
regarding the operation of the lines with which you are connected
and the differences in experience, other than they have testified to
concerning their own lines?
RAILWAY MAIL PAY. 167
Mr. HAMILTON. Nothing, except to say that in Chicago our oper-
ation is entirely under the supervision of the board of supervising
engineers. We are under municipal direction, and their require-
ments in the way of right of way and equipment have been strict, to
an extent that our cost will be more than either of the other two
roads whose representatives have testified.
The CHAIRMAN. What do you estimate your cost, as compared
with those submitted by Mr. Neal and Mr. Piper ?
Mr. HAMILTON. Our cost for the 11 months has been 25.75 cents
per car mile. -
The CHAIRMAN. You carry mail for the Government'
Mr. HAMILTON. Yes.
The CHAIRMAN. What is the gross amount you received from the
Government in compensation for mail carriage last year }
Mr. HAMILTON. #. gross amount received for the year ending
January 31%
The CHAIRMAN. The calendar year?
Mr. HAMILTON. No. The year ending January 31. The gross
amount is $36,427.
The CHAIRMAN. What do you figure it cost you to perform the
service for which you received that amount 3
Mr. HAMILTON. About $55,744.
The CHAIRMAN. Had you carried no mail at all, would your oper-
ating expenses have been $55,744 less than they were ?
Mr. HAMILTON. No, sir.
The CHAIRMAN. How much less than they were, do you figure
they would be 2
Mr. HAMILTON. I have not figured that out carefully. It would
have been probably from 85 to 90 per cent.
Mr. LLOYD. You mean from 85 to 90 per cent less or 10 to 15 per
cent less?
Mr. HAMILTON. Eighty-five to 90 per cent less; if we were not
required to perform the service, we could do away with all expense
except that due to supervision.
The CHAIRMAN. If I understand your answer, if you had not
carried mail your operating expenses would have shown $53,383 less
than they have shown 3 i
Mr. HAMILTON. As an estimated figure, of course.
The CHAIRMAN. That is on the basis of 15 per cent, or 85 per cent
reduction of what the actual operating expenses were for carrying
the mail, according to your calculation ?
Mr. HAMILTON. Yes, sir. -
The CHAIRMAN. How do you account for that difference of from
10 to 15 per cent in your estimated cost of operating expenses and
the decrease in operating expenses if you had not carried any mail?
Mr. HAMILTON. It is entirely due to the fact that the mail service
is so small a part of our total service that we would be unable to
reduce our supervision expenses by taking off the mail service. In
other words, we could not divide a high-priced man’s salary or take
off a portion of it. -
The CHAIRMAN. Then the deduction of from 10 to 15 per cent is
the charge to the mail of the overhead charge?
Mr. HAMILTON. Yes, sir.
168 RAILWAY MAIL PAY.
The CHAIRMAN. The committee would be very glad to hear such
views as you may have to express and any information you have to
impart in this matter. -
Mr. HAMILTON. Our cars at the present time are slightly over 20
feet in size. We are being paid on a 20-cent basis.
The CHAIRMAN. You say slightly over 20 feet. Do you mean
inside measurements?
Mr. HAMILTON. Yes.
The CHAIRMAN. How much over ? -
Mr. HAMILTON. About 7% inches. The department at the present
time is requesting us to give them larger cars and better service.
The CHAIRMAN. Do they specify how much larger cars, whether a
25-foot car 2 r -
Mr. HAMILTON. They wanted a 25-foot car, inside measure.
The CHAIRMAN. What reasons did they assign 7
Mr. HAMILTON. I am unable to answer that question.
The CHAIRMAN. Have you complied with that request at all?
Mr. HAMILTON. No, sir; we have not up to the present time. It
has not been made in the way of a formal request, but there is an
intimation that the request is to be made.
Mr. WEEKs. Do you know of any reason for maintaining that 20–
cent limit 2 -
Mr. HAMILTON. No, sir. I believe it was the limit fixed at a time
when all cars used by the street railroad companies were considerably
under 20 feet, inside measurements. The increase of length of cars
on the street-car lines for the last few years has been out of propor-
tion to the increase on other roads. -
Mr. WEEKs. Why should there be any limit at all ?
Mr. HAMILTON. There should not be any limit at all.
Mr. WEEKs. Have you heard any reasons for placing a limit :
Mr. HAMILTON. No, sir. The limit is unfair, under the present
conditions. I did want to call to the attention of the committee, if
I may be permitted, the mileage for which we are paid and which we
have to run. We are paid on the basis of 188,000. and some odd car
miles and we were obliged to run 216,000 car miles to get that
mileage.
The CHAIRMAN. Explain that a little, please.
Mr. HAMILTON. It is due to the way Chicago is built up. The
}. down near our post office is entirely too expensive for car
arns and we therefore must locate our car barns at places away from
the post offices and all runs for which we are paid i. at the post
office. This service back and forth must be done at our own expense.
Mr. WEEKs. Would not that be true in any place?
Mr. HAMILTON. No. Our passenger cars would start from the
barn and carry passengers at once. 4.
Mr. WEEKs. Yes, but it would be true, so far as the mail service
was concerned. in Boston, and New York, and elsewhere?
Mr. HAMILTON. Yes, sir; it would be true in almost any city. The
location of such stations from which the routes start would have
some bearing on that. -
Mr. WEEKs. Did you arrive at your cost in substantially the same
way as Mr. Neal?
Mr. HAMILTON. Yes, sir. The accounts which we use in Chicago
are divided practically on the same lines as are the accounts of the
RAILWAY MAIL PAY. 169
other street railway companies, with some few changes which the
board of supervising engineers insists on our keeping, and every fig-
ure we submit here is made from figures audited by the board of
supervising engineers.
... WEEKs. What is that board 2 Is it similar to the public-
service commissions in other States?
Mr. HAMILTON. Yes.
Mr. WEEKs. Is that a State board, or does it apply to the city
only'.
Mr. HAMILTON. It is a municipal board.
The CHAIRMAN. Have you any statement to put into the record?
Mr. HAMILTON. I have no statement, nor is it the policy of the
company to submit any statements, except those made up by the
board of supervising engineers, and we have asked them to make a
statement of this, which we hope you will allow us to submit.
The CHAIRMAN. As I understand, they occupy the same position
that the public-utility commissions do in the other cities?
Mr. HAMILTON. Yes, sir.
The CHAIRMAN. That is the board of engineers for the city of
Chicago 8
Mr. HAMILTON. Yes, sir. This statement has been made up from
the same figures that they use, but we prefer that they make the
statement. i
The CHAIRMAN. We will be very glad to receive that statement.
We thank you very much for your expression.
STATEMENT OF W. F. HAM.
The CHAIRMAN. Mr. Ham, it will be necessary for you to be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Kindly state your full name, age, residence, and
occupation and the capacity in which you appear before the com-
Imittee.
Mr. HAM. William F. Ham, vice president and comptroller of the
Washington Railway & Electric Co., Washington, D. C. Age, 42.
I have been connected with that company since 1899 in the capacity
of comptroller and as vice president for about a year and a half. I
appear as a member of the committee of the Electric Railway Asso-
ciation on the matter of compensation and am also a member of the
committee of the Electric Railway Accountants Association that has
to do with the classification of accounts in connection with the
Interstate Commerce Commission. -
The CHAIRMAN. You have heard the testimony submitted by
Messrs. Neal, Piper, and Hamilton. Have you any testimony to
offer showing experience or conditions on your lines different from
those on lines operated by the gentlemen I have named
Mr. HAM. The company with which I am connected does not
operate individual mail cars, and therefore I can not give any figures
in respect to that service.
The CHAIRMAN. Your service is all a pouch service?
Mr. HAM. Ours is all a pouch service. I was furnished some 10
days ago with a statement that was prepared by Mr. Neal and asked
170 RAILWAY MAIL PAY.
to go over it, criticize it, and I have made quite a careful examina-
tion of it and would arrive at substantially the same results. I
think his allowance for depreciation and interest would be considered
such as would be called for by good practice. I want particularly to
call attention to one thing which has been suggested to me by the
Questions asked by the chairman, and that is, if the carriage of mail
were looked upon as a by-product, what effect it might have upon the
figures that are prepared by Mr. Neal, I would say that out of his
total expense of 23.13 cents per car mile, it would be proper to elimi-
nate the item of track investment if it is looked upon as a by-product,
because I do not assume that ordinarily a track would be built where
the carriage of mail would affect it one way or the other. Therefore
I would consider that that item should be eliminated. Also under
the general expense as described by Mr. Hamilton, there could be a
very small expense saved if the mail were not carried. In other
words, the conclusion that I come to is that out of the expense of
23.13 cents per car mile, even looking at it as a by-product, you could
only take off about 3 cents; that the other costs are there whether
you look upon it as a by-product or not. -
The CHAIRMAN. Have you a prepared statement presenting your
views 7 e
Mr. HAM. No, sir; I have not.
The CHAIRMAN. What do you receive from the Government for
the service you render, in the way of mail transportation ?
Mr. HAM. Three cents a mile on the pouch service.
The CHAIRMAN. What does it amount to per annum ? *
Mr. HAM. I do not recall. It is a matter of minor consequence
and I am not appearing here particularly on behalf of my company.
Mr. LLOYD. You appear as a member of the General Electric Rail-
way Association ?
Mr. HAM. Yes, sir. •
Mr. TUTTLE. You have not had any of this trouble that Mr. Piper
referred to in Brooklyn with respect to interference with your
service by carrying pouch mail?
Mr. HAM. Not of that kind, but this is a much smaller city than
Brooklyn. The compensation which is given for the carriage of
pouches seems to me is on an entirely wrong theory. . It stands to
reason that we should be better compensated for carrying a number
of pouches through this city than we should for only one pouch on
a suburban line. The number of pouches that we carry is proba-
bly on an average very small compared with that carried by the
Brooklyn Rapid Transit Co., yet we are given the same compensa-
tion that they are. -
Mr. TUTTLE. Could you suggest some system of making some
better or different arrangements? &
Mr. HAM. I think it would be hard to lay down a rule which could
be universally applied. You would come nearer to it by making
some sliding schedule in cities of different sizes, because I presume
the volume of mail would correspond to the size of the city. I also
think that the basis of compensation on the length of a car should
also have modifications, because the expense of operating a 25-foot
car is not greater in the same proportion to the expense of operating
a 16-foot car. There ought to be some standard or sliding scale,
RAILWAY MAIL PAY. 171
varying according to the different lengths of cars if you want it on
a cost that "...# nearly represent the cost of the service.
The CHAIRMAN. Haven’t you a sliding scale where you have a
system of 1 cent a mile % -
Mr. HAM. That does not represent the difference in cost of opera-
tion. For instance, if we said that it cost 16 cents to operate a
16-foot car, it would not be true that it would cost 25 cents to oper-
ate a 25-foot car. Certain costs would remain the same and others
would vary. '
The CHAIRMAN. On the pouch service your position is that the
greater the volume of business the less necessary compensation for
the unit of business; that is, per pouch, if the pouch were a fixed
measure. In other words, it would be cheaper per pouch to carry
50 pouches than it would be to carry one pouch?
Mr. HAM. Certainly.
The CHAIRMAN. The greater the volume of business, the less it
would be, in the inverse ratio. Is there any further information,
Mr. Ham :
Mr. HAM. No, sir.
The CHAIRMAN. We thank you very much.
STATEMENT OF MIR, JOHN WILSON BROWN.
The CHAIRMAN. Mr. Brown, it will be necessary that you be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you please state your name, age, residence,
and occupation and the official position which you occupy with
transportation companies? -
Mr. BROwn. John Wilson Brown, Baltimore, Md.; president of the
Maryland Electric Railways Co.; age, 76.
The CHAIRMAN. How long have you been identified with trans-
portation lines?
Mr. BROWN. Continuously for some twenty-odd years. I really
began when I was a young man, some fifty-odd years ago.
The CHAIRMAN. There is an association here in the United States,
is there not, known as the Short Line Association?
Mr. BROWN. Yes, sir. -
The CHAIRMAN. Have you an official position with that association ?
Mr. BROWN. I think I am vice president of it, but I am not certain.
There is not much honor to it.
The CHAIRMAN The Short Line Association represents, as I under-
stand, a number of the short steam railroads, the shorter lines?
Mr. BROWN, I am president also of the Maryland and Pennsylvania
Steam Railroad. I thought your inquiry here to-day was alto-
gether concerning the electric lines :
The CHAIRMAN. We would like as much information as possible
and we desire to avail ourselves of an opportunity to get the views
of the gentlemen before the commission. -
Mr. BROWN. I came to-day rather as a listener than as a talker.
I do not see, so far as I am concerned, that the testimony here this
morning has been any but from the line of city delivery. My road
is an interurban road. We just carry the mail the same as a steam
172 RAILWAY MAIL, PAY.
road does at present and we are getting the steam railroad com-
pensation. -
The CHAIRMAN. What criticisms or suggestions have you to make
relative to the present method of compensation, so far as your lines
are concerned. V.
Mr. BROWN. The particular criticism is that it is too low. On the
Maryland & Pennsylvania Railroad I have had it worked up, but I
have not had it worked up on the electric line. They are possibly
the same. We are carrying mail at about 5 cents per hundred.
That is not a very high rate of freight—a very low rate of freight—
especially when you consider that in addition to the space occupied
by the mail you have the space occupied by the mail clerk and his
apparatus. Then we have to furnish various other things in con-
nection with that. g
The CHAIRMAN. Then on your lines, Mr. Brown, or those repre-
sented by you, weight rather than space is the determining measure
of the service rendered
Mr. BROWN. It is altogether that.
The CHAIRMAN. You have no R. P. O. cars 2
Mr. BROWN. We get paid nothing whatever for the operation of the
car fitted up as a post office.
The CHAIRMAN. Because you have no regular R. P. O. cars 40-foot
or greater 7
Mr. BROWN. No. But that is what we claim, we short-line people,
where we have not mail enough to put in to require a whole car. If
a 40-foot car is worth so much money, the 20-foot part of it is worth
a proportionate amount.
The CHAIRMAN. Then your contention is, as I understand it, that
the present system of compensation, a dual system of the R. P. O.
cars for space and the general mail compensation for weight, is an
injustice against the short lines because, on account of the 40-foot
legal limitation, you receive no compensation whatsoever on the
cars which you handle?
Mr. BROWN. Yes. The road that runs a full postal car gets paid by
the weight of the mail and the car besides. We get paid by the
weight of the mail.
The CHAIRMAN. Do you think if Congress enacted legislation that
would give you compensation for the car space on the basis of the
allowance made in your R. P. O. cars that . short-line roads would
then get a fair compensation for the total service rendered.
Mr. BROWN. We are not satisfied under the present rate of com—
pensation. ---
The CHAIRMAN. Have you had any statistics prepared by any of
your subordinates demonstrating accurately what your cost is .
Mr. BROWN. No, sir; I have not. Here is a statement which I
furnished that is printed in this record. This was made up by Mr.
Sullivan Smith, president of the Short Line Railroad Association,
and it goes into d.
The CHAIRMAN. Then the information contained in the prelimi-
nary report on pages 67,68, 69, 70, and at the top of page 71 in the
communication by Mr. Frank Sullivan Smith, president of the Short
Line Railroad Association, gives your views and those of the Short
Line Association, so far as you understand them 3
RAILWAY MAIL PAY. 173
Mr. BROwn. Yes, sir. There is also a communication in the earlier
#. of this º by Mr. Drake, secretary of the association.
.. i a copy of the Talbott bill, which we think would be an equit-
8, Ojé OIII.
The CHAIRMAN. You think what is known as the Talbott bill would
i. a fairer treatment to the short line roads than the existing legis-
ation ?
Mr. BROWN. That would give us fair treatment; yes.
The CHAIRMAN. Then the Talbott bill has the approval of the Short
Line Association, so far as you know?
Mr. BROWN. Yes. There is one thing I would like to say in view
of some matters that transpired here this morning. There seems
to be an idea afloat that the United States is in a different position
from any other shipper as regards the mail. I do not see that it is.
The United States say they will not give more than so much money
to the railroads, but on the other hand the railroads can say they
will not take it at that rate, but the United States can not say that
we must take it.
The CHAIRMAN. Do you not think that the United States can com-
pel the railroads to carry the mails, provided the rate determined is
not confiscatory
Mr. BROWN. No, sir; I think not, sir. They have no right to come
in ahead of everybody else, for the very fundamental principle of the
interstate law is that every shipper is on the same basis. As a shipper
the United States do not come as a paramount landlord.
The CHAIRMAN. Then, eliminating the legal question, do you not
think as a matter of policy the transportation companies should
take the mail at less compensation than they conduct the Ordinary
business? X.
Mr. BROWN. They might do that, but not take the mail as a grati-
tuity to the United States; not take it if they do not pay them.
The CHAIRMAN. Have you seen any expression from anybody
indicative that it would be advisable, if possible, to get the trans-
portation companies to carry the mail for nothing?
Mr. BROWN. Well, that is what they are doing.
The CHAIRMAN. Carrying it for nothing?
Mr. BROWN. These gentlemen who testified here this morning said
they were carrying it for nothing. •
The CHAIRMAN. I hardly think the testimony we heard this morn-
ing is capable of that deduction.
Mr. BROWN. The expenses are more than they receive. Is not
that carrying it for nothing? -
The CHAIRMAN. No.
Mr. BROWN. Well, we may differ in terms, but if I put a dollar
into one Fº and take out of the other pocket $2 for the same
business, I am doing that business for nothing. , My position is that
the railroad is a partner with the country that it serves, and I have
ordered things carried for nothing when I had a disputation of rates
with a contesting line, because I thought it was for the good of the
country. I never let the farmer wait #. the matter of a settlement
of rates. Take manure, for example, and I will cite an illustration:
I was once carrying a lot of manure for the farmers in Anne Arundel
County. They were getting it by the Pennsylvania Railroad and the
Pennsylvania Railroad suddenly raised the rate to the junction
174 RAILWAY MAIL PAY.
point to the amount of the rate at the delivery point. I directed
OUII’ ". le to carry it for nothing for the farmer, but we got the rate
fixed all right, and we never said anything to the farmer about it.
The CHAIRMAN. There were two reasons for that, competition
with the Pennsylvania Railroad for one 7 -
Mr. BROWN. No; there was no competition.
The CHAIRMAN. The reason was that it would pay you to carry it
for nothing because you would get an indirect benefit?
Mr. BROWN. That is another matter, but that is where the part-
nership comes in. k
Mr. WEEKs. What are the terminals of the steam railroad with
which you are connected ?
Mr. BROWN. Baltimore and York, Pa.
Mr. WEEKs. And the trolley line .
Mr. BROWN. Baltimore and Annapolis.
Mr. WEEKs. Are the services exactly similar'
Mr. BROWN. Substantially similar so far as the mails are concerned.
I do not see any reason to draw any distinction between them.
Mr. WEEKs. On which road can you carry the mail the cheaper?
Mr. BROWN. We can carry them cheaper on the steam roads. You
can carry anything cheaper on a steam road.
Mr. WEEKs. Why? -
Mr. BROWN. Because it is more expensive to operate trolley lines.
If you would give many steam roads in the country for their income—
that is, their gross receipts—what the trolley lines are paying for their
gross expenses, per . they would be very glad to get it. It is
shown in statistics.
Mr. WEEKs. Why did you change?
Mr. BROWN. That is another matter. I did not do it.
Mr. WEEKs. Why did you change the service from steam from
Baltimore to Annapolis ?
Mr. BROWN. On account of competing lines. They do better by
steam. These electric people, tell you that if you turn a road into
an electric line you ...if multiply your receipts three or four times.
That may be so in some cases.
Mr. LLOYD. How does it happen, if it costs more to run an electric
road than a steam road, that the passenger rate is usually about one-
half on the trolley road of what it is on the steam road'.
Mr. BROWN. Well, I do not know that that is a fact where they are
under the same conditions. You are speaking now of the trolley
road being a city road where there is a great concentration of travel.
Mr. LLOYD. No; I do not mean that. Take, for instance, Indian-
apolis—you can go out from that city for 100 miles in almost any
direction on a trolley for about two-thirds of what you pay on a
steam road.
Mr. BROWN. I know some trolley lines that do that same thing
that come out short in the end.
Mr. WEEKs. Is not that pretty nearly universal?
Mr. BROWN. I do not know. .
Mr. WEEKs. Would you be satisfied if you were paid the same
compensation on the road from Baltimore to York that you receive
for the service on the Annapolis road 7
Mr. BROWN. We are charging the same rate between Baltimore
and Annapolis on the trolley road that we did on the steam railroad.
RAILWAY MAIL PAY. 175
Mr. WEEKs. I am talking about the mail.
Mr. BRowN. I do not know. What was your exact question ?
Mr. WEEKs. My exact question was: Would you be satisfied if
ou would receive the same compensation for carrying the mail
etween Baltimore and York on the steam road that you receive for
carrying it on the trolley between Baltimore and Annapolis'
Mr. BROWN. Well, we are under the same basis on that, the same
scale. We have never changed since we changed into, a trolley road.
We give an apartment on the car and run it the same way.
Mr. WEEKs. I supposed you were receiving a compensation on the
Baltimore & Annapolis Railroad 2
Mr. BROWN. The basis you have been talking about this morning
is a city basis where you run cars frequently and pretty much all of
the time. As to this bill submitted by the Postmaster General, that
strikes us as being wrong all the way through. The general principle
of the bill, in the first place, is that it puts the whole matter of deter-
mining the question in the hands of the Postmaster General. It
gives a maximum above which he can not go, but it does not require
him to pay that maximum, but he can dicker with every railroad in
the country under the terms of that bill.
Mr. WEEKs. Why shouldn’t he?
Mr. BROWN. That ought to be fixed by law. It ought not be put
in the hands of any Government servant.
Mr. WEEKs. Then why not fix freight rates by law Ż
Mr. BROWN. You do. The Interstate Commerce Commission
fixes them so far as the interstate trade is concerned. The State
commissions fix the rates so far as the States are concerned.
Mr. WEEKS. Is there any other reason why you should carry the
mails on exactly the same basis that you carry the freight 7
Mr. BROWN. Put them in in the same way.
Mr. WEEKs. Suppose you went to the Postoffice Department and
tried to make an agreement for carrying the mails between Baltimore
and York and you made one that was satisfactory to you. You will
go ahead and conduct that service. Suppose it is not satisfactory
to you and it is submitted to the Interstate Commerce Commission.
Would that be a satisfactory method of procedure, from your view-
oint % -
p Mr. BROWN. Well, that is exactly what this bill calls for.
Mr. WEEKs. That is what would happen in the case of freight,
Or if you are doing business with anyone else than the Government.
Mr. BROWN. It is hardly right that the executive Government
should be the shipper and the judge of the freight rate at the same
time, for the Government is an interested party. -
Mr. WEEKs. It is impossible to avoid that, and I think we could
trust the Interstate Commerce Commission to be fair.
Mr. BROWN. You could give us a chance to go to the courts on it.
I suppose the courts would have a chance, anyhow?
l Mr. WEEKS. You can go to the courts now under the railroad rate
8.W
Mr. BROWN. Not under this bill. The Interstate Commerce Com-
mission is final. - - -
75904—No 1—13—12
176 RAILWAY MAIL I’AY.
Mr. WEEKs. What I am trying to ask you is, do you see any rea-
; for a difference of method in carrying the mail and carrying the
reight 7 s
. BROWN. It is a different class of carriage. If you dump your
mail pouches into a freight car it will go as freight.
Mr. WEEKs. I mean in the manner of reaching a proper compen-
sation. |
Mr. BROWN. Well, you can not reach it on a freight rate when you
are carrying it not only as a passenger but as a passenger in an apart-
Iment. º
Mr. WEEKs. I am not talking about passengers, but I am talking
about freight. If you and a shipper in Baltimore do not agree on a
freight rate between Baltimore and York the case goes to the Inter-
state Commerce Commission ?
Mr. BROWN. Yes.
Mr. WEEKs. Why should you not do the same thing with the mail?
Mr. BROWN. Oh, I do not know. Because the Government wants
you to make a contract for it.
Mr. WEEKs. Suppose the Government did not want a contract, but
wanted to º in the same way, as, for instance, say it wanted
some guns carried from an arsenal to the coast. Then it makes an
arrangement with the railroad companies to conduct the service'?
Mr. BROWN. Yes; and the rate is made according to the require-
ments of that particular service.
Mr. WEEKs. Would it not be so in the carrying of the mail?
Mr. BROWN. I do not know but what it would be proper to submit
it to the commission if you gave the railroads a chance to go before
the commission, too. In this bill of the Postmaster General there
is no chance for the railroads to appear before the commission. I
noticed that some of the replies to the circular issued by Senator
Bourne talked about an appeal, but there is nothing there of an ap-
peal in this bill.
Mr. WEEKs. Well, you have an appeal under the general law, so
far as the Interstate Commerce Commission is concerned 3
Mr. BROWN. But this does not come under the Interstate Commerce
law. Post-office matter is different matter. There never has been
any business in that line that came under the Ordinary railroad busi-
IOleSS. -
The CHAIRMAN. Are there any other viewpoints that you would
like to present -
Mr. BROWN. There seems to be nothing provided in the law, as
it stands, to pay the railroads for the parcels post for these six
months.
The CHAIRMAN. There is nothing in the present law, of course,
with reference to that.
Mr. BROWN. How are you going to pay them by a subsequent law?
I have written to the Second Assistant Postmaster General in answer
to a circular, with reference to our quadrennial weighing, asking him
if they could not make a provision for a separate weighing of the
parcels post, because from the weighing that takes place this winter
the rate begins from the 1st of July. If you do not take some weigh-
ing of the parcels post, you do not get any pay for that for these six
months, and unless you have a weight, how would Congress know?
They would have nothing to base it upon for subsequent legislation.
FAILWAY MAIL PAY. 177
It would require a special appropriation. Since that time I know of
one postmaster on our line who has been directed to weigh the parcels
post, but I think that is the only one. i
The CHAIRMAN. What is the size of that office 3
Mr. BROWN. It is the largest office on the line. I assume that that
was for information as to what the probable increase in business would
be due from what is known as the parcels post bill in fixing the weight
limit and decreasing the average of rates on fourth-class mail matter.
This January the express business has been increasing, so the parcels
post has not hurt them whether it has taken anything away from
them or not.
The CHAIRMAN. I will say that the Senate committee have that
very question under consideration now, in the study of the post office
appropriation bill. What the action of the committee and the action
of Congress will be, I will not assume to state. *
Mr. BROWN. Just as I said awhile ago, with regard to commodities,
sometimes they carry them for nothing. I told Mr. Stewart we would
not make any trouble, that we would carry it and render the service
to our patrons whether we go paid for it or not, but we are breaking
the Interstate Commerce law by doing it. *
The CHAIRMAN. We thank you very much for your views.
Thereupon, at 1.15 o'clock p. m., the hearing was adjourned until
Wednesday, February 12, 1913, at 11 o'clock a. m.
WEDNESDAY, FEBRUARY 12, 1913.
fºr
JoſNT COMMITTEE ON SECOND-CLASS MAIL MATTER,
Washington, D. C.
The hearing was resumed, according to adjournment, at 11 o'clock
8. Iſl.
Present: Senator Jonathan Bourne, jr., (chairman); Senator
Harry A. Richardson; Representative James T. Lloyd; Represen-
tative William E. Tuttle, jr.; and Representative John W. Weeks.
STATEMENT OF MR. RALPH PETERS.
The CHAIRMAN. Mr. Peters, it will be necessary for you to be
SWOI’Il. -
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. You have, as I understand, some supplemental
statements to make before the committee, in accordance with the
understanding we had at our last meeting.
Mr. PETERs. In view of the information that you have asked for,
Mr. Chairman, we have endeavored to prepare these statements.
The first is in regard to the value of the railroad property used in
connection with the mails and I have a brief statement here which
I will read in that regard showing the allowance that should be put
into cost to cover the interest on the property.
Although the Postmaster General's estimates of the operating
expenses and taxes chargeable to mail transportation are too low
further consideration of Document No. 105 may be based upon the
178 RAILWAY MAIL PAY.
hypothesis that they are correct. On this assumption railway mail
pay is too low if a reasonable return upon the fair value of the prop-
erty used would exceed $11,253,866.15. *. r
First. The Postmaster General's computations led to the follow-
ing (Doc. No. 105, revised issue, pp. 280–281): -
Railway mail pay in November, 1909 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,607,773. 13
Operating expenses and taxes chargeable to mail transportation, same
months---------------------------------------------------------- 2,682,797. 92
Balance, available for return on investment. . … * * * * * * *º 924, 975. 21
There are 30 days in November so that $924,975.21 for the month
is equivalent to $30,832.51 per day. Multiplied by 365 this gives
$11,253,866.15 as the annual sum available for a return upon the
fair value of the property used.
Second. No valuation of the railway property used in the mail
service has ever been made nor has there ever been any general
valuation of all the railway property of the United States. Valua-
tions made under State authority support the conclusion that the
real value of railway property exceeds the par value of all the out-
standing stocks and bonds. The following table was originally
published by Mr. Slason Thompson, of Chicago:

Yº. as
stated by com- * * * * * *
State. mission or tax Capitalization.
board.
Minnesota.-------------------------------------------------------------- $411, 735, 194 $334,979,691
SQuth Pakota. --------------------------------------------------------- 106,494,503 108,911,000
Wisconsin-------------------------------------------------------------- 284,066,000 249,299,060
Texas------------------------------------------------------------------ 413,000,000 412,465,743
Washington------------------------------------------------------------ 186,007,490 153,493, 940
Total.------------------------------------------------------------ 1,401,303,187 1,259,049,434
Excess of total valuation over total capitalization. . . . . . . . . . . . . . . . . 142,253,753
Mr. WEEKS. Has that valuation in each of those cases been by
careful appraisal of the property, or is it an estimate based on stock
and bonds 7
Mr. PETERS. I do not know. This statement of valuation was
ublished by the commissions or tax boards of the States named,
ut whether they were a full, complete valuation or an estimated
valuation, it is the valuation as fixed by those five States—Minne-
sota, South Dakota, Wisconsin, Texas, and Washington.
The CHAIRMAN. Your idea in inserting this is to show the difference
in the valuation placed by different boards or commissions on prop-
erty as compared with the capital and bonded indebtedness. ***
Mr. PETERs. It is to back up the statement made at the beginning
of the second paragraph to the effect that values, as a rule, where
they have been made, show that they exceed the par value of the
outstanding stocks and bonds. . While the information for Washing-
ton is given in the same way, the total valuation for the five States,
as stated by the tax board, is $1,401,303,000, while the capitaliza-
tion given for those States is $1,259,000,000.
Mr. WEEKs. You take the capitalization as the par value of the
stocks and bonds 2 ſ .
RAILWAY MAIL PAY. 179
Mr. PETERs. It is taken as the par value of the stocks and bonds.
It is therefore reasonable to assume that the present value of the
railway property of the United States exceeds its net capitalization.
The Interstate Commerce Commission has stated (Report on Sta-
tistics of Railways for 1910, p. 52) that the aggregate net capitaliza-
tion of the railway property of the United States on June 30, 1910,
was $14,338,575,940.
Third. Assuming, then, that $14,338,575,940 was the true value of
erican railway property at the time covered by the investigations
reported in Document No. 105, it is reasonable to conclude that the
mail revenues of the railways ought to have afforded them a fair
return on such proportion of their property as the total of those
revenues bears to the total receipts from operation. The operating
revenues of 1910 amounted to $2,750,667,435 (Statistics of Railways
for 1910, p. 69) and the mail revenues to $48,913,888, or 1.78 per
cent of that amount (Statistics of Railways for 1910, p. 71). Hence
it may be concluded that the mail service ought to produce, in addi-
tion to operating expenses and taxes, a fair return upon 1.78 per
cent of $14,338,575,940; that is to say, upon $255,226,651.73. Cer-
tainly no one would suggest a lower rate of return than 5 per cent per
annum. This minimum rate would, however, require $12,761,332.59,
or a sum considerably larger than the $11,253,866.15 which, even
accepting the unreasonably low figures of the Postmaster General as
the true cost of operation and taxes, is all that is left from present
mail revenues after paying those out-of-pocket expenses. Six per
cent would require $15,313,599.10 annually, 7 per cent would require
$17,865,865.62, and 8 per cent would require $20,418,132.14.
Fourth. The Postmaster General estimated (Document No. 105,
p. 280) that, out of total railway expenses for operation and taxes of
$137,355,150.79, the mail service should be charged with $2,682,797.92,
or 1.95 per cent. It would certainly be reasonable to conclude that
the portion of the total value of the property on which the mail
revenues should produce a fair return, is the same. But on this
hypothesis the mail pay would have to bring in a return on more
property value than that ascertained by the calculation in the third
Fº herein, and the present deficiency in mail revenues would
e still greater.
These are merely illustrations showing what should be included as
the 5.º. interest return on the value of the road. -
The CHAIRMAN. In your opinion. -
Mr. PETERS. In our opinion, and we have put it in this shape so
that it could be easily read and understood.
Fifth. If it should be assumed that property value should be
assigned to the passenger-train services in the proportion that the
mileage of passenger trains bears to the mileage of all revenue trains
and the property so assigned distributed among the passenger, express,
and ...'. in accordance with the space required on such trains,
a still high proportion of the property would appear to be entitled to
a fair return out of mail revenues. This would be so, even if the
Postmaster General's erroneous allotment of space to the mail
service were accepted as sufficient for the purposes of such a calcu-
lation.
Sixth. It has been stated herein that no one would suggest a lower
rate of return than 5 per cent per annum. It is not believed that 5
180 - RAILWAY MAIL PAY.
per cent would be considered high enough if the matter were to be
submitted to the United States courts. Six per cent is the common
rate of interest allowed upon judgments throughout the United States
although in some States it is as high as 8 and even 10. Real estate
mortgages, having absolute security, are rarely written at less than 5
per cent, even in the largest eastern centers of wealth and population;
7, 8, and 10 per cent are common in large sections of the country.
The railroad commission of the State of Washington has recently
allowed 8 per cent on property subject to its jurisdiction.
In Wilcox v. Consolidated Gas Co., decided on January 4, 1909, the
Supreme Court of the United States, in a unanimous opinion delivered
by the late Mr. Justice Peckham, said:
There is no particular rate of compensation which must in all cases and in all parts
of the country be regarded as sufficient for capital invested in business enterprises.
Such compensation must depend greatly upon circumstances and locality; among
other things, the amount of risk in business is a most important factor, as well as the
locality where the business is conducted and the rate expected and usually realized
there upon investments of a somewhat similar nature with regard to the risk attending
them. . There may be other matters which, in some cases, might also be properly
taken into account in determining the rate which an investor might properly expect
or hope to receive and which he would be entitled to without legislative interference.
The less risk, the less right to an unusual return upon the investment. One who
invests his money in a business of a somewhat hazardous character is very properly
held to have the right to a larger return, without legislative interference, than can be
obtained from an investment in Government bonds or other perfectly safe Security.
The man that invested in gas stock in 1823 had a right to look for and obtain, if possible,
a much greater rate upon his investment than he who invested in such property in
the city of New York years after the risk and danger involved had been almost entirely
eliminated. (212 U. S., 19, 48, 49.) -
It is extremely significant that, after thus finding that risk was
“almost entirely eliminated,” and, further, that the company was
“secure against competition” (212 U. S., 49) and that “it seems as
certain as anything of such a nature can be that the demand for gas
will increase” (212 U. S. 49), the Supreme Court should have said:
Taking all facts into consideration, we concur with the court below on this question,
and think complainant is entitled to 6 per cent on the fair value of its property devoted
to the public use. (212 U. S., 19, 50.)
In other words, it was held that if the statute attacked in the case
then at bar had allowed the gas company less than 6 per cent per
annum on the fair value of its property it would have been confisca-
º, and, therefore, unconstitutional and void. No one who com-
prehends the circumstances of that case can doubt that the same
reasoning, applied to a business subject to such varying territorial
conditions and such extreme vicissitudes, hazards, and fluctuations
as the railway industry of the United States, would not require a
higher average return than 6 per cent per annum.
The CHAIRMAN. Mr. Peters, the statement that you have just
presented, as I understand, is for the purpose of showing what, in
your opinion, would be a reasonable rate on the capital charges?
Mr. PETERs. Yes. -
The CHAIRMAN. Are you prepared to demonstrate that under the
existing method of railway-mail pay, you are receiving none of that
on your capital charges } *º-
Mr. PETERs. In the majority of cases that is true.
The CHAIRMAN. Which. -
Mr. PETERs. That we are receiving no return upon capital.
RAILWAY MAIL PAY. 181
The CHAIRMAN. In other words, that your present compensation
in the majority of cases simply represents the cost of the activity
with no allowance for capital charges incident to the performance
of the activity. Is that it?
Mr. PETERs. That is correct, although we start out in the beginning
of that statement and say that granting Document 105 is correct,
the allowance they make there does not cover by at least $1,000,000
what the railroads should have on the net valuation at 5 per cent,
and that at 6 per cent it does not cover by at least $4,000,000 what
the railroads shºuld have on the net valuation, taking the figures as
given in Document 105.
The CHAIRMAN. In your association, representing 214,000 of the
250,000 total mileage of railroads in the United States, are there
many companies able to demonstrate that out of the actual compen-
sation they receive from the Government for railway mail pay, they
are making a loss and demonstrate that they are receiving no allow-
ance on the capital charge of the operation ?
Mr. PETERS. The vast majority of the companies claim to have
shown that in their individual reports, from which Document 105
was compiled. The statement of the Long Island Railroad, which
is published in your preliminary pamphlet, shows that we do not in
any way get the full amount that the mail service costs us, much less
getting anything toward paying an interest on the capital invested.
The CHAIRMAN. You º then, that given the gross amount
received from the Government, you can demonstrate in a majority
of instances that the compensation received does not pay the cost
of hauling the mail—that is, the actual cost of the hauling? In
other words, that it would be advantageous, from a dollar standpoint,
for you to refuse to haul the mail rather than continue hauling at
the rates you receive from the Government at the present time !
Mr. PETERS. That is correct. Such information is shown in Doc-
ument 105.
The CHAIRMAN. You have some other statement to present 7
Mr. PETERs. We would ask to present a bill, which, in our opinion,
would remedy our difficulty. Our committee have all felt that we
could stand by the present law, provided it could be amended, and
in our draft we have endeavored to make that amendment as simple
and as brief as possible. That is what we have suggested here.
A BILL To provide for the transportation of parcel-post matter, to amend existing laws relative thereto,
and to equalize pay for mail service on railroad lines.
Be it enacted by the Senate and House of Representatives of the United States of America
in Congress assembled, That the proviso in the act of March third, nineteen hundred
and five, “That hereafter, before making the readjustment of pay for transportation of
mails on railroad routes, the average weight shall be ascertained by the actual weighin
of the mails for such number of successive working days, not less than ninety,” be an
the same is hereby repealed, and that hereafter such weighings shall be simultaneous
on all railroad mail routes not less frequently than once in each year; and the Post-
master General is hereby authorized and directed to require a railroad mail carrier
to provide for the carriage of the mails between its trains and a post office or postal
station only where such post office or postal station is located in a railroad depot or
station of such carrier, and the Postmaster General is hereby authorized and directed
to pay for space used as railway post officesin apartment cars in proportion to the present
rate allowed for postal cars sixty feet in length.
The CHAIRMAN. As I understand, Mr. Peters, this suggested bill
represents the views of the association of which you are chairman,
182 f RAILWAY MAIL PAY.
and if enacted into law would, in your opinion, remedy what from
your viewpoints are apparent present injustices. It would give you
annual weighing, eliminate the side service, and give you an allow-
ance on apartment cars under 40 feet; it would fix the weight as the
measure of service rendered, as at present, in 90 per cent of the mail
carried. f r
Mr. PETERS. Yes.
The CHAIRMAN. Are you all agreed upon this bill as being all in the
way of legislation which, in your opinion, is necessary to do justice
for the transportation companies, from your viewpoint?
Mr. PETERs. The short lines, I understand, would like to have the
rates changed on the minimum light weight roads; that is, the
minimum weight per mile per annum. -
The CHAIRMAN. Some of their representatives are present 7
Mr. PETERs. Some of them are here, but we feel under this amend-
ment the money received by the railroads for carrying the mails would
not have to be all paid out for messenger service or special facilities
furnished; that we would be more nearly compensated for the expense
we are subjected to and it would come as near making reasonable
compensation for the roads as anything we could possibly hope to get,
although it does not, in every case, fully compensate each road.
The CHAIRMAN. Is it possible to evolve a general plan, universal in
its application, that will fully compensate each road 7
Mr. PETERs. We have felt that it would not be.
The CHAIRMAN. What, in dollars, would the adoption of this legis-
lation mean in the way of increased pay, to the transportation com-
panies on the part of the Government?
Mr. PETERs. As we have discussed this here before, I can not say
from calculations made by myself, but from the best information I
would gather in our discussions, it would make a difference of about
$4,500,000 in the pay for apartment cars and make somewhere
between two million and three million increase in the revenues, due
to the annual weighing, or pay for the natural growth of the mail. In
other words, something between $6,500,000 and $7,500,000. Besides
this it would save the railroads in expenditure for terminal and mes-
senger service, about $4,300,000. g
The CHAIRMAN. But the Government would have to pay that,
instead of the railroads, as at present, if that estimate is correct,
would it not ?
Mr. PETERs. That is my understanding from a report made by the
Second Assistant Postmaster General in some document, which I
can not now recall, that the estimated cost of this service, if per-
formed by the Government would amount to about $4,300,000. I
can not say positively that the railroads could save that entire
$4,300,000, but they would save a large proportion of it.
The CHAIRMAN. This is true, is it not. If the railroads now have
to bear a certain expense for the service rendered and the duty of
that service was transferred from the railroads to the Government
the cost of that service would be borne directly by the Government
instead of by the railroads as at present. It is that which you seek
to be relieved from ? - *
Mr. PETERS. Yes.
Mr. WEEKs. Is it not true that that entire service is performed by
employees of the railroads?
RAILWAY MAIL PAY. 183
Mr. PETERs. No; some portion of it is so performed.
Mr. WEEKs. What part of it do you think is performed by em-
ployees of the railroad who are under fixed compensation and whose
º would not be changed if they did not do this work?
r. PETERs. In a very large number of cases, on many railroads,
special messengers are employed for carrying the mails between the
local station and the post office. In some cases that service is per-
formed by employees who perform other service and we would not
save that entire expense, but we would use those men entirely for
railroad service and not for carrying the mails. As I understand, the
most burdensome part of this messenger service is where the railroads,
in certain cases as are shown in this preliminary pamphlet, for instance
on the L. & N., have to pay out from $300 to $900 a year for wagon
service between their terminal and the post office. There are very
marked cases of that kind all around the country. In the case
cited by the L. & N.—and it is the case with many other roads—
they show the length of the road is counted not to the station but to
the post office; mails are handled to the station by train and then
special contracts are made for wagon service from the station to the
post office, which is, in many cases, three or four times the amount
of compensation that the railroad gets by having that distance
included as constructive mileage for the railroad. All that would
be a saving to the railroad.
The CHAIRMAN. In this estimate of side service have you made a
segregation of the compensation that the employees receive, charging
in this computation the actual time that it takes for side service, or
crediting him in the computations for the actual time that he devotes
to the railroad service outside of the side service?
Mr. PETERs. We attempted to do that in the report made to the
Postmaster General for November, 1909, but I understand it was not
fully given, or given to the satisfaction of the department, and the
information was not all tabulated. The estimate of $4,300,000 was
taken from a document that was put out by the Post Office Depart-
ment, which I can not refer to at this present time. That is a matter
we can have very carefully checked up and reported upon later if
that is the desire of the committee.
Mr. LLOYD. If this bill of yours were to become a law, as I under-
stand you, it would cost the Government a little over $11,000,000
more annually to transport the mails than it does now.
Mr. PETERs. No. I said it would cost the Government between
$6,500,000 and $7,500,000, and that they would be subjected to other
€XO€IlSO. *
º LLOYD. The Government would have to pay this $4,300,000.
Mr. PETERS. Then, in that event, it would amount to between
$10,500,000 and $11,500,000.
Mr. WEEKs. Would it not cost the Government more than
$3,400,000 to perform that service which is now performed by the
railroad 3 -
Mr. PETERs. No; I do not believe it would. I think they could
arrange to compensate the railroad for the actual cost of the service.
Mr. WEEKs. When you take into consideration the fact that very
much of the service is now performed by the station employees, who
otherwise would not be doing anything, do you not think that it would
probably cost the Government more than it costs the railroad now
184 RAILWAY MAIL PAY.
Mr. PETERS. I can not definitely answer that. As I stated, the
figure of $4,300,000 given by us was taken from some document issued
by the Post Office Department. That was their estimate of what
this messenger service would cost them. t
Mr. WEEKS: What roads were you connected with before you be-
came president of the Long Island 7
Mr. PETERS. I have been with the Pennsylvania and its lines all my
life. I was on the Pennsylvania lines west of Pittsburgh, at Pitts-
burgh, Chicago, Cincinnati, and Columbus. • ,
Mr. WEEKs. Were you familiar with the mail service performed by
the Pennsylvania Railroad 7 -
Mr. PETERs. Only in a general way. I did not pay much attention
to the details of it until I got into this committee work. I had studied
it very thoroughly on the Long Island, and I presented a petition for
relief some six or eight years ago.
Mr. WEEKs. Do you not think the Pennsylvania Railroad makes a
reasonable profit in carrying the mails?
Mr. PETERs, I do not believe they do. We have their representa- .
tives here, and they are prepared to give you detailed information in
regard to that.
... WEEKs. In your own case of the Long Island Railroad, you
have, I think, very successfully demonstrated that you are not getting
reasonable compensation. Would you be willing to leave that ques-
tion to the Interstate Commerce Commission to determine what you
should receive for transporting the mails?
Mr. PETERs. Yes; I think I would. r
Mr. WEEKs. Do you think that could be done in other cases so that
a fair arrangement could be made as between the railroads and the
Government to determine the proper rate to be paid
Mr. PETERs. I think the commission has its hands pretty full at the
present time; and if they were to investigate the matter and attempt
to determine the rates, it would have to be done by some subordinate
committee or commission. -
Mr. WEEKs. That is not an answer to the question, because the
commission might be enlarged. Assuming that it hasn't its hands full
and has plenty of time to pass on such questions, what do you think
would be the case ?
Mr. PETERs. As the commission is placing upon itself, and has
placed upon it by the laws, the responsibility for the railroads, since
it has to pass upon all rates, I should think it would be fair to let them
pass upon a rate for handling the mails. -
Mr. LLOYD. And handling express matter, too.
Mr. PETERs. They are passing upon that, too; but the rate there
is first suggested by the express companies and then the reasonable-
ness of the rate is passed upon by the commission. As I understand
the law, the commission does not originate any rates; the rates are
made by the railroads and reviewed by the commission. \
Mr. LLOYD. You would be willing, as I understand you, to have
the Government fix the rates and the question of its reasonableness .
might be submitted to the Interstate Commerce Commission?
Mr. PETERs. In this case I am perfectly willing to have a reason-
able commission, like yourselves, fix the rate, because I think you
will endeavor to do what is fair to both sides.
RAILWAY MAIL PAY. 185
Mr. WEEKs. Is not the Interstate Commerce Commission the best
independent authority on such matters? I did not intend to ask
you whether you would be willing to do this, but I am trying to get
your idea of what the results would be if it were done.
Mr. PETERs. I think the railroads should be asked first to make
their rates, and then have the reasonableness of the rates passed
upon by the commission. -
Mr. WEEKs. That is exactly what I intended to ask you.’
Mr. PETERs. I did not intend to suggest that the commission should
make the rates, but if there were a disagreement between the depart-
ment and the railroads that it should be referred to the commission.
That is what I had in mind. The difficulty in this matter is that it
is to make a rate for performing a function for the Government, the
handling of the mails, an universal service under universal conditions.
It is not like making the ordinary rate on a small commodity. Your
service has to be performed alike for all sections, for all parts of the
ºy, and the pay is to be arranged on a uniform basis on all
I’O3,OIS.
Mr. WEEKs. Should it'. That is the point I want to get at. It
seems to me that this service is very dissimilar in its cost and in its
character and that a rate that will pay a reasonable compensation to
some of the roads will pay excessive compensation to others, or a
rate that would be reasonable compensation to the others would pay
insufficient compensation to the short-line railroads, for instance.
Mr. PETERs. #. is possible to make a rate, you might say, on each
railroad, but you would discriminate; you would be paying one rail-
road, owing to its condition, location, and everything, on One basis,
while another road parallel, not necessarily parallel, but in another
section of the country, on a very much higher i. and there could be
claim there for discrimination, and that you are not treating all of
your people alike.
Mr. WEEKs. Very likely that is true, but should you not be paid a
higher rate for service on the Long Island Railroad, for instance,
than a similar service on the Great Northern Railroad in Montana,
where there are very few stations and the measure of the service and
the facility of the service amount to practically nothing?
Mr. PETERs. The relief from the messenger service will remove that
objection. The increase in weight would perhaps remove that,
although it might not in every case do so. For instance, we have here
one road that is 115 miles in iºn that gets fair compensation under
the present basis, its mail all being handled in postal cars and con-
centrated loads. Then we have other cases we know of where they
get a very fair compensation on account of practically 60 or 70 per
cent of the mails being concentrated on one train over a very long
route. Those are the exceptional cases. On many of the small
mail routes with light weight so much of the receipts of the Govern-
ment has to be paid out for messenger and terminal service and for
special expenses that it has been very burdensome. I do not believe
you can in every case compensate absolutely every individual road
for the handling of the mails without getting such a diversified system
of rates on the mail business that it would prove very unsatisfactory
and a constant source of dissatisfaction or litigation.
186 - RAILWAY MAIL PAY.
Mr. WEEKS, You do not have any litigation in freight rates, and
there are hundreds and thousands and tens of thousands of different
freight rates. -
Mr. PETERs. I think the records show those are in constant litiga-
tion before the commission now. . . -
Mr. WEEKs. In constant dispute, quite likely, but not in constant
litigation. -
Mr. PETERs. Prior to the institution of the Interstate Commerce
Commission I think there was a great deal of litigation on that
account. The railroads have lived under the mail pay law of 1873
and have cooperated with the Post Office Department in building up
a wonderful service and were reasonably well satisfied with the com-
pensation they were paid from the mails until this continual reduction
of pay was undertaken. I think if we returned to the basis that we
ſº or continue the present basis, after making these corrections,
that the railroads would be very well satisfied, preferring to live under
the conditions that we know all about than to undertake something
which we do not know anything about. I have figured that under
this amendment the Long Island Railroad should get about $85,000
or $90,000 a year instead of $43,000. We really ought to have about
$165,000 a year in order the give us a full return on the property.
The CHAIRMAN. Please elaborate on that $165,000 a year propo-
sition.
Mr. PETERs. I haven’t my figures here with me, but they are in
some reports which I think are on record.
The CHAIRMAN. Let me ask you this: Have the railroads, so far as
you know, in their accounting had an account with the Government,
and in their statements figured a profit or a loss so far as rail transpor-
ration is concerned, or R. P. O. pay?
Mr. PETERs. I do not so understand. The accounts are all kept
under the general form of distribution of accounts prescribed by the
Interstate Commerce Commission.
The CHAIRMAN. If they have no such system of accounting, how
are the railroads cognizant of the fact that they have made a profit or
a loss in the transportation of the mails? -
Mr. PETERs. It is only when they make a special study of the case.
We make special studies in the special rate cases before the Interstate
Commerce Commission or in the courts.
The CHAIRMAN. Then am I correct in this assumption or under-
standing: That prior to 1909 the railroads had no definite knowledge
as to whether they were making a profit or losing on their mail
contracts?
Mr. PETERs. As a whole throughout the country they are not.
Many railroads that have studied the matter, in connection with
their attorneys before congressional committees should have informa-
tion on the subject and that information is shown in our record.
The CHAIRMAN. That was intermittent information ? w
Mr. PETERS. Yes. l
The CHAIRMAN. They had not the same information or knowledge
that you had in your other transportation business, the freight,
passenger and express business.
Mr. PETERS. I §. not think there has been the detailed study of
the express accounts until recent years when the contracts with the
express companies were revised, some ten or fifteen years ago.
RAILWAY MAIL PAY., 187
The CHAIRMAN. Have you definite knowledge, or such knowledge
as would justify you, in your judgment, in advancing an opinion as
to what the cost to the transportation companies was for compliance
with the request of the department for the information embodied
partially in Document 105?
Mr. PETERs. The Pennsylvania Railroad, I understand, kept an
accurate record of a part of their expense. We were discussing that
a few days ago and their cost was over $25,000. It was figured the
total cost of gathering up this information was something like
$250,000; that is a rough estimate and a mere guess. I do not believe
there were detailed statements kept. -
The CHAIRMAN. Do you feel satisfied, with the knowledge that you
have, that it cost the transportation companies of the country at
least $200,000 to furnish that information?
Mr. PETERs. Not less than that. Our own expense in the pre-
liminary tabulation and calculation of the figures in our clearing
house office in Chicago was between $6,000 and $8,000, where no new
equipment and no new force was employed for it, but simply using
the organization we had. -
Mr. LLOYD. According to your statement, if you had your way
about it, you would like to have the railway mail pay increased about
20 per cent 7
Mr. PETERs. You are going to increase the weights fully that, as we
figure it, from the parceſ OSt.
Mr. LLOYD. You are asking for a weighing so you would get pay
for that ?
Mr. PETERs. Yes. -
Mr. LLOYD. But I mean these suggestions of change in existing
laws which have the effect of costing the Government 20 per cent
more than it now costs the Government. That is your statement 7
Mr. PETERs. The cost at the present time, being in round figures
$50,000,000, it would be about 20 per cent.
Mr. LLOYD. At $50,000,000 it would be a little less than 20 per
cent. Suppose the commission, after investigating the subject,
came to the conclusion that the railroads were receiving as much
money as they ought to receive for the service rendered, which would
you prefer, these changes that you have made and a flat reduction of
15 per cent on weight, or permit the law to remain as it is.
Mr. PETERs. I do not see how the commission can reach such a
conclusion.
Mr. LLOYD. I am not saying that we would.
Mr. PETERS. I think the more the commission studies this question
the more they will be like we are and feel that the railroads are not
fully paid. As I understand it, the Government does not want to
have service performed for nothing, and they should compensate the
railroads fairly and honestly for the work they do, and that is all the
railroads want.
Mr. LLOYD. Nobody objects to that. But suppose the commission
would come to the conclusion that the railroads are receiving as much
money as they ought to receive for the service rendered. Would
you rather have these changes you suggest with a 15 per cent flat
reduction on rate or would you rather have the existing law Ż
Mr. PETERs. A 15 per cent reduction on rates?
Mr. LLOYD. On existing rates.
188 RAILWAY MAIL PAY.
Mr. PETERs. For the rate per mile'. That would make a con-
fiscation of property on a majority of the railroads; but even if there
were a reduction -
Mr. LLOYD. You have not answered my question.
Mr. PETERS. I think these amendments ought to be made in order
that we might ascertain the weight each year, and that you should
relieve us from the messenger service.
Mr. LLOYD. I understand all that. I fix a limit of reduction much
less than that for which you ask an increase. If we were not going
to increase the pay, which would you rather have, a flat reduction of
15 per cent and have these changes in the law which you suggest or
have the law remain as it is .
Mr. PETERs. That is a question I am not prepared to answer
offhand. We did not come to ask for any reduction but we came to
plead for justice. We want an increase in pay. We are underpaid
now and to answer a question of that kind will require a little thought.
Mºore We will have a night session and you can answer that
to-night.
Mr. Peters. I will take that under advisement and answer you
later. However, it would strike us all as manifestly unfair to con-
sider any such question as a possible reduction in the rates of pay.
You have put on us the great burden of the parcel post.
Mr. LLOYD. In the annual weighing do you propose to get com-
pensation for the parcel post? -
Mr. PETERs. That will continue to grow and we shall be com-
pensated by the annual weighing. :
Mr. LLOYD. One of the things you ask is a change from a quad-
rennial weighing to an annual weighing.
Mr. PETERs. That is correct.
Mr. LLOYD. If you got that change and there is an annual weigh-
ing, then you would get compensation for all the parcels you carry.
The complaint that you now make could not then be a valid com-
plaint, because it would be removed by law.
Mr. PETERs. In fact, every pound of mail carried should be weighed
each day, but it would be too burdensome. ...t
Mr. LLOYD. Theoretically that is true; yes.
Mr. PETERs. Weighing once a year would come much nearer doing
the right thing than weighing once in four years.
Mr. LLOYD. Theoretically you ought to get paid for every pound
of mail you carry. :
Mr. PETERs. That is right. Also we ought to be paid for the serv-
ice we perform. -
Mr. WEEKs. Do you think it would be practicable to weigh the
mail every day ?
Mr. PETERs. I believe it could be done. We weigh all of the
freight.
Mr. LLOYD. Could you weigh the mail without extraordinary
expense to you ? t
Mr. PETERs. I believe we could.
Mr. LLOYD. Could you weigh the mail and make enough by reason
of its weighing to meet the expense of it?
Mr. PETERs. I am quite sure it could be done.
The CHAIRMAN. A daily weighing?
Mr. LLOYD. A daily weighing.
RAILWAY MAIL PAY. - 189
Mr. PETERs. That is a matter that can be considered in the course
of investigation. We can make a study on that point. I think the
New England roads attempted to weigh everything that was carried
until the Government interfered and asked them to stop it. They
could give us a very fair idea on the cost of that weighing.
Mr. LLOYD. It seems to me that is a very practical question, view-
ing it from the standpoint of weighing, and that is one of your com-
plaints. If a system could be devised by which all mail is weighed
and the Government, as well as yourselves, be satisfied that the weights
are correct, it might be one-way of solving the question.
Mr. PETERS. We weigh all of our parcels, freight, or package freight;
we weigh the carload freight and we weigh all of our express business.
Mr. LLOYD. If you weighed the mail you would weigh it in the sack
and it is not difficult to weigh the sack?
Mr. PETERs. We would weigh it in the sack.
The CHAIRMAN. You say the railroads weigh all of the express
business every day ?
Mr. PETERS. The express companies do. On the Long Island road,
where we operate our own express, we weigh it all.
The CHAIRMAN. Of course the express companies do the weighing
because their compensation is based on their weight, but they have
50,000 employees confined to the express business alone and the
railroads do not do that every day.
Mr. PETERs. No; but our own railroad, which handles all of its
express, weighs all of the packages.
The CHAIRMAN. That is, your express branch of the railroad does it?
Mr. PETERs. Yes.
The CHAIRMAN. Of course you have to do that in order to get your
*ation, because your compensation is based primarily upon
weight. f
Mr. LLOYD. In reaching the conclusion that you have reached and
the suggestion that you make in the pending suggested bill, what, if
any, profit would the railroads make for carrying the mail?
Mr. PETERs. I have not taken that into consideration.
Mr. LLOYD. If your system were adopted, I mean the present sys-
tem with the changes that you suggest, would the railroad companies
make or lose by carrying the mails?
Mr. PETERs. They would come nearer being compensated. They
would have some net money left, but they would not be able to
figure that out, except at greater cost than the information is worth,
to ascertain whether or not it produces part of the interest on bonds
or interest on dividends. -
Mr. TUTTLE. Do I understand you, Mr. Peters, to say that for-
merly the railroads made a profit for carrying this mail and that
recently they have not ?
Mr. PETERs. No ; I did not say that. I said the railroads had been
content to accept the compensation allowed them for the compensa-
tion of the mails, except that they had been subjected to constant
reduction; there were reductions in 1887 or 1888, reductions in 1905,
and again in 1907, and again a reduction by the change of the divisor;
reduction after reduction made in the basis of pay, while the weight of
the mail and service performed was constantly increasing and while
the regulations covering the performance of the service were gettin
more and more severe. Your act of Congress recently requiring stee
190 RAILWAY MAIL PAY.
cars and different improvements in them has made it harder than ever
for the railroads. - -
Mr. TUTTLE. About how long ago did the account shift from one
side of the ledger to the other?
Mr. PETERs. As I stated before, I do not believe any railroads,
except those who specifically prepared themselves for hearing before
Congress, had ever j; investigated the cost of handling the
mail or tried to get at it scientifically until the Postmaster General
called for the information.
Mr. TUTTLE. Therefore it is just your. impression that they were
being satisfactorily paid 3
Mr. PETERs. That is the impression, that they were reasonabl
compensated, but they have since then performed greater service §
no increase in the pay.
The CHAIRMAN. The committee will now take a recess until 8
o'clock p. m.
Thereupon, at 12 o'clock m., the committee took a recess until
8 o’clock p. m. -
AFTER RECESS.
The hearing was resumed, according to adjournment, at 8 o’clock
. Iſl.
Present: Senator Jonathan Bourne, jr. (chairman), Representative
James T. Lloyd, and Representative William E. Tuttle.
STATEMENT OF ME, JOHN STEWAR.T.
The CHAIRMAN. Mr. Stewart, it will be necessary for you to be
SWOTI). - -
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you state your full name, residence, occupa-
tion, and the official position, if any, in which you appear before the
committee this evening?
Mr. STEwART. John Stewart, superintendent and traffic manager of
the Marcellus & Otisco Lake Railway, Marcellus, N. Y.
The CHAIRMAN. That is a railroad running between what points?
Mr. STEwART. Between Martisco, N. Y., and Otisco Lake, N. Y.
The length of the line is 10 miles. We have verbally and by wire
frequently requested another weighing, a year ago, when catalogues
. Seeds were going out in large quantities. After a great deal of
telegraphing were were politely informed by the Post Office Depart-
ment that they could not do anything for us until the regular time.
The CHAIRMAN. The regular quadrennial weighing. w -
... Mr. STEwART. The regular quadrennial weighing. ... I submitted
the facts to the management of our property and asked their per-
mission to refuse to carry the mail. I § not get the permission.
Our general manager instructed me to have the mails weighed, which
we have done, commencing on January 9 and winding up on Febru-
ary 5 of this year. The catalogue mail, which was a little light,
during the 24 days amounted to 293,390 pounds. We had 14,855
pounds of mills empties (bags) to put the catalogues in, nearly 8 tons.
RAILWAY MATL PAY. 191
The total of the seed-house mail amounted to 308,245 pounds during
those dates, covering 24 working days. We had to take the section
men sometimes 5 miles from their work to unload that mail onto the
platform of the New York Central and delayed the mail trains in
getting the maximum of that mail, one day, of 9 tons, and a minimum
in that period of 4 tons. The highest amount we had of that cata-
logue mail was 9 tons for one day, and the lowest day was 3% tons.
The mail other than this seed-house mail, and the empties during that
period amounted to 14,168 pounds, or an average of 507 pounds per
diem. We have filed with the Interstate Commerce Commission,
I. C. C. freight tariff No. 10, which provided for a minimum of 25 cents
per individual shipment. On these movements we make 60 consign-
ments per diem on that small mail, amounting to 25 cents per con-
signment, which would give us $4 per day for the mail other than
the seed-house mail. For the seed-house mail we get, under this
tariff, a carload, per diem, $9.60. There are not 24,000 pounds per
day, but you can not put cabbages and potatoes in a box car on top
of mail. We have the empty box cars to haul 9 miles to load that
mail again, and we have to pay for the car, as we have none of our
-own. We have to haul a loaded car back, and, according to the
Interstate Commerce Commission a minimum of 24,000 pounds is
what we are entitled to, or $9.60.
The CHAIRMAN. Per car?
. STEwART. Per car. We moved it every day during that
€ITOCl.
p The CHAIRMAN. That $9.60 is per car on the freight basis?
Mr. STEwART. Yes, sir.
The CHAIRMAN. What did you receive per car from the Govern.
ment for carrying the mail?
Mr. STEwART. Per car, and less than carload, all told, $3.25.
The CHAIRMAN. So you received $3.25 from the Government as
against $9.60 which would be received, under the Interstate Com-
merce Commission rate, if full of freight?
Mr. STEWART. Yes, sir; and $4 for the other, each individual con-
signment having a minimum charge of 25 cents. That was an aver-
age of mills catalogue mail of 12,224 pounds per diem—6 tons.
During the period that I have mentioned, if we had been paid on a
fº basis for the carload mail, we would have received $230.40.
The CHAIRMAN. What did you receive during that period?
Mr. STEwART. We received as remuneration from the Post Office
Department $78. Our remuneration per annum last year was
$1,017.98. The route number is 107183. For the 24 days on the
carload minimum we should have had $230.40, and on the less than
carloads, under the I. C. C. tariff, $96, a total of $326.40. We re-
ceived $78, and for the 24 days, if it had been all freight, we would
have lost $248.40. At express rates of 50 cents per hundred, during
the period, we would have received $1,613.06. e have an express
business on the road, and that would be their rate.
The CHAIRMAN. For those 24 days?
Mr. STEWART. For the total weight, sir, for the 24 days.
The CHAIRMAN. You would have received the amount you have
just read?
75904—No. 1–13—13
192 RAILWAY MAIL PAY.
Mr. STEwART. Yes, sir; $1,612.06. We did receive $78, making
a difference in 24 days of $1,554.08. Allowing for the heavy mail to
run five days in December, 27 days in January and 24 days in Febru-
ary, leaving out March, which is 56 days, at freight rates of $9.60
per car we would receive $537.60. On the i. c. 1. mail, the Small mail,
we get $224, or a total of $761.60. We do not haul the mail on Sun-
days and if we deduct 56 days from the 312 days, that would leave
256 days. Leaving the heavy mail out altogether we would get
$1,024, and that, added to the heavy mail, would make $1,785.60,
and the Government gave us $1,017.98. -
Mr. LLOYD. Why do you not carry it all by freight?
Mr. STEwART. Our trains are all mixed, and it is just as convenient
to put the mail in a baggage car as it is in a box car. We can haul
it either way. In fact, we had to beg permission from the Government
to haul the heavy mail in a box car, and we got it. On the express
rate, if the whole mail were carried by express on the basis of 50
cents per hundred, we would lose in revenue per annum, $3,991.50.
The CHAIRMAN. The period of the weighing, covering the 24 days
according to your own statement, was the heaviest period for carrying
the mail. That is, you would get more mail during those 24 days
than during any other period of the year?
Mr. STEwART. No, sir; that started on December 26 of last year
and the postmaster advised me that that would be a heavy period,
but when it will wind up I do not know. It may wind up early in
March, and it might be prolonged. -
The CHAIRMAN, Does this catalogue business and the seed business
which you have mentioned, continue during the year?
Mr. STEwART. No, sir; just a short period.
The CHAIRMAN. And it was during that period that you made the
weighing?
Mr. STEwART. Yes. |
Mr. LLOYD. Your complaint, as I understand it, is that you do not
get *g for carrying those catalogues?
Mr. STEwART. That is part of it, sir, and the other feature, we do
not get as much for hauling mail as we do for merchandise of any
kind. We do not get a minimum for 16 consignments per diem of
25 cents. $
Mr. LLOYD. What do you mean by a consignment? Of mail, do
you mean?
Mr. STEwART. Using the freight term of a consignment, a given
parcel of freight or merchandise moving from one initial point to one
individual point and discharging it. -
Mr. LLOYD. Would that be a sack of mail?
Mr. STEwART. Yes, sir; or a mail pouch up to 200 pounds.
Mr. LLOYD. Would a single empty sack be a consignment'
Mr. STEwART. We do not get them that way.
Mr. LLOYD. I was trying to get at your idea of what you want to
have pay for. You claimed that if you had 25 cents, such as you
received for freight, for carrying the mail, that would give you a
little more money. I want to know what a consignment is. A full
sack, an empty sack, or both empty and full sacks?
Mr. STEwART. Anything of weight, sir.
Mr. LLOYD. Would an empty sack be included as an item?
RAILWAY MAIL PAY. 193
Mr. STEwART. We never have any sacks that are empty. Our
empties have always been sacks of sacks.
Mr. LLOYD. In sending the sacks to be filled again you would have
a sack full of sacks, and that would be one consignment
Mr. STEwART. If there were 200 pounds or 400 pounds of it when
we received it from the New York Central to take up to the post
office, that would be one consignment.
Mr. LLOYD. But suppose it only weighed 50 pounds?
Mr. STEwART. Then the mail would be in the same category as a
case of boots and shoes. . .
Mr. LLOYD. If a case of boots and shoes only weighed 50 pounds,
what about them?
Mr. STEwART. Anything which weighs but 50 pounds is charged
with the minimum rate of 100 pounds. Any consignment of freight
moving in the United States on a steam railroad is charged as 100
pounds, ordinarily, of the class to which it belongs, with a given
minimum in case the tariff rate is not sufficiently high.
Mr. LLOYD. If you were given 25 cents a pound for every sack of
mail and called every sack 100 pounds, then would you have the
freight condition to which you refer, as being a condition which would
produce you the greater amount of revenue !
Mr. STEwART. For 16 movements per diem, each individual con-
signment, irrespective of the weight, whether it is 200 pounds or 400
pounds, would be 25 cents each.
Mr. LLOYD. Sixteen times 25 cents would be $4 a day ?
Mr. STEwART. Yes, sir; that is the idea. Four dollars a day for
the service.
Mr. LLOYD. And you are now getting $3 a day for the service 3
Mr. STEwART. $3.25, but we are virtually getting nothing for the
heavy mail we are hauling in the carloads. §. get $9.60 for a car-
load of cabbages, and the department gives us nothing for a carload
of mail. That is the equivalent of it.
The CHAIRMAN. If I understood you correctly, you receive per
annum now, under the weighing upon which your mail rate is ad-
justed, $1,017.98%
Mr. STEwART. That is what we received last year.
The CHAIRMAN. Have you any computation to show what it costs
you to get that $1,017.98%
Mr. STEwART. No, sir; will you allow me to answer that further 3
The CHAIRMAN. I will be very glad if you will.
Mr. STEwART. Any array of figures compiled generally by an
auditing department getting out individual costs, in my experience
is not worth the labor, not worth a rap. The auditor's office can no
more tell what the individual cost of hauling a given parcel of any
individual portion of its service is, any more than it can fly to heaven.
*; LLOYD. You think you are not getting enough for carrying the
Iſla, -
Mr. STEwART. I am reasonably well assured of that, sir.
Mr. LLOYD. What would be a reasonable compensation?
Mr. STEwART. The freight rate that I have outlined.
Mr. LLOYD. You would want us to change the railway mail rate so
that you would get the same rate }
Mr. STEwART. I am interested only in my own company. I am
not capable of making any suggestion to a body of gentlemen, such
194 . RAILWAY MAIL PAY.
; W. are, for the whole of the service. I do not have brains enough
Or that. R
The CHAIRMAN. You are one of the units on which the whole serv-
ice is built up.
Mr. STEwART. But ours is so small. -
Mr. LLOYD. What would be enough? You say on a freight basis;
but we are not on a freight basis, and we are not paying on a freight
basis. How could the rate be changed so as to be compensatory to
you? - }
Mr. STEwART. I F. ask you to pay for it on any basis that will
give us the figures I mentioned. You gentlemen know more about it
than I ever will know. Any manner in which you may figure it out
will be acceptable to me, so long as we get the money.
Mr. LLOYD. Suppose we give you five times as much as you now
receive for carrying the mail. Would that be sufficient?
Mr. STEwART. In such a remote contingency, sir, I would drop
dead. [Laughter.] -
Mr. LLOYD. As I understood you a moment ago, you said if you
were receiving on the freight basis you would receive about five times
as much as you do now % *
Mr. STEwART. $9.60 and $4 makes $13.60. That would be about
five times as much, but we are not getting paid for what we are
doing now.
Mr. LLOYD. I say, if you received five times as much, you would
receive what you would get on a freight basis?
Mr. STEwART. We would just be paid, then, sir.
Mr. LLOYD. That answers the question. In order that the mail
may be compensatory to you, you ought to receive five times as much
as you do now %
Mr. STEwART. I wish to put it in a quiet way and I do not wish to
be rude about it.
Mr. LLOYD. I am not aiming to catch you. -
Mr. STEwART. I will put it this way, sir. We are to-day a very,
very small institution. I run every day a train leaving our little
village at 11.30, making a round trip which we are not supposed to
make at all. We do not have to do that, as we are only º for one
round trip per diem, but we run this train with the mail. -
Mr. LLOYD. Let me interrupt you right there. You get paid for
all the mail you carry, do you not %
Mr. STEwART. No, sir. After a fashion, yes.
Mr. LLOYD. When the mail was weighed they weighed the mail on
each one of those trains 7
Mr. STEWART. Yes.
Mr. LLOYD. And putting it all together it made the aggregate of
mail for which you receive compensation ? -
Mr. STEwART. Very true, sir. On the other hand, the mail would
presumably be carried on One round trip or two round trips, but it
would not be acceptable to the manufacturers and others located on
the property. We can not get along without the good will of one
barley mill, three paper manufacturers, and two woolen mills. They
need their mail in and they need it out; and we run at noon, just at a
time when it is most inconvenient, in order to make a round trip,
leaving at 11.30, and get it back at 12.30. The trip is 3 miles
each way, and it would go just as well in the afternoon, but it would
RAILWAY MAIL PAY. 195
not be as convenient for the patrons of our institution. In other
words, we have to try to help them out.
Mr. LLOYD. Is this a steam road 3
Mr. STEwART. Yes, sir.
Mr. LLOYD. And only 3 miles long?
Mr. STEwART. Ten, sir. The city of Marcellus is located not
midway, but 3 miles from the New York Central, and we get our
Fºund from the New York Central and outbound it all goes
to them. -*
Mr. LLOYD. Do you know what you ought to receive for carrying
the mail? * *
Mr. STEwART. Enough to pay us.
Mr. LLOYD. Do you know what that would be 2
Mr. STEwART. $13.60 a day, according to the figures I have com-
; That would simply be a freight rate, and we do not give
reight the same attention that we give to the mail.
Mr. TUTTLE. That is based on the heavy traffic in January 2
Mr. STEwART. Yes, sir. That is, just now.
Mr. TUTTLE. What relation does that bear to the slack traffic 2
What would your average traffic be?
Mr. STEwART. The parcels post business is beginning to come in,
brooms and everything else coming by mail, and it will keep on coming
more, and more every day.
Mr. LLOYD. Have they a broom factory in your neighboorhood 3
Mr. STEwART. No, sir; but they are beginning to buy them away.
It looks like they are trying to help the parcels post. I saw a piece
of pipe come by parcels post, the other day. To answer your ques-
tion, I figured the heavy mail and the light mail. Those figures are
accurate and every pound of mail was carefully weighed. . To
answer your question as to our getting five times as much, I think
the department, if I may be pardoned, really ought to be ashamed
of itself for permitting such a ratio.
Mr. LLOYD. Is the criticism on the department or on the legisla-
tive branch of the Government 2
Mr. STEwART. They could have weighed it over again, sir.
Mr. LLOYD. You mean they could have given an annual weighing
instead of a quadrennial weighing?
Mr. STEwART. One at the end of two years.
The CHAIRMAN. We thank you, Mr. Stewart.
STATEMENT OF ALFRED W. ANDERSON.
The CHAIRMAN. Mr. Anderson, It will be necessary for you to be
SWOTI). -
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Kindly state your full name, residence, occupa-
tion, and the official capacity, if any, in which you appear before the
committee. --
Mr. ANDERSON. Alfred W. Anderson; Augusta, Ga.; age 49. I am
general manager of the Charleston & Western Carolina Railway Co.
The CHAIRMAN. Have you a statement you wish to present?
Mr. ANDERSON. Yes, sir.
196 RAILWAY MAIL PAY.
Mr. Chairman, in order not to ramble too much and take up just
as little time as is necessary, I have to-day put in writing what I have
to saw. + +
i. CHAIRMAN. Will you give us your remarks :
Mr. ANDERSON. Yes. I shall be glad to answer any question that
the committee may have to ask. -
The road I represent has a mileage of 340, consisting of 236 miles
of main line and two branches, one of 59 miles, the other of 35 miles.
Like many of the roads in our section, the original owners lost all
that they put in it and some 17 years ago the property was reor-
ganized under its present name, the Charleston & Western Carolina
Railway Co. -
To reproduce the road to-day in its present condition would
probably cost $25,000 per mile. When º was reorgan-
ized, a first mortgage bond of $8,000 per mile was placed upon it,
and an income bond of a similar amount was also issued. A little
later on an additional debt—in the way of a fixed charge—was
assumed by the company for something over $1,000 per mile. Our
fixed charges per year aggregate $172,000, or just about $500 per
mile. I believe that the property, to say the least of it, is econom-
ically managed, and, notwithstanding some portions of it were
completed nearly 40 years ago, and all of it over 25 years ago, and its
present owners have operated it for some 15 years, they have never
received one cent's return on their investment. All earnings in
excess of interest on a low bonded indebtedness have been devoted
to improving the property in an effort to make it valuable—not alone
to the stockholders, but also in the section through which it runs.
Our territory is highly competitive, with such competitors as the
Southern and Seaboard. Some of our rates per ton }. mile seem
high, others so low as to make it questionable whether profitable.
Our passenger rates are the same as apply on other lines.
What I have said of our line is true of many others throughout
our section, and it has been necessary to reorganize nearly all of
them. It is easy to understand that rates must vary, not alone
because the articles hauled may differ, nor on account of the care
that must be exercised in the handling of one as compared to the
other, but they must differ for still another reason that is recog-
nized as perfectly sound, and that is that one class of traffic can
afford to pay a higher rate than another though similar in many
respects. Another thing always considered is volume, and still
another value.
Another feature of railroad operation recognized by all thinking
men as bearing upon the rates is speed with which business must
move and the frequency of the service. Fast service, safe service,
and frequent service are of much more importance to the individual
than the mere question of whether he pays a few cents more or less
per hundred on freight, express, or mail that he may ship, and noth-
ing is so much to be deplored from a standpoint of progress and
development as the attitude displayed, not alone by the public,
largely through them by a real misinterpretation of the facts, but
by the Government itself, as evidenced by the utterly inadequate
pay fixed by Congress for carrying the mails. I say “fixed” ad-
visedly, for, while we could no doubt sustain in the courts a refusal to
perform the service at the rates paid, public sentiment and our wish
BAILWAY MAIL PAY. 197
to do our full duty to our patrons has led us to perform the service
at such rates as you fix and under such regulations as the depart-
ment has laid down. And may I not add just here that that fact
alone should be a guaranty to us that we would receive justice at
your hands, if not liberal treatment. -
Notwithstanding the fact that we are spending considerably more
money in the maintenance and operation of our property than we
earned 12 years ago, we are actually being paid a total of less for
carrying the mails now than we were paid 12 years ago, though we
are handling, of course, more mail and performing 60 per cent more
mail-car miles. Please understand that in referring to the present
I am using our last annual figures; that is, figures for the year 1911–12.
. CHAIRMAN. Have you the weights as to those periods men-
tioned 3
Mr. ANDERSON. I may say, sir, that I have not, but the weights
have not materially increased. The truth of the matter is, Mr.
Chairman, that the department has rearranged the routes in such
a way that it is impossible to make a comparison. For instance,
we have a line north from Augusta of 134 miles and also one south
of Augusta 125 miles. There is absolutely no physical connection,
except such as we have arranged for in connection with other lines,
yet the department has, just before the recent mail weighing, made
it one route and called it one all the way through. In that way
they made one of the numerous reductions which have taken place
in our mail pay for the past number of years. During the time
referred to, when we had a 2.44 per cent reduction in our earnings,
the total mail-car miles for 1900 were 252,748; for 1911–12 there
were 400,543 miles, an increase of 147,795 miles, or an increase of
59.48 per cent. We are performing 60 per cent more service and
we are paid 2.44 per cent less for it, that is, less compensation. The
rate paid per car mile in 1903 was 9.3 cents, and, mind you, this
is an apartment car, and the rate paid per car-mile in 1911 and 1912
was 5.7 cents. $ -
These figures are exclusive of pouch routes, nor do they take into
consideration the cost of handling to and from post offices, which,
if included, would still further reduce our earnings per car mile.
In such we have some 40 to 50 pouch rates not included in this
statement of 5 cents.
Assuming that there had been no increase in the weight carried,
and that we were being paid under the increase we were entitled to
(if there had been no change in the rates to us), on account of increased
cost of doing business, we would have been paid about 15 cents per
mile, car-mile, instead of 5.7 cents. Laying aside every other con-
sideration but the fact of increase in doing business, and assuming
that we did the same amount of business we did a few years ago,
we would be paid now 15 cents as against what we are ...i
paid, of 5.7 cents.
We have never regarded our passenger business as profitable, as
you will understand from the following figures:
Mr. LLOYD. What passenger rate do you receive?
Mr. ANDERSON. at all other lines in our section receive. Two
and one-half cents is the maximum. That is just what the Pennsyl-
vania receives in the State of Pennsylvania as a maximum.
198 RAILWAY MAIL PAY.
During the past year our passenger service revenue per train-mile
was 82 cents. Our operating expenses per train-mile amounted to
$1.33. Last year our average passenger train revenue per car-mile,
including Pullman cars, coaches, baggage cars, and express cars, was
25.48 cents per mile, and yet our mail, which practically occupies the
half of one car, paid us only 5.7 cents per car-mile, or considerably less
than one-half of what the average car in our passenger trains earned,
and that, too, notwithstanding there was but little, if any, profit from
Our passenger trains.
The CHAIRMAN. To illuminate a little, you say your passenger
revenue per train-mile was 82 cents?
Mr. ANDERSON. Yes, sir.
The CHAIRMAN. And your operating expense per train-mile
amounted to $1.33%
Mr. ANDERSON. Not passenger-train mile. I do not want to mis-
lead you.
The CHAIRMAN. Your operating expenses for passenger trains?
Mr. ANDERSON. No, sir; per train-mile.
The CHAIRMAN. What was your freight per train-mile revenue,
your mail per train mile revenue, and your express per train mile
revenue, in order that we might determine what your revenues per
train-mile were 7
Mr. ANDERSON. I can not give you that in detail but I can tell you
our passenger trains earned about one-third of what our freight trains
earned.
The CHAIRMAN. Then under that your freight per train-mile was
2.46%
Mr. ANDERSON. What do you mean 7 - º
The CHAIRMAN. You say your passenger revenue per train-mile
was 82 cents, which was one-third of the revenue received on your
freight per train-mile 7
Mr. ANDERSON. No, sir; I do not think I said that. If you so
understood me, I do not mean that. What I meant to say was our
gross earnings of freight were about two-thirds of our passenger
trains. In other words, we will say that for every dollar of gross
earnings our freight trains earned about 65 cents and the passenger
trains about 35 cents. The proportion is a little less than that.
Our passenger train earning, per passenger-train mile, as I have said,
was 82 cents. I heard the gentleman make the statement that no
accountant could tell you enough in order to enable you to tell the
difference between the cost of operating a freight and passenger
train. The direct cost of operating one, as against the other, I should
say, does not differ a great deal.
The CHAIRMAN. If you will pardon me and let me interrupt you
I would like to ask a question. Under the statement that you have
resented to the committee this inference is possible, to my mind.
ou say you receive 82 cents for passenger service per train-mile.
Mr. ANDERSON. Yes, sir. *
The CHAIRMAN. And it cost $1.33 per train-mile to operate. You
do not expect rates from the passenger service to pay the cost of
operation of the whole service'? -
Mr. ANDERSON. I am basing this presentation of the facts to you
on the fact that even taking it at the 82-cent rate it is less than the
cost of the service.

RAILWAY MAIL PAY. 199
The CHAIRMAN. Less than the cost of the whole service
Mr. ANDERSON. Less than the cost of the passenger service.
Mr. LLOYD. Is the passenger service $1.33%
Mr. ANDERSON. I do not know just what it is, but certainly it is
not as low as 82 cents.
The CHAIRMAN. The reason that you make the presentation of the
passenger revenue per train-mile is because you figure mail as part of
the passenger service.
r. ANDERSON. Yes, sir; a part of the passenger earnings and
including the mail we get 82 cents.
Mr. LLOYD. Do you also include mail, express, and passenger ?
Mr. ANDERSON. Yes, sir. I include everything in our earnings,
that is 82 cents per passenger train mile.
Mr. LLOYD. How much of that is passenger, how much express,
and how much mail? ºf
Mr. ANDERSON. Our express is about what our mail is. The
express does not amount to anything, but it is operated and handled
absolutely at a loss just as our mail is handled at a loss.
Mr. LLOYD. The loss on each is about the same?
Mr. ANDERSON. Yes; I should say we furnish each about the same
ºnt of space and the tonnage of each does not amount to a great
€8.i.
Mr. LLOYD. And you entered into a voluntary contract with the
* company to carry that express at that rate.
. ANDERSON. Yes, sir.
Mr. LLOYD. And yet you make complaint against the Government
for paying you as much for the mail as you get under the Voluntary
contract that you have entered into with the express companies 7
Mr. ANDERSON. Yes, sir; and I think that is º: of the
easiest kind of an explanation. Our express business is handled at
a loss for the same reason that our mail business is handled at a loss
so far as the public is concerned. In other words the express, busi-
ness is a necessity for our section of the country and we feel the
importance of caring for our section, although we may care for them
at a loss just as well as the Southern Railway, the Atlantic Coast
Line, or any other railroad in our section cares for its people.
The CHAIRMAN. Has your railroad any interest in the express
companies 3
Mr. ANDERSON. None at all, sir. In our contract with the express
company we get about half the earnings. The express company
assumes all the responsibility for loss and damage to its employees
and to the express. All that we do is to furnish the space on our
cars and haul the business.
The CHAIRMAN. By half of the earnings you mean half of the gross
receipts from the express companies for the business which goes over
your line :
Mr. ANDERSON. Yes, sir. I use those figures in round numbers.
The figures may not be exactly accurate, but that is the method of
computation. The business of the express company has gone down
as low as $6,000 or $8,000 per year. Can you imagine our making a
trade with the Southern Express Co. whereby we would get more than
we would get out of the mail, $22,000, when their business goes down
as low as $6,000 or $8,000? ... To say the least it is a perfectly equitable
transaction between the railroad and the express company. We are
200 RAILWAY MAIL PAY.
not obliged to make the contract except we are forced into it by the
position of the country there, and we must serve our section as other
sections serve their people, and the express company would not go
into an arrangement with us and say, “ §. will guarantee to give you
$25,000 a year when our earnings are very much less.” They under-
take to provide our section of the country with express facilities, and
they say to us, “You haul the business, you furnish your cars for it,
and we will do the balance; we will furnish the messengers, we will
assume all the responsibility, we will pay all the claims, and you will
get one-half of whatever we earn.” P. not know but what that is
a very fair arrangement. It strikes me that it is, and I venture the
assertion that even if it is an unfair arrangement it is the best we can
make with the express companies. However, it is an entirely differ-
ent proposition with the mail. I think if our section of the country
needs mail facilities, supposed at least to be furnished by the United
States Government, that it is not the railroad's business to furnish it,
but the Government's, and if there is any loss sustained it is the Gov-
ernment's place to lose it and not the railroads. It strikes me that
is a very fair proposition.
Mr. LLOYD. Is not the same thing exactly true with reference to
the express'
Mr. ANDERSON. Not at all, sir. I think it is a very different prop-
osition.
Mr. LLOYD. Do you not think you are under just as much obliga-
tion to the people and to the Government to carry the mail as you
are to carry the express %
Mr. ANDERSON. We are discharging that obligation.
Mr. LLOYD. Yes; but you are complaining that you are not getting
paid for the one, and you are not complaining that you do not get
paid for the other.
Mr. ANDERSON. We do not share in the mail earnings. Suppose
the mail makes $1,000,000 a year on our road, which is rather an
absurd illustration, we would not participate in that. It does not
make any difference to us whether the mail earns $1 or $1,000,000,
but it is an entirely different proposition with the express company;
we undertake to go into an arrangement whereby we are going to
serve a section of the country for 25 years.
Mr. LLOYD. And you volunteer to enter into that contract to carry
that express at a loss, and you know it is going to be at a loss %
Mr. ANDERSON. No, sir; I do not think that is exactly a fair way
to put it. We go into an arrangement with them and say this:
“We will haul it, we will furnish the cars, you furnish the men, fur-
nish all expenses, assume all the risk, not only the damage that may
result to the express, but from personal injury to our employees, and
we will divide the profits.” That strikes me as rather a fair proposi-
tion. It may be one-sided, but I do not think so.
The CHAIRMAN. As I understand, you do not divide the profits,
but you divide the net receipts, and your distinction between the
Government in carrying the mail and your contract with the express
companies is that you hope for a profit in the express business, but
you see none in the Government business?
Mr. ANDERSON. That is true, sir; and every dollar that the express
company makes we share in.
RAILWAY MAIL PAY. 201
Mr. ILOYD. I can not understand you. You say that you carry
the express at a loss % f
Mr. ANDERSON. I say so; yes. ,”
Mr LLOYD. And you have carried it for these 25 years, and it has
been your experience that you have carried it at a loss, and you continue
to carry it at a loss. I can not understand why you would enter into
a contract at a continual loss %
Mr. ANDERSON. I just told you.
Mr. LLOYD. I do not know whether you participate or not.
Mr. ANDERSON. I told you the reason we continue it is because we
think it is due our section of the country.
Mr. LLOYD. If you and I enter into a partnership business and we
both know that we were going to lose money by it, and we continue
that partnership - + *
Mr. ANDERSON. I rather object to your putting it in that way,
because we hope we are going to build it up, and we will profit in the
end by the arrangement.
Mr. LLOYD. But you have explained you have done this for 25
years at a loss, and naturally the presumption will be that it will
continue at a loss.
Mr. ANDERSON. I do not think it is unnatural, because we have an
arrangement with the express company where we have something
to do with the division of the expense and earnings.
Mr. LLOYD. You have an arrangement with the Government
whereby you are going to receive a fixed compensation for carrying
the mail : -
Mr. ANDERSON. On the other hand, it is largely fixed by the Post
Office Department.
Mr. LLOYD. The difference between the two is that with the railroad
;”. and the Government you have a fixed compensation and
know what you are going to receive and you know just what you are
going to lose. With the express company you enter into a voluntary
contract which will be a loss, and you do not know how much you are
going to lose because you do not know how much express you are
going to carry.
Mr. ANDERSON. In our way of looking at it there is a great deal of
difference between us. -
Mr. TUTTLE. Does the Southern Express Co. find its business
profitable?
Mr. ANDERSON. I think, as a whole, they do. I am not interested
in the Southern Express Co., and it does not make a particle of differ-
ence to me or to my mind whether thay make one dollar or a million.
If you take into consideration the capital the Southern Express Co.
has invested, and the fact that the express company’s business is
largely what we call a kind of franchise or the right to do business, I
do not know that they make any undue return. In our State,
Georgia, the railroads are taxed on franchises—the right to exist.
We get a great right for which we pay very dearly, and we are taxed
for that privilege. It seems to me that the express companies are
largely franchises that are valuable to them, and it is an uncertain
kind of business, for one year they may do well and the next they may
|be out of business. ->
Mr. TUTTLE. I did not want to get you outside of your line of
thought.
202 - RAILWAY MAIL PAY.
Mr. LLOYD. While your road has a considerable number of miles,
would you not class it in the same category of what we call the short-
line roads. * . 4
Mr. ANDERSON. Well, sir, I have been trying to keep in touch with
both of them. I am perfectly willing to be classed with either.
Mr. LLOYD. It seems to me that I recognized you as being with
the short line people? -
Mr. ANDERSON. I am not going to disclaim my association with
those good people. I have been with them for two years in making
this fight, if I may so term it, for a more reasonable id: ustment of our
pay, and I am sure that I have no apology to make for that associa-
tion. They need aid and certainly we need it.
Mr. LLOYD. You may have misunderstood the purpose of my
question. The objection that you raise to the question of com-
pensation would be the objection which is raised by the short line
people, and whatever is applicable to the short line people ordinarily
would be applicable to your road, notwithstanding it is a longer
road than what we ordinarily call a short line road.
Mr. ANDERSON. That is true. I think what you will do for them
you will do for us.
Mr. LLOYD. From what I know of your road it does not run through
many large cities and it is largely what we would term, in many
localities, a kind of neighborhood road resulting in benefit to the
neighborhood that is not on the main line of road 7
Mr. ANDERSON. Unfortunately we run through a section of country
which I have already stated in my brief remarks is largely competitive.
A large part of our line is through the piedmont section of South.
Carolina, and the people who live in it think it is the garden spot of the
world. That part of the country has grown very largely and, not-
withstanding |. growth, our line, especially from the mail stand-
point, has not prospered or kept pace with it.
Mr. LLOYD. That is due to the fact that the mails are carried on
the competitive road?
Mr. ANDERSON. That is due to the fact that the methods of the
department and the regulations laid down by the Congress make it
possible for them to add expenses to our service for which we receive
no pay. The consequence is our earnings have been kept down and
our expenses have grown in enormous proportion. I will give you
some figures which I think will impress you all as being rather re-
markable.
Our cheapest service is supposed to be our freight-train service; it.
is cheapest because of the largest volume that can be hauled in the
most inexpensive way. It is because the facilities and men engaged
cost less per dollar earned than in the passenger service. It is be-
cause the original cost of freight cars and as well the maintenance
is hardly one-tenth the cost of passenger cars, and it is also because
we do not have to furnish in many other respects the same expensive
service that is required by passengers. *
I am sure it will be admitted by this committee that if the vast
majority of our roads fail to make something on their freight business,
they would fail to pay expenses and that if we use our cheapest
service as a comparison, that we govery much further than we ought
to have to go in demonstrating the utterly inadequate pay allowed
RAILWAY MAIL PAY. * 203
us for handling the United States mails. We averaged last year
(1911–12) 14 cents per car-mile for every freight car, whether
loaded or empty, handled on our line, yet we only earned 5.7 cents
per mail-car mile, not including—mind you—the handling of mail
to and from post offices, nor does this include some 40,000 pouch-route
miles.
To appreciate what this really means, I will add that 41 per cent
of our business is coal, much of which is handled at the very low rate
of 3.2 milis per ton per mile and the cars returned empty.
The space set aside in our apartment cars for mail service averages
about 192 square feet per car, while our freight-car average is about
306 square feet per car. Therefore, we find that had our mail-car
service paid the same rate per square foot per mile that our freight-
car service paid, including empties, we would have earned 8.8 cents
per mail-car mile, instead of 5.7 cents, or $35,247.78 instead of
$22,917, our present mail pay. Is this statement of facts not alone
sufficient to convince you how inadequately we are paid 7
Is not that mere travesty on the mail pay of the C. & W. C. Rail-
road 7 Our freight business, taking our freight cars loaded and
empty, per square foot, pay us nearly 60 per cent more than the
* used by the United States Government for the handling of their
Iſlall.
Mr. LLOYD. Do you think it would be profitable to your road to
stop carrying the mail?
Mr. ANDERSON. Mr. Chairman, if I had my way about it, I think
I would dare run the risk of having our tracks torn up in that section
of the country and go out of the mail business.
Mr. LLOYD. I am not putting it on that basis.
Mr. ANDERSON. I think I have answered your question. I mean
to say that I think it is unprofitable and we ought to go out of the
mail business, and we would go out of the mail business so far as I
am concerned if I did not think we were doing something for the
people of that country. That is as strong as I know how to put it. I
do not believe if the Second Assistant Postmaster General was him-
self present in this room, and he has looked into our situation, that
he would hesitate to tell you we are not being paid anything like the
cost of our service on our line. -
Mr. LLOYD. I am well satisfied you do not get much compensation
for carrying the mail on your road. I think your road is an excep-
tional case.
Mr. ANDERSON. On the other hand, I think that is about the same
way with every other railroad that has that kind of route. I do not see
how it can be any different. I heard a man from the Erie road the
other night state that on a number of his routes they were paid less
than 2 cents for apartment cars; actually not paid as º as you
would have to pay for a passenger.
The CHAIRMAN. You said that you were paid 5.7 cents?
Mr. ANDERSON. Our revenue for apartment car mile is 7.5 per mile.
The CHAIRMAN. While your freight revenue is 14 cents?
Mr. ANDERSON. No, sir; coal is 41 per cent of our freight business,
and on that the rate is 3 mills per ton per mile, and that is 8.8, or 60.
per cent more. If this applies on a light mail route, such as ours, I
do not understand why it would not apply on a light mail route, such
204 RAILWAY MAIL PAY.
as the Pennsylvania Railroad would have. I assume that every rail-
road in this country has a very great many very light routes; and if
they do this on every one of them, they compare almost identically
with our situation. * • {
. The CHAIRMAN, Is your road owned by any other railroad, or by
thº. generally?
r. ANDERSON. No, sir; it is not owned by any other railroad. It
is owned by the same interests that own the Atlantic Coast Line, and
the Atlantic Coast Line owns the Louisville & Nashville.
The CHAIRMAN. It is owned by individuals and not by another cor-
poration? You mean there is a common ownership; that the stock
is owned generally by the system :
Mr. ANDERSON. No, sir; I should not think it would be worth much,
and I imagine the man who bought it wanted to take it as a “job lot,”
and he got it very cheap; if he did not, he got bitten. .
The CHAIRMAN. He has not been able to let it go as yet'.
Mr. ANDERSON. He has not been able to let it go. I am trying to
#. the road in condition where he might let go # he wanted to; but
e is still hanging on.
Compare the character of cars, the character of contents, including
the Government's employee (who is in every sense regarded as a pas-
senger), the fast service, the greater risks, and the extra delivery serv-
ice at all stations with the ordinary freight service, and surely it can
not be questioned that the pay allowed us is absurdly low.
The committee will not doubt ask in what way our mail pay has
been reduced and to what extent. Need I answer the question other
than to refer to the fact that our total pay to-day is less than it was 12
years ago, though gross earnings of our road per mile have increased
during that time fully 100 per cent, and our mail car miles have
increased nearly 60 per cent, and our gross operating expenses during
the same time * increased more than 100 per-cent.
During that time our freight earnings have gone up 150 per cent.
During that time our passenger earnings have gone up 100 per cent.
During that time our gross earnings have gone up from $2,000 a mile
to $5,600 a mile. During that time our mail-car miles have been
increased 65 per cent from 250,000 miles, in round numbers, to 400,000
miles, and we are to-day getting less for handling the mails than we
got 12 years ago. There is something wrong, gentlemen, about a sys-
tem of that kind. -
Mr. LLOYD. In that time there have been two reductions of 5 per
cent each and a divisor reduction ?
Mr. ANDERSON. Yes, sir.
If our rates had not been reduced and we had been paid in accord
with the increased cost of doing business, not to mention the increased
mail-car miles, we would get to-day twice as much as we were paid
12 years ago. --
Mr. LLOYD. As I understand you, you say that you are only carry-
ing about the same amount of mail that you did 12 years ago?
Mr. ANDERSON. Not a great deal more. I do not think we are
carrying much more.
- M. LLOYD. The misfortune with you is that you are not carrying
mail? *
Mr. ANDERSON. Yes, sir; that is one of the misfortunes; but we
have a greater one than that.
RAILWAY MAIL PAY. 205
The CHAIRMAN. From your viewpoint, would not this be true:
That it would be rather good fortune to you if you did not have
more mail to carry, on the theory that the more you had to carry
the greater the loss would be .
Mr. ANDERSON. At one time before the congressional committee,
of which Mr. Lloyd was a member, I made the statement that I
thought that the only excuse for the department's method of rates
of pay to us was that they viewed it like the merchant who was asked
how in the world he managed to sell goods below cost, and he said
it was because he sold so many. You must remember, however,
we are called upon by the Government to furnish facilities that
involve the handling to-day of 205 pounds of mail in each direction.
We could just as easily handle a thousand and never know the
difference; and that is the only way to measure it, by pounds. At
the same time, we also know when we compare 250 pounds of mail
with 1,000 pounds of mail, both handled in a car that weighs 40,000
pounds, as the saying is, it does not cut much ice.
I took occasion some two years ago to compare our pay with that
of the rural carrier, whose pay is fixed by the same power that fixes
ours; and again I say “fixed” advisedly, because we all know that
reference to the arrangement as a contract is, to say the least of it, a
rather amusing misapplication of the term. The rural carrier is paid
some 14 cents per mile for the service that he performs, which con-
sists of carrying a few pounds of mail over a highway furnished by
the public, while the railroads maintain their own highway at a cost
to them of—in many cases—one-fifth of their gross earnings and in
addition they must furnish and transport, an office for the Govern-
ment's agent, who must also be carried free, all—in our case—for
5.7 cents per mile.
You pay one man for hauling your mail in the rural section.
The CHAIRMAN. You buy his whole time. You do not take his
time for hauling the mail? -
Mr. ANDERSON. You do not think that is exactly a fair way ?
The CHAIRMAN. I think it is just as fair as your presentation.
Mr. ANDERSON. I thought this was a very fair way of putting it.
I had not the least bit of trouble in convincing myself that the com-
mittee would agree with me on that proposition.
There must be some cause for so great a difference. Is it because
the Government can not get its work performed by the individual
if it paid even as low rates as it pays the railroads for ten—yes,
twenty times the service? Surely the fact alone that the Govern-
ment may force its regulations upon the one, while it must pay the
other reasonable rates, or else do without the service, is not the
reason we are being paid such unjust rates; rather it should be a
reason why the Government should see that we were properly paid.
We have no voice in this matter. All we can do is to appeal to this
committee.
The CHAIRMAN. And furnish the committee with the information.
Mr. ANDERSON. And furnish the committee with the information
and ask them to give us a fair return for the service that we perform.
As further evidencing the inadequate pay and the unreasonableness
of the practice indulged in by the department, I wish to cite a case
where, at Anderson, S. C., the terminus of our 59-mile branch, the
post office is located about one-fifth of a mile from our passenger
206 BAILWAY MAIL PAY.
station. We employ a carrier, in connection with the other lines, to
handle the mail to and from our trains. We are paid for the service
about $10 per year, which is one-fifth of the rate per mile we are paid
for handling mail on this branch. We paid for this service, up to
recently, $120, or twelve times what we received for it. Recently,
and since the parcels post was inaugurated, our carrier has insisted
upon an increase of $5 per month. We tried to make other arrange-
ments, but finally found it the most economical thing that we could
do to pay what he demanded—$180—or eighteen times what we get
for the service. -
The CHAIRMAN. That $180 is his compensation for the year for
carrying the mail, or that is his portion of his pay you charge to the
carrying of the mails?
Mr. ANDERSON. No, sir; that is the amount we pay him. That
is our proportion of the pay given that man out of some $40 or $50
a month by the lines interested, and I pay $15 a month of it for car-
rying that mail to and from our trains for that one-fifth of a mile,
for which we get about $1 a month.
The CHAIRMAN. And that is insignificant if his whole time were
employed in carrying the mail and he got compensation for his
service
Mr. ANDERSON. That is true, sir. -
In the Postmaster General's report, known as ‘‘Document 105,”
he shows that we lost on our so-called contract with the Government
for the month of November, 1909, $1,323.33, or 40.90 per cent.
Our figures, using as we did the basis outlined in the department's
directions for the preparation of the information, showed a net
loss per month of $3,369.04, which for the year means a loss of
$40,428.48.
Those are my figures, using his basis, and I could not follow him
any further.
The department figures that we ought to be paid 6 per cent on
the direct cost of performing the service—that is, 6 per cent on
$38,828.18, making the total amount that should be paid us $41,160.86.
We are paid $22,000. The department says, taking that basis,
we ought to be paid $41,000. Again, using the department's basis,
including the 6 per cent on their way of arriving at the cost, we should
be paid $67,179.28, or just about three times what we receive. We,
of course, do not agree with the department's method, but know
from experience that we must get 35 per cent in excess of the direct
cost to properly maintain the property and give to the owners a
reasonable return on its value.
As a general proposition, railroads to be prosperous must be able
to show an operating ratio of between 65 and 75 per cent of its gross
earnings. There are many roads that could not stand 75 per cent.
There are others, our line for instance, that should show less than
65, if we reach with our present earnings a healthy condition.
Referring for a moment to the proposition as generally outlined
in Document 105. To say that any other basis of pay should or
could be used than weight strikes me as just as much impossible,
if the rights of all concerned are to be regarded, as it would be to
say that in the purchase, for example, of tea the only thing to be
considered would be its flavor. Unquestionably flavor is a neces-
RAILWAY MAIL PAY. 207
sary factor. Likewise unquestionably, space is a necessary feature
that must be reckoned with; but to say that only space would
be paid for and that the department alone would say what space
was needed, and therefore what would be paid for, would be more
one-sided and more utterly without reason than the present practice
of forcing the railroads to furnish apartment cars without pay, with
the right to add apartment cars with every additional passenger
train schedule that may be put into service and still the department
only pay for the gross weight of the mileage covered.
hat seems to me to be all wrong, and it ought to be corrected.
There can hardly be anything fair in that proposition.
For example, up to a year or so ago we operated only one passenger
train daily in each direction on our main line, and the department
was paying us on gross mail weight of some 819 pounds per mile of
road, which, you understand, was handled on one train in each
direction. Now, we have two passenger trains in each direction, and
the department has called for mail service on the new trains, with
the result that we have had to double our expenses without receiving
one dollar's additional pay. That is to say, a few years ago we fur-
nished apartment cars for the handling of about 410 pounds of mail
per apartment car mile, for which we were paid some $80 per mile
of road. Now we are furnishing apartment cars for some 205 pounds
of mail and yet are still only paid $80 per mile of road, though we
are called upon for twice the facilities and put to twice the expense
heretofore incurred.
... The CHAIRMAN. That is on the basis that your weight of mail is
the same 3
Mr. ANDERSON. Is the same. This, I respectfully submit, should
be corrected, and for additional service we should receive additional
8, V.
p *he short lines are asking for the passage of what is known as the
Talbott bill, providing not alone for payment for apartment cars,
but for an increase in the present rates for the light routes.
I wish to go a step further, and I submit the suggestion as one to
which we are entitled in all fairness, and that is that where the
department calls for additional service on any route carrying less
than 1,000 pounds per mile per year that a minimum allowance
approximating 500 pounds be made. I do not believe that this will
mean a dollar's increase in the expense of the department for hand-
ling the mails, but it does mean that it will have a deterrent effect
upon the department in preventing their calling upon the railroads
for additional service on the same route, when probably the gross
weight of the mail carried will not pay the cost of the service per-
formed by the railroads.
Of course the department is going to ask for additional service;
it does not cost them anything. They will get a visit from a Con-
gressman and say you must put on certain routes; and, well, why
shouldn’t it? It costs the railroad a good many thousand dollars,
but that does not concern them. But it ought to concern them if
they are given the power to do things of that kind.
In further support, in a general way, of the Talbott bill, I submit
that we should be paid for office and mail car space, whether full-
length cars or apartment cars, for surely there can hardly be a reason
75904—No. 1–13—14
208 FAILWAY MAIL PAY.
why post offices on wheels should be furnished by the railroads free
of charge and transported over the roads for the convenience of the
department, whether they are 20 feet in length or 40 feet in length.
On one occasion, in discussing this º a committee, the
suggestion was made that the Government could not afford to
increase the pay of the light routes, upon the theory that the Gov-
ernment's receipts were very low. I respectfully submit that that
is a matter in which we are not intº If the Government pro-
posed to put on unprofitable routes and operate them at a loss, they
should pay for the service.
We are not here asking for an increase in rates already compensa-
tory, but we are here asking that we be paid something like a reason-
able price for the services that we are performing, and we are also
asking that the department be restricted in their demands for service
by at least Fº upon them the necessity of paying something
additional when they ask for increased service and facilities.
I thank you for the time that you have given me in presenting
what I feel is a simple plea for justice—nothing more.
Mr. LLOYD. Do you stand by the Talbott bill?
Mr. ANDERSON. I would not like to say that the Talbott bill is
exactly what I would like to have, but it is so much better than
what we have now, I think we could stand it. -
The CHAIRMAN. At the hearing this morning, before a recess was
taken, Mr. Peters presented a tentative draft of a bill which, in his
opinion, would meet with the approval of the 214,000 miles of road
represented in the Railway Mail Association, of which he is chairman.
That bill appears on page 194 of the typewritten record (p. 181 of the
printed record). Would you look that over, and say whether you
think the enactment of that measure would remedy what, from your
viewpoint, are the evils or injustice in the present method of railway
mail pay ? -
Mr. ANDERSON. Mr. Chairman, that is along the right lines, and
it is in the right direction, but I do not think it goes far enough.
Mºore That does not make the necessary charge of 500
OUIIlClS.
p Mr. ANDERSON. No, sir. Mr. Chairman and gentlemen, I think
that is in the right direction, but I think the department ought to be
restricted in their ability to place upon the railroads any kind of
service, and as much service as they may choose, when measured by
the number of passenger trains we may have on a railroad.
Mr. LLOYD. Do you not carry express on all of those trains 7
Mr. ANDERSON. No, sir; we do not. -
Mr. LLOYD. You are carrying mail on trains you do not carry
express on 3 -
Mr. ANDERSON. Yes, sir.
Mr. LLOYD. Do you carry express just one way ?
Mr. ANDERSON. I can only say that we do carry mail on some of
the trains we do not carry express on, but even though our property
is a small one, and it may reflect upon my knowledge of the situation,
and I ought to know it, I could not tell you whether we handle express
on all of our main-line trains. I think there is one round trip on one
part of the road on which we do not handle express, and we make this
arrangement with the express companies that our baggage-master can
RAILWAY MAIL PAY. 209
handle the express, and we simply provide for the tonnage on the
trains and he handles it in the baggage car.
Mr. TUTTLE. Is the side service or the messenger service a burden
to your road 7
Mr. ANDERSON. Yes, sir; it is and it is a rather serious burden, and
it is becoming vastly more so with the addition of the parcels post.
We are having applications from all along our line of road from our
agents for additional help in order to handle the mails to and from the
post office. -
Mr. TUTTLE. Do you have to do that in small villages }
Mr. ANDERSON. Yes, sir. For instance, we received a letter a few
days ago from the agent in the county seat of Hampton County, at
Hampton, saying that his men could not handle the stuff, and he would
have to have additional help. I told him to make two trips, that I did
not think the department would mind waiting a few minutes. It is a
considerable burden to us, and I want to emphasize the importance,
from my viewpoint, of some deterring influence by legislation or some
arrangement leaving it to the wisdom of you gentlemen to prevent the
department adding on mail service when they get ready, without any
possible cost to them and especially when there is a very small amount
of mail involved.
The CHAIRMAN. In that connection is there any benefit to them 7
Do you suppose a department head has any selfish interest at all in
making improved mail facilities?
Mr. ANDERSON. I certainly would not charge the department with
having any selfish interests there.
The CHAIRMAN. Should not your criticism, then, be that you are
entitled to compensation for every additional burden that may be
put upon you either by the legislature or administrative branch of
the Government 2
Mr. ANDERSON. I think that is what I said. That is at least what
I intended to say. I had no desire to criticize the department, and I
stated, and I stand by my assertion, that I venture it will not cost
the Government $1 more if they will place that deterring factor upon
the department. If it costs them more money to do it they are
going to be mighty careful how they do it. If it does not cost us any-
thing we will . most anything a fellow asks us to do
Mr. LLOYD. The only effect of requiring these additional services
to be rendered is to satisfy the public. The mail is wanted by the
people as frequently as they can get it, and if you have two trains
running each way a day it is perfectly natural the people will want the
mail on each train, and I certainly do not blame the people. Do you
not think these people are demanding of the department and insist-
ing that the mails shall be carried on each train?
Mr. ANDERSON. That is what I am complaining of. I am com-
plaining of the department's right to put it on without paying for it.
Mr. LLOYD. You complain of the law which permits it?
Mr. ANDERSON. I certainly, do, sir; and in my criticism I presume
the department is doing nothing but what they have a right, and I
hope nothing I have said has indicated a disposition to criticize the
department unjustly. I also feel some reluctance in going on record
as criticizing the lawmaking body of our land, but I have stated some
facts which I think in all justice should be corrected. -
The CHAIRMAN. We thank you very much, Mr. Anderson,
210 RAILWAY MAIL PAY.
STATEMENT OF H. E. MACK.
The CHAIRMAN. Mr. Mack, it will be necessary for you to be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Kindly state your full name, occupation, and the
official capacity in which you appear before the committee.
Mr. MACK. H. E. Mack, manager of mail traffic, Missouri Pacific
Railroad, St. Louis, Mo. My age is 46.
The CHAIRMAN. You are associated, are you not, with the Railway
Mail Association represented by Mr. Peters as chairman 7
Mr. MACK. Yes, sir.
The CHAIRMAN. In any official capacity ? . . .
Mr. MACK. Merely as a member of the subcommittee. On behalf
of the committee, and at the suggestion of the chairman, I have
taken up a special subject, rather than the general subject of trans-
portation, and that is this, to describe and bring out the situation
with regard to the messenger service, which has many phases that are
not developed and are not understood, as I find frequently in the dis-
cussion of the subject. - -
The carrying of mail between railway stations and post offices by
railroad, in connection with mail transportation, is not specifically
pº for by an act of Congress, but it is required of the railroads
y the Post Office Department, under a judicial decision, based upon
a practice in existence when the equalization law of 1873 was enacted,
which practice was grafted from the star route service upon the rail-
road service in the beginning, and has since continued.
The bill proposed by the Post Office Department in Document 105,
with reference to this service, reads as follows: *
They shall provide side, terminal, and direct transfer service for handling, distribu-
tion, and transfer of mails en route, and for offices and rooms for the employees of the
postal service engaged in such transportation, when ordered by the Postmaster
General.
The Post Office Department, in the statistics used in Document 105
makes the following statement:
The data reported by the companies on Form 2602 as to expenditures for station
service and station and terminal facilities furnished were very carefully considered,
and in view of the fact that it was found impossible to ascertain the totals of the
accounts from which the amounts directly charged on this form should be deducted,
and of the fact that such data were found to be unreliable in many instances, and of
the further fact that it was determined that the mail service should participate in all
of the station expenses upon a basis of car-foot miles, it was decided not to make use
of such information in connection with the cost ascertainment.
The view, as above stated, might be logical, with regard to station
service; that is, as to the handling on the railway station property
by agents and porters, but the carrying of mails between the post
office and station is not a station service. It is entirely an extra
service and in no sense a natural or usual function of a railroad in
connection with its transportation business.
The CHAIRMAN. The part that you read from the suggested bill
printed in Document 105 is the same requirement contained in the
second suggested bill as prepared and submitted by the Postmaster
General under date of January 20, as printed in the last portion of
this pamphlet 2 *
Mr. MACK. So far as I understand there has been no change. I do
not believe there has been any change.
RAILWAY MAIL PAY. 211
The railroad does not provide drayage for delivery of freight;
wagons for the delivery of ºś. ; carriages for the delivery of
passengers; nor wagons for the delivery of express. It performs no
service beyond its station property.
Although this is a most valuable service to the Post Office Depart-
ment, j actually saves the Government from employing probably
30,000 mail messengers, it is not taken into account in the depart-
ment's calculations of cost, nor as to compensation to the carriers,
in its proposed bill. -
The report of former Postmaster General Meyer to the Senate
Committee, on February 19, 1909, estimated the value of this service
as $4,393,000 per annum, and it may be fair to assume that its value
is higher to-day, as the rate per mile traveled on mail messenger
service routes, in 1909, was 12.28 cents, while in 1911 it was 13.36
Cents. -
The bill of the Post Office Department, however, as stated, makes
no provision for payment for this extra money to the Government,
of the amount above quoted, and under which bill the railroads would
be required to throw in this valuable service for nothing. This
mânifestly would not be right or fair to the railroads.
The CHAIRMAN. If you will allow me to interrupt you for a moment,
do you think it costs the transportation company the same as you
say the ex-Postmaster General estimated it would cost the Govern-
ment, $4,385,000 %
Mr. MACK. No, sir; it does not.
The CHAIRMAN. Have you any estimate as to what additional
expense, because of the side service, actually is to the railroad
companies?
Mr. MACK. I can not give you that information for all of the roads.
It was reported, but not compiled satisfactorily. I can give you
the information for our road, which shows the actual cost for em-
ployees solely for this purpose to be about $25,000 or $30,000 per
a,Illſll IIIl. w
The CHAIRMAN. What do you receive in the way of total mail
compensation ? -
r. MACK. $2,500,000.
b º; CHAIRMAN. That covers the R. P. O. and railway mail pay
Oth .
Mr. MACK. The entire pay; yes, sir.
The CHAIRMAN. And your additional cost of extra employees
solely occupied in the id: service to your road is from $25,000 to
$30,000 a year?
Mr. MACK. Yes, sir. --
It is desired for the information of your committee, and for the
record, to show some of the actual conditions and hardships arising
from changed conditions since it began, and from administrative
º in connection with this service performed by the roads, to a
etter understanding of the subject.
When referring to this messenger service performed by the rail-
roads the idea may be conveyed that the station agent, in connection
with his station duties, once or twice a day merely carries a bag of
mail on his back from the post office to the station for the outgoing
train and another bag to the post office after the train leaves. When
this service first began with the railroads this was probably true, but
with the rapid growth of the postal service in recent years, and the
212 - RAILWAY MAIL PAY.
great development of the railroads, the messenger service performed
by them has become increasingly difficult, and instead of being as it
began, an incident of the agent's duties conveniently performed, it
now requires the railroads in many cases to employ contract wagon
Service on account of the volume of mail, and special messengers on
account of other conditions.
The following illustrations will describe special burdens, difficulties,
and expense involved in performance of this service on the railroads
of the country at this time.
Mr. LLOYD. In that connection, in speaking of what it costs you
for the side service, do you know what the Post Office Department's
estimate was of what it would cost your road 7
Mr. MACK. I do not know, sir.
Mr. LLOYD. I did not know but what you might have made some
º º; a report. Would that appear in any report that you have
IOOl8,Ol62 :
Mr. MACK, No. I can probably answer your question that it was
probably based on the average cost of messenger service for which
the department does pay. º
The CHAIRMAN. w. it be fair to the transportation companies
with whom the Government does business, to take as a criterion the
specific information you have submitted, namely, that you receive
$2,500,000 of the total compensation paid by the Government for
railway mail and R. P. O. service, and it costs you for side service
from $25,000 to $30,000 to perform that ? Would it be fair to apply
that to all the transportation companies proportionately 3 In .
words, take the percentage of what you receive of what the Gov-
ernment pays for railway mail pay, and R. P. O. pay, and then
multiply the $25,000 or $30,000 by that percentage? Do you think
that would be fair to the other companies?
Mr. MACK. I could not say as to that, but I would like to say this:
That ºn the small independent roads that ratio would not be very
useful.
The CHAIRMAN. It would cost them proportionately much more
than it costs the Missouri Pacific with the large business that they do?
Mr. MACK. And it would affect them very directly and very seri-
ously, while with the large systems the proposition might be worked
out on the percentage basis of cost. -
The greater frequency of train service, especially in the denser
sections of the country, makes the service burdensome, on account
of the increased number of trips required between the post office and
the station, which may be #j by the conditions at Poplar
Bluff, Mo., shown in the following statement:
Station to post office: | Post office to station:
From train. 28, 12.30 a. m. To train 6, 1.25 a. m.
From train 6, 1.25 a. m. To train 5, 1.50 a. m.
From train 5, 1.50 a. m. To train. 29, 3.00 a. m.
From train 10, 1.50 a.m. To train 7, 6.50 a. m.
From train 7, 6.50 a. m. To train 433, 10.45 a. m.
From train 433, 10.45 a. m. To train 4, 1.00 p.m.
From train 4, 1.00 p.m. To train 3, 2.30 p.m.,
From train 3, 2.30 p.m. To train 8, 2.55 p. m.
From train 8, 2.35 p.m. To train 434, 2.40 p.m.
From train 436, 7.25 p.m.
RAILWAY MAIL PAY. 213
A
Transfers from the following arriving trains to other departing
trains:
Train 9, 12.20 a. m. | Train 22, 10.50 a. m.
Train 28, 12.30 a. m. | Train 4, 1.00 p. m.
Train 6, 1.25 a. m. Train 3, 2.30 p. m.
Train 5, 1.50 a. m. Train 8, 2.35 p. m.
Train 10, 1.50 a. m. Train 434, 2.40 p. m.
Train 7, 6.50 a. m. Train 435, 7.25 p. m.
Train 433, ió.45 a.m.
In addition the company is required to transfer the mails from its
arriving trains to the departing trains of the Frisco Railroad at their
depot, which is one-eighth of a mile distant.
2. As above alluded to in many instances this messenger service,
instead of being performed incidentally by the railroad agent, carrying
the mail between the post office and the station, the volume is so
great as to require the railroads to make contract service for trans-
Pºiº in wagons.
e following instances will illustrate, with the special cost of
Service :
- Per month.
Sedalia, Mo. ------------------------------------------------------------- $90. 00
Atchison, Kans- - - - - ---------------------------------------------------- 35. 00
Alexandria, La- - - - - - --------------------------------------------------- 37. 50
Joplin, Mo. - - - - - - ------------------------------------------------------ 37. 50
Warrensburg, Mo. - - - - - - ------------------------------------------------ 30. 00
Helena, Ark- - - - -------------------------------------------------------- 30. 00
El Paso, Tex- - - - - - ----------------------------------------------------- 40. 00
Sweetwater, Tex--------------------------------------------------------- 25. 00
Gatesville, Tex. - - - - ---------------------------------------------------- 30. 00
Salida, Colo- - - - - - ------------------------------------------------------ 25. 00
Grand Junction, Colo- - - - - - - -------------------------------------------- 50.00
I would like to say here that the service as performed by the rail-
roads grew up from a condition that is very different from what it is
to-day, and while from year to year it is costing the railroads more
money to perform the service because of the distance between the
post offices and stations, the night service, and other conditions—
which I will develop later—show that it is costing more. The
measure of that service is really the value of it to the Post Office
Department. The fact that it costs us $25,000 is no criterion of
what the value of that is to the Post Office Department.
The CHAIRMAN. Have you any computation or definite idea as
to what it would cost the Government itself to perform the side
service that you perform at an expense to you of from $25,000 to
$30,000 a year?
Mr. MACK. That which we contract for the Government could
probably perform at the same rate; that is, in this case where we
employ special service. Does that answer your question?
The CHAIRMAN. That answers the question as asked, but I will ask
another question. What would it cost the Government to perform
the side service that you perform, in toto, a great proportion of it
being performed, I presume, and not chargeable directly to the side
service, but to employees who perform other services as well as the
side service'? -
Mr. MACK. I think that is answered in the statement of Postmaster
General Meyer.
214 RAILWAY MAIL FAY.
The CHAIRMAN. I wanted your statement on it with regard to the
Missouri Pacific.
Mr. MACK. I could not give you that for our company alone. How-
ever, I think the information as to the entire country would apply
to all the systems equally. - -
The CHAIRMAN. You mean the $4,300,000 that you have quoted
from ex-Postmaster General Meyer's report 2 -
Mr. MACK. Yes; or, in other words, what it would cost the Govern-
ment if it employed messengers at the rate they pay for messenger
service now.
3. The nine-hour operator's service law, approved March 4, 1907,
adds to the difficulty of performing this service, and in a number of
instances requires the payment of overtime charges for mail handling,
as the operators’ hours do not always fit in with the required mail
exchanges.
4. It is difficult to perform this service in some States, because in
recent years State legislatures have enacted laws requiring the
ticket offices to be open from 30 minutes (as in Texas) to 1 hour
(as in Louisiana) before train departures, and the agents are not
permitted to receive the outgoing mails at the post office more than
15 or 20 minutes in advance of train time.
5. The Rural Free Delivery Service has imposed some additional
difficulties and expense, on account of the necessity of delivering
mails arriving on night trains early in the morning and before the
agent's scheduled hours of duty. -
An illustration of this kind is at Admire, Kans., where the agent's
hours, based upon train service, are necessarily fixed to begin at
8 a. m., and the Missouri Pacific Co. is obliged to deliver the mail at
the post office at 6.30 a. m., because the rural carrier leaves at 7.30
a. m., therefore paying the agent about $7.50 per month overtime.
6. It frequently occurs that the Post Office Department requires
exchanges of mails on trains passing stations through the night, when
sometimes the trains do not even stop, and when there is no business
of any kind requiring the agent to be on hand at the station. In such
instances, the railroad company must employ a special contractor
exclusively for the purpose of handling these night exchanges.
The postal regulation requires the service between the post office
and station “at which the company has an agent or other repre-
sentative employed.”
The interpretation given this regulation by the Post Office De-
partment is that if an agent or other representative is employed at
any time during the 24 hours, the company must perform the mes-
senger service during the entire 24 hours, and not only when an
employee, in connection with other duties, is at the station to
handle it.
The post offices usually are not open during the night, and the mail
must be gotten for the outgoing night trains before the post office
closes, kept in custody of the company, and put upon the proper train
by the night carrier, so employed, and the incoming mails put off the
night trains must be kept in the custody of the company and delivered
at the post office by the carrier at such an hour as the Post Office
Department may designate. -
RAILWAY MAIL PAY. 215
The following will illustrate cases of this character, with the amount
paid per annum by the company, in each case:
Allen, Kans--------------------------------------------------------------- $120
Swayne, Kans-------------------------------------------------------------- 120
Archie, Mo. ------ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 120
Bridgeport, Kans----------------------------------------------------------- 150
Carlton, Kans-------------------------------------------------------------- 120
Wilsey, Kans. . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - : 120
Delaven, Kans------------------------------------------------------------- 120
Dumas, Ark---------------------------------------------------------- : - - - - - 150
Wilmot, Ark. ------------------------------------------------------------- 150
Elmo, Kans---------------------------------------------------------------- I80
7. In recent years the railroads have not only been required to
handle the mail between the post office and the station, but the postal
regulations have extended this class of work even further, and require
transfer service from one railroad station to another in towns through-
out the country where the distance is 80 rods or less.
8. While it might be thought that the carrying between the post
office and station required of the railroads would naturally apply to
the local mail between the town and the post office, it often very much
exceeds this; as not only does the Post Office Department require the
carrying of the local mail, but also the mail for back country star
routes, or rural routes; and further, it requires the carrying of any
transit or connecting mail arriving on one road for departure on
another, by way of the post office, in instances where the distance
between the stations is greater than 80 rods, thereby saving to the
department the expense of direct transfer messenger service.
he Post Office iº employs certain direct transfer service
where the connections are so close that the mail can not be passed
through the post office.
9. There are many very small places, particularly in new sections,
where an arrangment is made with a storekeeper, or postmaster,
merely to sell tickets on commission for the public convenience, and
where the business is too trivial to permit the employment of an
agent or conduct a station.
The Postal Regulations are so construed by the department in such
cases, if the post office is within 80 rods, as to require the railroad
company to provide for the carrying of the mail.
Persons acting in this capacity are not regarded by the railway
company, nor are they in fact, station agent or employees in an
accepted sense.
In such cases the railroad companies are met with demands for the
payment to the postmaster or storekeeper for handling the mail.
Very often, however, it occurs that by reason of the department's
demands the companies are compelled to abandon such agencies.
A case of this kind occurs at Perkins, Mo., where the postmaster
requires $5 per month.
10. There are instances where the time fixed for delivery of the
arriving mails at the post office compel railroads to employ special
C8,II'10I’S.
Instances of this kind are at Conway Springs, Kans., where the
company pays $10 per month; and at Henderson, Tex., where,
although the distance is 0.49 mile, the department requires delivery
216 EAILWAY MAIL PAY.
within 20 minutes after train arrival, making it impossible for the station
employees to handle the service, and the company has had to make
a contract at $150 per annum.
11. Another difficulty of the railroads in the matter of messenger
service, and one which causes considerable dispute and dissatisfac-
tion particularly, is the postal regulation and practice thereunder in
regard to the measurement of distance between the post office and
station to determine whether it is within 80 rods and whether the
company shall be compelled or not to carry the mail. The difficulty
arises from the indefinite regulation on this subject, reading as follows:
Section 1191, paragraphs 4 and 5:
4. In all cases the distance between the railroad station and the post office or postal
station must be measured by the shortest route open to public travel, avoiding angles,
from the nearest door of the baggage room to the nearest door of the post office building
where the receipt and delivery of the mails is practicable. In case there is no baggage
room or station the measurement shall be made from the middle of the station platform
where mails are exchanged. The route need not be a way regularly dedicated to
public use; and if it be over private property, no prohibition against the Government
will be recognized which shall not also have been made and enforced against the
general public.
5. Any person acting for an advantage to himself or another, by authority or consent
of the railroad company, and representing in any manner the interests of the company
or railroad in its businesstransactions with the public, will be regarded as the company’s
agent or representative.
This leaves the employee of the Government to measure according
to his judgment of . is the “shortest route,” and in many cases
the railroad companies and the department do not agree.
The CHAIRMAN. Suppose that the Government, through its own em-,
loyees, performs the whole side service, and suppose the trains were
i. and the employee took half an hour or an hour or several hours of
his time waiting for the trains. Then should the transportation com-
pany be debited because of that loss of time to the governmental
employee due to the train being late }
Mr. MACK. I would not think so.
The CHAIRMAN. Is not the responsibility with the transportation
company because of the loss of time of the governmental employee
and not with the Government' I mean: Suppose that the Govern-
ment assumed the whole side service, eliminating for the time being
the question as to the compensation to the railroad for its perform-
ance of side service, and the Government does perform the whole side
service, in your opinion, under a condition of that kind, where the
employee's time was not occupied but was wasted, if you please,
because of the irregularity of the trains on their schedule, who would
bear that loss?, The transportation company, would they not ?
Mr. MACK. That is a new proposition.
The CHAIRMAN. There are a good many coming out at this hearing.
Mr. MACK. I should say that the transportation company ought
not to bear the expense simply because its train was late.
The CHAIRMAN. You are charged for some trains, are you not, if
you are late beyond a certain period
Mr. MACK. No, sir.
The CHAIRMAN. There is no such a case?
Mr. MACK. No, sir. We do not guarantee schedules, and it would
be impossible to guarantee them in the operation of a railroad.
The CHAIRMAN. No compensation is based upon a guaranteed
schedule within limitations Ž
RAILWAY MAIL PAY. 217
Mr. Mack. No, sir. That class of service went out of commission
with the special facility trains in the South about four or five years
agO. , - .
12. The railroads are required to carry the mails between the
station and the terminal post office on routes where required by the
Post Office Department, receiving therefor the same rate per mile as
paid on the particular railroad route.
compared to the cost of the service.
This frequently is trivial
This terminal service is not restricted to a distance of 80 rods, as
with side service, but covers a distance as much as 1.06 miles on my
routes, with a very considerable proportion of them beyond 80 rods.
The distance may be greater in the case of other lines.
The following will illustrate the earnings for such terminal service
and the cost to the companies performing it, in a number of cases:
Terminal | Earnings Cost per
distance. per annum. annum.
- - Miles.
Alexandria, La----------------------------------------------------- 0. 59 $35.81 $450.00
Relena. Ark-------------------------------------------------------- . 52 32.01 360.00
Womble, Ark....................................................I. . 54 38.31 240.00
Joplin. Mo--------------------------------------------------------- . 62 94.35 450.00
Si verton, Colo-------------------------\---------------------------- - 47 29.72 360.00
Crested Butte, Colo------------------------------------------------ . 50 21.37 180.00
Aspen, Colo-------------------------------------------------------- . 14 21.37 250.00
Grand Junction, Colo---------------------------------------------- . 37 113.87 600.00
Gatesville, Tex----------------------------------------------------- . S2 64. 50 360, 00
The L. & N. have the following special examples:
Terminal | Earnings | Cost per
distance. per annum. annum.
Miles.
Pensacola, Fla----------------------------------------------------- 0.73 $175.75 $900.00
Columbia, Tenn.--------------------------------------------------- . 60 44. 12 120.00
Gallatin, Tenn.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I. . 39 20. 30 180.00

In fact, terminal messenger service is not an incident of station
work on any of our routes, which are 50 miles or less in length, as on
every one of such routes the company is obliged to make contract
terminal arrangements at either one or both ends of such routes.
There are a good many cases on the shorter routes also where the
terminal service exceeds in cost the entire mail earnings, or nearly so,
as the following will illustrate:

al Terminal
+. Annua Service
Route. Length. mail pay. costs per
- 3.IllilliLIl.
* Miles.
145031. Marshall Junction to Marshall. . . . . . . . . . . . ... ---------...... 2.03 $118.02 $120.00
145049. Mineral Point to Potosi........... ------------------...----. 3.96 192.97 240.00
145085. Lake Junction to Creve Couer - - - - - - - - - - -------------------- , 8.60 367. 65 120.00
150026. Georgetown to Round Rock--- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10. 37 531.98 144.00
165030. Colorado Springs to Manitou.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 55 294, 20 180.00
155071. Hoisington to Great Bend - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10.43 588. 56 120.00
149042. Natchez to Incline.----------------------------------------- 3.08 284. 40 300.00
218 RAILWAY MAIL FAY.
Here it will be seen is a distinct hardship, which applies with par-
ticular force to independent short line railroads, and concerning
which I have no doubt testimony of the short lines will develop.
The foregoing will enable the commission to more fully under-
stand the messenger service as required of the railroads by the Post.
Office Department. g
The illustrations given are those on lines with which I am asso-
ciated, but which may be considered as fairly representative of gen-
eral conditions throughout the country, and I hope the information
will be of advantage in the commission's study of this question.
The CHAIRMAN. That is very interesting and illuminating. Is it
your contention that the railroads should be relieved entirely from
the side service, or that they should receive compensation for side
service performed 2
Mr. MACK. The suggestion of the railroads is, as a measure of
relief, that they be paid for an annual weighing and—
The CHAIRMAN. My question refers now to the side service.
Should you be relieved of it entirely, or should you be compensated
for it 7
Mr. MACK. I should say that we should be relieved of it or com-
pensated for it on some agreed basis.
The CHAIRMAN. If compensated for it, should you be repaid the
expense that you are put to because of the service rendered 2 . .
Mr. MACK. I should think that would afford very considerable
relief to the railroads and at the same time be very moderate in its
cost to the department. *
The CHAIRMAN. That is the point I wanted to draw out.
Mr. MACK. However, it would not compensate the railroads for
the service which they perform without specific cost, and that ought
not to be treated as a service of no value to the department. *
The CHAIRMAN. In other words, taking the Missouri Pacific as a
concrete case, your first point would be that if the Missouri Pacific
performed the side service it should receive as indirect pay or com-
pensation the $25,000 to $30,000 that it costs the Missouri Pacific
additional for performing that service, in the way of additional
employees 3
Mr. MACK. Yes, sir. . -
The CHAIRMAN. With an adjusted compensation for the nonsegre-
gated expense on the part of the Missouri Pacific for whatever part
of the other employee's time went for that particular service.
Mr. MACK. I should think that would be a very reasonable adjust-
ment for the messenger service at the stations.
The CHAIRMAN. But is the position of the railroads, as you under-
stand it, that they should be relieved entirely of the side service, or
do the railroads contend that they should receive compensation for
that service which, from their viewpoint they have no allowance for
now under the present method of adjustment of railway mail pay?
Mr. MACK. I think the railroads would be glad to be relieved of
the service. * -
The CHAIRMAN. Would not the railroads be glad to cooperate with
the Government if under their operation of the service they could
perform it much cheaper than the Government, as a distinct govern-
mental activity?
RAILWAY MAIL PAY. 219
Mr. MACK. I think in the adjustment of mail pay an agreement or
understanding could be reached that would be 'satisfactory to the
commission with regard to that question.
The CHAIRMAN. Do you think that is possible of solution so that
you could arrive at what would be a fair compensation ? The Mis-
souri Pacific Road is receiving $2,500,000 out of $55,000,000 of the
total railway mail pay, and the R. P. O. car, or $54,000,000. It
costs you from $25,000 to $30,000 that, from your viewpoint, you
receive no compensation for. It would amount to but a few hun-
dred thousand dollars, as compared with the ex-Postmaster General's
statement, where he, according to that statement you have read,
estimated that it would cost the Government $3,400,000 to perform
the same service. Is that correct 3
Mr. MACK. The direct expense and the value of the service to the
department are two separate things.
#. CHAIRMAN. I appreciate that, but what I wanted to get at
was whether the position of the transportation companies is that
they should be relieved entirely from the side service, or whether they
would be glad to perform that service with the cooperation on the
part of the Government, on the assumption that they could perform
it cheaper than the Government could, if they received compensation
for the service rendered 2
Mr. MACK. I think that that could be agreed to. I do not know
that the railroads have considered that question definitely, but I
think it would be agreed to.
The CHAIRMAN. Is not that a question ? Here you have an appar-
ent estimate, presented from some viewpoint, as though the railroads
were underpaid $4,300,000. That is based, as I now infer, upon a
report made by an ex-Postmaster General, and yet any information
that we have before the commission on that particular subject is
that it costs the Missouri Pacific from $25,000 to $30,000 additional
for performing that service themselves instead of the Government
performing it, and the Missouri Pacific receives $2,500,000 out of the
$54,000,000, we will say, of the total railway mail pay and R. P. O.
pay. Applying that information it would simply show that the rail-
roads were only losing three or four hundred thousand dollars because
of the side service. -
Understand, I am riot applying that because I believe myself that
it would not be fair to all of the 795 different railroads with whom
the Government has mail contracts to apply the experience of the
Missouri Pacific. . It simply shows the variety of viewpoints that
must come up in the study of a subject of this magnitude, does it not ?
Mr. MACK. It does.
The CHAIRMAN. And I think it would be most interesting and im-
portant to the committee to see whether the railroads' position was
that they should be relieved entirely of the side service or receive a
compensation for the side service on the basis of the additional cost
to the transportation company for the service rendered, with a com-
pensation that could be arrived at for the value of the cooperation,
Mr. LLOYD. Your company receives about one-twentieth part of
that amount which is paid for carrying the mails.
Mr. MACK. We receive about one-twentieth; yes.
Mr. LLOYD. It costs you, as you say, between $25,000 and $30,000
to perform this extra side service. It would cost the Government,
220 RAILWAY MAIL PAY.
according to the estimate of the Postmaster General, $4,300,000;
that is, to perform the whole service in the United States. If it cost
just its proportional part to render the service as rendered by your
road it would cost the Government $215,000. That is one-twentieth
part of $4,300,000. Now, it has cost you $25,000, whereas the same.
service would cost the Government $215,000 if the Postmaster-
General in his statement is correct.
Mr. MACK. I can not say what it would cost the Government, but
those are the figures which have been submitted.
Mr. LLOYD. What I am trying to get at is a concrete statement.
If we take it for granted the Postmaster General's was a correct.
ascertainment that it would cost the Government $4,300,000 to
render this service and it would cost you the one-twentieth part to
perform the service on your road, it would cost the Government
$215,000 to perform the service on your road; yet according to your
statement it has only cost you a little over $25,000 to perform that
service which would cost the Government $215,000. That is the
most accurate statement that we have had in connection with any-
thing concerning the side service. {
Mr. MACK. That is true as to the direct cost. The two figures do.
not represent the same thing. The $25,000 represents the service
where we pay for it. The $215,000 would provide for the service at
all of the stations on our line where we do not *
Mr. LLOYD. You are one of the best posted men on railway mail
§ that I know anything about. I want to ask you this question:
at, in your judgment, is the comparison between the two, that
service which costs you actually $25,000 and that which it costs you
in connection with other service 7 Which of the two is the greater 3
Mr. MACK. I do not get the point.
Mr. LLOYD. Does it cost you more for the service that is rendered
in this side way by those who perform other service, or does it cost.
you more for that which is rendered in specific service for which you.
pay $25,000?
Mr. MACK. The cost of the service incidentally rendered we have
no figures upon.
Mr. LLOYD. With your general knowledge, do you think it would
cost as much as that which you actually spend for the specific service #
Mr. MACK. It would be merely an estimate.
Mr. LLOYD, I know it would, but your estimate is one of the best I
know of that we could get.
Mr. MACK. It would be based upon a division of the time of the
station employee engaged in handling the mails. We have those
figures, and we gave that information in one of the reports to the
Post Office Department.
Mr. LLOYD. Haven’t you a copy of it 2
Mr. MACK. I have, but I haven’t the summary. I will put it in
the record. -
Mr. LLOYD. I wish you would. That will help us reach a basis in
connection with it. The trouble is with all this we do not get any-
thing on which to stand as a basis. You have given us a basis on
your road of what it will actually cost you. Now, if you can give us.
an estimate of the basis of what it will cost you for the service per-
formed partly by the railroad and partly by the Government, then
RAILWAY MAIL PAY. 221
you have on your railroad a practical, complete expenditure for this
side service. Then if we can ascertain what it would cost the Gov-
ernment to perform that side service, we can take the difference
between what it cost you and the Government and make the ascer-
tainment the chairman has undertaken to find out, and I believe
from you we are going to get those figures.
Mr. MACK. Of course it is going to be considered, as I said in the
outset, that in the department's calculations of cost, by which they
fººd at their figures of $9,000,000, that this service was not calcu-
ated -
Mr. LLOYD. I understand that, but I am going at this in connection
with Mr. Meyer's statement, taking that as a correct basis that it
would cost the Government $4,300,000, and now we want the facts
as to what it would cost the railroads. --
The CHAIRMAN. I think we should put in the record that the point
is simply a computation and not a definite ascertainment.
Mr. LLOYD. Certainly; I did not accept it as true.
Mr. MACK. Mr. Stewart testified the other day that it was approxi-
mately $4,000,000.
Mr. LLOYD. Mr. Peters's statement is based upon the theory that
that is probably the most accurate statement we have.
The CHAIRMAN. As I remember Mr. Peters's testimony, he said he
figured that it would cost about $1,000,000.
Mr. MACK. There may not be a great deal of difficulty in furnishing
the committee at its next meeting with some satisfactory information
as to the direct cost and as to the estimated cost.
Mr. LLOYD. Have you any special information that you can give us
on the question of space as the determining factor? If so, we would
like to have it.
Mr. MACK. That is, space as compared with weight?
Mr. LLOYD. Space as a determining factor, rather than weight.
Mr. MACK. I É. some views on that subject, Mr. Lloyd, but I
thought the investigation was taking a turn with a view of developing
conditions in car-foot miles.
Mr. LLOYD. Would you rather submit that later?
Mr. MACK. I think it would be more appropriate later, if agreeable
to the committee.
Mr. LLOYD. I am anxious for Mr. Mack now or some time to give .
us all of the information that he has in connection with every branch
of this whole question. Where he has investigated it I am sure his
information will be very illuminating.
The CHAIRMAN. Mr. Peters, as the chairman of the Railway Mail
Association I would ask you on behalf of the committee if you will
designate a committee of three to confer with a similar committee of
three, to be appointed by the Second Assistant Postmaster General,
Mr. Stewart, as representing the department, to take up what is
known as Document No. 105, and determine what the difference is
between your representatives and the departmental representatives,
whereby upon the same figures, which, as I understand, were the
returns rendered by the transportation companies to the department
in respect to specific questions, you reached the conclusion that the rail-
roads received from the mail 3.23 mills per car-foot mile and from other
service 4.35 mills per car-foot mile, while the department reached the
222 RAILWAY MAIL PAY. ,
conclusion that you received from the mail 4.14 mills per car-foot
mile and 4.16 mills from other service. Also to take up the extract
from ex-Postmaster General Vilas's statement, as appears in the
Postmaster General's report of the year 1887, referring to the R. P. O.
car and make comments in reference to that statement and furnish
the result of the conference between your respective committees to
this commission now sitting within the next two weeks if possible.
Mr. PETERs. We will be very glad to do that, but we think it will
take from two to three weeks. It will be done as quickly as possible,
and we will appoint Mr. Mack, Mr. Bradley, and Mr. Plant, the comp-
troller of the Southern Railway. I think Mr. Plant will be glad to
serve, and he is an expert accountant and the head of the American
Association of Railway Accountants. -
The CHAIRMAN. We are very much obliged, Mr. Mack.
STATEMENT OF MIR, S, C, SCOTT.
The CHAIRMAN. Mr. Scott, it will be necessary for you to be sworn:
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Kindly state your name, age, residence, and
occupation.
Mr. SCOTT. My name is S. C. Scott. I am assistant to the
first vice president of the Pennsylvania Lines West of Pittsburgh.
My residence is Pittsburgh, Pa.. I am 59 years of age. I have been
in the service of the Pennsylvania Lines for something over 31 years.
Mr. Chairman, I have written out what I have to say, because I have
had no experience in testifying before committees, and I am liable
to forget §. unless I have the information in front of me. With
reference to what I have prepared, a considerable part of it is statis-
tical, and with your permission I will summarize the figures as briefly
as possible. (See tables at the end of Mr. Scott's statement.)
n compliance with the request of the chairman and Mr. Weeks, I
beg to . the following statements which are attached hereto:
First. Statement C, which shows for the Pennsylvania Lines West
of Pittsburgh the miles of road, pounds of mail per day, tons per day
over the route, ton-miles per annum, and the gross earnings and
average ton-mile earnings ſºn weight and from R. P. O. car space
and the total, now in effect.
In several of the statements, to which your attention is called,
comparison is made with similar data submitted by Mr. James
McCrea, under date of December 30, 1898, to the Special Committee
on Postal Service, of which Hon. E. O. Wolcott was chairman.
There was no special reason for selecting the year 1897 for compari-
son, except that it was the only period for which similar data was
available.
Second. Statement C-1 gives the same character of information as
Statement C for the year 1911 compared with 1897, except that in
order to get on a comparative basis, only such routes are shown as
were included in the Pennsylvania Lines in 1897.
The CHAIRMAN. Are these routes selected with a view to making
these statements?
g
$
RAILWAY MAIL PAY. 223
Mr. Scott. They are selected with a view to showing the results
on the so-called lines of dense mail traffic.
In connection with this statement, attention is called to the fact
that with a decrease of 2.03 per cent in miles of road operated there
is an increase of 114.4 per cent in the number of tons over the route;
109.9 per cent in the tons hauled 1 mile; 67.2 per cent in pay for
weight carried, with a decrease of 7.6 per cent in the pay for R. P.O.
car space. The average earnings perton per mile for weight carried
has fallen from 8.05 cents to 6.41 cents, or 20.4 per cent; the rate per
ton per mile from pay for R. P. O. cars from 2.31 cents to 1.01 cents,
or 56.3 per cent, and the total from 10.36 cents to 7.42 cents, or
28.4 per cent.
Third. Statement D shows a comparison of the mail operations
and receipts in 1897 and 1911 between Pittsburgh and St. Louis.
Briefly this statement discloses that for º a postal car
costing, approximately $12,000, with 2.94 tons of mail, at a speed of
over 35 miles per hour, the railroad company received 3.19 mills
per ton per mile for the gross weight of the car and its load;
while for a freight car costing, say, $950, with 18.12 tons of lading,
moved at an average speed of 11 miles per hour, the company received
3.16 mills per ton-mile. In the case of the mails we haul 20.6 tons
of dead weight for each ton of mail, while for freight we only haul
1.06 tons of dead weight for each ton of freight.
The CHAIRMAN. What is the total tonnage capacity of that car,
if fully occupied with mail?
Mr. SCOTT. I should say about 15 tons.
The CHAIRMAN. Then the loss of carrying space falls on whom,
the railroad or the Government, under the present method of com-
putation?
Mr. SCOTT. I think the railroad.
On this line the tons carried 1 mile increased 90.4 per cent and the
ay for weight carried 72.7 per cent, while the pay for R. P. O. cars
§º a fraction less than 20 per cent. With an increase of 90.4
per cent in the ton-miles, there was an increase of only 28 per cent in
the average load per car, which, on this main trunk line, still remains
at the low average of 2.94 tons per car. The average earnings per car-
mile were 20.80 cents.
Fourth. Statement E gives similar information and comparisons for
the line between Pittsburgh and Chicago.
On this line the receipts for hauling a mail car and its lading is only
2.83 mills per ton per mile, as against 3.06 mills per ton per mile for a
freight car and its lading, while the average mail-car load has falled
from 2.80 to 2.59 tons, and the earnings from mail per car-mile have
decreased from 26.1 cents to 17.89 cents; all this with the same differ-
ences as to the cost of the cars and the speed of movement. Dead
; per ton of mail is 23.4 tons, as against 1.04 tons for a ton of
freight.
It costs just as much to haul an empty car as it does a loaded car.
The CHAIRMAN. It costs you just as much to haul a car empty with
a capacity of 60 tons as it does if it was loaded?
Mr. Scott. Probably I did not say that right. It costs just as
much to haul a ton of car as it does to haul a ton of freight.
75904—No. 1–13—15
224 RAILWAY MAIL PAY.
The CHAIRMAN. In that connection, does it? You mean the power?
Mr. SCOTT. Yes; I mean the operations of a railroad are all reflected
in the movement of the train. -
The CHAIRMAN. That statement of yours is simply applicable to
power. It would not be applicable to operating expenses.
Mr. SCOTT. Only in a general way.
Fifth. Statement K covers the line from New York to St. Louis
and gives like data and comparisons.
Here again the ton mileage has increased over 97 per cent, the pay
for weight 75.9 per cent, and the pay for R. P. O. cars shows a decrease
of 8.2 per cent. º
The receipts per car-mile are 22.54 cents for both weight and space;
the receipts per ton-mile for mail car and lading are 3.51 mills, while
for freight cars and lading the earnings per ton per mile are 3.23 mills.
While the total mail traffic as represented by the ton mileage has
increased over 97 per cent, as stated above, the average load per car
has only increased 21.4 per cent, and at the last weighing was only
3.52 tons per car. On this through line the dead weight per ton of
mail is 17.2 tons, while for freight it is only 0.77 of a ton. -
The latest available figures covering the mileage of cars in passenger
trains are those of the Interstate Commerce Commission, shown on
page 66 of Railway Statistics of the United States (1910) for the year
ending June 30, as follows:
Passenger-car miles------------------------------------------------. 1,420, 353, 329
Sleeping, parlor, and observation car miles. . . . . . . . . . . . . . . . . . . . . . . . . . 628, 244, 180
Other passenger-train car miles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949, 572,994
Total. . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,998, 170, 503
On page 510 of the same report we find that the total earnings from
all traffic carried on passenger trains during the same period were
$764,773,354, and a simple matter of division of the former into the
latter shows that the average earnings of all cars moved in passenger
º in that year, both loaded and empty, were 25.51 cents per car-
Dºll le.
It has been shown in Statement D that for mail cars between
Pittsburgh and St. Louis, the earnings per mail-car mile are 20.32
cents; on Statement E that the earnings per mail-car mile between
Pittsburgh and Chicago are 17.89 cents, and in Statement K that the
earnings per mail-car mile between New York and St. Louis are 22.54
cents, in each case well below the average earnings of all kinds of cars
carried in passenger trains.
Certainly these statements do not seem to offer any convincing
proof of overpayment on the so-called lines of dense mail traffic; on
the contrary do they not point rather to the impracticability of
securing any substantial increase in the loading of mail cars and the
consequent inability upon the part of the railways to make effective
those economies in the movement of mail traffic that are readily
accomplished with increase in the volume of all other kinds of traffic.
In passing, I would like to say a few words concerning two mail
trains which, for the distance traveled, are probably the fastest in the
world. They are trains Nos. 11 and 45 between New York and
St. Louis over the Pennsylvania lines and are scheduled to make the
run of 1,060 miles in 23 hours and 55 minutes, or at the rate of over
44 miles per hour.
RAILWAY MAIL PAY. - 225
. The following statement shows some of the changed conditions
that have taken place: -- - .

Train No. 11. 1912 1897
Number of cars----------------------------------------------------------------- 6
Character of materials--------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Steel. , Wood.
Length of cars in train----------------------------------------------------- feet. . 400 350
Weight of cars.---------------------------------------------- * - - - - - - - - - - - - tons. . 338 227
Weight of locomotive.---------------------------------------------------- do- - - - 221 90
Weight of train - - - - - - - - - - - - - - - 2- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - do- - - - 559 317
Weight of mail in train--------------------------------------------------- do- - - - 27 21
Dead weight per ton of mail---------------------------------------------- do---- 20. 7 15.1
Train No. 45 has been in commission since March 26, 1911, and
is of practically the same make-up as No. 11, but carries about 30
tons of mail, and the dead weight per ton of mail is about 18.6 tofs
instead of 20.7 tons.
Because of their fast schedules these two trains overtake and pass
around a large number of trains traveling in the same direction
and meet and pass many opposing trains on single track. In all
such cases the other trains are delayed from 20 minutes to 1 hour,
and it is estimated that these two trains each cause delays to other
trains that in the aggregate equals the total time which they consume
in running from New York to St. Louis.
While we have no figures as to expense other than average cost
per train mile, it is beyond all question that the cost of running these
trains is greatly in excess of any average figures.
The following shows the preponderance of mail movement in one
direction over the other:

Between— Weighing. West. East.
* \
Per cent. | Per cent.
New York and Philadelphia--------------------------------------- Spring, 1909. . . 71.90 28. 10
Philadelphia and Pittsburgh.---------------------------------------|----- do--------- 78.37 21.63
Pittsburgh and Chicago.-------------------------------------------- Spring, 1911 - - - 66.79 33. 21
O- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Fall, 1911 - - - - - 62.94 37.06
Pittsburgh and Columbus------------------------------------------ Spring, 1911 83.42 16.58
0- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - all, 1911 78. 92 21.08
Columbus and Cincinnati------------------------------------------ Spring, 1911 72. 50 27. 50
0- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - &ll, 74, 35 25. 65
Indianapolis and St. Louis----------------------------------------- Spring, 1911 88. 57 11.43
Do------------------------------------------------------------- all, - - - || 86.15 13.82
Mackinaw and Richmond--------------------------------- --------- Spring, 1911- - - 1 76.62 2 23.38
1 North. 2 South.
It will be noticed on the Fort Wayne route between Pittsburgh and
º that they have the largest per cent of the movement east-
bound, being 37 per cent, while between Indianapolis and St. Louis
the eastbound movement was less than 14 per cent.
Under such conditions of traffic the empty haul becomes a factor
of large import in determining the profiitableness or unprofitableness
of the mails even on the lines of greatest density, and trains like Nos.
11 and 45 should earn sufficient in one direction to compensate for the
almost entire absence of earnings in the other.
I have been asked by Mr. Peters to reply to Mr. Weeks's inquiry as
to the practicability of the Post Office Department segregating the
226 RAILWAY MAIL PAY.
through from the local mails and asking for bids for handling the
through mails as a distinctive movement, between, for instance, New
York and St. Louis, and it seems to me the answer depends primarily
..?. the question as to whether there is a j. large volume
of distinctly New York-St. Louis mail to justify its being withdrawn
from the regular service and handled independently.
The CHAIRMAN. But would it be withdrawn from the service and
handled independently upon Mr. Weeks’s question ?
Mr. SCOTT. It was my understanding of Mr. Weeks’s question that
he jº. to take the New York-St. Louis and New York-Chicago
mail that was destined to go through and handle it in solid cars from
one point to another. f
The CHAIRMAN. That is the through mail, to see whether there
could not be a separation of that, and put into competition with the
various competitive lines traveling over that route.
Mr. SCOTT. Over all of the roads between New York and St. Louis.
As to this I am wholly unable to say. We all know that there is a
very large volume of mail leaving New York for St. Louis each day
by the Pennsylvania lines. On the four principal mail trains, it is
approximately as follows:

e Leave New Weight of º Arrive St. Weight of
Train. York. Mail. Train. Louis. Mail.
Pounds. Pounds.
No. 25------------------ 8.25 a. m. . . . 25,000 | No. 13. . . . . . . . . . . . . . . . . . 8.30 a. m. - - - 15,847
No. 45. ----------------- 6.30 p.m. - - - º 000 | No. 45. . . . . . ... --------. 5.25 p.m.... 49,946
No. 1019---------------- 9.30 p.m. - 000 } ^x
No. 11------------------ 2.50 a. m. 65. 000 No. 11------------------ 1.45 a.m. --- 48,081
Total.-------------|-------------- 197,000 Total.------------|-------------- 113,874
The CHAIRMAN. Is this all the mail that is handled between New
York and St. Louis, or just the mail that is handled by your system 7
Mr. SCOTT. We haul most of the mail between New York and St.
Louis.
The CHAIRMAN. Does that represent all of the mail or only what
you haul ? * -
Mr. Scott. That represents only the mail handled on those four
trains.
The CHAIRMAN. And not all of your trains?
Mr. Scott. No, sir.
Of course these figures refer to the average amount of mail car-
ried over the route, but the 197,000 pounds leaving New York begins
to dissipate almost from the moment it starts and a ..º.º. part
of the mail going into St. Louis did not start from New York at all.
A large mail leaving New York City in these trains is destined to
Trenton, Philadelphia, and intermediate points, and some of it to
points south of Philadelphia; while they receive at Philadelphia
a very large mail for points west as far as the Pacific coast, as well as
receiving and delivering mails at almost every station between
New York and St. Louis.
So far as I know, there are no single cars regularly loaded solid
at New York and carried through to St. Louis on these trains, but
mail for different States is loaded into and taken out of the different
cars at all of the principal stations en route.
RAILWAY MAIL PAY. 227
At the last reweighing the Pennsylvania Lines carried between
Indianapolis and St. Louis a daily average of 145,657 pounds. Of
this almost 14 per cent or, say, 20,000 pounds moved eastbound,
and of the remaining 125,000 pounds it would be a very broad as-
sumption to say that half of this came from New York—I should
guess 25 per cent or less—but if we have 62,500 pounds per day
New York to St. Louis, it could easily be loaded into two cars, and
no two cars of mail would justify a special train from New York to
St. Louis, so that the only thing the Post Office Department could
do would be to put them on some of the existing trains—which they
can do now; however, if this amount of mail was taken from the
existing two exclusive mail trains, the amount remaining certainly
would not justify the continuance of both of them, and, unless the
whole quantity was taken from one of these two trains and the
other left as it now is, the company could not reasonably be expected
to run either of them.
The CHAIRMAN. Then, as I understand, the suggestion made by Mr.
Weeks would not be capable of being put into operation.
Mr. Scott. Of course this is a new question for me and I am only
expressing the views that have occurred to me in the matter. I
should think they would not. That will develop as we go on, though.
Then comes the question of the local service, the cost of which
probably could not be proportionately reduced. We all know that it
takes almost as much space to make separations for 1 ton of mail
as for 2 tons, and separate dispatches of mails would have to be
made from many local points on pouches made up on trains for St.
Louis and points west º: are now included in the through pouches.
As I understand the theory of mail handling on postal cars, it con-
templates a gradual but steady broadening of the scope of separations
as the mails approach their final destination. For instance, the clerks
on west-bound mail trains leaving New York, Philadelphia, Wash-
ington, and other large mail-producing centers, concentrate their
efforts first on mail to be dispatched at nearby points and the mak-
ing up of pouches for connections or for return on trains in opposite
directions; later, they take up city distribution for some of the more
important cities served by their pººl. train; then separations for
urposes of expediting dispatches on immediate connections, and,
#. y, separations for nearby States via different connections from
large terminals like Chicago, St. Louis, Kansas City, Omaha, and St.
Paul. At all times from the departure of the train from the initial
point there are pouches and sacks on the racks into which mails picked
up en route are being consolidated for final distribution in Kansas,
Colorado, Arizona, New Mexico, California, Utah, the Dakotas, Ore-
gon, and Washington, etc. . Mail from New York and Philadelphia and
other points in the Éast destined to these far western States is not
handled on the trains between New York and St. Louis or New York
and Chicago, except to the extent referred to above. . .
I am speaking with reference to our own line. I do not know what
the New York Central does in this matter.
On the contrary, mails from the far West, as well as the local mails,
must be assorted on the east-bound trains for final despatch.
This being the situation, we will assume that a certain volume of
mail for Chicago and points beyond is awarded to, say, the Erie Rail-
228 RAILWAY MAIL FAY.
road Co., to be handled in solid car or train loads. There would be no
necessity for the handling of these mails en route, and consequently
no clerical force, but there would still remain on the New York
Central Lines all of the mail traffic from the New England States and
that to and from the large cities and contiguous territory which it
serves, requiring a force of clerks and car space almost if not fully
equal to that now used. Obviously there could be no concentration
of the east-bound movement of through mails, because at Chicago and
St. Louis these mails have reached points from which distribution for
final dispatch must be made and to a large extent they become local
to the line over which they are routed.
Even if it were practicable to concentrate any considerable quantity
on the Erie Railroad, it would be necessary to organize a force of
clerks for distribution purposes, while ample facilities are already
available on the various local lines.
As I see it, the Erie Railroad Co. could only afford to carry this mail
at a rate that would compensate it for the movement in both direc-
tions, and the Post Office Department could not make a reduction in
its expenses on the local lines at all proportionate to the reduced
weight while the weight remaining on the local lines would, under the
existing law, take a considerably higher rate than it does now.
It must be remembered that so far as the weight is concerned, all
of the mail between New York and St. Louis, and a great deal more,
could easily be handled on one train per day, but a train so loaded
would not permit any work being done on it.
The CHAIRMAN. In that connection you mean so far as the weight
is concerned the car has the carrying capacity for all of the mail,
but it would not enable them to have the space to work the mail in
the car.
Mr. SCOTT. That is the idea.
If any substantial part of this mail was to be consolidated on one
train, a special movement would be necessary in order to make the
connection at St. Louis; but it seems to me that such an arrangement
would inevitably result in a discontinuance of some of the existing
fast mail trains, and while it would no doubt give a very satisfactory
service for New York, would result in seriously retarding the mails
from all intermediate points destined to the territory west of St.
Louis. It is hardly possible for any person, looking at this proposi-
tion from one side only, to do more than speculate as to the out-
come. As it appears to me, it would revolutionize the whole mail
traffic proposition, and if a service equal to that now in effect is given
to all localities, I can not see how any important economies to the
Post Office Department can be accomplished.
The question has been raised before this committee as to whether
or not a railroad company carrying mail for the General Government
was entitled to receive the same rate of return on that part of its
capital representing property used in the performance of such service
as it receives for that part of its capital invested in freight facilities,
etc., and it has been suggested that there is some vague, illusive, and
indescribable relation existing between the railroads and the Gov-
ernment by reason of which the former are called upon to perform a
service rendered the Government for some price less than it would
do the same service for individuals.
RAILWAY MAIL PAY. 229
A service for the Government is a service for the people. The
people have a right to conduct any service in any way that they may
deem best. Take the Post Office Department, for instance. The
function of free communication between all parts of the country is a
matter of such vital importance to the people individually and col-
lectively that the element of cost has to a large extent been lost
sight of. In no other country in the world is there a postal service
so complete in all its details. It is true the newspapers talk about
deficits semiperiodically, and once in a while we have heard of a
surplus; but does anyone know of a single citizen in the whole country
who is willing to forego any of the conveniencies he now enjoys in
order to make the Post Office Department self-sustaining 2 I think
not. Now, if the people want this kind of service, ought not the
people—the whole people—to pay the bill ?
The men who operate the railroads of the United States do not
own them. I think it would be a very great surprise if it could be
known how little of them they do own. They are simply employed
for a special kind of work, and the people who employ them—the
stockholders of the railroads—are plain, simple citizens of the United
States, and to my mind are no more called upon to devote any part
of their property to the service of the people at less than cost than
should stockholders in banks, steel mills, furniture factories, or for
that matter, farmers.
The great reason why a railroad is looked upon as being under
some special obligation to the Government—that is, some obligation
different from that of a steel corporation or a coal company or a
farmer, if you will—is that it gets with its charter the “right of
eminent domain.”
Now, this simply means that in order that the building of a rail-
road might not be stopped by someone who owned, or had bought
for the purpose, a piece of property needed by the railroad, and for
which an unreasonable or sº price was being demanded, the
State says to the railroad company, “You can have this property
ºpºd and take what you need by paying its full value”; that is
all there is to it. Supposing the people had not wanted railroads .
built or had not cared whether they were built or not, do you think
they would have given the railroads any such right 2 Now, so far
as I know, this is the only difference in the relationship between
railroad corporations and the Government and any other corpora-
tion and the Government, and it is the only ground that I am aware
of upon which to base the proposition that the railroads should per-
form a governmental service at a less rate than it gives the public.
The CHAIRMAN. You do not think there is anything in the protec-
tion due to the carriage of the mails or noninterference with the
carriage of the mails?
Mr. SCOTT. In the case of a strike, I would say yes. Otherwise, I
think the protection is the same that the Government gives to other
corporations. - *
e are before you, gentlemen, in order to protect the revenues of
the companies which we represent, and I want to say that the rail-
road officials of the country generally look upon the existing condi-
tions with the utmost apprehension. Comparing the year 1912 with
the year 1909, the operating revenues increased $433,174,027, or 16
230 RAILWAY MAIL PAY.
per cent, but the net operating income, after paying taxes, only
increased $7,180,844, or 0.88 per cent. Taxes increased $32,946,125,
or 35 per cent. , Rates, both passenger and freight, have for many
ears been stationary or in a downward scale, while expenses for
}. wages and materials are going up by leaps and bounds. We
all recognize the right of the Government and the obligation of the
Post Office Department to conduct its business in the most economical
manner consistent with reasonable recognition of the rights of the
railroads, and we are only here to ask for a fair and impartial decision
* the part of this committee and Congress as to the reasonableness
Of Our contention.
The CHAIRMAN. The system with which you are connected is mak-
ing extensions continuously, is it not ?
Mr. Scott. Only in the way of building branch lines occasionally.
The CHAIRMAN. Take the Pennsylvania system, as a whole; in the
determination as to whether they will extend or build any branch
line or extend in any way any of their lines, do they take into calcu-
lation any railway-mail pay that they would receive from the
Government 7
Mr. SCOTT. I should think not.
The CHAIRMAN. It would not be considered 3
Mr. Scott. I should think not.
The CHAIRMAN. Then is there anything in this viewpoint: The
flºº continually comes up in my mind that the railway mail pay,
rom one phase, is a sort of by-product of transportation. You do
not think that is sound 7
Mr. Scott. I think it is to a certain extent, but we have always
felt it ought to pay its fair proportion of the traffic movement.
The CHAIRMAN. Then to your mind there is absolutely no dis-
tinction, if I catch your idea, between mail compensation and com-
pensation for Ordinary transportation—that is, freight, passenger, or
*g." they should all be dealt with exactly the same?
. SCOTT. That is my general view. Of course we all recognize
our obligation to move the mail and to give the service to the public,
but as a matter of compensation we think it ought to be all on the
same basis.
The CHAIRMAN. Do you not think you get an indirect benefit from
the improvement in mail facilities in business in general? Is not all
business founded and dependent on mail facilities and benefited by
improved mail facilities?
Mr. SCOTT. I think I would answer that question by suggesting
that business and the mail facilities are improved by the railroad
facilities. I think they go jointly together. I do not see how you
can separate them.
The CHAIRMAN. There is much force in that, but is there not an
indirect benefit to the transportation companies in this extension
incident to improved mail facilities because of the dependence that
business has upon the method of intercommunication between
citizens?
Mr. SCOTT. I think so; yes.
The CHAIRMAN. That does not apply to business ordinarily—that
is, to freight and passenger business—or is there anything in that
viewpoint, in your opinion?
RAILWAY MAIL PAY. 231
Mr. Scott. I would hardly think it went that far, Senator.
The CHAIRMAN. Then the only difference that you make between
freight, passenger, and express service and the mail is the difference
that you have given in your statement and the protection of the
Federal Government in the case of strikes 3
Mr. Scott. Yes; I am speaking from the standpoint of the financial
benefit to the company.
The CHAIRMAN. Has not the Pennsylvania Railroad done business
at a very low cost, or even at cost, for the purpose of getting business
from competitors heretofore ?
Mr. Scott. I think all classes of corporations do some business for
much less than cost when they are in competition.
The CHAIRMAN. Do they do it in cases where they are not in com-
petition, but with the idea of building up business in general, and
thereby indirectly receiving the compensation in the total gross
receipts?
Mr. SCOTT. I think that has been done in the past more than it is
done at present. -
The CHAIRMAN. Due to the law and regulations Ž
Mr. Scott. Yes, sir.
The CHAIRMAN. Not because of a policy adopted by the railroads?
I put that not assertively, but interrogatively.
A. SCOTT. I do not know that I could answer the question clearly.
I do not know that I understand the drift of it. I think the railroad
companies in the º had to develop certain industries on their
lines, and before the existing regulations with regard to railroads,
they used to give them advantages and benefits to enable them to
prosper for the purpose of producing tonnage later on.
The CHAIRMAN. And you do not think the same principle would
apply to the carriage of mail, because of the increase in business in
general, and secondly, the increase in passenger and freight service
incident to the benefit of improved mail facilities?
Mr. SCOTT. I should think that that was a joint and coordinate
growth and benefit. There is one thing I would like to say with
reference to the matter mentioned by Mr. Mack, and that is the
question of the side deliveries. The Pennsylvania Lines paid out,
or, as I recollect it, in connection with the statement to the Post-
master General, they made the statment that they paid out directly
for delivery service over and above that performed by the joint
employees $50,000 a year.
The CHAIRMAN. The Pennsylvania Co. receives how much per
annum in all its systems of railway mail pay?
Mr. Scott. About $5,800,000.
Mr. LLOYD. That is nearly exactly in the same per cent.
Mr. SCOTT. Yes; the cash outlay for side and terminal service on
our lines is almost exactly the same per cent of the grosss mail pay
that it is on the Missouri Pacific. I think the railroads can perform
that service much more cheaply than the Government directly, and I
think the railroads would be perfectly willing to perform that service
at direct cash cost plus a fair division of the expense where railroad
employees perform the service without specific compensation.
The CHAIRMAN. Then, so far as your system is concerned, the side
service would be eliminated, from your viewpoint, as a present injus-
232 RAILWAY MAIL PAY.
tice to your company by the allowance of $50,000 and a fair appor-
tionment and allotment for the postal service as performed by your
employees, for which we make no direct outside payment. Have you
any idea what that would amount to in dollars? -
Mr. SCOTT. I have not. .
Mr. LLOYD. What would be the method of ascertaining that ?
Mr. Scott. I think the figures were given in the statement of
November, 1909. I think that information was given in those state-
ments. They are on file with the Post Office Department, and I have
a copy of them at home.
Mr. LLOYD. You could get a copy and put that statement in the
record. - *
Mr. Scott. Yes. You mean the statement I have just made 2
Mr. LLOYD. The specific statement, in dollars, of your estimate of
COSt.
Mr. Scott. Yes; I think possibly Mr. Bradley can put it in with
reference to the entire system. What I wanted to get before you
gentlemen was this: That we do not believe that that messenger
service will ever cost anything like $4,300,000, and while we want to
be relieved of the legal responsibility under which we are now required
to perform that service, we would be glad to cooperate with the Post
Office Department in doing it in the most economical manner in which
it can be done.
Mr. LLOYD. Could you not render this branch service much better
than the Post Office Department, where the mail is taken to the sta-
tion and must remain there to be placed on a night train, and where
mail has to be received from a ift train to be delivered to the post
office in the morning? Your people can do that a great deal better
than the Post Office Department, can they not ?
Mr. SCOTT. I think we can, but we do not like to accept that re-
sponsibility, because if anybody comes in and steals the mail the
Post Office Department fines.us for not taking care of it.
The CHAIRMAN. In your system and method of accounts, do you
show in addition to the receipts that you receive for railway mail pay
and R. P. O. service, what the actual cost of the performance of that
service is, so that you know whether you are making an actual loss
or an actual profit, and the amount, whichever it may be 3
Mr. SCOTT. Mr. Chairman, I do not think that there are any rail-
roads who show in their accounts a direct charge for the mail busi-
ness or the express business or the passenger business. All we have
are average figures as to the average earnings and cost per passenger
or the average earnings and cost per passenger train. In 1898, when
Mr. McCrea made his statement, and at every other time that we
have attempted to secure the information we have tried to do so by
finding out what proportion of the space occupied on passenger trains
was occupied by mail, passengers, and express, and that is all we
have in regard to the cost.
Mr. LLOYD. Is it not true that every time you undertake to make
i. estimate of cost to yourselves, that you go right back to the space
asis 3 -
Mr. SCOTT. With reference to passenger service, yes.
Mr. LLOYD. Any service'? -8.
Mr. SCOTT. No; not for the freight service.
RAILWAY MAIL PAY. 233
Mr. LLOYD. I am talking about the mail in connection with express
and passenger service. For instance, take a passenger coach, a mail
coach, and an express coach; in order to determine how much the
mail should pay, you ascertain the space that is used for mail, the
space that is used for passengers, and the space that is used for ex-
I’éSS. -
p Mr. Scott. Almost invariably, but some roads divide it on the
basis of earnings.
Mr. LLOYD. Then why would you say that the same basis is not
the proper method of determining what your compensation should be 2
†. §. Mr. Lloyd, I do not know anything about the space
basis. That is, I do not know anything about where it is going to
jead us. If we could agree with the Postmaster General upon the
percentages and upon a division of the expenses between passenger
and freight service, I do not know but what this might work out very
satisfactorily to the railroads.
Mr. LLOYD. Is not this true: The thing that has alarmed the rail-
roads is the statement made by the Postmaster General that the
space basis would result in a saving of $9,000,000?
Mr. Scott. Why, undoubtedly.
Mr. LLOYD. If that is true, you people would naturally be opposed
to it because it would cut down your pay ?
Mr. Scott. Undoubtedly.
Mr. LLOYD. Forgetting all about that, for the sake of argument,
is it not true that, after all, every one of us must necessarily come
back to the space basis to determine what should be the compensa-
tion ?
Mr. SCOTT. I do not know any other way to do it.
Mr. LLOYD. Then there seems to be a difference of opinion among
you gentlemen. -
Mr. Scott. Pardon me, Mr. Chairman. I do not say that I am
willing to take the space-cost basis as a basis for fixing the payment
for mail pay; that is, the cost as a basis for fixing the payment. I
do not think cost is a proper basis for fixing rates. I think the value
of the service should be the basis of fixing rates.
Mr. LLOYD. Do you not, in making your freight rates, take into
consideration the cost 3
Mr. Scott. Mr. Chairman, the freight-rate proposition is a very old
one, and in fixing rates to-day it is almost invariably adjusted on the
basis of competitive rates. The rates were established many, many
years ago, and the present rate structure is the development of every-
thing since the railroads started.
Mr. LLOYD. Can it be improved upon 3
Mr. Scott. I do not know of any way in which it could.
Mr. LLOYD. You think then that it has been solved 3
Mr. Scott. I would no say that. I am not an expert rate man,
but it seems to me it is wonderful the way the rate development of
this country has progressed without any scientific basis for it, and that
to-day it moves the traffic all over this country from one end to the
other in the way that it does.
Mr. LLOYD. That is due to the development of the country and the
necessity of the citizens requiring transportation, is it not ?
234 RAILWAY MAIL PAY.
Mr. SCOTT. No; it seems to me it is simply the development of
those great laws of “supply and demand” and “competition.”
Mr. LLOYD. Do you figue that the Pennsylvania system, or that
portion of it with which you are connected, makes a profit or a loss
on handling the mail?
Mr. SCOTT. The statement that we rendered to the Post Office
Department, as I recollect it, would show that the Pennsylvania
Lines West of Pittsburgh made $10,000 over their operating expenses
and taxes. -
Mr. LLOYD. What amount did they receive—that is, the whole
system—$5,800,000 %
Mr. SCOTT. Yes, sir.
Mr. LLOYD. That showed a profit over operating expenses and
taxes of $10,000, with the receipt of $5,800,000, more than 10 per
cent of the total railway mail pay and R. P. O. pay of the United
States ?
M SCOTT. Yes.
Subsequently Mr. Scott furnished the committee the following
explanatory statement: -
There is a misunderstanding here due to the fact that in one case we have been speak-
ing of the Pennsylvania lines west of Pittsburgh (about 4,900 miles), while in the other
case the Pennsylvania system (about 10,000 miles) is referred to. The mail pay of
the whole Pennsylvania system is in round figures $5,800,000 per annum. The state-
ments submitted to the Post Office Department for the month of November, 1909,
show that the lines west of Pittsburgh received about $10,500 for the month in excess
of the actual operating expenses and taxes, while the line east of Pittsburgh received
$39,500 less than it cost them for operating expenses and taxes, or for the entire system
about $29,000 less than the actual operating expenses and taxes for November, 1909, or
at the rate of $348,000 per annum.
Mr. LLOYD. From a dollar standpoint purely, eliminating any
indirect benefit incident to the carrying of the mail, in the way of
prestige with competing lines in the way of business development
incident to the mail facility, would you rather continue carrying the
mail at the present method of compensation or discontinue it? In
other words, would you rather abrogate and throw up all your con-
tracts : z
Mr. SCOTT. I should say no, because we have our trains going over
the road, and whatever we get on those trains over the operating cost
and taxes, contributes something toward the fixed or . charges
and we can afford to haul it rather than not take it at all.
Mr. LLOYD. Then the $10,000 profit over and above operating
expenses and taxes would justify you in the continuance of the busi-
ness, even under the present compensation that you receive, rather
than surrender the contract?
Mr. Scott. I would not want to say from a dollars and cents stand-
Fº that that justifies it, but we would not feel justified in giving
that up. * ,
Mr. ion, I am eliminating that and dealing with it from a dollar
standpoint only. •
Mr. SCOTT. Answering that question in that way, I do not think
the $10,000 would pay us (the Pennsylvania Lines West of Pitts-
burgh) for the expense, responsibility, and the extra service that we
perform. :
RAILWAY MAIL PAY. 235
Mr. LLOYD. Viewing it from the cold standpoint of dollars and
cents, would you rather not carry the mails at all than to receive
the present compensation ?
M. SCOTT. At only $10,000 over the actual cost; yes. From the
dollars and cents standpoint, I would say yes.
Mr. LLOYD. If you did not carry the mails, viewing it solely from a
dollars and cents standpoint, your competitors would. , Would you
not rather carry it than to have your competitors carry it?
Mr. Scott. I do not know that I would like to commit my company
on this proposition. If you will let me give my own personal views,
without committing my company, I would say this
Mr. LLOYD. You are not committing anybody.
Mr. Scott. I have felt this way about it: I have believed that the
railroad company that did not carry the mail, and could thus make
its passenger schedules in order to accommodate its passengers,
would be better off without the mail than with it. We take our pas-
senger train into Cincinnati at 6.40 in the morning. Who in the
world wants to get into Cincinnati at that time in the morning 2 We
take our train into Chicago, from Cincinnati, at 7 o'clock in the morn-
ing, winter and summer. We fix the leaving time of our trains at
New York to accommodate the mail in order to make the connections
at St. Louis. My own personal opinion is that the railroad company
that could eliminate the mails would afford so much better passenger
service as to attract the passengers to its trains. That is merely a
personal view of the matter.
The CHAIRMAN. To return, you say that the space is the sole
determining factor in your passenger and express rates, and not
weight 7 -
Mr. SCOTT. No; we do not weigh the passengers, of course.
The CHAIRMAN. I understand that. But is not the rate you deter-
mine upon primarily based on the carrying capacity of the train and
of the car, in the weight of material, rather than the space it has 2
Mr. SCOTT. In fixing passenger and express rates ?
The CHAIRMAN. Yes; do you not think that the carrying capacity
is so many tons Ž
Mr. SCOTT. Oh, no. With reference to the passengers the capacity
is the number of passengers that can be accommodated in a given
train. -
The CHAIRMAN. I understand that, but the rate is based on the
carrying capacity in weight of the train, is it not ?
Mr. SCOTT. Weight' is the prime factor in fixing rates, because the
Fº activity of a railway consists in hauling weight, or trains,
rom one place to another.
The CHAIRMAN. Therefore, is not the fundamental basis on which
all rates are founded weight and not space, and is not space supple-
mental in passenger and express service? I am not a traffic expert,
you understand.
Mr. SCOTT. I am not either, and I do not know that I would like
to answer that question categorically. The passenger rate situation
is very much like the freight rate situation; it has grown up through a
series of years, and our passenger rates to-day are not fixed by the
railroad company any more, but they are fixed by law; they are not
236 RAILWAY MAIL PAY.
a commercial proposition. We are not able to fix a passenger rate
at what we think will be a compensatory rate.
The CHAIRMAN. Prior to legislation fixing the passenger rates,
was not weight really the basic measure, and the space supplemental
to the weight, namely, the carrying capacity in weight 3 Was not
'that the determining factor as to what the charge would be for the
space occupied by the passenger or the express?
Mr. Scott. I do not think so, Mr. Chairman.
The CHAIRMAN. We thank you very much, Mr. Scott.
Following are the statistical tables mentioned at the beginning of
Mr. Scott's statement:
RAILWAY MAIL PAY.
237


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‘O INGIWALVIS
STATEMENT D.
Pounds and tons car-
ried daily Per cent carried in— Average
se * Tons 1 tons car-
No. Routes. º mile per .#
e Pounds Tons day. Baggage º: Postal | *.
OUIIACIS. g CaLS. C2FS C2. TS. daily.
13.1032 || Pittsburgh—Columbus: - -
1912------------------------------------------------------------------------- 190.90 222,048 111.02 || 21,193.71 1. 07 1.84 97.09 107.79 .
1897------------------------------------------------------------------------- 190. 77 105,007 52.50 | 10,015.40 . 30 . 90 98.80 51.80
1131015 | Columbus—Indianapolis:
1912------------------------------------------------------------------------- 187.82 154,487 77.24 14,507.21 5. 19 1.19 93. 62 72. 31
1897------------------------------------------------------------------------- 187.75 84,517 42. 26 7,934.00 1. 60 .80 97.60 41. 20
133002 || Indianapolis—East St. Louis:
1912------------------------------------------------------------------------ 238. 22 145,657 72.82 || 17,347.18 1.56 2. 29 96.15 70.02
1897------------------------------------------------------------------------ 238.59 83,058 41. 53 9,908.40 , 50 .80 98.70 41.00
Pittsburgh–East St. Louis:
1912------------------------------------------------------------------- 616.94 171,982 85.99 || 53,048.10 2.43 1.77 95.80 82.38
1897------------------------------------------------------------------- 617. 11 88,667 44.33 27,857.80 1, 00 . 90 98.10 43. 50
;

#
3.
Number of postal cars in inn–
daily service. Compensation f
- Annual Rate for
Average ostal-car cars
pace
No. Routes. R. P. O. Storage. *. Rate per #. per mile
(space º: Total * | For Weight | ton per For car (cents).
º not paid | *oºl. * of mail. mile space. d
or). for). (cents).
1310.32 || Pittsburgh—Columbus:
1912---------------------------------------------------------- 24 8 32 3.37 $431,372.20 5.57 $78,507. 63 2,150,298 3.65
97---------------------------------------------------------- I8 4 22 2, 30 236,507.00 6.46 95,385.00 | 1,531, 6, 23 .
131015 || Columbus—Indianapolis:
912---------------------------------------------------------- 20. 9 8 28.9 2.50 354, 110.00 6.04 || 63,371. 27 | 1,870,481 3.39
* * * * * * * * * * * * * * * * * * * s sº º sm as e º ºs e s as sº se as s sº º ºs e º sº sº as º gº as s is ſº e º ºs as sº sº º sº gº as 14 4 18 2, 30 191,508.00 6.61 57,169.00 1,233,517 4, 63
133002 || Indianapolis—East St. Louis:
1912---------------------------------------------------------- 16 8 24 2.91 368,214, 27 5.81 56,822.37 1,987,708 2.86 &
1897---------------------------------------------------------. 14 4 18 2.30 239,695.00 6.62 95,436.00 | 1,567,536 6,09
Pittsburgh–East St. Louis:
1912---------------------------------------------------- 20 8 28 2.94 | 1,153,696.47 5.79 || 198,701.27 | 6,008,487 3.30
1897---------------------------------------------------- 15 4 19 2. 30 667,710.00 6, 57 247,990, 00 4,332,936 5. 72
1 Includes earnings and mileage of through trains run via Piqua and Dayton.
NOTE.-Figures in parentheses are for 1897.
2 Includes storage and deadhead mileage.
Rate received per ton per mile, 5.79 cents (6.57 cents) × tons carried per car, 2.94 (2.30), + amount received for car space per car-mile, 3.30 cents (5.72 cents) = 20.32 cents (20.80
cents) received per car-mile.
Amount received per car-mile, 20.32 cents (20.80 cents) -- weight of car
60.66 (41) tons, -- weight of mail, 2.94 (2.30) tons =3.19 (4.80) mills per ton-mile.
Average load per freight car, 18.12 (13) tons, X average rate per ton miſe, 0.55 (6.30) mills = 11.87 cents (8.2 cents), amount received per freight car-mile. *
Average amount received per freight car mile, 11.87 cents (8.2 cents), -- weight of car, 19.41 (13) tons, + weight of load, 18.12 (13) tons=3.16 (3.20) mills per ton per mile.

Average speed mail carried, about 35.68 (35) miles per hour.
Average cost mail car, about $11,605 ($5,500).
Average speed freight carried, about 11 (11) miles per hour.
Average cost freight car, about $915 ($500).

§
|

STATEMENT E.
Pounds and tons C2.I'- Per cent carried in— Average
ried daily. T tonS Car-
tº OnS 1 * * * *
No. Route. º mile per ;
& † Pound Tons day. Baggage º: Postal CarS
S. g C8] S. C3IS C2,IS. daily.
131002 || I’ittsburgh—Chicago: - -
1912------------------------------------------------------------------------- 468.43 164,584 82. 29 38,547 1. 55 7. 78 90.67 74.61
1897------------------------------------------------------------------------- 468.63 60,425 30. 20 14, 153 2.00 4.00 94.00 28.40
Numºnia Compensation—
Average Annual *::: .
No. Route. R. P. O. Storage i. + Rate per º; ºf perile
(Space (Space Total * | For Weight | ton per | For car ge. (cents).
p. not paid g of mail. mile space.
or). for). (cents).
131002 || Pittsburgh—Chicago: -
1912---------------------------------------------------------- 2 16.75 12 28. 75 2.59 || $809, 489. 19 5.75 |$138,861, 17 4,622,979 3.00
1897---------------------------------------------------------- 10.00 - - - - - - - - - - 10.00 2.80 354,903.00 6.86 117, 157.00 | 1,710,500 6.85
1Includes storage and deadhead mileage.
2 Chicago-Cincinnati Cars running into and out of Chicago over route 131002 are not included. :-
NOTE.-Figures in parentheses are for 1897.
per mile
Average cost mail car, siſºo; $5.5%).
*-*.*.
l
, 11 (11) miles per hour,
ilisi Ii.6% 8.2) cents, amount received per freight car per
Amount received per gar-per mile, 17.89 cents (26.1 cents) + weight of car, 60.66 (41) tons + weight of mail, 2.59 (2.8) tons = 2.93 (6) mills per ton per mile.
Average load per freight car, 18.76 (13.6) tons X average weight 6.23 (6) m per mil
Amount received per freight car mile 11.69 cents (8.2) cents + weight of car, 19.41 (13) tons + weight of load, 18.76 (13.6) tons = 3.06
Average speed mail carried, about 35 (35) miles per-hour. Average speed freight carried
Average cost freight car, $913,61 ($500).
€.
(3.1) mills per ton per mile.
Rate received per ton per mile, 5.75 cents (6.86 cents), X tons Carried per car, 2.59 (2.8), + car space per mile 3 (6.85) cents = 17.89 cents (26.1 cents) amount received per car
RAILWAY MAIL PAY.
241

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|
STATEMENT K–Continued.
Number of postal cars in
te daily service. Compensation—
Average Annual #:
No. Routes. R. P. O. Storage tº. Rate per º; ºf periile
(space (space Total * | For weight | ton per For car ge. (cents).
paid not paid § of mail. mile space.
for). ' for). - (cents).
109004 || New York–Philadelphia:
1912---------------------------------------------------------- 36 18 54 3.55 || $430,249.77 5.40 $61,716.98 || 2,030,310 3.04
1897---------------------------------------------------------- 30 6 36 3.50 310,256.00 6.06 || 60,314.00 1,191,141 5.06
110001 || Philadelphia-Pittsburgh:
1912. --------------------------------------------------------- 28 15 43 4.29 1,431,543.92 5.50 | 171,708.57 | 6,843,828 2.51
as as as as s = e s = • * * * * * * * * * * * * = s. s. s. s = e s = * * * * * * * * * * * * * * * * * * * * * * * * * * * 18 6 24 3. 50 736,587.00 6.20 159,210.00 3,099,288 5. 14
13.1032 || Pittsburgh—Columbus:
1912---------------------------------------------------------- 24 8 32 3. 37 431,372.20 5.57 78,507. 63 2,150,298 3, 65
97---------------------------------------------------------- 18 4 22 2. 30 236,507.00 6.47 95,385.00 1,531,883 6.23
2131015 Columbus—Indianapolis:
1912---------------------------------------------------------- 20. 9 8 28.9 2.50 354, 110.00 6.04 || 63,371.27 | 1,870,481 3.39
1897---------------------------------------------------------- 14 4 18 2.30 191,508.00 6.61 57,169.00 1,233,517 4, 63
133002 || Indianapolis—East St. Louis: -
912---------------------------------------------------------- 16 8 24 2.91 368,214.27 5.81 56,822.37 1,987,708 2.86
1897---------------------------------------------------------- 14 4 18 2.30 239,695.00 6.62 95,436.00 1,567,536 6.09
New York—East St. Louis: -
1912---------------------------------------------------- 24 11 35 3.52 3,015,490. 16 5.58 432,126.82 14,882,625 2.90
1897---------------------------------------------------- 17.4 4.9 22.3 2.90 | 1,714,553.00 6.32 467,514.00 | 8,623,365 5.42
NoTE.—Figures in parentheses are for 1897.
Amount received per ton per mile, 5.58 cen
amount received per car per mile.
1 Includes storage and deadhead mileage.
2 Includes earnings and mileage of through trains run via Piqua and Dayton.
Amount received per car per mile 22.54 cents (23.75 cents)+ weight of car 60.66 (41) tons + weight of mail 3.52 (2.9) tons = 3.51 (5.4) mills per ton per mile.
Average load per freight car 25.10 (12.97) tons X average rate per ton per mile 5.72 (5.2) mills = 14.36 cents (7.4 cents), amount received per freight car per mile.
Average amount received
er freight car mile 14.36 cents (7.4 cents) + weight of car, 19.41 (13) tons + weight of load 25.10 (12.97) t
Average speed mail carried, about 35 (35) miles per hour. Average speed freight carried, about 11 (11) miles per hour.
Average cost mail car, about $11,605 ($5,500). Average cost freight car, about $913.61 ($500). -
ons =3.23 (2.6) .#
ts (6.32 cents) X tons carried, 3.52 (2.9),4- amount received for car space per mile, 2.90 cents (5.42 cents), - 22.54 cents (23.75 cents),
s per ton per mile.




RAILWAY MAIL PAY. 243
STATEMENT OF MR. H. M. wadE.
The CHAIRMAN. Mr. Wade, it will be necessary for you to be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Please state your name, age, residence, and
occupation.
Mr. WADE. H. M. Wade; 48; agent of the mail traffic and general
baggage agent, Erie Railroad. I have been an employee of the Erie
Co. for about 3 years and in the Government employ for about 23%
ſea,I’S.
y The CHAIRMAN. In what capacity were you with the Government?
Mr. WADE. As railway postal clerk, clerk of the Railway Mail Serv-
ice, and Assistant Superintendent of the Railway Mail Service. .
The CHAIRMAN. Have you any prepared statement to submit to the
committee ?
Mr. WADE. I have. Before submitting that, Senator, I would like
to call attention to the paragraph in the proposed bill in regard to the
railroads providing side messenger service.
The CHAIRMAN. You mean in the suggested bill of the department 3
Mr. WADE. The suggested bill of the department.
The CHAIRMAN. Submitted by the Postmaster General under date
of January 20, on page 109 of the preliminary report 3
, Mr. WADE. The proposed bill would require the railroads to provide
à. terminals and direct transfer service, etc. This would require the
railroads, according to my understanding, to carry the mails to all
post offices, regardless of the distances, whereas the present regula-
tions only require, them to carry it to post offices where they are
within easy run of the railroad station. That would make a very
material difference in the cost to the railroads.
The CHAIRMAN. What difference, in your opinion ?
Mr. WADE. At all stations where the Government now carries the
mail outside of the 80-rod limits the railroads would be required to
assume that expense.
The CHAIRMAN. Which you figure at $1,500,000 %
Mr. WADE. I have not made any figures on that. -
The CHAIRMAN. Could the appropriation for the messenger service
be ºpplicable to the side service under this viewpoint which you
resent, -
p Mr. WADE. Practically.
The CHAIRMAN. Will you kindly give us your statement 3
Mr. WADE. My statement is simply a comparison showing the ine-
quality of rates that would exist under the space-basis service:
The following table, comparing operating expenses charged to mail service and
car-foot miles made in mail service on several railroads, showing either an approxi-
mately equal amount of service or allowed about an equal amount for operating
expenses and taxes for mail service in Document No. 105, indicates a few of the
many varying results obtained.
244 RAILWAY MAIL PAY.
Operating Operating
expenses Car-foot miles expenses
chargeable made in mail per car-
to mail Service. mile, 60-
Service. foot car.
Astoria & Columbia River................................... $1,237.76 225,571.80 $0.3292
St. Johnsbury & Lake Champlain. . . . . . . . . . . . . . . . . . . . . . . . . . . . 857, 55 224, 184.05 . 2295
Colorado sº & § Creek---------------------------- 823. 69 29, 547.00 . 1672
Columbia & Puget Sound R. R. ............................. 815. 07 52,399.76 .9330
Columbia, Newberry & Laurens R. R. . . . . . . . . . . . . . . . . . . . . . . . 158.71 40,618.50 .2344
iénver, Northwestern & facific..............I.I.I.I.I.I.I. 2,396.60 256,956.00 . 5596
Duluth, South Shore & Atlantic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,442.61 813, 548. 55 . 1801
Louisville & Nashville. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,175.89 | 18, 191,222.62 . 1489
Missouri Pacific. ..................................... * - - - - - - - 58, 575. 10 | 16,887, 104.88 .2081
great Northern-s-------------------------------------------- 100, 501.66 30,889,628.27 . 1952
Chicago, Rock Island & Pacific.... . . . . . . . . . . . . . . . . . . . . . . . . . . . - 84,348.16 || 30, 188,296.09 . 1676
Chicago, Milwaukee & St. Paul. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,965. 16 || 36,974,295.97 . 2092
Atchison, Topeka & Santa Fe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,614.87 | 35,762,263.37 . 1570
Pennsylvania R. R.------------------------------------------ 138,686. 11 || 46,974,972.68 . 1771
New York Central & Hudson River R. R. . . . . . . . . . . . . . . . . . . . 129,886.96 || 49,076,804.02 . 1588
New York, New Haven & Hartford R. R. . . . . . . . . . . . . . . . . . . . . 69,381.99 14,687,728.45 .2834
Cleveland, Cincinnati, Chicago & St. Louis. . . . . . . . . . . . . . . . . . . 50,847.86 17,610,438.37 . 1732
Port Townsend Southern. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.89 1,869. 16 1. 6980
Potomac, Fredericksburg & Piedmont. . . . . . . . . . . . . . . . . . . . . . . 51.83 19,619.60 . 1585
Pittsburgh & Lake Erie-------------------------------------. 4, 197.92 674,064.79 . 3726
New York, Chicago & St. Louis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,589.98 837,040.38 . 1139
Analyzing the last two items, P. & L. E. and N. Y. C. & St. L., we
find that the P. & L. E. has five mail routes, viz, 1101.23, 110156,
110159, 110187, and 110222, but one route, No. 1101.23, 65.10 miles
in length, carries an average of 20,658 pounds per day, which is
about seven-eighths of the mail carried by all of the routes. There-
fore, the concentration of mails on this line is very largely on one
route, which, under ordinary circumstances, would be considered as
favoring economical operation. However, compared with the serv-
ice on the N. Y. C. & St. L. Railroad, route No. 131089, where a daily
average weight of only 1,527 pounds is carried, the result is very
interesting, as it will be noted that document No. 105 credits the
P. & L. E. with $4,197.92 operating expenses and taxes for 674,064
car-foot miles of mail service, whereas the N. Y. C. & St. L. Rail-
road is credited with an operating expense of $1,589.98 for 837,040
car-foot miles of mail service.
The CHAIRMAN. How do you account for that seeming discrep-
ancy?
Mr. WADE. It is in the figures.
The CHAIRMAN. Is it an error in the computation or an error in
the system of computation? -
Mr. WADE. I think it is an error in the system.
The CHAIRMAN. Then, you give this as a demonstration of the
weakness of the system recommended ? -
Mr. WADE. Yes, sir; the various results that would obtain on
similar railroads.
CLOSED-POUCH SERVICE.
The following table shows all Erie mail routes, with the total average daily weight
of mails carried on each during the last quadrennial weighing; percentage valuation
of all closed-pouch trains shown by the Post Office Department's train valuation
sheets; percentage of car-foot miles credited to closed-pouch Service in Document
No. 105; and the average daily weight of closed-pouch mails based on each of these
percentages. This table shows that the method adopted by the Post Office Depart-
ment for estimating closed-pouch service resulted in reducing the weight more than
50 per cent.
RAILWAY MAIL PAY.
245
* ~ *-** =~

Average daily weight of closed-
pouch mails.
Value of all Percentage of gº tº
Total average closed-pouch car-foot miles Cºg Based on the
daily weight of trains as shown credited to 1909 .# Orl ercentage of
Route No. mail, during º Post Office closed-pouch the value of #. miles
the weighing of Department's Service in closed-pouch Credited to
1909. tralºtion Pºnt trains as shown closed-pouch
S tº dº wºº & in Post Office service in
Department’s Document
train valuation No. 105.
sheets.
107001----------------- 18,964 0.0396 0.0301 751 571
107005----------------- 1,566 . 1409 . 0387 221 61
107006----------------- 773 . 2903 . 0749 224 58
107008----------------- 8,836 .0836 . 04:19 739 370
107009.---------------- 305 . 2041 . 2346 62 72
107091.---------------- 2,131 . 2013 .0594 429 127
107150----------------- 1,723 . 2413 . 0.383 417 66
109017--------------- * 1,754 .2754 . 0715 483 125
109024----------------- 959 . 1814 . 0413 174 40
109034----------------- 515 .4611 . 1746 237 90
109037..... ----- * 1,226 . 1666 . 0766 204 94
109055----------------- 2,814 .0312 . 0692 88 195
109058.---------------- 276 . 2916 .0497 80 14
110020----------------- 702 .0065 . 0.066 5 5
110043.---------------- 584 . 3923 . 1459 229 85
110064----------------- 766 . 0896 .0242 69 19
110.189----------------- 416 . 2027 . 0576 84 24
131005----------------- 18,623 . 2906 . 1301 5,412 2,423
131084----------------- 11,574 .0438 . 0.282 507 326
131059.---------------- 1,614 .3609 . 1612 582 260
131090 "...------------ 9,438 0.042 . 0315 40 297
Total.-----------|----------------|----------------|---------------- 11,037 5,322
I Shortly after the weighing of 1907, additional closed-pouch service
that greatly increased the percentage of closed-pouch mails.
was established on route 131090
If, as Second Assistant Postmaster General Stewart admits, it will be necessary to
weigh closed-pouch mails in order to ascertain the amount of space occupied by them,
there would seem to be no necessity for using any theoretical basis for adjusting the
pay for such service, as it would surely be more equitable to pay for the weight itself,
which provides a fixed basis, instead of using a theoretical method of converting weight
into space, which could not be accurate.
Another means of showing at a glance the inequality of results obtained from the
department’s method of computing space is shown in the following statement.
he ratio per 100 pounds is found by dividing the total mail car-foot miles for the
month of November, 1909, by 30 (number of days in month), and by dividing this
result by the length of route and by the number of hundred pounds of average daily
weight shown by the report of last quadrennial weighing of mails.
Route:
Erie Railroad— Ratio per
Class A– 100 pounds.
107001------------------------------------------------------- 2. Il
107008------------------------------------------------------- 2. 03
? 131006------------------------------------------------------- 1. I?
.131034. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1.94
181090------------------------------------------------------- 1.75
Average unit. ----------------------------------------------- 1, 80
Class B–
107005--------------------------- * * * * * * * * * * * * * * * * * * * * * * * * * * * * 5. 18
107006------------------------------------------------------- 4.84
107009. ------------------------------------------------------ 4. 73.
107091------------------------------------------------------- 3. 58
107150------------------------------------------------------- 4. 18
109017------------------------------------------------------- 3, 78
246 RAILWAY MAIL PAY.
Route—Continued.
Erie Railroad—Continued. Ratio per
Class B–Continued. 100 pounds.
109084. ------------------------------------------------------ 6, 11
110020------------------------------------------------------- 6. 28.
110043------------------------------------------------------- 5. 21
110064------------------------------------------------------- 6.86
110.189---------------------------------- * - - - - - - - - - - - - - - - - - - - - 7. 51
131059. ------------------------------------------------------ 3, 20
109087. ------------------------------------------------------ 4.59
109058. . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7. 92
109024---------------------------------------------------. . . . . 6.82
Average unit.----------------------------------------------- 5. 38.
Class C— i
107002. --------------------------------- --------------------- 1. 24
107004------------------------------------------------------- 2.41
107047------------------------------------------------------- 2.96.
107074------------------------------------------------------- 2.42
10709?------------------------------------------------------- I. O8
109030------------------------------------------------------- 1. 90
109064. ----------------------------------------------------- - 2.05
109066. ------------------------------------------------------ 4. 77
110009.------------------------------------------------------- 1.00
110024------------------------------------------------------- . 75
110136------------------------------------------------------- 1.85
131139---------------------------------------- - - - - - - - - - - - - - - - 1. 54 .
109069. ------------------------------------------------------ 2. 81
109084. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2.45
107104------------------------------------------------------- 4. 30
107096------------------------------------------------------- 1. 27
Average unit.----------------------------------------------- 2. 17
Class D, 109055. -------------------------------------------------- 1. 90
Class B, 131087---------------------------------------------------. 4. 58.
Class A: Full R. P. O., apartment-car, and closed-pouch service.
. Class B: Apartment-car and closed-pouch service.
Class C: Closed-pouch service only.
Class D: Full R. P. O. and closed-pouch service.
Class E: Apartment-car service only.
NoTE.—Between the two extremes the ratio varies approximately 1,000 per cent.
I have classified the 36 routes into classes A, B, C, D, and E, class A
having full R. P. O. apartment cars and closed-pouch service; class B,
apartment car and closed-pouch service; class C, closed-pouch.
service only; class D, full R. P. O. and closed-pouch service; and
class C, apartment-car service only, showing a variation in results of
from 1.80 to 5.38 on the same road.
The CHAIRMAN. The criticism being concretely what?
Mr. WADE. That the results would be unequal rates of pay.
The CHAIRMAN. And the criticism is on the formula adopted, is it? .
.# WADE. No; this is the formula I have used in arriving at this
result.
The CHAIRMAN. I thought you said that was the formula used in
Document 105?
Mr. WADE. No. Their criticism is on their form of arriving at the
result in Document 105.
RAILWAY MAIL PAY. 247
The CHAIRMAN. And you think you have demonstrated the weak-
ness of that formula by the substitution of your formula 3
Mr. WADE. No, sir; this is not intended as a formula for obtaining
that rate. It is a formula for obtaining this variation in the results
obtained by the department's formula. --
The CHAIRMAN. Then your criticism of the department’s formula
is that it causes results tº: vary tremendously in divergence?
Mr. WADE. Yes, sir.
As an example of inadequate mail pay on short routes, your attention is called to the
New Jersey & New York Railroad, page No. 274, Document No. 105, showing the
operating expenses and taxes chargeable to mail service as $310.83 for the month of
November, 1909; revenue from mail service $307.86, less $2.97. This road has two
mail routes: 107104 and 109024, 46–83 miles in length, and has 12-foot mail apartment
car Service on eight trains running 272.23 miles per day, and closed-pouch mail service
on eight trains running 221.83 miles per day, a votal of 494.06 miles per day, for which
the company received pay at the rate of $0.0239 per mile per day, which is a little
more than the first-class passenger fare of the postal clerk who performs service in the
mail apartment car.
It frequently happens that the use of these mail apartment cars requires the opera-
tion of an additional car on the train, as you will note from the attached letter from
Mr. G. W. Kirtley, superintendent of transportation, Erie Railroad Co., dated July 18,
1912. (Exhibit A.) This letter shows that 19 mail apartment cars on 31 different
trains are being operated exclusively for mail service, and this is a little over one-half
of all mail apartment cars in use on Erie Lines.
It also may be interesting to note the revenue per car-mile received from the operation
of a few of the mail apartment cars on the more important mail apartment car trains
which is shown in the following table and is computed from the percentage of value
given each train by the Post Office Department in their statement of weight of mails
and compensation per train for mail transportation that is made up from weights taken
during the quadrennial weighing and is approximately correct:

• * Revenue |Size of mail
Train No. Between percar-mile.} apartment.
Feet.
4 || Marion and Salamanca.--------------------------------------------. $0.1081 30
5 | Hornell and Buffalo. ----------------------------------------------- .0595 20
Return deadhead.
5-| Salamanca and Youngstown ---------------------------------------- . 0562 25
6 | Youngstown and Salamanca. --...-------------...------------------. . 0337 25
7 | Salamanca and Marion---------------------------------------------- . 0.969 30
7 | Marion and Chicago------------------------------------------------- . 0972 30
10 || Jamestown and Youngstown---------------- - - - - - - - - - - - - - - - - - - - - - - - - . 0547 20
11 || Youngstown and Jamestown-------...--------------------------...-- . 0125 20
15 Youngstown and Marion -------------------------------------------. . 0393 20
16 || Marion and Youngstown-------------------------------------------- .0344 20
26 | Salamanca and Susquehanna..............------------------------. . 0434 30
47-25 | Jersey City and Salamanca.-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - .0597 30
226 | Chicago and Marion------------------------------------------------- .0459 30
Baggage compartment not used in any of the above-mentioned mail apartment
Cars, due to the fact that a full car is required for the baggage and express on each
train,
I would also submit a letter from Mr. Kirtley, superintendent of transportation of
the Erie Railroad, which is as follows:
JULY 18, 1912.
Mr. H. M. WADE, Agent Mail Traffic.
DEAR SIR: Papers received with your letter of June 21, to Mr. Stuart relative
70-foot combined baggage and mail car, are returned herewith.
The amount of express shipping between Jersey City and Buffalo in train No. 1 is
too great to be taken care of in a car allowing only 30 feet loading space for express.
248 RAILWAY MAIL PAY.
The combined baggage and mail cars which are being operated exclusively for
mail service are as follows:
Car. Trains. Between— Car, Trains. Between—
603 || 222 and 541 -- Hornell and Salamanca. 615 5, 618, and 6. Salamanca and Cleveland.
604 || 178 and 179. Jersey City to Port Jervis. 617 | . . . . . do------ Do.
606 || 532 and 531. . . Salamanca and Dunkirk. 618 7, 226, and 4-| Salamanca and Chicago.
607 468 and 467. Corning and Rochester. 624 514 and 517..] Buffalo and Jamestown.
608 || 5 (478 DH). Hornell and Buffalo. 625 47, 25, 26, 48, Jersey City and Salamanca.
609 527 and 540. - | Salamanca and Dunkirk. and 130.
610 10 and 11... . . . Jamestown and Youngs- 626 - - - - - do------ Hornell and Buffalo.
town. 627 || 48 and 47---. T)0.
611 15 and 16... . . . Youngstown and Dayton. 628 47, 25, 26, 48, Jersey City and Salamanca.
612 | . . . . . O - - - - - - Do. and 180.
614 || 7, 226, and 4. | Salamanca and Chicago, 629 7, 226, and 4. Salamanca and Chicago.
Yours, truly, G. M. KiRTLEY,
Superintendent of Transportation.
Mr. LLOYD. In that connection, suppose that they were paid for the
space that was used, if a full car was required, you have pay for the
full car. Then there would not be objection at that point?
Mr. WADE. No, sir; but the full car is not required. In none of
these cases is more than 30 feet required for mail purposes. e
The CHAIRMAN. Then is your contention against the present polic
of receiving no compensation on the apartment cars, or is your criti-
cism against the substitution of space for weight as the determinate
factor of the service rendered? gº tº
Mr. WADE. This part of my paper is against the present method of
not paying for full cars, showing that we are obliged to operate
full cars in many instances without car pay?
Mr. LLOYD. But if you were paid according to space you would
get full pay ? -
Mr. WADE. Yes; but we would not get paid for the car. This re-
quiles the operation of a full car.
Mr. LLOYD. But you would get paid for the space used, whereas
at the present time you get no pay at all? -
Mr. WADE. Yes, sir; that is true. . . . ſº
The CHAIRMAN: What are your objections, based on your experi-
ence of 23 years in the Government service, to substitute the plan of
the department of space for weight as the measure of the service ren-
dered 3
Mr. WADE. Chiefly because it, would have no stability. ... It is
subject to the varying opinions of varying officials. If you will per-
mit me, I will also put in a little paper I wrote fitting our own line,
which shows the great elasticity:
To show the great elasticity of the space basis your attention is directed to the full
railway postal car service between Jersey City and Chicago on trains 3 and 8 of the
Erie Railroad.
This service was authorized by the Post Office Department in 1895 at the 60-foot
full postal car rate, and equipment was purchased by the railroad company to fulfill
the requirements of the department. In 1907, I believe, the authorization between
Salamanca and Chicago was reduced to the 50-foot full postal car rate, and in 1908 a
further reduction was made to the 40-foot rate between Salamanca and Marion, leav-
ing the service stated and paid for as follows—Jersey City to Salamanca, 60-foot rate;
Salamanca and Marion 40-foot rate; and Marion and Chicago, 50-foot rate; these differ-
ent authorizations being made with the full knowledge of the department that it
would be an operating impossibility to change the cars, load and unload the mails at
Salamanca and Marion without seriously interfering with the train schedule to the
detriment of passengers as well as mail service and with the full knowledge that
RAILWAY MAIL PAY. 249
more mail was being carried in 1907 and 1908 and more distribution was being per-
formed in the cars than when the original authorization was made in 1895.
No doubt the officers of the Post Office Department who recommended the original
authorization were honest in their judgment that 60-foot cars were needed and the
reductions made were due to a different opinion held by some one of his successors.
The CHAIRMAN. Do you contend that even theoretically space
would not be as scientific a measure of the service rendered as weight?
Mr. WADE. I think not—the space alone.
. The CHAIRMAN. Do you contend that the weight is a more scien-
tific measure of the service rendered than space, eliminating the
personal equation of the individuals who happen to be in charge 7
Mr. WADE. Do you mean by that strictly weight or a combination
of both space and weight?
The CHAIRMAN. As I understand, under the present method, 90
per cent of the mail compensation is determined by weight and 10
per cent practically by space, namely, that portion of the mail that
goes in the R. P. O. cars. Do you agree as to that statement 2
Mr. WADE. I think weight and space should be both considered.
The CHAIRMAN. Both are considered to-day ?
Mr. WADE. Yes, sir. I think that is the principal item on which
it should be based. -
The CHAIRMAN. Would both be considered under the suggested
plan of the department' -
Mr. WADE. Yes, sir.
The CHAIRMAN. Then why do you criticize the suggestion planned 2
Mr. WADE. No; I beg your pardon. The plan of the department
says space only.
The CHAIRMAN. It uses weight on the determination as to the
space occupied in the pouch service.
Mr. WADE. Simply as a means of ascertaining the weight, but not
as the basis on which to pay for the service.
The CHAIRMAN. I do not exactly catch your concrete criticism as
to the substitute plan of the department as represented in this bill.
Would you state your criticism again?
Mr. WADE. My criticism is that it would be too elastic, it would be
subject to the varying opinions of the different officials and would not
be as scientific as a combined weight and space basis. Freight
rates, I think, are based to some extent on the weight of the com-
modity and the space it occupies. I think express rates are, and I
think practically all rates are, except, of course, passenger rates.
You can ship a buggy if it is knocked down and crated cheaper than
if it is on its wheels and occupies more space.
The CHAIRMAN. Then I will put this question: You do not think
the present method of determination as to the payment of mail com-
pensation to the railroads can be improved upon so far as weight is
the determinate factor for the railway mail pay and space being the
determinate factor for the R. P. O. service.
Mr. WADE. I believe that is the best thing I can figure out.
The CHAIRMAN. Do you agree with the gentlemen who have
testified before the committee that an injustice is being done the
railroads by giving them no allowance for side service and allowing
them no compensation for apartment cars and not having a regular
annual weighing? --
Mr. WADE. I do, sir. y
250 RAILWAY MAIL PAY.
The CHAIRMAN. You have heard their testimony ?
Mr. WADE. Yes, sir.
Mr. LLOYD. Having had experience in the Post Office Department,
what is your objection to the quadrennial weighing?
Mr. WADE. We simply do not receive any compensation for the
increase in weight during the four years.
Mr. LLOYD. Have you any other reason ?
Mr. WADE. Well, that is the principal reason. That is the funda-
mental reason. -
Mr. LLOYD. I accept that as your answer, then, that that is the
fundamental reason. But are there any other reasons?
Mr. WADE. None that I think of. y
Mr. LLOYD. Do you think any advantage is taken of anybody
anywhere, under the quadrennial system that would not be taken
under an annual system of weighing?
Mr. WADE. I do not exactly understand what you mean?
Mr. LLOYD. I do not want to state it exactly. I thought possibly
you could answer it in that way. To be specific, it is charged that
the mails are padded somewhat under the present system, and ad-
vantage, in that way, is taken of the Government and that the in-
ducement to padding the mail is the fact that there is such a long
period before there is to be another weighing.
Mr. WADE. I do not think there is anything in that. I think
if a man was crooked once in four years he would be crooked every
€3.I’.
y Mr. LLOYD. There would be more inducement to be crooked for
a four-year period.
Mr. WADE. Well, perhaps. I think there are so few cases of that
kind they are not worth considering.
Mr. LLOYD. I am asking you from both sides. Your impression
is that it is a false idea, that is prevalent in many localities, that the
mails are padded for the weighing?
Mr. WADE. I think it is. In all my experience I never found
but one where there was any suspicion.
The CHAIRMAN. And you have had 23 years’ experience in the
service
Mr. WADE. Yes, sir.
Mr. LLOYD. You have read the stories in the magazines and news-
papers?
Mr. WADE. I do not believe in those things. .
Mr. LLOYD. That is what the people get hold of ?
Mr. WADE. I think most of the railroads and the Government
are honest, so far as that is concerned; I have no reason to believe
otherwise.
Mr. LLOYD, Who would be benefited by the annual weighing,
rather than the quadrennial weighing? &
Mr. WADE. The railroads.
Mr. LLOYD. Would the people be benefited in any way by having
an annual weighing rather than a quadrennial weighing?
Mr. WADE. The greater the compensation the railroads receive,
the better service they would be able to perform. I do not see any
other benefit.
Mr. LLOYD. They are rendering the best service then can now,
are they not : -
RAILWAY MAIL PAY. 251
Mr. WADE. Possibly not. r -
Mr. LLOYD. That is getting at the point I was aiming to reach.
Is it not true that an annual weighing will only result in benefit
to the railroad company and will have the effect of causing the
ºnment to pay more money to the railroads for carrying the
mail? *
Mr. WADE. I should judge so. -
Mr. LLOYD. In other words, the annual weighing scheme is a
railroad scheme to get more money for carrying the mails. -
d Mr. WADE. It is a scheme to get pay for the service actually ren-
ered.
The CHAIRMAN. We thank you very much, Mr. Wade.
STATEMENT OF P. R. ALBRIGHT.
The CHAIRMAN. Mr. Albright, it will be necessary for you to be
SWOI’Iſl.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you state your full name, your residence,
and occupation?
Mr. ALBRIGHT. T. R. Albright; residence, Wilmington, N. C.
Age 46. Assistant to general manager of the Atlantic Coast Line
Railroad Co. -
Mr. LLOYD. What phase of this subject do you aim to discuss?
Mr. ALBRIGHT. I have not prepared a paper on a particular feature,
but have rather made a small general statement as to conditions on
the Atlantic Coast Line Railroad to-day:
The act of March 3, 1873, is the basic act for the present railroad mail rates. It is
not believed the carriers of this country were overpaid in the earlier years of mail
transportation, yet the original rates were decreased beginning as far back as 1876,
by act of Congress of July 12 of that year, making a reduction of 10 per cent; by act
of June 17, 1878, a further reduction of 5 per cent was made, and by act of March 2,
1907, an additional reduction of 5 per cent on weights between 5,000 and 48,000 pounds,
and practically 10 per cent on weight above 48,000 pounds, and, additionally, com-
pensation for full R. P. O. cars was reduced about 20 per cent. In various other ways
our compensation for handling the mails has been seriously reduced. Departmental
orders were issued from time to time creating half lines and decreasing pay based on
length of R. P. O. cars arbitrarily on supposed space necessary, in the opinion of the
department, for the service between given points, irrespective of the length of the car
operated. One of the most serious losses to railroads has been the change of the divisor
from 6 to 7, under Order 412, effective on ourlines on July 1, 1908, which alone decreased
the compensation on the Atlantic Coast Line at the rate of about $49,000 per annum.
This was a serious blow, particularly on the poorly-paid routes, and while it might
have been deemed a fair method in arriving at averages in fixing pay, the compensa-
tion or earnings for the mail service having been based on a different factor, the rail-
roads should have had some increase in compensation otherwise to have overcome
this great loss.
The following table shows the annual compensation of this line for carrying the mails,
including compensation for R. P. O. for fiscal years 1903 to 1912, inclusive, and the
compensation for one year on the basis of the rates effective July 1, 1912:
Year ended June 30– Year ended June 30–
1903- - - - - - - - - - - - - - - - - - $600, 321. 39 1909 - - - - - - - - - - - - - - - - - - $607, 372.96
1904- - - - - - - - - - - - - - - - - - 600, 841. 04 1910- - - - - - - - - - - - - - - - - - 608, 301. 17
1905- - - - - - - - - - - - - - - - - - 618, 550.63 1911 - - - - - - - - - - - - - - - - - - 607, 869. 19
1906- - - - - - - - - - - - - - - - - - 619, 622.98 1912- - - - - - - - - - - - - - - - - - 590, 640.00
1907- - - - - - - - - - - - - - - - - - 611,400. 10 1913- - - - - - - - - - - - - - - - . . 618,049. 65
1908. - - - - - - - - - - - - - - - - - 587,897. 66
252 RAILWAY MAIL PAY.
It should be noted that the total compensation was less for the fiscal year beginning
July 1, 1913, than for either of the years 1905 and 1906.
In 1905 the compensation received by this company for use of full R. P. O. cars,
which cars were provided at the request of the Post Office Department, and for the
operation of which we assumed we had a well-understood contract, was $71,432; in
1908 this compensation had been reduced to $46,936.65, and from February 23, 1912,
the compensation was further reduced, until to-day our annual compensation for the
use of postal cars aggregates only $13,624.65, or a loss of 80.9 per cent within the period
of eight years from 1905 to 1912.
The CHAIRMAN. That is, you mean a reduction in compensation ?
Mr. ALBRIGHT. A reduction from $71,432.
The CHAIRMAN. You said a loss.
Mr. ALBRIGHT. A loss in revenue from that source.
Mr. LLOYD. How do you account for so much reduction in your
rates when the R. P. O. car pay has increased in the United States
with each recurring year }
Mr. ALBRIGHT. I am unable to understand it. That is just the
point. We have lost it. .
Mr. LLOYD. But other roads have not lost it. That is a very inter-
esting thing to know, why your road should have lost it.
Mr. ALBRIGHT. I think I can make it still more interesting by quot-
ing later on some figures which show the weight of the mail.
r. LLOYD. Is not that by reason of the diversion of the mail to
the Southern roads 3
Mr. ALBRIGHT. No, sir.
Mr. LLOYD. All through mails from here go over the Southern in-
stead of the Atlantic Coast Line?
Mr. ALBRIGHT. Oh, no. p
Mr. LLOYD. Does not the mail to Atlanta, Florida, and New Or-
leans go over the Southern ?
Mr. ALBRIGHT. The mail to Atlanta and New Orleans does, but
the mail for the coast points goes via the Atlantic Coast Line and
the Seaboard Air Line. The Southern Railroad has trackage rights
over our line from Hardeville, S. C., to Jacksonville, Fla., but they
carry a very small portion of the mail coming into Florida.
There was never any diminution of service rendered by these 60-foot cars; irre-
spective of the reduction in pay the same number of cars were maintained and changed
in accordance with departmental requirements as to construction from time to time.
In 1911 we purchased eight modern all-steel 60-foot R. P. O. cars, and have main-
tained them since in the lines we were originally paid for on proper basis.
Mr. LLOYD. May I ask you right there what is the difference
between the Seaboard Air Line and Atlantic Coast Line?
Mr. ALBRIGHT. The Atlantic Coast Line operates from Richmond
to Jacksonville, Fla., and on to Tampa, Fla. The Seaboard Air Line
operates a little farther west than our line in the coast section of the
South Atlantic States. While it does not parallel our line it is a
competitor for the southern business. -
Mr. LLOYD. Does it start from Norfolk 3
Mr. ALBRIGHT. One of the original coast lines runs from Norfolk
to Rocky Mount. The second main line of the system starts from
Richmond, south.
So, from the standpoint of the Atlantic Coast Line, it will thus be seen that our
losses have been particularly severe, as is more fully shown in the following table, ,
calculating on the reductions made effective since 1904 and on the rates to June 30,
1912: w
RAILWAY MAIL PAY. 253
On yº of mail, notwithstanding the large increase in weights carried. - $5,562.42
. P. O. pa
R. • pay- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 57,807. 35
By change in divisor from 6 to 7... . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - 49, 114. 97
Total per an Illinn - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 112,484. 74
While the above loss per annum is enormous, the first and second items thereof
have been increased on account of the readjustment of pay effective July 1, 1912,
and since that date we estimate that our total loss (had the divisor not been changed
and had we not been subjected to the foregoing reductions) from July 1, 1912, would
approximate $120,000 per annum.
Had either the traffic or the cost of the service been less, there might be some argu-
ment that, in a measure, these losses to the railroad company were justifiable, but
neither is the case; on the other hand, the records show, taking pay for the carriage
of mails only, the following figures: *
1904—Ton-miles per annum. -------. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,041, 131.40
Pay per annum-----------------------. as + - - - - - - * * * * * - - - - - - - - - $542, 927.08
1908–Ton-miles per annum------------------------------------------ 3,811, 192. 13
Pay per annum---------------------------------------------- $564, 554. 50
1912–Ton-miles per annum------------------------------------------ 4, 346, 608. 83
Pay per annum---------------------------------------------- $602, 336. 37
The percentage of reduction in rate from 1904 to 1908 was 17.03, and from 1908 to
1912 was 6.48, while that from 1904 to 1912 was 22.40.
Looking at the earnings from another standpoint, let us consider the R. P. O. pay
in conjunction with the pay for weight. It shows a reduction in receipts since 1904
of 29.9 per cent. These figures are startling in that while a steady increase in tonnage
is shown for the three periods named, the revenue has greatly decreased. Bear in
mind that no element of cost necessary to handle this great business has decreased
in the slightest degree, but, on the other hand, has enormously increased.
During the past eight years, or since 1904, wages of railroad employees in the
jº. have increased in a greater percentage than any other similar period in our
istory.
I might º right there in the years gone by, when the South was
partly settled and labor plentiful the wage of labor was low. In later
years the South has been compelled to adopt the same wages practi-
cally that other parts of the country have, where they are more
densely populated, and they pay for similar services, and the decreased
cost on percentage basis to the railroads of the South has been very
much larger than on the railroads in any other section of the country
within the past 10 years.
We will take, for illustration, the increase in rates of pay for train crews, who are
more closely associated with the conduct of the business under discussion. The
table following shows the average daily rate of passenger train crews for 1903, as
compared with the year 1912: - f
1903 1912 Increase. Per cent.
Engineers. . . . . . . ~~~~…~ *.* $5.00 $1.75 54
Sºnductors---------------------------------------------------- 3.00 4.50 1.50 50
|Firemen------------------------------------------------------ 1.50 2. 26 . 76 50
Baggagemen-------------------------------------------------- 1.50 2.90 1. 40 47
In comparing the receipts from other sources during the same period it is found that
in 1903 the receipts in passenger-train service per passenger-train mile amounted to 87
cents; in 1912, $1.198; or an increase of 32.8 cents, equal to 37.7 per cent.
Our passenger-train mileage for the years 1905 to 1912, inclusive, increased 42.7 per
cent,
Comparing the years 1905 to 1912, inclusive, there was an increase of 73.9 per cent in
passenger revenue, 81.4 per cent in express revenue, and a decrease in mail revenue for
the same period of 4.5 per cent. The percentage of total passenger-train revenues
divided under the three heads in 1905 was, from passengers, 79.6 per cent; from express,
254 RAILWAY MAIL PAY.
10.4 per cent; from mail, 10 per cent. In 1912 these figures were very materially
changed, and show, from passengers, 82.8 per cent; from express, 11.5 per cent; from
mail, only 5.7 per cent.
Another expensive factor in conjunction with handling the mails which adds to our
operating expenses is the cost of terminal service. From February 1, 1913, our allow-
ance from the Post Office Department for terminal service was $1,775.37 per annum.
The cost of performing this service, together with the cost of side service handled by
£mployees engaged exclusively in handling the mail, was $13,441.80 per annum.
This figure is the actual money paid out under contract and otherwise for handling the
mails only, no estimate having been made of the value of handling the mails otherwise
by employees who are paid for performing general duties at stations.
The CHAIRMAN. What do you receive from the Government for
railway mail pay and R. P. O. pay ?
Mr. ALBRIGHT. At the present $618,000 per annum. [Reading:
As an illustration of how the rulings of the department affect the pay of the short
routes, I wish to call attention to routes numbered 123063 and 123065.
Route 123063, Winston to Mulberry, Fla., length 10.82 miles, pay per annum
$766.76. Annual cost of side and terminal service $270, or 35.2 per cent of total pay.
Route 123065, Croom to Brooksville, Fla., 9.99 miles, pay per annum $629.62.
Annual cost of side and terminal service, $240, or 39.4 per cent of total pay.
Now, Mr. Chairman, I have made a note on the question of space
and weight, but I do not feel that with the statistics we have I would
be competent to give you any enlightenment on that subject, but if
you desire I ºiá be glad to read you a short note I have made from
our viewpoint.
The CHAIRMAN. We would be glad to get your viewpoint.
Mr. ALBRIGHT (reading):
In the consideration of the question of the proper basis for determining com-
pensation for the carriage of mails by railroads—that is to say, whether weight
or space shall be the measure upon which said compensation shall be deter-
mined—any system that might be deemed at first thought expedient in fixing com-
pensation on the basis of space must of necessity be thoroughly built up. Not only
should this be determined upon by actual trial, but the condition under which the
space should be used in connection with any rates that might be suggested should be
clearly laid down, and there are so many other conditions that would enter into regu-
lations governing the use of space that in our opinion it would be impossible to make
any calculations as to the value of space for the handling of mail traffic without first
determining the condition of usage. -
But aside from any other consideration of the subject, it seems impossible to regulate
the assignment of space in especially equipped cars for the postal service. Either full
Cars or apartment cars, designated for the mails, shall be paid for in Some manner, as
such space is not available for passengers or express; that is to Say, any surplus space
over and above the assignment under requirements as determined by the Postal
Department. The present practices of the Post Office Department with respect to 40-
foot and 50-foot allowances in 60-foot equipment is an illustration of the difficulty that
would confront us, not only in full R. P. O. cars but in apartment cars as well, under
rates based on space. &
The universal practice of charging for transportation of all matter on a weight basis is,
in our opinion, a proper method of fixing the rate, and we do not favor a change from
weight to space.
Mr. LLOYD. Is your objection to the space basis really that you are
likely to receive less compensation, or is it because you think it is
not a proper determining factor ? :
Mr. ALBRIGHT. We do not think it is the proper factor.
Mr. LLOYD. Is it not true that at the present time, in order to ob-
tain the estimate of compensation, it is necessary to take in space,
to SOme extent.
Mr. ALBRIGHT. That is to say the dual compensation that we
receive is, first, the weight carried, and, secondly, an allowance for the
use of the R. P. O. cars or specially fitted post-office cars.
RAILWAY MAIL FAY. 255
... Mr. LLOYD. And you think it should have compensation not only
for the R. P. O. cars, but for the apartment cars as well?
Mr. ALBRIGHT. I think it would be only justice that the railroads
should be paid for any special facilities that they render.
Mr. LLOYD. Then your idea is that you should receive compensation
for all the space that is used in carrying the mail, whether it be in the
apartment car or in the R. P. O. car?
Mr. ALBRIGHT. The space used for post-office purposes, especially
designed equipment, in our opinion should be paid for separately
from the weight.
Mr. LLoyd. Then your idea is you should have pay for the space
used as well as the weight of the mail itself?
Mr. ALBRIGHT. We feel that we should be paid for the equipment
that is furnished—special equipment for the use of the department as a
traveling post-office car.
Mr. LLOYD. I do not think that is a practical answer to the question.
Is it not true that you think that you ought to have compensation
for the space that is used, both in the R. P. O. car and the apartment
car, as well as for the weight of the mail that is carried either in the
R. P. O. car or the apartment car?
Mr. ALBRIGHT. I can only answer your question in this direct way:
That I should not consider that we were computing our compensation
on a space basis for the carriage of the mail.
Mr. LLOYD. Well, you are, in part.
Mr. ALBRIGHT. Yes; as I put it.
Mr. LLOYD. And for all mail that is not pouch mail.
Mr. ALBRIGHT. Well, a great deal of that mail is not pouch mail.
You mean letter mail?
Mr. LLOYD. Any kind of mail that is carried in any kind of car,
either an apartment or an R. P. O. car, you should have pay for on
the basis of the space used. Is that your idea º
Mr. ALBRIGHT. As well as the weight.
Mr. LLOYD. Then you are in favor of pay according to both space
and weight. You want pay for all the space used and you want pay
for all the weight carried?
Mr. ALBRIGHT. On the present method.
Mr. LLOYD. But you want to extend the present method by includ-
ing the apartment car.
The CHAIRMAN. The way Mr. Albright's position comes to my mind
is, he wants the transportation compensation based on weight; he
wants space compensation based on extra service. .
Mr. ALBRIGHT. Special facilities.
The CHAIRMAN. Is that your position ?
Mr. ALBRIGHT. Yes, sir.
Mr. LLOYD. Do you indorse as the proper change in existing law the
suggestion that is made by Mr. Peters in the bill which he presents,
and which is found on page 194 of the typewritten record? (See
D. of the printed record.)
}. ALBRIGHT. Yes, sir; and I think it would be helpful to our line
at least.
MºLloyd. Is it your judgment that that meets the present require-
ment
Mr. ALBRIGHT. I feel that that bill would give us relief.
75904—No. 1–13—17
256 RAILWAY MAIL PAY.
Mr. LLOYD. It would give you some relief, but would it give you
the relief which you think your road ought to have?
Mr. ALBRIGHT. That would be very difficult to determine without
making calculations.
Mr. LLOYD. Let me ask you the question a little diffierently. If
that bill were adopted, and it became a part of the law, would the
compensation which you think ought to be restored to you be
restored 3
Mr. ALBRIGHT. We feel that the compensation should be restored
to us, irrespective of what we may think as to the total amount we are
entitled to for the carriage of the mail, and for the furnishing of
special facilities in connection therewith, and should at least approxi-
mate $120,000 per annum. -
Mr. LLOYD. Will that approximate $120,000 per annum for your
road 3
Mr. ALBRIGHT. I am sorry that I can not give you that information.
Mr. LLOYD. Then the truth is you do not know. You have not
given the matter sufficient attention to know whether that would be
the change that ought to be made in the existing law §
Mr. ALBRIGHT. I feel this way about it: That it would certainly
give us much needed relief and would increase our compensation, and
we are willing to try it.
Mr. LLOYD. What I am getting at is this: This commission wants
to settle once and for all, if it can, by making a proper suggestion as to
what is the right compensation for the Government to pay the railroad
companies for the service rendered by the railroad companies to the
Government. If the law is changed in accordance with that bill, has
that been accomplished ?
Mr. ALBRIGHT. I feel to a great extent that we would be remuner-
ated for the service we render. I should only be too glad, Mr. Lloyd,
if I could answer that question from a dollars and cents standpoint.
I would like to be able to so answer it for my own satisfaction.
Mr. LLOYD. As I understand you, you do not know what is neces-
sary to be done, but you want the $120,000 restored ?
Mr. ALBRIGHT. We would like to have that back and a little bit
more, if we could get it.
Mr. LLOYD. That bill does not change the rate of compensation.
You complain in your statement of the divisor and you complain in
your statement of the reduction from time to time in railway mail pay.
This proposed bill does not restore those at all.
Mr. ALBRIGHT. We feel there are other considerations in that bill
that would go a long way toward restoring some of our losses.
Mr. LLOYD. And it would have the effect of taking the place of the
reduction.
Mr. ALBRIGHT. We hope so. -
The CHAIRMAN. We thank you very much, Mr. Albright.
Thereupon, at 12.30 o'clock a.m., the committee adjourned to meet
at the call of the chairman.
RAILWAY MAIL PAY. 257
MONDAY, FEBRUARY 17, 1913.
Joint CoMMITTEE on Second-Class MAIL MATTER,
Washington, D. C.
The hearing was resumed at the call of the chairman, at 11 o'clock
8. Iſl.
Present: Senator Jonathan Bourne, jr. (chairman), Senator Harry
A. Richardson, Senator John H. Bankhead, Representative James T.
Lloyd, Representative William E. Tuttle, jr., and Representative
John W. Weeks
STATEMENT OF MIR. E. G. BUCKLAND.
The CHAIRMAN. Mr. Buckland, it will be necessary for you to be
SWOTIl.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Kindly state your full name, residence, occupa-
tion, and the official position which you occupy with the company,
and in what capacity you appear before the commission this morning.
Mr. BUCKLAND. My name is Edward G. Buckland. My residence
is New Haven, Conn., occupation, vice president of the New York,
New Haven & Hartford Railroad Co., and as such charged, among
other things, with the duty of representing that company and its
allied and controlled lines in its relations to the Federal Government,
and in its relation with the Post Office Department.
The CHAIRMAN. Have you read the second suggested bill trans-
mitted by the Postmaster General to this commission in reference to
the readjustment of the method of railway mail pay embodying the
substitution of space for weight basis as the measure of the service
rendered 3
Mr. BUCKLAND.. I have.
The CHAIRMAN. Kindly give the committee your comments and
views on the main features of that bill? .
Mr. BUCKLAND. My criticism of the first paragraph of that bill is
that the Postmaster General is authorized and directed to require
companies to furnish such data as in his judgment may be deemed
necessary to ascertain the cost to the companies of carrying the mail.
The CHAIRMAN. He represents the Government so far as that part
of its activity is concerned, and is the proper individual, is he not, to
designate the information necessary for the Government to obtain
in order to get an intelligent ascertainment as to the compensation
to the railroads, provided cost is one of the elements entering into
that ascertainment 7
Mr. BUCKLAND. It is proper for him to obtain that information for
his own purposes, in order to present it to a tribunal who shall ascer-
tain that cost, but it is no more proper for him to require the railroads
to give data of that kind to enable him, for his own purpose and for
his own demands, to ascertain the cost than it is proper for the War
º to obtain similar data from the º companies in
order that the War Department may determine how much it will
pay to the railroad companies for carrying munitions of war or can-
nons or anything of that sort, or for the Navy Department to obtain
similar information. If I apprehend the function of the Postmaster
258 RAILWAY MAIL PAY.
General with reference to the carriage of mail, he stands in exactly the
same position toward the common carriers of this country as the
heads of other departments in regard to other commodities which
they are asking the railroads to carry.
The CHAIRMAN. If cost is to be an element in arriving at the com-
pensation to be paid the railroads, how is the Government to obtain
that information and what suggestion would you make as an improve-
ment on the plan in the suggested bill, concerning which you have
made a criticism as to the first paragraph'
Mr. BUCKLAND.. I think that the wording should be so plain as to
make it perfectly clear that the data which he is seeking to obtain
should be data of a kind which can be furnished by the railroad com-
panies, in order that he may obtain the necessary information to
present to the Interatate Commerce Commission, if you like, in case
the railroads and the P. M. G. can not agree as to what is a reasonable
charge for carrying the mail ® *
The CHAIRMAN. Is your criticism against the first paragraph that
cost should not be an element in the determination as to the compen-
sation or as to the method of ascertainment of that cost 7
Mr. BUCKLAND. As to the method of ascertainment of that cost.
Mr. LLOYD. You do not claim that the Postmaster General has not
a right to that information, do you ? -.
Mr. BUCKLAND. Are you asking me as a lawyer'?
Mr. LLOYD. No. I am asking you as a witness in this case. We
are not dealing with you as a lawyer, but we are trying to deal with
you in order to get the facts. I take it you are not sworn to answer
questions as a lawyer, but to answer as to facts.
Mr. BUCKLAND.. I will answer you on that same basis, I know
nothing which requires railroad companies to furnish such informa-
tion to the Postmaster General.
Mr. LLOYD. What they are proposing to do is to have a law enacted
and if a law is enacted, that you are required to furnish that informa-
tion to the Postmaster General, what harm is there in it 3
Mr. BUCKLAND. No harm at all, but you asked me whether they
were required to do it.
Mr. LLOYD. No; you misunderstood me. The chairman wants to
know what your objection to the proposed bill is, and the objection
that you urge to the proposed bill is that the Postmaster General will
be authorized to obtain information which you think he ought not
to obtain.
Mr. BUCKLAND.. I beg your pardon. I did not make that statement.
Mr. LLOYD. Then make your statement as it should be.
Mr. BUCKLAND.. I think that it should not be in the power of the
Postmaster General to obtain the information only in his own way for
the determining of the cost of carrying the mail in his own way. The
Postmaster General ought to have the right under this bill or some
other bill
Mr. LLOYD. Then whose way should we adopt?
Mr. BUCKLAND. He may obtain all the information which he likes,
but he should not thereby have the right to determine, for the sake of
enforcing his determination upon the railroad companies, what the
cost of carrying the mail is.
Mr. LLOYD. Your position is that the railroad companies ought to
be placed in position that they can give such information as they
RAILWAY MAIL PAY. 259
think the Postmaster General ought to have in order to determine the
element of cost 3 ,”
Mr. BUCKLAND... No; it is not that at all.
Mr. LLOYD. Then please state what it is ?
Mr. BUCKLAND. My position is that the railroad companies should
be required to give the Postmaster General any information he may
ask for the purpose of enabling him to present to an impartial tribunal
what, in his opinion, is the cost to the railroad companies of carrying
the mail, and that the railroad companies may, on their part, be
permitted to present their data to the same tribunal for the purpose
of meeting the Postmaster General and having the issue determined
between them.
Mr. LLOYD. You are getting away from the question that was
stated in the first proposition. The first proposition is that the
Government shall be placed in the position that it shall have the
necessary information to determine what it costs to carry the mail,
not to leave it to any other tribunal, but shall know itself. You, as I
understand it, do not want it placed in that position, but you want to
furnish such information as you desire and then you want to leave it
to a tribunal to determine whether it is fair or not fair, just or unjust,
whether it is a proper statement of cost 3
Mr. BUCKLAND. No, sir; I think you have misunderstood my posi-
tion entirely. May I read the bill?
Mr. LLOYD. Yes.
Mr. BUCKLAND (reading):
The Postmaster General is authorized and directed to require companies operating
railroads by steam, electricity, or other motive power, carrying the mails, to furnish,
under oath and seal, not less frequently than once in each fiscal year, such informa-
tion relating to the service, operation, receipts and expenditures, and such other
information of such roads for a period of not less than 30 days, to be designated
by him, as may, in his judgment, be deemed necessary to enable him to ascertain
the cost to the companies of carrying the mails on their respective roads and the
proper compensation to be paid for that service.
That is followed by a proposition that he shall adjust the pay upon
that basis, subject to a review by the Interstate Commerce Com-
DOllSSIOIl.
Mr. LLOYD. What is the criticism about the first part 2 How would
you have that changed, or would you cut it out altogetherº
Mr. BUCKLAND. No; I should not cut it out altogether. I think he
Ought to have that information.
Mr. LLOYD. How would you change it?
Mr. BUCKLAND.. I should strike out the words “in his judgment.”
Mr. LLOYD. Then whose judgment would you have 2
'Mr. BUCKLAND (reading):
As may be deemed necessary to ascertain the cost to the companies and the proper
compensation to be paid for that service.
Mr. LLOYD, Whose judgment would you have 2
Mr. BUCKLAND. The judgment of the Interstate Commerce Com-
IſllSSIOI).
Mr. LLOYD. Then you would have the inquiry made by the Inter-
state Commerce Commission and not by the Postmaster General?
Mr. BUCKLAND. If the railroads and the Postmaster General could
not agree without that inquiry.
260 RAILWAY MAIL PAY.
Mr. LLOYD. What objection is there to the Government finding out
what it costs?
Mr. BUCKLAND. None at all, sir. I am afraid you and I do not
understand each other. , *
Mr. LLOYD. Evidently we do not.
Mr. BUCKLAND.. I wish to give the greatest and fullest publicity to
the cost of carrying the mail.
Mr. LLOYD. The Government must get its information through the
Postmaster General 2 *
Mr. BUCKLAND.. I should think it ought to get it through a neutral
tribunal.” *
Mr. LLOYD. You would not allow the Government to obtain any
information through the Postmaster General, except that which is
directed by the Interstate Commerce Commission?
Mr. BUCKLAND.. I think it would be much fairer.
Mr. LLOYD. Let me ask you this question: Do you contend that
the Government has no right to make any inquiry at all, except
through a tribunal such as the Interstate Commerce Commission ?
Mr. BUCKLAND. Under the present law Ż
Mr. LLOYD. No; we are talking about a change in the law.
Mr. BUCKLAND. The Government has a right?
Mr. LLOYD. The sole purpose of this commission is to ascertain
what is right and make recommendations for changes.
Mr. BUCKLAND. The Government has a perfect right to obtain
such information, either through the Postmaster General
Mr. LLOYD. Why should they not obtain this through the Post-
master General, as this directs 2
Mr. BUCKLAND. There is no reason why they should not obtain
the information and I am perfectly willing to give the information
to the Postmaster General.
Mr. LLOYD. Then your objection is as to his determination as to
the cost 7
Mr. BUCKLAND. Yes, sir. -
Mr. LLOYD. You have no objection to giving him the information
whatever ? -
Mr. BUCKLAND. Not the slightest.
Mr. LLOYD. I wish you would indicate just what you think ought
to be cut out. Is that the only expression you want to cut out ‘‘in
his judgment” " -
Mr. BUCKLAND.. I think so. I have not studied the bill with the
idea of studying other language, but that in general is my idea.
Mr. LLOYD. Do you object to the Postmaster General ascertaining
the cost 7 *
Mr. BUCKLAND. Not for the purpose of making a presentation to
the Interstate Commerce Commission; no, sir.
Mr. LLOYD. I want you to understand that we are not dealing with
the Interstate Commerce Commission, that we have nothing to do
with that commission under existing law, in the slightest, and if we
* hº anything to do with it, it will be because we have changed
the law. >
Mr. BUCKLAND. That is what I understand this law contemplates.
Mr. LLOYD. We are not bound by this in any manner whatever. I
suppose that every member of this commission has some objection
RAILWAY MAIL PAY. 261
to that proposed law. We are not standing on that at all, but the
only question that is asked you is, What is your objection to the
proposed change in the law, which change is suggested by the Post-
master General?
Mr. BUCKLAND. If you ask for my criticism of this bill, I must, of
course, assume, in taking the first paragraph of the bill, that it is
connected with other paragraphs of the bill which deal with the
Interstate Commerce Commission and which do, perhaps, give to the
Interstate Commerce Commission certain revisory or reviewing
powers.
Mr. LLOYD. You may object to that too?
Mr. BUCKLAND. Possibly; but I was referring to the whole frame-
lººk of the bill. I must either talk upon this bill or upon the existing
8, W.
Mr. LLOYD. Go ahead, and I will understand you better later on.
The CHAIRMAN. As I understand your objection to the first para-
graph, it is the inferential right of the Postmaster General to make
a determination as to what shall enter into the element of cost 7
Mr. BUCKLAND. Yes, sir. My thought is that he should have the
fullest information and all of the information at the disposal of the
railroad companies, but that he should not be authorized, even by
inference, to include or exclude finally such information or such data
as would be material in determining the cost of carrying the mail.
The CHAIRMAN. I think we understand you.
Mr. BUCKLAND. In the third paragraph there is the same general
objection [reading]:
The Postmaster General shall determine the cost to each railroad company of carry-
ing the mails on its respective road or roads and shall verify and state the results in
such form and manner as he shall deem proper. For this purpose he shall transmit
the information furnished by the railroad companies relating to the operating ex-
penditures to the Interstate Commerce Commission, who shall credit, assign, and
apportion such operating expenses to the passenger and freight services, and report
the result as to the passenger service to the Postmaster General.
The CHAIRMAN. The right of determination, under that proposed
legislation, would rest entirely with the Interstate Commerce Com-
mission, would it 2
Mr. BUCKLAND.. I think it would, only as to the information which
he had received from the railroad companies.
The CHAIRMAN. Such information as he chose to transmit :
Mr. BUCKLAND. As he chose to transmit; yes, sir,
The CHAIRMAN. Your criticism is, that under the suggested plan
he would not be compelled to give all the information to the Inter-
state Commerce Commission for a final determination ?
Mr. BUCKLAND. That is my general criticism.
Mr. WEEKs. You do not think, do you, that the Postmaster Gen-
eral would withhold any information which would have been obtained,
but what you object to is the construction which he would put upon
that information?
Mr. BUCKLAND. He might not require such information as the rail-
roads might desire to give him, or he might exclude such information
as being immaterial that the railroads might wish to give him.
Mr. LLOYD. That is going back to another point on which we differed
a while ago. If I understand your statement, you want it left in the
262 RAILWAY MAIL PAY.
º of the railroads to furnish such information as they desire to
give
Mr. BUCKLAND. No, sir.
Mr. LLOYD. The term that you used there was such information as
they desired to furnish'.
Mr. BUCKLAND. No, sir. I did not advisedly say that; no.
Mr. LLOYD. Will the reporter kindly read the witness's answer?
The reporter read the answer, as follows:
Mr. BUCKLAND. He might not require such information as the railroads might desire
to give him, or he might exclude such information as being immaterial that the rail-
roads might wish to give him.
The CHAIRMAN. I understand that Mr. Buckland's objection to the
#. plan is that the Postmaster General might have the right of
etermination as to what was vitally important and material, and
what was not. -
Mr. LLOYD. Then as I understand his latter expression he thinks
the railroad companies ought to be permitted to give such informa-
tion as they want to give, and that gives them the opportunity to
furnish whatever they desire and they become the determining factor
as to what shall be furnished.
The CHAIRMAN, Let me ask a question in that connection. Would
you have any criticism on this section of the suggested plan of the
department, providing specific permission was given, that the rail-
roads should, in addition to answering the inquiries and furnishing the
information requested by the Postmaster General, be allowed to
submit such additional information and material as in their opinion
was of importance to the subject matter, and that information be
transmitted to the Interstate Commerce Commission through the
Postmaster General’s office.
Mr. BUCKLAND.. I think that would be an excellent suggestion, for
if the Postmaster General did not see fit to permit or to report all
information which the railroad companies gave him, that they might,
in their appearance before the Interstate Commerce Commission,
submit such additional information as they might have.
Mr. LLOYD. Do you not think it unwise to allow the Postmaster
General to fix the cost at allº
Mr. BUCKLAND. No; I think that he, in order to have some intelli-
gent idea of the position of his department, should know something
about it. I think he ought to know all he can about it. *
Mr. LLOYD. But this authorizes him, as I understand it, to deter-
mine the question of cost and in that way he would be expected also
to determine the question of pay which you would receive.
Mr. BUCKLAND.. I do not think that quite follows, if I read the bill
correctly. He proposed in the first instance to determine the cost and
submit it to the Interstate Commerce Commission. If, whether or
not he determines the cost, all of the data that he asks the railroad
companies to furnish, and all of the data in addition thereto that they
desire to furnish can be submitted to the Interstate Commerce Com-
mission, and they in the last analysis may have the determining of
this cost, I have no particular objection to his determining it for his
own purpose in the first instance.
Mr. LLOYD. Why should he have the right to determine it at all?
Mr. BUCKLAND. Well, I think it is perhaps similar to a proceeding
IRAILWAY MAIL PAY. 263
in equity where a bill of discovery is filed. There is certain informa-
tion which your opponent has—I used the word “opponent” not in
the sense that there is any issue—which you are entitled to, and the
court will undoubtedly give you that information and you can make
up your case on that and the Postmaster General certainly ought to be
in a position where he can intelligently present his case to the Inter-
state Commerce Commission. s
Mr. LLOYD. Do you not think that the law ought to fix the pay that
the railroads receive, rather than the Postmaster General'
Mr. BUCKLAND. The statute law Ż
Mr. LLOYD. Yes.
Mr. BUCKLAND. No, sir.
Mr. LLOYD. You would leave to him the determination, in any
particular, of the amount that you should receive in compensation ?
Mr. BUCKLAND. No, sir. *.
The CHAIRMAN. Your answer to Mr. Lloyd’s question would leave
that inference; at least it would in my own mind.
Mr. BUCKLAND. He asked me the direct question if I would make
the statute law fix it and I said no, and then he asked me if I would
leave it to the Postmaster General and I said no.
The CHAIRMAN. To whom would you leave it?
Mr. BUCKLAND. The Interstate Commerce Commission.
Mr. LLOYD. You would have all the rates of pay for carrying the
mail fixed by the Interstate Commerce Commission ?
Mr. BUCKLAND. Yes, sir.
Mr. LLOYD. You would have the statutes so changed that the sole
tribunal in the determination of railway mail pay would be the Inter-
state Commerce Commission ?
Mr. BUCKLAND. The sole tribunal; yes, sir.
Mr. LLOYD. The sole determining factor in the ascertainment of
railway mail pay ?
Mr. BUCKLAND. Not if you use the word “factor” in the sense of
an element or a function of government which should present the
facts to the Interstate Commerce Commission. In other words, I
think the Postmaster General ought to be able to present facts to the
Interstate Commerce Commission in regard to railway mail pay, just
as the railways should present the facts likewise.
Mr. LLOYD. Carry out that view of it, how would you fix the law
with reference to compensation to you ?
Mr. BUCKLAND.. I have drafted a bill here which I will present.
Mr. LLOYD. I beg your pardon; I did not know that.
Mr. BUCKLAND. My ideas in regard to this may perhaps clear up
what we have between us. I regard the railroad companies of this
country as commor carriers of all commodities of a proper kind to be
carried; it does not make any difference whether it is flour, sugar,
munitions of war, or mail.
Mr. LLOYD. And you place them all on the same basis :
Mr. BUCKLAND.. I place them all on the same basis, with this excep-
tion: Those things which belong to the Government and which must
be carried as a part of the Government’s business—not a part of the
Government function, but as a part of the Government business—I
think the common carriers ought to be required to carry without giv-
ing them certain rights of prepayment, if you like, or certain other
rights which belong to them as common carriers. To be specific. if
264 RAILWAY MAIL PAY.
you come down to my railroad company and deliver a barrel of apples
to be carried I have a right to demand as a condition precedent to the
carriage of those apples that you should prepay the freight; if I do
not carry them you could force me by mandamus, and think the
Government has the right to have its mail carried, munitions of war
carried, and its troops carried, and everything which pertains to it,
without the necessity in the first place of prepayment, if you like. I
do not see how the Government stands in any different position in
regard to the carriage of mail than any shipper stands in regard to the
carriage of any other commodity, so far as a fair compensation to the
common carrier is concerned. *
Mr. WEEKs. Then you would differentiate between Government
mail and personal mail? -
Mr. BUCKLAND.. I suppose that it is a function of the Government,
that the Government could compel the mail to be carried.
Mr. WEEKs. That is the purpose of the Post Office Department,
originally, to carry the Government mail?
Mr. BUCKLAND. That constitutes a very small part of the general
mail. I think we might consider it altogether. My idea has been
that something along the line of the English law is the law which
we ought to have in this country, to permanently remove this ques-
tion of railway mail pay from legislation. -
Mr. LLOYD. Do you think you would have the right to refuse to
carry the mail?
Mr. BUCKLAND. The Supreme Court of the United States says that
I have.
Mr. LLOYD. Would you have the right to refuse to carry munitions
of war :
Mr. BUCKLAND. No; I do not think so.
Mr. LLOYD. Why?
Mr. BUCKLAND. Because I think the Government holds itself out
as ready to pay a tariff rate to carry munitions of war. It does
not hold itself out as willing to pay such a rate for carrying the
mails.
The CHAIRMAN. Do you hold that the Congress of the United
States could not enact legislation that would compel you to carry
the mail, providing the rates were not confiscatory
Mr. BUCKLAND.. I have no hesitation in saying that Congress has
that power, but it has never exercised it.
Mr. LLOYD. The question has been raised in this investigation
several times as to whether the railroad companies have the right to
refuse to carry the mail? -. f
‘Mr. BUCKLAND.. I think we ought to clear that up. No common
carrier, in my opinion, has the right to refuse to carry any proper
commodity tendered to it, upon the payment of a proper
compensation.
Mr. LLOYD. The only difference you make between the mail and
anything else is that you think the Government ought to have an
exemption as to the demand for prepayment'
Mr. BUCKLAND.. I do; yes, sir.
Mr. LLOYD. But otherwise you place them on the same basis?
Mr. BUCKLAND.. I place them on the same basis.
Mr. LLOYD. Do you not receive a protection from the Government
you would not receive from a private individual % s
RAILway MAIL PAY. 265
Mr. BUCKLAND.. I do not think so; nothing, that is of such conse-
uence that would put the mail into any excepted class.
" The CHAIRMAN. Take the zone of the activity of your lines. If
you could not receive any profit on carrying the mail, would you not
deem that you would receive an indirect compensation for the addi-
tional facility to the business in your territory by the carrying of
mail at cost' I do not mean for you to infer from my question that
I favor, so far as I am concerned, compelling the railroads to carry
at cost at all, but I do mean to say that there is a distinction, an
indirect, benefit that the transportation company, would receive in
the facilitation of business by improved mail facilities, according to
my present viewpoint.
M. BUCKLAND. Mr. Chairman, I have heard that view expressed,
and I think you have expressed it once or twice before in these
hearings. Practically every commodity carried by a railroad is car-
ried with a view to promoting the transportation of some other com-
modity. We carry pig iron into New England with the idea of carry-
ing out machines. We carry copper ingots with the idea of carrying
out copper goods. We carry bricks for the purpose of erecting
buildings and factories, and I do not believe that the mail stands in
any different relation to the common carrier than do these commodi-
ties. The mail may differ slightly in degree, but every carrier
building up its business will take such commodities as will bring
other business to it.
The CHAIRMAN. And the Federal protection to the mail is no
advantage to the common carrier, in your judgment 7
Mr. BUCKLAND. Not enough to bring it into an excepted class. I
intended to start my statement here with the result of the report of
the Postmaster General as referring to our particular road, and in
that I include the New York, New Haven & Hartford, the Boston &
Maine, the Maine Central, St. Johnsbury & Lake Champlain, the
Somerset, Vermont Valley & Sullivan County, Washington County,
the Central New England, and the New York, Ontario & Western.
The CHAIRMAN. Representing what in mileage and what in
capitalization ?
r. BUCKLAND. Representing in mileage about 10,000 miles and
in capitalization about $750,000,000.
The CHAIRMAN. Bonds and stocks 3
Mr. BUCKLAND. Bonds and stocks.
The CHAIRMAN. At par?
Mr. BUCKLAND. At par. : w *
Mr. WEEKs. That covers all of the roads in New England with the
exception of the Boston & Albany and its leased lines, the Bangor
& Aroostook, and the Central Vermont?
Mr. BUCKLAND. The Central Vermont, the Canadian Pacific, and
the Grand Trunk. I can go over the losses for months which the
Postmaster General has figured that these roads are making on
account of the present law. -
The CHAIRMAN. Where has the Postmaster General figured that %
Mr. BUCKLAND. In House Document 105, page 276.
The CHAIRMAN. Does he make a direct and specific statement to
the effect that these roads are losing so much per month under the
present rates paid them for transporation ?

266 RAILWAY MAIL PAY.
Mr. BUCKLAND. Yes, sir.
The CHAIRMAN. Read it, kindly.
Mr. BUCKLAND.. I am reading from this pamphlet because it is
difficult to follow the line across. The New York, New Haven &
Hartford operating expenses and taxes chargeable to the mail service
were $69,391.89.
The CHAIRMAN. What page is that on of Document 105?
Mr. BUCKLAND. Page 276. Revenue from service, $53,180.54;
loss, $16,201.15.
The CHAIRMAN. This is a deduction made by the Post Office
Department, based upon answers to interrogatories propounded by
the department to your system, is it not ?
Mr. BUCKLAND. Yes, sir. .
The CHAIRMAN. Is there any other statement in Document 105
where the Postmaster General or his representative accurately states
or concedes that you are making a loss in the carriage of mail, or is
your prior statement based entirely upon this computation made
by the Post Office Department, or rather a compilation and tabula-
tion of information submitted by you at the request of the depart-
ment in answer to interrogatories? -
Mr. BUCKLAND. My present compilation, that I am now reading
from, is a compilation of Table 7, as relating to the roads owned,
operated, or controlled by the New York, New Haven & Hartford
Railroad Co.
The CHAIRMAN. But Table 7 is a compilation and tabulation of
information furnished by you ?
Mr. BUCKLAND. Yes, sir; but checked by the Post Office Depart-
ment.
The CHAIRMAN. Checked only upon the information furnished by
you in answer to specific questions asked of you by the Post Office
Department 2
Mr. BUCKLAND. Yes, sir.
The CHAIRMAN. Has the New York, New Haven & Hartford infor-
mation satisfactory to you so that you know definitely just what you
are making or losing in your mail contract with the United States :
Government 7 -
Mr. BUCKLAND. Yes, sir.
The CHAIRMAN. What do you claim you are making or losing and
how do you arrive at your statements?
Mr. BUCKLAND.. I would like to have that testified to by our statis-
tician, Mr. Bowman, when you put him on the stand.
The CHAIRMAN. You can do that later, but if you have the informa-
tion before you I would like to get it in the record at this point, so
as to get the relativeness between the information that you have
quoted from Document 105 and your own deductions.
Mr. BUCKLAND. Answering that specific question, I would say that
whereas the Postmaster General's Table 7 indicates a loss to the
New Haven road of $16,201.15 per month, the data of the New York,
New Haven & Harftord Railroad Co., as shown on the report of
the value of the service rendered in the transportation of mail for the
two and one-half years to December 31, 1911, prepared by Price,
Waterhouse & Co., chartered accountants, 54 William Street, New
York City, shows a loss for the fiscal year to June 30, 1910, of $743,035;
RAILWAY MAIL PAY. 267
for the fiscal year of June 30, 1911, $728,943; and for the six months
to December 31, 1911, $336,675. I quote from page 138 of that
report, but as to the specific method by which that result is reached,
I prefer to leave that to Mr. Bowman, the gentleman who made it up,
as he can tell you much more specifically than I.
The CHAIRMAN. What did the New York, New Haven & Hartford
system receive in the way of mail compensation, in R. P. O. pay, in
the last fiscal year? I suppose you combined the two º
Mr. BUCKLAND. Oh, yes. In the fiscal year ending June 30, 1910,
they received $645,572; for the fiscal year ending June 30, 1911,
$646,846; for the six months to December 31, 1911, $324,258.
The latter figures are both the earnings and the expenses for the
six months, and are necessarily not so accurate as those taken for the
complete fiscal year. The loss to the Boston & Maine, according to
Table 7 on page 272 of House Document 105 is $9,457.46 per
month. The loss to the Maine Central, on the same page, was $454.21
per month. The gain to the St. Johnsbury & Lake Champlain was
$12.92. The loss to the Somerset Railway was $114.06. The loss to
the Vermont Valley and Sullivan $º. Railway was $253.69. The
gain to the Washington County Railway, $518.74; gain to the
Central New England Railway, $105.73; loss to the New York,
Ontario & Western Railway, $720.50. These are losses; that is,
where the revenue does not meet the apportioned operating expenses.
The Postmaster General's proposed bill would add 6 per cent profit to
these operating expenses. If that were done, the total loss would be
somewhat greater. The total loss per month for the entire system
would be $35,066.47, or a total loss on the Postmaster General’s
figures of $420,797.64 per year.
The CHAIRMAN. Prior to the initiation of the inquiry under Docu-
ment 105 and receipt by your companies of request for information
for the Postmaster General did you carry on your books any accounts
with the railway mail pay, so that you knew yourselves exactly what
you were making, whether a loss or a profit, and if so, how much 3
Mr. BUCKLAND. We carried to a very considerable extent accounts
upon our books (but just how far they went I do not know) because
of our contention with the Post Office Department at the beginning
of the last period in 1909 that we were being inadequately paid and
the protest under which we sent the circulars. I think, Mr. Chair-
man, that the Postmaster General has never contended that the New
York, New Haven & Hartford Railway was fully paid.
The CHAIRMAN. The point is whether you had the definite informa-
tion and knew yourselves as to exactly how this particular account
stood in your earnings. .
Mr. BUCKLAND.. I could not say that we knew exactly how we stood,
but I think we knew approximately. We have come to the point
where I should like to introduce Mr. Bowman. º
The CHAIRMAN. Before doing so I would be glad if you would sub-
mit for the information of the committee the concrete bill, based on
the English system, which, in your judgment, if enacted would make
a more equitable method of mail compensation for the transportation
companies.
r. WEEKs. Mr. Chairman, would it not be well to have the English
law put into the record?
The CHAIRMAN. Yes; both. I think it would be well to put them
both into the record in order to get their relativeness.
268 RAILWAY MAIL PAY.
Mr. BUCKLAND.. I quote from a document entitled “The Railway
and Canal Traffic Acts, 1854, 1873, 1888, and 1894, and Other Statutes;
with the general rules of the Railway and the Canal Commission.
London: Printed for His Majesty’s stationery office by Darling &
Son,” in 1910. On page 14 of the regulation of railways act, 1873, I
quote as follows:
CONVEYANCE OF MAILS.
18. Every railway company shall convey by any train all such mails as may be
tendered for conveyance by such train, whether such mails be under the charge of a
guard appointed by the postmaster general or not, and notwithstanding that no
notice in writing requiring mails to be conveyed by such train has been given to the
company by the postmaster general.
Every railway company shall afford all reasonable facilities for the receipt and
delivery of mails at any of their stations without requiring them to be booked or
interposing any other delay.
Where the mails are in charge of a guard appointed by the postmaster general,
every railway company shall permit such guard, if he thinks fit, to receive and deliver
them at any station by himself or his assistants, rendering him nevertheless such
aid as he may require.
19. Every railway company shall be entitled to reasonable remuneration for any serv-
ices performed by them in pursuance of this act with respect to the conveyance of
mails, and such remuneration shall be paid by the postmaster general.
Any difference between the postmaster general and any railway company as to
the amount of such remuneration or as to any other question arising under this act
shall be decided by arbitration in manner provided by the act of the session of the
first and second years of the reign of her present majesty’s chapter 98, or at the option
of such railway company by the commissioners. A- *
I may say by later acts that arbitration is now referred to the
railway and canal commission.
Where a railway company use, maintain, or work, or are party to any arrangement
for using, maintaining, or working steam vessels for the purpose of carrying on a com-
munication between any towns or ports, all provisions contained in any act with
respect to the conveyance of mails by railways shall, so far as they are applicable to
the conveyance of mails by steam vessels, extend to the steam vessels so used, main-
tained, or worked.
The CHAIRMAN. Under that the postmaster general and the rail-
roads arrange as to the compensation to be paid the railroads for
the carriage of the mail?
Mr. BUCKLAND. If they can. If they can not, they leave it to
the railway and canal commission. *
The CHAIRMAN. Do you think, taking into consideration the dif-
ference in conditions in the United States and in England, that the
same laws of England could be enacted by this country with benefit
to the Government and to the transportation companies?
Mr. BUCKLAND.. I think not the same law, but the principle
involved in the law.
Mr. LLOYD. You have the proposed bill with you?
Mr. BUCKLAND. Yes, sir.
Mr. WEEKs. Has this bill of yours been submitted to the Post
Office Department?
Mr. BUCKLAND. No, sir.
A BILL To provide for the carriage of the mails.
Be it enacted by the Senate and House of Representatives of the United States in Congress
assembled— *.
SECTION 1. That every railroad company operating as a common carrier shall
convey by any train all such mail as may be tendered for conveyance by such train,
and where necessary shall provide sufficient and suitable room, fixtures, and fur-
RAILWAY MAIL PAY. - 269
niture a car or apartment properly lighted and heated for route agents to accom-
pany and distribute the mails. Every such railroad company shall afford all reason-
able facilities for the receipt and delivery of mails at any of its stations.
Mr. WEEKs. Who is to determine the necessity ?
Mr. BUCKLAND.. I am fixing here the rules and regulations of the
Post Office Department. That is practically the wording of section
4001, so far as providing suitable room, fixtures, and furniture is con-
cerned, the existing law regarding the carriage of the mails.
SEo. 2. That the Postmaster General is authorized to make and enforce all proper
rules and regulations to govern the receipt, transportation, and delivery of the mails,
which rules, regulations, and penalties for the violations thereof shall be filed with the
Interstate Commerce Commission prior to any hearing in regard to remuneration and
be considered in determining the cost of service for which remuneration is hereinafter
provided.” !
The CHAIRMAN. Under legislation of that nature there might be,
might there not, a different rate paid to each one of the 795 railroads
with whom the Government now has mail contracts 2
Mr. BUCKLAND. Very likely.
The CHAIRMAN. The enactment of the plan suggested by you would
not result in an universal rate applicable to all 7
Mr. BUCKLAND. No, sir.
The CHAIRMAN. In your opinion it is impossible, is it, to evolve a
plan where the rate would be universal to . and just to all?
Mr. BUCKLAND.. I do not know of any such plan that could be
evolved.
The CHAIRMAN. Is it your judgment that it could not be evolved,
an universal plan that would be just to all? .
Mr. BUCKLAND. It is my opinion that it can not be evolved, that
is, a plan to put into statute a specific sum to be paid either per car-
foot mile or per ton mile for the carriage of the mails, if you like, in
New # and in Arizona.
Mr. WEEKS, Taking section 2 of the proposed bill of yours, do you
not think the Post Office Department ought to have the sole right to
determine the responsibility in regard to the transportation and de-
livery of mail?
Mr. BUCKLAND.. I do; and I give them the same right.
Mr. WEEKs. You give them another tribunal to go to ?
Mr. BUCKLAND, No. I give that tribunal no supervisory powers
over those rules and regulations. The Postmaster General provides
his rules and regulations and they are to be considered in determining
the remuneration. He may provide such rules as he deems necessary.
He may ask for steel cars, if he is willing to pay for them, or he may
ask for electric or acetylene lights, provided he is willing to pay for
them, but the thing that I object to is that he asks for one thing when
he makes his contract and after the contract is made he calls for some
thing else. Let him state what he wants, and if we can not agree,
then let the Interstate Commerce Commission decide what is a fair
rate. - \.
The CHAIRMAN. What happens during that period of adjustment.
Are the mails interfered with ?
Mr. BUCKLAND. Not at all.
The CHAIRMAN. You go on and carry them, in accordance with
the request of the Postmaster General?
Mr. BUCKLAND. Yes, sir.
270 RAILWAY MAIſ. PAY.
The CHAIRMAN. And the basis of remuneration is determined sub-
sequently 7
Mr. BUCKLAND. Yes, sir. -
The CHAIRMAN. You having a right of appeal to the Interstate
Commerce Commission ? : -
Mr. BUCKLAND. Yes, sir. -
SEC. 3. That every such railroad company shall be entitled to reasonable remunera:
tion for any services performed by it in receiving, transporting, and delivering the
mails. +.
You will notice I do not limit the duty of the railroad companies
to ºpºrting the mail, but to receiving, transporting, and delivering
the mails. . •
Mr. WEEKs. How do you define reasonable remuneration ?
Mr. BUCKLAND. My definition of that would be—
Such remuneration shall be paid by the Postmaster General as shall equal the cost
to such companies for the performance of such service, plus six per centum of such
cost; in addition such companies shall be entitled to such additional amount as shall
constitute a proper proportion of a fair and reasonable return on the value of the
property necessarily employed in the performance of such services.
Those are practically the Postmaster General’s words in the modi-
fication which he has made of his present bill.
The CHAIRMAN. By subsequent legislation you would expect to
avoid the injustice ºi. as I understand, it is the contention of the
transportation companies they now suffer through the requirement
of said service without direct compensation through the failure to
receive compensation in apartment cars for the space occupied. I
notice in your bill you make no arrangement for annual weighing,
except every two years the adjustment shall be made, and inferen-
tially, in order to get such adjustment, you have to get an ascertain-
ment as to what the amount of the transportation is. t
Mr. BUCKLAND. Yes, sir. Upon that first point there is a conten-
tion on the part of the public that the railroads are overpaid and there
is a contention on the part of the railroads that they are underpaid.
Certainly nobody can object if a neutral tribunal shall determine
to what expense the railroads are put in the performance of this
service and give them a stated profit over that. It seems to me
if you agree to-day upon a bill which shall amply compensate every
railroad in the country in accordance with this contention, by mak-
ing a specific ton-mile or a specific cubic-foot rate of compensation,
that two years will not roll around before this matter ...' be up in
Congress again on the proposition that that ought to be reduced.
You will never get this out of continued legislation until the question
of remuneration is made flexible and to be determined by some
neutral tribunal.
The CHAIRMAN. You do not agree with the general railway mail
commission, representing some 214,000 out of the 250,000 total rail-
road mileage of the country, of which Mr. Peters, as chairman, has
appeared before the committee several times
Mr. BUCKLAND. To a certain extent I agree with them and to a
certain extent I do not. Their contention has been based very
largely on the question of space and weight. It seems to me that
the question of space and weight is immaterial, according to my con-
ception of what ought to be done in regard to railway mail pay. I
© RAILWAY MAIL PAY. 271
do not believe Congress should determine a ton-mile rate on mail any
more than it determines a ton-mile rate on coal. -
The CHAIRMAN. Do you not believe it is desirable, where possible,
to have the law, express specifically what the rights of the citizen
may be, rather than leave it to the ipse dixit of an individual or to a
rule and regulation ?
Mr. BUCKLAND. That is a very general proposition. I might
answer that and say yes, but when it comes to a question of compen-
sation for the performance of service, the cost of which and possibly
the value of which differs under different conditions, I can see no
more reason why the statute should fix the price at which the mail is
to be carried than the price at which gunpowder should be carried.
The CHAIRMAN. The statutes do fix the rates you can charge for
passenger traffic in many of the States ?
Mr. BUCKLAND. Yes. §
Mr. LLOYD. And the freight rates, too !
Mr. BUCKLAND.. I do not know of any. There may be some, but
there are none in the States that I represent. The commissions have
power to fix maximum reasonable rates which shall be charged for
the carriage of freight, but I do not know of any States in New Eng-
land where the commission fixed the rate definitely.
Mr. LLOYD. That is fixing a rate, though, by saying you shall not
charge more than a certain sum º
Mr. BUCKLAND.. I am perfectly willing in this case that the Inter-
state Commerce Commission should say that we shall not charge
more than a certain sum.
The CHAIRMAN. But your whole position is predicated upon the
elasticity incident to the delegation of this power to the Interstate
Commerce Commission, rather than to wait for legislation over a
period of time 2
Mr. BUCKLAND. Yes, that and the fact that this is no part of the
legislative function of the Government, which should be exercised
in a rigid statute.
Mr. LLOYD., Is it not true to-day that the greatest complaints the
railroad people have, or the greatest complaints made in the last
number of years are because of the treatment of the Postmaster
General toward the railroads, and his determination against them 7
Mr. BUCKLAND.. I have never known of a time when there has not
been this friction and this issue between the Post Office Department
and the railroads, I can not see how it can ever be avoided so lon
as the Postmaster General reserves the right to impose additiona
services upon a railroad without additional pay.
Mr. LLOYD. If you leave it all to him to fix the rates and deter-
mine rules, are you not placing yourselves completely subject to
him, º this, if you are dissatisfied you will have the right of
appeal, which you do not now have 7
Mr. BUCKLAND. Yes, sir.
Mr. LLOYD. That is the only difference, except this: That that
would give him, under your bill, all power, not only to make the
rules for the Government, but to make the rate himself, and if you
are not satisfied with that, you under your bill would have the right
to appeal to the Interstate Commerce Commission to determine
the differences between you ?
75904—No. 1–13—18
272 RAILWAY MAIL PAY. tº
Mr. BUCKLAND. Yes, sir.
Mr. LLOYD. But all the power you vest in the Postmaster General
to fix the rates and fix the rules to determine what shall be paid.
Mr. BUCKLAND.. I think there is no power in him to fix the rate.
He has the power to fix the rules and he ought to have that power,
and he should have the fullest power.
Mr. LLOYD. Who fixes the rates ?
Mr. BUCKLAND. The Interstate Commerce Commission, if you
can not agree.
Mr. LLOYD. Before you get to the court, who fixes it?
Mr. BUCKLAND. It must be by agreement between the two. He
has it between the railway company and the Postmaster General.
He has no power to fix the rates.
Mr. LLOYD. Let me put the matter in another light. Of course,
Congress must represent the people, or at least try to. Suppose we
pass a law such as you suggest, and leave it to the railroad company
to furnish the information and leave it to the Postmaster General
to determine the compensation, the compensation, however, to be
made by contract, to which the railroad companies must agree. Do
you think that would satisfy the people?
Mr. BUCKLAND. Not if it were left there, but if it were a contract
to which the railroad companies must agree, or to put it more exactly,
if it were a duty which the railroad companies must perform, after an
order of the Interstate Commerce Commission, I can not see how the
people could ask for any fairer treatment than that. #
Mr. WEEKs. Suppose the opposition to an administration contended
that the railroads and the Postmaster General were working in coop-
eration and had agreed on rates that were much higher than §.
service warranted. How would you remedy that situation?
Mr. BUCKLAND. As a railroad man, I could hardly charge derelic-
tion on the part of the Postmaster General. t
Mr. WEEKs. That is a situation that might arise.
Mr. BUCKLAND.. I think it might be possible for the Attorney
General to intervene in a case of that kind. That has been so foreign
to my mind that it has never occurred to me as a possibility.
Mr. LLOYD. What do you think in that connection with regard to
the doctrine of recall? Suppose, for instance, that the people
believed that the Postmaster Šº and the Interstate Commerce
Commission were both in sympathy with the railroads. What are
we going to do under such a situation as that ?
Mr. BUCKLAND. Mr. Lloyd, if we have gotten to such a place that
we can not trust our own Government officials, the Government is in
a pretty bad way. I do not think that that is a thing which we ought
to think could be brought about.
Mr. LLOYD. Do you not think it is the duty of the legislative body
to avoid just as much responsibility in the individual officer as is
possible, so as to prevent j. impression of the people that the indi-
vidual has sold himself out to the interests of the country?
Mr. BUCKLAND.. I should hardly put it that way. I think it is
our duty to get such men to serve us at the head of the Government
who will command the respect of the people.
Mr. LLOYD. Abstractly that is a splendid doctrine, but I am talking
about a concrete proposition. Take it in the light of recent occur-
rences and you will realize that the people are demanding now that
RAILWAY MAIL FAY. 273
an officer shall do his duty, and if he does not do his duty they are
demanding that they shall have the right to recall him, it does not
make any difference whether he is a judge of the Supreme Court, of
the Interstate Commerce Commission, or whether he is the Postmaster
General. Are we not encouraging the idea in the minds of the people
and are we not encouraging the sentiment that demands the recall
of everything if we give more power to the official instead of less?
Mr. BUCKLAND. Not if you have, as you have to-day, the Inter-
state Commerce Commission practically a permanent committee of
Congress appointed to perform legislative functions with limited
terms of office and their terms subject to the limitation of Congress
and always responsive to the demand of the people as exhibited
through Congress. I can not understand why if the tariff regarding
a commodity carried for the citizens generally is confided to the
Interstate Commerce Commission the Government is not willing to
confide to that same commission a tariff for the carriage of its mails.
Mr. LLOYD. The people of the country, as you know, have the
impression that the railroad companies are receiving too much.
You made that statement yourself a while ago.
Mr. BUCKLAND. Yes, sir.
Mr. LLOYD. Do you think that idea would be disabused by the
Interstate Commerce Commission saying that you are not receiving
too much 3 -
Mr. BUCKLAND. If it can not be disabused that way, I do not know
how it can be. You must understand, Mr. Lloyd, that the Inter-
state Commerce Commission receives to-day reports from the railroad
companies in regard to all sorts of operating expenses, and they have
by no means exhausted their powers or privileges in requiring addi-
tional reports. --
Mr. LLOYD. I am especially gratified that the Interstate Commerce
Commission seems to be at this day one body that is not attacked,
and I am especially anxious that it shall so remain that way.
Mr. BUCKLAND. As against that I think you must agree with me
that if you fix a rigid sum for the payment of the mails you are going
to have it a matter of controversy in the halls of Congress just as
long as you can see.
Mr. LLOYD. That is not a question for us to determine. Questions
of appropriation and questions of law are matters of constant legis-
lation. The only thing for us to do is to do what we think ought to
be done to-day and the next Congress will be charged with the respon-
sibility if it is deemed advisable to change a law. That is their
responsibility and not ours.
Mr. BUCKLAND. To-day the Supreme Court of the United States.
has said that the railroads are not bound to carry the mails, but, of
course, what the Supreme Court means is they are not legally bound
to carry the mails. -
The CHAIRMAN. That is under existing law Ż
Mr. BUCKLAND. Under the existing law.
The CHAIRMAN. But you concede Congress can enact legislation to
develop that ?
Mr. BUCKLAND. Yes. I am referring to our present statutes.
Supposing that any railroad which has appeared before you would
say we accept that decision of the Supreme Court and we will sto
carrying the mails. Why, that is an utter impossibility. The rail-
274 IRAILWAY MAIL PAY.
road company's property would not be worth anything a week after
it had stopped carrying the mails. It is a physical necessity for us
to carry the mails. -
Mr. LLOYD. That is the reason I think it is unwise for you to make
the statement repeatedly and leave it in the record, that you do not
have to do it, without making some explanation of your meaning.
Mr. BUCKLAND.. I had assumed that the gentlemen here realized
the scope of the decision.
Mr. LLOYD. This goes into the hearings which are read by the
public and they are the subject of magazine articles, newspaper
articles, and other publications of that kind. + -
Mr. BUCKLAND. Let me say that the Supreme Court of the United
States in the case of the Atchison, Topeka & Santa Fe Railroad Co.
have decided that the railroad companies are not required to carry
the mails, that if they do not like the compensation which the Post-
master General under authority of Congress prescribes, they can stop
carrying them. Therefore they have no legal right to go to court
and say that the compensation is insufficient. Everybody knows
that whereas a railroad may not legally be bound to carry the mail
it is physically obliged to carry the mail, and if Congress can continue
to diminish i. ay for carrying it, without leaving them any com-
pensation, they º practically required to carry the mail all the
time, the result will be that the time will come when they will not be
getting anything for carrying the mail and the people of this country
will regard it as a duty which the railroads should perform without
any charge whatever. That is the inevitable result, it seems to me,
of a continuing of statutes of that nature. I agree that the Govern-
ment has the right to require the railroads to carry the mail and I
think it ought to require them to do so. Then they would have a
standing as to whether or not on account of inadequate compensa-
tion they were being subjected to confiscation of their properties,
but so long as the law remains in this chaotic state the railroads may
be perfectly sure that their property is being confiscated and yet have
ºly no redress in the courts. Do I make myself plain for the
record 7
Mr. LLOYD. Yes, sir. I think that the frankest and plainest
statement we have had on that subject by far, from your viewpoint.
The CHAIRMAN. Under your suggested bill you provide for biennial
ascertainment by the Interstate Commerce Commission, do you not %
Mr. BUCKLAND. Had I better not read this section ?
The CHAIRMAN. I have read it.
Mr. BUCKLAND.. I say that the Postmaster General may not,
oftener than once in two years, apply to the Interstate Commerce
Commission.
The CHAIRMAN. There is no question at all in the development of
the postal service of the United States, roughly representing a 7 per
cent increase annually, that the railroads every two years would
demand increased compensation upon the increased tonnage, and the
ractical effect of your legislation would be a biennial ascertainment
|. the Interstate Commerce Commission. That is your judgment, "
is it not 7 -
Mr. BUCKLAND. In the absence of an agreement between the Post-
master General and the railroad; yes, sir.
RAILWAY MAIL PAY. 4 275
The CHAIRMAN. Do you think that the Interstate Commerce Com-
mission already have duties imposed upon them that occupy their
full time 3 *
Mr. BUCKLAND. In answering that, I think they have duties im-
posed upon them which require their full time, but I do not know of
any duties which should more clearly occupy their time than this.
The CHAIRMAN. Under this system your remedy would be increas-
ing the number of commissioners in the Interstate Commerce Com-
mission ?
Mr. BUCKLAND.. I do not think it necessary.
The CHAIRMAN. If a man's time is fully occupied, how is he going
to have an additional burden placed upon him and be able to do
justice to the matters he already has under consideration ?
Mr. BUCKLAND. It may be that some of his duties could be dele-
gated to some subordinate. In any event I think it will be found
soon that this question of the ascertainment of railway mail operat-
ing costs would reduce itself to such a routine as to be easily ascer-
tainable.
The CHAIRMAN. Then you think a yardstick can be evolved for
each one of the 795 railroads with whom the Government now has
mail contracts that would extend over a decade 2 -
Mr. BUCKLAND. Not a yardstick; no, sir—but a principle.
The CHAIRMAN. What is your distinction ?
Mr. BUCKLAND. A yardstick, I should say, would mean a com-
pensation per ton-mile or compensation per car-foot mile. I do not
believe that that can be evolved for all of the railroads. I think that
the principle of additions to profits beyond operating cost and fair
charges against the capital expenditures could be easily developed.
Senator BANKHEAD. Your idea is that the railroads over the country
might be classified, certain railroads with certain environments and
certain conditions should receive a certain amount.
Mr. BUCKLAND.. I should think it would nmount to that very
soon. I am not wise enough just how that would work out.
Sentor BANKHEAD. That is just what you propose for the Inter-
state Commerce Commission ?
Mr. BUCKLAND.. I imagine that railroads operating under sub-
stantially similar conditions could come under such a classification.
Senator BANKHEAD. That is the reason that I said classify them.
The CHAIRMAN. Then you think there is merit in the suggested bill
Submitted by the department of compensation being based upon the
cost of the operation, with a reasonable profit? Personally you
think that is the line on which the solution must be worked out?
Mr. BUCKLAND. Personally. I have always felt so; yes, sir. My
principal objection to the bill, as I have indicated to ğ. Lloyd, is
that it still leaves in the power of the Postmaster General the right
to prescribe additional services after we have made our contract.
I do not think that is fair. \
Mr. LLOYD. It must be true from the reports of the Postmaster
General that your system of railroad has suffered worse under the
existing law than any other system in the United States. How do
you account for that ? -
Mr. BUCKLAND.. I assume it is becaus
Mr. WEEKs. Just a moment. Do you admit that that is true?
276 RAILWAY MAIL PAY.
Mr. BUCKLAND.. I think of the large roads, ours has suffered the
worst. I think some of the short lines have suffered more.
Mr. LLOYD. I mean the New York, New Haven & Hartford system.
That is the one to which I refer. That seems to have lost in nearly
every direction. Why is it that that system is apparently losing
more than the other systems of the country? *
Mr. BUCKLAND.. I should say probably it is because of the short-
ness of the travel, the frequency of the trains and the amount of
terminal services which appertain to each train. As an illustration,
the New York, New Haven & Hartford road runs a train for every
mile of its road. It has, in round numbers, 2,000 miles, and runs
2,000 trains every day and most of those trains carry mail. Each
one of those trains has to perform certain terminal services.
Mr. LLOYD. Is not your system a combination of short line roads?
Mr. BUCKLAND. Yes; I should say that it was.
Mr. LLOYD. Then whatever applies to the short line railroad
would more nearly apply to your system than probably to any other
system, because there is no other system that is made up of short line
railroads?
Mr. BUCKLAND. Yes, sir; although there may be this addition, that
the density of traffic in the immediate viciniyt of large cities raises a
necessity for increased trains and increased terminal facilities, which
would apply not only to roasd like ours, like the New York, New
IHaven & Hartford, but I assume to roads like the Long Island, the
Jersey Central, and others that operate out from New York with
comparatively short distances. Further than that I think that we
are a collection of short roads. &
Mr. LLOYD. You think that the bill that is suggested by Mr. Peters,
. º into law, would not sufficiently compensate your system
of roads 7
Mr. BUCKLAND.. I do not know that I know the last bill which he
has submitted. I may say this, for your information, that I ob-
tained figures as to what annual weighings and compartment car
space would pay to our company, and I found that it would diminish
our deficit by about $50,000 a year that is, against the $400,000 we
are losing according to the Postmaster General's admission and some
$700,000 according to our own.
The CHAIRMAN. You say that according to the Postmaster General's
admission you are losing $400,000. That would, in my opinion, con-
vey a false impression to the public. Your contention is based upon
the information submitted by you in reply to specific interrogatories
made of you by the Postmaster General, is it dot?
Mr. BUCKLAND. Not quite that. I understand that the Postmaster
General examined our answers, checked them up, and wherever he
thought they were not accurate, he made them accurate according
to his understanding. In other words, the reports made by the
railroads of this country to the Postmaster General are not the reports
which he adopted in House Document 105.
The CHAIRMAN. House Document 105 contains deductions based
upon the compilation and tabulation made by the Post Office Depart-
ment on the information submitted by the railroads. .
Mr. BUCKLAND. As modified by the Post Office Department after
it had received it.
|
RAILWAY MAIL PAY. 277.
The CHAIRMAN. Modified to the extent of credits and debits under
the data submitted by the railroads and not checked by the Post Office
Department. You received a lot of interrogatories, you answered
them, but the Post Office Department did not send representatives
to go over your books and determine the answers to those questions?
It simply compiled a tabulation of the information you submitted,
and then made such and such deductions according to its own idea
of credits and debits or allowances in accordance with the information
submitted by you. Is not that true? ..
Mr. BUCKLAND. You may be correct, but I do not think that was
it. I thought the Post Office Department of its own motion, where
it believed it was warranted in so doing, modified those figures.
Mr. LLOYD. That is on the question of dead space, return cars, and
things of that kind.
Mr. BUCKLAND. Yes, sir; I think so. I should like to introduce.
at this point, if I may, Mr. Bowman. Owing to the fact that Mr.
Bowman is having a little trouble with his voice. I ask the permis-
sion to read the brief of Mr. Bowman of the firm of Price, Waterhouse
& Co., made upon the report of the value of the service rendered by
the New York, New Haven & Hartford Railroad Co., a copy of which
report I hand to the chairman.
r. WEEKs. Has the firm of Price, Waterhouse & Co. any con-
nection with the New York, New Haven & Hartford road other than
having been employed for this paper ?
Mr. BUCKLAND. None whatever. They are chartered accountants,
and as I understand it have no connection with anybody.
Mr. LLOYD. Where are they located ?
Mr. BUCKLAND. In New York and London, I believe.
Mr. LLOYD. From which office did you get this report'
Mr. BUCKLAND. Perhaps the reading of it will indicate.
The CHAIRMAN. For the time being we will excuse Mr. Buckland
and call Mr. Bowman.
STATEMENT OF MIR, JOHN HALL BOWMAN.
The CHAIRMAN. Mr. Bowman, it will be necessary for you to be
SWOTI),
The witness was thereupon duly sworn by the chairman.
The CHAIRMAN. Kindly state your full name, residence, and
occupation. -
Mr. Bow MAN. John Hall Bowman; residence, Clifton, N. J.;
certified public accountant, and principal of the firm of Price, Water-
house & pº 54 William Street, New York.
y; CHAIRMAN. Have you any other offices than the one in New
Ork &
Mr. Bow MAN. We have also some 10 or 12 offices scattered over
the United States from the Atlantic to the Pacific, and offices in
Canada and Mexico.
Mr. LLOYD. Where are your offices in the United States?
Mr. Bow MAN. The main office in the United States is 54 William
Street, New York City.
Mr. LLOYD. Where are your other offices?
278 RAILWAY MAIL PAY.
Mr. Bow MAN. Boston, Chicago, Pittsburgh, Philadelphia, San
Francisco, Seattle, and St. Louis. 4.
Mr. LLOYD. Is your St. Louis firm doing business under this name 3
Mr. BOWMAN. It is. It is a branch of the New York office.
The CHAIRMAN. Have you or your firm any interest in the New
York, New Haven & Hartford Railroad Co. §
Mr. BowMAN. Other than a professional interest; none whatever.
The CHAIRMAN. Your professional interest is that you are annually
º as chartered accountants, to go over their accounts anp
Iſla, i. a certification as to your findings for the stockholders and the
ublic :
p Mr. Bow MAN. We do not do that at the present time. We are
engaged on this particular occasion for the purpose of preparing this
report and investigating that matter.
The CHAIRMAN. How long were you on your investigation, the
iresults of which are embodied in the report whº, you have filed with
the commission here entitled, “Report on the value of the service
rendered in the transportation of mail for the two and one-half years
to December 31, 1911”? -
Mr. BOWMAN. Between six and seven months, -
The CHAIRMAN. Your investigation and results found apply only
to the value of the service rendered in the transportation of the mail?
Mr. BOWMAN. No. They apply also to the results of the transpor-
tation of other passenger-train service and of freight, as is shown by
the table in the separate pamphlet. .
The CHAIRMAN. The summary pamphlet which the committee have
before it gives, in brief, the information contained and elaborated in
the fuller report? •
Mr. Bowman. It does.
Mr. LLOYD. Other passenger service includes express, does it?
Mr. Bow MAN. It does. *
Mr. LLOYD. Did you make a separate accounting for express 2
Mr. Bow MAN. We did, but the data on the separation of express
from other passenger-train service is not satisfactory to ourselves.
We present it here subject to distinct limitations. The results are
shown on page 188 of the full report.
Mr. WEEKs. Has your firm been employed in connection with pre-
paring statistical information for the Post Office Department?
Mr. BOWMAN. It has in past years.
Mr. WEEKs. On another occasion ?
Mr. Bow MAN. On another occasion.
Mr. WEEKs. State what that occasion was.
Mr. Bow MAN. I am not fully posted as to that work. I was not
connected with it in any way myself. It was an investigation for a
commission in 1907, which was investigating, as I understand it, the
business efficiency of the Post Office Department. Our report there
had to do with the question of business efficiency entirely.
Mr. WEEKs. That is the report I had in mind.
The CHAIRMAN. That was the Weeks-Carter Commission?
Mr. BOWMAN. Senator Penrose was on it, I know.
Mr. WEEKs. That was the Overstreet Commission. It was a joint
commission of the Senate and House. The Weeks bill was simply the
bill that was framed at that time, which was originally introduced by
RAILWAY MAIL PAY. - 279
Mr. Overstreet in the House and, I think, by Senator Penrose in the
Senate.
The CHAIRMAN. In your study of the railway-mail compensation
of the New York, New Haven & Hartford system did you work down
a doctrine on the car-foot-mile basis as to what the system received
per car-foot mile from railway-mail pay, including R. P. O. pay, and
what they received from other services on the car-foot-mile basis :
Mr. Bowman. I do not remember calculating the receipts on that
basis. We used the car-foot-mile basis for arriving at the separation
of the expenses for passenger-train service, but we used it as a ratio
and not as a unit.
The CHAIRMAN. Using it as a ratio, you had to have some figure
even in that utilization. What was the figure that you used ?
Mr. Bowman. The ratio of the car-foot mileage in any particular
service to the total car-foot mileage of the passenger service.
The CHAIRMAN. What did you allow as the car-foot mile ratio for
the passenger service, and what did you allow for railway mail
service 3
Mr. Bowman. We allowed for railway mail service, June 30, 1910,
4.805 per cent of car-foot mileage and for the total passenger-train
service, including express, mail, and passenger, 100 per cent.
The CHAIRMAN. What was the per cent allowed for the express
service'? -
Mr. Bow MAN. In that year 8.772 per cent.
The CHAIRMAN. Then the balance remaining, after adding together
your ratio for express and mail, represented your passenger ratio !
Mr. BOWMAN. The passenger and small sundries that go on passen-
ger trains; a little bit of milk service and a little bit of circus-train
service that is negligible. -
The CHAIRMAN. Negligible?
Mr. Bow MAN. Practically negligible. I do not think it has any
bearing on the figures at all.
The CHAIRMAN. Have you had any experience in transportation
matters other than in the accounting branch 3
Mr. Bow MAN. The accounting branch as applied to both the finan-
cial matters and matters of valuation.
The CHAIRMAN. The statements read by Mr. Buckland as to the
receipts from the Government for the fiscal year 1910–11 and six
months of 1912, and the computed losses to the New York, New Haven
& Hartford system for those years, were based on the determinations
made by your firm'
Mr. Bowman. They were.
The CHAIRMAN. How did you reach the conclusion that, while this
yº. in the fiscal year 1910 received $645,572 from the Government,
ey made a loss in that period of $743,045?
Mr. BOWMAN. By assigning the operating expenses and taxes of the
road as a whole, first, as between passenger-train service and freight-
train service, then resubdividing that assigned passenger-train service
between mail service and other passenger-train service.
The CHAIRMAN. This was an autocratic assignment of yours?
Mr. BOWMAN. The method of this assignment was very similar to
that adopted by the Postmaster General. A great many expenses are
assigned on the basis of the actual purposes for which they were

S
t
280 RAILWAY MAIL PAY.
incurred. Many others have necessarily to be on the best relative
data that can be chosen. *
The CHAIRMAN. The method adopted by the Postmaster General?
How did you get the information as to that method?
Mr. Bow MAN. From House Document 105; the method is described
in that document.
The CHAIRMAN. Did you approve of that method as a specialist in
accounts 3
Mr. BOWMAN. Not fully. In fact, we differed quite a little in it.
But its net results we found to vary less than 2 per cent from the
method as regards the separation of expenses from the method that
we had approved fully.
The CHAIRMAN. That is your own method?
Mr. Bow MAN. Our own method.
The CHAIRMAN. There was but a difference of 2 per cent in net
results between the method requested by the Post Office Department
and your own methodº
Mr. BowMAN. Yes.
The CHAIRMAN. Will you explain for the information of the com-
mittee the difference between the Postmaster General's method
referred to by you in your testimony and your own method :
Mr. BOWMAN. In this full report the Postmaster General's method,
as described in Document 105, has been applied to all operating
* in detail alongside of the method that we prefer and recom-
Ille]] Ol.
The CHAIRMAN. Could you not concisely and briefly state the dis-
tinctions between the two methods, the result of which shows there
is a difference of but 2 per cent in the results obtained .
Mr. BOWMAN. The main difference was due to the fact that where
the Post Office Department was dependent on the imparted data,
we had opportunity to go into all of the records that were available
with a view to getting accurate separations in place of arbitrary ones,
and that condition applied to a large number, particularly many of
the transportation expenses.
The CHAIRMAN. Then, from your experience as a chartered account-
ant, in view of the fact that you had fuller information than that
which was received by the Postmaster General, because the questions
asked by the Postmaster General did not cover all the points, do you
think they had a bearing upon this ascertainment 2 The fact that
there was only a difference of 2 per cent in the results would demon-
strate, to my mind, that the Post Office Department evolved a very
satisfactory method of ascertainment.
Mr. Bow MAN. I do not think it would have fallen as closely on
every road as it did in this one, but it was somewhat of a coincidence.
The CHAIRMAN. What would be the difference between the New
York, New Haven & Hartford road and other systems, from your
viewpoint %
Mr. BOWMAN. The difference is more marked when you come to
taking individual groups of expense. The difference between the
amount assignable to pasesnger, of the maintenance of way and
structures in total, is, roughly, 8 per cent.
The CHAIRMAN. According to which methodº
Mr. Bow MAN. Our method assigns 8 per cent more of the mainte-
nance-of-way expenses to passenger service than the Postmaster
|
RAILWAY MAIL PAY. 281
General's method does. The difference is reversed in the separation
of transportation expenses.
The CHAIRMAN. Then, as I understand you, if you were going over
the accounts of some other system, like the New York Central or the
Pennsylvania, you would not expect to have the results come within
2 per cent of each other?
Mr. Bowman. I would not; no, sir.
The CHAIRMAN. In the brief which you have filed with the com-
mittee, previously referred to, you have summarized all of the infor-
mation contained in the larger report before the committee, have
ou ?
y Mr. BOWMAN. Yes.
The CHAIRMAN. You think you have brought out the salient fea-
tures 7
Mr. Bowman. I believe I have brought out the salient features,
leading, at least, directly to the results shown.
Mr. WEEKs. Will you point out to the committee the pages of
your report of the New York, New Haven & Hartford Railroad on
which appears your demonstration of the difference between the
method adopted by you and the method adopted by the Post Office
Department 7
Mr. Bowman. It covers pages 71 to 160. That matter is dealt
with under the heading of Expenses. The two methods are dealt
with and the reason for abandoning the post-office method is indi-
cated.
Mr. LLOYD. What per cent of operating expenses and taxes did
you assign to mail?
Mr. Bowman. That would show better from the table. I do not
think I have the calculation made.
Mr. LLOYD. It may be obtained from the table, but I did not know
but what you had it. It would be such part as $936,976 bears to
$42,217,789.
Mr. BOWMAN. Yes.
Mr. LLOYD. It would be a little over 2 per cent 7
Mr. Bow MAN. A little over 2 per cent; yes, sir.
Mr. LLOYD. You assign to other passenger-train service $18,681,412,
which would be about 40 per cent 7
Mr. Bow MAN. It is more than 40 per cent. It is 45.
Mr. LLOYD. Can you tell me why you made the assignment of 2
per cent to mail?
Mr. Bow MAN. Because, having divided the expenses between
passenger and freight train service, the two classes, we found that the
mail service represented, as shown on page 183 of our full report,
about 4.8 per cent of the car-foot mileage in the passenger train
Service.
Mr. LLOYD. What relation does that bear to the assignment of 2
per cent?
Mr. BowMAN, Four and eight-tenths per cent of the passenger
train cost is equivalent to that 2 per cent, approximately, of the total
of the passenger train costs and freight train costs, which were
divided on the basis of actual incidence or of calculated incidence
based on relative data.
Mr. LLOYD. In your estimate here, you ascertain that the freight
on that system is carried at a loss and the passenger traffic at a profit º
282 RAILWAY MAIL FAY.
Mr. BOWMAN. It must be; yes, sir.
Mr. LLOYD, And the profit on other passenger service is practically
the same as the loss on mail service?
Mr. Bowman. It is very close.
Mr. LLOYD. Then, using mail as a part of the passenger service, the
F. service was carried practically j. loss, while the
reight was carried at a heavy loss, including the mail?
Mr. Bow MAN. The passenger-train service, mail, express, and
passenger, did work out very closely.
f . LLOYD. But there was a very large loss on the carriage of
reight 7 * .*
Mr. BOWMAN. A large loss on the carriage of freight.
Mr. LLOYD. Generally it must be said that there is more money on
carrying freight than there is on carrying passengers. Have you had
any other source of information to indicate that there was more
money made on passenger service than on the freight service by the
railroads of the country?
Mr. BOWMAN. I do not quite understand your question.
Mr. LLOYD. Have you had any other information from any other
railroads, or from any other source, to carry out the idea that there
is a profit on passenger service and a loss on freight service in the
railroad business of the United States ?
Mr. BOWMAN. I think that is an exceptional condition; it is a condi-
tion that goes with a very dense population, and the natural conse-
quence, high valuation of terminals. Freight terminals include
enormous areas, and if the valuation of land in these areas is very
high; in other words, if the land is in congested portions of the cities,
the terminal costs of handling the freight that comes in through the
fair return on the property required become a very large factor
i. and ºut. ..., most of the profit that would otherwise
be made.
The CHAIRMAN. In your tables, in your summary of your large
report, as I read these things, you say the excess of value of service
over revenue shows a $700,000 loss in mail service, over $5,500,000
loss in freight service, and a total of over $5,500,000 in the entire
service, and a profit of $734,000 plus in the passenger service other
than the mail service. How do you pay dividends of 8 per cent on
the stock?
Mr. Bow MAN. For the reason that a large amount of the stock that
has been issued has been issued at a premium for which no capital
liability exists. In the second place, half of this property is not
represented by any capital value in this company’s accounts. It is
leased property, and the return on that investment is the profit the
company is entitled to by virtue of having guaranteed outright this
rental to the true owners, a rental which is low compared to what
those owners were originally entitled to receive.
The CHAIRMAN. You mean the Boston & Providence, 7 per cent,
and the Old Colony, 7 per cent, and the other lines. After all, the
information which you submit in your summary is predicated on
your own method of adjustment of operating expenses and revenues,
is it not %
Mr. BOWMAN. Of operating expenses and revenues, yes, but no
consideration is taken of the actual financial charges that were
incurred by the company.
RAILWAY MAIL PAY. 283
The CHAIRMAN. But not according to your own statement, unex-
plained, where the New Haven is paying dividends that it is not
68.TIOIIlº. -
Mr. flowwas. The New Haven road does not have to pay out in
cash the fair return on the property used that is quoted here.
The CHAIRMAN. It pays cash for its dividends?
Mr. Bowman. It is owing to the fact that this company, instead of
paying dividends in past years has chosen to reinvest this money in
the property, and is required to pay no return on it in the first place.
In second place, more than half of the property is not represented º
any dividend payments whatever; it is leased property under whic
there is no capitalization included in the New Haven balance sheet.
The stockholders of the New York, New Haven & Hartford road are
entitled to extra compensation for having assumed its properties and
operating them.
The CHAIRMAN. But those are arbitrary allowances which you
made as calculations for business shrewdness and foresight 2
Mr. Bowman. No. I think it has the right to secure a fair return
on the investment as taken over by the New Haven Co. from these
Other companies under the lease.
The CHAIRMAN. Do you make any computation as to the revenues
received in railway mail pay from the Government, and the actual
cost of the operation and hauling of the mail ®
Mr. Bowman. The first item in here, operating expenses and taxes,
is supposed to be the actual cost as nearly as can be ascertained, of
the handling of that mail, $936,976, for the year ending June 30, 1910.
The CHAIRMAN. Then the loss under that method of computation
would be the difference between these figures and the $645,572 that
the system receives from the Government in railway mail pay.
Mr. BOWMAN. Yes, sir. &
The CHAIRMAN. The apparent loss at the bottom, excess value of
service over revenue, is a deduction based on autocratic charge on
capital account in your computation, is it not ?
. Bowman. I do not like to call it autocratic.
The CHAIRMAN. Well, arbitrary. -
Mr. Bowman. It is arbitrary in a sense, but on the other hand the
value of the property that is used in operation is known in this case
case very accurately. When I say “very accurately” I mean rela-
tively. We will say it is within 2 or 3 per cent of what is the true
value of that property, as nearly as may be estimated. The rate
at which that return has been taken is 6 per cent on this depreciated
valuation. The result is a figure that is arbitrary in itself, but at the
same time it is a minimum figure because we do not see how any
method of computation could arrive at a smaller figure as a fair
return. º
The CHAIRMAN. Is this interpretation of your statement for the
year ending June 30, 1911, a fair one º You show operating expenses
and taxes for the mail service of $944,217, and you show actual
revenue from transportation, $646,846. Would not the difference
between these two statements represent the actual loss to the New
York, New Haven & Hartford road based on a computation of oper-
ating expenses and taxes and actual revenue received from that %
Mr. BOWMAN. Based as you have stated; yes.
284 RAILWAY MAIL PAY.
The CHAIRMAN. The loss you show of $728,943 takes into consider-
ation capital charges which, in your judgment, the conditions warrant
and are just and fair? -
Mr. BOWMAN. Perhaps I might put it in another way. It takes
into consideration the fact that the Post Office Department should
pay for the use of this enormous property that is at their disposal for
the transportation of mail, as well as for the actual cost of carriage
over the facilities. - *
The CHAIRMAN. Which you estimate should be a value to the Gov-
ernment of the difference between the actual loss sustained on the
two sets of figures I have mentioned and the difference of the amount
which you state, in your judgment, is a fail return on the value of
the property used. * i
º łº A fair return on the value of the property used is
the difference between our excess value of service and the figures
which you arrive at as the operating loss, subject to this secondary
revenue which has to be considered with a fair return on the value.
The CHAIRMAN. Then the actual loss would be the difference
between a fair return on the value of the property used and the
excess of value of service over revenue, that difference being, namely,
$197,941% & -
Mr. BOWMAN. I am afraid I am getting a little bit lost in this.
The CHAIRMAN. What do you figure your actual loss—the differ-
ence between $944,277 and $646,846%
Mr. BOWMAN. That is the operating loss. t
The CHAIRMAN. What is your distinction between actual and
operating loss %
Mr. BOWMAN. The actual loss is the loss after consideration is
given to the use of all of these facilities.
The CHAIRMAN. What do you allow as a compensation for the use
of these facilities 2 Is that estimated on the 6 per cent basis 3
Mr. BOWMAN. Six per cent on the depreciated costs of reproduction.
Mr. LLOYD. I understood you to say also that you charged up
something for cars not used but prepared and ready for use?.
Mr. Bow MAN. I do not recognize that statement. I did not
lº to make any such statement. I do not know just what you
refer t0.
Mr. LLOYD. I so understood you, that you thought somc thing
should be charged for this equipment that is required in the Rail-
way Mail Service, which at different times might not be used, but
capital was invested in it, and it was part of the investment of the
railway company for which compensation should be received.
Mr. Bowman. I was not aware that I had gotten into that ques-
tion at all. * --
Mr. LLOYD. If you do not intend it so, do not follow the question
now, except I would like to know whether you did take that into
aCCOunt Or not. -
Mr. Bowman. I did not take it into account, for the simple reason
the condition does not exist.
Mr. LLOYD. You mean the mail cars are used all the time 3
Mr. Bow MAN. I believe that all of the cars equipped for mail
service on the New Haven road are practically in use. -
RAILWAY MAIL PAY. 285
Mr. Lloyd. Did you take into account the passenger coaches that
might be prepared and ready for use, but might not be used by the
company?
. Bow MAN. Yes. All of the passenger equipment was taken
into consideration. If there was any such principle as that applied
it would have worked against the mail service so as to reduce the
cost of the mail service.
Mr. WEEKs. Has the New York, New Haven & Hartford road
equipment enough to perform the service'
Mr. Bow MAN. The mail service º .
Mr. WEEKs. All of its service 3
Mr. Bow MAN. I believe so.
Mr. WEEKs. Has it freight cars enough 3
Mr. Bow MAN. I do not know about the freight cars. It is very
easy to draw on other roads for freight cars, and vice versa.
Mr. WEEKs. What do you mean by “depreciated costs”?
Mr. Bow MAN. The cost to reproduce new, less a depreciation to
cover athe wear and tear in its present condition.
Mr. WEEKs. For how long a time?
Mr. Bow MAN. On the basis of the present condition of the facilities
at the time the engineering work of the appraisal was done. That
was done three or four years ago, but that average condition may be
regarded, broadly speaking, as being maintained, because where one
thing has been replaced another thing has gotten a little bit older.
Mr. WEEKs. What percentage of your total operating expenses
and taxes does the $944,217 charged to mail service, under your
statement for the year ending June 30, 1911, represent to all the
operating expenses and charges }
. Bow MAN. That question I was answering previously in con-
nection with the previous year. It is the percentage of $944,000 to
$44,476,000, as shown in that table.
Mr. WEEKs. What percentage of your total operating expenses
and taxes, in your statement, do you charge to mail service
Mr. BOWMAN. No particular percentage. The percentage is what
it works out. - -
Mr. WEEKs. Can you tell us what that is ?
Mr. Bow MAN. Approximately 2 per cent.
Mr. WEEKs. Then in a fair return on the value of the property
used, you make the same percentage charge to the Railway Mail
Service all the way through in this table?
Mr. Bow MAN. Not quite, no.
Mr. WEEKs. Why do you make a difference?
Mr. BOWMAN. It is dealt with in this pamphlet in some place.
There is an allowance made in the matter of equipment.
Mr. WEEKS. It would be hardly appreciable on a percentage basis,
would it -
Mr. BOWMAN. It is a very large amount. . The equipment is not
at all regarded as proportional to the expenses.
Mr. WEEKs. How about your classification of secondary revenues
incidental to but not direct compensation for transportation ?
Mr. BOWMAN. That is direct assignment.
Mr. WEEKs. Your percentage charged to the mail would be cor-
responding to the percentage charged to the mail under operating
expenses and taxes & -

286 BAILWAY MAIL PAY.
Mr. Bow MAN., No. The percentage of the total passenger charge
to the mail is the same, but the percentage of the total is not #.
same. The subdivision between passenger and freight service in
that case was actually according to the character of the revenues.
They were distinguishable. -
Mr. WEEKs. Then your statement for the year ending June 30,
1911, under your computation here, as to operating expenses and
taxes, taking that as a factor only, and your revenues received from
transportation would show a direct loss of $297,371 to the New York,
New Haven & Hartford system for that fiscal year, eliminating any
returns on capital allowance. - -
Mr. Bowman. Yes, sir.
Mr. WEEKs. Is your firm chartered accountants for other railroad
systems ?
Mr. BOWMAN. Our firm has done professional work for, I imagine,
about one-third of the mileage of the United States. +
Mr. WEEKs. Do you find in your work for these other systems a
similarity or a distinct difference between the other roads and the New
York, New Haven & Hartford, so far as this particular item of per-
centage of railway-mail pay is concerned, as compared with revenue !
Mr. BOWMAN. I have not made those calculations of mail service
for any other railroad excepting the New Haven.
Mr. WEEKS. Is there a general, universal system in the way of
determination of railroad accounts, according to your experience?
Mr. Bow MAN. By which the accounts of the road may be based ?
Mr. WEEKS. Yes.
Mr. BOWMAN. I do not think so. It would be a general-average
rule, but subject to a very great variation and must always be left open
to special interpretation.
Mr. WEEKs. Then you simply audit the accounts of the different
transportation companies based on their system of accounting and not
on your own 2
Mr. Bow MAN. Their system of accounting is rather limited by the
Interstate Commerce Commission’s requirements, and it takes a
general uniformity. In order to carry the accounting system beyond
that required by the Interstate Commerce Commission and make it a
cost system, there must be allowed leeway for variation from those
rigorous rules of the Interstate Commerce Commission, because they
will not apply.
Mr. WEEKs. Do you audit according to the system used by the
ºtent companies or according to your own system applicable to
all 7
Mr. BOWMAN. Our purpose in auditing, as a rule, is to secure true
financial statements that are true to the stockholders and the finan-
cial investors. -
Mr. WEEKs. But your audit is based on the system in vogue for
the company for whom you are auditing and not your own 2
Mr. Bow MAN. Not our own; no, sir.
Mr. WEEKs. Does the New York, New Haven & Hartford road
own freight terminals in New York? .
Mr. Bow MAN. Yes, sir.
Mr. WEEKs. How do you get at the value of those terminals, or
how was it done when the valuation of the property was made?
RAILWAY MAIL PAY. 287
Mr. Bowman. The New York terminals were very largely taken
at actual cost in recent years.
Mr. WEEKs. What do you mean by that ? Those terminals must
have been acquired, or parts of them, a great many years ago.
Mr. Bowman. The greater portion of that investment is an in-
vestment of recent creation; I should think within the last 10 years.
Mr. WEEKs. Let us take the passenger terminals at New York and
assume that the New York, New Haven & Hartford road owns the
Grand Central Station. How would you get at that value?
Mr. Bowman. I did ascertain the value of the Grand Central Sta-
tion property. Generally it would be the cost to reproduce all of
the improvements that constitute that terminal.
Mr. WEEKs. How did you figure the land?
Mr. BOWMAN. The j at its present valuation, based on the pres–
ent value of surrounding and ... property. We do not figure
a multiple in that at all. The western commissions have allowed
a multiple on account of the excessive cost that the railroad has to
pay for land.
Mr. WEEKs. Is that a fair valuation ?
Mr. BOWMAN. Which 3 With the western idea º
Mr. WEEKs. No. Based on the value of the surrounding property.
Is not the property worth more than it would be if the railroad was
not there 3 A -
Mr. Bow MAN. I think, in the first place, the property, adjacent
to a railroad is worth less than it would have been if #. railroad was
not there, assuming that the district had railroad facilities. I think
that the railroad tends to depreciate the value of surrounding prop-
erty, rather than to increase it.
Mr. WEEKs. It does for some purposes.
Thereupon, at 1.30 o'clock p. m., the committee took a recess
until 8 o’clock p. m.
AFTER RECESS.
The committee met after recess, at 8 o’clock p. m.
Present: Senator Jonathan Bourne, jr. (chairman), Representative
James T. Lloyd, Representative William E. Tuttle, jr., and Repre-
sentative John W. Weeks.
STATEMENT OF MB, JOHN HALL BOWMAN–Continued.
The CHAIRMAN. When we took our recess this afternoon we had
under consideration the tables in your summary, entitled “A Brief
Memorandum of the Results of an Investigation made by Price,
Waterhouse & Co., Chartered Accountants, which are described fully
in the report to C. S. Mellen, president, under date of October 31,
1912.” at elucidation would you be able to make in reference to
that summary where, under the item “Excess of value of service over
revenue,” you show an excess of value in the mail service, a large
excess of value in the freight service, a small excess of revenue in the
passenger service, and a total excess of value over revenue in all
service, the query being as to how you would be justified in paying
dividends under such a presentation. Would you kindly explain that
for the information of the committee ?
75904—No. 1–13—19
288 RAILWAY MAIL PAY.
Mr. Bow MAN. The explanation might be made in this manner:
The actual fixed charges and dividends are shown in the income
accounts of the company attached to the full report as Exhibit 1.
The CHAIRMAN. Could you not, without reference to a long report,
containing some one hundred and eighty odd pages, give a brief
explanation as to that ?
r. Bow MAN. I am going to do that.
The revenues sº received on all traffic yielded about 5 per
cent on the depreciated value of the property used in operation. Such
a rate was adequate, as may be seen from the reports, to pay, along
with the income from activities other than railroad operation, the
interest and rental charges for which the company was obligated and
to leave a little more than 8 per cent in 1909–10 and a little less than
8 per cent in 1910–11 on the outstanding capital stock. Inasmuch as
the value of the property is vastly greater than its capitalization,
owing to the issue of the stock at large premiums and to .. expendi-
ture of important sums out of income or surplus for capital purposes,
and inasmuch as the fair return on the values of the leased properties
is in general much greater than the rentals paid, it naturally follows
that the full return would if earned justify an increase of stock that
would bring the capitalization to an amount more nearly approaching
the true value of the property. -
The CHAIRMAN. Your annual statement shows that you earned
about 8 per cent on the stock'
Mr. Bow MAN. About 8 per cent. w
The CHAIRMAN. What would you have earned on this stock if,
under this statement referred to by me in the interrogatory on the
resumption of the hearing this evening, you had broken even on the
freight service or the total service º What dividends could you have
paid on the stock or would you have shown as earned on the stock?
Mr. Bow MAN. About 10 or 11 per cent.
The CHAIRMAN. Instead of the 8 per cent'
Mr. BowMAN. Instead of 8 per cent; yes.
The CHAIRMAN. As I understand, referring again to statements in
your summary for the years 1910 and 1911, the items, “Fair return
on value of property used” are based upon the value of the property
determined by you, which is about $20,000,000 less than what the
commission of Massachusetts allowed as the physical valuation of
#. pro ºy of the New York, New Haven & Hartford system. Is
that right'. g t
Mr. #ºws. It is less by a greater amount—the valuation used
for the New York, New Haven & Hartford property.
The CHAIRMAN. Based on the whole system or the company
I’OTO €I’. -
p Ş. Bow MAN. Based on all property operated by the New York,
New Haven & Hartford Co.
The CHAIRMAN. What is this statement based on ? -
Mr. BowMAN. All property operated by the New York, New
Haven & Hartford Railway Co., included in its income. •
The CHAIRMAN. Does this cover the returns of the aggregate of
7,000 miles or the return of the 2,000 miles of the New Haven Co. ?
Nſr Bowman. The return of the 2,000 miles.
RAILWAY MAIL PAY. 289
The CHAIRMAN. What is the stock and bonded indebtedness of
that amount, of about 2,000 miles, or the New Haven system proper,
as I think you designate it?
Mr. Bowman. The capital indebtedness of the New Haven system
is $424,000,000, as of June 30, 1911.
Mr. TUTTLE. That is the system :
Mr. Bowman. That is the operating system.
Mr. TUTTLE. What is the mileage of that ?
Mr. Bowman. Two thousand and forty-one miles of first track.
Mr. TUTTLE. That is the New York, New Haven & Hartford
Railroad 7
Mr. Bowman. Yes, sir.
Mr. TUTTLE. You say the bonded and stock indebtedness is what,
on the New Haven proper ?
Mr. Bowman. $424,221,292.98.
The CHAIRMAN. How do you get cents and odd dollars on the
stock and bonded indebtedness on a computation at par?
Mr. Bowman. The cents come in in the form of capital obligations
that are not represented by bonds or mortgages, but the payment of
which is deferred. *
The CHAIRMAN. Those are rentals?
Mr. Bowman. No ; they are not rentals.
The CHAIRMAN. Borrowed money, or accounts payable?
Mr. Bowman. It is liability for property used in operation and
taken over—equipment, and things of that kind.
The CHAIRMAN. Eliminating all of that, what is the total bonded
indebtedness and the total stock indebtedness of the New Haven
system; that is, the New York, New Haven & Hartford Railroad Co. 3
Mr. Bowman. The bonded indebtedness and stock indebtedness
would be $474,803.98 less than the amount I stated. -
The CHAIRMAN. As against the four hundred and twenty-four odd
million dollars bonded and stock indebtedness at par, what is your
physical valuation as determined under your own figures, which, as I
understand from the vice president, Mr. Buckland, is less than the
amount allowed or accredited to you by the Massachusetts validation
commission ? What was the valuation allowed by this commission
8. the property of the New York, New Haven & Hartford Railroad
o. 3
Mr. Bow MAN. The date of the validation was June 30, 1910, a year
rior to the date that I gave you those figures. At that date the total
#. validated was $394,147,563.63. The cents included at that
time are not due to the same item I included before. I do not know
what this item represented without some reference. The odd cents
there were due to installments for stock in the course of issue. The
valuation of the corresponding properties and securities shows an
excess over that amount of $101,612,074.38.
The CHAIRMAN. Am I to understand that the validation commission
under their allowance simply gave you a net credit of $101,000,000 as
against four hundred and twenty-four odd millions of dollars of bond
and stock issues? What I want to get at is what allowance did this
validation commission give the New York, New Haven & Hartford
Railroad system for the physical valuation of all their property?
s Mr. Furt, Did this commission value the property in other
tates
290 RAILWAY MAIL PAY.
Mr. Bow MAN. No; the engineers who were employed by the com-
mission, Stone & Webster, have done a great deal of valuation work.
Mr. TUTTLE. Have they valued property in the other States in
which this system runs 3
Mr. Bow MAN. Yes. The commission took over all the New York,
New Haven & Hartford properties wherever they might be.
Mr. LLOYD. Leased lines and all?
Mr. Bow MAN. They did not cover the leased lines. It was only
the property owned by the New York, New Haven & Hartford.
They were establishing a validation of assets. The valuations that
were dealt with here in our report are the valuations of property used
in operation, whether owned or whether rented.
The CHAIRMAN. Then the data upon which you base these two
tables is on the property rented, owned, and operated properties, by
the New York, New Haven & Hartford system 7
Mr. Bow MAN. Yes, sir; but not controlled and independently
operated. These are not touched at all.
Mr. LLOYD. What roads are controlled and independently operated ?
Mr. Bowman. The New York, Ontario & Western, for example.
The CHAIRMAN. What roads are owned and directly controlled by
the New York, New Haven & Hartford 7
Mr. Bow MAN. And included in the operation? The only one I
remember outside of the New York, New Haven & Hartford is the
JHarlem River & Port Chester. -
The CHAIRMAN. What roads are owned and directly operated by
the New York, New Haven & Hartford 7
Mr. BowMAN. The New York, New Haven & Hartford proper and
the Harlem River & Port Chester. * -
The CHAIRMAN. The Boston & Providence?
Mr. BOWMAN. The Boston & Providence is a leased line.
The CHAIRMAN. What we have to find out is upon what company's
property, according to my idea, Mt. Bowman º the return under
the heading of “Fair return on value of property used.” What I
would like to know is what the general stock and bonded indebtedness
is of these companies on whose properties you make an estimate of
fair return on value of property i. %
Mr. Bowman. I do not think we have that available.
The CHAIRMAN. But you must know upon what data and terms
you draw a conclusion to make a specific statement that under the
eading “Fair return on value of property used,” your system should
receive $25,000,000 %
Mr. BowMAN. That $25,000,000 is derived entirely from valuation.
The CHAIRMAN. It is a physical valuation ?
Mr. BowMAN. Yes.
The CHAIRMAN. Of what property 2
Mr. Bow MAN. Of the New York, New Haven & Hartford property
itself and the following leased lines: The Old Colony Railroad, the
Boston & Providence Railroad, Providence & Worcester Railroad,
Norwich & Worcester Railroad, Harlem River & Port Chester Rail-
road, Holyoke & Westfield Railroad, Providence, Warren & Bristol
|Railroad, the Plymouth & Middleboro Railroad, and the Chatham
Railroad; of certain properties operated jointly of which a percentage
of the valuation corresponding to the use was taken, part of the New
RAILWAY MAIL, PAY. 291
York & Harlem River Railroad tracks from Woodlawn to Grand
Central Station, New York; use of the Grand Central facilities,
South Station facilities at Boston, use of certain tracks between Ster-
ling Junction to Worcester, Hopewell Junction to Poughkeepsie,
Shelburne Junction to Shelburne Falls, and the use of station facilities
at Springfield, One hundred and twenty-fifth Street Station (New
York), New London, Worcester, and various minor points.
The CHAIRMAN. The valuation for the joint usage of those tracks
and these facilities is an arbitrary valuation made by you, or by this
Massachusetts Commission ?
Mr. Bow MAN. The Massachusetts Commission figures we can only
compare in the case of the New York, New Haven & Hartford proper,
which constitutes the greatest portion, as it happens, of the total
valuation of the properties.
The CHAIRMAN. Given the valuation of this property, what per-
centage or sum did you arbitrarily make as a fair return in order to
obtain your figures under the total column of $25,0000,000 plus ;
Mr. Bow MAN. I do not think we made any percentage of it arbi-
trarily. The valuations that were used when the complete valua-
tions were not available were either cost or they were a #. known
to be absolutely safe within the cost or present value.
The CHAIRMAN. It seems to me my question is very simple and
easily answered. How do you get your $25,000,000, which you say
is a fair return on the value of property used ? You say you ascer-
tained the value of the property. What do you estimate and deter-
mine is a fair return on that valuation; if your property is
$1,000,000,000, what is this percentage, 6 per cent, 1 per cent, 5
per cent, or what? How do you get the $25,000,000 :
Mr. Bow MAN. That is 6 per cent on values that were arrived at.
The CHAIRMAN. Then presumably the total valuation of these
properties directly owned and operated and in which you had equities
or joint interests, represented a capitalization, which, computed on
the 6 per cent basis would be 16 times as great as this $25,000,000.
Is that it
Mr. BOWMAN. Yes, sir. -
The CHAIRMAN. The item “Operating expenses and taxes” was
derived upon taking the total operating service or cost of all the dif-
ferent companies described by you in your previous answer and arbi-
trarily computing the 2 per cent of that aggregate as the operating
expense of the mail service. Is that right 2
Mr. BOWMAN. No, sir; that is not stated correctly. In the first
lace the total operating expenses are the operating expenses of the
ew York, New Haven & Hartford Railroad proper, precisely as
expended. The other companies had no operating expense because
they were all operated by the New Haven Co. In the second place
the subdivision worked out to 2 per cent or thereabouts, but is is
done by a system of subdivisions that is based on minute study and
the best judgment, item by item throughout.
The CHAIRMAN. Had you determined that the percentage was I
instead of 2, you would have shown a slight profit instead of a loss
in the actual expense of the mail service, would you not ?
Mr. Bow MAN. No. If that had been one instead of two——
The CHAIRMAN. That would have been the case in the year 1910?
292 FAILWAY MAIL BAY.
Mr. Bow MAN. It would have shown a slight operating profit, but
not an actual profit. -
The CHAIRMAN. You have not a statement of any one of the various
systems operated by the operating company segregated, so that you
could show what the capital indebtedness is, cost of operation, and
the physical valuation, and the deductions made on that one segre-
gated unit of the whole system, have you ?
Mr. Bow MAN. The operations are not kept separate for these dif-
ferent units. The operations are all one for the system, and there are
no statistical or other records kept of the individual operations.
Mr. LLOYD. Does the system include the independent lines?
Mr. Bow MAN. No, sir. We are not dealing with any lines that have
independent operations.
Mr. LLOYD. None at all ?
Mr. Bow MAN. No. Excepting the New Haven itself.
Mr. LLOYD. As I understand from these two tables in your sum-
mary for the years 1910 and 1911, you show an actual loss in the mail
service to the New York, New Haven & Hartford system of $291,404.
Mr. BOWMAN. Yes, sir; an operating loss of that amount.
Mr. LLOYD. That is arrived at by taking the actual operating ex-
#. plus taxes, of the entire system and figuring a percentage a
ittle less than 2 per cent of that as charged against the mail service
of the system. Is that it
Mr. BOWMAN. Yes, sir.
Mr. LLOYD. That little less than 2 per cent is a charge arbitrary in
its nature, but based upon the best known methods in railroad
accounting" -
Mr. Bow MAN. Yes, sir. - .
Mr. LLOYD. Agreeing with the method of accounting suggested
by the Post Office Department in its letter to you, answers to which
were the basis for what is known as House Document No. 105 with a
2 per cent variation between your own method and the method of the
Post Office Department.
Mr. Bow MAN. It has the result in net.
Mr. LLOYD. Now you claim that you have actually suffered a loss
by insufficient compensation from the Government for railway mail
pay, including R. P. O. service, of $743,035 for the fiscal year ending
June 30, 1910, that claim being based upon a 6 per cent allowance,
which from your viewpoint you should be credited with on the phy-
sical valuation of the properties engaged in the activities that you have
with the United States Government, such valuation being determined
by the board of railroad commissioners, the tax commissioner, and
the bank commissioner—the special board appointed by the Massachu-
setts Legislature. Is that right 3
Mr. Bow MAN. No, sir; that is not correctly stated.
Mr. LLOYD. Then will you make a correct statement' -
Mr. Bow MAN. It is correct, excepting for the valuation, which is
not that of the Massachusetts Validation Commission but is a valua-
tion which was in large part restudied by them and is covered by their
report, the part which they studied being shown to be undervalued
by them to the extent of some $20,000,000. -
Mr. LLOYD. Then, this question that I have pui applies to the
valuation made by the New York, New Haven & Hartford system
of its own 2
RAILWAY MAIL PAY. 293
Mr. Bow MAN. Yes. º
Mr. LLOYD. Which, as I understand from the previous answer, was
some $20,000,000 less than what this commission I have just referred
to allowed you?
Mr. Bowman. Yes, sir.
Mr. LLOYD. So that you would show a still further loss on the 6
per cent basis on the valuation if you took the valuation allowed by
this commission instead of your own valuation?
Mr. Bowman. Yes, sir.
Mr. LLOYD. Or $120,000 added to this?
Mr. Bow MAN. Yes, sir. *
Mr. LLOYD. Is it true that the public which has been served by the
New York, New Haven & Hartford Railroad has not received by
$5,595,088 for the year ending June 30, 1910, of the amount that it
actually expended in improving the service which it did render'
Mr. Bow MAN. No, sir. The return over and above the expendi-
tures for that year was less than the amount to which it may be
regarded as fairly entitled by that amount of $5,595,088.
Mr. LLOYD. Then, as a matter of fact, the Government for hand-
ling the mail should pay the New York, New Haven & Hartford
$743,035 in order to make a reasonable compensation, but it is not
necessary for the public served otherwise to pay the $5,595,088%
Mr. Bowman. The situation in regard to freight service is not
hardly under consideration, is it? We have not given consideration in
our report as to what the status of the freight service was.
Mr. LLOYD. You have a statement here in which you say “Excess
of value of service over revenue” was $5,586,088, and you place it
exactly on the same basis as the mail service. Here is shown a loss
in the mail service of $743,035 and a loss in the freight service of
$5,586,727. -
Mr. Bow MAN. There is a question that enters into the freight
service and that is the value to the shipper. It is possible that the
value of the service is less than a fair return on the value in the case
of freight. We do not think that such a condition can conceivably
exist in the case of the mail service. The value of the service to the
Government is incalculable and there is no basis for getting at it, but
it is certainly not a service that can be regarded as not able to bear
a fair rate of charges.
Mr. WEEKs. Let me assume that the physical valuation is
$425,000,000 and you are figuring that you should earn 6 per cent
on that valuation. That would amount to $25,500,000. Based on
that figure your operations show that you lost five and one-half mil-
lion dollars, in round numbers, in other words, you earn $20,000,000.
I think these figures are substantially correct, but assuming that they
are corregt, in 1909 you had outstanding $240,000,000 of bonds and
$100,000,000 of stock; on the bonds you were paying 4 per cent, or
$9,600,000, and on the stock you were paying 8 per cent, or $8,000,000,
making a total of $17,600,000. That left a surplus of $2,400,000
in the operations of the road to pay the leased charges or whatever
other charges you had to pay, but certainly showed in the net result
that the R. York, New Haven & Hartford Railroad would make
enough to pay 8 per cent on its capital stock?
Mr. Bow MAN. Yes, sir; that is correct,
294 RAILWAY MAIL PAY.
Mr. WEEKs. Does not that illustrate why you show a deficit of
$5,500,000, based on your valuation, and at the same time show why
you were able to pay your interest charges and show a dividend of 8
per cent on your capital stock outstanding. •
Mr. Bow MAN. Yes. If the full amount had been earned it would
have made it possible for the company to have enlarged the capitali-
zation to a point that would more nearly have covered all the property
that it actually possessed.
Mr. WEEKS. H. us assume that in that year you earned 6 per cent
on your valuation, or $25,500,000. That would have been 4 per cent
on your bonded debt and 16 per cent on the capital stock.
Mr. Bow MAN. Yes; on those figures.
Mr. WEEKs. Does not that absolutely illustrate why you are able
to pay an 8 per cent dividend, and have been, and at the same time
show a deficit in operation based on your valuation figures.
Mr. Bow MAN. That illustrates it perfectly.
Mr. LLOYD. If that is a correct hypothetical statement, then the
fair return on the value of the property used in the mail service for
the year ending June 30, 1910, includes the payment on all bonds
and 8 per cent interest on the capital stock.
Mr. Bow MAN. And a very low rental on very many properties, a
normal rental on others. It contains the only provision that is made
for abandoned property further.
Mr. WEEKs. If the interest was not paid and the 8 per cent divi-
dend was not paid and only actual operating expenses and taxes
were taken into the account, what would be the loss?
Mr. Bow MAN. About $20,000,000, if I understand you correctly.
Mr. WEEKs. What would be the loss on account of mail?
Mr. Bowman. On mail service about $291,000.
The CHAIRMAN. $291,000 for the fiscal year 1911 ?
Mr. BOWMAN. Yes.
Mr. LLOYD. If you had fixed 1 per cent of the total operating ex-
penses and taxes as the amount that should be met by mail service,
there would have been a profit made in carrying the mail, would
there not
Mr. Bow MAN. One per cent would not have been enough to have
made a profit. .
Mr. LLOYD. You fix nearly 2 per cent, or about 2 per cent. Sup-
ose that somebody else in making the ascertainment would have
ed it at 1 per cent. In that event there would have been a profit
for carrying the mail, would there not ?
The CHAIRMAN. Under that method of apportionment, there would
have been an operating profit in the year 1910 of $177,094, or debit
to the mail service.
Mr. LLOYD. In order to show that you are correct it would be a
fine thing if you could make a perfectly plain statement that the 2
per cent is the proper amount chargeable on account of the mail
service. I am not saying you have not done so.
The CHAIRMAN. If you will permit me to * you just there,
Mr. Lloyd, if I correctly understood Mr. Bowman, he claims that his
method of ascertainment as to the charge, practically a little less than
2 per cent, is in accordance with the Postmaster General's method of
ascertainment for the percentage to be charged to the mail, with a
difference of 2 per cent in the two methods—Mr. Bowman's method
RAILWAY MAIL PAY. 295
as indicated here and the Postmaster General's method as indicated
in interrogatories which led to what is known as Document 105—a
variation of 2 per cent only in the net results obtained by the appli-
cation of the two methods.
Mr. LLOYD. What I am aiming to get at is this: Is it not true that
the determining factor as to whether there has been a profit or a loss
for carrying the mail depends very largely upon the per cent that is
chargeable for carrying the mail?
Mr. BowMAN. The present per cent of the total expense?
Mr. LLOYD. Yes.
Mr. Bowman. Yes; that is the whole thing.
Mr. LLOYD. As I understand, you are a specialist in accounting?
Mr. BOWMAN. Yes, sir. * &
Mr. LLOYD. And you do not claim to be in transportation matters ?
Mr. Bowman. No; except that I have been engaged in railroad
accounting during the greater part of the last 15 years.
Mr. LLOYD. W. you feel qualified to pass upon the question
of the desirability of the substitution of space for weight as the
determining factor for the measure of the service rendered ?
Mr. Bow MAN. No, sir. I would like to read a short extract from
the full report bearing on that question, which is found on page 169
entitled “The choice of methods for separating the cost of passenger-
train service”:
The several classes of passenger-train traffic are commonly handled in the same
trains, though trains exclusively for passengers, mail, or express are also to some
extent hauled. The manner of running the exclusive trains differs, however, so
little in any respect pertinent to this inquiry from that of the common trains that
there is no advantage to be gained by attempting to deal with them separately.
The basis of subdivision is to be found in some common dimension or measure that
is applicable to each class. The measures of this character that call for consideration
are :
... Weight of cargo.
. Weight of car.
. Combined weight of car and cargo.
. Cubic space in car.
. Floor space in car.
. Inside length of car.
The weight of the cargo is less than 10 per cent of the weight of the cars themselves,
and as passenger-train cars are rarely loaded to capacity, increasing the cargo would
not in all probability noticeably increase the dead weight, while, on the other hand,
dead º: might be substantially increased to meet public demand for additional
train service without corresponding increase in the cargo. It is obvious that this
measure is not adequate.
The weight of the car is inadequate also for reasons analogous to those just cited
in regard to cargo weight. • 's
The combined wieght of car and cargo has a much stronger claim to consideration.
If it could be ascertained for each of the three classes it would provide an admirable
measure. Unfortunately it requires the use of too many arbitraries:
1. The weight of the passengers and their baggage.
2. The weight of the express matter,
3. The weight of the pouch mail.
4. The weight of mail in R. P. O. or apartment cars.
The weight of exclusive cars could be dealt with adequately after some labor,
but the weight of that portion of common cars used for pouch mail service and for
part of the express service would of necessity be arbitrary.
The lack of information in the respects mentioned is not due to mere failure to
º data but to impossibility of i. so in some cases and impracticability of
oing so in others. This measure must therefore be discarded as a working meas-
ure but kept in mind as a sound one in theory. -
The cubic space in the car differs in no important respect as a measure from the
floor-space basis, inasmuch as the variations in height do not affect the capacity of
:
296 RAILWAY MAIL PAY.
a passenger-train car except in the case of the express or baggage car. The tendency
is toward standard height. -
The floor space in its turn is proportional to the inside length, inasmuch as the cars
are of practically standard width. Linear car feet therefore measure for practical
purposes the cubic or the Square space as well as the length and may be considered
as proportional to the other two. f
I think there is some light, perhaps, on that subject.
The CHAIRMAN. That is very illuminating, indeed, and I infer
from same that you believe that space, as measured by linear car-foot
measure, is far more scientific than weight as the measure of service
rendered in mail transportation?
* BOWMAN. I do, owing to the enormous percentage of dead
Welght. Ç
The CHAIRMAN. You concur then with the Post Office Depart-
ment's views as presented on that particular phase of the question
in Document No. 105?
Mr. BowMAN. Fully. 4
The CHAIRMAN. Is this conclusion of yours based on your expe-
rience with the New York, New Haven & Hartford system, or on the
experience your firm has had with practically one-third of the rail-
road mileage of the United States ? -
Mr. Bow MAN. This is based on all of the experience that I have
accumulated, personally, perhaps, rather than the firm's experience,
because I largely wrote this myself.
The CHAIRMAN. You think then that the linear car foot should be
the basic measure upon which the question of railway mail pay must
rest fundamentally'
Mr. BOWMAN. That is my opinion.
The CHAIRMAN. You eliminate weight entirely except so far as the
pouch service is concerned ?
Mr. Bow MAN. Eliminate weight for the reason that it introduces
factors that are impossible of accurate determination. Combined
weight of car and cargo furnishes a very excellent method, but it is
impracticable.
The CHAIRMAN. But the only way weight would enter into the
problem at all would be the linear foot space occupied based upon
the supposed weight of a pouch of mail?
Mr. Bowman. Yes, sir.
The CHAIRMAN. It would be space º
Mr. Bow MAN. Space.
Mr. WEEKs. Do you know how much a steel car 60 feet long
weighs 3
Mr. Bow MAN. Not accurately, but something like 100,000 pounds
Ol' OVéI’.
Mr. WEEKs. Do you know how much the mail, if that car were a
storage car and were filled with mail, would weigh 3
Mr. Bowman. I know nothing about the weight of mail, exceptin
the information elicited at the Walcott commission’s inquiry severa
years ago.
Mr. WEEKs. Do you remember that figure?
Mr. Bowman. About two to three tons, and that was regarded as
high, I believe.
Mr. WEEKs. Then the car would weigh in round numbers 45 tons
and the mail not to exceed three tons?
RAILWAY MAIL PAY. 297
Mr. Bowman. I think that would be fairly putting it in approxi-
mate figures.
Mr. WEEKs. How much would a car with a steel frame and wooden
upper structure weigh, do you know?
Mr. Bowman. I have one class of cars here which weigh about
93,500.
Mr. WEEKs. Then a steel car would weigh more empty than the
steel frame car with a wooden upper structure loaded?
Mr. Bowman. I believe so; yes, sir.
Mr. WEEKs. That is the basis for your contention that the percent-
age of weight of the mail is so small compared with the weight of
equipment that it is not a good measure on which to base the pay?
Mr. Bow MAN. Yes, sir. On page 172 of the original report there
are some figures with reference to the New Haven road:
The average passenger car contained in the year to June 30, 1911, an average of 25.55
passengers when in transit. Assuming 175 pounds as the average weight of a passenger
and his hand baggage, the average load would have been 4,471 pounds, or, say, 24
tons. The average load in the R. P. O. cars was found by the Walcott Commission to
be about 2 tons, and it was believed that on this road it is less. It would seem, then,
º: the excess in the weight of a car was offset in part by the deficiency in weight
or cargo. -
The combined car and cargo of passengers and mail appear to be
very close in their average. -
The CHAIRMAN. Suppose space was accepted and space only, and
we will say only a portion or 10 feet of the car was authorized; sup:
pose there was an increased business and another 5 feet needed and
the department simply notified the transportation company that they
º 5 more feet. Suppose the railroad company, in order to give
them that 5 feet, had to put on another car. Suppose it was a 60-foot
car. In that event is the Government supposed to pay for the 60
feet, although they only use 5, and are only authorized to use 5%
Mr. Bowman. I think that it would be the duty of the railroad
company to furnish the car necessary for that space under such
circumstances in the same way that it is necessary to furnish a pas-
senger car for passengers offered.
The CHAIRMAN. Even if they only have two passengers to go in
that car and the rest of it had to go empty In other words, is it
your idea—I am not expecting you to bind the railroads in any way—
if space was substituted for weight as the determining factor and
authorization was made for additional space, so that only 10 per
cent of the space in the additional car would be used by the Gov-
ernment, should the Government pay for the whole 100 per cent 2
Mr. Bow MAN. Well, there are two possibilities there: If that car
is a specially equipped car, I think that the Government's requisition
for space should take into consideration the facilities that the railroad
company has to offer.
The CHAIRMAN. How would you clear up these questions of differ-
ence between the transportation companies and the Government
under the method of substitution of space for weight. Would there
not always be differences and claims for readjustment on the ground
such as I have indicated ? -
Mr. Bowman. It would not be necessary in the case of pouch
mail to requisition for space at all. Whatever space was required
by the mi that was put on the train would be necessary.
298 RAILWAY MAIL PAY.
The CHAIRMAN. That is, figuring that a pouch of mail occupied
so many inches of space?
Mr. Bow MAN. Yes, sir. *
The CHAIRMAN. Then the space would be determined absolutely .
by the number of pouches that the train carried?
Mr. BOWMAN. At its maximum point.
The CHAIRMAN. Then you would have to have a weighing for the
pouch mail and in order to determine the space really occupied by
the pouch mail, would you not ? -
Mr. BOWMAN. It might be done by a count system and you could
determine with weighing tests to find the average weight of pouches
in that particular part of the country. *
The CHAIRMAN. That is clear to my mind. I think then you
would have to have a count of the number of pouches
Mr. BOWMAN. That could be done by records. It would be a
matter of counting everything that went in and out.
The CHAIRMAN. So the , expense incident to weight would be
eliminated by the substitution of space for weight?
Mr. BOWMAN. It would be greatly reduced, I think, in any case.
The CHAIRMAN. Would it be entirely eliminated?
Mr. BOWMAN. I do not think so.
The CHAIRMAN. Why not ?
Mr. BOWMAN. Because there would have to be some sort of record
or check made.
The CHAIRMAN. You would substitute space for weight?
Mr. BOWMAN. Yes.
The CHAIRMAN. In the pouch system only 7
Mr. BOWMAN. In the pouch system only. &
The CHAIRMAN. And the other determinations would be based
entirely on authorization ?
Mr. Bow MAN. No ; entirely on use.
The CHAIRMAN. But your use has to be predicated on an authoriz-
tion ? -
Mr. BOWMAN. Yes, sir.
The CHAIRMAN. But before the authorization would come the
determination as to the amount of space which would be required,
based on the general average of the business coming in to the Post
master §.i. -
Mr. Bow MAN. The weighing would only be necessary in that case
for the department's own satisfaction.
The CHAIRMAN. Would any weighing be necessary other than the
original ascertainment as to what the average weight of a pouch of
mail was and what space a pouch of mail occupied ? Then you would
substitute count entirely for weight for the pouch mail and eliminate
weight entirely in the rest of the ascertainment, would you not ?
Mr. Bow MAN. I was thinking somewhat of the conditions offered
by the parcels post and which I have not given consideration to and
I do not know what they would be.
The CHAIRMAN. Thank you very much, Mr. Bowman.
STATEMENT OF E. G. BUCKLAND–Continued.
The CHAIRMAN. Mr. Buckland, I want to ask you whether you
attribute your losses, as shown in the summary here, the actual loss
of $290,000 for each year, 1910 and 1911, based on the cost of the
RAILWAY MAIL PAY. - 299
operation and taxes and the receipts from the Government for rail-
way mail pay, to the fact of the expense of the side service to the
New Haven system, the quadrennial weighing, the failure to receive
compensation in apartment cars, or all.
Mr. BUCKLAND. All, to a certain degree. It is particularly true of
the quadrennial weighing in this particular case, because the quad-
rennial weighing occurred in the autumn of 1908 and for the first time
in many series of weighings showed a decrease in the weights of mail
carried, due, I think, very largely to the fact that we were then expe-
riencing a period of very great depression. Of course the side service
rendered is directly proportional to the number of trains which are
run and the preparations for receipt and delivery as to each of these
trains. - -
The CHAIRMAN. Which is the largest factor in making up this actual
loss, according to your estimate, noncompensation for side service,
noncompensation for excess or increase in the mail over the four years
following the quadrennial weighing, or noncompensation for space
taken but not paid for, from your standpoint, in the apartment car?
Mr. BUCKLAND.. I am unable to answer that question. I have not
made the analyses. May I say one or two words in conclusion.
The CHAIRMAN. Yes.
Mr. BUCKLAND. The railroads of the country, since the decision of
the Supreme Court of the United States in the case of the Atchison,
Topeka, & Santa Fe Railroad Co. against the United States, are left
in this peculiar position, if I read that decision correctly: The rail-
roads to-day are not by law compelled to carry the mail, excepting in
the case of land-grant roads. Now, if a land-grant road is carrying
the mail at less than cost, it has a standing in court in order to make
a protest that its property is being confiscated; but the railroad which
has not been aided by land grants is, according to the decision of the
court, a voluntary carrier and has no standing in court, even though
it be carrying at an actual loss. That is an anomalous condition
which could only be corrected by a law which would require all rail-
roads to carry the mail and give them all an equal standing under the
law to determine whether they were being required to carry at a rate
which was confiscatory. One thing more. I do not believe it is nec-
essary for me to argue that in the case of the New England roads the
weights, having been taken during the autumn of 1912 for the four
years beginning July 1, 1913, an omission to give any additional
weighing will require them to carry for four years and a half mail,
including the parcels post, which has not been included in the weigh-
ing. That is so obviously unjust that it does not require any argu-
ment on my part to show that it is an injustice which ought to be
corrected. At the present time it is the custom of the Post Office
Department in taking the weights to take them without giving the
railroads an opportunity to check the weights as they are taken. It
is true that we have the right to weigh going on the cars and weigh
coming off the cars, but we have not the right to witness the weighing
done in the cars themselves. Inasmuch as upon these weights de-
pends our revenue, it seems only the part of justice that the railroads
should have the right to check those weights.
The CHAIRMAN. If you have the right to weigh going on the cars
and weigh coming off the cars, why should you criticize the fact that
300 RAILWAY MAIL PAY.
you have not the right to weigh in the cars? What is going to happen
to the mail in the cars between the period of time when it is put on
and taken off 3
Mr. BUCKLAND. Nothing intentional, but there may be a mistake
in the weight, and that often happens. It would seem to me, as a
matter of business between the buyer and seller, that there ought to
be an opportunity for both the buyer and seller to check the weight at
the same time under the same circumstances.
The CHAIRMAN. Have you ever asked the privilege of having your
representatives present when the mail was weighed going on the cars
and coming off of the cars ? * *
Mr. BUCKLAND. You mean in the car itself . The weight is taken
in the car itself, as I understand it. We have asked them for that
privilege and it has been refused.
The CHAIRMAN. The weight is taken in the car itself?
Mr. BUCKLAND. Yes.
The CHAIRMAN. You mean that the sacks are all weighed in the
car at the New York Terminal and in Chicago and all those large
oints - e
p Mr. BUCKLAND.. I understood that they were taken not only at the
points, but taken en route.
Mr. TUTTLE. Do they weigh on the car the same items which they
weigh when they are put on the cars
Mr. BUCKLAND.. I think so; yes, sir.
Mr. TUTTLE. Do those compare 3
Mr. BUCKLAND. Sometimes they do and sometimes they do not.
Mr. TUTTLE. Serious differences have arisen 3
Mr. BUCKLAND. Yes, sir.
Mr. LLOYD. Do they fail to correct when they find out your check
indicates an error 7 -
Mr. BUCKLAND. My impression is they rather insist upon their own
weight.
Mr. TUTTLE. Is it always against the railroads, or will it average up 2
Mr. BUCKLAND. Mr. Rowan, I think, could reply to that better than
I. I did not wish to leave the committee with the impression that
the valuation of the Joint Massachusetts Commission was made by
that commission, but it was made by Prof. George F. Swain, of the
Massachusetts Institute of Technology, who was employed by the
commission, and the commission accepted his valuation.
The CHAIRMAN. And stood sponsor for it
Mr. BUCKLAND.. I think so; yes, sir. They simply said they were
under obligations to him for services which he performed. I do not
know that they expressed themselves in any place as adopting that
valuation. I did not want to leave a loophole for a misunderstanding
in that regard. In conclusion I should like very much to have the
committee consider at some time this whole report of Mr. Bowman's,
because it does go into the methods whereby the cost of carrying the
mails is ascertained with very great accuracy. That report is pre-
pared with great care, and I am strongly in hope that you will con-
sider favorably printing it, so that every member of the committee
can have an opportunity to examine it.
Mr. LLOYD. Do you expect to have it printed and put in book form
yourself? 4. - -
RAILWAY MAIL PAY. 301
Mr. BUCKLAND.. I do not think so. We have only three or four
copies, and I do not think we will print any more.
he CHAIRMAN. Thank you very much, Mr. Buckland.
STATEMENT OF MR. H. E. MACK–Continued.
- º CHAIRMAN. Mr. Mack, you will still consider yourself under
oath. -
Mr. MACK. I will.
The CHAIRMAN. Will you give the committee the benefit of your
ideas in reference to the substitution of space for weight as the
measure of the service rendered in the transportation of the mails?
Mr. MACK. I have memoranda, Mr. Chairman, which I have pre-
pared at Mr. Peter's suggestion that cover most of the points per-
taining to that subject. - .
The railway mail pay is at present, and has been for 40 years, on a
twofold basis, namely, weight and space, upon rates and conditions
of service fixed, not by the railroads but by Congress and the Post
Office Department, the customer. The present system recognizes the
two distinct things done, the services rendered to the Government,
one of which is not done with relation to other transportation service.
The transportation part of the mail service rendered is on the uni-
versal basis commonly used for the transportation of things, viz,
wº and ºn. 90 per cent of the mail pay.
The railroads in addition thereto fit up and haul working post
offices and carry postal clerks for distribution of the mail, so that it
may both be consolidated and distributed from place to place and
junction to junction, utilizing transit time for this purpose. This,
owever, extends to full postal cars only at present, and is on a space
basis for cars 40 to 55 feet and over and represents 10 per cent of the
total mail pay.
The present basis, therefore, appears to be most logical and prac-
tical and sound in principle, as it recognizes the two distinct kinds
of service rendered.
Although the rates as to both weight and space have been reduced
since the equalization law was passed, the basis has remained the
same for 40 years, notwithstanding, as the testimony has shown, that
other methods, and even one exactly similar to that proposed in Docu-
ment No. 105, have been recommended and considered by Congress.
I can not state what particular reasons were urged from time to
time which prompted the discarding of proposed new methods for the
continuance of the present system, but the action taken from time to
time is very strong presumption against change to a single and
exclusive space basis, and for the maintenance of the space-and-
weight method; in other words, every time a space plan has been
proposed it has been rejected.
1. The change to an exclusive space basis, now proposed by the
Post Office Department, means the abandonment of the scales and
the exclusive use of the tapeline theoretically. But the matter at
issue is not a simple one of measuring the length of a car with a tape-
line, but instead is one wholly of opinion and judgment, at the very
best, and it is human judgment and opinion, therefore, and not the
tapeline, which would become the measure of pay to the railroads on
every mail route.
302 RAILWAY MAIL PAY.
The chief clerk, Railway Mail Service, would pass his judgment upon
the space to be paid for. This would be passed upon by the division
superintendent, general superintendent, Railway Mail Service, the
Second Assistant Postmaster General, and perhaps by, post-office
inspectors, each of whom would have a different idea, which would
result in a different measure on every line. There could be no sta-
bility or uniformity, with changing officers, from the Postmaster Gen-
eral on down the line, who would have changing views.
The volume of mails vary according to the days of the week and
month, and an opinion by a chief clerk as to space required on Monday
might be overruled by the superintendent who inspected a line on
Wednesday, with different conditions, and both might be overruled
by a post-office inspector who would inspect a line on Friday.
The railroads do not want to be placed in the position of having
their entire mail pay of $50,000,000 per annum depend upon the
judgment of officers in the service. As the railroads do not originate
the rates of mail pay as with other traffic, it seems to me sound doc-
trine, likely to receive the approval of the country, that Congress
should fix the rates and also the conditions of service: 'We should not
be asked or required by regulation of the department to perform
service of any character not clearly embraced within the rates fixed
by the law itself.
On the one hand, the space system would probably have the effect of
depriving a railroad of justice, where an officer, although conscientious,
might be reluctant or afraid, to recommend to his superiors an ade-
quate amount of space; and on the other hand there would be the
opportunity, with the postal officers whose opinion would be involved,
for favoritism, and abuse and resulting scandals could hardly be
avoided. The plan would confer too much arbitrary power upon an
executive department of the Government. It might be wielded un-
justly to the railroads or might be used as a powerful political instru-
ment.
The above is the chief and fundamental objection to the exclusive
space basis.
The CHAIRMAN. If space were the determining factor, do you think
it would be possible with the espionage (I do not use that term in-
vidiously) in the department for a conspiracy to exist by which the
Government would have to pay for space not used or authorized?
Mr. MACK. I think that the great fear that has existed in the past
in regard to the exclusive space basis is that possibility with entire
mail pay of fifty millions involved. I think it was developed in the
report of the commission in 1898. Congressman Loud, even, who
favored space, was impressed to a large extent by the possibility of
difficulties of that i. *
2. There would seem nothing scientific or practical in the depart-
ment's plan, which appears to be fundamentally wrong, because it is
based upon the relative proportion authorized (based on opinion) of
mail space on a train, º the mail pay would be fixed, not merely by
the mail space used, but would be º regulated and determined
by the number and size of the passenger or baggage cars in the train.
For example: An additional passenger, express, or baggage car on a
train would decrease the mail pay; and if a railroad should take off or
reduce the number of passenger, express, or baggage cars on a train,
it would increase the mail pay.

RAILWAY MAIL PAY. 303
The CHAIRMAN. I do not catch that. Providing that the deter-
mination would be based on the original authorization of the depart-
ment, through the various individuals as you have so clearly outlined,
what difference would it make how many additional passenger cars or
express cars you put on that train as long as you were authorized and
rººd by the Second Assistant Postmaster General to provide such
SO 8,06
Pº MACK. His basis of pay is proportional and conditioned upon
the express and passenger space on the trains.
The CHAIRMAN. On a 6 per cent basis, as in the suggested planº
Mr. MACK. On a cost basis; yes, sir.
3. Such a plan would provoke continuous and interminable dis-
ute and dissatisfaction as to space allowed or furnished, as may be
airly judged by the results of . space figures reported by the com—
anies for November, 1909, and as used by the department in Docu-
ment 105, there being a total monthly difference of 210,326,652 car-
foot miles, or an annual difference of 2,523,919,824 car-foot miles,
representing 21.28 per cent, on the list of roads alone, which is com-
ared in the document entitled “An examination and analysis of
ostmaster General's proposal,” Exhibit, pages 28 and 28a, the
differences in space on various lines ranged from 6 per cent to 53.59
per cent.
There are differences on nearly every route, and the controversy
between the railroads and the department, as to space, would there-
fore extend to practically every route, every railway, every year.
4. This enormous difference in space was a material factor in the
roduction of a reputed saving of $9,000,000 by the plan proposed in
ocument 105. The Post Office Department cut out this large
amount of space, which, so far as may be understood, can generally
be classed as “incidental” space, actually furnished and hauled in
connection with mail transportation, but treated by the department
as “dead” space (some of it is pretty live space on fast mail trains
on some lines), and was not only cut out of the mail proportion, but
the difference widened by adding it to the passenger space, which
had already been charged in the railroad reports, with its own “dead”
space.
If a 60-foot car is required by the Government one way, it is
obvious that that identical car must be returned, as it can not be
changed to a 40-foot car on its return run, simply because the Gov-
ernment may not use it to its full capacity the railroad must haul it.
The mails are as much as six times as heavy in one direction,
namely, West, South, or Northwest, as a rule, than in the opposite
direction, particularly where fast mail service exists, and a maximum
movement in one direction must be provided for to meet the neces-
sities of the postal service, and similar space must necessarily be
returned.
The CHAIRMAN. Do you understand that it is the suggestion of the
department, under its plan of substitution of space for weight, that
thew would have two space authorizations, one westbound and one
eastbound, one northbound and one southbound 3 Would it not be
a round-trip space authorization ?
75904—No. 1–13—20
304 RAILWAY MAIL PAY.
Mr. MACK. It has not been so calculated with reference to Docu-
ment 105 and the reputed saving of $9,000,000 calculated thereon.
The CHAIRMAN. The $9,000,000 supposed saving was based entirely,
then, on space authorization needed in each direction and not on a
round-trip space. -
Mr. MACK. It was based upon space assigned by the department,
which provided for some space in both directions, in . space
in only one direction. *
This heavy movement, in fast mails particularly, requires storage
cars in one direction, and usually the lift eastbound mail movement
requires their return empty, as such storage cars or space can not be
otherwise utilized, as each class of equipment, baggage, express, and
mail, must necessarily balance itself and be returned regularly on
schedule for the service in use in the opposite direction.
The CHAIRMAN. Where do you get your compensation for your
empties under your present system *.
b Mr. MACK. Theoretically it is in the rate of pay on the weight
8,SIS.
The CHAIRMAN. Well, practically
Mr. MACK. I do not think we get anything for it actually.
The annual train-miles of passenger service in the country is in the
neighborhood of 549,015,003. The Post Office Department and the
Government have the privilege, under the regulations, of using every
mile of this passenger train service, and do use most of it, and should
be fully charged with its proportion of dead or incidental space in
any statistics purporting to show comparative revenue or cost. The
average number of passengers per car is 15, and the average pas-
senger dead space therefore may be assumed to be at least 66 per cent
or more, in the reports made by the railroads to the department, and
to this large proportion of passenger dead space it reported the Post
Office Department added d. so-called dead mail space. *
5. The space basis is obviously not a proper measure to determine
pay on closed pouch mail routes, or baggage car service on other
routes. Weight is the exclusive determining factor in this class.
Under the plan of the department, the mail in such cases would be
weighed, but the weight would not be used as a pay basis, but an
estimate of space based on the weight would arbitrarily be assigned
and used as a basis for the payment of mail transportation. -
The Paragould Southeastern Railway, for example, under this
F. and which, on two trains a day, handles an average of 65 mail
ags and sacks, would only receive an average of 2 cents per piece.
The present pay is only 7 cents per piece. For these 65 pieces of
mail the Post Office Department only allows 2 car-feet for each
train. In a practical way, it would be utterly impossible to handle
these 65 pieces on and off at the various stations in 2 feet of space.
On this assumed and estimated basis, as shown in Document 105,
the annual mail earnings, on a large number of such routes, trival and
obviously inadequate, would be as follows:
• . Present pay.
Hoisington to Great Bend, 10.44 miles; $60.67 pay per annum; pay per
trip, 4 cents.---------------------------------------------------------- $517, 71
Dexter to Arkansas City, 20.27 miles, $72.12 pay per annum; pay per day,
20 cents------------------------------------------------------------- 1, 123.04
Mineral Point to Potosi, 3.96 miles; $9.41 per annum; pay per trip, 13 cents... 192.97
RAILWAY MAIL PAY. 305
A long list of these instances might be made, but the above will
suffice for illustration.
Mr. WEEKs. Have you got the comparative statements as to what
the earnings are under the present weight system : *
Mr. MACK. I have, and will be glad to put them in the record
alongside of that statement when it comes to me.
The CHAIRMAN. I think that will be very illuminating.
Mr. MACK. Sixth. If a basis of cost, plus 6 per cent, is adequate
and scientific, it is not clear upon what theory an arbitrary rate of
$25 is proposed if the earnings, under the department's plan, on
independent routes do not equal that amount.
Seventh. The space basis proposed by the department would, in
all probability, have effect, with its adoption, of eliminating the fast
mail train service.
The earnings on Missouri Pacific fast mail 7, per train-mile, would
be, one way only, $1.04; Missouri Pacific fast mail 5, per train-mile,
would be 62 cents; Iron Mountain fast mail 7, per train-mile, would
be 54 cents. Service could not be maintained with such earnings.
Eighth. The committee chairman has already stated that the plan
was fundamentally wrong, because there would be 795 different rates
for 795 different routes. *
I would like to supplement this by showing that wide variations
in rates would ...? from 0.08889 cent per car-foot mile on the
Arizona Copper Co.'s line, to 0.00157 cent on the East Broad Top
Coal Co.'s line. The present rates are uniform on every line.
Mr. WEEKs. Mr. Peters is assuming that they should be.
Mr. MACK. That they should but would not be, because under
Document 105 there are 795 different lates for the respective 795
different roads, and I am pointing out the wide rate variations of
from 8 cents in one case per car-foot mile as compared with 1 mill
in another case, as a result of this proposed plan of the department.
It would be rather hard to defend if the East Broad Top Coal Co.'s
line went to the Postmaster General and wanted an explanation.
9. The experience which the railroads have had with space, as
only an incidental factor, representing 10 per cent of the mail pay,
does not commend it as an exclusive basis, with the entire 100 per
cent of mail pay involved.
I would like to say I believe it was a wise provision to make the
present pay 90 per cent on weight and 10 per cent on space, the actual
mail determining itself, when weighed, the amount of mail pay on
weight, and only 10 per cent being i. to the judgment and discretion
of the officers of the service. I think that was a very deliberate in-
tention although that does not represent, by any means, the relative
Fº of space used for transportation and for post-office work.
think that was the deliberate purpose of the existing basis.
The law provides for “lines” of full R. P. O. cars and simultaneous
with the enactment of the law, the practice, as we understand, was
followed, of paying the railroads for such cars on a “line” basis, but
in recent years this practice has not been followed, and the railroads
have been paid in some cases, for a 60-foot car in one direction, based
on the necessities of the department, and only 40 foot in the opposite
direction, by agreement, for example, at the 50-foot rate. As obvi-
ously, the mail car going out must be brought back, and as the de-
306 RAILWAY MAIL PAY.
Fº need fixes 60 foot as the requirement in one direction, we
elieve 60 foot line should be paid for.
The CHAIRMAN. The same car? .
Mr. MACK. The same car. I would like to say there that mani-
festly the department's requirements for a 60-foot car out of a cer-
tain point, we will say St. Louis, absolutely fixes the kind and size of
car which the railroad company must furnish. We can not change
it to a 50-foot car half way over the road and then a 40-foot car and
haul it back empty without cost to us.
Where formerly a 60-foot line was authorized and paid for in cars
that had 92 letter boxes and 98 paper boxes, now by change in re-
quirement of the Government, a car must have 600 letter boxes and
200 paper boxes in use, before a railroad receives pay for a 60-foot
car, and the cost now is $12,000 per car, as compared with $4,200
years ago.
You can see how the post office has been developed in the mail
cars during that time.
The CHAIRMAN. Do you get the same compensation for the $12,000
car that you got for the $4,200 car?
Mr. MACK. No, sir; we get 20 per cent less, as the pay was reduced
in 1907 on 60-foot cars.
The CHAIRMAN. Although the requirements were increased ?
Mr. MACK. Although the requirements were increased, and since
then the law requires all-steel cars.
Mr. WEEKs. }. much does a steel car, of the same length, cost
more than a steel-frame car?
Mr. MACK. I do not know that I could answer the question as to
a steel underframe car, but I should think the difference would be
in the neighborhood of about $2,000 per car less than the higher pay
for an all-steel car.
With full cars, the payment does not always extend to the operating
end of the run, although in the operation of a railroad, a 60-foot car
can not be cut off, mail transferred to a 50-foot car at any point, and
to a 40-foot, or 30-foot car farther along, because it would ruin
schedules to do so, and the car which starts out the railroad must
haul through and back.
Inspectors have recently been on many lines, and the car pay
reduced, although the same cars, I think, are still in use, as formerly.
The experience the railroads have had, therefore, does not inspire
confidence that the space basis would be fair to them.
10. The department called upon the railroads for the average
amount of space during the month of November, but an average
amount .# not be a proper method, even of determining space,
because space implies reservation, and to take care of its needs on
a space basis, it would be necessary to consider the department's
maximum space, and not the average.
If a post office is rented by the Post Office Department it is not on
the average amount used, but it must be large enough for the greatest
amount of business it would handle, and which would be on a maxi-
mum basis. --
The CHAIRMAN. Your R. P. O. cars are rented by the year'
Mr. MACK. Not for any definite period; no, sir. The department,
if it needs full R. P. O. cars, issues what is termed an authorization
for those cars and they are paid for at the customary rate.
BAILWAY MAIL PAY. 307
The CHAIRMAN. Per month'' -
Mr. MACK. On a monthly basis, but service can be terminated at
any time the department chooses. -
The CHAIRMAN. It is at the option of the department?
Mr. MACK. Yes, sir.
Weight may be considered as the most practical, basis, as it is a
universal basis for rates for the transportation of things, on railroad
lines. It leaves nothing whatever to judgment or opinion. It is a
measure of the very article, the exact thing, which is to be trans-
orted, and as to mail, is the very identical basis upon which the
}. Office Department itself, as forwarders of mail for the public,
has charged, even to so small an article as a letter weighing as little
as 1 ounce. Weight may be considered an automatic adjuster.
The mail itself on this basis determines what the compensation
shall be, and protects the railroad company, as it does the Post Office
Department. The weight basis applied to mail on each train and
trip must balance, and is an added measure of protection, both to the
Government and the railroad, because the weights are taken both on
and off, and at the end of the run a balance exists, proving the
accuracy of the weights of the mail transported.
That is the memorandum that I have prepared, Mr. Chairman, on
, that question. It might clear the atmosphere a little in regard to
space if we differentiate between the two things that seem to have
gotten confused. One of those things is whether you can use space
as a measure of testing the adequacy or inadequacy of pay, and the
other is its possible use as a basis of pay. In testing the adequacy of
pay, all of the incidental mail space hauled, exactly as the service
existed, would go into the classification of mail car foot miles. Space,
perhaps, might be used as a common basis of comparison of the service
on passenger trains. Instead of trying to use that, however, to arrive
at the cost of the service, I have thought, and many others have
thought, that it could be better enmployed to show the comparative
revenue car foot mile earnings embracing all the incidental factors
involved and thus determine broadly whether the railroads are under-
paid or overpaid, and after the determination is reached then seek a
method of adjustment. It seems to me that that will produce a
simple basis of explanation to the people and also to members of
Congress who can not give, owing to their manifold duties, the time to
study volumes and volumes of complicated figures. In addition,
you do not go into the element of cost which brings into the question
a division of accounts—a complicated subject upon which there is no
authority at present to settle the subject universally.
The CHAIRMAN. Is it feasible to take a ton-mile as the measure,
determined by weighing, and then arrive at a specific payment of so
much per ton-mile; and if that was determined, would that be equita-
ble over a decade, for instance, or would the payment on a ton-mile
basis have to be changed during a period of years, in your opinion ?
Mr. MACK. It seems to me that a frequent weighing would be neces-
sary and more frequent than at present.
he CHAIRMAN. So as to ascertain the ton-mile?
Mr. MACK. So as to ascertain the pay and to take care of the
changed weight. The weights are not always increasing on every
route, and there are diversions of mail which occur.
308 RAILWAY MAIL PAY.
The CHAIRMAN. I do not think I make myself clear. You favor
the ton-mile basis instead of the linear foot ?
Mr. MACK. I favor the weight basis rather than the linear foot.
The CHAIRMAN. Then, taking the weight basis as the measure of
the Service, would it be possible, practicable, and equitable to deter-
mine a rate that that weight per pound or per ton should receive,
that compensation to be the same over a period of years, or would
it be necessary to change that compensation every two or three years?
Mr. MACK. That is, change the rate? -, * *
The CHAIRMAN. Yes. !
Mr. MACK. I do not see any need for changing the rate with any
frequency. The weight would change and pay change accordingly,
however. -
The CHAIRMAN. The number of tons of mail would change, but if
}. were to receive so much for each ton of mail hauled for every mile
auled could that amount which you receive be determined so that
it would be equitable and just, and be permanent for a decade, or
two or three decades, or would a change of conditions require a change
in that amount per ton per mile !
Mr. MACK. I should think a permanent rate could be determined.
I do not know why not. There might be changing conditions which
one could not, anticipate, but I do not see anything to prevent a
permanent and satisfactory rate on a weight basis. I do not see any
difficulty at all in that.
Mr. WEEKs. Would it be practicable to weigh all of the mail that
goes on every train }
Mr. MACK. I would say not. You mean daily
Mr. WEEKS. Yes. -
Mr. MACK. I would say not, because it would be too great an inter-
ference with the work of the Railway Mail Service in the first place;
it would be expensive in the second place, and it would also tend to
delay train service. For instance, let me cite an example: At St.
Louis the heavy mail arrives there from the eastern trains and there
is a limited margin of time in which to make connections. . During
the period when the weighing is in progress the trucks on which the
...P. unloaded are not taken directly to the outgoing trains, but
they are first taken to the scale, which involves an extra movement
of each truck, increased force of porters, and involves delay in the
departure of trains, and for that reason at the large points it would be
impracticable, I should think.
Mr. WEEKs. Do you not weigh all of the express every day?
Mr. MACK. No. The éxpress is weighed at the initial point, as I
understand it, but not on the intermediate routes.
Mr. WEEKs. Why weigh the mail on the intermediate route 3
Mr. MACK. You weigh the mail on every route. The express is
different from the mail in this respect: Your mail is changing con-
stantly as it goes over the road, but the identical single package of
express remains the same. The express is weighed and the rates
charged at the starting point, but the mail is constantly changing
as to receptacle as it goes along, and when weighed is worked out to
an average basis per mile. The express is not handled in that way.
Mr. LLoyd. Suppose the mail is weighed as it is put on the train.
Would not that give the full weight of mail? For instance, if you
start at St. Louis and weigh the mail which you start with, then take
RAILWAY MAIL PAY. 309
the weight of the mail that is put on at the first, second, third, or fourth
stations, and so forth, when you have reached Kansas City, if you
add those several weights together you have the total weight of the
mail carried between St. Louis and Kansas City.
Mr. MACK. Yes; but the difficulty is getting the w \ight at the ini-
tial point, at St. Louis, without delaying the trains. There is an
extra handling of the mail that is very troublesome at the large sta-
tions, and we are always very glad when the weighing is over on that
account.
Mr. LLOYD. Do you not think it possible to have a permanent
system by which that could be overcome 2.
Mr. MACK. I have not thought so, but it is rather hard to say that
anything is impossible.
Mr. LLOYD. That is the only trouble in that theory?
Mr. MACK. The expense of taking the weights and the interference
with the work of the Railway Mail Service and of course, great
expense of tabulation.
. LLOYD. There need not be much expense except at the large
stations? - -
Mr. MACK. I do not know but what a system of weighing could be
had at the small stations. I do not see, so far as the Railway Mail
Service is concerned, that there is any need of having a man on the
train, providing the station agent would take the weights of the mail
on and off, but the department, of course, does not permit that now.
Mr. LLOYD. Why can not the postmaster, when he sends his mail,
in the ordinary towns in the country, to the train, weigh it?
Mr. MACK. He could as to local mail, but a great quantity of this
mail does not go to the post office; it is connecting mail at junction
points. That mail does not go to the post office at all, and those are
the heavier mails. -
Mr. WEEKs. How many solid mail trains are there between St.
Louis and Kansas City a day?
Mr. MACK. We have two fast mail trains, but I would hardly call
them solid mail trains because we have a passenger car on each
train—a sleeper. There are two such trains.
Mr. WEEKs. Does that train go through without distributing mail
en route at all?
Mr. MACK. At the local points º
Mr. WEEKS. Yes.
Mr. MACK. No; it exchanges mail at the principal points between
St. Louis and Kansas City and the mail clerks work up the mail for
connecting trains at Kansas City.
Mr. WEEKs. Is there any train that goes through without dis-
tributing mail at all.
Mr. MACK. None at all; no, sir. In fact I might say that prac-
tically every car that carries mail from St. Louis to Kansas City has
distribution performed in it. . For instance, mail for New Mexico,
mail for Colorado, mail for Arizona, and mail for all distant territory
is worked up so that when it arrives at its connecting point it is all
worked up for the route at that connecting point.
Mr. WEEKs. How many other similar trains are there between these
two points on other roads? -
Mr. MACK. On other roads there are no fast mail trains between
St. Louis and Kansas City.
310 RAILWAY MAIL PAY.
Mr. WEEKs. Do other roads offer similar facilities as your road?
Mr. MACK. The regular passenger service on the other lines very
nearly corresponds to our own. \, *
Mr. WEEKs. Are the distances practically the same?
Mr. MACK. Practically the same.
Mr. WEEKs. Do you make better time? Is that the reason you
carry the mail?
Mr. MACK. I think the reason why it happens we have the through
mail is, as I understand, that we were the first through line from
St. Louis to Kansas City and that line was developed and the growth
has continued on that line.
Mr. WEEKs. What I was getting at was this: Is there any reason
why transportation lines between the two points like that should not
bid for such service? -
Mr. MACK. I should say, in answer to that question, that the fast
mail service which the department has to-day is a competitive
service, that is, the competition is on the basis of service and it is so
interwoven, as a general rule, with the local service that it can not
very well be disturbed, that is, from time to time, if you have that in
mind as I assume you did, for competitive bidding. I would hardly
consider that the instances where that could exist would be worth the
trouble of bothering with it. Of course if the railroads were earning
large sums of money from this service it would be quite different, but
to-day this committee on railway mail pay is very much like a
grievance committee. We were reduced in 1907 about $8,000,000
per annum, and instead of getting relief from Document 105, the
suggestion is that $9,000,000 more be dropped off, so we are naturally
a grievance committee now, feeling that our service is very much
underpaid and that restitution should be made, rather than cut us
Iſl OI’é.
Mr. LLOYD. How does the Post Office Department determine which
º the roads between St. Louis and Kansas City shall carry the
mail?
Mr. MACK. I do not know that that question comes up specifically.
For instance, in the establishment § the fast-mail service from
St. Louis to Kansas City, in 1887, that was by special contract, and I
can readily look back and see that the railroad lost money, without
any question, as the volume of mail was very small. Just why that
service started on the Missouri Pacific rather than on any other line
I do not know. I am not familiar with the history of the railroad
conditions in the West at that time. -
Mr. WEEKs. Has any other road attempted to secure the diversion
of the through mail? - -
Mr. MACK. Not that I am aware of; no, sir. I do not think any
road could offer any superior service, and I can see no advantage to
the department in making any change.
Mr. WEEKs. How many cars do you run on those through trains
ordinarily
Mr. MACK. On one train five cars and on the other three.
Mr. WEEKs. Five mail cars?
Mr. MACK. Yes, sir.
Mr. WEEKs. And one passenger car?
Mr. MACK. Yes, sir.
BAILWAY MAIL PAY. 4; 311
Mr. WEEKs. On the other, three mail cars?
Mr. MACK. Three mail cars and one passenger car.
Mr. WEEKs. How much does that train earn, the five-car train Ż
Mr. MACK. I think it is $1.30 a train mile.
Mr. WEEKs. How much does the other, the three-car train earn ?
Mr. MACK. About $1.03.
Mr. WEEKS. Do you run any trains between those points composed
of nothing but sleepers, for instance?
Mr. MACK. No, sir.
Mr. WEEKS. Take the best passenger train you run, how many cars.
will that train haul ?
Mr. MACK. The best passenger train we have usually carries about
9 or 10 cars.
Mr. WEEKs. How much does that earn ?
Mr. MACK. I could not say.
Mr. WEEKs. Could anybody say?
Mr. MACK. I have no doubt we could get that information.
Mr. WEEKs. Have you any opinion upon that ?
Mr. MACK. I have no hesitancy in saying that it earns very much
more than the mail.
Mr. WEEKs. It does, because it is a longer train and has more
equipment 7 &
Mr. MACK. Yes; but the unit is the same, one train as compared
with another.
Mr. WEEKs. Suppose they run a train of six passenger cars—do
you think it would earn more per train mile than the mail?
Mr. MACK. The passenger train }
Mr. WEEKS. Yes.
Mr. MACK. Well, that is problematical and it is a heavily loaded
train. I do not think we could carry the same number of people in
the six cars.
Mr. WEEKs. From your standpoint how are we going to determine
the contention that you make that you are not getting pay enough 2
Mr. MACK. My idea is this: That we have to try to get to a com-
mon basis of determining the general question and I believe that it is
most satisfactoril j on the principle that all of the pas-
senger space on the train ought to earn an equal amount. In other
words, there is no reason why the mail should earn less than the
assenger space on the same train. The figures that we produced
rom the committee on the railway mail pay indicated the earnings
from the mail space as $3.23 per thousand car-foot miles, while the
earnings on the remaining passenger space were $4.25 per thousand
car-foot miles, illustrating very clearly in two figures that the mail is
underpaid. The point of the calculation there, which, however,
is in Hºte at the present, is the car-foot mile, which is the basis of
division by which º figures are reached. Senator Bourne, a few
days º suggested a joint committee to see whether those figures
might be reconciled—that is, the difference in car-foot-mile earnings
might be reconciled to more accurately reach a more satisfactory
determination of what the earnings per car-foot mile were. I am a
member of that committee, and we had a meeting yesterday, and I
believe probably within two weeks the committee will be able to
reach a satisfactory conclusion in regard to that question.
312 - RAILWAY MAIL PAY.
The CHAIRMAN. A committee consisting of three from your associa-
tion and three, appointed by the Second Assistant Postmaster General,
rººf the departmentº
Mr. MACK. Yes, sir. We had a meeting to-day and have another
meeting for to-morrow morning. -
The CHAIRMAN. A meeting of the six -
Mr. MACK. Yes, sir. The committee is attempting to give you
figures that will assist you materially in reaching your conclusions.
Mr. TUTTLE. Your road never protested against carrying this mail
and insisted on your competitors taking it and showing a i.
Mr. MACK. Well, that is true; yes, sir.
Mr. TUTTLE. You never have protested ?
Mr. MACK. We never protested against carrying the mail, but we
have protested against the fact that the pay was inadequate, or at
least we felt it was.
Mr. WEEKs. Would not the natural result be that you would like
to get rid of something if you were being inadequately paid for it?
Mr. MACK. There does seem to be an inconsistency in the position
of the railroads, but they have their facilities and all of the additional
business that is secured on their train service adds to the earnings of
the train, just as an additional passenger adds to the earning of the
train.
Mr. TUTTLE. Do you know of any railroads that have ever tried
to avoid carrying the mails?
Mr. MACK. I i. not.
Mr. TUTTLE. Do you know of any railroads that have ever refused
to carry it because the pay was inadequate and were willing for their
º to carry it?
Mr. MACK. No; I do not think so.
Mr. TUTTLE. It is really a desirable traffic after all, is it not ?
Mr. MACK. Well, I do not know that it is desirable.
Mr. TUTTLE. Most railroads seem to want to get the mail contract.
Mr. MACK. I have explained that. I think the additional business
that you add to your train increases the earnings of that train just
as an additional passenger does that you have advertised for and
tried to get. f *
Mr. WEEKs. The New Haven Railroad has protested very vigor-
ously against carrying the mail? --
Mr. MACK. I do not know of the action of the New Haven Railroad.
Mr. WEEKs. No railroad would decline to carry the mail without
feeling that its interests would be jeopardized on account of the crys-
tallization of public sentiment against it because of its refusal to
carry the mail and the irritation incident to such refusal.
Mr. MACK. I think many railroads have considered the question as
to whether they could, but they probably have not given any notice
to the department, but they have felt that it was a public necessity
and they have always made their contracts on that basis, that it is a
public necessity. * -
Mr. LLOYD. How do you account for the apparent fact that the
New York, New Haven & Hartford Railroad does not get as much
compensation for its service as the other great systems of the country?
Mr. MACK. Well, I have not made any definite comparison, but
perhaps the division of accounts may have some bearing on that.
• *.
º
IRAILWAY MAIL PAY. 313
Those questions are settled to some extent by the relative volume of
passenger and freight traffic, with a corresponding division of ex-
penses, cost of fixed charges, and things of that sort.
Mr. WEEKs. How many miles of road has the Missouri Pacific in
operation? . º
Mr. MACK. In the neighborhood of 7,000 miles.
Mr. WEEKs. How many passenger trains do you run a day?
Mr. MACK. I could not answer that question without counting
from the time table.
Mr. WEEKs. Did you hear Mr. Buckland's statement that there
were 2,000 miles of New Haven road in operation and they ran 2,000
passenger trains?
Mr. MACK. I did; yes, sir.
*: WEEKs. How do you think your figures would compare with
those 3 3.
Mr. MACK. I do not think we have anything like the frequency of
service that exists on the New Haven road. $
The CHAIRMAN. Would not that be one reason why their service is
more expensive than yours?
Mr. MACK. That probably has some influence; yes.
* WEEKs. How many stations are there on the Missouri Pacific
I’O3,OI &
Mr. MACK. I think 862.
Mr. WEEKs. That is one station about every 8 miles. The proba-
bilities are there are just as many stations on the New Haven road.
Would you not think soº
Mr. MACK. Very likely.
Mr. WEEKs. That would add to the expense, would it not ?
Mr. MACK. That very likely would; yes, sir.
Mr. WEEKs. How many reasons can you think of why there would
be a difference of expense on different roads, depending on their loca-
tion, density of population, and all those questions?
Mr. MACK. I would prefer not to answer that question offhand.
Mr. WEEKs. You will be here for some days?
Mr. MACK. Yes; I expect to.
Mr. WEEKs. Will you think it over and try to give an answer to it
later on ?
Mr. MACK. I will be very glad to; yes, sir.
Mr. WEEKs. As Hinº, as possible.
Mr. MACK. I will be very glad to.
The CHAIRMAN. You think the joint committee of six, representing
the department and the committee on railway mail pay, probably can
reach their conclusion as to how near they can come together in a
couple of weeks?
Mr. MACK. I am inclined to think probably within a couple of
weeks. We can tell better to-morrow morning, when we ascertain the
condition of the figures at the department and how deep an investiga-
tion will be necessary to check up.
314 RAILWAY MAIL PAY.
STATEMENT OF MP, GRANT W., TAYLOR,
The CHAIRMAN. Mr. Taylor, it will be necessary for you to be
SWOTIl.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Kindly state your full name, residence, and occu-
pation, and the official position in which you appear before the
committee.
Mr. TAYLOR. Grant W. Taylor; general superintendent of trans-
portation, Southern Railway system. Residence, Washington, D. C.
The CHAIRMAN, Will you give the committee the benefit of your
views regarding the subject the commission has before it?
Mr. TAYLOR. Mr. Chairman, Mr. Peters asked me to make some
memorandum with reference to the departmental rulings and their
effect on transportation, and I have made a few notes.
In considering the effect on transportation of “administrative
regulations” (regulations promulgated by the Post Office Depart-
ment), it would seem proper to state that the existing contracts
covering the transportation of the United States mails were executed
by a very large number of the transportation lines, subject to pro-
test against the enforcement of the following specific regulations of
the Post Office Department:
1. Order No. 412, issued by the Postmaster General, June 7, 1907. S
2. “Requiring railroad companies to furnish free transportation to any person o
persons, other than those actually in charge of distributing the mails in transit.”
3. Section 1186, paragraph 2, requiring railroad companies “to provide suitable and
sufficient rooms, lighted, heated, furnished, supplied with ice water and kept in order,
at stations where clerks or transfer clerks are employed, for distributing, handling,
and assorting the mails, without agreed rental therefor.”
Mr. LLOYD. You are quoting from the law, and not from regula-
tions.
Mr. TAYLOR. I am quoting from regulations. These are the de-
partmental regulations.
4. Section 1186, paragraph 3. “The specific requirements of the service as to due
frequency and speed, space required on trains or at stations, fixtures, furniture, etc.,
will at all times be determined by the Post Office Department and made known
through the General Superintendent of Railway Mail Service.”
5. “Railroads to furnish and operate postal cars without full legal compensation for
the maximum length in both directions.” -
6. “The furnishing of postal apartments, or postal cars, for the distribution of the
mails, or for other post-office purposes, at stations or terminals, either before the regular
time of making up, or placing the train for loading for departure from such station, or
after the arrival of such cars at the terminus of the run of the train.”
7. “The night exchange of the mails at points where agents are not employed, ex-
cept at points where the department provides employees to take the mails from and
deliver them to the trains.”
8. Section 1187. “The requirement of the department that railroads shall keep and
furnish pouch records, and shortage slips, and protest against the imposition of fines
where pouch records are not kept or shortage slips not furnished.”
9. “Deductions from compensation for mail transportation where mail service is
regularly performed six times a week each way over the route.”
10. “The stoppage of through trains for mail purposes at other than the regularly
scheduled stopping places for such trains.”
11. That part of section 1330, reading as follows: “Railroad companies will be re-
quired to furnish monthly statements, certified as above, of all delays and other causes
to trains which the department regards as being of special importance as mail trains.”
12. Section 1334, paragraph 13. “Applications from companies for remission of de-
ductions made from their compensation for carrying mail will not be considered unless
RAILWAY MAIL PAY. 315
filed, with evidence, in the office of the Second Assistant Postmaster General within
six months from the date of notice by the Post Office Department to the railroad com-
pany that such deduction has been ordered.”
In “Pºº. I would say that it is generally felt that the enforce-
ment of the above departmental regulations create an operating, as
well as financial, hardship upon the transportation lines not contem-
plated by the law governing the transportation of the mails on rail-
road lines, in the following particulars:
First. Order 412 has materially reduced compensation for services
rendered, as fully set forth in evidence already submitted.
The CHAIRMAN. That is the divisor order?
Mr. TAYLOR. Yes, sir.
Second. The carriers object to furnishing free transportation to
other than those specified in the law, namely, “railway post-office
clerks to accompany and distribute the mails.” To accept the “ad-
ministrative ruling” relating to the carrying of persons not specified
in the law, involves the furnishing of a large amount of free trans-
portation, of a personal character, that has no connection with the
actual transportation of the mails, which, in effect, not only takes
away revenue that should properly accrue to the carrier line, but
further opens an avenue for the unlimited use of free transportation,
no record of which is in the carriers' possession.
Mr. LLOYD. In that connection, what is the practice with reference
§ persons riding with the railway-mail clerks, and who rides with
them :
Mr. TAYLOR. The post-office clerks or post-office employees, in-
spectors, and certain other classes of employees. They ride in the
postal cars with postal clerks, but those employees also hold com-
missions issued by the Postmaster General authorizing free travel.
Mr. WEEKs. There is no free travel when not on duty.
Mr. TAYLOR. I suppose that there are certain orders confining the
use of such transportation while on duty, but the transportation lines
. º method of checking or knowing whether the men are on duty
or off duty.
Mr. LLOYD, Your real complaint, then, is that you do not know
whether they are on duty or off?
Mr. TAYLOR. We do not know, for we have no means of knowing.
We have asked for that information and it has been declined.
Mr. LLOYD. The department has declined it
Mr. TAYLOR. The department has.
f Mr. TUTTLE. What class of employees besides inspectors travel
ree ? t
Mr. TAYLOR. I believe the postal clerks hold commissions and
substitute clerks hold commissions.
Mr. TUTTLE. You mean the railway mail clerks’
Mr. TAYLOR. Railway mail clerks and inspectors of the Post Office
Department, superintendents of Railway Mail Service, chief clerks
and others.
The CHAIRMAN. Do they not all come under the provision of the
law appertaining to that particular branch of the service'?
Mr. TAYLOR. Not necessarily pertaining to the branch of the
service of the individual lines that they might be traveling over.
316 RAILWAY MAIL PAY.
Mr. TUTTLE. You are aware that part of this has been remedied
by reason of the fact that clerks in the terminal offices do not hold
the commissions now % - -
Mr. TAYLOR. I know that.
Mr. WEEKs. You know there is a very stringent order of the
department that the commission shall only be used when the holder
is on duty or returning to his home from duty. w f
Mr. TAYLOR. I might give a little further information. While the
argument may be advanced by some that this item is inconsequential,
it is known that the money value of such transportation will, on the
Southern Railway system aggregate approximately $40,000 per
8,I\D UIIll.
We have some data covering that feature for a period of six months,
ending December 31, 1912. -
Mr. LLOYD. An inspection service of your own 3
Mr. TAYLOR. Post Office Department employees riding on our
trains in other than the postal cars or in charge of the mail.
The CHAIRMAN. That amounts to $40,000 : .
Mr. TAYLOR. Yes, sir; per year.
The CHAIRMAN. Your ascertainment was $20,000 actually for six
months? -
Mr. TAYLOR. $20,000 for six months.
Mr. WEEKs. How many miles of road do you operate }
Mr. TAYLOR. Approximately 7,036. * . -
M. WEEKs. How much do you receive for the transportation of the
mails : º
Mr. TAYLOR. The amount is decreasing quite rapidly. In the fiscal
year ending June 30, 1912, it was $1,352,219.62.
Mr. WEEKs. How much do you imagine it costs the railroad to
carry these men who, if they had been paying their transportation,
would have paid $40,000 :
Mr. TAYLOR. Mr. Chairman, that would be a very difficult question
to answer. We consider it in the light of furnishing service for which
we receive no return.
Mr. WEEKs. Do you think you furnish any more service than you
would if you did not transport those persons :
Mr. TAYLOR. We furnish a money value, a definite money value for
which there is no return. -
Mr. TUTTLE. Your railroad figures do not show how much it costs
to carry a passenger per mile.
Mr. TAYLOR. Taking into consideration all expense incident to pas-
senger service, I presume they do. -
Mr. TUTTLE. You have not that figure ?
Mr. TAYLOR. I have not. I am not up on statistics. I merely have
to do with the operating end of the railroad.
The CHAIRMAN. Your computation of $40,000 is based on what you
are allowed per mile for passengers ?
Mr. TAYLOR. That $40,000, Mr. Chairman, is on a basis of actual
money value at the current passenger rate for the number of miles
traveled by postal employees, for which we have their receipt in each
individual case.
The CHAIRMAN. In other words, if they had paid the regular pas-
senger rate you would have received $40,000 more than you did
receive from those employees? -
RAILWAY MAIL PAY. 317
Mr. TAYLOR. That is true.
Third. The carrier lines can not concede the right of the depart-
ment to require the furnishing free its terminal facilities for F.
º or other purposes not connected with the transportation of the
Iſla,IIS,
Mr. WEEKs. It does not do that in all cases. It furnishes some
space for the separation of the mail and for the handling of the mail,
but it does not furnish space for post-office purposes.
Mr. TAYLOR. We feel that to a very large extent we do. Perhaps
that may be brought cut more clearly in the use of postal cars at ter-
minals for distribution purposes.
Mr. WEEKs. The reason I differentiate in that case is I noticed a
short time ago that the Boston post office opened a substation in the
South Station in Boston, and I asked the postmaster about the rental,
and he told me what he paid. I do not recall the figures, but they
were a very exorbitant price per square foot for the space used for
that substation; so I think you ought to differentiate between the
space used for sorting, distribution, and handling of mail and for
post-office purposes.
Mr. TAYLOR. That may be true at some of the large terminal cen-
ters, such as Boston, or perhaps such as the Washington terminal, but
in the majority of large terminal stations throughout the South the
department requires facilities for making separations and distribu-
tions in these stations. -
The CHAIRMAN. For which you receive no rental 2
Mr. TAYLOR. For which we receive absolutely no pay. That is
common and the question has been up a great many times.
Fourth. The carriers can not concede the right to the department
to place in the hands of any individual the control of its property.
hat refers to section 1186, whereby the General Superintendent of
Railway Mail Service would determine all facilities required.
Fifth. The department having recently conceded the equity of the
protests of the carriers that the operation of a fixed postal car author-
ization in one direction should carry a similar compensation in return
movement, further comment would seem unnecessary at this time.
Sixth. The practical effect of carrying out the practice contem-
plated by the ruling of the department would be to create the use of
working post offices, in frequently congested terminals, involving the
use of tracks necessary in the conduct of the general terminal work,
as well as a material increase in the expense of additional switching
made necessary by such occupation.
That is the furnishing of postal apartments, or postal cars for the
distribution of mail in terminals?
Seventh. The requirement of this ruling necessitates the employ-
ment of additional men at many points whose services are not
essential to or needed otherwise in the companies' service.
The CHAIRMAN. As I understand, your criticism is not upon the
department's rules and regulations for the improvement of the
service, but that you receive no compensation for the increased
burdens imposed.
Mr. TAYLOR. That is true. In other words, the burden is placed
upon us without compensation.
Eighth. The compliance with section 1187 creates an unnecessary
burden on the carriers, especially in the matter of fines which do not
318 RAILWAY MAIL PAY.
Serye, any good purpose, nor can they be extended to employees
individually responsible. -
The CHAIRMAN. That is a direct criticism against the requirement,
which, from your viewpoint, is unnecessary and not in any way
beneficial to the service.
Mr. TAYLOR. It does not improve or add to the service. Penalties
of that character can not be, under present conditions, extended to
employees actually responsible for an individual failure. In years
gone by that has $ºn done.
Mr. WEEKs. Does it not stimulate the road to perform a better
service
Mr. TAYLOR. I can not see how it can. We are all anxious to do
the very best that is possible to be done, and so long as the mail or
any other branch of the service is dependent upon individuals, so
long you will continue to have some failures. e service can not
be 100 per cent perfect.
Mr. WEEKs. Are not those fines levied very largely on account of
delay in delivering the mail? -
Mr. TAYLOR. No, sir. They are for failure of employees, perhaps,
to dispatch mail. I do not know what the policy º the department
is in that respect as pertaining to its own employees. There may be
a system of fines in effect for failure of departmental employees to
fºrm certain work or for certain errors, but I do not know about
that. -
Mr. WEEKs. There is a demerit system.
Mr. TAYLOR. Our discipline, so far as the transportation lines is
concerned, is confined to a merit and a demerit system. The money
fines have been abolished for a number of years.
Mr. WEEKs. I supposed the fines imposed were very largely for
the failure to deliver the mail at the time stipulated.
Mr. TAYLOR. Ninth. There are instances where carrier lines have
been subjected to fines for the failure to transport mails on freight
trains between points where regular mail service has been performed
twice daily each way on passenger trains.
We regard that as an unjust departmental ruling.
Tenth. “The stopping of through trains for mail purposes at other
than regularly scheduled stopping points for such trains” is held by
transportation lines to be an unwarranted regulation, in that to com-
ply with the same would seriously interfere with train movement
and remove from the responsible operating officer the control of his
operation.
Mr. WEEKs. Is that frequently done?
Mr. TAYLOR. It is becoming more frequent since the establishment
of the parcel post. I might say that in other than the parcel post it is
done.
Eleventh. A compliance with section 1330 involves a useless
clerical expense for which there can be no adequate return.
Twelfth. Section 1334, paragraph 13, is objectionable in that it
only allows six months in which to present evidence in connection
with the applications for remissions of deductions or fines imposed
on railroad companies, Six months is frequently not sufficient for
the proper collection of the evidence necessary to meet such fines and
deductions; and, further, the provision seems to be in conflict with
RAILWAY MAIL PAY. 319
section 1069 of the Revised Statutes, which fixes the limitation
in which action may be brought in the Court of Claims against the
Government at six years. 4.
The CHAIRMAN. What time would you suggest instead of the six
months as being ample and proper?
Mr. TAYLOR. I would suggest the provision of the Revised Statutes—
six years—as ample. -
T. CHAIRMAN. Would you consider it as necessary 7
Mr. TAYLOR. Personally I would not; no, sir.
The CHAIRMAN. What would you think would be necessary? A
ear? - t -
y Mr. TAYLOR. I should say three years would be a fair compromise.
In addition to the above specific objectionable “administrative
rulings” seriously affecting the compensation of transportation lines
for service rendered the Government there are many other equally
burdensome rulings in connection with the adjustment of railway
mail compensation.
As illustrative of one of the points, there has come to my attention
an instance where, for reasons best known to the department, empty
mail equipment, the transportation of which has been withdrawn
from railway postal cars during the mail-weighing period, was sub-
sequently restored to and forwarded as mail in postal cars.
he CHAIRMAN. Which was withdrawn during the weighing period,
carried by freight during that period, and then returned to the postal
cars? -
Mr. TAYLOR. Yes, sir.
Mr. WEEKs. That is an old charge. Have you any recent instances
of that sort *
Mr. Taylor. Quite recent; yes, sir.
Mr. WEEKs. How recently 3
Mr. TAYLOR. Possibly within a year.
Mr. WEEKs. Is there any reason 7
Mr. TAYLOR. I will read the reason that was given.
The question of compensation for such service arose and the depart-
ment expressed a willingness to compensate the carrier on the basis
of freight rate transportation, but declined to make settlement on any
other basis. The equipment in question involved 3,113 pieces, an
aggregate weight of 142,765 pounds, Value of service performed on
basis of express transportation, $4,087.67; value of service performed
on basis of freight rate transportation, $1,152.59.
Mr. WEEKs. Did that happen on your line :
Mr. TAYLOR. Yes, sir. *
Thus it will be seen that although the highest class of service was
rendered by carrier line, the department declined to adjust on other
than freight-rate basis, insisting that the loss of $2,935.08 be assumed
by the carrier line; otherwise the service should remain unpaid for.
Instances of this kind have not been uncommon in the past, but have
been experienced in some form with frequency.
There is probably no line of endeavor that is more susceptible to
cooperation or where success is more dependent upon cooperation
than in the train and station service of a railroad, or where its absence
is more quickly reflected in unfavorable results. I have in mind the
employees having to do with the movement of trains. The prompt
75904—No. 1–13—21
320 - RAILWAY MAIL PAY.
and efficient manner in which each employee, in his particular sphere
of responsibility, performs his duty, whether it be the conductor, hav-
ing general charge of his train, the engineer, flagman, baggageman,
postal clerk, or express messenger, all of whom cojointly must at all
times contribute his best efforts if maximum efficiency of service is to
be realized. In other words, it is vital that every man upon whom
the success of the service depends should at all times do his full duty
with the promptness that the service requires. I regret to say that
it has not been the experience of the transportation lines that postal
and transfer clerks have displayed that uniform cooperation so essen-
tial, and this fact is not infrequently reflected in delayed train move—
ment. ...We believe that closer departmental supervision on educa-
tional lines, as applying to postal and transfer clerks, would result
in marked improvement in the movement of mail trains, and thereby
extend to the Railway Mail Service generally. .
The CHAIRMAN. If you had a train carrying an R. P. O. car and the
schedule time for the train to depart had arrived, would you hold the
train if there was a railway mail clerk who had not arrived
Mr. TAYLOR. We do those things.
The CHAIRMAN. Are you compelled to do it?
Mr. TAYTOR. The mail is a preferential service. All other branches
of passenger-train service are subordinated to the mail. ‘That is our
practice.
The CHAIRMAN. So, if a railway mail clerk is late you hold your
train until he arrives?
Mr. TAYLOR. I would not like to say until he arrives, but we would
be reasonable about it.
Mr. LLOYD. How long would you wait?
Mr. TAYLOR. I would wait 30 minutes.
Mr. LLOYD. You would hold up a passenger train 30 minutes?
Mr. TAYLOR. I would do it. I have not had occasion to do it, but
I would.
Mr. LLOYD. Did you ever do it?
Mr. TAYLOR. I have never held one that length of time.
Mr. LLOYD. Do you know of any other railroad that has held a
train that longº -
Mr. TAYLOR. I would not come in contact with that character
of information. *~
The CHAIRMAN. How long have you held a train?
Mr. TAYLOR. I can not state a concrete case where we have held
a train for the arrival of a postal clerk, but I can show you a number
of instances where we held our trains for the work to be performed
by postal clerks and by transfer clerks, --
Mr. WEEKs. You would report that?
Mr. TAYLOR. I have a number of times.
Mr. WEEKs. Do you always report it?
Mr. TAYLOR. Not always, because they are too frequent.
Mr. WEEKs. Does the department take any action?
Mr. TAYLOR. I have never observed material improvement from
such reports.
Mr. WEEKs. Do you know whether the employees are punished?
Mr. TAYLOR. I could not say.
There are instances where, apparently, the thought prevails in the
minds of postal and transfer clerks that their time is their own and
BAILWAY MAIL PAY. 321
their station work is conducted on that theory, which not only
demoralizes the work and discipline of employees in other branches of
the service, but actually .#. in delays in the operation of mail
trains. I do not wish to convey the impression that postal or transfer
clerks are altogether responsible for station deláys, for I recognize
that departmental economies have, in many cases, had the effect of
reducing the number of employees in postal cars below a point where
it is physically possible for postal clerks to handle their transfers
with the promptness that they would otherwise, such economies
being accomplished at the sacrifice of time and at the expense of the
carrier in which the other branches of the services which the carrier
undertakes to perform participate.
It is appreciated that the general question of railway mail service, as
well as the general question of just compensation therefor, are prob-
lems of great magnitude and at the same time are capable of being
worked out on lines of equity alike to the Government and the
carriers. This much-desired end, however, can not be accomplished
except through the most thorough cooperation of the parties at inter-
est, and the carriers stand ready to extend that cooperation un-
stintingly.
The CHAIRMAN. We thank you very much, Mr. Taylor.
Thereupon, at 11.30 o'clock, the committee adjourned to meet at
the call of the chairman. -
RAILWAY MAIL PAY

AAE! &
4.4%; HEARING
A$
* . 14/3 - BEFORE THE
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS
MAIL MATTER AND COMPENSATION FOR
THE TRANSPORTATION OF MAILS
MARCH 27 AND 28, 1913
Printed for the use of the joint committee
WASHINGTON
GOVERNMENT PRINTING OFFICE
1913
UNIVERSITY OF MICHIGAN LIBRARIES
Transportation
• Library
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER
AND COMPENSATION FOR THE TRANSPORTATION OF MAIL.
CoNGREss of THE UNITED STATEs.
Senators: Representatives:
JONATHAN BOURNE, JR., Chairman. JAMES T. LLOYD. .
HARRY A. RICHARDSON. WILLIAM E. TUTTLE, JR.
JOHN H. BANKHEAD. JOEIN W. WEEKS.
Robert H. TURNER, Secretary.
RICHARD B. NIXON, Disbursing Officer.
II
A- ºr
34–75 .
{ } \,...,
/*, *.
TABLE OF CONTENTS.
Page.
Bradley, W. J., general supervisor of mail traffic, Pennsylvania Railroad. . . . . . 400
Lorenz, Max Otto, associate statistician, Interstate Commerce Commission .... 364
Safford, W. W., gº. mail and express agent, Seaboard Air Line Railway Co. 380
Snead, Russell H., manager express traffic, Chesapeake & Ohio Railroad & - - - 380
Wºº, W. A., assistant director maintenance and operation, Southern 325
*CitiC UO--------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
RAILWAY MAIL PAY. *
THURSDAY, MARCH 27, 1913.
CoMMITTEE ON SECOND-CLASS MAIL MATTER,
Washington, D. C.
. The hearing was resumed, at the call of the chairman, at 10.30
o'clock a. m.
Present: Senator Jonathan Bourne, jr. (chairman), and Senator
John W. Weeks.
The CHAIRMAN. For the information of those present who have
not attended informal conferences, I would like to say that confer-
ences between members of the committee, representatives of the
Postal Department, Mr. Lorenz, associate statistician for the Inter-
state Commerce Commission, and representatives of the transporta-
tion companies, and particularly members-of the committee on rail-
way mail pay, have been held almost daily since the last official hear-
ings for the purpose of interchanging ideas and getting respective
viewpoints relative to the subject matter of this inquiry.
The committee, by request, and upon compliance by the Interstate
Commerce Commission, have had the very valuable assistance of its
associate statistician, Mr. Lorenz, in the study in the past two weeks,
and by permission of the commission he will continue to assist us in
the study we now have before us for some time to come. . .
At the last hearing a request was made by the committee or repre-
sentatives of the Postal Department and of the railroad companies
to give further consideration to the seeming discrepancy between the
deductions made by the two parties, the governmental representatives
and the railroad representatives, as to the relative earnings in pas-
senger service and the railway mail pay. In a reply by the Postal
Department to the answers and briefs filed by the railroad represent-
atives to Document 105, it appeared that the railroad companies
figured the earnings per car-foot mile from mail service at 3.23 mills
and 4.25 mills from other passenger service, whereas the depart-
mental representatives figured the revenue from mail service at 4.14
mills per car-foot mile and 4.16 mills from other passenger service.
The desire of the committee was to determine the reason for this
apparent great difference in deductions based on apparently the same
premise, namely, the information contained in Document 105. The
committee have received a joint letter under date of March 15, 1913,
representing their efforts in compliance with the request of the com-
323
324 RAILWAY MAIL FAY.
mittee to submit further information relative to this seeming dis-
crepancy. The letter is as follows:
WASHINGTON, March 15, 1918.
Hon. JONATHAN BOURNE, Jr.,
Chairman Joint Committee on Postage on Second-Class
Mail Matter and Compensation for the Transportation
of Mail, Congress of the United States.
MY DEAR MR. CHAIRMAN : In response to the direction of the joint committee
at its session February 12, 1913, the undersigned committees were designated
by the Second Assistant Postmaster General and Mr. Ralph Peters, chairman
committee on railway mail pay, to represent the Post Office Department and
the railroads respectively, to consider the differences in the statements of
revenue per car-foot-mile received by the railroads from the mail Service and
from other passenger-train Services, as COmputed by the department and the
Committee On railway mail pay. -
The earnings per car-foot-mile from the mail Service and other passenger
services as stated by the committee on railway mail pay were 3.23 mills for
the mail service and 4.25 mills from other passenger services. These figures.
were computed from the data as reported by the companies represented by the
railway mail pay committee and covered 178,716 miles of service. w
The earnings per car-foot-mile, as stated by the Post Office Department in its
memorandum dated January 17, 1913, in reply to the Statement of the rail-
roads entitled “Mail carrying railroads underpaid,” were 4.14 mills for mail
service and 4.16 mills for other passenger Services. These figures were com-
puted from the data as to Space reported to the department by companies rep-
resenting approximately 175,922 miles of service as reclassified by the de-
partment. - -
The differences between the car-foot-mile earnings by the two calculations
are due entirely to the fact that the Post Office Department upon receipt of
the data as to space from the railroads made certain modifications therein,
based upon the space deemed by the Post Office Department to be necessary
for its purposes and upon its rules with respect to assigning other space re-
ported by the Companies as mail space, which resulted in a reassignment of
the car-foot-mile Space to the different subdivisions of passenger train service.
A computation made by the Post Office Department from the data reported
by the railroads, representing 187,760 miles of service, as actually operated
in November, 1909, without any of the changes and modifications which the
department deemed necessary and proper to make in preparing Document 105,
brings the following results:
Mills.
Earnings per car-foot mile in mail service-- –––– 3. 37
In other passenger services -- 4. 34
The matter of an inquiry into the cost of construction, operation, and mainte-
nance of railway postal cars, which you also referred to the committee, is being
investigated and upon receipt of certain information asked for from the
companies a further report will be made relative thereto.
Yours, very truly, - .*
Joseph STEwART,
C. H. McBRIDE,
A. N. PRENTISS,
Committee Representing the Post Office Department,
H. E. MACK,
O. J. BRADLEY,
H. P. THRALL,
Committee Representing the Railroads.
At the committee's request Mr. Lorenz, associate statistician for
the Interstate Commerce Commission, made a study of the informa- .
tion contained in Document 105, and submitted a statement in refer-
ence to the figures and returns upon which the conclusions were
arrived at by the postal and railroad representatives. The statement
is as follows:
RAILWAY MAIL PAY. 325
PASSENGER-TRAIN CAR-MILE EARNINGS IN 1910 FOR THE UNITED STATES As A WHOLE.
Our first result, obtained by dividing the total earnings of passenger trains
as given in the printed volume by the total mileage of all cars in passenger
trains, is 25.51 cents per car-mile. If we eliminate those roads which report
earnings but not car mileage, and also eliminate certain passenger earnings
from ferry steamers, the average is not much affected, being 25.42 cents. It
would be desirable to have separate averages for passenger service proper, for
mail service, and for express service. The official statistics separate the earn-
ings but can not separate the car mileage in these three groups. Such a
Separation requires a Smaller unit. It is possible to make an estimate by
dividing the car mileage between the three services according to the propor-
tions given by the Post Office Department. If we take the Post Office Depart-
ment's view that dead space should be charged to passenger proper, we get
82.18 per cent as the proportion of Space in passenger trains devoted to other
than mail and express purposes. ACCOrding to the railroads’ contention, the
dead space should be charged to mail, and the percentage becomes 80.51 per
cent. On these two bases, the passenger-car-mile revenue, excluding mail and
express from consideration would be, according to the post-office percentage,
26.29 cents, and according to the railroad view, 26.84. With respect to the mail
service, the difference as to dead space, again gives two percentages: Post office,
7.16 per cent; railroad, 8.83 per cent. These lead to a mail-car-mile revenue of
22.80 cents and 18.49 cents, respectively. Finally, the express would have 10.66
per cent of the train space, and the corresponding car-mile revenue would be
21.03 cents. It should be emphasized that these averages are in the nature of
an estimate. They rest in part upon data annually reported to the commission,
but also in part on the facts reported by the railroads to the Post Office De-
partment for a single month. A warning should also be given against using a
single average for the United States as a whole without a detailed consideration
of similar averages for individual railroads. Finally, the averages given need
some minor adjustments which could not readily be made on account of the
clerical labor involved. They are offered simply as a basis for a discussion of
method.
STATEMENT OF W. A. WORTHINGTON.
The CHAIRMAN. Mr. Worthington, it will be necessary for you to
be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you kindly state your full name, residence,
and your official capacity with any transportation companies?
Mr. WoRTHINGTON. W. A. Worthington. I am assistant director
maintenance and operation, Southern Pacific Co.; residence, New
York City.
The CHAIRMAN. How long have you been connected with the
Southern Pacific Co. in your present official position?
Mr. WoRTHINGTON. About 6 years, and with the Southern Pacific
Co. about 26 years.
The CHAIRMAN. The matter of railway mail pay from the Gov-
ernment comes directly under your supervision, does it?
Mr. WoRTHINGTON. In a general way. We have a mail traffic
manager who handles the details.
The CHAIRMAN. You are the determining voice?
Mr. WoRTHINGTON. Yes; I have general supervision.
The CHAIRMAN. Have you prepared a statement to submit to the
committee relative to Document 105, and your comments on same?
Mr. WoRTHINGTON. I have prepared a statement. First, a state-
ment to be made for the Southern Pacific, which road I represent;
and then I have some additional information, including some
326 RAILWAY MAIL PAY,
graphic charts with relation to mail pay in the United States as a
whole. Will it be agreeable for me to read this?
The CHAIRMAN. If you would, kindly.
Mr. WoRTHINGTON. This presentation is made as a member of the
committee on railway mail pay and in behalf of the Southern Pacific
Co., of which I am assistant director of maintenance and operation.
I have read over and am familiar with the provisions of proposed
bill S. 7371, also with the views of the Post Office Department as
expressed in Document H. R. 105, and in behalf of our company wish
to indorse the position taken by the committee on railway pay in
respect to these matters as set forth in document entitled “Mail
carrying railways underpaid,” which has already been introduced
in evidence by the chairman of the committee on railway mail pay.
The Southern Pacific Co. operates 10,052 miles of railway in the
States of Louisiana, Texas, New Mexico, Arizona, California, Ne-
vada, Utah, and Oregon. There are about 120 mail routes on this mile-
age, the average daily weight of each of these routes ranging from
24 pounds on the smallest to 93,613 pounds on the route of the ãº:
traffic between Ogden and San Francisco; the total revenue from
mail for the year ending June 30, 1912, was $2,472,769; the earnings
from mail for each of the years from 1907 to 1912, inclusive, as com-
pared with the earnings from other passenger train service being
as follows:
Other pas-
Year ending June 30– Mails. senger-train
Service.
1907---------------------------------------------------------------------------- $2,488,286 $36,062,955
1908--------------------------------------------------------------- : - - - - - - - - - - - - 2,369,763 38,251,443
1909--------------------------------------------------- ------------------------- 2,397, 166 36,576,434
1910. . . . . . . . -------------------------------------------------------------------- 2,409, 503 || 42,811,625
1911---------------------------------------------------------------------------- 2,474,263 || 43,506,086
191?---------------------------------------------------------------------------- 2,472,769 42,786,324
Increase, 1912 over 1907- - - - - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,723,369
Decrease, 1912 from 1907- - - - - - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 517 |- - - - - - - - - - - -
Fer cent---------------------------------------------------------- ------------- 0.62 18.64
The CHAIRMAN. Was your apportionment each year the same be-
tween your mail revenue and the passenger? All your deductions are
on the same basis? -
Mr. WoRTHINGTON. Yes; exactly. They are taken from the an-
nual reports of the company. In these five years, the mail revenue
decreased 0.62 per cent, and other passenger-train revenue increased
18.64 per cent. *
The CHAIRMAN. Those are your gross revenues?
Mr. WoRTHINGTON. Yes, sir.
The CHAIRMAN. Not net at all?
Mr. WoRTHINGTON. No; gross. -
The CHAIRMAN. You did not try to work that down?
Mr. WoRTHINGTON. No; I have reached that afterwards.
The CHAIRMAN. That is gross revenue? *
Mr. WoRTHINGTON. That is gross revenue. That is simply put in
to show while our mail pay has been declining to a slight extent our
earnings from other passenger service have increased materially.
BAILway MAIL PAY. 327
The CHAIRMAN. That is gross? -
Mr. WoRTHINGTON. Yes. The total number of postal cars owned
on June 30, 1912, was 64. -
The annual report for the Southern Pacific Co. for 1912 not hav-
ing been issued when these data were prepared (the ratio of oper-
ating expenses to earnings for that year was greater than in the
previous year), the following statistics are presented for the South-
ern Pacific Co. for year ending June 30, 1911, showing service per-
formed in handling the mails as compared with revenues received in
contrast with similar information for other traffic.
Mail service, Southern Pacific Co., year ending June 30, 1911.
Received for mail transportation ____ $2,272, 791.
Received for railway post-office cars - - - 201; 472
* Total ___ 2, 474, 263
Ton-mileage of mails transported.------------------------------- . 25, 773, 572
Car-foot miles occupied by mails 610, 929, 100
Gross ton-miles:
Car weight at three-fourths ton per car-foot mile_____________ 458, 196, 683
Ton-miles clerks, at 3 men per car (8 pounds per car-foot mile) 2, 443, 716
Revenue ton-miles of mail _____ 25, 773, 572
Total – 486, 413, 971
The CHAIRMAN. How do you get the gross weight of the clerks?
Mr. WoRTHINGTON. I estimate that by three men per car, 8 pounds
per car-foot mile. --
The CHAIRMAN. How do you estimate the average weight of the
three men 3
Mr. WoRTHINGTON. At an estimated average weight on the postal
cars. We have them in our statistics. ~
. The CHAIRMAN. I understand you to say gross weight of clerks.
- M; WoRTHINGTON. You mean how much do I estimate for each
Iºla Il º -
The CHAIRMAN. Yes.
Mr. WoRTHINGTON. I think 160 pounds. It is 8 pounds per car-
foot mile.
The CHAIRMAN. That is an arbitrary figure?
Mr. WoRTHINGTON. Yes; that would be arbitrary.
Mail pay per revenue ton-mile, excluding railway post-office car
pay - CentS__ S. S1S
Mail pay per revenue ton-mile, including railway post-office car *
pay –––––––––––––––––––––––––––––––––––––––––––––––––––––––– CentS__ 9. 60
Mail pay per gross ton-mile, including railway post-office car pay__mills__ 5.083
Mail pay per car-foot mile, including railway post-Oſfice car pay__do- --- 4.05
Mail pay per 60 car-foot miles_-__ * * * * * * * * * * * * * * * *m-. CentS - 24.30
The CHAIRMAN. In that connection, do you receive compensation .
for the 60 feet or only 50 feet?
Mr. WoRTHINGTON. This, of course, includes car-foot mileage,
which we reported to the department, and does not include the
deductions made by the Post Office Department in the car-foot mile-
age which they considered not required.
The CHAIRMAN. That is dead space you credit to yourself?
Mr. WoRTHINGTON. Yes. *
328 RAILWAY MAIL PAY.
The CHAIRMAN. And debit the Government as well. The depart-
ment reverses that? -
Mr. WoRTHINGTON. Yes. *
Mail pay per 350 car-foot miles (the average passenger train inside
length) -------------- *- - - - - - –––– $1.42
Tons of gross weight per tom of paying weight - -, * * *- - - - - - - - - - - - - - 18. ST
Tons of dead weight per ton of paying weight _ 17. 87
A verage tons mail per 60 feet of Car Space----------------------------- 2.53
PASSENGER SERVICE OTHER THAN MAILS.
Revenue from Dassengers and eXpress_____ __ $43, 506, 086
Car-foot miles for passengers and express 8, 334, 500,000
TOn-miles weight of passengers and baggage at 200 pounds - s
per passenger______ –- 180, 813, 360
TOn-miles Weight of eXpress–––––––––––––– 52. 063, 558
Total revenue ton-miles–––––––––––––––––––––––––––––––– 232, 876, 918
Ton-miles weight of cars at # ton per car-foot mile____________ 6, 250, 875, 000
Total gross ton-miles - - - * * *- - - - - - - - - - - - - - - - * * * *- - - - - 6, 483, 751, 91S
Revenue per revenue ton-mile - CentS__ 18. 68
Revenue per gross ton-mile-------------------------------- mills-- 6. (1
Hevenue per car-foot mile ----do-- 5, 22
IRevenue per 60 car-foot miles-- cents-- 31. 32
Itevenue per 350 car-foot miles (the average passenger train .”
inside length) –––– * * $1.83
FREIGHT SERVICE.
Total miles run by freight cars 529, 341,793
Sar-foot miles run by freight cars at 38 feet average length-, - 20,098,988, 134
Total miles revenue freight---------- ---------------- 7,479, 204, 761
Ton-miles dead weight, at 18 tons per Car------------------- 9, 528, 152, 274
Total miles gross Weight.------------------------------ 17, 007, 357,035
Revenue received for transporting freight--- - $73, 677, 293
Revenue received per Car-mile, loaded and empty_______ CentS__ 13. 4)2
Revenue received per car-foot mile sm —-milkS.-- 3.67
Eliminating space used by company freight (17 per cent) the
freight revenue becomes 4.36 mills per car-foot mile, or more than
from mails. --
In other words, we received more for hauling freight on freight
trains than we do for hauling mail on passenger trains per car-
foot mile. --
The CHAIRMAN. You receive more for hauling freight than you
do for your passengers, per car-foot mile? . -
Mr. WoRTHINGTON. No, sir. For passengers we receive 5.22 mills.
The CHAIRMAN. You receive more for passengers than you do for
freight?
Mr. WoRTHINGTON. Yes; but less for mail than we do for freight
per car-foot mile.
The CHAIRMAN. And "less for mail than you do for passenger or
freight, per car-foot mile?
Mr. WoRTHINGTON. Yes, sir; considerably less.
RAILWAY MAIL PAY. 329.
Revenue received per ton-mile of freight (Commercial) ----------- cents__ 1.175.
Revenue received per gross ton mile--------------------------- mills-- 4: 33
Tons of groSS weight per ton of paying Weight------------------------- 2. 27
Tons of dead weight per ton of paying Weight------------------------ 1. 27
Length of average freight train---------------------------------feet—— 1, 272
Revenue of average freight train (including space used by company
freight) *- - - - - - - - - - - - - - * = ** - - - - - -º- sº - - - - - - - - __ $4.67
Following is an estimate for passenger train service on the
Southern Pacific Co. for the year ending June 30, 1911, comparing
the operating revenues from mails and from other passenger-train
service hereinbefore referred to, with the operating expenses charge-
able to the respective services. The estimate for operating ex-
penses is made on the basis used by the railroad company in furnish-
ing for November, 1909, to the Postmaster General an apportion-
ment of operating expenses of passenger-train service. In brief, this
apportionment first considered expenses which might be altogether
charged direct to passenger-train service, then withdrew from con-
sideration similar items chargeable altogether to freight service,
the remaining operating expenses being apportioned to passenger-
train service on a train-mileage basis. This basis was considered
carefully in view of the fact that many of these expenses are greater
per train-mile for passenger than for freight, such as expenses for
casualties, the necessity for expensive terminals, delays to other
traffic through preference given to passenger trains, additional main
tracks, and, particularly, higher standards of maintenance of road-
bed required for higher speed passenger-train movement.

Southern Pacific Co.—Summary of results, passenger-train service.
Mails. Other. Total.
Operating revenue........................................... $2,474,263 $43,506,086 $45,980,348
Operating expenses. ............................. . . . . . . . . . . . . 2,871,367 39,200,652 42,072,019
Operating income. . . . . . . . . . . . . . . . -------- r - - - - - - - - - - - - - - - - - - - - - - - - - - - 4,305,434 3,908, 329
Operating loss. ------------------------------------------.... 397,104 |...............l............."
Taxes, fixed charges, and dividends 1. . . . . . . . . . . . . . . . . . . . . . . . 1,099,672 14,993, 450 16,093, 122.
Peficit------------------------------------------------- 1,496,776 10,688,016 12, 184,793
Ratio to revenues: Per cent. Per cent. Percent."
Operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.9 89.9 91.5
Taxes, fixed charges, and dividends. . . . . . . . . . . . . . . . . . . . . . 44.4 34.5 35.0
Total. ------------------------------------------------- 160. 3 124.4 126.5
Revenue ton-miles. . . . . . . . . . . . ............................... 25,773,572 232,876,918 258, 650,490
Gross ton-miles---------------------... . . . . . . . . . . . . . . . . . . . . . . 486,413,971 6,483,751,918 6,970, 165,889
Car-foot miles---------------------------------------......... 610,929, 100 | 8,334, 500,000 | 8,945,429, 100
Per revenue ton-mile (cents): -
Operating revenue. --------------------. . . . . . . . . . . . . . . . . . 9.60 18.68 17.78
Operating expenses. ------------------------------------. 11. 14 16.83 16, 27.
Operating income--------------------------------------|------------- 1.85 1. 51
Operating loss. ---------------------------------------- 1.54 |---------------|--------------
Taxes, fixed charges, and dividends. . . . . . . . . . . . . . . . . . . . . . . . . . 4. 27 6, 44 6. 22.
Deficit------------------------------------------------- 5. 81 4, 59 4.71
1 Taxes, interest, and dividends have been apportioned to passenger service on basis of operating reve-
nue, although it would be equally fair to apportion these expenses on basis of train mileage, in which case
the amount so sº to passenger-train service would have been over 50 per cent greater than the
totals apportioned on the basis of revenue. Nothing charged to passenger for company freight. Ratio
of operating expenses to operating revenue for all traffic, 64.10.
330 RAILWAY MAIL PAY.
Senator WEEKs. What do you mean by “operating”?
Mr. WoRTHINGTON. That is the proportion of operating expenses
chargeable to the transportation of mails.
Senator WEEKs. What does that include?
Mr. WoRTHINGTON. It includes all of the operating expenses as
classified by the Interstate Commerce Commission, following that
classification, maintenance of way and structures, maintenance of
equipment, transportation expenses, traffic, and general expenses.
Senator WEEEKs. It is the Interstate Commerce Commission basis?
Mr. WoRTHINGTON. The Interstate Commerce Commission classi-
fication of operating expenses. -
The CHAIRMAN. Let me ask you, as a railroad representative, do
you think it is material to the railroad company from what source
they receive their revenue, providing their revenue received is suffi-
cient to pay operating expenses and dividends?
Mr. Worthington. Why, I think it is. I think that the railroads
should, wherever practicable receive from any class of traffic revenue
sufficient to cover its proper share of all the operating expenses and
the fixed charges, for the reason that if they do not it means that
the other classes of traffic will have to bear that burden—in other
words, the shippers of freight are really paying more than their
share as compared with traffic received from passenger trains.
The CHAIRMAN. That is a matter for the citizens. I am speaking
from the railroad standpoint purely. The desideratum of the rail-
roads is to receive sufficient earnings to enable them to pay all fixed
charges and expenses and dividends on the investment, is it not?
Mr. WoRTHINGTON. Yes, sir.
The CHAIRMAN. You make your apportionment of your earnings,
you know what your gross earnings are in determining the profit on
the freight or the passenger or the mail or express? And your de-
termination as to your apportionment is arbitrary, more or less,
principally more?
Mr. WoRTHINGTON. Yes. Practically half of the operating ex-
penses have to be apportioned arbitrarily.
The CHAIRMAN. So from the railroad standpoint it is not so im-
porant as to the source from which the revenue comes, provided
the burden is not placed on the revenue-producing source to such an
extent as to eliminate that as a factor, is it?
Mr. WoRTHINGTON. I think it is, Mr. Chairman, because we have
constantly to defend rate cases for example, and it would be rather
difficult to defend them, if it is conceded to be proper to operate
certain classes of traffic for an unduly low rate and throw all the
burdens of the fixed expenses on the freight shippers.
The CHAIRMAN. According to your statement, if I correctly un-
stand it, you show a loss there in round figures of some $12,000,000
from the passenger service, including in your passenger service, I
assume, express and mail.
Mr. WoRTHINGTON. Yes.
The CHAIRMAN. On presentation of that to the Interstate Com-
merce Commission for your freight rates the freight has to bear that
burden, and presumably the allowance would be made before its
permission would be granted to increase your passenger rates from
somebody in authority, would it not?
RAILWAY MAIL PAY. 331
Mr. WoRTHINGTON. Yes; but we find it pretty difficult to increase
the passenger rates. We have not been able to do it.
The CHAIRMAN. Why, if you can make a showing and demonstrate
the correctness of the fact that you are carrying it at a loss of
$12,000,000? >
Mr. WoRTHINGTON. We are constantly met with State legislation
fixing 2-cent passenger fares, which we have defeated, in Some cases,
The CHAIRMAN. Have you tried at all to get relief from the Inter-
state Commerce Commission? .
Mr. WoRTHINGTON. They have not any jurisdiction in the States,
The CHAIRMAN. Would they have in interstate passenger business?
Mr. WoRTHINGTON. Yes. -
The CHAIRMAN. Has that question ever been brought up before
the commission?
Mr. WoRTHINGTON. I do not know that it has.
The CHAIRMAN. When did the Southern Pacific initiate this system
of bookkeeping by which you show a loss in the passenger and mail
service? -
Mr. WoRTHINGTON. The system of bookkeeping was not initiated
by the Southern Pacific Co. As I before explained, the apportion-
ment was made following the method we used in answering the re-
quest of the ex-Postmaster General for the month of November, 1909.
We followed a suggestion made by the committee on railway mail
pay. -
The CHAIRMAN. In the information that you secured, yourselves,
in answering the questions of the ex-Postmaster General in 1909, it
is on that information that you base your conclusions in the loss of
the passenger service of $12,000,000, in round numbers?
Mr. WoRTHINGTON. Yes.
The CHAIRMAN. But you had no method of bookkeeping prior to
that by which you showed a loss in the passenger service, or a loss in
the carriage of the mails?
Mr. WoRTHINGTON. We do not regularly apportion expenses to
passenger and freight, because we know such an apportionment has
to be, in its end, largely arbitrary. In fact, 50 per cent of it has to
be apportioned, or a very large portion of it, in that way. -
The CHAIRMAN. Then you would not consider the information that
you obtained under requests, or in answering the questions pro-
pounded by ex-Postmaster General Hitchcock in 1909, of any prac-
tical benefit and value to your company in operating your railroad?
You do not change your accounts to comply with that?
Mr. WoRTHINGTON. No, sir. We do not consider it necessary to
keep accounts separate as to passenger and freight train service, but
in answering the requests of 1909 we adopted the basis which we
thought was fairest for apportioning these fixed expenses.
The CHAIRMAN. You have to make an apportionment between
freight and passenger to go before the Interstate Commerce Com-
mission to show that your freight rates are, from your viewpoint, too
low in asking for an increase in rates, do you not?
Mr. WoRTHINGTON. I do not know that I have made any appor.
tionment of that sort. I do not understand what case you refer to.
The CHAIRMAN. I am not referring to any particular concrete
case, but it seems to me, if you appear before the Interstate Com-
merce Commission to defend, if you please, or to secure authority
332 RAILWAY MAIL PAY.
for an increase in a freight rate, you have to take into consideration
in your presentation an apportionment between the revenue and the
cost of freight and passenger in some way. How is that apportion-
ment made, practically on arbitrary figures?
Mr. WoRTHINGTON. The only cases I have any recollection of, of
that sort, are in relation to some concrete cases and we have never
taken up the question of freight rates as a whole. In those special
cases we have made estimates of cost of handling particular com-
innodities. I recall several cases where we have made estimates, but
I do not recall any case where we have asked for an increase in
freight rates as a whole, which would involve any general appor-
tionment of the expenses, as between passenger and freight.
The CHAIRMAN. In connection with the merits of your applica-
tion for an increase of a particular freight rate, how do you demon-
strate your case, if you have not somewhere in your calculations an
upportionment between your passenger and freight revenues and
expenses?
Mr. WoRTHINGTON. We have made an apportionment similar to
this in those cases, and of course in those cases we also have to con-
sider the local conditions. We have to consider the carloading of
the commodity in question, the length of the train that we haul with
that commodity, and there are a great many other factors that are
considered in the same connection.
The CHAIRMAN. But nowhere in the calculation is there an arbi-
trary apportionment made, as, for instance, your gross revenues, so
many tens of millions, 70 per cent freight and 30 per cent passenger,
or whatever percentage it may be, your expenses so many tens of
millions, and an arbitrary percentage is charged to passenger Serv-
ice and an arbitrary percentage to freight?
Mr. WoRTHINGTON. Yes; of course it is necessary to make some
apportionment of your expenses if you want to make any exhibit
as to the result in any particular class of traffic.
The CHAIRMAN. What is your apportionment, in percentage, be-
tween freight and passenger?
Mr. Worth INGTON. It varies. Of course, I could not say offhand,
because it varies with every class of traffic we are moving. .
The CHAIRMAN. How does it vary 2 Supposing you are handling
lumber or handling tea? What has that to do with what your pas-"
senger revenues are? t
Mr. WoRTHINGTON. Your trainload may be greater according to
the class of commodities handled, and you may have 50 per cent
more tonnage of freight in a car of one commodity than another, and
naturally your tonnage expenses would be less.
The CHAIRMAN. But nowhere in that presentation is there a gen-
eral apportionment between passenger and freight on the earnings
and expenses of the system as a whole? -
Mr. WoRTHINGTON. The only general apportionment I recollect
that we have made on that subject is the one for November, 1909,
and that is the one that was made to ex-Postmaster General Hitch-
cock. *
The CHAIRMAN. And it has never been required to furnish to the
Interstate Commerce Commission in any way?
f - - RAILWAY MAIL PAY. 333
Mr. WoRTHINGTON. No. I think the Interstate Commerce Com-
mission, up to 1893, apportioned expenses between passenger and
freight. That is the only apportionment that I know of. The Inter:
state Commerce Commission themselves, you recall, up to 1893, did
require the railroads to make an apportionment between passenger
and freight service, and they dropped it in 1894.
The CHAIRMAN. As impracticable?
Mr. WoRTHINGTON. Yes. It was unsatisfactory and unreliable. I
do not recall what their reason was. That apportionment was the
only general one that I know of, except this one of November, 1909.
Southern Pacific Co.—Summary of results, passenger-train service.

Mails. | Other. | Total. Mails. | Other. | Total.
Per gross ton-mile (mills): Per car-foot mile (mills):
Operating revenues--| 5.09 6.71 6.60 Operating revenues...| 4.05 5. 22 5.
Operating expenses. 5.90 6.05 6. 04 Operating expenses-- 4. 70 4. 70 4. 70
Operating income.......... . 66 . 56 Operating income... . . . . . . . . . 52
Operating loss. . . . . .82 --------|-------- Operating loss. . . . . .65 - - - - - - - - - - - - - - - -
Taxes, fixed charges, and - Taxes, fixed charges, and
dividends. . . . . . . . . . . . . 2. 26 2. 33 2. 31 dividends - - - - - - - - - - - - - 1.80 1.80 1. 80
Deficit. . . . . . . . . . . . 3.08 1. 67 I. 75 Deficit. . . . . . . . . . . . 2.45 1.28 1.36
The CHAIRMAN. In your operating losses for mail, as contained in
your statement, all deductions are based on your investigation or
ascertainment made in 1909 in answering the Postmaster General’s
questions?
Mr. WoRTHINGTON. Yes, sir.
that time.
The CHAIRMAN. And your apportionments are arbitrary—made by
your company’s representative? Your dead space is charged to the
mail? -
Mr. WoRTHINGTON. I would qualify that by saying that the mail's
dead space is charged to the mail. Of course, dead space in connec-
tion with passenger-train service is charged to the passenger-train
service. Mail is not the only service that has dead space, and the
mail dead space is the space the Postmaster General has charged to
passenger service where it has no connection whatever. *
The CHAIRMAN. Taking your deductions in submitting your
premises to the Post Office Department, your inference would be that
they would not show the same apparent loss to your company in
compensation received for mail transportation that you do?
Mr. WoRTHINGTON. Certainly not, because they have excluded the
dead space and thereby increased the receipts per car-foot mile to
that extent.
The CHAIRMAN. They not only excluded the dead space which you
claim should be credited to the mail, but that exclusion has been
adopted as to passenger, thereby not only diminishing your deduction
as to your revenues from mail service, but increasing the apparent
computation as to revenue from other passenger service? %
Mr. WoRTHINGTON. Precisely. -
The CHAIRMAN. So your contention is that the Postal Department
has not used the proper basis; in other words, they have charged you
with two debits in securing deductions by which the information will
Special information worked up at
334 RAILWAY MAIL PAY.
present the difference between the percentage of passenger compen-
sation and mail compensation, and if any deduction is to be made
at all for dead space it should be made in both instances, both in the
mail and in the passenger? -
Mr. WORTHINGTON. We have included dead space chargeable to
passenger and express service, and we think that similar dead space
should be included by the department when it comes to mail.
The CHAIRMAN. In your presentation you have included dead
space in all three—passenger, mail, and express?
Mr. WORTHINGTON. Yes.
Senator WEEKs. The Southern Pacific Railroad knew, before 1909,
that it was losing money in the transportation of the mail?
Mr. WoRTHINGTON. I would not claim that the Southern Pacific
were actually losing money in the transportation of the mail. I
claim that the mail revenue is insufficient to pay not alone the direct
cost of movement but its proper pro rata of the fixed expenses. º:
Senator WEEKs. When I say “losing” I am including all ex-
penses, including overhead charges. +
Mr. WoRTHINGTON. Yes, Senator, we did that.
Senator WEEKs. How did you know?
Mr. WoRTHINGTON. Through computations of this kind, which we
made ourselves and through a presentation which we made about
13 or 14 years ago before the first congressional commission to in-
vestigate the mail service. At that time the Southern Pacific made
a presentation, and Mr. Kruttschnitt made one later, in New York,
for all the railroads of the United States, and the results were about
the same as this. - *
Senator WEEKs. Then this information obtained in 1909 did not
give you any new information on that subject?
Mr. WoRTHINGTON. No, sir. Nothing. We were quite sure that
would be the result. *
Senator WEEKs. Do you think that is true of all railroads—that
they had that information before?
Mr. WoRTHINGTON. Of course, I would not want to speak for other
railroads with which I am not connected. I suppose there are some
railroads which probably had the same impression. , - .
The CHAIRMAN. In your elucidation, I understood you in reply-
ing to Senator Weeks’s question, to state that you would not claim
that the Southern Pacific was actually losing money in mail trans-
portation under the present compensation that you receive, and
yet in your statement a little while ago, according to my under-
standing, you make a showing of about two millions loss on mail, or
twelve million in passenger, including mail.
Mr. WoRTHINGTON. Passenger train service, including mail serv-
ice, does not return a sufficient gross amount to pay its pro rata
of operating expenses, which was, to a certain extent, independent
of train mileage. We will take, for example, maintenance of way
and structures, which is, I think, 22 or 23 per cent of the total op-
erating expenses; that means the upkeep of the road, renewal of rail,
ties, and ballast. That is something it is absolutely impossible to
put to train mileage, and we think that it is proper it should be
apportioned to all classes of service. We might run an additional
train over the road without, perhaps, adding directly to that par-
ticular item of expense, but that is an item of expense that has to be
RAILWAY MAIL PAY. 335
apportioned to some class of traffic, and we think it should be appor-
tioned to all classes of traffic and that no one class should bear the
entire burden. - 3 - a
The CHAIRMAN. Do you think it is possible to work out an appor-
tionment on a percentage basis of charge against mail Service that
would be permanent, or would it have to be changed from year to
year as conditions vary?
Mr. WoRTHINGTON. You mean on a cost basis, on the so-called cost
basis? - -
The CHAIRMAN. Yes. - -
Mr. WoRTHINGTON. It would have to be changed from year to
year and be charged out on a different basis for practically every
railroad in the country, to be entirely fair. The local conditions are
so different. I will come into that very soon. You were asking
a moment ago whether the difference between the results shown on
this system and those shown by the ex-Postmaster General were
due to the handling of the dead space. That is one reason for the
difference. The other reason is on account of the difference in ap-
portionment that he used for his operating expenses to mail serv-
ice as compared to that used by the railroads. His basis apportioned
less to passenger train service than any method of which I have any
knowledge. He apportioned less expense to passenger train service.
The CHAIRMAN. How much would that account for in the seeming
discrepancy in the result obtained ? -
Mr. WoRTHINGTON. Ex-Postmaster General Hitchcock shows, in
House Document No. 105, that they were making considerable profit
in handling the mails.
The CHAIRMAN. Is that profit due to his method of handling dead
space, or is it due principally to his method of apportionment?
Mr. WoRTHINGTON. To both, I think, but principally to the appor-
tionment. I will say, I think it is almost half and half. I know he
cut out a very large amount of dead space, but I think mostly to the
apportionment of expenses.
. The CHAIRMAN. Then I had an incorrect impression. I supposed
that the apparent difference was due primarily to the method of
handling dead space.
SPECIAL COMPARISON BETWEEN MAIL, PASSENGER AND ExPRESS.
According to the information prepared by the company for No-
vember, 1909, in response to inquiry of the Postmaster General, the
revenue per car-foot mile for the Southern Pacific Co. averaged from
mails 4.05 mills; from express 3.84 mills; and from passengers 5.34
mills. The Southern Pacific Co. under its express contract receives
only 40 per cent of the express rate on account of having received
when the contract was made a cash and stock bonus. It is, therefore,
fairer to compare the revenue per car-foot mile on the Union Pacific
system where the usual contract is in effect. On that system the mail
revenue per car-foot mile is 4.03 mills, or practically the same as on
the Southern Pacific Co., whilst the express revenue per car-foot mile
is 4.48 mills. The conditions surrounding the transportation of mails
are particularly expensive. Our present common standard steel car,
60 feet long, weighs 116,000 pounds, or 37 per cent heavier than a
75904—No. 2–13—2
336 RAILWAY MAIL PAY.
similar car not built to the Post Office Department's specifications,
including post-office fixtures. Such a car, which we use for baggage
or express, weighs when built of steel and of the same length as the
postal car, only 84,500 pounds. The average weight of load in an
express car is about five tons, or from 70 per cent to 100 per cent
greater than the load in a mail car. The ratio of dead to paying
weight is twice as great for mail as for express, whilst the first cost
of the mail car is 40 per cent greater than the car without the postal
facilities, which is used for fº and express, and the cost of
ownership and maintenance is therefore greater.
Senator WEEKS. Is that true of all kinds of cars?
Mr. WoRTHINGTON. I am simply making a comparison between
cars used for express and those used for mail. -
Senator WEEKs. Would that be true of steel cars?
Mr. WoRTHINGTON. Passengers cars?
Senator WEEKs. No; I am speaking of steel cars.
Mr. WORTHINGTON. I am speaking of steel cars in this case, steel
baggage car and steel express car. A steel postal car on our road is
37 per cent heavier than a baggage car without the postal features.
Special expenses incident to the mails are also greater, such as the
large number of employees moved in proportion to tonnage account
of mail clerks distributing enroute; the liability of accidents to these
clerks borne by the railroad; free transportation granted to postal
inspectors on all trains; and particularly side and terminal mail
service required of the railroads. The railroads are also subject to
fines for delays.
In comparing mails with passengers, the space charged to passen-
gers includes baggage cars, dining cars from which special revenue
is received, observation and sleeping cars. For the latter more space
and weight per passenger is required than for ordinary passenger
cars, additional revenue being collected from passengers for the
special facilities, most of which is paid to a sleeping-car company,
but in consideration of which the railroad is relieved of the cost
of ownership and maintenance of the space in the sleeping cars. If
allowances were made for revenue collected from passengers outside
of the strict railroad fare, the revenue paid by passengers per car-
foot mile would be considerably greater than shown.
Comparison of mails with freight.
Revenue per car-foot mile from mail_______ * * * * * * * * mills 4.05
Revenue per car-foot mile from commercial and company freight——do---- 3.67
Revenue per car-foot mile from commercial freight Only---_______ do____ 4.36
Revenue per car-foot mile—commercial freight in loaded cars Only—do---- 6. 14
Average length of a passenger train______--------- feet__ 350
Average length of a freight train–––––––––––––––––––––––––––––––– do---- 1, 272
Average revenue from mail Space equal to the length of an average pas->
Senger train —- - * -s ºr mºm º ºr - - - - -ºº ºms º ºs º- ºr * $1.42
Average revenue from a freight train Carrying both Commercial and
company freight ---------------------------- –––– $4.67
Average revenue from a freight train carrying Commercial freight________ 5. 55
Average revenue from a freight train Carrying loaded Cars of commer-
cial freight only ––––––––––––––––––––––––––––– $7.81
Company freight is handled as much for account of passenger serv-
ice as for freight service, this freight including fuel used by loco-
"offves- rails, ties. lumber, and metals for maintenance of structures
RAILWAY MAIL PAY. 337
and equipment. After making proper allowance for the space used
by company freight, which brings in no revenue to the railroads, the
freight revenue per car-foot mile is actually greater than the mail
revenue after including the car space in empty cars, which represents
a considerable part of the freight service. The freight train is three
and one-half times as long as the passenger train, whilst the speed
at which mail is transported while the train is moving is two or
three times as great as freight; and the speed of transportation after
including station and terminal delays is three to five times as great
in the case of mails as with freight. That under the conditions at-
tending its transportation we are permitted to earn only one-third
as much for a train length of mail equaling the average passenger
train as we do in the case of a freight train, whilst we must incur
large special expenses and obligations incident to mails, is, it seems
to us, conclusive evidence of the inadequate compensation for the
handling the mail traffic as compared with freight traffic. Incident-
ally, this is also true as to passenger-train service as a whole when
compared with freight, although the mails are less remunerative than
any other class of service.
During the past 10 or 15 years rising labor and material prices
have largely increased the unit cost of railroad transportation. In
the case of freight, where the loading and movement is largely within
the control of the carrier, the railroads have been able to offset this
in great degree by building larger capacity cars and hauling more or
less of them in a train through the use of heavier locomotives. In
passenger service the rising costs of operations have been similarly
attended by an increase in weight and cost of cars, the latter due to
higher prices coupled, with substitution of steel for wood construc-
, tion, this equipment likewise requiring heavier locomotives, but it
has been impossible to materially increase the carrying capacity of
passenger cars or the loads in them, which would be the only way in
which the railroads could recoup themselves for higher operating
costs. This is particularly so in the case of mail transportation; the
method of handling it is beyond the control of the railroads, the
loading of cars being limited, due to the requirement for furnishing
postal facilities and space for clerks distributing mail en route.
Instead of increasing the payments to the railroads for the R. P. O.
cars as an offset to the higher operating costs and increased weight
and cost of equipment, the act of Congress of March 2, 1907, reduced
the R. P. O. car rates about 16 per cent.
RAILWAY POST-OFFICE CARS.
In some quarters there seems to be an impression that the addi-
tional compensation allowed the railroad company for railway postal
cars represents a rents' en the value of these cars and is, therefore,
excessive, as the usual compensation for a car making the normal
mileage will equal the value of a car in about two years. Payment
to the railroad, however, includes not only payment of rental to cover
interest on investment, depreciation, and cost of maintenance, but
also is supposed to cover the extra cost imposed on the railroads of
hauling in trains the great weight, and space due to moving a dis-
tributing post office on wheels, with necessary working space for
clerks, as compared with transportinº ºne mails merely as weight,
338 RAILWAY MAIL FA Y.
in which case far less space would be required, and that in much
lighter cars. Indeed, it is likely that but for the traveling post offices
the available space elsewhere on the train might be sufficient for most
of the tonnage now carried in the R. P. O. cars.
Senator WEERs. Do you know how much cheaper the Southern
Pacific Railroad could carry Solid mail trains, or cars filled with mail,
than they can R. P. O. cars with distribution facilities?
Mr. WORTHINGTON. They could carry the aggregate mails, of
course, very much cheaper, and if the cars were loaded solid they
would probably hold from 20 to 25 tons of mail. It would be very
easy to get that much mail, loading the cars to the roof, whereas in
the R. P. O. car we get only 24 tons. t
In other words, a load of 10 R. P. O. cars would go into a single
baggage car. In other words, there would be about one-tenth as
much. *
Senator WEEKs. How much lower would the rate be if all mail
were transported in solid carloads? Did you ever figure that out?
Mr. WoRTHINGTON. No. Under the present law I suppose the
only saving would be in the R. P. O. car pay. . - -
Senator WEEKs. I understand, under the present law, but I mean
as a practical railroad proposition.
Mr. WoRTHINGTON. I have never figured it out, but the cost would
only be a fraction as much as hauling cars loaded solid with mail
as compared with hauling mail in R. P. O. cars with 2% tons to a car.
Senator WEEKs. How many such trains do you have on the South-
ern Pacific Railroad; that is, solid mail trains? *
Mr. WoRTHINGTON. We have not any solid mail trains. We have
the mail train which has some storage mail in addition to the R. P. O.
cars. We have no sold mail trains without distributing cars in them.
The CHAIRMAN. How many trains have you which do not carry
passengers and express? .
Mr. WORTHINGTON. On the Southern Pacific I think we have not
any train that does not carry some express with it. We put express
cars on our mail trains on the Southern Pacific.
Senator WEEKs. But you have trains which do not carry passen-
ers? x
g Mr. WoRTHINGTON. That train. Then we have a train of that
sort which does not carry passengers, There is one train only, and
that is the train on the route from Ogden to San Francisco. We
have not any other trains that carry mails only and no passengers.
The cost of a 60-foot steel R. P. O. car at the present time is be-
tween $10,000 and $11,000. Senate Document No. 810, Sixty-first
Congress, third session, covering letter of the chairman of the Inter-
state Commerce Commission of February 2, 1911, gives this cost as
$9,500 to $10,500. Ten thousand dollars may be taken as rather be-
low than above the average price. This same letter gives the cost of
repairs to postal cars as $7.50 per 1,000 miles. This is less than our
experience, and, as the railroads are often obliged to make changes
in interior arrangement by direction of the department, we believe
it is too low, but have nevertheless adopted it for this purpose. The
cost of cleaning, lighting, and heating the car is given in the docu-
ment referred to as $4.75 per 1,000 miles. These cars make an aver-
age mileage of 90,000 to 100,000 yearly, the Interstate Commerce
*.
RAILWAY MAIL PAY. 339
Commission using the latter figure in its computations by which they
ſº that the annual cost of maintenance per postal car amounts
to $1,225. - -
The CHAIRMAN. Do they determine the annual deterioration?
Mr. WoRTHINGTON. That is maintenance only. They do not deter-
mine that.
The CHAIRMAN. What do you figure the life of a postal car?
Mr. WoRTHINGTON. If we allow only 8 per cent for interest on the
investment and depreciation, that would be, I should say, from 20 to
30 years; I should say not more than that.
If we allow only 8 per cent for interest on investment and de-
preciation—a low figure—$800 must be set aside for this purpose.
A conservative estimate of the actual cost of hauling in trains—that
is to say, train hauling cost, excluding station and road forces and all
other operating expenses—would be 15 cents per mile run, or $15,000
per annum. This would make an aggregate for direct train haul
and maintenance per annum of $17,025, or, say, 17 cents per mile run.
To cover these expenses the railroads receive from the department
for railway post-office car pay for 60-foot car $40 per mile per an-
num, or 10.96 cents per day for furnishing a car, maintaining it, and
hauling it both ways over a mile of railroad, this being equivalent
to 5.46 cents per car-mile run. Assuming an average annual mileage
of 100,000, the total R. P. O. car pay per annum would be $5,480, or
about one-third of the above expenses. In the case of half lines,
where no pay is received for return movement, the revenue would be
only one-half of this. - -
The following comparison is made of rates per mile received by
us for 60-foot R. P. O. cars as compared with rates we would receive
under our published tariff from Chicago to California for moving
empty cars belonging to other railroads:
Cents.
Railway postal-ear pay for 60-foot car, per mile run_____________________ 5. 5
Tariff rates for empty sleeping and dining cars, pep mile run_____________ 16. 7
Tariff rates for passenger coaches, per mile run_________________________ 15.4
Tariff rates for empty freight cars moving in freight trains, per mile run__ S. 3
The CHAIRMAN. That is what you receive from other roads?
Mr. WoRTHINGTON. Yes, sir; in other words, the tariff rate for an
empty freight car in a freight train is more than the R. P. O. car pay.
It should be borne in mind that the tariff rates referred to are for
hauling in trains only, and do not include any obligation on the part
of the carrying railroad for maintenance or cost of car ownership.
The CHAIRMAN. In that connection, your computation is based
entirely there on R. P. O. revenue? *
Mr. WoRTHINGTON. Yes, sir.
The CHAIRMAN. Should you not take into consideration also the
revenue you receive in the railway mail, for the mail that you carry
in the R. P. O. car? ---
Mr. WoRTHINGTON. This comparison I have made here is also with
hauling empty passenger cars and empty freight cars. There is no
tonnage in those cars. In other words, we get that much for hauling
an empty car. -
The CHAIRMAN. From other railroads?
Mr. WORTHINGTON. From other railroads.
340 RAILWAY MAIL PAY.
The CHAIRMAN. You think your comparison there is absolutely
fair, do you? In other words, do you not think, to make a compari-
Son of greater value, you should include an estimate as to the indirect
compensation that you receive in railway mail pay for the 24 tons
of mail that you figure the R. P. O. car will carry on an average?
Mr. WoRTHINGTON. We included that. I think it would also be
fair to include what we receive for a loaded passenger car or a loaded
freight car. I do not think it would be fair to compare what we
receive for R. P. O. car pay with freight in it with a rate for empty
passenger cars or empty freight cars. t
The CHAIRMAN. In your tariff sheets on freight and also on pas-
senger, do you not take into consideration, in making your tariff,
a tariff sufficiently high to pay the expenses of figuring that one-
third of your freight cars are probably empty on your return trip
and that 75 per cent of the full carrying capacity of your passenger
cars aré empty on the average? .
Mr. WoRTHINGTON. I think you misunderstood me, Senator. This
is not a rate for hauling an average empty freight car. This is a
rate we would make like this: We make a rate for hauling a through
freight car for some railroad which might purchase a car. It does
not include the ordinary interchange of average empty and loaded
freight cars. It is simply our tariff rate. If some one offers us for
transportation an empty freight car or a passenger car to reach
some destination -
The CHAIRMAN. For a concrete case, suppose the New York, New
Haven & Hartford sent 100 cars of freight over your line to the
Pacific coast and 20 of those come back empty. They ask to have
them returned.
Mr. WoRTHINGTON. They would be hauled free.
The CHAIRMAN. They would be hauled free?
Mr. WoRTHINGTON. If we receive a load in one direction.
The CHAIRMAN. Then your compensation in one direction covers
the contemplated return empty?
Mr. WoRTHINGTON. Yes, sir. The entire transportation. I have
already quoted what we receive on an average freight car per car-
foot mile as compared with passenger cars. -
Senator WEEKs. You spoke of fines, did you not? How much
was the Southern Pacific Railroad fined on account of delays dur-
ing the last fiscal year?
Mr. WoRTHINGTON. I have not that in mind.
Senator WEEKs. Was it any considerable amount?
Mr. WoRTHINGTON. I really do not know. I do not think it was.
The fines have not been as severe as they formerly were. Answer-
ing Senator Bourne's question, I think if we included the weight in
the R. P. O. cars with R. P. O. car pay on those routes, the average
rate would not be more than 6 cents a ton mile, and they are not
more than about 2% tons. That would add about 15 cents.
The CHAIRMAN. Figure 24 tons.
Mr. WoRTHINGTON. That would make a total rate, including pay,
of about 20 cents a car-mile for those cars. We receive on our pas-
senger cars 31.3 cents.
The CHAIRMAN. What would you receive from another road? I
want to get the relativeness? *
RAILWAY MAIL PAY. - 341
Mr. WoRTHINGTON. We would receive, if we were handling a car
for another road, 18 first-class fares.
The CHAIRMAN. Which would be 36 cents?
Mr. WoRTHINGTON. Yes. We do not handle any passenger cars
except, at the minimum basis of 18 fares. I have some charts here
which you might be interested in.
The CHAIRMAN. We are glad to get all the information we possi-
bly can on the subject.
The chart, marked “A,” attached, shows the percentage of total
postal receipts which the railroads of the United States have re-
ceived for each year from 1900 to 1911, inclusive, and the per-
centage of the total postal receipts which have been expended for
other purposes, as shown by Post Office Department annual reports.
In looking over the operations of the Post Office Department it might
be observed that in the 10 years from 1901 to 1911 the receipts have
more than doubled, and the following statement shows to what ex-
tent this large increase in receipts went to the railroads:

wº-
Increase 1911
1911 1901 ...iº.” | Percent.
Postal receipts-------------------------------. . . . . $237,879,823 $111,631, 193 $126,248,630 113
Postal expenditures:
To railroads. --...----------------------------. 50,583,123 38,158,969 12,424, 154 33
Other purposes. . . . . . . . . . . . . . ----------...------ 187,065,803 77,395,952 109,669,851 142
Total.--------------------------------------- 237,648,926 115,554,921 122,094,005 106
Surplus------------------------------------------- 230,897 --------------|--------------|----------
Deficit-------------------------------------------- -------------- 3,923,728 - . . . . . . . . . . . . . [- - - - - - - - - -
The above shows that out of the total postal receipts of $112,000,000
in 1901, $38,000,000, or 34 per cent, went to the railroads, whilst out
of the $126,000,000 increase in 1911 over 1901 only $12,000,000, or
less than 10 per cent, was paid to the railroads. As the volume of
service rendered by the railroads in hauling tonnage increased very
much in proportion to the receipts, they received only about one-third
as much for the added traffic since 1901 as they received on the total
traffic of 10 years ago. This saving to the Government, however, was
more than offset by the increased expenditures for other purposes,
which, while only $77,000,000 in 1901, were $187,000,000 in 1911.
In other words, of the total postal receipts of 1901, 69 per cent was
expended for purposes other than railroad compensation, whilst of
the increase since 1901, amounting to $126,000,000, 87 per cent was
expended for other than railroad transportation.
Chart B shows a distribution of expenditures of the Post Office
Department for years 1900 and 1911 as between railroad and other
expenditures; the relative service rendered for an increase of only a
little more than one-third in compensation.
Chart C illustrates graphically for years 1900, 1907, and 1911, the
great increase in receipts of the Post Office Department as compared
with the increase in total railroad revenue, in total operating ex-
penses, and in taxes paid by the railroads, and as compared with the
relatively small increase in the railways’ compensation for carrying
the mail. It also shows per 1,000 passenger train-miles run on the
railways of the United States that from 1900 to 1911 there was a
342 RAILWAY MAIL PAY.
decrease of 14 per cent in mail revenue, compared with an increase of
31 per cent in revenue from passengers, 45 per cent in revenue from
freight, and 61 per cent in revenue from express; during the same
time railway operating expenses per 1,000 train-miles increased 44
per cent.
This chart strikingly illustrates the slight extent in which the rail-
ways have shared in the available greater revenue of the Post Office
Department and the actual decrease in payments for carrying mail in
proportion to the volume of passenger-train service. As is well
known, railway wages are very much higher than formerly, prices of
material have advanced, the cost of building steel mail cars and oper-
ating them is much greater than formerly, yet railway mail pay per
unit of traffic has been very greatly decreased during the past 10 or
15 years in the face of changes in industrial conditions that should
have increased it. -
Senator WEEKs. That is assuming that the rate paid 10 or 12
years ago was an adequate one.
Mr. WoRTHINGTON. Assuming that it should have been.
Senator WEEKs. That it was a fair one at that time.
Mr. WoRTHINGTON. The commission that investigated at that time
did not see fit to make any decrease.
Chart D illustrates, in 1895, 1900, 1905, and 1910, as compared
with 1890, changes that have taken place in railway freight revenue,
passenger-train revenue, and railway operating expenses and taxes
per train-mile. The latter, which in 1900 were below the passenger-
train revenue, were in 1910 considerably above it, showing that there
is little for the railways in passenger-train service as a whole and
least of all in the conduct of the mail. This chart also shows that
for the year ending June 30, 1910, although 46.6 per cent of the total
train mileage was run for account of passenger-train service, only
27.8 per cent of the revenue was contributed by passenger trains.
Chart E shows, for the railroads of the United States, relative
revenue per unit of traffic from mails, passengers, and freight during
the past 21 years, the year 1890 being taken as unity, or 100. This
illustrates graphically the wide divergence that has taken place in
the last 15 years in railway operating expenses as compared with the
pay received for carrying mails. The cost of operating railways
per train-mile during this period increased over 60 per cent, the rail-
way revenue per passenger train-mile increased 20 per cent, the pas-
senger earnings per passenger carried 1 mile decreased slightly, but
the railway mail pay per ton-mile of mail was nearly cut in two,
using the same divisor throughout the period. The ton-mileage rate
for mails was obtainable up to and including 1898 from statement
of Mr. Henry C. Adams in 1899 before the commission to investi-
gate the postal service. In order to secure later figures, ton mileage
on all the mail routes was compiled by us for 1905, 1907, 1908, and
1911, figures for other years being approximated, as the decline in
railway mail pay under the natural law is fairly uniform.
Chart F illustrates graphically the fairness of the railways' request
for annual instead of quadrennial weighing. It shows for the Western
States, called the fourth contract section, the results of weighings from
1878 to date, the heavy line indicating the actual payments and the

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ALL RAILROADs of UNITED STATES
TREND DURING Twenty YEARs of REVENUE FROM PASSENGER AND FREIGHT TRAINS,AND OF OPERATING CoSI PERTRAIN MILE.
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7.5904—13. (To face page
342.)

ALL RAILROADS OF UNITED STATES
Relative Revenue per Unit of Traffic from Mails, Passengers and Freight
Year 1890 taken as too.
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7.5904—13. (To face page 342.)

CAarº G "
ALL RAILROADs of UNITED STATES
Annual Gain to Government and Loss to the Railroads since isso through decreased Mail Pay per Ton Mile
through automatic operation of the law and because of other reductions by Goverment authority commencing in leoz.
TOTAL GAIN ED BY GOVERNMENT AND LOST BY RAI LROADS
SIRUCE 1890 THROUGH UECREASED MAIL PAY PER TON MILE:
A/ozar. Or, Assas of sarze aftizºsor ºrozºg/roof errºre aeroa'
/Vew Yºrk, Jarr. Jo Zyzy.
75904—13. (To face page 342.)

RAILWAY MAIL PAY. . 343
dotted line the amounts to which the railways were fairly entitled, the
triangles formed between the heavy lines and dotted line represent-
ing the losses to the railroads through quadrennial weighings, these
losses being expressed in figures on the chart. The growth in the
western group of States was no doubt in greater ratio than the re-
mainder of the country, but the chart is presented to illustrate the
service rendered by the railroads for which they received no com-
pensation whatever. tº ſº &
The CHAIRMAN. Why did you take only the fourth division for
your Chart Fº
Mr. WoRTHINGTON. Because it is the division in which we operate,
and the weighings are at different periods, so I would have to have
separate charts. I think that is greater than what would result in
the United States as a whole, because that group has grown faster.
Senator WEEKs. Do you think the amount of mail has grown faster
in that group?
Mr. WoRTHINGTON. I think it has.
Senator WEEKs. I should have some doubt about that.
Mr. WoRTHINGTON. Possibly not. The population has increased, I
think, faster than the United States as a whole.
Chart G illustrates graphically the gain to the Government and
loss to the railroads by years since 1890 through decreased mail pay
per ton-mile on account of the natural or automatic operation of the
law and because of other reductions made by Government authority
since the beginning of 1907. This chart shows that the amount of
these reductions for the 17 years from 1891 to 1907, inclusive, was
$143,700,000, while for the four years from 1908 to 1911, inclusive, it
was $146,800,000, or a total for the 21 years of $290,500,000. These
figures are obtained by applying the average rate per ton-mile effec-
tive in 1890 to the traffic handled in subsequent years, the difference
between the amount so obtained and the actual compensation repre-
senting the amount saved to the Government and lost to the railroads
through reduction in rates per ton-mile. It also demonstrates that
the Government was sharing quite generously in reduced rates
through the automatic or natural operation of the law without im-
posing the additional reductions by Government authority com-
mencing in 1907, when it is considered that through most of this
period the railroads were contending with higher operating cost per
traffic unit through causes beyond their control. It further demon-
strates that the present law has been a most favorable one to the
Government in securing greater reductions for carrying mail than
were effective for any other class of railway traffic.
The CHAIRMAN. Let me ask you this in that connection: Does not
your ton-mile revenue decrease in an inverse ratio to the density of
your traffic?
Mr. WoRTHINGTON. As density of traffic increases ton mileage rates
decrease.
The CHAIRMAN. Hence, is not this apparent rate change to the rail-
roads due to a law of transportation? -
Mr. WoRTHINGTON. During the same period our ton mileage of
freight has increased also very largely, but the freight rate has been
maintained.
344 RAILWAY MAIL PAY.
The CHAIRMAN. Then your profits should have increased?
Mr. WoRTHINGTON. They ought not, because the gain in that re-
Spect was offset by the higher operating cost for increased labor and
material. In other words, if it had not been for the economy we
were able to effect in freight service by loading trains heavier and
increasing our earnings per freight train-mile, we would have been
in pretty bad straights by this time and we could have not paid the
higher labor and material prices. g
The CHAIRMAN. Is chart G, without an explanation, an absolutely
fair presentation? In other words, the ton-mile basis is not the fair
unit as to the actual net revenue of a railroad, is it?
Mr. WORTHINGTON. Why not? I think so. We use the ton-mile
basis in freight service.
The CHAIRMAN. As the density of your traffic increases your com-
pensation per ton-mile is less?
Mr. WoRTHINGTON. Is less.
The CHAIRMAN. Yet your actual net earnings at the end of the
yº, may be much greater, due to the increase of density, may they
not'. -
Mr. WORTHINGTON. They may be greater if we are able to handle
the traffic economically such as we have been in the case of freight,
but they are not greater when the load in a car is limited and flexible,
you may say, through the fact that not more than two and one-half
tons are carried in R. P. O. cars. As traffic increases we have to put
on more service. s:
The CHAIRMAN. But you only get less than 10 per cent of the total
compensation paid by the Government in R. P. O. compensation?
Mr. WoRTHINGTON. But the expenses are increased more than 10
per cent. That represents more than 10 per cent of the cost.
The CHAIRMAN. How much of the total mail is carried in the
R. P. O. cars? g
Mr. WoRTHINGTON. I do not know. Quite a large part, but I could
not say offhand. I do not think that has ever been computed, because
the mail is transferred en route from storage cars to R. P. O. cars,
and it would be a very difficult thing to say, as the mail is taken out
of the storage car and reworked in the R. P. O. car.
The plan advocated by the Postmaster General in document 105,
of the Sixty-second Congress, involves two vital principles that we
deem unfair to the railroads as a just compensation for the services
they render, these being as follows
The CHAIRMAN. If I may interrupt you just there; in starting in
with your testimony you referred to Senate bill 7371, which was the
first suggested plan emanating from the Post Office Department.
Mr. WoRTHINGTON. That was the one I had before me.
The CHAIRMAN. Are you familiar with the modification or second
suggested plan as submitted by ex-Postmaster General Hitchcock
to this committee under date of January 20, 1913?
Mr. WoRTHINGTON. I understand the plan was amended and am
familiar with that, Mr. Chairman.
The CHAIRMAN. Then, is your testimony applicable to the modi-
fied plan as well as to the originally suggested plan?
Mr. WoRTHINGTON. It is, because I refer to that amendment in
this memorandum further over.
The CHAIRMAN. Very well.
RAILWAY MAIL PAY. 345
Mr. WoRTHINGTON. 1. Payment of compensation according to the
car feet of space used on trains.
The CHAIRMAN. In view of the fact that the Postal Department,
as represented by ex-Postmaster General Hitchcock, has modified the
plan contained in Document 105, I think it would be well, if you are
able, to make your comments refer to the second or modified plan.
Mr. WoRTHINGTON. I will modify that as I go along. As I under-
stand this plan, he included allowance on the investment, plus 6
per cent.
The CHAIRMAN. That is, he suggested a reasonable allowance on
the capital invested, provided there was no duplication to it, 6 per
cent on the operating expenses and a reasonable allowance on the
capital invested without attempting to indicate to Congress what,
in his opinion, would be a just allowance on capital.
Mr. WoRTHINGTON. 2. Payment on basis of the cost to each indi-
vidual railroad, plus 6 per cent.
The adoption of this plan would be not only inequitable to the
railroads, but we believe would be a disadvantage rather than an
advantage to the public service. Before reciting a few of the prin-
cipal objections to these methods, I would say the argument is some-
times made in favor of the space basis that it would adjust inequali-
ties that now exist in the pay received by the various roads, House
of Representatives Document 105 apparently showing that some east-
ern lines are handling the mails at a loss, whilst some western lines are
making a large profit. This conclusion is, on its face, difficult to under-
stand, when it is remembered that the existing basis of compensation is
the same throughout the country, whilst labor and material costs are
very much higher in the West than in the East, and the cost of oper-
ating railroads per train-mile, according to statistics of the Interstate
Commerce Commission, amounts to $1.81 in the far western group
I. C. C. 10, as compared with $1.49 in the eastern group 1, $1.57 in
group 2, and $1.44 in group 3.
In other words, the commission says that it costs more to operate
railroads in the West than the ex-Postmaster General says we can
operate the mails for. An analysis of the methods used in produc-
ing the cost for mail service in Document 105, on which the Post-
master General’s conclusion is based, shows that the more favorable
results he reaches for the western lines are due entirely to the pe-
culiar method followed by the department in apportioning to pas-
senger and to mail service that part of the operating expenses which
can not be directly apportioned to either freight or passenger serv-
ice. As is well known, only a portion of the operating costs can be
so allocated, and at least one-half of the expenses must be appor-
tioned in an arbitrary manner, and the fact is that any basis of appor-
tionment, even though fair to the railroads as a whole, would be unfair
if applied to individual railroads operating under difficult local con-
ditions. For example, a railroad carrying large passenger train-
loads and small freight trainloads would show cost per train-mile
for the items that can be directly assigned approximately equal for
freight as for passenger service. On the other hand, a railroad
which moves very heavy freight trainloads and light passenger train-
loads would show very much greater cost per train-mile for these
direct expenses in case of freight than for passenger service.
346 RAILWAY MAIL PAY.
In other words, 50 per cent of the operating expenses we might
call direct, and where the freight trains are light and passenger
trains heavy those expenses will run about the same per train-mile.
Where conditions are reversed on a railroad handling very heavy
freight trains and lighter passenger trains, those costs are much
reater for the freight. In other words, there is quite a difference
in those expenses on certain railroads as compared to other railroads,
and these direct expenses are used by the former Postmaster General
Hitchcock to apply to the indirect expenses. In other words, he
finds that 50 per cent of the expenses on one road may be equal to
the passenger or freight on another road; it may be 50 per cent more
on freight, and he applies this same ratio to the indirect expenses
and produces a result that is not fair to both roads. T will show
you that result further on. As to the most of the unallocated, or
so-called “indirect,” expenses the Post Office Department apportions
these on the basis of the cost of the “direct” expenses. Conse-
quently a railroad having light freight trainloads and heavy pas-
senger trainloads would be charged with very heavy costs per pas-
senger-train mile for the indirect expenses, which had no particular
relation to train mileage, than in the case of a road having heavy
freight trainloads and light passenger trainloads. We find these
differences in conditions typified, for example, in the case of two
eastern roads, on which passenger traffic is very large, which I will
term road A and road B, compared with the Union Pacific system,
a very heavy freight carrier. The relative passenger trainloads on
these roads are: Road A, NH 96; road LI, B–93; Union Pacific
system, 66. The relative freight trainloads are: Union Pacific sys-
tem, 488; road A, 291; road B, 168. -
By the plan of the Postmaster General the cost per car-foot mile
is made for road B 5.34 mills, road A 4.72 mills, and for the Union
Pacific system 3.06 mills, the cost given for road B being 74 per
cent greater than the Union Pacific, as a result of which he shows a
considerable profit to the Union Pacific. Referring to Interstate
Commerce Commission Statistics of Railways of the United States
for 1910, however, it is found the operating expenses for the average
train mile of road B are $1.29, whilst on the Union Pacific system
they were $1.64. Thus, though the commission finds the cost of
operating a train on the Union Pacific system is nearly 50 per cent
greater than on eastern road B, the Postmaster General finds that
the operating cost per unit as applied to mail Service was 74 per
cent greater on the eastern line; hence it is not difficult to under-
stand how unfair to the Union Pacific would be his space basis for
compensating the railroads for carrying the mails. -
In other words, the differences are so tremendous. That is the real
reason why some of these lines, for instance, the New York, New
Haven & Hartford show a loss, and others, for instance, the Southern
Pacific, shows a profit. I think the impression has gone from
House Document 105 that the Union Pacific and Southern Pacific
were showing large profits from handling the mails, and I am trying
to show just the method used apportioning the expense.
The CHAIRMAN. You are commenting on the different methods
used by the Interstate Commerce Commission and the Post Office
Department?
RAILWAY MAIL PAY. * 347
Mr. WoRTHINGTON. Yes. An examination of Document H. R. 105
will show similar great disparities in the Postmaster General's
estimate of operating cost per car-foot mile on different railroads,
on which he would base their compensation. . For example: On the
West Jersey & Seashore, a passenger line of the Pennsylvania, he
shows a cost per car-foot mile of 4.72 mills, whilst on the Pennsyl-.
vania Railroad proper he shows a cost of only 2.94 mills; in other
words, the mail pay on his basis would be very much more on the
West Jersey & Seashore than on the Pennsylvania, although the
operating expense ratio on the former line is shown by the Inter-
state Commerce Commission to be 75.76 per cent, compared with
78.60 on the Pennsylvania Railroad proper. Again, referring to
the lines comprising the New York Central system, the Postmaster
General computes a cost for the Pittsburgh & Lake Erie Railroad
of 6.23 mills and for its connection, the Lake Shore & Michigan
Southern, only 2.02 mills; on his basis the Pittsburgh & Lake Erie
would receive three times the pay per car-foot mile based on Operat-
ing costs, although the Interstate Commerce Commission shows its
operating expense ratio is only 42.38 per cent, as compared with
64.81 per cent for the Lake Shore. Although we understand since
the publication of Document H. R. 105 the Post Office Department
is willing to concede that a return on the investment should be
allowed the railroads in fixing mail compensation as well as com-
pensation for operating expenses, it is apparent that the methods
used by the Postmaster General for determining the operating costs
are too unfair to the western railroads, as well as to any other lines
which are heavy freight carriers, to be used as a measure for ade-
quacy of their mail compensation.
As to the Southern Pacific Co., the department showed the rev-
enue from mails per car-foot mile to be 5.25 mills, after crediting
the railroad with only 38,589,000 car feet of space in mail service
and after excluding from the divisor 8,844,000 car-foot miles of
“dead” mail space, which though they admitted was furnished by
the railroads incident to mail transportation, but which it claimed
was not actually required to hold the mails, which dead space it
added to passenger service.
The CHAIRMAN. Although not used by passenger service in any way?
Mr. WoRTHINGTON. Yes; although not used by passenger service
in any way. If only this dead space incident to mail service was in-
cluded in the divisor the Southern Pacific's revenue from mail per
car-foot mile would have been reduced to 4.27 mills. The Southern
Pacific Co. reported to the department that 49,981,437 car-foot miles
were used for the mails in November, 1909, from which it received
compensation averaging 4.05 mills per car-foot mile. Nowhere in
the United States is railroad labor and material higher than in the
territory traversed by the Southern Pacific Co., and if the depart--
, ment had allowed us the same cost of operating per car-foot mile
as the two eastern roads designated as roads A and B included the
dead space incident to handling mails, it would have shown a large
deficit for mail transportation on the Southern Pacific Co. after
allowing for operating expenses only.
Whereas, if they had allowed the same costs per car-foot mile, we
would have shown a deficit in place of a considerable profit, as
shown. -
348 - RAILWAY MAIL PAY.
We believe compensation for mail service based on cost is wrong
in principle and impracticable for the following reasons:
1. It is impossible to exactly allocate operating expenses and fixed
charges to each class of service. Fixed charges can not be allocated
at all, whilst only about one-half of the operating expenses can be
allocated between passenger and freight service. The remainder
must be approximated and this approximation varies widely, ac-
cording to the judgment of the individual making it. No two ex-
perts would agree on this apportionment, and whilst expressing great
confidence in the Interstate Commerce Commission, we believe it
would have similar difficulty in reaching results that would be fair
to all roads and that successive statisticians of that commission would
not hold the same views as to methods. As a consequence, the fig-
ures when produced could not otherwise be regarded as not exact,
and, therefore, not sufficiently reliable to be used as a basis for rate
making. it.
The CHAIRMAN. If mail compensation is not to be based either
wholly or partially on cost, upon what is it to be based ?
Mr. WORTHINGTON. There is no compensation the railroad receives
based on cost for any class of traffic. There is no reason why the
adequacy of the pay as a whole can not be gauged in some way at
an estimate of cost, but I would not say that as a rate-making propo-
sition.
The CHAIRMAN. Is not the trend of rate determination toward the
necessitated ascertainment of the cost?
Mr. WoRTHINGTON. Mr. Chairman, in my opinion, it is absolutely
impossible to anywhere nearly ascertain a cost. You can obtain an
estimate of cost, but that will vary with the person who makes the
estimate, and it hardly seems to us that that is a good rate-making
proposition.
The CHAIRMAN. Will you kindly answer my question. If cost is
not a factor in determination of mail compensation, what are the
factors on which equitable mail compensation can be adjusted?
Mr. WoRTHINGTON. I am personally of the opinion that, figured on
a fair basis as to cost, it would be necessary to very largely increase
the compensation to railroads, according to the railroads' method of
ascertainment. *
The CHAIRMAN. That does not answer my question. What are the
factors to be taken into consideration to determine a fair compensa-
tion to the transportation companies, for transportation of mail, to
be paid by the Government?
Mr. WoRTHINGTON. I think the value of the service to the Govern-
ment as compared with the relative returns and revenue which the
railroads are receiving for other class of traffic. We are not asking
more for the mails than we get for other classes of traffic.
Senator WEEKs. Supposing the Government decided to transfer
the Cavalry regiment which is now stationed at Fort Myer, Va., to .
San Francisco, Cal. How would the rate be determined for trans-
porting the men, horses, and equipment? * *
Mr. WoRTHINGTON. I really am not familiar with the question of
rates. I am not a traffic man, and I do not know what arrangement
the Government has with our railroads for rates. I do not think I
would be competent to answer that, question. I have nothing to do
with rates at all. My duties are entirelv operatino.
RAILWAY MAIL PAY. 349
2. Even if it were possible to secure a proper basis for the rail-
roads as a whole such basis would unduly favor some roads and be
unfair to others, as local conditions vary greatly, there being wide
differences in the relative volume of passenger and freight traffic on
different roads, in average size of trains, in the requirements for
passenger traffic, etc., as shown by pamphlet “Mail-carrying rail-
ways underpaid,” which has been introduced in evidence. -
Senator WEEKs. You come to the conclusion up to that point that
a fixed rate for the whole of the country must necessarily be unfair
to some road, by paying some roads more than they should be paid
or some roads less? In other words, it is impossible to make a fixed
rate which is just to everyone, the Government included?
Mr. WoRTHINGTON. I think it would be impossible to make any
rate that would, for example, allow an extravagantly operated road,
we might say, as large net compensation as another road which might
be more economically operated.
Senator WEEKs. Even assuming that they were operating with
the same economy?
Mr. WoRTHINGTON. Certainly. It would be impossible to fix any
universal rate that would not return to one carrier more than it would
to another.
Senator WEEKs. That is exactly what we do.
Mr. WoRTHINGTON. For the reason that the cost of operating rail-
roads is different in different sections of the country.
Senator WEEKs. That is exactly what we have done in the past,
and that is the only suggestion we have before us now, to make a
fixed rate for the whole of the country.
Mr. WoRTHINGTON. At the same time I think that is more equitable
than to attempt to fix a different rate for every railroad, based on its
operating cost, but I think that is wholly impracticable. For ex-
ample, take two different railroads; a large system of railroads may
have a number of branch lines and one of the branch lines might be
competing with a short-line railroad. The operating cost on that
system would be the same and the mail pay for the large system
would be based on the operating cost of the system as a whole. The
short-line railroad would necessarily have a much higher operating
cost and would be at a disadvantage in competing for the mail. The
railroads’ expenses are not kept for all their branch lines, or for dif-
ferent parts of their main lines.
Senator WEEKs. Why do you think it would be impossible to make
a rate for every railroad or every group of railroads, depending on
the conditions?
Mr. WoRTHINGTON. Because I think you would have to adopt a
different method for estimating cost on different railroads.
Senator WEEKs. Is not that done in the case of other traffic?
Mr. WoRTHINGTON. It would leave the door open for discrimina-
tion, and it would be a tremendous task, it seems to me, to so adjust
your difference of apportionment to make up for the difference in
local operating conditions on different roads.
Senator WEEKs. Would it be any more difficult than it is to arrive
. ; sºme conclusion in regard to freight and different classes of
reight?
r. WoRTHINGTON. We do not do that as to freight. Freight
rates are not based on cost.
350 - RAILWAY MAIL, PAY.
The CHAIRMAN. What are they based on ? -
Mr. WoRTHINGTON. Only in a general way. High-class freight
would be moved at almost the same rate as low-class freight, if they
were. There are so many other considerations to be taken into ac-
count—the value of the commodity transported, the rate it will stand,
etc. A low-grade commodity would not stand a rate based on cost.
If this rate was based on cost of transportation the rate would be
lower than it is for high-grade commodities, whereas on the low-
grade commodities, such as coal, the rate would have to be increased.
The CHAIRMAN. Would it be any more difficult to arrive at a proper
rate in the case of mail than it is to arrive at a proper rate in the
case of coal or vegetables or any other commodity?
Mr. WoRTHINGTON. No; I do not think it would be more difficult
to arrive at a proper rate, but I would not base that on cost, that
individual rate.
Senator WEERs. I do not care what you base it on, if it is a suit-
able rate for the service performed by the road.
Mr. WoRTHINGTON. I think the only practicable basis is something
like we have at the present time, the uniform rate, and the test of
the adequacy of that rate might be obtained by determination. Let
the Interstate Commerce Commission determine and make an estimate
for the mail, as to whether the mail rate was adequate or inadequate.
Senator WEERs. Would not that do serious injustice to some rail-
roads? -
Mr. WoRTHINGTON. I do not think so.
Senator WEEKs. Do you not think that there are a great many rail-
roads in this country that are performing this service for less than
cost 7 -
Mr. WoRTHINGTON. Cost is something that has to be interpreted.
If you mean the actual cost of the transportation, I do not think so;
but if you mean an apportionment of the other charges, yes.
Senator WEEKs. I will take the actual cost so far as some of the
short-line railroads are concerned. -
Mr. WoRTHINGTON. There may be some short-line railroads that
are. I could not say as to that. I do not know. -
The plan of paying each railroad according to its own expenses is
very unfair to roads which may reduce operating costs through in-
creased efficiency and better management, as compared with roads
which can not do this and which have higher operating costs. In
other words, it penalizes efficiency, and as the cost of operating is
brought down by better methods the allowance for mail transporta-
tion would be reduced. On the other hand, it would be increased if
the railroad is extravagant. If the commission believes there should
be a difference in the rate of compensation to make up for differences
in operating costs in different sections of the country, we think the
rate should be uniform, at least within the confines of the 10 inter-
state commerce group of States, and the present statistics of the .
Interstate Commerce Commission give a fair index of the relative
operating costs per train-mile in each of these different groups. If it
is in doubt whether the mail pay compensation as a whole in the
United States is adequate or inadequate, it seems to us this could be
determined by the Interstate Commerce Commission making an ap-
portionment of the operating expenses, taxes, and fixed charges to
RAILWAY MAIL PAY. 351
all service for the railroads as a whole. We believe this apportion-
ment, if fairly made, would demonstrate conclusively that the pres-
ent mail pay is inadequate as compared with revenue from other
kinds of railroad traffic. It should be understood, however, that any
apportionment made must be largely on estimate and that an appor-
tionment made for the railroads of the United States as a whole
would not, on account of differences in local conditions, be applicable
to individual roads, as it would represent merely an average of all
roads. --
OBJECTIONS TO ABANDONIMENT OF PRESENT WEIGHT BASIS AND SUBSTITU-
TION OF SPACE BASIS.
The greatest objection to the space basis is that it places in the
hands of a single individual, i. e., the Postmaster General, the regu-
lation at will of the total compensation to the railroads; and inas-
much as in this case this individual also represents the shipper—that
is, the Government—it is hardly to be conceived that the results
would be as fair to the railroads as under a weight basis, as under
the present plan the pay to the railroads is regulated by weight car-
ried, and is therefore regulated by an impartial tribunal, i. e., the
public.
When the shipper—that is, the Government—also states how much
space he will pay for, it is apparent payment would be based on
minimum space and not the space which the railroad might have to
furnish to move the tonnage.
Under a space basis it is probable the Government would expect
to pay the same rate per foot whether the service furnished covered
a full car or only fraction of a car, in the latter case paying the rail-
roads nothing for space they would always, on an average, have to
furnish in excess of that actually required when the volume of traffic
is light. In freight service the latter consideration is adjusted by
charging higher proportionate rates for less-than-carload than for
carload traffic.
Space is not the sole consideration used in fixing rates on any other
class of railroad transportation, whether passengers, express, or
freight. Weight is the principal factor, although space is also taken
into account in fixing rates in freight service on bulky commodities.
This policy agrees with the principle recognized by the present basis
of mail pay, which takes into account the weight carried and the
space used for distributing post offices on wheels.
Under the present basis, where weight is the controlling factor of
railway mail pay, about nine-tenths of the railroad's compensation is
based on weight, the remaining one-tenth representing R. P. O. car
pay. The latter is subject to control by the Post Office Department,
and the effect of this control is illustrated by frequent arbitrary
changes ordered by the department in R. P. O. car space, most of
which have been decidedly unfair to the railroads. Through these
changes half lines have been substituted for full lines, depriving the
railroads of compensation for empty return of R. P. O. cars, allow-
ances once made for 60-foot cars have been reduced to cars of shorter
lengths when it is imposible for the railroads to make physical reduc-
tion in space, and in some cases R. P. O. car pay has been done away
75904—No. 2–13—3
352 RAILWAY MAIL PAY.
with altogether by substituting apartment cars without pay after
the R. P. O. lines have been established. In this way many roads
have suffered by losses in R. P. O. car pay of 25 per cent or more.
The CHAIRMAN. But the right of appeal exists there under the
suggested plan?
Mr. WoRTHINGTON. Yes. But the right of appeal would be after
giving us too little space instead of too much. -
The CHAIRMAN. You mean in space authorized rather than in the
compensation?
Mr. WORTHINGTON. Yes; in the amount of space authorized.
The CHAIRMAN. Your criticism on the bill is because the space
authorization is determined by the postal department and that no
relief would come in the right of appeal to the Interstate Commerce
Commission, because they would not pass upon that? g -
Mr. WoRTHINGTON. I do not think so. I think that we would be at
a disadvantage, and I think in most cases we would be allowed the
minimum space and not the space which we might be required to use
to move the tonnage. º
The CHAIRMAN. I think that could be easily overcome by putting
in the law the method of what space shall be paid for; that is,
clearly stated, let the law state what space shall be paid for; the
amount of space to be required has to be initiated by the Government
representatives. The railroads could not say; the Interstate Com-
merce Commission could not say; and that is necessarily so. The
presumption is that the department would call for the space that in
their opinion would be required, based upon experience of the pre-
vious year, with an allowance for the growth of the business. You
would not expect the departmental representative to call and pay for
space that they did not think would be required or was required. As
additional space was required by the postal department, it would
be called for and furnished by the railroads and paid for by the
Government. The law, if it clearly stated how those payments were
to be made, so that there could be no question between the Govern-
ment’s representatives and the railroad's representatives, it seems
to me, would eliminate the difficulty which you mention. I think
that could be worked out. ---
Mr. WoRTHINGTON. It is easy to see that on a space basis tempta-
tion to save in payments to the railroads might lead to sacrifice of
efficiency and quality of service given the public through discon-
tinuing distribution of mail en route, and even the abolition of the
latter on some routes in favor of carriage in pouches. Again, at the
present time the mail is handled between important cities on a large
number of trains, giving improved service to the public and frequent
deliveries. It would be quite easy to concentrate the mails, if pay-
ments were made on a space basis, on fewer trains in order to reduce
the railroad's pay, but it is hardly necessary to point out the dis-
advantage of this to the public.
The CHAIRMAN. In that connection would not the departmental
representatives be held responsible by an insistent public?
Mr. WoRTHINGTON. If they wanted to make a record for economy,
they are liable to impair the Service. . .
The CHAIRMAN. Wouldn’t they also get a red-letter criticism on
account of the inefficient service?
RAILWAY MAIL PAY. 353
Mr. WoRTHINGTON. No.
In case of light traffic routes railroads are generally obliged to
furnish whole cars in which mail, baggage, and express are carried,
there being necessarily a considerable amount of empty space in such
cars not required by any of the three classes of traffic. Under a space
basis it would probably be claimed that mails should be charged only
with space they occupy, leaving the empty space a burden on other
classes of traffic. The Government receives its pay for carrying mails
on a weight basis, and should not object to paying the railroads on the
same basis, as the Government's revenue increases with the weight
of mails. Operating expenses of railroads have been increasing for
10 or 15 years, due to higher wages and higher prices of material.
In freight service they have offset this effect by hauling greater
weights per foot. On a space basis for mails they would be denied
any additional revenue for hauling greater tonnage per foot, which
is unfair, as the railroads ought to be permitted to offset rising
operating costs in this way.
In other words, the R. P. O. pay is comparatively small at the
present time, and while that continues the small part of the compen-
sation the department is more apt to ask for increased services, as
they can get it cheaper than they would if the total compensation
was based on space. It seems to me if it was based on space the
department would hesitate a long time before they would ask for
more space on any route, because that would increase their rate
directly, whereas under the present conditions they can get more
space at comparatively little more charge; that is, more distributing
space. Suppose, for example, on a space basis another R. P. O. car
was required on any route. That would increase the pay directly
in proportion to the number of feet of space, and the department,
I think, would hesitate on ordering that car on, as compared with
the present conditions, whereas they can get that car by practically
a nominal compensation. That is another point that occurs to me.
No matter how much tonnage we put in a foot of space, if we were
paid on a space basis we would get no more compensation for it,
and as the Government can double the weight per foot, they can pay
the railroads much smaller percentage of the revenue. -
The CHAIRMAN. Let me ask you in that connection a question.
You say the governmental receipts themselves are a factor in de-
termination? In other words, what the Government can pay, to
your mind, is a large factor in the determination of what the Gov-
ernment shall pay?
Mr. WoRTHINGTON. I think so. In other words, it is the ability
of the Government to compensate the railroads, for handling the
mail. I think that is a factor just as much as the cost of service
or anything else. In other words, if in 10 years they can double
their revenue it only seems fair, if the railroads are hauling twice
#. ton mileage on a space basis, we could get nothing more for
that.
The CHAIRMAN. And your premises for that opinion are what?
That the people have to pay it in any event, whether they pay it
for freight or passenger or mail? -
Mr. WoRTHINGTON. No. I think the service rendered to the Gov-
ernment by the railroads is measured more in proportion to the
3.54 RAILWAY MAIL PAY.
tonnage they handle than anything else; that is, the service they
give the Government; they haul a certain tonnage of mail.
The CHAIRMAN. You put the Government on a par with the ordi-
nary citizen; the Government is not supposed to operate the mail
for profit to the Government. Personally I believe that the Postal
Department should be absolutely self-supporting and rates should be
established which would enable it to be self-supporting, but that is
Only my own personal opinion. -
Mr. WoRTHINGTON. You will find a great many roads where the
existing rates, per car-foot mile, on one road, is double what it is
on another. In other words, those roads carrying twice the rates
per car-foot mile are now performing twice the service not only
in transportation but in terminal service. Those roads are also
the roads furnishing the special mail trains. In other words, the
road hauling the double tonnage would get the same pay per car-
foot mile and would get nothing for additional special mail trains.
they run on account of the business they are handling and on account
of the amount of it.
The ºnammas. Why does not that objection apply to your present
system'.
Mr. WoRTHINGTON. Under the present system we do get more as
we increase our weight per foot. We divide with the Government.
In other words, we get more, but through the automatic reduction
of the present law, as density increases the Government pays less,
so it is a sort of division. The present law is admirable in that re-
spect. We get something and the Government gets something; on
the space basis the Government would get it all. That is the prop-
osition. I have a memorandum with regard to the railway mail pay
on heavy traffic routes.
There is an impression in some quarters that where mail trans-
portation is concentrated on heavy traffic routes the service is very
remunerative to the railroads, on account of the apparently large
compensation as compared with the amount paid on light traffic
routes.
There are 70 routes in the United States on which the total pay for
transportation is $100,000 or more per annum, and 3,308 routes on
which it is less than $100,000. On these 3,308 routes the total pay
for transportation is $23,515,258; on the 70 heavy traffic routes the
pay is slightly less, or $22,982,742. When we come to work done for
this compensation, however, it is found on the 3,308 routes only
168,368,512 tom-miles of mail are handled, while on the 70 heavy
traffic routes 381,479,461 ton-miles are handled, or two and one-fifth
times the service rendered the Government on the heavy traffic routes
for less money received. Per ton-mile of mail the pay for transporta-
tion is 14 cents for the 3,308 routes and only 6 cents for the 70 heavy
traffic routes, or less than half as much. If the railway postal car
pay is included the pay per ton-mile for the 3,308 routes becomes
14.8 cents and for the 70 routes 6.8 cents, R. P. O. car pay being
the same per ton-mile in each case. * •
Even on the space basis the pay on these 70 heavy traffic routes
compares unfavorably with the others, as the transportation pay
per car-foot mile for the 70 routes is only 4 mills, while it is 4.3 mills
for the 3,308 light traffic routes, using the car-foot mileage contained
RAILWAY MAIL PAY. 355
in Document 105, which does not take into account all the car-foot
space reported by the railroads. This shows the benefits received
by the Government through the automatic reduction in rate as ton-
nage increases and also shows that the heavy traffic routes are per-
forming vastly more service to the Government in proportion to the
money the railroads receive than any other routes. Not only, this,
but on a great many of these routes the railroads are maintaining
exclusive mail trains, which add materially to their expenses.
Therefore, although one-half of the mail pay goes to only 2 per
cent of the total number of routes, covering about 12 per cent of the
railroad mileage, these routes are not overpaid, but are really under-
paid. This being so, is not the conclusion justified that the compen-
sation is inadequate on the 98 per cent of the routes with 88 per cent
of the road mileage that receive only 50 per cent of the pay?
I just made that computation as to 70 of the heaviest traffic routes
to see how much business they were hauling. They were hauling
twice the ton mileage and this shows how this automatic rate works
out on the heavy traffic routes.
Under a space basis, as pointed out, a parsimonious administration
would be able to reduce payments to the railroads, often with in-
justice to the railroads, by cutting down space after, it is once au-
thorized; by not allowing pay for necessary empty movements, etc.,
and also at the expense of efficiency in Service to the public. A sub-
sequent administration might, on the other hand, be too extravagant
in the space allowances to the railroads. A weight basis is not open
to either of these criticisms. Only a small part of the railroads’ mail
pay compensation is based on the space required in R. P. O. cars,
this being under the control of the department. As a consequence
with the constant growth of the country, requiring increased dis-
tribution space on trains for the public benefit, the Postmaster Gen-
eral can secure this space from the railways with a minimum of cost
to the department. Under a space basis plan the added facilities
would be very expensive to the department and it can be conceived
that the expense would be sufficient in many instances to determine
the department against giving the public this greater Service on
account of higher cost involved. Whilst we are contending that the
railways are now carrying the mails for much less comparative
remuneration than that received from other classes of service, we
believe a continuance of the present plan with annual weighing and
pay for apartment cars, as well as some compensation for the side
and terminal delivery service, is fair and more acceptable to the
roads as a whole than the proposed space basis. If the commission
should find, as we believe they will, that the railroads should receive
more compensation than they are now getting, we think this could
best be brought about by restoring the losses incurred by the reduc-
tions in their pay commencing in 1907, which we have always thought
were unjustified.
The CHAIRMAN. Your presentation was very able, Mr. Worthing-
ton, and we thank you very much.
Thereupon, at 2 o’clock p. m., the committee took a recess until
2.30 o'clock p. m.
356 RAILWAY MAIL PAY.
AFTER RECESS.
The hearing was resumed at the expiration of recess at 2.30 o'clock
p. m. *
The CHAIRMAN. Now, Mr. Worthington, to resume and Summarize,
I infer from the statement that you have made to the committee that
it is your conclusion and conviction that either of the suggested plans
of former Postmaster General Hitchcock, contained in Document 105,
and submitted to this committee under date of January 13, 1913, the
adoption of which would be the substitution of space for weight as
the measure of the service rendered, is undesirable from the govern-
mental standpoint as being impracticable of administration and from
the transportation standpoint as being inequitable to the transporta-
tion companies and necessitating a very expensive method of account-
ing in the transportation companies, and that it is your opinion that
no improvement can be made on the present system of practically
determining the measure of the service rendered for 90 per cent of
the º, by weight and 10 per cent by space governed in the R. P. O.
Servl Ce
Mr. WoRTHINGTON. The present method, with the amendment sug-
gested by the committee on railway mail pay, which are annual
weighing, or the equivalent of that, and pay for apartment cars.
The CHAIRMAN. And compensation or relief from side service.
Mr. WoRTHINGTON. Compensation and relief from side or terminal
delivery service. I really think what the railroads are asking for is
more than reasonable, for even if they are given both of these addi-
tional payments, the compensation for handling the mails will be
very reasonable as compared with what they receive for other classes.
of traffic.
The CHAIRMAN. If I understand what the railroads are asking for
it is a continuance of the present system of weight as the measure of
service and compensation for apartment cars, annual weighing, and
compensation or relief from side service.
Mr. WoRTHINGTON. Yes, sir.
The CHAIRMAN. That briefly covers it all?
Mr. WoRTHINGTON. Yes, sir. I really believe if it were possible
to exactly apportion expenses to passenger and freight, on a basis
that would be fair to everyone, it would be found that they were
asking for less than the Government would determine, if it were
feasible to determine cost.
The CHAIRMAN. It is your conviction, is it, that in the adoption of
the suggested departmental plan a separate calculation or considera-
tion would have to be made or given to each route, or at least to each
one of the 795 railroads with whom the Government has a mail
contract? -
Mr. WoRTHINGTON. I think a separate method of apportionment
would have to be observed to allow for the difference in local condi-
tions which exist on one road as compared with another, and that
would leave too great discretion in the hands of any individual
charged with the duty of making these apportionments.
The CHAIRMAN. Why does not that objection apply with equal
force to the existing method?
RAILWAY MAIL PAY. 357
Mr. WoRTHINGTON. Well, the existing method is a certain rate
fixed by law that is not subject to the opinion of any individual, whilst
the proposed method would leave it altogether to the discretion of
some individual, whoever was charged with the duty of fixing the
basis of apportionment, to vary at will the compensation to the rail-
roads 10 or 20 per cent either way, according to his ideas as to the
methods to be followed.
The CHAIRMAN. Suppose the law specified, if one should be en-
acted, adopting in effect substitution of space for weight, the per-
centage of compensation on capital invested and on operating cost,
to be specified in the law, a method on which that compensation was
to be adjusted as the measure of the service rendered—and by that I
mean the number of linear feet authorized and used by the depart-
ment—so that you would know that you would receive so much an-
nually for each linear foot authorized, and the law stated that you
would receive that compensation for a number of feet that the de-
partment authorized and required you to furnish at the beginning
of every fiscal year, with an allowance in the law for compensation
for such additional authorization as conditions might require in ex-
cess of the estimated authorization made by the department that
covering, say, a period of days or a period included in the round
trip; would you not then have, theoretically at least, your annual
weighing and your weighing feature taken care of by your compensa-
tion being based on annual authorization for the linear number of
feet called for, be relieved of the burden which you claim you now
have to bear in getting no compensation for apartment cars, and
while, of course, the side service and terminal feature is not dealt
with in the suggested plan, yet theoretically does it not cover and
furnish relief for apartment car and quadrennial weighing?
Mr. WoRTHINGTON. Such a plan might remove some of the objec-
tions to control by the Postmaster General or to unreasonable control
or regulation and it might do away with the apartment car feature,
but it is open, I think, to the very serious objection that it does not
equalize the difference in existing conditions on different railroads
as to weights carried per foot; in other words, as to service rendered
to the Government in handling tonnage. There are some roads that
haul much larger amounts per foot than other roads, and it does
seem to me they ought to receive more compensation than the roads
furnishing the same car space and hauling less tonnage, because those
roads also are the roads that are running the fast mail trains, whereas
the other lines are furnishing most of their space on trains with
passengers and express.
The CHAIRMAN. Does the Government require you to put on fast
mail trains? -
Mr. WoRTHINGTON. No. They do not require us to put on fast
mail trains. -
The CHAIRMAN. You do that of your own initiation?
Mr. WoRTHINGTON. Yes, sir.
The CHAIRMAN. You do it because you expect to receive an indi-
rect benefit by so doing?
Mr. WoRTHINGTON. Yes.
The CHAIRMAN. Should the Government pay for that, as long as
you, of your own volition, initiate and improve that activity?
358 RAILWAY MAIL PAY.
Mr. WoRTHINGTON. Suppose the pay would be reduced on a space
basis on a line like the Union Pacific. In order for them to make
both ends meet, it would be necessary for them to take off trains of
that kind, otherwise if they did not do that the pay would be en-
tirely inadequate. They are hauling, very large tonnage per foot
and are getting enough money out of the business now, in a way,
to reasonably compensate them for this mail train, but if that amount
is going to be largely reduced, as a space basis is going to reduce it,
they could not afford to run the train.
The CHAIRMAN. You are predicating your position with the as-
sumption that by the substitution of space for weight your com-
pensation is going to be reduced. - -
Mr. WoRTHINGTON. It would be on lines which are carrying the
larger weights per car foot, and the lines which are carrying the less
weight per car foot would be raised. I think it would be rather
unjust to the lines that are performing the greater service per foot,
and besides that it would mean that they would not participate at
all in future economies through heavier carloading per foot. They
would get the same return whereas the Government would receive
directly in proportion to weight, as this is, on a weight basis. I
think if any change is going to be made it ought to consider both
space and weight. I do not think that the weight feature ought to
be left entirely out of consideration.
The CHAIRMAN. As I understand, you have both to-day—Space and
weight. 4.
Mr. WORTHINGTON. Yes. *
The CHAIRMAN. Ninety per cent weight and 10 per cent space,
represented by the R. P. O. cars. The adoption of the suggested
plan of former Postmaster General Hitchcock would simply reverse
those percentages?
Mr. WoRTHINGTON. It would not consider weight at all, would it?
The CHAIRMAN. Reverse those percentages, it would consider
weight simply as in the pouch service, which represents, as I under-
stand, a very small percentage of the total weight of all mail.
Mr. WoRTHINGTON. It seems to me there would be little inducement
on the part of the large lines to run fast mail trains because they
would get practically as much pay even though they would lose a
considerable part of that tonnage, because they would still get paid
on a space basis and even if their weights per foot were reduced, they
would get as much money for it on a space basis.
The CHAIRMAN. Would they? These authorizations are made
annually. Of two competing lines, if one gave superior service to the
other, at the expiration of the year the Government would make its
contract with the railroad showing the greatest efficiency. Therefore,
the inducement would be there just the same to run your fast mail
trains. Your competition now is not in the rate received per ton
of mail, but in the service rendered to the Government. That is the
only competition there is between the railroad companies in the way
of getting the mail contract in the United States, is it not?
Mr. WoRTHINGTON. Yes, sir.
The CHAIRMAN. There is quite a distinction. It is an efficiency
competition and not a cost competition.

RAILWAY MAIL PAY. * 359
Mr. WoRTHINGTON. That is about all the competition we have in
any class of service nowadays. There is no more rate competition,
but it is competition of service.
The CHAIRMAN. So, if you fail to give as efficient service as a com-
petitor of yours did, while you might carry in that zone of activity
90 per cent of the mail for this year, you would lose that 90 per cent
next year. Hence, your inducement would be there to continue your
fast mail service in order to hold prestige over your competitor.
The inducement of putting on fast mail service is to make you a more
effective competitor in the way of efficiency. Should the Government
pay for that additional cost that you yourself, of your own volition,
saw fit to incur because you believe, I assume, that the business is of
some value to you, either directly or indirectly—the carrying of
that mail? -
Mr. WoRTHINGTON. Well, we of course handle the mail on a special
mail train largely on account of its volume and, as you say, it is com-
petition of service and we feel we have to maintain the mail train on
the heavy traffic route in order to keep the mail to our line. But if
the mail compensation was made inadequate, or our compensation
was reduced, I do not think we could afford to compete for that mail
as actively as we have done before; the business would not be worth
so much to us and it is questionable whether it would be worth the
additional expense of running a mail train, or whether we could not
put the mail on the regular train, whatever we get.
The CHAIRMAN. That is optional, entirely with you.
Mr. WoRTHINGTON. Yes. But the rate might be brought down to
the point where we would do that.
The CHAIRMAN. Should the Government take that into consid-
eration?
Mr. WoRTHINGTON. I think if the mail trains are taken off it would
be a more serious disadvantage to the Government, or to the people,
because the mail trains are run at a faster speed than are other trains.
The mail is handled more expeditiously, but, as I say, if the rates are
going to be brought down, it is questionable whether there will be
enough new business to maintain them, and the rates would be
brought down on such lines as the Union Pacific and the Southern
Pacific, if we are to be equalized with roads which are hauling less
weight per foot than we are. I know that the Santa Fe, which is
compared with the Southern Pacific, hauls considerably less per foot
than the Southern Pacific, and gets considerably more out of the
mails. If we were put on a space basis it would make quite a dif-
ference in our compensation. Another thing I do not quite under-
stand is this: I have an idea that any space plan is necessarily con-
nected with a cost plan. If it is, that makes the space plan more
objectionable, because it would fix a different rate for the space per
foot on different lines, on competing lines, and wherever two lines
compete between two commercial centers, it would mean that the
rate fixed necessarily would be the rate of the lowest cost line, because
the high cost line could not afford to ask for more money than its
competitor. If the high cost line wanted to get any mail business it
would have to come down in the rate.
The CHAIRMAN. In other words, if I catch the trend of your mind
there, it is this: That on a compensatory basis of percentage allow-
ance on operating charges and capital charges in competing territory,
360 RAILWAY MAIL PAY.
one road would get all of the business providing it had a smaller
capitalization for the service rendered and its operating costs were
the same.
Mr. WoRTHINGTON. Yes. That is, it would have a lower cost and
I presume the department would, for the purpose of economy, give
the mail to the road showing the lowest cost. :
The CHAIRMAN. We thank you very much, Mr. Worthington, for
presenting your views.
The CHAIRMAN. I insert in the record a copy of a letter which
I addressed to Mr. Peters, chairman of the committee on railway-
mail pay, under date of March 13, 1913, as follows:
MARCH 13, 1913.
Mr. RALPH PETERs,
Chairman Committee on Railway Mail Pay,
Pennsylvania Station, New York, N. Y.
MY DEAR SIR : In the consideration of the question of railway mail pay, there
has frequently arisen a question as to the relative rates paid to the railroads
for transportation of express and of mail matter. It has been frequently asserted
that the mail rates are much in excess of the express rates. I wish to ask you
to advise the joint committee how the rates compare, and in what particulars
and to what extent the service rendered to the Post Office Department differs
from the Service rendered to the express companies. I wish this to include a
Statement, if any, in the amount of responsibility the railroad companies assume
in base of injury to mail or express or employees.
Thanking you for your courtesy in the matter, I am,
Yours, very truly,
, Chairman.
The CHAIRMAN. I herewith insert in the record a copy of Mr.
Peters's letter under date of March 26, 1913, in reply to my letter to
him under date of March 13: e
MARCH 26, 1913.
Hon. JONATHAN BOURNE, Jr.,
Chairman Joint Committee on Postage on Second-Class Mail Matter
and Compensation for the Transportation of Mail, Washington, D. C.
MY DEAR SIR : Answering your letter of March 13, I am very glad that you
give us an Opportunity to answer the question in regard to the relative rates
paid to the railroads for the transportation of express and of mail matter, as
there seems to be much misunderstanding and misinformation concerning these
matterS. --
The railroads do not participate in the rates made for express. The express
Companies setle with the railroads, as a rule, on a percentage basis, the con-
tracts providing that the railroads shall have a given percentage of the gross
revenue from the express business handled Over such railroads, the rates made
by the express companies in no case to be less than from One and a half up to
two and a half times the first-class freight rates. These percentages vary from
40 to 56 per cent. I believe the average for the country in 1910 was about 47
per cent.
The only way we have had to compare the relative revenues derived by the
railroads from express and mail matter was that brought Out by the investiga-
tion of the Postmaster General in November, 1909. In our preliminary report, ,
which is reproduced in Document No. 1 of the hearings before your joint com-
mittee, there is a statement, on page 52, showing the average revenue per 1,000
foot mile, for mail $3.23, for passenger $4.42, and for express $3.86—the total
average revenue per 1,000 car-foot mile for passenger trains $4.25. -
The Second Assistant Postmaster General has made a report to you as the
result of the work of the joint committees suggested by you at our hearing in
February, using the car-foot miles reported by the railroads in November, 1909,
without any of the changes and modifications made by the Post Office Depart-
ment, showing the earnings from mail service per 1,000 car-foot mile $3.37,
and the earnings from all other passenger Services $4.34. He does not give
the express separately. I think, however, it will be found by using the same
RAILWAY MAIL PAY. 361
Car-foot mileage figures that the revenue per 1,000 car-foot mile for express
Service was very near the figure given in the preliminary report of our com-
mittee, namely, $3.86 per 1,000 car-foot mile. 3.
This is the first time that any real comparison has been made of the revenues
from the two classes of service.
The revenue from express service as shown in these figures refers strictly
to the railroad companies' proportion received from the express business under
their respective contracts. Under these contracts the railroad companies assume
Ino responsibility whatever for damage or loss of express goods or for responsi-
bility of personal injuries to the express employees. The railroad companies
furnish the cars and haul them, but the cars furnished for the mails are much
heavier and more expensive. The express traffic is loaded in and loaded out
by employees of the express companies. Where any special station facilities
are furnished exclusively for the express companies, the railroads receive addi-
tional compensation, Where a railroad employee performs any service for the
express Company, like train baggage men, additional Compensation is paid
either to the railroad company or to the employee direct; likewise in the case of
the station agents. - *
In the Case of the mail the railroad companies are responsible for the Safety
of the mail clerks and employees while upon the trains or at the stations.
The railroads furnish the cars for hauling the mail, but receive special pay for
the special post-office cars of 40 feet or more in length, but this pay is included
in the revenue per car-foot mile given above. Station employees must handle
the mails to and from trains and to and from all post offices located within 80
rods Of the stations. The railroads and their employees receive no compen-
sation for such extra Service. Postal cars are placed in the terminal stations
many hours in advance of the departure of trains for the purpose of permit-
ting the assorting of mails; cars under these conditions have to be lighted
and heated and kept in good condition for such service.
In Some cases express cars are placed at the express platform in advance
of the departure of trains. On heavy routes express cars are loaded to their
capacity, which is very different from the case of the R. P. O. car, where the
Space required for assorting the mails limits the amount Of the load that can be
Carried.
A great many more postal Clerks are hauled with the mails than there are
of messengers carried with the express.
There is no comparison whatever between the incidental expense assumed by
the railroads On account Of the express at its terminals and local stations and
that incurred in caring for and handling the mails. The railroads do have an
expense in checking Over the waybills, including the checking of weights and
rates and tabulations, to ascertain the revenues derived by the express com-
panies on business handled Over each line from which the railroads are to
receive their proportion under the contracts. This expense, however, is small
when the aggregate payments made by the express companies are considered.
From these statements you will see that the railroads get more revenue
per car-foot mile out of the express business and assume less responsibility
and risk On account of Same than in the case of the mails.
I might say further that so far the railroads have not assumed any respon-
sibility whatever for any loss in the mails due to accident or otherwise while
being handled by the railroads, although attempts are being made by the Post-
Office Departument to place such responsibility upon them. There is great re-
sponsibility and loss to the railroads in caring for the employees of the Post
Office Department.
Very truly, yours, RAIPH PETERS, Chairman.
The CHAIRMAN. I also desire to insert in the record a copy of my
letter to the Interstate Commerce Commission under date of March
20, 1913, and a copy of the reply from the Interstate Commerce
Commission thereto under date of March 24, 1913, as follows:
MARCH 20, 1913.
INTERSTATE COMMERCE COMMISSION,
Washington, D. C.
GENTLEMEN : It has been suggested that from data on file with your commis-
sion can be reached an estimate of 25.51 cents per car-mile for the whole coun-
try as the average car-mile revenue for passenger service, including mail and
express. If such an estimate is correct, the joint committee will thank you for an
362 - RAILWAY MAIL PAY.
*
official statement in verification of same, or such other estimate as may be found
upon a Scertainment to be COrrect. -
While recognizing the fact that no segregation has been made of the car
mileage made in the passenger, mail, and express service, the joint committee
would like to have an estimate, even though an arbitrary One, Of the revenue
derived from the passenger service per car mile, the mail and express Service
being eliminated therefrom, provided the request is feasible as to Compliance
and will not necessitate any appreciable expenditure of the public fund. . -
Yours, very truly, - *
JONATHAN BOURNE, Chairm (lºn.
MARCH 24, 1913.
PIOn. JONATHAN BOURNE,
Chairman Joint Committee on Transportation of Mail,
United States Senate, Washington, D. C. '
DEAR SIR : Answering yours of the 20th instant inquiring concerning the aver-
age car-mile revenue for passenger-train service, I have to say that from Compila-
tions made in the Division of Statistics of this commission from annual reportS
of railway companies for the year ended June 30, 1911, it appears that for what
we denominate class 1 roads, being those whose operating revenues for the
year exceeded $1,000,000, the average revenue per car-mile from passenger-train
Service is 25.35 cents; for class 2 roads, being those baving operating revenues
for the year below $1,000,000 and above $100,000, the corresponding figure is
28.59 cents; for class 3 roads, being those whose Operating revenues for the
year were less than $100,000, the corresponding figure is 27.45 cents, and for
all three classes the figure averages at 25.43 cents. -
Owing to the fact that the reports of car mileage and revenues made to this
Commission in the annual reports of common Carriers are not segregated with
sufficient detail to enable us to state the revenue derived from the passenger
service per car-mile, we are unable to comply with the Second request contained
in your letter. To get any reliable information on that point would require a
Collection of Special data from the Carriers and the analysis and Compilation of
such data. This would be a matter requiring a considerable amount of time, for
the reason that the carriers in their accounts do not make segregations which
would enable them to state from their present records the figures which you
seek. To show precisely what you desire would require the setting up of
special records by the carriers for a time sufficient to furnish reliable data.-
Respectfully,
G. B. McGINTY, Secretary.
Mr. W. W. Safford, general mail and express agent of the Sea-
board Air Line Railway Co., submitted the following statement
under oath:
SEABOARD AIR I.INIE RAILWAY.
The question has been raised by your committee whether in the matter of
1'ailway mail pay the Government should be treated as a shipper or whether the
railroads owe a patriotic duty to the Government which should be considered
as justifying a lower rate for the transportation of mails than they are en-
titled to receive from their commercial business.
A great danger in the consideration of the subject from this point of view
before a congressional Committee is that a precedent may be established in a
matter affecting 1.78 per cent of our revenue, which might be seized upon by
other legislative bodies and commissions and applied disadvantageously to us
as to the Other 98.22 per Cent Of Our business.
If the postal service were a free public service the argument might have
Some force, but it is not. It is a commercial proposition all the way through.
Rates of postage and charges for other postal service are arranged upon a uni-
form cost to the public for each unit of Service, and there would seem to be no
moral foundation for a conclusion that the railroads should be called upon to
adopt an attitude in a purely commercial relation with the Government, the
principle of which the Government itself does not recognize in its deailngs with
the public. -
The courts have held that the relation of the railroads with the Post Office
Department is a relation of contract, and it would, therefore, appear that the
RAILWAY MAIL PAY. 363
same conditions should govern the question of pay for the transportation of
mail on railroads as apply generally to others having contractual relations with
the Government.
The first and most important purpose of the postal service is to facilitate
communication between the people, and the transportaton of the mails on
railroads is its most Valuable and important agency to that end. It has been
shown that but 21 per cent of the revenue of the Post Office Department is
expended for that purpose, while 79 per cent is used for conducting the service,
administration, etc. If the Object of this inquiry is to ascertain whether the
expenses of the Post Office Department can be reduced, would not true economic
principles suggest the 79 per cent item as the proper and more promising field,
particularly since by far the greater portion of postal revenue is derived from
transportation? *
The plan proposed by the Postmaster General in his “Tentative draft of
proposed law for regulation of railway mail pay ” Contemplates the ascertain-
ment annually by him of the cost of the service on each railroad and the ad-
justment of compensation at a rate per annum equal to the cost to the railroads
of carrying the mails and 6 per cent of such cost; and, in addition, com-
panies may (not shall) be allowed such “additional amounts , if any be neces-
sary, as shall render the whole a proper proportion of a fair and reasonable
return on the value of the property necessarily employed in Connection with the
mail service,” said cost and adjustment Of pay to be respectively ascertained
and made upon a space or Car-foot mile basis. The proposed law also provides
for practically unlimited administrative authority over railroads and terminal
companies with incidental penalties which smack strongly of confiscation.
It is scarcely to be believed that Congress will be disposed to so far sur-
render its prerogatives as to Confer upon a single executive officer the deter-
mination of all the elements which enter into this question, particularly when
it is realized that if the bill proposed by the POStmaster General were enacted
into law, it would be impracticable of administration, undoubtedly expensive,
and would place Congress in the position of making appropriations at the
will of an individual. There would be no “yardstick.”
If any doubts exist as to the progressive increase in the cost of the postal
service under the proposed plan, one needs but examine the constantly increas-
ing cost of railroad operation. Since the data covering the cost of operation.
for the month of November, 1909, was furnished the Postmaster General the
cost of labor alone to this company has increased Over $1,000,000 per annum.
Does Congress desire to take the responsibility for possible extravagance or
incompetence on the part of railroads? Does it desire to indorse a principle-
in rate making which would tend to remove all inducement to economical
management?
I have Stated the proposed kaw would be impracticable of administration.
My reason for that statement is that in the estimates for space made by the
Post Office Department it very naturally and perhaps properly limits its
demands and authorization to minimum or at best the average requirements
of the Service. Under the present weight and space plan railroad companies.
are compelled to furnish transportation for all mail offered on a given train
without regard to the space estimated to be necessary for distribution pur-
poses. Railroads are compelled frequently either to leave baggage behind or
to put an extra Car in their trains on account of Overflow mail carried in
baggage cars on trains carrying postal cars. With the pay based on space.
alone a railroad would be under no obligation to transport any mail beyond
the capacity of the Space Specifically authorized, and the quantities of mail
vary so greatly on different days of the week, and in different directions, that
it would be practically impossible for the Post Office Department, without
great eXtra Vagance, to provide for maximum requirements which are now
taken care of by the railroads as occasion requires.
The possibility of disadvantage to the Government having been shown it is
only fair to State What may happen to the railroads from a space basis. The
power to do a thing consciously or unconsciously creates a desire to do it,
and that inclination influenced by the point of view, prompts one to argue.
himself into the position that it is right to exercise his power in the manner
nost advantageous to the interest he represents. A particularly zealous or
economical administration could work great disadvantage to the postal service
through inadequate allowance for space. We suffer from this now, and it is a
Constant matter of contention between the railroads and the Post Office De-
partment, as well as between different officers of the department when only 10.
364. BAILWAY MAIL PAY.
per cent of the railroad mail pay is represented by space, what might we
not anticipate if all our pay were based on Space?
We come now to the question of cost in which we must also disagree with
the proposed plan of the Postmaster General. The fact that Space may be
used in passenger-train service as a factor in the ascertaining of cost does not
make it a controlling factor in fixing rates; it may be and undoubtedly is
used incidentally in fixing Some rates, particularly for the same Commodity
in different forms, but it is a relic of the early days of transportation on water
routes when it was an important element in the determination of a boatload,
and with the building of railroads with improved facilities for transportation
there has been a growing tendency to get away from it and to use weight alone
as far as practicable. Our passenger rates are fixed by law and do not neces-
Sarily afford a fair basis of revenue upon which to determine the value of any
Other transportation conducted in passenger trains.
The Suggestion of a level rate of return for all railroads is not a sound
economical proposition. The transportation of the mails is a universal service
throughout the Country. A given unit Of Service is of the same value to the
Government by whomsoever performed, and the Government should be con-
Cerned in securing the service it requires at a fair average rate of compen-
sation regardless of the cost to the party performing it. The value of a rail-
road depends upon its efficiency and the Government is under no obligation
to protect a badly located, poorly equipped, or inefficiently managed railroad,
nor should it place a penalty upon the capital, enterprise, and efficiency em-
ployed by a well-located, well-equipped, and well-managed railroad by paying
a high rate to the One and a low rate to the other. It follows from this that
... a level rate of profit, or specified rate of return upon the cost of service, plus
an allowance for capital or the value of the property employed in the per-
formance of the Service would be unjust to the Government on the One hand
and to the efficient property on the other. “The laborer is worthy of his
hire,” and if one railroad is able to perform a given unit of service for the
Government more economically than another, it is entitled to the benefit
accruing from its efficiency. The Government charges the public the same for
each similar unit of service it renders, why should it seek to employ a differ-
ent principle in fixing rates for the transportation of mail on railroads?
As to what constitutes compensation, I beg to Submit the fololwing:
“Compensation includes as a minimum, Cost of service, interest on bonds,
and legal rate of interest on bona fide investment where property is located.” .
Mr. Justice Brewer, in the case of C. & N. W. Ry. Co. v. Dey (35 Fed. Rep.,
866, 879), says:
“But where the rates prescribed will not pay some compensation to the
Owners, then it is the duty Of the courts to interfere, and to protect the com-
panies from such rates. Compensation implies three things : Payment of cost
of service, interest on bonds, and then some dividend. The fixed charges are
the interest on the bonds. This must be paid for Otherwise foreclosure would
follow and the interest of the mortgagor swept out of existence. The property
of the stockholder can not be destroyed any more than the property of the
bondholder. Each has a fixed and vested interest, which can not be taken
away. I know that often the stockholder and the bondholder are regarded
and spoken of as having but a Single interest; but the law recognizes a clear
distinction. A mortgage on a railroad creates the same rights in mortgagor
and mortgagee as a mortgage On my homestead. The legislature can not de-
stroy my property in my homestead simply because it is mortgaged, neither can
it destroy the stockholders’ property because the railroad is mortgaged.”
- W. W. SAFFORD,
General Mail and Easpress Agent.
STATEMENT OF MAX OTTO LORENZ.
The CHAIRMAN. Mr. Lorenz, it will be necessary for you to be
SWOI’Il.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN: Will you please state your full name, residence,
occupation, and the official position that you hold with the United
States Government? -
* RAILWAY MAIL FAY. 365
Mr. LORENz. Max Otto Lorenz, associate statistician, Interstate
Commerce Commission, residing at Washington, D. C.
The CHAIRMAN. You have heard the testimony submitted by Mr.
Worthington in the hearings to-day as a representative of the South-
ern Pacific Railway, have you not ?
Mr. LORENZ. Yes, sir. -
The CHAIRMAN. What additional questions do you think could be
asked of Mr. Worthington in connection with testimony submitted
by him that would give elucidation on the general subject that we
have under study now %
Mr. LORENz. There are a number of things that might be discussed.
I was very much interested in following Mr. Worthington's argument,
and would like especially to have him elucidate a little further in
answer to your questions regarding the basis which might be used
in determining the amount of -railway mail pay if the cost of the
service is not that basis; that is to say, if you do not directly or indi-
rectly make an apportionment of expenses between passenger and
freight, and then between passenger proper, express, and mail, so as
to get an idea of what the proper portion is which the mails should
bear of the total operating expenses and of capital charges, what
other basis could a person really get by which you could judge of
the fairness of the pay either for the service as a whole or on any
individual road?
The CHAIRMAN. I will ask Mr. Worthington if he will answer
Mr. Lorenz's inferential question there, and if both he and Mr. Lorenz
will, in effect, have a debate on this particular subject in order to get
it into the record and to have the benefit of any new viewpoints that
may be brought out in such a discussion.
Mr. WoRTHINGTON. I think I have already stated I see no objection
to testing the adequacy of the mail pay of the country as a whole by
making an estimate of the expenses, but I think it should not go any
further than that, for the reason principally that about half of the
operating expenses and all of the fixed charges have had to be de-
termined arbitrarily. I would like to ask Mr. Lorenz if he thinks
there is any one man competent to determine with equal justness to
all of the railroads of the United States a fair apportionment of those
expenses to passenger and freight Service, and subsequently a fair
spºrtiºnment to mail service, if there is any one man who has that
ability?
Mr. LORENz. No, sir; I would not trust any one man with making
such an apportionment, but I do think that it would be possible to
arrive at a conclusion as to what is a fair apportionment by having
some competent body consider the argument for and against each
basis and determine under all circumstances which is the fairest basis
to be used.
Mr. WoRTHINGTON. Has not the commission now up with some of
the accounting officers that very question, the apportionment of ex-
penses between passenger and freight?
Mr. LORENZ. It is being discussed with them; yes, sir; and the
accounting officers have recommended a method of apportioning or
determining those expenses which are definitely assignable to each
service, but have made no recommendation as to the common ex-
penses.
366 RAILWAY MAIL PAY.
Mr. WoRTHINGTON. I have never attended any of the meetings, but
I have understood that they do not wish to make any recommenda-
tion as to the common expenses and prefer that the commission shall.
outline the expenses. They are willing to apportion common ex-
penses on any basis which the commission may outline, but they dis-
claim any responsibilities themselves for such apportionment. That
is really the crux of the whole situation. That is the one point that
must rest on the judgment of some other individual.
Mr. LORENz. In other words, how to determine the division of all.
the common expenses is not simply a question of accounting, but a
question of justice, and that necessarily presumes adjustment by
some one who is in a more or less judicial position, and I think very
properly that would have to be made a matter of arbitrary decision,
in the sense that a jury finally arbitrarily decides a case in view of
all the facts as to what is right and what is wrong. :
Mr. WoRTHINGTON. Do you not think it would be difficult to reach.
any basis that would be fair to roads operating under different con-
ditions in that apportionment? -
Mr. LORENz. I am not sure but what some of the bases that have
been used would operate unfairly with respect to different roads, but
I am not sure but what some basis could be found which might be
flexible enough to adjust itself. I think, for example, the revenue
train-mile method, which is so commonly used, perhaps works fairly
well on some railroad, while at the same time it would not be so on
others. It might be that some basis which combines various factors
which represent different conditions or a combination unit of some
kind might possibly be devised which would be reasonably fair for
different roads. However, that is a matter of special study. So far
as the present problem is concerned, I think that you perhaps have
submitted all that is essential in really saying that as a general guide
it is possible that a cost determination might be of service. Your
principal objection, as I understand it, is that an individual deter-
mination of cost for each road and an inflexible application of that
cost in determining railway mail pay would be unsatisfactory.
Mr. WoRTHINGTON. Yes. That was my personal objection to the
cost basis. It is the individual application to each railroad.
The CHAIRMAN. Would that be obviated or minimized in any way
by grouping the roads?
Mr. WoRTHINGTON. It would be minimized, probably.
The CHAIRMAN. Have you any idea as to the number of groups?
Do you think the 10 groups the Interstate Commerce Commission has
heretofore used would meet your objections wholly or nearly wholly?
Mr. WoRTHINGTON. That would remove a great many of them.
Mr. LORENz. Would it be possible to make those groups not geo-
graphically, but according to operating conditions, such as density of
traffic, number of revenue train miles per mile of line, for example?
Mr. WoRTHINGTON. I do not think it would, for the reason that the
geographical conditions are the same on parallel lines; as to wages
they pay their employees where the line with less dense traffic pays
the same wages in the geographical section and their expenses gen-
erally run along about the same. If you make it. vary with the
density of traffic, then the roads would be classified in different
groups, which might compete with each other between two common
RAILWAY MAIL PAY. 367
points; one line would be in one group and one line in another be-
cause it had a different density of traffic. . .
The CHAIRMAN. You think a geographical grouping would answer
all F. and is the simplest way and would be the most equitable
and efficient way?
Mr. WoRTHINGTON. It is obviously better than individual basis.
The CHAIRMAN. And better than an effort to comply with Mr.
Lorenz's suggestion here as to grouping based on density of traffic?
Mr. WoRTHINGTON. I think so.
The CHAIRMAN. You think the 10 groups used by the Interstate
Commerce Commission heretofore would meet most of your ob-
jections?. -
Mr. WoRTHINGTON. They would meet the objection to using a cost
basis for different roads. It seems to me, though, if a plan is to be
devised of apportioning the expenses by anyone, that that plan ought
to be discussed with some of the railroad people first before it should
be put in to see if that plan is objectionable to them; in other words,
to see if there are some objections which they can raise which are
good objections. - ... *
The CHAIRMAN. Have not the railroads’ representatives had every
possible opportunity of appearing before this committee? -
Mr. WoRTHINGTON. Mr. Lorenz is speaking of some plan that
might be devised to apportion expenses between passenger and
freight for this purpose.
The CHAIRMAN. But I assume that the suggestion would cover an
interchange of ideas between the railroad companies and the govern-
mental representatives, would it not, Mr. Lorenzº
Mr. LORENZ. Yes, sir.
Mr. WoRTHINGTON. I think a group basis would be far less objec-
tionable than a cost basis for each railroad.
Mr. LORENz. How would that compare with the present method in
simplicity of administration? Would it mean that you would have
one rate for each geographic group? -
Mr. WoRTHINGTON. Well, necessarily, if the roads are grouped.
Mr. LORENz. Would that not be simpler than the present basis
where you have to determine a separate rate according to the density
of the mail route?
Mr. WoRTHINGTON. I do not know that it would, because that at
the present time is done only every four years over a short period of
time.
Mr. LORENZ. You ask that it be done annually. On that basis it
would be simpler. If your request was granted for an annual weigh-
ing you would every year have to determine the density of each mail
route and then apply a separate rate to each one. --
Mr. WORTHINGTON. Yes.
Mr. LORENz. Under the plan of having a cost determination for
each group, would it not be much simpler, because then you would
simply have your rate—
Mr. WoRTHINGTON. It depends on how much accounting we would
have to do to determine the cost. It depends a great deal on the
methods specified in getting at this cost.
Mr. LORENz. Supposing that were made a part of the regular re-
ports of the Interstate Commerce Commission, would not the group
75904—No. 2—13—4
368 RAILWAY MAIL PAY.
plan be pro tanto simpler than the present method, in that at the
present time you have the separate rates not only for each railroad,
but for each mail route? A separate rate is not specified in the
present law, but the law requires the department to determine first
the density of each route and then the rate.
Mr. WoRTHINGTON. It is a difficult question to answer, whether
the weighing of the mails is more or less difficult than the detailed
method of keeping accounts separate between passenger and freight,
without having any knowledge of how much detail the commission
would require. If they mean that we would have to start out at the
fundamentals and separate every item of expense and apportion the
time then by every man at a station between passenger and freight
service and go into a great deal of detail, it would mean a great
deal of labor. -
Mr. LORENZ. I am assuming that labor will be done anyhow, as
a general accounting practice requires on the part of the commission?
Mr. WoRTHINGTON. If we have to do it anyhow, it would not add
anything to our work, necessarily. .
Mr. LORENZ. Then so far as the railway-mail pay administration
is concerned, it would be simpler?
Mr. WoRTHINGTON. Yes, if the commission is going to make us
do this accounting anyhow, as you have qualified your question. I
would like you to understand that I am not saying that there are not
objections to this cost basis in itself. The great objection is that
in any event, all of the operating expenses and fixed charges have to
be left to the determination of some individual, and the railway-
mail pay to that extent is really in the hands of that person or that
commission, whoever it is, that makes this apportionment. -
Mr. LORENZ. But a general apportionment, if made by the Inter-
state Commerce Commission, or some other competent body, would
naturally be used, not merely in determining the cost for the purpose
of determining the railway-mail pay, but would also be used in
freight-rate cases where cost was important and in passenger-rate
cases, so that whatever injustice was done in one direction would be
counterbalanced in the other direction in the other class of cases.
Mr. WoRTHINGTON. Well, to a certain extent, yes; because when it
comes to freight or passenger rate cases cost is only an incidental
factor. The value of the service is considered there, whereas, as I
understand, the commission's opinion seems to be as to mail that
nothing but the cost of the service should be a factor, and the value
of the service to the Government should not be a factor.
The CHAIRMAN. In that connection, in order that no mistake may
appear in your testimony, do you refer in your remarks to the Inter-
state Commerce Commission or do you refer to this committee?
Mr. WORTHINGTON. Your committee. !
The CHAIRMAN. I would not want to put the committee in that
attitude. I know not what the committee's opinion or impression
may be. That is only my impression and not a conviction.
Mr. WoRTHINGTON. Well, I will modify my remarks to that ex-
tent—that is, what I have just said. . But Senator Bourne gave the
impression to me to-day that he individually considered that the cost
of the service was the prime factor as to the amount the Government
should pay rather than the value of the service to the Government.
Is my understanding correct, Senator?
RAILWAY MAIL PAY. 369
The CHAIRMAN. Yes. That is my present impression.
Mr. WoRTHINGTON. We have always maintained, you know, there
are a great many factors in our rate cases, not alone the cost of Serv-
ice but value of service to the Government; the value of the com-
modity and everything else ought to be considered. In other words,
we might take a railroad plant worth $60,000 a mile and another
railroad of the same value, and one of them might be performing
double the service with its plant that the other road is, and I have
always maintained that that line is entitled to a larger percentage of
profit, whereas on a cost basis purely the two railroads would be
allowed the same profit, no matter how much service they happened
to render, because it would cost them alike. It is the same as Mr.
Lorenz’s proposition—two men running two stores on two corners
opposite each other, their plant might be worth the same, but one
man might have three or four times the business the other fellow has,
and he would think he was entitled to a little more money.
The CHAIRMAN. That is the wholesale and retail principle, is it
not -
Mr. WoRTHINGTON. Exactly.
The CHAIRMAN. Is not your wholesale and retail principle covered
in the present laws in a sliding scale of compensation based on rates?
Mr. WoRTHINGTON. The present law recognizes that.
The CHAIRMAN. Would it not be equally recognized in the sug-
gested plan as modified by former Postmaster General Hitchcock
under the space basis?
Mr. WoRTHINGTON. I do not think so, Senator, because under that
plan, as I understand it, the railroads would be allowed a certain
fixed return on their cost, no matter how much they might transport.
If their service to the Government should increase space, for exam-
ple, they should be allowed a greater return on their cost above the
6 per cent or 4 per cent, no matter if the volume of their business
should double. Is not that true?
The CHAIRMAN. Why? They would require double the amount
of space, and the space would determine the amount that they would
receive. The basis of computation is revenue on cost and capitaliza-
tion; the apportionment of that basis is on the service rendered.
The service rendered is measured according to the space furnished
and used.
Mr. WoRTHINGTON. Plus a fixed allowance on the investment, as I
understand, in addition to the operating expenses.
The CHAIRMAN. What was your viewpoint, Mr. Lorenzº
Mr. LORENZ. There are two ways of looking at it. If you take the
position that a public utility is entitled to the cost of the service
which it renders, in addition to a reasonable return on capital and
a provision for Surplus, then it seems to me the mere fact that one
road might be rendering more service because there was a better
loading per car is not to be considered except in so far as that in-
creased loading per car causes more expense; to some extent, I sup-
pose, the denser traffic would cause more expense to each road, and to
that extent the cost basis would take it into account. But if the Post
Office Department can obtain better utilization of the cars, that would
seem to me, from that cost standpoint, a matter of profit or advantage
to the Post Office Department, and properly so.
370 RAILWAY MAIL PAY.
Mr. WoRTHINGTON. In other words, you think the railroads should
not be entitled to any of that advantage? -
Mr. LORENZ. I think not, if your purpose is to base your compen-
sation upon the complete cost, including a provision for surplus, to
the public utility. -
Mr. WoRTHINGTON. In other words, if the Government in one of
our cars should load 25 tons of mail, you do not think the railroad
should get any more compensation than if that car was loaded with
only 1 ton of mail?
Mr. LORENZ. Not except in so far as that increased weight of mail
required more expense in handling or hauling it. -
Mr. WORTHINGTON. But for the transportation of that 25 tons
you would not allow the railroad any more than you would for a
single ton on the same car, I suppose?
Mr. LORENZ. Not except as you can prove that the increased weight
increased the train expenses, more fuel and more lubricants. It
takes more fuel. Certainly to that extent the cost basis would pay
you more for hauling such a car. - -
Mr. WoRTHINGTON. Very little. -
Mr. LORENZ. In other words, it seems to me your objection there
is not to the cost basis so much as the straight space basis. In other
words, you yourself suggested in your paper, I think, a comparison
On the basis of the gross weight of car and ton, and I think from
One standpoint that would be fairer than a straight space basis, but
it may be less practicable than the other.
Mr. WoRTHINGTON. Under the proposed apportionment of ex-
penses, which you say the commission may order, would not that ap-
ply only to the apportionment between freight and passenger serv-
ice? Is not that all the commission has in mind. They have not in
mind making a further apportionment between the different classes
of passenger service?
Mr. LORENZ. I, of course, do not know what the commission has
in mind, whether they will enter upon that policy, but so far as the
order which they have issued is concerned it is true that relates
only to freight and passengers, but if they enter upon that policy
it would be but a slight extension of the general principle and indeed
would be doubtless desirable to have an apportionment to the various
parts of the passenger train service.
Mr. WoRTHINGTON. In order to make that further apportionment
to the mail service, would it not be necessary for railroads to keep
records of space in the trains at all times in order to comply with
the commission's requirements in applying the expenses of mail
service, if we have to go further?
Mr. LORENZ. It would require that much additional accounting
undoubtedly, either a current record or a record obtained by taking
the space at a certain date a certain number of times a year, or some-
thing of that sort. -
Mr. WoRTHINGTON. In other words, the railroads should, by the
mere expedient, for example, of lengthening out the size of their
passenger cars, it would reduce the proportion which they would
receive for mail, assuming that their mail cars were not of similar
Mength ?
Mr. LORENz. That doubtless is one objection to the space basis and
may not be the fairest basis.
a – RAILWAY MAIL PAY. 371
Mr. WoRTHINGTON. We have been putting on longer cars. I guess
we will have to shorten them up to get more pay for mail on the
space basis.
The CHAIRMAN. In railroad operations, is it not a fact that it is
desirable to have in your passenger trains cars of a uniform length?
Mr. WoRTHINGTON. That does not make so much difference, Sen-
ator. The Pullman Co. are getting cars pretty long.
The CHAIRMAN. Do you not build your passenger cars, your mail,
and your express cars a uniform length; I mean your new cars?
Mr. WoRTHINGTON. We have different lengths. We have different
standards. We have a 60-foot baggage car and a 70-foot baggage
car, and of course the sleepers are around 75 feet now. The dining
cars and observation cars are about the same length.
The CHAIRMAN. I would like in this connection to ask Mr. Lorenz
if he thinks the wholesale and retail feature, as provided for in the
varying compensation based on weight from 200 pounds minimum up
to 48,000 pounds and excess under existing laws, would be similarly
taken care of and provided for in the suggested plan of former Post-
master General Hitchcock?
Mr. LORENz. It would be taken account of to a considerable extent;
that is to say, to the extent that increased density of the traffic lowers
the cost per car-foot mile or increases the load per car-foot mile at
the same cost. But I am not convinced that that is a very great
difficulty. At any rate I should like first to see some statistics re-
garding the trend in the average loading per postal car or per
storage car. My impression is the loading per car is not very great
in the postal service.
Mr. WoRTHINGTON. I should not think it would be very great
unless it would be possible for the department to do away with some
of the distribution; in other words, to increase the proportion of
tonnage handled in storage cars. I think, though, as the country is
growing, judging from the past, we know there has been a large in-
crease in second-class matter, and it is my impression there is a larger
percentage in those cars now than formerly; if so, it means the
weights per car foot are more now than formerly, because that
weight comes in to be divided by the total car-foot space. So, even
though there is no real increase in the loads in the postal car, there
may be an increase in the weight per foot, due to the fact that more
mail is handled in storage cars.
Mr. LoRENz. I should like to come back to your suggestion of
geographic groups rather than groups of density of traffic. Would
it do justice as between the various railroads in any one group, hav-
ing in mind, for example, a branch road, a very small road with very
sparse traffic and a main-line road in that same geographic group
with a dense traffic? Would not there be an injustice upon any
uniform payment within that group.
Mr. WoRTHINGTON. I should think the injustice, if any, would be
against the heavy traffic line, if the branch line was to get the same
pay per car-foot mile.
Mr. LORENz. The injustice, however, would exist against some of
the lines.
Mr. WoRTHINGTON. Yes; but I think that would be far less in-
justice than in the original plan of having different rates for differ-
ent roads under that plan. The branch line would have to compete
372 RAILWAY MAIL PAY.
with the large system which would have a number of branches, one
of which branches might parallel this independent branch line and
which would be sufficient to shut it out altogether from handling all
mail, because the branch it competes with is part of the large system
which would have the advantage of the lower cost, figured for that
SVstem. - 4
yº, CHAIRMAN. You say, Mr. Worthington, “I should think the
injustice, if any, would be against the heavy traffic line, if the branch
line was to get the same pay per car-foot mile.” Does the branch
line get the same pay per car-foot mile under this contemplated plan?
Mr. WoRTHINGTON. Under a group plan it would. •
The CHAIRMAN. Under the suggested plan? The pay that the
branch line would receive would be a percentage on the capital cost
and a percentage of the operating expenses of that particular branch
line, measured on the car-foot mile of space taken or authorized by
the department.
Mr. WoRTHINGTON. Well, not under the plan of grouping the
roads, Senator. All the roads in a particular group would be taken
together, all of their expenses and their fixed charges would be taken
together and a uniform rate made for that group, as I understand.
Is not that correct, Mr. Lorenzº
Mr. LORENZ. The Senator's question applies to the modified plan
as proposed by the ex-Postmaster General. There, it is true, you
would take the operating expenses and the capital charges of each
particular road by itself and my objection would not hold, but what
we were discussing was that to avoid the difficulty and complexity
of taking each road by itself, we would take one group of roads in
a geographic district and find the average cost upon all the roads
in a district and proceed in the same manner. The question is
whether that average cost Would not be injurious to some roads and
unduly advantageous to others in that same district.
The CHAIRMAN. The cause of the difference in the value received
from the money invested in capital in different roads and the differ-
ence of efficiency of administration and operating costs. Is that it?
Mr. LORENZ. This would be among the reasons. I had in mind
especially the difference in traffic density which might effect the
charges per car-mile, so that if the average for the whole geographic
group gave you a reasonably low cost per car-foot mile, that might
be an injustice to that road with sparse traffic which had a high
cost per car-foot mile in that same district.
The CHAIRMAN. And such injustice does not apply, then, under the
present method of weight carried ?
Mr. LORENZ. No, sir. The present method of weight is supposed
to take account of the different density upon each road.
Mr. WoRTHINGTON. Is it not a fact now the light-traffic roads get
iess per car-foot mile than the heavy-traffic roads, or do they get
more?
Mr. LORENZ. I think that the present method may, in some cases,
work out unjustly.
Mr. WoRTHINGTON, Would it not be equally unjust, under the prop-
osition, of having different rates for each road? For the small-traffic
line I pointed out the situation before. If cases where the small-
traffic line had to compete for mail business with the branch of a
large system they would be at a disadvantage. Would it not, in that
RAILWAY MAIL PAY. 373.
case, have to either come down to the low rate of the branch of the
. system or go without handling the mail, speaking of the little
1’O3,Ol. *
Mr. LORENz. If the department attempted to make them complete,
I suppose that is true. ,
Mr. WoRTHINGTON. Is the department liable to give mail to a road
where the rate was materially higher than to another road between.
the same points? -
Mr. LORENz. I suppose the larger proportion of the mail would
go upon a certain mail route, irrespective of the rate. I do not know
what proportion of the total that would be.
Mr. WoRTHINGTON. Do you not foresee a great many difficulties
and a good deal of accounting in the plan proposed by ex-Postmaster
General Hitchcock to determine a different rate for each of the
different roads in the United States on a cost basis?
Mr. LoRENz. It would occasion many accounting difficulties, un-
doubtedly, and possibly might not be expedient unless it could be
made a part of some general system of accounting so that it would
be determined more or less automatically each year.
Mr. WoRTHINGTON. It seems to me until such time as the com-
mission does require the railroad to apportion their expenses in this
manner, that it would impose additional expense on them to do it
merely for the mail. It may be the commission may decide not to
ask the railroads to apportion expenses between passenger and freight
at all. If that is so. I think all expenses would be chargeable, if it is
done primarily to determine the mail cost, to this bill.
Mr. LORENz. A short cut might be justified for some years, but it
would not be recognized as being the permanent solution.
Mr. WoRTHINGTON. I do not think a short cut would be equitable
to different railroads. If you are going to base the pay of the mail
on cost, I think the cost ought to be very carefully determined.
Mr. LORENz. How, if you retain the present law, would you do
justice as between the various railroads? I think it is commonly
stated that the present law works inequitably as between different
railroads, that some railroads get more perhaps than they ought and
others less. *
Mr. WoRTHINGTON. I think there is a good deal of misunderstand-
ing on that point, and I think that misunderstanding was added to by
the figures presented in Document 105, whereas certain roads show-
ing they are incurring large losses, according to the method of sub-
dividing expenses between passenger and freight, would produce
quite a different result.
Mr. LORENz. But is it not shown that certain railroads actually
pay out for the expenses difinitely assigned to the mail service, tak-
ing the time of employees, and so forth, into consideration more than
they get in actual revenue?
Mr. WoRTHINGTON. No. I never heard of that. I never heard of
any road presenting a statement of that kind. They may have done
so. I do not think any road could actually show they had paid out
more in service to the employees than they got for the mail, unless it
was a very short line with large terminal services, I do not know of
any important road that has done that. -
Mr. LORENz. In order to eliminate that particular difficulty would
you make a separate consideration of the terminal service?
374 RAILWAY MAIL PAY.
Mr. WoRTHINGTON. Yes. I think the proposition of the railroads
that the roads should receive relief for side and terminal handling
would cover that point. It would cover the cases of the small roads
which had an enlarged amount of terminal or side delivery. Other-
wise, I do not see anything particularly inequitable between different
roads on a present basis of pay. They are all paid on the same basis,
and I am saying that from the standpoint of a road where operating
costs are high, as they are on the Southern Pacific.
Mr. LORENZ. But is it not true that the proportion of storage mail
and apartment car service is different on different roads?
Mr. WORTHINGTON. Oh, yes. -
Mr. LORENZ. And would not a straight tonnage payment basis
work injustice on that account?
Mr. WORTHINGTON. Perhaps that is offset by the present law pro-
viding for a material reduction in rates per ton-mile as the weight
increases. The result of that is on 70 of the heaviest traffic routes
the rate per ton-mile is 6 cents, and on 33 of the routes it is 14 cents,
and the 70 routes are receiving just half the amount of the other
routes and they are hauling two and one-fifth times the ton mileage.
Mr. LORENZ. Would you say that was injustice to one group or the
other group 3 -
Mr. WORTHINGTON, Well, that is rather a difficult thing to say
without going into the work done on those 70 groups as compared
with the work done on the others.
Mr. LORENZ. In other words, you come back again to the com-
pensation for the work done on the cost basis before you can tell
whether an injustice is done to one group or the other group. You
come back to the work done? *
Mr. WoRTHINGTON. You necessarily have to take into consideration
service rendered; yes.
Mr. LORENZ. And that has to be measured not by the ton-miles,
because that is in your computation?
Mr. WoRTHINGTON. The cost basis is not so objectionable in itself,
but it is objectionable on account of the impracticability of obtaining
it, so far as I know, in any definite manner, except by estimates for
the larger part of the expense. If cost was a matter of known de-
termination, if it was absolute and we knew just what it would cost
for passenger and mail service, it would be an entirely different
thing, but we do not know that.
Mr. LORENz. Subject to your claim that the railroad ought to get
the benefit of the economy in loading, even if it did not cost any
more?
Mr. WoRTHINGTON. That has not any particular connection with
the cost basis. That is connected with the space basis. The objec-
tion to the cost basis is it is impracticable, or rather the fact that it is
a mere guess. It is not any more than a guess. It can not be dis-
tinguished by anything better than that. f
The CHAIRMAN. Must it always necessarily be a guess?
Mr. WoRTHINGTON. I think so.
The CHAIRMAN. You think it is absolutely unattainable?
Mr. WoRTHINGTON. It is absolutely a guess, and that is all it is.
It is a question of how one man guesses as compared with another,
when you come down to fixed expenses, and how much capital charged
should be apportioned to the mails.
RAILWAY MAIL PAY. 375
Mr. LoRENz. Is the word “guess” a suitable term? Would it not
be better to say it is a matter of judgment as to the fair measures or
utilization of common facilities? For example, suppose we rented an
office together for $50 a month. There is a joint expense for a com-
mon facility. We have before us a statement of the number of square
feet of that office that each of us has used, and if we told a body of
umpires that we wanted a fair method of dividing that $50 between
us, and it seemed to them that the floor space, considering that you
had the same amount of other advantages in the office, was a fair
measure of division, could you say that that was a guess?
Mr. WoRTHINGTON. I think that is an entirely different proposition.
You have something to work on in that case.
Mr. LoRENZ. Let us see whether you haven’t something to work on
in the other case. Take for example the rails, the track upon which
the trains run. There you have a common facility which causes a
common expense. That track is utilized by passenger and freight
trains. For a certain distance on each end of a train you may say
the track is monopolized by the train passing over it. However, the
amount of monopolization seems to depend on other factors than the
mere presence of the train, because a train moving rapidly will
monopolize a given space a less time than a train moving slowly. In
other words, by presenting to a judicial mind all of the reasons why
on a given railroad the passenger service gets more utilization, you
might say, out of that track than the freight service does, could you
say that the final judgment rendered as to the proper basis of division
was a mere guess?
Mr. WoRTHINGTON. Would you consider in that case—a proper
basis—a train-mileage basis a proper one?
Mr. LORENz. I would not attempt here to say what is a proper
basis, but my point is that after hearing the arguments in favor of
the various bases, a fair determination of what seemed a fair basis
would not be in the nature of a mere guess.
Mr. WoRTHINGTON. But haven’t you formed in your own mind any
preference or any inclination toward any measure for proportioning
expenses of that kind?
Mr. LORENz. Not any definite conclusions, although it seems to me
that the basis which pays some attention to the weight carried and the
speed with which it is carried would perhaps be not so extreme in the
one direction as train-miles, or so extreme in the other direction as
car-miles, and might possibly form the basis for a compromise, but I
am not prepared to state just what the conclusions should be. It
seems to me any result we arrive at would not be wholly a guess, but
it at least could be defended as not being capricious or wholly unfair.
Mr. WoRTHINGTON. I think if some local railroad man familiar
with the conditions on his own railroad, or some one else unbiased who
was familiar with the conditions on that particular railroad, might
be able to make a fairer estimate: but if the duty is given to one man
or one body of men to fix a basis to be applied to all the railroads of
the United States, I think you can hardly distinguish it in any other
term than as a mere guess, because the man making the basis has ro
knowledge whatever of the conditions on the different railroads; he
possibly has not had any practical railroad experience, and it seems
to me rather a stupendous proposition to put up to him. A great
part of the operating expenses represent decay or obsolescence. Only
376 FAILWAY MAIL PAY.
a portion of tie renewal is due to crushing out under the wheels and
rails, and a good part of it is due to decay materially the same as to
structures, fencing, and things of that sort. Now, for any man to say
what basis of apportionment those expenses should be between pas-
senger and freight, it is hard to conceive of. -
Mr. LORENZ. It is obvious to me neither the passenger nor the
freight trains cause the decay of the ties. As you say, it is due to
the weather stress. But do they not utilize those ties while the
trains are passing over them, and possibly for that portion of the
expense the train-mile basis would be a fair one. In other words,
instead of trying to determine the extent to which each one causes
* expense, try to determine the extent to which each one utilizes
this. v-
Mr. WoRTHINGTON. This expense aggregates to a considerable
amount, and it may make quite a difference whether you use one
basis or another, whether you use train mileage or earnings. The
aggregate of these operating expenses is large. Take, for example,
the flood damage to the railroads in Ohio. The cost of repairing
them is going to be from $25,000,000 to $50,000,000, possibly, on all
of the railroads. How would you apportion work of that sort be-
tween passenger and freight?
Mr. LORENZ. That is simply an illustration of expense caused by
weather stress, we will say, and would be apportioned on a basis
measuring the use which each class of service made of this track
which would have to be repaired. V.
Mr. WoRTHINGTON. Now, consider return on investment, those ex-
penses are about 50 per cent as large as the entire operating expenses
and as to that large proportion of the expenses which would have
to be used in making the mail rate there is absolutely no definite
basis of apportionment. It is altogether a matter of judgment.
Mr. LORENz. I think the capital charges are not quite so difficult
in theory as frequently represented. If you can apportion the main-
tenance of way and maintenance of the different charges between
the two services in any satisfactory way at all the interest on the
capital invested in the property maintained might be apportioned
in the same ratio. . In other words, you simply apportion capital
charges in the same manner in which you apportion maintenance
charges. -
Mr. WoRTHINGTON. Is not that a mere approximation?
Mr. LORENz. Doubtless.
Mr. WoRTHINGTON. Some one else might come along who had au-
thority and apportion them on a train-mile basis or on a mainte-
nance basis.
Mr. LoRENz. Of course these different bases, as I say, have to be
presented and defended. * 2’
Mr. WoRTHINGTON. In other words, I think you have to admit it
would be within the power of the individual or the commission who
fixes the mail pay on this basis to change that from 10 or 20 per cent
by specifying changes in the method of apportioning expenses. I
thing that is so. ^- 3.
Mr. LORENz. I think it doubtless is true that if the body which is
important enough and which has authority enough to determine
the basis in the first instance, believed that the new basis was better,
RAILWAY MAIL PAY. 377
why then the whole matter should be so decided and it would be
entirely proper.
Mr. WoRTHINGTON. That is our real objection to the cost basis.
There is too much a matter of approximation.
The CHAIRMAN. Too much personal equation.
Mr. WoRTHINGTON. Too much altogether. -
The CHAIRMAN. The discussion between you gentlemen seems to
be whether it will be an approximation or a guess.
It is now time for adjournment and we will meet again to-morrow
morning at 10.30 o'clock.
Thereupon, at 5.30 o'clock p. m., the hearing was adjourned until
10.30 o'clock a. m., Friday, March 28, 1913.
FRIDAY, MARCH 28, 1913.
COMMITTEE ON SECOND-CLASS MAIL MATTER,
Washington, D. C.
The hearing was resumed, according to adjournment, at 10.30
o'clock a. m.
Present: Senator Jonathan Bourne, jr. (chairman), and Senator
John W. Weeks.
The CHAIRMAN. I had expected that General Stewart and Mr. Mc-
Bride, as representing the Post Office Department, would be present
at both the hearings held yesterday and to-day, but because of the
awful catastrophe of floods and tornadoes in the Middle West it was
impossible for them to leave their office because of the duties devolved
upon them in endeavoring to handle the mail or route mail in accord-
ance with the changed conditions incident to the catastrophe. The
committee realizes the desirability of having representatives of all
parties at interest present at the hearings of this kind, and will fur-
nish the departmental representatives later an opportunity of giving
comments upon testimony submitted yesterday and testimony to be
submitted to-day by representatives of the railroads and Mr. Lorenz
as associate statistician for the Interstate Commerce Commission.
For the purpose of expediting the hearing and getting a better
interchange of ideas by initiating a running debate between the
parties at interest here, I suggest and will request you gentlemen who
wish to express your views in the study to-day to be sworn.
Thereupon the following were duly sworn by the chairman: Mr.
Ralph Peters, chairman of the railway mail committee; Mr. V. J.
Bradley, general supervisor of mail traffic of the Pennsylvania Rail-
road system; Mr. W. W. Safford, general mail and express agent,
Seaboard Air Line Railway; Mr. Russell H. Snead, manager of ex-
press traffic of the Chesapeake & Ohio Railway Co.
The CHAIRMAN. Gentlemen, I will read a memorandum in the
nature of a suggestion submitted to me by Mr. Lorenz, the associate
statistician of the Interstate Commerce Commission, presenting views
or thought for consideration, and I would like to take them up for
discussion.
378 RAILWAY MAIL PAY.
POSSIBLE PLAN FOR RAILWAY MAIL PAY LEGISLATION.
1. It is inexpedient to have the Post Office Department determine the cost and
apply that Cost to each case, because that might do injustice in many cases
Where there is something peculiar or abnormal about the average cost. The
cost results should have weight, but not in an inflexible way.
2. It is at present inexpedient to turn the whole matter over to the Interstate
Commerce Commission because its annual report form has not yet been suitably
developed. -
3. From the compilation of cost data by the Post Office Department, as given
in DOCument 105 and from a comparison of car-mile earnings, the committee
may form a judgment that the railways are underpaid and about how much,
additional they should receive. '
4. From the preceding a judgment can be formed as to the fair amount which, .
On an average, for the country as a whole, a car-foot mile should earn.
5. The Committee then could prepare a table showing for each of the 795
roads for which the Post Office has contracts such facts as the following: The
passenger-train densify, mail density, passenger-train car-mile revenue, cost as
determined by the Post Office Department, etc.
6. Then they could say and actually state in the law what would be a fair
rate to pay per Car-foot mile for each of these roads, having taken into account
the factors mentioned under paragraph 5. The roads could be given a chance
to point out injustices, as could also the Post Office Department.
7. This rate is to remain in force five years. -
8. The Interstate Commerce Commission shall be directed to modify its annual
report form SO as to yield the best possible information regarding the cost of
carrying the mails.
9. As soon as practicable the commission shall report to Congress a compari-
son of the rates prescribed in the law with the cost as determined from the
improved annual report form.

Those are concrete suggestions emanating from an individual and
I think this a very valuable way of proceeding in this study, of not
making criticisms but making suggestions as they occur to the differ-
ent individuals interested in the subject and then taking them up and
discussing them either in informal hearings or in a formal hearing
like the present. This, as I understand, in no way represents the
opinion or views of the Interstate Commerce Commission but repre-
sents ideas that have come to Mr. Lorenz in a few weeks’ study and
close attention which he has given this subject. Mr. Lorenz has been
in conference with the committee nearly every day and with the
representatives of the Post Office Department and with..some of the
representatives of the railway mail-pay committee. Taking these nine
suggestions, Mr. Worthington, and looking them over, what comments
would you have to make regarding each one?
Mr. WoRTHINGTON. Well, I think without doubt Mr. Lorenz in
preparing these suggestions has aimed to be fair, but I think there is
a very serious objection to the third one. e -
The CHAIRMAN. Let us take them up seriatim. What do you Say
of suggestion No. 1%
Mr. WoRTHINGTON. I think that is correct; that it is inexpedient
to have the Post Office Department determine the cost. -
The CHAIRMAN. You concur in that?
Mr. WoRTHINGTON. I concur as to the first suggestion. The
second one, if the commission is to take into consideration the mat-
ter of cost, I would very much prefer that they would consider a
compilation made by authority of the Interstate Commerce Com-
mission rather than one made by the Postmaster General, which
can hardly be regarded except as biased, in my opinion.
RAILWAY MAIL PAY. 379
The CHAIRMAN. By the “commission ” you mean the joint con-
gressional committee?
Mr. WoRTHINGTON. The joint congressional commission; yes, sir.
As to the third suggestion, I think it would be unfair to the rail-
roads for this commission to reach their conclusion as to the rate
of compensation for mails from the evidence contained in Docu-
ment 105. I do not see any reason why they should give any greater
weight to that separation of expenses, as to freight, passenger, and
mail, than they should to that made by the railroads. In other
words, this means that they shall give no consideration at all to
the figures considered by the railroad. -
Mr. LORENZ. Perhaps you misunderstood me there. I mean from
the data contained in Document 105, rather than necessarily the
interpretation put upon this data by the Post Office Department.
Mr. WoRTHINGTON. It says: -
Erom the compilation of cost data from the Post Office Department as given
in Document 105. -
... Mr. LORENz. I did not state just what I meant. I assumed that
the interpretations put upon that data would be subject to argument.
Mr. WoRTHINGTON. I think the cost data in Document 105 is so
wholly unreliable it can not be used in fixing mail rates, and I think
that has been demonstrated by the evidence we have put in.
Mr. LORENz. Perhaps the Post Office Department would welcome
that view, inasmuch as that document seems to demonstrate the fact
that the railways are underpaid.
Mr. WORTHINGTON. I do not think this commission ought to be
guided entirely by the Post Office Department.
The CHAIRMAN. In that connection, taking the whole of the nine
suggestions made there by Mr. Lorenz, such impression as you have
indicated was not left on my mind at all. On the contrary, as Mr.
Lorenz has stated, his idea was simply to take the information which
was submitted by the railroad companies as presented, in part at
least, in Document 105. .
Mr. WoRTHINGTON. If Mr. Lorenz would amend his suggestion
by including in the consideration the cost data submitted by the
railroads, I should think it would be all right, and not as amended
by the Post Office Department.
Mr. LORENZ. Certainly; that would be the idea.
Mr. PETERS. If Mr. Lorenz would add one other section there as
helping you in the study of this question, the rule adopted by the
Post Office Department in fixing the allotment of space on the
trains --- -
Mr. WoRTHINGTON. I think that is very important.
Mr. PETERs. We differ in our conclusions on the information sub-
mitted in Document 105, because we did not know the method
adopted by them in assorting that space after we had reported it.
We allotted the space to the best of our knowledge and belief based
on the facts. -
The CHAIRMAN. Based on your experience and according to the
custom usually used in your operation. * - *
Mr. PETERs. Our observation of how the mails were handled.
When that space went in the department took hard and fast rules,
were allowing us to have only a 40-foot car, yet they were using a
380 RAILWAY MAIL PAY.
60-foot car and they were paying for 40, 50, or 60. We counted in
the entire size of the car. To make any sort of comparison we
should have the rules that govern them or must have a statement of
the space that they are allowed for each of the routes. Then we
can make a comparison between the space that they allow, how they
got their space in comparison with the space that we counted. -
Mr. LORENz. Undoubtedly those different interpretations should be
considered and not be ignored by simply taking the result of the
Post Office Department. I agree with you thoroughly. -
Mr. PETERS. I think that suggestion ought to go in as one of the
vital features in this discussion.
Mr. SNEAD. There is one thing that occurs to me, and that is,
Document 105 was the first compilation of the Post Office Depart-
ment. It was also the first report rendered by the railroads under
the particular forms furnished by the department and I never saw
a change yet in which the first reports were of any particular value.
I would not base any conclusions upon the first reports that were
rendered by anybody. They are unfamiliar with the forms, every-
one does not construe the construction alike, and as you no doubt
know by your own experience it is not the proper way. When I
was with the commission, the first reports we received for almost
any class of carriage were totally worthless for the purpose of com-
pilation. The post-office employees themselves would differ about it.
It took some ruling to settle those things and undoubtedly the same
question came up in the carriers' office here, and no representative
would construe instruction on any form in one way, and would fill
it out accordingly. Another would construe it in possibly an en-
tirely different manner. This is a vital matter, and I do not think
any conclusion based upon the methods developed in this one docu-
ment would be very good for anybody.
Mr. WORTHINGTON. Is it not a fact that since November, 1909,
there have been further reductions in mail pay on account of the
divisor in some of the routes. In other words, they were not in effect
on all of the railroads at the time, November, 1909, so that to-day
the mail pay is really less per car-foot mile than is shown in that
document. -
Mr. SNEAD. Because other roads in these sections are coming in
under the divisor law. .
Mr. WoRTHINGTON. So it really ought to be essential to make a new
compilation up to the present time. The R. P. O. car pay has been
decreased 25 per cent on our lines within the last year. •
Mr. SAFFORD. The railroads are not able, for a number of reasons,
to withdraw those cars. The department cuts out the space and the
allowance for space, but we will have to operate the car because we
are not able to take it out of the train at the point where they cut
off our pay. For instance, they are operating 70-foot cars from
Washington to Jacksonville.
The CHAIRMAN. On the Seaboard Air Line?
Mr. SAFFORD. On the Seaboard Air Line; and we only get pay for
those cars to Hamlet. In other words, we are operating those cars
over our own track 640 miles, approximately, and we are getting pay
for them for only 258 miles.
The CHAIRMAN. The reason being what?
FAILWAY MAIL PAY. 381
Mr. SAFFORD. The Postmaster General determined in his judgment
what was necessary to pay for that car space, and decided that the
service could be performed in a 30-foot car south of Hamlet. As a
matter of fact, we could not withdraw the car, so they are still get- .
ting the space in the service from us and our space stops for 384 miles
this side of the operating run of the car.
The CHAIRMAN. You operate what distance?
Mr. SAFFORD. Six hundred and forty-odd miles.
The CHAIRMAN. You get pay for how many miles?
Mr. SAFFORD. Two hundred and fifty-eight; and for operating rea-
sons it is absolutely impossible for us to withdraw that car at the end
of the 258 miles. *
The CHAIRMAN. Do you carry mail all of the 640 miles?
Mr. SAFFORD. The whole way—mail and clerks.
The CHAIRMAN. And you only receive pay for carrying the mail
258 miles? r
Mr. SAFFORD. That is all.
Th; CHAIRMAN. The reason being what, as presented by the depart-
ment'ſ w
Mr. SAFFORD. They could perform the necessary distribution for
the last 384 miles of this route in a 30-foot apartment car.
The CHAIRMAN. But they do perform the necessary distributions
for the whole 640 miles in the car that you furnish?
Mr. SAFFORD. Absolutely; yes, sir.
The CHAIRMAN. They call for a car for 258 miles of the size you
furnish them?
Mr. SAFFORD. We furnish them 10 feet more than they ask for.
The CHAIRMAN. What do they ask for?
Mr. SAFFORD. Sixty feet. That is the maximum authorization, the
maximum length of car provided for in the law, at the present.
The CHAIRMAN. They ask for a 60-foot car for 258 miles?
Mr. SAFFORD. Yes, sir.
The CHAIRMAN. And for the remaining 384 miles they pay for
only 30 feet? -
Mr. SAFFORD. That is all they say they need for the purpose of their
distribution. At the same time it would be impossible for them to
transmit the mail in the 30-foot car. They can not carry their work-
ing mail for local delivery in a 30-foot car.
The CHAIRMAN. That is for the 384 miles for which they only ask
for 30 feet? - ~.
Mr. SAFFORD. Yes, sir.
The CHAIRMAN. You say if it were possible to transfer at the end
of 258 miles for which they call for a 60-foot car, the mail remaining
in that car at the end of 258 miles, into a 30-foot car, that 30-foot
car would not contain the mail thus transferred and enable the postal
department to work the mail on the 384 miles remaining of the 640-
mile route.
Mr. SAFFORD. Absolutely not, in my judgment, after careful inspec-
tion of the circumstances.
. The CHAIRMAN. Have you presented that view to the Post Office
Department? *
Mr. SAFFORD. Yes, sir.
The CHAIRMAN. What reply have you received?
382 RAILWAY MAIL PAY.
Mr. SAFFORD. There has not been any reply. As I understand, the
two division superintendents are riding up and down the road to
find out whether or not the conditions can be taken care of under the
present authorization.
Mr. PETERS. Senator, Mr. Albright in his testimony called atten-
tion to pretty nearly the same situation on the Coast Line where they
were handling mail into Jacksonville they have to run those cars
through from Washington to Jacksonville, but the pay for the car
ceases Several hundred miles east of Jacksonville. It ceases, I think,
at Fayetteville, N. C. The department ruled that mail should be
handled in a 30-foot car. To stop those trains in the middle of the
run, cut out the postal car, substitute an apartment car and transfer
mail means a great delay and at the same time they would not have
a car that would accommodate the mails. That was the result of an
overzealous effort to reduce the expenses of the department, and I
think they realized they carried it too far, and I think those are
things that they will correct. I have seen a statement to the effect
that on the Chesapeake & Ohio there are several rulings where a
through car from Washington to Cincinnati is rated as a 60-foot
car on one end of the line and a 40-foot car on the other end of the
line and a 30-foot car on the other end, yet the same car runs through.
The CHAIRMAN. All of you gentlemen representing the railroad
companies, I assume, must concede that the departmental representa-
tive has got to be the individual who will determine the amount of
space that the Government requires to transport the mail, and that
the Government should only pay for such service as is requested by
the governmental representatives. I assume from the testimony that
we have had that it is your contention that the facilities that the
railroad company itself possesses should be a factor in considering
the compensation received ? -
Mr. PETERs. And in the facilities that we originally furnish at the
request of the Government and subsequently curtailed by the Govern-
ment without any ability on the part of the railroad to curtail it.
The CHAIRMAN. Would you hold, if the Government had made a
requisition on a railroad for cars under the present or any other
modified system, that the Government would be bound, or should be
bound, either legally or ethically, to continue rendering compensation
to the railroads for those cars even after they were not used by the
Government in the transportation of mails because of a changed
condition?
Mr. PETERs. Oh, no. -
Mr. WoRTHINGTON. I think in practice the volume of mail is gen-
erally increasing all the time rather than decreasing, and after a
car has once been provided at the request of the Government on a
route the volume of mail in that route as a rule does not diminish,
and if the Government owned those cars themselves and the rail-
roads ran them it is not very likely the Government would cast them
aside and build new cars for the purpose of cutting down the space,
say, 10 feet.
The CHAIRMAN. No. If the Government owned the cars they
would simply transfer them to the other routes to which the mail is
diverted, but if the railroad owned the cars, as they do to-day, and
the Government pays them a cqmpensation for the use of them, you
mean that the Government should continue that compensation,
RAILWAY MAIL PAY. 383
assuming that the life of the car, as I understood you to state in
your testimony of yesterday, was practically 30 years or a little over,
if the Government only used those cars 10 years, that they should
continue to pay for the whole 30 years? -
Mr. WoRTHINGTON. Not at all. But I think they should be han-
dled within reasonable limits. There should not be an arbitrary
10 feet of space cut off of that car pay when there is not any change
of density on the route after the car has once been requested, but I
think in most cases that has been done. It has not been due to any
diversion of traffic from one route to the other.
The CHAIRMAN. Suppose a railroad discontinued the fast-mail
trains and because of that discontinuance there is a large amount
of mail matter that has to be taken care of by other roads, and that
mail is diverted to the other roads. There is a change in your density
of traffic.
Mr. WoRTHINGTON. I think you are entirely right, but that is a
different condition.
The CHAIRMAN. These conditions are liable to be changed. You
just take the risk on the assumption that the mail is going to steadily
increase and you believe that the efficiency of your service will result
in the continuance of your getting your portion of the mail and your
proportion of the accumulation incident to the development of the
country. Now, the Government should not pay that. That is a
risk that you take in your business. That is a risk that the indi-
vidual management takes and there should be no compensation for
that from the Government.
Mr. PETERs. That is very true, but there is no pay allowed for
apartment cars, and in the effort to bring about economy they
order in a 30-foot apartment car that they do not pay for, which
results in the railroad having to continue the 60-foot car and count
it as a 30-foot car and get no pay for it. -
The CHAIRMAN. Then, without any reflection on any individual
representative of the Government, I assume Mr. Safford's concrete
illustration here on the Seaboard Air Line brings him to the conclu-
sion of the possibility of a governmental representative taking ad-
vantage of a situation in the interest of economy of the management
of the department under his administration.
Mr. PETERs. Which should always be done.
The CHAIRMAN. With no recourse on the part of the railroads.
Mr. PETERs. The department should always take advantage of
every opportunity to reach economy, but they should have due re-
gard to the service and to what is just to the other party to the
contract. Now, it is impossible to stop these through trains, shift
our cars, substitute others, and transfer the mail and not cause a
great delay. If only a 30-foot car is needed on a part of the line,
the Government should pay for a 30-foot car, but if they need a 60-
foot car on the other part of the run they should pay for the 60-foot
car and let the car go then on the continuous run.
The CHAIRMAN. Now, in that connection, the relief which you
gentlemen have practically unanimously claimed you are entitled to
is compensation for apartment cars. How would such legislation
cure the concrete illustration Mr. Safford has mentioned?
Mr. SAFFORD. We would have a very distinct remedial influence.
75904—No. 2—13—5
384 RAILWAY MAIL PAY.
The CHAIRMAN. Would you operate your 30-foot car?
Mr. SAFFORD. I would have to.
The CHAIRMAN. Sixty feet of which was required for 258 miles
and only 30 feet, according to the department's estimate, required
for 348 miles. You would get the compensation for your 30 feet
for 384 miles and your compensation for the 60 feet for the 258 miles,
but you would be operating your 70-foot car for the whole of the
640 miles. Now, where does your relief come, other than getting
compensation for the 30 feet for 384 miles? -
Mr. SAFFORD. There would be just that much inclination to dis-
continue or to change the pay; that is to say, if they knew that they
had to pay for 30 feet anyhow, there would probably be less inclina-
tion to discontinue this 60-foot authorization. Now, Senator, I would
like to put in the record, then, there is no difference of opinion, in
my mind, in regard to this thing with regard to the department.
I do not want to appear in any sense antagonistic to a proper ad-
ministration of the Railway Mail Service, for we are interested in that;
that is a partnership business, and, after all, it is not solely a ques-
tion between the railroads and the Post Office Department, but it is
the larger question which you represent—the service that is ren-
dered to the people—and anything that impairs our schedule or im-
pairs the efficiency of the mail service defeats the primary purpose
for which the post office was provided in the Constitution. The
service for the people is the primary object of the Post Office Depart-
ment—the intercommunication. I do not believe that the Post Office
Department should pay for car space under the present law for any
greater length of mileage than their requirements demand. If they
can on this last 384 miles of service give the people the service they
are entitled to and conduct their operations in the 30 feet of space, I
would not find any fault. It is not the question simply of operating
with us. The department should not pay for any more service than
the proper operation of the postal service requires.
The CHAIRMAN. Then, your sole contention, under the concrete
illustration you have given us, is that you should receive compensa-
tion for the 30 feet for the sorting and distribution of the mail for
which, under the present law, you receive no compensation?
Mr. SAFFORD. Not entirely; because if they require more than 30
feet they ought to pay for it. I would not make the contention in
this case or any other unless I felt satisfied that the requirements
of the service demanded it.
The CHAIRMAN. But the departmental representatives themselves
have to determine first the service required, and the responsibility is
with them. *
Mr. SAFFORD. Yes, sir; but the loss is with us. f
The CHAIRMAN. The loss would not be with you if they used more
than the 30 feet. If you had a 30-foot car to put on there, and it
was found that they did not take and work the mail or could not
carry the mail in that 30-foot car, then the responsibility would be
with them, would it not?
Mr. SAFFORD. Yes.
The CHAIRMAN. And they would have to ask for more space. The
fact that you have not a 30-foot car in your equipment to make that
exchange at the end of the 238 miles, for which they call for 60 feet,
is not a reason why the Government should pay for that.
RAILWAY MAIL PAY. 385
Mr. SAFFORD. We have a 30-foot car.
The CHAIRMAN. Why do you not put it on?
Mr. SAFFORD. Because we can not do it without destroying our
schedule, because it would involve a delay of possibly from 45 min-
utes to one hour and a half to make the transfer. They transfer at
this point as high as 20,000 pounds of mail. - -
The CHAIRMAN. You have the election, then, of that transfer. You
decide that because of your other service it would be impracticable
or undesirable for you to make that transfer. It is you who deter-
mines that and not the department. Why should the department
pay for it, or, rather, the Government? “
Mr. SAFFORD. I do not contend that they should pay for it unless
they need it or unless they use it, but unless we made that transfer
we would operate the whole car. If we put a 30-foot apartment car
in there we would have to use the baggage end of it to carry storage
mail and the apartment car end of it to work the mail and I doubt
very much whether it would work. But here is the point: The mail
pay represents approximately 8 per cent of our passenger train
revenue. Now, we have to resort to inconvenience and it would ser-
iously impair 92 per cent of the passenger train service in order to
take care of a burdensome operating proposition connected with the
8 per cent.
The CHAIRMAN. Consequently you elect to lose the earning power
of the 30 or 40 feet of space on which you receive no return because
you do not want to inconvenience 92 per cent of your business.
Mr. SAFFORD. We have to. It is practically a compulsory proposi-
tion.
The CHAIRMAN. But it is elective with you?
Mr. SAFFORD. We do not consider that we have a choice. We have
to serve the public.
The CHAIRMAN. But you take the choice. You choose to take and
run that 70-foot car, for which you receive º for only 60
feet a portion of the way and 30 feet for the balance of the way and
your balance for the 30 feet is simply the railway mail pay that you
receive for the weight carried in that 30 feet without any R. P. O.
car pay because of the present law. That is true?
Mr. SAFFORD. That is true, but we do not feel that we have any
choice. That is just the condition.
The CHAIRMAN. You do have the choice because you say—pardon
me, for I do not want to contradict you—you have a 30-foot car but
you do not choose to make the transfer because you do not want to
delay or change your time schedule 45 minutes.
Mr. SAFFORD. From our point of view, Senator, it is simply an
operating proposition, and we consequently are forced to the con-
tinued operation of that car, and I want to repeat that I would not
raise the question now if I believed that the service could be properly
conducted, if we could conduct our operations consistently with the
Post Office Department's authorization of space.
The CHAIRMAN. Do you believe that the Government should pay
for the additional cost of all service in the delay incident or result-
ing from stopping the train to put on or take off mail, from slowing
down the train in order to take the mail from the mail cranes along
the route? Do you think those factors should be taken into con-
386 RAILWAY MAIL PAY.
sideration in the determination as to the rates that shall be paid the
transportation companies handling mail?
Mr. SAFFORD. I think any difficulty of operation or impairment of
service incident to the conduct of the mail service ought to be given
due consideration in fixing any rate of mail pay.
The CHAIRMAN. But there should not be a specific pay because of
the interference with the service; you should not say that the inter-
ference with the service should be considered in making up what the
general pay shall be and the factors in that as to the liberality, if you
please, or justice from your viewpoint, that the Government arbi-
trarily within certain limitations fixes your compensation?
Mr. SAFFORD. I think so, sir, and I think the variations are so great
that it would be impossible for anybody to anticipate all of them.
I think it should be given general consideration.
Mr. WoRTHINGTON. I would like to ask Mr. Safford if it is not a
very important element in that question whether if a delay of an
hour to the mail is an important consideration and one that would
impair the service to the public to that extent?
Mr. SAFFORD. Certainly. It impairs connection and probably
would, in some instances, result in the loss of a whole business day to
the public.
Mr. WoRTHINGTON. In other words, your mails would arrive at
destination that much later ?
Mr. SAFFORD. Yes; and possibly not make connections.
Mr. WoRTHINGTON. That is worth something to the department?
Mr. SAFFORD. It is worth a great deal to the department.
The CHAIRMAN. But it is wholly intangible.
Mr. WoRTHINGTON. The point is rather lost sight of in that since
November, 1909, when the department prescribed these statistics,
there had been quite a material reduction in the railway mail pay, due
to the fact that the divisor was not in effect all over the country in
November, 1909. The divisor, as you know, made quite a difference
in rates per car-foot. - -
The CHAIRMAN. Because the weighing had not taken place.
Mr. Womsgros. Had not taken effect all over the country.
The CHAIRMAN. The question of the divisor of 7, instead of 6, was
in effect -
Mr. WoRTHINGTON. It took four years to get it in, and it seems to
me we ought to have statistics up to date or revise these statistics on
the basis of the new divisor. It makes quite a difference in the earn-
ings per car-foot-mile for mail. -
Mr. SAFFORD. There is another factor—the factor of cost. The
cost of labor alone has been increased greatly. -
The CHAIRMAN. Those facts were clearly brought out by Mr.
Worthington yesterday in submitting the cost on behalf of the South-
ern Pacific. -
Mr. PETERs. On the Seaboard Air Line alone their wages have in-
creased a million dollars a year, and it is practically on the same
ratio with every railroad. There it would be a difficult matter to
get a correct conclusion from the figures contained in Document 105.
That is why I suggested once before, even though it cost a lot of
money to make other compilations of the cost of the figures, in the
light of the experience, we have had in the past, we should take it
over again. I do not think the railroads would object. They want
RAILWAY MAIL, PAY. 387
to get at the actual facts, and the compilations could be under the
supervision of Mr. Lorenz or under the supervision of the Interstate
Commerce Commission.
The CHAIRMAN. I doubt if the Government would be justified in
going to an expenditure of $20,000, even if the railroads then were
willing to go to an expenditure of a quarter of a million dollars to
. another month’s compilation or computation of information and
ata. I do not see where that additional information would be
worth that much to the Government in elucidating this study. What
do you think of that particular phase, Mr. Lorenzº
Mr. LORENZ. I think that all attainable information along this line
would be of assistance.
The CHAIRMAN. Answer, if you will, kindly, specifically that ques-
tion, whether you think the Government, assuming that the railroads
were willing to go to an expense of a quarter of a million dollars to
collate more information and data for another month, now would be
justified in going to an expenditure of $20,000 for the compilation and
tabulation of that data when received. Is that going to furnish the
key to this problem?
Mr. LORENz. I think it would not furnish the key. It would help
solely on the single question of whether the railroads were overpaid
or underpaid. It would not solve the problem of the manner in which
they are to be paid.
The CHAIRMAN. You say it would help. It would simply help this
way, to my mind: In getting the relative percentage of revenue as
between mail pay and the passenger pay. It would not elucidate in
any manner the problem as to whether the railroads were entitled to
the same or less pay for mail than they are for passenger service.
Mr. LORENz. In addition to what you say, it would elucidate the
question of whether they were getting more than it cost them.
The CHAIRMAN. Would it, if they have not got the accounts and
everything to determine what it is costing them—and all the evidence
submitted to the committee from every source has been the fact that
they do not know what the cost is. I think it was pretty generally
agreed, if I correctly understand the various opinions, it was abso-
lutely impossible to ever obtain knowledge actually as to what the
cost is.
Mr. LORENz. I do not agree that it is impossible to obtain the actual
knowledge. I would say that it was impossible to obtain a specific
minute determination, but that it would be possible to state that the
cost is between certain limits. º
Mr. PETERs. An approximate fair estimate of the cost can be ob-
tained by keeping the record and compiling the cost for a month. It
would be the cost for that month and it would give you a fairly ac-
curate approximation on which to base conclusions. A month is only
an indication, but a month this year would be entirely different from
what a month was in 1909, conditions having changed very mate-
rially since then. e
Mr. WoRTHINGTON. As I remember the ratio of operating expense
in 1909, it was quite low, and now it is quite high. That would make
a difference on the net earnings. -
Mr. LoRENz. It is certainly dangerous to base conclusions on the
result of one month. That is the reason that I have suggested that
before, that any final and authoritative conclusion based upon cost,
388 . RAILWAY MAIL PAY.
that such cost data be obtained by annual compilations obtained
according to fixed rules and well thrashed out rules. In other words,
that at the present time it perhaps is inexpedient to give too much
weight to such cost calculations. -
Mr. WoRTHINGTON. Do you think the commission, from the data
furnished in November, 1909, could fix rates based on cost which
would be fair if applied to present conditions?
The CHAIRMAN. By “commission ” you mean the congressional
commission or the Interstate Commerce Commission?
Mr. WoRTHINGTON. The congressional commission.
Mr. LORENZ. I do not think they could fix them by taking into
account solely those cost results, but the information which the de-
partment has might be of use and might be considered along with
other questions of fact regarding each railroad.
Mr. WoRTHINGTON. In other words, they could not comply with
the requirements of the last suggestion to base the rates on cost, plus
6 per cent with interest on investment, without first obtaining addi-
tional data as to what the present costs are. Is that the idea? They
have not the data available at the present time to do that.
Senator WEEKs. Let me ask Mr. Lorenz this question: Suppose
Congress asked the Interstate Commerce Commission what rate it
should pay the Southern Pacific Railroad for transporting the
mails; how would the Interstate Commerce Commission proceed to
get the information in order to furnish it to Congress?
Mr. LORENZ. My own opinion is all that I can express as to how
they would proceed, but I think they would doubtless proceed by
calling for such data as would be necessary to make an estimate of
the cost of the service.
The CHAIRMAN. After determining what that data was, in order
to determine it they first determine in their own minds as to what
information it was necessary for them to find out, and then they
would request that information. How long would it take for the
Interstate Commerce Commission to come to a conclusion? It would
take quite a long time before they could get the necessary informa-
tion on which to make a scientific determination, would it not?
Mr. LoRENz. It might take considerable time, in view of the fact
that the accounting prescribed by the commission has not been shaped
to that end. t
The CHAIRMAN. Then it would take the railroads a long time to
get the information to conform to the new system of accounting?
Mr. LoRENZ. Yes, sir.
The CHAIRMAN. Now let us look at this viewpoint. Taking Mr.
Peters's suggestion and Mr. Lorenz's opinion as here expressed, Sup-
pose the suggestion is acted on, the railroad secured full information
based on the questions asked in 1909 by the Post Office Department,
so as to get the comparison between the two months—November,
1909, and July, 1913. Do you imagine that the submission of that
information to your own representatives and to the postal representa-
tives would bring you any closer as between your 3.23 mills and
your 4.16 mills, the 3.23 mills being your opinion as to the revenue
you were receiving per car-mile and the 4.16 mills being the opinion
that the postal representatives claim you were receiving per car-
mile? Would there not be exactly the same differences between you
RAILWAY MAIL PAY. 389
in the allotment of dead space and other factors, accounting for that
difference in deduction?
, Mr. PETERs. My suggestion, Mr. Chairman, was that you should,
in determining this, also prescribe the method for the allotment of
Space. Have that determined in advance, so that the records could be
kept accordingly, and not allot your space after the reports have
been made.
Mr. SNEAD. There is a hinging point right there. Somebody has
to Settle the dead-space question.
The CHAIRMAN. To my mind it would be wasteful of your money
and the Government's money to proceed along and get another lot
of information, and then make your tabulations, until you deter-
mined in advance what allotments were to be made under given
information.
Mr. PETERS. I suggested those points because Mr. Lorenz’s thoughts
and ideas as set forth in the memorandum as to how to proceed in
this matter were based on the consideration of the information fur-
nished through Document 105, and I said that we all felt that that
information was so unreliable to this extent: That it was a new
method, possibly crude in many ways, so faulty in its execution, and
it certainly was faulty in its deductions, and the allotment of the
space was determined after we had reported the facts, and we do
not know now on what basis the departmental representatives al-
lotted the space that was reported, and we have not been able to get
the department's committee and our committee to make an agreed
statement of facts as to the conditions in the allotment, or recom-
mendation as to how to apportion that disputed space.
The CHAIRMAN. You succeeded in getting a letter signed by six
representatives?
Mr. PETERs. We got a letter signed, taking the space as originally
reported, before it was allotted. The department confirmed the
figures that we did—we made it 3.23 and they made it 3.37 as the
revenue per car-foot-mile for the mail. I do not think it is of any
use to go to all that expense. I still feel that the basis of pay for the
mail is the weight basis, but you asked us to consider these points
suggested by Mr. Lorenz, and I say to consider these fairly and
properly you must have absolutely correct data, and you do not have
it in Document 105. .* -
The CHAIRMAN. Would it not be well to qualify that statement,
Mr. Peters? That is an inferential reflection, it seems to me, on you
gentlemen, and also on the department when you say we do not have
correct data in Document 105. Would it not be well to qualify that,
and say that you do not have complete data in Document 105?
Mr. PETERs. I will be very glad to correct my statement to that
effect.
The CHAIRMAN. Would not that be better expressed in that Way,
what you have in mind?
Mr. PETERs. Yes.
Mr. WoRTHINGTON. I think it is unfortunate the railroads' figures
were never printed by the department and set against their own:
Mr. PETERs. We asked you originally that Congress call for all of
these figures and submit them to the Interstate Commerce Commis-
sion, and take the deductions the department has made, and give us
from impartial sources the correct analysis of those figures, but that
390 RAILWAY MAIL PAY.
means money and time, yet it is water over the dam. That was the
condition in 1909. This is 1913, and conditions have absolutely
changed as to cost. They have all gone up.
The CHAIRMAN. Conditions will continue to change as to cost.
Mr. PETERs. Yes; they will change all the time.
Mr. WoRTHINGTON. We were at a disadvantage in 1909 in House
Document No. 105 statistics, because we had the old divisor in effect
on our lines. The eastern roads had the new divisor, so the results
were compared on the basis of the old divisor, while other roads have
the new divisor, because at that time the new divisor was not in
effect throughout the country.
The CHAIRMAN. By “we” you mean the Southern Pacific Rail-
road 2 -
Mr. WoRTHINGTON. Yes.
The CHAIRMAN. Now, to return to the tentative suggestion of Mr.
Lorenz, what would you say in reference to suggestion No. 1%
Mr. WORTHINGTON. Is not that covered by suggestion 3? I under-
stand Mr. Lorenz has modified his suggestion as to No. 3 by stating
that the statistics presented by the railroad should also be taken into
consideration, as well as the changes in conditions which have taken
place since November, 1909, as to the increased cost in operating
railroads, and the effect of the new divisors in the sections of the
country where it was not in effect in November, 1909. Is not that
correct?
Mr. LORENZ. Certainly all factors you could bring together fol
the avaliable use of the committee should be considered.
Mr. WoRTHINGTON. I think if the congressional committee had
all these factors available, it could determine their amount on an
average for the mail as a whole, that a car-foot mile should earn to
equal the cost as they determine it with that information.
The CHAIRMAN. How about No. 57
Mr. WoRTHINGTON. Of course, if they had available the data, they
could prepare information of that kind, although I, personally, do
not see any particular connection between train density and the cost
of handling the mail. If there is to be a classification, as I presume
Mr. Lorenz indicates from that, I would prefer a geographic group-
ing of roads, rather than a grouping based on density, because you
would not know where to start in or leave off on a grouping as to
density. You would not know where your classification would go,
where your rate would change, by what density it would be changed,
for example; and the operating costs of railroads are controlled
principally by grouping conditions and by cost of labor and ma-
terial, and they differ in different sections of the country.
Senator WEEKs. Are there not many cases where twice as many
trains are run on one road as on another operating in the same ter-
ritory, and would not that have some effect on the cost?
Mr. WoRTHINGTON. Some roads have a large passenger-train den-
sity, and perhaps a total less density than other roads for freight
carriage, for example.
Senator WEERs. What have other trains to do with it?
Mr. WoRTHINGTON. They have a great deal to do with the cost of
maintenance of way. If you have 100 trains, and 90 of those are
freight trains and 10 are passenger trains, you have as many trains
to take care of as if the conditions were reversed.
RAILWAY MAIL PAY. 391
Mr. LORENZ. My idea was that all railway statistics that would be
pertinent showing the nature of the operations would be included in
that “and so forth.” *
Mr. WoRTHINGTON. There would be no objection if the commission
wished to collect that data. I see no objections to their doing that.
Do you, Mr. Peters, see any objection, if the commission wants to
collect all these data for the different lines? Would you see any
objection to that? -
Mr. PETERs. No; I would not. Collect all the information possible
that will throw any light on the subject. The thought that was
running through my mind was whether it would be possible for the
department, from its records, to show the amount of space allotted
to each mail route to-day, and then let us make a tabulation of the
795 lines and the allotment of space to each one of those, and take
an arbitrary of so much per car-foot mile for each road that we
think fair, and make the calculation, and see what it would amount
to as compared to the present time.
Mr. LORENz. Do you not think that would be quite pertinent, and
should be done along with these other tabulations? My idea was that
all that was suggested there could be obtained from the existing rec-
ords filed with the Interstate Commerce Commission and also with
the Post Office Department.
Mr. WoRTHINGTON. I think I would add to that also the general
operating ratio of these different lines, because I notice in going over
Document 105 some roads are given a very low ratio for mail ex-
penses, which have at the same time a very high ratio for their gen-
eral operating results, and it seems rather inconsistent. Suggestion
No. 6 says: *
Then they could say and actually state in the law what would be a fair rate
to pay per car foot-mile for each of these roads, having taken into account the
factors mentioned under Daragraph 5. The roads could be given a chance to
point out injustices, as could also the Post Office Department.
I rather gather from the discussion it would be absolutely impos-
sible for the commission to fix a rate based on cost without additional
information.
The CHAIRMAN. You mean the congressional committee”
Mr. WoRTHINGTON. Yes: to fix a rate based on cost without addi-
tional information showing the cost at the present time.
Mr. LORENZ. The idea was not to base it solely upon cost, but upon
all these facts.
Mr. WoRTHINGTON. Would that apply to a different rate on each
road? -
Mr. LORENz. Exactly. The difficulties that we discussed yesterday
of finding a satisfactory grouping of the roads, either geographically
or by density, or some other basis, simply led me to think the simplest
way out is to make 795 groups, and while it would take two or three
weeks or a month more hard work on the part of the Postal Commis-
sion, it would in the end do more exact justice, for the reason that
you would fix the rate that seemed just for each particular road.
Senator WEEKs. Would it not be possible that there might be 40
roads where this would be so nearly alike that the rate could be made
the same on the 40 roads?
Mr. LORENz. There would not have to be 795 rates, necessarily.
392 - RAILWAY MAIL PAY.
Mr. WoRTHINGTON. Would these rates be maximum rates or mini-
mum rates? Could the Post Office Department accept less than these
rates if the roads offer to haul the mail for less, or would they have
to take the mail at those rates? -
Mr. LORENZ. My idea would be that the rate determined by the
commission would be the only rate the Post Office Department could
accept or pay. -
Mr. WORTHINGTON. In other words, between New York and Chi-
cago, if they determined the cost was different on the Pennsylvania
Railroad from what it was on the New York Central, the road with
the lowest rate would have an advantage under that scheme and in
securing the mails, would it not? -
Mr. LORENZ. No, sir; because the cost was not the only considera-
tion, but this competitive condition which you mention would be
another factor, and if they concluded it would be unwise to have two
rates on roads, constituted as you have described, they then would
simply make the same rate on those two roads.
Mr. WoRTHINGTON. But, as I understand, the cost factor would be
practically the determining consideration in fixing the rates. . .
Mr. LORENz. Not necessarily; but it could be varied, and the rates
could be made equal wherever it would seem to work satisfactorily.
Senator WEEKs. Where would be the injustice in a case like the
one referred to by Mr. Worthington, to make it a competitive propo-
sition?
Mr. LORENZ. That is to say, you could make both rates according
to the lower cost if it could be done?
Mr. WoRTHINGTON. If rates could be made, as I presume they
ought properly to be made, between large centers, uniform and made
on the basis of the lower cost, would that not have a tendency to
lower the general average of mail rates throughout the country?
Mr. LORENZ. But if it did that and lowered it unduly the com-
mittee would have discovered that fact, because before it would put
these rates into effect it would provide a table which would show
the amount of pay which would accrue to each road according to the
recent statistics of business done, and how that differed with the
present pay, and so forth. In other words, they could revise their
rates so that it would work out justly.
The CHAIRMAN. But your suggestion, according to item 7, is that
the rate determined upon shall be in force five years.
Mr. LORENZ. Yes, sir; the idea is it would hardly be practicable
for Congress to go through this work each year, and the injustice
that might be done in the course of five years would not be corrected.
Mr. PETERs. That is a year longer than we suffer under now.
Mr. LORENz. Please understand the amount paid would automati-
cally increase with the amount of business. &
Mr. PETERs. With the amount of space?
Mr. LORENZ. Yes.
Mr. PETERs. You are considering space alone in this and not
weight? -
Mr. WoRTHINGTON. There is not much difference between this plan
and the present one where that rate applies to density, whereas one
might vary between commercial centers. . . . .
Senator WEEKs. The present rate is not a scientific rate at all, but
it is an arbitrary One.
RAILWAY MAIL, PAY. 393
Mr. PETERs. It is a scientific one.
Mr. WoRTHINGTON. The present rate brings the Government an
advantage in securing a decrease in the ton mileage rate where ton-
nage grows, whereas it has been maintained here—I have not main-
tained it, but some of the others have—that there would not be any
material increase in the weight per foot, but as the weights grow
from now on additional space will have to be taken up. If that is so,
there would not be any further gain to the Government, would there,
as density grows, such as exists through the present system?
The CHAIRMAN. By substitution of space for weight?
Mr. LORENz. On that matter of economies to be achieved from the
fact that more can be loaded into a car, I think we should take into
account the fact that of a total space to-day devoted to the mails a
very large proportion of the space—perhaps on some roads 90 per
cent and on other roads at least 75 per cent of the space—is for mail
cars and apartment cars, and the storage space and closed-out space
is a very small factor. So that the amount of the economy that can
be achieved by increased loading has very decided limits.
Mr. WoRTHINGTON. Whereas there is now a substantial economy
on the heavy routes to the Government through the automatic revi-
sion in the rate per ton-mile regardless of how much space is used.
Mr. LORENZ. Yes, sir. And in that respect it seems to me payment
on a space basis measures a little more closely the actual work per-
formed by the railroad, and is therefore more just to the railroad.
Mr. WoRTHINGTON. Do you think it would be as favorable to the
Government as the existing rates on the different routes?
Mr. LORENz. I think so.
Mr. SNEAD. Assuming, of course, that a fair rate per car foot-mile
was started with.
Mr. WoRTHINGTON. There is another point in making different
rates on different roads, or different routes based on the lowest costs
between two commercial centers, that I think I have referred to be-
fore, and that is a fact that the road which is efficient in its opera-
tions gets no advantage from that, and as it becomes more efficient
the pay for carrying the mails would decrease, whereas if the reverse
was the case it would increase if the rate is based on cost.
Mr. LORENZ. The question whether the lowest cost in a region
should be taken, or the highest cost, or the average cost, is one of the
things the committee could see for itself. The question has been up,
I think, before the Interstate Commerce Commission. If I remember
correctly, the opinions in the advanced-rate cases dealt to some ex-
tent with that question.
Mr. WoRTHINGTON. There is still another question I would like to
ask as to that. In fixing rates On a space basis the compensation for
mails would be practically the percentage of the space which the
mails occupy in proportion to the total space in the train, would
it not?
Mr. LORENZ. Yes, sir.
Mr. WoRTHINGTON. In other words, a railroad, such as a transcon-
tinental line, which on account of the long haul has to take in more
baggage, space for passengers, furnish more sleeping cars, and fur-
nish for the convenience of the passengers more dining cars—in some
cases observation cars—allows for its space for passengers very
much more than roads with short hauls. In other words, there are
394 RAILWAY MAIL PAY.
cases in this country where the average size of a passenger train is 6
cars and the average passenger trainload is about 60. There are
other roads with an average-size train of 4 cars and an average load
of 100. The space for passengers in one case is two and one-half times
as great as in the other. On the roads that are furnishing these con-
veniences to passengers they would receive on that account less for
handling mails than the other lines. In other words, if they could
cut out their diner and make their passengers eat at eating stations
they could raise their mail rate, or if they cut off their observation
cars they could do the same, or if they decreased the number of pas-
senger trains they run they could accomplish the same result. In
other words, if they decrease the facilities they give the traveling
public they would increase their mail compensation.
The CHAIRMAN. But would they do that when the mail compensa-
tion was less than 2 per cent of the total compensation?
Mr. WoRTHINGTON. I was saying it hardly seems to me to be fair
in principle—a rate that would have that effect. I think if the roads
are grouped or regarded for the country as a whole they are not open
to that objection, as it would be when you have so many different
rates.
Mr. LORENZ. Why would not the same objection hold, so far as a
matter of principle is concerned, whether you group them or not?
One of your bases of determining a fair rate was the relative space
required in passenger trains. In other words, you would have before
you, instead of the statistics of one particular road, the statistics for
that whole group of roads, and your reasoning would be the same.
Mr. WoRTITINGTON. It would affect some lines to a less extent. I
know in our territory we run very long passenger trains with a
comparatively small passenger load, and we furnish a great deal of
space per passenger. Part of that space is contributed by the Pull-
man Co., which builds the sleepers and maintains them without any
cost to us, yet all that space is going in to reduce our mail pay.
Mr. LORENz. I should say these are factors which might well be
brought out in considering a great system like the Southern Pacific.
Mr. WORTHINGTON. I think if rates were made on this basis that
nonrevenue cars in passenger trains ought to be left out of considera-
tion altogether. Take dining cars, for instance; they bring in no
revenue, and in fact they are sources of expense to the railroads. The
same is true of an observation car, which we put on our trains simply
in order that the passengers might look out of the rear of the train.
Mr. WEERs. Is that universally true of dining cars?
Mr. WoRTIIINGTON. I think practically so. I think there are a
very few lines which make a profit out of the dining cars. I think,
taking the roads as a whole, there would be a loss. That is simply
including the commissary expenses and the car repairs and excluding
the cost of ownership.
Mr. LORENZ. But do not the peculiarities you mention regarding
the particular systems simply shows how hopeless it is to find one
rate or one simple formula for rates which will work out justly in
every case?
Mr. WoRTHINGTON. I am simply mentioning that a rate on the
space basis does have that effect on certain roads, and that is an
objection to it. *
The CHAIRMAN. Now kindly take up question No. 7.
RAILWAY MAIL PAY. - 395
Mr. WoRTHINGTON. Personally I do not see any objections to that
if a rate is fixed based on space. If we had to have a rate of that
sort, and the total compensation varies during the five years with
the amount of space that is furnished, the only objection to that
could be that there might be during that time an increase in the cost
of §º railroads. -
r. LORENZ. You notice the passenger fares do not change very
much and probably will not change very much.
Mr. WoRTHINGTON. Maybe some of the other gentlemen may have
Some suggestions on that point. -
Mr. SNEAD. By extending this period to five years, assuming that
the determinant factor is to be the cost of it, we should bear in mind
the cost question never would be anything better than an approxi-
mation. In the event that, an error was made in the approximation,
you are perpetuating that error a good long period of time before we
would have an opportunity to rectify it. If the cost feature is sim-
ply one element to be taken into consideration and not given undue
weight, it is a different proposition. If it is to be a determinant
factor, I think I see quite a decided objection to that five-year period.
Mr. WoRTHINGTON. Personally I see no objections to the sugges-
tion No. 8 if a rate of this sort should be put in on this basis.
The CHAIRMAN. That is taking the whole nine suggestions col-
lectively? *
Mr. WoRTHINGTON. Yes; taking them all collectively. Sugges-
tion 9 reads as follows: -
9. As soon as practicable the COmmission shall report to Congress a Com-
parison of the rates prescribed in the law with the cost as determined from
the improved annual report form.
That is, the Interstate Commerce Commission shall report that?
Mr. LORENZ. Yes. - ſ
Mr. WoRTHINGTON. I would not think that is objectionable.
Senator WEEKs. I want to ask Mr. Worthington a question. Sup-
pose Congress authorizes the appointment of an official in the Post
Office Department, call him a traffic manager or a director of posts,
or whatever you like, and that it should be his business to arrange
with railroad companies for the transportation of the mails and to
fix the compensation for doing it, without any law whatever as to
what the compensation should be, assuming, of course, if the railroad
company and the traffic manager did not agree on a rate, that it
should be referred to the Interstate Commerce Commission for ad-
justment. Now, having all that as an assumption and knowing, as
you probably do, about what the compensation for a traffic man is,
as paid by railroads, how much would the Government have to pay
a competent man for that Service? -
Mr. WoRTHINGTON. I do not think I would want to answer the
question of salary, because I do not know.
Senator WEEKs. Well, what would it have to pay a competent man
in order to secure his services for a term of years?
Mr. PETERs. $25,000 a year. - -
Mr. WoRTHINGTON. At least that much ; but it seems to me it is
open to this objection: That there are a great many roads in the
country that are not now handling the mails that would probably
regard that traffic as in the light of additional traffic if they can
396 RAILWAY MAIL PAY.
secure it from some of the trunk lines which are handling the mails,
and for that reason they could rather feel that they could afford to
offer terms better than the existing roads are handling the mails for;
and, as to them, it would represent traffic on which at the present
time they are earning nothing, and on additional traffic, if the rail-
road can obtain something above the bare cost of movement, there
is a little something in the business to apply to their fixed expenses.
Senator WEEKS. Is not that a benefit to the Government? -
Mr. WoRTHINGTON. No; I do not think so, because I do not think
these roads that would do that are the roads that would give the
Service as the present lines are giving. For example, there are a
number of freight lines between New York and Chicago that are
handling little mail. The Government has wisely given greater ton-
nage to the lines which are able to take it more expeditiously and
give them better service, because they have a larger number of pas-
senger trains, they have multiple tracks, and all the facilities for
handling it promptly.
Senator WEEKs. But this director of posts would not be able to
lessen the efficiency of the mail service, because there would imme-
diately arise a complaint from the public and he would have to main-
tain the service on the roads which could perform it most efficiently.
Mr. WoRTHINGTON. I do not think the roads which are handling
the mails now would feel that they were able to perform the service
at any less rate than they are doing it for at the present time. I do
not believe they would offer any better terms.
Senator WEEKs. If they did not offer any better terms, or if an
agreement could not be reached between the road and the traffic
manager, is not the proper place for it to go to the Interstate Com-
merce Commission?
Mr. WoRTHINGTON. You say the commission would determine the
rate, or the road?
Senator WEEKs. I mean the road and the representative of the
Post Office Department could agree on a rate, if possible, and if they
do not agree on a rate the matter then goes to the Interstate Com-
merce Commission, which fixes the rate.
Mr. WoRTHINGTON. There is an objection to that plan which just
occurred to me; it is quite different from the plan that has been advo-
cated and which takes into consideration the element of cost of Serv-
ice principally. You would be handling the mails entirely on a
traffic basis the same as freight and passenger if it becomes a matter
of a bargain between some officer of the Government and the railroad
to take the mail at any rate that they may agree upon. I would pre-
fer the present method to that. -
Senator WEEKs. What is your objection to that method?
Mr. WoRTHINGTON, One objection is that it leaves the rate to be
fixed largely by an individual. r
Senator WEERs. Do you not think an individual apt to be more
competent to fix rates than Congress? -
Mr. WoRTHINGTON. In a matter of this sort I would not think a
single individual was.
Senator WEERs. Why is this any different from any other class of
traffic?
RAILWAY MAIL PAY. 397
Mr. WoRTHINGTON. Because this is a case of fixing rates on all of
the railroads in the United States, and a man to do that ought to be
familiar with all of the conditions on the different roads.
Senator WEEKs. All the railroads in the United States perform
Some kind of similar traffic; they all carry passengers.
Mr. WoRTHINGTON. They all have their own traffic people, and the
rates are different, of course, on the different roads. For example,
in the western part of the country they are generally higher than
they are in the East. I doubt whether the Government would reap.
any advantages under a plan of that sort. Of course, I could not
say how it would work out.
Senator WEEKs. It is not a question of the Government reaping
advantages necessarily, but it is a question of arriving at Some method
of adjusting these rates which would be fair to the Government
and fair to the transportation companies. I think Senator Bourne
would bear me out in saying that we are not here necessarily to find
some cheaper way for the Government to transport the mail, but we
are here for the purpose of adjusting this important question, which
is one of controversy all the time and will be until it is scientifically
adjusted.
The CHAIRMAN. Absolutely.
Mr. WoRTHINGTON. Of course, I think it would be impossible to
predict what would be the result under a plan of that sort. I could
not predict it.
Senator WEEKs. Yet, of course, you or no one else could tell what
the result would be.
Mr. WoRTHINGTON. I would not wish to express a well-formed
opinion because I have not considered it and I have not any idea
what the result would be.
Senator WEEKs. I have gone into this enough to see how difficult
it is to arrive at any fair basis, and in turning the whole question over
in my mind I have not been able to work out, to my own satisfaction,
why that is not the businesslike way to adjust it. I do not mean
to say that is final, even with me, but it seems to me that that is a
way of adjusting this service which ought to be satisfactory to the
Government and to the transportation companies, and I want to have
some railroad man or somebody point out to me why it is not fair
and just and businesslike. -
Mr. WoRTHINGTON. The result would depend very largely on the
personality of the individual. * -
Senator WEEKs. Every result depends on the personality of an
individual. -
Mr. WoRTHINGTON. It is a tremendous responsibility to put in one
man's hands, to adjust rates all over the country.
Mr. PETERs. I think it would be a most excellent thing.
Senator WEEKs. We could have three men, if we chose.
Mr. WoRTHINGTON. No. You have the Interstate Commerce Com-
mission to appeal to. Have your director of posts a permanent offi-
cer during good behavior. *.
Senator WEERs. I am in favor of a director of posts, anyway.
Mr. PETERs. He can have a traffic man under him who can analyze
and study the organization conditions, but have a director of posts
make his contract with the railroads on a basis that is businesslike
398 RAILWAY MAIL PAY.
and fair to pay a compensation for the service performed, and if
they can not agree, then the Interstate Commerce Commission to
settle between them. Now, that is the basis that is used in England.
The postmaster general there makes his contracts with the railroads.
The compensation is paid direct to each railroad. In the parcel post
55 per cent of the total receipts is paid into a pool and that is pro-
rated by the board of trade according to the amount of traffic for
each one, but I do think if the railroad has one traffic man—a busi-
ness man in charge of the department—that we could make our con-
tracts with, it would be a good thing.
The CHAIRMAN. You say if the railroads had one.
Mr. PETERS. I say if they had one man to deal with who was in
charge of the affairs for the Government, you could manage this
thing in a more businesslike way, especially if you have the appeal
to the Interstate Commerce Commission.
Mr. WoRTHINGTON. Is not that the situation to-day ? They have
One man to deal with—the Postmaster General?
Mr. PETERs. He is an appointed man for practically a short period.
Mr. WoRTHINGTON, I would prefer leaving the determination to
the Interstate Commission to leaving it to one man. They handle
freight-rate questions and passenger-rate questions.
M; PETERS. They have to have an expert in charge of this busi-
In GSS 6
The CHAIRMAN. And if left to them the statistician would be the
determining factor there. •
Senator WEEKs. We have 100,000,000 to satisfy and the public
to-day is satisfied with the work of the Interstate Commerce Com-
mission, and I think the transportation lines are, too, and we must
have a final court to go to which is satisfactory not only to the
Government but to the public and the transportation lines as well.
Mr. PETERs. If the Government can get any benefit out of compe-
tition for the mail, they should have the opportunity to get it, but
every road is going to have mail service to take care of the local
interests along its line. The proportion of the competitive service is
not so large that a diversion of it would stop all the mail service on
any railroad. There would be enough of it to enable one road to run
through mail trains, while the other road would not.
Mr. WoRTHINGTON. There is only one difficulty I foresee, and
that is this: Where there is competition between centers, of course
such a man could obtain quite reasonable rates; but where there is
only one road to serve the territory, I do not see just how he could.
It seems to me he would have to accept any rate that that road should
offer. - *
Mr. PETERs. If he is not satisfied with the rate the road offers,
he goes to the Interstate Commerce Commission and says the road
has offered an unreasonable rate. &
Senator WEERs. Is not the real competition limited to lines from
New York to Chicago and from Chicago to certain western points?
Mr. WoRTHINGTON. Practically; yes. Between the large centers.
The CHAIRMAN. And further limited to the efficiency only 3
Mr. WoRTHINGTON. Of course, the railroads serve themselves, with-
out competition, a very large area of the country through branch lines
and locally. *
RAILWAY MAIL PAY. 399
Mr. SNEAD. The Government in that respect would be in the posi-
tion of any other shipper. They would get the advantage of com-
petitive rates between competitive points. .*-
Mr. WoRTHINGTON. They would get advantage of lower rates
where there are competitive points, and they would get higher rates
where there was no competition. It is a fact, however, that rates are
lower to competitive points as to all classes of railroad traffic.
Senator WEEKs. What is your view of that, Mr. Bradley?
Mr. BRADLEY. Senator, that is a subject I would rather give thought
to before giving an expression of opinion. As the discussion was
proceeding, it seems to me, according to the present temper of the
public mind and of the attitude of Congress as I see it by reading
its proceedings, as though it were placing too much power in one
individual. The thought occurs to me whether the point would not
be illuminated by asking a counter question: Would the Congress
be willing to impose upon that official the responsibility of fixing the
rates of postage?
Senator WEEKs. It is comparatively a simple matter to fix the rates
of postage. We base that on the fundamental principle that the same
postage shall carry to every section of the United States. Of course,
that is not businesslike, in a way, because there are places where
it costs the Government a dollar to deliver a letter with a 2-cent
stamp on it.
Mr. BRADLEY. As a businesslike arrangement of course it com-
mends itself to have one well-informed manager deal with the trans-
portation agency and make the best terms he could for the Govern-
ment on a reasonable basis, subject to appeal to a judicial body. Yet
in England when they adopted the parcel post they did not continue
that method of bargaining between the postmaster general and the
railroads, although there it is a comparatively small thing as com-
pared with this country.
Senator WEEKs. The #. post is merchandise. It is a different
proposition from the ordinary mail service.
Mr. PETERs. It was treated as such in England, but not so here.
The CHAIRMAN. I beg your pardon. It is in a way so here, from
the fact that the zone system is adopted in the method of rates. That
principle is recognized in the adoption of the zone system. It was
merchandise, but, according to the opinion of Congress, evidently
treated as a convenience rather than as a method of transportation.
Mr. WoRTHINGTON. I would like to ask a question as to mail trans-
portation entirely within a State, whether the Interstate Commerce
Commission has jurisdiction to decide on that if there was a case at
issue between this gentleman and the railroad.
The CHAIRMAN. They would have nothing to do with the mail in
a State.
Mr. WoRTHINGTON. Would the Interstate Commerce Commission
have authority to pass on that question? -
The CHAIRMAN. If Congress directed or prescribed a rule, they
would have authority to act under the rule, I assume.
Senator WEEKs. It does not strike me that the limitations of the
State or county line would affect the power of Congress to fix rates
for carrying its mail and determining what body should have the
final determination of the rate paid. - -
75904—No. 2—13—6
400 RAILWAY MAIL PAY.
Mr. PETERs. In the New York State law I think they reserve the
right to determine the rates for the railroads to carry the mail?
Mr. SAFFORD. Constitutional authority over post roads would give
the Postmaster General authority over certain intrastate roads.
Mr. BRADLEY. Would not the Interstate Commerce Commission be
acting in an unofficial way, as a board of arbitration, just as the law
may provide for any body of men to act as a board of arbitration,
just as the Interstate Commerce Commission ºy act to-day un-
officially through its members in the railroad field? I do not think
it would affect the original province of the Interstate Commerce
Commission when they were acting in this special capacity purely as
a board of referees.
Senator WEEKS. There are plenty of precedents to indicate that
Congress would have ample power to place that authority in the
hands of the Interstate Commerce Commission or any other commis-
sion. For instance, before we put a free-delivery service in a town
we make requirements as to sidewalks, that boxes shall be placed out-
side of the houses, and other conditions that are entirely local.
Mr. BRADLEY. The streets must be named and houses numbered.
Senator WEEKs. Yes.
The CHAIRMAN. There is no question whatever in regard to con-
gressional authority.
Mr. SAFFORD. I like a government of law. I do not like a govern-
ment of individuals. - *
Mr. WoRTHINGTON. You would not object if he was a railroad
man? -
Mr. SAFFORD. I do not know about that. When railroad men get
into Government positions they are biased about as much as anybody
else, due to their environments.
Mr. PETERs. I think if you could get the pick of your traffic men at
$25,000 a year and give him a good continuous office and hold him
strictly responsible for it no railroad could hold him up on rates for
carrying the mail, because he can appeal to the commission; he can
not hold up any railroad and force them to confiscatory rates, because
the railroads could appeal to the commission, and I think that would
be a most excellent solution of this whole question.
Senator WEEKs. Suppose it were charged there was collusion be-
tween the railroads and the official?
Mr. PETERs. The commission can determine.
Senator WEEKs. Who is going to make the appeal in that case?
Do you provide for a public appeal to the Postmaster General?
The CHAIRMAN. Congress, by resolution.
Mr. SAFFORD. You would reach him by impeachment, I should
think.
STATEMENT OF MIR. W. J. BRADLEY.
The CHAIRMAN. Mr. Bradley, will you kindly state your name and
your official occupation?
Mr. BRADLEY. W. J. Bradley, general supervisor of mail traffic of
the Pennsylvania Railroad, Philadelphia, Pa.. I have a statement
which is an analysis of the application of Document 105 to the mail
service on the Pennsylvania Railroad system. It is entitled “Rail-
way mail pay—An examination of the methods employed by the Post
BAILWAY MAIL PAY. 401
Office Department in arranging and tabulating the statistics of mail
transportation furnished by the railroads for the month of November
1909, and the result as applying to the Pennsylvania Railroa
system.
RAILwAY MAIL PAx–THE PENNSYLVANIA RAILROAD SYSTEM.
AN EXAMINATION OF THE METHODs EMPLOYED BY THE POST OFFICE DE-
PARTMENT IN ARRANGING AND TABULATING THE STATISTICS OF MAIL
TRANSPORTATION FURNISHED BY THE RAILROADS, FOR THE MONTH OF
NovEMBER, 1909, AND THE RESULTS As APPLYING TO THE PENNSYL-
VANIA RAILROAD SYSTEMI. -
On August 12, 1911, the Postmaster General sent a letter to the
Speaker of the House of Representatives presenting a report and
tabulated statement transmitting the results of an inquiry by the
Post Office Department as to the operation, receipts, and expendi-
tures of railroad companies transporting the mails, and recommend-
ing legislation on the subject. The newspapers at that time pub-
lished the announcement that the investigation developed the fact
that some roads were overpaid and others underpaid, but if the exist-
ing laws were in accordance with the specific recommendations of
the Postmaster General fixing the rate of pay so as to cover the cost
and 6 per cent profit, the readjustment would result in a saving to
the Government of about $9,000,000 per annum. The document was
not published until about December 8, 1911, the delay being ex-
plained as due to frequent changes and corrections in the proof. The
volume of tabulated data (H. Doc. No. 105), consisting of about 300
printed pages, represents an enormous amount of work, both by the
railroad companies and the Post Office Department, and any general
analysis or discussion concerning it can not well escape being some-
what lengthy.
BRIEF EIISTORY.
The investigation was in accordance with an old law (March 3,
1879), which had not previously been complied with. It read as
follows:
The Postmaster General shall request all railroad companies transporting the
mails to furnish, under Seal, such data relating to the operating, receipts, and
expenditures of such roads as may, in his judgment, be deemed necessary to
enable him to ascertain the cost of mail transportation and the proper compen-
sation to be paid for the same; and he shall, in his annual report to Congress,
make such recommendations, founded on the information obtained under this
section, as shall in his Opinion be just and equitable.
The chronology of important events in connection with railway
mail pay may be briefly set forth as follows:
1873, March 2. Enactment of law (still in effect) fixing the method of paying.
* for railway mail transportation and postal cars.
1876, July 12. Ilaw passed reducing rates for mail transportation 10 per cent.
1878, April. The Hubbard Commission (appointed by Congress) reported in fa-
vor of a new method of paying railroad companies based on space
limited by the average weight carried.
1878, June 17. Law passed reducing rates for mail transportation 5 per cent.
: 1879, March 3. Law requiring Postmaster General to request data from railroad
companies, etc., as above set forth.
402 RAILWAY MAIL PAY.
1883, March 3. Law enacted requiring Postmaster General to make thorough in-
vestigation into the Railway Mail Service and report a more complete
System of gauging the rates of pay for carrying the mails on railroad
l'OuteS.
1883, December 3. Postmaster General reports to Congress the findings of the
Elmer, Thompson and Slater Commission, proposing a new method of
paying the railroad companies based on weight and space. (This re-
port was regarded by the Post Office Department as in Some measure a
compliance with the law of March 3, 1879.) -
1898, January 13. Law enacted appointing a joint commission of the House and
Senate for the investigation of railway mail pay and other postal
Subjects. *
1901, January 14. This joint commission (the Wolcott-Loud Commission) re-
ported to Congress, stating substantially that the railroads were not
Overpaid for their mail transportation or postal-car service.
1906, December 1. Postmaster General Cortelyou, in his annual report, states
that forms of inquiry are being prepared so as to request railroad com-
panies to furnish information in response to the law of March 3, 1879.
1907, March 2. Law enacted reducing pay of railroad companies for mail trans-
portation 5 per cent on all weights over 5,000 to 48,000 pounds, and 10
per cent On other weights over 48,000 pounds; also reducing postal-car
pay 83 per cent for 45-foot cars, 18% per cent for 50-foot cars, and 20
per cent for cars of 55 feet or over.
1907, June 7. Postmaster General issues an order changing the divisor (from 6
to 7) in computing the average daily weight of mails, thus resulting in
a reduction of about 8 per cent in the pay of railroad companies for
mail transportation. º
1907, November 30. Postmaster General Meyer, in his annual report, announces
that letters of inquiry and tabular forms were sent to all railroad
Companies to obtain data for three months, beginning July 1, 1907, in
accordance with the terms of the law of March 3, 1879. However, at
the request of several leading companies, this period was postponed to
reach an agreement upon a uniform method of Considering and furnish-
ing the data. ... • , -
1908, November 30. Postmaster General Meyer, in his annual report, announces
that the period for obtaining data from railroad companies is not yet
fixed.
1909, December 1. Postmaster General Hitchcock, in his annual report, announces
that railroad companies have now been requested to furnish the de-
partment with comprehensive data as to cost, etc., as per law of March
3, 1879. This to cover the month of November, 1909.
1910, December 1. Postmaster General Hitchcock, in his annual report, describes
the details of data supplied by railroad companies for the month of
November, 1909, and mentions that reports have been received from
2,850 out of 3,300 mail routes. The checking and tabulation has been
in progress since July 1, 1910, and computations have been completed
showing the total car-foot miles for each of the three classes of serv-
ice—passenger, express, and mail. A careful consideration of the rail-
road companies' assignment and apportionment Of Operating expenses
to freight, passenger, mail, and express Service is in progress, and when
finished it will provide a comparison of the cost of passenger, mail, and
express service “on an ascertained unit basis.”
It is explained that the same process will be followed as to revenue
derived from the three classes of Service, and this will make possible
a comparison of the revenue with the cost of service for each class. It
is said that many discrepancies were found in the reports of the rail-
road companies, so that a complete check and verification was found
necessary to insure accuracy.
DESCRIPTION OF THE STATISTICAL INQUIRY FOR NOVEMBER, 1909.
It will be noticed from the above record that the Post Office Depart-
ment was making preparations to obtain the desired information as
early as 1906, and that conferences were had with representatives of
railway companies in regard to the forms that could be employed
practically. ' -
RAILWAY MAIL PAY. 403
The forms that were intended for the test beginning July 1, 1907,
were found to be impracticable to obtain satisfactory results. The
forms and instructions finally prepared called for a statement in the
most minute detail, covering the daily operation of each train run
during the month of November, 1909. This including the distance of
operation, frequency, average speed, the number and length of pas-
senger cars, express cars, postal cars, and of any car space used for
any of the three purposes in combination cars; also a statement cov-
ering the train and car mileage, the total revenue of passenger, express
and mail service, the total operating expenses, and the total passenger
operating expenses; the original cost and present value of railway
post-office and mail-apartment cars. It also called for a detailed
statement of expenditures for station service and station and terminal
facilities; also for information concerning the personal transporta-
tion of officers and employees of the Post Office Department when in
charge of the mails and when traveling as passengers.
Later the railroad companies were called upon for additional in-
formation as to operating expenses under 116 primary-expense ac-
counts, recognized by the Interstate Commerce Commission; to show
for each item the amounts assignable directly to mail, express, pas-
senger or freight service, and the amount of remainders apportioned
to the passenger service (including mail and express), and the basis
for such apportionments.
The essence of the Post Office Department's apparent intention was
to ascertain for a definite period the relative proportion of car space
in passenger trains assigned to mail service, in comparison with the
amount of car space assigned to passenger or express Service, and
accept the result as indicating the proper ratio to be used in establish-
ing the relative cost of mail transportation. The statistical elements
for the final solution of the problem would therefore be—
First. The total operating expenses.
Second. The proportion of these expenses chargeable to passenger-
train service as distinguished from freight-train service. tº
Third. The proportion of passenger-train operating expenses
chargeable to mail service on the basis of the car space assigned to
that service.
Fourth. The proportion of capital cost or fixed charges that should
be fairly apportioned to the mail service.
Fifth. The allowance of a suitable rate of interest to insure a fair
profit for the utilization of the facilities.
MAGNITUDE OF THE WORK.
The enormous amount of labor involved in collecting and tabulat-
ing the statistics desired for the month of November, 1909, may be
judged from the fact that on the Pennsylvania Railroad system it
was necessary to consider 146,262 trains (East of Pittsburgh, 115,548;
west of Pittsburgh, 30,714), this representing 7,323 individual trains
running daily or less frequently. These trains traveled on over 200
different mail routes, for each of which the desired information had
to be specifically stated.
The final results were shown on about 800 large sheets, and it is
estimated that there were between 300,000 and 400,000 calculations
404 RAILWAY MAIL PAY.
necessary, either by divisional officers or else at the railroad head-
quarters, before the work was finished. This included not only the
calculations in regard to car space on trains, but also in regard to
station and terminal space and employees. 3.
At the general headquarters of the company the final tabulations
required the services of about 10 clerks for a period of seven months.
The Post Office Department obtained an appropriation from Con-
gress of $20,000 to cover the extra expense for its clerical work, and
it is safe to assume that the railroad companies were obliged to
undergo an expense of several times that amount to furnish the origi-
nal data to the department.
The law of 1879 was not mandatory upon the railroad companies,
but they appear to have willingly undertaken the labor in order to
cooperate with the Post Office Department in a joint effort to ascer-
tain approximately the cost of performing mail service in relation to
passenger and express service upon the basis originally outlined.
It was inevitable in a work of such a great extent that errors would
occur, both on the part of the railroad companies and the Post Office
Department; but it has been gratifying to note that the rechecking
of the figures for the Pennsylvania Railroad system has discovered
Only 11 errors—most of these comparatively small—in a total of
nearly 200,000 items and calculations. The Post Office Department
has already conceded a number of errors made at Washington, aggre-
gating nearly 19,000,000 car-foot miles.
CAUTION NECESSARY.
It would naturally occur to a prudent statistician, in taking up a
work of such novelty and extent, that the greatest of caution would
be advisable, both as to calculations and the deductions to be drawn
therefrom : -
1. As to the range of possible error due to misunderstanding of
the instructions or as to the correct application of the instructions
or because of the unusual character of the experimental test that was
being undertaken.
2. As to whether the mathematical ratio of car space used for mail
purposes in comparison with similar space used for passenger or
express services was really a dependable and trustworthy ratio for
general conclusions, except as modified by other considerations, such
as speed and frequency, to which factors no positive value was
accredited. * -
3. As to whether a period of 30 days is sufficiently long to obtain
a trustworthy ratio between the three classes of service, and espe-
cially whether the particular month selected—November, 1909–
should have been accepted as a representative period upon which
any fixed conclusions could be safely reached. -
4. In view of the opinions held by many able economists that it is
not feasible to ascertain with exact accuracy the cost of particular
services in railroad transportation because of the many items of
joint expense which must be arbitrarily apportioned and for which
there is as yet no generally accepted method of apportionment, it
might be rash to assume, even if all the foregoing precautions had
been observed, that the cost had been ascertained with any degree of
exactitude.
RAILWAY MAIL PAY. * 405
5. Any tentative conclusions in regard to the approximate cost
§hould at least have been checked by comparison with the relative
revenues derived from each class of business (this factor being abso-
lutely known) in comparison with the car space assigned to each of
the services. *
JOINT CONFERENCES DISCONTINUED.
The joint conferences between the Post Office Department officials
and the railroad officials were only held during the preliminary
stages while the blank forms were being prepared, and the confer-
ences were obviously beneficial in enabling the inquiry to be started
on practical lines. The forms and inquiries were sent to railroad
companies on September 28, 1909.
Soon thereafter the railroads appointed the committee on rail-
way mail pay representing 282 railroads with 208,000 miles of line,
for the purpose of Securing uniformity in the basis of compilation
and to prevent, as far as possible, misunderstanding relative to the
method to be used in securing and tabulating the data. After this
committee was formed it called upon the Postmaster General to
explain its object and to offer its cooperation with the department in
securing the necessary information.
It suggested to the department that all railroads, instead of a few,
be requested to furnish information for all mail routes, which sug-
gestion was accepted. However, the suggestion for continued cooper-
ation was not accepted, the Post Office Department preferring to
develop its own final methods and to deal with the information re-
ceived according to its own judgment. It can now be seen that if
the cooperation of the committee on railway mail pay had been
accepted the results would have been more accurate and the conclu-
sions derived therefrom more acceptable.
GENERAL COMMENTS ON THE POSTMASTER GENERAL's REPORT.
When Document No. 105 was published, in December, 1911, it was
at once noticed— - •
First. That essential data for a complete understanding had been
withheld from Congress. There was no publication of the items of
revenue received by railroad companies from passenger or express
business so that Congress could make a comparison between these
and the revenue from mail business; there was no disclosure of the
expense of railroad station and terminal service, or of personal trans-
portation of officers and employees of the Post Office Department.
although this information was furnished to the Postmaster General;
nor was there any statement of the full extent of the car space as
originally reported by the railroad companies to the Postmaster Gen-
eral as being devoted to passenger, mail, and express service.
Second. It was also observed that the Post Office Department had
refused to recognize and accept a large portion of the car space
devoted to mail purposes on trains, as reported by the railroad com-
panies, and had made reductions from the railroad companies' re-
ports entirely on its own opinions and without sufficient regard to
the actual facts or the operating conditions.
Third. It was further observed that the car space devoted to the
mails, which the Post Office Department had refused to recognize or
406 - RAILWAY MAIL PAY.
accept, had been deliberately transferred to the car space credited
to the passenger Service, thus changing the relative ratios of one to
the other. The explanation of the Postmaster General was based
upon a discrimination between car space directly used by the mails,
and deemed absolutely necessary, and car space incidentally required
in connection with the mails, the latter being denominated “dead
space,” and thus transferred to the passenger service. The fact is, that
it is not dead space, but just as active as any other car space in the
trains, and is just as much an attendant feature of the mail service as
similar unoccupied space in the passenger or express cars is to those
services, and which the railroad companies, of course, charge to either
of those services.
Fourth. It was also discovered that the Post Office Department had
not accepted the apportionment of operating expenses as between
the freight and passenger services in accordance with the long stand-
ing and approved methods of the railroad companies in making up
their accounts, but had substituted a new method devised by the Post
Office Department and for which there was no authoritative standard.
Here the Post Office Department entered into the field of the Inter-
state Commerce Commission and undertook to give a quasi govern-
mental indorsement to a special method of apportionment, although
the Interstate Commerce Commission has refrained from laying down
any general rule, notwithstanding the fact that it has been studying
this intricate and important question for over 25 years.
Fifth. It was finally observed that the Post Office Department was
sufficiently satisfied with the results of its inquiry and with its novel
method of apportionment that it felt warranted in recommending to
Congress a new law to empower the Postmaster General to deter-
mine annually the cost to railroad companies of carrying the mail
by this method and to fix the compensation at such cost plus 6 per
cent. Even if the method of treating the inquiry and the method of
apportionment could be given approval, it was still evident that the
Post Office Department was content to fix the compensation at the
operating cost plus 6 per cent, thus overlooking the fixed charges
and other capital cost and practically ignoring the value of the
piece of machinery employed for the purpose of transportation.
CAR SPACE—CAR-FOOT MILEAGE.
As already explained, the whole structure of the Postmaster Gen-
eral’s recommendation is supposed to be based upon relative amount
of car space used for the United States mail service as compared
with the amount of car space used for the passenger service and the
express service, in order to establish a ratio of cost. As an example:
If a passenger train had 5 cars, 3 of which were devoted to passenger
service, 1 to mail service, and 1 to express service, the ratios would
be 60 per cent, 20 per cent, and 20 per cent, respectively. In actual
ractice, however, note must be taken of the distance traveled, of the
#. lengths of cars, and of combination cars in which the
passenger, mail, or express business occupies only a fractional part
of the entire car.
In working out the result no particular note was taken of the
varying widths of cars, because the variation is comparatively slight;
nor was any note taken of the height of the space in cars, because
RAILWAY MAIL PAY. 407
of the comparative uniformity in this respect. Therefore the car
space computed for either the passenger, mail, or express service was
based upon linear feet of car space, multiplied by the distance
traveled by each train, thus reaching a total of (linear) car-foot
miles.
CAR-FOOT MILES-PEN INSYTIVANIA RAILROAD SYSTEMI.
The total car-foot miles for the month of November, 1909, in pas-
senger, mail, and express service reported by the railroad company
for the Pennsylvania Railroad system (including all companies east
and west of Pittsburgh, except the Long Island Railroad Co.) was
1,536,703,973. The Post Office Department's figures, as printed in
December, 1911, were 1,525,747,296, a reduction by the Post Office
Department of 10,956,677. Accordingly the railroad company re-
checked and verified its figures, with the result that they were slightly
increased (801,523) to 1,537,505,496.
The Post Office Department, on January 22 and June 26, 1912, con-
ceded that a number of important errors had been made in their
tabulations, and in revising their calculations increased the total by
11,604,111 car-foot miles, this resulting in a grand total of 1,537,351,-
407.49 car-foot miles and proving the correctness of the railroad com-
pany’s total within one-hundredth of 1 per cent.
I’ennsylvania R. R. system (all companies east and west of Pittsburgh, eaccept
Long Island R. R.)—Comparison of car-foot miles for Wovember, 1909,
between railroad company's original report and Post Office Department's re-
adjustment of Statistics.

Pennsylvania R. R. Co.'s fig- |Post Office Department’s fig-
ures (car-foot miles). ures (car-foot miles). Difference
from railroad
Character of service. company’s
As originally Rechecked and As printed As revised figures—
reported revised Pecember, 1911 since column 3
$º February, 1912. y - w VerSUIS
column 5.
(1) (2) (3) (4) (5)
Passenger-- - - - - - - - - - - - - - 1, 174,768,949 | 1, 175,591,075 1, 195,975,851 1,201,792,771 +26, 201,696
Mail-------------------- 152,471,069 152,434,570 120,573, 101 126,279, 179 —26, 155,391
Express---------------- 209,463,955 209,479,851 209, 198,344 209,279,457 || – y
Total............. 1,536,703,973 1,537,505,496 | 1,525,747,296 | 1,537,351,407 || – 154,089
Result of corrections up
to June 26, 1912-------|---------------- +801,523 - - - - - - - - - - - - - - - - +11,604, 111 |- - - - - - - - - - - - - -
Result of comparison
after revision, June |,
26, 1912. --------------|----------------|----------------|---------------- — 1 154,089 |- - - - - - - - - - - - - -
P. S.—The Long Island R. R. is omitted from this table because the Post Office Department state-
ment treats the Long Island R. R. as entirely separate from the Pennsylvania R. R. system.
1 This difference of 154,089 car-foot miles is only about one-hundredth of 1 per cent of the total passen-
ger train space.
Although a close agreement has finally been reached in the grand
total of car-foot miles, it will be observed that there has been a very
important readjustment by the Post Office Department of the figures
as between passenger, mail, and express Services. There is no ques-
tion but that the railroad company reported the absolute facts, nor
is it alleged that the apportionment of car space to each of the services
during the month of November, 1909, was in any respect abnormal.
408 RAILWAY MAIL PAY.
The Post Office Department has simply made its own determination
that a certain proportion of the mail space was needed for its busi-
ness and that another portion was not absolutely needed, and as a
result it cut out about 20 per cent of the mail space, amounting to
over 30,000,000 car-foot miles, and disallowed it, and this action was
taken without conference with the railroad company. Subsequently,
it admitted clerical errors the correction of which reduced the deduc-
tion to 26,000,000 car-foot miles, or about 17 per cent of the mail-
car space.
In addition to this reduction of the mail-car space as reported, the
Post Office Department made a second unwarranted readjustment by
adding the 26,000,000 car-foot miles to the passenger space, thus dis-
torting the correct ratio as between the passenger, mail, and express
SèI*VI CeS.
The successive steps between the original presentation of the data
by the railroad company and its revision by the Post Office Depart-
ment are shown in the following table:
Total car-foot *niles, Pennsylvania R. R. system (all lines east and west of
Pittsburgh eaccept Long Island R. R.), as reported by railroad company and
as reported and altered by Post Office Department.
Passenger. Mail. Express. Total.
1. Railroad company’s figures: Original aw
§. 2S reported to Post || tºº, 949 tºº, 069 * sº 1,536,703,973
Ce Depart Inêſlº. . . . . . . -- - - - - - - - - - s * -
2. Railroad company’s figures: Rechecked } 1,175,591,075 | 152,434,570 209,479,851 | 1,537,505,496
P º, † iënt's figures; origi- (76.46) (9.91) (13.63)
3. Post Office Department’s figures: Origi-
nally published December, 1911, de- 1, º % 427 iºn * (1,496,070,872)
P º; #. #:Cent § i. jº - - º - •
4. POSt. ce Department’s figures: Snow- *
ing transfer of rejected mail space to } 1, º º; 851 iºn *sº 344 1,525,747,296
5. Pºiſſºl. " - e
. POSt. ce Department’s ngures: Cor- ,-
rected by Post Office Department, 1, 177,775,366 126,279, 179 209,279,457 | (1,513,334,002)
June 26, 1912, to show 17 per cent de- (77–83) (8.34) (13.83)
6. P º # mail ;h* * * * - - - Šhow.
. HºOS ce Department’s figures: Show- *
ing transfer of rejected mail space to } 1, % 7. 771 tºº *fºº 1,537,351,407
paSSenger Service. . . . . . . . . . . . . . . . . . . . º - e
The relative percentages of car space devoted to the passenger,
mail, and express services derived from the preceding table would
be as follows:
Percentage of total car space as ascertained by railroad comp
Post Office Department.
any and revised by
Basis of *...* | Mail. Express.
ger. , *
Per cent. | Per cent. | Per cent.
1. Railroad company's figures, originally computed.---------------------- 76.45 9.92 13.63
2. Railroad company’s figures, rechecked (Feb., 1912)-------------------- 76.46 9.91 13.63
3. Post Office Départment's figures, originally published December, 1911,
showing a deduction of 20 per cent mail space:::------------------- 77.96 8. 06 13. 98.
4. Post Office Department's figures, originally published showing a de;
duction of 20 per cent of mail space and the transfer of the rejected
Space to the passenger Service-------------------------------------- 78.39 7. 90 13.71
5. Post office Department's figures, corrected June 26, 1912, by Post Office
Department to 17 per cent deduction of mail Space.---------------- 77.83 8.34 13.83.
6. Post Office Department's figures, corrected by Post Office Department
to a 17 per cent deduction of mail space and the transfer of the re-
jected Space to the passenger Service-------------------------------- 78.18 8.21 13. 6i
RAILWAY MAIL PAY. - 409
APPLICATION OF MAIL RATIO TO PASSENGER TRAIN EXPENSES.
The extraordinary importance of the variation in the percentages
of mail space will be appreciated when it is pointed out that the
assenger train operating expenses (and taxes) for the Pennsylvania.
ailroad system for the month of November, 1909, was $5,535,546.49.
Applying the several mail ratios to this amount we obtain the
following:

& Proportion
Basis of Per cent. of expenses.
1. Railroad company’s figures, original------------------------------------------- 9.92 || $549, 126.21
2. Railroad company’s figures, rechecked.---------------------------------------- 9.91 || 548.572. 66
3. Post Office Department’s figures, original, 20 per cent space reduction.......... 8.06 446,165.05
4. Post Office Department's figures, adding this 20 per cent to passenger space. --- 7. 90 437,308. 17
5. Post Office Department's figures, revised, 17 percent space reduction. ......... 8.34 461,664.58
6. Post Office Department’s figures, revised, adding this 17 per cent to passenger
Space- - - - - - - --------------------------------------------------------------- 8.21 454,358. 37

It can now be seen (comparing items 2 and 3) that the unwar-
ranted rejection of mail space by the Post Office Department to the
extent of 20 per cent would have reduced the mail expenses
$102,407.61 per month, or $1,228,891.32 per year; also by comparing
items 2 and 4, that the transfer of the rejected space to the passenger
Service would still further reduce the mail expenses by changing the
amount to $111,264.49 per month, or $1,335,173.88 per year, and of
course correspondingly increase the passenger service expenses. -
By comparing items 2 and 6 it will be seen that by reducing its
subtraction of mail space from 20 per cent to 17 per cent the expenses
rejected are reduced from $111,264.49 to $94,214.29, a difference of
$17,050.20 per month, or $204,602.40 a year. This large amount
measures the result of some clerical errors made in the Post Office
Department’s calculations and recently admitted and corrected by the
department.
IMAIL-CAR SPACE—DISALLOWANCE BY POST OFFICE DEPARTMENT.
The failure of the Post Office Department to publish in its printed
document the full data submitted by the railroad company in regard
to car space devoted to the United States mails in comparison with
the car space which the Post Office Department was willing to recog-
nize for this purpose, makes it extremely difficult to analyze partic-
ular cases in order to disclose the methods pursued by the depart-
ment and the effect of those methods. However, a general explana-
tion can be made, and certain examples can be submitted which should
be sufficient to show that the methods of the Post Office Department
were not founded on correct principles of transportation, and their
use would produce unfair results.
410 r RAILWAY MAIL PAY.
MAIL-CAR SPACE—POST OFFICE DEPARTMENT METHODS.
In the letter of the Second Assistant Postmaster General, printed
on pages 5–7 of Document No. 105, the method pursued by the Post
Office Department in recognizing or disallowing mail-car space, as
reported by the railroad companies, is explained as follows:
In the mail Service, the car-foot mileage has been subdivided to show that
performed in the full railway post-office car service, apartment-car service,
Closed-pouch service, storage-car service, and deadhead service. The space in
the full railway post-office car service was based upon the actual length of the
CarS authorized. In cases where cars of greater length than authorized were
Operated, the excess space, if used by the department for the storage of mails,
WaS charged to Storage Space, and if not so used was considered as dead space
and charged to the passenger service. In cases where a full railway post-office
Car was necessary in one direction and not used by the department on its
return, Such return movement being necessary to maintain the service, its length
Was Considered as deadhead space and charged to the mail service. In the
apartment-car Service the space reported by the Railway Mail Service as being
necessary for the needs Of the particular train was used, the remaining space
being charged to storage or dead space the same as in the full railway post-
office car service. It early developed that there was no uniformity in the
manner of reporting the amount of space devoted to closed-pouch service by
the companies. Therefore it was necessary to fix a basis for the arbitrary
assignment of Space in Cars to that service. After careful consideration, and
from information obtained by actual tests, weighings and measurements, the
following rule was laid down : For weights of 100 pounds or less allow 6 linear
inches; for weights above 100 pounds and not exceeding 200 pounds allow 10
linear inches; for weights above 200 pounds allow 5 linear inches for each
additional 100 pounds. The weights were ascertained by multiplying the
maximum number of pouches and Sacks reported by the company as carried at
any one time on a train by the average weight of pouches and Sacks, namely,
20 pounds, as fixed by an actual weighing for 10 days of closed pouches on
express trains. In cases where companies reported Space less than the Space
which would be allowed upon the above rule, but in accordance with actual
measurement or careful estimate, the company’s report was accepted.
MAIL-CAR SPACE—ANALYSIS OF RAILROAD COMPANY AND POST OFFICE
- DEPARTMENT FIGURES.
In Table No. 4 of the document the Post Office Department pub-
lishes its own computation of mail-car space under five subdivisions,
i. e., (1) R. P. O. car service; (2) apartment-car service; (3) closed-
pouch space; (4) storage space; and (5) deadhead space. It does
not, however, publish the railroad company’s figures for the same
subdivisions, nor does it set forth the additional subdivisions which
are indicated in the description of the method employed as above
explained. The additional subdivisions would be: (6) Excess space
used for storage; (7) excess space not used; (8) deadhead cars return-
ing (according to authorized length or according to actual length).
These additional subdivisions would be justified under the head of
R. P. O. car service and apartment-car service.
In order to reveal the extent and character of the reductions made
by the Post Office Department from the mail-car space as reported by
the railroad company, the following table has been prepared:
RAILWAY MAIL BAY. 411
Pén/m34ylvania R. R. 84/stem (earcept Long Island R. R.)—Mail car-foot miles
for November, 1909, as reported by the railroad company and as published by
the Post Office Department.

Railroad Post Office Per cent
Company Department | DiSallowed. of disay-
figures. gures. lowan Ce,
R. P. O. cars:
Space authorized.---------------........... 63,423,463 63, 180,868.73
XCeSS Space used for storage... - - - - - - - - - - - 5,325,943 |----------------
Excess space not used.-------------------.. 1,853, 549 |-------------'---
Deadhead cars returning...........-------. 5, 166, 540 7,597,760.09
Total.----------------------------------- 75,769,495 || 70,778,628.82 4,990,866.18 6.58
Storage cars:
Loaded------------------------------------ 22,703,692 24,726,889.46
Deadhead cars returning................... 13, 546,378 |----------------
Total------------------------------------ 36,250,070 24,726,889.46 11,523, 180.54 31.78
Apartment cars: M y
Space required---------------------------- 28,494,624 25,728,822.06
Xcess Space used for storage. -------...:-- 932, 543 ||----------------
Excess space not used.............. ------. 2,249,022 ||----------------
Deadhead cars returning-------------...--- 1,506,847 ----------------
Total.----------------------------------- 33,183,036 || 25,728,822.06 || 7,454,213.94 22.46
Closed pouch space:
uS8-- - - - - - - - - - -------------------------- 7,222, 178 5,044,838.71
Deadhead.-------------------------------- 9,791 |----------------
Total.----------------------------------- 7,231,969 5,044,838.71 2,187,130.29 30.24
Grand total.----------------------------- 152,434,570 126,279, 179.05 || 26, 155,390.95 17. 15
This table shows that the Post Office Department has disallowed
mail-car space on the Pennsylvania Railroad system to the extent of
26,155,390 car-foot miles, this being 17 per cent of the total mail-car
Space. It is also obvious that this method of reduction has been
pursued in each class of mail-car space, there being a disallowance
of 6.58 per cent in R. P. O. cars, 31.78 per cent in storage cars, 22.46
per cent in apartment cars, and 30.24 per cent in closed pouch space.
The theory upon which the Post Office Department makes this
reduction in the first three items either minimizes or ignores the
operating conditions which necessarily control the railroad company.
The maximum necessities of the service must be provided for at all
times, while the Post Office Department apparently bases its calcula-
tions upon almost the minimum necessities. Their theory also fails
to recognize the operating requirements of standard car equipment of
uniform sizes and patterns; also that mail apartment cars (which
are combination baggage and mail cars or combination baggage, mail,
and passenger cars) must be run to the terminal of the division and
can not be eliminated from the trains at an intermediate place that
may suit the convenience of the mail, but would not suit the con-
venience of the passenger Service.
The greatest reduction in car space disallowance was made in the
R. P. O. and storage cars. These together represent a total of 16,514,-
046 out of a total disallowance of 26,155,390 car-foot miles. An effort
has been made to analyze the methods and results of the action of
the Post Office Department in these respects on route No. 110001,
Philadelphia to Pittsburgh, where a heavy cut of this character has
been made. The Post Office Department's report in Table No. 4 shows
412 RAILWAY MAIL PAY. -
only three subdivisions of R. P. O. and storage spaces under the
heads: (1) Railway post office car service; (2) storage space; (3)
deadhead space, and even here the deadhead space evidently includes
Some apartment-car space not credited as being actually needed. The
railroad company's figures for R. P. O. and storage space have been
tabulated and subdivided into six items, which refer exclusively to
R. P. O. and storage space, and do not include any apartment-car
space. However, by careful comparison and analysis the items have
been adjusted in relation to each other, so that it is believed a fair
approximation has been achieved.
Mail car-foot miles for November, 1909—Route No. 110001, Philadelphia to Pitts-
burgh, Pa.-Comparing railroad company's figures with Post Office Depart-
ment's figures.
~
[Length, railroad company, 348.8 miles; Post Office Department, 349.02 miles.]

Railroad | Post Office . alsº
Character of mail space. company Department Difference. g
- figures. gures. dead space.
R. P. O. CarS: - ~ * x t
Space authorized------------------------ 16,355,894 | 16, 465,327.90 |+ 109,433,90 - - - - - - - - - - - , * * *
Excess space used as Storage------------- 1,301,307 693,960.20 – 607,346.80 607,346.80
Excess space not used.------------------. 404, 182 |.... - - - - - - - - - - - - - 404,182.00 404,182.00
Deadhead cars returning. - - - - - - - - - - - - - - - 1,443, 513 1,361,840.00 ||— 81,673.00 81,673.00
Total.....----------------------------- 19,504.896 | 18,521,128.10 - 983,767.90 | 1,093,201.80
Storage cars: - º
Loaded---------------------------------- 8,626,631 8,626,631.00 |- - - - - - - - - - - - - - - - - - - - - - - - - - - -.* *
Empty---------------------------------- 6,013, 134 ||---------------- — 6,013,134.00 | 6,013, 134.00
Total.--------------------------------- 14,639,765 8,626,631.00 – 6,013,134.00 6,013,134.00
Total R. P. O. and storage- - - - - - - - - - - - 34,144,661 || 27,147,759.10 – 6,996, 901.90 | 7,106,335.80
On this route the Post Office Department's requirements in R. P. O.
£8.1°S Were— - ... • 4.
'Westbound : - -
60-foot cars, daily including Sundays
50-foot cars, daily including Sundays
40-foot car, daily including Sundays
60-foot car, daily except Sundays
Total cars, equivalent to 852 feet daily for 30 days
*
-
==‘1tº-ºº-ººººº-j
:
IEastbound :
60-foot cars, daily including Sundays___
50-foot cars, daily including Sundays
40-foot cars, daily including Sundays
60-foot car, daily except Sundays
i-
rººm. Emº;
Total cars, equivalent to 720 feet daily for 30 days 1
The car-foot miles calculated on this (the minimum) basis would
be—
3
852 feet X 30 days X 349.02 miles -- 8, 920, 951. 20
720 feet X 30 days X 349.02 miles ~. 7, 538, 832. 00
Total ––––––– sº ºm vºº º 16,459,783.20
RAILWAY MAIL PAY. 413
However, the Post Office Department says, in House Document
No. 105:
In cases where a full railway post-office car was necessary in one direction
and not used by the department on its return, such return movements being
necessary to maintain the service, its length was considered as deadhead Space
and charged to the mail Service.
Under this ruling the car-foot miles would be computed according
to the westbound authorization, thus:
*
852 feet X 2 × 30 days X 349.02 miles 17, 841, 902. 40
That this method was used is confirmed by the fact that if we add
the two items shown in the department's statement, Table 5–I—
Distribution Space - * * * * * * * * * * * * * *-* 16, 465, 327. 90
Deadhead Space ___ 1, 361, 840. 00
We have a total of ------------------------------------ 17, 827, 167. 90
But the railroad company, to meet the maximum necessities of the
department and to provide uniform facilities under all operating
conditions and exigencies, supplied in all cases R. P. O. cars of 60
feet inside length, and in fact had already introduced into the Service
a number of the new 70-foot all-steel R. P. O. cars. Therefore the 15
cars authorized westbound were represented by eleven 60-foot cars and
four 70-foot cars, and these cars were run every day both ways, except
that one of the 60-foot cars was not required to go west on Sundays
(train No. 33), because the department did not require it. Hence,
the railroad company made provision for an equivalent of 932 feet
westbound and, of course, the same car space eastbound. The calcu-
lation would be-
932 feet X 2 × 30 days X 348.8 miles--------------------------- 19, 504, 896
Here is an apparent discrepancy between what the railroad com-
pany furnished and what the Post Office Department recognized of
1,677,728.10.
The department, in Document No. 105, says that the excess space
in postal cars, if used for storage of mail, was charged to the mail
service, and if not was charged to the passenger service.
We find that the department allowed as storage space (i. e., in
storage cars as well as R. P. O. cars) 9,320,591.20 car-foot miles, while
the company reported for storage cars loaded 8,626,631; therefore the
difference—693,960.20—may be regarded as representing the depart-
ment's allowance of credit for storage space in R. P. O. cars. Adding
this to the department’s figures, we obtain a total for R. P. O. space
recognized of 18,521,128.10. There would still be left 983,767.90 car-
foot, miles not allowed and therefore cast back upon the passenger
Service. . .
This remainder just quoted, when reduced to the daily space per
mile, would be 94 feet both ways, or 47 feet per mile one way. Remem-
bering that the number of R. P. O. cars required are 15 daily west-
bound, the disallowance is tantamount to refusing to recognize an
average of 3 linear feet for each 60-foot car. This is a revelation of
the minuteness of the discrimination which finally resulted from the
method pursued. Of course the railroad company could make no
use of this fractional space in postal cars for other traffic.
414 RAILWAY MAIL PAY.
It is interesting to observe that the railroad company's figures for
this same item, “Excess space in R. P. O. cars not used,” was 404,182
car-foot miles, which would be equivalent to 20 feet each way per mile
to be spread over 15 R. P. O. cars, or an average of only 1% linear feet
of space in each 60-foot car not found to be in actual use.
The storage cars are usually 60-foot steel cars, specially fitted with
stanchions to mark off stalls in which the bulk mail can be kept sepa-
rate in piles for prompt delivery. These cars carry working mail
as well as other mail. They are usually run in association with
R. P. O. cars and are practically tenders to these cars or an exten-
sion of the storage space. The railroad company’s figures for No-
vember, 1909, show:
Car-foot miles.
Storage Cars loaded----------------- 8, 626, 631
Empty storage cars returning - 6,013, 134
Total 14, 639, 765
The Post Office Department gives no recognition to the return dead-
head movement of these cars, and cuts out in this one item 6,013,134
car-foot miles. The movement of mail traffic is very much heavier
in the westbound direction than in the eastbound, about 78 per cent
of the total load being moved westbound on this route and only 22
per cent eastbound. Neither the railroad company nor the Post
Office Department is responsible for this condition, but it can not
be ignored in arranging for the traffic, and it is necessary to take note
of the deadhead and empty space returning and charge it with its
proper proportion of the cost of operation.
The conclusion in regard to route No. 110001 is that the figures as
submitted by the railroad company should have been fully accepted
by the Post Office Department, and it is confidently believed that
any distinterested referee in possession of the above facts and with
a proper understanding of the matter would recognize and accept
the entire car space as reported.
In the item of apartment cars the railroad company reported
1,264,949 car-foot miles and the Post Office Department published
1,268,240.90. The difference is comparatively slight and requires no
discussion.
In closed-pouch service the railroad company reported 1,170,732
car-foot miles as the result of actual measurement, while the Post
Office Department reports 831,785.07 as the result of the employment
of an arbitrary obtained from a special and limited test of their own,
including the assumption that the average weight of a pouch or sack
was 20 pounds.
The method followed by the railroad company seems the more
dependable. It would be easy to reach a satisfactory understanding
regarding an item like this if the larger questions of R. P. O. stor-
age and apartment car space could be adjusted by securing the
recognition by the department of the operating conditions which are
mandatory upon the railroad management.
BAILWAY MAIL PAY. 415
- - ERRORS CONCEDED IN PART BY POST of FICE DEPARTMENT.
Similar analyses of other mail routes of the Pennsylvania Railroad
system would only result in similar conclusions as regards the sub-
traction by the Post Office Department of mail-car space from the
org. data reported by the railroad company.
Since Document No. 105 was printed the attention of the Post
Office Department has been called to a number of obvious errors in
computing mail space, and it has corrected some of the errors in a
revised edition of the statement so as to allow additional mail space
as follows:
Car-foot milese
Route No. 113001, Philadelphia and Washington 58, 512. 60
Route No. 131002, Pittsburgh and Chicago 1,075, 046.85
Route No. 131011, Xenia and Richmond • 178,644. 18
Route No. 131014, Columbus and Cincinnati 273, 195. 90
Route No. 131015, Columbus and Indianapolis 1,014, 370.00
Route No. 13.1032, Pittsburgh and Columbus 1, 704, 376. 00.
Route No. 133002, Indianapolis and East St. Louis 1, 389, 898. 88
Route No. 135097, Willows and Madison Tower 12,032.93
Total 5, 706, 077. 34
These corrections recognize and give credit for the mail space in
deadhead postal cars returning in the light direction to the extent of
the full R. P. O. car space authorized in the heavy direction. An
acceptance of the same principle in regard to deadhead mail-storage
cars would be perfectly logical.
MAFL-CAR SPACE—SUMIMARY.
The total mail car space is shown on page 14 of this state-
ment, classified according to its character. The figures as reported
by the railroad company and the disallowance by the Post Office
Department in each class is as follows: .

Railroad com- Disallowed | Percentage
pany figures—| by depart- of disal-
total. ment. lowance.
R. P. O. Space------------------------------------------------- 75,769,495 4,990,866 6.58.
Storage cars---------------------------------------------------- 36,250,070 11,523,180 31.78
Apartment cars------------------------------------------------ 33,183,036 7,454,214 22.46
Closed-pouch space-------------------------------------------- 7,231,969 2,187,130 30.24
Total.---------------------------------------------------- 152,434,570 26,155,390 17.16.
In R. P. O. space the disallowance of 4,990,866 car-foot miles (or
6.58 per cent) represents the distinction between the standard 70-foot
postal car furnished by the railroad company and the practice of the
department on a few trains to authorize a less amount of space than
70 feet. In view of the fact that it requires considerably over 100
postal cars to perform the service, the recognition of a standard type
of car would be entirely reasonable on the part of the department in
lieu of making casual deviations from the standard to meet the mini-
mum conditions. It will be observed that in this particular class of
75904—No. 2–13—7
416 RAILWAY MAIL PAY. - * &
mail-car space, where the Post Office Department has for years made
a definite recognition of space and with which it is most familiar,
there is the least variance between the space reported by the company’
and the space accepted by the department.
In regard to storage-car space, where the disallowance is 11,523,180
car-foot miles (or 31.78 per cent), the deficiency is due to the Post
Office Department failing to recognize the deadhead storage cars
returning, necessitated by the uneven character of the traffic which
ranges from 60 to 85 per cent in the heavy direction and only 15 to
40 per cent in the light direction. A simple recognition of the un-
avoidable facts of the case would necessitate an agreement from the
Post Office Department to the figures reported by the railroad com-
pany.
In regard to mail-apartment cars, the disallowance amounts to
7,454,214 car-foot miles (or 22.46 per cent), and is due to the fact
that the Post Office Department has reduced the figures actually used
to correspond with a space which it thinks would be adequate, be-
cause its local officials upon reviewing the figures have so reported.
The revision is therefore made on a theoretical basis and represents
an expectancy of minimum conditions or, at most, average conditions.
The provision of a mail apartment in a combination car, the re-
mainder of which may be used for baggage, express, or passengers,
must necessarily be gauged to some extent by the varying demands
and the varying volume of the other business. It must also be subject
to the standardization of combination cars, which would involve an
occasional necessity for using a mail apartment somewhat larger than
the need of the day or the hour or the route, because of the impos-
sibility of contracting or expanding an inclosed apartment to meet
the fluctuating requirements of the service. It is believed that a
fair discussion of the allotment and recognition of mail-apartment
car space, and of all the conditions affecting the question, would re-
sult in the acceptance by the Post Office Department of all the space,
or nearly all the space, reported by the company as being actually
provided during November, 1909.
In closed-pouch space the disallowance amounts to 2,187,130 car-
foot miles (or 30.24 per cent of the total). This class of service rep-
resents the mails that are carried in the baggage car in the custody
of the baggage-master. The reports of the railroad company for this
class of service were based upon actual measurements. The Post
Office Department, according to its report, made use of an arbitrary
formula on the assumption that the average mail pouch or sack
weighed 20 pounds, and this is deemed to have been a less trustworthy
method.
Test cases could readily be submitted showing the inadequacy of
the Post Office Department method to do justice. For example, on
the New York and Philadelphia route there was an actual weighing
of the mails for 105 days in the spring of 1909, as a result of which
the Post Office Department certified that the average weight carried
over the whole line was 473,230 pounds daily. The Post Office De-
partment also estimated that 17.75 per cent of this weight was
so-called closed-pouch mail in care of the baggage-master; this
would be 83,525 pounds. According to the department's space ratio
of 50 linear inches to 1,000 pounds used in Document No. 105, the
RAILWAY MAIL PAY. 417
weight just mentioned for a period of 30 days would have been equal
to 932,765 car-foot miles.
The railroad company reported for closed-pouch service on this
route in the November statistical report 837,174 car-foot miles. The
railroad company’s figures were, therefore, very conservative—95,000
car-foot miles less than the weight of mail would indicate. The Post
Office Department, by revising the railroad company's figures, allowed
for this route only 779,996 car-foot miles, which was less than the
weight would justify by over 150,000 car-foot miles.
Therefore in this class of mail space, as in all the other which are
reviewed above, it is very clear that consultation and comparison of
figures are necessary between both parties in interest in order to
arrive at accurate and acceptable results. -
The respective statements of car space devoted to passenger, mail,
and express service for each company embraced in the Pennsylvania
Railroad system, both as measured and reported by the railroad com-
pany and as rearranged by the Post Office Department, are shown
in close comparison in the following table. In a succeeding table are
shown the relative percentages of car space for passenger, mail, and
express service, based on both the railroad company’s figures and
upon the Post Office Department's rearrangement of the figures.
418 RAILWAY MAIL PAY.
Pemºtsylvania R. R. System east and west of Pittsburgh (eacept Long.
Island R. R.)—Car space for November, 1909, ea pressed in car-foot miles by
Companies—Railroad company's figures as verified and rechecked, and Post
Office Department figures as shown in revised edition of House Document
No. 105. r - -

Length Car-foot miles.
Company. of routes -
(*): Passenger. Mail. Express. Total.
Pennsylvania Lines East:
Pennsylvania R. R.---------...... 3,056.67 528,508,392 || 57,819,376 91,624,080 677,951,848
Post Office Department....... 3,065.35 539,255,118 || 46,974,973 91,272,822 677,502,913
Philadelphia, Baltimore & Wash- f
ington R. R. . . . . . . . . 663.95 132,844,668 8,336,728 15,638,456 | 156,819,852.
ost Office Department....... 669.24 133,683,273 7,498,346 15,646,654 156,828,273
Northern Central Ry............. 445.61 39,951,565 2,894,693 7, 549,442 50,395,700
Post Office Department---... - 445. 44 40,233,546 2,606,274 7,549,439 50,389,259
West Jersey & Sea Shore R. R. ... 310.03 35,171,605 | 1,132,387 1,827,845 38,131,837
Post Office Department. -- - - - - || 313.21 35,572,410 693, 987 1,823,137 || 38,089,534
New York, Philadelphia & Nor- -
folk R. R.----------------------- 111. 60 5,413,995 423, 166 1,550,697 7,387,858
Post Office Department..... - - 111.69 5,436,194 || 392,202 1,547,077 7,375,473.
Baltimore, Chesapeake & Atlan-
tie RV-------------------------- 87.10 999,141 141,764 177,092 1,317,997
Post Office Department....... 131. 13 1,028,091 113,207 177,153 1,318,451
Maryland, Delaware & Virginia
R},* * * * * * * * * * * * * * * * * * * * * * * * * * * * * 78.00 620,165 92,772 125,255 838,192
ost Office Department....... 105.95 659,158 53,825 125,255 838,238
Cumberland Valley R. R. . . . . . . . . 162. 40 9,492,880 501,010 1,067,108 11,060,998
Post Office Department....... 164.38 9,438,488 495,300 1,060,235 10,994,023
Total, Lines East - - - - - - - - - - - 4,915.36 753,002,411 || 71,341,896 119,559,975 943,904,282
Total, Post Office Depart-
ment--------------------- 5,006. 39 765,306,278 || 58,828, 114 119,201,772 943,336,164
, Pennsylvania Lines West: -
Pennsylvania Co------------------ 1,354.08 173,181,441 || 28,747,137 || 41,437,614 243,366,192
Post Office Department....... 1,358. 20 177,848,715 24, 363,892 || 41,429,675 243,642,282
Pittsburgh, Cincinnati, Chicago
& St. Louis º, - w w - * * * * * * as s sº we s sº * 1,460.17 158,968,990 || 32,381,282 33,434,990 224,785,262
Post Office Department... . . . . 1,465. 24 164,300,777 27,225, 190 33,615, 137 225, 141,104
Vandalia R. R.-------------------- 818. 26 45, 790,484 14,827,412 8,491,357 69, 109,253
Post Office Department... . . . . 821. 20 48,301,111 | 12,310,731 8, 491, 361 69, 103,203
Grand Rapids & Indiana Ry. . . . . 547. 10 25,792,537 2,708, 457 3,501,207 32,002,201
Post Office Department... . . . . 547. 92 26, 228,201 || 2,272,777 3,501,204 32,002, 182
Cincinnati, Lebanon & Northern
R.* * * * * * * * * * - a- - - - - - - - * * * * * * * * * * 29.43 898,709 31,092 43,660 973, 461
ost Office Department... . . . . 29. T9 - 912,339 17,459 43,660 973,458
Cincinnati & Muskingum Valley
R. R.--------------------------- 148.25 2,978, 759 415,309 620,074 4,014, 142
Post Office Department... . . . . 148.80 3,097,806 296,240 620,072 4,014, 118
Cleveland, Akron & Columbus Ry. 177. 60 8, 589,730 757,699 1, 734,569 11,081,998
Post Office Department... . . . . 178. 89 8,949,406 398,015 1,734,572 11,081,993
Toledo, Peoria & Western Ry..... 248.01 5,694,455 1,139,212 622,233 7,455,900
Post Office Department... . . . . 249. 46 6,108,682 527,598 607,835 7,244,115
Waynesburg & Washington R. R. 28. 16 693,559 85,074 34,172 812,805
Post Office Department....... 28.73 739, 456 39, 163 34,169 812,788
Total, Lines West. . . . . . . . . . 4,811.06 422,588,664 81,092,674 | 89,919,876 593,601,214
Total, Post Office Depart-
ment--------------------- 4,828.23 436,486,493 || 67,451,065 90,077,685 594,015,243
Grand total, Lines East and West. . . . 9,726.42 | 1,175,591,075 |152,434,570 209,479,851 1,537,505,496
Grand total, Post Office Department. 9,834.62 | 1,201,792,771 |126,279,179 209,279,457 1,537,351,407
BAILWAY MAIL PAY.
419
Pennsylvania R. R. system. East and West of Pittsburgh (earcept Long Island
R. R.)—Car space for November, 1909, showing ratio between passenger,
mail, and ea press service based on preceding table. *

PaSSen-
Mail, , Express, Total
Company. ɺgne | percent percent
pany tº #: śī. Pºrºnt.
Fennsylvania Lines East:
#. R. R.--------------------------------------- 77.96 8. 53 13.51 100.00
Post Qffice Department:------------------------------ 79.60 6.93 13.47 100.00
Philadelphia, Baltimore & Washington R. R.------------- 84.71 5. 32 9.97 100.00
Post Office Department------------------------------- 85.24 4. 78 9.98 100.00
Northern Central Ry-------------------------------------- 79.28 5. 74 14.98 100.00
Post Office Department------------------- * * * * * * * * * * * * 79.85 5.17 14.98 100.00
West Jersey & Seashore R. R. ---------------------------- 92.24 2.97 4, 79 100.00
Post Office Department------------------------------- 93.39 1.82 4. 79 100.00
New York, Philadelphia & Norfolk R. R............ ------ 73. 28 5. 73 20.99 100.00
Post Office Department------------------------------- 73.71 5. 32 20. 97 100.00
Baltimore, Chesapeake & Atlantic Ry. -------------------- 75. 81 10. 75 13.44 100.00
fost office Department............................... 77.98 8.58 13.44 100.00
Maryland, Delaware & Virginia Ry- - - - - - - - - - - - - - - - - - - - - - - 73.99 11. 07 14.94 100.00
ost ºffice department.............................. 78.64 6.42 14.94 100.00
Cumberland Valley R. R.---------------------------------- 85.82 4. 53 9. 65 100.00
Post Office Department------------------------------- 85.86 4. 50 9.64 100.00
Total, Lines East----------------------------------- 79. 77 7. 56 12.67 100.00
Total, Post Office Department......... --...-------- 81.13 6.23 12.64 100.00
Pennsylvania Lines West:
Pennsylvania Co------------------------------------------ 71.16 11. 81 17.03 100.00
Post Office Department.------------------------------- 73.00 10.00 17.00 100.00
Pittsburgh, Cincinnati, Chicago & St. Louis Ry... -------- 70. 72 14.41 14.87 100.00
Post Office Department. ------------------------------ 72.98 12.09 14.93 100.00
Vandalia R. R.-------------------------------------------- 66. 26 21.45 12. 29 100.00
Post Office Department------------------------------- 69.90 17. 81 12. 29 100.00
Grand Rapids & Indiana Ry------------------------------ 80. 60 8.46 10.94 100.00
Post Office Department.------------------------------ 81.96 7. 10 10.94 100.00
Cincinnati, Lebanon & Northern Ry---------------------- 92.32 3. 19 4. 49 100.00
Post Office Department------------------------------- 93. 72 1. 79 4. 49 100.00
Cincinnati & Muskingum Valley R. R.--------------------- 74. 20 10.35 15.45 100.00
Post Office Department------------------------------- 77. 17 7.38 15.45 100.00
Cleveland, Akron & Columbus Ry. ... -------------------- 77. 51 6.84 15. 65 100.00
Post Office Department---------------------------. --- 80. 76 3.59 15.65 100.00
Toledo, Peoria & Western Ry... -------------------------- 76. 38 15. 28 8. 34 100.00
Post Office Department.------------------------------ 84.33 7.28 8.39 100.00
Waynesburg & Washington R. R..... -------------------- 85.33 10.47 4.20 100.00
Post Office Department - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 90.98 4.82 4. 20 100.00
Total, Lines West----------------------------------- 71. 19 13. 66. 15. 15 100.00
Total, Post Office Department...................... 73. 48 11.36 15. 16 100.00
Grand total, Lines East and West. ---------------...---------- 76, 46 9.91 13.63 100.00
Grand total, Post Office Department........................ -- 78. 18 8. 21 13. 61 100.00
MAIL-CAR SPACE—RATIO FOR EACH COMPANY,
After ascertaining the relative amount of car space devoted to the
mail service as compared with the amount devoted to passenger and
express Service, the next step would be to apply the ratio of mail space
to the total expenses of the passenger-train service to learn the amount
of these expenses properly chargeable to the mail service. The origi-
nal intention of the Post Office Department was to secure the data of
operating expenses so that the cost of operation could be segregated
to each individual mail route (there are over 200 routes in the Penn-
sylvania Railroad system), but it learned that this would be impos-
sible, because the railroads do not have their accounts subdivided so
minutely. -- -
Therefore the application of the mail-space ratio to the operating
expenses is made for each railroad company in the system and not for
- the railroad system as a whole nor for any particular route. On page
420 RAILWAY MAIL PAY.
11, the mail-space ratio for the Pennsylvania Railroad system is ap-
plied to the total passenger-train expenses for the system, but this
was done only for illustrative purposes. - A.
The percentage of mail-car space for each of the companies east
and west of Pittsburgh is shown in the following table, first giving
the railroad company’s figures, original and revised, then the Post
Office Department's figures, both original and corrected, and finally
the Post Office Department expense ratio, which is usually lower than
its mail-space ratio because of excluding certain items in the expenses
as having no relation to the mail Service in their opinion.
Mail Car Space ratios, Pennsylvania R. R. system (all companies East and West
of Pittsburgh eacept Long Island R. R.).

Railroad company’s Post Office Depart- POSt.
figures. ment’s figures. Office
r Depart-
Company. Iment’s
Original. Revised. | Original. Corrected.| *P*
ratio.
East of Pittsburgh: g Per cent. | Per cent. | Per cent. | Per cent. | Per cent.
Pennsylvania R. R. Co- - - - - - - - - - - - - - - - - - - - - - - - - 8, 53 8. 53 7. 04 6.93 6. 74
Northern Central Ry. Co - - - - - - - - - - - - - - - - - - - - - - - 5, 75 5. 74 5. 17 5. 17 5. 07
Philadelphia, Baltimore & Washington R. R. Co. 5. 33 5. 32 4.77 4. 78 4.46
West Jersey & Seashore R. R. Co. . . . . . . . . . . . . . . 2.97 2.97 1.82 1.82 1.76
Baltimore, Chesapeake & Atlantic Ry. Co. . . . . . . 10. 64 10. 75 8. 58 8. 58 8. 56
Cumberland Valley R. R. Co. . . . . . . . . . . . . . . . . . . 4. 53 4. 53 4. 50 4. 50 4.42
Maryland, Delaware & Virginia Ry. Co. . . . . . . . . 10. 60 11. 07 6.42 6.42 6.03
New York, Philadelphia & Norfolk R. R. Co.... 5. 73 5. 73 5. 32 5. 32 4.45
West of Pittsburgh:
Pennsylvania Co- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11.85 11. 81 9. 56 10.00 9. 65
Pittsburgh, Cincinnati, Chicago & St. Louis
Ry. Co------------------ * * * * * * - - - - - - - - - - - - - - - 14. 41 14.41 10.68 12.09 11. 65
Vandalia R. R. Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.45 21.45 15. 78 17.81 17.06
Cincinnati & Muskingum Valley R. R. Co. . . . . . 10.35 10.35 7. 38 7. 38 7.36
Cincinnati, Lebanon & Northern Ry. Co.. . . . . . . 3. 33 3. 19 1. 79 1, 79 1.78
Cleveland, Akron & Columbus Ry. Co. . . . . . . . . . 6.84 || 6.84 3.59 3.59 | 3.54
Grand Rapids & Indiana Ry. Co. . . . . . . . . . ----- 8.46 8.46 7. 10 7. 10 6.93
Toledo, Peoria & Western R. R. Co. . . . . . . . . . . . . 15. 28 15. 28 7. 28 7, 28 7. 19
Waynesburg & Washington R. R. Co. . . . . . . . . . . 10.47 10. 47 4.82 4.82 4.82
Total, Lines East and West. . . . . . . . . . . . . . . . . . . 9.92 9.91 7. 90 8.21 7. 44
DIVISION OF OPERATING EXPENSES BETWEEN FREIGHT AND PASSENGER
SERVICES.
After the mail space ratio is correctly ascertained (in comparison
with the corresponding car space ratios for the passenger and ex-
press services) the next step would be to find out the amount of
operating expenses (including taxes) justly chargeable to the pas-
senger-train service. Then the application of the mail space ratio
to the passenger-train expenses should reveal the portion of these
expenses which should be charged to the mail service.
It is first necessary to take the total operating expenses which in-
clude both the freight and passenger train expenses and divide these
equitably between the freight and passenger services. . During this
process it will be found that many items can be definitely recognized
as belonging quite clearly to the one or the other classification, and
are therefore called “directly assignable.”. There are other items,
however, of a joint character wherein the line of division is not so
obvious. These are therefore called “nonassignable,” and it is nec-
RAILWAY MAIL PAY. 42I
essary to accept Some reasonable rule for their apportionment between
the freight and passenger services. “s
The rule most generally accepted is to take revenue train mileage
performed in each of the services separately (freight and passenger)
and use the relative percentage of each to establish the apportion-
ment of joint expenses to each service.
The Post Office Department called upon the railroads to furnish
on Form 2603 the desired data as to revenue and expenses for the
month of November, 1909, embracing, among other things, the total
operating expenses, the total passenger-train operating expenses, the
items directly assignable, the items not directly assignable, and as to
the latter, the proportion allotted to the passenger-train service and
the basis for such apportionment.
In response, the following information from the books of the com-
panies included in the Pennsylvania Railroad system was furnished:
Operating ea penses and taayes, November, 1909, Pennsylvania R. R. system
(eſp.cept Long Island R. R.).
|Total: Passenger train and per cent of latter to total.]

Total operating
Total operating expenses (and
Company. expenses (and taxes) charge- | Per cent
taxes), freight | able to passen- of total.
and passenger. ger-train
Service.
Rennsylvania Lines East of Pittsburgh:
Pennsylvania R. R. ---------------------------------. . . . $9,079,325.81 $2,743,857.49 30. 22
Northern Central Ry--- - - - - - - - - - - - - - - - - - - - - - - - - . . . . . . . . . . 829,891.35 204,993.77 24. 70
Philadelphia, Baltimore & Washington R. R. . . . . . . . . . . . 1, 109, 540.84 583, 635. 13 51. 70
West Jersey & Seashore R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,268.23 216,999.51 64. 15 .
Baltimore, Chesapeake & Atlantic Ry. - - - - - - - - - - - - - - - - - - 1 14, 181.89 9,058. 84 63. 88
Cumberland Valley R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,418.55 59,931.03 39.84
Maryland, Delaware & Virginia Ry. . . . . . . . . . . . . . . . . . . . . . 1 10,072, 64 6, 741. 44 66.93
New York, Philadelphia & Norfolk R. R. . . . . . . . . . . . . . . . 194,731.63 46,505.02 23. 88
Pennsylvania Lines West of Pittsburgh:
Pennsylvania R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,974,405. 48 630, 821. 19 21.21
Pittsburgh, Cincinnati, Chicago & St. Louis Ry. . . . . . . . . . 2,214, 180.83 621,819.84 28.08
Vandalia R. R.------------------------------------------. 3,064.90 201,457.09 31.82
Cincinnati & Muskingum Valley R. R. . . . . . . . . . . . . . . . . . . 66,061. 67 23,824.43 36. 37
Cincinnati, Lebanon & Northern Ry. . . . . . . . . . . . . . . . . . . . . 20,128.21 4,234.30 21.04
Cleveland, Akron & Columbus Ry. . . . . . . . . . . . . . . . . . . . . . . 171, 128.61 37,684.00 22, 02
Grand Rapids & Indiana Ry... . . . . . . . . . . . . . . . . . . . . . . . . . . 327, 167.47 117,055.77 35.78
Toledo, Peoria & Western Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . 86,787.48 33,382.06 38.46
Waynesburg & Washington R. R. . . . . . . . . . . . . . . . . . . . . . . . 9,320.47 3,815, 58 40.94
Pennsylvania Lines East of Pittsburgh . . . . . . . . . . . . . . . . . . . . . . 11,726,430.94 3,861,722.23 32.93.
Pennsylvania Lines West of Pittsburgh . . . . . . . . . . . . . . . . . . . . . . 6,502,245. 12 1,674,094, 26 25.75
Pennsylvania Lines East and West. . . . . . . . . . . . . . . . . . . . 18,228,676.06 5,535,816.49 30.36
1 Taxes are not included in this amount.
The passenger-train expenses shown above were also subdivided
between the assignable and nonassignable costs and reported from
the books of the companies, as per the following statement.
422 RAILWAY MAIL PAY.
Passenger operating ea penses and taayes, November, 1909, Pennsylvania R. R.
System (€4,0ept Long Island R. R.), reported by railroad companies.
$, -
[Total : Assignable and nonassignable and per cent of each to the total.]

Passenger operating expenses (and taxes).
Company. P t; N P t
2. ge €r Cen. On- ©r Ced
- Total. Assignable. oft. assi...ble. oft.
IPennsylvania Lines East:
Pennsylvania R. R. . . . . . . . . . . . . . . . . . $2,743,857.49 |$1,765,854.86 64.36 $978,002.63 35. 64
Philadelphia, Baltimore & Wash-
ington R. # --~~~~...~. 573,635. 13 351,664. 20 61, 30 221,970.93 38. 70
Northern Central Ry- - - - - . . . . . . . . . . 204,993.77 140,469.87 68, 52 64,523.90 31.48
West Jersey & Seashore R. R. . . . . . . 216,999.51 140,785.86 64, 88 76,213.65 35. 12
New York, Philadelphia & Norfolk
R. R.----------------------------- 46,505.02 27,007. 35 58. 07 19,497.67 41.93
Cumberland Valley R. R. . . . . . . . . . . 59,931.03 30,440.82 50. 79 29,490.21 49. 21
Baltimore, Chesapeake & Atlantic
Y- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9,058.84 2,612, 44 28.84 6,446.40 71.16
Maryland, Delaware & Virginia Ry- 6, 741. 44 2,073. 16 30. 75 4,668. 28 69.25
Pennsylvania Lines West:
Pennsylvania R. R. . . . . . . . . . . . . . . . . 630,821.19 360,836. 16 57. 20 269,985.03 42.80
Pittsburgh, Cincinnati, Chicago & g
St. Louis Ry--------------------. 621,819.84 360,727.99 58. 01 261,091.85 41.99
Vandalia R. R. -------------------. 201,457.09 103,982.42 51, 62 97,474,67 48.38
Grand Rapids & Indiana Ry. . . . . . . 117,055.77 59,412.96 50. 76 57,642.81 49.24
Cincinnati & Muskingum Valley
R. R.----------------------------- 23,824.43 13,490. 93 56.63 10,333.50 43. 37
Cleveland, Akron & Columbus Ry-- 37,684.00 20,167. 55 53.52 17,516.45 46. 48
Cincinnati, Lebanon & Northern Ry 4,234, 30 2,435.89 57. 53 1,798.41 42, 47
Toledo, Peoria & Western Ry. . . . . . 33,382.06 13,196.01 39, 53 20,186.05 60. 47
Waynesburg & Washington R. R. -- 3,815.58 2,020.87 52.96 1,794.71 47. 04
IPennsylvania Lines East. . . . . . . . . . . . . . . 3,861,722.23 2,460,908. 56 63.73 1,400,813.67 36. 27
Pennsylvania Lines West... . . . . . . . . . . . . 1,674,094.26 936,270.78 55.93 737,823.48 44. 07
Pennsylvania Lines East and West 5,535,816.49 3,397, 179.34 61.37 2,138,637. 15 38. 63
The basis of the apportionment was shown in each case, and for
the sake of brevity is sufficiently indicated by citing the instance
of the Pennsylvania Railroad Co., as illustrated in the following
BASIS OF APPORTION MENT FOR NONASSIGNABLE ITEMS.
table:
Passenger operating easpenses and taayes, November, 1909, Pennsylvania R. R.
Co., apportioned to each class of ea pense and reported by railroad company.
[Total : Assignable and nonassignable and per cent of each to the total.]
}
* Per cent Nonassigna- Per cent
Total. Assignable. oft. ble. of total.
(a) Maintenance of way and structures. . . $428,569. 19 $30,418.34 7.10 || $398,150.85 92.90
(b) Maintenance of equipment. . . . . . . . . . 869,565.27 744,475.45 85. 61 125,089.82 14.39
Traffic------------------------------ 76,627.50 76,627.50 100.00 l--------------|----------
"(c) Transportation. . . . . . . . . . . . . . . . . . . . . . 1, 107,030.38 885,602.59 80.00 221,427.79 20.00
(d) General----------------------------- 114,795.49 28,730.98 25.03 86,064. 51 74, 97
(e) Taxes------------------------------- 147,269.66 - - - - - - - - - - - - - - - - - - - - - - - - 147,269.66 100.00
Total.----------------------------- 2,743,857.49 1,765,854.86 64.36 978,002.63 35. 64
(a) Divided on revenue train mileage.
(b) Divided, generally, on revenue train mileage; a few items on the divided mainte-
nance of equipment items
(c) Divided, generally, on revenue train mileage ; a few
motive mileage.
d) Divided on revenue train mileage. &
. (e) Divided on various classes of taxes—-tax on gross receipts ànd tax on net earnings
on gross passenger earnings to total passenger and freight earnings; other taxes on main-
tenance of Way and structures. -
items on the yard and loco-
*


RAILway MAIL PAY. 423
•'
* } DIVISION OF EXPENSEs—FIRST REPORTs INADEQUATE.
The Post Office Department states in its report that the data sup-
plied by the railroad companies on Forms 2603 and 2604 was found
to be inadequate for the purposes needed. Accordingly request was
made for the information as to expenses in greater detail, a new
Form 2608 being printed, in which the total operating expenses for
November, 1909, were requested to be shown subdivided into the 116
primary operating expense accounts recognized by the Interstate
Commerce Commission. It was also desired that for each item the
amounts assignable directly to mail, express, passenger, and freight
services be stated and the amounts of remainders apportioned and
the basis of such apportionment. * -
DIVISION OF ExPENSES-POST OFFICE DEPARTMENT INTRODUCES ITS own
- : METHOD.
From this information the Post Office Department divided by its
own method the total operating expenses between the passenger and
freight services and determined what amounts were directly charge-
able to the mail, express, and passenger services. The remainder of
the passenger operating expenses (which were not directly assigned)
were apportioned on the basis of the car-foot mileage recognized in
each service. -
The effect of the departmental method of dividing the expenses
between freight and passenger service is shown as to each of the
companies in the following table:
424 -
RAILWAY MAIL PAY.
parison of results.
Division of ea penses by railroad company and Post Office Department—Com-

Difference--------------------------------------------------
Total operat. 99.5 --
ing expenses (i. ‘...) Per
Company. (and taxes), Cent of
freight and chargeable to total
º ÖI’ passenger º
p 8°. trăin service.
Pennsylvania Lines East of Pittsburgh:
Pennsylvania R. R.------------------------------------------ $9,079,325.81 $2,743,857.49 30.22
Post Office Department.-----------------------------...- 9,079,325.81 2,056,327.76 22.65.
Northern Central Ry----------------------------------------- 829,891.35 204,993.77 24.70.
Post Office Department-----------------................. 829,891.35 163,266.93 19. 67
Philadelphia, Baltimore & Washington R. R. . . . . . . . . . . . . . . . 1, 109, 540.84 583, 635. 13 51. 70
Post Office Department---------------------------------- 1, 109,540.84 469,729.03 42. 34
West Jersey & Seashore R. R. ............................... 338,268.23 216,999.51 64. 15
Post Office Department---------------------------------- 335,686. 37 187,581. 24 55.88.
Baltimore, Chesapeake & Atlantic Ry. . . . . . . . . . . . . . . . . . . . . . . 1 14, 181. 89 9,058.84 63. 88
Post Office Department---------------------------------- 15,744.42 8,662.94 55.02
Cumberland Valley R. R. ----------------------------------- 150,418. 55 59,931.03 39.84
Post Office Department. --------------------------------- 149,908. 69 52,426.25 34, 97
Maryland, Delaware & Virginia Ry- - - - - - - - - - - - - - - - - - - - - - - - - - 1 10,072.64 6,741, 44 66.93
fost Office jepartment........I.I.I.I.I.I.I.I.I.I.I. 10,486.81 6,729. 14 64. 17
New York, Philadelphia & Norfolk R. R.... . . . . . . . . . . . . . . . . . 194,731.63 46,505.02 23. 88
Post Office Department---------------------------------- 158,052.48 27,025.93 17, 10
Pennsylvania Lines West of Pittsburgh:
Pennsylvania Co--------------------------------------------- 2,974, 405. 48 630,821. 19 21.21
Post Office Department---------------------------------- 2,974,405. 48 513,350. 50 17.26
Pittsburgh, Cincinnati, Chicago & St. Louis Ry.... . . . . . . . . . . 2,214,180.83 621,819.84 28.08
Post Office Department---------------------------------- 2,214, 180.83 525,545.13 23. 74
Vandalia R. R.----------------------------------------------- 633,064.90 201,457.09 31.82
Post Office Department---------------------------------- 633,064.90 144,261.49 22. 79
Cincinnati & Muskingum Valley R. R. . . . . . . . . . . . . . . . . . . . . . . 66,061. 67 23,824.43 36. 37
Post Office Department..... ----------------------------- 66,061. 67 20,314.92 30. 75
Cincinnati, Lebanon & Northern Ry.............. . . . . . . . . . . . 20,128.21 4,234.30 21.04
Post Office Department. . . . . . . .-------------------------- 20,128.21 4,229. 14 21.01
Cleveland, Akron & Columbus Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . 171,128.61 37,684.00 22.02
fost ºffice Department.........* * * * * * * * * * * - - - - - - - - - - - - 171,128. 61 28, 143.06 | 16.45
Grand Rapids & Indiana Ry........... ---------------------- 327, 167.47 117,055.77 35.78
Post Office Department.------------......... ----........ 327, 167.47 92,828.38 28. 37
Toledo, Peoria & Western Ry-------------------------------. 86,787.48 33,382.06 38.46
Post Office Department.--------------------------------. 86,787. 48 26,928. 89 31.03
Waynesburg & Washington R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,320.47 3,815. 58 40.94
Post Office Department. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,320.47 2,851.76 30. 60
Pennsylvania Lines East and West, total........................ 18,228,676.06 || 5,535,816.49 30, 36
Post Office Department, total.................................... 18, 190,881. 89 4,330,202.49 . 80
37,794.17
1,205,614.00
1 Taxes are not included in this amount.
Upon examining the foregoing comparison it is immediately notice-
able that by the method devised by the Post Office Department for
this occasion the passenger train operating expenses are made much
lower in each case than the amount reported by the railroad com-
pany. The total for the 17 companies shows that the department's
method eliminated $1,205,614 from the passenger-train expenses, or
21.77 per cent of the amount reported. In the case of the Pennsyl-
vania Railroad Co. the amount is reduced from $2,743,857.49 to
$2,056,327.76, a reduction of $687,529.73, or 25.05 per cent. As these
amounts are for the single month of November, 1909, the reduction
in the case of the Pennsylvania Railroad Co. was equivalent to over
$8,000,000 per year, and for all of the 17 companies to over $14,000,000
for the year. This important alteration in the fundamental financial
basis of the inquiry was made by the department without any con-
sultation with the railroad company to obtain its views or its explana-
tions.
*
The method of apportionment of expenses used by the Pennsyl-
vania Railroad Co. was not created for the statistical inquiry of
RAILWAY MAIL PAY. 425
November, 1909, undertaken by the Post Office Department. It had
been in effect for over 40 years, and during that time it was fre-
quently the subject of discussion and verification by its expert ac-
counting officers, not only among themselves, but also in association
with the experts of other railroads in annual conventions as well as
in conference with the Interstate Commerce Commission and State
railroad commissions. The results reached from year to year from
this long-established method were the statistical guide for measuring
efficiency and for gauging expenditures many times greater than the
revenue derived from transporting the mails.
Consequently, the company would be fully warranted in conclud-
ing that in this particular inquiry its statement of passenger-train
expenses should have been accepted by the Post Office Department
because of the greater experience of its officers in dealing with such
matters and their greater intimacy with the financial and operating
factors involved than could possibly be possessed by those in the
postal service who were designated to give this subject their study
and consideration. Further, the company’s method of between 40
and 50 years’ duration was at least neutral as to this particular in-
quiry, while a special and peculiar method, such as that used by the
Post Office Department, devised for this inquiry, would need to be
closely scrutinized. The fact that it produces uniformly lower ex-
penses for the passenger train service (and consequently for the mail
service on passenger trains) would not lead one to conclude that it
was adopted for its abstract qualities regardless of its concrete
results.
NOVEMBER, 1909, OR ANY SINGLE MONTH NOT REPRESENTATIVE OF
AVERAGE CONDITIONS.
If all other computations and methods had been correct, it would
still be essential to verify the statistical results for November, 1909,
to ascertain whether they were truly representative of average con-
ditions throughout the year. It is contended that no unit less than
one year can correctly indicate a dependable ratio as to revenues and
j. and in some cases a series of years would be necessary. The
following table shows a comparison between November, 1909, and the
average 30 days of the calendar year 1909, for the principal com-
panies of the Pennsylvania Railroad system: - -

Revenue. Expenses.
November, November, November, November,
Company. tº y y 3.
higher than lower than higher than] lower than
average 30 average 30 average 30 average 30
days of year|days of year|days of year|days of year
1909 by— | 1909 by- | 1909 by- | 1909 by-
Per cent. Per cent. Per cent. | Per cent.
Pennsylvania R. R.----------------------------------. 4 ------------|------------ 2.
Philadelphia, Baltimore & Washington R. R. . . . . . . . . . 2 ------------ 2 ------------
Northern Central Ry------...--------................. 1 ------------|------------ 8
West Jersey & Seashore R. R..........................|............ 35 ------------ 12
Pennsylvania.Co-...-: - - -, -, - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 ------------ 4
Pittsburgh, Cincinnati, Chicago & St. Louis Ry- - - - - - - - - - - - - - - - - - - 1 1 F------------
Vandalia R. R. ---------------------------------------|-----------. 6 7 1-----------
Grand Rapids & Indiana Ry--------------------------|----...----- 10 ------------|-----------
426
RAILWAY MAIL PAY.
This shows a wide variation as between the different companies and
illustrates that it was rather precipitate to base a final judgment as
to profit or loss and a prediction of a $9,000,000 saving upon the
statistics of a single month unverified as to its truly representative
character.
COMPARATIVE REVENUES FROM PASSENGER, MAIL, AND ExPRESS.
Although the revenues from the passenger, mail, and express busi-
ness for November, 1909, were reported to the Post Office Department
as requested, they are not published in Document No. 105, but only
the revenue from the mails. It is certainly important for Congress
to know how the railway mail pay compares with the revenue from
passenger and express Service in relation to the car space devoted
to each service. The following table gives separately the earnings
from passenger, mail, and express traffic for each company:
Revenues for November, 1909, from passenger, mail, and ea press business.

Company. Passenger. Mail. Express. Total.
Pennsylvania Lines East of Pittsburgh:
Pennsylvania R. R. - - - - - - - - - - - - - - - - - - - - - - $2,623,967.32 $202,688.86 || $403,474.39 $3,230,130.57
Philadelphia, Baltimore & Washington
R. R.------------------------------------ 604, 170.75 29,594.18 88,848.70 722,613.63
Northern Central Ry---------------------- 178,733.67 9,860.89 30,501.27 219,095.83
West Jersey & Seashore R. R. - - - - - - - - - - - - 186,072.99 2,899.47 12,492.55 201,465.01
New York, Philadelphia & Norfolk R. R.1-. 32,494.53 2,723.79 9,628.52 ,846.84
Baltimore, Chesapeake & Atlantic Ry----. 5,504. 34 448.46 703,01 6,655.81
Maryland, Delaware & Virginia Ry- - - - - - - - 3,013.08 297. 29 389.53 3,699.90
Cumberland Valley R. R.? - - - - - - - - - - - - - - - - 42,821.07 1,768. 15 5,844.80 50,434.02
Total, Pennsylvania Lines East . . . . . . . . 3,676,777.75 250,281.09 551,882.77 4,478,941.61
Pennsylvania Lines West of Pittsburgh:
Pennsylvania Co. ------------------------- 607,938.74 83,666.93 112,023.02 803,628.69
Pittsburgh, Cincinnati, Chicago & St. --
Louis Ry------------------------------- 589,627.40 98,794.03 118,180.34 806,601.77
Vandalia R. R. --------------------------. 170,690.05 43,208.68 17,218.81 231,117.54
Grand Rapids & Indiana Ry.é. . . . . . . . . . . . 116,251.75 7,517.09 9,980.92 133,749.76
Cincinnati, Lebanon & Northern Ry.9-...- 4,515.61 180.40 575.00 5,271.01
Cincinnati & *ś Valley R. R.3- - - 19,366.72 1,219. 16 2,253.24 22,839.12
Cleveland, Akron & Columbus Ry.8-- - - - - - 38,775.58 1,710.94 7,687.83 48,174.35
Toledo, Peoria & Western Ry.8. . . . . . . . . . . . 34,078.65 1,879.58 1,500.00 37,458.23
Waynesburg & Washington R. R.3-....... 6, 109.32 251.7 273. 6,634.09
Total, Pennsylvania Lines West . . . . . . . . 1,587,353.82 238,428.58 269,692.16 2,095,474.56
Grand total, Pennsylvania Lines East • - **
and West. --------------------------. 5,264,131.57 488,709.67 821,574.93 6,574,416.17
* Data furnished for December, 1909.
2 Data furnished for Januar
1910.
y
* Data furnished for period, fee. 6, 1909, to Jan. 4, 1910.
^
If we measure these revenues according to the car space (car-foot
miles) assigned to each service during November, 1909, we would
use the following figures as reported for the different companies and
carefully revised and rechecked.
RAILWAY MAIL PAY.
427
Odº' space for November, 1909, ea pressed in car-foot miles, by companies.

Company. Passenger. Mail. Express. Total.
Pennsylvania Lines East of Pittsburgh:
- Pennsylvania R. R. . . . . . . . . . . . .----------- 528,508,392 57,819,376 91,624,080 677,951,848
Philadelphia, Baltimore & Washington
R. R.------------------------------------ 132,844,668 8,336,728 15,638,456 156,819,852
Northern Central Ry. - - - - - - - - - - - - - - - - - - - - - 39,951,565 2,894,693 7,549,442 50,395,700.
West Jersey & Seashore R. R.----------.... 35,171,605 1,132,387 1,827,845 38,131,837
New York, ;º. & Norfolk R. R.1- 5,413,995 423,166 1, 550,697 7,387,858
Baltimore, Chesapeake & Atlantic Ry..... 999,141 141,764 177,092 | 1,317,997
Maryland, Delaware & Virginia Ry-------. 620,165 92,772 125,255 838, 192
Cumberland Valley R. R.?---...-----...--- 9,492,880 501,010 1,067,108 11,060,998
Total, Pennsylvania Lines East........ : 753,002,411 71,341,896 || 119,559,975 || 943,904,282
Pennsylvania Lines West of Pittsburgh:
Pennsylvania Co--------------------------- 173, 181,441 28,747,137 41,437,614 243,366,192
Pittsburgh, Cincinnati, Chicago & St.
Louis RV------------------------->- - - - - - 158,968,990 32,381,282 33,434,990 224,785,262
Vandalia R. R.----------------------------- 45,790,484 || 14,827,412 8,491,357 69,109,253.
Grand Rapids & Indiana Ry.”------------- 25,792,537 2,708,457 3,501,207 32,002,201
Cincinnati, Lebanon & Northern Ry.º..... 898,709 31,092 43,66 973,461
Cincinnati & Muskingum Valley R. R.3---- 2,978,759 415,309 620,074 4,014, 142
Cleveland, Akron & Columbus Ry.3- - - - - - - 8,589,730 757,699 1, 734,569 | . 11,081,998
Toledo, Peoria & Western Ry.8-- - - - - - - - - - - 5,694,455 1,139,212 622,233 7,455,900
Waynesburg & Washington R. R.3.----... 693,559 85,074 34,172 812,805
Total, Pennsylvania Lines West.--------| 422,588,664 81,092,674 89,919,876 593,601,214
Grand, total, Pennsylvania Lines East
and West------------------------------ 1,175,591,075 152,434,570 209,479,851 | 1,537,505,496
1 Data furnished for December, 1909.
2 Data furnished for January, 1910.
3 Data furnished for period Dec. 6, 1909, to Jan. 4, 1910.
Dividing the revenues by the car-foot miles, we obtain the average
earnings from each class of service on the common unit, the car-foot
mile.
Revenues for November, 1909, per car-foot mile from each class of service.

*~ Company. Passenger. Mail. Express. | Total. Mail. I
Pennsylvania Lines East of Pittsburgh: lſills. Mills. Mills Mills. lſills.
Pennsylvania R. R. --------------------------- 4.965 3. 506 4.404 4. 765 4.324
Philadelphia, Baltimore & Washington R. R. . 4, 548 3. 550 5. 681 4. 607 4. 032
Northern Central RV - - - - - - - - * * * * * * * * * * * * * * * * * * 4.474 3. 407 4. 040 4.348 3. 789
West Jersey & Seashore R. R. - - - - - - - - - - - - ----- 5. 290 2. 560 6.835 5. 283 4. 231
New York, Philadelphia & Norfolk R. R. . . . . . 6.002 6. 437 6. 209 6. 070 3. 766
Baltimore, Chesapeake & Atlantic Ry......... 5. 509 3. 163 3, 970 5.050 3.961
Maryland, Delaware & Virginia Ry-...-------- 4.859 3.204 3. 110 4. 414 S. 063
Cumberland Valley R. R. --------------------- 4. 511 3.529 5. 477 4. 560 3.594
Total, Pennsylvania Lines East. - - - - - - - - - - - - 4.879 3.490 4.591 4, 737 4, 255
Pennsylvania Lines West of Pittsburgh:
Pennsylvania Co------------------------------ 3. 510 2.910 2. 703 3. 302 3. 450
Pittsburgh, Cincinnati, Chicago & St. Louis Ry- 3. 709 3.051 3.534 3. 588 3, 616
Vandalia R. R.--------------------------------- 3. 728 2.914 2.028 3.344 3. 510
Grand Rapids & Indiana Ry. . . . . . . . . . . . . . . . . . 4. 507 2. 775 2.851 4, 179 3.417
Cincinnati, Lebanon & Northern Ry. . . . . . . . . . 5.025 5. 802 13. 17 5. 415 10, 333
Cincinnati & Muskingum Valley R. R. . . . . . . . . 6. 502 2.936 3. 634 5. 690 4. 116
Cleveland, Akron & Columbus Ry. . . . . . . . . . . . . 4.514 2. 258 4.432 4. 347 4. 448
Toledo, Peoria & Western Ry. - - - - - - - - - - - - - - - - 5, 985 1.650 2,411 5.024 3.564
Waynesburg & Washington R. R. . . . . . . . . . . . . . 8. 808 2.959 7. 989 8. 162 6.429
Total, Pennsylvania Lines West............. 3. W63 2.940 2.998 3.535 3. 540
Grand, total, Pennsylvania Lines East and -
West of Pittsburgh. . . . . . . . . . ... ----------- 4.473 3. 195 3. 898 4.267 3. S73
1 Mail earnings as calculated by the Post Office Department using reduced car-space figures.
428 - RAILWAY MAIL PAY.
It thus appears that in 15 cases out of 17 the earnings from the
mails, according to the company’s figures, are lower than the earn-
ings from the passenger service as measured by the car space devoted
to each service. In 13 cases out of 17 the earnings from the mails are
lower than the earnings from the express service, although the mail
service enjoys greater speed and frequency of transmission than the
express traffic and is much more exacting in its requirements. Even
the Post Office Department's figures for mail earnings in the last
column show that in 11 cases out of 17 the mail earnings are lower
than passenger-train earnings per car-foot mile. — ”
In the case of the Pennsylvania Railroad Co., if the mail car-foot
miles (57,819,376) be multiplied by the average passenger earnings
per car-foot mile (4.965 mills) the mail pay for November, 1909,
would have been $287,073.50. The actual pay as stated by the Post
Office Department was $203,126.54. i. there was a shortage
of $83,946.96 for the month or an annual shortage of about $1,007,-
363.52 as compared with passenger earnings.
For the Pennsylvania Railroad system (both east and west of
Pittsburgh) the average revenue per car-foot mile was 4,267 mills
for all passenger-train service, including passenger, mail, and express
traffic. The mail pay was only 3.195 mills, this amount being cal-
culated by dividing the actual revenue from mail traffic by the num-
ber of car-foot miles reported by the railroad company. The mail
pay was, therefore, 33 per cent below the average earnings of pas-
senger trains. The revenue from the express service (a service much
less expensive to the railroad company than the transportation of
the mails) was 3.898 mills per car-foot mile, or 21 per cent higher
than the revenue from the mails.
If the Post Office Department's car-space total for the mail service
(17 per cent below that reported by the railroad company) be divided
into the mail pay, it will produce an average of 3.873 mills per car-
foot mile, against the railroad company’s figures of 3.195 mills, re-
ferred to above. Even if the Post Office Department's figures could
be accepted, the mail pay would still be 10 per cent below the average
passenger-train earnings and slightly below the average earnings
from express traffic.
COMPARISON OF MAIL REVENUE AND MAIL EXPENSES FOR NovKMBER, 1909.
A comparison is made in the following table between the railroad
company’s earnings from the mail service and the expenses charge-
able to the mail transportation as computed by the railroad company
and the Post Office Department: *
RAILWAY MAIL PAY.
429
Comparison of mail revenue and mail ea penses for November, 1909, as com-
puted by the railroad company and by the Post Office Department.

Mail E Peºger.
* Mia! r X- Tººl
Company. Space #: . pense expenses Gain LoSs.
ratio. * | ratio. . . chargeable
** to mail.
Pennsylvania Lines East: Per ct. Per Ct.
Pennsylvania R. R. . . . . . . . . . . . . . . . 8.53 |3202,688.86 8.53 |$234,051.04 |- - - - - - - - - - - - |$31,362. 18
Pušti º ‘ash- 6.93 203,126. 54 6.74 138,686. 11 || $64,440. 43 |- - - - - - - - - -
# Iſſlor ºf g º ºr tº
#: #: … 5.32 29,594. 18 5.32 || 30,517.39 . . . . . . . . . . . . 923. 21
sº: ##| *;| ##| ###| *|†:
* * * * * * * * * * * * * * * & gº gº * * * * * * * * * * * * º, ſo
W º: º: §"; * = * * * * § # ; : % 3.07 || 3,377. º i,596.16 |........
est Jersey €aSIGOTO bº... tº - - - - - - . 97 ,899.4 2.97 6,444. 88 - - - - - - - - - - - - 3, 545. 41
#óstółfice department...... i. 32 2,336.ii | 1.76 3,295.13 |..I.I.I.I.I. '353.02
Baltimore, Chesapeake & Atlantic
Ry------------------------------ 10. 75 448. 46 || 10. 75 973. 83 - - - - - - - - - - - - 525.37
Post Office Department. . . . . . . . 8.58 448.46 8. 56 741. 62 - - - - - - - - - - - - 293. 16
Maryland, Delaware & Virginia Ry. 11.07 297. 29 || 11.07 716.39 - - - - - - - - - - - - 419. 10
ost Office Department. . . . . . . . 6.42 434.02 6.03 406. 10 27.92 || -- - - - - - - - -
Cumberland. Valley R. R. . . . . . . . . . 4. 53 1,768. 15 4. 53 2,714.88 - - - - - - - - - - - - 946. 73
Post Office Department. . . . . . . . 4. 50 1,780. 17 4.42 2,315. 74 - - - - - - - - - - - - 535. 57
New York, Philadelphia & Nor- -
folk R. R.------------------------ 5. 73 2,723.79 5. 73 2,664. 74 59.05 - - - - - - - - - -
Post Office Department. . . . . . . . 5. 32 1,477. 16 4.45 1,205.21 271.95 |- - - - - - - - - -
Total, Pennsylvania Lines
T ; Post offic Depar£ 7.56 250,281.09 7.56 289,849. 79 . . . . . . . . . . . . 39,568.70
O OS ce Lepar
ment * * * * * * * * * * * * * * * * * * * * * * 6. 23 250,315.62 5.92 || 175,861.38 74,454. 24 |- - - - - - - - - -
Pennsylvania Lines West:
Pennsylvania Co. ------------------ 11.81 | 83,666.93 11.81 74,499.98 9,166.95 . . . . . . . . . .
Pit,t;";*ś & 10.00 | 84,043.34 9. 65 49, 530. 56 34, 512. 78 |- - - - - - - - - -
St. fojiš RV-------- . * * * * * * * * * * * * 14.41 98, 794.03 14.41 89,604. 24 9,189.79 - - - - - - - - - -
V ; º: Department. . . . . . . . # 09 º : § 11.65 61,242.34 37,192.45 - - - - - - - - - -
andalia R. R... ------------------ 21.45 208. 21.45 43,212. 54 - - - - - - - - - - - - 3. 86
g # $º gº; e & sº e ºs--- 1. % i; ; 1. º: 24,614. 75 18,594.94 - - - - - - - - - -
rand Rapids iana Ry------- g 7 . 0 .4 9,902.92 |- - - - - - - - - - - - 2,385.83
Post Office Department. . . . . . . . 7.10 7,766.70 || 6.93 6,435.57 || i.33i is ...' ...
Cincinnati, Lebanon & Northern
RV------------------------------ 3. 19 180. 40 3. 19 135. 07 45.33 - - - - - - - - - -
ost Office Department. - - - - - - - 1. 79 180. 40 1. 78 75.43 104.97 |- - - - - - - - - -
Cincinnati & Muskingurn Valley
R. R.----------------------------- 10.35 1,219.16 || 10.35 2,465.83 |- - - - - - - - - - - - 1,246.67
Post Office Department. - - - - - - - 7.38 1,219. 16 7.36 1,495. 12 - - - - - - - - - - - - 275.96
Cleveland. Akron & Columbus R.R. 6.84 1,710.94 6.84 2,577. 58 - - - - - - - - - - - - 866. 64
Post Office Department. . . . . . . . 3.59 1,770.52 3.54 997. 37 773. 15 - - - - - - - - - -
Tolº % : By tº E ºr sº tº tº # ; }: § # #. ; 5,100. 78 - - - - - - - - - - - - 3,221. 20
OS Ce Department - - - - - - - - & & . 1 1,935.40 l. -- - - - - - - - - - 54.8
Waynesburg & Washington R. R... 10.47 ’251.77 10.47 '369.43 |..I.I.I.I.I. 147, 72
Post Office Department. . . . . . . . 4.82 251. 77 4.82 137, 46 114.31 - - - - - - - - - -
Total, Pennsylvania Lines
Tºi Post office Departº 13.66 238,428.58 13.66 227,898.43 10,530. 15 |..........
Olga, OS ce Depar
ment............... 11.36 238,756.95 10.78 146,464.00 92,292.95 |. . . . . . . . . .
Grand total, lines East and
gºi total. Post office De- 9.91 || 488,709.67 9.91 || 517,748.22 |. . . . . . . . . . . . 29,038. 55
Ian CI TO OS Cè L)0-
partment............... 8. 21 489,072.57 7.44 || 322,325.38 166,747.19 - - - - - - -...
430 RAILWAY MAIL PAY.
Earnings and ea penses per car-foot mile, Pennsylvania R. R. System, November,
1909 (eaccept Long Island R. R.)—Railroad company figures compared with
Post Office Department figures. *

Earnings per car-foot mile. Expenses per car-foot mile.
Mail space. Mail space.
Company.
pany Total
passenger Post POSt. oßbe.
train. Railroad office pe. Railroad office pe. pºment
Company. Company. p
partment. partment. plus 6
per cent.
in Mills. Mills. Mills. JMills. Mills, Mills.
Pennsylvania R. R.---------------------- 4. 765 3. 506 4.324 4. 047 2.952 3. 129
Philadelphia, Baltimore & Washington
R. R.----------------------------------- 4. 607 3. 550 4. 032 3.658 2, 791 2.958
Northern Central Ry-- - - - - - - - - - - - - - - - - - - - 4, 348 3. 407 3. 789 4. 068 3. 176 3. 367
West Jersey & Seashore R. R. . . . . . . . . . . . . 5. 283 2. 560 4. 231 5. 691 4. 748 5. 033
Baltimore, Chesapeake & Atlantic Ry. -- 5.050 3. 163 3.961 6. 873 68 552 6.945
Maryland, Delaware & Virginia Ry. ... -- 4. 414 3. 204 8. 063 7. 721 7, 545 7. 998
Cumberland Valley R. R. . . . . . . . . . . . . . . . 4. 560 3.529 3. 594 5. 418 4.675 4.955
New York, Philadelphia & Norfolk R. R. 6. 070 6. 437 3. 766 6. 295 3.073 3.263
Pennsylvania Lines East. . . . . . . . . . 4. 74 3.49 4. 255 4. 063 2.989 3.169
Pegnsylvania.Co------------------------ 3. 302 2.910 3. 450 2. 592 2.033 2. 155
Pittsburgh, Cincinnati, Chicago & St.
Louis Ry------------------------------ 3. 588 3.051 3. 616 2. 766 2. 250 2.385
Vandalia R. R. -------------------------- 3.344 2.914 3. 510 2.915 2. 000 2. 120
Grand Rapids & Indiana Ry------------. 4. 179 2. 775 3. 417 3.058 2.832 3.002
Cincinnati, Lebanon & Northern Ry. . . . . 5. 415 5. 802 10.333 4, 350 | . 4.321 4. 580
Cincinnati & Muskingum Valley R. R. . . 5. 690 2.936 4. 116 5. 935 5. 047 5. 350
Cleveland, Akron & Columbus Ry. . . . . . . 4. 347 2, 258 4. 448 3, 400 2. 506 2, 656
Toledo, Peoria & Western Ry. . . . . . . . . . . . 5.024 1.650 3. 564 4. 477 3. 668 3.888
Waynesburg & Washington R. R. . . . . . . . 8. 162 2.959 6.429 4. 694 3.510 || 3.721
Pennsylvania Lines West. . . . . . . . . . 3.53 2.94 3. 540 2.8.10 2, 171 2. 302
Pennsylvania Lines East and West. 4. 27 3. 20 3. 873 3. 397 2. 552 2. 706
The railroad company found that the mail revenue was lower than
the operating expenses and taxes to the extent of $29,038.55 for the
month, or $348,462.60 for the year.
The Post Office Department, by reducing the space 17.16 per cent
and by excluding 21.77 per cent of the expenses, found that the mail
revenue was higher than the operating expenses and taxes to the
extent of $166,747.19 for the month, or $2,000,966.28 for the year,
equal to 51.7 per cent excess over operating expenses and taxes.
But neither of these calculations is complete, because both stop
at operating expenses and taxes and do not take into account the
fixed charges nor a reasonable dividend on the investment.
We must now seek the amount to be added to the operating ex-
penses and taxes in order to fully cover fixed charges, additions, and
betterments, a fair dividend and surplus for use in adversity, and
for this purpose it seems fair to quote the supplemental ratio (46.86
per cent) indicated in statement 43, page 70, of the annual report of
the Interstate Commerce Commission for the fiscal year 1910. If we
add 46.86 per cent to the expenses chargeable to mail transportation
($517,742.22), we obtain $760,356.22 as representing the amount
which the mail service should have paid the company in November,
1909, if it rendered its proportionate share of both operating expenses
and capital cost. This sum, in contrast with the actual revenue of
$488,709.67, reveals a loss of $271,646.55 for the month, or $3,259,-
758.60 for the year, equal to 36 per cent.
RAILWAY MAIL PAY. 431
The Post Office Department's figures for expenses chargeable to
the mail ($322,325.38) are considered to be so indefensible as to
render any extended calculations upon them entirely misleading;
but if 46.86 per cent were added to cover fixed charges, etc., the
amount would be raised to $473,367.05, or very little below the mail
pay ($488,709.67) at that time. -
SU MIMARY.
Review.—Taking a retrospective view of the entire inquiry and its
results, a doubt suggests itself as to the advisability of the Post Office
Department having undertaken the inquiry at all. The law of 1879
placed a judicial duty upon the Postmaster General regardless of the
disadvantages of his position, first, that he was of necessity an inter-
ested party as a shipper of mail traffic, and, second, that the ascer-
tainment would require an exploration into a field where he and his
officers were entirely unfamiliar. Eight years later, in 1887, the
Interstate Commerce Commission was created, and it is probable that
if the inquiry had again been directed by Congress the duty would
have been laid upon the Interstate Commerce Commission. Thirty
years had elapsed since the passage of the law before the statistics of
November, 1909, were taken. - -
Mail-car space.—However, in instituting the inquiry it was under-
stood that the car space devoted to the mail service was to be used
as the ratio for determining the amount of the expenses which should
be charged to the mail service. So when the Postmaster General
deducted 17.16 per cent of the mail-car space reported for the Penn-
Sylvania Railroad system, without obtaining the company’s views
as to the operating necessity for that space, he was undertaking to
protect his supposed rights as a shipper of mail and not treating the
case in a judicial capacity. This attitude would involve the corollary
that the railroad company should fix the tariff rate for the shipper,
subject only to review by the Interstate Commerce Commission.
Also, when the Postmaster General rejected this space he made a
statistical mistake in adding it to the passenger-car space, because he
ignored a statistical unit commonly used in railroad calculations
and known as the “passenger train.” This is a composite unit made
up of passenger, mail, express, and miscellaneous car space. If he
made the deduction at all, he should have made it from the entire
train. But if he deducted what he called “dead space ’’ for mail
from the entire train he would be at the necessity of deducting sim-
ilar “dead space ’’ in the passenger and other particular services from
the entire train, with the result that the ratio for mail space would
be higher than if he ignored “dead space ’’ entirely. These facts
and conditions would all be familiar to the Interstate Commerce
Commission. t
Ascertainment of cost.—The division of expenses between freight
and passenger service, which the Interstate Commerce Commission
discontinued 20 years ago, has been described as one of the greatest
economic questions of modern times. The reluctance and caution
shown by the Interstate Commerce Commission in considering the
formulation and adoption of a general rule applicable to all rail-
roads has been regarded as appropriate and wise by those who are
75904—No. 2—13—8
432 TAILWAY MAIL PAY.
familiar with the enormous difficulties and stupendous possibilities
of the question. The excursion of the Post Office Department into a
field where the experts of the Interstate Commerce Commission fear .
to tread was a consequence, perhaps, of the effort to comply with the
requirements of a very old law, but it is easily apparent that in any
ascertainment of cost the Post Office Department is not qualified by
knowledge of the subject and is not in a disinterested position to
enable it to reach correct conclusions, either as to the division be-
tween freight and passenger service or as to the subdivision between
passenger, mail, and express Services.
Effect on the Pennsylvania Railroad system.—In applying the
yardstick of mail space to measure the passenger train expenses
chargeable to the mail service, if the companies’ yardstick was 100 per
cent of the mail-car space, the Post Office Department's was 82.84 per
cent. This shrunken yardstick was applied not to 100 per cent of
the passenger train expenses as reported, but to only 78.23 per cent.
The result, therefore, was only 64.8 per cent of the correct total of
the operating expenses and taxes chargeable to the mail service, and
further omitted any allowance for fixed charges and interest on the
investment. The conclusion reached by the company, that it was
underpaid 36 per cent, or about $3,300,000, at that time, is based
upon actual facts as to operating expenses and taxes and by using
a formula for capital cost applicable to all the railroads of the
country, as a whole.
Mail pay in comparison with other revenues and ea penses.—In
January, 1901, the joint commission of the House and Senate, con-
cluding an investigation of the postal service extending over three
years, reported to Congress their conclusion that the pay of the
railroad companies for the transportation of the mails was not exces-
sive, and recommended that no reduction be made. The conditions
existing on the Pennsylvania Railroad system and services by the
company for the Post Office Department were given special study
by the commission and its experts, as the printed proceedings show.
Since that time the rate of pay has been reduced by law and by the
regulations and practices of the Post Office Department, so that it
does not now give a fair remuneration for the weight and car space
carried and provided and for the auxiliary services in connection
there with. ſº -
A comparison of a few principal items from the annual reports of
the Pennsylvania Railroad Co. for 1900 and for 1911 will illustrate
this point most forcibly:
The Pennsylvania Railroad Co.
Per cent
1911 1900 Increase. Of
increase.
Freight ton mileage. - - - - - - - - - - - - - - - - - - - - - - 19,419,779,983 11,922,671,210 || 7,497, 108,773 62.88.
Passengers carried 1 mile. . . . . . . . . . . . . . . . . . 1,722,734,924 1198,602 804, 536, 322 87.62
Freight revenue- - - - - - - - - - - - - - - - - - - - - - - - - - - $114,069,932.34 $64,390,452.51 $49,679,479.83 77. 15
Passenger revenue. . . . . . . . . . . . . . . "...-------- $34,113,529.48 || $18,181,081.77 $15,932,447.71. 87.63
Gross revenue. . . . . . . . . . . . . . --------------- $163,118,139.61 $88,534,107.24 || $74,584,032. 37 84.24
Operating expenses (except taxes). . . . . . . . . $120,384, 321.90, $58,832, 157.48 $61,552, 164.42 104.62
Taxes------------------------------------- $6,826,069.53 $2,027, 160.38 || $4,798,909. 15 236. 73
United States mail ton mileage. . . . . . . . . . . . ,859, 120 17,608,063 18,251,057 103.65
United States mail revenue. . . . . . . . . . . . . . . $2,445,557.86 $1,537,384.63 $908,173.23 59. 07
Express revenue. - - - - - - - - - - - - - - - - - - - - - - - - - $4,376,098.81 $1,817,358.75 $2,558,740,06 140.79
RAILWAY MAIL PAY. - 433
In the above statement the United States mail ton mileage is con-
siderably below the true figures, because the latest weighing east of
Pittsburgh took place in 1909, and there was a heavy increase in the
following two years. But taking the figures as they stand, the mail
traffic increased more than any other traffic in percentage, while the
pay is the lowest in the scale of increase and is the only one that re-
cedes as the volume of business advances.
Postal-car pay.—During the past five years the company has en-
tirely replaced its postal cars by new all-steel 70-foot cars at a cost
for the 120 cars of about $1,500,000. It adopted the policy before
there was any national law requiring steel cars. These cars cost 50
per cent more to build, and as they are 50 per cent heavier they cost
more to haul. The cost of maintenance (including electric lights) is
also much greater. The interior facilities for sorting the mails are
also considerably greater for the purposes of the Post Office Depart-
ment. When one seeks to ascertain what was the additional re-
muneration of this great improvement he finds:
Annual pay to Pennsylvania R. R. system for R. P. O. cars:
June 30, 1907 - ____ $920, 721. 15
July 1, 1912 * * - - - 669, 261. 21
Reduction — 251,459.94
Of this reduction about $172,000 was caused by the act of March 2,
1907, reducing pay for R. P. O. cars. About $73,000 represents de-
partmental reductions in pay, mainly without regard to the operating
conditions. The present pay for R. P. O. cars on the Pennsylvania
lines averages about 4.4 cents a running mile, and as the cost of re-
pairs, light, heat, etc., is about 3.4 cents, only 1 cent a mile is left for
the cost of hauling and a return on the capital investment of the road
upon which they are hauled.
Terminal service—Wew York, N. Y., etc.—Any doubt that one
might entertain that the mail service should participate in the charges
for expensive terminal service is readily removed upon a proper
understanding of the subject. The Second Assistant Postmaster
General, in his testimony on January 28, 1913, alluded to the Penn-
sylvania Station at New York, N. Y., as costing nearly $100,000,000,
the larger part of which might be admitted by everybody to be a
passenger facility in which the mails are not interested at all, and
drew a similar illustration as regards the Union Station at Wash-
ington, D. C. In response it might be said that in these great ter-
minals the facilities provided for the passengers, spacious in extent
and beautiful in design and material, attract the eye and obscure
for the moment the real facilities which perform the service. The
terminal facilities at New York, which are included in the total for
which over $100,000,000 was expended, extend from about Newark,
N. J., to the Sunnyside yards in Long Island City, a distance of about
12 miles. The Pennsylvania Station edifice and its appurtenances
would represent perhaps 25 per cent of this amount. In connection
with the Pennsylvania Station and the general post office adjacent
thereto there are provided spiral chutes, conveyors, and elevators for
speedy handling of the mails, these having been installed at an ex-
pense to the railroad company of approximately one-half million
dollars. All of these upper facilities depend for their efficiency upon
the tracks below, of which there are 21, 6 being ordinarily devoted
434 RAILWAY MAIL PAY.
to the Long Island Railroad business, thus leaving 15 tracks for the
Pennsylvania Railroad business. Of these 15 tracks there are 3
largely devoted to the mails, the R. P. O. and storage cars occupying
these tracks for hours at a time. It is estimated that track No. 8 is
used by the mails to the extent of 40 per cent; track No. 14, 41 per
cent; and track No. 15, 94 per cent. It would therefore seem that
fully 10 per cent of the terminal facilities at New York are properly
chargeable to the United States mails—i. e., rating the 15 tracks at
100 per cent each, or 1,500 per cent for the whole, in contrast with
175 per cent used by the mails.
Conclusion.—The Pennsylvania Railroad system performs service
for the Post Office Department on about 9,800 miles of road, supply-
ing an area which comprises the most important manufacturing,
commercial, and agricultural portion of the country, as shown by the
annexed map. -
It carries the mails on 2,700 trains daily, of which 160 are full
R. P. O. trains, about 725 are mail-apartment trains, and about 1,815
are closed-pouch trains.
Two of these trains are exclusive mail trains of the greatest speed,
making the run from New York to St. Louis in 24 hours. If these
trains were paid for specially at $2 a mile (a moderate rate) for
the round trip of 2,122 miles, they would cost the Post_Office De-
partment $3,098,120 per year, an amount equal to 53 per cent of the
total mail pay received by the company.
The frequency of its train service which gives the Post Office
Department such extraordinary facilities in serving the public sat-
isfactorily, may be seen in Table 3 of House Document No. 105, by
comparing the columns giving the length of mail routes, the train
mileage, the car mileage, and the total mail car-foot miles. It can
be seen that the Pennsylvania Railroad system affords, as com-
pared with the average of all the railroads of the country, 120 per
cent more train-miles per mile of road, 138 per cent more car-miles,
and 158 per cent more mail space per mile of road. -
It receives about 11 per cent of the total mail pay and carries about
16 per cent of the mail ton-mileage.
It is the main artery from New York to Washington for the mails
of the Atlantic coast from Maine to Florida. It is likewise the main
artery from New York to Pittsburgh, Columbus, Cincinnati, and St.
Louis, for the entire mails from New York and the intervening
country for the great Southwest from Missouri to Louisiana, and
thence to southern California. It duplicates between New York,
Philadelphia, and Chicago the fast-mail service which the New York
Central lines provide from New York and the New England States
to all the States lying west and northwest of Chicago.
Its best efforts and its full resources have always been employed
for the Post Office Department, because it is a service for the whole
people and because the prosperity and happiness of the general com-
munity is enhanced by a rapid and efficient postal Service.
TWhat is fair remuneration?—The maximum rate of pay for a
service rendered may be described as the value of the service to the
purchaser; this maximum being moderated in commercial trans-
actions by the law of supply and demand and the activity of com-
petition. If the company were paid for the mails transported and
RAILWAY MAIL PAY. 435
the Service performed in connection therewith in accordance with
the value of this service to the Post Office Department or its value
to the communities interested, the present rate of pay would have
to be multiplied many times.
The minimum rate of pay for a service rendered might be described
as the cost of performing the service, because this marks the limitation
beyond which the person performing the service could not be ex-
pected to go and any reward for the work performed is absent.
Between these two extremes there is a middle ground where a fair
and reasonable rate of pay can be expected and which would be
justified according to a fair appraisement of the value of the service
based upon the returns from other somewhat similar services. The
expenditures made by the company are based on prices which rep-
resent not the cost of the material furnished or of the personal
services rendered but the fair commercial value thereof. It is be-
lieved that Congress, after considering the testimony submitted by
the railroads in comparison with the testimony submitted by the
Post Office Department, can readjust the present rates for the trans-
portation of the mails and for the payment of car space used for
traveling post offices, both in full postal cars and in apartment cars.
so that a fair remuneration can be approximated and granted.
The recommendations already submitted by the railroad committee
on railway mail pay in favor of annual weighings, pay for mail
apartment cars, and relief from the side and terminal messenger
service have our concurrence.
Thereupon, at 2 o’clock p. m., the committee took a recess until 3
o'clock p. m.
AFTER RECESS.
The hearing was resumed at the expiration of the recess at 3 o'clock
D. Iſl.
The CHAIRMAN. Mr. Bradley, referring to that portion of your
testimony, as contained in your table entitled “ Pennsylvania Rail-
road system (except Long Island Railroad) total car-foot miles.
November, 1909, as reported by railroad company, and as reported
and altered by Post Office Department,” and the amount under your
disallowance claim in the grand total of 26,155,391, the percentage of
disallowance being 17, what is the principal difference between your
figures and those of the Post Office Department? Is it because of
your differences in reference to dead space?
Mr. BRADLEY. Entirely due to differences as to what is to be re-
garded as dead mail space. -
The CHAIRMAN. If you will turn to page 96 of the preliminary re-
port, entitled “Railway mail pay,” issued January 24, 1913, and the
quoted letter from Mr. Hitchcock, under date of January 9, 1913, the
second paragraph, subheaded “Second,” reading as follows: “That
in computing car-foot miles the mail service shall be charged in both
directions for the line of railway post-office cars, with the maximum
space authorized in either direction,” would the adoption of that
eliminate this difference of twenty-six million and odd car-foot miles?
Mr. BRADLEY. No, sir.
The CHAIRMAN. Why not?
436 RAILWAY MAIL PAY.
Mr. BRADLEY. Because that is simply a restatement by the former
Postmaster General of the practice which the Post Office Department
claimed to have pursued in preparing Document 105, in regard to
recognition of space in full railway post-office cars. It is therefore
not regarded as a modification.
The CHAIRMAN. Read my letter to the Postmaster General, on page
96, dated January 6, 1913, and kindly inform me if acquiescence of
the department or by law in the terms of such letter would, if in
effect, have wiped out this difference of twenty-six-odd millions?
Mr. BRADLEY. If the Post Office Department had given a plain
affirmation to your second paragraph, reading, “In the matter of car
space, the railroad companies be credited with the maximum space in
both directions,” I would say that would have entirely settled the
question at issue as regards dead mail space.
The CHAIRMAN. I have a telegram from the then Postmaster Gen-
eral, Mr. Hitchcock, referring to my letter of January 6, 1913, read-
ing as follows: “Your letter of to-day is accurate in its statement of
the modifications I favor.” That telegram, you take it, is contradic-
tory, taken in conjunction with my letter and the letter of Mr. Hitch-
cock of January 9, which you have read?
Mr. BRADLEY. It seems to me that the letter of the former Post-
master General particularly limits the modification he is willing to
make to the full railway post-office car, regarding which, in the case
of the Pennsylvania Railroad Co., we had a difference with the Post
Office Department of only 6% per cent, and that it does not propose or
consent to any modification in regard to the other classes of mail-car
space, storage cars, apartment cars, and closed-pouch space, which
together represent 21,000,000 car-foot miles out of 26,000,000 dis-,
allowed. Therefore the modification, as I understand it, is only a
very slight approach toward an adjustment of the differences.
The CHAIRMAN. But all this difference of twenty-six-odd million
car-foot miles would be dissipated by the allowance of car space by
crediting the railroad company with maximum space in both direc-
tions in the matter of car space. -
Mr. BRADLEY. Yes; and that would be, as I say, a simple recogni-
tion of the space that was actually and necessarily operated for the
mails during the month selected for the test—November, 1909.
The CHAIRMAN. Such an allowance, by law or by the department,
namely, crediting railroad companies with maximum space in both
directions for all car space used, would rectify the discrepancy be-
tween yourself and the department as represented by the nonallow-
ance for 13,546,378 car-foot miles on empty storage cars running,
would it not? - * -
Mr. BRADLEY. I believe so.
The CHAIRMAN. So that really the main difference between you
and the department in the results obtained on the information con-
tained in Document 105 is the difference in allowance or nonallow-
ance for maximum amount of space for the round trip !
Mr. BRADLEY. So far as the space is concerned; yes, sir. *
The CHAIRMAN. And a law or a regulation providing for an allow-
ance for part of the trip with a maximum space would cover that
and bring you and the department closer together?
Mr. BRADLEY. I am very much afraid that no law could be framed
sufficiently definite to prevent serious differences of opinion under
RAILWAY MAIL PAY. 437
the assumption which the Post Office Department entertains that it
is its exclusive privilege and within its duty to specify what space it
needs and what space it will pay for. I fear that the varied condi-
tions on the different routes are so many that it would be practically
impossible to frame a law which would remove the causes for mis-
understanding and irritation. -
The CHAIRMAN. In your testimony you say:
The revenue from the express service (a service much less expensive to the
railroad company than the transportation of the mail) was 3.898 mills per
car-foot mile, or 21 per cent higher than the revenue from the mail.
Would you kindly elucidate a little your statement to the effect
that the express service is less expensive to the railroad company
than the transportation of the mail? *
Mr. BRADLEY. I understand that you have called for a formal
statement on this phase of the matter from the chairman of the com-
mittee on railway mail pay, and no doubt that will bring out a
precise statement of the differences. It might, however, be said in a
general way that the express service enjoys much less frequency of
transportation than does the mail service. There is no doubt but that
the loading is greater per car-mile, and therefore there is an oper-
ating economy feasible in this class of traffic to a much greater extent
than is noticeable in the mail traffic. The express company contrib-
utes to the expense of station service; it pays rental for space occu-
pied. It contributes toward the wages of train employees who as-
sist in the performance of its service. It relieves the railroad com-
pany from any responsibility for loss or damage to the property
transported as express traffic, and also from any responsibility for
injury to its employees, while they are traveling on the express com-
pany’s business. I understand it also performs a number of special
services for railroad companies, such as the free transportation and
distribution of tickets, money, etc. This is merely an offhand state-
ment, because it is a subject on which I have only general informa-
...tlOn.
The CHAIRMAN. But it will be followed up by a carefully prepared
statement giving the differences and the relativeness as between the
services in expense to the railroad company ?
Mr. BRADLEY. Will it be satisfactory for the chairman of the com-
mittee to submit that statement, or is it desired that I should take
special note of the inquiry to send in something individually on it?
The CHAIRMAN. I would like something individually, in order to
get your particular views explanatory of the statement made by you
in your testimony which I have just referred to.
Mr. BRADLEY. I will be glad to do so. (Mr. Bradley subsequently
furnished the following comparison :)
Differences in the requirements imposed upon the railroad companies in the performance of
United States Mail Service as compared with similar relations in the performance of
service for the express companies.
Subject. Post Office Department. Fxpress companies.
Contracts.--------------- Post Office Department seeks to stip- Express companies formally contract
ulate all the conditions and reserves with railroad companies, the railroad
the right to change many of them at companies being the controlling party
will without consultation. and reserving important powers.
2. Differences........... Differences with Post Office Depart- Arbitration would be naturally re-
; ment not subject to arbitration as sorted to and many contracts so
in England. provide.
4.38
RAILWAY MAIL PAY.
Differences in the requirements imposed upon the railroad companies in the performance o
United States Mail Service as compared with similar relations in the performance of
Service for the express companies—Continued.
Subject.
Post Office Department.
Express companies.
5
8.
9.
10.
. Pay adjustments. . . . .
. Transporsation facili-
ties.
. Car Space----------...
. Railway post office
Cars; mail a part-
IIlent CarS.
. Construction; main-
tenance.
L 0 a d in g and un-
loading.
Employees accom-
panying traffic en
TOutC.
Station room........
11. Side and terminal
12.
13.
14.
15.
16.
17.
messenger service.
Free or reciprocal
SCIVICG.
Mail cranes and mail
ICCGIWeIS.
Advance loading of
railway post office
C3PS.
Handling traffic. ....
Responsibility for
loss or damage.
º
Fines and penalties..
Post Office Department weighs the
mails and adjusts the pay every four
years and practically gives itself a
rebate on the increased business for
the intermediate period.
Post Office Department demands un-
limited frequency—practically on
every train.
Post Office Department requires ex-
ceSS car space for sorting the mails en
route far beyond what the load re-
quires. -
The railway post oſſice cars are largely
Occupied by pigeonholes and iron
racks and are not available for gen-
eral railroad use when not occupied
by the mails.
The law requires steel railway post
office cars, and the Post Office De-
partment prescribes the interior fit-
tings and special sanitary fixtures
and requirements. Light (electric
or gas) is especially expensive, so
much being needed. Hence, high
cost of construction and main-
tenance.
The railroad companies pay for load-
ing and unloading mail cars.
Probably three or fonr times as many
railway postal clerks are carried for
Sorting the mails en route. The rail-
road companies are responsible for
their lives and safety. Substantial
amounts are paid annually on
account of accidents.
If the Post Office Department requires
room for transfer clerks at Stations,
the railroad companies provide them
without special charge and also fur-
nish them and supply heat, light, -
iced water, etc.
Post Office Department requires rail-
road companics to carry the mails
between the station and the post
office at many places.
Post Office Department makes no con-
cessions to railroad companies.
Post Office Department requires rail-
road companies to erect and main-
tain these devices at Several thou-
sand places throughout the country.
Post Office Department expects cars
to be placed in terminals several
hours before leaving time for distri- |
bution in addition to loading, and
thereby avoids renting space in post
offices for that purpose.
Post Office Department pays nothing
extra to train baggagemen nor to
station baggagemen for handling the
mail traffic. *
The Post Office Department has not,
so far as known, asserted the claim
that the railroad companies are
pecuniarily responsible for the gen-
eral mails, but have imposed fines to
cover the loss of registered mail or of
mail bags or locks lost or destroyed
as in railroad wrecks.
Post Office Department imposes fines
and deductions in many cases, some
of which are dependent upon the
idea that the particular mail (per-
haps relatively unimportant) must
be given preference over passenger
and other traffic.
Express pay to railroad companies is
automatically adjusted on the actual
daily business.
Express companies strictly limited to
Certain train movementS.
Express traffic loads more compactly
and therefore more economically.
Express traſſic does not requirespecially
equipped cars. Baggage cars serve
the purpose and are available for
general use.
The express company accepts the cars
that the railroad company can supply
and is content with ordinary service
and very little artificial light. Hence
low cost of construction and main-
tenance.
The -express companies bear this ex
pense themselves.
Express companies relieve the railroad
company from any responsibility for
injury or death of its employees.
The express company pays rent for
any space occupied in stations or
builds its own structures.
No such service is performed for the
express company.
The express company usually carries
free, money, tickets, valuable pack-
ages, etc., for the railroad company,
not only on the contracting railroads,
but also over the connecting lines
over which the express company op-
erates. -
No such requirement exists in connec-
tion with the express service.
Express companies own or rent their
own unloading or loading warehouses
and pay all costs and expenses.
Express company contributes to the
salary of railroad employees acting
in the joint capacity. .
Express company accepts all respon-
sibility for loss or damage to express
traffic. tº -
Express company accepts the railroad
company’s standard of efficiency and
has no superior privileges of super-
Vision.
RAILWAY MAIL PAY. - 439.
Mr. Chairman, in response to your recent informal suggestion I
have prepared a statement of views upon the question as to whether
the carriage of the United States mails represents an intangible asset
to the railroads which should be given weight in fixing the rates for
transportation. I submit it herewith for such disposition as you may
desire to make of it.
The CHAIRMAN. On behalf of the committee, I am extremely
obliged to you for your compliance with the request, and will insert
in the record your views relative to that particular phase of the
problem.
A CONSIDERATION OF THE QUESTION AS TO WHETHER THE CARRIAGE OF THE UNITED
STATES MAILS REPRESENTS AN INTANGIBLE ASSET TO THE RAILROADS WHICH
SHOULD BE GIVEN WEIGHT IN FIXING THE RATES FOR TRANSPORTATION.
This question requires some study as to the basic attitude of the United
States Government toward the post office and of the resultant duties or privi-
leges Of the citizen in regard to the post office; also an analysis of the relative
standing of those who as contractors, messengers, postmasters, clerks, or letter
carriers perform service for the Post Office Department.
The first resolution of the Continental Congress regarding postal matters was
passed on Monday, May 29, 1775, and reads:
“As the present critical condition of the Colonies renders it highly necessary
that ways and means should be devised for the speedy and secure conveyance
Of intelligence from One end of the continent to the other :
“Resolved, That Benjamin Franklin and five other Members be appointed a
committee to consider the best means of establishing posts for conveying letters
and intelligence through this continent.”
Two months later the committee reported and Congress agreed that a Post-
master General be appointed for the United Colonies; that a line of posts be
appointed from Falmouth, New England, to Savannah, Ga., with as many cross
posts as he shall think fit. That deputies should be paid 20 per cent of what
they collect and pay into the General Post Office up to $1,000 per annum, and
10 per cent on all sums beyond that amount, and the resolution continues:
“And if the necessary expenses of this establishment should exceed the pro-
duce of it, the deficiency shall be made good by the United Colonies.”
Later on—February 25, 1777—a resolution was passed that $5,000 be advanced
to the Postmaster General, and the language continues :
“And if the profits of the said post offices shall not be sufficient to defray the
expenses of same, the deficiency shall be supplied out of the Continental
Treasury.”
We therefore find that the Continental Congress, as a military and national
emergency, found it necessary to establish a postal service as an offset to the
ministerial post office that was still maintained in the Colonies under royal
authority. It is also evident that even at that time, when the new Nation was
struggling in its birth, it was expected that profits in conducting the post office
might be sufficient to defray expenses, and only in the event that they were not
was it provided that the deficiency should be supplied out of the Treasury.
After the adoption of the Constitution in 1789, an act was passed on Sep-
tember 22, 1789, for the temporary establishment of the post office until the
end of the next session of Congress, and no longer. A similar act was passed
in 1790, 1791, and 1792, and it was not until June 1, 1794, that a General Post,
Office was established at the seat of government. The Postmaster General did
not become a member of the Cabinet until 1829, 35 years after the permanent
establishment of the post Office. -
|Upon the permanent establishment of the post office, Congress limited the
postal monopoly to the letter mail—which at present we call first-class matter—
carried for the general public, and this limitation of monopoly still continues
after nearly 120 years. It is well to note that the growth in the volume of the
mails since that time has been largely in the Second, third, and fourth class
mail matter. In the special weighing of 1907 first-class matter constituted 7.29
per cent of all mail matter and equipment, and 12.81 per cent of all mail matter
excluding equipment.
440 * RAILWAY MAIL PAY.
It is also to be noted that when the post office was established in 1794 com-
munication by letter was practically the only means of communication, whereas
Since that time telegraph and telephone service have been established through
private enterprise, and continue under private control except as restrained and
regulated by the Government. &
The intention of Congress that all who performed the postal service should
receive fair remuneration is indicated again and again from the very beginning,
as is also the expectation that the system should be self-sustaining. The volume
of postal laws published in 1810 which are understood to contain the legisla-
tion of 1794 prescribes, among the duties of the Postmaster General : 4.
“He shall provide for the carriage of the mail on all post roads that aré o
may be established by law as often as he, having regard to the productiveness
thereof and other circumstances, shall think proper.”
Also, in Section 3, that : - # -
“It shall be lawful for the Postmaster General to provide by contract for
the carriage of the mail on any road on which a stage wagon or other stage
Carriage shall be established, on condition that the expense thereof shall not
exceed the revenue thence arising.” *
A very interesting method of pay is quoted in this same paragraph when
it says:
“It shall also be lawful for the Postmaster General to enter into contracts,
for terms not exceeding eight years, for extending the line of posts and to
authorize the persons so contracting * * * to receive during the continu-
ance of such contracts * * * all the postage which shall arise on letters,
newspapers, magazines, pamphlets, and packets conveyed by any such posts.” .
The principle of compensation for any specific service rendered to the Post
Office Department has been constantly maintained by the Government from
the beginning, and the expression “reasonable and just compensation ” is fre-
quently met with. In this respect it has been suggested that the United States
Government, recognizing that the national and industrial life was adjusted to
the principles of English jurisprudence, accepted the obligation of providing for
Compensation for services rendered, this view being also in accordance with
the spirit of the fifth section of the amendments to the Constitution, which
reads : - •
“Nor shall private property be taken for public use without just compen-
Sation.”
It might be suggested that if this supreme law restrains the action of the
Federal Government where its very sovereignty may be involved, it is all the
more controlling where the Government is an agency for the performance of
what has become largely a commercial Service.
In Great Britain it is observed that the Government pays the railroads for
transporting the nails, including the parcel post, an annount equal to 21% per
cent of the total postal expenditures, although the service rendered in Great
Britain by the railroads is obviously much less extensive and not nearly so
essential as the Sinhilar service is in the United States.
In 1838 a law was passed declaring every railroad a post road and authorizing
the Postmaster General to have the mails conveyed by rail, provided he can
have it done upon reasonable terms, and not paying therefore in any instance
more than 25 per cent over and above what similar transportation would cost
in post coaches. This shows that an attempt was made to measure the in-
creased value of the service due to the greater speed and regularity to be
expected from the railroads as compared with the post coach. -
It is frequently suggested that the railroad is benefited by carrying the
United States mail because of the protection which the railroad is supposed to
obtain from the National Government in Case of strikes Or labor troubleS. In
response it might be said that the National Government has not shown a dis-
position to exert its sovereignty to uphold the regularity of the postal service.
The usual course of the National Government is the withdrawal of the mail
facilities where there is local disorder or the Substitution of Some other means
of transportation where the disorder affects transportation lines. As recently
as October 9, 1912, the General Superintendent, Railway Mail Service, published
instructions of the Second Assistant Postmaster General on the subject of rail-
road strikes. Under the head of “Duty required of postmasters” it is pre-
scribed that the postmaster is expected to cooperate with United States district
attorney and advise him in the premises, but not to advise action beyond the
scope of his instructions without the approval of the Postmaster General. It
is further prescribed : º
RAILWAY MAIL PAY. 441
“He shall require the contracting company to furnish adequate service, and
if this can not be done on account of unlawful acts of the Strikers, he must
report the character of temporary service required and the lowest obtainable
rate for such service to the Second Assistant Postmaster General.”
It therefore seems to be a fair inference that the sovereignty of the Govern-
ment in connection with the Post Office Department is almost entirely latent,
and that in the few cases where the National Government has intervened be-
cause of widespread rioting and disorder and the entire suspension of trans-
portation facilities that the governmental action is more clearly in fulfillment
of Article IV, section 4, of the Constitution, which prescribes that the United
States shall guarantee to every State in the Union a republican form of govern-
ment and shall protect each of them against invasion and, on application,
against domestic violence, than for the relief of the postal service.
Conclusions.—First. It may be held that, strictly speaking, a service ren-
dered to the Post Office Department by a citizen or group of citizens is not
customarily performed because of any patriotic obligation. In the case of the
railroads the United States Supreme Court has decided that they are not obliged
to carry the mails.
Second. It seems evident that so long as the Federal Government monopolizes
the carriage of letters—a very essential form of communication—the railroads
could not as a rule bear the odium of incommoding the communities dependent
upon them by refusing to carry the mails, even though the service was per-
formed at a loss.
Third. It would seem that the monopoly is granted by Congress to the Post
Office Department in the interest of all the people and that it carries with it
the obligation to serve all of the Communities with mail and the avoidance of
any oppression upon those whose Services are essential in the performance of
the duty.
Fourth. The protection to the railroad from carrying the mails in the case
of Strikes Or labor troubles is SO remote as not to constitute a valuable factor
for consideration. The preservation of order in the community and the preven-
tion or suppression of industrial revolution which interferes with interstate
commerce seems to be a more adequate and satisfactory basis for interven-
tion by the National Government.
Fifth. Aside from any cold analysis of the respective rights and obligations,
it would seem that the citizens engaged in Operating railroads should be as
public spirited as other citizens in assisting cheerfully and even enthusiastically
in any service that is for the public good. There seems to be no greater obli-
gation upon them than upon their fellow citizens to make unnecessary sacri-
fices in the exhibition of their public spirit. Even if it could be held that they
should go further than their fellow citizens, it must be remembered that the
railroads of the country do not constitute one compact system, but many of
them are unable to pay dividends and some of them are struggling for existence,
even in times of prosperity.
Sixth. Keeping in mind the principle that the Post Office Department is
expected to be self-sustaining and not to be a drain upon the National Treasury,
it might be advanced that Congress in appropriating money for railway-mail
pay is not expending public funds for public purposes in the usual sense, but
rather distributing the postal revenues to those who have performed the service
in accordance with the value of Such service.
Seventh. The development of the postal service in modern times into the
commercial field, the recent establishment of the parcel post, and the agitation
that is continuing for further extensions in the same direction emphasize the
importance of paying adequately for all services rendered, because otherwise
certain citizens would be unduly taxed for the convenience and the economy of
OtherS.
Eighth. It is a commendable belief that it is the duty of any Government
to especially reward those who are faithful or valiant in its service, as an
incentive for further effort of the same character and as stimulating patriotism.
It seems all the more necessary when the General Government engages in a
commercial Service that it should not Only guarantee adequate remuneration
for the work performed but also allow exemplary reward for special facilities.
: f V. J. BRADLEY.
MARCH 26, 1913.
442 RAILWAY MAIL PAY.
Mr. Russell H. Snead, manager of express traffic for the Chesa-
peake & Ohio Railway Co., submitted under oath the following
Statement: -
ExHIBIT A.
Exhibit A shows a comparison of revenues from the transportation of pas-
Sengers, mail, and express for certain specified years, 1893 to 1912, inclusive,
Covering a total period of 20 years. In order to avoid burdening the commission
with a lengthy statement, which should show the figures in detail for each year,
I have shown them for each of the three years 1912, 1911, and 1910, and then
beginning with 1908 with five-year intervals. Upon the theory that passenger
trains are run primarily for the transportation of passengers, I have shown the
ratio of mail and express revenues to the revenue received from passengers
for each of the years named, and invite your attention to the fact that while
the ratio of express revenue increased from 5.04 per cent in 1893 to 10.64 per
cent in 1912, the corresponding ratio for mail decreased from 8.75 per cent in
1893 to 6.74 per cent in 1912, showing that the revenues received from express
transportation are, relatively, increasing faster than passenger revenues, while
mail revenues are decreasing. ---
Comparing revenues from the three classes of traffic carried on passenger
trains for 1912 with 1893, it is found that passenger revenue increased 133.51
per cent and express revenue increased 393.55 per cent, while mail revenue
increased only 79.92 per cent. It should be noted that in the same period of
time the operated mileage of the road has increased 75.49 per cent, so that the
per cent of increased mileage alone would very nearly account for the increased
revenue from mail, even if there had been no increase whatever in the volume of
mail matter transported. -
It should also be remembered that in the 20-year period the rate of mail
pay has twice been reduced. º -
Chesapeake dº Ohio lines—Comparison of revenues from transportation of
passengers, mail, and ea press for certain specified years, 1893 to 1912.
il ravy Per cent of increase
Passenger revenue. Mail revenue. Express revenue. 1912 over 1893.
Ratio of --~
Year. increase Rati Rati
Over 2,51O. 8,110 •.
Amount. |next pre- Amount. to pas. Amount. to pas-|* ºn- Mail. ºx:
ceding senger. senger. 8*. press
year here
shown.
Per ct. Per ct. Per ct. Per ct. Per ct. | Per ct
1912-------------- $5,505,536 I 0.13 || $371, 137 6.74 $586,021 10.64 || 133.51 79.92 || 393.55
1911-------------- 5,512,931 10.21 || 371,338 6.74 536,907 9.74 |--------|--------|--------
1910-------------. 5,002,205 1 2.31 360,223 7.20 || 450,772 9.01 |--------|--------|--------
1908-------------- 5, 120,529 47.36 395,714 7.73 407,976 7.97 --------|--------|--------
1903-------------- 3,474,905 77.76 368,396 10.60 245,490 7.06 |--------|--------|--------
1898-- - - - - - - - - - - - - 1,954,863 i 17.06 || 321,959 16.47 | 133,884 6.85 --------|--------|--------
1893-------------. 2,356,975 - - - - - - - - - - 206,281 8.75 118,737 5.04 |--------|--------|--------
* Per cent of . Average Average
... increase mail express
Year. p Oſl in mileage revenue revenue
June 30 1912 over per mile |- per mile
s 1893. of line. of line.
Miles.
1912--------------------------------------------------- 2,305.50 75. 49 $161.01 $254.24
1911--------------------------------------------------- 2,241.60 | . . . . . . . . -- . . 165.63 239.58
1910--------------------------------------------------- 1,938.80 | . . . . . . . . . . . . 185.78 232.60
1908--------------------------------------------------- 1,841.30 - - - - - - - - - - - - 214.95 221.61
1903--------------------------------------------------- 1,641. 40 . . . . . . . . . . . . 224. 49 149.60
1898--------------------------------------------------- 1,453.30 . . . . . . . . . . . . 221, 58 92. 14
1893--------------------------------------------------- 1,313.92 |. . . . . . . . . . . . 156.99 90. 43
1 Decrease.

#. figures for the years 1911 and 1912 include revenues and mileage of the Chesapeake & Ohio Ry. Co.
of Indiana. , *
J
RAILWAY MAIL PAY. 443
ExHIBIT B.
This table shows a comparison of passenger-train mileage for specified years
covering the 20-year period 1893 to 1912. inclusive. As mails are carried on all
our passenger trains, this table shows the relative importance of the transpor-
tation furnished for the years named and of the revenues received therefrom.
Comparing 1912 with 1893, it is found that there was an increase of 84.80
per cent in passenger-train mileage, and of only 79.92 per cent in mail pay.
Even if there were no increase whatever in the volume of mail transported,
the revenue received from mail did not increase in proportion to the mileage
Such matter was transported. According to the reports of the Bureau of the
Census, the population of the four States in which the bulk of the mail service
rendered by this company is performed (Virginia, West Virginia, Kentucky,
and Ohio) has increased, 1910 compared with 1890, by 2,390,013. It is a
well-known fact that the volume of mail increases much more rapidly, propor-
tionately, than does the population.
Comparison of passenger-train mileage for certain specified years, 1893 to 1912.
Ratio of in- *...*
* CTê3 Se II) -
* * Year P *...* mileage over Mail revenue ºpe
e mileage. ºt preced- received. preceding
**- ing year here year here
shown. shown
: Miles. Per cent. Per cent.
1912------------------------------------------- 4,932,122 15.54 $371, 137 1 0.05
1911------------------------------------------- 4,268,762 3.41 371,388 3.09
1910------------------------------------------- 4, 128, 176 3.97 360,223 1 8.97
1908------------------------------------------- 3,970, 427 21.94 395,714 7.42
1903------------------------------------------- 3,255,918 25.02 368, 396 14.42
1898------------------------------------------- 2,604,271 2.42 321,959 56.08
1898------------------------------------------- 2,668,922 |- - - - - - - - - - - - - - 206,281 - - - - - - - - - - - - - -
1 Decrease.
I º for the years 1911 and 1912 include mileage and revenues of the Chesapeake & Ohio Ry. Co. of
InCIlana. -
Per cent of increase in passenger-train mileage 1912 over 1893, 84.80. Per cent of increase in mail revenue,
1912 over 1893, 79.92.
EXHIBIT C.
This table is introduced as a matter of information and shows the mail reve-
nue received, by years, for the 10-year period—1903 to 1912, inclusive—and the
per cent of increase or decrease for each year when compared with the next
preceding year.
I have compared the amount of floor space in both full cars and apartment
cars devoted to mail use in 1903 with that used for the same purpose in 1912,
and find that 949 feet were used in 1903 and 1,398 feet in 1912, an increase of
47.31 per cent. Compare this increase in space used with the increase in reve-
nue, which amounted to only 0.74 per cent, and it will be apparent that mail pay
has not increased proportionately to the Space occupied in the cars which trans-
ported the mails. It should be noted that the above calculation disregards the
space in baggage cars in which closed-pouch mail is carried which, if taken into
account, would undoubtedly increase the disparity between the space occupied
and the pay received.
Statement showing mail revenue received for years 1903 to 1912, inclusive.

Increase Increase
Year. Amount. or de- Year. Amount. or de-
CreaSé. CreaSČ.
Per cent. Per cent.
1903-------------------------- $368, 396 - - - - - - - - - - - 1908-------------------------- $395,714 1 5, 00
1904-------------------------- 372,282 1.05 || 1909.------------- - - - - - - - - - - - - 388,453 1 1.83
1905-------------------------- 393,528 5. 71 || 1910-------------------------- 360,223 17.27
1906-------------------------- 423,087 7.59 || 1911-------------------------- 371,338 3.09
1907-------------------------- 416,553 * 1.54 || 1912-------------------------. 371, 137 1 0.05
1 Decrease.
Figures for the years 1911 and 1912 include revenues of the Chesapeake & Ohio Ry. Co. of Indiana.
Increase 1912 over 1903, 0.74 per cent.
Decrease 1912, compared with 1906, 12.26 per cent.
444 RAILWAY MAIL PAY
per cent.
§
~s
N
In 1893 this company owned 8 full R. P. O. mail cars, which cost a total of
$38,994, an average of $4,874 per car. In 1903 it owned 8 cars, costing $40,813,
an average of $5,102. In 1912 it was necessary to own 15 cars, at a total cost
of $102,692, an average of $6,846. It is thus apparent that in the 20-year period,
1893 to 1912, the number of full R. P. O. cars necessary to handle the mail on
this line has increased 87.50 per cent, the necessary investment in those cars
has increased 163.36 per cent, and the average cost per car has increased 40.46
Of the 15 cars owned and used on June 30, 1912, only 5 were of the
Steel type prescribed by the law passed in 1912. These cars cost an average of
$9,977 each. The railway companies are required, under the law, to provide
none but steel cars by the year 1917. Assuming that there will be no increase
in the cost of the cars and that no more cars will be necessary at that time
than are now in service, this company’s investment in R. P. O. cars will be
$149,654, an increase in investment on full R. P. O. cars alone, when compared
with 1893, of nearly 284 per cent. This calculation disregards apartment cars
entirely, and by far the greatest number of cars in mail service on this line
are apartment cars.
The Postmaster General’s report to Congress, which gives the results of his
inquiry into operations, receipts, and expenditures of railroad companies (IH.
Doc. No. 105), shows 32 mail routes on the Chesapeake & Ohio Railway, of
which number 16, or 50 per cent, carry the lowest average daily weight recog-
nized in the department’s classification (200 pounds or less), and, therefore,
receive the lowest pay, $42.75 per mile per annum.
There are 3 routes on which 200 to 500 pounds are carried daily, 6 on which
500 to 1,000 pounds are handled, and 1 on which 1,000 to 1,500 pounds are car-
ried. It thus appears that 26 out of 32 mail routes handle only the lowest four
classes of mail weights. The following table shows the classification according
to average daily weights carried and the number of routes in each class:
Number of
routes.
16
Classification :
200 pounds and less
200 to 500 pounds__ * * * *
500 to 1,000 pounds - *
1,000 to 1,500 poundS------------- -
1,500 to 2,000 pounds
2,000 to 3,500 pounds
3,500 to 5,000 pounds * *
Each additional 2,000 pounds above 5,000 pounds and less than 48,000
poundS - * * *
Each additional 2,000 pounds in excess of 48,000 pounds
*

Total_ 32
Of the total car-foot mileage made by the first four classes above shown
over 91 per cent was made in apartment cars, for which no R. P. O. car pay
was received, the remainder being closed-pouch mail. - -
In order to allow for mail carried in closed pouches the Postmaster General’s
report states that for weights of 100 pounds or less 6 linear inches were
allowed ; over 100 pounds and not over 200 pounds, 10 inches; above 200 pounds,
5 linear inches were allowed for each additional 100 pounds. Upon that basis
he arrived at the car-foot mileage of closed pouches. The car-foot miles made
in each character of service on the Chesapeake & Ohio Railway for the month
of November, 1909, were as follows: -
* Car-foot | Per cent
Character of Service. miles. of total.
Railway post-office cars----------------------------------------------------------- 4,314,687 60
Apartment cars------------------------------------------------------------------- 2,604,008 36
Closed pouches------------------------------------------------------------------- 123,367 2
Deadhead Space------------------------------------------------------------------ 167,336 2
Storage Space---------------------------------------------------------------------|------------|----------
Total.---------------------------------------------------------------------- 7,209,398 100
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-- -
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RAILWAY MAIL PAY. 445
From the above table it is apparent that 40 per cent of the total car-foot
mileage made in November, 1909, was paid for on a weight basis only. That is
to say, that no pay was received for space provided in apartment Cars, for dead-
head space, or for space Occupied by closed pouches.
Many of the requirements of the postal laws and regulations impose very Con-
siderable hardships upon us by requiring Services other than transportation, a
number of which cause additional expense and labor. For example, this COm-
pany is required to carry the mails between post offices and stations at 336
places for which no additional compensation is received; we are required to set
mail cars for advance distribution of mails at 13 places (at Some of them for
as many as 6 trains per day), at periods varying from about one hour to four
hours in advance of the departure of trains. The placing of these cars some-
times necessitates an extra Switch, requiring the Services of an engine and
switch crew. The usual charge for switching freight cars varies from $1 to $5
per car, but no compensation whatever is received for the additional switching
service performed in the case of mail cars.
In addition to the services above named, baggagemen and Station employees
who handle mail are required to keep records of mail pouches received and
dispatched, to report any and all shortages of pouches due, and to report and
explain all irregularities in the receipt or dispatch of mail, which requirements
frequently cause much telegraphing and correspondence between railway em-
ployees and officials, and also between railway and post-office officials.
It is respectfully Submitted that the performance of the incidental and ac-
CeSSOrial Services to which attention has been called without additional compen-
sation therefor is unjust and unfair to the railway company.
R. H. SNEAD.
Thereupon (at 5 o'clock p. m.) the hearing adjourned to meet at
the call of the chairman.
RAILw A. Y. M. A.I.L. P.A.Y.
tº & HEARING
MºW J
/ j/3 BEFORE THE
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS
MAIL MATTER AND COMPENSATION FOR
THE TRANSPORTATION OF MAILS
APRIL 8, 1913
NO. 3
Printed for the use of the joint committee
WASHINGTON
GOVERNMENT PRINTING OFFICE
1913
UNIVERSITY OF MICHIGAN LIBRARIES
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER,
AND COMPENSATION FOR THE TRANSPORTATION OF MAILS.
CONGRESS OF THE UNITED STATES.
JONATELAN BOURNE, JR., Chairman. JAMES T. LLOYD.
HARRY A. RICHARDSON. WILLIAM E. TUTTLE, JR.
JOHN H. BANKHEAD. | JOHN W. WEEKS.
ROBERT H. TURNER, Secretary.
RICHARD B. NIxoN, Disbursing Officer. tº
TABLE OF CONTENTS.
- - Page.
#. V. J., general supervisor of mail traffic, Pennsylvania Railroad. 449 et seq.
O
Hurst, John, assistant comptroller, Pennsylvania lines west of Pittsburgh. 449 et seq.
Lindsay, J. P., manager mail"traffic, Atchison, Topeka & Santa Fe Rail-
Way System ------------------------------------------------------- 449 et seq.
Lorenz, Max Otto, associate statistician, Interstate Commerce Commis-
Sion -------------------------------------------------------------- 450 et seq.
McBride, C. H., superintendent Division of Railway Adjustments, Post
Office Department------------------------------------------------- 449 et seq.
Peabody, James, statistician, Atchison, Topeka & Santa Fe Railroad. . . . 447 et seq.
Prentiss, Albert Noble, clerk, Post Office Department.......... . . . . . . . . 449 et seq.
Rowan, Archibald H., assistant to vice president, traffic department, New
York Central lines------------------------------------------------- 449 et seq.
Wishart, W. C., statistician of the New York Central lines . . . . . . . . . . . . . 449
RAILWAY MAIL PAY.
TUESDAY, APRIL 8, 1913.
CoMMITTEE on SECOND-CLAss MAIL MATTER,
.* Washington, D. C.
The hearing was resumed, at the call of the chairman, at 10.30
o'clock a. m.
Present: Hon. Jonathan Bourne, jr. (chairman), Hon. Harry
A. Richardson, and Representative William E. Tuttle, jr. -
STATEMENT OF MR. JAMES PEABODY.
The CHAIRMAN. Kindly state your full name, residence, and the
official capacity in which you appear before the committee this morn-
ing, if any? -
Mr. PEABODY. James Peabody; 68 years of age. I reside in Chi-
cago. I am statistician of the Atchison, Topeka & Santa Fe Railroad.
The CHAIRMAN. How long have you been statistician for that sys-
tem?
Answer. Since 1896.
The CHAIRMAN. You are familiar with what is known as House
Document 105?
Answer. Somewhat so.
The CHAIRMAN. Are you familiar with the modified suggested plan
of ex-Postmaster General Hitchcock of the substitution of space for
weight in the determination of the value of the service rendered in
railway mail pay, as set forth in my preliminary report to the joint
committee on postage on Second-class mail matter and compensation
for the transportation of mail, page 109, as transmitted by Mr. Hitch-
cock to this joint committee on January 20, 1913?
Mr. PEABODY. I have read this proposed law but have not analyzed
it sufficiently to say that I would be familiar with it.
The CHAIRMAN. Will you give the committee your views relative
to an equitable basis of compensation on the part of the Government
to the transportation companies of this country for railway mail pay
and R. P. O. Service?
Mr. PEABODY. My investigations have gone rather to the demon-
stration of what we believe to be a fact, that the railway mail pay
as at present adjusted is not compensatory to the railroads. I have
not given the subject sufficient thought to be willing to suggest any
plan by which that pay should be increased, but only that it ought to
be increased in some way. -.
447
448 RAILWAY MAIL PAY.
º: CHAIRMAN. Your reasons being, for the latter statement,
what? -
Mr. PEABODY. That we are able to show that the amount of money
which we receive for carrying the mail on the Santa Fe road is not
compensatory?
The CHAIRMAN. The Santa Fe represents what mileage?
Mr. PEABODY. Somewhat over 10,000 miles of road. -
The CHAIRMAN. By the Santa Fe system, you mean all the branch
lines and every other road affiliated with the system?
Mr. PEABODY. All the property owned by the Santa Fe Co. over
which mail routes run. º
The CHAIRMAN. Will you kindly proceed with the demonstration?
Mr. PEABODY. The report of the Postmaster General in Document
105, as to the compensation allowed the roads, proceeds to determine
for each road the amount of expense attaching to the mail service.
It does that for the purpose .# showing that the service is com-
pensatory. In the outset the report says:
In the determination of a basis for the apportionment of the remaining or
nona SSignable expenses Of Operation it was important that the method used be
Sound and equitable.
Perhaps I had better read before that the few preceding sentences:
In determining the method of separating the Operating expenses to the
passenger and freight traffic the suggestions and deductions of the railroad
Commission of Wisconsin set forth in its decision in the case of A. E. Buell v.
The Chicago, Milwaukee & St. Paul Railway Co., decided February 16, 1907,
have been made use of, and with the exceptions hereinafter noted the several
items Of Operating expenditures have been divided in accordance with the Con-
clusions reached in that decision. The operating expenses were reported by
the companies in accordance with the classification of operating expenses for
steam roads issued by the Interstate Commerce Commission, effective July 1,
1907, and amended July 1, 1908, comprising 116 accounts for the large roads
and 44 accounts for the small roads arranged under the general headings of the
Classification, namely : “Maintenance Of Way and structures,” “Maintenance of
equipment,” “Traffic expenses,” “Transportation expenses and general ex-
penses.” Assignments and apportionments thereof Were made according to the
basis adopted. For this-purpose Form 2608 was utilized, a copy of which ac-
companies this report.
Assignments were made directly to passenger and freight traffic and in some
instances to the mail and express services of Such account totals and such parts
of accounts as were reported by the companies as being actually expended in
each class of service. Approximately 12 per cent of the total maintenance of
equipment expenses and 25 per cent of the total transportation expenses were
SO assigned.
In the determination of a basis for the apportionment of the remaining or
monassignable expenses of Operation it was important that the method used
be sound and equitable. The bases used by railroads for the distribution of
monassignable operating expenses are revenue train mileage, revenue car
mileage, locomotive (including switching) mileage, the revenue, and the cost
percentages of direct charge accounts.
It would appear from the reading of the method so far that the
Wisconsin basis was used for the division of the expenses by the
Postmaster General in his report and he objects to the use of the
revenue train mileage basis, and as a foundation for that objection
he quotes as follows from the decision of the Wisconsin commission:
The revenue train-mile is the unit of work done in hauling trains between
terminals, and it is the most direct unit of COSt. That is, the passenger revenue
train mileage is the most direct unit of those expenses which depend upon the
same, and the freight revenue train mileage is the most direct unit of those
RAILWAY MAIL PAY. 449
expenses which depend upon this mileage. This is an important distinction,
for the passenger train mileage differs materially in cost as well as in many
other respects from the freight train mileage. * * * They evidently assume
that passenger and freight train mileage stand for substantially the same thing,
and that this is the proper unit of all expenses. . Even a superficial analysis
of the facts will show that this is not the case.
The CHAIRMAN. That is the decision of the Wisconsin commission?
Mr. PEABODY. The decision of the Wisconsin commission.
The CHAIRMAN. Which the ex-Postmaster General presents and
indorses in his presentation, I take it?
Mr. PEABODY. And which he quotes there to show that the revenue
train mileage is not the proper basis of division between freight
and passenger.
The CHAIRMAN. What are your comments in reference to that?
Mr. PEABODY. The trouble with that quotation is he leaves out a
very important part of that paragraph which does not refer to the
division between freight and passenger at all; it refers to the division
of expenses—that is, it refers to the apportionment of expenses to
the space as related to the entire line. They are condemning the use
of revenue train mileage for the division of expenses of the entire
line, or for the apportionment of the expenses of the entire line to
that part of the line which is in Wisconsin.
The CHAIRMAN. At this point of the proceedings, in accordance
with the practice at the last hearing, I will swear the gentlemen who
are present, in order that they may participate in a general discus-
sion, which procedure will bring out any Salient points which may
occur to them. º
Thereupon the following gentlemen were sworn by the chairman:
Archibald H. Rowan, assistant to vice president, traffic department,
New York Central Lines.
John Hurst, assistant comptroller, Pennsylvania Lines West of
Fittsburgh.
J. P. Lindsay, manager mail traffic, Atchison, Topeka & Santa Fe
Railway system. -
W. C. Wishart, statistician of the New York Central Lines.
W. J. Bradley, general supervisor of mail traffic of the Pennsylvania
Railroad system. •
Albert Noble Prentiss, clerk, Post Office Department.
C. H. McBride, Superintendent Division of Railway Adjustments,
I°ost Office Department.
Mr. PEABODY. I was just beginning to say that he quotes from the
decision of the Wiscónsin commission in the Buell case and has omit-
ted a very important sentence in the middle of the quotation, which
sentence shows that the revenue train mileage, to which the quotation
refers and which is condemned by the sentence, did not refer to the
division of expenses between freight and passenger at all but to the
division of expenses of the line as between Wisconsin and the balance
of the line. I will read it with the omitted sentence: -
The revenue train mile is the unit of work done in hauling trains between ter-
minals, and it is the most direct unit of cost. That is, the passenger revenue
train mileage is the most direct unit of those expenses which depend upon the
same, and the freight revenue train mileage is the most direct unit of those
expenses which depend upon this mileage. This is an important distinction,
for the passenger train mileage differs materially, in cost as well as in many
other respects, from the freight train mileage.
450 RAILWAY MAIL PAY.
This is the part he has left out:
Some roads apportion all of the operating expenses through the State in
which they run in the proportion which the total passenger and freight train
mileage in each State bears to the total passenger and freight train mileage for
the whole line. They evidently assume that passenger and freight train
mileage stand for substantially the same thing, and that this is the proper unit
Of all expenses. Even a superficial analysis of the facts will show that this is
not the Case.
The Postmaster General has used that paragraph to condemn the
train mileage feature for the division of freight and passenger,
whereas the report shows, and as it specifically states, it is condemned
for the use of the expenses as between Wisconsin and the balance of
the line and has no relation whatever to the division of expenses be-
tween freight and passenger.
The CHAIRMAN. Do you agree, Mr. McBride, in reference to Mr.
Peabody’s comment just made?
, Mr. McBRIDE. Senator, I hardly feel prepared to enter into a
discussion of this matter on such short notice. I have no data with
me or anything of any kind, and I fear I would be at a great disad-
vantage in discussing the matter with Mr. Peabody, under the cir-
cumstances.
The CHAIRMAN. You have had two years’ study of this, and you
were one of the committee that were sponsors for what is known as
Document 105?
Mr. McBRIDE. I worked on it, yes, sir; as one of the members of
the committee.
The CHAIRMAN. There was an administrative committee formed,
appointed by the Postmaster General, and, as I understand Docu-
ment 105, representing the compilation and tabulation of information
submitted by the railroads, was under that committee's direction.
Mr. McBRIDE. Yes. * f
The CHAIRMAN. Then I fail to see why you are not prepared, Mr.
McBride, to enter into a joint debate, if you please, in reference to
the findings in that document.
Mr. PEABODY. To show that that reference is correct, the paragraph
immediately preceding states:
By some of the roads this distribution among the States is made in propor-
tion to the revenue train mileage in each State.
Then it discusses that and condemns it, as I have read, but, as I
have stated, and it so states in the text itself, it relates to the division
as between the State and the balance of the line. -.
Mr. LORENz. Would you say that the Buell decision approved the
revenue train mileage basis for the division between freight and
passenger? -
Mr. PEABODY. No; not altogether.
Mr. LORENz. It partly condemned it, did it not? z
Mr. PEABODY. I will come to that later. I am merely starting out
to show that the apparent condemnation of the train mileage basis
for the division between freight and passenger is not authorized by
the decision, and it is misquoted and the quotation mutilated, I do
not know for what purpose, but it has the effect of showing the oppo-
site meaning from what it actually carries.
The CHAIRMAN. Your comments in reference to the quotation in
Document 105 and your elucidation of that quotation refer par-
RAILWAY MAIL PAY. 451
ticularly to the Wisconsin Railroad Commission Report, volume 1,
July 20, 1905, and July 31, 1907, pages 388 and 389.
Mr. PEABODY. That is right. In response to the question of Mr.
Lorenz I would say that the Wisconsin commission does not approve
the use of the revenue train mileage on the division of the unassign-
able expenses under all accounts. It does use that basis for some of
the accounts and does not condemn it for that use in any place.
The CHAIRMAN. Let me ask you if it is your opinion that the reve-
nue train mileage is the correct yardstick, if you please, for the appor-
tionment of accounts between freight and passenger?
Mr. PEABODY. If you are compelled to use only one yardstick for
all of the accounts and can not use a separate yardstick for the
various accounts, then the revenue train mileage, in my opinion, is
the best basis for what are known as the common or unassigned
expenses incident to the operation of a railroad.
The CHAIRMAN. What have you to say in reference to that, Mr.
McBride?
Mr. McBRIDE. We were of the opinion that the direct-charge ac-
counts provide a more competent basis for the distribution of the
common expenses.
Mr. PEABODY. May I ask a question there?
The CHAIRMAN. If you will, yes.
Mr. PEABODY. What do you mean by the “direct-charge accounts *—
those that are absolutely assignable to the freight and passenger,
without any division? -
Mr. PRENTISS. The direct-charge accounts as used by the Post
Office Department represent those accounts which are essential to the
conduct of railroad transportation. They represent, in accordance
with the Wisconsin commission's report, the accounts for equipment
repairs and the transportation accounts absolutely essential for the
operation of passenger trains. I will say that the principal ac-
counts can be actually divided, so that besides representing the rail-
road business they also represent the assignable expense to a great
extent. -
Mr. PEABODY. Which can be divided how—that is, naturally di-
vided as between freight and passenger?
Mr. PrºENTISs. Yes. It was also the intention of the department
in handling the division of expenses never to divide on an arbitrary
basis, but to get direct-charge percentage on which to divide the non-
assignable accounts.
Mr. PEABODY. May I ask if you will name some of those accounts
that can be thus divided without the use of an arbitrary Ż
Mr. PRENTISs. With the exception of the Atchison, Topeka & Santa
Fe Railroad, the accounts in transportation embracing road engine-
men, road trainmen, and fuel for road locomotives, which comprise
approximately 30 per cent of the transportation expenses, were
assigned by the railroad companies in every case.
Mr. PEABODY. Were assigned by the railroad companies?
Mr. PRENTIss. On other reports.
Mr. PEABODY. I understand you to say that it was the assignment
by the Post Office Department?
Mr. PRENTISs. The department assigned nothing.
Mr. PEABODY. The assignments by the railroad companies were on
arbitraries, were they not?
452 RAILWAY MAIL PAY.
Mr. PRENTISs. Not so far as the department was aware. .r
Mr. PEABODY. Will you tell me how you can divide fuel for loco-
motives, except on an arbitrary basis, and water for locomotives?
Mr. PRENTISs. That, I believe, is a question for each railroad to
determine. We were not in position to determine that.
Mr. PEABODY. The only reason I am asking this question is a large
part of the accounts divided by the department are divided upon
the direct-charge accounts. I am unable to find anything com-
ing under your definition of direct-charge accounts except the repairs
to passenger cars, repairs to freight cars, loss and damage to freight,
loss and damage to baggage. I think those are all of the accounts
that divide themselves. Others have to be divided on an arbitrary
of some kind and consequently are not direct-charge accounts.
Mr. PRENTISs. I have one case in mind, that of the New York,
New Haven & Hartford Railroad Co., where their fuel expenses are
absolutely divided by means of fuel vouchers which they use, accord-
ing to their own statement. . r -
Mr. PEABODY. Do you know how they divide it on those vouchers?
Our fuel is absolutely divided, but it is divided on an arbitrary basis
just the same. What I want to bring out is what you would have
for direct-charge accounts on which you base most of your divisions?
Mr. PRENTIss. What we intended to secure by the direct-charge
percentage on which the division was made was a percentage which
would represent the ratio of actual operations between passenger and
freight, the cost of the operation.
Mr. PEABODY. And if there are no accounts or practically no
accounts except those that are mentioned that divide themselves
directly, then your basis is not competent, is it?
Mr. PRENTISs. It is competent in this respect: That it represents
an item for passenger and freight cost which is reported by the
railroad companies to the department as actually expended for those
two items.
Mr. PEABODY. And if those items, or those four accounts which
are thus selected directly, comprise not more than about 15 per cent
of the total expenses, would you consider that a proper basis for the
division of the other expenses? -
Mr. PRENTISS. I think the equipment repair accounts and the three-
transportation accounts named represent in the minimum about 37
per cent.
Mr. LORENZ. Do you not think that we ought to recognize that:
there are perhaps three kinds of expenses rather than the two
which I think you have in mind? You have mentioned those which
are naturally and directly assignable without question, but I think
there is a Second class that is apportionable with reasonable accurac
and not with so much uncertainty as maintenance-of-way expense. It
is ; two classes together that the Post Office Department used,
I think.
Mr. PEABODY. You and I are in perfect harmony on that. There
are a large number of accounts that can be accurately divided.
Mr. LoRENz. So that I think the Post Office Department's direct-
charge method is not open to the criticism you have just made—that
it is misleading because there are only so few accounts that are
directly assignable. -
RAILWAY MAIL PAY. 453
The CHAIRMAN. Do you concur with Mr. Lorenz's suggestion there,
that the criticism of the Post Office Department's assignabilities
here are not exactly fair? -
Mr. PEABODY. No. What I wanted to ascertain, and my questions
were directed to ascertaining, was what items were called the direct-
, charge accounts in their assignments and the answer was that it was
those accounts that divided themselves or could be directly allocated,
and in such case I merely called attention to the fact that they were
very few in number. If, in addition to that, the gentleman means to
say that these accounts which could be allocated upon a fair and rea-
sonable basis were also included as a direct-charge account, I am per-
fectly willing to accept that, if that is the case, but that was not his
8.InSWer. -
The CHAIRMAN. These allocations would depend on the individual
who makes them?
. Mr. PEABODY. No. You can tell just what accounts can be directly
allocated without any opinion at all.
The CHAIRMAN. Is there a rule laid down, either by the Interstate
Commerce Commission or by the railroads themselves, so that there
is a general system as to the allocation of accounts, which is a uni-
versal agreement?
Mr. PEABODY. There was a rule laid down by the Interstate Com-
merce Commission, up until 1893 and it was then abandoned. Not
being absolutely sure for the reason for its abandonment I will
not state anything about why it was abandoned. But that was the
revenue train mileage which was abandoned in 1893 by the commis-
sion and the railroads were no longer required, as they had been be-
fore that, to make up their expenses on the basis of that division.
The CHAIRMAN. That discontinuance would tend to prove, would
it not, so far as the Interstate Commerce Commission is concerned,
that their opinion in 1893 was against the revenue train mileage as a
yardstick? *
Mr. PEABODY. I do not know whether that was their opinion or not.
It was the opinion of the statistician of the Interstate Commerce
Commission; I will say that. Whether it was with the other gentle-
men or not, I do not know.
The CHAIRMAN. The discontinuance took place in 1893?
Mr. PEABODY. It was discontinued at the solicitation of the railroad
officials and not at the instance of the Interstate Commerce Commis-
SIOI).
The CHAIRMAN. I understood you to say a little while ago that, in
your opinion, if there was only one yardstick to be used that was the
best yardstick that could be used.
Mr. PEABODY. I still maintain that position.
Mr. LORENz. I would like to ask whether you happen to know, ap-
proximately, the relative weights of passenger locomotives and freight
locomotives on your system?
Mr. PEABODY. I have in my office the weight of every separate loco-
motive on the system.
Mr. LORENz. Would you say that the freight locomotive was con-
siderably heavier than the average passenger locomotive?
Mr. PEABODY. With the exception of one class of locomotives which
we use on the mountain divisions, Mallet compounds, which we use
454 RAILWAY MAIL PAY.
almost exclusively for freight, all of our other engines we use inter-
changeably. One is not heavier than the other. Our passenger trains
are so large as to require the heaviest locomotives we can run.
Mr. LoRENz. Would you say that was generally true of the rail-
roads of the United States?
The CHAIRMAN. What is generally true—difference in weight? *
Mr. LoRENz. My impression is that the freight locomotives are
about 50 per cent heavier than the passenger locomotives, on the
average. That is at least indicated by the relative locomotive tractive
power as reported by the Pennsylvania Railroad Co.
Mr. PEABODY. The locomotive tractive power does not indicate the
weight of the locomotive with any degree of accuracy.
Mr. LoRENz. But it would at least indicate that the average weight
of a freight locomotive was much heavier than that of a passenger
locomotive? ~~~~
Mr. PEABODY. I am not able to say as to the United States whether
the average is larger. I should imagine, from my general knowl-
edge of the subject, that the freight locomotives are heavier, on an
average, but that is altogether supposition.
Mr. LoRENz. And with respect to the weight behind the tender, is
it not true that the freight train weighs a great deal more than a
passenger train'
Mr. PEABODY. That is true. --
Mr. LORENz. So that on the whole you have a freight train repre-
senting something entirely different from a passenger train, and the
question arises whether the difference in weight is offset by the dif-
ference in speed. N
Mr. PEABODY. I think if Dr. Lorenz will permit me to answer that
question we will get into a discussion which is now going on between
the Interstate Commerce Commission and a great many students of
the whole subject, with the idea of formulating a proposition that
will be more accurate than anything we have at present, revenue train
mileage or anything else. I want to say that the revenue train mile-
age is not an accurate basis for division. I am perfectly willing to
state that at the outset, and we on the Santa Fe road use it only
where it is absolutely necessary and where we can find no other basis
that is better. We do not use revenue train mileage on all un-
assignable accounts by a great deal, but it is used on a great many
railroads, and, as I stated, where you can only use one yardstick,
where that is the only yardstick possible to use, then I believe the
revenue train mileage is the best yardstick; that is, it will produce
the results that are nearest to being accurate than any other yard-
stick that I know of at present or that has been suggested so far.
Let me explain there what I mean. The Post Office Department
labored under great difficulty, and I only wonder that they produced
as good a result as they did. In the majority of their accounts they
only had the sum total of the amount charged against any particular
primary account. For instance, station agents. They knew that
there were so many dollars charged for station service, and they had
no way of dividing that except by applying their yardstick, whatever
they used, to that total amount of station service. There is a great
deal of that station service, when you come down to the units of the
service, which naturally divide themselves as between freight and
passenger. Some men at the station work entirely on freight, and
RAILWAY MAIL PAY. 455
some men at the station work entirely on passenger business, and
baggagemen work in a great many stations on the passenger busi-
ness, but all that is included in the one item of station service.
Now, if you are going to apply a yardstick to that station service,
I think the revenue train mileage is the best yardstick you can apply:
but the railroads, going back to the units present in that item under
station service can apply a great deal better yardstick to that item.
Our yardstick for #. particular account is that we require our
division superintendents to visit every station on the division and,
in conjunction with the agent, determine how much time of each
separate man at that station is devoted, respectively, to freight and
passenger service, and that man's pay is divided on each individual
voucher each month and charged against freight and passenger,
respectively. *
The CHAIRMAN. You do not pay him two vouchers?
Mr. PEABODY. No. He is given one voucher. The pay of each
man is divided under that rule.
The CHAIRMAN. But the voucher itself is for the month's pay, re-
gardless of whether 50 per cent of his time, or 60, 70, or 80 per cent
was for passenger and the remainder for freight?
Mr. PEABODY. That is true. The railroad says, “John Smith,
$50,” but that $50 is divided so much for freight and passenger. The
next will be “Peter Jones, $70,” and that is divided, and so on,
throughout the entire road.
The CHAIRMAN. Your idea being, as I take it, that you want the
passenger service to be self-supporting and the freight service self-
supporting? -
Mr. PEABODY. The idea being to ascertain just how much each cost,
if we can, with the ultimate idea of finding out which service is
profitable. That is why I said if we are going to apply only a single
yardstick—if we are compelled to apply a single yardstick—which, in
a large measure, the Post Office Department was compelled to do,
then I believe the revenue train mileage to be the best yardstick for
that part of the expense that is not assignable.
. The CHAIRMAN. Mr. Lorenz, conceding that your contention is cor-
rect, that the freight engines and freight trains are heavier than the
passenger engines and passenger trains, what would you expect to
prove by it? -
Mr. LORENZ. I would expect to prove that the freight department
should bear a little more expense than is indicated by the freight-
train mileage as compared with the passenger-train mileage. For
example, I have in mind one road in which the relative freight and
passenger train mileage would assign 44 per cent, or more, of the
common expenses to the passenger service; but on that road nearly
nine-tenths of the cars running over the tracks are freight cars,
and it does not seem right under those circumstances to make the
passenger department, bear nearly half the common expenses when
they run only one-tenth of the cars over the track. I am not inclined
to say that you should therefore reject the revenue train-miles alto-
ether. There are certain, accounts in which it is the proper basis,
but I do think that as a single measure for all maintenance-of-way
accounts it is unfair to the passenger department.
The CHAIRMAN. And your idea is that mail being part of the pas-
senger service, a fair apportionment of expense should be arrived at
456 RAILWAY MAIL PAY.
between freight and passenger and then between general passenger
service, specifically the mail service? *
Mr. LoRENZ. Yes, sir. *
Mr. PFABODY. There is no doubt about that proposition, Senator.
May I ask Dr. Lorenz this question: Have you taken into account in
that estimate the extra expenses incident to the maintenance of the
track suitable for passenger as compared with freight; that is, the
refinements of the track which are necessary for the passenger busi-
ness and which are very costly? Have you taken that into account
when you say that because of the extra numbér of cars in the freight
business it should be charged with other proportions?
Mr. LORENz. I think that that is a feature that must be considered,
especially on some roads. I think that is something that would vary
on different roads, probably. I have in mind a recent study of the
Buffalo, Rochester & Pittsburgh, where a division, according to the
revenue train mileage, shows the passenger department to be un-
profitable, but one of the editors of the Railway Age, in making a
special study of that system, thinks that, considering the nature of
the passenger traffic and the nature of the freight traffic, the passen-
ger traffic should not be charged with anything extra on account of
the reasons which you state.
Mr. PEABODY. May I ask who that editor is? Is it Mr. Dunn?
Mr. LORENz. No, sir. *.
Mr. PRENTIss. Mr. William E. Hooper. &
Mr. PEABODY. Did Mr. Hooper ever have a day’s experience in
railway service?
Mr. LORENz. I do not know.
Mr. PEABODY. I am afraid his opinion on that subject would not
stand criticism. Now, we have some idea of what is meant by the ex-
pression of the department with regard to direct expenses, and I want
to refer to this quotation which is taken from the first Wisconsin re--
port, on page 398. The reason for using this basis of separation is
given in the decision of the railroad commission of Wisconsin:
That all indirect costs and general expenses which are common to all depart-
ments and contracts should be apportioned between them in proportion to the
direct expenses or to some part of the direct expenses, such as the cost of either
labor or material, or both. As to which one of these bases should be applied is
a matter that depends on the conditions in each case.
The only trouble with that quotation is that it does not refer to the
railroad operation at all, but is a quotation from the discussion of
manufacturing cost accounting referred to in the decision and has no
possible relation to railroad accounting. . The decision is discussing
manufacturing costs. It speaks about the way in which that cost
accounting in manufacturing is carried on. I will read the whole
paragraph from which the quotation is taken:
But this is not the only puzzling question. It is also necessary to ascertain
the amount of the total operating expenses that can be fairly charged to the
traffic in the State. Each railway system is operated as one unit and without
any reference to State lines. Many of the current expenses can be, and often are,
kept by operating divisions. When these divisions are located wholly within
one State, a part of the expenses of the traffic of that State can, to that extent,
actually be kept apart. But when the division crosses State lines, no direct
separation is possible. It appears from this that the greater proportion of the
expenses must be distributed between the States in Some arbitrary manner.
Three or four pages before and after that are taken up with a dis-
cussion of cost accounting as applied to manufacturing, and then the
RAILWAY MAIL PAY. 457
decision concludes that “if cost accounting as thus applied to manu-
facturing is feasible and been used by the manufacturers of the
l]nited States with profit and with good results the same thing cer-
tainly should be applied to railroads,” but that quotation has no ref-
erence to any railroad account whatever, and is entirely referring to
the matter of cost accounting in manufacturing. Besides, it is to be
said that under the maintenance of way account 1, 2, 3, 7, and 90 per
cent of 8 and various other accounts under the maintenance of way
are alleged to be divided on the basis of the Wisconsin commission,
The CHAIRMAN. Reading from page 9 of Document 105, this ref-
erence that you have just made, I take it?
Mr. PEABODY. Yes. The trouble with that statement on page 9
is that the Wisconsin commission did not use that basis at all in their
division of maintenance of way expenses, but they used 90 per cent
on the percentage that the passenger and freight operating revenue
bears to the total operating revenue and 10 per cent on the percentage
that the passenger and freight train mileage, including switch train
mileage, bears to the total train mileage. In other words, they divide
all those accounts on a revenue basis and not on a direct charge
account. -
The CHAIRMAN. That is, the Post Office Department did in their
deductions, or the Wisconsin commission?
h Mr. PEABODY. No. They assumed to follow the Wisconsin method
€I’ê.
The CHAIRMAN. But they did not do it?
Mr. PEABODY. They did not do so. The Wisconsin commission
did not use the direct charge accounts, but they used the revenue basis
for a great portion of it—90 per cent of superintendence, of ballast,
66% of ties, which are the large items, were divided on the revenue
basis and not on the direct-charge basis at all.
The CHAIRMAN. What have you to say in reference to that, Mr.
Prentiss? g
Mr. PRENTISS. The Wisconsin commission, on another page of their
decision, make the specific division just as we have it here, and cite
the statistician of the Pennsylvania Railroad and some others as
authorities for the use of those percentages. I will say relative to
the Wisconsin commission and the way they handled the accounts,
that they stated that in handling a specific account that this account
should best be divided on the basis of the direct-charge accounts, but
the railroad company has divided it on train mileage. The commis-
sion ascertained the division by train mileage, by direct-charge ratio,
and by revenue, and the difference between the results of dividing
on the revenue basis and on the direct-charge basis is to small that
they divided it on the revenue accounts. They handled it as a judge
would handle a case, citing all the different opinions, and then they
showed the division.
The CHAIRMAN. That is, the Wisconsin commission did?
Mr. PRENTIss. Yes. But that did not amount to much in dollars.
They chose a division that would be acceptable to the railroad com-
pany. The department handled it according to the proposition laid
down by the Wisconsin commission in that case, that the direct-
charge ratio was the proper percentage to use for the division of
certain accounts and based on the percentages as shown there by the
statisticians and authorities.
458 RAILWAY MAIL PAY.
Mr. PEABODY. Let me read exactly what the commission says in
their decision, referring to the final division under maintenance of
way for Wisconsin:
While the facts thus indicate that we would be justified in adopting the
apportionment to the State which was made by this commission and in dis-
tributing that part of the expenses between passenger and freight which de-
pends on depreciation on the basis of the direct expenses, the situation, when
Considered as a whole, is such that it is undoubtedly fairest to all concerned
to adopt the Company’s apportionment to the State and to apportion those costs
which are due to depreciation on the basis of the gross earnings.
That is what they say, and that is the way they did.
Mr. PRENTISS. That is their decision in regard to that case?
Mr. PEABODY. They say it is undoubtedly the fairest. This assumes
that the commission used the other basis. That is what I am object-
ing to. -
The CHAIRMAN. By “this ’’ you mean the department's statement
as represented on page 9 of Document 105?
Mr. PEABODY. Yes. Coming down to account No. 25, on page 9 of
Documenu 105, which relates to steam locomotives and so on, repairs
to locomotives under the general head of maintenance equipment, the
Wisconsin commission used the locomotive mileage basis for the
freight and passenger, respectively, of the locomotives engaged in that
service. The department says:
It was found that the 10COmotive mileage, although used by Some companies
as a basis for apportionment Of these accounts, was too high for the passenger
traffic and was in many cases unobtainable. The train mileage was higher for
passenger Service than the locomotive mileage, and the car mileage Or Cost of
Car repairs was too low a basis for division when the passenger traffic was
COnSidered. *
That would seem to indicate that if the result reached by the ap-
plication of the most logical method, such as the mileage of the loco-
motives which were undergoing repairs, produced what, in the opin-
ion of the department, was too high and abandoned it they would take
some other method. Certainly there is no better basis for apportion-
ing repairs to locomotives than mileage made by the locomotive, and
that is the universal basis established by all railroads. On the Santa
Fe road we assign to those locomotives that, are exclusively passenger
their repairs to passenger accounts, and the repairs on freight engines
are assigned to freight accounts, but a majority of our locomotives
do both freight and passenger service, and when the repairs are made
they have to be divided between passenger and freight on some basis
and the respective mileage made in passenger and made in freight is
certainly the proper divisor, but because that made too high a charge
to the passenger department they abandoned that.
Mr. PRENTISS. It appears on the face of it as though the department
used its own discretion, but the facts were that there was before the
departmental committee a series of statistics of a great many roads
which had actually divided locomotive repairs between passenger and
freight. * -
Mr. PEABODY. On that same basis?
Mr. PRENTIss. No. But had actually been able to divide the cost
of repairs. Their repair shops were so separated that they were ac-
tually able to assign to passenger and freight the locomotive repairs.
By taking the amount and applying the percentage, which we could
easily do for those roads—the locomotive mileage, train mileage
&
RAILWAY MAIL PAY. 459
and so on—we ascertained that they were not in accord with the
actual facts as reported by the roads for actual expenses, but that the
direct charge costs, as we showed here, were very close, within 1 or 2
per cent of the actual facts, and consequently we used the percentage.
which would bring the proper result.
Mr. PEABODY. And because some roads made errors in that respect
you applied that to all roads? -
Mr. #j We had to have some general basis, of course.
Mr. PEABODY. I had to take the basis, as you stated it here, and I
had no other means of knowing. As I have already stated, the
department did a magnificent piece of work in doing this under the
conditions under which they worked. They are entitled to a great
deal of credit for the work that they did in regard to this division
between freight and passenger; there is no question about that, but in
the first place the men who were doing it, as I supposed, were not
experienced railway men. I do not know that that is a fact, but I
have understood that to be a fact. They also certainly did not have
access to the unit charges which in most cases would determine what
is the proper basis, and the result is that the conclusion they reached
is wrong and we are asked to stand by that wrong result, and that is
why I am questioning this report. I do not want to stand by that
result. So far as the Santa Fe is concerned, we sent you our basis
of division, showing how every account was divided, but you did
not use it. - -
Mr. PRENTISs. As I remember it, the Santa Fe only assigned a very
few expenses in their report to the department. I think it is only
those expenses which you enumerated which you assigned. I think
fuel, road enginemen, and road trainmen were not assigned.
Mr. PEABODY. In response to a request of the commission?
The CHAIRMAN. That is, the Post Office departmental commission?
Mr. PEABODY. In response to the request of the Post Office De-
partment, accompanied by a blank which we had to fill out, certain
information was requested. We filled that blank out strictly in ac-
cordance with that request, and that did not permit of any division.
We had to put it that way. We were not allowed under that to make
any division, but accompanying that we sent you our formula, which
was very elaborate and very complete, which takes up every account
separately and first assigns every expense to the exact operation of
the road on which that expense was incurred, dividing it between
main and branch lines and between divisions. After using it in that
way we apportion it between freight and passenger on the various
bases which are outlined and set forth with great particularity in
this statement, and this was sent you.
Mr. PRENTIss. I do not remember that we ever received it. We
would have considered it if we had received it.
Mr. PEABODY. We have your acknowledgment of it.
Mr. PRENTISs. I do not recall any specific statement from the
Atchison, Topeka & Santa Fe Railroad Co. giving a basis for each
specific account. * -
Mr. PEABODY. Thinking perhaps the commission would like that
apportionment I have drawn off our apportionment so far as it re-
lates to the passenger and freight part of it. Dr. Lorenz has that
full statement. - &

89246—No. 3—13 2
460 RAILWAY MAIL PAY.
The CHAIRMAN: Now, your idea for submitting this apportion-
ment is that it will be illuminating in reference to the discussion now
going on and should be inserted in the record at this place?
Mr. PEABODY. I think it should be inserted in the record at this
place to show the basis used by us. That, of course, only relates to
the division as between passenger and freight and does not relate to
the division as betwen different operations of the road.
ATCHISON, TOPEKA & SANTA FE RAILWAY SYSTEM.
METHOD OF DISTRIBUTING OPERATING EXPEN SES.
All items of expenditure comprised in the 116 primary accounts, among which
by direction of the Interstate Commerce Commission all railroad operating
expenses are distributed, are allocated to the exact operating division (sub-
divided as between main and branch line) upon which the expense was
incurred, the Common items, Such as Salaries of general Officers and Others
having to do with more than One division, being prorated on mileage basis.
Each of these items is also apportioned as between freight and passenger
expenses upon the following formula, which is condensed from the “Working
memorandum ” covering this distribution.
MAINTENANCE OF WAY AND STRUCTURES.
Accounts 1 to 15, inclusive, are denominated common and apportioned On
the basis of revenue train mileage.
Accounts 16 and 17. Allocated as far as possible; unal located items treated
as Common and apportioned on the basis of revenue train mileage.
Accounts 18 to 21, inclusive, are treated as common and apportioned. On the
basis of revenue train mileage. -
AccountS 22 and 25. Allocated where possible; unallOCated treated as COmmon
and apportioned on revenue train mileage.
MAINTENANCE OF EQUIPMENT.
Account 24. Treated as common and apportioned on the final assignment of
repairs as between freight and passenger.
Account 25. (a) Road locomotives, allocated on the basis of assignment to
service; (b) yard locomotives, allocated on the basis of cars handled; (c) non-
revenue service locomotives, apportioned on the basis of revenue train mileage;
(d) mixed service locomotives, allocated on the basis of respective car mileage
Of CarS handled in mixed trainS. r
Accounts 26 and 27. Treated as common and apportioned on the basis of
miles run in respective services.
Accounts 28 to 30, inclusive. No charges.
Accounts 31 to 33, inclusive. All passenger.
Accounts 34 to 36, inclusive. All freight.
Accounts 37 to 39, inclusive. No charges.
Accounts 40 to 42, inclusive. Allocated where possible; unallocated treated
as common and apportioned on the basis of Cars handled.
Accounts 43 to 45, inclusive. Treated as Common and apportioned. On revenue
train mileage.
Accounts 46 to 50, inclusive. Treated as Common and apportioned. On the
ascertained charges for repairs.
Accounts 51 and 52. Allocated where possible ; unallocated treated as Com-
mon and apportioned on the basis of Cars handled. f
TRAFFIC EXPENSES.
Accounts 53 to 60, inclusive. Allocated where possible; unallocated treated
as common and apportioned on revenue train mileage.
RAILWAY MAIL PAY. 461
- TRANSPORTATION EXPENSES.
. . . . Aceounts 61 and 62. Allocated where possible; una]located treated as common
and apportioned on revenue train mileage.
... Account 63. Allocated where possible; unallocated apportioned on the basis
of estimated time devoted to respective services at large stations, and at small
stations on the basis of allocated labor charges.
. . Accounts 64 and 65. All freight.
Account 66. Allocated where possible; unallocated treated as common and
apportioned on basis of revenue train mileage. -
Accounts 67 to 78, inclusive. Treated as common; apportioned on the basis
of cars handled by yard locomotives. ' - -
Account 79. No charges.
. . . Account 80. Allocated on basis of miles run in respective services.
Account 81. Allocated on the basis of assigned Service. •. -
Account 82. Allocated according to service.
Accounts 83 to 85, inclusive. Allocated on basis of assigned mileage.
Accounts 86 and 87. No charges.
Account 88. Allocated a CCOrding to Service.
Account 89. Allocated where possible; unallocated treated as common and ap-
portioned on the basis of revenue train mileage.
... Accounts 90 to 92, inclusive. Treated as common and apportioned on the
basis of revenue train mileage. -
Account 93. Actual work of clearing wrecks allocated direct : common ex-
penses are apportioned on the basis of revenue train mileage.
Account 94. Allocated where possible; unal located, apportioned on the basis
of revenue train mileage.
Account 95. Allocated where possible; unallocated, treated as common and
apportioned on the basis of cars handled.
Account 96. No charges.
Accounts 97 and 98. Allocated where possible; unallocated, treated as common
and apportioned on the basis of revenue train mileage.
Account 99. All freight.
Account 100. All passenger.
Accounts 101 to 105, inclusive. Allocated where possible; unallocated, treated
as common and apportioned on the basis of revenue train mileage.
GENERAL EXPEN SES.
Accounts 106 to 109, inclusive. Allocated where possible; unallocated, treated
as common and apportioned on the basis of revenue train mileage.
Account 110. Premium on merchandise in transit charged direct to freight.
à Other treated as COmmon and apportioned on the basis of revenue train
IOI 1628. § 62,
Aºints 111 to 114, inclusive. Treated as Common and apportioned on the
basis of revenue train mileage. - -
Accounts 115 and 116. Allocated where possible; unallocated, treated as com-
mon and apportioned on the basis of revenue train mileage.
The CHAIRMAN. Do you approve the Wisconsin commission method
of apportionment, and claim that it is the best developed method
to-day? . -
Mr. PEABODY. By no manner of means. --
The CHAIRMAN. Then why the criticism between the departmental
and the Wisconsin commission methods?
Mr. PEABODY. Simply to show that the department method does
not follow any basis at all, or is even used by anybody.
The CHAIRMAN. It is simply an arbitrary method of its own 2
Mr. PEABODY. That is all. That is the object of it.
The CHAIRMAN, I would like to ask Mr. Prentiss, if in the depart-
mental committee's work, where they got in the twilight zone, if their
deductions were made surely favorable to the Government? Is that
true?
Mr. PRENTISs. Not always.
The CHAIRMAN. Will you elucidate a little on that answer?
462 RAILWAY MAIL PAY.
Mr. PRENTIss. We followed the Wisconsin commission, using it as
a theoretical basis, as it were. We first ascertained a basis of division
for each separate primary account, and having ascertained a basis
for each account, we then applied it to every railroad company alike,
the idea being that we could not consider each railroad company
separately so far as the method of division was concerned. It must
be uniform in order to be just and equitable.
The CHAIRMAN. In your study were there certain questions which
presented themselves where you had no information, according to the
recommendations of the Wisconsin commission's method, and you
had to make arbitrary decisions yourself; and in your credits and
debits as between the Government and the railroad companies did
you equalize those credits and debits, or did you, in your deductions,
apply the debits to the railroad companies and the credits generally
to the Government? •º.
Mr. PRENTISs. In regard to certain accounts which were not named
by the Interstate Commerce Commission as primary at the time of
the Wisconsin commission's decision in the Buell case, we divided
those accounts in accordance with the best information at hand, fol-
lowing the Wisconsin commission method for like accounts.
The CHAIRMAN. That is not answering my question.
Mr. PRENTISs. But there were other accounts that it was impos-
sible to divide on any known basis, and the commission had to use
its best judgment in those specific accounts.
The CHAIRMAN. In coming to your conclusion did you figure what
the saving would be to the Government?
Mr. McBRIDE. May I answer that?
The CHAIRMAN. Yes.
Mr. McBRIDE. In our consideration of the entire question we
endeavored to be entirely fair to both the railroads and the depart-
ment. We considered it from all aspects.
The CHAIRMAN. One aspect being as to how it would show in dol-
lars—cost to the Government in the results?
Mr. McBRIDE. No, sir; I do not think that came into it at all.
Mr. PEABODY. May I ask Mr. McBride why, under that view, all
the items under traffic expenses were thrown out?
Mr. McBRIDE. Thrown out?
Mr. PEABODY. Were they not? Were they not considered as not
applicable to the mail Service?
Mr. McBRIDE. The totals of traffic accounts 54, 55, 56, 57, and 58
were divided between passenger and freight on the basis used by the
company, if not already assigned. The amounts charged to passen-
ger service were deducted, however, from the passenger operating
expenses before we apportioned those expenses to the mail service,
we deciding that they had no relation to the mail service. The mail
service participated in the remainder of traffic expense accounts.
The CHAIRMAN. Do you concur in that conclusion, that they had
no relation whatever to the mail service? -
Mr. PEABODY. Hardly. When you treat accounts of this kind as a
whole, in arriving at an expense an average must be taken into account,
and you can not by any possibility take out one particular account
because it does not happen to apply to the mail Service; and they did
not follow that rule all the way through by any manner of means.
RAILWAY MAIL PAY. - 463
There are many things that do not apply to the mail service particu-
larly, I presume—loss and damage to baggage.
Mr. McBRIDE. We eliminated that account from consideration
when apportioning operating expenses to mail service.
Mr. PEABODY. The porters on the trains do not apply to the mail
Ser’WICe. -
The CHAIRMAN. Is it your contention that they should?
Mr. PEABODY. My contention is that you can not take out any one
item that does not apply to the service and eliminate that without
at the same time taking out other items that apply altogether to
the mail service and putting the whole of that in—that is, it is not
fair to put a small proportion, 2 per cent, if you please, of an item
which goes altogether to the mail service in, because it applies to mail
service, and then cut out 100 per cent of an item that does not apply
to the mail service. In other words, when you are taking the accounts
of a railroad and dividing them on any general basis, you are obliged
to treat every account, because you have to take the accounts that do
not apply to that particular service, which make up a very large
majority of the expenses; consequently that very large majority of
the expense which does not apply to the mail service is also taken
out—if you take it out at all—of those items which do apply largely
or wholly to the mail service, the result being that the item which
applies wholly or largely to the mail service or what you charge
against it, would be the 2 per cent instead of the 50. 75, or 100 per
cent which would actually be the case. So you have to use it as an
average, and it is not fair to take out an item which goes to make
up a very large proportion that is not chargeable.
Mr. LORENZ. Can many items be found which are only chargeable
wholly to the mail?
Mr. PEABODY. No.
Mr. LORENZ. But many are assignable directly to freight or to
passenger?
Mr. PEABODY. Yes.
Mr. LORENZ. Therefore your objection seems to me not valid, be-
cause if you did separate, and properly, in the first place, all expenses
directly assignable to passenger and to the mail, and then proceeded
to divide the balance on some average basis, you would practically be
proceeding as the department proceeded.
Mr. PEABODY. But, unfortunately, you can separate some of these
items that do not apply at all to the mail, but you can not separate
any items that apply exclusively to the mail, so the separation would
not be fair.
The CHAIRMAN. Is not this separation made solely for ascertain-
ment as to what the percentage of mail charge shall be, as of the
total passenger charge? Consequently, in determination of that
* percentage, why should you charge to the mail something that does
not enter into mail transportation at all? You give the 100 per cent,
if it is all rental and chargeable to mail; but if it is half-and-half you
credit the fifty per cent, but where there is not a single per cent that
º; into the mail transportation, why should it be charged to the
Iſlám,II : *
Mr. PEABODY. Because we can not separate from the expenses an
item chargeable to the mail. We do not know how much of any
item is chargeable to the mail. That is impossible of ascertainment.
so the arbitrary has to be used, and the arbitrary should apply to the

464 RAILWAY MAIL PAY.
entire basis. The reason for that is that the passenger service finds
its unit in the train. That is the unit of the passenger service. The
maintenance and everything connected with the passenger service of
the railroad finds its expression in that train as a unit. Now, of that
train the mail service takes so much and is chargeable consequently
with that proportion of every item that goes into that unit of the
train. &
Mr. LORENZ. How are you going to tell how much of that the mail
service takes? sº -
Mr. PEABODY. That is what the department is trying to do now,
whether it shall be weight or space.
Mr. McBRIDE. How about fast-freight lines? Does that refer to
the cost of operating fast passenger trains?
Mr. PEABODY. No. I am referring now entirely to the passenger
expenses, after the passenger expenses are determined. He is speak-
ing now of the portion chargeable to the mail and passenger expenses.
Mr. PRENTISS. Would you consider advertising an account which
should be apportioned between the classes of service—express, mail,
and passenger? -- * i
Mr. PEABODY. Yes.
Mr. PRENTISS. Would the mail and express participate in pas-
senger advertising? -
Mr. PEABODY. That being a part of the expense attaching to the
passenger service, I should say yes, and if I had time probably I
could show by an argument that that would be perfectly proper, but
it would take too long a time to enter into a discussion of that ques-
tion for the purpose for which I am here. My general claim, how-
ever, is that after you have ascertained the cost attaching to the
passenger-train service then it is perfectly proper to divide the whole
of that cost between the different services performed by that train.
You must remember that in all of the accounting, everything that
finds its unit right in the train—there is not an expense in a railroad
that does not find its unit there; consequently, the proportion of the
different classes of service that a train performs should be made the
basis of the cost attaching to that service. That is the general propo-
sition. But my aim is not discuss that proposition, how you are to
divide it afterwards, but the division between freight and passenger,
which is the subject under discussion.
The CHAIRMAN. In mail transportation, who puts the mail on the
cars and takes it off, the railroad employees or the postal employees?
Mr. PEABODY. As a rule, the railroad employees. -
The CHAIRMAN. The cost to the railroad would be the same, would
it not, practically, if the pick-up and loading was made at Washing-
ton and the delivery and unloading was made at San Francisco or
made at New York, providing that the car was loaded at Washington
went through to New York and another car loaded in Washington
went through to San Francisco! Your cost to the railroad for
pick-up and for loading and delivery and unloading would be the
same to the railroad, would it not, assuming that wages were the
same? -- •
Mr. PEABODY. And that it was all on one railroad?
The CHAIRMAN. Yes.
Mr. PEABODY. Yes; I assume that is so. I presume it would not
cost any more to pick it up in Washington and unload it in New
RAILWAY MAIL PAY. 465
York than it would to pick it up at Washington and unload it at
San Francisco, so far as that particular service is the same. The cost
in rate would not be the same. -
The CHAIRMAN. The transportation cost would be in accordance
with the mileage?
Mr. PEABODY. Certainly.
The CHAIRMAN. In the construction of the parcel-post bill we made
two separations, one that we termed an overhead charge which was
pick-up and delivery, and which we assumed in constructing our
rates would be the same materially as to where the activity took place
and because it was done by governmental employees, and then took
the transportation cost to the Government, which was easily ascer-
tained, and added that in accordance with the distance embodied in
the zones that were adopted. Could that same principle, in your
opinion, be utilized at all in the solution of this problem of railway
mail pay, namely, that the mail being practically one classification,
one kind of freight or passenger—whichever you choose to term it—
that there would be two factors to be ascertained, one an overhead
charge, the cost of loading and unloading mail on the cars, performed
by the railroads, and the other a transportation charge based on the
ascertainment, as far as it is possible of ascertainment, based on the
ascertained cost to the transportation company, with a determination
on the part of Congress as to the compensation the transportation
company should receive over and above that ascertained or arbitrarily
adopted cost to the transportation company? -
r. PEABODY. It seems to me that there are so many difficulties
entering into the way of division of expense that I should not like to
express an opinion offhand as to its correctness. Mr. Lane, of the
Interstate Commerce Commission, in making his express rates, made
them somewhat on that theory—that is, he first determined a trans-
portation charge by his zones and he had a certain rate for each one
of the zones, and after having ascertained what the rates would be
under those rates through the different zones he then added the ter-
minals at each end to the amount thus found, and pronounced that
as the rate. That, I suppose, is somewhat in line with the theory
that you have just stated, but in this country we have never made
that dual rate on freight or anything else as they have in Eng-
land. If I might be permitted to speak wholly as a layman in regard
to the mail service without having given it any definite thought other
than the ordinary citizen gives it and without giving it really any
considerable thought at all, it has occurred to me that if the mail
could be handled on the basis of weight, ascertained by an automatic
recording device as put on and put off the trains, we would have the
ideal way of transportation, and the Government would pay for what
was carried and the railroad would get paid for what it did carry.
The CHAIRMAN. What would you do with the R. P. O. and the
apartment cars?
Mr. PEABODY. That is post-office space being transported over the
lines. That would have to be paid for as now, in addition to the
weight.
The CHAIRMAN. As extra service?
Mr. PEABODY. But instead of having a lump weight, as determined
now, which we have once every four years, if we could have a device
for weighing on and off the trains which would keep a record and
466 RAILWAY MAIL PAY.
which would be duplicated both to the railroad and to the depart-
ment, there would be very little difficulty in ascertaining what the
pay ought to be. *…* w
The CHAIRMAN. Is there any such device that has been developed ?
Mr. PEABODY. I do not know of anything of that sort, but I say,
from my confidence in Yankee ingenuity, that I think, perhaps, one
could be gotten up. I have not given it any serious thought. That
may be a thought that could be worked out. I am going to make
some investigation on that line simply for my own satisfaction. I
have not anything to do with the mail service on our road. -
As to why the department used the Wisconsin method when there
were others in use which had been decided by the courts to be supe-
rior to the Wisconsin method I can not say. In the first place, they
did not use it, but why they even selected that as their basis I would
like to know. Was it not because it allowed the least to the pas-
senger basis? Was it not because the case in which it occurred was
a passenger case, and it allowed the least possible expense to the
passenger business of all methods?
Mr. McBRIDE. No, sir; I do not think that entered into the mind
of any member of the departmental committee. The method adopted
by the department is not the Wisconsin method, but a modification
of it, and was selected after a prolonged consideration of the ques-
tion and after consultation with employees and officials of the Inter-
state Commerce Commission and a discussion of different methods.
It was determined on by the committee of the department as being,
in their opinion, the most equitable method obtainable.
The CHAIRMAN. I understand you to make the statement that other
methods have been decided by the courts to be superior to the Wis-
consin method, which has been under discussion here. Will you please
elucidate on that? :
Mr. PEABODY. I will call your attention to several of those cases
and the decisions.
Mr. McBRIDE. May I ask if the decisions were rendered before,
Document 105 was prepared. 4
Mr. PEABODY. Yes, sir. Nearly all of these cases antedate anything
that was done by the department. I want to say, however, before
going into that, that I have in my possession a letter from Commis-
sioner Meyer, who is one of the commissioners subscribing to the
Wisconsin decision. After an examination, at my request, of the
Santa Fe method, he pronounced it to be almost ideal, and he would
agree with it simply with one exception, that of switching mileage.
We divide switching expense on the Santa Fe on the basis of the
cars handled by the Switch engines and yard expenses. Commis-
sioner Meyer would assign all of the switching expenses to freight.
On what theory he would do that I can not conceive, but that is a
fact. However, with that exception, he has indorsed our basis in toto.
The CHAIRMAN. That is Commissioner Meyer, of the Interstate
Commerce Commission? - -
Mr. PEABODY. Yes. Commissioner Meyer spent some time studying
our method. I do not mean to say our method is by any means per-
fect. It is not perfect and we are striving now to improve it.
In a case in the court of common pleas, No. 4, for the county of
Philadelphia, in equity, the Pennsylvania Railroad Company, v.
RAILWAY MAIL PAY. 467
Philadelphia County, March term, 1907, it was stated and affirmed
by the court:
XIII. The complainant, at the request of the defendant, submitted its tables
of figures showing its business, its estimated business, and the probable results
of the reduced charge to the counsel for defendant, who in turn submitted the
Same to a competent accountant, Mr. Goldsmith, who spent several weeks in an
examination of the books and papers of the complainant bearing upon the
Subject, to which he was given the fullest and most complete access. He sub-
mitted a statement of the accounts which differed from those of the Com-
plainant by about $1,642,000. This difference came about as the result, first,
of using another method of apportioning certain expenses as between the freight
and passenger business than that used by the complainant, this method being
the locomotive-mileage basis, while that adopted by Complainant is known as
the revenue train-mileage basis.
Whilst the locomotive-mileage basis of apportionment had been used by
complainant prior to the first day of January, 1907, it appeared, without con-
tradiction, that during the period this method was used it affected no rights;
that as early as the year 1892 the Interstate Commerce Commission recom-
mended to the railroad companies of the country the use of the revenue train-
mileage basis of apportionment; that antecedently to 1907 almost all railroad
Companies Of the Country, which made any apportionment, had adopted that
basis; that in 1906 the then president of the complainant, Mr. Cassatt, had
instructed the comptroller to investigate the subject of the proper apportion-
ment, who did so investigate and who represented to Mr. Cassatt that the
revenue train mileage was almost universally used, and was the proper one
to adopt, and that the revenue train-mileage basis was thereupon adopted
because of the conviction of those in charge of the operations of the railroad
- that it was the proper one. This method was proven by expert witnesses to
be the proper method, and Mr. Goldsmith conceded that he had no such
knowledge or experience as was essential to enable him to express any opinion
as to which was the proper One.
One of the findings of the court, on page 24 of the same opinion, is
as follows:
(c) As nearly as can be ascertained through a careful application of a rule
of apportionment approved by railroad experts and in actual use by most of
the large railroads of the country, the approximate cost to the plaintiff of
handling its intrastate passenger business during the first three months of
the present year was $2,921,607.91. -
Turning to page 26 of the same report, the decision says:
Upon these facts we are asked by the plaintiff to declare that the regulation
Of passenger fares attempted by the act of April 5, 1907, is unreasonable. To
this there is advanced on behalf of the defendant the particular objection that
no evidence has been presented to show the results of the plaintiff's freight
business; that its intrastate passenger business is so combined with its intra-
State freight business as to be indistinguishable in their joint result; that
greater profits on the one kind of traffic may make up for the lowering of
profitS On the other, and that, therefore, before it can be said that the act
under consideration regulates the plaintiff’s business unreasonably, the whole
Of that business must be considered, freight traffic with passenger traffic. This
Objection we think is overcome by the following considerations: -
First. Men who understand the railroad business thoroughly and on whose
Opinion in relation to the subject we may with confidence rely, declare that
intrastate passenger traffic may readily be distinguished from the rest of the
plaintiff’s business by the application of certain rules developed by experience
and approved by general use.
Second. The legislature itself, in the very act now under discussion has, for
purposes of regulation, attempted to segregate the passenger traffic of the
railways and to deal with it as if it existed as a thing apart from all else.
Third. If pushed to its logical result the argument advanced would justify
a law requiring that the railroad companies of the State should carry all intra-
state passengers without charge and look to their freight business for reim-
bursement of expenses and for a return on their investment in the business,
which, of Course, is the reductio ad absurdum.
468 RAILWAY MAIL PAY.
*
It is further and more generally objected by the defendant that the plaintiff
invites the court in this case to leave the domain of fact, where it has to guide
it the testimony of witnesses who have seen the things that they describe, and
to enter the realm of Speculation, where all evidence is mere guesswork and
where probability is the nearest approach to reality and truth that can be found.
This objection seems at first sight more formidable than it really is. Antithesis
always arrests attention. In an inquiry, however, as to conditions resulting
from the Operation of a regulation not yet in force, nothing but probabilities
Can be expected. Such a situation is not one with which the law is unfamiliar.
It has never required mathematical proof of the facts with which it deals.
Most verdicts rest on the likelihood (not the certainty, by any means) that
witnesses will tell the truth under oath. Nevertheless, judgments are entered
solemnly On Such verdicts. And this is in accordance with the common practice
of mankind in the affairs of daily life. No plan for future conduct was ever
formed that was not based upon the probability as to what circumstances would
develop at the time for its performance. There is nothing more uncertain than
human life, but the study of the probabilities of its duration has made the insur-
ance of lives a safe and profitable business. It may well be doubted that the
fy usiness of life insurance has received more careful attention than has been
applied by intelligent students to the traffic of the country’s railways. To such
experts what seems to others mere chance and guesswork becomes reliable fore-
Cast. In Our Opinion, the approximations and probabilities worked out upon a
broad foundation of established facts by men of experience and sound judgment,
testifying under oath, may properly be considered a safe ground on which to
base judicial action. Having such testimony before us, we feel justified in
accepting and acting upon the probabilities which it establishes.
That is on the basis of the revenue train mileage.
Mr. HURST. There is a more recent reference than that. I would
call your attention to the case of the Chicago, Peoria & St. Louis
Railroad. - - -
Mr. PEABODY. I think I have every case of the sort. I have all
those cases, and will come to them later.
The CHAIRMAN. Has that been sustained?
Mr. PEABODY. The Pennsylvania case was sustained. I am quite
certain that it was. I know the rate which was approved by this
court is the present rate in Pennsylvania.
The CHAIRMAN. That was in 1907? -
Mr. PEABODY. That was in 1907. The next case is the case of the
Arkansas Rate case, in which Judge Van Devanter rendered his
opinion on the temporary injunction, before he went to the Supreme
Court. While he does not enter into any discussion, it is sufficient
to say that the revenue train mile basis was the basis used in that
case for the basis of dividing between freight and passenger.
The CHAIRMAN. What is the status of that case? Was that
affirmed ? -
Mr. PEABODY. That is now before the Supreme Court of the United
States, and we are waiting with some considerable degree of interest
for the decision. It has been pending before the court now for over
12 months. -
The CHAIRMAN. And the decision in that case was based on reve-
nue train mileage? f
Mr. PEABODY. Revenue train mileage. And Judge Van Devanter
stated in his opinion granting the injunction that the actual cost of
conducting the freight traffic and the actual cost of conducting the
passenger traffic had been ascertained. That you will find In re
Arkansas Rates, 163 Federal, 141.
The CHAIRMAN. A short time ago, as I remember, you stated that
you had received a letter from Mr. Commissioner Meyer, of the Inter-
RAILWAY MAIL PAY. 469
state Commerce Commission, approving, with one exception, the
method of accounting of the Atchison, Topeka & Santa Fe Railway
Co. as to the division between passenger and freight expenses.
Mr. PEABODY. As to the division between freight and passenger
and to the different operations of the road. * *
The CHAIRMAN. I infer from that that, in his opinion, you have
evolved the best method of accounting known to date, or, at least,
known by him to date, in apportionment between freight and passen-
ger; but have you made an apportionment between mail and pas-
senger?
Mr. PEABODY. I have; yes; and will come to that.
The CHAIRMAN. Did you submit that apportionment to Mr. Meyer?
Mr. PEABODY. Oh, no. That is only since this mail case came up.
The CHAIRMAN. So that, as a matter of fact, according to your
information, none of the railroads, and certainly not so far as your
own road is concerned, had attempted to make an apportionment
between mail and passenger until the department commenced its
study of the question, the results of which are represented in docu-
ment 105?
Mr. PEABODY. No, sir. The next case I want to refer to is the case
of the St. Louis & San Francisco Railroad Co. v. Herbert S. Hadley
(168 Fed., 317), the opinion of Judge McPherson in the Missouri
case, which is also before the Supreme Court at the present time.
In that case the revenue train-mile basis was submitted by all the
roads and the State employed two very competent accountants, a Mr.
Taliferro and a Mr. Hamilton—the latter now working for the St.
Louis & San Francisco Railroad—to examine the accounts of the
railroads to ascertain whether or not that division was correct, and
they testified on the stand that they had no fault whatever to find
in the division between freight and passenger as established by the
roads, and that division for each of the roads is published in the
opinion of Judge McPherson, showing the division between freight
and passenger for each one of these roads in that case, and approved
by the accountants. - --
The CHAIRMAN. Is that on the revenue train-mile basis?
Mr. PEABODY. That is on the revenue train-mile basis, with the
exception of the Santa Fe, which is on the revenue train-mile basis
where it is impossible to use anything else. For instance, the station
service on the Missouri Pacific was divided on the train-mile basis
and we divided it on the basis that I have explained. We divided
the switching on the train-mile basis and we divided it on the basis
of the cars handled, but, practically, the division was the same. But
the basis was the revenue train mileage, and the court approved of
that basis and rendered its decision under that basis.
The CHAIRMAN. What was the date of that decision ?
Mr. PEABODY. That is not dated, but it will be given in the refer- .
ence that I have stated. I should say that was about 1910. Judge
McPherson, commenting on it, says: -
The earnings are known and fixed and in these findings stated to a certainty.
But as to the expenses as between State and interstate business, there has been
a controversy, and Such is the principal controversy in the cases. There is no
known fixed or certain rule for determining how this separation of expenses
shall be made. The same can not be made with mathematical certainty.
470 RAILWAY MAIL PAY.
That is, the separation as between interstate freight and intrastate
freight and interstate passenger and intrastate passenger.
The CHAIRMAN. Have you attempted that in the Atchison method?
Mr. PEABODY. We use the basis that has been adopted by all of the
courts, which is the gross-revenue basis.
The CHAIRMAN. Do you make an inter and intrastate distinction?
Mr. PEABODY. In all the State cases which we have had the courts
have approved the Arkansas case, the Missouri case, the Minnesota
case, the Chicago, Peoria & St. Louis case; all of them have approved
this basis for the division as between freight and passenger, ascer-
tained by the revenue train-mile basis. Then the subdivision of pas-
Senger expenses as between interstate and intrastate is made upon the
respective revenues of those two classes of business; the same way
with the freight. That has been approved universally by every court
before whom it has been submitted, except Judge Trebeir, who used
a slightly modified basis in the Arkansas case. Judge McPherson
also said in connection with this:
With reasonable certainty the expenses for doing the freight and passenger,
including miscellaneous Of each, can be and have been separated.
The next case is that of Judge Hook's, the case of Missouri, Kansas
& Texas Railway Co. v. Love (177 Fed., 493). While Judge Hook
does not go into the discussion of it in that case, I will say the revenue
train-mile basis was the basis used. I was the principal witness in
that case on that point. Judge Hook says: *
As between freight and passenger traffic, a large part of the expenses may be
directly located and distributed, and it is the custom to apportion the remainder
by Various rules not necessary to mention here.
Those were the rules which we used in our method of division.
That case is still under injunction. It has not gone to the Supreme
Court. The Interstate Commerce Commission in the Advance Rate
case, decided February 22, 1911, and in the decision of the Western
case Commissioner Lane refers at some length to our basis of division.
The CHAIRMAN. That is the Atchison basis? g
Mr. PEABODY. That is the Atchison basis of division, and also the
Burlington, which is practically, the same. In the Advance Rate
case we find at page 49 of the decision the following:
While we find the carriers Contending uniformly that in the making of a rea-
sonable rate the cost of service is practically a negligible factor, yet the con-
tention is herein made that the Carriers should be allowed to increase their rates
upon that ground. In Short, that addition to Cost of Service justifies increased
rates. It becomes of immediate importance, therefore, to learn what we may
as to this factor in the problem. That the railroads are not indifferent to this.
element is shown by the fact that some of those of highest grade keep such
figures. It would be remarkable indeed if, in this time when all great business
enterprises make analyses Of costs, our railroads should keep no such accounts.
When we have sought to learn the cost of railroad service a twofold answer
has been made: (1) That rates were not and could not be made with reference
to cost because some traffic Could and should bear a higher rate than Other
traffic, and (2) because it was impossible to allocate to the different services
rendered their proper share of expenditures. The first of these answers we have
considered above. As to the second, it has been testified by an official of an .
important carrier that it was entirely feasible to absolutely segregate about 51
per cent of the cost of operation between passenger and freight traffic; that
about 29 per cent was subject to some arbitrary division, but that for all prac-
tical purposes it would be accurate; and that Only the remainder, or 20 per cent
of the whole, had to be determined upon an arbitrary basis. :
RAILWAY MAIL PAY. - 471
So that it was regarded as practicable by statisticians to leave but a very
narrow “twilight zone" between the actual cost of moving a ton of freight and
the statistician's estimate; and this estimate, it was thought, would not vary
5 per cent from actual cost. This is readily apparent from the fact that of the
total operating expense on most of the roads substantially 50 per cent is
chargeable to “conducting transportation,” 25 per cent to maintenance of way
and structures, and 25 per cent to maintenance of equipment. There is no diffi-
culty in segregating the cost of maintenance of equipment as between passen-
gers and freight. Likewise, the 50 per cent under the head of “Conducting
transportation ” is easily segregated, excepting as to some station, yard, and
similar expenses, which Constitute a Small proportion of the total.
Thus practically 75 per cent of the entire expense is taken care of. The ex-
pense of maintenance of way and structures can not be allocated, and this has
to be divided arbitrarily. Moreover, that it is not impracticable to estimate
cost of railway service is evidenced by the fact that we have before us the cost
figures of both the Santa Fe and the Burlington lines. The Santa Fe road has
had in its employ for many years a man who has a national reputation as a
statistician. It is a part of the general efficiency of the system of that great
road to keep such accounts, so that the management may ascertain through
varying periods of time how the income of the road is being expended. While
the figures, as the carriers contend, may not be sufficiently definite as to be
authoritative upon the cost of carrying traffic, they clearly and unquestionably
show the relative cost from year to year, because the same system of bookkeep-
ing and statistical accounting obtains throughout these periods of time. If we
find that On a Certain division of the Santa Fe road, for instance, the cost of
moving a ton a mile is 3 mills in September, 1910, and 3% mills in September.
1909, we may not be justified in concluding that to the nicety of one-tenth of
a mill this is the cost of moving that unit of traffie ; but we are justified in say-
ing that the cost over that particular portion of the road for that one month,
including all operating expenses, has decreased in 1910.
I will say, for the information of the commission, the Santa Fe
road has followed this method for the last 12 years. We started it
about 12 years ago, and I personally have been working with it for
12 years, and we have been working at it all that time to complete, as
nearly as we may, the expenses; so we feel somewhat competent to
speak on the subject. -
The CHAIRMAN. You think you have perfected or evolved a very
important plan in the segregation of expenses between freight and
passenger. Do you think you could be equally successful in the seg-
regation of expenses between mail and passenger?
'Mr. Pºpoº, we have not the data" which will enable us to get
that, Mr. Chairman. -
The CHAIRMAN. Is that data obtainable and would it be expensive
to obtain?
Mr. PEABODY. It would be expensive to obtain, and I know of no
manner of obtaining it except by weighing the mail on and off the
train. The next case I have is that of the famous Minnesota case,
184 Federal, 765, and this particular reference is at page 812. This
is quoted from the opinion of Judge Sanborn in the United States
Court : -
In the cases of the Northern Pacific Co. and the Great Northern Co. excep-
tions are urged to the master's division of common cost between freight busi-
Iness and passenger business, to his finding that the cost of doing intraState
freight business was two and one-half times the cost of doing interstate freight
business, and to his finding that the cost of doing intrastate passenger business
was 15 per cent more than the cost of doing interstate passenger business.
About 60 per cent of the cost of doing the passenger and freight business in
Minnesota consisted of items which in themselves disclosed the fact that they
were incurred either in doing the passenger or in doing the freight business.
All parties conceded that these items were properly assigned to the freight
business and the passenger business, respectively, by the railroad Companies,
472 RAILWAY MAIL PAY.
and these are termed “allocated items.” The remaining 40 per cent of the cost
Consisted of items incurred for the columon benefit of the passenger business
and the freight business, and there was no method of assigning these items
that was certain to be mathematically and absolutely correct. Two methods
were advocated by the respective parties to this controversy. The defendants
introduced in evidence an allocation of these items made by Mr. Conway W.
Hillman, an expert railway accountant, without extended experience as a rail-
road operator, whereby in the Northern Pacific case about $400,000 more
Common cost and in the Great Northern case about $900,000 more common
cost was assigned to the passenger business, and a correspondingly less amount
to the freight business, than was assigned by the companies and confirmed by the
master. This division was supported by the testimony of Mr. Hillman that in
his opinion it was right and reasonable and by his statement of his reasons
for this belief. But no other witness came to support his view. On the other
hand, a large number of witnesses, who had long been familiar with the details
of the expense of operating railroads, who had enjoyed a long experience in
their actual Operation, and who had considered in the light of their knowledge
and experience and formed opinions concerning a just division of this common
cost, testified that the allocation made by the companies and finally adopted
by the master was fair and just. -
This testimony was buttressed by evidence that this basis of division bad
been used by these and other railroad companies for their own information and
convenience for some time before the questions here at issue had arisen, and
that it had at One time received the approval Of the Interstate Commerce Com-
mission. So it is that whether the knowledge, experience, and Opportunities of
the witnesses to form correct judgments upon this issue of their numbers be
considered, the great preponderance of the evidence sustains the division made
by the master, and it must stand.
That is on the revenue train mile basis. Right here, without read-
ing it, I want to introduce another item. Judge Sanborn, also in
his opinion, stated the proper method for arriving at the value of the
property was the gross earnings method—I mean the value of the
property devoted to each class of business—and we used exactly that
same method for arriving at the value of the property:
The master divided the values of the Minnesota properties between freight
business and passenger business and between interstate business and intrastate
business on the basis of the respective gross earnings of these classes of busi-
ness. Counsel for the defendants challenge this basis of division, and COIntend
that the apportionment should have been made on the basis Of the use made
of the property by each of these classes of business, measured either (1) by
the aggregate number of the ton miles of the respective classes, or (2) by the
aggregate number of the car miles and engine miles of these classes. -
They say that if that proportion of the value of the property of a company
which the number of ton-miles hauled by it in . Minnesota bears to the aggre-
gate of its ton-miles and passenger miles in Minnesota be assigned to its freight
business, and that proportion which its number of passenger miles bears to the
same aggregate be assigned to the passenger business, and if that proportion
of the value thus assigned to the freight business which the aggregate of the
car miles and engine miles appertaining to the intrastate freight business bears
to the car miles and engine miles used in the freight business be assigned to
the intrastate freight business, and the same method be pursued in apportioning
value to the intrastate passenger business the apportionment will be more
equitable and just. The issue is between apportionment by use without regard
to the worth or value of the use, and apportionment according to the value of
the use. The latter basis seems to be more logical and rational. -
Capitalization is founded on the worth of use, not on mere use. The value
of property and of investment in every form is measured by the value of its
use, not by its use divorced from the value thereof. The Minnesota Railroad
Commission, the railroad companies, all rate makers, base their rates primarily
on the worth of the use of the railroad machines by the various classes of
freight and by the passengers, and not on the amount of that use. The rate for
hauling a ton of merchandise of the first class a mile is not five times the rate
for hauling a ton of merchandise of Class E a mile, because the former ton-
mile uses the railroad property five times as much as the latter, but because
the use by the former is worth more than the use by the latter.
RAILWAY MAIL PAY. 473
Moreover, there is no unit of measurement of ton-miles and passenger
miles, of freight-car miles and freight-engine miles, or of passenger car miles
and passenger engine miles divorced from the values of the uses they make
of the railroad property, from the classes of loads they carry, and the distances
these loads are hauled. Indeed, there is no proportioning or measuring relation
between such varying uses of property when no regard is given to the values
Of these uses.
On the other hand, the values of the uses, the earnings of the property,
unavoidable condition the value Of the property used and present a natural
and equitable basis of apportioning that value to these uses. Cases may indeed
be imagined in which this basis does not produce persuasive results. One of
them was suggested by Mr. Justice Brewer in Chicago, Milwaukee & St. Paul
Ry. Co. v. Tompkins (176 U. S., 167, 176; 20 Sup. Ct., 336; 44 L. Ed., 417), and
others of like character have been presented in argument by COunsel. But no
basis has been suggested and none has been discovered which seems to be Imore
equitable or more accurate. It may be that there is no basis or method that
brings perfect or ideal. results. But because the ton-mile and passenger-mile
basis has no common unit of measurement. because that basis and the Car-mile
and engine-mile and the passenger car-mile and passenger engine-mile bases
exclude the effect of the values of the uses made of the railroad property by
the various classes of freight and by the passengers carried, because there is
really no proportioning relation between uses divorced from their values and
the value of the property used, because these bases ignore the differences in the
classes of freight carried and in the distances they are handled, because the
apportionment of the value of railroad property on the basis of the gross earn-
ings of the classes of business, which disclose approximately the values of their
uses of it, gives effect to these material differences, appeals more persuasively
to the reason, and produces results more equitable than any other basis sug-
gested, and because this basis has commended itself to the judgment of and
has been adopted by the COUrts upon whom duties of apportionment of this
nature have been imposed in like Cases the master was justified in following.
their decisions, and his action and report in this regard is confirmed. (Ames v.
Union Pacific R. R. Co. (C. C.), 64 Fed., 165, 179; Chicago, Milwaukee & St.
Paul Ry. Co. v. Tompkins (C. C.), 90 Fed., 363, 370 : St. Louis & S. F. Ry. Co. v.
Hadley (C. C.), 168, 317, 348-352; Northern Pacific Ry. Co. v. Keyes (C. C.),
91 Fed., 47, 26, 57 ; in re Arkansas Railroad rates (C. C.), 163 Fed... 141, 142:
. Missouri, Kansas & Texas Ry. Co. v. Love (C. C.), 177 Fed., 493, 497.)
He also, in the same opinion, found that 7 per cent was a proper
return upon the value of the property devoted to this use, and there
is his argument in this respect:
Complaint is made that the master finds that the Companies are entitled to a
net return of 7 per cent per annum upon the respective value of their properties.
devoted to this public use. The character of the business in which an invest-
ment is made, the locality in which it is placed, the returns secured in that
locality from other investments of a similar nature, the uniformity and cer-
tainty of the return, and the risks to which the principal and the income from
it are subjected, condition the measure of a fair return upon capital invested.
An investment in a bank, in a factory, in a mercantile, manufacturing, or agri-
Cultural business is substantially free from regulation by the Government and
exempt from any duty to the public, except that of paying taxes. If the busi-
ness in which Such an investment is made is unprofitable, its owners may
plomptly discontinue its Operation until more prosperous days come and then
return to their undertaking. An investment in a railroad which Operates in
many States is subject to the regulation of its business by many Governments.
Its owners owe the duty to the Governments and to the public to operate their
railroad continually in days when its operation is unprofitable as well as when
it is remunerative, a duty they must discharge under the penalty of the for-
feiture of their property if they fail. In view of these facts they ought to be
permitted a return large enough to enable them to accumulate in prosperous
days a surplus sufficient to enable them to protect their property in days of
disaster and to make their average return through days of prosperity and of
adversity fair and just. The lands in Minnesota through which these railroads
extend are fertile and productive. The cities, villages, and towns they reach
are rapidly increasing in population and wealth, and the people they Serve are
thriving and successful.
474 RAILWAY MAIL PAY.
The evidence satisfies that the railroads are maintained in excellent condi-
tion, that they are efficiently and, on the whole, economically managed and op-
erted and are rendering commendable service. Justice to the thriving people
they serve does not require that the owners of these railroad properties should
be deprived of a fair return upon their values. To deprive them of such a re-
turn would prevent advances and tend to compel reductions in the wages and
Salaries of their employees, would tend to prevent the extension of their lines
into portions of the State where the development and accommodation that rail-
road Service assures would be welcome and may be needed, to deteriorate the
character of the service they render, and to retard the general prosperity.
The legal rate of interest on a debt in Minnesota in the absence of contract is
6 per cent, and by contract it may be 10 per cent per annum. (Rev. Laws
Minn., 1905, par. 2783.) Rational investments in agricultural, manufacturing,
mercantile, and other industrial pursuits, and even well-secured loans, yield
returns in Minnesota corresponding with these lawful rates, Investments in
Tailroads and the returns thereon are at the risk of failures and partial fail-
ures Of Crops, of disasters, delays, and expenses of unusual Storms, snow, and
Cold, of the great financial disasters which occasionally prevent or delay the
movement of traffic, and of the burden of continuous Operation, whether profit-
able or unremunerative. It is an axiom in economics that the greater the risk
the greater must the return be upon invested capital, and the conclusion is irre-
sistible that a net return of 7 per cent per annum upon the respective values
Of the properties of these companies in Minnesota devoted to transportation is
not more than the fair return to which they are entitled under the Constitution
Of the United States.
The last case to which I will refer is the most recent case, found in
the 199 Federal, 593. This is the most elaborate opinion in connec-
tion with this division of freight and passenger expenses and the
court goes into it very thoroughly. The master went into it very
thoroughly and the court likewise.
The CHAIRMAN. What court? # ' r
Mr. PEABODY. This is the United States district court, Judge San-
born, but not the Judge Sanborn of the circuit court.
The CHAIRMAN. This was rendered when }
Mr. PEABODY. It is a very late decision, contained in the 199
Federal. It is within the last year.
The CHAIRMAN. It has not gone to the Supreme Court?
Mr. PEABODY. No; not to the Supreme Court.
The CHAIRMAN. In your opinion, that is the most elaborate and
sound decision relative to the adoption of the revenue-train mileage
as the basis of segregation between freight and passenger?
Mr. PEABODY. It is the most elaborately argued and shows why,
up to this time, this method has been adopted as the division between
freight and passenger and why it is the most feasible method of
dividing the expenses as between these two accounts.
The CHAIRMAN. In support of your contention will you mark the
salient features of that decision and leave it with the reporter, so that
he may insert in the record those sections that you deem salient, or
do you deem it important that the whole opinion should be embodied
in the record?
Mr. PEABODY. It would be very helpful to the commission if they
would read the whole decision. It is a very fair discussion of that
subject and that is about all there is in it. First, the opinion of the
master and then the opinion of the court, Sustaining the opinion of
the master. He indorses unqualifiedly the train-mile basis, and I
want to say in this connection the only opponent in that case was Mr.
C. W. Hillman, but he adopted a very different method of dividing
between freight and passenger in this case than in the Minnesota
RAILWAY MAIL PAY. 475 .
case, because this was a passenger case, and he wanted the passenger
expenses to be as Small as possible.
The CHAIRMAN. We will insert the whole of the opinion in the
record at this point.
In the District Court of the United States, Southern District of Illinois,
- Southern Division.
Trust Co. of America, complainant; Chicago, Peoria & St. Louis Railway Co. of
Illinois, defendant. In Chancery.
John P. Ramsey and H. M. Merriam, receivers of the Chicago, Peoria & St. Louis
Railway Co. of Illinois, petitions, v. W. H. Stead, attorney general et al.,
respondents. Intervening petition.
Rinal hearing on exceptions to master’s report. Exceptions Overruled.
Baker, circuit judge, and Humphrey and Sanborn, district judges.
STATEMENT.
Prior to the 1st of July, 1909, the Trust Co. of America filed a bill against
the Chicago, Peoria & St. Louis Railway Co. of Illinois, to foreclose a mortgage
upon a railroad. John P. Ramsey and H. M. Merriam were appointed receivers
of the railway by order of July 1, 1909. They operated the road until October
13, 1909, when they filed their intervening petition against W. H. Stead, attorney
general of Illinois, and the various State's attorneys for the counties through
which the road runs, for the purpose of testing the validity of the maximum
railway-rate act, approved May 27, 1907, fixing the maximum passenger rate
at 2 cents per mile. On January 3, 1910, the attorney general and the other
respondents demurred to the intervening petition of the receivers upon Several
grounds, among others that it appeared by the petition and the bill that the
subject matter of the petition was wholly unrelated to the bill, and that an
answer to the intervening petition would raise a new and independent issue
in the foreclosure suit wholly foreign to the purpose and subject matter of the
bill and wholly unrelated to the issue raised by the bill and answer. The
court overruled the demurrer.
On October 13, 1909, the receivers moved for a preliminary injunction accord-
ing to the prayer of the intervening petition, and on the same day the Court
issued a preliminary injunction restraining the respondents from enforcing or
attempting to enforce the rates provided for in the Illinois maximum-rate act
referred to, and from enforcing or attempting to enforce, through any agency
provided in the statutes of Illinois or otherwise, any of the penalties prescribed
by the statutes of the State for failure on the part of the petitioners to observe
any of the provisions of the maximum-rate act, and from commencing or prose-
cuting any suit or action for the failure of the petitioners to observe the rates
provided for in said act. It was further provided in the order that the receivers
at the time of the sale of each passenger ticket should deliver to each passenger
a coupon, stating upon its face the amount of the fare received from the pas-
senger in excess of 2 cents per mile, and that the holders of coupons have a
first lien upon all the property of the railway company to secure the payment
Of all costs and damages Sustained by them by reason of the issuing of the
preliminary injunction if it should be finally adjudged that the injunction was
wrongfully issued. *- -
On January 25, 1910, the Attorney General and his corespondents answered
the intervening petition, again raising the question of jurisdiction and putting
the merits of the petition in issue. Issue was joined March 9, 1910, by the filing
of the general replication by the receivers. Thereupon the case was referred
to Walter McClelland Allen, master in chancery, to hear the testimony produced
by the parties and report his conclusions of fact and law thereon. The evidence
was taken before the master, who filed his report July 19, 1911, as follows:
To the Hon. J. OTIs HUMPHREY,
Presiding Judge of the Circuit Court of the United States -
for the Southern District of Illinois:
Pursuant to an order of reference heretofore entered in the above-entitled
cause whereby said intervening petition was referred to me as one of the mas-
89246—-No. 3–13—3
476 - - RAILWAY MAIL PAY.
ters in chancery of this court to hear the testimony produced by the parties
thereto and report conclusions of fact and law thereon, I respectfully submit
the following report, and herewith return a typewritten transcript of the testi-
lmony as a part thereof.
THE ISSUES.
The petitioners, who were appointed receivers on the 1st day of July, 1909,
of the property of the Chicago, Peoria & St. Louis Railway Co., of Illinois, an
Illinois Corporation, in this cause on a bill to foreclose a mortgage upon the
railway property, attack the validity of the “An act of the General Assembly
of the State of Illinois,” passed in the year 1907, commonly known as the
“Two-cent rate act,” as a deprivation of due process of law contrary to the
provisions Of Section 1 Of the fourteenth amendment to the Constitution of the
United States, as impairing the obligation of the comtract implied in the charter
of the company granted it by the State, in violation of section 10 of Article I
of the Constitution of the United States, and aver that the rate of charges
prescribed by said act is unreasonable, unjust, oppressive, discriminative, con-
fiscatory, and Void.
Petitioners claim that from the 1st day of July, 1907, until the 1st day of
July, 1909, the railway was operated in compliance with the provisions of said
act, and with as great economy as was compatible with efficient service to the
public and proper maintenance and preservation of its property, and that such
operation resulted for the first year in an actual deficit of $8,032.41 in the
earnings derived from the intrastate passenger business within the State of
Illinois, and for the second year in a surplus of only $794.80, the total intra-
state passenger earnings for said period amounting to $510,230.27, while the
Operating expenses solely incident to Said business, including no fixed charges
except taxes, amounted to $517,467.88.
|Upon the presentation of their petition an order for a preliminary injunction
was granted restraining the respondents, the attorney general, and the State's
attorneys of the various counties through which the railroad's right of way
extends from enforcing the rates prescribed by said act and penalties provided
for violation thereof, and directing the petitioners upon the Sale of passenger
tickets to issue to each purchaser a coupon Secured by first lien upon the railway
property for the amount paid in excess of 2 cents a mile, the coupons to be
payable in the event that the injunction was wrongfully issued.
Demurrer to the petition was overruled, and on March 9, 1910, answer was
filed in substance denying the allegations Of the bill and Challenging the
methods used in the division of common expenses between the freight and
passenger business and of the earnings and expenses between interstate and
intrastate passenger traffic.
CONTROVERTED QUESTIONS of FACT.
The ultimate questions of fact in controversy upon which the right of peti-
tioners to a permanent injunction depends are :
(1) The proper and equitable division of expenses common to both freight
and passenger traffic which can not be directly allocated to either SO that each
branch of the service shall bear its just share of the Common expenses.
(2) A proper and equitable division of earnings and expenses between intra-
state and interstate passenger business necessary to the ascertaining Of earn-
ings and expenses Of the intrastate busineSS.
(3) Proper apportionment of the value of the property as a whole to each
branch of the service in order to ascertain the value of the investment in the
intrastate passenger Service upon which a fair return Should be COmputed. *--
(4) The value of the use to the public of the intrastate passenger service
rendered by petitioners. *
DIVISION OF COMMON EXPEN SES.
The basis of division of most of the common operating expenses adopted by
petitioners in order to arrive at a just apportionment between the freight and
passenger service is that known as “revenue train mileage.” It is not contended
that this basis is mathematically accurate, but that it more nearly approximates
a division of expenses just to both branches of the Service than any other
RAILWAY MAIL PAY. 477
basis yet devised; that the existence of so many indeterminate factors renders
Such accuracy impossible; and that in the present state of the development of
railroad accounting this basis represents the substantially unanimous judg-
ment of the railroad world. It is a rule also which was prescribed by the
Interstate Commerce Commission at a time when it required a division of these
expenses, and as promulgated in its form of report for the year 1893 is thus
Stated :
“Expenses which are not naturally chargeable to either traffic should be
apportioned on a mileage basis, making the division between the passenger and
freight traffic in the proportion which the passenger and freight train mileage
'bears to the total mileage of trains earning revenue.”
Mr. Robert I. Farrington, vice president of the Great Northern Railroad,
who has spent 27 years in railroad service and was a member of the committee
. appointed by the ASSOciation of American Railway Accounting Officers to confer
with the Interstate Commerce Commission with reference to a uniform system
of railway accounting which the Commission was authorized by the Hepburn
bill, passed in 1906, to make, in explanation of the train-mileage basis, likens
the railroad business to that of a manufacturing institution whose product
is trains and train miles. Its entire business is devoted to running trains,
getting the business to handle in trains, and taking care of it after it has been
handled in trains. The train, he says, is the Only unit that applies equally to
the expense and the revenue. Other witnesses of large railroad experience who
have given much thought to the question Support this basis of division. These
witnesses include W. D. Taylor, chief engineer of four railroads, who has also
occupied the chair of civil engineering in the University of Louisiana for seven
years, of railroad engineering in the University Of Wisconsin for four years,
and has devoted half of his life since maturity to practical work; Chester K.
McPherson, assistant to the general manager of the Missouri Pacific Railroad;
W. B. Storey, vice president of the Sante Fe Railroad; W. B. Doddridge, who
has been general superintendent of the Union Pacific Railroad; John Hurst,
general accountant of the Pennsylvania Line; F. P. Johnson, statistician of the
Missouri Pacific; R. M. Huddleston, chief auditor of the New York Central;
John P. Ramsey, one of the petitioners; H. W. Berger, auditor of the Chicago,
Peoria & St. Louis Railway; M. P. Blauvelt, controller of the Illinois Central
Railway.
On behalf of the respondents Conway W. Hillman has testified against this
basis of division of common expenses. Mr. Eſillman entered railroad service in
1876 as a telegraph operator for the Cumberland Valley Railroad, and served
that road in the capacities of agent, operator, scales clerk, yard clerk, assistant
dispatcher, and finally as dispatcher until 1881, when he took a position with
the Northern Pacific Railroad in the treasurer’s Office and became assistant
treasurer in the year 1888. In 1896 he organized the accounting department of
the Metropolitan West Side Elevated Railway Co., of Chicago. In 1903 he left
the service of the company and took employment with the Chicago, Rock Island
& Pacific Railroad in the controller’s Office for a short time, and afterwards as
chief clerk in its insurance department. This is the extent of his experience
in practical railroad operation. He has since followed the business of a public
accountant. For the past three years or more he has devoted almost his
entire time to railroad rate bases, and has been employed as an expert on
behalf of various States and their railroad commissions where such litigation
has been pending. The division of common expenses did not become a practical
Question with him until after he was employed as an expert in rate litigation.
In all he has been employed in 10 or 12 of such cases. In the present case
he has had access to the railway Company’s books and records, and his
assistants were engaged for three months or thereabouts in the work of com-
piling from these records the data from which he testifies. While petitioners.
have presented the results Of Operations for two years, respondents have taken
only the year ending June 30, 1909, in which the earnings were considerably
larger than in previous year. Mr. Hillman regards revenue train mileage as only
an indicative factor and presents his own formulas in respondents' Exhibit 7
as a more accurate method of division. By the application of these formulae
he arrives at the figures shown in respondents’ corrected Exhibit 2, which shows
a total of operating expenses incurred for the year ending June 30, 1909, of
$205,476.29 in the intrastate passenger business, while the application of the
formulae used by petitioners introduced in evidence as Exhibit 2 results in a
total of Operating expenses chargeable to intrastate passenger business amount-
478 RAILWAY MAIL PAY.
ing to $233,943.65, exclusive of taxes, rental and hire of equipment, a difference
in results of over $28,000 arising from the difference in method of apportioning
COmmon expenses.
The Hillman method is set forth and explained in detail in his testimony,
and lengthy cross-examination was had. The subject matter is one of expert
railroad accounting, upon which the master must form his conclusions accord-
ing to the weight of evidence drawn from expert sources. The petitioners have
produced the testimony of men of high standing and large experience in railroad
operation and accounting in support of their basis of division. Mr. Hillman
Stands alone in Opposition to their views. The revenue train-mile basis was .
adopted and came into general use by railroads without reference to rate liti-
gation, but for the purpose of determining the cost and profit of Operation for
the railroad's own corporate purposes, and the testimony of the witnesses for
petitioners is free from the common criticism applied to expert testimony. Rail- .
roads have both the freight and passenger rate questions to meet. Unless,
therefore, the Hillman method as explained by its author is of itself so per-
Suasive of its merits as to overcome this general judgment of men specially
equipped in this particular field, there can be no doubt that the weight of the
testimony is on the side of the petitioners. -
The interState-Commerce Classification Of a CCOUIntS has been followed in this
Case and is set forth in the exhibits. There are in all five blocks in these
accounts: (1) Maintenance of way and structures, (2) maintenance of equip-
ment, (3) traffic expenses, (4) transportation expenses, (5) general expenses,
and a total Of 108 different accounts.
The criticism made of the revenue train-mileage basis is that it is arbitrary,
involves many assumptions, does not reflect the use of the facilities, the upkeep
of which causes the expense, and is at best a rough approximation. This
Criticism involves the Claim for the Hillman method of elimination Of these
Objections, Or at least of such a substantial reduction of them as to entitle it to
be substituted as producing a more reliable result. Mr. Hillman himself claims
for his methods of division practical accuracy. •
Reference to some only of the items of common expense will be sufficient for
the purposes of this report. <>
Account No. 2 in the first block of accounts (maintenance of way and
structure)—Ballast.—Petitioners for the year ending June 30, 1909, charge to
passenger expense $852.09 (Exhibit 8) upon the revenue train-mileage basis.
Mr. Hillman charges only $424.68 out of a total freight and passenger expense
of $1,860.76. He first divides the expense into two parts—that caused by wear,
which he estimates at 10 per cent, following a holding of the Wisconsin Rail-
road Commission in Buell v. Chicago, Milwaukee & St. Paul Railway Co.,
and that caused by weather, which he estimates at 90 per cent. He then divides
10 per cent, assumed to be due to wear between freight and passenger, upon the
basis of train weights passing over the track, and the remaining 90 per cent
upon the basis and in the proportions of earnings, freight and passenger. In
arriving at this result he assumes:
(1) That the percentage attributed to wear and weather are correct, or sub-
stantially so, there being no available statistics upon the question.
(2) That the extra speed of a passenger train equalizes the lower adjustment
of the freight train in destructive effect upon the ballast.
(3) That the kind of ballast used makes no difference in the percentages.
(4) That the freight train weights upon the Chicago, Peoria & St. Louis Rail-
road are obtained with substantial correctness by multiplying the number of
freight-car miles by the average weight of a freight car in use generally on rail-
roads; to this adding the ton miles of the live freight and to this the weight of
the engine and tender multiplied by the engine miles, the weight of the engine
being figured upon a general average basis: That the passenger-train weights
ar obtained with substantial accuracy in a similar manner, allowing 150 pounds
per passenger and the same weight of express, mail, and baggage, making a
total of 300 pounds as the weight of a passenger, express, mail, and baggage.
All of these assumptions are controverted and, obviously, in the absence of
statistics upon the general questions and data relating to the particular railway,
the conclusions drawn and Computations made based upon them are unreliable
and represent merely an individual opinion.
The only reason assigned for dividing 90 per cent of this expense in proportion
to freight and passenger earnings is that it is an expense the unit of which does
not exist in the Operation Of the road and that the earnings are the Source from
which the expense must be paid.
RAILWAY MAIL PAY. 479
There has been much discussion in the briefs of counsel as to the proper factor
to be used in dividing the common expense due to wear of ballast, ties, rails,
roadway, and tracks and some other accounts. It is conceded, as it obviously
must be, that the weight of trains has an effect and that this effect can not be
ignored. Respondents say that the train-mileage basis ignores train weights
entirely, while petitioners deny that this is so. The true situation is that while
no particular percentage of the expense is assigned to weight nor is it used as a
component factor of any formula, yet its consideration is involved as One of the
elements entering into the train-mileage basis. Mr. Taylor’s Opinion is that
weight alone is not a fair factor because a minor one. Mr. Blauvelt says, in
testifying in support of the train-mile basis, that it takes into consideration
all the factors.
Mr. Storey did say that the train-mile basis, without an assumption that
every train was of a certain weight would be “a poor measure of relative
deterioration,” but it is clear from his testimony, as a whole, that what he
meant was that it was fair to assume that each train had the same destructive
influence upon the track, weight, speed, and other elements considered. “You
have got,” he says, “to take all kinds of elements, and then in the end form a
judgment alone. There is no absolute measure.”
The train-weight basis as applied by Hillman ignores some important factors.
One of these is the number of points of contact where the weight rests; another,
the fact that the locomotive does as much Or more damage to the track than the
following train; and, that it is necessary to keep the track in much better con-
dition, because of the higher speed of passenger trains than would be necessary
if the track were used for freight trains only, a fact which is illustrated in
actual operation where two tracks are maintained, one for passenger and the
other for freight service.
Account No. 6, roadway and track, for the year ending June 30, 1909, announts,
as computed on the train-mileage basis used by petitioners, to $30,363.86 (Ex-
hibit 8), while the Hillman method produces only $15,494.75 (respondents'
corrected Exhibit 2).
In the division of this account between wear and weather Hillman takes the
various wear percentages he has already used for the prior accounts: Nos. (2),
ballast, 10 per cent wear, 90 per cent weather; (3), ties, 17.5 per cent wear,
82.5 per cent weather; (4), rails, 90 per cent wear, 10 per cent weather ; (5),
other track material, 90 per cent wear, 10 per cent weather, together with those
afterwards used for the following accounts: Nos. (8), bridges, trestles, and
Culverts, 15 per cent wear, 85 per cent weather; (10), grade crossings, fences,
Cattle guards, and signs, 25 per cent wear, 75 per cent weather, and applies
each of these percentages, respectively, to the amount in dollars and cents of
the particular account, adds together into Ome total sum the various Sums thus
Obtained representing wear, and then applies the percentage which the amount
produced is of the total amount, representing both wear and weather, to the
Sum total of common expenses in this account. Having thus obtained his per-
Centages for division between wear and weather, he then divides the weather
proportion on the basis of earnings and the wear proportion. On the basis of
train weights. -
All of the assumptions involved in the accounts 2, 3, 4, 5, 8, and 10 are neces-
Sarily involved in this division, and, in addition, the process is by the use of
averages. This division further illustrates the constantly recurring effect of
assumptions indulged with respect to one account entering into the other and
the intermingling in the result produced of unrelated items of expense.
ACC0 unt No. 13, telegraph, and telephone limes.—Hillman’s division of this ac-
Count is One half on the revenue train-mile basis and the other half upon the
car-mile basis. This division is admitted to be without data to support it and
is purely arbitrary.
Account No. 22 on petitioners’ Eashibit No. 8, No. 18 on respondents’ corrected
Eachibit 2—Maintaining joint track yards and other facilities.—Petitioners’
computation for the year ending June 30, 1909, shows total expense chargeable
to passenger traffic $12,731.35, while Hillman shows only $8,335.17, which, ac-
COrding to the formulae shown in respondents’ corrected Exhibit 7, he professes
to have allocated. Of course it is manifest and agreed by the parties that allo-
cation—meaning thereby the direct charging of an expense caused by one branch
of the service to that branch—should always, where possible, be adopted, and
if Mr. Hillman had done this there could be no question of the propriety of his
treatment of this account. He says that he gave particular attention to this
account; that his analysis is especially his own work, and that he personally
480 BAILWAY MAIL PAY.
examined all the vouchers. The terminals are at six places: (1) Springfield ;
(2) between Peoria and Pekin, including the terminals at both cities; (3) St.
I,ouis; (4) Ridgely and the tower at Alton; (5) Jacksonville; (6) Madison.
Common expenses at Springfield he professes to divide partly upon the basis
of train-miles, including switching.
Peoria and Pekin common terminal expenses he professes to divide upon a
Wheelage basis. St. Louis and Madison expenses are allocated to each branch.
Ridgely and Jacksonville common expenses he divides upon the revenue the
basis of other maintenance accounts and partly upon the train-mile basis.
Cross-examination developed many errors in the analysis of the various
à mounts used by Hillman, and it is conceded by respondents' counsel that he
was in error in basing his division of Peoria and Pekin union bills on the
Switching bills instead of the joint mileage statement of engines and cars of
the Chicago, Peoria & St. Louis Railway passing over the P. P. U. tracks
from Pekim to Peoria. It is said, however, that this error only makes a
difference of $894.61. He divided $3,295.34, part of this account accruing
at Springfield on the train-mile basis upon the assumption that the expense
Was mainly for the upkeep of crossings and crossing towers, when in fact it in-
cluded $1,399.45 paid for the maintenance of the Madison Street track and
$598.63 paid for the upkeep of the passenger station. It is clear that the results
arrived at are unreliable and that neither in process nor results does the
division made represent an “allocation ” in the sense in which that term has
been used in this proceeding.
Passing for further illustration to the second block Of accounts—maintenance
Of equipment.
Account 24, superintendence, is divided by Hillman as is the same account
under maintenance of Way and structures No. 1 and under transportation ex-
penses No. 61 upon the basis of all other accounts in the block, and therefore
is affected by every valid criticism of these other accounts. This is true of , a
Inumber of accounts and of the entire fifth block of accounts, general expenses,
106 to 1:16, which are divided upon the basis of all the preceding divisions of
accounts. The process of separate analysis of each item of Common expense
instead of using one basis for many appears upon the Surface to have merit,
but when the process is set forth in detail and applied to the various items the
claim of superiority turns out to be more specious than real. Arbitraries, pre-
sumptions, Opinions, averages, and approximations have not been eliminated
and certainly substituted in their place, but instead of one yardstick admittedly
inaccurate but in general use as practically satisfactory there are many yard-
sticks also inaccurate and without other Sanction than an individual Opinion.
Sufficient reference has been made to particular items for the purpose of
showing the general effect of the application Of the Hillman methods to the
entire list of common expenses, and the final question is whether his unsup-
ported individual opinion is to be accepted or the judgment of many men of
Iarger eXperience.
The same sort of testimony was given in the Minnesota case, Shepard v.
Northern Pacific Railway (184 P. R., 765), where the master—and later, upon
exceptions, the court—rejected the methods advocated by Hillman and adopted
the train-mileage basis, which was also the basis used in the Missouri and
Oklahoma rate cases. The weight of the testimony upon this question I find to
be with the petitioners.
DIVISION OF COST BETWEEN STATE AND INTERSTATE PASSENGER TRAFFIEC.
Petitioners' division of cost between State and interstate passenger traffic is
upon the revenue basis and is set forth for the year ending June 30, 1908, and
June 30, 1909, in Exhibits 11 and 12. The computation includes also an extra
cost of 15 per cent applied to Operating expenses Only of State traffic Over inter-
State.
Respondents' method of division is set forth in Exhibit 7, and is not expressed
in a single formula but proceeds according to Mr. Hillman's individual view
throughout the list of accounts.
As in the case of the division of common expenses between freight and
passenger traffic many witnesses of experience have testified in support of the
method applied by petitioners. That there is an excess cost of carrying State
passengers over interstate is clear. The evidence would justify a larger per-
centage than that used by petitioners to represent it. The cause of this excess
cost arises from the shorter haul of State passengers, the more frequent start-
RAILWAY MAIL FAY. 481
ing and stopping of trains and consequent wear upon track, roadway, and equip-
ment, greater Consumption of fuel, greater use of terminal facilities, more
frequent exposure of person and baggage to injury, the sale of more tickets,
the checking of baggage, the printing of more tickets, greater accounting ex-
penSe.
The Chicago, Peoria & St. Louis has 244 miles of track and the average length
Of haul of a State passenger for the year ending June 30, 1909, was 18.72 miles,
of an interstate passenger 50.26 miles.
Because the apportionment of expense contended for by respondents is sup-
ported only by the individual judgment of Mr. Hillman while the apportion-
ment made by petitioners is supported by the judgment of many witnesses who
have had large experience in practical railroad operation; because further the
Hillman method is not of itself to the mind of the master persuasive of its
Superiority and because cases thus far adjudicated have Sanctioned the method
used by petitioners, it is adopted for the purposes of this report as being
Supported by the Weight of the evidence, not as being mathematically accurate,
but as producing a more equitable result than the more detailed and Com-
plicated method employed by Hillman.
DIVISION OF PROPERTY VALUATION BETWEEN FREIGHT AND PASSENGER BUSINESS.
After considerable testimony had been taken on behalf of petitioners as to
the value of the railway property it was stipulated that for the purposes of this
case the value of the property used by it during the two years ending July 1,
1909, and thereafter by the receivers for the conduct of its business as a common
carrier of freight and passengers within the State of Illinois was and still is
$5,500,000. Petitioners divide this valuation upon the basis of gross revenue
using the operations for the two years ending June 30, 1909. This results in
a valuation of $927,994.98 for the property used in State passenger business.
For respondents, Mr. Hillman professes to divide the total property upon the ex-
pense basis whereby he arrives at a valuation of $814,011.71 for the same prop-
erty assigning as his reason for using this basis that in Computing the ex-
penses between freight and passenger he had employed the factors which show
the use of the property. The evidence does not warrant the statement that
the factor which expresses the use has been applied in all Cases. None of the
expenses caused by weather have been so computed.
In the division of maintenance and way and structures accounts much more
Of the expense is assigned to weather than to wear, and Such expense is extra-
neous to use. Nor does the expense basis appear, even though based on use
to be a more equitable one than the gross earnings basis. There is of course
no accurate basis for making this division, and the earnings basis is open to
Objection. Nevertheless for the reasons given in the Minnesota case where the
court says: “Because these bases (referring to the ton-mile, passenger-mile,
Car-mile, engine-mile, passenger car-mile, and passenger engine-mile) ignore the
differences in the classes of freight carried and in the distances they are hauled,
because the apportionment of the value of railroad property on the basis of the
gross earnings of the classes of business which disclose approximately the
values of their uses of it, gives effect to these material differences, appeals
more persuasively to the reason and produces results more equitable than any
Other basis Suggested, and because this basis has commended itself to the
judgment of and has been adopted by the courts in like cases the master was
justified in following their decisions,” the earnings basis and valuation made
thereon was adopted.
VALUE OF USE TO THE PUBLIC.
Counsel for respondents contend that there is no proof that a higher rate
than 2 cents a mile will be fair to the public. The rule is as stated in Smyth v.
Ames (169 U. S., 466), and quoted in the brief of counsel, “What the company
is entitled to ask is a fair return upon the value of that which it employs for
the public convenience. On the other hand, what the public is entitled to
demand is that no more be exacted from it for the use of a public highway
than the Services rendered by it are reasonably worth.”
Ordinarily cost of production with a reasonable profit added determines the
value of the product to the purchaser. This test of value assumes normal con-
ditions attending the production. In the absence of proof of special circum-
stances such as those suggested in Reagan v. Trust Co. (154 U. S., 412) waste
482 RAILWAY MAIL PAY.
in the management of the road, enormous salaries, unjust discrimination as
between individual shippers, construction at a time when material and labor
were at the highest price or in localities where there is not sufficient business to
sustain a road, proof of the cost of production makes at least a prima facie
C3 Se.
Counsel for respondents upon this branch of the Case argue that the Chicago,
Peoria & St. Louis Railway was unwisely built, and invoke further the doctrine
laid down in Covington v. Sanford (164 U. S., 578), “If the establishment of
11ew lines of transportation would cause a diminution of the number of those
who need to use the road # * * that is not in itself a sufficient reason
, why the corporation operating the road should be allowed to maintain rates
that would be unjust to those who must and do use the property.”
The argument of counsel is based upon the present existence of the competi-
tive lines of the Chicago & Alton and Illinois Traction systems, the latter an
electric interurban of recent construction. Counsel use five important terminal
stations for comparison with the Chicago & Alton Railroad, showing a consid-
erably shorter mileage than by the Chicago, Peoria & St. Louis Railway. On
the other hand, Counsel for petitioners point to Other important stations where
the comparison is inapplicable and where their road is the direct line, and,
besides, counsel say that there is no evidence in this case that 2 cents a mile
is compensatory to the Chicago & Alton Railroad. A finding upon evidence of
this character that a rule in excess of 2 cents a mile is unjust to the public
would lack substantial support and would be merely Speculative. Density of
population is one of the greatest factors in determining the reasonableness of a
rate. Comparisons between rates are of little value unless all the elements that
enter into the problem are presented. (Smythe v. Ames, supra.) For a like
reason the comparative table presented in respondents' Exhibit 6 is not re-
garded as Of Value.
From the evidence in this case it appears that to be compensatory a maxi-
mum rate of 3 cents a mile is necessary. It seems to the master that the rights
of the public at noncompetitive points upon this railroad would be adequately
protected by conditioning the grant of relief, so that a rate of 3 cents should
be the maximum chargeable between any stations on its line within the State.
REVENUES.
The amount of intrastate passenger revenue as computed by the accountant
for the petitioners for the year ending June 30, 1909, is $261,839.36, while the
computation made by the accountant for respondents is $261,145.62. The dif-
ference is trifling and does not affect the final result sufficiently to merit
discussion.
FINDINGS.
From the evidence, therefore, and in accordance with the views herein ex- .
pressed, I find : :
I. That the total value of the Chicago, Peoria & St. Louis Railway property
used during the two years ending July 1, 1909, and thereafter, by the receivers
for the conduct of its business as a Common carrier of freight and passengers
within the State of Illinois is the sum of $5,500,000.
II. That the most equitable basis of division of this total valuation between
the freight and passenger traffic is that of gross earnings, and that upon this
basis the value of said property used during the same period for the transpor-
tation of passengers within the State of Illinois is the sum of $927,994.98. -
III. That the most equitable bases of division of expenses common to the
freight and passenger traffic, which can not be allocated directly to either, are
those set forth in Exhibit 2, whereby most of these expenses (reference being
had to the exhibit) are divided upon the basis of revenue train mileage.
IV. That 6 per cent per annum is a reasonable net return upon the value of
the railway property used in the transportation of passengers within the State
of Illinois. The net annual income upon this basis would be the sum of
$55,679.69.
W. That the expenses of the intrastate passenger business for the year ending
June 30, 1908, amounted to $256,923.32, while revenue from the same source
amounted to $248,890.91, leaving a deficit of $8,032.31 in the net earnings; that
the expenses of the intrastate passenger business for the year ending June 30,
1909, amounted to the sum of $260,544.56, while the revenue from the same
RAILWAY MAIL PAY. 483
source amounted to $261,339.36, resulting in a surplus of met earnings amounting
to $794.80. (Exhibits 3 and 4.)
VI. That the effect of the operation of the maximum-rate law passed by the
Legislature of the State of Illinois in the year 1907 is to deprive petitioners of
a reasonable return upon the value of the Chicago, Peoria & St. Louis Railway
property devoted to passenger traffic within the State of Illinois, and that a
maximum rate of 3 cents a mile chargeable to passengers using its line withink
the State would not be unjust to the public.
CON CLUSION.
From the foregoing findings I conclude:
That the act of the Legislature of the State of Illinois passed in the year
1907 entitled “An act to establish and regulate the maximum rate of charges
for the transportation of passengers by corporations of companies operating
or controlling railroads in part or in whole in this State and to provide penalties
for the violation of the provisions thereof and repealing all acts or parts of
acts in conflict therewith,” is confiscatory and operates to deprive petitioners
of the power to earn reasonable compensation for the services rendered in the
carriage of passengers without due process of law and to deny them the equal
protection of the laws, in violation of the Constitution of the United States,
and that Said act, so far as petitioners are concerned, is void and of no effect,
and petitioners are entitled to a decree as prayed in their intervening petition.
It is recommended, however, that such decree be so conditioned that rate of
3 cents a mile shall be the maximum chargeable to intrastate passengers on the
line of Said railway.
Respectfully submitted.
Master in chancery,
OPINION.
SANBORN, District Judge: A technical question of jurisdiction was raised in
the former circuit court by demurrer and later by answer to the effect that the
receivers' injunction petition was not ancillary to the foreclosure suit, because.
the subject matter of the petition is wholly unrelated to the subject matter.
of the bill. The demurrer was overruled by the circuit court, upon the authority
of Ex parte Young (209 U. S., 123, 144; 28 Sup. Ct., 441; 52 L. Ed., 714), holding
that a Federal question is raised in suits like this, and Compton v. Jessup (68
Fed., 264; 15 C. C. A., 397), Blake v. Pine Mountain Coal Co. (76 Fed., 624;
22 C. C. A., 430), and like cases, holding that petitions similar to this are.
ancillary to the main suit and thence within the jurisdiction. We are entirely
Satisfied that the jurisdiction was properly sustained.
The Chicago, Peoria & St. Louis Railroad was operated at a loss during the
fiscal years of 1908 and 1909, and on June 30, 1909, the total deficit was
$202,071.60. A foreclosure suit was at once begun, and this intervening petition
was filed in that suit. Compliance with the 2-cent maximum passenger rate act
of Illinois by the road was in part responsible for the deficit. Receivers were.
appointed, who operated the road under the same conditions up to October 13,
1909, when they filed this petition, alleging that the maximum-passenger-rate
act as applied to this railroad was confiscatory and constituted a taking of its
property without due process of law. A temporary injunction was issued
prohibiting the enforcement of the statute as to this road; the receivers there-
upon put in force a 3-cent rate, with 1-cent coupons, as provided in the injunc-
tional Order. -
The question now before us is whether the evidence shows the Illinois rate.
to be confiscatory, as applied to this particular railroad, in respect to passenger
return.S.
Earnings from the State passenger business, including mail, express, and simi-
lar returns from the running Of passenger trains, are readily found. Expenses
directly chargeable to such business may also be figured with reasonable cer.
tainty. But the “common expenses,” so called, like maintenance of the line, the
equipment, traffic, and general expenses, and their proper distribution, between
freight and passenger business, present much difficulty. The master, follow-
ing the great weight of the expert testimony, as well as the decisions of the
courts, has adopted and applied what is known as the “revenue train-mile”
basis in the distribution of these common expenses between the freight business,
484 RAILWAY MAIL PAY.
State and interstate, and the passenger. On such basis the road was not earn-
ing a fair return from its State passenger business up to the time of the
receivership, and the master concludes that the injunction should be made
permanent, and the receivers allowed to charge 3 cents a mile for passenger
Service.
The revenue train-mile basis of apportionment, as between freight business
and passenger business, is applied to expenses not directly apportionable (called
* Common expenses”) by the following method: The ninth annual report of
the Company shows the train mileage for 1909 of passenger trains, 446,540;
freight trains, 582,962; mixed trains, 790; and special trains, 338. All but the
last were revenue-producing trains. Excluding the special trains, whose char-
acter is not shown, the total train mileage was 980,292. Of the mixed trains
One-fourth of the mileage was allowed to passenger service, the balance to
freight. The total passenger miles would therefore be 446,737.5 and the freight
583,554.5; total, 980,292; and the passenger percentage 45.57. The year 1909
is taken, instead of the year 1908 (June 30 to June 30), because showing a
nearer recovery from the panic of 1907, and thus being closer to normal con-
ditions. Thus, taking the common expense of superintendence for the year,
Which was $7,891.59, the passenger proportion would be $3,610.50, a difference
of $4.31. This method of apportionment was applied to all the common ex-
penses, in Order to ascertain what part were passenger expenses, with the
modifications referred to in Exhibit 2, shown on another page.
NeXt it was necessary to find the proportion of State and passenger expense.
This was done by finding the State and interstate revenues. It was found that
the State passenger returns for 1909 were $261,339.26; interstate, $48,217.58;
Imail, express, and miscellaneous income earned by passenger trains, undivided
as between State and interstate, $54,974.46; being a total of $364,531.40. By
applying the revenue train-mile basis to all common expenses for 1909, and allo-
Cating all direct passenger expense, it was found that both these kinds of
expense, including the proper share of taxes and hire of equipment, amounted "
to $350,914.45, which was the expense of producing the $364,531.40; also that the
State passenger expense was $326,326.75. It was then found that the State
passenger revenue represented 71.69 per cent of the total passenger revenue,
the inters' ate 13.23 per cent, and express, mail, and miscellaneous 15.08 per cent.
It was also shown by testimony for the receivers that it costs about 15 per cent
more to handle the State passenger business than it does the interstate, because
of the shorter haul of State passengers and other reasons. By applying the ad-
ditional 15 per cent to the operating expense it was found that 2.75 per cent of
Such expense, or $8,937.99, should be added to the State passenger expense, the
final result being that the State passenger business for 1909 earned a net return
of $794.80, or less than 1 per cent. This method is approved in Chicago, etc.,
Co. v. Tomkins (176 U. S., 179; 20 Sup. Ct., 336; 44 L. Ed., 417); Smyth v.
Ames (169 U. S., 466; 18 Sup. Ct., 417; 42 L. Ed., 819); and Louisville &
Nashville Railroad Co. v. Railroad Commission (196 Fed., 800, 824).
In order to find what the road was fairly entitled to earn on its passenger
business in 1909 the total value of the railroad in that year was found to be
$5,500,000. These figures were agreed to by both sides, and are supported by
the testimony. To obtain the proportion of the passenger value, State, inter-
state, and mail, and express the total revenue of $1,554,600.37 was taken, and
the total passenger revenue found to be 23.45 per cent of this, making the
valuation of the passenger proportion $1,292,329.35; 71.69 per cent of this,
or $926,464.46 represents the State passenger valuation. This should fairly
earn 6 per cent, or $55,587.87. On this basis the earnings for 1909 were about
$55,000 too small, That this is the proper rule see Smyth v. Ames, supra, and
Missouri, K. & F. Ry. Co. v. Love (177 Fed., 463) (the Oklahoma case).
The plan for formula of division or allocation of expense for each fiscal
year adopted by the master, and recommended by the testimony of substantially
all the witnesses, except Mr. Hillman, is as follows: - º
(A) To the revenue freight train mileage 75 per cent of the mixed train
mileage is added, and to the revenue passenger train mileage 26 per cent of
the mixed train mileage is added, and the Common expenses are apportioned
on the percentage thus obtained. The mixed train mileage is treated in this
manner wherever revenue train mileage is used in apportioning common
eXpenSeS. º
(B) Expenses incurred solely in the passenger business were charged to
passenger and expenses which could not be separated between freight and
passenger, but were common to both, were divided in the ratio which the
passenger revenue train mileage bore to the total revenue train mileage.
RAILWAY MAIL PAY. 485
(C) When the expense was upon a locomotive engaged in straight passenger
Service, the expense was charged to passenger. When the expense was upon
a locomotive which had made both freight and passenger miles during the
month, there was charged for each passenger mile made by that locomotive the
average cost per mile of like expense on locomotives in straight passenger
Service. &
(D) These are expenses which were incurred solely in the passenger service.
(E) Expenses incurred solely in the passenger business were charged to
passenger, and expenses which could not be separated between freight and
passenger, but were common to both, were divided in the ratio which the total
passenger revenues bore to the total freight and passenger revenues.
(F) Expenses incurred for a particular yard were charged to passenger in
the ratio which the number of passenger cars bore to the total freight and
passenger cars there handled. Expenses of a general character incurred in all
yards were charged to passenger in the ratio which the total number of
passenger cars bore to the total number of freight and passenger cars handled
in all yards. *
(G) Where the information obtainable showed wrecks to be passenger,
the expense was charged to passenger; in months in which passenger wrecks
occurred all expense which could not be allocated directly was charged to
passenger in the ration which the passenger revenue train mileage bore to the
total revenue train mileage. 3.
Applying this formula to the classification of expense accounts in use on most
railroads, recommended by the Interstate Commerce Commission, we obtain
the following for the fiscal year 1909 (wherever the passenger percentage is
45 and a fraction the figures in the passenger Column represent the revenue
train-mile basis) : When less than 45 a direct allocation to the freight business
is indicated, and when greater than 45 a like allocation to the passenger.
Direct and common ea pense table.


1 This is a deduction and not an addition.
Per cent
Total *
expense. Freight. Passenger. passen-
ger.
I. MAINTENANCE OF WAY AND STRUCTURES.
1. Superintendence (A) - - - - - ---------------------- $11,592.09 $7,891.59 $3,610.50 45. 76
2. Ballast (A)------------------------------------- 1,860.76 ,008.67. 852. 09 45.79
3. Ties (A)------------------------------ - - - - - - - - - - 37,242.08 21,582.61 15,659.47 42.05
4. Rails (A)----------------- - - - - - - - - - - - - - - - - - - - - - - 2,843.83 1,952.03 891. 80 31, 36
5. Other track material (A) - - - - - - - - - - - - - - - - - - - - - - - 11,702. 55 7,594.04 4, 108.51 35. 11
6. #º and track (A)------------------------ 74,891.98 44,528, 12 30,363.86 40. 54
7. Removal of snow, Sand, and ice (A) - - - - - - - - - - - - 1, 191.26 713. 10 478. 16 40. 14
8. Tunnels (none).---------------------------------|--------------|------------- - I - - - - - - - - - - - - - - I - - - - - - - - - -
9. Bridges, trestles, and culverts (A) - - - - - - - - - - - - - - 23,714.98 12,801.68 10,913.30 46.02
10. Crossings (over and under) (A) - - - - - - - - - - - - - - - - 24. 97 11. 88 13. 52.42
11. Grade crossings, cattle guards, and signs (A)--. 6,033.20 3,205.56 2,827.64 46.87
12. Snow and sand fences and Snowsheds (none).---------------|--------------|--------------|-- . . . . . . . .
13. Signal and interlocking plants (A). . . . . . . . . . . . . 5S6. 39 320.71 265. 68 45. 32
14. Telegraph and telephone lines (A) - - - - - - - - - - - - - 5, 106.25 2,805. 76 2,300.49 45.85
15. Electric power transmission (none).------------|--------------|--------------|--------------|---------.
16. Buildings, fixtures, and grounds (A) - - - - - - - - - - - 8,465.75 4,596. 56 3,869.25 45.71
17, jocks and wharves (none). -------------------|--------------|--------------|------- - - - - - - - - - - - - - - - - -
18. Roadway, tools, and supplies (A) - - - - - - - - - - - - - 2,521.26 1,394. 55 1,126.71 44.69
19. Injuries to persons (A) - - - - - - - - - - - - - - - - - - - - - - - - 1,080.66 575. 23 505. 43 46.77
20. Stationery and printing (A). . . . . . . . . . . . . . . . . . . 100.67 54.91 45. 76 45. 76
21. Other expenses (A)---------------------------- 1,011.90 541. 72 470.18 46, 77
22. Maintaining joint tracks and other facilities— r
r. (B)-------------------------------------- 28,964.66 16,233.31 12,731.35 43.95
23. Maintaining joint tracks and other facilities—
. (B)-------------------------------------- 9,392. 17 7,553.35 1,838.82 19.58
Totals"-------------------------------------- 205,752.57 116,558. 12 89, 194.45 43.35
II. MAINTENANCE OF EQUIPMENT.
24. Superintendence (A).-------------------------- 15,990.90 8,754.64 7,236. 26 45.26
25 Stéam locomotives, repairs (C).... . . . . . . . . . . . . . 98, 164.44 79,961. 26 18,203.18 18.54
26. 26. Steam locomotives, renewals º * * * * * * * * * * * * - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
27. Steam locomotives, depreciation (C) . . . . . . . . . . . 13, 207.44 11,218. S0 1,988.64 I5. 06
486
FAILWAY MAIL FAY.
Direct and com/mon ea pense table—Continued.

Per cent
sº Freight. Passenger. passen-
ger.
II. MAINTENANCE OF EQUIPMENT—continued.
Electric locomotives.
28. Repairs (none).--------------------------------|--------------|--------------|--------------|---------.t
29. Renewals (none).------------------------------|--------------|--------------|--------------|-----.....
30. Depreciation (none). . . . . . . . . . . . . . . . -----------|--------------|--------------|--------------|----------
Passenger train cars. -
31. Repairs (B).----------------------------------- $18,771.81 $100.00 $18,671.81 99.50
32. Renewals (none).----------------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
33. Depreciation (B)------------------------------ 3,067.96 - - - - - - - - - - - - 3,067.96 100.00
34. Freight cars, repairs (B). . . . . . . . . . . . . . . . . . . . . . . 179,254.68 179,254.68 |--------------|------...-
35. Freight cars, renewals (B). . . . . . . . . . . . . . . . . . . . . 2,573.08 2,573.08 |--------------|--------..
36. Freight cars, depreciation (B)... . . . . . . . . . . . . . . . 31,081.03 31,081.03 ||--------------|-- . . . . . . . .
Electric equipment of cars. -
37. Repairs (none). . . . . . . . . . . . . . . . . . ‘….--------------------|----------------------------|.…..
38. Renewals (none).------------------------------|--------------|--------------|--------------|----------
39. Depreciation (none).--------------------------|--------------|--------------|--------------|----------
Floating equipment.
40. Repairs (none).-------------------------------|--------------|--------------|--------------|----------
41. Renewals (none).-----------------------------|--------------|--------------|--------------|---------.
42. Depreciation (none).--------------------------|----------------------------|-------------- * * * * * * * * * * *
Work equipment.
43. Repairs (A)----------------------------------- 2,473.99 1,343.41 1,130.58 45. 70
44. Renewals (A). . . . . . . . . . . .--------------------- 130. 11 70.71 59.9 46.04
45. Depreciation (A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,602.42 870.91 731. 51 45.65
46. Shop, machinery, and tools (A). . . . . . . . . . . . . . . 6,097.37 3,271.15 2,826.22 46.35
47. Power-plant equipment (none).----------------|--------------|--------------|-------------- |- - - - - - - - - -
48. Injuries to persons (A). . . . . . . . . . --------------- 941. 76 593. 59 348. 17 36.97
49. Stationery and printing (A). . . . . . . . . . . . . . . . . . . 327. 63 183.00 144.63 44.15
50. Other expenses (A) - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,016.04 555.82 460. 22 45.30
51. Maintaining joint equipment at terminals—
r. (D)------------------ , - - - - - - - - - - - - - - - - - - - - 231. 54 210. 54 21.00 , 09
52. Maintaining joint equipment at terminals—
r (P)-------------------------------------- 17.91 l--------------|---------- - - - - - - - - - - - - - -
Total.---------------------------------------- 374,914. 28 316,039. 19 548,751.09 14, 63
53 III. TRAFFIC EXPENSES.
54. Superintendence (D). . . . . . . . . . . . . . . . .--------. 27, 184.78 20,637.03 6,547.75 24.09
55. Outside agencies (D). . . . . . . . . . . . ... ----------- 36,817.38 33,437.79 3,379.59 9. 18
56. Advertising (D). ------------------------------ 1,587.88 - - - - - - - - - - - - - - 1,587.88 100.00
57. Traffic associations (D). . . . . . . . . . . . . . . . . . . . . . . . 1,228.54 1, 179.48 49.06 3.99
58. Fast freight lines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,087.72 1,087.72 |--------------|---------.
59. Industrial and immigration bureaus (none). ---|-...----------|--------------|--------------|-- . . . . . . . .
60. Stationery and printing (B). . . . . . . . . . . . . . . . . . . 5,802.07 5,078. 14 723.93 12.48
Other expenses (none).------------------------|--------------|--------------|--------------|---------.
Totals--------------------------------------- 73,699.37 61,411. 16 12,288. 21 16.67
IV, TRANSPORTATION OTHER THAN TRAIN EX-
PENSES.
61. Superintendence (A) - - - - - - - - - - - - - - - - - - - - - - - - - - 13,851.07 7,573.83 6,277.24 45. 32
62. Dispatching trains (A). . . . . . . . . . . . . . . . . . . . . . . . 15,438.54 8,840.81 6,597. 73 45. 06
63. Station employees (A):------------------------ 81,444.29 72,703.22 8,741.07 10. 73
64. Weighing and car service association . . . . . . . . . . 3,022.22 3,022.22 |--------------|----------
65. Coal and ore docks (none).---------------------|--------------|--------------|--------------|----------
66. Station supplies and expenses (A). . . . . . . . . . . . . 6, 190.25 3,392.46 2,797.79 45.20
67. Yardmasters and clerks (F). . . . . . . . . . . . . . . . . . . 12,149.72 11,992.28 159.41 1.31
68. Yard conductors and brakemen (F). . . . . . . . . . . 27,036.86 26,397.21 639.65 , , 2, 37
69. Yard switch and signal tenders (F). . . . . . . . . . . . 608. 40 597. 07 11.33 1.86
70. Yard supplies and expenses (F). . . . . . . . . . . . . . . 560. 22 550.83 9. 39 1, 68
71–76. (See next head.)
77. Operating joint yards and terminals—Dr. §: sº 97,996.33 84,477.42 13,518.91 13.80
78. Operating joint yards and terminals—Cr. (B). 1,786.82 1,735. 16 51. 66 2.89
79–89. (See next head.)
90. Interlockers, block, and other # als (B)------ 3,017.32 1,804.87 1,212.45 40. 19
91. Crossing flagmen and gatemen (B). . . . . . . . . . . . . 3,980.62 2,293.38 1,687.24 42,39
92. Drawbridge operation (none). - - - - - - - - - - - - - - - - - we as a sº as a ºn as a sº a w we a s tº ºs e º ºs ºs = * * * * * * * * * * * * * * * * * *s s as , is tº * * * * * * * *
93. Clearing Wrecks (G)......--------------------. 3, 154.43 2,169.30 985. 13 31, 22
94. Telegraph and telephone operation............ 1,784. 13 1,470.90 313.23 17, 56
RAILWAY MAIL PAY.
487
Direct and COm/m.0m, eapense table—Continued.

IV. TRANSPORTATION OTHER THAN TRAIN EX-
PENSES-continued.
. Operating floating equipment (none). . . . . . . . .
. Express service (none
. Stationery and ºnting (B)------------------
. Other expense (B): ...
. LOSS and damage, freight. . . . . . . . . . . . . . . . -----
. Loss and damage, b
. Damage to property
. Damage to stock on right of way (B)
* * * * * * * * * * * * * * * * * * * * * - - -
* * * * * * * * * * * * * * * * * * * * * * * *
• * * * * * * * * * * * * *, * * * * * * * * * * * * * *
sº as sº a ºn as e º is sº * * * * *
* * * * * * * * * * * * * * * * * * * * * *
- * * * * - - - -
" nº ºn sº e s a º is ºn tº a º ºs e = * * * * * * * * * * * * * * * * * * * * * *
• * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
V. TRAIN TRANSPORTATION.
. Yard enginemen (F)
. Engine-house expenses, yard engines (F)
. Fuel, yard engines (F)
. Water, yard engines (F)--- - - - - - - - - - - - - - - - - - - - -
. Lubricants, yard engines (F)
. Other supplies, yard engines (F)-- - - - - - - - - - - - - -
. Motormen (none)
. Road enginemen (D) -
. Engine-house expense, road engines (B)
. Fuel, road engines (C)
. Water, road engines (B)----------------------.
. Lubricants, road engines (C). . . . . . . . . . . . . . . . . .
. Other supplies, road engines (C). . . . . . . . . . . . . . .
. Operating power plants (none)
. Purchased power (none).----------------------
. Road trainmen (D)
. Train Supplies and expenses (B).......... ----.
• * * * * * * * * * * is s • * * * * * * * * * * * * *
* * * * - -
a s = * * * * * * * * * * * * * * * * * * * * * *
• = s. s. s = * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
• * * * * * * * * * * * * * * * * * * * * * * * * *
* - - - - - -
v1. GENERAL ExPENSEs. …”
106. Salaries and expenses of general office (A). . . . .
107. Salaries, clerks and attendants (A)
108. General office supplies and expenses (A)
109. Law expense §y
110. Insurance (B
113. Stationery and printing (A)
114. Other expense (A)
General administration of joint tracks, yard,
and other facilities—Dr. §
General administration of
and other facilities—Cr. (A
- - - - - - - - - - -
s = * * - -
- - - - * * * * - - - - - ºr as a tº - - - - - - - - - - - -
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
- * * * * * * * * * * * * * * * * *
• * * * * * * * * * * * * * * * * * * * * * * * * * * *
115.
116.
* * * * - - - - - * * * * - - -
Taxes---------------------------------------------
Hire of equipment—Dr.---------------------------
Hire of equipment—Cr---------------------------.
Rentals, St. Louis Union Depot.-----------------.
Sther rentals, St. Louis. . . . . . . . . . . . - - - - - - - - - - - - - - -
Rentals, Illinois.-----------------------------------
Total rentals--------------------------------
Total expenses------------------------------------
Total revenue- - - - - - - - - - - - - - - - ---------------------
Net revenue for 1909.-----------------------------.
Value of road
- * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * -
Net revenue----------------------------- per cent. -
s = e s - w - - - a tº ºr e º 'º - …,
Per Cent,
Total º
expense. Freight. Passenger. pººr
$7,360.76 || $4,476.91 || $3,333.35 | 39.18
1,515.94 1, 164.42 351. 52 23. 19
16,789.59 16,789. 59 |--------------|----------
1-24 |-------------- 1. 24 100.00
5,522.39 2,400.31 3, 122.08 56.54
2, 159.84 1,426.36 33. 48 33.96
32, 541.63 26,728.94 5,812. 69 17.86
11,527. 19 6,611. 17 4,916.02 42.65
3,003.92 1,997.43 1,006. 49 33.50
342,862. 64 282,789.31 60,073.33 17. 52
15,836. 12 15,472.65 363.47 2.29
4,652.47 4,564.80 87.67 1. 88
12,523.97 12,230.21 293. 66 2. 34
1,550.26 1,506. 38 43.88 2.83
* 850.58 831. 55 43.88 2.83
495. 20 485. 10 10.10 2.24
77,972.24 || 5i, iió.98 || 26,361.26 || 34.45
21,144.60 11,661.81 9,482.79 44.86
113,804.15 82,654. 74 21, 149.41 20.38
8, 199.25 4,765.63 3,433.62 41.88
4,506.75 3,290.09 1,216.66 27.00
3,060.61 2,653.84 406. 77 13. 29
71,322.92 || 56,366.43 || i4,356.44 || || 20.37
20,969.65 13,614.41 7,355.24 35.08
346,889.47 261,209.17 85,680.30 24. 70
14, 178.44 7,760.28 6,418. 16 45.27
21,788.98 11,928.63 , 9,860.35 45.25
4, 150.28 2,337.27 1,813.01 43.68
8,075.22 4,442.81 3,632.41 44. 98
4,703.63 4,035. 76 667. 87 14, 20
2,073. 74 1,154.23 919. 51 44.35
1,675.03 944.82 730. 21 43. 60
477. 88 303. 7 174. 15 36. 44
310.44 |----------------------------|----------
56,812.76 32,597.09 24,215.67 42.62
51,401. 14 39,294.33 12,106.81 23, 55
9,762. 11 9,762. 11 ||--------------|----------
* * * * * * * - - - * * * * : * - - - - we º ºs m - - - - - 517.44 - - - - - - - - - -
5,252.24 |--------------|--------------|----------
9,097.20 --------------|--------------|----------
21,594, 27 |--------------|--------------|----------
35,943.71 22,945.38 12,998.33 36. 16
1,498,038.05 || 1,147,123.30 || 350,914.75 23, 42
1,564,833. 10 | 1,200,301.70 || 364,531.40 23. 23
66,795.05 53, 17S. 40 13,616.65 20.39
5,500,000.00 || 4,207,679.65 1,292,320.35 23.45
1, 21 1.26 -------------- 1.05
It appears from the foregoing that the whole earnings of the road for 1909
were only 1.21 per cent upon the fair and conceded valuation.
This Small
return resulted in part from the fact that the road is a COmparatively small
488 - RAILWAY MAIL PAY.
one and partly because it meets with sharp competition by stronger lines and
a well-developed trolley system. It appears inferentially from the testimony
that its freight rates can not be increased. The only practicable escape open
to the road, therefore, is to enlarge its passenger returns by obtaining authority
to put in a 3-cent fare for State passengers. This is not to help out its loss on
freight business, but to earn a fair return on the State passenger traffic. Hence
the filing of this petition and the well-prepared case of the receivers, presenting
a strong inference that the line was, in 1909, obtaining a very inadequate
return upon its passenger business. Much expert testimony was taken to the
effect that by applying common railroad bookkeeping the freight business in
1909 paid 14 per cont and the passenger 1 per cent.
The important question before the master, and now before us, is whether
the best possible rules for dividing the expense between freight and passenger
and between State and interstate passenger business have been applied. A
more difficult question is rarely presented. For want of a better rule railway
experts have adopted the revenue train mile as a fair (or as the least unfair)
basis; that is, as the total passenger miles for a year are to the whole number
of train miles (freight, passenger, and mixed, excluding switching, repair, and
Special trains not bringing in revenue), so is the common passenger expense
which can not be directly applied (unknown) to the whole common expense (a
known quantity). -
Other bases for the division of common expenses, especially between intra-
State and interstate freight and passenger business, are the straight revenue
basis (or gross earnings' basis), train weights, ton miles, passenger miles, engine
lmiles, etc. To apportion common expenses between intrastate freight and pas-
Senger business on the One hand and interstate business on the other, the
straight revenue basis is sometimes used for certain expenses, as in the Arkan-
sas Rate cases (187 Fed., 290, 355, 339, 341). To find the value assignable to
the freight and passenger business, respectively, freight gross earnings (State
and interstate) are taken to represent the freight value and passenger gross
earnings the passenger value, as in Shepard v. Northern Pacific Railway Co.
(184 Fed., 765, 811, 812). But for the apportionment of common expenses be-
tween freight business, State and interstate, and passenger business, State and
interstate, no rule So Satisfactory as the revenue train-mile basis has been dis-
covered. This method of division at One time received the approval of the
Interstate Commerce Commission, has been used by many railway companies
for their own information in advance of any controversy on the subject, was
adopted by the Wisconsin Railroad Commission in the Buell case (1 Wis. R. R.
Co. Rep., 324), and is approved in several decided cases, particularly the Min-
nesota case (184 Fed., 765, Supra). Judge Sanborn’s discussion of this basis
is on page S13, as the one used by the railway companies and adopted by the
master.
The revenue train mile basis was also used in the MissOuri Rate Cases, St.
Louis, etc., Co. v. Hadley (168 Fed., 317, 348), as appears from the language
of Judge McPherson, on page 348, and by the testimony of Mr. Johnson in this
case. He says this basis was applied by the expert State accountants, and
approved by the court, as, indeed, appears in the report. Care must be taken
in reading these cited opinions, as well as others, to distinguish between the
division of common expenses between freight business (State and interstate)
and passenger business, on one hand, and the division of earnings for valuation
purposes, or the separation of common expenses between intrastate freight and
passenger business, and interstate, on the other. None of the Opinions are as
clearly or carefully stated as they might have been in these respects, but a
careful reading leaves no doubt whatever.
To illustrate the difficulty of treating accounts on bases other than the revenue
train mile, take account No. 2, ballast, the total cost of which for 1909 was
$1,860.76. Of this 90 per cent is supposed to be due to weather and 10 per
cent to wear. The 10 per cent, or $186, may therefore be distributed between
freight and passenger on the revenue train mile basis; 45.79 per cent, or $85.16,
for passenger and $100.84 freight. How shall the weather proportion be
divided ? Weather bears no closer relation to gross earnings, or train Weights,
than it does to revenue train miles. *
Any application of a weather expense between passenger and freight is
unsatisfactory, and for want of a better plan it is divided on the revenue train
mile basis. Ties, bridges, and culverts, grade crossings and fences, cattle guards
and signs (all under the general head “Maintenance of way and structures”)
rest substantially on the same ground as ballast, while the others of the 19
RAILWAY MAIL PAY. 489
ºrs accounts in this head are naturally divisible on the revenue train mile
8 SIS.
Under the second general head, “Maintenance of equipment,” many of the
primary accounts are directly allocated. The rest are fairly divisible between
freight and passenger business upon the revenue train mile basis.
The third general account “Traffic expenses,” does riot bear as close a rela.
tion to the revenue train mile as the equipment group, but the amount of Com-
mon expense distributed to passenger is relatively small. Most of the items
have been directly allocated between freight and passenger.
The other two general accounts, 5 and 6, “Transportation expenses” and
“General expenses,” bear a closer relation to revenue train miles than to any
other principle of division. Many of the items in these heads are divided by
Mr. Hillman. On the revenue basis.
On the whole, therefore, we are satisfied that the master has adopted the
best method obtainable, one less unsatisfactory than any other which can be
fairly applied. Whether we follow the great weight of evidence or the
decisions cited, we may feel that justice has been done, and the master’s find-
ings and COnclusions should be sustained, except One provision. He recommends
that the decree provide that a maximum rate of 3 cents per mile be made
chargeable for State passengers. This would probably be the exercise of the
legislative power of making rates, and not a judicial power. See cases cited
in Peoria Water Works Co. v. Peoria Railway Co., 181 Fed., 990, 1004. In
this respect the decree should provide that the district court may, in exercising
its function of managing the road in its possession, institute any rate not
exceeding 3 cents, as in its judgment may be fair and proper.
A decree should be entered in accordance with this Opinion.
Judge.
SEPTEMBER 27, 1912.
That is all I wish to say in regard to the division between freight
and passenger. Now, understand that we think the revenue train
mileage is the best method up to the present time of any one yard-
stick that can be used, and also understanding that the Santa Fe
method does not altogether follow the revenue train mileage; that is,
it follows revenue train mileage where an approximate basis of
allocation can not be used. In explanation of that I will say, instead
of dividing switching or train mileage we divide it on the basis of
the cars handled, because we keep an account of cars handled by
switch engines at each terminal.
The CHAIRMAN. Do most of the railroads do that?
Mr. PEABODY. No, sir. Very few railroad systems go into this
-thing with the completeness with which we do.
The CHAIRMAN. Then how, in your study of railway-mail pay, are
we to apply the Atchison system when other roads do not follow it?
Mr. PEABODY. The revenue train mileage comes very very close to
the result reached by ours. If we should apply the revenue train
mileage to our figures we would not vary 2 per cent from our figures,
but we wish to get actual figures so far as we can for our own pur-
pose of operation. We do not make this division for the sake of
going into court or anything of that sort.
The CHAIRMAN. It is for your own information and knowledge of
what you are doing?
Mr. PEABODY. For the analysis of our business and for the purposes
of ascertaining expenses for each particular class of business.
The CHAIRMAN. Granting that you have evolved a satisfactory
method of ascertainment between freight and passenger, how are you
going to work out an apportionment between mail and passenger?
Mr. PEABODY. That is what I am now going into.

*190 RAILWAY MAIL PAY.
Mr. HURST. Did I understand the members of the Post Office De-
partment to say that they had come to this conclusion after a study
pf the subject that the Wisconsin method should be used as a basis?
Have they taken into consideration, in arriving at this conclusion, all
these cases Mr. Peabody has read from ?
The CHAIRMAN. Do you know, Mr. Prentiss?
Mr. PRENTIss. No; we could not. This letter was transmitted on
the 24th of July, 1911.
Mr. PEABODY. All but one of them were before that?
Mr. PRENTISS. The data was taken in November, 1909.
Mr. HURST. Most of these are prior to 1909?
Mr. PRENTIss. We considered the train mileage. That was consid-
ered as a basis and was thrown aside as being inequitable.
Mr. HURST. In spite of the fact that eminent judges had decided
they are? !
Mr. PRENTIss. In the face of data which can be submitted, showing
that in the proportion that expenses between passenger and freight
are allocated, the expenses divided to passenger decrease; that is, if
you divide on the basis of train mileage, and then begin to apply the
allocated expenses to any road, the passenger expenses begin to
decrease, showing that the train-mileage basis is not the proper ratio.
Mr. PEABODY. But no road applies revenue train mile basis to any-
thing except those items you can not allocate.
Mr. PRENTISs. I am not referring to a particular road. In the case
of the Atchison, Topeka & Santa Fe, if the train mileage is a proper
basis, all the expenses of the road divided on a train-mile basis would
result in a certain theoretical division. Then begin to allocate and
you will find that in every case you will immediately reach a lower
passenger cost. …
Mr. PEABODY. No one claims anything of that sort. In one of the
statements made to the Post Office Department—one which I think
was not used in Document 105—the railroads were asked to give
their allocation, the allocated items, and their division between pas-
senger and freight. If you are going to use some arbitrary basis,
why do you not first use the allocated items which they had set apart
and then apply your arbitrary, instead of throwing all that mass of
data that was actually furnished from the railways' standpoint, and
then apply it to everything?
Mr. $º. We did not. , What I am presenting is simply a
theoretical statement of proof that the train-mile basis is an incorrect
basis. In the actual division of the expenses we took all the allocated
expenses as reported by the railroad company, and in the case of the
large systems, such as the Pennsylvania Railroad Co., we not only
took the allocated expenses, but we took their own division of ex
º for the direct charge accounts, because of the fact that we
new that the company was more capable than the department of
dividing those expenses. If the railroad companies had submitted to
the department allocations to the best of their knowledge and belief,
the department would have had very little trouble in making the
division of expenses.
The CHAIRMAN. Mr. Prentiss, what is your official position in the
Post Office Department? -
RAILWAY MAIL PAY. 491
Mr. PRENTIss. I am a clerk in the Railway Adjustment Division.
Th; CHAIRMAN. How long have you been in the Post Office Depart-
ment?
Mr. PRENTISS. I have been connected with the department for over
20 years? -
The CHAIRMAN. Have you had any experience or connection with
any of the railroad companies of the country?
Mr. PRENTISS. No.
The CHAIRMAN. What experience have you had in railroad ac-
counting and their methods?
Mr. PRENTISS. I made a special study of railroad accounting when
the question came up before the departmental committee for the
division of these railroad expenses. I had previously had account-
ing experience in the department. - -
The CHAIRMAN. You commenced to make a special study of rail-
road accounting in 1909?
Mr. PRENTIss. Yes; and previous to that—in the spring of 1908.
The CHAIRMAN. When this matter was initiated?
Mr. PRENTISs. Yes.
The CHAIRMAN. Did you find in your special study of railroad
accounting that there was any uniformity among the railroads in
their systems? -
Mr. PRENTIss. No. I believe there is no basis used by all the rail-
roads.
Mr. PEABODY. I do not think you want that to go into the record.
The accounts of every railroad are kept absolutely in accordance
with the direction of the Interstate Commerce Commission, going
down to every item of the account.
The CHAIRMAN. To the extent of the direction of the Interstate
Commerce Commission?
Mr. PEABODY. They say to what account every item of expense
shall be charged.
The CHAIRMAN. Then why is not the question solved absolutely
under the direction of the Interstate Commerce Commission?
Mr. PEABODY. There is no division between freight and passenger;
but his answer would relate to the railway accounting?
Mr. PRENTISs. My experience with reports from the railroad com-
panies has shown that the accounting systems of the railroad com-
panies vary with respect to the accounts. While their accounts may
be all combined, as it were, into the Interstate Commerce Commission
method, some roads go into greater minutiae than others. These
roads subdivide the accounts of the Interstate Commerce Commission
and obtain far more reliable data than other roads.
The CHAIRMAN. Then, as I understand, there is no uniformity as
between the railroads themselves as to their own particular method
of getting information for their knowledge, but there is uniformity
necessarily under the direction of the Interstate Commerce Commis-
sion—in furnishing the Interstate Commerce Commission with
;" information based upon accounts outlined by the commission
itself?
Mr. PRENTISS. Yes.
89246—No. 3—13—4
492 - RAILWAY MAIL PAY.
Mr. PEABODY. I would like to ask one more question, because I still
think you have an erroneous impression. I think Dr. Lorenz will
bear me out. Is there a single item of expenditure on account of rail-
roading which is not directed by the Interstate Commerce Commis-
sion as to the account to which it shall be applied?
Mr. PRENTISS. No; I should not say there was any item of ex-
penditure. -
Mr. PEABODY. And is to be applied by all railroads to the same
account. Then the Interstate Commerce Commission does permit the
roads, if they care to, to make a separate division of any one or more
of the 116 primary accounts, a subdivision of that; but that is also
stated to the Interstate Commerce Commission, is it not?
Mr. PRENTIss. The subdivision?
Mr. PEABODY. Yes. ł
Mr. PRENTISS. I think they mention certain subdivisions, but I do
not think the roads necessarily follow those subdivisions.
Mr. PEABODY. All roads do not follow the subdivisions. Each road
makes special Subdivision of any one particular account it, pleases,
but these are very few, as a matter of fact, and the roads that make
that subdivision are also very few, in the main, and I will say as
much as 99 per cent of the roads use only the Interstate Commerce
Commission classification, do they not?
Mr. PRENTISS. A large percentage of them, I imagine, do.
Mr. PEABODY. So that there is absolute uniformity in the account-
ing methods of all the railroads? * *
The CHAIRMAN. You were one of the departmental commission
studying this question? -
Mr. PRENTISS. I was studying it with the commission, but I am
not a member of the commission. r
The CHAIRMAN. But you were studying it in connection with the
commission. Were any members of the commission gentlemen who
had had practical experience in railroad accounting, who were in
direct connection with any railroad company, according to your
knowledge? w
Mr. PRENTISS. Not as far as I know.
The CHAIRMAN. Mr. McBride, how about that?
Mr. McBRIDE. Not that I know of.
. CHAIRMAN. We will now take a recess for luncheon until 1.30
o'clock. -
(Thereupon, at 12.40 o’clock p. m., the committee took a recess until
1.30 o'clock p. m.) * -
AIFTER RECESS.
The hearing was resumed at the expiration of the recess at 1.30
o'clock p. m. *
The CHAIRMAN. I understand you completed your presentation of
the views of the court bearing on this subject? - - -
Mr. PEABODY. Yes, sir. In that connection I would ask that the
commission read with care that last opinion of the Chicago, Peoria &
St. Louis case. That is very completely and elaborately discussed
by the master who made the report and by the judge who passed upon
it, much more so than any other case that has ever been up.
RAILWAY MAIL PAY. 493.
The CHAIRMAN. Granting all that, what benefit in the particular
study that the committee have before it would they receive, provid-
ing, in your opinion, it is absolutely impossible to apportion your
mail costs out of your passenger costs, or to determine the compensa-
tion to be given for the mail service rendered by the transportation
companies under that method of ascertainment?
Mr. PEABODY. Well, I do not think that that is impossible, Sen-
ator.
The CHAIRMAN. Then I misunderstood you. I got the impression
this morning from your testimony that it was impossible unless all
mail was weighed as it went on and off of a car.
Mr. PEABODY. So far as a division of expenses of each primary ac-
count is concerned, it would be impossible; but there is a way of
arriving at the proportion properly chargeable to the mail, I think—
two ways of arriving at it, either of which would be measurably cor-
rect, but that would be after we had completed the division between
freight and passenger expenses.
The CHAIRMAN. As I understand, you thought you had evolved a
plan by which you had determined the method of correct division
between freight and passenger Service.
- Mr. PEABODY. Yes; approximately.
The CHAIRMAN. Now, you supplement that, adopting that plan
there of two methods, by which you can go still further and deter-
mine the division as between mail and passenger. What are those
Imethods?
- Mr. PEABODY. I am going to show you one right here. Before ex-
plaining this statement which I will present I want to emphasize,
for fear that I did not make it sufficiently emphatic this morning, that
one reason why we place so much dependence on our division as be-
tween freight and passenger expense is that every voucher that is
made in payment of everything, no matter what it is, for the operat-
ing expenses of the road is divided on that voucher as between freight
and passenger in accordance with our formula. It is first divided
as to the location on the road—whether it is on this division or that
division or the other division, and whether it is on the main line or
a branch line, and so designated in the voucher. Then the amounts
are subdivided as between freight and passenger right on that
voucher, and the sum total which we arrive at as the expense of the
freight and passenger business are the addition of all the units and
not the application of any rule to an aggregate sum.
The CHAIRMAN. That is very interesting. Now, do you figure in
the adoption of that plan of segregation in your vouchers that there
is any additional expense to the railroads? -
Mr. PEABODY. Not sufficient to condemn it.
The CHAIRMAN. It is unappreciable?
Mr. PEABODY. We have done it for 12 years, and we would not do
away with it. The expense is more than justified. It is not within
my province to criticize accounting officers, but I do think they could
extend their accounting methods with considerable advantage to the
railroads. -
The CHAIRMAN. You mean the accounting officers generally in the
transportation business?
Mr. PEABODY. That is what I mean.
* For statement referred to see conclusion of Mr. Peabody’s testimony, pp. 526–527.
494 RAILWAY MAIL FAY.
The CHAIRMAN. Let me ask you this in that connection: Do you
figure that it is an increased accounting cost, this minuteness of segre-
gation on your vouchers, equivalent to 1, 2, 3, 4, 5, or any definite
percentage because of that minuteness? t
Mr. PEABODY. I should say that it, perhaps, increased our account-
ing expenses somewhere from 5 to 10 per cent.
The CHAIRMAN. Over what it would be otherwise?
Mr. PEABODY. Yes.
The CHAIRMAN. And you think the benefits incident to the adop-
tion of the method are infinitely greater than the additional cost?
Mr. PEABODY. It would be worth it if it increased the cost 50 per
cent, because we find out what we are doing. We have been able to
save money by knowing these costs.
The CHAIRMAN. You know where to apply your ability and energy
in the way of minimization of waste and improvement of methods by
this method of minute ascertainment? º
Mr. PEABODY. That is right.
The Post Office Department called on the Santa Fe Road, in com-
mon with all the other roads of the country, to give them the mail-
carrying data, space occupied, for the month of November, 1909.
The request was made so near the month of November that I did not
think we could get the machinery in shape to make a concrete test
by the first of November, and not wishing to give any inaccurate
figures I deferred the making of that test until the month of Janu-
ary, 1910. I could have gotten ready for December, but I did not
think the month of December would be fair on account of the Christ-
mas season, when there would be a larger proportion of mail than
ordinarily.
The CHAIRMAN. Fair to which interest, the Government or the
railroad?
Mr. PEABODY. It would not be correct.
The CHAIRMAN. You said “fair.” Fair to whom ?
Mr. PEABODY. Fair to either.
The CHAIRMAN. On the theory that it would be incorrect informa-
tion to both parties?
Mr. PEABODY. Absolutely to both parties. We wanted to know the
facts, so I took that test during the month of January. We found
that it required a good deal of correspondence with the conductors
and the others to whom was committed the work of doing it; and, by
the way, that test on our line consisted of the absolute measurement
of the space in every car on every train during that entire month. I
had a special report made by the conductor and baggageman of every
train, which report came to my office.
The CHAIRMAN. You made no test for November?
Mr. PEABODY. No, sir. -
The CHAIRMAN. You did not furnish the Post Office Department
with the information in reply to that request for information for
that month? +
Mr. PEABODY. For November; no. But we gave them the informa-
tion for January, and that is what they have used in their report, the
January figures. -
The CHAIRMAN. You think that January and November are typical
average months? …”
Mr. PEABODY. Well, hardly so; and for that reason, and also for
the reason that a single month is hardly fair to either party, and also
RAILWAY MAIL PAY. 495
for the additional reason that our conductors, having had one month's
experience in doing that work, could do it a second time more cor-
rectly, I selected the months of September and October, 1911, for
another test, and took a similar test for those months in which I
had a special report made by every conductor on every train for those
two months, figuring that this would be a fair average of the year.
The CHAIRMAN. In what year was your January test made?
Mr. PEABODY. 1910.
The CHAIRMAN. So that you really have tests, then, for three
ºffs—J anuary, 1910, and the months of September and October,
1911? -
Mr. PEABODY. Yes, sir. The space used by mail, as was demon-
strated in those two months, was almost exactly double that used by
mail in the month of January. The space used by the other portions
of the passenger service, the passenger and express, were larger, so
that the percentage of the mail space for those two months is less than
the proportion of the mail space as shown in the January test. The
express was larger and the passenger business was larger. We also
had an increase in pay after the January test, so that our pay for the
months of September and October was larger for the same amount
of service than it was in January.
The CHAIRMAN. An increase of pay in the handling of the mail?
Mr. PEABODY. An increase in pay in the handling of the mail.
The CHAIRMAN. How did you obtain that?
Mr. LINDSAY. By the reweighing of 1911 east of the Missouri River
or between Kansas City and Chicago, the mileage resulted in increases
in our compensation.
The CHAIRMAN. Due to the increased weight shown by the re-
weighing? * *
Mr. LINDSAY. Yes.
Mr. PEABODY. Although it did not occupy any more space, rela-
tively, as shown by the test.
The CHAIRMAN. How do you show that by the test?
Mr. PEABODY. We took the actual measurement of the car-foot miles
in January, 1910, which was 55,480,640, whereas for September and
October, 1911, it was 110,125,645, almost double.
The CHAIRMAN. Almost double, but one for 30 days and the other
for 60 days.
Mr. PEABODY: Yes. That is a check on the mail space showing it
is correct as taken. The passenger space for those two months was
1,209,901,808, or 80.37 of the total. The mail space was 110,125,645,
or 7.32 of the whole.
The CHAIRMAN. Is that 7.32 of the total?
Mr. PEABODY. Total space on the train—car-foot miles on the train.
The CHAIRMAN. But on the passenger trains?
Mr. PEABODY. On the passenger trains; yes, sir.
The CHAIRMAN. And your 100 per cent simply takes what we term
the general passenger service, ºft. mail and express, as well as
passenger and milk?
Mr. PEABODY. Yes. 4.
The CHAIRMAN. So that you figure your mail on your apportion-
ment º, operating expense as 7.32 per cent of the total passenger
I'êVer).Uſe {


496 RAILWAY MAIL PAY.
Mr. PEABODY. No; not revenue. That is car-foot space, the express
occupying 185,382,251, or 12.31 per cent. Our total car-foot space of
the passenger trains for those two months was 1,505,409,704. That
divided, as already stated, by passengers 80.37 per cent, mail 7.32 per
cent, and express 12.31 per cent. - -
The CHAIRMAN. Is it your opinion that the expense is equal or
different in the handling of the segregations of your general passen-
ger service, namely, .# express, and passenger proper?
Mr. PEABODY. In this statement I have : the proportion of
the total passenger expense to mail that the percentage of mail car-
foot miles bears to the total car-foot miles.
The CHAIRMAN. That is, you have taken the total passenger-train
operating expense?
Mr. PEABODY. Which amounts to $4,394,347.26. - - -
The CHAIRMAN. And applying your 7.32 per cent, as arrived at in
the upper column, you make that $321,666.22% .
Mr. PEABODY. That is correct as the proper amount of expense at-
taching to the mail for those two months, of course understanding
that that $4,394,347.26 of the total passenger-train operating expense
was arrived at on the basis already outlined this morning.
The CHAIRMAN. On what we term the Atchison system?
Mr. PEABODY. On the Atchison system.
The CHAIRMAN. What was your total mail revenue from the Gov-
ernment during the year ending June 30, 1912?
Mr. LINDSAY. In round figures, about two and one-quarter million
dollars; that is, for the fiscal year—for 12 months.
The CHAIRMAN. The revenue of the Atchison system received from
the Government was what for the fiscal year 1911?
Mr. LINDSAY. In round numbers, about $2,250,000.
The CHAIRMAN. That includes the railway mail pay and R. P. O.
pay ?
Mr. LINDSAY. Yes, sir; the whole of it. . . - -
The CHAIRMAN. Now, Mr. Peabody, assuming that the months of
September and October are typical months, or represent the two
months collectively a fair average of the year's expenses, you would
have $1,929,996 for the actual charge against the mail for passenger-
train operating expenses which would leave an apparent profit of
$220,000 that the Atchison Company made over and above the actual
cost of hauling the mail on this compensation? -
Mr. PEABODY. I do not follow your figures, Senator. I have it all
figured out here below. -
The CHAIRMAN. You say that for the months of September and
October, 1911, that it cost the Atchison system, according to your
method of computation, as herewith presented, $321,666.22.
Mr. PEABODY. That is right. - -
The CHAIRMAN. Multiplying that by six it would give you the ap-
parent cost of carrying the mail for that year, on the assumption that
those two months were a fair average for the balance of the year?
Mr. PEABODY. Yes; but that is hardly correct, because the mail ex-
penses for those two months are less than the average, and that is one
reason for selecting it. I wanted to make it just as conservative for
the department as possible. Our expenses during the winter months
are much larger than during the Summer months, and that $321,666.22
does not represent the operating expenses for the year. I can give
RAILWAY MAIL PAY. 497
you the operating expenses for the year. I have those here in the
annual report. - -
The CHAIRMAN. Let us carry this out a little further. If your
figures for the months of September and October were typical bal-
ances of the year and fairly representative of the average, your ex-
enses for the year would then be $1,929,996, and your revenue would
e $2,250,000, and your apparent earnings would be $220,000 plus.
Mr. PEABODY. On that assumption; yes.
The CHAIRMAN. Now, what criticism have you to make of that
assumption? ---
Mr. PEABODY. The amount of the expenses are not typical of the
entire year. The summer expenses are always less than the winter
expenses, and we have used in all the summary of the expenses the
actual expenses for those particular months and not the average ex-
penses for the entire year for two months.
The CHAIRMAN. September and October are not generally conceded
to be summer months, are they? +.
Mr. PEABODY. They are not expensive operating months, anywhere
nearly as much so as the winter months.
The CHAIRMAN. Have you with you your passenger operating ex-
penses for the whole of the year? •
h Mr. PEABODY. No; but I will send it to you if you would like to
ave it.
The CHAIRMAN. No; but I would like your criticism or explana-
tion or concurrence or comment on my statement that under the table
presented this deduction is a fair one, that you had an apparent
earning there of $220,000 for that year over and above the actual cost
of hauling the mail.
Mr. PEABODY. On the figures presented that would be a fair as-
sumption. 4.
The CHAIRMAN. Why is it unfair to criticize the figures presented ?
Mr. PEABODY. Simply because those expenses are not fair for the
year. As I have stated, the expenses in September and October are
below the average for the year, and that is not one-sixth of the total
expenses attaching to the passenger business for the year.
The CHAIRMAN. The table presented by you here, in which you
make your apportionment of the operating expenses in the passenger
service and allow 7.32 per cent for mail, takes into consideration the
R. P. O. as well as the weight, the railway mail pay.
Mr. PEABODY. It takes the total we received as earnings for those
particular two months, which amounted to $377,864.26.
The CHAIRMAN. The relative percentage of mail to the passenger
service as a whole would not change according to the method. That
is typical for the months of September and October.
Mr. PEABODY. The space would not change; no.
The CHAIRMAN. That percentage would remain fixed the year
through, 7.32,
Mr. PEABODY. It could not be exactly, that per cent being varied by
the addition or lessening of the express or mail. *
The CHAIRMAN. Do they not go hand in hand?
Mr. PEABODY. Pretty nearly. The percentage in the month of Janu-
ary was 7.47, and in the months .# September and October, 7.32,
pretty nearly the same; but there was a little variation, and because
this was the smaller of the mail, and also the Smaller expense, I made
498 BAILWAY MAIL FAY.
up my figures on that basis so as to make just as favorable a showing
for the post office as was possible.
The CHAIRMAN. In your ascertainment of operating expenses do
you allow anything for interest on capital invested in any way?
Mr. PEABODY. Oh, no, sir. In these figures you have quoted there
there is also nothing for taxes, rental, or hire of equipment. Those
are not called operating expenses.
The CHAIRMAN. Taxes are not included ? .
Mr. PEABODY. No, sir; nor hire of equipment, nor rental.
The CHAIRMAN. If these two months of September and October
are typical average months, you would have, under this statement pre-
sented, $220,000 of revenue received from the Government over and
above what you paid out in actual operation to earn that revenue,
with no allowance whatever for taxes, no allowance for cost of ter-
minals, and no allowance for equipment. Is that right.
Mr. PEABODY. That is right. t
The CHAIRMAN. Have you any idea, or could you work down now,
under the figures given, what, in your opinion, a fair statement would
be as to the amount you received over and above what you actually

paid out under your apportionment here of operating expenses for
passenger trains? How much will you reduce that $220,000? Would
it be entirely wiped out? •
Mr. PEABODY. There is a balance over operating expenses when we
et through without taking any account of taxes, rentals, etc., of
$56,000; but charging the proportion of taxes, rentals, hire of equip-
ment, and also that proportion of the interest which we paid out on
our bonds, not allowing any dividends or anything of that sort, it
would show a deficit for those two months of $6,051.88. As I go
through this statement I will explain the method by which this is
all arrived at. The total passenger train operating expenses consti-
tute 36 per cent of our total operating expenses—that is to say, the
$4,000,000 which is charged here as the train operating expenses con-
stitute 36 per cent of our total operating expenses. The apportion-
ment of taxes, interest, and rentals, and the hire of equipment is
made on the revenue basis, consequently it is necessary to know the
revenue we received. Our freight revenue that year amounted to
$13,191,317.90, or 69.80 per cent of the total revenue. *
The CHAIRMAN. That is, for the two months of September and
October, 1911? -
Mr. PEABODY. For those two months. The passenger revenue
amounted to $4,722,656.95, or 24.99 per cent of the total revenue.
The mail was $377,864.26, or 2 per cent of the total revenue. The
express revenue was $608,263.98, or 3.21 per cent of the total revenue.
Taxes, interest, rentals, and hire of equipment that we paid that year
amounted to $3,112,495.90, and, divided on the proportions of rev-
enue which I have just indicated, would charge to the mail service
2 per cent, or $62,249.92. *, º
Recapitulating all of these figures, we have for the operating rev-
enue for freight $13,191,317.90, for passenger $4,722,656.95, for mail
$377,864.26, for express $608,263.98, or a total of $18,900,103.09. The
operating expenses chargeable to freight for those same two months,
determined on our regular formula, amounted to $7,791,471.10, and
to passenger, divided on the proportion of the car-foot miles, as shown
at the head of the statement, amount to $3,531,736.89; to mail, on the
RAILWAY MAIL PAY. 499
car-foot mile basis, $321,666.22; express, $540,944.15, making a total
of the operating expenses of $12,185,818.36. It is interesting to note
the ratio of the net operating expenses to the operating revenue.
The ratio of the expenses on freight is 59.06; on passenger, 74.78; on
mail, 85.13; and on express, 88.93, or a total ratio of 64.47 per cent.
The CHAIRMAN. That ratio is determined on the actual revenues,
based on your expenses as applied under the Atchison system'
Mr. PEABODY. As applied under the Atchison system; yes. The
total ratio of the passenger operation, including passengers, mail,
and express, is 77 per cent. The taxes for those two months were
$751,957.91. The rentals were $18,215.93. The hire of equipment
$101,135.91, or a total for those three accounts of $871,309.75. The
interest for the two months which we paid on our bonds amounted
to $2,241,186.15, making a total charge for taxes, rentals, hire of
equipment, and interest of $3,112,495.90.
The CHAIRMAN. That changes very materially the figures that you
have in the statement which we have before us.
Mr. PEABODY. No; they are additional figures. I will now explain
how the amount is the same. Apportioning the taxes, interest, etc.,
to freight, passenger, mail, and express, as shown in the statement,
we have a net income on the freight of $3,227,324.66; a net income on
the passenger of $413,107.34; a deficit on the mail of $6,051.88; and
a deficit on the express for the two months of $32,591.29, or a total
surplus, net income of $3,601,788.83. +.
The CHAIRMAN. Under your recapitulation table, will you explain
“Taxes, interest, etc.” As I understand, your interest is simply the
interest on your bonds.
Mr. PEABODY. That is right.
The CHAIRMAN. And not dividends at all.
Mr. PEABODY. No dividends at all.
The CHAIRMAN. What is the “ and so forth *%
Mr. PEABODY. Taxes represent 7.51 per cent.
The CHAIRMAN. I mean, what does the “ and so forth " mean?
Mr. PEABODY. Rental and hire of equipment are the other two,
The Interstate Commerce Commission will not permit us to put this
into operating expenses. They require us to keep a separate account
of that and deduct it from the net operating revenue. They state
what items shall constitute operating expenses. Those items are to
be deducted from operating revenue and then these other items of
taxes, rentals, and hire of equipment are put under another account
and deducted from the net operating revenue and called net operating
income. Therefore, we keep our accounts by their direction that
way. The taxes, rentals, and hire of equipment are treated as sepa-
rate items. Of that $3,112,495.90, which includes the interest paid
on the bonds for those two months, $871,309.75 are taxes, rental, and
hire of equipment, which is really an operating expense, and we are
not allowed to state them separately.
The CHAIRMAN. Would you kindly explain the reason for the dif-
ference in taking net apportionment of operating expenses on car
foot-mile basis, that the mail is 7.32 per cent of the total operating
expenses charged to the whole passenger service, and in your appor-
tionment of taxes, interest, rentals, and hire of equipment on the
revenue basis you only take a 2 per cent chareg as aganist the mail
revenue? -
500 RAILWAY MAIL PAY.
Mr. PEABODY. The item of operating expense as designated by
the Interstate Commerce Commission are first divided between pas-
senger and freight on the basis of our formula for division of ex-
penses. Of the amount thus ascertained and chargeable to passenger
we have charged against mail 7.32 per cent, that being the car-foot
mile proportion of all of the expenses embraced in the passenger
operating charges. Besides the operating charges or expenses there
are other items of taxes, rentals, and hire of equipment, and also
amounts paid out for interest on bonds. In all of the cases with
which I am familiar the courts have uniformly held that payments
of this character should be divided on the basis of the gross revenue
instead of being apportioned on any formula to expenses, or other
division, and in conformity with that rule I have divided those items
on the proportion that the mail revenue bears to total revenue re-
ceived in the operation of the road.
The CHAIRMAN. Which in the Atchison case is 2 per cent.
Mr. PEABODY. In the Atchison is 2 per cent.
Mr. LORENz. I would like to ask whether the purpose of this ap-
portionment is not to test the adequacy or inadequacy of existing
TeVenlle.S.
Mr. PEABODY. That, to my mind, is the absurdity of the proposi-
tion; but I do not like to take the attitude of calling anything a court
does absurd. -
Mr. LORENz. I think the courts have sometimes taken bases because
they simply did not know what else to do, because there was nothing
else at hand.
The CHAIRMAN. Do you think infallibility necessarily goes with
the ermine? - 7
Mr. PEABODY. No; not necessarily. But, as Dr. Lorenz says, there
is self-contradiction in that application. Here a complaint is made
that a rate is too low. We ascertain that the rate is too low, and one
item to prove that it is too low we base upon the rate itself.
Mr. LORENZ. As a matter of fact, the courts have not universally
so held. There is a recent case in which this basis is condemned as
illogical and absurd. It is a Federal case, but I can not recall the
name of it at this time. -
The CHAIRMAN. Please look it up and give the information to us
later, and I will have it put in the record.". What, according to your
idea, would be the proper method of arriving at a percentage there,
and what, in the adoption of such a method, would you have instead
of the 2 per cent which is the debit under the dictum of the court?
Mr. PEABODY. I should charge the same basis that I charged in
dividing the other expenses. -
* The following statement was later furnished by Mr. Lorenz :
“The case to which I referred in discussing with Mr. Peabody the gross-earnings basis
for dividing expenses is Chicago & North Western Railway Co. v. Smith et al., before the
United States Circuit Court, District of South Dakota, southern division. I had reference
to the report of the special master appointed by the court. The opinion of the court
itself has not as yet been rendered, I believe. The master says, on page 81 :
“‘ It seems to the master that these results conclusively prohibit the use of gross
earnings as a factor in cases of this kind. The $10,000,000 example shown by Mr.
Justice Brewer in the Tompkins case (176 U. S., 167) clearly indicated the same absurd
results, and the master therefore feels justified in following Mr. Justice Brewer in the
Tompkins case and in declining to follow the Love case and the Minnesota rate case and
the other cases on this Subject.
“‘ In regard to the remark of Judge Sanborn in the Minnesota rate case, heretofore
quoted, “Cases may, indeed, be imagined in which this basis does not produce persuasive
results,” the master is of the opinion that no case can be imagined where such absurd
results would not appear unless the freight earnings and passenger earnings were re-
duced or raised in exactly the same proportion.’”
RAILWAY MAIL PAY. 501
The CHAIRMAN. In other words, instead of the 2 per cent which
you take under the dictum of the court, you would take the 7.32 per
Cent'.
Mr. PEABODY. Let me correct that. I would first divide as between
º and freight on the revenue basis, for I know of no other
basis by which you could arrive at a fair division, but having arrived
at a division of those expenses between passenger and freight on the
revenue basis, I would then subdivide on the proportion of the Service
performed.
Mr. LoRENz. Do you think that it is fair to divide the interest on
the rails and ties, etc., in proportion to the revenue from the freight
and passenger, as you have just said, when you do not divide the
maintenance of those rails on the basis of the revenue?
Mr. PEABODY. The reason for it is this: Taxes and hire of equip-
ment and rentals are items that are paid out of general revenue. You
put your hand in the treasury and pull out a certain amount of
money, and I think that amount of money should be charged in the
proportion that the two distinctive services contribute to that fund.
That is my only reason. Whether that is the best one or not I do
not know, but it is the only one that I can find that is at all satisfac-
tory to my mind.
Mr. LORENZ. It seems to me it is utterly contradictory to what you
admitted a few moments ago regarding the absurdity of using exist-
ing bases for dividing the properties on the total cost.
Mr. PEABODY. I would like to have some one suggest a better one.
... Mr. LORENZ. The only way in which it seems to me to proceed with
the interest charges, if you are trying to find the total cost, is upon
Some ratio derived from consideration of cost. Now, then, the invest-
ment of the rails and equipment and property is for the purpose of
performing these various services. The interest on that investment
ought to bear some relation to the use made of the common facilities,
and it seems to me that the basis you use, whatever it may be, for
dividing the maintenance of way and equipment between passenger
and freight is also the proper basis for dividing the interest charges
between freight and passenger. *
Mr. PEABODY. Then you would determine the per cent that each
item of the 116 accounts bore to the total charge, the interest pro-
portionately to that account, and then subdivide that amount by the
formula that you use for dividing between freight and passenger?
Mr. LORENz. No, sir. I would find the relation between the main-
tenance of the freight cost to the maintenance of the passenger cost
and use that ratio in dividing the interest between freight and
passenger. That is merely a suggestion.
Mr. PEABODY. In other words, you put it on the expense basis
instead of the earning basis. w
Mr. LORENz. Exactly.
Mr. PEABODY. You base it on expenses instead of earnings.
Mr. LORENZ. Yes.
The CHAIRMAN. What do you think of that?
Mr. PEABODY. Well, I do not know but what it is just as good.
Mr. LORENz. As a matter of fact, it would subserve your purpose
better, I think, because it would charge a larger proportion to pas-
senger service.
502 RAILWAY MAIL PAY.
Mr. PEABODY. We have not any purpose in this. The Santa Fe
road is trying to get at facts. I have not any preconceived opinion,
but I am trying to bring out in all of our accounting the facts. We
absolutely adhere to that. We do not care where it lands us, but we
want the facts, and we use exactly the same basis, whether passenger
or freight, regardless of whether it meets the case or not. I have
gº into cases and shown where it was absolutely a sure loss to us
to do it.
Mr. LORENz. I should have said “interest * rather than “purpose.”
Mr. PEABODY. I do not take that offensively, of course, but I wanted
to explain what we are after. If we can find out the facts in the case,
and in carrying out that idea of Dr. Lorenz and in support of his
statement that the suggested basis would be charged more to the pas-
senger than the basis we have used, I would say that on the basis of
the expenses as ascertained and suggested by him it would have
charged to passenger $1,120,498.20. We actually did charge on the
basis used here $939,973.76. We charged $180,524.84 less on the basis
we used than we would have charged if we had used the basis sug-
gested by Dr. Lorenz.
Right here I would like to say this in explanation of a remark I
made in regard to what the Santa Fe is trying to do. When this
matter first came up as to the using of the analyses of cost in connec-
tion with our rate cases, which was, I think, in 1903, up to that time,
perhaps, as you are aware, it had been the general impression, which
had perhaps considerable for foundation, that railroads loathe to give
information to the authorities as to what they were doing, particu-
larly the regulating authorities, and in a case that we had I showed
where it would be of advantage to use some figures that we had in
our analyses. -
The CHAIRMAN. Of advantage to whom?
Mr. PEABODY. Advantage to us. It would help to win the case, I
will say. I submitted the proposition to our president, in connection
with our attorneys, and showed where that would be the result if we
used those figures. At the same time I called their attention to the
fact that if we used them in one case we would be obliged to use them
in others, and there would be cases just the other way where it would
be to our disadvantage, and I wanted to know what to do, being
called as a witness in the case. Our president said: “The time has
come when the regulating bodies are entitled to know what we are
doing. We will play all of our cards on top of the table.” Since
then we have had all of our figures open to everybody. That is why
I am bringing this here now.
The CHAIRMAN. You show a greater loss in handling the express
business here, under your statement presented for the two months
indicated, than you do in handling the mail.
Mr. PEABODY. Yes, sir. -
The CHAIRMAN. How do you account for that, and what contract
has the Atchison system with the express company ?
Mr. PEABODY. The Atchison system has a contract with the Wells,
Fargo Express Co., by which it receives 55 per cent of the total
receipts. - •
The CHAIRMAN. That is, the Atchison receives 55 per cent of the
total revenue of the Wells, Fargo business transacted over the Atchi-
son system?
RAILWAY MAIL PAY: 503
Mr. PEABODY. Yes, sir.
The CHAIRMAN. And yet the loss, under this statement, is greater
in the handling of the express than in the handling of the mail?
Mr. PEABODY. Yes, sir.
The CHAIRMAN. Because the volume of business is greater for one
factor, I assume?
Mr. PEABODY. Yes; or our operating revenue is not quite double,
$608,000 for the two months as against $377,000 for the mail. And
the expenses are charged on the same basis for car-foot miles.
The CHAIRMAN. The earnings per car foot-mile under the passen-
ger, mail, express, and total are percentages, are they, or are they
mills per car foot-mile?
Mr. PEABODY. Those are mills, earning per car foot-mile in mills.
The CHAIRMAN. Then, under your contract with the express com-
pany, the more business you have the greater your loss?
Mr. PEABODY. Oh, no. I do not mean that we are better off with-
out the mail or better off without the express by a great deal.
The CHAIRMAN. Without any elucidation of your statement that
would be the natural inference.
Mr. PEABODY. That merely means that these services do not pay
their proper proportion of the expenses by so much.
The CHAIRMAN. When you take into consideration taxes, interest,
and so forth, as explained heretofore in your testimony?
Mr. PEABODY. Yes, sir. They do not pay their relative proportion.
I want to say further in connection with this, leaving out that item
of interest, the mail net operating revenue, amounts, as shown in the
statement, to $56,198.04. The taxes, hire of equipment, and rental
alone, not taking interest into account, is $17,422.20, leaving a net
operating income of $38,771.84. We have to apportion that to the
interest and the value of the property. The value of the property
used for the year was $603,390,485. That is the total value of the
Santa Fe property.
The CHAIRMAN. The total value; how ascertained?
Mr. PEABODY. Our actual cost. The cost as shown in our accounts.
The CHAIRMAN. Is it the sum of the bonds and stocks at par value?
Mr. PEABODY. No, sir. . It is the cost of railroad franchises and
other property, including stocks and bonds which we have bought
of other properties to control. For instance, we own all of the stocks
and bonds of the Gulf, Colorado & Santa Fe road.
The CHAIRMAN. That is, including the stocks and bonds at their
par value or the purchase price that you paid for them; which 3
Mr. PEABODY. That includes the purchase price we paid for these
stocks and bonds that were bought. That also includes the expendi-
tures for additions, betterments, construction, and things of that
sort. In other words, it is the cost of the road as it appears in our
statement sent to the Interstate Commerce Commission, not the stocks
and bonds as appear on the other side of the balance sheet.
The CHAIRMAN. Your cost, taking the original purchase price and
adding from the date of purchase down to date, interest at 6 per cent?
Mr. PEABODY. No, sir.
The CHAIRMAN. Just the original cost without interest?
Mr. PEABODY. The original cost without interest, including addi-
tions or betterments since date of purchase.
504 - RAILWAY MAIL FAY.
Mr. LORENZ. How does that compare with the total stocks and
bonds at par value? • * -
Mr. PEABODY. Two million and one-half, in round numbers.
The CHAIRMAN. That is very interesting; on over a $600,000,000
computation? -
Mr. PEABODY. The proportion of that allotted to mail is $12,067,809.
The CHAIRMAN. On the basis of 2 per cent?
Mr. PEABODY. On the basis of 2 per cent.
The CHAIRMAN. You take 2 per cent of the total cost and charge
that to mail, and that amounts to $12,000,000 plus? -
Mr. PEABODY. That is the basis used, I guess, uniformly in the
courts’ decisions. The return on that for 60 days at 6 per cent would
be $120,678.09. At 7 per cent it would be $140,791.11, against which
we have a margin of $38,771.84 to apply.
Mr. LORENZ. This hire of equipment which you charge to the mail
service, does that contain any mail cars?
Mr. PEABODY. Any mail cars? Well, I can not answer that offhand
I) OW. º
Mr. LORENZ. Isn’t that mostly freight cars interchanged?
Mr. PEABODY. There are no freight cars interchangeable in this hire
of equipment. We would not use the freight-car hire as equipment
here. We can determine that very easily.
The CHAIRMAN. You say in your contract with the express com-
pany you receive 55 per cent of the gross receipts of the express com-
pany for all business handled over your line?
Mr. PEABODY. Yes, sir. -
The CHAIRMAN. Is there any railroad that receives a greater per-
centage than that that you know of? . -
Mr. PEABODY. There is one that receives a greater percentage. I
do not recall just now which one it is. As you may know, we have
lately had an express case before the Interstate Commerce Commis-
sion, and I was one of a committee to work up the data for sub-
mission for all the express companies of the United States, and in
doing that I remember that there was one road that had a larger per-
centage than 55; but I can state right now, and I am perfectly willing
to state, although it might not satisfy some of our express friends,
that when our contract is renewed I believe we will get a good deal
more than 55 per cent or it will not be renewed. -
The CHAIRMAN. That is the Atchison contract with the express
company, the Wells, Fargo Co. ?
Mr. PEABODY. Yes, sir.
The CHAIRMAN. In other words, you do not feel that 55 per cent
of their revenue gross is a fair compensation to the Atchison for the
service rendered? - -
Mr. PEABODY. No, sir. When we made that contract we did not
have the information that we are now possessed of. That is one of the
advantages of this analysis we are talking of, but we got the contract
under the best circumstances we could at the time. I think the Wells,
Fargo Co. will admit they did not know any more about it that we
did, and we traded and got the best contract we could; but they are
perfectly willing to admit now that a lump sum of 55 per cent on the
business that embraces haul varying from 25 miles to 2,500 miles is
not equitable. -
RAILWAY MAIL PAY. 505
We get 55 per cent of the rate for 25 miles and we get 55 per cent
of the rate for 2,500 miles. The service in both cases performed b
the express companies is the same, the delivery service at each end,
and we perform all the extra service and get no more money for it,
That was a jumped-at average. y
The CHAIRMAN. Your statement shows you are receiving per car-
foot mile fifteen one-hundredths of a mill more for mail than you
are for express? - • -
Mr. PEABODY. That is right. &
The CHAIRMAN. And yet the statement submitted by Mr. Peters,
as chairman of the railway mail pay committee, which committee rep-
resents 214,000 out of the 250,000 miles of railway in the United
States, and in which calculation I presume the Atchison system is
included, shows that the railroads on an average per car-foot mile
receive from express 3.86 mills, while they only receive 3.23 mills
from the mails. I know of no railroad that receives a higher per-
centage of the gross receipts of the express company than 55 per
cent—that is, I did not know of any until the statement you have
just made, that in your opinion there was one road that received a
higher percentage. I have understood that the percentage received
from the railroads from the express companies varied from 40 to
55 per cent? -
Mr. PEABODY. That is right, although that road that receives 40
is a mere question of bookkeeping. That is the Great Northern, and
inasmuch as they own both the express company and the railroad
company it does not make much difference what they credit to the
express business.
The CHAIRMAN. You say they own both the express company and
the railroad 3
Mr. PEABODY. And operate them.
The CHAIRMAN. There are no stockholders in the Great Northern
Express Co. other than the railroad itself? +
Mr. PEABODY. I think not. The explanation of the account you
just referred to is this: The railroads, as a whole, in the United States
have a comparatively short express route.
#. CHAIRMAN. That is, the average haul on express—about 200
IſllièS : •
Mr. PEABODY. The average haul being about 200 miles, whereas
our average is very much larger than that. We have a heavy Cali-
fornia business and naturally it brings up the average, but I think
somewhere over a thousand miles, Kansas City being a large point,
With 488.
The CHAIRMAN. And the express company probably gives low
rates on fruit and things of that kind?
Mr. PEABODY. Yes. They give a comparatively low rate on fruit,
because they compete against us on the fruit. We have a rate of $1
per 100 pounds on the citrus fruit over the United States, and they
can not charge but very little more. -
The CHAIRMAN. Do you deliver?
Mr. PEABODY. No.
The CHAIRMAN. Do they?
Mr. PEABODY. They do. But they are obliged to charge at least
one and one-half times as much as we do. But with the long haul as
against the short haul it reduces the rate per car-foot mile very
506 RAILWAY MAIL PAY.
rapidly, and with us that is probably the reason why the rate per
car-foot mile on express is more costly than the mail. * *
The CHAIRMAN. It is often stated that the railroads give far more
favorable terms to the express companies than they do to the Govern-
ment in the transportation of the mails—or possibly I had better put
the statement this way: That the Government pays more for mail
transportation than the railroads receive, relatively, for express trans-
portation. What would you say in reference to that?
Mr. PEABODY. I should say that as a general proposition that is so.
It does not happen to be so with our line, but as a general proposi-
tion I should say that that was so. I guess I misunderstood you. I
think I have turned your question around. So, I think that the ex-
press pays more, as a rule, to the railroads than the mail; that is, I
think they get more out of the express business than they do out of
the mail. That is what I meant to say.
The CHAIRMAN. Is there any distinction in your mind as between
the services rendered? In other words, should the railroads receive
the same compensation for the handling of the mail that they do for
the handling of express? -
Mr. PEABODY. I have not given that subject much thought, and I
should dislike to express an opinion.
The CHAIRMAN. I would not ask you if you have given no thought
to it. Have you any in reference to the distinction between passen-
ger service generally and mail, as to whether the compensation should
be the same or whether there should be a difference; and if so, which
should receive the greater compensation, the passenger service or the
mail?
Mr. PEABODY. I do not see how you can compare those two, the
services are so entirely different. The mail you have to handle, and
the passengers handle themselves. Still you supply some things for
passengers that you do not for the mail.
The CHAIRMAN. Then, how are you going to arrive at any basis of
fair computation to pay the transportation companies for the hand-
ling of the mail? y
Mr. PEABODY. As I suggested this morning as a layman, without
having studied the matter, it did occur to me only a day or two ago
that if they would weigh on and off every bit of mail that goes on and
off the train and charge accordingly and get so much per hundred
pounds for handling it that would be a fair way.
The CHAIRMAN. How are you going to determine what they are
going to get per hundred pounds?
Mr. PEABODY. That is a matter of determination. A rate based on
cost is an absurdity.
The CHAIRMAN. Yet is not the trend of opinion rather toward the
direction of scientific cost as nearly as possible?
Mr. PEABODY. To base rates on cost would stop the freight trans-
portation throughout the country. You could carry high-class goods
at an average cost, but you could not carry the low-cost goods at an
average cost. f
The CHAIRMAN. You have but the one classification in mail trans-
portation. • 's
Mr. PEABODY. Possibly you could come nearer basing it on cost
there than you could on quantities. Still, as I understand it, you
RAILWAY MAIL PAY. 507
have the classification in mail. You have the parcel post, which is a
less rate than you have on letters.
The CHAIRMAN. Not in the compensation that the railroads re-
ceive, but in the compensation that the Government receives. We
will have four classifications under the governmental charge to the
public, but none under the governmental payment to the transporta-
tion companies.
Mr. PEABODY. That may be so.
Mr. LORENz. If, as you say, you can not compare the mail and pas-
senger service on the basis of the car-foot miles because they are so
different, how do you justify your comparison?
Mr. PEABODY. I do not say you could not compare it on a basis of
car-foot miles. We have compared it on the basis of car-foot miles.
Mr. LORENz. That was the purport of the Senator's question. He
wanted to know whether the mail revenue ought to be based on that
earned per car-foot mile in the passenger service.
Mr. PEABODY. If that is so, we have applied it on the basis of the
car-foot mile.
Mr. LORENz. So you could compare revenues as well as cost?
Mr. PEABODY. Yes.
Mr. LORENz. Following up that question, I think the Senator
would have been interested to know whether, in your opinion, there
is enough difference in the mail service compared to passenger Service
so that revenue ought to be different.
Mr. PEABODY. That is where I said they were so different I could
not compare them. -
Mr. LORENz. Is not the only difference with respect to the items of
expense that attach to one as compared to the other?
Mr. PEABODY. Yes; but they are so very different it would be
pretty hard to make a comparison.
Mr. LORENz. Do you think your comparison of expense is accurate
when the services are so different, and when you are simply dividing
on the basis of car-foot miles?
Mr. PEABODY. Simply because the passenger train is the unit of
the total expense, and that is a different proposition. When you at-
tempt to make up those expenses by taking the expense attached to
one and attaching to another, you would fall into difficulty. -
Mr. LORENZ. It seems to me you are inconsistent in making a cost.
and revenue comparison between mail and passenger services and
then saying that a rate based on cost is an absurdity.
Mr. PEABODY. I am willing to compare the revenues on the car-foot
mile basis.
Mr. LORENz. The impression given is that one service is profitable
and the other is not.
Mr. PEABODY. We have shown the car-foot miles on the statements
for the purpose of comparison, but we could not say whether that is
too much or too little, in view of the expenses attached to each par-
ticular one.
Mr. LORENz. If you can not say whether it is too high or too low,
what is the purpose of this cost calculation?
Mr. PEABODY. The purpose of the calculation is, first, to ascertain
the expense chargeable to passenger: then, as a fair unit of division,
between the service performed by the passenger train, which is the
89246—No. 3—13—5
508 RAILWAY MAIL PAY.
only complete unit in the passenger Service, the car-foot mile is, to my
mind, the correct basis, and applying that car-foot mile to the pas-
senger expenses gives the proper proportion to be charged against
each of the services. -
Mr. LORENZ. So we arrive at a cost per car-foot mile, as compared
with revenue per car-foot mile, to see # the revenue is too high or too
low or just right. Is that the proper procedure? -
Mr. PEABODY. No; I do not know whether I could say whether
it is too high or too low. -
Mr. LORENZ. If you can not say whether the mail compensation on
the Atchison is right, then all these computations are really wasted?
Mr. PEABODY. The entire passenger service does not pay its proper
proportion to the business. One may pay a little more, relatively,
than the other, but the entire service does not pay its proper pro-
portion of the expenses and charges.
The CHAIRMAN. Why did you not charge more?
Mr. PEABODY. We wish we could, but they will not allow us.
The CHAIRMAN. Who will not allow you? You mean the State com-
missions?
Mr. PEABODY. The State commissions.
The CHAIRMAN. Have you ever taken the matter up with the Inter-
state Commerce Commission? -
Mr. PEABODY. It will not do any good. The State commissions
control that.
The CHAIRMAN. Do they control the interstate passengers?
Mr. PEABODY. Absolutely. You can not charge more for interstate
assengers than the sum of the two locals. A man can get off at the
tate line and buy a new ticket into the State.
The CHAIRMAN. Have you ever taken the question up with the
Interstate Commerce Commission? -
Mr. PEABODY. I do not now recall a single passenger case. We have
the question up before the Supreme Court, where we show that the
State made passenger rates absolutely control the interstate rates;
and that would be one of the points in the rate cases that will be de-
cided in the decision we are waiting for, if they will decide it.
Mr. BRADLEY. Mr. Peabody, the Post Office Department, in Table 7,
Document 105, shows that the Atchison road has an earning of 4.46
mills per car-foot mile, and your statement shows an earning of 3.43
mills. I would like to inquire how that discrepancy is accounted for?
, Mr. PEABODY. This statement in Document 105 relates to the Janu-
ary figures. My statement is for the months of September and Octo-
ber, 1911. *
Mr. BRADLEY. It occurred to me that the disparity might be ac-
counted for by your taking the car space actually employed in the
mail service, and the department's finding was probably arrived at
from a reduced mail space figure. Is that it? 2'
Mr. PEABODY. The department car-foot miles are 35,762,263.37.
The Sante Fe actual car-foot mile for same period were 55,484,640,
or about 20,000,000 less than the actual. That amount was taken out
of the mail car-foot space and largely added to the passenger car-
foot space, thus increasing the passenger percentage and reducing
the mail percentage, which the department themselves admit to be
WTOI). Ot. - -
; CHAIRMAN. Is that corrected in Document 105?
RAILWAY MAIL PAY. 509
Mr. PEABODY. No, sir; that is not corrected.
The CHAIRMAN. That is a subsequent realization on the part of the
department that they had made a mistake in making a double debit
instead of a debit, if to be made at all, to apply to both services.
Mr. PEABODY. They did correct one route. One, the route from
Chicago to Kansas City, they first published a total mail space of
5,800,760; they corrected that to 6,309,509, but originally published as
the passenger car-foot space 43,690,000, and in the corrected figures
they raised that to 78,886,000.
The CHAIRMAN. In that connection, Mr. McBride, in order to get
it into the record, as I understand, the department realizes that that
mistake was made if the debit was applied in the dead space and no
allowance made in mail revenue in charging that to the other pas-
senger service. In other words, that if disallowed in mail it should
be rejected in the balance of the passenger service?
Mr. McBRIDE. I do not think the department has as yet granted
that conclusion. It has been granted that some mistakes were made
in the classification of car-foot-mile space, but I do not think it has
as yet granted the conclusion mentioned.
The CHAIRMAN. I would like to ask you personally your own point
in reference to that. Is it not manifestly unfair to refuse to make an
allowance in one case and then take and charge that in the other
case? Shouldn’t it, if eliminated in the calculations, be eliminated
from both cases in order to secure a fair relativeness as between the
two services?
Mr. McBRIDE. Well, I hardly know how to answer that, Senator.
It is a question I have not fully settled in my own mind as yet. I
have given it a great deal of thought. There is something to be said
on both sides. * -
The CHAIRMAN. What is there to be said on both sides?
Mr. McBRIDE. In the dead space in the closed-pouch service, that
which was rejected, I think, should be charged to passenger service,
because it is part of the passenger train space which we considered
was not properly chargeable to the mail service, and if not chargeable
there was part of the passenger train space.
The CHAIRMAN. What is to be said on the other side?
Mr. McBRIDE. Possibly the dead space in apartment cars should
not be charged to passenger space.
Mr. PEABODY. May I ask this question to still further elucidate
that proposition?
The CHAIRMAN. Yes.
Mr. McBRIDE. Remember, I am stating my personal view.
Mr. PEABODY. What would be your personal view in the closed-
pouch car which went out loaded and came back empty?
Mr. McBRIDE. Do you mean a special car?
Mr. PEABODY. No. A regular baggage car went out full and came
º, empty. Where would that be charged, the space on the return
{I’11) : - - -
M. McBRIDE. I do not think the mail service should be charged
with that space. • }
Mr. PEABODY. And that is one of the deductions that was made?
Mr. McBRIDE. Yes. 4.
Mr. PEABODY. I traced every car that we carried out full of mail
which came back empty and it was all deducted. In our computation
it is included, and that is what makes the difference.
510 BAILWAY MAIL PAY.
The CHAIRMAN. Why should not the Government be charged, if
they call for and fill a baggage car, or any other car that is used in
the transportation of the mail and the railroads under the govern-
mental authorization or request, furnish the car and transport it to
the point of destination and then the railroad is absolutely unable to
use that car on the return? Why should not the Government pay for
i. return in case the railroad is unable to utilize that car to haul it
8,CR §
Mr. McBRIDE. Well, I think that is all right as regards specially
fitted-up cars, but I can not grant it in what is known as closed-pouch
Space. w
Mr. BRADLEY. Senator, might I ask a question along that line?
The CHAIRMAN. If you will.
Mr. BRADLEY. Aside from the subdivision of space and leaving out
of consideration closed-pouch space or mail apartment car space, or
any special division of mail space, and considering the general prob-
lem, suppose that this inquiry had been to ascertain the cost of pas-
senger service and that the person making the comparison had elimi-
nated the dead space in passenger service and had left the dead space
in the mail and express business. Would he arrive at a fair result?
Mr. McBRIDE. I hardly think so. - -
Mr. BRADLEY. May I restate the question?
The CHAIRMAN. Yes. -
Mr. BRADLEY. Suppose that this inquiry was to ascertain the rela-
tive revenue and the relative expense of the express service and the
person making the investigation had carefully eliminated all of the
dead space as he could recognize it in connection with the express
service, but had left in all of the dead space in the mail service.
Would that have been fair to the mail service as between the mail and
express service? +
Mr. McBRIDE. I do not think so.
The CHAIRMAN. Then would not this be a fair statement, that in
any calculation of this character that is made either the dead service
ought to be accounted for in each of the services or else it should be
eliminated in each of the services? - .*
Mr. McBRIDE. That might be a fair way to handle it, although
the fact should not be overlooked that the passenger train is oper-
ated primarily for passenger service and the mail service is incidental
only. The Government has no control over the amount of space
run in a train beyond that authorized and needed for the mail service.
The CHAIRMAN. What do you think about that, Mr. Prentiss?
Mr. PRENTIss. I think the three services are not comparable.
The CHAIRMAN. How are you going to get a relativeness between
the two, then? - . . . .
Mr. PRENTIss. You are dividing the train according to car-foot
miles, and in dividing that train you find a total of so many car-foot
miles in the train, and then you make your division in certain pro-
portions and say so much to mail, so much to express, and so much
to passenger. The railroad company is obliged to furnish so much,
space for passenger service, whether they carry them or not, and they
are obliged to furnish space for trunks, whether they carry them
or not. - -
The CHAIRMAN. They are also obliged to furnish space for the
mail, whether they carry it or not?
RAILWAY MAIL PAY. 511
Mr. PEAbody. Surely we do. We have to furnish the space, and
we do not know whether there will be 1,000 or 10,000 pounds. .
Mr. PRENTIss. On a large bulk of the lines the mail service is con-
stant, but it changes with different times, and there are certain days
during the week when the mail is heavier than it is on certain other
days. I recognize all of that. We know it to be so. . *
The CHAIRMAN. And you make preparations for it and there is a
steady increase in the mail business?
Mr. PRENTIss. Yes.
The CHAIRMAN. And you make preparations for that?
Mr. PRENTIss. We make preparations for it.
The CHAIRMAN. But you are not infallible?
Mr. PRENTISS. No. tº we
The CHAIRMAN. And consequently you can not anticipate just what
is going to be handled? &
Mr. PRENTISS. No.
The CHAIRMAN. And there are occasions where the railroads, ac-
cording to your directions and under the compelling influence of the
law, have to furnish more space than you use. Now, what are you
going to do with a case of that kind? .
Mr. McBRIDE. I think where the demand of the service requires
them to run an additional car in addition to the regular baggage car
they should be credited with the return space if they do not use it.
The CHAIRMAN. If it is not used?
Mr. McBRIDE. Yes.
Mr. RowAN. Did you carry that out in practice in the preparation
of Document 105?
Mr. McBRIDE. No; we did not. But I think we have said since
then that we should have done so.
Mr. PEABODY. Suppose that the amount of space which the mails
occupied in a car, and for which you allowed space, was boarded up
so that that was all the space devoted to the mail. How would it be
possible to handle it? Do you not require the dead space in order
to handle the mail that you have in there that does not occupy all
of that space? How can you handle mail just in the space that the
mail itself occupies? As I understand, in a car you throw a lot of
- mail into the front end of a car and you are delivering it. There may
be 3 feet of that car occupied by the mail. You allow 3 car-foot
miles in the space, do you not? -
Mr. McBRIDE. Three feet on One side.
Mr. PEABODY. How are you going to get that to the door without
occupying the other space?
Mr. McBRIDE. If there was 3 feet allowed across the width of the
car, it would provide sufficient space for that purpose.
Mr. PEABODY. How are you going to get it back to the door. Are
you not obliged to have that dead space in the car to handle that
mail with ? iº *
Mr. McBRIDE. We allowed 3 feet all the way across the car, the
whole width of the car. The opposite side of the car, which is not
occupied, and the aisle space, it seems to me, is a sufficient allowance
for handling space.
Mº, Peanoox. You mean in the length of the car, not the full
width ; - -
Mr. McBRIDE. Three feet in length of the full width.
512 - |RAILWAY MAIL PAY.
Mr. RowAN. In the case of a train that is running exclusively for
mail, and no other traffic being handled on the train, the dead space
in that case, as I understand it, was eliminated and put over on the
passenger side. I do not see why that was done.
The CHAIRMAN. Is that true, Mr. McBride?
Mr. McBRIDE. I do not think so.
The CHAIRMAN. Could you tell. You have Document 105 there,
Mr. Prentiss? *
Mr. PRENTISs. An examination of the reports for the particular
trains would be necessary.
Mr. BRADLEY. If you rejected any dead space on an exclusive mail
train, it would have been thrown to the passenger service, would
it not :
Mr. PRENTISs. It would have been thrown to dead space.
Mr. BRADLEY. And thence to the passenger.
Mr. PRENTISS. And thence to the passenger.
Mr. BRADLEY. Before Mr. Peabody concludes I would like to ask a
further question in regard to the Sante Fe. In that table 7 the Post
Office Department shows that the expenses per car-foot mile, operat-
ing expenses and taxes were 2.6 mills and that that figure, in com-
parison with the earning of 4.46 mills that we have just referred to
represented a profit in performing the service of 70 per cent. Was
that entirely due to the different space basis used by the Post Office
Department?
Mr. PEABODY. By no manner of means. They also reduced the
amount of expenses between freight and passenger very materially.
Mr. BRADLEY. Could you say how much?
Mr. PEABODY. I do not think I have the figures here, but they made
a very material reduction. You were here this morning when this
difference was discussed. Their method of dividing between freight
and passenger made a very material reduction. - -
Mr. PRENTIss. I have the figures here. The figures reported by the
company for the total passenger operating expenses, including
passenger, baggage, express, and mail, were $2,107,102, and the same
figures by the department were $1,863,224.
The CHAIRMAN. That difference, then, being due to what?
Mr. PRENTISs. To the department's method of apportionment as
distinguished from the company's. I have found, Mr. Peabody, that
we have never received from the company the statement of the com-
pany’s method of separating the expenses referred to this morning.
I have found in the files a telegram from the company in reply to a
letter requesting it. It is referred to at the bottom of Form 2603:
Your division of expenses as between passenger and freight is made in accord-
ance with working memorandum for distribution of operating expenses between
freight and passenger, copy of which is attached—
And we wrote for the copy, which was not attached. The telegram
in reply referred us to the Interstate Commerce Commission.
Mr. PEABODY. My clerk told me that he had furnished it. That
is all I know about it.
Mr. RowAN. There is one more question I would like to ask. I
would like to know if the Post Office Department charged to the mail
service the space occupied in passenger coaches by post-office in-
spectors and postal clerks riding to and from their tour of duty. It
is recognized we were forced to carry these people on postal commis-
RAILWAY MAIL PAY. 513
sions, and I would like to know whether the space occupied by them
was charged to the mail service or whether the space was charged to
the passenger service?
Mr. McBRIDE. It was not. We had no data as to the amount of
space those men occupied.
Mr. RowAN. Was it charged to the passenger service?
Mr. McBRIDE. I presume it was.
Mr. HURST. On page 272 of this document, Mr. Peabody, the third
from the last column, directly apportioned expenses chargeable to the
mail services; Atchison, Topeka & Santa Fe shows nothing. Now,
turn to page 29 in the same document of this Form 2602; column 31
shows the cost of station service and facilities chargeable to the mail.
Have you the figures that were shown in that statement?
Mr. PEABODY. Not here. We have the figures.
Mr. HURST. You filled out those forms, did you?
Mr. PEABODY. Yes; we filled every form that was asked for.
Mr. HURST. That would show certain items directly applicable for
station facilities for mail service? .
Mr. PEABODY. Yes.
Mr. HURST. Still this statement shows nothing directly chargeable.
Can you account for that?
Mr. PEABODY. I can not. I will take a memorandum of that and
advise the Senator of the result.
Mr. BRADLEY. The department said that they concluded not to
publish those figures. On page 6 they say the data reported by the
companies on Form 2602 as to expenditures for station service and
station and terminal facilities furnished were very carefully consid-
ered; and, in view of the fact that it was found impossible to ascertain
the total of the accounts from which the amounts directly charged
on this form should be deducted, and of the fact that such data were
found to be unreliable in many instances, and of the further fact
that it was determined that the mail service should participate in all
of the station expenses upon a basis of car-foot miles, it was decided
not to make use of such information in connection with the cost
ascertainment. - -
Mr. PEABODY. That is the reason why I am insisting that the car-
foot mile basis shall have regard to all of the operating expenses in
this that are particularly applicable to the mail. They themselves
say all the station expenses should be charged with it; all the other
expense should be equally charged.
The CHAIRMAN. Now, referring to what you have just read from
page 6 of Document 105, I assume that you criticize that position of
the department, do you?
Mr. BRADLEY. Yes.
The CHAIRMAN. Give us your reasons.
Mr. BRADLEY. The expenses were reported as definitely assignable
to the mail service, and it would seem only fair that they should have
been so published. - *
Mr. PEABODY. Whether they were used or not?
Mr. McBRIDE. Would it not be a fact that there would be a double
charge—for instance, if the department charged itself with certain
station expenses at certain stations and not being able to get the
total station expenses at those stations, and then participated in all
514 RAILWAY MAIL PAY.
station expenses on the car-foot mile basis, would there not be a
double charge? *
The CHAIRMAN. Your reason for nonpublication was due to the
incompleteness of the information, as we take it?
Mr. McBRIDE. Yes, sir. gº
Mr. HURST. There is only one comment to make on that. In the
first column of this particular table, 2602, that was not published, it
calls for the wages paid porters and messengers employed exclusively
in the handling of mails. If there were no figures shown in that for
the Atchison, Topeka & Santa Fe they should have been in this
account directly chargeable. The same condition will apply to all
the railroads. .
Mr. McBRIDE. That is true; they were the wages of employees em-
ployed exclusively on mail service. Supposing we did have the ex-
pense for one particular employee, unless we had the wages of all
the other employees at that station, in order to eliminate the amount
thereof from consideration we would participate in all the expense at
that station ?
Mr. HURST. Yet, on the other hand, you eliminate all the traffic
* or most of them, because they were not applicable to the
‘InallS. -
Mr. BRADLEY. Inasmuch as the inquiry extended over six years,
would it not have been possible for the Post Office Department to
have again called on the railroad companies for any additional infor-
mation they thought they needed? So far as I know, there was no
: reluctance on the part of the railroads to furnish anything the
department called for.
The CHAIRMAN. I think that Gen. Stewart has already stated in
the testimony heretofore and conceded that, so far as the department
was concerned and his knowledge went in reference to this inquiry,
there was no criticism whatever to be made on the part of the trans-
portation companies as to their compliance with requests that were
made. I am correct in that statement, am I not?
Mr. McBRIDE. The railroads cooperated very nicely.
Mr. PEABODY. I have one or two other matters I would like to
submit. -
The CHAIRMAN. I would like to ask Mr. Lorenz his view as to the
fairness of elimination of credit for dead space and the application
of that, as a debit, to the passenger service, given the desideratum—
being ascertainment between the passenger service and the mail
service or the relative compensation for both.
Mr. LORENz. I can not see how there can be two opinions. It
seems to me just as you can not operate a freight Service without
hauling empty freight cars, and just as you can not operate pas-
senger service without hauling empty space, you can not operate
: mail service without hauling empty space, and in comparing the
various departments, either on cost of revenue basis, you should
include all of the space used and unused which is hauled in connec-
tion with that service, and I can not understand, therefore, why on
this particular point the Post Office Department should have rejected
the dead space from the mails and put it in the passenger service.
It seems to me that there they made a clear error.
The CHAIRMAN. Now, proceed, Mr. Peabody?
RAILWAY MAIL PAY. 515
Mr. PEABODY. I was interested in ascertaining the returns per unit
of transportation on mail traffic as compared with less-than-carload
freight. There is a sort of relation, if you please, between handling
mail and handling less-than-carload freight. That is, it is in small
packages and put on and put off, and so forth. We keep an analysis
of our traffic so that we know just exactly what we handle of L. C. L.
freight, and so forth. Our mail traffic for September and October,
the revenue was $377,864, our L. C. L. traffic for the fiscal year was
$14,268,583. We reduced the car-foot space to car-foot miles on the
basis of the average length of the cars used. The car-miles were
1,903,311 for the two months in question. For the year on the
L. C. L. freight there were 93,175,853. The average dead weight per
car for the mail in tons was 46.68. The average dead weight for the
freight car in tons was 18.03. The ton-miles of car based on dead
weight was 88,846,557. The ton-miles of car based on dead weight
for the freight service was 1,679,960,630. The ton-miles of load for
the mail was 3,790,104. The ton-miles of load for the L. C. L.
freight was 513,966,726. The gross ton-miles of the mail was 92,-
636,661 and for the less-than-carload freight 2,193,927,356. The rev-
enue per gross ton-mile in mills on the mail traffic was 4.08. The
revenue per gross ton-mile in mills on L. C. L. freight was 6.50. In
other words, we get more on L. C. L. freight than we do on the mail,
although we haul one in a freight train and the other in a passenger
train.
Atchison, Topeka, & Santa Fe Ry. System—Return per un if of transportation—
Mail traffic compared with less-than-carload freight.
{Statistical department, Chicago, Feb. 20, 1913.)
Mail traffic
tº y L. C. L.
September frei
eight, fiscal
and Bºber, year 1912.
Revenue-------------------------------------------------------------------. $377,864 $14,268,583
Car-miles------------------------------------------------------------------- 1,903,311 93, 175,853
Average dead Weight per car. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . tonS.- . 46.68 18.03
Ton-miles of car, based on dead weight. . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - 88,846,557 1,679,960,630
Ton-miles of load----------------------------------------------------------- 3,790, 104 513,966,726
Grosston-miles------------------------------------------------------------. 92,636,661 2, 193,927,356
Revenue per gross ton-mile-------------------------------. . . . . . . . . . . mills. . 4.08 6.50
. The CHAIRMAN. That is a most interesting statement you have pre-
sented. This is applicable to the whole of the Atchison system, rep-
resenting over 10,000 miles of railroad. What constitutes less than a
carload lot—L. C. L. ? Suppose you had a car with a capacity of
100,000 tons and you carried 80,000 pounds; would that be less than
a carload lot?
Mr. PEABODY. We have no box cars for use in merchandise of that
capacity. Our largest box cars are 80,000 pounds capacity.
The CHAIRMAN. What would bring it under L. C. L. class?
Mr. PEABODY. It would make no difference how much or how little
was in that. If it only had 100 pounds in it, it would still be L. C. L.
freight, because it was all handled and loaded by the company in
lots. Carload freight is freight loaded by the consignor, and un-
loaded by the consignee. All that the railroad company does is to
switch and haul that freight. The L. C. L. freight is loaded through
the freight house by the employees of the company.
!
516 RAILWAY MAIL PAY.
The CHAIRMAN. I would like a definition of what constitutes
L. C. L. freight, and what proportion of your total freight handled do
you figure is L. C. L. freight, as demonstrated in this statement?
Mr. PEABODY. L. C. L. freight is freight delivered to the freight
house in small quantities, or in any quantity, if you please—although
in every instance, almost, it is in small quantities—which takes what
are called merchandise rates, or less-than-carload rates, consisting of
first, second, third, and fourth class under the western classification,
and I think under the eastern classification it includes some fifth-
class freight. However, it is freight that takes merchandise rates,
and takes the same rate whether it is 100 pounds, 1,000, or 1,500
pounds, and is handled exclusively by the railroad employees—loaded
into the cars and unloaded by the employees and delivered out of the
freight house to the consignee.
The CHAIRMAN. What percentage of the total freight business of
the Atchison system would this L. C. L. freight for the fiscal year
1912 represent? *
Mr. PEABODY. There were 18,798,719 tons of carload freight; there
were 1,417,014 of less-than-carload freight, or merchandise. Ton-
miles carload freight was 6,254,567,017, and the ton-miles of the less-
than-carload freight was 513,966,726. -
The CHAIRMAN. So that your less-than-carload freight represents
about 6 per cent of your total freight business?
Mr. PEABODY. Of the tons handled it represents 6.7 per cent; of the
ton-miles, 7.31 per cent.
The CHAIRMAN. The statement shows that you received for that
per cent of the freight business 2.42 mills more from that kind of
freight than you received from the mail traffic?
Mr. PEABODY. Per gross ton-miles handled. -
Mr. McBRIDE. May I ask how the ton-miles of mail were ascer-
tained 7
Mr. PEABODY. We know how many tons we hauled.
Mr. McBRIDE. Was it based on the average daily weight?
Mr. PEABODY. Based on the weight. Those figures were obtained
from Mr. Lindsay. -
Mr. RowAN. I want to ask Mr. Peabody if the definition of less
than carload lot is not any amount of freight less than carload mini-
mum. Has the loading through houses anything to do with it? For
example, in New York City we handle most all of our freight through
houses and through piers.
Mr. PEABODY. But you do not handle carload freight that takes
the carload rate? -
Mr. RowAN. Yes, indeed. At all of our pier stations in New York
City we have to handle it. The shipper can not handle it. He would
not be allowed to.
Mr. PEABODY. That is not the case with the Santa Fe road. A
carload lot—that is, freight which takes the carload rate—is never
handled by the company, but is always handled by the shipper.
Mr. Row AN. In the East it is different. It seems to me, the defini-
tion of less-than-carload freight is freight in quantities less than the
minimum carload weight. -
Mr. PEABODY. Oh, no. Any amount that takes a merchandise rate.
You can have less carload rates or more than minimum carload.
tº-
RAILWAY MAIL PAY. . 517
Mr. BRADLEY. Is not L. C. L. retail freight business and the car-
load the wholesale freight?
Mr. PEABODY. Yes. " -
1Mr. RowAN. I wanted to correct his statement that any freight
handled to the house as L. C. L. freight is not handled that way in
New York City.
The CHAIRMAN. Mr. Peabody's statement is applicable to the
Atchison system only. - -
Mr. PEABODY. That relates to all western freight.
The CHAIRMAN. I would like to ask Mr. McBride what percentage
of the total mail would correspond with less than carload lots? In
other words, what percentage of the mail carried would be in full
cars and what percentage would go in full cars and what percentage
would go in less than full cars? -
Mr. McBRIDE. I have not the figures, Senator. I would say, in my
opinion, that probably 10 per cent of the weight of the mail would
be carried in full carload lots. :
The CHAIRMAN. Ninety per cent in less than full carload lots?
Mr. McBRIDE. Yes; that is an estimate.
The CHAIRMAN. So that 90 per cent of the mail, for the purpose
of comparison with the statement just submitted by Mr. Peabody,
would compare with the less than carload column in that statement.
It would then present itself in this way, to my mind, that, so far
as the Atchison system was concerned the Atchison received 2.42
mills more for between 6 and 7 per cent of their total freight
business than they received from 90 per cent of their mail business.
Is that correct?
Mr. PEABODY. Oh, no. More per ton-mile. Not in amount.
The CHAIRMAN. I say, per ton-mile?
Mr. PEABODY. Yes; more per gross ton-mile.
Mr. McBRIDE. May I ask how ton-miles of the L. C. L. ship-
ments were obtained?
Mr. PEABODY. We keep in my own office absolute analyses of every-
thing we carry—all commodities. -
Mr. McBRIDE. Every shipment, or do you apply the average?
Mr. PEABODY. No. We take every actual shipment. I can tell you
how far on our road every shipment travels and between what sta-
tions.
Mr. McBRIDE. This data was obtained from those figures of actual
shipments?
Mr. PEABODY. Yes. This is something we keepsall the time. There
is a statement made of all the commodities handled on our road.
The CHAIRMAN. To my mind, that is one of the most interesting
statements that has been presented at our hearing, as I have always
assumed that the railroads received less per ton-mile for freight than
for any other class of business performed by the railroads.
Mr. PEABODY. We do; for all freight.
The CHAIRMAN. I accept the correction and was going to state that
this statement of a percentage, which in tons, as in value, is a very
material percentage for the gross business of the railroad, shows that
you receive more for freight than you do per ton-mile for 90 per cent
of the mail.
Mr. PEABODY. Yes, sir.
518 RAILWAY MAIL PAY.
Mr. LORENZ. You distinctly recognize that this is not per ton-mile
of mail and ton-mile of freight, but ton-mile of freight and car and
mail and car. In other words, the dead weight of the car is figured
in this, which makes the difference in the comparison.
The CHAIRMAN. What difference would that make in the compari-
SOIl -
Mr. PEABODY. You will notice that the average dead weight of the
car for mail is 46 tons and a fraction, whereas the average dead weight
of the car for the freight is 18 tons and a fraction. ,
The CHAIRMAN. Then this difference is due to the fact of the extra
weight of the car for mail? -
Mr. PEABODY. Largely, and chiefly.
Mr. McBRIDE. How did you ascertain the car miles in the mail
traffic for closed-pouch mail? -
Mr. PEABODY. I know just exactly.
Mr. McBRIDE. Prorate the car?
Mr. PEABODY. Every car handled.
Mr. McBRIDE. For instance, in the baggage car you devote a cer-
tain amount of space to mail? -
Mr. PEABODY. I do; and had a report for these two months for the
mail. I also had a report for those two months of every car handled
on our line, and the figures were made from those actual statements,
and I have in my office the dead weight of every car handled, so that
there was no difficulty in obtaining the exact figures. s
Mr. LORENZ. The difference, then, is not simply due to the weight
of the average car, but also due to the utilization in that car.
The CHAIRMAN. That is the load placed in the car?
Mr. PEABODY. Yes, sir.
The CHAIRMAN. The fact that a relatively smaller percentage of
weight of mail goes into the car than the weight of merchandise in
the L. C. L. classification.
Mr. LORENz. In other words, a load of 6 tons would be high for an
average of mail cars, whereas a load of something more than that
would be larger for less-than-carload freight? , - . .
Mr. PEABODY. Oh, no. Our average L. C. L. freight will be less
than 6 tons. -
Mr. LORENZ. Have you any figure as to the average load of the
mail car? * . . . -
Mr. PEABODY. No.
Mr. LORENz. Perhaps 2 or 3 tons?
Mr. PEABODY. I do not know what it is.
Mr. BRADLEY. It would not exceed 3 tons for the whole country?
Mr. PEABODY. But there is not very much difference between the
average weight of the mail, I should judge, and the average weight
of the L. C. L. freight. We handle many cars that only have 100
pounds or 200 pounds. If they have 100 pounds it is a loaded car.
Mr. LoRENZ. These reasons for the difference, however, do not
affect the value of the comparison, because the cost of hauling, of
course, is better figured on the basis of the car and contents than on
the contents alone. - 4 t * , ,
The CHAIRMAN. I would like for Mr. Lorenz, to further develop
the thought in his mind. You mean that the difference in tonnage
handled by the railroads in merchandise in less than carload lots or
RAILWAY MAIL PAY. 519
mail in less than carload lots, for the sake of comparison, is not as
important as the difference in weight of the two cars?
Mr. LORENZ. I would not say that it was not as important. What
I meant was, for the purposes of the comparison of cost combined,
weight of the contents and the car is a fair method of comparison—
in fact, a fairer method of comparison—than if you take the cost per
ton-mile of the load alone. " . - -
Mr. PEABODY. Because you have to haul both of them?
The CHAIRMAN. Here you have taken the combined weight in this
computation? - 2^
Mr. PEABODY. Yes. -
The CHAIRMAN. What do you think of that viewpoint, Mr. Mc-
Bride, namely, is not the combined weight of cars and the loads
fairer, for the sake of comparison, than the load alone?
Mr. McBRIDE. I think for some parts of the expenditure it would
be fairer.
The CHAIRMAN. As an element of computation for determination
as to compensation for the services to be rendered? -
Mr. McBRIDE. I think it is very valuable in that connection for
comparison.
The CHAIRMAN. If weight is a factor in determination of the com-
pensation should the two be considered together?
Mr. McBRIDE. I would not want to answer that question without
further consideration. -
The CHAIRMAN. How does it appeal to you, then, on first im-
pression? -
Mr. McBRIDE. There are so many things coming up here, one right
after the other, that I hardly feel prepared to offer an opinion off-
hand.
The CHAIRMAN. In mail compensation, weight of cars has never
been taken into calculation at all?
Mr. McBRIDE. No, sir. -
The CHAIRMAN. The weight of mail itself has?
Mr. McBRIDE. Yes.
The CHAIRMAN. In freight compensation is weight of cars taken
into consideration?
Mr. PEABODY. In making the rates?
The CHAIRMAN. Yes.
Mr. PEABODY. No, sir. -
The CHAIRMAN. As a more scientific method is developed, do you
think that the weight of the car should be a factor in rate making?
Mr. PEABODY. I will have to modify my answer that I just made.
In a sense the weight of the car is taken into account in rate making.
The rate on L. C. L. business is made higher for several reasons, one
of which is the light load which we are unable to carry in the cars,
as compared with the heavy car with carload freight. We make our
rates on L. C. L. business, and we will take, for instance, soap, if you
please. If we were offered a carload of soap our rate would be one
thing. If we were offered a thousand pounds of soap our rate would
be another thing.
The CHAIRMAN. That is the wholesale and retail feature of rate
making? -
Mr. PEABODY. And the higher rate per thousand pounds is made
partly because we would have to haul more dead weight with the
320 RAILWAY MAIL PAY.
thousand pounds. L. C. L. loads will be less than 6 tons and our
average carload freight is 22.44 tons. That is the average carload
on the entire line. - - . . .
The CHAIRMAN. What is your average carrying capacity of your
car? It varies, of course, with the classification? •
Mr. PEABODY. The carrying capacity does not mean what you have
in mind. The carrying capacity means the supporting power of the
axle. The carrying capacity of an 80,000-pounds car if you put
buggies in it would not be over 4,000 pounds, because the space would
determine that. 4.
The CHAIRMAN. But the charge you would make would be based
upon the fact that it would carry 80,000 pounds of something else
than buggies? - -
Mr. PEABODY. No. Our minimums are a great deal lower than that.
We do charge more for a carload of buggies, proportionately, a higher
rate per hundred pounds, than we would on a carload of brick, be-
cause we could load very many more brick in a car than we could
buggies. - - --
The CHAIRMAN. Then do you not take both space and weight into
consideration in making those rates? A.
Mr. PEABODY. Oh, yes. . . -
The CHAIRMAN. Then what is the objection to the departmental
recommendation of substitution of space for weight in 90 per cent of
the mail business? - -
Mr. PEABODY. I am not familiar enough with the mail business to
answer that question intelligently. That is somewhat outside of my-
line, and I have never investigated the carrying operation of the mail
business.
The CHAIRMAN. Very well. Now, you may proceed, Mr. Peabody.
Mr. PEABODY. Either yourself or Mr. Lloyd at the last hearing I
attended asked for some specific gauges of mail handled at different
points showing what the result was. I have prepared half a dozen
cases of that kind. The first one here is Carrollton, Mo. That I
selected because it was in Mr. Lloyd's district and quite a large town.
Statistics of mail handling at Carrollton, Mo.
Number of mail route on which located --- 135098,
Length of route---------------- - miles- 454
Population of town ––––––––– * - 3, 452
Total pounds handled per year on route---- 51,053,050
Total yearly Compensation of route $374, 852. 53
Pounds handled at Carrollton per year__ 369, 884
Proportion of Carrollton weight to total.---------- –––––per Cent—— 0.72451
Amount of pay accruing to Carrollton - -- $2,715. 84
Number of pounds handled at Carrollton per day----------.- - - - - - 1, 013
Compensation for Carrollton per day------ - $7.41
Number of mail trains serving Carrollton daily 6
Average pounds handled per train-- - 169
Average compensation per train. - $1.23
The CHAIRMAN. You have several stations with the same compu-
tation? - - -
Mr. PEABODY. Yes. Some of them are very startling. Here is one -
at La Plata, Mo., which is also in Mr. Lloyd's district.
statistics of mail handling at La Plata, Mo.
Number of mail route on which located - - ----. - - - - ** 135098
Length of route----------- — — — — --- mileS__ 454
Population of town - 1, 605
RAILWAY MAIL PAY. 521
Total pounds handled per year on route 7- - - - - - - - - - - - - - - - - 51,053,050
Total yearly compensation of route * * ----------- $374, 852. 53
Pounds handled at La Plata per year--------------------------- 528, 105
Proportion of La Plata weight to total-----------------per cent-- 1.03445
Amount of pay accruing to La Plata * ___ $3,877. 47
Number of pounds handled at La Plata per day------------------ 1,447
Compensation for La Plata per day------------- $10.63
Number of mail trains serving La Plata daily---- - - 6
Average pounds handled per train - - - 261
Average compensation per train - - - $1.77
The CHAIRMAN. While the Carrollton compensation shows $1.23. &
Mr. PEABODY. Yes. The next statement is Winslow, Ariz., a divi-
sion point out in the desert.
Statistics of mail handling at Winslow, Ariz.
Number of mail route on Which located.-------------------------- 167003
Length of route - mileS__ 565. 17
Population of town -------------------------------------------- 2, 381
Total pounds handled per year On route------------------------- 27, 963, 162
Total yearly compensation of route—— $211, 735. 65
Pounds handled at Winslow per year---------------------------- 184, 363
Proportion of Winslow weight to total __per cent__ 0.665738
Amount of pay accruing to Winslow - ___ $1,409. 60
Number of pounds handled at Winslow per day------------------ 505
Compensation for Winslow per day- $3.86
Number of mail trains Serving Winslow daily_-__________________ 4
Average pounds handled per train--- 101
Average compensation per train - -- $0.96%
The CHAIRMAN. How do you account for the differences in corn-
pensation? -
Mr. PEABODY. The difference in the weight of mail.
The CHAIRMAN. The volume of business?
Mr. PEABODY. Yes. The next statement is Saffordville, Kans.:
Statistics of mail handling at Saffordville, Kans.
Number Of mail route OIn which located - 155010
Length of route—— —-miles—— 472. 87
Population of town - - 250
Total pounds handled per year on route — 115, 941, 527
Total yearly compensation of route $425, 573. 41
Pounds handled at Saffordville per year 44, 595
Proportion of Saffordville weight to total ——per Cent—- O. O38463
Amount of pay accruing to Saffordville $163. 69
Number of pounds handled at Saffordville per day - 122
Compensation for Saffordville per day $0.45
Number of mail trains serving Saffordville daily -- 4
Average pounds handled per train . 31
Average Compensation per train––––––––––––––––––––––––––––––––– $0.11
Statistics of mail handling at Holly, Colo.
Number of mail route Oln which located 155010
Length of route miles—— 472. S7
1°opulation of town 920
Total pounds handled per year on route ___ 115,941. 527
Total yearly compensation of route---- $425, 573. 41
Pounds handled at Holly per year --- 144, 422
Proportion of Holly weight to total ––––per Cent—— 0. 124566
Amount of pay accruing to Holly $530. 12
1Number of pounds handled at Holly per day * 396
Compensation for Holly per day. -* $1.45
Number of mail trains serving Holly daily 6
Average pounds handled per train 66
Average compensation per train $0.24
522 RAILWAY MAIL PAY.
Statistics of mail handling at Spearville, Kans.
Number of mail route on which located.---- — — — — 155010
Pength of route----------------------------------------- mileS__ 472. 87
Population of town----------------- * - 576
Total pounds handled per year on route ---- 115,941, 527
Total yearly compensation of route $425, 573.41
Pounds handled at Spearville per year____ 98, 247
Proportion of Spearville weight to total________________ per cent-- "0.084739
Amount Of pay accruing to Spearville_-------------------------- $360.63
Number of pounds handled at Spearville per day -- 269
Compensation for Spearville per day----- *- - * - $0.99
Number of mail trains serving Spearville daily------------------- 8
Average pounds handled per train__________ - - - 34
Average compensation per train - - * * - - * * * * * - * * * - -s me • - * * * $0.12
Statistics of mail handling at Raton, N. Mea.
Number of mail route on which located-------------------------- 165006
Length of route------------------------- mileS__ 348. 37
Population of town______________ -------- * - * 4, 539
Total pounds handled per year On route-------------------------- 31, 760,075
Total yearly Compensation of route------------------------------ $188,246.41
Pounds handled at Raton per year------------------------------ 44.1. 139
Proportion of Raton weight to total-------------------- per cent__ 1. 389000
Amount of pay accruing to Raton------------------------------- $2,614. 74
Number of pounds handled at Raton per day--------------------- 1, 209
Compensation for Raton per day-------------------------------- $7.16
Number of mail trains Serving Raton daily_____________________ 5
Average pounds handled per train------------------------------ 242
Average Compensation per train_________ - - $1.43
Actual expenditure for terminal service per year - * * $300
The CHAIRMAN. To make your comparison there, what have you?
Mr. PEABODY. The total amount of pay is $2,614.74, out of which
we have to pay $300.
Shoemaker, N. Mex., is the next statement:
Statistics of mail handling at Shoemaker, N. Mea.
Number of mail route on which located–––––––––––––––––––––––– 165006
I ength of route------------------ - - ––––miles—— 348. 37
Population of town------------------------------------------- - 27
Total pounds handled per year on route------------------------ 31, 760, 0.75
Total yearly compensation of route - - - - - - - $188,246.41
Pounds handled at Shoemaker per year___ - 17, 207
Proportion of Shoemaker weight to total______________- per cent__ . O54178
Amount of pay accruing to Shoemaker--------- — — — — — — — — — — — — — — — — $101.99
Number of pounds handled at Shoemaker per day 47
Compensation for Shoemaker per day------------------------- $0.28
• Number of mail trains serving Shoemaker daily----------------- - 3
Average pounds handled per train––––––––––––––––––––––––––––––– 16
Average compensation per train--------------------------------- $0.09
Statistics of mail handling at Searchlight, Nev.
Number of mail route On Which located.-------------------------- 176013
Length of route ------------------------- miles__ 23. 57
Population of town–––––––––––––––––––––––––––––––––––––––––––– 387
Total pounds handled per year On route------------------------- 198,025
Total yearly compensation of route------------------------------ $1,047. 92
Pounds handled at Searchlight per year------------------------ 78,447
Proportion of Searchlight weight to total -------------- per cent__ 39. 616
Amount of pay accruing to Searchlight------------------------- $415. 14
Number of pounds handled at Searchlight per day--------------- 215
Compensation for Searchlight per day-------------------------- $1.14
Number of mail trains Serving Searchlight daily---------------- 2
Average pounds handled per train------------------------------ 108
Average compensation per train-------------------------------- $0.57
Actual expenditure for terminal service per year- - - $660
RAILWAY MAIL PAY. 523
We have to pay terminal service of $660–$245 more than we get.
The CHAIRMAN. You have to pay that because of handling the
mail there? *
Mr. PEABODY. Yes, sir. -
The CHAIRMAN. That is a side and terminal service?
Mr. McBRIDE. Have you included transportation pay for the
terminal distance in there?
Mr. PEABODY. Yes, sir. I am right, am I not? The terminal
service is in the Searchlight proposition?
Mr. LINDSAY. Yes.
Mr. McBRIDE. The transportation pay for the terminal distance
is included in that?
Mr. LINDSAY. Yes.
The CHAIRMAN. Before we leave this Scearchlight proposition, this
charge of $660 per year for terminal service, if you did not carry the
mail, you would not have to make that charge at all?
Mr. PEABODY. No, sir. That is a man we hire at $55 per month.
The CHAIRMAN. And his time is solely and wholly occupied in that
business? **
Mr. PEABODY. He is not a railroad employee at all in any other way.
The CHAIRMAN. You pay $55 a month to an individual at Scearch-
light who serves two trains a day at Scearchlight and handles per
train 108 pounds. Presumably, unless the department is at a very
much greater distance from the station than the population of the
town, #. stated at 387, not over an hour of his time should be
occupied in handling that mail and getting it to the train from the
post office and from the train to the post office. Is not that pretty
high gompensation for an individual for that limited consumption of
time?
Mr. PEABODY. I do not know the circumstances at all in connection
with it. I assume, however, that inasmuch as that is a mining town
and the demand for men is rather strong, I think it doubtful if you
could get a man to do that without paying him full time, even if it
did not occupy but an hour a day; but that is mere supposition.
Mr. LINDSAY. The condition there is it is let to a subcontractor, who
operates a wagon line, a hack, and you can not secure an individual
for that much money per month who wants to stay there and do that
work. The station force there is such that it can not conveniently
handle it, and they sublet to this outside man to do that service for
$55 a month. -
The CHAIRMAN. Then, is it hardly fair to bring this out as an illus-
tration of the burden of the side service without governmental con-
sideration and compensation for that burden, in view of the fact that
there ºre some 60,000, in round numbers, post offices in the United
States?
d Mr. LINDSAY. It is stated merely to illustrate what it costs us to
o it.
. The CHAIRMAN. Have you got here some statements of some of the
large cities where you serve?
Mr. PEABODY. No; I have not any large cities. I have quite a large
town of 2,689 people at Pauls Valley, which is south of Purcelle, in
the State of Oklahoma.
89246—No. 3—13—6
524 RAILWAY MAIL PAY.
Statistics of mail handling at Pauls Valley, Okla.
Number of mail route on which located_ * * * ____ 153009
Length of route--------- *—-miles_- 171.78
Population of town 2,689
Total pounds handled per year on route * . 5, 824, 621
Total yearly Compensation of route ----- $30,814. 98
Pounds handled at Pauls Valley per year ---- sm * 463,838
Proportion of Pauls Valley weight to total —per Cent—— 7. 9936
Amount of pay accruing to Pauls Valley_-__ $2,463. 22
Number of pounds handled at Pauls Valley per day — — — 1,271
Compensation for Pauls Valley per day____ * $6.75
Number of mail trains serving Pauls Valley daily_ * * 6
Average pounds handled per train__ - 212
Average Compensation per train $1.13
Actual expenditure for terminal Service per year_________________ $360
Statistics of mail handling at Chloride, Ariz.
Number of mail route on which located______________________________ 168009
Length of route --- --- * * * * miles_- 22.62
Population of town ------- :- - - - - - +. 470
Total pounds handled per year on route----. - 35, 429
Total yearly compensation of route - : $967. 00
Pounds handled at Chloride per year - 17, 715
Proportion of Chloride weight to total ———per Cent—— 50
Amount Of pay accruing to Chloride $483. 50
Number of pounds handled at Chloride per day - 49
Compensation for Chloride per day____________ $1.33
Number of mail trains serving Chloride daily 2
Average pounds handled per train 25
Average Compensation per train - $0.67
Actual expenditure for terminal service per year - - $469. 50
The CHAIRMAN. Suppose you had a statement of San Francisco.
Mr. PEABODY. I can get that for you. I will be glad to get any
point on our line.
The CHAIRMAN. How long would it take to get that statement?
Mr. PEABODY. It would not take any time at all after I get home.
The CHAIRMAN. I wish you would give a statement for the three
largest cities the Atchison system serves. — -
Mr. PEABODY. Chicago, Kansas City, and San Francisco.
be frank to say that I was asked for examples or illustrations.
The CHAIRMAN. For which we are very grateful to you for fur-
nishing the information to the committee, but in order to get the full
weight it is desirable, to my mind at least, to have the scope as broad
as possible. &
Mr. McBRIDE. I would suggest that as all of these cities have
wagon service and at none of them do railroads perform any service
except porterage service, if they would include one or two large cities
where they do perform the service, it would be illuminating.
The CHAIRMAN. I would be glad to elaborate my request. Could
you mention such city? - - -
Mr. McBRIDE. I could not offhand. -
Mr. LINDSAY. San Diego is a terminal and they are asking for
$900 more right now.
Mr. McBRIDE. I suggest San Diego, Cal., and Albuquerque, N. Mex.
The CHAIRMAN. Now, Mr. Peabody, have you the information as
to what the actual cost to the Atchison, Topeka & Santa Fe is for
the side and terminal service required by the Government? 3
Mr. PEABODY. All of it?
The CHAIRMAN. Yes.
I will
RAILWAY MAIL PAY. 525
** Mr. PEABODY. We have a statement of that sort at the office; yes,
SII’.
The CHAIRMAN. Have you in mind the figures?
Mr. PEABODY. No; I have not. I think probably Mr. Lindsay
could give you better information.
Mr. LINDSAY. I have an inquiry out for that now, trying to get it
in complete shape. We found a great many errors in it and they are
going all over it so we will make a complete statement of the side
and terminal service we are responsible for, the performance and
cost, estimated or real.
The CHAIRMAN. Mr. Peabody, would you state briefly what im-
provements, if any, could be made in the present method of ascertain-
ment and settlement by the Government with the transportation com-
panies for the railway mail pay at the R. P. O. service?
Mr. PEABODY. I do not know anything about the methods now.
I understand that it is a space basis for the R. P. O service and the
weight basis for the mail, with nothing for the apartment cars, and
that is about all of my knowledge on the subject. I do not think my
opinion would be worth anything, Senator.
The CHAIRMAN. Then the demonstration and presentation that
you have made before the committee is for the purpose of showing
the Atchison system’s method of accounting and apportionment of
operating expenses between freight and passenger, and the sugges-
tion as to the method you adopt in ascertainment of apportionment
between mail and passenger profit?
Mr. PEABODY. The object is to show that under what we believe
to be a fair apportionment of expenses as between freight and pas-
senger, that in proportion to space occupied by the mail on Our
passenger trains the service performed on account of the mail is un-
derpaid in proportion to the cost of the service, that it does not, in
other words, pay its fair share of the total expenses and outlays
to which the railroad is subjected in the performance of the service.
That is the object of the statement, and in that statement you will
notice I have shown the cost, I have shown the return, and I have
shown the value of the property and what the return should be on
the basis of 6 or 7 per cent, which is the normal rate of return as
found by the court. --
The CHAIRMAN. Have you any suggestion to make for the infor-
mation of the committee by which the insufficiency of compensation,
according to your viewpoint, could be rectified?
Mr. PEABODY. Only by an increase in the compensation, but I have
no suggestion formulated as to how that increase can be effected. I
do not know enough about the business. I do not like to offer sug-
gestions that are not feasible.
The CHAIRMAN. You will prepare and mail to the committee
specific comments in reference to the suggested plan of ex-Postmaster
General Hitchcock as set forth on page 159 of this pamphlet?
Mr. PEABODY. Yes, sir; I will undertake to do that as far as I can.
The CHAIRMAN. We are much obliged to you, Mr. Peabody, for
your view.
Thereupon, at 6 o'clock p. m., the hearing adjourned to meet at the
call of the chairman.
526 RAILWAY MAIL PAY.
Atchison, Topeka & Santa Fe Railway system—Net income, by classes, of traffic,
September and October, 1911.
[Statistical Department, Chicago, Mar. 6, 1912.]
Amount. Percent.
Apportionment of operating expenses (on car-foot mile basis):
Car-foot miles— - -
Pašenger------------------------------------------------------------- 1,209,901,808 |. 80.37
ail------------------------------------------------------------------ 110, 125,645 7.32
Express-------------------------------------------------------------- 185,382,251 12. 31
Total.--------------------------------------------------------------- 1,505,409,704 100.00
Total passenger train operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,394,347.26 . =36
Proportion chargeable to— -
Passenger, 80.37 per cent----------------------------------------------| 3,531,736.89 |----------
Mail, 7.32 percent---------------------------------------------------- 321,666.22 |..........
Express, 12.31 percent------------------------------------------------ 540,944. 15 ..........
Aprºnment of taxes, interest, rentals, hire of equipment (on revenue
3SIS):
Freight revenue (including freight, miscellaneous)........................ 13, 191,317.90 69.80
Passenger revenue (including passenger, miscellaneous). . . . . . . . . . . . . . . . . . . 4,722,656.95 1 24.99
Mail revenue-------------------------------------------------------------- 377,864.26 2 2.00
Express revenue---------------------------------------------------------'. 608,263.98 3 3.21
Total.----------------------- * * * - - - - - - - - - * * * * * * * * * * * - - - - - - - - * * * * * * * * * - - - 18,900, 103.09. 100.00
Taxes, interest, rentals, and hire of equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 112,495.90 |- - - - - - - - - -
Proportion chargeable to—
Freight, 69.80 per cent------------------------------------------- ------| 2, 172,522. 14 ... -------
Passenger, 24.99 per cent---------------------------------------------- 777,812.72 |..........
Mail, 2 percent------------------------------------------------------- 62,249.92 |....... ---
Express, 3.21 per cent------------------------------------------------- 99,911. 12 |..........
1 Equals 82.72 per cent of passenger revenue.
2 Equals 6.62 per cent of passenger revenue.
3 Equals 10.66 per cent of passenger revenue. -
RECAPITULATION.
Freight. Passenger. Mail. Express. Total.
Operating revenue. - - - - - - - $13,191,317.90 $4,722,656.95 || $377,864.26 $608,263.98 || $18,900,103.09
Operating expenses. . . . . . . 7,791,471. 10 | 3,531,736.89 321,666.22 540,944.15 12,185,818.36
N et opera ting - -
I'êVellule- - - - - - - - - - - 5,399,846.80 1, 190,920.06 56,198.04 67,319.83 6,714,284.73
Ratio--------------------- 59.06 1 74.78 185. 13 I 88.93 64.47
Taxes, interest, etc........ 2,172,522.14 777,812.72 2 62,249.92 99,911.12 3,112,495.90
Net income. . . . . . . . . 3,227,324.66 413, 107.34 36,051.88 8 32,591.29 3,601,788.83
Parºº per car-foot mile - -
-mills------------------|---------------- 3.89 3.43 3.28 3. 78
1 Average ratio all passenger service, 77 per cent. 8 Deficit.
- 2 Should be as adjusted at end of year, $64,629.60.
Mail, net operating revenue------------------------------------------------------------------- $56,198.04
Taxes, except equipment and rental.--------------------------------------------------------- 17,426.20
38,771.84

éOn the basis of January, 1910, revenue, the loss would have been $60,548.66.)
RAILWAY MAIL PAY.
527
Atchison, Topeka & Santa Fe Railway system met income, by classes, of traffic,
º, September and October, 1911—Continued.
Equals at 2
A mount. per cent—
Taxes.------------------------------------------------------------------------ $751,957.91 $15,039. 16
Rentals----------------------------------------------------------------------- 18,215.93 . 364. 32
Hire of equipment------------------------------------------------------------ 101,135.91 2,022.72
Total.------------------------------------------------------------------- 871,309.75 17,426.20
Interest.---------------------------------------------------------------------- 2,241,186.15 44,823.72
Total.------------------------------------------------------------------ 3, 112,495.90 62,249.92
Value of property used............... ~~~~ $603,390,485.00
Mail proportion-------------------------------------------------------------------------- 12,067,809.00
Return, 60 days at 6 per Cent-------------------------------.... . . . . . . . . ------...----...-- 120,678.09
Return, 60 days at 7 per Cent----------------------...- . . . . . . . . . . . . . . . . . . . . . . . . . . .-------- 140,791. 11

On basis of 7 per cent return the shortage would be $95,205 additional for mail, equal to $607,541 per year.
Cn basis of 6 per cent return the shortage would be $75,099 additional for mail, equal to $486,905 per year.
RAILWAY MAIL PAY

E HEARING
£475 -
A5
|?/3 -
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS
MAIL MATTER AND COMPENSATION FOR
THE TRANSPORTATION OF MAILS
BEFORE THE
mºnº-assºmºmºmºmºmº-ºº:
APRIL 22, 1913
*-assºmsºmº-mºmºmºm-º.
NO. 4
Printed for the use of the joint committee
WASHINGTON
GOVERNMENT PRINTING OFFICE
1913
UNIVERSITY OF MICHGAN UBRARIES
Transportation.
° Library
!
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: ;
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER
AND COMPENSATION FOR THE TRANSPORTATION OF MAILS.
CoNGREss of THE UNITED STATEs.
JONATHAN BOURNE, JR., Chairman. JAMES T. LLOYD.
\ HARRY A. RICHARDSON. WILLIAM E. TUTTLE, JR.
JOHN H. BANKHEAD. JOHN W. WEEICS.
RoBERT H. TURNER, Secretary.
RICHARD B. NIxon, Disbursing Officer.
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TABLE OF CONTENTS.
f Page.
Bradley, W. J., general supervisor of mail traffic, Pennsylvania Railroad
System ------------------------------------------------------------ 529 et seq.
Crocker, Joseph N., special mail agent, New York Central Lines, Grand
Central Terminal ------------------------------------------------- 529
Fairfield, Herbert L., Supervisor of mail traffic, Illinois Central Railroad Co. 529
Hurst, John, assistant comptroller Pennsylvania Lines West of Pittsburgh - 529 et seq.
Lindsay, J. P., manager mail traffic, Atchison, Topeka & Santa Fe Rail-
Way System ------------------------------------------------------‘. . 529
Logan, Robert S., vice president Grand Trunk Railway . . . . . . . . . . . . . . . . 529 et seq.
Lorenz, Max Otto, associate statistician, Interstate Commerce Commission. 529 et seq.
Mack, H. E., manageſ mail traffic, Missouri Pacific Railway. . . . . . . . . . . . . 608 et seq.
McBride, C. H., Superintendent, Division of Railway Adjustments, Post
Office Department------------------------------------------------- 530 et seq.
Plant, A. H., comptroller of the Southern Railway. ----------. . . . . . . . . . . 628 et seq.
Prentiss, Albert Noble, clerk, Post Office Department. . . . . . . . . . . . . . . . . . 530
Rowan, A. H., assistant to vice president, New York Central Lines. . . . . . 563 et seq.
Safford, W.W., general mail and express agent, Seaboard Air Line Railway. 529 et seq.
Snead, Russell H., manager express traffic, Chesapeake & Ohio Rail-
road Co.------------------------------------------- - - - - - - - - - - - - - - - - 529 et seq.
Wishart, William C., statistician, New York Central Lines, Albany, N. Y. 600 et seq.
III
RAILWAY MAIL PAY.
TUESDAY, APRIL 22, 1913.
Joint Committee, ON POSTAGE ON
SECOND-CLASS MAIL MATTER, ETC.,
Washington, D. C.
The hearing was resumed at the call of the chairman at 10.30
o'clock a. m.
Present: Hon. Jonathan Bourne, jr. (chairman), Hon. Harry A.
Fººdson, Senator John W. Weeks, and Representative James T.
Oyd.
STATEMENT OF MIR. ROBERT S. LOGAN.
The CHAIRMAN. Mr. Logan, it will be necessary that you be sworn.
Thereupon Mr. Logan was duly sworn by the chairman.
The CHAIRMAN. Will you kindly state your full name, residence,
occupation, and the official position that you occupy with any
transportation lines?
Mr. LOGAN. Robert S. Logan; residence, Montreal, Canada; I am
vice president of the Grand Trunk Railway system in charge of lands,
taxes, claims, mail matter, etc.
The CHAIRMAN. I will ask the gentlemen present to be sworn in
order that they may take part in ; debate, if they like.
Thereupon the following-named gentlemen were sworn by the
chairman:
H. E. Mack, manager mail traffic, Missouri Pacific Railway.
A. H. Rowan, assistant to vice president, New York Central Lines,
Grand Central Terminal, New York.
Joseph N. Crocker, special mail agent, New York Central Lines,
Grand Central #. New York.
Herbert L. Fairfield, supervisor of mail traffic, Illinois Central
Railroad Co., Chicago, Ill.
J. P. Lindsay, manager mail traffic, Atchison, Topeka & Santa Fe
Railway system, Chicago, Ill.
John Hurst, assistant comptroller, Pennsylvania Lines West of
Pittsburgh, Pittsburgh, Pa.
W. W. Safford, general mail and express agent, Seaboard Air Line
Railway, Norfolk, Va.
Russell H. Snead, manager express traffic, Chesapeake & Ohio
Railroad Co.
V. J. Bradley, general supervisor of mail traffic, Pennsylvania
Railroad, Philadelphis, Pa.
Max Otto Lorenz, associate statistician, Interstate Commerce
Commission. 2
529
530 t RAILWAY MAIL PAY.
C. H. McBride, superintendent division of railway adjustments,
Post Office Department. - *
Albert Noble Prentiss, clerk, Post Office Department.
The CHAIRMAN. Mr. Logan, what mileage and what capital does
the Grand Trunk Railway system represent * i
Mr. LOGAN. Between 1,000 and 1,100 miles in the United States.
The CHAIRMAN. How much in Canada?
Mr. LOGAN. About 3,600 miles. I do not remember just what the
capitalization is. We have several subsidiary railway companies
and other organizations in Canada. -
The CHAIRMAN. The whole system is composed of this mileage
you have stated 3
Mr. LOGAN. In Canada and the United States?
The CHAIRMAN. Yes. •8
Mr. LOGAN. No. The capitalization is about half a billion dollars;
to be more exact, about $420,000,000. That portion in the United
States is about $59,000,000.
The CHAIRMAN. Is that a subsidiary company, or is that a part of
the parent company? r
Mr. LOGAN. In the United States the several companies are sub-
sidiary, controlled by the parent company. -
The CHAIRMAN. What are the names of the roads that are operated
in the United States? - Y
Mr. LOGAN. The Grand Trunk Western is our principal mail-carry-
ing line, the Detroit, Grand Haven & Milwaukee; Toledo, Saginaw
and Muskegon; Cincinnati, Saginaw & Mackinaw; the Michigan Air
Line Railway; the Chicago, Detroit & Canada Grand Trunk Junction,
and the Pontiac, Oxford & Northern Railway. Those companies
compose what we term our western lines, and we have a line of about
160 miles in the New England States to Portland, Me. •
The CHAIRMAN. Your terminals in the United States are where?
Mr. LOGAN. Portland, Me., Chicago, Detroit, Milwaukee, Saginaw,
and Bay City and Port Huron. -
The CHAIRMAN. You receive mail, do you, from other railroads
at those points? - -> -
Mr. LOGAN. We receive mail at all of those points from other
railroads. -
The CHAIRMAN. And also deliver mail?
Mr. LOGAN. And deliver mail.
The CHAIRMAN. Have you read over Document 105, and especially
that portion of it known as the suggested plan of the Post Office
Department and the supplemental or amended suggested plan, as
º on page 109 of the preliminary report 3
. LOGAN. I have not read all of it, but I am familiar with the
main facts. *
The CHAIRMAN. What comments would you have to make in refer-
ence to that, from a transportation standpoint; that is, the compen-
sation to be received from the Government by the transportation
companies for the carriage of mail?
Mr. LOGAN. That is, as I understand, the proposition of the Post
Office Department, to pay on a space basis. * …
The CHAIRMAN. Yes; the substitution of space for weight, in
effect, and payment to be made upon a linear car-foot-mile basis? .
Mr. LoGAN. We do not consider that a fair basis to all alike.
RAILWAY MAIL FAY. 531
The CHAIRMAN. Your reasons being what? ..
Mr. LoGAN. I would concur in the views expressed in the written
form that Chairman Peters prepared, with the concurrence of the
committee on railway mail pay, especially the summary contained at
the end of that pamphlet as to the nature of the payment to the rail-
roads on the car-space basis now provided and the basis proposed.
I think they are eminently fair, except I do nor think they go far
enough, especially with the adoption and the inauguration of the
parcel-post system. -
The CHAIRMAN. Taking your own system, for example, you feel
that you are underpaid, overpaid, or equitably paid—which 3
Mr. LOGAN. We are underpaid.
The CHAIRMAN. What compensation do you receive annually
from the Government 3
Mr. LOGAN. About $225,000.
The CHAIRMAN. Is that all railway mail pay or part R. P. O. pay ?
Mr. LoGAN. Part R. P. O. pay.
• The CHAIRMAN. The two amount to $225,000%
Mr. LOGAN. Yes.
The CHAIRMAN. How much underpaid do you figure you are 3
Mr. LOGAN. We †. we now receive only about from 55 to 60
per cent of what we should receive. t
The CHAIRMAN. On what basis? -
Mr. LOGAN. On a basis of approximate expenditure and the approx-
imate earning capacity of the space provided and used.
The CHAIRMAN. Which, earning capacity or expenditure? -
Mr. LOGAN. We are about even. e do not consider our passenger
s. much more than pays our expenses on our lines in the United
tates.
The CHAIRMAN. Then you figure in the way of mail compensation
from the United States that you are doing it at a loss of from 40 to
45 per cent #
Mr. Logan. That is what we estimate.
The CHAIRMAN. Can you demonstrate that ?
Mr. LOGAN. Yes; I think I can give some facts and figures." When
the Post Office Department called for information in regard to the
carriage of mails in 1909, on the basis of monthly experience, for the
month of November, we had a statement prepared for our Grand
Trunk Western Railway only based on the data that was obtained at
that time for reporting to the Post Office Department, which I turned
over to our audit department to prepare me a statement based on
their estimates showing how this 5. out. They took our total
expense account, divided it between passenger and freight, on our
train-mile basis, which I understand is what general auditors concur
is as close an approximation as they can get, especially of the common
or unassignable expenses.
The CHAIRMAN. Is that plan that you adopt that of the auditors
of the Grand Trunk? -
Mr. LOGAN. Yes; it is the plan approved by the Bureau of Statis
tics for the Government of Canada and adopted by them in their work
in connection with their Government road.
l For statement showing net income by classes of traffic of Grand Trunk Western Railway Co. for year
ending June 30, 1912, see conclusion of Mr. Logan's testimony, pp. —
532 RAILWAY MAIL, PAY.
The CHAIRMAN. Are you aware as to how that compares with the
plan of the Interstate Commerce Commission in this country :
Mr. LOGAN. I think it was formerly the plan adopted by the Inter-
state Commerce Commission and so far as any definite basis has ever
been adopted. Then, to the expenses, as found between passenger
and freight, we added taxes, bond interest, hire of equipment, mis-
cellaneous rents, etc., deducted our general interest, dividends on
stock owned or controlled, miscellaneous rents, which we considered
very conservative, arriving at the total net operating expenses, and
then we divided these net operating expenses between the passenger
and the freight, finding the proportion chargeable to the passenger
service. Then we took our total baggage-car equipment º assigned
an average of 1 linear foot of each º gage car to the mail service
handled in baggage cars, and we consider that a very fair estimate;
it does not materially affect the result, however. We add that to the
space included in our mail cars. I might add, the mail proportion
of the baggage cars was 1.84 per cent of the total space occupied or
assigned for baggage and mail together. We ...' that proportion
to the mail-car or R. P. O. car mileage, which total we found to be
71,525 miles. The proportion that mileage bore to the total pas-
senger train car mileage for the entire month of November was 8.95
per cent, just a fraction less than 9 per cent. We then took our total
operating expenses chargeable to the passenger service and found
what 8.95 per cent of that amounted to, approximately $16,826 of
the total passenger portion of the expenses, $188,000 for the month.
Our mail revenue for the same month was $11,784; we had no diffi-
culty in finding what that was. They calculated that we were
operating them (year 1909) on G. T. Western at a loss of $5,000, or
approximately 30 per cent.
Mr. LLOYD. Are you through, at that point?
Mr. LOGAN. I was going to say that was for the year 1909, and our
costs have increased considerably since 1909, owing to the increase
in cost of material and wages. We found on this basis that our aver-
age cost per mail-car mile was 23.52 cents, whereas our average
revenue per mail-car mile was 16.47 cents, showing an actual loss of
7.05 cents; while our cost per car mile for 1912 was 27 cents. I sub-
mit a statement for 12 months ending June 30, 1912.
Mr. LLOYD. Just at that point, I think that is a proper place to
make an inquiry. You combined the space in the passenger car with
the space in the baggage car in calculating baggage space.
Mr. LOGAN. Yes; and express car; baggage, express, and passenger
space is all calculated in this proportion of 91.5 per cent.
The CHAIRMAN. Did you classify the baggage and the passenger
together as a passenger coach.
Mr. LOGAN. Yes.
The CHAIRMAN. Just the same way.
Mr. LOGAN. All included in passenger space. *
The CHAIRMAN. And took out of the baggage space 1.84 per cent of
that space and gave that to mail? - 3.
Mr. LOGAN. Gave that to mail. -
The CHAIRMAN. How much did you lose on the passenger traffic
Mr. LOGAN. During that month we got out about even.
The CHAIRMAN. In counting the passenger space, do you count all
the space in the passenger car? t
RAILWAY MAIL PAY. • 533
Mr. LOGAN. All the interior space.
The CHAIRMAN. All the interior space in the passenger car?
Mr. LOGAN. Yes; and all the interior space in the baggage and the
mail car. *
The CHAIRMAN. Figured on a floor basis; that is, square feet on the
floor, or cubic feet. --- - -
Mr. LOGAN. We figured that on a basis of square feet of space.
The CHAIRMAN. Floor space. -
Mr. LOGAN. Floor space.
Mr. LLOYD. Do you figure out any dead space in either passenger,
baggage, or mail car? -
Mr. Log AN. No; we took all .the space that was occupied in each
C8, I’.
Mr. LLOYD. And charged to mail everything in the mail car?
Mr. LOGAN. Everything in the mail car. They use it all whether
they pay us or not, as a rule.
The CHAIRMAN. What is your method of receiving compensation
from the Canadian Government for mail in Canada. ?
Mr. LOGAN. That is on the basis of $160 per road mile for main
lines, and $80 per road mile for branch lines.
The CHAIRMAN. That is the universal method :
Mr. LOGAN. No; there is a difference in basis of compensation in
Canada. Some roads are paid so much per train-mile, or so much per
baggage-car mile. The Post Office Department is now conducting a
study with a view to Pº all on an equal basis, so as to pay the
railroads on a uniform basis like they have here for a number of years
aSt.
p Mr. LLOYD. Have you any data to show what percentage of the
total postal expenditures in Canada the transportation companies,
steam and electric, receive?
Mr. LOGAN. I have that data, but I did not bring it with me.
Mr. LLOYD. Roughly, have you any idea 3
Mr. LOGAN. Let me get that question clearly; that is, the percentage
of the total expense ?
Mr. LLOYD. What percentage of the total expenditures of the
Canadian postal department do the transportation companies
receive?
Mr. LOGAN. I do not remember what that amounted to. I can
get that and give it to you to-morrow. [Subsequently Mr. Logan
stated that for the year ended March, 1912, the railway mail pay was
15 per cent of Post Office Department receipts and 22 per cent of
expenditures, and adding that Canada differed from the United
States in the fact that but comparatively little mail is carried by
steamers or other water carriers—the Post Office Department being
chiefly dependent upon the railways.]
Mr. LLOYD. Under the Canadian system do the railroad com-
panies receive comparatively more compensation than they do under
the American system 7
Mr. LOGAN. Very much less. We are very much underpaid there.
We consider we are underpaid at least 60 to 70 per cent there.
The CHAIRMAN. And 40 per cent in the United States, so far as
your lines are concerned ?
Mr. LOGAN. So far as our lines are concerned, about 40 per cent.
534 RAILWAY MAIL PAY.
Mr. LLOYD. In other words, we pay 30 per cent more than they
pay in Canada for carrying the .#.
Mr. LOGAN. I should judge you pay from 20 to 25 per cent more.
I said it is hard to determine that definitely, because they have
different bases of pay up there.
Mr. LLOYD. There are a little over 200,000 miles of railroad in
the United States, and if we paid $160 a mile, the same as you receive
there, for the main lines, it would amount to $34,000,000.
Mr. LOGAN. I beg your pardon. In the United States?
Mr. LLOYD. Yes.
Mr. LOGAN. That we would receive that amount
Mr. LLOYD. Yes. ſº
Mr. LOGAN. From 1,100 miles of line :
Mr. LLOYD. No. I said the railroads of the United States had a
mileage of a little over 200,000. : $
Mr. LOGAN. I do not think that is a fair comparison, for the con-
ditions are entirely different. ~. l
Mr. LLOYD. I was not aiming to make a comparison, but I was
trying to get in there the statement. Suppose we paid the same rate
that was paid by the Canadian Government for carrying the mail,
what would we pay in the United States, and, as I understand you,
without making any comparison, the railroad companies in the
United States would receive for carrying the mail something like
$35,000,000. * *
Mr. LOGAN. That is figuring on a basis of $160 a mile !
Mr. LLOYD. Yes.
li Mr. LOGAN. You must take out of that $80 a mile for the branch
IIléS. -
Mr. LLOYD. I am figuring it all on $160 a mile.
Mr. LOGAN. That would not be fair. . -
Mr. LLOYD. It would be fair to you if we figured all lines in the
United States at $160, instead of figuring branch lines at $80%
Mr. LOGAN. We do not consider it so. We consider we are not
now paid the cost on our mail operation on a basis of $160 per mile.
‘Mr. LLOYD. You do not understand my statement. You could not
complain in making the comparison, if we figure all lines in the United
States at $160 a mile instead of figuring the main kiries at $160 and
the branch lines at $80. In other words, the amount that you would
receive would be more if we figured all lines at $160 than if we figured
main lines at $160 and branch lines at $80. -
The CHAIRMAN. What is the total mileage in the United States?
Mr. LORENz. About 245,000 miles, I think, but they are not all
mail roads. -
º LLOYD. It is less than 220,000 miles. That is my recollection
of it. -
Mr. LORENz. I would like to ask, in connection with the statement
that you divide the expense on a train-mile basis, whether you would
divide all the operating expense on that basis or only the common
expenses?
Mr. LOGAN. Only the common expenses. . .
Mr. LORENz. I would like to ask also whether that includes simple
operating expenses or whether it includes taxes and interest charges?
Mr. LOGAN. Those are included in this statement of November,
1909, in addition to the expenses.
RAILWAY MAIL PAY. 535
Mr. LoRENz. It includes the taxes and interest ?
Mr. LOGAN. Yes.
Mr. LLOYD. What are the uncommon charges, then }
Mr. LoGAN. Such as would be charged direct to passenger ex-
penses—as expenditure for advertising; for instance, salaries and
wages of passenger employees.
Mr. LLOYD. Salaries of officers on passenger trains ?
Mr. LoGAN. Yes; and in offices handling passenger business only.
Mr. LLOYD. You pay a salary to officers on freight trains 3
Mr. LoGAN. Yes; that is charged to freight. That is easily
determined. It is the common expenses that are divided only on a
basis of freight and passenger train mileage.
Mr. LORENz. Have you the figure by which you could compare the
mail revenue which you receive with the operating expenses by itself;
that is to say, does the mail revenue more than pay the operating
expenses chargeable to the mail?
Mr. LOGAN. I think I have that here for year ending June 30, 1912;
but the way this is divided, the operating expenses, taxes, etc., ex-
ceed the mail revenue; that is, the operating expenses chargeable to
mail exceed the mail revenue by over 40 per cent; in other words, we
are underpaid to that extent. -
Mr. LORENz. That is, operating expenses including taxes and fixed
charges?
Mr. LOGAN. Yes. -
Mr. LORENz. Without the taxes and fixed charges, have you a com-
parison on that basis
Mr. LOGAN. No; we included taxes and fixed charges and de-
ducted miscellaneous rents received from outside companies that use
. tracks, and so on, which I feel is very conservative, to offset other
CP18,I’Q'eS.
# LORENZ. Have you a comparison on any other than a train-
mile basis ?
li Mr. LOGAN. Not for the Grand Trunk Western portion of the
IIle . In O.
Mr. LoRENz. Would it be possible to use any basis which made the
passenger expenses and allowances for mail expenses larger than does
the train-mile)basis :
Mr. LOGAN. I am not sufficiently familiar to give an opinion.
Mr. LORENZ. My impression is that train-mile basis, whether it is
fair or not, gives the maximum expense which you can reasonably
charge to the passenger service. *
Mr. LOGAN. I think the passenger train-mile basis gets the benefit
of a great deal of freight service that is not charged in on that basis;
for instance, for hauling the coal, which is all done by the freight
department; that coal goes on the passenger engine and is simply
charged on the basis of the passenger mileage.
Mr. LORENZ. It is company freight.
Mr. LOGAN. It is company freight. I think the passenger depart-
ment really gets the best end of the proposition on that basis. There-
fore, I think our figures are ultraconservative.
The CHAIRMAN. In your computation presented to the committee,
by which you endeavored to demonstrate you were underpaid by the
|United States Government for the transportation of mail 40 per cent,
as I understand, you take the actual cost of operation and the per-
536 -RAILWAY MAIL PAY.
centage basis of interest charges, of taxes, of capital charges, the cost
of your equipment, and your road and your terminals, and they all
enter into that computation? iº
Mr. LOGAN. That all enters into the computation.
The CHAIRMAN. Now, on the actual cost itself, eliminating your
capital charges, such as a prorata charge on the cost of the road and
of the terminals and of the equipment, what would you show %
Mr. LOGAN. I would have to figure that out. I believe I can do
that probably from this statement.
The CHAIRMAN. I wish you would, in order that we may have same
to supplement other information that we have from other lines
following the same method. -
Mr. LoGAN. Yes, sir. That is, including only the actual operating
expense, maintenance of way, maintenance of equipment, traffic
expenses, transportation and general expenses.
The CHAIRMAN. Yes. - -
Mr. LOGAN. Eliminate taxes, bond interest, and other interest, how
about hire of equipment' It seems to me that ought to go in, because
we have to hire a great deal of passenger equipment. Then there are
rents where we have to use property of other roads, both freight and
passenger.
Mr. LLOYD. Do you pay any more on account of the fact that you
carry mail?
Mr. LOGAN. No; but it is all for the benefit of the whole.
Mr. LLOYD. Do you build a railroad for the purpose of carrying
mail or carrying passengers and freight 2
Mr. LOGAN. For doing business of all kinds, as required by the law.
Mr. LLOYD. Under your computation, you claim you lose 30 per
**
cent on account of mail?
Mr. LOGAN. Yes.
Mr. LLOYD. How much do you lose on account of express?
Mr. LOGAN. That I have not calculated; but I do not suppose we
lose anything on account of express. - -
Mr. LLOYD. The passenger traffic is about even
Mr. LoGAN. The balance of the passenger-train expense is about
even to the income.
Mr. LLOYD. Then the money you make on your road is carrying
freight? &
Mr. LOGAN. Carrying freight; practically entirely. -
The CHAIRMAN. What are your contracts for the carriage of express 3
Mr. LOGAN. On a basis of 55 per cent of the revenue.
The CHAIRMAN. That is, of the express company's revenue you
receive 55 per cent.
Mr. LOGAN. The gross revenue; yes.
The CHAIRMAN. And your impression is that that is self-supporting
and it shows a profit.
Mr. LOGAN. It evidently shows a profit to help offset some of the
other expenditures we do not show a profit on. -
The CHAIRMAN. What express company have you a contract with ?
Mr. LOGAN. The National Express, for part of the line and part of
the line we operate with the Canadian Express Co.
Mr. LLOYD. What do you say to the proposition of the Post Office
Department of counting out dead space in connection with the
carrying of the mail? -
RAILWAY MAIL PAY. - 537
.*. LoGAN. I think that is all guesswork, very largely; it affords
In O O&SIS. t
Mr. LLOYD. You counted out no dead space in your calculations?
Mr. LoGAN. No, sir; not in Pºiº this statement. We took
Pº trains as they existed and I suppose assigned to each
Mr. LLOYD. You counted the space going and coming, incoming
and outgoing?
Mr. LoGAN. Qh, yes. I beg your pardon. No. We took simply
the total space for the equipment assigned to that portion of the Iine
for the month of November, 1909, used on that line.
Mr. LLOYD. Your other statement answers the question.
Mr. LoGAN. We do not take it every trip.
Mr. LLOYD. If a mail train goes out, it has to come back?
Mr. LoGAN. Yes; it was the equipment assigned for the month of
November and used on that portion of the line regardless of the
mileage made.
Mr. LLOYD. You assigned certain cars to a certain road, and
whether those cars were used or not you counted the space as used
all the time 3 -
Mr. LOGAN. Exactly. In that connection I might say we had one
mail car standing idle all the time; that was included in the mail
space, but it was there ready for the mail service, because we had to
hold it to take care of the business in case of emergency.
Mr. LLOYD. Do you know whether the Post Office Department in
making its calculations, on which Document 105 is based, made
similar calculations to that or not ?
Mr. LoGAN. I do not know what they did.
Mr. LLOYD. Then of course you do not know how much they
counted out on account of unused cars.
Mr. LOGAN. I have not kept track of that.
Mr. LLOYD. Have you any idea how much of your equipment was
not used from time to time, but was remaining ready for use
Mr. LOGAN. There was one spare mail car ready for use.
Mr. LLOYD. That was not used.
Mr. LOGAN. There are only five mail cars assigned to that line.
We also held out, doubtless, some passenger equipment, but the
passenger equipment was filling lines more frequently. When there
were delayed trains we filled in with the spare passenger equipment.
This was the equipment in active service on that line and what was
held in reserve for that month.
. Mr. LLOYD. You count that which was held in reserve as if it was
II]. UISé.
Mr. LOGAN. Yes; as if it was in use—all the passenger equipment.
Mr. LLOYD. I am talking about the mail equipment, whether it
is in use or not; if it is assigned for the purpose of use, you charge up
the space in making the computations. k
Mr. LOGAN. We charge for the space in making the computation.
Mr. LLOYD. In making your statement to the Post Office Depart-
ment, on which Document 105 is based, did you make that kind of,
calculation of space? A
Mr. LOGAN. We simply reported what information they called for.
Mr. LLOYD. They . for the space used. Do you consider that
space used where you have a car and do not use it
538 RAILWAY MAIL PAY.
Mr. LOGAN. I do not recall how that was; that has escaped my
memory. You will remember that was four or five years ago. It is
my recollection, however, that that was included as being used; it
was there ready to be used and if the emergency had arisen it would
have been used. - g
Mr. LLOYD. Were those cars that were demanded for use by the
Post Office Department counted, whether you used the space or not ?
Mr. LOGAN. "Yes.
Mr. BRADLEY. May I ask a question along the same line'
The CHAIRMAN. Certainly. + -
Mr. BRADLEY. Was the mail space that you reported all neces-
sarily operated to furnish the Post Office Department what it needed?
Mr. LOGAN. It was. s
Mr. BRADLEY. It was necessarily operated 3
Mr. LOGAN. It was necessarily operated.
The CHAIRMAN. But, as I understand Mr. Logan, he said there was
one car that was idle all of the time. -
Mr. LOGAN. It may have been used on one or two trips part of the
time. .
The CHAIRMAN. Did the Post Office Department request you to
have that car in readiness, or did you do it of your own volition in
order to be prepared in case there should be an emergency! :
Mr. LOGAN. It is generally under understandings with the Post
Office Department that these arrangements are made.
The CHAIRMAN. Were you paid anything for the use of that car?
Mr. LOGAN. No; just for the actual cars used.
The CHAIRMAN. But this car was kept in readiness at the request
of the Post Office Department 7
Mr. LOGAN. Under an understanding with the Post Office Depart-
ment.
Mr. LLOYD. Under a space basis, what difference did it make, in
compensation, if you counted for the space actually used and the
space constructively used, practically the difference of one-fifth.
Mr. LOGAN. Approximately 20 per cent, one-fifth.
Mr. MACK. You reported the reserved cars in your space to the
Post Office Department for the statistics of 1909'?
Mr. LOGAN. That is my recollection.
Mr. MACK. I would like to say, Mr. Chairman, that that was not
done by the railroads in the country as a whole, and that is, I think,
entirely an exceptional case if it was done by the Grand Trunk.
The CHAIRMAN. This is the only case that you know of in which
this was done? -
Mr. MACK. Yes, sir; and I am inclined to think it may not have been
done in this particular case for the statistics of 1909, although Mr.
Logan may have used it in these special statistics.
The CHAIRMAN. Mr. Logan, would you look into that particular
oint and let us know later, by letter, whether, in the information
#: the Post Office Department in answer to their questions,
your computation included this item or not ?
Mr. LOGAN. Yes, sir; I will.
Mr. LORENZ. How is it possible to count car foot-miles when a car
is standing still ? -
Mr. LOGAN. This statement is not on the basis of car foot-miles.
g
RAILWAY MAIL PAY. 539
Mr. LORENZ. Your basis is simply car feet in use?
Mr. LOGAN. Yes; cars assigned to that service.
Mr. LORENZ. Irrespective of the number of miles made?
Mr. LOGAN. That is what I said, whether it was in use or not, if it
was assigned for that purpose for that line for the month named.
Mr. BRADLEY., Did you make the same deduction in regard to pas-
senger cars held in reserve and express cars held in reserve?
Mr. LOGAN. Yes.
, Mr. BRADLEY. I think that is entirely exceptional to the practice
that the railroads followed.
Mr. MACK. What I wanted to get into the record was that the
so-called dead space reported by the railroads, unless this is an excep-
tional case, does not include any reserve space whatever; it is space
actually hauled. t
Mr. LLOYD. That is my understanding about it and that is the
reason I was pressing the inquiry. i
Mr. LOGAN. It may have been that the Post Office Department
took that interpretation of our report when preparing their figures.
Mr. LLOYD. T. am inclined to think, like Mr. Mack, that you must
be mistaken, and I think you should correct that in the record.
The CHAIRMAN. Mr. McBride, will you give the committee the
information relative to the method by which the Grand Trunk fur-
nished you the information at the request of the Post Office Depart-
ment 7
Mr. McBRIDE. I have not their particular report, Mr. Chairman.
The CHAIRMAN. Your recollection ?
Mr. McBRIDE. My recollection is that they were furnished in the
same way that the other railroads furnished them; that is, report of the
actual movement of the trains with the equipment on those particular
trains, and that there were no reserve cars reported in connection with
the car space reported. -
Mr. LoGAN. That may be. I would not question that.
The CHAIRMAN. That changes very materially your computation,
if that is so. --
Mr. RowAN. If the Grand Trunk had reported this reserve car,
wº not the Post Office have thrown it out, if they could not have
used it'.
Mr. McBRIDE. That is correct; we would have thrown it out.
Mr. LOGAN. Our computation is based on the basis of the equip-
ment that is necessary to operate that service.
Mr. LLOYD. Your computation now is an entirely different com-
putation from the computation that was made on which Document
105 is based.
Mr. LOGAN. Oh, yes; entirely different. I tried to impress that
in the first place, that this was a computation made by our audit
department according to their own ideas.
Mr. LLOYD. And would add about 20 per cent to the space used ?
Mr. MACK. I think, Mr. Lloyd, if I may interrupt there, he fol-
lowed the same rule with respect to passenger service, so that it
would not be 20 per cent charged to the mail that was not propor-
tionate also to other service. I am not saying anything about the
merit of the plan.
540 RAILWAY MAIL PAY.
Mr. LLOYD. That would cut out the other question. If the 20 per
cent is not used, so far as the mail is concerned, what per cent was
not used so far as the express was concerned ?
Mr. LOGAN. I do not know that. $ -
Mr. LLOYD. What per cent was not used so far as the passenger
service was concerned 3 ~ -
Mr. LOGAN. I can not say that. -
Mr. LLOYD. If they all had the same 20 per cent, then it would
have the same effect 3
Mr. MACK. I should think it would run in the same proportion.
The CHAIRMAN. I should think the percentage would be much
less for express and much greater for passenger. In other words,
they would have a far greater percentage of passenger cars ready
to take care of overloads than express cars.
Mr. MACK. I should think it is likely with regard to passenger. I
do not know about the express.
Mr. LOGAN. At that season of the year we would have probably
considerable idle equipment lying around, some getting repaired and
some held in reserve, but we have, judging from this statement, con-
sidered that one would offset the other. -
Mr. LLOYD. What do you say as to space as a proper method of
determining the pay that the railroad companies shall receive? .
Mr. LOGAN. I think it would be purely arbitrary in many cases.
Mr. LLOYD. Leave out the feature that you call arbitrary. Sup-
pose it is properly administered and there is nothing arbitrary in
the administering of the law § If space was taken as a basis, would
it be more equitable to the railroad companies and the Government
than the present system &
Mr. LOGAN. I do not think so.
Mr. LLOYD. Why not ?
Mr. LOGAN. Because it is so uncertain. You do not know what
i. is exactly; it is variable and more variable than the weight
a SIS.
Mr. LLOYD. What do you mean by being variable? I do not know
that I exactly understand you there.
Mr. LOGAN. The department uses part space one day and uses a
#. deal more the next day. They run the mails uneven on different
IIléS.
Mr. LLOYD. If your theory of what is correct were adopted, that
certain number of cars on certain lines were set apart for the use of
the mails, then there would not be anything uncertain about it,
would there 7 -
Mr. LOGAN. It depends on the character of business.
Mr. LLOYD. But you get pay whether you have the service or not ?
Mr. LOGAN. There is a good deal of space assigned that is not used
at times, and again there is an overflow that is used in excess of the
space assigned. &
Mr. LLOYD. You do not exactly answer my question. Suppose
you set apart the necessary cars for the carrying of the mail on the
main line of the Grand Trunk and those cars are to be at the service
of the Government whether they carry mail or whether they do not.
It is nothing to you whether they are full or whether they are empty?
The CHAIRMAN. Provided you get the compensation ? -
RAILWAY MAIL PAY. 541
Mr. LLOYD. Providing you get full compensation for all cars.
Would not that be a most satisfactory method of the determination
of pay and would it not be more equitable and certain than any other
system that you know of that could be adopted ? -
Mr. LoGAN. So far as the Grand Trunk is concerned it probably
would be as just and fair as the weight basis, but our line is different
from many other lines. In my opinion there are different classes of
service, you might say quality of service, there are fast mail lines,
heavy tonnage lines, and light tonnage lines. We happen to be a light
toº. providing a large space.
Mr. LLOYD. º tonnage would take little space and heavy
tº: would take larger space? -
Mr. LOGAN. . No; I beg your pardon. Sometimes a light tonnage
takes a great deal of space, as it does on our lines.
i. LLOYD. That depends on whether it is first-class mail or fourth
Clà.S.S. *
Mr. LOGAN. Whether it is mail cars, storage cars, cars especially as-
signed to the mail service.
Mr. LLOYD. Now, take the R. P. O service where you have full
cars. In that branch of the service would not the space be the most
equitable method of determination of pay ?
Mr. LOGAN. It depends on the circumstances entirely. There are
large cars and small cars and large weights and small weights.
Mr. LLOYD. If you were paid according to space, you would get pay
for the larger car if the large car was agreed upon and pay for the
small car if it was agreed upon. You would get pay for whatever
space was used.
Mr. LoGAN. Yes; if it was sufficient.
Mr. LLOYD. On the theory that it is sufficient we are trying to get
at what is right between the railroad companies and the Government:
Do you receive proper compensation for the space that is used in full
R. P. O. cars, not with reference to the size of the car? I mean in
this question with reference to the size of the car, it might be a
30 foot, 40 foot, 50 foot, or a 60 foot car, but if you got pay for the
full space and got pay all the time for the full space, whether used or
not, would not that be the most satisfactory and reasonable method
of determination of pay as a basis?
Mr. LoGAN. It might be in our individual case. I would not want
to say that for the other lines. p
Mr. LLOYD. Do you think it would in your individual case?
Mr. LoGAN. If we got paid what was proper. It simply comes
down to a question of what is proper.
Mr. LLOYD. It would on the weight basis, too?
Mr. LOGAN. If paid properly on a weight basis we would have
nothing to say.
Mr. LLOYD. Are you satisfied with the present system 3
Mr. LoGAN. Of weight basis?
Mr. LLOYD. Yes. *
Mr. LOGAN. So far as the mail proper is concerned we are perfectly
willing to have that continued. We are perfectly satisfied with that.
Mr. LLOYD. With the present rate?
Mr. LOGAN. With the present rate.
Mr. LLOYD. Notwithstanding it is carried at a loss?
87288—No. 4.—13—2
542 RAILWAY MAIL PAY.
s ; LOGAN. If we get proper compensation for car space and actual
weight.
, LLOYD. I mean taking the present law and the present system.
Mr. LOGAN. The present system is all right, but the present law is
underpaying us. -
Mr. LLOYD. Then you want the law changed to increase the pay?
Mr. LOGAN. Along the outline or the summary of the railway mail
pºº % -
. LLOYD. How much increase do you think you ought to have $
Mr. LOGAN. I believe 40 per cent. - -
Mr. LLOYD. You only speak for your own road'.
Mr. LOGAN. That is all. Some of the other roads, I am satisfied,
do not get 50 per cent of their expense.
Mr. LLOYD. Do you think the carrying of mail ought to be placed
on exactly the same basis as carrying express, passenger, or freight?
Mr. LOGAN. I do, certainly, for the reason that when you come to
determine a freight-rate question the Interstate Commerce Commission
takes nothing into consideration but freight-rate factors, the same way
when a passenger rate is determined. Formerly the railroads were
earning enough on their freight and passenger service to be indifferent
to the question of mail pay; they could carry it for little or for much.
Mr. LLOYD. And you do not think that the fact that you have a
right to take a man's house or his ground or his property away from
him, providing you pay him a compensation which is reasonable, is
SOmet # that you ought to take into account at all in determining
the pay that you receive for carrying the mails? -
º Łº We usually have the experience of paying from 40 to
50 per cent more than the property is worth.
Mr. LLOYD. That is because of the fault of the law and not because
of the law itself.
Mr. LOGAN. That is a matter of administration.
Mr. LLOYD. The fact is the same, that you can run right through
a man's house, you can take his home from him, under the eminent
domain proposition, and under the law all you have to do is to pay
him that which is a reasonable compensation for the value of his
roperty. Now, taking from the general public the right to a man's
OIOle
Mr. Logan. That is necessary and for the benefit of the public as
well as the benefit of the railroad.
Mr. LLOYD. I understand that; but you are receiving that benefit
and it seems to me you ought to take into account something for
having received that }.
Mr. LOGAN. We do. - *
Mr. LLOYD. But you are not disposed to pay any of it back?
Mr. Logan. We do. We take into account the service we render
the people and the high rates of taxes we pay, etc. -
\ſ. LLOYD. You do not take into consideration paying the people.
You say it does not enter into it and you ought not be º to do
tºº for the Government you would not do for me or for Senator
OUIIIlê.
Mr. LoGAN. We get that right of eminent domain from the States.
We are serving the Federal Government by carrying mail. . . -
Mr. LLOYD. You get your right of eminent domain from the State.
Mr. Logan. Yes, sir. wº
BAILWAY MAIL PAY. 543
Mr. LLOYD. I appreciate that, but if you did not have the Federal
Government you would not have any State government?
Mr. LOGAN. I do not know anything about that. That is another
question. - - - . .
Mr. LLOYD. Then, you think there is nothing in the proposition that
you owe º as a public corporation, to the Government?
Mr. LoGAN. We pay our taxes to the States who give the right of
eminent domain, and we are entitled to the same protection and some
return. g ..
Mr. LLOYD. But remember you get what you charge the people.
I can not take your private property and you can not take mine, but
as a railroad you can. Then you have rights as a railroad that the
public does not have, and having received those rights
Mr. LOGAN. That is the only way you can have railroads, that is to
have that right of eminent domain.
Mr. LLOYD. I am discussing the question of the railroad having
received these extraordinary rights whether or not the roads do not
owe something to the public for having received them. You make.
the º individual pay you; you make the man who carries
freight pay you; the man who carries express pay you. Where does
the general public get any benefit, or where do you show any apprecia-
tion for that which you receive from the Government in this extraor-
dinary power that comes to you, a right that comes to you under the
eminent domain proposition that does not come to the private citizen?
Mr. LOGAN. I do not think that should enter into the question of
whether the Post Office Department is paying the cost of the service
Or not. *
Mr. LLOYD. I just wanted your view about the situation.
Mr. LOGAN. I think Uncle Sam is rich enough and big enough to
pay his debts for services rendered.
Mr. LLOYD. We think the railroads are rich enough and big enough
to pay their debts, on the other hand. We think the corporations of
the country ought to have enough of the milk of human kindness to
appreciate that which they receive from the Government.
r. LOGAN. I do not think there is any question about that.
Mr. LLOYD. And there is nothing, apparently, that tends more to
prejudice the general public than §e act the corporations maintain
i. of appreciation of that which they receive that the individual
Oes not.
Mr. LOGAN. In answer to that I can only say that the railroads are
created by the Government for the service of the public. The rail-
roads are the public's just as much as the Post Office Department is
the public's.
Mr. LLOYD. That is the misfortune in the United States to-day.
The railroad companies have, to a certain extent, come to the conclu-
sion that they are “the public” and that they have the right to control
“the public,” and the misfortune is they fail to catch the very thing I
am trying to impress this moment, and that is that they are creatures
of the public and they ought to be subservient to it.
Mr. LOGAN. The people who own the railroads are the public, and
the railroads are created to serve the public. The stockholders are
just as much entitled to consideration as the man who travels over
the railroad—they are part of the same public. They are just as
544 RAILWAY MAIL PAY.
much interested in the railroad serving the public properly as the
public are in having the railroad serve them. #
Mr. LLOYD. You do not understand what I am driving at—the
fact that the railroad companies and the great corporations of the
º do not show their º to the public. -
Mr. LOGAN. In what way have they not shown it?
Mr. LLOYD, In many ways. Just like this: You say that the Gov-
ernment in all its transportation business ought to pay you just the
same as the individual; we owe no obligation to the Government
that we do not owe to the individual.
Mr. LOGAN. I think there is no question but that the railroads in a
great many cases serve the public and the Government without com-
pensation in times of calamity, just as they recently did for the storm
and flood sufferers in the West, where the railroads have carried train-
loads of supplies and material for nothing.
Mr. LLOYD. They did that because they wanted to ?
Mr. LOGAN. If that is your view, I can not question it.
The CHAIRMAN. Is there any additional payment for R. P. O. cars
in Canada. ? -
Mr. LOGAN. We have a small payment that figures out about
$5,000 per year per car for the service rendered.
The CHAIRMAN. On what basis is that computation made?
Mr. LOGAN. An arbitrary basis. ~,
The CHAIRMAN. That is, arbitrary, but assented to between the
Government and the transportation companies?
Mr. LOGAN. Yes; about 25 years ago. There has been no change
since then.
The CHAIRMAN. When was your basis of compensation of $160 a
mile on main line and $80 a mile on branch lines put into operation?
Mr. LOGAN. In 1872. * *
The CHAIRMAN. And it has been in operation ever since %
Mr. LOGAN. Without change on a good portion of the line and
since 1893 on the other portion of the line approximately 30 per
cent of the mileage. º
Mr. McBRIDE. Is that rate the same on all railroads in Canada?
Mr. LOGAN. No; I was just speaking for the Grand Trunk. The
rates are varying on the other roads. -
Mr. BRADLEY. Is Mr. Logan aware as to whether that rate of $160
is based upon any commercial valuation?
Mr. LOGAN. No; it is just arbitrary—a matter of negotiations.
The CHAIRMAN. When that went into operation, was the law such
that the post office department had the right to make contracts with
each transportation company ? .
Mr. LOGAN. The post office department was authorized to make
these contracts.
The CHAIRMAN. And they are still authorized ?
Mr. LOGAN. Yes.
The CHAIRMAN. And no change has been made since 1873 in these
contracts : -
Mr. LOGAN. Not since 1873 and 1893. *
The CHAIRMAN. You say 1873 and 1893. What is the difference.
As I understood, this method or basis of compensation went into
operation in 1873 and is still in existence. Why is 1893 brought in
RAILWAY MAIL PAY. 545
Mr. LoGAN. There were two lines in 1873—one the Great Western
and the other the Grand Trunk; they were consolidated in 1888, the
Great Western was receiving lower compensation than the Grand
Trunk, and in 1893 that basis was equalized on the basis of $160 for
the main lines and $80 for the branch lines.
The CHAIRMAN. What is the compensation for the Canadian Pacific;
do you know? .
Mr. LoGAN. They have varying rates.
The CHAIRMAN. There is a separate rate for each line?
Mr. LoGAN. Practically a separate rate for each line?
Mr. McBRIDE. Is there a law in Canada requiring the railroads to
carry the mail?
r. LOGAN. Yes. &
Mr. McBRIDE. They have to carry the mail?
Mr. LOGAN. They have to carry it. Aº
Mr. LLOYD. What exclusive or monopolistic features are there in
§. contract with the Canadian Government, or do you have any 3
You say you get $160 a mile for carrying the mail? What kind of a
contract have you ? ;
Mr. LOGAN. We have no contract, practically.
Mr. LLOYD. You just simply carry the mail -
Mr. LOGAN. It has been going on in a perfunctory manner for a
number of years without anybody paying any special attention to it
until I took the matter up some years ago. -
Mr. LLOYD. Do you have the same R. P. O. system as we have in
the United States ? ,
Mr. LOGAN. Yes.
Mr. LLOYD. Is that paid for extraº
Mr. LOGAN. That is paid for extra on a portion of our lines only.
Mr. LLOYD. How is that fixed 3
Mr. LOGAN. We have five mail cars in special service, and we are
paid $5,000 a car.
The CHAIRMAN. A year?
Mr. LOGAN. A year.
Mr. LLOYD, $5,000 a car?
Mr. LOGAN. Yes; for special mail cars running between Montreal
; Toronto only. We have many others that we receive noth-
IIlº IOI’. -
§. LLOYD. Unless you have full R. P. O. cars, you do not receive
any compensation?
Mr. Logan. We have a good many R. P. O. cars we receive no
compensation for. This special arrangement applies to those special
mail cars.
Mr. LLOYD. You say there is a law in Canada that requires you to
carry the mail?
r. LOGAN. There is.
Mr. LLOYD. That is the only reason you carry it?
Mr. LOGAN. I will not say that. &
Mr. LLOYD. You would not carry the mail in Canada or any other
place at a great loss like this if you could avoid it. The way to
avoid it would be to refuse to carry it. *
Mr. LOGAN. That is true.
546 RAILWAY MAIL FAY.
The CHAIRMAN. You could refuse to carry it in the United States
over the 1,100 miles you operate in the United States, but still you
carry it at this loss? % { -
r. LogAN. As a matter of policy we consider it best. • *
The CHAIRMAN. How does the service rendered the Government
in Canada compare with that in the United States? ~
Mr. LOGAN. Taking our lines between Toronto and Montreal it is
very similar to the line between Port Huron and Chicago in mileage
and character of service; we perform practically the same service,
having five cars assigned to that line, the same as between Port
Huron and Chicago, and we receive considerably less.
The CHAIRMAN. In Canada?
Mr. LOGAN. In Canada. * -
The CHAIRMAN, Do you get any allowance in Canada for side
service? - -
Mr. LOGAN. No; we have been forced to perform certain side
service heretofore.
The CHAIRMAN. In Canada?
Mr. LOGAN. In Canada. - -
The CHAIRMAN. How does that correspond with your experience
here in the United States? -
Mr. LoGAN. It has been more onerous. That is being readjusted
from the first of next month, they are taking over the side service
May 1.
ñ. CHAIRMAN. That is, the Canadian Government'
Mr. LoGAN. Yes; the Post Office Department. t
The CHAIRMAN. They are on the first of next month. Do they
expect to allow you compensation for side service performed in
Canada, or will they relieve you entirely of the side service and the
Government perform it?
Mr. LoGAN. We are to be relieved of all side service.
The CHAIRMAN. And the Government will perform that ?
Mr. LOGAN. Yes.
The CHAIRMAN. What do you figure the cost to you in Canada for
the performance of the side service for which you receive no compen-
sation? s
Mr. LOGAN. It has been approximately $40,000 a year. -
The CHAIRMAN. What, in your judgment, will it cost the Govern-
ment to perform that service itself? .
Mr. LOGAN. I could not say.
The CHAIRMAN. Do you think the Government could perform it as
cº, as you could?
Mr. LOGAN. I think they should. • *
The CHAIRMAN. How will they perform it? +
Mr. LoGAN. They will likely perform it through the same subcon-
tractors that we have been performing it through. \ & ‘
The CHAIRMAN. You have not done it directly, but by subcon-
tracts * - $
Mr. LOGAN. Yes; and I might add at only a limited number of our
stations; possibly a third of our stations. *
Mr. Wick. Has there been any distance limit at these different
stations in Candaaº ~~
Mr. LOGAN. No. ...”
Mr. McBRIDE. Do you perform it at all stations?
RAILWAY MAIL PAY. 547
Mr. LOGAN. No; about a third or less of the stations.
Mr. McBridE. What is the distance? -
Mr. LOGAN. Some of those distances run from a few hundred feet
up to 3 or 4 miles. - sº
Mr. McBRIDE. When does the Government take it over under the
present conditions Ž . .
Mr. LOGAN. The 1st of May. -
Mr. McBRIDE. I mean, when did the Government take over the
performance of the side service under the present conditions? You
say it is only performed at one-third of the stations. At the other
stations has the Government performed it 3
Mr. LoGAN. They have always performed it.
Mr. McBRIDE. What decided who would perform it?
Mr. LOGAN. It was under an old contract with the Grand Trunk,
the old original main-line stations had this service included when
the $160 rate was fixed.
The CHAIRMAN. That covered the side service?
Mr. LOGAN. That covered the side service.
Mr. BRADLEY. My impression is, Mr. Logan, that the Grand Trunk
is the only railroad in Canada that performs side service for the
Government. •
Mr. LOGAN. Yes; it was the only road at the time the contract
was made. •
Mr. BRADLEY. And the Government performs side service on
every other railroad in Canada except the Grand Trunk.
Mr. ROWAN. And that exists to-day, so far as you know?
Mr. LOGAN. Yes.
Mr. LLOYD. The computation that you made in this matter is all
over your system, both in Canada and the United States.
Mr. LOGAN. This statement for 1909'?
Mr. LLOYD. Yes.
Mr. LOGAN. No; this statement is only between Port Huron and
Chicago. Our Grand Trunk Western is 336 miles.
Mr. McBRIDE. That does not include your routes in New York
State? Haven’t you a few small routes in New York State that
are not included?
Mr. LOGAN. Those are not included; no.
Mr. BRADLEY. My understanding was that Mr. Logan said his
original presentation covered about 1,100 miles?
Mr. LOGAN. No; I said our mileage in the United States was be-
tween 1,000 and 1,100 miles. -
The CHAIRMAN. Does not the computation that you have pre-
sented to the committee cover the whole of the 1,100 miles?
Mr. LOGAN. No. Only between Port Huron and Chicago. That
is, º I have said, our heaviest and most easily calculated mail-carry-
IIl Q IIIl€.
#. CHAIRMAN. And on that you estimate that you are receiving
30 per cent less compensation than what you should receive 3
Mr. LOGAN. Approximately; what our audit department figured out
as the approximate cost in 1909. -
The CHAIRMAN. But the approximate cost takes in dividends, inter-
est, and capital as well as operating expenses and all?
Mr. LOGAN. No dividénds. It did not pay any dividends, but it
includes bond interest and taxes.
548 RAILWAY MAIL PAY.
The CHAIRMAN. And cost of terminals, cost of equipment, cost of
road, and everything? x * -
Mr. LOGAN. All costs.
Mr. LLOYD. Can you answer the question as to whether you receive
#. better compensation on the other lines than you do on the main
IIléS
Mr. LOGAN. On the Grand Trunk Western ?
Mr. LLOYD. Yes.
Mr. LOGAN. It is approximately the same, based on the service
performed.
Mr. LLOYD, What do you say to this general proposition, from your
experience, that the main trunk lines receive better compensation
under the existing law than the branch lines and the short lines 7
Mr. LOGAN. I do not know whether they do or not. I should think
it would be fairer to pay them on that basis—on the present weight
basis for the mails proper. -
Mr. IILOYD. And you think that the present weight basis would be
equitable as between the main trunk lines and the branch lines
and the short lines? r
Mr. LOGAN. As to the Grand Trunk lines I would say yes, so far
as it applies to the mail, but there should be a readjustment on ac-
count of the parcel-post business. -
Mr. LLOYD. I was only speaking of the mail. What kind of
readjustment should we make on the parcel post 3
Mr. LOGAN. I feel that the parcel-post business is practically a new
business; it is handling merchandise at a higher maximum weight per
pound than heretofore and that the determination of the payment for
that service should be on the weight plus the space basis, neither the
weight basis nor the space basis only being absolutely a fair meas-
urement.
Mr. LLOYD. You do not think you should receive as much per
pound for carrying merchandise as you would for carrying letters?
Mr. LOGAN. No; I do not think that is fair, but the weight basis
plus the space basis is the basis that has practically determined the
rates made by the express companies and it is in effect with the
steamship companies to-day and it is not therefore a new principle.
Mr. LLOYD. It is getting to be a very important phase of it. There
are two lines of thought with reference to the basis; one that it should
be purely a weight basis and the other that it should be purely a
space basis. The present law is about 90 per cent weight and 10 per
cent space. Now, isn’t it probable that a scheme could be worked
out which would be more nearly equitable both to the Government
and to the railroad companies that would more nearly equalize
the two 3 * -
Mr. LOGAN. I feel, so far as the parcels-post business is concerned,
that that is possible.
Mr. LLOYD. Do you think it is practicable to separate the parcel-
post business from the mail and make a different compensation for
carrying merchandise than for what you do for carrying the mail?
º LOGAN. I should think you could. You have your separation
now and your accounting—the different stamps. The parcel-post
matter is all carried under parcel-post stamps, as I understand.
Mr. LLOYD. Yes.
RAILWAY MAIL PAY. 549
Mr. LOGAN. And the theory that we arenegotiating with the Canadian
Government on and the theory that has obtained and is in practice in
Fº has been to divide that revenue, or practically a division of
the rate. & *
Mr. LLOYD. Do you think it would be fair to the railroad companies
to divide the compensation that the Government receives by 2–50
per cent to the railroad companies and 50 per cent to the Government?
Mr. LOGAN. That might be considered fair for a joint service. I
will not say that for the United States lines, but we would be willin
to accept that division in Canada, although we will probably hau
longer distances there than we do now. *
Mr. LLOYD. Would it not be equitable in the United States?
Mr. LoGAN. I will let the United States lines speak for themselves
in that respect.
... Mr. LLOYD. I am speaking of your line. Why would it not be all
right with you?
Mr. LoGAN. Of course we prefer to have it on a basis of 60 per cent,
if there is any possibility of getting it there.
Mr. LLOYD. Seventy-five per cent would be better still.
f . LOGAN. We feel we would be safer, but a fair division can be
Qūll Ol.
Mr. LLOYD. When you come down to the truth of it, we all want
to #. at the right thing. You want pay for carrying the mail, and
so far as this commission is concerned we can speak for it; it wants
you to have pay for carrying the mail. We want, if possible, to get
equitable º: that is fair to you and to the Government and try
to get the thing into as simple a shape as we can, so that we can
adjust the matter and have it permanently adjusted.
Mr. LOGAN. I feel this way, if you will allow me to answer it in my
own way: As I stated before, I think the railroads presented a fair
basis for compensation for the mail service, but I do not think they
have gone far enough; that with the introduction of the parcel-post
business there is a new departure, and while you may continue the
weight basis plus a space basis, as it is to-day; the parcel-post ought
to be treated as a parcel-post business, separate and distinct, and a
basis of division of the rate used—a percentage basis—similar to that
in England, a percentage to be determined by competent authorities.
The CHAIRMAN. Let me ask you in that connection do you think
the English method of compensation for carriage of the mail, in-
cluding the parcel post, is entirely satisfactory to the Government,
and the transportation companies as well, in England 2
Mr. LOGAN. I believe that the Government has been complaining
that the percentage is too high.
The CHAIRMAN. That is on parcel post, but take the whole com-
pensation and figuring the parcel post as mail, do you think the
present method is satisfactory as it exists in England 2
Mr. LoGAN. Conditions are entirely different there from what
they are here. I do not know whether they are satisfactory to the
English people or not. *
The CHAIRMAN: Are they satisfactory to the transportation com-
panies in England!
Mr. LOGAN. I do not know.
The CHAIRMAN. You say conditions are different. As a matter of
fact, in England, according to Mr. Bradley’s statement, the trans-
550 RAILWAY MAIL FAY.
portation companies receive 21% per cent, including parcel post, of
all the expenses of the postal department. - - -
Mr. LOGAN. Was that railroad transportation companies or railroad
and steamship transportation companies also }
Mr. BRADLEY. Railroad transportation.
Mr. LOGAN. There is a great deal of mail carried in England by
steamships around the coast—a great deal of it.
The CHAIRMAN. Let us take the railway transportation and the
R. P. O. service in the United States, and for the sake of comparison,
to get the relativeness, give the two figures. In England it is 21%
per cent that the railroad transportation companies receive for the
carriage of mail. . In the United States, according to the Postmaster
General's report for the fiscal year ending June 30, 1912, if you take
the transportation of mails on the railroads for that year and the
railway post office car service for that year and add them together,
and you take the expenditures on account of that year in the postal
department, the transportation companies receive 19.475 per cent
in the United States. If you take the figures of the Post Office
Department and add the actual expenses for that year, including the
amounts expended on account of the previous fiscal year, and add
them together, then the transportation companies of this country
the railway, and the R. P. O. service receive 20.7 per cent of the total
expenditures of the Post Office Department. Now, where is there a
distinction in operation in the United States in railway transporta-
tion of mails and in Great Britain }
Mr. LOGAN. I understand a big percentage of the postal service in
Great Britain is handled by steamship transportation companies.
That ought to be taken into that calculation.
The CHAIRMAN. We are simply taking the two calculations of
service in the two countries.
Mr. LOGAN. The mileage is different. In the first place, the amount
of service performed in the United States is far in excess, propor-
tionately.
The CHAIRMAN. Where is the difference?
Mr. LOGAN. That would have to be figured out by experts.
The CHAIRMAN. I would like to ask Mr. Bradley in that connection
a question, I was very much impressed with that portion of your
statement in volume 2 of the hearings on page 440, in the paragraph
reading as follows:
In Great Britain it is observed that the Government pays the railroads for transport-
ing the mails, including the parcel post, an amount equal to 21% per cent of the total
expenditures, although the service rendered in Great Britain by the railroads is obvi-
ously much less extensive and not nearly so essential as the similar service is in the
|United States.
Would you elucidate a little the difference in the two services and
why the relativeness can not be taken in percentage of the compen-
sation to the total cost of operation of the service in the two countries?
Mr. BRADLEY. It is difficult to get data sufficiently trustworthy
to make a serviceable comparison between the railway mail service
erformed in England and the railway mail service performed in the
nited States, but in this country the Post Office jº has
stated the average haul of mail to be 620 miles. I do not think the
figure as to the average haul in Great Britain is known, and we would
have to guess at it—possibly 100 miles or less. I think it could also
RAILWAY MAIL PAY. 551
be said that the railroads are not so essential to the postal service in
Great Britain, because they could perform much of their service by
motor vans on account of the shorter distances and because of their
better roads. -
Mr. LOGAN. And by steamship and coasting lines.
Mr. BRADLEY. We have no trustworthy figures as to the compara-
tive tonnage. -
The CHAIRMAN. Why would this make a difference 3 I want to
get it as a matter of information, and my questions are not based on
criticisms of your statement. , Your statement impressed me very
strongly as something definite for a º and I wanted to get
from you gentlemen who are experts and specialists on this particular
subject the reason why these comparisons could not be used to advan-
*:: by the committee.
T. §: I think it would be a very good comparison if we
could get the English data as to average haul and the progress that
*
is being made in replacing the railroad mail service by motor van
service. I do not know of any source from which that information
could be obtained, but I think the general statement could be made
and accepted that in the United States the haul is several times as
great as in Great Britain; the tonnage is greater, and the necessity of
the railway service is greater to the Post Office Department.
The CHAIRMAN. What difference would it make whether your
computations were based on 5,000,000,000 pieces of mail or on
100,000 tons or 200,000 tons? Five billion pieces of mail or
10,000,000,000 pieces of mail? -
Mr. BRADLEY. Would not that measure the value of the service
performed ? There ought to be a greater reward for moving 2 tons
100 miles than 1 ton.
The CHAIRMAN. You would get your greater reward and your per-
centage of cost would be the same. The point that impressed my
mind is, or the point on which I want to get more information, is
why it is not safe to take 21% per cent as the revenue to the railroads
in England to the total expenses to the postal service and take 21%
per cent as a figure, for instance, as to what the railroads should
receive in this country of the total expense of operation of the postal
service. . The services are the same, they have to have clerks, they
have to have mail carriers, they have to have different facilities, have
mail transportation and mail service in both countries, only one is
much larger territory than the other, and it means simply so many
more units added to perform the activity and each unit gets a pro-
ortional cost. As I understand the compensation in England is
ess than the compensation to the postal employees in the United
States, but I wanted to see from you gentlemen how far we could,
to advantage, utilize this information which you submitted in your
report from which I have just quoted. How does that impress you,
Mr. Lorenzº
Mr. LORENZ. I think that some differences that have been men-
tioned are very pertinent; for instance, the difference in the length
of haul would be one factor to consider.
The CHAIRMAN. Do you think that is vital 2
Mr. LoRENZ. That is vital.
552 RAILWAY MAIL PAY.
The CHAIRMAN. So that the mere statement of percentages, of
receipts and cost of operation can not be used without further
information? r &
Mr. LORENz. Not conclusively. I have also been impressed by
the statement that a large proportion of the mails are carried by
steamship, so that your postal receipts would include that part of
the mail carried on steamships, but the payment to the railroads
would not. In other words, you have to include your payments to
the steamships and railroads to make the comparison fair.
Mr. Log AN. Take all of the transportation companies in Great
Britain and in the United States and then that would be fair?
The CHAIRMAN. Do you think that would be fair?
Mr. LOGAN. That would be fairer.
The CHAIRMAN. How does that impress you, Mr. Lorenzº
Mr. LORENz. That would eliminate that difficulty.
The CHAIRMAN. Do you think that would be a fairer comparison?
Mr. LORENz. I should think the average length of haul should be
considered also.
Mr. LLOYD. What do you think of the theory of the New York, New
Haven & Hartford road to the effect that the short distances which
they haul their mail is accountable for the fact, in part, that they do
ºve compensation they ought to receive compared to other
roads 3
Mr. LORENz. I think it is an important factor and probably the
comparison between England the United States should not be made
as a whole, but of the New England group of roads that might be
fair. -
Mr. LOGAN. Or with the eastern roads where you have a dense
population ?
Mr. LLOYD. The theory of the New York, New Haven & Hartford
road was that because of their terminal facilities that must be pro-
vided and terminal equipment, that the expenses of their road, com-
paratively, were much greater than in a country that is less densely
opulated and where there is not so much required to be expended
or terminal charges. In other words, the New York, New Haven &
Hartford is a complex system of short roads and each short road has
its costly terminals, which add very much to the charge per mile and
the expense per mile for operating the road.
Mr. LOGAN. It is fair to take that into consideration. In connec-
tion with the English question, I might throw a little light on that by
a memorandum I have prepared. This is on the result of an arbi-
tration between the post office department and the Great Western
of England, made about 1906, I think, which determined the present
basis of pay to that road by the English post office department.
Without taking into consideration their differences in pay (for
instance, their enginemen will receive 60 per cent of what our engine-
men will receive), without taking those factors into consideration, but
taking the factor that their mail car weighs about 20 tons, compared
to over 40 tons for our average mail car, I figured out that the
Grand Trunk should receive per mail car mile 27 cents, based on
that decision. Their payment, in other words, approximated
between 13 and 14 cents per mail car mile for the service rendered on
a given district, which was stated in the decision. I multiplied that
by two because of the double capacity of our mail car. That was
RAILWAY MAIL PAY. 553
based on the mail carried. To that should be added the revenue
received from 55 per cent of the parcel-post revenues, whatever that
was determined at. Some of that parcel post, as you may be aware,
is practically handled on fast freight trains.
he CHAIRMAN. In Great Britain } -
Mr. LOGAN. In Great Britain. Here it is proposed to handle it
all on fast passenger trains.
Mr. LLOYD. Do you think it is practicable to provide for the car-
riage of parcel post mail by fast freight instead of fast passenger,
just like the English do 2 -
Mr. LOGAN. With the prospective growth–
Mr. LLOYD. Where it may be carried in carload lots. Let me
put it that way? -
Mr. LOGAN. I would hardly like to venture an opinion on that.
Mr. LLOYD. Could you carry it from New York to Chicago, or
Indianapolis, Cincinnati, or St. Louis in carload lots by fast freight 2
Mr. LOGAN. I doubt if it would compete with the express business.
Mr. LLOYD. You think it would be a factor which would prevent
its competition with the express business?
Mr. LOGAN. I do.
Mr. LLOYD. How much difference would there be in time of deliv-
ery, between sending by freight, for example, from New York to
Chicago, than by sending by passenger trains?
Mr. LOGAN. I do not know; I could not say. In partial answer
to your previous question relative to the handling by special freight
trains you may say if the parcel-post business increased during the
next five years as it has apparently increased during the past three
months, from reports ... and which I roughly estimate at
the rate of 10,000,000 parcels a month, at the end of this year the
jºimate amount of business handled will be close on to a billion
8.TCéIS.
p The CHAIRMAN. Do you mean a billion parcels or a billion pieces
of fourth-class mail matter?
Mr. LOGAN. Whatever you may term it, a billion pieces of mail
matter handled under parcel-post stamps.
The CHAIRMAN. It is fourth-class mail matter. We had 273,000,000
pieces, as I remember, before we had what is known as the parcel-
post law, so that it is simply the increase of that number that would
be due to the increased provisions of the fourth-class mail matter?
Mr. LOGAN. Whatever it is, it is an unknown quantity that we are
all up against, and with the growth of that during the next five years
at anything near the rate that the same business is growing in Canada
on a 5-pound basis, which is at the rate of 30 per cent per annum, we
would soon realize that it is a great big undertaking to handle all the
business on the passenger or mail trains in the United States within
the next four or five years, and it is bound to result in converting a
good many of your present mail trains into mixed trains of passenger
and parcels. In other words, there will be much delay at stations,
and I believe that is the experience of some of the trains now.
The CHAIRMAN. In Canada?
Mr. LOGAN. No; in the United States. The result of delay to
trains will result in delays to the mails proper. I understand
from inquiries that the railways and express companies report ap-
proximately increases and decreases respectively, from 25 to 30 per
554 RAILWAY MAIL PAY.
cent in the handling of parcel post—that is, the express companies
report losses in 11-pound parcels and under of between 28 and 30
per cent. * - -
The CHAIRMAN. Of their business?
Mr. LLOYD. Of their business of 11 pounds and less. -
. The CHAIRMAN. According to last year's statement, they had
90,000,000 pieces of 11 pounds and less. How are you going to
account for the increase of 750,000,000 pieces in fourth-class mail
matter because of what is known as the parcel post 8
Mr. LOGAN. Cut that estimate in two.
The CHAIRMAN. What is the use of cutting it? You can take any
law of theoretical figures you want to to make figures on.
Mr. LOGAN. Yes.
Mr. LLOYD. Then you have four times as much as the whole
express & -
r. LOGAN. I am taking just what was published in the press as
the increase during the last three months, the increase of 30,000,000.
pieces of parcel post.
The CHAIRMAN. They are not parcel post. It is impossible to
make a determination as to parcel post out of fourth-class mail
matter. The only information that is obtained has been by actual
count and weighing fourth-class mail matter, which prior to the
operation of what is known as the parcel-post law in January there
were 273,000,000 pieces, as I remember, of fourth-class mail matter
handled. -
Mr. LOGAN. Whatever the figure is it is going to be a very large
increase in the matter that is handled under parcel-post stamp.
The railroads should be compensated for that additional service whic
they are called upon to perform and which we understand to be the most
valuable portion of the service, as the railroads furnish the most
valuable equipment, and perform a great portion of the service similar
to the express service; and we feel we should be compensated for that
. some different basis than either the weight basis or the space basis
8, iOIlê.
Mr. LLOYD. If you were paid for the weight you could not com-
plain, could you ? - ! . .
Mr. LOGAN. Yes. tº .
Mr. LLOYD. Why?
Mr. LOGAN. Because it is not fair to have a 5-pound piece of silver,
a 5-pound package of soap, or a 5-pound package of feathers, or a 5-
pound piece of millinery sent over your line at the same charge. They
are all in different sizes. As an illustration, I have been referred to
a case where one of the big 5-ton trucks carrying express matter was
loaded up to the limit with millinery out of a millinery house; when
it was put on the scale it weighed just 500 pounds. If they were
required to carry that all on a weight basis it would be unreasonable.
They carry such parcels up to a certain weight, and all in excess of
that is on a space basis or the cubic contents.
Mr. LLOYD. Is it true you think there has been a greater per cent
increase in the carriage of goods by mail than any other class?
Mr. LOGAN. I can not say that; I do not know.
Mr. LLOYD. I heard that suggested. I do not know whether there
is any foundation for it or not, that nearly all the women in the
smaller towns now are getting their hats from the cities?
RAILWAY MAIL PAY. 555
Mr. MACK. I think the United Cigar Co. is supplying the West with
hats, from the looks of the business passing through. š. Louis.
The CHAIRMAN. If you had compensation, Mr. Logan, for your
R. P. O. and apartment cars and then compensation for the wº
of your mail, your difficulty would be obviated, would it not? You
would get the weight compensation and would have additional space,
abnormal amount of space paid for in extra compensation for the
R. P. O., provided the same compensation applied to apartment cars,
as it were 7 .. -
Mr. LOGAN. Our experience is that we do not get paid for the space
furnished.
The CHAIRMAN. I understand that is the claim of all the railroads.
Mr. LoGAN. That is an arbitrary rule?
The CHAIRMAN. That does not answer the question. If you did
get Fº for the space furnished in the apartment cars, as well as the
R. P. O., you would get paid for the R. P. O. space, would you not ?
Mr. LOGAN. Some of it, but not all of it.
The CHAIRMAN. Why not all of it? -
Mr. LOGAN. For instance, on one line we furnish 55-foot cars and
get a 40-foot allowance. : •
The CHAIRMAN. Because you have not got a 40-foot car to meet
the authorization of the department. Is that it?
Mr. LOGAN. Well, we have had some put in and some complaint
about it, and we put back the 55-foot space. That is my understand-
ing of it. The report came to me.
The CHAIRMAN. If the assumption is that 10 feet of space is not
to be used in a car—in other words, if there is a 40-foot requirement
in a car and there should be 10 feet additional space—your compen-
sation in effect covers the whole 50 feet, although it nominally covers
only 40, there is no criticism on the part of the transportation com-
pany, is there? -
Mr. LOGAN. I would not like to answer that.
The CHAIRMAN. There should not be? It would be simply a
matter of application of figures.
Mr. LOGAN. On some roads that would probably be fair, but on
other roads where they are carrying heavy tonnage it should be
taken into consideration as well. It is the service performed.
Mr. LLOYD. Tonnage does not make any difference to the railroads,
whether it is 1 ton in a mail car or 2 tons in a mail car.
Mr. LOGAN. It makes a difference if there are 2 tons or 20 tons?
Mr. LLOYD. If there were 2 tons and 20 tons there would be a
difference, because if there were 20 tons you would have to have
three or four cars; but it makes no difference to you, as a railway
proposition, so far as the transportation of the train is concerned,
whether there is 1 ton of mail or 2 tons of mail. The weight is in
the car itself and not in the contents of the car.
Mr. LOGAN. The value is in the service performed?
Mr. LLOYD. Yes; and not in the weight.
Mr. LoGAN. Weight is a factor the same as in freight, express, or
anything else. -
Mr. LLOYD. It would cost you just as much—not actually, but the-
oretically—to transfer an empty passenger as it does a passenger car
reasonably well filled, does it not ?
556 RAILWAY MAIL PAY.
Mr. Logan. I would not say that; no. It costs more in coal. The
more weight you haul the more coal you burn and the more wear and
tear. -
Mr. LLOYD, Slightly so. -
Mr. LoGAN. Taking it for the year around, it adds up.
The CHAIRMAN. What percentage of the mail handled by the Grand
Trunk in the United States goes in the R. P. O. cars?
Mr. LoGAN. I judge 90 per cent of it.
The CHAIRMAN. Ninety per cent of it is in the R. P. O. §
Mr. LOGAN. That is, what I meant by that is full mail and apart-
ment CarS.
The CHAIRMAN. What per cent goes in the full mail? You say you
receive no compensation extra for the apartment car?
Mr. LOGAN. R.
The CHAIRMAN. What per cent goes in the R. P. O. car proper, for
which you receive extra compensation ? . *
Mr. LOGAN. I have not determined that. I could not say. I have
not separated them.
The CHAIRMAN. Do you think if you got compensation for the
apartment-car service furnished that that would very materially
decrease what you think is an apparent loss of $93,000 to your com—
pany, according to your computation that you have presented 3
Mr. LOGAN. It would help to a certain extent.
The CHAIRMAN. What amount 3 • -
Mr. LOGAN. I do not know. I would have to figure that out.
The CHAIRMAN. Would the relief from the side service decrease your
apparent loss of $93,000?
Mr. LOGAN. It would.
The CHAIRMAN. To the extent of $40,000 a year?
Mr. LOGAN. That is in Canada only. In the United States that
does not amount to 10 per cent.
The CHAIRMAN. Ten per cent in the United States?
Mr. LOGAN. I do not suppose it would amount to more than $3,000
or $4,000 in the United States.
The CHAIRMAN. Is it your opinion if you were relieved of the side
service, received compensation for the apartment cars on the same
basis that you get for the R. P. O. car, and had an annual weighing
of the mail, under the present method, at least under the present law,
by weight, that that would give you a fair return on the service
rendered 7
Mr. LOGAN. I think it would give us approximately a fair return
of what we have heretofore expended for mail service, but I do not
think it would compensate us for the increased load we are now
carrying and which we are likely to carry in the future for the parcel
OSt.
p The CHAIRMAN. Why does not the compensation for space in addi-
tion to the compensation for weight cover that point %
Mr. LOGAN. Because a great deal of that will have to be carried in
baggage cars separate from your mail cars as it grows.
The CHAIRMAN. Then that would be a separate car—extra compen-
sation for use of storage car?
Mr. LOGAN. That is right. That also would have to be taken care
OT. - r
RAILWAY MAIL PAY. 557
The CHAIRMAN. Do you consider the Grand Trunk as typical of the
railroads here in the United States? In other words, the experience
that you have on the Grand Trunk, would that be a good indication
of the general lines of railroad in the United States ? -
Mr. I.OGAN. No; I would not. I would consider it typical of only
a small portion of the lines; not the short lines but the intermediate
lines, because our lines in the United States are more or less short
main lines and branches; that is, lines running for three or four hun-
dred miles. Our longest main line in the United States is 336 miles.
The CHAIRMAN. Would you consider the Grand Trunk and the New
Haven as analogous at allº
Mr. LOGAN. No; I would not; they are not analogous, because
the lines in Massachusetts and Connecticut are in densely settled
country, and they have a great many expensive terminals, wbile
we extend through a thinly settled country, comparatively, and
with comparatively few expensive terminals.
S The CHAIRMAN. That is the Grand Trunk system in the Unite
tates? -
Mr. LoGAN. Yes; that is as compared to the New Haven.
Senator WEEKs. How much difference do you think it would make
to the corporation in the cost of the service under such conditions as
obtain in the New Haven territory and those which obtain in the
Grand Trunk territory of the United States?
Mr. LOGAN. I am not able to judge that.
Senator WEEKs. Have you any idea?
Mr. LOGAN. I haven’t any idea.
Senator WEEKs. You could not guess at it?
Mr. LOGAN. It would be purely a guess.
Senator WEEKs. What sort of a guess would you make?
Mr. LOGAN. I would not like to venture.
Senator WEEKs. Do you think anybody knows?
Mr. LOGAN. No; it is pretty hard to figure that out. The condi-
tions are so different. #. conditions vary with different years.
Senator WEEKS. Suppose somebody was trying to make a fair and
just rate to everybody concerned, would you not have to arrive at
some conclusion on that point %
Mr. LOGAN. They would have to find approximately what would
be fair to both.
Senator WEEKs. But how would they go about it? -
Mr. LOGAN. Like the Interstate Commerce Commission are going
about the matter of finding the relative rates between passenger and
freight service, by hearings, investigations, and adjustments that ex-
tend over a period of years. --
Senator WEEKs. Would you think the Interstate Commerce Com-
mission the fittest organization for determining that; I mean that
is in existence now %
Mr. LOGAN. They might have the most experience. I do not
know whether they would be the most competent to judge or not.
The CHAIRMAN. When do you think they would be able to get an
ascertainment upon which they could make such a determination ?
Mr. LOGAN. I have not the least idea. It depends on the staff
they would have and what they would inquire into.
87.288—No. 4—13—3
558 RAILWAY MAIL PAY.
The CHAIRMAN. Then do you think the matter of adjustment of
. mail pay should be left in abeyance until the ascertainment
IS Iſla, Ole
Mr. LOGAN. No; I do not think so. I think I expressed an answer
to that when I said we were receiving back about 60 per cent of our
estimated cost in the United States.
The CHAIRMAN. What subsidy do you receive in Canada?
Mr. LOGAN. None. -.
The CHAIRMAN. None whatever?
Mr. LOGAN. At the present time?
The CHAIRMAN. Yes.
Mr. LOGAN. For carrying the mail?
The CHAIRMAN. Or for any purpose?
Mr. LOGAN. No; not that I know of.
The CHAIRMAN. Did you have a land grant from Canada?
Mr. LOGAN. No. -
The CHAIRMAN. Have you ever received any assistance from the
Canadian Government'
Mr. LOGAN. Received assistance in many cases to the extent, ac-
cording to my recollection, of $3,200 a mile. . .
• The CHAIRMAN. What proportion of the cost was that ?
Mr. LOGAN. That is hard for me to say.
The CHAIRMAN. Was that intended as a partial offset to the loss
you are making in carrying the mail?
Mr. LOGAN. No; the mail did not enter into consideration at all; it
was simply to get capital to build the lines.
The CHAIRMAN. Is not the railroad receiving any benefit, anything
for carrying the mail at one-third of the cost to the corporation?
Mr. LOGAN. None whatever. We figure that, º; speaking,
on the losses made for the carriage of the mail in the past they far
more than offset any subsidy that we have received. One of these
subsidies was in the nature of a loan of $15,000,000, which has never
been repaid.
The CHAIRMAN. How is the compensation which you shall receive
for carrying the mail determined 3
Mr. LoGAN. It is simply a matter of negotiation.
The CHAIRMAN. Between whom 7
* The Post Office Department and the railroads indi-
VICIUla,II.V.
The ënamas. What you would receive has nothing to do with
what the Canadian Pacific or some other railroad was receiving?
Mr. LOGAN. No. As I have stated before, the Post Office now is
studying a scheme to put into effect that will put the railroads
relatively on an equal basis.
The CHAIRMAN. Can they be put on an equal basis º
Mr. LoGAN. That remains to be developed.
The CHAIRMAN. Do you think they can be 2
Mr. LOGAN. I think approximately; yes. - * :
The CHAIRMAN. You just testified conditions vary from year to
year and in different territories? • *
Mr. LOGAN. We asked to have its inequalities adjusted between the
territories and also to have them adjusted every five years, or for
limited period. - I

RAILWAY MAIL RAY. , , 559
The CHAIRMAN. What reason is assigned for making an arrange-
iment with the Government for carrying the mail for one-third of the
, cost-of the service'?
Mr. LOGAN. I do not know; it has been a matter of growth.
The CHAIRMAN. Of course, you have to increase your other charges
...to make up that difference? -
Mr. LoGAN. That is true. o
The CHAIRMAN. And you are furnishing a subsidy for the Govern-
“ment by so doing?
Mr. LoGAN. I think this is equally true here in the United States .
where, under this parcel post system, a new method of discrimina-
tion has been created, whereby the mail-order houses and the de-
ſpartmental stores now can compete to their special advantage against
the trader who ships his goods by freight and has his traveling men
on the road, and the railway as the medium of service has to make
slip any difference on account of the loss that may result because
of cheap mail service. The railways are forced to assist in this
discrimination.
The CHAIRMAN. We are just going on to try to adjust it, but you
have been going on year after year in Canada.
Mr. LOGAN. But we hope to have a better adjustment in the future.
The CHAIRMAN. Have the Canadian railroads so kept their accounts
that they could demonstrate, to their own satisfaction at least,
whether they were receiving fair compensation in Canada for the
handling of the mail or not ?
Mr. LOGAN. That is, the post office department
The CHAIRMAN. Isay, the railroads themselves; the transportation
companies of Canada. -
Mr. LOGAN. We have made statements that I think have been
accepted as reasonable and fair by the Post Office Department, to
show that we are being underpaid.
The CHAIRMAN. Submitted when }
Mr. LOGAN. At least three of four years ago.
The CHAIRMAN. And since 1873 down to 1910, for a period of 37
years, the railroads of Canada were not cognizant of whether they
were underpaid or overpaid or equitably paid at all. In other words,
their method of accounting made no segregation as to the mail com-
spensation or cost, did they
Mr. LOGAN. No, not until the new statistical reports were made.
Then it developed that there were differences that should have been
2adjusted previously. There is one more point, if I might be per- .
mitted to bring it out, when making comparisons with the English
pay, we do not want to forget the fact that the English Government
also pays for the transportation of mail sorters, as they term them,
in the mail cars, and we have the same question up with the Canadian
Government, and we consider that when the Government of Canada, as
well as the Government of the United States in many cases, pays for
the transportation of their mail distributors in some sections and
on certain classes of transportation, they ought to pay them on all
classes of transportation and not discriminate in cases of the men
i traveling by steam railroad. As I understand, in a number of cities
the mail carriers pay street car fare on electric lines—as an instance
I am informed this is the rule here in Washington—and in Canada the
Government makes a direct bonus payment to the electric railway of
560 RAILWAY MAIL PAY.
a city of the size of Montreal, Toronto, Hamilton, and so on, and
paying them a certain amount per annum for the transportation of
their mail carriers. There is no difference between an employee of
the mail service riding upon a railroad train and riding upon an
electric car, and as it appeals to our sense of justice it seems to me
that we ought to be paid a fair compensation. In England it is the
lowest commutation rate over the road over which the service is
performed.
The CHAIRMAN. Every individual postal employee who travels
on the railroad pays, either himself or the government for him, for
that transportation to the transportation company ?
Mr. LOGAN. That is not my understanding. *
The CHAIRMAN. Does not the R. P. O. car cover the compensation
for the passenger transportation of the employees in the car? " *
Mr. LOGAN. We have never so understood it. I do not think
it is ºted by the law, nor are the men weighed when the mails are
We]9'Ile Ol.
#. CHAIRMAN. If you have not so understood it, why have you
not made a claim for payment at the transportation rates?
Mr. LOGAN. It has simply gone by default.
The CHAIRMAN. What difference would it make if you received
compensation for R. P. O. cars, if there were 2 tons of mail in that
car and six mail clerks or 4 tons of mail and two clerks?
Mr. LOGAN. The principal difference we find is that when that car
gets into a collision we have to pay these men as much, and some-
times more, than we do other people who are injured. We have to
assume the risk of carrying the men.
The CHAIRMAN. You assume no such risk in carrying the express-
men'.
Mr. LOGAN. No; the companies assume that themselves, and in
England that is taken care of by the post-office department assuming
the risk against claims of that kind." *
The CHAIRMAN. Insuring the railroad companies }
Mr. LOGAN. Insuring the employees. They assume the risk.
The CHAIRMAN. Then, if a postal employee in England is injured
he looks to the Government or the insurance established by the
Government and his own claim against the transportation company?"
Mr. LOGAN. That is my understanding," and in addition they pay
the fare on the lowest commutation rate. The mail clerks in the
United States are treated under the law in every respect the same as
a passenger, except they do not pay a fare. Yet we can not take
them as trespassers because they are there by authority.
The CHAIRMAN. Do you consider mail transportation as analogous
to passenger and express transportation, or are there differences, to
your mind, and is the railroad entitled to different compensation; if
so, what are the differences between the three classes of transporta-
tion ? * - . . .
Mr. LOGAN. There are great differences between all three classes
which make them hard to compare.
'.. i With reference to Mr. Logan’s statement that the British Post Office Department assumed all risks
of accident to mail “sorters,” he subsequently stated in a letter dated April 24 to the chairman that the risk
. ºiled, the post-office department assuming one-half after their consent to settlement had been
ohtained. - *
RAILWAY MAIL PAY. 561.
The CHAIRMAN. Suppose you had the right to determine the com-
pensation received from the three classes of service generally—passen-
ger service, express service, and mail service. What conditions would
you make and which would you #. the greater compensation to ?
Mr. LOGAN. It seems to me they ought, as a matter of right, to
practically earn an equal revenue per car.
The CHAIRMAN. And in your mind they are equivalent?
Mr. LOGAN. So far as their earning basis is concerned; yes.
The CHAIRMAN. Is the express basis equivalent, relatively 7
Mr. LOGAN. There are differences there. But so far as mail carrying
on the train is concerned the expense is practically equivalent, except
in the case of emergencies arising.
The CHAIRMAN. And the only difference between the mail and
passenger is that you would expect to pay under existing conditions a
greater reward to a mail employee for injury than to a passenger?
Mr. LOGAN. Well, only so far as the employee is concerned. Of
course human life is human life and ought to be looked on as being
more valuable and have far greater protection than mail matter in a
mail car.
The CHAIRMAN. I understand; but I understood you to say a
moment ago, at least that is my impression, that you expected to have
to pay more damages for injury to a mail employee than you would to
the ordinary passenger ?
Mr. LOGAN. That has been, on the average, our experience, yes;
for injury to a mail employee.
The CHAIRMAN. What has been the reason for that ?
Mr. LOGAN. They have been better educated to the conditions, I
presume, and know how to go about making their claims better, and
probably use better class of lawyers, and so on.
The CHAIRMAN. There is no recognized principle in law for a dis-
tinction of that nature?
Mr. LOGAN. No, sir. -
The CHAIRMAN. Then from that viewpoint you would expect that
the transportation companies should receive a higher compensation
for handling the mail than they do for carrying passengers or carrying
express 7
. LOGAN. No; although the mail always has the preference.
With the payment for the carriage of the mail clerks included it
would seem to me the amount earned per mail car ought to be approx-
imately what can be earned per passenger car.
Mr. LORENZ. Does not the passenger department have to carry
free officials, employees, and perhaps others? -
Mr. LOGAN. Yes.
Mr. LORENZ. So that there are certain persons necessarily carried
without compensation by the passenger department 3
Mr. LOGAN. Yes.
Mr. LORENz. Why could not that matter be eliminated in the com-
parison if the employees in the mail service are carried free and those
necessary in the passenger service are carried free ? -
Mr. LOGAN. It is necessary to carry men free account of, etc., the
freight service. That is only incidental, and it might be an infini-
tesimal amount as compared to the whole. I do not believe it could
be easily calculated.
56% RAILwax. MAIL PAY.”
The CHAIRMAN. Is there any further information
mit, Mr. Logan & .
Mt. LoGAN. No, sir.
you have to sub-
The CHAIRMAN, The committee are very much obliged to you for,
coming down and giving us your views on the matter.
Net income by classes of traffic, Grand Trunk Western Ry. Co., year ending June 30, 1912.
Amount. |Percent.
Car-miles: • * ,
Passenger----------------------------------------------------------------- 702,766 || 87.99%
Express------------------------------------------------------------------ 24,350 3.05
Mail---------------------------------------------------------------------- 71,525 8.96
Total. . . . . . . . . . . . * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 798,641 100.00
Freight-train operating expenses. . . . . . . . . . . . . . . . . . . . .------------------------- $2,638,889.92 |.......... y
Passenger-train operating expenses-------------. . . . . . . . . . . . . . . . . . . . . . . . .- - - - - - - 2, 191,070.70 | . . . . . . . . . .
Total operating expenses------------------------------------------------ 4,829,960.62 . . . . . . . . . .
Apportionment of passenger-train operating expenses on car-mile basis: .
Proportion chargeable to— • ..
Passenger-------------------------------------------------------------| 1,927,923, 11 87.99
Mail-----------------------------------------------------------------, 196,319.93 8: 96
Express-------------------------------------------------------------- 66,827.66 3.05.
Apportionment of taxes, interest, rentals, hire of equipment (on revenue basis): &
Freight revenue (including freight miscellaneous). . . . . . . . . . . . . . . . . . . . . . . . . 4,240,782.24 | 63.61
Passenger revenue (including passenger miscellaneous). . . . . . . . . . . . . . . . . . . . 2, 198,874.61 - 32.98.
Mail revenue-------------------------------------------------------------- 128,663.00 1.93
Express revenue---------------------------------------------------------- 98,485. 14 1.48
Total.------------------------------------------------------------------- 6,666,804.99 100.00
Taxes------------------------------------------------------------ $399, 422. 13 |- . . . . . . . . . . . . . . . . . . . . . . . . . .
Rentals---------------------------------------------------------- 90, 404.55 |- - - - - - - - - - - - - - - - - - - - - - - - - -
Hiré of equipment----------------------------------------------- 424,619.01 -----------...--|----------
Total.------------------------------------------------------ 914,445.69 - - - - - - - - - - - - - - - - - - - - - - - - - -
Interest.---------------------------------- \- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 847,855.32 - - - - - - - - - -
Prº chargeable to:
reight------------------------------------------------------ $581,678.90 539,320.77 |... . . . . . . . .
Passenger---------------------------------------------------- 301,584. 19 279,622.68
Mail--------------------------------------------------------- 17,648.80 16,363.61 |- - - - - - - - - -
Express----------------------------------------------------- 13,533.80 12,548. 26 | . . . . . . . . . .
RECAPITULATION.
[Italic figures indicate deficit.]
Freight. - Passenger. Mails. Bxpress. Total.
Operating revenue... . . . . . . . . . . . . . $4,240,782.24 || $2,198,874.61 || $128,663.00 $98,485.14 $6,666, 804.99
Operating expenses. . . . . . . . . . . . . . . 2,638,889.92 | 1,927,923.11 196,319.93 | 66,827.66 4,829,960.62
Net operating revenue. . . . . . 1,601,892.32 270,951.50 67,656.98 || 31,657.48 || 1,836,844.37
Ratio----------------------------- (62.23] (87.68] [152.58] [67.86] (72.45] . .
Taxes, rentals, and hire of equip- .
ment---------------- * - - - - - - - - - - 581,678.90 301,584.19 17,648.80 | 13,533.80 914,445.69
Operating income...... ----- 1,020,213. 42 30,632.69 85,805. 73 18, 123.68 922,398.68
Interest...... ** * * * * * * * * * * * * * * * * * * * = 539,320.77 279,622.68 16,363.61 | 12,548.26 847,855.32
Net income. ---------------. 480,892.65 310,255.87 | 101,669,34 5,575.42 r 74,543.36
Cost of property 1-- - - - - - - - - - - - - - - - 17,792,124.77 || 9,224,717. 41 || 539,833.37 || 413,965.49 || 27,970,641.04
6 per cent return on same-...- - - - - 1,067,527.49 553,483.04 32,390.00 24,837.93 1,678,238.46
Surplus per year............ 47,814.07 584, 115. 73 117,695.78 6,714.25- 755,839.78


1 Prorated between classes of Service in ratio of revenue.
RAILWAY MAIL PAY. 563.
STATEMENT OF ARCHIBAID H. RowAN.
The CHAIRMAN. Mr. Rowan, it will be necessary that you be sworn.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Will you kindly give your full name, residence,
and official occupation, which you occupy with any transportation
company ?:
r. RowAN. Archibald H. Rowan, assistant to the vice president
of the New York Central, and manager of mail traffic of the Boston
& Albany Railroad; residence, New York; age, 34.
The CHAfEMAN. How long have you been connected with the New
York Central and the Boston & Albany ?
Mr. RowAN. Fourteen years.
The CHAIRMAN. Your present official position is what?
Mr. RowAN. Assistant to the vice president of the New York
Central, and I am manager of mail traffic for the Boston & Albany
Railroad.
The CHAIRMAN. And have been for 14 years :
Mr. Row AN. No; 1 year in the direct employ of the Boston & Albany
Railroad, but 14 years with the New York Central.
The CHAIRMAN. But 14 years with the New York Central'.
Mr. RowAN. I should correct that, because the Boston & Albany
was part of the New York Central system until about a year ago,
but when they were operated separately I handled their mail business
independently. - -
The CHAIRMAN. In conjunction with the New York Central
Mr. RowAN. Yes, sir.
The CHAIRMAN. Are you familiar with what is known as Document
No. 105 %
Mr. ROWAN. Yes.
The CHAIRMAN. And also familiar with the amended suggested plan
of Mr. Hitchcock, the ex-Postmaster General, as represented on page
109 of the preliminary report in the pamphlet entitled “Railway mail
pay,” are you not ?
Mr. Row AN. Yes.
The CHAIRMAN. Would you favor the committee with your com-
ments in reference to the suggested plan?
Mr. ROWAN. Mr. Chairman, I have prepared a short statement,
and if it is agreeable to you I will be glad to read it and answer any
questions.
I have prepared a short statement for the information of the joint
commission of Congress investigating compensation for the trans-
portation of the mails, showing the extent of the mail service per-
formed by the New York Central lines for the Post Office Department.
I will endeavor to show in detail the extent of our service, the advan-
tages of same to the Post Office Department, and the pay which we
receive from the Government for the services which we perform.
Mr. W. C. Wishart, statistician of the New York Central lines, has
repared a criticism of House Document No. 105 as relates to the
New York Central lines, which he will submit as a matter of record
and for the information of the joint committee.
564 RAILWAY MAIL PAY.
I should be very glad to be interrupted at any time during my testi-
mony to answer, to the best of my ability, any questions which may
suggest themselves. * :
The New York Central lines have a total mileage of 12,962.31
miles, with total annual operating revenue for the year ending Decem-
ber 31, 1912, amounting to $286,604,248, the mail revenue for the
same period being approximately $5,864,000, representing about 2
per cent of the total revenue, the mail service being performed on
practically all of our mileage. •.
The bulk of the mails are handled on mail route 107011, between
New York and Buffalo, the pay being based on a daily average weight
of 389,411 pounds of mail, and route 131095, Buffalo to Chicago, on
which the daily average weight is 317,711 pounds. These two routes
comprise what is known by the Post Office Department as the New
York & Chicago R. P. O. There are other important R. P. O. lines
on our system, as, for example, between Boston and Albany, Buffalo
and Detroit, Detroit and Chicago, Cleveland and St. Louis, Cleveland
and Cincinnati, and Chicago and Cincinnati, on all of which R. P. O.
cars are operated.
About 1875 the first “fast mail” train between New York and
Chicago via the New York Central lines was inaugurated, on a
schedule of 27 hours and 40 minutes. This “fast mail” was equipped
with railway post-office cars and practically all of the through mail
Over our lines was handled on this train. To-day, in and out of
Grand Central Terminal, New York, we operate daily 258 passenger.
trains (not including trains of the New Haven road), of which num-
ber there are 20 trains a day from New York to Buffalo, 16 of which
trains all operate through to Chicago and are all used by the Post
Office Department in transporting the United States mail.
I do not know of a single train that does not carry mail on the New
York Central lines; that is, of the through passenger trains.
Five of these through westbound trains to Chicago are what are
known as mail trains and are operated primarily for the mail service,
together with the complementary eastbound trains, the schedules of
these trains being governed very largely by the needs of the depart-
Iment.
The CHAIRMAN. Are there any passengers on those five trains 7
Mr. Row AN. On some of them; yes, sir; but they are operated pri-
marily for the mail service, and if the mail service was not there they
would not be operated, but as long as they are operated they fill them
out with anything that has to go.
Mr. McBRIDE. Of how many trains is that true, that they are
operated primarily for the mail service, and if the mail service was
not on they would not be operated 3
Mr. RowAN. A good many, Mr. McBride. If the mail service did
not exist on the New York Central lines, if we did not have any mail
at all, we would run our trains on a different schedule from what we
do to-day.
The CHAIRMAN. How many of your trains would you discontinue
altogether, in your opinion ? -
Mr. RowAN. I think that the passenger business could be handled
on through trains that exist; there is such frequent train service on
the New York Central lines between New York and Chicago that we
RAILWAY MAIL PAY. 565
could manage to get alo
of them, but a miājority of them. -
* The CHAIRMAN. You say you have five trains which primarily
operate for mail. Suppose you carried no mail. Would you discon-
tinue those five trains entirely 7
Mr. RowAN. I think three or four of them could be taken off. I
refer to this in detail later.
While the advantages to the Post Office Department of these trains
are many, I desire to call attention to several of the more important
benefits:
First. The mail cars for these trains are brought to a terminal like
the Grand Central Terminal in New York many hours before the
scheduled departure to permit the Post Office Department to per-
form what they call “advance distribution,” which saves the depart-
ment the expense of maintaining terminals of their own for this work,
resulting in considerable additional expense for lighting, heating, and
valuable track space occupied in our terminals.
Second. The schedules of these trains are governed by the needs
of the Post Office Department, both as to the time of departure and
arrival at destination. To illustrate: W e have a mail train which
leaves New York at 3 o'clock in the morning and reaches Chicago at
1.20 a. m. This train takes the general clean up of mail out of New
York and is an important train for the newspaper mail, making con-
nections with the Rural Free-Delivery routes and permitting a first-
carrier delivery of mail from New York a distance of 150 miles from
New York. The arrival of this train in Chicago permits important
connections to be made and advances the mail many hours over the
regular passenger-train service. -
Train No. 3, leaving New York at 8.45 a. m., known as the “fast
mail,” is split at Buffalo and the mail cars are run as a first section
to Chicago, reaching there at 6.30 a. m., against the 7.30 a. m. arrival
of the passenger section. This operation of a train, a distance of 540
miles, is done to give the Post Office Department more time for the
important western connections out of Chicago and in order to permit
of a first-carrier delivery for important Chicago mail on this train.
The CHAIRMAN. Are your schedules designated at all by the Post
Office Department 7
Mr. Row AN. No. They do not order us to put on a train, but we
have always cooperated with the department, and when they tell us
a certain schedule is necessary we do everything in our power to give
it to them. -
The CHAIRMAN. But the right of determining what the schedule
will be rests entirely with your own management, does it not ?
Mr. RowAN. Oh, yes.
Train No. 9, which is also known as the “fast mail,” is operated
west of Buffalo ahead of the passenger section so as to permit an
arrival in Chicago at 11.43 a. m. Out of New York we have train
No. 9 which leaves at 12.50 p.m., the fast mail, and we have a passen-
ger section which leaves 10 minutes ahead, at 12.40 p.m. Now, if it
was not for the mail we could put the passenger cars now operated on
train No. 9 on No. 41, leaving at 12.40 p.m., and there would not be
the necessity of running the two trains.
Mr. McBRIDE. Has not that been largely due to the growth of the
service? When the service was first put on there was but one train?
ig without the mail trains; perhaps not all
*

566) RAILWAY MAIL.P.A.Y. ,
Mr. RowAN. Yes; it was all one train; but there are too many cars.
now, and besides it is bad for the passenger business to hold trains.
-at Albany and places like that a considerable time in order to transfer
the mail, but if the mail did not exist we could take, the passenger
cars and put them on No. 41. *
Train 21, leaving New York at 6.30 p. m., overtakes the Lake
Shore Limited, leaving New York an hour earlier, 5.30 p.m., and
the mail cars are transferred to the Lake Shore Limited at Toledo,
giving a 4 p.m. arrival in Chicago as against a 5 p.m. arrival for the
Fº section of No. 21. This is done to expedite the mails.
f for any reason train 21 is late and connection at Toledo is missed,
the mail cars are run special into Chicago, a distance of 244 miles.
Corresponding service is given eastbound where we run trains out
of Chicago at 3 o'clock in the morning with a 4.01 arrival at New
York and a mail train from Albany to Boston with a 5.15 a. m.
arrival in Boston, permitting a first carrier delivery in all parts of
New York City, Boston, and many New England cities. These two.
trains would never be operated on such schedules were it not for the
mail and they are of great importance to the department and with-
out them the postal service would be very much impaired.
In New England, if we did not have train No. 34, the Boston mail
would not reach Boston until 7.30 in the morning. As it is now it can
get there at 5.15 and the business interests can get their mail on the
first carrier delivery, and the same thing applies to points like Spring-
field, Worcester, Providence, and the whole section of New England.
that is served by that train. It is a very important train for the
mail service, and of absolutely no value from a passenger standpoint,
for there is not a passenger car that I know of that is handled on it.
The CHAIRMAN. That is on the Boston & Albany'. º
Mr. RowAN. On the Boston & Albany; yes, sir. Passengers would
not desire to arrive in Boston at 5.15 in the morning, or at any termi-
nal at that hour in the morning.
Third. In many instances these mail trains are held for important.
mail connections at starting points and junction points, in some
cases more than an hour.
To illustrate: We have trains starting from Chicago that are due
to make an overland mail connection, and when the overland con-
nection is late we frequently hold our trains for that connection.
The CHAIRMAN. You hold them for passengers as well as for mail?
Mr. Row AN. No, sir; we do not j them for passengers, because
they are mail trains, and if the passengers miss a train they take the
next one, but the mail train is frequently held for the mail. There
was a case two years ago where a train due to leave Chicago at 8.15 in
the morning was held until 2 o’clock in the afternoon because the
Post Office Department advised us that they had some important
mail that had come from Australia, or some place like that, and it had
to make a steamer in New York the next morning, and it was neces-
sary to run this train through to New York faster than the Twentieth
Century Limited.
The CHAIRMAN. You got no extra compensation for the com-
pliance with the request of the Post Office Department 3
Mr. Row AN. We did not ask for anything extra. We considered
that it was good mail service, and we were glad to cooperate with
them because they showed us the importance of complying with their
RAIL WAY3, MAIL". PAY, i. 56'ſ.

request. It meantanumber of days' delay if the steamer was missed
at New York, and I think we have always tried to cooperate with the
department: -
¥he GHAERMAN. That! loss of times means utilization of track for
that extra period which might have been used for some other purpose,
or ‘what do you expect to demonstrate from the comerete instance
that you have just mentioned ?
Mr. RowAN. To show the way we have cooperated with the de-
partment; the service, we give. And it certainly, costs, more, to
operate trains at high speed out of their schedule, sidetracking
other passenger and freight trains, and it is a very undesirable thing
to do from an operating'standpoint
Mr. McBRIDE. I think the department thoroughly appreciates the
cooperation it receives from the railroad companies, but nevertheless.
is it not a fact that during the weighing period you would hold your
train at Chicago for 10 hours or so in order to get the overland mail,
which would otherwise go to some other road 3
Mºtowas. The time we held the train was not during the weighing
€I’1OCl.
p Mr. McBRIDE. You were not holding trains during the weighing
period in order to get the mail? -
Mr. RowAN, I do not think we make any distinction on our lines
between a weighing period and any other time. We have held No. 34.
sometimes since the weighing. I do not think an average operating
official on our road knows when they are weighing the mail. I found
an official on our road' the other day who did not know we were
weighing on the New York Central, and he was an operating official.
Does that answer your question ? You do not know of any instance
where we have held them a longer time during the weighing period
than any other time?
Mr. §. I do not recall any instance just now. I remember
there have been instances where, during the weighing period; com—
panies have held their trains in order to get the mail, and we argued
that they should follow the same practice when they are not weighing.
Mr. RowAN. I know it has not made any difference in the operation
of our trains.
The CHAIRMAN. Mr. McBride, in that connection, have you found
any criticism of your contention that the operation should be the same,
whether during the weighing period or outside of the weighing period;
with any of the roads?
Mr. McBRIDE. There has been some contention along that line; yes,
sir. If a schedule changed the conditions would change, but so long
as the schedule remained the same we have asked that the train be
held; maintaining that if a train was held during the weighing period
for the purpose of getting the mail it should be held during the interim
when we were not weighing.
The CHAIRMAN. How does that affect the question as to the
increased cost to the railroads themselves, where delays result in
interference with traffic, and an indirect loss to the company itself Ż
Mr. McBRIDE. I do not think it would affect the cost in any way,
but it has a bearing on the question, of course, as showing that the
holding of the train is not wholly altruistic.
Mr. RowAN. I want to show the mail facilities at some of our great,
terminals.
568 FAILWAY MAIL PAY.
y MAIL FACILITIES AT THE GREAT TERMINALs.
At the Grand Central Terminal, New York, a large amount of val-
uable space is given over to the handling of the mails and certain tracks
and platforms are used exclusively by the mail service. As fast as one
mail train departs, the cars for the next mail train are placed at a mail
platform, so that the Post Office Department at all times has a mail
train available in which men can work the mails. We have plans
which have been approved by the department for the installation
of an electric mail conveyor, which will be installed at an expense of
over $150,000, and operated by the railroad company. This conveyor
will expedite the handling of the mail between the mailing platforms
and the trains and will take mail from incoming trains on conveyors
to the post office, pneumatic tubes or platforms where the mail
wagons take it to connecting roads or sub post offices. To handle the
mails at Grand Central Terminal about 100 men are employed and at
the La Salle Street Station, Chicago, 41 men, an increase of 21.6 per
cent since January 1, account parcels post at the latter point.
At all junction points and terminals important space is reserved
for the exclusive use of the Post Office Department. The railroad
furnishes trucks and men to handle the mail, and with the rapid
growth of the parcel post, which we are handling to-day without any
compensation, we have had to employ additional men, purchase more
trucks, and give up more space for the handling of the mails. At
the present time there is already installed pneumatic-tube service at
New York and Chicago, which permits the Post Office Department
to exchange mail with important substations and which occupies
valuable space for which no rental is paid.
. I want to bring out in connection with the pneumatic-tube service
we have in the stations, that this valuable space is provided without
any rental. - -
The CHAIRMAN. How much space, in square feet, is occupied by the
pneumatic terminal? -
Mr. Row AN. I could not say.
The CHAIRMAN. How many tubes do they operate %
Mr. Row AN. I do not know. They have a machine shop there,
and they have a shop for the machinery for compressing the air, and
at the La Salle Street Station they have what they call a pneumatic-
chute room, where the mail is taken and dispatched to the various
substations in Chicago.
The CHAIRMAN. Did you, at the request of the Post Office Depart-
ment, give this space for the pneumatic tube 2
Mr. Row AN. Yes.
The CHAIRMAN. You have asked for no additional compensation
for the utilization of that space, or absorption of it
Mr. Row AN. I have never officially. I have talked it over with
the Post Office Department officials many times, and thought we
ought to get some compensation, but as I understand there has been
no appropriation that could be used for that É.i. -
The CHAIRMAN. You say to-day you are handling that without
compensation. You get compensation, do you not, for the ordinary
amount of fourth-class mail matter that you handle under your
railway mail pay basis, and also under your R. P. O. car basis?
RAILWAY MAIL BAY. 569
What you mean is you get no compensation for the additional busi-
ness incident to the enlargement of the fourth-class mail business?
Mr. RowAN. We get no compensation for the new business of the
parcel post, and we are not getting to-day our full pay for R. P. O.
space furnished and used by the department. The Post Office De-
partment has that up now, and I suppose that will come along in
time. - -
The CHAIRMAN. But Congress at the last session made a provision
for 5 per cent extra compensation.
Mr. RowAN. Effective July 1, 1913, yes; but we are not getting
any compensation for such matter as is strictly parcel post up to
that time. -
The CHAIRMAN. This increase was made as compensation for the
increase in the business incident to the enlargement of the Scope of
the fourth-class mail matter.
Mr. RowAN. From July 1, 1913, but Congress, as I understand it,
has made no provision to pay the railroads for such additional mat-
ter as they have been handling and will handle from January 1, 1913,
to July 1, 1913.
The CHAIRMAN. The railroads' position, as I understood it, was
what they asked as a just demand from their viewpoint—and I
think correctly so, as I will say personally—was a special weighing
to be had in July or September or even October in order to determine
the additional matter handled, and they were satisfied or even willing
to waive any claim for compensation because of the increase in busi-
ness incident to the period of six months from the 1st of January to
the 1st of July, were they not?
Mr. RowAN. If we had gotten the special weighing, yes, Senator.
I am not making a claim for pay up to July 1, 1913, on parcel post.
The CHAIRMAN. We do not want to get in the record a false impres–
sion. Congress did take cognizance of the increased burden they
put upon you by what is known as the parcel-post legislation and
endeavored to give you compensation for the increased burden, and
the best method of ascertainment, in the opinion of Congress, in
accordance with its action, was an allowance of 5 per cent increase
in railway mail pay. That is the fact, is it not ?
Mr. Row AN. İYes.
Senator WEEKs. How many tracks are there in the Grand Central
Station ? •
Mr. RowAN. We have two levels with 67 tracks, or 42 tracks on
the upper level and 25 on the lower level.
Senator WEEKs. You give up one track to the mail trains?
Mr. RowAN. No. We have two tracks down on the lower level
where they load the fast mail trains, but there is hardly a train that
goes out that does not handle mail.
Senator WEEKs. Then you think about one-fiftieth of the tracks
is given up to the mail service
Mr. RowAN. But we bring the cars up from the lower level to the
upper level about half an hour before the train departs, and use the
upper-level tracks. •.
Senator WEEKs. Do you think you give up about one-fiftieth of
the trackage to the mail service?
Mr. RowAN. I should think more than that.
Senator WEEKs. How much do you give up to the express service?
; 570 , RAILWAY MAIL PAY.
Mr. ROWAN. None at all, sir; not directly, because the express is
not handled in the Grand Central Terminal. The express companies
have their own buildings on the west side of New York, and own their
building for that purpose. They do handle, some local business at
the Grand Central Terminal, and they have space in the baggage
troom where they handle this express, which is taken down and put
on the trains by the express messengers. They have their own, men
to do that.
Senator WEEKs. Do they pay for the space in the baggage room?
Mr. Row AN. Yes, sir.
The CHAIRMAN. You say the express cars are made up in their own
terminal. Are they not put on the train in the Grand Central
Station ? x
Mr. ROWAN. The bulk of our express business is handled in special
express trains, and we operate from the west side of the city, and those
trains run right through to the West, so that the only express that is
handled out of the Grand Central Terminal is the ...if amount of
express on the passenger trains that goes in baggage cars, and is local
business. Of course there is not enough local business to warrant a
through express train for that service.
SIDE SERVICE.
A service that we perform for the Post Office Department without
any direct compensation, and which has become quite, a burden, is
the delivery of mail from railroad stations to post offices where the
distance is less than 80 rods and where the Post Office Department
does not maintain its own screen-wagon service.
As of July 1, 1912, the New York Central Lines paid to outside
contractors employed to handle, the mails between railroad stations
and post offices $18,938.40, and the Boston & Albany Railroad paid
$1,841, or a total of $20,778.40 per annum. -
The CHAIRMAN. Then the New York Central and Boston & Albany
for side service were required to expend $20,778.40 per annum. How
much of the total mail of the United States does the New York Cen-
tral and Boston & Albany handle? Have you any idea of the per-
centage? |j-, .
Mr. Row AN. I could not tell you.
The CHAIRMAN. The compensation is $5,800,000 for railway mail
pay and R. P. O. pay ?
Mr. Row AN. Yes, approximately.
The CHAIRMAN. That is a little more than 10 percent of the total
compensation. - -
: Mr. ROWAN. This does not include, of course, the expenses that we
have in performing side and terminal service at stations where, the
work is ă. by our own men, where the time of our men is used in
handling the mail.
The CHAIRMAN. This is a direct additional cost to you represented
by an increased number of employees that you have to pay because
of the side service, this $20,778.40%
Mr. RowAN. The men are not our employees, but they are subcon-
tractOrs. 4. -
The CHAIRMAN. That is an additional expense?
Mr. Row AN. Yes, sir. -
RAILWAY MAIL PAY. 57.1
The CHAIRMAN. Po you have to engage any additional employees
because of the side service? ;
Mr. RowAN. I imagine there are a number of points on our railroad
where the burden of the side and terminal service requires the em-
iployment of additional men.
The CHAIRMAN. You have not that computation ?
*Mr. RowAN. I have not; no, sir. I have a record in my office of
the amounts paid to outside contractors, and that is the amount which
‘I am stating here.
‘Since January 1, account of the parcel post, we have received
numerous demands from contractors for increased compensation for
the handling of the mails between post offices, and railroad stations,
and in a number of places additional money has had to be paid in
order to keep the contractor from throwing up the work.
The CHAIRMAN. Have you any information as to the additional
amount you paid for that ?
Mr. RowAN. It is so incomplete I did not think it was worth while
submitting it. That is because we were still negotiating with a num-
ºber of contractors, and at a number of points where no contractor is
employed to-day the station agent is demanding more help or the
employment of some outside men to handle the mail, and we have
ºnot decided in every case just what we would do.
The CHAIRMAN. These side service contractors, do you make
your contracts with them by the year?
Mr. RowAN. Yes, sir; generally. -
There are also a number of points where the service has been per-
formed in the past by our station force, but as a result of the increase
in the mails, it has been necessary to either employ additional help
to take care of this work or give the contract to some outside party,
and if the parcel post continues to increase, as I believe it will, it is
going to result in a very large expense to the railroad to provide for
side service. There are some places where we will have to maintain
a regular express service.
There are many places where we pay contractors more for the car-
riage of the mails between the post office and the termini of a route
than we receive in pay from the d.º.º. To illustrate, the Little
‘Falls & Dolgeville road, part of the New York Central lines, known as
route 107163, has a mileage of 11.87 miles and the annual pay for the
transportation of the mail is $557.63. Of this amount we receive
from the Post Office Department $40.01 per annum for the handling
of the terminal mails at Dolgeville, and employ a contractor at the
rate of $200 a year to do it. In other words, it costs us $159.99
more than we receive to perform the terminal service.
The CHAIRMAN. For the total mail compensation at that point %
Mr. RowAN. Yes, sir.
On the New York Central & Hudson River Railroad we pay outside
contractors $2,403 annually to perform terminal service, and wereceive
from the Post Office Department $643.84, or a direct loss of $1,759.16
per annum. For all our lines, including the Boston & Albany Rail-
road, the difference between what we receive from the Government
for terminal service and what we pay to outside contractors amounts
to a loss of $6,252.36 per annum, and, as I have already stated, this
amount is going to be increased very largely as the parcel post grows.
572 - RAILWAY MAIL PAY.
The above figures do not include expense to the railroad where our
own employees handle the mail.
Mr. Wishart will show in his testimony how the mail earnings of
the system lines by years have decreased, although the weight of the
mail handled has increased, and that the cost of labor, fuel, and all
operating expenses have greatly increased. In the last 10 years the
cost of coal alone, which is a very important commodity in the opera-
tion of a railroad, has increased 76 per cent. In 1897 the daily aver-
age weight on New York Central & Hudson River Railroad was 250,000
pounds, in 1909,452,333 with a basis of 6-day divisor, or 389,441 with
7-day divisor, while the mail pay has not increased proportionately.
In 1906 our mail earnings on the New York Central lines were
$6,901,307.97 as compared with revenue for year ending December
31, 1912, of $5,864,000.
The CHAIRMAN. And the total railway mail pay or the pay that
you receive, including R. P. O. ,
Mr. Row AN. Including everything, R. P. O. and transportation
ay. . -
p Senator WEEKs. You do not mean to say the receipts from the
mail service have decreased in that time to the New York Central Rail-
road 7
Mr. Row AN. Yes, sir; and I want to show you how the weight has
increased and the pay has not increased in the same proportion. In
1897 the daily average weight of mail was 250,000 pounds. In 1909
it was at the last weighing, if the divisor had not been changed—in
order to make a comparison I have used the basis of the old divisor—
it would have been 452,333 pounds daily average weight.
The CHAIRMAN. That is because of the difference in divisor in 1907,
is it not
Mr. Row AN. No, I have raised the figures to what it would have
been under the old divisor.
The CHAIRMAN. Under the divisor of six instead of seven 3
Mr. Row AN. Yes. Under the seven-day divisor the daily average
is 389,441 pounds. The fº in 1907 to the New York Central main
line was $1,137,517.31. In 1906 it was $1,985,910.27.
The CHAIRMAN. For the same divisor in both computations?
Mr. RowAN. Yes, sir; in 1909, which is the basis under which we
are being paid to-day, the mail compensation was $1,804,814.02.
That does not include the R. P. O. pay, but it does include the trans-
portation pay, so that we got a great deal more money in 1906 than
... getting to-day, and we are handling a great deal more mail
to-Cia V. * •
†. CHAIRMAN. You got more money in 1906 because you had a
six-day divisor, and in 1909 you had the seven-day divisor'
Mr. Row AN. Yes, sir. That has largely affected it.
This decrease in pay has been due to change in divisor, acts of
Congress reducing mail pay, withdrawal of equipment from the mail,
deductions in R. P. O. pay, and the withdrawal of magazines from
the mails in the third contract section, so that while we are handling
more mail tonnage now than we did in 1906 we are receiving approxi-
mately $1,000,000 less revenue, yet the postal receipts of the depart-
ment for the 10 years, 1901 to 1911, have more than doubled.
RAILWAY MAIL PAY. 573
The CHAIRMAN. But for your tonnage of mail you computed both
the blue-tag mail that goes in the fast freight and the regular mail
that goes under the fast mail service? .
Mr. Row AN. No, sir. On the New York Central there is no blue-
tag mail, so there the blue tag could not be taken into consideration.
Not only has the weight of mail increased very heavily, but the
weight of equipment used in transporting the mail, as well as the
cost of this equipment, has increased materially. For º: Ollr
wooden postal cars weighed approximately 91,000 pounds, while our
latest steel postal cars weigh 122,000 pounds, an increase of 33 per
cent, and it naturally follows that this materially increases our cost
of operation.
#. CHAIRMAN. Have you got the relative figures as to the cost
of the wooden and the steel cars ? -
Mr. Row AN. Yes; I have it here. The cost of the wooden postal
car was approximately $6,000, while the cost of the steel postal car
used to-day is practically double that amount. * .
The CHAIRMAN. $12,000?
Mr. Row AN. Yes, sir. -
Mr. LORENz. For the same length of car?
Mr. ROWAN. Sixty-foot cars; yes, sir.
MAIL CARS AND APARTMENT CARS OPERATED ON NEW YORK CENTRAL,
LINES. - sí,
wº * ... ifſ . -
Following is a statement showing number of full R. Pº). Cars
and apartment cars operated on the New York Central lings during
month of November, 1909: -
Apart-
Full. ment.

New York Central & Hudson River R. R. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 54
Michigan Central R. R. . . . . .------------------------------------------------------- 15
fake ºrie & western R. R.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.........
Lake Erie, Alliance & Wheeling R. R. . . . .---------------------------------------------------
Big Four Route. -------------------------------------------------------------------
Pittsburgh & Lake Erie R. R. . . . . .------------------------------------------------
Cincinnati Northern Ry------------------------------------------------------------|----------
Lake Shore & Michigan Southern Ry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Dunkirk, Allegheny Valley & Pittsburgh R. R. ------------------------------------|-- - - - - - - - -
**
l
7
4
20
9
For the operation of a full postal car, the R. P. O. pay ranges from
3.4 cents per mile for a 40-foot car to 5.4 cents per mile for a 60-foot
car, and in addition we receive the transportation charge for the
weight of the mail handled in the car, which I understand the depart-
ment estimates to average 2% to 3 tons, so that the average earnings
on a railway post-office car would be about 20 cents per mile, as com-
pººl with the average number of passengers carried, which on the
ew York Central is 16 passengers, or 32 cents per car-mile, or with
the maximum earnings of a passenger coach with a seating capacity
of 84 persons at 2 cents per mile, or $1.68 per car-mile, or for a parlor
car with a seating capacity of 25 passengers, 50 cents per car-mile.
On some of the eastbound R. P. O. service we would not handle 1%
87288—No. 4—13—4
574 FAILWAY MAIL PAY.
tons of mail in an R. P. O. car, in which case our revenue would only
be 13 cents per car-mile, as compared with a rate of 12 cents per car-
mile for hauling an empty Pullman car or diner in a freight train.
As the mail on our lines westbound is over four times heavier than
the mail eastbound, and as we have to perform service in both direc-
tions for the Post Office Department, it is only right to take the com-
plimentary eastbound service into consideration in connection with
the westbound service to arrive at the mail train earnings. Leaving
out of consideration entirely the vast service performed in closed
pouch trains and in apartment cars where we furnish considerable
space, the earnings of the five mail trains westbound and the five mail
trains eastbound would not average $1 a train mile, while our tariff
rate for a special train is $2 per train mile, and our average revenue
on all passenger trains operated is approximately $1.51 per train mile,
and it should be noticed this average takes into account local trains
and commutation trains which are admittedly operated at a loss.
The CHAIRMAN. Have you the comparative figures as to your cost
per train mile 3
Mr. Row AN. We do not know what it costs.
Comparing the earnings of an exclusive train which earns the maxi-
mum mail pay on the Lake Shore road with a corresponding passenger
train, we find train 35, which will average from seven to nine cars,
earning $1.75 per train-mile on the Lake Shore, according to the train
sheets made up by the Post Office Department, while a passenger train
from Buffalo to Chicago, carrying about the same number of cars and
...; about the same time of day (No. 23), earns, exclusive of
express;3.06 per train-mile. The $1.75 earned by the mail train is a
westbound movement. The complimentary service eastbound of the
mail cars earn about 70 cents, or, averaging eastbound and westbound
movement, our mail earnings would average $1.20 per mile, against
$1.51, the average earnings for all passenger trains. The through
passenger trains pay about as well in one direction as in the other.
The CHAIRMAN. In this $1.51 average earnings for all passenger
trains you include in that the mail revenue !
Mr. RowAN. Yes, sir. The passenger trains pay about as well in
one direction as in the other, whereas the mail does not. The mail
pays better west than eastbound.
Let us take another illustration: The mail section of train 3 on the
Lake Shore road earns about 90 cents per train-mile, and the east-
bound mail section of the complimentary train, No. 4, earns an aver-
age of about 70 or 80 cents for the round trip. The passenger section
of train 3 from Buffalo to Chicago earns $2.94 per train-mile, and the
passenger section of train 4 earns $1.99 per train-mile, or $2.46 for the
round-trip passenger train.
The operation of the mail train is very expensive, as the mail
takes precedence over every other class of traffic, and the mail
trains, as I have stated before, are often held for a considerable
time at stations beyond the schedule station stop, in connection
with the loading of the mail. Especially is this true since the estab-
lishment of parcel post. To illustrate: . The exclusive mail train,
No. 35, between Buffalo and Chicago, for the period March 10 to
April 8, 1913, was held at various stations beyond the schedule
stop 1,051 minutes as compared with a corresponding delay of 359
minutes in the year of 1912. For the same period, train 43 was
RAILWAY MAIL PAY. - 575
delayed between Buffalo and Chicago 1,547 minutes in 1913 as
against corresponding delay of 913 minutes in 1912. The mail
Section of train 3 was delayed on account of mail 1,653 minutes in
1913 as against 884 minutes in 1912. On eastbound trains we find
train, 34 delayed 779 minutes in 1913 as compared with 249 min-
utes in 1912. Train 32 delayed 939 minutes in 1913 as compared
with 312 minutes in 1912. Train 22 was delayed 404 minutes in
1913 as against 85 minutes in 1912. This latter train is the Lake
Shore Limited, one of our high-class trains, and you can readily
appreciate the difficulties of making up this lost time. . There is con-
siderable additional expense attached to make up this lost time at
important mail points like Albany, Buffalo, Cleveland, etc., it often-
times being necessary to sidetrack less important trains and freight
trains in order to get the mail train to the next stopping point on
time, where it is perhaps further delayed in handling the mails.
What I mean by these delays is the delay chargeable to the mails
and does not include delays at Chicago waiting for connections.
A train may be delayed at Cleveland 10 minutes for the mail, and
it makes up that time and gets into Toledo on time, where it may
lose 10 minutes more—that would be 20 minutes delay to the train.
The CHAIRMAN. If you are delayed 10 minutes at Cleveland and
you make up that time between there and your next stop, do you
debit that to the mail?
Mr. RowAN. Yes. This computation is to show the length of time
beyond the schedule of the special train that the train is held on
i. of the mail. If it is held for passengers or baggage, it is not
Charged.
The CHAIRMAN. If you had 40 trunks at a station and you had
50,000 pounds of mail, you would not claim that the train was stopped
or delayed to get those 40 trunks on, but you would charge it to the
50,000 pounds of mail? -
Mr. RowAN. The chances are it would go on different cars.
The CHAIRMAN. It could not go on the cars as long as the train
stoppedº
Mr. ROWAN. No, sir. The station stop is all right, but any delay
beyond the station stop and if it is in order to handle the mail is
charged to the mail in our train sheets. If it is on account of
express, it is charged to that, or if it is passenger or baggage, it is
charged to that.
Mr. McBRIDE. Suppose you did not have help enough to put mail
and trunks on at the same time. How would you charge that %
Mr. RowAN. I do not know. I think that that ought to be
divided in some way. I do not know just how it is done. This
information is taken from the daily train operation sheet, showing
the delays all along the line of road.
In addition to the expense of side service and terminal service per-
formed for the mail, we supply men on our fast mail trains, paid by the
railroad company, to haul mail from the working car back into the
storage car. This is done with the idea of relieving the great station
delays account of transferring the mail from one car to the other; and
even with these men on the train there is a considerable amount of
mail which is put out of one car and trucked to another car in the same
train during a station stop, for which labor must be furnished

576 RAILWAY MAIL PAY.
Another large expense that we have, which the Post Office Depart-
ment has not taken into consideration in the preparation of Document
105, is the value of the transportation Fº to post-office inspec-
tors while on official duty and postal clerks riding to and from their .
points of duty in passenger coaches. We kept track of this for six
months, and on several of our lines it resulted as follows:
Walue of transportation given by the New York Central lines to Post Office Department,
account postal commissions honored in passenger coaches, June 1 to Dec. 31, 1910,
$nclusive.
New York Central------------------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31,039.48
Boston & Albany--------------------------------. . . . . . . . . . . . . . . . . . . . . 9, 514.68
Rutland R. R.------------------------------------------------------- 1, 285.08
Lake Shore----------------------------------------------------------. 37,837. 50
Michigan Central---------------------------------------. . . . . . . . . . . . . . . 4, 740. 73
Big Four----------------------------------------------. . . . . . . . . . . . . . . 27,007. 37
Pittsburgh & Lake Erie. . . . . . . . . . . . . . . . . . . . . . '- - - - - - - - - - - - - - - - - - - - - - - - - 607.25
Chicago, Indiana & Southern R. R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190. 15
Total.--------------------------------------------------------- 112,222. 24
The acceptance of these commissions as transportation has been the
outgrowth of the liberality of the railroads, so that now it is regarded
by the Post Office Department as one of our obligations in the hand-
ling of the mails to transport these men. +
The CHAIRMAN. That does not cover the railway mail clerks at all?
Mr. ROWAN. No, sir; except those in passenger coaches.
The CHAIRMAN. Under a six months’ actual computation ? -
Mr. ROWAN. Actual computation; and I have the details showing
#. º the commission number, and the points between which
they rode.
sº WEEKs. That was taken for what year }
Mr. ROWAN. 1910. *
Senator WEEKs. Is not that riding on those commissions decreas-
ingº
Mr. Row AN. I do not think so. I think it has probably increased,
as the mail and the number of clerks have increased.
Senator WEEKS. It was charged that about that time men were
º: on their commission when they had no public business to
€I’IOTIOl. •
p Mr. RowAN. My personal thought has been that there has been very
little personal travel on the commissions. The man who travels as
i. as a postal clerk travels, when he gets a day off likes to stay at
OIO €.
Senator WEEKS. It was pretty clearly demonstrated at that time
that many postal clerks went from the point where they happened
to be to some other point which might i. their home, or the place
where some of their relatives lived, or something of that sort, on their
own personal account.
Mr. RowAN. If I am not mistaken, I think that the same rules.
applied to the Post Office Department in 1910 that apply now.
Generally speaking, they are under oath, or at least had to make an
affidavit at the end of the month that they had not misused their
commissions.
The CHAIRMAN. How is that, Mr. McBride 3 Can you give us some
information relative to that ?
RAILWAY MAIL, PAY. 577
Mr. McBRIDE. I think there is less of that sort of travel that the
Senator speaks of now than there was in former years.
The CHAIRMAN. Do you think in 1910 commissions were being used
for personal travel by post-office inspectors and clerks
Mr. McBRIDE. I know in the old .. when I was on the road, they
were occasionally used for personal travel, but I do not think it is
done now to any extent; the department has made every effort to
stop the practice, it being absolutely forbidden by the Postmaster
General's orders. That is the wish of the department.
Thereupon, at 1.30 o'clock p. m., a recess was taken until 2.30
o'clock p.m.
AFTER RECESS.
The hearing was resumed at the expiration of the recess at 2.30
o'clock p. m. -
Mr. RowAN. Mr. Chairman, before we took the recess, Senator
Weeks asked a question when we were discussing the rules for the
use of the commission as to whether the department was as strict
in previous years as they are to-day. There are more postal clerks
to-day and that might affect the question. I just wanted to bring
that out.
The CHAIRMAN. In other words, since your computation in 1910,
you do not think there is any difference in the changes that may
have been made in the rules concerning employees, you think you
carry just as many in the passenger cars to-day as you did in 1910,
when you made this computation?
Mr. RowAN. Yes, sir; and if anything a slight increase, on ac-
count of theincreased number of postal clerks and post-office inspectors.
In view of these facts, why did not the Post Office Department
take into account in Document 105 the space occupied by these
men and charge same to the mail service, where it must certainly
apply, as we are required to transport them on account of the mail
service #
The CHAIRMAN. Why should they take it into account when the
Government paid no compensation for them on the passenger basis,
but assumed that the R. P. O. pay and the Railway Mail pay was
compensation for the postal employees’ -
Mr. RowAN. As long as they are figuring out the amount of space
on passenger trains devoted to the mail service, it seems to me they
should have taken into account the space occupied by their men on
duty in passenger cars.
The CHAIRMAN. Did the Post Office Department have that infor-
mation so that they could take it into account 7
Mr. RowAN. No; they could have asked us for it and we could
have given it to them.
The CHAIRMAN. You only had that for six months in 1910, and
document 105 was based on an inquiry on November 1909, so you
could not have furnished it to them.
Mr. ROWAN. If we had known in advance of the preparation of our
statistics we could have ascertained it.
The CHAIRMAN. But your question is inferentially a criticism on
the part of the Post Office Department, which, if merited, should be
578 RAILWAY MAIL PAY.
all right, but I do not see that your inferential criticism here is war-
ranted for the reason that they had not the information and they had
not the knowledge. How could you expect them to take cognizance
of a factor existing, of which they had no knowledge? -
Mr. RowAN. The only reason I bring it in here is to show, in the
preparation of document No. 105, the space occupied by the men in
the postal service was not taken into consideration; that is simply
a fact, and I am not offering a criticism one way or another, but it
seems to me that it might properly be taken into consideration, for
example, if they were doing it again.
The CHAIRMAN. Had the postal department the information that
you had for 1910 for the six months computation that so many
employees occupied passenger cars, equivalent to a passenger com-
pensation at regular rates of $110,000, as I understand—
Mr. ROWAN. $112,000 for six months.
The CHAIRMAN. Then, I think there would be some justice in your
inquiry, but under the conditions I do not see that there is.
Mr. MACK. Was not that information furnished the department in
connection with these reports; that is, the relative value of trans-
portation in passenger cars? -
Mr. Row AN. I do not recall positively. I think it was.
Mr. MACK. I think it was, and omitted by the department for
SOIOle Tê8,SOIl.
Mr. ROWAN. How about that, Mr. McBride? .
Mr. McBRIDE. We asked for no information regarding the amount
of space occupied in passenger cars. We did ask for miles traveled
by postal clerks on duty and those not on duty, for the mail service,
as well as the express service, and that information was furnished.
Mr. MACK. But was not used by the department'
Mr. McBRIDE. No, sir.
The CHAIRMAN. Why was it not used, Mr. McBride?
Mr. McBRIDE. I think that is explained in Document No. 105 in
the text there. I do not recall the wording of it, but for one reason
there was no way to check it up and see if it was accurate.
The CHAIRMAN. Was there any way of checking up the answers to
the 160 questions submitted by the Post Office Department 3
Mr. McBRIDE. Yes; we could check up the amount of space used.
The CHAIRMAN. You could check it up, but if you asked 160 ques-
tions and you received 160 answers, is there any way of checking that
up other than the computation that might be based on the information
submitted in answer to your interrogatories?
Mr. McBRIDE. Yes; we had information from our own people as to
the various items.
The CHAIRMAN. What was the purpose of getting the information
from the railroads if you had it all from your own people?
Mr. McBRIDE. Merely as a confirmation, and primarily because the
law provided for getting the information from the railroad companies,
and the other was secondary; we got the other information in connec–
tion with the inquiry made by the railroads.
The CHAIRMAN. I did not catch that.
Mr. McBRIDE. The inquiry was primarily conducted to secure from
the railroads certain information, and in order to verify that as much
as possible we obtained data from the officers of our service to check
the information furnished by the railroads.
FAILWAY MAIL PAY. 579
The CHAIRMAN. Then the data that you got from your field officers
was particular information sought for the purpose of comparing it
with the information that you received from the railroads for this spe-
cial method : -
Mr. McBRIDE. That is entirely correct. -
The CHAIRMAN. And that information would not be available
under the ordinary administration of the Post Office Department 3
Mr. McBRIDE. No, sir; not all of it. Some of it would be, but we
had to make an inquiry in order to get it.
Mr. RowAN. Did you check up all the space submitted by the rail-
roads for the month of November, 1909'? '
Mr. McBRIDE. Yes; as far as we could. -
Mr. RowAN. In other words, you duplicated the work that we did
on all of the railroads?
Mr. McBRIDE. We asked for specific information with regard to the
space used and needed on the trains for the Railway Mail Service.
e particular data regarding closed-pouch service was not checked
up, except that we applied our own basis to the data reported by the
CODOTO8, D162S.
º MACK. The point of the matter here is that this was service
rendered the Post Office Department in transportation of officers and
employees of the service, and it was not taken into account in the
deductions made in Document 105 for the reason that you had no
means of checking the accuracy of the reports of the railroads as to
the volume of that transportation. (Its value, based on November,
1909, statistics, was $1,171,810.68 per annum for transportation ren-
dered the Government as an incident of mail transportation.)
Mr. McBRIDE. Yes, sir.
Mr. MACK. And, as I understand, Mr. Rowan submits subsequent
information here to-day, indicating the value of that as a condition
or an incident of mail transportation.
The CHAIRMAN. The $112,000 loss to the railroad, according to
your viewpoint, represents the actual computation made by the New
York Central for i. six months of the year 1910?
Mr. ROWAN. It does; yes, sir.
SPACE BASIS WIERSUS WEIGHT BASIS.
There are serious objections, in my mind, to the substitution of
space for weight as a basis of paying the railroads for the transporta-
tion of the mails. First, the difficulty in arriving at any definite or
accurate basis on which to compute cost; second, varying rates of
pay on different railroads; third, the fact that it places in the hands
of One man, the Postmaster General, the power of adjusting pay for
the railroads; fourth, the constant friction which would result be-
tween the Post Office Department and the railroads as to the amount
of space used. Nine-tenths of the difficulties with the Post Office
Department to-day are over the question of car space, the depart-
ment repeatedly using more space than is authorized. This is due,
of course, largely to the fact that the department measures space not
by the number of feet used, but by the number of separations made
in the distribution of the mails, which, according to the yardstick
now used by the department, prescribes a definite number of letter
separations and paper separations as equivalent to 40, 50, or 60 feet
580 - RAILWAY MAIL PAY.
of #. For example, we have operating on the Boston & Albany
Railroad, between Boston and Albany, an exclusive car specially
fitted up to meet the peculiar needs of this run. In this car the
Post Office Department makes over 1,100 letter separations, and
the cars are manned by eight postal clerks. The Post Office Depart-
ment will not recognize this car as anything but a 30-foot apart-
ment car, because there is no paper mail separated on this train,
although the 1,100 letter separations exceed the requirements of a 60-
foot car by 500 separations.
I can see nothing but constant friction ahead if we have to argue
out the mail space on every mail train. There have been other argu-
ments presented by the railroads against the space basis, but weight
is the factor used in charging for freight and express, and why not
for mail?
The CHAIRMAN. Mr. McBride, in that connection what have you
to say to Mr. Rowan’s statement that your method of ascertainment
is based on the number of letter separations for the space used ? Is
that correct, in the department'.
Mr. McBRIDE. Not entirely so. -
The CHAIRMAN. How far is it? Would you elucidate a little on
. . How do you use letter separations as a measure for the space
UISéCi º
Mr. McBRIDE. We have heretofore had a standard number of
separations in letters and papers
The CHAIRMAN. Do you make any distinction between letters and
apers?
p Mr. McBRIDE. Yes; letter separations are small pigeonhole boxes,
while paper separations are provided by canvas º hung in a rack
fastened to the side of the car and were, before the advent of the
parcel post, hung with 9-inch openings.
The CHAIRMAN. Then piece separations was misleading to my mind,
the separations being the number of pigeonholes or divisions in
a car 3
Mr. McBRIDE. Divisions, pigeonholes, or number of sacks.
The CHAIRMAN. How many pigeonholes and how many sack spaces
do you figure as the equivalent of 30 feet, how many the equivalent
of 40 feet, and how many the equivalent of 50 feet? Have you an
universal number of separations that apply §
Mr. McBRIDE. We have a standard of separations for each size car,
but that is not the sole basis for a determination of car space; other
factors are the ampunt of space needed for the storage of the working
mail and of the registered mail and mail for local delivery. The reg-
ulation governing the determination of the amount of space upon
which car space is authorized is contained in ..º.; a of
ºph 3 of section 1179 of the Postal Laws and Regulations, as
OLLOWS :
a. In determining the amount of space which shall be the basis for a recommendation
and authorization of railway post-office cars and pay therefor the principal element
shall be the amount of space necessary for railway post-office purposes; that is, for
the handling and the distribution of the mails en route, the storage of the mails to be
. ºuted, and the storage and handling of registered matter and mails for local
elivery.
RAILWAY MAIL FAY. 581
The CHAIRMAN. Have you an universal rule 3
Mr. McBRIDE. No; no universal rule.
The CHAIRMAN. Then they are arbitrary in each instance? -
Mr. McBRIDE. The determination of the amount of space needed
for the storage of working mail and local delivery mail is left largely
to the division superintendents as they state their needs.
The CHAIRMAN. Is there any unanimity as between your superin-
tendents as to the yardstick which you have for that determination
of the separations for the space used, so many for so many feet?
Mr. McBRIDE. Entirely so, on the separations.
The CHAIRMAN. How many separations are required for 10 linear
feet 7
Mr. McBRIDE. We do not put it that way. We have a standard
for a 30-foot car, a 40-foot car, a 50-foot car, and a 60-foot car. In a
30-foot car there are 300 letter separations, and I think 96 paper sepa-
rations under the old rule, but since the advent of the parcel post we
have had to change that on account of the necessity of hanging sacks
with wider openings, and personally it is my opinion that we shall
have to adopt a linear space unit instead of a separation unit.
The CHAIRMAN. Then the development of what is known as the
parcel post strengthens your contention as to the advisability of the
substitution of space for weight as the determining factor or a measure
of compensation for the service rendered 3
Mr. McBRIDE. Yes, sir; we have had a great many recommenda-
tions recently for increase in car space due largely and principally to
the advent of the parcel post, which does not increase the number of
separations in the car, but which requires a greater number of linear
feet for a given number of separations, because we find it necessary
to hang them with 12 or 14 inch openings instead of 9 inches, on
account of the larger articles.
Mr. RowAN. To illustrate, I have a specific case here. We have
two postal cars operating on our line recently built and built accord-
ing to the pº prescribed by the Post Office Department. We are
in receipt of a letter from a Post Office Department official, dated April
12, 1913, in which he calls attention to the fact that the minimum
number of separations in a 60-foot car is 600 letters and 200 papers,
whereas in the two cars referred to the following openings are pro-
vided in one car, 884 letter and 140 paper; in the other car 884 letter
and 138 paper. We exceed the number of letter separations required
for a 60-foot car, but we have not got the required number of paper
separations.
Mr. McBRIDE. That is due, I assume, to the necessity for hanging
sacks with the wider openings.
Mr. RowAN. That I do not know. We are told if we can not
change them they do not see how they can consider this car as any-
thing else but a 40-foot car, although they are using 884 letter sepa-
rations and 140 paper separations and the inside arrangement of
the car was prescribed by the department. We will fix a car up in
any way the department asks, .. the car is 60 feet inside measure-
ment, and now we have to go to work and change it.
Mr. McBRIDE. I do not think you want that to go into the record,
that the department sent you a letter of that kind, do you—the
Post Office Bººn in Washington?
582 RAILWAY MAIL PAY.
Mr. ROWAN. No; I will change that. That is a letter I got several
days ago, and I brought that down to talk to you about it. But the
department has, in the past, used a yard stick as to the number of
Separations made in a car.
Mr. McBRIDE. They were constant under the old order of things,
but since the advent of parcel post we have had to abandon that,
practically, in so far as paper separations are concerned.
The CHAIRMAN. Let me ask you, in that connection, if heretofore
you have used the number of separations as your unit upon which to
determine the amount of space, why could not the number of sepa-
rations be the factor as to the determination of the space, providing
the º: are made always the same. -
Mr. McBRIDE. They could, and that was the reason for adopting the
standard under the old plan. But under the advent of the parcel
post something new is injected.
The CHAIRMAN. In 1909, under the old inquiry, there was no such
thing as the º post. The difference of opinion between the de-
partment and the transportation companies existed before the 1st
of January, 1913. I would like to ask some of you railroad gentlemen
in that connection what criticism you have as to the utilization of the
number of separations—if you have a fixed measurement for the letter
separations and a fixed measurement for the newspaper separations,
and a fixed measurement, if you please, for parcel post? What is
your criticism of that ? Mr. Mack, will you answer that ?
Mr. MACK. As a basis for space pay, you mean? -
The CHAIRMAN. Yes.
Mr. MACK. The number of separations primarily would depend
upon how much distribution the Post Office Department wants to
make. It can make it more or less as it chooses. There is not any
condition of service that requires a certain distribution of a certain
number of separations. -
The CHAIRMAN. They would not change the number of pigeonholes
for mail or the number of racks each trip; they would be fixed in the
car, and they would be the inches, if you please, of your yardstick.
Mr. MACK. On each trip, yes; that ...' be determined.
The CHAIRMAN. I mean, could a basis be worked out with the utili-
zation of the number of separations as the basis' MuſiMcBride said
because of the growth of what is known as the parcel-post business
he is more than ever convinced as to the desirability, and in fact of
the necessity, of the substitution of space for weight as the measure
of the service rendered. I simply ask now what your criticisms are
as to the utilization of a given number of pigeonholes for your letters
and sacks for your newspapers in a car, as the basis for your yardstick,
if you please, for the service rendered 3
Mr. MACK. Well, I presume it could, but there would have to be
an understanding as to what number of letter boxes was the proper
basis for that space pay. For instance, the Post Office Department
now, on a 60-foot car, would require 600 letter boxes. In 1876 the
pay for a 60-foot car was provided for with 98 letter boxes. We
think the post-office car has been very much overworked in its dis-
tributing j e
Mr. SAFFORD. There is another important item in that connection,
and that is that the number of separations do not necessarily repre-
sent the volume of mail in this case. -
RAILWAY MAIL PAY. 583
The CHAIRMAN. It represents the volume of facilities, does it not?
Mr. SAFFORD. So far as pigeonholes and rack space are concerned
they do, but they do not necessarily represent the amount of floor
STO 8,063.
P: BRADLEY. It would seem that the question of interior facilities
should not affect the question of car space at all. If car space were
the basis upon which the pay would be calculated, the interior facilities
then would merely be important to the Post Office Department, and
not important to the . company, unless the Post Office De-
partment should undertake to make frequent changes in the make-up
of those fixtures, thus obliging the j company to go to the
expense of refitting the car, which is a more difficult matter at the
present time with steel car equipment than it would be in the old
times with wooden equipment; but if space were the basis of pay and
there was a certain rate for a 60-foot car, it would seem to me that
the utilization of the interior of the car by the Post Office Depart-
ment in its own particular work would be a matter of indifference to
the railroad company, except, as I said, as to the item of changes
needed from time to time in the arrangement of these interior fittings.
Mr. Row AN. They require a different number of separations
between different points. There are often cases where they want a
40-foot car, say, for instance, from New York to Syracuse, and a 60–
foot car from Syracuse to Cleveland, and a 40-foot car from Cleve-
land to Chicago. On a run like that you would have to provide the
maximum number.
The CHAIRMAN. Mr. McBride, in the suggested plan of the depart-
ment, was it the idea of the committee that different rates of com—
pºſion per linear foot would be paid on a 60, 40, 30, 20, or 10 foot
8,SIS
Mr. McBRIDE. No, sir.
The CHAIRMAN. That the same rate per linear feet would be paid?
Mr. McBRIDE. A car-foot-mile rate for a railroad system.
The CHAIRMAN. If they got a dollar for a linear foot, would they
get $10 for 10 linear feet, $20 if there were $20 linear feet, and $30 if
there were 30 linear feet, $40 if there were 40, $50 if there were 50
linear feet, and $60 if there were 60 linear feet? -
Mr. McBRIDE, Yes, sir.
The CHAIRMAN. So that you would have the same compensation
whether 1 foot or 60 feet 7
Mr. MCBRIDE. Yes, sir; the same rate of compensation per car-
foot-mile. y
The CHAIRMAN. Per car-foot-mile
Mr. McBRIDE. Yes.
Mr. MACK. That is for a single system.
Mr. McBRIDE. It might vary with systems.
Mr. MACK. Seven hundred and ninety-five car-foot-mile rates on
that basis, the uniform rate applying simply to a particular company
or corporation.
The CHAIRMAN. And it is your contention that one of the weak-
nesses of the system is the necessity of making rates for each one of
the 795 roads with whom the Government has contracts to-day ?
Mr. MACK. We think there should be uniform rates.
584 RAILWAY MAIL PAY.
Mr. RowAN. Another objection to the present basis of mail pay is
the fact that no pay is given for apartment cars. At the time the pres-
ent basis of pay was established the apartment as it is to-day did not
exist. It originated by the railroads permitting the route agents to
have a few cubby-holes in the end of th. baggage car or a few hooks,
where he could hang up mail sacks, and the evolution has brought us
down to the point where to-day a 30-foot apartment car is half of a car
fitted up identically with a full mail car, with expensive fittings which
must conform to the prescribed apartment-car standards, and be
heated and lighted, and placed for advance distribution whenever
the department desires, and in which numerous mail clerks are
carried. It is impossible for the railroad to get sufficient tonnage in
these working post offices to anywhere near compensate them for the
operation of a car. The Post Office Department pays rent for its
post offices—why is it not fair to pay rental for a post office on
wheels, and a sufficient rental to pay for the cost of hauling this post
office over the road'. - .
The CHAIRMAN. It does in the R. P. O. car.
Mr. RowAN. It does in the R. P. O. car pay.
The CHAIRMAN. And your contention is that they should apply
the same system to the apartment car. -
Mr. Row AN. Yes, sir. The side service is the outgrowth of the old
stage coach which was required to go to the post office, where the dis-
tance from the main road was less than 80 rods. At a great many
points where the station is small and the train service not frequent, and
the amount of mail to be handled small, the work can be performed
without additional help and little or no expense, but as the mails have
increased and with the parcel post, it becomes a real burden which
was never intended by the originators of the law to be placed upon
the railroad company. In many cases, in my opinion, arrangements
could be made between the Post Office Department and the railroads
so that the railroad could be reimbursed for the actual cost of the
service performed. At places where the amount of mail to be handled
requires the employment of additional help, or an outside contractor,
the railroad should be relieved of the service altogether. There are
numerous points on our system lines where the public is considerably in-
convenienced by the One employee of the railroad being away from the
station at different periods during the day carrying the mail between
the station and the post office. There are also cases where we have
to employ an additional man in order to exchange mails between the
railway station and the post office at hours when an agent is not on
duty. In my opinion, it is no more the duty of the railroad company
to handle the mails beyond their station platform than it is for a rail-
road to transport a man from the railroad station to his residence.
Under the present system of weighing, once in four years, and with
a normal increase in the mails ranging from 6 per cent up, the rail-
roads are required to handle additional quantities of hº which
there is no compensation whatever. There is no justice to this, and
four years is entirely too long a time between weighings, and there
are cases where it works a tremendous injustice. For illustration,
just after the quadrennial weighing of the mails in the State of Ohio,
in 1907, the printing of stamped envelopes and newspaper wrappers
was changed from points in New England to Dayton, Ohio, so that
many roads have been required to handle this traffic for four years
RAILWAY MAIL PAY. 585
without any compensation, while other roads have been receiving
for the same period compensation for services not performed. There
can not be any justice to this whatever. After handling this matter
out of Dayton without compensation from three to four years the
Post Office Department withdrew a large amount of same from the
mails and shipped it by freight so that we will never receive a dollar
compensation }. all of this mail which has been handled.
The CHAIRMAN. What do you estimate that would amount to in
dollars under the present method?
Mr. RowAN. I could not say, Senator. I have never figured it up,
; i.suppose the department knows how much they have shipped by
reight.
The CHAIRMAN. Of this particular matter, have you any idea, Mr.
Prentiss, what that would amount to in weight?
Mr. PRENTIss. No, sir.
The CHAIRMAN. What would the volume of that business in
stamped envelopes and newspaper wrappers that were made at Day-
ton, Ohio, amount to ?
Mr. McBRIDE. I can not state offhand, but can possibly get the
data. The records show that during the fiscal year of 1912, 4,588,339
ounds of stamped envelopes and newspaper wrappers were shipped
y freight from Dayton.
Mr. ROWAN. I just wanted to bring this out. The department is
powerless to do anything. Annual weighings would make conditions
more equitable.
We are weighing the mails east of Buffalo to day and have been
accustomed to receive several days a week large consignments of
stamped envelopes and newspaper wrappers from Dayton to New
England territory. Since the flood in Ohio the shipments of this
matter from Dayton have practically ceased, so that on this particular
traffic we have only received the benefit of the weight from February
19 to March 25, and it is doubtful whether normal conditions will be
resumed before the weighing is over. In other words, for hauling
this traffic we are only going to receive one-third the pay that we are
entitled to, as only about one-third the amount of this matter handled
under normal conditions will be included in our weights. -
Further, in the fall of 1908 when the mails were weighed in New
England the country was just recovering from the financial depression
of 1907, and the weights of the mail on the Boston & Albany Railroad
between Boston and Albany showed a loss in weight over the four
years previous, a most unusual thing to have happen. The weighing
of the mails on the Boston & Albany during the fall of 1912, which
will govern the compensation for four years beginning July 1, 1913,
shows an increase of 34 per cent over the 1908 weighing, from which
you can readily see that we have been carrying for several years past
a considerable volume of mail for which we have had absolutely no
compensation, as the weighing was conducted at an abnormal time.
Conditions became normal again in the spring of 1909. The spring
weights in New York State in 1909 showed the normal increase which
was expected.
Mr. McBRIDE. Right there I might say that I am advised by the
Division of Stamps that they have practically resumed the regular
shipments out of Dayton.
586 ... . RAILWAY MAIL PAY.
Mr. ROWAN. I am glad to hear that. I asked our man in Dayton
to advise me and he said it would be some time before they were
normal, but he is not able to get the information as accurately as
WOUI al’6.
y Mr. McBRIDE. I was talking with the superintendent of the Division
of Stamps yesterday, and he said they had resumed shipments.
Mr. MACK. Have you any objection to the insertion in Mr. Rowan’s
testimony where the question of the value of the transportation of
§. employees in coaches came in to show that in the testimony of
Second Assistant Postmaster General Stewart he showed that infor-
mation and showed that the statistics indicated $97,650.89 a month
and the annual value of that service would be at the rate of $1,171,-
810.68% -
The CHAIRMAN. For the whole allowance?
Mr. MACK. For the whole allowance. That is not the postal clerks
in the cars, but the officials and the clerks traveling in coaches and in
Pullman cars. I thought it might be interesting to have it put in at
that point in the testimony. It shows the annual value of it as re-
ported by the railroad companies.
Mr. RowAN. The main lines would be apt to get more of that than
the side lines. We find it is mostly on the main line on our road. The
side lines do not get much of it.
The CHAIRMAN. Do you think transportation companies should
receive relatively the same pay for mail service that they do for
express and passenger, or what difference, if any, would you make
between these three services in the way of compensation, and what do
you figure the difference in the way of actual cost and operation?
Mr. ROWAN. We think that the mail service should pay its share of
the expenses.
The CHAIRMAN. You mean that the mail, passenger, and express
should all be treated alike?
Mr. ROWAN. Yes, sir.
The CHAIRMAN. Are their operating expenses all alike 3
Mr. RowAN. I should say so. The ...' is given preferential treat-
ment in every case and given precedence over the passenger service
every time. e
The CHAIRMAN. Do you figure your operating cost the same in all
three cases? tº dº
Mr. RowAN. We have not figured the cost of each service, Senator.
The CHAIRMAN. That has never been done?
Mr. RowAN. No, sir.
The CHAIRMAN. Then it is simply an impression on your part that
they should receive equal compensation ?
Mr. Row AN. I think every class of service should pay its way; if
we are paid any less we ought to be told that, so that we could go to
the Interstate Commerce Commission and get them to permit us to
charge more for some other class of traffic.
Mr. LLOYD, Is it not true you receive better compensation for
carrying freight than you do for carrying passengers?
Mr. RowAN. Yes, sir. - l ;
Mr. LLOYD. Should not that be equalized ? Why should a man
pay more for carrying freight than for carrying passengers?
Mr. RowAN. Well, the freight service will stand it better. You
can not raise the passenger rates; the commissions would not permit it.
RAILWAY MAIL PAY. 587
Mr. LLOYD. That is all right, then. s
Mr. RowAN. The railroads have to stay in business. They have
to get revenue from some source or go bankrupt.
Mr. LLOYD. The Government might cut down the railroads' pay
a little and say you must carry it, on the same principle. You said
that the three ought to bear the same proportion of expense, and
then you said they did not do it. Now, why? I am talking about
the passenger and freight 3
Mr. RowAN. Oh, I do not know.
Mr. LLOYD. Why don’t they
Mr. RowAN. I do not know.
Mr. LLOYD. Have the railroads ever tried to secure a rate which
would be equally compensatory for both freight and passenger
service
Mr. Row AN. We tried to get more money out of our freight. I do
not know how it is on the passenger service. &
Mr. LLOYD. The trouble about the passenger is that ordinarily
it is governed by State legislation ?
Mr. RowAN. Yes. We tried to raise our passenger rate—our com-
mutation rate—and failed. The º: service commission ordered
us to put back the rate we formerly charged, although we have the
lowest commutation rates out of New York City.
º: CHAIRMAN. What is your rate per mile out of New York City—
5 mills' -
Mr. RowAN. I do not know.
The CHAIRMAN. The New York, New Haven & Hartford has a
5-mill rate, I think, and they endeavored to increase that rate but
could not.
Mr. LLOYD. Does it make any difference to the railroad from which
service it gets its profits 3. In other words, from the railroads’ stand-
- Fº and from an operating standpoint it is better that they should
ave a profit on all three services; or, better, if they had a greater
profit on the freight service and a lesser profit on the passenger,
express, and mail? Does it make any difference from an operating
standpoint or a financial standpoint to the roads as to how the
dollars earned are apportioned ts between the services 7
Mr. ROWAN. I can only state my personal opinion. It seems to
me that on the three classes of passenger service the roads should
endeavor to have each branch of the service pay its way. Otherwise,
you make the passenger service pay for mail, or the man who pays
the express charges pay for passenger traffic. -
Mr. LLOYD. Then, assuming that your goal was to make a 6 per
cent return or 7 per cent return on your investment, would it be
material as to where you got your 7 per cent, whether you got it from
passenger or freight, or in your apportionment for the passenger
service whether you got it out of the mail, passenger, or express, or
the passenger and milk service generally 3
Mr. ROWAN. I should think it would, because in the passenger rate
cases that we have if we showed that we were earning more than a
reasonable rate to offset a mail deficit, we might have to reduce our
pº rates.
Mr. LLOYD. Does your system figure that you are making as much
ºnal profit per car mile on your passenger as you are on your
reight'
588 RAILWAY MAIL PAY.
Mr. Row AN. We make more money out of the freight.
Mr. LLOYD. You make more money out of the freight?
Mr. RowAN. Yes, sir; a couple of train-miles.
Mr. LLOYD. What is the difference between car mile and train-
Mr. ROWAN. Train-mile is the operation of a train 1 mile.
Mr. LLOYD. One mile 7
Mr. RowAN. One mile; yes.
Mr. LLOYD. Now, what is a car mile %
Mr. RowAN. For the individual car operated 1 mile.
Mr. LLOYD. Running an individual car 1 mile %
Mr. ROWAN. Yes.
The CHAIRMAN. What is a common unit of computation as be-
tween freight and passenger ? s
Mr. Row AN. The train-mile is the only basis, but it is common.
really only in name, because a train-mile in freight service is not the
same thing as a train-mile in passenger service, while they each have
different locomotives and have a different number of cars and run at
different speeds, and so on.
The CHAIRMAN. Mr. Peabody contended if there was to be but one
yardstick it should be the train-mile 3
Mr. ROWAN. Yes; you could use a car mile as a common unit, but
it would be a very different result from the train-mile.
Mr. LLOYD. The pay there would depend on the number of cars
Mr. ROWAN. Yes, sir; and they are relatively much more numerous
in the freight service. -
Mr. LOGAN. Would not that be the same, Mr. Lorenz—the train-
mile and the car mile 7
Mr. LORENz. No, sir. Frequently on a railroad you will find half
of the train-miles are passenger and half freight, whereas perhaps
eight-tenths of the car miles are freight and one to two tenths pas-
senger, so you would get a very different result if you took one or the
other basis.
The CHAIRMAN. I understand you received $5,800,000 last year
from the Government in R. P. O. and railway mail pay. Do you
figure that so far as the cost of that service to your company is con-
cerned, that you operate at a loss or at a profit
Mr. Row AN. It did not pay as well as the other traffic.
The CHAIRMAN. Relatively your compensation was not as great as
that you received from the passenger service # .
Mr. Row AN. Yes, sir.
The CHAIRMAN. How about express -
Mr. Row AN. I think we earned more on the express.
The CHAIRMAN. Have you made any computation to determine
what actual profit you make in the handling of the mail?
Mr. Row AN. We never thought we did make much profit, if any,
On the mail.
The CHAIRMAN. You know what your profits are for your freight
and you know what your profits are for passenger ?
Mr. Row AN. I think that Mr. Wishart has prepared some figures
on that, and I haven’t those figures at my finger tips. Mr. Wishart
will follow me and I think he is going to discuss that feature.
Mr. LLOYD. Let me ask this question: Suppose you perform no
mail service at all; do you think your surplus account would be
IłAILWAY MAIL PAY. 589
decreased or increased ? Suppose you cut out the mail service; would
your surplus account for the road be decreased or increased at the end
of each year?
Mr. RowAN. I do not know. I never figured that out.
The CHAIRMAN. Mr. Wishart has made a series of computations?
Mr. ROWAN. Yes.
Mr. LLOYD. I want to state right here that my candid judgment is
that you can cut out the mail service and every important road in the
º: States would lose by reason of cutting it out at the present
rate Of pay. & -
The ºnvas. That is, there would be a reduction in the net
earnings? . &
Mr. LLOYD. Yes, sir; a reduction in the net earnings. -
The CHAIRMAN. What do you think of Mr. Lloyd's impression ?
How would you apply that to the New York Central?
Mr. RowAN. I do not know, Senator. I would want to give a good
deal of thought to that.
Mr. LORENz. There is no question but what Mr. Lloyd is correct.
That is to say, there is hardly any contention on the part of the
railroads that the mail revenue is not as great as the additional
expense caused by the mail service; they are running the passenger
trains anyhow, and the extra cost of carrying the mail cars is cer-
tainly not as great as the mail revenue. The only contention the
railroads can make is when you count in the common expenses and
interest charges and taxes and apportion them on any basis you
please, then the mail does not bear its full proportion, so that to cut
out the mail service entirely would very clearly cut down the surplus to
some extent. I do not think there is any railroad man here who would
dispute that proposition.
Mr. BRADLEY." That might be accentuated by the thought that the
revenue for carrying the mail is less than 2 per cent of the total
revenue. The difference would be difficult to perceive in the oper-
ating result. -
Mr. LLOYD. Then there is something in that.
The CHAIRMAN. That statement is not applicable to all the roads.
The New York, New Haven & Hartford º a claim that for certain
months of certain years their actual loss was so many thousands of
dollars; if I remember, it was $93,000 for one year and $97,000 for
another year. They would have been gainers to that extent if they
had not carried any mail.
Mr. LLOYD. I do not believe their computation is accurate.
Mr. LORENz. I think, Senator, that was on the basis of the total
operating expenses; but if you consider that º half of those
operating expenses would have gone on just the same whether the
mail was carried or not, then the actual expenses occasioned by the
mail would certainly not be as great as their revenue from the mail.
The CHAIRMAN. They figured a loss from the standpoint of allow-
ance on capitalization of $500,000 or $600,000 a year. But the
made an actual loss, as I understand from the statement; and I thin
Mr. Buckland stated specifically that the New York, New Haven &
Hartford, under their system, would have been gainers by $93,000
one year and $97,000 the other if they had not carried any mail at all.
87288—NO. 4.—13—5
590 RAILWAY MAIL PAY.
Mr. LLOYD, That is the way I understood it, and in that I think
he was mistaken. -
Mr. LORENZ. Mr. Rowan described at some length the special
service occasioned by the mail service—special facilities that had
to be rendered, the interference with the train schedules, etc. I
wondered whether an equally eloquent description could not be given
of the special facilities occasioned by the passenger service proper;
that is to say, compare for example the mere collection of the money
in the case of the mail service, where you get in one or a few checks
from the Government the entire amount of money you receive for
the mail service. In the case of the passenger service you collect it in
small sums of one and two dollars, which requires the maintenance
of passenger ticket offices and ticket agents and ticket collectors, and
so on. It seems to me perhaps if we set down all the special facilities
occasioned by the passenger service that we would be even more im–
pressed than by this discussion of the special facilities occasioned
by the mail service, and the two things ought to be taken together.
Mr. ROWAN. I was simply endeavoring to bring out and show for
the information of the commission what was done in connection with
handling the mail on a line like the New York Central.
Mr. LLOYD. Now, would you be kind enough to state what the
special facilities are that are afforded the passenger service? That is,
answering the same question from the passenger standpoint.
Mr. ROWAN. I would have to go all over this paper again to point
out the facilities.
Mr. LLOYD. The truth about it is you have not prepared anything
from that standpoint, have you ?
Mr. Row AN. No, sir; I have not prepared any statement from a
passenger standpoint.
Mr. LLOYD. I wonder if anybody has that prepared for any road 3
I would like to have that done by two or three of the different roads,
if they would, because that side of it has been repeatedly brought out
in the hearings, but there has not been anything brought out that
shows specifically just what extraordinary expense there is on account
of passenger service, like those expenses to which Mr. Lorenz referred.
The CHAIRMAN. ; think Mr. Mack has a statement to make.
Mr. MACK. Hardly in that particular way, but it seems to me that
a railroad structure must first be there and the railroad passenger
service in operation and the mail must stand its share of cost or
should produce equal revenue with the other passenger service,
because it participates in all the benefits that are derived from that
great organization. º
Mr. LLOYD. How does it derive any benefit from that organization ?
That organization was in existence before you undertook to carry any
mail. You are prepared to carry passengers, you have to have your
ticket agents and ticket officers and conductors, and all that kind of
service whether you carry any mail or not, and because you have to
have that whether you carry any mail or not, that ºpense ought to
be charged to the passenger traffic and not to the mail.
Mr. MACK. It seems to me that we have to support and provide
that service, and that that forms the possibility of the use of that
structure by and for the postal service.
Mr. LLOYD. You do not use a ticket agent in handling mail.
The mail has nothing to do with him.
RAILWAY MAIL PAY. 59].
Mr. MACK. I know, but it is necessary to have a ticket agent in
conjunction with the º service, and if we did not have the
passenger service and ticket agent we would not have any mail
Se]*VICé.
Mr. LLOYD. You have to have a freight department. Do you
think that ought to be charged up 7 You have to have a freight
office and freight agent, and persons to handle the freight and all
manner of equipment connected with freight service. No part of
that could be charged to the mail, and yet it is that which you must
have before the road is completed before you are expected to carry
mail at all. It seems to me that the passenger and #. traffic in
that particular stand exactly on the same basis, and that the mail
should not be charged with any part of the expenses, either of the
freight or the passenger.
The CHAIRMAN. You look on mail as a by-product?
Mr. LLOYD. Certainly it is a by-product.
The CHAIRMAN. And the express is a by-product 2
Mr. LLOYD. Certainly. e
The CHAIRMAN. And the milk?
Mr. LLOYD. Certainly; and they have always treated them that
way. They speak of it as a combination service. The railroads of
the United States to-day, I think I can safely say, regard the carrying
of the mail as an accommodation to the Government, and while they
are accommodating the Government they feel they ought to have
reasonable compensation for carrying it just like they would for
carrying any other by-product. But the serious question open right
º is how much of the operating expense should be charged to the
Iſlall.
Mr. BRADLEY. Would not this be a fair reflection? Why not, in
connection with passenger service, regard this generation as a by-
product, that the railroad was built for the last generation and that
this generation is a by-product of the last and should not be charged
any rate that would render a return to the railroad 7
The CHAIRMAN. You are increasing your facilities all the time,
your track and equipment, to take care of the increase in business.
Mr. LLOYD. And you are making this generation pay the cost. You
did not pay for it to start with. -
The CHAIRMAN. I would like to hear the comments of the railroad
gentlemen on Mr. Lloyd's question.
Mr. BRADLEY. It would seem to me, Mr. Chairman, when we go
into the realm of comparing the outgo and the income we have to
part company with all ideas of noncontribution on the part of any
particular factor. It is often said in the case of a passenger, “This
train is going from New York to Chicago; why can’t I be carried
free? It will be no more expense to the company,” which, no doubt,
is true. It is an expense that could not be measured, but it seems
to me just as soon as you enter the realm of comparing expenses
with revenue, you have to charge each factor in the problem with its
due proportion of one or the ...
Mr. LLOYD. In that connection do you think it would be fair to
charge to freight anything that you expend on account of the mail car
and the equipment of the mail car?
Mr. BRADLEY. Of course in seeking to apportion your expenses
you must first survey the entire structure and you will see that it is
592 RAILWAY MAIL PAY.
made up of two grand divisions, freight and passenger service; you
next observe the mail service associates itself with passenger service.
Mr. LLOYD. No; it does not until you have the railroad, the pas-
senger service, and the freight service. After you have all that, then
you undertake to carry the mail, and we want to get at the question
what it costs, you to carry the mail, and it seems to me it is no more
right to charge freight expense to mail than it is mail expense to
freight; it is no part of the expense of carrying the mail, what you
pay on freight agents and the men who are handling and disposing of
the freight. My own candid judgment is that you have no right to
charge up the ticket agent for any service that is rendered in connec–
tion with the passenger service specifically to mail, and you do not
charge that any more to mail than you would charge the equipment
of the car and the car itself to passenger or to freight. -
The CHAIRMAN. Would you extend that to overhead charges, to
management, and things of that kind? They would be the same
whether they carried the mail or not.
Mr. LLOYD. Yes. They are the same whether they carry the mail
or not. They have to have a general superintendent and all the
officers of the company. They have to have the directorate, and all
that has to be whether you carry a single pound of mail or not.
Mr. WISHART. Does not that mean that you would have to go
into a separate accounting for all expenses? It leaves out of the
equation any refinement of that kind to say that a very small vol-
ume of mail should bear its percentage of all the passenger business?
Mr. Rowan makes a case of special carriers around the station
employed for the mail service.
Mr. LLOYD. That is a side service which you claim the Government
ought to pay for. *
Mr. WISHART. That is station service. -
Mr. Row AN. I mentioned a number of special facilities, where we
had a number of men employed at Grand 8. Terminal working
exclusively on the mail.
Mr. LLOYD. Every man employed by the railroads to render exclu-
sive service to the mail ought to be charged to the mail.
Mr. SNEAD. Why exclusively .
Mr. LLOYD. You are speaking of men performing exclusive service.
Every man who performs exclusive service for the benefit of the
mail ought to be charged to the mail.
Mr. WISHART. That might be done, but there are so many cases
where there are joint employees that it would be rather difficult to
keep an accurate account.
. LLOYD. That would be an exception where you would have to
work it out on an equitable basis, but where the person is employed
º for handling the mail, or in connection with mail facilities,
that service, whatever it is, ought to be charged to the mail. -
Mr. BRADLEY. Why should you not there say, in following out your
own line of thought, that that joint employee would be there anyway
for the general railroad business, and that no part of his time should
be charged to the mail? *
Mr. LLOYD. I am taking it for granted he is rendering additional
service for which he should receive additional pay, and whatever
additional pay he received on account of mail ou # to be charged
to the mail. If he does not receive any additional compensation at
RAILWAY MAIL PAY. 593
all because he has rendered service for the Government, and if it
does not cost the railroad company any more, then the railroad com-
£º. ought not to receive the pay. If that man must necessarily
e there, the railroad company is going to pay him the same amount
whether the mail is carried and handled or whether it is not carried
or handled; then that individual ought not to be charged to the mail.
The CHAIRMAN. Suppose in that connection 50 per cent of his
time could be utilized to earn something that is now occupied in
handling something for the railroad company?
Mr. LLOYD. That 50 per cent ought to be charged to the handling
of the mail.
Mr. SNEAD. Suppose a man in his day's work performs 100 pieces
of work and one º the hundred is handling .# Why should not
that mail be charged with one-hundredth part of than man's salary?
Mr. LLOYD. It ought to.
Mr. MACK. Is not that an index of the whole proposition?
Mr. SNEAD. And why should not a mail car be charged with a cer-
tain amount of wear and tear, and wear and tear on tracks, and main-
tenance, of rent of rooms the mail service occupies in the passenger
stations, and all those common expenses?
Mr. LLOYD. I should say that a mail car in a station, if it cost the
railroad company anything to maintain the station, if it has to pay
rent on its own property, a reasonable compensation might be
charged to the Hai I am perfectly willing that everything should
be charged to the mail that belongs to it; whatever is a mail charge
ought to be chargéd to the mail, but my theory is this: You have your
trains, your ..i. and having the road and the road in operation,
and Yºu have your passenger traffic and your freight traffic, and your
freight agents. Now, you carry the mail. Whatever additional
expense comes to the railroad for carrying the mail, that expense ought
to be charged to the mail account, and every dollar of it should be
compensated.
Mr. SNEAD. You get off of the realm of facts into metaphysics,
where nobody would ever have a foot on the ground.
Mr. LLOYD. The misfortune with this investigation is it is largely
in metaphysics. -
Mr. SNEAD. That is the difficulty in trying to ascertain what it
does cost to perform any transportation service. It is a plant just
the same as a manufacturing plant is, but the manufacturing plant
produces one, two, or three 㺠kinds of goods, whereas the
transportation plant manufactures 500,000 kinds of goods.
Mr. LLOYD. You yourself make a distinction between freight and
passenger. You charge to freight that which belongs to freight, and
you charge to passenger what belongs to passenger. Now, what we
would like to have done is for you to charge to what you call passenger
service in its three divisions the individual cost of carrying the bag-
gage, carrying the express, and carrying the mail, and assign to mail
that which is its legitimate expense, and that to express which is its
legitimate expense, and that to passenger which is its legitimate
expense. When we have worked that out completely we have the
whole solution of the thing we are passing on now.
Mr. HURST. I take exception to one remark, and that is that the
railroad separates its º to passenger and freight. It is not
passenger and freight traffic, but it is the passenger and freight trains

594 RAILWAY MAIL PAY.
in which they divide their expenses. Not the traffic, but the trains.
Now, we further segregate the train as between the cost of hauling
these three commodities. -
Mr. LLOYD. Do you separate in your expense the freight agent from
the passenger agent 3
º: HURST. Yes.
Mr. LLOYD. Do you not take the freight agent and put that in the
expenses of the freight train, if I may use your expression ?
Mr. HURST. Yes, sir.
Mr. LLOYD, And you take the passenger agent and use him in
connection with the passenger service : $
Mr. HURST. Yes, sir. -
Mr. LLOYD. Then there is no difference between us. That is what
you ought to do.
Mr. HURST. That is an element in the running of that train. That
is what he is hired for, for the purpose of preparing passengers to ride
on that train, or the mail or the baggage or the express or anything
that comes to his station. It may be his duty to put a sack of mail
on or anything at all that refers to the passenger train. Therefore
his pay is chargeable to that train, and the mail is an element in that
Se]"W1C0.
Mr. LLOYD, We do not differ about that. -
Senator WEEKs. What are you going to do with a train that
carries both passenger and freight 3
Mr. HURST. There has been an arbitrary used. As it happens, the
Pennsylvania does not have anything of that sort on its #. West
of Pittsburgh, so I can not give any opinion on that. There has
been a proposition by the Interstate Commerce Commission in cal-
culating statistics that the element of miles of mixed trains used in
* Services should be considered both as freight and passenger
traffic.
Mr. McBRIDE. How about a station where a station agent performs
both freight and passenger service?
Mr. HURST. We attempt to divide his pay on the basis of the time
employed in the various services.
The CHAIRMAN. That is necessarily an arbitrary.
: Mºst An arbitrary based on the agent's report of the time
OCCUITO16O1.
#. CHAIRMAN. And where you have a mixed train a division is
made and a charge made both to freight and passenger.
Mr. HURST. We do not have mixed trains. I can not say what the
rule is by roads that have mixed trains.
The CHAIRMAN. Have you any mixed trains, Mr. Rowan'
Mr. Row AN. On some of our branch lines we might have, but I do
not recall any now. Some of our branch lines in Pennsylvania might
have some mixed trains.
Mr. LORENz. Mr. Rowan enumerated certain objections to the
space basis payment. I think he numbered them 1, 2, 3, and 4. I
think, however, he did not elaborate them especially, and I am not
sure that I understand exactly what the conditions were in each case.
For example, Mr. Rowan, you said that the space basis was ob-
jectionable because it was not definite. I do not quite understand
why it is not possible to have a measurement for a certain number of
RAILWAY MAIL PAY. 595
days in the year, just as you have a weighing of the mail for a certain
number of days now. '
Mr. RowAN. No. You misunderstood me. I said the difficulty
in arriving at any definite or accurate basis on which to compute cost.
Mr. LORENZ. I understand, then, your objections to the so-called
º were really objections to a cost basis and not to the space
8,STS
Mr. ROWAN. Arriving at the cost of paying for space.
Mr. LORENZ. Is it proper in that way to mix space and cost 7 You
could have a space basis based on revenues instead of cost.
Mr. RowAN. Then I tried to show the varying rates of pay and
the fact that it would put in the hands of the Postmaster General the
entire power to determine what the railroad should be paid.
Mr. TORENZ. Why does a space basis necessarily place in the hands
of the Postmaster General any more power than any other basis,
if you have it properly limited in the law Ż f
r. ROWAN. Because he determines the amount of space that shall
be used, and if they should use the present yardstick of separations,
and we have no access to the
Mr. LORENZ. Your objection is to the measurement of space, rather
than the space basis. Why would it not be possible to provide a
method of determining space that would not be arbitrary, in the
hands of one man Ż
Mr. ROWAN. I do not know. I have not heard of any such basis.
Mr. LORENZ. I simply wished to bring out clearly that the objec-
tions of Mr. Rowan to the space basis are really not objections to the
space basis itself, but are objections to a proposed or possible method
of sº that basis.
r. RowAN. Yes; there are objections to the space basis.
Mr. LORENZ. I do not now that you have mentioned any. Which
one is an objection to the space basis ?
Mr. RowAN. The difficulty in arriving at a definite or accurate
basis of cost.
Mr. LORENz. What has cost to do with the space basis 2
Mr. RowAN. How are you going to pay for the space'
Mr. LORENZ. You could pay for the space on the principle that it
should earn the same revenue as your passenger service and have
nothing to do with the cost. The two are independent things.
Mr. RowAN. Then the fair rates of pay are based on the cost 7
Mr. LORENZ. That is again a cost objection and not a space
objection. *.
Mr. RowAN. Then, the friction that I feel there might be with
the Post Office Department in arriving at the amount of space which
they used ?
Mr. LORENz. That would depend, then, entirely on the way in
which the law specified the determination of the amount of space.
In other words, }*. you have not touched the theoretical ; eC—
tions to the space basis as much as the administrative questions
which have been associated with it in the discussions?
Mr. LLOYD. Is not this true, after all, Mr. Rowan: Is it not true
that your real objection to the space basis is that, first, you will not
receive as much compensation under the space basis system as you
do under the weight basis system, and, second, that you would have
596 RAILWAY MAIL PAY.
more trouble in the administration on the space basis system than
you would under a weight basis system'
Mr. Row AN. The latter objection is my principal one.
Mr. LLOYD. Is not the first one the real one?
Mr. WISHART. Not if we were paid on the passenger basis. We
would get more.
Mr. LLOYD. You people are objecting to the space basis, and there
is not one of you º would object to it, I am sure, if you knew you
were going to get more money by reason of having the space basis for
the service you render, unless the administrative features, which
would cause you annoyance to such an extent that you would con-
sider that an offset for that which you would receive additional pay
on account of the space basis? *
Mr. Row AN. I think that the administrative feature is a very serious
one. Part of our pay now is on a space basis and, as I said in my
testimony, most º my work with the Post Office Department is on
the question of space, because they use one yardstick and I use
another. They use the number of separations and I use the number
of feet inside of the car and we never do agree.
Mr. LLOYD. If that is the only thing in the way, we might make the
law such that it could be easily demonstrated and avoid that trouble.
The law might be changed so that the space basis, if that is to be
adopted as the basis, could be adopted and the adjustment on account
of space used could be gradually ascertained. Now, if you knew that
was going to be, then your objection as to the administration would not
exist?
The CHAIRMAN. That is, it could be specified in the law.
Mr. LLOYD. Yes. I readily understand your objection, and I
think it is a good one. I can see where you people have ground to
complain already if we go into the space-basis theory with the present
idea of how that space is to be determined and by the system of
accounting that has already been made and by the system of manage-
ment to-day with reference to the space basis, that you do not want
to be annoyed by an administrative officer saying you are going to
get pay for so many feet in this car and you are not going to get any
more, but if the law specified just what you should receive and
determined the space, then the administrative officer would have
nothing to say about it, it would be fixed by law. For instance, if
you use a 40-foot car and use at the instance of the department and
receive pay for the 40-foot car, then there would be no further trouble,
but now, in the administrative feature under the present arrange-
ment you have trouble in determining the basis of pay that is deter-
mined on the question of weight and space combined. It is the
administrative º now, in connection with weight and space,
that you have trouble with.
Mr. RowAN. As it is now they might say they wanted 40 feet, and
we might furnish a 60-foot car because we have only 60-foot cars,
and we would have no way of telling whether the department uses
the 60 feet or the 40 feet.
Mr. LLOYD. You do not care.
Mr. RowAN. If we are paid on a space basis, we do care.
Mr. LLOYD. If you furnish the space the Government could use it
or not 7
RAILWAY MAIL PAY. 597
Mr. RowAN. If they asked for 60 feet
Mr. LLOYD. If the space were determined by the law in some way
so that there was no question about it, you would have no objec-
tion to it? *
Mi RowAN. I can not get my mind away from the present basis
at all. &
Mr. LLOYD. Your trouble now is all about space. If the law
fixed the space, then there would be no trouble about it. ... The Post
Office Department contends, and it seems to me rightfully, that if
they insist on a 40-foot car and you furnish a 60-foot car because
you have not a 40-foot car, or because you do not want to use a 40-
foot car, that you ought to have pay for a 40-foot car because that
is what they demand. -
Mr. RowAN. A 60-foot car is a standard car, Mr. Lloyd, and we
would not build anything but a 60-foot car. I do not know any
railroad to-day that would build a car under 60 feet.
Mr. LLOYD. If they demand, under existing regulations, a 40-foot
car, you do not get paid for a 60-foot car?
Mr. ROWAN. No.
Mr. LLOYD. What is the trouble between you and they They
say they do not need a 60-foot car; we only need a 40-foot car, and
under the law they have a right to fix the space, but if the law was
such as to protect you and leave nothing to the administrative to
determine except whether the car was to be used or not, then you
would be relieved of your srouble. In other words, the trouble now
is that you get paid for a 30-foot car, a 40-foot car, and a 60-foot car.
The Government says we want a 40-foot car, you have not got it, and
you use a 60-foot car. You do that on your own account, and you
say you ought to have pay for a 60-foot car, because you have used it.
The Government says no; we do not ask for a 60-foot car; we ask for
a 40-foot car. That is the source of your trouble to-day. Now, if
that law was changed so that there was a uniform car and there were
no cars except 60-foot cars, there were no 30-foot, 40-foot, or 50-foot,
cars, but one class of cars, and that was a 60-foot car, and when you
furnished a 60-foot car you got paid for a 60-foot car, the question,
so far as the administration was concerned, would be overcome 3
The CHAIRMAN. How about that case, if there was one standard
C3,I* {
Mr. RowAN. That would relieve the situation a great deal, but in
my contention with the department I recognized a 40-foot car a 50-
foot car, and I never tried to get pay for a 60-foot car when they ask
for 40 feet, because I know they can not give it. I would like to get
it, and I can see a good many reasons why we should get it, but I have
never asked them for it because, according to the present regulations,
they only need 40feet of space, and that is all they are going to pay for.
Mr. LLOYD. What I was getting at is, if that was regulated by law,
so that there was only one car, and that was the 60-foot car, then all
the trouble you have now about a 40-foot car and 30-foot car would
be eliminated 3
Mr. RowAN. It would, if you pay for the space in the car instead
of the number of separations ºft. in the car as at present.
Mr. LLOYD. That is an administrative question thus far, and that
might be relieved by the law if the law was such, and I think it ought
to be such, if you furnish a 40-foot car it does not make any difference
598 RAILWAY MAIL PAY.
to you how many separations there are, and the law ought to be such
that the Government has nothing to do with that. If they demanded
a 40-foot car and you furnished it, you ought to have pay for a 40-foot
car, and if you furnish a 60-foot car instead of a 40-foot car, on your
part you did that voluntarily and you would still get paid for a 40-foot
car. I do not believe in governmental regulation with reference to
the distribution basis, and while the Government is doing all right, I
believe the law ought to be changed so that that administrative fea-
ture would not be a bone of contention between the railroads and the
Government.
The CHAIRMAN. That is expressed in the law itself?
Mr. LLOYD. Yes.
The CHAIRMAN. How would it be to have two standard cars, one
30 feet and one 60 feet, and only have two kinds of cars—that is,
apartment cars and a 30-foot standard and a 60-foot standard—and
whether you used 1 foot or the whole 60 the Government has to pay
for that ? Could not the postal department conform to that ?
Mr. McBRIDE. We could do it, but I think it would cost a great
deal more money. - º
The CHAIRMAN. Wherein 7 -
Mr. McBRIDE. Because we do not need 30 feet everywhere.
Mr. LLOYD. Now we are talking about a space theory. Suppose
you abandon the weight basis altogether and the railroads get paid
according to the space used, if they furnish you a 30-foot car at your
suggestion they ought to be paid for a 30-foot car, whether they
used 1 foot or 30. If you demand a 60-foot car, if you use 1 foot,
that is your business, and if you use 60 feet it is their business.
Mr. McBRIDE. There might be lines on which we would not need
more than 15 feet for service. If we had nothing but 30-foot cars
we would have to pay for 30 feet instead of 15 feet in such cases.
Mr. LLOYD. It costs them just as much to furnish you a 30-foot
car as it would a 15-foot space in that car, and if they furnish you
a 30-foot car the Government ought to pay for it.
Mr. McBRIDE. If it is a 30-foot car, but if only 15 feet are needed
we should pay for only 15 feet.
Mr. LLOYD. If you take a 30-foot car you ought to Fº for it.
Now, if you demand 15 feet of space, and only 15, and the law per-
mits you to call for 15 feet of space, then you ought to pay for 15
feet, but if there is no provision for this 15 feet and there is no pro-
vision for the 30-foot space and you use a 30-foot car you ought to
pay for the 30-foot car.
Mr. McBRIDE. We would have to, if the law read that way.
Mr. LLOYD. If the law read that way it would avoid your admin-
istrative trouble.
Mr. McBRIDE. I believe it would eliminate most of it.
Mr. LLOYD. It would avoid their administrative trouble, and then
the only question to be determined on the part of the Government
would be, What is reasonable compensation for the space used? Does
not that relieve the situation so far as the administrative features
are concerned? - -
Mr. McBRIDE. It would probably relieve the administrative diffi-
culties with the railroad companies. -
RAILWAY MAIL PAY. 599
The CHAIRMAN. That would leave your pouch service as it is to-day,
and you would have three units, a 30-foot car, a 60-foot car, and a
pouch service, and you would have to pay for it.
Mr. LLOYD. From a railroad standpoint, if they furnished a 30-
foot car it costs them just as much full as empty. They do not
know whether you have any mail in it or not; the expense to them is
just the same. r . *
The CHAIRMAN. Would there be any question as between the
departmental representatives and the railroads under any such
system as that, if it was adopted
Mr. RowAN. I think it would be largely eliminated, but I would
like to know what the rate of pay would be for the car?
Mr. LLOYD. That is not the question, because if we reach a space
basis as the proper basis for the determination of pay, then the next
question is, What should you receive for the space?
The CHAIRMAN. Before we leave that space basis, Mr. McBride says
it would cost the Government a great deal more under that plan. I
would like for him to explain to me, if you have a 60-foot car, a 30-foot
car, and a pouch service to limit yourself to-and those are all the units
you have, and you have to adjust yourself to those three measures—
where it is going to cost the Government so much more ?
Mr. McBRIDE. I had in mind the present rates of pay. Possibly,
if the rates of pay under the proposed law were appropriate, it would
not cost any more.
The CHAIRMAN. Well, taking the present rate of pay, where is it
going to cost the Government so much more ?
Mr. McBRIDE. Because we would pay for 60-foot cars in cases
where we now pay for 40 or 50-foot cars.
The CHAIRMAN. You would save $1,600,000 every four years for the
cost of weighing. The Government would pay that.
Mr. McBRIDE. Yes, sir.
The CHAIRMAN. And it would not require any weighing at all.
You would take an arbitrary for the number of pouches, under the
assumption that a pouch was equivalent to so much weight, and you
would pay so much per pouch, and you have that information already
under your present method of administration—the number of pouches.
Mr. McBRIDE. We could get it. I haven’t that information
tabulated.
The CHAIRMAN. Is it available %
Mr. MCBRIDE. Yes.
Mr. LLOYD, Mr. McBride, you see what I am driving at. It is not
a question of what the pay should be, but the question of what basis
should be used, should it be a weight or space basis. The railroads
are insisting they did not want the space basis because of the adminis-
trative features. Now, if we can remove the administrative features,
So far as that is concerned, and there is nothing for you people to do
and nothing for them to do in the way of administration it simplifies
the matter so that when the proper rate is fixed the whole matter is
adiusted 3
r. McBRIDE. The only possible chance for disagreement would be
as to whether a 60-foot car was needed or a 30-foot car.
*:: LLOYD. That the Government would have to determine for
itself.
600 BAILWAY MAIL FAY.
The CHAIRMAN. I do not see where that disagreement would come
in at all, you would ask for a 30-foot car and if they offered you a
60-foot car they would know they would only get paid for 30.
Mr. McBRIDE. They might contend we needed 60.
The CHAIRMAN. They are not running the department.
Mr. McBRIDE. They contend at present that the service on certain
lines demands greater space than is being paid for.
Mr. LLOYD. Is not this the real contention, that they are furnishing
a space which you use and which is not paid for ? Is not that really
the contention?
Mr. BRADLEY. It might be put stronger than that, Mr. Lloyd, that
the railroads are obliged to operate a certain amount of space beyond
what the department calls for.
. The CHAIRMAN. We thank you very much, Mr. Rowan, for your
W10WS. - *
STATEMENT OF WILLIAM C. WISHART,
The CHAIRMAN. Mr. Wishart, it will be necessary for you to be
SWOI’Il.
Thereupon the witness was duly sworn by the chairman.
The CHAIRMAN. Kindly state your full name, residence, and
official capacity, if any, with any railroad company.
Mr. WISHART. William C. Wishart, residence, Albany, N. Y.;
I am statistician of the New York Central Lines. I would say, Mr.
Chairman, I have only been with the New York Central Lines about
a month, and was only brought into this case last week. Before that I
was with the public service commission of New York for the second
district as statistićian for about three years.
Mr. LLOYD. Before that where were you ? *
Mr. WISHART. With the Interstate Commerce Commission, as
examiner, for about two years. -.
Mr. LLOYD. Where were you before that ?
Mr. WISHART. I was an assistant auditor for the Dupont Co. I
was there for five or six years, and prior to that with different rail-
roads. I will say I do not profess to know a great deal about this
question. Mr. Rowan asked me to look into Document 105 and what
I am going to say may be only an opinion of little value formed after
a hurried inspection of the subject.
MEMO RELATING TO MAIL REVENUE OF THE NEW YORK CENTRAL LINES.
In document 105, prepared under the direction of the Post Office
Department, it is made to appear that the railway mail pay is profit-
able to the carriers, but the basic figures are incorrect, and therefore
any conclusions as to the relative cost of the services must also be
incorrect. *.
In response to requests from the department the several roads
comprising the New York Central lines prepared and submitted
various statements in accordance with the forms furnished for that
purpose, but these figures have been arbitrarily altered and rear-
ranged.
RAILWAY MAIL PAY. 601
The case of the New York Central & Hudson River Railroad is
probably typical of all the roads in this system. The following state-
ment for this company shows some of the figures submitted to the
department, and those used by it in the preparation of document 105:
Reported by Used by Post
Office Depart-
the company. ment.
Total operating expenses......- ... . . . . . . . . . . . . .- - - - - - - - - - - - - - - - - - - - - - - - - - $5,684,916. 89 $5,670,975. 41
Taxes------------------------------------------------------------------- 436,157.20 435,068.19
Operating expenses and taxes assigned to passenger Service. - - - - - - - - - - - - 2,350,596.86 2,096,398.21
Car-foot mileage: *
ail---------------------------------------------------------------- 54,095,823.46 48,963,759.82
Mail deadhead.-----------------------------------------------------|---------------- 113,044.
Passenger----------------------------------------------------------- 623, 536,321.67 628, 514,517.96
Passenger deadhead.------------------------------------------------|---------------- 3,285,293. 12
Express------------------------------------------------------------- 83,978,738.64 84,261,407.22
Total car-foot mileage- - - - - - - * - - - - - - - - - - - - - - - - - - - - - - - - - - - - - * * * * * * * * 761,611,883.77 || 765, 138,022.32
.*
The company is not advised as to the reason for making the
changes indicated. A further reduction is effected in the amount
that finally lodges in the so-called cost of mail service by the transfer
of mail car space to the space assigned to other classes of service.
These transfers and alterations result in changing the percentage
relations of the space devoted to the three classes of service as follows:
Percentage of train space occupied.
Used by
Reported. depart-
Inent.
| Per cent. Per cent.
7. 10 6.41
Express------------------------------------------------------------------------ 11.63 1íði
Passengers---------------------------------------------------------------------- 81.87 82.58
The basis of assignment of the expenses was also changed mate-
rially, so that the company’s statement giving $2,350,596.86 as
expenses belonging properly to passenger service was reduced by the
department to $2,096,328.91, or by 9.9 per cent of the amount
reported.
The proportion determined by the department as applicable to
mail service on a car-foot-mile basis is 6.41 per cent of the total pas-
senger-car space, but when this percentage is applied to the amount.
assigned as cost of the passenger-train service still another cut is
found to have been made, and a test shows that the proportion of the
whole actually allowed is not 6.41 per cent but 6.19 per cent. The
amount assigned by the company to passenger service on account of
traffic expense appears to have been eliminated before prorating the
total to the classes of service. The traffic department is not one whose
attention is given solely to solicitation, and such a department is
necessary to the development of any road, and if the removal of such
an item as traffic is warranted before dividing the common expenses
the same line of reasoning might be extended to other items which
602 RAILWAY MAIL PAY.
are absolutely necessary to the conduct of a transportation company,
but which might not be considered as essential to the mail service.
In working out the statement shown in document 105 upon the
basis of cost of service the department's auditors seem, in some
instances, to have leaned very far toward regarding the mail service
as merely a by-product of transportation and as not obliged to carry
its share of overhead charges. ~
On the basis of assignment made by the New York Central &
Hudson River Railroad Co. the passenger service—as distinguished
from freight—is charged with only 38.4 per cent of the operating
expenses and taxes—$2,350,596.86 out of $6,121,071.49—and in the
department's computation this is further reduced to only 34.3 per
cent of the amount assigned to operating expenses and taxes, but dur-
ing the year 1909 the total number of revenue train miles in the two
branches of service was divided in the proportion of 54.3 per cent for
passenger trains and 45.7 per cent for freight trains. Still this change,
coupled with the lowered percentage of mail space, makes the differ-
ence between a very profitable business and one that barely pays
operating expenses and taxes and nothing for interest upon the neces-
sary investment. -
The method of division adopted by the department has the effect
of making the relatively small proportion of operating expenses,
known as direct charges, govern the assignment of a very large part
of the unassignable expenses. For example, the New York Central
& Hudson River Railroad reported as expense for ties in the month
of November, 1909, $152,238.87, of which $730.17 were assigned by
the company to passenger business, presumably because during that
month there happened to be applied to passenger tracks, ties of that
cost. The balance was distributed by the company on the basis of
the relative number of revenue train miles in the two branches of the
service. Under the rule of the department, however, two-thirds of
this unassigned expense follows what are called the direct charge
accounts, and only one-third is divided on the basis of revenue train
miles. It appears, therefore, that two-thirds of $151,508.70 was
distributed to passenger and freight business on the basis of the ratio
that the amounts charged to two groups of a very few freight only
and passenger only accounts of small magnitude bear to each other.
If the department's method is understood, the distribution made
by it resulted in assigning to freight service $108,552.57 of the tie
expense, and to passenger service $43,686.44. As another example,
the expense of maintenance of bridges, trestles, and culverts, for
which there was reported by the company an expenditure of
$67,673.57, was divided under the department's plan, solely on the
basis of the direct charges, or as it appears in the proportion of about
20 per cent to passenger and 80 per cent to freight.
To anyone at all familiar with the New York Central road, such
treatment of its expenses is unjustified. It has not been possible to
determine exactly what is meant by “direct charge accounts”, as
used in the department's compilations. Of the 116 operating
accounts sº by the Interstate Commerce Commission, there
are only 14 or 15 which may be justly termed “direct charge
accounts.” These, with the amounts reported by the New York
Central for November, 1909, are as follows:
RAILWAY MAIL PAY. - 603

Passenger. . . . Freight.
Passenger-train car: -
Repairs----------------------------------------------------------------- $140,812.68 |- - - - - - - - - - - - - -
Renewals--------------------------------------------------------------- 1,500.00
Depreciation------------------------------------------------------------|--------------|--------------
Freight-train car:
Repairs-----------------------------------------------------------------|-------------- $476, 752.25
Renewals------------------------------------ - * * * * * * * * * * * * - - - - -, * * * * * * * * * : - - - - - - * * * * * * * * 146,939. 57
Depreciation------------------------------------------------------------|--------------|--------------
Electric equipment of cars:
Repairs----------------------------------------------------------------- 1, 120.47 |- - - - - - - - - - - - - -
Renewals---------------------------------------------------------------|--------------|-------------- J
J2epreciation.-----------------------------------------------------------|--------------|--------------
Weighing, car-service associations. ------------------------------------------|-- - - - - - - - - - - - - 1,235. 57
Coal and ore docks.---------------------------------------------------------|--. - - - - - - - - - - - - - - - - - - - - - - - - -
Total direct charge accounts. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 144, 129.88 706,394.61
Percentage of total expense--------. . . . . . . . . . . . . . . . ---------------. per cent. - 2.5 12.4
One other account, fast freight lines, might be considered a
direct-charge account, but it is found to be divided between pas-
senger and freight in November, 1909. It does not seem fair to assume
that unrelated expenses, such as for maintenance of tracks or bridges,
should be affected by the distribution of these two accounts, but under
the department method they are so affected and very seriously, as may
easily be determined by referring to the foregoing statement. If in
November, 1909, the company had not repaired any passenger cars
or damaged any baggage, the direct-charge passenger accounts would
have shown no charges, and the so-called assignment would have
resulted in the free use of bridges, trestles, and culverts by the pas-
senger trains. -
If we take the operating expense accounts of the New York Central
& Hudson River Railroad for 1912 and divide all except the direct-
charge accounts on a revenue train-mile basis, we shall have assigned
to passenger, mail, and express business a cost of $40,041,608.97, and
to freight, $41,269,544.33. The total revenues from all passenger
business were only $41,959,327.87, which would leave the freight
business to carry the burden of all the interest and rents and nearly
all of the taxes paid. It is not contended that this division is a correct
One. It has been used in important cases, and it is believed to be more
nearly in accord with the actual facts than the figures presented by
the department.
The management of the New York Central lines has reached no
definite conclusions as to what may or may not be done in the way of
cost accounting for transportation service. Many methods have
been proposed, but it is doubtful if any rule can ever be devised which
can be applied equitably to all roads alike for the division of their
expenses. If such accounting is to be undertaken, it will be necessary
first to change the methods now in use for the distribution of such
costs. It does not appear that the department has available the
data upon which to base the important deductions it sought to make.
On the New York Central & Hudson River Railroad, with four
tracks in its main line, two of which are devoted largely to passenger
traffic and maintained at high efficiency for such traffic, conditions
are wholly different from those obtaining on the Pittsburgh & Lake
Erie. On the latter road the revenue passenger train-miles in 1912
604 RAILWAY MAIL PAY.
constituted 43.1 per cent of the total revenue train-miles, but such
trains produced only 9.4 per cent of the transportation revenues;
while on the New York Central & Hudson River Railroad the revenue
train-miles constituted 54 per cent of the revenue train-miles and
produced 38.3 per cent of the transportation revenues. -
For the four larger roads of the system the following statement will
show that in the face of greatly increased expenses and capital re-
quirements the mail service has not borne its share of the increasing
burden, and the same tendency is observable with the small com-
8,IlléS.
p It is to be noted that in a 10-year period beginning with 1903 the
revenue from mail service has actually decreased on the Lake Shore &
Michigan Southern and Big Four roads, has increased only 5.7 per
cent on the New York Central, and was on the Michigan Central the
same in 1912 as in 1903, although on this road it had materially de-
creased in 1907 and remained below the basis for five years. These
tables show the percentage increase or decrease in each year as
compared with 100 per cent for 1903. • -
* :

NEW YORK CENTRAL & HUDSON RIVER, R. R. C.O.
***|Passenger Express | Mail |****
Year. erating rºll reºu. | reºle. || erating | Taxes.
& TeVerlule. * g |expenses.
Per cent. | Per cent. | Per cent. | Per cent. | Per cent. | Per cent.
1903------------------------- ------------- 100 100 100 100 100 100
1904-------------------------------------- 101.3 102.5 114 100.4 102 97.1
1905-------------------------------------- 111.2 109. 2 120.1 113 112.1 110
1906-------------------------------------- 119 121.1 130. 7 125.4 121.5 112.5
1907-------------------------------------- 127. 1 126.5 149.8 115. 7 141.7 97.2
1908-------------------------------------- 111.2 117.9 150. 1 114.1 114.6 115.9
1909.------------------------------------- 123.5 126. 5 170.9 109.8 120.8 121
1910-------------------------------------- 132.4 135.2 172.6 106.4 138.5 128.2
1911-------------------------------------- . 137.8 139.4 176 106.5 141.6 148.6
1912-------------------------------------- 145.6 145.4 198.3 105.7 152.09 161.1
LAKE SHORE & MICHIGAN SOUTHERN R.Y. CO.
1903.------------------------------------ 100 100 100 100 100 100
1904-------------------------------------- .101.3 98.6 105.3 112.9 105.7 109.3
1905-------------------- - - - - - - - - - - - - - - - - - - 109.4 106.7 118.1 113.4 118.3 109.3
1906-------------------------------------- 120. 6 121.1 126.2 1133 133.3 149.8
1907-------------------------------------- 127.5 135 133. 7 110.3. 144. 5 135.4
1908-------------------------------------- 112.4 133 167. 1 103.5 123.3 148.3
1909.------------------------ - - - - - - - - - - - - - 129. 7 150 171.9 105.4 137. 1 151.9
1910-------------------------------------- 142.1 164.3 188.8 105.3 170.4 179. 1
1911-------------------------------------- 139.1 168.4 199.8 108 158.7 174.3
1912-------------------------------------- 156.1 175. 1 227.3 97.9 173.8 184.4
MICHIGAN CENTRAL R. R.
1903-------------------------------------- 100 100 100 100 100 100
1904-------------------------------------- 95.3 94.5 95.8 104.3 94.8 125
1905-------------------------------------- 102.9 102.5 131. 1 104.4 104.9 108.2
1906-------------------------------------- 116.3 116.3 121.4 104.6 120. 9 112. 7
1907-------------------------------------- 126.4 128. 3 167.3 98.8 128.7 113.4
1908-------------------------------------- 107.4 121 140.2 95.2 105.7 124.3
1909.------------------------------------- 121.5 133.3 167.7 94.2 - 102.9 126, 1
1910-------------------------------------- 131.6 147.9 204.8 99.3 120.3 152.6
1911-------------------------------------- 133. 7 152. 1 199. 2 94.8 118.7 148.8
1912-------------------------------------- 145.9 164.5 216.9 100 128 155
RAILWAY MAIL PAY. - 605
CLEVELAND, CINCINNATI, CHICAGO & ST. LOUIS RY. CO.

- **|Passenger Express | Mail ºr
Year. erating erating Taxes.
revenue, revenue. revenue. revenue. expenses.
Per cent. | Per cent. | Per cent. | Per cent. | Per cent. | Per cent.
"I , 100 100
1903-------------------------------------- , 100 100 100 100
1904-------------------------------------- 108.3 128.9 125 117. 5 109.8 96.4
1905-------------------------------------- ... 109.8 110.3 135.9 119.1 116.6 105.4
1906-------------------------------------- 119.8 120.5 143.2 119.1 127.3 118.1
1907-------------------------------------- 129. I 123.3 188.2 112.9 139. 1 119.9
1908-------------------------------------- 120.5 118.2 167. 8 108.9 132.9 128.2
1909-------------------------------------- 137.4 127.5 173.7 | 111 136.2 124.7
1910-------------------------------------- 151. 1 || 138.2 201.9 109.8 162.3 134.9
1911------------------------ -------------- 151.2 138.3 197.8 109 156.7 150.9
1912-------------------------------------- 162.5 || 137.8 211.9 98.8 168. 3 169.5
If there had been imposed upon the carriers the same proportionate
reduction in freight, passenger, and express revenues as was brought
about in the mail revenues during the years 1906–1909, three of the
rincipal roads of this system would have been unable to meet their
ed charges out of the year's earnings, to say nothing of dividends.
This may be seen in the following statement, showing effect of the
_same rate of reduction upon all classes of revenue as was applied by
the Government to the mail service during the years 1906–1909:


º - | Cleveland
New York Lake Shore & Michigan Cincinnati,
|... Central & - Michigan Central Chicago &
Hudson River. Southern. St. Louis.
Mail revenue, 1906..................... $3,007,462.96 $2,287,254.04 || $454,594.24 $782,577.02
Mail revenue, 1909. - - - - - - - - - - - - - - - - - - - - $2,633,969.85 $2,124,186.70 $409,212.23 $729,272.38
Ratio 1909 to 1906---------------------- 87. 58 92.87 90.02 93. 19
Total operating revenue, 1906. ...-----. 1$89,773,883.30 || 1 $41,949,754.39 || 1 $26,250,725.77 | 1 $24,107,189.40
Decreased for 1909 by same ratio as
mail revenue------------------------- 78,623,966.99 || 38,958,736.90 23,630,903.34 22,465,489.42
Operating expenses, 1909.--------------- 268,905,855.31 |228,524,967.77|2 19,040,607.34 220,073,357.94
Net operating revenue. ---------------- 9,718,111.68 || 10,433,769.13 4,598,398.00 2,392,131.48
Taxes accrued.------------------------- 4,434,504.32 1,458,905.00 1,121,531.99 878,328.26
Operating income. --------------------- 5,283,607.36 | 8,974,864.13 || 3,121,531.99 1,513,803.22
Other income, 1909--------------------- 11,392,858.86 6,486,887.28 941,480.65 623,232.87
Gross corporate income- - - - - - - - - - - - - - - - 16,676,466.22 15,461,751.41 4,418,346.66 2, 137,036.09
Deductions from gross corporate income. 22,046,936.46 10,382,049.39 5,812,238.76 4,858,240.77
Income or deficit.---------------------- d 5,370,470.14 || 35,079,702.02 | d 1,393,892.10 d 2,721,204.68
i Excludes rentals. ge
* Sum of expenses for rail operations and expenses for outside operations. Both are taken because 1906
operating revenue includes both kinds of operations. -
3 Net corporate income available for dividends.
NoTE.—If during the 10-year period 1903–1912, other revenues had been held down to the basis estab-
lished by the Post Office Department, and expenses had increased as they have, all these roads would now
; hopelessly bankrupt and unable to pay their operating expenses alone, with nothing for taxes and other
Charges.
Senator WEEKs. That all goes back to the question of whether the
compensation which the railroads received in 1903 was too high 3
Mr. WISHART. Yes. - -
-Senator WEEKs. Have you anything to say about that?
Mr. WISHART. No; I have not. I am informed that the relative
service was about the same in 1903 as in 1912; that is, the mail
occupied the same proportion of the space in the trains and made about
87288—No.4—13—6
--—---- - 4
606 RAILWAY MAIL PAY.
the same car-foot miles, but I am not sure about that. I can not
testify to that. •
The CHAIRMAN. To your mind, is there any difference in compen-
sation that should be received in passenger service, express service,
and the mail service
Mr. WISHART. Well, the tendency in all the accounting that I know
of has been to segregate the two great classes of service, passenger
and freight. I can not see any reason why the mail service should
not pay its proportion of the cost of passenger business, because we
must consider on any basis of division made so far that relatively the
passenger business is the unprofitable end of the transportation busi-
ness as a whole.
The CHAIRMAN. What are the analogous requirements as between
passenger and mail service #
Mr. WISHART. You mean in the way of service by the railroad
companies? •
The CHAIRMAN. Yes. - * ; :
Mr. WISHART. I do not know that there is any analogy, except in
transportation and station service, possibly. ;
The CHAIRMAN. Is it because of that definition, that mail is made
part of the passenger, that they should receive the same relative
compensation ?
. WISHART. It requires, the same service at the hands of the
railroad company; yes.
The CHAIRMAN. To your mind there is no difference, then, in the
requirements of the service'? *
Mr. LLOYD. The mail does not add any requirements º
Mr. WISHART. It does in some cases. I do not know that I am
prepared to testify about that, but I understand it requires sides erv-
ice and things of that kind. I do not care to go into that, because I
am not familiar with the subject.
Mr. BRADLEY. Could you say, if you have the information, how
your computation for November, 1909, developed the case of the New
York Central in comparison with the Post Office Department's pre-
sentation as to the relative profit and loss? Did your revenue from
mail service cover your operating expenses and taxes chargeable to
mail service #
Mr. WISHART. In November, 1909'? *.
Mr. BRADLEY. Yes. .
Mr. WISHART. If we use the basis for ascertaining the cost they did;
it did. If we use the basis that has been recommended in other cases,
the train-mile, for dividing expenses, it barely did. I figured it up,
and I think it was something like 97 per cent of the revenues.
Mr. BRADLEY. But made no contribution to capital at all?
Mr. WISHART. No.
The CHAIRMAN. As to the express business of the New York Cen-
tral, in your computation did you go into that ?
Mr. WISHART. Yes.
The CHAIRMAN. How does it show 'from an earning standpoint as
compared to mail?
Mr. WISHART. On some lines it pays more than its percentage of
iºns as determined by the car space occupied. On some it pays
€SS, -
RAILWAY MAIL PAY. 607
The CHAIRMAN. Is there any basis of computation on the New
York Central lines where it would be shown that company received a
greater compensation from the express than it did from the mail?
Mr. WISHART. It does, in the aggregate; much more.
The CHAIRMAN. That depends on the volume of business, but
adopting any system of unit, in order to get the relativeness between
the two services.
Mr. WISHART. I think there are some things in there, Senator, you
can not measure. The car-foot-mile basis is a basis of transportation,
but there are other things in there you can not measure in money by
any method that I know of; for instance, collateral service rendered
by the express companies and other things that are generally brought
out by witnesses in the case; for instance, the express companies trans-
port the railroad companies' money to its treasury, and they take care
of their own employees.
The CHAIRMAN. And the Government does nothing at all except to
handle the mail for the transportation companies?
Mr. WISHART. Yes.
The CHAIRMAN. Your books show that you get a greater revenue
from the express than from the mail on the system as a whole %
Mr. WISHART. Yes. - g; -
Mr. LORENZ. Have you worked out the percentage of the common
expenses which the Post Office Department assigned to passenger by
their direct charge method, as compared to the train-mile percentage 2
You gave the actual figures, but I do not know whether you put it
On a basis of percentage.
Mr. WISHART. No; I did not. I took the figures as I found them
in Document 105, but I did not work out the percentage. I did not
know what percentage of all expenses they were able to assign directly;
in fact, I could not determine the method.
Mr. LORENZ. I do not question your criticism that on a road
like the New York Central, which does not have a system of appor-
tioning all those expenses which can be apportioned to the passenger
or to freight, the #. charge method is rather unfortunate. It
certainly is absurd to assign maintenance of way expenses in the pro-
portion in which the few tracks which you happen to have exclusivel
for passenger or exclusively for freight might be divided, but I
thought possibly, by accident, it might have been worked out with
reasonable satisfaction as between the two services. I think you
showed that the train-mile method was about half and half
Mr. WISHART. Yes.
Mr. LORENz. If they worked out about a third, it may be that their
results are not so absurd, because my contention is that the train-mile
method assigns the maximum proportion to passenger service, because
the train mile is something different in the two services.
Mr. WISHART. Well, as I showed here in the case of the New York
Central and the Lake Erie, I do not believe that any one method will
ever be devised that will be applicable to all roads. The New York
Central, as I said, is going to take up this question of cost accounting
as soon as they can get to it.
The CHAIRMAN. With your experience, and with what knowledge
you have of the railway-mail question, do you believe it is possible to
evolve a plan that will be universal in its application?
Mr. WISHART. No, sir; I do not.
608 FAILWAY MAIL IPAY.
The CHAIRMAN. You think that is an absolute impossibility?
Mr. WISHART. I do. -
The CHAIRMAN. Will it be necessary to make a separate contract
with each one of the 795 railroads with which the Government has mail
contracts?
Mr. WISHART. If you are going to base it on cost of service, it will.
The CHAIRMAN. Do you think the cost of service is a prerequisite
for the solution of any problem? -
Mr. WISHART. That does not seem to be a prerequisite in other rate
making. I do not see how it could be used as a factor in the present
state of the art of accounting. -
The CHAIRMAN. Then what is the use of endeavoring to use that as
a factor if it is unascertainable?
Mr. WISHART. I do not believe it has been done as yet.
The CHAIRMAN. Do you think it would be possible to group the
railroads in the United States and make separate contracts with each
one of the groups that would be equitable to each one in the groups?
Mr. WISHART. You mean territorial groups?
The CHAIRMAN. Territorial groups, along the line the Interstate
Commerce Commission has worked out.
Mr. WISHART. No; I do not. I do not think the territory has so
much to do with it as the service they are rendering.
The CHAIRMAN. Does not the geographical grouping make the
environment practically the same for the roads in the same group 3
Mr. WISHART. No. The New York Central is much more a pas-
senger road relatively than the Pennsylvania and practically in the
Same group.
The CHAIRMAN. Then how would you suggest a grouping if not
territorially
Mr. WISHART. I have not studied the question long enough to be
able to tell you that.
Mr. LLOYD. He answered a moment ago he did not think they
could be grouped. - …” -
Mr. WISHART. If you could do it, it would be more nearly accord"
ing to the nature of the physical characteristics of the road and the
service they are rendering.
The CHAIRMAN. That would necessarily be an arbitrary grouping ?
Mr. WISHART. I think so.
The CHAIRMAN. We are very much obliged to you for your views.
STATEMENT OF MIR. H. E. MACK.
The CHAIRMAN. Mr. Mack, it will be necessary to be sworn.
The witness was thereupon duly sworn by the chairman.
The CHAIRMAN. Mr. Mack, we are anxious to hear from you why
the Government should pay more for mail transportation than the
public should pay for passenger service.
RAILWAY MAIL PAY. 609
RAILWAY MAIL PAY SHOULD MORE THAN EQUAL PASSENGER-TRAIN
EARNINGS.
Mr. MACK. While scarcely attaining the importance of an issue,
the question has been raised, during the progress of the hearings by
your honorable committee, whether the railroads should earn as
much from transportation of the mail as they derive from other trans-
portation service, and at your request I have made this memorandum,
summarizing my views on that particular phase of the question before
your commission. I would unhesitatingly say that it should, for the
transportation service alone, and furthermore there should be addi-
tional pay for extra requirements. -
According to my view, the transportation of the mail is a business
matter, pure and simple (certainly it is such from a railroad stand-
point), should be regarded and treated as such, and divested of
sovereign power of the Government. It is not necessary to exert
sovereign power to compel service from the railroads, for, while on
the one hand the Government in administration of the postal service,
which transportation business it has assumed, is compelled to avail
of the railroad transportation in exercising this function—there being
no other mode of general transportation—the railroads, under stress
of public necessity, must and do carry the mails and are necessarily
dependent upon the fairness of Congress for adequate rates and
reasonable conditions; to decline to carry the mail would be regarded
by the public as a defiance of the Government. -
. Under the circumstances, the railroads of necessity “accept and
perform mail service under the conditions prescribed by law and the
regulations of the department.”
ote Supreme Court decision of June 7, 1912, as follows:
For public policy requires that the mail should be carried subject to postal regu-
lations, and that the department and not the railroad should, in the absence of a
contract, determine what service was needed and under what conditions it should
be performed. The company in carrying the mails was not hauling freight, nor was
it acting as a common carrier, with corresponding rights and liabilities, but in this
respect it was serving as an agency of Government, and as much subject to the laws
and regulations as every other branch of the post office.
It seems to me, therefore, that in view of these circumstances, Con-
#. is under the highest obligation to pay the railroads adequately
or the transportation of mail. -
It is to be borne in mind that the Government, in the matter of
mail service, is conducting a transportation business for the people,
and collects postage from the people for such transportation and
collection ºf delivery of service, and out of that postage it would
seem there should be no hesitation in paying an adequate amount for
the transportation service on practically every mile of railroad and
}. every º train in the country, which form the very
oundation of and which is vital to efficient postal service, such as
the people expect, yet the railroads receive only about 21 cents out
of the dollar of postage collected, the balance being employed in the
collection, delivery, and administration service. It is remarkable
that the Government has been enabled to expand and inaugurate a
free-delivery service throughout the country on over 40,000 routes
with an annual cost of $47,500,000 and to make large increases in
salaries of working forces in recent years without any increase in
610 RAILWAY MAIL PAY. /
postage rates. The railway mail pay has been cut, however, during
this period approximately $8,000,000 per annum.
During the same period, 1907 to 1912, increases have been as fol-
lows in operating revenue on the railroads:
Passenger--------------- ** * * * * * * * * * * * * * * * * * * * * * * * * * * * * $104,035, 657.00
Freight---------------------------------- - - - - - - - - - - - 157, 153,002.00
Express--------------------------------------------- 17,402,069.00
Mail------------------------------------------------ 1,933, 230.20
While the increased pay to the railroads for mail has been only
$1,933,230.20, the Government has collected increased postage
amounting to $63,159,010 during this five-year period. -
With these preliminary remarks of a general nature, I would say
the railroads are entitled to earn as much or more from the mail
service as from other passenger service.
First. Because the railroads are enterprises operated upon private
capital, and as the mail is a participant in the activities of trans-
portation and use of the property and capital employed, the mail
should be in the same relationship, and having the same rights as to
privilege, should be on the same footing as to earnings as other
transportation, such as freight and passenger service. To hold dif-
ferently would approach a confiscatory process; otherwise, the law
and the courts must permit any deficiency from inadequate mail pay
to be recovered from the passenger or freight service, the effect of
which policy would be to put the whole people of the country in the
attitude of shifting upon the individual shippers of freight, or pas-
sengers who traveled, such a deficiency, for railroad capital has its
undoubted constitutional right to lawful earnings.
Second. I think the railroads should earn as much from mail trans-
portation as other passenger-train service, for the principal reason
that the mail is primarily dependent upon the passenger service on
the railroads, and"participates to the very fullest extent in the passen-
ger service itself, and is even a preferred service on passenger trains.
Very often special mail trains throughout the country are superior
to passenger service.
Now we fall short of this, earning from the mail $3.37 per thousand
car-foot miles and from other passenger service $4.34 per thousand
car-foot miles, as shown in joint report of the departmental and
railroad committees, dated March 15, 1913, mail earnings being 97
cents less per thousand car-foot miles, and representing for the car-
foot mileage involved upon 189,760 miles of service a deficiency in
mail earnings of $13,190,724 per annum. This deficiency of course
would be very largely increased if the figures were available for
the entire service performed on 226,071 miles of railroad.
The high efficiency demanded of the postal service by the peo-
ple compels the use of the best train service, established primarily
for passenger business, as well as the use of almost every train
operated in the country. Congress itself requires the highest
j. passenger facilities, under severest penalty, as follows:
Revised Statute, 4000:
Every railway company carrying the mail shall carry on any train which may run
over its road, and without extra charge therefor, all mailable matter directed to be
carried thereon, with the person in charge of the same.
RAILWAY MAIL PAY. - 611
Act of March 3, 1897:
The Postmaster General shall, in all cases, decide upon what trains and in what
manner the mails shall be conveyed.
Act of July 5, 1884:
If any railroad company shall fail or refuse to transport the mails, when required
by the Post Office Department, upon the fastest train or trains run upon said road,
said company shall have its pay reduced fifty per centum of the amount provided by
law.
The act of August 24, 1912, requires a superior class of equip-
ment in the construction of all steel full postal cars.
A. The use of all trains prevents economies in handling or the ad-
justment frequently to the other business on the trains.
Not only are all passenger trains available, but special mail trains,
in many cases with schedules to fit specially important connections,
and adjusted to suitable hours of dispatch for the great city daily
papers, are furnished, the speed in some cases being quicker than
passenger service. For example: On our line, not only special
schedules are provided, but faster time made from St. Louis to Kansas
City, viz., 7 hours, whereas, the passenger schedule is 8 hours and 15
minutes, and St. Louis to Texas, the fast-mail train is 6 hours quicker
than the passenger service.
An additional train, particularly if a fast train, is scarcely scheduled
before there is a demand for mail service upon it. The better the
passenger train, the more urgent the demand for its use for mail
service, the department even having the right to and securing the
service of special-fare trains, where operated.
B. Under State laws, the railroads have the same full passenger
liability for damages in the case of accident to railway postal clerks,
as they have to passengers, and the United States Supreme Court,
in a recent case, extended this liability, by a decision to apply where
a postal employee was not even traveling upon official, but instead
was traveling upon personal business.
C. Mail apartment cars, if only 10 or 15 feet in length, with a
single postal clerk, must have individual toilet facilities, wash water,
ice water, and sanitary arrangements, as in private cars, yet in some
instances, earn only as much as the fare of two passengers.
D. The railroads are required to take on its scheduled train,
designated by the department, all mail, even if necessary to exclude
and hold back baggage (which should accompany passengers to avoid
complaint and claims) and express. In fact, it is not an uncommon
thing at St. Louis, to unload both baggage and express, after being
placed in baggage cars, to make room for the mail.
E. Mail trains must be held for loading mail from connections that
have arrived before leaving time; this is not done for other passenger-
train traffic, except in very rare instances.
F. Where fast mail trains are operated, they have the right of way
over all service, and freight trains, from one end of the line to the
other, have to be sidetracked at meeting points for safe clearances.
G. The mail service does not adjust itself as passenger and express
business does to stops, but mail cranes and dº service have to be
provided, so that even the smallest local communities may exchange
mails with the fastest trains, to secure high efficiency.
612 RAILWAY MAIL PAY.
H. Mail cars must be set for advance work many hours before
departures, requiring lighting, heating, extra switching, etc., whereas
passenger trains need to be set only a few minutes before schedule
departure, except in the case of some sleepers on late night trains,
which may be set an hour or two before departure, to permit passen-
gers to retire.
I. The mail cars require more and better light than any passenger
cars operated. -
J. The department requires, preferred handling of the mail at
stations over other work of station employees; that is, the mail must
be exchanged before baggage and express are handled, so as to give
the mail clerks an opportunity to open the mail bags quickly and
assort the mail and have it ready for the next stations.
The foregoing are practical reasons showing how completely the
passenger service is utilized by the Government in mail transporta-
tion, which seem conclusively to indicate to my mind that when the
highest quality of service is demanded for the people the compensa-
tion ought to be proportionate, as a business principle.
It has been indicated that perhaps on account of property protec-
tion, advertising, or the possible stimulating effect of mail upon
freight and passenger business, there might be benefits to the rail-
roads, incidental to mail transportation. If correct, the same prin-
‘. would be involved as stated in the outset, that the people as a
whole would thereby shift a burden to the shippers of freight, and
to the passengers who travel, to make up for this so-called asset,
which, I think, would be unsound in doctrine. -
Property protection: As to property protection, the railroads, it
would seem, should have ample protection to property in considera-
tion of taxation, the same as other property, th. railroads paying 3%
per cent of gross revenue in direct taxation. I might allude here to
the rapid increase of taxes paid by the railroads, amounting in 1912
to $120,873,472, an increase of 121.9 per cent in 10 years, while oper
ating revenue has increased but 66.3 per cent in comparison. As to
indirect taxation, upon materials, etc., they pay a full share, as all
other business does. It is as much public necessity as protection to
property for the United States Government, in extreme rare cases,
to reenforce State powers and aid in the movement of the mails.
Advertising: It is the consensus of opinion among railroad people
that there is no advertising value whatever to the railroads, so far
as being mail carriers is concerned. Practically all railroads carry
the mail, and therefore are mail carriers.
Stimulation of other traffic: There seems no reason why the mail
should pay less than other passenger-train service, because it may
have a stimulating effect upon freight and passenger business. The
mail is essential to the conduct of business. It is so absolutely
important that public opinion would rather tend to a policy of sub-
sidizing railroads for service, and did so until a very few years ago,
were it not for the fact that passenger-train service is so frequent
and efficient as to meet the necessities of the people. -
The railroads have rendered a great service to the people in going
into new territory and furnishing the means of transportation of
products to and from markets, and thereby to some extent creating
the very need for the mail facilities. The growth and development
TRAILWAY MAIL PAY. 613
of communities which have followed railroad construction into new
territory, private capital taking great hazards, is well known: &
In the Pacific group of States, viz, Washington, Oregon, California,
Nevada, Idaho, Arizona, and Utah, the population in 1860 was
491,183, with 23 miles of railroad; in 1910 the population was
5,177,487, with 23,256 miles of railroad.
In the southwestern group of States, viz, Missouri, Arkansas,
Texas, Kansas, Colorado, New Mexico, and Oklahoma, the popula-
tion in 1860 was 2,456,676, with 1,162 miles of railroad; in 1910,
the population was 13,238,850, with 51,772 miles of railroad.
In }. intervening periods the rapid growth of railroad con-
struction was followed by rapid increase in population. How much
increase in the country's wealth is based * railroad construction
and operation I do not know, but they have been great creators
of value and wealth to the people. How much “unearned incre-
ment” may be traced primarily to the railroad construction will never
be known. -
In the pacific group of States above mentioned, between even 1890
and 1910, the increase in railroad mileage was 11,225 miles, and the
increased value of farm property, buildings, implements, machinery,
and live stock was $2,246,321,252, and in the southwestern group
the increased railroad mileage during the same period was 18,884,
with increased value of property as described above of $5,910,778,895,
according to census figures.
When railroad transportation has rendered such great aid in the
settlement and development of the country, and in the production of
values to the people, it would appear in the nature of a penalty if
they should not now be permitted to earn as much from mail trans-
portation as from other transportation service.
I trust these views may at least be of some material service to
your committee. -
The CHAIRMAN. What compensation per car mile does the Missouri
Pacific receive from passenger service?
Mr. MACK. I have not those statistics. &
The CHAIRMAN. Do you know the difference—how much more you
receive from passenger service than from mail service'
Mr. MACK. Per car-mile?
The CHAIRMAN. Yes.
Mr. MACK. No; I do not.
The CHAIRMAN. Per train mile 3
Mr. MACK. I gave figures with respect to the special mail trains
that we had at a previous hearing. If I recall, the mail train be—
tween St. Louis and Kansas City early in the morning earned $1.30
per train mile and the earlier train in the evening earned $1.01, which
is, I am very sure, much lower than the earnings from the passenger
trains.
The CHAIRMAN. That is, per train-mile 3
Mr. MACK. Per train-mile; yes, sir. I would like to make this
answer to Mr. Lloyd's point which came up this morning with Mr.
Logan on the question of eminent domain. The right of condemna-
tion of property for railroad construction is based upon the public need
of transportation facilities and the construction of the railroad and
its operation (good service and reasonable rates being secured) fulfills
the obligation of the railroad companies. The law confers the right,
614 RAILWAY MAIL PAY.
but is based upon public necessity and is an inducement to capital to
invest and supply such needs.
Mr. LLOYD, But that which you receive is due to the law. If the
law should provide that you should carry the mails free, you would
be required to carry the mail, because it would be a part of the law.
Mr. MACK. That would be very true if we were discussing original
franchise conditions; but of course the postal service has proceeded
along different lines, and up to this time the theory and practice has
been, so far as I know, that the railroads should be compensated
without any special privilege to the Government for mail service.
Mr. LLOYD. Speaking for myself, and I am sure for the commis–
sion, we have no antagonism toward the railroads and we are ready
to admit all you say with reference to their being benefactors and
paving the way for civilization and advancement of prosperity and
development of the country, but I do not think that has very much
to do with the question of how much pay we should give them, nor
does that settle the question of space and weight.
The CHAIRMAN. How does the viewpoint present itself to your
mind, of mail transportation as a by-product of transportation itself?
Mr. MACK. I do not consider it a by-product.
The CHAIRMAN. In any way ? r
Mr. MACK. No.
The CHAIRMAN. Nor the express'
Mr. MACK. No. I think it is part and parcel of transportation, and
that it should all be on the same basis. If the rates could be fixed
and service conditions matched accurately, each class of service
ought to support itself—the freight, the passenger, mail, and express.
That exact condition, of course, can not be developed, but when we
are dealing with a specific proposition like the mail, one proposition
that apparently itself could be adjusted on the basis of other passen-
ger service, I think we should have the same earnings. If the passen-
ger service is profitable to a small degree, the mail should pay, in a
small degree, and if the passenger service is unprofitable and it is
generally believed it is, if the mail paid a proportionate rate to pas-
'senger trains, it would still fail to pay a profit to the railroad. That is
taking the proposition as a whole. &
The CHAIRMAN. Is it generally believed, in the country as a whole,
that the passenger service is unprofitable? -r -
Mr. MACK. It is so regarded, I think, by all the railroads of the
country.
Mr. LLOYD. What do you think would be the effect if your railroad
company carried no mail? Would its surplus fund be as great at the
end of the year or its earnings as great each year as it would without
carrying the mail? * s
Mr. MACK. Why, no. We would save, of course, the cost of the
special trains, and save the special terminal costs that are incident
to the performance of the mail service, but, aside from that, probably
the passenger service and other train service would be the same.
Mr. LLOYD. Then the carrying of the mail is profitable to the rail-
roads 3 -
Mr. MACK. I would not say that it is profitable to the railroads,
because on that basis you eliminate all proportional charges. #
RAILWAY MAIL PAY. 615
Mr. LLOYD. I am asking general questions, as you will observe.
I think you must answer that that is the answer of every railroad—
that it is beneficial to the railroads to carry the mail ®
Mr. MACK. There are special benefits, of course. It is beneficial
to the railroad to carry the mail and beneficial to the Post Office
Department. In fact, the Post Office Department is here acting
as an agency of transportation and using our property.
The CHAIRMAN. Do you think it is right to charge up as an expense
of mail the charges for passenger agents and ticket agents
Mr. MACK. My impression is that the question rests rather upon
relative revenue rather than the relative cost, because costs are not
definite and reliable. The costs are based upon an arbitrary divi–
vision; but, answering your specific question, if you were to go to a
†: basis of cost, and it could be ascertained, my judgment is
the mail service participating so fully in the benefits and requiring
the very highest class of passenger service there is should partici-
pate fully in all costs that go to make up the passenger service.
Mr. LLOYD. Do you not think that this is true, that where you
run the mail train by itself without any passenger service that you
ought to charge everything connected with that service to mail and
no part of it to passenger?
r. MACK. There would not be any charge to the passenger serv-
ice for the operation of a special mail train; no.
Mr. LLOYD. Everything connected with the special mail train, the
conductor on that train, the brakemen on that train, the engineer, and
everybody connected with that train, and everything that is in the
way of expense for handling that special train ought to be charged
to the nº.
Mr. MACK. That is so; yes, sir. Likewise, if there was a passenger
train operated without any mail on it the charge for that train would
be for the passenger service on the same basis. -
Mr. LLOYD. Then there would be no difference between us on that
proposition, except as to what you term common charges for passen-
ger and mail facilities. It seems to me that there can be no question
about this proposition, that anything that the railroad does in the
transportation of mail ought to be charged to mail, just like the spe-
cial trains; everything connected with them ought to go to the mail
expense, if it is to be figured at all on the cost basis, and I take it
that you people are figuring on a cost basis. All this hearing has been
on the theory that it costs so much to carry the mail, and because of
the cost you ought to have the cost back, and in addition to that, some
compensation. Now, if you do away with the cost theory and take
the revenue theory—what do you mean by that %
Mr. MACK. I mean that the car-foot-mile earnings on passenger
trains for mail are below the earnings of the other space on these
trains.
Mr. LLOYD, Now, let us see if I understand you. You say a rev-
enue basis. Take the amount you receive for mail and the amount
you receive for express and the amount you receive for passengers;
those are the three elements that make the revenue on a passenger
train. Now, as I understand you, you think that the pay ought to
be based according to the revenue received 3
616 RAILWAY MAIL PAY.
Mr. MACK. I think they ought to earn an equal amount. In
other words, these figures demonstrate the question of under pay
very definitely. -
Mr. LLOYD. Now, going back, here is what I want to reach. You
say that they ought to pay relatively. Then we ought to pay for the
space that is used on º trains, the space that is used for
express, and the space that is used for mail, and that gets back to the
space basis?
Mr. MACK. No; hardly. We arrive at the figures based upon the
space that is actually used and operated as a common basis for com-
parison, or test at a given time just as the service existed at that
time. •
Mr. TILOYD. I am trying to get you, if I can, to get at some kind of
synthetic statement that does not use car miles nor train miles, not
any of these technical terms that the average individual does not
understand, if there is any way to do that. One trouble about it is
that in all of our conversations—I just as much so as the rest of you—
we talk about car miles. What does the average individual in the
country know about car miles? He does not know about it. If we
can reach some kind of a system of pay by which John Jones working
on the street, can understand what we pay the railroads and some
kind of a system that I can explain to j; Jones, who is one of my
constituents, what we do pay the railroads, I think it means more than
this question of how much we pay, because the whole thing to the
average individual of the country is a complete mystery. I was just
talking to the Senator here, and neither one of us, unless we gave
some thought with reference to that thing, could go before a pro-
miscuous audience and make a speech of 30 minutes and satisfy that
audience to-day as to the present system of paying the railroads for
carrying the mails. It is such a complex subject that it is almost
impossible for anybody except an expert to explain it at all.
* #. CHAIRMAN. I do not think he could.
Mr. LLOYD. I am pretty nearly ready to say that. In my judgment
you are one of the best we have along the line of investigation, and I
am anxious that some kind of a system should be worked out that
anybody can understand. Everybody understands, when they go
to buy a ticket for transportation, how much they are paying for that
ticket from one town to another. If you take freight to the depot,
you understand how much you are paying for that freight, and if you
take an express package to the depot, you understand how much you
are paying for express. That feature of it we will understand. Now,
we want to get a system, if we can, so that everybody will understand
what we pay for carrying the mail. º
Mr. MACK. Of course we would be the principal beneficiaries of
any system that could be devised.
Mr. LLOYD. I do not care anything about that, but I am anxious to
get a system that everybody can understand.
At this point of the proceedings, the committee went into an
informal session, and at 5.40 o'clock, took a recess until 8 o'clock
p. m.
RAILWAY MAIL, PAY. 617
EVENING SESSION.
The hearing was resumed at 8 o’clock p. m.
The CHAIRMAN. At this point I want to insert in the record a copy
of my letter to Chairman Prouty of the Interstate Commerce Com-
mission requesting a comparative statement showing the increase
in the year 1911 over the year 1909 in the expenses or costs incurred
by the railroads, and the reply of Chairman Clark, of the Interstate
Commerce Commission, together with the statement transmitted
by his letter.
Hon. C. A. PROUTY,
Chairman Interstate Commerce Commission, Washington, D. C.
. . My DEAR SIR: I should like to have a comparative statement prepared for insertion
in the hearings now being conducted on the subject of railway mail pay, showing
what, if any, increase there has been in the year 1911, or preferably 1912, if obtain-
able, in the expenses or cost incurred by the railroads over 1909, same to include
taxes. In order that the actual increase over 1909 may be shown, allowance should
be made for the increased traffic and additional mileage of the railroads of the country.
... As prompt a response as the nature of this request will permit will be greatly appre-
Ciated. - -
APRIL 11, 1913.
Yours, very truly
~ y JonATHAN Bourn E, Jr.,
Chairman.
INTERSTATE CoMMERCE Commission,
Washington, April 19, 1913.
Hon. JonATHAN Bourne, Jr.,
Chairman Joint Committee on Compensation for Transportation of Mail,
- - Washington, D. C.
DEAR SIR: In compliance with your request of the Ilth to the former chairman of
this commission, I take pleasure in submitting to you the desired statement, which
I trust may be of service in your work. If there is anything further which we can
do for you, kindly write again. -
Very respectfully, yours, E. E. CLARK, Chairman.
Statement compiled from annual reports of operating steam railway companies to the
Interstate Commerce Commission for the years named, ended June 30.
[Does not include switching and terminal companies.]
Year.
s [. w Item.
1909 1911
Miles of roads for which operations were reported.---------------------- 1235,402.09 2 246,238.02
Qperating revenues–Rail operations *---------------------------------- $2,418,677,538. $2,789,761,669
Operating ºne-ºal Operations”----------------------------------- $1,599,443,410 || $1,915,054,005
Taxes accrued *--------------------------------------------------- - - - - - - $85,139,554 $102,657,157
Operating income *- - - - - - - - - - - - - - - ----,- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $738,031,543 $773,865,700
umber of revenue passengers carried---------------------------------- 891,472,425 997,409,882
Number of revenue passengers carried 1 mile---------------------------. 29, 109,322,589 || 33,201,694,699
Number of revenue passengers carried 1 mile per mile of road - - - - - - - - - - - 127,299 139, 191
Average receipts per passenger per mile (cents)------------------------- 1.92S 1.974
Number of tons of revenue freight carried------------------------------- 1,556, 559,741 1,781,638,043
Number of tons of revenue freight carried 1 mile------------------------ 218,802,986,929 || 253,783,701,839
Number of tons of revenue freight carried 1 mile per mile of road. . . . . . . . 953,986 1,053,566
Average receipts per ton per mile (cents) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . 763 . 757
Passenger service train revenue per mile of road. ... --- - - - - - - - - - - - - - - - - - - - $2,979 $3,312
Freight revenue per mile of road.---------------------------------------- $7, 184 $7,895.
Operating reventies per mile of road. - - - - - - - - - - - - - - - - - ? - - - - - - - - - - - - - - - - - $10,356 $11,433
§. expenses per mile of road------------------------------------ $6,851 $7,850
* Net operating revenue per mile of road--------------------------------- $3,505 $3,583
Ratio of operating expenses to operating revenues (per cent) -- - - - - - - - - - - 66. 16 68.66
Ratio of operating expenses and taxes to operating revenues (per cent). - 69. 65 72. 32
1 Includes 9,396.35 miles operated under trackage rights, and 1,343.45 miles not in United States.
* Includes 11,008.85 miles operated under trackage rights, and 1,761.58 miles not in United States.
8 Excludes returns for a few small roads because of deficiencies in their reports.
t;18 RAILWAY MAIL PAY.
I also wish to put into the record a memorandum of railway mail
pay submitted by Mr. M. O. Lorenz under date of April 19, 1913:
MEMORANDUM REGARDING RAILwAY MAIL PAY.
The services performed by railroad companies for the Post Office Department may
be divided into the following three classes:
1. Carrying mails in apartment, R. P. O., and storage cars.
2. Carrying mail in closed pouches, these being handled along with baggage or
other traffic.
3. Side services—that is, carrying mail between station and post office.
These three classes of service need not all be paid for on the same basis. The
basis used should be suited to each class. Taking up the last class first, we must
admit that this is not really a steam railroad transportation service, and the pre-
sumption is that the Post Office Department would take this out of the hands of the
railroads altogether. It is urged that the railroad company has men employed any-
how who will carry the mail in many cases without extra pay; but does this not
work both ways? Wherever there is a post office, there must be some one employed
anyhow by the post office. It has been suggested that the matter might be adjusted
in this way: In cases where it would clearly not cost them anything the railroads
might continue to perform this service without pay; but whenever they demanded
pay for the service, the Post Office Department should take over the work,
Turning to the closed-pouch service. We have here a service analogous to the
express service. Is not the natural method of payment on the basis of actual weight
or number of pouches? As to the rate, how would it do for the Government to pay
one-half the rates fixed by the Interstate Commerce Commission as fair rates for the
public to pay to the express companies? If the department wished to send a carload
of closed pouches by freight, the payment could bear some relation to the first-class
freight rate.
This leaves us simply the first class mentioned above to consider. The proposition
is here advanced that the proper solution for this class of service is the payment of a
specific rate per car-foot mile in both directions for the maximum space used or neces-
sary in either direction, unless by mutual agreement the empty space can be utilized
in other services, the payment per car-foot mile to be the same to each and every
railroad, except that possibly a minimum payment might be prescribed if it is found
that very small roads are not taken care of by the payment for closed pouches'sepa-
rately. The argument in favor of this proposal will first be indicated, before taking
up the question of what that payment should be.
It is commonly thought, and rightly, that as a general proposition increasing density
of traffic means a lower cost per unit of traffic. (By density of traffic is meant the
amount of traffic per mile of road operated.) . We get this general impression doubtless
chiefly from the fact that in the freight service increasing density means larger train-
loads and larger carloads, and this decreases the cost per ton. Furthermore, in any
traffic, the more cars are hauled, the less is the share for each car of those common
expenses that are independent of wear and tear. But it would be a mistake to con-
clude from these well-known facts that the train mile expense is less in regions of
dense traffic. A train mile does not always mean the same thing. Freight trains
vary tremendously in weight and passenger trains very in speed, number of cars, and
nature of service. Compare for example the Lake Shore with the Santa Fe:
1911
Santa Lake
Fe. Shore.
Operating revenues per mile of road -- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,817 $29,138
Operating expense per train mile--------------------------------------------------- 1.64 1.76
* & JPer cent. | Per cent.
Per cent passenger-train miles are of total train miles (revenue service). . . . . . . . . . . . . 48. 57 49.86
Passenger cars per train ----------------------------------.------------------------- 6.05 6.88
Loaded freight cars per train--------------------------------...--------------------- 21.90 2šči
RAILWAY MAIL PAY. 619
The additional expenses of the heavier traffic per mile of line more than counter-
balance the economies per train that come from a better utilization of track. We can
not, of course, use directly the average train-mile *g. both freight and passenger;
in a study involving the passenger service alone. Such an average is much affected
by the relative number of heavy freight trains. Thus on the Pittsburgh and Lake
Erie the average train-mile expense is $2.82 as against $1.74 on the New Haven. To
test the relative expense of hauling a passenger-train car a mile satisfactorily would
require a separation of the passenger from the freight expenses. We do not have
reliable figures of this kind for all roads. But just at present we are arguing concern-
ing the question whether one payment per car-foot mile would be reasonable for roads
in different sections of the country. As bearing on this particular point, the following
table may be of interest:
Year ending June 30, 1911.

Per cent
*:::. operating Column B
P.P." expenses applied to
*. are of rev- | column. A
(cents) enues (all (cents).
v. business).
A. B. C.
I. Large roads: ' 25.5 Per %; 90
8Stern - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 5. * * 17.
Southern----------------------------------------------------- 24.3 68. 40 16. 60
Western----------------------------------------------------- 25.5 66. 56 . 16.97
II–III. The smaller roads—that is, those having revenues of less than a million dol-
lars a year—show a higher car-mile revenue and a higher operating ratio, but they may
be ignored in this discussion because (1) they would be affected more by the closed-
pouch method of payment than by the car-space payment; (2) a minimum payment
per mile of line might be provided for; (3) the large roads mentioned above do over
96 per cent of the business. •
From the above table it does not seem that a different payment is required for
roads in different regions. For individual roads there is more variation, but the gen-
eral impression produced is the same. Notice the exceptional cases of the New
Haven and Boston & Maine resulting from the small trains and well-filled cars.
Revenue Ratio of
per passen- |expenses to X
Road. ger-train revenues— (cents)
- car-mile all opera-
(cents). tions.
Pennsylvania R. R.'...'.............................................. 27. I6 72. 15 19. 60
Pennsylvania Co----------------------------------------------------. 21. 13 68. 28 14.42
New York Central---------------------------------.................. 24. 57 73. 98 18. 17
Lake Shore----------------------------------------------------------- 23, 36 71.66 16. 74
Baltimore & Ohio.............. -------------------------------------- 22, 22 71.21 15. 81
Prie-----------------------------------------------------------------. 21.98 64.94 14. 27
New Haven---------------------------------------------------------- 39.51 65.80 25.99
Boston & Maine.------------------------------------------........... 29. 78 78.43 23. 35
Southern------------------------------------------------------------- 24. 57 67.82 16. 66
Chesapeake & Ohio----------------------...-------------............. 27. 92 64. 79 18.09
Seaboard Air Line----------------------------....................... 21.69 66. 48 14.42
Southern Pacific------------------------------....................... 29. 39 57. 33 16.85
Qhicago, Burlington & Quincy....................................... 25. 10 67. 45 | 16.93
Santa Fe. . . . . ...: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 25. 48 63. 52 16, 18
Northern Pacific----------------------------------------------------- 27. 60 61. 20 16. 89
Union Pacifie-------------------------------------------------------. 21, 70 53. 19 11.54
Denver & Rio Grande---------------------------..................... 22.75 68. 22 15, 52
620 BAILWAY MAIL PAY.
Aside from the statistics, does it not appear reasonable to pay the same per car-foot
mile, when you consider that the roads which have a dense traffic and which thus have
certain expenses less per car, nevertheless haul more weight per car foot and give
better service; that is, faster and more frequent? The pounds per car-foot mile can
not be given by roads, but may be estimated by routes. Thus:
founds per
b car-foot mile.
Route No. 109004. New York to Philadelphia, Pennsylvania R. R..... * * * * * * * * * 105
Route No. 11001. Philadelphia to Pittsburgh, Pennsylvania R. R.-------. . . . . . . II9
Route No. 110123. Pittsburgh to Youngstown, Pittsburgh & Lake Erie. . . . . . . . . . 82
Route No. 167009. El Paso to Bisbee, Santa Fe. - - - - - - - - - - - - - - - - - - - - - - - - ------ 52
Route No. 159001. Sioux City to Edgley, Chicago, Milwaukee & St. Paul. . . . . . . . 19
The impression gained from the preceding considerations is that no grouping of the
roads is necessary. This simplifies tremendously the problem of railway mail pay if
the car-foot-mile basis is adopted for the railway post office, apartment, and storage
car service. -
The question now is, what shall be the revenue per car-foot-mile?
Such information as we have at this time enables us to make the following statement
as demonstrable: The existing mail revenue for the roads as a whole is, on the one hand,
profitable traffic for the railroads in the sense that it more than pays the actual out-of-
pocket expenses occasioned by the mail service directly or indirectly, but on the other
hand the mail service does not pay its full proportionate share of taxes and interest
charges. In other words, no crying injustice would be done to the railroads or to the .
Post Office Department if no radical change is made in the existing level of pay for the
next three or four years, by which time it is to be hoped that the accounting practices
of the railroads generally will be sufficiently developed to permit of a reasonably
definite determination of the relative cost of various branches of the railroad service.
The existing revenue per car-mile for all passenger-train traffic is about 25.5 cents as
against a mail revenue of about 20 cents (using the 3.37 mills per car-foot mile given on
page 324 of the Hearings No. 2). Doubtless the mail revenue ought not to be as large
as the other passenger-train revenue per car-foot mile, because certain expenses are
incurred for the passenger traffic that are peculiar to it to a larger extent than is true of
the mail traffic. T This consideration would probably not warrant a reduction of more
than 10 per cent from the passenger earnings, although no definite conclusion is pre-
sented on this point. In other words, it is possible that the committee might find that
a car-foot mile in the mail service should earn 3.37 or 3.50 or 3.75 mills (as further
consideration may determine), subject to a proportionate reduction if the closed-pouch
service is paid for separately. -
Before reaching a definite conclusion on this point, all parties interested will doubt-
less wish to see how it would work out in individual cases. Practically the only
statistics of car-foot miles we have at the present time are for the single month, as com-
piled by the Post Office Department. Perhaps, before weighty conclusions are
reached, additional data should be collected regarding the actual car-foot miles de-
voted to the mail service on various roads. --
The CHAIRMAN. I want to ask Mr. Lorenz to elucidate a little on
this portion of his statement reading as follows:
Doubtless the mail revenue ought not to be as large as the other passenger train rev-
enue per car-foot mile, because certain expenses are incurred for the passenger service
that are peculiar to it to a larger extent than is true of the mail traffic.
What,
Mr. LORENZ. I had in mind in writing that, for example, the
expenses which the railroad officials reported as traffic expenses.
They, presumably, do not maintain relatively as many officials or
agents to get the mail traffic from the Government as they do main-
tain to get their passenger traffic for the railway. That is one illus-
tration of the expense that is peculiar to the passenger traffic and not
the mail traffic.
The CHAIRMAN. I would like to get a little discussion between you,
Mr. Bradley, Mr. Mack, and the other gentlemen here in reference to
that; as to the difference between passenger and mail. *
Mr. LORENZ. I think the question can only be satisfactorily deter-
mined by a complete system of cost accounting, where every item
RAILWAY MAIL PAY. 621
would be set down that is *. chargeable to freight, exclusively
passenger, or exclusively chargeable to the mail or to express, and
then the balance of the expenses and divided among these depart-
ments on some basis that is proper for each account. That would
automatically determine this question, but not having that we
can only take into account these features which are obvious. It seems
to me the one I have mentioned, traffic expense, and again, the ticket
; and probably also the expenses for passenger stations, are
relatively greater. Some illustration has been given of the terminal
service performed for the mail, and of the fact that cars must be
placed upon side tracks, and that some room must be furnished,
erhaps in the station, and the mail handled, and so forth. I do not
£. just where the line would be drawn, but on the whole it seems
to me a little more was done for the passenger service along these
lines than for the mail service, and that therefore the revenue per car-
mile should be somewhat greater to cover that extra expense in the
passenger service.
The CHAIRMAN. That is, revenue per car-mile should be greater in
thºr. than in the mail service 2
r. LORENZ. Yes, sir.
The CHAIRMAN. Mr. Bradley presented a statement, as is shown on
page 438 of the second volume of the railway-mail pay hearing, which
made a strong impression on my mind, giving the relativeness between
the Post Office Department and the express companies. Why could
not that same thing be done with the passenger service 2 You have
read that statement, have you ?
. LORENZ. Yes, sir. I think such a statement would be very
llSe][Ull.
The CHAIRMAN. Is there any criticism that you would make in ref-
erence to Mr. Bradley's presentation under that comparison between
express and mail :
Mr. LORENZ. No, sir; I have no particular criticism on this. It
may be, in the comparison between mail and express, that there might
be relatively more done for the post office than for the express.
The CHAIRMAN. In other words, under that comparison, I take it
Mr. Bradley thinks that the transportation companies should receive
more compensation in the handling of the mail than they do for
express, because more is required. Is that correct, Mr. Bradley';
Mr. BRADLEY. Yes, sir.
The CHAIRMAN. Are there any criticisms whatever to make as to
his deductions based on those premises? Do you think they are a
fair presentation of the relativeness between the two 2
lº. LORENZ. I have not studied them closely enough to answer
that. -
The CHAIRMAN. Have you, Mr. McBride?
Mr. McBRIDE. I have not had an opportunity to study them very
closely. I do not want to go on record at this time.
The CHAIRMAN. I wish you gentlemen would both kindly look into
that question between the express and mail. That presentation has
made a very strong impression on my mind.
Mr. McBRIDE. I think from a casual reading that the differences
are presented correctly, although I do not agree with the language
87288—No. 4—13—7
------ -- * ** – = *-* * *
622 - RAILWAY MAIL PAY.
of that part presenting the Post Office Department's side of the case.
I think it is probably correct as to the facts.
Mr. BRADLEY. Would you instance a case? -
Mr. McBRIDE, I am not prepared to instance a case at this time.
I want to give the subject more study.
Mr. RowAN. I want to ask Mr. Lorenz if some consideration ought
not be given to the fact that mail is given precedence over every other
class of traffic : -
Mr. LORENZ. Yes; I think it should be.
Mr. RowAN. And it is admittedly given preference over every other
class of traffic that is handled?
Mr. BRADLEY. I was going to ask that in a general way—whether
Mr. Lorenz, in considering this subject, had turned his attention as
much to the extra advantages that the mail service enjoys, or the
extra expense attendant upon the performance of the mail service,
as he did to the extra expense which appertained to the passenger
service'?
Mr. LORENZ. Perhaps they were not fully considered. Of course
I had them in mind, but I reached no final conclusion.
Mr. RowAN. Do you not think that the activity of all traffic officers
results in advantage to the department' - -
Mr. LORENZ. I do not see how.
Mr. ROWAN. Because the traffic official solicits passengers for the
trains and enables the road to run a train like the Century. With-
out the traffic department booming a train like that, there would not
be such a train for the Post Office Department to use.
Mr. LORENz. On the other hand, if it was not for the Post Office
Department, those trains would not pay so well... Perhaps in help-
ing out the mails enable you to establish a train like the &º.
r. RowAN. Our earnings for mail on the Twentieth Century
Limited are less than 4 cents a mile, and we give them 9 feet of space.
I do not think there is anything in that.
Mr. SNEAD. There is one part of the traffic activities that does it
which seems to me helps th. Post Office Department, and that is
soliciting settlers to move into a country—immigration. They settle
in a country, build it up into farms and towns and create mail along
with other business, but the mail does benefit and profit by that the
same as your freight and passenger business does.
Mr. LORENZ. I think that is too intangible to be measured directly.
Mr. SNEAD. I think that is true of a great many others, but that is
a direct benefit.
Mr. RowAN. If it were not for the traffic department the Post Office
Department would not have the good, trains they have to-day.
The traffic department creates the necessity for additional trains.
Mr. BRADLEY. I prepared some time ago a tentative statement
about weight or space which I have not presented, but in that I point
out that we can readily distinguish the 15 separate services rendered
by the railroad company in connection with the Railway Mail Service,
of which only two were specifically paid for, namely, the transporta-
tion of the mails and the R. P. O. cars.
The CHAIRMAN. What are the other thirteen 3
Mr. BRADLEY. Mail apartments in combination cars, side messenger
service within 80 rods, terminal messenger service, transfers if depots
are 80 rods or less apart, station rooms for transfer clerks, station
RAILWAY MAIL, PAY. 623
rooms for sorting mail, R. P. O. cars and apartments Pl: in rail-
road terminals hours before train's departure or held after train's
arrival, mail cranes, mail receivers, and mail catchers. Right there,
the British Government pays for their own mail cranes and catchers,
but in this country the railroads are obliged to pay the expense. The
next item is transportation of railway postal clerks on duty and to and
from duty, transportation of postal officers connected with Railway
Mail Service, transportation of postal officers connected with the other
branches of the postal service, fines and deductions (including dis-
ciplinary action), speed and frequency.
As Mr. Mack pointed out to day, the holding of postal cars in
railway terminals for several hours before departure, and in some
instances providing for the distribution of mail in terminals for more
hours than the postal car travels on its journey is one distinction be-
tween the mail and passenger service, and it leads to the impression
that if all these credits were given on both sides of the account,
it might be concluded to be entirely fair to make no discrimination
against an equal rate for postal cars on account of such few items in the
passenger account as can not be identified as being directly applicable
to the mail service.
Mr. MACK. The postal service certainly gets the very best there is
in our passenger service, and in addition to that, special mail train
service. Do you not think, for instance, when we are required to give
that preferred service—for instance, we have to put our baggage and
express off of our trains to accommodate mail that comes in on a late
connection, when we can not get another car—do you not think
those are factors clearly in the case of preferred service that ought to be
on the highest passenger basis possible?
Mr. LoRENZ. That should be considered; yes. But how would you
reduce that to dollars and cents, as to whether it should be 5 per cent
more or 10 per cent less than passenger earnings'
Mr. MACK. We have not attempted to do that. The position I
have taken personally is that the passenger service is organized,
including its whole outfit, of which i. traffic expense is a part, and
the Government comes along, representing the people in the conduct
of the postal service, and finds to hand this passenger service and gets
the use of it. Now, why should it not bear a proportion of all the
expense necessary to maintain that service without cutting out a little
here or there. As I also showed this afternoon, the Government has
been willing to pay for 30 years a subsidy in order to get the postal
facilities that it desired, that were not secured through the regular
É. service. The Post Office Department and Congress have
een willing to pay a higher rate in order to get a service that was
needed, but that higher rate and that subsidy has been eliminated
by a great improvement and an increase in our passenger service
which now meets practically all the necessities of the postal service
which should pay us as much at least, as the other passenger service.
The CHAIRMAN. What subsidy do you refer to s ;
Mr. MACK. From 1876 until 1907 there were subsidies for the fast
mail service from Washington to New Orleans, from Kansas City to
Newton, and some other cases that I have forgotten now, but they
have gradually disappeared, based primarily upon the fact of the
improved passenger service.
he CHAIRMAN. The general improvement of passenger service?
624 RAILWAY MAIL PAY.
Mr. MACK. Yes. ~. . .
Mr. BRADLEY. It represented an expenditure, as I recall it, of about
$250,000 a year by the Government. +
Mr. MACK. Now we give them not only passenger service, but special
mail train service at regular rates. We feel when we do that we are
giving the Government a great deal for its money, and to cut out
traffic expense because you have your service built up, based upon
passenger business, it is hardly just to put it on any other basis than
even terms with the passenger revenue. It seems to me that that
is clearly sound.
Mr. BRADLEY. Then referring to the idea that the mail service is
a by-product, it occurred to me to-day that the mail service was in
existence before the railroads were built, and they commenced using
the railroads as soon as they were built.
The CHAIRMAN. So you take it that the passenger service is a
by-product of the mail?
Mr. BRADLEY. I would not go that far, but at least I would place
them on even terms. * *
Mr. McBRIDE. Do you not think you are slightly incorrect in saying
that speed and frequency are not considered in compensation?
Mr. BRADLEY. What I say about that is this: There is no greater
pay for a speed of 60 miles per hour than for 15 miles per hour "
There is no greater pay for 100 trips a day than for one trip, if the
aggregate weight of the mail is the same in both instances, yet if a
single train fails to make its usual time, a deduction is made from the
pay of the company. It should be admitted, however, that speed and
frequency are thus rewarded indirectly.
Mr. McBRIDE. I think your statement should be modified by saying,
that if the failure is unavoidable, the deduction made is only 50 per
cent of the value of the trip.
Mr. BRADLEY. How would it be in the recent floods in Ohio and
Indiana. What allowance would be made for an act of Providence 2
The CHAIRMAN. I would like to get that statement of yours into
the record, Mr. Bradley. -
Mr. BRADLEY. This was made in February, and I do not know
whether it is up to date. We have had very many informal con-
ferences since this was written.
The CHAIRMAN. We will insert it in the record here.
WEIGHT OR SPACE.
In studying the subject of railway-mail pay in order to distinguish and select those
elements of service upon which the rate of pay should be based it is first important to
survey all the services performed by the railroads for the Post Office Department and
estimate their relative importance. We can readily distinguish 15 separate services
of which only 2 are specifically paid for, the other 13 being not paid for specifically.
First. Transportation of the mails.--This service is paid for and is the carriage of
the weight of mails from every place of origin on a railway to every place of destination
on a railway. It is an indispensable service for the Post Office Department; without
it we could not have an efficient postal system. Car space is only necessary according
to the amount and character of the load and is not an unduly prominent factor as
compared with the weight. This service could be performed by the railroads if all
R. P. O. cars and mail apartments for sorting the mails en route were abolished. The
space statistics in Document No. 105, accepted by the Post Office Department as
necessary both for the transportation and the sorting of the mails en route, allows
87 per cent for sorting space and 13 per cent for storage space. This implies that the
excess space (almost six times beyond what the load requires) is primarily a necessity
RAILWAY MAIL PAY. 625
of the Post Office Department to secure a high quality of postal service and not, so
far as the railroad is concerned, an essential concomitant of the weight of mail
transported.
Second. R. P. O. cars.-These cars are built and provided and hauled by the rail-
roads, and are paid for specifically in addition to the pay for the weight of mail carried.
In theory this additional pay is intended to cover the additional space in R. P. O.
cars beyond the space in which the load is carried, but it is inadequate for the purpose.
In Document No. 105 the R. P. O. car distribution space is stated by the Post Office
Department as being 45 per cent of the total of all mail space accepted by the depart-
ment. The pay to the railroad companies for furnishing this class of service—that is,
full R. P. O. cars—is equivalent to about 10 per cent of the transportation pay. The
13 services not specifically paid for are:
Third. Mail apartments in combination cars.-These are from 10 feet to 30 feet in
length, furnished with complete sorting facilities, and serve as traveling post offices
for over 7,000 railway ºf clerks, similar to the full R. P. O. cars. In Document
No. 105 the Post Office Department attributes to these mail apartments 39 per cent
of all car space used for mails. The lack of additional pay for these apartments
widens the inadequacy of the pay for the weight carried, especially as there is no
effective check upon the Post Office Department to restrain its demands for apartment
Car SiO2,Ce.
ile this statement applies to the railroads generally it can be given especial
emphasis in relation to the short-line railroads that are required to supply mail apart-
ment CarS. -
Fourth. Side messenger service within 80 rods.--Fifth. Terminal messenger service.—
Sixth. Transfers if depots are 80 rods or less apart.—None of these services are specifically
paid for. In the case of the short-line railroads the requirement is very often a great
hardship, and sometimes means that the railroad company pays out more than it
receives for its entire mail service. In the case of the larger railroad systems it is not
so serious a hardship, but is thought that it should not be a requirement without
special accounting.
Seventh. Station rooms for transfer clerks.-Eighth. Station rooms for sorting mails.--
The station rooms for transfer clerks are not specifically paid for, but to a reasonable
extent might be regarded as a proper auxiliary of the transportation service, especially
if the Post Office Department would not assert the power to determine the size and
location of them in the stations or terminals. In the case of station rooms for Sorting
mails, as in a post office or railway post office, a fair rental should always be paid, as
is now done in some instances.
Ninth. R. P. O. cars and apartments placed in railroad terminals hours before train's
departure or held after train's arrival.—This requirement is not specifically paid for; is
very burdensome, and is a very valuable service in expensive terminals. . The effect
is to relieve the Post Office Department from paying rental elsewhere or from paying
for the maximum requirements en route. It is not considered to be a reasonable
º of the transportation service beyond the time needed for loading or unloading
the mails. -
Tenth. Mail cranes, mail receivers, and mail catchers.—These are demanded at the
j. of the companies, although purely postal necessities. They sometimes entail
enlarged secondary responsibilities, both burdensome and expensive, while relieving
the Post Office Department of expenses justly their own. These requirements are
likely to bear heavily on the short line roads.
Eleventh. Transportation of railway postal clerks on duty and to and from duty.—
Twelfth (a) Transportation of postal officers connected with Railway Mail Service.—(b)
Transportation of postal officers connected with other branches of the postal service.—
Thirteenth. Fines and deductions (including disciplinary action).--Fourteenth-Speed.—
Fifteenth. Frequency.—There is no greater pay for a speed of 60 miles per hour than
for 15 miles per hour. There is no greater pay for 100 trips a day than for one trip if
the aggregate weight of mail carried is the same in both cases. Yet, if a single train
fails to make its usual trip a deduction is made from the pay of the company. It
should be admitted, however, that speed and frequency influence the allotment of
#. tºge to the roads giving the best quality of service and are thus rewarded
indirectly.
Of the 15 items, car space is obviously the proper measure for items 2 and 3 (R. P. O.
cars and apartment cars), but it is not a good measure for the other items, such as mes-
senger service, or mail cranes, or station facilities. Neither is the weight of mail
transported a good measure for these services because their extent and cost do not
advance or recede in close accordance with the tonnage. -
These auxiliary services deserve recognition and suitable remuneration, and a very
good beginning would be to allow pay for mail apartments and relieve the companies
626 RAILWAY MAIL PAY.
from the compulsory performance of messenger and terminal service without pay.
It would also seem desirable to relieve the Post Office Department from the necessity
for pursuing the precedent of compelling railroads to perform the other services and
give them the freedom of mutual arrangement and agreement as in usual contracts
in the commercial world.
Réverting to the main service performed by the railroads for the Post Office Depart-
ment, the transportation of the mails, I have already intimated that the weight carried
represents the essence of the service rendered. The delivery of the weight, the thing
itself, at destination is a guarantee that the service was performed. The weight is
easily ascertained by both of the contracting parties and joint verification is possible.
If, instead of taking the weight of mail as the measure of the transportation service
to the Post Office Department, we were to take the car space operated, we would be at
least one remove from the thing itself—the mail transported. Instead of considering
the traffic we would consider the container of the traffic, i. e., the car space either in
full cars or in part of cars.
It is known that there is no invariable relation between mail-car space and the mail
tonnage transported. The car space accepted by the Post Office Department in
Document No. 105 showed for the whole country about 23 linear feet of car space per
ton of mail. Yet, one route showed as low as 8 linear feet per ton, and one Small rail-
road system showed 66 linear feet to the ton. These diverse results were partly the
result of transportation conditions and partly caused by the Post Office Department’s
method of performing the service. We are enabled to see this disparity because we
have the weights as well as the space, but if car space were the only measure there
would be no gauge for determining the value to the Post Office Department of the
car space used. Therefore, the amount of car space accepted by the Post Office Depart-
ment for the mails would be determined by the varying opinions of subordinate
officers with frequent fluctuations and consequent instability.
If it were possible to make a four-year agreement on mutually satisfactory terms, the
railroad company to fix the rate, as the owner of a building would fix the rate, one
might say that it would be immaterial which basis was selected because the company
would be able to satisfy itself as to the adequacy of the pay and protect itself against
excessive exactions. But when the rate of pay is not fixed by the railroad company
and when experience has shown that the officials of the Post Office Department do not
see the same space for payment that the railroad officials find necessary for operation,
and when experience has shown that the Post Office Department even now alters its
allowances of R. P. O. car space at frequent intervals, reducing authorizations on
30 days' notice, or even less, it is natural that a strong preference should be expressed
for the more stable factor—weight of mail transported, which is less subject to mere
ODIIllOI).
"...ier very strong reason should appeal to the Post Office Department. While
it is true that there is no constant or exact proportion between bulk weight of mail
carried and its attendant car space for distribution and storage, yet there is an approxi-
mate relation, especially if the “working mall” is differentiated from the “through
mail.” If an officer of the Post Office Department were attacked for overliberality
in allowing car space to a particular railroad system, it would be difficult for him to
defend himself without having the statistics of weight to quote.
For similar reasons the statistics of weight carried would be important to Congress
or to the Interstate Commerce Commission when either is dealing with the question,
because the value of the total car space paid for would be expected to rest in some
measure upon the amount of the traffic, and this could only be learned by a periodical
weighing, as at present. -
In 1899, when the last joint congressional commission was studying this question,
I held the opinion, which I surmise is still held by some officials of the Post Office
Department, that if the department paid for car space instead of for weight they
could load the space to the maximum, and so effect great economies... I am satisfied
that this is a delusion. The low average load carried per car is really the result of
the variable character of the traffic and not of the present basis of pay. The fact
that the volume of mail in one direction is heavier than in the reverse direction lowers
the average load, but the department can not control or change this condition. The
further fact that the load from the heavy initial terminal varies from day to day can
not be controlled by the department unless it takes all expedition and high quality
out of the service by holding the mail back until it accumulates a full load, as in the
freight service. . Congress and the American people would not consent to this.
Superficially it appears quite clear that the average load per car is too low, and
therefore extrayagant, but close examination discloses the fact that this is an insepa-
rable characteristic of the mail traffic and partly the price paid for expedition (includ-
ing distribution en route). *
RAILWAY MAIL PAY. 627
It would therefore seem that there is nothing to be gained and much to be lost
by both the Post Office Department and the railroad companies in substituting space
as the sole measure for the transportation service and for the pay in comparison with
the present basis by which about 90 per cent is apportioned to weight and about 10
per cent to space. The correct view seems to be that in the passage of time since
the law of 1873 was passed the service has so developed, especially the distribution
of mails en route, that the measure of weight is at present overemphasized in the
law and the additional measure of space is underemphasized. If Congress would
now allow pay for mail apartment cars, and If It would also revoke the law of March 2,
1907, so as to restore the former rates of pay for full postal cars, such action would
give recognition to the changes that have occurred in the character of the service
and tend toward a fairer adjustment.
Mr. BRADLEY. Unless Mr. Lorenz is about to make some remark,
I would like to ask this question: Is it generally conceded outside of
railroad circles that the passenger service on the railroads of the
country as a whole is an unremunerative service
Mr. LORENZ. It is frequently so stated. I can not state that it is
generally conceded.
Mr. BRADLEY. What would you say, in your opinion, whether the
statement is true that the passenger-train service is unremunerative
to the railroads as a whole'
Mr. LORENZ. I do not think I could express an opinion, so much
depends on the particular method of figuring the expense; but I
am rather ºf to think it is not likely to be found as profitable
as the freight.
Mr. Mack. That is pretty well demonstrated in the rate cases, is
it not ? -
Mr. LORENz. I think so. But testimony before this committee
shows that on the New Haven the passenger service is the more
profitable.
Mr. MACK. So, if the question of overpay or underpay were deter-
mined on relative revenues it would be founded on passenger service
that at least is not excessively profitable?
Mr. LORENZ. That would be my impression; yes.
Mr. BRADLEY. If the rate per car-mile in the passenger-train serv-
ice could be regarded as not distinctly º to the railroads as
a whole it would hardly be necessary to make any deduction from
that rate in the case of the mail service.
Mr. LORENZ. You mean, even conceding that the mail should earn
a little less than the passenger service under ideal rate adjustments,
it ought to earn as much as the passenger does now Ż
Mr. BRADLEY. Yes, at least that that would not be an unreasonable
position to take.
The CHAIRMAN. All of you gentlemen are unanimous, are you not,
in your opinion that the mail service should be self-supporting to the
Government? In other words, that the charges jº by the Gov-
ernment of the citizens should cover the cost to the Government of
the service? - *
Mr. BRADLEY. That is my opinion, absolutely. -
The CHAIRMAN. There is no difference among any of you railroad
gentlemen as to that ?
Mr. MACK. I think not.
I Mr. SNEAD. I do not think it would be good business to do anything
€1S62. * - g *
Mr. MACK. Of course there might be a little over or a little under
which would not adjust itself with exactness; but the principle, I
628 RAILWAY MAIL PAY.
think, we all agree on, that it ought to pay its way and the postage
rate ought to be adjusted accordingly.
The CHAIRMAN. I desire at this point to put into the record the
statement of Mr. A. H. Plant, comptroller of the Southern Railway,
which he has submitted to the commission.
ASSIGNMENT OF RAILWAY OPERATING ExPENSEs To THE WARIOUs CLAssEs of SERVICE
{FOR WHICH SUCH EXPENSES ARE INCURRED.
The proposed law for the regulation of railway mail pay has as a foundation the
allocation of railway operating expenses to freight service and to passenger service,
Separately, and a further subdivision of those expenses assigned to passenger service,
between costs incident to the transportation º mails as distinguished from other
passenger-train costs.
It is assumed from the proposed regulation that, if enacted into law, fixed and uni-
form rules or methods must be prescribed: A
(1) By the Interstate Commerce Commission for the purpose of determining: (a)
those costs incident to freight service; (b) those costs incident to passenger service.
(2) By the Postmaster General for determining that part of the passenger costs
assignable to the transportation of mails.
The purpose of this paper is to point out the impossibility of fixing a general rule or
method for allocating railway operating costs, separately, to the several classes of
Service for which they are incurred, which will be equitable alike to all carriers con-
cerned and to the Post Office Department.
This Segregation or allocation of railway operating expenses to the several classes
of Service is by no means a new or an experimental question. For years past it has
had the serious and thoughtful consideration of railway managers, and especially of
railway accounting officers, and their conclusions have invariably been that, while
in Some cases a part of such costs can be accurately assigned and that other costs are
assignable with a fair degree of accuracy upon arbitrary bases applicable only to
the individual line making this assignment, no trustworthy rule or method could be
adopted which could with equity or with a fair degree of accuracy be applied to
all railways alike. s
As far back as 1885, in conjunction with several of my colleagues, careful consid-
eration was given to the matter, and at that time, with far less complications and
difficulties than now confront us, our conclusions were that there were too many
elements of averages and approximations to be dealt with and too many varying
conditions existing on different railways and on individual operating divisions of a
single railway to warrant the establishment of a uniform basis for such an allotment.
Since that time, by reason of the changed conditions incident to railway operations,
such as heavier and faster trains of both classes, new and complicated appliances, the
greater use of joint facilities for both classes of service, the complications and diffi-
culties in the way of such a determination have materially increased, making the
problem far more difficult of solution than it was at that time.
Prior to 1894 the scheme of accounting and statistics required of carriers by the
Interstate Commerce Commission called for an assignment of operating costs to the
two classes of traffic; i. e., freight and passenger.
Effective July 1, 1894, the Interstate Commerce Commission promulgated a revised
classification of operating expenses, and from it. I quote the following:
“The classification of operating expenses herewith presented has been nearly four
years in process of revision. Every accounting officer of an operating road, as also
all State railroad commissioners, have been asked for criticisms and suggestions,
and there is hardly an important railway line in the country which has not been
represented, eithér directly or indirectly, on some one of the various committees ...;
this matter in charge. It is needless to say that Some of the changes finally agre
upon do not meet the approval of all the members of all the committees, but the state-
ment may be made without fear of contradiction, that this revised classification rep-
resents the best thought of the railway commissioners and the railway accounting
officers of the United States.”
Again, in that same document, is found the following:
“The most important change in this revised classification consists in the abandon-
ment of the assignment of expenses between passenger traffic and freight traffic, a
change which for a long time had been urged by accountants and which Secured the
approval of the State railroad commissioners at their fifth annual convention, held
in Washington, April, 1893.” -
RAILWAY MAIL PAY. 629
Going a little further back, we find, in the Fifth Annual Report of Statistics of
Railways, issued by the Interstate Commerce Commission, being the report for the
year ended June 30, 1892, pages 86 and 87, the following:
“The second change was the abandonment of the attempt to assign operating
expenses to passenger, and to freight traffic, respectively. This assignment was
introduced by the railways many years ago, when the difference in the character
of the two services was so marked as to permit it to be made with a fair degree of
accuracy. With the development of railway economy, however, which has resulted
in increasing the rapidity of freight trains and the weight of passenger trains, it has
been found that not more than half of the items of operating expenses can by any
means be assigned to passenger and to freight service.”
Again, in the Sixth Annual Report of the Interstate Commerce Commission, pages
61 and 62, the following appears:
“This summary also contains a statement of the proportion of operating expenses
assignable to the passenger service and to the freight service, but, as stated in the
report of the previous year, this assignment appears for the last time in the present
report, it having become evident that no trustworthy rule exists for making the
assignment in question.”
#. we have, after nearly four years of consideration, an acknowledgment by the
Interstate Commerce Commission that at that time and under more favorable condi-
tions than exist at the present time no equitable allocation of the two classes of
expenses could be made.
In 1906 the Interstate Commerce Commission, under authority vested in it by Con-
gress, began its work of promulgating a uniform system of accounts to be kept by car-
riers subject to the act to regulate commerce. One of the first acts of the commission's
accredited representative in respect to that work was the issuance of a circular letter
to carriers, in which their views were asked upon certain pertinent questions of account-
ing, among which was question 5, reading as follows:
“While refraining at the present time from expressing any opinion on the proposal
that an authoritative rule should be formulated for the separation of operating ex-
penses incident to the passenger service and the freight service, it is recognized that
certain expenses can be accurately divided between the two services named. Your
attention is called to this matter with the request that you state in detail the extent
to which and the manner in which such separation may be made.”
The replies to that question summarized were, as shown on page 10 of Bulletin No.
13, issued by the Association of American Railway Accounting Officers under date of
December 10, 1906, which is as follows:
“It is considered that the larger proportion of operating expenses can not be ac-
curately separated as between freight and passenger service. There are a few accounts
which can be separated by all lines, and several which can be separated by some lines,
but not by all. Any arbitrary basis applied for this purpose to all roads would there-
fore produce results which would be absolutely incorrect and misleading.
“No division can be made of the accounts under “Maintenance of roadway and
structures’ except perhaps as relates to a few individual buildings.
“The same condition exists as to the accounts under ‘General administration
expenses.’ -
“The maintenance of passenger and freight cars may be readily shown, but loco-
motives are for the most part used in both freight and passenger service, and the
jº. can only be divided as between freight and passenger on an arbitrary basis.
The remaining accounts under Maintenance of equipment’ are subject to the same
arbitrary conditions. Traffic solicitation and administration expenses may be sepa-
rated as between freight and passenger on those roads which have through their
organization provision for a separate staff of freight and passenger work, but it
would be impracticable to divide on such roads as have one staff for the entire traffic
department.
“The expense of handling traffic at stations and in yards is for the most part per-
formed by a common staff, and the requirement is used for both purposes. In the
train service the wages of train crews and the supplies for trains can not be separated
when there is mixed train service. Dispatchers and protecting by telegraph are
indivisible.
“LOSs and damage, injuries, clearing wrecks, mileage and per diem of equipment,
and insurance may be separated, with some minor exceptions, but the operation of
joint tracks and terminals, floating equipment, and the remaining accounts under
‘Handling traffic’ can only be º: when under a particular organization they
provide exclusively for one branch of the service.
“An examination of the replies submitted on this subject by the chief accounting
officers of the railways of the United States shows a practical unanimity in support of
630 RAILWAY MAIL PAY.
the conclusions reached by the committee, and such replies as propose a division give
only such bases as are entirely arbitrary, and the accounting officers for the most part
jº. assert that the information is only approximately correct and would be value-
ess if used for any other purpose than as a comparison with the same property during a
corresponding period. *
“The only basis which receives any considerable support as applied to the separation
of those expenses which can not be accurately divided, is that of train mileage, but it is
a well-known fact that passenger trains vary widely in weight, speed, and number of
stops; that the same conditions exist as regards freight trains, and that the disparity be-
tween the two services is even more strongly marked. The cost of maintaining tracks,
apart from natural depreciation which is uninfluenced by the amount of traffic, is
affected principally by speed, weight of load, and number of stops, but no known formula
exists for determining the influence of each, nor can any basis be reached for averaging
these elements as between the two classes of Service. There are many other conditions
which would influence the question, such as climatic conditions, the varying classes
of traffic handled, both passenger and freight, differences of grade and alignment, etc.,
and it is therefore evident that no uniform basis can be provided for the purpose of
making this separation throughout the country.
“If it is desirable to show expenses for passenger and freight service separately, it
should be confined to only such items as can be charged direct to either service.
Whenever it is necessary to prorate expenses to obtain such division the information
furnished is without value and should not be required.”
Again, in the latter part of the calendar year 1912 the question of cost statistics was
taken up with carriers by the Interstate Commerce Commission, and the matter of
allocating expenses to each of the two classes of business was carefully studied with
the results outlined on pages 2 and 3 of Extract from Minutes of a Meeting of the Stand-
ing Committee on Corporate, Fiscal and General Accounts of the Association of
American Railway Accounting Officers, held at French Lick, Ind., November 13
and 14, 1912, copy of which, marked “Exhibit A,” is herewith submitted.
Thus it is shown that for approximately 20 years the matter of allocating operating
expenses to freight service and to passenger service, separately, has been diligently
and intelligently considered by both the officials of railroads and by the Interstate
Commerce Commission with the conclusion always that no fixed or definite equitable
rule could be found under which the allocation could be made.
It is true that, for comparative operating purposes, some railway companies allot
their operating cost to the two classes of service, separately, and it is also true that,
for special studies by individual lines, such allocations have been made. This, I
frankly admit, can be accomplished with a fair degree of accuracy by and for an indi-
vidual line, but a rule or formula which would make such an allocation possible on one
railroad would be inappropriate to the affairs and conditions of another railroad. The
individuality of and the particular conditions existing on each line must be taken into
consideration and reckoned with; otherwise the results obtained would be incorrect
and misleading. As a practical illustration of this fact, I submit the following: The
gross cost of an individual operating expense for the year ended June 30, 1912, on the
line Irepresent amounted to $3,100,259.95. Of this amount 98 percent, or $3,038,936.69,
could, under Southern Railway methods, be assigned to the two classes of service with
a fair degree of accuracy. The proportion assignable to passenger service, under
such methods, would amount to approximately 39 per cent, or $1,189,395.39. Apply-
ing the rule suggested by the Post Office Department the proportion of this expense
applicable to passenger service would be 50 per cent or $1,534,359.14, an excess over
Southern Railway Co.'s method of 29 per cent, or $344,963.75.
Another individual expense account of the same line and for the same period
amounted to $3,327,144.82, of which, under Southern Railway methods, $3,258,073.34
could be assigned separately to the two classes of service. Of this latter amount the
assignments to passenger service would be: Under Southern Railway method, 39
per cent, or $1,290,814.15; under method suggested by the Post Office Department,
51 per cent, or $1,678,233.58; post-office method in excess of Southern Railway method
30 per cent, or $387, 419.43. -
Furthermore, notwithstanding the careful thought and consideration which has
been given the matter by accounting officers, I find that there is a wide difference of
opinion among them as to an equitable and proper basis or formula to be used for arriv-
ing at passenger train costs on an individual railroad. This fact was emphasized in
a recent study of operating expenses made for a specific purpose. In that study it
was necessary to approximate passenger costs. . Four different plans, the result of
much thought and consideration on the part of accounting officers, as well as the
Post Office Department officials, were produced. Applying the four different plans
to the Southern Railway Co.'s gross operating costs for the yoar ended June 30, 1912,
RAILWAY MAIL PAY. 631
we find, under one plan, the costs assignable to passenger business were 32.24 per
cent of the total operating costs; under another, the costs were 35.81 per cent; under
the third, the costs were 35.83 per cent; and under the fourth, the costs were found
to be 39.73 per cent. Thus under the four bases averages ranging from 32.24 to 39.73
per cent were found, representing a variation in costs assignable to passenger service
of something over $3,200,000. In the second and third bases the per cents were fairl
well together, varying only from 35.81 to 35.83 per cent, representing a difference of,
in the º only $8,000. However, in one particular group of expenses the differ-
ence under the two plans aggregated over $1,000,000, such difference being made up
and equalized in other expense accounts.
These results demonstrate most emphatically that, first, there is a wide variation
in the opinion of railway officers as to what method should be used in assigning oper-
ating expenses to the two classes of service on an individual line; and, second, that no
general rule can be produced which can be applied with any degree of equity to all
railroads under all conditions.
- §
T.EPORT OF THE SUBCOMMITTEE ON STATISTICS.
Division of operating expenses between passenger service and freight service.—The sub'
committee on statistics, consisting of Messrs. A. H. Plant (chairman), C. I. Sturgis.
L. A. Robinson, M. P. Blauvelt, Frank Nay, C. M. Bunting, C. B. Seger, and R. A-
White, presented the following report on the allocation of operating expenses to pas
senger service and freight service, which was accepted and approved:
Whereas Commissioner B. H. Meyer, in his letters to the presidents of sundry railroads,
in referring to division of operating expenses between passenger and freight, used
the following language:
“I am advised that the question of separating expenses among the different
branches of the business has been raised. This idea is as old as the railways. I
believe such a separation should be undertaken as far as it can be correctly done
without unnecessarily suggesting misleading conclusions. I have long felt that
every useful scheme of operating statistics rests upon such a separation. I regard
this separation as fundamental, and unless hitherto unthought of objections can
be raised, I assume that all the carriers will cooperate in doing it in the future, as
Some of them have done it for many years past. A beginning could be made by
reporting all expenses which are assignable to passenger, freight, and other branches
of the business under existing classifications. All those expenses which can not be
directly assigned should be reported unassigned, unless the carriers voluntarily
desire to submit a complete apportionment. Such apportionments have been
made very elaborately for important systems and the commission would certainly
wish to get the benefit of this work; but I should be opposed, for the
present at least, to any plan looking toward the assignment or apportionment
of all expenses of every class to the respective branches of the business in reports
to be made to this commission. If the commission is in possession of the figures
representing expenses which are actually assignable, it can, if necessary, go beyond
this, stating for the information of all concerned the bases more or less arbitrarily
adopted for common items and the reason for their adoption in every individual
case. I should be inclined to recommend the adoption of a report form which will
leave it optional with the different carriers to report separately only the assignable
expenses, leaving common expenses unapportioned, or to report a complete appor-
tionment. . In case the latter alternative is elected, however, each carrier should
be required to state the basis upon which it made its apportionments and the reason
for adopting that particular basis.”
And whereas, in his remarks before this subcommittee in Washington, D. C., February
8, 1912, he reiterated that opinion using the following language: -
“One of my suggestions was that, putting aside all controversy with respect to the
separation of expenses between the different branches of the business, carriers
might report all expenses assignable to passenger, freight, and other branches of
service under existing classifications. As I see it from the point of view of the
commission, I feel that this is fundamental. * * * It is axiomatic with you
that before we can have anything in the way of cost, we must have a separation of
expenses. Then, of course, you come in to the complicated question of mixed ex-
penses, and expenses that can not be allocated. What would help the commission
is the expenses that can be allocated and then enter those that can not be allocated.
It would help if some companies would report all expenses which are actually
assignable, designating other expenses as unassignable, unless they desire to submit
a complete apportionment, stating the basis used. If 20 roads make such returns,
it is quite possible that in those 20 roads there will be suggestions enough to lead to
uniformity for 50 next year. So in working along these matters will develop. If
Y
632 RAILWAY MAIL PAY.
we would put ourselves to the problem like the people in the manufacturing business
have put themselves to the problem, I am inclined to believe that we could make
headway. I realize those differences that exist, and yet the fact remains that they,
too, have these arbitrary apportionments to deal with. * * * I did not mean
to convey the impression that I had in mind to apportion 100 per cent of the expenses
between different classes.
“In my written communication I intimated that I would oppose it. * * * As
for the apportionment of expenses between freight and passenger; they might be
divided as far as possible and then the common expenses put in a pot, so to speak.
* * * I should hope that the matter of division between passenger and freight
should not cause you to pause too long in the elaboration of our operating statistics.
In the separation, between passenger and freight, here are certain things that have
been definitely apportioned to passenger, say 40 per cent, and that leaves 60 per
cent unapportioned. No one can use that. The present proposition is to separate
the 40 per cent and then leave the 60 per cent to any one interested in making the
additional separation.” } *
And whereas the question of formulating rules for the division of operating expenses
between freight and passenger was discussed by the special committee on corporate,
fiscal, and general accounts prior to the promulgation of the present classification
of operating expenses, at which time, after full consideration, it was decided that
no fixed rules could be made which would apply alike to all railroads under the
varying conditions.
And whereas this subcommittee has formulated a text indicating the items of oper-
ating expenses, under the existing classifications, which are directly assignable to
freight or to passenger, and the question of apportioning expenses common to both
classes of service has not been brought before this subcommittee;
And whereas while in practical experience some carriers have made division of ex-
penses between freight and passenger, this has been true only in specific cases and
ºt to the individual judgment of the party making the division: Therefore
e it
Resolved, That this subcommittee concurs in the view expressed by the special com-
mittee on corporate, fiscal, and general accounts in the year 1906, and that this sub-
committee, after due and deliberate consideration, reiterates that no fixed rule for
the division of common expenses between freight and passenger can be devised which
will be equitable to all carriers, to the same carrier under all conditions, or to all divis-
ions of the same carrier; and be it further
Resolved, That the attention of the commission be called to the fact that even the
partial separation suggested by the commission of stating the amount of expense
directly assignable to freight or passenger will involve some additional expenses to
the carriers, with no appreciable benefit to the commission.
Thereupon, at 11 o'clock p. m., the hearing was adjourned.
By direction of the chairman the following letter, with accompany-
ing memorandum, from Mr. M. O. Lorenz, associate statistician,
Interstate Commerce Commission, is inserted: *
INTERSTATE COMMERCE COMMISSION,
DIVISION OF STATISTICs,
Washington, May 13, 1913.
Hon. Jon ATHAN Bourne, Jr.,
Washington, D. C.
DEAR SENATOR Bourne: The inclosed is a memorandum of such thoughts as have
occurred to me in reading the paper submitted to the committee on railway mail pay
by Mr. A. H. Plant. I thought they might possibly be of interest to you.
Respectfully, yours,
M. O. LoRENz, Associate Statistician.
[Remarks concerning a paper entitled “Assignment of railway operating expenses, etc.,” submitted
to the committee on railway mail pay by Mr. A. H. Plant, comptroller of the Southern Railway.]
The purpose of Mr. Plant's paper is “to point out the impossibility of fixing a gen-
eral rule or method for allocating railway operating costs, separately, to the several
classes of service for which they are incurred, which will be equitable alike to all
carriers concerned and to the Post Office Department.”
He says that the problem is far more difficult of solution now than it was in 1885. . .
This is surely not correct. To-day we have a uniformity in railway accounting
which did not exist then. Furthermore, it is probable that, with the improved, ac-..."
counting and with the development of traffic a larger proportion of the total oper-
RAILWAY MAIL, PAY. . - 633
ating expenses can be definitely assigned to one service or to another. On a road
with a well-developed traffic there is probably less interchange of locomotives, for
example, between freight and passenger service.
After giving certain historical facts, Mr. Plant says: -
“Thus it is shown that for approximately 20 years the matter of allocating oper-
ating expenses to freight service and to passenger service separately has been dili-
gently and intelligently considered by both the officials of railroads and by the
Interstate Commerce Commission with the conclusion always that no fixed or definite
equitable rule could be found under which the allocation could be made.”
The reader would doubtless be misinformed if he came to the conclusion from this
statement that cost accounting is a closed book so far as the Interstate Commerce Com-
mission is concerned. Numerous recent decisions of the commission indicate that
they are paying attention to estimates of the cost of carrying specific commodities.
The commission has recently issued a formal order requiring railroad companies to
state the extent to which and the manner in which they are separating their operating
expenses between freight and passenger services, and while this order does not commit
the commission to any policy regarding the matter, it indicates at least that they are
still open to conviction. Furthermore, Mr. Plant near the close of his paper himself
quotes certain expressions of Commissioner Meyer which indicate that at least one
member of the commission hopes that a system of cost accounting for railways will be
worked out, even though the time may not be ripe for a uniform rule for apportionments
of expenses to be prescribed for all roads. He says, “I have long felt that every useful
Scheme of operating statistics rests upon such a separation.” It is true that the former
statistician of the Interstate Commerce Commission, Mr. Henry C. Adams, was opposed
to cost estimates of this kind, but his successor, Mr. William J. Meyers, is of the opinion
that a separation of expenses among the various branches of the services would serve
a useful purpose.
So far as the resolutions of accounting officers are concerned, it may be observed that
they as accountants do not have need for estimates of this kind, but we do find that
other railway men resort to cost estimates to the extent that they have need for them.
Qperating officials, for example, have need for only a partial system of cost accounting.
The expenses which they can cut down by economical methods are the ones which
they watch. Traffic men have generally felt no need for cost estimates because it is
their business to make rates as high as possible without curtailing the volume of traffic.
Railroad lawyers, on the other hand, have made frequent use of complete cost estimates
because they have found them to be the basis of the only effective argument which
could be made in many cases to prove the reasonableness of an advance in rates or the
unjustness of a reduction in rates. In attacking a 2-cent-fare law, they could proceed
in no other way than to make a complete cost estimate. Mr. Plant himself mentions
a recent study of operating expenses “in which it was necessary to approximate
assenger costs.” The following quotations are from a recent book by Mr. Samuel O.
unn, entitled “The American Transportation Problem,” Mr. Dunn being one of the
editors of the Railway Age Gazette. He says: “Many railway men in their public
utterances say that rates can not and should not be based to any considerable degree
on cost of Service. Their practice refutes their theory” (p. 13). Again: “If railways
can work out cost figures to defend or to attack rates, they can work them out as more
or less useful guides for making rates” (p. 18). Again: “One of the main obstacles
to the better apportionment of rates according to costs has been the failure of the
railways to develop as good methods of cost accounting as are in use in many manufac-
turing concerns” (p. 17).
It should be stated that much of the opposition to cost estimates probably would
disappear if it were thoroughly understood that the term “cost estimate” should be
understood as meaning “cost and use” estimate. Common expenses can not be
assigned in a convincing way to branches of traffic on the ground that each branch
causes So much expense. What can be measured is the use which each branch of
the traffic makes of the common facilities, and whatever may be determined as a
fair measure of the use will also be a fair measure for the distribution of the expense.
Mr. Plant's paper is purely destructive. In place of the post-office method, which
he attacks, he gives us absolutely nothing to put in place of it as a means of ascer-
taining what is a fair payment to the railroads for the service of carrying the mails.
The statement may be ventured without fear of contradiction that neither he nor
any other railroad representative can suggest a method of telling whether the rail-
roads are overpaid or underpaid for this service and demonstrate its correctness with-
out directly or indirectly making a “cost and use” estimate.
X - - - - --- - ~ *.* ** --- ~~~
ERA-IL WAY MAIL F. A. Y.
A/A- f A STATEMENT ON BEHALF OF THE
#7 -
A ſº Post of FICE DEPARTMENT
ſº o -
C -
- / 7/3 SUBMITTED TO THE
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS
MAIL MATTER AND COMPENSATION FOR
THE TRANSPORTATION OF MAILS
JANUARY 16, 1914
Printed for the use of the joint committee
WASHINGTON
GOVERNMENT PRINTING OFFICE
1914
UNIVERSITY OF MICHICAN LIBRAREs
Transportation
Eibrary
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER,
ANT) COMPENSATION FOR THE TRANSPORTATION OF MAILS.
CoNGRESS OF THE UNITED STATEs.
JONATHAN BOURNE, JR., Chairman. JAMES T. LLOYD.
HARRY A. RICHARDSON. WILLIAM E. TUTTLE, Jr.
JOHN H. BANKHEAD. JOHN W. WEEKS.
RoBERT H. TURNER, Secretary.
RICHARD B. NIxoN, Disbursing Officer.
RAILWAY MAIL PAY.
OFFICE OF THE POSTMASTER GENERAL,
Washington, D. C., January 16, 1914.
Hon. JonATHAN BOURNE, Jr., -
Chairman Joint Committee on Postage on Second-class Mail Matter
and Compensation for the Transportation of Mails, Congress of
the United States.
MY DEAR MR. CHAIRMAN:
I hand you herewith a statement prepared by the Second Assistant
Postmaster General in review of the testimony taken before the joint
committee, respecting compensation for the transportation of mails.
Yours, very truly,
- A. S. BURLESON,
Postmaster General.
III
TABLE OF CONTENTS.
I.
Page.
House Document No. 105 and its findings............ . . . . . . . . . . . . . . . . . . . . . . . . 987
* II.
The conclusion as to railroad mail pay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 989
The railroads’ claim as to underpayment... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 989
The department's refutation of claims of underpayment. . . . . . . . . . . . . . . . . •991
The railroads' premises--------------------------------------------- 991
Mail revenue exceeded in 1910 a reasonable rate on commercial basis,
ascertained from data and ratios of Document No. 105. . . . . . . . . . . . . 992
Operating revenues, and operating expenses, and charges against
income. --------------------------------------------------- 994
What shall be the gauge of railroad mail pay?—shall it be a strictly
commercial rate?------------------------------------------------- 998
(1) The certainty, constancy, and homogeneity of traffic. . . . 998
§ The certainty and regularity of payment. . . . . . . . . . . . . . . . 1000
(3) Railroads are not built primarily to carry mails. . . . . . . . . . 1000
(4) The protection of mail trains........ . . . . . . . . . . . . . . . . . . . . 1000
(5) The principle of public utility:--------------. . . . . . . . . . . . 1001
Cost of service as a guide in determining fairness of rate under com-
mercial principle------------------------------------------------ 1005
Comparison between department’s estimate of operating expenses,
excluding taxes, chargeable to mail service, and companies’ estimate
of Same chargeable to passenger Service. . . . . . . . . . . . . . . . . . . . . . . . . . . 1008
Method of apportioning unassigned expenses between freight and pas-
senger Services. . . . . . . . . . . . .------------------------------------- 1009
The charge of space to the mail service--------. . . . . . . . . . . . . . . . . . . . . . 1013
Annual weighings, side and terminal service, and apartment cars. . . . 1018
Annual weighings.-------------------------------------------. 1018
Side and terminal service----. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1018
Apartment cars------------------------------------------------ 1019
The law of March 2, 1907, and Postmaster General’s Order No. 412, of
June 7, 1907. . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1020
III.
The present plan of adjustment of railroad mail pay........ . . . . - - - - - - - - - - - - - - 1025
The suggested plans of adjusting railroad mail pay. . . . . . . . . . . . . . . . . . . . . . . . . . . 1026
The cost and space basis.------------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1026
The standard unit suggestion------------------ . . . . . . . . . . . . . . . . . . . . . . . . . . 1031
Weight, space, and distance; the Lorenz plan. . . . . . . . . . . . . . . . . . . . . . . . . . . 1032
The percentage method.------------------------------------------------ 1033
The plan of Senator John W. Weeks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1033
The plan of Hon. David J. Lewis. . . . . . . ---------- ----------------------- 1033
The Peabody plan. ----------------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1034
The Buckland plan. --------------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1034
The Pºpºlº of the railroads.----------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1034

Exhibit A --------------------------------------------------------------- 1035
EAILWAY MAIL PAY.
A STATEMENT ON BEHALF 0F THE POST OFFICE DEPART-
MENT IN REVIEW OF THE TESTIMONY TAKEN BEFORE
THE JOINT COMMITTEE, RESPECTING COMPENSATION
FOR THE TRANSPORTATION OF MAILS. •+
I.
HOUSE Document NO. 105 AND ITS FINDINGS.
The inquiry, the results of which are stated in House Document
No. 105, was begun and prosecuted under the provisions of the act
of March 3, 1879, chapter 180, section 6 (20 Stats. L., 358), requiring
the Postmaster General to request all railroad companies carrying the
mails to furnish under seal such data relating to operating, receipts,
and expenditures of such roads as may, in his judgment, be necessary
to enable him to ascertain the cost of mail transportation and the
proper compensation to be paid for the same, and to report to Con-
gress, with such recommendation, founded upon the information
obtained, as shall, in his opinion be just and equitable.
The forms and instructions prepared by the department and sent
to, all railroad companies, carr the mails, requested detailed
information as to facilities furnished or employed for mail, passenger,
and express services. The forms required for each train run during
a specified period, a statement as to the termini and distance of opera-
tion, the frequency, the average speed, the number and size of railway
post-office cars and apartment cars run, and the closed-pouch service
performed; also the number and length of passenger cars, and of
express cars, and of apartments for express run in such trains; also a
statement of station service and station and terminal facilities fur-
nished, and of personal transportation and supervision for the mail and
express services. A statement was required for each road or system
showing the train and car mileage, the total revenues of the passenger,
express, and mail services, the total operating expenses, º the total
passenger operating expenses. As to the passenger operating ex-
penses, additional detailed information was requested with respect
to each of the 116 primary accounts recognized by the Interstate Com-
merce Commission, showing for each item the amounts assignable
directly to the mail, . passenger, and freight services, and the
amounts of the remainders apportioned to the passenger service (in-
cluding mail and express), and the basis for such apportionments.
The original cost and the present value of railway .#. and mail-
apartment cars was also covered. (See report of Second Assistant
Postmaster General for 1910, pp. 15 and 16.) • ,
987
988 RAILWAY MAIL PAY.
The period from midnight, October 31, to midnight, November 30,
1909, was selected by the department for which the information
should be furnished. Some companies, however, prepared their
reports from records kept in the months of December, 1909, and
January, 1910. Reports were received from 430 companies, including
practically all the large systems, and data were submitted for 2,778
routes, a percentage of 83.95 of a total of 3,309 authorized railroad
mail routes. The routes for which reports were received represent a
mileage of length of 194,587.46 miles, or 88.95 per cent of a total
authorized mileage of length of 218,746.71 miles. The transporta-
tion pay for the fiscal year 1910 on the routes reporting was $41,870,-
654.45, or 94.23 per cent of a total of $44,435,504.47. Of the expendi-
ture for railway post-office cars the companies operating the routes
reporting received $4,496,610.19, or 95.73 per cent of a total expendi-
ture of $4,697,140.10. (See Report of Second Assistant Postmaster
General for 1911, p. 17.)
Under an authorization of an appropriation by Congress a special
force of temporary employees was secured and was engaged under the
direction of expert regular employees in verifying the reports and
making the necessary computations. It was found that the reports
were inaccurate and defective in many particulars, and the special
force checked the operation of every train and corrected every inac-
curacy or discrepancy found. Supplemental forms and inquiries
were sent out where the information furnished was incomplete. " (Id.)
The completed work shows the relation between the operating
expenses charged to each of the three classes of service and the amount
of service performed in each class upon a unit basis as well as a com-
arison between them. It shows the same relation on a unit basis
etween the revenue derived from the mail service and a comparison
with the ascertained cost.
Although the results obtained by the department have been
assailed by the railroad companies’ committee, they have neverthe-
less shown that it is possible to approximately divide the total operat-
ing expenses of the railroads between the passenger and freight
services, respectively, and, further, to ascertain the space relation
between passenger proper, express, and mail services, and assign to
these several classes the direct expenses and apportion the unas-
signed expenses upon the ratio of the space devoted to each of the
three classes of service. Therefore, it has been possible to compare
the expense to the railroad companies of performing the mail service
with the revenue derived by the companies from it on a unit basis
of service performed.
Besides furnishing for the first time a reliable gauge by which to
compare compensation paid railroads with the estimated cost to
them of performing service crediting them with the full pro rata
share of all operating expenses in which the mails participate, the
inquiry has developed the fact that the present system of adjusting
compensation for mail service results in a very unequal distribution
of pay among the companies due to conditions which are not uni-
formly represented in a weight basis of pay.
On the face of the data properly checked and revised where
erroneous it was shown that that part of the total operating ex-
penses and taxes of the railroads which was charged to the mail
RAILWAY MAIL PAY. 989
service on the basis of its proportion of car space to the whole passen-
ger-car space, with the addition of 6 per cent thereon, was, for the
companies or systems reporting, for the year in question, in the aggre-
gate $9,000,000 less than the mail revenue received from the Gov-
ernment." (House Doc. No. 105, p. 7.)
It will be observed that this amount is stated as the approximate
excess of revenue over cost of operating expenses and 6 per cent “for
the companies or systems reporting.” Unfortunately for the ac-
curacy of the matter the letter of Postmaster. General Hitchcock
transmitting Document No. 105, differed from the letter of the Sec-
ond Assistant Postmaster General in stating that “the committee
estimates that through a readjustment of railway mail pay on the
basis of cost with 6 per cent profit a saving to the Government could
be made of about $9,000,000.”
It will be readily seen that this estimate upon the entire service is
too low. The $9,000,000 estimate was based on Table 7 of the docu-
ment referred to, which represented 175,922 miles of routes out of a
total of 220,730 miles of railroad mail routes. The full amount may
be estimated by applying the ratio between revenue and expense,
taxes, and 6 per cent, as shown by Table 7. The operating expenses,
taxes, and 6 per cent charged to mails, based on Table 7, are 78.6383
}. cent of the revenue shown by the same table to have been received
rom mails. The total revenue for the fiscal year 1910 was $49,302,217.
Applying the per cent above named gives an estimated total of operat-
º expenses, taxes, and 6 per cent, of $38,770,425. This would leave
a balance of $10,531,792." -
The conclusions reached in the document were assailed by the rail-
roads on the following main grounds, namely:
That the $9,000,000 excess of revenue over expense does not take
into consideration a return on value of property used; -
That the department's division of total operating expenses between
freight and passenger services was made in a manner resulting in too
small an apportionment of unassigned expenses to the passenger Serv-
ice, and consequently decreased the cost to the mail service; and
That the º did not charge to the mail service “dead
space” reported by the companies as having been run in connection
with space used for the mails.
These contentions will be severally examined hereinafter.
II.
THE CONCLUSION AS TO RAILROAD MAIL PAY.
THE RAILROADs' CLAIMS AS TO UNDERPAYMENT.
In submitting Document No. 105 Postmaster General Hitchcock
made the following statement:
Taken as a whole, it is shown that the railroad companies are receiving from the
Government for transporting mails payments considerably in excess of the cost of
such service. The committee estimates that through a readjustment of railway mail
pay on the basis of cost with 6 per cent profit a Saving to the Government could be
made of about $9,000,000.
* 1 This does not allow for certain charges hereinafter named.
990 * BAILWAY MAIL PAY.
This statement was assailed by the railroads' committee in their
document entitled “Mail Carrying Railways Underpaid,” set forth in
full in the preliminary report, the specific objection being that the
estimate above named was based upon apportionment to the mail
service of cost and 6 per cent thereon without any allowance for a
return on investment in property employed in conducting the mail
SePW1Cé. - -
In reply to this, Postmaster General Hitchcock submitted to the
chairman of the joint committee, by letter of January 9, 1913, the
following statement:
That in addition to the operating expenses and taxes apportionable to the mail
service and 6 per cent thereof, companies may be allowed such additional amounts,
if any be necessary, as shall render the whole a proper proportion of a fair and rea-
sonable return on the value of the property necessarily employed in connection with
the mail service. (Preliminary report, p. 96.)
It was pointed out by the Second Assistant Postmaster General at
the hearing that this involved a duplication of 6 per cent interest on
eost. This is stated to be so by Mr. Lorenz. (Hearings, p. 860.)
In the “Memorandum on Behalf of the Post Office Department,”
etc., in reply to the above statement by the railroads, the Second
Assistant Postmaster General made a preliminary review of this con-
tention of º railroads and a reply thereto. (Preliminary report,
5p. 98, 99.
| "big the hearings the representatives of the railroads' committee
undertook to charge against the mail service, in addition to operating
expenses, taxes and 6 per cent thereon, an additional sum of
$15,000,000, being-approximately 6 per cent upon the share (assumed
by them as 1.78 per cent based on per cent of revenue) of the mails
in the value of the total property of the railroads of the United States,
placed at $14,387,816,099, as reported by the railroad companies to
the Interstate Commerce Commission in 1910. , (Hearings, p. 15.) In
presenting this the railroads assumed that the proportionate part
which is devoted to the mail service bore the same relation to the
total value of the property as the mail revenues bore to the total
revenues of the companies, and that 6 per cent on that base was a
proper charge against the mail service. From these premises, faulty
though they are, as will be-hereinafter shown, the conclusion was
drawn that the railroads are underpaid $15,000,000, and this was
arrived at without considering the $9,000,000' which was referred to
by Postmaster General Hitchcock, which would have reduced the
$15,000,000 to $6,000,000, or considering the further fact that there
was a duplication of 6 per cent on operating expenses. This alleged
underpayment has been set forth in documents printed and distributed
widecast by the railroads’ committee and reproduced in the press
throughout the country. Further efforts were made on the part of
the railroads’ committee to show underpayment by making a com-
parison between growth of postal revenues and railway mail pay,
and also between growth of their railway traffic earnings and mail
earnings (pp. 733, 734). The elements compared have no necessary
relation wº each other as has been shown in the hearings (pp. 655,
659) and need no further comment here. -
1 This amount was for only the roads reporting, as stated hereinbefore.
‘RAILWAY MATL PAY. 991
Finally, the railroads' committee contend in their brief that a
proper understanding of Document No. 105 “demonstrates that these
railways are actually underpaid” (p. 721).
In his “Memorandum in Review of the Testimony,” etc., Mr.
Robert H. Turner, secretary to the joint committee, asserts that under
existing law if the present system is to be continued the railroads are
underpaid approximately $12,000,000 (p. 959). He further states
that upon a consideration of Document No. 105 the railroads are
apparently underpaid either $14,000,000 plus or $9,000,000 plus,
dependent upon whether 6 per cent or 4 per cent return is allowed on
capital employed (pp. 960, 961, 962).
THE DEPARTMENT'S REFUTATION OF CLAIMS OF UNDERPAYMENT,
THE RAILROADs’ PREMISEs.
In support of their claims the railroads' committee relies upon an
argument, set forth on pages 721, 722, based upon Postmaster Gen-
eral Hitcheock's statement that he would recommend an allowance,
in addition to operating expenses, of such additional amounts, if any
be necessary, as shall render the whole a proper proportion of a fair
and reasonable return on the value of the property necessarily, em-
loyed in connection with the mail service, and the answers of the
§. Assistant Postmaster General upon hypothetical questions
concerning a 6 per cent allowance on the assumed total value of rail-
road property of fourteen billion dollars.
It §. noticed that Postmaster General Hitchcock did not in his
letter concede or recommend an allowance of 6 per cent as a return
upon the value of the property necessarily employed in connection
with the mail service, but specifically stated that such additional
amount might be allowed, if any be necessary, “as shall render the
whole a proper proportion of a fair and reasonable return on the value
of the property necessarily employed in , connection with the mail
service.” "Nowhere in the testimony of the department's officers is
there any concession that 6 per cent is a proper allowance to “render
the whole a proper proportion of the fair and reasonable return on the
value of the property,” as set forth in Postmaster General Hitchcock's
letter. Nowhere in the testimony of the Second Assistant Post-
master General or that of any officer of the department is there any
acceptance of the fourteen billion dollars as the proper valuation of
the railroad property, or agreement that 1.78 per cent of the same is a
proper part of the total valuation of railroad property to represent
the “value of the property necessarily employed in connection with
the mail service.” The quotations from the testimony of the Second
Assistant Postmaster General, set forth on pages above referred to, are
partial and fragmentary and are used as part of an argument rather
than as indicating the true views of that officer with respect to the
points above mentioned. This is carried to the extreme in such
paragraphs as the following:
The effect of adding to the estimated payments shown in Document No. 105 the
just allowanee for return on invested capital thus conceded would be to increase the
aggregate of these estimates beyond the present total payments. This is freely
admitted by the Post Office Department (p. 721).
1 Italics are those of writer of this brief.
992 RAILWAY MAIL PAY.
The department's position is clearly shown in the testimony and
can not with justice be construed to support the above statement of
the railroads' committee. The statement of the Second Assistant
Postmaster General, regarding the matter, appearing on page 9 of
the hearings, is as follows: *.
Because, Senator, upon a further and more careful consideration of the subject we
were convinced that the railroad companies were entitled to consideration for this
additional element. We are not prepared to say what that should be. It is a very
difficult question, and it involves the physical valuation or ascertainment of capital-
ization and then the ascertainment of a fair proportion of that devoted to the miáil
Service, and, furthermore, after you ascertain that, a determination of what rate per
cent return thereon is due the companies for performing a public function for the
United States. It is a difficult question, but we believe that that is an element which
should enter into compensation to Some extent, and having come to that conclusion,
we submitted this amendment to our original plan.
The further testimony in reply to Mr. Lloyd's questions on page 20
of the hearings, cited by the railroads’ committee and set forth in
Mr. Turner's memorandum, shows clearly that the Second Assistant
Postmaster General regarded the questions as purely hypothetical
and particularly stated that the conclusions were true if the premises
...}} be granted, but in no part of his testimony did he grant the
premises. - -
The conclusions of both the railroads' committee and Mr. Turner
are based upon the following assumptions: • -
1. That the $14,387,816,099 reported to the Interstate Commerce
Commission by the railroads is the true value of their properties;
2. That the value of the railroad property necessarily employed
in connection with the mail service is represented by 1.78 per cent of
the total value of all railroad property, the per cent nº being the
ºn' of mail revenue to the total operating revenues of the rail-
roads;
3. That the mail service should be charged with 6 per cent of such
valuation; and
4. That rates for mail service should be governed by the same
principles as govern the making of rates for commercial business.
MAIL REVENUE EXCEEDED IN 1910 A REASONABLE RATE ON COMMERCIAL BASIS, ASCER-
- TAINED FROM DATA AND RATIOS OF DOCUMENT NO. 105.
The mail revenues received by the railroad companies for the fiscal
year 1910 exceeded by a considerable amount the cost to the railroad
companies of operation and taxes apportionable to the mail service, on
the basis of Document No. 105, with an additional apportionment to
such service of a pro rata share of all other expenses which are a
charge against income and payable out of operating revenues.
In making clear the basis for this statement the first three assump-
tions will be discussed, followed by an apportionment to the mail, in
addition to the cost of operation and taxes, of a share of other expenses
which are a charge against income and payable out of operating rev-
enues, thus treating the mail service in precisely the same manner
as the business of the railroads is tººd by themselves.
With respect to the first assumption stated in the preceding sub-
division, it may be said that while the amount of $14,387,816,099 is
stated by the Interstate Commerce Commission's report as that
RAILWAY MAIL PAY. - 993
which has been invested by the railroads of the country in road and
equipment, the doubt of the commission as to the reliability of such
estimates is very pronounced. In the advance rate cases (20 I. C. C.
Report, 257) Commissioner Prouty says:
Carriers are now required to state in their statistical returns to the commission the
cost of their properties. If this amount were carefully kept it would show the mone
expended from the first in building and equipping the railroad. In point of fact this
item is not reliable.
Again, on page 258 of the same report, the following appears:
Were it possible to determine the exact amount of money which has been put into
these properties, the amount of return which has been paid up to the present time, the
degree of prudence with which the property has been constructed and operated,
certainly the investment would furnish a very satisfactory basis for arriving at an
equitable return. But these facts never can be determined with accuracy.
The commission, in passing upon the cases, makes the following
statements (p. 305):
We have been compelled to dispose of this case upon the evidence available. As
previously noted, there is no testimony tending to show the cost of reproducing these
properties. It is plain that a physical valuation would introduce into the calculation
a new element which might lead to a different conclusion. The conclusion reached
here extends, therefore, no further than the facts upon which it is based.
The interest of the public ought not to depend upon a valuation made entirely by
the owners of these properties, no matter how honestly the work may be prosecuted.
In the case of the City of Spokane v. Northern Pacific Railway Co.
(15, I. C. C. Rep., 399), in connection with a consideration of the
money invested in the road, etc., the following paragraph occurs:
It will be seen from the above statement that it is utterly impossible to know what
amount of money has been actually expended in constructing the Northern Pacific
properties up to the present time. Previous to September 1, 1896, the account which
we have is entirely unreliable. It is impossible to say either what cash was invested
or what return has been paid upon the investment.
As further showing the difficulty involved in such estimates, the
following statement in the case of Ames v. Union Pacific Railway Co.
(64 Fed., 177), in regard to the value of railroad property, is made:
It is not easy to always determine the value of railroad property, and if there is no
other testimony in respect thereto than the amount of stock and bonds outstanding,
or the construction account, it may be fairly assumed that one or other of these repre-
sents it, and computation as to the compensatory quality of rates may be based upon
such amounts. In the cases before us, however, there is abundant testimony that the
cost of reproducing these roads is less than the amount of the stock and bond account,
or the cost of construction, and that the present value of the property is not accurately
represented by either the stocks and bonds, or the original construction account.
In a paper entitled “Certain considerations in railway rate making,”
read by Hon. Balthasar H. Meyer, member of the Interstate Com-
merce Commission, before the American Economic Association,
December 29, 1913, the slight credit to be accorded reputed values of
properties and their alleged relation to outstanding securities is
discussed." -
1 Perhaps the most important single factor, now unknown, which will enter into the consideration of
railway rates in the future is that of the value of the property. Theoretically, it has long been considered
by commissions and Courts, but in practice its application has been limited to isolated valuations or partial
valuations made under different, if not mutually exclusive methods varying in degree of thoroughness and
applied almost exclusively to meet allegations of confiscation of property. In the not distant future we
may hope to know what the fair value or final value of our railway properties is, whatever these terms may
be made to include. In the past attempt has been made to appeal to the volume and market value of
outstanding securities with the view of having/them considered as evidence of value to support a rate or
rate structure under attack. In the future, after the valuations have been made, similar appeals can have
little weight. (Railway Age Gazette, Jan. 9, 1914, p. 69.)
994 RAILWAY MAIL PAY.
In view of the fact that Congress has authorized the commission
to make a physical valuation of the railroad property, as recom-
mended by the commission, and the further fact that the commission
considers the present railroad estimates of valuation as unreliable,
the conclusion seems inevitable that no authentic calculation can be
made which has for its basis the value of road and equipment as
reported to the commission, or introduced into the hearings by the
railroad companies. --
With respect to the second assumption it may be said that it is
º to the objection that the revenue per cent is not a proper basis
of division as it does not apportion the property according to the
“value of the use.” This is well stated by the Supreme Court in
the Minnesota rate case, as follows:
In Support of this method it is said that a division of the value of the property
according to gross earnings is a division according to the “value of the use” and there-
fore proper. But it would seem to be clear that the value of the use is not shown by
; earnings. The gross earnings may be consumed by expenses leaving little or no
profit. -
It is not asserted that the relation of expense to revenue is the same in both busi-
nesses; on the contrary, it is insisted that it is widely different. * * * -
If the property is to be divided according to the value of the use, it is plain that the
gross-earnings method is not—an accurate measure of that value.
For the purposes of estimate we have used hereinafter the per cent
on which cost was apportioned, but this, though more than the rate
- º, the railroads, is open to a similar objection and is probably
too high. *.
w; respect to the third assumption, it may be said that it is not
necessary for the railroads of the country to realize 6 per cent upon
the stated valuation of their property in order to pay other charges
against income payable from operating revenues after meeting
operating expenses and taxes.
The fourth assumption will for convenience of presentation be
considered hereinafter.
The following is a statement, so far as the mail service is concerned,
of the application of operating revenues to the payment of operating
expenses and taxes and all the other charges against income which
must be paid out of operating revenues upon a commercial basis.
Even upon this basis it completely disproves the contentions of the
railroads that they were underpaid. ---
Operating revenues, and operating expenses and charges against income.
Total operating revenues (rail operations) for all railroads, as shown
by the report of the Interstate Commerce Commission for 1910
(Statistics of Railways, 1911, p. 53). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,750, 667, 435
Total operating expenses (rail operations) of all rail-
roads as shown by the same report. . . . . . . . . . . . . . . . $1,822, 630,433
Accrued taxes (id.).-------------------------------- 103,795, 701 .
Total.---------------------. * * * * * * * * * * * * * * * * * * ------------. 1, 926,426, 134
Remainder------------------------------------------------- 824, 241, 301
RAILWAY MAIL, PAY. 995
out of which the following items of expense, as shown by the same report, chargeable
against income and payable out of operating revenues (rail operations) must be paid,
VIZ:
Net rents accrued for lease of other
roads ------------- is gº sº sº sº is sº gº gº º sº ºr * * * * 1 $2,834,991
Hire of equipment, net debit balance . * 15, 841,144
Joint facilities, net debit balance... . . . * 11, 289, 579
Miscellaneous rent debits.......... . . . . 4,499, 260
Net interest accrued on funded debt. - * 370,092, 222
Other interest.------------------------
16, 520, 342
Extinguishment of discount on securi- ‘
ties- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 565, 337
Sinking and redemption funds charge-
able to income------- - - - - - - - - - - - - - - 5, 886, 977
Other deductions-------- - - - - - - - - - - - - 9,973,828
Total.-------------------------------------- $437, 503, 680
Less total other income: i.
Miscellaneous rent credits.-------- 6, 515, 218
Separately operated property, net
rofits-------------------------- 2, 278,720
Net dividends receivable on stocks
accrued or controlled. . . . . . . . . . . 1 28,069,039
Net interest receivable on funded
debt owned or controlled.-------- * 5,964, 331
Interest receivable on other securi-
ties, loans, and accounts. . . . . . . . 30, 650, 925
Miscellaneous income. . . . . . . . . . . . . 9, 253, 557
Total.---------------------------------------- 82, 731, 790
Balance-------------------------------------- 354,771, 890
Net dividends declared- - - - - - - - - - - 1293,836,863
Appropriations for reserves. . . . . . . 3, 581, 342
297,418, 205
Total items of charge against income to be paid out of these
reWelllleS- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 652, 190,095
Leaving surplus of . . . . . . . . . . . . . . . . . . . . . . --------------------- 172,051, 206
available for appropriation for additions and betterments, and new lines and exten-
sions, aggregating $58,906,952.
However, this amount of $652,190,095 represents the entire railroad mileage of
239,446 miles of lines. Table 7 of Document No. 105 represents 175,922 miles of
railroad mail lines out of a total of 220,730 miles of railroad mail lines. It is necessary
to reduce the amount by that part which represents miles of lines on which there is
no mail service. A tabulation of the mileage, operating revenue, and operating
expenses of such roads receiving $100,000 or over in revenues for 1910, made by the
aid of the Interstate Commerce Commission reports for 1910 and 1911, shows mileage
2,011, revenues $18,551,892, and operating expenses $11,368,027. The difference
between these last-named amounts, $7,183,865, is net revenue. This subtracted
from $652,190,095 leaves $645,006,230. This amount still includes the remaining
lines (16,705 miles, being 18,716 less 2,011) on which there is no mail service. De-
ducting the 2,011 miles from the 239,446 miles leaves 237,435 miles. Dividing this
into the $645,006,230 and multiplying the quotient by 16,705 miles (the 18,716 less
the 2,011) gives $45,370,780 as approximately representing the lines of railroad so
included and on which no mail service is performed. This subtracted from
$645,006,230 leaves $599,635,450 as the total of the items of charge, other than operating
expenses and taxes, to be considered in connection with the mails.
1 The ºgures shown for this item represent the net remaining after intercorporate payments were
eliminated.
996 BAILWAY MAIL PAY.
According to Table 7, Document No. 105, the operating expenses and
taxes apportioned to the passenger service were 29.21 percent of the
total, and those apportioned to the mails were 6.68 per cent of the
passenger service; 29.21 per cent of $599,635,450 is $175,153,515,
and 6.68 per cent of this is the amount above operating expenses
and taxes which may be charged to the mails if #. are to partici-
pate in all these charges and at the pro rata based on Document
No. 106--------------------------------------------------------. $11,700, 255
Table 7 shows $2,682,797 as the operating expenses and taxes charged
to the mail service for November, 1909. This raised to the amount
for a year is.------------------------. . . . * - - - - - - - - - - - - - - - - - - - - - - - 32, 193, 564
However, Table 7 represents only 175,922 miles of railroad mail
routes, the total of which is 220,730 miles. It is therefore necessary
to ascertain approximately the operating expenses and taxes for the
omitted mileage.
Table 7, shows $137,355,150 as the total operating expenses and
taxes for November, 1909. This raised to the amount for a year is
$1,648,261,800. But Table 7 does not represent the full mileage
of mail routes, and the full mileage of mail routes is less than the
total railroad mileage represented in the total railroad operating
expenses, as stated particularly above.
Subtracting the $1,648,261,800 from the total operating expenses
and taxes for all railroads of $1,926,426,134 leaves $278,164,334 as the
operating expenses and taxes for all other miles of lines of railroads,
63,524 miles. g
By the tabulation of railroads on which there is no mail service,
as above mentioned, their mileage was found to be 2,011 and their
operating expenses $11,368,027. These subtracted, respectively,
from 63,524 miles and $278,164,334, leaves 61,513 miles and
$266,796,307.
This last-named amount, however, includes the 44,808 miles of mail
routes not represented in Table 7, and in addition the difference
between 44,808 and 61,513, on which no mails were carried. There-
fore, it is necessary to ascertain the proportion represented by mail
lines. Dividing $266,796,307 by 61,513 and multiplying the quo-
tient by 44,808 gives $194,332,296 as approximately representing
the lines of railroad on which mails were carried.
29.21 per cent of $194,332,296 gives the passenger proportion, and 6.68
per cent of the passenger gives, as the share to the mails. . . . . . . . . 3,791, 866
This makes a total chargeable to the mail service on the basis followed *
of------------------------------------------------------------ 47,685, 685
The total revenue received by the railroads for the fiscal year 1910,
as shown by the report of the Second Assistant Postmaster General
(p. 15, “Transportation and railway post-office cars combined”), was 49, 302, 217
Being an excess over the apportioned cost of . . . . . . . . . . . . . . . . . 1 1,616, 532
1 While it is true that for the fiscal year 1910 there was this surplus of revenue over the apportioned cost,
any conclusion with respect to the relation of revenue and cost on this basis for a subsequent fiscal year
must take into account the reduction in the fourth contract section by reason of the º Of the new
divisor which became effective in that section July 1, 1910. The new divisor had already become effective
in the other sections. The rate of pay for railroad transportation which became effective on July 1, 1910
in the fourth contract section was ascertained to be 9.13 per cent less than it would have been if the old
divisor instead of the new divisor had been used. If the divisor provided by Order No. 412 had been effec-
tive in the fourth contract section at the preceding quadrennial readjustment (1906), that part of the pay
for the fourth contract section which is represented in the $49,302,217, the total pay for the fiscal year 1910,
would have been reduced $1,318,340 (9.13 per cent of $14,439,655), leaving the amount $47,855,364, or $298,192
in excess of apportioned cost. If we estimate that the º cost increased from 1910 to 1913 in pro-
ortion as the mail revenue increased, the cost for the fiscal year 1913 would be expressed by $51,146,198.
he revenue was $51,466,030, an excess of revenue over apportioned cost of $319,832. That this amount is
too small will be evident from this fact, among others, that the total amount of railway post-office car
facilities required by the department during the years subsequent to 1909 has been materially reduced.
The annual rate of pay for railway post-office cars Nov.30, 1909, was $4,689,094.29; the same for Nov.30,
1912, was $4,225,499.30, or a reduction of 9.88 per cent; and for June 30, 1913, it was $4,598,917.07, or a reduc-
tion from 1909 of 1.92 per cent. The increase from Nov.30, 1912, to June 30, 1913, was due primarily to the
introduction of parcel post, most of which increase in car space was authorized after Mar. 1, 1913. The
companies have been paid for the additional transportation service on account of parcel post at the Tate of
approximately $1,700,000 a year effective from July 1, 1913. This reduction in car pay means, of course,
reduction in Čar facilities required. An accurate estimate of the effect of this on total º: COSt.
can not be given at this time. It is noted, however, that the car-foot miles of railway post-office car service
performed by all roads that reported space is 46.25 per cent of the whole car-foot miles of mail service on
such roads (Table 6–F, Doc. No. 105). -
RAILWAY MAIL PAY. 997
From the above analysis it is seen that the entire charges against
income, above considered, in excess of the entire operating expenses
and taxes, paid from operating revenue, namely, $652,190,095, is only
4.53 per cent of $14,387,816,099. The railroads do not receive 6 per
cent net on the reported valuation of property. That this is a well-
known fact expressing the normal condition of returns on the capital-
ization of American railroads is shown by the report of the Railroads'
Securities’ Commission transmitted by the President to Congress
December 11, 1911, and quoted by Mr. Howard Elliott in his work,
The Truth About the Railroads, pages 254, 255, as follows:
Neither the rate of return actually received on the par value of American railroad
bonds and stocks to-day nor the security which can be offered for additional railroad
investments in the future will make it easy to raise the needed amount of capital.
' The rates of interest and dividends to outstanding bonds and stocks of American
railroads is not quite 4% per cent in each case. -
Why, then, should the railroads claim from the Government for
carrying the mails, even on the basis of a commercial rate, 6 per cent
on value of property employed, in addition to operating expenses and
taxes 2 The claim is unreasonable, as it is shown to be in excess of
that which is necessary in their commercial business to pay operating
expenses and taxes and other expenses chargeable against income and
º: out of operating revenues. It is upon this basis that they
ave attempted to charge the department with a return which would
show the deficiency in revenue which they have claimed before the
joint committee and asserted in the public press. * *
Attention is further called to the fact that the above apportion-
ment of expenses (other than operating expenses) chargeable to oper-
ating revenues is made to the mail service on the basis of 6.68 per
cent of the passenger apportionment. Such a plan of apportionment
makes the mail service participate in this ratio in all the pas-
senger operating expenses included in the above account, in addi-
tion to dividends. When it is remembered that these items cover
the whole field of operating expenses chargeable to operating reve-
nues for the maintenance and operation of the railroads, as well as
interest on bonded indebtedness and dividends on capital invested
in expensive terminal stations in large cities, it becomes evident that
this charge against the mail serviće is too large." It is impossible to
say from data at hand how much it is in excess of a fair charge. The
charge against the mail service on these accounts should not be
greater than the fair value of the use of the property represented by
them and which is employed in connection with the mail service.
Neither the railroads nor the department have this information, but
it is evident that it must be much smaller than the sum used in the
above apportionment. - - .
1 A very great proportion of the physical value of railways is concentrated in their terminals in large
cities. * * * These are often constructed with special consideration to the convenience of passenger
traffic, and expressing architectural jº. sk * The Pennsylvania Terminal in New York cost
$115,000,000; the Grand Central Terminal (New York), $150,000,000; the Washington Terminal, $20,000,000;
the Northwestern Terminal, at Chicago, $24,000,000; the Union Station at Kansas City, $40,000,099.
(Government Ownership of Railways, Samuel O. Dunn, pp. 65, 216, 217.) -
26276—No. 7–14 2
998 RAILWAY MAIL PAY.
whAT SHALL BE THE GAUGE OF RAILROAD, MAIL PAY?—SHALL IT BE A STRICTLY COM
--- MERCIAL RATE’”
It is demonstrated by the above analysis of the disposition of
operating revenues that on the strictly commercial basis the railroads
are overpaid in the aggregate. Whether they should receive a full
commercial rate for the carriage of the mails is a question which must
be decided as a matter of public policy and determined by Congress.
As an aid to this determination the following considerations may
be given weight, namely: - *s
1. The certainty, constancy, and homogeneity of traffic.
2. The certainty and regularity of payment.
3. Railroads are not built primarily to carry mails.
4. The protection to their mail trains which railroads, as Govern-
ment agencies, receive against unlawful acts in interference with or
obstruction of the mails carried.
5. The principle of public utility.
(1) The certainty, constancy, and homogeneity of traffic.—It is pre-
sumed that in fixing commercial rates railroad companies take into
consideration such elements as certainty, constancy, and homo-
geneity of the traffic and fix lower rates than they would for it under
conditions where these elements are absent. Probably no other
class of service is characterized by these elements in as great or greater
degree. The mail service on a railroad route is certain and constant
and practically always of the same character after establishment.
Furthermore, mail traffic does not require an expensive force of agents
and solicitors to secure business. It is a traffic that offers itself to
the companies without solicitation and remains without urging or
other consideration except good service.
Upon the question of the importance to the railroads in rate making
of a certain, constant, and homogeneous traffic, Prof. Henry C.
Adams, professor of political economy, University of Michigan, in
his testimony before the Commission to Investigate , the Postal
Service, Fifty-sixth Congress, second session, states as follows:
In the first place, this traffic (mail) is a sure traffic to the railways. It is a steady
traffic; and while it may be true that a heavier weight of mail passes from the seaboard
on either side to the interior than in the opposite direction, it is, nevertheless, dis-
tributed with a fair degree of equity. It . not vary from month to month in as
great a degree as freight and passenger traffic, which enables the mail equipment of
railways to be used more nearly to their full capacity than is the case in freight equip-
ment and passenger equipment. * -
In the second place, mail traffic is, from the railway point of view, a homogeneous
traffic. (S. Doc., vol. 9, Railway Mail Pay, p. 236.)
Upon this point Mr. Finley Acker testified before the same com-
mission, as follows:
The third factor relates to the character of the business, as to whether it is daily,
occasional, or spasmodic, and the significance of this feature has not, in my judgment,
received the serious consideration which its importance warrants.
'At certain seasons of the year both the passenger and freight business of the railroads
is dull, and at such times they could well afford to offer unusually low rates, if such
rates would create sufficient artificial business to fully employ their regular facilities.
At other periods they are taxed to supply all the facilities demanded.
If it were practicable to make arrangements with shippers to pay for a fixed quantity
of freight 365 days in the year, what strong inducement would be offered?
We get the practical idea of how much the railroads appreciate this steady form of
traffic by the low rates they offer in their passenger service to those who will make a
monthly or yearly contract. (S. Doc., vol. 9, Railway Mail Pay, p. 114.) .
RAILWAY MAIL pay. - 999
The element which is present in the case of commutation rates
granted by railroads to passengers is conspicuous in the mail traffic
business. The Interstate Commerce Commission, in opinion No.
1628, The Commutation Rate Case, decided June 21, 1911, traces the
history and reason for commutation rates on railroads. . The com-
mission finds that this service stands by itself as a special and dis-
tinct kind of service for which the carrier may demand no more
than a reasonable compensation. It is said that it no doubt origi-
nated with the practice of the proprietor of a stage coach “having
an established schedule between two towns which he must meet
even though the coach be but half filled, would readily appreciate
the small additional cost in picking up a traveler on the way and
carrying him to town, and would not be slow in encouraging such
travel by making special rates to those º daily to a nearby mar-
ket or place of industry.” (21 I. C. C. Rep., 438.) . This feature of
transportation charge appears to have been established when steam
transportation originated. The commission further say:
. This “made” or additional daily traffic, picked up as an incident to through traffic,
could be carried without adding proportionately to the cost and came in time to be
transported for that reason at a charge less than the normal cost for the one-way jour-
ney. (Id., 438.)
On page 440 of the same report, the commission say further:
There can be little doubt that commutation traffic was regarded originally as a
mere incident to through traffic and was attractive because it could be handled at
little additional cost to the carrier. Besides adding volume to the regular passenger
traffic and thus tending materially to reduce the operating cost per passenger, it had
the effect of substantially increasing the freight traffic.
The fundamental reason for a lower rate is stated on page 442 of
the same report, as follows:
Unlike excursion traffic, commutation traffic is neither occasional nor sporadic, but
on the contrary is characterized by an unusual regularity in volume; it may be accu-
rately measured and provided for more readily than in the case of any other kind of
passenger traffic.
All the reasons stated for low rates for commutation service apply
with equal force to the mail service.
w It is interesting to note that the commutation rate of $10.35 (id.,
445) given by the Central of New Jersey Railroad for a daily round
trip a month for 40 miles is at the rate of 4.31 mills per passenger
mile. With 50 passengers to the car this is equal to 21.5 cents per car-
mile. On the basis of Document No. 105 it is shown that the rail-
roads are receiving on the average 4.144 mills per car-foot mile, which
is equal to 24.86 cents per car-mile for a 60-foot car, or 13 per cent
more than the revenue for 50 commutation passengers. Further-
more the element of liability for personal injury in the case of passen-
ger traffic is proportionately very small in the mail service.
The marked advantage to railroads offered by the mail service in
the matter of the unvarying amount and regularity of service is
shown by a comparison of the freight service. Railroads have not
enough cars to meet the maximum freight requirements at times of
heaviest business activity and need, but such cars as they have are
often idle for want of business and because of uneconomical handling
of equipment. This is in marked contrast with the conditions in the
mail service. The traffic is comparatively stable and constant and is
handled with a minimum equipment which is constantly in use. The
af

1000 RAILWAY MAIL PAY.
mail equipment, too, is confined to one road or system and is not in-
terchanged in the manner that freight equipment is. The tracing
and securing possession and use of its freight cars is a cause of heavy
expense to railroads. Such expense is unnecessary with respect to
mail cars. The maximum benefit is received by the company from
its investment in mail cars. Concerning this feature of the freight
business, Mr. Howard Elliott in his work “The Truth About The Rail-
roads” states as follows:
The most important service performed by the railways is the transportation of
freight. Not everybody has to travel, but everybody must have food, clothing,
shelter, and fuel, and nearly all of the food, clothing, shelter, and fuel of the people
of this country is carried all or part of the way from producer to consumer in freight
cars. The use that the railways make of their cars is, therefore, of the utmost impor-
tance, not only to the railways but to the people. When a freight car is standing
still it is doing no good to the railway or to the people, but the railways have had to
pay for that car, and a part of their capital is invested in it. . When it is standing still
it is not earning anything on that capital, and as the capital of the railways is a part
of the national wealth, the usefulness of the national wealth is impaired by the loss
incurred through the idleness of the car. When a freight car is waiting to be loaded
by a shipper, or when it is waiting to be unloaded by a consignee, that car is not in
the service of the people, whose demand for transportation is now in excess of the capac-
ity of the railways to supply.
It would be a very happy condition if the railways always had enough cars, so that
they could supply every shipper with an empty car whenever he wanted it and just
as soon as he wanted it. They have not enough cars to meet this requirement at times
of the heaviest business in the country, and it is not their fault that they have not.
In fact, it would be an economic waste, taking the country as a whole, to have enough
cars for the very highest amount of business; this would mean that many cars would
be idle for several months of the year. There would be too much idle capital in such
a plan. (“The Truth About The Railroads,” pp. 77, 78, 79.)
(2) The certainty and regularity of payment.—Not only is the traffic
constant, practically unvarying in amount, and certain, but there is
a certainty of payment for mail transportation. The compensation
of railroad companies is fixed for specific amounts per annum, and
does not vary materially until the next readjustment, or until some
material change in the service requires the fixing of a new rate.
Payments are made monthly by warrant on the Treasury. The
railroads, therefore, know with a certainty the approximate amount
which they will receive for this service, and when they will receive it,
and can make their calculations accordingly. While the aggregate
amount is small compared with the total operating revenues, it
sometimes becomes of greater importance than its proportion in
amount would suggest. For instance, during the days of financial
depression in 1907 and 1908 the certain and regular payments made
by the Post Office Department to the railroads of the country were
relied upon by them as a great assistance.
(3) Railroads are not built primarily to carry mails.-Railroads are
projected and built for the purpose of securing passenger and freight
traffic. It is doubtful if º question of the carriage of the mails
ever enters into the calculations of any railroad enterprise. After
its construction the mail naturally follows and the companies usually
secure that business without solicitation. This is a strong argument
in favor of treating the carriage of the mail as a by-product, and to
charge it with a participation in all of the costs of the road is very
liberal policy. º s -
(4) The protection of mail trains.—There is a special direct benefit
to railroads from carrying the mails which they do not realize from
ordinary traffic. This is the protection from the Federal Govern-
RAILWAY MAIL PAY. & 1001
ment which their mail trains receive against unlawful acts in inter-
ference with or obstruction of the mails which they carry. The Gov-
ernment does not take sides for or against a railroad in any contro-
versy which it has with employees, but in the case of railroads, as well
as of other governmental agencies employed in the transportation
of the mails, it insists that mail trains shall not be interfered with,
and persons who are guilty of overt acts for the purpose of obstruct-
ing or delaying the mails are held responsible under Federal statutes.
(5) The principle of public utility.—The principle of public utility
is of special force in connection with the transportation of the mails
by railroads. Whether it should influence the mail rate of pay is a
question of public policy which must be determined by Congress.
During the hearings the Second Assistant Postmaster General, in
answering the question of the chairman as to what practice shall be
taken into consideration in determining what rates of compensation
should be paid, stated, among other things, as follows:
* * * Consider what it is worth to the railroad companies to carry the United
States mails and what they owe the Government of the United States, what they owe
the people, what they owe the country at large for the privilege of maintaining their
corporate existence and receiving public grants of lands, rights of way, and perform-
ing practically a monopoly of the transportation service of the country. , Those things,
I think, are very potent in the consideration of the subject, and I think very earnest
consideration should be given to what the value of those intangible elements are and
what you might call the fair commercial or business gauge of the service should be
reduced by such an amount as would fairly represent those very material elements
that are concerned in the matter.
The principle of public utility is better expressed by Prof. Henry
C. Adams, professor of political economy, University of Michigan, in
his testimony before the Commission to Investigate the Postal Service,
Fifty-sixth Congress, second session. He states it thus:
If asked why public utility should be accepted as a controlling consideration in
determining reasonable compensation, a complete answer would rest upon three
points, as follows: First, because of the sovereign character of the postal service itself,
which implies that its administration from beginning to end must be such as to safe-
uard the enduring and the collective rather than the temporary and the personal
interests of the people; second, because of the quasi-public character of the railways,
which secures to the Government the right of regulating the charges for all classes of
service according to the principle of public utility; and third, because of the different
results that would follow the application of the political principle on the one hand
and of the commercial principle on the other (p. 195).
S . The railways undoubtedly have the right to insist, from their point of view, that
the character of the facilities furnished for the mail service should be taken into
account in fixing compensation, and the recognition of this right is involved in all
that has been said relative to the commercial interpretation of “reasonable com-
pensation.” But, on the other hand, the Government bas the right to insist that the
transportation of mail is an essential Social function; that it is imperative, not alone
to the present advantage of the public, but to the healthful and permanent develop-
ment of the State. It has the right openly, publicly, and without apology to put in
practice, in the interest of the public at large, a rule universally acknowledged by
railway men in the development of their property. A railway manager is willing,
for example, to carry coal at a very low rate, even at the risk of incurring loss, because
he knows that coal is potential in industrial development, and that what he loses on
the coal traffic becomes for him a gain on the transportation of high-class freight,
the product of the mills and factories which the distribution of the coal renders possible.
The railway manager adjusts his charges upon coal with a view to the development
of industry in the territory contributing freight to his railway rather than according
to the cost of transporting coal. ra. "
The same line of reasoning is pertinent, even in a higher degree, to the transmission
of intelligence, because the means of diffusing intelligence is an essential consideration
of growth and development. As the distribution of coal, which is latent manufactur-
1002 - RAILWAY MAIL PAY.
ing power, is essential to the upbuilding of manufactories, so the diffusion of intelli-
gence is a fundamental condition of all social and industrial evolution. The meaning
of all this is evident. When the Government, in considering the question of compen-
sation for carrying mail, finds it necessary to classify the mail service in the general
schedule of services rendered, it will, if it accept the principle of public utility as the
ruling consideration, conclude that the transportation of mail should be classed among
those services which minister to the development of the process of production rather
than to the satisfaction of wants through the transportation of the products. Of all
things transported by rail intelligence is the most essential to social and economic
advantage, and on this account is in the highest degree amenable to the consideration
of public utility (p. 196).
* * * The position of this report is that the private interest in railway charges is
limited to the claim that the gross revenue of railways should be adequate to cover
operating expenses, fixed charges, and a fair return to stockholders; but this sum
having been guaranteed, the manner in which this gross amount is collected from the
shippers is a matter of public policy and not of private interest.
* * * The application of the principle of public utility classifies mail transporta-
tion with freight; it classifies it among the fundamental or social services of railways
and it justifies an unusually low rate upon mail transportation, provided this is essen-
tial to rendering the important service undertaken by the postal department, and pro-
vided that by this adjustment the gross revenue to railways is not so far depressed as to
deprive investors of property. (S. Doc., vol. 9, Railway Mail Pay, p. 197.)
These quotations from Prof. Adams state the principle clearly. In
brief, it is that the Postal Service has a sovereign character and its
administration must be such as to safeguard the enduring and collec-
tive, rather than the temporary and personal, interests of the people;
that because of the quasi-public character of railways the Government
has the right to regulate charges according to the principle of public
utility.
#. railroads undoubtedly have the right to receive reasonable
compensation for mail service, “but, on the other hand, the Govern-
ment has the right to insist that the transportation of mail is an
essential social function; that it is imperative not alone to the present
advantage of the public but to the healthful and permanent develop-
ment of the State. It has the right openly, publicly, and without
apology to put in practice, in the interest of the public at large, a
rule universally acknowledged by railway men in the development of
their property.” Railways are willing to carry special commodities -
at very low rates, even at the risk of incurring loss, because they are
potential in industrial development and the loss thus incurred be-
comes a gain in the transportation of other commodities which the
distribution of the one renders possible. In the same way the trans-
mission of intelligence is an essential consideration in the growth and
development of #. country which sustains the railroad, and without
which railroad construction and operation would be of small practical
importance. Such transmission is amenable in the highest degree to
the consideration of public utility and justifies an unusually low rate
for mail transportation, provided that by this adjustment the gross
revenue of railways is not so depressed as to deprive investors of
property. That such depression would not result from any reason-
able reduction from a commercial rate is apparent from a considera–
tion of the very small per cent mail earnings are of the total oper-
ating revenues of railways, constituting in 1910, even at the rates
paid, only 1.78 per cent.
No railroad of any importance could be successful in its operations
without the regular, certain, and speedy transmission of the mails
over its line. It is a truism which no one will controvert, that prac-
tically all commercial and industrial enterprises, as well as social
RAILWAY MAIL PAY. 1003
intercourse extending beyond the neighborhood, depend absolutely
upon the mails. As the community thus primarily dºl. upon the
mails, in a greater degree railroads so depend, as they must rely
wholly upon the communities for whose business they are constructed
and operated. It must, therefore, be apparent that no commodity
transported is entitled to as great consideration in the matter of rate-
making as the United States mails.
If it be argued that any lowering in the rate for mail service must
be met by an increase in other rates, it may be replied: (1) That this
is true from a practical point of view only where the reduction is below
“out-of-pocket” expenses; (2) that the same objection may be made
against every correspondingly low rate on other commodities; and (3)
that in the case of the mails if it were necessary to make up a defi-
ciency from other rates approximately the same interests which receive
the direct benefits of the mail service by the railroads would be those
who would contribute to supplying such deficiency through other
rates.
Specific instances of lower than commercial rates for services which
contribute to the prosperity of railroads or which are potential for
business and prosperity in the communities which they serve may be
found in the low rates given the Department of Commerce, Bureau of
Fisheries, for the transportation of its fish cars. These rates range
from 7% to 30 cents per mile, principally 10, 15, and 20 cents, includ-
ing five attendants for each car, generally. In regard to rates paid,
the acting commissioner, among other statements, says: “It is
believed that most railroad companies realize the value of having the
waters contiguous to their lines stocked with fish, and have granted
the bureau comparatively low rates.” (Hearings, p. 969.) Again,
the Director of the Bureau of Standards, Department of Commerce,
with reference to the charges paid by the bureau for the transporta-
tion of its car devised for the purpose of testing railroad track scales,
states, among other facts, that no charges have yet been paid by the
bureau for the transportation of this car, although º bills have.
been rendered on the basis of 8 cents a car-mile for moving the car,
etc.; and, further, “the whole question of tariff for moving the car
belonging to this bureau is now being considered by the American
Railway Association, and none of the bills submitted will be paid until
the negotiations with the American Railway Association have been
concluded. At the present time they are considering the proposition
of moving the car between certain points in each State free of charge,
and then charging 10 cents per mile for movement within the several
States.” (Hearings, p. 972.)
If it is of such consideration to the railroads to have the waters
contiguous to their lines stocked with fish, how much more important
is it to them to have the mails carried to all their patrons and insti-
tutions of business upon whom they depend for their very existence.
In considering this principle in connection with the possible credit
to the Government in the matter of mail rate, it should be remembered
that any reasonable rate for mail service will be far in excess of the
“out-of-pocket” expense. ... Even the pro rata share of general ex-
penses assigned to the mail service on the basis of car-foot miles, as
shown in Document, 105, in addition to actual and direct expenses
for that service, will be far above an actual “out-of-pocket” cost.
Such an apportionment includes a pro rata participation in expenses
$4.
1004 l RAILWAY MAIL PAY.
which must continue whether the mails are carried or not, and such
shares are contributions above actual “out-of-pocket” expense to
general expenses of the railways. With even more force this may
be said of any participation in dividends, interest on funded debt,
etc.
Attention is invited to the statements of Mr. Lorenz (Hearings, p.
789) upon the subject of “out-of-pocket” costs and a comparison of
them with “total operating expenses, taxes, and a fair return on invest-
ment.” In his letter on the subject, set forth on the page above
#. to, he quotes the Interstate Commerce Commission as
OLIOWS . :
However, it should be borne in mind that the costs as here figured include prac-
tically all of the costs except return upon capital account. It has been roughly esti-
mated that of the total costs only about 50 per cent are what may be termed out-of-
pocket costs—that is, the cost of fuel, wages of crews, and repairs of locomotives and
cars. The other 50 per cent is made up of Salaries of general officers, way and structure
account, etc., to which the carrier would be subject, whether or not the particular com-
modity moves. In other words, when the carrier claims that the cost of moving the
coal is 4 mills the actual outlay on the part of the carrier for the particular business
is not much in excess of 2 mills.
Anything above the out-of-pocket cost of handling is a contribution to general
expenses, and to that extent tends to relieve rather than burden other traffic. (Opin-
ion Nº. 2141, Louisville & Nashville Railroad Coal and Coke rates, decided Jan. 7,
1913.
Concerning the question of out-of-pocket expenses to railroads on
account of mail service, see discussion on pages 588, 589 of the hear-
ings, and Mr. Lorenz's judgment, which stood undisputed at the
hearings, to the following effect:
There is no question but what Mr. Lloyd is correct. That is to say, there is hardly
any contention on the part of the railroads that the mail revenue is not as great as
the additional expense caused by the mail service. They are running the passenger
trains anyhow, and the extra cost of carrying the mail cars is certainly not as great
as the mail revenue.
Whether these considerations above mentioned shall be given effect
in fixing the rate for mail service by the railroads is a question, as
stated above, of public policy, to be determined by Congress. If it
be determined by Congress that they should be given weight and
effect, it would seem that in view of all the advantages to the rail-
roads and to the communities which they serve a material reduction
below a commercial rate would be reasonable. In this connection
Postmaster General Burleson says, in his annual report for 1913,
pages 21 and 22: tº
The determination of what shall be the basis for ascertaining a fair rate of compen-
sation for carrying the mails is not free from difficulties. From a careful consideration
of the subject it becomes evident that the carriage of the mails by the railroad com-
panies for the Government can not be considered as of the same character of service
as that performed by them as common carriers for the general public. The railroads
have received certain benefits from the States from which they derive their corporate
existence, and their interstate commerce is subject to the regulation of the Federal
Government. Some of them have received substantial aid from the Federal Gov-
ernment by grants of lands and otherwise. They are declared by law to be post roads.
As mail carriers they are agencies of the Post Office Department and are performing
a governmental function. The postal business is not carried on by the Government
for profit but in furtherance of the constitutional power to establish post offices and
post roads, under which it furnishes postal facilities to all of its citizens. The rail-
roads, therefore, may not deal with the Government as they would with a shipper
who uses their facilities as a common carrier for profit or for some special advantage.
Furthermore, the general business which sustains a railroad is to a large extent depend-
ent upon the mails and their certain and expeditious transportation, and the carriage
RAILWAY MAIL PAY. º 1005
of the mails by the railroad contributes to its prosperity to an extent and in a manner
which does not obtain for any other class of its business. From these and other con-
siderations it follows that rates for carrying the mails on railroads should be less than
those which might be fixed for commercial business.
COST OF SERVICE AS A GUIDE IN DETERMINING FAIRNESS OF RATE UNIDER COMMERCIAL
* w PRINCIPLE.
The plan of the inquiry made by the Post Office Department, the
results of which are stated in Document No. 105, was to make an
ascertainment of the cost to the railroads of conducting the mail
service by dividing the total operating expenses of the passenger
service (direct .# apportioned) between the mail, express, and
passenger services on a common unit basis of space devoted to these
several services. The principle was eminently fair to the railroads,
because, although many general expenditures would continue to a
large extent in the absence of the mail service, yet it was made to
participate to the extent of its car-foot, miles percentage in all which
could have any relation to it. The idea of cost as a basis for rate
making appears to be clearly contemplated by the statute of 1879,
under which the inquiry was made. It authorizes the Postmaster
General to require railroad companies to submit data relating to
their operating receipts and expenditures as may be deemed necessary
in his judgment “to enable him to ascertain the cost of mail trans-
portation and the proper compensation to be paid for the same.”
There was º testimony by individual representatives of
railroads questioning cost as a method of ascertaining the adequacy
or inadequacy of rates, although others declared it to be a proper
gauge for that purpose. Among the latter were Mr. Buckland, of
the New Haven, who said, “I think that the principle of additions
to profits beyond operating cost and fair charges against the capital
expenditures could be easily developed” (Hearings, p. 275); Mr.
Worthington, of the Southern Pacific, who said, “There is no reason
why the adequacy of the pay as a whole can not be gauged in some wa
at an estimated cost, but I would not say that as a practical rate-mak-
ing proposition” (p. 348); and Mr. Peabody, of the Santa Fe System,
who said that on his system they use the cost to determine whether
they are underpaid and that cost is a primary factor in determining
the minimum rate (p. 646).
Upon the subject of practicability of cost ascertainment, Mr.
Turner, in his review of the evidence, states as follows:
The department has attempted to fix a reasonable rate on such a basis. The rail-
roads, on the other hand, have failed, as the testimony will disclose, even to make an
effort to demonstrate the reasonableness or unreasonableness of a rate on such a basis.
It is true, individual roads have figured out a cost basis not acceptable to or followed
by other railroads, and only acceptable to them for their own purposes and not as a
basis for railway-mail pay. Practically half of the roads seem to have a basis of account-
ing by which they can determine whether they are over or under paid for carrying the
mails. (Hearings, p. 924).
The matter is aptly summarized by Mr. Lorenz in his memorandum
in review of the testimony thus:
The º taken by the committee contains much concerning the difficulties
of ascertaining the cost of the mail service to the railroads, but it is safe to say that the
hearings developed no method of testing the adequacy or inadequacy of railway-mail
pay not resting, in the last analysis, upon some estimate of the cost of service. While
cost may not be capable of that exact ascertainment which enables us to make it the
sole determinant factor on which to base the rate of pay for each road, the usefulness
1006 . RAILWAY MAIL, PAY.
of a cost estimate seems clear if used merely as a general guide to help us to decide
whether the fifty-odd millions which the railroads receive from the Post Office Depart-
ment constitutes an excessive payment or not. (Hearings, p. 878).
Mr. Samuel O. Dunn, in his “The American Transportation Ques-
tion,” discusses extensively the element of cost of the service as a
factor in rate making (pp. 1 to 18, inclusive). On the general subject
of cost he points out the inconsistency of the railroads in insisting
that cost is not a factor, yet attempting to defend attacks on the
rates by computations on cost, but deprecates the lack of uniform
bases on which calculations have been made and their shifting and
changing character as different cases arise or questions are presented
in different courts. An instructive discrimination is also made
between average total cost of the service and additional expense,
which is well worth considering in connection with the carriage of
the mails. In this connection he says:
For the words “cost of service” do not always mean the same thing to him and
others, or even to him at different times. If he is considering what is the very lowest
rate he can afford to make, he thinks only of the additional expense that handling the
additional traffic will cause. The additional cost of handling certain traffic may be
but 4 mills per ton per mile; if the traffic manager can get it with a rate of 5 mills and
mo more it is worth having at that rate. But if the road's average cost of handling
all traffic is 8 mills, obviously he could not take all traffic for 5 mills. Since he must
get an average of 8 mills he makes all traffic that can not pay that much pay as near it
as it reasonably can, and then offsets the traffic which can not pay the average cost
with traffic that is required to pay more than the average cost. (The American
Transportation Question, p. 16.) -
In the paper entitled “Certain considerations in railroad rate
making,” supra, presented by Hon. Balthasar H. Meyer, a member
of the Interstate Commerce Commission, before the American Eco-
nomic Association, he discusses the elements, including that of cost
of the service, which enter into rate making. He contends that it is
a factor equally fundamental with the value-of-the-property factor,
and although recognizing the difficulties and uncertainties involved
pleads for the application of cost accounting to railroad transportation
as an aid to proper rate-making.”
Mr. Frank Hay Dixon, professor of economics at Dartmouth
College, in discussing Mr. Meyer's paper, mentions the use of cost
estimates by the railroads in their contention before this joint com-
mittee for increase of mail rates. He says:
Elaborate cost studies have been made from time to time, notably in the application
In OW º to Congress for an increase in mail pay. (Railway Age Gazette, Jan. 9,
1914, p. 72.
1 A second factor equally fundamental with the value of the property factor, which I believe will be
employed very much more in the future, is that of the cost of the service. A great variety of statistical
analyses have heretofore been made, but systematic efforts directed toward the ascertainment of the
approximate cost of the service have, generally speaking, been strangely neglected. A small minority
among those dealing with rate problems have long advocated it, but their plans have been thwarted by the
skepticism and unwillingness of a persistent majority. There are those who have opposed the develop-
ment of statistical investigations along the lines of cost because they assert the results are bound to be
misleading and unreliable. Others confess a fear that information of that kind will be misused. Others
declare that it will result in the establishment of rigid distance tariffs, with attendant chaos in the in-
dustrial world. Still others maintain the view that the cost of the service has nothing to do with the rate
either in general or in particular. The combined weight and influence of all these objectors has thus far
been sufficient to obstruct substantial progress.
It is a fact of common knowledge that so-called cost accounting has been applied to every important
branch of industry except steam railway transportation. A prolific literature upon the subject has been
produced within the last decade, and competent specialists in all branches of business are prepared to give
these principles practical application. e railways themselves have made limited application of the
principles of cost accounting to more than one-half of the railway mileage in the United States. The
declare, however, that this has been done for internal corporate administrative purposes rather than wit
a view of assisting in the establishment of just and reasonable rates. The difficulties of separating operatin
expenses among the various branches of the railway business are as apparent as the benefits of the fina
results are clear to those who are willing to undertake the task. It is perfectly obvious that controversy
• RAILWAY MAIL PAY. 1007
While in a strict cost-accounting system the subjection of the
mail service to a cost ascertainment and a participation in payment of
dividends, interest on funded debt, etc., as above indicated, upon a
flat pro rata space basis is most informing, it must be conceded that it
is a severe test for making a rate for such a specially conditioned
commodity, and we should be careful that it be not given undue
weight in support of a high rate. The general principle would appear
to be useful as a guide in considering the adequacy or inadequacy of a
rate for a commodity, the transportation of which is among the
principal objects and functions of the railroad. But for the
purpose of rate-making for so specially a conditioned business as
mail service, which can be relinquished by the railroads without
reducing their operating expenses proportionally with the consequent
loss of revenue, it need not be given controlling weight to sustain
high rates. The transportation of the mails is not the prime object
of railroading. No railroad was ever built with the purpose in view
of transporting the mails. Such transportation forms but a small
part of their business, represented by only 1.78 per cent of the total
revenue of all the roads of the country, although it contributes to
the railroads’ prosperity in much greater degree. Therefore, even if
it were shown that in this complete participation on a flat pro rata space
basis the railroads were receiving less than such aggregate estimated
cost, it would be no sufficient argument for concluding that such rates
were noncompensatory and that the railroads were underpaid.
Apparently in line with this is the decision of the Interstate Com-
merce Commission in Opinion No. 2408, in the cases of the express
companies. The Great Northern Express Co. and the Great North-
ern Railway Co. filed with the Interstate Commerce Commission
tables which produced the results of an apportionment of railway
operating expenses on three bases, namely, that “used by the prin-
cipal carriers in the country,” that used by the Postmaster General
in the preparation of the data published in House Document 105,
and the “so-called Buell system,” for the purpose of showing that
the proposed reduction in express rates would not produce a suffi-
cient rate to the railroads. The Interstate Commerce Commission
say as follows:
The respondents have attempted to show that the proposed rates will not provide
a reasonable return to the railroads, the position taken being that even the existing
rates do not give adequate return to the railroads, in addition to the expenses of the
; the apportionment of maintenance of way items, for instance, can never end. Is this, however,
Sufficient reason for refraining from undertaking a work which is so promising in beneficial results? There
exists surprising similarity in the methods employed by different railway companies in apportioning
*
certain common or overhead expenses. This similarity appears to have been brought about without
previous conference and agreement and is apparently the result of similar conclusions arrived at by men
Working at the same problem independently of one another. However, I am not suggesting that méthods
and rules which are now found to be common to several railway accounting departments are necessarily
those which commissions should .#. or prescribe. If cost accounting is not to be applied to railway
transportation until every refinement has been settled by unanimous consent of the accountants, we shall
never get anywhere. Institutional reforms are rarely effected from within, and the railway is no exception.
If such a rule were to be applied to the assessment and collection of taxes, the government of every civilized
Country in the world would be obliged to cease its activities for want of revenue.
A new system of express rates is about to be put into effect throughout the United States. It inaugurates
a revolution in the conduct of the express business. It is a carefully considered experiment, the exact
outcome of which no one can predict with full confidence. How will any one be able to draw a conclusion
at the expiration of a definite period of time regarding the financial results of the operation of the express.
companies without approximating a segregation of the expenses incurred by the failroads on account of
the express business. Railway mail pay is the object of periodical controversy. Does not that involve
essentially the same fundamental accounting questions? "Passenger rates are an issue in different States.
in various parts of the country. How can these controversies be properly and justly settled without some
reference to the cost of conducting the passenger business? One might ;". that the railways in this.
country would fairly vie with one another in producing the most scientific cost data in regard to their
respective ºns which the best talent can compile. With a few conspicuous exceptions, the exact
contrary is the fact. (Railway Age Gazette, Jan. 9, 1914, pp. 70, 71.)
1008 RAILWAY MAIL PAY. *
express company and the expenses which the railroads have arbitrarily assigned for,
the purposes of this controversy to their express operations. This contentien, how-
ever, is based upon theories and assumptions to which the record gives no support
such as the adoption of an arbitrary and theoretical basis for the apportionment of
railroad expenses between passenger operations and freight operations, and the fur-
ther adoption of a like basis for the allotment of passenger-train expenses between
passenger service, baggage service, express service, and mail service.
The conclusion which the commission is asked to reach upon these theoretical
arguments would demand the condemnation as noncompensatory and burdensome
to other traffic of a multitude of rates established by the railroads for transportation of
property on passenger trains. It would also force a further conclusion that the pres-
ent express rates would in many cases be subject to condemnation as unreasonably
low, for the reason that the railroad’s share of such rates is insufficient to meet the
expenses thus arbitrarily apportioned and give a reasonable return on the property
values which the railroads serving these respondents ask to have arbitrarily assigned
to the express service.
The commission rejected the statements, because they were based
upon theories “to which the record gives no support.” Apparently
the companies did not support by evidence the divisions .
This is sustained by an examination of their statement, in which
they refer to the commission's familiarity with the different bases for
the division of operating expenses, etc., which “precludes a detailed
explanation of the basis of division of each item of expense.” . But
the particular part relevant to the point under discussion here is the
statement that the method “would demand the condemnation as
noncompensatory and burdensome to other traffic, of a multitude of
rates established by the railroads for transportation of property on
passenger trains.” This is clearly the position in which the railroads
are in the present controversy with respect to their contention that
this severe test adopted in Document 105 proves the mail business
noncompensatory. -- :
ComPARIson BETwFEN DEPARTMENT's ESTIMATE OF OPERATING EXPENSES, EXCLUD-
ING TAXES, CHARGEABLE TO MAIL SERVICE, AND COMPANIES’ ESTIMATES OF SAME
CHARGEABLE TO PASSENGER SERVICE.
It is instructive to compare the department's ascertainment of the
mail service's proportion of the operating expenses with the testimony
of the representatives of the railroads as to cost of passenger service.
By Table 7, Document No. 105, page 281, it is ascertained that the
cost, including taxes, per car-foot mile made in the mail service was
3.08.2 mills. This, equated to a 60-foot car basis, would be 18.492.
cents per car-foot mile. On page 882 of the hearings Mr. Lorenz
ascertains from data in Table 3, Document No. 105, that the pas-
senger-train car-mile operating expenses, excluding taxes, is 18.5
cents, subject to the criticism of the railroads on grounds mentioned.
The following table, compiled from Document No. 105, shows for
the mail, express, and passenger services the relation of car-foot mile
revenue; operating expenses and taxes:


- te Operating
Operating
Car-foot | Revenue º ©x100IlSèS * .
Service. mileage per car- Pº and taxes €T C3I-
ratioS. foot mile. } per car. P.
60-foot car. foot mile mile,
. * | 60-foot car.
Per cent. Mills. Cents. Mills. Cents.
Mail--------------------------------------- 7.09 4. 144 24.8 3.08.2 | - 18.49
Express ". . . . . . . . . . . . . . . , - - - - - - - - - - - - - - - - - - - - 10.66 3. 865 23. 19 3. 107 I 18.64
Passenger and dead Space. . . . . . . . . . . . . . . . . 82.25 4.431 26, 59 3,303 19.82
Passenger without dead Space. . . . . . . . . . . . . • , 80. 66 4.519 27. 11 3.368 20.21
1 Since this ascertainment the Interstate Commerce Commission has ordered material reductions in
express rates from Feb. 1, 1914 which will reduce the unit revenues.
RAILWAY MAIL PAY. 1009
On page 882 Mr. Lorenz gives the result of the reports from 64
railroads to the Interstate Commerce Commission in 1913, who re-
orted a complete separation of their operating expenses as between
reight and passenger services by methods, however, not uniform:
The average operating expense per passenger-train-car mile for all
these roads º together for the year ended June 30, 1912, was
19.41 cents. He thinks this is lower than it would have been if all
roads had been included in the report. -
On page 887 he considers the reports of all railroads to the Inter-
state Commerce Commission on the basis of the assumption that for
the country as a whole the passenger service is not more profitable
than the freight service, which he says is the same as saying that the
ercentage of expenses to revenues in the passenger service is not
ess than the percentage for all business together, and applying this
expense percentage for all business, as officially reported, to the pas-
senger revenues, he gets a minimum operating expense of 17.5 cents a
passenger-train-car mile for the United States. He states that this is
subject to the objections which he names on the page referred to and
concludes that the passenger operating expense must be more.
On pages 888, 889, 890, and 891 Mr. Lorenz reviews the ascertain-
ments of costs of the representatives of several important systems,
ranging from 17.52 to 28.42 cents per passenger-car mile and distin-
guishes as to the reliability of the several estimates.
Mr. Lorenz concludes that uncertain as the testimony may be he
thinks that 18 cents a passenger-car mile may be safely considered
as the average operating expenses. It should be understood that
these figures include only operating expenses.
METHOD OF APPORTIONING UNASSIGNED EXPENSES BETWEEN FREIGHT AND
PASSENGER SERVICES.
. The railroads complain that the department divided the total oper-
ating expenses between the freight and passenger services by a method
which resulted in too small an apportionment of unassigned expenses
to the passenger service, and consequently decreased the cost of the
mail service.
This complaint is based upon the railroad committee's theory that
such unassigned expenses should be divided between these two prin-
cipal services on a revenue-train-mileage basis, the fairness of which
the department insists can not be sustained.
Upon this point the railroads' committee in their brief (Hearings,
p. 728) allege that the testimony and discussion show that at present
there is no generally accepted rule or formula for making the necessary
assignments or estimating a close approximation of cost of any par-
ticular service; that the Interstate Commerce Commission, after
attempting such apportionment between passenger and freight servi
ices, abandoned the effort many years ago; that a subcommittee of
the American Association of Railway Accountants resolved that no
fixed rule can be devised for division of common expenses between
freight and passenger.
It is understood that the method used by the Interstate Commerce
Commission, which was abandoned years ago, as mentioned by the
railroads' committee, was largely the method of dividing unassigned
expenses on revenue train-mileage, the basis which was urged by the
1010 * RAILWAY MAIL PAY.
railroads during the hearings. Furthermore, the Interstate Commerce
Commission has not abandoned the purpose of arriving at a satisfac-
tory solution of the question. Upon this point Mr. Lorenz, in reply
to a statement credited to Mr. Plant, of the Southern Railway, says:
The reader would doubtless be misinformed if he came to the conclusion from this
statement that cost accounting is a closed book, so far as the Interstate Commerce
Commission is concerned. Numerous recent decisions of the commission indicate
that they are paying attention to estimates of the cost of carrying specific commod-
ities. The commission has recently issued a formal order requiring railroad companies
to state the extent to which and the manner in which they are separating their operat-
ing expenses between freight and passenger services, and, while this order does not
commit the commission to any policy regarding the matter, it indicates at least that
they are still open to conviction (p. 633).
The conclusion reached in the resolution of the American railway
accounting officers, above referred to, was effectually disposed of by
Mr. Lorenz in his memorandum (pp. 632, 633), in which we find the
following among other statements:
Mr. Plant’s paper is purely destructive. In place of the post-office method, which
he attacks, he gives us absolutely nothing to put in place of it as a means of ascertain- .
ing what is a fair payment to the railroads for the service of carrying the mails. The
statement may be ventured upon without fear of contradiction that neither he nor
any other railroad representative can suggest a method of telling whether the railroads
are overpaid or underpaid for this service and demonstrate its correctness without
directly or indirectly making a “cost and use” estimate.
The department fully agrees that division should not be made on
any arbitrary basis, but that there should be some reason for the rule,
and that such reason should approximate as nearly as practicable
the element of use. For this reason we insist that the method advo-
cated by the railroads' committee, namely, revenue train mileage, is
too arbitrary and does not take into consideration the elements
which Mr. Lorenz has pointed out. **.
Although the railroad companies’ brief appears to have waived
general criticism of the method used by the department in dividing
unassigned expenses between freight and passenger services, never-
theless the criticism of the individual representatives of railroads
before the joint committee was directed thereto, and for this reason
it is deemed proper to briefly speak here regarding it. The general
principles governing the department's action are set forth in Document
o. 105, as follows:
In the determination of a basis for the -apportionment of the remaining or non-
assignable expenses of operation it was important that the method used be sound and
equitable. The bases used by railroads for the distribution of nonassignable operating
expenses are revenue train mileage, revenue car mileage, locomotive (including
-switching) mileage, the revenue, and the cost percentages of direct charge accounts.
Revenue train mileage, the basis most frequently used by railroad companies, is
referred to by the Wisconsin commission, in its decision, page 69, as follows:
“The revenue train mile is the unit of work done in hauling trains between terminals,
and it is the most direct unit of cost. That is, the passenger revenue train mileage is
the most direct unit of those expenses which depend upon the same, and the freight
revenue train mileage is the most direct unit of those expenses which depend upon
this mileage. This is an important distinction, for the passenger train mileage differs
materially in cost as well as in many other respects from the freight train mileage. * * *
They evidently assume that passenger and freight train mileage stand for substantially
the same thing, and that this is the proper unit of all expenses. Even a superficial
analysis of the facts will show that this is not the case.”
The revenue car mileage is not a correct one for the division of expenses of large
carriers because of the disparity existing between the weight and number of cars
operated in the two classes of service. Locomotive (including switching) mileage
is only applicable to a limited number of accounts, the charges to which depend upon
RAILWAY MAIL PAY. 1011
the locomotive movement. The revenue earned by the two classes of traffic is used
... as a basis for the division of operating expenses by many roads, but is not a correct
basis. The direct charge cost percentage basis is a cost accounting method of appor-
tioning expenses used i. large manufacturing concerns, and is indorsed by expert
accountants. In brief, the method consists in the determination of the known parts
of the expenditures chargeable to the several departments or to the direct operations
of manufacture and in apportioning the unknown parts of the expenditures to the
several departments or operations in accordance with the cost ratios of the known
expenditures. In the method followed by the department all of the bases referred
to, with the exception of the revenue basis, were made use of where applicable.
On pages 8, 9, 10, 11, 12, 13, and 14 of Document No. 105 will be
found a detailed statement of the manner in which the accounts were
handled in making the divisions. -
The formulas there given are the result of the best thought and
; of reliable authorities which could be found by the department's
-OlſſºCeI’S.
As against this rational effort the railroads' eommittee present to
the joint committee the more arbitrary method of dividing unassigned
expenses on the basis of revenue train miles.
In support of their plan Mr. Peabody, of the Santa Fe System, pre-
sented at the hearings (pp. 467 to 489, inclusive) several decisions
relating to the use of revenue train mileage for the purpose of such
division. He referred to the case of Trust Co. of America, complain-
ant; Chicago, St. Louis & Peoria Railroad Co. of Illinois, defendant:
in chancery, in the United States District Court for the Southern
District of Illinois, claiming that the opinion of the court sustained
the master and indorsed “unqualifiedly #. train mile basis,” and that
the only opponent among the witnesses to such basis was Mr. C. W.
Hillman.
- In the first place, the master, as shown by the record of the case
itself on page 480 of the hearings, did not so unqualifiedly indorse
the plan, but instead, comparing it with the method used by Mr.
Hillman, stated it was “admittedly inaccurate,” but he accepted
it as being only one yardstick instead of many yardsticks also
inaccurate “and without other sanction than an individual opinion.”
He further stated that the weight of testimony in the case was in
favor of the petitioners.
It is thus seen that the master was forced to decide between the
train-mileage system, supported by the testimony of a number of rail-
road men and which was opposed by the opinion of one, Mr. Hillman.
The decision, therefore, was in favor of the weight of evidence.
When the Minnesota rate case was considered by the Supreme
Court of the United States that court did not pass upon the method of
division between passenger and freight expenses.
The decision in the lower court against the Hillman plan can have
no weight before this joint committee unless it can be shown that
his plan was substantially the plan of the Post Office Department
used in preparation of House Document No. 105. This can not be
done. As a matter of fact, the plan was substantially different from
the department's plan. A careful review of his method employed in
the division of those accounts, which could not be directly allocated,
discloses the fact that while he follows the conclusions of the Wisconsin
Railway Commission decision in Buell v. The Chicago, Milwaukee &
St. Paul Railway Co. in certain accounts, he does not use the method
adopted by the Post Office Department and presented by the
1012 RAILWAY MAIL PAY.
Wisconsin commission as upheld by the weight of opinion of the
experts in railroad accounting, quoted on pages 97 and 98 of the
report of the railroad commission of Wisconsin.”
The method adopted by the department, which is supported by
the evidence in the Wisconsin commission decision, was {. upon
the known expenditures chargeable to train movement in conducting
transportation; that is, the business of the railroad as a train unit.
The result of the use of this basis in dividing the unassignable oper-
ating expenses is to bring the passenger and freight expenses, respec-
tively, into proportion with the known ratios of transportation costs
of the respective services, instead of using a traffic estimate of service
such as the revenue train mileage, or a weight arbitrary, such as that
used by Mr. Hillman.
As stated by the Wisconsin commission and quoted in House Docu-
ment, 105, on page 8, the revenue train mileage is a just basis for
dividing the unassignable expenditures providing the relative cost
of passenger and freight movement is the same; in other words, if
the passenger and freight train mileage stand for substantially the
same thing, it is a proper unit, but this is not the case. The proof
of this fact is amply demonstrated in the reports of the railroads to
the department for November, 1909, and as set forth in Exhibit A.
The revenue train mileage as a basis having been urged upon the
railroad companies by the railway mail pay committee, and the reports
to the department showing conclusively that it was used extensively,
if not exclusively, in separating the unassignable expenses, led to
the investigation by the department as to its accuracy. The result
proved that the assumption of the railway mail pay committee “that
a passenger train-mile costs the same to run as a freight train-mile”
was contrary to fact. This condition in the relation of passenger and
freight traffic was the principal determining reason for the adoption
by the department of a method which was capable of producing
results more nearly approximating the correct relation between the
actual known expenditures for the two classes of traffic.
The principle involved in the department's division of expenses is
stated by the Supreme Court of the United States in the Minnesota
rate case to be the true principle upon which a division of values of
properties should be made.” While this is said with reference to
division of property values it is equally true in principle with reference
to division of common expenses.
Practical examples of the results in applying the revenue train-mile
basis for division of all unassigned expenses will at once disclose its
unreliability. These may be found in the memorandum hereto
attached, marked “Exhibit A,” entitled “Department's method in
"Mr. Hillman used a method for ascertaining the proportion of the expenses for maintenance.9′Yº!
$ºigtures chargeable to passenger traffic jº W. }. upon weight . mileage, according tº a º
.# ºr ºiles, ca. weight, weight of passengers, express and mail, and engine.º.º.º.
§ºng an arbitrary of 300 pounds, representing one passenger and the factors of express and mail weiß § {
This formula Was used for dividing that part of the item involved in the wear on account of traffic. ti le
#º: involving depreciatioãº, c.nº weather he divided in pro ratio to the respº"*
* paSSenger earnings. g
With the exception of ºftems, namely, ballast, and roadway and track, the prºpº º #
Mr. Hillman to traffic wear differ materially from that used by the department; º §
the #eneral expenses his method was identical with that of the department. In other Wordº. º fic
used his own discretion in regard to the several percentages, both in regard to the propºrtiºn betweentral ; -
Wear and weather and the proportion between freight and passenger for the accounts of º, i.
Wº: The départment followed the onsensus of the opinion of the experts quoted PY"
* ºblSSIOI). * # *
.*.*Support of this method it is said that a division of the value of the property according tº gº;
is a division according to the tº aide of the use; and therefor proper. But it would seem to be clear *
RAILwax MAIL pay. 1013
separating the unassignable º expenses of railroad companies
unjustly criticized by the railroads, who have offered no valid criti-
cism of the aetual apportionment made by the department.”
THE CHARGE OF SPAOE TO THE MAIL SERVICE.
In no part of the presentation of the railroads is there more error
than in their brief concerning the question of “dead space” set forth
on pages 722 and 723 of the hearings, where the following statements
are found, namely:
The Post Office Department now concedes that Document No. 105, through erro-
neous treatment of So-called “dead space,” underestimated the pay due the railways.
The Post Office Department, in addition to admitting that Document No. 105 should
be revised in order to make a reasonable allowance for a just return on invested capital,
also concedes that the so-called “dead space” was erroneously treated, with the
result of underestimating the compensation fairly due the railways. -
Messrs. Joseph Stewart, C. H. 5. and A. N. Prentiss, for the Post Office
Department, and Messrs. H. E. Mack, W. J. Bradley, and H. P. Thrall, for the railways,
agreed upon the following, which was submitted to the joint committee under the date
of March 15, 1913:
“The differences between the car-foot mile earnings by the two calculations are due
entirely to the fact that the Post Office Department, upon receipt of the data as to
space from the railroads, made certain modifications therein, based upon the space
eemed by the Post Office Department to be necessary for its purposes and upon its
rules with respect to assigning other space reported by the companies as mail space,
which resulted in a reassignment of the car-foot mile space to the different subdivis-
ions of passenger-train service.” (Testimony, p. 324.)
The above specifically and by inference incorrectly states the facts.
The Post Office Department did not by the letter referred to or at any
other time concede that the “dead space” tabulated in Document
105 and charged to the passenger service was erroneously treated
with the result of underestimating the compensation fairly due the
railways. The facts are simple and do not justify misunderstanding.
The chairman of the joint committee requested representatives of
the department and of the railroads, respectively, to consider the
differences in the statements of revenue per car-foot mile received
by the railroads from the mail service and from other passenger serv-
ices, as Computed by the department and the Committee on Railway
Mail Pay, respectively, there being a difference between the two results.
A committee consisting of the Second Assistant Postmaster General,
Messrs. McBride and Prentiss for the Post Office Department, and
Messrs. Mack, Bradley and Thrall, for the railroads, gave consideration
to the matter and submitted a reply in writing to the effect that the
difference between the two results reached by the two calculations
the value of the use is not shown by gross earnings. The gross earnings may be consumed by expenses
leaving little or no profit.
It is not asserted that the relation of oxpense to revenue is the same in both businesses; on the contrary,
it is insisted that it is widely different. -
sk × Sk sk >k sk sk
If the property is to be divided according to the value of the use, it is plain that the gross earnings method
is not an accurate measure of that value.
sk ". sk Sk x: sk >k >k
When rates are in controversy it would seem to be necessary to find a basis for a division of the total
yalue of the property independent of revenue, and this must be ſound in the use that is made of the property.
It would seem that, after assigning to the passenger and freight departments, respectively, the property
exclusively used in each, comparable use units might be found which would afford the basis for a reasonable
division with respect to property used in common,
... It is sufficient to say that the method here adopted is not of a character to justify the court in basing upon
it a finding that the rates are confiscatory. (Minnesota rate cases, 230 U. S., 459, 461.)
26276—No. 7–14—3
1014 RAILWAY MAIL, PAY,
was “due entirely to the fact that the Post Office Department upon
receipt of the data as to space from the railroads made certain modi-
fications therein, based upon the space deemed by the Post Office De-
partment to be necessary for its purposes and upon its rules with re-
spect to assigning other space reported by the companies as mail
space, which resulted in a reassignment of the . mile space
to the different subdivisions of the passenger-train service.” The
full letter is set forth on page 324 of the hearings. . There is nothing
in the language used which will justify the conclusions that the Post
Office Department's representatives conceded that the space so re-
- F. by the railroad companies and unchecked by the Post Office
epartment as deemed “to be necessary for its purpºses and upon
its rules with respect to assigning other space reported by the com-
panies as mail space” was the proper space to be used as representing
the mail service. The purpose of the letter was merely to state to
the chairman the reasons for the difference in the results obtained
by the railroads' committee and the Post Office Department. This
must be well known to the representatives of the railroads who
signed the letter, for the representatives of the department declined
to sign any reply until it was so worded as in their opinion would make
it perfectly clear that no concession as to the correctness of the rail-
roads' claims of erroneous assignment of space was made in the letter
by the department. It is therefore difficult to understand why this
statement is made in the brief of the railroads’ committee.
All arguments, therefore, based upon any assumed concession of
the Post Office Department that the unchecked space as reported by
the railroad companies for mails were correct must fall.
For the above reasons the conclusion reached by Mr. Turner that
the department and railroad representatives referred to “met and
on March 15, 1913, reported that the earnings per car-foot mile in
mail service were 3.37 mills and in passenger service 4.34 mills” is
incorrect, and all the argument based by him upon the assumption
made must be dismissed from consideration. . (Hearings, p. 961.)
Equally erroneous is the assumption made in the railroad com-
mittee's brief (Hearings, p. 723) in this same connection, as follows:
. The foregoing shows that unless the modifications referred to were justified, addi-
tions to the estimated payments under the proposed system would have to be made
corresponding in extent to the erroneous changes. In his letter of January 9, 1913,
already quoted from herein (hearings, p. 72]), Postmaster General Hitchcock conceded,
in effect, that these modifications ought not to have been made as to railway post-
office cars, by saying—
“I am willing to recommend * * * that in computing the car-foot miles the
mail service shall be charged in both directions for a line of railway post-office cars
with the maximum space authorized in either direction.” (Preliminary Report, p.
96.) -
As a matter of fact the cases covered by Postmaster General Hitch-
cock's letter are not such cases as are involved in the difference
between the results reached by the railroads’ committee and the
officers of the Post Office Department. The language of Mr. Hitch-
cock's letter is that he is willing to “recommend the following in
connection” with the proposed plan submitted in House Document
No. 105 for readjusting railroad mail pay, namely: “That in comput-
ing car-foot miles the mail service shall be charged in both directions
for a line of railway post office cars with the maximum space author-
ized in either direction.” : -
RAILWAY MAIL PAY. 1015
As will be seen hereinafter, this referred to cases where because of
a difference in the authorization of railway post office cars in the two
directions a doubt had arisen as to whether under the new plan pro-
posed the railroad companies would receive credit in both directions
or the maximum space authorized in either direction. Its purpose
was to remove all doubt upon this point and to agree that the rule
should be written in the statute in order that it could not be ques-
tioned. It was not an admission that the allowances made in Docu-
ment 105 had been erroneous in such cases. A consideration of the
rules followed by the department in tabulating space, set forth here-
inafter, will make this entirely clear.
Mr. Turner's conclusions on page 961 regarding dead space reported
by the railroads as chargeable to mail service but charged, against
passenger service, made in connection with quotations, is therefore
erroneous. The inference to be drawn from the argument set forth
is that the amount of car-foot miles named, which covers the haul of
dead space, was admitted both by Mr. McBride and Mr. Hitchcock
as having been erroneously charged to the passenger service. Mr.
Hitchcock did not make any such admission, and it is only neces- .
sary to refer to his letter and to consider it in connection with what
he said above and also in connection with the instructions of the
department which governed the tabulation of space to make this
entirely apparent.
The opinion of Mr. Lorenz, as quoted on page 961 by Mr. Turner
in connection with the dead space, I think, should be considered in
connection with a misunderstanding apparently existing regarding
what constitutes the dead space reported in Document No. 105. It
would appear that he did not have in mind the instructions which
governed the tabulation in accordance with which the railroad com-
panies received credit for extra space in railway post-office cars where
such operation was made necessary by the mail service, and could not
have been aware of the fact that the larger part of the dead space
represented railroad operations for the convenience of the railroad
companies and only indirectly incidental to the mail service. :
It is pertinent to now inquire what space largely constitutes the
item called “dead space” reported in Document No. 105 and how it
was operated by the companies. In order to understand this it is
first necessary to fully consider the instructions and rules adopted by
the Post Office Department to check the reports of the railroad com-
anies of space necessary for the mail service. These rules were as
ollows:
Closed-pouch space.—The following basis for the estimate of the space in baggage
cars devoted to mail service for closed pouches during the month of November, 1909,
in connection with the railroad companies’ reports, will be observed: -
For 100 pounds or less, allow 6 linear inches.
For weights above 100 pounds and not exceeding 200 pounds, allow 10 linear inches.
For weights above 200 pounds, allow 5 linear inches for each additional 100 pounds.
The weight will be ascertained by multiplying the maximum number of pouches
and sacks reported by the company as carried at any one time by the average weight
of pouches and sacks as shown by the report of the General Superintendent, Railway
Mail Service, upon the actual weighing for 10 days of closed pouches on express
trains, namely, 20 pounds.
Apartment car space.—Where the railroad reports cars longer than those authorized
by the department, enter the authorized length in column 11, form 2601, and enter
the excess space in an additional column to be headed “Linear feet of the cars—dead
- 1016 RAILWAY MAIL PAY.
space,” and its car-foot mileage to be computed and entered in another additional
column headed “Car-foot mileage—dead space.” :
Railway post office car space.—Where the railroad company reports cars longer than
those authorized by the department, the cases may be one of the following three
characters:
Full line authorized with maximum pay.—Where the space reported is greater than
that authorized by the department, enter the authorized length in column 9, form
2601, and the excess space in an additional column marked “Linear feet of cars—dead
space” and compute the car-foot mileage on the dead space and enter it in another
additional column, marked “Car-foot mileage—dead space.” &
Agreement lines.—These cases are where the department authorizes a full line of
cars (as, for instance, a 60-foot line), and the º operates such sized cars in both
directions, but the department pays a rate equal to half the rate for a full line of the
maximum length, plus one-half the rate for a full line of minimum length (as, for
instance, pay equal to half a 60-foot plus half of a 50-foot or 40-foot line). In this case
enter the length of the line, as authorized, in column 11, form 2601.
Half lines.—These are cases where the authorizations are for specific half lines (as
for instance, half line of 60-foot cars in one direction and half a line of 40-foot cars in
the opposite direction). It is usual for the company to operate the maximum length
of car in both directions. If, therefore, the company reports greater length than that
authorized, enter the authorized length in column 11 and the surplus space reported,
if any, in another column (additional), marked “Linear feet of cars—deadhead space”
and compute the car-foot mileage upon the deadhead space and enter it in another
additional column headed “Car-foot mileage—deadhead space.”
If a railway post-office car is reported deadhead and its running is necessary for the
maintenance of the authorized car service, the space should be entered in the column
“Linear feet of cars—deadhead space” and its car-foot mileage computed and entered
in the column “Car-foot mileage—deadhead space.”
Milk car operated in passenger train.—Where a milk car is operated in a passenger
train, the car space should be treated as passenger-car space.
Railway post-office cars run beyond the points between which such service is duly author-
ized and paid for.—Where a company reports the operation of a full railway post-office
car beyond the points between which the line is duly authorized, give credit in col-
umn 11 for the length of space necessary for apartment car service, if any be necessary,
for the extra distance for which the car is so operated and enter the surplus space in
the column “Linear feet of cars—dead space” and carry the car-foot mileage for each
to their appropriate columns. If no space is needed for apartment-car service over the
extra distance run, enter the entire space reported for such distance in the column
“Linear feet of cars—dead space” and carry out its car-foot mileage. -
The space ascertained to be “deadhead space” under the foregoing
rules was charged to the mail service and formed a part of the car-foot
mileage percentage for that service.
It will be seen from the above:
That for closed-pouch service liberal allowance of space was made.
That the full amount of space authorized in apartment cars was
allowed. When it is understood that the department does not pay
anything additional for apartment-car space the conclusion naturally
follows that space was not illiberally authorized. If the railroad
companies, for their own convenience, chose to build apartments in
cars longer than apartments are authorized and needed for the mail
service, anticipating future needs and conserving future expense in-
cident to possible changes, certainly the department should not be
compelled to charge itself with this extra unneeded space. However,
if there be cases where the authorization of apartment-car space is
different in the two directions it would be proper to consider the claim
for the maximum space just as allowance was made in such cases for
full railway post-oº::ce cars.
That for full railway post-office lines with maximum pay the space
authorized by the department was allowed. If the company chose
for its own convenience to run cars of a greater length than those
RAILWAY MAIL, PAY. 1017
authorized, certainly the department should not be charged with the
excess space. *
That for agreement lines of railway post-office cars credit was
allowed for the full space on the line, although the department needed
and paid for less space in one direction than in the other.
That for half lines of railway post-office cars full credit was given
for the maximum length in either direction—first, in mail space for
the actual authorized length in each direction, and, second, in “dead-
head space” for the surplus space run over that authorized, credited
to “deadhead space” and transferred to the mail service.
That for railway post-office cars run “deadhead” and necessary for
the maintenance of the authorized car service full credit was given
the companies for the space, the same being entered under “dead-
héad” and transferred to the mail service.
That for railway post-office cars, run beyond the points between
which the service was duly authorized and paid for full credit was
given for the necessary space thus carried by the full railway post-
office car beyond its point of authorization if run as an authorized
apartment car, and the surplus space in the full car so run was charged
to “dead space,” as such operation was purely for the convenience of
the railroad company, and the department should not be charged with
the surplus. If no apartment-car service were necessary over the line
beyond the authorized full railway post-office line, no credit was given
the company, because the mail service was in no wise interested in such
operation and it was not necessary for postal purposes.
From the above it will be seen that the department was liberal in
allowing space for full railway post-office car service and, furthermore,
as above mentioned, had actually employed the rule in the preparation
of Document No. 105, which Postmaster General Hitchcock stated in
his letter he was willing to recommend be incorporated in the law.
Notwithstanding this liberality of the º in crediting
. the results obtained by the Post Office Department and those
obtained by the railroad mail pay committee varied considerebly, as
hereinbefore mentioned. The reason for this is that the operations of
the railroads were used by the railroad mail pay committee in making
their computations without regard to the proper ind equitable rules
of the department, above mentioned, limiting credit for certain space.
The railroad companies generally reported the space at the maximum
of operating conditions, whether warranted by the needs of the mail
service or not. An examination of the instructions of the various com-
panies to their employees in regard to reporting closed-pouch space
indicates that no matter what the size of the baggage car utilized, the
mail service, even if the mail was very light in weight and quantity,
was charged with unused space in the baggage car proportional to
the amount carried. The rule of the department in regard to closed-
ouch space was based upon measurements and tests made by officers
of the department. ... From the rules regarding allowance of space for
full railway post-office cars it will be seen that only in cases where
the company operated cars of a greater length than authorized by the
department and also where the companies, for their own purposes,
operated lines beyond the authorized points was the surplus space so
run directed to be charged to “dead space” and ultimately to passenger.
1018 RAILWAY MAIL, PAY.
ANNUAL WEIGHINGS, SIDE AND TERMINAL SERVICE, AND APARTMENT CARs.
Annual weighings.-The contention for annual weighings of mails
upon which to make readjustments of railroad mail pay, the request
by the railroads to be relieved of the performance of side and terminal
services, and the request to be paid specifically for apartment car space
as they are paid additionally for full cars are presented for considera-
tion in two aspects: First, by the railroad companies as a part of their
proposed plan for modification of existing law relating to compensa-
tion; and, second, as elements which either entitle the companies
to additional compensation for facilities furnished or necessitate
undué expenditure compared with the revenue received. It is pro-
posed here to consider them in their second aspect, leaving the first
to be treated hereinafter when the railroads' proposed plan shall be
under consideration.
Regarding the contention for annual weighings, the railroads
claim that readjustments based on the quadrennial weighings do not
adequately compensate them for the increase in weight of mails dur-
ing the four-year period.
, Lorenz names an estimate of $3,255,000 as covering this addi-
tional claim and includes it in the total asked for by the railroads (Hear-
ings, p. 868). Mr. Turner, in his memorandum, reviews the conten-
tions of the railroads in this respect, suggests an estimate of $3,000,000
as the consequent deficiency in railroad pay (Hearings, p. 912),
and * $2,900,000 as an item of underpayment (Hearings,
. 918). *
p In answer to this it may be said that if the rate fixed on a quadren-
nial weighing is not adequate to compensate for service for the four-
year term, there would be merit in the railroads’ contention. However,
it has been shown hereinbefore that on the basis of Document No. 105
and an additional liberal charge against the mail service for participa-
tion in payments of dividends, interest on funded debt, etc., É. aggre-
gate annual payment to the railroads in 1910 exceeded the apportioned
cost. Furthermore, and this is a fact which has not been heretofore
presented, the compensation paid for the year 1910 was compared
with the estimated cost of tº representing a growth in the ser-
vice of almost four years in the fourth contract section, of three years
in the third contract section, of two years in the second contract sec-
tion, and of about six months in the first contract section. The sig-
nificance of this is at once apparent. The $49,000,000 compensation
was composed of the pay for service in the fourth contract section
fixed nearly four years prior to 1910; the pay for service in the third
section fixed nearly three years prior; the pay for service in the second
section fixed nearly two years prior; and the pay for service in the
first section fixed less than a year prior; yet the cost of the service
measured on space including the necessary growth in the several
sections during these periods did not equal the amount of the pay
fixed at the earlier dates. This shows clearly that the growth of the
service during the quadrennial period is amply paid for under the
existing plan.
In view of these facts the claim for an annual weighing under ex-
isting law appears to have no merit.
Side and terminal service.—Regarding the request of the com-
panies to be relieved of side and terminal services, so far as it affects
RAILWAY MAIL, PAY. 1019
the question of the ascertainment of cost and therefore the adequacy
of f. pay, the following may be stated:
e companies claim that this service is not reasonably a part of
the railroad transportation service or of the service of a common car-
rier. Except in some individual instances they do not submit any
evidence as to the “out-of-pocket” expense to themselves in per-
forming this service. It is well known that in most cases at small
stations the railroad agent is required to carry the mails to and from
the post office as a part of his regular duties and receives little or no
additional compensation from the railroad company for it. On the
other hand, it is true that at other more important places where the
companies are required to perform the service they are obliged to
expend a certain “out-of-pocket” amount for the service, and on
Small short lines this amount proves to be a considerable part of the
º received for the carriage of the mails.
Mr. Lorenz names an estimate of $1,000,000 as covering this addi-
tional amount and includes it in the total asked for by the railroads
(Hearings, p. 868). Mr. Turner, in his memorandum (Hearings, pp.
914 and 915), estimates the cost to the railroads of sº
$500,000, and includes this amount in his computation of under-
payment to the railroads (Hearings, p. 918). The department has
estimated in 1909 that it would cost approximately $4,373,000 for
it to take up and perform this service.
In reply to this, it may be said that, so far as existing law is con-
cerned, the railroads are amply paid in the aggregate for this service.
The testimony has not been discriminating in this respect, and it has
from time to time been stated by the railroads that no allowance was
made for side and terminal service. This is incorrect. The fact is
that, in the cost ascertainment the mails participated on the basis of
car-foot miles in every expenditure for messengers, porters, and
station service in which the mails were concerned, excepting where the
specific amounts expended for the mail service were reported, in which
cases such specific amounts were allowed. A full statement as to
these credits and the manner in which they were given and the reasons
therefor are set forth on page 104 of the preliminary report.
It is, therefore, evident that inasmuch as the pay exceeded the cost
and proper charges against the mails, as hereinbefore stated, no addi-
tional amounts should be allowed for side and terminal service under
existing law.
The iºry of the requirement that railroad companies shall pro-
vide for side and terminal service where the department does not make
other provision runs back into the days when the principal mail trans-
Fº service was performed on star routes instead of railroads.
he rule with reference to this service was applied to railroad service,
and after the law of 1873 was still continued. The Court of Claims
thereafter held that Congress had taken that service into consideration
when they established the rates of 1873. (Hearings, p. 17.) -
Apartment cars.-Regarding the request for specific additional
payment for apartment cars, the railroads claim that they should
receive specific additional pay for such space on the same basis as they
now receive pay for full railway post-office cars. Mr. Lorenz esti-
mates the annual pay for apartments on the basis of car-foot mileage
shown in Document 105 as $3,690,140, and includes this in his esti-
mated amount necessary for “correcting the inconsistencies in the
1020 - RAILWAY MAIL PAY.
present law in the manner asked for by the railroads.” (Hearings,
p. 868.) Mr. Turner estimates the amount as $3,700,000, and in-
cludes it in the total which he submits as the amount of underpay-
ment under existing law. (Hearings, pp. 916,917, and 918.)
In regard to this contention it may º said, as in the two cases
above mentioned, that it is without merit as an argument to show .
underpayment under present law. It seems to have been overlooked
in commenting upon the facts and the evidence that the ascertain-
ment of cost made by the department includes every possible credit
which could be claimed for apartment-car service, assuming that
such space was properly represented in the statistics of Document
105. In other words, the apartment-car service participated in the
apportionment of cost and other charges against operating revenues
in exactly the same manner and to the same pro rata extent as the
full railway post office cars did, and all other space used for the
transportation of mails. It is apparent, therefore, that there is no
merit in the contention that the railroads are underpaid on account
of apartment-car service. - -
It is interesting to note that the theory of the statute of 1873
(afterwards R. S., 4002) is that the rates of pay therein fixed were
intended to fully cover the facilities furnished in apartment cars.
That law provides that the Postmaster General is authorized and
directed to readjust compensation to railroad companies upon the
conditions and at the rates named, the first condition being “that
the mails shall be conveyed with due frequency and speed; and
that sufficient and suitable room, fixtures, and furniture, in a
car or apartment properly lighted and warmed, shall be provided
for * * * (railway postal clerks) to accompany and distribute
the mails.”
THE LAW OF MARCH 2, 1907, AND POSTMASTER GENERAL’S ORDER NO. 412 OF JUNE 7,
1907.
An argument is presented for the railroads in the memorandum
prepared for them by Mr. H. T. Newcomb, statistician (Hearings, pp.
59 et seq.), that because the Wolcott commission reported in 1901
that the prices paid the railroads for transporting the mails were not
excessive the reductions made by Congress in 1907 and that resulting
from the Executive order known as the “divisor order” in the same
year, together with other reductions resulting from changes in the
service, have decreased the rates of railroad transportation below a
fair level.
The fundamental error in this is in the assumption that all inquiries
subsequent to 1901 must necessarily be ... so far as the con-
clusion is concerned, by the finding of the Wolcott commission. It
ignores the present inquiry and the radical differences between the
methods followed upon the two occasions. If it be shown that in
1909 the pay to railroads was excessive what possible bearing upon
the case can a previous finding in 1901 have 7 -
Furthermore, the reductions which he has mentioned are not all
reductions in pay without corresponding reduction in service require-
ments or such reductions as the railroads themselves legard as unwar-
ranted from a commercial point of view. For instance, on pages 97
and 98 of the hearings, he refers to the administrative policy of pro-
RAILWAY MAIL PAY. 1021
curing equalized rates where there are competing lines, one of which
is shorter or cheaper than the other. . . .
The rate given the department under these conditions is purely
voluntary on the part of the railroad, and no one can doubt that it
regards the rate as fully remunerative, or it would not retain the
mails, as the department stands ready to divert them to the cheaper
line if the carrying company does not wish to carry them. Again,
on page 100, he mentions the withdrawal of payments for special
facilities, but does not mention the fact that the º furnishing
the trains to the South, for which this special subsidy was paid,
withdrew its fast trains because they did not longer wish to maintain
the schedules and voluntarily relinquished the subsidy. On pages 100
and 101 he mentions the withdrawal of envelopes, postal cards, and
mail equipment from the mails, but in this case does mention the fact
that this was coincident with a reduction in mail service required. If
they do not carry these articles in the mails, how can it be said that
railroad pay for service rendered has been reduced because of their
withdrawal, or how does it increase the cost of service rendered
except on the theory that mail service is a by-product of railroad
business? Furthermore, all these articles were carried by the com-
panies in freight trains at regular freight rates, and all companies are
anxious to receive the business and spend time and money in soliciting
it. On page 101 he mentions the forwarding of periodicals by freight.
These articles were withdrawn from the passenger service and were
carried in the fast-freight service of the companies. Again, it must
be asked how it can be said that railroad pay for service rendered has
been reduced because of their withdrawal, or how the cost has been
increased thereby, unless, as mentioned above, it be on the theory
that the mail service is a by-product and the withdrawal did not
reduce the expense, but did reduce the surplus from it. On the
other hand, they receive full and adequate pay at freight rates for
carrying the same articles in freight trains, and all companies are
anxious to have the business. All these items so mentioned are
represented in his total of over $8,000,000 “reductions,” set forth by
him in the table on page 101, excepting a money value for the with-
drawing of jºi.
He further mentions two reductions in pay which do not involve
a reduction in service, namely, that by the act of March 2, 1907,
and that effected by order No. 412. So far as the reductions effected
by these two measures are concerned, they are wholly irrelevant to
the question before the joint committee for the reason, as stated
above, that the premise upon which they are advanced, namely,
the conclusive effect of the finding of the Wolcott commission, can
not be considered.
However, as the question of the divisor has been introduced,
though unnecessarily, I think, it seems necessary to inform the
joint committee respecting the principle involved in order that
there may be no prejudice arise from the remarks of Mr. Newcomb
regarding it on page 99 and of Mr. Turner on pages 917 and 958.
When the law of 1873 became effective, the six-day-a-week rail-
road mail routes predominated over the seven-day-a-week railroad
mail routes, both as to aggregate compensation and aggregate mile-
age of routes. Prior to 1907 it was the practice of the department to
weigh the mails for not less than 35 or 105 days and to divide the
1022 RAILWAY MAIL PAY.
total weights for all the weighings by the number of week days in
the weighing period, the result thus secured being considered the
average weight of mails per day carried. This process produced a
higher average than the true mathematical average daily weight.
It produced an average for each day of 313 days in the year instead
of for each day of 365 days in the year. It appears to have been a
concession to the predominating feature of j. mail service at
the time the practice was inaugurated, and the same divisor was
used for the seven-day routes apparently for the reason that to
have used a divisor of seven days in the week for those routes would
have penalized the seven-day route carrying the same amount of
mail as a six-day route by producing for a seven-day route a lower
average daily weight, and consequently a lower rate of pay.
This condition continued until 1884, when Postmaster General
Gresham issued what is known as Order No. 44, of September 18,
1884, which directed that on routes performing service seven days in
the week the whole number of days the mails are weighed should be
used as a divisor, thus creating a divisor of a multiple of seven days
in the week for seven-day routes and leaving the old divisor of a
multiple of six days in the week as a divisor for six-day routes. This
order continued in force until January 16, 1885, though no weighings
occurred in the meantime. It created two different divisors, one to
apply to six-day routes and another to apply to seven-day routes,
and would have worked inequitably to the seven-day routes as above
mentioned. .
By order of January 16, 1885, Postmaster General Hatton revoked
the order of September 18, 1884, leaving in force the practice begun
in 1873, which continued until 1907. Between the date of the
issuance of Order No. 44 and its revocation Mr. Hatton submitted an
inquiry to the Attorney General, setting forth a specific example of a
division of the same weights on both classes of routes by the same
divisor and asked whether that process was the correct one. The
Attorney General did not have before him any proposition to make
the divisor a multiple of seven instead of six, as was afterwards done
by Order No. 412. Naturally he said that the method detailed in
Mr. Hatton's letter was the correct one. The rationale of the letter
submitting the question concerned itself with the principle of using
the same divisor in all cases. The question of the use of a multiple
of seven instead of a multiple of six was not presented.
This condition continued until March 2, 1907, when Postmaster
General Cortelyou issued an order, known as No. 165, of that date,
directing that in obtaining the average weight per day the whole
number of days the mails are weighed shall be used as a divisor. It
will be observed that the effect of this was to restore the order of
1884 and to necessitate the use of a divisor of multiples of six days
in the week for six-day routes and a multiple of seven days in the
week for seven-day routes, which would have resulted in the same
inequality as to the seven-day routes as above mentioned.
To correct this Postmaster General Meyer issued his order of
June 7, 1907, No. 412, which directed that the average weight per
day shall be obtained by using the whole number of days included in
the weighing period as a divisor, which rule has continued in force to
the present time. The effect of it is to require a divisor of a multiple
of seven days in the week (or, in other words, the whole number of
RAILWAY MAIL PAY. 1023
days in the weighing period) for both the six-day and seven-day
routes and, furthermore, not only to produce an exact mathematical
average for every day in the year of 365 days, but to do the same
even justice between the two classes of routes that the old divisor
accomplished. t
In order that the use of the several divisors may be more readily
understood the following graphic examples are given:
- Effect of old divisor.
Six-day-a-week route.
pounds
30 ) 60,000 (2,000 pounds average.
Seven-day-a-week route.
* pounds
30 ) 60,000 (2,000 pounds average.
Producing in each case an average for 313 days in a year of 365
days. . *
~. Effect of Order No. 44 (of 1884) and No. 165 (of 1907).
Six-day-a-week route.
pounds
30 ) 60,000 (2,000 pounds average.
Producing an average for 313 days in a year of 365 days.
Seven-day-a-week route.
pounds
35 ) 60,000 (1,714 pounds average.
Producing an average for 365 days in a year of 365 days.
The rate for this average daily weight would be less than the rate
for the 2,000 pounds on the six-day-a-week route, although the same
aggregate weight would be carried and a more frequent service
rendered.
Effect of new divisor (Order No. 412).
Six-day-a-week-route.
pounds
35) 60,000 (1,714 pounds average.
Seven-day-a-week route.
pounds
35) 60,000 (1,174 pounds average.
Producing in each case an average for 365 days in a year of 365
days, and the average being the same for both classes of routes.
A further correction should be noted in regard to a statement made
by Mr. Turner on page 958 that Postmaster General Hatton, in a
“Documentary History of the Railway Mail Service,” transmitted to
the Senate, strongly condemned an order similar to one which was
issued and afterwards known as order No. 412. It is probably true
that Postmaster General Hatton favored the six-day divisor. It is
not true that order No. 44, which he revoked, was the same as order
No. 412, for, as pointed out above, order No. 44 made a distinction
between the two classes of routes and would have worked an injustice
1024 RAILWAY MAIL PAY.
to the seven-day routes, while order No. 412 treats them on the
same basis and works no inequity. Neither is it correct that Mr.
Hatton condemned the principle of order No. 412 in the documentary
history referred to. The document was a compilation of historical
facts relating to the development of the Railway Mail Service, pre-
pared by an inferior officer as a matter of information for his superior,
and among many other subjects contained reference to the then cur-
rent argument in support of the six-day divisor; and its transmission
to the Senate was made for the º: of having it printed, as shown
by the correspondence printed in the volume itself.
The justification for the application of the new divisor prescribed
by Order 412 is found in a consideration of the conditions existing in
the service in 1907 compared with those existing in the service in
1873. At the time of the passage of the act of 1873 there were in
operation throughout the United States 781 railroad mail routes.
On 684 of such routes the mails were carried on six days in the week,
and on 97 of such routes the mails were carried every day in the
week. The annual rate of compensation paid by the Government
to the railroads for carrying the mails on the 6-day routes was #.
proximately $4,703,543, .# such rate of compensation paid on the
seven-day routes was approximately $2,553,653. The aggregate
mileage of the six-day routes was approximately 48,444 miles, and
of the seven-day routes approximately 15,013 miles. (Table B,
Annual Report, Postmaster General, for 1873.) In 1907, at the
time Order No. 412 was promulgated, there were in operation through-
out the United States about 1,394 six-day routes, and about 1,604
seven-day routes. The annual rate of compensation on the routes
of the first-named class being approximately $3,253,305, and on the
routes of the second class approximately $41,817,100, and the º:
gate mileage of the six-day routes, about 48,705 miles, and of the
seven-day routes about 153,596 miles. (Table B, Annual Reports,
Second Assistant Postmaster General, for 1904, 1905, 1906, and 1907.)
From this statement it will be readily seen that vast changes had
occurred during the period from 1873 to 1907; that in 1873 the six-
day routes represented a very large proportion of the pay for railroad
mail service and a very large proportion of the mileage of route, while
in 1907 the conditions were completely reversed—the seven-day routes
represented a very large proportion of the transportation pay for rail-
road mail service and also the very large proportion of the mileage of
routes. The old divisor put into effect in 1873 was an appropriate
exercise of discretion of the Postmaster General in recognizing in the
service at large the predominance of the six-day service upon rail-
roads, and the application of the same divisor to the seven-day routes
compensated them (in a degree comparative with service on the six-
day routes) for the superior service performed by them. For exactly
similar reasons the adoption of the new divisor prescribed by order
412 was a recognition of the complete reversal of the conditions in
the railroad mail service throughout the country, in which the seven-
day routes had taken the place, in predominance, of the six-day
routes. The service of the entire country had evolved from a basis
of six days in the week to practically a daily service the whole year
around. Only approximately $3,000,000 out of the $45,000,000 of
pay went to the six-day routes, and only approximately 48,000 miles
out of the 200,000 miles of railroad mail routes operated six days only
RAILWAY MAIL PAY. 1025
in the week. In the exercise of his sound discretion it was appropriate
and proper that the Postmaster General should adopt and apply to
the new conditions the mathematically exact divisor which produced
the true average for every day in the year, and thus end the recogni-
tion of a condition of service which had ceased to exist.
This is not deemed the proper forum to discuss the legality of order
No. 412. The railroads have taken the matter into court. The cases
are pending in the Court of Claims, one of which has been decided
favorably to the railroads, but it is still pending on the motion of the
Government to amend the findings of fact and a motion for a rehear-
ing on assignments of errors of law. It is º: that the rehearing
will occur in a short time and that ultimately the Supreme Court of
the United States will be asked to pass upon the question.
However, if the railroad's contention should be conceded by the
joint committee, or if they should finally prevail in court, and it should
be decided that Order No. 412 is illegal and should not have been
applied, then the difference shown in this statement between revenue
and apportioned cost will be increased by the annual reduction in
j mail transportation pay effected by the application of the
new divisor. This is stated in the report of the §. Assistant
Postmaster General for the fiscal year 1910 as $4,941,940 for the four
contract sections for the fiscal year 1911. This would be increased
during the subsequent years and at the present time would be at
least $5,000,000 per annum. -
III.
THE PRESENT PLAN OF ADJUSTMENT OF RAILROAD MAIL PAY.
*
At present railroad mail pay is provided for and adjusted upon the
basis of the average daily weights carried over the several established
railroad routes, and an additional amount is allowable for railway
post-office cars when the space for distribution purposes equals or
exceeds 40 feet in the car. Space for distribution purposes in apart-
ment cars—that is, space less than 40 feet—is not compensated for
in addition to the pay for the weight of mails. There are, therefore,
under present law two different methods of pay for service, which
cover three different conditions in the service. That is, there is pay
for weight under all circumstances; there is additional pay for space,
40 feet and more, in cars; and there is pay for weight only in cases
where apartments less than 40 feet in cars are furnished.
The laws, respecting pay for transportation of mail on railroad
routes and for railway post-office cars are set forth on pages 19 and
20 of Document No. 105,
Readjustments are made under the law allowing pay for average
daily weights upon weighings in each contract section not less fre-
uently than one in every four years. The country is divided into
our contract sections, all quadrennial contracts for the several classes
of services, together with the railroad service, expiring in each con-
tract section at the same time. The weighings of mails on the rail-
road routes occur successively in the several contract sections. Hence
there is a weighing every year in the whole service, although but one
every four years in any particular section. Upon the weights of mails
for each route obtained during the weighing period the average daily
1026 - RAILWAY MAIL PAY.
weight carried over its whole length is computed, and the pay per
annum is fixed according to the schedule of rates provided by law.
The order readjusts the pay for the contract term of four years,
subject to future orders and fines and deductions.
The statute fixing the pay for railroad transportation based on
average daily weights provides certain conditions precedent to entitle
the companies to full pay, one of which is that sufficient and suitable
room, fixtures, and furniture in a car or apartment properly lighted
and warmed shall be º for railway postal clerks to accom-
pany and distribute the mails. toº no additional pay is
authorized for space to distribute the mails in apartment cars 30feet
or less in length.
The additional pay allowed for full railway post-office cars of 40
feet or more in length is ordered at the rates Fº by statute and the
regulations of the department upon the needs of the service, as ascer-
tained and reported by the field officers of the service and finally
N
accepted by the officers of the department, in accordance with the
postal regulations governing such authorizations.
Further information respecting the present law may be found in
Mr. Lorenz's memorandum, pages 852 et seq., and in Mr. Turner's
respecting rates, on pages 907, 908, and 909.
In the consideration of the present plan of providing rates for
service, the query has been noted both i. Mr. Lorenz (Hearings, p.
857) and Mr. Turner (Hearings, p. 906) as to why a proportionate
rate under the law of 1873 was not made for apartment cars, or space
less than that authorized in full railway post-office cars 40 feet or
more in length. The thought that this omission has no foundation
in the conditions of the service is no doubt further suggested by the
sentence in Postmaster General Hitchcock's letter transmitting Docu-
ment No. 105 to the effect that “this distinction is a purely arbitrary
one and without any logical reason for its existence.” r -
As a matter of fact there is a reason in the conditions of the service
which no doubt led Congress in 1873, when that law was framed, to
omit a specific rate for apartment cars, and I believe this fact to be
that apartment-car space is invariably furnished the department in a
baggage or other car which is run in the train for the railroad's own
purposes, and the distinction was properly made in favor of special
payment for cars 40 feet or more in length because such requirement
necessitated the placing of an additional car in the train, no part of
which was allowed to be used by the company. Attention is called to
the history of the legislation set forth by the Second Assistant Post-
master General on page 107 of the preliminary report. This has been
cited by Mr. Turner in his memorandum. Mr. Lorenz has submitted
†º. of the defects in the present law, as viewed by him.
(Hearings, pp. 854 to 858, inclusive.)
THE SUGGESTED PLANs of ADJUSTING RAILROAD MAIL PAY.
THE COST AND SIPACE BASIS.
The plan for readjusting railroad mail pay suggested by Postmaster
General Hitchcock in Document No. 105, and his subsequent letter
to the chairman of the joint committee of January 9, 1913, is set out
RAILWAY MAIL PAY. 1027
in full on pages 4 and 5 of said document and on page 96 of the
preliminary report. In brief it may be summarized as follows:
Summary.—The Postmaster General shall require companies operating railroads by
steam, electricity, or other motive power carrying the mails to furnish not less fre-
quently than once in each fiscal year information relating to the service, operation,
receipts, and expenditures for a period of not less than 30 days, to be designated by
him, to enable him to ascertain the cost to the companies of carrying the mails and
the proper compensation to be paid for the service. Upon these data he shall deter-
mine the cost to each railroad company for carrying the mails on its respective road
or roads and for this service is authorized to credit, assign, and apportion the revenues
and expenses of railroad companies in such manner as he shall deem fair and equitable
to ascertain as near as practicable such cost. The primary separation, however, of
operating expenses between freight and passenger services shall be made by the
Interstate Commerce Commission. The Interstate Commerce Commission shall
review the findings of the Postmaster General and affirm, modify, or revise them in
any case where a company shall object to his method of crediting, assigning, or *.
tioning the revenues and expenses and file such objection with the Postmaster Gen-
tral within a specified time. -
In charging mail service with its space in passenger trains it shall be charged in
both directions with the maximum car space for railway post-office purposes authorized
in either direction. -
. . No credit shall be given for space in cars devoted to the distribution of the mails
unless such space be authorized by the Postmaster General or unless he shall deter-
mine that its use is made necessary by a specific authorization.
Upon his findings the Postmaster General is authorized to readjust the pay to the
companies not less frequently than once in each year at a rate of compensation per
annum not exceeding the cost to the companies of carrying the mail and 6 per cent of
such cost, and in addition to such operating expenses and taxes apportionable to the
mail service to allow such additional amounts as may be necessary as shall render
the whole a proper proportion of a fair and reasonable return on the value of the
property necessarily employed in connection with the mail service. A minimum
rate of not exceeding $25 per mile per annum is fixed.
Land-grant roads shall receive not exceeding the cost to them of performing the
Service.
Information shall be furnished by the roads and adjustments made by the depart-
ment as nearly as practicable by accounting systems.
Additional service during the term for which adjustment is made may be authorized
without additional compensation during such term.
Service may be ordered over new or additional trackage during a term and payment
made for the remainder of the term on statistics for the first 30 days of service at not
exceeding the average rate per car-foot mile for the system or road ascertained at the
regular adjustment. Entire discontinuance of service over trackage included in the
adjustment or thereafter added shall be deducted for. New service over trackage
of a company not operating service under a regular adjustment may be authorized and
Fº for at not exceeding $42.75 per mile of trackage per annum for the remainder of
the term. -
The provisions of present law regarding the construction and sanitary condition of
cars; the furnishing of cars; the carriage of mails upon all trains selected by the Post-
master General with the persons in charge of the same; for fines and deductions, etc.,
are retained and suitable provisions for carrying out the provisions of the act are in-
cluded. It is further provided that it shall be unlawful for any railroad company
to refuse to carry the mails at rates of compensation fixed by law when required by the
Postmaster General, and a fine is provided for such refusal.
The following objections were urged at the hearings by the repre-
sentatives of the railroads:
Mr. Peters, of the Long Island Railroad, admitted that by the
space measure of service “a fairly reasonable comparison of the cost of
a passenger train and its distribution between the passenger, the ex-
press, and the mail can be made, but for purposes of comparison
only,” and claimed that: -
This measure, however, does not represent all the service that is performed in com-
pleting the transportation for which each class of service pays.
1028 * RAILWAY MAIL PAY.
In support of this he points out certain differences between the
services rendered the passenger, express, and mail business. (Hear-
ings, pp. 43 and 44.)
This objection appears to overlook the fact that on an approved
system of cost ascertainment the special services performed exclus-
sively for any one branch would be charged directly to it where it
could be separated from other items of like expense, and that the
space ratio would be applied to the unassigned expenses in which the
service participated.
He offers the further objection that the space basis plan which has
been proposed would result in practically 795 rates of pay for the 795
railroads. (Hearings, p. 44.)
Under the present law there are 3,409 different adjusted rates of
pay per mile per annum; that is to say, one for every route, as the law
provides that the pay shall be adjusted according to schedule rates on
the average daily weight carried over the individual route. This neces-
sitates the ascertainment of a rate for every route. These rates vary
for a ton-mile from $1.49 on an average daily weight of 211 pounds
or less to 5.76 cents on routes carrying 48,000 pounds or more average
daily weight. -
M. Bradley, of the Pennsylvania Railroad, claims that there is no
invariable ºn between car space and the mail tonnage trans-
ported, but that while it is true there is no constant or exact propor-
tion between bulk of mail carried and its attendant car space for
distribution and storage, yet there is an approximate relation if the
“working mail” is differentiated from the “through mail,” and he
thinks that the weights of mails are important prudential considera-
tions to the department's officers and useful statistics for information
of Congress and the Interstate Commerce Commission. (Hearings,
. 626.)
p The department does not overlook the value of statistical informa-
tion. So far as weight as an administrative check is concerned it is
of very slight value. Railway post-office car space is authorized not
primarily with respect to the weight of mails carried in the car, but
with respect to the space needed for distribution purposes.
Mr. Logan, of the Grand Trunk Railway System, thinks the space
basis would not be a fair basis to all alike (Hearings, p. 530), but
admits that so far as his system is concerned it probably would be as
just and fair as the weight basis. It appears that Mr. Logan thinks
it would be satisfactory to his system if the rate were satisfactory,
because they carry a light tonnage compared with the space occupied.
He also mentions weight plus space as particularly desirable for
parcel post, and states that this rule is observed by express compa-
nies and also by steamship companies in fixing rates. (Hearings,
. 548.)
p Mr. Worthington, of the Southern Pacific System, states that the
greatest objection to the space basis is that it places in the hands of the
Postmaster General the regulation of the compensation to the rail-
roads, and thinks that because the Government is the shipper the
results would not be as fair to the railroads as under a weight basis.
He further says that the Government would expect to pay the same
rate per foot whether the service performed covered a full car or only
a fraction of a car, and that in the latter case in freight service con-
sideration is given to the less-than-carload lot in fixing the rate.
Further, that space is not the sole consideration in fixing rates on
RAILWAY MAIL PAY. 1029
other classes of railroad transportation, and that weight is the prin-
cipal factor, although space is also taken into account in fixing rates
in freight service on bulky commodities. (Hearings, p. 351.)
So far as the objection against reposing in the Postmaster General
the power to regulate the rate is concerned, it can have no valid force.
The Postmaster General and those under his direction must neces-
sarily have complete control of the service which shall be required of
the railroad companies. If such service is measured by an automatic
gauge of weights, the railroads claim there will be no dispute. If
such service is to be measured by the space by which the department
requires to properly and economically conduct the service, there can
be no valid objection on the part of the railroads to the authorization
of that space being wholly within the control of the Postmaster Gen-
eral. The department alone, and not the railroad companies, must
be the judge of what the service needs.
So much for general objections found in the record. There are
others which will now be considered that relate more particularly
to the administration of the service. These may be mentioned
briefly, as follows: g
Mr. Albright, of the Atlantic Coast Line, states that aside from
other considerations—
It seems impossible to regulate the assignment of space in especially equipped cars
for the postal service. * * * The present practices of the Post Office Department
with respect to 40-foot and 50-foot allowances in 60-foot equipment is an illustration
of the difficulty which would confront us, not only in full railway post-office cars, but
in apartment cars as well, under rates based on space. (Hearings, p. 254.)
Mr. Bradley, of the Pennsylvania Railroad System, says among
other things:
But when the rate of pay is not fixed by the railroad company and when experience
has shown that the officials of the Post Office Department do not see the same space
for payment that the railroad officials find necessary for operation, and when experi-
ence has shown that the Post Office Department even now alters its allowances on
R. P. O. car space at frequent intervals, reducing operations on 30 days' notice or
even less, it is natural that a strong preference should be expressed for the more stable
ºwest of mail transported—which is less subject to mere opinion. (Hearings,
p. 620.
Mr. Mack, of the Missouri Pacific System, thinks that the adoption
of the space basis would relegate the gauge of pay to the mere judg-
ment of the officials of the service, and that this judgment would be
liable to be influenced against the interests of the railroads for
reasons stated by him. (Hearings, pp. 301 and 302.)
Mr. Rowan, of the New York Central, urges as objection, among
other things, that it places in the hands of the Postmaster Genera
the power of adjusting pay, and that constant friction would result
between the Post Office Department and the railroads as to the
amount of space used. (Hearings, p. 579.)
These objections against the administration of a space basis are
often advanced in connection with the general statement that car
authorizations under the present system represent about 10 per cent
of the total pay and weight represents about the remaining 90 per
cent of the pay received by the railroads for mail service, the inference
being that if Congress adopted the space basis, the alleged difficulties
arising out of contentions between the railroads and the department
about authorizations would be increased approximately tenfold.
26276—No. 7—14—4
1030 RAILWAY MAIL PAY.
This argument rests upon a false premise. The per cent of com-
pensation paid the railroads for cars being purely an additional rate
above the weight rate does not correctly represent the per cent of
authorized mail space under the present law. From Table 5J,
House Document No. 105, it will be seen that the per cent of car-foot
mileage represented by railway post-office car space was 46.249, for
storage space 10.127, for apartment-car space 30,080, for closed-
pouch space 2.821, and for deadhead space 1.723. Therefore, over
46 per cent of the entire space devoted to the mail service is now the
subject of authorization under the same kind of administrative
supervision as is provided for in the proposed plan. Furthermore,
over 10 per cent of the space which is devoted to storage and over
39 per cent of the space which is devoted to apartment cars is
subject to the same general plan of authorization—that is to say,
they represent space required and authorized by the Post Office
Department, but they differ from space authorized for full railway
ost-office cars in that no additional specific compensation is carried
y the authorizations. Consequently, over 85 per cent of the space
now is subject to authorization or requirement by the department
for the purposes of railway post-office car service. Therefore, in
discussing the probable effect from an administrative point of view
of basing pay on space instead of the present system, the space now
j should not be referred to as 10 per cent (representing
merely additional extra pay for cars above weight pay), but as 85
per cent, representing the actual percentage of space, which is now
the subject of direct authorization or requirement by the department.
Furthermore, it is over the authorizations for 46 per cent of service
represented by the space-mileage that the controversies arise to
which reference has been made in the testimony.
This brings us to a consideration of the objections of the railroads.
Why do controversies arise ? They arise in three general classes of
cases: (1) Where the railroad company contends that the needs of
the mail service are greater than can be accommodated in a 30-foot
apartment car, and therefore require the allowance of the additional
compensation for a 40-foot car, (2) where the railroad company con-
tends that the requirements of the service necessitate a greater
authorization in full cars run than that admitted by the officers of
the department, and (3) where the space needed in full cars, in the
opinion of the officers of the department, is less than the authoriza-
tion and necessitates a reduction. In many of these cases the rail-
road company is for its own operating convenience running a full
railway post-office car in lieu of an apartment car, or where full
railway post-office car service is authorized the company is running a
larger size car than the car needed and authorized by the department.
The controversies therefore referred to and dwelt on with such
emphasis by the representatives of the companies are merely con-
tentions on the part of the representatives of the railroad com-
panies that the needs for space in the distribution of mails on trains
are greater than that decided upon by the officers of the service.
The officers of the service are in all these instances conserving the
interests of the Government and carefully weighing the claims of the
railroad companies for additional pay. It would seem that if any
objection were to be considered in this connection, such objection
RAILWAY MAIL, PAY, 1031
must come from the department; the department has not offered
the joint committee, any objection on this score. Furthermore, it
must be admitted that the administration of the service devolves
wholly upon the Post Office Department and not upon the railroad
companies, and that the decision as to the facilities needed rests
entirely with the department's officers. It would seem that the
railroads can have no valid objection to the action of the depart-
ment's officers in authorizing space either under the present system
or the proposed system, excepting in those cases where the companies
run, for their own convenience, a larger car than that authorized
and needed and used by the department without receiving pay for
the whole space used.
Under the present system of authorizing railway post-office car
space, the matter is under constant supervision which requires the
lines to be inspected frequently by the officers in the field and period-
ical reports made thereon. If the department is using more space
than is paid for, the matter promptly becomes one for investigation
and the authorization is made at the earliest date that those responsi-
ble for the expenditure of the appropriation can become satisfied
that the space is actually needed and used. There is no question
in my mind that under the general system of authorizing space
and with a proper supervision and constant checking of the require-
ments with the authorizations, injustice would not result to either
the Government or the railroad companies as a permanent condition
and all inequalities would tend to be promptly adjusted in the usual
course of business. -
THE STANDARD UNIT SUGGESTION,
This is a space-basis proposition. The standard unit suggestion is
the designation given by Mr. Lorenz to the idea advanced by Congress-
man Lloyd at the hearings that there might be three standard units
for cars to be authorized by the department, namely, 15, 30, and 60
feet, in addition to closed-pouch service.
Mr. Lorenz has discussed the merits and demerits of the proposi-
tion on pages 861, 862, and 863 of the hearings. He believes the
suggestion has merit in directing attention specifically to “one of
the most perplexing difficulties in the administrative details for any
lan that uses space either in part or entirety” (p. 861). This dif-
culty, in brief, is the effort to make the car space “needed,” the car
space “used,” and the car space “furnished” approximately identical.
e thinks that if standard units were adopted, as Mr. Lloyd suggests,
the railroads would build that size only and the department would
ask for that size only and this j' tend to bring more nearly
together what the department would ask for and what the railroads
would furnish (p. s. *
"We now have standard units of 40-foot, 50-foot, and 60-foot cars,
and †. the railroad companies have not in late years built many
cars less than 60 feet in length, preferring to ilā larger cars for
their own operating º ºf also because they are willing to
furnish the additional space above the 40 feet and 50 feet needed
until greater needs shall arise by growth of service rather than to build
smaller cars and abandon them for larger ones to meet the growing
1032 RAILWAY MAIL PAY.
needs. This mainly results from the fact that the requirement of 40
feet or more space necessitates the placing of an additional car in
the train. In other words the railroad companies apparently could
not furnish apartment space of such lengths to advantage, nor would
the department accept and pay for these dimensions of space except
in a car devoted entirely to mail purposes, although in recent years
40-foot space has been accepted in 70-foot cars. On the other hand
apartment space 30 feet or less may be partitioned off for mail uses
in the baggage car run by the company for its own purposes. Where
a car some part of which can be used by the company is concerned, .
it is apparent that the necessity or advisability of designating spe-
cific units varying widely in linear extent does not exist. This is
made evident by an examination of the table showing apartment-car
space of different lengths in the service set forth by Mr. Lorenz on
page 862. The variation between the different sizes 1 anges from 3
to 5 feet. This is no disadvantage to the railroad companies. In
fact it may prove a distinct advantage to them as well as to the
department, because the nearer the approach is made to furnishing
the space required by the department the more economical is the
utilization of the remaining space by the company for its own
purposes. **
Upon careful analysis it will be seen that the plan proposed by Mr.
Lloyd will not have the effect of removing the causes for controversy
between the railroads and the department over the amount of space
needed in the car for mail service, excepting in so far as it is affected
by the reduction of the number of units of different sizes. There will
be the same cause for controversy over what unit shall be authorized.
It will be noticed, however, that a material reduction in the number
of units, thereby increasing the difference in linear length of space to
be furnished, will mitigate against the interests of the department,
because it will often result in the necessity for authorizing greater
space than that needed. . For instance, with no unit between 30 and
60 feet the postal necessity for anything over 30 feet would require
a 60-foot authorization, whereas with the existing units of 40 and 50
feet the department has the advantage of saving 20 feet and 10 feet,
respectively, when it is not needed. It would therefore seem to be
desirable to have more units than are provided for in this suggestion
and to make a distinction between the extent of variation in cars used
wholly by the department and in those some part of which may be
used by the companies. -
As this plan appears to be more or less involved in the Lorenz plan
(weight, space, and distance) a further discussion of its principles
will be reserved until views are submitted upon that plan.
WEIGHT, SPACE, AND DISTANCE—THE LORENZ PLAN.
In an endeavor to supply the elements which in Mr. Lorenz's
opinion the straight-space plan omits, he has submitted on pages
868 to 876, inclusive, a plan based upon a consideration of three ele-
ments—weight, space, and distance. * *
The department is not immediately prepared to discuss this plan.
Earnest consideration is being given it, and at the earliest possible
day our views regarding it in connection 'with further suggestions
with reference to the space basis will be submitted.
RAILWAY MAIL. PAY. t 1033
THE PERCENTAGE METHOD,
The percentage plan would allow the railroads a stated per cent,
of the postal revenues as compensation. My opinion is that such
a plan is without merit. The principal reasons therefor are stated
in the testimony (p. 655) and are summarized and supplemented by
Mr. Lorenz on pages 863 and 864 of the hearings.
THE PLAN OF SENATOR JOHN W. WEEKS.
In substance the suggestion of Senator Weeks is that a director
of posts be appointed to make contracts with railroad companies,
subject to appeal to the Interstate Commerce Commission.
Mr. Lorenz has discussed the plan on pages 864 and 865 and Mr.
Turner on pages 942 and 943. The objections to the plan are con-
sidered in these discussions. It would seem to present serious
administrative difficulties and uncertainties. In the administration
of the service the present tendency on the part of railroads is to
insist on higher pay than that now allowed under the statutes, and
some even threaten to discontinue the service in case demands are
not met. It would seem to be inadvisable to eliminate statutory
support of the department in matters of rates for a business that
is strictly governmental, notwithstanding the proposed recourse to
the Interstate Commerce Commission.
THE PLAN OF HON. DAVID J. LEWIS.
Mr. Lewis's plan is set forth on pages 696 to 698, inclusive, of the
hearings. . . Mr. Lorenz has discussed it on page 865, and Mr. Turner
on pages 945 to 947, inclusive. The essential features are as follows:
(1) The weighing of parcels with notation of zones of destination
where railroad transportation is involved and the ascertainment of
total ton-miles of such transportation. These ton-miles are to be
multiplied by the rate, say 5 cents, and the gross sum paid to the
railroads upon car-foot mileage of mail service performed by the
roads, respectively. -
This would require reports from offices on railroads and from
offices dispatching direct to railroad trains, aggregating in number
40,000, if one report were made by the postmaster for the whole
period of weighing. If the report extended over considerable time
reports would necessarily be required by weeks at least, which would
increase the number greatly. The tabulation and computations of
this mass of figures would be a considerable undertaking, but not
insuperable. It would be open to the objection that the reports
from many postmasters would likely be unreliable, and the depart-
ment ja have no means of checking them. In an inquiry upon
the results of which such large payments are to be directly based, it
would be of the utmost importance to secure correct reports of all
matter mailed on trains, ...? if this be left to postmasters exclusively
there would be possibility of error and no check against irregularity.
(2) The plan provides for paying for first, second, and third class
railway-going mail upon the § of $43.65 per ton. There must be
a weighing at the post office of all such mail for railroad transporta-
tion. These weights are to be totaled into tons for the entire coun-
try to give the gross amount of railway service rendered the ordinary
1034 RAILWAY MAIL PAY.
mail, and this total is to be multiplied by the ton rate to give the
total fund payable to the railroads for this branch of the service,
This total is to be distributed as in the other case on the basis of
car-foot miles of postal service performed by the several companies.
The same criticism regarding the weighings, reports, and tabula-
tions as made in the case of parcels applies equally to this class.
The fundamental difficulty regarding the . of distribution of
these funds is that it presupposes that mails of both classes will be
carried in the same proportion by all railroads. This is not so; there
will be a great variation. There would not necessarily be any inti-
mate relation between the mails actually carried by a railroad and
the pay received on this basis. The rate paid on a mileage unit
º be directly related to the service performed by that unit.
THE PEABODY PLAN.
The Peabody plan is discussed by Mr. Lorenz on page 866 and by
Mr. Turner on pages 943 and 944. -
The plan is subject to serious objection. It turns the matter of
rate over to the Interstate Commerce Commission and places the
burden on the Post Office Department of going to court to prove the
rate unjust if it has objection to it. This would practically force
every case into that forum for determination and demoralize the
administration of the service.
THE BUCKLAND PLAN.
This is discussed by Mr. Lorenz on page 866 and by Mr. Turner on
pages 937 to 942, inclusive,
Mr. Buckland accepts the cost basis, including the principles of
additions for fair charges against capital expenditures. The man-
ner of determining the rate, however, is essentially different from
the department's plan. On the one side it attempts to specifically
guarantee by statute “a reasonable remuneration for any services
performed,” and on the other hand requires the Postmaster General
to pay such remuneration equal to the cost and the fair return, as
above indicated. Any difference between the Postmaster General
and any railroad company as to the amount of such remuneration
is to be determined by the Interstate Commerce Commission.
This plan has the principal defects of being unspecific as to rates
of pay and of placing the burden on the Postmaster General of
fixing every rate at such an amount as shall be held by the Interstate
Commerce Commission or, ultimately, the courts, to be reasonable
remuneration. This seems to invite endless controversy and litiga-
tion over the rates fixed. -
THE PROPOSALS OF THE RAILROADS.
The railroads’ committee offered no constructive plan aside from
proposals for certain changes in existing legislation. Their plan is
to retain the present system of readjustments based on average
daily weights carried and to extend the scope of additional payment
for railway post-office car space so as to cover apartment cars, as
well as full railway post-office cars. They also desire to be relieved
of side and terminal service, or urge that they be specially and ade-
!
RAILWAY MAIHL PAY. 1035
º compensated for the same if they continue its performance.
hey also ask for annual weighings.
With reference to the effect upon compensation which these three
elements have, it may be said that it will necessarily be accounted for
in any system which uses cost as a guide for fixing rates. Therefore,
in any proposed plans to supersede the present one these objections
urged by the companies to the present law, if they be valid, will be
properly met.
If the present system be continued, it can not be concluded, from
the showing hereinbefore made with reference to compensation and
cost, that any additional compensationshould be allowed for any one of
these items, or that the companies should be relieved of side and ter-
minal service or given annual weighings without appropriate reduc-
tions in the present rates of pay. As to the reasons for this conclu;
sion, attention is invited to the showing as to revenue and cost, an
what is further said under the headings “Annual weighings,” “Side
and terminal service,” and “Apartment cars,” supra. •
However, if the present system is to continue some changes should
be made regarding side and terminal service, so as to relieve short lines
with small pay, supplying a number of post offices along their route;
from expense disproportionate to the revenue received.
Jose PH STEwART,
Second Assistant Postmaster-General.
ExHIBIT A.
THE DEPARTMENT's METHOD IN SEPARATING THE UNAssIGNABLE OPERATING EXPENSES
OF RAILROAD COMPANIES UNJUSTLY CRITICIZED BY THE RAILROAD COMPANIES, WHO
HAVE OFFERED NO VALID CRITICISM OF THE ACTUAL APPORTIONMENT MADE BY THE
DEPARTMENT. *
[Prepared by Mr. Albert N. Prentiss.]
In the hearings before the joint congressional committee the testimony of certain
representatives of the railroads criticized the method utilized by the department in
separating those items of operating expenses which were not, or could not, for various
reasons, be allocated directly to either the passenger or freight service. These criti-
cisms may be summarized as follows:
I. It is claimed by the railroads that the department should not have made use of
the report of the Railroad Commission of Wisconsin in the so-called “Buell case,” as the
method therein employed produces a passenger cost that is lowest or considerably less
than that produced by the use of the revenue train mileage as a general basis for
separating the unassignable expenses. • *
2. The department is criticized for attempting to make such a separation at all, and
it is claimed that the data furnished by the railroad companies as separated by them
should have been accepted without question.
3. It is claimed, also, that the department did not use the basis for dividing operating
costs set forth in the “Buell case,” but used its own method while claiming to use
the “Buell” method.
Early in the investigation the question of providing for a division of the unassignable
operating expenses of the mail-carrying railroads was forced upon the department by
the action of certain railroad representatives, at a conference held in Washington,
D. C., on October 22, 1909, when the following resolutions were adopted:
“1. Resolved, That the Committee on Railway Mail Pay be requested to use its in-
fluence with the American railways to induce them to fill out their reports to the
Post Office Department in accordance with the recommendations of this meeting; and
be it further •
“2. Resolved, That the railroads here represented cooperate fully with the Com-
mittee on Railway Mail Pay, and that their reports to the Post Office Department on
the above forms be forwarded in duplicate to Mr. Julius Kruttschnitt, chairman of the
Committee on Railway Mail Pay, rôom 401, Grand Central Station, Chicago, Ill., with
the request that after collating the same, the originals be returned to the roads for
1036 RAILWAY MAIL PAY.
transmission to the Post Office Department, and the duplicates retained by the said
committee for their assistance in their work; and be it further
“3. Resolved, That the Committee on Railway Mail Pay be requested to send each
of º railroads here represented a copy of the summary of the replies by all the rail-
roads.”
Among other recommendations forwarded to the mail-carrying roads, in accordance
with the above resolutions, there appears the following (the italics are the writer's):
“As to assignable expenses, select those which under the interstate-commerce classi-
fication are confined exclusively to passenger service.
“Leave out of consideration expenses which under the interstate-commerce classi-
fication are confined exclusively to freight service.
“Take the remaining operating expenses and apportion them to passenger and
freight service on basis of train mileage, assuming for this purpose that a passenger train-
mile costs the same to run as a freight train-mile.
- “Add the assignable passenger expenses to the other expenses estimated in order
to get the total. It is recommended that this basis be uniformly used in ascertaining
the “total passenger operating expense (covering all passenger and baggage, express,
and mail service).” - -
The reports received by the department from the railroads indicated that a large
majority of the companies separated the unassignable operating expenses on the basis of
the revenue train-mileage in accordance with the recommendation of the committee.
An example of the result obtained by this method, if applied to all accounts not al-
located, was shown in the first reports of the Chicago & North Western Railway Co.,
which gave only 14 per cent of the operating expenses as assignable directly to either
passenger or freight service, and resulted in a passenger i. of all expenses of
41 per cent. A second report, and correspondence with the company relative thereto,
revealed actual assigned expenses, or such as could be divided upon a working basis
other than revenue train-mileage, of 42 per cent instead of 14 per cent, with a very
much reduced passenger expense ratio (37 per cent instead of 41 per cent). The com-
pany used the revenue train-mileage ratio of 44.83 per cent for dividing all the remain-
ing costs, notwithstanding the passenger part of the assigned expenses was only 27.97 per
cent. Upon dividing, according to the department’s method, that portion of the
operating expenses which was not allocated, a passenger operating cost of 33.37 per
cent of the total operating expenses was obtained.
The above example is only one Öf many which support my statement on page 490
of the hearings, which reads:
“In the proportion that expenses between passenger and freight are allocated, the
expenses divided to passenger decrease; that is, if you divide on the basis of train
mileage, and then begin to apply the allocated expenses to any road, the passenger
* begin to decrease, showing that the train-mileage basis is not the proper
Tall O,
... In view of the foregoing, and considering the evidence and opinions of experts, and
the facts shown in the reports of the railroad companies to the department demonstrating
that the revenue train-mileage basis for all unassignable items was a method arbitrary
in character, illogical in effect, and producing a gross inflation of passenger operating
costs on many roads, it was proved beyond question that the assumption above quoted
“that a passenger train mile costs the same to run as a freight train mile” was in general
application contrary to fact. Nevertheless, this method of separating the operating
expenses was the only one urged upon the railroads of the country by the railway mail
pay committee as indicated by the resolutions above quoted. Whether or not the use
of the “Buell” basis produced the lowest passenger cost obtainable by any method, as
claimed by Mr. Peabody on page 466 of the hearings, it is certainly a fact that the use
ºf revenue train-mileage for this purpose gave, in almost every instance, a higher
passenger operating cost than was warranted by the actual cost relationship in rail-
road expenditures.
The basis used by the department is explained in House Document No. 105, on
page 8. The following paragraph indicates the position of the department in regard
to the utilization of the Wisconsin commission report: h s
“In determining the method of Separating the operating expenses to the passenger
and freight traffic the suggestions and deductions of the railroad commission of Wis-
consin set forth in its decision in the case of A. E. Buell v. The Chicago, Milwaukee,
& St. Paul Railway Co., decided February 16, 1907, have been made use of, and with
the exceptions hereinafter noted the several items of operating expenditures have been
divided in accordance with the conclusions reached in that decision.”
... The exceptions referred to in the above quotation embraced principally the
accounts which were incorporated in the Interstate Commerce Commission classifi-
cation of railroad accounts at a date subsequent to the Wisconsin commission decision.
BAILWAY MAHL PAY. 1037
The “Buell case” furnishes one of the best examples of investigation that has come
before the department in regard to the question of account separations. The method
there advocated based the division of the unassignable expenditures upon the known
costs chargeable to train movement in conducting transportation as well as upon the
revenue train mile arbitrary. Those accounts wherein the relative cost of passenger
and freight movement is the same are divided on the basis of the traffic arbitrary or
revenue train mileage, but those accounts, or parts of accounts, which depend en-
tirely upon expenditure for the two classes of service are divided upon their cost
relationship in some form. The business of a railroad is based upon the train as a
unit, and the relative cost of train movement is more closely connected with the cost
of operating certain other departments of railroad business than any traffic arbitrary.
The revenue train-mileage as a basis having been urged upon the railroad com-
panies by the railway mail pay committee, and the reports of the department showing
conclusively that it had been extensively used in separating the unassignable ex-
penses, the department was forced, in the face of the facts before it, to utilize a basis
which was recognized by competent authorities and accounting usage to be more
accurate in its results.
That the department should not have attempted to make such a separation at all
but should have accepted the data furnished by the railroad companies without
question is a criticism which has already been answered. In this connection Mr.
V. J. Bradley says, in his statement, published in the hearings on page 425, refer-
ring to the report of the Pennsylvania Railroad Co.:
“Consequently the company would be fully warranted in concluding that in this
particularinquiry its statement of passenger-train expenses should have been accepted
by the Post Office Department because of the greater experience of its officers in
dealing with such matters and their greater intimacy with the financial and oper-
ating factors involved than could possibly be possessed by those in the Postal Serv-
ice who were designated to give this subject their study and consideration. Fur-
ther, the company's method of between 40 and 50 years' duration was at least neu-
tral as to this particular inquiry, while a special and peculiar method, such as that
used by the Post Office Department, devised for this inquiry, would need to be
closely scrutinized.”
That the basis used by the department is not open to the criticism above indi-
cated will be made apparent also from the comparative tables hereinafter shown,
demonstrating that the use of the revenue train mileage by the railroad companies,
in their separations of the unassignable expenses, was not warranted by the known
cost data for passenger and freight services in their possession.
That the department did not use the basis set forth in the “Buell case,” but used
its own method while claiming to use the Buell method, is another criticism
which can not be entertained in view of the statement made in House Document
No. 105, which has been quoted. The suggestions, deductions, and opinions of the
Wisconsin commission, as set forth in the case, were made the basis of the depart-
ment's method. The commission was spassing upon the account separations for one
railroad company in that case and not for all roads. The department endeavored
to adhere to the principles laid down, but not to the specific results in the case and
adopted that general method of apportionment which was uniform in application,
and thus of statistical value.
That each class of traffic should bear its own share of the expense of road operation
is referred to by Mr. W. A. Worthington, of the Southern Pacific Co., when he says,
on page 330: gº
“I think that the railroads should, wherever practicable, receive from any class of
traffic revenue sufficient to cover its proper share of all the operating expenses and the
fixed charges, for the reason that if they do not it means that the other classes of traffic
will have to bear that burden; in other words, the shippers of freight are really paying
more than their share as compared with traffic received from passenger trains.”
If true, is not the proposition here presented applicable to the subject of a division
in rates between different roads? Should not the shipper or passenger pay a revenue
sufficient to compensate each road proportionately, the rate to include the cost of
operation plus a reasonable percentage of profit? The cost basis adopted by the depart- .
ment is objected to by the railroad representatives generally for the reason that a
large percentage of the operating expenses must be arbitrarily apportioned, but at
the same time they submit cost estimates based upon revenue train-mileage appor-
tionments in support of their testimony. *
In explanation of the method used by the department in dividing the expenses it
should be stated that the “direct charge” accounts do not represent all of the passen-
ger and freight expenses which are directly assignable to each class, but are only those
1038 RAILWAY MAIL PAY.
charges reflecting the actual transportation business of the road, and include accounts,
in some instances, not directly allocated. As explained in House Document No. 105,
age 8– ; z
pag The whole or a large percentage of the expenditures covered by the foregoing
(direct charge) accounts was assigned directly to passenger or freight traffic by the
companies generally. Those accounts named in the table not so assigned for any
reason were separated by the department in accordance with the character of the
particular account in question. The ratios of the total passenger and total freight
costs so obtained were used as the direct charge basis of apportionment for the non-
assignable expenses.” -
Heavier freight traffic on freight trains results in greater cost per train-mile and
more freight revenues, but does not increase the train mileage. The same may be
said of passenger trains but not with equal force, as the nature of the traffic places
a limit upon the load. The factor of density is reflected in cost, not in train mileage.
Those accounts not directly dependent on train movement would be incorrectly
divided on a basis of revenue train-mileage. The use of the “direct charge” basis
for such accounts has the effect of bringing the passenger and freight costs into pro-
portion with the known ratios of transportation costs for the respective services,
and in harmony with the train unit of cost which is produced by density of traffic.
Therefore the “direct charge” or train cost ratios are equitable for a division of
many accounts under maintenance of way and structures, and reflect the actual
conditions more accurately than the use of revenue train mileage ratios exclusively.
When to the “direct charge” ratios is added the factor of traffic represented by the
revenue train-mileage, there is produced a result which stands for actual cost con-
ditions, including traffic density, and traffic movement (including speed and fre-
quency). To illustrate the difficulties encountered by the department, and the results
obtained by the use of the department method in comparison with that of the railroad
companies, comparative statements follow showing the apportionment of expenses
for certain railway companies as reported to the department and as computed and
published in House Document No. 105, with a detailed consideration thereof:
Statement showing for the Atchison, Topeka & Santa Fe Ry. Co. the percentages of oper-
ating expenditures directly assigned on reports to department, the percentages which
could have been so assigned, and the wrapportioned balance.

Per cent of the several items to the
total operating expenses, showing
'relative weights of account sepa-
rations.
Item. Atººs
Assigned ... Balance to
© or directly ||...}}. be appor:
separated. Shown as tioned.
allocated.
Per cent. Per cent. | Per cent.
Total expenses for maintenance of way and structures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.56.
Total expenses for maintenance of equipment... . . . . . . . . . . . . . . . . . . . . . 11.68 10.06 1.25
Total traffic expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.95
Total transportation expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 55 39. 38 4.43
Total general expenses... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.14
Total of items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.23 49.44 37. 33
The sum of the percentage total of all items equals 100 per cent.
#
**
t *
r
Items or parts of items that remained to be apportioned by the depart.
ment, and which were combined by the company in its
apportionment.
ocation and
Total of items & ported by the com- Q e
as reported for º É. and result pub- Apportioned to passenger Apºn. "...;
Item. January, 1910 the ished in H. Doc. 105. service as reported by d r wº ublished in
(total cº Total to be Company. tºp
amount). ; apportioned tº o tº ºs º ºf e.
f amount). P t; of Gººd
* er Cent Of 3.11101111b). - `-- *
.* total Passenger Fººt Passenger *:::::::::
assigned. amount. portioned. amount. portioned.
Total expenses for maintenance of way and * *
Structures. . . . . . . . . ..--- - - - - - - - - - - - - - - - - - - - - - - - - $1,567,985.96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,567,985.96 $720,061.36 45.92 $530,790.43 33, 86
Total expenses for maintenance of equipment....| 1,410,345.45 $716,976. 15 $137,125.18 26. 07 93,369.30 234,029.40 33.75 232,049. 18 33.47
Total traffic expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 181,104.07 --------------|------------|------------ 181,104,07 102,025.21 56. 34 97,349.21 53.75
Total transportation expenses.................... 2,782,655.90 95,261. 14 854, 68 8.97 2,687,394,76 834,677. 10 31, 06 806, 582.74 30. 02
Total general expenses.... . . . . . . . . . . . . ,- - - - - - - - - 192,535.08 |--------------|------------|------------ 192,535.08 78,329. 16 40. 69 58,472.90 30, 37
Total of items............................. 6, 134,626.46 1812,237.29 || 137,979.86 16.99 || 2 5,322,389. 17 | 1,969,122.23 36.99 32.41
1, 725,244.46
statement compiled from reports of the Atchison, Topeka & Santa Fe Ry. Co. to the Post
* of operating expenses submitted by the company and as apportioned by the department.
Items or parts of items
that were directly
chargeable to pas-
3. Total of items e
* that were senger service as re-
1 13.23 per cent assigned.
* 86.77 per cent apportioned.
Office ſº showing the assignment and apportionment - - ,

I040 # RAILWAY MAIL, PAY,
Referring to the table (p. 1038) and the method described in the hearings on page
460 by Mr. Peabody, representing the Santa Fe system, it is manifest that the Atch-
ison, Topeka & Santa Fe Railway, for statistical purposes, was actually assigning
more than 62.67 per cent of the total operating expenses to the passenger and freight
services, although this company reported an assignment to the department of only
13.23 per cent. The departmental Form 2608 requested this data from the company
in detail. Mr. Peabody, on page 459 of the hearings, etc., says:
“We sent you our formula, which was very elaborate and complete, which takes
Up every account separately and first assigns every expense to the exact operation
of the road on which that expense was incurred, dividing it between main and branch
lines and between divisions.” - -
This statement of the method used by the Sante Fe system was not received at
the department. It was requested of the company in a special communication, but
was not furnished. (See testimony, p. 512 of the hearings.) -
As to the method employed by the company in separating the unallocated expenses,
a glance at the statement on p. 1039 reveals the reason for the difference in the com-
pany's figures and those of the department. The inaccuracy of a revenue train-
mile basis for account, separations of the unassignable expenses and the very great
accuracy with which the department was able to secure a just and equitable division
is demonstrated, notwithstanding the fact that 87 per cent of the total expenses were
required to be apportioned. It was in the power of the company to have furnished
the department data with approximately 62 per cent of the expenses directly assigned
to either passenger or freight traffic. A comparison of the percentages for mainte- —
nance of way and structures and general expenses shows that by the use of the revenues
train-mileage ratios by the company (which charged 45.92 per cent to the passenger
Service) a considerably greater expense is imposed upon the passenger service than
it is justly entitled to, in view of the actual expense ratio for this service of only 16.99
per cent. The apportionment of maintenance of equipment, traffic, and transpor-
tation expenses by the company and by the department, are practically in agree-
ment, but the separation to passenger of the equipment and transportation expenses,
aggregating 60 per cent of the operating expenses, is only a trifle over 30 per cent as
divided by the department, while the revenue train-mile basis used by the company
is 45.92 per cent, which accounts for the large amount added to these items by the
company and was due to the use of this method of apportionment. &
As to the method employed by the department for account separations, the table
on p. 1039 gives a striking, illustration of its practicability for the purpose. The
resulting figures for over 60 per cent of the operating expenses as divided by the
department are practically the same as those reported by the company. ge
The fact that railroad companies generally use a revenue train-mileage basis for
apportionment of the unassignable expenses, and the further fact that certain courts
have, for various reasons, held that the weight of evidence justified their decisions in
favor of testimony based upon a revenue train-mileage apportionment for railroad
operating expense accounts, can not justly be claimed a proof of the accuracy of this
method. The exceptions are so few, in practice, that it may be set down as a maxim,
that the ratios of revenue train-mileage are not in proportion to the cost of train move-
ment and operation, and can only be considered as a basis for dividing that account
. depends on traffic alone and when no other factor enters into the consideration
of the item. -
The statement of Mr. Peabody, on page 489 of the hearings, is quoted as follows:
“The revenue train-mileage comes very close to the result reached by ours. If we
should apply the revenue train-mileage to our figures we would not vary 2 per cent
from our figures, but we wish to get actual figures so far as we can for our own purpose
of operation. We do not make this division for the sake of going into court or any-
thing of that sort.” *
Upon reference to the comparative statement above it may be seen that the appli-
cation of the revenue train-mileage ratio of 45.92 per cent to the apportioning of the
unassigned expenses would result in a passenger cost at least 8.93 per cent higher
than was reported to the department by the company, which amount is shown to be
between 5 and 10 per cent above the ratio for the known cost of passenger traffic. The
statement of Mr. #. does not seem to be justified by the facts presented.
|
#

Statement-compiled from reports of the Grand Trunk Railway System to the Post 0ºffice Department showing the assignment and apportionment of
operating expenses submitted by the company and as apportioned by the department.
& ... ' | Items or parts of items that remained to be apportioned by the depart-
Items or parts ºf items ment, and which were combined by the company in its allocation and
that were directly apportionment. - Y
Total of items chargeable to pas- - -
! that senger service as re- --
Total of items flºº ported by the com- ' . . | Apportioned to 8SSèngé
as reported ſº, s.a H. and result pub- Apportioned to passenger | *.*. ãº:
November, 1909 p ished in H. Doc. No. - service as reported by y • * * *
Item. tal by the and result published in
º (tota Company 105. Total to be company. H. Doc. No. 105.
amount). § apportioned * * * * * * * * * * * * **** * *
amount). —h- Gººd - *
&II1OU1Ill;). --
Passenger |* . Of w Passenger º Passenger || Fº
amount. assi.d. amount. pºd. amount. |p.
Total expenses for maintenance of way and struc- + -r *
tures. ------------------------. !--------------- $137,792.95 |... . . . - - - - - - - - I - - - - - - - - - - - - I - - - - - - - - - - - - $137,792.95 $53,986, 99 39, 18 $44,575.81 32.35
Total expenses for maintenance of equipment.... 129,689.02 $55,597. 25 || $16,877. 79 30, 36 74,091.77 28,201.05 38.06 23,061. 74 31.13
Total traffic expenses............................ 30, 201.69 27,286. 43 || 10,253.63 37.58 2,915. 26 1,171.95 40, 20 907. 81 31. 14
Total transportation expenses. . . . . . . . . . . . . . . . . . . 372,780.36 94,549.83 25,079,87 26, 52 278,230.53 109,205,54 39, 25 88,297, 47 31. 74
Total general expenses........................... 25,798. 20 --------------|------------|--------...- 25,798. 20 10,330, 37 40.05 8,043.88 31, 18
Total of items.......................... ...] 696,262.22 1177,433.51 || 52,211.29 29.43 * 2 518, 828,71 202,895.90 - 39, 11 164,886.71 31.78
125.48 per cent assigned,
* 74.52 per cent apportioned,
1042 - RAILWAY MAIL PAY.
The difference in passenger operating cost between the figures presented by the
company and those computed by the department is shown by the above table.
The passenger operating cost assigned directly to that service for maintenance of
equipment items and the items of transportation expense produced passenger ratios
of 30.36 per cent and 26.52 per cent, respectively. The company apportioned the
remaining items of these accounts on a basis which produced passenger ratios of 38.06
per cent and 39.25 per cent, respectively. The passenger total cost was further in-
creased at a rate above the known cost ratios by the use of bases which produced
39.18 per cent for maintenance of way and structures, 40.20 per cent for traffic, and
40.05 for general expenses.
Reference to the column for “Apportioned passenger service expenses by the depart-
ment” will show that the average passenger ratio of apportionment was 31.78 per
cent, which was 2.35 per cent above the passenger ratio for assigned or known passen-
ger cost, namely, 29.43 per cent.
Of the total operating expenses, 74.52 per cent were apportioned by the company
on a basis which charged the passenger service with 39.11 per cent thereof. The
increase in the ratio of apportionment for passenger traffic was 9.68 per cent above the
known passenger ratio, or an increase of approximately 25 per cent. No reason is
given for this inflation of passenger cost, and thus the department is placed in the
position of either accepting as correct a passenger charge of known inaccuracy or
substituting therefor an equitable basis of apportionment. No criticism of the deci-
sion made by the department appears warranted.
s Mr. Robert S. Logan, representing the Grand Trunk System, states in his testimony,
page 533 of the hearings, that his road is underpaid for mail service about 40 per cent.
The statement which he submits is shown on page 562 of the hearings.
Detailed information in regard to the ascertainment of the item for passenger oper-
ating expenses shown to be $2,191,070.70, or 45.36 per cent of the total operating
expenses, namely, $4,829,960.62, is lacking, but upon reference to the Interstate
Commerce Commission statistical report there is found a passenger revenue train-mile
ratio of 47.40 per cent. The use of revenue train mileage as a basis of dividing the
unassignable operating expenses is thus indicated, which it has been shown is inac-
curate and out of proportion to the known cost relation of passenger and freight traffic
and density thereof.
* The result of the investigation into operations of the company for November 1909 is
shown by House Document 105, at page 275, and indicates a gain to the road of
$4,409.86 for mail service for that month. Deducting from this amount the mail pro-
pº of the interest on funded debt, hire of equipment, etc., computed on same
asis, amounting to $3,166.60, there is left a gain to the company on mail service of
$1,243.26 per month, or $14,919.12 per annum, this amount covering the cost of all
operations, taxes, interest, and hire of equipment. Mr. Logan, in his statement on
page 562 of the hearings, shows a corresponding loss of $101,669.34 per annum. º
In view of the facts presented, the statement of Mr. Logan that his road is underpaid
40 per cent for services rendered in the transportation of the mails should be sup-
ported by more detailed information both in regard to cost and space chargeable to
the mail service.
#
Statement compiled from reports of the New York Central & Hudson River R. R. Co. to the Post Office Department, showing the assignment and appor-
- tionment of operating expenses submitted by the company and the apportionment made by the department of the unassignable items.
Items or parts of items that remained to be apportioned by the depart-
ment and which were combined by the company in its allocation and
apportionment.
Total of items º * . sº a.S re- A d
irec Orte the COm- * Ortioned to passenger
as reported for Sé ...a #. inéesis pub- Apportioned to passenger . b ãº:
It N ber, 1 p pany It’ y
QII] . ovember 1909 “º. lished in H. Doc. No. .V.,...eported by and résuit published in
(total company 105. . Total to be the company. H. Doc. No. 105.
amount). (assigned apportioned
amount). Gººd *
IIl &
Passenger |**::::: Of Passenger *:::::::: Passenger Fº
amount. asj.d. amount. pºd. amount. pºtioned. .
Total of items
Items or parts of items
that were directly
chargeable to pas-
Total expenses for maintenance of way and struc-
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * $1,059,625.26 || 1 $80,470.94 || $20,958.04 26.04 $979, 154.32 $504,425.37 51. 51 $386,791.26 39.50
Total expenses for maintenance of equipment. ... 1,396,064. 11 . . . . . . . . . . . . . . 353, 113. 62 |------------|---------------- 82,978.23 2 31.24 62,879.06 2 29.80
Repair accounts and electric equipment of cars 777, 124.97 777, 124.97 || 143,433. 13 18.46 --------------------------------|----------------------------------------
Total traffic expenses- - - - - - - - - - - - - - - - - - - - - - - - - - - 210,612. 74 210,612.74 || 79,857.68 37.92 --------------------------------------------|------------- - - - - - - - - - - - - - - -
Total transportation expenses - - - - - - - - - - - - - - - - - - - 2,883,966. 50 . . . . . . . . . . ---- 693,918.92 ||------------|---------------. 329,860.93 2 35.50 308,919. 34 2 34, 77
Road enginemen, fuel for road locomotives,
and road trainmen ------------------------|---------------- 1,273,621.31 475,450.37 37.34 ----------------|----------------|----------------------------|------------
Total general expenses... - - - - - - - - - - - - - - - - - - - - - - - - 134, 648.28 |- - - - - - - - - - - - - - 13,986. 77 ------------|---------------- 46,876. 19 2.45. 20 31,240.80 2 33.59
Total of items. ------------------------. * - - 6, 120, 151. 60 - - - - - - - - - - - - - - 1,161,835.03 |------------|---------------- 964, 140.72 2 34.74 789,830.46 31.89
Total of repairs accounts, road, train expenses,
and traffic *------------------------------------|---------------- 32,261,359.02 || 698,741.20 30.90 ----------------|----------------|----------------------------|------------
1 Freight assignments computed. Company requested to furnish this data and declined.
8 Over 33% per cent of total operating expenses.
2 Per cent for both assi
gned and apportioned passenger expenses as separated.


1044 RAILWAY MAIL PAY.
Mr. W. C. Wishart, statistician for the New York Central Lines, in his testimony, on
page 602 of the hearings, referring to the data for that road published in House Docu-
ment 105, says:
“On the basis of assignment made by the New York Central & Hudson River Rail-
road Co. the passenger service, as distinguished from freight, is charged with only 38.4
per cent of the operating expenses and taxes—$2,350,596.86 out of $6,121,071.49—and
in the department’s computation this is further reduced to only 34.3 per cent of the
amount assigned to operating expenses and taxes, but during the year 1909 the total
number of revenue train miles in the two branches of service was divided in the pro-
portion of 54.3 per cent for passenger trains and 45.7 per cent for freight trains. Still
this change, coupled with the lowered percentage of mail space, makes the difference
between a very profitable business and one that barely pays operating expenses and
taxes and nothing for interest upon the necessary investment.” -
In explanation of the revenue train-mile percentage ratios for passenger and freight
traffic here stated for the year 1909, namely, passenger 54.3 per cent and freight 45.7
per cent, there should be shown the revenue train-mileage ratios furnished the depart-
ment by the company upon written request, which were 51.50 per cent and 48.50 per
cent, respectively. ~ -
In connection with the above table, Mr. Wishart's statement, on page 603 of the
hearings, should be quoted, which reads as follows:
“It does not appear that the department has available the data upon which to base
the important deductions it sought to make.” -
The department requested, in a special communication to the company, to be fur-
nished with the data in regard to the amounts actually assigned to passenger and
freight service. This was refused by the company on the ground that it would entail
considerable labor and expense.
That the actual expenditures for both classes of traffic were and are matters of record
with the company was not denied. From the nature of the case, therefore, it is not
possible to analyze the method used by the company for a separation of the unassigna-
ble expenses, but whatever method was adopted tended to greatly increase the cost to
passenger traffic. By referring to the statement above, that part of the maintenance-
of-way and structures accounts assigned directly to passenger service shows a ratio of
26.04 per cent, and the apportionment of the remainder of the same accounts, on a
revenue train mileage basis, gave 51.51 per cent.
The assignment and apportionment of the items for maintenance of equipment was
in the ratio of 31.24 per cent to passenger, but the repair accounts, comprising the large
percentage of this division of expenses, shows a passenger ratio of only 18.46 per cent,
which is an actual cost ratio based on separate accounts according to the Interstate
Commerce Commission classification.
The transportation expenses as assigned and apportioned by the company and the
department produce almost identical ratios, namely, 35.50 per cent by the company
and 34.77 per cent by the department. However, the items for road enginemen, fuel
for road locomotives, and road trainmen, the three largest accounts in this division,
show an assignment to passenger at the ratio of 37.34 per cent. The traffic expenses
show an assignment at the ratio of 37.92 per cent, and the equipment repair accounts
have a passenger ratio of 18.46 per cent. The total items named, aggregating over
one-third of the total operating expenses, produce a passenger ratio of only 30.90 per
cent. By use of the revenue train mileage ratios the company divided the remaining
items on a sufficiently higher percentage to produce a passenger service ratio for aii
expenses of 34.74 per cent. The department's method produced 31.89 per cent.
On page 602 of the hearings, Mr. Wishart states: •
“It has not been possible to determine exactly what is meant by ‘direct charge
accounts’ as used in the department's compilations. Of the 116 operating accounts
established by the Interstate Commerce Commission, there are only 14 or 15 which may
be justly termed ‘direct charge accounts.’’’ *.
A description of what is meant by the term “direct charge” appears on pages 8 and
9 of House Document No. 105, and requires no further explanation, but the deduc-
tions drawn by him in regard to the department's method of separating certain
primary accounts require explanation.
His testimony, on page 602 of the hearings, follows:
“For example, the New York Central & Hudson River Railroad reported as ex-
pense for ties in the month of November, 1909, $152,238.87, of which $730.17 were
assigned by the company to passenger business, presumably because during that
month there happened to be applied to passenger tracks, ties of that cost. The balance
was distributed by the company on the basis of the relative mumber of revenue-train
miles in the two branches of the service. Under the rule of the department, however,
two-thirds of this unassigned expense follows what are called the direct charge
RAILway MAIL PAY. 1045
accounts and only one-third is divided on the basis of revenue train miles. It ap:
pears, therefore, that two-thirds of $151,508.70 was distributed to passenger and
and freight business on the basis of the ratio that the amounts charged to two groups
of a very few freight only and passenger only accounts of small magnitude bear to
each other.’’ ; - . . . : ...
The account for “ties” was handled by the department in accordance, with the
method described for this primary account in House Document No. 105. The passen-
ger portion directly assignable as reported by the company was $730.57 and the
passenger part of the unassignable expense was reported as $75,209.80, making a total
passenger cost for this item on the company basis of $75,940.37, or #38 per cent of
the total of the item. - . - -
The department assigned to passenger the amount reported by the company as
stated, $730.57, and in separating the unassignable portion charged passenger traffic
with 51.50 per cent (revenue train-mileage passenger º of one-third, and 32.29
per cent (the “direct charge” passenger ratio) of two-thirds, making the passenger
apportioned amount;56,501.04, and the total passenger charge for this item $57,231.61,
or 37.60 per cent of the total of the item. . & º , !
The department's method of dividing the account in question reduced the pas-
senger charge as computed by the company by 12.28 per cent, or $18,708.76, for the
item. The relative passenger and freight cost for station service and trains moving
over the ties was the principal factor considered and applied to two-thirds of the
unassignable portion of the item, the factors considered having direct relation to the
cost of traffic and operation of the road. .
The items entering into the “direct charge” accounts comprise 35 per cent of the
total operating expenses, which items can be directly assigned by nearly all roads.
In the reports of many companies the per cent was considerably higher. By reference
to House Document No. 105, at page 8, it will be found that the “direct charge” items
are exclusively train movement costs, so that Mr. Wishart's statement that the “direct
charge” accounts are of Small magnitude is due to his misunderstanding of the method
used by the department. - - - -
The combined “direct charge” cost ratio for passenger service was found to be
only 32.29 per cent and the maintenance of way and structures passenger ratio of
assigned or actual cost was only 26.04 per cent, and yet the unassignable part of the
item of ties, in common with all other items or parts of items nôt assignable, was
i. by the company on the basis of 51.50 per cent for passenger revenue train-
I'll] e2.96. : J
#. ratio used by the company for apportionment to passenger service of the main-
tenance of way and structures was stated by them as 51.50 per cent, and the tabular
statement above shows that approximately 26 per cent of the assignable expenses
were chargeable to passenger Service, so that the difference, or approximately 25.50
per cent, represents an increase of 100 per cent in the ratio used by the company over
the ratio of the actual known expenses for maintenance of way and structures. The
increase in ratio for the “ties” account was considerably higher. .. -
Referring to the remark of Mr. Max O. Lorenz, assistant statistician of the Interstate
Commerce Commission, on page 607 of the hearings, commenting on the result of the
apportionment for the New York Central & Hudson River Railroad Co., he stated:
“If they worked out about a third, it may be that their results are not so absurd,
because my contention is that the train-mile method assigns the maximum proportion
to passenger service, because the train-mile is something different in the two services.”
The result of the apportionment of maintenance of way and structures produced a
passenger ratio of cost of approximately 38 per cent. The same data computed by
the company produced a passenger ratio of 49.60 per cent, only 2 per cent less than
the revenue train-mileage ratio, which is a palpable inflation of passenger cost.
26276—No. 7–14—5
#
|
a

Statements compiled from reports of the Pennsylvania R. R. Co. to the Post Office Department showing the assignment and apportionment of operating
expenses submitted by the company and the apportionment made by the department of the unassignable items. -
. Data submitted - -
Beport to Report to -- by company : Data, the , , , ;
* department on | . . department on checked and |results of which ... g.
Items. Form 2603 by | Per cent. | Form 2608 by | Per cent. corrected; Per cent. were reported | Per cent.
the Pennsyl- the Pennsyl- § company … by department * *
vania.R.R.Co. vania R. R. Co. figures and in H. Doc. 105. |.
& - - apportionment. - -
Total of expenses and taxes. . . . . . . . . . . . . - - - - - - - - - - - -- - - - - - - - - - - $9,079,325.81 |. . . . . . . . . . . . $9,079,325.81 |............ $9,079,325.81 - . . . . . . . . . . . $9,079,325.81 |............
Assigned to passenger Service... . . . . . ~~~~ 1,765,854.86 |. . . . . . . . . . . . 76,627. 23 |. . . . . . . . . . . . 991,197.36°]............ 991, 197.36 - - - - - - - - - - - -
Per cent of total assigned... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .- - - - - - - - 27.10 -------------... 1.58 .............. ** = 17.26 . . . . . . . * - - - - - - - - 17.26
Assigned to freight Service... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,749,952.60 |. . . . . . . . . . . . 4,749,952.60 |. . . . . . . . . . . . ,4,749,952.60 |............ 4,749,952.60 - - - - - - - - - - --
Per cent of total assigned.-- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72.90 l. . . . . . . . . . . . . . . . 98.42 . . . . . . . . . . . . . . . . 82.74 l- - - - - - - - - - - - - - - - 82.74
Total assigned-------------------------------. . . . . . . . . . . . . . . . . . . 6, 515,807.46 . . . . . . . . . . . . 4,826,579.83 |. . . . . . . . . . . . 5,741,149.96 |............ 5,741, 149.96 |... ---------
Per cent of total operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71.77 |... ------------- 53.16 1. --------------. 63.24 i. . . . . . . . . . . . . . . . 63.24
Apportioned to passenger Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 978,002.63 . . . . . . . . . . . . 2,667,230.26 |. . . . . . . . . . . . 1,752,660. 13 . . . . . . . . . . . . 1,065,130.40 - - - - - - - - - - - - ,
Percent of total apportioned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38. 15 . . . . . . . . . . . . . . . . 62.72 |..... ----------. 52.50 - - - - - - - - - - - - - - - - 31.91
Apportioned to freight service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,585,515. 72 . . . . . . . . . . . . 1,585,515.72 |. . . . . . . . . . . . 1,585,515.72 - . . . . . . . . . . . 2,273,045.45 |- - - - - - - - - - - -
Per cent of total apportioned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * - H = * * * * * * * * * * * * * ~ * 61.85 |. . . . . . . . . . . . . . . . 37.28 - . . . . . . . . . . . . . . . 47.50 - - - - - - - - - - - - - - - - 68.09
Total apportioned (unassigned). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,563, 518.35 . . . . . . . . . . ...| 4,252,745.98 |... . . . . . . . . . 3,338,175.85 |............ 3,338,175.85 . . . . . …
Per cent of total operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.23 |..... . . . . . . . - - - - 46.84 |. . . . . . . . . - - - - - - - 36.76 |- - - - - - - - - - - - - - - - 36.76
Total passenger expenses....................................... 2,743,857.49 . . . . . . . . . . . . 2,743,857.49 . . . . . . . . . . . . 2,743,857.49 - - - - - - - - - - - - 2,056,327.76 |............
Per cent of total operating expenses......... - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 35.65 |. . . . . . . . . . . . . . . . 35.65 |. . . . . . . . . . . . . . . . 35.65 |. . . . . . . --------- 22.65
Total freight expenses. . . . . . . . . . . --~~~~ 6,335,468.32 . . . ... . . . . . . . 6,335,468.32 |............ 6,335, 468.32 |............] 7,022,998.05 |............
Per cent of total operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.35 | . . . . . . . . . . . . . . . . 64.35 |........ . . . . . . . . 64.35 (. . . . . . . . . . . . . . . . 77.35
i. -
* .. § º f
* , 3.
RAILWAY MAIL PAY. 1047
The passenger revenue train-mileage per cent reported to the department by the
company was 44 per cent, upon which the company based its apportionment of the
large part of the unassignable accounts. Locomotive mileage ratios were also used
for dividing certain items. - - -
In making its first report of revenue and expenses to the department, on the Form
2603, the company submitted certain amounts as assigned expenses directly charge-
able to passenger traffic sº $1,765,854.86, but upon the supplemental report
of operating expenses on Form 2608 there was assigned to passenger service only
$76,627.23. In the first instance accounts amounting to 71.77 i. cent of the total
operating expenses were assigned, while on the form which called for the detailed
assignment and apportionment by primary accounts only 53.16 per cent of the total
operating expenses was assigned to passenger and freight traffic. - *
An analysis of the two reports shows that in the first report the proportion of known
passenger cost was 27.10 per cent and in the subsequent report the passenger propor-
tion of known cost was only 1.58 per cent, and when corrected by the department
from company data previously reported was increased to only 17.26 per cent.
By reference to the above table these figures will be shown in comparative tabula:
tion, and also the percentages of apportionment for both passenger and freight service
resulting from the company’s method. In its first report the company apportionment
results show 38.15 per cent charged against passenger traffic, which should be com-
pared with the passenger per cent of cost actually assigned of 27.10 per cent, showing
an increase of 11.05 percent above the ratio of known cost. Turning to the data reported
on the supplemental report (Form 2608), it is readily seen that many items stated as
assignable in the first report were subsequently reported as apportionable, increasing
the proportion charged to passenger traffic to 62.72 per cent, considerably higher
than the revenue train mileage passenger ratio of 44 per cent. Without attempting
to deduce a reason for the action of the company in this connection, it is sufficient
to evidence the difficulties thrown in the pathway of the department in its effort to
secure a true statement of passenger operating cost. - -
A glance at the results secured by the department based on the method of apportion-
ment as described in House Document No. 105, indicates that the ratios secured thereby
are closely related to the actual cost conditions of passenger and freight operations.
The passenger apportionment resulted in a percentage of 31.91 per cent, comparable


with the passenger percentage of known cost reported by the company of 27.10 per
cent and the revenue train mileage of 44 per cent. The actual cost of locomotive and
train cars repairs and train service including yard expenses chargeable to passenger
service from the figures furnished by the company and taken by the department with
practically no correction or deviation gives a “ direct charge” percentage ratio for
passenger traffic of only 22.65 per cent, yet the company in its report to the department
shows a passenger ratio for the total apportionment of 38.15 per cent, due almost entirely
to the use of revenue train mileage as a basis for dividing the unassignable costs.
As the greatest difference in passenger cost between the company results and that
secured by the department, is in regard to the respective methods employed in
handling the maintenance of way and structures accounts, a short comparative tabu-
lation will make clear the reason therefor.
Division of expenses as separated to passenger and freight traffic for maintenance of way
. . and structures accounts, reported by the Pennsylvania Railroad Co. on Forms 2603 and
. . 2608, and as allocated by the department, based on all data reported by the company.
* . . . , ,
Reported by company. Computed by depart-
- - - * - ment, based on com-
Item. i Form 2603r Form 900s. . . . pany reports.
— — — — — —
*
s
Amount. Per cent. Amount. |Per centi Aniount. #Percent.
Total assigned . . . . . . . . . . . . . . . . . - - - - (1) -- - - - - - - - - (*) --------- $186, 758. 73 j- - - - - - - --
Percent of total assigned to total of - - - *
all items-------------------------|---------------------|------------------- - - - - - - - - - - - - - - - - - - 15.90
Assigned to passenger - - - - - - - - - - . . . . $30,418.34"; 16. 29 | $33. S9 0.02 30, 418. 34. 16. 29
‘Assigned to freight... . . . . . . . . . . . . . . (*) ------ - - - 156,340. 38 99.98 156,340. 38 83.71
Total apportioned... . . . . . . . . . . . . . . . . (1) 'l-- - - - - - - - , : (*) : - - - - - - - s: 987, 758. 42 |- - - - - - - - -
Per's cent of total apportioned to . . . - , - . - + - -
total of all items-----------------|------------|---------|--------------------. - - - - - - - - - - - - - - - ‘. 84.10
‘Apportioned to passenger. . . . . . . . . . 398, 150. S5 40. 31' | 426,922, S5 41.97 . . . 242,415.26 24. 54
<Apportioned to freight. . . . . . . . . . . . . . (1) . . . . . . . . . (1) , • - - - - s . . . . , 745,343. 16 75.46
Total passenger. . . . . . . . . . . . . . . . . . . . 428,569, 19 36.49 426,956, 74 || 36.36 272,833. 60 i. 23.23
Total freight. ---------------------- (*) --------- (1) : --------- goiſé. § 75.7
Total maintenance of way and . . . . . ------- - -
structures items... - - - - - - - - - - - - - - - - ‘(*) - |: . . . . . . . . 1, 174,517, 14- 100.00 1, #74, 517. 14 | 100. 90
1 Item not reported by company.
1048 RAILWAY MAIL PAY.
The total passenger cost of maintenance of way and structures was stated by the
company on Form 2603 to be $428,569.19 and on Form 2608 as $426,956.74, or 36.49
er cent and 36.36 per cent, respectively, of the total for all items. The later amount
is $154,123.14 more than is shown on the above table for the department's figure, or
an increase of 56.50 per cent. The passenger ratio of 36.49 per cent is an increase
over the ratio for the actually assigned items (Form 2608) of 124 per cent, and is only
7.51 per cent less than the revenue-train-miléage ratio of 44 percent.
The department would have accepted the data reported by the company without
question, as suggested by Mr. Bradley in his testimony on page 425 of the hearings,
had the factor of revenue train-mileage been supplemented by a cost factor relating
to actual operations. This is in answer also to *. following statement on the same
page referring to the method used by the department, which reads:
‘The fact that it produces uniformly lower expenses for the passenger-train service
(and consequently for the mail service on passenger trains) would not lead one to
conclude that it was adopted for its abstract qualities regardless of its concrete results.”
The fact that the company has used the revenue-train-mileage basis of apportion-
ment for 40 years reflects little credit . its validity for the purpose, in view of the
preponderance of evidence againstit and with special reference to its use for the separa-
tion of the accounts above considered. When only 22.56 per cent of the cost of *
motive and train operationis shown by the company's own figures to be chargeableto
passenger traffic, the use exclusively of a traffic ratio for account separations of 44 per
<ent passenger revenue train-mileage is certainly not justified for any other reason than
its antiquity.
On page 430 of the hearings the total passenger earnings per car-foot mile is shown
for the Pennsylvania Railroad Co. to be 4.765 mills. Dividing the total passenger
cost, as reported by the company on page 424, namely, $2,743,857.49, by the total
passenger-train car-foot mileage given on page 427 (667,951,848 car-foot miles), there
results a passenger cost per car-foot mile of 4.047 mills. Corresponding figures (H.
Doc. 105, Table 7) on the department basis produce:
Passenger revenue per car-foot mile, 4,758 mills.
Passenger cost per car-foot mile, 3.035 mills.
The company data and bases produce a gain in passenger service of only 0.718 of a
mill per car-foot mile, which is not sufficient to cover the passenger proportion of
fixed anaual interest charges, while on the basis used by the départment the passenger
service shows a gain of 1,733 mills per car-foot mile, which produces a gain warranting
the extensive passenger service and the expenditures for superb station facilities.
Mr. W. W. Safford, general mail and express agent, Seaboard Air Line Railway Co.,
gives, in his testimony on page 138 of the bearing, a “comparative cost and revenue
table for mail service for the year 1912 by various methods of apportionment.”. In
this statement he shows that a great diversity of results are obtained by various .
methods of division of operating expenses between passenger and freight service.
He attempts to ſº that, given a desired result, it can be reached by applying the
required method. Howeyer, on page 137, referring to the revenue train ; 3S 3.
basis of apportionment, Mr. Safford testifies as fºllows:
“It has been and it is generally accepted by railroads as the best and most acceptable
method, but it is not accepted by accounting officers as an absolute proposition, and it
is in question now as between the methods used by the Postmastºr General and the
methods used by the raikaads in order to have a wniform ºethod tº prººt ºniorm
figures to the Postmaster Genºal, so that there ºlight not be a great many different
opinions about this thing. The railroads already, in making their segregation of
©xpenses, use the revenue-train-mile basis in their assignment of expenses to passenger-
train service, and that has been most frequently used and perhaps is the best because
it represents more nearly the use of the property.”
And, again, on page 139, he says (the italics are the writer's):
“I furthermore want to state that I am not an expert accountant. I am deducing
these things from figures that I get from expert accountants, and I would not like to go
into the question of railroad accounting, because there are men so very much more
£ompetent to do that than I. * * *
“I will say this for the department: The modification of the Buell System, which
they used in part, was favorable to the railroads. They seem to have been trying to
get at something fair from their point of view.” g
Mr. J. H. Bowman, certified public accountant, testifying for the New § Nº.
Haven & Hartfºrd Railroad Co., oa page 280, compares the division ºf expenses by the
department and by himself. The results of his work in assigning and º: the
operating expenses of the New York, New Haven & Hartford Railroad differ from the
department's results by only 2 per cent. This is due to two causes: First, the fact that
he had access to the detailed information which was not furnished to the department;



BAILWAY MAIL PAY. 1049
and second, to the use of a basis differing somewhat from that used by the department
in its division of operating costs. He states that he used a method substantially the
same, but differing for certain particular accounts.
It is not claimed that the department's method of account separations is the best
that could be devised, but it is firmly held that traffic is only the means by which the
railroad business is conducted and not the result thereof, which is represented by the
revenue and cost produced by transportation. ... It seems most probable from the
testimony of the advocates of the revenue train mileage as a basis en bloc for separating
the unassignable costs, that usage and precedent have argued with greater weight than
equity and accuracy of results.
Accuracy in the results and equity of method have been striven for by the depart-
ment in the consideration and compilation of the cost data of the mail-carrying rail-
roads. No valid criticism has been made of the method used, and no better method
has been suggested in the published testimony.
The results published in Table 7, House Document No. 105, secured by the applica-
tion of the department's method have not been criticised, nor has the accuracy of the
computations been questioned. “.
•rº
E. A. L. L. W. A. Y. M. A. L. L TE’ A. Y.
LETTER OF
THE POSTMASTER GENERAL
TO THE
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS
|MAIL MATTER AND COMPENSATION FOR
THE TRANSPORTATION OF MAILS
TRANSMITTING
A REPORT AND TENTATIVE DRAFT OF LEGISLATION
RELATIVE TO RAILROAD MAIL SERVICE AND
COMPENSATION TEIEREFOR.
FEBRUARY 12, 1914
N O. 8
Printed for the use of the joint committee
W.A.S.H.I.N.GºDON
GOVERNMENT PRINTING OFFICE
1914
Transportation
Library
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER
AND COMPENSATION FOR THE TRANSPORTATION OF MAILS.
CONGRESS OF THE UNITED STATES.
JONATHAN BOURNE, JR., Chairman. JAMES T. LLOYD.
HARRY A. RICHARDSON. WILLIAM EX, TUTTLE, JR.
JOHN W. WEEKS.
JOHN H. BANKHEAD.
Robert H. TURNER, Secretary.
RICHARD B. NIxoN, Disbursing Officer.
II
RAILWAY MAIL PAY.
POST OFFICE DEPARTMENT,
OFFICE OF THE POSTMASTER GENERAL,
& Washington, D. C., February 12, 1914.
Hon. JonATHAN Bourne, Jr.,
Chairman Joint Committee on Postage on Second-Class Mail
Matter and Compensation for the Transportation of Mails,
Congress of the United States.
MY DEAR MR. CHAIRMAN: I have the honor to hand vou herewith
a further report by the Second Assistant Postmaster General upon
the plans for regulating railroad mail service, providing for and
readjusting compensation therefor, which have been submitted to
your joint committee. Accompanying the same is a tentative draft
of suggestions for recommendation for legislation and regulation of
railroad mail service and compensation therefor, which I approve,
and of which I earnestly recommend your favorable consideration.
Yours, very truly,
A. S. BURLESON,
Postmaster General.
Post OFFICE DEPARTMENT,
SECOND ASSISTANT PostMASTER GENERAL,
Washington, February 12, 1914.
Hon. A. S. BURLESON,
Postmaster General.
SIR: In my statement of January 16, 1914, on behalf of the Post
Office Department in review of the testimony taken before the joint
committee respecting compensation for the transportation of mails, I
discussed the several plans for readjusting compensation for railroad
mail service which have been submitted to the joint committee. Those
plans which combined the main elements of a space basis were men-
tioned as the plan of the department, the plan of Hon. James T.
Lloyd, and the plan of Mr. Max O. Lorenz. At the time the state-
ment above referred to was submitted I had not had sufficient oppor-
tunity to consider the Lorenz plan to pass an opinion upon it. I have
since, however, given this plan, in connection with the other space
plans, very careful and thorough consideration and submit herewith
a tentative draft of suggestions for recommendation for legislation
and regulation of railroad mail service and compensation therefor.
This draft embodies my conclusions with respect to the various fea-
tures of the several plans heretofore submitted. These are, briefly
described, as follows:
. 29824—No. 8—14 1051
1052 RAILWAY MAIL PAY.
The Postmaster General is authorized and directed to readjust com-
pensation for railroad mail service from July 1, 1914, to state railroad
mail routes from that date and thereafter as he may deem proper,
and to establish on any route any one or more of the several classes
of service provided for.
Provision is made for five classes of service, namely, full railway
post-office car mail service, apartment railway post-office car mail
service, storage-car mail service, closed-pouch mail service, and side,
terminal, and transfer mail service. These several classes of mail
service are described in the draft submitted.
This provision differs from the department's original plan, as well
as from the Lloyd and Lorenz plans in recognizing a distinction be-
tween these several postal facilities. This becomes especially im-
portant in the consideration of rates of pay. Furthermore, the
standard sizes of cars provided for are greater in number and there-
fore are graded with less difference in length between them than be-
tween the sizes suggested by the Lloyd and Lorenz plans. This will
be a distinct advantage to the department, as I have pointed out in
my statement above referred to, and will be no disadvantage to the
railroad companies, because they conform to the standard sizes now
recognized in the service.
Provision is made for payment at different rates for each of the
five classes of service. The rates for full and apartment railway
post-office cars and storage cars are determined on the basis of the
average revenue per passenger car mile for the railroads of the
United States, as reported by the Interstate Commerce Commission,
with suitable reduction therefrom to compensate for the difference in
the character of services and for considerations mentioned in my
statement. The acceptance of this basis follows the suggestion of
the Lorenz plan and abandons the plan of direct ascertainment of
cost for each individual route as proposed in the department's origi-
nal plan accompanying document No. 105. This is fully justified
by the results of the department’s investigation and the findings
ublished in document No. 105, which enabled a safe comparison
etween revenues received by railroad companies and expenditures
made for unit of service for passenger and mail services. It is.
further warranted by a general supervision of passenger rates by
legislative bodies.
The rates determined for full and apartment railway post-office
car mail service and storage-car mail service consist of two elements:
(1) A rate for a car-foot mile of service equated to a 60-foot car,
and (2) an initial and a terminal rate. The latter in turn consist
of two elements, namely, (1) a charge for loading and unloading
mails at the initial point or terminal point of the car run, and (2)
a charge for switching, lighting, heating, cleaning the mail cars, etc.
In the constitution of such rates in this manner the Lorenz plan is
followed.
The rates determined for the line charge; that is, for the car-foot
mile of service, differ as they recognize the differences in the char-
acter of car equipment furnished, but do not differ with respect to
the average loads carried in the cars. In these two respects the plan
differs from, the Lorenz plan and it is believed is a distinct improve-
ment thereon. It is important to recognize the difference in the cost
to the railroad companies of furnishing a full car wholly for the
RAILWAY MAIL PAY. 1053
use of the Post Office Department and that of furnishing an apart-
ment in a car which the railroad company must run for its own
convenience. It is also important to recognize a difference between
wooden and steel apartment cars and to pay a higher rate for the
i. character of equipment, thus conserving safety of human
life and encouraging the introduction of steel apartment cars. It
was found upon a careful consideration of the matter that the
average load of mail in a working car is of little value in determining
a rate to be paid, for the reason that the average load is a small
factor in determining the authorized space necessary for the dis-
tribution of mails in transit. Furthermore, if a handling charge is
recognized at the initial and terminal points of a car run the small
additional tonnage represented by the variation in the weights of
mails in working cars of 60-ton weight is inappreciable in cost of
operation. This feature therefore was rejected.
In applying the line charge provision is made for computing the
car miles of full and apartment railway post-office cars at the maxi-
mum space authorized in either direction of a round-trip car run,
unless otherwise mutually agreed upon, and for computing the car
miles of storage cars at the maximum space authorized in either di-
rection of a round-trip car run, unless the car be used by the com-
pany in the return movement or it be otherwise mutually agreed upon.
The rates for initial and terminal charge consist of the two ele-
ments above stated, one of which will be a constant, and the other—
the charge for loading and unloading—will be a variant. The con-
stant terminal rates provided are not exceeding $1.45 for full railway
post-office car service, $1.40 for apartment railway post-office car
service, and $1.30 for storage-car service, which apply at each termi-
nal of a car run of a 60-foot car with pro rata thereof for cars of
lesser or greater length. The variant loading and unloading charge
is fixed at not exceeding 12 cents for the first 2,000 pounds or less
and 12 cents for each additional 2,000 pounds of the average weight
of mail loaded and unloaded at the initial and terminal of a car run.
The terminal rate and the loading and unloading rate together make
total payments of $3.62 for each one-way trip of a 60-foot full, rail-
way post-office car with a load of 3 tons on at the initial and off at the
terminal of the run; $3.52 per trip in the apartment car service; and
$3.32 per trip in the storage-car service for equivalent load and serv-
ice. The study that we have been able to make of this question leads
to the conclusion that the rates named in the bill are a fair charge
for the services involved, which, when applied with the line rate,
adequately and very properly furnish a suitable declension in the
i. rate between a charge for a short haul and a charge for a long
haul. se
Provision is made for paying for closed-pouch mail service on
routes upon which closed-pouch service only is performed, at not ex-
ceeding 95 per cent of the rates of compensation provided by ex-
isting law for average daily weights of mail carried over the whole
route. On routes upon which apartment railway post-office car and
closed-pouch services are performed, at not exceeding $20 per mile
per annum for each 2,000 pounds average daily weight of mails car-
ried, and at pro rata of such rate of compensation for each 100
pounds of average daily, weights greater or less than 2,000 pounds;
and on routes upon which full railway post-office car and closed-
1054 RAILWAY MAIL PAY. **,
pouch services or full railway post-office car, apartment car, and
closed-pouch services are performed, at not exceeding $19 per mile
per annum for each 2,000 pounds average daily weight of mails car-
ried, and at pro rata of such rate of compensation for each 100
pounds of average daily weights greater or less than 2,000 pounds,
the average daily weights to be ascertained in every case by the actual
weighing of the mails as elsewhere provided in the bill. Closed-
pouch mail service, although performed on a large number of small
routes, represents a very small part of railroad mail pay. The serv-
ice is of a simple character, consisting merely of carrying the
pouch and Sack mail in the baggage car in the care of the railroad.
employee and of receiving and delivering it from the door of the car
at the stations en route. These receipts and deliveries are generally
Small in number and light in weight. After careful consideration of
its character, I have not been able to find a better method of paying
for this than upon the basis of the average daily weight. As to rate
of compensation, it is provided that on routes upon which closed-
pouch service only is performed, it shall be at not exceeding 95 per
cent of existing rates.
The relief of the companies from the performance of side and
terminal service will remove a burden from these small lines which
will receive at these rates ample compensation for a service con-
sisting merely in receiving the mail in the car, carrying it, and de-
livering it from the door. Inasmuch as the cost to the railroads of
performing side and terminal service, as stated by them in the pre-
liminary report of the commission (p. 14), is about 5 per cent of
the mail revenue received by them, it is believed that a reduction of 5
per cent from the present mail rates is warranted. On routes upon
which apartment railway post-office car and closed-pouch services are
performed and on those upon which full railway post-office car and
closed-pouch services or full railway post-office car, apartment rail-
way post-office car, and closed-pouch services are performed the
rates provided are approximately the rates per ton provided by
existing law for average daily weights from 5,000 to 48,000 pounds
on the first class of routes named and for average daily weights
of over 48,000 pounds on the second class of routes named. It
is believed that these rates will result in the companies receiving
somewhat smaller compensation than at present for the closed-
pouch service on the classes of routes affected, which appears to be
proper in view of the relief from side and terminal messenger serv-
ice to be afforded. The reduction in the rate is a proper recognition
of this change in the conditions of the performance of service. In
recommending this method of adjustment the suggestion differs from
the Lorenz plan.
Provision is made for taking over the side, terminal, and transfer
mail service by the department and thereby relieving the companies of
this service, which they contend is not strictly railroad transportation,
and is a source of continual controversy. In the provision the Post-
master General is given the power to contract with postmasters of
post offices of the third and fourth classes to perform the service and
with, railroad companies operating the lines to perform any or all of
the Šervice thereon." This will be "a"distinct advantage, and result
in económies by securing much lower rates for the service than is
otherwise possible. *
RAILWAY MAIL PAY. 1055
The present provision with respect to land-grant railroads is con- .
tinued. * -
Suitable provision is made for new and additional service and for
paying for all regularly authorized service as it is performed, for
making deductions for service not performed or discontinued, and,
for suitable fines in cases of refusal to provide cars and facilities. . .
All of the existing provisions with reference to the Čonstruction,
furnishing, maintaining, and the sanitation of mail cars, the opera-
tion of wooden cars between steel or steel underframe cars, and the
conversion of wooden full railway post-office cars into steel cars are
continued. In addition the Postmaster Géneral is allowed in cases.
of emergency and in cases where the necessities of the service require
it to provide for service by full railway post-office cars of other than
steel or steel underframe construction and pay suitable rate therefor.
Provision is made for requiring railroad companies to furnish
all suitable facilities for caring for and handling mails while in their
custody, for furnishing cars or parts of cars and placing them in
stations, and for furnishing suitable space and rooms in stations for:
the handling, distribution, and transfer of mails in transit, etc.
The present provisions with respect to carrying persons in the .
custody of the mails and when on duty and traveling to and from
duty and for carrying duly accredited agents and officers of the
Post Office Department and the Postal Service while traveling on
official business are continued. * *
The existing authority in the Postmaster General to decide upon.
what trains and in what manner the mails shall be conveyed is con-
tinued.
Provision is made for not disturbing the practice of transporting
periodicals in fast freight trains at freight rates.
The Postmaster General is given the power to request information
from the Interstate Commerce Commission as to revenue received
by railroad companies from express companies for services rend-
ered in the transportation of express matter and to provide for the
transportation of mail matter other than first-class matter at rates.
not exceeding those so ascertained. He is also given authority to
petition the Interstate Commerce Commission for the determina-
tion of a postal car-load rate for transportation of mail matter of
the fourth class and periodicals, and to provide for their trans-
portation, when practicable, at such rates. He is also authorized
to distinguish between the Several classes of mail matter, and pro-
vide for less frequent dispatches of third and fourth classes and
periodicals when lower rates or other economies may be secured.
thereby without material detriment to the service. . These are im-
portant provisions and will render material economies, possible. . .
Provision is made for the return to the mails for the utilization
of car space paid for and not needed for the mails of empty equip-
ment and supplies. This is an important provision and will effect
-large economy by saving freight now paid for the transportation.
of empty mail bags in the direction in which empty storage cars
now move. This is possible because the great bulk of the mail with
equipment moves outward from, large centers and not inward, while
the empty equipment must be brought back to these centers. There-
fore, the empty storage cars which convey the mails outward can
be utilized to return the equipment to points where it is needed.
1056 RAILWAY MAIL PAY.
Provision is made for taking the weights of mails on railroad
mail routes, and for making computations of the average loads of
the several classes of cars, etc., for statistical and administrative
purposes at the discretion of the Postmaster General.
The rates provided for are maximum rates; that is, they are
provided for at not exceeding amounts named in the statute. In
this respect the draft follows the provision of existing law, and
this is desirable and necessary for a proper administration of the
Service. -
Other minor provisions of existing law are continued.
It is made unlawful for any railroad company to refuse to per-
form mail service at the rates of compensation provided by law
º jºired by the Postmaster General, and a penalty for refusal
IS TIXéOl.
The rates provided for in the draft submitted are somewhat lower
than the rates provided for in the Lorenz plan. It is believed, how-
ever, that they provide adequate compensation for the service per-
formed under the conditions of performance. In this connection
attention is called to the fact that Mr. Lorenz's rates were intended
to slightly increase the aggregate compensation, and were also
predicated upon the theory that the increases in the average loads
warranted increases in the specific rates. In these regards it is
fair to say that Mr. Lorenz's plan was submitted before my state-
ment of January 16, 1914, was prepared and submitted to the joint
committee, in which I show conclusively that the railroad com-
panies under present rates are not underpaid for the services per-
formed, and, further, his differentiation in rates for different average
loads was suggested before it was pointed out by the department
with definiteness that this element is of slight importance in au-
thorizing space or in fixing a rate. Furthermore, it has been shown
in my statement referred to that under existing rates the railroad
companies are compensated for the side and terminal services, which,
under the proposed plan, the department will assume. These and
other considerations set forth in my statement warranting a lower
than a commercial rate fully justify a material reduction. Not-
withstanding this it is believed that the rates fixed in the draft
submitted herewith are commercial rates as compared with rates
fixed by the railroad companies for other Services.
The plan itself, in my opinion. embodies the desirable features of
the plans submitted to the joint committee and those which, upon
further consideration and study, have been determined upon by this
office. It is a great improvement over the existing laws and provides
for full and exact payment for all services rendered. In this respect
it will accomplish what the present plan does not—that is, an equita-
ble distribution of railroad mail pay among the railroad carriers in
accordance with the services performed for the Government. For
the department it affords a plan embodying the maximum oppor:
tunities for economical as well as satisfactory administration and
conduct of the railroad mail transportation Service. As to all con-
cerned it is a just, equitable, and scientific plan of dealing with the
subject. I earnestly recommend your approval of the same.
*.* Respectfully;… º . . . . . . . . . . . . . . . rºſs tº jºz . . . . . -
. . . . . - - Joseph STEwART,
- Second Assistant Postmaster General.
RAILWAY MAIL PAY. * 1.057
A TENTATIVE DRAFT OF SUGGESTIONS FOR RECOMMENDATION FOR LEGISLA-
TION AND REGULATION OF RAILROAD MAIL SERVICE AND COMPENSATION
THEREFOR. - - 3.
The Postmaster General is authorized and directed to readjust the
compensation to be paid to railroad companies from July first, nine-
teen hundred and fourteen, for the transportation and handling of
the mails and furnishing facilities and services in connection there-
with upon the conditions and at the rates hereinafter provided.
The Postmaster General may authorize railroad mail service and
may state railroad mail routes from July first, nineteen hundred and
fourteen, and thereafter, in such manner as he may deem proper.
Any one or more of the classes of service hereinafter described and
provided for may be authorized on a stated route.
Service herein provided for shall be of five classes, namely, full
railway post office car mail service, apartment railway post office car
mail service, storage car mail service, closed-pouch mail service, and
side, terminal, and transfer mail service. -
Full railway post office car mail service shall be service by cars
forty feet or more in length constructed, fitted up, and maintained
for the distribution of mails on trains. Four standard sizes of full
railway post-office cars may be authorized and paid for, namely, cars
forty feet, fifty feet, sixty feet, and seventy feet in length.
Apartment railway post office car mail service shall be service by
apartments less than forty feet in length in cars constructed and fitted
up and maintained for the distribution of mails on trains. Five
standard sizes of apartment railway post office cars may be authorized
and paid for, namely, apartments ten feet, fifteen feet, twenty feet,
twenty-five feet, and thirty feet in length. -
Storage-car mail service shall be service by cars used for the
storage and carriage of mails in transit other than by full and apart-
ment railway post-office cars. Four standard sizes of storage cars
may be authorized and paid for, namely, cars forty feet, fifty feet,
sixty feet, and seventy feet in length: Provided, That less than forty
feet of storage space may be authorized in baggage cars on trains
. which full railway post-office cars or apartment railway post-
office cars are not operated.
Service by full and apartment railway post-office cars and storage
cars shall include the carriage therein of all mail matter, equipment,
and supplies for the mail service and the employees of the Postal
Service or Post Office Department, as shall be directed by the Post-
master General to be so carried.
Closed-pouch mail service shall be the transportation and handling
by railroad º of mails on trains on which full or apartment
railway post-Office cars are not authorized, except as hereinbefore
provided. -
Side, terminal, and transfer mail service shall be the transporta-
tion of mails between railroad stations and post offices supplied
therefrom and between railroad stations.
The Postmaster General shall, from July first, nineteen hundred
and fourteen, restate the service upon the several routes as authorized
under this act by making such authorizations of service of the several
classes hereinbefore described as he may deem necessary and pay
1058 RAILWAY MAIL PAY.
*
for the service performed in accordance therewith at not exceeding
the following rates, namely: :
For full railway post-office car mail service at not exceeding 20
cents for each mile of service by a sixty-foot car or its equivalent in
authorized car space. -
In addition thereto he may allow not exceeding $1.45 as an initial
rate and the same as a terminal rate for each one-way trip of a sixty-
foot car, or a prorata part thereof for a car of less length, and not
exceeding 12 cents for the first two thousand pounds or less, and 12
cents for each additional two thousand pounds of the average weight
of mails loaded or unloaded at initial and terminal of each car run.
For apartment railway post-office car mail service at not exceeding
18 cents for each mile of service by the equivalent in authorized
space of a sixty-foot car if the car be other than of steel construction,
and 19 cents for each mile of service by the equivalent in authorized
space of a sixty-foot car if the car be of steel construction.
In addition thereto he may allow not exceeding $1.40 as an initial
rate and the same as a terminal rate for each one-way trip of the
equivalent in authorized space of a sixty-foot car, prorated to the
authorized space, and not exceeding 12 cents for the first two thou-
sand pounds or less and 12 cents for each additional two thousand
pounds of the average weight of mails loaded and unloaded at initial
and terminal of each car run.
For storage car mail service at not exceeding 18 cents for each
mile of service by a sixty-foot car or its equivalent in authorized
Space.
In addition thereto he may allow not exceeding $1.30 as an initial
rate and the same as a terminal rate for each one-way trip of a
sixty-foot car or a pro rata part thereof for a car of less authorized
length, and not exceeding 12 cents for the first two thousand pounds
or less and 12 cents for each additional two thousand pounds of the
average weight of mails loaded or unloaded at initial and terminal
of each car run. *
For closed-pouch service, on routes upon which closed-pouch.
service only is performed, at not exceeding ninety-five percentum
of the rates of compensation provided by existing law for average
daily weights of mail carried over the whole route; on routes upon
which apartment railway post-office car and closed-pouch services
are performed, at not exceeding $20 per mile per annum for each
two thousand pounds average daily weight of mails carried, and at
pro rata of such rate of compensation for each one hundred pounds
of average daily weight greater or less than two thousand pounds;
and on routes upon which full railway post-office car and closed-
pouch services or full railway post-office car, apartment-car, and
closed-pouch services are performed, at not exceeding $19 per mile
per annum for each two thousand pounds average daily weight of
mails carried, and at pro rata of such rate of compensation for each
one hundred pounds of average daily weights greater or less than
two thousand pounds, the average daily weights to be ascertained in
every case by the actual weighing of the mails.
For side, terminal, and transfer mail service the Postmaster Gen-
eral is authorized to provide, in his diseretion, by regulation screen
or other wagon, automobile, or mail messenger service under exist-
ing law, or to contract with the railroad company, after advertise-
RAILWAY MAIL PAY. 1059.
ment, for the performance of any or all service on its route.
Postmasters at post offices of the third and fourth classes shall be
eligible as contractors for this service.
Railroad companies whose railroads were constructed in whole
or in part by a land grant made by Congress, on the condition that
the mails should be transported over their roads at such price as
Congress should by law direct, shall receive only eighty per centum
of the compensation otherwise authorized by this act, excepting for
side, terminal, and transfer mail service.
The initial and terminal rates provided for herein shall cover ex-
penses of loading and unloading mails, switching, lighting, heating,
cleaning mail cars, and , all other expenses incidental to station
service and required by the Postmaster General in connection with
the mails that are not included in the car-mile rate. It shall be
fixed upon the consideration of two elements, namely: First, loading
and unloading mails, and, second, all other services rendered. For
loading and unloading mails it shall not exceed 12 cents per ton,
and for the remainder of the rate the allowance for full railway
post-office cars, apartment railway post-office cars, and storage cars
shall be varied in accordance with the approximate difference in
their respective cost of construction and maintenance. *
For the purpose of ascertaining the average weight of closed-pouch
mails per day upon which to adjust compensation, the Postmaster
General is authorized and directed to have such mails carried on the
several routes weighed by the employees of the Post Office Depart-
ment for such a number of successive days, not less than thirty-five,
at such times after July first, nineteen hundred and fourteen, as he
may direct, and not less frequently than once in every year thereafter,
the result to be stated and certified in such form and manner as he
may direct. In computing the average weight of mails per day
carried on a railroad route, the whole number of days included in
the weighing period shall be used as a divisor. The expenses of taking
the weights of mails and the compensation to tabulators and clerks
employed in connection with the weighings, for assistance in com-
pleting computations, and of rental, if necessary, in Washington,
District of Columbia, shall be paid out of the appropriation for
inland transportation by railroad routes.
In computing the car miles of the full railway post-office cars and
apartment railway post-Office cars the maximum space authorized
in either direction of a round-trip car run shall be regarded as the
space to be computed in both directions, unless otherwise mutually
agreed upon.
In computing the car miles of storage cars, the maximum space
authorized in either direction of a round-trip car run shall be re-
garded as the space to be computed in both directions, unless the car
be used by the company in the return movement, or otherwise mutu-
ally agreed upon.
New service and additional service may be authorized at not ex-
ceeding the rates herein provided, and service may be reduced or
discontinued with pro rata reductions in pay, as the needs of the
Postal Service may require: ‘Provided, That no additional pay shall
be allowed for additional closed-pouch sepvice on established routes
until the next regular readjustment of pay therefor on such routes,
§
1060 RAILWAY MAIL PAY.
and no additional pay shall be allowed for additional car service unless
Specifically authorized by the Postmaster General.
All cars or parts of cars used for the railroad mail service shall be
of such construction, style, length, and character, and furnished in
Such manner as shall be required by the Postmaster General, and
shall be constructed, fitted up, maintained, heated, lighted, and
cleaned by and at the expense of the railroad companies. . No pay
shall be allowed for service by any railway post-office car which is not
Sound in material and construction, and which is not equipped with
sanitary drinking-water containers and toilet facilities, nor; unless
such car is regularly and thoroughly cleaned. No pay shall be
allowed for service by any wooden full railway post-office car unless
constructed substantially in accordance with the most approved plans
and specifications of the Post Office Department for such type of
cars, nor for service by any wooden full railway post-office car run
in any train between adjoining steel cars, or between the engine
and a steel car adjoining. After the first of July, nineteen hundred
and seventeen, the Postmaster General shall not approve or allow to
be used, or pay for service by any full railway post-office car not con-
structed of steel or steel underframe, or equally indestructible material,
and not less than twenty-five per centum of the full railway post-
office cars of a railroad company not conforming to these provisions
on August twenty-fourth, nineteen hundred and twelve, shall be
replaced with cars constructed of steel annually after June, nineteen
hundred and thirteen; and all full railway post-office cars accepted
for this service and contracted for by the railroad companies here-
after shall be constructed of steel. In cases of emergency and in
cases where the necessities of the service require it the Postmaster
General may provide for service by full railway post-office cars of
other than steel or steel underframe construction, and fix therefor
Such rate of compensation within the maximum herein provided as
shall give consideration to the inferior character of construction, and
the railroad companies shall furnish service by such cars at such
rates so fixed. -
Service over property owned or controlled by another company or
a terminal company shall be considered service of the railroad com-
pany using such property and not that of the other or terminal
company: Provided, That service over a land-grant road shall be paid
for as herein provided. * "
Railroad companies carrying the mails shall furnish all necessary
facilities for caring for and handling them while in their custody.
They shall furnish all cars or parts of cars used in the transporta-
tion and distribution of the mails, except as is herein otherwise pro-
vided, and place them in stations before the departure of trains at
such times and when required to do so. They shall provide station
space and rooms for handling, distribution, and transfer of mails in
transit, and for offices and rooms for the employees of the Postal
Service engaged in such transportation, when required by the Post-
master General. - -
Every railroad company carrying the mails shall carry on any
train it operates and without extra charge therefor the persons in
charge of the mails, and when on duty and traveling to and from
duty, and all duly accredited agents and officers of the Post Office
RAILWAY MAIL PAY. 1061
Department and the Postal Service, while traveling on official busi-
ness, upon the exhibition of their credentials. *
If any railroad company carrying the mails shall fail or refuse
to provide cars or apartments in cars for distribution purposes when
required by the Postmaster General, or shall fail or refuse to con-
struct, fit up, maintain, heat, light, and clean such cars and pro:
vide such appliances for use in case of accident as may be required
by the Postmaster General, it shall be fined such sum as may, in the
discretion of the Postmaster General, be deemed proper.
The Postmaster General shall in all cases decide upon what trains
and in what manner the mails shall be conveyed. Every railroad
company carrying the mails shall carry on any train it operates and
with due speed all mailable matter, equipment, and supplies directed
to be carried thereon. If any such railroad company shall fail or
refuse to transport the mails, equipment, and supplies when required
by the Postmaster General on any train or trains it operates, such
company shall be fined such amount as may in the discretion of the
Postmaster General be deemed proper.
The Postmaster General may make deductions from the pay of rail-
road companies carrying the mails under the provisions of this act
for reduction in service or in frequency of service where, in his judg-
ment, the importance of the facilities withdrawn or reduced requires
it and impose fines upon them for delinquencies. He may deduct
the price of the value of the service in cases where it is not performed,
and not exceeding three times its value if the failure be occasioned
by the fault of the railroad company.
The provisions of this act shall apply to service operated by rail-
road companies, partly by railroad, and partly by steamboats.
The provisions of this act respecting the rates of compensation shall
not apply to mails conveyed under special arrangement in freight
trains, for, which rates not exceeding the usual and just freight
rates may be paid, in accordance with the classifications and tariffs
approved by the Interstate Commerce Commission.
Railroad companies carrying the mails shall submit under oath,
when and in such forms as may be required by the Postmaster
General, evidence as to the performance of service.
The Postmaster General is authorized to have such weights of
mails taken and ascertainments of needed space made and to collect
such information by employees of the Post Office Department as he
may deem necessary, and to have the same stated and verified to him
by them under such instructions as he may consider just to the
Post Office Department and the railroad companies, and to employ
such clerical and other assistance as shall be necessary to carry out
the provisions of this act, and to rent quarters in Washington, Dis-
trict of Columbia, if necessary, for the clerical force engaged ºthere-
on, and to pay for the same out of the appropriation for inland trans-
portation by railroad routes.
The Postmaster General shall, from time to time, request informa-
tion from the Interstate Commerce Commission as to the revenue
received by railroad companies from express companies for services
rendered in the transportation of express matter, and may, in his
discretion, arrange for the transportation of mail matter other than
of the first class at rates, not exceeding those so ascertained and re-
1062 RAILWAY MAIL PAY.
ported to him, and it shall be the duty of the railroad companies
to carry such mail matter at such rates fixed by the Postmaster
General. t
The Postmaster General is authorized, in his discretion, to petition
the Interstate Commerce Commission for the determination of a
poštål carload or less than carload rate for transportation of mail
matter of the fourth class and periodicals, and may provide for and
authorize such transportation, when practicable, at such rates, and it
shall be the duty of the railroad companies to provide and perform
such service at such rates and on the conditions prescribed by the
Postmaster General. * §
The Postmaster General may, in his discretion, distinguish be-
tween the several classes of mail matter and provide for less frequent
dispatches of mail matter of the third and fourth classes and periodi-
cals, when lower rates for transportation or other economies may be
secured thereby without material detriment to the service. n
The Postmaster General is authorized to return to the mails, when
practicable for the utilization of car space paid for and not needed
for the mails, postal cards, stamped envelopes, newspaper wrappers,
empty mail bags, furniture, equipment, and other supplies for the
Postal Service, theretofore withdrawn from the mails as provided
by law and transported by freight or express, and thereafter trans-
port them in the railway post-office cars and storage cars herein
provided for. * -
The Postmaster General in cases of emergency between October
first and April first of any year, may hereafter return to the mails
empty mail bags and other equipment theretofore withdrawn there:
from as required by law, and where such return requires additional
authorization of car space under the provisions of this act, to pay
for the transportation thereof as provided for herein out of the
appropriation for inland transportation by railroad routes. . .
The Postmaster General may have the weights of mail taken on
railroad-mail routes, and computations of the average loads of the
several classes of cars and other computations for statistical and ad-
ministrative purposes made at such times as he may elect, and pay the
expense thereof out of the appropriation for inland transportation
by railroad routes.
It shall be unlawful for any railroad company to refuse to perform
mail service at the rates of compensation provided by law when and
for the period required by the Postmaster General so to do, and for
every such offense it shall be fined not exceeding $5,000.
All laws or parts of laws inconsistent herewith are hereby re-
pealed.
*
ERAILWAY MAIL PAY

f .# HEARING
º A5 BEFORE THE
1713
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS
MAIL MATTER AND COMPENSATION FOR
THE TRANSPORTATION OF MAILS
MARCH 16 AND 17, 1914
*
N O. 10
Printed for the use of the joint committee
WASHINGTON
GOVERNMENT PRINTING OFFICE
1914
UNNERSITY OF MICHCAN LBRARIES
Transportation *.
Library -***
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER
AND COMPENSATION FOR THE TRANSPORTATION OF MAILS.
CoN&#ss of THE UNITED STATEs.
JONATHAN BOURNE, JR., Chairman. JAMES T, LLOYD.
HARRY A. RICHARDSON. WILLIAM E. TUTTLE, JR.
JOHN H. BANKHEAD. __ __JOHN W. WEEKS.
RoBERT H. TURNER, Secretary.
RICHARD B. NIxon, Disbursing Officer.
II

TABLE OF CONTENTS.
- Page.
Bandel, George E., assistant superintendent division of railway ad- g
justments, Post Office Department 1112 et seq.
Bradley, W. J., general supervisor mail traffic, Pennsylvania R. R.—- 1112 et Seq.
Baldwin, W. W., vice president Chicago, Burlington & Quincy R. R. 1117 et Seq.
Blount, W. M., president Birmingham & Southeastern Ry---------- 1241 et Seq.
Blomeyer, E. F., vice president and general manager Tennessee,
Alabama & Georgia Ry - 1235 et Seq.
- Campbell, F. E., traveling agent, transportation department, Nor-
folk & Western Ry 1111
Coleman, R. B., chairman committee No. 2, Short Line Railroad
ASSociation of South Carolina ; general manager Georgia, Florida
& Alabama R. R. Co __ 1189 et Seq.
Connolly, J. P., supervisor of mail traffic, Central R. R. of New -
Jersey 1111 et Seq.
Denham, W. B., general manager Ocala Northern R. R____________ 1224 et Seq.
Drake, John N., Secretary Short Line Railroad ASSOCiation________ 1111
Fairfield, H. L., superpisor of mails, Illinois Central and Central
of Georgia R. Rs 1111 et Seq.
Faulkner, ex-Senator Charles J., counsel 1111
Hardin, George W., vice president East Tennessee & Western North
Carolina Ry - 1200 et seq.
Hitt, Moultrie, Secretary General Managers' Association of the
Southeast; general manager Georgia R. R. 1141, 1178 et Seq.
Lindsay, J. P., manager mail traffic, Santa Fe system 1112
Lorenz, M. O., associate statistician, Interstate Commerce Commis-
SiOn 1112 et Seq.
Mack, H. E., manager mail traffic, Missouri Pacific Ry----________ 1120 et Seq.
Madden, Martin B., Member of Congress from Illinois 1174 et seq.
Maddox, Samuel P., counsel 1112 et seq.
McBride, C. H., superintendent division of railway adjustments,
Post Office Department 1112 et seq.
Nichols, L. T., general manager, Carolina & Northwestern R. R____ –1207 et seq.
Peters, Ralph, chairman committee on railway mail pay; president
Long Island R. R. - 1112 et Seq.
Peabody, James, statistician, Santa Fe system 1142 et seq.
Prentiss, A. N., clerk, Post Office Department - 1112 et seq.
Rowan, A. H., assistant to vice president, New York Central
Lines 1111, 1169 et seq.
Safford, W. W., general mail and express agent, Seaboard Air Line
Ry - 1161 et seq.
Scott, S. C., Vice president’s assistant, Pennsylvania R. R_________ 1111 et Seq.
Searle, C. A., manager mail traffic, Rock Island lines 1111 et Seq.
Snead, R. H., manager express traffic, Chesapeake & Ohio Ry______ 1111 et seq.
Stewart, Joseph, Second Assistant Postmaster General____________ 1111 et seq.
Wade, H. M., agent mail traffic, Erie R. R. 1111 et seq.
Thompson, W. B., counsel 1111
III
RAILWAY MAIL PAY.
MONDAY, MARCH 16, 1914.
Joint CoMMITTEE ON
PoSTAGE ON SECOND-CLASS MAIL MATTER, ETC.,
Washington, D. C.
The committee met at the call of the chairman at 10 o’clock a. m.
Present: Hon. Jonathan Bourne, jr. (chairman), Senator John W.
Weeks, and Representatives James T. Lloyd and William E.
Tuttle, jr.
The following gentlemen were present and were sworn by the
chairman:
Representing the railway-mail pay committee: e
Mr. Ralph Peters, chairman, president Long Island Railroad.
Mr. H. L. Fairfield, supervisor of mails, Illinois Central and Cen-
tral of Georgia Railroads.
Mr. R. B. Coleman, chairman committee No. 2, Short Line Rail-
road Association of South Carolina; general manager Georgia,
Florida & Alabama Railroad. * ---
Mr. W. J. Bradley, general supervisor mail traffic, Pennsylvania
Railroad.
Mr. S. C. Scott, vice president’s assistant, Pennsylvania Railroad.
Mr. A. H. Rowan, assistant to vice president, New York Central
Railroad.
Mr. H. E. Mack, manager mail traffic, Missouri Pacific Railway.
Mr. W. W. Safford, general mail and express agent, Seaboard Air
Line Railway.
Mr. F. E. Campbell, traveling agent, transportation department,
Norfolk & Western Railway.
Mr. George W. Hardin, vice president, East Tennessee & West-
ern North Carolina Railroad. *
Ex-Senator Charles J. Faulkner, counsel.
Mr. H. M. Wade, agent mail traffic, Erie Railroad.
Mr. R. H. Snead, manager express traffic, Chesapeake & Ohio
Railway.
Col. W. B. Thompson, counsel.
Mr. Moultrie Hitt, secretary General Managers’ Association of the
Southeast, etc.
Mr. J. P. Connolly, supervisor of mail traffic, Central Railroad of
New Jersey.
Mr. John N. Drake, secretary Short line Railroad Association.
Mr. James Peabody, statistician, Santa Fe system.
Mr. W. W. Baldwin, vice president, Chicago, Burlington & Quincy
Railroad.
1111
1112 RAILWAY MAIL PAY.
Mr. C. A. Searle, manager mail traffic, Rock Island lines.
ºpt W. B. Denham, general manager, Ocala & Northern Rail-
I’O3,Ol.
Mr. L. T. Nichols, general manager, Carolina & Northwestern
Railroad. - -
Mr. J. P. Lindsay, manager mail traffic, Santa Fe system.
Col. Samuel P. Maddox, counsel.
* W. M. Blount, president, Birmingham & Southeastern Rail-
I’Oa,Ol. -
Representing Post Office Department:
Hon. Joseph Stewart, Second Assistant Postmaster General.
Mr. C. H. McBride, superintendent division of railway adjust-
ments.
Mr. George E. Bandel, assistant superintendent division of rail-
way adjustments.
Mr. A. N. Prentiss, clerk.
Mr. M. O. Lorenz, statistician, Interstate Commerce Commission.
The CHAIRMAN. Gentlemen, this meeting was called for the pur-
pose of giving the representatives of the railroad companies doing
business with the Government, opportunity of expressing their com-
ment in reference to a tentative draft of legislation relative to rail-
road mail service and compensation therefor, submitted by the Post-
master General in what is known as volume No. 8, under date of
February 12, 1914.
Mr. Peters, will you start the hearing?
Mr. PETERs. I have prepared a short statement which I would like
to read and put into the record, and it will be followed by two
more statements from other members of the committee before we go
into a general discussion of the subject.
The CHAIRMAN. You prefer to submit the matter in full without
interruption and then take up the discussion of the details after-
wards?
Mr. PETERs. Yes.
STATEMENT OF MR. PETERS.
Mr. PETERs. We have been asked to discuss to-day volume 8 of
your hearings, this containing the letter of the Postmaster General
to your honorable committee of February 12, 1914, transmitting “a
report and tentative draft of legislation relative to railroad mail
service and compensation therefor,” as submitted by the Second
Assistant Postmaster General under the same date. - -
We thus find ourselves in a similar position to that we occupied
over a year ago when we were called upon to discuss a similar “ten-
tative draft of proposed law for regulation of railway mail pay ”
which had been submitted by the Post Office Department in connec-
tion with House Document No. 105, under date of August 12, 1911.
That bill had been introduced in the United States Senate on July
25, 1912 (S. 7371) at the request of the Post Office Department, not-
withstanding the fact that when Document No. 105 was first pub-
lished in December, 1911, it was promptly assailed by the chairman
RAILWAY MAIL PAY. 1113
of the railroad committee as being based on incomplete data, inºr.
rect tabulations, and fallacious assumptions; alsº notwithstanding
the fact that no hearings had as yet been held to determine the rela-
tive merits of the respective arguments. A similar bill had already
been introduced in the House of Representatives as early as April
24, 1912, under the title H. R. 23721. ©
since that time the whole subject has been analyzed and discussed
at the many hearings accorded to both sides by your honorable com:
mittee; and we take advantage of this opportunity to express ºur
acknowledgments for the fair and impartial attitude of the con-
gressional committee toward the subject and to express the opinion
that the information and data collected at these hearings are by far
the clearest and most important contributions to the subject of rail-
way mail pay that have ever been made. tº
in presenting the proposed bill which accompanied, Dºcument No.
105, and which reappeared in Senate bill 7871, and H. R. 23721,
former Postmaster General Hitchcock indicated that the new method
of fixing railway-mail pay would entirely abandon the long-existing
method of fixing it in accordance with weight and would substitute
therefor the measure of car space based on rates which would be
ascertained according to the cost to each railway company of per-
forming the service. *
It now appears in volume 8 that the Post Office Department had
also abandoned the cost method of arriving at the rates, but main-
tains its adherence to the car space measure of service.
Before proceeding to the consideration, first, as to the general
character, and, second, as to the particular provisions of the new
space bill proposed in volume 8, it may be advantageous to occupy
a few minutes, with your permission, in very briefly reviewing the
present situation as it appears to us.
The law of August 24, 1912, appointing the joint congressional
committee prescribed that it is “to make inquiry into the subject of
postage on second-class mail matter and compensation for the trans-
portation of mail, and to report at the earliest practicable date.”
Therefore, so far as the question of railway-mail pay is concerned,
it appears that your honorable committee is expected to make inquiry
as to the compensation.
We would, therefore, seem justified in surmising that whatever
range your committee gives to the scope of its recommendations in
the way of remedial legislation, it is of first and paramount im-
portance to decide the question of underpay or overpay and approxi-
mately the amount of such underpay or overpay. It might also be
argued with much force that such an ascertainment and such a de-
cision is essential before the question of constructive legislation or
amendatory legislation is determined upon.
In regard to underpay or overpay, the Post Office Department has
claimed overpayment and has based their claim entirely upon Docu-
ment No. 105; that is, their own ascertainment of cost, reaching a
result of $9,000,000 overpay for the fiscal year 1910. When they
subsequently revised this estimate to include capital cost which they
had originally overlooked, they reduced the amount of their claim
to $1,600,000. The railroad committee in making the same calcula-
tion, but by using different ratios, which they believed to be more
1114 RAILWAY MAIL PAY.
correct, showed underpay in the fiscal year of 1910 of $29,000,000,
instead of overpay of $1,600,000.
It has been pointed out that the Post Office Department, in addi-
tion to omitting capital cost, had treated the car space for the post
office purposes on a different basis from what they had treated the
car space devoted to other than mail traffic. The railroads have been
perfectly willing to have the comparison made according to the gross
amount of space for the passenger, mail, or express business, and they
have been equally willing to have the comparison made on the basis of
the net amount of space for each of these traffics, but they could not
consent that the Post Office Department should compare the net
amount of space required for mail service with the gross amount in
the passenger and express service, when it is perfectly clear that the
public pays in one way or another for all of these services. *
The railroad committee has submitted a number of comparisons
entirely distinct from the ascertainment in Document No. 105, which
tend to confirm their claim of underpay, and none of these compari-
sons have been refuted or matched by the Post Office Department.
For example, it has been shown that by comparing the mail reve-
nue of the railroads on the space basis with the revenue from similar
car space in the rest of the train, there was a deficit in mail pay in
1909 of $17,000,000.
Again it has been shown that by applying to the postal revenues
for 1912 the same percentage of postal revenues which were employed
for railway-mail pay in 1901, there would have been a deficit in rail-
way-mail pay in 1912 of $32,000,000. -
Again it has been shown by the relative increase in freight and
passenger revenues between the years 1901 and 1910 that there would
have been a deficit in railway-mail pay in 1910 of from $15,000,000
to $17,000,000.
We therefore believe that in making the statement that the amount
or railway-mail pay is at least $15,000,000 below what it should be,
the claim is moderate. We also feel that this condition fully sus-
tains the statement made in the letter to the chairman of your com-
mittee on October 3, 1912, which said:
The existing law has never worked to the disadvantage of the Government,
but has failed to do justice to the railways by reason of infrequent weighing;
absence of pay for nearly 40 per cent of the space Occupied as traveling post
offices; the performance, without pay, of side and terminal messenger Service;
and the unjustifiable reduction in pay by the act of Congress dated March 2, 1907,
supplemented by Order No. 412 of the Postmaster General changing the divisor.
We respectfully submit that if your committee decides that the
railroads generally were underpaid in 1909 for mail transportation
not less than $15,000,000 per annum, it would not be inappropriate to
regard most carefully, and perhaps preferentially, the recommenda-
tions which the railroad committee would submit for remedying
those applications of the present law and regulations which are
obviously the most burdensome. The committee on railway-mail pay
submitted in the letter of October 3, 1912, addressed to the chair-
man of your committee, a statement of a few amendments which
seem to be desirable in the present law and regulations in order to
correct in a measure the condition of underpayment.
We have all been working under the present law of 1873 for the
past 40 years, and all concerned are more or less familiar with its
BAILWAY MAIL PAY. 1115
operations. That is one reason why it is deemed preferable to any
untried or theoretical plan that could be proposed. Yet, if expe-
rience had demonstrated that a different plan would be desirable,
it would be proper for those advocating such a plan to show a
fundamental importance for it and unmistakable advantages. We
believe that no alternative plan thus far proposed satisfies these pri-
mary conditions of consideration, but if there were any such plan
before us it might still be held that the present time is not oppor-
tune for any final and deliberate legislative action, because since
this investigation was started the Government has embarked upon
an entirely new class of mail traffic, namely, the parcel post. The
original law which fixed the zones, rates, and conditions, as well as
the weight limits, included a clause authorizing the Postmaster
General to alter these conditions subject to the concurrence of the
Interstate Commerce Commission. The present Postmaster General
has used this power to greatly extend the weight limits and to re-
duce the rates and to alter the other conditions according to his views
of his duty in the premises. The Interstate Commerce Commission
has indicated that its participation in the joint responsibility for
Such action is on such a restricted basis that it has asked to be relieved,
but Congress has not taken action to that end. The Postmaster
General has intimated his purpose of greatly raising the weight
Hºt and making other modifications in the provisions of the original
à, W.
There is already a great difference of opinion in regard to the
true volume of the new parcel-post traffic, and there is no one who
can estimate with any degree of accuracy the effect of future changes.
Therefore, the problem of railway mail pay which was of sufficiently
complicated character when your committee first undertook a study
of the subject has been radically changed so far as the traffic is con-
cerned, and the operating conditions as regards the future and as
affecting both the Post Office Department and the railroads can not
now be satisfactorily estimated.
Certainly any law which seeks to properly measure the service
rendered, or the method of arriving at the ascertainment of pay,
should fulfill certain primary conditions:
First. It should take cognizance of the relations of the future as
well as of the past between the railroads and the Postal Service.
Second. It should measure the service performed by the railroads
by Some simple factor easily understood and meaning the same to
both parties in interest.
Third. Its provisions should be obviously and manifestly just to
both parties in interest, and thus protect equally the rights of the
Government and the rights of the railroad carriers.
Fourth. The rates of pay should, we believe, take cognizance of
the present condition of underpayment, and make provision for
remedying that condition.
ſº Its basis, as well as its provisions, should tend toward sim-
plicity.
Sixth. The terms and conditions under which the service is to be
performed should be so explicitly defined that any causes for misun-
derstanding or irritation leading to lack of cooperation between the
post office service and the railroad service should be eliminated, or,
at least, reduced to a minimum.
1116 RAILWAY MAIL PAY.
Our judgment is that the plan proposed in volume 8 of the hear-
ings, and the terms in which it is expressed, completely fail to sat-
isfy any of these requirements. •
If the tentative draft of a postal law which was submitted with
Document No. 105 was conceived in a spirit of justice and fairness,
it is difficult to understand how some of the autocratic provisions
were made, because it is believed that this was the first time in the
history of the United States Postal Service that such an extreme po-
sition was taken. References might be made to many of the para-
graphs, but it may be sufficient to point out that the first paragraph
provides that any railroad company that fails or refuses to submit
statistical information to the Postmaster General of all of its oper-
ating expenses shall have its compensation for the service rendered
forfeited to the United States and withheld as liquidated damages.
The second paragraph provides for a fine of $20,000 or imprison-
ment for five years for any railroad employee who knowingly fur-
nishes false information, but there is no mention of any correspond-
ing penalty for any postal employee who might perpetrate a similar
act. The third paragraph provides that the Postmaster General
shall assign or apportion all of the railroad expenses between freight
and passenger service, and if an appeal is made to the Interstate
Commerce Commission he need only submit such papers as in his
judgment may be essential to an understanding of the method. The
action of the Interstate Commerce Commission was made final with-
out any intimation that any voluntary recourse to the courts would be
permitted. The proposed law in Document No. 105 continues in this
spirit, and concludes with a new requirement that any railroad com-
pany refusing to carry the mails at the rates of compensation pro-
vided by law, when and for the period required by the Postmaster
º so to do, shall be fined for every such offense not exceeding
5,000. r
We respectfully submit that the same spirit permeates the new
proposed law published in volume 8, the concluding paragraphs of
which propose to give practically unlimited power to the Post Office
Department to change all of the conditions regardless of the specifi-
cations in the earlier paragraphs, in addition to which it concludes
with a penalty of $5,000 for every failure of a railroad company to
carry the mails.
Where is the justification for according such arbitrary power to
any department of the executive branch of the Government, even if
the existing conditions were such as to create a tendency toward a
legislative inclination in that direction, because it might be deemed
temporarily advantageous, although not permanently advisable in
the best interests of the Republic? Where are the conditions that
even suggest the temptation? The railroads are all carrying the
mails in such a manner as to give the United States Postal Service
the highest reputation for expedition and ample facilities and yet at
a rate of pay which has been demonstrated to be far below the amount.
which should be justly allowed for the service. The attitude ex-
pressed in recent years by some officers of the department, that the
only way in which a railroad could make its protest effective would
be by refusing to carry the mails, has probably created an atmos-
phere in which imaginary dangers exist. It is most earnestly sug-
gested that those occupying public office, as well as those operating
RAILWAY MAIL PAY. 1117
public utilities, should feel equally as trustees of the public good
that it is their first duty to secure enthusiastic cooperation in the joint
performance of a public service by making sure that their relations
with each other and that the rates of compensation and the condi-
tions of the service shall rest upon such an unmistakably just and
fair basis that there will be no reason and, in fact, no excuse for
any deficiency.
We are willing, if your committee desires it, to discuss the detailed
provisions of this proposed law. We believe, however, that in its
entirety it is no more deserving of serious consideration than was the
tentative draft of the law submitted in connection with document
No. 105, as many of the provisions of that proposal are included in
the new proposal. ---
We also believe that your honorable committee should take cog-
nizance of the fact that this new plan is proposed on a basis of rates
which are apparently calculated to reduce railway mail pay $2,000,-
000 and upward, in comparison with the present amount, and while
it might be said in response to this suggestion that the rates could
be made higher by Congress, the uncertainty which attaches to the
interpretation of the measurement by space and of the other details
of the service would make the total amount indeterminate. We are
therefore obliged to estimate the department's purpose by the rates
that are specifically named in volume 8.
In concluding these general remarks we ask that it be remembered
that while this matter may appear to be a question between the Post
Office Department on the one hand and the railroad companies of
the United States on the other, it is really a subject of great conse-
quence to the whole people.
When we survey the field of those who are financially concerned in
this matter, either as employees of the railroad companies or em-
ployees of industrial establishments depending upon railroad busi-
ness, or as stockholders or bondholders of railroad securities, or as
depositors in savings banks, or policyholders of life insurance com-
panies, or as members of fraternal insurance organizations whose in-
vestments are largely in railroad securities, we are convinced that a
great majority of the American people are now interested or will
become interested in the proper settlement of this important question.
I submit this statement as a general opening of the discussion, and
would ask that you call Mr. Baldwin, who is chairman of the sub-.
committee appointed from the Chicago lines, to open the discussion
of the bill.
The CHAIRMAN. We will be glad to hear from Mr. Baldwin.
STATEMENT OF MR, BALDWIN.
Mr. BALDw1N. At a meeting of the representatives of the road held
after the last session it was suggested that a committee representing
the western railroads take up this separate consideration of this
matter, and that committee has asked me to present some general
observations by way of introduction and has asked Mr. Mack to pre-
sent some specific comments on the details of the bill, after which, of
course, we will take it up section by section, if you so desire.
The members of the mail pay committee representing the railroads
are of opinion that the evidence submitted to the commission shows
1118 RAILWAY MAIL PAY.
that the companies carrying the mails of the country are underpaid
at this time, for the service they perform for the Government in
that behalf, at least $15,000,000 annually. Any bill in the framing
of which they participate and cooperate should, they respectfully
Suggest, have for at least one of its purposes the correction of this
condition. The bill that is embodied in volume 8 of your hearings,
instead of such a purpose, is designed, as we have been advised, to
still further reduce the already inadequate pay of the railroad com-
panies from two to six million dollars a year, based upon a contin-
uance of the present service.
Senator WEEKs. You do not mean to say designed for that pur-
pose nº
Mr. DALDw1N. I did not say that. I said, if it existed. Let me
read the next sentence.
Not having sympathy with this purpose of the bill if it exists
such comments as we make should not be regarded as primarily made
with a view of perfecting it, because from our point of view the
principle upon which it is based is not workable.
Senator WEEKs. It struck me, as you read that, that it was an
unfortunate expression. The Post Office officials ought not to rest
under the charge that they are designedly doing something to reduce
pay, but their judgment does reduce the pay.
Mr. BALDw1N. I understand that, but they also believe, or have
expressed the opinion, that the pay is higher than it ought to be,
and have also said that the effect of this bill—I have understood that
some of the officials of the department have claimed—would be to
reduce the mail pay about $6,000,000 a year. We can not very well
sypathize with that.
Senator WEEKS. I am not criticizing your sympathy or your lack
of sympathy with it, but simply the suggestion that the bill was
designed for that purpose. That is what I am criticizing.
Mr. BALDWIN. I did not mean to assert that.
There are certain general considerations that we desire to call to
your attention before referring to the separate sections.
We assume that the service which the railways are now perform-
ing for the Government in the transportation of the mails is in the
main satisfactory and that it is the desire of the commission not to
destroy nor to seriously impair this service. •.
The question which led to the appointment of your commission
did not relate to the quality of the service which the railroads are
furnishing, but were substantially confined to the question of ade-
quate compensation for that service.
Before the railroad companies can be asked or expected to agree
to continue the service in its present form they should, it seems to
us, have some assurance regarding the definiteness and certainty
of the rules under which they are to be compensated, if new rules
are to be adopted. The plan embodied in volume 8 does not accord-
ing to our view embrace such definite and certain rules, but intro-
duces elements of indefiniteness and uncertainty that have not here-
tofore existed in the law. No one familiar with the wide differences
of opinion that have developed at these hearings with apparent
good faith on both sides, regarding space authorized, or space neces-
sary, or space used, in November, 1909, and the question of “dead
space,” “deadhead space,” and other features can fail to appreciate
RAILWAY MAIL PAY. 1119
the possibilities in future disputes and controversy that are sure to
8,I’IS62.
But the proposed bill would confide in the officials of the Post
Office unlimited discretion over every feature of the subject, not
only by the use of the phrase “not exceeding,” but in different
terms, and by fines or by the exercise of such discretion as to make
the compensation adequate or inadequate, almost at will. The phrase
“not exceeding” in previous enactments had to be applied to definite
rates per pound, leaving little room for dispute.
Practically every controversy the railroads have had with the
department has arisen over “half lines” and other questions grow-
ing out of what would seem to be the simplest form of the space
question—the payment per mile-run for the use of cars of a specified
length. But questions of space “authorized" and space “neces-
sary” and space “used,” which inspectors of the department have
been able to raise have proved vexatious and have been frequent.
Under a system basing everything on space, with a maximum rate
schedule, and the entire authorization and use governed solely by
the unlimited discretion of inspectors anxious to make a record, and
of their superiors slow to disregard recommendations that may
produce possible economies, it is plain that no railway can know
with definiteness or certainty what its compensation is to be. This
uncertainty may have an important bearing upon the continuation
of the expedited or special mail trains which have been denominated
the “heart” of the Railway Mail Service. This service has been
highly developed and made possible, because it was made com-
pensatory by concentrating weights of mail upon the lines which
have the facilities for providing the service. With the termination
of the weight system you terminate the present motive and reason
for the railroads to operate fast mail trains, and no method for
reviving such a service has to our knowledge been suggested except
subsidy, the appropriation for which in 1883, before compensatory
weights existed, reached as high as $600,000 a year, and at this time
must apparently be much greater. There are now many special
fast mail trains where one existed in 1883.
The bill in volume 8 was framed to embody the idea of a “prefer-
ential rate.” This means, as the author says, a rate based upon a
consideration of what the railroads owe, first, to the Government of
the United States; secondly, what they owe the people; and, thirdly,
what they owe the country at large for the privilege of existence, etc.,
and presents a wide field for contemplation. It necessarily leaves to
those who may have the power of decision the right to give such
weight to these very indefinite elements as they may think they de-
serve. To this is now to be added the condition that the Government,
through orders issued at the discretion of the Post Office Department,
is rapidly extending the transportation package freight by mail in
competition with the railroads. That is to say, this bill is framed to
enforce upon the railroads by law a preferential rate upon indefinite
premises in competition with the roads themselves, and to be based
upon authorized space that is to be measured by department officials,
the rate to be only a maximum rate and the decision of all questions
arising to rest solely in the discretion of the same officials.
It is an anomaly in legislation appropriating private property.
1120 RAILWAY MAIL PAY.
The CHAIRMAN. With no parallel whatever?
Mr. BALDw1N. I think not, sir; in its indefiniteness and possibilities.
Railroad corporations are common carriers, but their roads, and
steamboats and other facilities for conducting the business are private
property which the Post Office Department could thus appropriate
without compensation through the process described.
It has been suggested that Mr. Mack has the committee's memoran-
dum as to the details, which I think you will find, to some extent at
least, tends to corroborate this.
The CHAIRMAN. Would you like to put that in now? -
Mr. BALDw1N. Yes; if you please. "We will have them set out in
their order. -
Mr. MACK. I would like to have it printed as a complete argument,
so that the interruptions will not break the thread of it in the print
of hearings.
The CHAIRMAN. I will say that thus far there have been no inter-
ruptions until the witness completed his statement. We can continue
that and any point the committee may have in mind can be taken up
for discussion later. -
STATEMENT OF MIR. MACK,
Mr. MACK. The latest method proposed by the Post Office Depart-
ment for the adjustment of railway-mail pay, and submitted on Feb-
ruary 12, 1914, for the consideration of the joint committee of Con-
gress, may be considered coercive and unjust to the railroads, if it is
necessary that the Sovereign power of the Government be exerted
through a requirement of compulsory service, with compulsory ac-
ceptance of rates wholly in the discretion of the Postmaster General,
as maximum and not fixed rates are stated and compulsory compli-
ance with every condition the Post Office Department may in its dis-
cretion impose under a penalty of $5,000 fine for each offense of
refusal to carry the mail under the proposed law. t r
Mistaken inference might be drawn from this provision that the
railroads have refused to carry the United States mail, but although
they are under provocation of unjust treatment, particularly with ref-
erence to the failure of the Government to provide proper compensa-
tion for the transportation of parcel, post, they have responded to
obvious public necessity and carried the mails, confident in ultimate
fair adjustment, as the United States Government can not afford to
do otherwise. +
As the maximum rates provided in the bill are concededly by im-
plication not compensatory rates, the proposed law is fundamentally
unsound, and as noncompensatory rates would be alternatively con-
fiscatory rates, the suggested law instead of proving a solution of the
question would be merely an initiative in throwing all the railroads
of the country into the courts with years of litigation, a most unfor-
tunate outcome of the six years of continuous protest by the railroads
against the unjust reductions made in 1907 and the work and ex-
pense of investigation by the railroads themselves, by the Post Office
Department, and by the joint commission. -
The railroads now have twenty-five million or more dollars in-
volved in litigation on the mail-pay question, resulting from an ex-
RAILWAY MAIL PAY. - 1121
ecutive order of the Post Office Department, issued in 1907, effecting
a change in existing law, and hope any legislation that may arise in
future will be free of legal complications.
Any rates fixed upon a noncompensatory basis, upon a theory that
the Government has rights to less rates for mail, would put Congress
in the attitude of fixing discriminatory rates as representing the peo-
ple as a whole against the individual citizens who travel as passen-
gers or ship by freight or express, for it is certain that the burden of
meeting any deficiency would fall upon them as a matter of course.
As discriminatory rates are so generally condemned, the Govern-
ment might fairly set an example of fixing full and adequate pay for
every service required, as well of corporations as necessarily of
citizens.
The effect of a noncompensatory rate for mail would mainly be to
enable the Post Office Department to make an economical showing
for transportation. •
The opinion may be stated that anything less than full compen-
satory rates to be legal must be founded upon express valuable con-
sideration in some form, such as franchise privileges, etc., but special
pleading on the ground of Government protection to railway prop-
erty or a theory of incidental interest or benefit to other traffic would
not be valid. Railroad property is fully entitled to complete protec-
tion by reason of its participation in direct and indirect taxation as
other property.
The rates named in the plan are designated as maximum rates and
&re not fazed rates, and as to each and all of them complete discretion-
ary power is conferred upon the Postmaster General to fix any other
rate he may choose, with no alternative to the railroads but recourse
to the courts, and as to all of these rates, even if they were fixed rates,
they would be nullified and rendered inoperative by paragraphs 36,
37, and 38. -
The entire bill therefore as to rates and conditions of service en-
larges to the last degree the discretionary power of the Postmaster
General, and as to the three paragraphs of the bill just described, it
conveys to him also the power to discriminate between the classes of
mail matter in the service rendered the public.
The proposed method instead of settling the mail-pay question for
a long period of years, aside from the certainty of litigation to result,
would be largely an embarkment upon the field of experiment, for it
can not be doubted that it would revolutionize the service in some
respects. -
Instead of being in the direction of simplification of method, it
would be the most complicated of all plans that have been proposed.
Certain it is that the plan would make a great many rearrange-
ments and readjustments, as shown by the application of it by the
department to a list of routes submitted informally at the last hear-
ing, but it is speculative as to whether any of these readjustments
would promote efficiency of Service. It is impossible to learn their
full extent, as the effect of the plan can not be definitely known
upon all routes until put into actual practice. But obviously, so far
as the railroads themselves are concerned, aside from the inadequacy
of pay of all the rates proposed, the readjustments would create a
great deal of dissatisfaction, and there is certainly enough now.
1122 RAILWAY MAIL PAY.
NO PRESUMPTION IN FAVOR OF THE PROPOSED PLAN.
There is no presumptive weight of evidence in favor of this new
plan because it originates with the Post Office Department, either
upon the theory that it would be sound in principle or fair either as
to rates or conditions, for the essential reason that the department
is in the position of a shipper, and proposes through this bill, as its
terms show, to Secure complete discretionary and thereforé arbi-
trary power over the rates which will be paid for mail transporta-
tion and the conditions of service that it may demand, and the de-
partment, is therefore not in an impartial or judicial attitude in
laying this plan before the joint commission. $º
There are facts which it is necessary for your commission to re-
flect upon concerning the attitude of the Post Office Department in
ºnce to proposed mail-pay legislation in considering any new
plan.
In submitting, on July 25, 1911, the plan described and recom-
mended in Document 105, it was confidently presented as “one which
will be scientific and businesslike.” (Doc. 105, p. 19.)
The new plan, which is fundamentally different both as to basic
methods and rates, is now represented as a “scientific plan of deal-
ing with the subject.” (Vol. 8, p. 1056.)
The plan recommended in Document 105 was the “one-unit” plan
(Doc. 105, p. 15), being an exclusive-space plan.
The new plan is a weight-and-space plan with many complica-
tions, as will hereafter be explained, although in Document 105,
page 15, the existing method, which is a simplified weight-and-space
plan, is criticized as “unscientifie in plan” because of the “two
different methods of pay.”
The plan described in Document 105 was upon an alleged cost basis
with 6 per cent profit on such operating cost. As the cost was to be
determined by the Postmaster General, it involved the necessity of
his determining the cost of all classes of transportation before he
could attempt any ascertainment on any basis of the subcost for mail
SePWICe.
Later the department proposed that the cost be ascertained by the
Interstate Commerce Commission. Now the department proposes
rates fixed in its own discretion, without any governing basis except
the inadequate maximum limitation.
As to the rate of profit which the department originally proposed
as 6 per cent, it must be remembered that it was to be applied to the
operating costs, obviously upon the wrong thing, for as a simple ele-
mental principle profit is based upon capital invested instead of the
cost of doing business.
When this was pointed out the department afterwards changed
position, and in conceding that profit should be upon capital, was
not willing to support the principle of profit at 6 per cent, which it
had originally proposed, but proposes a less rate of earning for mail,
a subject which has otherwise been dealt with separately. . . . .
The department proposed originally to eliminate mail weighing
entirely (Doc. 105, p. 15) and now recommends that there should
be a weighing, but upon a more complicated system, as will hereafter
be explained.
RAILWAY MAIL PAY. 1123
An annual weighing under existing law was stated by the depart-
ment on January 16, 1914, to have no merit (vol. 7, p. 1018), but on
February 12, 1914, the department recommended an annual weighing
as applicable to the weights of mail to be paid for on the weight
basis. (Vol. 8.) *
On January 16, 1914, the department stated that there is no merit
in the contention that the railroads are underpaid as to apartment-
car service, yet in Document 105 it was stated that “no additional
compensation is allowed for space for distribution purposes occupy-
ing less than 40 feet of the car length. This distinction is a purely
arbitrary one and without any logical reason for its existence.”
It is but fair to state upon the foregoing premises as to uncer-
tainty and changing view in the department, that the weight of evi-
dence is against rather than in favor of the plan now proposed by
the department.
FUNDAMENTAL ERROR.
The serious defect with the new plan proposed by the department
on February 12, 1914, is that which has been continuously pointed
out at length throughout the hearings before the joint committee,
that space as a main factor to fix mail pay would be fundamentally
wrong, because the volume of mail does not automatically deter-
mine the space required in its transportation, but instead is one
wholly of opinion and judgment at the very best, and it is human
judgment and opinion under a space plan which would determine
the measure of pay to the railroads on every mail route and be the
factor determining the disbursement of $50,000,000 or $60,000,000
annually.
The objection would seem to be greater from the standpoint of
Congress as unsound and impolitic, but is objected to by the rail-
roads because relationship with the Post Office Department would
be unsatisfactory upon that basis, and they ask a definite basis for
the transportation service rendered, upon weight with the object of
transportation itself facing and determining the eacact volume of
transportation service rendered and which is free of any element of
opinion or judgment in the transaction.
It is more essential to-day even than heretofore, because the new
plan of handling mail through what are termed “Terminal R. P.
O.'s" throws a greater bulk of mail into the strictly transportation
channels of baggage-car service than under the former plan.
The existing method upon this sure foundation is as thoroughly
important to the Government as to the railroads, as to 90 per cent
of the mail pay, leaving but 10 per cent now determinable upon opin-
ion or judgment of postal officers, which is for space for post-office
work, very properly in the discretion of the department, as this fea-
ture of the service is based upon the extent of letter and paper dis-
tribution which the Post Office Department desires to carry on upon
the railway trains. -
The space plan would be productive of perpetual controversy be-
tween the railroads and the administrative officers of the service, not
only in Washington but in the local sections throughout the country
where chief clerks of Railway Mail Service have supervision; and
35797—No. 10—14—2
1124 RAILWAY MAIL PAY.
how serious this would be may be estimated by your committee front
its observation throughout the hearings of the difference in opinion
goncerning in the neighborhood of 21.28 per cent of space reported
by the railroads and eliminated by the Post Office Department in its
calculations in Document 105.
There is nothing original or new in the proposition to make space
a main factor, because it has been proposed by previous commissions
and as often rejected, and the presumption is very strongly against
it for the Solid fundamental objections briefly alluded to throughout
the hearings and in condensed form in volume 1, pages 301 to 314, and
volume 4, pages 624 to 627.
. . COMPLICATIONS OF PLAN.
j -
Obviously any plan of mail pay should fit the character of service
performed, which has been pointed out frequently and specifically,
is of two important features: First, the transportation of the mail
itself; and second, the feature which is not a transportation facility,
namely, that of post-office distribution in mail cars. The existing
plan recognizes these two distinct services in a comparatively simple
way; that is, weight for the transportation service and space for the
postal-distributing facilities.
The new plan of the department now recognizes these two essen-
tials, but substitutes a 5-unit plan instead of a 1-unit plan, as origi-
nally proposed. It is more complicated as to the weight feature, as
now the mails are simply weighted to the route and the daily average
thereof ascertained; but the new plan maintains this method as to 37
per cent of routes, and as to all others requires separate weighing of
all trains which do not have full R. P. O. or apartment mail cars;
and then, as to trains having such cars, it is necessary that the weight
be taken of the mail placed in each car for determining the pro-
posed loading rate, as to all classes of full R. P. O. apartment cars
and storage cars, and as to baggage-car overflow mail on such trains.
This would be exceedingly complicated and difficult at large sta-
#ions like St. Louis, Chicago, Kansas City, Omaha, and other inter-
mediate points where the mails for each car would have to be trans-
ferred and trucked separately, whereas now to a considerable extent
truck loads contain mail for several different cars.
There is further complication in the fact that if mails are carried
in the baggage car of a train with full R. P. O. or mail apartment
cars, the pay would be on a space basis, without any fixed method of
determining the amount of space to be paid for; whereas, on a mail-
car route if the mail were carried in a baggage care upon a train
without full R. P. O. or mail-apartment cars, the pay would be on a
weight basis. If mail which ordinarily was transported in an au-
thorized mail or storage car and paid for on a space basis, missed con-
nection and was shipped on a following train without mail cars there
would be no compensation for it, except as based upon such miscon-
nections and irregular dispatch if it occurred during the weighing
Seriod.
p It would be possible for the mail to be confined or limited during
the weighing period to trains paid for upon a space basis and there-
after to be carried upon trains for which the railroads are paid upon
weight, but without the weight being included in the adjustment. A
RAILWAY MAIL PAY. 1125
plan of this kind ought not to be possible, and is not when all trans-
portation service is upon the weight basis.
While nominally the new proposed plan is designated as of five
units, it is a fact that a single route could have, and some would have,
#. fºliated system of 64 different factors of pay, illustrated as
ollows: -
Full R. P. O. car 4 kinds at different mileage rate each Car.
Storage cars 4 kinds at different mileage rate each Car.
Apartment cars 5 kinds at different mileage rate each Car.
Baggage car (weight) 1.
Baggage car (Space) pay------------ 1.
- 15 mileage rates.
Full R. P. O. cars––––––––– 4 initial, terminal,loading, and unloading rates each.
Car—16 rates.
Storage cars–––––––––––––– 4 initial, terminal, loading, and unloading rates each.
Car—16 rates.
Apartment CarS ––––––––––– 4 initial, terminal, loading, and unloading rates each.
Car—20 rates.
Terminal rates - –––– 52
Mileage rates rºm * * * 15
Terminal rates---------------------------------------------------------- 52
Total __ 67
The present plan with graduated rates would apply to 1,293 routes,
or 37 per cent, representing 35,874,714 annual miles of service (1913).
Baggage-car mail rates on the remaining 63 per cent of routes would
be on a straight tonnage rate, representing 117,396,569 annual miles
of service. The full R. P. O. car rate would apply to 86,613,684
annual miles of Service, and the apartment-car rates to 231,656,122
annual miles of service; but there are no figures in the department’s
reports showing how many annual miles of service there would be
representing the storage car or the overflow baggage-car service on
a space basis upon routes having the full R. P. O. and the apart-
ment-car service.
DISCUSSION OF RATES.
In addition to what has been said previously with reference to
the noncompensatory character of rates as a whole in the proposed
plan, further specific criticism as to their inadequacy should be made.
The rate for a 30-foot apartment would be 9 or 94 cents per car-
mile; for a 15-foot apartment, 4} cents per car-mile; for a 10-foot
apartment, 3 cents per car-mile.
As to 30-foot cars, it is a fact that in many instances throughout
the country the furnishing of 30-foot distributing facilities requires
the hauling of an entire car; in such cases the proposed rates are
ridiculously low, and as to the cars of smaller units, it is only neces-
sary to point out that one or two passengers occupying a single seat
in a coach would pay as much or more fare than the department pro-
poses to pay for a private apartment occupied by a mail clerk who
would use 10 or 15 feet in a car, which would be equipped with
private-car facilities.
To further illustrate that a theory of lower rates for apartment cars
than for full R. P. O. cars would be inadequate, it may be pointed out
that four cars of 15-foot apartments or six cars of 10-foot apartments
would have to be furnished and operated with four or six units of
1126 RAILWAY MAIL PAY.
service as to all details of such operation, with station handling,
switching charges, and cleaning; ice would have to be furnished
them and placed in four to six cars instead of one; hoppers would
have to be furnished and cleaned in four to six cars instead of one;
the switching of four to six cars would have to be done; and four to
Six cars would have to be set for advance work; all in comparison
With one unit of a 60-foot car, as the proposed plan does not fix
specific rates for each specific car, but provides proper earnings based
upon a 60-foot-car rate. t .”
Initial and terminal rates.—Initial and terminal rates are proposed
on a prorated basis of a 60-foot car, which for a 70-foot car, if the
maximum were paid, would be $1.68; for a 40-foot car, 96 cents; a
30-foot apartment, 70 cents; a 10-foot apartment, 23 cents; and as
to storage cars, a 70-foot car, if paid for at the maximum rate,
Would be $1.51; and for a 40-foot car, 84 cents; while as to heating,
lighting, and cleaning there would be some difference in the relative
cost, according to the length of the car, yet as to other terminal
charges, such as inspection, switching, etc., the car unit of service
and movement would be the same for one car as for another regard-
less of length and this would be true as to the space occupied by the
cars in stations for advance distribution. #s
In the proposed plan maximum rates, not fixed rates, are stated
for this service, and it is explained that they are in the discretion
of the department, and the determining factors in rate as to each of
the different kinds of cars “shall be varied in accordance with the
approximate difference in their respective cost of construction and
maintenance.”
Certainly as to none of these factors of initial or terminal charges
has the cost of construction anything whatever to do with the use of
the cars. -
Loading rates.—The loading rate of not to exceed 12 cents per ton
is also grossly inadequate. It is ascertained that at St. Louis, where
the mail is handled in truck loads to a great extent on account of
volume, the actual cost of specially employed porters is 31 cents per
ton; and at Kansas City, where there are lighter volumes for the
transfers as compared to truck volumes, the actual cost is 47 cents per
ton. -
Senator WEEKs. In your judgment would that represent a fair
average of cost in cities of that class?
Mr. MACK. Why, it is impossible to say. It is a factor that will
vary greatly in accordance with the volume of the mail. For in-
stance, you see that between St. Louis and Kansas City. At St.
Louis there are truck loads and at Kansas City there are some truck
loads and some small volumes of transfer, but it takes a man just
as long to go from one point to another in the depot with two or
three parcels as it would to take an entire truck load of mail, so
that the cost would vary, and at the heavier stations it seems likely
that we are quoting low costs rather than high costs.
Mr. BALDw1N. Mr. Peabody has some figures illuminating the cost
figures applying to less than carload lots.
Mr. MACK. I have no doubt that these would be comparatively low
figures.
RAILWAY MAIL PAY. 1127
Senator WEEKS. Figures are not very useful unless they are com-
pared with the average, and you have not any reason to feel that
these are not clear averages in cities of that class. -
Mr. MACK. I should say they were low, rather than high. We
had a figure ascertained at Chicago which was considerably in excess
of this, but we did not desire to use it because it had not been fully
verified, but that rate was 77 cents. Is that correct, Mr. Scott?
Mr. Scott. That depends altogether on the volume of mail. I
would rather that would not go in the record.
Mr. MACK. I only mention that to show we have not selected
places with an object of showing high cost.
Mr. BRADLEY: I have figures which I have not had opportunity to
verify, yet which show that at the Pennsylvania Station in New
York, the average cost is 40 cents per ton for handling, and I think
Mr. Wade has some figures for Jersey City. -
Mr. WADE. Eighty cents.
Mr. MACK. There you will find a difference between the extreme
heavy loading and a comparatively light loading as between the
Pennsylvania at New York and the Erie at Jersey City.
Under the proposed plan, all the larger railroad systems would be
compelled to build new and keep in supply, four classes of full R. P. O.
cars, as compared with one standard as a rule to-day, and four classes
of storage cars, as compared with one to-day, for cars under 60 feet
in length now in the service are few in number, and are largely
those constructed in the past, or which were built to some extent, for
demonstration purposes.
It would be unreasonable to adopt a plan that would compel large
railroad systems to buy large numbers of additional cars of differ-
ent classes now, and yet they could not afford to run cars of greater
length than the department was willing to pay for where the entire
pay was dependent upon space, as there would be interminable con-
troversy as to whether more than 40 feet were actually used in cars
of greater length of run. -
Now, where full R. P. O. pay is supplemental, and where the rail-
roads furnish cars of 60 feet, and are paid for possibly 40 or 50, or 40
one way and 60 the other, of course it is not so material; but it would
be a much more serious matter if standard cars of 60-foot length
were used, with discretionary power to pay for 40 or 50 foot cars, if
the entire mail pay were affected. So that the result of the situa-
tion would be that the railroads would have to carry a stock of 40
and 50 foot postal cars and storage cars, which they do not now do.
LAND-GRANT ROUTES.
The proposed plan would extend the reduction of pay upon a
greater volume of mail earnings than at present, for now the 20 per
cent reduction applies only to transportation pay and not to full
R. P. O. car pay. It would doubtless develop upon investigation
that the time has arrived when land-grant routes, particularly those
furnishing fast-mail service, should not suffer any reduction at all
in their mail pay.
ROOMS AT STATIONS.
The plan proposed by the Postmaster General to give him power to
require such space as he might choose without limitation or restraint
1128 RAILWAY MAIL, PAY.
for rooms at stations for mail work, without compensation, would
be entirely, inconsistent and out of place with a plan to pay for
transportation of mail upon a space or mixed basis as proposed, as
it could be developed to any extent without compensation to the com-
pany, and could be utilized to such an extent as to actually deprive
railroads of their main sourue of revenue for transportation and dis-
tribution space on the trains. * &
FAST-MAIL SERVICE.
The proposed plan with these rates would undoubtedly endanger
the continuance of the fast-mail service, which is of inestimable value
in special and expedited schedule to the important first-class main
revenue-producing mail. One clear illustration would be that of the
fast mail from St. Louis to Texas. - -
The rates provided for this special service of 664 train miles daily
would only produce for two 60-foot postal cars 40 cents; for baggage
cars, 27 cents; total, 67 cents per train-mile. These figures show
conclusively that such pay would not be adequate to maintain the
Service. i
Senator WEEKs. Why do they show conclusively?
Mr. MACK. The rate of 67 cents? We could not run a train for 67
cents a mile. r
Mr. BALDw1N. The average cost of running all trains is $1.64.
Mr. MACK. Some things are self-evident to us that may not be self-
evident to you gentlemen. As Mr. Baldwin states, it costs us much
more than 67 cents. *
Mr. STEwART. How much a mile do you get now for that train?
Mr. MACK. We get now about $1.15 or $1.20.
Dr. LORENZ. How many cars are in the train?
Mr. MACK. Four mail cars. The fact is, even now we had to put
on a sleeping car in order to try to maintain the train.
TIRA NSPORTATION OF POSTAL OFFICERS AND EMPLOYEES.
There has never been a good reason for free transportation of
postal officers engaged in the inspection of the post offices, star and
rural routes of the country, or for their general transportation, ex-
cept, perhaps, as to the direct force supervisory over the Railway
Mail Service itself, or even for the transportation of postal em-
ployees, except when actually in postal cars engaged in work; but
whatever vestige of reason exists now, would disappear entirely upon
any space plan.
ADMINISTRATION.
In administration the plan proposed would permit the cutting off
of distributing cars between weighing periods with material reduc-
tion in expense to the Post Office Department, and throw mail into
the baggage cars without any compensation to the railroads until the
new weighing period.
CLOSING,
While investigation of railway-mail pay very naturally and prop-
erly includes consideration of new methods proposed from any source,
RAILWAY MAIL, PAY. 1129
it does not at all follow that a solution of the question involves a
new plan, which would be experimental at best, and it is very clear
in our opinion, irrespective entirely of the question of rates or total
compensation, that no plan has as yet been considered that fits the
service as well as the present general plan with imperfections easily
remedied without overturning conditions to which the service has be-
come adapted from its foundation.
No plan, in our judgment, would do justice to the railroads unless
predicated upon increasing pay of at least $15,000,000 per annum, so
that the gross earnings from this service, to be adequate and compen-
satory, would equal the other earnings on passenger trains.
In connection with this, I would like to say that I attempted to
figure the revenue that would be derived by some of our companies
from the new rates. On the Denver & Rio Grande Railroad, with
an entire apartment-car service, it would reduce the compensation
$124,021 per annum; cutting it down from $303,128 to $179,107.
That may give you a fair indication of the effect the plan would
have on short lines, because the Denver & Rio Grande service is en-
tirely apartment-car service.
Senator WEEKs. Where does that run from ? And to where?
Mr. MACK. It takes in all the local service in Colorado and part
of Utah. It is entirely a mountainous road and runs from Denver to
Ogden. Practically all of the interior service in Colorado is on the
Denver & Rio Grande, and much of it on narrow-gauge roads.
Mr. BALDw1N. You say that is all apartment-car service?
Mr. MACK. There are no full cars on that line. It is entirely
apartment-car service.
The CHAIRMAN. The compensation is based on maximum pay-
ments under the suggested plan?
Mr. MACK. Yes, sir; on the space that now exist, that is, that
which is now in use, or supposed to be needed, by the department,
as shown by their division schedules of railway-mail service. With
regard to this apartment-car service, the effect of a plan of this kind,
by strict administration and by the application of strict methods of
economy in the department, would be to impair efficiency. For in-
stance, we would find where there are two trains a day each way
over a railroad; upon a basis of this kind the Post Office Depart-
ment would be enabled to cut the cost of transportation on a line in
half, and there would be very strong temptation to do it with the
resulting impairment of the facilities to the public. The apartment-
car service and the distribution service to-day on sparsely settled
lines throughout the country is based upon the fact that there is no
specific pay for apartment cars. With supplemental pay for apart-
ment cars no such tendency as that would exist. It might have a
restraining influence on the extension or reduction of service, but
very naturally there would be a strong disposition to economize and
withdraw facilities when so much could be saved.
Senator WEEKs. Do you think that would be a very practical
proposition? . Withdrawing facilities immediately affects someone,
and someone is going to make complaint to the department, and the
department can not afford to withdraw facilities in any way that
will affect the service materially.
Mr. MACK. But the department does not necessarily establish
facilities or withdraw facilities simply because there is complaint?
1130 RAILWAY MAIL PAY,
Senator WEEKS. But when the department wants to establish
facilities, then it gives a lot of people vested rights, or they think they
are, and to change this by a reduction immediately brings complaint.
Therefore, as a practical proposition, do you think that wherever
there has been a facility in operation that there is likely to be a mate-
rial reduction for that very reason?
Mr. MACK. Of course, we are going into the field of opinion. I
should say yes.
Senator WEEKS. If you had been a Representative in Congress
you would probably have said no. * *
Mr. MACK. I think the reply would be—in many such cases, not all
of them—that the cost of the service was out of proportion to the
benefits derived. With regard to the service between St. Louis and
Ransas City—which was referred to at the informal meeting—on
. Missouri Pacific, we find that there would be a reduction of about
22,109. 2
The CHAIRMAN. That is just on that route?
Mr. MACK. Yes.
The CHAIRMAN. Not on the whole Missouri Pacific line?
Mr. MACK. No; just that route. There may be some imperfections
here, but we have allowed for all possible space. Between St. Louis
and Texarkana, 493 miles to Texas, as nearly as we can figure, there
would be a reduction of about $146,233 per annum. w
Senator WEEKS. Is that the entire service between those points on
one train? -
Mr. MACK. That is the entire service between those points on all
#. That is a land-grant route, with 493 miles of railroad to
62Xà.S. - -
Senator WEEKs. Do you think those are fair inferences of what
would happen? -
Mr. MACK. We have taken our heavy routes and we have taken our
apartment-car lines on the Denver & Rio Grande, and I do not see
how it would be possible for anything except very great reductions
to follow a plan of this kind.
ºtor WEEKs. How did you happen to select these particular
FO3,OIS
. . Mr. MACK. I selected the Missouri Pacific because Mr. Lloyd picked
it out at the informal meeting, and I selected the Rio Grande myself,
because it was an entirely apartment-car service.
Mr. LLOYD. I suggested the Missouri Pacific, because it was the
heaviest road in Missouri, and the one with which Mr. Mack was
most familiar.
Mr. MACK. When I found the reduction on the Missouri Pacific
would be $23,000 I wanted to see myself then what the effect would
be on the Iron Mountain, which is our heavy route to Texas, and I
discovered this. . Of course I did not know what it was going to be
when I started figuring.
mºtor WEEKS. Did you try any figures on any other routes than
€Se
Mr. MACK. No, sir; I did not; simply for lack of time.
Mr. LLOYD. Do you want this to go into the record?
Mr. MACR. I have no objection to it going into the record.
Senator WEEKS. How are we going to know that these are fair
examples for that kind of service?
RAILWAY MAIL, PAY. 1131
Mr. MACK. They represent all of our heavier service between St.
Louis and Kansas City and St. Louis and Texarkana.
Senator WEEKs. Do you think the proportional reduction in the
Jight service will be greater?
Mr. MACK. No; there would be a fluctuation in the apartment-
car service depending on the amount of weight as compared with
the volume of apartment-car service to the line. For instance, where
there were several apartment cars, but light weight, the new plan
would show an increase, but where there is considerable weight in the
car it would show a decrease under the new plan. That would be
the tendency. I think there is no question about that.
Mr. LLoyd. Did you not find this, also, that the rates on the shorter
lines, or on the lines on which there is not so much business, would
be affected by the frequency of transit of the mails each day? wº
Mr. MACK. As I say, that would depend in comparison with the
weight of mail that is now the basis which you are comparing with.
If the route had two 15-foot apartments, with a tonnage of 500 or
600 pounds in the way of distributing facilities, this plan would
probably produce an increase, and if it had 1,000 or 1,500 pounds it
would probably produce a decrease. I think that would be the way
a comparison of that kind would work out.
Mr. LLOYD. I made a comparison on two roads in my section, one
on which there was one mail each way a day and One on which there
were two mails each way a day, and I found on investigation that
where they had two mails each way a day the probabilities were
that there would be an increase of pay, and where there was only
one mail each way each day there would be a decrease.
Mr. MACK. It would work almost certainly in that case, provided
the weights were light and I have no doubt the weight was light.
Sometimes frequency of service and the amount of apartment cars
would be the same on a route with 500 or 600 pounds as a route with
1,500. So that the new plan as applied would, perhaps, decrease
the rate with the heavier weight and increase the rate compared to
the lighter weights.
Mr. LLOYD. Have you something more in detail on these matters?
Mr. MACK. No, sir; that is all, I think.
Mr. LLOYD. Is that a full statement of your case?
Mr. PETERS. Yes.
M; LLOYD. Have you anyone you desire to make an oral state-
ment'.
The CHAIRMAN. I would like to ask Gen. Stewart with reference
to the concrete illustrations mentioned by Mr. Mack of 64 different
rates being possible on a single route, if the proposed or suggested
plan of the department should be enacted into law § What have you
to say in reference to that? Have you any criticism to make as to
the correctness of his statement?
Mr. STEwART. My impression is that Mr. Mack has greatly exag-
gerated the possibilities of fluctuation in service and multiplicity of .
rates on a particular route. I should like to analyze the statement,
and prepare and read to you for the record our specific reply thereto.
Apparently he has taken the possibility of running every sized car
on the route, necessitating the adjustment of a loading charge and a
constant terminal charge for each sized car.
1132 . . RAILWAY MAIL, PAY.
The CHAIRMAN. Would you, in this connection, just discuss that
particular phase with Mr. Mack here, so that we will have the benefit
of an interchange of ideas on the concrete illustration such as he has
mentioned? ^. -
Mr. STEwART. Yes, sir. I will ask the privilege of taking his con-
crete statement and making a statement in reply. --
Mr. LLOYD. Have you any questions you might ask him on anything
he has stated in his paper? º
Mr. STEwART. I hardly think it essential to take up the time of the
commission now in going into it.
Senator WEEKs. You say Mr. Mack has exaggerated the possibili-
ties. Do you mean probabilities?
Mr. STEwART. Yes; probabilities.
Senator WEEKs. You do not mean possibilities?
Mr. STEwART. Yes.
Senator WEEKs. Do you mean to say it would not be possible to
have this result under any condition?
Mr. STEwART. I do not know of any conditions which render it
probable.
Mr. MACK. But it is possible?
Mr. STEwART. Not under the conditions of the service. %.
Mr. MACK. The conditions of the service as they would occur out
of this plan? -
Mr. STEwART. Unless you could find such conditions existing to-
day, you can hardly imagine such a condition in the future.
Mr. MACK. Take the existing standards of 60, 50, 40, 30, 25, 20, 15,
and 10 foot apartment cars; I do not think it difficult to find such
illustrations.
Mr. STEwART. I think it would be extremely difficult to find any
such condition on any one route.
Mr. MACK. We have some of them ourselves.
Mr. RowAN. Between New York and Buffalo you will find them.
Mr. MACK. Of course, as I have said, this plan would require the
railroads to build 40 and 50 foot cars, storage as well as mail cars,
because we could not afford to put in a 60-foot car and then get paid
for a 40-foot car; there is too much difference. We run a risk of too
great a loss of money.
Mr. STEwART. You do that now.
Mr. MACK. With full cars, because the amount, depending on the
supplemental space pay, is very small; but if this plan were made ef-
fective we could not; for instance, take a storage car. We could not
run a 60-foot storage car for which we should receive 18 cents and get
only 12 cents and be certain that we derived all the pay that we ought
to have from that car.
Mr. STEwART. Under the proposed plan the tendency would be to
eliminate the Smaller-sized cars by combining what we now call the
authorized space, for which we pay specifically, and the space to
carry the mails which are otherwise carried now in baggage and
storage cars, for which we do not pay an additional specific amount,
so that the objection raised by Mr. Mack would be gradually elimi-
nated from the service. The department would so authorize the
space for distribution purposes in connection with the storage mails,
the mails now carried in the baggage cars, as to practically take up
RAILWAY MAIL PAY. 1133
all the space in a 50 or 60 foot car. So, therefore, his objection
would gradually disappear. -
Senator WEEKs. Could not the department do that?
Mr. STEwART. Yes, sir. When we go on this basis it will be a space
basis and the distinction between distribution space and other space
disappears. It is on this very distinction that exists now out of
which the controversies arise that Mr. Mack and others have spoken
of. The controversy that exists between the railroad companies and
the department is about space. What kind of space? Distribution
space. Space in the car which we claim is only necessary for dis-
tribution space and the company claims should be more because we
may carry some storage mail in the excess space over that authorized.
The CHAIRMAN. If you do, you ought to pay for it.
Mr. STEwART. Mails for which we do not need distribution space.
There is where the controversy arises, and the new plan would tend
to eliminate such controversies, for we would be paying for all space
under the new plan, whereas under the old plan we are paying ad-
ditional for distribution space only. I think the gentlemen have
overlooked that, and it is a very material point in connection with
this plan. is *- :-
The CHAIRMAN. What difference does it make whether it is dis-
tribution space or space for carrying sacks or pouches of mail?
What is the difference? º
Mr. STEwART. There would be no difference under the proposed
law. That is the advantage of the new law in this respect.
The CHAIRMAN. I do not see why you make any distinction at all;
it is so much space occupied and used and it should be paid for.
Mr. STEwART. We do not under the proposed law, but under the
present law there are two different rates of pay, one based upon the
weight of the mail for transportation, and additional pay for
distribution space. Under the law we can not allow additional
money for distribution space except for space devoted to distribu-
tion.
The CHAIRMAN. Is it your contention in the plan suggested by the
department that it is far simpler in its operation than the present
OIlê
Mr. STEwART. Yes, sir; I think so.
The CHAIRMAN. And it is yours, Mr. Mack, and the opinion of
your associates, that it would be more intricate?
Mr. MACK. Infinitely more intricate, and I can not agree with
Gen. Stewart about its eliminating points of dispute. I think it
would multiply them very rapidly, and I am very sure that, that
is the opinion of all railroad men who have studied the question,
that the complications will be multiplied rather than eliminated.
That is one of the great points of objection we have to the space
basis, that it is not a factor that adjusts itself, but it rests absolutely
upon the judgment of somebody as to how much space they would
say they needed. With this large variation of cars we would have
to carry a big stock of all sorts of cars, otherwise we would lose a
great deal of money while we were arguing the question whether
40, 50, or 60 feet ought to be paid for. -
The CHAIRMAN. You would not furnish any more space than they
would ask for 3
1134 - RAILWAY MAIL PAY.
Mr. MACK. We would have to build a lot of cars as a result of the
plan, and we would have to keep in stock a lot of cars we do not
now have. *
Mr. STEwART. Why would you have to build a lot of new cars?
We have the service now in operation, and if we adopt the new plan
we would gradually merge from one to the other without the neces-
sity of the companies supplying new cars. The cars now in use will
serve as well under the new law as under the old. <
Mr. MACK. I haven’t any idea but what there would be demands
for 40-foot storage cars.
Mr. STEwART. What is the average size of your storage cars now?
Mr. MACK. There are no storage cars under 60 feet, and nobody
is building any under 60 feet to-day, except where they build 40-
foot postal cars with the idea of demonstrating that a 40-foot car
would not hold the mail.
Mr. STEwART. Which you partitioned off the mail space?
Mr. MACK. No.
Mr. STEwART. You are not building any of those?
Mr. MACK. No.
Mr. STEwART. I think the railroads are, as a rule, building at least
60-foot cars. My judgment is, and I think these gentlemen are
clearly mistaken on that point, that this plan would gradually tend
to eliminate the shorter-length cars, for wherever we are now paying
for an authorization of 50 feet, for instance, and storage mail is
carried in addition, we would combine the whole into a 60-foot car,
because it will be on the same basis of pay. -
Senator WEEKS. Suppose you only had mail enough for a 40-
foot car. Then what?
Mr. STEwART. Then we would pay for 40 feet, unless there were
storage or baggage mails that could be combined in the 60-foot postal
car, if the company was running that sized car. -
Senator WEEKs. Then they would be running a 60-foot car and
getting pay for a 40-foot car?
Mr. STEwART. If there was a condition of that kind.
Senator WEEKs. Would not that exist frequently?
Mr. STEwART. I hardly think so.
Mr. LLOYD. Does it exist now Ż
Mr. STEwART. In nearly every case where full cars are run I pre-
sume we have baggage mails, and we would combine the space occu-
pied by them with the 40 feet of distribution space.
Mr. LLOYD. Are they not combined now Ż
Mr. STEwART. They are combined, but we do not pay additional
money.
Mr. LLOYD. You pay for carrying the baggage mail by weight?
Mr. STEwART. Yes; and under the new plan we would pay for it
on basis of space and combine it with the other space. -
The CHAIRMAN. Gen. Stewart, what do you say to the presenta-
tion made by Mr. Mack, and some of these other gentlemen, in ref-
erence to the loading charge. You suggest a maximum of 12 cents a
ton loading charge, and they present concrete instances running
from 40 cents up to 77 cents per ton, which latter I think was the
maximum. There is a vast discrepancy there.
RAILWAY MAIL, PAY. 1135
‘Mr. Scott. I would not like to have that 77 cents go into the rec-
ord as a correct figure. We have 107 men in Chicago who do noth-
ing but transfer mail. If we divide their salary into 300 tons of
mail a day it means 77 cents, but if it is 500 tons it means 47 cents.'
I do not know whether to-day there are 300 or 500 tons going through
the station. -
Mr. MACK. Mr. Wade mentioned 80 cents at Jersey City.
The CHAIRMAN. What was the one you mentioned, the maximum?
Mr. MACK. Forty-nine. -
Mr. LLOYD. How are we to know that 49 cents is accurate?
Mr. MACK. There is no question about that. My testimony is that
that is the actual cost.
Mr. LLOYD. And you have figured it out in your statement and
your statement will show that? t
Mr. MACK. Yes. That is the actual average tonnage taken from
the weights of the mail as handled at St. Louis and at Kansas City?
Senator WEEKs. For how long a time?
Mr. MACK. You see it is worked out from an average daily
weight.
Mr. LLOYD. Is this worked out with the same accuracy?
Mr. WADE. There are no special mail employees. We have about
30, perhaps, who work on the mail for an hour or two at a time at
different times during the day and my estimate was based upon the
figures made by the station baggage agents of the number of hours
that each man on this force of porters was engaged in the work of
handling the mails.
The CHAIRMAN. And doing no other work during that period?
Mr. WADE. Doing no other work during that period. •
Mr. LLOYD. How did you determine the weight of the mail?
Mr. WADE. That is from the last annual weighing.
Mr. LLOYD. You obtained the daily average from that?
Mr. WADE. Yes, sir.
Dr. LORENz. May I ask whether the figures given per ton are the
cost of handling on alone, off alone, or does it include the cost of
handling both off and on ? -
Mr. WADE. The cost of handling the tonnage.
Dr. LORENz. That is indefinite. If you transfer mail from one
car, put it on a truck, carry it over to the next car and put it into
that car, that is handling it twice. I understand your maximum of
49 cents includes those two operations?
Mr. MACK. Yes.
Dr. LORENz. So that the 12 cents should be compared with half
your rate and not the entire rate you quote, because Mr. Stewart pro-
poses to pay 12 cents for putting it off and 12 cents for putting it on?
Mr. MACK. It is a loading rate.
Dr. LORENz. Mr. Stewart's is both loading and unloading. That
would make 100 per cent difference.
Mr. MACK. Then it would increase the rate to 24 cents as compared
with 49, but I do not think the bill covers that. *
Dr. LORENZ. That is the intention of the bill.
The CHAIRMAN. The mails loaded and unloaded at terminal, or
anywhere, 12 cents per ton?
1136 * RAILWAY MAIL PAY.
Mr. STEwART. In reply to the question asked me, I should like to
make this request of the gentlemen, that they file with the commission
the data upon which they have reached these conclusions, so that we
may examine it.
The CHAIRMAN. Mr. Mack gave concrete instances which have gone
into the record of ascertainments that he has made on these lines.
Mr. STEwART. He has given his ascertainments, and I want the
data from which he arrived at those ascertainments.
Mr. MACK. We would be very glad to give you that.
Mr. STEwART. This question is an extremely difficult one, and we
have given it all the attention we could, since it was necessary to
submit to you the draft of a bill. Both Dr. Lorenz and ourselves
have endeavored in every way to get adequate light on the subject.
We have examined, for instance, the amounts given by the companies
themselves, on page 14 of the preliminary report of the commission,
on which they set forth certain items of wages and other expenses at
terminals throughout the United States as the basis for their claim
that the department did not allow sufficient in Document 105. We
assumed that that statement represented the maximum and that it
is correct, so far as the judgment of the railway-mail pay committee
was concerned. We have made some calculations upon those figures,
although they are much higher than our judgment would dictate.
The CHAIRMAN. Based on your judgment, do I understand you
think 12 cents is too high! -
Mr. STEwART. I think 12 cents is about right. Based on those fig-
ures, we are unable to make a higher rate than $3.50 for the constant
and the loading charge throughout the entire country; that is, per
trip. That would cover both the loading and the unloading, and is
almost the same amount proposed by Dr. Lorenz in his bill. Ours
is a trifle lower than that, but, as I say, the figures given by the rail-
way-mail pay committee I assume to be the maximum and with
which they could not find any fault. We have also compared our
figures with statements of terminal charges submitted by a number
of terminal associations and union depots to the Interstate Com-
merce Commission, and we find that our constant and leading charge
is well sustained by the figures. .
The CHAIRMAN. That is 12 cents a ton?
Mr. STEwART. Yes, sir. Jn addition to that, I have a specific in-
stance here which is in the files of the department and which covers
the operations of the Terminal Railroad Association of St. Louis.
You all know that the Terminal Railroad Association of St. Louis
handles all the cars in and out of St. Louis and operates the trackage
over the Eads and Merchants’ bridges and extending into the Union
Station. Here is a complete statement of all charges of every de-
scription, including overhead charges.
Senator WEEKs. Furnished by whom? - -
Mr. STEwART. Furnished by the Terminal Railroad Association
of St. Louis in connection with their claim that the allowance of
$50,000 for the special services there should not be reduced. This
proposition has been before Congress for two years. They have
reduced these expenses to a car basis, and they are as follows:
Average cost per car, all lines, operating expenses, $1.767; rental,
taxes, etc., less joint facility revenues, 86.3 cents; total, $2.63; mail
transfer expenses, 6.7 cents a car; Washington Avenue Station ex-
RAILWAY MAIL PAY. - r 1137
penses, 3.2 cents; total, $2.73 a car for all the cars handled in and
out of that immense terminal, the gateway to the Southwest.
Senator WEEKs. Does that cover both in and out?
Mr. STEwART. Yes, sir; that is only one way. Covering a trackage
of 5 to 10 miles outside of the Union Station itself.
Senator WEEKs. Does that mean that they would load and tſhload
mail in the car for 6.7 cents?
Mr. STEwART. These are the figures indicated by this account.
Senator WEEKs. How long would it take a man to do it in your
opinion?
Mr. STEwART. It would depend on the load, of course.
Senator WEEKs. Suppose you filled the car?
Mr. STEwART. You do not mean one man, but you mean enough
men at the station to load it? Of course they have a number of
porters there who are engaged on this work alone.
Senator WEEKs. I mean reduced to the basis of one man. If you
had a dozen men, we will assume that they would do it 12 times as
quickly as one man, but how long do you think it would take one
man to load a car with mail?
Mr. STEwART. I have never made a calculation on that.
Senator WEEKs. What does your common sense indicate?
Mr. STEwART. I should not want to guess.
Senator WEEKs. Do you think it would take him several hours?
Mr. STEwART. No; I do not.
h Senator WEEKS. Do you not think it would take him two or three
OUII°S
Mr. STEwART. There are practical railroad and mail men here who
can give you an exact estimate on that.
Senator WEEKs. But you dispute their figures?
Mr. STEwART. No ; I do not. I dispute their conclusions.
Senator WEEKs. What have you to say, Mr. Mack, as to how long
it would take a man to load a car of mail?
Mr. MACK. Of course that depends on the loading. With our out-
going trains at St. Louis the loading is through a process of time,
and we set our cars for both of the fast mails—South and West—at
9 o'clock in the evening, and the trains do not leave until half past 2,
and the process of loading is going on in five cars on one train and
six on the other constantly during that time.
Senator WEEKs. We are not getting anywhere on this proposition.
Do you think it would take a man three hours to load one of those
C3.I'S
Mr. MACK. It would take two men three hours, I have not the
slightest doubt of it. I am giving, however, an offhand opinion.
enator WEEKs. You have not any men who work for less than 20
cents an hour?
Mr. MACK. No, sir. w
Senator WEEKs. Then, if it would take two men three hours, it
would cost $1.20% -
Mr. MACK. Yes.
Senator WEEKs. Then, how is it possible 6.7 could be right?
Mr. MACK. I do not understand it.
Senator WEEKs. Mr. Peters, are not those figures the cost of all
cars in and out? Is that of mail cars alone or of all cars?
Mr. PETERs, That is mail cars alone.
1138 RAILWAY MAIL PAY.
Senator WEEKs. When he adds it up and says the total cost of all
cars is $2.73 per car, “all cars ” means every class of car handled in
and out of the station, express, baggage, postal, and storage?
Mr. MACK. This statement might not purport to show what Gen.
Stewart has understood.
Mr. PETERs. Bearing on the cost of handling, Mr. Peabody has a
record of a great many stations on the road. . The handling of freight,
of course, is different from the handling of mail, but they keep the
pay for handling freight on a tonnage basis, and Mr. Peabody has
the rate at many of those stations and can give it to us. Whether that
will give you an idea as to what it should cost for handling mail, it
would, at least, give you a very fair idea of what their labor cost is.
Mr. MACK. I would like the opportunity to see the statement that
Mr. Stewart has, to see whether it really shows what he thinks it
does.
Mr. STEwART. Which statement is that?
Mr. MACK. The statement that you have here. :
Mr. LLOYD. Do you wish to make any further statement?
Mr. STEwART. Yes. There was something said by each of the gen-
tlemen in presenting their papers with regard to the Supposed ab-
sence of an exigency for legislation requiring the railroad companies
to carry the mails, and they seemed to be under the impression that
all the railroad companies are carrying the mails without protest and
without threat to discontinue service. I assume that they are not
familiar with the facts as they have developed in the last one or
two years and the situation in which the department now finds
itself where we are confronted almost daily with the difficulty of
keeping mails on the railroads. We have had specific notices from
some of the large companies that they intended to discontinue the
carrying of mails, and cases are still pending where the question is
unsettled as to whether they will continue to carry the mails. I re-
plied to one yesterday; I replied to one last week; and to another one
recently in the New England section. I have a letter on my desk
now in which the writer states that I have forgotten the controversy
I had with him a few months ago in which he threatened to take
the mails off of his entire line and forced me to come to his terms for
railroad mail service. So the matter goes on from day to day.
The CHAIRMAN. The reason being what? Do they specify in their
letters any specific reason ?
Mr. STEwART. Because of difference of opinion existing between
the department and the railroad companies as to what they think
the terms of the service are. For instance, in one case the controversy
was over the fact that the department refused to waive the postal
regulation and relieve the company of the terminal service on cer-
tain routes. Those cases are not infrequent.
Mr. MACR. They are short lines?
Mr. STEwART. No; they are not all short lines.
Mr. MACK. But they are short routes?
Mr. STEwART. They are short routes on branch lines operated in
connection with main-line routes. I did not intend to put into the
record at this time the name of any specific company, but it is well
known that the Toledo, St. Louis & Western Railroad gave the de-
partment notice that on a certain day they would discontinue the
RAILWAY. MAIL PAY. 1139
carrying of the mails. That company has some 400 miles of line
running from Toledo, Ohio, to St. Louis, Mo.; supplying a large
number of offices and towns that are not otherwise supplied by rail-
road-mail service. The withdrawal of that service would result in
great inconvenience to many patrons of the mails and many patrons
of the railroad itself. g
The CHAIRMAN. Would not the threat or the suggestion of with-
drawal of service indicate that, in the opinion of the operators of the
road, they are not making large profits?
Mr. STEwART. Yes, sir. In that case it was alleged by the company
that they were not making expenses. I am satisfied that they had
been induced to believe that by representations which may have been
sincerely made to them, but which were entirely inaccurate. I went
to Toledo and convinced the gentlemen, I think, that they were
wrong in that.
The CHAIRMAN. That is, the management of the company? .
Mr. STEwART. Yes, sir. They consented to continue the service
upon certain conditions, which we attempted to comply with ; but
after I returned to Washington I found that our agreement was mis-
understood by the company, or certainly we did not understand the
matter the same way, and I still have pending the proposition to
take the mails off that road. It is usually over small, trifling, and
immaterial things, as in this case, that these controversies arise. We
asked the company to take care of the mails during the night at two
or three stations where they did not think that they should do
so, and that is one of the things that led to the notice. We discon-
tinued delivery of mails for these towns from the night-mail trains
in order to help out the company and keep the service going, and
have since supplied them by local freight trains in the early morning.
Mr. BALDwin. I will ask General Stewart if any such condition
ever came to his notice prior to that time? In other words, if it
has not all arisen in recent years from the present administration
of the Post Office Department? f
Mr. STEwART. It has arisen during recent years.
Mr. BALDw1N. Yes.
Mr. MACK. Do you not think it is due to dissatisfaction with the
pay, dissatisfaction with the requirements, and dissatisfaction be-
cause there has not been reasonable pay, in their judgment, for the
Parcel Post Service? Is not the whole trouble one resulting from the
question of inadequate pay, or believed to be inadequate in the judg-
ment of the railroads, and is it not further true that it applies to ex-
ceptional instances and does not apply to large railroad systems or to
the railroads of the country anything like a whole?
Mr. STEwART. Answering your last question first, we have serious
controversies with some of the large companies with regard to dis-
continuing the mail service, not with the Missouri Pacific, the Bur-
lington, the Pennsylvania, or the New York Central, but with some
roads of what might be called the “intermediate grades.” Answering
your other question, I am compelled to say that I believe that the
sentiment of managers of railroads throughout the country in regard
to railway-mail pay and its adequacy, or inadequacy, has been
brought about by the needless and unwarranted agitation by persons
35797—No. 10—14—3
1140 RAILWAY MAIL PAY.
.." have represented throughout the country that the mail pay is
too low. $
Mr. MACK. All growing out of the reductions that were made in
1907, and the application of the divisor reducing the railway-mail
pay $9,000,000? There was no trouble before that.
Mr. STEwART. Congress reduced the mail pay in 1907.
Mr. MACK. Yes; I am not charging you with reducing the mail
pay. I am stating the conditions now.
Mr. STEwART. I am also stating the conditions.
Mr. LLOYD. You might charge the Postmaster General with obtain-
ing the divisor.
Mr. MACK. I think we can do that all right.
Mr. STEwART. The Post Office Department assumes responsibility
for changing the divisor. I am satisfied that there are not many men
in this room who do not believe that the mathematically correct
divisor is the right divisor. -
Mr. PETERS. I am one who will disagree with you on that.
Mr. STEwART. Although the pay is fixed per annum ?
Mr. PETERs. No; fixed on the average daily weight carried per
mile per annum.
Mr. STEwART. Yes; not per diem.
Mr. PETERs. Not the weight carried per annum.
Mr. MACK. We will have to refer to the Court of Claims decision.
Mr. STEwART. The Court of Claims has this under consideration
now, and it will be argued next week.
Mr. PETERs. Mr. Chairman, I would like to say to Mr. Stewart that
while there is such a feeling about this, our committee is responsible
for it and I will assume the responsibility, if nobody else will. We
have studied this question as it was never studied before, and we
have had the best minds we could get hold of to devote their atten-
tion to it, and we have advised the railroad people of the country of
the condition, we have advised the people of the country of the
condition and we honestly believe we are doing a great work for very
small pay. That is why there is that feeling. It was not started
with any antagonism, but it was started with the idea of getting
what we think is fair. Now, you differ from us and we differ from
you. We have put all the cards on the table before this commission
and we are asking this commission to decide that. May I add just
one more thing in regard to the St. Louis terminal situation: That I
think there has been a great misunderstanding there. The total num-
ber of cars handled there is proportioned between the different roads;
that is, all classes of cars, at 523,000, as I understand it, and this is
the proportion of cars to each road, and the mail transfer chargeable
to each road has been proportioned on the basis of the total cars for
each road, and that same thing is carried out there. These are not
mail cars, but it is the proportion on which they distribute the mail
expense to each one of these different roads. That is the way I
analyzed the statement, but I think before it should go into the
record as to what is right, we ought to have the St. Louis Terminal
Association analyze it for us. We have with us Mr. Hitt, of the
Short Line Association.
The CHAIRMAN. We will be glad to hear Mr. Hitt after Mr. Stewart
gets through. Do you think Mr. Hitt can make a statement on this
point':
RAILWAY MAIL, PAY. 1141
Mr. PETERs. They carry a similar statement on the terminals at
Atlanta. - -
The CHAIRMAN. We will be glad to have you take this statement up
and make a statement as to your experience of a similar nature.
STATEMENT OF ME, HITT,
Mr. HITT. I can throw some light on the question of cost of cars
for mail transfer, as I am familiar with the operations of the At:
lanta terminal station, the expenses, as I understand it, being divided
on a basis similar to that at St. Louis. That is, expenses are prorated
on basis of all cars handled. The total figure runs about 76 cents,
not including interest. For the information of the roads concerned
this total average figure of 76 cents is divided into certain subele-
ments, and while I do not know that the cost of mail transfer by the
Atlanta Terminal Station is shown separately, other items are and
for that purpose no certain classes of cars are segregated. . For com-
parative purposes from year to year it is entirely convenient to use
the one factor of total average cars. -
By noticing the St. Louis statement there will be found a total of
523,000 cars, which is the average used in getting the rate of 6.7 cents.
In other words, it is an average charge spread over all cars, showing
what proportion of the total average consists of handling the mail
transfer.
The CHAIRMAN. From which, do you deduce that that is not a fair
statement as to the cost of loading the car at that terminal?
Mr. HITT. Not loading a carload of mail. Of the charge of the
grand total cost of handling all cars at the St. Louis Terminal Sta-
tion, 6.7 cents is chargeable to the cost of the mail transfer; that is
the average cost of the grand total of handling all cars.
The CHAIRMAN. Not a cost per mail car in cents?
Mr. HITT. No, sir.
Mr. BRADLEY. Mr. Chairman, I think it will be illuminating to
analyze that rate in this way: The average reported by the depart-
ment for the loading of a storage car is a little over 7 tons. The rate
per car assigned in this statement is a little less than 7 cents. Re-
membering that the cars are not loaded mechanically, but by hand,
that only allows 1 cent a ton for the manual labor of loading a stor-
age car. In the case of a railway post office it would average a little
over 2 cents a ton for the manual loading of a postal car, so it seems
from that point of view alone that it is obvious that the figures can
not be correct.
Mr. STEwART. In regard to this statement of the Terminal Rail-
road Association of St. Louis, I want to say that we have not had an
opportunity of analyzing this with reference to the question before
the commission, but I simply "introduced it here to-day during the
casual discussion as I want to give you all the available informa-
tion we have before us. It may be correct, as these gentlemen say,
that this is prorated on all the cars, for I think it very low. It struck
us as extremely low, but we did not predicate a rate upon it.
The CHAIRMAN. I misunderstood you. I thought you had this un-
der consideration when you came to your determination as to the
maximum of 12 cents.
1142 RAILWAY MAIL PAY.
Mr. STEwART. Not at all. -
(Mr. Stewart subsequently submitted the following memorandum
relative to this matter:)
As stated in the hearings, the average costs for each car were as follows:
Operating expenses * $1.767
Rental, taxes, etc., less general facilities revenue_-_ __ . 863
Total----------------- ____ 2. 630
Mail transfer expenses _ . 0679
Washington Avenue Station eXpenses–––––––––––––––––––––––––––––––– . 0324
Grand total–––––––––––––––– _ 2. 731
The total mail-transfer expenses are shown in the company’s statement to
be $35,557.25. A statement submitted by the company for the fiscal year ended
June 30, 1912, showing the number of mail, express, and baggage cars handled
at the Union Station, St. Louis, Mo., gives the total number of mail cars
handled as 53,175. It has been ascertained from the records of the department
that the total weight handled on and Off at the Union Station for the several
mail routes involved aggregates 133,590 tons per annum. Dividing the total
mail transfer cost as above stated by the total weight handled results in an
average cost per ton handled of 26.62 cents. Dividing the total weight by twice
the number of Cars handled gives the average load for each car in and out of
the station as 1.26 tons and shows the average number of mail cars handled per
day as 291. However, this total mail transfer cost is based on two items, one
for actual labor involved in handling the mails by porters aggregating $29,017.25,
and the other for supervisory labor of eight foremen at an annual cost of
$6,540. The total cost per ton handled should therefore be divided into the
Cost for handling and the cost for supervision, which produces 21.72 cents and
4.90 cents, respectively. -
Mr. PETERs. Now, Mr. Chairman, if you would like some more in-
formation as to the average cost for handling freight in less than
Carloads in freight houses, which would give you a fairly good idea
of what would be a good average cost of handling the mail, Mr.
Peabody has some figures on that subject.
The CHAIRMAN. We would be glad to have Mr. Peabody come for-
ward and give us the benefit of the computations he has made on the
Atchison road.
STATEMENT OF MIR. PEABODY.
Mr. PEABODY. Mr. Chairman, when I received a copy of pamphlet
No. 8 and noticed the allowance of 12 cents per ton, I immediately
commenced an investigation as to the cost of handling less-than-
Carload freight on our own line at various points. We keep these
figures constantly on file and I have compiled the actual handling
cost for less-than-carload freight for the months of September, Oc-
tober, and November, those months being taken as being the last
three months where I had the complete record at Chicago, St. Joseph,
Ransas City, Topeka, Wichita, Oklahoma City, Fresno, Cal., San
Francisco, Los Angeles, San Diego, Dallas, Fort Worth, Galveston,
and Houston, as being representative points over the country. The
statement covers the number of cars that we handled at the time,
the number of tons loaded into those cars, the actual handling cost.
and the cost per ton. The Chicago cost per ton was 45 cents; St.
Joseph, 36 cents; Kansas City, 45 cents; Topeka, 32 cents; Wichita,
35 cents; Oklahoma City, 31 cents; Fresno, 44 cents; San Francisco,
47 cents; Los Angeles, 53 cents; San Diego, 46 cents; Dallas, 45
RAILWAY MAIL PAY. 1143.
cents; Fort Worth, 31 cents; Galveston, 23; Houston, 34 cents;
making an average of 43 cents.
The CHAIRMAN. Will you kindly give the committee the benefit
of the information as to what factors entered into your calculation
in making up those costs. a'
Mr. PEABODY. The cost of the truckers and the stowers, the cost
of the checkers. It is all labor cost and there is included no clerical
cost in connection with the billing. .
The CHAIRMAN. No overhead charge whatever?
Mr. PEABODY. No overhead charge whatever, but simply labor cost.
Dr. LoRENz. Is that cost per ton counted once off and once on?
Mr. PEABODY. That is the cost per ton of handling. Most of it is
received from a wagon, it is unloaded from the wagon by the man in
the wagon.
Mr. LLOYD. That includes both the cost of loading and unloading?
Mr. PEABODY. Oh, no. It is unloaded from the wagon to the plat-
form by the men in the wagon and our truckers take it from that
point and load it into the cars. It is true, however, in some cases,
we do transfer freight and in that case it would check the labor cost
of taking it from one car and putting it into another.
Mr. STEwART. How much of this is an apportioned cost and how
much is direct?
Mr. PEABODY. Not a cent apportioned. It is was all direct labor
cost.
Mr. STEwART. These men do not do anything else but handle
freight?
Mr. PEABODY. They all work by the hour.
Dr. LORENZ. Is it not true that in the case of the mail handling
that the work of the checker and the work of the stower in the car
is done by the Post Office Department and not done by the railroad
company?
Mr. PEABODY. Certainly not done by the railroad, because they
have no interest in the car.
Dr. LORENz. So that these figures would make a difference in the
comparison?
Mr. SEARLE. With reference to the loading of storage cars on
our line, the stowing away is done by the railroad employees and
not by the post-office employees.
The CHAIRMAN. Then, Mr. Peabody, if you had a car of freight
loaded at Chicago and unloaded it at Houston, the cost of the loading
and unloading would be the cost of the total of your two computa-
tions; that is, 45 cents and 34 cents?
Mr. PEABODY. The same total; yes, sir.
The CHAIRMAN. Seventy-nine cents would be the cost?
Mr. PEABODY. That is correct.
Mr. STEwART. What are the services performed by these porters?
Mr. PEABODY. You mean the truckers?
They are not porters. They put the stuff on the truck and truck it
to the car. *
Dr. LORENZ. Does it include the cost of weighing the freight?
Mr. PEABODY. No; this is not mail, but it is freight. They take it
from the point that it is put into the house at the freight-receiving
door, load it onto the truck, truck it to the car, unload it, and come
back and get another load.
1144 RAILWAY MAIL PAY.
Mr. STEwART. Put it in the car? -
Mr. PEABODY. They run the truck into the car.
Mr. STEwART. And stow it in the car?
Mr. PEABODY. No ; there is a stower in most cases.
Dr. LORENZ. Does it include the cost of weighing the freight?
Mr. PEABODY. I would not be certain. I should say I think not.
There is a scale at the door and the weighing is almost automatically
done as it goes in.
Mr. LLOYD. Some one has to look after it?
Mr. PEABODY. Yes.
Mr. SCOTT. The general practice is to accept small shipments on
shippers' weights; they are already fixed by tariff by special instruc-
tion in regard to the weight. For instance, a box of soap would be
put in at So many pounds; that would not be weighed, and it saves a
great deal of time in that way. r -
Senator WEEKs. How much do you pay these men an hour?
Mr. PEABODY. I do not know.
Senator WEEKs. How much do you think?
Mr. PEABODY. Somewhere between 20 and 25 cents, I think. I do
not know what the rate is; it varies at different places. I should
judge in Los Angeles the rate of pay was a good deal more, because
the rate there is 53 cents, whereas in Galveston, where they employ
colored labor, the cost is only 23 cents.
Mr. STEwART. What is the character of the articles?
Mr. PEABODY. Everything that is shipped.
Mr. STEwART. Are they small articles?
Mr. PEABODY. Small boxes and large boxes.
Mr. STEwART. Then there is quite a material difference from sacks
of mail that are all uniform in character and size?
Mr. PEABODY. Oh, yes. It is not intended to be compared with
mail, but it is an indication of what it will cost to handle stuff over
the platform.
Mr. LLOYD. Then this will prove that the proposed rate of $1.40 is
a little bit too high, would it not?
Mr. PEABODY. $1.40 for what?
Mr. LLOYD. This proposed bill allows $1.40 for the terminal charge
and, according to this statement
Mr. PEABODY. Oh, no. As I understand it, $1.40 is the expense for
handling the car, switching, and cleaning.
Mr. STEwART. How much longer do you think it would require to
load a ton of this kind of matter you are speaking of than it would
require to load a ton of mail in sacks?
Mr. PEABODY. I should think that if there was any difference it
would be in favor of the merchandise.
Mr. STEwART. You say they are smaller packages?
Mr. PEABODY. Smaller and larger.
Mr. STEwART. Are they principally larger or smaller?
Mr. PEABODY. There are all sorts. They run all the way from 10
pounds up to 200 and 300 and 400 pounds. In some cases they load
pianos, furniture, and everything else of that sort.
Mr. STEwART. What would be the average weight of the parcel?
Mr. PEABODY. That would be impossible to state.
Senator WEEKs. What is the average weight of a sack of mail?
RAILWAY MAIL pay. 1145
Mr. STEwART. It depends somewhat on whether it is storage mail
or mail in the working car.
Senator WEEKs. The sacks are of different sizes?
Mr. PEABODY. Yes. +.
Mr. McBRIDE. The average weight of sacks containing second
class mail is about 40 pounds.
º CHAIRMAN. What is your average for first-class mail, and
third'.
Mr. McBRIDE. I could not say. --
Senator WEEKS. The only value of this is whether it is a fair com-
parison with the mail. Are you prepared to say it is not?
Mr. STEwART. I am not. I was trying to get information from
him because I am not familiar with the freight business.
Mr. SAFFORD. I think the department has a regulation in order to
conserve the use of equipment that requires that any sacks having
less than 25 pounds shall be consolidated, so that the weight of mail
sacks would run, according to their theoretical adjustment of the
matter, from 25 pounds to, probably 250 or 300 pounds. A sack of
documents going out of here, for instance, is as much as two men
can handle. -
Mr. McBRIDE. I might say that in 1909 when the department de-
termined upon the basis for the allotment of closed-pouch space a
record was kept for a period of the weights of pouches and sacks on
closed-pouch lines, from which it was determined that the average
weight was about 20 pounds on closed-pouch lines.
Mr. PEABODY. If the average is 20 pounds for the mail, there are
more packages of mail to be handled per ton than less-than-carload
freight.
Mr. LLOYD. But you can handle them more easily because they are
uniform 2 -
Mr. McBRIDE. The figure I gave was for sacks and pouches car-
ried on closed-pouch trains, not on trains where mail is carried in
bulk. The limit of weight prescribed by the department is 150
pounds to a sack.
Mr. MACK. You have a larger number of parcels and do not get
the limit : •
Mr. TUTTLE. It is a fact you have to take a great deal more time
in handling the ordinary freight packages of glass and groceries,
than the average sacks of mail? --
Mr. PEABODY. We would be glad to believe our men handled that
stuff carefully, but we do not believe they do.
The CHAIRMAN. Mr. Peabody, have you any other statements in
reference to this?
Mr. PEABODY. No.
Mr. LLOYD, Mr. Mack, suppose that, according to your view of
things the commission should commit the unpardonable blunder of
accepting this space basis. What would you say as to the division
into the five classes, “Services herein provided for shall be of five
classes, namely, full railway-post-office-car mail service, apartment
railway-post-office-car mail service, storage-car mail service, closed-
pouch mail service, and side, terminal, and transfer mail service ’’’
Mr. MACK. How many classes do I think there should be 2
1146 RAILWAY MAIL PAY,
Mr. LLOYD. If we are going to accept this theory of the space basis,
what is your objection to the division into classes, and are those the
classes that ought to be made?
Mr. MACK. I think the parcel post is developing a very consider-
able change in the Postal Service. The probabilities are with our
company, that we will not build any mail apartment cars less than
30 feet in length.
Mr. LLOYD. You would have these five divisions, would you not, if
we are going to have this space basis?
Mr. MACR. On any space system I would not think there would be
need of any such number of units. To-day, for instance, practically
all of the apartment-car service is developing overflow mail into bag-
gage cars, and we find that a pretty general condition in the service.
They work this mail up at the terminals.
Mr. LLOYD. Now, what kind of services, if they do not adopt these
five classes, should be adopted? You are not committing yourself to
space, but you have decidedly taken a position against space and in
favor of weight. But suppose we should conclude to make a report
in favor of the space basis. Now, if we do, you people are certain
to protect yourselves as much as possible in the fixing and arrange-
ment of the line in reference to the space basis. I want your idea
with reference to these things. I am not committing any member of
the commission or myself, but suppose we come to the conclusion that
General Stewart's suggestion, or something like that, should be the
basis of pay ? I want to get at your notion with reference to these
classes. You have not objected to General Stewart's provision with
reference to side, terminal, and transfer mail service, because that is
one thing you want, and he relieves you of that burden. -
Mr. MACK. Yes, sir; we will be very glad to be relieved of that.
Mr. LLOYD. So you would be satisfied with that suggestion. How
about the other, the railway postal car, apartment railway postal
car, storage and closed pouch mail service? You would need all of
those, would you not?
Mr. MACK. There are all classes of that kind of service to-day, but
the proposition to pay for them on a space basis would produce these
difficulties that we have endeavored to point out. -
Mr. LLOYD. Would it produce difficulty if you changed the classes?
Mr. MACK. I think the service itself is producing a change in the
matter of apartment-car service, or will produce it. For instance,
let me show you the effect of a change that came up a day or two
ago on the Denver & Rio Grande. On a train out of Salida they
have a 25-foot mail apartment car w
Mr. LLOYD. I have not reached that point yet, but I am coming
to that.
Mr. MACK. All this has a very direct bearing on the sizes of apart-
ment cars and shows you how the overflow mail is going into the
baggage car, and for that reason, as I say, we will not undertake to
build anything less than 30-foot mail apartments in the future. For
instance, on the Rio Grande train, No. 315, out of Salida, the baggage-
master said that there are 77 sacks of mail in the baggage car, and
he makes a note on the bottom of his report and says that is less than
half the number when they are not weighing the mail. When weigh-
ing the mail they load up their car to a greater capacity, because it
is easier to weigh it. As I say, we would not undertake to build
RAILWAY MAIL PAY. 1147
anything less than 30-foot apartments on our railroad hereafter.
Particularly will that be necessary with the parcel post. If the
parcel post develops and increases, the tendency is going to eliminate
need for a smaller car; that is, the smaller cars that are in service
to-day. ... If the department was to enlarge the space to take in all
the mails, instead of throwing the surplus mail into the baggage
car, it would eliminate the smaller cars, except, in my judgment, in
very rare instances on very small lines. *
Mr. LLOYD. In the suggested bill it is proposed that—
Full railway post office car mail service shall be service by cars 40 feet or
more in length, constructed, fitted up, and maintained for the distribution
of mails on trains. Four standard sizes of full railway post-office cars may be
authorized and paid for, namely, cars 40 feet, 50 feet, 60 feet, and 70 feet in
length.
What would you say to those classes?
Mr. MACK. I pointed out that we are not building anything less
than 60-foot cars, neither storage cars or postal cars. No railroad is
building 40-foot cars.
Mr. LLOYD. Do you think that any system that is adopted ought to
provide for only one class of car, namely, a 60-foot car for a railway
post-office car?
Mr. MACK. I do not think any plan ought to provide for anything
less, when a full car is used, than a 60-foot car.
Mr. LLOYD. You think that is the view generally of all your
people? -
Mr. MACK. I can not say for them all, because we have not dis-
cussed it, but I think it is fair to take the judgment of the railway
men present. That is my own view. We would not build anything
less than 30-foot in apartment cars in view of the service as it exists
to-day and the probable development of the parcels post on similar
lines. As to full cars, nobody would think of building less than
60-foot cars except as a matter of compulsion to protect ourselves on
40 and 50 foot car rates. -
Mr. LLOYD. Then, as I understand you, you think if that was
adopted there ought to be one standard size for full cars and that
should be 60 feet in length?
Mr. MACK. That is my judgment.
Mr. LLOYD. In reference to the post-office cars, there is a recom-
mendation of “Five standard sizes of apartment railway post-office
cars may be authorized and paid for, namely, apartments 10 feet,
15 feet, 20 feet, 25 feet, and 30 feet in length.” As I understand you,
your suggestion is that if this is to be adopted there should not be but
one class, and that class a 30-foot car.
Mr. MACK. I say I do not want to commit myself as favoring the
plan at all. I don’t think space fits the service.
Mr. LLOYD. We are not committing you to the plan.
Mr. MACK. Nor to any rate in connection with it, but I say we
would not build anything less than 30-foot apartments, and I do not
know why any other railroad should do so, considering the develop-
ment of the Postal Service.
Mr. LLOYD. You do not want to say that, because if this becomes a
law it would provide that you will have to do it.
Mr. CoNNoLLY. The Jersey Central is now building steel cars, 71
feet in all, 70 feet inside length, and every one of those cars are to
1148 RAILWAY MAIL PAY.
have apartments, although the department had standardized some
of those down as low as 10 feet on our trains.
Mr. STEwART. He is willing to provide that 30 feet under the
present conditions.
Mr. LLOYD. Under your suggested plan he would not get paid for
weight, but he would get paid for space. Then the question of 10
feet, 20 feet, and 30 feet is to him a very serious matter if he is paid
on a space basis. He says that he ought to be paid for the full 30
feet, because now he gives 30 feet; hereafter he will give 30 feet if
he is required to use that car, and he ought to have pay for 30 feet.
You say, in the suggested plan, we will not pay you for 30 feet, not-
withstanding you furnish the car, but we will pay you for 10 feet, 15
feet, or 20, as the case may be.
f Mr. STEwART. But his rate of pay does not pay him now for 30
eet. -
Mr. LLOYD. This is on an apartment car, where he gets paid for
nothing except the weight.
Mr. McBRIDE. Is it not probable that in that car, where he uses
10 feet only for distribution space, the rest of the space would be
taken up with storage mail, which, if the apartment was but 10 feet
in length, would have to be loaded in the baggage end? Under the
new plan we would pay for 30 feet under such conditions.
Mr. CoNNoLLY. I beg your pardon. You are using that 30 feet
now and sending it back in your baggage cars, too.
Mr. McBRIDE. Then under the new plan we would probably pay
for more than 30 feet.
Mr. CONNOLLY. I think the position is inconsistent. #
Mr. MACK. I do not think that these two questions have been thor-
oughly discussed between us, and I do not know what their view is,
but I think it would be a good idea to take the view of the other
gentlemen present to see whether the view that I have expressed, as
to 30 and 60 feet, is correct.
The CHAIRMAN. We might add if any of the gentlemen present
differ with Mr. Mack’s judgment in this matter, and his statement
that his line, so far as he believes, would build no cars of less than
30-foot apartment, that they will so indicate.
Mr. PETERs. In our opinion, Mr. Chairman, we would not be justi-
fied in building new steel cars (and that is all we build on account of
running through the tunnels and running the electric service), with
an apartment of less than 30 feet. In building a steel car it costs a
great deal of money to change the apartment. Taking one-sized car,
even though the department is asking for only 15 and 20 feet now,
we feel that with the growth of the mail they will soon be using 30
feet and it is better to adopt a standard of 30 feet instead of going
to the different sizes, because in building the steel cars we can get
them all of the proper size. -
Mr. Chairman, we have with us a number of the representatives
of the short-line road association of the southeast, who hoped that
they could have a hearing before you to-morrow morning, if you
will give them the time.
The CHAIRMAN. We will be glad to hear them in the morning.
Mr. LLOYD. In the matter of storage cars in this suggested bill,
there are four standard sizes, namely, 40 feet, 50 feet, 60 feet, and 70

RAILWAY MAIL PAY. 1149
feet. ? If this system is to be adopted, what do you say as to these four
S126S
Mr. MACK. The same thing would apply to the storage car and
apply more particularly to the storage car than the mail car. A
storage car is nothing more or less than a baggage car with perhaps
better lighting facilities than the baggage car.
Mr. LLOYD. Do you not have all lengths of baggage cars?
Mr. MACK. No, sir. We do not build anything in the way of bag.
gage cars to-day under 70 feet. The tendency is not to build short
cars, as we have outgrown that condition entirely.
Mr. LLOYD. Suppose, if this system were adopted, there is enough
storage mail to fill a 40-foot car, or fill the space of a 40-foot car in
the car. Do you think it would be right for the Government to pay
for 60 feet?
Mr. MACK. I think it would be right for the Government to pay
for the car, or whatever we have to haul, whatever we have to fur-
nish. We ought not be asked to furnish a 40-foot car or a 50-foot
car, or carry a lot of irregular-sized cars in our equipment simply
to give what would be equivalent to a special rate to the Govern-
ment in furnishing a car we do not furnish to anybody else.
Mr. LLOYD. You are getting at the point I want to reach with
reference to storage and other cars, too. Is the mail car to be 10
feet, 15 feet, 20 feet, 25, 30, 35, 40, 45, 50, 55, 60, 65, or 70 feet to suit
the suggestion of the Post Office Department, or would it be a wiser
proposition to have a standard R. P. O. car and a standard storage
car and a standard apartment car. Do you think it would be better
to have a standard car?
Mr. MACK. It is a transportation proposition.
Mr. LLOYD. What would you say to that, General Stewart?
Mr. STEwART. I think it would be very unfair to the department
to establish such a unit, because it would compel the Government to
pay for a large amount of space that it was not using and did not
need to use, and which the railroad company could use. Those con-
ditions could be met just as they are met to-day. Take, for instance,
the 70 foot cars which some companies have been building for
some time past. They do not want to build any more 60-foot cars.
The companies came to the department and asked if we would con-
sent to their partitioning off 40 feet in a 70-foot car, and if we
would agree to pay for that 40-foot space in a 70-foot car as a 40-
foot car. We said we would do so and made a regulation to that
effect, and we are now paying for some such cars. So that this
Question could be met in the same way. They use the remainder of
the cars for their own purposes.
The CHAIRMAN. What do they use them for, for express and
baggage?
Mr. STEwART. I do not know. I presume so.
Mr. Scott. I had no recollection of that. -
Mr. STEwART. Haven’t you 70-foot cars with 40-foot apartments?
Mr. Scott. Not one on the system.
Mr. BRADLEY. Probably you are thinking of the Frisco.
Mr. STEwART. Probably. I will correct the record. .
Mr. MACK. There is one road that does that, and I think that was
the Frisco Road, and I am very sure they only do that on one train,
which is the Meteor out of St. Louis—their fast train.
1150 RAILWAY MAIL PAY.
Mr. STEwART. The regulation was promulgated to meet a condi-
º in the service, and any company is privileged to avail itself
of it.
Mr. LLOYD. As I understand your proposed bill, you propose to
pay for the maximum space used. Then you would have a great
deal of dead space in every car, would you not?
Mr. STEwART. No. We would pay for the space that we authorize.
Mr. LLOYD. In order to get at the question of authorization, you
would determine about how much mail was carried from day to day,
and you would direct them to furnish from time to time a certain
car—60 feet, full R. P. O. car, and a 60-foot car. Now, that is the
terminal arrangement every day, starting out at the same time, and
you suppose they must furnish that 60-foot car, yet you may not fill
it half of the time.
Mr. STEwART. The probabilities are we would have need for all
that space if we authorized it. We would take into consideration
riot only the need for distribution, which we now do, but how we
could use the rest of that car for storage or for baggage mail, and we
would attempt to utilize all of the space.
Mr. LLOYD. If you had a full 60-foot car which you had ordered,
what objection would there be under this proposed bill to using part
of it for storage? - -
Mr. STEwART. None. That is what I am saying. We would com-
bine the space needed for distribution purposes and that needed for
the other purposes in one car where we could. We can not do that
now and pay for all the space occupied, for the additional pay for .
space is allowable under the law only for space needed for distribu-
tion purposes.
Mr. LLOYD. According to your plan, suppose that you would
order in a given place a regular 60-foot R. P. O. car, and that is the
only car you would need on that particular line for that particular
train, and it turned out that during certain periods of the year when
there was an excessive amount of mail that you had an overflow;
what would you do with that?.
Mr. STEwART. We would have to authorize that additional space
during the time that we needed it. Under this bill we can authorize
from time to time additional space. That is one of the advantages of
the bill—it makes authorization conform to the conditions existing
in the service.
Mr. LLOYD. How do the railroad companies prepare for these
emergencies? Suppose you order a 60-foot car on the line I am
speaking of and it turns out to be during the Christmas time, which
is a busy time with all the railroad companies, and you demand two
cars? -
Mr. STEwART. They would put on an extra car.
Mr. LLOYD. They would not have it to put on.
Mr. STEwART. They meet that same necessity now, and we pay
under the present plan for the additional authorization.
Mr. LLOYD. Do you know what becomes of that car during the rest
of the year? &
Mr. STEwART. I could not say. The cars in reserve are probably
utilized, and cars are doubled back on their runs with shorter lay-
overs at terminals. .
RAILWAY MAIL PAY. 1151
Mr. LLoyd. That is a very important thing to determine. If it is
true that you make a demand for a car for one month in the year
that is not used during the other 11 months, and it can not be used
during the other 11 months, then that is a matter which ought to be
considered. -
Mr. STEwART. There are a number of cars in reserve. -
Mr. Scott. We build standard cars on the Pennsylvania system
70 feet long. If the Post Office Department authorizes a car 60 feet
long during the winter months and in the summer months, when the
business becomes light, when the mail becomes light, they would say
we only need a 40 or a 50 foot car, the car is not a collapsible sort of a
thing, and we can not change it, because the framing of the car is
such that we can not change it.
Mr. LLOYD. You do that like you do with your freight. There
are some times when you utilize all of your cars in handling the
freight, and other times when you will not use them all.
Mr. SCOTT. We are put to our wits end to find cars to handle the
business during the busy season. We had a lot of old cars that were
going to the scrap heap, but the Post Office Department allowed us
to use them in an emergency.
Mr. LLOYD. Do you not have empty movement in freight cars?
Mr. Scott. Of course, but that is considered in the rate.
Mr. LLOYD. You do not take into consideration the cars that are
held in reserve?
Mr. Scott. We know what our empty freight car movements are
during the year, that is, a certain percentage of the total movement,
and the freight car also has a minimum load, which the postal car
does not. I do not see how we can have two or three different types
of cars, it would be an enormously expensive thing for us to build
cars that cost anywhere from $9,000 to $12,000 and have to hold
them in reserve.
Mr. LLOYD. Is there any necessity for having these provisions of
10, 15, 20, 25, and 30 foot apartment cars?
Mr. SCOTT. I have been trying to get a standard car for a good
while; that is, a standard apartment and a standard full car.
Mr. LLOYD. Suppose you have a space basis, then the Government
* have to pay for the full 30 feet whether they used 10 feet or
15 feet.
Mr. Scott. It seems to me the thing to do would be to fix a
standard, as you suggest, at 15 feet and 30 feet, and pay a higher
relative rate for 15 feet than for 30 feet. We had a case on our line.
where a 60-foot car was authorized in one direction and an apart-
ment car in the other. We had to either haul both of those cars over
the road empty one way, or we had to allow a 60-foot car going east
to be used as an apartment car. That is what we did during the
weighing and the Post Office Department got the benefit of it. -
Mr. LLOYD. This suggested bill would remedy that, because you
would get paid for the maximum use both ways. In other words,
you would get paid for the greatest space used each way.
Mr. Scott. But that is subject to change, as I understood Mr.
Stewart to say, for the fluctuations of traffic, and then we would be
where we are now, a 40-foot car one way and a 60-foot car another,
The CHAIRMAN. Your authorization is for a round-trip compensa-
tion? - -
ll 52 RAILWAY MAIL PAY.
Mr. STEwART. You do not understand me. I do not think the
application of this law would subject the company to any such fluctu-
ations. The pay under it for cars would be the same in each direc-
tion of a round trip.
Mr. LLOYD. That is a very essential point to come out.
Mr. SCOTT. Would the authority be for the year; for instance,
would you authorize a 60-foot car to be run for the year?
Mr. STEwART. No. For such times as the needs of the service
Would require that space. You do not mean to say the mails will
fluctuate on the Pennsylvania road from month to month to such
an extent as to reduce a 60-foot car to a 40-foot car?
Mr. Scott. I do not know.
Mr. MACK. There are very great fluctuations in mail from day to
day and from week to week and from one part of a month to another.
For instance, during the latter part of the month when the periodi-
cals are running the volume of space is much greater. If for the
maximum needed during the month we had a 40-foot car authoriza-
tion, there are plenty of days when the 60-foot car would be used
to its capacity.
Mr. STEwART. You know the periodical mail is carried largely in
the storage cars and worked in terminals?
Mr. MACK. Only on trunk lines.
The CHAIRMAN. Suppose your authorization holds for a month.
Would that interfere with administration and would it not equalize
and adjust itself if it were over the ordinary peak?
Mr. STEwART. I do not say there are no conditions in the service
when the mails would fluctuate so as to necessitate changes by the
month, but at present it is only during the Christmas season that we
call upon the companies to furnish extra equipment to carry and
handle the extraordinary amount of mails.
Mr. LLOYD. That is getting at a very, very, important point, if
it is true you can make an authorization that will run through the
year except, perhaps at the Christmas period, and at that time you
will ask for additional space only during the Christmas period,
no harm will result to the railroad companies.
Mr. STEwART. No. But I do not think it wise to tie the depart-
ment up for a year's authorization. -
Mr. LLOYD. You have had practical experience. Your idea, as I
understand you now, is that the authorization ordinarily would not
be changed during the year except at the Christmas period.
Mr. STEwART. I would not say during the year, but it would not
be changed from month to month. The changes in the service occur
very much less frequently than that. There would have to be some
remarkable change in the service to cause changes in the car author-
izations. The mails gradually grow and on the big trunk lines the
authorization of space would gradually grow. You would reach the
time on a particular train when you would need more space, and we
would authorize it and that authorization would possibly continue
for some time before any change would be made. Suppose some
changes in schedules should occur, or some other reason which would
result in diversion of a large amount of mail. That would result in
a radical change, perhaps, in the authorization and we might take
off a 40-foot or a 50-foot car, or it might reduce a 60-foot car to a
40-foot car.
RAILWAY MAIL PAY. 1153
The CHAIRMAN. What would be the objection to having the law
specify that any authorization should hold through a period of
months? * -
Mr. STEwART. The objection is, I think, that it is wholly unnec-
essary.
The CHAIRMAN. Then, if it is unnecessary, certainly no hardship
can be done, but there should be something definite in the law so that
the transportation companies could know exactly what they had to
comply with and what you might expect.
Mr. BRADLEY. Is there not an analogy in the practice of the First
Assistant Postmaster General when he makes leases for post-office
buildings and post-office space for a term of 5 years or for a term
of 10 years? He must take into consideration the growth of the
business under those circumstances. It might be held against him
that if he made a suitable provision for the growth of the business he
was wasting the Government’s money in hiring to-day more space
than he was going to need next year, because he was including a
view of next year’s necessities.
The CHAIRMAN. These are slight analogies, but not complete ones,
because in certain localities the postmaster is accustomed to making
arrangements.
Senator WEEKs. I do not understand Mr. Lloyd is talking about
the growth of business, but the irregularity.
Mr. LLOYD. That is it exactly. You can readily see the fear of
the railroads, that is what I term it—the fear of the railroads. They
have the idea, for example, if the mail is heavy in March, which is
in the springtime, that they might make an authorization then,
when in June, when the mail is not so heavy, they would change the
60-foot car to a 40-foot car, change the authorization of 30-foot in
the apartment to 15 feet and carry the change during a period when
there is not so much mail carried. That is the thing they object to,
the probable effect in the space to be used during different times in
the year. Is not that the fear?
Mr. Scott. Yes; that is the fear.
Mr. MACK. A minimum authorization with maximum use.
Mr. STEwART. I think that is without any foundation for this
reason: That the present practice is to give 30 days’ notice before we
discontinue a line or change an authorization. We now give the
company 30 days’ notice.
The CHAIRMAN. Then there could be no objection whatever to
having the law specify that an authorization when made was to hold
good for 30 days? *
Mr. STEwART. Except, as I say, it might be unnecessary.
Mr. BALDw1N. Under the present law it applies to only 10 per
cent of our pay, but when you base the whole pay on the space, the
department multiplies—
Mr. STEwART. I am glad Mr. Baldwin brings that out, because it
gives me an opportunity to correct the idea that the full-car service
represents 10 per cent of the space. That 10 per cent is the pay.
The full cars represent, I think, about 46 per cent of the service now
and authorizations of full cars now control 46 per cent of the service
and not 10 per cent.
Mr. MACK. It is additional pay.
1154 RAILWAY MAIL PAY.
Mr. STEwART. That is for additional pay. If we go on the basis
of this bill, the apartment cars, which are now authorized, in a sense,
would be authorized formally instead of being authorized as they
are now, and that, together with the full R. P. O. cars, represents
about 86 per cent of the entire service. So that we are now practi-
cally upon a space basis So far as the authorization is concerned. It
would be a very slight transition from the old to the new system.
Mr. MACK. But not as to pay?
Mr. STEwART. Pay would be based on space.
Mr. MACK. Ninety per cent of our pay depends on weight and is .
fixed by the volume of mail handled. The 10 per cent of pay repre-
Sents the greater amount of space, which, as you described, is not
fixed on the amount of space used, but it is additional pay allowed
in consideration of the facilities furnished in connection with han-
dling the mail in full cars, because the transportation rate is based
primarily upon the fact that the load in the postal car will not pay
adequately for the haul of the car. *
Mr. STEwART. That covers the field of authorization to which you
gentlemen have so frequently referred. It is 46 per cent of the
service now.
Mr. MACK. We have been very careful throughout, I think, to say
10 per cent of the pay.
Mr. STEwART. You do not say either service or pay, but leave the
inference to be drawn that it is service.
Mr. MACK. We do not desire to mislead in that respect. We think
that 10 per cent of the pay is certainly about all that ought to be
dependent on the judgment and opinion of the officers in the service.
The CHAIRMAN. There is a question I would like to ask you gen-
tlemen while you are here, and that is, supposing that three units
were adopted, the R. P. O. 60-foot car, 30-foot apartment car, and a
storage car, do you agree with the department that there is a dif-
ference in cost of service and that there should be a resultant differ-
ence in the compensation, the department suggesting in its plan a
reduction of 5 per cent on the cost to the Government on the apart-
ment car from an R. P. O. car and a reduction of 10 per cent on the
storage car over an R. P. O. car. What would you gentlemen have
to say in reference to the department's position on those particulars?
Mr. MACK. That there should be less pay for the apartment car.
The CHAIRMAN. Less relative pay?
Mr. MACK. I have pointed out in my statement the very strongest
reasons why it should be higher rather than lower.
The CHAIRMAN. How about the storage car?
Mr. MACK. Well, there is no storage car considered under 40 feet.
The CHAIRMAN. But the storage car will be considered, or is con-
sidered under the suggested plan of the department and the rate of 18
cents per car mile, as against 20 cents per R. P. O. car mile, the full
rate for a 60-foot car?
Mr. MACK. We do not think any of these rates are adequate, but
as to differential rates
The CHAIRMAN. The differentiation of rates; entirely apply your
comments to that. - - -
Mr. MACK. There would be some less care in the maintenance, the
cleaning, and some little less expense in the lighting in the storage
RAILWAY MAIL PAY. - 1155
car. There is no question about that; but just what that would be,
I do not know.
Mr. PETERs. Do you think there should be any less rate per car
mile on the storage cars with full loads than on R. P. O. cars that
haul two or three tons?
Mr. MACK. For hauling, no; I do not. -
Mr. PETERs. Ought there be any difference? Your sºge C2, I’
hauls full weight, yet your R. P. O. car hauls the postal clerk?
Mr. MACK. I did not get the point. Those features that I was
describing were largely covered in the proposed initial charge, clean-
ing, and lighting. -
The CHAIRMAN. I mean in the transportation?
Mr. MACK. In the transportation I can see no difference, certainly
for not any less rate, for the value to the Government would be
greater in the storage than in the full postal car. The storage car
would transport 15 or 20 tons, as compared with the postal car prob-
ably transporting two and one-half tons, so that the storage car
would furnish the most valuable service to the department in the
way of transportation.
The CHAIRMAN. On the car-mile basis?
Mr. MACK. Yes, sir.
Dr. LORENz. In spite of the heavier load of a storage car, would
not the gross weight of the car and contents together be less than
the gross weight of the R. P. O. car?
Mr. MACK. The gross weight?
Dr. LORENZ. Yes. -
Mr. MACK. No.
Dr. LORENz. What is the tare weight of the storage car?
Mr. MACK. I do not think there would be much difference in the
weight of the cars themselves. -
Mr. Scott. A 70-foot R. P. O. car weighs from 120,000 to 125,000
pounds. A 60-foot storage car runs about 100,000 pounds; that is,
50 tons in one case and 62% in the other. The load in the storage car
would raise the weight of the storage car to almost the load of the
working car with the light tonnage in it. The expense to the rail-
road company is energy expended in hauling the cars and weight
over the road, and it costs us just as much to haul a storage car with
a heavy weight as it would a working car with less weight. The
only difference would be in the cost of lighting, as there would not
be any difference in the heating, because they are both heated by steam.
Mr. STEwART. They would not be heated, lighted, or cleaned in
the same way. One is fitted with sanitary appliances, the other
is not. Neither would there be the amount of service performed
by the company en route between terminals, as the greater part of
the storage mails are undisturbed until they reach destination and
require no intermediate handling. -
Mr. scort. Are you not distributing parcel post in storage cars
to-day 7
Nº. STEwART. That is not the point I am speaking of. I am speak-
ing of the service the company renders the Government.
Mr. LLOYD. I am afraid you do not understand it. . He is saying
you now require them to make some distribution in the storage car
and that they are actually distributing the mails in the storage car.
Mr. STEwART. I am referring to the service performed en route
in the handling of mail at stations by railroad men. -
35797—No. 10—14—4
1156 - RAILWAY MAIL PAY.
Mr. Scott. I am getting at the revenue to the company for the
hauling of those two cars and the relative cost of hauling them, and
I say there is practically no difference.
Mr. STEwART. You certainly give us a very different service in the
case of the storage cars. You simply haul the car from one large
terminal to another, with a limited amount of intermediate handling
of mail.
Mr. PETERs. But we haul the large quantity of mail; we perform
the transportation service; in the other you get the distribution
service.
Mr. STEwART. But Dr. Lorenz has called attention to the question
of weight which, according to Dr. Scott, seems to about balance.
Now, I call attention to the other conditions, the difference in fitting
up and furnishing the car, in lighting, heating, and cleaning it, and
putting in sanitary appliances, and of the service the company gives
from one terminal point to another. All of these services are dif-
ferent in the case of a full car from those rendered in the case of an
apartment car.
The CHAIRMAN. Would there be any difference in the cost of
cleaning?
Mr. STEwART. Yes.
The CHAIRMAN. I should think it would cost just as much to clean
a storage car as an R. P. O. car.
Mr. STEwART. No; the requirements are not so exacting. The
statute requires the full cars to be regularly and thoroughly cleaned,
and says that no payment shall be made for such service unless this
is done.
Mr. MACK. The storage cars have to be cleaned.
Mr. STEwART. Yes; but not in the same way as the full cars.
Mr. MACK. They have to have closet arrangements. All baggage
cars are equipped with toilet facilities. As to the cleaning, I do not
think there is much difference in the cost.
Mr. McBRIDE. Storage mail cars have no closet arrangements.
There are not as many windows in a storage car as in a mail car, nor
is the amount of cleaning necessary, because it consists in simply
sweeping the floors in the storage cars, while the floors, racks, side
walls, etc., of the mail car have to be cleaned.
Mr. PETERS. They are getting away from the transportation service
the railroads perform. It is the hauling of the mails.
The CHAIRMAN. What percentage of your cost is the hauling cost
and what percentage of your cost, according to your methods of
calculations or accounting, is your cost for lighting and cleaning?
Mr. Scott. I do not believe I could tell you that off-hand.
Mr. STEwART. The companies have submitted some very specific
* on the cost of cleaning, etc., which are published in volume
No. 6. -
Mr. MACK. A great many of these charges would be the same—in-
spection and maintenance of the car and trucks. * *
Mr. SEARLE. General Stewart referred to the question of storage
cars as a purely haulage question;, that the cars were loaded at ter-
minals and hauled to the destination without breaking the bulk or
breaking the contents. That is not correct in every instance. We
have instances where the bulk is broken at three points; and there is
another instance, with which I am familiar, where the mail is taken
RATEWAY MAIL PAY. 1157
from the storage car at four different points. For instance, in con-
nection with this I want to make this observation: Here is a car
that is a storage car which is loaded with 10 tons of mail, for which
they pay 12 cents per ton. That car is unloaded at a point 200 miles
distant and 4 tons of the mail are taken out there at a junction
point. At a point 200 miles farther a couple of more tons are un-
loaded, with the result that when it arrives at the terminal of the
route there is only a ton left in there. There does not appear to be
any provision for that loading or unloading—a rate for the 9 tons
which have been dispatched at intermediate points—and that is of
frequent occurrence, I am inclined to think, out in our section.
Mr. MACK. While the bill provides for a maximum in both direc-
tions, it does not provide for a maximum over a natural operating
run of the car. For instance, a car starts out loaded and goes to the
end of the line with only a ton left. In that case we would have
great difficulty in having it understood that we ought to be paid for
that car as far as we have to haul it.
The CHAIRMAN. You are paid for the car on the car-mile basis
for the distance the car travels, and you would be paid for the ton-
nage that was put on. If 10 tons went on you would get 12 cents a
ton, and if only 1 ton was delivered at the ultimate destination and
only 9 tons delivered at the intermediate point, you would still get
your 12 cents unloading for each of the 9 tons.
Mr. MACK. No; not under the bill.
Mr. STEwART. The mail would be weighed at each terminal.
b The CHAIRMAN. Then that is a weakness, it seems to me, in the
ill.
Mr. STEwART. I think not.
The CHAIRMAN. It seems to me it is a weakness in the bill if you
only allow one payment, namely, the loading payment on 80 per cent
of the business and double payment on 10 per cent in the case
mentioned. -
Mr. STEwART. Such compensation as is represented by the other
service is covered by the line rates; that is the idea. It would be
wholly impracticable to weigh mails on and off and fix loading
charges at different intermediate points. They can only be fixed at
the ends of the route.
Mr. BALDw1N. Then the Post Office Department has the absolute
control of stating a route. Suppose they stated a route on the Santa
Fe, say from Chicago to San Francisco, and on the Great Northern
from St. Paul to Seattle. Then there would be nothing paid for
any loading or unloading charge except at the initial point and the
terminal point and nothing for all that intermediate route.
Mr. STEwART. The line rates would cover all of that service.
The CHAIRMAN. Then why have any loading charge at all, but
make everything a line rate? -
Mr. STEwART. I have never been particularly favorable to the load-
ing charge otherwise than for this reason, that it is a concession to
the short line; it serves to equalize the pay between long and short
lines. It is not so very material to the large lines on the long routes,
and if it were not for the fact that there are 'so many short hauls,
it would be better, I think, to include the loading, charge and the
constant terminal charge with the one line charge; but the great
advantage of having separate terminal and loading charges is that it
1158 RAILWAY MAIL PAY.
tends to equalize the pay to the short lines and the short routes, and
it does that very well.
The CHAIRMAN. Why would not this be more equitable: If you
were to have an unloading charge which would be 24 cents a ton, you
provide first for loading and unloading the mail at a rate which shall
not exceed 12 cents per ton—that is, for loading maximum, and 12
cents per ton for unloading.
Mr. BALDw1N. Does it say so?
The CHAIRMAN. It says for loading and unloading the mails it
shall not exceed 12 cents per ton.
Mr. BALDw1N. That is both loading and unloading. That is what
it says.
The CHAIRMAN. What would be the objection to saying for load-
ing and unloading the mails the aggregate shall not be more than 24
cents a ton? &
Mr. STEwART. Under the bill as it is now drafted we would ascer-
tain the loading charge at the initial terminal and the unloading
charge at the other terminal. We would adjust each case by con-
sidering them both together and fixing one rate.
Mr. PETERs. Would it not be the one charge for the unloading end?
If you have the one total put on all the loads that went into that car
when it started, you would make no charge on account of labor when
it gets to its terminal. The next car that starts at that point would
take the mail and get full pay for loading and nothing for unload-
ing. I think that was the point the chairman was trying to bring
Cut. At the last meeting, Mr. Chairman, it was suggested that
General Stewart should submit at this hearing some statements
worked up to show the effect on many lines of this proposed method.
He gave us one or two statements at that time, but I think he was
asked to pick out some more typical routes to show what effect it
would have compared with the present basis and this new basis.
The CHAIRMAN. Were you able to prepare those, General Stewart?
Mr. LLOYD. I supposed General Stewart would give that in his
general statement. He will make a statement when you get through.
Mr. MACK. Before we get away from the point which Mr. Searle
referred to, initial and terminal charge, I want to put in one re-
mark. What I was drawing attention to was the fact that while
the proposed plan provides for a maximum authorization in both
directions, or a rate in both directions based upon the maximum re-
quirement, it does not fix what that maximum requirement is going
to be, nor how far that maximum requirement is going to go. For
instance, we will take a car that leaves St. Louis fully loaded;
when that car gets to Little Rock half of the load is out, when it
gets to Texarkana, there is very little left, and there would be an
immediate controversy as to whether we will be paid on that car on
the basis of the maximum load outbound as far as the car gees.
We have cases like this in the postal car service. We have a 60-foot
car that goes all the way from St. Louis to San Antonio and it is
paid for at the rate of 60 feet to Texarkana and from Texarkana to
Dongview it is paid for at either 40 or 50 feet, and from Longview
it is paid for at 60 feet. That is a postal car, but it indicates the
possibility with regard to both storage and postal cars, as to whether
the actual car we are required to use will be paid for on the maxi-
mum basis for the natural operating run of the car. We can not
RAILWAY MAIL PAY. 1159
shift from a 60 to 50-foot car and from 50 to 40 as we go down the
line, so the bill does not cover a very essential feature of that kind
on a space basis, because, undoubtedly, we would have a great deal of
controversy about that.
I would be glad to know what General Stewart's idea would be
in instances of that character, also with regard to the overflow space
in baggage cars on passenger trains which have a full R. P. O. car.
The rate flufctuates not only day by day but as the car goes over
the road; sometimes the load increases between points as well as
diminishes, and in fixing space, how are we going to find out what
that would be 2 We have a car in which the Government can expand
according to the volume of the mail handled, and we can not give
them 6 feet authorized and throw the rest of the mail out. That
is one of the great advantages of the plan of to-day, the Government
is not restricted in the use of all the train service of the country,
but it is on a weight basis, and if you have service on a space basis
which implies reservation and limitation, you can not expect to ex-
ceed it with your overflow mails, neither can you expect to have space
unless you pay for the maximum which you will use.
Mr. STEwART. There would be no essential difference between the
new plan and the old plan in that respect. Mr. Mack speaks of the
fluctuations in the service and the fact that he thinks they would not
get paid under the space basis for fluctuations which occur. They
do not get paid to-day upon the weight basis for fluctuations in serv-
ice during the term.
Mr. MACK. Yes we do.
Mr. STEwART. The mails are weighed once in four years and the
fluctuations occur many times during the four years, but pay is not
reduced or increased for that. You get the full pay you start with
for the four years.
Mr. MACK. We can not accept that view. That may be your view
of the matter. -
Mr. STEwART. I am going to supplement it in a few days with
additional evidence which I hope will convince you.
Mr. LLOYD. What would be the objection to providing for an
initial charge and not for a terminal charge in the matter of loading
and unloading? In other words it provides for loading and makes
a charge of 20 cents for loading and half that charge for unloading.
That is on the theory that every pound of mail that starts will have
to be unloaded, and they will get paid for it.
Mr. Scott. The trouble about that is this: That westbound we
would have a heavy load in our cars to start out with: but east bound
we would have a light load.
Mr. LLOYD. It is equalized. You have a heavy charge going one
way and a light charge going the other.
Mr. MACK. I can do better than that. Mr. Scott would get all
the money on through storage car that we carry. We would unload
it at Kansas City without getting any money and it would come back
emptW.
#. CHAIRMAN. The bill proposes that loading and unloading
shall not exceed 12 cents per ton. The intention is that there shall
be a payment for each activity.
Mr. STEwART. Yes.
1160 RAILWAY MAIL PAY.
The CHAIRMAN. For the loading of every ton and the unloading
of every ton.
Mr. STEwART. Yes; at the terminals. -
Mr. SEARLE. It costs just as much to unload at intermediate points
as it does at the terminal. -
The CHAIRMAN. I did not so understand the bill. I thought it
was a maximum of 12 cents for loading and a maximum of 12 cents
for unloading, wherever it was unloaded. º
Mr. MACK. It would not multiply on the weight. What difference
does it make whether you pay for unloading at Little Rock on our
line or at Texarkana: We start out with 10,000 pounds and unload
5,000 at Little Rock and 5,000 at Texarkana. Why not pay for what
we unload at Little Rock as well as at Texarkana’,
Mr. SEARLE. Another feature with regard to that is that we have
a storage car that starts out with 10 tons, and a good portion of that
is unloaded at a junction point; then, in addition to that, it is un-
loaded at the junction point and there is a quantity that has to be
unloaded from the storage car and put into the working car on the
same train for distribution purposes. Why should not that partici-
pate in the loading and unloading? -
Mr. MACK. Just the same as at the terminal. - A
Mr. STEwART. Because it is amply covered in the line charge.
The CHAIRMAN. If the line charge amply covers part, I do not
see why it should not cover all and eliminate the loading charge.
Mr. STEwART. It would if we had routes of uniform length. As
I said, it furnishes that natural and proper declension in the rate
between the short line and the long line. The loading charge on the
short line will raise the line rate very materially. It provides the
declension in rate which occurs in ordinary rate making, as sug-
gested by Dr. Lorenz’s draft. I was not at first in favor of the
loading charge.
Dr. LORENZ. May I supplement what Gen. Stewart has just said?
It is true that I suggested in my draft the separation between line
charge and terminal charge, but I suggested something in the line
charge which Gen. Stewart has rejected, namely, that that line
charge should increase as the weight of the mails on that line in-
creased, on the assumption that the increased weights of mail occa-
sion not merely additional handling at terminals, but also occasional
rehandling en route, and even though the weight might be small,
compared with the total weight carried, and might not affect the loco-
motives, nevertheless there would be more work on the route with
the heavy mail, as compared with the route in light mail, and there-
fore the line charge itself should increase with the increased weight
of mail as well as the terminal charge.
General Stewart has followed my suggestion with respect to the
terminal charge, but not with respect to the line charge, and I think
that it would be very helpful indeed if the railroad representatives
here present could express an opinion as to whether the weight should
be rejected altogther, proceeding upon the assumption which Mr.
Lloyd suggested in this discussion, if the space basis is to be adopted
at all, whether in that case we should have simply one charge at the
terminal, say $3.50, and one charge on the line, Say 20 or 21 cents,
or whether both the terminal charge and the line charge should be
affected by the weight. In other words, does it appeal to them as
RAILWAY MAIL PAY. 1161
reasonable that if there is one line in which the average post-office
car carries 1 ton of mail, another line in which the average
R. P. O. car carries 2 tons of mail, whether both of those lines
should receive the same rate per car mile, or whether one line should
not receive a greater rate per car mile because of its increasing
weight of mail. Before I leave that particular subject I wish to
emphasize one point which General Stewart made, which appears to
be very important, and that is in regard to the controversy as to what
the terminal rate should be. In reality it is not a controversy be-
tween the Post Office Department and the railroads, but a contro-
versy between the long lines and the short lines solely. To make this
perfectly clear, let as assume that the average rate is 224 cents per
car mile. *
Suppose the average run is 200 miles; your payment for that
line would be $45. If you take out $3 of that for terminal charges,
you have $42 left for the line charge; if you take $5 of that for the
terminal charge, you have left only $40 for the line charge and,
obviously, if your total payment is to be a specified sum, because you
are proceeding on average earnings and average costs per car mile,
it is totally a matter of indifference to the Post Office Department
whether they pay $5 or even $10 for the terminal charge, providing
you reduce the line charge correspondingly, so that the combined
charge will be the rate you want it to be—20, 22%, or 25 cents. So
that I should think that the Post Office Department would be open
to any suggestion as to changing the terminal rate; that they would
gladly make it $5 if the railroads would like to have it $5. The
rate suggested, $3.50 for a terminal charge, makes a difference in
rate of long hauls and short hauls of from about 30 cents for the
short haul of 30 miles, down to about 20 cents for the long haul, and
the sole question is whether that is a reasonable variation for the
different lengths of haul.
The CHAIRMAN. I want to thank Dr. Lorenz for making the sug-
gestion he has made, and to ask the gentlemen representing the rail-
roads if they can throw any light on the question he has propounded.
Mr. SAFFORD. The remarks that Dr. Lorenz just made bring to
my mind a suggestion I made when we were here at the last meet-
ing, but which occurred in our informal talk so that it did not get
into the record. I do not think that any space basis for mail pay,
adjusted on a flat rate for space, that limits the earning capacity of
the railroad facilities by law, is in accordance with any known traf-
fic principle or that it is economically sound.
We carry passengers for, say, 2 cents a mile, and we carry freight
for so much a hundred pounds, but nobody tells us how many pas-
sengers we shall put in a car or how many tons we shall haul in a
freight car. They do not limit the earning capacity of the facility.
The proposition to do that not only disregards the value of the
service performed, but it also absolutely fails to recognize the ele-
ment of efficiency, and in every human activity the element of effi-
ciency is the key to success.
Mr. LLOYD. If you did not have a sufficient number of passengers
in a coach to make it compensatory for you to carry the passengers,
you would certainly discontinue the carrying of it. -
Mr. SAFFORD. We would discontinue the train or cut out some of
the facilities.
1162 RAILWAY MAIL PAY.
Mr. Lloyd. And if it turned out that there was not enough freight
for the freight charge that you were making, you would increase the
freight charge. *
Mr. SAFFORD. Or we would not run the train. . sº
Mr. Lloyd. Then you are doing the very thing in a different way
that the Post Office Department is seeking to do. -
Mr. SAFFORD. The difference is simply this: That when you pass
a law it puts us in a position where we must accept the terms be:
cause public policy requires us to carry the mail and we have no
voice as to whether we can afford to do it for the rate or not. There
is no element of contract or meeting of the minds or anything of
that sort in a rate fixed by law, and there is no element of justice in
a law that absolutely limits the earning capacity of any organization
or any person. That is my fundamental objection to a space basis,
and I think it is vital. I think that Dr. Lorenz will confirm the
statement that no railroad facility is limited as to its earning. You
would not fix a rate for freight on the average earnings per freight
car? - -
Dr. LoRENz. There are several railroads, having representatives
present to-day, which have in force at the Interstate Commerce Com-
mission a tariff which provides that a special baggage car loaded
and not accompanied by persons will be carried at the rate of 25
cents per car-mile for 500 miles and for a distance over 625 miles at
20 cents per car-mile irrespective of what is in the car.
Mr. SAFFORD. In that case the railroad adjusts the compensation
to its operating conditions, having in view the fares of the passengers
to whom the baggage belongs, to be collected on some other train,
as part of the consideration. In the other case the Post Office De-
partment adjusts the operating conditions to its own will or its own
necessity. gº
Mr. STEwART. Suppose it was shown that the rates which the Post
Office Department are suggesting are as high, or higher, than the
rates for like space and service that the railroad companies them-
sºlºs by contract receive for express service. Then what would you
Say º g
Mr. SAFFORD. I would say that in either case the railroad com-
panies should have an opportunity to say whether the service is de-
sirable or not; but I do not believe, as a rule, it can be proven that
the mail rate is higher than the express rate. To start with, the two
services are not comparable. It is worth very much more to carry
mail than it is express.
The CHAIRMAN. Do you mean the cost is very much more?
Mr. SAFFORD. I mean to say we have much more service to per-
form, much more duty, trouble, and annoyance. Practically all that
a railroad does in the express business is to haul the car in which the
express matter is loaded; it has no responsibility for the express
messengers—their personal safety; it has no responsibility for the
traffic. The express company is responsible for all loss and damage
and personal injury and everything of that sort. They solicit the
business, collect the business, load it on the cars, and when it gets to
the destination they take it off the cars, and we do not touch it.
The CHAIRMAN. You do not solicit the Government mail business?
Mr. SAFFORD. Certainly not. But we handle it, and we perform a
thousand services for the Government that we do not perform for
RAILWAY MAIL PAY. 1163
the express people. We furnish a specially equipped car exclusively
for the Government that we do not furnish for the express people;
we take care of all the side and terminal services; with the mail we are
responsible not only for the safety of the business but for the safety
of the people in the car that go with it—six, seven, or eight people
Sometimes. r
Mr. STEwART. Under the proposed plan side and terminal services
are eliminated. That is one of the differences between the express
and the mail service as performed by the railroad companies. I
grant that there are other differences. I am going to submit to the
commission a comparison between express rates and mail rates, and,
then, of course, it will be incumbent upon the representatives of the
railroads to point out the differences that exist, if there are any dif-
ferences, between the services that would be performed under this
bill for the Government and the services performed for the express
companies.
Mr. MACK. With regard to relief from side and messenger service,
it ought to be clear that at the local station the handling is done by
the express company’s employees. In other words, they pay the sta-
tion agent or their own people for the handling at the station as
well, whereas we handle mail at stations as well as handle side and
terminal service.
Mr. STEwART. Under the proposed bill you will not have to per-
form the latter.
Mr. MACK. But under this bill we would have to handle at all sta-
tions.
Mr. STEwART. What handling?
Mr. MACK. At all stations; the loading and unloading at all of our
stations. : • ~
Mr. STEwART. The handling until it reaches the postal employee,
the mail messenger, would continue to be performed by the company.
Mr. MACK. Is it your purpose to have messengers load and unload
directly at the car?
Mr. STEwART. There would be services at the station proper that
would not be performed by the mail mesenger.
Mr. MACK. I say with regard to the express service we do not
even do that. I wanted to bring that out.
Mr. PETERS. But, General Stewart, you make a reduction of 5 per
cent from the present weight basis of pay to give you funds to pay
for this terminal service. Your recommendation is that you would
pay only 95 per cent, cutting off 5 per cent in consideration of your
reducing the cost to the railroads of that service.
Mr. STEwART. You are assuming that it would cost the railroads
generally 5 per cent. Is that your idea?
Mr. PETERs. Yes. And also the special one with reference to
closed-pouch service. I think your Document No. 8 specified that.
Mr. STEwART. I am not expecting that the railway mail pay com-
mittee are prepared to point out all the differences in the services
they perform for the express companies and all the duties they
perform for the Government under this bill. I am prepared to say
now that I am going to file with the joint committee very soon a state-
ment showing a comparison between the amounts the railroads are
now receiving for performing express service and the amounts they
are receiving for performing the mail service. Then, I say, it will be

1164 RAILWAY MAIL PAY.
incumbent upon the representatives of the railroads to point out the
differences in the services they perform for each.
Mr. BRADLEY. Will that statement apply to all the railroads of the
country? -- ' s
Mr. STEwART. Yes, sir; as a whole.
Mr. BRADLEY. I would like to call the chairman's attention to the
fact that we have filed a statement during one of the earlier hearings
showing the incidental service performed for the express companies
as compared with the service rendered the Post Office Department.
Mr. LLOYD. But you did not show what you were receiving for it.
Mr. MACK. I think that the figures that have been submitted on the
space basis show the relative earnings of space. I can tell you off-
hand that it is $3.86 per thousand car-foot mile. -
Mr. LLOYD. He is going to be able to show what you are going to
get or actually receiving for carrying the express between certain
points. He will show what you receive for carrying the mail also
between those points.
Mr. STEwART. I will also show a comparison between the total re-
ceipts of the railroads from the express business and the total receipts
from the mail service.
Mr. Scott. Is that on the present basis or the proposed basis?
Mr. STEwART. On the existing conditions.
Mr. BALDw1N. Express is on a partnership basis?
Mr. STEwART. Yes; I understand that. -
Mr. BALDw1N. Did we not report that in our answers to you on
which Document 105 was based, and did we not report that in
detail for express and mail? -
Mr. STEwART. I think you did, in some of the statistics.
Mr. MACK. How recent are these figures, may I ask?
Mr. STEwART. They are up to date. --
Mr. MACK. You apply those to the express rates?
Mr. STEwART. Yes. --- -
Mr. MACK. The application under the new express rate should not
be considered a voluntary proposition on the part of the railroad
companies, so far as they are concerned, and it should be understood
that those express rates are on trial as experimental for two years,
I believe.
Mr. STEwART. We will also show it on the rates before they were
reduced. -
Mr. PEABODY. Will it be submitted on a tonnage basis?
Mr. STEwART. Yes.. - *.
Mr. SEARLE. If the gentleman intimated that he was going to pro-
duce figures showing: we were getting more for the mail than the
express, I presume if he usesyour figures for compensation he would
do it the same as I do with the express; that is, we get, a certain per-
centage of all the business secured, and we would naturally want
a percentage they have of the Post. Office Department. -
Mr. LLOYD. The theory is this: If you went into a voluntary con-
tract with a private corporation, to transport their goods, you cell-
º ought to be willing to carry the mail on about the same basis
Of pay. ~
Mr. SEARLE. Yes; but without the limitation, the Government puts
OI] llS.
RAILWAY MAIL PAY. 1165
The CHAIRMAN. Are any of you gentlemen going to submit any
further remarks in regard to Dr. Lorenz's suggestion of a few mo-
ments ago?
Mr. BRADLEY. I would suggest that Dr. Lorenz's bill, or pro-
posed law, takes cognizance of the fact, that there is an additional
value of Service rendered in the increased tonnage carried per car.
It is true that his allowances in that direction are very, very small—
they average, I think, about three-tenths of 1 cent per ton per mile;
however, it was in the right direction, according to our view. The
Post Office Department, in their proposed law, gives no consideration
to that. It does not seem to me that an initial and a terminal
charge is a very important contribution to the settlement of this
question, because it introduces a great many additional com-
plications.
However, Dr. Lorenz's suggestions bring us back to a discussion
that was not completed earlier this afternoon, as to the difference in
the value of services between an R. P. O. car and a storage car. It
has occurred to me to suggest that if the department's figures are ac-
cepted, that the average load of a railway post-office car is about 3
tons and the average load of a storage car is about 7 tons; then,
remembering that the principal service which the railroads per-
form for the Post Office Department is the transportation of its
tonnage, it might be roughly assumed that the storage car repre-
sented twice the service that the postal car does. However, that
would have to be modified by the fact that the department, within
the postal car, distributes the mails, en route and so gets some addi-
tional advantage. I do not think, however, that that additional
advantage would offset the difference in 3 tons in the service ren-
dered by the railroads to the Post Office Department. There-
fore, it would seem to be to me that the service rendered is about
equally represented, whether in the R. P. O. car or in the storage car.
The CHAIRMAN. How about the apartment car? Would it be
relatively the same as the R. P. O. car?
Mr. BRADLEY. Relatively the same, except that I think there it
would be just to apply the retail principle. When you divide your
cars into fractions, even on the suggestion of Congressman Lloyd,
15 feet and 30 feet, there is an economical loss in operating those
fractional units in combination with other activities, such as bag-
gage and express. That, I think, should be taken into considera-
tlOI).
The CHAIRMAN. Taken into consideration in doing what; giving
a higher rate relatively.
Mr. BRADLEY. In justifying, I think, a higher rate. When you
proceed further and recognize minor distinctions in the allotment of
space, as in the department’s plan, 10 feet, 15, 20, 25, and 30 feet,
you increase the relative necessity for the recognition of higher rates.
There was some talk this afternoon in regard to the stability of the
rates, and it was suggested that authorization should be made for at
least one month. It occurred to me to contrast that with the pro-
posed rates. For instance, at the rate of 18 cents for the 60 feet
of mail-apartment car space, we would find that a 25-foot apartment
would get 74 cents per mile, a 20-foot apartment would get 6 cents
per running mile. There is a difference of 13 cents. If it happened
to be a short-line route, say, 50 miles long, it would be 75 cents
1166 RAILWAY MAIL PAY.
extra each way per day for the difference between the 20-foot apart-
ment and the 25-foot apartment, or, say, $1.50 a day. Monthly earn-
ings, for that, then, would be $45. If the department should later
notify the railroads that it no longer needs 95 feet, but that it only
needs 20 feet, the cost of making that alteration in the interior of the
car would be an addiional expense plus the loss of mileage rates. If,
on the contrary, the department authorized an extension of 5 feet,
the cost of the alteration in the car alone would eat up the earnings
for a long time to come—that is, the extra earnings.
It seems to me, as a result of all the conferences to-day as well as
our previous study of the subject, that the new plan proposed is very
much more complicated than the present plan, and that the difficulty
with any space plan is more in the administrative treatment of the
subject, the inevitable differences between the Post Office Department
officials on the one side and the railroad officials on the other; that
they would not be able to talk in common language as to what was
meant, and that the amount of friction and irritation would be
greatly increased without any resulting advantages. -
Mr. STEwART. Could I be privileged to ask you when you changed
your mind about the space basis?
Mr. BRADLEY. I will be glad to answer that if it is of any interest
to the committee. When the Wolcott-Loud commission investigated
the question in the year 1900 or thereabouts, it happened that I, as
superintendent of the Railway Mail Service at New York, had
rather intimate relations with the Wolcott-Loud commission and I
prepared a brief relative to Railway Mail Pay which was submitted
to the commission, and incidentally in that brief I favored the adop-
tion of a space basis of payment. Of course, I looked upon the ques-
tion from my viewpoint, as an officer of the postal service. When
this subject came up later in 1911, in Document 105, I gave further
study to the subject, and about that time I left the Government
service and went into the railroad service.
Now, I think that any change in viewpoint tends to broaden the
opinion that one has on any subject, and in that case I think my
views were broadened. I also learned by a more intimate study of
the subject that I had made a mistake previously in assuming that
there was a great opportunity for the Post Office Department to
economize by controlling its own cars and loading its space to
the capacity. When I had, in recent years—within the last two or
three—opportunity to test that by study and by working out particu-
lar examples, I found it was very largely a delusion. The mail
from the initial point, contrary to being a traffic of great stability,
varies greatly. I have seen instances where the volume would vary
60 per cent from day to day. The outbound tonnage is much greater
than the inbound tonnage, varying in some cases from 60 per cent
outbound to 30 per cent inbound. I recall a case of one very im-
portant line where it varied from 85 per cent outbound to 15 per cent
inbound. Then there is a diminishing load in the car from the initial
point going to the terminal point. When you add all those varia-
tions together you find that while you have a maximum loading ca-
pacity at one place, you can not utilize it at all times, so while I would
not say that the department could not practice Some economy in its
loading, I will offer the opinion that it would be a very small per-
centage of economy, unless, in regard to the storage carload, it would
RAILWAY MAIL PAY. 1167
undertake through the establishment of terminal railway post offices
and by delaying the dispatch of mail to allow it to accumulate in
order to get full carloads. That practice would enable them to get
some small economies in the storage car space, and yet, according to
Document 105, the storage car space is only about 10 per cent of the
whole. -
The economies that are practiced in regard to the storage space
illustrate the attention that is given to cases where the weight of mail
can be concentrated, thus attracting the notice of the department
and leading to an effort to reduce the earnings of the company in that
particular line of traffic without, I think, giving due regard to many
of the unremunerative features of the business which the companies
are obliged to perform in the full railway post-office cars, in the
apartment cars, and sometimes in the closed-pouch service. Those
briefly are the reasons why I was led to change my belief, and, in
addition to all that, and perhaps what is in Gen. Stewart's mind, is
the fact that under the last administration, under a particular pres-
sure, there came to pass an attempted economy in the Railway Mail
Service toward cutting down railway post-office space. It was found
that in the development of that policy the postal officials, the chief
clerks, and division superintendents felt under such compulsion from
the criticism of the post-office inspectors that they were obliged to
make recommendations for reductions which were contrary to their
better judgment. There entered into the service a new measure-
ment of space according to the interior facilities; the department
changed its formula to read, not that they needed 40 feet of space,
or 50 or 60, but that they needed the facilities of a 40-foot car or
a 50-foot car, as the case may be. It developed in such a way that
the chief clerk would base his estimate of space according to the
number of pigeonholes he would need in the letter case. He would
say we do not need 5 or 25 pigeonholes, or we do not need but four
sections of that rack instead of five; consequently we only need 40
feet instead of 50.
The CHAIRMAN. You would not take out the rack or the four or
five pigeonholes.
Mr. BRADLEY. It would not pay the railroad company to take them
out. I think that is undue pressure, but space is subject to that sort
of supervision which coerces the postal officials against their better
judgment, and it seems to me it is not as safe as the plan that has
been in use for so many years. Those briefly are the reasons why I
have changed my opinion.
Mr. STEwART. I do not want it understood that I question in any
way the right of Mr. Bradley to change his views or the sincerity of
his position at any time.
The CHAIRMAN. I do not think anyone so inferred that.
Mr. STEwART. I have known Mr. Bradley for many years in the
Postal Service as well as during his connection with the railway busi-
ness since, and I have had the highest regard for him as a postal official,
just as I now have for him as a railway official. Knowing, however,
that he did hold the position that space was the right basis, and held
it so long, and so ably defended it, I asked him if I was privileged to
ask the question why he now thinks the weight basis is better. Per-
haps he does not remember that when the inquiry was under consid-
eration that he wrote me a very good defense of the space basis. I
1,168 RAILWAY MAIL PAY.
did not expect to make any point of this, and do not want to now. I
know that Mr. Bradley is sincere in his views. w
The CHAIRMAN. Do you not think it is advantageous to us all to
get the evolution of his views?
Mr. STEwART. Yes.
Mr. BALDWIN. Before we adjourn I would like to make one in-
Quiry. When we were here the last time the department produced
Quite a large table of mail routes in which they showed the results
of the application of this law. I believe you were not here at the
time, Mr. Chairman. A large proportion showed reductions and
some showed increases, but when we came to examine the table we
found they were all light routes and there were no heavy routes, so
we said at once, show us some heavy routes and they said they
would. Mr. McBride afterwards came to me and asked for certain
information. Now, that was three weeks ago, and I asked Mr.
McBride to-day if he had made his calculation with regard to the
route, say, from Chicago to Council Bluffs; that is a heavy route
and we would like to see that. Mr. McBride said no, that he had
not done it. Now, I would like to have them state when we will
have an opportunity to see what effect this law has upon that par-
ticular route and upon a heavier route. -
The CHAIRMAN. Under the suggested plan?
Mr. STEwART. Just one moment before we leave the other subject.
I have a matter I would like to mention before going into an entirely
different question. I would like to suggest as to the validity of the
reasons presented by Mr. Bradley that they appear to be based
largely upon the fact that he has come to the conclusion that the
Post Öm. Department can not accomplish any economies under the
space basis, such as he formerly believed they would, and therefore
while I concede his right to change his views, I think the reasons for
his changing them are not very good from the railroad standpoint.
Upon this other point I wish to call attention to the fact that the
weight of mails carried in a car and discharged along the route at
the several post offices, is not a very material element in considering
rates, for the reason that mails must be discharged and received at
every one of those points, whatever the weight may be. If you
have full R. P. O. service or apartment-car service and are supplying
20 offices along the route there will be mail to be discharged and mail
to be received at every point regardless of the amount of mail in-
volved, and an increase in the amount of mail may not add an ad-
ditional pouch at any point. It in most cases simply increases the
quantity of mail in those pouches and sacks. Therefore, the question
as to the amount of mail carried in a car reduces itself to a Very in-
consequential element so far as the tonnage is concerned. Therefore,
the only other element could be the additional service performed at
the station in discharging and receiving the mail and as you have to
discharge and receive mails anyway at all of these points, the ad-
ditionai weight makes very little difference in the cost of the service,
Mr. SEARLE. That remark is true with respect to the ordinary rail;
road R. P. O. car service. We do despatch mail at every station and
take on mail at every station, but my remarks are in reply to Mr.
Stewart's that the car was loaded intact at the terminal and went
intact to destination. I think there is a clear distinction there.
RAIEWAY MAIL PAY. 1169
The CHAIRMAN. We will resume this discussion in the morning, if
we can, and I would like Gen. Stewart to give the information asked
by the gentlemen present, as to when the statement as to the heavy
lines, as propounded by Mr. Baldwin and some other gentlemen, will
robably be ready. As I understand, the department promised at the
i. meeting to have it? ,-
Mr. BALDw1N. On February 6, when we were here.
Mr. STEwART. I do not understand the great haste Mr. Baldwin
is in. We are now preparing a statement for this committee and
T do not think it would be wise to delay that paper to get statistics
for Mr. Baldwin.
The CHAIRMAN. I was absent at the last meeting, because I was ill
at the time, but I understood the department stated they would be
able to furnish that information in a very short time. -
Mr. BALDw1N. That is not the whole of it. The department brought
in a statement which purported to show certain things and which did
relate to light lines, and we said, “Will you show that for the heavy
lines,” and we asked for certain information. Now, if Gen. Stewart
means to say he does not intend to furnish that information, that is
one thing. I simply ask him if he will furnish it; and if so, when?
Mr. STEwART. We will furnish it at the very earliest day possible.
The CHAIRMAN. Can you give any day?
Mr. STEwART. No; we can not do that. We are getting this other
reply ready now.
The CHAIRMAN. We will now adjourn until 10 o'clock to-morrow
morning.
(Thereupon, at 6 o'clock p. m., the hearing adjourned until 10
o’clock a. m., March 17, 1914.) -
TUESDAY, MARCH 17, 1914.
Joint CoMMITTEE ON
SECOND-CLASS MAIL MATTER, ETC.,
Washington, D. C.
The hearing was resumed, according to adjournment, at 10 o'clock
3. Iſl.
Present: Hon. Jonathan Bourne, jr. (chairman), Senators John H.
Bankhead and John W. Weeks, and Representatives James T. Lloyd
and William E. Tuttle, jr. -
There was present, also, in addition to those noted on the preced-
ing day, Mr. E. F. Blomeyer, vice president and general managei
of the Tennessee, Alabama & Georgia Railroad, who was sworn by
the chairman. -
The CHAIRMAN. As I understand, Mr. Peters, the representa-
tives of the short lines are present and want to be heard with refer.
ence to this suggested plan of the department?
Mr. PETERs. That is correct, Mr. Chairman; but before you go into
that I would like to have an entry made into the record with regard,
to a statement of Dr. Lorenz, on yesterday, in regard to a rate that
is made by the railroads of 25 cents, a mile for a baggage car for
500 miles and for a distance beyond of, say, 20 cents a mile. I would
like for Mr. Rowan, who has the tariff giving that rate, to explain
how it is made. It is not made as a mercantile rate.
1170 - RAILWAY MAIL PAY.
Mr. RowAN. I telephoned to New York this morning, and found
out that that is a rate which is made in connection with theatrical
baggage in cases where they do not accompany the baggage, but
send the baggage on ahead of them, with Sunday intervening, or
something like that. -
The CHAIRMAN. That is 25 cents a car-mile?
Mr. RowAN. Twenty-five cents a car-mile. The same tariff pro-
vides a rate of 25 cents a car-mile for empty cars—privately owned
cars that are to be transported from one point to another in order
to take a load or to go from one road to another.
The CHAIRMAN. Dr. Lorenz, is this information new to you?
Dr. LORENz. I think it is very well to have this explanation. I did
not know anything more than just what the tariff called for. As I
understand, it does not contradict the rate, but simply explains that
it is made for theatrical companies which send persons on some other
train. -
The CHAIRMAN. Does that in any way change your conclusion that
you drew from the information issued by the Interstate Commerce
Commission in making this rate?
Dr. LORENZ. I do not think it especially changes the conclusions,
except that it perhaps shows it is not a commercial rate to the same
extent that it would be if it were made generally, without being a
part of a combination, you might say, in which the persons were
transported at regular rates on some other train or in another car.
Mr. Row AN. The point I wanted to bring out is the fact that this
is an exceptional rate and tariff reads in this manner: When unac-
companied by parties, or accompanied by parties of less than 10 per-
sons, in which latter case tickets sold at regular first-class rates must
be held by each person; the rate from 1 to 499 miles, 25 cents a mile;
from 500 miles to 624 miles, $124; 625 miles and over, 20 cents a mile;
a minimum charge of $15, which, after June 1, 1914, will be $25, and
the rate will be 30 cents per car-mile instead of 25 cents, as at present.
The CHAIRMAN. That is an order from the Interstate Commerce
Commission ?
Mr. RowAN. Yes, sir; it is a regularly published tariff.
Mr. LLOYD. Is it true that in the case of a privately owned car
being transported from one place to another in order that it may be
used at some other point, you charge 25 cents per mile for its transit?
Mr. RowAN. I am not thoroughly familiar with that.
Mr. LLOYD. Do any of the rest of you know whether that is the
rule or not?
Mr. PEABODY. That is the rule on the Santa Fe. We move empty
cars for private parties at 25 cents a mile.
Mr. RowAN. Unoccupied cars, passenger or baggage cars, not in
service, owned by individuals, theatrical companies, amusement or
advertising companies, when moved empty, when a charge for porter
or other attendants will be charged for at the rate of 25 cents per
mile per car, with a minimum charge of $25 per car, plus one adult
individual fare for each porter or attendant. This charge will apply
whether or not the cars move in service in the first direction. After
June 1 this rate will be 30 cents.
The CHAIRMAN. What is the date of that order?
Mr. RowAN. That will be effective June 1.
The CHAIRMAN. What is the designation of the order?
-*
RAILWAY MAIL PAY. 1171
Mr. RowAN. It is a tariff and it will be a supplement to New York
Central tariff No. 1.
The CHAIRMAN. And goes into effect on June 1%
Mr. Row AN. Yes. I. C. C. No. 817. The rate in effect to-day is
25 cents per car, and new rate 30 cents per car-mile, and the minimum
charge of $15 will be $25 after June 1. -
Senator WEEKs. That means that the rate would obtain in each
direction ? -
Mr. RowAN. In each direction; yes, sir.
Senator WEEKs. And if the car made a round trip the rate would
be doubled ?
Mr. RowAN. It will be doubled; yes, sir. I would like to call the
attention of the commission to an interesting comparison I worked
out yesterday, showing the difference between the rate per car which
we get now for handling magazines by freight (blue tag), and the
rate which it is proposed to pay under this bill, for the month of
October, 1913. During that month there were 41 cars of blue-tag
mail handled between Buffalo and Chicago with a total of 1,415,880
pounds, or an average per car of 34,530 pounds. At the freight rate
of 30 cents per 100 pounds, which is the commercial freight rate, it
gives an earning per car (a 36-foot car) of 19.8 cents per mile. Un-
der this proposed law we would get 18 cents for hauling a steel 60-
foot car on a passenger train the speed of which is three time as great
as that of the freight service.
The CHAIRMAN. What is your present rate per car mile brought
up to a 60-foot car basis?
Mr. RowAN. I have not figured that out, but the standard freight
car is 36 feet 6 inches in length.
The CHAIRMAN. That is the rate you are receiving for freight on
blue tag?
Mr. RowAN. Yes, sir; we get approximately, taking an average for
the month, of 20 cents a car mile for a 36-foot freight car to-day be-
tween Buffalo and Chicago, and under the proposed law we would
get 18 cents for hauling on a passenger train of three times the speed.
The freight service is about 36 hours and the passenger-train service
is about 12 hours. *
Mr. LLOYD. Who fixes the present rate?
Mr. RowAN. The freight rate?
Mr. LLOYD. The blue-tag rate?
Mr. RowAN. We quoted the regular freight rate that is open to
every shipper in the country, published and filed with the Interstate
Commerce Commission.
Mr. MACK. You get a very direct comparison with the 40-foot
storage-car rate proposed in the bill—that is, a 36-foot car is similar.
to that which earns 20 cents. -
The CHAIRMAN. On a freight train?
Mr. MACK. A freight train. Freight service in a freight car built
at one-eighth of the cost, and maintained at nominal cost by com-
parison with a mail car.
Mr. RowAN. The result would be that the Post Office Department
would turn over all their freight to the storage car, because it would
be cheaper. ; - ~
35797—No. 10–14—5
1172 RAILWAY MAIL PAY.
Dr. LORENZ. I did not understand whether, in getting the 19 cents,
Mr. Rowan took the mileage in one direction or both directions?
Mr. RowAN. One direction.
Dr. LORENZ. The rate the Post Office Department pays you is for
a round trip, So you would have to double that rate. " .
Mr. PETERs. Those cars may be loaded back?
Mr. RowAN. The preponderance of freight is eastbound. It is the
reverse of the mail movement. We never bring back empty freight
CàI’S.
Mr. LLOYD. That answers the contention of the Post Office Depart-
ment that you have an opportunity to use the cars coming back, be-
cause you have much more freight to handle coming East than going
West, but you have more mail going West than East?
Mr. STEwART. We have empty equipment to transport East.
Mr. PETERs. But that would not fill up your cars, Mr. Stewart.
Mr. STEwART. Perhaps not all of them. Mr. Rowan is making a
comparison between a strictly freight business, 34,000 pounds to the
car, and a passenger movement with an average of 7 tons to the
car. It is well understood that the freight business is always con-
ducted very largely on the weight basis and is very different from
the passenger business. The latter is conducted almost exclusively
on a space basis. This being the case, the comparison is not a fair one.
Mr. RowAN. The comparison I am making is the comparison of
the revenue which we receive. We are receiving to-day 20 cents for
the shipment in a freight car that you are proposing to pay for, under
the new bill, 12 cents when on a passenger train. .*
Mr. LLOYD. But you are carrying about 17 tons of mail, while in
the R. P. O. car you carry only about 3 tons.
Mr. PETERs. I just want to call Mr. Stewart's attention to the
fact that this is what he is paying for carrying the mail that has been
taken out of the postal cars and sent by freight—the blue-tag mail.
Mr. RowAN. Let us take the weight of the stuff that is handled.
A storage car with 20,000 pounds of mail in it would make 125,000
pounds to haul over the road. A freight car weighs 40,000 pounds.
This average weight of 34,530 pounds would make a total of 74,570
pounds, for which we get approximately 20 cents as against pro-
posed hauling of 125,000 pounds in a passenger train for 18 cents.
The CHAIRMAN. To my mind, the strength of your presentation
depends entirely on your answer to Dr. Lorenz's question as to
whether your calculation is on a single trip or a round trip—a one-
way movement or a round-trip movement.
Mr. RowAN. I took a one-way movement, because we would use
the car coming back and there are frequently cars of blue-tag mail
that have as much as 46,000, 48,000, and, in Some cases, 50,000 pounds.
in a car. Take the particular car that I picked out that had 46,595
pounds of blue-tag matter moved in the month of October, and there
were many more that had a greater tonnage than that. At 30 cents,
that gives a car earning, for a 36-foot car, of 26.7 cents per mile.
If you want to bring that up to a 60-foot car, it would be at least 50
per cent more.
The CHAIRMAN. Then you think the department ought to reduce
that rate? &
Mr. Row AN. No. We are asking for an increase of freight rates.
The CHAIRMAN. I mean on the blue tag. -
RAILWAY MAIL PAY. 1173
Mr. STEwART. "You are asking an increase of freight rates on what
basis?
Mr. RowAN. I think they are asking for an increase of 5 per cent.
Mr. STEwART. For what reason? The freight rates are too low %
Mr. RowAN. Yes. I do not want to get into a discussion of
freight rates, however.
Mr. STEwART. I will refer to that incidentally here next Tuesday
and I want to know what your views are as to the reasons why the
railroads are asking for an increase in freight rates.
Mr. RowAN. The Interstate Commerce Commission is handling
that question.
Mr. STEwART. But you gentlemen have introduced it here in the
percentages which you have submitted to the joint committee. How-
ever, we will take that up later. On this question of comparison be-
tween passenger and freight service, I want to read what Mr. Tom-
linson, an expert of the Pennsylvania Railroad Co., said during a
conference at the department in 1908:
I might add that as between passenger traffic and freight traffic, freight traf-
fic is carried entirely by weight, but passenger traffic is, from its original
standpoint, handling per Capita. Consequently in the passenger traffic we reach
a space basis rather than a tonnage basis.
And again, he says:
As I have pointed out before, the difference between the passenger service
and the freight Service is the difference between carrying the load on a tonnage
basis and carrying it per capita—equivalent to space basis. If I desire to
travel on a train and occupy a sleeper I will pay for a definite amount of
space, whether my personal weight is large or small. I would still occupy the
Same Space. The passenger train is always limited, so that no logical Solution
of passenger traffic to be divided between several classes appears to us except
the Space basis.
Mr. Tomlinson is one of the most expert railroad men in the
country, and every railroad man here knows the value of his opiniori,
which goes directly to the validity of the comparison which has
been submitted this morning between a freight rate for 34,000 pounds
and a purely passenger movement, where the minimum load would
be perhaps 3 tons and the maximum, say, 12 tons.
Mr. PETERs. Mr. Chairman, that is just where we differ with
General Stewart. The mails are not passenger business. The mails
now are largely composed of merchandise, parcels post, and it is a
traffic that should be carried by weight and not by space. We do
not handle the mails as we do passengers and that is the difference.
While it is carried on passenger trains it should be carried by weight.
Express is carried on passenger trains under a series of rates based
on weights and size. The railroads make no specific charge for that.
Those rates are issued by the express companies, but the contracts
with the express companies say that the railroads shall have a cer-
tain proportion of their gross receipts. The express business is car-
ried on the passenger trains, but not on a space basis. The mails
have become practically like the express and they should be carried
on a weight and not on a space basis.
The CHAIRMAN. We will suspend for a moment. Representative
Madden is here. Mr. Madden has a committee meeting to attend in
a short time and he will give this commission the benefit of some
views he has relative to the subject under consideration. Mr. Mad-
den, would you kindly address us?
II 74 ItAILWAY MAIL PAY.
STATEMENT OF HON. MARTIN B. MADDEN.
Mr. MADDEN. Mr. Chairman, I really did not come here to speak
of the value of the service, but rather to make a suggestion that oc-
curred to me of letting contracts for the movements of the mail.
It has occurred to me, from a little experience that I have had, that
the present method of letting contracts for the movement of the
mail might be changed with some benefit, perhaps, to the Govern-
ment. The present method is that the Post Office Department enters
into private arrangements with the railroad companies instead of
advertising for bids, as I think public policy demands they should
do. The fact that the department makes a contract with a particu-
lar railroad company for the transportation of the mails into a
given territory now without competition in fact, I think sometimes
prevents the expedition of the mails and service to territory far
west or far east as the case may be. For example, I have in mind
this situation: Two competing railroads running, say, to the Pacific
slope out of Chicago, one having a contract and the other not carry-
ing the mails to any extent, one railroad not having any contract
for the movement of the mails to-day might be willing to offer to the
Government a special service that would enable the mail to reach,
say, Portland, Oreg., 10 or 12 hours earlier than it goes now.
Under the present method of letting mail contracts that could not
happen, because if the railroads that would be willing to move the
mails to the Pacific slope territory 12 hours earlier than it is moved
to-day were to offer that suggestion to the Post Office Department,
the Post Office Department would say all right, offer your sugges-
tion, but we must submit that suggestion to the railroad company
that now has the contract, and if they are willing to meet the pro-
posal that you contemplate making, your bid will not be considered.
Of course, the natural consequence of that is that the proposal is
not made, because no railroad company would be willing to make
a proposal merely to force another railroad company to do something
which it would like to do, but would not have the opportunity to do
even after a proposal was made. But it is my opinion that if bids
were asked at the end of each quadrennial period from railroads
in competing territory, you would get a better movement of the
mails; that is, you would get more rapidity, get faster trains. A
continuation of the present method seems to be antiquated, not up
to the scientific method of doing business in the commercial life of
the country and in a sense tends to give a monopoly to some particu-
lar railroad.
The CHAIRMAN. Then, it is your opinion that the law should
direct and compel the Post Office Department to do this?
Mr. MADDEN. Yes, sir.
The CHAIRMAN. Not leaving it to its discretion? º
Mr. MADDEN. Yes, sir. I think that is about all I have to say.
Mr. LLOYD. That would not affect the question of the rate or com-
pensation that is paid to the railroad companies for carrying the
mails.
Mr. MADDEN. No: but I think the two things ought to be con-
sidered together, while you are considering the question of com-
pensation, the question of services ought to also be taken into account,
and hence my suggestion.

RAILWAY MAIL PAY. - 1175
Mr. LLOYD. Do you think it is true, at the present time, that the
railroad companies in some instances do not have the most expedi-
tious service?
Mr. MADDEN. I do. I know of cases now where proposals would
be made to the Post Office Department for the transportation of
mails to given territory where 12 hours’ better time could be made in
the delivery of the mails than is made, but the company that would
be willing to do this hesitates to make the proposal, because they are
notified in advance if they do make the proposal that it will have
to be submitted to their competitors, and if their competitors are
willing to beat the proposal their proposition would not be consid-
ered at all.
The CHAIRMAN. It is irritation without compensation?
Mr. MADDEN. Yes.
Mr. LLOYD. My understanding is that your position has been as one
representing the Post Office Department.
Mr. MADDEN. I am not representing any department.
Mr. LLoyd. My understanding is they will send the mails by a
route which will make the greatest expedition.
Mr. MADDEN. I do not agree with that, because I know of at least
one case to-day where they could get the mails moved to a given
territory 12 hours sooner than they are being moved if the parties
who are willing to move them with that extra degree of rapidity
could be given any assurance that they would get any part of the
mail to transport; but they are told when they make the suggestion
that the suggestion would be welcome and received with open arms,
but it would be received with the distinct understanding that the
question be submitted to the road already carrying the mail.
Senator BANKHEAD. Under your theory, suppose two competing
lines between Chicago and San Francisco should bid in competition
for the mail; one line, of course, would get the contract. How would
the mail be supplied on the line that did not get any contract, and
how would the branch lines be supplied? How would the offices be
supplied that had generally been supplied by the road that failed to
get the contract under competitive bid between San Francisco and
Chicago or New York and Chicago or between any other points?
Mr. MADDEN. The way they are supplied now where one road does
not get it.
Senator BANKHEAD. The roads carry the mail wherever the service
is necessary.
Mr. MADDEN. I am only calling attention to a case I have had
called to my attention, and I have called it to the attention of the
Second Assistant Postmaster General, and he verifies the truth of the
statement.
Mr. TUTTLE. As I understand it, is a railroad so anxious to get
the mail at the present rate of compensation that they would cut
down 12 hours’ time limit?
Mr. MADDEN. I do not know what their anxiety leads to, but I
know they would be willing to cut down the time. In the eastern
territory, I understand, for example, the mail carried is divided be-
tween the Baltimore & Ohio and the Pennsylvania Railroad, both
companies being owned by the same people, or they were up to within
a very recent period, and the Lake Shore & Michigan Southern and
the New York Central, of course, are in the same territory, and the
1176 RAILWAY MAIL PAY.
transportation of the mails is divided between these people so there
is really no competition. º
Mr. TUTTLE. We have got the impression that the carriage of the
mail was very undesirable, people were anxious to get rid of it rather
than to get contracts for carrying it.
Mr. MADDEN. Of course, that impression can be easily obtained if
you listen to certain people, and if you listen to certain other people
an entirely different impression may be gained. Of course, I do not
know anything about the value of the service, and all I know is that
railroads are anxious to get part of this tonnage, whatever it amounts
to, in a given territory. I do not speak for any railroad, but I speak
simply for the principle. , *.
Senator WEEKs. What particular instance have you in mind?
Mr. MADDEN. Do you want me to name the railroad?
Senator WEEKs. Yes.
Mr. MADDEN. For example, the Chicago & Northwestern out of
Chicago to-day is willing to put on an extra train and make 10 or
12 hours' faster time to Portland, Oreg., on the Pacific coast if it
could be assured that it could get any part of the mail to transport,
and I believe it would be willing to take part of the mail during
the present quadrennial period and transport it without deducting
from the compensation that is paid to the railroad that now carries
the mail.
Mr. LLOYD. What railroad now carries it? &
Mr. MADDEN. I think it is the Milwaukee & St. Paul. They are
both competing lines in the same territory. -
The CHAIRMAN. That would be through post mail?
Mr. MADDEN. I suppose so.
Senator BANKHEAD. Who is going to carry it for the other people,
the same road?
Mr. MADDEN. I suppose so. Of course, I am not an expert, but I
wanted to call the attention of the commission to this particular case.
Senator BANKHEAD. I think it is just as important to other sections
not to be deprived of their mail as it would be to deprive the patrons
along the line from St. Louis to Chicago or any other points. I
think the whole country is entitled to the best service.
Mr. MADDEN. Surely; and I think you would get the best mail
service in the way I suggest.
The CHAIRMAN. The territory served by the St. Paul would get
exactly the same service and the coast would get 12 hours’ quicker
service by the utilization of the Northwestern for the coast business,
as against the St. Paul, as I understand Mr. Madden’s idea.
Mr. MADDEN. I suppose both roads would then make the fast time
if the contracts were let on the basis of what the best time would be.
The CHAIRMAN. It would be only competitive territory and com-
petitive business. -
Mr. MADDEN. Surely. }
Mr. BALDw1N. Before you place too much reliance on general
statements about what railroads have offered to do in this direction,
you ought to hear from those railroads themselves.
The CHAIRMAN. I will ask Mr. Baldwin if he has had any in-
stance in the hearings which we have held where we have been
known to take the ipse dixit of any witness without giving every
witness full opportunity of expressing his viewpoint?
RAILWAY MAIL PAY. 1177
Mr. BALDw1N. Oh, no. The Northwestern has no road to the
Puget Sound country and the Milwaukee has. Just what proposi-
tion the Northwestern would be willing to make, it seems to me,
should be gotten from the Northwestern people themselves, if it is
said that they have made any such proposition. I have never heard
of it myself, and I do not quite see how they could perform the
service, and I do not believe that they have proposed to perform
the service.
Mr. MADDEN. I think it might be well for me to say that they have
not made the proposition. I said they would be willing to make
the proposition and had suggested their willingness to do it, but
would not care to do it under the conditions named.
The CHAIRMAN. As I understand, your suggestion is purely that
a well-known business principle be applied to a governmental op-
eration? **.
Mr. MADDEN. Surely. That is all I care to say, and I just wanted
the committee to have the thought so that they might apply it if
they thought it wise.
Mr. STEwART. Before Mr. Madden goes, would you allow me to
supplement his remarks by a little more complete statement in regard
to the practice of the department? We universally dispatch the
mails by the fastest service available, the best schedules that are
offered to get the mails through are the schedules that are accepted,
whatever they may be, subject to the further rule that where
a company is carrying particular mails the department does not
take those mails from the carrying company and give them to a
competitor as long as the carrying company will furnish equal facil-
ities, as good schedules, and the same advantages for getting the
mails through. There are fairly good reasons for that; where the
service is built up on a line that has carried the mail for many
years, they have the equipment already built, they have their cars,
and we have our clerks who live along the line, many of them at the
terminus, but a number of them will live out along the line, and a
radical change from one line to another may render the equipment,
which has been constructed for the use of the department, valueless,
and may necessitate the removal of our postal clerks from their homes,
because they would have to take up service on the other lines. How-
ever, if the advantages were sufficiently in favor of the diversion,
those considerations might be waived.
Senator WEEKs. If there was a case where you could deliver the
mail 10 hours earlier, as has been instanced as a tentative proposi-
tion by Representative Madden, would you consider that sufficient
reason for making a change?
Mr. STEwART. Yes, sir; and we welcome all those propositions.
The proposition which Mr. Madden has instanced this morning
has been discussed with me, and I told the gentleman that I was
ready at any moment to receive their proposition and I would treat
it just as we treat all other propositions of the kind; that is to say,
if they put the train on, and they would have to do that to show
that they were in good faith with the department and in good faith
with the carrying company, that the carrying company would have
a reasonable time to meet their schedule. If the latter met the sched-
ule they would continue to carry the mails they are now carrying, and
1178 RAILWAY MAIL PAY.
if they did not meet the schedule the mails would go to the other
Company.
The CHAIRMAN. But they would not put the train on under such
circumstances?
Mr. STEwART. They sometimes do. *
The CHAIRMAN. With no assurance whatever that they are going
to get the business? -
Mr. STEwART. Yes.
The CHAIRMAN. I would hate to own securities on that line.
Mr. STEwART. I can mention some prominent railroads that do it.
The Rock Island put on a special train at one time running from
Chicago to Burlington to compete with the C., B. & Q., and the C., B.
& Q. met the terms of the Rock Island in order to retain the haul of
the mails. The Burlington road has, for many years, given us fast
mail service out of Chicago, and so far as that particular mail is con-
cerned they hold it against all competitors, but there are competitors
in the field, and from time to time we receive propositions offering to
better their schedules. The Burlington does not allow anybody to get
the mail. The Pennsylvania Co. gives us fast mail trains from New
York to St. Louis under similar conditions. The New York Central
give us fast mail trains to Chicago likewise. The Missouri Pacific
system gives us fast mail trains to the South and West. They can
not hold a pound of that mail if there is anybody else who is will-
ing to put on a better schedule between those points, and they do
not meet it. Those are the general rules of the department. I some-
what sympathize with the views expressed by Mr. Madden here
about competition for through mail service. Of course, it can not
be applied to anything but through mails. But considering all the
facts and viewing the question from long experience in the depart-
ment, I am not sure but that the present plan works out just about as
well as if we asked for bids for the service between principal points,
because there is sharp competition for the mail. In connection with
the statement that has been made to the joint committee only yesterday,
that if the department adopts the space basis it will lose the fast mail
trains, I will say that it was following the first suggestion of that
kind made here that I received two propositions from competing lines
out of Chicago to put on fast mail trains, and I said to them, “Will
you do it with the understanding that you are going to be paid on a
space basis?’ and they said, “Give us the mails.”
Mr. MADDEN. I am much obliged to you, gentlemen.
The CHAIRMAN. We are much obliged to you. -
Now, we will be glad to hear from the gentlemen representing
the short lines. Who desires to speak first.
Mr. PETERs. I will ask Mr. Hitt to appear first.
STATEMENT OF MIR, MOULTRIE HITT.
The CHAIRMAN. Mr. Hitt, will you kindly give us your full name
and your official position? - -
Mr. HITT. Moultrie Hitt. I am here, Mr. Chairman, in rather a
peculiar capacity. I am secretary of the General Managers’ Asso-
ciation of the Southeast, which has a number of the short lines in its
membership, I am chief clerk to the present general manager of
the Atlanta & West Point and Western Railway of Alabama, and
RAILWAY MAIL PAY. 1179
general manager of the Georgia Railroad. There are some points
that came up yesterday which I did not expect to testify about, but
on which, perhaps, I could throw a little light from my general
knowledge of the situation on the Atlanta & West Point and Western
Railway of Alabama particularly, and partly on the Georgia Rail-
road. The point was made on yesterday that if the basis of pay
was fixed on space, that there would be an incentive for the depart-
ment to economize on space. One of the members of the committee
suggested that that proposition would be impracticable on account
of the protest that might arise from the public on account of the
curtailment of the service. On the Western Railway of Alabama
we had this experience: We had 50-foot cars on trains Nos. 35 and
36, between Atlanta and Montgomery, and 60-foot cars on trains
Nos. 37 and 38. Those cars run through from Atlanta to New
Orleans. Under the Hitchcock régime there was an attempt made
to curtail expenses on the railway post-office car. Our first ex-
perience with that was they ordered a 40-foot car in one direction
and a 50-foot car in the return movement, which forced us to fur-
nish 50-foot cars in both directions, for which we got no pay for
the difference between the 40 and 50 feet in one direction.
In the meantime the law went into effect, or was about to go into
effect, requiring the use of steel cars. Our road from Atlanta to
Montgomery is 173 miles long, and we ordered four full 60-foot steel
cars, according to the department’s specifications and their repre-
sentative went over the cars and inspected them at the shops. Just
about the time those cars were delivered, the department notified us
that they would only need 40-foot cars on our trains and said that
we might furnish 60-foot cars for the 40-foot pay, which we were
unwilling to do. The matter was discussed and in the meantime
the department made further report that it only needed 25 feet of
. on trains 35 and 36, and I think it was 30 feet on trains Nos. 37
and 38.
The CHAIRMAN. When you ordered the four 60-foot steel cars, did
you do so under the requirements from the department?
Mr. HITT. It was under the provision in the appropriatic n bill
that we would have to furnish steel cars.
The CHAIRMAN. Had you any indication from the department
that they would require cars of that size? t
Mr. HITT. Not the slightest. -
The CHAIRMAN. They approved of your plans and specifications?
Mr. HITT. They did. -
The CHAIRMAN. But you had no indication from them that they
needed 60 feet?
Mr. HITT. That is correct. When the cars were delivered we had
them on hand and we have since been trying to dispose of them
without too great a loss. In the meantime our trains Nos. 37 and 38,
the fast through trains between New York and New Orleans were
running and we had to put steel cars into those trains, so we used
the 60-foot cars for the 30 feet of space required by the department.
We felt that our pay having been cut off entirely, we would not
furnish any more space than the department, needed, so we parti-
tioned 30 feet of space in the 60-foot car, and found that the départ-
ment was using the other part of car for storage mail and at the
same time they would step into the storage car and bring out mail
1180 RAILWAY MAIL PAY.
they wanted to work in transit. However, coming to the point of
the curtailment of the service, so far as it would affect the public—
The CHAIRMAN. Before we reach that I would like a little more
light on this concrete instance you have mentioned. Why did you
build four 60-foot cars?
Mr. HITT. We built them to take care of the Government service,
as we understood it. We thought they would need 60-foot cars.
The CHAIRMAN. What had they indicated to you as to what their
need was?
Mr. HITT. We had been going on the past assumption; that is to
say, we had been furnishing 60-foot cars on two trains and 50-foot
cars on the two others.
The CHAIRMAN. Receiving compensation at what rate?
Mr. HITT. For 60-foot and 50-foot cars until the time they made
what they called the half line.
The CHAIRMAN. What is your criticism? Is it directed at the
Post Office Department or at the existing law on account of the ex-
perience that you had, as just mentioned?
Mr. HITT. We feel that the department is entirely within its rights,
So far as reducing the amount of space is concerned, but we do feel
they should pay for such space as they use; in other words, they cut
down our 60-foot cars in order to avoid paying for any space, and
now they are using 30 feet without any pay.
The CHAIRMAN. Using 30 feet in what way?
Mr. HITT. As a distributing office.
The CHAIRMAN. You get compensation for the carriage of the
weight of the mail put into that 30 feet? -
Mr. HITT. Yes, sir. - -
The CHAIRMAN. But you get no compensation for the service for
the utilization of distribution space in the 30 feet?
Mr. HITT. That is correct.
Senator WEEKs. And you complained also that the balance of the
car is used for storage purposes?
Mr. HITT. Yes. They probably would have to use the baggage car
for storage purposes, anyhow. In other words, if they choose to
inconvenience themselves by using only 30 feet of space for distri-
bution purposes, we have no particular complaint on that, but we
feel we should be paid for what they use.
Mr. LLOYD. Suppose that the law is changed so that you would
receive it on a space basis. Then, how would you be with reference
to the matter?
Mr. HITT. I would like to make this explanation as to the effect of
the curtailment of the service. What we fear in the space basis is that
it would be manipulated so as to cut our pay, without reducing the
value of our service, in this way: The former practice was to dis-
tribute the mail between Atlanta and New Orleans. The Govern-
ment in saving the railway post-office car pay used a 30-foot car from
Atlanta to Montgomery and do not work the mail that they formerly
worked between Atlanta and Montgomery for distribution beyond
Montgomery. They undertook to overcome that by doubling the
force out of Atlanta and between Montgomery and New Orleans.
The Atlanta papers were filled, for quite a while, with complaints
of this passing through Atlanta and this false economy, as they
called it, and they attacked the administration on that proposition.
RAILWAY MAIL, PAY. 1181
They said that their papers going to points in Alabama, which
theretofore had been worked in transit between Atlanta and Mont-
gomery and despatched promptly from Montgomery, were not
worked, but that they laid over at those places and reached their
subscribers from 12 to 24 hours late. They kept that complaint up
for quite a while until the Democratic administration came in.
Mr. Col.EMAN. That reduction in your car service, in your 50 and
60 foot cars, did not take place until the Hitchcock administration
had undertaken to readjust with economies?
Mr. HITT. No. That was the point I was making, about the
tendency or the incentive to economize in space. There they were
economizing for the sake of Saving the railway post-office car space,
and now, if the entire basis of railway-mail pay was put on Space,
there would certainly be a large incentive to reduce that amount of
space to a minimum.
Mr. CoIEMAN. During the period of Mr. Hitchcock's régime, were
they trying to effect considerable economies in the operation of the
mail? -
Mr. HITT. Yes, sir.
The CHAIRMAN. Is that all?
Mr. HITT. There is another point I would like to ask Gen. Stewart
about. On the Georgia railroad, between Atlanta and Augusta, a
distance of 171 miles, they have two midnight trains, one leaving
Augusta about midnight and arriving at Atlanta at about 6 o'clock
in the morning, with a corresponding train in the reverse direction.
Heretofore there has been more attention paid on the Georgia Rail-
road to the development of local travel than through travel, and
there are plans . way for the purpose of undertaking to give
the territory between the Carolina coast and the territory south of
Atlanta better through service. One of the conditions we met with on
the Georgia Railroad was that on the two midnight trains between
Atlanta and Augusta there were 20 stations at which the train had to
stop at night, and a member of the crew goes to the post-office car,
the clerk hands him a sack of mail, he takes that sack to a lock box
on the platform, unlocks the box, puts the sack in, and takes another
sack out, and picks it up and gives it to the post-office clerk. There
are 20 of those stations, and it perhaps takes fully 5 minutes for each
one of those stations in a distance of 171 miles. At a modest calcu-
º there is an hour and a half's delay within a distance of 171
IQIlêS.
The CHAIRMAN. Delay to what?
Mr. HITT. Delay to those two trains. I understood from a dis-
cussion of the plan here suggested that it was the idea to relieve the
railroads of side and terminal service. Someone asked General
Stewart the question, if that meant that the postmaster would go
down and take the pouch off of the train, and he said that it would
not, but that it meant that the railroads would take the custody of
the pouch until the postmaster did show up. That represents a very
considerable delay to our trains, and in order to overcome that we
would have to put on night men at all of those points at considerable
expense.
The CHAIRMAN. It would necessitate the employment of 20 addi-
tional men?
1182 RAILWAY MAIL PAY.
Mr. HITT. Yes. I would like to know, under the proposed plan,
how we get relief or compensation for the additional 20 men?
Mr. STEwART. That service would be incidental to your main trans-
portation service; if you carry the mails on a train you would get
your regular rates for the line movement, which would cover all the
incidental service along the lines. r, +
Mr. HITT. In a case of that sort you know the line charge would
have to be considerably higher than the average to take care of a
peculiar condition of that sort. We are paid, as I understand, on
a line charge. The proposition is for the service of hauling the mail,
and not the service of hauling trains or employing 20 men to take
care or custody of the mail.
Mr. STEwART. The line charge covers not only the hauling charge,
but includes an allowance for all the incidental service along the line.
It is based on the passenger-car revenue, which, of course, is associated
with the question of cost. You were not at the former hearings when
the origin of the rate was discussed. There was a proposition to
fix the rate on costs. That would necessitate the ascertainment of
cost on every line, but afterwards it was proposed to take the average
passenger-car revenue as a basis, assuming that the revenues actually
covered cost, and make certain reductions in that rate to compensate
for the difference between the passenger service and the mail service,
so that the line charge, on an average, is supposed to cover all of
these different services.
The CHAIRMAN. Do you think the services would equalize?
Mr. STEwART. Yes, sir.
The CHAIRMAN. Cases like the 20 illustrations Mr. Hitt mentioned
make quite an impression on my mind as to whether there was an
equality that stands through all the service and the line charge
would cover that. If not, the line charge would be unfair to some
and too great to others.
Mr. STEwART. The line charge, I think, would equalize very well
throughout the service and does not present as great a contrast
as the rates of pay do under the present plan. Under this new
plan they will get pay for every movement of a car. If you have
service twice a day over a line, you will get double the amount of pay
for single daily service, even if you carried the same amount of mail.
Now we do not specifically take into consideration the frequency of
service, as the frequency of service is reflected in the weights.
Mr. HITT. Assuming as you say, that under the proposed basis we
would get double the amount of our present pay, do you go on the
assumption that the space basis would bring about practically the
same results that we now get by the weight basis?
Mr. STEwART. No. You misunderstood me. I did not say you
would get double the amount of the present pay. I said if you run
double daily service you would get double the pay you would get for
running one train carrying the same amount of mail. f
Mr. HITT. Then, suppose that the department saw fit, for the sake
of economy, to reduce the service from two trains a day to a single
train daily. Would our pay not be reduced on a space basis and cut
in half?
Mr. STEwART. Yes; it would.
RAILWAY MAIL PAY. 1183
The CHAIRMAN. Whereas under the present basis it would be un-
changed?
Mr. HITT. It would be unchanged.
Mr. STEwART. There would be compensation, however, for the service.
It is not practical for the department to reduce service arbitrarily
where there is need for it. As has been suggested before, the depart-
ment, in the first place, is not disposed to reduce mail facilities be-
cause they want to give the best possible service to the patrons of the
Postal Service. There are many people who would make known the
service they desire and would be insistent on a continuance of service
being provided, as has been suggested here. It is impracticable to
materially reduce the mail service unless there is a reason which is
convincing to everybody.
Mr. HITT. I gave an illustration just now of a case where it was
not considered impracticable in spite of the complaint to reduce the
service. In recent months there has been considerable development of
R. P. O. terminal post-office service. There has been a good deal
in the papers at least from time to time, to the effect that the depart-
ment proposes to extend that even further in order to reduce the
amount of space that they use on trains in R. P. O. cars by chang-
ing to a space basis that more mail would be handled in an R. P. O.
terminal post office. Would not that have a tendency to cut down the
space if the Government could economize by cutting our pay by re-
ducing the amount of space used on trains?
Mr. STEwART. You must not believe everything you see in the pa-
pers about the contemplations of the Post Office Department. The
authorization of R. P. O. terminals was for specific purposes, first, to
handle the blue tag mail, which would not affect a line like this; and,
Secondly, to handle the parcel-post mail. We can not handle the
parcel-post mail in the cars to any advantage; we tried it, and it was
not at all successful. The best and most economical way is to handle
it in the railway post-office terminals by railway post-office clerks
who are accustomed to handling it on the trains, but where there are
facilities for handling it in a manner which can not be accomplished
on the trains. The extension of R. P. O. terminals to handle other
mail might affect the question of car space, but that is not practicable;
we can not handle first-class mail at the railway post-office terminals
unless it is what we call “stuck” mail—that is, mail that might be
carried, for instance, on the New York & St. Louis Line, which, be-
cause of extra quantity, could not be distributed en route by the
clerks on the trains and is taken into St. Louis undistributed. Such
mail might go into the R. P. O. terminal and be worked there, where
we have the force.
Mr. HITT. As I understand the proposed plan, the railroads would
be required to furnish an unlimited amount of space in terminals?
Mr. STEwART. No; that is a mistaken idea. Railroad companies
would be required to furnish space in terminals for transfer purposes;
that is to the advantage of the railroads just as much as it is to the ad-
vantage of the department. We do not have to put a transfer clerk
there. We can call on railroad men, under the present regulations, to
furnish all of that service, but we prefer to put the transfer clerk
there, because he is a man who knows how the mail should be trans-
ferred and dispatched, and he assists the railroad service as well as
ours; SO we furnish the employee and the companies furnish him the
1184 RAILWAY MAIL PAY.
space for his office. Further than that, we require the railroad com-
pany now—and we are not asking a thing more under this proposed
law—to furnish us such space as is necessary to handle the mails in
transit, to distribute the mails between trains, not mails that go into
a post office, but only mails that are in transit. There is no such
condition on your road.
Mr. HITT. Take this case: Suppose now it is the custom to place
a mail car at the station for some time before the departure of the
train, and that a full car is used for distributing the mail, would not
there be a tendency to use the terminal facilities in the station to
do that distributing instead of in the postal car, and put the mail
on the car in bulk, rather than put three or four tons in the car to be
worked in transit';
Mr. STEwART. No; we would not use the space required of the
companies for that purpose. -
Mr. HITT. If the pay is based on space, there would certainly be an
incentive, for space is much cheaper at some given settled points than
on trains.
Mr. STEwART. Yes; but if we get space from the railroad company
for that purpose we would have to pay rental for it. If we paid
rental to you for the space for such purposes, and we could delay the
mail sufficiently to accomplish that, without complaint from the
patrons of the mails, then you could not complain because we did
not need your car.
Mr. HITT. That argument sounds well, except that in fixing your
basis of pay now on space, then when you made that readjustment
about which you said we could not complain, we would have already
provided facilities on the present basis and then you would cut down
our facilities and throw them out, and we would simply be losing
that capital that has been put into those facilities.
Mr. STEwART. That is true, but I can hardly imagine changes in
the service which would bring about any such condition on your line.
Mr. Col.EMAN. It has already happened on his line.
Mr. STEwART. No. I beg your pardon. We had there an authori-
zation which was greatly in excess of the needs of the service, which
continued for years without a proper supervision and the time came,
as it comes throughout the entire Service, when there had to be a
reckoning and checking up, and it occurred on this line. I do not
blame the company for complaining, because they thought we needed
the space, which had been authorized and paid for, when, as a matter
of fact, we had not needed it for years.
Mr. Col.EMAN. Do I understand you to say that the line charge
would take care of these 20 additional men on the Georgia Railroad
who would be necessarily employed to take care of the night station,
or would it take care of the proportionate cost of the hire of these
20 men? What would be the department's ruling on that proposi-
tion?
Mr. STEwART. It ought to take care of such services as were neces-
sary for that service.
Mr. Col.EMAN. The Georgia Railroad does not keep any agents or
operators at any of those points at the present time. Would your
line charge take care of the entire cost of the 20 additional employees
of the railroads?
RAILWAY MAIL PAY. 1185
Mr. STEwART. It should, on the average. It may be, in a plan such
as we propose, that you can pick out individual cases where it would
seem not to be true that the specific charge would cover all the cir-
cumstances; but I think on the whole service on his line that the
line charge would even up very well. Of course there are not a
great many night trains like that where we would ask to have the
mails carried. It would not necessarily follow if you put on a night
train that we would require you to supply every office along the line.
Mr. TUTTLE. You do not agree that it would necessitate the em-
ployment of 20 additional men like Mr. Hitt suggested?
Mr. STEwART. No, sir; I doubt if there is a parallel case in the
service. The instance cited is an extreme One.
Mr. HITT. But it would delay the train. In other words, we would
have to put it in the box and it would require the 20 men. That is
the condition at the present time.
Mr. STEwART. You stop your trains there for some purpose. You
do not mean to say you stop them at every station just to put the
pouch off?
Mr. HITT. Not at every station, but at these 20 stations there is
not sufficient business there to require a night agent to sell tickets
and in the majority of those cases we would need a special employee
for that purpose.
Mr. STEwART. We do not require you to put an agent there, but
we require you to put a box there with a lock on it and require your
men to put the mail in the box.
The CHAIRMAN. That necessitates stopping the train.
Mr. STEwART. Stopping and starting, but Mr. Hitt says he stops
the train for other purposes.
Mr. HITT. No. I beg your pardon. I said in some few cases, but
in the majority of the cases we would not stop for any purpose.
Mr. LLOYD. But there would not be any additional cost beyond
that which is now paid, because they are rendering the same service.
Mr. HITT. As I understood you just now, you said it would not be
the intention, under this proposed bill, to require the railroad to
furnish space for distributing the mails in order to save space on
post office cars. Let me read you this section:
They shall provide station space and room for handling, distribution, and
transfer of mails in transit, and for offices and rooms for the employees of the
Postal Service engaged in such transportation, when required by the Postmaster
General.
That is not exactly the same thing, as I understand it. In other
words, this is rather broader than I understood you to state.
Mr. STEwART. No. This is just as I stated it, and this follows
the present practice.
The CHAIRMAN. And it makes no compensation extra for this?
Mr. STEwART. The general compensation covers all of this. If
we should require other space than that named in the provision just
quoted we would rent it from the company.
Mr. HITT. I happen to be rather familiar with the Atlanta Termi-
nal Station. When the station was first opened there seemed to be
a general impression among the railroad people that the depart-
ment would call for as much space as they might want and they did
call for, I think, some 12,000 square feet of space. The department's
wagons would drive in and all around this space, but when we dis-
1186 RAILWAY MAIL PAY.
covered that under the present law it was not necessary for us to
furnish an unlimited amount of space, but merely an amount of
space necessary to take care of mail between trains, that amount of
space was cut down from about 12,000 square feet to something like
2,000 square feet, or maybe 1,200 square feet. Under this bill it
would seem to open it up and they would have power to require the
whole 12,000 feet of space.
l Mr. STEwART. No; not at all. It follows exactly the present regu-
ation.
Mr. HITT. The present regulation does not say anything about dis-
tribution of transit mail in terminal post office.
Mr. STEwART. But it says “distribution of mails in transit,” and
that has been the practice throughout the country and has been for
many years, and it has been decided by the Court of Claims that it
is proper under the law and regulations. There is no change what-
ever. That matter has been adjudicated in the courts, so that it is
practically removed from dispute.
Mr. Coi.EMAN. Under the new plan would you pay for this space
at the terminal?
Mr. STEwART. Not the particular space under discussion that we
have said will be covered by the line charge, but if we needed more
space for general distribution of mails we would pay for it. . We are
now paying for such space in many places where we have installed
the parcel-post terminals. -
The CHAIRMAN. Where is the line of demarcation drawn 3
Mr. STEwART. We can only ask the railroad company to furnish
such space as is pertinent to the services they perform for us.
Senator BANKHEAD. That is entirely in the discretion of the de-
partment what that should be? -
Mr. STEwART. Yes.
Senator BANKHEAD. For instance, you cut down the space from
12,000 to 2,000 feet. Would the Post Office Department not be forced,
under this provision, to require restoration of that 12,000 feet?
Mr. STEwART. No; not unless we needed it for the purpose of
handling the mail in transit.
Mr. Col.EMAN. They could take the whole terminal if the Postmaster
General said it was necessary in the operation of the mail?
Mr. STEwART. We could not do anything of the kind, and no such
condition ever arose in the service, and could not. -
Mr. HITT. When they took on the parcel post the department nego-
tiated with the terminal station companies for space to handle the
parcel post. They did not consider under the law they had a right to
demand space for the distribution of the parcel post in the terminal
station, and they were not satisfied with the offer of the terminal
station company for space, and the department rented a storage
room away from the terminal station on a side street. They now
take the mails from the trains and require the wagon Service located
there to take the mail up to this wareroom, and they made a distri-
bution at the wareroom, and then require the wagon people to bring
it back to the terminal station and put it on the train. -
The CHAIRMAN. With no extra compensation to the wagon people?
Mr. HITT. No extra compensation to the wagon people.
The CHAIRMAN. The only additional cost being the rental of the
storage room?
RAILWAY MAIL PAY. 1187
Mr. HITT. The only additional cost being the rental of the storage
room away from the terminal station at, presumably, a lower rate
than they could get at these stations.
Mr. STEwART. On what authority do you say that?
Mr. HITT. My information comes in a sort of a confidential way
from the wagon people.
Mr. STEwART. I can not see how it could be true, because unless
the new point was named in the advertisement we could not require
the screen-wagon contractor to perform that service without addi-
tional pay. As a matter of fact, I have been authorizing additional
pay for additional wagon service at practically all places where termi-
nal railway post offices have been established, and it has cost a great
deal of money to take care of the parcel post mail at these places.
Mr. HITT. That is exactly what they were complaining about. That
was several months ago, but it may have been adjusted since that
time. -
Mr. STEwART. What relevancy has that to the proposition in this
bill to pay the railroads on a space basis?
Mr. HITT. The incentive on the space basis would be to require he
railroad companies to furnish free distributing space in their depot.
Mr. STEwART. Did we get space free at Atlanta ? You just said
we rented it.
Mr. HITT. I am speaking of your bill wherein you say they shall
provide rooms for handling the distribution of mails in transit.
Mr. STEwART. The language is very clear; it can not be mistaken.
It is the same as the present laws and regulations provide, and, as I
Say, it has been the subject of adjudication.
Mr. HITT. Allow me to call on one of the gentlemen who is more
expert in these matters.
Mr. LLOYD. Haven’t you got the matter confused in your mind, “ in
transit” and “for transit?” “This language is “in transit.” It
seems to me that you have the idea that you are required to furnish
space in the station for transit.
Mr. HITT. In transit. For instance, if mail comes in on one line
at 10 o'clock in the morning and it would go out on a route at 4
o'clock in the afternoon, we are now required to furnish space to take
care of that mail between those two trains. It would require a much
less amount of space to take care of that mail between trains than to
furnish facilities for distributing that mail to save themselves the
distribution on the train that leaves at 4 o'clock.
Mr. STEwART. The mails in transit are either those distributed
on the cars or those distributed to sacks in the terminal for lines
connected from that station. That is the only space for distribution
purposes we require the railroad company to furnish.
Mr. LLOYD, Could additional space be required by the Government?
At the present time you are only requiring that amount of Space, but
could you not require additional space for additional service that is
now performed on the railway trains? -
Mr. STEwART. No. -- -
Mr. HITT. That would seem to be a question of fact, as per the
regulations of the department at present in existence. I am not a
mail expert, but I have a sort of a general knowledge of these things,
and I would like to ask one of the mail experts if they could refer
35797—No. 10—14—6
1.188 RAILWAY MAIL PAY.
me to the present regulations of the department as to the space that
must be furnished at terminal post offices?
Mr. LLOYD. General Stewart knows about that.
Mr. STEwART. As I have previously stated, the provision of the
proposed bill under discussion is, in effect, the regulation that now
exists, and under this we require just such space as I have outlined to
you, and none other. Where we require additional space we rent
the space from the terminal company.
Mr. BRADLEY. Is it not a fact that there is no law requiring the
railroad companies to furnish space at railroad stations for dis-
tribution purposes, but a regulation has been made that requires that,
and is not this an effort to put into the law the present regulation;
and in connection with that is it not a fact that all mail can be re-
garded as in transit until it is delivered to the person to whom it is
addressed, and that under the interpretation which the department
would give to this law you would have complete power to demand
any amount of space to the extent that all of the mail would require
distribution? 5.
Mr. STEwART. Oh, no. That is an exaggerated view of the possi-
bilities. This expresses the present regulation the practice under
which has been in effect for many years throughout the country, well
known to the department and its officers and to the railroad com-
panies, and never was disputed. A few railroad mail agents got
together a few years ago and disputed the right of the department to
require this space, and declined to furnish it at the union station at
Kansas City. The department rented the space of the Union Sta-
tion Co. under an arrangement and charged the cost back to the com-
panies. The Missouri Pacific Railway brought suit against the
United States to recover the amount charged back, the case was fully
heard in the Court of Claims, and the Court of Claims decided that
this space was pertinent to the service; that it was a reasonable re-
quirement; that the department had a right to handle the mails in
this way and to require space for handling them. The Court of
Claims dismissed the suit. That provision does not go a particle
further than the present regulation. It defines it exactly as we
define it in the proposed law.
The CHAIRMAN. The purpose is to make permanent law the present
rule or regulation which has been in operation for a number of years?
Mr. STEwART. Yes; and it has been decided by the court to be a
reasonable requirement.
Mr. RowAN. I might say that the lawyers whom I have consulted
put a different interpretation on that clause there. They think it is
broad enough to require the railroad companies to furnish any space
the department might need for distribution. If the department
wants to confine it to certain distribution it seems to me it ought to
be limited in the phraseology there, and not as broad as it is, because
I think the average lawyer would put a different interpretation on it.
Mr. STEwART. The lawyers you have consulted, I presume, never
had any experience in the Postal Service and do not know the history
of this practice and its application?
Mr. RowAN. It ought to be so that there could be no dispute what-
ever. As it is now, it could be disputed. '.
Mr. MACK. Mr. Chairman, I think we ought to put into the record
at this point a statement to correct the impression that General
RAILWAY MAIL PAY. 1189.
Stewart creates by his statements. The case at Kansas City is not
settled; the case did not involve a sufficient amount of money for
appeal to the Supreme Court of the United States, and we think the
decision of the Court of Claims is very unsatisfactory, and a new
suit has been instituted and will be prosecuted as soon as necessary
data is furnished by the department to permit of the procedure, and
that case will be appealed to the Supreme Court of the United States.
We decidedly disagree with General Stewart as to the right of the
department to require this space. If the paragraph under discussion
were enacted into law it would eventually be referred to by somebody
in the future to develop why the Government was paying for space
in terminals for terminal R. P. O., which at all intermediate points
handle mail in transit, not only parcel post but circular mail and
other mail of that class, so that the language of that section is very
dangerous; it admits of all sorts of interpretations in the future, and
while I entirely concede that Mr. Stewart's purpose is fairly to main-
tain the existing practice, such language will undoubtedly involve
trouble in the future just the same as we are having trouble with the
divisor. Any power of that kind ought to be very clearly and defi-
nitely stated and its limitations ought to be secure and definite.
Mr. STEwART. Mr. Mack's statement is incorrect when he says that
the case is not settled. The case is finally settled by the Court of
Claims and there is no appeal from it. What the Missouri Pacific
has done is to present a new case, and they are not even arguing this
case in the Court of Claims, but expect to go to the Supreme Court
on the dismissal of the petition. Therefore the case is not pending
in the ordinary sense. .
Mr. LLOYD. Is it true that the reason may be it had not been ap-
pealed was because the amount involved was not sufficient?
Mr. STEwART. Yes, sir.
Mr. LLOYD. Then there is no difference between you and Mr. Mack
on that. Mr. Mack said it was not appealed because they could not
appeal, but now they are making a new case which they can appeal?
Mr. MACK. It will not be finally settled until this case is settled by
the Supreme Court.
Mr. LLOYD. There is only a technical difference. This case is set-
tled; you are right in that, Mr. Stewart, but the principle involved
is not settled and they are going to try to have it settled in the
Supreme Court.
Mr. STEwART. In another case they have failed.
Mr. HITT. Mr. Chairman, that is all I have to say.
The CHAIRMAN. We thank you, Mr. Hitt.
Who will you have appear next?
Mr. PETERs. I would be glad to have you call Mr. Coleman.
STATEMENT OF MIR. R. B. COLEMAN.
The CHAIRMAN. Kindly state your name and official position.
Mr. Col.EMAN. R. B. Coleman; general manager of the Georgia,
Florida & Alabama Railroad.
Mr. Chairman, about the only thing I care to add to Mr. Hitt's
statement is to try and apply this whole law to our line as I see it.
We are, at the present time, receiving about $16,000 annually from
mail pay. I think that the new law would result in giving us about
$19,000, or an additional $3,000 per annum. -
1190 RAILWAY MAIL PAY.
The CHAIRMAN. Assuming that you are allowed the maximum in
the suggested plan? * y
Mr. CoIEMAN. Yes. But my conviction is that if we would weigh
our mail to-day it would be twenty-five or thirty thousand a year,
based upon the tonnage we are actually hauling, and we therefore
want to enter our earnest protest against any space basis for rail-
way-mail pay.
The Chamas. Simply because you would receive less compen-
Satlon'ſ *
Mr. COLEMAN. Simply because we would receive less compensa-
tion than we are due to receive to-day, according to the tonnage we
are hauling, if paid for -
The -CHAIRMAN. Under the present-method of payment?
Mr. CoIFMAN. Yes, sir. - -
The CHAIRMAN. Then your objection is not to the principle, but
rather to the remuneration received. Is that it?
Mr. CoIEMAN. Well, the principle is what produces the under pay.
The CHAIRMAN. Will you give us the benefit of your views and
comments regarding the principle, namely the present method and
the suggested one? -
Mr. COLEMAN. The method is absolutely contrary to any other rate
of pay or compensation with which a railroad deals. We do not sell
space to anybody. To the contrary, where you have a carload of
freight, a rate may vary. It is a recognized principle, and it is ap-
proved by the Interstate Commerce Commission, that where we have
a carload of mules moving 100 miles, we would have a less-than-car-
load rate for 5 mules, and it would exceed the carload rate for 30
mules.
The CHAIRMAN. Then you think the apartment-car pay should be
greater than the R. P. O. pay?
Mr. Col.BMAN. No; I do not, but I think on the principle of the
linear feet it ought to be.
The CHAIRMAN. I mean relatively?
Mr. CoI.EMAN. Yes; relatively.
The CHAIRMAN. How about storage?
Mr. Col.FMAN. I haven’t any storage cars on our line. I am not
prepared to go into that detail.
The CIIAIRMAN. What are your principal objections to the space
plan as outlined in the suggested plan submitted by the Post Office
Department in volume.8% ~ - -
Mr. Col.BMAN. I do not think it is fair to the railroad companies
from any angle.
The CHAIRMAN. Your reasons being what?
Mr. Col.BMAN. Just as I said, it has a tendency to reduce our pay,
the space plan. -
Mr. LLOYD. Suppose we made that rate 30 cents instead of of 20
cents. Then it would increase your pay. Would you object to it
then 3 - -
Mr. Col.FMAN. Yes; because I do not want any pay for what I
do not do, but I do want pay for what I do. I am not up here asking
you gentlemen to help us out and be gratuitous to us and hand us
something, but we want fairly and honestly to deal with this ques-
tion and get light on it and apply a remedy that will be fair, not
only to the railroads, but fair to the Government. <
RAHLWAY MAIL PAY. 1.191
The CHAIRMAN. That is the proper spirit?
Mr. ColeMAN. We do not feel that a space basis is fair to anybody.
Mr. LLoyd. The Chairman is trying to get at your reasons why.
Mr. Col.FMAN. There are a great many reasons why. In the first
place, while General Stewart has disclaimed any purpose of re-
ducing the frequency of service, and that kind of thing, or cuttin
down the mail space— ; :
Mr. LLOYD. Now, let us deal with this proposition just like Gen-
eral Stewart was going out of the office to-morrow.
Mr. Col.BMAN. I do not think he is going out. He has been there
tôo long.
Mr. LLOYD. Well, leave the personnel out.
Mr. Col.EMAN. Well, the personnel is the railway branch of the
Post Office Department and the head of that is General Stewart.
That is why I referred to General Stewart. On the present basis
of pay for the side and terminal service at several points, we have
three or four routes on our line of 225 miles and we have terminals
where it costs us a great deal of money to attend to terminal delivery.
For instance, at Tallahassee, the capital of Florida, we get pay for
an additional mile on a line where we receive about $42 or $45 and
it costs us $240 to attend to that service.
The CHAIRMAN. Do you think a single rule of law, or method,
can apply with equal justice to the long trunk and the short lines?
Mr. Col.FMAN. Yes, sir. I believe it can be figured out so that it
will be applicable in every case.
The CHAIRMAN. You do?
Mr. Col.FMAN. Yes, sir; I believe that is possible.
The CHAIRMAN. And you do not think, under the present methods,
that there is an inequality or injustice to the short lines as com-
pared with the longer lines?
Mr. Col.BMAN. I do not, under the present method.
The CHAIRMAN. I mean the present system, for the time being,
eliminating the question of rates?
Mr. Col.BMAN. No; I do not know that there is, if you eliminate
rate, because rate is the whole show in the mail argument.
The CHAIRMAN. But the method as to distribution—the rate for
that is universal? .
Mr. Col.EMAN. Yes, sir.
The CHAIRMAN. And you think that a universal rate will be per-
fectly equitable and just to both short and long lines; that is, it is
not necessary to have two different methods? .*
Mr. Col.EMAN. No; I do not think so. Take the railway-mail pay
since the introduction of the parcel post on our lines, you will find
the department has allowed us in the thickly settled territory of 107
miles an increase of 2.7.
The CHAIRMAN. That is an increase in your pay? * -
Mr. Col.F.MAN. In our pay; yes, sir. On a line 82 miles south of
there, where we have practically no people at all, where it will hardly
average four people per square mile along the coast, we got an in-
crease of 3.3, and there is nobody there to use the parcel post at all;
but there we got a greater amount of increase than we did where we
had people. sºr
The CHAIRMAN. There was an increase in figures, but not in
money?
1.192 RAILWAY MAIL PAY.
Mr. Col.EMAN. That is it.
The CHAIRMAN. How was this increase arrived at 3
Mr. CoI.EMAN. I wrote to General Stewart along that line and tried
to get him to say how it was arrived at; but I could not get anything
definite that would explain to my mind the reasons why the increases
were made in that respect. Then, again, on two lines we got no in-
crease at all.
Mr. STEwART. Have you my letter with you?
Mr. CoIEMAN. I think so; yes, sir.
Mr. STEwART. Will you read it to the commission? Read the last
One. *
Mr. CoI.EMAN. I am not sure that I have it, but I think so.
Mr. STEwART. That is the one I wish you would read, because that
has the explanation. &
Mr. COLEMAN. I guess it would probably be better for me to read
my letter to General Stewart first?
The CHAIRMAN. We would be very glad to have it.
Mr. Col.BMAN. I will first read my letter to General Stewart and
then his reply:
Mr. Joseph STEwART,
Second Assistant Postmaster General, Washington, D. C.
DEAR SIR : Referring to your letter of October 14, regarding increase in rail-
Way-mail pay and Compensation to be allowed on account of parcel post, I
desire to state that the method and manner quoted in your letter of ascertain-
ing the facts regarding the increased weights are so at variance with actual
Conditions that I desire to call your attention specifically to the following in-
formation
On route No. 123045, between Tallahassee and Appalachicola, Fla., on which
you allowed us 3.39 per cent increase, is practically no people living along
Our line except the towns of Sopchoppy, Carrabelle, and Appalachicola.
On route No. 121077, between Cuthbert, Ga., and Tallahassee, Fla., where
you allow us 2.53 per cent increase, it is very thickly populated with towns
ranging from 500 to 7,000, densely settled with farmers, and intermediate
points, and possibly beyond twenty times as many people per Square mile as
on route No. 123045, Still Our increase is less than it is where we have very few
people. In our thinly populated territory, which has not yet developed to any
appreciable extent, viz, south of Tallahassee, you state that the increase was
9 per cent; on route No. 121077, where it is densely populated by towns and
farmers at intermediate points, our increase was only 8 per cent. The popu-
lated districts Of Our Country are the Sections which require and use the Rail-
way Mail Service, and I would thank you to look into this situation again, and
See if the percentage between Cuthbert, Ga., and Tallahassee, Fla., should not
be 18 per cent rather than 8 per cent. I would also like to inquire further
whether or not the field agents reporting on these routes were one and the same
person; if not, them it was purely a guess as to the increase which we are un-
Willing to accept.
No increase whatever was allowed on route No. 123048 between Quincy and
Havana, Fla., nor was any increase allowed on route No. 121079, between Rich-
land and Cuthbert, Ga., although these routes have increased in such propor-
tion that the Other routes have.
The language of the act, viz, “not exceeding,” would not be construed as
permitting you to compel the railroads to accept less than 5 per cent increase.
In legal effect, this language is the same as the language of the act of March
3, 1873, which provided that the pay should be at “not exceeding ” the rates
thereinafter named. As I understand the situation, the most that has ever
been held with reference to this language is that it gave the Postmaster Gen-
eral the right, if he could do so, to make contracts with the railroad Companies
for less than the rates named in the statute, but you have no right to compel
them to accept less. At the time the law was being discussed, conference
report submitted to the House and Senate stated the cost of reweighing would
be about $500,000, and the departmental estimate of the increased railway
mail pay, due to the establishment of parcel post, was 10 per cent, but the
RAILWAY MAIL PAY. 1193
Conferees had agreed to allow 5 per cent, and both in the conference report
itself and in the debates upon it it was not only treated as a flat 5 per cent in-
crease but an actual saving in cost of reweighing and of 5 per cent on your
estimate. The discussion resulted in statements on the floor of the House and
Senate that if the mails were reweighed it would cost the Government 10 per
Cent more than they were then paying them, so it was agreed to make the rail-
roads take 5 per cent more and save 5 per cent besides the cost of reweighing.
We therefore desire to advise our construction of the act of March 4, 1913, in
that it allows to the railroad companies an increase of 5 per cent on their mail
pay, and we believe the action of the department in allowing us less to be viola-
tion of our rights. We therefore reserve the right, as we may be advised, to
recover the difference between what the department is allowing us and what
We COnceive to be due US.
I shall be glad to have reply as early as possible.
. Yours, truly,
R. B. COLEMAN.
General Manager.
Mr. R. B. CoIEMAN,
General Manager Georgia, Florida & Alabama Railway Co.,
Bainbridge, Ga.
SIR: The statements in your communication of December 22, 1913, respecting
the increase in compensation allowed your company for increased weight of
mail carried due to the inauguration of the parcel-post system have been investi-
gated. You State that On the route between Tallahassee and Apalachicola,
which serves a thinly populated territory, the increase in weight was reported
as 9 per cent, while on the route between Cuthbert and Tallahassee, a well-
Settled district, an increase of only 8 per cent is reported, and ask that the mat-
ter be looked into.
This has been done, and in reports recently received it is stated that the
estimates of the increases in weight due to the establishment of the parcel-
post system were given careful attention at the time they were made, and it is
not thought any error was made in them. In this connection your attention is
called to the fact that the reported percentage of increase in weight have rela-
tion to the average daily weights of all mail carried on the routes. On the route
between Tallahassee and Apalachicola the average daily weight is 310 pounds,
and an increase of 9 per cent represents only 28 pounds, while on the route
between Cuthbert and Tallahassee the average daily weight is 1,367 pounds, and
an increase of 8 per cent represents 110 pounds. Respecting the increases in
weight On the routes between Quincy and Havana and between Richland and
Cuthbert, I have to say that these routes carried average daily weights of 93
and 88 pounds, respectively, during the quadrennial weighing in 1912. The
reported increase due to the parcel post on the first-named route is 9 per cent,
or 8 pounds, and on the other route 8 per cent, or 7 pounds. This gives a total
weight of 101 and 96 pounds, respectively, for the two routes. The rate of
compensation allowed your Company for Service on each of these routes is
$42.75 per mile per annum, which is the maximum rate allowable for routes
carrying an average daily weight of 211 pounds or less. You will therefore
See that the department would not have been warranted in increasing the pay
on these routes unless the increase in weight had been considerably more than
100 per cent.
Concerning your statement that you construe the act of March 4, 1913, to
allow railroad companies an increase of 5 per cent in their pay, and that the
action of the department in making allowances of less amounts is a violation
of your rights, I would invite your attention to my letter of October 14, 1913, in
which the position of the department is fully set forth. In reply to your state-
ment that you reserve the right to recover the difference between what the
department is allowing your company and what you conceive to be due it, I
have to say that the compensation fixed by the orders of the Postmaster Gen-
eral for service on the routes of your company is full compensation for all Serv-
ice performed and no other or further compensation will be paid for such
service, subject to future orders that may be determined warranted by the Post-
master General.
Very respectfully,
JOSEPH STEWART,
Second ASSistant POStºnaster Gomoral.
1194 RAILWAY MAIL PAY.
That is not the language of the law. There is a 5 per cent increase
on all roads which was established prior to July 1, 1912, but it does
not say if you had 100 pounds, 40 pounds, or 10 pounds; but the law
says to allow not exceedingly 5 per cent increase to those lines which
were established prior to a given period. Our legal department says
that the words “not in excess of " so much per cent do not mean that
it is discretionary with the Postmaster General whether he should
allow 1, 2, or 3 per cent, but the law intended to give to the lines a
flat 5 per cent increase. Gen. Stewart takes another view. -
The CHAIRMAN. You do not think the law intended to give a fla
5 per cent increase unless there was a demonstration that the increase
was 5 per cent in the fourth-class mail activity?
Mr. Col.BMAN. What are you going to do? Really it was more
than 5 per cent with us.
The CHAIRMAN. It could not exceed 5 per cent?
Mr. Col.FMAN. No.
The CHAIRMAN. But please answer my question.
Mr. ColeM.A.N. My impression is that since the law did not carry
any specific weight authorization, I think it was the intention—and I
understand from the argument in Congress that it was the generalim-
pression—even in the committee that it would be a 5 per cent increase,
and at that percentage the Government would save money. If I re-
member correctly the department's estimate was that the parcel-post
matter would increase 10 per cent and it would cost the Government a
half a million dollars to reweigh all of the routes. Therefore, they
decided they would not reweigh the routes but give a 5 per cent on
what they thought was the actual increase.
The CHAIRMAN. Your contention is that you thought you would
be entitled to the increase under the law where it was demonstrated
the increase was 5 per cent or more?
Mr. Col.FMAN. Yes, sir; that is my contention. -
The CHAIRMAN. General Stewart, will you further elucidate with
reference to those two cases. -
Mr. STEwART. In the last two cases Mr. Coleman mentioned, the
average daily weight was far below 200 pounds, and what he is con-
tending for is that he should be allowed 5 per cent, notwithstanding
the fact that the increase in the weight .P mails would not justify
us, under the law, if we had weighed the mails, in paying the addi-
tional amount.
The CHAIRMAN. The department's position being that you had no
legal authority but were in fact prohibited under the law, because
of the weight limitation in giving any greater increase than was
allowed in those two cases.
Mr. STEwART. For instance, under this provision of law allowing
us to pay not exceeding 5 per cent where the companies were entitled
to additional pay, we could not allow them an increase which they
would not be entitled to if we weighed the mail. As stated by the
gentleman, the proposition first before Congress was to permit us to
weigh the mails and to readjust upon the weights, but in lieu of that
Congress provided that we might pay not exceeding 5 per cent. It is
not to be supposed that Congress intended that we should pay under
that provision money we could not pay if we had weighed the mails,
and that is what the gentleman wants us to do on those two little
routes. On the other road the condition is accounted for by the fact
RAILWAY MAIL PAY. 119.5
that the average daily weight on one of the two routes is greater than
on the other, so that a 9 per cent increase in one case does not add as
much money per mile as does an 8 per cent increase in the other. We,
of course, must consider the average daily weight on a route, and we
can not make any adjustment of pay except under the terms of the
statute.
Mr. ColeMAN. I insist that my mail has increased on every route
more than 5 per cent. That is my contention.
Mr. Stewart. You understand that this adjustment was made to
cover conditions resulting from the inauguration of the parcel post.
The Postmaster General made an order, under date of August 15,
1913, which changed the conditions of the service and we are expect-
ing to make a readjustment upon that change if Congress grants
authority. We also made a change effective January 1, 1914, and We
expect to take statistics and make a readjustment, if Congress gives
us authority, to cover the changes effective on that date.
Mr. Colist AN. I think we are carrying 100 per cent more than We
were carrying prior. . - &
Mr. STEwART. You will get the pay as soon as Congress authorizes
us to do it.
Mr. LLOYD. It will not be retroactive?
Mr. STEwART. Yes; it will be retroactive.
Mr. RowAN. Based on estimates?
Mr. STEwART. It will be retroactive, effective from the date of the
Postmaster General’s order. For instance, from August 15, 1913, up
to January 1, 1914, and from January 1, 1914, when the new order
was made, until the regular weighing occurs on the routes.
Mr. ColeMAN. May I ask, just for information, as to how those
estimates were arrived at' A.
Mr. STEwART. They were arrived at by our field officers who
traveled the lines and observed the conditions of the service.
Mr. CoIFMAN. Did your field officers depend, to any extent, upon
the post office clerks on those lines for an estimate?
Mr. STEwART. They availed themselves of all the information they
could get as to the conditions on the lines. Those were the instruc-
tions.
Mr. PETERs. Could I ask this question: Will you kindly state the
amount you decided was the readjustment you should make on ac-
count of the increase of August 15?
Mr. STEwART. About $254,000.
Mr. PETERs. One-half of 1 per cent.
Mr. STEwART. Yes; about $254,000. That estimate is based on
actual weighings of parcel-post mails dispatched from the 50 largest
offices, October 1 to 15, 1913, and the ascertainment of weight of par-
cels over 11 pounds handled on screen-wagon routes, October 23 to
November 22, 1913. -
The CHAIRMAN. Let me understand that under this ascertain-
ment, based on the actual weighing, that your opinion was that the
increase in the mail matter due to what is known as parcel-post legis-
lation was only one-half of 1 per cent.
Mr. STEwART. No. That is the effect of the order of August 15
alone.
Mr. LLOYD. The order of August 15 changed the weight from 11 to
20 pounds?
..] 196 RAILWAY MAIL PAY.
Mr. STEwART. Yes. We added approximately $1,700,000 under
the provision allowing us to pay not exceeding 5 per cent. That
adjusted the condition that existed before August 15. The Post-
master General made an order which changed conditions from that
date and in October we took statistics in post offices, actually weighing
the parcel-post mail and the mails on the wagon routes, upon which
data the estimate made to Congress was based.
The CHAIRMAN. For the calendar year, 1913, how much has the
Post Office Department paid additional compensation to the trans-
portation companies because of what is known as the parcel-post
law, just one year in operation?
STEwART. That would be one-half of $1,700,000. The orders
took effect July 1, 1913, and the calendar year ended December 31,
1913. The annual rate of the increases allowed was about $1,700,000.
The CHAIRMAN. So that the law went into operation on the 1st of
January, 1913, and for that year you paid the railroads and the
transportation companies $1,700,000 more than their regular pay
because of what is known as the parcel-post law operation for that
year. Is that right? -
Mr. STEwART. No. We fixed an annual rate of $1,700,000, taking
effect July 1, 1913, and, for the calendar year, of course, the railroads
received only one-half of that amount.
The CHAIRMAN. So that they actually got for the year, 1913,
$850,000?
Mr. STEwART. Yes, sir. They will get an additional amount if
Congress authorizes it, for the changes that occurred by reason of
the order effective August 15.
The CHAIRMAN. Under what is known as the parcel-post bill you
were authorized to pay two million and a half?
Mr. STEwART. No. We were authorized not to pay exceeding 5
per cent of the compensation on certain routes.
The CHAIRMAN. On railway mail pay?
Mr. STEwART. Yes.
The CHAIRMAN. That was $50,000,000 or $49,000,000.
Mr. PETERs. That is the point that I wanted to bring out. Would
you say the amount you have paid for the parcel post on this parcel-
post adjustment was not exceeding $850,000, but you paid for parcel
post to the roads that were weighed in the spring of 1913 on the
weights of parcels that came into that weighing?
Mr. STEwART. Yes, sir.
Mr. PETERs. Was not the pay on all those roads that were weighed
very, very largely increased ? Did not the majority of them show a
very large growth of mail, partly due to the regular growth and
partly due to the parcel post? Were you able to make any estimate
as to what part of the increased weighing on the eastern weighing
section was due to the parcel post? *
Mr. STEwART. No. Unfortunately, we can not make a reliable es-
timate there, for this reason: You will remember that preceding and
during the weighing period of 1909 there was a depression in business
in the country which affected the weights in the first section which
was weighed that year, and there was actually a decrease in the rail-
way-mail pay below that fixed by the adjustment of 1905, and there-
fore it prevented an accurate comparison of the percentages.
BAILWAY MAIL PAY. 1197
Mr. Col.FMAN. It is..just on that point that I tried to get at my ex-
pense, the weight of the mail. We thought we were being underpaid
at least 50 per cent.
The CHAIRMAN. In other words, the department's hands were tied
under the law. If the department was satisfied that there was an 8
or 9 per cent increase in weight, it could not disregard the existing
law as to certain payments according to certain schedules of rates.
That was the cruxº -
Mr. STEwART. Yes. A certain percentage of weight means so many
pounds added to the daily weight, and we allowed the rate warranted
by such increased weight, and we could not exceed that.
Mr. MACK. As I understand, your opinion is that you have more
mail than was estimated by the officers of the Railway Mail Service?
Mr. CoIEMAN. That is it, exactly.
Mr. STEwART. No. He says he has more now?
Mr. MACK. He said more, then.
Mr. COLEMAN. We had more at that time and attention was called
to it. We unfortunately got into a lawsuit with one of the R. P. O.
clerks and my information is that that R. P. O. clerk practically said
what our increase was. We had had a fight with him for a good long
time and we finally paid him a thousand dollars to get rid of him.
The CHAIRMAN. I doubt if that is of very much value to us unless
you can substantate your statement. You say that that is your in-
formation. -
Mr. CoIEMAN. Yes, sir.
The CHAIRMAN. I doubt if that is material in our consideration.
We would be glad if you could corroborate a statement of that kind.
Mr. BRADLEY. Might it not be considered material in this way,
that the ordinary provision of law to determine the rate of pay is
by an actual weighing, whereas this 5 per cent was ascertained by
personal estimates which might, of course, be affected by the excep-
tional circumstance Mr. Coleman has referred to ?
Mr. CoI.EMAN. That is what I had in mind. I think we were
legally entitled to and would have gotten more if it had not been
for that circumstance.
The CHAIRMAN. Have you any evidence to submit to this commis-
sion by which you can substantiate the impression which you got?
Mr. Col.FMAN. Nothing definite.
The CHAIRMAN. It is simply an impression on your part?
Mr. CoIFMAN. Yes, sir. - -
- The CHAIRMAN. Is there any further evidence you wish to pre-
sent
1Mr. Col.EMAN. No ; I think that is about all I had in mind.
Mr. HITT. What does your increase in parcel post amount to per
annum ? } - •
Mr. COLEMAN. It amounts to $314 annually and our express earn-
ings show a probable reduction for the fiscal year of between $4,000
and $6,000. *.
The CHAIRMAN. At the same point over the same route?
Mr. Col.EMAN. Over the same route; yes, sir. That is why I con-
tend I am not being paid what I ought to be. I ought to have 5 per
cent anyhow.
The CHAIRMAN. That is interesting. Do you say that you receive
from $6,000 to $8,000 annually less from the express since January,
1198 RAILWAY MAIL PAY.
1913, and that you only get $314 from the Government for the
railway-mail pay over those same routes? -
Mr. Col.FMAN. Yes, sir. That is exactly what I mean. The in-
dications are that our express earnings, so far as I recall, are about
$4,500 to $5,500 less over identically the same route than it was
prior to that time. Again, we are losing in our freight business.
There is a haberdasher in our town who tells me at the present time
that all of his fill-in orders between seasons, formerly shipped by
freight, he now gets every week by parcel post, and so we are not
only losing on our express, but on our freight traffic. We have no
way of determining what the amount is on our freight traffic.
The CHAIRMAN. Do you mean to say that the parcel-post rate
is less than the freight rate? *
Mr. CoIEMAN. Yes, sir; a great deal less. If you ship a package
from Atlanta to Bainbridge, Ga., the minimum rate is 99 cents, if it
weighs 5 pounds, and it would be 8 cents on the parcel post. -
The CHAIRMAN. How about on 250 pounds?
Mr. Col.FMAN. They are not doing it that way.
The CHAIRMAN. How about the relative rates there?
Mr. Col.BMAN. I think 100 pounds of freight would be 99 cents.
The CHAIRMAN. Less than a cent a pound on 100-pound lots.
Mr. MACK. I think this gentleman explained the case to me last
night. I think it would be interesting for him to illustrate the exact
effect of this haberdasher's business. I know it will be interesting as
to how that operates in taking the stuff out of the freight and put-
ting it in the parcel post.
Mr. COLEMAN. That was just his explanation. He said to me that
if he wants a dozen shirts as a fill-in order between the fall and sum-
mer seasons, that he gets it by parcel post, he does not wait and ac-
cumulate 100 pounds of freight, but he orders it in pounds at what-
ever the parcel-post maximum might be. :
The CHAIRMAN. So there is one instance of a merchant who has
been benefited by the parcel post? -
Mr. Col.FMAN. Yes, sir; to the detriment of the railway.
Mr. PETERs. How about you?
Mr. Col.FMAN. I have been very much hurt by it.
Mr. HITT. Is your line one continuous mileage or is it broken up
into branches.
Mr. Col.FMAN. One straight system with the exception of an 11-
mile branch.
Mr. Hirt. How many post-office routes have you on that straight
SVStem :
yº COLEMAN. We have three.
Mr. HITT. Why is that divided into separate routes?
Mr. COLEMAN. My impression is it is in order to get a terminal
delivery. We have tried to get it changed, but we could not.
Mr. HITT. In other words, that seems to be an arbitrary division
for the purpose of compelling you to assume the expense of deliver-
ing the mail from these three offices and to and from the office in
transit?
Mr. CoIEMAN. That is it exactly.
Mr. STEwART. That is a very unfair statement to introduce here
imputing improper motives to the officers of the department.
RAILWAY MAIL, PAY. 1199.
The CHAIRMAN. You will have ample opportunity to refute it.
Mr. STEwART. It is absolutely untrue.
The department is never actuated by motives of that kind in stat-
ing mail routes. We state mail routes in accordance with the opera-
tion of the Railway Mail Service as a rule and the operation of the
trains has a great deal to do with it, so that if his line is divided
into three different routes, there are excellent Railway Mail Service
reasons for those divisions. Before we weigh a section we go over
all the routes in the section and wherever we can combine the routes
we do so and many changes of this kind are made, most of which
result in relieving companies of terminal service. The question of
throwing the terminal service on to the company is not a controlling
consideration if it is the proper thing otherwise to combine the
routes.
The CHAIRMAN. The desideratum of the department is first, effi-
º for the department and, secondly, economy to the Govern-
ment'.
Mr. STEwART. Yes, sir. •
The CHAIRMAN. And justice to all parties in interest?
Mr. STEwART. Yes, sir. The tendency of the department is to
eliminate all such conditions that this gentleman states exist here.
If there is any reason why those routes should be combined, we would
combine them. We would not arbitrarily keep them separate simply
to compel the railroad to perform the terminal Service. We pay
especial attention to all those features every time a weighing is had.
Mr. McBRIDE. In your estimate of the probable revenue you would
receive under the new plan, did you take into consideration the saving
that you will accomplish in the cost of side and terminal service?
Mr. CoIEMAN. Yes, sir; I did.
Mr. McBRIDE. What did that amount to ?
Mr. CoIEMAN. $1,080, I think.
The CHAIRMAN. The statement that you have made as to the falls
ing off in revenue from express business made quite an impression
on my mind. As I remember, you made a conflicting statement there.
I understood you to refer to the fact that the decrease in the rev-
enue from the express business was from $6,000 to $8,000, and then I
understood you to say
...Mr. CoIEMAN. No. I corrected that. I said from $4,000 to $6,000,
somewhere between those figures.
The CHAIRMAN. And the conditions are exactly the same as ex-
isted before, with reference to the express service? There has been
no change, no express company has gone out of business or taken off
any of its agencies or anything of that kind? In other words, the
conditions are exactly the same? -
Mr. COLEMAN. Exactly the same; that is, covering the present fis-
cal year up to this time. That is why I can not say definitely what
amount. .
h M, McBRIDE. Do you know what effect the new express rates will
3, Ve .
Mr. Col.FMAN. No; I do not. It looks like it will have a pretty
bad effect when we see notice of an express company going out of
business. r
1200 RAILWAY MAIL PAY. - .
The CHAIRMAN. Is that all, Mr. Coleman?
Mr. COLEMAN. Yes.
The CHAIRMAN. We thank you very much.
STATEMENT OF MR. GEORGE W. HARDIN.
The CHAIRMAN. Mr. Hardin, will you kindly state your full name,
your residence, and official position?
Mr. HARDIN. George W. Hardin, Johnson City, Tenn. I am vice
president and superintendent of the East Tennessee & Western North.
Carolina Railway. I have a peculiar story to tell. This is a narrow-
gauge road 34 miles long and runs from Johnson City, Tenn., to
Cranberry, N. C., serving a people not served in any other way. Our
passenger and mail train consists of one combination car, which has
a mail apartment, baggage, and small passenger end the entire year
and a parlor car four months of the year. In order to get what this
train would be 12 months, I have taken one-third of the 4-months’
car for 12 months. These cars are each 40 feet long, which gives us a
train 133 feet long. The apartment used by the Post Office Depart-
ment, as I said, and the rest of the space for passengers and baggage,
we not having any express line on our road. The 133 feet of train
makes 6,602,120 car-foot-miles per year, of which 510,816 car-foot-
miles are included in the apartment car, and 6,191,304 car-foot-miles
assigned to baggage and passenger. The mail pay is $2.050 per
year, which makes the department pay 4 mills per car-foot-miles,
while the balance of the train is 7 mills per car-foot-mile. I
understood General Stewart to state—and if I am not correct, I
wish you would correct me—that getting up this recommendation
here for this bill they use the earnings of the passenger train, or
what the passenger train would earn, to establish a basis for making
their calculation on it. Am I correct?
Mr. STEwART. The average earnings?
Mr. HARDIN. The average earnings. So, in our case, the basis.
used does not fit the situation by any means.
The CHAIRMAN. The figures submitted, however, as I understand,
simply apply to existing conditions and are not applicable to the
suggested plan of the department. -
Mr. HARDIN. I am coming to that, Senator. I have not included in
this 4,819 closed-pouch-miles which I left out, thinking that if I had
made an error at all in my calculations that it would be favorable to
the department rather than to ourselves. The increase of our mail.
by reason of the parcel post is rather peculiar. We serve a section up
there in the mountains where the express companies do not operate,
there is no delivery of that kind, and 34 miles we have mail deliv-
eries, an average of only a little over 4 miles apart, and our people
around there have just about stopped shipping any light material
at all by freight, they have taken it out of our freight cars where we
got paid for it and are putting it in the mail car where we do not get
paid for it and it gets us both coming and going. I make the state-
ment that the weight of our mail, by reason of the parcels post, has
increased 100 per cent. -
The CHAIRMAN. Is that an opinion or an ascertainment?
Mr. HARDIN. That is an opinion from observation. I would have
brought the actual results if I had been allowed by the department to
do so.
RAILWAY MAIL, PAY. 1201.
Aº
. The CHAIRMAN. How did the department prevent you from bring-
ing your own ascertainment?
Mr. HARDIN. I asked that we be allowed, for our own information,
at our own expense, without inconvenience, delay, or interference at
all with the mail service, to weigh this mail for 30 days, in order that
we might state positively what it was, rather than to express an
Opinion about it.
The CHAIRMAN. What was the reply of the department to that
request?
Mr. HARDIN. The reply is here and I can read it if you like.
The CHAIRMAN. We would like to have it; yes.
Mr. HARDIN. There are only four short letters. Will you have
them all?
The CHAIRMAN. Yes.
Mr. HARDIN. The four letters referred to are as follows:
SEPTEMBER 27, 1913.
SUPERINTENDENT RAILWAY-MAIL SERVICE, -
t Atlanta, Ga.
DEAR SIR : We would be very glad to weigh the mails carried on this (Cran-
berry and Johnson City) route for 30 days for our own information.
We assume, Of course, that there will be no objection on the part of the de-
partment, and we will thank you very much to give such advice to the mail
Clerk as will allow him to COOperate with us in such way as he may care to
without adding to his work or responsibilities in any way whatever.
It Will be Our purpose to put a competent man in the baggage car and weigh
all mail just as it comes in without any inconvenience in any way to the mail
º
clerk. If you should desire it, we would be very glad to furnish you with any
information gained by the weighing. If you will be kind enough to give this
yOur early attention, we will thank you very much indeed.
Very respectfully,
GEORGE W. HARDIN,
Vice President and Superintendent.
POST OFFICE DEPARTMENT,
SECOND ASSISTANT POSTMASTER GENERAL,
DIVISION OF RAILWAY ADJUSTMENTS,
Washington, October 6, 1913.
Mr. GEORGE W. HARDIN, *
Vice President and Superintendent East Tennessee dé
Western North Carolina Railroad Co., Johnson City, Tenn.
SIR: Your communication of the 27th ultimo, addressed to the superintendent
Railway-Mail Service, Atlanta, Ga., in which you advise that you will weigh
the mails on your route from Cranberry, N. C., to Johnson City, Tenn., for 30
days for your own information has been referred to the department.
In this Connection you are informed that the law requires that the weighing
of the mails for the purpose of readjustment of compensation shall be per-
formed by the employees Qf the Post Office Department. See paragraph 4 of
section 1164, Of the Postal Ilaws and Regulations. (1875, Mar. 3, chap. 128, 1
Sup., 70.) Under this provision of law, the mails were weighed during the regu-
lar quadrennial period Commencing February 15, 1912, and ending May 29,
1912, and upon the results Of Such weighing the COmpensation paid the Company
has been readjusted from July 1, 1912. No reports have been received that
there were any failures to weigh the mails during the period or that the weights
were incorrectly taken. In regular course the next weighing on the route will
occur in the Spring of 1916.
Relative to your proposed weighing of the mails, you are informed that
neither the law nor the regulation devolves upon you the duty, and the depart-
ment can not recognize any result which you may obtain for any purpose what-
ever. Furthermore, railroad companies are not permitted to interfere in any
manner with the handling or the passage of the mails, and the obstruction or
I 202 RAILwAY MAIL PAY.
retarding of such passage is made an offense under section 1622, Postal Laws
and Regulations (35 Stats, I., 1127), to which your attention is invited. -
Very respectfully, -
* , a - JOSEPH STEWART,
Second Assistant l’Ostmaster Général.
~. - OCTOBER 7, 1913.
Hon. JOSEPH STEWART, - -
Second Assistant Postmaster General, Washington, D. C. -
DEAR SIR: We are in receipt of yours of the 6th replying to our communica-
tion of September 27 to the superintendent Railway Mail Service, Atlanta, Ga.,
in which we suggested to him that we desired very much to weigh the mails
for 30 days on the Cranberry and Johnson City route for our own information,
asking his permission to do so. -
We understand quite well that the department weighing period was early in
1912, and that it will come again in 1916. Our purpose in weighing would be,
as stated in former letter, for our own information, and Our request was made
for permission and cooperation in doing so. It was not a notice that we were
going to do so, but was a request that we be allowed to do so. We had no idea
that there would be objection on the part of the department. We respectfully
ask that you review the said letter and beg that you indulge us to the extent
of a further reply to the Same. *
Very respectfully,
GEORGE W. HARDIN,
Vice President amól Superintendent.
POST OFFICE DEPARTMENT,
SEcond AssistANT PostMASTER GENERAL,
DIVISION OF RAILWAY ADJUSTMENTS, * -
Washington, October 14, 1913.
Mr. GEORGE W. HARDIN, -
l’ice President and Superintendent East Tennessee &
Western North Carolina Railroad Co., Johnsom City, Tenm.
SIR : In answer to your communication of the 7th instant, in further reference
to your desire to weigh the mails for 30 days on the Cranberry and Johnson
City route for your own information, I have to inform you that the proposed
weighing would serve no purpose whatever for departmental use, and if the
privilege you ask were extended to your company the department would be
bound to extend the same privilege to other companies which might request it.
Such action would undoubtedly result in confusion, and it does not seem ad-
visable to grant your company’s request.
Very respectfully,
JOSEPH STEWART,
Second ASSistant POSłmaSter GenèTal.
The CHAIRMAN. What criticism have you to make of those replies?
Mr. HARDIN. The criticism that I could have gotten actual results
before this commission from our particular operation rather than
coming here and saying to you that my best and honest judgment
was that the parcel post had increased 100 per cent.
The CHAIRMAN. You do not think that the department's position
is well taken? Don’t you think that if such permission had been
extended to one road, and it was generally requested by others, that
it might have interfered with the administration of the mail service?
Mr. HARDIN. If the department was put to no expense or incon-
venience, or the mails delayed in any way whatever, I do not see
where trouble would arise. f
The CHAIRMAN. It takes some time to weigh the mails?
Mr. HARDIN. Yes; but if the railroad companies undertook to do
that at their own time, cost, and expense, without delay, as I say, I
do not know where the objection would come from the department.
BAILWAY MAIL PAY. 1203
The CHAIRMAN. But in the weighing of the mails that would inter-
fere with the mails in the car, would it not?
Mr. HARDIN. No, sir. -
The CHAIRMAN. Where would you weigh the mails?
Mr. HARDIN. The bulk of our mail goes on at Johnson City. We
would weigh that before the train came in, before the car was ready
for the mail, and we could have weighed that without hindrance or
interference from anybody, but we did not weigh any part of it
without weighing all of it, and we could not weigh the mail handed
in along the line that our carriers did not actually carry without per-
mission—that is, I did not think we could. When the carrier at the
intermediate point took the mail we could have our agent weigh
that and hand it back to him.
Mr. Col.EMAN. Is it not a fact there is no delay even when the Gov-
ernment weighs the mail?
Mr. HARDIN. No delay to the mail so far as I know.
Mr. LLOYD. Do you think you are getting enough pay for carrying
the mail?
Mr. HARDIN. No, sir.
Mr. LLOYD. Are you satisfied with the present system of railway-
mail pay? p -
Mr. HARDIN. With the system itself or the pay we get?
Mr. LLOYD. I asked about the system.
Mr. HARDIN. If it were corrected to allow for side and terminal
service and more frequent weighing, I think we would be.
Mr. LLOYD. If you had an annual weighing and did not have to
perform the side and terminal service, would you then be content
with the present system?
Mr. HARDIN. With the addition that we want pay for the equip-
ment we furnish the Government to carry it in—the car.
Mr. LLOYD. Do you want the Government to pay for the car?
Mr. HARDIN. We want them to pay for what part of the car they
USe.
Mr. LLOYD. You want pay for the apartment?
Mr. HARDIN. Yes, sir.
Mr. LLOYD, But you are satisfied with the rate of pay if the side
and terminal service were discontinued, and you got paid for the
use of the apartment car?
Mr. HARDIN. Pay for the mail that we actually carry.
Mr. LLOYD. By having an annual weighing?
Mr. HARDIN. I did not say I was entirely satisfied.
Mr. LLoyd. I left out the word “entirely.” We are never entirely
satisfied with anything.
Mr. HARDIN. I do not think that the graduation of the schedule
of rates is exactly just to the light lines. -
Mr. LLOYD. How would you change that?
... Mr. HARDIN. By increasing the pay per 100 pounds or tons for the
lighter lines. - --
Mr. LLOYD. Have you figured out what it ought to be? It is
$42.75 now, the smallest amount carried.
Mr. HARDIN. I have not made those figures and that low class
does not affect this line, but it seems to me that we should have a
rate of at least $50 for the first class.
35797—No. 10—14—7
1204 - RAILWAY MAIL PAY.
Mr. LLOYD. The next is $64.12. How would you change that?
Mr. HARDIN. I would make it about $85.
Mr. LLOYD. Would that reach your road?
Mr. HARDIN. Yes. I think it would reach us now, if we had a
weighing.
Mr. LLOYD. And the next class you would want raised in about
the same proportion?
Mr. HARDIN. As the tonnage increases I would decrease the rate
per 100 pounds.
Mr. LLOYD. You think the main lines get enough now where they
carry 48,000 pounds?
Mr. HARDIN. I am not enough familiar with that subject to state.
Mr. LLOYD. Then, on your road you think you ought to have $85
per mile, that the Government ought to pay for side and terminal
service, and that you ought to have an annual weighing. If you
had all those things and got paid for the apartment car, do you
think you would be satisfied? -
Mr. HARDIN. I would risk that for a while.
Mr. LLOYD. How much pay would you want for apartments? The
same rate that you do for the R. P. O. ?
Mr. HARDIN. No, sir. I think the smaller the space, the shorter
the length of the car that the Government requires, the more per
foot they ought to pay for it. It is like a retail and wholesale busi-
TheSS.
Mr. LLOYD. What difference would you make between the apart-
ment and the R. P. O. car in point of space?
Mr. HARDIN. The apartment car, where 10, 15, 20, or 30 feet
is used—in the first place, I would not have all of those divisions.
Mr. LLOYD. We do not have them now under existing law. . We
are talking about existing law. I am trying to get at what you think
the law ought to be.
Mr. HARDIN. The pay for space in 30-foot apartment car?
Mr. LLOYD. It ought to be about half what the similar space would
be in the R. P. O. car?
Mr. HARDIN. No; it ought to be about twice as much as the same
space would be in the R. P. O. car; twice as much per foot, I mean.
We are confronted with a proposition to fix a maximum. It seems
it ought to carry with it the idea of some minimum.
Mr. LLOYD. We are talking about the suggested bill.
Mr. HARDIN. Yes. I got off the track for a moment.
Mr. LLOYD. I understand you are decidedly opposed to the sug-
gested bill.
Mr. HARDIN. Yes, sir.
Mr. LLOYD. And you, are not in favor of it in any particular ex-
cept that part which would rid you of the side and terminal service?
Mr. HARDIN. I think, without going into it carefully, from what
I have in my mind, that that is about the only thing in it I see to
commend it, and I believe it is offset by the methods of the Post-
master General; when the companies are relieved of that, they might
have their pay reduced 5 per cent. -
Mr. PETERS. Have you made up, in your mind, any objection to the
space basis? Have you formed any conclusion on that? -
Mr. HARDIN. Yes. As suggested in this bill the power given to
the department is such that it would have the tendency to concen-
RAILWAY MAIL PAY. 1205
trate their loads in such a way that they would pay for little space,
and they would get increased service out of the expenditures made
without giving the railroads an opportunity to exercise the same
degree .#economy and to participate in any economies of that kind.
Mr. LLOYD. That is a matter of administration. Now, what is
your objection to the principle involved in making space the basis of
pay rather than weight? Suppose all other things were made right.
Then would you still object to space being used as the basis?
Mr. HARDIN. On general principles, I think I would.
Mr. LLoyd. Why? .
Mr. HARDIN. The fact that the railroad weighs its stuff, they have
track scales at all principal points and platform Scales at all depots,
and their rates for every kind of freight service are, almost without
exception, based on weight, because they can determine that—they
know what they are doing, what they are up against, and what they
have to do.
Mr. LLOYD. Is it possible to weigh the mails and get paid for them
on a weight basis just like you do on freight?
Mr. HARDIN. I think so.
Mr. LLOYD. Would that not be the correct system if you are going
to have a correct system?
Mr. HARDIN. Yes. That could be done at frequent intervals if
you did not want to weigh it every day. So far as I am concerned,
I would be willing to weigh it every day.
Mr. LLOYD. Having all the scales that are necessary, you could
weigh it every day just as you do everything else?
Mr. HARDIN. Yes.
Mr. TUTTLE. Are there many lines in the country like yours, Mr.
Hardin'?
Mr. HARDIN. Well, I rather think not.
Mr. TUTTLE. What I was getting at is whether there are many
short lines 34 miles long, and are there enough of them that would
have an influence in framing a law?
Mr. HARDIN. Yes; there are a great many lines in North Carolina,
South Carolina, Tennessee, Georgia, Alabama, and West Virginia that
are about our length. I will say down to 20 miles. . Just to show you
I have some knowledge of what I am speaking of, I have just had
occasion in the last 30 days to address a communication to 42 short
lines around there near us to get at the rate of pay each one of them
was paying their employees, and I think I have had answers from 34.
There are at least that many in what the Interstate Commerce Com-
mission designates as Division No. 5. N
Mr. BALDw1N. May I ask a few questions?.
The CHAIRMAN. Yes; we will be glad to have you do so.
Mr. BALDw1N. Is there any official statement of what your loss
below actual cost is from carrying the mail at the present time?
Mr. HARDIN. I think Document 105 has that in it.
Mr. BALDw1N. How much below the actual cost do they report?
Mr. HARDIN. It seems to me it is $300 or $400 a year.
Mr. BALDw1N. About 25 per cent below actual cost. Well, if you
were allowed relief from the side and terminal service and pay for
your apartment-car service and an annual weighing, about how much
would your pay increase above the present amount, in your opinion?
Mr. HARDIN. Relieved from the side and terminal service, our pay
1206 RAILWAY MAIL PAY.
would increase about $400 from the last weighing. If we had a
weighing I think it would be increased 100 per cent.
Mr. BALDw1N. With that increase, would you then be paid accept-
ably for the service you would render the Government compared with
freight service?
Mr. HARDIN. No, sir; we would not.
Dr. LORENZ. A moment ago Mr. Hardin gave here what he is get-
ting per car-foot mile from this train for passenger and mail service,
and as I understood it was 7 mills and a fraction for the passenger
and 4 mills and a fraction for the mails per car-foot mile. Now, I
wish to ask whether he has calculated what the suggested law would
give him per car-foot mile in the mail service?
Mr. HARDIN. No, sir; I have not.
Dr. LORENZ. From a rough computation I made a moment ago,
which is not accurate, the indications are that the earnings would be
increased. I am not certain about that, but it would be worth look-
ing into first before condemning the proposed law. It might actually
increase your mail pay as it stands. , '
The CHAIRMAN. That is, the suggested plan, if adopted, would, in
your opinion, equalize the mail pay for passenger compensation?
Dr. LORENZ. Yes; for a short line like that.
The CHAIRMAN. On this particular road?
Dr. LORENZ. Yes; for a short line such as this road, which is
earning per car-mile in the neighborhood of about 30 cents; in the
rate suggested in the bill it is about what he is getting from the
passenger service.
Mr. BALDw1N. You mean on the basis of the present service?
Dr. LORENZ. I assume that; yes. -
Mr. LLOYD. Do you run trains on Sunday?
Mr. HARDIN. Yes. We began some years ago with a mixed train
leaving Johnson City in the morning and getting back when we
could; that has a full coach, a combination coach, with a mail apart-
ment in it. Some 12 years ago we put on a regular passenger train
making two round trips a day. For some time the department put a
mail clerk on one round trip, and after that some months they had a
closed pouch on the other trip. Then a few years later they put a
mail clerk on both of the round trips and closed pouches on the
freight trains, so we are supposed to carry the two mail clerks two
round trips a day for six days in the week. The accumulation of the
mail on Sunday is such that we can not distribute it in the 34 miles,
so we have instructed the men in our district to send it from John-
son City to Cranberry on Sunday, and the mail clerk is supposed to
go to work 5 o'clock Monday morning and work that way so that he
can distribute it coming back, so we are hauling that mail twice
over the road. What he actually does is to come down to Johnson
City on Sunday and work his mail up so that he has it ready to dis-
tribute and does not have to get up early in the morning.
Mr. BALDw1N. Your mail during the weighing period is weighed
for how many days? § * o
Mr. HARDIN. During the last weighing period it was weighed for
15 weeks. It is weighed 90 days.
Mr. BALDw1N. Do they divide the aggregate by 90%
Mr. HARDIN. I understood by 105.
Mr. STEwART. Is your pay fixed per annum ?
RAILWAY MAIL PAY. - 1207
Mr. HARDIN. The pay is fixed at an average daily weight per mile;
yes, Slr. -
Mr. STEwART. How many days in the year does your average pro-
cured by the division by 90 represent? .
Mr. HARDIN. If we divide by 90 the average would be greater
than if we divide by 105.
Mr. STEwART. I am asking you how many days that would repre-
sent in the year—365 or 313.
b Mr. HARDIN. Six days in the week for 52 weeks, of course, would
e 312.
Mr. STEwART. Then it would be applying an average daily weight
for 312 days to a compensation fixed by Congress for 365 days'
Service.
Mr. HARDIN. We handle it 365 days.
Mr. STEwART. Then the average ascertained by the department is
absolutely correct.
Mr. BALDw1N. Did you weigh on Sunday?
Mr. HARDIN. No.
Mr. BALDw1N. There is the point of the whole thing.
The CHAIRMAN. Is that all, Mr. Hardin?
Mr. HARDIN. Yes, sir.
The CHAIRMAN. Thank you very much.
STATEMENT OF ME. L. T. NICHOLS.
The CHAIRMAN. Mr. Nichols, will you kindly state your name and
your official position. -
Mr. NICHOLs. L. T. Nichols, general manager Carolina & North-
Western.
Mr. Chairman, the Carolina & Northwestern is a small road run-
ning from Chester, S. C., to Edgemont, N. C., in the mountains. I
shall not undertake to go into any technical matters under this pro-
posed bill because the gentlemen who have preceded me seem to know
more about that than I. However, I am in hopes that the com-
mission will hear our individual conditions and I trust that it will
help the commission in any bill they may decide to report, in correct-
ing these individual cases. I wish to say further, if I make any
reference to the Post Office Department, that it is done with all due
deference, for I have the highest respect for all of the officials of the
department, and there is no intention whatever to show that there
is any feeling in the matter, but I am simply stating facts and I
do not think I will have anything to say that you will object to. As
to the position of my line On the mail pay business, we have not
changed. We still stand on our letter of October, 1912, which is
published in the preliminary report of January, 1913, in which we
tº: a 30 days’ weighing period each year, a divisor by 6 and not
by 7, in order to encourage seven-day mail pay, rather than dis-
courage it, and the pay on weight basis for haulage. Please bear
in mind that when I say “haulage’” I mean for the carriage. And
pay a fair passage rate, or relieve the roads of the risk of handling
the clerks. Cut out the side line and terminal deliveries. Pay for
apartment cars on some fair basis, and I think we can find statistics
enough to get that, and it can be worked out by experts; and I
am willing to leave it to the Interstate Commerce Commission ex-
1208 RAILWAY MAIL PAY.
perts so far as our line goes. The Carolina & Northwestern is a poor
line by reason of unusual conditions in the way of competition, but
it does not serve a poor territory, but one of the thriftiest 134-mile
sections that the South boasts of outside of large cities. That is
further evidenced by the fact that on information which I believe
to be correct, the post-office receipts from the post offices along our
lines increased from 1905 to 1913 from $59,000, in round numbers, to
$72,000. The department pays for R. F. D. and star routes at purely
local stations not served by any railroad, approximately $39,000
per annum, and at one station which is served altogether by our line
they paid $6,589 for that service, while the Carolina & Northwestern
Railroad received during the fiscal year $8,459, or only $870 in excess.
Mr. PETERS. How many miles of road was that?
Mr. NICHOLS. One hundred and thirty-four is our mileage. Docu-
ment 105 shows that the C. & N. W. was underpaid, and since that
time the parcel post has been inaugurated. We object to the pro-
posed bill because we do not think it is a sound principle; it is an
untried proposition, except as it has been forced upon the railroads
by their own shortsightedness. I have been directly and indirectly
connected with the handling of the mail in one way or another for a
good long while, and in recent years there has been a constant de-
crease—that is, the 10 per cent and 5 per cent and the divisor—and
constant demands of the Post Office Department for additional serv-
ice in railway post-office cars and a rapid growth of the country in
the last two years, which seems to have called for so much of this
free service, speaking for ourselves, it has become burdensome. My
opinion is that when it comes to paying for railway post-office cars
it is exactly as you would pay for a post office in any of the cities.
The carriage of the mail is an entirely different thing to housing it,
and I do not see how the renting of a post office can be made to pay
for carriage of the mail unless they are separately considered and
put together; for, if you are going to consider them separately and
combine them you might work out something, but I am not in a
position to know just now how you would do it. I do not know that
we have a correct idea from this proposed bill, but we are operating
two 20-foot apartment cars, 134 miles each way, daily, with a pouch
service 20 miles each way on weekdays, and I am not sure, but I
think some of that mail is going on the passenger trains Sundays.
I figure that we would be reduced $500 per annum and that the esti-
mate in Document 103 shows that we are already $3,960 short on
pay; and since that time the parcel post has been added. The time
is getting very short and I do not want to keep you gentlemen at all,
but I would be glad to answer any questions that may occur to you.
The CHAIRMAN. You say your present compensation will be re-
duced $500 per annum by the adoption of the suggested plan of the
department, assuming that the maximum rates proposed under this
plan is adopted were allowed you?
Mr. NICHOLs. Yes, sir. Now, may I state, too, a condition there
that we fear may operate against the car space with us and make it
exceedingly unfair. We have trunk lines crossing us every 10 to 23
miles; those trunk lines naturally lead out to the larger cities; the
mail coming over our lines from points intermediate will be shunted
off from that on to the short routes to these other places, reducing
the car space that the department would use on our lines, giving it
RAILWAY MAIL PAY. - 1209
to these other lines. From 1901 to 1909 our mail receipts increased
6.42 per cent. a’
The CHAIRMAN. You mean the mail payments that you received
from the Government for carrying the mails?
Mr. NICHOLs. Yes, sir. The amount of revenue from express re-
ceived during the same period was 71.15 per cent; the freight ton-
nage increased in the same period 147.8 per cent. From 1901 to
1913, according to the best information I have, the post-office receipts
from the offices on my line increased nearly 33 per cent. The mail
pay received by the Carolina & Northwestern Railroad in 1909 was
approximately $8,436. The mail pay received in 1913 was $8,461.
The cost of doing business for the 10 years up to 1909, cost us 66 per
cent of our gross revenue. Since that time it has gone to 74 per
cent. I make that statement to show the relative increase of busi-
ness and to indicate the rapidly increasing cost of business, and want
to state that it occurs to me that the mail is not carrying its propor-
tional part of the increased burden. I will state one or two physical
situations, showing the hardship under which the Small lines operate.
A few years ago there was quite a demand on the line of our road
by the public—not in the volume of business offered—for a second
passenger train, and it became so forcible that we put on a second
passenger train. The people at once petitioned the Post Office De-
partment for additional mail service, wanting double daily service.
We did not have the cars, and, under the rulings of the department,
heavy fines would accrue against us if we did not operate those cars,
and therefore we discontinued the trains at a very great cost, by
reason of dissatisfaction among the people, and it hurt the competi-
tive business very seriously, but we were helpless. We had not
money to go out and buy apartment cars for 10 feet, and when the
department changes its mind, buy one of 20. I will state the final
condition we are confronted with to-day. Several months ago we
had the misfortune to lose one of the three mail cars we had, in a de-
railment. It tore the car up and the cost of repairs being greater
than we thought it would warrant, we cut it out of service. That
left us with only two cars, and those cars cross on the line every day,
and when it becomes necessary to put one of those cars in the shop
for ordinary every day repairs, the train is not served by a mail
car unless our connections find themselves in position to help us out
and let us have a car. And, as occurred very recently, I had to go
and hunt for one, and I could only find a full car, and I had to
operate that car, pay for it on our line of road for over two weeks,
while making minor repairs to this other car.
The CHAIRMAN. And getting pay for how many feet?
Mr. NICHOLs. Getting pay for no feet, but the same that we got
before. It made no difference in our rates. It would not have made
any difference under this proposed bill, as I understand it. There is
another feature in this matter that I am free to say that I am seeking
information about from the Post Office Department and making an
appeal to them more than to you gentlemen, perhaps, but it is a cir-
cumstance that represents some of our conditions. These post-office
clerks the railroad companies have absolutely no control over. The
rules and regulations for their safety can be disobeyed with impunity.
For instance, my transportation superintendent passing along a
passenger landing, with a train standing and receiving passengers,

1210 RAILWAY MAIL PAY.
went by the mail-car door and the mail clerk kicked a mail pouch
out on top of him. He turned around to the clerk and said, “Look
out, old man, the first thing you know you will hurt some passenger
and we will have to pay for it.” The clerk replied, “Well, keep out
of the way and you won’t get hit.” Not three weeks ago at a hotel
at one of our terminals a postal clerk had his opinion of the character
of cars we were running, their condition, and made the statement that
the cars we were running had been condemned by the department
three years ago. In this very car that we destroyed there was a mail
clerk and a helper and one of them sprained his ankle and another
his elbow, or something, and it cost us $500. I suppose the only thing
that would actuate the clerk in making such a remark was to lay a
foundation in case he had a similar action to get $500, or as much as
the two others. What redress has a railroad when the postal clerks
act like that? -
The CHAIRMAN. Do you report these things to the postal authori-
ties?
Mr. NICHOLs. We did not, sir.
The CHAIRMAN. Is not that the proper place for your redress?
Mr. NICHOLs. We steer as far from disturbing the Post Office De-
partment in any way, shape, or form as is possible.
Mr. LLOYD. For the good of the service, aside from your position
as a railroad official, do you not think it is your duty as a citizen to
notify the department of any wrongdoing of its employees?
Mr. NICHOLS. We have trouble without hunting it, and as long as
he does not hurt somebody we do not bother with them.
Mr. LLOYD. You are talking about a condition, however, that hurts
you. Your implication is that this man is pursuing a course that
will enable him to make money out of you in the end.
Mr. NICHOLs. As I stated, I brought out the question to see if the
department would feel inclined to express themselves on that condi-
tion.
Mr. LLOYD, I have had a great deal of dealing with the depart-
ment as an official, and I have found them exceedingly fair in mat-
ters of that kind, and if you call their attention to these troubles
and things they will do the best they can to remedy the evil. It is
impossible to control every employee, and you know that is true in
your own business, as well as being true in the Government business.
Mr. NICHOLs. That is a little aside, perhaps, and I might say it
has nothing to do with this particular case. However, if that con-
tinues to go on further and further, we will have people on our
trains that we are responsible for that we have not the control over
that we have over the passengers.
Mr. LLOYD. That is the point; you are censuring, by indirection,
the Post Office Department for the dereliction of those officers and
yet you have not notified the department of that dereliction.
Mr. NICHOLs. If it is any censure, I beg your pardon. I was try-
ing to find out how to get at it.
Mr. STEwART. I assure you we expect the officers of a railway com-
pany to report every dereliction, even every discourtesy, of a rail-
way-mail clerk, and if you do that I assure you that every effort
will be made to correct it. We do not countenance any acts of dis-
courtesy on the part of clerks.
RAILWAY MAIL PAY. 1211
Mr. NIGHols. I thank you, Mr. Stewart, and I will say no more
except that I am delighted to have that information. &
Mr. Lloyd. I know of an instance on a road in Missouri where a
postal clerk had a fight or altercation with the conductor. The clerk
was sitting on the seat and the seat in front of him was thrown back
and he was occupying two seats. In going from place to place the
conductor suggested to him that they needed the Space and he would
like for him to give up one of the seats. The clerk abused the gon;
ductor a little bit, a war of words followed, and the result, was that
that conductor notified the Post Office Department. The Post Office
Department sent out its inspector, who inspected that case and they
dismissed the employee from the service.
Mr. NICHOLs. That post-office clerk was in the passenger car, Was
he not? *
Mr. LLOYD. Yes.
Mr. NIGHols. We would not have gone to the Post Office Depart-
ment with it. We would have taken him up before the first justice
of the peace. Here, in the case I mentioned, is a man in the post-
office car surrounded by the power of the United States.
Mr. LLOYD. I am illustrating another point, that you do not have
to go to the justice of the peace. The Post Office Department dis-
missed this man from the service and he is out of the railway post-
office service to-day.
Mr. NICHOLs. I am glad to hear that, because I am getting a little
concerned with some of ours. I was wondering whether we had to
give up the entire car and everything else with it.
The CHAIRMAN. Do you see any difference between the short lines
and the long lines? In other words, is it necessary to have two meth-
ods of ascertainment to be equitable and just as between the two—
#. are known as short lines and what are known as the trunk
IIlêS :
Mr. NICHOLs. Mr. Chairman, I will give my opinion for what it
is worth. The rate for the mileage basis was made when there was
no such thing as a post-office car or an apartment car; the mail was
brought to the station, or if it was within 80 rods of where the sta-
tion agent could walk out and get it, but very often at that time he
was the postmaster, and he put it on the baggage car, tagged for the
station, and so on, and the baggage-master put it off and the agent
carried it to the post office, and that was the basis on which the pay
was made at a time when there was such a small volume that it could
be followed; every item could be counted and it was gone into, and I
think the proof of the condition of the situation is that it has stood
the test of time. That is the basis on which all railroad earnings are
arrived at. You may talk about your passenger-rate basis as you
please, but it is the tonnage basis of that train that we base our cost
on, and it takes coal to pull tonnage, and our conditions are largely
more in proportion to the tonnage than anything else. The apart-
ment car came along later, voluntarily, first by the railroads and later
demanded by the department, but here is where the trouble comes in,
like freight rates and other conditions: The freight rates, mail rates,
and passenger rates are downward; the expense multiplies upward
all the time until we have gotten to the dividing line and there is no
longer any leeway for us, and, to use an expression which has been
pretty generally used and understood to be correct, we are gradually
1212 RAILWAY MAIL PAY.
starving to death. That may be going a little too far, but if you will
put back the 10 and the 15 per cent that was taken off of the mail-pay
basis at different periods and you will give us a fair rental basis for
the Space that the department would use for its exclusive purpose and
relieve us from the side line and terminal service I think along that
line you would find it a correct basis.
The CHAIRMAN. It is self-evident that you have received more
compensation than you receive to-day, but you failed to demonstrate
that you are entitled to it, have you not? • ‘
Mr. NICHOLS. I do not think so, sir; speaking for the Carolina &
Northwestern. To be perfectly frank with you, sir, and every rail-
road—I am speaking for mine, particularly—certainly needs and
wants every dollar that it can get, but I feel that every dollar the
mail service is paying us to-day is costing more than it is paying.
Mr. LLOYD. Do you want to carry the mail? *
‘Mr. NICHOLS. If the property belonged to me it would not be car-
ried on that route at the price at which it is being taken.
The CHAIRMAN. We will now take a recess until 2.30 o'clock p. m.
(Thereupon, at 1.15 o'clock p. m., a recess was taken until 2.30
o'clock p. m.) *
AFTER RECESS,
(The hearing was resumed at the expiration of the recess at 2.30
o'clock p. m.)
- N.'s, LLOYD. Mr. Nichols, have you carefully examined Document
O. 8%
Mr. NICHOLS. I can not say that I have, further than to read and
look at it.
Mr. LLOYD. You have the suggested plan of pay?
Mr. NICHOLs. Yes, sir. ---
Mr. LLOYD. What is your objection to that plan?
Mr. NICHOLs. It is so complicated that I have not as yet been
able to analyze it. The document seems to make the basis of pay
altogether on space. --
Mr. LLOYD. Excepting pouch mail? ..ºr
Mr. NICHOLs. Excepting pouch mail; yes, sir. In that particular
we have one 20-mile pouch mail route and I do not understand
whether they would pay for that independently and irrespectively
of the other or whether it would be combined. My auditor, who is
a very fine accountant, only had a short time to go over it, but ac-
cording to our figures, it is the best we could make out of it. It
evidently is not correct, because the department has very kindly
given me some figures here and it does not agree with our under-
standing. Therefore, I think I am rather at a loss on this docu-
Iment. -
Mr. LLOYD. According to your figures, as you understand it, how
much will you receive compared with what you now receive?
Mr. NICHOLs. About as 6,300 is to 8,400.
Mr. LLOYD. And, according to the department's figures?
Mr. NICHOLS. We would make some money according to their
figures. -
nº LLOYD. Did you include the same items of cost—you and
they
FAILWAY MAIL PAY. . 1213
Mr. NICHOLs. They are not using cost items, but revenue items.
Mr. LLOYD. Now you have revenue from mileage, revenue from
loading and unloading Service, and the weight of the mail.
Mr. NICHOLs. Where the figures of the department seem to differ
the greatest from my figures—I went into more detail than I was
capable of doing, because I do not profess to be an expert in that
line—is that where we are running a 22-foot apartment, and under
that bill, as I understand it, they would either have to take a 20 or
25 foot apartment, and they would naturally authorize the 20-foot
apartment.
Mr. LLOYD. They would have to authorize a 20 or 25 foot apart-
ment, one or the other.
Mr. NICHOLs. In that case it appears from their figures, and I am
not capable of criticizing them, but we would get more money. But
let me cite a condition. We have two daily passenger trains, as I
stated, only one carrying the mail, and they say we have been paid
for a 25-foot apartment. As I understand this document the Post
Office Department is allowed all discretion, and if I were in their
place, in making a showing for the Government, I would certainly
take advantage of that law, so far as good business judgment would
permit. Therefore, in calling for the service they would put on four
additional cars instead of two.
Mr. LLOYD. You mean twice a day each way?
Mr. NICHOLs. Yes, sir; twice a day each way.
Mr. LLOYD. That would nearly double your pay.
Mr. NICHOLs. I beg your pardon. If they are performing all that
service in a 22-foot apartment, they would not order four 25-foot
apartments, but they would order four 10-foot apartments, and I
would get instead of pay for two 20-foot apartments pay for four
10-foot apartments. As to the susceptibility of the changes, I gave an
illustration a while ago, and I will add to it in this way: We come
across to Hickory, Newton, Lincolnton, Gastonia, Chester, and the
mail is picked up in between those points passing over the larger lines
to a larger center than we serve direct and good business judgment
of the department requires them to shunt that mail and get into those
larger centers by the shortest route so as to use the least space on
my line that they could require, because on the larger lines the varia-
tion of the mail is such that they are better prepared to take care
of the fluctuation than they would be on the shorter line. That is
the only way the space basis can be used that I can conceive of.
No matter on what space you make the rate you have to get back to
the mileage basis to start with. You are compelled to take the ex-
perience and the data, which is on the weight, in order to get to it.
Now, if that can be done, then you get into the space basis. If you
do, I venture the assertion that unless there is a minimum provided
as to the amount of space, as well as a miximum, there will always be
more or less dissatisfaction. •
Mr. LLOYD. You make an arbitrary statement, as I take it, that on
the figures submitted to you on the 25-foot car, if they had mail
twice each day, that the amount would be less, because they would
use a 10-foot apartment. It seems to me that that presumption is
wide of the mark. The natural presumption would be that there
would be at least a 15-foot car each way and it would make a 60-foot
1214 RAILWAY MAIL PAY.
space instead of 50, and you would get paid for 10 feet additional
each day. .-
º NICHOLS. I am simply putting myself in the department's
place.
Mr. LLOYD. I mean to put you in the department's place.
Mr. NICHOLs. I would not put on 15 feet if 10 feet would do.
Mr. LLOYD. Certainly not; but you have 22 feet of space now each
way, and you have to use a 25-foot car. You can not divide that
evenly.
Mr. STEwART. The gentleman is wrong for this reason: He does
not understand the manner of authorizing the apartment-car service.
We would not divide the separation; the main item that controls the
Space is the matter of separation dependent on the number of post
offices supplied and connections made. We now have 22 feet needed
to provide the number of separations necessary on the line and we
could not cut that number of separations in two and do the required
work in 10 feet, for we would require approximately the same space,
whether we had the same amount of mail or not, because we would
have to make the same separations.
The CHAIRMAN. Does your authorization have to go to the peak of
the load?
Mr. STEwART. It must cover the separations necessary; that is the
main thing.
Mr. NICHOLS. I do not exactly get that. If you are doing the
business alone in 22-foot apartments and you wanted to double the
Service you would certainly have correspondingly less.
Mr. STEwART. Not necessarily, as I said before, if the separations
required were the same on each train, the space authorized would be
the same.
Mr. NICHOLs. You mean to work in 2
Mr. STEwART. To work in; yes.
Mr. NICHOLs. If you can work mail in a 10-foot apartment it
strikes me you would be able to do this, by dividing apartments into
4 and let us do away with the 10-foot apartments.
Mr. LLOYD. Take the 22-foot apartment and divide by 2, that would
be 11. If you had 11 feet of space you can not put that in a 10-foot
space, so you will have to have a 15-foot car, and in any event you
would then have a 60-foot daily space.
Mr. NICHOLs. My idea is that it just so happens that the 22-foot
apartment car was divided that way and we used it for some reason.
I do not know why, but we followed out their regulations so far as
we could. On the new basis it goes 10 feet, 15, and so on. If 10 feet
would not do I would certainly use 15, but my contention is with the
mail as it now stands, but with the ability to allot the mail the other
way without hurting the mail very seriously, I would naturally, as
a business proposition, use as little as I could, and therefore 10 feet
would do, and we would not get any more for four services than for
the two.
Mr. LLOYD. That would be because the mail is diverted.
Mr. NICHOLs. A natural diversion, and it is proper business for
them to divert it.
Mr. LLOYD. If it is diverted then the other roads would get the
benefit of it.
Mr. NICHOLS. Certainly; but we are not doing that business.
RAILWAY MAIL PAY. 1215.
Mr. LLOYD. But the general public is interested, and the cost of
the service is the thing in which the Government is especially con:
cerned. Now, if it shunts the mail off onto another line, it would
cost them just as much to carry it on the other line as it would yours.
M. NICHOLs. But you are getting the benefit of double service on
my line.
Mr. LLOYD. You have not presented a case yet to show why they
would want to shunt it. Why would they want to get rid of your
service? -
Mr. NICHOLs. Naturally, with all traffic conditions, if there is
nothing else to induce them to do it, they would naturally give the
originating carrier the longest haul they could so that they could get
it to its destination without delaying it. If they have additional
space on these other lines, and want to give the additional space to
the other people, and want to do it as cheap as possible, they would
not shunt it off so they could load it up between points, and they
would not need so much space on my line, but I am doing it at a
double cost. We are crossed at six points and our service is taking
it at these points and carrying it from the junction points to the
distant centers.
Mr. LLOYD. Evidently your road is a fair sample.
Mr. NICHOLs. But it is the conditions under which we have to
Operate.
Mr. LLOYD. Yes; but you could not make a law that would fit every
particular case, unless you leave it to the Post Office Department to
contract with each individual railroad.
Mr. NICHOLs. I think, sir, the present basis has been worked out
and seems to take notice of the several conditions.
Mr. LLOYD. The short-line people contend that you are not getting
enough pay.
Mr. NICHOLs. Yes, sir.
Mr. LLOYD. And that you are not getting as much proportionately
as the main trunk-line roads.
M. NICHOLS. I have not said anything about the main trunk-line
I'O3,OHS.
Mr. LLOYD. I know, but you are very anxious not to say anything
about them. I may say the trunk-line railroads are getting pay out
of proportion what you people receive, and I say—and I think that
it is the concensus of opinion of all of us—that the trunk-line roads
have but little ground for complaint. It is the little fellow that has
ground to complain.
Mr. NICHOLs. I am not familiar enough with the trunk line to
form an opinion. *
Mr. LLOYD. You are in a position where it would not be wise for
you to say, and I do not want you to say, because you are crossing
other roads and you must do business with other roads, and you
probably do business with roads larger than your own, and that is
true with many of the roads of the United States. Apparently
there are about five roads at the present time directing the policy
of this business and the hearing before this committee. That is
my judgment about that.
Mr. PETERs. I would like to take an exception to that.
Mr. LLOYD. You can note your exception, because it goes in the
record.
1216 * RAILWAY MAIL PAY.
Mr. PETERs. Those five roads are not directing this, but we are all
trying to get at what is best for us to have. ſº
Mr. LLOYD. I think that this is true: That there is not one trunk-
line representative here but who is doing everything in his power to
make it appear they are not receiving enough for carrying the mail,
and it is not the question of whether it should be carried by weight
or space, and the reason you are objecting to space is because you do
not think you will get as much compensation as under the weight
system.
Mr. PETERs. No; we do not think it is right to attempt to pay by
space for One of the utilities of the transportation companies that
you will use on a weight basis for transporting a revenue producing
or commercial business. You propose to take the space and pay for
it on the wholesale space basis and then farm it out on the package or
piece or pound basis, and use the facilities of the railroad to produce
you a great revenue from what you sell by the pound or by the
piece. Now, we feel that as we are in the transportation business,
the business of furnishing transportation and carrying commodities,
and have been carrying these in express, carrying them in freight,
they are now taken out of that and put into your big cars on a space
basis and carried there without the railroad having any oppor-
tunity to participate in the increased traffic which you are making
and taking from the other side. There is the real truth of it. You
propose to utilize or pay the railroads on the space basis, and yet,
through that means of transportation, you collect from the people
on a pound or piece basis. Now, you take the trunk-line roads, they
are carrying the mails for something like from 5% cents to 6 or 7 cents
a ton a mile. I think Mr. Hardin's road, as it was figured out, was
about $1.40 a ton-mile. The rate based on weight and on a mile haul
produced those different results. You are getting the big quantity
of your mail carried by the big railroads, your trunk lines, carried
at a very low rate when you consider the service performed. We
have studied this from all sides. At first it was thought that the
space basis would be good and we studied it from that point of
view and we all came back to the one thing, that the weight was
what we transport and that we should participate in these increased
revenues the United States is making out of the transportation
facilities we are furnishing, by being paid on the weight basis rather
than on a space basis.
Mr. STEwART. Are you objecting, then, to the character of the
matter that we put in the cars and use we make of the space for the
transportation? -- -
Mr. PETERs. We do object to your going into the wholesale freight
business. We felt when you went into the parcel-post business up
to 11 pounds that that was an adjunct of the mails, it was something
that the people wanted, they had it in other countries and it was
bound to come, but when you started in general competition with
the freight and express and go to 50 pounds or 100 pounds, or per-
haps—we do not know—to 200 pounds, then you have gone into
actual competition with the railroads themselves in the conduct of
the business for which they were incorporated and for which they
were built. ~
Mr. STEwART. Then you are objecting to our taking business from
you which you are now transporting as express or freight?
BAILWAY MAIL PAY. 1217
Mr. PETERs. Yes.
Mr. STEwART. And transporting it on the space basis in the pas-
senger train. Do I understand your objection correctly?
Mr. PETERs. That is right, without our being able to participate in
the revenue that is obtained through the instrumentality that we
furnish.
Mr. LLOYD. So far as the commission is concerned, we have never
as yet for one moment considered the question of how much you
would get, but it is the kind of system and what we have begged
you from time to time to do, was to discuss this system, and the
thing you complain about in connection with the proposed system is
that it leaves too much to the discretion of the Postmaster General,
and yet we have never gotten one of you at any time to assist us a
particle in trying to suggest a bill on the space basis which would
eliminate, to some extent, the discretion of the Postmaster General.
Mr. PETERs. Because we did not see how it could be possible to
provide a bill on the space basis that did not leave the whole matter
to the discretion of the administration. It is a question of adminis-
tration. A weight basis is one that depends upon what the scales
say and the number of miles that the weight is hauled.
Mr. STEwART. Would you be willing to make a division of the
mail and accept space for all but fourth-class matter and let fourth-
class matter go upon some other basis?
Mr. PETERs. I do not quite catch that.
Mr. STEwART. Would you be willing to have a combination plan
and accept the space basis for all but fourth-class matter and let
fourth-class matter be handled upon some other basis? I understand
your objection is that we are taking over a part of the railroad's busi-
ness, as you think, and are going to ask you to transport that matter
on a space basis on your passenger trains. Now, if that be your
objection, I ask you whether you would be willing to divide the plan
and go to the space basis on all but fourth-class mail and have some
other plan to handle the fourth class as, for instance, fast freight or
fast express? Give us, for instance, the same rate on fourth class
that you get for the express matter, which is somewhat less than we
pay for the mail in large lots.
Mr. PETERs. It is all carried under the general law and part of the
mail, and I do not see how you can discriminate. You use the
sovereign power of the people to handle the mail, to perform its
governmental functions. I think it is a Government function han-
dling the mail. The Constitution gave Congress the right to legis-
late on it, to establish post roads and establish the mail, and Con-
gress has so done, and it has, therefore, by law, become a Govern-
ment function. I do not see how you can make different classes of
such a function. I have considered that point of separating. We do
have it to a small extent now with the traveling post office, or
the railway post-office car, which is paid for at so much for a
car per mile—that is, a partial space payment—but the principal part
of it is carried on a basis of weight. We have sincerely studied it
and we do not see how you can make any kind of a combination of
space and weight other than that which now exists. I think Mr.
Worthington brought it out in one of his statements that there were
about 70 mail routes in the United States that received over $100,000
a year and they represented a little over 2 per cent of all the mail
1218 RAILWAY MAIL PAY.
routes. They carried over 60 per cent of all the mail. The other
98 per cent of the mail routes carried the other 40 per cent.
That 2 per cent of the mail routes received nearly 50 per cent of the
total mail pay and the other 98 per cent of the mail routes, repre-
senting about 88 per cent of the mileage of the railroads of the
country, got the other 50 per cent. Therefore, you can see that a
great majority of the roads are thinly paid for rather thin mail, but
the mail handled on those 70 heavy routes is handled at the very
lowest rate, as your schedule for increasing weight brings the pay per
ton mile down very low. -
Mr. STEwART. Is it not true that the very active members of the
railway mail pay committee largely represent those 70 routes?
Mr. PETERs. Yes; it is true. When the committee was originally
appointed, of only five, and they were executive officers of the roads
and were so occupied with other matters that we had to call in other
representatives and their mail experts, the men who would attend
and work on these matters, with those who were near by, and those
who could be spared for it, and we had to depend on those men to
come in and do this work, and we have had counsel from all over
the country, we have kept all the roads posted as to what we are
doing, and we have had in the committee representatives from many
directions and from different sections and different classes of roads.
Mr. BRADLEY. I was going to ask Mr. Peters whether it was not a
fact that the companies operating these heavy routes you speak of,
where the mail is carried at the lowest possible rate per ton-mile,
also includes the management of hundreds of small routes that
would be affected by the various considerations that have been
brought out by Mr. Nichols's testimony.
Mr. PETERS. I think that is true.
Mr. MACK. That is particularly true of the western country where
the predominance of the apartment-car service exists.
Mr. BRADLEY. It is particularly true with the eastern country.
Mr. LLOYD. I think it is probably true in the western country that
more branch lines are part of the main system, and that there are
fewer independent roads than there are in the South.
Mr. NICHOLs. I wish to say that we had nothing to hide on the
point I last spoke of. The small lines, speaking from our stand-
point, are not able to keep in touch with these things as the larger
lines are. They do tell us when these things are going on, and in
that way we get together with them and they give us very valuable
assistance in matters which we are not able to work out for ourselves,
and we find a great similarity on the Smaller roads, with our own,
but I do not know that we are so tied up that we want to lose any-
thing by it. A small line must have a preferred connection with a
larger line.
Mr. LLOYD. That was the point I called your attention to.
Mr. NICHOLs. I have no recollection of the lines with which we
have that particular traffic arrangement ever having brought, in
any shape or form, any undue pressure on the Small line, so far
as I know, upon this mail-pay question. The pressure is the con-
dition as it appeals to us and as we see it, and I would like very much
if there is anything I can tell you in my experience to help you to
come to a conclusion, I certainly want to do it, and I will only regret
it if I can not.
RAILWAY MAIL PAY. 1219
*
Mr. LLoyd. You said a while ago you had not carefully examined
this plan and you started to give general objections, Can you give
specific objections to this plan—that is, the suggested plan of the
Post Office Department
Mr. BRADLEY. Might I suggest a thought there?
Mr. LLOYD. Yes.
Mr. BRADLEY. As bearing on a remark which Mr. Nichols previ:
ously made, which I think indicated that he was operating a mail
apartment car which was 22 feet in length. Suppose that under this
proposed bill the department reorganized the service on your line,
and called upon you to establish a mail-apartment car service in a 15-
foot apartment on your present trains, with an additional service in
a 10-foot apartment on the other train. ... Would the additional re-
muneration, if you see any in the new bill, recompense you for the
changes that they would call upon you to make in their discretion?
Mr. NICHOLs. If I understand your question, and answering you
under the condition which we now labor under, it would be physi-
cally impossible for us to supply those cars, and the fines would be
imposed upon us—I was coming to that point. That is one of my
objections to that proposition there—and we would be confiscated in
a short while by the fines by reason of the physical inability to com-
ply with the requirements of the department.
'Mr. LLoyd. That is on the theory that they would make demands
of you that they do not now do?
Mr. NICHOLs. On the theory of what they can do and on the theory
that good business would require them to make demands upon us.
Mr. LLOYD., Under the existing law if they need the space and need
the service, and they demand it, you are expected to comply with the
demand?
Mr. NICHOLs. Their fines, however, are commensurate with the serv-
ice. They simply cut us off 10 per cent if we do not furnish a car.
There is no objection to a reasonable fine. -
Mr. LLOYD. What you object to there, then, is that the penalty that
they propose in the suggested bill is too severe?
Mr. NICHOLs. Not only burdensome, sir, but in many cases they
would confiscate the property if it is unlimited.
Mr. LLOYD. Then, if it was decided to make a recommendation to
pay for space, would you say that the penalty proposed there is en-
tirely too severe and the penalty that is proposed in the law ought to
be a much lighter penalty?
Mr. NICHOLs. That ought to bear some relation to the service we
refuse the Government. Another thing, this bill says we shall per-
form that service regardless of what the conditions are, while the
present law allows us to make a contract every four years, and allows
the department to go out, if we can not agree, and contract with
somebody else to carry it. Here they simply say “We will take
everything you have if necessary and make you carry this mail.”
Mr. LLOYD. Now, let us come back to the principle involved.
You do not object to the railroad companies, as a general principle,
being required to carry the mails, do you? -
Mr. NICHOLs. Absolutely not. - * . . .
Mr. LLOYD. You would say they ought to be required?
35797—No. 10—14——8
1220 RAILWAY MAIL PAY.
Mr. NICHOLs. We would like to carry them the same as any other
traffic. We do say, however, that this road is not getting a fair re-
muneration for the service now, for reasons that I cited a while ago.
. Mr. LLOYD. I think you present a very strong case on a road that
is, not receiving sufficient remuneration. . But coming back to the
other question, the objection that you urge is not to the principle but
Mºit would result in to you under the enforcement of that prin-
Clple
Mr. NICHOLS. I am using that as a fact to criticize a principle.
Mr. LLOYD. In other words, you would use the exceptional case
to prove that the rule is not a good one?
Mr. NICHOLs. No, sir; but a rule that has so many of these ex-
ceptions that it is going to crush out the smaller roads.
Mr. LLOYD. The crushing out comes from what is proposed in the
Way of revenue. Now, if that were put in so that the penalty was
no more Severe than the penalty to-day, then you would have no more
complaint on that score?
Mr. NICHOLS. I think I made myself clear in my statement that
there might be a way of getting at an apartment-space basis, but that
you would, in my opinion, get down to the weight basis first in order
to get a basis to make it on. The question, then, in my mind was, Is
not the weight basis, after all, the better. I do not mean to say that
the space basis can not be worked out.
Mr. LLOYD. You do not think, as a practical business proposition,
that the weight of mail put in a car necessarily determines the space
that may be used in that car? -
Mr. NICHOLs. My contention, as stated this morning, is that the
two services are entirely separate and distinct.
Mr. LLOYD. That is first-class and fourth-class mail?
Mr. NICHOLs. Regardless of the class. I speak of the mail as a
whole. We are carrying in our car a passenger or two passengers,
and furnish him with a private-apartment car service that is exclu-
sively the Government's, and that I can not use after it is once as-
signed, whether I want to or not. If the Government wants a house
on wheels, they certainly should pay for that house, no matter what
use they make of it.
Mr. BRADLEY. Imagine, Mr. Nichols, that there were no penalties
prescribed in this bill and that you managed to find capital enough
to build those additional cars and so provide the 15 feet of space on
one train for a mail apartment and 10 feet of space on another, and
continue performing that service for a month, in connection with the
conference on yesterday, when it was suggested that these contracts
should at least be made to last for one month, and if, at the end of
that month, the post-office inspector went over your line, and the
department, acting upon his recommendation, called upon you to
furnish a 10-foot apartment on your present train and a 20-foot
apartment on your other train, do you think that you could fulfill
the obligation, and do you think that the compensation proposed in
that law would be remunerative?
Mr. NICHOLs. You started off by saying if we had the capital to do
it. Assuming that we have, of course we could go to work and then
we would supply the cars as soon as we could build them or rearrange
them in the shops. As to the remuneration, the point I made a while
RAILWAY MAIL PAY. 1221
ago was that if the car-space basis is to be the basis, then it must be
flexible enough to take care of an increase as well as a decrease in
the traffic and there should be a minimum as well as a maximum
amount which the post office could call for if it establishes a route.
Mr. STEwART. Mr. Bradley’s question is hardly a fair one, because
the present practice of the department is not in accordance with it—
that is to say, we do not authorize car space nor call upon the com-
pany to furnish additional cars at the behest of the post-office in-
spectors. Such a request would come from the officers of the Railway
Mail Service or those connected with the immediate office of the Sec-
ond Assistant Postmaster General. Under the present practice it is
true that post-office inspectors inspect authorizations that are already
made and do make reports upon whether or not the space authorized
is needed, and they sometimes report that more space is needed than
is authorized.
Mr. LLOYD. Is it not true, as a matter of fact, that the position he
takes, that you are governed very largely in your determination by
the report that is made by the post-office inspector is correct?
Mr. STEwART. No; it is not true.
Mr. LLOYD. What officer do you rely upon?
Mr. STEwART. We rely upon our own officers in the field.
Mr. LLOYD. Who are your officers?
Mr. STEwART. The division superintendents.
Mr. LLOYD. Who does he look to?
Mr. STEwART. The chief clerks.
Mr. LLOYD. Who does he look to ?
Mr. STEwART. The chief clerk looks to himself. He goes over the
line and inspects the line personally.
Mr. LLOYD. Then he is your post-office inspector?
Mr. STEwART. Yes, sir. -
Mr. LLOYD. Then it depends upon that one officer?
Mr. STEwART. Depends upon him for facts.
Mr. LLOYD. He reports to the superintendent and the superintend-
ent reports to you and the natural supposition is that whatever he
reports will be carried out by you?
Mr. STEwART. No. The chief clerk inspects the line and he alone
reports to the division superintendent; the division superintendent
passes his judgment upon the case and reports to the general super-
intendent. The general Superintendent goes over the case thoroughly,
exercises his judgment in the matter, and reports to the Second
Assistant Postmaster General. The Superintendent of the Division
of Railway Adjustments goes over the case carefully and reports
upon the matter in writing with recommendation to the Second
Assistant Postmaster General and he exercises his judgment.
Mr. LLOYD. I am getting back to the practical proposition. The
practical proposition is, after all, that you rely upon the statement
of facts that is made by the chief clerk?
Mr. STEwART. On a statement of facts, yes. -
Mr. BRADLEY. Of whom there are, I think, 125 chief clerks, 15
division superintendents, all making reports to headquarters at Wash-
ington. General Stewart commented on my question as not being
fair. I want to say that I have every desire to be fair. Is it not a
fact that this law places entire discretion upon the department?
1222 RAILWAY MAIL PAY.
Mr. STEwART. Yes; but not upon the post-office inspectors. The
post-office inspectors, under the present practice, would not or could
not require the railroad company to furnish a car -
Mr. LLOYD. As a matter of fact, under the proposed law, the dis-
cretion will be placed in the Postmaster General; he is the man who
would decide. The Postmaster General would get his information
from the Second Assistant Postmaster General, and you can follow
on down the line. The Second Assistant Postmaster General gets
his information from the division superintendent, the division super-
intendent from the chief clerk. Now, who makes the statement of
facts upon which the Postmaster General decides? Why, it is the
chief clerk. Whose opinion controls the Postmaster General? Yours.
Who controls your opinion, if anybody? The statement of fact that
is made by the superintendent and the report made by the super-
intendent upon that statement of fact, and you follow it back after
all, and you rely on the chief clerk because he makes the statement
of fact. Now, if there is anything wrong it may be in the statement
of fact. Then the railroad company suffers the wrong because the
chief clerk has not made a correct statement of the situation. It is
largely a matter of judgment, too, in many of these cases, about
which the chief clerk or inspector makes his report. He may have
his little bias or feeling in the matter, as they frequently do, and he
makes a statement of fact which may not be exactly the statement
of facts as they exist.
Mr. STEwART. Mr. Nichols, you referred to the excessive fine that
might be imposed. Will you indicate under what provision of this
proposed law you anticipate anything of the kind?
Mr. NICHOLs. If for any reason a railroad found that the carry-
ing of the mail was a burden too great for it to bear, and it wished
not to do so, it would be subject to this clause: •
It shall be unlawful for any railroad company to refuse to perform mail
service at the rates of compensation provided by law when and for the period
required by the Postmaster General so to do, and for every such offense it shall
be fined not exceeding $5,000.
Mr. STEwART. That has nothing to do with the question we have
before us and which we were discussing; that is, whether or not your
company would be able to furnish a car when asked to furnish it.
Mr. NICHOLS. My idea was that that applied to any one of these
requests.
Mr. STEwART. No; it would not. ~~
Mr. NICHOLs. It says when “required by the Postmaster General
so to do.” When the Postmaster General or his assistants request
me to put on a car -
Mr. STEwART. That relates to the refusal to perform service. Turn
over to page 1061 and note the paragraph at the top of the page:
If any railroad company carrying the mail shall fail or refuse to provide
cars or apartments in cars for distribution purposes when required by the
Postmaster General, or shall fail or refuse to construct, fit up, maintain, heat,
light, and clean Such cars and provide such appliances for use in case of acci-
dent, as may be required by the Postmaster General, it shall be fined such sum
as may, in the discretion of the Postmaster General, be deemed proper.
Mr. NICHOLs. It may be $10,000. -
Mr. STEwART. That is the provision that exists to-day. It is no
different from the present law or regulation. - *
The CHAIRMAN. Is that law to-day, or is it a regulation?
RAILWAY MAIL PAY. 1223
Mr. STEwART. It is covered partly by law and partly by regula-
tion. -
Mr. LLOYD. What is the law § Have you got it there before you?
Mr.-NICHOLs. Only this particular feature, but that is not my un-
derstanding.
Mr. STEwART. Let me go a little further. The present situation
with regard to furnishing apartments is this: Your transportation
pay is, by law, based upon several conditions. It so states in the first
paragraph of the law, and one condition is that the company shall
furnish a suitable apartment or apartments in cars for the purpose
of enabling the distribution of mail en route.
Mr. NICHOLs. May I ask you when that amendment to the law of
1873 was put in Ž
Mr. STEwART. That is part of the original law of 1873.
Mr. NICHOLS. Are you certain about that?
Mr. STEwART. Yes; I am very familiar with it. That is a condi-
tion precedent to your getting pay for transportation of the mail on
a weight basis, and the penalty for failure to furnish such apart-
ments would be a fine.
Mr. NICHOLs. Ten per cent. ar
Mr. STEwART. No; that is contained in another statute. That
penalty is for failure to furnish full cars. This refers to an apart-
ment car. The law makes the furnishing of an apartment car a
condition precedent to earning the compensation for transporta-
tion, and if you do not furnish the apartment car, under the existing
law, the Assistant Attorney General has held that you would not
get any pay for transportation of mail at all. That is under existing
law, and it is more drastic than this.
Mr. NICHOLs. I do not think he can show the law for it. I know
the ruling is there.
Mr. STEwART. I will say that I have not imposed that kind of
penalty for refusal to furnish a car.
Mr. NICHOLs. I would not hesitate to go before any court on the
law against the Postmaster General’s contention on that point under
the present law, but if this was law I would go to Canada.
M. STEwART. Under the existing law we have the power to
impose a fine, and that is what we do if you do not furnish the car,
There has never been, so far as I remember, any case where a fine
was imposed where a road refused to provide a car because of not
having one; we aim to give a company a reasonable time to obtain
a car. We do not impose fines in such cases, yet we have the same
power now that this provision confers. -
Mr. NICHOLS. I did not read it that way.
Mr. STEwART. That is the correct reading of it.
Mr. NICHOLs. My idea is that even in the department's ruling that
such a fine as you will note in it has some relation to the pay or to
the service which you fail to give them. But this proposition here
puts the railroads absolutely at the mercy of the department.
Mr. STEwART. The provision is the same as it exists to-day. There
is no change whatever, and if you will drop down to another para-
graph you will see that it says:
He may deduct the price of the value of the service in cases where it is not
performed, and not exceeding three times its value if the failure be occasioned
by the fault of the railroad company.
:*
1224 RAILWAY MAIL PAY.
That is in the present statute also.
Mr. NICHOLs. You make a case where you say if the service is the
fault of the railroad company. In my case it might be a physical
condition which I can not get over, which would be quite a different
case to the aggravated case of a malicious refusal and a desire to
hamper the Government. There ought to be a difference on that. I
might incidentally handle a gun and kill a friend across the street,
but it would be quite different than if I went hunting for him.
Mr. LLOYD. Mr. Chairman, I think there is quite a difference in
the two laws. The proposed law states—
it shall be unlawful for ally railroad company to refuse to perform mail service
at the rates of compensation provided by law when and for the period required
by the Postmaster General so to do, and for every such offense it shall be fined
not exceeding $5,000. * *
The existing law is
The Postmaster General may make deductions from the pay of contractors for
failure to perform service according to contract and impose fines upon them for
other delinquencies. He may deduct the price of the trip in all cases where the
trip is not performed and not exceeding three times the price if the failure be
occasioned by the fault of the contractor or carriers.
Mr. NICHOLs. That always applies where some carrier goes out and
falls down and does not handle it, but leaves it. :
Mr. LLOYD. There does not seem to be much difference, except in
one case it fixes the limit; it could not be more than $5,000, while
under the existing law it says they may impose fines, but it does not
say how much.
The CHAIRMAN. Have you anything further, Mr. Nichols?
Mr. NICHOLs. That is all, unless I can serve you further.
The CHAIRMAN. We thank you for presenting your views to the
commission.
STATEMENT OF MIR. W. B. DENIHAM.
The CHAIRMAN. Will you kindly state your name, your residence,
and official position? §
Mr. DENHAM. W. B. Denham; residence, Jacksonville, Fla. I am
general manager of the Ocala Northern Railroad. This is a new
piece of property, a railroad that has been recently constructed within
the last year or two by some local people who were originally mill-
men. It was first started as a tramroad, and after it was extended
they made a railroad of it. After being in operation for about a
couple of years they got into trouble, and it is now in the hands of a
receiver. A receiver was appointed last May, and I took charge of it
as manager. The railroad at the present time is about 54 miles long,
with a branch of about 10 or 15 miles, but that has not been put in
operation, as it was under construction when it went into the hands
of a receiver. We have two mail routes on that little line. -
Mr. LLOYD. Two each way? w x
Mr. DENHAMI. No, sir. A round trip, with two mail routes; it is
a straight line, but it has two mail routes—that is, we have one mail
route from Ocala to Fort McCoy, about 20 miles, and from there we
have another route from Fort McCoy to Palatka. The first 4.44 is
over what is known as the Seaboard Air Line Railroad, over which
we have trackage rights. The Government pays that little road $1.30
RAILWAY MAIL PAY. 1225
per mile per year for handling the mail over that 4.44 miles. The
next 1.98 miles they pay $30.25. The next 13.22 miles they pay $42.75.
The CHAIRMAN. A mile, or for the distance?
Mr. DENHAM. Per mile per year. Then from Fort McCoy to
Palatka, 33 miles and a fraction, they pay $42.75.
The CHAIRMAN. All those figures you have stated are applicable to
the mile per year?
Mr. DENHAM. Yes, sir. It costs this railroad at Ocala $150 a year
to deliver the mail. We have to deliver it from the station to the
post office. We also have to deliver the mail at Fort McCoy, at a
cost of $12.50 per month. There is an item of $300 out of about $900
we get on that route that goes for terminal service, not including any
side service between these points; and from Fort McCoy to Palatka
we have to handle the mail on that route, and when we get to Palatka
we pay $15 a month, or $180 a year, to deliver the mail there. That is
$480 which we have to pay out of the railway mail pay for service
we perform for the Government for which you gentlemen can see on
one line, the first 4.44 miles we get $1.30 a mile for.
Mr. LLOYD. How is that; by special contract?
Mr. DENHAM. Yes, sir; it was a contract made when I took charge
of the road. Those were the conditions. We handle the mail just
the same; the same mail that comes to Ocala goes all over the road.
I do not know how they ever arrived at $1.30, but at any rate it
does not compensate the railroad company for what it does.
Mr. STEwART. I will explain that. On that part of the road
where they use the trackage of another road they are receiving pay
at what is known as the lap rate—that is to say, the total amount
paid to all of the companies using that part of the road as one rail-
road equals the maximum rate provided by law for service over
that road, and the pay of the route lapping the parent route is fixed
at the difference between the maximum rate and the rate which the
parent company receives. Mr. Denham's road gets the smaller
amount of pay because the other company owns the road and has
the maximum service. In this case, the mileage of tracks lapped
by the Ocala Northern route happens to be land grant as well.
This is by agreement. If the company refuses to accept these terms
the department pays the maximum rates.
Mr. DENIIAM. I know, and so do you gentlemen, that it does not
pay that road to handle the mail at $1.30 a mile. There is an in-
justice right there. Not only that, but we have to pay $150 a year
to deliver that mail up town.
Mr. LLOYD. You mean this is $1.30 per mile per year?
Mr. DENHAM. Per mile per year.
Mr. LLOYD. And all the pay you get is a little over $5 for carrying
that mail for 4 miles?
Mr. DENHAM. Yes.
Mr. STEwART. The terminal charge relates to the whole line and
not to the 4 miles.
Mr. DENHAM. Yes. Here is another thing that I think is very
clear. Why do we want two routes on that little line? There is
some reason for that.
Mr. STEwART. There are two contractors. That is it.
Mr. DENHAM. It is the same contractor, one contract made by the
same company. You all know, and So does Gen. Stewart, and he
must admit why it is done.
1226 RAILWAY MAIL PAY.
Mr. LLOYD. Why is it done?
Mr. Stewart subsequently furnished the following:
The record shows that the reason for their being two routes stated
in the name of the Ocala Northern Railway Co. is that service over
the entire line was not in effect during the weighing in the spring of
1912, the extensions between Fort McCoy and Palatka not taking
effect until July 1, 1912, and January 6, 1913. During the weighing
the only service of this company was between Fort McCoy and
Ocala. Subsequent to the weighing the proposition to establish
service over the extension to Kenwood came before the department
and later to Palatka, and in accordance with the regular practice
pay was fixed on them at the rate of $42.75 per mile per annum.
Mr. DENHAM. Because he does not pay anything for it when it
comes to the Government. If he had to pay that $12.50 it would
cost the Government something. They pay me at Palatka $22.50
a year for delivering that mail which costs me $180. If this was
only one case that would be an exception, but you will find a great
many cases like that; the Government simply takes advantage of
the little line like that when they know we can not perform the
service for that amount. We will grind it down to every cent we
can get out of it, but that is just as low as we can get anybody to
carry it for, and I think they ought to be compensated for it. In
addition to that they call on the company for a postal car. That
little line is developing very fast; it opened a large area of good
country. People are moving to that part of Florida as well as they
are to all parts, and it is developing rapidly. I think it would be
an advantage to the Government and to the railroad to have a postal
clerk, but the question is where are we going to get that money?
The road is in the hands of a rece ver, the court has instructed the
receiver that he can use what he makes to operate the road. That
is what we must do, and besides pay any debts that are absolutely
necessary for the operation of the road, but they do not authorize
the road to go out and borrow anything. I notified the department
that at present we did not have the means of supplying that car.
I agreed with them that it would be an advantage so far as develop-
ment is concerned to have the car, but at the same time we would
have to furnish the car without any compensation, and under the
present law we do not get anything for it. We would simply have
to provide that car, haul a messenger, and furnish him all the con-
veniences in that car and not get a dollar for it.
Mr. STEwART. You mean you do not get any additional pay for it?
Mr. DENHAM. No, sir. *
Mr. STEwART. Because the law makes that one of the conditions
precedent to earning the compensation for transportation.
Mr. DENHAM. You are speaking of your understanding of the law,
but I am speaking of the injustice of the law. We are not blamin
anybody for what we get except that little $1.30, and I do not thin
that is right. If I had to do that I would dump the mail into the
spring, but where you accommodate a lot of people you can not
afford to do it. -
Mr. STEwART. Have you ever presented the matter to the depart-
ment in any way? -
Mr. DENHAM. I wrote the Department to increase it for carrying
all of the parcel post, and they did not do anything; but I know very
RAILWAY MAIL PAY. 1227
well we are handling a lot of parcel post. There are a great many
people in there, and they all take advantage of it. - You can not get
any of these Georgia “Crackers” who do not know about the parcel
post; they know everything, and they take advantage of it. I think
we ought to be compensated for what we do. If we are going to
provide a mail car, I think we ought to get compensation for that.
I have spent my life in the development of railroad property. I
started with the first railroad south in Florida after the close of the
War, first as an engineer, and then I have spent the balance of my life
in the railroad business. I have done a great deal of developing, and
we have been handling the mail for years without being properly
compensated. *
The CHAIRMAN. What do you figure would be just compensation
to you in those particular instances?
Mr. DENHAM. I think we ought to be paid extra for the postal car.
The CHAIRMAN. How much?
Mr. DENHAM. I never figured what amount. In addition, I think
we ought to get paid for the mail handled, and I think we ought to
be relieved of this terminal delivery. I do not think the Government
ought to require a railroad company to deliver that mail itself and
pay for it. We carry the mail to the end of the route, and of course
we had to make a contract with somebody else to carry it. It is just
as easy for the Government to do that as the railroad, and even bet-
ter. Our corporate right and authority ceases when we deliver it at
the end of the rails and we ought not to be responsible for carrying
it to the post office, as none of our men have control over it. There-
fore I think we should be compensated for that delivery, or the Gov-
ernment should have it done itself. If they think we can do it
* the railroads do not object to it if they are compensated
airly. º
The CHAIRMAN. Do you think the present system of railway mail
pay by the Government to transportation companies can be im-
proved upon, except in these instances you have mentioned, namely,
relief from side service and compensation for apartment cars?
Mr. DENHAM. No, sir; I think, Mr. Chairman, the principle is
right on which we perform the service and you pay us for what we
do. The mails are weighed, but at the same time the pay for han-
dling the mails has been decreased since my connection with the rail-
road. Our pay has been decreased, but our expenses have been going
up all the time. To-day the railroad expenses are at least 30 to 40
per cent higher.
The CHAIRMAN. Due to what—labor, increased taxes, etc.?
Mr. DENHAM. Increased labor, taxes, and everything we buy.
Yet, in view of all these increases, our rate has been gradually de-
creased until it has gotten to where there is really not a dollar in it
to the railroad company, and we merely perform the service in order
to develop the country.
The CHAIRMAN. Are any rates of the short-line roads, according
to your knowledge or information, satisfactory as proposed in the
suggested plan of the department and provided in volume 8, or would
they prefer a continuance of the present method of ascertainment?
Mr. DENHAM. I think, so far as we have already discussed it, we
think the present method, with the recommendations that were made,
would be much fairer to us all. The principle involved in this new
I228 RAILWAY MARL PAY.
law is contrary to all railroad practice. A man who has spent his
life in the railroad business would not be approached by another
who wants to run a car on a space basis. He would be refused and
told that the railroad company did not do business that way. If
you make him a rate, you would want to know what he was going
to use the car for, and you would restrict the use so that you would
get the highest possible rate out of him.
Mr. LLOYD. Do you not rent your cars to persons who want as
much as a full car, and do you not receive compensation per car for
the use of it? . -
Mr. DENHAM. No, sir; we have very little, if any, of that kind of
business. In fact, we are not allowed to do it. -
Mr. LLOYD. Can you not furnish a car to a man who wants to
move his household goods from one place to another, and can you
not furnish him a full car in which to handle those household goods?
Mr. DENHAM. I can; I do it; but I will restrict the use of that car,
and I will want to know what he has in it.
Mr. LLoyd. That is, you will not allow him to put anything in
there but furniture?
Mr. DENHAM. Yes. If he puts furniture in there, I will go in and
see what the furniture rate is per mile, according to the interstate-
commerce rate, and he will pay the full rate for that car for a mini-
mum carload and pay everything over it. -
Mr. LLOYD. You would let him have the car?
Mr. DENHAM. I would not let him have it unless he told me what
he was going to use it for. I have to know that.
Mr. LLOYD. After he takes the car for the purpose of putting the
furniture into it, do you inquire about how much furniture he puts
in it?
Mr. DENHAM. Yes, sir; I do; and I have it weighed. We would
be violating the law if we did not. *
Mr. LLOYD. Do you furnish the car at so much per car or do you
furnish it at a rate per 100 pounds for what goes in the car?
Mr. DENTIAM. We charge them a rate per 100 pounds. There is
no misquoting that rate, and we must know it is the advertised rate.
Mr. LLOYD. Do you ship horses and cattle from your part of the
country to the north ?
Mr. DENHAM. We do not over this road, but they do over any
number of roads I have handled.
Mr. LLOYD. Do you let a man have a car to haul a carload of
horses?
Mr. DENHAM. Yes, sir; but he pays a rate on that car of horses.
Mr. LLOYD. Is that by the weight of the horses or by the size of the
car, or what? -
Mr. DENHAM. Of course, the size of the car. Some of the States
now prescribe the size of the car that shall contain so many horses
and that is the carload rate. If a man ships less than a carload he
pays more for it. If a man puts 5 horses in a car and wanted to
have it shipped he would have to pay the carload rate.
Mr. LLOYD. Do you mean to say if he shipped 5 horses in your
country, he would pay more than if he shipped 18, proportionately?
Mr. DENHAM. Yes. - -
Mr. LLOYD. Do you weigh the horses?
Mr. DENHAM. No ; they are generally billed at a minimum rate.
RAILWAY MAIL PAY. 1229
Mr. LLOYD. The truth is that you furnish the space, which is a car,
to haul the horses? -
Mr. DENHAM. But we get the full car, whatever the Government
allows us to get. We get our full rate for it.
Mr. LLOYD. But, after all, you are not transporting the horses
according to weight, but you are transporting them according to the
space, and the space in the car is what you sell?
Mr. DENHAM. No, sir. Everything above a certain rate should be
in addition.
Mr. HITT. There is no such thing, or rather it is practically un-
heard of, to charge for a car. There is a general impression in the
minds of a good many people that if you have a carload of freight to
ship the shipper will say I can charter a car and put my household
#. and live stock in it. I do not think there are any cases in the
iles of the commission where there is any such basis as that. For
instance, in the case of less than carload shipments of mules or horses
they are billed on the basis of estimated weight of, say, 1,000 pounds
or 1,500 pounds, as the tariff prescribes. On carload shipments they
are based on a basis of 30,000 pounds, dependent upon the size of the
car, whether it is a 36,000 or a 40,000 pound car.
Mr. LLOYD. In our country we deal in horses, cattle, and mules, and
if a man wants to ship a carload of mules he gets the car and he does
not pay for anything else but the car.
Mr. Scott. But the rate for the car is based upon so many 100
pounds.
Mr. LLOYD. The rate per car is based upon the capacity per car.
Mr. HITT. That is true, but you pay so much per 100 pounds for
that capacity.
Mr. DENHAM. The rates are made on so much per 100 pounds for
capacity. They did not give you so much as a flat rate.
Mr. MACK. I am sorry to say I can not tell you on the mule ques-
tion, but I think I understand the process of ascertaining the special-
car rate as to freight. It is based primarily upon the minimum
weight of the loading, with an extra rate of pay in excess of that
loading, and on the passenger car it is not based on the car itself, but
fixed on the number of passengers in the car.
Mr. LLOYD. If I wanted to ship from Shelbina a carload of hogs I
would not ship them by weight, but I would ship them by carload
and pay so much per car.
Mr. MACK. But the rate you get is based on the weight capacity.
Mr. LLOYD. There might be half a dozen persons who would ship
on the same day, and ship 12 cars, but each one would pay exactly
the same amount per car. - -
Mr. MACK. But that rate is based primarily upon the weight.
... Mr. LLOYD. I appreciate that, but you do not weigh the hogs. You
have a car with the capacity.
Mr. BALDw1N. If you wanted to ship fancy horses—
Mr. LLOYD. I am not talking about fancy horses.
Mr. BLOMEYER. Mr. Chairman, if you will permit me, as an old
traffic man, and having spent a great deal of my time in Missouri on
railroads, I perhaps can enlighten you on the subject. The live-stock
rate is based on a certain weight, depending upon the length of the
car. If a car is 30 feet long the minimum weight for that car is
24,000 pounds. Whether in recent years they have changed the prac.
1230 RAILWAY MAIL PAY.
tice of weighing live stock I do not know, but there is a weight de-
pendent upon the length of that car and on that weight there is a
rate per 100 pounds that fixes it. I believe if they think a man is
crowding a car they will weigh it, but it is hard to crowd a car and
get any excess over the minimum weight.
Mr. BALDWIN. Suppose you wanted a car on the basis of space for
two or three horses, and put it on a passenger train, would there be
any comparison between that and the weight per 100 pounds for
horses generally? - -
Mr. BLOMEYER. No, there would not for this reason: When two
or three or four animals are charged at a fixed rate per 100 pounds,
and also based upon the valuation of the animal, some of the rates
are fixed so that they charge a minimum of, we will say, four or five
animals in the car, although you may put one in at a certain rate
per 100 pounds, and they fix the weight of those single animals.
However, the total charge for those four or five animals must not ex-
ceed the rate charged for a carload of the same kind of animals.
The CHAIRMAN. Are there any further comments you wish to
make in reference to this matter?
Mr. DENHAM. I have figured what our pay would be under this. .
The CHAIRMAN. We would like to get that, the present pay, and
what you would receive if given the adoption of the suggested plan
under the application of the maximum rate to your line?
Mr. DENHAM. The total length of the Ocala Northern Railroad is
53.26 miles. The present service is by closed pouches, and the Post
Office Department is demanding an apartment car now, which I
Suppose would be 10 feet. At the present rate we would get $995.34.
The initial and terminal service, according to that, would be $287.96.
The cost of the messenger service we are performing to-day is about
$480, so that would make the pay of the route to-day about $1,763.30,
and we get about $2,200. If I was going to build a car, I would
never build a 10-foot car, and, as a matter of fact, I would not build
less than a 30-foot car, because it is simply a question of a short
time when we would outgrow the 10-foot car and the Government
would demand something more, and it is better to go to the 30-foot
car at once and give it to them.
The CHAIRMAN. Then if you were asked by the Government for a
10-foot car you would give them a 30-foot car?
Mr. DENHAM. That is it exactly, because I know very well, taking
the condition of the country and the growth of it, it would not be
but a very short while before they would be calling for something
more and that car would have to be torn to pieces. In a country like
ours it is developing very rapidly, and it will only be a short time
when they will want more space, and if you build a car for a certain
small space you will have to tear it down and build it all over again,
Mr. STEwART. The same condition exists to-day?
Mr. DENIHAM. The same condition exists to-day.
Mr. STEwART. You have the closed-pouch service now Ż
Mr. DENHAM. Yes.
- Mr. STEwART. How do you figure that you would get less pay
under the proposed law when we are going to relieve you of the side
and terminal service? -
Mr. DENHAM. If you deduct the side and terminal service and we
do not get anything for the mail car, it would make our pay about the
RAILWAY MAIL PAY. 123].
same as it is to-day. If we deduct $480 from $2,260 we would get,
according to the new pay, about $1,700, according to the present
application. -
... Mr. LLOYD. You mean on the closed pouch? -
Mr. DENHAM. Yes, sir; that is, I am figuring on the railroad pay.
Mr. McBRIDE. If it remained as a closed-pouch service you would
get 5 per cent less. -
Mr. DENHAM. Yes. - • *
... Mr. McBRIDE. Your computation is made on the basis of furnish-
IIl Q 3, CàI’.
T. STEwART. But you would be relieved of the side and terminal
Service? - -
Mr. DENIHAM. Yes.
Mr. STEwART. That would be more than 5 per cent, would it not?
Mr. DENHAM. Yes. I think too, in regard to weighing the mail,
that they ought to be weighed at least once every year. We know very
well that our mail has been increasing rapidly. We know the law is
not retroactive and the railroad company loses all that additional
weight since the last weighing.
Mr. LLOYD. Do you know the average weight of the mail you
carry? Would it be less than 200 pounds?
Mr. DENIHAM. Yes.
Mr. LLOYD. You do not carry much mail?
Mr. DENHAM. No; it is a new road, just opened, you might say.
I think the mail will increase as soon as they put on the postal car.
Mr. McBRIDE. Do you know what the increase was from 1908 to
1912%
Mr. DENHAM. No, sir; I do not. That is what we are getting to-
day. I think the road was first opened in 1912. -
Mr. McBRIDE. You had no route in 1908? -
Mr. DENHAM. No. w -
Mr. LLOYD. Under this proposed plan, as I understand, you would
receive about the same compensation you receive under the existing
law Ż
Mr. DENHAM. Yes. -
… Mr. LLOYD. Then, so far as the compensation is concerned, it would
not make any difference to you. Now, what is your objection to the
space plan on that theory, if it does not make any difference in com-
pensation? - - . . . .
Mr. DENEIAM. As my business increases
Mr. LLOYD. As your business increases under the space system you
get paid for space here?
Mr. DENHAM. I do not know under what basis you are going to
pay me. In the first place, I think the space basis is all wrong.
Mr. LLOYD. Why? -
Mr. DENHAM. It is all wrong because there is no railroad in
America to-day - - * - -
... Mr. LLOYD. That is not proof to us as to what railroads do.
... Mr. DENHAM. Our common experience ever since we have been in
the transportation business has been to have some man work out
some other problem; and I think the railroads have some of the finest
traffic men in the world, but they have never yet figured on a space
basis. - - - .
… Mr. STEwART. In the passenger service?
1232 ...” RAILWAY MAIL PAY.
Mr. DENHAM. No, sir.
Mr. STEwART. You do not carry passengers on the weight basis?
Mr. DENHAM. We carry them at so much per mile. # -
Mr. LLOYD. If you have them in a Pullman car you carry them on
the space basis? - - :
Mr. DENHAM, Yes. But we, at the same time, get our fare from
them. The Pullman car is supplied by the Pullman Co., and that is
an accommodation. The railroad company does not furnish the pas-
senger. The Pullman Co. gets their revenue the same as the railroad,
but the railroad has nothing to do with the Pullman people.
Mr. LLOYD. So far as the passengers are concerned, you do not
carry them on either a weight or space basis, strictly; but if you
carry them on either, it is a space basis, because every passenger is
entitled to a seat in a car? -
Mr. DENHAM. Yes, sir. -
Mr. LLOYD. What is he entitled to when he buys his ticket? He
is entitled to get on the train and entitled to a seat. -
Mr. PETERs. He is entitled to be carried from where he gets on to
the point to which he buys his ticket. Sometimes they are so crowded
they can not give him a seat; he can not stop the train and make
them put on a car. It may be you will not carry him with comfort;
you are overloaded and you can not give him a seat. That has been
tested out.
Mr. LLOYD. You will not question the fact that there may be
emergencies where a man gets on a railroad train, and wants to ride
from here to the city of New York, he does not get a seat and might
have to stand up the whole distance to New York because the train
might be crowded all the way, yet he has no right to expect from the
railroad company that kind of accommodation. He is entitled to
a seat, but there may be an emergency where he would not secure it.
Mr. PETERs. As a rule he is entitled to a seat, but he buys the
transportation and the railroad company must furnish it, and must
carry him safely.
Mr. LLOYD. But that transportation entitles him also to a seat.
Mr. PETERs. As a rule, yes.
Mr. DENHAM. Then we classify. That is our highest class of rate.
We classify everything else and the rate is based on that. We make
one rate for one thing and one and another for another.
Mr. LLOYD. Do not understand me as trying to make you show
that the passenger traffic is based on space. It say it is based on
neither, but it is more nearly based on space than on weight, because
in such a case weight is not a factor at all.
Mr. DENHAM. As Mr. Peters said, we may have one passenger in
a coach but we are allowed to charge the highest rate for that
passenger.
Mr. LLOYD. To everybody.
Mr. DENHAM. Yes. Especially the short line. For instance, in
Florida, on this little road we are allowed to charge 4 cents a mile,
while on another line they are only allowed to charge from 2% to
3 cents per mile. *. *
The CHAIRMAN. That is under a State law?
Nſr. DENHAM. Under a State law; yes, sir. The reason they allow
increased rates is on account of the sparsely settled territory we go
through. We are allowed to increase our rates in order that we may
IRAILWAY MAIL PAY. 1233
be compensated for the passenger business. Every class of freight
we have is all classified and the rates made according to the value,
or nearly, of the freight we are handling. That is the way it is
classified. We have first-class rate, second-class rate, third class,
then a commodity rate, on vegetables and all such as that.
The CHAIRMAN. The passenger extreme rates are from 2% to 4
cents, in Florida. ?
Mr. DENIHAM. Yes, sir.
The CHAIRMAN. The short lines in sparsely settled territory being
allowed to charge the higher rate?
Mr. DENHAM. Yes, sir. Some of the States classify the railroads
and make their rates according to the classification. The roads are
classified according to their earning power per mile, per year, and
after you get to a certain earning capacity they put you in class A,
so while they may reduce the rate a little in that particular class,
it does not affect the others. *
The CHAIRMAN. Do you see any similarity between the mail busi-
ness and passenger business, or the freight service and the express
service?
Mr. DENHAM. They are all handled, that is, the mail service and
passenger service on the same train—a first-class train—and that is
the highest-class service that we have. The other service is based
on second and third-class service.
The CHAIRMAN. You think the mail service should be compensa-
tion analagous to passenger compensation and should be so deter-
mined.
Mr. DENHAM. Yes, sir. I think it ought to be based on your
highest first-class rate, because that is the kind of service we have to
give, and you assume a lot of risk in handling your mail. If you
take one of these little roads with the postal clerk in the car and
you happen to hurt him, it is apt to bankrupt the railroad and that
is the end of it. That is one reason I think the Post Office Depart-
ment ought to take that risk themselves.
Mr. STEwART. Is it not the same with the passengers?
Mr. DENHAM. Yes, sir; but it is a little different in handling that.
We do not take any risk with the express messenger.
The CHAIRMAN. In answering Mr. Stewart what is the difference
in handling the passenger and postal clerk in the mail service?
Mr. DENHAM. One, of course, is carried in the mail car and the
other is carried in the passenger car.
Mr. LLOYD. They are both about the same weight, are they not?
Mr. DENHAM. No. I think you will find the passenger car a little
heavier. They may be the same with the mail in it.
Mr. LLOYD. When a passenger car is filled it is considerably
heavier?
Mr. DENHAM. Yes; if it is filled it probably would be heavier, but
just taking the two cars, the passenger car is a little heavier than the
skeleton mail car. -.
Mr. LLOYD. If we could ascertain how much you get on the average
for hauling the passenger car, would it not be about right to pay
the same amount for hauling the mail car?
Mr. DENHAM. Gentlemen, when you get down to figuring those
things it is something almost impossible to figure.
1234 RAILWAY MAIL PAY,
Mr. LLOYD. That is an easy question to answer. Here are two
cars in a train—a mail car and a passenger car—and they are both
about the same weight and it costs about the same to haul them;
from a transportation standpoint the expense is the same. If you
get a certain sum, on an average, for carrying one and receive the
same for carrying the other, would not that be about right?
Mr. DENHAM. You might classify other freight in the same way.
Here is a carload of stone and here is a carload of silk; we do not
handle the carload of stone and the carload of silk for the same
money, by any means.
The CHAIRMAN. That does not answer Mr. Lloyd’s question at all.
Mr. DENHAM. In your question you asked how I handled the mail
car, and you also asked the question if the mail car ought to be
handled the same as express.
Mr. LLOYD. Would you not receive about the same compensation
for pulling the mail car as you would the passenger car? The
ºnger coach is a little bit heavier and when loaded will be heavier
still.
Mr. DENHAM. But what is the revenue we are getting out of the
passenger car? -
Mr. LLOYD. I am suggesting that you get the same amount of
revenue from each. Would not that be right?
Mr. DENHAM. If you give the same amount of revenue I should
think it would be right. The passenger comes to the train and gets
on and off of it.
Mr. LLOYD. I am talking about compensation for pulling the train.
The CHAIRMAN. You are undoubtedly receiving more for the
passenger service per car-mile than the mail service per car-mile.
Mr. DENHAM. That is the same kind of service on the same train.
I should think we certainly could pull them for the same pay.
Mr. LLOYD. I think there would be a difference, but I think it would
be in favor of the mail as against the passenger. -
Mr. DENHAM, Why do you think that?
Mr. LLOYD. I think there are some things in costs that would be
charged to the passenger service that would not be chargeable to
the mail service.
Mr. DENHAM. Not at present, because we have to furnish the
passengers Water. -
Mr. LLOYD. You have to have ticket agents and service of that kind
and overhead charges that you do not have on the mail.
Mr. DENHAM. There is a big overcharge with the mail. We are
relieved from selling the tickets; that is the only thing, but every
other expense enters into the factor of handling of both cars.
Mr. Col.EMAN. Is it not true wherever you have a ticket seller you
have men to handle the mail too?
Mr. DENHAM. Yes.
Mr. Col.BMAN. You do not have to deliver the passengers?
Mr. DENHAM. No.
Mr. Col.BMAN. You are not responsible for him after he leaves the
step of the coach? *
Mr. DENHAM. No.
Mr. LLOYD. As a practical proposition you do deliver the passenger.
He may jump on or off the train himself, but after all you put him on
the train as a legal passenger, and you take him off of the train.
RAILWAY MAIL PAY. 1235
Mr. DENHAM. But there is no expense attached to that.
Mr. LLOYD. There is the expense of your conductor to see that he
gets off and on; there is the brakeman and the box on which he has
to step, and the helping of women and children out of the coach.
Mr. DENHAM. There is the same responsibility so far as the mail is
concerned; that is, he has to see that the mail is put on. We perform
the same service for both.
Mr. LLOYD. You are conveying the idea that he did not perform
any service for the passenger, but he does.
Mr. TUTTLE. Are the people in your part of the country inclined
to think the railroads are paid more than they are entitled to for
carrying the mails? -
Mr. DENHAM. No, sir.
Mr. TUTTLE. You think they are satisfied ? -
Mr. DENHAM. We have been trying to educate the people down
there. When we tell the people what the railroad pay is for carrying
the mail they are surprised, and they say, “The Government is rob-
bing you, and I agree with you.” *
Mr. STEwART. Do you tell them you get $1.47 a ton-mile?
Mr. DENHAM. No; I tell them we get $1.34 for hauling the mail
º,444 miles. They say, “Why don’t you throw it off of the
train?
Mr. STEwART. You are getting $1.47 a ton-mile for your service on
that road 2
Mr. DENHAM. Even with that the road is losing money.
Mr. LLOYD. Your road is not losing money because of the mail?
Mr. DENHAM. Yes, sir. It is there for the benefit of the public
out in that country. -
The CHAIRMAN. Have you any further comments to make?
Mr. DENHAM. No, sir.
The CHAIRMAN. We thank you.
Mr. PETERs. Mr. Chairman, I would like to present Mr. Blomeyer.
STATEMENT OF MIR. E. F. BLOMEYER.
The CHAIRMAN. Mr. Blomeyer, will you kindly state your name
and your official occupation ?
Mr. BLOMEYER. E. F. Blomeyer. Residence, Chattanooga, Tenn.
I am vice president and general manager of the Tennessee, Alabama
& Georgia Railroad.
Mr. Chairman, I have not much to say in regard to this matter,
but what I say I believe will be pertinent. I am. unfortunately, in
charge of one of those roads Mr. Hardin spoke of this morning,
although it is more so, if anything. My road is one of the poor
roads of the South, and there are very near 30 of them in the State
of Georgia, about 25 in the State of Alabama, some 15 or 20 in
Florida—small, independent roads that were originally mostly log-
ging roads, but when the timber was cut off, they developed into
common carriers. The road I represent was formerly the Chatta-
nooga Southern. It has had three receiverships, and I do not know
what other trouble since it has been in existence, about 23 years. It
runs from Chattanooga, Tenn., to Gadsden, Ala., a distance of about
92 miles. Formerly, before Mr. Hitchcock introduced his econom-
35797—No. 10–14—9
1236 RAILWAY MAIL PAY.
ical divisor, the road was paid about $4,605 per annum, or at the rate
of $48.75 per mile per annum. Now it is paid, under the present
method of dividing, $42.75 per mile per annum.
Mr. LLOYD. What is the amount?
Mr. BLOMEYER. The amount in dollars and cents is $3,944.04. It
was $4,606.80, making a decrease of $662.76, due to the method of
dividing established some years ago. We were decreased from 8
cents per train mile, under the old method, to 6.8 per train mile, the
present method. I took up with the department—with General
Stewart—several months ago the question with respect to the in-
crease of 5 per cent authorized by Congress and was informed that
the initial rate by reason of the parcel post on our line amounted to
12 per cent, or 21 pounds; that under their weighing in the early
part of 1912 our average weight was 183 pounds; that adding the
increase of 12 per cent, or 21 pounds, it would make a daily weight
of 204 pounds, so that they dropped the larger portion of the frac-
tion of the 12 per cent figures and 21.96 pounds, and they dropped
the ninety-six one-hundredths fraction of a pound and gave us only
21 pounds, so that we are just below the 211-pound minimum. I
contend that the increase is anywhere from 25 to 50 per cent, by rea-
Son of the parcel post. I have some statements from agents, besides
my own observations. For instance, I have a written statement of one
agent before the parcel post was established, where he states he handled
about 50 pounds of mail per day, and he now handles from 150 to
200 pounds per day. Others show various increases ranging from
25 to 200 per cent. The best information our conductors got from
the postal clerks was that the increase was about 25 per cent. I
feel very certain it runs over 25 per cent. Had we been given the
25 per cent we would have come under the next rate of pay, and it
is a manifest injustice to permit a postal clerk or field agent, who-
ever he is, to determine the increase in weights without some method
of weighing, something to go by more than his visional judgment.
The CHAIRMAN. Are all these computations, so far as you are
aware, based on visional judgment.
Mr. BLOMEYER. The computations of my agents are based on rather
lifting judgment, I should say, because they carry this mail to the
post office from the railroad station along the line, and where they
did carry it on their shoulders they now provide themselves with
push carts and other methods of handling. That brings about the
other matter which the railroads were up against, providing addi-
tional pay for agents for handling the increased mail, or providing
outside labor.
The CHAIRMAN. If it will not disturb you, I would like to ask
General Stewart what the method of the department was for mak-
ing the computations. ' -
Mr. STEwART. You will recall that we recommended to Congress
a weighing, but that it was not deemed advisable by Congress to
provide for such, and we were authorized to allow not exceeding 5
per cent additional to the pay then given to certain railroads. There
must be some basis upon which to allow this $1,700,000. -
The CHAIRMAN. What was the basis? -
Mr. STEwART. No officer of the department can authorize the pay-
ment of that amount of money without a basis, and, therefore,
the only recourse we had was to secure the very best estimate of the
RAILWAY MAIL PAY. - 1237
increase in weights from our field officers, and they were made by
the chief clerks and the superintendents in the field.
The CHAIRMAN. Were they actual counts of the weights, or vis-
ional 2
Mr. STEwART. They utilized various methods to arrive at their
conclusions, but probably not actual weights to any extent.
The CHAIRMAN. In their report to you did they describe their
method of ascertainment or determination?
Mr. STEwART. I am not sure about that, but I think not. I would
not say that there was any considerable weighing.
As to the estimates of the agents of the railroad company, the
agent can be very easily misled by the amount of the mail that
he individually handles. It is not a question of how much goes
on or off at one place, but the question of 'average daily weight over
the whole length of the route, so that one man might be handling
considerably over 25 per cent, but unless it was handled in the same
proportion everywhere and carried in the same proportion over the
whole route the average daily weight would be increased a very much
less per cent, and that is not understood generally by the railroad men.
Mr. BLOMEYER. I understand that, Gen. Stewart, and I believe
that is offset. We will say down at the other end of our line there is
practically no increase, or we will say the increase is 15 per cent, while
up here on the first 25 miles the increase is from 150 to 200 per cent.
I claim that the large increase on the first 25 miles of the line, with
the middle part of the line showing an increase of about 50 per cent,
taking it as a whole, I am certain that the increase will run any-
where from 25 to 50 per cent. Your estimate of 12 per cent pro-
duces figures just 7 pounds below the next scale of pay and deprives
us of the additional $6 per mile per annum, not to speak of the 5
per cent increase. Gen. Stewart writes me that the average weight
being 183 pounds, and the estimated increase only 12 per cent, it
produces 204 pounds, that therefore we are not brought up within
the next schedule of pay, and we are not entitled to any portion of the
5 per cent increase. They stop 7 pounds short of the next schedule
of pay. -- -
The CHAIRMAN. That might happen under the actual weighing?
Mr. STEwART. We do not stop short. It is your weight that stops
short.
Mr. BLOMEYER. That is where we differ, as to rates.
Mr. STEwART. We could not arbitrarily increase your weight in
order to give you a dollar more. -
Mr. BLoMEYER. We could weigh it if you would permit it, but, as
Mr. Hardin said this morning, we know that you will not permit it:
but it could be readily determined by a weighing of one week, that
we are not only entitled to the increased schedule, but entitled to the
5 per cent in addition, and that is the contention that we are going to
make. As to the proposed bill, I did not see this until to-day, but I
have gone over it pretty carefully. We run an apartment car on
our line with a mail compartment of 12 feet 2 inches. It stands to
reason the department would cut that down to 10 feet, and here is the
result: The old rate before the divisor was established was $4,606.80
per annum. The present rate, under the present method or provision,
is $3,944.04 per annum for 10 feet, which is equal to one-sixth of a
60-foot car. - - * • .
1238 RAILWAY MAIL PAY.
Mr. LLOYD. Forty feet is a full car?
Mr. BLOMEYER. I must have read this wrong, then. Do I under-
stand, then, that we would get 10 feet, we will say, of a 60-foot car,
or one-sixth of 18 cents per mile, or 3 cents per mile, for that 10-foot
apartment? -
Mr. LLOYD. How do you figure that?
Mr. STEwART. That is right; you prorate the space used to a 60-
foot car basis.
Mr. BLOMEYER. Then I will show the result on that basis. -
Mr. TUTTLE. The third paragraph on page 1058 provides for the
payment of apartment cars.
Mr. BLOMEYER. Now, this is what we would get if we have an
apartment of 12 feet. It stands to reason that the apartment would
be cut down to 10 feet in order to have it conform to one of the
general sizes established, and not increased to 15, which, perhaps, is
not necessary. Therefore, 10 feet, on the basis of 18 cents per car
mile for a 60-foot car and on the same equivalent for the $1.40
per car terminal charge—we run only one mail train the round trip
over the line and therefore we have the 4 terminals or starting
points—therefore I have taken 4 times $1.40, which produces $5.60
and one-sixth of that amount to 93 cents per day, and the whole
thing would bring us compensation of $2,006.16 per annum, or a
reduction from 6.8 cents per mile to 3% cents per mile, or a reduction
in dollars and cents of from $3,944.04 to $2,006.16, or a decrease of
$1,937.88. That is the result of the space basis. There may be
cases where little roads of 20, 30, or 40 miles long, which run 4 or 5
mail trains a day, where this charge would amount to something, but
in our particular case with the two trains, or one round-trip service
per day, you will see it means a reduction of mail pay to our road
of 50 per cent. - -
The CHAIRMAN. Mr. McBride, have you any comments to make
on the correctness of that computation?
Mr. McBRIDE. I have not followed the process.
Mr. LLOYD. Mr. McBride figured that at 15 feet instead of 10.
The CHAIRMAN. How do you assume, if the department has 12%
feet of space, that it requires, that they will be able to contract that
into 10 feet. -
Mr. BLOMEYER. I claim that it is more likely that 12 feet and 2
inches will be reduced to 10 feet than it will be increased to 15 feet,
for that makes 2 feet 8 inches one way as against 2 feet 2 inches the
other way.
The CHAIRMAN. How are you going to compress that in bulk?
Mr. BLOMEYER. That can be done from the arrangement of the
car. While on that subject, allow me to make this statement: That
while we would have this mail apartment of 12 feet 2 inches, we
have an express baggage department combined of 17 feet 2 inches,
the express takes about one-half of that 17-foot space and we earn,
we will say, $5,650 as against $3,944 for 12 feet 2 inches.
The CHAIRMAN. That is what you get from the express company
as revenue for the business you perform according to that number
of feet used?
Mr. BLOMEYER. Yes, sir. My contention is that no pay to the
small roads for an apartment less than one-half of the 60-foot car
would be equitable. In other words, my contention is that not less
RAILWAY MAIL PAY. 1239
than 9 cents per car mile for any sized apartment would be fair.
In other words, we should have the minimum for any sized apart-
ment for the small roads in order to make the pay compare favor-
ably with the express and with the passenger earnings.
The CHAIRMAN. Your company has no interest whatever in the
express company? t
Mr. BLOMEYER. None whatever.
The CHAIRMAN. I say you have no interest?
Mr. BLOMEYER. No. -
The CHAIRMAN. So that your revenue is purely paid by the express
companies, with no ownership in the express business on the part
of your company to you for performing that service.
Mr. BLOMEYER. Entirely so.
Mr. LLOYD. In that connection it might be interesting to know
whether your express business has increased or decreased in the last
12 months?
Mr. BLOMEYER. I endeavored to make a comparison the other day,
but it was not satisfactory, for this reason. In August, 1912, we re-
arranged our contract with the Southern Express Co, and where we
formerly obtained 45 per cent of the gross revenue on express freight
handled, under the contract, we were allowed 51 per cent of the
express freight traffic that ran up an immediate increase, and there
was an increase all through the year 1913 attributable largely to the
increased percentage in the contract. I have yet to determine what
effect the parcels post has on the express on our line, but that can be
determined this year when we have a comparison against 1913.
The CHAIRMAN. In that connection I would like to know how much
you paid for side service.
Mr. BLOMEYER. You mean for the mail service?
The CHAIRMAN. Yes.
Mr. BLOMEYER. That, so far, has not cost us anything because
where we have agents they handle the mail, and at Chattanooga the
Government takes care of the terminal service, and at Gadsden, the
other end of our line, the porter takes care of our terminal service,
so that the terminal and side service is of very little consequence to
us. Our line is peculiar in that respect as compared with the other
short lines in the South.
Mr. STEwART. What is the average daily weight of your express
matter? w-
Mr. BLOMEYER. I really do not know. I want to say the reason
our express has been holding up is that the whisky shipments out of
Chattanooga, Georgia, and Alabama have been pretty active during
the last year under some of the laws, and they can not go by parcels
post. About everything else has gone by parcels post.
Mr. STEwART. Can you make an estimate of the weight of your
express matter?
Mr. BLOMEYER. Yes, I can. Whenever I have gone into the express
car, all I would see is a bunch of these cartons of whisky going to
Gadsden, Ala., into a dry county, and there is practically nothing else
in the express car of late. -
Mr. TUTTLE. Is not the Kenyon bill effective so that it prevents
the shipment of liquor into dry States?
Mr. BLOMEYER. Not in individual packages.
Mr. STEwART. Does it fill up the car pretty well?
1240 RAILWAY MAIL PAY.
Mr. BLOMEYER. No, I should say it would not amount to more
than three or four hundred pounds a day. That is my opinion, but
the rate is pretty high.
Mr. STEwART. Then in making a comparison between the revenue
from express and mail, it should be understood that you are carrying
double the amount of express matter as of mail, matter, for your
average daily weight of mail is only 200 pounds.
Mr. BLOMEYER. That may be true, but, as I stated, that is carried
in little more than half the space taken by the Post Office Department.
Mr. STEwART. How would you justify making a charge against
the Government for 30 feet of car space to handle 200 pounds of
mail matter?
Mr. BLOMEYER. I am not advocating the car space. In fact, I do
not want car space. I want the pay to continue as at present, but I
want to get the benefit of everything we are handling. Here is a
case: We weighed this mail early in 1912, right at the time when
everything was dead; the ore mines opened up immediately after the
weighing, and the mail got heavy all up and down the line, and on
the weight determined in that weighing of 1912 we have to carry the
mail at that same rate, notwithstanding the annual increase of 5, 10,
or 15 per cent of the ordinary mail, outside of the parcel post. For
the next four years we have to conform to the weight established in
that period of 90 days in the first part of the four years.
Mr. LLOYD. Have you examined the bill introduced with reference
to the annual weighing?
Mr. BLOMEYER. No ; I have not. I have not seen that. I think
that is the only equitable method—an annual weighing and payments
based upon the weight carried. I am speaking now for the short
roads, and I do not know what the troubles of the large roads are.
The CHAIRMAN. So far as you are concerned, that is the unanimous
opinion of practically all of the short lines?
Mr. BLOMEYER. I know it to be, so far as I have talked to any of
the short-line roads of the South.
Mr. LLOYD. In your judgment, what should be the change in the
existing law with reference to compensation to your railroads?
Mr. BLOMEYER. It occurs to me that the first scale of 200 pounds,
or 211 pounds, as they happen to be, should be $50 per mile per
annum, the next schedule at $75, and as the weight increases the in-
crease would be proportionately less.
Mr. LLOYD. But you commence with $50 instead of $42.75.
Mr. BLOMEYER. Yes, sir.
Mr. LLOYD. Do you insist, as the others do, upon pay for apart-
ment cars?
Mr. BLOMEYER. I believe, just as Mr. Nichols said, when we rent
the Government a house on wheels that they ought to pay a little
rent for it. I think something ought to be paid for that. We pay
the owners of other railroads for the use of their freight cars 45
cents, and the cost for the upkeep of that car is considered along with
the rate charged for freight traffic, and it ought to be considered in
passenger, mail, and express.
Mr. LLOYD. What do you think of the plan of the Government
owning its own R. P. O. cars? Would not that relieve you people
of a great deal of responsibility? -
Mr. BLOMEYER. Yes.
RAILWAY MAIL PAY. 1241
Mr. LLOYD. Would not that be especially beneficial to these little
small roads that can not buy these cars?
Mr. BLOMEYER. Yes; if the Government would go into the matter
of furnishing such cars as the roads require; that is, combination
mail, baggage, and express, and in some cases combinations of all
four, mail, baggage, express, and passenger, such as we have. We
have a car divided into three parts-—one-third mail, one-third ex-
press, and one-third passenger. If the Government could provide
such cars as R. P. O. cars for the roads, it seems to me it would relieve
the railroads of a great deal of burden.
Mr. BALDw1N. How about the cost to the Government?
Mr. BLOMEYER. Fortunately, we would not be concerned about
that if they are going to build cars and furnish them to us rather than
rent Our cars. e
Mr. BALDw1N. You would have to be paid for hauling them?
Mr. BLOMEYER. I do not know but what we ought to agree to haul
them if they furnish them. That is the way I look at it.
Mr. TUTTLE. You would have to rent the passenger, baggage, and
express space? -
Mr. BLOMEYER. No; we would expect that free for hauling the
mail car.
Mr. TUTTLE. It would be a complicated system?
Mr. BLOMEYER. It would be complicated; yes, of course. .
The CHAIRMAN. Have you anything further, Mr. Blomeyer?
Mr. BLOMEYER. No.
. The CHAIRMAN. We thank you for your views.
STATEMENT OF MIR. W. M. BLOUNT.
The CHAIRMAN. Mr. Blount, will you kindly give your name and
your official occupation?
Mr. BLOUNT. Mr. Chairman, I am the president and owner of the
Birmingham & Southeastern Railroad, which was built by individual
capital and some borrowed money. We carried United States mail and
in purchasing the road which we have there I notified General Stew-
art of the conditions, and he very readily relieved me of the condi-
tions. We found we were running at a loss of $20 a month, and I
notified him and he very nicely relieved me of that.
The CHAIRMAN. How long is that road?
Mr. BLOUNT. Fifty miles long. I am going to build 100 miles more.
I have owned several roads in the South, and I find that these roads
in the beginning have to carry mail, and the small amount of $42.50
per mile is not commensurate with the service, for the reason that in
one instance if a letter from Union Springs is sent over my line it can
be mailed 3 hours later and reach New York 12 hours earlier than
if sent by the trunk lines that run through my town and leave at
6 o'clock. But there is not enough in that to warrant pay for it,
because the mail between New York and the Springs is not so great.
The point I want to discuss here is the financial standpoint. I am not
an operator. If you will allow me to come right down to facts, I
regard the space proposition as illogical from the standpoint that
to-day I am paying more money than I did 10 years ago, and the
prospects are the cost of operation has doubled. My ties to-day are
1242 RAILWAY MAIL PAY.
costing me twice as much and the cost of building a railroad is very
much higher. We expect that increase to continue.
When I went into the railroad business 15 years ago the cost of
the railroad operation was half what it is now. Or, in other words,
it costs twice as much to-day—that is, the cost of building and oper-
ating. We are called upon by the Government to-day to keep our
equipment in condition, right up to date. There is no objection to
that, but we are required to. An inspector went out on one of my
trains the other day, and he found 75 per cent of the air leaking. I
have not a shop of my own, but I have to rely upon other people
to take care of my equipment, but we have to carry more equipment
than formerly. Instead of being able to build a road at $10,000
er mile it is costing from $15,000 to $25,000 per mile. I paid
$25,000 a mile for a little road the other day. These things are
much higher, and from a sound financial standpoint we do not look
for them to be decreased, and therefore the rates to-day, you might
say, for space the next day would be much higher. The cost of car-
rying a car increases yearly, and I think the weighing of the mails
should be done yearly, otherwise I think it would be a very serious
problem.
The CHAIRMAN. Why does not your same objection apply to the
weight?
Mr. BLOUNT. It applies to the rate in this, that perhaps the amount
we are getting for the mail is commensurate with the service, save
that of weight, and we are preparing facilities to-day for four years
ahead. I am building a road into a new territory that does not
give much freight, because there is not much there. As we go along
the Government has the advantage of a four-year's increase, which we
calculate should be 10 per cent, therefore, at the end of the year we
have performed services of 40 per cent less than they are willing to
pay us for. I think it quite an injustice that we should not have
a weighing once a year.
The CHAIRMAN. Replying to your argument as to the benefit of
space and weight, it seems to me the viewpoint is quite applicable to
SO3,Oe.
º BLOUNT. On the weight of the mail we get the benefit of the
increase. For instance, in the Birmingham district in which I op-
erate, we had probably the largest increase of any city, save Cleve-
land, in the business there. We had to take care of that business
for four years without having a reweighing. As to the space part
of it, the space on that train to-day is worth very much more money
than it was two years ago. We did not have a demand for space,
we did not have the requirements, and we could sell our space for
more to-day.
The CHAIRMAN. Could you sell your weight for more to-day? -
. Mr. BLOUNT. My line is a new line and I deal with the railroad
commission of Alabama, and they very readily allow me to increase
the rates when they see that it is low. For instance, they made a
ruling of fertilizer, and I know the president of the commission very
well and I went to him and took my gross rate. I said, “If you
apply the fertilizer rate to my whole tonnage, how much money
would that produce?” and he gave me the figures; and then I said,
“Where would I be with my operating expenses?” They very
RAILWAY MAIL PAY. 1243
readily changed that and gave us a better rate. There we can get
relief, but when you put rates into law the Government can not
change the rates. It is a very serious problem, and I would not
want to invest my money in a railroad where the operation cost me
more and the rate could not be changed on the possibilities of the
return for that money.
The CHAIRMAN. Is not your whole argument applicable to the de-
sirability of an elastic rate—a cumulative rate or graduated rates
commensurate with service performed and with changes in condi-
tions—rather than to the question of whether space or weight should
be the determinant factor?
Mr. BLOUNT, The point I suggest is this: That we have worked
out this rate problem. I have no trouble in going to my general
freight agent and saying to him, “I wish you would work out this
rate and tell me about what you can afford to do it for.”
The CHAIRMAN. Then you would be an advocate of a scheme to
go to-a Postmaster General to make the rate for each road?
Mr. BLOUNT. That might be, but there is such a large field in which
he has to operate that you probably could not reach that for a long
time. In the meantime your expenses are going ahead. It takes a
long time to make an investigation from Washington away down in
Alabama. I own a compress in Alabama, and we have had that be-
fore the commission here—the operation of it for seven or eight
years, bring it up before the Interstate Commerce Commission. In
the meantime the press has made no money and could not make it.
We have the press, but we have been pressed. There is one other
thing I am interested in and that is, that the northern division of
my line will probably always be a heavy mail line. The southern di-
vision, owing to the number of lines it crosses, will always have very
light mail. If I have an apartment coming down from Birmingham
through to Milstead, say, 100 miles, and from Milstead down south to
a contemplated line, what would we do? On the northern division
we would have the heavy line, and on the southern division we would
practically have nothing, because it is the cross-country line and we
could not control the mails to the centers.
Mr. LLOYD. On the space basis you would get paid for whatever
you started with.
Mr. BLOUNT. I do not know how that was, but if you go down
there 100 miles you say that might be put into a division, and when
you go 100 miles further you have another division.
f The CHAIRMAN. It would be a division between the lean and the
at .
Mr. BLOUNT. Yes; and we would have to have cars.
The CHAIRMAN. And you are afraid you would get the lean?
Mr. BLOUNT. Yes. -
The CHAIRMAN. Would it not equalize?
Mr. BLOUNT. I think we would get the lean because we would be
operating a car on the southern division as we are to-day, with a
very light mail, and on the northern division I understand that the
parcel post there has increased. It seems to me we are approaching
a proposition that requires serious consideration from a financial
standpoint. -
The CHAIRMAN. We have found that out for over a year?
1244 RAILWAY MAIL PAY.
Mr. BLOUNT. I am taking it individually. This is a new matter
with me. I am a railroad builder; that is my business, to build and
operate a railroad, and finally to sell it to some trunk line, so they
can operate it more profitably. I have been on this line for 12 years
and I have my individual money in it and I am directly interested
in it.
Mr. LLOYD. Would you say, with reference to this bill, it would be
applicable to the weight system, because your idea seems to be that
your company ought to be helped to meet the additional expense from
time to time?
Mr. BLOUNT. No. We have no apartment cars. As I see it, we
would have to buy apartment cars. s
Mr. LLOYD. Would you want apartment cars pretty soon?
Mr. BLOUNT. It might be, but we could not change an apartment
car on a railroad that is going to get a 10-foot or 20-foot car. I
think it is a very serious matter when you come to changing this
system that has been So well tried out. -
Mr. STEWART. You would not have to supply an apartment car
under the new law any quicker than you would under the old law §
Mr. BLOUNT. I do not know anything about that, but I think we
are really more at a loss to know, because we do not know much about
this new law. -
Mr. STEwART. The proposed law would not make any great changes
in the service. Take it just as we have it to-day, it would continue
practically with the same plant we now have, with increases from
time to time as the needs of the service grow. We would not call
upon you for an apartment under the proposed law any sooner than
we would call upon you for an apartment under the present law.
The CHAIRMAN. Are there any other witnesses, Mr. Peters?
Mr. PETERs. No. We haven’t anyone else, Mr. Chairman.
The CHAIRMAN. Are there any further comments that any of you
gentlemen desire to make to the commission at this session?
Mr. PETERs. Mr. Chairman, in regard to the next meeting, on Tues-
day, as I understood, Mr. Stewart was to bring out some new points
in regard to express rates and express weights and he was also going
into the broad field of freight rates. - --
Mr. STEwART. Not freight rates, but we will discuss your division
of expenses between passenger and freight, which involves the freight
earnings to some extent.
Mr. PETERs. Mr. Chairman, we will want to answer that and dis-
cuss it very freely. We do not want to prolong these hearings. Would
it not be possible for Mr. Stewart to put his statement in the form of a
brief, let us have a copy of it, let us study it and make our brief
and submit it to him, and then come before you in two weeks or two
weeks and a half and be prepared to settle these hearings when we
come together, without asking for another statement, and let us try to
close the hearings then? -
The CHAIRMAN. It is the desire of the committee to come to a con-
clusion as soon as possible, but I think you will agree the committee
has evinced no desire to take advantage anywhere.
Mr. PETERs. You have been most fair to all of us.
The CHAIRMAN. I think if we reserve decision in that matter until
after we get the statement and see what it is, then you may be able
to make your comment when the statement is submitted without any
RAILWAY MAIL PAY. 1245 - 2
desire for further time. If you require further time in order to
familiarize yourself with the presentation made, so far as we can, I
assume that the committee will be glad to extend to you a reasonable
time, but it is the desire to come to a conclusion just as soon as
possible and expedite matters.
Mr. PETERs. All of us would like to do that. The members of our
committee come from a long distance—many of them from Chicago
and St. Louis, men who have other work to do—and it requires a
great deal of care, thought, and preparation to answer these state-
ments that are going into the record under oath, and we want to
know we are right from our position. I think if it was possible to
have that statement presented here and printed and a copy sent to us
we could study it and make our answer, and when we come here we
would try and close the matter up.
Mr. LLOYD. I think you have one wrong idea. Both sides seem to
be working on the theory that this is a lawsuit; you must keep On
filing pleadings. We are anxious to get through with the pleadings.
Mr. MACK. Our thought, in the suggestion of Mr. Peters, was that
when a statement is made and it is fresh in mind that we would be
able to answer it and discuss it immediately, rather than at a sub-
sequent time, and we thought it would be much more useful to your
commission, and I might say personally in consideration for our-
selves, in the matter of trouble. We believe this would be more useful
to your commission than to have a statement made to-day or next
Tuesday, and then the following week come along with an answer to
it. What we are trying to do is to join the issue in order to thrash
it out when the statement is made, and we think we will be able to do
that if we have a statement before it is formally presented, and, if
necessary, the discussion of the proposition at once rather than at
two different times. I should think that would be an advantage to
your commission, as it stands now. For instance, there is a statement
made by the railroads and answered by the department at a sub-
sequent time, and then a further answer by the railroads, and in that
manner it just prolongs the joining of the issue.
The CHAIRMAN. We will take an adjournment until Tuesday morn-
ing at 10 o’clock. I think it would be wise for the representatives of
the railroads to be here, and if it evolves that there are questions that
develop which they want to take up later we can grant an extension
of time.
(Thereupon at 5 o'clock p.m. the hearing adjourned until Tuesday,
March 24, 1914, at 10 o’clock a. m.)
Tº A T L VW A Y M A IT, E” A Y
H E. A STATEMENT ON BEHALF of THE
@476. POST OFFICE DEPARTMENT
, A5
||13 SUBMITTED TO THE
JOINT 00MMITTEE ON POSTAGE ON SECOND-CLASS
MAIL MATTER AND COMPENSATION FOR
THE TRANSPORTATION OF MAILS
MARCH 24, 1914
NO. 11
Printed for the use of the joint committee
WASHINGTON
GOVERNMENT PRINTING OFFICE
1914
UNIVERSITY OF MICHIGAN LIBRARIES
Transportation .
Library
JOINT COMMITTEE ON POSTAGE ON SECOND-CLAss MAIL MATTER
AND COMPENSATION FOR THE TRANSPORTATION OF MAILS.
CoNGRESS OF THE UNITED STATES.
JONATHAN BOURNE, JR., Chairman. JAMES T. LLOYD. .
HARRY A. RICHARDSON. WILLIAM E. TUTTLE, JR.
JOHN H. BANKHEAD. * JOHN W. WEEKS. - -
ROBERT H. TURNER, Secretary,
RICHARD B. NIXON, Disbursing Officer.
II
RAILWAY MAIL PAY.
The statement presented by Hon. Joseph Stewart, Second As-
sistant Postmaster General, on behalf of the Post Office Department,
was sent to press without opportunity being afforded him to make
corrections of clerical or other errors that might appear therein.
Its publication as presented is deemed necessary by the Joint Com-
mittee in order that its own conclusions as to the subject matter of
the statement may be expedited.
- III

RAILWAY MAIL PAY.
A STATEMENT ON BEHALF OF THE POST OFFICE DEPARTMENT
IN REPLY TO STATEMENTS OF FEBRUARY 26 AND MARCH 16,
1914, BY THE RAILROADS COMMITTEE ON RAILWAY MAIL
PAY.
The paper read by the chairman of the railroads’ committee on
railway mail pay before the joint committee of Congress February
26, 1914, in reply to the department's statement of January 16, 1914,
is an attempt at detraction from the official work of the officers of the
Post Office Department presenting the matter under consideration
and the reiteration of the railroads’ committee's contention re-
garding the method of dividing expenses between the freight and
passenger services and the assignment of space in passenger trains
to the mail service. It is conspicuous for its failure to specifically
reply to the material matters set out in the department's statement
referred to.
The officers of the department believe that the questions before this
joint committee should be decided purely upon the facts and the
merits and therefore decline to enter into a controversy with the rail-
roads’ committee concerning the relative merits of the personal work
of those representing the railroads and those representing the depart-
ment in fields of inquiry disassociated from the one under considera-
tion. However, in reviewing the statements made by the railroads’
committee, such notice will be taken of their statements of the char-
acter referred to as may be necessary to correctly state the facts.
The statement opens with an assertion that the officials of the Post
Office Department showed—
a lack of acquaintance with the proper method of pursuing the inquiry, a lack
of familiarity with the factors employed, and a lack of appreciation of the
financial elements which had to be dealt with. It is also evident that there
was a lack of knowledge on their part as to the origin of the inquiry.
So far as this statement relates to methods, factors, and elements
the preceding paper of the department of January 16, 1914, amply
disposes of such general and unsupported assertions. As to the claim
regarding lack of knowledge as to the origin of the inquiry the only
meaning this appears to have is gathered from the context in which
reference is made to the Hubbard commission appointed under the
act of July 12, 1876, and whose report was made April 1 and April
5, 1878. The inference to be drawn is that the present inquiry before
this commission is practically the inquiry which was commenced and
reported upon by the Hubbard commission. As pointed out in the
statement of January 16, 1914 (hearings, p. 1020, et seq.), the rail-
roads’ committee have been insistent upon connecting the present
1247
1248 RAILWAY MAIL PAY.
inquiry with previous inquiries made by prior commissions in years
Past and upon totally different methods of securing and handling
data. That these inquiries and their results can have no controlling
influence upon questions that are now presented before this commis:
. Sion has been repeatedly pointed out by the department. Further-
more, the statement in this connection, on page 1064, regarding the
passage of the act of 1879 requiring the Postmaster General to re-
quest certain data from the railroad companies carrying the mails
and report the same to Congress with recommendations and the as-
Sertion that it was not until 30 years later that the Post Office De-
partment submitted the required report would lead the joint com-
mittee to believe that no steps were taken either by the department
or by Congress during those years to comply with either the letter or
the spirit of the law, as all mention is omitted of the effort of the
department made immediately after the passage of the law of 1879
to secure the information and its inability to do so because of the
imperfect, reports of the railroad companies and their neglect to
comply with the department's requests, and also of the work of the
several commissions authorized by Congress thereafter, special refer-
ence to which may be found in the record and in the annual reports
of the department. Are the railroads’ committee unacquainted with
these facts? And if not, why were they not mentioned in this con-
nection where they are material, if reference to any part of the subject
is at all material?
DOCUMENT No. 105.
Under the heading “The incompleteness and the inaccuracy of
Document No. 105,” the railroads’ committee restate objections here-
tofore presented and submit arguments based upon incomplete state-
ments of fact or facts of a wholly inconsequential nature so far as
the main inquiry is concerned.
In their first paragraph on page 1065 they claim that the Post
Office Department commenced preparations for the inquiry in 1906,
“and, therefore, were engaged upon it five years before Document
No. 105 was published.” From this statement and what follows it
would be inferred that the subject matter of Document No. 105 as
presented in the main was under preparation by the department for
five years and that the railroad companies neither participated in
the benefits of the five years’ consideration nor were responsible for
extending the period beyond what might have been a reasonable one.
As a matter of fact these inferences are untrue. The department
issued its first forms to the railroad companies on March 2, 1907,
to all railroad companies carrying the mails. By these instructions
they were required to furnish the department for a period of three
months from July 1, 1907, certain information as to operation, re-
ceipts, and expenditures. It soon became evident that without fur-
ther instruction the scope of the inquiries would not be understood
uniformly by the companies and requests were received from them
to postpone the period until such time as representatives of leading
companies would be able to confer with the department and amon
themselves and agree upon a uniform method of procedure an
treatment (report Second Assistant Postmaster General, 1907, p. 7).
This postponement was agreed to by the department’s officers at the
RAILWAY MAIL PAY. 1249
request of representatives of the railroad companies following a con-
ference had at the department. The officers of the department were
diligent in pursuing the matter thereafter. On July 15, 1907, the
Acting Second Assistant Postmaster General wrote to the assistant
to the president of the Pennsylvania Railroad Co., whose special
representative, Mr. Charles M. Sheaffer, had been one of the prin-
cipal representatives of the railroad at the conference, referred to,
calling attention to the postponement and the desire of the depart-
ment to secure the data to be furnished at the earliest practicable
date and requesting to know what had been done by the companies
in that respect. Again, by letter of January 20, 1908, the Second
Assistant Postmaster General wrote to the assistant to the president
of the Pennsylvania Railroad Co., as follows:
Referring to the correspondence relative to the preparation of reports cover-
ing data as to the cost of mail service, etc., and your letter of July 17, 1907,
I have now to inquire whether your committee has completed its work and
will be ready soon to consult with the department upon the subject. It is very
much desired that a time in the early future be fixed for securing this infor-
mation, and I shall be obliged to you if you can have the matter given early
Consideration.
The company replied to this under date of January 31, 1908.
Again, on June 25, 1908, the Second Assistant Postmaster General
addressed a further letter to the assistant to the president of the
Pennsylvania Railroad Co., as follows:
Kindly refer to the correspondence commencing in May, 1907, and continuing
to last February, in regard to the result of the conference had at my office
between Mr. Sheaffer and the representatives of other COmpanies, upon the
part of the companies, and Mr. Stewart, upon the part of the department,
regarding the matter of arriving at an understanding as to the scope of the
answers to be submitted by the railroad companies to the inquiries forwarded
by the department asking for certain data showing the cost of operating the
mail service, etc., as provided for by law.
Nothing has been heard from you since your letter of January 31, 1908, in
which you stated that the committee representing the accounting and trans-
portation departments of your system had been giving the subject careful
attention and Outlining Suitable blanks, etc., that it was assuming tangible shape,
and that you felt, that in the near future you would be prepared to have your
representatives consult further with the department.
The Sécuring of these data has mow been deferred almost a year, and it is
felt that the department would not be warranted in further delay. The Post-
master General has expressed a desire that the matter be taken up without
delay and the information secured.
The date for the commencement of the period during which the - Companies
will be asked to keep their records has not been fixed, but will be decided upon
at an early day. In the meantime I shall be pleased to hear from you in regard
to any further representations you wish to make.
In reply to this, on July 9, 1908, the Second Assistant Postmaster
General received from the assistant to the president of the Pennsyl-
vania Railroad Co. the following letter:
Replying to your letter of June 25, relative to the furnishing of data by rail-
road companies showing cost of operating mail service, etc., as provided for by
law, I beg leave to state that we have not overlooked the subject. We have had
a number of meetings of the committee composed of representatives of Our
lines east and west of Pittsburgh, and also of the New York Central lines,
and recently the committee met and finally agreed upon the form which it was
thought would meet the situation, both from a department and railroad point
of view. I send you herewith a copy of the form, and would be glad to arrange
for the committee to meet your department people whenever it may he con-
venient.
1250 RAILWAY MAIL, PAY.
In reply to this letter the Second Assistant Postmaster General on
July 22, 1908, sent the following:
Your letter of the 8th instant, forwarding copy of form prepared by your
Committee for adoption and use in furnishing data by the railroad companies
showing cost of operating mail service, etc., is received. I shall be glad to have
you arrange for your committee to meet our department people at this office
some day early next week. Kindly advise me at your early convenience when
this may be.
Thereafter the conference so arranged was held in the office of the
Second Assistant Postmaster General on August 4, 1908, at which
there were present besides the officers of the department the represent-
atives of the Pennsylvania Railroad, the Pennsylvania Co. West, the
Northern Pacific Railway, the Minneapolis, St. Paul & Sault Ste. Marie
Railway, the Wabash Railroad, and the Great Northern Railway for
the railroad companies. At this conference Mr. Tomlinson, repre-
senting the Pennsylvania Railroad, submitted to the department the
suggestions agreed upon by the Pennsylvania Railroad and the New
York Central & Hudson River Railroad, the railroads’ committee at
that time, and a thorough examination and discussion of the forms
submitted by the parties present followed. On August 13, 1908, the
department sent the forms suggested by the companies in modifica-
tion of the department's plan to a number of railroad companies for
suggestion, to which response was made during that and succeeding
months.
The preparation of the final forms was by the Second Assistant
Postmaster General referred to a committee, who continued the work
and conferred with the representatives of the Pennsylvania and New
York Central & Hudson River Railroad Cos., and reported in March.
1909. The forms were finally completed, and the Postmaster Gen-
eral, on August 6, 1909, authorized their issue for the securing of
data from representative routes in the several classes of service.
This was done, and afterwards the inquiry was extended to cover
data for all railroad routes.
It will be seen, therefore, that the inquiry was postponed at the
request of the principal railroad companies, and there was mutual
cooperation between them and the department to provide a plan
which should be practicable, and that the benefits of such delay as
occurred were participated in as fully by the railroad companies as
by the department.
It was not until after the last issuance of the forms above referred
to that the present railroads’ committee appear to have been organ-
ized and became first known to the department. They held a con-
ference in Washington on October 22, 1909, at which no representa-
tive of the Post Office Department was present or invited to be
present, at which time they drew up certain instructions which they
afterwards sent to all the railroad companies, in which they directed
them how to make their reports to the Post Office Department. In
many of the instances these directions varied from the instructions
given on the blanks sent out by the department. The railroad com-
panies were requested by them to forward their reports to the Post
Office Department in duplicate to the chairman of the railroads'
committee in Chicago, and informed that after collating the same
the originals would be returned to the railroads for transmission to
the Post Office Department and the duplicates retained by the rail-
roads’ committee. *
RAILWAY MAIL PAY. 1251
On page 1067 of the hearings they say that the railroads, started
in 1909 in a spirit of sincere cooperation with the Post Office De-
partment, and, notwithstanding the rejection of their offer of assist-
ance, endeavored to make a satisfactory response. It is presumed
that the rejection mentioned of offer for further cooperation during
the progress of the work refers to the specific offer of that committee
to participate in the department's special work of checking the re-
ports from the railroad companies and compiling the statistics there-
from. The following are copies of letters from the chairman of the
railroads' committee referring to the oral proposition made to the
officers of the department:
CHICAGO, Februtal ry 5, 1910.
IHon. Jos. STEwART, . .
Second Assistant Postmaster General, Washington, D. C.
DEAR SIR: I am advised by Mr. Baldwin and Mr. Hale of their interviews
with the Postmaster General and with yourself in regard to the totaling Of
the reports from the various railroads made in accordance with the request of
the department, and desire to confirm the proposition that we should be very
glad indeed to furnish you with the totals which we are making, and should
also be glad, in case you find it desirable, to send a representative from the de-
partment here to check up our work.
We are very much disappointed that you have not seen your way clear to
accept this suggestion. I understand that the department’s estimate for this
work is $10,000, which can not be available until July 1. We are offering you
the figures free, and we think they will be ready at a very much earlier date.
Of course we are making this offer because we feel it absolutely essential to
progress in this matter that our totals and the totals of the department sluall
be the sanje, but I am sure you will agree that it will be of equal advalitage to
the department to eliminate any possible causes of controversy in details.
Under the circumstances I trust you will lye able to accept our totals and
assure you we will welcome any precaution which you feel is essential to secure
accuracy. -
Yours, truly,
J. R. RUTTSCIHN ITT, Ch ſtir miſt in.
CHICAGO, JI arch 25, 19 ft).
Hon. JOSEPH STEWART,
Second Assistant Postmaster General. Washington. D. C.
DEAR SIR : Our committee would very much appreciate a reply from you to
my letter of February 5, offering our cooperation in consolidating reports being
made from the various railroads in compliance with the request of the Post
Office Department.
Will you kindly let me hear from you at your earliest convenience?
Yours, very truly,
J. R. RUTTSCHIN ITT.
To these letters the following reply was made:
MARCH 29, 1910.
Mr. J. RRUTTSCHNITT, -
Chairman Committee on Railway-l'Iail Pay.
Grand Central Station, Chicago, Ill. -
SIR : I have your letter of the 25th instant, referring to an earlier one of
February 5, offering your cooperation in consolidating reports from time various
railroads, in compliance with the request of the Post Office Department.
The proposition submitted has been given very careful consideration, and I do
not think that cooperation in the manner suggested would be practicable or
desirable. I think your committee will appreciate as fully as I do the fact that
the duty of receiving, examining, checking, and compiling the information Sub-
mitted by the railroad companies devolves upon the department and that any
determination reached in a different manner would fail to meet the require-
ments of the law, which requires the Postmaster General to secure this informa-
tion and transmit it to Congress with such recommendation as he may see fit
to make. Accordingly the House of Representatives has incorporated in the
1252 RAILWAY MAIL PAY.
pending appropriation bill an item appropriating $10,000 to enable the Postmas-
ter General to do this work through the employment of temporary clerks under
the SuperVision of this office. As soon as the bill passes the amount will become
immediately available, and the work will be taken up aCCOrdingly. In the
meantime the department will give such attention to the reports as is practicable
With our existing force. If the Companies make returns of the information as
requested by the department there will be no difficulty or delay in the handling
Of the information secured. -.
Very respectfully,
Joseph STEwART,
Second Assistant Postmaster General.
It will be observed from this correspondence that the railroads'
committee sought to induce the officers of the department to accept
the totals obtained by the employees of such committee instead of
relying upon the independent efforts of the officers and employees
of the department in ascertaining the same in accordance with their
duty preseribed by law. In oral conferences it was pointed out to
the representatives of that committee that such a course would vitiate
any finding which the department might make and would be wholly
inconsistent, with the duty devolved upon the Postmaster General
by law and by his obligations in the premises. This evidently is the
cooperation which is referred to by the railroads' committee as that
which was refused by the department. In my judgment the depart-
ment's course was the only proper one, and, in view of the outcome,
there can be no doubt about its wisdom. ---
On pages 1066 and 1067 the railroads’ committee discuss the state-
ments made by the department that the results of Document No. 105
show that it is possible to approximately divide the total operating
expenses of the railroads between passenger and freight services and
to ascertain the space relation between passenger proper, express,
and mail services and assign to these several classes the direct ex-
penses and apportion the unassigned expenses upon the ratio of the
Space devoted to each of the three classes of service. The discussion
upon these statement amounts to nothing more than a quibble.
In the first place, the railroads’ committee separated the statement
made by the department, which appears on page 988 as one sentence,
divided only by a comma, into two separate and distinct propositions,
placing one in a separate sentence upon one page and the other in a
separate sentence upon another page, following each by a separate
argument. This separation of the sentence destroyed to some extent
the meaning of the paragraph, for, although each proposition made
by the department is true taken separately, they were stated as one
whole and were intended to be considered as such. tº º
It is needles to say that although the Pennsylvania Railroad Co.
and the Atchison, Topeka & Santa Fe Railway Co. have made an
effort for a number of years to separate expenses between passenger
and freight services, these facts in no wise discredit the department's
statement that the results of Document No. 105 show that it is pos-
sible to approximately divide these total expenses. When it is
pointed out that out of the 430 reports submitted to the department
from railway companies and systems only 319 made any effort to
make a division between freight and passenger expenses, although
an effort was made by the railroads committee to induce all of them
to make such division on the basis which that committee suggested,
and that only 124 furnished reports in the manner desired by the
department, it will be seen that the problem of a division of such
RAILWAY MAIL PAY. 1258
expenses by the companies generally is given but little consideration
by them. - -
The criticism of the department’s statement that it was shown to
be possible to ascertain the space relation between passenger proper,
express, and mail services, and assign to those several classes the direct
expenses, and apportion the unassigned expenses upon the basis of
the space devoted to each of the three classes of service, is based
upon the small per cent of direct expenses assigned. It must be
evident that the small amount of direct expenses assigned does not
sustain a valid criticism against the statement that it was found
possible to assign the direct expenses and apportion the others.
Plainly the railroads committee have not been able to understand
the import of the plain language of the department’s statement.
Furthermore, the fact that only a small part of direct expenses for
mail service were assigned can be a criticism only against the imper-
fect and incomplete reports made by the companies themselves.
The comments made on pages 1067 and 1068 with respect to the
large per cent of gain shown in exceptional cases of short-line rail-
roads must fail of any force upon an examination of the statistics
upon which they are based. They are mathematically sound and
are the inevitable result of the elements upon which they are based.
That there can be no valid criticism against the statistics of Docu-
ment No. 105 arising from, such isolated cases is shown by the fact
that the railroads committee have at all times been willing to accept
the statistics modified by their own ascertainment of a division of
expenses between freight and passenger services and of the space
devoted to the mails. That an argument of this character should be
presented to the commission, devoting its best efforts to ascertain the
facts and to reach a solution of as serious and large a question as
railroad-mail pay is to be regretted, but such is the character of
much of the matter included in the railroads committee's paper,
found in volume 9 of the hearings. -
THE QUESTION OF OVERPAYMENT.
There is nothing new on this subject presented in the paper of
the railroads committee. Their position is restated, and their
claims reiterated, with respect to two elements involved in the ascer-
tainment of Document No. 105, namely, the division of expenses
between freight and passenger services and the assignment of pas-
senger space to the mail service. These matters have been fully
discussed by the department in the statement of January 16, 1914,
volume 7 of the hearings, pages 1009 to 1020, inclusive, and pages
1035 to 1049, inclusive, to which the attention of the joint committee
is again respectfully invited. It is noteworthy that the railroads
committee have made no effort to discuss or to refute the statements
made by the department in the pages above referred to except in the
few remarks made on pages 1069, 1070, and 1071 of their paper,
and these remarks are principally predicated upon a letter written
by Mr. Kruttschnitt, at one time chairman of the railroads com-
mittee, and dated December 20, 1911.
The railroads’ committee have apparently failed to keep up with
the information which has been submitted to the joint committee
upon these features of the inquiry. This evidenced by the omission
1254 RAILWAY MAIL PAY.
of any discussion of the matters from time to time presented by the
department and especially in the statement of January 16, 1914, and
if further shown by such expressions as that found on page 1069, to
the effect that “there was no publication of the expenses at railroad
stations or of terminal service or of personal transportation of
officers and employees of the Post Office Department, although this
information was furnished to the Postmaster General.” As early as
January 17, 1913, the Post Office Department, replying to the docu-
ment issued by the railroads’ committee and published in the Prelimi-
nary Report pointed out that no items for these expenditures could
be used specifically unless-the individual accounts, including such
expenditures, were also segregated and reported separately to the
department in order that when the apportionment of expenditures on
the car-foot-mile basis should be made the department should not
participate in a double charge for the same service, and that the
department had assigned to the mail service such expenses for those
items as were reported by the companies in this manner and appor-
tioned to it on the basis of car-foot miles performed in the mail serv-
ice, a portion of the sum of such like expenses unaffected by the
already assigned direct expenditures (Preliminary Report, p. 104).
If these items had not been used in this manner the department
would have participated in this charge twice. There were other
valid reasons why the reports of the companies could not be accepted
for the total of these items given by them, and these may be found
on page 103, Preliminary Report. Furthermore, the sufficient rea-
sons were stated in Document No. 105 and also in subsequent papers
filed by the department as to why it was impracticable to deal
specifically with the matter of personal transportation.
The railroads’ committee have presented to the joint committee
new claims respecting underpayment for mail service, which vary
as greatly in amounts as the methods by which they are reached are
unreliable. Before the filing by the department of its statement of
January 16, 1914 (hearings, vol. 7), clearly showing overpayment,
the railroads were claiming underpayment of $15,000,000, although
their own statistician, who filed for them a paper published in the
hearings, claimed an underpayment of only about $3,000,000 per
annum (hearings, p. 84)". Now, we are told on page 1068 that the
underpayment is nearly $38,000,000; on pages 1073 and 1074, by
using the railroads’ percentages, the result will show an underpay-
ment of $29,000,000; on page 1074, by using one of the railroads'
disputed percentages, the underpayment will be over $17,000,000,
and that by using another it will be over $6,000,000, and finally, on
page 1076, they declare that they are underpaid $15,000,000. And
this is not all, for in an exhibit filed with their statement it is .
attempted to be shown that upon one basis the underpayment is
over $20,000,000 and upon another over $13,000,000 (hearings,
p. 1087).
What possible weight can be given to processes and the usé of ele-
ments which will produce such varying results and what value can
be placed upon the results themselves? It is evident that the rail-
roads’ committee have no definite or accepted basis in which it has
1 When Mr. Newcomb's figures are corrected they show a gain for the mail service of
$1,271,586 with the elements he uses. The true gain was shown by the department to
be $1,616,532 (hearings, p. 996).
RAILWAY MAIL PAY. 1255
sufficient confidence to commend unreservedly to the joint committee
and rest its case thereon. *
The results obtained by the railroads’ committee are based upon
the application of two rates per cent differing from those used by
the department, namely, 34.42 per cent as that part of the total
operating expenses and taxes divisible to the passenger Service,
and 9.32 per cent as that part of the passenger traffic operating ex-
penses and taxes chargeable to the mails. The department used
29.21 per cent as the first and 6.68 per cent as the second.
The railroads’ committee obtained the first rate per cent 34.42, as
the share of operating expenses and taxes apportionable to the pas-
senger service by reason of adhering to and insisting upon the use
of the revenue train-mile ratio for the apportionment of the unas-
signed operating expenses on the revenue train-mile ratio.
This method was abandoned by the Interstate Commerce Commis-
sion many years ago and, although it may be used to Some extent
by the companies at the present time for comparative purposes, it
is believed that the results obtained thereby are not used for pur-
poses of rate making (hearings, p. 883). The method is based on the
theory that a passenger-train mile and a freight-train mile are
equally expensive, “an unjustified assumption ”.. as said by Dr.
Lorenz. How incorrect and unreliable this is has been shown in the
statement of the Post Office Department of January 16, 1914, and
will be further considered hereinafter.
The railroads’ committee obtained the second rate per cent, namely,
9.32, as that part of the passenger-train space devoted to the mails
by charging against the mail service all portions of cars used in con-
nection with the mail service where such space or operation exceeded
the authorization or needs of the mail service and in disregard of
the proper and equitable rules of the department limiting the charge
to its proper scope. This will be given further consideration herein-
after. Before passing, however, attention is invited to the fact that
the railroads’ committee have committed a serious error in the use
of their percentages. In their computations to show underpayment
they have substituted their per cent of 9.32 for the department’s per
cent of 6.68, thus showing a lack of understanding of the problem
and the elements to be used. A discussion of this point appears on
page 463 of the hearings. The 9.32 per cent claimed by the railroads'
committee represents per cent of car-foot miles and is comparable
with 7.18 per cent ascertained by the department and shown in Table
6F, page 269 of Document No. 105. The 6.68 per cent used by the
department in apportioning to the mail service a share of the pas-
senger part of $599,635,450 (hearings, p. 996) represents per cent of
passenger traffic operating expenses and taxes chargeable to the
mail service (p. 280, Document No. 105) and not car-foot miles. On
their theory of the correctness of 9.32 per cent as representing car-
foot miles they should have used 8.409, which would approximately
represent the ratio of passenger operating expenses and the taxes
chargeable to mail service. This error made a difference in the rail-
road committee's figures of $7,658,175, being that much more than
their own theory, justified.
Before submitting further, and it is believed, conclusive evidence
that the railroad's committee are wrong in both their claims it will be
1256 RAILWAY MAIL PAY. *
permissible to notice and appropriately reply to certain assump-
tions of superior competency of railroad experts and reflections upon
the officers of the department made by the railroads’ committee and
found on page 1075. The broad assumption is made that postal
officials, even if fully competent to understand and apply the statis-
tics of the postal business to postal operations, are not equally com-
petent to render similar service respecting railroad statistics, and the
inference is presented that their work in connection with this in-
Quiry suffers in a comparison with that of railroad experts. Their
assumption would command reasonable consideration had the rail-
roads’ committee contributed anything whatever worthy of consid-
eration in support of their contention for the rule for the division
of all common and unassigned expenses which they followed, or if
they had pointed out in what respect the department's plan was in-
ferior to their own or theirs entitled to higher consideration than the
department's. This they have utterly failed to do. If railroad
accounting and rate making stood commended before the public, the
Interstate Commerce Commission and authorities on the subject,
there would be at least prima facie grounds for the assumption of
the railroads’ committee that railroad men are most competent and
reliable in those fields. Inasmuch as the question has been presented
to the joint committee by the railroads’ committee with the evident
purpose of accrediting railroad methods and discrediting depart-
mental methods it will be appropriate to call attention to at least
one of the many criticisms by disinterested parties. Attention is
respectfully directed to the paper “Certain considerations in railway
rate making,” by Hon. Balthasar H. Meyer, a member of the Inter-
state Commerce Commission, published in the Railway Age Gazette
of January 9, 1914, some quotations from which were set forth in the
department's statement of January 16, 1914 (hearings, pp. 993, 1006,
1007). Among other things Mr. Meyer says:
One might suppose that the railways in this country would fairly vie with one
another in producing the most scientific cost data in regard to their respective
operations which the best talent can compile. With a few conspicuous excep-
tions, the exact contrary is the fact. -
And again, in speaking of cost accounting and its application to
railway transportation, he says:
Institutional reforms are rarely effected from within and the railway is no
exception. A most remarkable example of the unreliable handling of statistics
and expense items by railroads is discussed in the decision of the Interstate
Commerce Commission of February 9, 1914, in No. 933, St. Paul & Puget Sound
accounts; in the matter of rates, practices, accounts, and revenues of carrier's
subject to the act to regulate commerce. -
In an effort to support their assumption the railroads’ committee
refer to the presentation before the Hughes commission by the de-
partment’s officers of the case respecting the cost of carrying and
handling second-class mail matter. After stating that the depart-
ment's officers revised their estimates again and again to meet the
repeated criticisms directed against them, with the final result that
the distinguished commission entirely rejected the great item of
“General Post Office Service ’’ expenses, the railroads’ committee con-
tinue :
* * * It may be fairly contended that when they found that their efforts
in their own familiar field were not sufficiently convinëing to satisfy the Hughes
FAILWAY MAIL PAY. 1257
Commission, they would have been justified in entertaining some doubt in regard
to the propriety of urging that their estimate of the proper division of railroad
expenses should supersede the estimates of experienced railroad officials and
railroad accountants.
The truth of the matter is that the Hughes commission, after a
most exhaustive analysis and searching examination by the commis-
sion and attorneys for the periodicals of the data and tables presented
by the officials of the department, accepted the department officers'
apportionment of cost to second-class mail matter, of all expenses of
railroad transportation, all other transportation, railway post-office
car service, Railway Mail Service, rural delivery service, and miscel-
laneous expenses directly assignable, these being all the items of ex-
penses with the exception of that for general post-office service and
for miscellaneous expenses not directly assignable, and did not make
any finding with respect to the latter items for the reason that a
sufficient basis for apportionment was not presented, and this re-
sulted not from any lack of ability on the part of the officers of the
department to make such apportionment but solely because the post-
masters’ reports upon which it was necessary to rely in making such
apportionment were insufficient and incomplete. It will therefore
be seen that the results for which the officers of the department pre-
senting the case were responsible for their work was fully accepted
by the Hughes commission, and the railroads’ committee in making
the reflection have been either unable to understand the report or so
disregardful of facts as to inferentially misrepresent them.
Frequent reference is made in the report of the Hughes commission
to the work of the officers of the department in connection with the
inquiry, and no word of condemnation is found in it. With respect
to the original finding, the commission say:
We shall have frequent occasion to refer critically to these records and com-
putations, but it may now be said that it is entirely evident that the officers of
the department devoted themselves to their difficult task with the sincere desire
to use every means at their command to accomplish the purpose of Congress
and to secure trustworthy results upon which an accurate determination and
apportionment of cost could be made. (Message of the President of the United
States, transmitting the report of the Commission on Second-Class Mail Matter,
etc., pp. 20 and 21).
It is not to be supposed that in a controversy between the great
periodical publishers’ interests and the Post Office Department as to
the cost of carrying and handling second-class mail matter the most
strenuous efforts were not made to break down the department's
finding. With respect to these and the judgment of the Hughes
commission thereupon the following excerpt from the report is
pertinent:
Many objections have been made to various points in the methods of Compu-
tation and some of these have been argued with earnestness. Those which
appear to the commission to be important have been discussed. With the
others it is unnecessary to deal in detail. The fact that they are not mentioned
does not mean that they have been overlooked. It is sufficient to say that in our
judgment they rest upon misunderstandings of the evidence or of the methods
adopted and their significance. Some of them were based upon the assumption
that if a result could not be proved to be exactly accurate it must be valueless,
whereas in matters where precise accuracy is of necessity unobtainable an
approximation must be deemed satisfactory if the limits of error are too small
to affect the value of the result for the purposes for which it is used. (Id.,
p. 81.)
1258 RAILWAY MAIL FAY.
If the facts were known to the railroads’ committee it would
appear the interpolation of reference to such matter in their state-
ment, in the incomplete manner in which presented, could have no
other intention than that of misleading the joint committee.
THE RAILROADS’ COMMITTEE’s ERRONEOUS 34.42 PER CENT.
It is appropriate now to examine further the claim of the rail-
roads’ committee that the operating expenses and taxes apportioned
to the passenger service were 34.42 per cent of the total, instead of
29.21 per cent as found by the department. The error of this claim
will be shown by the following:
(1) The claim of the railroads’ committee is based solely upon an
arbitrary method of apportioning common expenses between freight
and passenger Services upon the antiquated theory “that a passenger-
train-mile costs the same to run as a freight-train-mile.” The
claims in Support of this method are discussed in the department's
statement (hearings, pp. 1009 to 1013, inclusive), and reasons briefly
given as to why the method is unreliable and should not be accepted
for such purpose. Furthermore, in Exhibit A to said statement
(hearings, pp. 1035 to 1049, inclusive) the method is examined in
greater detail and its application to specific systems shown to result
in conclusions which are so palpably erroneous as to condemn the
method employed. It is noteworthy, as stated hereinbefore, that the
railroads’ committee have made no attempt to answer the arguments
and facts set forth in the exhibit and in the text of the statement.
(2) Notwithstanding the assumption upon which the findings of
34.42 per cent is based, namely, that it costs as much to run a pas-
senger-train-mile as a freight-train-mile, a division of the total
Operating expenses and taxes on the basis which the railroads’ com-
mittee claim to be correct results in an ascertainment of a cost of
$1.934 per freight-train-mile and $1.165 per passenger-train-mile,
This result proves that this assumption is untrue.
(3) The Pennsylvania Railroad Co. shows by its annual report for
1909 that on the basis of the division of expenses between freight and
passenger services, to which general practice of the Pennsylvania Co.
the railroads’ committee has referred (hearings, p. 1066), it cost the
company $2.449 per freight-train-mile and $1.394 per passenger-
train-mile.
(4) The railroads’ committee applied its rule of division to the
unassigned expenses, the per cent of which to the total expenses may
differ widely for the different companies and systems. If the rule
be true for such a considerable part of the expense it should be
approximately true when applied to all of them. But if the rule
be so applied to all operating expenses the result would be $1.508
(the average cost per train-mile for both classes of service for the
fiscal year 1910) as the cost of each freight and passenger train-
mile. This would reduce to 5.186 cents per freight-car-mile and
28.55 cents per passenger-car-mile. This result is obviously incor-
rect and inconsistent with the result of the application of the rail-
roads’ committee’s assumption of 34.42 per cent as the passenger
ratio of cost resulting in an ascertainment of 6.65 cents as the cost
of a freight-train-mile and 22.07 cents as that of a passenger-train-
mile.
RAILWAY MAIL PAY.
1259
(5) The application of the per cent claimed by the railroads' com-
mittee, namely, 34.42, as the passenger share of total expenses and
taxes produces a result as to surplus or deficit which is obviously
incorrect and not sustained by any other data.
parent by the following table of statistics for 1910:
Totals for railroads carrying mails.
This is made ap-


Total. Freight. Per cent. | Passenger. Per cent.
Revenue of mail-carrying IOdds?... . . . $2,610,266,694 | S1, 856,421,673 71. 12 $729,646, 544 27. 95
Unallocated revenue *. . . . . . . . . . . . . . . 24, 198, 47: ----------------|----------|--------------|- . . . . . . . . .
Operating expenses and taxes, rail-
way mail pay, committee basis. ... 1.842,594,096 1,208,354,751 65. 58 Č34,239,345 34.42
Operating ratios... . . . . . . . . . . . . . . . . . . 70.59 65.09 |- - - - - - - - - - $6.93 . . . . . . . . . . .
Net revenue (Taxes included in oper-
ating cost), railway mall pay, com-
mittee basis. . . . . . . . . . . . . . . . . . . . . . . 767. 672, 598 648,066,922 84.43 95,407, 199 12.4%
Charges against income, railway rºail
pay, committee basis. . . . . . . . . . . . . . ; º ; 393,240,928 65. 5S ,”; : ; 34.42
w 168,037, 14 gº ºf ge 58, 51. S is
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . { §: ) 272,195,651 | 101.99 ſº } , #3}. 99
Total revenue for mail roads, based on statistics for fiscal year 1910, Interstate Commerce Commission,
p. 71, and mail-revenue statistics, Report of Second Assistant Postmaster General, 1910, p. 15. . .
2 Result after adding to allocated revenue the $24,198.477 unallocated revenue apportioned on ratio of total
aliocated revenues for freight and passenger.
It is thus seen that on the theory of the railroads’ committee the
passenger service on railroads carrying mails was operated in
1910 at a loss of $104,158,513, and that the freight service on such
railroads produced a surplus of $272,195,661, an amount sufficient
to pay the deficit in the passenger service revenue and produce a net
surplus of $168,037,148. Furthermore, on the same basis, the passen-
ger service on all railroads (I. C. C. statistics for 1910 and 1911)
is claimed by the railroads’ committee to have been operated at a
loss of $111,420,950, and that the freight service was operated at a
plus of $283,481,156, an amount sufficient to offset this vast deficit
in the passenger-service revenue and produce a net surplus of
$172,051,206; and yet the railroads are now before the Interstate
Commercie Commission petitioning for an increase in freight rates
on the theory that railroad rates are inadequate. It must be evi-
dent that the two propositions can not be true and that the above
application of the railroads’ committee's theory demonstrates the
reductio ad absurdum. -
(6) The operating ratio (the relation of all operating expenses
and taxes to revenue) for the fiscal year 1910—
+ *. Per cent.
For railroads carrying the mails was 70. 59
For all railroads 70.04
The operating ratios deduced from the railroads’ committee's
apportionment between freight and passenger services were-
Per cent.
For freight 65. 09
For passenger 86. 93
And for all railroads—
- Per cent.
For freight 64. 59
For passenger --- 86. 25
35797—No. 11—14—2
1260 - RAILWAY MAIL PAY.
The operating ratios deduced from the department's apportion-
ment Were— • - -
- Per cent.
For freight---------------------------------------------------------- 70.26
For passenger -------------------------------*- - - - - - - - - - - - - - - - - - - - - - - - 73. 77
It is evident that the ratios resulting from the department's di-
vision of expenses are more in agreement with businesslike adminis-
tration of the railroads than are those presented by the railroads'
committee. It would not be impossible for the operating ratio of
one main class of service to be radically different from that of the
other, but the presumption is strongly against such an average con-
dition as a result of long years of businesslike administration of the
railroads, and it appears improbable when no other data can be
found which will support it.
(7) The general average cost per passenger-car-mile, according to
the special reports made to the Interstate Commerce Commission for
the year ended June 30, 1912, by 64 railroads, was 19.41 cents, and this
notwithstanding the fact that the prevailing method used by them for
dividing expenses between freight and passenger services was revenue
train-miles. (Hearings, p. 883.) Dr. Lorenz states that this was
somewhat lower that it would have been for all roads. On pages
887 and 888 of the hearings Dr. Lorenz shows the minimum as 17.50
cents and the maximum somewhat over 19.41 cents. Compare these
results with the results deducible from the railroads’ committee's con-
tention presented here, namely, 22.07 cents, and it is apparent that
the latter can gain no support from the examples of actual cost so
reported by the companies.
(8) The effect of the use of 34.42 per cent instead of 29.21 per cent
is shown in the following:
The accounts to which the train-mileage ratios are applied by the
railroads’ committee in making a division of expenses to the two
classes of traffic aggregate over 50 per cent of the total operating
expenses ($921,297,048), which, divided on the basis of revenue train-
mileage (all roads), gives 46.56 per cent to passenger service. This
makes an apportioned passenger cost of $428,955,905. But if the
total ($1,842,594,096) be divided on the basis of 34.42 per cent to
passenger service, it gives the total cost of passenger service as
$634,239,345, which shows the amount of $205,283,440 as that part
of the passenger cost which may be assigned to passenger service on
a basis of fact. The department's total charge to passenger service
was $538,224,224. Subtracting the $205,283,440 therefrom, leaves
$332,940,784 as the apportioned part, but the railroads’ committee
used revenue train-mileage as a basis, which apportioned $428,955,905,
a difference of $96,015,121, or 17.84 per cent increase in passenger
cost due solely to the use of revenue train-mileage as a basis of appor-
tionment. - -
From the foregoing considerations it will be evident that the as-
sumption of the railroads’ committee that the passenger portion of
the operating expenses and taxes is, 34.42 per cent of the whole is
unsupported by and is contrary to all conclusions deducible from the
facts and, furthermore, in its application produces in every instance
an absured result.
RAILWAY MAIL PAY. 1261
THE RAILROADS COMMITTEE’s ERRONEOUS 9.32 PER CENT.
The other erroneous rate per cent used by the railroads’ committee
in reaching its results which it has submitted to the joint committee
is that used as representing the per cent of operating expenses and
taxes of passenger service apportioned to the mails. This as used
by the railroads’ committee is 9.32 per cent instead of 6.68 per cent,
as used by the department. -
As pointed out hereinbefore the 9.32 per cent represents the claim
of the railroads’ committee of car-foot miles in the mail service, and
not per cent of operating expenses and taxes of passenger service
apportioned to the mail service. It is therefore not comparable with
the rate per cent (6.68) used by the department for this purpose,
and if any comparison is to be made it should be made with 7.18 per
cent, that being the per cent of car-foot miles in the mail service
as ascertained by the department. (Table 3, p. 59, Doc. No. 105.)
The error in using 9.32 per cent in the computations of the railroads'
committee instead of a reduced per cent representing per cent of
operating expenses and taxes, resulted in an erroneous charge against
the department in their computations of $7,658,175 upon their own
theory of the case as pointed out hereinbefore.
But the 9.32 per cent is itself incorrect, because it represents the
car-foot miles of alleged mail service computed upon the maximum
space and operation of train service reported by the railroad com-
panies without regard to the needs of the service, the authoriza-
tions of space and the equitable rules of the department governing
the fair charge. This matter has been thoroughly discussed not
only in the oral hearings but particularly in the department’s state-
ment of January 16, 1914, pages 1013 to 1017, inclusive. There will
be given here, however, additional reasons and data which will make
it apparent that the railroads’ result can not be considered.
(1) The 9.32 per cent is materially affected by the nonmail car-
foot miles which were either not reported to the railroads’ committee
or which, having been reported, were erroneously charged to the
máil service. Of the total of 26,864,608 nonmail car-foot miles of
roads which rendered reports to the railroads’ committee, 14,990,260
car-foot miles were not reported to the committee, so far as the de-
partment is aware, but were obtained by departmental inquiry
thereafter. Of the 11,874,348 nonmail car-foot miles which were
reported to the railroads’ committee, the committee erroneously
chârged 2,486,600 of the same to mail service. There were 2,779,617
nonmail car-foot miles otherwise reported upon inquiry made by
the department of roads that did not report to the railroads’ com-
mittee. When these corrections are made they affect the railroad's
figures given on page 71 of the hearings by reducing their mail
per cent to 9.28 from 9.32 as stated thereon. Even if the railroad’s
basis could be accepted, this change would further affect the rate
per cent of operating expenses and taxes chargeable to the mail
service reducing it to 8.363 and making a further reduction of
$218,564 in their estimate on page 1073. -
(2) Again, their per cent of 9.32 is shown to be erroneous by a
comparison of the results to which it leads as to the average load per
1262 RAILWAY MAIL PAY.
car and the estimated car-mile earning when compared with the
known facts in regard to these items. For instance, we have the
actual pound miles per annum for all mail service ascertained by a
special tabulation as of April 30, 1913. This gives 510,327,522 ton-
miles per annum. Dividing this into the total mail pay per annum
(annual rate) as of that date, gives a ton-mile rate of 10.04 cents.
The estimated car miles of mail service on a prorated 60-foot
car basis on November 30, 1913, were 225,633,845, which gives an
average load per car of 2,264 tons. Applying the rate per ton-mile
this produces an estimated rate per car mile of 22.73 cents. These
are approximately exact figures. Now, let us take the prorated car
miles in the mail service November, 1909, as claimed by the railroads'
committee, and which are based on the 9.32 per cent referred to.
Increasing this number by 7.95 per cent (being the rate per cent of
increase in railroad mail revenue to the railroads from November,
1909, to September 30, 1913) produces prorated car miles of 274,-
824,911. This divided into the tons per annum given above gives
1,859 tons as the average load per car, and applying the 10.04 cents
per ton-mile thereto, gives 18.66 cents as the estimated rate per car
mile based on the railroads’ committee's assumption of 9.32 per
cent as representing the car-foot miles in the mail service. The mate-
rial discrepancy between these unit figures—that is, the 2,264 tons
and the 1,859 tons and the 22.73 cents and the 18.66 cents, the 2,264
and the 22.73 being known factors, discloses that there is without
reasonable doubt serious error in the elements by which the latter .
Series is obtained. This error, of course, is in the car-foot miles rep-
resented by the 9.32 per cent claimed by the railroads’ committee.
(3) Again, it is evident that either the car-foot miles represented
by 9.32 per cent, as charged against the mails by the railroads’ com-
mittee are excessive or that the rates proposed by the department
in the suggested bill are on the average too high and should be mate-
rially reduced. By applying the average cost per car mile under the
suggested bill (20.91 cents) to the 274,824,911 car miles (the railroads’
committee’s prorated car miles of November, 1909, raised 7.95 per
cent to the basis of November, 1913, as above stated) produces an
annual pay of $57,465,888.89 as against the actual compensation re-
ceived as of that date at an annual rate of $55,410,775.28.
From the above considerations it is clearly seen that the per cent
of car space charged to the mail service by the railroads’ committee
is excessive. As frequently pointed out this arises from the fact that
the railroads’ committee made unwarranted and excessive charges
against the mail service for space. The sole claim in defense of these
figures is that the department's per cent of 7.18 is too low because of
the rejection of certain dead space and the charge of the same to the
passenger service. The rules under which the tabulation was made
have been fully set out at different times in the record (preliminary
report, p. 102, hearings, pp. 1015, 1016) and have been discussed dur-
ing the hearings. The precise character of the space which was re-
ported by the railroad companies and charged to the mail service by
the railroads’ committee, but charged as “dead space” by the depart-
ment, can not be ascertained for every route or system and specifically
placed before the joint committee for examination without a com-
plete retabulation of the thousands of sheets at a great expenditure
of time and labor, which are not available. However, in order to
RAILWAY MAIL PAY. 1263
present he joint committee with a fair example of , he department's
fabulation of space the Missouri Pacific system has been selected and
a complete reexamination of the sheets has been made. This system
was selected because it was mentioned at the hearings and the depart-
ment undertook to make an examination of the record and submit
the result. The complete statement of the differences between apart-
ment and full railway post-office car space reported by the com-
panies comprising the Missouri Pacific system, and as tabulated by
the department, showing the reasons for the charges to “dead space,”
is set forth as Appendix A hereto. It must be remembered that the
statement does not cover any case where the space was tabulated as
reported. An examination of this statement will convince the mem-
bers of the joint committee that the changes made by the department
in the tabulation of the car-foot miles, with the very few exceptions
which have been noted therein, were proper and in accordance with
the facts as known to the department and will, it is thought, be
equally convincing as showing that the companies did not overlook
any space that might under their conception of the matter be charged
to mail service.
The review and recalculations made have not taken into consider-
ation the changes in closed-pouch space due to the application of the
department rule or those changes in the car-foot mileage resulting
from errors in distance or in multiplication, of which there were a
considerable number, although their effect was slight when compared
with the total results.
THE CHARGE OF SPACE TO THE MAIL SERVICE.
As shown hereinbefore the claims of the railroads' committee as
to the total car-foot miles chargeable to the mail service are un-
reliable, when tested by the general results produced by the use
of the per cent so claimed.
As to specific claims regarding the charge of space to mail “dead-
head" or “dead space,” nothing further need be said as to the
reiterations of the claims of the railroads’ committee other than to
specifically refer to the statements heretofore made by the depart-
ment, especially pages 1013 to 1017, inclusive. The statement of
the railroads’ committee on this point confuses the elements to be
dealt with and the manner in which they were treated by the depart-
ment, mingling error with statement of fact and irrelevant matter.
For instance, statements on page 1079 would lead to the belief that
the department did not credit the return movement of a 60-foot
authorized car, if it were not used for mail purposes or if it were
used in lieu of an apartment car, whereas it was the rule in such
cases to give full credit for the return movement where the run-
ning was necessary for the maintenance of the authorized car service
(hearings, p. 1016). Again, on page 1079, it is stated that apart-
ment-car service is not “authorized '' in the sense that the term is
really employed, because such cars are not specifically paid for.
This is wholly irrelevant to the discussion. In connection with
full-car service the railroads’ committee claims that the present
method of authorization is not the same as the rules employed in
tabulating the space in Document No. 105, the latter having been
more liberal in such credit of space. If this is at all relevant to
1264 RAILWAY MAIL PAY.
the subject, it is clearly in favor of the action of the department
in the credit given in Document No. 105.
Concerning mail-storage cars, the claim is made that a large
amount of space necessary in the operation of storage cars was
disallowed by the department. The department credited all storage-
car space where it was used for mail purposes. Where it was not
so used it was charged to “dead space.” It is believed that the
railroad companies use such storage cars for their own purposes
in many cases. The claim of the railroads’ committee therefore
that a large portion of this space should have been charged to mail
is a claim unsupported by any definite evidence as to amount and
should not be given serious consideration.
As to closed-pouch space, and the rule followed by the department
whereby the excessive space claimed by the railroad companies
under the instruction of the railroad-mail pay committee was dis-
allowed and charged to passenger service, much has been said during
the hearings and in the papers filed. If anything further may be
necessary to support the reasonableness of the department's rule,
it is found in the views of one of the largest and most conserva-
tive railroad companies, and which is represented upon the rail-
roads’ committee, namely, the Pennsylvania Railroad Co. When it
was observed that the reports of the railroads being received by the
department showed great differences in the charge of space to the
mail for the closed-pouch service, the Second Assistant Postmaster
General addressed a communication to each of the companies re-
questing information as to the rule followed in determining the
space reported. Most of them replied that they were following the
rules laid down by the railroad-mail pay committee (referred to
herein most frequently as the railroads’ committee). The Pennsyl-
vania Railroad Co. described the method they used in a letter from
Mr. Sheaffer, superintendent of passenger transportation, dated
July 13, 1910, addressed to Mr. Postlethwaite, assistant of the presi-
dent of the Pennsylvania Railroad, and forwarded by him to the
Second Assistant Postmaster General, as follows: r
. The average linear space used for express and mails was determined by a
daily report made by the conductor of each train during the month of Novem-
ber, 1909, showing the square feet of space occupied. The results thus obtained
were averaged for the month or such period as the train ram, and to this
result, the square feet used, was added 40 per cent for aisle space and doorway
space, and the ultimate result reduced to linear feet. This result was then
entered on form 2601 as being the daily average, and in turn worked out for the
month or for the period during which the train ran.
The allowance of 40 per cent for aisle space and doorway space for handling
mails was determined after an investigation showing the usual amount of
space devoted in all baggage cars for working purposes, i. e., the aisle way
through the car and a clear space at the doorway. & *.
It is perhaps proper to explain that in order that the baggage master might
be able to have access to all material carried in his car and be able to both
receive and deliver at all stations, that he must leave a space at each of the
side doors vacant and also a small isle way from end to end of car. . . . . .
The standard 60-foot baggage cars as used on the Pennsylvania. Railroad and
by nearly all of the railroads in the country has two doors on each side, each
4 feet 6 inches wide. The inside dimensions of the cars are 60 feet long
by 9 feet 6 inches wide, making a total of 570 square feet of floor space. The
doorway space with the two doors on each side 43 feet wide amounts to 85%
square feet, and the aisle-way space 3 feet wide and 51 feet long, eliminating
the doorway space, amounts to 153 square feet, making a total of 2383 square
feet devoted to working purposes, which is 41.8 per cent of the entire floor
-RAILWAY MAIL PAY. - 1265
space in the car. A similar examination of shorter baggage cars and the bag-
gage room in combined passenger and baggage cars developed that the amount
of working space in all cases was equivalent to at least 40 per cent, and this
ratio was therefore adopted for general use. In figuring out the amount of
space devoted to either mail, express, or baggage, the actual square feet used
was taken and then 40 per cent added to this as its proper pro rata of work-
ling Space. g
It will be seen that the average linear space used by the mails was
determined by a daily report from the conductor of each train show-
ing the square feet of space occupied, and that to this there was
added 40 per cent for aisle and doorway space and the ultimate
result was reduced to linear feet. Now it must be admitted that if
the linear space obtained in this manner, allowing for all the space
actually used and 40 per cent additional, ascertained by the railroad
officials themselves, approximated the linear space which they were
entitled to under the rules prescribed by the department, it is a com-
plete and unanswerable verification of the fairness and sufficiency
of the department's rule. The fact is that the report of the Pennsyl-
vania Railroad Co. and that of the New York Central & Hudson River
Railroad Co., both of which used the rule above mentioned, showed less
linear space for closed-pouch service than the computations made by
the department upon the statistics of closed-pouch mails taken during
the month of November entitled them to. It is submitted that no
more conclusive argument need be advanced in favor of the Suffi-
ciency and fairness of the department’s rule in that respect.
THE GAUGE OF RAILROAD IMAIL, PAY.
Under the heading “Shall the gauge of railroad mail pay be a
strictly commercial rate,” the railroads’ committee attempt to answer
the suggestions made by the department in its statement on pages
998 to 1005, inclusive. It is submitted by the department that the
answer is insufficient. Most of it is a reprint of considerations sub-
mitted by the railroads’ committee June 26, 1913, before the specific
claims of the department were set forth in detail and with particu-
larity and with reasons and authorities in support of the same.
Whether the question of public utility shall enter into the deter-
mination of rates is a matter of public policy which must be declared
by Congress. What are these considerations which may be urged
under this principle? They are set forth in Prof. Adams's state-
ment found on pages 1001 and 1002 of the hearings. At the risk
of repetition they may be summarized briefly as follows:
The Postal Service has a sovereign character and its administra-
tion must be such as to safeguard the enduring and the collective
rather than the temporary and the personal interests of the people.
Because of the quasi public character of the railways the Govern-
ment has the right to regulate charges for all classes of service ac-
cording to the principle of public utility. º
The railroads undoubtedly have the right to receive reasonable
compensation for mail service, but, on the other hand, the Govern-
ment has the right to insist that the transportation of mail is an
essential social function; that it is imperative not alone to the present
advantage of the public but to the healthful and permanent develop-
ment of the State. It has the right openly, publicly, and without
apology to put in practice, in the interest of the public at large, a
1266 * RAILWAY MAIL PAY.
rule universally acknowledged by railway men in the development
of their property. Railways are willing to carry special commodi-
ties at very low rates, even at the risk of incurring loss, because they
are potential in industrial development and the loss thus incurred
becomes a gain in the transportation of other commodities which the
distribution of the one renders possible. In the same way the trans-
mission of intelligence is an essential consideration in the growth
and development of the country which sustains the railroad, and
without which railroad construction and operation would be of
small practical importance. Such transmission is amenable in the
highest degree to the consideration of public utility and justifies
an unusually low rate for mail transportation, provided that by this
adjustment the gross revenue of railways is not so depressed as to
deprive investors of property.
That such depression would not result from any reasonable reduc-
tion from a commercial rate is apparent from a consideration of
the very small per cent mail earnings are of the total operating reve-
nues of railways, constituting in 1910, even at the rates paid, only
1.78 per cent. No railroad of any importance could be successful
in its operations without the regular, certain, and speedy transmis-
sion of the mails over its line. It is a truism which no one will
controvert, that practically all commercial and industrial enterprises,
as well as social intercourse extending beyond the neighborhood,
depend absolutely upon the mails. As the community thus primarily
depends upon the mails, in a greater degree railroads so depend, as
they must rely wholly upon the communities for whose business they
are constructed and operated. It must, therefore, be apparent that
no commodity transported is entitled to as great consideration in
the matter of rate making as the United States mails.
Attention is respectfully invited again to the full text of the
department's presentation under this heading on pages 1001, 1002,
1003, and 1004, inclusive.
However, it does not require any declaration of public policy to
justify giving weight to the considerations of (1) the certainty, con-
stancy, and homogeneity of the traffic; (2) the certainty and regu-
larity of payment; (3) the fact that railroads are not built primarily
to carry the mails; and (4) the protection to their mail trains which
railroads or Government agencies receive against unlawful acts in
interference with or obstruction of the mails carried. These are
elements which would enter into the question of rate making if the
railroad companies were dealing with a private patron. Many other
considerations, some of which are not as general in their application,
are given weight by railroads in fixing rates for traffic; and there
is no reason why the Government should not receive as such con-
sideration in the determination of such a question as private patrons
have received in the history of the growth of railroad rates.
The railroads’ committee have attempted to minimize some of these
considerations, and in such attempt have used language which is
misleading to those who are not familiar with the subject. For
instance, in referring to the claims for the certainty and regularity
of payments statements are made regarding the discretion of the
Postmaster General as to the amounts which may be paid, fines and
deductions which may be assessed, and deliberation in the verifica-
tion and settlement of accounts. From this it would be inferred that
RAILWAY MAIL PAY. wº. 1267
he amounts fixed by the orders of the Postmaster General are varied
at the discretion of the officers of the department, are subject to fines
and deductions without sufficient cause or dereliction on the part of
the railroads, and that settlements are delayed more than in com-
mercial business. None of these assumptions is true. The amounts
due are fixed by orders upon bases prescribed by statute and are not
changed unless those bases are changed; fines are imposed only for
delinquencies, and deductions are made only for failures to perform
service; and settlements are made regularly, the accounts being stated
promptly after the close of the month for which payment is to be
made, under the following conditions: as
For railroad transportation service payments are made monthly.
On the routes of the large systems the accounts are stated promptly
after the close of the month for which payment is being made if
the companies’ affidavits covering service during the second preced-
ing month on the routes involved have been received. On these
routes the warrants are usually mailed to the companies within a few
days after the accounts are stated, so that ordinarily the warrants
in payment should be received by the companies within 15 days or
less after the close of the month for which the warrant is in payment.
On routes of small independent companies the accounts are not
stated for payment until a certificate has been received from the
division superintendent of Railway Mail Service, showing whether
the service was in operation throughout the month. Certificates
are made by the division superintendents as soon as practicable
after the close of the month for which the payment is to be made
and usually reach the department so that the accounts can be
stated prior to or by the middle of the month following that for
which payment is being made. The warrants ordinarily are mailed
about six days later. Like the routes of the large systems the ac-
counts on these small routes are dependent upon the affidavits of
the second preceding month being at hand. -
The affidavits mentioned are prepared by the railroad companies
for each route for the purpose of showing what failures, if any, to
perform scheduled mail-train service have occurred. These affi-
davits are transmitted by the companies to the division superin-
tendent of Railway Mail Service and by him transmitted to the
department with a statement as to whether they are correct, and if
not correct, with a statement as to the discrepancies. Upon receipt
of these affidavits deduction cases are prepared to cover any failures
of service that may be shown. These deductions are ordinarily
taken from the pay of the company for the second month following
that covered by the affidavit. For instance, failures occurring in
January are charged against the pay for the month of March.
The imposition of fines does not affect the date of the payments
for the performance of the service, as the stating of the accounts is
not held up pending the receipt of reports covering delinquencies
which occurred during the month for which payment is made, but
the fine cases are prepared as soon as practicable after the receipt
of the reports of the delinquencies and the amounts of the fines
withheld in making payments for succeeding months. i
For railway post-office car service the accounts are not stated for
payment until the companies’ affidavits covering the performance of
the service during the month for which payment is to be made have
-1268 s RAILWAY MAIL PAY.
been received. These affidavits are transmitted by the companies to
the division superintendents of Railway Mail Service and by then
checked with their records and forwarded to the department with
proper certification as to the correctness of the affidavits.
Where deductions are necessary for failures to perform service
properly, deduction cases are prepared before the accounts are
stated and the amounts of these deductions are taken from the pay-
ment for the month in which the failures occurred. It is not pos-
sible to state specifically how soon after the close of the month the
payments are made, because of the fact that they vary from month
to month. However, it may be stated generally that on a majority
of the routes the warrants are mailed to the companies within from
one to two months after the close of the month for which the pay.
ment is made. In some cases where the companies forward their
affidavits promptly the warrants are mailed in less than a month.
The reason for having a different rule for stating the accounts in
this service and that in the transportation service is on account of
the restrictions placed by law upon payments for the operation of
postal cars with reference to the character of the cars and their
sanitary condition, it being deemed necessary to have evidence of a
compliance with the law at hand before the payments are made.
ANNUAL WEIGHINGS, SIDE AND TERMINAL SERVICE, APARTMENT CARs, ETC.
The railroads’ committee have not presented anything worthy of
consideration in reply to the department's statement under these
headings set forth on pages 1018 to 1025, inclusive, to which atten-
tion is again invited.
The department has there shown that the claims of the railroads'
committee for annual weighings and for apartment-car pay have no
merit, because the present rates of pay are ample to cover the increase
in weights during the four-year period and to compensate, on the
average, for space in apartment as well as in full cars.
As to the act of March 2, 1907, reducing the pay, this, too, has been
shown to have been justified, because the pay since such reduction
is ample.
As P. the application of order No. 412, of June 7, 1907, it may also
be said that this did not reduce the pay below a fair rate for the
reasons above stated. Furthermore, as before fully set out and
wholly unanswered as to substance and merit, the new divisor is the
correct and equitable one. In this connection it is noted that the
railroads’ committee have been unable to understand the significance
of the use of the whole number of days in the weighing period in
producing the exact mathematical average for everyday in the year
of 365 days. For their information it may be stated that dividing the
total weight of mails during the weighing period by the whole num-
ber of days in such period produces an exact mathematical average,
and that this exact mathematical average is an average for every, day
in that weighing period and therefore for every day in a year of 365
days, as distinguished from an average for 313 days in the year
secured by dividing the weights by the number of week days in the
period. . . . . . . . . " . . . . • . .
Before dismissing the matter under this heading a misstatement
regarding the weighing of the mails should be corrected in order that
RAILWAY MAIL PAY. 1269
* ;
mittee states that—
for many years following the passage of that law (of 1873) it was the practice
of the department to take the weights every four years on the side lines, where
the mail tons were light, and every year or two on the heavy lines, where
increased growth was more noticeable and burdensome. In recent years, how-
ever, the department has changed the practice and, as a rule, has taken the
weights only every fourth year.
This statement finds no justification in the facts. An examination
has been made of the annual reports of the department with the fol-
lowing result: .
Following the act of 1873 “the proprietors of all the railroad
routes in the country’ were called on to submit reports of weight
carried for 30 days, commencing October 1, 1873, #. readjustment
to be made thereon to take effect from July 1, 1873." (Annual Report
of the Postmaster General, 1873, p. 12.) g
In the report of the following year the Postmaster General states
the call of the department was very generally responded to, and upon
the returns submitted pay from July 1, 1873, has been readjusted
upon 415 routes. At the time of the issuance of this report some of
the routes had not been heard from. (Annual Report of the Post-
master General, 1874, p. 18.) * • , =
The Postmaster General states in his report of 1875 that the read-
justment under the act of 1873 on routes on which the necessary
returns had not come to hand when the previous report was issued,
“and also on routes in States in which a new contract térm com-
menced July 1, 1875,” as well as the readjustment on certain new
routes, is shown in Table F of that report. (Annual Report of the
Postmaster General, 1875, p. 8.) . . . . . . . .
In the annual report of the Postmaster General for 1876 he says
that returns showing the weight of mails and other particulars re-
specting the service performed on railroad routes in States in which
a new contract term commenced July 1, 1876, as well as in other
States and Territories, are given in tables contained in the report.
These tables show adjustments made to take effect from various dates,
some as far back as July 1, 1873, such adjustments evidently being
those on which the railroads had not theretofore responded to his
first call. (Annual Report of the Postmaster General, 1876, p. 7.)
In the annual report of 1877 the Postmaster General says the read-
justment of pay in New England and the States of New York, New
Jersey, Pennsylvania, Delaware, Maryland, Virginia, and West Vir-
ginia for the regular contract term of four years, commencing July
1, 1877, and on certain routes in other States and Térritories shows a
reduction in rate, etc. (Annual Report of the Postmaster General,
1877, p. 10.) The New England States and the other States named
are the same States now included in the first contract section, on
which the last contract term expired June 30, 1913. The term re-
ferred to in the report of 1877 as having expired that year is 36 years
prior to 1913, or 9 contract terms of 4 years each. It is also to be
observed that it is four years after 1873 and is therefore the first full
contract term occurring after the passage of the act of that year.
In the annual report of 1878 the Postmaster General refers to the
readjustment of pay on railroad routes in the States of Kansas,
Nebraska. Arkansas, Louisiana. Texas, Colorado. Nevada, California,
the record may show the facts. On page 1081 the railroads’ com-
1270 RAILWAY MAIL PAY.
and Oregon, and in the Territories of Utah, Dakota, and Washington
for the “regular term of four years, commencing July 1, 1878,” and on
certain routes in other States. (Annual Report of the Postmaster
General, 1878, p. 8.) The States and Territories mentioned comprise
the Section of the country now included in the fourth contract sec-
tion, in which the present quadrennial term will expire June 30, 1914.
It will be observed: nine full terms of four years will have occurred
between 1878 and 1914. -
In the annual report of 1879 no reference is made by the Post-
master General to the readjustment of pay on railroad routes. How-
ever, Table F of that report shows the readjustment of rates of pay
railroad routes in States in which the contract term expired June 30,
1899, also in other States and on new routes. (Annual Report of the
Postmaster General, 1879, p. 132.) The Postal Laws and Regula-
tions, edition of 1879, section 574, together with an examination of
this table, shows the contract section referred to was composed of the
States of Illinois, Michigan, Wisconsin, Minnesota, Iowa, and
Missouri. This corresponds closely with the territory included in
the present third contract section, in which the current term will
expire June 30, 1915, 36 years, or 9 full terms of 4 years each,
after 1879. - •
Neither the Postmaster General nor the Second Assistant Post-
master-General-réfer to the readjustment of compensation on railroad
routes in the body of their reports for 1880. However, Table E of
that report gives the same information as is set forth in the para-
graph next above for the railroad routes in the States in which the
contract term expired June 30, 1880. The Postal Laws and Regula-
tions, edition of 1879, section 574, together with an examination of
this table, shows the contract section referred to was composed of the
States of North Carolina, South Carolina, Georgia, Florida, Ala-
bama, Mississippi, Tennessee, Kentucky, Ohio, and Indiana. With
the exception of the States of Ohio and Indiana, now included in
the third contract section, the States named correspond with the
States included in the present second contract section, in which the
current term will expire June 30, 1916, 36 years, or 9 full terms of
4 years each, after 1880. -
From the foregoing it is seen that after the law of 1873 was enacted
instructions: wěreaissued to weigh the mails and readjust pay from
July 1 of that year on all railroad routes throughout the country and
that there after it became the rule to weigh the mails on the routes of
only one section each year. It is true there were exceptions to this
rule, notably in the cases of service on newly established routes, where
it was the practice to authorize the transportation of the mails on the
line and thereafter to fix the pay for the service on the basis of
weights taken after the mails had been attracted to the new lines, but
it was the general practice to weigh only those routes included in the
contract section on which the term was expiring. As early as 1881
the Second Assistant Postmaster General speaks of the “regular
weighing” (Annual Report of the Postmaster General, 1881, p. 100);
and in 1885 the practice to weigh, the routes only during the time of
the regular weighing for the section in which they were located had
become so well settled that the Second Assistant Postmaster General
felt called on to note in his annual report that during that year, by
reason of certain contracts made between the department and the
RAILWAY MAIL PAY. 1271
Chicago, Burlington & Quincy and the Chicago, Milwaukee & St.
Paul Railroads for fast mail trains, a “special reweighing” of the
mails carried on these and on parallel and competing roads was
ordered in compliance with the conditions of the contracts, and read-
justments of pay thereon were made. (Annual Report of Postmaster
General, 1885, p. 243.) In his annual report for the following year
the Second Assistant Postmaster General, in commenting on the
comparative reduction in the annual increase in cost for railroad
transportation, makes the following statement:
The explanation of this reduction, it is confidently believed, is to be found,
first, in the fact that during the past fiscal year there were no special weighings
outside of the regular quadrennial weighings, although numerous applications
were made by railroad companies for such special weighings, which were de-
clined, the department not perceiving their justice ºr their necessity. Those
special weighings necessarily result in an increase of cost. (Annual Report of
the Postmaster General, 1886, p. 181. ) - -
In the report of 1888 a change is noted in the heading of the table.
showing readjustment of rates of pay on railroad routes. In the
earlier reports this table was designated Table F, and showed the
readjustment on routes in States in which the contract term ex-
pired during the year in which the table was published, also in other
States and on new routes. It having become the settled practice to
weigh only the routes in the States in which the contract term ex-
pired, the heading of this table was changed in 1888 so as to omit
the statement that it contained a list of the readjustments on routes
nn other States than those in which the contract term had expired.
At a later date the present plan of fixing pay on new routes by
agreement with the operating company at a rate within the maxi-
mum that may be paid without a weighing was inaugurated and the
former practice of establishing the service on such lines and there-
after weighing the mails carried and fixing pay on the basis of such
weights was abandoned.
ComPARISON BETwFEN REVENUE RECEIVED BY RAILROAD COMPANIES FOR
EXPRESS AND FOR MAIL SERVICES,
Since submitting the statement of February 12, 1914, accompanied
by a tentative draft of suggestions for recommendation for legisla-
tion and regulation of railroad mail service and compensation there-
for, an investigation has been made of express rates between certain
points fixed by Interstate Commerce Commission Opinion No. 2408,
of July 24, 1913, and a comparison made between those rates and the
rates of compensation paid to the railroad companies for trans-
porting a like weight of mails between the same points. A further
investigation has been made of the revenue derived by railroad com-
panies from the service rendered the express companies as a whole
before the order of the Interstate Commerce Commission above re-
ferred to became effective, and a comparison made between the same
and the revenue received by the railroad companies as a whole from
the Post Office Department for the mail service on their lines.
The results are so remarkable as to justify their submission to
this joint committee for consideration in connection with the rates
which have been suggested in the tentative draft above referred to
and the contentions of the railroads’ committee that such proposed
rates are too low. The railroads’ committee have ºf certain
1272.
RAILWAY MAIT PAY.
differences claimed between the two services, but these differences
have not been appraised at any specific value. Furthermore these
differences would be considerably reduced if the department's sug-
gested plan be adopted.
In this connection it should be remembered that the compensation
aid the railroads-for mail service is for all classes of mail service,
including the transportation of first-class mail, while the compensa-
tion received by the railroads from express companies is for the
transportation of articles of merchandise principally.
CoMPARISON of ExPRESS AND MAIL RATES BETwºBN SPECIFIC Points.
Below will be found a table giving a comparison of actual first-
class express rates as prescribed by Interstate Commerce Commission
Order No. 2408, above referred to, per 100 pounds between repre-
sentative points; the actual average rates of pay per 100 pounds
weight of mails to the railroad companies operating railroad mail
routes between such points; 50 per cent of the express rates, respec-
tively, the amounts assumed as received by the railroad companies
for the service; and the excess of the mail rate over the 50 per cent
of the express rate, or the reverse where it exists.
Comparison of ea;press and mail rates per 100 pounds.


\
- Excess
First- || Excess. Excess || “...º.
. class of mail 59 per er cent
Length ex- Mail rate cent of of ex-
From- of mail press . OVer ex- prèss
routes. rate, . ex- press rate . .
. . % I. C. §. press | rate. over the
order. , rate. mail
; * rate.
Miles.
Akron, Ohio. . . . . . . . . 132.05 $1.00 $0.75 - - - - - - - - $0.50 || $0.25 | . . . . . . . .
Altoona, Pa.. . . . . . . . . N 326.86 || 1.40 | . .88 - ....... .70 . 18. *
Anniston, Ala... . . . . . . 748. 2.90 2.53 . . . . . . . . 1.45 | 1.08.' . . . . . . . .
Asheville, N. C. . . . . . . O-23 $ 476-17 || 2.29 1.97 -------. 1. 10 * * * * * * * * * * * *
Ashland, Ky. . . . . . . . . Cincinnati, Ohib. . . . 145.71 1.15 .56 l........ . 58 $0.02
Buffalo, N. Y. . . . . . . . 496.90 | 1.60 | 1.37 . . . . . . . . .80 | . 57 |........
Burlington, Yt-------|--|x-rdo----, 247.34 || 1.15 || 1.62 $0.37 |, .58 . .94 |.......:
ğ. Iowa.....] Chicago, Ih......... 205.57 | 1.25 | .58 ........ , 63 .05
Cedar Rapids; Iowa. 9:23, ;---------| 213.39'ſ 1.25 || --71 [-------- . 63 * *** | * g º gº tº gº tº sº.
Charleston, W.Vä.... fington, f. 6...] 387.7; 1.75 | 1:44 |........ .88, .56 . . . . . . . .
Chattanodga, Tenn. . . . . iti, Oh 338.15 1.85. 1:40 l. - - - - - - - .93 • * * - - - - - - - -
Chicago, Ill. . . . . . . . 1,019.08. 2.50 2.81 .31 | 1.25 | 1.56 ||........ +.
Do. -------------- * -- a 4 54.00 2.10 | 1.52 . . . . . . . . 1.05 * * * * * * * * * * * *
D0--------------- filwaukee, Wis:. ... 85.00. .9% . .29 |-------. .45 .T.6
Do--------------- Minneapolis, Minn. - 423,79 || 2.00 | 1.19 |....... - 1.00 | . 19 |........
' Do--------------- New York, N. Y. . . . , 909. 12. 2.40 2.53 . 13 | 1:20 || 1:33 |........
Cincinnati, Ohio..... 980.48 || 2.45 2.77 . .32 1.23 || 1.54 ........
Do--------------- 3. .1.25 1.05 |... . . . . . . .68 / .42 |........
Do--------------- 113.61 .90 || .41 |........ .45 || .04
Do. -------------- New York, N. Y. ...} 781.33 2.15 2.09 ||........ 1.08 | 1.01 ........
Do--------------- ; 310.44 1. 40. .90 |........ .70 | . 20 - . . . . . . .
Po. -------------, 339.36 1.50 1.28 ||... . . . . . .75 .gs is e º s sº as *
Clarksburg, W.Va. . . . 276,43 | 1.25 .97 . . . . . . . . .63 .33 |........
Corinth, Miss. . . . .... • * * * * 93.69 || 1:20 .53 I-------- . 60 | .07
Council Bluffs, Iowa. 493.89 2.25 | 1.26 . . . . . . . . 1.18 || 13 |........
Des Moines, Idwal....|s 357.76 ſ. 1.60 | 1.17 | . . . . . . . . .90 .27 l........
Deshler, Ohio. . . . . . . . 284.66 || 1.25 | 1.40 l........ .63 . 77 . . . . . . . .
Dubüque, Towa. . . . . . 181.97 || 1.00, .66 [........ . 50 * * * * * * * *
Elmira, N. Y......... 273-08 || 1:25 | 1.13 ||... ----. . 63; .50 |.....'...
Po--------------- 119.08 .90 .5i I.------- .45. - - - - - - - -
Enid, Okla - - - - - - - - -} 392-19 || 2:00 2.75' .75 | 1.00 | 1.75 |. . . . . . . .
fort Wayne, ind.... 148, 18 || 1.90 .42. -------. .50 , .08.'
§ºiſãº. ##| ##| #:::::::: #| #|........
rand Rapids; Mich. ' s ſº iſ a • vivºr . • *O. T. tº º sº tº sº. ºf tº ºvº º gº tº s g º & gº as
Harrisburg, Pä...... ." fö5.57 | 1.00 :58 -------- .50 | . .03 |...... *
Hattiesburg;Miss, -:- -] . 1, O01. ºf # 3. 60 °F 3. 85 . 26. 1. 30 tº & º º gº tº sº tº
Hinton, W. Va... . . . . , - 2 - --> , 29.1.21 1.55 1.85 . 10 . 76 . . .87 |........
Indianápolis, Ind. ...!. Rod 534.31 | 1.90 1.77 |. . . . . . . . .95 . . 82 l........


RAFLWAY MAIL PAY: .
1273
Comparison of ea press and mail rates per 100 pounds—Continued.


Excess
First-, Excess jº
class ofmail|50 per.|*.*|percent
~. Length ex- Mail rate |cent of 50 per of ex-
From— To— of mail press rate Over ex- &# f| press
routes. | rate, ex: press |*.*| rate
I. C. C. press rate. ress over the
order. rate. - j mail
* rate.
se Miles.
Knoxville, Tenn. . . . . Cincinnati, Ohio. . . . 291. 50 $1.90 $1.88 . . . . . . . . $0.95 $0.63 - - - - - - - -
La Crosse, wis. ... Chicago, fill T.I. 282.99 || 1.35 | . 81 ... -- - - - - - - 68 . 13 - - - - - - - -
Lafayette, Ind.......|... -- do-------------- 129. 12 .90 .41 .........} .45 -...---- $0.04
Hºnºaster, Pa--...... New York, N. Y. . . . . 159.82 1.00 .43. I-., ----- . 50 - - - - - - - - . 07
Madison, Wis. . . . . . . . Chicago, fi!......I. 129.70 | 1. 15 .48 |. . . . . . . . . 58 |........ ... 10
New London, Conn. - Boston, Mass. . . . . . 106.09 . 90 31 |-------- .45 14 --------
Forthfield. Vºt...]...do?........ 197, 24 1.15 | 1.09 . . . . . . . . . 58 . 51 - - - - - - - -
Omaha, Nebr. . . . . . . . Chicago, Ill. . . . . . . . . 488.89 2.25 1.26 . . . . . . . . 1. 13 • 13 --------
Parkersburg, W. Va. Washington, D.C.--| 357.88 1.50 1.31 l- - - - - - - - . 75 . 56 --------
Pittsburgh, Pa....... Chicago, Ill. - - - - - - - -], 468.43 | 1.70 | 1.34 |........ . 85 . 49 - - - - - - - -
Rouses Point, N. Y..] Boston, Mass. ...... , 391.63 | 1.15 | 1.41 || $0.26 . 58 .63 - - - - - - - -
***:::::::: Nº.: ; ; ; ; ; ; };}| ##|:
* * * * *.- - - - - - - - - - adelphia, Pa.... g 24. ... 7 & * * * * * * * * * * * * *
St. ºl, Minn....... É. * * * * * * * * *::: % §§ # . .31 #; 2. # sº ºr ºr sº * * * *
0- - - - - - - - -T- - - - - - C39.0, ill- - - - - - - - - * * * * * * * * * * * * * * g & sº * : * * * * * * * s
Salisbury, N. C. . . . . . *::::::::::, D. C. --| 334.77 | 1.75 | 1.05 - - - - - - - - . 88 17 --------
Sayre, Pa............ New York, N. Y. . . . 269. 35 1.25 1.34 |-------- .63 .71 --------
sehºla:::::::::: *:::::::...B.C.: #%| ##| ##| ##| 1: ##|........
0- - - - - - - - - - - - - - - &SºlIlgī;Orl, L. C. - - & º & s * * * * * * * * * * * *
Scranton, Pa. -- - - - - - - New Yºjº y II 135.2% 1.00 .61 -------- .50 - 11 --------
Washington, D.C.. Hartford, Čonn. ....] 335.87 | 1.66 .35|........ .80 15 --------
Po--------------- Huntington, & W.Va.; 438.51 1.90 1.65 - - - - - - - - .95 .70 ||--------
Po--------------- Jersey City, N.J.---| 226.96 1.25 .63 - - - - - - - - .63 ----------------
Do--------------- New York, N. Y. ---| 226.96 1.25 .63 - - - - - - - - .66 ----------------
#............... #º: ; ; };}| #|:::::::: #| “...;......”
0- - - - - - - - - - - - - - - ur *- - - - - - ^: tº & ºr ºt, -s º is gº ºs is ºr ºs º * * ºr i < * * * * * * *
Po--------------- #; R. I. - - -] 412. 1.70 | 1.16 1. ------. .85 / .31 - . . . . . . .
Do--------------- Rochester, N.Y.... & 1. 60 | 1.81 . 21. .80 | 1.01 ........
P0--------------- St. Lºuis, Mo........ 692. 59 2.45 3.38 .93 i 1.23 2.15 --------
B. as ºr º º sº º º sº tº * * * * * * W. % Va. . . # 54 # % i. # tº ; .# 1. § * * * * * * * *
0- - - - - - - - - - - - - - - OTCéStęT, MáSS. . . . . - º g # * * * * * } = * * * * * *s ºr
Waterloo, Iowa. . . . . . Chicago, iii...I. 274.94 1.65 | 1.00 . . . . . . . . .83 17 --------
Wells River, Vt. . . . . . Boston, Mass- - - .... 167. 18 1. 15 1.15 -------- .58 .58 -------.
Wilkes-Barre, Pa....] New York, N.Y.... 174.34 1.00 .68 - - - - - - - - . 50 -38 --------
Zanesville, ohio. ... Pittsburgh, Pa...... 152.49 1.00 .72 ........ .50 .22 - - - - - - - -
|
W. ESTERN SECTION.
Aberdeen, S. Dak. ... St, Paul, Minn. . . . . . 295.01 $1.80 $0.73 |- . . . . . . . $0.90 - - - - - - - - $0.17
Aibany, Greg....... Chicago, Ill.----..... 2,362.41 9.25 6.20 |. . . . . . . . 4.63 $1.58 - - - - - - - -
Albuquerque, N. Mex Kansas City, Mo. . . . . 905.36 4. 25 2.83 - - - - - - - - 2. 13 .70 - - - - - - - -
Bakersfield, Cal... . . . Chicago, Ill.--------. 2,491.60 8. 90 5.45 - - - - - - - - 4.45 1.00 l. - - - - - - -
Beaumont, Tex. . . . . . New Örjeans, La. . . . . . 280. 3S 1. 80 1.28 - - - - - - - - . 90 . 38 - - - - - - - -
Billings, Mont----. . . . . Chicago, Ill------. . . . . . 1,304. 16 5. 49. 3:44 - - - - - - - - 2. 70 . 44 - - - - - - - -
Bismarck, N. Dak. ... St. Paul, Minn. . . . . . 355. 06 2.45 1.02 - - - - - - - - 1.23 - - - - - - - - . 21
gº . . . . . . Chicago, Ill.----. . . . . 2 #. - § 2. ſ: mº m º º sº; g º & 2. 08- .65 - - - - - - - -
Xolton, Cal-----------|-----do--------------- !, 191.37 ... 6 5.40 - - - - - - - - 4.30 1.10 - - - - - - - -
El Reno, Okla. . . . . . . Kansas City, Mo. . . . 382. 12 2.25 1.04 |. . . . . . . . 1. 13 - - - - - - - - , 09
Everett, Wash. . . . . . . Chicago, Ill..... . . . . . 2,229.93 8.60 5.29 |. . . . . . . . 4. 30 .99 - - - - - - - -
Fargo, N. Dak. . . . . . . Minneapolis, Minn. , 231.04 1. 60 - 82 - - - - - - - - . 3i) .02 --------
Fort Smith, Ark......| St. Louis, Mo. . . . . . . 513. 71 2, 25 2.40 $0.15 1.13 1.27 l. . . . . . . .
Great Falls, Mont. . . . . Chicago, Ill..... . . . . . 1,538.53 6.25 4. 42 i- - - - - - - - 3. 13 1. 29 |. . . . . . . .
Havre, Mont- - - - - - - - - -----do--------------- 1,367. 29 5. 55 3. 55 |. . . . . . . . 2. TS 77 . . . . . . . .
Hugº S. Dak. . . . . . . . St. #. Minn - - - - - - ; ; 3. § 1.69 - - - - - - - - 1. : • 19 . . . . . . . 5
0 - - - - - - - - - - - - - - - ... Paul, Minn. . . . . . 297. 3. ... 8 -75 - - - - - - - - .90 . . . . . . . . ... 1
#º #. & sº * * * * §6Ill. iſsº as s as sº 1, #. § - ; ; f : * * * * * * * * ; ; * ; * * * * * * * *
8 JUID.ta, COIO - - - - - - - anSaS City, MO- . 87 * 1. Oö - - - - - - - - wº * * * : * * * * * * * *
Lewiston, Idaho. - - - -] Chicago, Ill. - - - - - - - - 2,064.76 8.05 4.93 - - - - - - - - 4. 03 .90 - - - - - - - -
Livingston, Mont. ...|- - - - - do-------------- 1,343. 45 5.95 3.40 [- - - - - - - - 2.98 . 42 --------
§ºis.....:::::::::::::: #| }}}| ##|::::::: ; ; :::::::
innidoka, Idaho....|- - - - - 0- - - - - - - - - - - - - - 4. * • 11 - - - - - - - - & gº ºf sº º s = * * * *
Minot, N. Dak. . . . . . . St. Paul, Minn. . . . . . '523.5i 2.80 | 1.33 |........ 1.40 - - - - - - - - . 07
§.” \!. * * * * * * * - Chlºgº Ill--------- 1, ; ; 6. º : ; * * * * * * * * : : tº § * * * * * * * *
3IIlpa, O - - - - - - - - - - - - 0 - - - - - - - - - - - - - - 1,800.7 7. * * * * * * * * * * * * § * * * : * * * * * * * *
Oklahoma, Okla. . . . . Kansas City, Mo.. 400. 2.25 1.59 l. . . . . . . . 1. 13 • 46 - - - - - - - -
Pasco, Wash - - - - - - - - - Chicago, Ill- - - - - - - - - 2,070.29 8. 20 4.80 . . . . . . . . 4, 10 .70 - - - - - - - -
Phoenix, Ariz. . . . . . . . • St. Louis, MO. . . . . . . 1,783.42 7. 40 4.90 - . . . . . . . 3. 70 1.20 |- - - - - - - -
Pocatello, Idaho...... Chicago, Ill. - - - - - - - - ,553.23 7.00 4. 44 I. . . . . . . . 3.50 .94 - - - - - - - -
Portland, Oreg. . . . . . . . . . . -do-------------- 2,281.92 8.85 7.03 - . . . . . . . 4.42 2.61 - - - - - - - -
Roseburg, Oreg...........do-------------. ,628.63 9. 40 - 6: 85 i. . . . . . . . 4.70 2, 15 1. . . . . . . .
1274.
RAILWAY MAIL PAY.
Comparison of ea press and mail rates per 100 pounds—Continued.
WESTERN SECTION.—Continued.

y
*
First- Excess ...; ºS
class of mail 50 per ov.” percent
Length - ex- Mail rate | cent of 50 per of ex-
From- TO- ofmail | press . over Tex: ||...] press
*. routes. rate * | ex- press €X- rate
I. C. b. press rate. ress OVº the
order. rate. º: mail
" | rate
lºſiles.
Reno, Nev... . . . . . . . . San Francisco, Cal. 243.88 $1.60 $0.64 |. . . . . . . . $0.80 |........ $0.16
Seattle, Wash. . . . . . . . Chicago, Ill------... 2,323.24 8. 60 7.29 |- - - - - - - - 4. 30 $2.99 - - - - - - - -
D0--------------. St. Paul, Minn. . . . . . 1,824.76 7. 90 6. 10 |- - - - - - - - 3.95 2. 15 - - - - - - - -
Spokane, Wash. . . . . . Chicago, Ill- - - - - - - - - 1,923.95 7.75 6.06 - - - - - - - - 3. 87 2.19 |... -- - - -
Tacoma, Wash...... .* | * * * * * do-------------- 2,319.94 8.60 5.47 l. . . . . . . . 4. 30 1.17 1--------
Walla Walla, Wash. -|- . . . . do-------------- 2,101.57 8.10 5. 52 |... . . . . . 4.05 1.47 l. . . . . . . .
Wenatchee, Wash----|- - - - - do-------------- ,073.00 8. 30 5.45 l- - - - - - - - 4. 15 1.30 l. . . . . . . .
Wichita, Kans- - - - - - - Kansas City, Mo- 228.25 1. 60 . 68 - - - - - - - - .80 -------- . 12
St. Paul, Minn...... 644.25 3. 20 1.65 . . . . . . . . 1. 60 .05 - - - - - - - -
Williston, N. Dak....
Below is set forth a like table based upon 40 pounds instead of
100 pounds weight, the 40 pounds being assumed as the average
weight of an express parcel.
The average weight of an express
parcel in 1910 was reported by the Interstate Commerce Commis-
sion in Statistics of Revenue Tonnage for the months of April,
August, and December, 1909, was 32.8 pounds (First Annual Report
of the Statistics of Express Companies in the United States, 1909,
p. 18).
Since the inauguration of parcel post many of the smaller
express packages have been lost to the express and are carried in
the mails, and it is believed that this has raised the average weight
of express parcels to approximately 40 pounds.
Comparison, of etpress and mail rates per 40 pounds.


Excess
First- Excess º; of 50
class of mail 50 per | * ... per cent
Length €X- Mail rate | cent of 3. of ex-
From- To– of mail press rate Over eX- º press
routes. rate ex: press |*.*| rate
I. C. b. press rate. OVer
order. rate. Prºss || mail
rate. rate
Miles.
Akron, Ohio. . . . . . . . . Pittsburgh, Pa. --... 132.06 || $0.52 || $0.30 - - - - - - - - $0.26 $0.04 |- - -,
Altoona, Pa. ----...-- New York, N. Y....| 326.86 . 68 .34 -------- 34 --------|--------
Anniston, Ala-- . . . . . . Washington, D.C.--| 748.20 1.28 1.01 -------- . 64 • 37 -------.
Asheville, N. C. . . . . . . . . . . . O- - - - - - - - - - - - - - - 476. 17 1.00 ... 79 |-------- . 50 . 29 |--------
Ashland, Ky. . . . . . . . . Cincinnati, Ohio. . . . 145.71 . 58 . 22 -------- .29 l-------- $0.07
Buffalo, N. Y. . . . . . . . Boston, Mass... ----. 496. 90 . 76 . 55 -------- . 38 • 17 --------
Burlington, Iowa..... Chicago, Ill.--------- 205. 57 . 62 • 23 I-------- .31 l-------- .08
Burlington, Vt. - - - - - - Boston, Mass... . . . . . 247.34 . 58 . 61 || $0.03 . 29 .32 I.-------
Cedar Rapids, Iowa-- Chicago, Ill.---------| 218.36 . 62 . 28 -------- .31 l-------- .03
Charleston, W. Va...] Washington, D.C.--| 387.71 .82 . 58 -------- .41 • 17 --------
Čhattanooga, Tenn...] Cincinnati, Öhio...] §§ 15 , 86 . 56 - - - - - - - - .43 . 13 --------
Chicago, Ill.---------. Boston, MašS.------- 1,019.08 || 1. 12 | 1.12 - - - - - - - - . 56 .56 - - - - - - - -
Pol-------------- Kansas City, Mo. 454.00 .96 .61 -------- .48 - 13 --------
Do--------------- Milwaukee, Wis. 85.00 | . 48 | . 12 - - - - - - - - , 24 -------- . 12
Po--------------- Minneapolis, Minn. . 423.79 . 92 .48 - - - - - - - - .46 .02 . . . . . . . .
Do--------------- New Yorº, N. Y. gojiž | 1.35 | 1.0i [...I.I. . 54 .47 l. - - - - - - -
Cincinnati, Ohio. . . . . Boston, Mass.-- - - - - - 980. 48 1. 10 1. 11 .01 . 55 . 56 - - - - - - - -
Do--------------- icago, Ilī---------- 303. 50 . 62 . 42 -------- . 31 - 11 ----, -->
Do--------------- ionisville, Ky....I. 113. 61 .48 . 16 -------- .24 |-------- 08
Do--------------- New York, N.Y.. 751.33 .98 .84 - - - - - - - - .49 . 35 l. . . . . . .'-
Po------------- ---| Pittsburgh, Pa. ----- 310. 64 , 68 . 36 l-------- .34 .02 - - - - - - - -
Po--------------- St. Louis. Mo....... 339. 36 . 72 . 51 l-------- . 36 15 --------
Clarksburg, w, va...] washington, D.C..] 376.43 62 || 36||........ .31 .08 |. . . . . . . .
Corinth, Miss.........] Memphis, Tenn.---. 93. 59 . 60 .21 -------- .30 -------- { . 09
RAILwAY MAIL PAY.
1275.
comparison of express and mail rates per 40 pounds–Continued.
• , J


Excess
First- ExceSS º: of 50
class of mail 50 per ove.” per cent
Length eX- Mail rate cent of 50 per of ex-
From- To— of mail press | . OYer e. cent of pºss
routes. rate g €X- press €X- rate
I. C. §. press rate. ress over the
order. rate. º: i.
Miles.
Council Bluffs, Iowa. Chicago, Ill. -------- 493.89 $1.02 || $0.50 - - - - - - - - $0.51 |- - - - - - - - $0.01
Des Moines, Iowa. . . . . . . . . do--------------- 357.76 .84 .47 - - - - - - - - .42 $0.05 ------- º
Deshler, Ohio. ------. Pittsburgh, Pa...... 264.66 . 62 -56 -------- - 31 gº ºf as ºr * * * * * sº
Dubuque, Iowa. . . . . . Chicago, iſ...T.I. 181.97 . 52 - 26 - - - - - - - - .26 --------|------- *
imirº, N.Y......I. New York. N. Y. . . . . 273.08 . 62 | .45 - - - - - - - - .31 .14 - - - - - - - -
Do--------------- Scranton, Pa........ 119.08 .48 .20 - - - - - - - - .24 |-------- .04
Enid, Okla----------. Kansas City, Kans. - 392.19 .92 | 1.10 || $0.18 .46 . 64 - - - - - - - -
Fort Wayne, Ind----. Chicago, Ill---------- 148. 18 . 52 - 17 -------- - 26 - - - - - - - - - 09
Grafton, W. Va. . . . . . Washington, D.C...] 253.93 . 62 . 35 -------- . 31 -04 |- - - - - - - sº
Graná Rapids, Mich.| Chicago, ii..........] 177.5i .52 | .30 |........ . 26 | .04 |- - - - - - - -
Harrisburg, Pä------. New York, N.Y. . . . . 195.57 . 52 • 21 |-------- - 26 -------. . 05,
Hattiesburg, Miss.... Washington, D.C.---| 1,001. 71 1.56 1.54 - - - - - - - - . 78 . 76 - - - - - - - -
Hinton, W. Va.-------|----- do-------------- 291. 2 . 74 . 66 - - - - - - - - . 37 . 29 |--------
Indianapolis, Ind....] Rochester, N.Y----- 534. 31 . 88 -71 -------- .44 -27 --------
Knoxville, Tenn...] Cincinnati, Ohio. 291. 56 . 88 .63 -------- .44 - 19 |--------
La Crosse, Wis.----...} Chicago, Ill--------- 282.99 . 66 -32 -------. .33 - - - - - - - - .01
Lafayette, Ind. . . . . . .]----- do-------------- 129. 12 . 48 - 16 -------- .24 i.------- - 08
Lancaster, Pa.. . . . . . . New York, N. Y. . . . 159.82 . 52 - 17 -------- . 26 |- - - - - - - - .09
Madison, Wis. . . . . . . . Chicago, Ill.... . . . . . . . 129.70 . 58 - 19 |-------- - 29 - - - - - - - - ... 10
New London, Conn...] Boston, Mass-----. . . . 106.09 .48 - 12 -------- . 24 |-------- . 12
Northfield, Vt.-------|----- do. . . . .--------- 197. 24 . 58 . 44 - - - - - - - - . 29 - 15 --------
Omaha, Nebr. . . . . . . . Chicago, Ill.---- - - - - - 488. 89 1.02 - 50 - - - - - - - - . 51 l-------- . Of
Parkersburg, W. Va.-| Washington, D.C.-. 357.88 . 72 -52 -------- . 36 - 16 --------
Pittsburgh, Pa... ---. Chicago, Ill..... . . . . . . 468:43 . 80 - 54 - - - - - - - - . 40 . 14 - - - - - - - -
Rouses Point, N. Y. . . Boston, Mass-------. 391.63 . 58 - 56 - - - - - - - - . 29 - 27 |- - - - - - - -
St. Louis, Mo. . . . . . . . New York, N. Y. -- . 1,061.60 1. 16 1, 19 - 03 . 58 . 61 --------
Do--------------- Philadelphia, Pa. -- . 970. 03 1. 14 1.09 - - - - - - - - . 57 . 52 l--------
St. Paul, Minn. . . . . . . Boston, Mass--- - - - - - 1,432.87 1- 60 1.60 - - - - - - - - . 80 -80 - - - - - - - -
Po--------------- Chicago, Ill.:-------- 413. 79 . 92 .48 - - - - - - - - .46 .02 |--------
Salisbury, N. C. . . . . . Washington, D.C...] 334.77 - 82 .42 1.-------- .41 .01 - - - - - - - -
Sayre, Pa.... -------- New York, N. Y. . . . 269. 35 . 62 - 54 - - - - - - - - . 31 • 23 - - - - - - - -
Selma, Ala----------- Atlanta, Ga- - - - - - - - - 132.03 . 68 1. 18 . 50 . 34 . 84 - - - - - - - -
Do--------------- Washington, D.C.-- 778. 40 1.44 2. 03 .59 . 72 1.31 - - - - - - - -
Scranton, Pa. - . . . . . . . New York. N. Y. . . . . 135. 23 . 52 - 24 - - - - - - - - - 26 - - - - - - - - . 02
Washington, D.C.... Hartford, Conn.----- 335.87 . 76 . 38 - - - - - - - - -38 --------|--------
Po--------------. Huntington, W. Va. 438.51 . 88 .66 i-------- .44 - 22 --------
Po--------------- Jersey City, N. J. ... 226.96 . 62 • 25 -------- - 31 -------- - 06:
Po--------------- New York, N. Y. . . . . 226.96 - 62 .25 -------- -31 |-------- - 06
Po--------------- Philadelphia, Pa. -- . 135. 39 . 52 - 15 l-------- - 26 - - - - - - - - - 11
Po--------------- Pittsburgh, Pa. -- . . . 369. 69 - 68 . 39 - - - - - - - - . 34 .05 - - - - - - - -
Po--------------- Providence, R. I. . . . . 412. 22 . 80 • 46 -------- . 40 - 06 |- - - - - - - sº
Po--------------- Rochester, N. Y----- 392. 60 . 76 • 72 -------- . 38 .34 --------
Po.-------------. St. Louis, Mo... . . . . 892. 59 1. 10 1.35 . 25 - 55 -80 |--------
Po--------------- Wheeling, W. Va.-- 354.54 . 72 .72 -------- . 36 . 36 l- - - - - - - -
Do--------------- Worcester, Mass.---. 422. 28 .80 .72 -------- . 40 .32 I--------
Waterloo, Iowa....... Chicago, Ill..... . . . . . 274.94 . 78 . 40 - - - - - - - - - 39 .01 --------
Wells River, Vt...... Boston, Mass--------| 167. 18 . 58 • 46 - - - - - - - - . 29 17 l--------
Wilkes-Barre, Pa. ---. New York, N. Y. ...| 174.34 . 52 . 35 -------- - 26 -09 |--------
Zanesville, Ohio.... . . Pittsburgh, Pa. - - - - - 152.49 . 52 -29 - - - - - - - - . 26 .03 |--------
WESTERN SECTION.
Aberdeen, S. Dak----| St. Paul, Minn.----- 295.01 $0.84 $0.29 |- - - - - - - - $0.42 - - - - - - - - $0.13
Albany, Oreg- - - - - - - - Chicago, Ill. - - - - - - - - 2,362.41 3. 82 2.48 - - - - - - - - 1.91 || $0.57 |- - - - - - - -
Albuquerque, N.Mex. Kansas City, Mo - - - - , 905.36 1.82 1. 13 -------- .91 -22 |--------
Bakersfielä, öal. Chicago, Ill. . . . . . . . . 2,491.60 3.68 2.18 - - - - - - - - 1.84 -34 - - - - - - - -
Beaumont, Tex... . . . New Órleans, La...] "286.33 .84 .51 -------- . 42 .09 - - - - - - - -
Billings, Mont...I. Chicago, Ill. . . . . . . . . 1,304. 16 || 2.28 1.26 - - - - - - - - 1. 14 . 12 - - - - - - - -
#ismårök, N. Dai: ...] §t. Paul, Minn....I. 355.06 | 1. 10 ; .41 - - - - - - - - -55 -------- . 14
Cheyenne, Wyo. . . . . . Chicago, Ill. - - - - - - - - 997. 78 1.78 1.09 - - - - - - - - . 89 - 20 --------
Colton, Cal-----------|----- do-------------- 2, 191.37 3.56 2. 16 - - - - - - - - 1.78 -38 --------
El Reno, Okla. - - - - - - Kansas City, Mo. ---| 382. 1 1.02 . 42 -------- .51 -------- - 09
Everett. Wash - - - - - - - Chicago, Ill. - - - - - - - - 2,229.93 3.56 2. 12 -------- 1.78 . 34 ||--------
Fargo, N. Dak-----...} Minneapolis, Minn. - 231.04 . 76 . 33 l-------- . 38 - - - - - - - - .05.
fort Smith, Ark...] St. Louis, Mo....... 513. 71 | 1.02 . .96 |- - - - - - - - .51 .45 - - - - - - - - *
Great fails, Mont...] Chicago, iii......I. 1,538.53 2.62 1.77 - - - - - - - - 1. 31 - 46 - - - - - - - -
Havre, Mont--------- Chicago, Ill..... ---- 1,367. 29 2.34 1.42 -------- 1. 17 -25 |------- ºf
Huron, S. Dak.....--|----- 0- - - - - - - - - - - - - - 646. 19 1. 32 .68 -------- . 66 .02 |------ * *
O- - - - - - - - - - - - - - - St. Paul, Minn. . . . . . 297, 33 .84 -30 -------- .42 l-------- . 12
ECalispell, Mont------| Chicago, Ill. . . . . . . . . 1,631.59 2.84 1.72 -------- 1.42 .30 --------

35797—No. 11–14–8
1276 RAILWAY MAIL PAY. .
Comparison of crpress and mail rates per }0 pounds—Continued.
WESTERN SECTION.—Continued.


* - Excess
* First- Excess º: of 50
class of mail 50 per over Pº. Cent
Length. ex- Mail rate | cent of 50 per of ex-
From- To— of mail press rate OVer ex- |c .# of press
routeS. Tate, s €X- press 6X- rate
I. C. C. preSS | Tate. ress 9V9.
order. rate. £. mail
g rate.
- Miles
La Junta, Colo- - - - - - - Kansas City, Mo. . . . 556.87 $1.32 $0.63 |- - - - - - - - $0.56 |- - - - - - - - $0.03
Lewiston, Idaho. . . . . Chicago, Ill. . . . . . . . . 2,064.76 3. 34 1.97 -------- 1. 67 || $0.30 j-.......
Livingston, Mont - - - -] . . . . . do-------------- 1, 343.45 2.50 1.36 |- - - - - - - - 1.25 11 --------
Medford, Oreg. . . . . . . . . . . . do-------------- 2,497. 70 4.08 2.59 |- - - - - - - - 2.04 54 --------
Minnidoka, Idaho....|. . . . . do- - - - - - - - - - - - - -] 1,614.52 2.88 1.64 |- - - - - - - - 1.49 15 --------
Minot, N. Dak. - - - - - - St. Paul, Minn. - - - - - 523.51 1. 24 53 -------- .62 -------- 09
Missoula, Mont-------| Chicago, Ill . . . . . . . . . 1, 585.59 2.88 1.57 -------. 1.44 13 --------
Nampa, Idaho. . . . . . . . . . . . do------------- 1,800. 70 3.26 1.84 - - - - - - - - 1.63 21 --------
Qklahoma, Okla. . . . . Kansas City, Mo. . . . 400.83 1.02 64 - - - - - - - - : 51 13 --------
Pasco, Wash. . . . . . . . . Chicago, Ill. . . . . . . . . 2,070.29 3. 40 1.92 - - - - - - - - T. 70 22 ſ--------
Phoenix, Ariz-- - - - - - - St. Louis, Mo. . . . . . . 1,783.42 3.08 1.96 - - - - - - - - 1.54 42 --------
Pocatello, Idaho. . . . . Chicago, Ill- - - - - - - - - 1, 553.23 2.92 1, 77 . . . . . ._- - 1.46 31 l--------
Portland, Oreg. . . . . . . . . . . . do-------------- 2, 281.92 3. 66 2.81 - - - - - - - - 1.83 .98 ||--------
Roseburg, Oreg- - - - - - - - - - - do-------------- 2, 628.63 3.88 2.74 - - - - - - - - 1.94 .80 --------
Reno, New . . . . . . . . . . . San Francisco, Cal. . 243.88 , 76 , 26 -------- . 38 -------- 12
Seattle, Wash. . . . . . . . Chicago, Ill. - - - - - - - - 2,323.24 3.56 2.92 ſ. -- - - - - - 1.78 1. 14 |--------
D0--------------- St. Paul, Minn. . . . . . 1,824.76 3.28 2.44 |- - - - - - - - 1.64 .80 --------
Spokane, Wash. . . . . . Chicago, Ill- - - - - - - - - 1,923.85 3. 22 2.42 - - - - - - - - 1.61 .81 --------
Tacoma, Wash. . . . . . . . . . . . do-------------- 2, 319.94 3.56 2. 19 |- - - - - - - - 1.78 .41 . . . . . . . .
Walla Walla, Wash. . . . . . . do-------------- 2, 101.57 3.36 2.21 -------- 1.68 .53 |--------
Wenatchee, Wash....|..... do-------------- 2,073.00 3.44 2.18 - - - - - - - - 1. 72 .46 --------
Wichita, Kans- - - - - - - Kansas City, Mo - - - - 228.25 .76 .27 -------- .38 -------- . 11
Williston, N. Dak.... St. Paul, Minn. . . . . . 644.25 1.40 .66 -------- .70 ||-------- .04
These statistics show that in most cases the revenue received by the
railroad companies for the carriage of 100 pounds and 40 pounds of
mail matter between the points named is in excess of the revenue
received from the express companies for the carriage of express
packages of 100 pounds and 40 pounds, respectively, between the
same points. The differences in the rates vary considerably but in
a majority of cases the excess of the mail rate over the compensation
from the express is material. •
It should be remembered also that the mail rates named in these
tables are for transportation alone and do not include the revenue
received by the railroad companies for railway post-office cars oper-
ated over the routes. Such cars are operated over most if not all of
the routes between the points named. The total compensation for
railway post-office cars paid the railroads is approximately 10 per
cent of the total pay including transportation and railway post-office
cars, but it would not follow that this ratio of pay would exist upon
each individual route. No attempt has been made to ascertain for
each route the part of the railway post-office car pay apportioned to
the specific weight of mail for the reason that although the result
would be approximately correct it would not be exact, and these
tables are submitted to show exact and uncontrovertible results.
COMPARISON OF REVENUE TO RAILROADS FROM ExPRESS AND MAIL
sERVICES As A whoLE.—A careful analysis of available statistics has
been made in an endeavor to reach an approximately accurate com-
parison between the total revenue received by railroad companies
from the express service and that which they would receive from the
mail service if the railroad rate per ton-mile so received from the
express service were applied to the ton-miles of mail service.
RAILWAY MAIL PAY. 1277
Recourse has been had to the First Annual Report of the Statis-
tics of Express Companies in the United States for 1909, pages 18
and 19, and to opinion No. 1967, of June 8, 1912, of the Interstate
Commerce Commission in case No. 4198, “In the matter of express
rates, practices, accounts, and revenues.” On pages 501 and 502 of
said report the commission give an analysis of freight revenue of
Adams Express Co. as of August 18, 1909, and an analysis of freight
revenue of United States Express Co. as of December 22, 1909; the
statement showing traffic averages for character of traffic moved.
For the Adams Express Co. the statement covers the movement of
traffic between 206 points for which mileage could be assigned, be-
tween which, in general, 100 or more pieces moved. It represents
15.48 per cent of the total number of pieces, 15.70 per cent of the total
weight, and 13.98 per cent of the total revenue on business handled
as of August 18, 1909. For the United States Express Co. the state-
ment covers the movement of traffic between 218 points for which
mileage could be assigned, between which, in general, 100 or more
pieces moved. It represents 14.66 per cent of the total number of
pieces, 13.77 per cent of the total weight, and 13.26 per cent of the
total revenue on business handled as of December 22, 1909.
The average charge per ton per mile ascertained from the statis-
tics of the Adams Express Co. is 15.30 cents (I. C. C. Rept., in the
matter of express rates, etc., p. 501), and the average charge per
ton per mile ascertained from the statistics of the United States
Express Co. was 18.37 cents. (Id., p. 502.) Original exhibits from
which these statistics were computed by the Interstate Commerce
Commission show that the average charge per ton per mile for both
companies for express matter handled was 16.84 cents. Apportion-
ing 47.53 per cent (First Annual Report of the Statistics of Express
Companies, etc., for 1909, p. 19) as that part of their receipts from
operation paid by the express companies to the railroad companies,
we have 8.004 cents per ton-mile as the average rate which the rail-
road companies receive from the express service. By reference to
the hearings, page 122, it is observed that Mr. V. J. Brådley, repre-
senting the Pennsylvania Railroad Co., has practically accepted lower
figures, apparently based upon similar data. He also states that
the Bureau of Railway Economics in its study of the parcel post
quoted the results of its calculations as 7.7 and 7.5 cents per ton-mile.
The ton-miles per annum in the mail service computed as of April
30, 1913, were 510,827,522. Applying the ton-mile rate of revenue
received by the railroad companies from the express service, namely,
8.004 cents, we obtain a total of $40,886,634.86 as the mail revenue
computed on the revenue per ton-mile received by the companies
from the express service.
But it may be said that this comparison is solely upon the basis
of weight and does not take into consideration any variation in space
per unit of weight; that is, for density of loading. To compensate
for this the pay based on ton-miles must be translated into pay based
on space. The average haul of 1 pound of express matter by the
Adams Express Co., as shown by the table above referred to, was
166.57 miles, and the average haul of 1 pound of express matter by
the United States Express Co., as shown by the same table, was
206.60 miles. The average haul of all express matter was ascertained
1278 FAILWAY MAIL PAY.
to be 183.72 miles for each pound." The average load of a 60-foot
express car was ascertained to be 2.57 tons.” It is estimated that
there were 225,633,845 car-miles pro rated to 60-foot car basis per
annum performed in the mail service as of November, 1913. This
divided into the ton-miles per annum, 510,827,522 (Hearings, p.
852) gives a density of load of 2.26 tons. Therefore, to compensate
for the difference in density of load we may state the proportion as
follows: 2.57 is to 2.26 as the compensated mail pay is to $40,886,-
634.86. This produces a result of $46,494,978.58.
It will be remembered that these figures are based upon the ex-
press rates before they were reduced by the order No. 2408 of the
Interstate Commerce Commission effective February 1, 1914. It
has been estimated that this reduction was approximately 16 per cent.
The department has no other information on this point and can
not say how reliable this estimate is, but it is lower than that men-
tioned by the railroads’ committee. Applying this reduction to the
last ascertained amount produces an annual compensation of
$39,055,782.01. -
It must be remembered, as hereinbefore stated, that this is placing
the mail service on the basis of the express service and not account-
ing for the value of such differences between them as may exist.
Furthermore, it is placing the entire subject matter of the mail
service upon the same basis as the subject matter of the express
Service.
REPLY TO CRITICISMS OF THE RAILROADs’ COMMITTEE RESPECTING THE
* SUGGESTED BILL.
The statements submitted to the joint committee at the hearings
held on March 16 and 17, 1914, by Messrs. Peters, Baldwin, and
Mack, representing the railroads’ committee, with reference to the
tentative draft of a suggested bill for the regulation of railroad-
mail pay prepared by the department and presented to the joint
committee February 12, 1914, have been examined.
In general the statements referred to are a reiteration of the
claims of the railroads’ committee that the railroads are underpaid
for mail service and a depreciation of any plan which will change
the present system of adjusting railroad-mail pay, excepting as sug-
gested by themselves or which will not result in an increase in pay.
* This is obtained from the original exhibits of the Interstate Commerce Commission,
showing the total weight carried for the Adams Express Co. and the United States Ex-
press Co., and the total of both was thus ascertained. The exhibits also showed the
pounds carried 1 mile for each company, and the total pounds per mile was thus ascer-
tained. Dividing the pounds carried 1 mile by the total weight, the average haul per
pound was obtained.
* This is obtained as follows : The express car-foot miles (Table 3, Doc. No. 105,
p. 59) are stated as 1,379,396,873 car-foot miles. The express revenue for the
roads represented in table 3 was ascertained by a tabulation from the Interstate Com-
merce Commission statistics for 1910. The total annual revenue for the roads listed
in table 3 was found to be $58,973,885. One-twelfth of this amount represents the
express revenue for One month. Dividing this amount by the car-foot miles in the
express service produces an express revenue per car-foot mile of 3.56278 + mills. The
total average express revenue per month for the three months of April, August, and
December, 1909, as shown on page 19 of the Statistics of Express. Companies, 1909, was
$5,921,995.96. Dividing this revenue by the revenue rate per car-foot mile for the roads
represented in table 3 gives 1,662,184,166 express car-foot miles for the express service
for one month. The average ton-miles for one month, obtained by multiplying the pounds
carried, 776,447,397 pounds, average of one month (Statistics of Express Companies,
1909), by the average haul of 183.72 miles, gives 142,648,915,777 pound-miles, or 71,..
324,457.88 ton-miles. This average ton-mileage is comparable with the express car-foot
miles above shown. Dividing the ton-miles by the car-foot miles gives the average load
per car. Af
RAILWAY MAIL PAY. 1279
Consequently their presentation is devoid of any fair discussion of
the provisions of the suggested plan, but makes strenuous objections
to the provision giving the Postmaster General the power to secure
information from the Interstate Commerce Commission as to the
revenue received by railroad companies from express companies for
service rendered in the transportation of express matter, and to
arrange for the transportation of mail matter other than first class
at rates not exceeding those so ascertained; to that authorizing him
to petition the Interstate Commerce Commission for the determina-
tion of a postal carload or less than postal-carload rates for trans-
portation of mail matter of the fourth class and periodicals and to
provide for and authorize such transportation at such rates and
other salutory provisions, and denounces the provision requiring
railroad companies to carry the mails under penalty of $5,000.
It seems to be the idea of the railroads’ committee that all those
powers which would give the Postmaster General authority to pro-
vide for the transportation of the mails on railroads in the most
businesslike manner and in the greatest interest of the public should
be withheld from him. Their objection to the salutary provisions
which give him the power to invoke the assistance of the Interstate
Commerce Commission and thereafter to fix equitable and fair rates
for certain classes of service is without merit.
With respect to their objection to the provision that all railroad
companies shall carry the mails, and their argument that the pro-
vision is unnecessary and drastic, it is sufficient reply that the de-
partment has been in receipt of a number of communications from
railroad companies either declining to continue the mail service or
threatening to do so unless the department accedes to their terms
for the same, and that it is confronted with a serious problem as to
how the mail service may be maintained under such conditions. As
stated at the hearings this condition has been partially brought
about by the campaign of publicity carried on by the railroads'
committee, in which they disseminated statements calculated to dis-
turb the relations which have heretofore existed between the rail-
road companies and the Post Office Department. It is not believed
by the officers of the department that railroad companies have the
public and moral right to decline to carry the mails, and such con-
stitutional power as Congress may have in the premises should be
expressed in some provisions requiring the carriage of the mails.
Such discussion of the proposed plan as has been presented by the
railroads’ representatives is largely directed against the discretion
reposed in the Postmaster General with respect to the conduct of the
service. The main features will be examined.
The objection against the continuance of the present provision of
law providing that the Postmaster General shall pay rates “not
exceeding ” those named has no merit, and if accepted and those
words omitted from the statute the Postmaster General would be
without power to provide in an economical and businesslike way for
many conditions that arise in the service. If rates were absolutely
fixed from which the Postmaster General could not vary, there would
be innumerable instances in the usual conduct of the Service where
disputes would arise between the railroad companies and the Post
Office Department as to the precise amount due for the service, and
the usual order of the Postmaster General, which, if it fixes the rate
1280 RAILWAY MAIL PAY.
Within the maximum prescribed by law, has been held by the courts
to be final, would only mark the beginning of lawsuits, which would
be numerous and vexatious.
From the point of view of economical administration such a pro-
Vision is necessary. This is illustrated by instances such as the
following:
In the case of competing railroads between common points where
the mileage differed, in the absence of such provision the depart-
ment would be compelled to always dispatch the competitive mails
by the cheaper route, with disastrous results financially to the route
of longer mileage. A concrete instance may be cited between New
York and Chicago, where the route of the Pennsylvania Co. is some 60
miles shorter than that of its principal competitor for through busi-
ness. If rates were absolutely fixed the department would be com-
pelled to send all through mails via the Pennsylvania line, and trans-
fer thereto mails carried by more expensive lines. We now continue
the service by the carrying companies who equalize the rates. Under
the “not exceeding” clause the department is enabled to propose
to the more expensive line that it carry the competitive mails at the
lower rate available to the department over the shorter line. It also
enables a carrying line to retain the haulage of such mails if it
desires to meet the terms. This is the practice under the existing
law, and the new plan contemplates its continuance.
It is submitted that in a service subject to the mutations and
fluctuations inherent to the mail service a wide latitude of discretion
for the supervisory officers of the service is necessary if the service
is to be efficiently and economically administered. Furthermore, the
language is that of the present law and there does not appear to be
any valid reason or justification for divesting the Postmaster General
º a discretion which he has always had and which has never been
abused.
The railroads urge that the new plan, by increasing the amount
of service to be paid for on a space basis, will make the pay of rail-
roads largely dependent upon the opinions of inspectors anxious to
make a record and with their superiors slow to disregard recommen-
dations that may produce possible economies, the railroads will not
know with definiteness or certainty what its compensation is to be.
In reply to this it should be said that it must be granted by all that
the determination of the space needed must necessarily be left with
the officers of the department. The railroads could not expect the
Government to accept their statements in such matters. The officers
of the department are responsible to the Congress and the people for
the administration of the service, must render to them an account-
ing thereof, and could not in their conduct of the service rely upon
any other reports than those of the departmental field officers in im-
mediate supervision of the lines. -
Past experience has demonstrated that the causes for disagree-
ment between the railroads and the department have usually been
those relating to the construction of the laws and regulations govern-
ing the authorization of railway post-office car space, particularly
as to the factors taken into consideration in determining what amount
of space for purposes for which additional payment is contemplated
by the statute is needed on a particular train. The department has
promulgated certain regulations and standards to govern the ques-
tion, with which the railroad representatives do not agree and to
PAILWAY MAIL PAY. 1281
some parts of which there have been strenuous objections offered by
them. The department maintains that the additional payment for
car space authorized by the statute is for distribution space in cars,
space for the storage of working and registered mails and those for
local delivery, and under this construction frequently authorizes pay-
ment for 40 or 50 feet of space and the company operates a 60 or 70
foot car in satisfaction of such authorization.
The companies in most such cases assert that they are running a
60-foot car and that the department is using the entire space therein
and therefore should pay for 60 feet instead of the lesser space
authorized. It may be true that the entire space in the car is util-
ized, but the excess over the authorized space is occupied by storage
mails, compensation for which is paid on the weight basis, and
which, if not carried in the mail car, would necessarily be carried in.
the baggage car. The companies have objected to the department's
construction as to what constitutes mail for local delivery, and this
has been a frequent cause for disagreement in connection with car
space. The department takes the ground that mails for local deliv-
ery comprise that for stations along the line in insufficient quantity
to warrant a separation, and that if there is a sufficient amount for
any station or junction point to warrant a separation in piling, it
becomes storage mail and additional payment for its space is not
warranted. Objection has also been made to the practice of the de-
partment on long runs of transferring worked mail from working
car to storage or baggage car and working mail in the reverse move-
ment, but it is thought that no one will contend that the department
ought to pay for space to store mails to be worked several hundred
miles distant from the initial point of the car run. The department
is willing and does pay for sufficient space to store the working mails
necessary to employ the clerks over a reasonable length of run.
These details of the railroads’ objections to the space proposition
have been given in order to show that under the proposed bill the causes
for the disagreements as to construction of regulations will largely
disappear, inasmuch as all the space used will be paid for whether it
is occupied by distribution requirements, by working mails, regis-
tered mails, local-delivery mails, or by storage mails. If the entire
space in a 60-foot car is occupied by the mails in any way a 60-foot
car will be authorized under the proposed plan. The present
authorization in that particular car may be but 40 feet or 50 feet, but
under the new plan it will be entitled to 60-foot pay and will receive
that pay in each direction. -
The proposed plan will also eliminate the “half line " and the
“agreement line,” about which so much has been said by the railroad
representatives, and thereby the difference of opinion between the
companies and the department with reference thereto will no longer
exist. - s
It is interesting to observe that all the objections which the rail.
roads’ committee have urged against the present system of authori:
zation of car space and against the proposed bill hold with equal
force against the railroads’ committee's proposed plan to extend the
pay for space to cover apartment cars. This inconsistency appari
rently has not occurred to them. º
With respect to the statement of Mr. Mack that the adoption of
a five-unit plan would be more complicated than the present plan as
1282 RAILWAY MAIL PAY.
to the weight feature, as now the mails are simply weighed to the
route and the daily average asecrtained, but the new plan maintains
this method as to 37 percent of the routes and as to all others re-
quires separate weighing of all trains which do not have full railway
post-office or apartment mail cars, and then as to trains having such
cars it is necessary that the weight be taken of the mail placed in
each car for determining the proposed leading rates, it may be said
that the continuance of the present weighing and adjustment on 37
er cent of the routes does not assume the proportions indicated by
W. Mack. The mail car-foot-mileage of the closed pouch routes
shown in document No. 105 was 0.192 per cent of the mail car-foot-
mileage on all routes. Therefore its significance from a weighing
standpoint is apparent. Furthermore, the weighing on such routes
is of the simplest character and isprincipally done by the postmasters
without cost to the department. This applies with almost equal
force to the weighing of closed pouch trains on lines having railway
post-office and apartment-car service. On most lines of this charac-
ter the closed pouch trains carry but little mails, and the weighing
arrangements are simple and inexpensive. They can be handled
with equial facility under the new plan. As to the weighing at ter-
minals to determine the basis for loading charges, the department
does not anticipate any difficuty or complication in securing these
weights. As a matter of fact, mails are now separated at a majority
of stations and at practically all terminals for the several cars of a
train, and the weights for each particular car can be ascertained
and determined without trouble. Under present methods of weigh-
ing and the system of truck tickets in vogue the separate weights
per car are available if desired.
Answering the criticism of Mr. Mack as to the further complica-
tion that might ensue under the operation of the new plan if mails
due to ordinarily connect a mail or storage car missed connection and
were transported in a following train upon which there was no mail
or storage car, the pay for the latter train being on a weight basis,
there would be no compensation to the company for the carriage of
the delayed mails, it may be stated that in such a case the pay for
the mail or storage car would not be reduced because of the missed
connection; furthermore, there would be as much probability of
missed connections during the statistical period, as otherwise, and,
therefore, the company would be adequately compensated on the
weight basis.
Mr. Mack further states in this connection that it would be possible
for the mail to be confined or limited during the weighing period
to trains paid for on a space basis and thereafter to be carried on
trains on which the mail carried is paid for on a weight basis, and
as the mails transferred to such train were not carried thereon dur-
ing the period of weighing the company would receive no compen-
sation for its carriage. This criticism involves the assumption that
the officers of the Government will be guilty of sharp practices in
Order to reduce the compensation to the railroads. The department
does not wish any railroad to carry mails without compensation,
neither would it countenance such practices as would be necessary to
warrant the fears of Mr. Mack. The exigencies and demands of
the service would govern and affect the action of the department in
determining what mails were proper to handle in closed pouch trains,
RAILWAY MAIL PAY. 3. 1283
and those influences would be as potent during the non weighing
period as during the weighing period. Undoubtedly previous to the
weighing period steps would be taken to insure all mails possible
being carried in the space paid for, and the maintenance of the
policy of good faith with the railroads which the department has
always endeavored to follow would dictate that the conditions ex-
isting during the weighing period should continue thereafter in so
far as the fluctuating demands of the service will permit.
The assumption of Mr. Mack that a single route might have every
factor represented in the service thereon and that consequently 64
separate and distinct computations would be necessary in order to
ascertain the compensation on a route is an exaggeration. It is so
improbable as to amount to a negligible consideration. The officers
of the department are satisfied that the process of ascertainment of
the compensation of a railroad will be much simpler than under the
present system. In the first place there will be relief from the
greater part of the expensive and annoying weighings, with the
resulting voluminous consolidations and computations to ascertain
the average daily weights and the rate per mile. The proposed plan
continues the weighings on closed-pouch routes and trains, but, as
pointed out hereinbefore, such service is but a small part of the
whole service. On the railway post-office apartment and storage
cars it simply involves the collection of data as to space, frequency,
mileage, and load at terminals. With these data at hand the com-
putations will be simple and the compensation can be readily ascer-
tained without difficulty. Tables of rates, constant and loading
terminal charges for different weights, etc., can be prepared, further
simplifying the work of adjustment. The department views with
equanimity the question of alleged complicated rates, and submits
that even if Mr. Mack's contention were true it would be a poor
argument in condemnation of the plan if it were scientific otherwise.
No service as extensive and fluctuating as the great mail service of
the country can expect to be administered upon a single basis. The
efforts of the department in the study of the subject have been
directed toward devising a plan that would be as simple as possible
in a service of such complex and varying character, and believes that
the tentative plan presented in volume 8 is such a plan.
The criticisms with regard to the changes in the plans proposed
by the department since the commencement of the present inquiry
are not valid arguments against the merits of the suggested bill.
These are evidence, rather, of the disposition of the department’s
officers to present the best results of study and judgment. This
should be appreciated rather than depreciated. It is to be regretted
that the railroads' committee have not reached some advance posi-
tion beyond that at which it started, or that it could not have con-
tributed something constructive to the solution of the problem.
The papers of the railroads’ representatives discuss in general
terms the rates named in the suggested bill, and claim that they are
noncompensatory, discriminatory, and confiscatory. In view of the
presentation of the department on the subject of compensation, it is
unnecessary to give any further attention to such claims.
The railroads’ representatives further contend that the car-mile
rate provided in the bill for apartment cars should be relatively the
same as that paid for full railway post-office cars, on the ground that
the expense to the companies is relatively the same in each case, and
1284 RAILWAY MAIL PAY.
that if any distinction is to be made it should rather be in an in-
creased rate for apartment cars, because of the retail character of the
service performed by the latter, and, further, because in many cases
the requirement of the running of an apartment car necessitates the
operation of an extra 60-foot car, the remainder of which can not be
utilized by the companies for their own purposes.
Adequate reply to this has been frequently made at the hearings
and set forth in the department's statement heretofore filed. The
operation of an entirely independent car in a train as a full railway
post-office car can not be considered the same as the operation for
the department of an apartment in a car which must be run and
part of which is used by the railroad company for its own uses.
Furthermore, the construction of a full car is, as a rule, much more
expensive. In view of all of the considerations there is no warrant
for paying as high for an apartment in a car, part of which is used
by the railroad company for its own purposes, as for a full car which
is operated in a train solely for the use of the department.
In his statement as to what would be necessary in the line of con-
struction of cars by the companies under the requirements of the new
plan, Mr. Mack seeks to convey the impression that the conditions in
the service would radically change from those at present existing
and to meet them the companies would find it necessary to construct.
and keep on hand a stock of each and every size of car specified in
the tentative draft in order to meet the demands of the department.
This was negatived at the hearing, but brief reference may be made
to it again. The railroad representatives apparently base their asser-
tion upon the theory that under the administration of the tentative
plan, if it becomes law, the service at present being performed will
be radically changed and that the department will at once proceed to
cut down the postal-car service to a minimum, and in doing this will
make demands on the railroads for the furnishing of cars of every
size on every road. Anyone familiar with the Railway Mail Service
will at once see that the view is unwarranted. As the departmental
officers view the probable application of the bill’s provisions to the
service, it will in most cases simply be a continuation of the present
facilities furnished with such readjustments of space and authoriza-
tion as seem to be required. There will be no radical disruption of
present conditions. The cars now running will continue to run, new
cars will not be necessary. The tendency will be, as explained at the
hearings, to concentrate the mails on a train in the mail car or com-
partment where it can be done rather than to continue the loading of
storage mails in the baggage car or compartment. This policy will
undoubtedly justify the allowance of the full space in most cars or
apartments now operated of a size in excess of the space needed for
distribution and allied purposes, which only can be specially com-
pensated for under the present law. The fears of the railroads as
expressed in this respect are not well founded.
CON CLUSION.
The Post Office Department, believing that this extended examina-
tion of its data and conclusions have substantially verified them,
respectfully submit the whole to the consideration of the joint com-
mittee.
- Jose.P.H STEwART,
Second Assistant Postmaster General.
A PPENIDIX A.
STATEMENT OF DIFFERENCES BETWEEN APARTMENT AND FULL RAILWAY POST
OFFICE CAR SPACE REPORTED BY THE COMPANIES COMPRISING THE MISSOURI
PACIFIC SYSTEM AND AS TABULATED BY THE DEPARTMENT SHOWING REASONS
FOR CHARGES TO “DEAD SPACE.”
APARTMENT-CAR SPACE.
Route 145040, Pleasant Hill to Joplin, Mo., Missouri Pacific Railroad:
Company reported 30 feet distribution space and 25 feet deadhead in trains
207 and 208, evidently operating a 55-foot car. Thirty feet is all that was
needed in either train. It could hardly be contended that the department should
pay for deadhead space in each direction. The car-foot miles representing this
deadhead movement was charged to “dead Space.” 4.
Between C. & W. Junction and Joplin 22-foot deadhead apartment-car space
in each direction in trains 631 and 632 was charged by company. No apart-
ment-car service in these trains, and the car was apparently run by company
for its own purposes. Charged by department to “dead space.”
Five feet of storage space charged by company in the 30-foot apartment car
operated in train 209, but which Railway Mail Service stated was not needed,
was charged by the department to “dead space.”
Total “dead space ’’ on route, 235,148 car-foot miles, none of which could be
legitimately charged as mail space.
Route 145042, Sedalia to Warsaw, Mo., Missouri Pacific Railroad :
Company charged 20 feet apartment-car space in trains 636 and 637 daily,
including Sunday, whereas service not required on Sunday. Also charged 5
feet closed-polich space on each day, whereas closed-pouch service Only per-
formed on Sunday. Necessary and proper revisions charged 6,776.46 cir-foot
miles to “dead space.” -
Route 145047, Jefferson City to Bagnell, Mo., Missouri Pacific Railroad :
Company charged 16 feet apartment-car space daily, including Sunday. No
postal-car service on Sunday, but closed pouches carried. Necessary and proper
revisions charged 5,558.63 car-foot miles to “dead space.”
Rout 145093, Cole Junction (n. O.) and Myrick Station (n. O.), Mo., Missouri
Pacific Railroad :
Company reported 19 feet apartment-car space and 9 feet storage Space in
train 5 and 19 feet apartment-car space and 8 feet storage space in train 6.
lèailway Mail Service reported 15 feet only necessary in either train. Company
also charged 5 feet space each in baggage car in trains 631 and 632. Depart-
ment charged mail service with 15 feet apartment space in each direction and
1.25 feet closed-pouch space in train 631 and 0.83 foot in train 632 and charged
remainder to “dead space ’’—88,537 car-foot miles.
Route 145100, Webb City to Granby, Mo., Missouri Pacific Railroad :
Company reported 22-foot apartment car over route daily, except Sunday. No
postal-car service on this line. Space charged to “dead space,” 27,772.80 car-
foot miles. -
Route 155031, Osowatomie to Deering, Kans., Missouri Pacific Railroad :
Company reported 30 feet deadhead apartment-car space in trains 103 and
104 between Osawatomie and Yates Center, in addition to regular 30-foot apart-
ment car. Not used or necessary for postal purposes. Charged to “dead
space,” 121,140 car-foot miles.
Route 155036, Fort Scott to Kiowa, Kans, Missouri Pacific Railroad: * *
Company reported 23 feet apartment-car space in trains 407 and 40S. 703
and 704, and 20 feet in trains 705 and 706. Space necessary to handle all mails
as reported by Railway Mail Service was 20 feet in trains 407 and 40S and 14
feet in other trains. Balance of space, S3,847.24 car-foot miles, charged to
‘dead space.” . . . . . . - * & : -
Route 155040, Atchison, Kans, to Omaha, Nebr., Missouri Pacific :
1285
1286 RAILWAY MAIL PAY.
The company reported 26 feet apartment-car space in trains 131 and 132 and
23 feet of distribution space and 1 foot of storage space in trains 137 and 138.
The Space actually needed in trains 131 and 132 was reported by the Bailway
Mail Service to be 20 feet. No postal-car service operated in trains 137 and
138, the only mail Service on these trains being closed-pouch service. The
department charged to dead space on this route 52,231.32 car-foot miles, rep-
resenting the items above detailed.
Route 155046, Eldorado to McPherson, Kans., Missouri Pacific Railroad:
Company reported 16 feet apartment-car space in trains 749 and 762. Rail-
Way Mail Service reported 12 feet actually needed. The residue, amounting to
12,812.80 car-foot-miles, was charged to “dead space.”
Route 155060, Topeka to Fort Scott, Kans., Missouri Pacific Railroad :
Company reported 22 feet apartment-car space used by the mails. Railway
Mail Service reported 20 feet as ample for all purposes. The residue, amount-
ing to 13,563.68 car-foot-miles, charged to “dead space.”
Rouse 155067, Ottawa, Kans., to Towner, Colo., Missouri Pacific Railroad:
Company reported 30 feet apartment-car space and 30 feet deadhead space
in each of four trains. Thirty-foot apartment car answered all needs of these
trains. Apparently company operated 60-foot car and charged mail service
with full space on this route; 1,390,805 car-foot-miles charged to “dead space,”
representing the deadhead space reported by the company.
Route 155074, Conway Springs to Larned, Kans., Missouri Pacific Railroad :
Company reported 18 feet apartment-car space in two trains. Railway Mail
Service reported 16 feet ample for all needs of the service; 12,740.40 car-foot-
miles charged to “dead space,” representing the balance of space reported by
the Company not needed by the department. -
Route 155080, Rich Hill, Mo., to Fort Scott, Kans., Missouri Pacific Railroad :
Company reported 23 feet apartment-car Space in trains 407 and 408. Rail-
way Mail Service reported 20 feet ample for all purposes. The balance, 4,899.6
car-foot-miles, charged to “dead space.”
Route 155084, Kansas City, Mo., to Atchison, Kans., Missouri Pacific Railroad:
Company reported 26 feet of apartment-car space in trains 131 and 132.
Railway Mail Service reported 20 feet ample for all purposes. The balance,
representing 14,682.72 car-foot-miles, charged to “dead space.” In closed-pouch
service on this route the company reported 6 feet of space in train 101 to ac-
commodate a maximum of 69 and a minimum of 25 pouches and Sacks in the
car at One time, and, in train 102, 7 feet of Space to accommodate a maximum
of 6 pouches and a minimum of 1 pouch and sack in a car. Under depart-
mental rules the allowance ou train 101 was 5.83 feet, and in train 102, 0.83 feet.
Balance charged to passenger Space.
Route 155091, Kansas City, Mo., to Ottawa, Kans., Missouri Pacific Railroad :
Company reported 30 feet of apartment-car space in each of trains 1, 2, 3, 4,
103, 104, 105, and 106, and 30 feet deadhead apartment-car space in each of
trains 1, 2, 3, 4, 103, and 104. The Railway Mail Service reported that 30 feet
of space was ample in any one of these trains. Apparently the company Oper-
ated 60-foot cars and charged full space to the mails. The car-foot-miles,
401,544, represented by this deadhead movement, were charged to “dead Space.”
Route 155094, Warwick, Kans., to Prosser, Nebr., Missouri Pacific Railroad :
Company reported 14 feet of apartment-car space in trains 643 and 644.
Railway Mail Service reported 12 feet ample for the needs of those trains. The
balance was charged to “dead space ’’ and equaled 7,528.56 car-foot-miles.
Route 155095, Gypsum to Marquette, Kans., Missouri Pacific Railroad :
Company reported 30-foot apartment-car space in trains 1 and 2 and 30-foot
deadhead apartment-car space in same trains. Railway Mail Service reported
30 feet ample for all mail purposes in those trains; the balance, amounting to
48,348 car-foot-miles, charged to “dead space.” Apparently company operated
60-foot car and charged full space to mail Service. -
- Route 157038, Omaha to Auburn, Nebr., Missouri Pacific Railroad :
Company reported 23 feet apartment-car distribution and 5 feet storage
space in trains 137 and 138, and 16 feet apartment-car space in trains 645 and
and 648. Railway Mail Service reported 12 feet of Space sufficient in trains
137 and 138 and 15 feet in trains 645 and 648. That amount of Space was
charged to the mail service, and the balance, equaling 67,517.84 car-foot-miles,
charged to “dead space.”
Route 157040, Union to Lincoln, Nebr., Missouri Pacific Railroad :
Company reported 16 feet apartment-car distribution Space and 2 feet Storage
space in trains 633 and 634 and 16 feet of distribution space in trains 638 and
RAILWAY MAIL PAY. 1287
689. Fifteen feet reported by Railway Mail Service as being ample in all
trains. This was charged to the mail service and the balance, equaling 9,907
Car-foot miles, charged to “dead space.”
Route 157059, Talmage to Crete, Nebh., Missouri Pacific Railroad :
Company reported 16 feet apartment-car space in trains 645 and 468. Fifteen
feet ample for postal purposes in those trains, which was charged to mail
Service. The balance, equaling 3,019.64 car-foot miles, charged to “dead space.”
Route 165036, Towner to Pueblo, Colo., Missouri Pacific Railroad :
Company reported 30 feet distribution apartment-car space in each of trains
1, 2, 3, and 4, and 30 feet deadhead space in each of the same trains. Thirty
feet ample for all postal purposes. Apparently company operated 60-foot car
and charged all space to mail service. The space reported by company as
deadhead Space, equaling 541,584 car-foot miles, was charged to “dead space.”
Route 147009, Nashville to Hope, Ark., Missouri Pacific Railroad :
Company reported 16 feet of space in each of four trains. Fifteen feet
needed by department. Balance, amounting to 2,838.08 car-foot miles, charged
to “dead space.”
Route 147051, Paris to Fort Smith, Ark., Missouri Pacific Railroad:
Company reported 14 feet apartment-car space daily, including Sunday.
Postal-car Service on week days only, closed-pouch service being performed on
Sundays. Charge against mail service was revised accordingly and resulted
in charge to “dead space ’’ 4,868.64 car-foot miles.
Route 147002, Helena to Clarendon, Ark., Missouri Pacific, Railroad :
Company reported 15 feet apartment-car space in trains 829 and 830 daily,
including Sunday. No postal-clerk service on these trains on Sundays, closed-
pouch service only being performed on that day. The charge against mail serv-
ice was revised accordingly and resulted in a charge to “dead space ’’ of
5,491.41 car-foot miles.
Route 1470.17, Smithton to Pike, Ark., Missouri Pacific Railroad :
Company reported 18 feet apartment-car space in trains 1 and 2. Railway
Mail Service reported 15 feet sufficient for postal purposes in these trains. The
balance, amounting to 3,447 car-foot miles, charged to “dead Space.”
Route 165001, Pueblo to Trinidad, Colo., Denver & Rio Grande, Missouri
Pacific System :
-Company reported 30 feet of apartment-car space in trains 109 and 114.
Department reported 15 feet ample for postal purposes in those trains. Com-
pany also reported 6 feet storage space in train 115 in addition to the 30-foot
apartment Car. Railway Mail Service reported as not necessary. The sur-
plus space was charged to “dead space,” and amounted to 91,268 car-foot miles.
Route 165004, Mears Junction to Espanola, N. Mex., Denver & Rio Grande,
Missouri Pacific System :
Company reported 25 feet distribution apartment-car space and 20 feet storage
space in trains 115 and 116; 20 feet apartment-car Space in trains 317 and 318,
and 20 feet apartment-car space and 3 feet Storage in train 425, and 20 feet
apartment and 4 feet storage space in train 426. Railway Mail Service reported
25 feet Sufficient in trains 115 and 116, 15 feet in trains 317 and 318, and 12 feet
in trains 425 and 426. The surplus space, amounting to 108,278 car-foot miles,
charged to “dead Space.” y
Route 165012, Salida to Grand Junction, Colo., Denver & Rio Grande, Missouri
Pacific System :
Company reported 20 feet of apartment-car space and 3 feet of storage Space
in train 315, Salida to Montrose, and 30 feet of apartment-car space in same
train, Montrose to Grand Junction, 30 feet apartment-car space in train 316
between Grand Junction and Montrose, and 26 feet, Montrose to Salida, and
20 feet apartment-car space in trains 317 and 318, Salida to Mears. Railway
Mail Service reported 20 feet sufficient in trains 315 and 316, and 15 feet in
trains 317 and 318. This amount of space was charged to mail Service and
the balance, equaling 46,444 car-foot miles, charged to “dead Space.”
Route 16501S, Glenwood Springs to Aspen, Colo., Denver & Rio Grande, Mis-
Souri Pacific System : - -
Company reported 30 feet apartment-car space in trains 227 and 228. Rail-
way Mail Service reported 10 feet sufficient. The balance was charged to
“ dead space ’’ and equaled 51.240 car-foot miles, -
Route 165019, Denver to Newcastle, Colo., Denver & Rio Grande, Mis-
Souri Pacific System :
Company reported 30 feet of apartment-car space and 20 feet storage space
in train 5 as necessary, a total of 50 feet. Railway Mail Service reported
1288 BAILWAY MAIL PAY.
that 40 feet was sufficient. The balance was charged to “dead space ’’ and
equaled 77,658 Car-foot miles.
ROute 165025, Delta to Somerset, Colo., Denver & Rio Grande, Missouri
Pacific system :
Company reported 21 feet of apartment-car space in trains 377 and 378.
Railway Mail Service reported 10 feet sufficient for postal purposes. The
balance, 11 feet, was charged to “dead space ’’ and equaled for the period
28,030 car-foot miles. -
Route 165037, Montrose to Ouray, Colo., Denver & Rio Grande, Missouri
Pacific system :
Company reported 20 feet apartment-car space in train 367 and 26 feet in
train 368. Railway Mail Service reported 15 feet sufficient in each train, which
was charged. The balance, equaling 17,230.50 car-foot miles, charged to “dead
space.” •
Route 165042, Newcastle to Grand Junction, Colo., Denver & Rio Grande, Mis-
souri Pacific system :
Company reported in trains 3 and 5, in addition to 30 feet apartment-
car space, 1 foot storage space in train 3 and 5 foot storage in train 5.
Railway Mail Service reported that this space was not necessary, and it was
therefore charged to “dead Space,” which equaled 13,841 Car-foot miles.
Route 167002, Antonito to Silverton, Colo., Denver & Rio Grande, Mis-
souri Pacific system : -
Company reported 20 feet apartment-car space in trains 115 and 116 be-
tween Antonito and Durango and in the same trains between Durango and
Silverton. Railway Mail Service reported 10 feet of space ample between
Durango and Silverton. Surplus spaced charged to “dead space,” 27,108
Car-foot miles. The Car in these trains between DurangO and Silverton was
not the same Car Operated between Antonito and DurangO.
Route 167011, Espanola to Santa Fe, N. Mex., Denver & Rio Grande, Mis-
souri Pacific system : -
Company reported 20 feet apartment-car space, while Railway Mail Service
reported 12 feet sufficient for all purposes. Balance, amounting to 14,032
car-foot miles, charged to “dead space.”
Route 169002, Grand Junction, Colo., to Ogden, Utah, Denver & Rio Grande,
Missouri Pacific system :
Company reported 21 feet apartment-car space in trains 409 and 410 be-
tween Springville and Salt Lake. Railway Mail Service reported 15 feet suffl-
cient for postal purposes. Company also reported 4 feet storage space addi-
tional to 30-foot apartment car in train 5 between Grand Junction and Ogden.
Railway Mail Service stated 30 feet ample for all postal purposes. The surplus
space, amounting to 57,228 car-foot miles, charged to “dead Space.”
Route 169015, Springville, Utah, to Silver City, N. Mex., Denver & Rio Grande,
Missouri Pacific system :
Company reported 21 feet apartment-car space in trains 409 and 410. Rail-
way Mail Service reported 15 feet sufficient for postal purposes. The balance,
amounting to 16,232.40 car-foot miles, charged to “dead space.”
Route 150008, Houston to Columbia, Tex., International & Great Northern,
Railway, Missouri Pacific system :
Company charged mail service with 17 feet apartment-car space in trains
404 and 405. Railway Mail Service reported 15 feet ample for postal pur-
poses. The balance amounting to 5,233.28 car-foot miles, charged to “dead
space.”
Route 150032, Mineola to Troup, Tex., International & Great Northern Rail-
way, Missouri Pacific system : 3.
Company reported 21 feet apartment-car space in trains 205 and 206. Fifteen
feet reported sufficient by Railway Mail Service. Balance, amounting to
15,912 car-foot miles, charged to “dead space.” -
Route 150126, San Antonio to international boundary, Texas, International
& Great Northern Railway, Missouri Pacific system :
Company reported 30 feet apartment-car space and 37 feet storage in train
5, and 30 feet apartment-car space and 30 feet deadhead space in train 4.
Railway Mal Service reported 30 feet apartment-car space and 15 feet storage
sufficient in train 5, and 30-foot apartment car sufficient in train 4. Company
apparently operated 60-foot car. Forty-five feet was charged to mail service in
train 5 and 30 feet in train 4. The balance, amounting to 240,052.80 Car-foot
miles, charged to “dead space.” $
RAILWAY MAIL PAY. 1289
Route 149056, F. & S. Junction (n. O.) to Monroe, La., Little Rock & Monroe
Railway Co., Missouri Pacific system :
Company reported 16 feet apartment-car space and 6 inches closed-pouch
space daily, including Sunday. Railway Mail Service reported 15 feet, apart-
ment-car service used by mail service daily except Sunday and closed-pouch
space Sunday only. The correct assignment of space resulted in charging to
“dead space ’’ 7,018.20 car-foot miles. *
Route 147067, P. B. & W. Junction to Benton, Ark., Pine Bluff & Western
Railroad Co., Missouri Pacific system :
Company reported 23 feet apartment-car space daily, including Sunday.
Railway Mail Service reported 15 feet of space sufficient and only used daily
except Sunday, closed-pouch service being performed on Sunday. Reassign-
ment of space on this basis resulted in charge to “dead space ’’ of 26,552.46
car-fot miles.
Route 145027, Cairo, Ill., to Poplar Bluff, Mo., St. Louis, Iron Mountain &
Southern Railway Co., Missouri Pacific system : -
Railroad reported 20 feet apartment-car space, trains 431 and 436. Railway
Mail Service reported 15 feet ample for postal purposes. The balance, amount-
ing to 22,086 car-foot miles, charged to “dead space.” -
Route 145034, Bismarck, Mo., to Columbus, Ky., St. Louis, Iron Mountain &
Southern Railway Co., Missouri Pacific system :
Company reported 26 feet apartment-car space in trains 422, 423, 410, and
425. Railway Mail Service reported 20 feet ample in trains 422 and 423 and
none needed and used in trains 410 and 425. In the first two trains the
balance was charged to “dead space ’’ and amounted to 43.488 car-foot miles.
In trains 410 and 425 the space reported was thrown into passenger Space and
was not tabulated separately. Departmental rule was not followed here.
Route 145062, Springfield to Crane, Mo., St. Louis, Iron Mountain & Southern
Railway Co., Missouri Pacific system :
Original statement of company reported only two trains on this route.
Investigation disclosed the fact that four additional trains were Operated.
which upon being reported to the company brought forth a supplemental re-
port of such trains, which added 406,440 car-foot miles to the passenger
Service.
Route 147004, Halley to Warren, Ark., St. Louis, Iron Mountain & Southern
Railway Co., Missouri Pacific System :
Company reported 18 feet apartment-car space in trains 825 and 826 daily,
including Sunday. Railway Mail Service reported a car used for postal pur-
poses daily except Sunday, no mail service of any kind being performed on
Sunday, and that 15 feet of space was sufficient on week days. The balance,
amounting to 13,389 car-foot miles, charged to “dead Space.”
Route 147012, Knobel to Helena, Ark., St. Louis, Iron Mountain & Southern
Railway Co., Missouri Pacific system :
Company reported 21 feet of apartment-car space and 4 feet of storage space
in trains 9 and 10, and 20 feet of apartment-car Space in trains 309 and 310.
Railway Mail Service reported 20 feet of space ample for postal purposes in
all trains. The balance, amounting to 28,032 car-foot miles, charged to “dead
space.”
Route 147023, Memphis, Tenn., to Bald Knob, Ark., St. Louis, Iron Mountain
& Southern Railway Co., Missouri Pacific system :
Company reported 20 feet of apartment-car space in trains 223 and 204, and
16 feet of apartment-car space and 3 feet storage space in train 205, 16 feet
apartment-car space in train 202, and 30 feet apratment car and 2 feet storage
in train 931. Railway Mail Service reported 15 feet of space ample for all
postal purposes in the first four trains named and 30 feet in train 931. Sur-
plus space was charged by the department to “dead space,” and announted to
44,640 car-foot miles.
Route 147044, McGehee, Ark., to Clayton Junction, Ila. : St. I.Ouis, Iron
Mountain & Southern Railway Co., Missouri Pacific System :
Company reported 18 feet apartment-car space in trains S25 and 826 daily,
including Sunday. Railway Mail Service reported 15 feet apartment-car space
utilized only on week days, with closed-pouch Service on Sundays. Reassign-
ment of space on this basis resulted in charge to “dead space ’’ of 2,699.53
Car-foot miles.
Route 147057, Arkansas Southwestern Railway Junction (n. o.) to Womble,
Ark. ; Gurdon & Fort Smith Railway, Missouri Pacific System :
1290 RAILWAY MAIL PAY.
Company reported 18 feet apartment-car space in trains 1 and 2. Railway
Mail Service reported 15 feet sufficient for postal purposes. The balance,
amounting to 7,090.20 car-foot miles, was charged to “dead space.”
Route 147060, Arkansas City to Trippe Junction (n. o.), Ark. ; St. Louis, Iron
Mountain & Southern Railway Co., Missouri Pacific System :
Company reported 15 feet apartment-car space in each of four trains daily,
including Sunday. Postal-clerk service in those trains on week days only,
Closed-pouch service being performed on Sundays. Reassignment of space on
this basis charged to “dead space,” 4,256.46 car-foot miles.
Route 153005, Fort Smith, Ark., to Coffeyville, Kans. ; St. Louis, Iron
Mountain & Southern Railway. Co., Missouri Pacific System :
Company reported 30 feet apartment-car Space and 30 feet “deadhead
Space ’’ in each of trains 103 and 104. Railway Mail Service reported 30 feet
apartment-Car Space all that was needed in those trains. Company apparently
Operated 60-foot car and charged department with full space. The surplus
Was Charged to “dead Space,” and amounted to 295,002 Car-foot miles.
Route 147026, Little Rock to Altheimer, Ark. ; St. Louis Southwestern Rail-
way Co., Missouri Pacific System :
Company reported 26 feet of apartment-car space in trains 31 and 32 daily,
including Sunday, ond the same amount of space in trains 35 and 36. Railway
Mail Service reported 15 feet ample on each train, and that postal-clerk Service
was performed in trains 31 and 32 daily, except Sunday, closed-pouch service .
being performed on Sunday. Reassignment of space on basis of needs resulted
in charging to “dead space'' 63,699.79 car-foot miles.
Route 147030, Stuttgart to Gillett, Ark. ; St. Louis Southwestern Railway
Co., Missouri Pacific lines:
Company charged mail service with 26 feet apartment-car space in trains
25 and 26. Sixteen feet reported sufficient for postal purposes. Balance
charged to “dead space,” amounting to 23,123 car-foot miles. -
Route 147042, Cairo, Ill., to Texarkana, Tex.; St. Louis Southwestern Rail-
way Co., Missouri Pacific System :
Company reported 26 feet apartment-car space, trains 1 and 2 between Alden
and Jonesboro, and 4 feet additional in train 2, Storage Space. Railway Mail
Service reported 15 feet ample for postal purposes. Also reported 30 feet
“deadhead space ’’ in trains 3 and 4 between Fair Oaks and Malden. Rail-
way Mail Service reported this space not needed in either train. Company
evidently operated 60-foot car and charged mail service with all space. Com-
pany also reported 26 feet apartment-car space in trains 25, 26, 31, and 32,
in which trains Railway Mail Service reported 15 feet ample for postal pur-
poses. The surplus space was charged to “dead Space,” and amounted to
280,808.40 car-foot miles.
Route 149019, Lewisville, Ark., to Shreveport, La. ; St. Louis Southwestern
Railway Co., Missouri Pacific System :
Twenty-six feet apartment-car space charged to mail Service in trains 23
and 24. Fifteen feet reported ample for postal purposes. The balance, equal-
ing 35,361 car-foot miles, charged to “dead Space.”
Route 150164, Corsicana to Hillsboro, Tex., St. Louis Southwestern Railway
Co., Missouri Pacific system :
Company reported 25 feet of apartment-car space in trains 503 and 504 daily,
including Sunday. No postal-clerk service on these trains On Sundays; Closed-
pouch service being performed; and 15 feet ample on week dayS. Rearrange-
ment of space on this basis resulted in charging to “dead space ’’ 29,663.80 car-
foot miles.
Route 150067, Mount Pleasant to Fort Worth, Tex., St. Louis Southwestern
Railway Co., Missouri Pacific system :
Gompany reported 26 feet apartment-car space in each of trains 101, 102, 103,
and 104. Railway Mail Service reported 25 feet necessary in train 101, and
20 feet in each of the other trains, which was charged by the department to the
mail service. The balance, amounting to 88,224.60 car-foot miles, was charged
to “dead space.” -
An error was made here in that 25 feet was not charged to mail Space in
train 102, the return movement of train 101. Had this been properly charged
it would have reduced the charge to “dead space ’’ 23,217 car-foot miles.
Route 150025, Texarkana to Waco, Tex.; St. Louis Southwestern Railway
Co., Missouri Pacific System :
Company reported 30 feet apartment-car space in trains 3 and 4. This was
reduced to 20 feet by the department, except in train 4 between Mount Pleasant
RAILWAY MAIL PAY. 1291
and Texarkana. It appears that in this case the department made an error
and should have charged only 20 feet between Mount Pleasant and Texarkana,
instead of 30 feet. The readjustments actually made charged to dead Space
136,470 car-foot miles. This should have been increased 18,138 car-foot miles
additional, making a total of 154,608 car-foot miles.
Route 150042, Noel Junction to Dallas, Tex.; St. Louis Southwestern Railway
Co., Missouri Pacific system :
Company reported 26 feet of apartment-car space in each of trains 201, 202,
205, and 206. Railway Mail Service reported 25 feet necessary in train 201,
and 20 feet in the other trains, which was charged to mail Service by the de-
partment, the balance going to “dead Space.”
An error was made here in that 25 feet of space should have been charged
to mail service in train 202. This would have reduced the amount of car-foot
miles charged to dead space 2,120 car-foot miles, making the total 5,860, instead
of 7,980 car-foot miles.
Route 150144 Tyler to Lufkin, Tex.; St. Louis Southwestern Railway Co.,
Missouri Pacific system :
Company reported 22 feet apartment-car space in trains 403 and 404. Rail-
way Mail Service reported 15 feet sufficient for postal purposes. The balance,
amounting to 37,636.20 car-foot miles, charged to “dead space.”
Route 150060, Commerce to Sherman, Tex.; St. Louis Southwestern Railway
Co., Missouri Pacific system : -
Company reported 26 feet apartment-car space in trains 203 and 204. Rail-
way Mail Service reported 15 feet ample for postal purposes. Balance, amount-
ing to 34,452 car-foot miles, charged to “dead space.”
Route 150127, Waco to Gatesville, Tex.; St. Louis Southwestern Railway
Co., Missouri Pacific system : #
Company reported 22 feet apartment-car space in trains 1 and 2. Railway
Mail Service reported 15 feet sufficient. Balance charged to “dead space,”
equaling 19,740 car-foot miles.
Route 149002, New Orleans, La., to Marshall; Texas & Pacific Railway Co.,
Missouri Pacific system : -
Company reported 25 feet apartment-car space in trains 55 and 56 between
New Orleans and Addis, and in trains 57 and 58 between Shreveport and Mar-
shall. Railway Mail Service reported 20 feet ample in the former trains, and
no postal-clerk service in the two latter trains. This Space thus charged to
mail service, of which the department charged to “dead space ’’ was 76,791 car-
foot miles.
Route 149017, Cypress to Shreveport, La. ; Texas & Pacific Railway Co., Mis-
souri Pacific system :
Company reported 25 feet apartment-car space in trains 75 and 76 daily, in-.
cluding Sunday. No postal-clerk service in those trains on Sunday; closed-
pouch service only being performed, and 15 feet reported ample for postal pur-
poses Reassignment of Space on this basis resulted in charging to “dead
space ’’ 62,222 car-foot miles.
Route 149018, Addis to Ferriday, La., Texas & Pacific Railway Co., Missouri
Pacific system :
Company reported 25 feet apartment-car Space in trains 61 and 62 between
Addis and Ferriday, and 55 and 56 between Addis and Torras. Railway Mail
Service reported 15 feet ample in first two trains, and 20 feet in trains 55 and
56. Surplus space charged to “dead space ’’ and equaled S5,008 car-foot miles.
Route 149034, Simmesport to Bunkie, La., Texas & Pacific Railway Co., Mis-
souri Pacific system :
Company reported 11 feet apartment-car space daily, including Sunday. No
postal-clerk service on this train on Sunday, closed-pouch service only being
performed on that day, and 10 feet was ample for postal purposes. Reassign-
ment of space on this basis charged to “dead Space,” 3,570 car-foot miles.
Route 149035, Junction to Macksville, La., Texas & Pacific Railway Co.,
Missouri Pacific system : -
Company reported 11 feet of apartment-car space in each of four trains
daily, including Sunday. No postal-clerk Service in these trains on Sunday,
and 10 feet of space .ample for postal purposes. Readjustment of space On
this basis charged to “dead space,” 2,464 car-foot miles.
Route 149039, Texarkana, Ark., to Shreveport, La., Texas & Pacific Railway
Co., Missouri Pacific system: - -
35797—No. 11—14—4
1292 RAILWAY MAIL PAY.
Company reported 25 feet apartment car daily, including Sunday. No.
postal-clerk Service on this train or closed-pouch service on Sunday. The
Space charged by company for Sunday service was transferred to “dead space”
and announted to 15,322 car-foot miles.
Route 149059, Simmesport to Mellville, Texas & Pacific Railway Co., Mis-
Souri Pacific system : -
Company reported 11 feet apartment car daily, including Sunday. No.
postal-clerk Service on this train Sunday. Closed-pouch service only being per-
formed, and 10 feet apartment-car space sufficient. Readjustment of space
On this basis charged to “dead space,” 3,145.S0 car-foot miles. º
Route 150073, Whitesboro to Fort Worth, Tex.; Texas & Pacific Railway Co.,
Missouri Pacific system :
Company reported 25 feet apartment-car space in trains 31 and 32. No.
postal-clerk Service on this route, closed-pouch service only being performed.
This apartment car is the car run in the Texarkana & Whitesboro R. P. O.,
trains 31 and 32, and is run through to Fort Worth, but is not used for postal
purposes. The Car-foot miles represented by this movement equaled 106,995
car-foot miles, which was charged to “dead space.”
Route 145070, Tower Grove Station (n. O.) to Kirkwood Branch Connection
(n.o.), Mo.; St. Louis, Iron Mountain & Southern Co., Missouri Pacific system:
Company reported 26 feet apartment-car space in train 23, and 28 feet, in
train 22 (St. Louis & Columbus R. P. O.). Railway Mail Service reported 20.
feet ample for postal purposes. Balance, equaling 2,982 car-foot miles, charged
to “dead space.” -
Route 147041, Kirkwood Branch Connection (n. O.), Mo., to Texarkana, Ark. ;.
St. Louis, Iron Mountain & Southern Railway, Missouri Pacific system.
Company reported 26 feet distribution and 2 feet storage apartment-car space
in trains 22 and 23 between R. B. Con. and Bismarck (St. Louis & Columbus
R. P. O.). Railway Mail Service reported 20 feet sufficient for postal purposes:
Balance, representing 28,799.4 car-foot miles, charged to “dead space.”
Company also reported 25 feet apartment-car space in trains 9 and 10 be-
tween Poplar Bluff and [nobel. Twenty feet only needed in these trains.
Balance should have been charged to “dead space,” but through error was not
deducted; so car-foot-miles reported by company was charged to “mail service.”
By this error 9,694 car-foot miles were erroneously charged to mail service.
Route 150007, Longview to San Antonio, Tex.; International & Great North-
ern Railroad, Missouri Pacific lines:
Company reported 30 feet apartment-car space in train 2 between Palestine
and Longview. Closed-pouch service only in this train. Sixty-eight thousand
and ninety-six car-foot miles charged to “dead space.” This car is the return.
movement of 30 feet apartment Car run in train 5 between the Same pointS,
which train takes the full car to San Antonio brought from Longview on
train 7. Full car returned over route in train 4. While the charge made by
the department was in accordance with the rule, the company might have been
credited with the space used in this return movement. Company reported.
30 feet apartment-car space in trains 7, 8, and 9. Railway Mail Service re-
ported 15 feet sufficient for postal purposes in train 7 and 20 feet in trains
8 and 9. Difference, amounting, to 231,725 car-foot miles, charged to “dead
Space.” *
Route 150009, Texarkana, Ark., to El Paso, Tex., Texas & Pacific Railway,
Missouri Pacific System :
. Company reported 30 feet apartment-car space in trains 3 and 4 between
Big Spring and El Paso. Railway Mail Service reported 15 feet sufficient in
train 3 and 20 feet in train 4. Balance, amounting to 259,695 car-foot-miles,
charged to “dead space.” Department probably should have charged mail:
Service with 20 feet in each train. This would have reduced the charge to
“dead space” 51,939 car-foot miles, leaving a remainder of 207,756 car-foot
miles as correct “dead-space ’’ charge. -
Route 145001, St. Louis to Kansas City, Mo., Missouri Pacific Railway:
Company reported 19 feet apartment-car space and 9 feet storage Space in
train 5 and 19 feet apartment-car space and 8 feet storage space in train 6
between Jefferson City and Kansas City. Railway Mail Service reported 15.
feet ample for postal purposes. Balance, representing 6,618.60 car-foot miles,
charged to “dead space.” This should have been 1,443.60 car-foot miles more,
as the computation was not carried through as one train. -
Company reported 30 feet apartment-car space and 5 feet storage in train
212, 30 feet apartment-car space and 25 feet deadhead space in trains 214 and
RAILywAY. MAIL PAY.
1298
245, between Kansas City, and Pleasant Hill, Mo. Thirty feet in each train
Ireported by Railway Mail Service as sufficient.
space,” 56,859 car-foot miles.
Company reported 20 feet apartment-ear space in trains 621 and 622 and
25 feet apartment-car space in trains 623 and 624 between Independence and
Kansas City, Mo.
Remainder charged to “dead
Railway Mail Service reported 15 feet sufficient in each
train. Balance of spage, 9,144 car-foot miles, charged to “dead space.”
Company reported 26 feet apartment-car space in train 23 and 28 feet apart-
ment-car space in train 22 between St. Louis and Tower Grove station (n. O.),
MO.
Twenty feet reported as sufficient by Railway Mail Service.
Balance Of
space, 1,213.80 car-foot miles, charged to “dead space.”
Statement of dead Space as revised on routes of the Missouri Pacific system.
APARTMENT-CAR SPACE.
1 406,440 added to passenger space on this route, but not tabulated here.
Dead space
*:::::::::*| Mail space || Dead space Dead space
Dead space charged by ..., | ..., |carfootinies
***** ...'t department department
car-foot miles department *: •l- 3 roperly
y r *
Route No. ... . . . . . which should which should chºſe
de .# t. sºliº e have been have been upon
p been charged charged as charged to reºn
2S j dead space. mail space. tº
Space.
145040. -------------------------- 235,148.00 --------------|--------------|-------------- 235,148.00
145042--------------------------- 6,776.46 --------------|--------------|-------------- 6,776.46
145047--------------------------- 5,558.63 --------------|--------------|-------------- 5,558.63
145092- - - - - - - - - - - - - - - - * * * * * * * - - - - 88, 537.00 --------------|--------------|-------------- 88, 537.00
145100--------------------------- 27,772.80 --------------|--------------|-------------- 772.80
165031--------------------------- 121,140.00 --------------|--------------|-------------- 121,140.00
155036--------------------------- 83,847. 24 |--------------|--------------|-------------- 83, 847. 24
155040--------------------------- 52,231.32 --------------|--------------|-------------- 52,231. 32
155046--------------------------- 12,812.80 --------------|--------------|-------------- 12,812.80
155060--------------------------- 13,563.68 --------------|--------------|-------------- 13, 563.
155067--------------------------- 1,390,806.00 --------------|--------------|-------------- 1,390,806.00
155074--------------------------- 12,740, 40 ----------------------------|-------------- 12, 740.
#::::::::::::::::::::::::::: 1: .............................…. 1;%
4--------------------------- ,682.72 --------------|--------------|-------------- y --~~
155091--------------------------- 401,544.00 --------------|--------------|-------------- 401, 544.00
155094. -------------------------- 7, 528, 56 |--------------|--------------|-------------- 7,528. 56
155095--------------------------- 48,348.00 --------------|--------------|- '------------- 48,348.00
157038. -------------------------- 67, 517.84 - - - - - - - - - - - - - - - - - - - - * - - - - - - - - - - - - - - - - - - - - - 67,517.84
157040. -------------------------- ,907. 00 - - - - - - - - - - - - 3. * * * * * * - - - - - - - - - - I - - - - - - - - - - - - - - 9,907.00
157059. -------------------------- 3,019.64 ----------------------------|-------------- 3,019.64
165036. -------------------------- $41,584.00 --------------|--------------|-------------. 541,584.00
147009. -------------------------- 2,838.08 --------------|--------------|-------------- 2,838.08
147051--------------------------- 4,868.64 --------------|--------------|-------------- 4,868.64
147002. -------------------------- 5,491. 41 i--------------|--------------|-------------- 5,491. 41
147017-------------------------- 3,447.00 --------------|--------------|-------------- 3,447.00
165001--------------------------- 91,268.00 --------------|--------------|-------------- 91,268.00
165004. -------------------------- 108,278.00 --------------|--------------|-------------- 108,278.00
#::::::::::::::::::::::::::: #}|…l........................ #%
* * * * * * * * * * * * * * * * * * * * * * * * * * * 51,240.00 --------------|--------------|-------------- 51,240.
165019. -------------------------- 77,658.00 --------------|--------------|-------------- 77,658.00
165025--------------------------- 28,030.00 --------------|--------------|-------------- 28,030.00
165037--------------------------- 17,230.50 --------------|--------------|-------------- 17, 230. 50
165042--------------------------- 13,841.00 --------------|---------------------------- 13, S41.00
167002--------------------------- 27, 108.00 --------------|--------------|-------------- 27, 108.00
167011--------------------------- 14,032.00 --------------|--------------|-------------- 14,032.00
169002--------------------------. 57,928.00 --------------|--------------|-------------- 57,228.00
169015. -------------------------- 16,232.40 --------------|--------------|-------------- 16,232.40
150008--------------------------- 5,233,28 --------------|--------------|-------------- 5,233.28
150032. -------------------------- 15,912.00 --------------|--------------|-------------- 15,912.00
150126--------------------------- 240,052.80 --------------|--------------|-------------- 240,052.80
149056--------------------------- 7,018.20 ----------------------------|-------------- 7,018.20
147067--------------------------- 26,552.46 |--------------|---------------------------- 26,552.46
1450.27--------------------------- 22,086.00 --------------|--------------|-------------- 22,086.00
#. * * * * * * * * * * * * * * * * * * * * * * * * * * * 43,488.00 --------------|--------------|-------------- 43,488.00
5062 *----------------------------------------|--------------|--------------|----------------------------
147004--------------------------- 13,389.00 --------------|--------------|-------------- 13,389.00
147012. -------------------------- 28,032.00 --------------|--------------|-------------- 28,032.00
147023--------------------------- 44,640.00 --------------|--------------|-------------- 44,640.00
147044. -------------------------- 2,699.52 --------------|--------------|-------------- 2,699.52
147057. -------------------------- 7,090.20 --------------|--------------|-------------- 7,090.20
147060. -------------------------- 4,256.48 |--------------|--------------|-------------- 4,256.48
153005--------------------------- 295,002.00 --------------|--------------|-------------- 295,002.00
147026. ------------------------- *{ 63,699.79 |--------------|--------------|-------------- 63,699.79
147030-------------------------- s—s 23,123.00 --------------|--------------|-------------- 23, 123.00
147042-. ------------------------- 280,808.40 '----------------------------'-------------- 280,808. 40
1294
RAILWAY MAIL PAY.
Statement of dead space as revised on routes of the Missouri Pacific system—Con.
APARTMENT-CAR SPACE.

º: #.
Car-foot, mileS *
º Mail space || Dead space
Dead Space . charged by charged by sººis
c.º.s. ..., | departmeiſt, department roperl
Route No. charged b . Which which should which should C §
ged by l have been have been geable
department. should have charged as charged to upon
*...* dead space. mail space. TěVISIOIl.
\ Space.
149019.--------------------------- 35,361.00 --------------|--------------|-------------- 35,361.00
150064--------------------------- 29,663.80 --------------|--------------|-------------- 29,663.80
150067--------------------------- 88,224.60 --------------|-------------. 23,217.00 3 * * * *
150025- - - ------------------------ 136,470.00 - - - - - - - - - - - - - - 18, 138.00 - - - - - - - - - - - - - - 154,608.00
150042--------------------------- 7,980.00 --------------|-------------- 2,120.00 ,860.
150044--------------------------- 37,636.20 !--------------|--------------|-------------- 37,636.20
150000--------------------------- 34,452.00 --------------|--------------|-------------- 34,452.00
150127--------------------------- 19,740.00 --------------|--------------|-------------- 19,740.00
149002. -------------------------- 76,791.00 ----------------------------|-------------- 76,791.00
149017--------------------------- 62,222.00 --------------|--------------|-------------- 62,222.00
149018--------------------------- 85,008.00 --------------|--------------|-------------- 85,008.00
149034. -------------------------- 3,570.00 --------------|--------------|-------------- 3,570.00
149035- - - ------------------------ 2,464.00 ----------------------------|-------------- 2,464.00
149039--------------------------- 15,322.00 --------------|---------------------------- 15,322.00
149059--------------------------- 3, 145.80 --------------|--------------|-------------- 3, 145.80
150073--------------------------- 106,995.00 --------------|--------------|-------------- 106,995.00
145070--------------------------- ,982.00 --------------|--------------|-------------- ,982.
147041--------------------------- 28,799.40 - - - - - - - - - - - - - - 9,894.00 |... . . . . . . . . . . . 38,693.40
150007. -------------------------- 299,621.00 231,525.00 --------------|-------------- 68,096.00
150009.--------------------------. 259,695.00 51,939.00 --------------|-------------- 207,756.00
145001--------------------------- 6,618.60 - - - - - - - - - - - - - - 1 1,443.60 |... . . . . . . . . . . . 8,062. 20
56,859.00 --------------|-------------* - ? - - - - - - - - - - - - - - 56,859.00
9,144.00 --------------|---------------------------- 9,144.00
1,213.80 --------------|--------------|-------------- 1,213.80
a 6,248,262.05 || 283,464.00 29,475.60 25,337.00 5,968,936.65
Net reduction-------------|------------------------------------------|-------------- 279,325.40
1 Error in computation.
Railway post office car Space.
ROUTES 145001 (PART)–145070–147041 (PART)—ST. LOUIS, MO., TO LITTLE ROCK, ARK.

Car-foot
- º miles of
Train Space authorized Space reported by Space as charged by || Space ...; §
No. by department. company. department. de #t- dead space. charge
. to dead
r . •Space.
IFeet.
One 60-foot car. - One 60-foot, dist . . . . . . . One 60-foot dist. . . . .
3 |{One 40-foot Car..] One 40-foot dist. - - - - - - One 40-foot dist. . . . . 14 || 146,483.40 |...... . . . . .
e = s. m = * * - - - - - - - - e as 29-foot storage. . . 15-foot storage..
One 60-foot Car-. One 60-foot dist . . . . . . . One 60-foot dist. . . . .
5 |{One 40-foot Car. - One 40-foot dist. . . . . . . One 40-foot dist. . . . . 7 73,241.70 - - - - - - - - - - -
s = * * * * * - - - - - - - * * * 22-foot Storage. . . . 15-foot storage--
One 60 foot car. - One 60-foot dist. . . . . . . One 60-foot dist. . . . .
7 |{One 60-foot Car. ... One 60-foot dist. . . . . . . One 60-foot dist. . . . . 8 83, 704.80 |. . . . . . . . . . .
sº me a sº as a - - - - - - - - - s = 38-foot storage. . . . 30-foot Storage..
One 60-foot Car..! One 60-foot dist. - - - - - - - - - - - - - - - - - - - - - - - - - - - -
4 R----------------- One 60-foot D. H...----|---------------------- 61 633,047. 10 |1609,804.00
* * * * * * - - - - - - - - - s = 1-foot Storage. ---|---------------------- -
One 60-foot car..! One 60-foot dist. . . . . . . One 60-foot dist. . . . .
6 |{One 40-foot car...] One 40-foot dist. . . . . . . One 40-foot dist. . . . . - 20 209,262.00 |... . . . . . . . .
one 40-foot car. O ;ºge: One 40-foot dist.....
ne 40-foot Car- me 40-foot dist. . . . . . . ne 40-foot dist - - - - -
8 one 40-foot car. O ; º ...] one 40.foot dist..... 20 | 207,528.00 |... . . . . . . . .
ne 40-foot Car. - One 40-foot dist. . . . . . . ne 40-foot dist. . . . . • {
28–10 { * * * * * * - - - - - - - - as sº * 20-foot Storage. ---|---------------------- } 20 99,522.00 - ... -------
560 feet. . . . . 770feet. . . . . . . . . . . 620 feet......... 150 1,452,789.00 609,804.00
RAILWAY MAIL PAY.
1295
Railway post office car space—Continued.
ROUTE 147041—LITTLE ROCK TO TEXARKANA, ARK.

Car-foot
: ‘.. miles of
--- * Car-foot space in-
Train Space authorized Space reported by Space as charged by space miles of correctl
No. by department. company. department. de #t dead space. charg
t . to dead
wº Space.
º Feet.
One 40-foot car..] One 40-foot dist. - - - - - - One 40-foot dist.....
3 R----------------- 20-foot storage...-- 15-foot storage.. 19 82,427.70 |- - - - - - - - - - -
* * * * * * * * * * * * * * * * * 14-foot storage----|----------------------
5 One 60-foot car. ..] One 60-foot dist... -- - - - One 60-foot dist.---- 4 17,353. 20
ſl- - - - - - - - - - - - - - - - - 4-foot storage----|---------------------- , ºvº- ºrv - - - - - - - - - - -
7 One 60-foot Car. - One 60-foot dist....... One 60-foot dist. - - - - } None
* - - - - - - - * * * * - - - - - 40-foot storage- - - - 40-foot storage.. s e - - - - - e ºs s es sº a • * * * * * * * * * * * *
8 One 40-foot Car...] One 40-foot dist. - - - - - - One 40-foot dist. ---. 20 86,766.00
* * - - - - - * * * * * * - - - - 20-foot storage----|---------------------- y - vºw- • * * * * * * * * * *
6 One 60-foot Car..! One 60-foot dist. . . . . . . One 60-foot dist - - - - - 4 17,353. 20
ône 66.foot car. one ºf Sãºi..... y wºrv. -v I - - - - - - - - - - -
ne 60-foot, Car...] One Oot dist. - - - - - - Ilê Oot dist.....
4 { - - - - - - - - sº ºr is s s - - - - 2-foot storage----|---------------------- } 2 8,676.60 - - - - - - - - - - -
320 feet-- - - - - 424 feet-- - - - - - - - - - - 375 feet... ------- 49 212, 576.70 - - - - - - - - - - -
1 Return of 60-foot car authorized in train 7 erroneously charged to dead space.
ROUTE 150009 (Port)—TEXARKANA, ARK., TO LONGVIEW, TEX.

3 One 40-foot car...! One 40-foot dist. - - - - - - One 40-foot dist - - - - - } 11 29.828. 70
* * * * * * * * * * * * * * * * * 21-foot storage- - - - 10-foot Storage.-- • *-ºn-ºvº is * * * * * * * * * * *
5 One 50-foot car...! One 50-foot dist - - - - - - - One 50-foot dist - - - - - } None
One 40-foot car. O ; º: ...] O. #: º: * * * *-s ºf e i s - - - - - - e s as a sº m r * * * * * * * * is º º
me 40-foot car...] One 40-foot dist - - - - - - -] One 40-foot dist - - - - -
4 One 50-foot car. O :::::::::::: *:::: One 50-foot dist...I. } 20 | 1.47.684.00 - - - - - - - - - - -
ne 50-foot car...] One 50-foot dist - - - - - - - ne 50-foot dist - - - - -
6 tº: 10-foot storage----|---------------------- 10 26.940.00 i- - - - - - - - - - -
One 50-foot car...! One 50-foot dist - - - - - - - One 50-foot dist - - - - -
105 R----------------- 10-foot storage... 20-foot Storage - - 17 37.716.00 [- - - - - - - - - - -
ône 50-foot car. O ;:ºgº.... Öne 50-foot dist...I.
ne 50-foot car...] One 50-foot dist - - - - - - - Iłę Oot dist. . . . . **
104 { * - - - - - - * * * * = ----- 10-foot storage----|-- - - - - - - - - - - - - - - - - - - - - } 10 || 27. 117.00 - - - - - - - - - - -
280 feet. - - - - - 389 feet. - - - - - - - - ... 321 feet. - - - - - - - - - 68 249.285.70 |- - - - - - - - - - -
ROUTE 150009 (PORT)—LONGVIEW TO FORT WORTH, TEX.
One 40-foot car. One 40-foot dist....... One 40-foot dist - - - - - -
a ſtºº. 21-foot storage - - - - 5-foot storage-- } 16 || 75,043.00 - - - - - - - - - - .
5 One 50-foot car...] One 50-foot dist. - - - - - - One 50-foot dist - - - - - } None
* - - - - - - - * * * * * - - - - 11-foot Storage - - - - 11-foot storage--|ſ * * I e - a - * * * * * * * * * : * * * * * * * * * * *
4 One 40-foot car...] One 40-foot dist - - - - - - - One 40-foot dist - - - - - } 20 107. 604.00 - - - - - - - - - - -
* * * * * * * * * * * * * * * * * 20-foot storage----|-- - - - - - - - - - - - - - - - - - - - - 40.080.00 |- - - - - - - - - - -
6 (One 50-foot car. One 50-foot dist.-----. - One 50-foot dist - - - - - \ 10 46.902.00
* - - - - - - sº º º 'º - sº sº ºn - - 10-foot storage----|----------------------|ſ - º Aº ºf e - - - - * * * * * * *-
180 feet. . . . . . 242 feet............ 196 feet. . . . . . . . . . 46 || 269. 629.00 - - - - - - - - - - -
ROUTE 150007—LONGVIEW TO SAN ANTONIO, TEX.
One 50-foot car --| One 50-foot dist - - - - - - - One 50-foot dist - - - - - 93.204.00 - - - - - - - - - - -
7-5 R----------------- 10-foot Storage- - - - 25-foot storage-- 12 29.268.00 - - - - - - - - - - -
- - - - - - - * * * * * * - - - - 27-foot Storage----|-- - - - - - - - - - - - - - - - - - - - - 77. 670.00
4 ſº 50-foot car...] One 50-foot dist - - - - - - - One 50-foot dist - - - - - } 10 24. 39ööö - - - - - * * * * * *
- * - - - - - * * * * * * * * - - 10-foot storage----|---------------------- * * * * * • * * * * * * * * * *
100 feet. - - - - - 147 feet............ 125 feet. . . . . . . . . . 22 224.532.00 - - - - - - - - - - -


1296 RAILWAY MAIL PAY.
Railway post office car space—Continued.
* ROUTE 145001—ST. LOUIS TO KANSAS CITY, MO.

; : t - . Car-foot.
- º miles of
Train Spaceauthorized Space reported by Space as charged by space . º §§
No. : y department. Company. * department. | by dead s ł cha º
• * | * depart- pace. rg
& - ment to dead
* space.
- º * Feet.
l One 60-foot car... One 60-foot dist. . . . . . One 60-foot dist....[ None
- - - - - - - - - - - - - - - - - 10-foot Storage... 10-foot storage. & º & s & s = ºn e s ∈ sº sº º us sº e º ºs º ºs º ºr tº *
3 | One 60-foot car - . One 60-foot dist. . . . . . One 60-foot dist. ... Non
tº gº as s = * * * * * * * * * * sº gº 14-foot storage... 14-foot storage. 9. I- - - - - - - - - - - - - - - - - - - - - - - -
2 | Two 60-foot cars. Two 60-foot dist. . . . . . TWO 60-foot dist....! None. . . . . . . . . . . . . . . . . . . . . . . .-
Three 60-foot cars. Three 60-foot dist. . . . . . Three 60-foot dist... ;
* * * * * ºr s = sº s sº sº * * * * * One 40-foot dist...... One 40-foot dist....
7 R----------------- 20-foot storage.-- 60-foot storage. 32 || 271, 180.00 - - - - - - - - - - -
* * * * * * * * * * * * * * * * * 70-foot Storage.--|- . . . . . . . . . . . . . . . . . . . . .
* * * * * * * * * * * * * * * * * 2-foot Storage---|---------------------.
12 Two 60-foot cars. Two 60-foot dist. . . . . . Two 60-foot dist... ºf None. . . . . . . . . . . . . . . . . . . . . . . . .
One 60-foot car. - Two 60-foot dist. D. H. Ope 60-foot D. H. . . . }
4 One 40-foot car. . on; fºot storage | One 40-foot D. H. . . . 92 779,6 44.80 - - - - - - - - - - -
* * * * * * * * * * * * * * * * * 2-foot storage..........l......................
One 60-foot car. - || One 60-foot dist. . . . . . . One 60-foot dist - - - - -
9 ROne 50-foot Car . . . One 50-foot dist - - - - - - - One 50-foot-dist. . . . . JNone. -------------|-----------
* -º º sº º º ºs º º & º º ſº ----| 14-foot storage---------| 14-foot storage----...} f
8 {3; 50-foot car. - One 60-foot dist - - - - - - - One 50-foot dist. . . . . 10 84.744.00
One 60-foot car. . . One 60-foot D. H. - - - - - One 60-foot D. H. . . . ; : ***, vv. - - - - - - - - - - -
900 feet - - - - - - - - - - 1,132 feel. . . . . . . . . . . . . . | 998 feet......... .... 134 |, 135,559.60 |. ----------
Grand total dead space railway post-office car service shown in above table ... . . . . . . . . . . . . . . . . . $3,544,382
“Deadhead space” erroneously charged as “dead space”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . y
Total “dead space” correctly charged upon revision.......... . * * * * * * * * * * * * * * * * * * * * * * * * * * 2,934,578
Recapitulation.
APARTMENT AND RAILWAY POST-OFFICE SPACE COMBINED.
Difference er-
- roneously
Charged by Tabulated by As reviewed to 3:..."
Classification. company to department as and revised by should have
* mail space. “dead space.” department. been charged
as “dead-
head” space.
Apartment----------------------------- 6,248,262.05 6,248,262.05 5,968,936.65 279,325.40
Railway post office--- - - - - - - - - - - - - . . . . . . 3,544,382.00 3,544,382.00 2,934,578.00 609,804.00
Total.---------------------------- 9,792,644.05 9,792,644.05 8,903,514.65 889,129.40

Adding to this revised total of 8,903,514.65 dead space car-foot miles 16,208.28
car-foot miles of dead space charged on routes not listed in the foregoing tabu-
lation, the total dead space for the system is found to be 8,919,722.93 instead of
9,808,852.33 car-foot miles, as given in Document No. 105. Using the former
figure and increasing the deadhead space and passenger space in accordance
with the results shown hereinbefore, the Comparison of Car-foot miles in the
several services with those given in Document No. 105 is as follows:

f Per cent - © Per Cent aS
- º, Car-foot miles *
* & Car-foot miles of car-foot| shown in
Classification of space. as revised. miles as | * §ºnt Document
- revised. o. No. 105,
il------------------------------------------- 46,097,323.63 8.97 || 46,097,323,63 8.98
Deadhead.------------------------------------- 2,234,027. 12 .43 || 1,361,106.00 .27
Total mail ------------------------------------- 48,331,350. 75 9.40 || 47,458,429.63 9.25
Passenger-------------------------------------- 422,764,786.91 82.28 422,358,346.91 82.25
Dead Space------------------------------------ 8,919,722.93 1.74 9,808,852.33 1.91
Passenger and dead Space. --------------------- 431,684,509.84 84.02 || 432,167,209.24 84.16
Express---------------------------------------- 33,833,154.93 6.58 33,833,154.93 6, 59 .
RAILw A. Y. MAIL PAY

E. - -
lFſ. HEARING
A^
1413.
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS
MAIL MATTER AND COMPENSATION FOR
THE TRANSPORTATION OF MAILS
BEFORE THE
APRIL 1, 2, AND 3, 1914
N O. 12
Printed for the use of the joint committee
WASHINGTON
GOVERNMENT PRINTING OFFICE
I914
UNIVERSITY OF MICHIGAN LIBRARIES
Transportation
Library
JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER
AND COMPENSATION FOR TEIE TRANSPORTATION OF MAILS.
CoNGREss of THE UNITED STATEs.
JONATHAN BOURNE, JR., Chairman. JAMES T, LLOYD.
EIARRY A. RICHARDSON. WILLIAM E. TUTTLE, JR.
JOHN H. BANKEI.E.A.D. JOEIN W. WEEES.
RoBERT H. TURNER, Secretary.
RICHARD B. NIxon, Disbursing Officer.
II
TABLE OF CONTENTS.
a e - Page.
Bandel, Mr. §. E., assistant superintendent, Division of Railway Adjust-
ments, Post Office Department........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1476 et seq.
Baskerville, Mr. W. S., general agent mail traffic, Great Northern Railroad
• * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 1297 et Seq.
Blackwell, Mr. M. H., assistant Superintendent, Railway Mail Service, Omaha, QI
br. . . . .- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1298
• - - - - - - - - * * * * * * * * * * * * * ~ * - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1297 et Seq.
Brown, Mr. Jno. Wilson, president Maryland & Pennsylvania Railroad Co. Q.
and vice president, Short Line Railroad Association. . . . . . . . . . . . . . . . . 1529 et seq.
Campbell, Mr. F. E., traveling agent, transportation department, Norfolk &
#Western Railway--------------------------------------------------------- 1297
Connolly, Mr. J. P., supervisor of mail traffic, Central Railroad of New Jersey
- * * - - - - me - - - - as e - - - e º - a- a se - - - as * - - - - - - - as es - - - - - - - s = - - * * * - - as s - - - sº tº - - as sº - - - 1297 et seq.
Coulter, Hon. R. M., Deputy Postmaster General of Canada. . . . . . . . . . . . . 1501–1502
Drake, Mr. John N., secretary Short Line Railroad Association. . . . . . . . . . . . . . . 1297
Gaines, Mr. S. M., superintendent, Railway Mail Service, Fort Worth, Tex.
- * * - - - * * * - - - sº * - - - sº - - - sº º - - * * * - - * * * - sº s sº - - * * - - - s = - - * * * - * * * - - - e s - - - sº - - - 1298 et seq.
Rindel, Hon. George John, Member of Congress from Colorado. . . . . . . . . . . . . . . 1369
Lorenz, Mr. M. O., associate statistician, Interstate Cómmerce Commission
- - s - - - - as º - - - - - - ---------------------------------------------------- 1298 et seq.
Mack, Mr. H. E., manager mail traffic, Missouri Pacific Railway. . . . . . . . . . . . . .
McBride, Mr. C. H., superintendent, Division of Railway Adjustments, Post
Office Department-------------------------------------------------- 1469 et seq.
McCahan, Mr. J. C., supervisor of mail traffic, Baltimore & Ohio Railroad. 1342 et seq.
McFarland, Mr. Frank, superintendent, Railway Mail Service, St. Louis, Mo... 1298
Peters, Mr. Ralph, chairman committee on railway mail pay, president Long
Island Railroad---------------------------------------------------- 1298 et seq.
Peabody, Mr. James, statistician, Santa Fe System. - - - - - - - - - - - - - - - - - - - - - 1325 et seq.
Pelletier, Hon. Louis P., Postmaster General of Canada. . . . . . . . . . . . . . . . 1497 et seq.
Prentiss, Mr. A., N., clerk, Post Office Department------- - - - - - - - - - - - - - - - - - - - 1298
Rowan, Mr. A. H., assistant to vice president, New York Central lines. . 1297 et seq.
Safford, Mr. W. W., general mail and express agent, Seaboard Air Line Rail-
Way - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1297 et seq.
Scott, Mr. S. C., vice president's assistant, Pennsylvania Railroad. . . . . . 1297 et seq.
Snead, Mr. R. H., manager express traffic, Chesapeake & Ohio Railway. - 1297 et Seq.
Stewart, Hon. Joseph, Second Assistant Postmaster General. . . . . . . . . . . . 1298 et seq.
Wade, Mr. H. M., agent mail traffic, Erie Railroad. . . . . . . . . . . . . . . . . . . . . . . . . . . 1297
Thompson, Mr.W. B., counsel--------------------------------------------- 1297
Worthington, Mr. W. A., vice president and assistant director of maintenance
and operation, Southern Pacific Co....... . . . . . . . . . . . . . . . . . . . . . . . . . . . 1420 et seq.
III
RAILWAY MAIL PAY.
WEDNESDAY, APRIL 1, 1914.
CoMMITTEE ON SECOND-CLASS MAIL MATTER,
- Washington, D. C.
The committee met, pursuant to adjournment, at 10 o'clock a. m.
Present: Hon. Jonathan Bourne, jr. (chairman), Senator John W.
º and Representatives James T. Lloyd and William E. Tut-
tle, jr.
The following gentlemen were present and sworn by the chairman:
Mr. Ralph Peters, chairman railway mail pay committee, presi-
dent Long Island Railroad Co.
Mr. W. A. Worthington, vice president and assistant director of
maintenance and operation, Southern Pacific Railroad.
li Mr. A. H. Rowan, assistant to vice president, New York Central
IIlêS.
Mr. H. E. Mack, manager mail traffic, Missouri Pacific Railway.
Mr. S. C. Scott, vice president's assistant, Pennsylvania Railroad.
Mr. W. J. Bradley, general supervisor mail traffic, Pennsylvania
Railroad.
W. W. Safford, general mail and express agent, Seaboard Air Line
Railway.
Mr. R. H. Snead, manager express traffic, Chesapeake & Ohio
Railway.
Mr. F. E. Campbell, traveling agent transportation department,
Norfolk & Western Railway.
Mr. J. P. Connolly, supervisor mail traffic, Central Railroad of
New Jersey.
Col. W. B. Thompson, counsel.
Mr. John N. Drake, secretary-treasurer, Short Line Railroad Asso-
ciation. *
Mr. James Peabody, statistician, Atchison, Topeka & Santa Fe
Railroad.
Mr. W. S. Baskerville, general agent mail traffic, Great Northern
Railroad.
Mr. J. C. McCahan, supervisor of mail traffic, Baltimore & Ohio
Railroad.
Mr. H. M. Wade, agent mail traffic, Erie Railroad.
Representing Post Office Department:
Hon. Joseph Stewart, Second Assistant Postmaster General.
1297
1298 RAILWAY MAIL PAY.
Mr. C. H. McBride, Superintendent Division of Railway Adjust-
ments, Post Office Department.
Mr. A. N. Prentiss, clerk, Post Office Department.
Mr. Frank McFarland, Superintendent Railway Mail Service, St.
Louis, Mo. -
Mr. S. M. Gaines, Superintendent Railway Mail Service, Fort
Worth, Tex.
Mr. M. H. Blackwell, Assistant Superintendent Railway Mail
Service, Omaha, Nebr. * w -
Dr. M. O. Lorenz, associate statistician, Interstate Commerce Com-
II]]|SSIOIl. -
The CHAIRMAN. This is a meeting for hearing the railroad repre-
sentatives in reply to the department's statement submitted at the
last meeting, Tuesday, March 24, 1914, and printed in volume 11.
Mr. PETERs. Mr. Chairman, we have prepared a statement in reply
to the Post Office Department, which will be a final statement on the
part of the committee on railway mail pay. [Reading:]
CLOSING STATEMENT FROM THE COMMITTEE ON RAILWAY MAIL PAY
TO THE JOINT CONGRESSIONAL COMMITTEE IN REPLY TO THE STATE-
MENT OF THE POST OFFICE DEPARTMENT OF MARCH 24, 1914.
The committee representing the railroads would have preferred
to have rested its case before your honorable committee with its
statement of February 26, volume No. 9, because a careful review
of the statement of the Post Office Department submitted on March
24 does not bring up any important features that require elucidation
for the information of your committee, but it is realized that the
testimony already printed is voluminous and that the reiteration
in the Post Office Department's statement of certain claims already
refuted may not be conveniently associated with the refutation or
with the explanation. • • - - -
In view of the announcement by the chairman that this will be the
closing meeting of an investigation that has lasted 18 months, it is
both interesting and instructive to recall that the last previous joint
committee of Congress to study this question found a somewhat
similar situation before it. * -
The investigation of the Wolcott-Loud commission extended from
1898 to 1901. Representative Moody, of Massachusetts, a member
of that commission (and subsequently a justice of the United States
Supreme Court), made a speech in the House of Representatives on
February 5, 1901, reviewing the work of the commission. He said:
When we began the work there were in existence, and Supposed to be true,
certain statistics which had largely affected public opinion. The statistics came
from the Post Office Department itself. Gentlemen who based their reasoning
upon those statistics had good excuse for doing so, because they were issued
and put in circulation by the department itself. By these statistics it appeared
that the average rate paid to railroads for transporting the mails was 6.58
cents per pound and that the average haul was 328 miles, and that we paid, on
an average, 40 cents per ton per mile to the railroads for transporting the mails.
Gentlemen may carry these figures, if they please, in their minds, as they are
important. We went staggering along under the weight of those statistics
until the summer of 1899. While we suspected that they were false, there did
not seem to be anybody who could demonstrate that they were not true.
RAILWAY MAIL PAY. 1299

Later, on in his speech he says that a special weighing for 35 days
in October and November, 1899, showed that mail equipment con-
stituted 48 per cent of the mail matter sent by the railroads, although
the department had previously claimed that the percentage of equip-
ment was about 9% per cent. He says elsewhere in his speech:
It has been supposed that we were paying 6% cents per pound for the aver-
age payment to the railroads for the transportation of mails. In point of fact
We were paying 2% cents per pound.
Later, he says:
Further, we found that the haul instead of being 328 miles was 438 miles.
We further found, what is most important of all, that instead of paying 40
Cents per ton-mile we were only paying 12.56 cents per ton-mile. In other
Words, we were not paying one-third as much as the Post Office Department
had led the people of the country to believe we had been paying.
While the comments of Mr. Moody describe plainly and frankly
the very grave statistical errors made by the Post Office Department,
no one questioned for one moment the honesty or conscientiousness of
the postal officials who had given authority and currency to those
figures. The refutation was largely the result of the work of Prof.
Henry C. Adams, the statistician of the Interstate Commerce Com-
mission, whose services were secured by the joint congressional com-
mittee for that special work.
Document No. 105 and the Hughes commission inquiry.—Since
the report of the Wolcott-Loud commission, in 1901, the Post Office
Department has undertaken two very important and complicated
tasks. The first was the ascertainment of cost to railroad companies
of transporting the mails and the incidental services in connection
therewith during the month of November, 1909, the results of which
were published in House Document No. 105. The other was the
earnest effort by the Post Office Department to analyze for the
Hughes commission in the year 1911 the expenses of postal opera-
tions so as to determine the specific cost of handling and transporting
second-class mail matter.
The inquiry of November, 1909 (H. Doc. No. 105), was from its
nature a railroad problem more than a Post Office Department
problem, whereas the ascertainment for the Hughes commission was
entirely a problem resting on postal statistics. In the former, the
cooperation and continuous advice of the railroad companies was
quite essential to obtain correct results, whereas in the other the
Post Office Department was not obliged to rely on any efforts and
statements other than those of its own officers and its own post-
masters and employees.
It should also be pointed out that these two inquiries were funda-
mentally different in their respective paths of procedure, because
the inquiry of November, 1909, was conducted to ascertain certain
percentages or ratios which would subsequently be applied to large
sums of money, representing many millions of dollars; on the other
hand the inquiry before the Hughes commission dealt with the sub-
division of large sums of money with the object of focusing the
several amounts to the respective classes of mail matter; finally reach-
ing a result of a few cents per pound. -
The Hughes commission dealt with the postal expenses for the
year 1908, which were $210,000,000. The original calculation of the
department's estimated cost per pound of second-class mail was
13:00 - RAILWAY MAIL PAY.
9.285 cents; consequently it was in the ratio of about 1 cent for each
$22,000,000 of expenses. In other words, an error of over $20,000,000.
could be disregarded without affecting the final result more than 1
cent. In the Hughes commission report, page 82 (footnote), it is
shown that the department's revised computations showed a mini-
mum cost of 8.263 cents per pound as compared with the original
calculation of 9.235 cents per pound. The conclusions of the Hughes
commission, on page 89 of their report, announce the following de-
CISIOIlS :
First. That the evidence submitted does not justify a finding of the total
tº: transporting and handling the different classes of second-class mail
à. sº
Fifth. That upon the basis. of their apportionment for the fiscal year. 1908,
as modified by Subsequent reductions in the expense of railroad transportation,
the cost of paid-at-the-pound-rate matter for the services above mentioned is
approximately 5% cents a pound.
That is, the decision rests on only part of the postal expenses,
Omitting the general post-office service expenses, $86,000,000, and mis-
cellaneous expenses not directly assignable, $30,000,000, or a total of
$89,000,000 omitted. In the Hughes commission report, on page 73,
referring to the general post-office service expenses, for which it
could not obtain satisfactory statistics, the following remarks are
Quoted:
It seems hardly worth while to include the subsidiary tables from which
these later results are taken or to criticize the details, as the commission has
little confidence in their accuracy.
And later, on the same page, the commission says:
In view Of the errors and inconsistencies in which the returns from the
post Offices abound—we do not extend this report to review them—Our examina-
tion has convinced us that the computation is not sufficiently accurate to base
an apportionment Of the Cost of the general post-Office service.
The Hughes commission, therefore, preferred to rhake an incom-
plete report and rest their decision upon an ascertained cost of 53.
cents a pound for second-class matter rather than accept the findings
of the Post Office Department for the apportionment of the remain-
ing 3 cents.
Our purpose in alluding to this case is to emphasize the fact that
the division of expenses in a calculation to ascertain specific cost is
a delicate and difficult problem even for those who are familiar with
the statistics that are necessarily employed. We also hope that we
can say, without meaning any discourtesy to the officers of the de-
partment, that when an able and distinguished body such as the
Hughes commission refused to accept the department's subdivision
of the postal expenditures because they produced an uncertain varia-
tion in the final amount of 3 cents or less, we are probably justified
in questioning the ratios arrived at by the Post Office Department
in regard to railroad expenditures when small discrepancies in ratios
or percentages would lead to final differences of many millions of
dollars.
The expression of these views is not inconsistent with the apprecia-
tion we entertain for the enterprise, the industry, and the tenacity of
purpose which the Post Office Department officials have exhibited
in the prosecution of these two important inquiries.
RAffway MAIL PAY. 1301
The inquiry of November, 1909, and the committee on railway mail
pay.—The history of the inquiry of November, 1909, resulting in
House Document No. 105, has been so fully explained and the view
of the railroads’ committee has been so fully set forth in regard to
the deficiencies and inaccuracies of Document No. 105, that there is
no disposition to refer to the subject again. . It seems advisable,
however, to note in the record an expression of regret that the Sec-
ond Assistant Postmaster General, in publishing the correspondence
between the department and the committee on railway mail pay
during 1910, should make the comment as he does on page 1252, that—
It will be observed from this correspondence that the railroads’ committee
Sought to induce the Officers of the department to accept the totals obtained
by the employees of such committee instead of relying upon the independent
efforts of the officers and employees of the department in ascertaining the
same in accordance with their duty prescribed by law.
Your committee will note that in the published letter of February
5, 1910, from Mr. Kruttschnitt, chairman of the committee on railway
mail pay, that the assurance was given by Mr. Kruttschnitt to the
Second Assistant Postmaster General that the committee would wel-
come any precaution which the department felt was essential to
secure accuracy.
The Second Assistant Postmaster General intimates, on page 1252,
that the acceptance of cooperation from the railroad committee would
vitiate any finding which the department might make and would be
wholly inconsistent with the duty devolved upon the Postmaster Gen-
eral by law and by his obligations in the premises.
This statement ignores the fact that the law of March 3, 1879, did
not prescribe in detail the operations and precautions which the Post-
master General should employ, and consequently the Post Office
Department was free to cooperate and free to adopt any precautions
deemed necessary to insure trustworthy and accurate returns. From
the very nature of the inquiry all of the information had to be sup-
plied by the individual railroads, and it was the work of assembling
this information and the work of coordinating it and interpreting it
intelligently that the Post Office Department sought to do alone, with
the unfortunate results that have been explained to your committee
during the past year.
The Second Assistant Postmaster General says, page 1252:
In my judgment the department’s course was the only proper one, and, in
view of the OutConne, there Can be no doubt about its wisdom.
In the view of the railroad committee it was not a question of pro-
priety that governed the attitude of the Post Office Department, but
rather questions of policy. If the department felt that cooperation
would vitiate any Hºg which the department might make, it
thereby confesses its unsuitability to be intrusted with the responsi-
bility. When the law of March 3, 1879, was passed the Interstate
Commerce Commission was not in existence. If the inquiry of No-
vember, 1909, had been conducted under the auspices of the Inter-
state Commerce Commission, we believe there would be no hesitancy
or reluctance on the part of that commission to confer with the rail-
roads and to cooperate in the ascertainment of correct statistics and
in the proper interpretation of them.
1302 RAILWAY MAIL PAY.
But even if it be conceded that the Post Office Department for rea-
sons of policy should have proceeded alone and made its own tabu-
lation, there could be no good reason why, when this work was com-
pleted, they should not have conferred with the railroads again to
match the respective totals, to discuss the differences, and to remedy.
the inadequacy of statistics, which in some cases were insufficiently
given because of misunderstanding, such as would naturally arise in
an extensive inquiry instituted for the first time. If such conferences
had resulted in unreconcilable differences, these could have been sub-
mitted to Congress for final determination.
Aside from all of the important criticisms that have been justly
made against the statistical presentation and conclusions drawn from
Document No. 105, it can not be lost sight of that the department
passed judgment upon the statistics of a single month, upon the im-
perfect results of a single and new inquiry, and failed to observe
those precautions of prudential precedure which might properly be
expected from any department of the General Government when
dealing with a case involving the property and rights of the citizens.
No statement of contrary views and no reiteration of such state-
ments by a bureau officer of the Government will debar the railroads'
committee from insisting upon its right to be heard when it makes
statements in regard to the division of the railroads total operating
expenses and the space relation necessary under operating conditions
between the passenger, express, and mail services, notwithstanding
the fact that the Second Assistant Postmaster General, on page 1252,
says that the railroads’ discussion upon these statements amounts to
nothing more than a quibble.
The question of underpayment.—There seems to be nothing in the
department's statements relating to overpayment or underpayment
that calls for further comment. The department alludes to varying
estimates made by the railroads as to the total amount of underpay-
ment, but your committee understands very well that estimates based
upon the comparative growth of freight revenue, or passenger reve-
nue, or postal revenue are simply illustrative of tendencies which
might be expected to be reflected in railway mail pay, especially if
the national conditions are such as to warrant the belief that the
volume and tonnage of mail transportation is at least keeping equal
pace with other traffic. We believed that these incidental illustra-
tions would assist the judgment of your committee in determining the
fairness of the railroads’ claim that the amount of underpay is at
least $15,000,000. -
Under this head the Post Office Department also alludes to the
efforts made before the Hughes commission to apportion the postal
expenditures for second-class mail matter, and concludes by saying:
If the facts were known to the railroads' Committee it would appear the
interpolation of reference to such matter in their statement, in the incomplete
manner in which presented, could have no other intention than that of mis-
leading the joint committee.
We have already dealt adequately with that subject by making
precise quotations from the Hughes commission report, and we take
pleasure in referring your committee to the document itself, i. e.,
House Document No. 559, Sixty-second Congress, second session. .
Short-line railroads.-On page 1253 the department mentions the
criticism by the railroads of Table 7, Document No. 105, as showing
RAILWAY MAIL PAY. 1303
a large per cent of gain for short-line railroads, and says the results
came from the statistics used; that “they are mathematically sound
and the inevitable result of the elements on which they are based ”
and are “isolated cases.” t
Our criticism was not based upon the inevitable mathematical re-
sult of the figures used, but upon the acceptance of that result and
the publication of it; and further, the cases are not isolated. -
Table 7 of Document No. 105 shows 99 railroads charged with
making a profit of from 100 per cent to 2,918 per cent on their mail
Service. Of these 99 railroads, 84 roads are 50 miles or less in length.
In some cases the department reached its result by cutting out part
of the space charged to the mails. In other cases the little railroads
apparently did not understand the department's forms and failed to
make complete or correct reports, and this would have been evident to
Fº acquainted with the railroad service. The reports should
ave been verified and corrected before being published.
Observe on page 32, preliminary report of the joint committee,
where Mr. Frazer of the Bellefonte Central Railroad, 19.51 miles
long, shows that his road loses $1,521 a year, although the department
attributed to him a profit of $575 a year. The department said he
made a profit of 97 per cent. He says he had a loss of 61 per cent.
Observe in volume No. 5 (p. 750) that the East Broad Top Rail-
road reports a cost for side and terminal messenger service of $823 a
year, although in Table 7, Document No. 105, the department credits
only $5.80 for November, 1909, equivalent to $69.60 a year, or about
one-twelfth of what the company claims. That road is shown in
Table 7 as making a profit of 2,374.52 per cent.
The ratio of total operating ea penses to passenger-train service—
Railroad, 34.4% per cent; Post Office Department, 29.21 per cent (p.
1258).-On pºgºs 1258 and 1260 the Post Office Department under
the caption “The railroads’ committee's erroneous 34.42 per cent,”
endeavors to disprove the correctness of the railways' assignment to
passenger-train service of operating expenses and taxes in favor of
the department's assignment, which apportions only 29.21 per cent
of these expenses to passenger-train service.
No valid argument is made for rejecting the railroads' appor-
tionment of operating expenses and taxes or for supporting that of
the department. As has been before explained, about one-half of the
railway operating expenses and approximately all of the taxes
are not directly assignable to any class of traffic and must be ap-
portioned arbitrarily. As to these expenses the department adopted
a method of apportionment which allocated a lower estinate of cost
chargeable to the mails than would have been obtained by any recog-
nized plan of apportionment. Certain expenses which may be
directly allocated to freight and passenger service are higher per
train-mile for freight than for passenger, such as fuel, wages of train-
men, car repairs, etc. .The operating expenses first referred to, which
are of an indivisible nature, have no relation whatever to the ex-
penses last named. Notwithstanding this fact, these expenses, to an
aggregate of about 40 per cent of the total operating expenses, were
assigned by the department in the same way as the direct charges.
As a result of this, such expenses as the large sums incurred for
maintaining roadbeds and track, according to the department's ap-
portionment, would be far lower per train-mile for passenger than
1304 RAILWAY. MAIL: PAY.
for freight-train service. As passenger-train service is operated at
faster speed, requires higher standard of maintenance, including
more double track, expensive terminals, etc., and its presence in-
creases the cost of freight operation because of delays to the latter,
the reasoning of the department in this respect is fallacious, while
the method used by the railways in apportioning these expenses is
far more entitled to consideration. The railroads apportion, on a
train-mileage basis, only the expenses which can not be directly
assigned. This apportionment has been frequently termed by the
department as arbitrary and antiquated. What may be said of the
department's apportionment, based on the theory that because fuel
for locomotives and wages of trainmen cost more per freight-train
mile than per passenger-train mile, the same relative lower cost per
passenger-train mile exists as to expenses of an entirely different
nature, such as renewal of ballast, labor cost of repairing roadbed
and track, cost of tunnel repairs, expense of maintenance of high-
way crossings of various kinds, etc.? There is good foundation for
the railways' assumption that as these expenses are incurred for
train service as a whole they may be justly apportioned on the basis
of train mileage, but absolutely no justification for the application
of the method used by the Post Office Department. The insufficiency
of the department’s allowance for passenger-train expenses may be
further understood by considering certain expenses incident to pas-
senger-train operations which have been charged wholly to freight
service, such as delay to freight trains because of preference given
passenger trains (this being one reason for increased wage cost per
freight-train mile) and to the charging to freight-train service of
the whole cost of handling company freight.
This freight, consisting of rails, lumber, and other material for
maintenance, fuel, etc., is handled for passenger-train service as well
as for freight, and a substantial part of the freight-train expense
should, on this account, be transferred to passenger-train service.
Analysis of annual reports for the year ending June 30, 1910, for
108,801 miles of road, moving approximately one-half of the freight
traffic of the United States, showed that ton-mileage of company
freight comprised 11.85 per cent of the total ton-mileage handled by
freight trains. A transfer of a proper share of the cost of handling
this tonnage to the passenger-train service would largely increase the
Post Office Department's estimate of passenger-train expenses.
On page 1260 the department concludes that the ratio of operating
expenses and taxes to revenue for passenger-train service is only
slightly more than for freight. The erroneous nature of this result
is obvious when it is considered that revenue, which is the divisor,
was for the year under discussion $2.86 per train-mile for freight
trains and only $1.30 for passenger trains. -
Mr. Stewart expresses the view that his figures are more in accord
with a businesslike administration of the railroads, which may be
true, but he forgets that the rates and conditions of service which
produce the existing results are out of the control of the carriers.
For many years railway wages and material prices have been going
up. The railways have been able to partly recoup themselves
through better car and train loading in the freight service; but with
different conditions in passenger-train service a similar improve-
ment in loading has not been possible. This is illustrated by the
RAILWAY MAIL PAY. 1305
trend of revenue from passenger service as compared with the op-
erating cost. During the 20 years from 1890 to 1910 the operating
expenses and taxes per total train-mile for all railways in the United
States increased 56 cents. Compared with this the passenger-train
revenue per train-mile increased only 22 cents, in 1890 the passenger
revenue per train-mile being 8 cents higher than the operating cost
per total train-mile, whilst in 1910 it was 26 cents lower.
In this connection attention should again be drawn to the fact that
all of the calculations of the department as to railway-mail ex-
penses are based on the statistics obtained for November, 1909,
whilst statement submitted by the committee on railway-mail pay
(p. 1085) showed that during the four years ending 1913 railway
operating expenses increased 29.6 per cent per mile of road oper-
ated, taxes increasing during this period 34.6 per cent per mile of
road, net revenue i. taxes decreasing 6.9 per cent, whilst the
ratio of operating expenses to revenue, which in 1909 was 65.5 per
cent, had increased in 1913 to 71.2 per cent. This further empha-
sizes the necessity for permitting the railways, under a fair plan of
mail compensation, to secure some advantage through reduced oper-
ating cost per ton-mile by better car loading to offset the effect of
rises in labor and material prices. It may be remarked incidentally
that a space basis for payment is directly opposed to this theory,
in that the shipper receives all the advantage of better car loading,
whilst the railway expenses are increased without any compensa-
tion therefor.
The charge of space to the mail service.—The department’s de-
fensive statements under this head do not meet squarely the argu-
ment of the railroad committee, as set forth in volume No. 9, in
regard to the unfairness of picking out and disallowing so-called
“dead space” in connection with the mail service without taking
similar note of so-called “dead space” in the passenger and express
services. In regard to full R. P. O. cars, the department quotes its
rule that it was the intention to credit the mail service with the
return movement of the maximum space authorized outbound, and
the railroads do not doubt that this was the intention, but the ques-
tion remains as to whether this intention was carried out. It may be
noted that in volume No. 2 (p. 415) it is shown for the Pennsylvania
Railroad system that after the first publication of Document No. 105
the department made a correction upon representations of the rail-
road company so that 5,706,000 car-foot miles was credited to the
mail service for R. P. O. cars which had not been treated accord-
ing to the department's rule. It is possible that if other railroad
companies had made similar analysis of the details, further credits
might have been called for and obtained, as was done in the case of
the Pennsylvania Railroad system. There is the further point to
be made that while the department’s intention as to R. P. O. cars
may have seemed perfectly fair from the department viewpoint,
yet it failed to recognize the necessity of uniform standard sizes
which the railroad company is operating and which would be
incumbent upon the department itself if it owned the R. P. O. cars.
On page 1264 the department says:
Congerning mail-storage cars, the claim is made that a large amount of
space necessary in the operation of storage cars was disallowed by the depart-
ment. The department Credited all storage-Car Space where it was used for
1306 : - RAILWAY MAIL PAY.
mail purposes. Where it was not so used it was charged to “dead, space.” It
is believed that the railroad companies use such storage cars for their own
purposes in many cases. The claim of the railroads' committee, therefore, that
a large portion of this space should have been charged to mail is a claim un-
Supported by any definite evidence as to amount and should not be given serious
consideration. -
In this the department gives a very narrow meaning to the word
“used " when they say that they credited all storage-car space where
it was used for mail purposes. The inevitable return movement of
empty storage cars that were loaded outbound with mail is part of
the use made of the car equipment, and the department itself recog-
nizes this principle in its proposed bill in volume No. 8, where it is
said that payment will be made for the round trip. t -
As to the suggestion that this claim is unsupported by any definite
evidence as to amount and should not be given any serious consider-
ation, attention is called to the statement by the Pennsylvania Rail-
road system in volume No. 2 of the hearings (p. 411), where it is
clearly shown that the department disallowed 11,523,000 car-foot
miles for the month of November, 1909, for deadhead storage cars
returning, which were not used in the company’s business. It is
probable that the total amount of storage-car space disallowed by
the department for all railroads for November, 1909, would be not
less than 50,000,000 car-foot miles. i
The department under this head does not discuss fairer allowances
for mail-apartment cars. It has previously intimated that a revision
of its figures for this class of service might be justified, but has never
stated definitely the amount of additional allowance of space which
its further consideration of the subject would lead it to grant.
As regards closed-pouch space, the department quotes the rule em-
ployed on the Pennsylvania Railroad lines during November, 1909,
and then makes the following statement on page 1265:
The fact is that the report of the Pennsylvania Railroad and that of the
New York Central & Hudson River Railroad Co., both of which used the rule
above mentioned, showed less linear Space for closed-pouch Service than the
computations made by the department upon the statistics of closed-pouch
mails taken during the month of November entitled them to. It is submitted
that no more conclusive argument need be advanced in favor of the sufficiency
and fairness of the department's rule in that respect.
In reply to this statement of the department just quoted, it is
learned that the records of the Pennsylvania Railroad Co. show for
closed-pouch service during November, 1909, 2,774,460 car-foot miles,
of which the Post Office Department allowed only 2,122,106.18. The
Post Office Department in this case disallowed 652,353.82 car-foot
miles, or about 23% per cent. The same figures for the Pennsylvania
Railroad system, as shown in the companies’ records for closed-pouch
service, was 7,231,969 car-foot miles, of which the department allowed
5,044,839, thus disallowing 2,187,130 car-foot miles, a disallowance of
30 per cent. :
As regards the New York Central & Hudson River Railroad Co,
the company reported 3,406,641.67 car-foot miles and the department
allowed 1,453,829.34. The department disallowed 1,952,812.33 car-
foot miles, or 74.45 per cent. - -
It would therefore seem that the department's idea is erroneous
that these companies reported less than the department's computa-
tions showed them to be entitled to. - . . . . . . . .
RAILWAY MAIL PAY. 1307
This whole subject of the charge of space to the mail service would
have been greatly clarified if the request from the railroad's side of
a year ago had been complied with, namely, that the department be
called upon to analyze the so-called “dead space” so as to show
whether it was chargeable to R. P. O. car space, or storage-car space,
or apartment-car space, or closed-pouch space. The Second Assist-
ant Postmaster General indicated at that time that this analysis
could not be made without additional clerical force which would
have cost about $1,500, and that he was unable to proceed with the
analysis unless the joint congressional committee would authorize
that expense.
The gauge of railway mail pay.—The department contends that
the reply of the railroads’ committee to their question “Shall the
gauge of railroad mail pay be a strictly commercial rate?” is in-
sufficient, and they again invite attention to their argument which
appears in volume No. 7 (pp. 998–1004). The considerations which
the department ask to be given weight (see p. 998) are the following:
1. The certainty, constancy, and homogeneity of traffic.
2. The certainty and regularity of payment.
3. Railroads are not built primarily to carry mails.
4. The protection to their mail trains which railroads, as Govern-
ment agencies, receive against unlawful acts in interference with or
obstruction of the mails carried.
5. The principle of public utility.
The railroad committee believe that in volume No. 9 (pp. 1076–
1078) it made a sufficient reply on the whole subject, and specifically
with reference to considerations 1, 2, and 4. If the joint committee
desires further discussion of these considerations it will give us
pleasure to cover the subject more extensively, but, in our opinion,
this is not necessary.
In preparing our reply that was published in volume No. 9 we re-
frained from presenting some quotations and some discussion which
may now be briefly submitted in response to the insistence of the
department's representative.
The department, in volume No. 7 (p. 1000), makes the following
statement:
3. Railroads are not built primarily to carry mails.-Railroads are pro-
jected and built for the purpose of securing passenger and freight traffic. It
is doubtful if the question of the carriage Of the mails ever enters into the
calculations of any railroad enterprise. After its construction the mail natur-
, ally follows, and the companies usually secure that business without solicita-
tion. This is a strong argument in favor of treating the carriage of the mail
as a by-product, and to charge it with a participation in all of the costs of the
road is very liberal policy.
After perusing this statement the reader would naturally pause to
consider that as the United States mail had been an important article
of transportation fully 50 years before any railroads were built in the
United States, it would be quite.likely that the builders of railroads
would have in mind all possible traffic that could be obtained and
would certainly include the mails in their calculation.
However, we find at the foot of page 1002 the following assertior,
by the Post Office Department:
. No railroad of any importance could be successful in its operations without
the regular, certain, and speedy transmission of the mails over its line. It is
a truism which no one will controvert, that practically all commercial and
1808 - RAILWAY MAIL PAY.
industrial enterprsies, as well as social intercourse extending beyond the
neighborhood, depend absolutely upon the mails. As the community thus pri-
marily depends upon the mails, in a greater degree railroads so depend, as
they must rely wholly upon the communities for whose business they are con-
structed and operated. It must, therefore, be apparent that no commodity
transported is entitled to as great consideration in the matter of rate making
as the United States mails. f
Here we have the assertion that the mails are so essential to the
community and to the railroad that it could not be successfully op-
erated without them, in apposition to the statement previously made
that it is doubtful if the question of the carriage of the mails ever
enters into the calculations of any railroad enterprise. *
But we recall that something was said on this subject in the hear-
ings of May 14, 1913. Turning to volume No. 5 (p. 659) we find
that the Second Assistant Postmaster General was asked what would
be the probable revenue to the Government from first-class mail
matter if there were no railroad service. The Second Assistant
Postmaster replied as follows: . .
Of course, it would be greatly reduced. We are all glad to admit, and it
is not an admission, for we are glad to say that the railroad companies perform
a wonderful service for the Government and for the people; and if it were not
for the railroads mail service would be a very insignificant thing.
We respectfully submit that the views expressed by the depart-
ment's representative on both sides of the question are sufficiently
comprehensive to relieve the railroads' committee from offering any
comment or argument.
In response to the fifth consideration, namely, “the principle of
public utility,” it is to be observed that the main dependence of the
department in volume No. 7 is a quotation from Prof. Henry C.
Adams in the report which he made to the Wolcott-Loud commission
on February 1, 1900. The department makes two quotations from
Prof. Adams and omits a number of other quotations which might
have been made with more effect, because they are more significant
of Mr. Adams as a statistician and as a student at that time of the
railroad mail service. For example, in Senate Document No. 89,
part 2, Fifty-sixth Congress, second session, pages 190–200, Prof.
Adams reaches the conclusion that ton mileage or weight multiplied
into distance is the proper basis for determining railway-mail com-
pensation.
On page 182 Prof. Adams insists that the ascertainment of cost.
by analysis of operating expenses is not practicable, and says: -
It can not be recognized as a proper method of arriving at reasonable Com-
pensation for the transportation of the mail.
On pages 203–206 Prof. Adams gives a useful interpretation of the
law of 1873, which he discusses with marked approval as to the
general arrangement of rates. º
Again, on page 419, he expresses the opinion that postal officials
and employees when traveling in passeneger cars should certainly
have their fare paid by the Government. - s
On page 442, discussing side messenger Service, he says:
In equity the Government ought to assume the expense of this Service.
None of these opinions of the eminent statistician are quoted by
the Post Office Départment in either volume No. 7 or volume No.
11 of the hearings. - + - -
RAILWAY MAIL PAY. - 1809
The opinion of Prof. Adams that is quoted by the Post Office De-
partment is his discussion of the principle of public utility which
he introduced in his report to the Wolcott-Loud commission, not be-
cause it was appropriate to his position as statistician of the Inter-
state Commerce Commission, but rather as a development of his
studies as professor of political economy in the University of Ann
Arbor, Mich.
It may be said on behalf of statistician Adams that whatever
views he held as professor of political economy and felt tempted to
express in his official report did not in any way influence the definite
recommendations which he made to the Wolcott-Loud commission
in regard to the amount of railway-mail pay. His conclusion was
that the railroads at that time were not grossly overpaid, although
they were receiving about 35 per cent of the postal revenues. His
study of the subject led him to believe that the railroads carrying
an average daily weight of over 30,000 pounds were somewhat over-
paid. He proposed a level reduction of 5 per cent for all railroads,
with an additional reduction of from 1 to 12 per cent on all roads re-
ceiving in excess of 20 per cent per ton per mile. He also recom-
mended further investigation, because he believed that if the aver-
age load in mail cars could not be materially increased his recom-
mendations for a reduction in pay would have to be withdrawn.
When his report was under review by the Wolcott-Loud commission
and he was under cross-examination he admitted that his recommen-
dations for reduction and at the same time for further investigation
Were inconsistent with each other; he also admitted that his recom-
mendation for a reduction of 5 per cent for all roads was inconsistent
with his conclusion that the roads carrying less than 30,000 pounds
a day were not overpaid.
He finally revised his statement and declared that his conclusions
as to reductions in pay were all based on the idea that the joint com-
mittee desired to eliminate the postal deficit, and he thought the
greatest contribution which the railroads could be justly expected to
make toward reducing the postal deficit would be approximately
$3,000,000 out of a total railway mail pay at that time of $34,000,000.
The conclusion of the joint committee was that Prof. Adams had
not sustained his recommendation for the reduction in pay which he
proposed and they, therefore, reported to Congress that the railroads
were not overpaid. It will thus be seen that the action of Congress
as well as the recommendations of Prof. Adams were in accordance
with the recognized customary constitutional relations existing be-
tween the Government and those citizens from which it purchased
ServlC6. -
Prof. Adams's theory regarding the principle of public utility was
considered to have a strong tendency toward general socialism. In
this connection it is interesting to quote from his cross-examination
at the hearing of April 7, 1900, page 436:
Mr. Loud. Does it not lead right up to the German system as operated to-
day—the Government ownership of railroads, supported by taxation, and levy-
ing such tariffs upon articles as they see fit, and then recouping from another?
Mr. ADAMs. Yes; it leads to the determination of the entire schedule of rail-
road rates upon the principle of public utility.
It is suggested that the so-called principle of public utility, the full
consideration of which would bring into contemplation the total so-
35797—No. 12–14—2
1310 RAILWAY MAIL PAY.
cial structure and governmental relations of the whole American
people, has no proper place in the discussion of a question of simple
business administration, i. e., reasonable compensation for the per-
formance of a service that is almost entirely commercial.
In closing this question of public utility it is only fair to Prof.
Adams to restate the most significant paragraph of the quotation
which the department employs in volume 7, page 1002, but omits to
Quote verbatim in its statement contained in volume No. 11. This
reads as follows: *.
The position of this report is that the private interest in railway charges is
limited to the claim that the gross revenue of railways should be adequate to
cover operating expenses, fixed charges, and a fair return to stockholders; but
this Sulm having been guaranteed, the manner in which the gross amount is
collected from the shippers is a matter of public policy and not of private
interest.
Senator WEEKS. May I ask you right here how much of an au-
thority you consider Prof. Adams in these matters? -
Mr. PETERs, Prof. Adams is a very deep student; a very earnest,
honest, and sincere man. When Document 105 came out we asked
him to analyze the method used for dividing expenses and give us a
paper on it. He did so. We studied it very thoroughly, but never
submitted it, because he made the statement that you never could
exactly allocate expenses, but they could only be approximated.
All of us have been allocating expenses and have been endeavor-
ing in One manner and another to ascertain cost expenses, some of
us on the train mileage basis, some on a basis used in the West,
but all were methods of estimating, and it had to be estimated.
Prof. Adams said that costs could be estimated, but you could not
accurately determine them, and therefore you could not determine
pay on a cost basis because you could not ascertain the exact cost.
It was a very long and able paper, and I do not know but what it
might be a good thing some time to put it into the record as a matter
of instruction, because Prof. Adams has been looked up to as a great
authority on this question of analyzing accounts and is an authority
in political economy. -
The CHAIRMAN. Have you got it here with you?
Mr. PETERs. No; I have not.
The CHAIRMAN. How soon could you send it over here?
Mr. PETERs. As soon as I return home. However, like doctors, all
political economists differ, as statisticians differ.
Senator WEEKs. I understand that; but Prof. Adams has for many
years been quoted as an authority on this general subject, and I
wanted your view as to his competency.
Mr. LLOYD. Are you willing that his statement go into the record
as coming from your side, or would you want it in as an independent
statement? -
Mr. PETERs. If it goes into the record it should go in as presented
by our committee, but we felt that putting it into the record and
bringing up this question of the inability to make a comparative
statement of costs by an arbitrary allocation of expenses or distri-
bution of expenses would cloud the discussion and cause every one
of you to get into a whole lot of detailed disputes and arguments
over the question of distributing the expenses. You know the dis-
cussion that has arisen between the department and ourselves; there
RAILWAY MAIL PAY. 1311
have been differences in the methods used, and Prof. Adams said
there is no possible way of exactly distributing costs. º
Mr. LLoyd. Is that the only difference between your view and that
of Prof. Adams? -
Mr. PETERs. That was the difference. Many of our committee
objected to our going on record with a statement from any expert
that it was not possible to make a reasonably fair allocation or dis-
tribution of expenses to obtain a fairly reasonable comparison of
cost.
Senator WEEKs. Will you please have it sent over?
Mr. PETERS. I will. -
Mr. TUTTLE. Do you refer to Prof. Adams's statement in 1900?
Mr. PETERs. No. I refer to one he made for our committee.
Mr. TUTTLE. How recently?
Mr. PETERs. Nearly four years ago when we started the study of
Document 105. - - -
Mr. LLOYD. It is a statement based on Document 105.
Mr. PETERs. Yes. We also had a statement from Mr. Woodlock,
a statistician in New York City, and also one from the editor of the
London Statist, Mr. W. M. Ackworth.
The CHAIRMAN. How elaborate were their examinations?
Mr. PETERs. They were not near so elaborate as that of Prof.
Adams, but his discussion was on the ability to exactly and accu-
rately distribute expenses into the different classes of service.
The CHAIRMAN. In view of the fact that you have introduced in
your testimony the information that Prof. Adams, at your request,
has prepared for your committee, after examination and study, a
report on Document 105, I think the committee would appreciate
it if you would send such report to us in order that we may have the
benefit of same in our consideration and determination, and also to
enable us to determine whether we will have it printed or not.
Mr. PETERS. I will be glad to send it, and we will also send the
one from Mr. Woodlock, which is short. [Reading:]
It will be observed that Prof. Adams insists upon an allowance not
only to cover operating expenses, but also to cover fixed charges and
a fair return to stockholders, these last two important specifications
representing factors that were entirely omitted in House Document
No. 105. Your committee will also not fail to see the significance
of the clause which reads “but this sum having been guaranteed.”
The Post Office Department in its statements discussing the principle
of public utility in either volume No. 7 or volume No. 11 does not
indicate whether in their opinion the General Government should
guarantee the interest on all the railroads’ securities in advance of
asking Congress to approve the principle of public utility, which
would be applicable to freight and passenger service, as well as to
the mail service.
While we have thus responded to the urgent insistence of the Post
Office Department for further discussion of these general considera-
tions, it seems proper to state that none of this general discussion
would have been necessary if the Post Office Department had not
overlooked in Document No. 105 the necessity of providing for the
capital cost—that is, a return upon the railroad property utilized
in the performance of the mail service.
1312 RAILWAY MAIL PAY.
In Document No. 105 there are three letters of transmittal; one
signed by the former Postmaster General, Mr. Frank H. Hitchcock,
the second signed by the Second Assistant Postmaster General, Mr.
Joseph Stewart, and the third signed by the committee of Post Office
Department officials who were charged with the duty of considering
the results of the information secured from the railroad companies
and to report thereupon to the Postmaster General One can search
in all these letters in vain for any statement that shows a conscious-
ness of the necessity of providing for this fundamental item of cost.
When this omission was fully developed before your joint com-
mittee the Post Office Department admitted their error by conceding
in letter of January 9, 1913, to the chairman of the joint committee
that— -
In addition to the Operating eXpenses and taxes apportionable to the mail
Service and 6 per cent thereto, companies may be allowed such additional
amounts, if any be necessary, as shall render the whole a proper proportion
of a fair and reasonable return on the value of the property necessarily em-
ployed in connection with the mail service.
The phrasing of this concession represents the beginning of the
development of the line of thought which has culminated in these
later discussions regarding the alleged certainty, constancy, and
homogeneity of the traffic, and the other features that lead up to
the so-called principle of public utility.
None of these considerations were apparently in the minds of the
Post Office Department officials when Document No. 105 was sub-
mitted, and there was apparently no thought of treating this ques-
tion except on the basis of reasonable compensation and in accordance
with the commercial principle. If there had been, surely there would
have been some allusion to it in these several letters of transmittal,
Comparison between revenue received by railroad companies for
ea press and for mail services.—Preliminary to any remarks from
the railroads’ side regarding the statements made by the Post Office
Department (pp. 1271–1278) relative to the comparative compensa-
tion received by the railroad companies from the express traffic and
the mail traffic, it should be noted by your committee that this sub-
ject is now introduced for the first time by the Post Office Depart-
ment officials, although Document No. 105 was published over two
years ago and your committee has been collecting evidence and hear-
ing testimony for the past 18 months and have now arrived at the
last days of the investigation.
In Document No. 105 none of the letters of transmittal say one
word on this subject. The tables published in Document No. 105
fail to state the amount of revenue received by the railroad companies
from the express business or the passenger business, although this
information was given to the department by the railroads for the
month of November, 1909, and the railroads have complained of the
failure of the department to publish the amounts for the information
of Congress.
The statement of the Post Office Department made under date of
January 16, 1914, contained in volume No. 7 of the hearings, was
apparently intended as a complete recital of the department case
and was written after six months’ delay for the purpose of review-
ing the data and the hearings, and yet we can not find one word in
RAILWAY MAIL PAY. : 1313
it relating to any comparison with express traffic or the revenue re-
ceived by the railroad companies from express and from mail.
Now, at this late date, March 24, 1914, the Post Office Department
lays before your committee a lot of undigested material, and con-
cludes by saying, on page 1278: - - ºr,
It must be remembered, as hereinbefore stated, that this is placing the mail
Service On the basis of the express service and not accounting for the value
of such differences between them as may exist. Furthermore, it is placing
the entire subject matter of the mail service upon the same basis as the subject
amatter of the express service.
We believe that it is evident to your committee, before we make any
explanation on the subject, that it would be impracticable to make
any satisfactory comparison without several months for additional
investigation.
The two services are on an entirely different basis. In the case of
the express traffic, the railroads receive a percentage of the gross re-
ceipts varying from, perhaps, 40 per cent to 55 or 58 per cent. The
Interstate Commerce Commission in its report for 1909 stated that
the average percentage was 47.53 per cent. The mail service is paid
for mainly on the basis of weight multiplied by distance or ton-
mileage. The total ton-mileage of the express traffic is not known, but
whether the comparison is made between the express and mail on the
basis of relative returns from ton-mileage or relative returns from car
space, there would have to be a precise appraisal of the differences in
the relations, because the express companies in connection with their
railroad transportation perform many services for themselves which
the Post Office Department requires from the railroad companies.
Also, the express companies make many payments for rent of station
facilities, and as sharing in the wages of railroad employees for
which there is no similar contribution from the mail service. In
addition to this, the express companies perform many services for the
railroad companies, as in the transportation of railroad companies’
express packages, the collection and forwarding of money, the dis-
tribution and transportation of railroad tickets, etc., for which there
are no precise ascertainments or even estimates as relating to the
entire railroad mileage upon which the mails are also carried. To
obtain this information it would be necessary to start a new inquiry
and to obtain in detail from each company the terms of its contrac-
tual relations with the express company operating over its lines and a
definite appraisal of these various services. -
Information regarding ea press traffic already in the record.—In
the hearings held before your committee during the past year there
are a number of contributions from the committee on railway mail
pay which enable you to obtain a general idea regarding the relative
pay to the railroads from express and mail traffic. In volume 1
(pp. 51–52) the committee on railway mail pay showed that, accord-
ing to their ascertainment for the month of November, 1909, covering
178,709 miles of railroad, the relative earnings on the car-foot mile
basis were, from mail, 3.228 mills, and from express 3.855 mills. For
a 60-foot car this would show an earning from mail of 19.36 cents and
from express 23.13 cents. The railroads, therefore, earned from the
express traffic, on the space basis, 19 per cent more than from the
1314 RAILWAY MAIL PAY.
mail, notwithstanding the fact that the mail service is known to be
much more expensive for the railroads to operate.
In volume No. 1 (p. 122) a statement was submitted showing that
on inadequate data it appeared as though the earnings of the rail-
roads per ton-mile express as compared with the ton-mile earnings
from mail were not far apart, being somewhere between 7 and 8
cents for either. This conclusion must also be received with the
same reservation that the express tonnage can be loaded more com-
pactly and economically than the mail tonnage, and that the service
is less expensive to the company than the performance of the mail
Servl Ce. * --
In volume No. 2 (p. 325) Dr. Lorenz computes the respective car-
mile earnings to railroad companies from mail and express. It ap-
pears in his calculation that the railroad earnings per car-mile are 13
per cent higher from the express if the gross mail space reported in
Document No. 105 for mail is credited to the companies. It also
shows that if the gross space as published by the Post Office Depart-
ment is not credited, but only the net space taken, the earning from a
60-foot mail car would be 9 per cent greater than the earning from
an express car of similar length. In this case the railroads would
point out that even the gross amount of space published in Document
No. 105 as reported against the mail service does not represent the
correct total as reported by the companies. Also, that in this illus-
tration, as in the others, it would be necessary to make allowances
for the greater economy to the railroads of performing the express
business both in operations and in incidental services rendered by
the express companies themselves. *
In volume No. 2 (p. 335) Mr. Worthington, on behalf of the South-
ern Pacific road, showed that on the very low contract basis of 40
per cent of express earnings the mail traffic showed only 4% per cent
greater earnings than the express traffic, whereas on the Union
Pacific, where the usual contract was in operation, the express space
showed 11 per cent greater earning than the mail space.
In volume No. 2 (p. 419) Mr. Bradley, reporting for the Pennsyl-
vania Railroad system, showed that on the company’s compilation
of space the earnings from express traffic were 22 per cent greater
than from the mail traffic. He also showed that the Post Office De-
partment credited a mail earning to the Pennsylvania Railroad sys-
tem of 3.873 mills, while the earning from express on the company’s
showing was 3.898 mills, so that even here there was a small ad-
vantage from the express traffic independent of the modifications that
would be subsequently necessary on account of the more economical
performance of service and an appraisal of the express company's
contributions toward the work and expenses.
In volume No. 2 (pp. 437–438) there is stated in parallel columns a
number of differences in the relations which the railroad company
bear to the express companies and to the Post Office Department,
showing that these relations are much more favorable both finan-
cially and in operating performance with the express traffic than they
are with the mail trafić, -
In volume No. 2 (p. 526) Mr. Peabody, on behalf of the Atchison,
Topeka & Santa Fe Railway, shows that on the space basis the mail
BAILWAY MAIL PAY. 1315
earnings are about 4 per cent higher than from the express traffic, but
explains that this is due to a contract which will not be renewed. It
will be noted in this case that the railroad company will be able in
due time to revise this contract, which would not be the case in rela-
tion to mail service, where the rates and conditions of service are
fixed by statute or by Post Office Department regulations having the
same force. . It is also to be noted that Mr. Peabody's finding would
require further modification if the comparative relations as to econ-
omy of operation in connection with the express traffic as compared
with the mail traffic were fully set forth.
In volume No. 2 (pp. 747–758) there is published a statement on
behalf of 21 short-line railroads which shows respective earnings
from express and mail traffic. The summary indicates that the re-
ceipts from express traffic are about 30 per cent greater than from
mail traffic, but as the units of service, such as ton-miles or relative
amount of car space, are not stated, one can only get a general impres-
sion. . It will thus be seen that the subject has not been overlooked
in the testimony offered by the representatives of the railroads, and
that a review of the testimony indicates quite plainly that the express
traffic is somewhat more remunerative to the railroads as a whole than
the mail traffic. -
Comparative gross receipts.-At the hearing of March 24, 1914, Mr.
Worthington, on behalf of the committee on railway mail pay, sub-
mitted a memorandum of the annual receipts of the railroad com-
panies from mail traffic and express traffic for the years 1909 to 1913,
i. For the first and last of these years the figures are as
ollows:
* Express
}
- }
Year ending June 30–
1909----------------------------------------------------------------- | $49,869,375 $64,032,127
*. 1913----------------------------------------------------------------- $51,959,388 $83,872,497
Increase, 1913 over 1909.---------------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . r $2,090,013 $19,840,370
Increase in per cent----------------------------------------------------- 4 31
Comparison of ea press and mail rates between specific points.-The
Post Office Department submits a list of comparative express and mail
rates per 100 pounds between specific points. The table submitted
contains 114 illustrations, and the whole number of illustrations are
without value to your committee, because they are all based upon the
minimum express rate, i. e., the rate per 100 pounds.
Suppose that the railroad companies had been submitting a similar
illustration and based it upon the maximum express rate, namely, the
rate for 1 pound. What would be thought of the fairness of the
presentation? -
To illustrate this point we have prepared a statement based on the
first 15 examples quoted by the department in its 100-pound table on
page 1272, and show on successive lines the rate which the department
has worked out for each package of 100 pounds in weight in compari-
son with what the rate would be if it were based upon 100 1-pound
packages. The ton mileage in both cases would be the same.
l316
RAILWAY MAIL PAY. .
Comparison of capress and mail rates per 100 pounds,
First. At the rate for 100 pounds (in one package) used by the Post Office Department.
Second. At the rate for 100 pounds (in one hundred 1-pound packages) used by the railroad company.
Railroad company-- - - - -
Për
e Per x,
*****
|First . Excess * cent of º
class express 50 of º per . of 50
eXpress ..., per rate * OIIIlåll
#|º] Mail ºf ºver [...] rate" ºf
... one 100+ j rate. express 50 per ; %Y* express
* | pound ound 4 rate. cent of over 50 per ;
pack | P ack- express ºil cent of j
age. º: - rate. . express ºft
tºvº • * | rate. rate
Aº Ohio, to Pittsburgh,
a. .
Post Office Department. 132.05 || $1.00 |........ $0.75 || $0.50 $0.25 | . . . . . . . . 50 l... -----
Railroad company... . . . 132.05 |. . . . . . . . $21.00 . 75 10. 50 | . . . . . . . . $9.75 |- - - - - - - - 1,300
Altoona, Pa., to New York,
N. Y.: x - zºr
Post Office Department. 326.86 1. 40 l. . . . . . . . . 8S . 7 18 i-------- 26 1. -------
Railroad company... . . . 326.86 - - - - - - - - 22, 00 . 88 11.00 | . . . . . . . . 10. 12 |... . . . . . 1,150
Anniston, Ala., to Washing-
ton, D.C.:
Post Office Department. 748.20 2.90 |........ 2. 53 1, 45 | 1.08 . . . . . . . . 74 |--------
Railroad company.. . . . . 748. 20 |- - - - - - - - 23.00 2.53 | 11. 50 - - - - - - - . 8.97 | . . . . . . . . 355
Asheville, N. C., to Wash-
ington, D.C.: *
Post Office Department. 476. 17 2, 20 ! . . . . . . . . 1, 97 1. 10 .87 - - - - - - - - 79 |. . . . . . . .
Railroad company... . . . 476. 17 |. . . . . . . . 22.00 1.97 | 11.00 | . . . . . . . . 9.03 |. . . . . . . . 458
Ashland, Ky., to Cincin-
nati, Ohio:
Post Office Department. 145.71 1. 15 . . . . . . . . . 56 . 58 - - - - - - - - .02 - . . . . . . .
Railroad company.. . . . . 145. 71 | . . . . . . . . 21.00 . 56 | 10. 50 - - - - - - - - 9.94 | . . . . . . . . 1,775
Buſialo, N. Y., to Boston, --
Mass.:
Post Office Department. 496. 90 1.60 - - - - - - - - 1. 37 , 80 57 -------- 71 --------
Railroad company... . . . 496. 90 | . . . . . . . . 22.00 1. 37 | 11, 00 | . . . . . . . . 9.63 |. . . . . . . . 703
Burlington, Vt., to Boston,
Mass.:
Post Office Department. 247. 34 1. 15 1. . . . . . . . 1. 52 . 58 .94 - - - - - - - - 61 --------
Railroad company. . . . . . 247. 34 | . . . . . . . . 21.00 1.52 | 10. 50 | . . . . . . . . 8.98 |........ 591
Burlington, Iowa, to Chi-
cago, Ill.:
Post Office Department. 205. 57 1.25 ||-------- . 58 .63 |-------- .05 ||-------. 9
Railroad company. . . . . . 205. 57 . . . . . . . . . 22.00 . 58 | 11.00 | . . . . . . . . 10.42 1. . . . . . . . 1,797
Cedar Rapids, Iowa, to Chi- e
cago, Ill.:
Post Office Department-| 21S. 30 1.25 | . . . . . . . . . 71 . 63 .08 - - - - - - - - 13 --------
Railroad Company. . . . . . 218.30 - - - - - - - - 22. 00 . 71 | 11.00 | . . . . . . . . 10. 29 - - - - - - - - 1,449
Charleston, W. Va., to
Washington, D.C.: -
Post Office Department. 387.71 1.75 -------- 1. 44 . 88 . 56 -------- 64 |... ----.
Railroad company. . . . . . 387. 71 || - - - - - - - - 22.00 1.44 11.00 | . . . . . . . . 9.56 |. . . . . . . . 664
Chattanooga, Tenn., to Cin-
cinnati, Ohio:
Post Office Department. 338, 15 1.85 . . . . . . . . 1. 40 .93 . 47 |-------- 51 --------
Railroad company--- - - - 338. 15 . . . . . . . . 22.00 1. 40 | 11.00 | . . . . . . . . 9.60 - - - - - - - - 686
Chicago, Ill., to Boston, Mass.:
|Post office Department. 1,019. 18 2.50 - - - - - - - - 2.81 1. 25 1. 56 l. . . . . . . . 125 --------
Railroad company... . . . 1,019. 18 - - - - - - - - 23.00 2.81 11. 50 |- - - - - - - - 8.69 |- - - - - - - - 309
Chºo, Ill., to Kansas City,
O. :
Post Oſfice Department. 454.00 2. 10 . . . . . . . . 1. 52 1.05 . 47 l. . . . . . . . 45 1. . . . . . . .
Railroad company. . . . . . 454.00 | - - - - - - - - 22. 00 1, 52 | 11.00 |- - - - - - - - 9.48 - - - - - - - - 623
Chicago, Ill., to Milwaukee,
Wis. :
Post Office Department. 85.00 .90 | . . . . . . . . . 29 . 45 |-------- 16 |-------- 55
Tailroad company. . . . . . 85. 00 - - - - - - - - 21.00 29 || 10, 50 - - - - - - - - 10. 21 |. . . . . . . . 3,520
Chicago, Ill., to Minneapolis,
Minn.:
Post Office Department. 423.79 2.00 | . . . . . . . . 1. 19 1. 00 . 19 |-------- 19 |--------
423.70 - - - . . . . . 22. 00 1. 19 11.00 |- - - - - - - - 9.81 - - - - - - . . S24

It will be seen by comparing the last two columns that the depart-
partment finds that the railroad company received from the mail
traffic a greater revenue than from express traffic, ranging from 13
per cent to 125 per cent, whereas the last column, based upon one
hundred 1-pound packages, shows that the railroads received from
RAILway MAIL PAY.
1317
the express traffic a higher revenue than from mail, ra
309 per cent to 3,520 per cent.
Taking one specifi
c instance—
nging from
Chicago to Milwaukee—the depart-
ment admits a higher earning to the railroad company from the
express of 55 per cent at the 100-pound rate, while our statement
shows greater earnings of 3,520 per cent, or 60 times as great, based
on the 1-pound rate.
A similar illustration will be made of the first 15 examples shown
on page 1274 in the table headed “Comparison of express and mail
rates per 40 pounds.” The department shows an excess of earnings
to the railroad company from the mail varying from 4 per cent to
110 per cent, while we show, on the basis of forty 1-pound packages,
that there is a greater earning from express traffic, ranging from 311
per cent to 3,400 per cent.
Comparison of ea;press and mail rates per 40 pounds.
First. At the rate for 40
Second. At the rate for 4
$º. (in 1 package) used by the Post Office Department.
pounds (in forty
-pound packages) used by the railroad com-
pany.
p Per
pe Per
First- First- Excess Fº cent of º:
class class 50 of ºil per . of 50
express express per ra Of Iſla
º rate for rate for Mail cent of over : rate cºol
routes. 90° 40- forty 1- rate. express 50 per †. 9Yº express
° pound pound rate. cent of OVer 50 per . wº
pack- pack- express mail cent of OVer
age. ages. rate. rate. express mail
rate. rate
Aº, Ohio, to Pittsburgh,
3.:
Post Office Department. 132.05 $0.52 |........ $0.30 || $0.26 $0.04 - - - - - - - - 15 --------
Railroad company. . . . . . 132.05 - - - - - - - - $8.40 . 30 4. 20 - - - - - - - - $3.90 |- - - - - - - - 1,300
Altoona, Pa., to New York,
N. Y.:
Post Office Department. 326.86 .68 - - - - - - - - . 34 :* ----------------|----------------
Railroad company......| 326.86 - - - - - - -|-| 8.80 .34 || 4.40 - - - - - - - - 4.06 - - - - - - - - 1, 194
Anniston, Ala., to Wash-
ington, D.C.:
Post Office Department. 748.20 1.28 - - - - - - - - 1.01 . 64 • 37 -------- 57 --------
Railroad company.. . . . . 748. 20 - - - - - - - - 9. 20 1.01 4.60 - - - - - - - - 3.59 |- - - - - - - - 355
Asheville, N. C., to Wash-
ington, D.C.:
ost Office Department. 476. 17 1.00 - - - - - - - - . 79 . 50 .29 |-------- 58 i--------
Railroad company...... 476. 17 - - - - - - - - 8.80 ... 79 4.40 l. ------- 3.61 |-------- 457
Ashland, Ky., to Cincin-
nati, Ohio:
Post Office Department. 145.71 .58 -------- . 22 . 29 i.------- .07 -------- 31
Railroad company...... 145.71 - - - - - - - - 8.40 . 22 4.20 - - - - - - - - 3.98 |. . . . . . . . 1,809
Buffalo, N. Y., to Boston,
Mass.:
Post Office Department. 496.90 .76 . . . . . . . . . 55 . 38 -17 |-------- 45 -------.
Railroad company...... 496.90 l. . . . . . . . 8, 80 .55 4.40 - - - - - - - - 3.85 - - - - - - - - 700
Burlington, Vt., to Boston,
3.SS. .
Post Office Department. 247.30 .58 |...... -- . 61 . 29 .32 I.-------- 110 --------
Railroad company.-- - - - 247.30 - - - - - - - - 8.40 .61 4.20 -------- 3. 59 . . . . . . . . 589
Burlington, Iowa, to Chi-
cago, Ill.:
Post Office Department. 205.57 .62 -------- . 23 -31 |-------- .08 - - - - - - - - 35
Railroad company.... --. 205.57 |- - - - - - - - 8. 80 . 23 4.40 - - - - - - - - 4, 17 - - - - - - - - 1,813
Cedar hºlds, Iowa, to Chi-
O, Ill.: *.
ost Office Department. 218.30 .62 -------- . 28 -31 |-------- .03 |.. ------ 11
Railroad company-----. 218.30 - - - - - - - - 8. 80 . 28 4.40 l. ------- 4. 12 -------- 1,471
Charleston, W. Va., to *
Washington, D.C.:
Post Office Department. 387.71 .82 |-------- . 58 .41 • 17 -------- 41 --------
Railroad company...... 387.71 - - - - - - - - 8. 80 . 58 4.40 - - - - - - - - 3.82 - - - - - - - - 659
Chattanooga, Tenn., to Cin-
cinnati, Ohio:
Post Office Department. 338.15 .86 -------- . 56 .43 • 13 l-------- 30 - - - - - - - -
Railroad company...... 338. 15 |........ 8, 80 . 56 4.40 l. . . . . . . . 3.84 - - - - - - - - 686



1318
RAILWAY MAIL PAY.
~
Comparison of ea press and mail rates
per 40 pounds—Continued.


Per
©T
First- | First- Excesſºslc.ºotlºo!
class | class - ofºil jº |...] ..."
Length expºssie:Prºss , 50 per rate cºol of mail 9 º'
º; rate fºr rate for Mail cent of over ..., rate |c. f
... [one 40 forty; rate, express|50 per.|*.* ºver .
pound | pound räte. cent of | * 50 per express
pack- pack- express ś cent of .
age. ageS. rate. rate. * mail
* | rate.
Chicago, Ill., to Boston,
Mass.:
Post Office Department. 1,019. 18 $1.12 |... . . . . . $1.12 $0.56 || $0.56 - - - - - - - - 100 l........
Railroad company...... 1,019. 18 |........ $9.20 1.12 4.60 |... . . . . . $3.48 |........ 311
Chicago, Ill., to Kansas
City, Mo.;
Post Office Department. 454.00 .96 -------- . 61 .48 13 I-------- 27 --------
, Railroad company...... 454.00 . . . . . . . . 8. 80 . 61 4.40 l. . . . . . . . 3.79 - - - - - - - - 621
Chº?, Ill., to Milwaukee, -
IS. .
Post Office Department. 85.00 -48 |-------- . 12 • 24 l-------- • 12 -------- 100
Railroad company...... 85.00 |........ 8.40 . 12 4.20 -------- 4.08 |........ 3,400
º Ill., to Minneapo-
IS, MIDIl.
Fost office Department. 423.79 .92 |........ .48 .46 .02 -------- 4 --------
Railroad company...... 423.79 - - - - - - - - 8. 80 .48 4.40 l........ 3.92 ſ. . . . . . * 816
Now, neither of these calculations would give a fair idea to your
committee of this subject, because the truth is somewhere between the
two extremes, but we do not feel required to submit an apology for
stating the maximum earnings when it seems to be necessary to illus-
trate the unfairness of the Post Office Department in making their
comparison on the minimum earnings.
The importance of the average haul.-The Interstate Commerce
Commission has attributed to the average express package a haul of
about 200 miles. The Post Office Department has asserted that the
average haul of mail, including equipment, is about 620 miles. If
these estimates are accepted it must be assumed that the radial
.." of the mail traffic is three times as great as the express
traffic.
It would also have to be borne in mind that the express rates pre-
scribed by the Interstate Commerce Commission start with 21 cents
for the first pound and then go through a process of declension
according to increasing weight and increasing distance. It is easily
demonstrable that the return received by the railroad company from
an express package weighing 1 pound is at a higher ton rate than
the revenue received from the mail even for a transcontinental haul.
It is also easily demonstrable that the railroad company receives
for an express package of 100 pounds a higher rate than from the
mail on a haul of over 100 miles, but we are not able to say at what
weight and at what distance the neutral point would occur as between
the express traffic and the mail traffic. This would require a long
and intricate investigation, and even after it was made it would still
be necessary to make allowances between the two services by apprais-
ing the differences in the contractual relations and operating condi-
tions already alluded to. -
However, it should not escape notice that in the list of specific
shipments quoted by the Post Office Department on pages 1272–
1276 only two are under 100 miles, while 112 are over 100 miles; also
-* - RAILWAY MAIL PAY. 1319
that 93 of the instances are over 200 miles as compared with 21 in-
stances under 200 miles. -
We may conclude the statement by remarking that if the railroads
receive 50 per cent of the gross postal revenue as they do of the ex-
press companies, the amount of railway-mail pay for the year 1913
would have been $133,000,000 instead of $51,466,000. Instead of
getting 50 per cent of the postal revenues the railroads receive only
about 19 per cent. -
THE SPACE BASIS.
In connection with the very ample testimony already submitted by
the railroads relating to the unavoidable complexities and causes of
irritation that would be inherent in the department's proposal that
the pay be adjusted on the basis of car space authorized, we deem
it important to call your attention to two or three facts:
First. Those who have previously investigated the subject and
concluded that space rather than weight would be a fairer basis were
either unaware or unfamiliar with the administrative difficulties that
would be encountered in connection, with any space basis of pay.
Second. The Elmer, Thompson, and Slater committee, composed of
high officers of the Post Office Department, recommended the space
basis, but were careful to insist that for the protection of the Govern-
ment it must be coupled with a prescribed average weight to justify
a certain amount of space.
Third. None of the previous investigators who reached a conclusion
in favor of the space basis could have had in contemplation the
present condition of the Parcel Post Service that already deals with
packages weighing as much as 50 pounds, with intimations of still
further increase in the weight limit, thus placing the Post Office De-
partment in competition with the railroad companies and the express
companies in the transportation business.
Any law fixing rates and terms on a space basis would leave the
measure of pay for transportation to be interpreted by the Post Office
Department according to the discretion it must necessarily have as
to the amount of space it would authorize, and this power, coupled
with the power already held to increase the weight limit indefinitely
and to lower rates indefinitely, would make it impossible for the
railroads to secure a compensatory basis of pay except at the pleasure
of the department.
It is proper to call the attention of the joint committee to the
injustice of a space basis to the heavy traffic routes on which mail
is largely handled in expedited fast mail trains. These trains are
costly to operate, conduct a heavier load of mail in generally heavier
cars, at faster speed than the average transportation, and the pro-
posed space pay would be so inadequate as to make the operation
of these trains very unattractive. There are 40 mail routes in the
|United States handling 56 per cent of the ton-mileage of mail, for
which service these routes would receive on a space basis only about
34 per cent of the compensation, receiving no more per car-mile than
lighter traffic routes, although the average load per car on the 40
heavy traffic routes is two and one-half times as great as on other
routes.
A space basis is not only unjust to the larger roads, but is unfair
to the railways as a whole in denying to them the privilege of some
1320 RAILWAY MAIL PAY.
return from operating economies due to the larger car loading, all
of which would inure to the Government. Under the present law
the benefits of heavier car loading would be shared by both—the rail-
roads receiving more pay for the increased tonnage, but performing
the service at a decreased ton-mile rate. Under a space basis for
payment the railroads would be limited to a fixed revenue per car-
mile, regardless of tonnage and the extent to which the Post Office
Department might enlarge the weight limit of the parcel post and
load cars with 15 to 20 tons each without additional compensation
to the railroads. A future situation might even be imagined under
which carload traffic might be handled in this way on passenger trains
at rates per ton-mile no higher than ordinary freight rates.
The cost of operating a train-mile in the last 20 years has increased
50 per cent. To meet these advancing costs of labor and material the
railways are justly entitled to a fair share of the greater revenues
per car-mile unit that may result through better loading. The space
basis not only denies this but actually imposes some added cost due
to the greater tonnage carried. Had a space plan applied, for ex-
ample, to freight transportation, it is safe to say that the advancing
operating costs would have long ago forced most of the roads into
financial ruin through prohibiting the greater earnings they have re-
ceived per train-mile unit through heavier loading.
In conclusion, we believe that your committee in deciding this
question, which is really one between the citizens who ship traffic
through the medium of the Post Office Department and the citizens
who carry the traffic through the medium of the railroads, will not
be concerned as to the personal feelings of those who have conducted
this debate on the one side or the other, but will render its judgment
in accordance with the best interests and the abiding interests of the
American people.
Senator WEEKs. How much more does it cost to run a train at the
rate of 60 miles an hour than 30 miles an hour? -
Mr. PETERs. I do not think anyone has attempted to work out that
proposition so that it would be commonly talked about and familiar
to all hands. I know that the Pennsylvania Railroad has its test
plant at Altoona, and there are other testing plants at some of the
universities where they get the cost of the locomotive-mile on dif-
ferent speeds. I can not answer the question, however.
Senator WEERs. What would be the difference in cost in fuel, do
you know?
Mr. PETERs. I am not familiar enough with that question to
2,I\SW €I’.
Senator WEEKs. That is definitely worked out in case of ships?
Mr. PETERs. Yes; I think they have worked it out also at Altoona.
Mr. WoRTHINGTON. Mr. Delano presented some figures as to that in
a former hearing before the Loud commission showing very large
increases in fuel consumption as speed per hour increases. That
principle is recognized in passenger transportation in the excess fares
that are charged on fast passenger trains, for example, between New
York and Chicago. - -
Senator WEEKs. But I supposed there was a definite basis to justify
that increase; that it had been worked out definitely so that someone
would know the difference in cost? , -
RAILWAY MAIL PAY. 1321.
Mr. WoRTHINGTON. The increase in cost relates not alone to the
train itself, but to delay to other trains, for naturally the fastest
train must be given preference and other trains are sidetracked
for it. -
Mr. PETERs. I see that we gave a statement on pages 642 and 643
of the record, volume 5, which shows the increase in resistance per
car, from records taken at Altoona testing plant, of the 40-ton car
and 60-ton car and the different speeds, and it shows the increase for
steel over a wooden car; that is, the increased resistance. An increase
in resistance necessarily means an increase in cost.
Senator WEEKs. What did Prof. Buck, of the engineering school
of the University of Illinois, testify to relative to increased fuel con-
sumption?
Dr. LoRENz. This was a letter to the chairman of this commission.
He discussed in a general way the effect of increasing speed on cost
of operation. He discussed it under various heads, one of which is
the cost of fuel, and he concludes that discussion with this statement:
“With modern fast passenger engines, it is quite possible to have
the coal consumption doubled by an increase of speed from 60 miles
per hour to 70 miles per hour.” That is volume 6, page 896.
Senator WEEKs. What I am trying to get at is when a railroad
furnishes a better and faster service, how much more is it costing the
railroad to perform that service? Of course it would be difficult to
give definite figures, but it is a material increase.
Mr. PETERs. It would be a mere guess on my part for I have not
attempted to analyze in that direction. I have not been brought up
against that particular development of the traffic question.
Senator WEEKs. What surprises me is that railroad men do not
know all these questions and have not carefully determined what it
costs to run a passenger train.
Mr. Peters. I think they have worked that proposition out some-
where, but I am not able to answer offhand.
Mr. WoRTHINGTON. I would like to remark, if I might, that fast
passenger train service requires a very much higher standard of
track maintenance than slower trains. It requires heavier rails,
better ballasted road bed, and the risk of accident is tremendously
increased as the speed is increased, also all other classes of traffic are
interrupted, more or less, and delayed through giving way to the
faster trains.
Senator WEEKs. Dr. Lorenz, has the Interstate Commerce Com-
mission given consideration to the question of cost of operating
trains, and have they arrived at any conclusions?
Dr. LORENZ. Yes, sir. Many years ago they published in their
annual report the cost of operating a passenger train a mile and the
cost of operating a freight train a mile, but they abandoned that at
the time when Prof. Adams, who has been mentioned here to-day,
was conducting the department's statistics. Recently, however, the
commission has again taken an interest in the subject. In the in-
terim practically nothing was done by the commission in that direc-
tion, except as it might have come up in some particular case in
the exhibits. The commission has recently issued a tentative order
providing for separation of expense between passenger and freight
service, which order will come up for hearing at the end of this
1322, RAILWAY MAIL PAY.
month, so that you might say that the commission in the past has
done practically nothing along that line but have been making
strenuous efforts to get the railroads to cooperate. As a matter of
fact, the railroads on many lines have done considerable work of that
kind. We find that in the manufacturing industry, generally, there
is much less hesitancy to speak of the value of that kind of work,
namely, cost accounting. I think one reason why the railroads have
not developed to the same extent the manufacturing companies have
is the fact that the fixing of rates has not been on theories which
required a knowledge of the cost; in other words, the traffic officer
naturally wished to get as high rates as he possibly could in order
to move the traffic, and he did not need to know the cost except to
know a minimum cost, and we find that the cost statistics developed
by the railroads are very largely by operating officials who used
them to gauge efficiency of operation rather than actual cost of per-
forming the final service. With the growth of public regulation,
the making of rates according to what the traffic would bear, is no
longer an entirely satisfactory principle, because there seems to be a
greater necessity for finding out exactly what it does cost to render
a particular service to the public. -
Senator WEEKS. I should suppose the commission and the railroads
would attempt to work that out very definitely. That has been done
in water transportation, and certainly the speed with which that
transportation is performed should be taken into consideration in
fixing a rate. I have just had my attention called to that matter in
connection with a resolution which I introduced providing for mail
service to South America to run scout cruisers of the Navy at a
20-knot speed. The cost is twice as great as to run them at a 15-knot
speed. The same general consideration must bear relatively in train
transportation, I should think.
Mr. PETERs. There are so many elements that enter into a question
of that kind—the question of grades, the question of stopping and
starting, the reduction of speed through crowded communities, and
so on—that it has been very difficult to work up any general rules on
the question. I think one of the great objections that the railroads
have had in the past to going into a detailed separation of all ex-
penses at the point of origin was the large expense involved in get-
ting at the information and the difficulties of keeping those records,
and as to what was the value of them after we got them. It would
not justify the expense, in other words. In many cases, as Dr.
Lorenz states, the rates were made or based on what the traffic would
bear. The railroads in the past, in developing this country and in
developing traffic, especially on new lines, have had to make rates
that would move and build up the traffic, as, for instance, the rates on
grain from the far West into the interior, such as wheat from Ore-
gon and Washington and lumber from that territory. Those rates
were very low and were made at a time when there was a preponder-
ance of the merchandise movement from distributing centers in the
Middle West to the Pacific coast, the movement was westward bound,
and they wanted something to load eastbound. Consequently they
made low rates on wheat, but it was in order to move the traffic.
There are many cases where rates are made that way in order to
develop and build up, so that we have a system of rates all over the
country made up, in some cases, to meet water competition, in others
4-
RAILWAY MAIL PAY. - 1323
to meet commercial center competition, and in others to meet com-
petition between different roads that could in roundabout ways meet
the conditions. Another reason: A railroad may be very active in
securing business. A town or community may be inviting factories
to come there. In such case the railroads would cooperate in order
to help out, build up, and develop such town or community.
Now, you have the commission studying all those things, working
them out, and getting rates to reasonable points. They have to build
up some rates as j as cut down others, and we are going through
that process; but you see the result to-day, the railroads are suffering
and the country is suffering because our hands are tied so tight.
The CHAIRMAN. Is it not true that it is much easier to get the cost
on a manufacturing business than on a transportation business?
Dr. LoRENz. I should say generally that would be true where the
product is relatively simple; but I think there are manufacturing
enterprises where the product is complicated.
The CHAIRMAN. But, taking business as a whole—generically—
manufacturing and transportation business?
Dr. LORENz. I should say it would be more localized to a different
product which is usually produced by a unit of a plant, so that I
think it is true that it is easier to develop cost in manufacturing than
in railroad transportation. However, I do not think that the differ-
ence is so great as to prohibit the railroads from approximating that
information.
The CHAIRMAN. Do you believe it is possible at all to work out an
absolutely correct estimate of cost in transportation without the
adoption of a large amount of arbitrary percentages?
Dr. LORENz. You could not call the result absolutely accurate; no.
sir. For that matter, you could not do so in the manufacturing busi-
ness either.
The CHAIRMAN. You can in some manufacturing businesses, or
practically so, can you not?
Dr. LORENz. It depends on the manufacturing business. With re-
gard to the railroad industry, for example, the average cost of op-
erating a freight train or a freight car a mile on a particular road
can be ascertained with such degree of accuracy that you can make it
the basis of rates.
The CHAIRMAN. In your opinion, would the value of such infor-
mation be commensurate with the cost of ascertainment?
Dr. LORENz. I think a method can be devised which would not be
prohibitive as to cost.
The CHAIRMAN. Just the initial cost?
Dr. LORENZ. Yes. There are various degrees of cost accounting.
The tendency is to run to extremes and get everything down to a
fine point, but I think a system which would be useful could be de-
vised and still not be prohibitive on account of cost.
Mr. Scott. Mr. Chairman, I dislike to talk about such a complicated
proposition as the cost of fuel on a fast passenger train, for I think if
you were to ask 25 experts to come here and give you an opinion, you
would probably get 25 different opinions in regard to it. I only
offer this suggestion to show one of the difficulties. It is pretty
nearly universal that railroad companies run locomotives first in
and first out; for instance, take one of our passenger engines that we
run on the 20-hour train between New York and Chicago. From
1324 RAILWAY MAIF, PAY.
2^
Pittsburgh to Crestline, west bound, it would make no stops between
those points and would run at a high rate of speed. When the en-
gine leaves Pittsburgh it has a tank full of coal and when it gets to
Crestline that tank of coal is not exhausted, but it comes back pos-
sibly on a train that will make every stop between Crestline and
Pittsburgh. We put some additional coal on at Crestline and you see
the difficulty of attempting to keep a separate account of the coal
consumption. It is not like a steam vessel, where the steam engine
is performing the same kind of service every day. I do not know
whether I have enlightened you on the subject or not.
Mr. WoRTHINGTON. While I think it would be possible to make an
accurate estimate of the difference in fuel consumption at different
speeds per hour on any individual road, that comparison would not
be of any value when compared with another road operating under
different circumstances. For example, we operate passenger trains
Over the Sierra Nevada mountains up 2.2 per cent grades at a speed
of 25 miles an hour, where the fuel consumption per mile is very
much larger than trains operated on level roads in the East at the
rate of 50 miles an hour. It is necessary to use Mallet locomotives
on those trains, the Mallets being practically double locomotives,
where the fuel consumption is very large. Therefore, any rule that
might be fixed for equating the cost according to speed would not
apply to all roads alike.
The CHAIRMAN. The value of the information as to cost ascer-
tainment would depend entirely on the rule adopted in the way of
rate making, would it not?
Dr. LORENZ. Yes, sir. I think it is desirable to have a rule adopted
independent of any case or investigation, which rule should be, you
might say, prescribed by a commission or some other body.
The CHAIRMAN. Would not the value be whether cost was to be
given the greater weight in the determination of the rate charged
by the commission or by congressional law or whether capital in-
vested in the operation was to be given the greater weight?
Dr. LORENZ. The value would depend on how much you would
take cost into consideration, but both commissions and courts have
said with perfect definiteness that cost is one of the elements that
you must consider. If that is one of the elements which you must
consider, obviously you can not consider them until you know it and .
therefore you must ascertain it before you can consider it.
The CHAIRMAN. Why have the commission and courts come to
ºnclusion? Because of construction of laws enacted by Con-
QºI'êS3
"Dr. Lorenz. Because, so far as I can see it, they could not discover
any other basis on which to arrive at any conclusion as to fairness
of a general level of freight or passenger rates.
The CHAIRMAN. Have either the commission or courts determined
as to what percentage of weight in any rule that might be adopted in
rate making should be given to cost as compared with the capital in-
vested? -
Dr. LORENZ. I think it is practically the dominant consideration
when you are considering the general level of rates; for example, the
courts in their decision as to j the 2-cent law is confiscatory or
not have tried to discover what the cost of the passenger Service is,
whether it yields a percentage on the capital devoted to that seryice,
RAILWAY MAIL PAY. 1325
and that is the consideration in determining the fairness of the 2-cent
passenger law. , s
The CHAIRMAN. Disregarding the capital invested?
Dr. LORENz. Oh, no.
The CHAIRMAN. The cost takes into consideration an allowance on
the capital invested?
Dr. LORENZ. Yes.
Mr. WoRTHINGTON. My impression of the decision of the Supreme
Court was that cost was simply to be considered as one of the ele-
ments, others to be the value of the service, the return on the invest-
ment, and I think some other elements, but cost was simply one to
be considered.
Dr. LORENZ. I think that is true with respect to particular rates,
but when you are talking generally, say, passenger rates, I do not
know whether it would be so construed. -
Mr. BASKERVILLE. When trains are operated at a high rate of speed,
the atmosphere, the wind, and all such matters control. A train op-
erated at 60 miles an hour against a 20-mile wind is operated at a
greater cost than one operated at 60 miles an hour against no wind.
Mr. PEABODY. Mr. Chairman, I have a statement somewhat in line
with that of Mr. Peters which I would like to present.
The CHAIRMAN. We will be glad to have you submit it now.

}
STATEMENT OF MIR, JAMES PEABODY.
Mr. PEABODY. Considerable has been said this morning in reference
to Prof. Henry C. Adams's position as to the division of expense be-
tween freight and passenger trains. It should be borne in mind that
the objection of Prof. Adams, he being a professional statistician, is
that it is not possible to get exact figures in such a division. Prof.
Adams does not object, I think, to the proposition that it is possible
to get approximate figures which in the opinion of very many people
will serve, so far as their usefulness in connection with railway mat-
ters is concerned, as good a purpose as if the figures were exact, and
his objection to the division should always have that in mind.
The major portion of the statement presented by the Second As-
sistant Postmaster General at the hearing before the committee last
week (March 24) depends for its probative force primarily upon the
assumption that the method employed by the Post Office Department
for determining, first, the cost to the railways of performing the
passenger service; and, second, the proportion of the passenger-train
space properly assignable to the mail service, are correct. If these
assumptions are faulty, then his argument falls, and that such is the
case seems to be easily demonstrable. -
First. As to the basis of apportionment of costs employed by the
Post Office Department.
It is well understood by those who are at all familiar with this sub-
ject that the main difficulty in dividing railroad expenses between the
freight and passenger service is in connection with what are known
as the maintenance of way accounts, and this for two reasons, first,
that both the freight and passenger service utilize the same facilities;
and, second, that the larger part of such maintenance expense is due
to the action of the elements, or as it is termed “weather stress.”
35797—No. 12–14—3
1326 RAILWAY MAIL PAY.
which is wholly independent of either service. What is the relative
proportion of the maintenance cost incident to weather stress on the
one hand and use on the other is absolutely indeterminable with ac-
curacy, but in connection with these two elements the Post Office
Department has made the following apportionment: -
wº-
Proportion | Proportion
due to due to
US8, weather.
/
Per cent. Per cent,
Ballast-------------------------------------------------------------------------- 10 90
Ties----------------------------------------------------------------------------- 33% 664
Rails and other track material---------...---------. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 ------------
Roadway and track------------------------------------------------------------- 10 90
Terminals----------------------------------------------------------------------- 10 90
Bridges, trestles, and culverts.-------------------------------------------------- 10 90
Signals and interlocking plants-------------------------------------------------- 100 l. -----------
Roadway, tools, and Supplies. . . . . . . . . . . . . . . ... --------------------------------- 10 90
These items, which constitute upward of 70 per cent of the total
charges to maintenance, are then apportioned to freight and passenger
as follows: The “use” proportion on respective revenue train mileage
and “weather stress” proportion on basis of direct charge accounts.
Why a different basis should have been selected for apportioning
these items, unless a predetermined result was to be reached, is past
comprehension. The natural as well as logical method of apportion-
ment of these expenses would have been to let the portion allotted to
“weather stress” follow that employed for dividing the expenses
assigned account of “use,” which was the revenue train-mile.
By adopting the revenue train-mile basis as the proper one to be
employed in distributing expenses in connection with that portion
of the maintenance expense due to “use,” the department appears
to be at variance with the Second Assistant Postmaster General, who
seems to consider that basis as erroneous for any purpose and wholly
unworthy of credence. Other people also differ with him. In his
argument (p. 1256), he quoted from a paper written by Interstate
Commerce Commissioner Meyer. This quotation he used had no
direct reference to revenue train mileage as a basis of apportionment,
but in the preceding paragraph of this same paper Commissioner
Meyer did refer to this subject. He said:
The railways themselves have made limited application of the principles of
cost accounting to more than one-half of the railway mileage in the United
States. They declare, however, that this has been done for internal Corporate
administrative purposes rather than just and reasonable rates. The difficulties
of separating operating expenses among the various branches of the railway
business are as apparent as the benefits of the final results are Clear to those
who are willing to undertake the task. It is perfectly obvious that controversy
respecting the apportionment of maintenance of way items, for instance, can
never end. Is this, however, sufficient reason for refraining from undertaking
a work which is so promising in beneficial results? There exists Surprising
similarity in the methods employed by different railway companies in appor-
tioning certain common or overhead expenses. This similarity appears to have
been brought about without previous conference and agreement, and is appar-
ently the result of similar conclusions arrived at by men working at the same
problem independently of one another.
There can be no better evidence that the revenue train mileage is
at least a defensible method of distributing maintenance of way ex-
penses than that so many experienced men in all parts of the country,
RAILWAY MAIL, PAY. . 1327
seeking only to ascertain the facts and with no ulterior purpose in
view, are in agreement upon it, while the method adopted by the
department finds practically no advocates. Further than this, many
railroads have gone into court using the revenue train-mile basis
of apportionment for many of the so-called items of “common ex-
pense” in both freight and passenger cases, thus evidencing their
confidence in its approximate accuracy, and up to date no court has
found against it. .
I want to observe right here that the railroads have taken their
cost into court on the basis of expenses and have used exactly the
same division, whether passenger or freight case. If they had loaded
either one they would have been rather loath to use it in the other.
The Sante Fe, in many cases, has taken their division into court,
using exactly the same basis in each case.
The CHAIRMAN. What has been the attitude of the courts, princi-
pally, on such division by the Santa Feº
Mr. PEABODY. The lower courts and the circuit courts have ac-
cepted that division and made their decisions upon it. The Supreme
Court has not passed upon that as to the division between passenger
and freight. The Supreme Court did object to the methods used by
the so-called experts testifying as to the difference in the cost of State
and interstate business, respectively, that being a matter of opinion,
and they said that could be ascertained upon the use basis to some
extent and which therefore should be employed, but they have
not questioned the division made by the railroads between freight
and passenger.
Mr. STEwART. If you will allow me to suggest right here, the
court decisions in those cases were based upon the fact that there
was no better plan presented to them. The decisions clearly indicate
that there was arrayed against one single man, who did present
another plan, all the experts of the railroad companies, and the
courts virtually said that the weight of evidence was in favor of the
railroad plan. In regard to what Mr. Meyer has said, do you recall
the very next sentence, which you did not quote?
Mr. PEABODY. That is your quotation?
Mr. STEwART. No. There is one sentence in Mr. Meyer's statement
that followed what you quote, and, as I recall it, it is to this effect:
That notwithstanding this unanimity of practice, that was not any
special reason why it should be adopted. That followed immediately
the quotation which you gave with regard to the similarity among
railroad accountants in the method used in dividing unassigned
expenses. - - -
Mr. PEABODY. Have you the paper?
Mr. STEwART. I have it at the office. Mr. Meyer says, as I recall it,
that even though this be true, it is not specially conclusive that such
method should be adopted.
Mr. PEABODY. So far as your statement regarding the court is
concerned, with relation to the Santa Fe cases, I will say that there
was no such conclusion of the court. Mr. Justice Sanborn, in the
Minnesota case, adopted that basis as the basis of his decision. Judge
Hook, in the Oklahoma case, adopted it as the basis of his decision,
and Judge McPherson, in the Missouri case, adopted it as his de-
CIS10Il.
1328 RAILWAY MAIL PAY.
Mr. STEwART. On that point I refer to pages 1010, 1011, and 1012
of the hearings, volume 7, in which the decisions of those courts are
quoted.
Mr. WoRTHINGTON. In the Minnesota case the decision of the
Supreme Court was practically to the effect that the division of ex-
penses between passenger and freight and State and interstate
should be on the basis of use of the property for the respective
classes of service. I can not imagine any better use of the property
than train mileage.
... Mr. PEABODY. And the cases were sent back for development on
that proposition. I will say that the western roads concerned in
the Oklahoma case have been having a very elaborate test, cover-
ing a period in Oklahoma of five months, for the purpose of ascer-
taining the division of expenses on the basis of use. I put a man on
every train we had in Oklahoma and in Missouri, and also in Ari-
zona, because we have a State case there. I have every element of
traffic separated in the report which I obtained. We are now work-
ing up that data, and we propose to submit a statement of cost on
the basis of use as suggested by the Supreme Court in the Oklahoma
case, which will come up this succeeding month.
Mr. WoRTHINGTON. That basis of use simply follows the decision
in the Minnesota case.
Mr. PEABODY. Yes. - - - *.
Mr. LLOYD. Do you aim to make Judge McPherson’s decision an
authority, or Judge Sanborn’s decision ?
Mr. PEABODY. I am not quoting either as authority. I am simply
stating the facts.
The CHAIRMAN. You may proceed, Mr. Peabody.
Mr. PEABODY. Another and perhaps most striking illustration of
the unwarranted methods employed by the Post Office Department
is found in its apportionment of steam-locomotive repairs, renewals,
and depreciation, one of the largest items of expenditure and which,
in the year embracing the figures under consideration amounted to
upward of $150,000,000. The usual, and in fact almost universal,
basis of apportionment for these accounts is the respective loco-
motive freight and passenger mileage—that is to say, the miles
run in each service. So self-evident is it that this is the proper basis
that the Interstate Commerce Commission, in its proposed “tenta-
tive plan for the division of operating expenses between freight and
passenger services,” has suggested it in the following terms:
Steam locomotives, repairs.-A record should be kept of the repairs of each
locomotive, apportioning to the freight service and to the passenger Service
according to the miles run in each service by the individual locomotive. Run-
ning repairs should be apportioned on the basis of the mileage of each month
and general or shop repairs on the basis of the mileage made by the individual
locomotive since last general repairs. The mileage made by locomotives in
mixed-train service shall be apportioned monthly between freight and passenger
services on each operating division according to the total mileage made thereon
by freight and passenger cars in such trains. Repairs to locomotives engaged
in yard switching for both freight and passenger services shall be divided in
accordance with the assignment of yard Switching locomotive miles made in
accordance with the rules governing the classification of train-miles, car-miles,
and locomotive-miles. -
Steam locomotives, depreciation and retirements.-Assign directly as far as
possible. Apportion the remainder in accordance with the freight and passen-
ger proportions in the whole of account No. 308. (Steam-locomotive repairs.)
RAILWAY MAIL PAY. 1329
This basis, however, did not appear to suit the purposes of the
Post Office Department. The formula it uses reads as follows:
Steam locomotives, repairs; steam locomotives, renewals; steam locomotives,
depreciation; electric locomotives, repairs; electric locomotives, renewals;
electric locomotives, depreciation. The above six accounts were divided on the
basis of the ratios of the direct-charge accounts, but excluding the direct
charge accounts for station service—i. e., account 63, station employees, and
account 66, station supplies and expenses. It was found that the locomotive
mileage, although used by some companies as a basis for apportionment of these
accounts, was too high for the passenger traffic and was in many cases unob-
tainable. The train mileage was higher for passenger service than the loco-
motive mileage, and the car mileage or cost of car repairs was too low a basis
for division when the passenger traffic was considered. The direct-charge
basis of separation exclusive of the accounts for station Service seems a just
and equitable one.
This statement has at least the merit of frankness, but it is difficult
to perceive any other advantages attaching to it except that it serves
to contribute to a desired result.
One other example of the unreliable character of the department's
figures will suffice. It is found in connection with accounts 67 to 78,
yard accounts; 80 to 85, engine accounts, and 88 to 93, train-service ac-
counts. These accounts are very large, embracing about 70 per cent
of the total transportation expenses. These accounts are by the
department divided on locomotive mileage when the data are avail-
able, but in the absence of such figures revenue train mileage—that
obnoxious basis, which is held by the Second Assistant Postmaster
General to be wholly indefensible—was used. In this connection it
may be said that as applied to some of these accounts he is correct.
To apportion yard expenses upon either the locomotive mileage or
train mileage is absurd. It is only necessary to read the formula
used by the department to make it plain to any student of the prob-
lem that the Post Office Department plan, under which it is declared
(Doc. 105, p. 3) “possible for the first time to determine the total
expense chargeable to the mail service,” is a conglomeration of ex-
pedients alike unsound in theory, illogical in application, and erro-
neous in result.
In his determination of the space allotted to the mail service, the
Second Assistant Postmaster General is equally unfortunate. He
compiles a large amount of car-foot miles under the title of dead
space which, although necessarily furnished by the railroads, were
not, he claims, used by the mails; and he not only deducts such com-
piled figures from the car-foot miles allotted by the railroads to the
mail Service, but adds same to the car-foot miles allotted to the pas-
senger service. This dead space was necessary to the proper handlin
of the mails, although the mails may not have actually occupie
Same; just as necessary as the dead space in the passenger coaches
was to the operation of the passenger traffic. If only the actually
occupied space was to be allowed for the mails, then as a correspond-
ing factor the actually occupied space in the passenger coaches and
express cars should have been employed in order to determine the
relative car-foot miles used in each service, and the cost of operation
divided on the ratio thus ascertained. There is no element of fair-
ness in taking out the dead space in one case and leaving it in the
other, to say nothing of adding the excluded space in the mail service
to the included space in the passenger service. I venture to assert
1330 RAILWAY MAIL PAY.
that, on the basis of the relative space of the trains actually occu-
pied in the respective services, the mail service would be charged
with a much greater proportion than is claimed by the railroads. It
must be apparent, therefore, that, inasmuch as the assumptions upon
which the arguments of the Second Assistant Postmaster General are
predicated are indefensible, his conclusions are equally unsound.
The statement submitted by the Second Assistant Postmaster Gen-
eral at the same hearing, as to comparative express and mail rates,
is also wholly misleading. In the first place, the average length of
the routes selected are much in excess of the average length of haul
of the express, and in the second place 100 pounds of express is
measured as a single shipment against 100 pounds of mail, whereas
on the average it is made up of several shipments, each taking an
undivided rate, while the mail rate is applied to 100 pounds in the
aggregate. The average weight of all express shipments, as pub-
lished by the Interstate Commerce Commission (First Annual Report
of the Statistics of Express Companies in the United States, p. 18),
is 32.8 pounds, while the average weight per shipment of the five
large express companies on October 23, 1912, was 39.81 pounds. The
average weight per shipment of merchandise, which is more nearly
analagous to mail matter, was on the same date 29.54 pounds. It is
manifest, therefore, the correct basis of comparison is to consolidate
the charges accruing upon 100 pounds of the average merchandise
shipments for a given distance and compare same with the pay for
100 pounds of mail for the same distance.
The average haul of the Adams Express Co., shown in I. C. C.
decision in the express-rate cases of the United States and Adams
Express case (pp. 501, 502), was 169.24 miles, and for the United
States Express Co. was 234.96 miles. Two tables have been prepared
embracing all the routes shown by the Second Assistant Postmaster
General in his statement—one carrying all distances between 100 and
200 miles, as corresponding with the average distance hauled by the
Adams Express Co., and the others including all routes from 200 to
300 miles, as equivalent to the average haul of the United States
Express Co. Three shipments of express, consisting of 30, 30, and 40
pounds, have been taken as representing the average shipments
making up 100 pounds, and the rates computed thereon in order to
show the average express revenue per 100 pounds. The express reve-
nue thus formed was then divided in .# to show the railroad pro-
portion and set down opposite the rate of mail pay. * •
It will be observed that this makes a very different showing from
that submitted by the Second Assistant Postmaster General, and that
only in a very few cases is the mail pay higher than the express
revenue, and in nearly every one of such cases the distance covered
in the rate is above the average haul, or else the pay on two short
mail routes here have been united, thereby making a much higher
rate for the whole distance than is applicable to any single mail route,
and which is not comparable to the express revenue, that being com-
puted for the entire distance at a single rate.
Take two short mail routes and put them together for a distance;
it will make a higher rate than the express rate. • -
Mr. WoRTHINGTON. But your 100 pounds does not include any
light shipments at all for express.

RAILWAY MAIL PAY. 1331
Mr. PEABODY. No; no light shipments for the express. It is taken
as representing the average merchandise shipment. l
Mr. WoRTHINGTON. In other words, it takes as to express three
shipments of about 30 pounds or a little over?
"Mr. PEABODY. Yes; 30, 30, and 40.
Mr. WORTHINGTON. But as to mails, it takes all the light shipments
which are included in the mail and parcel post?
Mr. PEABODY. Yes.
Mr. WoRTHINGTON. The point I wanted to bring out is that includ-
ing the light shipments, such as were handled in the parcel post, the
º given by Mr. Peabody would be larger than he has shown
there.
Mr. PEABODY; Of course, if that was made up of many packages
the rates would be much higher, but I was just taking three ship-
ments which were fairly representative of the average shipments
and uniting them to make a 100-pound revenue.
Mr. LLOYD. Let me interrupt you at this point. What kind of an
arrangement is made with the express companies where in trans-
mitting the parcel it passes through the hands of two different ex-
press companies and over two different railroads?
Mr. PEABODY. So far as the railroad part of it is concerned, the
express companies handle it at the station themselves.
Mr. LLOYD. I mean how do the railroad companies divide their
share of the profits? Where is the division among the express
companies? -
Mr. PEABODY. I do not know what the division amongst the ex-
press companies is. The division among the railroad companies is
a contractual rate on the earnings that are made by the express com-
panies, or their haul, whatever that may be.
Mr. SNEAD. Where it is handled by two express companies the
delivering express company reports the waybill to the originating
company and those two companies divide the total revenue on a pro
rata basis. The express companies will settle with their own rail-
road company according to their contract, under the rate prorate of
what it gets or under a mileage pro rata; that is, the entire dis-
tance hauled on both lines divided between the two companies.
Mr. LLOYD. Does the railroad company over which the express
package is carried in that event get 50 per cent?
Mr. SNEAD. Yes, sir.
Mr. PEABODY. It may be 55 per cent.
Mr. LLOYD. We are just accepting that as the rate.
Mr. BASKERVILLE. It is sometimes carried by one company for an-
other on a tonnage basis. For instance, the Wells Fargo Co. will
deliver to the Great Northern Express Co. at St. Paul Portland mat-
ter on a tonnage basis. I do not know how much it is, but it is ar-
ranged on a tonnage basis.
Mr. Connolly. There is something of a similar arrangement on
the Lackawanna and the New York Central. The Lackawanna has
an individual contract with the United States Express Co., and, due
to its inability to deliver beyond Buffalo, it goes in tonnage lots over
the Lake Shore Railroad to Chicago.
Mr. STEwART. I wish to call attention to the fact that two repre-
sentatives here have specifically stated that the railroads carry ex-
1832 RAILWAY MAIL PAY.
press matter on a tonnage basis, yet Mr. Peabody is presenting his
statistics upon packages of 30 and 40 pounds. -
Mr. BASKERVILLE. He stated it was between different companies.
Mr. WoRTHINGTON. It is my understanding the railroads do not
carry this on a tonnage or pro rata basis. They simply receive one-
half of the total express earnings accruing to their railroad. They
do not get any proportion of any particular rate but receive a per-
centage on the entire business handled over that road.
Mr. SNEAD. I think Mr. Stewart misunderstood Mr. Baskerville.
What he meant was that one express company would carry business
On a tonnage basis for another express company, but that is not done
except under exceptional circumstances where, by reason of the
fact that one express company has a very circuitous route between
two points, it will arrange with another express company having a
direct route to handle that business for it and under an agreed basis it
will pay them so much per hundred pounds to handle that matter.
Mr. STEwART. What I want to call attention to is the great dis-
crepancy between the facts as they exist and the examples that are
being given by Mr. Peabody. Mail is not presented to the railroad
companies in 30-pound packages under any circumstances, and there-
fore the example of a 30-pound package is not at all a fair com-
parison. Now, we learn that the railroads have relations with each
other in which they are actually paid on a tonnage basis.
The CHAIRMAN. No. That is between express companies exchang-
ing business.
Mr. WoRTHINGTON. The express company apportions its revenues
according to the individual road over which it does business and it
pays each road according to its contract, say, 50 per cent of their en-
tire earnings, whatever might be apportioned to that road.
Mr. PEABODY. Further than that the packages are not delivered
to the railroad company individually in 30 and 40 pounds, but they
are delivered in mass, and the correct measure as against the mail
is the measure that we get per hundred pounds for carrying the
mails and the measure we get per hundred pounds for carrying the
express. The revenue which we get for carrying 100 pounds of ex-
press is not based upon a rate upon 100 pounds, but based upon a
rate on the various packages constituting 100 pounds, and that is the
reason I am making the comparison.
Mr. STEwART. And we have taken the average parcel, or the rate
for the average parcel of 40 pounds. -
Mr. PEABODY. Merchandise is scarcely 40 pounds, it is 29 and a
fraction. The mail-rate does not apply to 40 pounds, but it applies
to 100 pounds and therefore it should be measured against the revenue
which the railway receives for carrying the express. -
Mr. STEwART. The mail rate is just the same for 40 pounds as it
is for 100 pounds, prorated.
Mr. BRADLEY. Would the rate for a 40-pound package of express be
the same as the rate for 40 pounds of express matter?
Mr. PEABODY. Not by a great deal. The rate for 40 pounds of
express would be a great deal more, for it is a higher rate.
Mr. WoRTHINGTON. In other words, the 100-pound rate to which
Gen. Stewart refers would apply to every large shipment of 100
pounds or more and would not apply to a shipment of less than 100
pounds? - * *

RAILWAY MAIL PAY. 1333
Mr. STEwART. I refer particularly to the 40-pound table which we
submitted.
Mr. WoRTHINGTON. That would not apply to a shipment of less
than 40 pounds? -
Mr. STEwART. It would be the average.
Mr. WoRTHINGTON. No. The rate would be higher, I think.
Mr. STEwART. The Interstate Commerce Commission found that
the average weight of express parcels in 1909 was 32 pounds or there-
abouts. The parcel post has taken out a large number of the Smaller
articles from the express and we estimate the average weight now to
be about 40 pounds.
Mr. WoRTHINGTON. It does not follow that because the average
weight is 40 pounds, that is the average rate, because the rate for
40 pounds and 100 pounds or over is very much lower. What I mean
to say is this: The 100-pound rate is very little lower per ton-mile
than for 40 pounds, whereas the rate per ton-mile increases very fast
with weights of less than 40 pounds. It is exceedingly high on the
light, bulky packages shipped by express.
Mr. PEABODY. If we could get the actual weights on the packages
constituting the 100 pounds it would be very very much higher than
the rate shown here, because a large majority of those packages would
leave the small ones at a very high rate and the rate is not at all pro-
portioned. * . -
Mr. STEwART. A complete answer to Mr. Worthington and Mr.
Peabody on that point is found in the official statistics which we gave
on the service as a whole, regardless of weight of individual parcels
or the amount you received from different parcels. We showed that
practically the same difference exists between the total amount re-
ceived by the railroad companies for the express service and the mail
service as exists between the individual rates, so that the general
statistics refute the theory
Mr. WoRTHINGTON. Upon what basis do you refer to a ton-mile
rate on all the express traffic. -
Mr. STEwART. I refer to the comparison we submitted of revenue
to the railroads from express and mail service as a whole, which was
embodied in my paper and is found on pages 1278 and following of
the record.
Mr. WORTHINGTON. Is it not a fact that based on ton mileage rate
it is of very doubtful value for the reason that the ton mileage for ex-
press has never been computed for the country?
Mr. STEwART. We have a very fair estimate upon ton mileage.
Mr. WoRTHINGTON. Based upon about 15 per cent, as I understand,
of the traffic of two express companies?
Mr. STEwART. But the results which are obtained by those figures
are so near the results submitted by Mr. Bradley for the Pennsyl-
vania Railroad Co., and those ascertained by the Bureau of Railroad
Economics, that it seems to me they are practically beyond dispute.
The figures they submitted were lower than ours, so that our figures
are more favorable to the railroads. -
Mr. PEABODY. Do not those figures represent the old express rates
and not the new ones?
Mr. STEwART. Yes. So did mine.
Mr. PEABODY. That statement which you submitted of the various
examples of express rates were the new rates?
1334 - RAILWAY MAIL PAY.
Mr. STEwART. Yes. -
Mr. PEABODY. That is the one I am replying to. My figures are
based on the new rate.
Mr. BRADLEY, Did the computation take into consideration the
difference between the average hauls?
Mr. STEwART. Yes. We ascertained the average haul for the ex-
press from statistics of the Interstate Commerce Commission.
Mr. WORTHINGTON. I would like to call attention to the statement
you referred to. You will find on analyzing that that you used
car-foot miles used by the express for November, 1909, divided
into one-twelfth of the express revenue for the whole fiscal year.
You had available in your reports from the railroads the actual
express earnings for November, 1909. The mail pay committee also
received both the space and the revenue from express for November,
1909, and the express space as computed by the railway mail pay
committee was almost identical with the express space found in
Document 105. Document 105 shows that the express space was
10.62 per cent of the passenger train service. The independent com-
putation of the railway mail pay committee showed it was 10.62 per
cent, a difference of only five one-hundredths of 1 per cent. Divid-
ing that space into the revenue the railway mail pay committee found
that the revenue from express per car-foot mile was 3.86 mills, or
nearly 20 per cent more than we received for handling the mails.
Three and eighty-six one-hundredths mills are greater than the figures
found in your document, which are 3.56 mills, due, no doubt, to the
fact that you divide the space into one-twelfth of the express revenue
for the fiscal year and not into the express revenue for November.
The express revenue for November was more than one-twelfth of the .
express revenue for the fiscal year.
Mr. STEwART. We did not accept those figures for November as
submitted by the railroad companies for express, because they ap-
peared to be inflated. They undoubtedly cover items which should
not be included, because if you compare them with the average
monthly revenue you will find them much in excess of the average.
Mr. WoRTHINGTON, Did you ascertain that they were inflated?
Mr. STEwART. That is an inference.
Mr. WoRTHINGTON. I will say as to our road, we sent these figures
to you under oath, as I remember, and we would resent any imputa-
tion that our figures were inflated as to express revenues, because they
were not. The figures were returned exactly as reported to the Inter-
state Commerce Commission. -
Mr. PEABODY. The same is true with respect to the Sante Fe. *
Mr. STEwART. When I said “inflated ”I did not mean they sub-
mitted figures which were false. What I mean is that the totals evi-
dently contained items that would not be entertained by the Inter-
state Commerce Commission. I draw that conclusion from the fact
that on comparison with the Interstate Commerce Commission fig-
ures we find them much in excess of the average. -
Mr. WoRTHINGTON. Did you compare them with the November fig-
ures for the Interstate Commerce Commission?
Dr. LORENZ. The express companies do not report monthly their
revenues.
Mr. WoRTHINGTON. The railroads report monthly their revenues
from express? ; -
RAILWAY MAIL BAY. * 1335
Dr. LORENz. We do not want the express companies’ reports, but we
want the railroad companies’ reports. That is reported in one lump,
as other passenger-train revenue and not segregated.
Mr. W. I would like to say as to the Southern Pacific
that our express revenue included only 40 per cent of the express
revenue. We entirely omitted any reference to the stock and bond
bonuses which we received years ago when we made our express con-
tract in lieu of 55 per cent. Possibly other lines have done the same
thing. Now, if that were so, the express revenue would be even
larger than shown.
Mr. LLOYD. You got 40 per cent, so far as the record shows, but,
as a matter of fact, you got 55.
Mr. WoRTHINGTON. We did not get 55. We received other con-
siderations at the time our contract was made. r
Mr. LLOYD. But that other consideration was equal to 15 per cent,
and that would make your compensation 55 per cent instead of 40
per cent. If that be true, then your report was not a correct report.
Mr. WoRTHINGTON. It was correct so far as the express revenue was
concerned.
Mr. LLOYD. But it did not include all express revenue, because it
did not take into consideration all you got as bonus. What you re-
ceived in compensation, whether it was bonus stock, cash, or credit,
it is part of the company’s revenue and ought to go in.
Mr. WoRTHINGTON. Under the commission’s rules we could not in-
clude in our revenue for that year any cash bonus or stock bonus
which we had received a number of years ago as a consideration for
making the contract with the express company.
Mr. LLOYD. What I was getting at was the accuracy of your report.
Your report was not an accurate report, for it did not correctly state
that which you received in revenue, because you had previously made
some other arrangement and had received a bonus, which bonus is not
taken into account at all in making this particular report.
Mr. WoRTHINGTON. We thought if we had to go into these outside
considerations we would also have to go into many other things which
were received for handling express.
Mr. LLOYD. I am only getting at the question of the reliability of
the report. The report, as I understand your statement, is not a
reliable one, for it does not give information to Senator Bourne, or
the commission, or what was the exact relation between you and the
express company. It shows that you got 40 per cent, but there was a
hidden arrangement between you that gave you compensation, you
Say, of 15 per cent, which 15 per cent is not shown as part of the
revenue which you received from the express company for the work
which you did for them.
Mr. WORTHINGTON. I would not term it a hidden arrangement, be-
cause it was well known at the time it was made.
Mr. LLOYD. But not known to the public, as I understand you, in
the report you have made?
*: WoRTHINGTON. I think it has been reported publicly a number
of times. -
Mr. SNEAD. You will find it fully explained in the commission's
decision on the express case. The contract is specifically named and
analyzed.
1336 Railway MAIL PAY,
The CHAIRMAN. As I understand the report which your company
furnished, it was in accordance with the requirements of the Inter-
state Commerce Commission for information, which, however, did not
cover the bonus, the concealed equity which Mr. Lloyd has drawn out
in his discussion? -
Mr. WoRTHINGTON. We did not feel we were justified in enlarging
our regular express earnings for the year in any way. We thought
that it was absolutely necessary.for us to report the revenue absolutely
received in the month of November for handling the express.
Mr. LLOYD. I am simply getting at the correctness of your state-
ment. You now say, and that is the basis of the inquiry I have been
making, that the 40 per cent was not a correct statement, because
there was another consideration, which consideration did not go into
the report and did not show on the face of your return, and it did not
show on the face of the return because the questions asked did not
demand that you reveal the whole story. -
Mr. WoRTHINGTON. I am rather of the opinion, though I am not
certain, there was a supplemental statement furnished which did
show the value of other equities for the express.
Mr. PEABODY. The report made by the Southern Pacific to the In-
terstate Commerce Commission necessarily included, only such items
as went to make up their total receipts and could not have included
any bonus of previous years. The idea of the Interstate Commerce
Commission was not to find out what they were receiving from the
express companies, but to find out the total of the receipts going to
make up that total for the year, of which this 40 per cent received
from the express company was one item and had to be reported in
that way.
Mr. LLOYD. Are there any other railroad companies that any of
you know about that have gotten this secret compensation that is not
shown in the report? Has your company, Mr. Peabody? *
Mr. PEABODY. No, sir. We get a straight 55 per cent of the receipts
of the express company.
Mr. LLOYD. And have you bonus of any kind?
Mr. PEABODY. And have no bonus of any kind, and I think those
are very rare instances. I do not know of any important case except
that of the Southern Pacific, but if there are any they will be shown
in that decision of the express-rate case, for all contracts were de-
tailed in that case. -
The CHAIRMAN. Taking the case in point as to the relativeness be-
tween express and mail revenue, you are understating your case,
rather than overstating it, from that viewpoint?
Mr. LLOYD. Yes.
Mr. WoRTHINGTON. That is the point I was trying to bring out.
Senator WEEKs. There are two questions here, whether you have
made a statement that complies with the requirement of the Inter-
state Commerce Commission, and, assuming that you have done that,
whether your figures can be taken as a basis for making other com-
parisons with the receipts received from the mail or from some other
service, and evidently those figures can not be taken as iº.
basis, because they are 40 per cent of the express rates, while they
should be 55 per cent. - -
Mr. WoRTHINGTON. However, that has only a small influence on
the express revenue of all the roads in the country.
RAILWAY MAIL pay. 1837
Senator WEEKs. It would have a considerable influence on roads
like this. -
Mr. SNEAD. That contract was made 15 or 16 years ago, I believe.
Mr. WoRTHINGTON. It was made 20 years ago.
Mr. PEABODY. I do not think it º bring the 40 per cent up to
55 per cent? w
Mr. WoRTHINGTON. No. That is a matter of doubt.
The CHAIRMAN. You may resume, Mr. Peabody.
Mr. PEABODY. It is further to be remarked that these express rates
are not voluntary but are compelled by the ruling of the Interstate
Commerce Commission and are at best only experimental, the express
companies being given permission to come before that tribunal at any
time and show cause for the promulgation of a higher basis of rates.
It is also to be said that the contracts upon which the present division
of revenue is based were all entered into when the express rate was
upon a higher plane and do not in any wise represent what would be
the basis adopted in any new contracts which may be entered into at
the expiration of those now in force. -
Mr. LLOYD. What do you mean by “a higher plane’?
Mr. PEABODY. The higher plane of rate?
Mr. LLoyd. Yes. What do you mean by “higher plane”?
Mr. PEABODY. The contracts were entered into when the express
rates were on a higher basis than they are now fixed by the Inter-
state Commerce Commission.
Mr. LLOYD. You mean a higher plane of charges?
Mr. PEABODY. A higher plane of charges. If we were not willing
to accept 55 per cent of these rates we are certainly not willing to
accept 55 per cent of the present rates, because the service is of the
same character.
It can be established that even under the old rates the express bus-
iness was unremunerative to the railroads; and to compel them to
carry the mails for a compensation no higher than that at present
received for transporting express would be to still further reduce
the already inadequate pay received from the mail service.
The statement submitted at the last hearing by the Second Assist-
ant Postmaster General showing a comparison of express and mail
rates has also been revised on the basis of the average merchandise
shipments going to make up the revenue received per 100 pounds.
This is interesting as showing 39 points between which 50 per cent
of the express revenue exceeds the mail pay instead of 17 as set out in
the statement of the department. Although the instances where one-
half of the express revenue exceeds that of the mail are more than
doubled, it must be remembered that the relatively small number
of such cases is due to the numerous long and consolidated routes em-
braced in the statement when the pay of several routes is added to-
gether, thus obtaining a high rate of mail pay as contrasted with a
single rate of express pay for the entire distance. * *
These statements are merely submitted in reply to the statement
prepared by the Post Office Department officials. I have also some
instances in connection with parcel post which may be interesting.
We had some shipments of fruit contained in boxes of 20 pounds each
between Farmington, N. Mex., and Gallup, N. Mex., a distance of
somewhat less than 150 miles in a direct line. - - -
1338 . RAILWAY MAIL PAY.
We had three shipments, which were carried between these points
by the following routes: From Farmington to Durango, 50 miles,
where a transfer was made. From Durango to Antonito, 172 miles,
and Antonito to Alamosa, 28 miles, where another transfer was made.
From Alamoso to Cucharas Junction, 78 miles, with another trans-
fer. From Cucharas Junction to El Moro, 37 miles, where it reached
our line, the Santa Fe, and another transfer was made. From there
it was carried by the Santa Fe for 270 miles to Albuquerque, and
thence 158 miles from Albuquerque to Gallup without transfer, mak-
ing a total of 793 miles haulage. The three shipments thus handled
consisted respectively of 240 boxes, 83 boxes, and 93 boxes, or a total
of 426. Another shipment of 165 boxes between the same two points
was handled by the same route as far as Antonito, from there it was
hauled to Santa Fe, 125 miles, at which point it was transferred by
the Rio Grande to the Santa Fe Railway, which line hauled it from
Santa Fe to Lamy, 18 miles, where a transfer was made to the main
line train, and from there it was hauled 68 miles to Albuquerque and
158 miles from there to Gallup, making a total haul of 591 miles.
That is merely an illustration of the work to which the railroads are
now subjected in these roundabout routes where the matter has to be
carried, because although it is somewhere within 150 miles across
the country it requires a haulage of 793 miles.
The CHAIRMAN. Your system is the Atchison, Topeka & Santa Fe?
Mr. PEABODY. Yes. -
The CHAIRMAN. What is its mileage?
Mr. PEABODY. About 10,000 miles.
º: CHAIRMAN. How many express companies have you a contract
with ?
Mr. PEABODY. One.
The CHAIRMAN. What is your contract?
Mr. PEABODY. Fifty-five per cent.
The CHAIRMAN. And you have notified the company that you
would not renew the contract under the old rate?
Mr. PEABODY. Not only that, but we have told them that we would
rºot renew the contract at the same rate.
Senator WEEKs. Do you mean that?
Mr. PEABODY. We do.
Mr. WoRTHINGTON. His contract is just expiring.
Mr. PEABODY. The contract expires in 1916. We would not renew
it under the old rate, to say nothing of the new.
Senator WEEKs. I was looking over the express returns the other
day as reported to the Interstate Commerce Commission, and, as I
recall it, they showed earnings of about 3 per cent on their capital
in the past year. What do you suppose the express companies will
do if they are going to pay you more?
Mr. PEABODY. I know what one did and I presume the others will
do the same thing. The United States Express Co. is going out of
business.
The CHAIRMAN. Are you familiar with the express business in the
United States?
Mr. PEABODY. No, sir; not very familiar.
The CHAIRMAN. Are there any gentlemen here who are familiar
with the large express companies? --
Mr. PEABODY. I do not know.
RAILWAY MAIL PAY. - 1339
The CHAIRMAN. Were not the original contracts made between
the railroads and the express companies purposely made favorable
to the express companies because of the railroads themselves or
some of their managers being largely interested in the express com-
panies?
p Mr. PEABODY. To what extent that is true I am not at all advised,
but I understand in some cases that was the proceeding.
The CHAIRMAN. If that were true, the natural bias would be in
favor of the express companies and not in favor of the railroads,
would it not?
Mr. PEABODY. That would be the natural bias in that case, to give
higher earnings to the express companies.
The CHAIRMAN. So that the railroads, on account of mutual owner-
ship, would give more favorable rates to the express companies in
which they had an interest than they would to an independent com-
3.I.W 3
p º PEABODY. It is claimed that that is the case.
Senator WEEKs. The reverse is also true, that in some cases the
managers or owners of express companies own considerable interest
in the railroads. ---
Mr. PEABODY. But they do not control the railroad rates. It is
also to be said, Mr. Chairman, that it is only in recent years that any
idea has been possessed by railroad officials as to the costs of doing
business. Railroad officials are very busy men; they did not have
time to investigate into the workings of the road as to the ascer-
tainment of the cost of the different services, and that will answer
your question this morning as to whether the railroads have not
ascertained all these things. Railroad officials have not had time to
ascertain all these things; they have been busy developing their
properties, and in obtaining the best and most efficient results pos-
sible, but they have not had time to look, into the cost and, as
was remarked this morning, the cost of doing that thing is very
great, and they have not felt as though they could afford to use the
money for it. I presume, perhaps, no road has gone into it to the
extent that the Santa Fe road has done. We have spent on an aver-
age of, say, $40,000 a year for the last 15 years investigating that
very subject, and we have not gotten through investigating yet. We
do not know now what it costs. We are going to get it if we can and
our time and money holds out. I have two other items under parcel
post I would like to call attention to. •r
Mr. STEwART. Before you leave that one case, Mr. Blackwell, who
is an assistant superintendent of Railway Mail Service at Omaha
and located until recently at Denver, is here and he informs me the
shipment that you speak of went the roundabout way because there
was no Sunday service between the two points.
Mr. PEABODY. But there were three shipments that went that way.
Mr. LLOYD. If there is no objection, I would suggest that we now
take a recess.
(Thereupon, at 1 o'clock p. m., a recess was taken until 2 o’clock
p.m.)
AFTER RECESS,
The hearing was continued, at the expiration of the recess, at 2
o'clock p. m.
1340 RAILWAY MAIL PAY.
The CHAIRMAN. Mr. Peabody, will you kindly continue with your
statement? -- - * .
Mr. PEABODY. I have but very little more to say. I was simply
going to cite one or two instances of the Parcel Post Service, or,
rather, what shape it is taking. On March 12 there were 70 sacks
of beans shipped from to a place called , N. Mex.,
on which the postage rate was $1.04, whereas the freight rate be-
tween the same points was $1.55. I only wanted to show that it is
taking away from our freight service business that naturally belongs
there and putting it into the parcel post, because of the extremely
high rates for that service in that territory and the comparatively
low rates for the parcel post. - * *
Mr. LLOYD. You do not mean to say that that occurs very fre-
quently' That is an exceptional case. -
Mr. PEABODY. We had another one of a lot of salt. There were
26 sacks of salt from Park View, N. Mex., weighing 2,100 pounds,
loaded on March 9, or about that date.
Mr. LLOYD. These extraordinary cases you would be certain to
find out? --
Mr. PEABODY. Yes. I am afraid, however, that that service will
grow where the cross-country distance is short and transportation
distance is long. -
Mr. LLOYD. That occurs only occasionaly?
Mr. PEABODY. That is true. It is not a common thing.
Mr. LLOYD. It would be impossible for the Government to make
a rule that might not make a hardship somewhere.
Mr. PEABODY. Absolutely, but we are just as willing to share our
proportion of the hardship as anyone. - .
Mr. LLOYD. This example that you give is one of the examples
which proves the rule.
Mr. PEABODY. My object in citing was more to enter a quiet protest
against this extension of the parcel-post weight to 100 pounds, be-
cause if you get it up to 100 pounds, there will be a good deal of it.
The CHAIRMAN. This apparent great difference in rates is due
primarily to the distance in air, a direct line, and the rail distance,
which is possibly three times as great?
Mr. PEABODY. Yes; three, four, or five times. That can not be
helped, however. * - º
The CHAIRMAN. Is that all, Mr. Peabody?
Mr. PEABODY. That is all.
Mr. STEwART. I would like to read into the record the sentence
to which I referred as being contained in Mr. Meyer's statement,
from which Mr. Peabody quoted. Mr. Peabody quoted up to this
sentence, referring to the general plan followed by railroad account-
ants. Mr. Meyer said about that: “However, I am not suggesting
that methods and rules which are now found to be common to several
railway accounting departments are those which the commission
should necessarily accept or prescribe.” g
Mr. PEABODY. I will indorse that sentence of Mr. Meyer's exactly,
because those that are now being used by the railroads are as yet
imperfect, and I should dislike very much to have the method we
use prescribed by the Interstate Commerce Commission as a rule.
Mr. SNEAD. I should like to ask Mr. Stewart if he construes those
remarks of Mr. Meyer as an official expression of the Interstate Com-
merce Commission or from Mr. Meyer as his own personal views?
RAILWAY MAIL PAY. 1341
Mr. PEABODY. I can answer that for Mr. Stewart, because Mr.
Meyer states in the beginning of his paper that they are his own
personal views, and are not to be taken as the expression of the
Interstate Commerce Commission. - .
Mr. STEwART. I think that is correct. This was an address der
livered before an association meeting in Chicago.
Mr. LLoyd. But this is more valuable than if it were his official
#. because it is supposed to be a statement of what he really
thinks. - --
Mr. SNEAD. But it does not bind the commission to those views ex-
pressed by Mr. Meyer. There are six other gentlemen who would
have something to say on that subject.
Mr. PEABODY. It is also to be said that Commissioner Meyer is
very much in favor of prescribing a formula, and he believes that
a practical formula that can be worked out would be practically
accurate. - -
Mr. STEwART. In connection with that statement of Mr. Meyer as
an authority, it will be remembered that he was one of the railway
commissioners of Wisconsin at the time the celebrated Buell case
was heard there, and I believe his name appears at the end of the
opinion in that case. The principles of that case largely controlled
in the department's determination of a method of dividing expenses.
This is what Mr. Meyer said regarding the principle which Mr.
Peabody has announced this morning. -
Rails constitute the one item which is said to be entirely affected by the
traffic. The COst per revenue train-mile for the renewal of rails in the pas-
senger group varied from 0.68 of a cent on the B. & M. to 1.2 cents on the New
York Central. In the freight group this cost varied from 1.40 cents on the
D. L. & W., which is also a heavy passenger road, to 2.68 cents on the W. &
L. E.; 2.80 cents on the Norfolk & Western; 3.51 cents on the D. & I. ; 10.40
cents on D. M. & N., to 2.55 per revenue train-mile on the C. M. & St. P. From
these figures, which cover several years, it is very clear that the cost of
maintenance of rails was relatively much greater on the freight than on the
passenger road. What is true with respect to the maintenance of rails is also
true for the maintenance of ties and other maintenance expenses. The periods
Covered are long enough to indicate the general tendency. The extraordinary
improvement during the periods does not seem to have been relatively greater on
the freight than on the passenger roads. No conditions have been discovered
which would Warrant any other COnclusion than that these differences in the
costs actually measured the wear and tear on practically all of the roads in-
cluded in the table, If this is actually the case, then it must follow as a
matter of course that an average passenger train-mile is, On the whole, less
injurious to the rail and track than an average freight train-mile.
Mr. Meyer has since become a member of the Interstate Commerce
Commission.
The part of the testimony-known as volume 11 was, as it is shown
in the prefatory note, printed without the opportunity of the depart-
ment to make the usual corrections. This was to expedite the work
of the committee, as stated by the chairman. When we received the
printed volume it was checked up, and not anticipating the submis-
sion by Mr. Peabody of tables based upon rates and weights com-
parable with the express tables, we changed the mail rates on various
items in the table for the western section from the top rates to the
average rates to make them uniform with all other rates in the tables,
the other rates being average mail rates. The volume has not been
reprinted. I have suggested to the chairman and to Mr. Peabody
35797—No. 12–14—4
1342 RAILWAY MAIL PAY.
that in order not to confuse Mr. Peabody's tables, I will let these
tables stand just as they are in the record, so that his tables will have
a relevancy to the original tables presented, and I will ask permis-
ision to supplement the latter by tables showing the average rate in
every case for the reprinted volume, and then Mr. Peabody can sub-
mit other tables on those if he desires.
The CHAIRMAN. There is an explanation similar to what you have
stated on the supplementary case.
Mr. STEwART. Yes; Mr. Chairman. Is it the desire, before tak-
ing up the question of Mr. Mack's space on the Missouri Pacific that
We submit any suggestion upon the paper read by Mr. Peters?
The CHAIRMAN. We will leave all these things for general discus-
sion until we have before the commission all the papers that have
been prepared and written. 4’
Mr. MACK. I have not quite completed my statement as yet.
The CHAIRMAN. Is Mr. McCahan ready to submit his statement?
Mr. McCAHAN. Yes, sir. *.
The CHAIRMAN. This is for the Baltimore & Ohio Railroad?
STATEMENT OF MR. J. C. McCAHAN, JR.
Mr. McCAHAN. Yes, sir; for the Baltimore & Ohio Railroad Co.
Mr. Chairman, what I have prepared here is a set of tables alpha-
betically lettered from A to I. They represent the space on the line
as a whole and one particular route, which represents various classes
of service performed by the company for the Post Office Depart-
ment. The others represent from an accounting standpoint, some
of which have been prepared by our comptroller, Mr. J. T. Leary.
Under the heading of Table A we show the total car-foot miles re-
ported by the company classified by the various classes of cars, such
as postal cars, apartment cars, and closed-pouch space.
The CHAIRMAN. Reported to whom?
Mr. McCAHAN. The Post Office Department. *
The CHAIRMAN. When they were making up their compilations
for Document 105?
Mr. McCAHAN. Yes; for 1909. The total result of the compari-
Son is that the company reported 33,134,015 car-foot miles to the
mail service. The department allowed 25,391,708, a reduction of
7,742,307 car-foot miles. The passenger has been increased over
that reported by the company by 7,772,775 miles, substantially the
S8,I\}{2.
The CHAIRMAN. Tt is just a transfer?
Mr. McCAHAN. Apparently such ; a transfer from the mail into
the passenger. I have taken one route, No. 113003, which runs
through Washington, Table B. It was stated at that time from
Baltimore, Md., to Grafton, W. Va., and I show in the full postal
cars distribution space the department has given 216,955 more than
we reported, but in the storage they have taken from us 907,494
car-foot miles. In connection with the storage I find that during
the time these statistics were taken we had a full storage car oper-
ated from Washington to Cincinnati on train No. 1. That car op-
erated over three different routes, but over the particular route I
have figured, allowing for a basis of 40 feet to the car, which was
reasonably correct, the car being equipped with stanchions, it
RAILWAY MAIL PAY. 1343
amounted to 304,260 car-foot miles. I can not find, however, that
any return movement was allowed for that car, so far as the car-
foot miles are concerned, which, if they had been allowed, would
have increased our car-foot miles in storage for that particular car
just 100 per cent. The car operated over three routes between
Washington and Cincinnati, as shown in Table C–1, and I find from
Document 105 that the department allowed us storage space over
route 113003, which closely equals the amount that I figured. Be-
tween Grafton and Parkersburg, which was part of the operating
run of the car, and during which time the car was still occupied
with mail, T can find no allowance whatever for storage space, but
when that car got on the route between Parkersburg and Cincinnati
I find storage space has been allowed. I have a diagram here in
these statements which I will turn over to you. I do not know just
§ the storage space was disallowed between Grafton and Parkers-
urg.
The CHAIRMAN. Have you made any inquiry of the department
as to the seeming discrepancy between their and your computation?
Mr. McCAHAN. No, sir; I have not. That would represent a con-
siderable space, but that part that I show where the storage space
was disallowed is not given in detail figures on these statements,
because I have only taken the one route as an illustration. In the
mail apartment-car service for that particular route I find the de-
partment allowed us 943,937 car-foot miles in the distribution;
that is all for apartment cars, shown on Table B. That decreases
what we reported 66,575 car-foot miles. In storage for mail apart-
ment cars we reported 812,280. I can not find that the department
allowed anything for that, which made a decrease of that amount.
ſ)eadheading we reported 179,700, and I find that has been elimi-
Iuated also. In connection with that I have taken certain trains on
that route, with which I am personally familiar and about which I
felt no doubt as to the conditions prevailing at the time these figures
were taken—Nos. 5, 11, 12, and 14—the first two representing west-
bound trains and the last two eastbound trains. The westbound
trains represent maximum amount handled as loaded at Washing-
ton and eastbound the minimum amount as unloaded at Washing-
ton. I find that on an average these trains handled over 4 tons
westbound and from 1 to 2 tons eastbound. I am reasonably satis-
fied that my figures as to the space allowed by the department in
apartment-car service are reasonably correct, for the reason that I
have figured out to see if there was any difference between that re-
ported in Document 105 and the Railway Mail Service schedule in
effect at that time, Table D. On one particular train that I speak
of, train No. 5, it carried during the weighing period of 1909,
939,500 pounds, which averaged per day a total of 8,947 pounds,
but the maximum daily average for the heaviest week of the weigh-
ing period there was loaded on at Washington 12,100 pounds. I
figure that a full postal car would run about 2% tons. Here is a 30-
foot mail apartment car that carried over 6 tons out of Washington,
on an average, and at times it went higher. I have a personal recol-
lection at one time when there were 25,000 pounds of mail loaded in
that car, and it went down so heavy on the bearings that it cut the
air pipes, and the mail had to be transferred at Cumberland. I
can not find from Document 105 that there was any space allowed
for the overflow in the baggage end of the car.
1344 RAILWAY MAIL PAY.
Mr. STEwART. Are you referring to the figures of 1913 weighing?
Mr. McCAHAN. No, sir; 1909. I have the figures for 1913 sepa-
rately. These are 1909 figures, taken in the spring of 1909, during
the same year these statistics were gathered.
I took this from the weight cards furnished by the Railway Mail
Service. On train No. 11 we carried during the period a total of
1,012,300 pounds, an average per day of 9,641 pounds, the maximum
daily average being 12,442 pounds. That represents the two west-
bound trains on which the department had a 30-foot car authorized.
On the two eastbound trains with the same space, the amount of
mail carried into Washington was not as heavy as carried out, as I
have previously stated. Train No. 12 carried into Washington and
unloaded at that É." 430,200 pounds with an average of 4,097
º per day. Even that train, with the mail in the light-weight
irection, carried over 2 tons on an average. The maximum daily
average went to 4,843 pounds. Train No. 14, unloaded 218,200
pounds, an average per day of 2,078 pounds, the maximum daily
average being 2,628 pounds. It will be observed that the lowest
maximum weight loaded was over 6 tons, and unloaded at the same
point was over 14 tons. The amount unloaded at Washington from
trains Nos. 12 and 14 (the two eastbound trains) represent about the
minimum weight carried at any one time. The purpose of this is to
demonstrate that the company was entitled to the full inside length
of the cars in each case cited. I have taken the 1913 weighing and
have made calculations somewhat similar, and I find that train No. 5
left Washington 61 per cent of the time with over 5 tons of mail.
The maximum at any one time was 9% tons. That car had the same
service in 1913, during the weighing, as it had in 1909, so that the
figures are running very close. Train No. 11 left Washington 73
per cent of its time with over 3 tons of mail, the maximum at any
One time being about 7 tons. Train No. 12 arrived at Washington—
this is the eastbound train—48 per cent of the time with over 2 tons
of mail, the maximum at any one time being 5% tons. Train No. 14
arrived in Washington 49 per cent of the time with over 24 tons, the
maximum at any one time being 5% tons—the same as No. 12. That
is prepared, Mr. Chairman, in order to demonstrate the conditions
prevailing during the two periods with the same service, and that
the company ought to have been allowed credit in the 1909 figures
for the full length of the cars run which were used entirely by the
Post Office Department for mail service.
The CHAIRMAN. Was it allowed by the Post Office Department in
its computation?
Mr. McCAHAN. I can not find that it was.
The CHAIRMAN. No credit whatever?
Mr. McCAHAN. No, sir; I can not find it.
The CHAIRMAN. General Stewart, I know it is pretty hard to carry
these things in mind, but can you answer that question? -
Mr. STEwART. I could not say without examining the records.
Mr. McCAHAN. In order to satisfy myself, as nearly as possible, that
this calculation was correct (as previously stated) I took the cars
as the department figured in the schedule at the time, and figured
out the car-foot miles for each train in order to see that my total
would come near Document 105, Table D. The result of that calcu-
lation is that I have reached it all but 10,000 car-foot miles. They
RAILWAY MAIL PAY. 1345
allowed us 943,937, and I find 954,841, the difference probably being
due to some mileage calculations.
The CHAIRMAN. What do you figure you have lost in the failure
of the department to grant all the allowance you claim? *
Mr. McCAHAN. I figure that we have lost a total of 7,742,309
mail car-foot miles. If we work that down to earnings per car-foot
mile, I find that they have increased the earnings per car-foot mile
nine-tenths of a mill.
The CHAIRMAN. And the actual payments made you are in the
tables made up in Document 105?
Mr. McCAHAN. This is based on the actual payment for the month
of November, 1909. I thought it would be well if I could present
these figures, as they may be of some use to you even at this late day.
Dr. LORENz. With the weights for the two periods and the record
of the space service for the two periods, you could give us a pretty
good idea of the change in the average load per car, could you not?
Mr. McCAHAN. On that particular route; yes, sir.
Dr. LoRENz. Has it changed appreciably?
Mr. McCAHAN. It shows here (so far as the average I have worked
out) that it has increased so much—that is, so far as taking the per
cent of time. That would be no factor to compare with this—that is,
1913, with the individual weight per day. -
Dr. LORENz. Is it your impression, from a study of this, that
the average weight in the car has increased as much as half a ton?
Mr. McCAHAN. I would not like to make that as a definite state-
ment, because I have not looked that up intelligently enough to find
out. I haven’t that in mind. -
The CHAIRMAN. Let me understand this: From concrete illustra-
tions you have submitted to the committee, do you deduce the conclu-
sion that Document 105, or particularly Table No. 7 of that docu-
ment, is incorrect, or that it should not be given too great credence?
Mr. McCAHAN. I do.
The CHAIRMAN. Or is it your presentation simply that your road
was underpaid nine-tenths of 1 mill per car-foot mile during that
year on the rates then existing?
Mr. McCAHAN. I spoke so far as the Baltimore & Ohio Railroad
is concerned that Table 7, Document 105, in my opinion, does not
represent the full amount of car space that we were entitled to.
Dr. LORENZ. But Table 7 does not purport to give anything else
but the mail plus deadhead space and not the dead space. Now, if
you add to that the dead space, would the total then be similar to
your total?
Mr. McCAHAN. I have in here everything that we reported and
everything the department allowed. I have taken this by individual
routes which I have here. Here is the way that worked out on indi-
vidual routes on the same basis. --
Dr. LORENz. My question is whether the total space which you
determined is greater than the space generally in Table 3, for ex-
ample, where the mail space plus dead space may be derived. If they
have allowed you all the dead space, would they then have allowed
you all you determined?
Mr. McCAHAN. I did not figure on that basis.
Dr. LORENz. No railroad will find that there is any agreement be-
tween its figures and Table 7; so, unless you add to that dead space,
you can not make any comparison.
1346 RAILWAY MAIL PAY.
Mr. McCAHAN. I can very easily do that and work it out and see
what the result would be. That represents the few cases, Mr. Chair-
man, that I wanted to present. I did not want to encroach upon your
time too much.
The CHAIRMAN. We are glad to have all the information we can
on the specific subject under consideration.
Mr. McCAHAN. Mr. Chairman, I have here also a table lettered F,
which represents the operating expenses and taxes reported by the
railroad company in 1909 and those used by the Post Office Depart-
ment. I have applied the percentage of car-foot miles reported, both
by the railroad company and those used by the department, to both
the operating expenses and taxes and then to the fixed charges: My
object in that was to find out just what over or under payment the
different calculations would make, and I find that with the total
operating expenses, by using our own car-foot miles, it shows we
were underpaid the total of $21,886 per month. This is all based on
the November, 1909, figures. With the fixed charges that the com-
pany reported, I find our underpayment was $69,508 per month.
The table following gives it by years and the per cent. With the Post
Office Department car-foot miles applied to the same operating ex-
penses, I find that we were overpaid $5,980.92. By taking the fixed
charges and applying them to the same figures with the same per-
centage, I find that we were underpaid $30,572.84. If I take the Post
Office Department’s operating expenses as they apportioned them,
then I get, with the car-foot miles reported by the company, an over-
payment of $4,391.66. -
The CHAIRMAN. These are all by the month’ .
Mr. McCAHAN. All on a monthly basis. If I take the fixed charges
and add to the same, then I get an underpayment of $24,477.14.
Then the last two calculations are based on the Post Office Depart-
ment’s car-foot miles and operating expenses, which gives us an over-
payment of $26,151.45 per month, which is what the department
reported in Document 105; by applying the fixed charges to the same
item, I get an overpayment of $3,992.21. The idea in compiling this
statement was merely to illustrate the effect in the application of the
car-foot miles as both reported by us and those used in the depart-
ment to the different methods of dividing operating expenses. The
operating expenses we show here are divided on a train-mile basis.
I have a couple of statements also, Tables G and H, prepared by Mr.
J. T. Leary, comptroller, who is thoroughly familiar with the details.
I asked him if they could be presented here, and any detailed ex-
planation you would like, if I am not able to furnish it, I will be glad
to get it. Table G is the formula for dividing the operating expenses
and taxes, identical with the formula used by the Post Office Depart-
ment. This represents the expenses as arrived at for the fiscal year
ending June 30, 1913. These are brought up-to-date. The result of
that is it shows that the mail service, based on our car-foot miles, is
costing the company $1,780,155.48, while we received from the mail
$1,205,158.95. In other words, on the net return from operation,
instead of the mail earning anything it shows it went back $574,-
996.53, or about 5.9 per cent on property investment. With the fixed
charges added to that it increased the underpayment to $760,135.69,
or representing a deficit on property investment of 7.83 per cent.
We have another statement labeled H, which is worked out on the
RAILWAY MAIL PAY. 1347
1Buell formula. This is the statement used in the Wisconsin rate case,
as I understand it. The same method has been applied to this as in
the other ones, with the result that the underpayment shows $390,-
616.09, as compared with $574,996.53 on the Post Office Department's
basis. With the fixed charges, that goes to $575,755.25, as compared
with $760,135.69 on the Post Office Department basis. Those two
statements represent the operating expenses for the last fiscal year,
and we felt that it would represent very clearly the difference in the
increased cost, as compared with the average, when the statistics were
originally compiled and on which Document 105 is based. I think
you have heard a great deal about the increased cost of labor and
material and I think these statements are illustrative; they were pre-
pared with a view to seeing just exactly what the relative results
would be. Then I have another table lettered I, worked out on the
basis of passenger-car-mile earnings. In other words, if we applied
the rate that we earned from passenger-car miles to the mail-car
miles, we get a result similar to the other two statements—an under-
payment of $559,431.02. In the Buell statement it runs $390,616.09
and in the Post Office Department formulas it runs $574,996.53, so
the effect of all these statements is to substantially harmonize.
Dr. LoRENz. How did you get the earnings of passenger-car miles?
Mr. McCAHAN. By taking the total car miles and dividing them
into the passenger earnings.
Dr. LoRENz. So that it is an average, including baggage, mail, and
express? s
Mr. McCAHAN. Yes; everything.
Mr. TUTTLE. How much was that a car mile !
Mr. McCAHAN. Twenty-two and three-tenths cents.
The CHAIRMAN. That is for a 60-foot car?
Mr. McCAHAN. That is on the passenger-car service; that is, it
takes all the passenger equipment. I do not know just what cars
were used; in fact, every car we had was used.
Mr. TUTTLE. Does your table show what the cost was per car mile?
Mr. McCAHAN. No; the cost per car mile, I think, will work out
pretty near on an equal basis. I have not figured that out.
Mr. TUTTLE. Does it about equal the revenue?
Mr. McCAHAN. I am not sure. Not exactly. I think it will run
pretty close. -
The CHAIRMAN. Do you not take a 60-foot car as your standard;
as your unit? Your earning of 22 cents a car mile is on that basis?
Mr. McCAHAN. In the passenger service?
The CHAIRMAN. Yes. *.
Mr. McCAHAN. We took the total car miles regardless of the car
length and figured out exactly what the total passenger earnings
were per car mile. -
The CHAIRMAN. Then would it be equally fair to take the postal
cars, regardless of their length—whether 70, 40, 50, or 60 feet—and
make a computation on the same basis?
Mr. McCAHAN. I did allow straight car mileage for full postal
cars because that represents the unit of service, but in the mail-apart-
ment cars I took the car actually assigned to the run, figured out the
length of the mail apartment, took the total mileage of the car, and
arrived at it on that basis. In other words, if a car was 50 feet
long and the mail space occupied 20 feet, I took two-fifths of that
1348 RAILWAY MAIL PAY.
mileage. I took the proportioned mileage. That was the best way
I could arrive at it. That statement is simply submitted as an illus-
tration in connection with the other two statements.
For convenient reference I submit the Tables A to I, inclusive,
referred to in my general statement.
s [The Baltimore & Ohio Railroad Co. Mail department.]
RAILWAY MAIL PAY.
[Information prepared for presentation to the Joint Committee on Postage on Second-
- §§ * and Compensation for the Transportation of Mails. Baltimore, Md.,
prl y e
TABLE A.—comparative car-foot miles, Baltimore & Ohio Railroad and Post
Office Department, November, 1909.

ºp;
w y Pos
Pºlº, e Per POSt Office Per | Office De-
I.ii. cent. |Department. cent. partment
* (increase--,
decrease–)
Postal cars: - Car-foot miles. Car-foot miles.
Distribution.-------------------------. 13,970,480 . . . . . . . . . . 14,242,425 |... . . . . . . . + 271,945
Storage-------------------------------- 3,366,923 |- - - - - - - - - - 818,061 |.......... –2, 548,862
i.eadfiead......I. - - - - - - - - - - - - - - - - - - - - 662,400 - - - - - - - - - - 489, 150 |- - - - - - - - - - — 173,25
Total.-------------------------------- 17,999,803 . . . . . . . . . . 15,549,636 |- - - - - - - - - - | —2,450, 167
Mail apartment cars:
Distribution. . . . . . . . . . . . . -------------. 10,233,814 - - - - - - - - - - 8,986,451 |.......... —1,247,363
Storage-------------------------------- 1,501, 300 ----------|--------------|---------- —1, 501,300
Deadhead. ---------------------------. 604, 122 |----------|--------------|---------- — 604,122
Total.-------------------------------- 12,339,236 - . . . . . . . . . 8,986,451 |.......... —3,352,785
Mail space in baggage cars. . . . . . . . . . . . . . . . . 2,794,976 - - - - - - - - - - 855,621 |- - - - - - - - - - —1,939,355
Total mail--------------------------- 33, 134,015 9. 81 25,391, 708 7.53 —7,742,307
Passenger: **
Revenue. ----------------------------- 248,656,914 - - - - - - - - - - 251, 582,255 |... . . . . . . . +2,925,341
ead---------------------------------------------------------- 5, 660,543 |- - - - - - - - - - +5,660,543
Deadhead.---------------------------- 813, 109 ----------|--------------|---------- — 813, 109
Total.------------------------------- 249,470,023 73.85 257,242,798 76.28 +7,772,775
Express----------------------------------- 55, 187,434 16. 34 54,585,970 16. 19 – 601, 464
Grand total.---------...-------------- 337,791,472 100.00 337,220,476 100.00 — 570,996
EARNINGS PER CAR-FOOT MILE.
Mail--------------------------------------- $0.00296 - - - - - - - - - - $0.00386 . . . . . . . . . . +$0.00090
Passenger--------------------------------- . 00463 |.......... .00449 |...... ---. — . 00014
Express----------------------------------- .00272 - - - - - - - - - - .00275 [.......... + . 00003

Average weight per pouch or sack used by the Post Office Department, 20
pounds. Results obtained by the Baltimore & Ohio Railroad Co. at Chicago,
Ill., based on regular weighing by Post Office Department: -
Per cent of N b Per cent of
increase over ovember, increase over
March, 1911. i.rººs igii. ' | department's
average. average.
Average rººt per pouch or Sack: Pounds. Pounds.
Received----------------------------------- 28 -------------- 26 --------------
Forwarded.-------------------------------- 42 l-------------- 39 --------------
Total average---------------------------- 36 S0.00 34 70, 00
Mail revenue---------------------------------------------------------------------------------- $98,015.98
Mail revenue if paid on earnings per passenger car-foot mile. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 153,410.49
Increase (56.52 per cent). -----------------------------------. > - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 55,394, 51

*
RAILWAY MAIL PAY. 1349
hio Railroad Co.—Route 118003–Baltimore, Md.,
TABLE B.—The Baltimore & O
to Grafton, W. Va.

-
Reported
Ar Post Offi d; º
- º : Post Ce Ce De-
. B. & O. R. R. Per cent. Department. Per cent. artment
-- increase-H,
decrease—).
Postal cars: Car ft. miles. Car ft. miles.
Distribution... . . . . . . . . . . . . . . . . . . . . . . . . , 0 (U, ZOU |- - - - - - - - - - - ,887,235 |- - - - - - - - - - + 216,955
Storage-------------------------------- 1,251,714 |- - - - - - - - - - y --~ I - - - - - - - - - - – 907,
- Peadhead.----------------------------|--------------|----------|--------------|----------|------------
Mail apartment cars:
Distribution.-------------------------. 1,010, 512 - - - - - - - - - - 943, 937 - - - - - - - - - - — 66,575
Storage-------------------------------- 812,280 ----------|--------------|---------- — 812,280
...Deadhead...-------------------------- - 179,700 ----------|--------------|---------- – 179,700
Mail space in baggage cars................. 294,968 . . . . . - - - - - 186,297 - - - - - - - - - - – 208, 671
Total mail............... - - - - - - - - - - - - 7,319,454 10. 52 5,361,689 7.63 –1,957, 765
Passenger - - - —
Revenue------------------------------ 47,830,493 |. . . . . . . . . . 49, 552,270 - - - - - - - - - - +1,721,777
ead.---------------------------------|------------------------ 1, 730, 233 - - - - - - - - - - +1,730,233
Deadhead. ---------------------------- 813, 109 ----------|--------------|---------. — 813, 109
Total passenger...................... 48,643,602 || 69.92 || 51,282,503 | 73.02 +2,638,901
Express.....-----------------------------. 13,604, 250 19.56 13,582,424 19.35 | – 21,826
Grand total. ................. ------- 69,567,306 T100.00 Tºo,226,616 T10000 || Tºso,310
- }
TABLE C.
The Baltimore d' Ohio Railroad Co.—Full postal cars—Route 113003–Balti-
more, Md., to Grafton. W. Va.

1 2 3 4 5 6
Length Authorized º
Mººr, $ * - Il Space page €S O3S
Trains. Between Distance. paid for. 190, Docu- on column
Iment 105. 5.
- - Feet. Feet.
1 Washington-Cumberland.-------------------. 151.67 50 50 227,505
12 |..... do----------------------------------------|------------ 50 50 227,505
55 |----- do---------------------------------------- 151. 67 50 50 227,505
2 |----- do---------------------------------------------------- 50 50 y
3 ----- do---------------------------------------- 151. 67 50 50 227,505
4 ----- do---------------------------------------------------- 40 40 182,004
9 i----- do---------------------------------------- 151. 67 60 60 ,006.
10 |..... do----------------------------------------|------------ 60 60 273,006
47 -----do---------------------------------------- 151. 67 50 50 227,505
6 ----- do---------------------------------------------------- 60 60 273,006
1 | Cumberland-Grafton......................... 101.88 50 50 152,820
12 |----. do---------------------------------------------------- 50 50 152,820
55 ----- do---------------------------------------- 101.88 50 50 152,820
2 I----- do---------------------------------------------------- 50 50 152,820
3 |----- do---------------------------------------- 101.88 50 50 152,820
4 ||----- do----------------------------------------|------------ 40 40 122,256
555 | Baltimore-Washington..... ------------------ 39.71 50 50 59,565
504 - - - - - do---------------------------------------------------- 40 40 47,652
511 ..... do---------------------------------------- 39, 71 50 50 59,565
516 |..... do---------------------------------------------------- 40 50 , 565
506 |..... do---------------------------------------- 39. 71 40 50 59,565
547 |..... do----------------------------------------|------------ 50 50 59,565
Total----------------------------------------------------------------------- 3,597,885
Total car-foot miles shown “Distribution space,” page 191, Document 105....:-----------. § 3,887,235
Total car-foot miles based on R. P. O. car authorization, page 190, Document 105. ---------- (b) 3,597,885
Pifference----------------------------------------------------------------------------- * * * * 289,350
Reported by railroad company.------------------------------------------------------- tº a se s s 3,670,280
Difference compared with § * e s e º is sº * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * –216,955
Difference compared with (b)............. r" - * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * +72,395
1350 RAILWAY MAIL PAY.
TABLE C–1.—The Baltimore & Ohio Railroad Co.—Route 118003–Baltimore, Md.,
to Grafton, W. Va.
STORAGE CAR TRAIN 1.
Document 105 allows 344,220 car-foot miles.
Car equipped with stanchions and about 40 feet long, .304,260 car-foot miles.
Department's allowance for this car reasonable.
No allowance for return movement eastbound deadhead made necessary by
movement westbound for mail service and no use to company eastbound.
If credit had been allowed for return movement, storage space for this one
car would have been increased 344,220 car-foot miles. This does not take into
consideration storage space in postal cars or similar space in mail-apartment
C&I*S.
Car operated from Washington to Cincinnati over three routes, Washington
to Grafton, Grafton to Parkersburg, and Parkersburg to Cincinnati. Credit
allowed Washington to Grafton, none between Grafton and Parkersburg, and
credit allowed between Parkersburg and Cincinnati: -
Washington Grafton Parkersburg
Storage disallowed
Cincinnati

Storage allowed - - - - - - -
Storage allowed
Operating run of car carrying storage mail
MAIL-APARTMENT CAR.
Document 105, 943,937 car-foot miles.
No credit given for baggage end of Certain cars used for storage of mails.
Train 5, Washington, D. C., to Cumberland, Md., 30-foot apartment and
29-foot baggage: latter Space used entirely for mail. This will also apply to
trains 11, 12, 14. These four trains have an aggregate of 116 linear feet of
space in baggage end, representing 527,812 Car-foot miles. Allowing for dead-
head movement of storage car previously mentioned, makes a total of 872,032
car-foot miles disallowed for these five trains On this One route. There may
have been other cases, but these particular trains were selected because of the
concrete evidence as to the use of the whole Car for mail Service.
Total car-foot miles disallowed, DOCument 105, On this route as it applies to
full postal and mail-apartment cars, 1,749,094, exclusive of 208,671 car-foot miles
disallowed in closed pouch service, the total disallowance being 1, 957,765, or
26.70 per cent of total mail space reported by company for this one route.
TABLE D.—The Baltimore & Ohio Railroad Co.— Mail apartment cars—Route
113003–Baltimore, Md., to Grafton, W. Va.

Trains. Between— Distance. tº. º
*s Feet.
145 | Baltimore–Washington. ---...---------------------------- 39. 71 20 20,649
160 | Washington-Baltimore - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 39, 71 20 20,649
161 | Baltimore–Washington - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 39. 71 30 35,739
144 | Washington-Baltimore. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39. 7.1 25 29,781
153 | Baltimore–Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39. 71 30 35,739
171 . . . . . do---------------------------------------------------- 39. 71 25 29,781
19 | Baltimore-Relay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --------- 9.00 20 4,680
19 || Washington Junction–Harpers Ferry. . . . . . . . . . . . . . . . . . . . . . - 13.04 20 6, 781
17 | Baltimore-Relay------------------------------------------ 9.00 20 4,680
17 | Washington Junction–Harpers Ferry- - - - - - - - - - - - - - - - - - - - - - 13.04 20 6,781
16 || Harpers Ferry–Washington Junction. . . . . . . . . . . . . . . . . . . . . . 13.04 20 6,781
16 | Relay-Baltimore..... ------------------------------------- 9.00 20 4,680
20 | Harpers Ferry–Washington Junction. . . . . . . . . . . . . . . . . . . . . . 13.04 20 6, 781
20 | Relay–Baltimore... . . . . . . . . . . . . . . . .................. ,- - - - - - - 9. 00 20 4,680
25 | Baltimore-Relay----------------------------------------, - 9.00 15 3, 510
26 Relay–Baltimore. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 00 15 3, 510
5 | Washington-Cumberland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151. (57 30 136,503
11 I. - - - - 0 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 151. 67 30 136,503
12 | Cumberland–Washington - - - - - - - - - - - - - . . . . . . . . . . . . . . . . . . . . 151, 67 30 136,503
14 | Grafton-Cumberland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.88 25 76,410
14 | Cumberland–Baltimore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191. 38 30 172,242
502 || Washington-Baltimoré . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39. 71 30 35,739
512 |- - - - - do---------------------------------------------------- 39. 71 30 35,739
* = a, sº us as ºn s ſº a s = * * * * * * * * s ºn as as a s = s. sº sº a tº sº a tº sº nº º m ºn sº as a s a s is º ºs º ºs º º ºs º ºs º as a * * * * * * * * * * * * 954, 841
Amount shown on page 191, Document 105. . . . . . . . . . . . ... -------------|-----------. 943,937
Difference-------------------------------------------|------------|------------ 10,904
RAILWAY MAIL PAY. - 1351
TABLE E-The Baltimore & Ohio Railroad Co.—Use of mail apartment cars on
trains 5, 11, 12, and 14, loaded and unloaded at Washington, D. C., during
weighing of 1909.

. . . . . l. Loaded Maximum
Train. and * | *.iii.
| unloaded. | Pº “”y. average.
-- Pownds. Pounds. Pounds.
5 Loaded--------------------------------------------------- 939,500 8,947 12,100
11 ----- do---------------------------------------------------- 1,012,300 9,641 12,442
12 | Unloaded............................- - - - - - - - - - - - - - - - - - - - - 430% 4,097 4,843
14 |..... do---------------------------------------------- * * * * * as 218,200 2,078 2,628
Average load in postal car will run about 2% tons. It will be observed from the
foregoing table that the lowest maximum average weight loaded on at Washington
is over 6 tons, and unloaded at same point over 14 tons. The amount unloaded
at Washington from trains 12 and 14 represent about the minimum weight car-
ried at any one time on the route. The purpose of this exhibit is to demon-
Sträte that the railroad company was entitled to the full inside length of cars
in each case cited. -
During the last weighing, 1913, these trains had the same character of serv-
ice—30-foot mail apartment cars. Here is what they handled :
Train 5 left Washington, D. C., 61.90 per cent of the time with over 5 tons of
mail; maximum at any one time being 93 tons.
Train 11 left Washington, D. C., 73.33 per cent of the time with over 3 tons
of mail; maximum at any one time being 7 tons.
Train 12 arrived at Washington, D. C., 48.60 per cent of the time with over
2 tons of mail; maximum at any one time being 5% tons.
Train 14 arrived at Washingtoni, D. C., 49.50 per cent of the time with over 2%
tons of mail; maximum at any One time being 5% tons.
If the investigation had been conducted in November, 1913, and the same
method followed by the department as in November, 1909, these four trains,
carrying above-mentioned weights, would have received credit for only 30 feet,
while it would have been impossible to have loaded the amount of mail mentioned
in the mail compartment, and the same is relatively true of the conditions
applying in 1909. -
TABLE F.—Comparative application of car-foot miles in mail service to passen-
ger-operating ea penses and fiated charges, the Baltimore dé Ohio Railroad Co.
Passenger - Fixed
operating Taxes. Total. charges Grand total.
expenses. geS.
Railroad company.... . . . . . . . $1,151,649.02 || $70,596. 18 $1,222,245.20 $485,441.70 $1,707,686.90
Car-foot miles:
Railroad, 9.81 per Cent---|-- - - - - - - - - - - - - - - - - - - - - - - - - - - (a) 119,902. 25 |. . . . . . . . . . . . . . (b) 167,524.08
Post Office Department,
7.53 per Cent-----------|----------------|------------ (c) 92,035.06 |. . . . . . . . . . . . . . (d) 128,588.82
Post Office Department. . . . . 954, 573.41 37,337.54 991,910.95 || 1 256,744. 72 . 1,248,655.67
Car-foot miles:
Railroad, 9.81 per cent---|- - - - - - - - - - - - - - - - - - - - - - - - - - - - (e) 93,624.32 |- - - - - - - - - - - - - - (ſ) 122,493. 12
Post Office Department,
7.53 per Cent-----------|----------------|------------ (g) 71,864. 53 |. . . . . . . . . . . . . . (h) 94 023.77
Month. Year. Per cent.
Mail earnings--------------------------------------------------- $98,015.98 || $1,176, 191. 76 . . . . . . . . . .
Underpaid on basis of (a)--------------------------------------- 21,886. 27 262,635. 24 22. 33
Underpaid on basis of (b) -------------------------------------- 69, 508. 10 S34,097. 20 70. 92
Overpaid on basis of º se s = ºn sº as sº e º 'º e a we w = e < * * * * * * * * * * * * * * * * * * * * * * * 5,980. 92 71, 771. 04 6, 11
Underpaid on basis of (d). ------------------------------------- 30, 572.84 366,874.08 31, 19
Overpaid on basis of (e).--------------------------------------- 4,391.66 52, 699.92 4.48
Underpaid on basis of (f) - - - - - - - - - - - - - - - - - - - - - - - - - - - , - - - - - - - - - - - - 24,477. 14 293, 725.68 , 24.97
Overpaid on basis of § as s = * * * * * * * * * * * * * * * - - - - - - - - - - - - - - - - - - - - - - 26, 151.45 313,817. 40 26. 62
Overpaid on basis of (h)---------------------------------------- 3,992. 21 47,906. 52 4. 07

Passenger operating expenses as arrived at by company on revenue train mileage basis.
1 Determined by railroad company, using 19.04 per cent, which ratio was used by Post Office Depart-
ment in apportioning general expenses and taxes to passenger service.
1352
RAILWAY MAIL PAY.
TARLE. G.-The Baltimore & Ohio Railroad Co. earnings and earpenses of mail
service, year ended June 30, 1913.
[Post of FICE FORMUL.A.)

* Assignable
| conducting t §.
Conducting * onducting | . . Taill& Càr-
Summary of results. Total. * Ratio. passenger Ratio. foot space
- freight traffic. traffic. railroad. '
figures 9.81
per cent.
Operating expenses: -
Maintenance of way
and structures. ------|$14,019,619.57 |$10,468,806.88 74.67 $3,550,812.69 || 25.33 |..............
Maintenance of equip- - -
ment----------------- 18,323,210.39 15,352,396.78 || 83.79 2,970, 813.61 | 16.21 |..............
Traffic expenses........ 2,026,273.88 1,255,326.31 || 61.95 770,947. 57 || 38.05 |..............
Transportation ex-
penSeS - - - - - - - - - - - - - - - 37,274,397.06 || 28,530,920.31 76.54|| 8,743,476.75 23.46 |..............
General expenses------- 2,136,137.08 || 1,706,464.61 79.89 429,672.47 | 20. 11 |............. tº
Outside operations..... 2,648,171.61 2,030,946.43 76.69 617,225.18 23.31 ||-------------.
Total operating ex- -
penSeS- - - - - - - - - - - - - 76,427,809.59 59,344,861.32 || 77.65 17,082,948.27 22.35 |..............
Taxes.-----:- - - - - - - - - - - - - - - - 3, 113,382.51 2,517,792.44 80.87 595, 590.07 || 19. 13 |..............
Hire of equipment......: ... 627, 138.55 460, 502.70 | 73.43 166,635.85 || 26. 57 -------------.
Miscellaneous rents (joint -
facilities) Dr. ------...- ... 979,652.08 474,662.25 48.45 504,989. 83 || 51.55 ----------....
81,147,982.73 || 62,797,818. 71 || 77.39 18,350,164.02 22.61 |-------------.
LeSS miscellaneous rents -
(joint facilities) Cr. ...... 1,065,493.00 861,664. 19 80.87 203,828.81 | 19.13 --------------
Total operating cost... 80,082,489.73 || 61,936,154.52 77.34 18, 146,335.21 22.66 1,780,155.48
Total operating reve- -
nue, including out-
side operations----- 103,329,992.33 83,560,745.84 || 80.87 19,769,246.49 | 19.13 - 1,205,158.95
A. Net return from opera-
Od---------------------- 23,247,502, 60 21,624,591.32 93.02 | 1,622,911.28 6.98 || 1 574,996.53
Interest. On funded debt
and other interest,
less income other - -
than from operation. 9,865,391. 21 || 7,978,141.87 | 80.87 | 1,887,249.34 || 19.13 185,139.16
B. Net balance. . . . . . . . . . . . 13,382, 111.39 13,646,449.45 || 101.98 264,338.06 1.98 1760, 135.69
C. Property investment....|517, 123,131.00 |418, 197,476.04 || 80.87 98,925,654.96 || 19.13 || 9,704,606.75
Ratio of return upon -
property used—
A divided by C. ... 4. 50 5.17 -------- 1.64 - - - - - - - - 5.92
B divided by C. - - - 2. 59 3.26 - - - - - - - - -27 |-------- 7.83
l Excess cost mail Service over revenue.
TABLE H.—The Baltimore & Ohio Railroad Co. earnings and
Service, year ended June 30, 1913.
[Buell formula.]
eapenses of mail

Assignable
Conducti t §.
- y * Conducting o +: onducting Rati T3THC C3T-
summar, of resultS. Total. freight traffic. Ratio. Pººr atio. *º,
figures, 9.81
per cent.
Operating expenses: -
Maintenance of Way -
and structures.......|314,019,619.57 |$10,810,433.68 77.11 $3,209,185.89 22.89 |............. sº
Maintenance of equip- -
ment----------------- 18,323,210.39 15,326,803.71 83.65 2,996,406.68 || 16.35 |----..........
Traffic expenses.------- 2,026,273.88 1,255,326.31 61.95 770,947. 57 || 38.05 - - -----------.
Transportation ex- -
penSéS - - - - - - - - - - - - - - - 37,274,397.06 || 30,054,678.32 80.63 || 7,219,718.74 | 19.37 ------------..
General expenses....... 2,136,137.08 1,746,188. 10 | 81.75 389,948.98 || 18.25 |------------
Outside operations..... 2,648,171.61 2,030,946.43 || 76.69 617,225. 18 || 23.31 ||--------------
Total operating ex- - - - -
penSeS - - - - - - - - - - - - - 76,427,809.59 61,224,376.55 | 80.11 | 15,203,433.04 | 19.89 |..... ---------
RAILWAY MAIL PAY. - 1353
TABLE H.-The Baltimore & Ohio Railroad Co. earnings and eagenses of mail
, “ . . . . service, year ended June 30, 1913–Continued.

- * Assignable
Conducting || tº:-
- Conducting ſº Sonducting Iſaid C. Car-
Summary of results. Total. tº i Ratio. assenger | Ratio. foot space
- - freight traffic. p ; railroad
figures, 9.81
per cent. .
Taxes...................... $3,113,382.51 $2,517,792.44 80.87 $595,590.07 || 19. 13 |--------......
Hire of equipment.--------- 627,138.55 460,502.70 | 73.43 166,635.85 26.57 -----------...
Miscellaneous rents (joint * -
facilities), Dr............. 979,652.08 474,662.25 48.45 504,989.83 51.55 - - - - - -...-...--
* - 81,147,982.73 || 64,677,333.94 || 79.70 | 16,470,648.79 || 20.30 -----.........
Less, miscellaneous rents
(joint facilities), Cr....... 1,065,493.00 861,664. 19 80.87 203,828.81 | 19.13 --------------
Total operating cost. 80,082,489.73 63,815,669.75 79.69 | 16,266,819.98 || 20.31 $1,595,775.04
Total operating reve- | • *-*
nue, including out- ... .
side operations..... 103,329,992.33 83,560,745.84 80.87 | 19,769,246.49 || 19.13 1,205,158.95
A. Net revenue from op-
eration------------------- 23,247,502.60- 19,745,076.09 | 84.93 3,502,426.51 15.07 || 1390,616.09
Interest onfunded debt -
and other interest
less income other
than from operation. 9,865,391.21 7,978,141.87 | 80.87 | 1,887,249.34 | 19.13 185,139.16
B. Net balance....... ----. 13,382,111.39 11,766,934.22 || 87.93 1,615, 177.17 | 12.07 1575, 755.25
C. Property investment....|517, 123,131.00 (418,197,476.04 || 80.87 98,925,654.96 || 19. 13 || 9,704,606.75
Ratio of return upon
property used:
A divided by C-... 4.50 4. 72 - - - - - - - - 3.54 |-------- 4.03
B divided by C. - - - - 2.59 2.81 -------- 1.63 -------- 5.93
i Excess cost mail service over revenue.
TABLE I.—The Baltimore dé Ohio Railroad Co., earnings per mail car-mile based
on earnings per passenger car-mile year ending June 30, 1913.
Passenger earnings $19,769, 246.49
Passenger car-mileage - - 88, 336, 782
Earnings per car-mile - - $0.223.79
Mail car-miles * * * * 7, 8S5, 0.26
Mail revenue, based on earnings per passenger car-mile-------- $1,764, 589. 97
Mail revenue received $1,205,158. 95
Underpayment mail compared with passenger - $559,431. O2
Per cent of mail revenue received 46.42
The CHAIRMAN. Mr. Mack, are you prepared with your statement?
Mr. MACK. I haven’t got the complete statement finished, but I
think it can be finished to-morrow morning. The statement ought to
be read and followed along consecutively in order to be understood,
and it all ought to be read at one time. As there is to be a session
to-morrow morning, I understand, it will be much more satisfactory
if it can be arranged for me to present my paper then.
The CHAIRMAN. Are there any other gentlemen present who would
like to have anything to say?
Mr. BRADLEY. Mr. Chairman, before we adjourn I would like to
ask a question on the express-rate matter. This morning, when I
questioned General Stewart in regard to the computations of the de-
partment in volume No. 11 regarding the gross revenue received
from the railroad companies from the express traffic, instead of the
1354 RAILWAY MAIL PAY.
mail traffic, I asked whether the difference in the average haul was
taken into account, and I understood General Stewart to say that it
was. I have been examining pages 1277 and 1278 casually since that
conversation, and I do not find it. Will General Stewart kindly point
that out?
Mr. STEwART. Yes. The ton-mile rate in the mail service of 10.04
cents takes into acount, of course, the average haul, and the ton-mile
•rate in the express figures here also takes into account the average
haul, which is stated on page 1279.
Mr. BRADLEY. The observations I would submit in regard to that
computation from a casual examination of it are, first, that the aver-
age rate per ton-mile is ascertained upon slender data. It is the
same situation that I had to deal with when I prepared a paper
about a year ago in trying to find out for your committee the rela-
tive earnings per ton-mile from the express and from the mail.
The statistics available are very few.. I judge that in this computa-
tion reliance has been had upon the reports for two days’ business.
The Adams Express Co., I believe, for one day in August, 1909, and
the United States Express Co. for one day in December, 1909; and
therefore the business taken as establishing the average haul only
included about 15 per cent of the total traffic. So that the ascer-
tainment is not on a basis that would lead one to accept it as being
at all conclusive. It may be right, but I am inclined to suspect
that it is not. The second step in this computation seems to be based
upon the ton-mileage of the mail. That is, having ascertained from
the slender data that I have already spoken of the approximate rate
per ton-mile for express, the department has applied that factor to
the ton-mileage of mail service as of April 30, 1913. When I first
read that statement of 510,000,000 ton-miles in volume 6 of Dr.
Lorenz, I seriously doubted if it could be correct, and at that time I
spoke to Mr. McBride and asked him whether he had verified the
figures, but he felt content that the ascertainment as made by the
department was correct. I do not know whether the department has
been able to verify those figures, but in attempting to test the accu-
racy of those figures I make this comparison: I understand that on
July 1, 1908, the department reported to the Hughes commission that
the total annual ton-mileage of the mail was 489,000,000.
Remembering that that was of July 1, 1908, and this ton mileage
is given as of April 30, 1913, almost five years later, there has been
a growth of 21,000,000 ton-miles, or only 4 per cent. That seems to be
a very small growth compared with other mail statistics that are
known. The weight of second-class mail matter for the year 1908 was
694,000,000. For the year 1913 it was 997,000,000, a growth of 302,000,-
000 pounds, or 43 per cent, and second-class mail matter is apt to be of
long haul. In reflecting upon this I think there are two causes that
might account for the smaller growth in the ton mileage since 1908
than in previous years—one the application of the divisor and the
other the transfer of a certain percentage of second-class mail to
the blue-tag shipments—but I think any calculations made in regard
to both of those causes would not account for the difference that is
represented in so small a growth of only 4 per cent in the ton mileage,
as compared with the growth of 43 per cent in the second-class mail
matter. The Post Šiš. Department calculation having obtained a
total of $40,000,000 by the use of the figures I have just described,
RAILWAY MAIL PAY. 1355
then proceeds to ascertain the average loading per car, and this is
based again on the figures of the Interstate Commerce Commission
for express statistics that I have already referred to as being not
sufficiently comprehensive. I do not believe that they are on a firm
foundation. The conclusion arrived at, that the express-car loading
of 2.57 tons and the loading of the mail car as 2.26 tons, does not
appeal to the mind of a railroad man as arriving at a correct con-
clusion. Further, it will be observed that in these other statistics,
it is estimated by the department that there were 225,000,000 car-
miles pro rated to a 60-foot car basis as of November, 1913, while
Dr. Lorenz, in volume No. 6, has 228,000,000 car-miles as represent-
ing the 60-foot car mileage of the mail Service as of 1909.
Dr. LoRENz. That raises the question as to what is included in the
225,000,000 miles. As I understand, it includes no dead space.
Mr. WoRTHINGTON. Might I also add that Dr. Lorenz's figures
refer to only 84 per cent of the road mileage and 94 per cent of the
present earnings, which figure was divided into the total ton mileage
for all the mail routes to obtain an average load per car. The ton
mileage was not complete? -
Dr. LORENz. I recognize the proportion was too high.
Mr. BRADLEY. I do not wish to set forth any final conclusions on
this subject at all, because these calculations I made were simply
made within a short time while listening to this testimony, but I
think that there is enough in what I have said to suggest the im-
portance of a verification before any acceptance is given to the con-
clusions of the Post Office Department.
Mr. STEwART. Mr. Chairman, of course we realize the interest that
Mr. Bradley has in this question, because he is already on record,
somewhere, with reference to the ton-miles, having based his esti-
mate, as he states, upon information which was given to the Hughes
commission. I notice, however, that he has suggested the main
factors which account for the difference between the figures of 1908
and the figures of 1913, namely, the application of the divisor to the
pay which began July 1, 1907, and therefore prior to July 1, 1908.
had become effective in only one section of the country. The with-
drawal of second-class mail matter from the main mail routes and the
sending of it by fast freight of course reduced the ton-miles very
materially. Another factor which I do not think he mentioned is
the reduction in car space which has been effected by administrative
orders between those years and which amounts to 955,690,000 car-foot
miles. This, of course, would have a bearing upon the subject. So
far as the figures submitted for April 30, 1913, of 510,827,522, are
concerned, I will say that those are the result of actual computations
upon the data in the files of the department. There is no estimate
upon this, and there is no necessity for verification.
The CHAIRMAN. How was that data obtained? -
Mr. STEwART. Those data were obtained at the time of the weigh-
ing in each section. -
The CHAIRMAN. Then, the data is for the period of the weighing?
Mr. STEwART. Yes, sir. As to the 255,633,845 car miles pro rated
to the 60-foot car basis, that estimate is also made upon the best in-
formation to be gathered from the records of the department, show-
ing the conditions of the service at the time it was made.

1356 RAILWAY MAIL PAY.
Dr. LORENZ. Does that include mail space used, or does it include
something else actually run? .
Mr. STEwART. It includes the actual space authorized.
Mr. WORTHINGTON. It does not include the dead space? .
Mr. STEwART, Mr. McBride, what does the 225,000,000 car miles
specifically include?
Mr. McBRIDE. It includes the car mile figures from the authorized
space in each train.
Mr. STEwART. It also includes the return movement of all storage
Cà,TS.
Mr. McBRIDE. I will correct that. Not as to all storage cars, be-
cause the storage-car miles were computed from the car foot miles
in Document 105. It includes approximately 40 per cent of the return
storage-car movement.
Mr. WoRTHINGTON. In other words, any rate obtained from that
divisor would exclude dead space and it would not be comparable
with the load for the express car, which might include dead space
in the express service. It seems to me it would not be comparable
with the load for the express car, which might include the dead space
consequent upon handling express.
Mr. STEwART. If you mean by that that it does not take account
of dead space the companies are running which the department does
not need and does not use, I agree with you. -
Mr. BRADLEY. I would ask whether Gen. Stewart is able to at-
tribute a value to those causes which he has mentioned—for instance,
the divisor—could he venture an opinion as to what influence that
would have upon the reduction in the ton mileage?
Mr. STEwART. The only guide that I would have is the reduction
accomplished in the pay to the railroad companies. The annual re-
duction, I think, amounts to nearly $5,000,000. At the time the sta-
tistics were submitted to the Hughes commission the divisor had be-
come effective only in the third contract section, and on a rough esti-
mate three-fourths of the total reduction is unaccounted for in the
result. -
Mr. BRADLEY. Say 73 per cent. Could you offer an opinion in re-
gard to the blue tag?
Mr. STEwART. No; I would not care to do that offhand.
Mr. BRADLEY. I would like to suggest in regard to the computation
of car mileage as of November 30, 1913, I think that it is quite likely
that it would be difficult for the department to make a satisfactory
estimate, because of the inability to get a correct record of the storage-
car movement, especially the additional storage-car movement, with-
out actually going to the companies or to the Railway Mail Service
and having the records kept. There has been a great growth in
that class of service, largely due to the growth of the parcel post.
If the computation was made from the railway post-office schedule
made in the Railway Mail Service that is supposed to report the usual
conditions, I do not think that an accurate estimate could be obtained.
Mr. STEwART. We differ from Mr. Bradley on that. Furthermore,
we would hardly take the chance of making a mistake on these figures
without safeguarding ourselves in every way, inasmuch as we are
dependent upon them for our judgment as to the effect of these rates
proposed in the suggested bill. -
RAILWAY MAIL PAY. 1357
Mr. BRADLEY. There is such an extraordinary difference in the
figures on the ton mileage of 4 per cent, compared with the second-
class mail matter, which shows a growth in the same period of about
43 per cent, that I think it important to have any verification made
that is feasible. - -
The CHAIRMAN. How is that computation of 43 per cent increase
in second-class mail matter made—on the revenue received, or is it
made on the weighings?
Mr. McBRIDE. Made on the basis of revenue, which is coincident
with the weight, because the rate is a cent a pound.
Mr., BRADLEY. It is one of the most dependable ratios in working
out any problems of this kind.
Mr. McBRIDE. I think we have a compilation at the department
of tom mileage of blue-tag matter for a year, and if we have I would
be glad to submit it. *
The CHAIRMAN. You say it is on the revenue, which depends on
the weight ascertainment?
Mr. McBRIDE. Yes. -
The CHAIRMAN. The divisor is applicable to second-class mail
matter as well as third and fourth?
Mr. McBRIDE. Yes.
The CHAIRMAN. Then, why should there be an increase of 43 per
cent on second-class matter, while there is only 4 per cent during the
period mentioned by Mr. Bradley?
Mr. McBRIDE. One of the reasons, as Mr. Stewart has stated, was
on account of the withdrawal of a great part of the second-class
matter, and the moving of it in freight trains, which amounts, if my
recollection is correct, to about 90,000,000 ton-miles for that year.
I will verify that, however.
The CHAIRMAN. That is blue-tag diversion?
Mr. McBRIDE. Yes.
Th; CHAIRMAN. Would that account for that seeming discrep-
ancy &
Mr. BRADLEY. I would suggest that Mr. McBride have opportunity
to look up his authority. I do not think he would like to have
ninety million rest in the record.
Mr. McBRIDE. I said that I would verify it.
The CHAIRMAN. But, with the verification of that, would that
clear up that point that you raised yourself?
Mr. BRADLEY. It would help, but I doubt if all the blue-tag matter
in the country in the second and third sections—this is merely a
personal opinion—would exceed 50,000,000 ton-miles.
, Mr. McBRIDE. We can figure that absolutely. We have record of
every pound that was moved. There is no guesswork about that.
I find that the ton-mileage of the blue-tag mails amounted, for 1913,
to 42,623,102 ton-miles.
Mr. STEwART. So far as the effect of the divisor is concerned, Mr.
Bradley has probably overlooked the fact that the change of divisor
º the total of ascertained average weights 16 per cent where
applied. -
r. LLOYD. Mr. Chairman, I would like to have in the record
again what is dead space and what is dead-head space. I believe
that has been stated twice, as I remember it, but when this is to be
35797—NO. 12–14 5
1358 RAILWAY MAIL PAY.
investigated hereafter, it is very necessary to get that into the record,
because very few persons know the difference.
The CHAIRMAN. According to the post-office classification.
Mr. STEwART. Speaking generally, and I will say that the record is
more specific, dead space as it appears in Document 105, and as the
subject of discussion here, is that space in cars reported by the
railroad companies and charged to the mail service which the de-
partment determined was operated for the convenience of the rail-
road company without a necessary connection with the mail service,
or space operated in excess of the authorization made by the de-
partment and operated for the convenience of the railroad company,
or operated for some reason for which the department is not responsi-
ble. In some cases it consisted of the operation of a full 60-foot car
where the department asked for only 30 feet of space. Sometimes
it represented the operation of a car beyond the terminus of an
authorized line. In other cases it represented the operation of a car
over a rail line where no mail service was authorized to be performed
and sometimes it was the operation of an apartment car over a line on
Sunday where no railway post office service was performed on Sunday
although performed on week days. Those cases the department de-
termined were not properly chargeable to the mail service and the
space involved was designated as dead space and charged to the
passenger service. Dead-head space is space which was operated by
the companies in excess of the immediate needs of the service, but
which the department believed the mail service was properly charge-
able with as being incidental to the operation of the authorized
Service as, for instance, where a 60-foot car was authorized in one
direction and a 40-foot car in the opposite direction. If that neces-
sitated the operation of a 60-foot car in each direction, it was thought
that the mail service should be charged with the entire space
both ways, therefore the additional 20 feet in the return movement
was designated as dead-head space and charged to the mail Service;
that is combined with the mail space but set out separately so that
Congress might know what the dead-head space amounted to in its
relation to the rest of the service.
Mr. WoRTHINGTON. Did you mention the return of empty storage
cars and in what attitude they were placed, those not used by the
railroads?
Mr. STEwART. The storage cars not used by the department were
charged to dead space. *
Dr. LORENZ. If the department needed a 10-foot apartment and the
company furnished an 11-foot apartment, that 1 foot was charged to
dead space?
Mr. STEwART. Yes. -
Mr. BASKERVILLE. In case of a transcontinental train you authorize
a 60-foot car over part of the route, 40-foot over another part, 30-foot
over another part of that route, etc. You started out with a 60-foot
car, and I would like to know how was the 40 feet handled on the
second lap and the 30 feet on the third lap, and then the 50-foot car
on the last lap 2 Is that chargeable to dead space?
Mr. STEwART. If we had a case like that, and we might have, the
space actually authorized would be charged to the mail service.
RAILWAY MAIL PAY. 1859
Mr. BASKERVILLE. Then you would argue that the railroad com-
panies should keep at these points the different sized cars, and that
they should break up the trains at all these places?
Mr. STEwART. I did not argue anything of the kind. That is the
application of your rule which I want to bring out before this com-
mittee, a point which has not been dwelt upon sufficiently, and that
is this: That the railroad companies have been holding the depart-
ment to the strictest rule with reference to all space operated during
November, 1909, as being the proper measure of service upon which
to gauge railway-mail pay. That is too strict, a rule against the
department. We should regard the statistics of 1909 more in this
sense, that it is a proper guide to the ascertainment of the space
which the mails ought to occupy under a good administration as being
a proper gauge for the payment which the United States should make
to the railroad companies for the service. Now, if it should develop
that here and there throughout the railroad mail service, through lax
administration on the one hand or through a liberal policy on the
other hand, that there was more space operated to accommodate the
mail service than the department ought to pay for, I do not think
that that is a valid reason for this commission to make a finding that
the cost of the mail service should be based upon an inclusion of such
large amount of dead space.
The CHAIRMAN. I would like to return to your original definition
of dead space. At the conclusion of your definition you stated, as I
remember, that you did not allow that which was claimed by the rail-
roads which you claimed was chargeable to the passenger Service.
Why did you charge it to the passenger service?
Mr. STEwART. We charged that to the passenger service because
the responsibility as to how the trains shall be made up and operated
rests entirely with the railroad companies. . The º company
has that responsibility and if it operates dead space for which the de-
partment is not responsible, it should take the charge of that space
in any apportionment of cost. . That space represents expense just
the same as other space, and if the department should not be charged
with it the railroads who are responsible for the running of it
should be.
The CHAIRMAN. For the value of any comparative figures between
passenger and mail service, it seems to me that you should not charge
the passenger service with dead space that was in some way used in
the mail service if you decline to charge to the mail dead space that
was used in some way in the passenger service.
Mr. STEwART. I do not think that follows at all. Take just such a
case as I have mentioned, where a railroad company will run a 30-
foot car over a mail route which, we will say is 50 miles long, and
they have a system that covers 150 miles. Beyond the authorized line
they find it convenient to run that car down over several routes over
which they have no mail service until they strike another route upon
which there is mail service. Suppose they charged to us, as they
did in one instance, the operation of that car over the whole line?
Why should the department pay for that?
The CHAIRMAN. You are perfectly sound on that.
Mr. STEwART. Those are cases such as I have mentioned.
1360 RAILWAY MAIL PAY.
The CHAIRMAN. But suppose you call for a 60-foot car and they
furnish you a 60-foot car, and then you call at the end of the route for
a 40-foot car and they haven’t got a 40-foot car and they can only
give you a 60-foot car and that goes 200 miles over the route. They
do not use that 20 feet extra space in any way, shape, or form, and,
if not, why should the passenger service be charged with that 20
feet of space when it gets no benefit from it or earns nothing from it?
Mr. STEwART. The passenger service could not be charged with it
excepting to form a basis for ascertaining the division of expenses.
If anybody pays for the expense, certainly the passenger service or
the railroad company should pay for it.
The CHAIRMAN. But in making your comparison between passen-
ger and mail, if you debit for the mail why not debit for the passen-
ger as well and throw it out of both computations?
Mr. STEwART. We were not making an ascertainment for passen-
ger Service and it was not incumbent upon us to do that. We take
the passenger service as a whole and it makes no difference for our
purpose how much passenger dead space there is in the passenger
service, because we compare the whole of that with the mail. We
did not make any attempt to ascertain the passenger cost.
Dr. LORENZ. You ascertained the passenger revenues as 4.16 mills,
did you not.
Mr. STEwART. We did not make any ascertainment of that, but
later the hearings brought out some ascertainment of that kind.
Mr. LLOYD. Suppose having started from St. Louis to Galveston,
Tex., with through mail in a 60-foot car, you find that the service be-
yond Texarkana does not need more than a 40-foot car and you re-
Quire of the railroad company a 40-foot car at Texarkana and from
there to Galveston, what kind of a credit would you give the railroad
company? - &
Mr. STEWART. For the 20 feet?
Mr. LLOYD. Yes. Af
Mr. STEwART. Under our suggested plan it is altogether likely that
the additional 20 feet would be taken up. There would probably
be sufficient mails to occupy the 20 feet in excess of the 40 feet needed
for distribution purposes, so the authorization would probably be
for a 60-foot car through. This question enables me to point out
the difference between the use of space under the present system
and under the proposed system. The reason this question is con-
tinually recurring here, of differing authorizations of 60-foot car,
50-foot car, and 40-foot car over different parts of a through line,
is that we are paying for space now in addition to weight, and under
the law authorizing us to pay additional money for space for dis-
tribution purposes we pay specifically for units of space of 60 feet,
50 feet, and 40 feet. That brings about this seeming inconsistency
that we will pay for 60 feet for a certain distance and for 50 feet for
another distance. That is because we do not need the 60 feet for dis-
tribution purposes and 50 feet is sufficient, for which we pay. These
differences, you understand, are the result of the present system of
paying additional money for distribution space.
Mr. LLOYD. As I understand you, under the proposed bill that
could not be. -
Mr. STEwART. Probably would not be.
RAILWAY MAIL FAY. 1361
Mr. LLOYD. I want to get at the question whether it would or
would not. The railroad companies claim with reference to your
bill, that the matter is left open and it is susceptible of that con-
struction. I want to get your idea, if you demanded a through
mail car from St. Louis to Galveston, a 60-foot car, whether you are
going to pay for that 60-foot car to Galveston and back again or
would you pay the railroad company for a 60-foot car to Texarkana
and then pay for the same car with 40 feet of space in the same car
tº Texarkans to Galveston and from Galveston back to Texar-
{8. Ila, -
Mr. STEwART. If we did not need more than 40 feet for all pur-
poses .
Mr. LLOYD. Then you would not start with but 40?
Mr. STEwART. We would pay for only 40.
Mr. LLOYD. But you would only start with 40 if you only needed
40. The proposition I put to you is that you start with 60 feet be-
cause you need 60 feet as far as Texarkana and you did not need
60 feet beyond that point. {
Mr. STEwART. If we did not need 60 feet beyond Texarkana, for all
purposes, we would expect to pay for only such space as we needed,
say 50 feet or 40 feet. -
Mr. LLOYD. You would not want the mail transferred from one
car to another, but you would expect to use the same car. Then why
should not the railroad company get paid for it if space is the basis
of pay?
Nº. STEwART. That brings up the question as to what considera-
tion should be given to the necessities of Operation. t
Mr. LLOYD. Now, let’s go back to the comparison of cost, because,
after all, we must consider that question of comparison. Is that 20
feet properly chargeable to passenger Service from Texarkana to
Galveston? Why should you charge it to the passenger space? The
passenger space is in no way interested in it at all, the railroad com-
pany is not interested in 20 feet of space and it is only there because
you order it and it seems to me as long as you Ordered it your
bill ought to require, whether it does or not, that the Government
should pay for the 60-foot car that you required from St. Louis to
Galveston.
Mr. McCAHAN. We have a case right now of a full car, 50 feet,
running from Washington to Grafton. The operating run of the
train is through to Cincinnati, but when it gets to Grafton, then the
service changes to apartment-car service. It is almost an operating
impossibility to give the department what they require at Grafton.
We must necessarily operate that car clear through to Cincinnati.
Mr. LLOYD. What I am trying to impress upon you is, if you are
required to carry that car through to Cincinnati, you ought to get
pay for it? *.
Mr. McCAHAN. Well, we do not.
Mr. BASKERVILLE. We have a 60-foot car from St. Paul to Fargo,
they use 40 feet from Fargo to Glasgow and 30 feet from Glasgow
to Spokane. -
Mr. LLOYD. I do not think you railroad people have any right to
complain at the present time because you are insisting upon the
present system of pay. Now, we are talking about changing this
system and if it is changed to a space basis, my idea is that the Gov-
1362 RAILWAY MAIL PAY.
ernment ought to be placed in the position that if space is the basis
of pay, that it shall pay for the space that it demands. Now you
get your pay on the basis of weight and space only comes in con-
nection with the railway post office car. \
Mr. BASKERVILLE. What I was trying to find out was how he
made his computation for document 105 to measure this question
of the 60 foot, 50 foot, 40 foot, 30 foot and then back over to 50 feet
On one train. Naturally he reduces his distribution space, for which
he is paid for but 30 feet at Glagow, but the storage mails are there,
the mails are there that we have had in the 60-foot car.
Mr. MACK. I think in the analysis of dead space, which comes up
to-morrow in connection with the Missouri Pacific, which has been
presented by the department as a typical case that all of this will be
explained and dealt with in detail and in a consecutive way.
Mr. LLOYD. Very well, then; I am willing to wait until to-morrow.
Mr. RowAN. In the case you illustrate of the car that went from
St. Louis to Galveston, I would like to ask Mr. Stewart how long it
would take, under ordinary circumstances, to tie out, supposing the
railroads transferred the mail at Texarkana, and put it into a 40-foot
car if it were available? In other words, how long would it take to
tie up the mail before it reached Texarkana, and how long would
it take to set up the pouches and label the sacks for the 40-foot car
starting out from Texarkana 3
Mr. STEwART. That is a Railway Mail Service technical question
I am not prepared to answer, but it suggests this further considera-
tion that it is just as much to the interest of the railroad companies
to run that car through as it is to our interest, because it is an
expense to have to change the train and put in a new car.
Mr. RowAN. I want to bring out the point that it is to the interest
of the Post Office Department as much as it is to the railroads.
Mr. STEwART. What we insist on is as much to your interest as
OUII*S.
Mr. RowAN. In case you change the authorization of a car in the
middle of a run, it would not be a practical thing to set the car out
and put a different sized car in, even if we had cars available.
Mr. STEwART. Therefore I think that question Mr. Lloyd put
a while ago, as to what you do in a case of that kind, is answered by
the fact that companies now furnish cars under authorizations of
different lengths, and that you are insisting now upon the present
basis of pay. If you are doing that you are apparently satisfied
with the condition that now exists. I do not see that we should
make any different rule as to space if we go on the space basis.
Mr. LLOYD. If we change the present law we want to do the right
thing toward everybody. I do not want to see any law enacted that
works any hardship on the railroad companies; they are a part of
the country and a very necessary part of the country, and you want
to deal as fairly and honestly with the railroad companies as you
would with any individual, and any law that we enact in changing
the existing law ought to be à fair, honest, and equitable law, with
no disposition on the part of the railroad companies to take advan-
tage of the Government or the Government to take advantage of
the railroads. What we are trying to do now is to reach a satisfactory
determination as to what is right in the ascertainment of pay. I am
IRAILWAY MAIL PAY. 1863
speaking for myself, and I am sure I am speaking for the commis-
sion when I say that we have no bias on either side. We want to
do the fair thing, and I know you want to do the fair thing. I do
not hesitate to say that before the railroad people you want to do
the fair thing. But I want to get at what you understand would be
the practical application of the law that you propose to enact, be-
cause if what you propose becomes a law, then they would not get
any pay excepting for space. The railroads are in no position now
to complain, because they get pay for the weight and they are in-
sisting that the basis shall remain that way; but if we change the
basis to space, in doing the thing that is fair to them, it seems to me
if we had through mail in the instance that I gave that we ought to
pay for that full 60-foot car from St. Louis to Galveston and back,
because the Government demands that space.
Mr. LORENz. It might be pointed out, under Mr. Stewart's sug-
gested bill, that if he changed the authorization at Texarkana, he
would have to pay the terminal charge for ending one route there
and beginning a new route.
Mr. LLOYD. I appreciate that; but in the long run, in the instance
I gave in the St. Louis and Galveston case, the terminal charge would
be a small consideration.
Mr. STEwART. Mr. Lloyd, I think this is the important thing to
consider in connection with the question that is in your mind. The
practical operation of the service under the proposed bill will go
further to eliminate that one criticism against the service as it stands
to-day than any other plan that can be devised.
Mr. LLOYD. I am trying to get out of you how you are going to
operate it. *
Mr. STEwART. When we carry a 60-foot car down to Texarkana
we have a 60-foot space authorized for distribution purposes; if we
have a 60-foot car we have sufficient mail on that train to occupy
more than 60 feet, some of which we are carrying somewhere else,
probably in the baggage car, and after we reach Texarkana that mail,
under the new plan, will be combined with the mail in the 60-foot
car, and undoubtedly justify payment for 60 feet through. In other
words, the authorization of the space would tend to require the 60-
foot car all the way through, because then we would be paying for
space and nothing else. Now we pay for weight wherever we carry
it and for space only when we need it for distribution purposes. We
would combine all elements of space under the suggested plan.
Mr. LLOYD. That is getting at another thing I was leading to in
connection with the same proposition. In carrying the mail from
St. Louis to Texarkana you might need a full č0-foot car and you
might need a 30-foot apartment car. When you get to Texarkana
you might need a 30-foot apartment car and it would come back to
St. Louis. But that would not affect the 60-foot car at all. The
railroad companies would get pay for a 60-foot car, as I see it, from
Galveston and back, but that car used between St. Louis and Tex-
arkana need not go farther than Texarkana, for when you get to
Texarkana you put the mail that is in that apartment car in the 60-
foot car. Now, what is the authorization? A 60-foot car to Gal-
veston, a 30-foot car to Texarkana; but that 30-foot car, when it gets
to Texarkana, turns around and comes back. Nobody is injured by
1364 RAILWAY MAIL PAY.
that proposition; but if, when you get to Texarkana, you say we do
not need a 60-foot car, we want a 40-foot car, then it seems to me that
you would work a hardship on the railroads if you only paid them
º the 40-foot space between Texarkana and Galveston. That is
p1aln.
Mr. STEwART. Yes; but you must bear in mind that our discussion
on the different lengths of cars has reference to the existing condi-
tions under the authorization of space that is needed for distribution
purposes. If we adopt the proposed plan, authorizations will not
depend primarily on distribution space, but we will combine all space
necessary in the 60-foot car. We would not divide the mail up and
put part in one car and part in another.
Mr. LLOYD. But you have seen several times a number of cases
where these things appear to show these discrepancies; but it seems
to me that you are right if your new system is adopted; there is no
necessity for these discrepancies at all, for they are overcome, and,
it seems to me, wholly overcome.
Mr. STEwART. That is our expectation. . :
Mr. LLOYD. If you have a through car to Galveston you are going
to pay for a maximum car 60 feet; you pay for that to Galveston
and back. If you have an additional car to Texarkana you would
pay for the space you use to Texarkana and back, and there ought
not be any trouble in adjusting that rate at all.
Mr. PETERs. Mr. Lloyd, would not that car that was used part
storage car from St. Louis to Texarkana have to be set out of the
train?
Mr. LLOYD. Yes. *
Mr. PETERs. Your train is delayed getting rid of dead space and
also delayed taking it on again when you come back. If not delayed,
then the railroad, for the convenience of the department, has got to
haul that empty space to the end of the train run.
Mr. LLOYD. The probabilities are, as a practical proposition in the
instance I mentioned, there would be a readjustment of the train
at Texarkana, you would readjust your train, you would readjust
your passenger cars, and at the same time you would readjust them
you would readjust the number of cars used in the train.
Mr. STEwART. Furthermore, they would have a need for part of
that car themselves.
Mr. LLOYD. I am taking it for granted they would not need the
car beyond Texarkana. º
Mr. BASKERVILLE. My question was to find out how he treated this
matter in compiling Document 105. In other words, did Mr. Stewart
allow credit for the 60-foot car that we run through to Spokane?
Mr. LLOYD. I was trying to get at another proposition. *
Mr. BASKERVILLE. We transfer mail into that car at Grand Forks
and other points on the line. There was mail in there, but we got
no credit for the storage Space. . .
Mr. LLoyd. What I am trying to get at is, if we change this law
how are we going to pay on a space basis? It seems to me under the
proposed law the Government would be required to pay for a
60-foot car all the way. - s
The CHAIRMAN. That is, if the law was stated.
Mr. LLOYD. According to the law he proposes.
RAILWAY MAIL PAY. 1365
Mr. WADE. Dr. Lorenz's suggestion that there would be a terminal
rate on this car if any change was made in the authorization leads
me to wonder what the arrangement would be in a case of that sort,
whether there would be a terminal charge or not on a car that was
run through and no switching done or no mail transfer where a
change in authorization occurred under the proposed law?
Mr. WoRTHINGTON. There would not be under the proposed law
from the way it reads. The terminal charge occurs only at the ter-
minal of the car run.
Mr. LORENZ. The bill as it is drawn by Gen. Stewart provides that
he may state the mail routes as he sees fit. If he states a route, of
course he can not assume anything else. Personally I think the law
ought to be amended on that point and should read that mail routes
shall correspond, as near as practicable, with the actual run of the
cars. That would cover this very difficulty.
Mr. STEwART. That is covered in the language of the statute
Sufficiently where we say we fix these terminal charges by car runs.
Mr. LORENZ. You would not in that case pay a terminal charge,
but change the authorization.
Mr. LLOYD. That is a very nice point. I have studied that out. I
may be wrong about that. I want Gen. Stewart's view on that point.
My idea is in the case I have mentioned, in going through to Tex-
arkana, that that car—not the train, but the 60-foot car—would get
a terminal charge at the initial point, St. Louis; it would get pay for
the terminal charge at Galveston, Tex. The 30-foot apartment car
that I mentioned, that started at St. Louis, would get its pay at St.
Louis for the initial service, and it would get its terminal charge at
Texarkana, Tex.
Dr. LORENZ. I should say the bill was clearly defective if it per-
mits a change in authorization without a terminal charge.
Mr. LLOYD. I am somewhat inclined to think that your view about
the bill on that particular point is a valid criticism, and that is the
reason I was trying to bring it out. I am not sure whether it is or
Inot. - -
Mr. STEwART. I think not; if you will let me suggest this, that if
you attempted to state routes with reference to the runs of the indi-
vidual cars they would be very numerous. Under the operation of
this proposed statute we would state a route between two main
points which would most nearly coincide with the operation of
trains and the operation of the Railway Mail Service, but there might
be a car operated between, for instance, the initial terminal and an
intermediate point which would receive its line pay and also its pay
for the terminal charge at the initial point and the point at which
the car ceases on its run on the same route. There would not be any
complication about that.
The CHAIRMAN. Then it is possible that such a difference of con-
ditions might have existed in the different years as, for instance, the
fact that the railroads were underpaid or overpaid in the year 1909;
that the reverse of that situation would be true in 1910, 1911, or 1912
or 1913? -
Mr. STEwART. I do not have in mind such a change in conditions.
The CHAIRMAN. If they were underpaid or overpaid then, pre-
sumably they are now? -
Mr. STEwART. I think they received liberal pay in 1909.
1366 BAILWAY MAIL PAY.
The CHAIRMAN. That is not the point. Would the same reason
apply now that was applied in 1909, or would new factors have to
be taken into consideration to come to any conclusion?
Mr. STEwART. I think you could very fairly come to a conclusion
to-day from the status of 1909. \ t
Dr. LORENz. Suppose that in the interim the total weight of the
mails, as carried, has increased considerably, thereby increasing the
compensation to the railroads, or that the space has not increased in
the same proportion. Would it not be true that the railroads might
have been underpaid in 1910 and still not be underpaid to-day ?
Mr. STEwART. On a space basis, that would be true. -
Mr. WoRTHINGTON. Do you not think the increase in railway op-
erating expenses has something to do with it? Since 1909 there
has been a large increase in ratio of operating expenses to operating
I’éVe]] Uſe. r #
Mr. STEwART. That is an element that is worthy of consideration,
but I do not see how it would be safe to attempt an ascertainment,
supplementing it by these considerations at this time, without going
over the whole process again.
Dr. LORENz. It might be said that increase of expenses is one of
the things the Interstate Commerce Commission is investigating at
the present time.
Mr. WoRTHINGTON. But the record shows there has been an in-
crease in the ratio of operating expenses to revenue from 65 per
cent in 1909 to nearly 72 per cent in 1913, and the first month of 1914
shows a very heavy fall in net earnings over January, 1913.
Mr. STEwART. I would like to say again that which I have sug-
gested several times, that the further I have studied the matter the
more am I convinced that the plan followed by the department in
making an ascertainment of cost is very liberal to the railroad com-
pany. -
The CHAIRMAN. That is, you mean the deductions based on Docu-
ment 105?
Mr. STEwART. Yes.
The CHAIRMAN. Then you think that Table 7 is too liberal to the
railroads?
Mr. STEwART. Not Table 7. That is specific data. I mean the ap-
plication of the percentages to the expenses, both with reference to
operating expenses and the overhead charges; the charges payable
out of operating expenses; for instance, dividends and interest on
bonded debt, and the plan of making the mails participate on the
ratio of 6.68 per cent—the ratio of operating expenses and taxes to
all operating expenses and taxes—in the cost of the extensive rail-
road plant including, for example, all of the expensive and ornate
union stations and the great stations throughout the country, in
which the mail service has a very remote interest. The plan adopted
by the department makes the mail Service participate on the same
basis in all of those expensive appurtenances to the railroad business.
I think it is very much too liberal, and if I were going to propose
another ascertainment, I would be compelled, from what I believe to-
day, to adopt a less liberal plan in that respect. For example, if you
take the cost of railroad equipment—the cars—and make a compari-
son between the cost of passenger cars, including all other cars ex-
RAILWAY MAIL PAY. 1867
cepting mail cars, you will find that the ratio of cost is very much less
than 6.68 per cent; in fact, not more than a little over 4 per cent.
We have not participated in benefit in this ratio of 6.68 per cent in
that actual investment of something like probably $308,500,000.
That is charging to the mail service a greater ratio of the investment
than the department is properly accountable for. Furthermore, we
have applied that same ratio to every kind of investment, even to
payment of interest on funded debt, which represents the extensive
railroad plant throughout the country and to the dividends that
the railroads have paid from their revenues.
The CHAIRMAN. Do you not participate in that? Would they be
able to handle a thousand passenger trains a day if they did not have
terminals for them? Could they handle 500 or 200 or 300? Does
not the Government get the benefit of the more improved and efficient
service, and are not those terminals necessary, and are they not a
direct benefit to the Government and should not the Government
participate in their proportionate part?
Mr. STEwART. They should participate, but not in that proportion.
The CHAIRMAN. I am speaking only for myself, but to my mind it
seems to me in the terminal charge there should be no distinction;
that the mail participates as much as any other branch of the busi-
ness and thereby obtains a more efficient. better, and quicker service,
if speed is one of your factors in the transportation of mails. It is
one of the factors, is it not ?
Mr. STEwART. Speed is one of the main factors. The mail service
is not interested in expensive waiting rooms and all the expensive
accessories which large union stations furnish to the public.
The CHAIRMAN. Does it not get the additional increased train serv-
ice? Is not the increased service because of additional speed put
on for handling the additional number of passengers?
Mr. STEwART. But we could handle that without these outlays.
The CHAIRMAN. No; not without the passenger service you could
not. -
Mr. STEwART. I think the passenger service could take care of itself
without burdening the mails with these extra costs.
The CHAIRMAN. Very true, but you make that a line of cleavage
upon which I am not convinced. It seems to me that the mail would
benefit in terminals just as much, and it is entitled to the same per-
centage in proportion as any other charge in the mail or passenger
transportation.
Mr. STEwART. Furthermore, on that point, while we are discussing
it, I would like to call the committee’s attention to the fact that I
think it would be difficult to find any rate which has been fixed by a
commission or by the railroads themselves upon the strict lines that
we have suggested here. I have read all the works that I have found
available in a short time upon rate making, and I find nowhere in the
development of rates that the railroad companies have themselves
fixed rates upon this very strict method which has been proposed here.
In fact, it was suggested here this morning that many of the railroad
rates are fixed upon expediency—what the traffic will bear—and we
all know that there are many other considerations that enter into the
subject, not only competition between the roads themselves but com-
petition between the products, for instance, the products of the west-
ern coast of the United States competing with the products of
1368 RAILWAY MAIL PAY.
Florida, and the railroads give rates which enable the producer in
California to get his oranges to New York just as readily as the
producer in Florida can get his oranges there. Therefore all these
things enter into the rate-making question. I think the committee
should bear all these things in mind in considering this subject and
not hold the department down to the strict rule of apportionment
which has been discussed. We had to present something to the com-
mittee and we presented it in the most scientific manner we could
devise. What I am suggesting is that that is strongly suggestive but
not necessarily controlling. It was suggested here by Mr. Lloyd
that we are launching upon a new era of rate making and that the
United States should set a good example by fixing a scientific rate
in this case. While I appreciate a consideration of that kind, I do
not want it to unduly influence this committee in making a rate for
mail service which would be based wholly upon a scientific theory,
rather than to take into consideration some of these other elements
that we have suggested and which we have shown all railroad com-
panies take into consideration when fixing rates for the general public.
The CHAIRMAN. How much importance do you attach to the testi-
mony and evidence that you submitted in reference to the express
companies? I would like to get your idea as to what weight we
should give in our consideration to the information submitted con-
cerning the express operations? Do you think that the express
charges should control the mail charges or, if not, to what extent
should they effect them and how much 3 ... * A
Mr. STEwART. I can not escape the conclusion that the matter which
we have presented upon that point is of special importance in con-
nection with the question of rates. It is something definite and
specific and the comparison is made, I think it is fair to say, with
reasonable certainty for the first time. There was something said
here this morning by Mr. Peters to the effect that this is a new ques-
tion injected by the department during the closing days of the hear-
ing, and I think it was suggested inferentially that the railroad rep-
resentatives felt at a disadvantage in replying to what the depart-
ment had submitted, but I notice throughout the hearings that the
question of express rates as compared with mail rates has been dis-
cussed. Such mention is in the gentleman’s paper submitted this
morning. Citations are also made to volumes in which railroad rates
have been discussed with relation to express and mail rates. Dr.
Lorenz discussed what Senator Ashurst said on the floor of the Senate
last year; and altogether it has been before the committee to some
extent. The chairman will recall that he asked the department to
submit views upon that very question, but I have not been able to
present views which I thought were worthy of consideration until we
took it up on this basis of comparison. Coming to the question of
what they are worth, it seems to me they show, without doubt, that
the rates which we have proposed in this suggested bill, are not gen-
erally too low. The question as to whether they are too high must
turn upon a consideration of the extent of similarity between the two
classes of service, and an appraisal of the value of the differences
between them. What services do the railroad companies perform
for the department which they do not perform for the express com-
panies, and what is the fair value of such differences?
RAILWAY MAIL PAY. 1369
The CHAIRMAN. Do you not also have to have another premise
that the present express rates are scientific, sound, and just?
Mr. STEwART. ;P we were going on a strictly scientific basis that
would be correct, but I think we are entitled to the benefit of the con-
dition that exists. - t
The CHAIRMAN. That is not the point. What I want to get at
is this: To what extent, in your opinion, should consideration be
given to the express operations in our conclusions relative to railway
mail pay?
Mr. STEwART. It is a condition that exists in railroading and I
do not see why we should not give full faith and credit to it.
The CHAIRMAN. Of how much importance; would it be a determin-
same pay to the railway for the railway mail that the express com-
pany gives to the railroads?
Mr. STEwART. If the services were the same I would say that you
would be justified in doing that.
The CHAIRMAN. That conclusion assumes a premise that the
present rates are absolutely just and fair.
Mr. STEwART. Yes. -
The CHAIRMAN. You are convinced that they are?
Mr. STEwART. I take it they are.
The CHAIRMAN. I believe that Mr. Kindel has something to say
to us.
STATEMENT OF HON. GEORGE JOHN KINDEL.
Mr. KINDEL. Mr. Chairman, for the past 20 years, being a resident
of Colorado and a manufacturer, I have had occasion to study the
question of transportation. I have been before the Interstate Com-
merce Commission since 1902 constantly, and finally have had myself
elected to Congress. In the last and final effort to control and equalize
express rates, you gentlemen remember, if familiar with the Inter-
state Commerce Commission hearings, I was the first man to attack
the express companies after the Hepburn law was enacted, and have
succeeded by two suits to reduce the rates from New York to Denver
from $8.50 to $5.70 per hundredweight. In my next move I started
in on the plan of parcel post rate graduates, and zones that would
be the means of insuring reasonable and relative rates. It has never
been a question with me to get low rates, but only relative rates,
never as to how high or how low, but we in the West object to being
made the goat to pay from 100 to 300 per cent higher rates than in
any other part of these United States, and that applies equally to
freight, express, and parcel post as they are established to-day. I
heard the discussion and have listened with much interest to the basis
of rates. The express table that was brought out and perfected by
Mr. Lane and his aids is one of the very best; it is scientific, but his
basis of rate making is as faulty as anything we ever had to do with,
because when we reach the one hundred and fifth meridian and go
westward the express rates are based on a ratio of 23 as against 10
that prevail east of the Missouri River. In my labors to improve
the parcel post I found one way, first, of taking the zones as you had
established them, eight Zones, by multiplying the pounds by the zones,
adding three, and getting the rates. Manifestly the railroads are
satisfied and the express companies are satisfied with the rulings of
1370 RAILWAY MAIL PAY.
the Interstate Commerce Commission as to express rates, and knowing
that the railroads get about 50 per cent of the earnings of the express
companies I made numerous comparisons of rates. I have made
numerous tables with 90 points, with 30 points, and with 10 points,
of which I brought one little 10-point table with me to show you how
it works out. t *
In this case, knowing that the railroads are satisfied with the rates
that are given them by the express companies, one-half, I would take
that as a base rate. Here is a rate from Omaha to New Orleans;
the rate per hundred pounds on express is $4.10. The parcel-post
rate would figure out $6,02, if you had the 100 pounds weight limit.
You can ship 50 pounds, or you can multiply the five 20-pound
rates. Take the $4.10 rate, of which the railroad gets $2.05, and
I say pay the railroads not $2.05, but 50 per cent Tigher; OI 2.Il-
other $1.02% on top of the $2.05. Then, at the Postmaster Gen-
eral’s foolish low rate of $1.04 per hundredweight for 150 miles,
for which he now assumes he is paying the railroad 80 cents, he keeps
the whole of it this time and the total rate would be $4.12 as against
the express rate of $4.10. Now, you have paid the railroads 50 per
cent more than they are getting from the express companies to-day
and you are making Mr. Burleson's rate 80 cents greater than before,
because he does not divide with anybody on his $4.10 rate or the 100
pounds. In the fourth zone it would be 4 times 100 plus 3, or $4.03.
Mr. Burleson’s rate on that would be $6.02. The railroads com-
plain of being overburdened with parcel post. I deny it. I do not
believe there are chumps enough in the country who will pay $6.02
to the post office when the express companies will carry it for $4.10.
If it happens to be second class, they get 25 per cent off by express,
so that in thousands of cases I could enumerate you will find the par-
cel-post rates to-day are 200 per cent and more higher than the ex-
press rates. That applies to territory east of the Missouri River.
When you go west of the Missouri River in territory where the .
ratio is 23 to 10, it is a different story, because there they are pretty
nearly equal. There, where the post office would charge $6.02, the
express rate is $6.30. An express rate worked out on the basis I ex-
plained to you, to give them 50 per cent more; and applying Mr.
Burleson's 100-pound rate would be $5.77 as against the present ex-
press $6.30 and against the parcel post of $6.02. My rate again in
this case, multiplying the pounds by the zones, would be 5 times 100
plus 3, which would be $5.03, whereas the other is $6.30 and $5.77,
respectively.
I have come here for the very purpose of seeing if we could not
get something done, because I can not get Mr. Burleson or anyone
else to listen to me. I tried going before the Interstate Commerce
Committee and the Post Office Committee, and this is as far as I have
gotten. In the determination reached in your parcel post investigation
you have stated that there is an overhead charge on every parcel of
3 cents per parcel, so I added that to each, and it further does this:
It prevents the reshipping without the penalty of at least 3 cents,
whereas at Mr. Burleson's rate you can ship to every one of the ter-
ritories beyond the third and save 95 cents on every hundred pounds.
That is to say, he multiplies on his first pound, so you can ship one
hundred 1-pound packages very much cheaper than you can ship a
RAILWAY MAIL PAY. 1871
100-pound package, while it ought to be the reverse. They appar-
ently do not exercise the least bit of common sense, outside of our
friend, Mr. Stewart, here, and he knows I am right if he dares say so.
Mr. Stewart is one of the Republicans they have not dismissed be-
cause he has too much knowledge and brains; they need him. If there
are any questions you want to ask further I will give you more data.
The CHAIRMAN. No. We are glad to have that.
Mr. KINDEL. If you want to find out the lowest express rate, take
25 per cent off on all eatables, which rule is not permitted on the par-
cel post rate. The express rates are so low in the East that you can
ship to-day from New York to Des Moines, Iowa, 100 pounds (5
20-pound packages), and when it gets to Des Moines throw it into the
post office, and it will take five 150-mile rural routes, and you will
save over $5 on combination express and parcel post as against the all
parcel-post rate. .
Mr. LLOYD. In your judgment, does the express company get to
much or too little for its service?
Mr. KINDEL. I think in parts of the country they get too little.
In the eastern part I think the rate is abnormally low, and I think
in our section it is so high that they knock themselves all out of
business. Even the parcel-post rate is low on the 150-mile hauls.
We do not want rates too low any more than we want them too high.
To-day, from Denver to Newcastle, Colo., the freight rate is $1.40
per hundred, first-class rate. By parcels post we take the freight
trains off and give you all baggage cars, and put it into the parcels
post because we do it for $1.04. We talk about building tunnels to
make freight rates cheaper. We do not need to. The same condi-
tion as to rates prevails all over the West, and I am glad to say I
have the attention of the Senators. I am glad to bring it to your
attention, for the truth can not be suppressed much longer.
Mr. LLOYD. I asked you the question whether in your judgment
the express companies are receiving too much or too little, and
you answered in some cases too much and in some cases too little.
Would it be safe to base the mail rate on the express rate, or, in
other words, to pay the railroad companies for carrying the mail
about what they are paid for carrying the express?
Mr. KINDEL. First I would ask you what base you take, whether
1 pound, 10 pounds, or 100 pounds? -
Mr. LLOYD, I am not taking any base, but the general proposition,
If we pay the railroad companies as much for carrying the mails
per hundred pounds as we pay the railroads for carrying the ex-
press per hundred pounds, would that be fair?
Mr. KINDEL. Well, I would give them more, especially if they
handle the parcel post.
Mr. LLOYD. If you make the mail rate less than the express rate.
Mr. KINDEL. I would not do that. - *- -
Mr. LLOYD. Everything would go by mail in that event.
Mr. KINDEL. You can equalize these rates just that way, as I tell
you.
Mr. LLOYD. I am getting at the other question. From your knowl-
edge of the express rates, if the railroad companies get as much for
carrying the mails per hundred pounds as they do for carrying the
express per hundred pounds, on an average, is that just 7
1372 RAILWAY MAIL PAY.
Mr. KINDEL. I do not see why it would not be fair, why they could
not carry it as cheap for the Government as for express companies,
under similar circumstances and conditions. -
Mr. LLOYD. Why they do not at the present time.
Mr. KINDEL. I do not think they are getting paid at all for what
they are doing on parcel post according to their statement.
Mr. LLOYD. You are speaking of the parcel post?
Mr. KINDEL. Yes. -
Mr. LLOYD. I am speaking with reference to all mail.
Mr. KINDEL. I do not know anything about that.
Mºllow. You have not studied the question of railway mail pay
at all?
Mr. KINDEL. No; I have not.
Mr. LLOYD. Except from the relation of parcel post?
Mr. KINDEL. Except in the relation of E. merchandise traf-
fic. I oppose 1-cent postage rate until we get through with the
other matter. - -
Mr. BRADLEY. Observing your comments in regard to Commis-
sioner Lane's project of express rates, that they were very scientific
in construction, although the base was not acceptable, and remember-
ing that that scale allows 21 cents for the first pound to the express
company, while the parcel-post rate is based upon a 3-cent overhead
charge such as you have used in your schedule, I would like to know
what your opinion is as between these two primary rates? . -
Mr. SIGINDEL. The express companies insuring and making de-
livery was the cause of the Interstate Commerce Commission’s lib-
erality to them, but I believe that business ought to go through the
Post Office Department.
Mr. BRADLEY. Would it lead you to think that the 3-cent overhead
charge was adequate? - -
Mr. KINDEL. No; hardly. I would make that greater, to my mind,
as I see it. But I take it because of reports by Senator Bourne and
others. -
- The CHAIRMAN. We recommended a 5 per cent overhead charge.
Mr. KINDEL. There are a lot of these rates that I think are abnor-
mally low, especially since he eliminated the 50-mile distance. Sen-
ator Bristow showed that very ably on the floor of the Senate the
other day. To-day, gentlemen, the mail-order house and the express
companies are making a carrier out of the Post Office. The Sears
Roebuck people, of Chicago, engaged quarters in Denver for which
they are paying $900 a month and which they are not occupying.
I pointed out to them what they were going to run into on freight
rates, and they are leaving the store vacant. They can better afford
to do business from their Chicago store and redistribute by parcel
post from Denver.
Mr. LLOYD. What is the necessity for paying $900 a month?
Mr. KINDEL. They made a contract, and the other party would
not release them. They are still continuing to pay $900 a month.
The Suit & Cloak Co. of New York are doing that very thing,
putting their stamps on their goods before they leave New York by
express, and when they get to the different points they are distributed
by mail.
'Nº. TUTTLE. Do they have distributing offices at these points?
RAILWAY MAIL PAY. 1373
Mr. KINDEL. Yes; and if a man will study that thing, on every 100
pounds he will save 95 cents. *
Mr. Turne. Is that the general custom of the mail-order house
to-day ! * *
Mr. KINDEL. Yes; I have been pointing it out to them. They will
make a tool of the Post Office. I do not think I have anything fur-
ther to say, Mr. Chairman.
Mr. STEwART. I have one other matter I want to present. The
question has been broached as to what is the monetary value of these
differences between the mail and express services. I have hoped the
railroad representatives might submit something on that, but they
did not do so this morning. The chairman asked me if I would do
my best in getting information, and I have this to submit. I have
here a statement from Exhibit No. 28 of the Interstate Commerce
Commission, express tables of revenue and expense showing summary
of total amounts paid to the railroad companies by express companies
for the fiscal year ended June 30, 1911, and per cent of the several
items to the total amount paid. The total express privileges, 1911—
shown by the Interstate Commerce Commission's statistics of ex-
penses, preliminary abstract—are placed at $73,956,450. That total
amount is not yet accounted for, but the tabulation up to date shows
this as the basis of the total involved. In this tabulation of $73,-
371,161.41, $69,429,471.65 was paid for what are known as express
privileges. As I take it, that means the amount which the railroad
companies receive from the express companies as their share of the
express charge. So that something over $69,000,000 of the $73,-
000,000 is represented by this division of the express charge. The
balance of it is scheduled as total other charges, $941,219.76. I take
it that that amount represents the value to the railroad companies of
the particular services which they render the express companies. It
is itemized as follows, with their monetary value: Rent of buildin
and grounds, $551,852.61; joint messenger service, $122,272.68; freight
charges, $44,743.31; car mileage and rental, $844.99; switching serv-
ice, $58,270.22; miscellaneous charges, $163,235.95; making a total of
$941,219.76, which is 1.34 per cent of the total amount received by
the railroad companies.
The CHAIRMAN. The entire revenue of the railroad companies?
Mr. STEwART. Yes; the revenue the railroad companies received
from the express companies. It will be observed that these items
correspond in nature to some extent, at least, to the stated differ-
ences between these two classes of service. It covers the amount the
railroad companies receive from the express companies for rental
charges, rent of buildings, and grounds; it covers the amount they
get for joint messenger service and for the freight charges, and I
take it that these services are outside of the contract services. It
takes in car mileage and rental, Switching charges, and miscellaneous
charges. If we should go to the basis proposed in volume 8, it
eliminates the difference which now exists between the services with
respect to side and terminal service. I do not recall the other differ-
ences which have been named, but you will notice that the monetary
value of the differences I have named amounts to about $941,000
a year.
35797—No. 12–14—6
1374 RAILWAY MAIL PAY.
The CHAIRMAN. Was there not a different suggestion with refer-
ence to the liability?
Mr. STEwART. Yes, sir.
The CHAIRMAN. Liability for death or injury to a postal clerk?
Mr. STEwART. Yes, sir. On that point I have something to submit.
As I understand it, it has been claimed that the railroad companies
are not liable for any damages for injuries which may occur to the
express messengers. I notice that the case entitled “The Missouri,
Kansas & Texas Railway Co., National Surety Co., and American
Surety Co., of New York, plaintiffs in error, v. Ivolue B. West,
in error to the Supreme Court of the State of Oklahoma,” and
brought to the United States Supreme Court, has just been decided.
This was an action for damages by the widow of an express mes-
senger against the railroad company. The messenger died as a
result of injuries sustained by reason of a collision between a freight
train and a passenger train in which he was engaged in his employ-
ment. The deceased was a joint employee of the railway company
and the express company, his salary being paid by the express
company, which drew a bill each month for half the amount on the
railway company. -
The messenger had executed the usual contract assuming risk of
injury. In addition to that he contracted that he would ratify any
contract which the express company would make with the railroad
company limiting liability. This the State court held to be void,
as against the public policy of Oklahoma and in contravention of
the laws of the State of Kansas.
The railroad insisted that the messenger was an employee of a
railroad company and therefore subject to the Federal employees’
liability act. This was the question considered by the Supreme
Court, which, however, sustained the holding of the State court
that the deceased was an employee of the express company.
The material point of this case is that so far as the States of Okla-
homa and Kansas are concerned contracts of this nature are either
against public policy or in contravention of the statute.
While I have not looked up the decisions in other courts I am
inclined to think that we would find the decisions the same in all
the courts, that contracts of that kind are against public policy.
Mr. MACK. In that event I should think it probable that the ex-
press companies would necessarily stand by the contract. --
Mr. STEwART. They were not made party defendants in this case.
Mr. MACK. But I should think the effect would be, if the employee
won the suit, that the express company would be liable to the rail-
road company for the amount of damages under the contract, so that
the railroad company would not have any liability that was not
protected by the express company.
Mr. WoRTHINGTON. I think the contracts contain clauses throwing
liability on the express company for accidents to its employees.
Mr. STEwART. This is a direct adjudication that the railway is
always responsible to the messenger.
Mr. LLOYD. While that might be true as between the railway com-
pany and the general public, the railway company and the express
company have entered into a contract, and that contract is that the
express company will bear all such loss. Now, if there is a judgment
RAILWAY MAIL PAY. 1875
against the railroad company the express company would be liable to
the railroad company. If the judgment is against the express com-
pany, it is that which it is claimed is the liability of the express
Company. |
Mr. MACK. But in no case is the railway company liable, because
the express company has indemnified it. •
Mr. LLOYD. That is, it is not liable as against the express company
but against the general public.
Mr. STEwART. The judgment in this case was against the railroad
company. I do not mean to say that the railroad company can not
contract with the express company in such manner that the express
company will be liable to the railroad company if the railroad eom-
pany has to pay a judgment of this kind. The thing that impressed
me further in this case was that the usual procedure of that kind was
not followed—for instance, the railroad company did not bring the
express company into the case, which, under a contract of that kind
they had a right to do.
Mr. LLOYD. But the individual injury was settled by the railroad
company?
Mr. STEwART. But the railroad company could come right back
and bring the express company in as a party, so if the messenger got
judgment it would go against the express company also. -
Mr. Scott. They do not have to do that, because the express com-
pany agrees to save them harmless against any accident to their em-
ployees.
Mr. LLOYD. You would not say that an employee having sued a
railroad company and having secured a judgment from the railroad
company could now sue the express company?
Mr. MACK. No; but in case he had lost he would simply sue the ex-
press company.
Mr. LLOYD. I would doubt that very much, because I would say
the case was res adjudicata, was disposed of; the employee was in-
jured, he brought suit and lost.
The CHAIRMAN. General Stewart, in your suggested bill and sug-
gested rates, did you give any consideration whatever to express
charges in making up the suggested rate?
Mr. STEwART. No ; we did not.
The CHAIRMAN. No consideration?
Mr. STEwART. We did not have that data before us when we sub-
mitted those cates.
The CHAIRMAN. And your rates were based primarily on cost as-
certainment under Document 105, particularly Table 7.
Mr. STEwART. No; that can hardly be said, because you recall that
Dr. Lorenz submitted to the committee a proposed bill based on the
average passenger-car-mile revenue. We can only say that the rates
are related in a manner to cost, but not primarily so. We go upon the
assumption of Dr. Lorenz that the revenue per passenger-car mile is
a safe basis and thus avoid the expensive and elaborate process of
ascertaining cost each time.
The CHAIRMAN. So that the passenger revenue was more of a de-
terminant factor than any other one factor in arriving at your Sug-
gested rate?
Mr. STEwART. Yes, sir.
1376 RAILWAY MAIL PAY.
Dr. LORENZ. It is interesting in this connection to notice the fair
agreement, rather than the wide differences as we have seen them in
many cases here. We have heard to-day from the railroad repre-
sentatives that the railway mail pay committee estimated the express-
car-mile revenue to be twenty-three and a fraction cents and Gen-
eral Stewart has told us that his ascertainment is twenty-one and a
fraction cents, so we have the difference between them of less than
2 cents per car-mile. Of course, that amounts to a good deal, but
after all it is a margin that is somewhat less than the other differences
we have had.
Mr. WORTHINGTON. Our space figures are almost identical. The
difference arises from the revenue from express into which space was
divided. We took reports for November, 1909, received from the
railroads, giving the express revenue for that month, while, as I
understand it, General Stewart took one-twelfth of the express
revenue for the fiscal year ending June 30, 1910.
Dr. LORENZ. But he also took one-twelfth of the mail revenue for
that year. -
Mr. WORTHINGTON. Not necessarily. Where the express revenue is
available I think it should be used. -
Mr. SCOTT. The difficulty about that is in taking the average for
that 12 months. The actual traffic carried during the month of
November affected the car-feet space.
Mr. STEwART. Not in express service.
Mr. Scott. I mean it affected it relatively as compared with other
months; that is, November would not be a fair month so far as traffic
is concerned any more than any other month.
Mr. STEwART. You did not change the car space after November,
or before November, materially, did you?
Mr. Scott. The express-car space depends very largely upon the
revenue. Take the Pennsylvania Lines, for instance, while I am not
quoting the figures accurately, they will vary from $85,000 in one
month to $130,000 in another month on one system.
Mr. LLOYD. But you would use the same space in carrying it?
Mr. Scott. Not necessarily so at all. - -
Mr. STEwART. How is your space arranged for?
Mr. Scott. We just load the cars up. We have no authorized
space. We furnish whatever cars are necessary to carry whatever
the express company delivers to us.
Mr. WORTHINGTON. In the fruit shipping season, for example, we
ship º whole carloads by express, which take additional
cars, and we ship at times silk and horses, all of which affects the
amount of space which would be chargeable to express in any par-
ticular month.
Mr. STEwART. And that itself varies from month to month?
Mr. WoRTHINGTON. It varies some, but how materially I could not
S2, W.
Šir. STEwART. What do you call that space, dead space or dead-
head space?
Mr. Scott. We never heard of the terms until the advent of
document 105. .--~~
Mr. WoRTHINGTON. I would like to make a few remarks on the use
of comparative rates per ton-mile for express and for mail. I think
RAILWAY MAIL PAY. 1377
in discussing the express and mail rates on the ton-mileage basis we
are losing sight of a factor which is the principal one justifying a
lower ton-mile rate for express than for mail; #. is, as applied to
the entire traffic of either, this is the fact that in the mail service a
large part of the mails have to be conducted in the railway post-office
cars. The post-office facilities restricting the tonnage which the rail-
ways can carry in those cars and those cars also weighing, perhaps, 15
tons more of dead weight than the average express car. For that
reason I think any comparison on a tonnage-mile basis of express
and mail rates, taking the traffic as a whole, is not quite fair.
Mr. LLOYD. That would not be true of a storage car?
Mr. WoRTHINGTON. No; not true of a storage car.
Mr. LLOYD. Would it be true of an apartment car?
Mr. WoRTHINGTON. Yes. The car has the post-office facilities.
Mr. LLOYD. And the express in the same way?
Mr. WoRTHINGTON. Not in the same space. It might in the same
car, but the express part of that car would be available for much
greater tonnage than the mail portion.
Mr. LLOYD. What are you getting at # Is the weight of the car
the same? If part of it is used for mail and part for express, the
car would have the same weight? -
Mr. WoRTHINGTON. But the weight of the fixtures is certainly
chargeable against the mail and not the express.
Mr. LLOYD. The weight of the fixtures is not very much, because
the weight of the express fixtures are, perhaps, as much as the weight
of the mail fixtures, for I presume you would have a safe in connec-
tion with every express car.
Mr. WORTHINGTON. Yes. -
Mr. LLOYD. That would be pretty near as heavy as the mail.
Mr. BASKERVILLE. Not a stationary safe. We only have stationary
safes in a few cars, and the messenger carries a little hand safe.
Mr. MACK. Adverting to the question of rates to the proposed
bill I would like to refer to the Denver & Rio Grande Railroad.
For instance, Document 105 shows, on the space used by the depart-
ment, a gain of $5,206 a month. On that basis the company would
have been cut $62,400 a year. Under the proposed basis in volume
No. 8 the loss to that company would be twice that, or $124,800 a
€2,I’.
y Mr. SNEAD. Ishould like to refer for a moment to General Stewart's
remarks about $941,000 paid the railroads by the express companies,
to say that this $941,000 does not include the amounts paid by the
express companies to joint agents at stations where the agent is also
the express agent. Neither did it include joint service of trainmen
and baggagemen, because it did not include the payment to the
employees where it was made by the express companies directly. In
making this return the companies simply report in accordance with
the commission's question, amounts paid to railroad companies, and
the $122,000 did not include all payments for joint messenger service.
That $122,000 did not include all the payments to joint employees.
Mr. STEwART, What relevancy would that have? -
Mr. SNEAD. It would increase the relevaney. There must be a
man on there. -
1378 RAILWAY MAIL PAY.
Mr. STEwART. Does it save something which the railroad com-
pany would have to pay, or is it something extra the express com-
pany pays over and above what the railroad company pays?
Mr. SNEAD. It saves, unquestionably, what the railroad company
has to pay. th
Mr. STEwART. How can you make that definite?
Mr. SNEAD. By my own experience?
Mr. STEwART. Give us an example? -
Mr. SNEAD. I do not know that I can give you an absolutely accu-
rate example, for it has been a good many years since I was in the
express business; but I do know, of my own knowledge, on many
runs where we would pay a messenger, for example, $75 a month
where the express and baggage business was not so heavy but that
One man could handle both, the railroad company would withdraw
the baggage man, and one man would perform the entire service and
receive $80 a month, each company dividing the amount.
Mr. LLOYD. Would they deduct that amount from the gross earn-
in: of the express company in settling with the railroad company?
r. SNEAD. No; there were different methods employed.
Mr. LLOYD. How does this come into the question between the rail-
road and the express company ?
Mr. SNEAD. It does not. That is what I was attempting to point
out, that if the express company would pay this joint employee $40.
direct, it would not come into the railroad account. It would not be
covered by these figures Mr. Stewart has given.
Mr. McCAHAN. When the salary of a station agent is considered,
is not the express business first taken into consideration?
Mr. SNEAD. I think that is true where the station agent is a joint
employee. : -
Mr. STEwART. Do you think it would probably be as much as this
item—joint messenger service, $122,000?
Mr. PEABODY. Do you mean by that the commissions paid to the
station agent would amount to that sum ? -
Mr. STEwART. No. The amount I stated was what the railroad
companies saved by these commissions paid to joint employees.
Mr. SNEAD. Including station agents I should say it was a great
deal more.
Mr. STEwART. How much more?
Mr. SNEAD. That is a matter of guesswork. No one, so far as I
know, has any figures.
Mr. LLOYD. My understanding is that in most of those cases the
railroad company employs the man and pays him and the express
company employs a man and pays him and what the express com-
pany pays would go into the express company’s account, and what
the railroad company pays goes into the railroad company’s account,
and it would not affect this question at all.
The CHAIRMAN. Two years ago the express companies had 50,000
employees who attended to the express business only and 35,000 em-
ployees who had joint service—express, railroad, telegraph, or tele-
hone. ---
p Mr. LLOYD. There are 35,000 employees, as I understand it, that
have two paymasters; the railroad company pays the employee as
its employee and then the employee gets another salary from the ex-
RAILWAY MAIL PAY. 1379
press company. Now, there are some of these that are paid jointly,
and that is accounted for in this item here.
Mr. SNEAD. For instance, at nearly all these stations the railroad
company controls them; they have the hiring of the employee and
they will say the service at such a station is worth, for instance, $80
a month—that is, the joint service for handling express, baggage,
mail, and everything. The express company ordinarily allows 10
per cent commission on all business handled in and out of offices
where they pay on a commission basis. Suppose the express commis-
Sion at that particular point should average, for a period of perhaps
six months or perhaps a year, $10 a month. The railroad company
having fixed the salary at $80 per month would say to the man, “We
will pay you $70 a month and the express company will pay you $10
a month; that is, your commission from the express company will
average you $10 a month.” -
Mr. LLOYD. Es not this the point you make: Suppose that the sal-
ary of an individual is $100 a month. The railroad company pays
him $75 a month, the express company pays him $25 a month. Does
not the railroad company figure it out something like this, that if the
express company did not pay him that $25 for the service that he ren-
dered the express company in order to retain that man would be re-
quired to pay him $100?
Mr. SNEAD. Or something additional to the $75.
Mr. LLOYD. Now, coming back to the other feature, if this is the
situation the railroad company has paid him for all the services he
has rendered the railroad company and the express company has
paid him for all the services he has rendered, and it seems to me that
it has nothing to do with this question at all.
Mr. MACK. Except, Mr. Lloyd, if the express company did not pay
that man the railroad company would have to. -
Mr. LLOYD. It might be, because possibly that man could not be
secured for a $75 salary.
Mr. MACR. It is always calculated by the railroads, where that
character of service is concerned, such as Mr. Snead has pointed out.
where the express company pays part of the salary, that it is an ad-
vantage to the company to that extent. -
Mr. LLOYD. It saves the railroad company just the amount that the
express company pays?
Mr. MACK. That is the point exactly. -
Mr. LLOYD. But that amount that is paid for by the express com-
pany is paid for services rendered to the express company ?
Mr. MACK. Within the time which the railroad company pays for.
Mr. STEwART. Something was said this morning about the in-
terest that railroad companies might have in the express companies
and which interest might influence the question of rates and contracts
between them. In that connection I want to submit this, in addition
to what was said. This is Exhibit 36 from the Interstate Commerce
Commission calculation which shows that $54,890,950 in stocks and
bonds of railroads are owned by express companies. That is the
other side of it.
The CHAIRMAN. At this point we will take an adjournment until
to-morrow morning.
(Thereupon, at 5 o'clock p. m., an adjournment was taken until 10
o'clock a. m. Thursday, April 2, 1914.)
1380 RAILWAY MAIL PAY.
THURSDAY, APRIL 2, 1914.
CoMMITTEE on SECOND-CLASS MAIL MATTER, ETC.,
Washington, D. C.
The committee met, pursuant to adjournment, at 10 o'clock a. m.
Present: Hon. Jonathan Bourne, jr. (chairman), Senator John W.
Weeks, and Representatives James T. Lloyd and William E. Tut-
tle, ir. -
'Ali of the witnesses, with a few exceptions, attending the meeting
of the previous day were present and all indicating a desire to be
heard, and those subsequently participating in the discussion were
duly sworn by the chairman.
The CHAIRMAN. Mr. Mack, have you your statement ready for the
Missouri Pacific?
Mr. MACK. Yes, sir. -
Mr. STEwART. Mr. Chairman, before we go into this matter there
is some additional information I want to submit in connection with
- our discussion last evening as to the difference between the two
classes of service and the monetary value of such differences.
The CHAIRMAN. Which two classes of service?
Mr. STEwART. The mail and express. Reference was made to the
contracts between the express companies and the railroad companies,
exempting the railroad companies from liability in case of accident
or death to the express employees. I would like to know whether
the railroad representatives have any information to submit on that
point—as to its value to the railroad companies?
The CHAIRMAN. You mean in dollars?
Mr. STEwART. Yes. *.
Mr. PETERs. No; we have not. We attempted to get up a state-
ment for the railroads showing the amount they have paid out for
personal injuries to postal clerks and we could not get the informa-
tion in any intelligent shape to be sufficiently reliable. I think it
was not as high as most of us had thought, but it was impossible to
get the information from all of the roads, and it was so incomplete
that we never worked it up. I did not bring those papers with me.
That was some two or three years ago that I attempted to collect the
information, but I was not successful. I do not know from my own
experience whether we have had to pay anything for personal in-
juries to an express messenger. Sometimes a railroad may have a
judgment rendered against it in a court, but under the contracts
with the express companies the express companies pay the bills after-
wards, so that the railroad company is relieved. ---
The CHAIRMAN. Have you the information as to what the rail-
roads have to pay because of injuries to postal employees?
Mr. PETERs. No; I could not get it complete enough; from the few
roads I was able to get the information. I should say it was some-
thing like $200,000 a year.
The CHAIRMAN. Have you the information, General Stewart?
Mr. STEwART. I have information as to the amount we paid in
1913 on account of the death of clerks who were killed in accidents
or who died during the year as a result of accidents and the amount
paid for acting clerks in place of clerks who were injured and who
RAILWAY MAIL PAY. 1381
were given leave of absence for periods not exceeding two years, as
allowed by the statute. The law allows us to pay $2,000 in case of
death, and it also allows us to put on acting clerks in place of clerks
who were injured and to give leave of absence within a period of
two years. If that will be pertinent information, I will submit the
figures. Six hundred and eighty-eight clerks were granted leave for
one year or less, and the acting clerks employed in consequence received
$84,826.21. Forty-one clerks were granted leave during the second
year, and the acting clerks employed in consequence received $5,-
268.76. That makes a total amount of $90,094.97 paid in 1913 for
injury. Four clerks were killed outright and five died as a result of
injuries, a total of nine clerks, whose representatives received $18,000.
The total expenditure under the appropriation for 1913 was
$108,094.97.
Mr. PETERS. Those payments would not prevent the clerks from re-
covering damages from the railroads?
Mr. WORTHINGTON. I recall a single instance on the Oregon Short
Line within the last year where the road paid about $10,000 for the
death of a clerk. -
The CHAIRMAN. Now, Mr. Mack, we will hear from you.
STATEMENT BY MR. H. E. MACK.
The statement submitted by the Post Office Department at the
hearing March 24, 1914, before your committee, concerning reports
made by the Missouri Pacific system and also the Denver & Rio
Grande, Texas & Pacific, International & Great Northern, and St.
Louis Southwestern Cos., as typical of the reports by the railroads in
general, contains reference to no errors of fact in such reports, but is
an ea planation of the department’s action in detail in changing the
zeports submitted by the companies as to the facts, and classifying
some mail space as “dead space ’’ and charging it to passenger space.
I will ask you to keep in mind throughout that you are not consid-
ering errors in reports made by the railroads, for, as to these com-
panies, the facts are beyond controversy and can not be disputed, that
the mail space reported in full railway post-office cars and apartment
cars was in actual private and exclusive use of the Post Office De-
partment, so reported by conductors during the period fixed by the
department and checked in tabulation as to the length of mail cars
and apartments by the companies’ car records from the numbers of
the cars reported in actual service; the space reported as baggage-car
overflow, referred to in the statements, and the storage-car space on
the other routes was based on reports made by conductors or bag-
gagemen, being the daily average, representing the varying higher
or lower space used day by day. In some few instances the space
reported was compulsorily hauled by the companies deadhead, essen-
tially due to its use by the Post Office Department; but it is a fact
that a portion of this space was charged by the department to pas-
senger service instead of mail, notwithstanding none of it was in use
for passenger service.
This so-called “dead space ’’ is that proportion of mail space which
was in actual use, or directly hauled in connection with such use, and
the Post Office Department disowned after its use.
1382 HAILWAY MAIL PAY.
It was not space which was not in use by the Post Office Depart-
ment, or incidentally hauled for the Post Office Department, but
what, on the space basis of pay proposed in Document No. 105, the
department would not be willing to pay for under that plan; but
upon the question of underpay to the railroad, it must be considered
as operated for the mail service to be comparable with the space used
directly and incidentally in the passenger and express service simi-
larly reported, or the usefulness of the figures for purposes of
comparison are destroyed altogether. The same rule must apply
throughout or there would be no proper ratio for comparison.
There is just one fair basis of comparison, and that is the exact
service with the mail, express as well as the passenger service, as it
actually existed during the month of November, without any change
in the Space assigned to each at any time by anybody.
“Dead space ’’ is based also upon units of a single car-foot mile,
now discarded by the department. ~.
Of course, average space is not sound for a space basis, for the
maximum must be provided to take care of the business at all times.
While this detailed data have been in the department nearly four
years, and Document 105 should have contained it for all compa-
nies, I have endeavored in only the four days I have had it for our
lines, as a typical statement, to classify and rearrange it in four
statements in tabular form, comparing the route so as to show
through-car runs, that it may be clear to you, as would not have been
the case as segregated by routes in paragraph form as submitted by
the department.
Before proceeding it may be well to dispose of a few errors in the
department's statement:
Route 147041. The department corrects its error on this route of
609,804 car-foot miles; but the calculation is in error, as the amount
is 627,786 car-foot miles. This would make the total error of the
department, in car-foot miles, 907,112 instead of 889,129.
Route 145034. The original error on this route, as to trains 410 and
425, was corrected by letter of August 31, 1910. -
Route 145062. The original error on this route was corrected in
letter of September 1, 1910.
Route 147051. Not our company.
Route 145042. Company did not report five car-feet of space on
this route, as department’s memorandum indicated.
Route 1450.39. Texarkana-Shreveport. The department states there
was no Sunday service on this route, but the schedules of the Railway
Mail Service show, for both trains 11 and 12, such service. Proceed-
ing to the four statements submitted, as follows:
Statement No. 1. Sunday cases affecting 11 short-line trains.
Statement No. 2. Incidental haul of cars affecting five short-line
trains.
Statement No. 3. Apartment-car service.
Statement No. 4. Full railway post-office service.
RAILWAY MAIL PAY. 1383
STATEMENT Noº.
Details in cases where mail apartment cars were necessarily operated on Sun- *
days, but without a mail clerk, the mail in 8wch cases being in care of the
train baggageman.

• - º & Mail
Route * , Dis– Train -
No. Points between— tance. Nos. º: Car-foot miles.
ent.
\ –-sº
MISSOURI PACIFIC–IRON MOUNTAIN. Feet
• Č67.
145042 | Sedalia-Warsaw - - - - - - - - - - - - - - - - - - - - - - - - - - ... . 42.30 637–636 20 6,768
145047 || Jefferson City-Bagnell. . . . . . . . . . . . . . . . . . . . . . . . 45.31 641–642 16 5,799 -
149056 | F. & S. Junction (n.o.)-Monroe . . . . . . . . . . . . . . 38.99 535–536 16 4,990
147067.| P. B. & W. Junction (n.o.)-Benton. . . . . . . . . . 44.65 941–942 ~ 23 8,215
147004 || Halley-Warren. . . . . . . . . . . . . . . . * - - - - - - - - - - - - - - 44. 63 825–826 6,426
* 147044 | McGehee-Halley. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 12 825–826 18 |{1,313} 8,774
147060 Arkansas City-Trippe. . . . . . . . . . . . . . . . . . . . . . . . 7. 19 828–827 1,035
147002 | Helena-Clarendon. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47. 34 829–830 15 5,680 40,226.
ST, LOTUIS SOUTHWESTERN. y
147026 I Little Rock-Altheimer........................ 42.90 31– 32 26 8,923
150164 || Corsicana-Hillsboro... . . . . . . . . . . . . . . . . . . . . . . . . . 41. 78 503–504 25 8,356 17, 279.
. TEXAS & PACIFIC. f
149017 | Cypress-Shreveport........................... 86. 42 75— 76 25 17,284
149034 || SimmeSport-Bunkie. . . . . . . . . . . . . . . . . . . . . . . . . . 25. 79 81— 82 2,26.
149035 || Junction-Marksville. . . . . . . . . . . . . . . . . . . . . . . . . . 9.04 || 81–82 11 || 795; 5,313
149059 || SimmeSport-Melville.... . . . . . . . . . . . . . . . . . . . . . . 25.56 81– 82 2,249
149039 || Pexarkana-Shreveport. . . . . . . . . . . . . . . . . . . . . . . . 75. 11 41–42 25 15,022
- 37,619.
Total-----------------------------------|---------------------------- 95, 124
This list comprises the instances where the mail-apartment-car space was
Cperated on Sundays (one case on Saturday) without postal clerks; but the
train with all of its equipment, including the mail-apartment car, is run on
Sundays, and the mail space is therefore compulsorily hauled, because of the
private apartment for mail which is in the car for the convenience and use of
the department at all other times.
Mails were carried on the trains as closed pouches nevertheless.
In Some cases the mail is actually placed in the mail apartment just the
Same On Sundays as it would be on week days, but the baggageman puts it in
and takes it out on Sundays instead of the postal clerks. This was explained to
Mr. Stewart in a letter on September 12, 1910, copy attached, in one case illus-
trating this.
The instances of this kind only represent 11 trains each way, Sunday only,
a total Car-foot miles for November, 95,124 feet.
SEPTEMBER 12, 1910.
Hon. Joseph STEwART;
Second Assistant Postmaster General.
DEAR SIR: In answer to your letters of August 4 (C. H. M.) with regard to
Sunday service trains 538–535 and 536–537, mail routes 149054 and 149056,
would Say that while true the postal clerk who runs on these trains week days
does not run on Sundays, the same car in the make-up of the train is necessarily
run on Sundays, and the closed mails which are carried are carried in the mail
compartment although in charge of the company's employee instead of the
postal clerk,
The requirement to furnish an apartment car six times a week perforce re-
quires furnishing and hauling it seven times a week.
Very respectfully,
(Signed) H. E. MACK.
N *E*
MIssou RI PACIFIC RAILWAY Co.,
ST. LOUIS, IRON MoUNTAIN & SOUTHERN RY. Co.,
. Ferriday, La., September 7, 1910.
Mr. H. E. MACK,
* General Agent Mail Department, St. Louis, MO.
DEAR SIR: Referring to your special letter August 30, regarding mail handled
on trains 538, 535, 536, and 537 on Sundays between Monroe and Farmerville,
1884 RAILWAY MAIL PAY.
the same mail-apartment car is tººd On Sundays as on other days, and the mail
-is not handled in baggage car on Sundays, but is handled in the mail apartment.
Mail is handled as follows: T -.
No. 538–1 pouch from Farmerville for train 806 at Felsenthal, 1 pouch
from Farmerville for 535 at Felsenthal. -
No. 535—1 pouch from train 538 for Monroe. -
No. 536—1 pouch from Monroe for train 537 at Felsenthal, 3 sacks paper
from Monroe for train 537 at Felsenthal. :
No. 537—1 pouch from train 536 for Farmerville, 3 sacks papers from train
536 for Farmerville, 1 pouch from train 805 for Farmerville, 5 sacks papers
train 805 for Farmerville.
Yours, truly, --
(Signed) C. M. ANDREW s, Superintendent.
STATEMENT NO. 2.
Details in instances reported by the companies where deadhead movement of
postal cars was compulsory and necessary operating incident of their use by
the Government in connection with the COmpanies' Operation of train service.

Length
Route - - ... Train Of Car-
No. Termini. No. apart- º
ment. miles.
MISSOURI PACIFIC-IRON MOUNTAIN.
Feet.
145040 C. & W. JC.-Joplin -------------------------------------------------- 631–632 22 21, 175
145100 Webb City-Granby------------------------------------------------. 631–632 |ſ. 24,070
Trains 631 and 632 over the two routes named, haul the mail apart-
ment car operating between Topeka and Fort Scott. The Railway
Mail Service requested and the company consented to the bag racks
being hung, and the company was required to heat the car south of
Fort Scott, so as to be in readiness for the clerk when he entered the
car on the return trip at that point. This car was in use therefore in-
cidentally to that extent. -
155040 || Auburn-Falls City-------------------------------------------------- 137–138 23 34,767
In this instance the train and car run between Omaha and Falls
City, but the postal clerk occupies it only between Omaha and
Auburn, route 157038. It is necessarily hauled by the company as a
part of the train to Falls City, and is a necessary incident to its use by
the Government in connection with our train service.
155091 Kansas City-OSawatomie-------------------------------------------. 103
155031 OSawatomie-Yates Center --------, - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 104
The car on these trains is occupied by the mail clerks south of Yates
Center, but is run through between Yates Center and Kansas City as
* necessary incident of train operation to avoid transfers at Yates
enter.
3
0
08,720
121,140
TEXAS & PACIFIC.
150073 | Whitesboro-Fort Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31–32 25 | 106,995
This mail apartment car is a part of the train operating between
Texarkana and Fort Worth, but is used by the postal clerks between
Texarkana and Whitesboro, route 150011, and is necessarily run
through in connection with the operation of the train.
149002 | Shreveport-Marshall.------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 57–58 25 65, 100
This car is part of the equipment of train running from Texarkana
to Marshall via Shreveport, and was occupied by the mail clerk be-
tween Texarkana and Shreveport, route 149039, and was run through
as incident of the train operation. The car is now in Service be-
tween Shreveport and Marshall.
Senator WEEKs. What do you mean by “incident of the train
operation ”?
1Mr. MACK. It was part of the train and necessarily a car having
an apartment had to run through. In the case of a full R. P. O.
car, if the department discontinued its use, the car could be cut out.
That is not true of the mail-apartment car. It must be operated
through as a part of the train and if the department does not use it,
for reasons of its own, it does not relieve the necessity of carrying that
Space. *
Senator WEEKs. That train always carries mail?
RAILWAY MAIL FAY. 1885
Mr. MACK. Yes, sir. It ran through and the closed-pouch mail
was carried in the mail apartment in care of the baggagemen between
Shreveport and Marshall. At the present time the mail clerk is in
charge of that space.
Mr. McBRIDE. At the time the statement was made in 1909 was
the mail actually carried in the apartment car on Sundays between
Shreveport and Marshall?
Mr. MACK. Yes, sir. That is paper mail from Texas and Pacific
mail for the east forwarded via Marshall on the W. S. & P. The
letter mail was forwarded via St. Louis and Fort Wayne, Ind., to
connect with the 20-hour train on the Pennsylvania Railroad.
STATEMENT NO. 3.
The apartment cars were all in the exclusive use of the Post Office
Service, as reported, and hereafter explained and quite generally
had been in use for years, but under document 105 the space would
have been cut down as indicated by “dead space,” and this is an
indication of what would happen generally to the short lines on a
space basis. Where it was estimated that a 15-foot car would be
sufficient, instead of a 20-foot car in use, and an error was made, and
it would develop from experience that an error was made, the com-
pany would have to go to the expense of changing the car on account
of the error by the Postal Service.
The department, in a number of instances in the statements, has
not recognized the full space through over the operating run of the
car, although such cars are run through and can not be changed at
different points en route from a 25 to a 20 foot car, and then to a 10-
foot car. An important transportation principle must here be recog-
nized that through operation is a necessity in connection with train
service itself, and especially with fast-train service, and a change to
different size cars could not be made without impairment of the
service, resulting from train delays that would follow from trans-
ferring not only the mail but baggage and express, and sometimes
passengers also, in the case of apartment-car service.
In some instances the department demand for 30-foot mail service
compels the railroads in furnishing it to actually haul a 60-foot car,
as when 30 feet of space is required by the department, it would so .
far encroach upon the space in the car as to not leave sufficient re-
maining space in the car for any company use. Where possible,
however, to use this space in the opposite end of the car for baggage
or express it is done, but only those cases are reported to the depart-
ment where the space referred to could not be used at all.
In many cases the department changed apartment-car space in use
to “dead space,” although reports actually show overflow mail in
baggage car in such train. -
The overflow mail in baggage car in all but two cases was thrown
by the department into “dead space” and classified as passenger
space, although only, the daily average was reported, and in many
cases the company might very fairly have added a charge on return
of the car to correspond to the outward use, because when that is not
done the entire “dead space” returning was all charged to the pas-
º and express service, although the car was operated for general
Iſlall UIS®.
1386
RAILWAY MAIL PAY.
*
As the statement submitted shows, every foot of space reported by
the companies was properly charged by the companies to mail service
and was in actual use by the department, as fully explained in state-
ment submitted.
Statement No. 3,

Length
ºf Clºsed Clºsed
- as “dead || * as “dead -
apart- S ace” Daily à08 y?
ment º: average sº d
* e operated ch.ed overflºw ch Il d
Mail Termini Train and in tº . n- mail, to arge
route. s Nos. exclusive"...P. actually .P.
private º, ... garrie º º
leiði. ºff; º; öß
rºº Depart- gage CarS. Depart-
ment. ment. ment.
MISSOTURI PACIFIC–IRON MOUNTAIN.
Feet. Feet. Feet. Fleet.
145001 | St. Louis-Tower Grove.--------------------|----------|----------|--------------------|----------
145070 Tower Grove—K.B. Conn. . . . . . - - - - - - - - - - - - 23 26 6 ----------|------ * * * *
147041 K. B. Conn–Bismarck. . . . . . . . . . . . . . . . . . . . . 22 ----------|---------- 2 2
145034 || Bismarck-Columbus. . . . . . . . . . . . . . . . . . . . . . . | 422–423 26 6 --------------------
145027 | Cairo–Poplar Bluff. --- - - - - - - - - - - - - - - - . . . . . . 431–436 20 5 --------------------
145001 || Kansas City–Pleasant Hill - - - - - - - - - - - - - - - - - 214–215 1 30–25 *25 ----------|----------
145040 | Pleasant Hill–Joplin. . . . . . . . . . . . . . . . . . . . . . . 207-208 ----------|----------|----------|----------
145001 || Kansas City–Pleasant Hill. . . . . . . . . . . . . . . . . 212- ----------|---------- 5 5
145040 | Pleasant Hill–Joplin. . . . . . . . . . . . . . . . . . . . . . . 209 ----------|----------|----------|----------
145001 || Jefferson City–Cole Junction---------------|----------|----------|----------|----------|----------
145093 Cole Junction—Myrick Junction- - - - - - - - - - - - 5 19 4 9 9
145001 Myrick Junction—Kansas City. . . . . . . . . . . . . . 6 19 4 8 8
145093 l Boonville–Marshall. . . . . . . . . . . . . . . . . . . . . . . . 631 [-...------|---------- 5 1. 25
- 632 - . . . . . . - - -'l - - - - - - - - - - 5 . 83
147009 || Nashville–Hope. . . . . . . . . . . . . . . . . . . . . . . . . . . . § 16 1 ----------|----------
847 --------------------|----------|----------
- 848 --------------------|----------|----------
147044 McGehee-Halley. . . . . . . . . . . . . . . . . . . . . . . . . . . 825 ----------|----------|----------|----------
147004 || Halley–Warren. . . . . . . . . . . . . . . . . . . . . . . . . . . . 826 18 3 ----------|----------
147017 Smithton–Pike. - - - - - - - - - - - - - - - - - - - -- - - - - - - § 18 3 ----------|----------
147041 || Poplar Bluff-R nobel. . . . . . . . . . . . . . . . . . . . . . . 9 21 1. 4 4
147012 || Knobel—Wynne. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 21 1 4 4.
147012 || Wynne-Helena. . . . . . . . . . . . . . . . . . . . . . . . . . . . ; 21 1 --------------------
147023 || Memphis—Bald Knob . . . . . . . . . . . . . . . . . . . . . . ; 20 5 l----------|----------
205 16 1 3 3
202 ----------|----------|--------------------
Memphis-Fair Oaks - - - - - - - - - - - - - - - - - - - - - - - 93] 30 ---------- 2 2
147057 A. S. W. Junction—Womble. . . . . . . . . . . . . . . . ; 18 3 |----------|----------
147067 | P. B. & W. Junction-IBenton. . . . . . . . . . . . . . ; 23 8 ----------|----------
149056 | F. & S. Junction-Monroe - - - - - - - - - - - - - - - - - - 536 ----------|----------|----------|----------
- 535 16 || 1 % #
153005 || Fort Smith–Coffeyville. . . . . . . . . . . . . . . . . . . . . ; 1 30–30 * 30 ----------|----------
4 l--------------------|----------|----------
155084 || Kansas City–Atchison - - - - - - - - - - - - - - - - - - - - - 131 26 6 ----------|----------
155040 || Atchison—Falls City. . . . . . . . . . . . . . . . . ------- 132 ----------|----------|----------|----------
155080 | Rich Hill–Fort Scott. . . . . . . . . . . . . . . . . . . . . . . 407 ----------|----------|----------|----------
408 23 3 |----------|----------
155036 | Fort Scott—Yates Center. . . . . . . . . . . . . . . . . . . # 23 3 l----------|----------
155036 Wichita-Kiowa. . . . . . . . . . . . . . . . . . . . . . . . . . . . 703 ||----------|----------|----------|----------
704 23 9 |----------|----------
706 ----------|----------|----------|----------
705, 20 6 ----------|----------
155046 | Eldorado–McPherson. . . . . . . . . . . . . . . . . . . . . . 749 - - - - - - - - - - - - - - - - - -------------|----------
w 762 16 4 ----------|----------
155091 Kansas City–Ottawa. . . . . . . . . . . . . . . . . . . . . . . ; - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
3 2 30–30 * 30 ----------|----------
4 - - - - - - - - - - - - - - - - - - - -]----------|----------
155060 || Topeka-Fort Scott. . . . . . . . . . . . . . . . . . . . . . . . . § 22 2 ----------|----------
155067 | Ottawa–Towner. . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - - - - - - * - - - I - - - - - - - - - - I - - - - - - - - - - H = • - - - - - - - -
2 1 30–30 * 30 l.---------|----------
3 |----------|----------|----------|----------
4 ----------|----------|----------|----------
1 D. H. j 2 D. # H.
RAILwax MAIL pay.
1887
Statement No. 8—Continued.

* * f Length l
of: sº. *:
apart- ace” ,” Daily : S ace”
:a sº *. | p
. . Opera OVerſlow
Mail Termini Train and in *::::. mail º:
route. €IIIlirlì. Nos. exclusive º 2C9 ºf er SO3Ce
- private º ºf ºried by ºst
use Of Šá. in bag- | Office
Post Office Depart- gage cars. Depart-
º Iſlent. ment.
MISSOURI Pacific-IRon MOUNTAIN–COn.
- - Feet. Feet. Feet. Feet.
155074 || Conway Springs–Larned. . . . . . . . . . . . . . . . . . . ; 18 2 --------------------
155094 || Warwick–Prosser. . . . . . . . . . . . . . . . . . . . . . . . . . ; - - - * * * * 14 || 2 . . . . . . . . . . . . . . .
155095 || Gypsum–Marquette. - - - - - - - - - - - - - - - - - - - - - - 12 || || 30-30 |..........]..........|..........
157038 || Omaha-Auburn. - - - - - - - - - - - - - - - - - - - - - - - - - - # 11 5 5
| Auburn–Talmage------. . . . . . . . . . . . . . . . . . . . º: - - - - ºr º - 16 || i [...]. . . . . . . . . .
157040 | Union—Lincoln. . . . . . . . . . . . . . . . . . . . . . . . . . . . .* § - - - - * = - 16 || iſ...… 3"| 2
w 638 16 || I [[III]
- 639 ------------------------------|----------
157059 | Talmage–Crete. . . . . . . . . . . . . . . . . . . . . . . . . . . . . § 16 1 --------------------
165036 Towner-Pueblo............ . . . . . . . . . . . . . . . . - I | . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 1 30–30 * 30 --------------------
3 ------------------------------|----------
4 ------------------------------|----------
of the
and as to the overflow space reported in
1 D. H.
The apartment car space was correctly reported by the company as in the private, exclusive, actual use
ost Office Department, or †. operated by the company in connection with such use,
aggage cars, it was based upon reports by conductors upon meas-
urements taken day by day and represents the daily average space so occupied..actually by mail for the
period, although this average includes higher maximum space in use at times.
MISSOURI PACIFIC-IRON MOUNTAIN.
Route 157040, 12 to 14 feet of space was used in baggage car on Sundays, making a daily average of 2 feet
baggage car mail.
###| classed Classed
as “dead - as “dead
*P. spaciº || P. spa.º
* Inent and average and
- .* i., 9Pºd charged oVºw charged
Mail * * Train and in mail
route Termini. Nos re, lº-fi ci to passen- to passen-
ſººn . . exclusive 3.C. actually
private * Spºel carried Éer space
POSt . by Post
use of ºf." | in bag- Office
Fº Depart- šage * Depart-
epart-
Iment. Inent. ment.
DENVER & RIO GRANDE.
Feet. Feet. Feet. Feet.
165001 | Pueblo–Trinidad. . . . . . . . . . . . . . . . . . . . . . . . . . . # 30 15 1. ---------|----------
| Pueblo-Cucharas........................... 115 ...I.I.I.I.I.I.I.I.I.I.' ' ' ' ' ' ' ' g--------- 6
165004 || Alamosa-Antonito. . . . . . . . . . . . . . . . . . . . . . . . . #: 25 ---------- 20 20
167002 || Antonito—Durango. . . . . . . . . . . . . . . . . . . . . . . . . 115 || ' ' ' ' ' ' 20 |I|I.I.I.I.I.I.I.I.I.I.
116 ----------|--------------------|----------
Durango—Silverton......................... # 20 10 ----------|----------
165004 || Antonito-Espanola......................... ; - - - - sº sº sº. 30.’ ‘’’’ ‘’’ 5'-------- 3-------- 3
426 ----------|---------. 4 4
167011 Espanola-Santa Fe.... . . . . . . . . . . . . . . . . . . . . . 425 20 8|--------------------
426 ----------|----------|----------|---------.
165012 | Salida–Mears Junction.... . . . . . . . . . . . . . . . . . . 317 20 * !----------|---------.
318 l----------|----------|----------|----------
165004 || Mears Junction—Alamosa. . . . . . . . . . . . . . . . . . . 317 20 * !-------------------.
318 l----------|----------|----------|----------
165012 | Salida–Montrose.----...- . . . . . . . . . . . . . . . . . . . 315 20 |---------- 3 3
- 316 26 6 --------------------

1388
RAILWAY MAIL PAY.
-. Statement No. 3—Continued.



ºngº classed Classed
- ºr assed
of mºil lasººd si- as “dead
s ºr "spacº" Pºy, spacº,
ment and average and
- - - & operated charged overflow charged
Mail & a Train and in , mail *
Termini. ... i. ºo |{0 passen- to passen-
route. Nos. exclusive €T SO3Cé actuall er space
private º, #5ost garrie º: Post
use of Öffice in bag- Öffice
º Depart gage cars: Depart-
ment. ment. Iment
DENVER & RIO GRANDE—continued. -
- JFeet, Feet. Feet. YFeet
165037 || Montrose-Ouray. . . . . . . . . . . . . . . . . . . . . . . . . . . 367 20 * ----------|----------
368 26 11 I----------|----------
165012 || Montrose—Grand Junction. . . . . . . . . - - - - - - - - - § i; 30 10 !--------------------
165018 Glenwood Springs–Aspen. . . . . . . . . . . . . . . . . . § sº º is sº * * * 36"| ‘’’’’ 20 |II.I.I.I.I.I.I.I.I.
228 ----------|--------------------|--------- tº-
165025 | Delta–Somerset. . . . . . . . . . . . . . . . . . . . . . . . . . . . # 21 11 --------------------
- 378 ----------|----------|----------|----------
165019 || Denver—Newcastle. . . . . . . . . . . . . . . . . . . . . . . . . 5 30 I---------- 20 10.
165042 | Newcastle-Grand Junction. . . . . . . . . . . . . . . . . 5 30 ---------- 5 ;
3 30 ---------- 1
169002 || Grand Junction-Ogden..................... 5 30 ---------. 4 4.
169002 | Salt Lake–Springville...................... 409 21 6 ----------|----------
1690.15 Springville—Silver City. . . . . . . . . . . . . . . . . . . . . 410 21 6 ----------|----------
DENVER. & RIO GRANDE.
Route 165001, Pueblo to Trinidad, train 109; on Sundays there was an average of 6,253 pounds, rendering
30 feet º: necessary on that train. The company could not furnish 30-foot cars Sundays and 15-foot
CarS Week Cl2, WS.
Route 167002, Antonito to Durango, Durango to Silverton, trains 115 and 116; company reported 20-foot.
mail apartment cars in use; should have reported 25, increasing car-foot miles 51,460 and 13,554 car-foot
miles, respectively.
The mail car on these trains was started on route 165004 at Alamosa, and ran via Durango to Silverton,
cars 64 and 66 being operated through. The department recognizes 25 feet between Alamosa and Antonito,
*. recognizes only 20 feet between Antonito and Durango, and only 10 feet between Durango and Sil-
Vert,Orl. - -
Route 165037, trains 367 and 368, narrow-gauge cars run through from Salida to Ouray; department
recognizes 20-foot from Salida to Montrose and only 15-foot from Montrose to Ouray over this route.
Route 165004, company reported 20-foot storage space, Alamosa to Antonito, trains 115 and 116. This
represents the mail for trains 425 and 426 between Antonito and Santa Fe. 'Mail loaded in the car at
Alamosa and would have been in baggage car had not the mail car been operated through. Postal clerk
got on at Antonito; also a necessary operating movement of car to avoid transfers of mail, baggage and
express at Antonito.


Length
of mail Classed
apart- as “dead
ment space”
º *: d
Mail & e Train and ºl, ºšē
Termini. exclusive to passen-
route. NOS. private |ger space
use of y Post
POSt. Office
Office Depart-
Depart- ment.
ment.
INTERNATIONAL & GREAT NORTHERN.
gº Feet. Feet.
150007 | Hearne-San Antonio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 30 15
Palestine-San Antonio.......................................... ; 30 10
150008 || Houston-Columbia... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ; * e = g = e sº iž"| `------- 2
150032 Mineola-Troup... . . . . . . . . ~~~~ 205 || 3i'I''''''''' 6
206 |----------|----------
INTERNATIONAL & GREAT NORTEIERN.
Route 150007, company should have reported 30-foot deadhead apartment on train 10, the return move-
ment of car in use on train 7, Hearne to San Antonio. This would have increased mail car-foot miles, this
route, 152,170.
NOTE.-Essential to have 30-foot cars in use on this route, because of changing about of equipment
account of the operation of the service in connection with through trains from the north.
*
RAFLWAY MAIL PAY.
Statement No. 3—Continued.
1889
Big Springs—El Paso
. . . . . . . -- Length . .
.** of mail | Classed
a apart- as “dead
ment space”
- *:::::: *: d
waii w and in charge
; : , Termini. º exclusive to passen-
“v. g private ger space
- use of by Post
PoSt. Office
Office Depart-
Depart- ment,
ment.
TEXAS & PACIFIC. Feet. Feet.
149002 || New Orleans—Addis. . . . . . . . . . . . . . . . ----------------------------- ; 25 5
149018 || Addis-Torras....?.......--------------------------------------. #|. 35 | ‘’’ ‘’’’ 5
Addis-Ferriday------------------------------------------------. #| || 35 | ‘’’’ ‘’’ ió
149017 | Shreveport-Cypress............................................. # * * * - - - - 35 | ‘’’ ‘’’’ ió
149034 Simmesport-Bunkie. ... --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 81 | I]. I.I.I.I.
149038 Junction—Marksville.-- . . . . . . . . . . . . . . . . . . . . . . . . . . . . --- - - - - - - - - - - - 82 11 10
149059 | SimmeSport—Melville. ----...------------------------------------|----------|- . . . . . . . . . . . . . . . . . . .
150009 || Big Springs-El Paso. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - { }} 30 10
TEXAS & - PACIFIC.
Route 150009, Big Springs to El Paso, the department recognizes the 30-foot car, which was run from
35797—No. 12–14
ST. LOUIS souTHWESTERN LINEs.
Route 150025, Texarkana to Waco, trains 5 and 4, the department recognizes 30-foot car carried to Tex-
arkana, but not over this route from Texarkana to Waco, recognizing only 20-foot, although the car is
essentially operated through for efficiency of service.
7
#'sWorth to # #. Tex., between fort worth and Big Springs, but recognizes only 20 feet between
Big Springs an 2SO.
###| classed Classed
- as “dead Dai as “dead
apart- space” aily space”
Iment and average and
Mail - - Train º charged ºw charged
route. Termini. Nos. exclusive|99 passen actually to passen-
* ger space - ger Space
- private º ż. garried º. #.
use of Office in bag- Office
O mºbe. Depari- |&#e ºars: Depart-
partment. Iment. ment.
ST. LOUIS SOUTHWESTERN LINES. +º Feet. Feet. Feet. Feet.
147026 Little Rock—Altheimer...'. . . . . . . . . . . . . . . . . . . # 26 11 ----------|----------
-- ' ; * * * * * * - 26 ii [...I.I.I.I.I.I.I.I.
147030 | Stuttgart—Gillett- - - - - - - - - - - - - - - - - - - - - - - - - - - ; - * * * * * * 26'ſ ' ' ' ' ' ' 11 || III.
147042 Malden-Jonesboro - - - - - - - - - - - - - - - - - - - - - - - - - ; - - * * * * - 26 || ii [...]II.
. . " I - * * * * * * * * * * * * * * * * * * * * 4 4
Stuttgart–Altheimer... -- - - - - - - - - - - - - - - - - -s" ; 26 11 --------------------
Pine Bluff—Altheimer. -- - - - - - - - - - - - - - - - - - - - 31 || 26 ii. I.I.I.I.I.I.I.I.I.
39 --------------------|--------------------
Fair Oaks—Malden - - - - - - - - - - - - - - - - - - - - - - - - - 3 1 30–30 * 30 --------------------
* * ----------|--------------------|---------.
149019 || Lewisville–Shreveport.... . . . . . . . . . . . . . . . . . . 23 26 11 ------------------- s'
150025 Texarkana-Waco - . . . . . . . . . . . . . . . . . . . . . . . . . ; 30 10 ----------|----------
150042 | Noel Junction—Dallas...................... § - - - - - - - 26 i || III.
9° ------------------------------|----------
205 26 6 ----------|----------
206 ----------|----------|----------|----------
U50060 | Commerce—Sherman - - - - - - - - - - - - - - - - - - - - - - - 203 26 11 ----------|----------
- 204 ----------------------------------------
150067 Mount Pleasant—Fort Worth - - - - - - - - - - - - - - - 101 26 ! ----------|----------
102 --------------------|--------------------
103 26 6 --------------------
104 ----------|----------|----------|----------
150127 | Waco—Gatesville - - - - - - - - - - - - - - - - - - - - - - - - - - - I 22 7 --------------------
* !--------------------|----------|----------
150144 Tyler–Lufkin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 22 7 --------------------
404 ----------|----------|----------|----------
1 D. Ei.

1390
RAILWAY MAIL PAY.
Statement No. 4.
Ó RºſičičN'``TH
MISSOURI PACIFIC, rº MOUNTAIN, TEXAS & PACIFIC, INTERNATIONAL & GREAT
ROtjof Tºx. As SīāRvior.

Train 3, St. Louis to Fort Worth
and mail car run. through
St. Louis—Tower Grove, route 145001, Mis-
souri Paci
Tower Grove-K. B. Conn., route 145070,
Missouri Pacific-----------------------------
K. B. Conn.-Little Rock, Ark., route 147041,
ge. (train
Iron Mountain------------------------------ -
Little Rock—Texarkana, Ark., route 147041,
Iron Mountain------------------------------
Texarkana–Longview, Junction, Tex., route
150009, Texas & Pacific . . . . . . . . . . . . . . . . . . . . .
Longview Junction—Fort Worth, Tex., route
150009, Texas & Pacific . . . . . . . . . . . . . . . . . . . . .
Train 4, returning Fort Worth to St. Louis
(train and mail car run through).
Fort Worth–Longview Junction, route 150009,
Texas & Pacific-----------------------------
Jongview Junction—Texarkana, Ark., route
150009, Texas & Pacific-------...------------
Texarkana–Little Rock, Ark., route 147041,
Iron Mountain------------------------------
Little Rock-K. B. Conn., route 147041, Iron
Mountain-----------------------------------
K. B. Conn.--Tower Grove, route 145070,
Missouri Pacific----------...................
Tower Grove—St. Louis, route 145001, Mis-
Souri Pacific... . . . . . . . - - - - - - - - - - - - - - - - - - - - - - ‘.
Train 5, St. Louis to Fort Worth, Tez. (train
and mail car run through).
St. Louis-Tower Grove, route 145001, Mis-
Souri Pacific-----------------------------....
Tower Grove-K. B. Conn., route 145070,
Missouri Pacific-----------------------......
K. B. Conn.—Little Rock, route 147041, Iron
Mountain----------------------------------.
ſittle Rock—Texarkana, route 147041, Iron
Mountain. ----------------------------------
Texarkana-Longview Junction, route 150009,
Texas & Pacific----.........................
Longview Junction—Fort Worth, route 150009,
Texas & Pacific.............................
Train 6, returning Fort Worth to St. Louis
(train and mail car run through).
Fort Worth-Longview Junction, route 150009,
Texas & Pacific------.......................
Texas & P
Texarkana–Little Rock, route 147041, Iron
Mountain---------------------------........
Little Rock-K. B. Conn., route 147041, Iron
Mountain----------------------------.......
K. B. Conn.--Tower Grove, route 145070, Mis-
Souri Pacific-------------------..............
Tower. Grove—St. Louis, route 145001, Mis-
Souri Pacific------------------...............
Miles.
48.277
144.61
93.35
156,34
156. 34
93.35
144.61
348. 77
348. 77
144.61
93.35
156. 34
156.34
93.35
144.61 -
348. 77
Dail §
Dally In actua
Size of #. average use, re-
mail reported overflow ported by
Cars in ºp ... mailin || depºrt:
UIS®, ban baggage ment as
pany, CarS. dead
i Space.
Q:
Feet, Feet. Feet. Feet.
60 40–20 9 14
* * * * * * * * 40–20 14 19
sº sº º º sº º ºs ºf 40–20 | 1. 11 , ||
sº e º 'º º ºs º was 40–20 | 1 16
60 40–20 |.......... 20
sº sº tº a s gº º ºs 40–20 - - - - - - - - - - 20
a * * * * g us tº 60 2 2
as ºs e º 'º º sº tº 60 1 I
60 60 2 2
sº we we º ºs us tº s 60 4 4
sº a e s º a sº tº 50–10 1 ----------
* = e º 'º me. * * 50–10 1 ----------
60 50–10 |..... ----- 10
* * * * * * * * 50–10 .......... 10
- - - - - - - - 60 4 4
as º ºs º ºs º º ºs 60 ---------.
sº, s a s = * * * * *
Properl
reporte
by com-
pany,
Car-foot;
miles.
146,482
82,427
30,805
75,043
334,757.
° 46,902
28,005
17,352
* * * * * * * * * *
RAILWAY MAIL PAY.
1891
MISSOURI PACIFIC, IRON MOUNTAIN
TEXAS & PACIFIC, INTERNATIONAL & GREAT
NößN THiiotjøHTÉxAs šīāvīdī-Continued.

Miles.
Size of
mail
Cars in
US6.
Space
used as
reported
by com-
pany.
Daily
average
Overflow
mail in
baggage
CºS.
Although
in actual
use, re-
ported by
depart-
ment as
dead
space.
Properl
#;
by com-
pany,
car-foot
miles.
Fast mail train 7, St. Louis to Mexico border
(train and mail car run through).
Bºwer Grove, route 145001, Missouri
*Clti6- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Tower Grove—K. B. Conn., route 145070, Mis-
Souri Pacific---------------------, * * * * * * * * * * *
K. B. Conn.-Little Rock, route 147041, Iron
Mountain----------------------------------- *
Little ‘Rock—Texarkana, route 147041, Iron
Mountain-----------------------------------
Texarkana–Lo
Texas & Pacific-----------------------------
Longview Junction–Palestine, route 150007,
International & Great Northern.............
I’alestine–San Antonio, route 150007, Inter-
national & Great Northern------------...-----
San Antonio—Mexican boundary, route 150126,
International & Great Northern........ . . . . .
Trains 4–8, returning Mexican boundary to St.
Lowis (train and mail cars run through).
Mexican boundary–San Antonio, route 150126,
International & Great Northern-----------..
San Antonio–Palestine, route 150007, Inter-
national & Great Northern..................
Palestine—Longview Junction, route 150007,
International & Great Northern.............
Longview. Junction—Texarkana, route 150009,
Texas & Pacific-----------------------------
Texarkana–Little Rock, route 147041, Iron
Mountain-----------------------------------
Little Rock—K. B. Conn., route 147041, Iron
Mountain-----------------------------------
K. B. Conn.—Tower Grove, route 145070, Mis-
Souri Pacific--------------------------------
Tower Grove—St. Louis, route 145001, Missouri ||
Pacific--------------------------------------
Train 8, second car, St. Louis to Little Rock.
shºws, Groye, route 145001, Missouri
*OldC--------------------------------------
Tower Grove—K. B. Conn., route 145070, Mis-
Souri Pacific---------------------------------
K. B. Conn.—Little Rock, route 147041, Iron
Mountain-----------------------------------
Trains 28–10, return trip of car.
Little Rock-K. B. Conn., route 147041, Iron
Mountain-----------------------------------
K. B. Conn.--Tower Grove, route 145070, Mis-
Souri Pacific-------------------------.- - - - - - -
Tower Grove—St. Louis, route 145001, Missouri
Pacific--------------------------------------
Train 5, second car, St. Louis to Little Rock.
sº-Tºwer Grove, route 145001, Missouri
3Gli10--------------------------------------
Tower Grove—K. B. Conn., route 145070, Mis-
souri Pacific--------------------------------
E. B. Conn.—Little Rock, route 147041, Iron
Mountain-----------------------------------
348. 77
144.61
93.35
81. 30
259.89
153. 88
153.88
259.89
81. 30
93.35
14. 61
348. 77
• *** * * * * *
sº sº gº as gº tº ſº º
* gº is tº ſº gº tº sº.
<e tº º, º ºs º ºr ae
tº s s gº dº º º is
* * * * * * * *
as ºs s. sº tº me tº sº
60
I'eet.
60
30–30
50–10
50–10
50–10
40–20
40–20
40–20
tº º º ºs º nº ſº tº º 'º
tº º Aº sº º sº gº º sº º
tº º gº º ºs º º ºs & ſº-
sº se as a ſº e º 'º sº sº
* * ſº sº, º º gº tº ſº sº
wº, º ºn tº sº º ºs e º sº.
Feet.
8
10
10
10
e = e º ºs e tº sº tº º
20
* * * * * * * @ gº &
355,700
138,492
77,967
24,390
28,005
86,766
209,262
564,882
* * * * * * * * * * * *
209,262
52,315
1392
RAILWAY MAIL PAY.
MISSOURI PACIFIC, IRON MOUNTAIN, TEXAS AND PACIFIC, INTERNATIONAL &
GREAT NORTHERN – T. H.R.OU GEI TEXAS SERVICE–Continued.

Although
. Space Daily in actual | Properly
Size of º as a Verºge. use. Fºr reported
Mil mail | overflow ported by by com-
*S. cars in tºº. mail in depart- pany,
UISé. #. y baggage ment as car-foot
pany. C3IS. dead miles.
space.
Train 6, return trip of car.
tº Rock-K. B. Conn., route 147041, Iron
ountain--------------------------------
* * * * * * * * * * * * * * * * ºr as º ºs e º sº * * * * * * sº - - - Feet. Feet. Fect. Feet,
K. B. Conn.—Tower Grove, route 145070, Mis- ! –’
Souri Pacific. - - - - - - - - - - - “...” “...}....... 60 40–20 ! . . . . . . . . . . 20 209,262
Tower Grove—St. Louis, route 145001, Missouri
Pacific-------------------------------------- . .
Total-----------------------------------------------------------------------|---------- 2,025,667
NOTES.
Trains 3 and 4: The foregoing statement shows that there were two cars outward from St. Louis on train
3, one running through to Fort Worth, Tex.; and returning on train 4, and that part way over the line
the car WaS recongized by the Post Office Department as having 55 feet of space in use, St. Louis to Little
Rock; 50 feet of space, Little Rock to Longview Junction; 45 feet of space, Longview Junction to Fort
Worth; while on the réturn trip the same car is recognized as having 40 feet in use to Texarkana, Whereas
from Texarkana to St. Louis, it is recognized as a 60-foot car. As the train and mail car run through, the
company properly reported 60-foot car service through in both directions between St. Louis and ‘Fort
Worth.
The second car is recognized as 60-foot outward to Little Rock and returning on trains 28–10, was recog-
nized by the department only as a 40-foot car from Little Rock to Hoxie, aná not recognized at all from
Hoxie to St. Louis, although the outward car was necessarily returned. Properly reported in both direc-
tions by the company as a 60-foot car. -
Trains 5 and 6: There were also two outward cars on train 5 from St. Louis; one to Fort Worth returning
on train 6, and the second running to Little Rock and returning also on train 6. As to the through car,
it was recognized by the department as a 60-foot car all the way through on train 5, but as a 50-foot car only
from Fort Worth to Texarkana on the return trip, although as a 60-foot car from the latter point to St. Louis.
As the train and car ran through, company properly reported it as a 60-foot car in both directions.
As to the second car, which was of 60-foot length, the department recognized it as 55 feet in average use
on the outward trip, but on the return trip on train 6 it recognizes it only as a 40-foot car.
As the average use of the storage space was recognized as a 15-foot outward, and as there was a daily
average overflow mail in the baggage car of 2 feet, the company properly reported 60-foot car in service in
both directions. -
Trains 7–5 and 4–8: This train represents the expedited fast-mail service from St. Louis to the Mexican
border, the train being run as a fast-mail train St. Louis to Palestine, Tex., where the mail car is attached
to regular train 5, leaving St. Louis six hours previously, the company running the fast-mail train si
hours faster than its regular passenger train, for the postal Service. .
There were two cars on this train, one running through from St. Louis to Mexican border, which the
department recognizes as of 60-foot from St.Louis to Texarkana; 50-foot, Texarkana to San Antonio, 30-foot,
San Antonio to Mexican boundary; returning, the car is recognized as 30-foot from the Mexican boundary
to San Antonio; 50-foot, San Antonio to Texarkana; 40-foot, Texarkana to St. Louis. The company prop-
erly reported 60-foot car in outward service and the return service.
Manifestly, as a 60-foot car was necessary from St. Louis to Texarkana, the company was compelled, on
account of the fast schedule, to run the car through to the Mexican border. It was not possible even to
transfer from a full car to an apartment car at San Antonio, as in that case it would have been impossible to
make the Mexican National connection, which was essential.
Even from San Antonio to Mexican boundary, the department recognizes 45 feet of space as necessary on
the outward trip. Not only was the 60-foot car run through, but there was overflow Mexican parcel post
mail in the baggage car loaded in that car at St. Louis and run through. As the train and car service was
necessarily operated through, the company properly reported 60-foot car both directions.
As to the second car, the department recognizes 60-foot outward, and by correcting its error, 60-foot
Teturn deadhead. 4.
As to the overflow baggage-car mail on these trains, it is based upon the daily reports of the conductors
of the train, and in many cases exceeded the amounts reported, as the statement submitted shows the
average only and not the maximum space in service.
Total amount of space properly reported by the company, 2,025,667 car-foot miles, and although actually
and necessarily in use in the mail service, as explained was treated by the department as dead space and
charged to passenger service, when not a foot of it was in any passenger service whatever, and nearly half
of the space was operated in connection with the fast-mail train.
BAILWAY MAIL PAY.
1393
MISSouRI PACIFIC-ST. Louis-KANSAs CITY SERVICE.

Although
Space Daily |* *al Properly
Size of used as average reported reported
Miles. mail reported overflºw | * P; by
** cars in by mail in de ärt. Company
use, coin- baggage | . car foot
- pany. C3rS. dead miles.
Space.
* - Feet. Feet. Feet. Feet.
Fast mail train 7, St. Louis-Kansas City. . . . . . 282.48 º : * * * * * * * * * * | * * * * *s- ºr * ~ * * : * * * * * * s m ºr ºf
- 60 60 ------------------------------
60° 40–20 - - - - - - - - - - 20 ----------
2 70 70 - - - - - - - - - - 10 ----------
, ' 2 2 271, 180
Train 12–Train 4, returning this equipment
Kansas City to St. Louis..... . . . . . . . . . . . . . . . . . . . . . . . 60 60 ----------|----------|----------
60 60 ------------------------------
60 *60 --------------------|----------
60 * 60 l. . . . . . . . . . 20 ----------
2 70 470 - - - - - - - - - - 70 ----------
J - 2 2 779,644
Train 8, returning equipment west on train 9.......... 60 2 50–10 - - - - - - - - - - 10 584,744
Total.--------------------------------------------------------------------------------- 1, 135,568
1 Postal. 4 D. H. storage.
2 Storage. 5 Department does not show correctly to 9 west, as reported,
8 D. H. postal.
NOTES.
Train 7, St. Louis to Kansas City, is a fast-mail train, and the department eliminates 20 feet of space in
one of the 60-foot postal cars operated; 10 feet of space in storage car operated, and a daily average of 2 feet
of overflow in the express car. The amount sometimes in this overflow was over 10 feet, but the average
Was 2 feet. All of this space was properly reported by the company. -
The depyrtment does not recognize the 20 feet of späce on the return trip in train 4, nor does it recognize
70 feet in the return mºvement of the storage cr, and also does not recognize 2 feet of mail carried in the
regular baggage car on train 4.
All of this splge wis properly raported by the company as char
Train 8: The department’s statement does not correctly quote
of 60-foot car with 50 feet for R. P. O. and 10-foot storage, and fails to recognize in the 60-foot car in return,
the 10 feet of
geable to mail service. *
the company report outward for train 9
#. referred to, which was properly reported by the company as return for the outward
movement and recognized by the department.
Total amount properly º: by the company in mail service, 1,135,568 car-foot miles, which the
department classified as dea
nection with the fast-mail operation.
Total car-foot miles properly and accurately reported by company as actually operated for and
in actual and exclusive use of Post Office Department and erroneously treated by department
as ‘‘dead splge” and improperly classified by department as passenger space:
space and charged to passenger service, although practically all was in con-
St. Pouis-Texas Service... ----------------------------------------------------------------- 2,025,667
St. Louis-Kansas City service. --------------............. ------------...------------------. 1, 135,568
Total. ----------------------------------------------------------------------------------- 3, 161,235
Mr. MACK. I think that explains the situation with regard to the
Missouri Pacific service thoroughly and completely.
The CHAIRMAN. Do you eliminate in your statement the fourth
paragraph on page 5?
service following the apartment-car service.
Mr. MACK. I read the fourth paragraph with regard to the through
The CHAIRMAN. You changed the order of the reading?
Mr. MACK. Yes. With reference to the remark of the department
that the company did not overlook any opportunity to report space,
I would like to make a statement for the Missouri Pacific that we
might have shown on our line between St. Louis and Kansas City
1,522,800 additional car-foot miles for the month of November.
The CHAIRMAN. Why did you not do so?
Mr. MACK. We operated a fast-mail train for a temporary period
of about 4 weeks, and 15 days of that time was in the month of No-
1394 RAILWAY MAIL PAY.
vember, 1909. As the service was not permanent, and these figures
should not be used except to indicate service on a permanent basis,
we refrained from reporting that space and instead took the space as
it existed on the first 15 days as typical. At the beginning of the
statement I should also have made the correction in stating that there
were no errors in our report. I did find in looking it over that there
were two, but those two errors were against the company and not the
Post Office Department. They represent 217,184 miles which should
be added to the mail-car mileage reported by the company.
The CHAIRMAN. I see you have attached here a map of the United
States showing the Missouri Pacific and Iron Mountain. It will be
impossible to put that into the record.
Mr. MACK. I merely submit that in case anyone desires to follow
the routes in reading the statements. With regard to the closed-
pouch service, which is not alluded to by the department in its
memorandum in regard to the Missouri Pacific, the company re-
ported, based on measurements taken by train baggagemen, space
representing 2,377,024 car-foot miles, and the department cut that
space 63 per cent and recognized only 857,211 car-foot miles. Per-
haps Mr. Prentiss could state whether that ratio held throughout
the country.
Mr. PRENTISs. The ratio for the whole country was about 50 per
cent. Approximately as much closed-pouch space was transferred to
passenger space as was charged to mail in Table No. 3.
Mr. MACK. The department recognizes 26,299,260 car-foot miles,
and if the ratio on our lines held throughout the country the de-
partment would have cut out 44,779,883 car-foot miles; and, as I
recall, that was not classed as dead space, but was directly charged
by the department into the passenger service altogether, and it was
not based upon any measurement by the Railway Mail Service, but
was based on an estimate as to the number of pouches in which certain
weight of mail might be included, and the space in which it was
assumed it might have been placed. Is that correct? *
Mr. McBRIDE. Based on the number of pouches and sacks reported
by the company, to which we applied our rule of weights.
Mr. MACK. Without any measurement as to the space used in the
car?
The CHAIRMAN. Then, as I understand, what you have stated with
regard to the department, as far as the Missouri Pacific is concerned,
they cut out a larger percentage than they did for the rest of the
country.
Mr. MACK. The average throughout the country.
The CHAIRMAN. According to Mr. Prentiss's statement they cut
out 50 per cent. - -
Mr. PRENTISS. I say that is approximate.
The CHAIRMAN. Why did you cut out so much more in the case of
the Missouri Pacific? -
Mr. PRENTIss. The reason for that is that the Pennsylvania and
the New York Central reported on practically the same basis that
was used by the department, or a little less than the department
would have allowed them. Those two systems comprise a large per
cent of the whole service of the country and affect the average by
reducing it to about 50 per cent.
RAILWAY MAIL PAY. 1395
The CHAIRMAN. Still that does not answer my question as to why
ou cut out a much larger percentage in the case of the Missouri
acific than on the roads in #. rest of the country.
Mr. McBRIDE. I presume it is because that company reported
greater space per sack or pouch than some of the other roads.
Mr. MACK. With regard to Mr. Prentiss's statement that the New
York Central followed more closely the department's rule, a memo-
randum I have here, included in yesterday's record, shows that the
department cut out 57 per cent of the closed-pouch space on the New
York Central.
Mr. STEwART. You are referring to the New York Central? I
named the New York Central & Hudson River Railroad. The fact
that there may have been returns made by the company which we
disallowed had nothing to do with the rule which the company
followed and which approximated the department's rule. That is
the example I stated here. The Pennsylvania Railroad adopted a
different rule from that used by the railroads’ committee. These two
companies adopted their own plan, the results of which approxi-
mated very closely to the result obtained by the department’s plan.
The CHAIRMAN. Would it be possible in that connection to state
distinctly the two rules—the department's rule and the railway mail
pay committee's rule—so that the ordinary citizen may understand
that? I mean so that a man does not have to be a specialist in mail
transportation to get an understanding of the difference in the two
Mr. STEwART. Those three plans are all stated in the record.
The CHAIRMAN. Well, in this connection it might be wise to re-
peat them, if it can be done clearly.
Mr. STEwART. It can not be done without taking the record and
reading it. It is not a very small matter.
The CHAIRMAN. Is it lengthy?
Mr. STEwART. Yes.
The CHAIRMAN. What is the page in the record—in the volume?
Mr. BRADLEY. With regard to the rule of the railway mail pay
committee, it will be found on pages 71, 72, and 73 of volume No. 1.
Mr. STEwART. You first want to refer to the department's rule
and then the rule which the railway mail pay committee have put
into the record. - t -
The CHAIRMAN. Do they follow in sequence? .
Mr. STEwART. I think not.
The CHAIRMAN. How many pages would it take to give a clear
distinction as to the two rules—the department's rule and the rule
of the railway mail pay committee—to which you have referred?
Mr. STEwART. Probably one and one-half pages of text for all
three rules.
The CHAIRMAN. If you will furnish the information as to where
in the hearings these three rules are set forth, it will be sufficient.
Mr. STEwART. The rules followed by the department in determin-
ing the charge for closed-pouch space are given in full on page 101
of the preliminary report and on page 1015 of volume 7. The rule
followed by the railroad companies generally is referred to on page
102 of the preliminary report and page 1017 of volume 7. The rule
followed by the Pennsylvania and New York Central Cos. is recited
in full on pages 1264 and 1265 of volume 11.
1396 RAILWAY MAIL PAY.
Mr. MACR. This is the same subject that was discussed during the
day you were absent—about the relative proportions of unoccupied
space in baggage cars, door space and aisle space being charged to
the mail exactly as was charged to the express and passenger Service.
Mr. STEwART. I should like also to have the record show that the
department does not concede that we cut out closed-pouch space.
The references made would indicate that we arbitrarily cut out space
that the companies were entitled to. I think the record ought to
show that what we did was to make an allowance for closed-pouch
space upon the department's rule, as distinguished from the rule
laid down by the railroads’ committee.
Senator WEERs. How much did the Missouri Pacific receive for
transportation of the mails?
Mr. MACK. About one million and a half.
Senator WEEKs. Suppose all the space had been allowed by the
department throughout. How much additional compensation would
you have received ?
Mr. MACK. I have not calculated that. We can apply the per-
centage, which was in the neighborhood of 20 per cent. It would
have increased our compensation that much. :
The CHAIRMAN. Twenty per cent of $1,500,000?
Mr. MACK. Yes.
The CHAIRMAN. That is, you would have received that much more
of a credit under your space ascertainment than was allowed you in
the department’s space ascertainment?
Mr. MACK. Yes.
The CHAIRMAN. You would not have received $300,000 more under
the present method of railway mail pay than you did receive?
Mr. MACK. No, sir; but the import of the figures is that they rep-
resent underpay to that extent.
The CHAIRMAN. On a space basis; that is, if the suggested plan of
the department were in operation?
Mr. MACK. No. We would not receive that if the suggested plan
of the department was in operation. Our pay would be very much
reduced, as I pointed out in my testimony the other day. The import
of these figures is on the basis reported by the department, the com-
parative basis of express, mail, and passenger, the railroads are un-
derpaid over $15,000,000 a year. I pointed out particularly the fig-
ures in previous testimony, the exact amount based upon the exact
number of car-foot miles.
The CHAIRMAN. I do not see where that has application. It may
possibly be because of the subject being extremely technical. You
do not claim that you were $300,000 underpaid in the money you
actually received from the department for that year?
Mr. MACK. Not on the present basis of pay.
The CHAIRMAN. That is what I mean. -
Mr. MACK. If we had been paid adequately for the service as meas-
ured on that basis, we should have received 20 per cent more money.
The CHAIRMAN. Measured on what basis?
Mr. MACK. On the basis of the space actually in use.
The CHAIRMAN. Upon what rate of compensation—the space actu-
ally used?
Mr. MACK. Upon the present rate of compensation. In other
words, the result from the present rate of pay did not produce an
RAILWAY MAIL PAY. 1397.
adequate amount of pay in proportion to the space occupied by the
mail service.
Mr. LLOYD. In other words, if you had gotten pay for all the space
used according to the space that was used, you would have gotten
$300,000 more? - -
Mr. MACK. Yes, sir; on the Missouri Pacific.
The CHAIRMAN. But under the present rate of pay the only space
classification is that of the R. P. O. car, is it not? You have your
pay for the weight of the mail?
Mr. MACK. Yes, sir. The proposition here is a comparison to de-
termine whether the pay was adequate or not. We claim the pay was
not adequate because the space occupied by the mails was greater in
proportion than the pay received for services on the other basis for
passenger trains.
The CHAIRMAN. But you do not predicate your claim that the rail-
roads are underpaid $15,000,000 on this demonstration that you made,
so far as the Missouri Pacific is concerned? As I understand, the
contention of the railroads’ representatives is that they are underpaid
$15,000,000 because they received nothing for the side service, because
of the quadrennial weighings, and because of one other factor—the
failure to pay for apartment-car service. That is true? Those are
the main factors on which the claim of the railroads is based that they
are underpaid Ž
Mr. MACK. Those are the suggested means of meeting the question
of underpay.
The CHAIRMAN. Then, what is the method by which you arrive
at a determination that you are $15,000,000 underpaid!
Mr. MACK. On the comparison of space occupied. -
The CHAIRMAN. Yet you object to the adoption of space as the
measure of the service rendered.
Mr. MACK. Not as a measure of comparison of the value of the
services at that time.
The CHAIRMAN. Value of the service to what—passenger?
Mr. MACK. Compared with the passenger service.
The CHAIRMAN. Then, your contention is that the mail payment
should be based upon and commensurate with the passenger returns—
a revenue basis entirely?
Mr. MACK. Yes, sir; on the ground that the passenger rates are
either approved by the Interstate Commerce Commission as to inter-
state rates and are approved or fixed as intrastate rates by the State
railroad commissions or State laws. -
Mr. LLOYD. That is the strongest statement, I believe, that has
been made on either side in favor of a space basis, -
Mr. STEwART. I would like further to suggest that Mr. Mack's
conclusions as to what his company was entitled to in space in No-
vember, 1909, and what his company would be entitled to if he had
received pay for that space on the basis of the present law are all
predicated upon the theory that the railroad company is going to
absolutely control the space that the department needs for transport-
ing the mails. - -
The CHAIRMAN. I do not catch that? How do you deduce that
from the statement?
Mr. STEwART. Because the Missouri Pacific charged to us full
space on every occasion, on every train, for every run, regardless of
1398 RAILWAY MAIL PAY.
the needs of the department. Now, we are operating at the present
under a statute of Congress which provides that we shall pay for
three sizes of cars specifically in addition to the weight-basis pay—40
feet, 50 feet, and 60 feet. If we adopt Mr. Mack's theory of this cost
ascertainment, we necessarily disregard all distinctions that are now
made in the law in the matter of authorizing full railroad post-office
cars, because he has charged us for 60 feet in every case whether we
need it or not, and if we followed that plan in the administration
of the service to-day we would pay for only 60-foot cars under the
present law.
Mr. LLOYD. In that connection, as I understood your statement
made just before we adjourned yesterday, you said that on these
trips where you used a 60-foot car part of the way, that under your
proposed system you would pay for the full 60-foot car both ways.
If that is true, you admit that his contention is right.
Mr. STEwART. I think there is a distinction that you have not
observed.
Mr. LLOYD. I am anxious to get it, because this is crucial, it strikes
me. It seems to me you are each yielding to the other.
Mr. STEwART. I think not. The practical operation of this pro-
posed plan would be that where we now pay specifically additional
money for full cars, and, therefore, we authorize 40 feet over part
of the run and 60 feet over another part of it, the tendency would
be to combine all mails in the 60-foot cars and we would have, in-
stead of these separate authorizations and accountings, practically
a 60-foot line throughout. This, in my judgment, would be the prac-
tical operation of the proposed law. It abolishes the distinction be-
tween the space basis and the weight basis, and necessarily forces the
department and the companies to accommodate the service to the
conditions of one basis.
The CHAIRMAN. To make the record clear, you say the new law.
You mean the suggested plan, if adopted ?
Mr. STEwART. Yes.
Mr. MACK. I would be glad to get down to the actual proposition
as applied to this car from St. Louis to the Mexican boundary. We
run a 60-foot car through to the Mexican boundary, or we did at that
time, and return. That car was recognized by the department as a
60-foot car part of the way, 50-foot car part of the way, 35 foot or
40 foot part of the way, and on the return trip 30 foot, 50, and 40
foot. Now, this was a through operating run which was absolutely
necessary. There seems to be no question but what that space should
have been recognized as a 60-foot car throughout, and in all cases
there was overflow mail in the baggage car, sometimes two cars and
at the present time there are three cars. On a long run of a car, such
as that, on the space basis, would the department pay for 60-foot car
without any question in a case of that kind? *.
Mr. STEwART. In the first place, let me go back to the first part of
your proposition; that is, the fast-mail train. You offered that train
to the department knowing the conditions under which you were go-
ing to operate it. You accepted the present pay on the theory that
you were getting compensation adequate to put that train on and you
have maintained it ever since under those conditions. We do not
think it fair now to say that the department should change the basis
of our arrangement in this ascertainment of cost of service. As to
BAILWAY MAIL PAY. 1899
the rest of your question, I can only say, as I replied to Mr. Lloyd,
that we can not go into the details of a specific line at this time and
say what would actually happen, but our belief is that under the
operation of this proposed statute the mails will be consolidated
upon a basis of space. The result would be the most economical ar-
rangement for the department on the one side and the most eco-
nomical arrangement for the companies on the other side. It could
not be anything else where both are interested in the same thing.
We are interested in paying for the least amount of space and the
railroads would be interested in furnishing us the space most eco-
nomically arranged. The tendency would therefore be to combine
all mails in the space we would authorize and the probabilities are,
on a long line like that, that authorizations would be very much more
uniform than they are now, because now we have two bases of pay.
There is only part of the space we can pay for specifically under the
present law.
Mr. MACK. I so understand, but that does not answer the question
which, I think, could be answered very directly in this case and cases
like the Great Northern, which was presented yesterday. If Mr.
Baskerville is here, perhaps he could illustrate it at this time: that is,
would the car on its through operating run be paid for on the max-
imum basis required in either direction over even part of the route;
if not, any rule otherwise would be unfair to the company, because
the company must furnish and haul such a car such a distance.
Mr. STEwART. Yes. That is our plan—to pay for the maximum.
The CHAIRMAN. That would be your plan?
Mr. MACK. I understand, but Gen. Stewart does not come to the
point I am trying to reach. He says he would pay for the maximum,
but will he pay for the maximum over the usual operating run of the
car in this case to the Mexican border, and in the case of the Fort
Worth cars through to Fort Worth, in the case of the Little Rock
cars to Little Rock and return. -
Mr. STEwART. That would depend on what the needs of the services
are. I understood your question to be whether we would pay, in both
directions, for the maximum required in one direction. That is our
plan. Whether we would pay for a 60-foot car between certain
points I could not say to-day and nobody else could say to-day, but
it depends on the needs of the service.
Mr. MACK. The point we are trying to get at is when the car must
run through is it to be changed as it is now, a 60-foot car part of
the way, 30-foot car part of the way, and on the return run different
lengths of car paid for? -
Mr. McBRIDE. Is the entire 60-foot car used to its capacity all the
way through to the boundary line?
Mr. MACK. I can not tell. The car is run through because it is
needed as a 60-foot car when we start out at St. Louis. You can not
change it several times as you go over the line before you get down
to the end of the run. It is like a passenger car, with the maximum
mail starting out, but in many cases, when you get to the end of the
line, there is only one passenger left in a car, possibly one bag of mail
in a car, but any basis of pay must necessarily be on the maximum
required, which fixes the requirement as to the car which must be
furnished at the initial point, and then run through.
1400 RAILWAY MAIL PAY.
The CHAIRMAN. That is required by the Post Office Department?
Mr. MACK. Yes. •
The CHAIRMAN. And necessarily operated during the run by the
railroad 2 - o
Mr. MACK. Yes.
Mr. WORTHINGTON. I would like to mention another viewpoint in
that connection. . At the present time the R. P. O. car represents one-
tenth of the total pay, and changes of authorization made by the de-
partment necessarily affect only one-tenth of the pay, where the roads
still get nine-tenths of the pay based on the weight, whereas under
the proposed law changes of that kind would have 10 times the
extent—that is, it would affect all of the pay of the railways directly,
and the incentive of the department to change authorizations, to my
mind, would be much greater where they could thereby save 10 times
the amount that they do at the present time. ...”
Mr. STEwART. I corrected that statement at the last hearing and
said that that was erroneous, because while full cars represent one-
tenth of the total pay they represent 46.24 per cent of the service
On Space basis.
Mr. WORTHINGTON. . At the same time the compensation for han-
dling the mail at the present time is nine-tenths, based on weight.
Mr. MACK. In other words, we are having a controversy with the
department, as Mr. Stewart has pointed out, with reference to the
full R. P. O. car space used in connection with that service, which
represents only a portion of the service and only one-tenth of our com-
pensation. But when our entire compensation, representing 10 times
that amount, is at stake, the controversy will then not only apply to
these routes which are full R. P. O. routes, and only 10 per cent of the
pay, but it will apply to every dollar of mail pay that we would receive,
except on exclusive closed-pouch routes. As I pointed out the other
day, we would have to have 60-foot cars, 50-foot cars, and all these
different classes of cars, and we would not do as we do to-day where
we are paid on a different basis. We could not do, as we do to-day,
furnish the cars that we have, because our pay would be so entirely
different. If the Post Office Department said they needed a 40-foot
car, we could not furnish a 60-foot car, but we would have to go out
and buy a 40-foot car, because we could not afford to run the chance
of putting in a 60-foot car and have them pay for only 40 feet of it; it
would mean too great a loss. So we would not only be in that pre-
dicament as to full R. P. O. cars, but it would apply also to the apart-
ment car as to how much space we used. We would have to have 13
different kinds of cars and keep them in stock like boxes on a shelf.
Senator WEEKs. You do that now, on the train from St. Louis to
the Mexican border? }
Mr. MACK. No, sir. Only 60-foot cars are used.
Senator WEEKs. Do you carry passengers on that train?
Mr. MACK. We carry from St. Louis to Texas a sleeping car to aid :
in maintaining the service.
Senator WEEKs. Do you carry express?
Mr. MACK. We carry some express, but very little.
Senator WEEKs. What part of the space in the train is used for
passengers, express, and mail? *
Mr. MACK. From St. Louis to Palestine, Tex., is what we con-
sider the fast mail train. We put one sleeping car on out of St.
RAILWAY MAIL PAY. 1401
Louis, with the idea of trying to augment the earnings of that train,
because the mail did not support it for some years. On the new
space basis of pay proposed in Document 105, no railroad could op-
erate a fast mail-train service of two postal cars with a 20 per cent
land-grant reduction, for we would only be paid 15 cents a car-mile,
and we would not earn 50 cents a mile on the train.
Senator WEEKs. Is the train profitable now %
Mr. MACK. It probably supports itself now. I think we earn about
$1.15 to $1.20 per train-mile.
Senator WEEKs. Can you tell the relative earnings of the passenger
space, the express space, and the mail space on that train?
Mr. MACK. We have no such separate statistics by trains.
Senator WEEKs. Do you not run some number of cars?
Mr. MACK. Yes, sir.
Senator WEEKs. Would it not be easy enough to do that?
Mr. MACK. I do not know that it would. I do not know what the
express earnings were.
Mr. WoRTHINGTON. The difficulty is with the express earnings.
That is reported to the railroads as a whole for the entire system.
Senator WEEKs. It seems to me that would be a complete illustra-
tion, if you could do that, of the passenger space, express space, and
mail space on a train of that kind where you run cars, using the same
equipment or in the same manner, that there you could show you were
earning as much from your mail space as from your passenger space.
Mr. MACK. Our passenger space on that train is a mere incident.
Mr. WoRTHINGTON. Is it not a fact that that train was run pri-
marily for the mail service and you simply added the express and pas-
senger service to fill out, otherwise that traffic would be handled on
your regular train?
Mr. MACK. That is entirely true.
Senator WEEKs. It strikes me where 60 feet of space is needed on
some part of a through route, that the department should pay for the
60 feet of space for the entire route. If there was a case in which the
amount of space required was not over 40 feet and the railroad had
but a 60-foot car to furnish for that service
Mr. MACK. Then the department could only pay for 40 feet.
Senator WEEKs. Yes. .
Mr. MACK. Our point there is we would have to have a lot of cars
of different kinds that the railroads would not now employ and will
not now build. The railroads are not building 40-foot cars; they are
building 60 and 70 foot cars only.
Senator WEEKs. In that case you would have to run a 60-foot car
and be paid for the maximum amount used on any part of the run.
Mr. MACK. We would not undertake to do that, because on the
maximum days an excess of that 40-foot space would likely be used,
and we are not permitted in the mail cars to observe and if we sus-
pected it was being used on those days without any compensation,
the only way we could protect our compensation would be by having
a complete outfit of these various units of cars. Take to-day, with
the varying cars we have, we are unable to put specified cars on some
runs. If the department calls for a 15-foot car on a particular run,
we might not be able to put any 15-foot car on that run, but we
might have to put in a 20 or an 18 foot car; but where our entire pay
depended upon space we would be compelled to have all these classes
1402 RAILWAY MAIL PAY.
of cars to protect our pay. We could not take the chance of having
the Railway Mail Service say they only needed 15 feet in a car.
Mr. STEwART. Why could you not put a partition in a 60-foot
car, just as you do now, and use the rest of the car for your own
purpose?
Mr. MACK. I think you will recognize from the plan of the 60-foot
car that you cannot do that. It is impossible.
Mr. STEwART. What we would ask for would be 40 feet on your
assumption. We have a plan for a 40-foot car. Why could you not
use the rest of the car for your own purpose? t
Mr. Row AN. Because you get your mail in there and out of the car
through the use of the doors and you would not have the use of the
doors at all, the 40 feet of distribution space being between the two
sets of doors. -
Mr. BASKERVILLE. Twenty feet of space on lines that would justify
60 feet would not be worth anything to the railroad company. That
is why we do not put partitions in there. We start out with a 60-
foot car with the mail and the baggage is in another car and the 20
feet would not do us any good after you took out the 20 feet of mail
and changed the authorization to 40 feet. That is why we would not
put a partition in it. We would have to have a partition that we
could move around.
Mr. MACK. The design of the car makes it impossible to change a
40-foot car to a 50-foot car and a 50-foot car to a 60-foot car. I hap-
pened to be a member of a committee representing the railroads, in
cooperation with the Post Office Department, on the standards for
steel cars and we very earnestly urged, on behalf of the railroads, that
the committee adopt a plan that would permit of extension such as
that. The committee did not adopt any such plan.
Mr. STEwART. The question of construction of cars is always open
to change. The Postmaster General is given authority by law to
provide for emergencies just like that.
Dr. LORENz. Would not most of your objection be answered if the
units Mr. Lloyd suggested, 15 feet and 60 feet, were adopted? Then
you would not have to break up a car into units which you could not
USe. -
Mr. MACK. Personally I would not favor any units less than 60
feet for a car, for we are not building anything less. As to apart-
ment cars I would like to say that even 30 feet of space in some cases
requires furnishing to the department a full car, and I think that we
have really reached the capacity of apartment-car service to-day
when we have a 25-foot standard, and then a straight full car. I
think that that is the experience on the railroads, that really a 30-foot
car is too large for an apartment car. -
The CHAIRMAN. You think the uniformity of car lengths is desir-
able for safety and economical operation of trains. Is that an estab-
lished railroad policy? -
Mr. MACK. Uniformity of cars?
The CHAIRMAN. Car lengths; that is, 60-foot cars, 70-foot cars, or
would a 30-foot car or a 40-foot car put in between the two 60-foot
cars minimize the safety and increase the cost of operation?
Mr. MACK. I could not pass any opinion on that. That is an oper-
ating question.
RAILWAY MAIL PAY. 1403
The CHAIRMAN. Do you have regular standards on the Missouri
Pacific for car lengths? -
Mr. MACK. Of course the railroads to-day have all sorts of cars,
particularly the older roads. The proposition we have to consider
here is the fact that the railroads to-day are not building such cars,
but they are building 60 and 70 foot cars as standard cars—passenger,
express, and all classes.
The CHAIRMAN. The reason being what—increased speed and de-
creased cost of operation? What is the reason for it?
Mr. MACK. I expect the purpose is standardizing uniformity.
The CHAIRMAN. Mr. Worthington, can you answer that.
Mr. WoRTHINGTON. On our lines, as to apartment cars, we are not
building any mail apartments of less than 30 feet in length.
Mr. CHAIRMAN. You do not have 30-foot cars, but you take a 60-
foot car and use 30 feet for the authorized apartment and 30 feet
for baggage and express. You do not build any 30-foot cars to run
on the Southern Pacific! -
Mr. WORTHINGTON. No.
The CHAIRMAN. The smallest car you build is a 60-foot car?
Mr. WoRTHINGTON. At the present our standard is 60 feet for full
R. P. O. cars.
The CHAIRMAN. For any car that goes into a passenger train?
Mr. WoRTHINGTON. Yes, sir; not less than 60 feet.
. The CHAIRMAN. Your reason being what? Increased speed and
decreased cost of operation?
Mr. WoRTHINGTON. Well, we feel that a car of smaller length is
not economical. Take, for example, a passenger coach: The dead
weight per single seat is always greater as the car is made smaller
and }. would feel that anything less than 60 feet is not an economical
length. ,
#. CHAIRMAN. Mr. Mack, referring to Dr. Lorenz's question about
Mr. Lloyd's suggested plan adopting three units of 60, 30, and 15
foot cars, if that was designated in the law, would you then say that
you would have, under an authorization of 15 feet by the department,
45 feet to utilize for other business and could adapt your other busi-
ness to a certainty instead of an uncertainty where it was left to the
discretion of the department. -
Mr. MACK. Your thought is that in a 15-foot car the Post Office
Department, where they had a 15-foot car, would confine their mail
to the 15 feet of space?
The CHAIRMAN. But they can not get over 15 feet, and when they
have 16 feet of business they have to make some other arrangement
with an increased authorization? •
Mr. MACK. But that they would not do.
The CHAIRMAN. What would they do?
Mr. MACK. They would keep on carrying the overflow in the
baggage space. *
The CHAIRMAN. That is cut out. That is lumped, under the Lloyd
suggestion, and Dr. Lorenz's elaboration of it.
Mr. MACK. We do not feel that the space basis fits the service.
Mr. LLOYD. So far as I am concerned, on the space basis, if you
are going to have an absolute space basis, I am inclined to think we
can go farther than has been suggested in any concrete form and
provide that wherever closed-pouch mail is carried that the mini-
1404 RAILWAY MAIL PAY.
mum space that shall be used in carrying closed-pouch mail shall be,
Say, 10 feet in a car. In other words, if you carry closed-pouch
mail and only carry half a dozen closed pouches, so far as the au-
thorization between the railroad company and the Government is
concerned, it must be a certain number of feet. It seems to me that
that would overcome the problem about the closed pouch. Then if you
had a full 60-foot car, and there is overflow mail and it goes into the
car, you get pay for the space; if it was just a small space, you would
get paid for at least 10 feet, and if it is a larger space, you would
get pay for the space actually used. So far as I am personally con-
cerned I am opposed to any kind of system that does not give the
railroad companies full pay for everything they do for the Gov-
ernment, and I do not want them to have a cent more than they
ought to have for the service rendered.
Mr. MACK. The postal system is very fluctuating. I do not be-
lieve, under practical administration, it would be possible to confine
the mail as it flows in such varying and irregular quantities within
a given space unles that space were based strictly and absolutely
upon the maximum.
Mr. LLOYD. The bill which Gen. Stewart suggests, so far as full
railway post-office cars are concerned, is so plain that it seems to
me there is no possibility of trouble about its construction. It says:
“In computing the car-miles of the full railway post-office cars and
apartment railway post-office cars the maximum authorized in
either direction of a round-trip car run shall be regarded as the space
to be computed in both directions,” etc.
Mr. WoRTHINGTON. That refers really to the return trip !
Mr. LLOYD. It refers to both directions. -
Mr. WoRTHINGTON. That would not prevent in any way the change
in authorization from a 50-foot to a 60-foot car 100 miles out if the
department wished to do it? Z º
Mr. LLOYD. Yes. This applies to the car you start with, a 60-foot car.
As I understand this, if you start with a 60-foot car and it makes a
round trip, the Government would be bound to pay for a 60-foot car
for the round trip 2 •
Mr. MACK. I see your point. Your distinction is the round-trip
movement, but that paragraph very studiously avoids reference to
the length of the run. That is what I am pointing out here, that
when the department only pays one-tenth of the total mail pay for
full railway post-office cars they decline to recognize the minimum
space used in both directions over a through operating run of the
Cà.I’.
Mr. LLOYD. I understand that now, but they have no such require-
ment as that. I may misunderstand this proposed section, but to
me it is perfectly plain that they are bound to pay for the car, not
the train, but the car used, and they have to pay for the car at the
maximum space used, so that if they call at any time, either outgo-
ing or incoming, for 60-foot space, they have to pay for it all the
way around.
Mr. MACK. That is for the route, but Mr. Stewart will not say it.
10r. LORENz. That is for the route, and he may break up the run
into more than one route. -
Mr. LLOYD. That is the contention that has been met at times
past, but it seems to me, according to this, if the car starts at St.
BAILWAY MAIL PAY. 1405
Louis and goes to the Mexican border, and then comes back from the
Mexican border to St. Louis, they have to pay for the full space
used at any place on that run; it does not make any difference where
it runs, but it is the round trip.
Mr. MACK. Suppose the department says that that particular car,
although it is a 60-foot car, is not needed all the way through? -
Mr. LLOYD. They are precluded from that. Let us get the gentle-
man's idea. I think he has precluded himself from saying that if
the cars makes a round trip he has to pay for it. How about that,
Gen. Stewart? $
Mr. STEwART. That can be controlled by the manner of stating the
route, very largely. -
Mr. LLoyd. Then if you just stated the route half way, you made
that 60 part of the way, 40 part of the way, you would pay for 60
feet on the part you needed 60 feet and 40 feet where you needed
40 feet. If that is true, then I am opposed to that proposition, for
that is not fair. If you are going to use a 60-foot car from St. Louis
to the Mexican border and not pay for it, I do not think that is a
fair proposition. . w
Mr. STEwART. You have to confine your payment for cars to routes
over which they are operated. -
JMr. LLOYD. But between St. Louis and the Mexican border there
are three or four routes, and you can make just as many routes as
there are divisions. You can make a dozen routes between St. Louis
and the Mexican border over which this car would travel.
Mr. STEwART. We would make our routes conform, as near as prac-
ticable, to the running of the cars. That is the idea under this plan.
Mr. LLOYD. I am getting at the discretion of the department. I
understood you just now opposite to what I understood you to say
on yesterday. You would make the authorization on the route, and
if you had half a dozen routes between St. Louis and the Mexican
border you might have half a dozen different kinds of authorization
for that between St. Louis and the Mexican border.
Mr. STEwART. Yes; because you might not have a through car run
always on that same route.
Mr. LLOYD. I am talking about a through car.
Mr. STEwART. That would be a different thing. I think I would
agree with you there. *.
Mr. LLOYD. Now, let us see if we understand each other, because
this, it seems to me, is vital, and that is the difference between you
people, as I understand. If a car actually starts at St. Louis and
goes to the Mexican border and returns to St. Louis, as demanded by
you, as I understand this law, the car has made a round trip where
to? Not on a route, but on several routes. It has made a run from
St. Louis to the Mexican border and return, and that is the round
trip of that car. If that is the round trip of that car and at any
place on the journey, according to your proposed law, you authorize
the use of a 60-foot space, you must pay for that 60-foot space the
whole distance, outgoing and incoming. Is that right?
Mr. STEwART. Hardly right. That would leave the control of the
space for which the department should pay entirely to the railroad.
If you are going to combine a through car run over several routes
and compel the department to pay for the maximum needed on any
35797—No. 12–14—8
1406 RAILWAY MAIL PAY.
route it gives the company the opportunity to run one size car out to
fill these several authorizations. That will not be fair to the depart-
ment.
The CHAIRMAN. But you have the protection in your own hands,
have you not? . The initiation has to take place with the department
because the authorization is from the department.
Mr. STEwART. We would call for a 60-foot car.
The CHAIRMAN. Then, as Mr. Lloyd says, why should you not pay
for a 60-foot car for the whole run, provided it is used by the Post
Office Department for that run, although in different lengths, 40
feet part of the way, 50 feet, and 60 feet; but you need it for the
whole run, and why should you not pay by the run instead of by the
route? g
Mr. STEwART. We would pay by the run, according to the routes.
Mr. LLOYD. And you pay according to the route and not the run?
Mr. STEwART. It would carry the same pay on the several routes.
A 60-foot car would carry the same pay.
Mr. MACK. That is not the point. -
The CHAIRMAN. Would you pay for the full 60 feet for the whole
I’UIn
Mr. STEwART. If we needed it, of course.
The CHAIRMAN. If you needed it for any part of that run, and
you called for it. It seems to me you have the absolute protection,
from a governmental standpoint, in the fact that the initiation lies
entirely with you. You call for so much space, you make the ap-
portionment, and you call for 60 feet, and they run 60 feet. If it is
not used by the railroads during any portion of that run for any
other business except the mail service, why should not the Govern-
ment pay for that if the initiation comes from the Government's
representative? -
Mr. STEwART. There is no question at all between us on that. We
would pay for it. - -
Senator WEEKs. Why would you not be on all fours with the
sleeping-car service? Suppose every time that train leaves St. Louis
with a full car of mail, 60 feet, and two sleeping cars filled with
passengers; they have to run those two sleeping cars through, al-
though they are dropping the passengers all the way down, and
erhaps they do not have half a car when they reach the Mexican
i. but sometimes they have a full car. I should think one
service was on all fours with the other; it is necessary to run the car
at Some part of the trip, or the two cars, because there are two car-
loads of passengers, and there may be. I should think it was on
all fours with the mail service of that character. If it is necessary
to run the cars through at all it seems to me you should pay for the
whole service.
Mr. LLOYD. Let me ask another question. It seems to me that it
all hinges on what the definition of a round-trip car run is. As I
understand General Stewart now, he construes that to mean the
round trip of a run which they have established.
Mr. STEwART. No, Mr. Lloyd; I am sorry that I have not made
myself plain. This is what I intended to say: That car runs must
be considered with reference to the stated route over which it is
operated, and necessarily so. We have to state the service by routes.
Senator WEEKs. Why do you have to do that?
RAILWAY MAIL PAY. 1407
Mr. STEwART. I will come to that in a moment. Then, neces-
sarily, the payment for all car operations over that route must be
separate and distinct from the payment on other routes. -
Senator WEEKs. Why is not a route the distance from St. Louis
to the Mexican border instead of from the Mexican border to San
Antonio !. - s
Mr. McBRIDE. There are three different railroad companies in-
volved there.
Senator WEEKs. Why is it necessary to divide a route by the com-
panies operating?
Mr. McBRIDE. I presume it is necessary, because the companies
desire to have the revenue accruing to each company paid to each
company. -
Mr. STEwART. We contract now with separate companies. We
never consider the practicability of contracting with joint companies,
but that might be done. .
Senator WEEKS. For a car goes through over different tracks on
a route.
Mr. STEwART. It might be done.
Senator WEEKs. Would not that simplify the matter very ma-
terially? -
Mr. STEwART. If there was any advantage in it.
Mr. McBRIDE. It would put on the railroads the burden of divid-
ing the revenue between themselves.
Mr. LLOYD. Could you not do this? I do not know the facts about
it, but suppose you have a through mail car from St. Louis to the
Mexican border and you have to Texarkana, Tex., a through 60-foot
car and a 30-foot compartment. Why could you not call the 60-foot
car run a route, as far as that particular service is concerned, and the
other, to Texarkana, a route so far as the compartment car was con-
concerned ?
Mr. STEwART. That would make such a multiplicity of routes it
would be very difficult to administer, and you can accomplish exactly
the same purpose by stating the routes as we do now, which conform
as nearly as practicable to the car runs. ;
Mr. LLOYD. I am trying to get at the trouble that is between you
people and the railroad companies; they say you are going to do just
about what they say you are going to do, and I am trying to make it
appear that you ought not do that way.
Mr. MACK. Take, for instance, a 30-foot car that Mr. Lloyd sug-
gests, which is the second car on the train. We would have to fur-
nish 30 feet of space on the train, where the Government already
requires a full car. For instance, in this through service that Mr.
Lloyd refers to we would have no passenger use for a 30-foot apart-
ment car in service of that character. We could not use space in
it at all. We have to build up our train with baggage, sleeping, and
passenger cars for the general business, and your demands for a
30-foot car on a train of that character would compel us absolutely
to haul the 60-foot car with 30 feet of space that we have no use for
whatever. -
The CHAIRMAN. Suppose that that authorization extended over
30 days and the pay extended over 30 days whether it was used or
not. Would you not have opportunity of adjusting your business to
utilize the 30 feet of space? -
1408 RAILWAY MAIL FAY.
Mr. MACK. On trains of that character we could not use it.
The CHAIRMAN. Could you not adjust your business so that your
30 feet could be used for baggage or express service?
Mr. MACK. No. On trains of that character an apartment for bag-
gage space is of no value because we must make provision in large
cars. In this case we use 70-foot baggage cars for service of that
kind to take care of our baggage and express. . A request for a 30-
foot apartment car is absolutely to us a request for a full car, and on
such trains we would hesitate very much to furnish it, if possible.
Take, for example, what the effect of it would be. The effect would
be on this proposed rate, on a land-grant road, to pay 7% cents a mile
for hauling a car on a heavy train with perhaps 10 or 12 cars. It is
a very serious matter with us to consider a second car under such
circumstances.
The CHAIRMAN. Take the conditions as they exist to-day. You are
called on by the department for a 30-foot apartment car. What do
you do? Put on a 60-foot car?
Mr. MACK. We do not happen to have such cases on our line. We
would be unable to furnish 30-foot cars for that kind of service.
The CHAIRMAN. What kind? ;
Mr. MACK. For a supplemental car on a heavy through train of
this character.
The CHAIRMAN. If they call for 40 feet, what would you do?
Mr. MACK. We would have to furnish a 60-foot car. -
The CHAIRMAN. What do you do to-day with the excess 20 feet
of space? -
Mr. MACK. It is in the postal car. We furnish a 60-foot car if
they call for a 40-foot car. -
The CHAIRMAN. What do you do with the 20 feet of extra space?
Mr. MACK. Nothing at all. .* *
The CHAIRMAN. In no instance?
Mr. MACK. No, sir.
The CHAIRMAN. It is not utilized by the railroad for any service
whatever?
Mr. MACK. No, sir.
The CHAIRMAN. It is not?
Mr. MACK. No, sir; it is not.
The CHAIRMAN. What would be the objection to stating the pay
of the railroad runs and the service by routes? You say it is neces-
sary to designate your service by routes. Is it possible to designate
the service by routes in order to arrange for the pay by car runs?
Mr. STEwART. That is exactly what we would do under this pro-
posed law. *
The CHAIRMAN. You would 3
Mr. STEwART. Yes. •
The CHAIRMAN. Then you would pay for the car run for the maxi-
mum authorization the full round trip of the car run, would you?
Mr. STEwART. Yes; over the route. •
The CHAIRMAN. Over the runs?
Mr. LLOYD. He says over the route.
Mr. McBRIDE. The run might cover several routes. -
Mr. STEwART. The supposed car run may cover the trackage of sev-
eral companies. We contract with one company for the service. We
do not contract with two or three companies. t .
RAILWAY MAIL, PAY. 1409
Mr. LLOYD. Of course not. Just exactly as they do with the Pull-
man coach. Here is a coach put on at St. Louis that goes to the
Mexican border. You make a contract with the initial road which
takes it through to the end, and it does not make any difference how
many companies there are handling it. It is nothing to the passen-
ger or passengers what arrangements may be made with the several
roads, just as long as they get the service. -
Mr. MACK. Here is the Great Northern with a clearer case than
that. There is one route, one railroad, from St. Paul to Devils Lake,
where they use a 60-foot car; from Devils Lake to Glasgow they
allow 40 feet; and from Glasgow to Spokane 30 feet, and from
Spokane to Seattle 50 feet.
Mr. McBRIDE. That is not all one route. -
Mr. BASKERVILLE. It was when you made up Document 105—one
route from Fargo to Spokane.
Mr. LLOYD. Is it a through car that goes from St. Paul to Spokane?
Mr, BASKERVILLE. Yes, sir; from St. Paul to Seattle—the route
ran from Fargo to Spokane when Document 105 was made.
Mr. McBRIDE. It does not run from St. Paul to Spokane?
Mr. BASKERVILLE. You have given 60 feet from Fargo to Devils
Lake, 40 feet from Devils Lake to Glasgow, and, on the same route,
30 feet from Glasgow to Spokane. We have to run a 60-foot postal
C2;I’. -
Mr. McBRIDE. It is occupied by storage mail?
Mr. BASKERVILLE. Not at all. You did not give us any credit or
allowance for it.
Mr. McBRIDE. Do you mean in Document 105?
Mr. BASKERVILLE. You did not allow it in your calculation in Doc-
ument 105. You did not allow for 60 feet, and you charged that
back into the passenger space.
Mr. MACK. The point of the matter is this: The proposition is
whether in that case a 60-foot car should be authorized from St. Paul
to Seattle?
Mr. BASKERVILLE. Fargo to Spokane, we will put it.
Mr. LLOYD. My notion was, as I read this law, that it was the
car run, and if the car ran from St. Paul to Seattle and return you
would get pay for 60 feet of space; but that is not, however, the in-
tent of Gen. Stewart.
Dr. LORENz. Should not the car run be taken into connection with
the train run?
Mr. LLOYD. I am using his language. The language here is the
car run, and I understand the car run is the run of the car; if the
car runs from St. Paul to Seattle and return, that is the round-trip
car run of that car.
Dr. LORENz. But there may be cases in which the car run is longer
than the train run?
Mr. MACK. Yes. A train may start at one point and break up
into different sections at junction points, but you can not break a
60-foot car into a 50-foot car or a 40-foot car; and, in this case, on
the Great Northern, you can not change it from a 60-foot to a 40-foot
car, and then from a 50 to a 30-foot car.
Dr. LORENZ. My idea is, when the company breaks up the train it
is no hardship to assume there is a new starting point, and they may
then authorize what they please.

1410 RAILWAY MAIL PAY.
Mr. MACK. There is hardship whether the train is broken there
or not, but it has no bearing on the matter whatever. w
The CHAIRMAN. The hardship being what? -
Mr. MACR. There would be a hardship because we would have to
run the car through or change to a different car. If you change to
a different car you would have to delay the train perhaps an hour
transferring the mail, so that these movements of cars are not
based on convenience of the railroad at all, but they are based on
the necessities of operation; they are transportation propositions,
pure and simple.
Mr. LLOYD. Does not this extend the car-run proposition? The
car run, as Gen. Stewart would construe it, is the run of the car to
the end of a route and return. Now, if that same car goes farther,
theoretically it is not the same car, it is the car in another route, and
the pay would be based on the run of that car in the next route; then,
if it passed over the third before it has reached the final terminus
of that car, it would be, so far as the law is concerned, a different car
again, and you would receive pay in accordance with the demands of
that route in round-trip service. It seems to me that that works a
hardship on the railroad, and that the car, if it makes the run, it does
not make any difference how many routes there are, ought to be paid
for the run it makes.
Mr. STEwART. The tendency would be to make the routes conform,
as nearly as practicable, to the car runs. That would be the tendency
under the new plan. -
Mr. LLOYD. Let me state it a little differently: Suppose in starting
out from St. Louis the needs of the department require two full rail-
way post-office cars. You need one of those through to the Mexican
border, you need the other one to Texarkana; at Texarkana you take
off one car and the other goes through to the Mexican border and
makes its return. My notion would be, possibly I am wrong about
it, that this full car that runs from St. Louis to the Mexican border
and return should be paid for according to the maximum use of that
car at any point on that run. The other car, the one to Texarkana,
would pay for full space only to Texarkana and back, because that is
as far as it went.
Mr. STEwART. The practical operation of it would be as you say.
This Great Northern case is a good example of what we believe would
occur. That is a case where the authorization of the car space be-
tween those extreme points, 1,800 miles, is changed from time to time
because the needs for distribution space throughout that long distance
across the country change and it could not be otherwise under the
existing statutes. But we always have mails to carry across the
continent, and the difference between 60-foot and 40-foot authoriza-
tions would entirely disappear on that route, because the distinctions
between distribution space and storage space will not exist under the
proposed plan. *
Mr. LLOYD. What is the objection to have the law specify the pay
that way, if that will be the practical operation? In your judgment,
what is the objection to having the law so designate and specifically
so to make certain that the pay would be dependent upon existing
law and not upon personal opinions? -
Mr. STEwART. The objection is this: That the result that Mr. Mack
and Mr. Baskerville are seeking to accomplish, and the result which
RAILWAY MAIL PAY. * 1411
I state would be the practical one under this suggested plan, must
be accomplished through the administration of the service as it
exists at the time, and you can not frame any law which would meet
that specifically without completely tying the hands of the depart-
ment and compelling it to pay in any event the maximum rate.
Mr. LLOYD. It seems to me there could not be any question when
you demand a full R. P. O. car they are to receive so much. If you
demand an R. P. O. car they shall receive that pay. If later on you
authorize two R. P. O. cars they would then get pay for two. If
still later on you needed three, they would get paid for three. It
looks to me like the expanding of the service is fully provided for in
the bill which you propose, and you provide for additional service
and provide pay for additional service. It seems to me you have
that safeguard.
Mr. STEwART. That is my own view about it.
Mr. MACK. We know how difficult it is, in the law, to state spe-
cifically what must be done. Then in reference to our pay, the one-
tenth of our pay provides that we shall be paid on a round-trip basis.
As I understand, there is no question but what for many years we
were paid on a round-trip basis. The department some years ago
started in the half car line proposition and split the lines, and the
Supreme Court sustained the position of the department in that
matter. The department has discretion in the matter to-day of the
full R. P. O. car space, representing only one-tenth of our pay. Even
with only one-tenth of our pay the department does not accept the
principle that the maximum needed over the operating run in both
directions should be paid for. How much more difficult would the
situation be when ten-tenths, or the whole of the pay, was involved
in questions of discretion of that character.
Mr. LLOYD. Very marked differences, according to my construction
of this law, because it specifically proposes that the maximum shall
be the basis. That is not the law to-day.
Mr. MACK. But it does not provide for the length of run or through
movement of the car. -
Mr. LLOYD. It provides for full car runs. It may be that some
suggestion right there as to just what is meant—and that is what I
have been trying to get at for the last hour, just that very thing—so
that we may fully understand the difference between Gen. Stewart
and the railroad people at that point.
Mr. MACK. If we would accept that principle and apply it to the
space in 1909, it demonstrates that we are underpaid over $15,000,000,
and that under any provision of this kind our pay should be increased
$15,000,000. -
The CHAIRMAN. In that connection your statement and assertion
just made to my mind is capable of the construction that you would
receive, under the new plan suggested by the department, if adopted
and enacted into law, $15,000,000 more than you receive in pay to-day.
Mr. MACK. If the rates were fixed equal to the earnings on the
passenger service. But if we take the space herein proposed, which
seems to be entirely fair, we come immediately to the question that
we think settles the question of underpay very, very clearly and the
amount of it. - -
Dr. LORENz. The amount of $15,000,000?
Mr. MACK. Yes, sir. -
1412 * RAILWAY MAIL PAY.
Dr. LORENz. I do not think so.
Mr. MACK. The actual car-foot miles, a little over $15,000,000.
Mr. LLOYD. Now we have this thing narrowed down to two ques-
tions, one, the discretion of the department with reference to the
runs and the other the question of the rate. I am speaking of the
rate of the storage and apartment. -
The CHAIRMAN. As I understand it, the difference between the
department and the railroads is that the department wants the au-
thority to route the pay, the railroads want to bind the department
to pay them on car runs under the law. Is that a correct statement?
Mr. LLOYD. That depends on the construction of the words “car
run * used in the proposed law.
The CHAIRMAN. Dr. Lorenz, in that connection, in the tentative
draft that you have submitted, what was your idea in making the
bill provide for runs instead of routes?
Mr. LORENZ. It was to meet this very difficulty that has been
brought up here.
º CHAIRMAN. Do you think that your plan did meet the diffi-
culty?
Dr. LORENz. I rather thought it did. I think even that might re-
quire some elaboration, because I have not thought of the case where
the car runs were for longer distance than the train runs. Some one
called my attention to the case of a car which started in eastern
territory and went through to Chicago or Omaha.
Mr. Scott. There are several storage cars from New York to
Omaha, or Council Bluffs. *
Dr. LORENZ. I should think since there was a general break-up of
trains at Chicago, that the natural authorization would stop at Chi-
cago and begin again at that point?
ir. Scott. That is the question. Where does it stop?
Mr. WoRTHINGTON. I do not think Chicago is a typical illustration
of the breaking-up point, for the reason that nearly all trains pass-
ing through Chicago from the east to the west are delayed a con-
siderable time, which is not the case at ordinary railway junction
joints. That would not apply to the car mentioned by Mr. Scott
rom New York to St. Louis, which operates, as I understand, en-
tirely over the Pennsylvania lines.
Mr. Scott. That is a car that operates over seven different routes
and four different corporate companies, all on one system, and the
car runs through from New York to St. Louis. When that car
leaves New York on the first route between New York and Phila-
delphia it will have an average load of, say, three and one-half tons,
and when it gets to St. Louis over the Vandalia road the average load
would be about two tons. Dr. Lorenz's basis of pay contemplates an
augmentation of his rate on the basis of the tonnage, which would
result in that case, if that was made a mail run from New York to
St. Louis, in throwing part of the pay of the Pennsylvania Railroad
on to the Vandalia Railroad, an entirely different company. That is
why I thought that Dr. Lorenz’s mail lines might be defective.
Dr. LORENZ. I agreed to that proposition, but inasmuch as I am
willing to omit the difference in weight as a basis for condition in
pay, I think that objection would fall. - -
Mr. Scott. I do not know whether that is less objectionable than
the mail routes. & * *
Railway MAIL, PAY. 1413
Mr. WoRTHINGTON. I think Dr. Lorenz has mentioned the vital
É. He says he is willing to omit the allowance because of dif-
erence in weight, and that is the very factor that enables, at the
present time, the heavy traffic routes to run mail trains with Some
profit, which would be denied them on a space basis, making those
trains extremely unprofitable. If the general question of pay, based
on space, is up for discussion I would like to read into the record a
protest on behalf of the Southern Pacific on the space basis.
The CHAIRMAN. Before doing that and before Mr. Mack completes
his testimony, I would like to get Mr. Gaines, who is the division
superintendent of Railway Mail Service for the eleventh division and
who lives at Fort Worth, Tex., an opportunity of asking Mr. Mack
º questions which he wished to ask while Mr. Mack was reading
his paper.
Mr. GAINEs. Mr. Chairman and gentlemen, I think it may be of in-
terest to know that this particular train under consideration—the
St. Louis-Mexican train—where it is proposed to make a car run,
starts out of St. Louis with mail in five different cars. One of those
cars, the mail car, is cut out at Little Rock, Ark., the mail tied out of
the racks, and that going forward is transferred at Little Rock
either to one of the baggage and express cars in the train or into the
other mail car, the one which runs through to the Mexican border.
At Texarkana, the point that has been mentioned here as a place
where the car could not be handled, one of the cars containing mail
and express is cut out. The third car containing mail and express is
cut out at Palestine, Tex. The mail car, with mail in the express
car, runs through to Laredo, the Mexican border. For distributing
purposes a 20-foot apartment car would suffice between San Antonio
and Laredo. The department credited 45 feet of space to the mail
between San Antonio and Laredo, leaving 25 feet for storage. That
storage mail consists entirely of through Mexican mail, for which the
company is paid by weight, which, as a matter of fact, when it was
being handled in large quantities before the Mexican trouble, was
being loaded in the baggage or express car at St. Louis and went
through to Laredo in the express car and not in the mail car. If I
am mistaken in any particular I would be glad to have Mr. Mack
correct me as to my understanding of the car movement. Is that
correct, Mr. Mack? f
Mr. MACK. No. That car is run through for the specific purpose
of avoiding transfers.
Mr. GAINEs. I am making simply a statement of fact as to the way
the car is handled.
Mr. MACK. No question exists about that.
Mr. GAINEs. The mail which is credited with 25 feet of space is
carried in the express car and not in the mail car.
The CHAIRMAN. Why, if you only needed 25 feet for distribution
purposes, did you allow 45?
Mr. GAINEs. We have not allowed that. I am not entirely familiar
with this, but the information the department called for was the
space occupied for distribution and by storage mail in November,
1909. In our reply we not only informed them of the amount of
space occupied in the mail cars, but the space Occupied for storage
purposes also, and we gave them the information, as I recall it, that
the mail service required 45 feet of space between San Antonio and
1414 RAILWAY MAIL PAY.
Laredo, 25 feet of that space to be charged or credited to storage
space and not to space for mail distribution. I thought it might be
that showing that this particular train was broken up in that way,
might serve to point out the fact that it would not be impossible to
handle mail cars in the same way if the department were paying by
space instead.of by weight; at least, I thought it might be of interest
in that connection on this particular train, which was referred to as
a train which, on account of its through service, necessarily could not
be stopped en route to make any change in equipment by being
broken up and a car dropped out at Little Rock, a car dropped at
Texarkana, and a car dropped at Palestine.
The CHAIRMAN. The dropping of a car from the train is the same
as changing mail from one car to another on the train?
Mr. GAINEs. No; that would require more time. As a matter of
fact, however, at Little Rock, that operation is very largely per-
formed. The mail is taken out of what we call the Arkansas car, the
car that is operated for the purpose of distribution of Arkansas mail
between St. Louis and Little Rock; that car is cut out and all the mail
in that car is transferred to other cars.
The CHAIRMAN. Is that done under your direction or under the
railroad's election? t
Mr. GAINEs. They are only paid for that car to Dittle Rock, be-
cause that is as far as the car is needed for distributing purposes, and
they elect to cut the car out at that point and transfer the mail either
to the storage or mail car. -
Mr. MACK. If I may explain, that is the mail that still remains in
the car at Little Rock, and that car is the local car that runs from
St. Louis to Little Rock, and practically the principal part of its
load, and almost its entire load, is delivered from the train before the
train gets to Little Rock. We do not object in case of that kind to
the car being cut out; it is very proper that it should be cut out, be-
cause it is not needed beyond there. There are probably a couple
of truck loads of mail to be transferred at that point, and it is trans-
ferred while the necessary change of engines is in process at that
point.
Mr. GAINEs. Would not that same reason apply to a car cut out
at any other point?
Mr. MACK. In that event you would have trains of several cars
more than we have now. We have trains built up now on a basis of
traffic as near as possible to adjust it from initial points to get a
through loading. For instance, on this train at this time there are
three baggage cars on that train. In order to secure exactly the
transportation proposition of eliminating all transferring, instead of
putting all the mail in one car, and for the purpose of avoiding
transfer, we split up the transfer mail and it goes into the three cars
with the baggage and express. At Texarkana we cut out a car
that contains the mail and baggage and the other cars go through
to Palestine and Laredo with the overflow mail and baggage. It is
a pure, simple illustration of what we have been trying to show here,
that through car movements are essentially a part of the transporta-
tion and operation, and that is the point that the department did not
recognize in Document 105 in its report of space.
The CHAIRMAN. Is it recognized in the present suggested plan?
RAILWAY MAIL PAY. 1415
Mr. MACK. I do not think so; no, sir. That is the point at issue.
That is where the difference exists between the department and our-
selves and it applies to apartment-car service as well as full postal-
car service. -
Mr. GAINEs. It occurs to me, in any case where we had a route
terminal or any arrangement for changing from One sized car to
another, or from a three-car train to a two-car train, or from a two-
car to a one-car train, as the case may be, that where the mail had
necessarily diminished by being put off at local stations, just as Mr.
Mack refers to in the case of the Little Rock car, that there would
be no more difficulty in making the change at that point than there is
now at Little Rock. It might well be that we could not perform
service, in fact, I am sure we could not perform service if we were
paying for the entire space occupied by the mail. We could not go
beyond Texarkana with one car, it would be two cars or three cars,
but we might cut out a car at Texarkana or Long View Junction or
any other point where the particular mail that was being handled in
that car that we propose to eliminate from that train had been re-
duced to such an extent that we no longer needed it. I think the
same would apply to a reduction from a 60 to a 50 foot car or 40-foot
car, as the case may be. I do not see anything impossible about it.
In the case Mr. Mack referred to, of the fast-mail train, it would
be one of the hardest problems we would have to contend with, but
I can not believe it would be entirely impossible, the department.
paying for all the space that it needed to handle the mail. If we
had to have two cars at San Antonio or Palestine, I think whenever
the needs of the service could be met by less space than we started
out with than we had at that particular point, it would be possible
to eliminate the car. -
The CHAIRMAN. Does not the department absolutely control the
car run?
Mr. GAINEs. As I understand it, that is what the railroad company
now wants to control. - -
The CHAIRMAN. I say, does not the department absolutely control
the car run?
Mr. GAINEs. We pay for cars over certain lines; that is true.
The CHAIRMAN. The car is sent where the department authorizes
it to be sent?
Mr. GAINEs. It is authorized between certain points.
The CHAIRMAN. Then, the department controls the car run?
Mr. GAINEs. Not absolutely.
The CHAIRMAN. Why not?
Mr. GAINES. I will say in some cases of through-car service, where
from some standpoints it would be better to have another car set into
the train, we would agree to the other car operation for the purpose
of eliminating any possible delay. -
The CHAIRMAN. You assent to it?
Mr. GAINEs. Yes.
The CHAIRMAN. Consequently you control it?
Mr. GAINEs. Yes.
The CHAIRMAN. You direct it, and the Government directs every
car run? -
Mr. GAINEs. In that sense, yes.
1416 RAILWAY MAIL PAY.
The CHAIRMAN. Do you concur on that, General Stewart? Is that
the case, that the Government absolutely controls every car run?
Mr. STEwART. I do not think I could answer yes to the question
that you have in mind. The way I understand your question is this,
does the Government, to the exclusion of the railroad company's
management, control the operation of these cars? I should say, no.
We control them only so far as we authorize the space, and we do
control that far. Between the railroad company and the department
comes in this zone of mutual agreement and cooperation in the oper-
ation of the service. *
The CHAIRMAN. The railroad has no discretionary power in the
activity whatever. In other words, their hands are tied so far as
having any say in the authorization of the department?
Mr. STEwART. Theoretically that is so. We cooperate with each
other. If the railroads do not have the cars, we say we will wait.
The CHAIRMAN. But the power of initiation in every activity lies
with the department itself? -
Mr. McBRIDE. Not always in the operation of the car.
The CHAIRMAN. It does in the pay?
Mr. McBRIDE. Yes. But, for instance, we authorize a line of cars
between certain points, and we only need an apartment car the rest
of the way. For operating reasons the company may want to operate
that car through.
The CHAIRMAN. And you assent?
Mr. McBRIDE. Yes; we assent.
The CHAIRMAN. They can not do it without your consent?
Mr. STEwART. They could.
Mr. MACK. Let me illustrate that point by using the Union Pa-
cific experience between Kansas City and Denver. The Union Pa-
cific had an authorization of a 40-foot mail car from Kansas City
to Denver, and the department decided that they did not need this
40-foot car beyond Ellis, Kans, even with only one-tenth of the pay
involved, with the smallest unit of 40 feet, they decided they only
needed 30 feet beyond Ellis, and they gave the railroad company
the opportunity of delaying the train at that point and transferring
the mail into a 30-foot car because they did not need a 40-foot car.
Mr. WoRTHINGTON. They are now being paid for the 30-foot car?
The CHAIRMAN. Did the railroad company do that?
Mr. MACK. My understanding is they temporarily did, and par-
alyzed the train service so that they had to stop and run the car
through. So that would be the experience of the railroads, which
shows an absolute necessity of the recognition of the car that started
out at the initial point and recognition of it through its operating
point. This train ran between Kansas City and Denver.
Mr. STEwART. Mr. Mack is referring altogether to conditions which
arise under a law which fixes two bases of pay and which gives the
department power to exercise judgment with reference to one case
where we pay for additional space.
Mr. MACK. That proposition would be vastly worse when there
were ten times the pay involved and it covered the transportation
service also, because if the department then started out with a 40-foot
car, or, perhaps, conceding here that the load as well as the dis-
tributing facilities were involved, that they started out with a 60-foot
car, then when they got to Ellis they would say they needed a 50-foot
IRAILWAY MAIL PAY. --- 1417
car and at some other point a still smaller car. There is a situation
which would be much worse under a space plan than it is to-day,
where the questions at issue involve comparatively a small amount of
II].OI) e.V. a - :
§ BANDEL. I happen to be familiar with that case because I be-
lieve I prepared the draft for the order. The facts are that the run
is from Kansas City to Denver, 500 miles, and the mail largely went
through to Denver and we paid additional only for distributing facili-
ties. From Ellis, Kans., to Denver the clerk slept and, of course,
we did not need any distributing space.
Mr. MACK. But on a space basis the men would not sleep.
Mr. RowAN. Mr. Chairman, I have a better illustration than that
between Utica and Massena Springs. We have train service there
where the department authorized a 40-foot car between Utica and
Watertown and the department said they only needed an apartment
car between Watertown and Massena Springs, so, in order to comply
with the exact requirements of the Post Office Department, we op-
erated the full car as far as Watertown and then we put on an apart-
ment car from Watertown to Massena Springs. That is not what
the department wanted and the superintendent of the Railway Mail
Service in New York came to me and asked me whether I would not
operate the full railway post office car through to Massena Springs
because it took an hour to tie out the mail in order to make the trans-
fer of cars at Watertown and it took some little time to set up the
sacks and label them to do the distribution from Watertown to
Massena Springs and it was delaying the mail and they could not
perform the distribution and the clerks were complaining. I ob-
jected to doing that. I said we are going to give you exactly what
you ask for and cooperate with you in every way, but if you want a
full car through you ought to authorize it, and we negotiated back
and forth and finally the department, in order to prevent a transfer
being made at Watertown, authorized the car from Utica through to
Massena Springs. In that particular case it was possible to make
the transfer; there was sufficient time at Watertown to do so, but in
most cases where they changed an authorization from 60 feet to 40
feet and later changed it in the same train to 50 feet there is no
time to make the transfer, even if we had the cars and maintained
the through schedules that the department wished and which we
have to make in connection with our passenger service.
The CHAIRMAN. Is this isolated, or are these cases of general in-
stances?
Mr. RowAN. This is an actual case.
The CHAIRMAN. But it is an exception rather than the rule?
Mr. RowAN. It is the first case I have had on the New York Cen-
tral Lines. I am sure if we attempted to change cars every time
the department changed their authorization that the department
would not change the authorization. But we can not do it, because
we haven’t got the different size cars. Furthermore, our schedules
would not permit the delays incident to making changes in size of
cars en route.
The CHAIRMAN. Has the New York Central a standard-sized car?
Mr. RowAN. Yes, sir; a 60-foot car.
The CHAIRMAN. All your cars in passenger trains are 60 feet or
over?
I418 RAILWAY MAIL PAY.
Mr. RowAN. Yes, sir; and every apartment car. We are building
to-day 50 all-steel 30-foot apartment cars. These are all 60-foot cars.
The CHAIRMAN. All the cars on what are known as passenger
trains are 60 feet or over?
Mr. RowAN. So far as I know; yes, sir.
The CHAIRMAN. The purpose being what in building them 60 feet,
increased speed and decreased cost of operation?
f Mr. RowAN. I do not know the exact reasons for building them 60
eet long.
Mr. WoRTHINGTON. You can realize a passenger car has to have two
trucks, regardless of its length, and naturally a 60-foot car is more
economical to operate in proportion to its loading capacity than a
shorter car.
The CHAIRMAN. And I understand for that purpose a 60-foot car
has been adopted as a standard car by all the railroads?
Mr. WoRTHINGTON. Sixty feet or more.
Mr. MACK. As to the cars being built at this time.
The CHAIRMAN. I mean that is the present and future policy, so
far as is known? +
Mr. MACK. Yes.
Mr. McBRIDE. Referring to the case Mr. Rowan brings up, I think
it sufficient to say that the department, as soon as the facts were
learned, paid for 40 feet in each direction.
Mr. RowAN. Mr. McBride himself asked me if I would not operate
the full car through to Massena Springs, but in lieu of an apartment
car from Watertown, so as to avoid transfer.
Mr. STEwART. I want to call your attention to the fact that these
complaints are directed entirely to the administration of the service
at present.
The CHAIRMAN. You mean under the present conditions and law?
Mr. STEwART. Yes. Further, it appears from Mr. Rowan’s state-
ment that, notwithstanding the fact that the present law authorizes
the Postmaster General to pay for 60 feet, 50 feet, and 40 feet rail-
way post-office cars, and he knows that it is the practice of the depart-
ment to-day, and has been for a long time past, to scrutinize care-
fully the matter of space for which we give additional pay, they are
nevertheless building 60-foot cars and none other. I take it also that
Mr. Rowan does not expect to go on the space basis because he is
here opposing it, and T assume that he is satisfied to build 60-foot
cars and provide them wherever we need 40-foot authorizations or
50-foot authorizations. Furthermore, notwithstanding the fact that
he knows that we have plans for 10, 15, 20, and 25 foot apart-
ment cars, he says they are building nothing but 30-foot apartment
cars. They are, therefore, willing to continue giving us 30 feet of
space, notwithstanding the fact he knows we may not need more
than 10, 15, or 20 feet.
Mr. RowAN. We were living in hopes and do hope that some day
the thing will be corrected. We are not satisfied, and we are in
hopes that some day it will be corrected and the department will
recognize a standard car, and when they want distribution facilities
they will authorize a standard car. Now, the 40, 50, and 60 foot cars,
as I understand it, were originally put into the law at the time when
there were different sizes of cars, and the law was made to fit the
conditions that existed at that time, and since that time the depart-
RAILWAY MAIL PAY. . 1419
ment has gone to the different-sized authorizations. Originally it
was made to fit the different-sized cars that existed. -
Mr. MACK. In building steel cars, Mr. Chairman, it is not an easy
matter, but it is almost possible in building steel equipment to change
the length of cars to conform to the views of the department with
reference to the amount of space needed on a particular train. Rail-
roads building cars to-day certainly do not overlook the fact that
we have parcel post, and the parcel-post growth is not going to be
in the direction of small cars, but it is going to be in the direction
of larger units, and it would not be a sound proposition to build
steel cars with 10-foot apartments with the expectation that it might
be necessary later to turn them later into 15 feet and later into 20
and later into 30. So that those are reasons, and very complete
reasons, for the action of the New York Central and the action of
our own lines. We are building 21 to-day with 30-foot apartments—
steel cars—and it is based upon these primary reasons.
The CHAIRMAN. You are building 21 60-foot cars with 30-foot
apartments?
Mr. MACK. Yes.
The CHAIRMAN. Mr. Gaines, have you finished your discussion
with Mr. Mack in reference to these concrete instances Mr. Mack has
submitted?
Mr. GAINEs. Mr. Chairman, there was another point I wanted to
inquire of Mr. Mack upon. The report that the department received
of the particular case of space between San Antonio and Laredo came
from my office, and Mr. Mack, in his statement a while ago, claimed
that it was a necessary movement of the through car between San
Antonio and Laredo, and therefore that 60 feet of space was charged,
but I do not see the reason for that statement. The heavy mail which
we credited with 25 feet of linear space is carried in the baggage car
and not-in the mail car, and therefore I see no reason for the opera-
tion of the through mail car beyond San Antonio, at which point the
department ceases to pay for it as a full railway post-office car. If
Mr. Mack will enlighten me on that subject I will be glad to have
him do so.
Mr. MACK. The car, as I pointed out, was operated through be-
cause of the necessity of * transfer and because of the neces-
sity of avoiding any delay in connection with it on account of the
Mexican National Railroad connections, which had an arbitrary de-
parting time, and we absolutely had to run the car through.
Mº, GAINEs. Did you not have an hour's dead time at San An-
tonio'
Mr. MACK. No; we never did have an hour's dead time at San
Antonio.
Besides, the train, of course, can not always be depended upon to
be on time at the end of a thousand-mile run, so that it was prima-
rily an operating necessity. We did not operate it just for the pur-
pose of hauling the car. --
Mr. GAINEs. I can not agree with that proposition, because the
heavy mail was in the baggage car and was not in the mail car.
The CHAIRMAN. And went through the run of the baggage car?
Mr. GAINEs. That was the heavy mail—the Mexican mail—that
was in the through baggage car and not in the through mail car.
1420 r RAILWAY MAIL PAY.
Mr. MACK. The registered mail, I think, without getting into any
controversy about how many bags or pounds there were, for Mexico
is usually heavy and has to be carried in the postal car. We could
not get it in a 20-foot car—the registered mail alone.
Mr. GAINEs. There is another point I would like to ask Mr. Mack
about, and that is his statement that mail arriving at Shreveport,
where a certain apartment-car run emptied, was carried in the same
mail apartment car between Shreveport and Marshall. If that was
done, it was improperly done; the railroad company had no right
to carry mail in the mail apartment car where there was no clerk
on duty, unless the matter had been taken up with the officials of the
Railway Mail Service and an agreement had been reached whereby,
for the convenience of the railroad company, the mail would be al-
lowed to remain in the mail apartment car and the mail apartment
car would not be locked with a mail lock, but would be locked with
a switch lock and entirely under the control of the railroad company,
just the same as though it was in a baggage car.
Mr. MACK. That entire presumption, with regard to the space,
is that it was in our custody, and if it was in our custody we have
the right to carry the mail in any part of the train that is in our
custody. It does not make any difference to the department whether
it is in the mail, baggage, or apartment car, and if we carried it
there for our convenience, certainly the question of propriety which
you raise is not involved at all, for the department's rule can not ap-
ply over cases of that kind.
Mr. GAINEs. We have allowed some cases of that kind after corre-
spondence with the railroad companies, and upon their agreeing to
see that the mail-car doors were secured with a switch lock, and it
being understood it would be entirely under the control of the rail-
road company. Recently we have had a case where the mail-car doors
were not secured and where a tramp, or someone, had gotten in there
and robbed the mail pouch, and we have refused to allow that ar-
rangement to continue. -
The CHAIRMAN. Would not that be a criticism on your own judg-
ment in permitting it in the beginning?
Mr. GAINEs. In that particular instance it looks like our judgment
was wrong; that the railroad company did not properly protect it.
Mr. PETERs. If there was anything in there for a tramp to rob and
you keep it under your supervision, it must be in your service.
Mr. GAINEs. It was not operated under our service.
The CHAIRMAN. The committee will now take a recess until 2
o'clock. -
(Thereupon, at 12.40 o'clock p. m., a recess was taken until 2 o'clock
... II).
p.m.) AIFTER RECESS.
The CHAIRMAN. Mr. Worthington, have you got your statement?
STATEMENT OF ME. W. A. WORTHINGTON.
Mr. WoRTHINGTON. The discussion this morning dealt with the ad-
ministrative features of the space basis. On behalf of the Southern
Pacific Co. I would like to place in the record a respectful protest
RAILWAY MAIL PAY. 1421
against the confiscatory nature of the proposed department space
measure as applied to the lines which I represent, and in doing so
will base my conclusions on the department's apportionment of space
and expenses found in Document 105. The Southern Pacific Co. to
reach the valleys of California must cross high mountain ranges with
maximum grades of 116 feet to the mile or more, our heaviest traffic
mail route, involving the lifting of trains almost from sea level to.
an altitude of 7,000 feet in a distance of 80 miles. Because of dis-
tance from eastern markets we must pay excessive prices for rails
and other material used in operation, while on account of local in-
dustrial conditions our wages paid are the highest in the United
States. On our heaviest mail routes we operate a fast expedited mail
train, which is moved at much higher speed than the other passenger
trains. On the route between Ogden and San Francisco Document
105, page 194, showed that our mail revenue averaged 6.4 mills per
car-foot mile, or 38.4 cents per 60-foot car mile. Gen. Stewart says,
on page 1261, that the pay under his proposed bill would be 20.91
cents per car-mile, including the terminal allowances, which would
be less frequent on our Ogden route because of the long haul. Our
annual reduction on this one route would thus be about $400,000.
Our high operating costs are confirmed by the department itself
in table 7 of Document 105, which shows a cost for all Southern
Pacific lines for operating expenses and taxes of 3.70 cents per car-
foot mile, or 22.60 cents for a 60-foot car-mile. The same table shows
that we are now receiving 5.25 cents per car-foot mile, or 31.5 cents
per 60-foot car-mile, on our total mail traffic, or about sufficient to
cover the allowance for other charges against income; 32.57 per
cent of the operating expenses and taxes, as computed by department
in volume 7, pages 95–96. Note, however, that the proposed pay is
only 20.91 cents per car-mile, or below the department’s own estimate
for operating expenses and taxes only, without any allowance for
capital charges, coupled with an obligation under the proposed law
to transport the mails at not exceeding these rates. Is not this clearly
confiscation of property; and is it fair to ask us to accept such a bill,
which is below the department's own estimate of operating cost, to
say nothing of a return on our investment, and at the same time .
expect us to operate the expedited train service? Not only is the
plan confiscatory, as far as we are concerned, but it introduces into
our passenger service a rate far below the carload earnings received
on many classes of freight traffic, and the possibilities in this connec-
tion are not pleasant to contemplate. Furthermore, it confines us to
a minimum and noncompensatory car-mile revenue and denies us
the opportunity which every road should have of taking advantage
of economies that may result from heavier car loading. In the past
15 years on our lines material prices have gone up 30 per cent and
wages 20 per cent, and a space rate that might have been fair at the
beginning of such a period would be ruinous at its close. The South-
ern Pacific Co. can not protest too strongly against the radical and
unjust operation of the plan recommended by the department, which
would reduce its compensation below the figure which the department
itself estimates is necessary as an adequate return for operating ex-
penses and taxes only, leaving no interest whatever or return on the
investment.
35797—No. 12—14—9
1422 * RAILWAY MAIL PAY.
The CHAIRMAN. As I understand that, do you think the present
method is more equitable as between roads operating under different
conditions? 3.
Mr. WoRTHINGTON. I think it is much more fair.
The CHAIRMAN. That is, so far as topographical and climatic con-
ditions and varying wage schedules are concerned, the present plan
would be much fairer than the suggested plan of the department, if
adopted, would be? - -
Mr. WoRTHINGTON. I think so.
Dr. LORENz. I do not quite understand how varying climatic con-
ditions, grades, etc., can be better taken care of by a weight system
than by a space system, for the existing law pays the same rate per
ton per mile for a given load per route with reference to one system
as on any other in the United States. The law is simply one schedule
for the whole country for a given density of traffic. Therefore I do
not see why, in that respect, the department's bill is any more illogi-
cal and inconsistent than the present law. I admit that any one rate
for the whole country can not fit any one railroad company.
Mr. WoRTHINGTON. Do you think it would be fair to fix a rate
which would be actually confiscatory on one road, simply because it
fits the average conditions of the United States?
Dr. LORENZ. The question as to whether you wish to vary the rate
for each individual railroad is a question which can be discussed.
For the sake of simplicity I assumed that we had arrived at the con-
clusion that it was impracticable to have a changing rate for every
railroad. I think the railroads themselves have discussed that
proposition, that it was impossible to have a rate adjusted to every
railroad, but the existing law, I say, is equally objectionable as the
Post Office bill in that respect. -
Mr. WoRTHINGTON. So far as the existing law is concerned, we
do receive more per car-mile than the average railroad, and in that
respect we do make up the difference in operating cost.
Mr. LLOYD. Why do you receive more?
Mr. WoRTHINGTON. Because our load per car is more.
Mr. LLOYD. Because you are more fortunate in having more mail?
Mr. WoRTHINGTON. The traffic is more concentrated on our lines.
Dr. LORENz. Could you estimate what is the difference on your
line compared with the average for the country?
Mr. WoRTHINGTON. That could be done, but I have not done it.
Dr. LORENZ. Are your R. P. O. cars heavier than the R. P. O. cars
on the Pennsylvania Railroad?
Mr. WoRTHINGTON. I could not say as to that.
Dr. LORENZ. Is it not true that the heavier mail on your line is
due to the fact that you operate more storage cars on your long hauls?
Mr. WoRTHINGTON. I think we have.
Mr. McBRIDE. Is it not due also to the fact that practically all
your mail is carried on one train, which permits very heavy loading?
Mr. WoRTHINGTON. On a very expensive train, which is operated
at faster speed than other trains. $ -
Dr. LORENZ. Could you not, under the proposed bill, refuse to pro-
vide special mail trains if you saw they would not pay?
Mr. WoRTHINGTON. I do not think it was contemplated under the
proposed bill that the obligation should be so onerous on the rail-
RAILWAY MAIL PAY. 1423
roads that they should think it necessary to refuse to move fast-mail
trains. I suppose we could refuse to move them.
The CHAIRMAN. As I remember, in the suggested bill it is com-
pulsory, and wherever a railroad is forced it has a recourse to the
courts. * . -
Mr. STEwART. To carry the mail, but not to inaugurate fast mail
trains. * -
Mr. WoRTHINGTON. I understand we have the option of taking off
the fast mail trains and placing the mail on the other trains which
are now operated.
Mr. MACK. I would like to suggest a point there which will de-
velop this practice, that the authority of the department to require
this space on given trains would have the effect, if they required sev-
eral cars on one of your faster passenger trains, of operating a special
train for the mail service. While we could not be compelled under
the provisions of the bill itself to operate a specific train, the effect
would be to require us to do so.
The CHAIRMAN. I do not agree with you on that.
'Mr. MACK. As a practical matter, it would, Mr. Chairman.
The CHAIRMAN. I would like for you to elucidate that a little. He
would simply be compelled to operate the mail car on one of the ex-
isting passenger trains, but it would be optional with him whether
he should continue a fast mail train that solely carried the mails.
Mr. MACK. I agree with you as to that, as to the schedule for the
fast mail train. f
Mr. McBRIDE. We have the same provision now, but we do not
require the companies to carry mail cars on trains on which they
object to carrying them, such as the 20-hour train on the Pennsyl-
V8, Illa.
Mr. BRADLEY. Might I ask how this clause in the proposed bill
would be interpreted: “The Postmaster General shall in all cases de-
cide upon what trains and in what manner the mails shall be con-
veyed. Every railroad company carrying the mails shall carry on
any train it operates and with due speed all mailable matter, equip-
ment, and supplies directed to be carried thereon. If any such rail-
road company shall fail or refuse to transport the mails, equipment,
and supplies when required by the Postmaster General on any train
or trains it operates, such company shall be fined such amount as may
in the discretion of the Postmaster General he deemed proper”?
Mr. STEwART. Mr. Bradley has read what is practically now the
law, and I assume the latter part would arise out of existing law and
regulations, but the rest of it is almost in words as the present law
now reads. I think it combines one or two sections, and I assume the
administration of it will be practically the same as now. I do not see
any reason why there should be any change. *
Mr. BRADLEY. Is there any law to-day that permits the Postmaster
General to impose fines according to his discretion only in such cases,
merely according to his discretion?
Mr. STEwART. Yes. All the fines are provided for in the discretion.
of the Postmaster General; that is, he #. discretion to impose such
fines as he thinks proper under the circumstances.
Mr. BRADLEY. Is it not limited to three times the price of the trip 7
Mr. STEwART. That is a deduction, I think. As I recall it, there
is a deduction from pay limited to the price of the trip, where it is
1424 RAILWAY MAIL PAY.
not the fault or the carrier, but three times the price of the trip
where it is the fault of the carrier. Fines are imposed in the discre-
tion of the Postmaster General, and the limit of them is not speci-
fied in the law.
Mr. BRADLEY. Do you think that the action of the Postmaster Gen-
eral under this clause would be limited as to the extent of fines im-
posed by the compensation which the railroad company receives for
carrying the mails, or might it go beyond that? The language does
not seem to restrict the power.
Mr. STEWART. No; nor does the language of the present statute re-
strict the power. I do not think it would be proper for me to state
what the department might do in the future under a statute like this.
I can only say that my only guide would be experience and judgment
as to the fairness of the case. I know we have not imposed excessive
fines in a case of that kind.
Mr. SAFFORD. My recollection is the specific requirement of the law
at the present time is that a railroad which refuses to carry mail on
its fastest trains may be fined 50 per cent of its compensation.
Mr. STEwART. I think you are mistaken on that.
Mr. SAFFORD. I am sorry I haven’t the regulations here.
Mr. MACK. I can say that is correct. Fifty per cent on the fastest
trains for failure or refusal. -
Mr. STEwART. Is not that a regulation?
Mr. MACK. No, sir; that is the statute.
Mr. WoRTHINGTON. I think the limitation which would be placed
on the railroads of a fixed rate per car mile is most unfair. Even the
obnoxious 2-cent passenger laws would permit the roads, on an
average load of 10 passengers to the car, to earn as much as the pro-
posed bill, and there is no limitation on loading the cars to their
capacity, if possible. We have no such limitation as to any other
class of traffic. Under the proposed rates if carload shipments were
made we would probably receive less on our lines for carloads in
passenger service, I would say about one-half of what we receive
for a carload of coal in freight service. Under the parcel-post act
there is no limitation, as I understand it, on weights which the Post-
master General may eventually take over into the Postal Service.
It might be easily imagined that sooner or later carloads of traffic
might be placed on us to move in passenger trains and move at this
fixed rate. I am not speaking so much about the rate as applied
to R. P. O. cars, but with reference to storage cars and parcel post.
Dr. LORENZ. You would not suppose that the law could be framed
on what might possibly happen when it is entirely probable there
will not be greater weights than 24 tons or 3 tons in an R. P. O. car, or,
say, a maximum of 10 tons in a storage car? Suppose they did de-
velop that service? The gross weight of your 10-ton storage car
would probably not be any greater than your R. P. O. car with 3
tons, so that I do not see where you would be harmed by the multi-
plication of the carload service which you mention.
Mr. WoRTHINGTON. In this way. The traffic taken over by the
parcel post would be withdrawn to a large extent from the express
service, for which we are now being paid on a tonnage basis.
Dr. LORENz. If the people can effect an economy in that way I do
not see why they should not do it.
RAILWAY MAIL PAY. 1425
Mr. WoRTHINGTON. At the expense of the railroads.
Dr. LORENZ. Provided the cost of the transportation is paid for,
certainly. & -
Mr. LLOYD. It is your computation that you refer to in your state-
ment for the whole Southern Pacific System?
Mr. WoRTHINGTON. For the entire Southern Pacific System.
Mr. LLOYD. And your complaint is against the fact that it would
affect your system to the extent of $400,000 a year?
Mr. WoRTHINGTON. Not exactly $400,000 a year. I mean $400,000
a year on one route, between Ogden and San Francisco. I should
say, regarding the system as a whole, it would be in the neighborhood
of $1,000,000 a year.
Mr. LLOYD. How much do you now receive?
Mr. WoRTHINGTON. We receive $2,500,000. The department says
we are receiving on all our mail routes, according to Document 105,
5.25 mills per car-foot mile, or 31.5 cents per 60-foot-car mile.
Dr. LORENz. Is that from table No. 7?
Mr. WORTHINGTON. From table No. 7.
Dr. LORENZ. That is based on space, excluding dead space?
Mr. WoRTHINGTON. Yes, sir.
Dr. LORENz. Whereas the department, in its proposed bill, would
necessarily have to authorize some dead space, the rate which you
take out of table No. 7 could not be applied exactly.
Mr. WoRTHINGTON. It would probably be something additional on
that account, but how much I can not say. However, inasmuch as
the department has used Document 105 as an authority, I thought
we could use the same document. -
Mr. LLOYD. The objection that you read is to a uniform system of
ay?
p Mr. WoRTHINGTON. Under the space basis. We do not object to
the present uniform system.
Mr. LLOYD. You do not object to the present system on the weight
basis because it happens that your road gets the best of the proposi-
tion, but you would object to the proposed bill because you might
get the worst of it. *
Mr. WoRTHINGTON. We would get much the worst of it.
Mr. LLOYD. That is not proof to us that you are not getting too
much now. The probability is you are getting $400,000 too much,
while under the proposed system you would get what you are en-
titled to. .
Mr. WoRTHINGTON. I do not follow youthere as to our now receiving
too much, when the department shows that our expenses, according
to Document 105, was 3.70 mills per car-foot mile, or 22.60 cents per
60-foot-car mile for operating expenses and taxes only. Later on,
the department estimated an addition should be made for other
charges against income of 32.5 per cent, which would bring our re-
quirement up to 30 cents for 60-foot-car miles, which is practically
what we are getting, whereas the proposed pay is only 21 cents.
What I am protesting against is the injurious effect on our line of the
proposed bill, and how much below the actual cost it is according
to the department’s own figures for the Southern Pacific.
Mr. LLOYD. Is it your candid judgment that if the proposed bill
were adopted, that it would mean a loss to the Southern Pacific Rail-
road System of $400,000 a year?
1426 RAILWAY MAIL PAY.
Mr. WoRTHINGTON. I have not said it would mean a loss to the
Southern Pacific System of $400,000 a year. The statement I make
is that it would fall $400,000 below our present compensation.
The CHAIRMAN. On that route? -
Mr. WoRTHINGTON. Yes; that is, that the proposed pay would
lower our present compensation by that much.
Mr. LLOYD. I understand on the whole system a while ago you
said it would lower it about $1,000,000?
Mr. WoRTHINGTON. Yes; on the basis of Document 105.
Mr. LLOYD. I am not talking about Document 105. I am trying
to get at the amount and what would be the actual fact, as a practical
proposition, if this bill were adopted as a law. Have you made any
estimate of your road to determine the fact whether it would increase
your pay and, if it increased your pay, how much; or, if it decreased
your pay, how much it would decrease it?
Mr. WoRTHINGTON. I think I have just said it would decrease our
pay according to the department's estimate
Mr. LLOYD. You say according to the department's estimate. I
am talking about your own judgment. You are basing your judg-
ment on what they say. We want to find out what the fact is.
Mr. WoRTHINGTON. I am taking the present pay from the reports
of the department. They say our present pay is 5.25 mills per car-
foot mile, which would be 31.5 cents per 60-foot-car mile. .
Mr. LLOYD. In other words, the statement you are making is an
answer to the department, rather than a statement of fact. You base
your statement on the argument made by the department and, com-
bating that argument, you say what you have said. What we want
to get at is the fact. Does it or does it not have the effect of reducing
the pay that you would receive to the extent of $1,000,000?
Mr. WoRTHINGTON. It will be impossible for me to answer that
question because I do not know how much space which the depart-
ment eliminated in Document No. 105 they would pay for under the
proposed bill, but if they paid for all space that is classed as dead
space, it would make our present revenue per car-foot mile 4.27 mills
in place of 5.25 or 25.62 cents per 60-foot-car mile. Against that
the proposed bill would pay us something less than 21 cents a car-
foot mile. In other words, if we include all the dead space and
receive pay for all of that under the proposed bill, we would still
receive a material reduction from the present compensation.
The CHAIRMAN. A little over 20 per cent? .
Mr. LLoyd. The result of that would be to reach the conclusion
that the department’s bill makes the rate 20 per cent too low to meet
the present rate of pay. In other words, expressing it differently,
that it would be a reduction of 20 per cent in the present rate of
pay to your railroad system? - -
Mr. WoRTHINGTON. Yes; that is it. *
Mr. LLOYD. What have you to say to that, Mr. Stewart?
Mr. STEwART. Mr. Worthington is basing his argument entirely
upon the revenue per car-foot mile, shown by the figures in Docu-
ment 105. I think the safe thing to do, if Mr. Worthington wants
to know what this bill that is now before the commission would do
for his road, would be to apply its terms directly to the conditions
found on his road at this time. How that would result I do not
RAILWAY MAIL PAY. 1427
know. We have made estimates on various lines, gut we haven’t
Mr. Worthington's with us. I was just asking Mr. McBride if he
had it. We could make a statement. I would not want to take the
whole system, but we could take any particular line Mr. Worthington
will designate and give you the result. i.
Mr. WoRTHINGTON. Of course, I have not a detailed statement but,
as I said, if we include all of the dead space which is shown in Docu-
ment 105, we would still receive a materially lower compensation
than we do at the present time if we include all that dead space, and
I understand the department contemplates paying for only a portion
of that space. sº
The CHAIRMAN. I would like to ask Mr. Stewart what criticism or
comment he might have to make with reference to the statement that
including all of the dead space, and allowing it, there would still be
this rejuction of 20 per cent, and why that is not sound in its appli-
cation?
Mr. STEwART. You might find some reason for reduction on his
route in analyzing the particular kind of service that is required.
For instance, if a large proportion of his mails are storage mails,
for which he is getting 40, 50, or 60 cents a car-mile, it would ac-
count for a large part of the reduction, and I believe that is where
much of it will be located. We all understand that it is true, that
where we have a heavy storage-car movement, under the present law,
the rates will run up to 40 and 60 cents a car-mile.
The CHAIRMAN. Run up the car miles but run down the ton-miles.
There is an increase on the car-mile basis but a decrease on the ton-
mile basis. -
Mr. STEwART. Yes.
Mr. MACK. I showed, with reference to the Denver & Rio Grande,
that the loss, by applying the department’s bill, would be $124,000,
out of the present total compensation of about $310,000, nearly 40
per cent, and on the Iron Mountain $146,000 a year compared with
Something less than half a million dollars, or between 30 and 40 per
cent. So that the loss would be very heavy by the application of the
bill to the space, so far as we can ascertain what would be allowed.
Mr. LLOYD. Do you include dead space in that?
Mr. MACK. I include space figured on the department’s bill, which
is the maximum in both directions, based upon outward maximum
needed over that particular route, the exact application of it, as I
understood, including the tonnage and including the terminal charges
through. -
Mr. STEwART. I think it is only necessary to say that the companies
are now receiving, in some cases, as high as 60 cents a car mile for
storage movement, to indicate that it is altogether too high for that
class of service and wherever we find that in the service it should be
reduced. I do not think anyone can defend the contention that pay
for that particular service should not be reduced. I think it is a ques-
tion of what it is worth, 18 cents throughout the country, exclusive
of loading and the terminal charge. -
Mr. WoRTHINGTON. That is a service which really enables railroads
to run the expedited mail train, it gives them some additional com-
pensation for the extra cost.
The CHAIRMAN. That is the storage-car service?
1428 RAILWAY MAIL PAY.
\
Mr. WoRTHINGTON. Additional pay per car-mile which they get in
that way. ... I think, without question, if they receive the same amount
per car-mile as routes which carry less weight and do not furnish
that service, it would be very unattractive to them.
Mr. STEwART. I will admit that is a consideration at the present
time in putting on fast-mail trains.
Mr. WORTHINGTON. I think you, yourself, said so in your early
testimony. -
Mr. STEwART. Yes, sir; that is a consideration with the companies
now, but that does not change my view in this respect, that if we did
not have that consideration to offer you, we would still get the fast-
mail trains, and I think it is proper for me to state that I have had
assurances from railroad people that I could get fast trains under a
statute of this kind.
The CHAIRMAN. At the suggested rate?
Mr. STEwART. Yes, sir.
Mr. WoRTHINGTON. I would like to ask Mr. Stewart if the 60-cent
rate which he referred to for storage cars took into consideration
return movement of those cars?
Mr. STEwART. Yes, sir.
Mr. WoRTHINGTON. You mean to say $1.20 in one direction?
Mr. STEwART. No ; I misunderstood your question.
Mr. LLOYD. It is 30 cents each way?
Mr. WoRTHINGTON. Yes; it makes quite a difference. Most storage
cars have to return empty.
Mr. LLOYD. Under this bill you would get pay, the maximum being
18 going out and 18 coming back. There is no question about the
back pay. 1 *
Mr. WoRTHINGTON. I could express that in another way. Accord-
ing to the figure presented by the department of 20.91 cents as the
proposed pay for a 60-foot car, that is equivalent to 3.5 mills per car-
foot mile. Our pay under Document 105 is 5.25 mills, excluding
dead space, and 4.27 mills including the dead space, and the depart-
ment's own figures for expenses and taxes, according to their appor-
tionment of expenses, was 3.7 mills, or more than the proposed pay
on our line for operating expenses and taxes alone, without any
return on the investment.
Mr. PEABODY. I would like to ask if I understand Gen. Stewart
aright, to say that he had assurances from railroads that they were
willing to put on fast mail trains at the rate of 18 cents a car-mile?
That is what I understood him to say, and I would like to know if
that is correct?
Mr. STEwART. No; you modified my statement somewhat. I said
under the provisions of a statute like this we had suggested.
The CHAIRMAN. At the rate suggested here, that is 20 cents a car-
mile R. P. O., 19 for apartment and 18 for storage.
Mr. STEwART. That is one of the rates named in the statute.
Mr. MACK. As I understood, these rates have been proposed subse-
quently to the fast mail proposition that you have in mind. Is not
that true?
Mr. STEwART. No.
Mr. MACK. Practically within the last two or three weeks? .
Mr. STEwART. Yes, sir. ... Recurring to the question which Mr.
Bradley brought up about the limitation in the present law, which I
RAILWAY MAIL PAY. 1429
find is the act of July 5, 1884, limiting the power of the Postmaster
General to fine roads 50 per cent of the amount allowable by law for
that particular train service in case the company fails or refuses to
transport the mails on the fastest trains; I wish to say, while that is
the law, and has been the law since 1884, I have never known of a
case where such a fine has ever been imposed or where such a case
has ever been presented to the Second Assistant Postmaster General
to impose such a fine; so I think that answers the question suggested
by Mr. Bradley and the other gentleman as to what will be done
under the proposed law.
Mr. BRADLEY. The point I desire particularly to bring out as
referring to the position of the Southern Pacific Co. in this sup-
posititious case was that the present law does limit the fine. The
proposed law leaves it entirely in the discretion of the Postmaster
General. .”
Mr., LLOYD. That can be very easily remedied if we decide to do
anything of that kind by limiting it. There ought to be a limit.
The CHAIRMAN. Mr. Worthington, do the same objections or weak-
nesses, as they appear to your mind, exist against the suggested
Lorenz plan as against the suggested departmental plan?
Mr. WoRTHINGTON. Nowhere near to the same extent. As be-
tween the two plans, I think the plan suggested by Dr. Lorenz is far
superior to a space basis. My only criticism of his plan was that the
allowances for increased weights per car did not seem to me to be
large enough. .
The CHAIRMAN. Why?
Mr. WoRTHINGTON. I believe his allowances were about three-
tenths of a cent, or something of that sort, for each additional ton-
weight per car.
Dr. LORENz. Per mile. I think that was the practical working
out of it. -- --
Mr. WoRTHINGTON. I think the amount should be at least 1 or 2
cents.
The CHAIRMAN. The reason being what?
Mr. WoRTHINGTON. I do not exactly understand Dr. Lorenz's basis
for fixing that allowance. \
Dr. LoRENz. The basis was the estimated gross weight of the car.
Mr. WoRTHINGTON. What did you take the tare weight at?
Dr. LORENZ. The tare was taken at 60 tons.
Mr. WoRTHINGTON. Sixty tons is perhaps the heaviest mail car in
the country. The average mail car in service at the present time is
very much less than that. Our mail cars weigh only about 50 tons,
and the apartment cars weigh less per car foot than the railway post-
office cars. º
Dr. LORENz. I think the precise differences I made were only tenta-
tive, and I would, of course, be glad to modify them if it were shown
that the average weight of the postal car was going to be 50 rather
than 60 tons. But since I made those suggestions I have been rather
impressed with the statement and discussion to the effect that, after
all, variations of the load in a car, whether 50 or 60 tons, were not
sufficient to be taken account of when you consider the great sim-
plicity of a system which rejects the weight element altogether.
Theoretically, I think it would be right to divide the increased gain
of loading between the railroad company and the department.
1430 - RAILWAY MAIL PAY.
Mr. WoRTHINGTON. As a matter of justice? -
Dr. LORENz. Well, as a matter of justice, but the injustice is slight
compared to the great convenience. - * .
Mr. WORTHINGTON. The heavier weights per car, although the
difference may be only two or three tons, will be found on the heavier
traffic mail routes which furnish the expedited service and move that
Service much faster and with generally heavier equipment. That
should be compensated for. If the allowance, on account of differ-
ence in weight were liberal, the railroads would be paid for the excess
cost, and it would be much fairer than payment on a space basis. .
Dr. LORENZ. I should think the object you have in mind could be
accomplished, perhaps, directly better than by this indirect method
of paying for combined weight and space, the direct method being
to pay for expedited service. The Postmaster General may be given
authority, in this bill, to provide for special fast mail trains by
special agreement, and pay therefor somewhat higher rates if that
is deemed advisable. It seems to me the discussion has shown, out-
side of the contentions of Mr. Worthington for his particular road,
that for the country as a whole the weight in the car was, perhaps,
not so important as to regard its consideration. I realized that, of
course, in studying the questions last summer, but there was this ad-
ditional consideration in recommending that the weight be taken
into account, that heretofore one of the strong objections to the space
basis had been the fact, that there would be no limit upon the depart-
ment as to the amount of space authorized, you would have no statis-
tical check as to what was being done, and if, therefore, we could
have a way by which we could keep track year by year or month
by month, as these statistics were compiled, as to the relation between
the space authorized and the weight carried, there would be a sort
of check upon the authorization of space. That consideration, how-
ever, seems not to have impressed the other persons in this discus-
sion. The railroads think the department will be too economical
in the use of space, and for these reasons I think the great simplicity
which would come from having simply a space basis, going even
further than the department and eliminating the weight from the
terminals as well as from the line, would possibly be justified.
Mr. WoRTHINGTON. That might be so as applied to R. P. O. cars
only, but not as to storage cars under the present conditions, includ-
ing the recent enlargement of the activity in the department in tak-
ing over the parcel post, which may, eventually, result in a very large
bulk tonnage. It is decidedly unfair to expect railroads to handle
any class of tonnage in bulk without paying them something for the
additional load in the car. That principle is not followed in any
other class of railroad transportation.
Dr. LORENz. Suppose we make it a rate that is fair for the average
storage car with a good load. In the freight business an article is
classified, the commodities are in some carload class; or take a special
commodity rate, the classification committee taking account, of
course, of the loading and the load that that commodity supplies to
the car, but they do not change that classification for every partic-
ular shipment if the weight in a car changes, but they have the same
general classification, paying, of course, a different rate per ton. So
here, if you had a fair rate for a 74-ton storage car, would the rate
RAILWAY MAIL PAY. - 1431
be very unfair if you had on your system an average of 8 or 9 tons?
t is not a question of whether a rate for a 1-ton car is fair for a 7 or
8 ton car, but it is a question of whether the average rate for a stor-
age car is fair for all storage cars and whether the average rate for
all R. P. O. cars is not fair for all R. P. O. cars. You may reasonably
argue the storage-car rate ought not to pay 18 cents but 25 or 30
cents on account of the contents; but even at 30 cents 10 tons would
be only 3 cents per ton-mile, and it does not seem to me the mere fact
that you have more storage cars than the other companies necessarily
invalidates or, rather, is a reason for ignoring the weight of the car.
Mr. SAFFORD. I would like to ask Dr. Lorenz if it does not make
a great deal of difference whether you figure on a maximum rate
or a minimum rate in this connection? There is nothing on earth,
when you fix a maximum rate, that you can do under actual operation
except pull down that maximum rate.
Dr. LORENz. I do not understand what you mean by maximum or
minimum rates. º
Mr. SAFFORD. I mean just this: That the proposition as presented
here seems to be entirely contrary to the experience and processes of
rate making. For instance, you fix a maximum rate, whatever it
may be, 20 or 25 or 30 cents for a 60-feet car at less proportionate
rates for other classes of cars and that is the utmost you can re-
ceive. It does not make any difference how efficient your car service
may be, how much you could transport, how much revenue the ship-
per may get out of a load, you carry you can not possibly get any
more. But in your lighter and less important services your rate goes
constantly down, and you wind up with an average very much below
what would be carried in the minds of these gentlemen as to what
the average would be, because you are not going to improve, you are
not going to maintain that average at 20 or 30 cents, or whatever it
may be, and you can not possibly do it on the rates proposed.
Mr. BRADLEY. Is it not a fact that if you make a car-mile rate
high enough the company can afford to ignore the modification caused
by increase of loading?
Dr. LORENz. That is the idea.
Mr. BRADLEY. Then, in order to make sure that it would be high
enough, would you not have to fix a maximum rate? I imagine that
is what Mr. Safford had in mind. -
Dr. LORENZ. You would have to fix a rate based on the average
conditions, and then you would carry some carloads at too low a
rate and Some at too high a rate, but in the end you would come out
even. The idea would be to fix the average conditions on that road,
and if the Post Office Department was willing to have a bill compli-
cated enough to have a rate separate for each road, I do not see that
anyone can object to it, but I understand you have a present law
which defines what the proposed law does, namely, have one schedule
of rates for the whole country.
Mr. BRADLEY. Which, of course, is modified by the increasing
volume of weight, concentration of weight leading to the establish-
ment of fast mail trains, and to a class of service of the highest
quality which the department obtains at a constantly decreasing rate
per ton-mile. -
1432 RAILWAY MAIL PAY.
Dr. LORENZ. The present law would also work in a much similar
fashion, for if we assume on a light road the load is 1 ton, and
they would get 25 cents a car mile, on the dense road, where your
average is 3 tons for the R. P. O. car, they would pay one-third of
that, or 8 cents a car mile, so you would have the same declension
With an increasing weight, perhaps, more rate declension under the
space basis than you do with the weight basis. -
Mr. BRADLEY. I would like to ask Dr. Lorenz whether in his study
of this matter his opinion was affected by the suggestion that storage
Cars earn as much as 60 cents a car mile at the present time?
Dr. LORENZ. No, sir. I was not affected by that. I had in mind,
more than anything else, the gross weight of the two classes of cars.
Mr. BRADLEY. I was wondering whether you had examined the
subject sufficiently to determine to what extent any such rate as-60
cents a car mile applied to the whole service, if at all? -
Dr. LORENZ. There is no separate payment for storage cars, so you
can not say that there is a separate rate of 60 cents. That is ob-
tained simply by taking the average payment per ton-mile and
multiplying it by the assumed load. .
Mr. BRADLEY. According to the testimony of to-day, it would seem
that the statement of the Second Assistant Postmaster General alleg-
ing an earning of 60 cents a car mile for storage cars was a mistake
and that counting in the empty return movement it was really an
earning of 30 cents, and even that rate associates itself with the one
mail route in the country where the greatest concentration of weight
occurs on a single train. Inasmuch as the storage-car space in the
whole country, quoting the Department's figures, is only 10 per cent
of the whole mail space, and this particular storage-car earning of
30 cents is a maximum car-mile earning on a very small fraction of
that 10 per cent, does it not look as though it might seriously mislead
us, if we pay any attention whatever to the idea that there is so high
a storage-car earning as 60 cents?
Dr. LORENZ. However, the storage-car service may become more
important in the future.
Mr. BRADLEY. The average loadings as ascertained by the Depart-
ment in 1907 were, as I recall them, 73 tons for a storage car for the
loaded movement. That would be 3% tons for the double movement,
including the empty movement. At the normal rate of 6 cents a
ton-mile on heavy routes would you consider that to be an extrava-
gant car-mile rate?
Dr. LORENZ. I might suggest at this point that it might be a good
thing in the proposed bill to make a higher rate for the storage cars
and not pay for the empty return movement. As a practical propo-
sition it looks strange to a good many people that the Department
should pay for empty space at all. We know that it is the logical
thing when you are comparing the different services to consider the
empty space, but to pay directly for empty space strikes a good many
people as being something that needs explanation. It is not the
custom, of course, in freight business to pay for empty space. You
pay high enough in the loaded space to cover the empty space, and
it might be a wise thing to make a rate for the storage car 36 cents
and pay nothing for the return movement on the assumption that it
is 100 per cent empty movement, or if you do not think it is 100
RAILWAY MAIL PAY. 1433
per cent make it 30 cents. That would make it look more attractive
to the railroad companies on the one hand and shock much less those
people who do not believe in paying for empty space.
The CHAIRMAN. Would it shock less if you paid 30 cents on the
storage car?
Dr. LoRENz. You could explain to them what is the load of that
.# . I simply suggest it with regard to a question of practical
politics.
Mr. BRADLEY. Does not the same consideration apply to the pro-
posed terminal charge? In the case of short-line mail-apartment
cars is it no possible, if you pay the railroad company 13 cents a car-
mile for part of the car that that would be made up in the proportions
of, say, 10 cents for the terminal allowance and only 3 cents for the
line allowance. Would not that be subject to the criticism that you
were paying heavily for the thing that was merely incidental rather
than the main service that ought to be recognized in the rate of pay-
ment—that is, the service rendered in moving the load of mail and
Supplying the apartment car. The major portion of the rate paid is
made up of the terminal allowance, and, in the minds of the ignorant,
would be criticized?
Dr. LORENz. The only way to avoid that criticism would be to
state the rates in a different way, have a zone system, and have
a rate of 30 cents for the nearer zone, 25 for the next, and so on,
but that has other objections, which lead me to suggest this more
simple method of statement.
Mr. STEwART. You considered that once?
Dr. LORENZ. Yes; but I found that had this objection: That for
certain distances the total rate would be less than for nearer dis-
tances.
Mr. BRADLEY. You say it led you to select this “more simple method
of statement.” Might I suggest you call it “a less complicated
method,” because it seems to me inevitable that all methods are more
or less complicated when you attempt to form rates on space and
terminal charges.
The CHAIRMAN. Have they got to be considered under any plan?
Mr. BRADLEY. I should say yes, they should all be considered in
the formulation of a rate, but my personal opinion is that it would
be very unwise to state them in the rate.
Dr. LORENz. How would you take account of the fact that the
shorter haul ought to receive larger payment per mile?
Mr. BRADLEY. I would prefer, of course, the schedule in the pres-
ent law for fixing the retail payment.
Dr. LORENz. The present law does not make a higher rate for the
shorter haul?
The CHAIRMAN. The retail and wholesale principle is only appli-
cable to the weight itself and not to the haul.
Mr. BRADLEY. I have not been able to follow Mr. Lorenz in that,
because it seems to me the long hauls and the short hauls are recon-
ciled and accounted for in the average weight carried per day under
the operations of the present law.
Dr. LORENz. For a given weight per day the present law pays
absolutely the same whether the haul is 10 miles or 1,000 miles.
Mr. BRADLEY. A haul of what?
1434 RAILWAY MAIL PAY.
Dr. LORENZ. The run of a car. -
Mr. BRADLEY. What car? * -
Dr. LoRENZ. The R. P. O. car. The pay is the same per mile to
the New England roads as it is to the Pennsylvania Railroad.
Mr. BRADLEY. You mean according to load?
Dr. LORENZ. If the load is the same, the road is paid, according
to the law, exactly the same per car mile.
Mr. BRADLEY. Per car mile? -
Dr. LORENZ. Either one. If the load is the same it does not make
any difference whether you take it at a ton-mile or car mile. It is
exactly the same per car mile or per ton-mile, whether the haul is
long or short.
Mr. BRADLEY. I do not see what you refer to when you say the
haul is long or short. -
Dr. LORENz. I refer to the run of the car.
Mr. BRADLEY. It seems to me when you compare the average haul,
which the Department states is 620 miles, with the average pay for
that distance, you have automatically accounted for your long hauls
and your short hauls.
Dr. LORENZ. I do not think that the average haul of the mail itself
is the significant thing here, because that is a question for the De-
partment and not for the railroads. The average haul of 620 miles
may be over two or three railroad routes; it may be transferred from
one car to another, so that the significant thing is the run of the car,
the operating unit is the run of the car to the railroad company.
Mr. BRADLEY. Let me suggest this: That the lowest rate of pay
under the present law is $42.75, equal to $1.17 a ton-mile, for 200
..pounds. That is the highest rate per ton-mile if 200 pounds are
carried. The lowest rate of pay is above 48,000 pounds average
daily weight carried and amounts to about 5% cents a ton-mile. There
is a difference between the retail rate and the wholesale rate of
20 to 1. -
The CHAIRMAN. But on weight, distance cutting no figure.
Mr. BRADLEY. On weight. Now I am going to apply it. Ordi-
narily that retail measure of pay is most predominant on the short
routes, while on the long routes the wholesale rate approaching the
minimum of 5}, cents a ton-mile is in operation, so that it seems to
me automatically the law of 1873 follows the haul of the mail by
the declension in the rate according to the greater weight that is
carried and the greater weight being carried on the heavy lines.
Whether that fully accounts for the exact haul of the unit of mail
might still be a matter for some debate, but it seems to me that the
intrinsic idea of the whole law does account for the difference in the
relative haul. - - *
The CHAIRMAN. You mean conditions take recognition in the ap-
plication of the wholesale and retail principle? The law takes rec-
ognition in the rate of compensation? * :
Mr. BRADLEY. Yes. - -
The CHAIRMAN. What do you say to that, Dr. Lorenzº
Dr. LORENZ. I think that operates to some extent, undoubtedly.
The CHAIRMAN. Is it general in its operation? That applies to
#. ºneylvania. but would it apply equally to the Southern
3,OITIC. § - * *
RAILWAY MAIL PAY. 1435
Dr. LORENz. I doubt very much whether it applies with any ap-
proach to accuracy; for we have routes, let us say, of 200 miles or
150 miles, some of which are very thin routes, and some of which
are very heavy routes. -
Mr. BRADLEY..It has also been suggested that on the long haul the
load thins out as you approach the terminal points, and that fact
reduces the average weight carried over the whole line. Thus, again,
we see that the operation of the law takes note of the varying length
of hauls.
While I am at the table, Mr. Chairman, I would like to make a
remark that I did not have suitable opportunity to make this morning
when Mr. Rowan presented the case regarding the object lesson his
company was able to give to the Post Office Department as to the
operating necessity for running an R. P. O. car through from Utica
to Massena Springs instead of transferring at Watertown, where
the authorization ceased. It seems to me that the suggestion from
the department that such cases would be eliminated under the opera-
tion of the proposed law failed to take into consideration this fact,
that the railroad is seldom able to match the conditions which repre-
sent the wishes of the department, and thus test the sufficiency of
the authorization which the department in its discretion proclaims.
It suggests further as bearing upon this whole question that any
proper settlement of the relations of the railroads, on the one hand,
and the Post Office Department on the other, each should be pro-
tected against the other. If the department is at liberty through the
discretion sought in the new law to authorize so much space, so much
more or so much less space, according to its judgment, it may be able
to impose its wishes on the railroad because of the inability of the
railroad to accommodate itself to those successive changes because
of the expense entailed upon the company either in making up the
train or in rebuilding the car. -
t Mr. LLoyd. But you would remedy that if we went to the space
àSIS. t
Mr. BRADLEY. I do not see any way of remedying that. It would
seem to me that the natural remedy would be for the railroad com-
pany to make its own rates. Then it could, on its side, take note
of all these conditions and modify the rate accordingly. Even then
it would be controlled by the competition which is sought as between
different lines. But if any new law on the subject fixes a specific
rate, and then the department operates under that rate with full
discretion as to authorizations and changes, the company would be
helpless.
The CHAIRMAN. Then your idea, as I understand it, is that the
ideal plan would be for the railroads to initiate the rates, for the de-
partment to accept those rates, and then adjudicate the fairness of
the rates in the courts if the department claimed the rates were exor-
bitant.
Mr. BRADLEY. That would be the logical sequence of that line of
thought. On the other hand, it seems to me if the space basis were
put into law that Congress would almost of necessity be obliged to
give a large amount of discretion to the Postmaster General, and
when you once give him that discretion the railroad is helpless to
adjust itself. Complications, irritations, and injustices come in.

1436 PAILWAY MAIL PAY.
The discretion, if not abused under this administration, may be
abused under some future administration.
The CHAIRMAN. Then, you would still have the right of appeal to
the courts for adjudication of an injury that had been done you?
Mr. BRADLEY. That process does not seem to appeal to anybody.
I noticed when the department discussed the various plans, those of
Senator Weeks and Mr. Buckland and others, where the suggestion
was made to have recourse to the Interstate Commerce Commission,
they said that such plans would throw all disputes into the arena
of discussion, with demoralization of administration and continual
controversy.
The CHAIRMAN. I would like to ask you whether you are ac-
quainted with the policy of the Pennsylvania system in the ordering
of cars going on passenger trains; that is, as to the length'? Is it
the general policy, without exception, that all cars are 60 feet in
length or more for passenger travel, whether express, baggage, mail,
or regular passenger?
Mr. BRADLEY. Of course, I have not the familiarity with the ques-
tion that would enable me to make the final answer on that subject,
but to the best of my knowledge and belief all equipment that is be-
ing constructed for passenger trains is 60 feet or more in length.
The CHAIRMAN. Do you know the reason for that?
Mr. BRADLEY. I suppose it must be a process of standardization
to secure economy in construction and in operation. I recall an
instance where a suggestion was made by a representative of the
department for a slight change in the pattern of a window sash of a
ostal car. It looked like a request that ought to be complied with,
ut the motive-power department explained that if a mechanic went
out to repair a broker window sash he would have to take all of the
different kinds with him. It was thought very important to have
one standard. Therefore if it is important to have a uniform stand-
ard in regard to a small component part of a car, it would be so
much more important to have the standard run throughout.
The CHAIRMAN. Mr. Peabody, I would like to ask you, so far as
the Atchison system is concerned, what the policy of that company
is in the ordering of cars?
Mr. PEABODY. The effort of the Santa Fe road and all other roads,
for that matter, is toward economy in service, and our experience
has taught us that the larger we can make the unit of Service—that
is, the proportion of dead weight to total weight carried—the better
will be the result, and that applies, equally to passenger or freight
cars. Consequently we seek to make that service as advantageous
as possible. There are many things, of course, that have to be con-
sidered. Our cars are limited, so far as the length of the car is con-
cerned, in passenger service particularly, to the curves of the road.
We can not increase that length indefinitely on account of the added
resistance on the curves. Also, we find that the tunnels and the plat-
forms of the road are so adjusted that if the cars are made an ex-
treme length it would require an alteration of the tunnels and plat-
forms on a great many of our lines. We have found, therefore, in
practical operation, that on the main line we can use a 70-foot car to
advantage, the curves having been eliminated. On our branch lines,
however, where the curves have not been so reduced, we find that a
RAILWAY MAIL PAY. 1437
60-foot car is about the limit, and our standards are a 60-foot car
usually. But on our main line we have 70-foot cars used as standards
and as our maximum. e
The CHAIRMAN. But you use no car in your passenger service
shorter than 60 feet on your main line?
Mr. PEABODY. No. We had some 50-foot cars which we used on
some of our branch lines where the curves were excessive, but gen-
erally speaking, those curves have been so reduced that we have
nothing now less than 60-foot cars.
The CHAIRMAN. Do you feel you should receive greater relative
compensation for two 30-foot apartment cars than you would receive
for one full 60-foot car? -
Mr. PEABODY. Certainly.
The CHAIRMAN. On what ground?
Mr. PEABODY. We would have to haul double the amount of
weight; that is, the dead weight of two cars, proportioned to 30 feet
of space on each car, would be very much more than one 60-foot car.
Dr. LORENz. That is assuming that the other half goes empty?
Mr. PEABODY. In a great many cases it does.
Dr. LORENz. But you are assuming that it does so in all cases?
Mr. BRADLEY. Does not the other half have to go empty, according
to the discretion of the department?
Mr. PEABODY. We do not assume the basis will be twice as much,
but we do assume that we should have a higher rate per car-mile
proportionately for the 30-foot car than for the 60-foot car. By that
I mean if the pay were based on a 60-foot car, it should pay a pro-
portionately higher rate for 30 feet.
Dr. LORENz. Now, in order to tell how much more you would have
to know the percentage of the cases that they are half empty.
Mr. PEABODY. It would be absolutely impossible to set a mathemati-
cal rule for that. &
The CHAIRMAN. As I understand the department and you gentle-
men representing the railroads, you are diametrically opposed in your
views on that phase of the subject. The department suggests a lower
rate per car-foot on the apartment car than on the full R. P. O. car
and the full-sized car. You suggest that you should receive a higher
rate.
Mr. PEABODY. I say a higher proportional rate. I understand the
department recommends a lower proportional rate for an apart-
ment car. I understand they recommend that if the full car rate
was 30 cents, the 30-foot car should be less than 15 cents.
The CHAIRMAN. As I understand the department on the full
R. P. O., they recommend that the maximum should be 20 cents a car-
mile, and the apartment car at 30 feet would be at the rate of 19
cents for a 60-foot car. So that there you are both diametrically
opposed in your views of the application of the wholesale and retail
principle on the rate.
Mr. PEABODY. That, as I understand, is not because of the propor-
tional space, but because of the kind of car used, the proposition being
that the apartment cars of wooden construction are not as valuable
for the service as the others and consequently pay less, not because
it is an apartment car, but because they are of wooden construction,
and the rate should be less for that reason.
35797—No. 12—14—10
1438. RAILWAY MAIL PAY.
Mr. BRADLEY. Yes; because it is an apartment car. The depart-
ment proposes a rate of 20 cents for a full car and 18 cents for 60
feet of space. *
Mr. STEwART. If it is constructed of wood?
Mr. BRADLEY. There is a distinction.
Mr. PEABODY. I can see no just cause for reducing a proportional
rate for the apartment car.
The CHAIRMAN. General Stewart, would you repeat your reasons,
in order that we may get a running discussion on that phase of the
question. -
Mr. STEwART. I have stated many times the reason why, in my
opinion, the apartment car should not be paid the same rate as
the full car, the main reason being that the full car necessitates
the placing in the train of an independent car for the use of the
department, which adds a new element to the train. That is gener-
ally recognized by the railroad companies. The requirement for an
apartment in a car calls for part only of a car which the company
runs for its own purpose to a large extent, and would probably have
to run if we did not take the apartment in it. So that there is that
very material difference in the service, and which existed at the time
the law of 1873 made the distinction and allowed specific pay for
the specific additional cars that had to be put in the train, if they
were 40 feet or over in length. That is the first and fundamental
difference as I see it. One other difference is that I understand the
construction of the full cars, as we have them to-day, is a very differ-
ent proposition from the construction of apartment cars; that is to
say, they are very much more expensive in their original construction,
and they are certainly more expensive in the manner in which they
are fitted up and taken care of. Under the existing law we are not
permitted to pay anything for the cars unless they are thoroughly
cleaned and unless they meet certain other requirements and are
kept sanitary. There are no such provisions in the present law with
regard to apartment cars; however, we have followed the general
spirit of the law and are requiring the companies to comply with it
respecting the sanitary condition of apartment cars.
The CHAIRMAN. For sanitation you would have proportionately
the same requirement, whether it was for a 30-foot car or a 60-
foot car.
Mr. STEwART. Yes, sir. - -
The CHAIRMAN. So that there would be no difference in the rates,
relatively? -
Mr. STEwART. No. I am giving you the conditions as they exist
in the service now. There has been an evolution in car building
toward the steel car, and Congress has provided certain limitations
on the use of cars, requiring all companies to convert practically all
of their cars into steel cars. There is no such provision in regard to
apartment cars, although some companies are constructing steel cars
in which there are apartments. In the proposed bill we made a dis-
tinction between the wooden apartment car and the steel apartment
car which we think is fair and which would encourage the construc-
tion of steel cars. -
The CHAIRMAN. How do you arrive at your 5 per cent reduction
because of the difference in apartment and full cars, and then your
RAILWAY MAIL PAY. t 1439
additional 5 per cent reduction between the steel and the wooden
Cà,I*.
Mr. STEwART. That, as we have explained heretofore, is an estimate
based upon judgment. -
The CHAIRMAN. It is an arbitrary, as a matter of fact?
Mr. STEwART. Yes. There is no possible way of getting at it
definitely under the present conditions in any other way.
Mr. PEABODY. Might I ask a question now 2 Do I understand you
to say that the railroads generally admit that proposition, that these
cars will be run anyway if they were not used for mail? *
Mr. STEwART. No. I could not say what the railroads would say
on that question. I meant to say, so far as my understanding was
concerned, that generally the cars in which we have apartments
would be run anyway. -
Mr. PEABODY. I understood you to say that the railroads admit-
ted that? -
Mr. STEwART. I do not think I said that. -
Mr. PETERs. If Gen. Stewart was right in regard to his idea that
pay for apartment cars should be less than the pay for full cars
because the car is one that is provided for other service on the train,
and you take every part of it to handle the mails in, that might have
been the theory when you were contemplating the new rate basis, to
pay for the apartments and were also paying for the handling of the
mails on the weight basis. When you change and go to paying for
the mails on the space basis, is there any reason why the space in the
apartment car should be at a lower rate than the space in the full
R. P. O. car? I can not see it at all. -
Dr. LORENz. I would like to ask Mr. Stewart one question upon
this particular point—whether he has considered the fact that apart-
ment car lines are usually on lines of thinner traffic than the R. P. O.
cars, and on that account might be paid a higher rate, or at least the
same rate proportionate as the old R. P. O. cars? I think in his bill
he suggested, in connection with the closed-pouch service, to pay a
higher rate for the closed-pouch mail on lines that had only apart-
ment cars, and that those were lines that had only thin traffic.
Mr. STEwART. The reason why, in my mind, that it would not apply
is this: When you make the transition from weight to space the dis-
tinction which you have in your mind disappears.
Dr. LORENz. I did not mean traffic in the sense of mail, but in the
sense of train-mile—per mile of traffic. I mean the railroads” whole
business would be relatively thin.
Mr. STEwART. I see your point. I did take into consideration
those facts in proposing that there be a different rate for closed-pouch
service on apartment car lines. We had in view the present con-
ditions and rates of pay; that is to say, unless we made that distinc-
tion, we would be paying a higher rate for the closed-pouch service
on full lines under the proposed law than under the existing law,
which we thought would be inconsistent. I did not see any justifica-
tion for doing it.
The CHAIRMAN. I would like to ask Dr. Lorenz how that phase
of the subject comes to his mind; whether the department, in its sug-
gestion as to relative compensation for apartment cars and full cars,
provided the construction is the same, is sound 2
1440 RAILWAY MAIL PAY.
Dr. LORENz. I have not been able to agree with the department—
with its view—on that point, because it seems to me, so far as the
matter of running the car is concerned, it applies as much one way
as the other. Sometimes a car would be run solely for mail service,
and sometimes it would be run for the other service. If you could
always match them up, it is clear each should pay the actual propor-
tion rate; but it is wholly impossible to tell to what extent the empty
movement in apartment cars is due to one service or the other. For
that reason I do not see any distinction to be made in the rates. If
any distinction is to be made, it should be a higher rate for the apart-
ment car, on the ground that, so far as I know, the apartment car is
likely to be on the line which has thinner traffic; by which I mean
fewer trains per day over a mile of track.
Mr. BRADLEY. Does that mean the line of thinner traffic needs the
money more?
Dr. LORENZ. Yes. -
Mr. BRADLEY. Not that it earns more, but that it needs it more.
Dr. LORENz. I think the cost of maintaining the roadway is less
per train-mile on a road that has 10 trains per day than on roads
with two trains per day. d
Mr. BRADLEY. That is getting down to cost basis.
Dr. LORENZ. I think for that reason the pay for apartment cars
would be higher.
Mr. BRADLEY. Would you apply the wholesale and retail principle
as between full cars and apartment cars? / .
Dr. LORENZ. As I say, the unused space, which may come from
cutting up the car, seems to me may be logically attributed to the
baggage as well as to the express or mail.
Mr. BRADLEY. Except the railroad company would control the
allotment for baggage and express, but in regard to the mail space
would not under the proposed compulsory law.
Dr. LORENz. It would not make any difference whether it con-
trolled it or not. The fact would be there would be occasions when
the department’s view would be correct; that is, you would not have
to run the extra car on account of the mails.
Mr. BRADLEY. Would there not be a great difference in results
because of the ability to control the car movement and to economize
in loading and operation, whereas compulsory service must be per-
formed under heavy penalties, whether or not it is remunerative
or economical?
Dr. LORENZ. That is clearly a waste in cutting up cars, but, as I
say, I do not know that you could charge it entirely to the mail
Se]"VICe.
Mr. LLOYD. Would it not be a reasonable proposition to say that
when a railroad company needed less space that the demand of the
department would be for less space also } In other words, if the Gov-
ernment needs less space in a given instance, would it not be natural
that the railroad company would need less space in that given in-
stance and it would not have the opportunity to use the space which
might be vacated by the Government in the given instance?
Dr. LORENz. I think that is very probable; yes, sir. ~ ...
The CHAIRMAN. I think that is a very strong point. To my mind,
as I look at it at present, one of the elements of weakness in the de-
RAILWAY MAIL PAY. 1441
partment's position as to the reduction of rate in the apartment over
the full car is the assumption that there is always an overflow of
business that the railroads can take up which does not exist.
Mr. LLOYD. It seems to me that the assumption would naturally be
the other way. •
The CHAIRMAN. It would in its operation—in effect. But the de-
partment assumes there is always business available that the rail-
roads can put right into the unused space and it earns something.
Mr. STEwART. To prove that is correct we refer to the present con-
ditions in the apartment-car service, where the railroads are, on their
own account, voluntarily furnishing us a great deal more space than
we need. What is that space? It is space that is surplus in their
trains which they have liberty to use at any time. It is overflow
space which is available to them if we do not need it.
The CHAIRMAN. It is not available to them, for they can not use
it, or they would not furnish it to you when you ask for it.
Mr. STEwART. If they needed it they would not surrender it to us.
The CHAIRMAN. The case you have just cited, instead of proving
your view, disproves it, namely, that they would have additional un-
earned space that they would get no return on at all.
Mr. LLOYD. At the present time it does not make much difference,
but if you are going to change to a space basis it is a serious element,
and it seems to me when you do not need the space, or the Govern-
ment does not need the space, it would naturally follow that the rail-
road company would not need it either. When you have increased
business and need the space it would naturally follow the railroad
company would have increased business and need the space. The
very fact that at times they give you more space than you need proves
positively the fact they have more space than they need.
Mr. BRADLEY. I think, also you do not get an exact idea of what
we are discussing, if we simply use the general term “space.” Here
would be the thought: If a railroad company, looking to the future,
and especially in connection with parcel post, voluntarily provides
30 feet of space where the department at present needs only 25 feet,
that 5 feet additional may necessarily carry with it the rest of the
car. It is not to be contended that because the company can spare
that 5 feet that they can also spare the other 30 feet that goes to make
up the rest of the car. Very often an additional car would have
to be run.
Mr. RowAN. In this connection I want to bring out the point,
which I think it is well to have, as a result of the full-crews bills
which have gone into effect in many States. We have cut out the
handling of baggage on a great many trains, especially in suburban
territory, so that where the department asks for an apartment-car
facility, it means the railroad can not use the baggage end of that
car without putting a baggageman on that train. Your committee,
when they were in New York this summer, saw an instance where we
were hauling an apartment car of 12 or 14 feet from New York to
Croton and from Croton to New York with the baggage end abso-
lutely empty; we had no use for it, and we did not use it for baggage,
because according to the laws of the State of New York we would
have had to employ a baggageman to ride on that train, and that is
one of the trains we have marked on our timetable which does not
1442 RAILWAY MAIL PAY.
carry baggage. Dr. Lorenz and Mr. McBride saw that particular
case, and we have many like it. -
Mr. McBRIDE. That was a fact on that one particular train.
Mr. RowAN. And on a good many others. -
Mr. SAFFORD. I would like to say also that in the South, where
we have to separate the races, we generally build what we call a
baggage and a seat car; one end of the car is used for baggage and
the other end is devoted to carrying of colored people. Those cars
are entirely sufficient for most of our local trains upon which apart-
ment-car service is performed, and it is very generally the case,
where we are asked to put in apartment-car service, it means an-
other car on the train. It is not unusual at all that the railroads
have to put in another car to supply the apartment-car space. Then
there is another matter which, we will say, probably would be con-
sidered as optional with the railroads, but still it is a condition we
have to practice in pursuit of economy. This question of furnishing
more space in apartment cars than the department actually requires
is due very largely to the fact that the railroad company, without
great extravagance, can not keep all of the types of cars that the
department may ask for. I have on my system requirements running
all the way from 6 feet up to 30 feet. We do not have any 6-foot cars,
we haven’t any 10-foot cars, but in order to exercise the best eco-
nomy we can, we build a larger proportion of cars with larger mail
apartments in them, so that they will be interchangeable through-
out the system. The department never finds fault except when we
furnish them too little space. They never have made any objection
when we gave them more than they called for.
The CHAIRMAN. Why should they?
Mr. SAFFORD. I do not know why they should, but no specific men-
tion was ever made of that fact until we began to go into the ele-
ments that finally developed Document No. 105.
The CHAIRMAN. Then, Gen. Stewart, as I understand you, it gets
down to the one factor of the greater cost of a 60-foot steel-
constructed R. P. O. car than of an apartment steel car, and a reduc-
tion of 5 per cent suggested by the department in the rates. The
cost is relatively the same and the cost of heating relatively the
same? . -- *
Mr. STEwART. It ought to be. -
The CHAIRMAN. Then it is simply the difference in the cost of the
car?
Mr. STEwART. That is the undisputed difference. I could not say
that that was the only difference, because I do not think the ques-
tion has been settled here that it is the only one.
The CHAIRMAN. I mean the department's objection in making up
its mind for a 5 per cent reduction between the two?
Mr. STEwART. No, sir. I still insist that the railroad companies in
many cases have to put this car in their train, and in every case that
we call for a whole car they have to put a separate and distinct car
in the train. That is certainly a difference that ought to be con-
sidered. Mr. Lorenz suggests that on the space basis he does not
see how that could enter into the consideration. I can not quite fol-
low him there at present. It does seem to me that it makes a differ-
ence in the cost and leaves it to the company whether they have to
RAILWAY MAIL PAY. 1443
put an independent car in or whether they give the department 30
feet in one which it runs anyway, for its own convenience. &
Dr. LORENz. I. agree with you that if it is true they are running
the car anyway, that their giving you that part of the car does not
cause a proportionate increase in expense for furnishing the new car,
but the question is to what extent is that typical and to what extent
the other case presented by the railroad is typical where they have to
put in another car where you ask for an apartment car? The only
question is which is relatively the more frequent. : *
Mr. BRADLEY. Is there not one thing that always happens, that if
the department orders an additional R. P. O. car they would be ex-
pected to pay the full rate for the whole car? If they order an addi-
tional mail apartment car, if it happened to be 15 feet, it would only
pay 44 cents; yet the company might have to put on a full car, which
according to the department's own schedule is given a rate of 20 cents.
Dr. LoRENz. That is one case that might happen, and the other is
Gen. Stewart's, where you would run the car anyway; without the
statistics as to the frequency of relative cost, I do not see why it should
be more or less on that ground.
Mr. Scott. Assume that 30-foot apartment cars cost the same as
60-foot full R. P. O. cars and the Post Office wants 30-foot mail
apartment cars running in both directions between two points. The
value of that car is fixed at 20 cents and the Post Office ‘tºrtment
will say for that 30 feet we will pay you 9 cents, because some days
you have an opportunity to load your end of the car partly full.
Why should the railroad company be penalized that 10 per cent
whether they load their end of the car or not? They are penalized
to start with, by being paid for only half of the car.
The CHAIRMAN. And the risk they run to fill the other half.
Mr. Scott. Yes; it seems to me it is a one-sided proposition.
Mr. MACK. We have many cases of that kind. For instance, I
pointed out on our line from Kansas City to Pueblo, as I showed in our
statement, we are obliged to furnish a full car. We would get 9 cents
if it is a wood car and 94 cents if it is a steel car, but no question ex-
ists about the fact, but some provision ought to be made even under
the existing plan. We have suggested apartment-car pay as a pres-
ent remedy for it, but this class of cars is quite general in the West
and they are not a negligble quantity and undoubtedly ought to have
some consideration, not merely with respect to the difference in rate
between the apartment car and the full R. P. O. car, but as a different
class of cars.
Dr. LORENZ. Have you any case in which, if the department should
take off the mail service entirely from part of the car line, you would
still have to run the same number of cars for the baggage and ex-
press t
Mr. MACK. If the department took off the space? -
Dr. LORENZ. Yes. If the department said they did not need the
apartment on this train at all, would you not still have to run that car
in many cases for baggage and express? -
Mr. MACK. No. That is the point we make, that 30 feet of space
in the other end is not of any value.
Dr. LORENz. Then there is no case in which an apartment
Mr. MACK. Do not misunderstand me. It is not in all cases where
we have a 30-foot apartment car that we have to haul other cars,
1444 RAILWAY MAIL PAY.
but there are cases where it does occur, and that is a condition that
ought to be considered. r
Mr. BASKERVILLE. There are other cases. Take, for instance, the
two or three car trains on the branch lines; we could use the combined
passenger and express car and eliminate the postal car.
Mr. WADE. Is it a fact that in the development of the passenger
service that the first thing provided for is passenger and baggage
Service, and that the mail is incidental? Naturally, in that case the
railroad º would provide the space in the part of the car to
take care of the passenger business, perhaps the Smoker. As the mail
developed, additional space is required, and in a great many cases an
additional car would be required on that train. We presented a state-
ment that showed that 19 out of 42 apartment cars in use on the
Erie Railroad were not used for any other purpose except for mail
at the present time.
Mr. RowAN. Nineteen out of forty-two!
Mr. WADE. Nineteen out of forty-two, if I remember correctly.
Mr. Connolly. On the Central Railroad of New Jersey they run
three 30-foot cars every day 120 miles, four 30-foot cars 60 miles, and
one 30-foot car 90 miles. Of those seven 60-foot cars, with 30 mail
apartment cars, the storage space is of no use to the railroad company.
The Chamxas. It is not utilized at all on any one of those seven
trains?
Mr. CoNNOLLY. No, sir. To get away from that we are building
70-foot cars, 30 feet of mail and 40 feet to be devoted to the express
and baggage, so that we can cut one car out of the train. There is
one of the most glaring instances in this part of the country.
Mr. McBRIDE. Then, 10 feet additional will take care of your bag-
gage and express? -
Mr. Connolly. On an average; but not all the time. #
Mr. LLOYD. I want to ask Mr. Worthington a question which will
get away from this particular point. On your heavy Ogden trains
you stated, as I understand you, that you had several storage cars.
Is it not true that in the storage cars you have a very great tonnage?
Mr. WoRTHINGTON. A large tonnage.
Mr. LLOYD. Do you know how much 3
Mr. WoRTHINGTON. I do not think I said several storage cars. A
few storage cars; but I do not remember the number.
Mr. LLOYD. But you have storage cars on every train.
Mr. WoRTHINGTON. On every mail train.
Mr. LLOYD. Have you any idea of the weight carried in that storage
Car?
Mr. WoRTHINGTON. I have not. A special weighing was had in
1907, which I think gives the weights of those cars. Dr. Lorenz
showed me some figures to-day on that. He showed me a figure on
page 857 of 9.26 tons for a 60-foot storage car.
Mr. LLOYD. That is the average weight carried in a storage car?
Dr. LORENz. That is the average loaded movement.
Mr. LLOYD. Do you know whether it is true that on your train
the average weight of your storage car is not very much heavier than
that? --
Dr. LORENz. That is the average in his section; the average for
the country was less than that.
RAILWAY MAIL PAY. 1445
Mr. LLOYD. What was the average of the country?
Dr. LORENZ. A little less than seven and one-half.
Mr. LLOYD. Do you know what the average is on your road'
Mr. WoRTHINGTON. For the entire country 7.26, according to this
statement, and for the district comprising California, Nevada, Ore-
gon, Arizona, Idaho, Utah, and Washington, 9.26 tons.
Mr. LLOYD. Your Ogden road would #. away beyond 9.26%
Mr. WoRTHINGTON. It may be. I do not know the average for
the Ogden route. It probably is, but I do not know.
Mr. LLOYD. The probabilities are that on that Ogden road, where
you are getting large compensation for the individual train or in-
dividual car, that you are carrying away beyond the average weight,
and if some kind of a provision were put into the law that fixed,
by weight, what a storage-car load is, like you actually do on hogs,
would not that, to a very great extent, increase your pay and over-
come your objection.
Mr. WoRTHINGTON. I think it would.
Mr. LLOYD. If we come to the space basis, would not that equalize
the pay to the railroads, if some such system were adopted?
Mr. WoRTHINGTON. If a system were adopted which increased the
pay according to the load in the car, it would overcome most of the
objections.
Mr. LLOYD. What I was getting at was the fixing of the weight
that makes a storage-car load. In explanation, a few days ago we
were talking about cattle and hogs, and I raised the question as to
whether you shipped them by weight. I asked the question whether
or not you shipped them by carloads, but the answer of the rail-
road companies was that we do ship by the carload, but we fix the
weight. Here is a car that carries so many tons and we count up
so many tons, but we do not actually weigh it. Now, if you fix the
limit of weight which makes a full storage-car load, and you actually
carry twice that weight in storage cars, you might make some kind
of a system by which you could pay for carrying twice the weight in
the storage car. In other words, you have two cars in one.
Mr. PEABODY. May I correct your understanding there? On all
shipments of live stock we have a minimum weight for different sizes
of cars, but we charge for the actual weight in that car when it is
above the minimum. That is always the rule. For instance, we
have a minimum of 20,000 pounds in a 30-foot car, 22,000 in a 36-foot
car, and so on. We have a minimum weight for each sized car and
then we charge for the actual weight in case the cars are loaded above
their minimum.
Mr. LLOYD. Here is a carload of hogs that weighs 20,000 pounds;
that is the minimum weight and it turns out, however, you have very
heavy hogs. For the purpose of illustration, suppose you have very
heavy hogs and crowd them in close and get in 40,000 pounds of hogs
in that car. Then, as I understand you, the effect of your rate would
be to charge twice as much as the minimum weight. Now, if the
Same principle were applied to the mail on the space basis, if you
carried two loads in one you would get pay for two loads and that
would overcome the problem that we meet here on these heavy
storage cars in the West. As I understand it, there is this difference
between the eastern cars and the western cars, and it is a very marked
1446 BAILWAY MAIL FAY.
*
difference, that when you get west of Chicago and St. Louis, you
carry the magazines. East of Chicago and St. Louis the trains do
not carry the magazines except few in number. &
Mr. McBRIDE. West of Council Bluffs and Kansas City. The
freight shipments end at Kansas City and Council Bluffs. •
Mr. LLOYD, Beyond that limit, wherever it may be, you carry these
heavy magazines, but if you fill up a car with magazines it is going
to be much heavier than it will be if it is filled with ordinary mail.
That is the heaviest mail you could carry, and I can conceive how
you could fill up a car and put nearly twice the weight in it if you
had that heavy mail than you would with the ordinary mail that
makes up the storage car.
Mr. PETERs. The service is being performed by the railroad and
under the weight basis the railroad gets paid?
Mr. LLOYD. He was making the statement that by indirection he
would not be treated fairly under this proposed pay system. I was
trying to reach a solution of the matter to ascertain if there was not
Some way to fix that space by law so that he would get that, and it
struck me that that might be feasible. -
Mr. WORTHINGTON. In freight service that is the rule as to all
carload traffic.
Mr. LLOYD. The chairman very properly asks how you would make
the ascertainment of weight. Can you answer that? -
Mr. WoRTHINGTON. I do not see how you could get an ascertain-
ment of weight without weighing the mails. The department could
answer that better than I could. You would have to weigh the mails
in those cars. - •
The CHAIRMAN. You would have to weigh every car and every
movement. - - - -
Mr. WoRTHINGTON. Unless they follow the present plan and take
the weight for a certain number of days.
Mr. LLOYD. Take the hogs that you speak of. Do you actually
weigh the hogs that go into the car?
Mr. PEABODY. Whenever they are taken to market they are always
weighed. •, w
Mr. LLOYD. Do you weigh the horses that go into your cars?
Mr. PEABODY. Rarely, except by scale weight.
Mr. LLOYD. What do you mean by scale weight?
Mr. PEABODY. The track scale weights. We take the market
weights where they go to market, with cattle and hogs, but where

they do not go to market we take the track scale weights. We always
weigh every car.
Mr. LLOYD. Is it not possible to determine the weight question this
way: The railroad company comes to the conclusion that there are
more than 74 tons being carried from day to day. That question
can be easily settled between the railroad company and the Govern-
ment by taking the mail actually weighed for a few days to deter-
mine it. It need not be any particular time, but whenever a railroad
company says they are not getting enough you could weigh it to see.
If it should happen to be a heavy period, and the Government would
say it would not be a fair test, it would determine just for the time
being whether they were getting enough or not, and at some other
time the Government could demand a weighing, and they could ascer-
tain what was the average weight.
RAILWAY MAIL PAY. 1447
Mr. WADE. Why not fix the schedule at 73 tons? i
Mr. LLoyd. Because, as I understand it, that was said to be the
average weight of the storage-car mail. -
Mr. BRADLEY. In 1907 in the special weighing? .
Mr. WoRTHINGTON. I suppose that has changed since the maga-
zines have been taken out of that east of Council Bluffs.
Mr. McBRIDE. I think the statistics of 1907 show the average load
of storage cars in the eighth division, which would take in your line,
was somewhat heavier than 7% tons. -
Mr. WoRTHINGTON. The weight varies in different sections from 2%
tons to 9.26 tons, and the average shown is 7.26 tons. That is accord-
ing to the special weighing of 1907. 3.
Mr. McBRIDE. That is my impression.
... The CHAIRMAN. Would you gentlemen of the railroads be satisfied
if you had compensation from the Government for railway mail pay,
including the railway post office, equivalent on a car-mile basis to
your passenger revenue? 3.
Mr. PEABODY. The passenger car-mile revenue?
The CHAIRMAN. Yes.
Mr. PETERs. I think we would. *
Mr. PEABODY. While it is true that the passenger-train-car revenue
does not pay for its proportion of the expense of conducting the
service, I think it would be only fair that the mail should not pay
any larger revenue than accrues to the other service. But that is
considerably more than 25 cents per car mile on our road.
The CHAIRMAN. Would you go as far as to say you think the mail
should pay exactly the same in revenue to the railroads that the
passenger service pays.
Mr. PETERs. I think they should pay fully that much.
The CHAIRMAN. Your reasons are what?
Mr. PETERS. It occupies so much space in the train.
Mr. WoRTHINGTON. Would you mean for each individual road or
for the railroads as a whole; for example, our passenger-train mile
revenue is, I think, about 34 cents a car mile, which is higher than
the average for the United States, and it would make a material
difference to us whether you mean the average for the whole
country. -
The CHAIRMAN. What I meant was the average for the country of,
say, 25 cents a car mile?
Mr. WoRTHINGTON. We get more than that now, according to these
figures.
Mr. LLOYD. How about you, Mr. Bradley Are you getting more
than that now?
Mr. BRADLEY. Oh, no.
Mr. LLOYD. What do you get now?
Mr. BRADLEY. We get considerably less than the average passen-
ger car earning. -
The CHAIRMAN. As I understand, in the rate suggested in the
proposed bill, the determinant factor in your mind in arriving at the
suggested rate was the revenue from the average passenger Service?
Mr. STEwART. Yes, sir; that was the basis.
The CHAIRMAN. And your reason for making a reduction there of
20 per cent in the average passenger rate as applied to the mail reve-
1448 RAILWAY MAIL PAY.
nue was what? How did you arrive at that 20 per cent? Was that
an arbitrary { - w `s
Mr. STEwART. In the first place, we accepted the 10 per cent reduc-
tion proposed by Dr. Lorenz, somewhat measuring the difference
between the passenger service and the mail service. -
Dr. LORENZ. I might suggest at that point I do not venture to
measure the exact difference in the value of the mail service per car-
mile and the other passenger service per car mile, but I said it could
not exceed 10 per cent at the outside, I thought.
Mr. WORTHINGTON. Did you not say, Dr. Lorenz, that your thought
was that the rate should be somewhere in the neighborhood of 25
cents, but you doubted whether it would be well to go all that dis-
hº at once in increasing the rate, and that 22% cents was going
aliVW 3. W.
Mr. Yours, Yes. I think the evidence was too slender to bas
an award of $15,000,000. -
Mr. STEwART. I am glad Dr. Lorenz has finally brought that out
and put it into the record. Of course you gentlemen all know that
I do not think the evidence is sufficient upon which to reach such
conclusion. I furthermore think we have clearly shown that that
conclusion is based upon premises which have been disproven.
The CHAIRMAN. That is the $15,000,000? -
Mr. STEwART. Yes. w
Mr. LLOYD. In that connection, may I ask Dr. Lorenz what would
be his award, if anything, on the $15,000,000 proposition?
Dr. LORENz. How much do I think the evidence warrants?
Mr. LLOYD. Yes.
Dr. LORENZ. Well, my actual suggestion was 224 cents.
Mr. LLOYD. You made a statement as to $15,000,000. You said
you would not make an award of $15,000,000. Now, I said, if you
were going to make an award, are you prepared to make an answer
which would make any part of the $15,000,000?
Dr. LORENz. Yes. I suggested possibly 10 per cent of the existing
pay—$5,000,000. w
Mr. PETERs. I thought you suggested $8,000,000.
Dr. LORENz. No. I suggested that $8,000,000 was what the claims
of the railroads amounted to if their amendments were allowed.
But it seems to me, on the commercial basis, that the department has
itself furnished the evidence, so far as we can judge, from the returns
for the single month, that there was some underpay; that is to say,
if we take their statement in Document 105, Table 7, their figures
for a division between freight and passenger and make a single
correction, that they should be charged with at least half the dead
space—and I think it could be argued they should be charged more—
that with that correction it would amount to four or five million
dollars, according to their own showing. #y.
The CHAIRMAN. That is, that the railroads were underpaid instead
of overpaid!
Dr. LORENz. I think that is indicated. But, as I said, I do not think
the evidence sufficient to say positively how much more than that
they were underpaid. • " .
Mr. BRADLEY. That was on the department's division of expenses,
their ratio of 29.21, and increasing their space ratio to approximately
what?
RAILWAY MAIL PAY. 1449
Dr. LORENz. It would be between their figure and 8 per cent.
Mr. WoRTHINGTON. I would like to make one deduction. Docu-
ment 105, Table 7, shows the figures of space and operating expenses
and taxes chargeable to the mail service. Dividing the space figures
into the operating expenses and taxes chargeable to the mail, produces
an average of 3.08 mills per car-foot mile for operating expenses
and taxes, according to the department's calculations. In volume
No. 7, the department gave other figures, which would increase the
operating expenses and taxes by 32.51 per cent to cover other charges
against income, increasing the 3.08 for the operating expenses and
taxes by 32.51; this would make a total of 24.81 cents per 60-foot car-
mile, which the railroads should receive to cover operating expenses
and other charges against income, according to the department's own
calculation, whereas the proposed rate is 20.91.
Dr. LORENz. I made the same calculation, but I think it should be
stated that indirectly your result there assumes that they would have
to pay that on the live space, for in Table No. 7 their figures are based
on the mail space without dead space.
* WoRTHINGTON. The mail space figures do not enter into this
at all.
Dr. LORENZ. Yes; because they then say that by using 68.8 per
cent— $
Mr. WoRTHINGTON. It is the pasenger train space as a total divided
into passenger operating expenses as a total.
Dr. LORENz. But that space you have divided as a total is the live
space?
Mr. WoRTHINGTON. It is the total space on the passenger train.
Dr. LORENz. Excluding the dead space. In Table No. 7 there is no
dead space.
Mr. WoRTHINGTON. Yes, there is. *-
Dr. LORENz. Pardon me, not Table 7. You have simply mail plus
deadhead space. -
Mr. WoRTHINGTON. I am not speaking of mail space. I am speak-
ing of total passenger space as shown in Table No. 7.
Dr. LORENz. There is none shown in Table No. 7.
Mr. WoRTHINGTON. I am not speaking of the division of mail
space in revenue, but the operating expenses. -
The CHAIRMAN. You were interrupted in answering a question I
propounded as to the reasons why you arrived at a 20 per cent de-
duction from the passenger rate for mail revenue. When the inter-
ruption took place you referred to Dr. Lorenz's suggestion of 10
per cent. * -
Mr. STEwART. In addition to the 10 per cent suggested by Dr.
Lorenz we made another deduction of 10 per cent on consideration
of, first, the overpayment to the railroads as demonstrated by our
presentation to the committee, which we think is as yet unsuccess-
fully controverted. Further, in consideration of the additional ele-
ments which we have suggested, which Dr. Lorenz took no notice
of, and which justifies a considerable reduction from a strictly
commercial rate. Those considerations have been referred to fre-
quently in the hearings and are set out specifically in our reply.
Mr. LLOYD. What is that; uniformity of service, homogenity, etc.?
Mr. STEwART. Yes.
1450 RAILWAY MAIL PAY.
The CHAIRMAN. Public-utility features?
Mr. STEwART. Yes. • : .
The CHAIRMAN. If you eliminate the public-utility features and
treat it purely as a commercial proposition, then what reduction,
further than that suggested by Dr. Lorenz, do you think the Gov-
ernment would be justified in making as between mail and pas-
senger? * -
Mr. STEwART. I think the same reduction we have suggested, be-
cause I have given very little consideration to the specific element
of public utility in that 10 per cent. . We have named a number of
elements and public utility is only one of them.
Mr. LLOYD. You mean those several elements combined are 10 per
sent? - w *
Mr. STEwART. Yes. We have stated specifically that whether or
not the element of public utility is to be considered must be de-
clared by Congress as a public policy, and we have not attempted to
put a value on it.
The CHAIRMAN. Then your 10 per cent further reduction is an
arbitrary of your's, based upon taking into consideration such factors,
but without comparing the value or weight, relatively, or each one
of those factors? Is that it? - -
Mr. STEwART. Necessarily so, because there is no other basis upon
which to proceed, excepting the one basis of overpayment to the
railroads. -*
The CHAIRMAN. Let us turn to that for a minute for discussion and
analysis. If that were true, and if you were right in your contention
that they were overpaid, and these suggested rates would go into
operation for a period of years, how long would it remain in opera-
tion? Congress might see fit to change the rates. How do you
justify that viewpoint of the adjustment of that overpayment, for
how many years before these rates would equalize that, in which
event, after that indebtedness on the part of the railroads to the
Government had been repaid because of the overpaying, would this
pay be sufficient? -
Mr. STEwART. You mistake me entirely if you think the purpose is
to recoup something that has been paid out. It is only to reduce the
pay to what it ought to be. The reductions were preliminary to the
further building of the rates. Those reductions determined the line
rate, and upon that line rate we build an additional element into the
rate by adding the terminal charge and the loading charge, which
brings the average for the entire service up to about 20.9 cents a
car-mile. *
The CHAIRMAN. As against 25 cents plus for the passenger revenue !
Mr. STEwART. That reduces the 10 per cent reduction which I
made to about 7 per cent. In regard to Dr. Lorenz's answer to
your question as to how much of this alleged $15,000,000 under-
payment he would venture as a suggestion should be allowed, it
is still to be observed that he bases that upon the showing which
he says has been made in regard to the Missouri Pacific system,
and he says that perhaps one-half of the dead space ought to be
allowed. We show that over 9,000,000 car-foot miles was in con-
troversy in the Missouri Pacific case. The answer of Mr. Mack is
before you, and he has not successfully shown that any material
BAILWAY MAIL PAY. 1451
part of that should have been put back in the mails. What he has
said in his answer is a reiteration of the points of difference between
the administrative rule of the department on the one side and the
contention of the railroads on the other as to what should have been
, charged to the mails and as to what should not have been so charged.
IHe has given you nothing but a restatement, in concrete figures, of
the same controversy between us. We thought we would have the
opportunity before the closing of the day to give you some further
light upon the Missouri Pacific system and show you the kind of
examples which make up, to a very large extent, at least, the 9,000,000
car-foot miles.
The CHAIRMAN. Have you got it ready?
Mr. STEwART. We have that now.
The CHAIRMAN. I understand you want some little time to look
over that statement?
Mr. STEwART. In the morning will do just as well, so far as we are
concerned.
The CHAIRMAN. As I understand, you have still further modified
your views in reference to the question of rates, because of the dis-
covery or working out of the express cases that you submitted to
the committee in your table, so that you are now of the opinion that
the maximum rate suggested in your proposed plan should be made
still lower?
Mr. STEwART. I am not prepared to make a suggestion.
. LLOYD. I think your suggestion was that it was certainly
liberal.
Mr. STEwART. Yes. I said that they were certainly high enough.
I am not in position to suggest to your committee that any reduction
should be made. I could not bind the Postmaster General in that
respect.
The CHAIRMAN. There is no desire to bind the Postmaster General,
but we are trying to get for the information of the committee the
development of your mind in your study. Having the determinant
voice, provided your suggested plan were enacted into law, the rates
being maximum, your present impression would be to reduce in all
instances, would it not?
Mr. STEwART. To reduce the pay to the company below the rates.
fixed by law Ż
The CHAIRMAN. Below the maximum rates.
Mr. STEwART. Oh, no.
The CHAIRMAN. Would you not have the authority under the law
to give lower than 20 cents a car mile—19 cents and 18 cents?
Mr. STEwART. Yes; but that is not the question you asked me. You
asked me whether it would be my intention to reduce them in practice.
The CHAIRMAN. That is what I mean?
Mr. STEwART. No, sir; I have no such purpose as that in view.
Practically that could be done under this provision which permits
the Postmaster General to ascertain from the Interstate Commerce
Commission certain information upon which he might act. That is
independent entirely of the rates that are fixed in the proposed bill.
The CHLARMAN. You think those rates are extremely liberal? That
is your present impression? Now, if on further investigation you
became convinced that they were excessive, would you not have au-
1452 RAILWAY MAIL PAY.
thority, under the suggested plan, if enacted into law, to pay less
than the maximum provided there?
Mr. STEwART. Yes, sir.
The CHAIRMAN. Would it not be your inclination and your duty,
under the position you occupy, to do that?
Mr. STEwART. The sufficient answer to that is this, that the same
provision exists in the present law and has been there since 1873.
The CHAIRMAN. We used to use tallow dips, but we now use elec-
tric light. - *
Mr. STEwART. The same controversy has continued for many years.
There have been a number of Postmasters General who have believed
that these rates fixed by the law of 1873 and the amending acts were
too high, and they have so expressed it in their annual reports and
otherwise, and no Postmaster General has arbitrarily made a reduc-
tion in rates.
Mr. PETERs. When you changed the divisor you did?
Mr. STEwART. No. That was correcting a process. The effect of
it was to reduce the rates about 10 per cent.
The CHAIRMAN. What I meant was, as a practical proposition, the
change in the divisor was a change in rates of about 10 per cent?
Mr. STEwART. It had that effect.
The CHAIRMAN. That was the purpose of it?
Mr. STEwART. I think not. I think the purpose, primarily, was to
adopt the correct process for finding the average daily weight.
The CHAIRMAN. I think Gen. Cortelyou, who made the order, ex-
pressed the other view, that there ought to be a reduction. That has
always been my view, but I may be wrong.
Mr. STEWART. I do not know of any such expression. This is what
it did do: It reduced the rates and we have maintained that as a
reduction in rates it was justified under the power given the Post-
master General under that statute, aside from its being a correct
process. -
Mr. RowAN. Did you not also make a reduction of 5 per cent at the
same time?
Mr. STEwART. Congress did, on weights above 5,000 pounds.
Mr. RowAN. So altogether the reduction is how much?
Mr. STEwART. On the whole body of the mail I do not know. All
rates were not reduced by the statute at that time.
Mr. RowAN. On routes handling over 48,000 pounds, what did the
two reductions amount to? 8
Mr. STEwART. It may probably be stated in the annual reports, but
I do not recall the approximate amount.
The CHAIRMAN. Is it absolutely necessary for administrative pur-
poses that the law should give a maximum and not specified rates?
Mr. STEwART. I think so. *
The CHAIRMAN. It is necessary? -
Mr. STEwART. Yes. That has been my opinion and I do not see
any reason for changing it.
The CHAIRMAN. The point is not, as to the policy but as to the
necessity. The law, if it was fixed, namely, if the law provided
20 cents, 19 cents, and 18 cents and fixed a flat rate, it could not be
administered, or would interfere with the administration. --
Mr. STEwART. It could be administered, but I think it would inter-
fere with the administration. . .
RAILWAY MAIL PAY. 1453
Mr. LLOYD. You mentioned one instance where it would stop; that
was the case of competing railroads between the same points where
the routes were of different length? -
The CHAIRMAN. That would work a hardship as between roads,
but would it work a detriment to the Government in dollars or in
efficiency of service. - . . .
Mr. LLOYD. His idea was, when he expressed it, that the Govern-
ment ought to be permitted to use, in that case, the shortest route
between two points as the basis of pay, and under the system if there
was no leeway at all, it could not be done, because you would have
to charge a flat rate of 18 cents or 20 cents as the case may be for the
whole distance. For instance, if he sent mail by the Baltimore &
Ohio Railroad there would be one rate, if he sent it by the Pennsyl-
vania there would be another and a different rate, for instance, from
Washington to Baltimore if he sent it by the Baltimore & Ohio which
would be the shorter route.
Mr. STEWART. It is a consideration which would not impress you
entlemen very deeply, because you would not appreciate how often
it comes up. If you have maximum rates, the act of the Postmaster
General in making a pay order, if it carries an amount of money
which is within the maximum, is a lawful order and it stands, it
can not be successfully contested. If you had the rates absolutely
fixed, there are so many little differences in the adjustments of service
that no order which the Postmaster General could make would be
final, because there would always be a chance for controversy be-
tween the railroad company and the department as to whether that
was the exact rate for that specific service allowable under the
statute, whereas now the pay carried by an order which does not
exceed the maximum rate is a legal order and there can be no con-
troversy about it.
The CHAIRMAN. Why does not your same objection apply under
existing conditions?
Mr. STEwART. The very same principle which I am naming does
exist under the present law. , Our orders are now valid orders, be-
cause they carry a rate which is within the maximum.
The CHAIRMAN. Do you not ever pay the maximum?
Mr. STEwART. We pay the maximum generally.
The CHAIRMAN. Then, why would not the same objection apply in
administrative cases paying the maximum as having a maximum
fixed rate. -
Mr. STEwART. You do not see the point that I have in mind.
There is, upon the one hand, the service performed which is meas-
ured, for instance, by the length of the route and the weight of mail
carried, and the other considerations that enter into the question of
how much money the company is entitled to per mile per annum for
that service. The Postmaster General makes an order allowing a
maximum rate for a given service. That is nominally the maximum
rate, but if the company disputes the fact that it is the maximum
rate, because there is some small item somewhere along the line for
Which it makes claim, and which it claims the rate does not cover,
the reply to that would be that the Postmaster General's order is a
Valid order, because he has fixed the pay within the maximum rate
provided by law. -
35797—No. 12–14—11
1454 *. RAILWAY MAIL PAY.
Mr. LLoyd. It seems to me the suggestion you make there would
show you are not doing justice, because there might be some little
thing left out. If there is anything left out it ought to be paid.
Mr. STEwART. It ought to be paid, and it would be paid, if the
railroads and the department came to an agreement upon it.
Mr. LLOYD, I thought you said that the maximum fixed by the
Postmaster General was final, and if it is a finality there would not be
any chance for additional pay? -
Mr. STEwART. It is final as long as the order stands, but it is
always subject to revision. *
Mr. BRADLEY. Is it not the maximum amount of the payment you
are discussing, and not the maximum rate upon which that amount
is based ? -
Mr. STEwART. No. It is the maximum rate.
Mr. LLOYD. So far as administration is concerned, the railroads
make a good many complaints. We provided by law last year that
there should be an increase of 5 per cent on account of the parcel
post. You say that as an administrative feature you complied
strictly with that law, but, so far as I know, there is no railroad in
the country that has gotten a 5 per cent increase.
Mr. STEwART. Yes; there are some. -
Mr. LLOYD. I knew that Congress intended that every road should
be paid a 5 per cent increase.
Mr. STEwART. Then, why did they say, “not exceeding”?
Mr. LLOYD. That is what I am talking about. Whenever they give
the department leeway it takes advantage of it. If we had said
what Congress intended, that the railroad companies should have 5
per cent increase, there would not have been any trouble at all, but
instead of that we made the very serious blunder of putting in the
words “not exceeding,” and because, we put in the words “not ex-
ceeding” you have been construing it from time to time to satisfy
your administrative purposes, and the railroad companies have not
received the 5 per cent. 's
Mr. STEwART. Take a company carrying 100 pounds daily average
weight at the time that law was passed. They were receiving pay
at the rate of $42.75 per car mile per annum, based upon the average
daily weight of 211 pounds or less. Suppose there was a 50 per
cent increase in weight? >
Mr. LLOYD. I am not talking about your reasoning, but I am talk-
ing about how the thing has worked out.
Mr. STEwART. As a result of the parcel post. Their average daily
weight would have been 150 pounds. Now, will anybody contend
that Congress intended to pay that road 5 per cent more, while if we
had ºftually weighed the mails we would not have paid them a cent
IOOI’é &
Mr. LLOYD. There is not any question in the world but what Con-
gress intended, in addition to the $42.75, that they should get 5 per
cent more.
Mr. STEwART. That is, pay them more than if we had actually
weighed the mails?
Mr. LLOYD. Yes. -
Mr. BRADLEY. Even the 50 per cent increase of weight might in-
crease the expense of their side and terminal messenger service far
beyond the allowance? -
RAILWAY MAIL PAY. 1455
Mr. MACK. It would be interesting to know how the 5 per cent
was applied to the Missouri Pacific and the other lines in the case
which I presented to the department. The application of the non-
exceeding clause deprives the company on its 150 mail routes of all
sizes, of $22,000 a year. Now, had Congress not placed any restric-
tion or limitation and intended the department to estimate the
growth and pay on the assumed weight, it is hardly to be supposed
that Congress would have limited the 5 per cent, because Congress
should have been willing to pay for the weight over 5 per cent as well
as the weight under 5 per cent. According to the estimate made by
the Railway Mail Service with respect to our routes, which the Post
Office Department furnished, we would have had $64,000, but by the
use of the term “not exceeding ” we lost out at both ends; we did not
get the twenty-two thousand or the sixty-four thousand.
Mr. LLOYD. You got no pay at all?
Mr. MACK. We got 4.07 per cent instead of 5 per cent, but we have
instances where there was considerable excess estimated by the Post
Office Department over 5 per cent.
The CHAIRMAN. So you lost three-tenths of 1 per cent?
Mr. MACK. We lost ninety-seven one-hundredths of 1 per cent.
Mr. LLOYD. I did not intend to arouse any discussion but only to
show the illustration.
The CHAIRMAN. I do not for the life of me see how Congress could
have done anything else but what it did do. I did not see how it
was possible for Congress to say that this increase of an activity
had grown to be 5 per cent or 6 per cent. I put it in the bill myself
in Congress, and there was debate made on the floor of the Senate,
and a good deal of discussion in reference to it, and it was finally
adopted by the Senate and concurred in by the House. I do not
#. Congress, not because I at the time happened to be one of the
Members, was justifiably subject to criticism in that particular. I
do not see how it was possible to make an explicit and specific rate
any more than what went into the law. The intention unquestion-
ably was, at least so far as the Members of the Senate supporting the
amendment are concerned, that whatever increase was determined
up to 5 per cent should be paid to the railroads because of increased
business due to the extension of the privileges of the fourth-class
mail. - -
Mr. LLOYD, And the “not exceeding ” only applied to railroads
that had not increased up to 5 per cent?
Mr. STEwART. Senator Bourne expresses it as we administered
it; that is, the roads received everything they were entitled to
on the weight up to 5 per cent. The rates were applied to these
estimates of weights and we did not reduce the allowance below 5 per
cent excepting where the additional weights did not justify 5 per
cent. We gave them everything they were entitled to up to and in-
cluding 5 per cent.
Mr. MACK. Do you not think under an equitable provision the
railroads should have been paid for the increase if there was more
than 5 per cent?
Mr. LLOYD. The law did not provide that.
Mr. MACK. I know, but I would like a reply in the record. *.
Mr. WoRTHINGTON. I would like to get something else in the
record. I think Dr. Lorenz will bear me out that my deduction from
1456 RAILWAY MAIL PAY.
Table No. 7 as to the operating expenses and taxes per car-foot mile
for passenger service, was not incorrect. Is not that so, Dr. Lorenzº
Dr. LORENZ. Yes; i did not say it was incorrect, but I thought at
the time the deductions you drew from it, that the department had
justified twenty-four and a fraction cents, would apply only if paid
for by the live space and not for the dead space. I see now, how-
ever, there is a little statistical puzzle and that the twenty-four and a
fraction cents is the rate at the operating ratio they provide for in
hearings No. 7, which would be the rate they would have to pay for
all the space. -
Mr. WoRTHINGTON. It is 24.88 cents per car mile, the computation
that I made.
Mr. SCOTT. With reference to the question of difference between
competitive points, the universal rule in regard to all rates, both
freight and passenger, is that the short-line distance rules. From
New York to Chicago, on the mileage, the New York Central Rail-
road will only take advantage of the number of miles covering the
distance by the Pennsylvania Railroad, and, therefore, any fixed
rate that is fixed in this bill applying under the car rate should be
applied to the short-line distance between any two competitive points.
It seems to me that would meet Mr. Stewart’s objection with refer-
ence to what is now covered by an agreement where the long line
accepts the short-line pay.
The CHAIRMAN. As I understand, you concur with Gen. Stewart’s
statement as to the impracticability of putting fixed rates in the bill?
Mr. Scott. No; I do not agree to that. I said if the rate was
fixed so much per car per mile, in fixing the rate from New York to
Chicago it would be the rate both on the New York Central line and
the Pennsylvania line on a competitive basis, notwithstanding the
fact that the New York Central is longer than the Pennsylvania,
because they use the short-line distance in fixing the rate.
Dr. LORENz. And the law would have to provide that the Post-
master General may pay less than these rates per ton per mile on
agreement with the railroad carrying it?
Mr. MACR. There is the point I arose to make a moment ago, and
that was this: Fix a specific rate except where agreed to between the
department and the company. That would give the railroad com-
pany some right. The maximum rate would have to prevail except
where there were conditions justifying an agreement.
The CHAIRMAN. You mean a maximum rate or flat rate?
Mr. MACK. A flat rate. •
The CHAIRMAN. You said maximum.
Mr. MACK. I did not use the correct term.
Mr. LLOYD. And provide further that it shall not exceed the flat
rate.
Mr. MACK. The point I am getting at is that you can have a fixed
rate and it ought to be a fixed rate except where there are condi-
tions that justify an agreement between the department and the
railroad company, and I think that rate ought to be fixed in existing
law, because the department holds it can make any rate it chooses
to-dav.
†. CHAIRMAN. How would that suggestion interfere with admin-
1stration? Would it interfere at all? A flat rate, except where
/
RAILWAY MAIL PAY. 1457
agreed to between the Post Office Department and the railroad com-
panies, providing that the agreement can not exceed the flat fixed
rate in the law. Would not that cover your difficulties in administra-
tion -
Mr. STEwART. No. It would not cover in many cases, such as I
mentioned a while ago. It would leave a wide field of controversy
between the railroad companies and the department, and it would
encourage controversies rather than eliminate them, because if there
was a difference of opinion as to the facts in the case upon which
the pay is fixed, if the statute has fixed the pay absolutely, that would
give to the company a cause of action against the department in-
every case where there was that dispute, whereas now, where we have
the statute, as it has been since 1873, with the “not exceeding ” clause,
as I explained a while ago, the order of the Postmaster General set-
tles the question. If there is a slight difference between the company
and the department, the order that fixes the pay within the maximum
is a legal order.
The CHAIRMAN. Would that same difficulty exist in the suggested
plan if adopted in administration? Would you have the same
trouble?
Mr. STEwART. No; it would be exactly as it is now under the sug-
gested plan.
The CHAIRMAN. I do not see where so many differences could occur
if the suggested plan were adopted. I wanted to get from you
whether, in your opinion, many of the opportunities for differences
would cease in the adoption of the suggested plan.
Mr. STEwART. The suggested plan is the same as the present law;
that is, it contains the words “not exceeding.”
The CHAIRMAN. I know it does; but I do not know whether it
would minimize the possibility of differences.
Mr. MACK. Then, when we get into court, where the maximum
rate has not been fixed, the department's order puts the railroad in
the position of having no defense, because the rate has not been fixed,
and the proposition of fixing the stated rate, except where there is an
agreement, would give the railroad some opportunity to have an
agreement with the department and give it a standing, but it has no
standing for anything at all to-day. At least I think the department
takes the position that it has the right to fix the rate and we have
nothing to do but accept it or decline to perform the service.
Mr. BRADLEY. My understanding is that Congress has frequently
taken away a limitation on the payment of salaries to employees
where for a period of years the rate was prescribed at not exceeding
a certain amount, and then because of complaint from the employees
that term “not exceeding ” was eliminated, and I never hear that
the department had any difficulty in administering the law.
Mr. LLOYD. We have a case where that is involved which has
caused considerable trouble, and that is the case of an assistant post-
master. There is a specific allowance made for pay of postmasters
in the Unitéd States, and the assistant postmaster receives in com-
pensation “not exceeding one-half the pay of the postmaster.” As
a practical proposition, he never gets half the pay of the postmaster.
Mr. WoRTHINGTON. He is mot compelled to work for that salary.
|Under this present bill we have a law under which the rate will be
tº
1458 RAILWAY MAIL PAY.
known, not exceeding, with the further provision that the railroads
shall carry the mail. - - -
Mr. LLOYD. There may be this marked difference between you and
the employee: The employee, as a practical proposition, might be
obliged to say in order to make a living for himself and family,
whereas the railroad might not accept and you would still live.
Mr. STEwART. It has been held by the court that an executive can
not diminish that pay. *
Mr. LLOYD. In this particular instance I have mentioned they have
fixed the pay, and the pay in some instances of the assistant post-
masters is not as much as the clerks’ pay in the post office.
Dr. LORENZ. It may be noted that the Interstate Commerce Com-
mission in fixing rates to be charged by the carriers can only fix maxi-
mum rates, and perhaps this law could read that the carrier may
charge not to exceed 21 cents. In that case any less payment would
be a matter of agreement. +.
Mr. LLOYD. That is a good suggestion to think about. -
Mr. MACK. That is substantially the suggestion I make, but only
in another form.
(Thereupon, at 5.15 o'clock p. m., an adjournment was taken until
10 o’clock a. m. Friday, April 3, 1914.)
e.”
FRIDAY, APRIL 3, 1914.
CoMMITTEE ON POSTAGE ON
SECOND-CLAss MAIL MATTER, ETC.,
+ TWashington, D. C.
The committee net, pursuant to adjournment, at 10 o’clock a. m.
Present: Hon. Jonathan Bourne, jr. (chairman), Senator John W.
Weeks, and Representative James T. Lloyd.
All of the witnesses, with a few exceptions, attending the two pre-
ceding meetings were present, and all indicating a desire to be heard
and those subsequently participating in the discussion were duly
sworn by the chairman. -
The CHAIRMAN. Dr. Lorenz, as I remember, yesterday at the hear-
ing it was your opinion that under the evidence submitted and from
the investigation you have been making during the past year or more
on this particular subject, that the railroads were underpaid in 1909
about $5,000,000?
Dr. LORENz. I would say that I thought the underpayment on the
commercial basis was at least as much as that, but I would not under-
take to say how much more.
The CHAIRMAN. But you think $5,000,000 of underpayment is a
conservative statement and deduction from the evidence submitted
from a governmental standpoint? -
Dr. LoRENz. On a con mercial basis; yes, sir.
The CHAIRMAN. In that connection, do you think that the main
pay should be treated on a commercial basis or does it differ from
the ordinary commerce; and if so, what are the lines of distinction
or difference in your opinion?
Dr. LORENz. I have taken the position in my report, and I do not
See any reason for changing it, that each branch of transportation
RAILWAY MAIL PAY. 1459
|#| * -
should, as far as possible, stand on its own bottom; that it should
represent the expenses directly chargeable to it, as well as a portion
of the cost of the joint facilities which it uses, and that, as I see it,
is the commercial basis. -
The CHAIRMAN. Therefore in your opinion, based upon experience
in transportation and rate matters, the mail pay to the transportation
companies from the Government should be treated entirely on a com-
mercial basis? - *
Dr. LoRENz. I think so. Of course there is this fact to be consid-
ered in actual rate making: That the railroads do not receive the
same rate of profits on all of their business; they may haul grain,
for example, at very little above the operating expenses; they may
haul ore and get a rate that is almost twice the operating expenses;
and they get, in other words, the highest rate of profit they can, tak-
ing a low rate on some things where necessary and a high rate on
others. If it be true that they have made a low rate on express
matter, it is quite fair to argue that it is a presumption at least that
equally as good a rate should be made on the transportation of mail
for the Post Office Department.
The CHAIRMAN. Why? Because of the competition between trans-
portation of mail and express?
Dr. LORENz. It might be argued that the Post Office Department is
in competition with the express companies.
The CHAIRMAN. That puts the department into competition with
private parties, then?
Dr. LORENZ. It does.
The CHAIRMAN. That would be a new departure?
Dr. LORENz. In a degree, yes; because they have always been more
or less in competition, because small packages could always be sent
by mail or express.
The CHAIRMAN. Would it be sound governmental policy for the
Government to embark in private business where a private enter-
prise could perform the service as cheaply and efficiently as the
Government itself?
Dr. LORENZ. I should say under those premises that the Govern-
ment probably ought not to en bark, providing there were not other
advantages in Government operation. The power and influence
which might come from monopolistic industries might make Govern-
ment operation advisable on other grounds than mere efficiency and
economy. -
The CHAIRMAN. Monopolistic tendencies should be regulated by
law and regulations?
Dr. LORENZ. That is a question that is now up—as to whether we
can successfully regulate monopolies. We are trying to regulate
the railroads, but it has been a case where regulations seem to be a
few laps behind practice.
The CHAIRMAN. That is always so in legislation ?
Dr. LORENZ. Yes, sir.
The CHAIRMAN. And must necessarily always be so?
Dr. LORENz. I would say, therefore, whether or not governmental
ownership is desirable will depend upon the extent to which we can
demonstrate that control of privately-owned monopolies is not waste-
ful, difficult, and impossible.
1460 RAILWAY MAIL PAY.
The CHAIRMAN. But it is your judgment it should be given a fair
trial before embarking on governmental ownership? . .
Dr. LORENZ. Yes, sir; but those are general questions upon which
my opinion is not worth very much. That is a matter of statesman-
ship and policy. - - w
The CHAIRMAN. But your opinion is valuable from the experience
you have had in rate making with the Interstate Commerce Commis-
sion and your training before your connection with the Interstate
Commerce Commission with reference to the question as to whether,
on the evidence submitted, the railroads were underpaid or overpaid
in 1909'? -
Dr. LORENZ. That is largely a matter of analysis of the statistics
submitted. -
The CHAIRMAN. That is all we have to go on ?
Dr. LORENZ. Yes, sir. ;
Senator WEEKs. In making that analysis did you come to the con-
clusions that there were any classes of railroads being inadequately
paid or any part of the service that was being suitably paid!
Dr. LORENZ. I was unable to come to a conclusion regarding spe-
cific classes of the service, but took the mail service as a whole; that
is, I did not attempt to distinguish fast mail service, for example,
from other service.
Senator WEEKs. You have no opinion whether the trunk lines
are being suitably paid and the short lines not? Did you segregate
those in any way?
Dr. LORENZ. I did submit a table in which the earnings per car
mile of the mail as compared with the earnings from passenger
traffic by classes, such as you mentioned, but I do not remember ex-
actly the result. It seems to me there was not such a difference as I
had originally thought. It did not seem to me that the heavy trunk
lines were specially overpaid as compared with the others; they
were receiving less per car mile than the short lines or lines wit
light traffic and their car-mile revenue from passenger trains gener-
ally was also less. It seems to me, as I remember it now, that on the
intermediate lines there was more disparity in the earnings rather
than in the case of the heavy lines on light lines.
Senator WEERs. What do you call intermediate lines?
Dr. LORENZ. I mean the lines from 5,000 pounds to 48,000 per day.
But those figures were in the nature of an estimate, so I would not
express that conclusion with any great confidence.
Senator WEERs. Did you bring the figures of 1909 down to 1913,
taking into account the increased pay to railroads and the volume of
business carried, and come to any conclusion as to whether the rail-
roads were suitably paid in 1913, leaving out the parcels post?
Dr. LORENZ. Only in this way: The average passenger train car-
mile earnings in 1912 are very similar to those in 1911 and 1910,
and from the statistics of mail car miles of service, compiled by the
Post Office Department as of 1913, it does not seem that there is much
change there in the earnings per car mile in the mail service, so that
from that evidence I would say that there was no great change to be
shown in the amount of overpay or underpay.
Senator WEEKs. In the amount, or in the proportional part of
total earnings?
RAILWAY MAIL PAY. 1461
... Dr. LoßENz. In the proportional part of total earnings, that is,
the total pay has increased very slightly in that period.
Senator WEEKs. Then the underpayment in 1913 would probably
be less than it was in 1909, according to your conclusion?
Dr. LORENz. I think it might be greater unless there has been an
economy in space authorized. : -
Senator WEEKs. I said the underpayment would probably be less,
but I meant would probably be more.
Dr. LORENz. There are several influences at work. On the one
hand the railroads claim that their expenses of operation have in-
creased, and they undoubtedly have in some respects. On the other
hand we are operating during these years under a weight basis and
some additional weighings have taken place during that period and
naturally that would increase the total pay coming to the railroads,
without necessarily increasing the actual cars hauled, or the amount
of service rendered, the cost to them of rendering the service. So
that would be an influence tending to reduce the amount of under-
pay. If they are getting more money and not rendering more service
so far as expense is concerned, it would tend to reduce the amount of
overpay. In fact, if we should let the present system of pay, the
present rate, go on for 10 or 20 years, it is conceivable if the depart-
ment is able to effect economy in loading, and so forth, the underpay
would soon be entirely wiped out. -
4 Sºnator WEEKs. How could the department effect economy in load-
Ing -
Dr. LORENZ. In the increased tendency to use storage cars if the
parcel post developed. My understanding is that relatively less
distribution space is required for parcel post because a greater
proportion of it is distributed before it goes on the train and that
would tend to reduce the greater relative proportion of storage cars
and therefore the pay to the railroads increases faster than the num-
ber of cars hauled under the present law. In other words, if you
could increase the proportion of storage cars from 10 to 20 per cent,
you would be adding to the pay of the railroads under the present law
much more than you would be adding to the car mileage.
Mr. PETERS. At the same time would you not be getting service per-
formed for the Government at a lower rate per ton-mile by the con-
centrated weights?
Dr. LORENZ. Yes; I think that would be true. º
Mr. PETERS. In other words, there is still opportunity for the
Government to economize in the actual aggregate cost of transport-
ing the mails under the present system of pay.
Mr. MACK. With regard to the increased earnings for mail, I sub-
mitted a statement the other day showing the total for 1913 and the
increase in compensation was less than half a million dollars as com-
pared with 1907. •
Mr. WoRTHINGTON. In that connection the report of the Postmaster
General for 1913 shows a large increase in service with very little in-
crease in revenue. The railway mail pay committee submitted a
statement for 1913 which shows a decrease in the annual rate of rail-
way mail pay per mile of mail routes from $229 in 1909 to $225 in
1913. During the same period the operating revenue from all traffic
per mile of road increased 17.6 per cent and the operating expenses
1462 RAILWAY MAIL PAY.
increased 29.6 per cent, taxes increasing 34.6 per cent, which would
indicate to my mind that there has been a very large increase in
railway operating cost and a decrease in mail revenue per unit of
service performed. -
Dr. LORENZ. It is true in these years following 1907 the increasing
weights of mail will not have the effect that they will have later on,
or would have before, because of the change in the method of calcu-
lating the weights, until all the routes have been weighed, so that we
have a sort of lull, you might say, in the increase in railway mail pay.
Mr. Scott. On account of the divisor. But that was all wiped out
in 1911 and since 1911 we are on an even keel.
Dr. LORENZ. My impression was that the earnings of 1913 showed
very heavy increase in the western section.
Mr. Scott. That may be, but it is not due to the divisor.
Dr. LORENz. In that case; no. -
Senator WEEKs. Do you think it would be practicable for the Post
Office Department to handle the parcel-post service in a similar
manner, as the express business has been conducted by the express
companies, by segregating the business and paying the railroads a
proportional part of the gross receipts?
Dr. LORENZ. I have not given much attention to such segregation.
It would be necessary, of course, in that case to restore the special
stamp in order to keep track of the revenues on that business. -
Senator WEEKs. By hauling it in different cars?
Dr. LORENz. The mere hauling of it in different cars would not
distinguish the revenue. -
Mr. SNEAD. That is, assuming that there was a separate office to
handle the parcel post, in which event you would have to duplicate
the express equipment to handle it. º
Dr. LORENz. Of course we would have to assume the Post Office
Department would take the parcel post through its regular chan-
nels. -
Senator WEEKs. I am thinking particularly of Mr. Stewart's con-
tention that the Government is entitled to a different rate from the
railroads in conducting the mail service from that given to general
shippers. Certainly there would not be any virtue in that argument
if it applied to parcel post alone. That is commercial business. If
there is any virtue in it, it must apply to first-class mail and mail of
that character. . -
Mr. LLOYD. First and second class mail?
Mr. PETERs. That is because the Government exercises absolute
monopoly in that service.
Senator WEEKs. It does as to first-class mail.
Mr. PETERs. While, as you explain it, that is the real difference
between the first and second class, yet with the new commercial busi-
ness, to run as you suggest, the department would have to have a
regular accounting system and would be forced to keep segregated
the earnings of the parcel post as well as the earnings from the other
classes, and then the railroads would have another class of cars to
handle, another branch of service to perform later—the first-class
mail, the parcel-post mail, and the express mail—which makes it
still more difficult. -
Mr. LLOYD. That is true, if the idea that is advocated by some
people and what seems to be the inclination of the Postmaster Gen-
RAILWAY MAIL PAY. 1463:
eral, to actually take over the express business, is carried out. If
we take over the express business, the Government will have to con-
duct it as a good business man would conduct the same business, be-
cause it is purely commercial, as Senator Weeks says.
Mr. MACK. But as it stands to-day on all the mail routes of the
country, it is practically a necessity to keep the two services to-
gether. On the smaller lines it would be a practical impossibility
in the operation of the Railway Mail Service. I speak from many
ears’ experience in the Railway Mail Service myself, and I say it
is a practical impossibility to segregate the two classes of mail. l
have no doubt it would have been done long ago if it were at all
possible. zº a -
Mr. LLOYD. Do you not think that the Government could conduct
the express business and carry parcel post as express and not as mail,
just as the express company carries the parcel as a commercial
proposition and not as mail?
Mr. MACK. I speak now with reference to the parcel post as it ex-
ists to-day. • -
Mr. LLOYD. I am talking about how it might exist if the express
companies are done away with, if the Government takes over the ex-
press business, either by confiscation or changing the rates. The
question is how will the Government handle that express business. I
was getting at the question whether they would not have to handle it
the same as the express companies handle that business, and would
they not handle it as a commercial proposition and not as a mail
proposition, and if they handle it as a commercial proposition, would
they not keep the same kind of accounting that the express compa-
nies now keep in conducting that class of commercial business, and
would it not be reasonable for the Government to make some arrange-
ment with the railroads, as do the express companies now, to wit, a
division of the profits? If they did that, it would be conducted
merely on a commercial basis and it would be an entirely different
kind of accounting to what there is in vogue at the present time. In
other words, we would have a new class of business handled by the
United States, and we would say, in effect, we will no longer carry
parcels as mail, but hereafter we will carry parcels as express and we
will have a monopoly of that business, just as we have a monopoly of
the first-class mail business. But it shall be a commercial monopoly
and not a mail monopoly. -
Mr. BASKERVILLE. Would not the railroad company be a common
carrier in that instance, instead of an agent of the Government?
Mr. LLOYD. I am not a witness on the stand.
The CHAIRMAN. What would be the result if that were done?
Would not the result be that the Government would have to pay
probably $25,000,000 or more in compensation to employees than is
now paid by the express companies, and would the Government get
any cheaper rates under governmental ownership and operation than
they receive to-day from the express companies under regulation?
Mr. LLOYD. That is getting back to the merits of the proposition of
taking over the express companies. At the present time, and speak-
ing for myself, I am not convinced that the wisest thing to do is to
take over the express companies, but there are those who are con-
ºvinced.
1464 RAILWAY MAIL PAY.
The CHAIRMAN. I think it would be most detrimental. I do not
think the public would get as good service or anything like as cheap
rates as they would under private operation of the express compa-
nies, regulated as they are now by the Interstate Commerce Commis-
Sion. I think the two services are entirely separate and distinct; the
Government should operate the mail and the express companies the
express, so that they should be correlated together as they are now.
The evidence submitted, as I recall, in 1912 was that the number of
express employees was 50,000, who devoted their entire time to the
express business and 35,000 devoting a part of their time to the ex-
ress business and part to the railroad, telephone, and telegraph
usiness. Their average compensation was a little less than $50 a
month. The average compensation of postal carriers and clerks per-
forming similar service to the express employee was over $90 a month.
Unquestionably, if the express employee became a governmental em-
ployee, his salary would be the same as the present postal employee
receives at the present time, assuming he performed a similar duty.
In addition to that, I think there is a tremendous danger in adding
that many additional employees to the present number of govern-
mental employees because of the increasingly political influence they
would wield under our form of government.
Mr. WORTHINGTON. I think a very good argument against the space
basis is the possibility of the Government taking over a large amount
of the express matter which would put it directly in competition
with the express companies, which necessarily have to pay the rail-
roads more or less in proportion to the tonnage handled, whereas
under the space plan the Government would have available a very
low car-mile rate which they could utilize by filling the cars to
capacity and handling that class of freight for rates that would be
ruinous to the express companies competing with it.
The CHAIRMAN. I am not convinced at all as to the Soundness of
that application against the adoption of the space basis.
Mr. LLOYD. That would be only an objection to the proposed rate
and would not be an objection to the proposed space basis. As I
understand it, the railroads’ objection—to bring it down to the cor-
rect analysis, is only an objection to the rate and not an objection
to the space basis. The objection to the space theory that is urged by
the railroad companies is the administrative feature, the railroad
companies fearing they will not be properly treated in the adminis-
tration of space when we leave it solely to the department as to what
space shall be used when the railroads have no opportunity of appeal
to anybody to determine whether the demand or the requirement of
the Postmaster General is a reasonable demand to make upon them.
In other words, under the proposed system, there is no appeal from
the decision of the Postmaster General.
Mr. PETERs. We have more objection than that. We put up as a
still further objection to the space basis the argument that the Gov-
ernment, through the space method, would be taking a utility of
transportation on some unfixable basis that they could use to their
advantage to greatly increase their profits from the transportation
of parcel post, and the railroads not participating in the increased
revenues from the use of such facilities of transportation.
Mr. MACK. In other words, the railroads were constructed to handle
commercial transportation and the Government assumes a part of
RAILWAY MAIL, PAY. 1465
that transportation and takes the business from the people. If the
railroad company undertook to handle this commercial business, and
where it does it fixes a rate for the transportation of that business.
The proposition on a space basis is that the Government collects the
postage on the basis of weight and then proposes to ship it in bulk
on a space basis, the Government making a profit which properly
and reasonably, I think, belongs to the railroad company which would
otherwise handle the business itself. As to freight, the Government
puts itself into competition with the railroad company, as Mr. Worth-
ington points out, and which would, on that theory, seriously injure
the railroad earnings.
Mr. LLOYD. You do not concede that the Government will make a
profit on parcel mail, do you?
Mr. MACK. The Government should charge an equal amount for
transportation to pay the railroads a proper amount for transporta-
tion equal to that which they receive from the express companies,
which I think is too low in many cases. -.
Mr. PETERs. Mr. Lloyd, do you not think the Government will
make a profit from the parcel-post business?
Mr. LLOYD. I thought the contention of the railroads was that it
would not make a profit.
Mr. PETERs. I do not think we have contended that at all. On the
contrary, estimates and statements made by officials of the depart-
ment would indicate a large profit.
Mr. LLOYD. Would the railroad companies be willing to carry the
parcels at a 50 per cent rate of what the Government now receives?
Mr. PETERs. In other words, on the same basis as the express?
Mr. WoRTHINGTON. I should say we would.
Mr. BRADLEY. But on a very different schedule of rates, the rate
now being paid being much lower than those now charged in the
express service on short hauls? -
Mr. WoRTHINGTON. To show the difference in profit on small par-
cels, I have a statement prepared by Wells, Fargo & Co. showing
the results, under the Interstate Commerce Commission, on packages
from 1 to 20 pounds, based on the actual traffic for one day. Moved
at the latest Interstate Commerce Commission rates for express, the
charges to the public on those small parcels would average 80 cents
per ton-mile, of which the railroads would receive 36.53 cents per ton-
mile. Moving the same traffic by parcel post, the charges to the
public per ton-mile would be 34.40 cents, of which the railroads
would receive 6.56 cents, or approximately a little more than one-
fifth their compensation at the express rates.
Mr. LLOYD. The question I asked a while ago was would you be
willing to carry it for one-half of the amount, 17 cents; and to that
question you answered yes. But if you answer yes to that proposi-
tion, then you answer yes to the contention of the Post Office Depart-
ment that 18, 19, or 20 cents is sufficient pay.
Mr. PETERS. I answered on the general proposition that, taking the
experience of the English railroad, where they get 55 per cent of the
earnings from the parcel post we get here practically 50 per cent of
the express companies’ revenues. With the parcel post as a whole
you might be able to-work out an arrangement whereby the railroads
would be in partnership with the Government and get 50 per cent
of the earnings for the transportation.
l466 RAILWAY MAIL PAY.
Mr. LLOYD. But would you want them to increase the present par-
cel-post rate? -
M. PETERs. It would largely depend on what could be worked
out of it. .*
Mr. WoRTHINGTON. I think the department would have to increase
the rate, because they would have to pay more to the railroads, and
it would be necessary for them to increase the rate to the public to
cover their other expenses. \ 4. -
Dr. LORENz. Does not this discussion show that perhaps the rela-
tions between the railroad companies and the express companies
ought to be studied to ascertain what is the best method of paying the
express companies?
Mr. -LLOYD. In that connection I want to ask you some questions.
What do you say as to the effect of the comparisons submitted by
the Second Assistant Postmaster General between express pay and
mail pay between the various large cities of the United States? Do
you think that that is an argument that tends to show that the rail-
road companies are receiving too much or too little? Is it an argu-
ment that has a direct bearing in determining whether the railroad
companies are now receiving too much or too little?
Dr. LORENZ. I do not think the direct comparison of the charges
per hundred pounds or per ton between cities is of significance, unless
you take into account the volume of the business per car between the
cities. However, the same comparison can be made and was made
by the Second Assistant Postmaster General on the car basis, and
there he showed from his figures that the average revenue to the
railroad companies from carrying the express was something over
21 cents, whereas the railroad companies claim that it was 23 and a
fraction cents. That is a more convincing comparison, I think, than
the mere comparison of the rates to the shipments, because you are
-completely in the dark as to what that produces per car. You can
-readily see that it is the car earning rather than the per ton earning
that is important, if you imagine a change in the load per car of only
1,000 pounds. If 21 cents is the payment per car, if you have 3
tons in the car it is 7 cents per ton-mile; and if you have 2 tons
per car it is 104 cents per ton-mile; and, obviously, if you show
that between two cities the Government was paying 10 cents per ton-
mile and express 7 cents per ton-mile, you would not be showing
by that that there was any discrepancy in the pay, because for the
same service, namely, the hauling of a car between two cities, they
would be getting exactly the same per ton-mile, and the only thing
you would have to consider would be the expensiveness of that service,
and we have had some testimony on that point. -
Mr. LLOYD. What would you say as to his comparison of what he
-calls an average package of express, with a similar weight in mail
carried between principal cities; in other words, the 40-pound table
that he fixes?
Dr. LORENz. I should say that was an indirect way of making the
comparison I just mentioned, but with less accuracy. In attempting
to state the average package at 30 pounds, he is trying to make an
allowance for the difference in the method of shipment, but I do
not believe you can obtain any exact results in that case. --
RAILWAY MAIL PAY. 1467
Mr. LLOYD. What would you say of the railroads' presentation of
40 packages of 1 pound each, carried by the express company, com-
pared with the 40 pounds of mail in one package? -
; Dr. LORENz. I should say that was quite unconvincing. I do not
think they presented it for any other purpose than to show the un-
reasonableness of that sort of comparison? -
Mr. LLOYD. Does it show unreasonableness?
Dr. LORENz. I think it does.
Mr. WADE. Have you any data which would show, the average
ºnt of express that is carried in carload lots in individual pack-
ages?
Dr. LORENz. No, sir. I have no statistics at all except those that
have been mentioned, tending to show the average weight per piece.
Mr. WADE. You do not know the percentage of express that is car-
ried in full carload lots?
Dr. LORENz. No, sir.
The CHAIRMAN. Dr. Lorenz, the question of under or over pay,
based upon the ascertainment and presentation made in what is
known as Document 105, depends entirely, does it not, upon the ap-
portionment of dead space for the month of November as represented
in table 7 of that document?
Dr. LORENz. The original contention of overpay by the Govern-
ment depended partly on that and partly on other things. It de-
pended partly also on the question of what was a proper basis for
reckoning capital charges. In other words, they had practically
omitted capital charges. •
The CHAIRMAN. That was in the original suggested bill submitted
by Postmaster General Hitchcock, but the supplemental bill modi-
fied the position of the Postmaster General taken originally. But
what I mean is the space reported and submitted by the railroads
at the request of the Post Office Department, filed and tabulated
by the Post Office Department and shown in what is known as
Document 105, is the only information available upon which the
Post Office Department's contention rests as to overpay or under-
pay, is it not?
Dr. LORENz. I think it is. -
The CHAIRMAN. And the soundness or correctness or justness of
their deduction depends upon the apportionment of dead space as
represented in that document?
Dr. LORENZ. There can be no question about that.
The CHAIRMAN. What are your views in reference to the justness
of their apportionment of dead space in that document?
Dr. LORENZ. I have said, I think, many times before that in my
opinion there can be no question about the justness of making a
comparison between passenger-train services, upon the same basis
exactly in all cases, that is to say, to take the gross amount of space
necessarily run in connection with the service. The only way in
which the Post Office Department can justify the elimination of any
part of what has been known as dead space, is to prove that the re-
turns were inaccurate, or that there was negligence or lack of atten-
tion given in the matter of the amount of space run. I think the
analysis of the Missouri Pacific figures, as made by the Post Office
Department, and in turn as made by Mr. Mack, shows very clearly
that there was no great error on either side as to the facts, but that
1468 JRAILWAY MAIL FAY.
the difference is entirely a matter of interpretation of those facts.
The amount of fictitious space, or you might say space that was
charged by the Missouri Pacific which did not exist, which the Post
Office Department claimed did not exist, such as the mails run on
Sunday, the space charged for on Sunday when there was no apart-
ment-car service on Sunday, constituted a very small fraction of the
total. On the other hand, the errors of the Post Office Department
also were less than 1 per cent. - *
Mr. MACK. Ten times as much as the instance you illustrate,
900,000 as against 95,000?
Dr. LORENZ. But it seems to me that the dead space which they
did throw out was divisible into a few different types. For one
thing, a large bulk of it is due to the furnishing of apartment cars
Somewhat longer than the department reported they needed. With
respect to that I do not see how one can avoid charging the depart-
ment with such space, for the reason that you can not sell fractions
of a car without having left over what might be called trimmings.
In other words, you can not fit the department's exact needs. Re-
garding one type of dead space, however, in the Missouri Pacific
analysis, there might be a question, and I think a third of it nearly
was of this nature, namely, that the department needed a half or
less than a half a car and the company furnished a whole car. The
question might be raised in that connection whether they could not
have, by a different arrangement of the service, supplied them to the
department rather than the whole car; that that would occasionally
happen is probable, but when it constitutes a third of the total I
think one may fairly raise the question as to whether by close atten-
tion, it could not have been reduced. -
Mr. MACK. I would like to say in connection with the total that
this happened on a very long line we had on the prairie from Kansas
City to Penblo, and I doubt very much whether that proportion
would hold throughout the coul,try. I doubt if it is quite as much
as that.
Mr. LLOYD. As I understand you on the question of dead space,
your question is that the correct position to occupy is somewhat
near midway between the contention of the railroads on the one
hand and the department on the other?
Dr. LORENz. I do not wish to simply split the difference.
Mr. LLOYD. I am not asking that.
Dr. LORENz. I would say that the department has certainly as-
sumed an extreme position, and this analysis of the Missouri Pacific
shows that one might raise some question at least, but I am rather
inclined to think
Mº, LLOYD. That the department is nearer correct than the rail-
roads?
Dr. LORENz. No. I am inclined to think rather the other way,
according to this analysis, that it would be somewhat more than half
the space properly charged to the department.
Mr. STEwART. I think it would be fair to allow Dr. Lorenz to hear
the department's statement before he expresses an opinion upon that
point, because we have considerable matter to offer this morning
bearing directly thereon. }
Mr. BRADLEY. Mr. Chairman, might I make a suggestion right
here?
--- RAILWAY MAIL PAY. 1469
When the case of the Missouri Pacific was spoken of as being typi-
cal, I made a comparison between the proportions of the different
kinds of mail space on the Missouri Pacific as shown in Document
105, with the proportions assigned by the department for the differ-
ent kinds of space on all the railroads of the country, and then I
made a further analysis of percentages for the different kinds of
space on the Pennsylvania Railroad system, and I find that of full
railway post-office space the Missouri Pacific had 31 per cent of its
mail space, whereas the average for the whole country was 373 per
cent, for the Pennsylvania Railroad system 41% per cent, so you see
there is a difference in railway post-office space between the Missouri
Pacific and the Pennsylvania system of, say, 10 per cent. On apart-
ment-car space the Missouri Pacific's proportion of its whole was 47
per cent as against 32 per cent for the whole country and as against
17 per cent on the Pennsylvania system. On the chosed-pouch space
the relative percentages were 1.4, 2.29, and 3.3. Further, there is not
a very serious difference in the storage space, the Missouri Pacific
being 1.3, the percentage of the whole country, including dead space,
being 8.25, and on the Pennsylvania Railroad system 16 per cent.
The relation between the deadhead space and the dead space was also
somewhat variable. I simply wanted to bring that out to show that
one would have to be guarded as to the extent to which the Missouri
Pacific case could be regarded as typical, particularly as to storage
space. -
The CHAIRMAN. Gen. Stewart, we are ready to hear from you.
Mr. STEwART. T stated yesterday that the Missouri Pacific state-
ment was in effect a restatement in another form of the differences
between the method of the Post Office Department in handling the
reports of the railroad companies and classifying the space and the
rules of the railroad committee in regard to the same subject matter.
We have this morning some specific facts in regard to reports which
we wish to submit and which will, I think, bring to your attention
more particularly the reasons which underly the department's
method.
The CHAIRMAN. That is the rule that you adopted in making the
apportionment? +.
Mr. STEwART. Yes; as it is specifically related to the Missouri
Pacific data. --
STATEMENT OF MIR. C. H. McBRIDE.

Mr. McBRIDE. I wish first to specifically refer to some of the par-
ticular cases mentioned by Mr. Mack on page 3 of his statement with
regard to the data on some of the routes which he states are erroneous.
With regard to route 147040 Mr. Mack is correct in his calculation.
I might state here that volume 11 was printed without the depart-
ment being given an opportunity of making corrections. We were -
rechecking it at the time it was submitted, and in the recheck we
discovered the error on route 147040, which amounted to 17,982 car-
foot miles additional credit to the company. In that recheck we
also found some typographical and other errors which will be cor-
rected in the revised edition, but they changed only slightly the total
results presented on page 1296. As to routes 1450.34 and 145062,
with respect to which Mr. Mack states the original errors made by
35797—No. 12—14—12
1470 RAILWAY MAIL, PAY.
the company were corrected by letter of August 31, ‘I will say that
he was right in both cases. We mentioned the fact in the memoran-
dum regarding the second route, but not as to the first. As to route
147061, which Mr. Mack states is not a route of his company, I will
say that the report for this company came in with the other Missouri .
Pacific reports and bore the imprint of Mr. Mack's office stamp.
Furthermore, we consulted Poor’s Manual, which stated that it was
controlled by the Iron Mountain, and it was therefore concluded that
it was part of the Missouri Pacific system. If that is incorrect it
would require the elimination of all the car-foot miles of all the
services reported for this route from the totals for the system. A
computation as to the effect such elimination would have on the
totals for each service for the system given in Document 105 does
not change the percentages at all, although the total amounts are
slightly changed."
Mr. MACK. Mr. McBride should add to his statement what I men-
tioned to him yesterday with reference to that route. I stated that
I transmitted that report at the request of the Short Line's secretary.
Mr. McBRIDE. We are willing to eliminate the report for that
route.
On route 145042 Mr. Mack states that the company did not report
5 feet of car space on this route as the department memorandum
indicated. I would state that this was due to a typographical error in
volume 11, which showed 5 feet instead of five-tenths of a foot, the
correct figure. I think you will find that agrees with the original
report. -
K. MACK. It does not agree with my original report. We had
nothing in the month.
Mr. McBRIDE. On route 149039 Mr. Mack states that there was
Sunday service on this route, and that the railway mail schedule
shows for trains 11 and 12 such service. There was no railway post-
office service on Sundays. Page 77 of the eleventh division schedule, in
effect in November, 1909, which I have here, shows trains 41 and 42
and not trains 11 and 12 between Texarkana and Shreveport, with the
key letter “H,” which interpreted means “Trains daily. Railway
post office service daily except Sunday.” Furthermore, if you will
look below the time-table for the railway post office in the schedule,
you will find that it shows train 42 pouching to Cairo and Texar-
kana, train 4 at Texarkana “B,” which means “daily except Sunday.”
Cairo and Texarkana railway post office is a daily train, and if this
railway post office ran on Sunday it would certainly have made this
pouch on that day as well as week days. Apparently, however, there
were express pouches carried on Sunday, for which no charge was
made by the department. This is immaterial, but it is one of the
cases where space was charged on Sundays that was not used. I
wish to call particular attention to the item which Dr. Lorenz was
discussing when I came in, and that is the deadhead space reported
in the apartment-car service in each direction by the company,
which was transferred to “dead space" by the department in its
tabulation. The particular instance which I desire to call atten-
tion to is that of the Kansas City and Pueblo railway post office
and the Kansas City and Coffeyville railway post office, which ran
RAILWAY MAIL PAY. 1471
over routes 155091, 155067, and 165036, between Kansas City and
Pueblo, 639 miles, and route 155031, Osawatomie to Dearing, Kans.
There were two railway post offices operated over these lines—the
Kansas City and Pueblo railway post office, which runs through be-
tween those points, and Kansas City and Coffeyville railway post office, .
which operates over routes 155091 and 155067 to Osawatomie, where
it diverts and runs to Coffeyville. There are two trains each way on
each railway post office, making eight trains altogether. On six of
these trains the company reported 30 feet apartment-car space and
30 feet deadhead space. The Railway Mail Service reported that
this additional 30 feet was not needed for any purpose by the mail
service. The department contends that in an ascertainment of the
character of that of November, 1909, it was unfair to take a condi-
tion of operation existing in the month of November, which might
change in the very next month, and, properly, I think, diverted that
º of deadhead space to dead space in the tabulation of car-foot-
ITQIlêS. -
The CHAIRMAN. Why would not that same argument apply to the
value of all the ascertainment in November, 1909? *
Mr. McBRIDE. I do not think it would. We were endeavoring to
get a basis for ascertaining the cost of the service, based upon what
the Service needed and not upon what the railroads might choose to
operate. The Space of that character on the system amounted to
3,248,000 car-foot miles. The case that Mr. Mack referred to specifi-
cally in his statement, of the car running from Topeka to Granby,
I might mention. As I understand it, the car was operated from
Topeka to Fort Scott on route 155060, and from Fort Scott to Cornell
Station over trackage on which there was no mail service authorized
at that time.
Senator WEEKs. How far is that?
Mr. McBRIDE. I haven’t the distances. From Cornell Station
to Pittsburg the car was operated over route 145073, from Pittsburg
to C. & W. junction it was operated over trackage upon which no
service was authorized, and then it was taken up on route 145040
and ran from C. & W. junction to Webb City on that route, and from
Webb City to Granby on route 145100, although no R. P. O. service
was performed on any part of the route except between Topeka and
Fort Scott. The company charged us with 22 feet from Topeka to
Fort Scott and from C. & W. junction to Granby, but made no charge
to mail service between Fort Scott and C. & W. junction.
The CHAIRMAN. Was there any service authorized between C. & W.
junction and Granby ?
Mr. McBRIDE. No R. P. O. car service.
The CHAIRMAN. But they charged you with it?
Mr. McBRIDE. Yes, sir.
Mr. LLOYD. Was it necessary that the car pass over that route in
the performance of the service?
Mr. McBRIDE. Not in the performance of mail service. This
amounts to very little, only 44,000 car-foot miles, but I cite the case
to show how the companies charged unused space to the mail service.
Senator WEERs. Before you go on, I understand that the month
of November has been taken as a basis for these figures, because it was
a fairly average month. Now, that you question the desirability of
1472 RAILWAY MAIL PAY.
taking that in one instance, why can not it be questioned in every
instance? -
Mr. McBRIDE. I do not question the fairness of taking it for an
ascertainment of the space in use, but I do question the fairness of
charging against the mail service deadhead space in each direction
in the ascertainment of space upon which to divide cost.
Senator WEEKs. Would it be an error to take any other methodº
Mr. McBRIDE. I do not know that it would, but, as I stated before,
the conditions in the very next month might be changed; the roads
might change their operations so that this 30 feet of space was not
necessary even from their standpoint.
The CHAIRMAN. Is it possible to get a fair permanent basis?
Mr. McBRIDE. Based on the needs of the service; yes. -
The CHAIRMAN. How about the needs of the railroads themselves?
Should not they be considered as well as the needs of the service in
the apportionment of cost or in the compensation?
Mr. McBRIDE. That is entirely in the hands of the company. We
tell them what we need, but under this proposed law it is not to be
supposed that we would pay for 30 feet additional space in each
direction from Kansas City to Pueblo, for 1,278 miles, which we do
need or use. M.
The CHAIRMAN. Not if you did not authorize it and did not use it?
Mr. McBRIDE. That is the point.
The CHAIRMAN. Neither do the railroads contend that you should.
Mr. McBRIDE. They contend that we should be charged with this
space in this ascertainment.
Senator WEEKs. How often do you change your instructions to
the railroads as to how much space you are going to need?
Mr. McBRIDE. I do not think that it would be possible to make
any definite answer to that. * • *
Mr. LLOYD. You change just as the service changes?
Mr. McBRIDE. Yes; there might be some special conditions come
up at any time that would require additional space on a line through
diversion of mails formerly sent over other lines.
Mr. LLOYD. How much notice do you give the railroads when you
make a change with reference to the authorization of space?
Mr. McBRIDE. In the railway post-office service we give 30 days.
Mr. LLOYD. In apartment car, how much 3
Mr. McBRIDE. I think it varies. I would not want to say, because
I do not think there is any settled rule.
Mr. LLOYD. Can you give some instances—the extremes, for in-
stance? I think that information is of value.
Mr. McBRIDE. I might cite the case of the Western Pacific Rail-
way Co., where we asked for apartment-car space a year and a half
before we secured it. We were in negotiations with the company
during the entire period, and finally we persuaded them, previous
to the weighing, to fit up part of a car for use as a distributing
apartment. They agreed to provide steel apartment cars as soon as
they could get them. In the meantime they fitted up a small space in
their baggage cars until the regular cars could be furnished, which
are now running.
Senator WEEKs. That is a new road?
Mr. McBRIDE. Yes, sir.
RAILWAY MAIL PAY. 1473
Sºnator WEEKs. That condition would not apply to roads gener-
ally?
Mr. McBRIDE. We would give them a reasonable time in which to
provide a larger car. We do not require the impossible.
The CHAIRMAN. What are the extremes in cases where you have
notified the railroads of changes, in days, weeks, or months?
Mr. McBRIDE. The Railway Mail Service has the specific charge of:
the apartment-car service, and it would not come under my personal
observation sufficiently to know that.
Mr. STEwART. Mr. Gaines, of the eleventh division, is here, and we
would like to hear from him.
The CHAIRMAN. We would like to hear from you on concrete in-
ºf extremes, the periods of notice of change in apartment-car
Service £
Mr. GAINES. Changes, or asking for additional apartment-car
service?
The CHAIRMAN. Either. The discontinuance, decrease, or increase?
Mr. GAINEs. It is a matter that calls for correspondence with the
railroad companies. For instance, if we desire to put additional
apartment-car service on a line, we ask the company if they can fur-
nish cars of a designated size. If they have the cars available, we
put the Service on as soon as we get authority from the department
for the additional service. It may be one week, it may be two weeks,
and in Some cases that have come under my personal knowledge the
railroad companies have stated that they did not have the cars and
could not furnish them. In one instance that I recall it was over a
year before we secured the apartment cars we had requested and
were able to start the postal-clerk service.
The CHAIRMAN. In that instance was there any criticism on your
part as to the inattention of the railroads to your application, or was
it due entirely to the conditions existing and the impossibility of com-
pliance by the railroad with your request?
Mr. GAINEs. The facts were reported to the department. The rail-
road company stated that it was on account of inability to furnish
the cars. The case I had in mind was on the Gulf, Colorado & Santa
Fe between Fort Worth and Galveston. •
The CHAIRMAN. There was no criticism, then, on your part, so
far as the railroads were concerned ? .
Mr. GAINEs. No. -
The CHAIRMAN. With regard to the change due to diversion or
decrease in the number of feet of apartment service, how long a
period—I should say the shortest and the longest—have you given
the railroads to comply with your changes?
Mr. GAINEs. Do you mean the decrease in apartment-car serviee?
The CHAIRMAN. Yes; or discontinuance, either.
Mr. GAINEs. If it is a case of discontinuance, there would be no
time necessary, for we would simply withdraw the clerk from the
trains and notify the railroad company that the apartment-car serv-
ice, so far as the Railway Mail Service was concerned, had been dis-
continued.
The CHAIRMAN. That would be a day's notice or two º
Mr. GAINEs. Yes. I want to correct that statement. If we were
taking a postal-clerk service off—that is, where clerks perform serv-
1474 RAILWAY MAIL PAY.
ice in apartment cars—and were substituting closed-pouch service, we
would give the railroad companies due notice that the department
would discontinue the apartment-car service and that the railroad
company would be expected to handle the closed-pouch mail from a
certain day, giving them ample time to arrange for handling the
mails by train baggagemen. \ w
The CHAIRMAN. You would give the company several days' notice
regarding a change of that kind?
Mr. GAINEs. Yes.
The CHAIRMAN. In the case of a discontinuance you would notify
them 28 hours or 48 hours ahead 2
Mr. GAINEs. If it was a case of discontinuance of apartment-car
service without substituting closed-pouch service therefor.
I do not remember an example of just that kind. In cases where
the railroad company discontinues the train service the apartment-car
service would be discontinued automatically.
The CHAIRMAN. There is no instance where the department has
discontinued on account of diversion of mail to some other route 2
Mr. GAINEs. Not as long as the mail service was maintained.
Mr. McBRIDE. Or without substitution of closed-pouch service.
Mr. Row AN. Do you notify the railroad companies every time that
there is a change in the amount of space that you need for apartment-
car space—that is, where you require less space than the space which
the railroad company is furnishing? .
Mr. GAINEs. I can not say that that has been done. In the first
place, we made a close estimate of the amount of apartment-car space
that was necessary for the use of the Railway Mail Service and noti-
fied the railroad company. I do not recall any cases where we subse-
quently notified the railroad company that 25 feet would be neces-
sary instead of 30 feet. I do not know that we have had a case of
that kind arise in the eleventh division. There have been cases
where the needs of the service would outgrow a 20-foot car and we
would notify the company that we needed a 25 or 30 foot car, but
the tendency is nearly always to grow, except in abnormal conditions,
and I do not recall a single instance where we have notified the rail-
road company that a 30-foot car was no longer needed and that a
25-foot car would do.
Mr. RowAN. On the New York Central lines the policy has been
for the Post Office Department to notify the railroad company when
they desired apartment-car service, due to either change in schedules
or change in conditions, notify the company of the size of the car
that they want—we furnish it if we can, and if we can not we furnish
a larger size car, and we are willing to put the car on 12 hours after
we get the notice. In fact, we have had cases where we have had less
than 12 hours’ notice from the Railway Mail Service—where the
necessity for it arose and where we were asked to do so. But we
have had no instances that have come to my attention in the last five
years where the Railway Mail Service have ever told us, having
furnished a larger-sized car than was necessary, that they needed less
space. As long as we are furnishing more space than they need there
is no complaint. Where a 15-foot car is furnished and they find the
needs of the service require 25 or 30 feet, we do get notice that they
desire us to put on a larger-sized car.
RAILWAY MAIL PAY. 1475
The CHAIRMAN. Can you criticize the Government representative
for that? …”
Mr. Row AN. No. You simply said you wanted to get these cases
in the record, and I was putting them in for what they were worth.
Mr. STEwART. I would like to ask Mr. Gaines if it is not his prac-
tice to inform the representative of the railroad company, when the
representative asks him, as to what the approximate needs of the
Service are, based upon distribution, etc., in the apartment cars.
Mr. GAINEs. Yes, sir. I believe due notice has been given to every
railway company in the eleventh division of the needs of the service
both in apartment and full R. P. O.
The CHAIRMAN. What do you construe to be due notice?
Mr. GAINEs. We gave them a list of the lines.
The CHAIRMAN. I mean in time?
Mr. GAINEs. There is no emergency about that, Mr. Chairman.
Mr. McBRIDE. You do that periodically?
Mr. GAINEs. No. I do not believe they have received any addi-
tional notice.
The CHAIRMAN. Have you had any criticism on the part of the
railroads as to the shortness of notice given by the department :
Mr. GAINEs. No, sir. r
The CHAIRMAN. Mr. McBride, would you prefer not to be inter-
rupted at all?
Mr. McBRIDE. I have about finished. Mr. Stewart has something
more to present. I might say in connection with the Kansas City-
Pueblo case that the regular quadrennial weighing in the spring of
1910, subsequent to the November, 1909, ascertainment, showed a
daily average weight of slightly over 10,000 pounds dispatched daily
out of Kansas City on four trains on that route. That would be a
little over a ton to a train.
The CHAIRMAN. That is the weighing for 1910?
Mr. McBRIDE. Yes. It would be easy to take care of a ton of mail
in a 30-foot car.
Mr. STEwART. That is the train they charged the mails with 60
feet of space clear through to Pueblo'
The CHAIRMAN. Under the 1909 ascertainment.
Mr. STEwART. Yes. -
Mr. McBRIDE. The railroads charged the mails with 240 feet of
space a day in each direction, and but 120 feet were needed.
Mr. STEwART. How much would that aggregate?
Mr. McBRIDE. The car-foot miles of the unnecessary space aggre-
gated on this route 2,382,281 car-foot miles for the month of No-
vember.
Mr. STEwART. Mr. Chairman, we have carefully gone over these
Missouri Pacific statistics, and we have made a computation based
upon the theory of the Lloyd bill as to allowance of space, the theory
of the Lorenz bill as to the allowance of space, and upon the depart-
mental plan as to the allowance of space that should be paid for un-
der the new law, and we have credited to the Missouri Pacific all
the space that these theories would justify. For storage space we
have taken one-half of the return movement, because we have no
statistics as to what proportion of the storage cars are used by the
companies on their return trip, and nothing has been presented by the
railroad companies which would be any guide. -
1476 RAILWAY MAIL PAY.
The Chamxas. It is an arbitrary 50 per cent allowance of the
return ?
Mr. STEwART. Yes; of the return storage dead space. We have
split this with the railroad companies and have charged the mail
Service with one-half. We have then ascertained the percentage of
that to the total dead space in controversy, and find the percentage
to be 18.32 per cent; we have applied that percentage to the total
dead space on all the railroads in the country, which we have tabu-
lated and charged in Document 105, and ascertained the effect of
that, producing a new ratio for the mail service of 7.40 per cent
instead of 7.18 per cent. We have ascertained the effect of that upon
the 6.68 per cent, which is used as a ratio of cost and taxes for the
mails to the total cost and taxes in the passenger service, and have
applied that to our ascertainment of cost on pages 994, 995, and 996
of the record, where we have shown a profit to the railroads of
$1,616,532; and these new figures, which we submit to the joint com-
mittee for consideration, produced instead of that surplus a surplus
of $221,832 over all fair charges of cost against the department. We
submit that for consideration in order to present to the committee
every fair theory that we believe you should have before you; that is,
the result of every fair theory. And these ascertainments of space,
as I Say, are in accordance with these theories which are now before
you, and I do not see how anyone could claim anything more for
the railroad companies. I should be glad, if the committee desire
it, and if Dr. Lorenz wishes to do so, to have him go over these
figures.
Dr. LORENZ. Might I ask a question in regard to these figures?
Your 18 per cent, is that the average of the three or which one of the
plans does that represent, your plan, my plan, or Mr. Lloyd’s plan?
Mr. STEwART. It represents them all, because they are all prac-
tically the same on space. We have always given the maximum in
each direction and have been liberal with the railroad companies.
Dr. LORENz. I do not quite understand. In the case of Mr. Lloyd’s
method of authorization if you ask for a 20-foot apartment you would
have to authorize a 30-foot car. Do I understand if you applied that
all the way through that it would make a difference of only 18 per
cent of the total, that it would charge you with only 18 per cent of
the dead space?
Mr. STEwART. I will ask Mr. Bandel to answer that question.
Mr. BANDEL. We did not raise any question where there was a
regular sized apartment operated different in length from those stated
in Mr. Lloyd's plan. In this ascertainment we applied the principle
that is announced by Mr. Lloyd and announced by yourself; that is,
the maximum space in both directions. If we had raised them I
doubt whether it would affect this computation 1 per cent.
Dr. LoRENz. I can state definitely it would affect it, for this reason:
If you turn to volume 5 of the hearings you will find there that the
estimate was made under Mr. Lloyd’s plan of 224 cents a car-mile.
The total payment made to the railroad companies would be
$58,000,000. Divide 224 cents into $58,000,000 and you get 260,000,000
car-miles of service, and if you divide that into your present mail
pay you will get less than 20 cents a car-mile. Under those circum-
stances it seems to me this statement you have just made can not pos-
RAILWAY MAIL PAY. 1477
sibly be correct, Mr. Stewart. You could not apply Mr. Lloyd's
plan and get only 18 per cent dead space charged to yourself.
Mr. MACK. It did not use the units of the Lloyd plan?
Mr. BANDEL. We applied the principles to the Missouri Pacific
case and that is all. Then when we made the ascertainment for that
we applied it to the conditions in the Missouri Pacific case, and the
result was regarded as a difference in all cases. The specific thing
we applied it to was the Missouri Pacific case.
Mr. MACK. What did you do with reference to the case that Dr.
Lorenz cites? *
Mr. BANDEL. As I say, we did not raise them.
Mr. MACK. You did not raise them?
Mr. BANDEL. No; we did not raise them 3 -
Mr. MACK. Then your figures do not serve any purpose?
Mr. BANDEL. I said we followed the principle of Mr. Lloyd's plan.
Dr. LORENz. How could you follow the principle if you do not
charge 30 feet of space when you only need 20%
Mr. BANDEL. The principle of the full car run.
Mr. MACK. You are not using the Lloyd units at all?
Mr. BANDEL. We did not intend to use units. We used the unit
furnished by the company at that time.
Mr. LLOYD. Dr. Lorenz, as I understand it, General Stewart refers
to the idea that I advanced that we ought to pay for the full car run.
While a car might run over several routes, it would be a full car run,
such as given in the illustration of running to the Mexican border, if
they used a full 60-foot car run to the Mexican border they must use
it all the way round.
Dr. LORENz. But I understand that is not to recede in any way from
the position General Stewart has occupied with regard to dead space
in general?
Mr. LLOYD. Oh, no.
Dr. LORENZ. Since the department insists on taking this position,
I would like to ask Gen. Stewart if he could operate the Missouri
Pacific and furnish the space the department has asked for in va-
rious length apartments and not have any of this dead space, so
called, left over, or whether any officer, the most efficient operating
officer in the United States, could operate the Missouri Pacific and
not have any dead space left over? w
Mr. STEwART. That would be pretty difficult to answer offhand.
If you apply it to a specific case, like that from Kansas City to
Pueblo, such as you were discussing when we came in, I should
Sà V VeS.
5. LoRENz. I will admit there are individual cases, but I said
where there is none of the dead space.
Mr. STEwART. I would not be able to say that it could be done.
Mr. LLOYD. I think you are slightly mistaken as to what he was
discussing when you came in. Dr. Lorenz was discussing the general
proposition of the difference between your method of accounting and
the railroads' method of accounting and the percentage of the dif-
ference between you and them. It is the general proposition he was
discussing.
Mr. SPEwART. I only referred to the specific case I heard when I
came in. -
1478 RAILWAY MAIL PAY.
Mr. BRADLEY. Mr. Chairman, I would like to call attention again
to the comparison I submitted a few minutes ago as to whether the
Missouri Pacific case is typical in all respects or not.
The CHAIRMAN. You already have that in the record?
Mr. BRADLEY. I want to give it this application, that in the com-
putation made on the railroad side regarding the amount of storage-
car space thrown out by the department we reached a total of about
50,000,000 car-foot miles.
The CHAIRMAN. For the whole service?
. Mr. BRADLEY. In comparison with the total for all classes of serv-
ice, of 211,000,000, a very large proportion, while on the Missouri
Pacific there is a very small proportion of that class of service, only
1.3 per cent. . It would be like comparing two cases as typical where
one contained 1.3 per cent of an important element and the other
contained 25 per cent of an important element.
Mr. MACR. But there is no concession that any of this space was
not furnished in connection with the mail service. The diº I’e-
ports show different proportions of the different classifications, but
Mr. Bradley’s remark I do not interpret to mean that there is any
dead space that was classified by the company as in use for mail serv-
ice that was not in such use. -
Mr. BRADLEY. Undoubtedly. For instance, for the Pennsylvania
Railroad System for the month of November, 1909, the department
used 11,523,000 car-foot miles of space in storage-car service, and the
company contends that every bit of that service was in the return
movement of storage cars and was inevitable because of the mail
movement in the outward direction and that none of that space was
used for any other traffic or for the company's purpose.
Mr. WoRTHINGTON. I think the department concedes that point in
admitting that pay should include return space under their pro-
posed bill and it is a legitimate charge against the mail service in
computing the estimated cost.
Mr. STEwART. No; we did not; and there is no such admission
in effect, because under the operation of the proposed bill we shall
use the return cars as far as practicable for some purpose if the com-
pany does not use them, but if neither the company nor the depart-
ment make use of them for a specific purpose, the suggested plan
proposes to pay for the return movement. 2
The CHAIRMAN. In this case just referred to of the Pennsylvania
Railroad, by Mr. Bradley, I would like to ask Gen. Stewart if he
allowed 50 per cent of the 11,000,000 car-foot miles in this recent com-
putation that you have just made?
Mr. STEwART. We did not have Mr. Bradley’s statement before us.
We were figuring on the Missouri Pacific data only.
The CHAIRMAN. I think there was a difference of 11,000,000 car-
foot miles in dispute between the department and the Pennsylvania
Railroad under Document 105.
Mr. BRADLEY. That is right.
The CHAIRMAN. Now, I want to find out whether, in this computa-
tion you made this morning and this information submitted, why
you made a 50 per cent allowance, which you said was general, and
splitting with the railroads and the department, and I want to ask
if that was made in this specific case of 11,000,000 car-foot miles.
RAILWAY MAIL PAY. 1479
Mr. STEwART. I can not say exactly that because we have only
the statistics as a whole, and Mr. Bradley calls attention to the fact
that the percentage of storage cars will differ on different lines. In
order to make an exact apportionment we would have to Segregate
the space on each system. • -
Mr. BRADLEY. That brings out the very point that I wanted to set
forth emphatically—that while there might be compromises in re-
gard to the differing interpretations of some of the minor features
of car space, I do not think that this is a case where there could be
any compromise, but that 100 per cent of this space would have to be
allowed as an operating necessity just as it is conceded, in principle
at least, in the proposed new bill.
Mr. LLOYD. But there might be some place in a computation where
100 per cent dead space might be disallowed ?
Mr. BRADLEY. Possibly.
Mr. LLOYD. His computation is on the theory now that supposing
the commission, when they came to adjust the matter, not being able
to reach a definite and concrete conclusion with reference to the mat-
ter, do conclude that neither the railroad companies are right or
the Government is right in its figures and they make something of
a compromise between the two as a matter of judgment and fix it at
50 per cent, and this is an estimate on that 50 per cent, as I under-
stand it.
Mr. BRADLEY. I desire to ask the question also, whether in the com-
putation which the department submits this morning, as applied to
the entire railway mail service of the whole country, an allowance was
made as between the Missouri Pacific example and the percentages
of allotment of space for the rest of the country in order to account
for the differences which I have set forth in explaining that the
Missouri Pacific case is not typical in all respects. Of course the
final result arrived at, of $200,000, would absolutely depend upon a
fair allowance for those differences.
Mr. MACK. That is the proportion.
The CHAIRMAN. To my mind, Gen. Stewart, there is still a de-
cided discrepancy between the conclusions arrived at by the depart-
ment and by Dr. Lorenz. We will say under this computation, with
an allowance of 50 per cent of the dead space in dispute between
the department and the railroads, that you still show an overpay-
ment by the Government of $200,000. For what year would that be?
Mr. STEwART. That was for 1910.
The CHAIRMAN. As I understand Dr. Lorenz's impression or de-
duction, it is that the railroads were underpaid about $5,000,000 for
that year. Now, if 50 per cent of all the space in dispute is allowed,
and it only makes a difference of $1,600,000, I can not follow it?
Dr. LORENZ. There is no real dispute or discrepancy. Gen. Stew-
art did not allow 50 per cent of the dead space. He debited himself
with only a small portion of the dead space, which was only 18 per
cent in his last computation, as I understand it. -
di The ºnammas. I thought you said 50 per cent of the space in
ispute?
Mr. STEwART. Only 50 per cent of the return storage-car dead
space.
1480 RAILWAY MAIL PAY.
Mr. MACK. Which is a very small item in this particular instance.
Will Gen. Stewart tell me how many additional car-foot miles he
allowed the Missouri Pacific under his new calculation. We are at
a disadvantage in not having his figures.
Mr. STEwART. 1,793,706.
Mr. MACK. On the full railway post-office car statement alone,
with reference to other cars, I showed that our report was correct
in reporting three million and some odd thousand full railway post-
office car-foot miles alone between St. Louis and Texas and St. Louis
and Kansas City. The apartment-car space is probably very close
to another amount of the same kind. Then the 30-foot deadhead
space in the cars where we are required to furnish 30 feet of space is
about another third of the total. So that the department's modifica-
tion is far from complete. -
Mr. LLOYD. Gen. Stewart, do you aim to submit a report of the
tables, or are you just submitting the results? - -
Mr. STEwART. I am submitting the results, but I can submit the
detailed ascertainment. -
The CHAIRMAN. I would rather have the detailed statement, and
then we can reach a better judgment as to whether your deductions
are proper. *
Mr. STEwART. I would be glad to put that into the record. S
Mr. MACK. I would be glad to see that before it goes into the rec-
ord or to know what it is, because it may call for some reply. After
the record is closed on this question we have no further opportunity
to question the figures. -
The CHAIRMAN. The record has to be closed some time. There is
no snap judgment that has been taken on the part of anyone so far
as the commission is concerned, but we have to come to an end pretty
SOOI). . .
Mr. MACK. I appreciate that.'
The CHAIRMAN. How long would it take to prepare that?
Mr. STEwART. Possibly a day or two.
The following statement will show process followed:
The tables of railway post-office car space, on pages 1296, 1297, and 1298 of
volume 11, were analyzed and the number of linear feet of storage Space Out-
bound as charged by the department to the mail Service was ascertained. The
car-foot miles of this outbound storage space was then computed and an addi-
tional charge of one-half of the car-foot miles of the storage Space was made
against the mail Service. By this method the mail service participated in one-
Half of the return movement of the storage cars. On the Missouri Pacific Line
these storage cars are merely baggage cars equipped in some cases with port-
able stanchions and are used interchangeably for baggage, mail, and express,
and the department believes that charging the mail service with 50 per cent
of the return movement is liberal. The car-foot miles represented by this total
948,380. In the same volume and on the same pages appear errors of the
department in charging to dead space certain car miles of railway post-office
cars. These total approximately 726,326 car-foot miles.
We examined carefully each of the specific cases of dead space in connection
with apartment-car service furnished set forth in Appendix “A” of volume 11,
and where we found any case in which, on the principle of the Lloyd, Lorenz,
or departmental plan, the company would be credited with such dead space
an allowance was made for it. In the apartment service these cases were few,
and it was determined that the percentage of dead space that might have been
credited to the mails for this class of service would not exceed 2 per cent of
the total dead space in apartment-car service. This 2 per cent of apartment-
Car dead Space equalled 119,000 car-foot miles.
The sum of these several items is 1,793,706 car-foot-miles and represents the
car-foot miles which would be charged to the mail service on the theory of the
RAILWAY MAIL PAY. 1481
several suggested plans referred to and the correction of errors by the depart-
ment. The total car-foot miles of apartment, railway post office, and storage
space tabulated by the department as dead space in its original computations
was 9,792,644.05; 1,793,706 car-foot miles is approximately 18.32 per cent of the
total car-foot miles of dead space as used in the department’s computation.
Mr. MACK. They are questions of fact and questions of policy. So
far as the company is concerned, there has been no question raised by
the department, so far as I know of, as to any figure, as to its cor-
rectness, but it is the failure of the department to recognize some
space which we reported as in use directly in connection with the
service. I would like to have that made clear.
Mr. McBRIDE. There were some slight inaccuracies, but they were
not material.
The CHAIRMAN. The difference is one purely of rule, is it not?
Mr. McBRIDE. Yes.
Mr. WoRTHINGTON. The railway mail pay committee, on page 1074,
showed that the department’s statement on page 996, revised by
using the Post Office Department's percentage for passenger-train
expenses, 29.21, with the railroad percentage for mail-car space, 9.32,
produces a deficit below the apportioned cost of $17,229,000 instead
of a surplus of $1,616,000. Now, if one-half of the difference between
the railroads and the department as to space were allowed, the result
would be midway between those two figures. In other words, in place
of $1,616,000 surplus there would be a deficit of $7,800,000, there-
fore, adopting a principle of splitting the difference as to space
between the railroads and the department, there would still be a
deficit shown of $7,800,000, and that on the department's apportion-
ment of expenses.
Mr. STEwART. We would not be willing to split the difference with
the railroads on that.
Mr. LLOYD. Suppose we allow Gen. Stewart to complete his state-
ment.
Mr. STEwART. I wish now, if I may be permitted, to supplement
our statement by calling attention to some special features which
have not been particularly developed, and to refer again to what I
have dwelt upon from time to time in a general way—that is, the
extremely liberal plan the department followed in making its ap-
portionment of costs to the mail service. I have previously called
attention to certain items of general expense, investment, capitaliza-
tion, etc., in which the mails participated to the full extent of 6.68 per
cent, just the same as in the items in which the participation was
proper, upon a car-foot-mile basis, and have suggested that if time
and opportunity permitted further inquiry into this question, I am
perfectly satisfied that it could be shown that the application of that
percentage to the items first named is too strict against the mail
service and too liberal to the railroads in an ascertainment of cºst. I
have some figures here with special reference to the cost of car equip-
ment, which I want to submit along that line. They have a bearing
upon the question.
A comparison may be made based on value of equipment between the
mail service and the passenger service (proper) in passenger trains
for all roads in the United States, on information from the statement
No. 21, entitled “Classification of Cars in the Service on June 30, .
1911,” from the Interstate Commerce Commission Statistics of 1911,
page 25. --
1482 RAILWAY MAIL PAY.
The statement in question shows 20,518 first-class passengers cars,
5,363 second-class cars, and 2,171 emigrant, dining, parlor, sleeping
cars, etc., 5,679 combination cars, and 11,524 baggage, express, and
postal cars in service for the fiscal year 1910. By reference to the
annual report of the Second Assistant Postmaster General for the
fiscal year ended June 30, 1910, page 35, it is found that there were
in the service on June 30 of that year 1,320 full railway post-office
cars and 3,767 apartment cars. Peducting the number of apartment
cars and full railway post-office cars from the combination cars and
the baggage, express, and postal cars leaves a balance of 1,930 combi-
nation cars which do not contain mail and 10,204 baggage and express
cars other than full mail cars. The proportion of the latter amount
embracing baggage cars which may be used in the mail service is
not known. . •
It is ascertained by reference to the “outline of testimony of W. C.
Wishart’ in the case before the Interstate Commerce Commission
for a general advance in freight rates in official classification terri-
tory (I. and S. Docket 333, p. 5) that in 1903 passenger cars cost
$10,860, and to-day cost $17,050; the new ones, he says, are steel,
but carry no more passengers. Estimating the cost of the passenger
car in 1910 as approximately $11,000, and the cost of the mail car, as
reported to the department in November, 1909, as approximately
$7,000, we find that the amount of equipment above tabulated may
be estimated in value as follows: Twenty thousand five hundred and
eighteen first-class passenger cars at $11,000, $225,698,000; adding to
this amount the second-class and the other passenger cars (proper)
results in a total estimated cost of approximately $308,572,000. The
cost of 1,320 full railway post-office cars at an average construction
value per car of $7,000 would be $9,240,000, or 4.09 per cent of the
value of first-class passenger cars and 2.99 per cent of the value
of all passenger cars (proper). But the proportion of the car space
which was chargeable to the mails on the space basis of ascertainment
of November, 1909, was 7.18 per cent (Table 3, Document 105),
and if comparison is made with the passenger space (proper) for
November, would be stated as 8.73 per cent. It is thus seen that a
much larger proportion of the actual cost of the passenger train is
included in the mail per cent of cost, namely, 6.68 per cent, repre-
senting the proportion of operating expenses and taxes to total oper-
ating expenses and taxes, than is justified by the relative equipment
values.
Reports of railroad companies to the department for November,
1909, showing the cost of construction of mail cars give results
which have been tabulated as follows:
Total number of full cars–––––––––––––––––––––––––––––––––––––––––––– 1, 312
40 to 50 feet__ * * 127
50 to 60 feet 231
Over 60 feet--------------------------------------------------------- 954
Amount
Total amount. per car.
Total cost of Construction, all full cars... ----------------. . . . . . . . . . . . . . . . . . . . . . $8,100,067.60 $6,174
Total approximate value November, 1909, all full cars......................... 7,214,029.22 || > 5,498

RAILWAY MAIL PAY. 1483
The highest estimate for November, 1909, was made by the Penn-
sylvania Railroad Co., which shows the average cost of construct-
ing a 60 to 70 foot car as $12,979.48 and the value of same as
$12,894.13. On April 30, 1913, this company reported that for the
Pennsylvania system the steel cars in service cost $12,000 and the
60-foot steel car approved by the department cost $11,000. The
average cost for a 60-foot steel car is shown to be $10,675. (Hear-
ings, p. 951.)
Corresponding data showing the total passenger cars in service
for the fiscal year ended June 30, 1913, is not available; therefore a
comparison for all roads can not be made on the basis of cost of
$17,050 for a passenger car at the present time, as stated by Mr.
Wishart. There is given, however, in the statements of the 14 rail-
road companies to the joint committee showing cost of construction
and cost of maintenance as of April, 1913, the estimated cost of a
mail car 60 feet in length built of steel, which is shown to be ap-
proximately $11,500. (Hearings, p. 951.) The cost of the passenger
car in 1903 was stated to be approximately $10,860, and to-day costs
$17,050. The average mail car cost in 1909 approximately $6,000
and the 60 or 70 foot mail car approximately $8,000, and in 1913 is
shown by the statement referred to as costing $11,500.
To show the relation in cost of construction at the present time of
the several classes of service there may be taken for the purposes of
illustration 10 passenger-train cars at the minimum cost of construc-
tion, which, it will be assumed, compose two trains, as follows: One
60-foot full railway post-office mail car costing $11,500, one 70-foot
express car costing $8,500 (Pennsylvania Railroad shows storage
cars cost in November, 1909, $7,900), one 70-foot baggage car cost-
ing $8,500, and seven 70-foot passenger coaches costing $17,000 each.
A tabulation of the resulting space and cost of construction and
the percentage of each class of service to the total follows:


|
Feet of Total cost| Per cent
C9. It º: º of Space ; of total
Space. pace. Trún. CoSt.
Mail------------------------------------------------------------- 60 8.695 $11,500 7. 796
Express---------------------------------------------------------- 70 10. 145 8,500 5. 762
Baggage--------------------------------------------------------- 70 | 10.145 || 8,500 5. 762
Passenger-------------------------------------------------------- 490 71.015 119,000 80. 680
Total.----------------------------------------------------- 690 100.000 147,500 100.000
It is thus seen that a division of cost of construction on basis of
train space is unfavorable to the mail service both as to the full cars
and as to the baggage and mail-storage cars. The percentages above
shown indicate that the space percentage charged to mail should be
reduced on a basis of train cost of construction by 10.33 per cent, and
that the storage and baggage-mail space should be reduced 43.19
per cent under the proportion charged to the mails on the basis used—-
that is, the per cent of operating expenses and taxes.
Mr. LLOYD. In that connection, you figure that on 7 passenger
ºes and 3 cars, making 10 in a train. Is not that ordinarily too
long?
i. STEwART. Yes. It is not supposed to represent an actual
train, but the table has been prepared to show the relative passenger
space in a train to 60 feet of mail-car space.
1484 RAILWAY MAIL PAY.
Mr. LLOYD. Do you not have 60 feet of mail space where you would
only have three or four coaches? -
Mr. STEwART. I doubt that very much. If we have a 60-foot
R. P. O. car, I presume it would be in a longer train than that.
Dr. LORENZ. The average length of the passenger train is between
five and six coaches. -
Mr. WoRTHINGTON. The average passenger train in the United
States has five cars, which includes mail, coaches, and a very im-
portant element which Gen. Stewart leaves out altogether, sleeping
cars, which are paid for by the sleeping-car companies and main-
tained by them, although Gen. Stewart puts those cars in the space
and omits entire consideration of the value of the car for which the
railroads pay nothing.
Senator WEEKs. Speaking of the cost of the car, is not a large pro-
portion of cost of the cars employed in the mail service still greater
than any other class?
Mr. MACK. I do not think there is any doubt of that.
Senator WEEKs. We have made requirements that, I should think,
would compel the railroads to furnish steel cars for other services.
Mr. STEwART. They are obliged by law to convert all wooden cars
into steel, excepting those which have steel underframes, by July 1,
1917, at the rate of 25 per cent a year.
Senator WEEKs. Is it not doubtful whether any other railroad
has done as much with reference to other classes of cars as the Penn-
sylvania? * - -
Mr. STEwART. I think there is a greater proportion of steel mail
cars than there is of steel passenger cars.
Senator WEEKs. Then those figures would have to be modified to
that extent. -
Mr. STEwART. No. We have taken the average value on the mail
car as $11,500, which will buy a steel car.
Senator WEEKs. A steel mail car?
Mr. STEwART. Yes.
Dr. LORENz. Would not the fact that nearly half of the mail apart-
ment car space be of consideration here? Of course, wherever you
have apartment-car space the cost of construction per foot must be
the same for mail as any other service. -
Mr. STEwART. Yes.
Dr. LORENz. You have taken the R. P. O. as the standard.
Mr. STEwART. In this ideal train I have taken the R. P. O. car.
Mr. LLOYD. The only point I had to inquire about was whether
the seven coaches would be the proper proportion of passenger
coaches that went with a single mail car. It struck me that that was
somewhat large, although you may be right.
Mr. STEwART. The point I desire to bring out in these statistics
is to show that when we participated in the cost of car equipment
as a whole, on a basis of mail car-foot miles, we exceeded the proper
charge by at least 2 per cent. -
The CHAIRMAN. What per cent did you allow %
Mr. STEwART. Six and sixty-eight one-hundredths.
The CHAIRMAN. You say it should have been 4.09?
Mr. STEwART. We participated in the cost of property in paying
4.53 per cent on capitalization, you might say. We participated to
*.
-
RAILWAY MAIL PAY. 1485
that extent in the total cost of this passenger equipment, as well as
the mail equipment. Then we applied our 6.68 per cent, the mail
ratio of expense and taxes, to all expenses and taxes, which, you see,
is much higher than these figures of 4.09 or 2.99.
Mr. LLOYD. If you change that ideal train from seven passenger
coaches to six, what effect would it have upon your computation?
Mr. STEwART. That would not have any effect if you had the same
proportion of space to the several services. We simply took a full
passenger train to get the full car. v
Mr. LLOYD. Suppose you used a 60-foot mail car in the ideal train.
and only have six passenger coaches, making the ideal train, which it
seems to me is more nearly accurate than seven; but I may be wrong.
If that were done, what effect would it have upon your computation ?
Mr. STEwART. If the proper proportion of space were maintained,
I do not think it would make any difference, because it all resolves
itself into cost per foot. I would like to state the effect of that;
as I have indicated here on our general figures I think it would make
a difference of about $453,000, which I think the department is en-
titled to have credit for.
The CHAIRMAN. Right in that connection, I infer from your state-
ment that you thought that your 6.68 per cent was 2 per cent too
high, namely, that you would reduce the 6.68 to 4.09. My under-
standing is that the 6.68 is not made up of cost of equipment, that
is only one element upon which your 6.68 per cent has a bearing.
Is that true? *. &
Mr. STEwART. Yes. The 6.68 represents the ratio of the propor-
tionate operating cost of the mail service, plus the taxes, to the total
passenger-service cost and taxes.
The CHAIRMAN. Then the 2 per cent excess liberal allowance that
you made applies simply to the factor of the cost of equipment, which
is one of the factors on which you made up your 6.68 per cent of ap-
portionment. Is that it? -
Mr. STEwART. You have the right idea, but you have not applied
it correctly. The 6.68 per cent is not changed in its general appli-
cation, but when applied to overhead charges and to investment,
where we say, for instance, our proportion here of the overhead
charges and get $11,700,000, it affects that.
The CHAIRMAN. And that is only in the computation?
Mr. STEwART. Yes; I think that is about the only item.
The CHAIRMAN. Therefore, in dollars, you think it would make a
difference of about $453,000?
Mr. STEwART. Yes. -
Mr. LLOYD. I do not think we need any additional statement on
that.
Mr. BRADLEY. But is that a correct percentage to apply to the
capital cost? Our understanding was the department applied 6.68
per cent of 29.21 per cent, or a little less than 2 per cent (1.95 per
cent). That the 6.68 per cent was applied to operating expenses and
taxes, but when you came to make an application to the capital cost
it was 6.68 of 29.21, or 1.95 per cent.
Mr. STEwART. The 29.21 does not enter here at all, because this is
all passenger.
35797—No. 12–14—13
1486. RAILWAY MAIL PAY.
Mr. WoRTHINGTON, Mr. Chairman, I think the railroad people
ought to know something about the cost of equipment. As to pas-
senger cars, Gen. Stewart has compared a 60-foot mail car with a
70-foot passenger coach. The latter requires a six-wheel truck and
is much more expensive than the average passenger coach. We do
not build our coaches longer than 60 feet. Our 60-foot coach does
not cost us much more than the railway mail cars, and, on the other
hand, our baggage and express cars cost materially less, so if you set
against the mail car the average of our other passenger cars, the cost
of the mail car is higher and not lower, and it is entirely unfair to
draw a deduction from figures which do not apply to the average
situation. In place of decreasing the percentage General Stewart
ought to increase it. In this conclusion we have not considered the
fact that the Pullman and parlor cars are furnished by the Pullman
company and do not cost the railroads anything for construction or
maintenance, although they are included in the passenger car mile-
age and charged against the passenger service.
Mr. STEwART. Mr. Worthington has overlooked the fact that I
have taken the figures furnished by the railroads in 1909 as the basis
of the cost of those cars. }
Mr. WoRTHINGTON. What railroad companies?
Mr. STEwART. All railroad companies reporting.
Mr. WoRTHINGTON. As to passenger coaches?
Mr. STEwART. No ; as to mail cars. -
Mr. WoRTHINGTON. The mail-car figures show
Mr. STEwART. For cost of passenger coaches we rely on Mr.
Wishart, who has submitted data to the Interstate Commerce Com-
II]. ISSIOIl. #
Mr. WoRTHINGTON. You yourself say it refers to a 70-foot coach.
Mr. STEwART. Yes.
Mr. WoRTHINGTON. We do not build 70-foot coaches, because they
are too expensive in proportion to the carrying capacity.
The CHAIRMAN. Mr. Wishart's figures are applicable only to the
New York Central, as I understand.
Mr. WoRTHINGTON. Our standard coach is 60 feet, and I think
that is the general size throughout the United States.
Mr. PRENTIss. I have the statement of the Southern Pacific Rail-
road Co. of the cost of construction of 60-foot railway post-office
cars, and the amount is $9,361 for cars in service and $9,650 for the
new department plan of 60-foot steel railway post-office cars. This
new-plan cost of $11,500 which we state here includes the Pennsyl-
vania Railroad plan and represents a higher cost than the average.
Recognizing that Mr. Wishart's statement of cost was probably
maximum, I took the maximum cost of the 60-foot railway post-
office car.
Mr. RowAN. I would like to say the New York Central paid over
$12,000 for the last mail cars they built. -
The CHAIRMAN. Postal cars?
Mr. RowAN. Yes, sir. We would be glad to buy some for $11,000.
Mr. STEwART. Do you think $11,500 is out of the way for an aver-
age? In this connection, it may be said that the New York Central
Railroad reported the average cost of construction of steel postal
cars in service in April, 1913, as $10,900, and for the new 60-foot
department plan steel cars as $11,655.
RAILWAY MAIL PAY. 1487
Mr. RowAN. I am not talking about an average. Mr. Prentiss said
he took the maximum, and I am telling you what we paid on the New
York Central. -
Mr. STEwART. Now, Mr. Chairman, if I may continue, in closing
allow me to call attention to this fact which I have been emphasizing
this morning, and I read from page 997 of the record:
Attention is further called to the fact that the above apportionment of ex-
penses (other than operating expenses) chargeable to operating revenues is
made to the mail service on the basis of 6.68 per cent of the passenger appor-
tionment. Such a plan of apportionment makes the mail service participate in
this ratio in all the passenger operating expenses included in the above account.
in addition to dividends.
The above account refers to the specific account set out on the
previous pages where we participate in the same ratio in all the in-
vestments of the railroad companies.
When it is remembered that these items cover the whole field of operating
eXpenses chargeable to Operating revenues for the maintenance and operation
of the railroads, as well as interest on bonded indebtedness and dividends on
Capital invested in expensive terminal stations in large cities, it becomes evident
that this charge against the mail service is too large.
I will read from Mr. Samuel O. Dunn on “Government ownership
of railroads,” with special reference to these large terminals:
A very great proportion of the physical value of the railways is concentrated:
in their terminals in large cities. These are often constructed with special con-
Sideration to the convenience of passenger traffic and expressing architectural
beauty. The Pennsylvania Terminal in New York City cost $115,000,000; the
Grand Central Terminal (New York), $150,000,000; the Washington Terminal,
$20,000,000; the Northwestern Terminal at Chicago, $24,000,000; the Union
Station at Ransas City, $40,000,000.
The portion of the paragraph on page 907 continues:
It is impossible to say from “data at hand how much it is in excess of a fair
Charge. The Charge against the mail service on these accounts should not be
greater than the fair value of the use of the property represented by them and
which is employed in connection with the mail service. Neither the railroads
nor the department have this information, but it is evident that it must be
much smaller than the sum used in the above apportionment.
Now, apply that to the entire country, and just bear in mind the
charge against the mail service which the present apportionment
makes. As to cost, I would further call attention to what we have
submitted in connection with the express service. I said on yesterday
that I was not prepared to make a recommendation that the particu-
lar rates we suggested be reduced, but I do urge upon the committee
the careful consideration of a comparison between the mail and the
express service and the legitimate and fair results which my showing
is entitled to in the consideration of railway mail pay. When it is
shown that if we paid the railroad companies for mail service on
approximately the same basis as express service, the amount would
have been $39,000,000 in 1913 instead of $51,000,000, I think that fact
alone is the most potent single one that has been developed in this
inquiry. I have said, however, because I want to be absolutely fair
from all points of view, that there are differences between the two
services, and those differences should be accounted for and carefully
appraised in the consideration of these express stātistics. I have
myself tried to locate those differences and get a fair appraisal of
them. The best that I could do was to submit an appraisal here of
1488 RAILWAY MAIL PAY.
approximately $1,000,000. The railroad companies have not sub-
mitted anything upon that point, and I rather expected that they
would. There is this to be further considered. I pointed out in my
statement that the mail service as a whole is not altogether like the
express service; it transports letters and intelligence and other
classes of mail, while the express service handles practically mer-
chandise only, and in considering the effect of the difference between
these two gross rates I think a fair consideration should be given to
that, and, of course, that is favorable to the railroad companies.
The CHAIRMAN. If it will not break the trend of your thought,
you say there was $1,000,000 difference. You say, as I understand,
that the application of the express rates, as submitted by you, to
mail would have returned to the railroads for railway mail pay
$39,000,000, instead of $51,000,000? # ,
Mr. STEwART. Under the present express rates.
The CHAIRMAN. That is, the rates that have been recently put
into operation by the Interstate Commerce Commission ?
Mr. STEwART. Yes, sir. -
The CHAIRMAN. Then, am I to understand you would add $1,000,-
000 to $39,000,000 and pay to the railroads $40,000,000, instead of
$51,000,000? Is that your conclusion? t
Mr. STEwART. No. I think the conclusion will have to be made
by the joint committee.
The CHAIRMAN. I understand that perfectly well, so far as the
report of the joint committee is concerned, but I am asking for your
individual deduction. I understand you to say there was a differ-
ence of a million dollars, according to the figures submitted by you
day before yesterday, also in the evidence just submitted you have
stated that the railroads would have received $39,000,000 instead of
$51,000,000 that they are receiving to-day, and I want to know where
that million dollars comes in.
Mr. STEwART. The million dollars that I mentioned is the best
information as to the value of those particular differences between the
two services that I could locate, and I submitted the statement in
detail in the record.
The CHAIRMAN. But what do you do with that million dollars.
Mr. STEwART. That would be added to the $39,000,000.
The CHAIRMAN. So that the railway mail pay, in your opinion,
from an express basis, and the allowance you have made for the
difference between the two services, should be $40,000,000 to the
ºil pad companies instead of $51,000,000 that we are paying them
In OW
Mr. STEwART. That would be the comparison. That is not what
I said the railroads should be paid. I, at no time have said the
railroads should be paid only what they receive from the express
companies for handling the express business.
The CHAIRMAN. I understand you to say that the railroad com-
panies, if they received the same compensation from the Govern-
ment that they received from the express business, they would get
$39,000,000 on the present volume of business instead of $51,000,000
that they receive to-day ? •,
Mr. STEwART. That is right. ~,
The CHAIRMAN. And you take into consideration the differences
of the two services and add $1,000,000 to the railway mail pay over
RAILWAY MAIL PAY. 1489
what the railroads receive from the express pay, and that would
make $40,000,000. The natural conclusion, in my mind, from those
statements, would be that you conclude that the railroads should
receive $40,000,000 instead of $51,000,000 which they receive to-day
for railway mail pay. ... I wanted to elucidate and see whether I
caught your conclusion ? *
Mr. STEwART. Your deduction is right so far as the figures are
concerned for a comparison between the two different rates. At no
time have I said I think you ought to reduce the railway mail pay
to that extent. 4 -
Dr. LORENz. May I ask whether the comparison shows $39,000,000,
according to Mr. Stewart's testimony a few days ago? I do not
wish to always be in the position of combating Mr. Stewart's posi-
tion, but a few days ago the department showed the average rate
for the express-car mile was twenty-one and a fraction cents. Mr.
Stewart has shown that of the total car miles of mail it is 225,000,000
car miles, and multiplying that by 21 you get over 47,000,000, and I
do not see how he gets $39,000,000? *
Mr. STEwART. The $39,000,000 is the express payment under the
new rates. I will give you the other figure. It is $46,494,978.58.
Dr. LORENz. That should be made clear, that the $39,000,000 is
under the new rates, and the $47,000,000 under the old rates.
Mr. PETERs. All the rates are under the illustration he made of a
rate per hundred pounds?
Mr. STEwART. No. That is confusing the two methods of com-
parison. The figures that I have just given are based upon the entire
service, a comparison of revenue the railroads receive from express
and from mail as a whole, set forth on pages 1278 and 1279 of the
hearings.
The CHAIRMAN. Under the relative presentation that you have
made as to the difference between actual railway-mail pay and ex-
press pay, under the new rate put into operation by the Interstate
Commerce Commission, what conclusion have you come to in your
own mind, if any, as to the difference between railway-mail pay and
express pay that the Government should pay for railway-mail pay
or how much weight should you give in your determination to the
railway-mail pay regarding the express pay?
Mr. STEwART. I would give this weight to it, that I would not in-
crease the rates which we have suggested here.
Mr. LLOYD. In that connection have you ascertained definitely, to
your own satisfaction, whether the proposed rates under the new
space plan which you suggest will add to or take from the amount
of pay that is received by the railroad companies for carrying the
mails?
Mr. STEwART. We have made an estimate for 1913 which would in-
dicate that the application of the proposed rates would make a re-
duction in the pay for 1913 of something over $2,000,000. I do not
remember the exact figures. -
Mr. PETERs. Do I not understand, General Stewart, that after your
final deduction this morning, after allowing one-half of the dead
space, that on the basis of the cost of service that was ascertained
in 1909, that for the service as performed the following year,
the overpayment to the railroad companies, in your opinion, was
about $206,000? Is not that the figure you read this morning?
1490 RAILWAY MAIL PAY.
Mr. STEwART. A little over that—$221,832.
Mr. PETERs. Now, to apply your new basis, on the basis of increased
service performed in 1913, would you make a reduction of about
$2,000,000 in the pay, under your basis for 1913, with the parcel post
added, and everything else? Would you make a reduction in pay
for 1913 amounting to about $2,000,000?
Mr. LLOYD. That would be the effect of his bill?
Mr. WoRTHINGTON. General Stewart said allowing 18 per cent of
the dead space.
Mr. LLOYD. No. That 18 per cent was based upon the existing law.
It was not based on the proposed law at all.
Mr. PETERs. The percentage of the figures is material. General
Stewart's conclusion this morning was, after making an allowance
for dead space, and so on, that his idea of a reasonable amount for
overhead charges would come down to a point in 1909, when the in-
vestigation was made, that we were actually overpaid about $221,000?
Mr. LLOYD. Under the proposed law there would be a reduction of
$2,000,000.
Mr. PETERs. Not on that basis, though.
Mr. STEwART. I presume that Mr. Peters is intending to bring out
the fact that if you go on the basis of the space in 1913 we might
have more space to account for than in 1909. -
Mr. LLOYD. But if you do you get paid for it?
Mr. MACK. I would like to call attention to the $2,000,000 figures
again, that the effect of these rates between St. Louis and Texarkana,
on the Iron Mountain road, would be a reduction of pay of nearly
40 per cent; and on the Denver & Rio Grande Railroad a reduction
of 40 per cent. We can not enter a protest too earnestly against such
a reduction. r
Mr. STEwART. We have not checked those figures.
Mr. MACK. Those figures are substantially correct.
Mr. STEwART. Of course, under any system, you will not find it
working the same on every road. But the plan to pay on space will
pay for the service rendered.
Mr. LLOYD. Mr. Chairman, I am anxious to find out what road
will get that 40 per cent. He is going to lose 40 per cent, and who
will get it? *
Mr. STEwART. If he loses it, the company that performs frequent
service will gain. That is one of the great advantages of the pro-
posed bill. It pays for every service we will get, and there is a cer-
tain class of roads that run frequent service, which are now paid
only on a basis of weight, that will get considerable more on a space
basis, because frequency of service is a very potent factor.
Mr. PETERs. On the basis of frequency you work out the matter
for the Long Island Railroad Co. and you show that we would get
about $4,000 more per year for carrying the mail than was ascer-
tained on the weight basis on the weighing of 1913, and that you
would relieve us of messenger and terminal service of about $12,000
a year or that we might get an increase of $16,000. I think on the
basis of frequency of service we are entitled to at least double the
pay that we are getting now. We are handling mails on so many
trains through different parts of that thickly settled suburb of New
York. The frequency of service on the most frequently served
routes would make a reduction. *. 3.
RAILWAY MAIL PAY. 1491
Mr. MACK. On the Denver & Rio Grande Railroad a reduction of
40 per cent would seem to me to be a very serious injustice to a line
operating in a mountainous region, with much service on narrow-
gauge trains, and I do not think that there is any justification in
Document 105. The proposition in that document would only have
made a reduction of half that amount. -
Mr. WoRTHINGTON. The present basis is much fairer for the west-
ern roads where the operating costs are high. While it is true there
is less frequency of service, there is a higher cost per train-mile for
operating expenses, and I think Dr. Lorenz will bear me out that
where frequency of service is less, the expense is higher per train-mile.
Dr. LORENZ. Generally speaking; but I think the separations of
the service, for example, on the Santa Fe and on the Burlington,
show a lower operating expense per car mile than for the country as a
whole. -
Mr. WoRTHINGTON. I spoke yesterday for the Southern Pacific
and showed what a great injustice the proposed rate would be on our
line, and I think we are justified in protesting vigorously against iu.
It would simply allow us less money per car mile than Gen. Stewart
shows it costs us, according to his own basis of apportionment, for
operating expenses and taxes.
Mr. LLOYD. What do you get out there for the passenger service?
Mr. WORTHINGTON. About 2 cents per passenger mile.
Mr. LLOYD. In that mountainous region?
Mr. WoRTHINGTON. Two cents, including our suburban service.
We get 3 and 4 cents a mile for local travel.
Dr. LORENZ. I would like to ask Mr. Worthington what the operat-
ing ratio on his road is?
r. WORTHINGTON. The operating ratio has nothing to do with it.
That is lowered because of freight service. Freight trains are heavy.
Our freight rates average about a cent a ton-mile, which is higher
than the average for all traffic throughout the United States.
Dr. LORENZ. Suppose you make this assumption, that your freight
and passenger business are equally profitable; this will show that you
had an operating expense of probably 15 or 16 cents per car-mile.
Now, you will say your passenger service is not as profitable as the
freight, but it seems to me that if you make that assumption you must
assume that the freight department is unusually profitable.
Mr. WoRTHINGTON. You just mentioned our operating expense of
16 cents a car mile. Gen. Stewart's figures showed 22 cents a car
mile. w
Dr. LORENz. Gen. Stewart could only take the report which your
company made and apply certain principles to it, and inasmuch as
your company does not make a current separation of freight and
passenger we can not attach any significance to the results.
Mr. WoRTHINGTON. Gen. Stewart applied the same rule of appor-
tionment to all roads in the United States.
Dr. LORENZ. You do not make a current separation?
Mr. WoRTHINGTON. We keep our accounts in the same manner as
all railroads—in accordance with the requirements of the Interstate
Commerce Commission.
Dr. LORENZ. Yes; but you do not make a separation of freight and
passenger expenses assignable. Half of the operating roads do.
1492 RAILWAY MAIL PAY.
Mr. WoRTHINGTON. Half of the roads of the United States sepa-
rate expenses between passenger and freight? -
Dr. LORENZ. Yes, sir. * -
Mr. WoRTHINGTON. I did not know that. That is news to me. ,
Dr. LORENZ. That is the result of tabulation of sworn reports of
companies for 1912. 4.
Mr. WoRTHINGTON. However, our figures were reported to the
department in accordance with their requirement, and the basis of
apportionment to passenger service was the same as applied to any
other road. - •
Dr. LORENz. As to the alleged exceptional cost on the Southern Pa-
cific, I think you keep currently your cost for freight and passenger
separately on three important transportation costs—locomotive en-
ginemen, fuel, and trainmen. Your cost for those items per car-
mile is actually lower than for the country as a whole, although a
little bit higher than the Santa Fe? -
Mr. WoRTHINGTON. Do you say that our cost of train service is
lower Ž -
Dr. LORENZ. Enginemen, trainmen, and fuel per car mile?
Mr. WoRTHINGTON. I can not understand that statement when we
ay higher wages than anywhere in the United States and pay more
}. our material. l - -
Dr. LORENZ. The reason is you have the longer hauls and that re-
duces it. !
Mr. WoRTHINGTON. We pay much more per mile run for firemen,
brakemen, conductors, and engineers than the average pay. **.
Dr. LORENZ. You will find my figures are based on your monthly
report. -
Mr. STEwART. I will say in this connection, since the reports made
by this system have been brought into question, that I have been
informed that they were in a very unsatisfactory condition in some
respects when they reached us and that would verify to a large ex-
tent Dr. Lorenz’s conclusion that our specific finding in that case
would not be as representative as in some other cases where the colm-
pany more strictly followed our suggestions in submitting data as to
expenses. & *
Mr. WoRTHINGTON. Do you mean to say our operating expenses as
reported to you were upon any different basis from those reported
by other roads? Were they not strictly in accordance with the In-
terstate Commission requirements?
Mr. STEwART. I am so informed. * -
Mr. PRENTIss. The fact is that some roads reported an assignment
of expenses in greater detail than others. One hundred and twenty-
four railroads reported to the department approximately 50 per cent
of the operating expenses assigned directly to either passenger or
freight traffic. Just what percentage the Southern Pacific assigned
I do not recall. If the percentage of total assigned expenses was
similar to that of the Santa Fe, which gave the department only 13.
per cent, it would account for the higher cost per passenger-car mile
on the Southern Pacific. The only remaining factor, which was
revenue-train mileage, was used to apportion the other items of cost.
The CHAIRMAN. You submitted to the Southern Pacific a regular
list of inquiries, did you not? .
Mr. PRENTIss. Yes, sir.
ſº RAILWAY MAIL PAY. 1493
The CHAIRMAN. The same as you did to all roads?
Mr. PRENTISs. Yes. *
The CHAIRMAN. Was their reply as full and complete to those in-
quiries as the average of the other roads?
Mr. PRENTIss. No, sir; it was not.
Mr. WoRTHINGTON. In what respect?
Mr. PRENTISs. In the assignment of operating expenses. The
Southern Pacific assigned proportionally less than others, and as the
basis on which the department divided the expenses was the train
unit, if the assigned expenses for the passenger train and freight train
were not given, the department had no alternative and simply used
the data reported by the company, applying the train or locomotive
mileage ratios, whichever was furnished by the company, in order to
get an ascertainment. - *
Mr. WoRTHINGTON. Is it not a fact that two requests were made for
the assignment of expenses and we complied with both of your re-
quests? You are speaking of the first request. I think our com-
hº was exactly in accordance with the accounts the way we had
them.
Mr. PRENTIss. In the first request the department asked for the
assigned expenses and apportioned expenses for passenger service.
In the second request the department asked for the mail assignment,
the express assignment, the passenger assignment, and the freight
assignment.
Mr. WoRTHINGTON. You did not accept the railroad's assignment?
Mr. PRENTIss. In the case of the Southern Pacific the two reports
were in agreement as to the assigned expenses. A careful compari-
son of the two reports was made for each road and the results were
based on both reports.
Mr. WoRTHINGTON. I would like to bring out the fact that the
assignment I referred to is not the railroad assignment, but the as-
signment found in Document No. 105, which was the department's
assignment. Document No. 105 shows how the department assigned
each account. You made the assignment?
. . . Mr. PRENTIss. I would like to correct that statement. The depart-
ment made no assignment of expenses. The unassigned expenses
were apportioned on the basis of the train cost, using the assignments
furnished by the railroad companies. *
Mr. WoRTHINGTON. It is that apportionment that I refer to.
Mr. PETERs. Mr. Lloyd asked General Stewart as to where that
money would go that would be taken from the Denver & Rio Grande,
and General Stewart said that it would go to the road that had fre-
quency of Service. On Long Island our next longest line, between
Greenport and New York, on the weight basis we get as a result of the
weighing of 1913—these are computations made by the department—
$16,065 a year. On the space basis we would get $8,834. Yet we
have 38.49 trips per week on that line. We would get, in addition to
that, $2,900 for relief from side and terminal service, but that is a
relief they are going to give us by assuming the side and terminal
service and not as a result of pay for space. The most frequent line
between Brooklyn and Jamaica we now get on a weight basis $1,494;
on the closed-pouch service as proposed under the law in volume 8
we would get $1,420, a reduction of $74 a year, and there we have
*
1494 RAILWAY MAIL, PAY.
203 trips per week. We would be relieved of $742 of station and
messenger service. That just illustrates that it does not work out
the way General Stewart stated. - * -
Mr. McBRIDE. I think it ought to be stated in connection with the
Greenport and New York illustration that on the weight basis there
was included the weights carried on the trains of the Wading River
& Long Island City line and of the Oyster Bay & Long Island City
line over part of the route. Under the new plan these trains are on
another mail run and the compensation for those trains is not repre-
sented in the Greenport and New York computation, but is included
in the pay for the other mail runs.
Mr. PETERs. But taking the total cost of the apartment and closed-
pounch service you make it $55,000, while on the new basis we are get-
ting $51,000. In Document No. 105, after cutting off a portion of the
mileage and throwing it out as space not allowed, you showed there
we were underpaid $1,418 a month, or at the rate of $17,000 a year, in
1909. s
Mr. McBRIDE. This statement shows that you will receive $16,000
additional compensation.
Mr. PETERs. Oh, no. *. -
Mr. MACK. I would like to ask the question if the effect of your
bill will not be to take the pay away from the lines that perform the
volume of service in the transportation of the mail and give it to the
lines that perform a less transportation service for the Post Office
Department?
Mr. STEwART. I do not think it will. I think the opposite is true.
The CHAIRMAN. General Stewart, I would like to see whether I
have a correct understanding. As I understand your conclusion
with reference to overpay by the Government to the railroads, they
are based entirely upon the ascertainment set forth in Document 105.
Is that true?
Mr. STEwART. Yes, Senator, inasmuch as that is the only thing
before us, it is the only ascertainment that has been made.
Mr. LLOYD. Did you not get some ascertainments from the Gov-
ernment employees, railway mail clerks, and railway superintendents
as the basis of your charge for space or allowance for space that is not
found in Document 105?
Mr. STEwART. Document 105 is based on all the information we
could get on the subject.
Mr. LLOYD. Document 105 is the report of the railroads, and the
report of your employees and determination based on all information
you have obtained from the railroads and the departmental em-
ployees?
Mr. STEwART. Yes.
The CHAIRMAN. Document 105 was the result of inquiries for the
month of November, 1909, made by the department upon the rail-
roads, and the tables were prepared by the department from the
answers to those questions. That is true, is it? .
Mr. STEwART. No. I could not say that that is true. If I an-
swered that yes it would not be correct, and if I answered it no it
would not be correct. We have explained a number of times that the
railroad companies reported more space than we could accept and,
therefore, it is not based primarily on what they reported to us.
RAILWAY MAIL, PAY, 1495
It is based upon the reports of the railroad companies as properly
revised by the department to represent the space needed and used.
The CHAIRMAN. Then that comes to what I want to get at. Then
the correctness of the deductions in reference to overpayment de-
ends, upon the correctness of the apportionment of tables prepared
y the department upon the information submitted by the railroads
in reply to inquiries submitted by the Government to the railroads.
Is that correct? -
... Mr. STEwART. That is substantially correct.
The CHAIRMAN. Then the difference in dead space, the allotment
between the department and the railroads, is the crucial test as to
the correctness of the deductions in reference to the question of over-
pay or underpay. Is that true?
Mr. STEwART. That, I think, represents the material point of dif-
ference between the railroads and the department.
The CHAIRMAN. That is the key to the problem of correctness
of the dead-space apportionment, the key to the main factor?
Mr. STEwART. I think so, in so far as Document 105 is concerned.
The CHAIRMAN. So far as the conclusions in reference to the under-
pay or overpay, if the conclusions are based solely upon the ascer-
tainment and information, that being all available as contained in
Document 105?
Mr. STEwART. You are referring, of course, to Document 105 as
shown, without reference to anything else that has been submitted to
the commission, the consideration of express rates, etc.?
The CHAIRMAN. I am, so far as the overpay or underpay is con-
cerned; that is, so far as your own conclusions are concerned.
Mr. STEwART. And without regard to any consideration of the
sº items I have submitted here which might be taken into ac-
count
The CHAIRMAN. I am not asserting anything, but I am trying to
put interrogatories to follow out your line and see how your thoughts
appeal to my mind. * *
Mr. STEwART. To make my answer complete to your question,
which is very comprehensive, I would have to insert at this point
in the record all the things I have said which I think the commis-
sion should take into consideration, not solely those presented in
Document 105, but all the other considerations as to whether the
railroads were overpaid or underpaid.
The CHAIRMAN. And you have come to a conclusion, as I under-
stand it, that the railroads have been overpaid, and the testimony
will show specific statements to the effect, if my memory serves me
rightly. What value do you give to Document 105 ascertainment?
Mr. STEwART. I gave primary value to that. All these other con-
siderations that I have mentioned simply accentuate the conditions
shown by Document 105. For instance, when I say that Document
105, taken on its face, shows more revenue received than expenses
fairly apportioned to the mail service, that is subject again to the
criticism that I myself make against the plan, to the effect that it
proceeds upon a most liberal plan of apportionment, which I pointed
out this morning. -
The CHAIRMAN. I was not discussing the plan at all, but simply the
conclusion or conviction in your own mind with reference to overpay
or underpay, which is one of the phases of the study, and that your
1496 t RAILWAY MAIL PAY.
conclusions, which are definite, according to the testimony, are based
primarily and, as I understood you, almost entirely upon Document
105 ascertainment. -
Mr. STEwART. So far as the specific figures are concerned which we
have submitted, that is true.
(Thereupon, at 1 o'clock p. m., a recess was taken until 2 o'clock
p. m.) -
AIFTER RECESS.
The hearing was resumed at the expiration of the recess at 2 o’clock
p. Im. -
The CHAIRMAN. Dr. Lorenz, you have read all of the evidence that
has been submitted at the various hearings and have for a period of
over two months devoted your time exclusively to a special study of
this subject and intermittently it has had your consideration for over
a year; now, outside of the information contained in Document 105
and other viewpoints submitted in the evidence, are there any other
facts or additional information that occur to your mind that it would
be wise to consider in our study of this subject?
Dr. LORENz. It seems to me that the conclusion of the committee
ought not necessarily rest entirely on Document 105, that there are
other indications of what might be a fair rate per car mile, which help
to determine the question of overpay and underpay that do not de-
pend upon that particular tabulation for 1909. For example, the Post
Office Department can make and has made estimates of the total
amount of mail service measured in 60-foot-car miles, and the result
varies according to the method of estimating that service. In one
estimate in which they charged the department with mail space based
upon the three units of 15, 30, and 60 feet, they give us a figure of
about 260,000,000 car miles as the equivalent of the Railway Mail
Service 60-foot cars. That is not dependent on Document 105.
Dividing that into existing revenue as reported by the Second Assist-
ant Postmaster General, we get an idea of the existing revenue to the
railroads per car mile for the mail service. The pay being $51,000,-
000, the car miles being 260,000,000, we get an average payment of
something less than 20 cents a car mile.
That does not depend in any way upon Document 105, but it does
involve the same controversy that has come up in connection with this
matter, because in that estimate of 260,000,000 car miles the depart-
ment has been charged with a certain amount of dead space; that is
to say, if they charge themselves with a 30-foot apartment when they
need 20 or 25, it is obvious that they are charging themselves with a
certain amount of dead space, although not as much as the total
amount involved in Document 105; for example, under this three-unit
system, if they needed a 30-foot apartment and the railroad company
furnished a whole car, they would not be charged with the whole car,
but only with the 30-foot apartment, because that is one of the units,
consequently that element of dead space which exists would not be
charged against the department under the three-unit plan. Having
arrived, then, at the conclusion that upon a fair apportionment of
dead space, which presumably would result from these three units, you
have your starting point, the existing revenue of something less than
20 cents a car mile. To know whether that is too high or too low, we,
of course, have the basis of comparison with the average revenue re-
*
RAILWAY MAIL PAY. 1497
ceived from passenger-train service, and that average is furnished by
the Interstate Commerce Commission to this committee and is not
open to much dispute, although it varies a little each year, although
it must be considered that the average of approximately 25 cents
is the result of considering all of the dead space in the divisor,
because all of the car miles, whether they are empty or partly used,
are divided into the total passenger-train revenue. So there you have
two figures which it seems to me are pretty well fixed and not open
much to dispute and which do not depend on Document 105.
The CHAIRMAN. That is the 260,000,000 car miles as figured by the
department and the car mileage from the passenger service as figured
by the Interstate Commerce Commission ?
Dr. LORENZ. Yes. Of course the department made that estimate
simply in response to a question of the committee, and possibly on
revision they would change it somewhat. They have more recently
submitted an estimate of 225,000,000 car miles when the authoriza–
tion is made upon a different basis. In other words, the number
of car miles with which the department charged themselves depends
largely on the units which they can authorize. If they can author-
ize 15, 20, and 25 feet they are obviously going to escape some of
the dead space which they must assume if they authorize units of
15, 30, and 60 feet.
The CHAIRMAN. In that connection it may be interesting to all of
you gentlemen to hear the contents of a letter I have received from
Canada in response to a letter I addressed to the postmaster general
under date of March 3. My letter of March 3 reads as follows:
*, MARCH 3, 1914.
HOn. IOUIS P. PELLETIER.
Postmaster General, Ottawa, Canada.
DEAR SIR : My attention has been called to the February 7 issue of the Rail—
way Review, published at Chicago, Ill., in which you are quoted as follows:
“After long negotiations, in which the railways were most insistent for an
increase of about $4,000,000 as extra compensation for carrying the parcel post,
no special or additional compensation was allowed. A car mile instead of a
track mile was agreed upon, however. Under this plan the railways will get
about $786,000 a year more than now. This was only a readjustment of the
existing arrangement, and is in no Sense an additional payment for the parcel-
post system.” g
Since the above-named joint Committee is now investigating the general sub-
ject of railway mail pay, it would be appreciated if you could favor us with
the details entering into the adjustment referred to.
} Yours respectfully,
JONATHAN BOURNE. Jr., ("hairm (1 m.
To this I received the following reply, dated March 14, 1914:
MARCH 14, 1914.
Hon. JONATHAN BOURNE.
Chairman Mail Transportation Committee,
Washington, D. C., United States of America.
DEAR SIR : I have the honor to acknowledge the receipt of your letter of the
3d instant, asking to be furnished with details regarding the rates of payment
allowed the Canadian railways for mail transportation.
In reply, I have to inform you that under the arrangements recently made,
which went into effect on the 1st of February last, the Canadian post-office de-
partment has agreed to pay for railway mail service according to the following:
rates and conditions until the 1st of February, 1915: *
1. For a full postal car equipped for the sortation and handling of mails, in-
cluding parcels, and the accommodation and transportation of post-Office officials.
on duty, 16 cents a car mile.
1.498 RAILWAY MAIL PAY.
2. For a half car or section of a car completely equipped in the same manner
as a full postal car and the transportation of post-office officials on duty, 9 cents
a Car mile. -
3. For the conveyance of closed mails carried in baggage cars in charge of
baggagemen or other railway officials in charge of such cars on regular trains,
4 cents a car mile.
4. The equipment and accommodation furnished by postal cars shall include
light, heat, and an adequate supply of drinking water.
5. For Special trains ordered by the post-office department for the transpor-
tation of Ocean mails, $1.25 a train-mile when no passengers, baggage, or freight
is carried. When cars for the conveyance of passengers, freight, or baggage are
attached to such trains by the railway company, the rate shall be $1 a mile.
6. The rate of 16 cents a car mile shall apply to all cars used wholly for mail
purposes, whether hauled in special trains run by the railway companies for
their own convenience or on regular trains. However, the department will not
require the railways to haul more than one car with mails on any such train at
the 16-cent rate. If more than one car has to be attached to a special train by
order of the post-office department, the rates provided for in the preceding sec-
tion—that is, $1 a mile—will apply.
7. All railway companies shall provide, without extra charge to the post-office
department, for the care and storage . Of mails at junction points when such
mails have to be held Or Stored for train COnnection and are to be transferred
from one train to another of the same company. The work of transferring
mails between the trains of any railway shall be performed by the railway
company, except at points where the department has already provided for such
transfers or may hereafter agree to provide for them owing to growth or devel-
Opment.
I may say that no special arrangements have been made for the transporta-
tion of parcels, which have to be conveyed in the same manner and paid for at
the same rate as other mail matter. Under the arrangements above described
the postmaster general will simply require the railways to furnish whatever
car space may be necessary for the accommodation of mails of every description,
and will pay accordingly. - -
The increase that the railways will earn under the new schedule of rates, cal-
culated on the basis of the service as it existed last year, will amount to about
$786,000, as stated in the Railway Review. If it is found, however, that the
increased amount of mail to be handled, owing to the introduction of parcel post,
will make it necessary for the railways to furnish extra accommodation, they
will, of course, be paid a larger amount than that above mentioned.
Yours respectfully,
LOUIS P. PELLETIER.
Then I addressed another letter dated March 19, 1914, to draw out
more specific information as to what their standard cars were, etc.,
and have to-day his reply under date of March 31, 1914, which letters
read, respectively, as follows:
MARCH 19, 1914.
Hon. LOUIS P. PELLETIER,
Postmaster General, Ottawa, Canada.
DEAR SIR : I have your letter of March 14, in response to mine of the 3d
instant, and desire to express my appreciation of your favoring me with the
details entering into your recent readjustment of mail compensation to the rail-
roads of Canada. On account of parcel pOSt. 1.
I should be pleased if you would further favor me with information on the
following points:
(1) The length of what you denominate a full postal car, inside measure-
ment, and which you state is paid for at the rate of 16 cents per car mile, sub-
ject to exceptions stated in your letter.
(2) Is the 9 cents a car mile a flat rate for cars of any length less than that
of a full postal car, or is the rate for smaller size cars pro rated on the 16-cent
rate for the full car. This query is prompted by the application of the 9-centS-
a-car-mile rate to “a half car or section of a car,” etc. A Section of a Car may
be less than half a car. -
(3) How the rates the railroads receive for their mail service compare with
those received from their passenger and express Service on a car-mile basis. º
RAILWAY MAIL PAY. 1499.
Definite information on the foregoing points will be of great benefit to us in
our study of the railway mail pay question. •
I have had some intimation that Canada had or expected to inaugurate a
parcel-post system similar to our own. If it has such a law, I should be pleased
to receive a copy, if same is available for distribution, with such comments as
you may favor me with. I should particularly like to know the maximum
weight and size of packages that can be carried and the rates applicable
thereto, as also the estimated amount of package mail handled. It would be of
value to know the number of pieces of such mail matter as well as the total
weight. *
Again expressing my appreciation of your courteous response to my letter of
the 3d instant and assuring you of my further appreciation of Such information
as you can furnish me with along the line above indicated, I am,
Very respectfully yours,
JonATHAN BOURNE, Jr., Chairman,
MARCH 31, 1914.
Hon. JonATHAN BOURNE,
Chairman of Mail and T'ransportation Committee,
Washington, D. C., United States of America.
DEAR SIR: I have to acknowledge the receipt of your letter of the 19th instant
with further reference to the recent arrangement made with Canadian rail-
ways for the transmission of mails.
As regards the measurement of postal cars, concerning which you asked for
further information, I have to say that the length of a full car, for which 16
cents a mile is to be allowed, is 60 feet, and a half car or Section of a car, for
which 9 cents shall be paid, is 30 feet, inside measurement in both cases. I
may say, however, that a number of the full postal cars at present in use
exceed 60 feet in length, while others are somewhat less, varying from 50 to
60 feet, and it is the intention to allow the full rate of 16 cents for the latter
so long as they are found sufficient for the accommodation of the mails on
the routes on which they are being used. The same privilege will be allowed
in respect to half cars or sections now in use that may be under 30 feet in
length. These will receive 9 cents a car-mile under the same conditions.
It is provided in the agreement, however, that all postal cars that may here-
after be equipped for the railway mail Service shall be constructed and ar-
ranged in accordance with plans approved by the postmaster general.
In reply to your third question I may inform you that according to the
Canadian railway statistics of 1913 the average earnings of all passenger cars
was 31.27 cents a car mile, but there are no statistics available as to the earn-
ings Of the express Service on a car-mile basis. It is Seldom that a Whole Car
is used for express purposes, the general practice On the larger railways being
to divide a car, using one half for the express and the other half for mail or
baggage. On the small railways whatever express matter has to be handled
is carried in the baggage car, and there is no fixed mileage rate in any case,
the railways being paid a percentage of the express revenue for transportation
according to agreements made from time to time with the express Companies.
With reference to the parcel-post system lately inaugurated in Canada I
regret that this department is not yet able to furnish any figures or statistics
that would be of value to you, but such statistics are being compiled at the
larger offices, and I shall be glad to furnish you with the information you de-
Sire just as SOOn as returns are received at the department.
I may explain that when parcel post went into operation on the 10th Feb-
ruary the weight of parcels was restricted to 6 pounds, and an extra charge of
5 cents was imposed on parcels mailed in the cities for local delivery. These
restrictions were imposed. So as to give the department an opportunity to
organize thoroughly for carrying on the work. After an experience of about
three weeks it was found that no difficulty would be experienced in carrying
out the system in its entirety and the restrictions were removed on the 4th
March, the full weight of 11 pounds being accepted and the extra charge for
local delivery in cities discontinued. It may be considered, therefore, that
Canadian parcel post only went into full operation about three weeks ago.
A number of copies of the Canadian parcel post regulations, which give full
information as to the maximum weight and size of packages received for post
and the rates applicable thereto, are inclosed herewith.
Yours, respectfully,
LOUIS P. PELLETIER.
1500 RAILWAY MAIL PAY.
I thought that this information, just having been received, would
be good to get before you, and it might perhaps be a good idea to get
the opinion and expression of views of you gentlemen representing
the railroads, of the representatives of the department, and of Dr.
Lorenz as to the difference in conditions between this country and
Canada and how far it would be safe, if at all, to adopt the experience
or action of the Canadian Government in our own studies.
(Subsequent to the hearings, and under date of April 6, 1914, the
ºhairman addressed a communication to the postmaster general of
Canada relative to subsidized railroads, and in reply received a letter
from the deputy postmaster general, dated April 8, 1914, together
with a statement of aid granted and paid to railways of Canada by
Governments and municipalities, which letters and statement are in
their order, respectively, as follows:)
APRIL 6, 1914.
Hon. LOUIs P. PELLETIER,
Postmaster General, Ottawa, Canada.
DEAR SIB : Referring to my letters of March 3 and March 19 and your re-
plies of March 14 and 31 relative to railway mail pay in Canada. º
Will you kindly advise me whether or not all railroads of Canada are sub-
sidized by the Government, indicating, if in the affirmative, whether by land
grants Or Cash donations. If there are any not subsidized, I would appreciate
it if You Would indicate by name those roads which are and those which are not.
I Would further like to inquire what consideration, if any, was given to the
factor of Federal aid in construction and maintenance to the railroads of Can-
ada in your Government's fixing a 16-cent rate per car-mile for a full railway
post-Office car and a 9-cent rate for an apartment car, as stated in your letters
above referred to. In other words, I would like to know what influence, if
any, Federal aid in construction and operation had in the determination of
the 16 and 9 cent rates. It would also be interesting to know whether such
rates Were fixed upon a public utility or strict commercial basis.
With appreciation of your past favors, I remain,
Respectfully yours,
JONATHAN BOURNE, Jr.
Post OFFFICE DEPARTMENT, CANADA,
Ottawa, April 8, 1914.
Hon. JonATHAN Bourne,
Chairman JIail Transportation Committee,
Washington, D. C., U. S. A.
DEAR SIR : In the absence of the postmaster general I beg to acknowledge
the receipt of your letter of the 6th instant with further reference to the rates
InOW being paid railways in Canada for mail transportation. You inquire
whether all Canadian railways are subsidized by the Government and whether
the aid granted to railways was a factor in deciding the rates that have
recently been fixed.
In reply I have to say that, with few exceptions, all railways in Canada have
received assistance in connection with the construction of their roads either
in the form of cash subsidies, guarantee of bonds, or land grants, and I am
inclosing for your information a copy of the Canadian Railway Statistics, in
which you will find at page 34 a complete statement of the cash subsidies
(including loans) granted to all railways. In addition to the statistics
shown in this statement some of the railways mentioned received land grants.
No assistance has been given toward the maintenance of any railway after
construction. In fixing the rates recently adopted the post Office department
was influenced by the grants that have been made to railways to the extent
of deciding that the payment for mail transportation should be based on the
cost of operation only of the cars used for mail purposes and not on a strictly
commercial basis, it being considered that the Government has the right to
demand some return for the amount contributed by it toward the construc-
tion of the railwayS.
RAFEway MAIL PAY. 1301

In this connection I may inform you that all railways that have been sub-
sidized by the Dominion Government during the last 16 years, either by cash-
subsidies or land grants, are required by law to perform any service required
by the Government, such as the transportation of mails, men, and supplies up
to the value of 3 per cent yearly on the amount of their subsidy. The rates
allowed for mail service are applied to railway companies’ obligations in
respect of their subsidies, and the amount earned is simply transferred by
the post office department to the finance department. These provisions, how-
ever, do not apply, to railways who have only received assistance in the way of
loans or the guaranty of bonds. -
& Yours very truly,
. Deputy Postmaster General.
35797—No. 12–14—14 *
1502
RAILWAY MAIL PAY.
statement of aid, granted and paid to railways w
By Dominion Government.
By provincial governments.

Name of railway. - - - *
Subsid Subsidy Loan Name of ;
granted. paid up. •. Province. granted,
1 | Albert Souther n $50,460.00 $50,460.00 |.............. New Brunswick. $48,680,00
(abandoned). § -
2 Harvey Branch 5,553.57 5,553.57 --------------|---- -do----------- 9,000.00
(abondoned).
3 Alberta Ry, & Irriga- 148,094.00 || 148,094.00 |... . . . . . . . . . . . . . . . . . . * * * * * * * * * * * , as a • * * * * * * * * * * *
tº &º £5. -
4 Algoma entral & 2,054,976.00 | 1,453,419.44 |.............. Ontario. . . . . . . . . 201,580.00
udson Bay. -
5 || Algoma Eastern. - - - - - - 547,200.00 365,649. 13 . . . . . . . . . . . . . . . . . . . do---------- 265,000.00
6 Atlantic, Quebec & 902,800.00 902,800.00 --------------|------------------|--------------
Western.
7 | Bay of Quinte. - - - - - - - - 350,455.25 350, 455.25 |... -- - - - - - - - - - Ontario. . . . . . . . . 84,000.00
8 Bºston & Nelson ----------------------------|--------------|------------------|--------------
Illl),
9 | Brandon, Sask... & !--------------|--------------|--------------|------------------|--------------
Hudson Bay (nil). -
19 British Yukon---(nil) --------------|----------------------------|------------------|--------------
11 || Brookville, Westport 140,800.00 140,800.0 . . . . . . . . . . . . . . Ontario. --------|--------------
and Western. -
12 | Bruce Mines & Algoma 53,920.00 53,920.00 --------------|----- do----------- 50,918.00
13 Cºle & Gulf Termi- 210,053.59 210,053.59 |... . . . . . . . . . . . Quebec.---------|--------------
Ilal.
14 | Canada Southern, in-
º;
~15 sº atham & 1------------------------------------------ Ontario---------|--------------
3, Ilê. -
16 Lºngton & St. i. 51,200.00 51,200.00 --------------|..... do----------- 147,859.00
8,ir.
17 | Canadian Government
railways; inter-
colonial, includ-
ing:
18 Canada Eastern. ..] 374,839.84 374,839.84 |--------------|------------------|--------------
19 D r u m m O n d 423,936.00 423,936.00 - - - - - - - - - - - - - - Quebec.---------|--------------
County.
20 Fººton & St. 30,000.00 30,000.00 --------------|------------------|--------------
arys. * -
21 Nova Scotia Steel 40,000.00 39,840.00 - - - - - - - - - - - - - - Nova Scotia. . . . . 40,000.00
& Coal Co.'s Ry.
22 Prince Edward IS- --------------|----------------------------|------------------|--------------
land.
23 Canadian Northern, in-| 374,606.00 374,606.00 --------------|------------------|--------------
cluding.
24 Winnipeg Great |.. ------------|--------------|--------------|------------------|--------------
Northern. *
25 Port Arthur, Du- 271,200.00 271,200.00 - - - - - - - - - - - - - - Ontario. . . . . . . . . 255,571.00
luth & Western.
26 oº:: & Rainy | 1,534,526.00 | 1,534,526.00 - - - - - - - - - - - - - - - - - - - do----------- 1,072,800.00
IVer. -
27 Manitoba----------|--------------|--------------|-------------- Manitoba. . . . . . . 641,575.25
28 Edmonton, Yukon | 160,000.00 91,200.00 --------------|------------------|--------------
& Pacific.
29 Cº. Northern 2,255,872.00 2,240,832.00 |. . . . . . . . . . . . . . Ontario. . . . . . . . . (2)
ntario. -
30 º Northern 2,020,616.89 2,020,616.89 |...... . . . . . . . . Quebec... ...] 1, 194,129.46 |
Ulebec.
31 || Canadian Norther n | 2,589,600.00 | 2,589,600.00 |. . . . . . . . . . . . . .l..................|- - - - - - - - - - - - - -
Alberta.
32 Cº. Northern 4,349,930.40 4,349,930.40 |... . . . . . . . . . . . . . . . . . . . . . . . . ... --|------------..
a CITIC.
- º 30,053,283.00 |29,944,660.43 |.............. Manitoba- - - - - - - 375,377.50
33 | Canadian Pacific. . . ... {:}; giðið,521.6% [.............. Brit. Columbia... ,500.00
34 || Owned—Can. Central.. 1,525,250.00 1,525,250.00 |.............. Ontario--------- 1,479,000.00
35 Lake Temiskam- 310,335.95 310,335.95 ||---........... Quebec. ........ 350,076.82
ing Colonization. -
36 North Shore-------| 1,500,000.00 | 1,500,000.00 ---...........|-...-------...----|--. * * * * * * * * * * *
37 Montreal & West- 361,270.00 361,270.00 -............. Quebec. -------. 472,500.00
©IIl.
38 Quebec, Montreal, --------------|--------------|--------------|-----do---------- 727,000.00
Ottawa & Occi-
- dental.
39 || Leased—Atlantic & 3,888,800.00 3,888,800.00 - .............|- - - - - do---------- 711,122.02
North West. & w
40 Cap dela Madeleine 7,424.00 7,424.00 --------------|------------------|--------------
41 Columbia & Koo- 88,800.00 88,800.00 --------------|----------- * * * * * * * * * * * * * * * * * * tº tº se tº
1 From Table
ending June 30, ióſ.
tenay,
5.
pp. 34 to 43, inclusive, of ‘Railway Statistics of the Dominion of Canada for the year
RAILWAY MAIL PAY. 1503
* Ontario Government g
Governments and municipalities, to June 30, 1913.”
|. By provincial governments—Continued. . . . . By municipalities.
Subsidy a | Subscription | Subsid Subsidy Subscription
paid up. Loan, “...” i. paid up. Loan. to shares.
s18,680.00 • - - - - - - - - - - - - - - s = * * * * * s as as º ºr s sº = •,• * * * * * * * * * * * * • - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- 9,000.00 - - - - - - - - - - - - - - - • - - - - - - - - - - - - - - - * * * * * * * * * - - - - | * * * * * * * * * * * * * * * * * * * * * * * * * * * * - I - - - - - - - - - - - - - -
100,000.00 ---------------|--------------|---------------|---------------|--------------|-------------.
250,000.00 ---------------|-----------------------------|-----------------------------|-------------.
84,000.00 ---------------|-------------- $197,990. 43 $197,990.43 |............................
::::::::::::::::::::::::::::::::::::::::::::-- iió,000.00 ii.6,000.00".I.I.I.I.I.I.I.I.I.I.I.I.I.
50,918.00 ---------------|-------------- 500. 500.00 --------------i--------------
- - - - - - - - - - - - - ------------------------------- 20,600.00 20,600.00 - - - - - - - - - - - - - - - - - - - - - - - - - - - -
vi • * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * : * * * * * * * * * * * * * * 322,500.00 322, 500.00 - - - - - - - - - - - - - - - - - - - - - - - - - - - -
*** […]…]…]…l…l…
...........................................[… i5,000.00 i5,000.00 |.....I.I.I.I.I.I.I.I.I.I.I.
40,000.00 ---------------|-------------- 4, 000. 00 4,000.00 --------------|--------------
255, 571.00 ---------------|-------------- 40,000.00 40,000.00 --------------|- - - - - - - - - - - - - -
1,072,800.00 |...............l.............. 50,000.00 50,000.00 --------------|--------------
641,575.25 ---------------|--------------|---------------|-----------------------------|------........
(*) ---------------|-------------- 20,000.00 20,000.00 --------------|- - - - - - - - - - - - - -
1, 194,129.46 |........ -- - - - - -!------------. 72,000.00 72,000.00 - - - - - - - - - - - - - - $200,000, 00
*### }~ - - - - - - - - - - - - - - - - - Y- - - 572, 500.00 464, 761. 29 - - - - - - - - - - - - - - - - - - - - - - - - - - - -
y ºvve
. 1, 479,000.00 ---------------|--------------|---------------|---------------|-------------- 42,500.00
360,076.8% ---------------|--------------|---------------|---------------|--------------|--------------
472,500.00 |..I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.I.
727,000.00 || $1,176,956.00 |.............. 25,000.00 25,000.00 771,644, 62 |- - - - - - - - - - - - - -
"99, 192.08 ------------------------------------------------------------------------- 325,000.00,

* guarantee bonds, 318 miles at $20,000 per mile.
* Amount paid for 6,793,014 acres land relinquished by company.
1504;
RAILWAY MAIL PAY.
Statement to aid, gramted and paid to railways by • ,

By Dominion Government. | By provincial governments.
NO Name of railway. * . . .
Subsid: Subsidy Loan Name of ; I
grante paid up. • Province, grantèd.
42 Credit Valley------|--------------|--------------|-------------- io--------- $531,000.00
43 Fredericton.-------|--------------|--------------|-------------- New Brunswick. 230,000.
44 Guelph Junction...] $51,200.00 $46,000.00 |.............. Ontario---------|--------------
45 Guelph&Goderich-l--------------|--------------|--------------|----- do-----------------------.
46 Lindsay, Bobcay- 185,173.06 185,173.06 ||--------------|----- do---------- 52,500.00
geon & Ponty- - - -
pool. º
47 Manitoba & North-l--------------|--------------|-------------- Manitoba. ------|-------------.
4. Western. - -
48 || Manitoba & South I----------------------------|--------------- * * * * * do---------- * - - - - - - - - - * * * *
West Coloniza- -
tion.
49 Montreal & Lake 41,280.00 41,280.00 |- - - - - - - - - - - - - - Quebec.......... 87,750.00
Mºus-l *... Ontar 100,000.00
50 OIlúT69, wº- Iltaſlo. - - - - - - - - 00, º
W3. } 192,000.00 | 192,000.00 |.............. (3.* * * * * * * * * * 182,210.00
51 || Nahusp & Slocan... 121,600.00 117,760.00 |.............. Bºh Colum- --------------
- 18.
52 New Brunswick-----------------|---------------------------- New Brunswick. 76,000.00 ||
53 New Brunswick & 1--------------|--------------|------------------- 0- - - - - - - - - - 575,000.00
Canada. -
54 New Brunswick l--------------|--------------|--------------|----- do---------- 413,000-00 |
Southern.
55 Nicola, Kamloops 300,800.00 300,800.00 --------------|------------------|--------------
& Similkameen. -
56 Nº. Colomi- 355,200.00 355,200.00 . . . . . . . . . . . . . . Quebec.......... 96,000.00
Z3UlOſl. -
57 Ontario & Quebec. 196,000.00 196,000.00 |.............. Ontario---------|--------------
58 3. Mº. - 202,926.50 202,926. 50 |... ----------- 3. sº s = s. 1; ; 92
59 awa, Northern ntario. -------. 50,000.00
& Western. } 950,000.00 | 821,009.29 |.............. {3. - * * * * * * * * 1,316,389.iš
60 Saskatchewan & !--------------|--------------|-------------- Manitoba.... ---|-------.......
Western.
61 Shuswap & Oka- 163,200.00 163,200.00 --------------|------------------|--------------
nagan. -
62 St. John Bridge & |--------------|-------------. $433,900.00 | New Brunswick. $5,181.81
Ry. Extension. -
63 St. John & Maine..!--------------|--------------|--------------1----. do. . . . .----- 880,000.00
64 St. Lawrence & |--------------|--------------|-------------- Ontario. ---------------------.
Ottawa.
65 St. Marys & West- 67,709.00 67,709.00 - - - - - - - - - - - - - -|-- - - - do. . . . .-----|-------------.
ern, Ont. * -
66 sº Stephen & Mill- 14,848.00 14,848.00 - - - - - - - - - - - - - - New Brunswick. 13,920.00
OWI).
67 Tillsonburg, Lake 158,871. 48 117,431.48 - - - - - - - - - - - - - - Ontario... -----. 38,564.00
Erie & Pacific. - --
68 Tobique Valley--- . 134,016.00 134,016.00 |... . . . . . . . . . . . New Brunswick- 70,000.00
69 Tºº Grey & 14,656.00 14,656.00 - - - - - - - - - - - - - - Ontario... -----. 375,282.00
IUICe. --
70 Vancouver and 61,760.00 61,760.00 --------------|------------------|--------------
Lulu Island.
71 Wº: Ontario Pa- 60,000.00 60,000.00 |- - - - - - - - - - - - - - Ontario. --------|--------------
CITIC. -
72 Cape Breton... . . . . . . . . 196,800.00 196,800.00 - - - - - - - - - - - - - - Nova Scotia. . . . . 99,200.00
73 || Caraquet. . . . . . . . . . . . . . 224,000.00 224,000.00 - - - - - - - - - - - - - - New Brunswick. 180,000.00
74 º & Grenville --------------|----------------------------|------------------|--------------
Illil). - - - --
75 centrºl ºrio, in- 204,893. 49 204, 893.49 - - - - - - - - - - - - - - Ontario...------ 278,000.00
CIUICIII] g. -
76 M.; Ry. & 30,720.00 30,720.00 - - - - - - - - - - - - - - - - - - - do. . . . . ----- 19, 149,39
Mining Co.
77 | Colchester Coal & Ry. 12,800.00 12,800.00 --------------|------------------|--------------
O.
78 Cº. Nest Southern l--------------|----------------------------|------------------|--------------
Illi ).
79 Cºnd Ry. & 44,800.00 39,850.00 - - - - - - - - - - - - - - Nova Scotia- - - - - 184,450.00
!oal Co. * -
80 Dominion Atlantic, in- º a
cluding:
81 Wilso: & Annap-] 1, 193,369.00 1, 193,369.00 ||----...-------|------------------|-------------.
OILS, - ..
82 Cornwallis Valley.. 44,800.00 44,800.00 |.............. Nova Scotia..... 44,800.00
83 Western Counties--| 500,000.00 500,000.00 |. . . . . . . . . . . . . . . . . . . do..........| 679, 197.45
84. Midland of N. S. - - 399,060.40 399,060.40 |- - - - - - - - - - - - - - - - - - - do---------- 185,600.00
85 | Eastern British Co- |--------------|--------------|--------------|------------------|--------- -----
lumbia (nil). • -
86 | Elgin & Havelock. - - - - 182,652.82 | 182,652.82 |.... ------| New Brunswick. 107,500.00
1 Includes used from rails.
x *
RAILwax. MAIL pay.
Governments and wimmicipalities, to June 30, 1913–Continued.
1505

By municipalities.
Subsidy
paid up.
Loan.
subscription
to shares.
:
| By provincial governments—Continued.
* subsidy | ~ subscription Subsid
paid up. Ioan. . to shares. granted.
l. $531,000.00 |.............. * ,< * * * * * * * * * * * * * $1,085,000.00
, “ 230,000.00 * * * * * * * * * * * * * * * : * * * * * * * * * * * * * * 80, º
.........................................] I’ 31,000.06
52, 500. 00 'l - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 73, 000.
* * * * * * * * * * * * * * * : - - - - - - - - - - s = * - * * * * * * * * * * * * * * * }. ' 215,600.00
---------------| $900,000,00:--------------|---------------
87,750.00 l....-----------|--------------|---------------
100,000.00 |...... tº sº as s = * * * * * * * ------------|---------------
182,210.00 |.............. *... as s a s m = w is s sº a s = * , 5,300.00
& ſº gº tº gº º dº sº ſº sº º sº º dº is 647,074.00 -----------------------------
76,000.00 |...............|… 23,000.00
575,000.00 ---------------|-------------- 47,500.00
413,000.00 |...............]..... tº stºº & a tº ſº * * 3,000.00
96,000.00 |.......... * * * * *, *, * = • * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * : * * **- as sº sº a s sº * * * * * 52,500.00
138,884.92 ---------------|-------------- 3,000.00
50,000.00 ---------------|-------------- 150,000.00.
1,192,672.58 |---------------|----- * * * * * * * * *, 101,000.00
* * * * * * * * * * * * * * * * g e e s is sº as sº we s tº ºn tº gº sº º ºs s a s is se s tº º sº º sº º 10,000.00
5,181.81 |.......----------------------|---------------
880,000.00 |.....------- $300,000.00 - - - - - - - - - - - - - - -
is as sº ºn tº º sº, sº sº, º is sº º ºs º it * * * * * * * **, sº tº sº- tº sº tº sº sº. ºº & 8 º ºs º ºs ºs - e º & tº tº * * * * 80,000.00
13,920.00 ---------------|--------------|---------------
38,564.00ſ........... * = s. *, * = • * * * * * * * * * * ** 75,000.00
70,000.00 ---------------|--------------|- -------------
375,282.00 ---------------|-------------- 988,000.00
* * * * * * * * * * * * * * * * : * * * * * *s…]...----------. 25,000.00
99,200.00 -...- …------ sº sº. º. º ºs º – sº sa º ºs º º ºs º ºr 10,000.00
180,000.00 |--.............}. ----. is as sº * * is sº tº sº. As ºn a sº e º ºs º ºs e a s = *
278,000.00 |......... -- * * * * * * * * * * * * * * * * * * * 93,500.00
- 19,149.39 *, * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ~ *
178,650.00 |---------------|--------------------- tº ºn is tº * * * *
* * * * * * * * * - º *
* : * * * * * * *à oðl..............].............I’āīāšč0
675,137.3;[.............. • * * * * * * * * * * * * * #$$.
,510.40.]---------------|--------------|.... 36,000.00
--------….:*::::. .. <----. #. -----------4--------------
* * * * * * * * * * * * * * *
sº º sº sº, sº º & sº sº ºr sº sº sº sº tº
As º gº as tº gº as sº º is e º ſe is ºw
e sº sº º ºs º ºs e º ºn ºf s is sº º
s & e º sº is sº sº sº gº as s º is a
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
* * ~ * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
** * * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
gº tº e º sº tº tº º its tº º e º 'º
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
** * * * * * * * * * * * * *
'• * * * * * * ~ * * * * ~ *
as ºn º ºs as is sº gº ºn ºf a sº * *
--------------
as º dº º ºs º ºs º sº sº º º sº º
*I sº º ºs ºn sº ºf sº * * * * * *
* * * * * g sº sº sº gº º sº gº º
As º ºs º gº gº as sº as ºs sº sº sº tº
* * * * * * * * * * * * * **
s: º ºs e º sº s sº tº dº is sº is sº
s sº nº gº ºs º gº sº sº sº º sº º &
sº ºr gº sº sº us as sº e º e º mº sº
* * * * * * * * * * * * * *
* * * * * * * * * * * * = 4s
as sº tº a sº e º sº ºn a º sº sº tº
sº º is º ºr ºf s sº tº º sº º sº sº.
* * * *s sº ºn s ess º ºr sº sº sº º
* * * * * * *e as * * * * * *
* * * * * * * * * * * * * *
* * ºr 4-, º 'º - ºr = <= * * * *
* * * * * * * * * * * * * *
* Aº tº 4-3 tº º ºi º º ºi º ºr E *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * & º º º º E * * * * * *
sº s sº sº, sº sº s tº sº as sº *s sº sº.
* * * * * * * * * * * * * *
sº ºr sº sº º ºs º º sº a sº sº * *
* * * * * * * * * * * * * *
* * * * * * * * sº º sº º º ºs
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * > * > *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *-
* * * * * * * * * * * º ºs e
* * * * * * * = * * * * * * *
as ºs as s sº as º. ºf sº gº tº sº sº sº
* & ºr º º ºr ºr ºl ºf tº º sº & &
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
sº as gº ºs s as º is º ºs º º is is
& ſº tº gº sº º ºs º ºs & sº is is ºw
s sº a se is is sº is s is e s = s.
a. * * * * * * * * * * * * *
as as as tº sº tº sº * * * * * * *
s: º sº e º ºs º º ºs & & sº is &
tº gº º is sº sº e º & sº * * * *
* * * * * sº tº is sº sº tº º dº tº
a sº sº, º ºs e º sº tº sº * * * *
• * * * * * * * * * * * * *
* * * * * *s s sº e ºr is # * *
* = * * * * * * * * * * * *
s- sº sº s ºs = e º sº tº e º º sº.
s = * * * * * * * * * * * *
sº s = s. * * * *s a # * * * *
as sº sm ºs s. sº sº º sº tº * * * *
• * * * * * * * * * * * * *
s = < * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * sº * * * * * * * *
• * * * * * * * * * * * * *
as a º s a º ºr * * * * * * *
e = * = * * * * * * * * * =
a s = * * * * * * * * * * *
we is tº * * * * * * * * * * *
a. * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * tº wº
s s a tº a sº ºn e º is tº º sº º
• * * * * * * * * * * * * *
* * * * * * * * = & sº º * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
1506
RAILWAY MAIL PAY.
Statement of aid, granted and paid to railways by:

1 Under construction.
By Dominion Government. By provincial governments.
NO Name of railway. Subsid - Subsid N f Subsid
• * UlDSIOly. ubsidy n §ºlò O ubsid
i. paid up. Loan. Province. - .
87 sº & Nanaimo $1,115,440.00 si, 115,440.00 --------------|------------------|--------------
88 Essex Terminal--(nil) --------------|--------------|--------------|------------------|--------------
89 Fººton & Gran 104,996.04 104,996.04 |... -----------|------------------|--------------
6.
90 Grand Trunk, includ- |............. ---............ $15,142,633.33 ||------------------|--------------
Ing:
91 Beauharnois Junc- 62,400.00 62,400.00 |.............. Quebec. . . . . . . . . $179,073.00
tion.
92 Brantford, Norfolk|......... -----|--------------|-------------- Ontario. . . . . . . . . 68,000.00
& Pt. Burwell.
93 Buffalo & Lake --------------|--------------|--------------|----- do------------------------
Huron,
94 Cobourg, Blairton ----------------------------|----------- * - - - - - - - do---------- 18,740.00
Marmora.
95 Grand Trunk, Vic- "500,000.00 500,000.00 --------------|------------------|--------------
toria Bridge.
96 Grand Trunk, Geor-l--------------|--------------|-------------- Ontario. ----.... 336,000.00
#. Bay &
lake Erie.
97 Grand Junction, 21,888.00 21,888.00 --------------|----- do---------- 224,660.00
Belleville & N. - sº •
Hastings. **.
98 Owen So un d 39,744.00 39,744.00 --------------|----- do------------------------
Branch. -
99 Hamilton & North --------------|--------------|--------------|----- do---------- 565,020.00
Western.
100 London, Huron & !--------------|--------------|--------------|----- do---------- 178,630.00
& Bruce.
101 Midland, Ontario --|----------------------------|--------------|----- do. --------- 168,350.00
102 Montreal & Cham- 103,600.00 103,600.00 |.............. Quebec. . . . . . . . . 150,000.00
plain Junction. -
103 Northern----------|--------------|--------------|-------------- Ontario. -------. 196, 188.00
104 North Simcoe-----|--------------|----------------------------|----- do---------- 83,300.00
105 Northern Pacific 1,320,000.00 1,320,000.00 - - - - - - - - - - - - - - - - - - - - - -----------|--------------
Junction.
106 South Norfolk. . . . . 54,400.00 54,400.00 |...... . . . . . . . . Ontario. ... -----|--------------
107 | Toronto Belt Line-l--------------|--------------|--------------|------------------|--------------
108 Toronto & Nipis --------------|--------------|-------------- Ontario......... 105,212.00
Sing.
109 tº: Simcoe Junc-l--------------|--------------|--------------|----- do----------- 53,000.00
HOIl.
110 Victoria...--------|--------------|------- * = * * * * * * as sº º sm º ºs sº e s as as º is sº I º ºs e º º do----------- 312,000.00
111 Waterloo Junction. 32,800.00 32,800.00 |... . . . . . . . . ---|- : - - - do-----------|--------------
112 Wellington, Grey --------------|--------------|--------------|----- do----------- 241,276.00
& Bruce.
113 Whitby, Port Per- --------------|--------------|--------------|----- do. 94,957.59
ul grandºña 270,000.00
Tall —U8DºCl2, * * * * * * * * * * * * * * * * sº e y ºvve
Atlantic division. 282,355.20 282,355.20 |.............. º tº ºr tº º º ºs º ºs º is 200,000.00
115 Ottawa, Arnprior 932,512.00 932,512.00 . . . . . . . . . . . . . . Ontario... -----. 577,326.06
& Parry Sound. -
116 Central Counties...]--------------|--------------|--------------|----- do-------------------------
117 Pembroke South- 64,000.00 64,000.00 |.......... ----|----- do----------- 55,500.00
ۼn.
* 4,994, 416. 66 24,994. 416.66 -
118 Grand Trunk Pacific 2. i. Żóg, 299. 20 i.269,295.30 }10,000,000.00 & sº gº º ºs do..... . . . . . . . 376,320.00
119 Gulf Shore... - - - - - - - - - - 53,699.20 53,699. 20 - - - - - - - - - - - - - - New Brunswick. 41,950.00
120 | Ha Ha Bay 3. . . . . . . . . . 148,148.20 148,148.20 |............ -- - - - - - - - - - - - - - - - - - - I - - - - - - - - - - - - - -
121 | Halifax & Southwest- 819,874.93 819,874.93 |.............. Nova Scotia......] 3,899,605.00
ern, including. º
122 Central of N. S. & 653,776.00 653,776.00 --------------|----- do-----------|--------------
N. S. Southern.
123 H a lif º x & Yar- 160,000.00 160,000.00 - - - - - - - - - - - - - - - - - - - do----------- 156,499.33
In Outh. *
124 Middleton and . . . 125,760.00 125,760.00 --------------|----. do----------- 96,000.00
Victoria Beach.
125 | Hereford.............. 170,560.00 170,560.00 - - - - - - - - - - - - - - uebec. ........ 103,000.00
126 Iºnes Ry. & Coal 627,000.00 368, 545.97 -----...------ Nova Scotia..... 272,000.00
O. - * * * *
127 intº of New 726,080.00 725,288,07 |.............. New Brunswick. 275,000.00
Illins W1CR. w
128 º Bancroft & 144, 000.00 144, 000.00 is tº gº tº º gº gº tº tº º ºs º ſº tº Ontario. tº sº tº º ºs º º sº 315, 000, 00
W8.
129 Kaslo & Slocan --(nil)-1--------------|--------------|--------------------------------|--------------
Paid under the “Implement clause” by Dominion Government.
RAILWAY MAIL PAY.
1507
Governments and municipalities, to June 30, 1913–Continued.

By provincial governments—continued. |
By municipalities.
subsidy
paid up.
º
Loan.
Subscription
to shares.
Subsidy.
- ;
Subsidy
paid up.
Loan.
Subscription
to shares.
* * * * * * * * * * * * * is nº e
" * * * * * * * * * * * * * * *
tº ºr º e º sº º is ſº gº ºn e º me •
68,000.00
565,020.00
178,630.00
168,350.00
150,000.00
* * *" º e º sº s = * * * * * *
• * * * * * - - - - - - - - -
• * * * s e a s = * s • * * *
- 53,000.00
312,000.00
241,276.00
94,957.59
270,000.00
200,000.00
577,326.06
'... º. º e º 'º e º - * * * * * * *
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
156,499.33
84,226.36
,000.00
275,000.00
135,000.00
s107,500.00
a ºn e º ºr es is ºr ºr e = * * * *
- * * * *
* * * * * * * * * * * * * * *
* * * * * * ºr it s º º sº ºr ºn as
* * * * *
* * * * * * * *
- * * * * * *s is tº e s - e.
* * * * * * * * * * * * * * *
* - -, * * * * * * * * * * * * *
• * * * * * * * * * * * * * *
- - - - ºr sº º ºs º ºs º ºs º 'º -
* - - - we as ºr we se s is sº * * *
- - - - - * * * * * * * - - -
- - - - - - - sº e º ºs e - - -
* * * * * * * * * * * * * * *
• * * * * * * * * * * * * * *
- - - - - * * * * * * * - - -
- - - - * * * * * * - - - - -
• * '• * * * * * * * * * * * *
- * * * * * * * * * * * * * *
- - - - - - * * * * * * * - -
• * * * * * * * * * * * * * *
• * * * * * * * * * * * * * *
- - - - - - * * * * * * - - -
- - - - - - s = * * * * * * -
- - - - sº ºn as sº e º a m - - -
- - - - - a as tº s = * * - - -
- - - - - as e º 'º s = - - - -
- - - - - - * * * * * * - - -
- - - a- - * * * * * * * - - -
- - - - - * * * * * * * - - -
- - - - - - * * * * - - - - -
- - - - - * * * * * * * - - -
- - - - * * * * * * * * - - -
- - - - * * * * * * * * * * *
- * - * * * * * * * * * * - -
- - - - - as s º ºr * * * - - -
-> * * * * * * * * * * * * ~ *
- tº º º ºr tº a tº e s tº º º º º
• * * * * * * * * = • * * * *
* * * * * * * * * * e º 'º - -
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
w is a sº as a sº e s is ~ * * *
• * * * * * * * * * * * * *
* ~ * * g is º ºs º is & tº º º
* * * * * * g º gº tº º ºs e -
• * * * * * * * * * * * * *
• * * * * * * * * * * * * *
* - & sº e º sº e º 'º e º º -
4 - - * * * * * * * * * * *
- - - - - * * * * * * * - -
- - - - ºr ºn e = * * > * - -
* * * * * * * * * * w is a º
* * * * * * * * * * * * * *
- - - - - - ºr * * * - - - -
- - - - - - a. s. s. a- - - - -
- - - - - - - - - - - - - -
- - - - - - - - - - - - - -
- - - e º ºs as an º' ºr w - - -
*- - - - - * * * * * * - - -
- - - - - - - - - - - - - -
* ~ * * * * * * * * * * - -
* - *- - - - - * * - - - - -
- we ºn tº º sº sº m, a - - - - -
- Y - - - - sº tº º ºr * * - - -
* @ º ºs e = * * * * * * * *
* * * * * * * * * * * * * *
* * * * tº e º e is ºn as a e -
* * * * * * * * * * * * * * *
* - e º ºs º ºs e & sº we s sº wº º
- - - ºr s ºs º ºs º ºs w w tº an º'
a sm º ºs e º sº gº ºr sº tº sº - a -
- - - - sº us tº * * * * * * - -
100,000.00
186,000.00
47,000.00
682,000.00
- - - - - as e º 'º - - - - - -
- - - - - e º ºs e º - - - - -
- - - - - * * * * * * - - - -
- - - - - tº tº sº º te º 'º - - -
88,874. 17
15,338.93
- - - - -e ºs º ºs º- + - - - - -
x - - - e º ºs e º ºs e º 'º - - -
- - - - tº e = e º e º - - - -
• * * * * * s as a s - As * * *
* * * * * * * * * * * * * * *
• * * * * * * * s w sº sº w w -
- - - - * * * * * * * - - - -
- - - - - - e º as
• * * * * * * s sº s ºr w - - -
85,500.00
599,805.00
311,500.00
144,870.85
21,774.00
- * * * * * * * * * * - - - -
100,000.00
186,000.00.
47,000. 00
000.00
- * * * * * * * * * - - - - -
- - - * * * * * * * - - - - -
- - - - * * * * * - - - - - -
... ea º e º a sº ºn sº e º - - - -
• * * * * * * * * * * * * *
* * * * * * * * * * * * * *
• * * * * * * * * * * * ~ *
• * * * * * * * * * * * * *
* * * * * as º ºs s tº ºw º' tº jº
- as us ºs ºf s e s = e º 'º - -
* as tº ºn a es º sº * * * * * *
* * * * * * * * * * * * * *
• ‘s e º s sº as s a sº * * ~ *
• * * * e s = * * * * * * *
* - * * * * * * * * * - - -
* * * * * * * * * * * * * *
* ~ * * * * * * * * * * * *
* * * * * * * * * * * * * *
- - - - - - as as s - - - - -
- - - - * * * * * * - - - -
- - - - - a - a - - - - - -
• * * * * * * * * - - - - -"
- - - * * * * *- - - - - - -
- - * * * * * * * * - - - -
• * * * * * * * * * * - - - A
* * * * e s sº as as we - - - -
- * * * * * * * * - - - - -
* * * * * * * * * * * * * *
• * * * * * * * * * * * * *
* * * * * * > * * * * * - ºr
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
• * * * * * * * * * * * * *
* * * * * * * * * * * * * -
• * * * * * * * * * * * * -
* * * * * * * * * * * * * *
* ºr * * * * * * * * * * ~ *
- - - - as a s = * * - - - -
• * * * * * * * * * - - - -
- * * * * * * * * - - - - -
* * * * * * * * * - - - - -
- - - * * * * * - - - - - -
- * * * * * * * * - - - - -
* - m = * * * * * - - - - -
• * * * * * * * * * * - - -
- - - * * * * * * - - - - -
- * * * * * * * * - - - - -
• * * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * -
1508
RAILWAY MAIL PAY.
By Dominion Government,
×
By provincial governments.
Statement of aid, granted and paid to railways by
*
No. Name of railway, - * * * * * * ~ * ~ * * * *** * * *-ºrº. - —
& Subsid Subsidy Loan Name of : *
E. paid up. R Province. granted.
130 Kent Northern, and ... I $58,334.27 | 1858,334.27 |.............. New Brunswick. $135,000.
131 sº 22,400.00 22,400.00 |................... 0- - - - - - - - - - 21,000.00 |
doned). ; 7 ;
132 Kettle Valley........... 353,709.92 || 353,709.92 |.............. British Columbia 675,000.00
133 º* embroke **, vvve Y 48,000.00 ||--............ Ontario......... 456,493.00
134 || Kiondike Mines.......| 197, 184.00 | 197, 184.00 --------------|------------------|--------------
135 Pºption (aban- 11,200. ,200.00 --------------|------------------|--------------
OneCl). - - -
136 tºº Erie & Detroit 571,851.00 571,851.00 |.............. Ontario......... 83,000.00
IWer. -
137 London & Port |..............!..... * * * * * * * * * * * * * * * * * * * * * * * * | * * * * * * * * * * * * * * * * * * | * * * * * * * * * * * * * *
* ... • , Stanley.
138 | Liverpool Milton: 32,000.00 32,000.00 --------------|------------------|--------------
Halifax & South --
eStern). i’
139 Lotbinière & Megantic. 96,000.00 96,000.00 . . . . . . . . . . . . . . Quebec. . . . . . . . . 126,994.00
140 | Manitoba Great North-l----------------------------|--------------|------------------|--------------
ern (nil). -
141 Maganetawan River...] 3,552.00 3,552.00 -------------- Ontario. . . . . . . . . 10,000.00
142 Mºrº gºal. 0,700. 40,700.00 ||-----......... Nova Scotia.-- - - 39,788.00
way & Power Co.
143 || Massawippi Valley. . . . 5,376,00 5,376.00 - - - - - - - - - - - - - - Quebec - - - - - - - - - 5,000.00
144 Mºa of Manitoba --------------|--------------|--------------------------------|--------------
Illl). - -
145 || Minudie Coal & Rail- 18,544.00 18,544.00 --------------|------------------|--------------|.
way Uo. } .
146 | Montreal & Atlantic...l........... ---|--------------|-------------. Quebec. ........ 444,000.00
147 Lake Champlain & !--------------|--------------|--------------|----- do---------- 250,280.00
St. Lawrence
Junction. -
148 || Montreal & Province 58,560.00 58,560.00 ||----------.... Quebec. . . . . . . . . 231,122.00
Line. t -
149 | Montreal & Vermont --------------|--------------|--------------|------------------|-------------.
Junction (nil). *
# #; & ºº:: 102,400.00 101,600.00 |.............. New Brunswick. 96,000.00
OTTISS0 ©rnle & 1- - - - - - - - - - - - - - - - ------------|- - - - - - - - - - - - - - - - - - - - - - - - - .* * * * * * * * * * * * * ** - - - - - - - -
#;"º *
152 | Napierville Junction...: 173,440.00 173,440.00 |.............. Quebec----------|--------------
153 | Nelson & Fort Shep- |--------------|--------------|-............. - 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
pard (nil). - -
154 | New Brunswick Coal; 190,400.00 190,400.00 |.............. New Brunswick. 224,000.00
. UO. : - • *
155 Nº. * Bºnsº #. 113,440.00 113,440.00 |..............|... --do----------- 99,708. 90
T 1 in Ce War
Islan º
156 | New Westminsterºl--------------|--------------|--------------|------------------|-------------.
Southern (nil). s
# Nº. śg §: 27,616.00 27,616.00 ||-------------- New Brunswick. 16,200.00
Osponsing 191S- |- - - - - - - - - - - - - - i- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
sing (nil). -
159 || Northern New Bruns- 86,528.00 86,528.00 |--------------|------------------|--------------
wick & Seaboard.? g
160 | Ottawa & New York. - 262,384.00 262,384.00 '.............. Ontario......... 35,000.00
161 º Ry, & 23,712.00 23,712.00 -------------- Quebec.......... 25,667.00
uarry Co. *
* - 162 | Pontiac & Renfrew. . . . 13,600.00 13,600.00 --------------|----- do----------- 17,433.60
163 Qºre Bridge & Ry. 374,353.33 374,353.33 ||--...---------|----- do----------- evy says:-
O. -- -
164 Qº. º Light & 96,000.00 96,000.00 |............. ºn I gº © tº º ºs do----------- 306,945.50
OWer UO.
165 - 541, # ; # # ; is gº ºn sº º ºs º gº º sº ºn gº ºn tº & º ºs º º 3. tº º g º º se tº º ºs º º }: § ; §
166 *-ºp rºws tº Wºº º s g º dº sº sº tº sº tº se is sº as se -----ClO-- - - - - - - - - - Sºy Sºx's
17|Qº 1,453,635.00 | 1,261,463.50 |.............. -----do----------- 2.Édº
On D. - - -
168 Quebec & Saguenay "...# 132,633. 60 || 133,633. 60 - - - - - - - - - - - - - -|------------------|--------------
169 °g. Nº. & 500,386.25 500,386.25 |.............. Quebec. - - - - - - - - 219,000.00
- Southern, including. •
170 Üß gº tºº." | *.*.00|…}… do----------. nºis.”
ast Richelieu : , , , * .
- Valley. -
171 South Shore....... 296,998.38 296,998.38 |... . . . . . . . . . . . . . . . . do.. ... . .276,645.00
172 | Red Mountain.... § * = gº ºr e º gº sº sº sº gº tº a º sº tº e º sº gº º sº e º 'º is sº tº !--------------|--------------------------------
173 | Rutland & Noyan-(nil)|--------------|--------------|--------------|------------------|--------------
174 ś2. ... 48,442.88. . . . 48,442.88 |--------------|------------------|--------------
175 | Salisbury & Albert.'...] * *29,665.45 | * * 29,391.01 .............. New Brunswick. 455,000.00
176 Schomberg & Aurora-- 48,000.00 46,144.00 |..............l. -----------------'--------------
1 Includes used iron rails. 2 Under construction,

RAILwax MAIL pay.
1509
By municipalities.
jºr
| Subsidy.
| paid up.
|Subscription
to shares.
Subsidy
paid up.
Loan.
Subscription
to shares.
| . . .3135,000.
- 21 000.00
p
| 200,000.00
, 456,493.00
$ as a s = * * * * * * * * * * * *
* * * * * * * * * * * * * * *
5,000.00
* * * *...* * * * * * * * *
315,891.89
280.00
--~,
• * * * - - - - - - - - - - -
* * * * - w we ºn º ºs e º - a- -
•e e s - - - we ºr se is a s as an º-
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * - -
00 |
4 -
, ºs = • * * * * * * * * * * * ~!'
* ** * * * * * * * * * * * *
* * * * * * * * * * * * * * *
* s is as sº as as * * * * * * * *
As in sº tº as a ºn tº e º º ºs e º ºs
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
• * * sº º is - - ºr sº e º ºs e e
, sº ºf s is ºr e º 'º' is ~ * is s ºn as
• * * * * * * * * * * * * * *
- *- As s sº as as - - - - sº as as A-
* * * * * * * * * * * * * * *
• * * is s as as a - * * * * * *
- a mº as * * - - - - - s a tº º
- * * * * * - - - - - a sm * *
- * * * * * - - - *, * * * * *
• * is s as a dº e = * * * * * *
- * = * - - - - - - - - - - -
* * * * * * * * * * * * * * *
- * * * * * - - - - - as e s m -
- * * * * * - - - * * * * * -
* * * * * * * * * * * * * * *
• * * * * * * * * * * * * * *
- * * * - - - - - - - tº 4- - -
* * * * * * * * * * * * * * *
35,000.00
306,945.50
1,076, 123. 14
947,199.25
2,368,816.88
* * * * * * * * * * * * * * *
* * * - - - * = a m s = - -
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
* * * * * * - - - - * * * * *
* * * * * - - - - - ºr e = * *
* * * * * - - - - - * * * * *
* * * * * * * * * * * * * * *
wº, º sº e º 'º - w w as º sº a sº tº
* * * * * * * * * * * * s e ºs
* * * * * * * * * * * * * * *
• * * * - - - - - - * * * * *
* * * * * * - - - * * * * * *
we w tº s a wº we we ºr º e º 'º, º a
* * * * * * * * * * * * * * *
* * * * * * - * * * * * * * *
• * * * * s s sº e º 'º as e = *
* - sº e as ºs e s - - - as º ſº
- - - sº tº dº ſº e - © º 'º & tº
* * * * * * > * * * * * * *
4- a tº as ſº * is sº º sº & ºl ºn tº
- - - sº sº gº tº 4- - - - - * *
- * * * * * * * * ~ * * * *
* * * * * * * * * * * * * *
- - - - is as sº - - - - - as s
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
- - - * * * * - - - - - as *
* * * * * * * * * * * * * s
* * * * s sº me • * * * * * *
*, * * * * * * * * * * * * *.
- - - * * * - - - - - - º ºs
- * * * * * * * - - - * * *
- - - - e s - - - - - - s s
- - * * * * * - - - - sº sº sº
- * * * * * * * * - - - sº º
- - - a s = - - - - - - sº sº.
- - - * * * * * - - - * * *
- - - - as sº se - - - - - sº *
* * * * * * * * * * * * * *
- - - * is sº tº - - - - - * *
- * * * * * - - - - - º º is
- - - e º 'º - - - - - - tº *
• * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
* - - - - - ſº is sº dº - - - -º º
* * * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
* * - - - - - as a dº nº - - - -
* * - - - - as s as a º ºr - * *
* * * * * * * * * * * * * * * *
* - - - - * * * * * - - - - -
* - - - - - * * * * - - - - ºr
* - - - - - is as a -- - - - - -
- - - - - - * * - - - - - - -
* - - - - - - * *- - - - - -
* * * * * * * * * * * * * * *
* - - - - - * s • * * * * * *
- - - - - - sº tº º - - - - - sº
is * * * * * * * * * * * * * *
tº º ºs - - - sº tº sº, sº dº ſº wº º e
* is sº * * * * sº gº e º sº, º ºr
s sº * * * * * * * g. sº sº ºr - tº
* * * * * * * * * * * * * * *
* * * * - - - - * * * * - - -
* * *- - - - - - - - - - - - -
s is a - - - - - * * * * - - -
* * * * - - - ºr s = * * - - -
• * > - - - - - e s - - - - -
sº a - - - - - - - - - - - - -
s = ** - - - - * * * * * - - -
* * * - - - -, * * * * * - - -
* * * * - - - * * * * * - - -
* * - - - - - & sº º tº ºn 4- - -
* * * - - - * * * * * - - - -
* * * - - - - * * * * - - - -
70,000.00
- * * * * - - - - - * * * * -
* * * * * * * * * * * * * *
* * * * * * * * * * * * * * *
* * is s as ºn e º is as e s a s
tº ſº tº * * * * * * * * is is as
• e º ºr a tº - sº º ºs e º Aº ‘e
* * * * * * * - & º ºs as tº º
- * * * - - - - - - sº se - -
* * * * * - - - - * * * * *
• * * * * - - - - - as as as e-
* * * * * - - - - * * *s ºr -
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * s = * *
* * * * * * * * * * * * * *
- sº * - - - - - - - + - - -
* * * * - - - - - - sº sº a -
* * * * * * * * * * * * * *
- * * - - - - - - - - - - -
* * * * * - - - * * * * * *
* * * * - - - - - e s = - -
* * * * * - - - - * * * * *
* s = * - - - - * * * * * -
* * * * * - - - tº ºr tº * * *
- a tº e - - - - - -º-º- - -
• * * * * * * * * * * * * *
* * * * *- - - - - * * * * *
* * * * *- - - - - & & tº * *
e is sº e - - - - - * * > * -
* * * * - - - - - * * * * -
- * ºr me * is © & Cº - E * *
- * * * * * * * - - - sº as sº
* * * * * * * * * * * * * *
- * * * * * tº wº º' - ºr º e go
* * * * * * * * * * * * tº sº
• * * * * * * * * * * * e sº
- - * * *s s as * - - - - ºr ge
* * * * * * * * * * * * * *
- - - s = * * * - - - - sº sº.
- - - ºr ºs s. sº - - - - - * *
• * * * * * * * * * * * e sº
- - - ºr ºs ºf a - - - - * * *s
- - - - * * * - - - - - - sº
* * * * * * * * * * * * * *
- - - e = * * - - - - - e. e.
- - - - - - - - - - - tº m ºn
- - - ºn a s = - - - - -e. As sº
- - - sº e s - - - - - * * s
- - - - e s - - - - - - tº s
- - - - e º - - - - - - * *
- - - - e s - - - - - * * *
- - - * * * * - - - - * * *
- - - - * * - - - - - - - -
- - - * * * * - - - - - us s
- - - an ºr * - - - - - * ~ *
- - - -a < * * - - - - - * *
- - * * * * * - - - - - * *
- * ~ * * * * - - - - - - -
- - - * * * * * - - - - - se
* * * * s ºn tº a º ºn tº ea º &
- * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *

1510
RAILWAY MAIL: PAY.
Statement of aid, granted and paid to railways by º .

By Dominion Government.
By provincial governments...}
NO Name of railway. - I.
. Subsidy Loan Name of . Subsidy ||
granted. paid up. ~. º Province. granted. :)
177 | Stanstead, . Shefford --------------|--------------|--------------|------------------|-------------il
and Chambly (nil). * $ ' > ...;
178 St. Clair Tunnel. - - - - - - $375,000.00 || $375,000.00 --------......]-...-----...........|......------...}
179 St. ºnce & Adi- 149,481.60 149,481.60 |.............. Quebec. ........ $70,400.00;
TOD1018) CR. - , t ,
180 || St. John and Quebec 1...] 174,120.96 174,120.96 |--------------|--------------- •--|------------.
181 St. Martins............. * 83,612.54 ? 83,612.54 |.............. New Brunswick || 145,600. ū‘
182 She * Valley 173,120.00 173,120.00 --------------|--- - - - - - - - - - - - - - - - - - - - - - - - - - - - --l
183 | Sydney & ‘Louisburg | 89,600.00 | 87,808.00 |.............. Nova Scotia.....| 87,808.00
Tº (Dom. Coal Co.). -
184 TheSSalon & Northern 6, 112.00 6, 112.00 --------------|------------------|--------------
Ontario.i
185 | Temiskaming & |--------------|--------------|--------------|------------------|--------------
Northern Ontario -
(Ontario Govern- ,
ment Ry.). Queb 362,250 ool
tº UlèbéC. --- - - - - - - * - • ****
186 Temiscouata.-- - - - - - - - - - 645,950.00 645,950, 00 |.............. \Mew Brunswick. 6. 000.00
187 | Thousand Islands. - - - - 61,200.00 29,840.00 |.............. Ontario. ........!----------- * --|
188 || Toronto, Hamilton & 57,600.00 57,600.00 |... ------------|----- do-----------|--------------
Buffalo.
189 | Vancouver, Victoria & |--------------|--------------|--------------|------------------|--------------
Eastern (nil). * .
190 | Victoria & Sidney.....]. . . . . . . . . . . . . . . . . . . . . . . . . . . .]-------------- British Colum- 124,135.00
18. ->
191 | Victoria Terminal Ry. --------------|--------------|--------------|--------------------------------
& Ferry Co. (nil).
192 wºmencounco • - - - - - - - - - - - - - 1 - - - - - - - - - - - - - - I - - - - - - - - - - - - - - 1 - - - - - - - - - - - - - - - - - - I - - - - - - - - - * * * * *
IIIl). - - • 4
193 York & Carleton....... 32,896. 00 32,896.00/-...------------ New Brunswick. 25,247.00:
Total.----------- 96,378,272. * 94,729,562. * 576,533.33].................. 35,478,319.89 |
1 Under construction. -
:
Railway MAIL Pax.
1511
unts and municipalities, to June 30, 1913–Continued.
| , By provincial gºvernments—continued. º
By municipalities.
* 3-
Loan.
Subscription
to shares.
Subsidy
paid up.
Loan.
Subscription
to shares.
" **
* *
tº its º is ſº tº gº º sº º ºs º e º sº
… •
• * * * * * * * * : * * * * * * * *
s e > *-* * * * * * * * * * *
‘s w = e = * * * * * * * * * * *
362,250.
$70,400.00 |.
145,600.00 |
00. .
00
• * * * * * * * * * * * * ~ * |
# ºr sº gº is sº gº tº is s tº sº tº
nº sº sº ºr ºr sº sº as ºr as * * * * *
g sº ſº, e as º ºr is as as a sºr ºn tº sº.
º, sº gº & º g º ſº gº is g º is tº s
A. is a s = e s = − = • * * * * *
ºf my & tº e º ºs sº gº as sº tº ºr sº sº
tº gº tº º is tº ſº tº sº tº is sº tº & gº
* * * * * * * * * * * * * * *
'• * * * * * * * * * * * * * *
sº sº me tº º ºs sº wº º ºs tº s sº s ºs
• * * * * * * * * * * * * ~ *
* * * * is ºs ºs ºn e º sº s is ºs ºs
e gº ºn we s sº sº º ºs s = e s sº sº.
tº ſº gº tº º gº ºr & sº is º dº sº gº
ge & ſº ºn tº dº y º gº tº tº sº a tº 4
tº gº ºs º ºs ºs º º ºs ºr ſº sº dº sº
tº zºº is º ºr sº is is gº as ºr º is tº
gº º sº gº ºs º ºx tº ºr * > & ºr º
* * * * * * * * * * * * * *
a. * * * * * * * * * * * * *
s s as ºs ºs ºf , s is ºs º Aº gº tº s
= * * * * * * * * * * * * *
gºs & gº tº sº dº º jºs & s. sº sº tº º
gºs Anga º ºr & sº sº is sº gº tº # = sº
* * * * * * * * * * * * * *
t
a s = * * * * * * * * * * *
• * * * * * * * * * * * * *
sº e s sº sº, ºr ºr s as sº as sº s sº
sº sº sº nº e º ºs sº sº ºn s = &m sº
* * * * * * * * * * * * * *
s: º gº gº ºs s = * * * * * * *
st sº sº gº ºf iº º ºr ſº wº sº sº, sº sº as
as tº gº tº sº gº º g º ºs º º ºr ſº g
as e º ºr sº tº e g º sº tº ºr gº ºn as
am tº s º ºs º is ºr sº * * * * is as
sº, º as -º as sº gº º ºs º a ¥ s is ge
s sº gº as sº is º ºs & sº e º ºs as is
tº º tº gº is º º gº gº tº tº sº & ºr s
<º sº º is ºr ºf w e º sº tº sº dº sº dº
sº gº tº º sº gº º ºs º is ºn tº e s sº
gº º ºs º ºs as sº as ºn e º is ºr gº ºf
-* * * sº dº sº gº ºn gº º is sº gº º sº.
sº tº ºr sº sº sº º sº sº sº º tº gº º ºs
* † = sº º sº sº as tº º sº º sº is ºr
* * * * * * * * * * * * * * *
sº gº is sº sº sº * * * * * * * * *
s ºr as ºs s is sº sº, sº ºr s = * * *
• * * * * s = ºr as we & s sº * *
sº º sº gº ºr ºn tº ºr & sº sº tº ºn tº ºr
a º ºr sm is as ºr as s as is nº is sº is
* * * * * * * * * * * * * * *
asº gº & sº nº sº º ºs º ºs º º sº tº dº
* * * * * * * * * * * * * * *
• * * * ~ * ~ * * * * * * * *
* * * * * = * * * ºr º º º ſº tº
* * * * * * * * * * * * * * *
sº s º º sº º gº sº º ºr s ºr gº ºf sº
• * * * * * * * * * * * * *
is ºs sº sº º ºs º ºs º ºr ºs º as sº
* * * * * * * * * * * * * * *
as ºs s sº gº sº gº is e s is ºn sº ºr
* * * *s ºf sº sº º ºs º ºs º ºs &
* * * * * * * * * * * * * *
* * * * * * * s sº *s ºr sº as sº
as tº º ºr gº º Aº ‘º & sº sº as º is
* * *-* - ºf tºº & 4.9 tº gº +º gº º gº
e-º º sº tº gº tº º ſº tº gº º ſº º ºr
& & sº sº * * * * * * * * * * *
* * * * * * * * * * * * * *
*
tº e º ºr ºs º ºr ſº sº gº ºf sº º tº
st & º sº as ºs s sº tº º is sº gº tº
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
& sº is tº as sº º sº º ºs º ºs º ºs
* * * * * * * * * * * * * *
* * * * * * * * * * * * > *E*
* * * * * * * * * * * * s &
* is sº s º ºs º sº sº sº * * * *
º gº tº º sº sº gº is ºr ºn as e º 'º
* * * * * * * * * * * * * *
* * * * * * * * * * * * * *
tº e º sº sº º º ºs ºs º ºs º gº tº
* * * * * * * * * * * * * *
º, º sº is sº * * * * * * * * *
33,449,985.16
j
$2,750,030.00
13,083,530.40
12,834,674.98
$2,404,498.62

1512 RAILWAY MAIL PAY.
Mr. LLOYD. The New York Central man ought to knew something
about Canada. -- - - . . .
Mr. PETERs. Mr. Chairman, is it not a fact that a majority of the
Canadian roads are subsidized by their Government? 2.
The CHAIRMAN. I can not answer that question, but I think they
are. Some of them are, I know. . .
Mr. PETERS. I think that is one of the reasons that they have been
so parsimonious in their payments on account of mail, because of the
large subsidies that have been granted the railroads in encouraging
their building and developing. I have understood that their post-
office department shows a surplus, and that this arrangement that
has been made to give the railroads increased pay was an experiment,
and I inferred that there was an implied promise to readjust later on.
I am informed that their surplus prior to last year was about a mil-
lion and a half dollars, and they were willing to give the railroads
one-half of that surplus, and they increased the railroads' pay ac-
cordingly. They had not paid the railroads amounts at all compensa-
tory with their service. There have been no adjustments for a num-
ber of years, and this adjustment was on account of taking on the
parcel post and to help the roads out, with a promise that if the sur-
plus from the post-office department should be increased and the bur-
dens of operation should be increased, there would be a further
adjustment. ^- - . . "
The CHAIRMAN. Do you see any differences of condition that would
prevent the careful consideration of what Canada has done in this
case in our study?
Mr. RowAN. There are large benefits they receive in Canada which
we do not receive in the United States. I know; for example, in
building the St. Lawrence & Adirondack road, the Canadian Gov-
ernment gave a subsidy of, I think, about $7,000 a mile. I am not
familiar with the subsidies that have been given to other railroads, but
they vary. It is pretty well understood that the Grand Trunk Pacific
that is putting through this wonderful road from one coast to the
other has been given very large guaranties in lieu of subsidies.
Mr. LLOYD. What is the cost per mile of the Grand Trunk to which
you refer? Do you know? .
Mr. RowAN. I do not know, Mr. Lloyd. They are building a road
up there in the wilderness, miles from everywhere else, and it will do
a great thing for Canada; it will develop the whole northern coun-
try, and it is a great venture for a railroad to undertake such con-
struction, and they can only do it with the help of the Government.
The Government up there is glad to help them, because they are go-
ing to benefit, because it is going to open up a country that has never
been opened up before. *-
The CHAIRMAN. Gen. Stewart, I infer from this that they only
have two units there in the handling of the mail service; that is, that
they only have a unit of 60 feet and a unit of 30 feet for distribution
service. What difference in conditions in the United States would
make it impracticable to apply only two units here?- The greater
volume of business, the greater number of trains?
Mr. STEwART. I inferred from the reading of the letters that, while
there is a difference in the size of the cars, the practical application o
the rates would reduce them to two units. --
RAILWAY MAIL PAY. 1513
The CHAIRMAN. That is what I understood. - !
Mr. STEwART. The full cars to be paid for at the same rate for a car
less than 60 feet, as has been provided for a 60-foot car; the same
for an apartment less than 30 feet as for a 30-foot car. The railroad
conditions, as well as the mail-service conditions, differ considerably
in the two countries. While I have not thought especially about
it, I should say offhand that we would find it a little more difficult
to adapt ourselves to fixed units of those sizes in this country on
account of the diversity of the mail service, the larger number of
trains that run over a road, and perhaps the volume of the service.
I think where you increase your frequency you are bound to decrease
the amount of mail that you can concentrate on a train, and it is our
policy now to use every train on a road that is available for mail
service where the patrons want the service.
The CHAIRMAN. In that connection is your policy toward concen-
tration of mail movement or rather toward distribution of mail
mºment—that is, breaking them up into more frequent move-
ments?
Mr. STEwART. At the present it is toward distributing and break-
ing it up, because we aim primarily to secure expedition. The public
demand is for mail on practically every train.
The CHAIRMAN. And that will always be so, undoubtedly, in the
mail service?
Mr. STEwART. I think so, because when the public has become
accustomed to a facility it is impracticable to withdraw it, and that
is a settled condition in this country. We can, I think, practice con-
centration of mails to some extent. .
The CHAIRMAN. By concentration of mails? -
Mr. STEwART. Yes. I believe that under the proposed plan there
is a certain amount of concentration that may be practiced econom-
ically by the department, and which would inure to the benefit of
the railroads as well, because wherever we could concentrate the
mails and utilize full cars, our disposition would be to do it, which
would lessen the requirements for equipment. I should say that
there are those main differences, as I think of them, between the
service in the two countries. 3. r
The practical operation under a space-basis plan would bring the
services a little nearer together.
The CHAIRMAN. But would the differences between the two coun-
tries affect at all the adoption of a policy as to a higher relative rate
for an apartment than for a full car? They are diametrically op-
posed in their action to your views on that, I notice.
Mr. STEwART. I noticed that. The theory on which they have
made a higher rate for an apartment car is not stated. I have at
different times mentioned the different conditions which I personally
thought might be taken into account as reasons for fixing a lower rate
for apartment cars. Whether those conditions exist in Canada in the
railroad world I do not know, and my suggestion to make a different
rate here is, of course, based upon the idea that the differences exist
here. * * -
The CHAIRMAN. And they might not have considered even these
same points in their conclusions. Dr. Lorenz, has anything occurred
1514 RAILWAY MAIL PAY.
to cause you to change your conclusion in reference to the overpay
or underpay of the railroads to-day? ,
Dr. LORENz. No, sir; nothing at all. I have tried to make it plain,
however, in my statement that I thought the railroads were somewhat
underpaid on a strictly commercial basis. I think it is obvious those
rates in Canada were not fixed on a commercial basis, because what-
ever difference of opinion there may be regarding costs, we are
absolutely certain that these rates mentioned would not pay the
operating expenses of railroads in this country for rendering mail
Service. -
The CHAIRMAN. That is, without subsidy? ar #
Dr. LORENz. Without subsidy? No. Irrespective of the question
of subsidy, the mere operating expenses.
The CHAIRMAN. Would not pay the cost of operation, 16 cents a
car-mile ! -
Dr. LORENZ. I mean the operating expenses of running of trains
and maintenance, etc. •
The CHAIRMAN. What is generally conceded to be the operating
cost, per car-mile, on a 60-foot car? Has that been determined by
the Interstate Commerce Commission?
Dr. LORENz. No, sir; because that would involve the separation of
expenses between freight and passenger which we have discussed a
great deal. I make that statement on this basis, that if you assume
that the passenger department is as profitable as the freight depart-
ment, you will get a percentage of expenses which you can apply to
the passenger revenue, and that for the United States, as a whole,
would give you about 17% cents operating expenses on a passenger-
train car-mile, which would be increased for the passenger depart-
ment if less profitable. It will be decreased if it is more profitable,
but as it is improbable that the passenger department of the country,
as a whole, is more profitable, I conclude that 17% cents is a minimum
expense. The Post Office Department found it to be a little higher
than that for the average passenger-train car, although they assumed
that the mail cars were somewhat less expensive because they did
not allow the mail car to participate in all the accounts as, for
example, traffic expenses. -
The CHAIRMAN. Do you think that the passenger revenue now
received by the railroads is a fair compensation to the railroads—
25 cents a car-mile on an average? I should say, is it your impres-
sion, for I do not suppose anyone has been able to come to an abso-
lute conclusion. -
Dr. LORENz. I would not like to express any positive opinion in
advance of that determination, which I hope will be made in the next
few years, after this question of the division between freight and pas-
senger expenses has been more definitely thrashed out.
The CHAIRMAN. That will take some years for determination?
Dr. LORENz. I think it will take over a year to compile the ex-
penses themselves; that is, they would have to allow a year to elapse
in order to have a year's statistics upon which to base a conclusion.
The CHAIRMAN. From the available information and from the
action of the various State railroad commissions, do you think that
a 10 per cent reduction of the passenger revenue of the railroads
for a determination in the fixing of rates for mail pay is ample pro-
tection to the Government? --
RAILwAY MAIL PAY. 1515
Dr. LoRENz. I think that is true. That is the point which I, ex-
pressed in my report, and I am still of the same opinion. I wish to
emphasize again, at the risk of emphasizing it too often, that any
rate which you name must always be taken into consideration in con-
nection with the method of authorizing the space. If you authorized
only the used space, it is obvious that the rate must be higher than
for the used and the empty space, just as you find the return for a
loaded car-mile in freight service is more than if you take the aver-
age for the loaded and . car-miles; so the rate is meaningless
unless you have the paragraph showing the method of authorization
right alongside with it. -
The CHAIRMAN. I would like to ask some of the railroad represent-
atives present, taking the three plans that have been suggested—the
three-unit plan suggested by Mr. Lloyd, the Lorenz plan, and the
departmental plan—which of the three, eliminating for the time
being the question of rates, in the method of ascertainment of the
service has the greater advantages?
Mr. BRADLEY. I will say it is hard to answer that question categori-
cally or offhand. I would say that the result reached by Dr. Lo-
renz's plan shows that he takes into consideration better the various
elements that are involved in the problem, but his plan would neces-
sarily be complicated in administration, because it associates itself
with the ascertainment of the average load per car. I think the sim-
plest of the plans is that suggested by Mr. Lloyd, as to the units, with
a flat rate for the car space, except as modified by the consideration
that we have spoken of between the retail measure for mail apart-
ment cars as compared with the wholesale measure for the full car.
The CHAIRMAN. Would not the adoption of the Lloyd unit mini-
mize the possibility of friction between the department and the trans-
portation company?
Mr. BRADLEY. I think just to the extent that the number of units
is reduced.
The CHAIRMAN. You think there will always be friction under any
plan between the the Government and the transportation company?
Mr. BRADLEY. I do not see how there can help but be.
The CHAIRMAN. Under any possible plan?
Mr. BRADLEY. Any j. plan; due to the fact that the au-
thorization of space depends upon discretion or opinion, and opinion
varies according to individuals.
The CHAIRMAN. True; but the Government has to initiate that
authorization, does it not?
Mr. BRADLEY. Yes.
The CHAIRMAN. Hence it must be left to the discretion of an indi-
vidual for that initiation? -
Mr. BRADLEY. Yes.
The CHAIRMAN. It would be an absolute impossibility for the rail-
road performing the service to designate what service they would
perform for the Government.
Mr. BRADLEY. I think the initiation should come from the Gov-
ernment.
The CHAIRMAN. Then, it has to come from a governmental repre-
sentative, so we are confronted with that on which we all agree is a
necessity. Criticism to that would not be applicable where it is an
absolute necessity for the performance of a duty or an activity.
1516 RAILWAY MAIL PAY.
Mr. BRADLEY. If you could only discover some rule by which the
unit furnished would be the same as the unit authorized the problem
might be solved, I think.
The CHAIRMAN. It seems to me you come nearer to the discovery.
of such a rule in Mr. Lloyd's suggestion where the department, rep-
resenting the Government, notifies the transportation company as to
its requirements, You are absolutely sure of getting a credit for
every performance of such a requirement, assuming that the rates
that might be paid are fair rates. However, elminating at this par-
ticular phase of the discussion the question of rates and assuming'
that the rates will be fair, as the purpose will unquestionably be to
make them fair on the part of the Government, if it can be deter-
mined and demonstrated what would be fair rates, it seems to me that
scientifically space is the better factor for a determination of the
service rendered than weight, as under the present situation. My
mind is still open, but that is the impression I have... I do not mean
that I have come to any conclusion in reference to any of these plans
that have been suggested, but as I start out I find my mind con-
tinually impressed with the idea that space is a more scientific plan;
that there is merit in all of the suggestions that have been made for
the substitution of space for weight. It further seems to me that the
fewer units you have the less the probability of irritation or difference
of opinion. I also feel that the Government is amply protected so
long as the sole right of initiation rests with the governmental em-
ployee; that the transportation company is amply protected in get-
ting a credit for the performance, where the credit applies to each
performance. It is a decided advantage over the present method
where you have your quadrennial weighing.
I would like to understand or get your criticisms as to that bas-
ically, if you please, and to ask you whether your objections are not
based upon an uncertainty of rule and regulation, whether if it was
enacted into law some of your fears would not be minimized and
your objections removed if the law stated specific rates and few units.
Mr. BRADLEY. That is getting at the kernel of the whole subject.
The CHAIRMAN. Absolutely. -
Mr. BRADLEY. Why, it seems to me that the service rendered by the
railroads to the Post Office Department is more easily recognized
in the transportation of the weight of mail than in the amount of
space furnished; yet it might be that the space furnished would be
a simpler measure of determining the price of the original service
which was performed in the transportation of the mails. However,
I think it would occur to one that when you are measuring the service
by an element that is only incidentally involved in the original serv-
ice, which is the transportation weight, you are taking some chances
by accepting a basis of settlement which does not directly reveal the
essential service rendered. In other words, you enlarge the possi-
bilities of misunderstanding. On the other hand, the ascertainment
of a certain number of pounds and the distance it is transported is
comparatively simple and does not seem to lend itself to very much
misunderstanding. A. &
The CHAIRMAN. Yet there is no system you can evolve, unless you
have daily weighings, by which you can weigh every piece that is
transported, and you will be transporting some business for which
you receive no compensation. . *
RAILWAY MAIL PAY. 1517
Mr. BRADLEY. Yes. -
The CHAIRMAN. Under the other plan—the space plan—you would
be receiving compensation for some space that was not utilized by the
Government, which would be just a reversal of existing conditions,
it seems to me, on the measure of the service rendered.
Mr. BRADLEY. I think have seen at the hearings here the different
*. that have played around the table in regard to significance
of space and the latitude which the department should have in con-
nection with its initiatory move to determine the amount of space
that it will require, and I think it has also been shown how difficult,
perhaps impossible would not be too strong a word, it would be for
a railroad company to accommodate itself economically to the vary-
ing authorizations by the department.
The CHAIRMAN. The fewer the units, however, the less the diffi-
culties. That is true, is it not?
Mr. BRADLEY. A long step forward might be made if the depart-
ment were required, as under Mr. Lloyd's plan, to recognize the full
units that are prescribed in the law and to keep its necessities some-
where within those units. Very calmly there was discussed here
during the past two days the making of authorizations for as long as
one month, and this morning it was mentioned that a steel postal car
would cost approximately $12,000. Now let us seek an analogy. A
very commodious residence can be built for $12,000, and if a prospec-
tive tenant went to the owner to lease the house for one month and
wanted to decide himself how much space he would need and change
that authorization from month to month, I do not think it is at all
likely that he would get a very friendly reception.
The CHAIRMAN. True; but does not the same objection apply to
the present system 3 Can not the Post Office Department divert its
mail if conditions were such that it would be, in the opinion of the
department, beneficial to the Government to do so?
Mr. BRADLEY. Yes. -
The CHAIRMAN. Would not the same apply to the weight basis?
Mr. BRADLEY. No; I think not; because it has been the policy of
the department for the past 30 or 40 years to concentrate the mails
on the shortest and most expeditious route.
The CHAIRMAN. Would there not be the same policy in the substi-
tution of space for weight?
Mr. BRADLEY. Well, I do not know. Space is so largely a matter
of discretion and opinion that I have not undertaken to apply the
new bill to the Pennsylvania Railroad system. I felt the range of
discretion was so wide that it was quite useless to apply those rates
to the existing service.
The CHAIRMAN. Gen. Stewart, by the adoption of the system of
space for a weight basis can you conceive of any change in the ad-
ministration policy that would inject any new factors that would at
all divert the run of the mail, namely, efficiency and cost to the Gov-
ernment, which at the present are the determinate factors?
Mr. STEwART. I can not. There would be a tendency to concen-
trate the mails sufficiently to utilize the space authorized and to
conduct the service as economically as possible.
The CHAIRMAN. And if the rate were based on the utmost carry-
ing capacity of the space in weight, they could not get into a given
35797—No. 12—14—15
1518 RAILWAY MAIL, PAY.
space any more than a certain weight of mail or certain volume of
mail, and when they wanted more they would have to call for more
space, and the moment you called for more space the railroads
would get credit for it. It seems to me, from a railroad standpoint,
that the substitution, so far as getting compensation for service per-
formed is concerned, is an infinitely preferable one to the existing
method of your quadrennial weighing, because I think we all con-
cur that the mail steadily increases annually, and will, in the develop-
ment of the country, necessarily steadily increase.
Mr. BRADLEY. Would not the weighings have to continue in order
to verify the amount of the space .. the department could
authorize?
The CHAIRMAN. Not if a rate was determined based entirely upon
the space basis. *
Mr. BRADLEY. That, in turn, resting purely on opinion.
The CHAIRMAN. You mean space? -
Mr. BRADLEY. Yes.
The CHAIRMAN. It is immaterial what the opinion of an individual
might be. You could not get any more than the maximum weight in
a given space; the personal equation there has no effect. If you re-
ceived a fair compensation for the maximum carrying capacity of a
given space, I should think you had absolute protection.
Mr. MACK. Your idea being that all of the mail would be carried
in these three classes of cars?
The CHAIRMAN. Yes.
Mr. MACR. If there was a 15-foot car the Post Office Department
would have to accommodate itself on that scheme to that 15-foot
apartment.
The CHAIRMAN. The triple unit.
Mr. MACK. And there would not be any overflow mail in baggage
cars if the mail varies and fluctuates from day to day? -
The CHAIRMAN. The pouch mail would be worked out. I think
Mr. Lloyd made a suggestion yesterday in reference to that. No
conclusions have been reached, but it is simply to take up these dif-
ferent suggestions that have been made, and while we have an oppor-
tunity to interchange ideas in reference to them in the hope of get-
ting additional light, I think we should do so. -
Mr. LLOYD. Apparently the Canadian Government has worked out
the suggestion I made yesterday. They allowed 4 cents for the
pouch service. I suggested 3 cents, which was on the basis of 18
cents; if it was a higher rate it would be higher. Or, if we changed
the rate making a little—that is, charged more for the shorter space—
the rate would be still higher. I think that is worthy of considera-
tion. For instance, if we fix the rate for a 60-foot car at 20 cents,
the 30-foot car at 11 cents, and 15-foot car at 6 cents, that would
correspond with the Canadian idea. . Then, if we carried it a little
further and provided that any mail, it does not make any difference
how small, carried in a pouch they would receive 3 or 4 cents a mile
for, it would entirely eliminate the necessity for weight and make
an absolute payment in Space. *
Mr. MACK. I speak now of the overflow mail.
Mr. LLOYD. If there is overflow mail you are to have pay for it in
any system, I would suggest ?
RAILWAY MAIL PAY. 1519
Mr. MACK. With this condition, that there would be overflow mail
unless the car was big enough to take care of the extreme maximum
condition. With a space basis the overflow mail would be elastic,
and there would be no space basis at all. That is due to the fluctua-
tions, and I do not think the department would concede that it is
necessary in the administration of the service, day by day, to have
overflow space.
i:Mr. LLOYD. If they ordered a 60-foot car, and that is the authoriza-
tion made by the Government and the demand made upon the rail-
road company, and they furnished the 60-foot car and it turns out
that that is not sufficient, they would make further authorization;
but all that you have to do is to furnish the 60-foot car. You have
complied fully with the demands made upon you; that is, to furnish
a 60-foot car. If any further authorization is made for a larger.
amount of mail you could get pay for it.
..Mr. MACK. What happens to the mail in such a case? There is a
60-foot authorization, and the mail would not go into it.
Mr. Loºp. I would suppose this to be true, that ordinarily you
would not have any trouble about that authorization, because the
- maximum authorization would be intended to be a sufficient author-
ization to meet at least a little bit more than the ordinary demands
of the mail.
Mr. MACK. For instance, on the train that I discussed yesterday,
we do not have exclusive storage cars, but we have a carload and a
half of mail distributed into three cars. I do not understand how
the conditions of transportation could be met by specific authoriza-
tions of cars. Those are actual conditions of service.
The CHAIRMAN. Suppose you had the three units, 60, 30, and 15
feet, and there was overflow mail and you were allowed 3 or 4 cents
a mile for the pouch mail. Would not your overflow go into the
pouch mail? :
Mr. MACK. It varies. It destroys your units. There would not
be any value in 15 and 30 foot units if the overflow mail was going
into the baggage cars. You would not have a space basis at all.
The CHAIRMAN. Then, the absolute protection would be that the
Government could send no mail except pouch mail that did not go
in one of the three units?
Mr. MACK. You would not have any space basis without it was
fixed on a maximum, just like renting a house; if you rent a house
you have your limitation, and you can not use somebody else’s
property.
Mr. LLOYD. Mr. Bradley, on this space basis theory, taken the plan
suggested by the department, which allows pay for space and elimi-
nates the side and terminal service. Which would you rather accept,
that plan as the provision of law or the reduction of 5 per cent in
. . the present railway mail pay on the Pennsylvania system?
Mr. BRADLEY. You mean which is the lesser of two evils?
Mr. LLOYD. Yes; the lesser of two evils? -
fift BRADLEY. The reduction of 5 per cent, if the conditions justi-
ed it.
Mr. LLOYD. I base that question on the statement made by Gen.
Stewart that he believed that the system would result in a reduction
in railway mail pay of $2,500,000, which would practically be 5 per
1520 RAILWAY MAIL PAY.
cent. Now, if the railway mail pay is 5 per cent too large under the
present system, we ought to make a reduction of 5 per cent, and the
other system, according to the suggestion of Gen. Stewart, is a reduc-
tion of 5 per cent.
Mr. BRADLEY. But I do not answer the question on that basis. I
answered the question purely on the basis that if we suffered the 5
per cent reduction we would know precisely what it was, while under
the other plan we do not know what the reduction in pay would be,
because it is largely a question of individual interpretation.
Mr. MACR. And it would create a complete change in readjust-
ment. For instance, on the 33 routes on which the department
worked out tables there were 22 routes with reductions, 11 routes
with increases—increases representing $21,772 and the decreases rep-
resenting $44,909. I see one instance of two round trips of 30-foot
cars in daily service of 1,230 pounds. It is rather difficult to see
how two round trips in service would be maintained on a space basis.
Mr. LLOYD. If the deductions made in document 105 by the de-
partment are correct, then some railroads are now receiving too much
and other railroads are not receiving enough. You people have not
as yet made any ascertainment at all, or given us any light except
in one or two cases, as to what would be the general effect of this
proposed change. It might be that these roads that are now making
money would not make any money and the roads which at the present
time are losing money might turn the other way and make money.
You people have not made for us any ascertainment at all to deter-
mine what is going to be the general effect upon the railroad systems
of the country.
M; MACK. Should not the department have submitted that state-
ment r e
Mr. LLOYD: I will be perfectly frank. I think the railroad com-
panies, when we started out, knew that the question before us was to
determine whether we should go from a weight to a space basis, and
that they were expected to give us some information on the question
of space, but you people from the beginning started out on the theory
that you were going to stand by the existing law and ask for an in-
crease in rates on the existing law, and you have given us but very
little information on the question as to what will be the result if we
go to a space basis. I think you people have made a serious blunder
in that, too. Certainly you have from the commission’s standpoint,
because you have not given us the information which we need and
the information which you could have given us after a study of 12
months.
Mr. SAFFORD. I think perhaps that criticism is a little broad, be-
cause when you take into consideration the administrative features
of this bill it is clearly impossible for any railroad to figure out what
will happen. I tried, but I could not tell what the attitude of the .
department might be as to how the service might be stated, what the
routes would be, or what sort of a basis to figure on. •
Mr. LLOYD. You have a splendid basis on which to start. You have
the basis that you now furnish. .
Mr. SAFFORD. It does not follow that the law will be administered
on that basis. -
Mr. LLOYD. I appreciate that, but if you had come to us and said
after a careful and fair investigation of the matter on the space basis,
gº
RAILWAY MAIL PAY. 1521.
the bill will have this effect upon our pay, then we would have had a
basis upon which to work, but you have not done that. -
Mr. SAFFORD. We do not feel that we could stand on that, at least
I did not. I could not find a basis. I took Dr. Lorenz's plan, and
I applied that to different routes on our system, and I found that we
would lose about 25 per cent on that. Then when I found that the
bill proposed by the Post Office Department was less favorable as
to rates and that it contained more objectionable administrative ele-
ments, I knew it was worse and I was discouraged and I did not
figure it.
Mr. BRADLEY. For instance, one of the provisions in the new law
is that the Postmaster General shall restate all the mail routes, thus
putting into somewhat different language, the same idea that Dr.
Lorenz introduced, the establishment of mail lines. Our interpre-
tation of that was that it was an entire departure from the present
mail route. Then a terminal charge was to be added and One could
not tell whether it would be merely an initial charge and terminal
charge, or whether it would also apply to the important intermediate
junctions where similar charges would be entirely logical and proper.
Then the department in its plan provided for a great many more
units than Mr. Lloyd, and we could not tell how existing units
would be treated in relation to the new units. We could not tell
how the department would reduce its authorization in connection
with the use of the full car. We might furnish a 60 or 70 foot car
and under the new arrangement they might conclude that 40 feet
was all that was needed. There were so many factors dependent
on the determination of the department in each individual case and
which the department itself is probably not able to make, that it
has been impossible to work out a satisfactory result.
Mr. LLOYD. But the department comes to us with a general state-
ment and they work it out.
Mr. MACK. I have shown you the effect upon our lines, as nearly
as we could estimate, of what space might be allowed. All of it is
a matter of dispute and opinion and it shows very great losses.
Mr. LLoyd. I appreciate that you show a 40 per cent loss. Some-
body is going to get that as a gain; that is unquestionably true,
because if the department’s statement is correct, that there is only
two million and one-half dollars difference between the old system
and the proposed system, there is not going to be a 40 per cent re-
duction to you. It is true you would get a 40 per cent reduction
according to your estimate, but somebody else will get a 25 per cent
gain, and we have not any information from the railroads as to who
is going to get that gain. There is only one railroad here that admits
it might have a gain and that is the Long Island.
Mr. RowAN. No two people can figure it out the same. Mr. Wis-
hart, of the New York Central, tried to figure it out, and he said it
was so unreliable that he did not even send the figures to me. I
understand it would show a substantial loss, and the department fig-
ured it out that we would get more money.
Mr. Scott. The clause we were discussing yesterday, in regard to
maximum pay for car runs, was almost impossible for Gen. Stewart
to explain how he would administer thai. We could not make an ap-
plication of that unless we know how it is going to be administered
1522 RAILWAY MAIL, PAY.
to at least some degree. I have been as anxious to find out about this
as anybody, but I must confess I do not know where to begin.
Mr. MACK. The question of opinion is absolutely eliminated upon
the weight basis. The object of transportation itself determines our
pay. We feel that is very much safer.
Dr. LORENZ. Has the history of the past 10 years shown that weight
eliminates controversy % It seems to me the big controversy in the
last 10 years has been caused by weight and not space basis. You
have had very few controversies regarding R. P. O. cars, but your
divisor and your quadrennial weighing are probably the big problems
that have caused trouble, and they are the result of weight and not
the space basis.
Mr. BRADLEY. If you always used the same yardstick in space most
of these difficulties would be eliminated. It occurs to me, Mr. Chair-
man, that there is a phase of the matter worthy of attention, al-
though perhaps it would be more appropriate for your own delibera-
tions, and that is, if the department officers came to Congress with an
estimate for a very large increase in the appropriation for railway
mail pay, and its estimate was sharply questioned. At present they
can explain that it is arrived at by the actual weighing of the mail
transported. In the future case they would be obliged to explain
that their officers and employees had convinced them of the neces-
sity for authorizing a large amount of additional car space. Would
that be as convincing, do you think, to the Committee on Post Offices
and Post Roads as the actual amount of weight transported?
The CHAIRMAN. I should think so; yes. It would minimize the
possibility of the public impression that at times has existed that
there was padding of the mail. It would eliminate any such sup-
position or possibility existing.
Mr. PETERs. That could be eliminated, could it not, if the state-
ment was made by the department that they would do all the weigh-
ing? The railroads can not do it. They do not have their men in
the cars on the line, but it is done by the department.
The CHAIRMAN. T. understand that; but I am stating that the im-
pression had some weight in the country, and possibly the impres-
sion would be eliminated by the substitution of space for weight.
Mr. PETERs. They might just as well say that the railroads helped
to measure the space and padded the space.
Mr. LLOYD. But every man can see how the cars are used. There
is no secret about that, and it is open to the whole public if you have
a space system. Here is a train running which has one 60-foot car;
everybody understands that, and there is no secret about it. The
element of mystery has been removed. After all it is not a question
of satisfying this commission or satisfying the post office Committee
of the House or the Post Office Committee of the Senate, but the
important thing is to satisfy the American people, and the American
people wish to be satisfied with that which they can see for them-
selves. The more mystery you remove in a system the more satisfac-
tory it is going to be to all. -
Mr. MACK. It occurs to me the question that the public is most
vitally interested in and has always been is not the detailed question
of the method but the question of overpay or underpay. That is the
great question the American people are interested in, to know that
the railroads do not get too much, and if they do not get enough
RAILWAY MAIL PAY. 1523:
they want them to get enough. I think it is out of the question to
expect the American people to analyze detailed rates as applicable toº
the mail service, and it seems to me, so far as the people are con-
cerned—perhaps in course of time it may be different—the only in-
terest they have is to know the Government does not pay the rail-
roads too much. : .* -
Mr. LLOYD. How are the people going to find it out?
Mr. MACK. They are depending on the information from your
committee.
Mr. LLOYD. We do not bind the American people. -
Mr. MACK. I know, but the question is before your commission to
determine, and I believe the country will accept the judgment of
your commission in that respect. -
Mr. SCOTT. Mr. Lloyd just said a few moments ago people can see
themselves the number of cars used; if we have a 60-foot car in a
train the people can see it. If they see a car westbound loaded with
raail, all right; but if they see it coming back empty how long will
it take before they will begin raising questions about that?
Mr. LLOYD. That seldom occurs. It does not occur except with
storage cars, and it does not affect the railway mail car, because
where we have an outgoing car you have an incoming car.
Mr. Scott. In different degrees, of course. .
Mr. LLOYD. The space proposition settles all that question, because
if you start out with a 60-foot car you have to come back with it.
Mr. McCAHAN. Mr. Lloyd, what would happen in a case of this
kind: In the service they have a 40-foot distribution, and a 60-foot car
is operated; the car is equipped with 50-foot facilities, by leaving
out 5 feet of rack. They have given orders to keep out of that car
direct mail until they see whether they have space enough to put in
the working mail. That does not happen every day, but they are on
record in issuing those orders. What protection would we have
under a case of that kind? -
Mr. STEwART. If I understand Mr. McCahan’s question, it relates
entirely to a situation that arises under existing law, where we are
obliged to carefully scrutinize the space for distribution purposes
for which we pay additional money over and above compensation
for transportation. On this new basis my opinion is that the situa-
tion he suggests will not arise, because we will get all the mail in the
mail car and pay for it. -
Mr. McCAHAN. We can not get it in there now?
Mr. STEwART. Then we would authorize additional space.
Mr. MACK. In what way? As to the question of overflow. That
is the point I raised a while ago.
Mr. STEwART. If it were a general condition, of course we would
have to authorize the next unit. If it were only an occasional over-
flow and it were not provided for by an additional unit regularly
authorized, it would take care of itself in exactly the way it now takes
care of itself under the weight basis. During the weighing, if over-
flow mail is handled you get credit for the additional weight and
receive pay for it for four years. In the same way the maximum pay
would be determined during the statistical period.
ſº CHAIRMAN. Would there be any statistical period under your
plan
1524. RAILWAY MAIL PAY.
Mr. STEwART. We have eliminated the weighing, except that we
A. undoubtedly take statistics for a period to determine the space
IleeOS.
The CHAIRMAN. That is one of the strong features of the plan—
that you do eliminate the weighing?
Mr. STEwART. We are providing for weighing at the initial point.
The CHAIRMAN. Is that necessary for the plan?
Mr. STEwART. It has been suggested that it be eliminated.
The CHAIRMAN. To return to the overflow mail, suppose that the
law adopted three, four, five, or six units and made no allowance for
overflow mail. What would be the practical operation? You would
have to authorize an additional unit or the overflow would have to
wait over until there was space for it in some following train? What
would be the objection to that?
Mr. STEwART. There would be no objection to it, but we could meet
a condition of that kind if it occurred frequently by making a special
authorization, just as we do now in New York City where we have
a wagon contract on a mileage basis. Besides the regular authoriza-
tions of trips we authorize the postmaster to use a certain number of
additional trips during the month, if necessary, giving him the privi-
lege of ordering the extra Service as occasion may require. He re-
ports at the end of the month how much of it he has used and the con-
tractor gets paid for it. We could make similar authorizations under
this statute to cover extra or emergency services that might be re-
quired and pay for such as were used.
The CHAIRMAN. What is the increase in weight, or estimated by
the department, during the holiday season during those 15 days?
Was there 5 per cent or 10 per cent increase over the normal or 20
per cent 2 -
Mr. STEwART. Yes; more than that.
The CHAIRMAN. You get no pay for that under the present system.
Under the space system you would get compensation for that.
Mr. PETERS. Would we?
The CHAIRMAN. You must, for there can be no overflow if the
department is required under the law to send the mail. •
Mr. STEwART. Let me supplement what the chairman says in
regard to that. Up to a few years ago the railroads did not get
additional pay for the extra railway postal cars operated during
the Christmas season, but believing that they should receive pay
for such cars, for the last few years I have been authorizing addi-
tional full car space temporarily during the Christmas season to
provide compensation for the same. We would do the same thing
under the proposed plan whenever the emergency arose. *
The CHAIRMAN. You would have to, for it would be compulsory
if there was no overflow recognized in the bill.
Mr. MACK. The question of overflow is a very considerable ques-
tion.
Mr. LLOYD. Here are two questions. There is no difference, how-
ever, and I as sure we are all of the opinion that all overflow mail
shall be paid for ?
The CHAIRMAN. For every service performed you should get a
fair compensation? -
Mr. LLOYD. This must provide for that overflow if we go to a
space basis? -
RAILWAY MAIL PAY. 1525
Mr. MACK. But the overflow mail eliminates to a large extent your
maximitiſh unit of space in the apartment car? r
Then the question comes up as to how far that overflow mail is
transported. We get a little light on the practical administration
on the Denver & Rio Grande as based upon the statistics of the
department taken in 1909. A train started out of Denver with a 30-
foot apartment and the railroad company reported over part of the
line 20 feet of overflow space, not in one of the baggage cars, but two
parts of baggage cars. The department allowed 10 feet from Pueblo
to Grand Junction, the railroad company reported 5 feet, and the
department eliminated space altogether, and so on over the lines.
The CHAIRMAN. Repetition of those occurrences would be impos-
sible if there was no recognition of overflow under the proposed
plan? -
Mr. MACK. It is very essential if you go to a space basis to elimi-
nate overflow mail. -
The CHAIRMAN. Supposing there wasn’t any overflow. How would
the space basis appear to the minds of you gentlemen.
Mr. MACK. From our viewpoint we do not regard it as satisfactory,
because the question of opinion is involved in every instance in
regard to the amount of space. ---
The CHAIRMAN. But they would be minimized in the possibility
of units, possibility of friction, and misunderstanding.
Mr. BRADLEY. Might I suggest that if this clause in the law were
changed it might meet the difficulty: In computing the mail-car space
to be paid for, let the word “authorized ” be changed to “furnished ”
and let the maximum space furnished in either direction be regarded
as the space to be paid for.
The CHAIRMAN. That would always be a question of discussion
and controversy. tº
Mr. BRADLEY. Why should not the railroads be paid for what is
furnished unless it is furnished dishonestly 2
The CHAIRMAN. You should be paid for every service you are per-
forming, that you are requested by the department to perform, and
you should receive, in my opinion—and I think in the opinion of
every member of the commission—a fair compensation for the service
rendered. The question with us is how to arrive at a basis to insure
that—the simplest, best, and most certain.
Mr. BRADLEY. There is a severe penalty against padding the mails,
because there were, many years ago, two or three instances of that.
I believe there is an imprisonment of 20 years, and a fine of $5,000.
Suppose there was a similar penalty against the dishonest supplying
of space by the company and this word was changed from “author-
ized” to “furnished.” Is not the term “furnished ” a better descrip-
tion of the service rendered by the railroad company than the word
“authorized,” if you are considering the actual thing?
The CHAIRMAN. Then why not add “authorized and furnished ”?
Mr. BRADLEY. I am afraid that does not help us.
Dr. LORENZ. Is it not true that to-day additional storage cars are
authorized just as they are needed? Is it not true that if there is a
certain rush of mail the mail clerk would telephone to the railway
man and say, “Give us another car on this train to-day,” and there
is immediately a car switched in }

1526 RAILWAY MAIL PAY.
Mr. BRADLEY. No ; the word “authorization ” is not properly used
there. Authorization means the order by the department that car-
ries pay with it. To-day, if another car is needed, the railroad.com-
pany furnishes it automatically. -
Dr. LORENZ. The needs of the department are met by the request
on short notice. As I understand it, the department could provide
for the immediate authorization of additional storage cars as needed.
I do not see why the overflow could not be taken care of by authori-
zations from day to day, if a leeway is given, just as General Stewart
has shown in the case of the wagon service. They could authorize
space in baggage cars.
Mr. BRADLEY. Are you speaking for the department now I do
not think the department has made any such statement as -
Dr. LORENz. ë. Stewart has just given an illustration, of
where the postmaster was allowed to provide for additional service.
Mr. STEWART. It is now the practice to do that on wagon routes
where the contract is on a mileage basis, such as the route in New
York City. This provides a good illustration of how the space
basis would work out in railroad service. We pay for the trips per-
formed and the mileage made in that kind of wagon service. A cer-
tain number of trips between certain points are authorized regularly,
which we find a great improvement over the old system, under which
a contract at a flat rate was made for all service that might occur in .
four years, like the railroad service is now. We find it a great im-
provement to contract for service on the mileage basis. However,
we can not foresee all the service which we are going to need, so, in
addition to the regular trips authorized, we issue a supplemental
order authorizing the postmaster to use a certain number of addi-
tional trips between certain points during the month. The post-
master calls on the contractor for the extra trips as he needs them
in the service and reports that additional service to the department
monthly, and we pay for it. My idea is that we will take care of all
this extra service in the same way, by issuing orders authorizing
additional space to be used if needed in addition to the regular space
authorizations.
Mr. LLOYD. I think that the proposed bill covers that. You say
that new service and additional service may be authorized at not
exceeding the rates herein provided for. “At not exceeding ” may
be left out. A service may be reduced or discontinued and operated
i the needs of the Postal Service require. That is intended to cover
that.
Mr. McCAHAN. Does not that refer to the permanent new service?
Mr. LLOYD. That might be; yes. ---
The CHAIRMAN. The absolute elimination of overflow mail; that
is, no recognition of any overflow mail under the law, and that the
department would have to call for space as needed would make the
space basis less objectionable? ~ -
Mr. BRADLEY. I think so.
The CHAIRMAN. General Stewart, could you explain how you would
administer a law substituting space for weight in any of the plans
that have been suggested, either the department's, Dr. Lorenz's, or
Mr. Lloyd’s plan' That would be the modus operandi of authoriza-
tion of space, the individuals who would originate it, who would be
responsible for it and the notice to the railroads?
RAILWAY MAIL PAY. 1527
Mr. STEwART. Speaking in a very general way my opinion is, if
Congress adopted the plan we have suggested, or something similar
to it, that the plant now in operation in the service would merge into
the new system in a simple manner. The new authorizations of the
space basis would be continuations in most cases of the present au-
thorizations. . We now have the full R. P. O. car service, which we
would continue practically on the same authorization. We have the
apartment car service, in which space is not now specifically au-
thorized. This we would authorize just as we do the full-car service.
That would cover all the service excepting the closed-pouch and
storage-car services, providing the closed-pouch service was not put
on a space basis as Mr. Lloyd suggested. If that were put on a space
basis, it would be easy to authorize that at so much a car-mile.
Mr. LLOYD. That does not affect the plan at all, as I understand it?
Mr. STEwART. Not at all. The recommendation for authorizations
to cover the needs of the service, of course, would come from the field
officers to the department as at present. The field officers would take
up the question and report upon the conditions as they exist and the
needs of the service as they see them and make recommendations.
Those recommendations would come along the line through the di-
vision superintendent of the Railway Mail Service to the general
superintendent and through the division of railway adjustments to
the Second Assistant Postmaster General, who would determine and
make orders of authorization.
The CHAIRMAN. He authorizes. Does he notify one of his sub-
ordinates?
Mr. STEwART. Yes, sir.
The CHAIRMAN. And the subordinate notifies the railway ?
Mr. STEwART. The company is notified direct by the second as-
sistant where it involves pay, and at the same time the division of
Railway Mail Service is informed, and the detailed arrangements
with the company are taken care of by that division.
The CHAIRMAN. Go from the second assistant?
Mr. STEwART. Yes.
The CHAIRMAN. Then you would receive the information as to
when that authorization was furnished by the road and the credit
would be immediately open to the road to the extent it was furnished?
Mr. STEwART. Credit would be given from the date fixed in the
order of the second assistant authorizing the service. From that
date the railroad company would be entitled to the credit. Then,
in the matter of payment, we would have the actual service per-
formed reported each month by the railroads, and the reports verified
and certified by the Railway Mail Service just as they are now.
These reports are signed by an officer of the railway under oath and
are checked by the Railway Mail Service; when they come in, the
.* are audited and payments made for service performed each
IſlCIAUſ).
The CHAIRMAN. The payment would be the same each month?
Mr. STEwART. Would be the same. In cases where we needed more
than the regular service supplemental orders would be issued to cover
the additional service, and so much of that service as was used during
the month would be reported and paid for. The rest, of course,
would not be paid for.
1528 RAILWAY MAIL PAY.
The CHAIRMAN. If we eliminated overflow mail, and the law was
so drawn as to require the department to call for additional authori-
zation, when there was overflow or delay to the mail the operation
of such a law would be that the Government would always have
through efficient administration a little excess space to use there over
a period of days or months; the average must necessarily be so, and
good administration would require that.
Mr. STEwART. Yes, sir; and there would be more of that if you
reduced the number of units.
The CHAIRMAN. Mr. Lloyd asked the question awhile ago, which
impressed me strongly and led to the idea in my mind, whether
you gentlemen in approaching this subject had not given attention,
and quite properly so, to the rates rather than to the method.
Mr. BRADLEY. I think there are many details that are not appre-
ciated; for instance, General Stewart was speaking about the cars he
needed in the service. No doubt in this country you can find every
size mail-apartment car and every size R. P. O. car mentioned in
this proposed bill; but each company does not have them. Now they
are supplied to the Postal Service as the result of years of coopera-
tive consultation and arrangement between the railway company and
the division superintendent of the Railway Mail Service. Under the
new bill the requirement for different sizes would be compulsory.
A company to-day having a 20-foot apartment might be given an
order to-morrow to reduce it to a 15-foot apartment for an authoriza-
tion covering only an engagement for one month.
Mr. LLOYD. Would not the 15, 30, and 60 foot units to a great ex-
tent relieve you from that complaint?
Mr. BRADLEY. Yes; just so far as you reduced the units you reduce
the cause of irritation; and I might make a further suggestion, that
a clause be put in here under which it would be compulsory for the
department to pay for any changes in the construction or alteration
of mail-apartment cars when it issues an order reducing the space
authorized. If the pay for increased space really made full allow-
ance for the cost of the repairs, that might not be specifically men-
tioned; but if the department gave notice for a reduction in its
authorization, and it was required in connection therewith to pay for
that alteration, that requirement would check the undue use of that
administrative power. * ,
The CHAIRMAN. Is it probable that there would be many instances
of that reduction under the three-unit plan?
Mr. BRADLEY. I can only say there would be much less reason for
friction under one unit than three units, and less under three than under
five. I want to refer to a remark Gen. Stewart made yesterday and to-
day about expensive terminals. I desire to refer you to the description
that I included in the statement for the Pennsylvania Railroad Co. re-
garding the terminal service at New York on pages 433–434, volume 2.
The New York terminal extends practically from Newark, N. J., to
a point on Long Island, a distance of about 12 miles; it includes not
only the trackage, very solidly constructed between those points, but
also two tunnels under the North River and four tunnels under the
East River as well as all the other tunnels and construction in New
York. All of that wonderful work, one of the engineering triumphs
of the world, is represented in the total cost of about $100,000,000.-
What attracts attention especially is the station edifice. Including
RAILWAY MAIL PAY. 1529
the value of the real estate and the excavation as well as the construc-
tion, the station edifice and its appurtenances would probably not
exceed 25 per cent of the total expenditure. The passenger waiting
rooms, of course, attract admiring notice, but are only a small frac-
tion of the total facilities. In so far as that building is beautiful and
costly, it is only out of decent regard for the opinions of mankind
just as the new post-office building adjoining it is built along beauti-
ful lines and in architectural harmony with its purpose. No doubt
one reason for the high cost of these terminals is the high price of
real estate. That would apply also to the new post-office building in
Washington adjoining the Union Station. Of course the Govern-
ment would not think of locating it in the outskirts of Alexandria to
save expenses. Now coming to the actual use of the terminal facili-
ties, the department being indisposed in this case to debit itself with
even 1.95 per cent of the capital cost, I have made a careful estimate
there as to the occupancy of the tracks at the Pennsylvania Station,
New York City, because the tracks are the real facilities, and I found
that about 11 per cent of the trackage facilities out of the Pennsyl-
vania Station were used for the mail service. It would, therefore,
not seem unfair to charge the mails with less than 2 per cent of the
capital expenditure.
Mr. STEwART. I am not objecting to charging the mails with its
share of trackage-facilities costs, but it is the participation on the
car-foot-mile ratio in the cost of the expensive station facilities in
which the mails are only remotely interested to which I object.
Yesterday the Baltimore & Ohio, through Mr. McCahan, sub-
mitted a statement, which, of course, the department has never had
a chance to see, although Mr. McCahan said he had had it for some
time. He has not asked the department to check or verify it. I
do not think I could be expected under the circumstances to examine
it or make a reply to it, and I wish the record to show the depart-
ment has not had an opportunity to do that.
The CHAIRMAN. At this point the hearing will adjourn sine die.
(Thereupon, at 4 o’clock p. m., the hearing adjourned sine die.)
Subsequent to the hearings the chairman received two letters from
Mr. John Wilson Brown, one dated April 21, 1914, signed by him as
president of the Maryland & Pennsylvania Railroad Co., and the
other, dated April 9, 1914, signed as vice president of the Short Line
Railroad Association. These letters, which are self-explanatory, are
by direction of the chairman submitted for the record, and read,
respectively as follows:
MARYLAND & PENNSYLVANIA RAILROAD CO.,
* Baltimore, JId., April 21, 1914.
Hon. JonATHAN BOURNE, Jr.,
Chairman, Joint Committee on Railway JIail Pay, Ctc.
DEAR SIR: I was disappointed in not being able to attend one of the last ses-
Sions Of the committee and now have learned that the hearings have closed. .
So, if it is in order, I desire to file the inclosed paper which expresses in
a condensed form what, to my mind, are the main principles involved in the
matter, and suggests a method of ascertaining a proper rate of pay to carrier
for the space contracted for by the Post Office Department.
In the hearings the railroads have denied that they rate things by space.
This is a mistake, but they fail to recognize it, because the freight is not billed
1530 RAILWAY MAIL PAY.
by Space but by weight. They are entangled in their own terms. Railroad
people are peculiar as a rule. In all the cases that have come under my
knowledge they have either failed to present the right case or, if the right case,
have failed to present it in the right way. In this case on both sides each one
Seems to think that he proves his own case by showing errors on the part of
the Other. So that after this voluminous argument, oral and written, the
department and the carriers seem to be no closer together than at the beginning.
My own opinion is that both sides are in error in their calculations of expense.
Craving your pardon for troubling you with this,
I am, very truly yours,
JNO. WILSON BROWN, President,
BALTIMORE, MD., April 9, 1914.
Hon. JONATHAN BOURNE, Jr., -
Chairmnan Joint Committee on Railway liail Pay, w
Washington, D. C.
DEAR SIR : The Short Line Railroad Association presents to the committee
the following considerations:
In the discussion of this question it has been assumed by the Post Office De-
partment, with little question on the part of the railroads, that the power of
the Congress is pretty much absolute in this matter. That, because the power
is vested in the Congress to establish post offices and post roads, therefore it
has the right to dictate to carriers what they shall carry and at what rate. Is
this borne out either in theory or in practice?
The power of the Congress has been decided to be exclusive in the carrying
of mail. But what is mail? Is that settled by act of Congress? For example,
is the merchandise carriage attached to the post-office service really mail?
“Oh, yes,” say its advocates, “it is done in Britain,” and that is supposed to
Settle the question. But does it? We can not go to British precedent to settle
Such question in this country, for the power of Parliament is absolute and has
the force Of a COnstitutional provision with us. This whole matter seems to be
in nubibus. If it is once granted that the Congress may establish a transporta-
tion service of 20, 50, or 100 pounds, what is to prevent its going further and
taking off all limit and thus taking over the whole carrying trade? Logically
this Conclusion is inevitable. ,
Now as to practice. The dealings of the Post Office Department with car-
riers has always negatived the power of the Government to dictate to carriers
the terms upon which the business must be conducted, and thus far has been an
interpretation by the Government of the extent of its powers. The department
has approached the carriers not with the law as mandatory, but with a Contract
by which the carriers agreed to carry the mail on the terms specified. This
has always been repeated after each Weighing of mails.
This summary statement is sufficient as to the fundamental principle.
There would seem to be no reason why the department should endeavor to
obtain from carriers for carrying the mails a rate not only far lower than Other
shippers, but a rate which does not pay. Although there is a dispute between
the department and the carriers as to the cost of the Service, there can be no
question that the department has obtained a service which affords the carriers
no commensurate profit, if any at all. The department practically admits this
in the reasons it adduces for its claims On the CarrierS. The reaSOnS are
following :
1. That the Government protects the carrier during a strike. -
This, at first blush, seems to have weight, but becomes very light weight when
examined. For the protection furnished is only to such passenger trains as
carry mails; and even if extended to all passenger trains would be of little
benefit, as it is notorious that little profit is made by carriers from passenger
business. It affords no protection whatever to freight trains, either from
strikes within the railroad service or strikes among the industries upon which
the carriers are dependent for a large portion of their trade. This reaSOn, then,
seems to have little, if any, force. •
2. Another reason upon which the department claims a low rate is that the
distribution of the mails through rural regions hastens Settlement of those
regions and thereby increased carriers’ trade.
This reason is also stronger in appearance than in reality. The Census.
reports show a steady decrease in the proportion of rural population in spite of
RAILWAY MAIL PAY. 1531
the immense "increase in rural mail facilities. This would seem to dispose of
this reason. - -
3. Another reason is the size and regularity of the business furnished by the
Post Office Department.
This reason is evidently dependent upon the profit which accrues to the car-
'riers. If, as the carriers claim, there is no profit, or, as the department claims,
the profit is small, it is not a business that the carriers would struggle for.
The department's idea of a good profit is 6 per cent of expenses. Not Gnly is
it true that business generally can not be successful with such a profit, but
examination of railroads' reports the country over reveals the fact that to fur-
nish a reasonable interest on the capital invested requires a profit of 30 or 40
per cent on the gross receipts, which means a much larger per cent on eXpenses.
This association has asked for relief in the following respects, viz:
1. Pay for an apartment.
2. Annual weighings. *
3. Release from deliveries.
4. Increased rate.
5. Divisor for averaging weight to be the number of weighing days.
The Post Office Department in a “Tentative draft of legislation,” filed Feb-
ruary 12, 1914, concedes the first three of these viz.: Pay for an apartment;
annual weighings; and release from deliveries; but instead of increasing the
rate of pay the sum of all the items of pay, including that for the apartment, is
less than the rate now paid, when nothing is allowed for the apartment. We
asked for bread and they offer us a stone. This can not be called a Square deal.
Again, on page 1059, it provides that the mails shall be weighed for not less
than 35 successive days (which would include 4 or 5 Sundays) and the
whole 35 days taken as the divisor to ascertain the daily average weight. Now,
the short lines, as a rule, carry no Sunday mail. Therefore, by this method of
computation the carrier would receive no pay for, say, from one-ninth to one-
seventh of the weight carried. - -
The last paragraph, on page 1059 (beginning new service, etc.), provides that
while “ Service may be reduced or discontinued with pro rata reductions in
pay,” yet additional and new service may be authorized without additional pay.
This is on the rule of “Heads I win and tails you lose.”
Then, on page 1060, it provides that “no pay shall be allowed for any wooden
full railway post-office car unless constructed substantially in accordance with
the most approved plans and specifications of the Post Office Department.”
That is to say, the department will accept the service, for which it will give no
compensation. This is hardly in harmony with the benevolent expressions
engraven on the new Post Office Building in Washington. -
On page 1062, it provides that under two stated contingencies it shall be the
duty of carriers to carry the mail at rates prescribed and fixed by the Post-
master General. I)uty is a very strong word, especially in relation to a pur-
chase to which the department is a party, and the selling party has not even
been consulted about the price. What would be thought of an act that would
provide that the Navy Department should fix a price for armor plate and make
it the duty of steel companies to furnish it for that price? The statement of
Such a proposition is its refutation. -
It is congruous with this that there follows a penalty of $5,000 for the refusal
On the part of the carrier to perform the service at the rates provided by law
“when and for the period required by the Postmaster General so to do.” Upon
what meat has this our Caesar fed that he has grown so great? These provi-
Sions made a crime of the refusal by One party to enter into a contract on the
demand of another party.
Now let us look at the matter in a Sober, businesslike way. It is patent that
the railroads are necessary to the Post Office Department. To go no further, the
drastic provisions of this tentative bill are proof of this proposition ; otherwise
the bill would not endeavor to force carriers to take the business against their
will. 'The carriers have never acted in an arbitrary manner, but, on the con-
, trary, have submitted from time to time to arbitrary acts or demands of the
department which have increased their expenses and lessened their revenue.
It is beneath the dignity of the Government to desire to obtain from the
carriers what the law forbids a private person to do, i. e., discrimination in
its favor. It is more : it is immoral and Subversive of law.
The deficiency of the Post Office Department is not due to the railroads. It
is due partly to the extension of the service ahead of its requirements and
partly to the fact that the Post Office Department is carrying the expenses of
1532 RAILWAY MAIL, PAY.
:
2
the other branches of the Government. The attention of the Congress has been 3
called to this latter reason, but relief sought has never been obtained., And . . ;
the Post Office Department still furnishes free use of the mails to all the other
•ºr.
S.
departments.
Now for the conclusion of the whole matter: a & x >
1. Let it be taken up between the department and the carriers as purely .
a business transaction, with no question of duty and penalty. The department
and .%he carriers are both in for shekels, not for sentiment; for profit, not for
arºtisement. Both are on the same level.
~ 2. The bulk of the business, at least, and perhaps the whole of it, may be:
tediuced to a question of space used. Take a 60-foot car as a standard of
measurement. Find the daily average number of passengers carried, multiply
this by the average mileage rate, and the product will be the daily mileage value
Of the car. The value of an apartment would be prorated according to its size.
This space would, so to speak, belong to the department for the term of the
Contract to transport in it anything connected with the mail. sº
This leaves open the question of pouch mail, which would, perhaps, not be so
difficult of settlement after the car and apartment mail had been settled.
3. Wherever the question of weight of mail comes in the true average should
be taken, not something unknown to mathematics,
To sum up, what we consider that we are entitled to ask is *
First. Pay for space which shall be equal to its value otherwise to carriers.
Second. Annual weighings.
Third. Release from deliveries.
Fourth. Increased rate On pouch mail.
Fifth. A true mathematical average where weight is concerned.
Respectfully submitted.
SHORT LINE RAILROAD ASSOCIATION,
By JNo. WILSON BROWN,
Vice President.
NoTE.—It is proper to state that, so far as it relates to space, this paper is
not intended to express the opinion of the Short Line Railroad Association, but
that Of the WI'iter.