{
Mail Carrying Railways
Underpaid
A Statement by the Committee
on Railway Mail Pay representing
214,275 miles of Railway in the
United States, operated by 268
companies, containing facts and
figures which prove that Railway
Mail Pay does not equal the oper-
ating expenses that it makes nec-
essary, leaving nothing for return
upon the value of the property.
THE COMMITTEE ON RAILWAY
MAIL PAY
J. KRUTTSCHNITT, Chairman
Director of Maintenance and Operation, Union and
Southern Pacific Systems
RALPH PETERS, Vice-Chairman
President, Long Island Railroad
CHARLES A. WICKERSHAM
President and General Manager, Western Railway
of Alabama
W. W. BALDWIN
Vice-President, Chicago, Burlington &
Quincy Railroad
W. W. ATTERBURY
Vice-President, Pennsylvania Railroad
GEORGE 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
H. T. NEW COMB, Statistician
Mail Carrying Railways Underpaid
A STATEMENT
By the
Committee on Railway Mail Pay
representing
214,275 miles of Railway in the United States,
operated by 268 companies,
containing facts and figures which
prove that
RAILWAY MAIL PAY
does not equal the operating expenses that it makes
necessary, leaving nothing for
return upon the value
of the property.
October, 1912.
II.
III.
IV.
V.
VI.
- TABLE OF CONTENTs. - Page
Scope of this Pamphlet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Railway Mail Pay Is About to be Forced Still Further Below the
Level of Just Compensation, Unless Payments are Promptly Read-
justed, on Account of the Additional Volume of Mail that Will
Result from the Inauguration, on January 1, 1913, of the Parcels Post. 3
The Postmaster-General’s Erroneous Assertion that the Railways
were Overpaid “About $9,000,000.00” in the Year 1909, Rests Primarily
Upon His Adopting an Unprecedented Theory which Allows Nothing
for a Return. Upon the Capital Invested in Railway Property. . . . . . . . . 4
The Mail Service Supplied by the Railways Costs Them More in
Operating Expenses and Taxes than They Are Paid For It, and Leaves
Nothing for Return on the Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Postmaster-General's Apportionment of Space Between the Mail
Service and the Other Services Rendered on Passenger Trains Did
Not Allow to the . Mails the Space which They Actually Require and
Use and this Had the Result of Unduly Reducing His Estimates Of
the Cost to the Railways of the Mail Service. . . . . . . . . . . . . . . . . . . . . . . . 9
The Postmaster-General Ignored Data which He Had Obtained Show-
ing Expenditures on Account of the Mails Largely in Excess of the
Direct Expenses for that Service which He Reported. . . . . . . . . . . . . . . . 11
VII. The Month of November Is Not a Fair Average Month in Any Rail-
way Year or One that Is Typical of a Year's Business and Its Use as
the Sole Basis of the POStnaster-General's Calculations Was So Un-
favorable to the Railways as to Deprive the Results of Any Value
Even If in All Other Respects His Methods were Beyond Criticism. . . . 13
VIII. A Commission of Senators and Members of Congress which, Be-
IX.
XI.
tween 1898 and 1901, Most Fully and Carefully Investigated the Sub-
ject, Ascertained and Declared that Railway Mail Pay was Not Then
Excessive; Since Then there Have Been Many and Extensive Reduc-
tions in Pay Accompanied by Substantial Increases in the CoSt. and
Value of the Services Rendered by the Railways. . . . . . . . . . . . . . . . . . . . . 14
The Administration of the Post Office Department Has Not, in the
Last Twelve Years, Effected any Reduction in the Annual Total of Its
Expenses for Other Purposes than Railway Transportation or in the
Proportion of Its Revenues Required for Such Other Expenses, but
the Whole Saving Which Has Nearly Eliminated the Annual Deficit
of the Department Is Represented by the Reduced Payments, Per Unit
of Service, to the Railways. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
The Continuous Refusal of the Post Office Department to Order Re-
weighings of the Mails Except After the Maximum Interval of Four
Years which the Law Allows, the Demands for Station and Terminal
Services that Are Rendered Without Any or Without Adequate Compen-
Sation and the Unjust Discrimination Against Compartment Cars Used
as Railway Post Offices Are All Abuses, Seriously Injurious to the
Railways, Which Have Grown Up Under the Present System of Pay-
ment and Ought at Once to Be Remedied. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The Postmaster-General’s Proposed Plan of Payment Based Upon
Operating Cost and Taxes, to Be Ascertained by the Post Office Depart-
ment, Plus Six Per Cent. Is Seriously Wrong in Principle and Would
Encourage and Perpetuate Injustice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Appendices.
i
G.
Extracts from the Postal Laws and Regulations. . . . . . . . . . . . . . . . . . . . 23
Classification of Operating Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Receipts from Passenger and Freight Traffic by Months. . . . . . . . . . . . . . 28
HOW Railway Wages Have Increased. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
HOW Railway Taxes Have Increased. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C)
Letter dated September 11, 1912, from Hon. Jonathan Bourne, Jr.,
Chairman, Senate Committee on Post Offices and Post Roads....... 31.
Reply made thereto by the Committee on Railway Mail Pay. . . . . . . . 32
2
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A
I. SCOPE OF THIS PAMPHIBET.
The Committee on Railway Mail Pay, representing railways whose
lines include ninety-two per cent. of the aggregate length of all railway
mail routes in the United States, believes that the payments to the rail-
ways for the services and facilities furnished by them to the Post Office
Department are, and for a long time have been, unjustly low. This
pamphlet contains a concise statement of the facts which prove that this
belief is warranted and, incidentally, a refutation of the estimates made
by the Postmaster-General, and reported to the Congress (House Docu-
ment No. 105, Sixty-second Congress, first session), which led him to
conclude that the basis of payment could now properly be changed so
as to accomplish a present reduction of about twenty per cent. It will
be shown that although the insufficient data and the erroneous methods
employed by the Postmaster-General resulted in his making estimates of
cost tº the railways that are far below the real cost, his own figures and
calculations, when properly analyzed and Supplemented, demonstrate that
the mail service has not been fairly remunerative to the railways.
Before proceeding to this demonstration it should, however, be noted
that—
II. RAILWAY MAIL PAY IS ABOUT TO BE FORCED
STILL FURTHER BELOW THE LEVEL OF JUST COMPEN-
SATION, UNLESS PAYMENTS ARE PROMPTLY READJUSTED,
ON ACCOUNT OF THE ADDITIONAL VOLUME OF MAIL
THAT WILL RESULT FROM THE INAUGURATION, ON JANU-
ARY 1, 1913, OF THE PARCELS POST.
Congress has provided for a vast and incalculable extension of mail
traffic by creating a “Parcels Post,” to be inaugurated on January 1,
1913, which, by opening the mails to many articles not previously ac-
cepted at the post-offices and by materially reducing the rates on mailed
merchandise, is expected enormously to increase the Volume of the ship-
ments which it covers. The Government seems to have assumed that,
under existing contracts, which were made before the meaning of the
word “mail” was thus extended, the railways can be compelled, until
these contracts expire, to carry this great additional volume of mail
traffic WITHOUT ANY COMPENSATION WEHATEVER. If the
former practice of the Post Office Department is followed, no new con-
tracts will be made until after the next quadrennial weighings in each
3
of the four weighing sections, so that the position of the Government
amounts to an assertion that the whole added volume of the Parcels Post
mails will have to be carried without any compensation by the railways
of New England for four years and six months (these railways are in
the first weighing section but the weighing for the adjustment to be
made on July 1, 1913, has begun and will be completed before the
Parcels Post is inaugurated), by those of the second weighing section for
three years and six months, by those of the third weighing section for
two years and six months, by those of the fourth weighing section for
One year and six months, and by those of the first weighing Section, not
located in New England, for six months. No presentation of the injus-
tice of the mail pay received in former years suggests even the approxi-
mate extent of the losses which the railways will thus incur in the
next four and one-half years, unless readjustments are promptly made
on account of the Parcels Post.
III. THE POSTMASTER-GENERAL’S ERRONIEOUS AS-
SERTION THAT THE RAILWAYS WERE OVERPAID “ABOUT
$9,000,000.00” IN THE YEAR 1909, RESTS PRIMARILY UPON
HIS AIDOPTING AN UNPRECEDENTED THEORY WHICH AL-
LOWS NOTHING FOR A RETURN UPON THE CAPITAL IN-
TVESTED IN RAITVWAY PROPERTY. *
The Postmaster-General assumed that the railways would be pro-
perly compensated if they received a sum equal to the operating expenses
and taxes attributable to the carriage of the mails plus six per cent. Of
the sum of those expenses and taxes. The calculation by which he ob-
tained the sum which he assumed would have been proper compensation
for the single month covered by his investigation was as follows:
His estimate of operating expenses and taxes on
account of mail service (Document No. 105, p.
280) for One month. . . . . . . . . . . . . . . . . . . . . . . $2,676,503.75
Six per cent. Of above. . . . . . . . . . . . . . . . . . . . . . . . 160,590.22
Total, assumed to represent just compensa-
tion for One month. . . . . . . . . . . . . . . . . . . . $2,837,093.97
The railways having been paid, for the month selected, $770,679.16
in excess of the sum resulting from the above calculation, the Post-
master-General assumed that this excess over expenses and taxes plus six
per cent. constituted excessive profit for that month. He multiplied this
assumed excess by twelve to get his estimate of annual excess and stated
the result, in round figures, as “about $9,000,000.”
The mere statement of this method discloses the fact that it makes
no allowance for any return upon the fair value of the railway property
4
employed in the service of the public. This omission is, of itself, suffi-
cient wholly to destroy the Postmaster-General’s conclusion. Everyone
recognizes that a railway is entitled to at least a reasonable return upon
the value of its property devoted to the public service. The Postmaster-
General ignored this universally accepted principle and adopted a theory
which, if applied to the general business of the companies, would render
substantially every mile of railway in the United States immediately and
hopelessly bankrupt. The recently published report of the Interstate
Commerce Commission on the railway statistics of the year that ended
with June 30, 1910, contains data by which this statement is easily
demonstrated, as follows:
Operating expenses of all United States rail- g
Ways, for the year. . . . . . . . . . . . . . . . . . . . ... . . $1,822,630,433
Taxes of all United States railways, for the year 103,795,701
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,926,426,134
Six per cent. of above total . . . . . . . . . . . . . . . . 115,585,568
Total gross receipts permitted by Post-
master-General’s plan . . . . . . . . . . J. . . . $2,042,011,702
But if this plan had been in force, the railways would have had, for
interest on mortgage bonds, a reasonable surplus as a margin of Safety,
dividends on stocks, unprofitable but necessary permanent improve-
ments,” rents of leased properties, etc., etc., only the six per cent. or
$115,585,568. This figure may be compared with the following, among
others:
Interest obligations (on funded debt only) of
all United States railways, for the same year.. $370,092,222
Rentals of leased properties, all United States
railways, for the same year. . . . . . . . . . . . . . . . $133,881,409
Plainly, the Postmaster-General’s proposal is equivalent to an asser-
tion that the railways would make a fair profit if they were enabled to
collect the sum of $115,585,568 in addition to their operating expenses
and taxes, but the figures given by the Interstate Commerce Commission
* The necessity for providing, out of income, for some kinds of improve-
ments is commonly admitted. The public Constantly demands greater Comfort
and convenience which can be supplied only by improvements in property and
equipment that bring in no additional income. A present example in the mail
service, itself, is the great expense which the railways are now undergoing in
Substituting steel mail Cars for those formerly in use. The old cars, which
thus become a total loss Were fully up to the most advanced standards of Con-
Struction When built and they could Continue for a long time to serve the
purposes of the service except for the public demand for stronger cars.
5
show that this would be less than one-third of the sum necessary to meet
interest charges which must be paid in order to prevent foreclosures of
mortgages and, if bond interest could be ignored, is much less than the
rentals that must be paid if the existing systems are not to be broken
up. And, of course, it would allow nothing whatever for legitimate
demands upon income for dividends, permanent improvements or surplus.
It is unnecessary to dwell upon the consequences of such a theory
of “compensation” to railroad credit and to the public interest in effi-
cient transportation service, to say nothing of the consequences to owners
of railroad stock and bonds. Such a theory is not a theory of compen-
sation—it is a theory of oppression and of destruction.
The fact that the Postmaster-General has found it necessary to
justify his attack upon the present basis of railway mail pay by a theory
so unprecedented and so unwarranted in principle and in law, raises a
strong presumption against all his opinions and conclusions upon this
subject.
IV. THE MAIL SERVICE SUPPLIED BY THE RAILWAYS
COSTS THEM MORE IN OPERATING EXPENSES AND TAXES
THAN THEY ARE PAID FOR IT, AND LEAVES NOTHING FOR
RETURN ON THE PROPERTY.
It cannot be too strongly emphasized that the railway mail pay at
present is insufficient to pay even its proper share of operating cost and
taxes and does not produce any return upon the property. This will
be demonstrated by any fair inquiry, as will now be shown. Reports
Submitted to the Postmaster-General by railways operating 2,411 mail
routes, with a total length of 178,710 miles, showed that their gross
receipts, per car-foot mile”, from services rendered on passenger trains
during November, 1909, were as follows:
From mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.23 mills
From other services. . . . . . . . . . . . . . . . . . . . . . . . . . 4.35 mills
Thus it appears that the space on passenger trains required for the
mails is proportionately less than three-quarters as productive as that
devoted to passengers, express, milk, excess baggage, etc., etc. As it is
the general belief of railway managers, whose conclusion in this respect
has rarely if ever been challenged, that the passenger train services, as
a whole, do not produce revenues sufficient to meet their fair proportion
of the operating costs and the necessary return upon investment, and
* A Cal-foot mile is a unit equal to moving one foot in car length (re-
gardless of Width or height) one mile. Thus to move a car sixty feet long One
mile results in sixty car-foot miles; to move the same car three miles results
in 180 car-foot miles, etc. -
therefore are not reasonably compensatory, it is evident that the mail
service, the pay for which is more than twenty-five per cent. below the
average for the other services rendered on the same trains, must bring in
much less than reasonable compensation. Certainly railroad revenues
as a whole could not be reduced twenty-five per cent. without destroying
all return upon the property. If so, it must be true that there can be
no compensation in a rate of mail pay that is twenty-five per cent. less
than the rate of pay for passenger traffic which, as above shown, is rela-
tively unprofitable. .
No merely statistical comparison can, however, reveal the whole
story for the railways are required to furnish many incidental facilities
and to perform many additional services for the Post Office Department,
which render the mail service exceptionally arduous and costly. These
extra services include calling for and delivering mails at a large propor-
tion of the post offices located at railway towns; supplying rooms, with
light, heat and water, in railway stations for the use of the mail clerks;
placing cars, duly lighted and heated, on station tracks for advance
distribution, often many hours before the departure of trains; carrying
officers and agents of the Post Office Department as passengers but with-
out compensation to the extent of more than 50,000,000 passenger miles
annually (this baing, of course, in addition to the railway mail clerks on
duty), etc., etc. Extracts from the “Postal Laws and Regulations” defin-
ing and demanding these services are given in Appendix A. No one can
examine this appendix and not be convinced that the mail service is the
most exacting among all those rendered by American railways.
The fairness of railway mail pay can also be tested by apportioning
operating expenses between passenger and freight traffic, and then mak-
ing a secondary apportionment of the passenger expenses between mail
and other kinds of traffic carried on passenger trains. This method in-
volves 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 expenses wholly due to it they appor-
tioned the common expenses between the passenger 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
7
for the mails. Using this method, 186 railways, operating 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-Gen-
eral states (Document No. 105, page 281), that all the railways repre-
sented in the foregoing, and enough others to increase the mileage rep-
resented 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 ex-
penses, 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 reasonably urged
which would not demonstrate the non-compensatory character of the
present mail pay. This is illustrated by the method which the Post-
master-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 (as will be shown
below, on account of his erroneous appor-
tionment of car space (page 10), by . . . . 800,802.00
And also on account of his refusal to as-
sign expenses directly incurred in the mail
Service (page 12). . . . . . . . . . . . . . . . . . . . . 401,126.00%
Total, according to the Postmaster-Gen-
eral’s method of apportioning costs he-
tween 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
of the total pay received by the railways, leaving nothing whatever for
return upon the fair value of the property or necessary but non-income
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
* TheNe may be some duplication in this item, but to eliminate it would
require an elaborate Computation which, in view of the broad margin of ex-
penses over receipts, is wholly superfluous. Whatever duplication exists must
be small in Comparison with this margin.
8
over 50,000,000 passenger miles annually and, at the low average Tate of
two cents per mile, would cost the Post Office Department more than
$1,000,000 per year.
Moreover, as will presently be shown (pages 13-14) all the figures
here discussed are for the month of November, a month which, because
of the abnormally low ratio of passenger traffic to freight traffic, Sub-
stantially understates the cost of the passenger train Services, when fig-
ures derived from it are applied to an entire year.
It thus becomes evident that any inquiry which takes into consider-
ation the necessary elements of the situation will demonstrate that rail-
way mail pay is too low. It is only by ignoring essential elements of
the service and of expense and the fundamental element of a return on
the value of the property that any argument to the contrary can be
constructed.
Thus the mail traffic does not pay its operating cost. That traffic
is a substantial percentage of the total public Service performed by the
railroads. It should contribute a substantial proportion to the taxes
which the railroads have to pay and to the return on railroad property
which its owners are entitled to receive. Clearly no fair method can be
devised which will fail to show that the existing mail pay is far below
a fairly compensatory basis. Certainly this condition ought not to be
intensified by adding the injustice of still further reductions. On the
contrary, the unjust reductions of recent years should be corrected for
the future, and the railroads should be relieved from the strikingly
unjust methods by which they are at present deprived of anything ap-
proaching fair compensation.
V. THE POSTMASTER-GENERAL’S APPORTIONMENT
OF SPACE BETWEEN THE MAIL SERVICE AND THE OTHER
SERVICES RENDERED ON PASSIENGER TRAINS DID NOT
ALLOW TO THE MAILS THE SPACE WHICH THEY ACTU-
ALLY REQUIRE AND USE AND THIS HAD THE RESULT OF
|UNDULY REDUCING HIS ESTIMATES OF THE COST TO THE
RAILWAYS OF THE MAIL SERVICE.
Detailed reference will now be made to the methods and controlling
effect of the Postmaster-General’s apportionment of passenger train
space between the mails and the other services rendered on passenger
trains. Such an apportionment was a necessary step in the calculations
reported in Document No. 105. Having obtained certain estimates of
the cost of the passenger train services, considered together, by methods,
producing the lowest results, the next step shown in Document No. 105
was to apportion a part of this cost to the mail service. The accepted
method for such an apportionment is to distribute the total cost in pro-
portion to the train space required by each of the respective services.
The Postmaster-General obtained from the railways statements which
9
he might have used in applying this method and these statements showed
that 9.32 per cent. of the total space in passenger trains was required by
the mails, but, instead of using the data showing this fact, he substituted
figures of his own which reduced the space credited to the mail service
to 7.16 per cent. of the total. The total of passenger train costs which
the Postmaster-General estimated should be apportioned among pas-
sengers, express and mail, on the basis of Space occupied, Was
$37,074,172.* He therefore assigned to the mail service 7.16 per cent. of
the last-named sum or $2,654,510.69. If, however, he had used the
proportion of space, 9.32 per cent., resulting from the reports he had
obtained from the railways, the amount apportioned as cost of the mail
service for the month would have been $800,802 greater. Multiplying
this by twelve gives an increase in the estimated annual cost of over
$9,600,000.
Thus the Postmaster-General arrived at his declaration that the
railways were getting an excess profit of $9,000,000 by means of two
fundamental errors, omitting for the present reference to any other
errors. He understated the annual mail expenses and taxes of the rail-
ways by at least $9,600,000, and he ignored entirely the necessary return
on the value of railroad property.
This examination of his methods shows that the determination of
space was of primary and controlling importance and that the changes in
space allotment have destroyed the value of his deductions. These
changes were due to his refusal to assign to the mail service the working
space and temporarily unoccupied space on trains, which were necessary
to the mail service and to his actually assigning much of this space to
the passenger service rendered on the same trains.
+
It is scarcely necessary to note that all kinds of traffic require
“working space” in addition to the space actually occupied by the traffic
itself, and that this is especially true of the mail traffic, or that where
there is a preponderating movement of a certain traffic in one direction
there must be some empty space on account of that traffic, sometimes
called “dead” space, in trains moving in the direction of lighter traffic.
Thus passenger cars must have aisles, vestibules and platforms, and
postal cars must have a great deal of space in which to sort the mails
while, for mail carried in baggage cars, there must be space in which
to reach the pouches and to receive and deliver them through the doors.
A through train must also have the full capacity required for the max-
*This is the sum which was apportioned by the Postmaster General on the
basis of train space occupied. He estimated $40,121,294.83 (Document No. 105,
page 280) as the total operating expenses and taxes of the passenger train
services for the month. Of this total $21,993.06 was charged directly to the
mails and $3,025,129.77 directly to the other passenger train services, leaving
the sum stated in the text to be apportioned on the space basis.
\ 10
imum traffic of any kind likely to seek accommodation on any part of its
journey, although during much of each trip the actual traffic may be
considerably below this limit. The Postmaster-General, however, refused
to credit the mail service with much of the space thus required by the
Department although his figures for the other passenger train services
allowed fully for all such space required by them. In fact in many cases
such space, actually required by the mails and so reported by the railways,
was taken from the total mail space and, without reason, assigned to
the passenger service. These modifications of the data correctly reported,
not susceptible of justification upon any Sound transportation principle,
were carried so far that the tabulations of the Post Office Department,
which are stated for railway mail routes having a total length of
194,977.55 miles* show only 926,164,459 “car-foot miles” made in the
mail service, although certain railways, included therein, and having
railway mail routes aggregating only 178,709.96 miles, had correctly
reported mail space equivalent to 1,153,110,245 “car-foot miles.” Thus,
although the Department’s figures cover 8.3 per cent more mileage, its
reductions of space resulted in assigning to this greater mileage about
one-quarter (24.5 per cent.) less mail space. At the same time the De-
partment actually increased the space assigned to the other passenger
train services, its figures showing 12,014,065,506 car-foot miles in these
services for 194,977.55 miles of mail routes which must be compared
with 11,222,478,739 car-foot miles reported by the railways for
178,709.96 mail-route miles.
This treatment of the controlling figures as to space, supplementing
the other errors of method and omissions of fact, which have been or
will be cited, was amply sufficient to turn a real loss into an apparent
profit.
WI. THE POSTMASTER - GENERAL IGNORED DATA
WHICH HE HAD OBTAINED SHOWING EXPENDITURES ON
ACCOUNT OF THE MAILS LARGELY IN EXCESS OF THE
DIRECT EXPENSES FOR THAT SERVICE WHICH HE RE-
PORTED.
As a part of the investigation reported in Document No. 105 the
Postmaster-General obtained from the railways statements showing the
amounts expended by them for the station and terminal services required
by his Department and the amount of free transportation furnished on
his requisition for officers and agents of the postal service when not in
charge of mail. These data were not used (Document No. 105, p. 6)
and, as no adequate allowance was made in any other way for these ex-
penses, the Omission unjustly reduced the estimates of the cost to the
* Document No. 105, p. 53.
11
railways of their postal services. The Postmaster-General’s explanation
of this omission implies that it was partially offset by the assignment as
cost of mail service of its proportion, on the space basis, of all the station
and terminal expenses of the passenger train services but these special
mail expenses are disproportionately heavy and the amount So assigned
was far too low. The expenses for station and terminal services espe-
cially incurred for the mails, during November, 1909, and reported to
the Postmaster-General, for ninety-two per cent. Of the mileage covered
by Document No. 105 aggregated $401,136.00, as follows:
Amount of wages paid to messengers and porters
employed exclusively in handling mails. . . . . . . . . $79,980.84
Portion properly chargeable to mail Service, pro-
rated 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,640.98
Rental value, plus average monthly cost of light
and heat, of room or rooms Set apart for the ex-
clusive 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 mail 18,400.57
Interest at the legal rate upon the value of Cranes,
catchers and trucks required for mail service. . . . 3,895.36
Total . . . . . . . . . . . . . . . . . . . . ... º sº e s tº e º e º 'º & © tº gº gº $401,126.00%
All the foregoing data were reported to the Postmaster-General in
response to his request but he made no use of these items, an omission
manifestly to the serious disadvantage of the railways and having the
effect of unduly reducing his estimates of the cost of the mail service.
Similarly, the Postmaster-General omitted to use the data he had
obtained from the railways showing the Volume of free passenger trans-
portation, already referred to, Supplied to the officers and agents of the
Post Office Department and his estimates contain no recognition of the
cost of this service although its extent should be a matter of record in
the Department as it is furnished only on its requisition. The space
* This total includes $9,993.19 reported by four companies which gave
totals for these items, but did not report the items Separately.
12
in passenger coaches occupied by these representatives of the Post Office
Department, traveling free, was not assigned to the mail service but was
treated as passenger Space.
VII. TELE MONTEL OF NOVEMBER IS [WOT A FAIR
AVERAGE MONTH IN ANY RAILWAY YEAR OR ONE THAT
IS TYPICAL OF A YEAR’S BUSINESS AND ITS USE AS THE
SOLE BASIS OF THE POSTMASTER-GENERAL’S CALCULA-
TIONS WAS SO UNFAVORABLE TO THE RAILWAYS AS TO
DEPRIVE THE RESULTS OF ANY WALUE EVEN IF IN ALL
OTHER RESPECTS HIS METHODS WIFERE BEYOND CRITI-
CJSM.
All the Postmaster-General’s calculations, reported in Document
No. 105, and by him relied upon therein, and elsewhere, to substantiate
his attack upon existing railway mail pay, depend solely upon data for
the single month of November, in the year 1909. It is obvious, therefore,
that the validity of his conclusions, if all the rest of his processes were
accurate and his deductions otherwise sound, would depend upon whether
November is sufficiently typical of the railway year to be safely used as
the sole basis for conclusions applicable to a whole year. The truth is,
however, that November is not a typical or average month and that all
of its deviations from the averages of the year are such as greatly to
favor the result which the Postmaster-General was seeking.
It may well be doubted whether the railway year contains any
month that can properly be regarded as typical of the whole period but
if it does, the month of November, with four Sundays, two holidays and
Only twenty-four working days, is certainly not such a month. The
Interstate Commerce Commission publishes the monthly aggregates of
railway receipts and these official data conclusively prove that Novem-
ber, 1909, was the one month for which the data were most strongly
favorable to finding, by the Postmaster-General’s method, an abnormally
low apparent cost for the passenger train services and, consequently, for
the mail service.
It is a month in which substantially Winter conditions prevail in
a large part of the country and, on this account, one during which much
of the Ordinary work of maintenance of way and structures must be
suspended. Such work occasions a large fraction of the yearly expenses of
all railways and these expenses pertain in a relatively large proportion to
the passenger Services because the higher speed of passenger trains results
in greater relative wear and tear upon road-bed and structures than that
caused by the slower trains of the freight service and the requirements
of Safety to passengers carried at high speed impose more costly stan-
dards of maintenance than would otherwise be necessary. Consequently
13
a month in which these maintenance expenses are necessarily below
the yearly average cannot typify the full annual cost of the passenger
train services. Figures.showing the facts are contained in Appendix B.
It is, of course, understood that the respective expenses of the pas-
senger and freight services must move upward and downward with the
fluctuations in the volume of each sort of traffic. No month can furnish
a reliable basis for estimating the proportion of the total expenses that
is caused by the passenger service unless during that month the volume
of passenger traffic bears a normal relation to the volume of freight
traffic. But in November, 1909, as will appear from official figures for
each month in the year contained in Appendix C, passenger traffic, as
measured by receipts therefrom, was much below the average month of
the year while freight traffic was far above the average. The November
receipts from passengers amounted to only 21.5 per cent. of total receipts,
the lowest relation shown for any month in the year. Of course, under
these conditions passenger expenses were curtailed and freight expenses
relatively enhanced. Certainly the use of data resulting from these ab-
normal relations could not possibly produce results fairly typical of a
normal period, that is of a whole. year. The results so obtained must
have diminished the apparent cost of the passenger train services below
the true cost, by just as much as the figures for November were below
the average figures of the year.
These considerations fully establish the truth that, if every other
feature of Document No. 105 were absolutely beyond criticism, the fact
that it rests wholly upon estimates based upon data for the single month
of November would render its conclusions illusory, misleading and seri-
ously prejudicial to the railways.
VIII. A COMMISSION OF SENATORS AND MEMBERS
OF CONGRESS WHICH, BETWEEN 1898 AND 1901, MOST
FULLY AND CAREFULLY INVESTIGATED THE SUBJECT,
ASCERTAINED AND DECLARED THATRAILWAY MAIL PAY
WAS NOT THEN EXCESSIVE; SINCE THEN THERE HAVE
BEEN MANY AND EXTENSIVE REDUCTIONS IN PAY AC-
COMPANIED BY SUBSTANTIAL INCREASES IN THE COST
AND VALUE OF THE SERVICES RENDERED BY THE RAIL-
WAYS.
The Congressional Joint Commission to Investigate the Postal Serv.
ice, which reported on January 14, 1901, is authority for the fact that, at
that time, railway mail pay was not excessive. Senator William B.
Allison, of Iowa; Senator Edward S. Wolcott, of Colorado; Senator
Thomas S. Martin, of Virginia; Representative Eugene F. Loud, of Cali-
fornia; Representative W. H. Moody, of Massachusetts, and Represen-
14
tative T. C. Catchings, of Mississippi, six of the eight members of the
Commission, then 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 railways, we are of the
opinion that “the prices now paid to the railroad com-
panies for the transportation of the mails’ are not exces-
sive, and recommend that no reduction thereof be made
at this time.” Fifty-second Congress, Second Session,
Senate Document No. 89, pp. 19, 22, 25, 29.
Since the Commission reported, the Volume of the American mails,
the revenue of the American postal service and its demands upon the
railways for services and facilities have greatly increased. The costs of
Supplying railway transportation have also greatly increased. The neces-
sary cost of railway property per unit of Service has increased, and in
consequence the amount required as a reasonable return thereon, on
account of higher wages and prices, the higher standards of service
demanded and the higher value of the real estate required for extended
and necessary terminal plants. Operating expenses have grown by
reason of repeated advances in rates of wages paid to employees of every
grade and increased prices of materials and supplies. Taxes have in-
creased with the rapidly augmenting exactions of State and local govern-
ments and the imposition of an entirely new Federal corporation tax.”
Yet during this period of rapidly advancing railway expenses, and in
spite of the fact that at its commencement the railway mail pay was not
excessive, the rates of payment for railway mail services have been sub-
jected to repeated and drastic decreases accomplished both by legislative
action and by administrative orders. These reductions have so much
more than offset the rather doubtful advantages which the railways
might be assumed to have obtained from the increased volume of mail
traffic that in 1912 they find their mail service more unprofitable than
ever before. The following table shows the facts:
Average railway mail
FiScal Total railway pay per $100.00 of
Year mail pay postal receipts.
1901 $38,158,969 e $34.18
1904. 43,971,848 30.62
1907 49,758,071 27.10
1910 49,405,311 22.04
1911 50,583,123 21.26
* Data indicating Some of the increases in wages and taxes are given in
Appendices D and E.
15
The foregoing shows that the Post Office Department expended for
railway transportation, in 1901, $34.18 in order to earn $100.00 in gross
and that by 1911 this expenditure had been reduced 37.8 per cent. to
$21.26. *
This notable reduction was the consequence (first) of the operation
of the law fixing mail pay under which the average payment per unit of
service decreases as the volume of mail increases; (Second) of the Acts
of Congress of March 2, 1907, and May 12, 1910, and (third) of admin-
istrative changes effected by the Post Office Department which, without
decreasing the services required of the railways or enabling those Services
to be rendered at any lower cost, greatly reduced the payment therefor.
Chief among these administrative changes was the Postmaster-General’s
order known as the “Divisor” order (No. 412 of June 7, 1907, Super-
seding Order No. 165 of March 2, 1907) radically lowering the basis
for calculating the annual payments for transportation. No official
estimate of the reduction in the aggregate annual payment produced
by the operation of the law fixing the scheme of payment has been made
but from time to time the Department has published estimates of the
reductions otherwise effected. None of these estimates is now up to date,
and to make them comparable with the present volume of mail sub-
stantial increases would be necessary, but they are given below as repre-
senting an amount substantially less than the lowest possible statement
of the total present annual reduction.
Cause of reduction Amount of annual reduction.
Natural operation of the law. . . . . . . . . . . . . . . . . . No estimate.
Acts of March 2, 1907, and May 12, 1910. . . . . . $2,723,658.90
Withdrawal of pay for special facilities. . . . . . . . . 167,005.00
Postmaster-General’s divisor order. . . . . . . . . . . . 4,941,940.34
Other administrative changes. . . . . . . . . . . . . . . . . 699,544.51
Total (with no allowance for the first item
above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,532,148.75
No one will contend for a moment that there has been any net
reduction in the cost of supplying railway mail Services and facilities
since 1901, the year in which the report of the Joint Commission to
Investigate the Postal Service was made. In fact, all changes in railway
operating costs, except those due to increased efficiency of organization
and management, which can have little if any effect in connection with
mail traffic, have been in the opposite direction. During the years charac-
terized by these reductions the railways have been called upon contin-
ually to improve the character of their postal service and the Post Office
Department will not deny that the railways are now rendering better,
more frequent, and more expeditious postal service than in 1901, or
16
any intermediate year, and are doing so at greatly increased cost to them-
selves.
In view of these thoroughly substantiated facts the drastic reduc-
stions of recent years afford unanswerable' proof that railway mail pay
is now too low.
IX. THE ADMINISTRATION OF THE POST OFFICE DE-
PARTMENT HAS NOT, IN THE LAST TWELVE YEARS, EF-
FECTED ANY REDUCTION IN THE ANNUAL TOTAL OF ITS
EXPENSES FOR OTHER PURPOSES THAN RAILWAY TRANS-
PORTATION OR IN THE PROPORTION OF ITS REVENUES
REQUIRED FOR SUCH OTHER EXPENSES, BUT THE
WHOLE SAVING WIEHICH HAS NEARLY ELIMINATED THE
ANNUAL DEFICIT OF THE DEPARTMENT IS REPRESENTED
BY THE REDUCED PAYMENTS, PER UNIT OF SERVICE, TO
THE RAILWAYS.
That the recent savings of the postal service have been wholly at
the expense of the railways is shown by the following:
1901. 1911.
Postal gross receipts. . . . . . . . . . $111,631,193 $237,879,823
Postal expenses, all purposes;
Total . . . . . . . . . . . . . . . . . . . . . $115,554,921 $238,507,669
Per cent. of gross receipts. . . . 103.5 100.3
Railway mail pay;
Total . . . . . . . . . . . . . . . . . . . . . $38,158,969 $50,583,123
Per cent. of gross receipts. . . . 34.2 21.3
Postal expenses other than rail-
way mail pay;
Total . . . . . . . . . . . . . . . . . . . . . $77,395,952 $187.924,546
Per cent. Of gross receipts. . . . 69.3 79.0
This table shows that in the ten years from 1901 to 1911 the Post
Office Department reduced its operating ratio between its total expenses
and its gross receipts from 103.5 per cent, to 100.3 per cent., being a
reduction of 3.2 points; but it also shows that this improvement was
due solely to the fact that the ratio of railway mail pay expenses to gross
receipts was reduced from 34.2 per cent. to 21.3 per cent., a reduction
of 12.9 points, while the ratio of all other expenses to gross receipts
increased from 69.3 per cent. to 79 per cent., an increase of 9.7 points.
Thus the improvement of 3.2 points in the ratio for all expenses was due
entirely to the greatly reduced ratio of Tailway mail pay, the heavy re-
duction in that respect exceeding by 3.2 points the very substan-
tial increase in the ratio of all other expenses.
17
During the ten years from 1901 to 1911 the Department took up
an enormous increase in business at a greatly decreased cost for railway
transportation and at a largely increased cost for other purposes. It
cost the Department, for purposes other than railway transportation,
nearly nine-tenths of $126,248,630 to add that amount to its gross re-
ceipts (although for these other purposes it had previously spent less
than seven-tenths of its gross receipts) while it required less than one-
tenth of the same sum to pay for the added railway transportation that
the new business required (although at the beginning of the period
railway transportation had cost more than one-third of the gross re-
ceipts). This startling comparison fully warrants the conclusion that
the power of Congress and the Department has been exercised to force
upon the railways, by reducing the payments for their services, the
burden not only of the effort to eliminate the annual postal deficit but
of considerable increases in other forms of postal expenditure. No ref-
erence to rural free delivery will serve to explain away the conclusion
suggested by this comparison especially since only a fraction of the cost
of that service represents really an additional net outlay. This service
has permitted a reduction of one-third in the number of post offices and
has been in many cases substituted for star route service and the savings
thus permitted ought to be credited to it before determining its cost.
That increases in postal expenditures were necessary, between 1901
and 1911, is not denied. The period was one in which steady and exten-
sive increases in the cost of living made necessary considerable increases
in the salaries of postal employees and in the cost of postal supplies,
precisely as the railways were impelled to increase the salaries and wages
of their employees and were obliged to pay higher prices for their Sup-
plies. In other words, the purchasing power of the American dollar,
and of standard money everywhere, greatly decreased and this decrease
affected the Post Office Department as it has affected every business
undertaking. But the purchasing power of the railway dollar decreased
exactly as that of all other dollars and it was unreasonable and unjust
that while this change was in progress, the losses which it entailed in
the postal service of the Government should be shifted, as it has been
shown that they were, to the railways which were, at the same time,
suffering far greater losses from the same cause.
X. THE CONTINUOUS REFUSAT, OF THE POST OFFICE
DEPARTMENT TO QRDER REWEIGHINGS OF THE MAILS
EXCEPT AFTER THE MAXIMUM INTERVAL OF FOUR
YEARS WHICH THE LAW ALLOWS, THE DEMANDS FOR STA-
TION AND TERMINAL SERVICES THAT ARE RENDERED
WITHOUT ANY OR WITHOUT ADEQUATE COMPENSATION
AND THE UNJUST DISCRIMINATION AGAINST COMPART-
18
MENT CARS USED AS RAILWAY POST OFFICES ARE ALL
ABUSES, SERIOUSLY INJURIOUS TO THE RAILWAYS, WHICH
HAVE GROWN UP UNDER THE PRESENT SYSTEM OF PAY-
MENT AND OUGHT AT ONCE TO BE REMEDIED.
In addition to the inadequacies in the rates of pay provided under
the present law, which result in payments that do not leave any balance
for taxes or return upon property and indeed do not even meet Oper-
ating expenses, there are certain conditions which have grown up in
the application of the existing basis of pay that ought to be rectified.
This is especially necessary in view of the tendency, herein shown, of
the Post Office Department to apply the system so as to reduce its ex-
pense for railway transportation, and to look to this item as the chief
or sole source of economies.
The transportation pay received for each railway route is deter-
mined, under the practice of the Department, for a period of four years
on the basis of the average daily weight carried during a period of
about three months duration prior to the beginning of the period for
which it is fixed. Thus, by the terms of the law, the Government upholds
the principle that weight should be the basis of payment but, by
an inconsistent practice, denies that principle and creates a condition
under which it is practically certain that the weight actually carried
will differ materially from the weight paid for. Congress, Surely, never
intended this result for the provision of law is, merely, that the mail
shall be weighed “not less frequently” than once in four years and clearly
implies an intention that it should be weighed whenever a substantial
change in volume has taken place. But the Post Office Department
controls, subject to the provision of law, the frequency of the weighings,
and naturally seeks those reductions in its expenses which can be effected
without loss anywhere except in railway revenues. Consequently, it long
ago ceased to order new weighings, except when compelled to do so by
the expiration of the statutory limit. It thus happens that while the
railways are paid on the basis of a certain average daily weight they are
frequently carrying a much greater weight and with no compensation
whatever for the increase in the weight. In other instances the change
is in the opposite direction but with increasing national population and
wealth it is obvious that most of these changes must be to the injury
of the railways. However, the element of uncertainty thus introduced
into each contract is unbusinesslike and in fairness to both parties ought
to be removed. No railway would make a four years’ contract to carry,
for a definite sum, the unlimited output of any manufacturing plant
and if it attempted to do so the contract would be void under the Inter-
state Commerce law. The terms of the mail contracts are substantially
19
dictated by the Postmaster-General and by Congress and the latter
ought, in justice both to the railways and to the Government, to require
the former to make annual weighings in order that the scheme of pay-
ment provided in the law may be fairly and accurately applied.
Railways are required to transfer the mails between their stations
and all post offices not more than a quarter of a mile distant from the
former and, at the election of the Post Office Department, to make
similar transfers at terminals. For the former no compensation is
accorded, and for the latter the allowances are inadequate. There are
numerous instances in which these extra Services require expenditures,
on the part of the railways concerned, that exceed the total compensation
of the mail routes on which they occur. The extent of these require-
ments in particular cases is largely subject to the will of the Department
and this produces unreasonable uncertainties as to what may be de-
manded during the life of any contract. The basis of payment plainly
does not contemplate such services, they are a survival from the period
when the mails were carried by stage-coaches, which could readily
deviate these distances from their ordinary routes, and it is clear that
the Government ought to perform these services itself or reasonably
compensate the railways therefor.
Much of the mail moved by the railways is carried in cars especially
equipped as traveling post offices in order that it may be accompanied by
postal clerks who perform, on the journey, precisely the labor which
they would otherwise perform in local post offices. Cars so used can be
but lightly loaded and are costly to supply, to equip, to maintain and to
move. Their use has greatly increased the efficiency of the postal service
and vastly expedited the handling of the mails. In the infancy of this
service Congress provided for additional payments for the full cars so
required, but when the practice of requiring portions of cars for the
same identical purpose was inaugurated no provision for paying for
them was made and this condition never has been corrected. Even in
Document No. 105, the injustice of this situation is recognized (page
3) and the Postmaster-General asserts that it is a purely arbitrary
discrimination and without logical basis. Obviously a reasonable allow-
ance for apartment cars ought to be made.
XI. THE POSTMASTER-GTENERAL’S PROPOSED PLAN
OF PAYMENT BASED UPON OPERATING COST AND TAXES,
TO BE ASCERTAINED BY THE POST OFFICE DEPARTMENT,
PLUS SIX PER CENT. IS SERIOUSLY WRONG IN PRINCIPLE
AND WOULD ENCOURAGE AND PERPETUATE INJUSTICE.
The foregoing discussion makes plain the error and injustice in the
Postmaster-General’s proposal to pay the railways for carrying the mail
20
upon the basis of returning to them the operating expenses and taxes,
as ascertained by the Post Office Department, attributable to the car-
riage of the mails, plus six per cent. of the sum of these expenses and
taxes.
The discussion under heading III above demonstrates that the plan
leaves out of consideration any allowance for return upon the property
and would be destructive of the universally recognized rights of the
railroad companies.
\ .
Furthermore, such a plan is fundamentally erroneous because it
involves paying the highest rates to the railroad that by reason of
physical disabilities or inefficient methods is most expensively operated
and the lowest rates to the railroad which, by reason of the highest
efficiency, operates at the lowest cost. A railroad's Superior operating'
efficiency is frequently due to exceptionally heavy capital expenditures
to obtain low grades, two, three or four main tracks, and to improve in
other respects the roadbed and tracks to the end that trains may be
hauled at the lowest expense. Such a railroad needs, and is entitled
to sufficient net earnings to enable it to pay a proper return upon the
increased value which is due to such expenditures. But under the Post-
master-General’s plan, a railroad would be penalized for all the capital
expenditures made by it for the purpose of decreasing its operating cost,
because the more it decreased its operating cost the more it would de-
crease its mail pay. *.
The ascertainment of the cost to a railroad of conducting mail
service is necessarily very largely a matter of judgment and opinion,
because a large proportion of the total operating expenses are Com-
mon to the freight and passenger traffic and can only be approx-
imately apportioned. There is room for a very wide discretion in the
making of such apportionments. It would not be right or proper to
entrust the Post Office Department with the discretion of making such
apportionment, because the Post Office Department has an obvious in-
terest at stake, its object always being to reduce the railroad pay to
a minimum.
The last preceding statement is fully justified by the facts disclosed
by the foregoing pages, which show how consistently the Post Office
Department has relied upon reductions in railway mail pay as the ever
available source of desired curtailments of expenses and how unsuccess-
fully the railways have resisted this persistent pressure. They show
that successive Postmasters-General have taken advantage of every legal
possibility, such as taking the longest time between mail weighings
which the law permits and the strained interpretation of the statute
fixing the basis of payment (page 19), in order to effect reductions
21
in railway mail pay. Consequently, the facts point irresistibly to one
conclusion, namely, that the Post Office Department is a bureaucratic
entity with an interest in the reduction of the amounts paid to the rail-
ways that is incompatible with an impartial ascertainment of what is
fair compensation. This interest, coupled with the brief tenure of the
responsible officers of the Department, must always incline the latter to
support insufficient standards of mail pay and prevent their recognizing
the ultimate necessity of paying fairly for efficient service. It would,
therefore, be clearly inexpedient and strikingly unjust to place railway
mail revenues wholly at the mercy of the Department by enacting a law
which would authorize each Postmaster-General to fix railway mail pay
on the basis of his own inquiries and opinions in a field in which so much
must be left to estimate and approximation as that of the relative or
actual cost of the different kinds of railway service.
It is conceded that every railway mail contract is between the
Government, which is the Sovereign, and a citizen, and that the nature
and terms of the contract are always substantially to be dictated by the
former. But this very condition invokes the principle of primary justice,
that the sovereign shall take care to exercise its power without oppres-
sion. To this end the determination of the terms on which the Post
Office Department may have the essential services of the railways ought
to be reserved, as at least partially in the past, to the Congress, or, if
delegated at all, they should be entrusted to some bureau or agency
of Government not directly and immediately interested in reducing
railway mail pay below a just and reasonable compensation.
APPENDIX A.
EXTRACTS FROM THE POSTAL LAWS AND REGULATIONS.
“Railroad companies, at stations where transfer clerks are em-
ployed, 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.” Section 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.” Section 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 dis-
patched, 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 exception.” Section 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 Superintendent of Railway Mail Serv-
ice.” Section 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.” Section
1187, third paragraph.
23
“Train pouch records will be kept on file at the headquarters of
division superintendents of railroad companies for at least one year im-
mediately 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 De-
partment.” Section 1187, fourth paragraph. --
“Railroad companies will require their employees to submit pouch
records for examination to post office inspectors and other duly accredited
agents of the Post Office Department upon their request and exhibition
of credentials to such employees.” Section 1187, fifth paragraph.
“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.” Section 1191, first paragraph.
“The railroad company must also take the mails from and deliver
them into all intermediate post offices and postal stations located not
more than eighty rods from the nearest railroad station at which the
company has an agent or other representative employed, and the com-
pany shall not be relieved of Such duty on account of the discontinuance
of an agency without thirty days’ notice to the Department.” Section
1191, Second paragraph.
“At connecting points where railroad stations are not over eighty
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 dispatched by
the trains of said company.” Section 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 companies and not employees of the postal serv-
ice, and need not be sworn; but such persons must be more than sixteen
years old and of Suitable intelligence and character. Postmasters will
promptly report any violation of this requirement.” Section 1193.
24
“Where it is desirable to have mails taken from the post office or
postal station to train at a terminal point where the terminal service de-
volves upon the company, in advance of the regular time of closing mails,
the company will be required to make such advance delivery as becomes
necessary by the requirements of the service.” Section 1194.
“When a messenger employed by the Post Office Department cannot
wait for a delayed train without missing other mails the railroad com-
pany will be required to take charge of and dispatch the mails for the
delayed train, and will be responsible for the inward mail until delivered
to the messenger or other authorized representative of the Department.”
Section 1195. -
“Whenever the mail on any railroad route arrives at a late hour of
the night the railroad 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 at the post office,
or to the mail messenger employed by the Post Office Department, at
as early an hour as the necessities of the post office may require.” Sec-
tion 1196.
“When a train departs from a railroad station in the night time
later than 9 o'clock, and it is deemed necessary to have the mail dis-
patched 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 messen-
ger 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 train arrives, and
then see that it is properly dispatched.” Section 1197, first paragraph.
“The 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 representatives of the company may be prop-
erly instructed.” Section 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 contractor.” Section 1198.
25
“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.” Section 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 re-
ceipt and delivery of mails satisfactory 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.” Section 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.” Section 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.” Section 1200, third paragraph.
“The engineer of a train shall give timely notice, by whistle or other
signal, of its approach to a mail crane.” Section 1200, fourth paragraph.
“Railroad companies are required to convey upon any train, with-
out 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.”
Section 1184.
26
APPENDIX B.
CLASSIFICATION OF OPERATING EXPENSES.
(Data from Reports of the Interstate Commerce Commission.)
Average Cost per mile of line.
Fiscal year 1910
- November, 1909
Monthly average for the
Other eleven months Of
the fiscal year
Per Cent. Of Per cent. Of
Monthly monthly monthly
Class. Amount average Amount average for Amount average for
- the fiscal the fiscal
year. year.
Maintenance of Way and structures. . . . . . . . $1,562.88 $130.24 $124.04 95.24 $130.80 100.43
Maintenance of equipment. . . . . . . . . . . . . . . . . 1,746.00 145.50 148.44 102.02 145.23 99.82
Traffic expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 220.61 18.38 18.85 102.56 18.34 99.78
Transportation expenses. . . . . . . . . . . . . . . . . . . 2,893.71 324.48 327.7S 101.02 324.18 99.91
General expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 287.71 23.98 23.10 96.33 24.06 100.33
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . $7,710.91 $642.58 $642.21 99.94 $642.61 100.00
§
APPENDIX C.
RECEIPTS FROM PASSENGER AND FREIGHT TRAFFIC BY MONTHS.
(Data from Reports of the Interstate Commerce Commission.)
Passenger receipts per Freight receipts per Per cent, of
Imile Of line mile Of line passenger
receipts to
Per Cent. Of Per cent. Of receipts from
MOnth Total Daily daily av- Total Daily daily av- both passen-
Average erage for average erage for gerS and
year year freight
1909, July . . . . . . . . . . . . . . . $251.66 $8.12 112.15 $608.67 $19.63 88.46 29.25
Aug. . . . . . . . . . . . . . . . . 269.70 8.70 120.17 653.97 21.10 95.09 29.20
Sept. . . . . . . . . . . . . . . . 254.95 8.50 117.40 704.51 23.48 105.81 26.57
Oct. . . . . . . . . . . . . . . . . 231.80 7.48 103.31 781.91 25.22 113.65 22.87
NOV. . . . . . . . . . . . . . . . 206.69 6.89 95.17 752.69 25.09 113.07 21.54
Dec. . . . . . . . . . . . . . . . 211.55 6.82 94.20 640.59 20.66 93.11 24.83
1910, Jan. . . . . . . . . . . . . . . . . 187.42 6.05 83.56 618.06 19.94 89.86 23.27
Feb. . . . . . . . . . . . . . . . . 171.92 6.14 84.81 603.76 21.56 97.16 22.16
March . . . . . . . . . . . . . . 202.61 6.54 90.33 716.76 23.12 104.19 22.04
April . . . . . . . . . . . . . . . 208.84 6.79 93.78 658.93 21.96 98.96 23.63
May . . . . . . . . . . . . . . . . 218.47 7.05 97.38 6S2.96 22.03 99.28 24.24
June . . . . . . . . . . . . . . . . 233.25 7.78 107.46 674.97 22.50 101.40 25.68
Average . . . . . . . . . . . . . . . . . $220.32 $7.24 $100.00 $674.81 $22.19 100.00 24.61
£3
APPENDIX D.
HOW RAILWAY WAGES HAVE INCREASED.
In the year 1901 the railways reporting to the Interstate Com-
merce Commission received, in gross from operating sources, the sum of
$1,588,526,037.00 and expended in wages and salaries the sum of $610,-
713,701.00; in 1910 the corresponding totals were $2,750,667,435.00 and
$1,143,725,306.00. Computations from these totals show that in 1901
the railways expended in wages and salaries $38.45 out of each $100.00
of gross operating receipts, while in 1910 the proportion had increased
to $41.58 a difference of $3.13 in each $100.00 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
would 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 method and facilities. Comparisons of
rates of wages, from the annual statistical reports of the Interstate Com-
merce Commission, follow:
Average wages per day
Class of Employees Increase,
1901 1910 per cent.
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 Shop men . . . . . . . . . . . . . . . . . . . . . . . . . . 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
29
APPENDIX E.
HOW RAILWAY TAXES HAVE INCREASED.
(Data from Reports of the Interstate Commerce Commission.)
Average per
Per cent. Of
Year Amount paid mile operated net receipts
1900 . . . . . . . . . . . . . . $48,332,273 $251.00 8.7
1901 . . . . . . . . . . . . . . 50,944,372 260.50 8.6
1902 . . . . . . . . . . . . . . 54,465,437 272.12 8.3
1908 . . . . . . . . . . . . . . 57,849,569 281.76 8.4
1904 . . . . . . . . . . . . . . 61,696,354 290.69 9.0
1905 . . . . . . . . . . . . . . 63,474,679 292.55 8.5
1906 . . . . . . . . . . . . . . 74,785,615 336.36 S.8
1907 . . . . . . . . . . . . . . 80,312,375 353.09 S.9
1908 (1) . . . . . . . . . . . 84,555,146 366.84 10.7
1909 (1) . . . . . . . . . . . 90,529,014 384.57 10.1
1910 (1) . . . . . . . . . . . 103,795,701 430.99 10.3
(1) Not including terminal and switching companies.
30
APPENDIX F.
DNITED STATES SENATE
COMMITTEE ON POST OFFICES AND POST ROADs
September 11, 1912.
My dear Sir:
I hand you herewith a copy of Senate Bill No. 7371, introduced by
me by direction of the Senate Committee on Post Offices and Post
Roads, embodying a plan recommended by the Post Office Department
for determining the compensation to be paid to railroad companies for
transportation of the mails. This general subject has been referred to
a joint Committee of Congress. The Committee has not yet organized
and probably will not do so for several weeks, but as a member of that
Committee and as Chairman of the Senate Committee on Post Offices
and Post Roads and under authority of Senate Resolution No. 56, I de-
sire to secure immediately such information as may be available for
submission to the Committee at its first meeting. I will ask you, there-
fore, to answer the following questions:
(1) Do you deem the present plan of compensation an equitable
one as between the Government and the railroads? If not, in what re-
spects and as to what classes of railroads is it inequitable?
(2) Is the underlying principle of the plan embodied in the in-
closed bill a proper basis for compensation? If not, wherein is it
improper, and why?
(3) What, in your opinion, is a desirable plan for compensating
railroad companies for transporting the mails?
I desire an early reply to these inquiries relating to the general plan,
and, if you are not ready to do so now, shall be glad to have you submit
later a detailed discussion of this bill and of House Document No. 105,
62d Congress, 1st Session, with which, I assume, you are familiar.
Yours very truly,
(Sgd.) JONATHAN BOURNE, JR.
Chairman Senate Com. on Post Offices and Post Roads.
31
APPENDIX G.
COMMITTEE ON RAILWAY MAIL PAY.
October 3, 1912.
Hon. Jonathan Bourne, Jr., .
Chairman, Senate Committee on Post Offices and Post Roads,
Washington, D. C.
My dear Sir:-
The Committee on Railway Mail Pay, representing 268 roads operat-
ing over 214,275 miles of road, has been investigating the subject of
mail compensation for about three years, or since the Post Office Depart-
ment, in 1909, sent out a series of questions regarding the space fur-
nished for mails in passenger trains, and the cost to railroad companies
of the service which they perform for the Government in the carriage
of the mails. Therefore the Committee has thought it would be of in-
terest to you to receive from it an answer to the questions propounded
by your letter of September 11, 1912, addressed to the officers of rail-
roads throughout the country.
A response to House Document No. 105 is now in course of prepara-
tion, and will be submitted at an early date. In the meantime, our
committee desires to submit the following replies to your inquiries:
Question 1.—Do you deem the present plan of compensation an
equitable one as between the Government and the railroads? If not,
in what respects and as to what classes of railroads is it inequitable?
Answer.—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 travelling 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.
The present law is based upon correct principles, but should be so
amended as to provide— :* -
32
(a) For the Repeal of the Act of March 2, 1907.
Notwithstanding the large increase in every other item con-
nected with the administration of the Post Office Department, the
Tailroads’ pay has been singled out as the one element in these oper-
ations for concentration of economies. This too, in the face of
the fact that the operating expenses of the railroads have been
greatly augmented by the requirements of the law with reference to
steel equipment, and a general increase in cost characteristic of all
business operations.
(b) For annual weighings, and a definite and just method for
ascertaining daily average weights.
Under the quadrennial weighing all increased weight of mail
during the next succeeding four years is carried by the railroads
without any compensation whatever, which is manifestly unfair.
The railroads must provide car space and facilities for the maa-
imum weight offered at any time, yet they are paid only for the
average weight carried. The Postmaster General’s order covering
the divisor has unfairly reduced this average.
This provision is essentially necessary in view of the bill estab-
lishing the Parcels Post, effective January 1, 1913, which will re-
sult in taking from the express service traffic for which the railroad
companies now receive compensation and transferring it to the mail
service; the bill referred to containing no provision for payment to
the railroad companies for the increased tonnage to be handled in
mail cars, although such provision was made for the star routes and
the city wagon Service.
(c) For pay for Apartment Cars on some basis that will com-
pensate for the service.
That the Postmaster General has himself recognized the justice
of such a change, is indicated in the following quotation from page
3 of House Document No. 105:—
<<:: :}; an additional amount may be allowed for railway
post office cars when the space for distribution purposes occupies 40
feet or more of the car length. No additional compensation 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.”
33
(d) For a fair allowance to the railroads for the side and
terminal messenger service which they perform for the Post Office
Department, according to the value of this service to the Post Office
Department.
The necessity for this is also emphasized by the establishment of
the Parcels Post which will undoubtedly add greatly to the ex-
pense of the service.
(e) That all rates of pay should be definite and not subject
to the discretion of the officers of the Post Office Department.
Other inequities exist under the present law, but are due to the
administrative methods rather than to the law itself.
Question 2–Is the underlying principle of the plan embodied in
the enclosed bill a proper basis for compensation ? If not, wherein is it
improper, and why?
Answer.—The underlying principle of the plan embodied in Senate
Bill No. 7371 is not correct. Any plan of compensation based upon
operating cost and taxes, plus six per cent. for profit, is fundamentally
Wrong, because it makes no allowance for return upon the property
employed.
Furthermore, such plan is not correct, because it involves paying the
highest rates to the railroad that by reason of physical disabilities or
inefficient methods is most expensively operated, and the lowest rates
to the railroad whose operations are most efficient and whose Service is
most satisfactory and valuable to the Post Office Department. Under
the plan proposed, a railroad would be penalized for all the capital ex-
penditures made by it for the purpose of decreasing its operating cost,
because the more it. decreased its operating cost the more it would de-
crease its mail pay, although by making this improvement in Operating
cost it would have incurred an additional capital charge upon which
it would have to pay dividends or interest.
The ascertainment of the cost to a railroad of conducting the mail
service is necessarily very largely a matter of judgment and opinion,
because a large proportion of the total operating expenses are expenses
common to the freight and passenger traffic and can only be approxi-
mately apportioned and there are various formulas existing for such
apportionment. It would not be right or proper to entrust to the Post
Office Department the discretion of selecting the formulas by which to
ascertain these costs, because the Post Office Department has an obvious
interest at stake, its object always being to reduce the railroad pay to a
minimum.
34
The estimated cost of a specific service is not a proper basis for fixing
rates for transportation of any commodity. The railroads are entitled
to receive a full and fair return for the value of the sérvice performed,
and the ascertainment of cost of such service is principally of value as
a protection against the establishment of confiscatory rates.
Question 3.—What, in your opinion, is a desirable plan for compen-
Sating railroad companies for transporting the mails?
Answer.—The existing law has been in effect for nearly forty years,
and those who have worked under it are more or less familiar with its
operations. If it were amended to correct serious inequities, as Sug-
gested in the answer to Question 1, and fairly and impartially admin-
istered by the Post Office Department, it would be preferable to any
untried or theoretical plan that could be proposed.
Very respectfully yours,
COMMITTEE ON RAILWAY MAIL PAY,
By
(Signed) RALPH PETERs,
Acting Chairman.
*
35
75
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akewºº-
64-
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§

“There is no warrant in the oft-repeated assertion
that the Government is being robbed in its mail pay-
ments by comparison with what the express companies
pay. There has been an amazing amount of reckless
assertion on this subject.”
-Report of Joint Congressional Committee on
Railway Mail Pay.
Railroads Earn Less from Mails
than from Express
The Joint Congressional Committee on Railway Mail
Pay finds the railroads are better paid for serving the ex-
press companies than for serving the Government in
carrying the mails.
The Committee has reported to Congress that the
mail service costs the railroads more and yields them less
than the express service.
The report holds that the comparison of mail and
express receipts furnishes no basis to support the claim
that the railroads have been overpaid for carrying the mails.
The Committee declares the records of the Interstate
Commerce Commission prove “that the express payments
have been responsive to the growth in traffic, while the
mail payments clearly have not.”
The evidence before the Committee showed that in a
typical passenger train the express car earned $6 while the
mail car was earning $5.
Express Yields the Higher Earnings—Mail
- Forces the Higher Costs
The Services Compared
The Joint Congressional Committee's re-
port Says :
“The express service undoubtedly costs
the railroads less than the mail per car-mile.
" Railway employes help to load and un-
load mail but not express matter, except
where employes are jointly paid by the rail-
road and express companies.
* Express cars are cheaper than equipped
mail cars.
“Railroad companies are liable for injuries
to mail clerks but not for injuries to express
employes.
* Express matter is handled at all times by
express company employes.
“A railroad company not only handles
the mail at and in stations, but in a great many
instances bears the expense of transporting
mail between the station and the post office.
“Mail must be carried on all trains, in-
cluding the fast trains, while express matter
is limited in frequency and speed of service.
“Postal employes are carried free on rail-
roads while on official business, whether
connected with railroad mail service or not.
Transportation of express employes is recip-
rocated by free services rendered by the
express companies for the railroads.”
Mail vs. Express Receipts
As to how the receipts of the railroads
from mail and express Compare, the Com-
mittee reviews the evidence for the test month
of November, 1909, and states this conclusion:
"Suffice it to say that we are convinced that
the railroad earnings from mail were in
1909 decidedly lower than from express
on a car-mile basis, which is the only basis
for Comparison we have.
“Certainly there is no warrant in the
oft-repeated assertion that the Government
is being robbed in its mail payments by com-
parison with what the express companies
pay. There has been an amazing amount of
reckless assertion on this subject.”
%. , X; X +
In 10 years railway mail pay increased
only 22 per cent., while the earnings of the
railroads from express traffic increased 91
per cent., according to the records of the
Interstate Commerce Commission placed in
evidence before the Joint Committee.
+ -K- -X: +
Burdens of the Mail Service
In the hearings before the Committee the
railroads proved mathematically that express
cars earn an average of 19 per cent, more,
for each mile traveled, than mail cars.
The railroads claimed, nevertheless, that
the mail service was the more burdensome
and costly to perform. Proof of this assertion
was called for by the chairman of the Joint
Committee, Hon. Jonathan Bourne, Jr. In
response, Mr. V. J. Bradley, General Super-
visor of Mail Traffic of the Pennsylvania
Railroad, prepared a comparative statement
of the differences between the two services.
For the information of the public that
statement is reprinted on the following pages
by the committee representing the railroads
in the matter of mail pay.
RALPH PETERS, Chairman.

The railroads are paid approximately 50 per cent. of the total
gross receipts of the express companies for carrying their traffic;
they receive less than 20 per cent. of the gross receipts of the Post
Office Department for a similar, but much more costly, service.
2
--------------------- - - Mails Burden Railroads More than Express
Differenceſ in the requirements tºmpoſed upon the railroad companies in the performance oy United States Mai.
Service as compared with ſimilar relations in the performance of ſervice for the express companies.
POST OFFICE DEPARTMENT
EXPRESS COMPANIES
Post Office Department seeks to
stipulate all the conditions and
many of them at will without
Consultation.
Differences with Post Office
Department not subject to
arbitration as in England.
Post Office Department weighs
the mails and adjusts the pay
reserves the right to change
every four years and practi-
cally gives itself a rebate on
the increased business for the
intermediate period.
Post Office Department demands
unlimited frequency — practi-
cally on every train.
Post Office Department requires
excess car space for sorting the
mails en route far beyond what
the load requires.
The railway post office cars are
largely occupied by pigeon-
holes and iron racks and are not
available forgeneral railroad use
when not occupied by the mails.
The law requires steel railway
post office cars, and the Post
Office Department prescribes
the interior fittings and special
sanitary fixtures and require-
ments. Light (electric or gas)
is especially expensive, so
much being needed. Hence
high cost of construction and
maintenance.
The railroad companies pay for
loading and unloading mailcars.
Probably three or four times as
many railway postal clerks
are carried for sorting the
SUBJECT
1. Contracts
2. Differences tº
3. Pay adjustments . .
4. Transportation facili-
ties
5. Car space .
6. Railway post office
cars; mail apartment
C2. TS
7. Construction; main-
ten all Ce
8. Loading and unload-
ing . . . . .
9. Employes accompany-
ing traffic en route
10. Station room
mails en route. The railroad
companies are responsible for
their lives and safety. Sub-
stantial amounts are paid annu-
ally on account of accidents.
If the Post Office Department
requires room for transfer
clerks at stations, the railroad
companies provide them with-
out special charge and also
furnish them and supply heat,
Express companies formally con-
tract with railroad companies,
the railroad companies being
the controlling party and re-
serving important power.
Arbitration would be naturally
resorted to, and many contracts
so provide. -
Express pay to railroad companies
is automatically adjusted on
the actual daily business.
Express companies strictly limited
tC) CeItal n tral In In OVern entS.
Express traffic loads more com-
pactly and therefore more eco-
nomically.
Express traffic does not require
specially equipped cars. Bag-
gage 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 mainte-
Ila Il Ce,
The express companies bear this
expense themselves.
Express companies relieve the
railroad company from any re-
sponsibility for injury or death
of its employes.
The express company pays rent
for any space occupied in sta-
tions or builds its own struc-
tu IeS.
light, iced water, etc.
SUBJECT
POST OFFICE DEPARTMENT
EXPRESS COMPANIES
11.
12.
13.
14.
15.
16.
17.
Side and terminal
messenger service .
Free or reciprocal ser–
W1Ce
Mail cranes and mail
receivers .
Advance loading of
railway post office
C2 [S
Handling traffic.
Responsibility for loss
or damage
Fines and penalties
Post Office Department requires
railroad companies to carry
the mails between the station and
the post office at many places.
Post Office Department makes
no concessions to railroad com-
panies.
Post Office Department requires
railroad companies to erect
and maintain these devices at
sever al thousand places
throughout the country.
Post Office Department expects
cars to be placed in terminals
several hours before leaving
time for distribution in addi-
tion to loading, and thereby
avoids renting space in post
offices for that purpose.
Post Office Department pays
nothing extra to train baggage-
men 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 re-
sponsible for the general 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 (perhaps
relatively unimportant) must
be given preference over pas-
senger and other traffic.
No such service is performed for
the express company.
The express company usually car-
ries free, money, tickets, valu-
able packages, etc., for the rail-
road company, not only on the
contracting railroads, but also
over the connecting lines over
which the express company
Operates.
No such requirement exists in
connection 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 employes
acting in the joint capacity.
Express company accepts all re-
sponsibility for loss or damage
to express traffic.
Express company accepts the rail-
road company’s standard of
efficiency and has no superior
privileges of supervision.
*.
º

“The evidence before us shows a relatively higher earning
from express than from mail, taking the railroads as a whole.”
—Report of Joint Congressional Committee on
Railway Mail Pay.

“That there should be an increase in railway mail
pay . . . must be expected. No reasonable man can
expect that the Government can increase its postal rev-
enues at an average rate of $13,000,000 per year without
increasing its expenses.”
—Report of Joint Congressional Committee on
Railway Mail Pay.
Railroads' Right to Higher
Mail Pay Vindicated
The Joint Congressional Committee on Railway Mail
Pay, of which ex-Senator Jonathan Bourne, Jr., is Chairman,
after two years of investigation, sustains the main conten-
tion of the railroads that they are underpaid for carrying
the mails.
The Committee now recommends to Congress a scale
of rates which it estimates will increase the total payments
to the railroads by about $3,000,000 per year, and says:
“We believe our suggested rates are certainly not too
high from a Governmental standpoint, though they may be
too low from a railroad standpoint.” § {
% ºf k +
Three years ago Postmaster General Hitch-
cock announced to the public that the Post
Office Department had found the railroads
to be overpaid by $9,000,000 per year.
That “finding” is now completely demol-
ished as the result of the most thoroughgoing
inquiry ever made into railway postal con-
ditions. -
The position that the railroads should in
fairness be paid more is not only sustained,
but the general principles of Post Office
Department policy toward the railroads—
and against which the companies have so
long protested—are condemned.
The Congressional Committee also decries
Postmaster General that “rates for carrying
the mails on railroads should be less than
those which might be fixed for commercial
purposes.”
The Committee report replies:
“Do we ask a mail clerk to work for less
than a normal salary because he handles
letters? s
“The patrons of either freight or passen-
ger service should pay no more and no less
than a fair rate, and the Government should
pay no more and no less than a fair rate for
the transportation of mail. * -
“The money paid for freight, passenger,
the doctrine in the last annual report of the
express and mail transportation is all ulti-
mately paid by the public. Fair rates should
be made in all branches of traffic, otherwise
a deficiency of return from one branch must
be made up by an overcharge from another
branch. --
“The Government is the people organized.
The patrons of the freight or passenger train
services are the public unorganized. We see
no reason for favoring the people organized
as against the people unorganized.” .
The Right to a Fair Profit
“Regarding the certainty of the traffic,
some claim that the railroads are not com-
pelled to spend as much to get the mail
traffic in the way of advertising and traffic
bureaus as in the case of the passenger traffic
proper, and argue that this would tend to
make the mail car somewhat less expensive
per mile than the regular passenger car; but
even if this were a fact, it is in no wise in
conflict with the commercial principle. . . .
“ Unfortunate also is the attempt of the
department to find an analogy between the
commutation passenger traffic and the mail
traffic. The making of low rates per pas-
senger when there are many passengers in a
car is not in conflict with the commercial
principle. The earnings per car mile may
be greater than in the regular passenger ser-
vice. o * .
“In the matter of the certainty of the pay-
ment, we can see no reason for regarding the
department as a favored shipper. Is pay-
ment once a month for mail service any
better than payment in advance from the
passenger ?
Should Foster All Traffic
“It is said that railroads are not built
primarily to carry the mails. This may be
true. They are built primarily to get all the
traffic that can be developed, and, according
to the commercial principle, each great branch
of that traffic should, if possible, be made
to bear its proportionate share of the ex-
penses. . . .
“We are asked to consider the principle
of public utility’ as a reason for departing
from the commercial principle. Just as
railroads accept a low rate of profit on one
class of freight in order to develop a given
territory, they might, it is urged, be called
upon to make a special rate on mail because
mail helps to diffuse intelligence.
“The desirability of diffusing intelligence
may well be taken into account in fixing the
postage rates to be paid by the public, but it
is not clear that this has any connection with
what the Government should pay the rail-
roads.
“Does the manufacturer of desks make a
special price to the Post Office Department
because the mail service helps to diffuse
intelligence 2
“Then why should the railroad, which is
merely another instrumentality used by the
Government in its mail business, sell its
services at an abnormally low rate if the
Government is able to pay the normal rate ’’’
% + X x
No Allowance for Capital
The original estimate of $9,000,000 over-
pay was based on a proposal submitted to
Congress by the then Postmaster General,
Mr. Hitchcock, who proposed to save the
Government that amount yearly by paying
the railroads on the basis of the estimated
operating cost of carrying the mails plus 6 per
cent., with no allowance for return on capital.
“Evidently Mr. Hitchcock, and his De-
partmental Committee studying this prob-
lem, failed to realize,” says the report, “that
rights of way, roadbeds, tracks, equipment,
and terminals were necessary prerequisites in
the operation of mail cars, as no allowance
whatever was made in the suggested method
of payment for capital charges.”
- % k + X.
Increased Pay Natural
The Bourne Committee estimates that
its plan will increase the total of railway
mail pay by slightly less than $3,000,000
above the appropriations for 1914–15. The
report thus points out that railway mail pay
normally should be continuously higher :
“That there should be an increase in
railway mail pay need not be surprising; in
fact, it must be expected. The volume of
postal revenue increased at the average rate
of about 7 per cent. per annum, or an average
of about $13,000,000 a year during the
10-year period from 1903 to 1913. This
necessarily means a corresponding increase
in the volume of mail.
“NO reasonable man can expect that the
Government can increase its postal reve-
nues at an average rate of $13,000,000 per
year without increasing its expenses in
practically all departments of the service,
though perhaps at a smaller ratio.
"In this connection it is pertinent to
remark that although the postal revenues
doubled in that 10-year period, railway mail
compensation increased only 20 per cent.”
Railroad Claims Justified
In what manner the Bourne Committee
has supported the fundamental contentions of
the railroad as to the fact of underpayment
and unfair treatment, the following principles
for which the railroads have contended may
be repeated :
1. That the quadrennial system
Of adjusting payments to the in-
creased weights of the mails is unjust
and unbusiness-like.
2. That the railroads should be
paid for the messenger and terminal
services they now perform without
pay.
3. That apartments fitted up as
traveling post offices in cars partly
used for other purposes should be
paid for.
4. That the railroads are entitled
to a fair commercial profit for carry-
ing the mails.
5. That the rates of pay and con-
ditions of the mail service should be
fixed by law and not left discre-
tionary with Post Office Department
officials.
% -}{ }{ %
This is what the Committee says:
Quadrennial Weighings
“The country is divided into four divisions,
weighings being made in each division every
four years. This method is antiquated, un-
scientific, and unsatisfactory, as a quadrennial
weighing in a postal division must be unfair
to the Government in cases where there is a
decrease in the volume of mail in the four-
year period and unfair to the railroads in case
there is an increase.
“No actual data are obtainable as to the
actual increase or decrease in the weight of
lack of this information in the Post Office
Department was a great surprise to your
committee.
“The annual post office reports show,
however, an average increase in mail revenue
of 7 per cent. for the past 10 years; hence,
undoubtedly, there has been an annual in-
crease in the volume of mail during the
same period.
“If the increase in weight has been pro-
portional to the increase in revenue, then
under the present quadrennial weighing
system the railroads of the country have
received no compensation whatever from
the Government for about 14 per cent. Of
the mail carried by them during each four-
year period.
“Since expansion of the parcel post, the
quadrennial weighing has become much
more unsatisfactory as a means of determin-
ing the compensation to be paid for trans-
portation.”
% + X. X-
Relief from Messenger Duty
“It is no more reasonable or just to com-
pel the railroads to deliver mail to a post
office after it reaches the depots or terminals
than it would be for the Interstate Com-
merce Commission to require railroads to
furnish taxicabs free of cost to take passen-
gers to their homes on arrival at their desti-
nation depots, or motor trucks to move
freight from the freight terminals to the con-
signees at the expense of the railroads.
“Hence we provide in our suggested plan
for the relief of the railroads from this unjust
burden now placed upon them. . . .
mail, though under a weight system the
“Conveyance of mail on city streets is no
proper part of railroad duty. Railroad trans-
portation, both freight and passenger, begins
and ends at railroad depots and terminals.”
% -k
Free Transportation Limited
* *
The Committee considers that the free
transportation of Post Office Department
employes should be limited to those actually
engaged in the railway mail service, when on
actual dutv in such capacity, in contrast with
the Moon bill provision for free transporta-
tion when on official duty of any character.
On this point the report says:
“The railroads should no more be expected
to carry postal employes free of charge when
not directly and officially connected with the
Railway Mail Service than they should
United States Government engineers, officers,
or employes of any other department in our
Government.”
+ % * *
Government Ownership of
Postal Cars
“Our study of the subject has convinced
us that Government ownership of post office
cars is entirely impracticable and would be
Conclusions of the
much more expensive to the Government
than the present system of compensation.
At present the railroad companies own the
cars and pay all the expenses of heating,
lighting, repairing, painting, cleaning, inspect-
ing, furnishing ice water, etc.
“If the Government owned these cars,
which would be scattered throughout the
United States, it would be compelled to em-
ploy skilled inspectors to guard against de-
velopment of defects which would render
the cars unsafe, would employ cleaners and
arrange for heating and lighting, would main-
tain repair shops and employ expert me-
chanics.
“We do not believe that any person of
business experience will doubt for a moment
that to maintain the comparatively few R.
P. O. cars used in the Railway Mail Service
would cost the Government many times
what it costs the railroads.
“Nor do we believe that anyone, after
giving the subject consideration, will contend
that the railroads should be required to haul
such Government-owned cars without addi-
tional compensation for the service rendered.”
Bourne Committee
“It has been our view that it is not our duty to endeavor to make
out a case that is favorable or unfavorable to either the Government
or the railroads, but to ascertain with as great accuracy as possible
what is a reasonable compensation to be paid.
“We believe that the Government should deal justly with its citizens,
for if it expects them to deal justly with one another and with the Gov-
ernment, the Government must set the example by dealing justly with
them.
“We are aware that it is popular to denounce and attack the rail-
roads and that it would be pleasing to the taxpayer if the expenditure
for railway mail compensation could equitably be reduced.
“We do not believe, however, that the American people desire
the mails carried by the railroads or by anyone else for less than a
reasonable compensation therefor.
“We have endeavored to ascertain what are reasonable charges.
We recommend that such charges be paid.”
4

“The railroads 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.”
—Testimony of Second Assistant Postmaster General Stewart, before Joint Congres-
sional Committee on Railway Mai 1 Pay, Washington, D. C., May 14, 1913.
->- -
The Railroads' Appeal for Fair
Payment for Carrying
the People's Mail -
O carry the people's mail quickly,
safely and frequently is a social
obligation which the railroads freely
concede. It is a service voluntarily
performed, for no law compels a railroad
Company to carry mails unless it contracts to
do so. The courts hold, however, that if
the railroads so contract, they must do so on
terms named by the Government.
Though surrounded by these anomalous
conditions, the railroads have without stint
placed their resources at the disposal of the
Nation to develop the transportation of mails
to the highest possible state of efficiency,
This service has been paid for at a price
fixed by the Government, a price from which
the carriers have had no appeal, Railroad
officers have felt, ever since the present
method of railway mail payment was estab-
lished in 1873, that this compensation was
unjustly low.
This opinion is still held by experienced
railroad officers throughout the country, but
with even greater firmness and earnestness,
on account of the increasing costs of railroad
operation combined with frequent heavy
reductions in railway mail pay made by the
Government.
The United States Government, in 1912,
paid the railways $51,697,374.49 for carry-
ing mail. This was about 20.95 per cent.
of all postal revenues. In 1901 the rail-
revenues. In that same year, 1901, the
"Joint Committee to Investigate the Postal
Service,” of which Senator Wolcott
Chairman, reported to Congress its opinion
{ { º º e
that "the prices now paid to the railroads
W2S
for the transportation of the mails are not
excessive.” Yet, in 1907, Congress reduced
railway mail pay by $2,723,000, about five
per cent., and the Postmaster General, upon
his own initiative, by Administrative Order,
made a further reduction of nearly $5,000,000,
about ten per cent. ; an aggregate reduction of
$7,700,000 per annum, or fifteen per cent.
The railroads maintain that at present they
are underpaid by at least $15,000,000 per
year. It is their belief that a fair adjustment
would require that the Government should
pay the railroads for all services they render.
The complaint of the railways is not
against the standard of measuring such mail
service as is paid for, but that a very large
amount of service is demanded for which
the nation makes no payment whatever.
+ k + +
Present Method of Railway Mail
Pay
Railroads are now paid for carrying the
mails by two methods of measurement :
1. According to the weight hauled each
mile ; and -
2. For each mile a postal car is used for
ways received 34 per cent, of the postal
sorting mails en route.
THE RAILROADS CLAIM, HOW-
EVER, THAT THE NATION DOES
NOT PAY FOR THE ENTIRE WEIGHT
CARRIED OR ALL THE CAR SPACE
UTILIZED FOR SORTING.. IN DETAIL:
1. Weight. Ninety per cent. of all the
money paid to the railroads is for the weight
of mail carried. This is entirely proper, and
it is also but just that the law should stipu-
late that the rate of compensation should au–
tomatically diminish as the weight of mail
carried increases. Weight is the standard by
which freight rates and express rates are ap-
plied. It is a universal measure of the ser–
vice of hauling goods. It is an automatic
adjuster. On this basis the quantity of the
mail itself, multiplied by the distance it is
carried, determines what the compensation
shall be, and protects the railroad companies
as it does the Post Office Department.
The law stipulates that the mail shall be
weighed for a typical period at least once
every four years and that payment shall be
made during the entire period according to the
average weights then actually ascertained. In
practice, the Post Office Department has con-
strued this law to mean that the mails shall be
weighed not oftener than every four years.
The result is that though there is a constantly
increasing weight of mail, the railroads
receive no payment whatever for the
increase until the next quadrennial weighing
period, when a basis is arrived at which shall
govern the payments to be made for the suc-
ceeding four years. When, at the end of
four years, it is found that a very decided
increase in weight has taken place, no back
pay is permitted for the mail which was
actually carried in addition to the average
weight ascertained four years before.
An illustration of the injustice of this
quadrennial weighing system is in the
fact that just after the weighing of the
mails in Ohio in 1907, the printing of
stamped envelopes and newspaper
wrappers was changed from New England
to Dayton, Ohio, so that many railroads
have been required to handle this traffic
for four years without compensation,
while other roads have been receiving for
the same period compensation for services
not performed. After handling this
matter at Dayton for about three years
and before the next succeeding quadren-
nial weighing, the Post Office Depart-
ment withdrew a large amount of this
matter from the mails and shipped it by
freight. Thus the railroads will never
receive one dollar in compensation for all
of this mail which was handled during
that period.
This principle is at present working great
hardship to many railroads. The parcels
post started January 1, 1913, and immediately
there was a great increase of mail and a
reduction of express matter for which the
railroads had been previously paid. Congress
has allowed a 5 per cent, increase in pay to
Compensate for the parcels post, but the
records already indicate that the Govern-
ment's postal revenues will increase this year
from 20 to 30 per cent. On account of the
Parcels post.
In considering the foregoing, it should be
understood that the Government makes no
additional payment for speed or for fre-
quency of service. There is no greater pay
accorded the railroads for carrying mails at a
speed of sixty miles per hour than for fifteen
miles per hour. There is no greater pay for
100 trips a day than for one trip a day.
The aggregate weight of mail carried, and
therefore the pay, is the same, whatever the
speed or whatever the frequency with which
it is carried. -
The railroads are required to take on
scheduled trains all mail, even if necessary to
exclude and hold back baggage or express
matter. In fact, it is not an uncommon
thing, in St. Louis for instance, to unload
both baggage and express, and place mail in
baggage cars in order to supply the space
needed to carry all of the mail presented.
THE RAILROADS MAINTAIN,
THEREFORE, THAT WHILE WEIGHT
IS THE PROPER MEASURE OF PAY,
IT SHOULD BE ASCERTAINED EVERY
YEAR AND PAID FOR ACCORDINGLY.
% + 3 +
2. Railway Postal Car Service. To
facilitate the distribution of mail en route,
the railways have provided 1388 traveling
postal cars. They are fitted with every
modern appliance and every comfort for the
clerks who shall work in them. Full rail-
way post office cars of all sizes travelled

The complaint of the railways is not so much against the
standard of measuring such mail service as is paid for,
but that a very large amount of service is demanded
for which the Nation makes no payment whatever.
126,798,405 miles in the performance of
service during the fiscal year 1912. Pas-
senger cars on American railroads the same
year yielded revenue of about 25 cents for
each mile run. If the railway postal cars
had yielded as much per mile, it would have
amounted to a total of $31,699,601.
Yet the railway postal cars only con-
stitute about 38 per cent. of the entire car
space devoted to the U. S. mails, the other
62 per cent. being in mail apartment cars,
mail storage cars, and baggage cars.
On a number of routes pay has been
allowed for running full cars in one direc-
tion only. This obliges the railroad to
move the car in the opposite direction
without pay. To illustrate : The Union
Pacific, in one case, receives no pay for
handling eastbound, between Council
Bluffs, Iowa, and Ogden, Utah, 1003
miles, a sixty-foot mail car which is paid
for westbound only. For the round trip
the Company receives only 2.24 cents per
mile, or about the fare of a single passen-
ger, although a standard coach of the same
size will carry seventy passengers.
These railway postal cars in many cases
must be placed in stations from two to seven
hours before the time of the train's departure,
in order that the clerks may have opportu-
nity to begin sorting the mails. This saves
the Post Office Department the rental of
outside office space for that purpose. Where
such track space is used in expensive ter-
minals, such as the Grand Central Station in
New York, this item is of considerable
2CCOUInt.
THE POSITION OF THE RAILROADS
IS THAT THE EFFECT OF THE PRES-
ENT PRACTICE IS TO COMPEL MUCH
RAILWAY POST AL CAR SERVICE
WHICH IS NOT PAID FOR ; AND THAT
THE ACT OF MARCH 2, 1907, REDUC-
ING POSTAL CAR PAY WAS WITHOUT
Railway Services for Which No
Payment is Made
For the foregoing elements in the railway
mail service—weight of mail transported and
railway postal service—the Nation makes cer-
tain though partial payment. But as was stated
by the Wolcott-Loud Commission in 1901,
{ { e tº
The railroads perform many services and
afford many facilities for which the law does
not allow and the railroads do not receive
That statement is no
less true today than it was in 1901. Under
the law the Post Office Department alone
determines how far the Government shall
any compensation.”
compel these free services, and that depart-
ment has uniformly pursued a policy of
considering the efficiency of the postal service
regardless of how far provision had been
made for compensating the railroads for the
additional burden imposed.
Those services rendered the Nation for
which the railways receive no compensation
are the following:
I. Providing apartments for mail distribu-
tion in combination baggage cars.
Though the Government has recognized
that the space used for the distribution of
mail en route should be paid for, the law
stipulates that there shall be no payment for
such space unless the car, or portion of the
car, used aggregates forty feet in length. As
a matter of fact, a very large number of cars
have distribution space of from but ten to
thirty feet.
in use with space utilized for the mail serv-
Some 4029 such cars are now
ice aggregating 92,866 linear feet, equal to
WARRANT.
1548 full 60-foot postal cars. This is 160
The Government pays for the space used in
this car for sorting the mail
INTERIOR OF A 70-FOOT ALL STEEL RAILWAY POST OFFICE CAR
In the foreground observe the steel racks for holding the sacks open, into which the second-, third- and fourth-class mail is assorted.
Note the overhead boxes running down both sides of the car, also used for these classes of mail and permitting of over 200 separa-
tions simultaneously. The letter mails are assorted in the winged cases in the background, these having 748 pigeon holes, and
consequently permitting of that number of separations at one time. In the particular car here illustrated there are five railway
postal clerks at work. In other similar cars there are sometimes as many as eight or nine clerks. The extra pay for Railway Post
Office cars, in addition to the weight pay, ranges from 3.4 cents per mile for a 40-foot car to 5.4 cents per mile for a 60-foot car.
The law of 1873 does not make a rate for a 70-foot car.
The paying load in these cars averages only 3 tons of mail, although the
car could easily contain 20 tons if the space were not occupied with fixtures used in assorting the mails for different destinations.
more than the number of full cars actually
in use and paid for by the Government.
Yet for the sorting space in these compart-
ments the Government makes no pay what-
ever.
On the Pennsylvania Railroad's 20-hour
trains between New York and Chicago 13
feet of space for the use of the post office
is set aside and fitted up with necessary
sorting apparatus. The trains carry about
one ton of letter mail with the postal
clerks who distribute it. The revenue
from the mail is solely for weight, and
results in compensation of about seven
cents per mile going from New York to
Chicago, and about three cents per mile
in the opposite direction—equal to the
fare of two ordinary passengers west-
bound and one eastbound.
2. Carrying free post office employes not in
charge of mails.
Were fair pay to be made for the car
space used for distribution the railroads
would make no objection to the transpor-
tation of a reasonable number of clerks in
charge of mail, or to free transportation of
officers of the Post Office Department having
to do with the transportation of mail. BUT
WHEN AN EMPLOYE OR AGENT OF
THE DEPARTMENT TRAVELS ON
GOVERNMENT BUSINESS AS A PAS-
SENGER IN A PASSENGER CAR, THE
GOVERNMENT, IT IS MAINTAINED,
OUGHT TO PAY HIS REASONABLE

The Government does not pay for the space
used in this car for sorting the mail
INTERIOR OF A 30-FOOT APARTMENT IN AN ALL STEEL COMBINATION
MAIL AND BAGGAGE CAR
In the foreground observe the steel racks for holding the sacks open to assort second-, third- and fourth-class mail; also the
double row of overhead side boxes used for the same purpose, both to permit of 106 separations to be made at one time. The
large pigeon hole case in the background is for sorting letter mail into 312 separations.
also one weigher.
Note the Parcel Post packages, occupying much space, but contributing little weight.
There are four railway postal clerks at work,
Although the post office
work in this apartment is similar to that of the full Railway Post Office car, the law provides no extra pay for the extra car space
required by the Post Office Department.
The paying load in these 30-foot apartments averages only 1500 pounds, although there is
room enough for 10 tons of mail if the space were not occupied with fixtures used in assorting the mails for different destinations.
FARE. The amount of transportation
required by the department and not covered
by law, for which no compensation is
rendered, aggregates over $1,000,000 in
value per annum.
For the postal clerks who separate the
mail in postal cars or apartment cars the
railroads have the same full passenger
liability as for passengers. Indeed, the
United States Supreme Court has recently
extended this liability to apply where a
postal employe was not even traveling
upon official, but was traveling free upon
the railroad on personal business.
3. Railroads must carry the mail between
railroad stations and post offices when such
post offices are within one-quarter of a mile
of the station.
This regulation is a survival of stage-coach
days, when carriers of mail by stage were
compelled to set the mail down at the post
offices. This service is not expected in the
transportation of passengers, express, bag-
gage, or freight.
4. The railroads are also required to trans-
fºr the mail between stations or from one train
to a connection, if the stations or connections
are within one-quarter of a mile of each other.
This unremunerated service in the city of
St. Louis calls for 60 porters especially to


“The railroads perform many services and afford
many facilities for which the law does not allow and
the railroads do not receive any compensation.”
—From Report of Wolcott-Loud Congressional “Joint
Committee to Investigate the Postal Service,” 1901.
carry the mails from the different roads to
their connections. In Kansas City 85 men
are thus required. In Chicago there are 60
such attendants in one station alone.
5. Railroads are required to provide rooms
in the stations for transfer clerks employed by
the Post Office Department. -
6. Rooms in stations are also provided for
sorting mail. This is a charge on the rail-
road, but relieves the Post Office Department of
the necessity to pay rent for such space.
7. The railroads are compelled to provide
mail receivers and mail catchers, so that mails
may be taken on and put off moving trains,
although in Great Britain, where similar ap-
paratus is employed, the Post Office Department
pays for its installation and maintenance.
% + 3 +
Such are the incidental services required
of the railways for which no payment is
made by the Nation.
It is estimated that the extra space in mail
apartment cars for traveling post offices is
worth $5,000,000, if paid for at the same
rate as full railway post office cars, and also
that the other incidental services would, if
performed directly by the Government, cost
even more than $5,000,000.
THE RAILROADS URGE THAT DIS-
TRIBUTING SPACE IN APARTMENT
CARS SHOULD BE PAID FOR.
THEY MAINTAIN, ALSO, THAT
THE IN CIDENT AL SERVICES RE-
FERRED TO SHOULD BE PERFORMED
BY THE POST OFFICE DEPARTMENT,
OR THE RAILROADS SHOULD RE-
CEIVE COMPENSATION FOR WHAT
THEY DO.
% + 3 +
What the Government Found
In order, if possible, to ascertain the pro-
portionate cost of carrying the mails in rela-
tion to other railway passenger services, the
Postmaster General, in November, 1909, re-
quired the report of most exhaustive data by
the railroads. The result was transmitted to
Congress on August 15, 1911, in H. R.
Document, No. 105. In that report the
Postmaster General said that the Committee
of the Department which has compiled the
data “estimates that through a readjustment
of railway mail pay on the basis of cost with
six per cent. profit, a saving to the Govern-
ment could be made of about $9,000,000.”
This estimate of the costs to the railways
of carrying the mails has subsequently been
abandoned by the Department. This will
be apparent from the following:
Testimony of Second Assistant Post-
master General Stewart, January 28, 1913:
The Chairman: “Do you mean to im-
ply * * * that, in your opinion, based
upon the information received and the
deductions made by you in your study
of this question, the railroads have been
overpaid $9,000,000 annually for the trans-
portation of mail P”
Mr. Stewart : “No ; there is no
purpose to make a statement of that
kind. The statement which you have
read is “ ” * solely on the basis of
statistics furnished, and the ascertainment
made on those statistics, namely, that
having considered the data and considered
the computations made by the depart-
ment, the cost of service upon that basis
is $9,000,000 less than the amount which
was paid to the railroads for the transpor-
tation charge.”
The result arrived at “ upon that basis”
was reached by (a) making a division of rail-
way freight and passenger expenses upon a
method having but little sanction in experi-
ence; (b) eliminating a large amount of pas-
senger train space reported by the railroads as
necessarily used for the mail service; and (c)
ignoring the justice of any return upon the
capital invested in the railroad plant.
Subsequent to the issuance of Document
105, the Postmaster General submitted to
Congress a draft of a revised bill in which
he suggested that instead of the method he
had originally proposed for paying for carry-
ing the mails at cost of service and 6 per cent.
additional, there should also be a further sum
for return upon the capital employed.
The Second Assistant Postmaster Gen-
eral, in testifying, January 28th, stated
that if the railroad companies were allowed
credit for what would be a fair return on
the value of the property employed, it
would, in his judgment, eliminate the
$9,000,000 which it had been stated the
railroads had been overpaid.
The Chairman : “Why did the depart-
ment modify its views, * * * especially
the one of an allowance of a reasonable
compensation on capital charges P’’
Mr. Stewart : “Because, upon a further
and more careful consideration of the
subject, we were convinced that the rail-
road companies were entitled to consider-
ation for this additional element.”
What the Service Costs
Taking the Post Office Department's own
figures, allowing for interest on the plant and
making adjustments in the percentage of the
plant used, shows the following revised re-
sult as to the minimum cost of the service:
1. Interest at 6 per cent. on 1.95
per cent. (the share of the
railway plant used for
postal service) of the net
capital investment of all
the railways in the United
States is . . . . . $16,380,000
2. The space actually used for
mail and incidental there-
to, but eliminated from
the department’s calcu-
lations tº tº e 9,600,000
3. Difference between approved
methods and the depart-
ment's methods of sepa-
rating freight and pas–
senger expenses 5,000,000
Total . . . . $30,980,000
If this sum is added to the net amount
estimated in Document 105, as the cost of
carrying the mails, it will yield about
$15,000,000 more than the sum now paid
for railway mail service.
THE RAILROADS MAINTAIN,
THEREFORE, THAT THE MOST EX-
HAUSTIVE INQUIRY EVER MADE OF
PAYMENT TO THE RAILROADS FOR
THE ACTUAL COST OF THE SERVICE
WOULD RESULT IN THE COMPANIES
RECEIVING AT LEAST $15,000,000
MORE THAN THEY ARE NOW PAID.
% + + 3:
The Value of the Service All
Important
Though it is believed that the mail service
is not a source of profit, it is not claimed
that the railways could abandon the mail
service altogether and save money. The
principle governing the case was well stated
by President Hadley, of Yale, in his book,
"Railroad Transportation ” (page 112), as
follows:
“Any rate which will more than cover the
expense of moving the cars and hauling the
goods is a paying rate, provided the business
can be had on no better terms.” The quali-
fication noted is all important.
Individual railroad rates cannot be based
upon the mere cost of service. The only
sound principle which experience has shown
should cover rates is the VALUE of the
It is unquestionably this principle
“enables
service.
which, as President Hadley says,
railroads to render most efficient service to
the community.”
Carrying mail is a commercial service.
The Post Office is a commercial department
of the Government. If a private company
ran the post office, there could be no thought
of an individual having that company do a
service for him at less than a fair rate, and
there could be no thought of that private
company expecting railroads to transport the
mails for other than a reasonable compensa-
tion. The post office is operated by the
Government chiefly because of the economic
gain which results from having the whole
work done by a single organization. As
Alexander Hamilton said, in reference to the
Constitutional power over Post Roads:
“Nothing which tends to facilitate the inter-
course between the States can be deemed
unworthy of the public care.”
In paying the expenses of the Post Office,
THIS SUBJECT SHOWS THAT A FAIR
the Government is not distributing public

the GOvernment.
Only a very small part of the mail is carried for
- The Postmaster General reports
that franked and official matter is less than 4 per cent.
of all mail carried. Ninety-six per cent. is service for
private individuals and corporations. -
funds, but it is paying one class of citizens
for services rendered to another class.
SHOULD THE RAILROADS, THEN, BE
EXPECTED TO PERFORM A SERVICE
FOR THE PEOPLE COLLECTIVELY
AT A LESS RATE THAN WOULD BE
EXPECTED FOR THE SAME PERSONS
HINHDIVIDUALLY P
Railway mail service should undoubtedly
shoulder its due proportion of the expenses
incurred by the railroads in the maintenance
of their organizations, as well as in the oper-
ation of their trains. The whole system of
railroad rates is based upon the thought that
mail will pay its due proportion. If the
rates for carrying mail should be upon a
lower basis (in relation to the value of the
service) than other rates, who should make
the sacrifice? Must investors accept lower
dividends? If so, railroad credit is injured.
Must railway labor sacrifice a portion of its
Must passenger or freight rates be
Whatever the answer, is it not
wages f
higher?
clear that those portions of the community
which provide the railway plant and pay for
its service would, under such a plan, be taxed
to provide postal transportation for those
who make use of the mail facilities
The Government very properly pays citi-
zens in the Federal employ fair prices for
their work. When it buys supplies, it pays
the market price. The Government does
not expect to get its heat, light and telephone
service at reduced rates. Yet such services
are an essential part of the Post Office service.
The Government contracts for the con-
struction of a warship at a price which enables
the highest scale of wages to be paid to work-
men and allowing a commercial profit to ac-
crue to the contractor. When the Govern-
ment ships troops or army supplies it pays
prices established by the railroad companies,
with recourse to the Interstate Commerce
Commission in case the railroads seek to
impose an unreasonable rate,
In England, where railroads are privately
owned and where the railway mail service
is operated under conditions similar to those
which prevail in this country, the railroads
can appeal to the Railway and Canal Com-
mission if they feel themselves inadequately
In this
compensated for their service.
country, however, there is no administrative
tribunal to which the railways may appeal
against a similar burden. There is, however,
a provision in the Constitution of the United
States which says,
property be taken for public use without
“Nor shall private
just compensation.”
It is upon the basis of this constitutional
guarantee, convinced of the justice of their
case, and believing in the ultimate sense of
fairness in the American people, that the
railroad companies have appealed to Congress
to remove the existing injustices and establish
the method of railway mail compensation
upon a fair and equitable basis. º
COMMITTEE ON RAILWAY MAIL PAY
(Representing 264 railroad companies of the United States
which transport mail; on 218,729 miles of line).
RALPH PETERS
(President of the Long Island R. R. Co.),
New York City, August 1, 1913,
Chairman,
ONGRESS last year appointed a
Commission, of which Senator
Jonathan Bourne, Jr., of Oregon, is
Chairman, to inquire into the adequacy of the
payment being made to the railways for
carrying the mails.
The 264 principal railways, having over
218,000 miles of road, appointed a com—
mittee to represent them in presenting their
case to Congress and the public. That
Committee is as follows:
RALPH PETERS (Chairman),
President, Long Island Railroad
CHAS. A. WICKERSHAM,
President and General Manager, Western Ry. of Alabama
W. W. BALDWIN,
Vice-President, Chicago, Burlington & Quincy Railroad
W. W. ATTERBURY,
Vice-President, Pennsylvania Railroad
E. J. PEARSON,
First Vice-President, Missouri Pacific Railway
E. G. BüCKLAND,
Vice-President, New York, New Haven & Hartford Railroad
C. F. DALY,
Vice-President, New York Central Lines
W. A. WORTHINGTON,
Vice-President, Southern Pacific Company
W. F. ALLEN, Secretary
Many hearings have been held before the
Congressional Commission. The railways
have offered a large quantity of evidence. The
Post Office Department was represented by
Second Assistant Postmaster General Stewart.
The Interstate Commerce Commission
was represented by Prof. Max O. Lorenz,
Associate Statistician. Every phase of the
subject has been considered. The report
of the Commission will probably be made to
Congress next winter.
In the meantime, in order to make clear the
reasons for the position they have taken before
Congress—to show why they consider them-
selves underpaid—the railways propose to lay
before the public facts of interest and impor-
tance concerning the railway mail service.
The enclosed is with that end in view.
*

since January 1st last.”
“The United States Government through its Post
Office Department ought not to continue the reproach
of demanding service from the railroads for nothing,
or for inadequate compensation, a day longer than is
necessary to right the wrong which has been done
—From Editorial in Pittsburgh Gazette-Times, October 1, 1913.
What the Parcel Post is Costing
the Railways

The railways of the United
States carried the parcel post from
January 1st to July 1st without
any compensation from the Govern-
ment. On August 1st the weight
limit was increased from 11 to 20
pounds for a portion of the country
and no provision has yet been made
for paying the railroads for carry-
ing this extra load. To present
the case as it is viewed by several
responsible newspapers, the fol-
lowing quotations are reprinted by
the
COMMITTEE ON RAILVVAY MAIL, PAY
* Representing 264 railroads carrying mails
on over 218,000 miles of line.
RALPH PETERS,
Chairman.
HE parcel post will increase the
receipts for fourth class mail for the
present calendar year by $15,500,-
000. It will increase the receipts
for the same class of mail for the present
fiscal which July 1st
last, by an amount estimated to be between
$20,000,000 and $30,000,000, and will prob-
ably give the Post Office Department a sur-
plus for the fiscal year of at least $10,000,000.
For New York City alone the parcel post
caused a gross increase for the first nine
year, began on
This period includes only six weeks of the
twenty pound limit to parcel post packages,
as the limit was raised from eleven pounds
on August 15th.
+ + X +
Railroad managers have complained re-
peatedly to the Post Office Department and
to Congress that they have not been getting
fair treatment in the matter of pay for the
post office matter which they carry.
Last winter Congress appointed a joint
Congressional Committee, of which Senator
Jonathan Bourne was chairman, to inquire
into the matter of railroad compensation for
carrying the mails. There were many hear-
ings and voluminous books of testimony were
filled. It is probable that the Committee's
findings will be reported this winter.
In the meantime the Post Office Depart-
ment announces that its receipts for fourth
class mail for the first six months of 1913
were $14,000,000, as compared with
$12,500,000 for the same class of mail during
the entire fiscal year that ended July 1, 1912.
The railroad managers say that they have
had to carry the post office matter represented
by the increase of receipts without a cent of
increased pay; that they were working for
inadequate compensation, before parcel post
packages were added to the mail matter they
handled, and that when the rates of compen-
sation were adjusted last spring, a rate which
months of this calendar year of $2,930,000.
is to stand for the next four years, the Post
Office Department, without a word of warn-
ing to the railroads, increased the parcel post
limit to twenty pounds, and that for the next
four years the railroads will have to carry
packages over eleven pounds for nothing.
+ X X X:
The Complaint of the Railroads
"Just what is the complaint of the rail-
roads in regard to the rates of post office
pay?” the Sun asked Ralph Peters, presi-
dent of the Long Island Railroad. Mr. Peters
is chairman of a committee on railway mail
pay which represents 264 railroad companies
of the United States, which transport mail
on 218,729 miles of lines.
The first thing to understand
matter is how the railroads are paid.
in the
The
Government does not attempt to weigh all
the mail carried; it arranges a weighing
period, to occur in not more than four years.
Then for a period ranging from thirty days
to ninety days the mails carried over a rail-
road are weighed. The total is divided by
the number of working days in the weighing
period, the average amount for each day is
determined, and that is the basis of pay until
the next weighing period four years later.
Right here the railroads have two of their
strongest complaints. The post office makes
no allowance for natural increase and growth
of the mails, which would naturally be larger
at the end of a four year period than at the
beginning. The other complaint is in the
matter of finding the average weight each
day for the weighing period.
“The consequences of this system of
quadrennial weighing are frequently so in-
tolerably unjust that no one could defend
them,” said Mr. Peters.
was occasioned when the manufacture of
“One such instance
stamped envelopes and newspaper wrappings,
made for the Department, was removed from
New England to Ohio, just after the mails
carried by the Ohio had been
weighed and the rates of pay fixed for four
railroads
years ensuing. After carrying all this matter
in the mails for more than three years the
greater portion of it was taken out of the
mails just prior to the next weighing. So
that not a dollar of compensation was ever
received or ever will be received by any rail-
way on account of this heavy mail move-
ment. It is also in evidence that during this
year the mails from Dayton were being
weighed during the disastrous floods, which
practically brought all the business of that
region to a standstill.”
The railroads want this weighing period
to occur every year, so that they can be
paid according to the actual amount of mail
they carry. They say that it would be bet-
ter to have the mails weighed every six
months, so they could come closer to being
paid for the actual weight of mail carried,
but that being denied them, they think that
the closer the weighing periods are fixed the
nearer they will get to being paid for the
actual work they do.
Another complaint to the system of weigh-
ing the mail every four years is the system
of finding the average weight carried each
day. -
Some railroads carry mail seven days a
week, others only six days. The law pro-
vides that the weighing should be done for
not less than " thirty successive working
days.” This eliminates Sunday from the
weighing period, and in weighing the Post
Office counts only the mail shipped over
railroads in working days. For the roads
which carry mail on Sundays it is claimed
that they don’t get paid for any of this work,
as it is not weighed in figuring the average,
nor do they get paid on the basis of seven
days in a week. Roads such as the Long
Island are not affected by this, but the trans-
continental roads, which carry heavy mails on
Sundays as well as week days, believe they
lose 15 per cent. of
entitled to.
the pay they are
* * *
Present Rates Fixed in 1873
The rates of pay were established in 1873,
but have been reduced three times since
then. The original rate was $200 for carry-
ing 5000 pounds per day over the whole
length of the route. This was reduced 10
per cent. in 1876, and again 5 per cent. in
1878, and again in 1907 by an act of Con-
gress, which reduced the pay 5 per cent. on
all routes moving more than 5000 pounds
and not exceeding 48,000 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.
In 1907 the railroads received $49,757,960
for the transportation of the mails, and the
next year they received $48,155,378, although
the increased volume of the mails caused an
increase in the Department's revenue of
$7,893,658. The revenue of the Depart-
ment increased in 1910, $40,543,625 over
1907, and during the same period the
increased cost of handling by the Post Office
Department increased $39,737,936, divided
as follows:
Salaries of clerks increased more than
$11,000,000, rural delivery service increased
more than $10,000,000, city delivery service
increased more than $8,000,000, railway
clerks’ pay increased more
$4,000,000, postmasters’ salaries increased
more than $3,000,000, miscellaneous in-
creased about $3,700,000.
But there was not one cent of increase in
postal than
payments to the railroads for hauling and
furnishing cars for the distribution of the
vast increase in the amount of mail carried,
which was more than 22 per cent., and which
produced more than $40,000,000 in revenue.
In fact, the pay to the railroads decreased by
about $350,000.
The railroads are paid something for al-
lowing space in the railroad cars for the
postal clerks to distribute the mail. The
system of payment does not recognize any
Many cars
have distribution space of from ten to
thirty feet. Some 4029 cars are now in use,
with space utilized for the mail service aggre-
gating 92,866 linear feet, equal to 1548 full
sixty-foot cars. This is equal to 160 more
cars than the Government pays for.
Service Not Paid For
Another service given by the railroads,
which totals more than $1,000,000 a year,
for which no pay is obtained, is carrying post
space less than forty linear feet.
railroad managers feel that when a Govern-
ment employe travels on Government busi-
ness as a passenger in a passenger car the
Government ought to pay his reasonable
fare. And in spite of the fact that the rail-
roads carry the post office employes free
they have the same liabilities for the postal
clerks who separate the mails in cars as they
have for passengers. This has been decided
in the Supreme Court.
Another rule of the Post Office Depart-
ment makes railroads carry the mail between
railroad stations and post offices when they
are within one-quarter of a mile apart. Post-
master General Meyer in 1909 estimated
the annual value to the Department of this
service, performed for nothing, as $4,393,000.
The railroads do not wish to thrust upon the
Department the burden of services which
would actually cost the latter more than they
cost the former, and feel that if other matters
of payment are satisfactorily adjusted they
would be willing to do this work for nothing,
but under existing circumstances they feel
they should be compensated for the work done.
Other services which the railroads perform
for which they are not paid are the furnish-
ing of rooms in the stations for transfer
clerks, furnishing rooms in stations for sort-
ing mail and providing mail receivers and
mail catchers, so that mails can be put off
and taken on fast moving trains.
* * * *
Every considerable element in the cost of
supplying railroad transportation in any part
of the United States has greatly increased
since 1901.
ployes have been repeatedly augmented, and
two-thirds of the
expenses of operation; fuel costs more; loco-
Wages paid to railroad em-
wages absorb almost
motives and cars are more expensive; the
standard of service demanded by the public
has been raised; employers' liability laws,
hours of service laws and full crew laws have
all helped to increase operating expenses; taxes
have been multiplied, and even the rates
of interest demanded by investors have
increased. Recent legislation requires more
office employes not in charge of mails. The
extensive use of steel cars, and the railroads
feel that there is not any justification for a
reduction of any rate for any considerable
volume of traffic.
Four years ago last spring the mail carried
by roads in this vicinity was weighed. Then
on January 1st last the parcel post law went
into effect.
Burden Suddenly Increased
Last spring, after the parcel post had been
in operation a few months, the roads had
another weighing period. In computing the
rate of pay for the next four years the parcel
post was considered, but it is a growing class
of mail and will undoubtedly increase tre-
mendously before the next weighing period
four years hence.
Then without a word of warning the Post
Office Department increased the size of
parcel post packages from eleven to twenty
pounds. This rule went into effect August
15th. The roads feel that even if the limit
had not been increased they would be inade-
quately paid for the next four years, but the
increase is more than they can bear.
And another important point in regard to
this increased limit is that the Post Office
carries the matter without paying the rail-
roads, and that much of the parcel post mail
is taken from the express and freight receipts
of the railroads. So the roads lose traffic in
two classes and carry it for nothing for the
Government.
The roads that did not have their weighing
periods last spring have been allowed a 5
per cent. increase in their pay to make up for
the added volume of fourth class matter they
will have to carry. But they do not think
this is enough.
% + 3 +
The definite recommendations made by
the committee of which Mr. Peters is the
head are as follows:
The repeal of the act of March 2, 1907,
which reduced pay for heavy weights carried
and reduced pay for full postal car service.
Annual weighings and a definite and just
method of ascertaining the daily average
weights.
Pay for mail apartment car service on a
basis which would compensate for the service.
* ( * &
A fair allowance for "side” and terminal
messenger service.
That all rates of pay be definite and not
subject to the discretion of the officers of the
Post Office Department.
—From New York Sun, October 6, 1913.
“The mail service of the United States today is
undoubtedly of great benefit to the people, and
they are much gratified at the increased facilities
afforded them through the operations of the rural
free delivery, the special delivery, and the parcel
post systems, but they neither expect nor desire
that the railways of the country be called upon to do
their part of this great work without proper reward
for their Services.”
—From the Cincinnati, Ohio, Enquirer, Auguſt 18, 1913.
',~.*3.
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* * * * * ** , k . . . . .” Fºres * .**). 4. sº 4. 3. * ... . . .” * * *
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ºlº FE3 2 1918

The Railroads must themselves properly
conserve their sources of revenue by
making every service rendered by them
contribute reasonably to their earnings.
—Interstate Commerce Commissioner Harlan, in
Industrial Railways, Case 4181. January 20, 1914.
Fair Pay Denied the Railways for
Carrying the Mails
An Earnest Protest on behalf of the Railroads of
the United States presented to the Joint Committee
of Congress against the conclusions of the Post
Office Department in regard to Railway Pay for
transporting the Mails.
HE railroad companies of the United States claim
| that data compiled by the Post Office Department
itself shows the railroads to be underpaid by $29,-
000,000 annually for carrying the mails.
The railroads claim that according to their own calcu-
lations they were underpaid at least $15,000,000 per annum
before the Parcel Post was instituted.
* 3: X →X.
The railroads maintain that their treatment by the
Government has been unjust for many years past. That
no proper recognition has been given of their increased
services to the public may be seen in these facts :
The postal revenues in 1907 were $183,585,005.57; in
1912 they were $246,744,015.88, an increase in the five years
of $63,159,010.31.
The railway mail pay for 1907 was $51,008,111.32; for
1912, only $50,703,323.02.
Therefore, the railway transportation of the mails—the
chief factor enabling the Post Office Department to earn
this increased revenue of $63,000,000—not only did not
receive anything extra for the additional mails, but suffered
a reduction of $304,788.30.
This was before the parcel post service was established
on January 1, 1913.
The Parcel Post
The parcel post was established
on January 1, 1913, with a weight
limit of 11 pounds, and up to July
1, 1913 (six months), the railroad
companies received no compensa-
tion whatever for carrying this
additional burden.
On July 1, 1913, an adjustment
Of pay was made to the railroads
On a basis of weight for those
railroads having a weighing of the
mails in the spring of 1913, and
for those railroads which did not
have a weighing at that time an
increase of not exceeding 5 per
cent. in compensation was allowed
by Congress on account of the
parcel post. -
On August 15, 1913, and o
January 1, 1914, the Postmaster
General increased the weight limit
to 20 and 50 pounds, respectively,
and materially decreased the rates
of postage on parcel post, thus
encouraging a very large increase
in the volume of this traffic, and
for this increased traffic on the
railroads no compensation what-
ever is provided.
Congress has just passed a bill
providing for the expenditures of
the Post Office Department for
the next fiscal year. That bill is
based upon the official estimates
of the Post Office Department
that during the next fiscal year the
parcel post will probably handle
about 600,000,000 packages yield-
ing a revenue to the Post Office
Department of about $60,000,000.
Before the establishment of the
parcel post the railroads received
for their services in transporting
the mails approximately one-fifth
of the revenues of the Depart-
ment. Assuming that their service
is as great in handling the parcel
post—and it is really greater—than
in handling other mail, increased
revenue of $60,000,000 to the De-
partment should in all fairness
mean increased payments to the
railroads of about $12,000,000 for
parcel post alone.
In Great Britain the Govern-
ment pays the railroads specifically
55 per cent. of all receipts from
the parcel post for the service the
railroads perform in transporting
it.
Nevertheless, the appropriation
bill passed by the Congress of the
United States provides no payment
to the railroads for their increased
services in handling the parcel
post, beyond the trivial provision
already made.
* * * *
Congress Inquiring
For over one year past a Joint
Committee of the United States
Senate and House of Representa-
tives has been investigating the
sufficiency of the pay received by
the railroad companies for carrying
the mails. It is expected that the
Committee will soon make its re-
port to Congress.
The main subject of discussion
has been an inquiry which was
conducted for the month of No-
venber, 1909, to find out what it
cost the railroads to carry the
United States Mails. The Post
Office Department was required
by law to make such an inquiry.
The law was not mandatory upon
the railroads. However, the rail-
roads co-operated at an expense to
them of about one-quarter of a
million dollars, this being about
ten times the expenditure of the
Post Office Department.
After the preliminary forms
were completed in collaboration
the Post Office Department elected
to proceed with the inquiry alone,
notwithstanding the disadvantage
it labored under in its unfamiliarity
with railroad accounts and statistics
and with railroad operating condi-
tions, and notwithstanding the fact
that it was an interested party.
Finally, on August 12, 1911,
ex-Postmaster General Hitchcock
made a report to Congress that on
the basis of the share which the
United States Mail should be
debited with the railroads' oper-
ating expenses and taxes, with 6
per cent. added, the railroads were
in 1909–1910 paid $9,000,000 excess.
The railroads at once pointed
Out :
1. That this was an ex parte
finding.
2. That the Post Office Depart-
ment had not divided the railroad
expenses as between freight and
passenger services correctly.
3. That the Post Office Depart-
ment had not accepted a sufficient
amount of car space for the mail
service; in fact, the Railway Mail
Service could not be operated upon
the amount of car space with
which the Post Office Department
charged themselves.
4. That the proposed allowance
Of pay merely to cover oper-
ating expenses and taxes, plus 6
per cent., would omit all fixed
charges and interest on the prop-
erty investment. In other words,
the position of the Department
was that the mail service could be
between the two parties in interest,
performed without regard to cars,
or rails, or roadbeds, or terminals,
or any other fundamental railroad
facilities which represent invest-
ment of capital.
The Railroad Loss
The Officials of the Post Office
Department have endeavored to
sustain the position taken by
former Postmaster General Hitch-
cock, and have introduced new
issues, such as the allegation that
the railroads perform a Govern-
mental function in carrying the
mails, and should, therefore, earn
less than a commercial rate. The
case of the Post Office Depart-
ment was summed up by the
Second Assistant Postmaster
General in a statement dated Jan-
uary 16, 1914, addressed to the
Congressional Committee above
referred to.
On February 26th the railroads,
through their Committee on Rail-
way Mail Pay, submitted the fol—
lowing rejoinder, showing that by
using more correct percentages
the Department’s own figures
would show an underpayment
to the railroads of about $29,000,—
000 per annum.
Calculations have been made on
different bases showing loss to the
railroads on this business ranging
from $13,000,000 to $37,000,000, so
that the railroads have felt entirely
warranted in making the moderate
claim that in 1909 the underpay
was at least $15,000,000.
K: # X- X:
Since that time there has been a
great growth in the mail tonnage;
an entirely new business—the par-
cel post—has been established,
and it is, therefore, evident that a
prompt and Satisfactory adjust-
ment of this important question
is demanded by every considera–
tion of justice and right.
The Railroad Rejoinder
Mr. Ralph Peters, Chairman of the Committee on Rail-
way Mail Pay, On February 26, 1914, Submitted to the
Congressional Committee
Despite the hearings and testimony be-
fore the Joint Congressional Committee
during the past year, the results of which
have been published in the preliminary
report and in volumes Nos. 1 to 6, inclu-
sive, the Second Assistant Postmaster
General in his brief of January 16th (Vol.
No. 7) traverses the whole subject and
still adheres to the old ratios, and conse-
quently reaches results which are not, we
submit, Supported by any rational analysis
of the facts as brought out in the testi-
mony.
the Following Rejoinder :
It has been shown that in the institu-
tion of the inquiry, the results of which
were published in House Document No.
105, as well as in the development of it
and in the final statement of results, 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 em-
ployed 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.
Although several Congressional Com-
mittees have studied and reported upon
the subject of railway mail pay, there was
only one Commission which recommended
that the pay be based upon the cost to the
railroad company of performing the
service and that the measure of such pay
be the amount of car space devoted to the
use of the mails. This was the Hubbard
Commission, appointed by the President
of the United States under the Act of
July 12, 1876. This Commission made a
very thorough investigation covering a
period of almost two years. It Visited all
of the principal cities, conferred with rail-
road managers and other representative
business men, and took a large amount of
valuable testimony. Its reports, contained
in Miscellaneous Document No. 20 of the
Forty-fourth Congress, and Miscellaneous
Document No. 14 of the Forty-fifth Con-
gress, comprise over 700 pages of testi-
mony. That Committee submitted, in
tabular form, an estimate of the cost of
performing the service per linear foot of
train space, this being based upon detailed
information obtained from 113 railroads,
covering about 50 per cent. of the trans-
portation service of the country. Two re-
ports were submitted to Congress, on April
1 and April 5, 1878. The first, the minor-
ity report, recommended “that the Post-
master 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 recommended and
what percentage should be added thereto
to give a fair profit to the railroads.”
Congress did not enact legislation in
compliance with the report of the Hub-
bard Commission, but in the following
year, March 3, 1879, passed the law re-
quiring the Postmaster General to request
all railroad companies carrying the mails
to furnish under seal such data relating
Such roads as was in his judgment neces-
sary to enable him to ascertain the cost of
mail transportation and the proper com-
pensation to be paid for the same, and to
report to Congress with such recommenda-
tions, founded upon the information ob-
tained, as would in his opinion be just and
equitable.
It was not until thirty years later—viz.,
on August 12, 1911—that the Post Office
Department submitted the required re-
port. This was subsequently published as
House Document No. 105, which appeared
in December, 1911.
In the Hearings, Volume No. 1, of Jan-
uary 28, 1913, page 28, the Second AS-
sistant Postmaster General says:
“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 ad-
dressed to the Second Assistant Post-
master General, signed by myself as
Superintendent of the Division of
Railway Adjustment, and contains ex-
cerpts from the reports of previous
Commissions who have studied the
question, and all of whom have re-
ported in favor of a space basis, and
one recommends the basis for pay the
Same as is recommended in Document
No. 105, a fact of which I was not
consciously aware. That is, they be-
lieved 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 Commissions
have taken that into consideration.”
Opinions in 1878
It is only necessary to turn over two
pages (i. e., to page 32, Hearings No. 1)
to consult one of the excerpts, this being
a quotation from the minority report of
the Hubbard Commission of 1878, to see
that the question of capitalization was
fully considered by the Hubbard Comº
mission in the following paragraph:
“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.
to operating, receipts and expenditures of
These sums will yield on the average
6.2 mills per linear foot, or nearly the
Same compensation according to the
cost of service that the railroads re-
ceive from the remaining business on
the passenger trains.”
This formula would produce an amount
of railway mail pay equivalent to 126 per
cent. Of the operating expenses.
The majority report of the Hubbard
Commission offered a different formula,
although of the same general character,
resulting in an amount of railway mail
pay equal to 140 per cent. of the operating
expenses.
It is, therefore, perfectly clear that the
Hubbard Commission made the first study
of the cost system, as a basis for railway
mail pay, and fully contemplated a fair
return on the capital investment. It is
unfortunate that the Post Office Depart-
ment was not consciously aware of these
important facts.
The Incompleteness and the Inac-
curacy of Document No. 105
The Post Office Department commenced
preparations for this inquiry in the year
1906, and, therefore, were engaged upon
it for five years, before Document No. 105
was published. The preliminary forms
for ascertaining the daily conditions of
service were prepared by the Post Office
Department after many conferences with
railroad officials, which helped greatly to-
ward making these blank forms practi-
cable to obtain the information sought.
The forms and inquiries were sent to the
railroad companies on September 28, 1909,
to obtain the information for the month
of November, 1909. Soon thereafter, Oc-
tober 12, 1909, the railroads appointed the
Committee on Railway Mail Pay, repre-
senting 282 railroads with 208,000 miles
of line, for the purpose of preventing mis-
understanding relative to the method to
be used in securing and tabulating the
data, and to insure uniformity in the
basis of compilation so that comparisons
subsequently made would be trustworthy.
It was learned by this Committee that the
Department’s intention was simply to call
for the information from comparatively
few railroads. The Railroad Committee
suggested to the Department that the in-
quiry, to be valuable, should extend to all
of the railroads. This suggestion was ac-
cepted by the Department, but it rejected
the offer for further co-operation during
the progress of the work, and the Railroad
Committee was, therefore, obliged to
gather duplicate information as far as
they were able in order to have some
check upon the correctness of the returns
in what they knew would prove a very in-
tricate and complicated piece of work.
In Hearings No. 7, page 988, it is said:
“The period from midnight, Octo-
ber 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.”
This omits to explain the reason why
some of the companies submitted re-
ports for December or January, instead of
November, as specified by the Department.
It was due to the fact that when the De-
partment accepted the suggestion of the
Railroad Committee that the inquiry be
made general, the notifications sent out by
the Department to the railway companies
not already notified were received too late
to make preparations to gather the current
information for the month of November,
and it was, therefore, necessary to gather
it during either December or January. It
should be understood that much of the
information called for by the Department
is not regularly compiled by the railroads
in their routine of business. As a matter
of fact, however, the great bulk of the
data in Document No. 105 is for the
month of November.
November Not Typical
The Second Assistant Postmaster Gen-
eral, on page 5, Hearings No. 1, men-
tions the month of November as hav-
ing been considered a fair average for the
year. -
It might be suggested that as November
includes two holidays—i. e., Election day
and Thanksgiving day, as well as four
Sundays — there are only twenty-four
working days in the month, and it would
ordinarily be considered in some respects
a month rather below the average.
On page 988, the fourth paragraph
says:
“Although the results obtained by
the department have been assailed by
the Railroad Companies’ Committee,
they have nevertheless shown that it is
possible to approximately divide the
total operating expenses of the rail-
roads between passenger and freight
services, respectively.”
This statement implies that Document
No. 105 shows for the first time the pos-
sibility of approximately dividing the total
Operating expenses of the railroads be-
tween the passenger and freight services,
respectively. When it is pointed out in re-
buttal that this division of expenses be-
tween the freight and passenger services
has been made by many of the railroads
for a great many years it will be apparent
that this is another important fact of
which some of the officers of the Depart-
ment have not been consciously aware.
The Pennsylvania Railroad Company has
made this division of expenses and pub-
lished the results in its annual report since
1864—fifty years ago. The Atchison, To-
peka and Santa Fé Railway Company has
pursued its present method of dividing
the expenses for over twelve years past.
The Interstate Commerce Commission
soon after its creation in 1887 adopted a
rule which was contained in its book of
instructions for the guidance of railway
carriers in making their annual reports,
which reads as follows:
“All expenses which are naturally
chargeable to either freight or passen-
ger traffic should be entered in their
respective columns; expenses which are
traffic should be apportioned on a
mileage basis, making the division as
between freight and passenger traffic
in the proportion which the freight
and passenger train mileage bears to
the total mileage of trains earning
revenue.”
This rule, however, was discontinued
after 1893, because the Commission found
that, generally speaking, not more than
one-half the items of operating expenses
could be assigned to the passenger service
or to the freight service, and also because
the average cost per ton per mile or per
passenger per mile obtained by the basis
of such computation was rarely used by
the Commissioners in judging of fair rates.
Dividing Freight and Passenger
Expenses
It should, therefore, be quite evident
that the process of dividing expenses be-
tween freight and passenger service has
been employed for a great many years, and
was even required by a rule of the Inter-
state Commerce Commission over twenty-
five years ago, and at that time the Inter-
state Commerce Commission gave its coun-
tenance to the method of dividing the com-
mon expenses on the basis of the number
of revenue train miles in either the pas-
senger or freight Service.
The same paragraph, page 988, con-
tinues:
“and, further, 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.”
It is plainly intimated in this statement
that the Department has found it possible
in Document No. 105 to assign to the pas-
senger, express and mail services the direct
expenses chargeable to each. It is only
necessary to turn to page 280 of Docu-
ment No. 105 and to note the fact that the
Department in the grand total shows a
total charge of railroad operating expenses
not naturally chargeable to either
and taxes against the mail service of $2,-
682,797 for the month of November, of
which there was directly chargeable (see
sixth column) only $21,993, or less than 1
per cent. The direct expense to the rail-
roads of performing side and terminal
service for the mails would alone be far
greater than this direct charge which the
Department credited to the railroads of
the entire country.
The following appears in the fifth para-
graph, page 988:
“Besides furnishing for the first
time a reliable gauge by which to com-
pare compensation paid railroads with
the estimated cost to them of perform-
ing service, crediting them with the
full pro rata share of all operating ex-
penses 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 uniformly represented
in a weight basis of pay.”
Post Office Inaccuracies
Whether a “reliable gauge” would have
been developed if the inquiry had been
properly made may be a subject for de-
bate. But the omission of essential data,
the incorrect treatment of other data, and
the illogical conclusions arrived at, as dem-
onstrated in the hearings, have destroyed
its value and utterly preclude its accept-
ance as a “reliable gauge.” The railroads
have reasons to regret this fact, because
they started in 1909 in a spirit of sincere
co-operation with the Post Office Depart-
ment, and notwithstanding the rejection
of their offers of assistance, endeavored to
make a satisfactory response, although this
entailed an expense of approximately one-
quarter of a million dollars, or fully ten
times as much as the Post Office Depart-
ment expended for the purpose. It will
be remembered that the law of March 3,
1879, while mandatory upon Postmaster
General Hitchcock and his predecessors,
was not mandatory so far as the railroad
carriers were concerned. Consequently,
all of their action to assist in the deter-
mination of this important question was
voluntary.
When the paragraph above cited at-
tributes inequalities in pay to the weight
basis, which discloses an impression that
the important railroads are overpaid and
the short lines are underpaid, it is per-
tinent to inquire how it is that Table 7
of Document No. 105 displays a large
number of the short-line roads as mak-
ing a profit of several hundred per cent.,
and in some cases over 2,000 per cent.
The Sharpsville Railroad Company,
which has a mail revenue of $60.95 a
month, is shown as making a profit of
2,182 per cent., and the Shreveport, Hous-
ton and Gulf Railroad Company, which
has a mail revenue of $32.06 a month, as
making a profit of 2,918 per cent. It
would seem to any prudent mind that if
the work had been carried out intelli-
gently such absurd deductions as those
just cited would arouse suspicion in the
minds of those supervising the work and
lead to a verification for the discovery
and correction of the errors. The fact
that these illogical results were accepted
and published is a convincing demonstra-
tion that the officers of the Department
were either unable for lack of time to
study the results produced in the prosecu-
tion of the work or else were not suffi-
ciently familiar with the conditions of the
service to appreciate the significance of
such revelations.
In the succeeding paragraphs on
pages 988 and 989 it is stated that on
the face of the data “properly checked
and revised” it was shown that the railroad
expenses chargeable to the mail service,
plus 6 per cent., would have aggregated
$9,000,000 less than the mail revenue re-
ceived by the railroads from the Govern-
ment, and then remarks that if Postmaster
General Hitchcock had not made an un-
fortunate inaccuracy of statement the
overpay of the railroads would really have
been stated as $10,531,792.
The railroads have submitted testimony
(notably in Vol. 5, pp. 732-734) of under-
payment of at least $15,000,000 a year. A
statement is annexed hereto (Exhibit “A”)
showing that if the figures of Document
No. 105 were worked out upon the correct
ratios, there would be revealed an under-
payment of $10,900,000 on the operating
expenses and taxes alone without any al-
lowance of 6 per cent. interest thereon,
or any allowance for capital cost. If in-
terest were allowed at 6 per cent. On the
railroad property used in the performance
of the mail service, the amount of under-
payment would be increased to nearly
$38,000,000 for the fiscal year 1910.
The first chapter concludes, on page
989, with the following observations:
“The conclusions reached in the doc-
ument were assailed by the railroads
on the following main grounds,
namely:
“That the $9,000,000 excess of rev-
enue 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 service, and
consequently decreased the cost to the
mail service; and
“That the department 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.”
Summary Not Adequate
This is far from being an adequate sum-
mary of the objections which the railroads
promptly pointed out in the make-up and
conclusions of Document No. 105. In
Volume 1 of the Hearings, page 65, is
published a letter from Mr. J. Kruttsch-
nitt, Chairman of the Committee on Rail-
way Mail Pay, addressed to the Speaker of
the House of Representatives, under date
of December 20, 1911, a few days after
Document No. 105 was published. This
letter calls attention to House Document
No. 105, and then makes the following
“This report has been so recently
made public that there has not been
sufficient time for its detailed exami-
nation and analysis, but such scrutiny
as has already been possible dis-
closes that the data submitted are in-
complete, the figures distorted, the
presentation unfair and the conclu-
Sions illogical and unwarranted.
Among other things, it is grossly un-
just to the railroads in that:
“1. Data submitted by the railroads
at the request of the Post Office De-
partment, which are essential to a com-
plete understanding of the subject,
have been withheld and suppressed.
“2. The Postmaster General has
arbitrarily transferred to the passen-
ger service much of the so-called
‘dead’ space in mail cars, although this
Space could not be utilized as passen-
ger Space, thus improperly increasing
the apparent car-foot miles of passen-
ger Service and correspondingly de-
creasing the car-foot miles of mail
Servl(20.
“3. The Postmaster General has ap-
portioned expenses incurred for the
joint purposes of the passenger and
freight Services between these services
in accordance with a method never ac-
cepted by any one with practical ex-
perience in railway accounting or op-
eration. º
“4. The Postmaster General has
wholly overlooked the fact that a large
part of the cost incurred by the rail-
Ways in carrying the mails consists of
interest on the capital they employ.
By ignoring all capital expenses, con-
fining his attention to mere operating
Cost, and proposing to return to the
railways only the amount of these op-
erating costs, plus 6 per cent., he urges
a method which if applied generally to
all their business would render every
railroad at once bankrupt.”
It will thus be seen from the statement
just quoted, as well as from the specifica-
tions given several times in the hearings,
that it was not merely some of the conclu-
Sions that were criticised and assailed, but
the integrity of the Document itself.
Document No. 105 did not publish the
items of revenue received by railroad com-
panies from passenger or express business,
So that Congress could make a compari-
son between these and the revenue from
mail transportation. There was no publi-
cation of the expenses at railroad stations
or of terminal service, or of personal trans-
portation of officers and employes of the
statements:
Post Office Department, although this in-
formation was furnished to the Postmaster
General. Neither was there a statement
of the full extent of the car space as
originally reported by the railroad com-
panies to the Postmaster General as being
devoted to passenger, mail and express
service. A certain portion of the mail
space reported was characterized by the
Post Office Department as “dead” space,
but another portion was cast back into the
passenger column without being recorded
and published. The modification by the
Post Office Department of the figures
originally submitted, which the Depart-
ment alludes to as “corrections,” and
which the railroad representatives allude
to as “distortions,” was made entirely
upon the opinion of the Postal officials
without consultation with the railroad
companies and without sufficient regard
to the actual facts or the operating con-
ditions.
The only allusion that is made in the
above quotation to this serious charge of
incomplete presentation and rearrange-
ment of the figures contrary to their
Original significance is contained in the
third paragraph of his summary, where
he indicates that the railroad companies
complained “that the Department 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.”
Department Statement
Not Correct
This is not a correct statement at all.
The railroad companies did not report any
“dead space” whatsoever. If they had been
called upon to report “dead space” in the
mail service they should also have been
called upon to report the so-called “dead
space” in passenger service and express
service, in which the proportion is greater.
Statistics have been quoted to show that
the average passenger car in operation car-
ries only sixteen or seventeen passengers
out of a total capacity for, perhaps, fifty
passengers. Therefore, there would be
about two-thirds of the passenger car Space
that could be denominated “dead space” if
such characterization were permissible in
a statistical inquiry of this kind. So also
in the express service: it is probable that
one-half of the total car space assigned
to the express service is not actually occu-
pied by express matter and so could be
described as “dead space.” It is not un-
likely that the Second Assistant Post-
master General and his colleagues were not
consciously aware of this important fact
when Document No. 105 was in course of
preparation or when it was published. But
the hearings of the past year before the
Joint Congressional Committee have fur-
nished useful illumination upon this phase
of the subject, and it would be extremely
gratifying if the Department in its brief
of January 16, 1914, had shown a willing-
ness to admit an error which is now ob-
vious to every one.
If it is possible that any doubts still re-
main regarding this question, they should
be dispelled by the diagram on the follow-
ling page.
10
Diagram of a Typical Passenger Train
As Reported by the Railroads
Mail Express
Passenger—80.01% 9.32% 10.67%

| | |
As Stated by Post Office Department in Document No. 105
Dead Mail Express
Passenger–80.01% 2.69% 6.68% 10.62%

As intimated above it is the belief that the Office Department undertook to do in Docu-
proportion of unoccupied space in the passenger ment No. 105 for the mail service.
service and express service is greater than is Using for the passenger and express services
the unoccupied space in the mail Service on the same percentage of “dead” space which the
passenger trains, but without making a full Post Office Department allotted to the mail
claim in this respect, let us observe the effect service — 28.86% (2.69 + 9.32 = 28.86) — will
of killing the same proportion of space in the show the apportionment of “live” and “dead”
passenger and express services which the Post space to each class of service.
Passenger Passenger Mail Express
56.92% 23.09% 6.68% 2.69% 7.54% 3.08%
Live Dead Live Dead Live Dead

If the space in the train is re-apportioned on bears to the total “live” space, the result will
the basis which the “live” space in each class be seen in the following diagram:
Mail Express
Passenger–80.01% 9.39% 10.60%

| | |
It will be noted that, after apportioning the occupied by the mail is 9.39% as against
whole train by the same method as that used by 6.68% allowed by the Post Office Department
the Post Office Department in allotting “dead” and 9.32% reported by the railroads.
space to the mail service, the per cent. of space
This subject may be dismissed by quot- Department should have rejected the
* * e ..~ + . dead space from the mails and put it
ing the judgment of the Associate Statis- in the passenger service. It seems to
tician of the Interstate Commerce Com- me that there they made a clear error.”
mission, in Hearings, Vol. 3, page 514: e
The Question of Underpayment
“The Chairman: I would like to ask tº
Mr. Lorenz his view as to the fairness in 1910
of elimination of credit for dead On pages 991-994, Hearings No. 7,
space and the application of that, as a
debit, to the passenger service, given certain statements are reviewed relat-
the desideratum—being ascertainment ing to the claims of the railroads that
º º instead of being overpaid $9,000,000 in
tion for both. the year 1910, they were underpaid at
º tºº least $15,000,000, and that part of this
just as you cannot operate a freight result should come from an allowance of
º * .. ; interest on the proportion of railroad prop-
passenger service without hauling erty used in the mail service, which factor
º, *. "..." ãº. had been overlooked in Document No. 105.
and in comparing the various depart- Following this, on pages 994-996, there
º ºf º is displayed a calculation which purports
used and unused which is hauled in to ascertain the charge to the mail serv-
:*.*.*.*.*.*.*.* ice by considering the application of op-
this particular point the Post Öffice erating revenues to the payment of oper-
11
ating expenses and taxes, and all the
other charges against income which must
be paid out of operating revenues upon
a commercial basis for the year 1910, in-
cluding this comment:
“Even upon this basis it completely
disproves the contentions of the rail-
roads that they were underpaid.”
An examination of this statement (p.
994), headed “Operating revenues, and op-
erating expenses and charges against in-
come,” shows a number of discrepancies
and erroneous assumptions. The most im-
portant criticism affects the very basis of
the calculation, namely, the use by the
Post Office Department of its own ratio
for the division of railroad operating ex-
penses and the Post Office Department’s
own ratio for the proportion of train space
devoted to the mails, these being precisely
the same as the Department employed in
Document No. 105. This fact is disclosed
on page 996, where it appears that the
proportion of operating expenses and taxes
assigned to passenger train service is 29.21
per cent., and the proportion of these ac-
cepted by the Post Office Department as
chargeable to the mail service on the space
basis is 6.68 per cent.
The first ratio, 29.21 per cent., rests
upon the untenable assumption that it is
the right or privilege of the Post Office
Department to divide the entire train oper-
ating expenses of all the railroads carrying
the mails so as to determine what propor-
tion should be assigned to the freight serv-
ice and what proportion should be assigned
to the passenger train Service. This as-
sumption carries with it the implication
that the officers of the Post Office Depart-
ment are more competent to perform this
difficult and technical division than the
railroad officers whose lives have been de-
voted to the study of the problem.
How the Railroads Divide
Expenses.
The railroads in making the division of
expenses for November, 1909, as between
freight service and passenger service, fol-
lowed the customary method of dividing
the unassigned expenses in proportion to
the revenue train miles in either service.
This was the method approved by the In-
terstate Commerce Commission for several
years. The Post Office Department method
used in Document No. 105, and again used
in this calculation which we are consider-
ing, is their own special method, devised
for use in the preparation of Document .
No. 105. The Post Office Department
method assigns 29.21 per cent. of the total
expenses to the passenger train service.
The railroad method was not worked out
by the Post Office Department and was not
published in Document No. 105 in asso-
ciation with its own results, so as to re-
veal to Congress the difference between the
two systems. A recent estimate from data
originally obtained by the Committee on
Railway Mail Pay would indicate that the
railroad percentage for passenger train ex-
penses in November, 1909, for 176,000
miles (approximately the same mileage as
shown in Table 7, Document No. 105)
would be about 34.42 per cent.
The importance of the distinction will
be appreciated when it is noted that if the
difference between these two percentages
(34.42 — 29.21 =) 5.21 is applied to the
total operating expenses and taxes for the
fiscal year 1910—viz., $1,926,426,134—it
would make a difference in money of over
$100,000,000 in the amount chargeable to
passenger train Service. -
The space ratio used by the Post Office
Department in Table 7, Document No.
105, to determine its share of the pas-
Senger train operating expenses and taxes
was 6.68 per cent. This was lower than
the mail space which they accepted on page
269—viz., 7.18 per cent. Further, it is
shown in the same Document that 8.81 per
cent. was reported, and there is reason
to believe that the Department’s own fig-
ures if correctly compiled would show that
8.96 per cent., or practically 9 per cent.,
12
was reported. The Railroad Committee’s
computation for 176,000 miles shows that
9.32 per cent. of the passenger-train space
was devoted to the mails. It was disclosed
in the hearings that the Post Office De-
partment had thrown out a great deal of
car space necessarily used in the operation
of the mail service and considered it as
“dead space” without making a similar
computation for the same class of unoccu-
pied space in the passenger or express Serv-
ices. It is believed that everybody outside
of the Post Office Department, and many
within the Post Office Department, con-
sider that this was a clear error, and it is,
therefore, difficult to understand the men-
tal viewpoint of the Second Assistant Post-
master General when he again uses this
ratio of 6.68 per cent. with no explanation
whatever.
How the Post Office Figures
Mislead
The difference between the two sets of
ratios when applied to the income account
on pages 994-996 is as follows:
Railroad ratio
Post Office Depart-
ment ratio
34.42% X 9.32% = 3.21%
29.21% × 6.68% = 1.95%
Without assuming any responsibility, of
course, for the first large amount quoted
on page 996—viz., $599,635,450—we will
show that by merely substituting the rail-
roads’ percentages for those used by the
Department, the result will be an under-
payment of over $29,000,000 instead of an
overpayment of $1,616,532.
Illustration No. 1.—Using Railroad Per-
centage for Passenger-Train Expenses and
Railroad Percentage for Mail-Car Space
(quotation from page 996, revised, as ex-
plained):
“According to Table 7, Document No.
total, and those apportioned to the
9.32
mails were 6468 per cent. of the
34.42
passenger Service; -29:24 per cent.
$206,394,522,
of $599,635,450 is -$4+5++5.3+5.45,
9.32
and 6+68 per cent. of this is the
amount above operating expenses
and taxes which may be charged
to the mails if they are to par-
ticipate in all these charges and
at the pro rata based on Docu-
- $19,235,969
ment No. 1 -####60-255
Table 7 shows-49;689:797 as the op-
erating expenses and taxes
charged to the mail service for
November, 1909. This raised to
105, the operating expenses and
taxes apportioned to the passenger
34.42 8.5
service were-99-91 per cent. of the
52,878,036
the amount for a year is
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 ascer-
tain 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 repre-
Sent the full mileage of mail routes,
and the full mileage of mail routes
is less than the total railroad mile-
age represented in the total railroad
operating expenses, as stated par-
ticularly above.
Subtracting the $1,648,261,800
from the total operating expenses
and taxes for all railroads of $1,-
13
926,426,134 leaves $278,164,334 as
the operating expenses and taxes for
all other miles of lines of railroads,
63,524 miles.
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 operat-
ing 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 be-
tween 44,808 and 61,513, on which
no mails were carried. Therefore,
it is necessary to ascertain the pro-
portion represented by mail lines.
Dividing $266,796,307 by 61,513 and
multiplying the quotient by 44,808
gives $194,332,296 as approximately
representing the lines of railroad on
which mails were carried.
34.42
–29.21 per cent. of $194,332,296
gives the passenger proportion,
and ºft per cent. Of the passen-
- 6,233,071
ger gives, as the share to the mails
This makes a total chargeable to the
mail service on the basis followed
$78,347,076
The total revenue received by the
railroads for the fiscal year 1910,
as shown by the report of the Sec-
ond Assistant Postmaster General
(p. 15, ‘Transportation and rail-
way post office cars combined'),
WaS . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,302,217
e a deficit below
Being an—excess—over the appor-
- $29,044,859
tioned cost of . . . . . . . . . . . . . . . . –$1,616,532?
We thus find that the use of the rail-
road factors show a deficit of $29,044,859
instead of the excess of $1,616,532 claimed
by the Post Office Department.
It will be interesting to observe what the
effect would be of reworking this same cal-
culation by using mixed factors, those of
the railroads and those of the Post Office
Department, in conjunction with each
other.
Illustration No. 2.-If the statement on
page 996 were revised by using the Post
Office Department percentage for pas-
senger-train cost, 29.21, with the railroad
percentage for mail-car space, 9.32, the last
line would be restated as follows:
a deficit below
Being -an—excess—over the appor-
$17,229,305
tioned cost of . . . . . . . . . . . . . . . . . —$1,616,532
Here again we find that the result is a
disclosure of a deficit of $17,229,305 in-
stead of an excess of $1,616,532, estimated
by the Post Office Department.
A further illustration may now be
brought forward to reveal the result of
reworking the calculation on the basis of
using the railroad percentage for pas-
senger train expenses with the Post Office
Department percentage for mail-car space.
Illustration No. 3.−If the statement on
page 996 were revised by using the rail-
road percentage for passenger-train ex-
penses, 34.42, with the Post Office Depart-
ment percentage for mail-car space, 6.68,
the last line would be restated as follows:
& a deficit below
Being —an—excess—over the appor-
$6,852,841
tioned cost of . . . . . . . . . . . . . . . . . .
14
To recapitulate the several illustrations
in comparison with the original statement
of the Post Office Department:
Original statement by Post Office
Department, page 996, using Post
Office Department percentage for
dividing train expenses and Post
Office Department percentage for
mail car space,
Excess . . . . . . . . . . . . . . . . . . . . . . $1,616,532
Illustration No. 1, using railroad
percentages for both factors,
Deficit . . . . . . . . . . . . . . . . . . . . . . 29,044,859
Illustration No. 2, experimental use
of Post Office Department per-
centage for train expenses in con-
junction with railroad percentage
for mail car space,
Deficit . . . . . . . . . . . . . . . . . . . . . .
Illustration No. 3, using railroad
percentage for dividing train ex-
penses and experimental use of
Post Office Department percent-
age for mail car space,
Deficit
17,229,305
6,852,841
* * * * * * * * * * * * * g e g º e g g g &
Two Important Factors
1. The correct ratio in the division of rail-
road operating expenses; and
2. The correct percentage of car space to be
charged against the postal service—
are of Supreme consequence in arriving at
a correct conclusion as to underpay or
Overpay from the statistics obtained for
November, 1909, for the inquiry, the re-
Sults of which were imperfectly published
in Document No. 105. It is believed that
the demonstration offered by the railroads
in regard to the proportion of car space
chargeable to the postal service is abso-
lutely unassailable.
Post Office Department
Handicapped
It is further believed that no one would
Seriously contend that the officers of the
Post Office Department, even though fully
competent to understand and apply the
statistics of postal business to postal opera-
tions, would from that fact be equally com-
petent to render similar service in the field
of railroad statistics and railroad opera-
tions, with which they must in the nature
of things be entirely unacquainted. Yet,
if the officials of the Post Office Depart-
ment had shown marked and unusual
ability in dealing with and applying postal
statistics, they would have at least demon-
strated qualifications worthy of respect,
although even then their unfamiliarity
with the railroad field of investigation
might prove a fatal handicap.
Our attention has been called to an
earnest effort made by the Post Office De-
partment in the year 1911 to explain for
the benefit of the Hughes Commission the
proportion of postal expenditures charge-
able against Second-class mail matter.
This Commission, it will be remembered,
was appointed by President Taft in re-
sponse to an Act of Congress, and con-
sisted of the Hon. Chas. E. Hughes, As-
sociate Judge of the Supreme Court of the
United States, Mr. A. Lawrence Lowell,
President of Harvard University, and Mr.
H. A. Wheeler, President of the Associa-
tion of Commerce of the City of Chicago.
The Hughes Commission in its report
of February 2, 1912, under the head of
“General Post Office Service,” discusses
in detail the futile efforts of the Post
Office Department to make a satisfactory
apportionment of the expenses of the
“General Post Office Service.” It appears
that the original statements submitted by
the Department to the Commission were
revised again and again to meet the re-
peated criticisms directed against them,
with the final result that the distinguished
Commission entirely rejected the great
item of “General Post Office Service” ex-
penses amounting to over $80,000,000 a
year, or 40 per cent. of the entire postal
expenditures at that time, because it could
not satisfy itself that the estimates were
trustworthy. This incident is not referred
to for the purpose of discrediting the en-
terprise or industry of the postal officials.
It is quite likely that, remembering the
difficulties of their task, they performed a
relatively creditable piece of work, but it
may be fairly contended that when they
found that their efforts in their own fa-
15
miliar field were not sufficiently con-
Vincing to satisfy the Hughes Commission,
they would have been justified in enter-
taining some doubt in regard to the pro-
priety of urging that their estimate of the
proper division of railroad expenses should
Supersede the estimates of experienced
railroad officials and railroad accountants.
Department “Surplus ” Becomes
a “Deficit ’’
It may not be deemed offensive, since it
is a matter of public record, to point out
that this statistical uncertainty in the
Post Office Department extends to postal
subjects of more fundamental importance
than the assignment of a proportion of
expenses to second-class mail matter. Only
recently the announcement of one admin-
istration regarding a surplus existing at
the end of the fiscal year was revised by
the succeeding administration, so that a
deficit was made to appear for the same
year.
We, therefore, see no good reason for
modifying or reducing our claim that the
railroads carrying the mails in 1909 were
underpaid at least $15,000,000, and we
note with sincere approval a substantial
concurrence in this opinion as expressed
after careful investigation by Messrs.
Lorenz and Turner in their very able re-
view of the Hearings published in Volume
No. 6.
Shall the Gauge of Railroad Mail Pay
Be a Strictly Commercial Rate P
On pages 998-1001 there is allusion to
certain advantages which it is claimed
that the railroads enjoy in carrying
the United States mails from the intrinsic
character of the traffic, from the incidental
benefits of participating in a national mail
service, and from the principle of public
utility.
As regards the intrinsic character of the
mail traffic, it seems hardly necessary to
discuss the “certainty, constancy, and
homogeneity of traffic.” The testimony
submitted to the Joint Congressional Com-
mittee abounds in disclosures of the vary-
ing quantity of mail presented for ship-
ment, the difference in the volume out-
bound as compared with inbound, the
necessity for providing at all times for
maximum conditions, and a failure sub-
jecting the railway carrier to fines. With
particular reference to “homogeneity,” a
great deal might be said to the contrary,
even as regards the conditions as existing
previous to January 1, 1913, but since that
date the parcel post has been established
with the widest possible diversity in the
character of the traffic, including the
bulky, the perishable and the most fragile
character of manufactures and products.
The certainty and regularity of payment
is not distinguishable in comparison with
the ordinary commercial transactions of
the railroads. In fact, the payments are
so largely within the discretion of the
Postmaster General as to amounts through
the “not-exceeding” clause in the law, are
so subject to fines and deductions, and
subject to so much deliberation and verifi-
cation before settlement as to be in marked
contrast with payments received for pas-
senger and freight business which are prac-
tically simultaneous with the transaction.
As regards the protection of mail trains,
the principle of public utility and sugges-
tions incident thereto, we quote from the
summing up of the Committee on Railway
Mail Pay to the Joint Congressional Com-
mittee, under date of June 26, 1913, Vol-
ume No. 5, page 730:
“Some general ideas advanced from
time to time during the hearings call
for a few words in conclusion.
“One of these ideas is that the mail
service, being a governmental function,
ought to be performed for less than
what would be a reasonable compen-
sation for a similar service performed
for persons other than the Govern-
ment. The first observation on this
idea is that no such principle is ap-
plied to anybody else. Any individual
who works for the Government is paid
for his Services, and in a great many
instances he is paid more than he
would be paid if he were performing
similar service for a private employer.
16
Again, it is a fundamental principle of
the Constitutions, both Federal and
State, that property shall not be taken
for public use without just compensa-
tion. If a tract of land is condemned
in order to obtain a site for a post
office, the owner is entitled to the fair
value of the land, notwithstanding the
fact that it is to be used to promote
the postal service. It is also a well-
founded constitutional principle that
to take the use of property without
just compensation is the same as tak-
ing the property itself without just
compensation. The Government could
not appropriate the entire use of a rail-
way to governmental service without
making a fair compensation therefor;
and likewise there is no basis for its
appropriating a part of the use of a
railway to the governmental service
without making a fair compensation
therefor. Again, in addition to these
controlling constitutional principles,
there can be no justifiable political or
economic basis for the idea that the
people who use the mails shall do so at
the expense of the passengers and ship-
pers who use the railways; and in the
last analysis any inadequacy in the
compensation made to the railways by
the Government for the carriage of the
mails must be made up by the railways
in the charges imposed upon shippers
of freight and upon passengers. This
observation becomes even more obvious
in connection with the recently estab-
lished parcel post, which is princi-
pally used by merchants in the conduct
of their ordinary business. Why should
the man who ships by freight pay for
the transportation service of the other
man who ships by parcel post? There
may be plausible argun.ents for a plan
of taxing the entire people through the
ordinary forms of governmental taxa-
tion in order to provide for the trans-
portation by the Government of letters
at less than cost; but there can be no
pretext for compelling individuals who
use transportation in other forms to
pay for transportation for letters.
“Another of these ideas is that the
railway transportation of mail is a
mere incident or by-product, and on
that ground 113t entitled to full com-
pensation. (ertainly the passenger
service as a whole is not a mere inci-
dent or a by product and as a whole
ought to yield, as far as possible, an
adequate counpensation for the prop-
erty de 0ted to that use and for the
services performed in that use. Yet
there is no part of the passenger serv-
ice which is of greater importance to
the gei.eral public than the mail Serv-
ice There is no part of the passenger
service which imposes greater demands
ul', the railways for speed and cer-
a uty of operation of their passenger
I rains than is imposed by the mail
service. Certainly a service which is
of such paramount importance to the
public, and of such an exacting and
costly nature from the standpoint of
the railway, cannot in any proper
sense be regarded as a mere incident
or by-product.
“Another way in which the idea
here discussed is sometimes suggested
is that if we assume that the railways
did not carry the mail, the railway
cost would be but little less than it is
at present. Such an assumption is
utterly inconsistent with the existence
of the Post Office Department under
present conditions. The railroads
could exist without the postal service,
but the postal service could not exist,
in any modern sense of the term, with-
out the railways. An assumption
which is thus inconsistent with the
very nature of the Post Office Depart-
ment ought not to be indulged for the
purpose of depriving the railways of
a just compensation for carrying the
mails.
“The further idea has been advanced
that on account of carrying the mails
the railways enjoy the power of emi-
nent domain and the protection of the
Government in case of strikes, and that
therefore they should carry the mail
for less than what would be a full
compensation therefor. The same rea-
Sons would apply equally to all other
carrying functions of the railways.
They enjoy the power of eminent do-
main because they are common carriers
of passengers and freight, and they
enjoy the protection of the Federal
Government because they are instru-
mentalities of commerce among the
States. If these are reasons for their
being paid less than full compensation
for their services, the reduction of com-
pensation cannot be restricted to the
mails. If the power of eminent do-
main and the governmental protection
operated as an excuse for giving the
railways less than just compensation,
then there would be no inducement
whatever for anybody to invest his
capital in the construction and opera-
tion of railways.
“The railways owe to the public and
to every member of the public the duty
to transport all passengers and all
commodities seeking their services ef-
ficiently and safely and at just and
reasonable rates. This is the highest
of obligations, and the sum of their
obligations to the individual members
of the public is their obligation to the
Government. They owe no obligation
to the State which is separate or apart
from, or independent of, or inconsist-
ent with their obligations to individual
applicants for their services. They
can have no obligation to the people's
Government which could require them,
except when necessary to the public
defense, to discriminate in rates in
favor of traffic offered by the Govern-
17
ment when, in order to offset such un-
necessary discrimination, they would
be compelled to collect higher charges
from some members of the public and
upon other traffic. Words better
adapted to the assertion of this prin-
ciple could not be chosen than those
used to express it by the Joint Com-
mission to investigate the Postal Serv-
ice which reported in 1901. We
quote:
“‘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 rea-
sonable that while on the one 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 Serv-
ice shall bear its due proportion of
the expenses incurred by the railroads
in the maintenance of their organiza-
tion and business, as well as in the op-
eration of their mail trains.” (S. Doc.
No. 89, 56th Cong., 2d Sess., p. 10.)”
Cost of Service as a Guide in Deter-
mining Fairness of Rate Under
Commercial Principle
To the remarks which are made under
this head (page 1005), a very brief re-
sponse will suffice. It has not been ques-
tioned that under suitable circumstances
an approximate ascertainment of cost
may be arrived at to serve as a useful
guide to measure relative efficiency, to
regulate expenditures, and to some de-
gree establish approximately the rate be-
low which unmistakable loss would ensue.
The limitations and imperfections of
the question in the present stage of the
science of railroad statistics are suggested
in the following quotations.
The letter from the Committee on Rail-
way Mail Pay addressed to the Hon. Jona-
than Bourne, Jr., Chairman of the Joint
Congressional Committee, under date of
October 3, 1912, Preliminary Report, page
8, contains the following:
“The ascertainment of the cost to a
railroad of conducting the mail serv-
ice is necessarily very largely a matter
of judgment and opinion, because a
large proportion of the total operating
expenses are expenses common to the
freight and passenger traffic and can
only be approximately apportioned,
and there are various formulas exist-
ing for such apportionment. It would
not be right or proper to intrust to the
Post Office Department the discretion
of selecting the formulas by which to
ascertain these costs, because the Post
Office Department has an obvious in-
terest at stake, its object always being
to reduce the railroad pay to a mini-
IIllllll.
“The estimated cost of a specific
Service is not a proper basis for fixing
rates for transportation of any com-
modity. The railroads are entitled to
receive a full and fair return for the
value of the service performed, and
the ascertainment of cost of such serv-
ice is principally of value as a protec-
tion against the establishment of con-
fiscatory rates.”
The following quotations from Dr. Lor-
enz's statement in Hearings, No. 6, page
860, are also pertinent:
“A strong objection is that the cost
is to be ascertained separately for each
road and made the sole criterion of
the rate on that road. Cost is an im-
portant guide to what is a reasonable
rate, as will be discussed more fully
later, but as a matter of principle it
would be wrong to pay every road ac-
cording to cost, because this would be
rewarding inefficiency or extravagance
and penalizing efficiency.”
Page 878:
“While cost may not be capable of
that exact ascertainment which en-
ables us to make it the sole determi-
nant factor on which to base the rate
of pay for each road, the usefulness
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 Department constitutes an
excessive payment or not.”
Page 892:
“Let it be understood that in view
of the undeveloped state of railroad
cost accounting, we can hardly con-
sider the cost data submitted as giv-
ing a persuasive and definite answer to
what is a fair rate. But they tend to
Support the conclusion to be derived
from a study of the average car-mile
earnings in passenger trains.”
The Charge of Space to the
Mail Service
Under this caption, on pages 1013-
1017, there is a discussion of the changes
made by the Department in preparing the
information contained in Document No.
105 as to the mail space reported by the
18
railroad companies as having been actu-
ally operated, and says, on page 1014:
“All arguments, therefore, based
upon any assumed concession of the
Post Office Department that the un-
checked space as reported by the rail-
road companies for mails were correct
must fall.”
Throughout the discussion frequent al-
lusions are made to mail-car space oper-
ated by the railroad company “for its own
convenience” whenever the rules for
the acceptance of mail-car space fail to
take cognizance of the operating condi-
tions. In other words, the space which the
Department considered to be beyond its
immediate necessities was necessarily op-
erated in order to supply the space which
the Department admitted it needed. For
example, if a 60-foot car is needed West-
bound and the Department believes that
it needs only 30 feet Eastbound, it is
manifest that the railroad company must
return the 60 feet of space Eastbound in
Order to supply it to the Department for
the next trip Westbound. This phase of
the matter has been very carefully covered
above in the discussion of so-called “dead
space,” setting forth the illogical treat-
ment of the subject by the Department in
Document No. 105.
On pages 1015-1016 there is a quota-
tion of the Post Office Department rules
which were issued for the purpose of
tabulating the information as to car space
for Document No. 105.
It should be pointed out that in this list
of rules there is no recognition whatever
of mail storage cars, although these are a
a very important part of the postal equip-
ment and constituted over 10 per cent. of
the car-foot miles tabulated in Document
No. 105.
Under the head of “Closed-pouch space”
(p. 1015), the rule described will be found
to allow 50 inches of linear space for 1,000
pounds of mail. Now, a 60-foot car would
contain 720 inches, and according to the
rule just quoted would carry 14,400
pounds of mail. This is a high average
load for a storage car to carry in actual
practice, and this means a car in which the
entire space is devoted to the mails and
the mails are loaded to the full capacity
of the car. On the contrary, the closed-
pouch service is the retail phase of mail
transportation, consisting usually of a
few pouches or sacks in the baggage apart-
ment, and is entitled to be measured on
the retail principle rather than on the
wholesale principle. The Department’s
rule bore very heavily and unjustly on the
short-line railroads, and was probably a
strong influence in enabling the Depart-
ment to reach the conclusion that some of
these poorly paid short railroads were
really earning over 2,000 per cent. profit
on their present mail revenue.
Yet, in spite of all this, on page 1016,
it is said:
“That for closed-pouch service lib-
eral allowance of space was made.”
Apartment-Car Space
On page 1016 this appears:
“That the full amount of space
authorized in apartment cars was al-
lowed.”
The fact is that apartment-car space is
not “authorized” by the Department in the
sense that that term is really employed.
Inasmuch as the companies are not paid
for the space occupied, it would be natural
to suppose that they would furnish as
little of it to the Department as they could.
On the contrary, the demands of the De-
partment for the same reason would tend
to exceed its necessities. The fact that the
Department’s standard plans for mail
apartments call for apartments of 6 feet,
8 feet, 10 feet, 12 feet, 15 feet, 20 feet, 25
feet and 30 feet would require a railroad
company to keep a large assortment of
different size mail apartments if it under-
took to meet precisely the current needs of
the postal service and also the changing
sizes required by the increased volume of
19
mail from year to year. It is a simple and
inexpensive proceeding for the Department
to indicate that it needs a mail apartment
5 feet larger or 5 feet smaller than the
railroad company has in stock, especially
when it is not required by law to pay for
the space or to pay for the alteration. But
to the railroad company it means recon-
structing the interior of the car, chang-
ing the dimensions of the postal furniture
and probably the framing of the car to
accommodate the changed location of the
doors and windows. This entails a con-
siderable outlay, and has created the policy
on many roads of providing mail apart-
ments of such length and with such in-
terior facilities as will fully care for the
postal business on the maximum day and
the heaviest period of the year, with per-
haps some consideration of growth in the
near future. The Department in its cur-
rent practice seems to be oblivious of these
facts, and instances can be quoted where
the railway mail service demands a 12-
foot apartment in one direction and a 20-
foot apartment in the other on one set
of trains, and 6 feet in one direction and
10 feet in the other on another set of
trains. These are only illustrations of
numerous variations of this sort.
Inasmuch as there has never been spe-
cific pay for mail apartment-car space, and
therefore, since the interest of every rail-
road company would be to provide barely
what the postal service absolutely needed,
only modified by the unavoidable and con-
trolling operating conditions, it does not
seem necessary to argue further that a full
allowance for all apartment-car space re-
ported by the railroad should have been
made in Document No. 105.
Full Railway Post Office Cars
In this case the Post Office Department
came nearest to recognizing the actual Con-
ditions, but even here, by ignoring the
necessity for uniform standards, disallow-
ances of car space were made. On pages
1016–1017 it is said:
“If the company chose for its own
convenience to run cars of a greater
length than those authorized, certainly
the Department should not be charged
with the excess space.”
A full response to this fallacious doc-
trine has already been made. In current
practice the Department’s rules for pay-
ment for full R. P. O. cars are at variance
with each other. In Document No. 105
the Department undertook in the case of
full R. P. O. cars to credit the company
with the full space for the round-trip
movement according to the authorization
in the heavy direction, but in the actual
operation of the service this is not done.
By referring to Section 1334, Postal Laws
and Regulations, paragraph C, the De-
partment’s rule prescribes:
“Where the needs of the postal serv-
ice require 40 feet of car space for
railway post office purposes in one di-
rection, but less than 40 feet in the op-
posite direction, a line of 40-foot cars
may be authorized.”
This rule clearly recognizes the justice
of paying for the round trip in accordance
with the authorization in the heaviest
direction. On the contrary, many cases
can be cited where a 60-foot authorization
in the heavy direction is matched by a
40-foot authorization in the reverse direc-
tion.
Another rule of the Department, Sec-
tion 1334, paragraph F, shows an entire
lack of perception of the equities involved.
This prescribes:
“Where a line of 60-foot cars is
authorized and paid for, and the needs
of the service require additional space
but do not warrant the authorization
of an additional line of 40-foot cars,
the railroad company may be required
to furnish apartment space.”
This would mean that the railroad com-
pany must operate an additional car in
Order to supply the mail-apartment car as
a tender to the full R. P. O. car without
any additional pay, notwithstanding the
fact that the company itself has no use
for the Space in the extra car not occupied
by the mail apartment, and would prob-
ably be obliged to return this car dead-
20
head in the opposite direction. It is un-
derstood that heavy fines have been im-
posed upon companies which showed a dis-
inclination to submit to this condition.
Mail Storage Cars
These cars, constituting an important
part of the mail-car space reported in
Document No. 105, are not mentioned
specifically as having been treated in ac-
cordance with a precise rule of procedure.
It is almost invariably the case that these
cars are returned empty in the light direc-
tion. A large amount of such space abso-
lutely necessary under operating condi-
tions was disallowed by the Post Office De-
partment, and the impropriety of the De-
partment’s action has already been fully
described in the discussion of so-called
“dead space,” but is again alluded to here
because of there being no mention of these
cars either in the rules quoted by the De-
partment on pages 1015-1016 or in the
discussion which is devoted to the Subject.
However, the Department concludes, on
page 1017:
“Notwithstanding this liberality of
the Department in crediting space, the
results obtained by the Post Office
Department and those obtained by the
Railroad Mail Pay Committee varied
considerably, as hereinbefore men-
tioned.”
Annual Weighings, Side and Ter-
minal Service, and Apartment Cars
Annual Weighings
We quote from page 1018, fourth para-
graph :
“. if the rate fixed on a quad-
rennial 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 ad-
ditional liberal charge against the
mail service for participation in pay-
ments of dividends, interest on funded
debt, etc., the aggregate annual pay-
ment to the railroads in 1910 exceeded
the apportioned cost.”
As the railroads have plainly demon-
strated that they were heavily underpaid
for carrying the mails in 1910, it is evi-
dent that a more frequent weighing in
connection with a constantly growing
traffic is a decidedly appropriate method
in conjunction with other reforms of rem-
edying the inadequacy.
Dr. Lorenz, in Volume No. 6, page 868,
estimates, on figures furnished by the Post
Office Department, that an annual weigh-
ing would result in additional pay to the
railroad companies of $3,255,000 for the
additional work performed, although in
this he takes no account of the fact that
the ton-mile rate would decline with the
increased weight. The law of 1873 re-
quired that the mails be weighed not less
frequently than every four years, and left
the discretion of more frequent weighings
to the Postmaster General. For many
years following the passage of that law 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, however,
the Department has changed the practice,
and as a rule has taken the weights only
every fourth year.
It is a well-known fact that the tonnage
increases constantly, and it is merely a
business-like proposal to ask that the ad-
justment of the account be made more fre-
quently than every four years, especially
since the introduction of the parcel post.
As a case in point; the present Post-
master General has announced officially
that he expects the parcel-post traffic next
year to amount to 600,000,000 parcels, of
which a large proportion will undoubtedly
be transported by the railroads. If the
conditions were reversed and these par-
cels were withdrawn from the mails, and
the Postmaster General failed to order a
weighing to protect the interest of the
Government, he would certainly be subject
to severe criticism.
21
Side and Terminal Service
On pages 1018–1019 it is argued that
the delivery of the mails to and from
the post offices by the railroad companies
is not a subject for relief, because Docu-
ment No. 105 has shown that the rail-
roads are already overpaid. The railroad
testimony, to the contrary, disposes of this
idea.
In addition to this, it has been uniformly
held by all Commissions, Congressional
and otherwise, that have studied the Sub-
ject of mail transportation that the rail-
roads should be relieved of this service,
and many of the Postmasters General and
other postal officers have expressed opin-
ions to the same effect. There is a small
concession to this opinion on page 1035:
“. . some changes should be
made regarding side and terminal Serv-
ice so as to relieve short lines with
small pay, supplying a number of post
offices along their route, from expense
disproportionate to the revenue re-
ceived.”
Apartment Cars
On pages 1019-1020 the denial of al-
lowance of pay for mail-apartment cars
rests on the repeated contention that
the railroads were overpaid in 1909. The
testimony of the railroads entirely re-
futing the conclusions of Document No.
105, have, of course, withdrawn all sup-
port to this claim.
In the letter of former Postmaster Gen-
eral Hitchcock, of August 12, 1911, trans-
mitting the report that was subsequently
printed as Document No. 105, the follow-
ing is contained:
“No additional compensation is al-
lowed for space for distribution pur-
poses occupying less than 40 feet of
the car length. This distinction is a
purely arbitrary one and without any
logical reason for its existence. It
affords a striking example of the un-
scientific and unbusiness-like methods
now followed in adjusting railway mail
pay.”
Notwithstanding this opinion, the
statement on page 1026 throws doubt
upon it by Suggesting that:
“As a matter of fact there is a rea-
son 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 rail-
road's own purposes.”
A further study of the subject is con-
Vincing that Mr. Hitchcock’s remarks
are true as relating to the existing
conditions of the year 1914 as distin-
guished from the conditions in 1873—
41 years ago. The rates prescribed in the
law of 1873 were much higher than the
now existing rates, and can be said to have
made fair provision for mail-apartment car
space on the then existing frequency of
six round trips a week. The great in-
crease in the frequency of mail-apartment
car service since that time would make the
Original rates inadequate to-day.
While it may be true in some cases that
the mail apartment occupies a portion of
a car which the railroad would neverthe-
less run for its other traffic, there are
many cases where the car would not be
run at all except to provide the mail apart-
ment for the postal service which neces-
sarily involves the operation of an addi-
tional car in the train.
In regard to the last three items—i. e.,
“Annual Weighings,” “Side and Terminal
Service,” and “Apartment Cars”—the
main contention of the Department is that
no specific remedial measures are needed
because the gross amount of railroad mail
pay according to the conclusions reached
in Document No. 105 indicated that the
railroads were overpaid. It is hardly
necessary to repeat that that conclusion is
dependent upon the use of the Post Office
Department percentages for division of
train expenses and for proportion of mail-
car space which have been thoroughly dis-
cussed and disposed of.
22
The Law of March 2, 1907, and Post-
master General’s Order No. 412
of June 7, 1907
It is perhaps unnecessary to make any
lengthy response to the remarks under this
heading, which appear on pages 1020-1025,
except to express the belief so far as the
Act of March 2, 1907, is concerned that
the action of Congress at that time in re-
ducing the rates for mail transportation
and for R. P. O. cars was not justified by
the then existing conditions, and if an
investigation had been held it is not likely
that Congress would have taken such ac-
tion.
The “Divisor” Order of the Postmaster
General, under date of June 7, 1907, has
already been submitted to judicial review,
with the result that the Court of Claims
has decided in favor of the railroads. The
discussion by the Second Assistant
Postmaster General is largely on the
mathematical phases of the question,
and there is one phrase in italics on page
1023 which is almost as imperfect as any
of the mathematical practices described
in Document No. 105. This is where, in
describing the process of dividing the total
weight for the weighing period which is
customarily for 105 days by the total num-
ber of days in the weighing period (105),
it is asserted that this would produce an
“exact mathematical average for every
day in the year of 365 days.”
It hardly seems necessary to point out
that the only way to obtain such a result
would be to weigh the mails for 365 days.
Conclusion
The remainder of the Department’s
statement deals in a descriptive way
with the various plans of adjusting rail-
way mail pay and states its objections
to them, and will not be taken up for
analytical consideration and criticism.
The Committee on Railway Mail Pay
having studied this question for several
years past in connection with the
inquiry of November, 1909, and having
had considerable experience in dealing
with transportation problems, have been
able, in a professional spirit, to appreciate
the natural genius exhibited by those who
constructed the scale of rates contained in
the law of 1873.
It would have been a source of satisfac-
tion to have read a more appreciative and
a more extensive description of the basic
merits of the law of 1873 than is contained
in Volume 7 on pages 1025 and 1026.
The law was admirably adapted to the
conditions as they existed in 1873, with
the exception that the full R. P. O.
cars which had then been recently intro-
duced were not accorded an adequate rate
of pay. However, this affected relatively
only a small percentage of the total amount
of pay at that time.
Since 1873 the conditions of service have
greatly changed; the volume of tonnage
transported has increased enormously, and
this has probably been the cause of the suc-
cessive reductions in the scale of pay by
Congressional and Departmental action.
On the other hand, the increased frequency
in mail-train service and the great de-
velopment in the distribution of mails en
route, with corresponding increase in fa-
cilities provided by the railroads, have
not been fairly considered in conjunction
with the increased tonnage.
Notwithstanding this, the intrinsic
merit of the weight scale as set forth in
the law of 1873 is by all means the best
and most secure foundation for the ad-
justment of rates both for the Government
and for the railroads.
The statement made on page 1034,
reading:
“The Railroads' Committee offered
no constructive plan aside from pro-
posals for certain changes in existing
legislation,”
might be thought to convey the inference
that the recommendations of the Com-
mittee on Railway Mail Pay were lacking
in affirmative proposals through insuf-
23
ficient study of the subject or through dis-
regard of the conclusions arrived at by
others who have investigated the subject,
some of whom have proposed that space
rather than weight should be the measure
of the pay to be allowed.
Any such inference would do serious in-
justice to the earnest consideration that
has been given to this subject by those on
the railroad side who have had the priv-
ilege of studying it. The Committee on
Railway Mail Pay selected and recom-
mended those features of amendment
which are most important to be dealt with
in order to correct the inequalities which
have arisen either through successive hori-
zontal reductions in pay or through
changes in the conditions of the Service.
These recommendations, as submitted
on October 3, 1912, in a letter to the
Chairman, were as follows:
1. For the repeal of the act of March 2, 1907.
2. For annual weighings and a definite and
just method for ascertaining daily average
weights.
3. For pay for apartment cars on some basis
that will compensate for the service.
4. For a fair allowance to the railroads for
side and terminal messenger service which they
perform for the Post Office Department ac-
cording to the value of this service to the Post
Office Department. w
5. That all rates of pay should be definite
and not subject to the discretion of the officers
of the Post Office Department.
The Railroad Committee throughout its
existence has not failed to give the most
thorough consideration to the proposal that
space rather than weight be made the
measure of the service rendered, but is
absolutely convinced by its consideration
of the subject that any such plan would
be dangerous to the Government and un-
Satisfactory to the railroads, principally
because of the large amount of discretion
the adjustment would leave to the officers
of the Department. This conclusion is not
inconsistent with the deepest faith in the
honesty of the Departmental officers, but,
recognizes the disadvantages of their posi-
tion under our political form of Govern-
ment and the opportunities which would
present themselves for serious irregu-
larities.
The growth of the republic has brought
about a vast concentration of public busi-
ness at the national capital, and while it is
the expectation that when discretion is
allowed under a law it shall be exercised
by the chief officer of the Department, it is
a physical impossibility for him to per-
sonally examine the cases in order to exer-
cise this discretion, and it is likewise
physically impossible for this important
duty to be performed by the chief officers
under his control. The result is that an
important question such as this would rest
upon the opinions of hundreds of subor-
dinate officials, and the possibilities are
uncomfortable to contemplate.
There would be frequent occasions for
misunderstanding and irritation. These
would lead inevitably toward a lack of co-
operation which should always exist be-
tween two national, industrial establish-
ments such as the railroads on the one
hand and the postal service on the other.
Committee on Railway Mail Pay Repre-
senting 264 Railroads Carrying Mails
On Over 218,000 Miles of Line.
RALPH PETERs,
Chairman.
Supplement—Present Conditions (1913)
Compared with 1909
When using estimates of expenses per
car mile chargeable to mail based on the
special statistics of November, 1909, the
fact should be considered that since that
time railway expenses per unit of service
have greatly increased. A statement is at-
tached showing, for about 90 per cent. of
the railroads of the United States, the op-
erating revenues and expenses per mile of
road for the calendar years 1909 (which,
24
of course, includes November, 1909) to
1913 inclusive. This shows that since
1909 operating expenses have increased
29.6 per cent., and taxes 34.6 per cent.,
while net revenue, after deducting oper-
ating expenses and taxes, decreased 6.9
per cent., despite an increase of 17.6 per
cent. in operating revenue. The annual
rate of railway mail pay per mile of mail
routes, according to the 1913 annual re-
port of the Second Assistant Postmaster
General, was, on June 30, 1909, $229, and
only $225 on June 30, 1913, or a decrease
of 1.8 per cent., notwithstanding the
greater service because of the inauguration
of the parcel post, and the great increase
in railway expenses.
Operating Results by Calendar Years on Railways of United States

PER CENT. OF
1909 1910 1911 1912 1913 lºſſ.
OVER 1909
Mileage 210,047 213,347 224,648 220,058 223,078 + 6.2
Operating Revenue $11,673 $12,524 $11,954 || $13,287 || $13,723 + 17.6
Operating Expenses 7,640 8,534 8,176 9,139 9,771 +29.6
Net . $4,034 || $3,991 || $3,778 || $4,148 $3,952 – 2.0
Ratio 65.5 68.1 66.0 68.7 71.2 | + 8.7
Taxes $433 $483 $487 $545 $583 +34.6
Net after Taxes . $3,615 $3,512 $3,297 $3,609 $3,364 – 6.9
Annual Rate of Railway
Mail Pay per Mile
of Mail Routes on
June 30th $229 $223 $227 $224 $225
Authority—Published reports of Bureau of Railway Economics, Washington, D. C., and 1913
Annual Report of Second Assistant Postmaster General.

Aside from the right of the owners of the property so
devoted to the use of the public to receive from the
public a reasonable return on their investments, it is of
profound importance to the public in its own interest to
accord fair and equal treatment to the owners of rail-
roads, for upon no other basis may we continue to look
to private capital for the further development and exten-
Sion of our railroad facilities.
—Interstate Commerce Commissioner Harlan, in
Industrial Railways, Case 4181. January 20, 1914.
Exhibit A
AN ESTIMLATE as to the AMOUNT of
RAILWAY MAIL PAY which would be al-
lowed according to the modified plan of Post-
master General Hitchcock, presented in the
Preliminary Report of the Joint Congressional
Committee (pages 109-111).
Any estimate must be based upon the footing
of Table 7, Document 105, this being the only
statement submitted by Mr. Hitchcock under-
taking to show the financial results in detail.
That table, however, is incomplete. It repre-
sents only 80.44 per cent. of the total length
and 88.11 per cent. of the total pay.
Per cent.
in
Total. Table 7. Table 7.
L ength of
R a il w a y
Mail Routes
(miles) . . . 218,747 175,922 80.44
Railway Mail
Pay, includ-
ing R. P. O.349,132,644 $43,293,277 88.11
In making the estimate, the factors to be
dealt with, successively, are these four:
First. What were the total operating expenses
(including taxes) for both freight and passen-
ger service of the railroads shown in Table 7?
Second. How much of that total amount
should be charged to the passenger train serv-
ice 3
Third. What proportion of the second item
should be charged to the mail service?
Fourth. What additional amount should be
allowed to cover the cost of the capital in-
vested?
First Item—Total Operating Earpenses.
There would be no question for dispute here.
If the department has made no clerical errors,
we can accept for this item the total given on
page 280. Total operating expenses and taxes
for the month of November, 1909, $137,355,150.
Second Item—Passenger Train Earpenses.
Here there is a very serious difference. The
Department, using its own method, assigns
about 29 per cent., or $40,121,647. We cannot
tell precisely what the railroads' result would be
without reworking all the original reports, and
these are not available, and the work would be
very expensive, but it has been estimated that
for the group of railroads shown in Table 7 the
result would be 34.42 per cent., or say $47,000,-
000 as against the Department's estimate of
$40,000,000.
Mr. Hitchcock, in his revised plan, relin-
quished his claim to be allowed to make this
division and was willing that the Interstate
Commerce Commission should do it. As the
Interstate Commerce Commission has no stand-
ard formula for the purpose, it can only be
surmised that their decision would be closer
to the railroad companies' estimate than to the
Post Office Department estimate.
Third Item—Passenger Train. Eacpenses Charge-
able to Mail Service.
After deciding whether the amount in Item
2 should be $40,000,000 or $47,000,000 for the
month of November, 1909, we next seek to
ascertain what portion of this amount should
be charged to the mail service, on the basis of
the percentage of car space in all passenger
train service devoted to the United States mails.
The Post Office Department, in Document
105, pages 269-270, accepted 7.18 per cent., but
admits that 8.81 per cent. was reported. It is
understood that about 20,000,000 car-foot miles
in the Closed Pouch Service was cast out with-
out being published, and this would raise the
total to 8.96. The railroads' own computation
was 9.32 per cent. (Hearings No. 1, page 52.)
Mr. Hitchcock's revised plan does not recon-
cile these divergencies, and yet a difference of
2 per cent. when applied to $47,000,000 would
mean a difference of $940,000 a month, or $11,-
280,000 a year.
It must be noted also that in Table 7 the
Department did not use its lowest space per-
centage (7.18), but one still lower (6.68 per
cent.).
Fourth Item—Capital Cost.
This essential factor had been overlooked by
the Post Office Department in its original pro-
posals. In the revised plan it is said “the com-
panies may be allowed such additional amounts,
if any be necessary, as shall render the whole a
proper proportion of a fair and reasonable re-
turn on the value of the property necessarily
employed in connection with the mail service.”
As the phrase is not mandatory, the Postmaster
General would be authorized to grant or with-
hold millions of dollars a year, upon his discre-
tion instead of upon a specific law of Congress.
It would be quite impracticable to make an
estimate of any amount that could rest securely
upon the phrases quoted above.
We may calculate the use of the railroad
property by the mail service, in the ratio that
the operating expenses (and taxes) applicable
to the mail service bear to the total operating
expenses, and upon the amount ascertained
charge interest at 6 per cent.
The Post Office Department, in Table 7, pub-
lished the total expenses of certain railroads as
$137,355,150, of which it accepts $2,682,798 as
its own proportion, or 1.95 per cent.
The railroads, on the same amount, $137,-
355,150, would charge the mail service with
$4,406,503, or 3.21 per cent.
Taking the net capitalization of the railroads
as $14,000,000,000 (the Report of the Inter-
state Commerce Commission for 1910, page 52,
gives the amount as $14,338,575,940), we find
the proportion chargeable to the mail service
to be
Post Office Department,
Table 7 . . . . . . . . . . . . . . 1.95% $273,000,000
Railroad calculation . . . . . 3.21% $449,400,000
The interest on these amounts would be:
At 4%. At 6%.
For $273,000,000 . . . . $10,920,000 $16,380,000
For $449,400,000 . . . . 17,976,000 26,964,000
26
Comparative Statement Based on Table No. 7—House Document No. 105
Covering 88.11 per cent. of Total Railway Mail Pay for 1909-1910 -
POST OFFICE RAILROAD AN A V ERA GE OF .
DEPARTMENT COMPANIES THE TWO
First Item :
Total Operating Expenses and Taxes
for Month of November, 1909 $137,355,150 $137,355,150| $137,355,150
Post Office Railroad An Average of
Second Item : º º: tºº.
Passenger Train Expenses and Taxes
for Month of November, 1909 . . $40,121,647 || $47,280,083| $43,700,865
Post Office , Railroad n Aycrage of
Third Item : tº Gº | ***:::
Passenger Train Expenses and Taxes
chargeable to MAIL SERVICE:
“a” Month of November, 1909 $2,682,798 $4,406,503 $3,544,650
“b ’’ Annual Basis . e & e º gº 32,193,576 52,878,036 42,535,806
“c” Raised from 88.11% to 100% to
cover all Mail Routes . 36,537,936 60,013,660 48,275,798
§. cº, anº, a
Fourth Item : at 1.95% at 3.21% .
Net Capital ($14,000,000,000) covering
Roadbed, Rails, Engines, Cars,
Stations, Terminals, and other
Facilities, chargeable to MAIL
SERVICE $273,000,000 || $449,400,000 $361,200,000
“a " Interest on Net Capital at 6%
chargeable to MAIL SERVICE 16,380,000 26,964,000 21,672,000
“b '' Interest on Net Capital at 4%
chargeable to MAIL SERVICE 10,920,000 17,976,000 14,448,000
Recapitulation
Total Cost chargeable to MAIL SERVICE:
“a” Operating Expenses and Taxes|| $36,537,936|| $60,013,660| $48,275,798
“a " Interest on Net Capital at 6% 16,380,000 26,964,000 21,672,000
Total $52,917,936 $86,977,660| $69,947,798
“b’’ Operating Expenses and Taxes|| $36,537,936|| $60,013,660| $48,275,798
“b '' Interest on Net Capital at 4% 10,920,000 17,976,000 14,448,000
Total $47,457,936 $77,989,660; $62,723,798
Total Pay:
Mail Pay—Year 1910 $49,132,644 || $49,132,644|| $49,132,644
Annual Surplus or Deficit:
“a” Interest at 6% 3,785,292 37,845,016 20,815,154
“b’” Interest at 4% 1,674,708 28,857,016 13,591,154
27
It will be noticed that the railroad *
up to and including the third item, reveals an
underpayment of $10,900,000 without counting
the capital cost. It also seems evident that
Postmaster General Hitchcock could not assume
to demonstrate overpayment, except by intro-
ducing his own method of dividing the total
railroad expenses, by reducing to the lowest
minimum the car space devoted to the mails and
by arguing against any participation in a fair
return upon the property.
January 23, 1914.
(Revised February 16, 1914.)

sengers and of property.
We have proceeded in this country upon the theory very
largely that the treasury of a railroad was an inexhaust-
ible fund from which you might draw ad libitum with-
out any reference to the source of supply. . . . So long
as the railroad pays the bill it costs nobody anything.
Now, that is manifestly the most fallacious of all notions.
A railroad has no source of income ordinarily except
what it derives from its charges for the carriage of pas-
—Extract from Address of Hon. C. A. Prouty, before
the Traffic Club of Baltimore, February 17, 1914.
28
The Fair Method of Paying for
Transporting the Mails
Fº G as the railroads do that every day's delay in
rectifying existing conditions is an accumulative in-
justice, the railroad managers of the country have
submitted to Congress a formal recommendation as to a
definite system which should be followed in compensating
the railroads for carrying the mails.
That plan embodies four main principles, as follows:
1. That the mails should be weighed annually (instead
of quadrennially, as at present) and payment made for the
weight and distance carried.
2. That Mail Apartments, in railroad cars, fitted up
as traveling post offices should be paid for.
3. That side and terminal messenger service, between
railroad stations and post offices, and other special services
should be paid for.
4. That all rates of pay and conditions of service should
be definite and not subject to the discretion of employes
of the Post Office Department.
3r * : * >}:
It is the belief of railroad managers that the adoption
of these general principles and establishing fair units of pay
will remove this complicated subject from public contro-
versy. It would also result in payment for carrying the
parcel post. The present situation is unjust and ought to
be corrected.
Carrying the mails has always been an important detail
of railroading. The great development of the country has
increased the volume and tonnage of the mails enormously,
and has correspondingly intensified the burdens and
responsibilities.
It is the feeling of railroad managers that as soon as
the American people realize the anomalous and inequitable
conditions under which the railroads now carry the mails,
prompt action will be forthcoming from Congress to pro-
vide adequate compensation for the services performed.
:k >k -k >k
Summary of Recent Congressional
Investigation
The Act of Congress approved
August 24, 1912, provided for a
Joint Committee composed of
three members of the Senate and
three members of the House of
Representatives to make inquiry
into the subject of postage on
second-class mail matter and Com-
pensation for the transportation of
mails, and report at the earliest
practicable date. The Committee,
when appointed, consisted of Sen-
ators Bourne, Richardson and
Bankhead, and Representatives
Lloyd, Tuttle and Weeks.
On September 11, 1912, Senator
Bourne addressed an inquiry to
the executive officers of all rail-
roads carrying the mails—795 in
number—asking for an expression
of opinion on the plan recom-
mended by the Post Office De-
partment and embodied in Senate
Bill 7371. This plan proposed to pay
the railroads according to the num-
ber of linear feet occupied by the
mails in cars, the rate to be based
upon the cost to each of the 795
railroads for Operating expenses
and taxes, plus 6 per cent. The
cost was also to be ascertained by
the Post Office Department.
The railroads generally replied
that the underlying principle of
the plan was not correct. The
Post Office Department had based
its recommendations upon its Own
incomplete and inaccurate pres–
entation of the railroad statistics
for the month of November, 1909.
Further, that a cost based only
upon Operating expenses and taxes,
plus 6 per cent., omitted allowance
for interest on the investment, and
was, therefore, fatally defective.
Further, that if the full cost was
ascertained for each railroad, even
then any plan which used this as
a basis of pay would be compli-
cated in Operation and unjust in
its application by failing to take
into account the value of the ser-
vice rendered.
Beyond all these considerations
was the further fact that in this
case the Post Office Department
—the shipper— was undertaking
to determine the cost for itself;
to prescribe the car space it would
pay for; and to buttress its position
by a new clause in the law making
it compulsory on the railroads to
carry the mails under penalty of
$5,000 for each failure.
>k :k >k 3k
The Congressional Committee
opened formal hearings on the
subject on January 28, 1913,
and these were continued until
May 14, 1913, after which oppor-
tunity was given to both sides to
sum up the testimony. The rail-
roads presented their summing
up on June 26, 1913, but the Post
Office Department took six
months additional and presented
their summing up on January 16,
1914.
sk :k :k :k
How the Railroads are Underpaid
In the meantime a statistical ad-
viser of the Congressional Com-
mittee, Dr. M. O. Lorenz, Asso-
ciate Statistician of the Interstate
Commerce Commission, made a
report dated September 27, 1913,
in which he reached the conclu-
sion that an increase in railway
mail pay of at least 10 per cent.
was warranted, with the suggestion
of the pay could be further decided
by reference to the Interstate Com-
merce Commission.
The Secretary of the Joint Con-
gressional Committee, Mr. R. H.
Turner, made a summary of the
hearings under date of November
28th, and reached the conclusion
that on the present system of pay
the railroads are underpaid approx-
imately $12,000,000.
The Second Assistant Postmas–
ter General in his summing up of
January 16, 1914, reiterated the
position of the Post Office Depart-
ment, and on February 12, 1914,
Submitted a new plan of paying
the railroad companies on the space
basis at certain rates per car mile,
but claiming for the Post Office
Department the power to pre-
scribe the car space that would be
paid for, full control of the rail-
road facilities under heavy fines
which the Postmaster General
might impose without limit, and
reserving to the Postmaster Gen-
eral discretion to change the con-
ditions under penalty of $5,000
fine for every failure of a railroad
company to carry the mails.
In the original Bill, Senate 7371,
the Post Office Department had
abandoned the weight basis of pay
in favor of space based upon cost
to the individual railroad. In the
new Bill it abandoned the cost basis
in favor of a space basis, which,
while ostensibly associated with
that the adequacy or inadequacy
definite rates, was left entirely
within the discretion of the Post-
master General.
The railroads submitted to the
Joint Congressional Committee on
February 26, 1914, an earnest pro-
test against the findings and con-
clusions of the Post Office Depart-
ment as set forth in its summing
up of January 16, 1914, and as
embraced in its new proposals of
February 12, 1914. The Second
Assistant Postmaster General re-
plied in a lengthy statement of
March 24, 1914.
The railroads made their closing
statement on April 1, 1914, and the
Joint Congressional Committee,
after verbal discussion, closed the
hearings finally on April 3d. The
testimony, all taken under oath, is
the most complete and valuable
ever submitted on this important
subject, and is comprised in pam-
phlets which already include about
1,300 pages of printed matter.
:k >{: :k >k
The Fair Basis
The Railroads' Committee has
studied this whole question for
Over four years. It has endeavored
to regard the question from all
sides. It has attempted to con-
sider the interests of the people,
of the Post Office Department,
as well as of the railroads. It has
carefully examined the record of
previous investigations and the
various plans proposed for chang-
ing the method or the basis of pay.
It has especially studied the sug-
gestion that the present basis, i. e.,
the weight of mail transported
multiplied by the distance it is
transported, be abandoned, and that
the basis of car space authorized
be substituted therefor.
The Railroads' Committee has
concluded that the original plan,
as embodied in the law of 1873, is
the safest and most enduring basis
for all of the parties concerned.
That the weight of mail carried
and the distance it is carried rep-
resent the essential service ren-
dered. It is, therefore, the most
direct element upon which the
pay should be measured and com-
puted. The weight basis is also
the most definitely ascertained ba-
sis and the one regarding which
there can be no uncertainty. It
is not subject to fluctuation, ac-
cording to individual opinion. The
car space plan of pay involves esti-
mates based on individual Opinion,
and this would be dangerous to
both parties.
The Railroads' Committee,
therefore, adhere to the recom-
mendations made on October 3,
1912, to the Joint Congressional
Committee, as follows:
1. For the repeal of the act of March
2, 1907.
2. For annual weighings and a defi-
nite and just method for ascer-
taining daily average weights.
3. For pay for apartment cars on
Some basis that will compensate
for the service.
4. For a fair allowance to the rail-
roads for side and terminal
messenger service which they
perform for the Post Office
Department according to the
value of this service to the Post
Office Department.
5. That all rates of pay should be
definite and not subject to the
discretion of the officers of the
Post Office Department.
The closing statement for the
railroads was read to the Joint
Congressional Committee at the
hearing of April 1st, by the Chair-
man of the Railroads' Committee,
and is here published :
The Railroads' Closing Statement
The Committee on Railway Mail Pay On April 1st made the
following statement to the Joint Congressional Committee,
in reply to the statement made by the Post Office Department
On March 24, 1914.
The Committee representing the rail-
roads would have preferred to have rested
its case before your Honorable Committee
with its statement of February 26th,
Volume No. 9, because a careful review
of the statement of the Post Office De-
partment submitted on March 24th 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 volumi-
nous and that the reiteration in the Post
Office Department’s statement of certain
claims already refuted may not be con-
veniently 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
eighteen 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.
2k Sk × ×
Extent of the Wolcott-Loud Joint
Commission
The investigation of the Wolcott-Loud
Commission extended from 1898 to 1901.
Representative Moody, of Massachusetts,
sequently 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 Commis-
sion. 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 sta-
tistics 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 fig-
ures if they please in their minds, as
they are important. We went stag-
gering 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.”
Later on, in his speech, he said that a
special weighing for thirty-five days in
October and November, 1899, showed that
mail equipment constituted 48 per cent.
of the mail matter sent by the railroads,
although the Department had previously
claimed that the percentage of equipment
was about 9% per cent. He says else-
a member of that Commission (and sub-
where in his speech:
“It had been supposed that we were
paying 6% cents per pound as the av-
erage 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 pay-
ing 40 cents per ton mile we were only
paying 12.56 cents per ton per 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 pay-
ing.”
While the comments of Mr. Moody de-
scribe 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
Commission, whose services were secured
by the Joint Congressional Committee for
that special work.
:k :k :k :k
Document No. 105 and the Hughes
Commission Inquiry
Since the report of the Wolcott-Loud
Commission in 1901, the Post Office De-
partment has undertaken two very im-
portant and complicated tasks.
was the ascertainment of cost to railroad
companies of transporting the mails and
the incidental services in connection there-
with 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 operations so as to de-
termine the specific cost of handling and
transporting second-class mail matter.
The inquiry of November, 1909 (House
Document No. 105), was from its nature
a railroad problem more than a Post Of-
The first
fice Department problem, whereas the as-
certainment for the Hughes Commission
was entirely a problem resting on postal
statistics. In the former, the co-opera-
tion and continuous advice of the rail-
road companies was quite essential to ob-
tain 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 postmasters and employes.
It should also be pointed out that these
two inquiries were fundamentally different
in their respective paths of procedure,
because the inquiry of November, 1909,
was conducted to ascertain certain per-
centages or ratios which would subse-
quently 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
reaching 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 calcula-
tion of the Department’s estimated cost
per pound of second-class mail was 9.235
cents; consequently it was in the ratio of
about 1 cent for each $22,000,000 of ex-
penses. 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 De-
partment’s revised computations showed a
minimum cost of 8.263 cents per pound as
compared with the original calculation of
9.235 cents per pound.
:k ::: :k :k
The Hughes Commission Rejects
the Post Office Department
Estimates -
The conclusions of the Hughes Com-
mission, on page 89 of their report, an-
nounce the following decisions:
“First. That the evidence submitted
does not justify a finding of the total
cost of transporting and handling the
different classes of second-class mail
matter.
“Fifth. That upon the basis of
their apportionment for the fiscal year
1908, as modified by subsequent reduc-
tions in the expense of railroad trans-
portation, 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 gene-
ral post office service expenses $86,000,-
000, and miscellaneous expenses not di-
rectly assignable $3,000,000, 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 in-
clude the subsidiary tables from which
these later results are taken or to criti-
cise the details, as the commission has
little confidence in their accuracy.”
And later, on the same page, the Com-
mission says:
“In view of the errors and inconsist-
encies in which the returns from the
post offices abound we do not extend
this report to review them—our ex-
amination has convinced us that the
computation is not sufficiently accu-
rate to base an apportionment of the
cost of the general post office service.”
The Hughes Commission, therefore,
preferred to make an incomplete report
and rest their decision upon an ascertained
cost of 5% cents a pound for second-class
matter rather than accept the findings of
the Post Office Department for the ap-
portionment of the remaining 3 cents.
:k :k :: ::
The Railroads Reject the Post Office
Department Estimates
Our purpose in alluding to this case is
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 em-
ployed. We also hope that we can say,
without meaning any discourtesy to the
officers of the Department, that when an
able and distinguished body such as the
Hughes Commission refused to accept the
Department's sub-division of the postal
expenditures because they produced an
uncertain variation 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 dis-
crepancies in ratios or percentages would
lead to final differences of many millions
of dollars.
The expression of these views is not in-
consistent with the appreciation we en-
tertain for the enterprise, the industry
and the tenacity of purpose which the
Post Office Department officials have ex-
hibited in the prosecution of these two
important inquiries.
The Inquiry of November, 1909,
and the Committee on Railway
Mail Pay
The history of the inquiry of Novem-
ber, 1909, resulting in House Document
No. 105, has been so fully explained and
the view of the Railroad's 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 ad-
visable, however, to note in the record an
expression of regret that the Second AS-
sistant Postmaster General, in publishing
the correspondence between the Depart-
ment and the Committee on Railway Mail
Pay during 1910, should make the com-
to emphasize the fact that the division of
ment as he does on page 1252, that:
“It will be observed from this cor-
respondence that the Railroads' Com-
mittee sought to induce the officers of
the Department to accept the totals
obtained by the employes of such com-
mittee instead of relying upon the in-
dependent efforts of the officers and
employes of the Department in ascer-
taining 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 Com-
mittee on Railway Mail Pay, that the as-
surance was given by Mr. Kruttschnitt
to the Second Assistant Postmaster Gene-
ral that the Committee would welcome
any precaution which the Department felt
was essential to secure accuracy.
The Second Assistant Postmaster Gene-
ral intimates, on page 1252, that the ac-
ceptance of co-operation 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 Gene-
ral by law and by his obligations in the
premises.
This statement ignores the fact that
the law of March 3, 1879, did not pre-
scribe in detail the operations and pre-
cautions which the Postmaster General
should employ, and consequently the Post
Office Department was free to co-operate
and free to adopt any precautions deemed
necessary to insure trustworthy and ac-
curate returns. From the very nature of
the inquiry all of the information had to
be supplied by the individual railroads,
and it was the work of assembling this
information and the work of co-ordinating
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 Gene-
ral says, page 1252:
“In my judgment the Department's
course was the only proper one, and,
in view of the outcome, there can be
no doubt about its wisdom.”
The Railroad Committee's View
In the view of the Railroad Committee
it was not a question of propriety that
governed the attitude of the Post Office
Department, but rather questions of
policy. If the Department felt that co-
operation would vitiate any finding which
the Department might make, it thereby
confesses its unsuitability to be intrusted
with the responsibility. When the law
of March 3, 1879, was passed, the Inter-
state Commerce Commission was not in
existence. If the inquiry of November,
1909, had been conducted under the aus-
pices of the Interstate Commerce Com-
mission we believe there would be no hesi-
tancy or reluctance on the part of that
Commission to confer with the railroads
and to co-operate in the ascertainment of
correct statistics and in the proper in-
terpretation of them.
But even if it be conceded that the Post
Office Department for reasons of policy
should have proceeded alone and made
its own tabulation, 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 re-
spective totals, to discuss the differences,
and to remedy the inadequacy of statis-
tics 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 unrecon-
cilable differences, these could have been
submitted to Congress for final determi-
nation.
:: >k :: ::
Aside from all of the important criti-
cisms that have been justly made against
the statistical presentation and conclusions
drawn from Document No. 105, it cannot
be lost sight of that the Department
passed judgment upon the statistics of a
single month, upon the imperfect results
of a single and new inquiry, and failed to
observe those precautions of prudential
procedure which might properly be ex-
pected from any Department of the gene-
ral Government when dealing with a case
involving the property and rights of the
citizens.
No statement of contrary views and
no reiteration of such statements by a
bureau officer of the Government will de-
bar the Railroads’ Committee from insist-
ing upon its right to be heard when it
makes statements in regard to the divi-
sion of the railroads’ total operating ex-
penses and the space relation necessary
under operating conditions between the
passenger, express and mail services, not-
withstanding the fact that the Second As-
sistant Postmaster General, on page 1252,
says that the “railroads’ discussion upon
these statements amounts to nothing more
than a quibble.”
:: :: :: >{<
The Question of Underpayment
Of the Railroads
There seems to be nothing in the De-
partment’s statements relating to overpay-
ment or underpayment that calls for fur-
ther comment. The Department alludes
to varying estimates made by the rail-
roads as to the total amount of under-
payment, but your Committee understands
very well that estimates based upon the
comparative growth of freight revenue, or
passenger revenue, or postal revenue are
simply illustrative of tendencies which
might be expected to be reflected in rail-
way mail pay, especially if the national
conditions are such as to warrant the be-
lief that the volume and tonnage of mail
transportation is at least keeping equal
pace with other traffic. We believed that
these incidental illustrations would assist
the judgment of your Committee in de-
claim that the amount of underpay is at
least $15,000,000.
Under this head the Post Office De-
partment also alludes to the efforts made
before the Hughes Commission to appor-
tion the postal expenditures for second-
class mail matter, and concludes by say-
ing:
“If the facts were known to the
Railroads' Committee it would appear
the interpolation of reference to such
matter in their statement, in the in-
complete manner in which presented,
Could have no other intention than that
of misleading 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 Com-
mittee to the document itself, i. e., House
Document No. 559, 62d Congress, 2d Ses-
Sion.
:: *k :k ::
The Case of the Short Line
Railroads
On page 1253 the Department mentions
the criticism by the railroads of Table 7,
Document No. 105, as showing a large
percentage of gain for Short Line Rail-
roads, and says the results came from the
statistics used, that “they are mathemat-
ically sound and the inevitable result of
the elements on which they are based”
and are “isolated cases.”
Our Criticism was not based upon the
inevitable mathematical result 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 rail-
roads, 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
termining the fairness of the railroads'
little railroads apparently did not under-
stand the Department’s forms and failed
to make complete or correct reports, and
this would have been evident to per-
sons acquainted with the railroad service.
The reports should have 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 at-
tributed 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 (page 750)
that the East Broad Top Railroad 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 Expenses to Passenger
Train Service—Railroad Estimate, 34.42 Per
Cent.; Post Office Department,
29.21 Per Cent.
On pages 1258 and 1260 the Post Office
Department under the caption, “The Rail-
roads’ Committee’s Erroneous 34.42%,”
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 for Rejecting
Railroads’ Apportionment
No valid argument is made for reject-
ing the railroads’ apportionment of op-
erating expenses and taxes or for Support-
ing that of the Department. As has been
before explained, about one-half of the
railway operating expenses and approxi-
mately all of the taxes are not directly
assignable to any class of traffic and must
be apportioned arbitrarily. As to these
expenses the Department adopted a
method of apportionment which allocated
a lower estimate of cost chargeable to the
mails than would have been obtained by
any recognized 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 ex-
penses first referred to, which are of an
indivisible nature, have no relation what-
ever to the expenses last named. Not-
withstanding 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 road-
bed and track, according to the Depart-
ment’s apportionment, would be far lower
per train mile for passenger than for
freight train service. As passenger train.
Service is operated at faster speed, re-
quires higher standard of maintenance, in-
cluding more double track, expensive ter-
minals, etc., and its presence increases the
cost of freight operation because of delays
to the latter, the reasoning of the De-
partment in this respect is fallacious,
whilst the method used by the railways in
apportioning these expenses is far more.
entitled to consideration. The railroads,
10
apportion, on a train mileage basis, only
the expenses which can not be directly as-
signed. This apportionment has been fre-
quently termed by the Department as ar-
bitrary 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 differ-
ent nature, such as renewal of ballast, labor
cost of repairing roadbed and track, cost
of tunnel repairs, expense of maintenance
of highway crossings of various kinds, etc.
No Justification for Department
Method
There is good foundation for the rail-
>}:
ways’ 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 Depart-
The insufficiency of the Depart-
ment.
ment’s allowance for passenger train ex-
penses may be further understood by con-
sidering certain expenses incident to pas-
senger train operations which have been
charged wholly to freight service, such as
delay to freight trains because of prefer-
ence 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, consist-
ing 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 ac-
count 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 com-
pany 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 in-
crease the Post Office Department's esti-
mate of passenger train expenses.
* x 3 +
The Department’s Conclusion
On page 1260 the Department concludes
that the ratio of operating expenses and
taxes to revenue for passenger train serv-
ice is only slightly more than for freight.
The erroneous nature of this result is ob-
vious when it is considered that revenue,
which is the divisor, was for the year un-
der discussion $2.86 per train mile for
freight trains, and only $1.30 for pas-
senger trains.
:k ::: :k
Transportation Rates are Out of
Railroads’ Control
Mr. Stewart expresses the view that his
figures are more in accord with a business-
like 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 go-
ing up. The railways have been able to
partly recoup themselves through better
car and train loading in the freight serv-
ice, but with different conditions in pas-
senger train service a similar improvement
in loading has not been possible. This is
illustrated by the trend of revenue from
passenger service as compared with the
operating 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
11
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 rail-
way mail expenses are based on the sta-
tistics obtained for November, 1909,
whilst statements submitted by the Com-
mittee on Railway Mail Pay (page 1085)
showed that during the four years end-
ing 1913 railway operating expenses in-
creased 29.6 per cent. per mile of road op-
erated, taxes increasing during this period
34.6 per cent. per mile of road, net reve-
nue after 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 emphasizes the necessity for
permitting the railways under a fair plan
of mail compensation to Secure some ad-
vantage through reduced operating cost
per ton mile by better car loading to off-
set 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 compensation there-
for.
>}: :ſ:
The Charge of Car Space to the
Mail Service
The Department’s defensive statements
under this head do not meet squarely the
argument of the Railroad Committee as
set forth in Volume No. 9, in regard to
the unfairness of picking out and disal-
lowing so-called “dead space” in connec-
tion with the mail service without taking
similar note of so-called “dead space” in
the passenger and express services.
:: :}; :k: :};
Full R. P. O. Cars
In regard to full R. P. O. cars, the De-
partment quotes its rule that it was the
intention to credit the mail service with
>k :k
the return movement of the maximum
Space authorized outbound, and the rail-
roads do not doubt that this was the in-
tention, but the question remains as to
whether this intention was carried out.
It may be noted that in Volume No. 2
(page 415), it is shown for the Pennsyl-
vania Railroad System that after the first
publication of Document No. 105 the De-
partment made a correction upon repre-
sentations of the railroad 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 according to the De-
partment’s rule. It is possible that if
other railroad companies had made simi-
lar analysis of the details, further credits
might have been called for and obtained
as was done in the case of the Pennsyl-
Vania Railroad System. There is the fur-
ther point to be made that while the De-
|partment’s intention as to R. P. O. cars
may have seemed perfectly fair from the
Department viewpoint, yet it failed to rec-
Ognize the necessity of uniform standard
sizes which the railroad company is op-
erating and which would be incumbent
upon the Department itself if it owned
the R. P. O. cars.
>}: #
The Mail Storage Cars
On page 1264 the Department says:
>k ::
“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 cred-
ited 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 rail-
road 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 defi-
nite 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-
12
car space where it was used for mail pur-
poses. The inevitable return movement
of empty storage cars that were loaded
outbound with mails is part of the use
made of the car equipment, and the De-
partment itself recognizes this principle
in its proposed bill in Volume No. 8,
where it is said that payment will be made
for the round trip.
As to the suggestion that this claim is
unsupported by any definite evidence as to
amount and should not be given any seri-
ous consideration, attention is called to
the statement by the Pennsylvania Rail-
road System in Volume No. 2 of the hear-
ings (page 411), where it is clearly shown
that the Department disallowed 11,523,-
000 car-foot miles for the month of No-
vember, 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 dis-
allowed by the Department for all rail-
roads for November, 1909, would be not
less than 50,000,000 car-foot miles.
>k x}: × >k
The Mail Apartment Cars
The Department under this head does
not discuss fairer allowances for mail
apartment cars. It has previously inti-
mated that a revision of its figures for this
class of Service might be justified, but has
never stated definitely the amount of ad-
ditional allowance of space which its fur-
ther consideration of the subject would
lead it to grant.
:: *k xk ::
Closed-Pouch Space
As regards closed-pouch space, the De-
partment quotes the rule employed on the
Pennsylvania Railroad Lines during No-
vember, 1909, and then makes the follow-
ing statement on page 1265:
“The fact is that the report of the
|Pennsylvania Railroad and that of the
New York Central and Hudson River
Railroad Company, 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 De-
partment just quoted, it is learned that
the records of the Pennsylvania Railroad
Company show for closed-pouch service
during November, 1909, 2,774,460 car-
foot miles, of which the Post Office De-
partment allowed only 2,122,106.18. The
Post Office Department in this case dis-
allowed 652,353.82 car-foot miles, or about
23% per cent. The same figures for the
Pennsylvania Railroad System as shown
in the Company’s 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 Company, 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 57 per cent.
It would, therefore, seem that the De-
partment’s idea is erroneous that these
companies reported less than the Depart-
ment’s computations showed them to be
entitled to.
This whole subject of the charge of
space to the mail service would have been
greatly clarified if the request from the
railroads’ side of a year ago had been com-
plied 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
13
would have cost about $1,500, and that
he was unable to proceed with the analysis
unless the Joint Congressional Commit-
tee would authorize that expense.
:k :: :: ::
The Gauge of Railway Mail Pay
General Considerations
The Department contends that the re-
ply 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 (pages 998-1004). The
considerations which the Department ask
be given weight (see page 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 Government
agencies, receive against unlawful acts
in interference with or obstruction of
the mails carried.
5. The principle of public utility.
The Railroad Committee believes that in
Volume No. 9 (pages 1076-1078) it made
a sufficient reply on the whole subject and
specifically with reference to considera-
tions 1, 2 and 4. If the Joint Committee
desires further discussion of these con-
siderations, 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 pub-
lished in Volume No. 9 we refrained from
presenting some quotations and some dis-
cussion which may now be briefly sub-
mitted in response to the insistence of the
Department’s representative.
The Department in Volume No. 7
(page 1000) makes the following state-
ment:
“3. Railroads are not built primarily
to carry mails.-Railroads are pro-
jected and built for the purpose of se-
curing passenger and freight traffic.
It is doubtful if the question of the
carriage of the mails ever enters into
the calculations of any railroad enter-
prise. After its construction the mail
naturally follows and the companies
usually secure that business without so-
licitation. 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 im-
portant article of transportation fully
fifty 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 assertion 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 industrial enterprises,
as well as social intercourse extending
beyond the neighborhood, depends ab-
solutely upon the mails. As the com-
munity thus primarily depends upon
the mails, in a greater degree railroads
so depend, as they must rely wholly
upon the communities for whose busi-
ness they are constructed and operated.
It must, therefore, be apparent that
no commodity transported is entitled
to as great consideration in the mat-
ter of rate-making as the United
States mails.”
Here we have the assertion that the
mails are so essential to the community
and to the railroad that it could not be
successfully operated without them, in op-
position 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 hearings of May
14, 1913. Turning to Volume No. 5, page
659, we find that the Second Assistant
14
Postmaster General was asked what would
be the probable revenue to the Govern-
ment from first-class mail matter if there
were no railroad service. The Second
Assistant Postmaster General replied as
follows:
“Of course, it would be greatly re-
duced. We are all glad to admit, and
it is not an admission, for we are glad
to say that the railroad companies per-
form a wonderful service for the Gov-
ernment and for the people; and if it
were not for the railroads, mail serv-
ice would be a very insignificant
We respectfully submit that the views
expressed by the Department's representa-
tive on both sides of the question are
sufficiently comprehensive to relieve the
Railroads’ Committee from offering any
Comment or argument.
:::
The Principle of Public Utility
In response to the fifth consideration,
namely, “The principle of public utility,”
it is to be observed that the main depend-
ence 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 Febru-
ary 1, 1900. The Department makes two
quotations from Professor 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, 56th Congress, 2d Session
(pages 198-200), Professor 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 Professor Adams insists
that the ascertainment of cost by analysis
of Operating expenses is not practicable,
and says:
:}; :}; ::
“It cannot be recognized as a proper
method of arriving at reasonable com-
pensation for the transportation of
the mail.”
On pages 203-206 Professor Adams
gives a useful interpretation of the law
of 1873 which he discusses with marked
approval as to the general arrangement
of rates.
Again, on page 419, he expresses the
opinion that postal officials and employes
when traveling in passenger cars should
certainly have their fare paid by the
Government.
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
Department in either Volume No. 7 or
Volume No. 11 of the hearings.
The opinion of Professor Adams that
is quoted by the Post Office Department, is
in 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 Interstate Commerce
Commission, but rather as a development
of his studies as Professor of Political
Economy in the University of Ann Arbor,
Michigan.
*
>k :}; ::: >{:
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 sub-
ject led him to believe that the railroads
15
carrying an average daily weight of over
30,000 pounds were somewhat overpaid.
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 receiving in excess of 20 cents per
ton per mile. He also recommended fur-
ther investigation, because he believed that
if the average load in mail cars could not
be materially increased his recommenda-
tions for a reduction in pay would have
to be withdrawn. When his report was
under review by the Wolcott-Loud Com-
mission and he was under cross-examina-
tion, he admitted that his recommenda-
tions for reduction and at the same time
for further investigation were inconsistent
with each other; he also admitted that
his recommendation for a reduction of
5 per cent. for all roads was inconsistent
with his conclusion that the roads carry-
ing less than 30,000 pounds a day were
not overpaid.
He finally revised his statement and
declared that his conclusions as to re-
ductions in pay were all based on the idea
that the Joint Committee desired to elimi-
nate 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 ap-
proximately $3,000,000 out of a total rail-
way mail pay at that time of $34,000,000.
* :): :k ×
Railroads Not Overpaid
The conclusion of the Joint Committee
was that Professor Adams had not sus-
tained his recommendation for the reduc-
tion 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 Professor
Adams, were in accordance with the rec-
ognized customary constitutional rela-
tions existing between the Government
and those citizens from which it purchased
service.
Professor Adams' theory regarding the
principle of public utility was considered
to have a strong tendency toward general
socialism. In this connection it is inter-
esting 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
levying 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
railroad rates upon the principle of
public utility.”
It is suggested that the so-called prin-
ciple of public utility, the full considera-
tion of which would bring into contempla-
tion the total social structure and govern-
mental relations of the whole American
people, has no proper place in the dis-
cussion of a question of simple business
administration, i. e., reasonable compensa-
tion for the performance of a service that
is almost entirely commercial.
In closing this question of public
utility, it is only fair to Professor Adams
to restate the most significant paragraph
of the quotation which the Department
employs in Volume No. 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 ade-
quate to cover operating expenses,
fixed charges and a fair return to
stockholders; but this sum 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.”
It will be observed that Professor
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
16
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 prin-
ciple of public utility which would be
applicable to freight and passenger serv-
ice, as well as to the mail service.
:: :: :: :}:
While we have thus responded to the
urgent insistence of the Post Office De-
partment for further discussion of these
general considerations, 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 pro-
viding for the capital cost—that is, a re-
turn upon the railroad property utilized
in the performance of the mail service.
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 informa-
tion secured from the railroad companies
and to report thereupon to the Postmaster
General. One can search in all these let-
ters in vain for any statement that shows
a consciousness of the necessity of pro-
viding for this fundamental item of cost.
When this omission was fully developed
before your Joint Committee, the Post Of-
fice 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 ex-
penses and taxes apportionable to the
mail service and 6 per cent. thereto,
companies may be allowed such addi-
tional 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 connection
with the mail service.”
The phrasing of this concession repre-
sents the beginning of the development of
the line of thought which has culminated
in these later discussions regarding the
alleged certainty, constancy and homo-
geneity of the traffic and the other fea-
tures that lead up to the so-called “prin-
ciple of public utility.”
None of these considerations were ap-
parently in the minds of the Post Office
Department officials when Document No.
105 was submitted, and there was ap-
parently no thought of treating this ques-
tion except on the basis of reasonable com-
pensation and in accordance with the com-
mercial principle. If there had been,
Surely there would have been some allu-
Sion to it in these several letters of trans-
mittal.
Comparison Between Revenue Re-
ceived by Railroad Companies
for Express and for Mail
Service
Preliminary to any remarks from the
railroads’ side regarding the statements
made by the Post Office Department
(pages 1271-1278) relative to the com-
parative compensation received by the rail-
road companies from the express traffic
and the mail traffic, it should be noted by
your Committee that this subject is now
introduced for the first time by the Post
Office Department officials, although Docu-
ent No. 105 was published over two years
ago and your Committee has been col-
lecting evidence and hearing testimony for
17
the past eighteen months and has now
arrived at the last days of the investi-
gation.
In Document No. 105 none of the let-
ters of transmittal say one word on this
subject. The tables published in Docu-
ment No. 105 fail to state the amount of
revenue received by the railroad companies
from the express business or the pas-
senger business, although this informa-
tion 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 pub-
lish the amounts for the information of
Congress.
The statement of the Post Office De-
partment 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 reviewing the data and
the hearings, and yet we cannot find one
word in it relating to any comparison
with express traffic or the revenue received
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 ma-
terial and concludes by saying, on page
1278 :
“It must be remembered, as herein-
before stated, that this is placing the
mail service on the basis of the ex-
press 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 matter of the express
Service.” -
We believe that it is evident to your
Committee, before we make any explana-
tion on the subject, that it would be im-
practicable to make any satisfactory com-
parison without several months for addi-
tional investigation.
Express and Mail Services On
Different Basis
The two services are on an entirely
different basis. In the case of the ex-
press traffic, the railroads receive a per-
centage of the gross receipts, 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 ex-
press and mail on the basis of relative
returns from ton mileage or relative re-
turns from car space, there would have
to be a precise appraisal of the differ-
ences in the relations, because the express
companies in connection with their rail-
road transportation perform many Serv-
ices 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 employes for which there is no
similar contribution from the mail serv-
ice. In addition to this, the express com-
panies perform many services for the rail-
road companies, as in the transportation
of railroad companies’ express packages,
the collection and forwarding of money,
the distribution and transportation of rail-
road tickets, etc., for which there are no
precise ascertainments or even estimates
as relating to the entire railroad mile-
age 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 contractual relations with
the express company operating over its
lines and a definite appraisal of these vari-
ous services.
18
Information Regarding Express
Traffic Already in the Record
In the hearings held before your Com-
mittee during the past year there are a
number of contributions from the Com-
mittee 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 No. 1 (pages
51, 52), the Committee on Railway Mail
Pay showed that according to their as-
certainment 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 mail, notwith-
Standing the fact that the mail service is
known to be much more expensive for the
railroads to operate.
In Volume No. 1 (page 122) a state-
ment was submitted showing that on in-
adequate data it appeared as though the
earnings of the railroads per ton mile of
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 re-
ceived 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 ex-
pensive to the company than the perform-
ance of the mail service.
In Volume No. 2 (page 325) Doctor
Lorenz computes the respective car mile
earnings to railroad companies from mail
and express. It appears in his calcula-
tion that the railroad earnings per car
mile is 13 per cent. higher from the ex-
press 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
Department 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 serv-
ice does not represent the correct total
as reported by the companies. Also, that
in this illustration, 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 ren-
dered by the express companies them-
selves.
::: ::
:: ::
In Volume No. 2 (page 335) Mr. Worth-
ington on behalf of the Southern Pacific
road showed that on the very low con-
tract basis of 40 per cent. of express earn- .
ings 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 opera-
tion, the express space showed 11 per cent.
greater earnings than the mail space.
In Volume No. 2 (page 419) Mr. Brad-
ley, reporting for the Pennsylvania Rail-
road System, showed that on the Com-
pany’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 Depart-
ment credited a mail earning to the Penn-
Sylvania Railroad System 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 advantage
from the express traffic independent of the
modifications that would be subsequently
necessary on account of the more economi-
cal performance of service and an ap-
praisal of the express company’s contri-
bution toward the work and expenses.
19
Railroads’ Relations to Express
Companies and Post Office
Department
In Volume No. 2 (pages 437-438) there
is stated in parallel columns a number of
differences in the relations which the rail-
road companies bear to the express Com-
panies and to the Post Office Department
showing that these relations are much
more favorable both financially and in
operating performance with the express
traffic than they are with the mail traffic.
In Volume No. 2 (page 526) Mr. Pea-
body, on behalf of the Atchison, Topeka
and Santa Fé Railway, shows that on the
space basis the mail 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 rail-
road company will be able in due time to
revise this contract, which would not be
the case in relation to mail service where
the rates and conditions of Service are
fixed by statute or by Post Office Depart-
ment regulations having the same force.
It is also to be noted that Mr. Peabody’s
finding would require further modifica-
tion if the comparative relations as to
economy of operation in connection with
the express traffic as compared with the
mail traffic were fully set forth.
In Volume No. 2 (pages 747-758) there
is published a statement on behalf of
twenty-one Short Line Railroads which
shows respective earnings from express
and mail traffic. The summary indi-
cates that the receipts 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 impression. It will thus be
seen that the subject has not been over-
looked 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 some-
what more remunerative to the railroads
as a whole than the mail traffic.
Comparative Gross Receipts by
Railroads from Mail Traffic
and Express Traffic
At the hearing of March 24, 1914, Mr.
Worthington, on behalf of the Committee
on Railway Mail Pay, submitted a memo-
randum of the annual receipts of the
railroad companies from mail traffic and
express traffic for the years 1909 to 1913,
inclusive. For the first and last of these
years the figures are as follows:
Year ending
June 30th : Mail Traffic. Express Traffic.
1909 . . . . . . . . . . . $49,869,375.00 $64,032,127.00
1913 . . . . . . . . . . . 51,959,388.00 83,872,497.00
Increase — 1913
over 1909 . . . . 2,090,013.00 19,840,370.00
Increase in per -
Cent. . . . . . . . . . . 4% 31%
:: *k sk 2:
Comparison of Express 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 illustra:
tions, and the whole number of illustra-
tions are without value to your Committee
because they are all based upon the mini-
mum 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 one pound.
What would be thought of the fairness of
the presentation ?
To illustrate this point, we have pre-
pared a statement based on the first fifteen
examples quoted by the Department in its
100-pound table on page 1272, and show
on successive lines the rate which the De-
partment has worked out for each pack-
age of 100 pounds in weight in comparison
with what the rate would be if it were
based upon 100 one-pound packages. The
ton mileage in both cases would be the
S8. Iſle :
20
Comparison of Express and Mail Rates Per 100 Pounds
1st—at the Rate for 100 pounds (in one package) used by the Post Office Department
2d—at the Rate for 100 pounds (in 100 one-pound packages) used by the Railroad Company
. — Akron, Ohio, to Pittsburgh, Pa.
— Akron, Ohio, to Pittsburgh, Pa.
. — Altoona, Pa., to New York, N. Y.
— Altoona, Pa., to New York, N. Y.
. —Anniston, Ala., to Washington, D. C.
. — Anniston, Ala., to Washington, D. C. .
. — Asheville, N. C., to Washington, D. C. .
— Asheville, N. C., to Washington, D. C. .
. — Ashland, Ky., to Cincinnati, Ohio .
— Ashland, Ky., to Cincinnati, Ohio .
. — Buffalo, N. Y., to Boston, Mass.
— Buffalo, N. Y., to Boston, Mass.
. — Burlington, Vt., to Boston, Mass.
— Burlington, Vt., to Boston, Mass.
. — Burlington, Iowa, to Chicago, Ill. .
— Burlington, Iowa, to Chicago, Ill. .
. — Cedar Rapids, Iowa, to Chicago, Ill.
– Cedar Rapids, Iowa, to Chicago, Ill.
. — Charleston, W. Va., to Washington, D. C.
— Charleston, W. Va., to Washington, D. C.
. — Chattanooga, Tenn., to Cincinnati, Ohio
— Chattanooga, Tenn., to Cincinnati, Ohio
. — Chicago, Ill., to Boston, Mass. gº tº
— Chicago, Ill., to Boston, Mass. . .
. — Chicago, Ill., to Kansas City, Mo.
— Chicago, Ill., to Kansas City, Mo.
. — Chicago, Ill., to Milwaukee, Wis. .
— Chicago, Ill., to Milwaukee, Wis. .
. — Chicago, Ill., to Minneapolis, Minn.
— Chicago, Ill., to Minneapolis, Minn.
1st Class 1st Class Excess of
Length of Express Express 50 Per Cent. Mail
º Rate Rate Mail of Rate Over
Mail for 1 for 100 Rate Express 50
RouteS 100-pound 1-pound Rate Per Cent.
Package Packages of Express
Rate
132.05 $1.00 $0.75 $ 0.50 $0.25
132.05 $21.00 0.75 10.50 .
326.86 1.40 0.88 0.70 0.18
326.86 22.00 0.88 11.00
748.20 2.90 2.53 1.45 1.08
748.20 23.00 2.53 11.50
476.17 2.20 1.97 1.10 0.87
476.17 22.00 1.97 11.00
145.71 1.15 0.56 0.58
145.71 21.00 0.56 10.50
496.90 1.60 1.37 0.80 0.57
496.90 22.00 1.37 11.00
247.34 1.15 1.52 0.58 0.94
247.34 21.00 1.52 10.50
205.57 1.25 0.58 0.63
205.57 22.00 0.58 11.00
218.30 1.25 - 0.71 0.63 0.08
218.30 22.00 0.71 11.00
387.71 1.75 1.44 0.88 0.56
387.71 22.00 1.44 11.00
338.15 1.85 1.40 0.93 0.47
338.15 22.00 1.40 11.00
1019.18 2.50 2.81 1.25 1.56
1019.18 23.00 2.81 11.50
454.00 2.10 1.52 1.05 0.47
454.00 22.00 1.52 11.00
85.00 0.90 0.29 0.45
85.00 21.00 0.29 10.50
423.79 2.00 1.19 1.00 0.19
423.79 22.00 1.19 11.00
Excess of Per Cent. Per Cent.
50 of Excess of Excess
Per Cent. of Mail Of 50
Rate Over Per Cent.
º: 50 of Express
º Per Cent. Rate Over
Mail Rate | of express Mail Rate
Rate
50%
$ 9.75 1300%
26%
10.12 1150%
74%
8.97 355%
79%
9.03 458%
0.02 4%
9.94 1775%
71%
9.63 703%
61%
8.98 591%
0.05 9%
10.42 1797%
13%
10.29 1449%
64%
9.56 664%
51%
9.60 686%
125%
8.69 309%
45%
9.48 623%
0.16 55%
10.21 3520%
19%
9.81 824%
s
It will be seen by comparing the last
two columns that the Department 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 100 one-pound packages, shows
that the railroad received from the ex-
press traffic a higher revenue than from
mail, ranging from 309 per cent. to 3,520
per cent.
Taking one specific instance, Chicago to
Milwaukee, the Department admits a
higher earning to the railroad company
from the express of 55 per cent. at the 100-
pound rate, while our statement shows a
greater earning of 3,520 per cent., or sixty
times as great, based on the one-pound
rate.
A similar illustration will be made of
the first fifteen examples shown on page
1274 in the table headed “Comparison of
express and mail rates per 40 pounds.”
The Department shows an excess of earn-
ings to the railroad company from the
mail varying from 4 per cent. to 110 per
cent., while we show, on the basis of 40
one-pound packages, that there is a greater
earning from express traffic, ranging from
311 per cent. to 3,400 per cent. :
22
Comparison of Express and Mail Rates Per 40 Pounds
1st—at the Rate for 40 pounds (in one package) used by the Post Office Department
2d—at the Rate for 40 pounds (in 40 one-pound packages) used by the Railroad Company
1st Class 1st Class * Excess of º: Per Cent.
Length of Express Express e 50 Per Cent. º 50 of Mail of º
Rate Rate Mail of Per Cent. | Rate Over O I o
Mail for 1 for 40 Rate Express P º of Express 50 Per cent
Routes 40-pound 1-pound Rate º * ent. Rate Over Per Cent. of Express
Package Packages Xpress Mail Rate of Express Rate Over
Rate Rate Mail Rate
P. O. Dept. — Akron, Ohio, to Pittsburgh, Pa. 132.05 $0.52 $0.30 $0.26 $0.04 15%
R. R. Co. — Akron, Ohio, to Pittsburgh, Pa. . 132.05 $8.40 0.30 4.20 $3.90 1300%
P. O. Dept. — Altoona, Pa., to New York, N. Y. 326.86 0.68 0.34 0.34 -
R. R. Co. — Altoona, Pa., to New York, N. Y. 326.86 8.80 0.34 4.40 4.06 1194%
P. O. Dept. — Anniston, Ala., to Washington, D. C. 748.20 1.28 1.01 0.64 0.37 57%
R. R. Co. — Anniston, Ala., to Washington, D. C. . 748.20 9.20 1.01 4.60 3.59 355%
P. O. Dept. — Asheville, N. C., to Washington, D. C. . 476.17 1.00 0.79 0.50 0.29 58%
R. R. Co. — Asheville. N. C., to Washington, D. C. . 476.17 8.80 0.79 4.40 3.61 457%
P. O. Dept. — Ashland, Ky., to Cincinnati, Ohio 145.71 0.58 0.22 0.29 0.07 31%
R. R. Co. — Ashland, Ky., to Cincinnati, Ohio 145.71 8.40 0.22 4.20 3.98 1809%
P. O. Dept. — Buffalo, N. Y., to Boston, Mass. 496.90 0.76 0.55 0.38 0.17 45%
R. R. Co. — Buffalo, N. Y., to Boston, Mass. 496.90 8.80 0.55 4.40 3.85 700%
P. O. Dept. — Burlington, Vt., to Boston, Mass. . 247.30 0.58 0.61 0.29 0.32 1.10%
R. R. Co. — Burlington, Vt., to Boston, Mass. . 247.30 8.40 0.61 4.20 3.59 589%
P. O. Dept. — Burlington, Iowa, to Chicago, Ill. . 205.57 0.62 0.23 0.31 0.08 35%
R. R. Co. — Burlington, Iowa, to Chicago, Ill. . 205.57 8.80 0.23 4.40 4.17 1813%
P. O. Dept. — Cedar Rapids, Iowa, to Chicago, Ill. 218.30 0.62 0.28 0.31 0.03 11%
R. R. Co. — Cedar Rapids, Iowa, to Chicago, Ill. g 218.30 8.80 0.28 4.40 4.12 1471%
P. O. Dept. — Charleston, W. Va., to Washington, D. C. 387.71 0.82 0.58 0.41 0.17 41%
R. R. Co. — Charleston, W. Va., to Washington, D. C. 387.71 8.80 0.58 4.40 3.82 65.9%
P. O. Dept. — Chattanooga, Tenn., to Cincinnati, Ohio 338.15 0.86 0.56 0.43 0.13 30%
R. R. Co. — Chattanooga, Tenn., to Cincinnati, Ohio 338.15 8.80 0.56 4.40 3.84 686%
P. O. Dept. — Chicago, Ill., to Boston, Mass. . 1019.18 1.12 1.12 0.56 0.56 100%
R. R. Co. — Chicago, Ill., to Boston, Mass. . . 1019.18 9.20 1.12 4.60 3.48 31.1%
P. O. Dept. — Chicago, Ill., to Kansas City, Mo. 454.00 0.96 0.61 0.48 0.13 27%
R. R. Co. — Chicago, Ill., to Kansas City, Mo. 454.00 8.80 0.61 4.40 3.79 62.1%
P. O. Dept. — Chicago, Ill., to Milwaukee, Wis. . 85.00 0.48 0.12 0.24 0.12 100%
R. R. Co. — Chicago, Ill., to Milwaukee, Wis. . 85.00 8.40 0.12 4.20 4.08 3400%
P. O. Dept. — Chicago, Ill., to Minneapolis, Minn. . 423.79 0.92 0.48 0.46 0.02 4%
R. R. Co. — Chicago, Ill., to Minneapolis, Minn. . 423.79 8.80 0.48 4.40 3.92 816%
§
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 illustrate the un-
fairness of the Post Office Department in
making their comparison on the minimum
earnings.
1, ºr 1. Ós
The Importance of the Average
Haul in Comparing Express
and Mail Rates
The Interstate Commerce Commission
has attributed to the average express pack-
age a haul of about 200 miles. The Post
Office Department has asserted that the
average haul of mail, including equip-
ment, is about 620 miles. If these esti-
mates are accepted it must be assumed
that the radial activity 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 prescribed by the
Interstate Commerce Commission start
with 21 cents for the first pound and then
go through a process of declension accord-
ing to increasing weight and increasing
distance. It is easily demonstrable that
the return received by the railroad com-
pany from an express package weighing
one 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 appraising the differences
in the contractual relations and operating
conditions 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 that 93 of
the instances are over 200 miles as com-
pared with 21 instances under 200 miles.
We may conclude the statement by re-
marking that if the railroads received 50
per cent. of the gross postal revenues as
they do of the express revenues, the
amount of railway mail pay for the year
1913 would have been $133,000,000 in-
stead of $51,466,000. Instead of getting
50 per cent. of the postal revenues the rail-
roads receive only about 19 per cent.
$º ºr
sº ºr
The Proposed Space Basis for
Railway Mail Pay
In connection with the very ample tes-
timony already submitted by the railroads
relating the unavoidable complexities
and causes of irritation that would be in-
herent 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 in-
vestigated 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 of
ficers of the Post Office Department,
recomended the space basis, but were care-
ful to insist that for the protection of the
Government it must be coupled with a
prescribed average weight to justify a
certain amount of space.
Third. None of the previous investi-
gators who reached a conclusion in favor
of the space basis could have had in con-
templation the present condition of the
24
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 Department in competition with the
railroad companies and the express com-
panies 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 the rates indefi-
nitely would make it impossible for the
railroads to Secure a compensatory basis
of pay except at the pleasure of the De-
partment.
x * * *
Continuance of Fast Mail Trains
Endangered
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
proposed space pay would be so inadequate
as to make the operation of these trains
very unattractive. There are forty 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 a half
times as great as on other routes.
sult through better loading.
Space Basis Unjust
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 privi-
lege of some return from operating econo-
mies due to 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
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.
railroads.
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 re-
The space
basis not only denies this, but actually
imposes some added cost due to the greater
tonnage carried. Had a space plan ap-
plied, for example, to freight transporta-
tion, 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 received per train mile unit
through heavier loading.
25
Conclusion
In conclusion, we believe that your Committee in deciding this ques-
tion, 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.
COMMITTEE ON RAILWAY MAIL PAY
Representing 264 railroads carrying mails
on over 218,000 miles of line.
RALPH PETERS,
Chairman.
April 30, 1914
26

“It seems clear that the railway mail
service is at present unremunerative to
the carriers.”
—LOUIS D. BRANDEIS, in his brief submitted to the Interstate
Commerce Commission in the 5 per cent. advance rate case.
Mr. Brandeis Finds the Railroads
Are Not Overpaid for
Carrying the Mails
HE Interstate Commerce Commission retained the
| services of Mr. Louis D. Brandeis as Special Counsel
in connection with the application of railroads in
official classification territory for an advance of 5 per cent.
in freight rates.
Mr. Brandeis made a careful study of every phase of
railroad operation. With his opinions as to remedies the
railroads have expressed a difference of viewpoint.
The findings of fact at which Mr. Brandeis arrived
with reference to the compensation paid the railways for
carrying the mails, embody, however, a valuable contribu-
tion to the subject, and are therefore reprinted by the Rail-
way Mail Pay Committee representing the railroads of the
COuntry.
Mr. Brandeis' findings, which follow, represent his in-
dependent advice to the Interstate Commerce Commission:
What Mr. Brandeis Said in His Brief
Closely allied to the passenger service
is the carrying of the mails.
the main, on passenger trains. With a
view to safety, wooden mail cars are being
retired and steel cars introduced; and this
change has now been made compulsory.
(Act of Congress, August 24, 1912.)
Improvement in car fittings have
added to the comfort of the railway postal
officials. The added weight increases the
cost of haul and the wear on the road-
bed. . . . -
Improvements in car fittings have
added to cost of the car and of its main-
tenance. Steel construction adds nothing
to the carrying capacity. The Govern-
ment pays no additional remuneration
for the added safety and comfort.
It moves, in
ing an investigation of the postal service ex-
tending over three years, reported to Congress
their conclusion that the pay of the railroad
companies for the transportation of the mails
was not excessive, and recommended that no re-
duction 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 re-
duced by law and by the regulations and prac-
tices 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.
A comparison of a few principal items from
the annual reports of the Pennsylvania Railroad
Company for 1900 and for 1911 will illustrate
this point most forcibly:
What the Pennsylvania Railroad Co. Figures Show
Per cent.
1911 1900 Increase. of
Increase.
Freight ton mile age . . 19,419,779,983 || 11,922.671,210 7,497, 108,773 62.88
Passengers carried 1
mile . . . . . . . . . 1,722,734,924 918, 198,602 804,536,322 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
Oper a ting 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
U n i t e d States mail
ton mile age . . . . . 35,859,120 17,608,063 18,251,057 103.65
U n i t e d States mail
I CW e In Ul 6: . . . . . . . $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
Congress appointed a special commit-
tee to investigate the compensation of the
railroads for carrying the mail.
(a) In testifying before the committee
Mr. V. J. Bradley, general supervisor of
mail traffic on the Pennsylvania, stated
(Railway Mail Pay Hearings, pp. 432-
433):
Mail pay in comparison with other revenues
and eacpenses.—In January, 1901, the joint
commission of the House and Senate, conclud-
In the above statement the United States
mail ton mileage is considerably 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 per-
centage, while the pay is the lowest in the scale
of increase and is the only one that recedes
as the volume of business advances.
Postal-car pay.—During the past five years
the company has entirely 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 Department.
When one seeks to ascertain what was the addi-
tional remuneration of this great improvement
he finds: t
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 repairs, 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
invested of the road upon which they are hauled.
Mr. Bradley estimates that the Penn-
sylvania System alone, which carries
about 16 per cent. of the mail tonnage
and received 11 per cent. of the total mail
pay, was underpaid for its services about
$3,300,000.
(b) Chairman Elliott in his statement
to stockholders April 11, 1914, declared:
This company is underpaid for the carriage
of mail and parcel post. For the carriage of
mail and for other services performed by this
railroad for the Post Office Department the
Government is now paying about $725,000 per
annum. This amount includes $21,000 for the
parcel post. This is 9 per cent. less than the
payments made for the mail service during the
four-year period ending June 30, 1909, when
the parcel post was not in operation. A study
by chartered accountants made three years ago
indicated that $1,400,000 was approximately
the sum to which the company was entitled for
about half that sum, and since then the parcel
post has been added, with no corresponding in-
crease in pay, on account of which the railroad
is receiving at least $700,000 per year less than
it is fairly entitled to for carrying mail and
parcel post.
(c) Mr. Ralph Peters, president of the
Long Island Railroad and chairman of
the railroad committee, declared that the
railroads of the United States, which re-
ceived for mail pay in 1911 $50,099,-
537.02, were underpaid at least $15,000,-
000. (Railway Mail Pay Hearings, p.
47.) -
(d) Mr. Robert H. Turner, secretary
of the committee appointed by Congress,
reached the conclusion that the railroads
were underpaid approximately $12,000,-
000 (Railway Mail Pay Hearings, p. 962);
and Mr. M. O. Lorenz, associate statistician
of the Interstate Commerce Commission,
thought the evidence indicated an under-
payment of at least 10 per cent., although
he recommends a further test of the con-
clusions. (Railway Mail Pay Hearings,
p. 894.)
The post office authorities have opposed
an increase in pay. The special commit-
tee appointed by Congress to investigate
the compensation of railroads for carry-
ing the mail has not yet made its report.
The amount properly payable is a matter
not easily determined.
Not only is the actual cost to the rail-
roads of this service in dispute, but there
is a wide divergence of view as to whether
the Government should pay a fair return
or profit on the railroad property used in
carrying the mail.
BUT WHATEVER CONCLUSION MAY
BE REACHED ON THESE MATTERS,
IT SEEMS CLEAR THAT THE RAIL-
WAY MAIL SERVICE IS AT PRESENT
TJNREMUNE RATIVE TO THE CAR-
carrying the mail. Instead, it was receiving
RIERS.
What Mr. Brandeis Said in His
Oral Argument
Mr. Louis D. Brandeis, on behalf of the Interstate Com-
merce Commission, May 1, 1914, in the closing proceedings
of the Case of the Railroads Petitioning for Five Per Cent.
Increase in Freight Rates, said, concerning railway mail pay:
Then there is another element in con-
nection with this passenger train service
which we expect to find unremunerative,
and more and more unremunerative, and
that is the matter of the railway mail
pay.
A committee of Congress is now in-
vestigating this subject, and it would be
improper in advance of that investiga-
tion to express any opinion, certainly as
to what the Government ought to pay for
the railway mail service.
It is contended by the representatives
of the Government that the ordinary rules
should not apply as to compensation; that
by reason of what the Government has
given to the railways in protection, in
rights of way and the like, there should
not be expected that same return upon
Government business that there is upon
private business.
It is unnecessary to express any opin-
ion as to whether that view is correct, or
is not correct. But it seems to be con-
tended by the railway representatives,
and sincerely contended by them, that
there is a great underpayment, and the
representatives of the Baltimore and Ohio,
figuring that on the basis of the passenger
train expenses, figured an underpayment
to the Baltimore and Ohio of over five
hundred thousand dollars a year.
It would not be surprising if that was
correct; it would not be surprising if Mr.
Peters’ contention that fifteen million
dollars are withheld from the railroads,
which ought to be paid to them, is correct.
We know that there is a weighing of mails
only once in four years, and we know the
rapid increase in mail weight each year.
We know that since the parcel post
has been introduced that increase has been
particularly rapid.
It is not for us, as I say, to determine
whether the Government ought to pay
more or not, or what the considerations
ought to be; but WE CANNOT, I
THINK, FEEL ANY GRAVE DOUBTS,
IF WE EXAMINE THE FIGURES WHICH
HAVE BEEN SUBMITTED TO THE
COMMITTEE, THAT THAT SERVICE
WHICH IS CARRYING THE RAILWAY
MAILS IS AN UN REMU NERATIVE
SERVICE TO THE RAILROADS.
The Proper Basis of Railway
Mail Pay
A consideration of “A Bill to Amend the Postal and
Civil Service Laws, and for Other Purposes” (H.R. 17042),
introduced in the House of Representatives June 4, 1914,
by Mr. Moon, of Tennessee.
The bill covers a large number of unre-
lated proposals before it reaches the sub-
ject of Railway Mail Pay. Some of these
proposals are probably meritorious, while
others will no doubt be criticised and op-
posed by large numbers of American citi-
Zé]].S.
These proposals will now be briefly re-
ferred to :
Pages 1 and 2:
Weighing of Mails in Flooded Dis-
tricts.-In this the Post Office De-
partment seeks authority to average
the weights, when railway train servi
ice during a weighing period is sus-
pended by floods, etc., so that the re-
Sults will be more nearly normal.
As the purpose is to correct unavoid-
able irregularities and the amendment is
confined to this purpose, there appears to
be no reason for objection.
Page 2:
Parcel Post—Additional Pay to
Railroads.-This proposes to increase
by one-half of 1 per cent, the pay of
the railroads for increased tonnage
resulting from the Postmaster Gen-
eral’s order effective August 15,
1913. This would amount to about
$250,000.
The railroads have regarded this allow-
ance as ridiculously inadequate The
Post Office Department did not conduct a
weighing to discover the additional ton-
nage transported, and the railroad com-
panies have not been accorded an oppor-
tunity to examine the data upon which
The express companies pay the railroad
companies about 50 per cent. of their
gross revenues for transportation. In
Great Britain the Government pays the
railroads 55 per cent. of the postage from
parcel post packages carried by rail. The
United States Postmaster General esti-
mated that the Post Office Department
would have a revenue of $60,000,000 from
parcel post during the year beginning
July 1, 1914. The pay allotted to the
railroads, both from the original 5 per
cent. increase allowed by Congress and
from the proposed one-half of 1 per cent.
would, together, be less than $2,000,000.
Page 3:
Diversions of mail from one rail-
road to another between weighing
periods may be followed by readjust-
ment of pay even if the weight be
less than 10 per cent.
The principal result of this law would
be a great grant of unrestrained power to
the executive branch of the Government
as represented by the Postmaster General.
The law of 1873 requires the actual
weighing of the mails for not less than
thirty successive working days. The law
of 1905 increased the minimum period to
ninety successive working days. The pro-
posed law would take off all limitations in
the law of August 24, 1912, and permit
the Postmaster General “in his discretion”
to weigh the mails for such number of
successive working days “as he may de-
the Department arrived at its estimate.
termine” and readjust the pay.
Instead of weighing mails of the
United States by four groups, each made
up of several States, a Postmaster General
by merely diverting a few pounds of mail
from one route to another could weigh the
mails on a particular railroad by a spe-
cial weighing, while another railroad in
the same section would have to await the
regular quadrennial readjustment to ob-
tain an increase of pay for increased ton-
Image.
The proper course to reach the fair re-
sult is a more frequent general weighing
—say annually—so that all will be treated
equally and thus lessen the temptation
for executive officers to be partial instead
of increasing the temptation to the limit,
as the proposed law appears to do.
Pages 3 and 4: -
Bonding of, and Civil Service ex-
aminations of Assistant Postmasters.
This will probably be fully discussed
by those who are especially interested in
questions of civil service and party poli-
tics, and is not within the scope of this
brief.
Page 4:
Postmasters’ salaries — Adjust-
ments.
Not discussed in this brief.
Page 5: -
Postmaster General may establish
branch post offices, etc.
Not discussed in this brief.
Pages 5 and 6:
Repeals the Act of Congress of
August 24, 1912, restraining the
Postmaster General from extending
the practice of sending second-class
mail by freight trains.
From the railroad viewpoint there is
no question but that the Post Office De-
partment as a shipper should have ac-
cess to any class of transportation—pas-
senger, express or freight—provided al-
ways that it respects the laws and policies
of the people as represented in congres-
sional enactments and its contractual ob-
ligations with the carriers.
When, in 1911, under the Hitchcock
administration, the Post Office Depart-
ment commenced to send periodicals by
freight, it had no law to justify its action.
The only recourse of a publisher would
have been to pay the third-class rate, equal
to 8 cents a pound, an increase of 700 per
cent.
So far as the railroads were affected, it
was an effort to reduce their mail revenue
from storage cars that were supposed to
yield a profit without a corresponding ef-
fort to increase their mail revenue from
R. P. O. cars and mail apartment cars,
which were supposed to be rum at a seri-
ous loss.
All good citizens should approve and
honor any effort by an executive officer to
decrease the public expenditures, provided
always that the means adopted are fair
and honorable.
Page 6:
Services performed by others for
mail contractors may be compensated
by the Postmaster General.
Not discussed in this brief.
Pages 6 and 7:
Temporary mail service may be
provided by the Postmaster General
without advertisement.
Not discussed in this brief.
Pages 7 and 8:
Letter boxes or mail carriers—AS-
sault upon—Penalty prescribed.
Not discussed in this brief.
Page 8:
Confederate or Federal veterans to
be exempt from age limitation.
Not discussed in this brief.
Page 8:
Postal savings limit—$1000.
Not discussed in this brief.
Pages 8 and 9:
Postal Savings—Official
Annual Report.
Postal Savings—No pay to postal
employes for labors in its behalf.
Not discussed in this brief.
Mail—
Railway Mail Pay
l’ages 9 to 22:
The rest of the bill—about four-
teen pages—is devoted to a new
method of compensating the rail-
roads for carrying the mails. The
report of the Moon Committee, Sub-
mitted with the bill, declares that the
new plan, if adopted, will result in a
saving of about $3,000,000 a year.
This so-called “saving” would be at the
expense of the railroads because the Post
Office Department drafted the proposed
law, prescribed the amount of free and
incidental service it would require, and
named rates for each car mile run which
are far below the present earnings of rail-
road companies from passenger train
service. The passenger train service is
well known to be generally unremunera-
tive, so that the proposed rates for mail
cars are far below rates that in themselves
are already inadequate. In view of this
situation it is perhaps not surprising
that one of the final clauses of the pro-
posed law compels the railroad companies
to perform the service at the rates named
or suffer a penalty of $5000 for every
failure.
The new plan is suddenly brought for-
ward by the Post Office Department to
anticipate a report of the Joint Commit-
tee of Senators and Representatives which
was appointed by Congress to consider
this whole subject and has been studying
it for the past two years. It is expected
to file its report at an early date, after
reviewing the testimony comprised in
1600 pages of printed matter.
It is quite possible that the railroads
will be obliged to differ with the conclu-
sions of the Joint Congressional Commit-
tee after its report is made, but they at
least have sufficient faith in the strength
of the facts submitted to the Joint Com-
mittee under oath to await with confi-
dence the report of the committee ap-
|pointed by the people’s congress to de-
The action of the Post Office Depart-
ment in pressing forward through the
Moon Committee its own bill, and the
acquiescent action of the House of Rep-
resentatives in preparing for its consid-
eration, has created a situation in the
legislative field that is probably unprece-
dented. Any comment appropriate to this
situation may properly be left entirely
to those Representatives and Senators
who are vested with the authority and
responsibility for regulating ared insuring
orderly legislative procedure.
Present Laws Relating to Railway
Mail Service
Before taking up for discussion the
general purposes and the particular pro-
visions of the Post Office Department
measure, it is first important to survey
the scope and requirements of the present
laws, remembering that the basic law has
been in effect since 1873, or 41 years. A
brief Summary of substantially all of the
laws relating to railway mail service is
here given :
Laws Relating to Compensation
1873, March 3. Postmaster General author-
ized and directed to readjust compensation
on the basis of a rate of pay per mile per
annum according to the average daily
weight carried on the route, the rate of
pay decreasing as the weight increases;
the weight to be determined by an actual
weighing of the mails for not less than
30 successive working days and not less
frequently than once in every four years.
1873, March 3. R. P. O. Cars. Additional
pay will be allowed for a daily trip of
full railway post office cars forty feet or
more in length at a prescribed rate per
£ll] lllllll.
1876, July 12. The law prescribes a 10 per
cent. Teduction in the weight rates.
1878, June 17. The law prescribes a further
reduction of 5 per cent. in the weight
rates.
1905, March 3. The law prescribes that the
weighing of mails shall be for not less
than 90 successive working days instead
of 30 successive working days.
1907, March 2. The law prescribes a 5 per
cent. reduction in weight rates over 5000
pounds, daily average, and 10 per cent.
on weights over 48,000 pounds, daily
termine this question.
average.
1907, March 2. The law prescribes a reduc-
tion in R. P. O. car rates, 8 per cent. to
20 per cent., according to length of car.
1912, August 24. Postmaster General author-
ized to readjust pay and have special
Weighings, in his discretion, if mail is di-
verted from one route to another to affect
at least 10 per cent. of the weight on
either route.
1876, July 12. Land grant railroads will be
paid 80 per cent. of the regular rates.
Laws Relating to Performance of Service
1872, June 8. Every railroad company carry-
ing the mail shall carry on any train
which may run over its road all mailable
matter with the person in charge of the
Same. t
1873, March 3. The mails shall be conveyed
with due frequency and speed; and suffi-
cient and suitable room, fixtures, and fur-
niture, in a car or apartment properly
lighted and warmed shall be provided for
route agents to accompany and distribute
the mails.
1879, March 3. The Postmaster General shall
in all cases decide upon what trains and
in what manner the mail shall be con-
veyed. -
1879, March 3. All cars or parts of cars used
for the Railway Mail Service shall be of
such style, length and character, and fur-
nished in such manner as shall be re-
quired by the Postmaster General, and
shall be constructed, fitted up, maintained,
heated and lighted by and at the expense
of the railroad companies.
1907, March 2. The Postmaster General is
required to withdraw from the mails the
postal supplies, when in freightable lots,
and transmit them by freight or express.
1911, March 4. Postmaster General allowed in
emergencies, from November 15th to Jan-
uary 15th, to send empty mail bags by mail
instead of by freight or express.
1911, March 4–1912, August 24. Prohibition
against paying railroad companies for
wooden full R. P. O. cars if run in con-
junction with steel passenger cars, and re-
quirement that after July 1, 1917, no full
R. P. O. car shall be paid for unless con-
structed of steel cr steel underframe, nor
unless sound in construction and sanitary
as to drinking water containers and toilet
facilities and general cleanliness.
Fines, Deductions, Etc.
1872, June 8. The Postmaster General may
make deductions for failures to perform
service and impose fines for other delin-
quencies. He may deduct the price of
the trip, and not exceeding three times
the price if the failure be occasioned by
the fault of the contractor or carrier.
1881, March 1. Any railroad company failing
or refusing to provide R. P. O. cars when
required by the Post Office Department,
or safety heaters or safety lamps, with
such number of saws and axes as may be
required in case of accident, shall have its
1st.—What are the intrinsic merits or de-
merits of the present law?
1884, July 5. 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 50 per centum of the amount pro-
vided by law.
The Basic Principle
It is evident that the present laws rest
upon the basic principle of the convey-
ance or transportation of the mails, in-
cluding a person in charge of them; that
due frequency and speed are prescribed
in the laws of 1873, which meant at that
time 6 times a week service each way,
or one daily round trip, at the rate of
speed scheduled for passenger trains; that
the Postmaster General decides on what
trains and in what manner the mails
should be conveyed, and decides the style
and character of the fixtures and furni-
ture installed in the postal car or apart-
ment wherein the mails are opened and
assorted while traveling.
The Rates
The original rates of 1873, which have
been reduced several times, are shown in
the following table, both as to 1873 and
the present year 1914; also the daily pay
corresponding to the yearly rates named
in the law :
Pay for Weight Transported
Average Daily Weight Annual Pay per Mile Daily Pay per Mile
Carried Over Whole of Route of Route
Length of Route, 1873 1914 1873 1914
Pounds Cents
200 . . . . . . $50.00 $42.75 16 12
e 64.12 24 18
1,000 . . . . . . 100.00 85.50 32 23
1,500 . . . . . . 125.00 106.87 40 29
2,000 . . . . . . 150.00 128.25 48 35
3,500 . . . . . . 175.00 149.62 56 41
5,000 . . . . . . 200.00 171.00 64 47
Per ton (2000
lbs.) up to
48,000 . . . 25.00 20.30 8 5%
Per ton (2000
lbs.) over
48,000 . . . 25.00 19.24 8 5%
The last column gives the present daily
pay per mile of route, but does not make
allowance for the number of trains that
carry the weight. To get the earning per
mile for each train, divide by the num-
ber of trains carrying the weight. Illus-
tration No. 1–If a railroad carries 5000
pounds daily on 10 trains, the earning
of each train would be 1/10 of 47 cents,
or 4.7 cents for 500 pounds, or 9 mills a
mile per 100 pounds.
—If a railroad carried 10,000 pounds
daily on 10 trains, the earning of each
train would be 1/10 of 61 cents, or 6.1
cents for 1000 pounds, or 6 mills a mile
for each 100 pounds. Illustration No. 3
—If a railroad carries 10,000 pounds
daily, the excess pays 5% or 5% cents
a ton per mile. This is equivalent to
2% mills for carrying 100 pounds one
mile.
Additional Pay for Full R. P. O. Cars
Annual Rate per Mile
(round trip)
Daily Rate per
Length of Car Mile Run
1873 1914 1873 1914
Cents
40 feet . . . . $25.00 $25.00 3.4 3.4
45 feet . . . 30.00 27.50 4.1 3.8
50 feet . 40.00 32.50 5.5 4.4
55 or more
feet . . . . . 50.00 40.00 6.8 5.5
Illustration No. 1–If a railroad car-
ried 5000 pounds daily in one round trip
of a 60-foot R. P. O. car and had no
other mail service, the earning would be
23% cents per mile for the weight of
mail and 5% cents for the R. P. O. car,
or a total of 29 cents a mile—a fairly
satisfactory rate.
Illustration No. 2—If the railroad car-
ried over 5000 pounds daily, and the ex-
cess to the extent of 2% tons (the aver-
age load of an R. P. O. car) were con-
veyed in a 60-foot R. P. O. car, the earn-
ing would be 12.4 cents per car mile for
the weight carried, plus 5% cents for
the R. P. O. car, or less than 18 cents
Illustration No. 2
Postal Requirements Covered by
Postal Regulations Supple-
menting the Law
There are a large number of Postal
Regulations supplementary to the laws
which add to the duties and burdens of
railroad companies. Among these are:
Sec. 1339–Free transportation for all agents
of the Post Office Department and Post
Office Inspectors.
Sec. 1341—Rooms at railroad stations for pos-
tal purposes; to be provided, heated,
lighted and cleaned at the expense of the
companies.
Sec. 1346–Side and terminal delivery to post
offices and transfer between railroad sta-
tions.
1351–Late mails to be kept overnight at
railroad stations, to permit the post office.
to close.
Sec. 1354–Holding passenger trains for mails,
unless the Post Office Department permits
an exception.
Sec. 1355–To stop passenger trains “at all
points” that the Post Office Department
deems necessary for exchange of mails.
Sec. 1355–Engineer to give notice of approach-
ing a mail crame to relieve the postal clerk.
from watching out.
Sec. 571—Companies must erect mail cranes.
or other devices for receipt and delivery
of mails, or else stop their trains.
New requirement that trains must stop.
for the exchange of fragile parcel post
matter.
Sec. 1484—Companies must make monthly
statement under oath of all failures to,
operate mail trains, etc.
Also a requirement, not yet in law or
regulation, that R. P. O. cars and apart-
ments be placed in railroad depots for ad-
vance postal work, ahead of making up,
train—sometimes several hours in advance.
Sec.
The Need for New Legislation
The bill prepared by the Post Office.
Department as regards railroad mail
service and pay proposes a complete and
revolutionary change in the method, rates
and conditions.
It revives the old proposal to measure
the service performed and the rates of
pay by car space authorized instead of
on the actual weight of the mail carried.
The space plan has been discussed for
many years, and has been advocated to
Congress several times in the past, but
a car mile—a very inadequate return.
Congress has always refrained from adopt-
ing it. It is considered by many to be
full of danger to the Government as well
as to the railroads, mainly for the reason
that car space is a factor that has such
a large margin of variation according to
the load to be carried and the purpose
for which it is used, and is, therefore, so
subject to determination on personal
opinion as to lend itself on the one hand
to action that might be tyrannical toward
the railroads, or, on the other hand, to
favoritism which, if surmised or detected,
would be difficult, if not impossible, to
prove.
The Post Office Department’s space
plan is the latest of a series of plans pro-
posed by itself since 1911. All of these
plans vary as to the scientific basis of
pay or the method of applying the pay.
Each new plan, when introduced, has been
announced as the perfect solution, only to
be superseded by a later plan of a radi-
cally different type. All of the several
proposed bills contain, however, a num-
'ber of proposed laws which seek to give
complete and arbitrary power to the Post
Office Department which would enable it
to be independent of and superior to the
specific units of operation or rates of pay
which are named in the bills, but are
all subject to the opinion of the postal
officer who would have the administration
of the service.
Before any steps are taken to formulate
Inew legislation, and least of all an en-
tirely new method, it would seem wise to
ascertain :
1st.—What are the intrinsic merits or de-
merits of the present law?
2d.—Has it operated to the advantage or
disadvantage of the Government or the rail-
road companies? and
3d.—If these inquiries bring out reasons
for new legislation, should the new legisla-
tion be in the direction of perfecting the
present law or venturing upon a new experi-
ment? s
The Present Law—Its Intrinsic
Merits and Demerits
The present law is based on the weight
of mail transported and, therefore, has
a direct relation to the amount of busi-
ness transacted by the Post Office Depart-
ment from year to year and relatively to
the amount of revenue derived from the
business by the Post Office Department
from the people. It is based on the re-
tail principle and the wholesale principle
by providing a lower rate of pay rela-
tively for heavy weights than for light
weights. For example, a railroad carry-
ing an average daily weight of 2000
pounds receives three times as much pay
per mile as a railroad carrying 200
pounds a day, although the weight car-
ried is ten times greater. A railroad
carrying 5000 pounds a day gets four
times as much pay as a railroad carry-
ing 200 pounds, although the weight is
twenty-five times greater. A railroad
carrying over 5000 pounds a day receives
a rate for each additional ton that is
only one-half as much as the pay re-
ceived by a railroad company for the first
200 pounds. It may, therefore, be con-
cluded that the plan is scientific as being
based directly upon the character of serv-
ice rendered with due regard for a de-
clension in the rate according to increas-
ing quantities.
A demerit of the present law is that
it does not give direct recognition to the
value of frequency of train service. When
the law was passed in 1873 the usual
frequency was one train each way daily,
or six round trips a week. As all mails
carried over a route are merged into one
amount to ascertain the average weight
carried daily over the whole route, the
greater train frequency of the present day
is not given due recognition; but this
Works to the financial advantage of the
Government.
The Present Law—Its Advantages
and Disadvantages
The first question under this head is
whether the law of 1873 paid too much
or too little in 1873, and whether it paid
too much or too little in 1913. A brief
answer is obtained from consulting the
official records. For the year 1873 the
gross postal revenues were about $23,-
000,000, and the railway mail pay $7,-
257,000, or about 31% per cent. In 1913
the gross postal revenues were $266,000,-
000, and the railway mail pay $51,000,-
000, or about 19 per cent. &
Another authoritative answer is ob-
tained by converting the weight rates into
space rates. Here is an example: The
highest relative rate for weight is for
the retail unit of 200 pounds a day, and
as shown above this is equal to 12 cents
per mile of route. If one round trip of
mail were made in a 15-foot apartment
car, the rate just mentioned would pay
6 cents a running mile. Raising this to
a corresponding rate for a 60-foot car, we
obtain 24 cents per running mile, which
is less than the average passenger car
mile earning for the whole country, and
was no doubt much less in 1873. The
protests of railroad companies following
the passage of the law of 1873 and the
concessions made by Post Office Depart-
ment officers at that time would also tend
to confirm the statement that the rates
of 1873 were not fully compensatory. It
is, therefore, clear without going into ex-
tended comparisons and statistical pres-
entations that the financial results of the
law of 1873 have been of advantage to
the Government and to the disadvantage
of the railroad companies.
The laws have given the Postmaster
General extensive power in regard to the
operations of the railroad mail service,
even when this power intrenches upon
the regularity, safety and freedom of pas-
senger train operation, probably because
there was no Interstate Commerce Com-
mission until 1887. In any new legis-
lation at the present day it would seem
advisable to consider the present condi-
tions, and while giving the Postmaster
General large powers so far as the postal
terstate Commerce Commission any gen-
eral powers which apply to the operation
or holding of trains and other railroad
conditions which have a larger relation.
and more general importance to the peo-
ple as a whole. -
Additional burdens and expenses not.
contemplated in the laws have been im-
posed upon the railroads by means of
postal regulations supplementing the laws,.
and it would seem wise in taking legis-
lative action at the present time to cor-
rect these conditions so that any similar
tendency as to the future should be re-
stricted and somewhat curbed.
The railroads have continued to carry
the mails and to supply the very best fa-
cilities for over forty years past, notwith-
standing the belief that the rates were:
unremunerative and the conditions some-
what oppressive.
They have asked relief as follows:
1. That the mails should be weighed.
annually instead of quadrennially, as at
present.
The present laws permit of this and
the relief desired is against the practice.
of the Post Office Department for the
past twenty or twenty-five years in de-
clining to make this readjustment, thus.
ignoring it is believed common and fair
business principles.
2. They have requested that mail
apartments fitted up as traveling post.
offices should be paid for similar to
the payment made for full R. P. O.
Call'S.
This would give recognition to the
great present frequency of R. P. O. train
service and would perfect the application.
Of the law of 1873.
3. That side and terminal messen-
ger service between railroad stations.
and post offices, and other special serv-
ices, should be paid for.
This seeks relief from or compensation
for additional services imposed by the
Postal Regulations which should have
function is concerned, transfer to the In-
been separately provided for by the Post
Office Department and duly recommended
to Congress in years past for appropria-
tions.
4. They have asked that all rates of
pay and conditions of service should be
definite and not subject to the discre-
tion of employes of the Post Office De-
partment.
This recommendation is in the direc-
tion of stability and fairness, and to pre-
vent official favoritism or official arbitrary
action, which is just as deplorable and
oppressive to railroad carriers as would
any action of Government
similar any
Department toward citizens generally.
The recommendation of the Railroads’
Committee is, therefore, for a few amend-
ments in the law that would correct the
inequalities of the present day from the
law or from the postal regulations, but
otherwise keep intact the original law,
which is scientifically sound and mani-
festly in the interests of good govern-
ment and good service, and is supported
by the good departmental practice of
forty years’ dealing with particular cases
between the Post Office Department and
the railroads, resulting in a mutual rela-
tion which is in a large measure definite
and understood. A recourse to entirely
new legislation would wipe out or trans-
form all of the precedents and decisions
which necessarily rest upon the interpre-
tations and observances under the old
law.
Inasmuch as the causes for the present
discontent and petitions for relief are al-
most entirely due to the regulations and
practices of the Post Office Department
rather than to the law itself, the time is
not opportune—if it ever could be op-
portune—for favoring any new legisla-
tion which would widen the possibility
of purely departmental control of a sit-
uation which the interests of the people
require should continue to rest in Con-
gress.
Shall New Legislation be Amendatory
Or Reconstructive P
If there is claimed to be a need for
radical and reconstructive legislation, the
burden of demonstrating its necessity
should rest upon those who make the
claim. What is the general situation?
1. The railroads are all carrying the
mail, and carrying it on all trains and
on the fastest trains needed by the De-
partment, so that the United States
Railway Mail Service has a greater ex-
pedition and higher reputation than
any in the civilized world, notwith-
standing that the railroads consider
their pay deficient and that certain op-
pressive conditions should be rectified.
2. As the service is admitted to be
of the highest character, and the cost
to the Government has been demon-
strated to be below the full cost to the
companies, there is no need of legis-
lation to reduce rates so far as the
Government is concerned.
3. Parcel Post. The postage rates
to the public for Parcel Post were cal-
culated so as to include the transporta-
tion charge. Hence the public are pay-
ing the transportation charge which is
largely retained by the Post Office De-
partment instead of being transmitted
to the railroad carriers.
Congressman Lewis urged legislation
toward a rate for Parcel Post that
would give the railroads 5 cents a ton
mile. The present law requires that
all roads carrying over 5000 pounds
shall carry the mail at rates equivalent
to 5% to 5% cents a ton mile.
4. Post Office Department Regula-
tions. If the Post Office Department
had instituted an annual weighing
when the Parcel Post was established
as it could have done under the law,
the present situation would be much
less aggravated. If the Post Office De-
partment had not made regulations re-
quiring the railroads to perform side
and terminal service; to provide pos-
tal cars for a round trip at single trip
pay; to provide rooms at railroad sta-
tions for post office work; to carry
without extra charge all agents of the
Department regardless of whether their
duties were connected with the trans-
portation of the mails; also other
similar requirements beyond the inten-
tion of the law, the railroads would
not be placed in the position of re-
questing legal protection from unwar-
ranted exactions.
The conclusion is logical and irresist-
ible that the main remedies required are
those that will insure a proper adminis-
tration of the present law. This course
will safeguard the interests of the Amer-
ican people and should satisfy the rail-
roads carrying the mails.
H. R. 17042—Readjustment of Rail-
way Mail Pay
In this bill the Post Office Department
proposes that car space in R. P. O. cars,
apartment cars and storage cars author-
ized by the Department shall be the basis
of pay instead of the weight of mail car-
ried, thus adhering to the basis proposed
by former Postmaster General Hitchcock
in 1911. The terms of the law provide
that payment shall be made only for space
authorized and leave the authorization
discretionary with the Post Office Depart-
ment. There is no provision that the
authorization shall be for a definite period.
Hence, the Department which
changes authorizations on one month’s
notice could notify a railroad company
of radical alterations in the authorization
of Car Space, leaving the company the al-
ternative of accepting the expense of re-
constructing the cars without any recov-
ery for the cost of such reconstruction.
If the car space plan were deemed neces-
Sary or desirable it is essential that the
requirements be stated in the law, with
a provision for reimbursing the companies
for any expense in changes of construc-
tion. It must be remembered that all of
these cars are essentially private cars,
solely for the purposes of the Post Office
Department and not used by the railroad
Companies for other traffic.
It is provided that five classes of serv-
In OW
1. Full R. P. O. cars 40 feet or more
in length.
2. Apartment R. P. O. cars less than
40 feet in length.
3. Mail storage cars 60 feet or less
in length. -
4. Closed-pouch service; this being
mails on trains in custody of railroad
employes.
5. Side and terminal service to and
from post offices and railroad stations.
The fifth specification should not be
included as a class of service to be author-
ized in connection with railroad mail
service, because the declared purpose is
to relieve the railroad companies of this
service. It, therefore, becomes relegated
to the class of mail messenger Service and
would only be performed by the railroad
companies when they happen to be the
lowest bidders.
Rates
The rates named are “not exceeding”
the following:
Rate per Initial Terminal
Class of Car Mile Run Charge Charge
Full R. P. O. Cars. . . 20c. $2.00 $2.00
30-foot Apartment R.
P. O. Cars. . . . . . . . 10.C. 1.00 1.00
15-foot Apartment R.
P. O. Cars. . . . . . . . 5C. .50 .50
Storage Cars . . . . . . . 18C. 2.50 2.50
The fact that the rates are stated at
“not exceeding” leaves the amount en-
tirely in the hands of the Post Office De-
|partment. It may be said in response that
the present law prescribes weight rates
at “not exceeding” certain amounts, but
it is to be remembered that the rates in
the present law are sustained by the cus-
tom and practice of forty years, while
the new law completely replaces the pres-
ent law and wipes out all precedents of
action. It is to be noted that the rates
are extremely complicated, because they
are composed of a line rate plus an initial
ice may be authorized, i. e.:
Čharge and a terminal charge, all of these
being variable according to the opinion
of the Post Office Department rendered
in each case.
Initial and Terminal Rates
On page 14 in the bill it is prescribed
that the “initial and terminal rates pro-
vided for herein shall cover expenses of
loading and unloading mail, switching,
lighting, heating, cleaning mail cars, and
all other expenses incidental to station
service and required by the Post Office
Department in connection with the mails
that are not included in the car mile
rate.” This clause would enable the Post
Office Department to require any addi-
tional service it might deem proper with-
out any additional allowance to the rail-
road company affected.
The same paragraph also specifies “the
allowance for full Railway Post Office
cars, Apartment Railway Post Office cars,
and Storage cars may be varied in accord-
ance with the approximate difference in
their respective cost of construction and
maintenance.” It is impossible for any
one to approximate what these allowances
would amount to if subject to the discre-
tionary variations that might be made by
the employes of the Post Office Depart-
ment.
Closed-Pouch Rates *
On page 13 it is proposed that the
closed-pouch rates (mails in care of bag-
gagelman), shall be paid for at the rate
of $20 per ton per mile per annum on
certain lines and at the rate of $19 per
ton per mile per annum on other lines.
The last rate stated, divided by 365 days,
is equivalent to an allowance of 5.2 cents
per ton per mile. This would be 2.6 mills
per hundred pounds carried one mile. The
purpose of this provision is to merge all
of the retail business of closed-pouch
Service on hundreds of trains into one
wholesale amount to be paid for at a
rate that would be substantially on the
Carload basis. The rate proposed in the
bill, H. R. 17042, would be equal to 2.6
mills per hundred pounds per mile, or
23 cents per hundred pounds for the dis-
tance from New York to Philadelphia.
The Interstate Commerce Commission
rate for express service from New York
to Philadelphia is 90 cents a hundred
pounds, and allowing 50 per cent. of this
to the railroad company, the railroad reve-
nue would be 45 cents. Therefore, the
proposed rate in the bill is only one-half
of the earning of the railroad from ex-
press traffic. The suggestion is, therefore,
neither scientific nor reasonable.
The further provision that railroads
performing only closed-pouch service shall
be paid only 95 per cent. of the present
rates would apply especially to the short-
line railroads, which are deserving of bet-
ter treatment.
Emergency Service
On page 16 it is specified that “no ad-
ditional pay shall be allowed for addi-
tional car service unless specifically
authorized by the Postmaster General.”
The question arises here as to what the
railroad company is to do when mails of
unusual quantity are offered for trans-
portation that exceed the space formally
authorized by the Post Office Department.
It is not customary for the Department
to make retroactive authorizations, and
there is no distinct provision in the law
which would enable the railroad company
to transport the excess mail and save it
from delay and then submit a bill to the
Post Office Department for the service
necessarily rendered. This is a serious
and important gap, which might lead to
unfortunate consequences.
Construction of Combination, Cars
On page 16 it is provided that 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
10
Postmaster General, etc. This is an ex-
pansion of the present law, which has been
for many years construed as authorizing
the Postmaster General to prescribe the
interior fittings of Apartment cars, but
not to require a degree of construction
out of harmony with the rest of the rail-
road equipment. These Apartment cars
are partly used for other traffic—passen-
ger, baggage and express—so that the
power sought by the Post Office Depart-
ment would extend beyond the mail Apart-
ment car into a field with which the Post
Office Department has no concern. If any
such regulation of construction is needed
and can be defined, it would be more
Within the province of the Interstate Com-
merce Commission than of the Postmaster
General.
“Necessary Facilities ''
On pages 17-18 it is specified that rail-
road companies carrying the mails shall
furnish all necessary facilities, for caring
for and handling them while in their cus-
tody. This does not sound unreasonable,
but the question arises as to how it would
be construed. The railroads should cer-
tainly furnish all customary and necessary
facilities in connection with the trans-
portation, but the term “handling” might
be construed as assorting or distributing.
The words “necessary facilities” should
be defined in some general way so as to
insure a reasonable interpretation.
Advance Placing of Cars
On page 18 the railroads are required
to furnish all cars or parts of cars and
“place them in stations before the de-
parture of trains, at such times and when
required to do so.” There is no law or
regulation at present to justify placing
postal cars and mail apartments a long
time before the train’s departure, but a
practice has grown up in many places in
response to requests or demands of pos-
tal employes so that cars are placed in
terminals several hours before train time.
It is now proposed to make this a law
which would give the Post Office Depart-
ment the privilege of occupying Valuable
station tracks without due regard to the
necessities of the passenger train service,
and it is later provided that heavy penal-
ties in the discretion of the Postmaster
General might be imposed for any dis-
regard of such instructions. Here is
another instance where if supervisory
regulation of railroad conditions contrary
to the views of the railroad officers is
considered justifiable, the supervision
should be under such a body as the In-
terstate Commerce Commission rather
than in the hands of the Postmaster Gen-
eral.
Station Space
It is specified that railroads must pro-
vide station space and rooms for the
handling, distribution and transfer of
mails in transit. This is another effort
to convert into a law what has hereto-
fore been a regulation, and to extend the
provisions so as to widen its scope. A
general provision would not be unsuitable
if it referred to “custody and transfer,”
but the inclusion of the terms “handling
and distribution” would enable the Post
Office Department to demand space, with-
out rental, for post office purposes.
Free Transportation of Employes
in Passenger Cars
On page 18 provision is made for the
free transportation of all persons in
charge of the mails when on duty and
when traveling to and from their homes,
and all agents and officers of the Post
Office Department while on official busi-
ness, not on the exhibition of railroad
tickets or passes, but upon the exhibition
of their credentials. This seeks to make
a law of what has heretofore been a Pos-
tal Regulation and is entirely indefensible
as relating to postal officers or employes
not immediately in charge of the mails
that are being transported. These offi-
cers and employes, other than those in
11
charge of the mails, ride in passenger
cars and Pullman cars and occupy the
seats and space that belong to the pas-
senger service. Their transportation
should be duly accounted for.
Fines for Failures
On page 18 it is provided that a com-
pany failing or refusing to provide cars
or apartments, or to heat and light them
as may be required by the Postmaster
General, shall be fined such “reasonable”
sum as he may deem proper. The present
law limits the penalty to 10 per cent. of
the pay.
Control of Trains
On page 19 the proposed law enables
the Postmaster General to decide on what
trains and in what manner the mails
shall be conveyed and requires the rail-
road company to carry on any train it
operates all mailable matter and mail
equipment and supplies, with the al-
ternative of paying a fine of such reason-
able amount as the Postmaster General
may deem proper. It should not be left
within the power of the Post Office De-
|partment to regulate the passenger train
Service in this way. It is entirely proper
that the Post Office Department should
have all facilities for the dispatch of the
mails in accordance with the amounts
paid for such service, but any detrimental
effect that this might have upon the
maintenance of fast passenger train
Schedules should be checked by the super-
vision of the Interstate Commerce Com-
mission. All postal requirements on rail-
road trains which interfere with or super-
sede the authority of the railroad man-
agement to preserve the present high
quality of passenger train service should
be subject to the full approval of the
Interstate Commerce Commission.
Steamboat Service
On page 19 it is provided that the act
shall apply to service partly by railroad
and partly by steamboats. This is en-
tirely inconsistent. Steamboat Service
should be treated on its own merits."
Express Rates
On page 20 it is provided that the
Postmaster General may from time to
time obtain information from the Inter-
state Commerce Commission regarding
the revenue received by railroad com-
panies from express matter and arrange
for the transportation of second, third
and fourth-class matter at such rates.
This provision seems to have no merit
whatever unless the Post Office Depart-
ment is Willing to assume the same rela-
tions to the railroad company that the
express company occupies. The express
companies pay about 50 per cent. of their
gross revenues for the transportation of
their traffic. The Post Office Department
would not be willing to do the same.
Car Load Rates
Page 21. This provides that the Post-
master General may petition the Inter-
state Commerce Commission for postal
Carload or less than carload rates for
fourth-class matter and periodicals, and
then require the railroad companies to
carry the traffic at such rates. This, like
the previous Section, is a vague attempt
to accomplish some arrangement which
would render nugatory all of the preced-
ing clauses which purport to establish
the rates and conditions of mail service
On railroads.
Slow Mails
On page 21 there is a new provision
to enable the Postmaster General to dis-
criminate between the several classes of
mail matter and provide for the slower
movement of the third- and fourth-class
Imail matter and periodicals when lower
rates or other economies can be secured.
This would seem to be a question for
Congress to determine definitely in con-
nection with the enactment of postage
rates for the different classes of mail mat-
12
ter. A Departmental discrimination be-
tween the several classes independent of
the judgment of Congress would hardly
lead to good results.
Weighing of the Mails
On page 22 the proposed law authorizes
the Postmaster General to have the
weights of mail taken in his discretion
on railroad mail routes for administrative
as well as statistical purposes, at such
times as he may elect. This seems to
disclose the uncertainty of the Post Office
Department regarding its own bill. Its
explanations would indicate art intention
to abandon entirely the system of weigh-
ing the mails except for closed-pouch
Service, but this clause we are discussing
would really permit the Postmaster Gen-
eral to Order weighings even more ex-
tensive than those now conducted, espe-
cially for the purpose of computing the
average loads for the several classes of
cars. It must be evident that if it is
necessary in the opinion of the Depart-
ment to verify the necessity for the car
space authorized by the average load car-
ried in the several classes of cars, the pay
would really be dependent upon the weight
of mail conveyed and the proposed space
plan would, therefore, be merely a sup-
plementary and complicated process added
on to the weighings as prescribed in the
law of 1873.
Compulsory Clause
Since the first establishment of railway
mail service the railroad companies have
carried the mails under conditions of free
contract so far as the laws are concerned.
All of the large railroad systems no doubt
consider that they have a moral duty
to carry the mails for the benefit of the
communities that they serve, and they
have, therefore, not been free agents as
to whether they would or would not per-
form the mail service, but the United
States Supreme Court has decided in sev-
eral cases that legally they were not
obliged to carry the mails. This com-
pulsory clause which appears in H. R.
17042 was apparently brought forward
for the first time in the bill submitted by
former Postmaster General Hitchcock,
under date of August 12, 1911, and pub-
lished in House Document No. 105. Its
effect would undoubtedly be to give the
railroads a standing in court to Secure
relief from any of these rates that may
be found confiscatory. The space plan
for paying the railroads would result as
to each railroad company in a statement
from the Post Office Department an-
nouncing a certain rate of pay for a
specific unit of train space. It might,
therefore, furnish a convenient basis by
which the companies could make a clear
demonstration to the courts that they
were underpaid and enable them to se-
cure full recovery. However, it is not
a high compliment to the proposed law,
which is alleged to be of a constructive
nature, to admit that it probably would
make more definite a legal basis upon
which a railroad company might sue in
the courts for justice which it should
obtain in the first instance from Congress
itself.
The compulsory clause in the proposed
law, coupled with a $5000 penalty, would
enormously increase the scope of arbi-
trary power of the officers and employes
of the Post Office Department. It is in
fact a highly remarkable proposal in the
direction of centralization of power when
we remember that the recent legislation
in connection with the parcel post would
enable a Postmaster General of radical
tendencies to modify the weight limits
and rates so as to include the entire
freight service of the country. If there
be any sufficient reason for the enactment
of such law (none has occurred to the
writer), it would seem absolutely neces-
sary that all of the powers of the Post
Office Department sustained by this com-
pulsory clause should be subject to re-
13
view by some judicial and disinterested
body before they become obligatory upon
the railroad carriers.
Conclusion
1. There appears to be no warrant for
radical and revolutionary legislation on
the subject of railway mail pay.
2. The relief asked by the railroads in
the definite program submitted by them
can be granted at less expense to the Gov-
ernment than full pay recoverable on the
space plan.
3. The space plan, while apparently
simple, introduces additional complica-
tions and must finally rest upon a weigh-
ing of the mails.
4. If a weighing of the mails were dis-
pensed with, there would be no effective
check upon the misuse of official discre-
tion in the authorization of car space.
5. The discretion in regard to car space
and the payments that would be made in
connection therewith might at times be
used in oppressive treatment of railroad
companies and at other times as an in-
strument of favoritism and possible cor-
ruption.
6. If in spite of these fundamental ob-
jections a space plan were tried experi-
mentally, the discretion allowed the Post
Office Department should be limited as
closely as practicable, and in those cases
where the allowance of discretion is un-
avoidable its application to the railroad
companies, should be under the super-
vision of some quasi-judicial body such as
the Interstate Commerce Commission,
which has the especial responsibility of
Supervising railroad operations.
7. The subject of railway mail pay—
both as to the total amount and as to its
apportionment—is clearly a question to
be determined by the exercise of good
judgment and careful approximation. It
is not at the present time a question that
admits of scientific adjustment, and it
will not be until there is an adequate sta-
tistical basis for scientific study and
treatment.
It is to be regretted that the Post Office
Department has not been able to present
to the Joint Congressional Committee
adequate data to indicate the ton mileage
of the mails or for the car mileage of the
mails.
These two factors are of fundamental
importance. Yet, in the case of the ton
mileage of the mails there have been no
figures published in the annual reports
of the Post Office Department for any
year. The Wolcott-Loud Joint Congres-
sional Commission had the ton mileage
of mails computed for the twenty-six-year
period, 1873 to 1898, inclusive, but no
official figures have been published for
the past fifteen years. It is highly im-
portant that this data should be computed
as of July 1st of each year and published
without delay in each annual report of
the Department.
The mail car mileage (especially as to
full R. P. O. cars, apartment R. P. O.
cars and storage cars) should also be
computed and published in the annual
report. By co-operation from the rail-
road companies this information could be
published in two phases:
1st. The mail car mileage directly
required by the Post Office Department
for transportation and sorting the
mails; and
2d. The mail car mileage required
by operating conditions to provide the
car space directly required by the De-
partment.
If this information had been available
during the recent hearings, it would have
been of invaluable assistance to those who
were dealing with the subject on all sides.
Such information will be indispensable
if Congress directs an annual weighing
of the mails, because dependable statistics
as to the growth of the traffic in com-
parison with statistics as to the car space
required will enable Congress to perceive
14
the precise effects of the parcel post legis-
lation and the result of the extensions
of the service which have been intrusted
so completely to the good judgment and
discretion of the Postmaster General. It
will also be undoubtedly of great value
to the Interstate Commerce Commission
in connection with its supervision of the
express traffic and in connection with any
enlarged powers of revision or supervision
which Congress may devolve upon the In-
terstate Commerce Commission in rela-
tion to the Postal Service. -
W. J. BRADDEY.
15
Shall the Basis Of Railway
Mail Pay Be Made a
Political FOOtball?

The following article from the
Boston Transcript of June 9, 1914,
describes a situation which seems
little short of trifling with a most
serious question of Government
policy—a question involving the
rights of citizens performing a
public service.
—Committee on Railway Mail Pay.
T&alph Peters, Chairman.
WASHINGTON, June 8.
What is characterized the most amazing
treatment of a Congressional Commission
in the recent annals of Congress is re-
corded of the Post Office Department, in
ignoring the work of the Joint Commis-
sion on Railway Mail Pay and insisting
upon the introduction of what is termed
the “Administration” or Moon bill, for
the readjustment of railway mail compen-
sation.
The inner history of this bit of secret
strategy is just coming to light, with the
result that Democrats and Republicans
alike, the former silently and the latter
openly, are indulging in criticisms of Post-
master General Burleson, which evidently
foreshadows a battle over the railway mail
pay bill.
Long Struggle with Difficult
Problem
Eor more than a year one of the ablest
commissions appointed by Congress in re-
cent years has been struggling with the
mail pay problem. It consists of three
Republicans and three Democrats—the
and Richardson, of Delaware, and Senator
Weeks, of Massachusetts; the latter, Sena-
tor Bankhead, of Alabama, and Represen-
tatives Lloyd, of Missouri, and Tuttle, of
New Jersey.
They sought long and earnestly for a
basis of pay that would be fair to railroads
and to Government alike, and having
found it they made their rates and were
prepared to report a bill.
Postmaster General Burleson kept in
touch with the work of the Commission,
through Representatives Lloyd and Tuttle,
and within a week Mr. Burleson called a
Senatorial member of the committee and
urged haste with the bill, that it might
be put through quickly under a rule in
the House.
The bill, under this arrangement, was
to have been introduced in the House last
Thursday, passed upon by the House Com-
mittee on PostOffices and Post Roads Fri-
day, and reported back to the House Sat-
urday. All plans for this procedure were
made, and a statement for the press giving
the outlines of the measure was authorized
to be released Thursday noon.
About midnight Wednesday, Chairman
Bourne was called on the telephone and
informed that Postmaster General Burle-
son “insisted” that Chairman Moon of the
House Committee should introduce a bill
of his own, and that this should be recog-
nized as the Administration bill.
This was done the next day. A hearing
was called, to which Senator Weeks had
been invited by the Democratic members
of the Commission to explain the merits
of the measure.
former, ex-Senators Bourne, of Oregon,
When the senator entered the com-
mittee room he learned for the first time
that the bill under discussion was the Moon
or Administration bill, and not that of
the Commission.
Spoils System in the Offing
No explanation of the sudden shift of
the Postmaster General has been made,
nor is it yet known whether President Wil-
son has any knowledge of the substitute
measure introduced in his name or
whether he knows the differences between
the two. The chief difference is that the
Moon bill fixes the line rates at a cent a
mile less than those of the commission bill
and reduces the terminal allowances some-
thing like 25 per cent.
The commission bill confines itself
strictly to railway mail pay, while the
Moon bill requires that all assistant post-
masters, even those carried into the classi-
fied service by executive orders, shall take
a civil service examination within ninety
days.
These are the permanent officials of the
various post offices and have remained for
the most part undisturbed because of their
proved efficiency, but under this bill the
whole list would be thrown open for ap-
pointment, giving Democratic applicants
a chance which does not now exist to win
Federal jobs.
This is an indirect application of the
spoils system in the name of civil service
reform, and at any event has no more to
do with railway mail pay than the ap-
pointment of charwomen.
Less Pay Under Moon Bill
One reason likely to be assigned for re-
jecting the scientific rates of the Commis-
sion is that the railroads will receive less
under the Moon than under the Commis-
sion bill. The latter, although not cal-
culated with reference to cutting down or
raising the pay of the roads, would reduce
their compensation more than $2,000,000 a
year.
The Moon bill not only shades the rates
all along the line, but is figured on a basis
of fourteen million more car miles than
Dr. Lorenz, the statistician of the In-
terstate Commerce Commission, calculates
to be involved in payments to the rail-
roads.
This difference would not affect the
actual rates, but would materially reduce
the disbursements of the Government in
comparison with the appropriation of
1915.
Thus the Post Office Department, in
arguing for its own bill, would be able to
eater to the sentiment, very general in
Congress, but with no knowledge back of
it, that “the railroads are receiving too
much for carrying the mails.” t
The subject is so intricate that no one
has been able to say definitely whether the
roads have been paid too much or too
little, but the Commission has no doubt
that some of the trunk lines have been
carrying the mails at a loss. -
. The main post of the Commission’s po-
sition is, however, that its own rates are
fair, and that there is no merit in either
increasing or reducing the compensation
of the railroads on general principles, par-
ticularly if it appears that political con-
siderations rather than justice are the gov-
erming factor.
It is believed by the members of the
Commission without exception that one
purpose of the Moon bill is to make a
political appeal rather than to write scien-
tific legislation.
No Line On Parcel Post
This belief is strengthened by the fact
that, owing to the policy of Postmaster
General Burleson, it is now impossible to
do more than estimate the cost to the
Government and the railroads of the par-
eel post Service.
When the parcel post was instituted, pa-
trons were required to use Special stamps,
from the sale of which an accurate state-
ment of the parcel post receipts could be
compiled. With the requirement of a
special stamp abolished, however, no means
of distinguishing the parcel post from the
mail business exists.
After abandoning this guide, the Post-
master General allowed the size of the
parcel post package to be increased from
eleven to fifty pounds, this without an in-
crease of expense to the Government, but
solely at the expense of the carriers.
The result of the Postmaster General’s
ambition to serve the public has been that
the parcel post promises to cost a great
many more million dollars than the Gov-
ernment receives for the service, but there
is no measure to indicate what the annual
deficit is. -
Obviously, if Mr. Burleson can take six
million dollars a year out of the railroads,
as he proposes in the Moon bill, the annual
deficit of the Post Office Department will
be just that much less, even though the
loss is made in the parcel post division and
not in railway mail pay.
Joint Committee Much Disturbed
The Democratic members of the Bourne
Commission (strictly speaking it is a joint
committee) are no less chagrined than
their Republican colleagues over the sur-
prising action of the Post Office Depart-
ment—which is the Administration, so
far as they are concerned.
Two of them are candidates for re-elec-
tion, and deeply as they may feel the hu-
miliation put upon them by the Post-
master General, they may hesitate to op-
pose the Moon bill if it is found to bear
the O. K. of the President.
Senator Bankhead is expected to bring
the Senate to his way of thinking over the
situation, for the Alabama Senator is hot
clear through over what is currently re-
ferred to as the “trick” of the Post Office
commission a deadlock with the House
&
Over One of the most important questions
before Congress is possible.
Moon Rates are Arbitrary
It is pointed out that the split which
has come, if it is not healed soon, will give
the railroads a power of obstruction over
the legislation which they would not have
over the Bourne bill. -
That measure was calculated on a basis
of Science and fairness, agreed to be sound
The
trunk lines were expected to fight it more
or less, but to yield finally in the knowl-
edge that it was the nearest approach
to fairness they could hope to receive, from
Congress. - ! 2
The rates in the Moon bill are arbitrary,
if the work of the commission has been
done accurately, and the railroads will have
justification in protesting against them as
unfair and unscientific. . . . . . . . . .
by all members of the commission.
The evident purpose of the Post Office
Department has been to cut the pay of
the railroads, while the intention of the
commission has been simply to institute
a just, fair and scientific system.
The two non-congressional members of
the commission, ex-Senators Bourne and
Richardson, like others, have worked with-
out pay. Senator Bourne has continued
his residence in Washington at his own
expense and Mr. Richardson has spent
many days here. -
Bourne, in fact, abandoned his cam-
paign for election to the Senate that he
might complete this work, and to have
the Habors of a year ignored and under-
mined at the last moment, without warn-
ing or explanation, has precipitated a situ-
ation in Congress that may breed endless
trouble.
Department. If the Senate supports the
W. E. B.
The People Will Not Support a Plan
that Savors of Confiscation
On June 12, 1914, Mr. Ralph
Peters, Chairman of the Committee
on Railway Mail Pay, authorized
the following statement:
“The Rules Committee of the
House of Representatives has, I
am informed, adopted a recom-
mendation that the so-called
“Moon Bill’ follow the Sundry
Civil Appropriation Bill now
being considered by the House.
The underlying principle of the
Moon Bill is to reduce the pay of
the railroads for carrying the mails
by about $10,000,000.
“Congress sometime ago ap-
pointed a Joint Committee, of
which former Senator Jonathan
Bourne, Jr., of Oregon, is the
Chairman, to investigate the whole
subject of railway mail pay and rec-
Ommend to Congress the proper
method which should be adopted.
That Commission has conducted
a most exhaustive investigation,
but has not yet reported, al-
though it intends shortly to do so.
“The railroads have, I believe,
proven conclusively to the Com-
mittee that they were certainly
not overpaid for carrying the mails,
but were, as we see it, underpaid
by at least $15,000,000 annually.
In making his closing argument on
the Five Per Cent. Advance Rate
Case, Mr. Brandeis, as its special
counsel, advised the Interstate
Commerce Commission that to
him it seemed clear that the rail-
way mail service was unremuner-
ative to the railways.
“At the instigation of the Post
Office Department, which has, we
feel, been grossly unfair in all
Questions relating to compensat-
ing the railroads for carrying the
increased burden of the parcel
post, and before the Joint Con-
gressional Committee has ren-
dered its report, Congressman
Moon has introduced the bill
which revises the methods of
paying the railroads in such a
manner as to reduce by about
20 per cent. the compensation
now paid to the railroads.
“This proceeding not only seems
highly inappropriate in advance of
the recommendation of the Con-
gressional Committee, but in itself
proposes an imposition upon the
railroads which is without warrant
and is in the highest degree unjust.
It cannot be that such a plan will
have the support of the American
people, when the people realize
what the plan actually means.”

The American people want a square deal for all.
They will approve of a square deal for the railroads,
which represent the honest investment of thousands of
persons. When they fail in this spirit, the end of the
American republic will be at hand.
Atº - - -
—Chicago Tribune, june 18, 1914. '
What the Newspapers Say
About Railway Mail Pay
Q.
“Cannot the Railroads Have
a Little Fair Play?”
(New York Sun, June 23, 1914.)
That the railroads of this country are
underpaid by from $10,000,000 to $15,-
000,000 a year for transporting the mails
is the conclusion reached, after careful
study, by men of such opposed interests as
Ralph Peters, President of the Long
Island Railroad, and Robert A. Turner,
Secretary of the Joint Congressional Com-
mittee on Second Class Mail Matter and
Compensation for Transportation of
Mails. M. O. Lorenz, Associate Statis-
tician of the Interstate Commerce Com-
mission, “thinks the evidence indicates an
underpayment of at least 10 per cent.,”
and recommends a further test of the fig-
Ull'éS.
Louis D. Brandeis, who, to put it
mildly, is not overgenerous to the carrier
corporations, finds that “it seems clear
that the railway mail service is at present
unremunerative” to them.
This condition of underpayment was
recognized before the parcel post came
into being. Imposing that burden on the
railroads without payment for it made the
situation more unfair. The railroads
complained and Congress, acknowledging
the justice of their demand for readjust-
ment, appointed, more than a year ago,
the joint committee mentioned above, of
which Senator Bourne was made chair-
man, with Senators Bankhead and Weeks
and Representatives Lloyd, Richardson
and Tuttle as his associates. This Com-
mittee undertook an exhaustive study of
the subject, planning to devise a scheme
of payment fair to the carriers and the
Government and elastic enough to accom-
modate any changes in the Service Occa-
sioned by future growth and development.
Since then Senator Bourne and Repre-
sentative Richardson have been retired
from the Congress, but because of the im-
portance of the matter intrusted to them
they have served without pay on the Com-
mittee. Its researches have been careful,
and the expectation of Congress and the
railroads was that its report and recom-
mendations would furnish a sound basis
for intelligent legislation on an intricate
and highly technical subject.
But while this reasonable and proper
method of correcting the inequalities
º Agº y
* | * : * 'i “. -

1914
KATAt OG DiVi.Sjøn.
which mark one detail of the Govern-
ment’s dealing with the railroads was en-
grossing the attention of those interested
in the subject the Post Office Department
has had another idea, which came to gen-
eral knowledge when, at midnight on the
evening of the day preceding that on
which the joint committee’s bill was to
have been introduced, Chairman Bourne
was informed over the telephone that
Postmaster General Burleson “insisted.”
that Chairman Moon, of the House Com-
mittee on Post Offices and Post Roads,
should introduce a bill of his own and that
this should be “recognized as the Adminis-
tration bill.” -
By this proceeding, wholly unexpected
by the joint committee, the labors of that
body and the special knowledge obtained
by it were ignored; its recommendations
were discarded, and the time and effort
it had expended were lost. Why were
these sacrifices made 2 An examination
of the committee’s bill and of the Moon
measure throws light on what might
otherwise be a mystery.
The joint committee’s bill is confined
to railway mail pay, and provides for
line rates one cent a mile higher than
the Moon bill. The Moon bill also makes
the terminal allowances about 25 per cent.
lower than the committee bill. Here.com-
parisons must stop, because the committee
bill deals with nothing else; here the
popular appeal of the Moon bill lies, in
the opinion of its authors, because it “hits
the roads again,” and here is the colored
gentleman in the woodpile:
The Moon bill requires that all as-
sistant postmasters, including those now
in the classified service, shall take a civil
service examination within ninety days.
These assistants are mostly officers who
have held their jobs because they were
competent; those jobs are wanted by hun-
gry Democrats; under the false claim of
extending the civil service the Adminis-
tration will be able to oust some of them
and put Democrats in their places.
In this lies the appeal to the Demo-
crats in Congress; add to it that the
Moon bill caters to the anti-railroad
prejudice of the country, and a strong
combination results. The joint commit-
tee offers a fair and reasonable adjust-
ment of rates to be paid for service ac-
tually performed by the railroads; the
Moon bill joins politics to office grabbing,
and the Wilson Administration supports
the latter.
As for the details of the Moon bill so
far as they affect the underpayment of
the railroads, which offers the excuse for
its introduction, they reveal an utter dis-
regard for the rights of the carriers.
These unfortunates must, under its pro-
visions, provide terminal post offices for
handling and distributing the mails, as
directed by the Postmaster General.
They must furnish free transportation
to the officers of the Post Office Depart-
ment and the Postal Service traveling on
official business, without regard to whether
it concerns the railway mail service; the
bill puts the railroads at the mercy of
the Postmaster General as to the convey-
ance of the mails in every detail.
It provides that “clerical and other as-
sistance” and office rent for it shall be
paid out of the appropriation “for inland
transportation by railway routes.”
It gives to the Postmaster General
power to fix in his discretion payment for
carrying all mail matter other than first
class, including, of course, the parcel post
business.
It betrays in every section whose ap-
plication makes possible the revelation of
such a purpose a design not to treat the
carriers fairly, not to pay just rates for
services rendered, but still further to milk
the roads, to force them to do part of the
work for nothing, and generally to starve
them in their relations with the Govern-
ment.
This amazing product of politics and
hunger is to be discussed at a hearing to-
morrow. It will not be defended as sci-
entific or suitable; its strength will be in
partisan playing for jobs and the Sup-
posed hatred of a substantial fraction of
the public for railroads. The railroads
will be represented, to plead for a con-
sideration of the merits of the case, for a
study of the joint committee’s report, and
to test the boasted love of the American
people for fair play for all. -
Are the railroads to get that fair play
from any department of the Federal Gov-
ernment P

compensation.
The roads are entitled to a fair margin of profit for
carrying the mails, and it should be a just and fair
—Rock Island, Ill., Union, june 15, 1914.
Railroads Not Being
Treated Fairly
(Indianapolis News, June 19, 1914.)
There seems to be a general conviction that
the railroads are not being treated fairly by
the Post Office Department.
The contention is that the carriers, ever
since the establishment of the parcel post
system, have been compelled to carry an ever-
increasing quantity of matter at the old flat
rate.
The Post Office Department denies that rail-
roads have been underpaid in the past, but
now there appears to be a disposition to be
more lenient with regard to the handling of
the parcel post business. -
A bill embodying the recommendation of
the Congressional Commission on Railway Mail
Pay probably will be introduced in Congress
this session. The Commission has inquired
thoroughly into the question, and condemns
the present system of compensating the rail-
roads as antiquated, inaccurate and unfair
both to carrier and to Government.
Under the present arrangement, the rail-
roads receive annually about fifty-one million
dollars for mail transportation.
Under . the new rate this would be about
ten million dollars a year more, with increases
in the future based on growth. It is pro-
posed that the roads be paid according to
space and not according to weight, to com-
pensate them for the bulky parcel business.
The railroads have expressed dissatisfaction
have no reason to complain that they are not
treated fairly in the proposed bill, it appears.
The Government really is as deeply inter-
ested as the railroads are, for the parcel post,
to be self-supporting, must offer rates based
on actual service costs, not on costs that de-
prive the carriers of the compensation justly
due them.
Congress Should Not Legislate
Confiscation
(Providence, R. I., Journal, June 19, 1914.)
In the discussion at Washington on the
question of railway mail payments the intention
of the Post Office Department to get service
at less than cost is disclosed. No schedule
which has in it the element of confiscation
should be approved by Congress.
The Government which prosecutes individ-
uals for the acceptance of free passes or re-
bates on freight cannot consistently offer the
railroads less than the regular price for carry-
ing the mails.
The probability is that the Post Office, when
all charges are made, is not self-sustaining.
BUT THERE SHOULD BE NO ATTEMPT
TO CONCEAL THE EXACT CONDITION
OF THE DEPARTMENT—if there is a defi-
cit the people should know all about it; it
is most improper to make a better showing
than the facts warrant by compelling the
railroads to handle the mail at a heavy loss;
in fact, such a procedure is palpably dis-
ever since the parcel post was originated. They
honest.
The position taken by ex-Senator Bourne,
Chairman of the Joint Congressional Commit-
tee on Railway Pay, that the rate should give
the railroads the returns per car mile derived
from the average passenger traffic, is good in
that it provides for adequate compensation.
While investigation may show the desirabil-
ity of amendments in detail, the spirit of
the Bourne plan should not be departed from
—Congress should see that the legitimate ex-
penses of the mail service are paid in full.
The inevitable result of the postal plan of
“getting something for nothing,” should it be
adopted by Congress, will be the cutting of
transportation facilities.
Money lost on Government contracts must
be made up in some way. The Government
should pay a fair price for mail transportation
to the end that the people may not be deprived
of good cars and frequent trains.
IT SHOULD BE UNINECESSARY TO HAVE A
LONG DISCUSSION ON A SIMPLE QUESTION
OF HONESTY.
Unworthy of a Great
Government
(Wilmington, N. C., Morning Star, June 19,
1914.)
Commission that to him it seemed clear that
the railway mail service was unremunerative
to the railways, and now to lop off summarily
ten to fifteen million dollars from this re-
muneration does not appeal to the fair-minded
people of this country as just, necessary or
reconcilable with any sort of governmental
policy in the past.
Such a proceeding certainly strikes the aver-
age citizen not only as highly inappropriate
in advance of the recommendation of the Con-
gressional Committee, but in itself proposes
an imposition upon the railroads which seems
altogether unwarranted.
THE RAILROAD PEOPLE ARE PER-
JFECTLY WILLING TO SUBMIT THEIR
CONTENTIONS TO THE AMERICAN
PEOPLE, BELIEVING THAT WHEN
THEY KNOW WIFIAT THE BILL ACTU-
ALLY MEANS THEY . WILL RESENT
CONGRESSIONAL ACTION ALONG : THE
LINE PROPOSED, not only as beneath the
dignity of a nation like ours, but as a posi-
tive wielding of the big stick which should
cease some time in the interest of fair play.
Congress should, at least, in our opinion,
wait for its own committee to make its report
and to announce to the public what it con-
siders fair and equitable. There is a general
feeling that the Bourne committee has gone
into the matter thoroughly and is itself so
unbiased that the public may rely on the jus-
tice of its findings.
“Trying to Put One Over”
We have heard much of late about railway
mail pay—the Government and the railways,
and the disposition of the former to saddle
the railroads with the parcel post service with
no adequate remuneration. The rural mail
carriers of the country have felt the pinch of
the same policy of the Government, and nat-
urally both the carriers and the railroads see
neither the justice nor the sense of requiring
of them an extra service with no extra pay.
And the public is with them, we believe.
This Government of ours is too great and
too powerful to saddle the expense of an extra
public service on the carriers without expect-
ing to pay its way. It has been shown con-
clusively that the common carriers were not
being allowed fair compensation for the serv-
ices rendered the Government and all our
boasted perfection and utility of the parcel
post has been at the expense of the carriers.
It is now time for the Government and Con-
gress to deal fairly with the railroads and not
take an unfair advantage of them simply be-
cause they have the power.
* + * *
Even so eminent an authority as Mr. Louis
Brandeis has advised the Interstate Commerce
(St. Paul, Minn., Pioneer Press, June 15,
1914.)
This paper noted a few weeks ago the seri-
ous effort that was being made by the mem-
bers of the Joint Congressional Commission
on Railway Pay to draw up a measure that
would be at once scientific and just both to
the Government and to the railways. They
labored long and hard, completed their task
a fortnight ago and were ready to submit
their bill to Congress, with the supposed sanc-
tion of the Government and the Postmaster
General. But at the last minute Senator
Bourne, Chairman of the Commission, was in-
formed that Postmaster General Burleson in-
sisted that Congressman Moon should be al-
lowed to submit a bill of his own, which hence-
forth was to be known as the Administration
In 62.Sullſe.
When the Moon bill was examined, it re-
quired no very practical eye to see that Mr.
4
Burleson, with or without the knowledge of
the President, was trying to “slip one over”
on the country. -
For it contained several clauses which were
in no way connected with railroad pay, but
were mere contrivances on the part of the
Postmaster General to grab some spoils and
play politics. The Moon bill would reduce
mail pay by one cent a mile as compared with
the joint commission's proposed rate, thus per-
mitting the Post Office Department to save a
neat sum of $6,000,000, which would show up
well in the annual report.
But it did not stop there. It proposed to
subject to re-examination all assistant post-
masters now in the classified service, and pave
the way for the appointment of Democrats.
Again, it would exempt Confederate veterans,
as Union veterans are now exempted, from
the regulation age limit in the appointment
of fourth-class postmasters. This clause has
stirred up the ire of many Congressmen. And
the whole bill is so full of “stratagems and
spoils” that a wise Congress will have nothing
to do with it.
Unpaid Service is Confiscation
(Atlanta, Ga., Constitution, June 30, 1914.)
If the roads are being overpaid, we should
know it from a judicial source. If they are
being underpaid, we should know that, too.
THE GOVERNMENT CANNOT AFFORD TO
TAKE SERVICE FOR NOTHING, EVEN FROM
A RAILROAD. THAT SAVORS TOO MUCH
OF CONFISCATION.
To this end there is no reason why the com-
mission that began the mail probe should
not conclude and make its report to Congress.
Thus, there would be gained an accurate basis
of pay.
It should not be forgotten that while the
addition of the parcel post feature to the
service has vastly increased the demands on
the carriers, their rate of pay has remained
stationary.
We do not believe the House of Representa-
tives would perpetrate a wilful injustice. It
can easily assure equity as between the Gov-
-
ernment and the roads by asking for the re-
port of its own commission. Even Mr. Bran-
deis, whom no one will accuse, of fondness for
railroads, has stated that, in his belief, the
Government is unjust in the matter of pay.
EVEN THE RAILROADS ARE EN-
TITLED TO A SQUARE DEAL
Entitled to Fair Profit
(Chicago, Ill., Tribune, June 18, 1914.)
It is very strange that the findings of a
reputable commission, made after months of
study, should be thrown out of the window
without warning and an executive department
head's conclusions adopted. Such a proceed-
ing calls for explanation, and if Congress
respects itself an explanation will be insisted
upon.
The railroads should be paid not only for
the cost of the service they give, they should
be allowed a fair profit.
The Tribune has no sympathy with the vio-
lent and demagogic spirit shown in some
quarters against the railroads. It took a lead-
ing role in the fighting for railroad regulation.
It has exposed and excoriated the evils com-
mitted in the history of the railroads, high
finance, nepotism, political manipulation,
iniquities and inefficiencies of management.
It has fought and will always fight for a
square deal for the public. But a politician
who expects to get any support from the
Tribune for a play upon prejudice will be
disappointed.
The American people want a square deal
for all. They will approve a square deal for
the railroads which represent the honest in-
vestment of thousands of persons. When they
fail in this spirit the end of the American
republic will be at hand.
This railway mail pay incident should be
explained, and if it is a piece of politics it
should be rebuked. Presumably the mail pay
commission knows what the railroads in fair-
ness should be paid. Congress should see that
they are paid no less.

Department.
There seems to be a general conviction that the rail-
roads are not being treated fairly by the Post Office
—Indianapolis News, June 19, 1914.
Sacrificing the Railroads
(Savannah, Ga., News, June 23, 1914.)
It looks a little as if the Post Office Depart-
ment were bent on making it appear that the
Department is self-sustaining, even if, in order
to do so, it has to be unjust to the railroads.
Recently, at its instigation it is alleged, Rep-
resentative Moon introduced a bill which pro-
vides a new method for paying the railroads
for carrying the mails, a method which the
railroads regard as grossly unfair. It would
reduce the compensation of the railroads about
20 per cent., or approximately $10,000,000 a
year. The railroads contend that they ought
to have at least $15,000,000 more than they
are now getting.
Recently Congress appointed a joint com-
mittee of Congress to investigate the whole
subject of compensating the railroads for
carrying the mails, and the committee has
given a great deal of time to the subject. It
is about ready to make a report. It does
look as if Congress should do nothing in the
matter until it has this report.
The Post Office Department, it is pretty safe
to assume, doesn’t know a great deal about
the cost of carrying the mails. Its aim is to
get the mails carried as cheaply as possible.
Dut the railroads should be given a square
deal. It is reasonable to suppose that the
joint committee is prepared to report a meas-
ure that would be fair as between the people
and the railroads.
The people are more interested in doing
what is right than in the efforts of the Post
Office Department in making a record for keep-
ing the expenses of the Department down.
It is hardly reasonable to suppose that the
joint committee would report in favor of mak-
ing the compensation of the railroads for
carrying the mails greater than it ought to
be. If it has any bias at all it is more likely
to be in favor of the Government.
The Public Directly Concerned
(Norfolk, Va., Virginian Pilot, June 18, 1914.)
But the public is vitally interested in the
question of railway mail compensation, to the
end that it may with the least possible delay
be settled on a scientific basis of fairness to
all interests legitimately concerned.
Without entering into any detailed discus-
sion of the comparative merits of the Moon
bill and the recommendations of the Commis-
Sion, it stands to reason that the findings of
a body which has devoted more than a year
to thorough and painstaking investigation of
the subject are more likely to embody a proper
Solution of the problem sought to be solved
than a bill prepared with more or less haste
by the chairman of a Congressional committee
whose duties are so various and so manifold
as to leave but small opportunity for original
research. w
And, such being the case, it Ought to go
without saying that CONGRESS SHOULD
TAKE NO DEFINITE ACTION IN THE MAT-
TER UNTIL IT HAS THOROUGHLY CONSID-
ERED AND DIGESTED THE COMMISSION'S
REPORT and the evidence upon which the find-
ings therein contained are based.
The problem of railway mail compensation
ought obviously to be approached, not with
any preconceived idea of increasing or cutting
down the rate of pay, but with an eye Single
to so adjusting the whole system to the
changed conditions brought about by the in-
auguration and extension of the parcel post
as to insure even-handed justice alike to the
railroads and the Government, regardless of
whether the result shall entail increased or
diminished payments from the public treasury.
The railroads are entitled to no less, and
the public, as represented by the Government,
has no right to demand any more.
Fair Payment a Matter of Right
(Pittsburgh, Pa., Dispatch, June 14, 1914.)
It is plain that the services of the railroads
in carrying the heavily increased mails are
deserving of fair, though not excessive, pay.
The presumption is quite strong that the non-
partisan commission which has been consider-
ing this subject for a twelve-month and has
reported a bill calculated to save the Govern-
ment $2,000,000 is more likely to produce a
fair measure than the private author of a bill
making a reduction five times greater.
Every reader of the Dispatch knows that
it is not prejudiced in favor of the railroads.
But we believe in fair pay, and where there
has been such an enlargement of service as
that necessitated by the parcel post, it should
be honorably and reasonably paid for.

Government should set the example of being honest
and fair with all its people, and that it is not is evidence
of the low tone of morals prevailing among the politi-
cians who run the Government.
—Jackson, Mich., Patriot, June 13, 1914.
The Proper Car-Mile Rate
(Middletown, N. Y., Argus, June 17, 1914.)
The suggestion of Senator Bourne, a mem-
ber of the Committee on Railway Mail Pay,
that the railroads should be paid a rate for
carrying the mails that would give them the
same net return, per car mile, that they now
receive on an average from passenger traffic,
is a good one.
The mails are carried on passenger trains.
It costs about the same to build, equip and
operate the mail cars as it does the passenger
cars. There would seem to be no sound rea-
son why a carload of mail drawn by the same
engine and under the same conditions should
not be paid for at the same rate as a carload
of passengers. The same conditions of safety,
speed, frequency and regularity are demanded
in the carrying of the mails as govern the
transportation of passengers.
In support of his contention Mr. Bourne
further says:
“The Post Office Department has advanced
the theory that the mail shall not bear its
relative proportion of expensive terminals,
ticket agents, and many other things ap-
pertaining to the passenger service, but I
assert this contention is not sound. The
volume of passenger business depends on
all of those things and they are necessary
to the increase of passenger business, and,
hence, necessary for mail transportation, and
the Government should pay its relative pro-
portion of same.”
It is true that the expense of ticket agents
could not logically be chargeable to carriage
of mails, but this item would be more than
offset by the greater expense of getting the
mails on and off the cars and handling the
mail bags at terminals. It is not the func-
tion of the Post Office Department to reduce the
rate paid the railroads to a point below the
cost of the service. That would amount to
practical confiscation. It would be no benefit
at the expense of the transportation lines of
the country. It would mean simply the shift-
ing of a burden where, perhaps, it could be
less easily borne. And there is so large a
proportion of the population of the country
that draw their daily bread from the opera-
tion of the railroads that anything tending
to cripple these reacts disastrously upon the
people.
Under the circumstances it is greatly to be
desired that the Committee of Congress hav-
ing the adjustment of these mail contracts in
hand will investigate thoroughly all sides of
the question, and find a solution that is equit-
able to the railroads as well as to the people.
Railroads Entitled to a Hearing
(Worcester, Mass., Gazette, June 17, 1914.)
The surmises and conjectures as to whether
the railroads got too much out of former con-
tracts ought not to be made the basis for at-
tempts to square old accounts at this date.
The railroads have the right to be heard.
Congress ought not to make any new rulings
as to rates until the evidence before its joint
committee is presented.
The Gazette has never hesitated to criti-
cise railroads or any other public Service cor-
poration when there appeared to be good cause
for such criticism.
But this fact must always be kept in mind:
Their welfare is the welfare of the public.
They cannot be unjustly hurt without the
injury being passed on to the public. There
is but one safe policy to follow in treating
this railroad situation.
That policy is to treat them with the ut-
most fairness possible and insist in return
that they treat the public with the utmost
fairness. As matters now stand with respect
to the railway mail rates, there appears to
to the people to give them one cent postage
be a wide straying from that policy.
Four Just Complaints Of
the Railroads
(Fall River, Mass., Herald, May 6, 1914.)
Now that the Government is taking so much
interest in getting a fair deal for the public
from railroads, the latter are taking the op-
portunity to point a finger of circumspect
scorn at the Government for its unwillingness
to pay a fair rate for carrying the mails.
The railroads are making out a strong case,
which is getting the general endorsement of
the press. They have formulated four com-
plaints.
Under existing arrangements rates are ad-
justed by weighing the mails once in four
years. The roads ask that this be done more
often, because conditions change rapidly.
At present the roads provide the mail cars,
which are of no other use to them and must
be given over to the postal service. They
think the railway mail should supply its own
C2, I’S.
They are also required to provide terminal
and messenger service for the Government at
their own expense, and they object to the
sliding rates of pay and conditions of service
that are not definite and are affected by the
discretion of the Post Office employes.
The parcel post has lately added new bur-
dens, and under the circumstances they feel
justified in their appeal for better treatment.
TEIE POST OFFICE D EP A R T M E N T
SHOULD NOT BE ALLOWED TO DEPEND
FOR ITS RECORD OF ECONOMY AND
EFFICIENCY UPON WEHAT IT CAN
SQUEEZE OUT OF THE RAILROADS.
If it is going to presume to secure value
in service for the money which the public
pays to the railroads it should enter court
with clean hands, as it were, and see that it
is itself paying the railroads value for the
service which it requires of them.
Government Should Be Honest
(Jackson, Mich., Patriot, June 13, 1914.)
Government ought to be honest and fair
with every person and every interest, but that
is something it never has been, and probably
never will be, because politicians who are not
honest and fair administer the Government. A
corrupt tree will not bring forth good fruit.
Look at the low credit in the markets of
the world of railroad securities, and the ex-
actions of the Government in the matter of
carrying the mails. Presumably the railroads
of the country will receive some compensation,
after awhile, for the additional service imposed
upon them in the matter of the new parcel
post, but that does not help them now when
they are hard pressed financially.
The Government is honest and fair in taking
care of its bonded indebtedness, but practically
that is where its honesty and fairness ends.
The experience of the railroads with the Gov-
ernment in the matter of the mail Service, espe-
cially during the past decade, is discouraging
from any point of view.
Railroads are sorely pinched; the best of
them are not earning money enough to meet
the burdens imposed upon them by the Gov-
ernment and pay the usual dividends to their
stockholders; yet the Government treats them
unfairly and unjustly; and this comes from
the fact that the politicians who run the Gov-
ernment are unfair and unjust.
The plain fact of the case is that in the
last ten years the mail revenues of the big
Eastern roads—the New York Central, the
Pennsylvania, and the Baltimore and Ohio–
have remained practically stationary, while the
amount of business taken care of has doubled
since 1904.
We remember that a former Postmaster
General seriously proposed that the money paid
for carrying the mail should be based on the
actual cost of the service plus 6 per cent.
Every well-informed man knows that no busi-
mess can be successfully conducted on so Small

in full.
While investigation may show the desirability of
amendments in detail, the spirit of the Bourne plan
should not be departed from-Congress should see that
the legitimate expenses of the mail service are paid
—Providence, R. I., Journal, june 19, 1914.

This Government of ours is too great and too power-
ful to saddle the expense of an extra public service on
the carriers without expecting to pay its way.
—Wilmington, N. C., Morning Star, June 19, 1914.
a sum above its actual cost. Business would
go to everlasting Smash on such a basis.
GOVERNMENT SHOULD SET TEIE EX-
AMPLE OF BIFING EIONEST AND FAIR
WITH ALL ITS PEOPLE, AND THAT IT
IS NOT IS EVIDENCE OF THE LOW
TONE OF MORALS PREVAILING AMONG
TEIE POLITICIANS WHO RUN THE GOV-
ERNMENT.
Pay Should Cover Costs and
Fair Profit
(St. Louis, Mo., Republic, June 23, 1914.)
When the facts are ascertained the pay fixed
for the service should be sufficient to cover the
cost and leave a fair profit.
Certainly no one can disagree with that prop-
osition. It is peculiarly the duty of the Gov-
ernment to be circumspect in this matter. It
is the purchaser, but acts for the seller in
fixing the price. -
The railroads have no choice in the matter
except the choice of refusing to carry the
mail, which every one knows they will not do.
All they can do is to curtail train service,
and that hurts the people worse than it hurts
the roads.
If any member of Congress doubts this prop-
osition let him consult the merchants of St.
Louis on the through mail service out of this
city at the present time.
“Payment Plainly Too Low ’’
(New York Journal of Commerce, June 11,
1914.)
The essential thing is the amount of the
pay obtained in the aggregate by the roads.
At present, there can be no doubt that the
payment is wholly inadequate. Good reason
for such a view was advanced by careful stat-
isticians even before the adoption of the par-
cel post legislation, and since that act be-
came law the ground for demanding an ad-
vance in compensation has been greatly en-
The roads are not being paid in anything
like the proportion they would be if they did
a like amount of work for other shippers.
There has been an effort to show that they
were receiving more than they were entitled
to, and Postmaster General Hitchcock made an
investigation some years ago with this same
purpose apparently in view, at the time he
was prosecuting his campaign to make the de-
partment Self-supporting.
The investigation fell flat so far as the
attainment of its chief object was concerned,
although it, like Some other inquiries of similar
kind, seemed to reveal that there was con-
siderable lack of adjustment in the payments
and that some roads received more and others
less than they were entitled to upon a fair
basis of comparison. -
Since Mr. Hitchcock's investigation, other
attempts have been made in parallel directions,
but there has been no material difference in
their results. It is not possible to establish a
“scientific” basis for paying the roads, inas-
much as the same difficulty inheres in such
undertakings that is always encountered when
efforts are made to show what part of railroad
expenditure appertains to freight and what to
passenger traffic, or how it should be divided
between freight of different classes. No good
or workable plan of differentiation in such
matters exists.
It is, however, possible to find out about
how much the roads are charging private in-
dividuals for approximately the same kind and
quality of service that they are rendering the
Government in connection with mail trans-
portation, and to base the compensation upon
that as a foundation.
If it be true that present freights are too
high, the question may be asked why the Gov-
ernment, which has full power over them, has
suffered these rates to go on being exacted.
If they are not too high, as most conserva-
tive men agree they are not, then the ques-
tion recurs why the Government should fix its
own rate of payment below that set for private
persons. There is some reason at first sight
larged.
to believe that the new rates, suggested in
the preliminary statement of the postal pay
commission, have been framed in this way, and
that they will be more helpful in establishing
a good showing for the Post Office Department
than in enabling the railroads to meet the de-
mands upon them for fixed charges. The
equities of the case, as well as the plain dic-
tates of existing conditions, call for a fair
return to the roads for service actually ren-
dered.
“Snap Action ”
Strongly Condemned
- (Macon, Ga., Telegraph, June 30, 1914.)
The Telegraph would not undertake to
criticise the Moon bill or to say that the
railroads ought to receive more pay for their
service unless it knew more about the arrange-
ments between the railroads and the Post Office
Department.
But it does seem to us, and it will so impress
all fair-minded men, that it is not fair to
rush in a bill before Congress virtually setting
aside the report of a special committee before
that committee has had a chance of making
its report.
It would be fair for Congress to have the
report of that committee before taking action
which might be contrary to that which the
report might justify.
This “snap action” seems to bear out the
contention of the railroads that they are not
getting a fair deal from the Post Office Depart-
ment.
As we said in the outset, the main interest
which the public has in the matter is to see
justice done, both to the railroads and the
Government.
If the railroads are getting too little for
hauling the mails they ought to be paid more.
Congress certainly ought to have the benefit
of the special committee's report before action
on the matter is taken. With all of the lights
before them the Congressmen would know bet-
ter how to deal with the question.
No Share in Increased
Postal Receipts
(New York Times, June 23, 1914.)
The Government's postal receipts increased
one-third within the five years before the par-
cel post service was added to the strict mail
service.
This increase would have been impossible
without the help of the railways, and yet the
railways receive nothing more for their Serv-
ices.
The Government income from the post office
increased sixty-three millions, and none of the
increase was allowed to the railways. The
case between the Government and the railways
is essentially the same as the case between
the railways and the shippers.
The railways’ gross has increased and their
net has fallen. The railways are working
harder and getting less money from those who
employ them.
It has been a long and hard fight to convince
the public that this is so, but as regards
shippers in general the case has been won.
The opinion that the railway rates ought to
advance is general. Yet this opinion has not
animated the sentiment of Congress on the
railway mail pay question.
IT IS NOW PROPOSED NOT TEIAT THE
RAILWAY MAIL PAY SHALL BE IN-
CREASED AT ALL, BUT THAT IT SHALL
BE IREDUCED.
Heretofore railway mail pay has been cal-
culated at long intervals, and the railways
carried the growth between calculations for
nothing. They also furnished space in cars
for which they were not paid, and what was
called “side” services were exacted at ter-
minals for nothing.
The Government has gone so far as to admit
that this was wrong, and ought to be changed,
in the interest of the railways and the Gov-
ernment’s sense of fairness. So the Govern-
ment’s lawmakers have wrestled with the sub-
ject and have determined that the railways
should be paid by the distance they carry the
mails and for space which they supply, side
services being abolished. There are to be a

Certainly no fair-minded person will say that the
railroads, like any other employe, are not entitled to a
fair wage for a service performed. *
—Corpus Christi, Tex., Caller, june 20, 1914.
line charge and a terminal charge, and every-
thing is scientific to the last degree.
The railways have issued a statement on
the subject in which they igmore the scientific
advantages of the plan. They think they have
made out a case of underpayment, in fact, and
they are in no mood to accept a theoretical
payment of less.
They calculate that the scientific method
will pay them less by $10,000,000. Senator
Bourne's estimate is a reduction of $2,500,000.
The railways hardly can be blamed for their
indifference to the technique of the calcula-
tion.
Even Mr. Brandeis has said that the postal
service was unremunerative to the railways,
and now the representatives of the people are
preparing to reduce it scientifically.
IN ALL CANDOR, IT MAY BE ASKED
WHETHER THE ANTI-RAILWAY SENTI-
MENT OF CONGRESS IS THE SENTI-
MENT OF THE PEOPLE WHO SO GEN-
ERALLY FAVOR THE ADVANCE OF
RAILWAY RATES.
Railroads Victims of Neglect
(Charlotte, N. C., Observer, April 13, 1914.)
Whether or not any railroads are granted
freight rate increases or similar relief, they
should no longer be denied a readjustment of
the payments made them for carrying the
mails.
They have to carry the mails and at the
Government's price.
They are helpless against being victimized
if such is the Government’s attitude.
THROUGH IN CONSIDERATE N E G L E CT
RATHER THAN WILFUL INTENTION, THEY
ARE BEING VICTIMIZED AT PRESENT.
Congress has compelled them to bear the
brunt of the parcel post experiment, knowing,
if it gave the matter any thought, that the
more successful the parcel post proved the more
money the railroads, with their unchanged com-
pensation, would lose.
The injustice done them as necessary public
servants already in difficulties calls for correc-
tion at the earliest possible date.

The railroads should be paid not only for the cost of
the service they give, they should be allowed a fair profit.
—Chicago, Ill., Tribune, june 18, 1914.
A Forced Service Uncompensated
(The Toledo Times, April 6, 1914.)
The parcel post ruined or 'crippled the ex-
press companies without any compensation to
them. It is now proving itself a heavy bur-
den to the railroads, also without compensation,
at a time when they are under the strictest
Government surveillance and undergoing a
critical period in the history of their develop-
ment.
If this is justice, there can be no such word
as hardship in the English language.
The time has come for the American people
to call upon their representatives to cease an
attitude toward corporations indicating that
they are to be harassed simply because they
are corporations.
It is time to cease wringing unnecessary
taxation from them and treating them as
necessary evils if not public enemies.
The parcel post should be developed to the
utmost, but it should be done with justice
Is Uncle Sam a Fair Master
(Boston, Mass., Traveler and Evening Herald,
June 25, 1914.)
Uncle Sam is getting a pretty poor repu-
tation as an employer among those whose busi-
mess it is to haul the mails. -
Cries of distress have come from the rail-
roads which, while busy dodging the strong
right arm of the Interstate Commerce Com-
mission, have felt the pilfering hand of the
Post Office Department in their pockets. They
are not satisfied even with the rates that have
been revised to allow for the tremendous in-
crease in the mail business since the establish-
ment of the parcel post.
Through the legal talent they are able to
command the railroads can speak for them-
Selves. The great army of parcel post dis-
tributors on city and rural routes must plod
along under their burdens in order that the
postal establishment may make claims of
economy of administration.
A nearby Massachusetts postmaster recently
to all.
threw up his job because the allowance for

partment down.
The people are more interested in doing what is right
than in the efforts of the Post Office Department in
making a record for keeping the expenses of the De-
—Savannah, Ga., News, June 22, 1914.
&
transportation of mail between the railroad
station and the depot was so miserly. The
appropriation for hiring horses and carriages
for the parcel post service ran out and even
the ramshackle equipments that the Govern-
ment employed have been laid aside. Word
comes from the Pacific northwcºst that star
route carriers are quitting by scores because
they have been made into freight caravans.
Having established the parcel post it is in-
cumbent upon Congress to provide sufficient
money for its operation. The niggardly al-
lowance for horse hire and the unbusiness-like
way of making contracts has been nothing
short of disgraceful.
Uncle Sam need not be a lavish paymaster,
but he should be able to maintain the self-
respect of the country.
Railroads Properly Protesting
(St. Louis, Mo., Star, June 16, 1914.)
The railroads are properly protesting against
the proposed pushing of the Moon bill to regu-
late railway mail pay at the present time.
There is probably no subject, not even that of
tariff schedules, which is less easily under-
stood by the ordinary member of Congress
than that of the proper compensation for
carrying the mails.
In order to get at the bottom of this com-
plicated matter, a joint committee of the
House and Senate has been investigating it
for some time and is expected to make a re-
port and recommendations before long. Action
before that report is made is unwise, as it
would be sure to fall short of an accurate and
equitable adjustment. Either the railroads
would be treated unfairly or the Government
would be paying too much. -
It goes without saying that the roads are
entitled to pay for what they do on the same
general basis as other handlers of Government
business. It also should go without saying
that the Government should handle the trans-
portation of the mails in the most systematic
and economical manner possible and render
proper service.
Be Fair
(Corpus Christi, Tew, Caller, June 20, 1914.)
Railroads of the United States are claim-
ing that the business of the parcel post has
increased to such an appreciable extent that
they are clearly entitled to increased pay for
hauling the mails of Uncle Sam.
The railroads have gone to great expense
and trouble in an attempt to press their case
exhaustively to the Joint Congressional Com-
mittee that is now investigating this subject.
They have claimed and have attempted to
prove that the railroads are very much under-
paid for carrying the mails. The railroads
feel that the joint committee has gone into
the matter so thoroughly and is itself so un-
biased that they can rely upon the justice of
its findings.
Certainly no fair-minded person will say
that the railroads, like any other employe, are
not entitled to a fair wage for a service per-
formed. If it be true that the railway mail
carriage charges are not fair, then it is clearly
a duty to remedy such conditions. Be fair!

of confiscation.
The Government cannot afford to take service for
nothing, even from a railroad. That savors too much
—Atlanta, Ga., Constitution, June 20, 1914.
FEB 2 1915

r—
“The duty of our Committee is to determine, as far
as it is possible to determine, what is a JUST compen-
sation to be paid to the railroads for the carriage of
mail.
“The apparent aim of the Post Office Department
has been to evolve a method by which the railroad
mail pay could be REDUCED.”
—Former Senator Jonatham Bourne, Jr., Chairman of the
Joint Congressional Committee on Railway Mail Pay.
Should the Railroads Carry
the Mails at a Loss?
For two years past a Joint Committee of Congress
has been inquiring what the railroads ought, in all fairness,
to be paid for carrying the mails.
Without awaiting the report of that committee, which
is expected shortly, Congressman Moon, chairman of the
House of Representatives Committee on Post Offices and
Post Roads, introduced a bill, the effect of which, he says
in his report, would be to reduce railway mail pay this year
about $3,000,000. *
Since the introduction of the Moon bill, former Senator
Jonathan Bourne, Jr., chairman of the Joint Congressional
Committee, has given to the press five statements in which
he expressed his views personally, but not in his official
capacity as committee chairman. Senator Bourne showed:
1. That the aim of the Joint Congressional Com-
mittee has at all times been to fix just rates for trans-
porting the mails, fair alike to the carriers and the public.
2. That the apparent aim of the Moon bill is to
impose lower rates, wholly regardless of their fairness.
3. That the Post Office Department, which stands
behind the Moon bill, has shown a similar spirit through-
out the mail pay controversy.
4. That the rates proposed by the Moon bill are
not merely too low, they are absolutely confiscatory.
5. That a rate theory which considers only oper-
ating costs, and allows nothing for capital costs, is inde-
fensible.
6. That equally wrong is the theory that because
carrying the mails is a public service it should be per-
formed at a loss.
Senator Bourne's five statements to the press are here-
with reprinted in full, not as expressing the views of the
railroads, but in order that the public may be kept in-
formed upon every phase of this important question.
COMMITTEE ON RAILWAY MAIL PAY
RALPH PETERS, Chairman.
Position of the Congressional Committee
Senator Bourne’s First Statement *

The Joint Congressional Com-
mittee proposes to remedy the
injustice of the quadrennial weigh-
ings of the mail and of the unpaid
“side" and “transfer” services,
and to devise a scientific method
which will assure fair payment to
the railways for carrying the mails.
“Several newspaper clippings have
been sent me purporting to represent the
conclusions of the Joint Congressional
Committee on Railway Mail Pay, which,
because of the extreme technicality of the
Subject, have clearly misrepresented the
views now held by the Committee.
“While true that the Committee has not
finally determined as to all its conclusions
regarding this extremely intricate subject,
I believe it desirable that a statement be
made to the people, through the press,
briefly indicating the fundamentals on
which the Committee plan is based and
stating the suggested rates of pay that the
Committee now has under consideration.
“The plan adopts space as the measure
of the service rendered. At present the
compensation is based partially on space
and partially on weight, about 90 per
cent. Of the payments made to the rail-
roads being determined by weight.
“The average weight is ascertained by
quadrennial weighings at an annual cost
of approximately $400,000 to the Govern-
ment. The country is divided into four
divisions. A weighing is made in each
division every four years.
“The postal revenues have increased on
an average 7 per cent. per annum the
past ten years. There is no data on which
to determine what the increase in weight
has been.
An Injustice to the Railroads
“If the increase in weight of the mails
transported by the railroads has been 7
2
per cent., as the increase in Government
revenue from postal receipts has been, on
an average, for the last ten years, then
under a quadrennial weighing system every
railroad company carries 14 per cent. of the
Government mail for a period of four years
and receives no compensation therefor.
This is antiquated, unjust and ridiculous.
Under our Committee’s plan this is all
rectified.
“There is no weighing, hence no cost to
the Government in ascertainment. Four
units are adopted—namely, a sixty-foot
car, a thirty-foot car, a fifteen-foot car
and pouch mail.
“Under the weighing system, padding
of mails is possible during a weighing
period. Some concrete instances have
been developed where it was attempted.
Under the suggested plan there is no
possibility of any dishonesty.
“The Government is absolutely pro-
tected, as the sole right of authorization
of car space in any of the four units above
designated rests entirely with the Post-
master General, and the railroad receives
a credit the instant it complies with the
authorization of the Postmaster General.
The system is standardized to the benefit
of the Government and the railroad.
“A new feature has been introduced in
rate making. Two charges are provided
for: A terminal charge which is fixed
regardless of the distance traveled, grad-
uated according to the amount of space
authorized in the car by the Postmaster
General and constructed scientifically
upon the base of the switching and clean-
ing costs in the movement of the car.
“The second charge is the line charge
upon a car-mile basis. By the segrega-
tion of the terminal and of the line
charges there is created a plan which
equalizes the long and short haul; equal-
izes the payment for service rendered be-
tween the short line and the trunk lines
and applies the wholesale and retail prin-
The Proposed Basis of Rates
“The following terminal rates for a
round trip are now under consideration
by the Committee :
Tor a 60-foot R. P. O. and storage car.. $8.50
For a 30-foot apartment car 5.50
For a 15-foot apartment car . . . . . . . . . . . 4.20
For every car carrying closed pouch mail 1.20
“The line rates to be paid the railroads
for each mile that the car travels under
its authorization are:
For 60-foot R. P. O. and storage cars. . . . 21c
For 30-foot apartment cars . . . . . . . . . . . . 11C
For 15-foot apartment cars . . . . . . . . . . . . 6C
I'or car carrying closed pouch mail . . . . . . 3C
“Under our plan the railroads are
rightly relieved of or compensated for
what is known as ‘side’ and ‘transfer”
service.
“It is no more reasonable or just to com-
pel the railroads to deliver mail to a post
Office after it reaches their terminals than
for the Interstate Commerce Commission
to require the railroads to furnish taxicabs
free of cost to take passengers to their
homes on arrival at their destination depots,
Or motor trucks to receive freight at the
freight terminals for delivery to the con-
signees at the expense of the railroads.
“There are a number of other strong
features in the Joint Committee’s sug-
gested plan which will be elaborated upon
in its report to be made to Congress.
“The aim of the Commission is to work
out a sound, simple and scientific plan to
Substitute for the present antiquated, in-
tricate and unsound one. This, the Com-
mittee feels, has been accomplished.
“The goal has been the determination,
demonstration and recommendation of just
rates rather than the raising or lowering
the amount of railway mail pay. This we
believe will shortly be accomplished. To
expect justice among its citizens, the Gov-
ernment must do justice to its citizens.”
ciple.
× × xk ::
What the Mail Service Should Yield
Senator Bourne’s Second Statement

Railway mail pay should be
equally remunerative, per unit of
service, as passenger receipts. The
mail service participates fully in
the benefits, and therefore should
bear its share of the costs of all
the facilities of the entire passenger
traffic.
“I am thoroughly convinced that for
carrying the mails the railroads should be
paid a rate that will give them the same re-
turns, per car - mile, that they get On
an average from p as senger traffic.
I am speaking entirely for myself and
in no manner for the Joint Committee
on Railway Mail Pay. My conclusions
have been reached after many months’
study of the subject.
“The desiderata in mail transportation
by railroads are frequency, regularity,
speed and safety. Mail is carried almost
entirely on passenger trains. The volume
of passenger traffic determines and pri-
marily controls the frequency, speed and
regularity, and to a great extent the
safety, of railroad passenger transporta-
tion. Hence, everything that is necessary
for increased volume of passenger traffic
is a relatively corresponding benefit to
the mail in its transportation over the
railroads.
“The Post Office Department has ad-
vanced the theory that the mail shall not
bear its relative proportion of expensive
terminals, ticket agents and many other
things appertaining to the passenger serv-
ice, but I assert this contention is not
Sound. The volume of passenger business
depends on all of these things, and they
are necessary to the increase of passenger
business and, hence, necessary for mail
transportation, and the Government
should pay its relative proportion of same.
An Inevitable Conclusion
“With these premises and deductions I
again assert that my own conviction is
that the Government should at least pay
a car-mile rate equivalent to the average
passenger car-mile rate for the last five
years, assuming the passenger car-mile
rate to be a just rate—namely, a little
over 25 cents per car-mile. If my premises
are sound, my deductions are certainly
syllogistical.
“The duty of our Committee is to deter-
mine, as far as it is possible to determine,
what is a just compensation to be paid to the
railroads for the carriage of mail.
“The apparent aim of the Post Office
Department has been to evolve a method
by which the railroad mail pay could be
reduced.
“Government is formed for the protec-
tion of its citizens and the preservation of
their personal and property rights. It
Ought to set an example for all the people
and should, therefore, itself do justice to
each individual in society.”

a deficit?
Are you not more interested in receiving a thoroughly
efficient mail service than in reading in the newspapers
that the Post Office Department has apparently escaped
How Postal Authorities Changed Theories
Senator Bourne’s Third Statement

Four plans in four years, all
with one object—not fair pay but
lower pay ! No reason to suppose
that the Moon bill is the final word
of the Post Office Department.
“Neither the Post Office nor any other
Department in our Government should be
intrusted with needless discretionary
power. The function of an administra-
tive branch of government is to administer
law, not to legislate or enact law. A dura-
tive government must be a government of
law and not of rule and regulation.
“During the past four years the Post Of-
fice Department has suggested to Congress
four plans for readjusting railway mail pay,
all similar in the evident determination to
reduce mail pay to railroads and se-
cure more discretionary and autocratic
powers for the Department, but all radi-
cally different in their construction and
possibility of practical administration.
“On August 12, 1911, then Postmaster
General Hitchcock recommended to Con-
gress a bill fixing railroad mail pay on
the basis of space, the compensation being
determined by an apportionment by the
Department of the railroad cost of oper-
ation and taxes plus 6 per cent. thereof as
a profit. For eighteen months the De-
partment urged the adoption of this plan,
asserting it to be ‘scientific and business-
like.’
“It finally awakened to the realization
that rights of way, road beds, tracks, equip-
ment and terminals were necessary pre-
requisites for the Operation of mail cars,
and then it suggested a supplemental
bill conceding that in addition to the 6
per cent. profit on the mail’s apportioned
cost of operation and taxes, a reasonable
employed and that the Interstate Com-
merce Commission, rather than the Post
Office Department, should determine said
apportionments of cost; and further con-
ceded that the law should specify that
mail Service should be charged with the
maximum space authorized in either
direction.
Not A Practicable System
“The Department insisted that this sec-
Ond suggested plan was scientifically
sound. Yet this plan would require a different
rate for each of the 795 railroads carrying
mail. The apportionment of the items of
cost would necessitate the adoption of many
arbitraries and the present lack of a uniform
Scientific method of cost apportionment
in railroading would make the plan not only
undesirable but practically unadministrable.
“Recognition of the vital defects of its
second plan caused the Department on
February 12, 1914, to abandon its scheme
for ascertainment and apportionment of
operating and capital costs and to pro-
pose a third plan embodying some of the
features of a plan suggested by Mr. M. O.
Ilorenz, Associate Statistician of the In-
terstate Commerce Commission. - -
“This third suggested bill remained in
favor with the Department for only four
months, when it again shifted its position
by securing the introduction in Congress
of what is known as the Moon bill, adopting
some of the fundamental features of the
Lorenz suggestion, but arbitrarily reducing
rates and insisting on unnecessary discre-
tionary and autocratic Departmental power.
“Judging the future by the past, it may
be reasonably expected that before Con-
gress shall have time to act upon the De-
partment’s fourth suggested bill, the De-
partment itself will again shift its posi-
tion, repudiate its work and propose some
return should be allowed on the capital
new plan for consideration and adoption.
Why the Moon Bill Rates Are Far TOO LOw
Senator Bourne’s Fourth Statement

The Post Office Department's
own figures show the rates of pay
proposed by the Moon bill to be
confiscatory, since they fail to cover
the interest on capital. A like
basis for all rates would speedily
bankrupt every railroad.
“In its insistent efforts to reduce rail-
way mail pay the Post Office Department
has attempted to dictate to Congress rates
which, if adopted, would be confiscatory.
“House Bill 17042, introduced by Mr.
Moon, Chairman of the House Committee
on Post Office and Post Roads, was, I am
informed, prepared by officials of the Post
Office Department and introduced by Mr.
Moon at the request of the Postmaster
General.
“Under that bill the average revenue to
the railroads would be less than 21.8 cents
for hauling a 60-foot mail car one mile.
I assert that this rate is confiscatory. I
realize the responsibility of making such an
assertion, but its justification lies in the
Post Office Department’s own figures.
“The Department spent several years in
an attempted elaborate investigation of
railroad expenses and car space. It pro-
pounded over 140 interrogatories to the
795 railroads carrying mail. The rail-
roads spent over $250,000 in securing the
information asked for, and it cost the
Government $19,500 to compile, tabulate
and present such information in what is
known as House Document No. 105, 62d
Congress, 1st Session. According to
Table 7 of that document the operating
expenses and taxes alone amounted to
3.08 mills per mail car-foot mile, or 18.48
cents for hauling a 60-foot mail car one
mile. This excludes the advertising and
other traffic expenses with which the De-
partment claimed the mail should not be
burdened. The margin between this 18.48
cents and the less than 21.8 cents allowed in
the Departmental bill, is so small that if sim-
ilarly unprofitable rates were made on all
railroad traffic, the roads must necessarily
go into bankruptcy, because there must be
a sufficient allowance for capital charges.
What the Allowance Should Be
“According to the Statistics of Rail-
ways in the United States for 1911, pub-
lished by the Interstate Commerce Com-
mission, operating expenses and taxes were
72.53 per cent. of the operating révenues.
At the same ratio, 7 cents, instead of the
3.32 cents allowed under the Department
rates, would have to be added to the 18.48
cents to allow for capital charges, as the
18.48 cents covers only operating ex-
penses and taxes.
“In other words, 25.48 cents would have
to be paid the railroads for hauling a 60-foot
car one mile to yield the railroads from the
mail business the average rate of profit now
realized on all railroad traffic, both freight
and passenger taken together.
“This incident shows the danger of
accepting and acting upon the recom-
mendations of the Departments. It also
illustrates the necessity for checking the
present trend toward the initiation and
control of legislation by officers of the ad-
ministrative branch of government.”

“A conspicuous example of false economy has been
found in the railway mail pay situation.”
—Birmingham, Ala., Age Herald, June 21, 1914.
Bureaucracy Run Mad
Senator Bourne’s Fifth Statement
“In its persistent efforts to secure dic-
tatorial power, the Post Office Depart-
ment has broken all records.
“The Department bill, H. R. 17042,
provides that ‘not exceeding certain rates
shall be paid to steam railroads for trans-
portation of the mail. The same bill also
contains a clause compelling the railroads
to carry mail.
“It is claimed that “not exceeding’ is
but a continuance of existing law, but
heretofore the railroads have not been
compelled by law to carry mail. They are
Supposed to have accepted the rates as a
Voluntary act which in itself was assumed
to be sufficient guarantee that rates will
not be too low and it was only necessary
for Congress to fix maximum rates.
“But this assumption was not sound, as
a railroad would hardly dare to refuse
to carry mail because of irritation result-
ant from Such action in the community
in which the road operates.
“The Interstate Commerce Commission
is now authorized to fix maximum freight
rates, it being left to the railroads to fix
the minimum. It would be considered
preposterous that the Commission should
fix the maximum rates at which railroads
must carry freight and leave the shippers
to fix the minimum.
“Yet this is the very thing that the
Post Office Department proposes for mail
pay in the Departmental bill. Congress
is to fix the maximum rates and the
shipper—the Post Office Department—is
to fix the minimum rates, and the rail-
roads are to be compelled to carry the
mail. This is a proposition without
parallel in the history of Tate regulation.
It is Bureaucracy run mad.”


Unfair Competition by the
Government
Speakers at the recent convention of the
wholesale Grocers’ Association at Minne-
apolis protested against the use made of the
parcel post in the distribution of merchan-
dise at less than cost, and one of them said
that he did not believe it was fair competi-
tion for the Government to grant a subsidy
through the Post Office Department in
favor of certain kinds of business.
Certainly the Government engages in
unfair competition with the express com-
panies when it carries the parcel post at a
loss, and in the matter of railway mail pay
it has been less than honest.
—Rochester, N. Y., Post-Express,
July 3, 1914.
Railway Mail Pay Should
Yield a Fair Profit
There is pending before Congress a law
regulating the amount to be paid to the
railroads for carrying the mails. It is
charged on the part of the railroads, with
considerable force, that the bill, known as
the Moon Bill, disregards the results of a
prolonged investigation by a commission
appointed by Congress, and that it will
result in underpaying the roads.
This is a matter which can be determined
by a candid examination of the data sub-
mitted by the Department, the roads and
the commission. When the facts are ascer-
tained the pay fixed for the service should
be sufficient to cover the cost and leave a
fair profit. Certainly no one can disagree
with that proposition.
—St. Louis, Mo., Republic,
June 23, 1914.
“Squeezing the Mail Carriers”
Reprinted from the Philadelphia Record, June II, 1914
Former Senator Bourne, who is chair-
man of the Joint Congressional Com-
mittee on Railway Mail Pay, is quite right
in characterizing the pending Moon bill
as a most extraordinary measure.
It is claimed for the bill that, in au-
thorizing the payment of rates “not ex-
ceeding” a scale therein fixed, it merely
follows the existing law; but there is a
very substantial difference between the
existing regulations and their proposed
substitutes.
The Moon bill would make the trans-
portation of the mails by the railroads
compulsory.
To be sure, the railroads have not here-
tofore been absolutely free to take the
Government’s business or leave it. The
compulsion, if not legal, was moral. No
common carrier would have cared to ex-
pose itself to the hostile public criticism
which would have been aroused by a re-
fusal to provide mail transportation fa-
cilities.
But, theoretically at least, the railroads
under the old law enjoyed the liberty of
contract. If the rates received by them
for transportation fell below the maxi-
mum prescribed by Congress it could be
assumed that the remuneration was sat-
isfactory to them, for the statute left it
to the volition of the carrier to transport
at a price less than the maximum fixed.
The Moon bill enlarges “the authority of
the Post Office Department by making
transportation compulsory, in addition to
giving the Postmaster General authority to
say what the rates ought to be.
This would be equivalent to a law per-
mitting shippers to prescribe minimum
freight rates on their own shipments after
Congress or the State Legislatures or ad-
ministrative commissions had established
maximum rates.
A sack of mail is freight, and the Post
Office Department to all intents and pur-
poses is a shipper.
Privately owned railroads are run for
profit as well as for public convenience,
and, from a commercial point of view,
traffic that can bear a relatively high rate
(and postal traffic can) ought to bear it
so that other commodities, which must
be moved at unremunerative rates or not
at all, may be transported to their mar-
kets.
If the regulation of the rates for trans-
porting the enormously greater volume of
ordinary freight can be safely left to the
Interstate Commerce Commission, why
could not that body be intrusted with the
duty of finding fair rates for the lesser
quantity of postal freight?
A law which would permit the Post-
master General to cite the railroads be-
fore the Interstate Commerce Commis-
sion, to adjust from time to time the rates
of mail transportation, would answer the
requirements of the case far better than
any statutory schedule of railway mail
pay. -

“The railroads are part and parcel of our life, and we
cannot be unjust to them and maintain the fair dealing
which should be characteristic of an honest people.”
—Charleston, W. Va., Gazette, june 25, 1914.

“The mails are freight, and they are becoming more
SO as the weight of the parcel post increases. . . . The
Government is a shipper, and no other shipper demands
the right to fix his own rates.”
The Railroads Appeal to
Congress for Fair Treatment
Congressman Moon, Chairman of the House of Rep-
resentatives Committee on Post Offices and Post Roads,
has introduced a bill (H. R. 17042) the effect of which
will be to reduce the payment to the railroads for carrying
the mails by many million dollars annually.
Immediately upon the bill's introduction, representa-
tives of the railroads asked for a public hearing on the new
bill, before it should be acted on. That request was not
granted.
The Joint Congressional (bi-partisan) Committee, of
which Ex-Senator Jonathan Bourne, Jr., is Chairman, which
had for two years been making a thorough investigation of
this subject, had announced its intention shortly to submit
a report.
The Railroad Committee, through its Chairman, Mr.
Ralph Peters, President of the Long Island Railroad,
has accordingly addressed an open letter to Congressman
Moon, setting forth the railroads' view that the proposed
bill is unfair and unwarranted. That letter follows:
The Plea of the Railroads
for Fair Play
NEW YORK, July 1, 1914.
HON. JoHN A. Moon,
Chairman, Committee on the Post
Office and Post Roads, House of
Representatives, Washington, D. C.
My Dear Sir: The Committee on Rail-
way Mail Pay, representing two hundred
and sixty-four railroads, operating 218,-
000 miles of line in the United States,
has been urged by the presidents and
other executive officers of the railroads
throughout the country to appeal to you,
and through you to the representatives of
the people in Congress assembled, for
fair treatment in fixing any basis of com-
pensation for the handling of the mails.
A personal effort was made by mem-
bers of this committee to secure from you
a hearing on the bill recently introduced
in Congress by your committee, but with-
out success; therefore, we submit this
open letter.
We desire to protest against the method
of paying the railroads for the valuable
Service rendered the Government, as con-
templated in House Bill No. 17042.
:}: :k ::: :::
Our first and logical reason for making
this protest to you is that this question
is now pending before a Joint Congres-
sional Committee, which has had the
whole subject under most careful con-
sideration, continuously, for more than
two years, and has announced that it is
about ready to make its report.
The introduction of bill No. 17042, in
effect, forestalls the report of this Joint
Committee, and commits Congress before
the results of that investigation are made
known.
The Joint Committee of Congress is a
bi-partisan body, and the Post Office De-
partment has had the fullest opportunity
of presenting the views of its officials be-
fore it, many of them having appeared
as witnesses.
The railroad companies have been
called upon at great expense to furnish
complete detailed information regarding
their mail service, and the evidence in-
troduced, occupying twelve volumes, is
thought to embody the most complete and
exhaustive testimony that has ever been
collected on the subject.
The passage of House Bill No. 17042
would practically ignore the action of
your own Joint Committee.
:: ::: ::: :::
The Post Office Department’s
Four Bills
This is the fourth bill which the
Post Office Department has framed and
recommended on this subject within the
past two years, each differing materially
from the others.
Its first notable announcement was that,
upon the basis of the statistics which it
had published, the railroads of the coun-
try were overpaid $9,000,000 per year
for carrying the mails, a conclusion
reached by excluding from the considera-
tion of cost any return upon the capital
used and employed by the companies in
conducting the mail service.
So glaring was this error that the Depart-
ment was compelled to rectify it and
modify its claim of overpayment down
to $221,000 in testimony before the Joint
Congressional Committee.
The proposed bill Will, in our opinion,
reduce the compensation of the railroads
for carrying the mails several million
dollars annually, while we are now under-
paid at least $15,000,000 per year for the
service we render.
The compensation for carrying the
mails on the basis of weight and distance
has shown a large growth, due to the re-
weighing in two sections of the country.
The appropriation bill, adopted in
March, 1914, provides for this growth,
but House Bill No. 17042 makes a basis
that will produce several million dollars
less pay than has been provided in that
appropriation bill.
:: :: :}: ::
Proposed Inconsistency
There are two sections of the country
where the mails have not been weighed
since the parcel post was introduced, and
it is inconsistent to make a new basis of
pay that will not fully provide for the large
growth of the mails in these sections. Fur-
thermore, there has been a very large in-
crease in the weights of mail in the first
section that was weighed after the inaugu-
ration of the parcel post, and no allow-
ance has been made for that service.
If the proposed new basis of pay has
been figured out at rates that will pro-
duce approximately the compensation paid
under the weight basis, the rates should
not be adopted until the weights and
compensation for same have been ascer-
tained for the entire country by a simul-
taneous weighing in all sections.
:: :k :k :k
When the parcel post legislation was
enacted and the railroads petitioned the
Department for a weighing, so that they
might secure full compensation for car-
rying this greatly added volume of traffic
on their passenger trains, the answer
given by the Department was: “Wait until
the Congressional Committee makes its
report.” #
The Railroad Companies do not favor
the adoption of any space basis for as-
certaining what is proper compensation
for carrying the mails.
:}: :k ::: :::
THE MAILS ARE FREIGHT, AND
MORE SO AS THE WEIGHT OF THE
PARCEL POST INCREASES AND THE
GOVERNMENT ENTERS MORE AND
MORE INTO COMPETITION WITH
THE RAILROADS IN THE CARRIAGE
OF COMMERCIAL FREIGHT.
:k Sk :}; >}:
Space in cars under complete control
of officials of the Post Office Department
as a basis of payment for this service is
an anomaly; it will not fit your mail
Service; and, in our opinion, it will tend
to the reduction of facilities and general
inefficiency.
In this service the Government is a
shipper, and no other shipper demands
the right to fix his own rates. It uses
the facilities of the Companies in com-
peting with their own service, and in view
of the published intimations of greatly
added revenue from the carriage of parcel
post, common fairness would seem to de-
mand that the Railroad Companies should
be permitted to share in the increased rev-
enues that the Government collects from
the people for the use of these facilities.
:k :: :: :}:
The Sound Policy
The wiser policy,
will consist in
it seems to us,
modifications and im-
provements of the existing system,
based, as that system is, upon the
method of compensating railroads for
carrying freight that is universally recog-
nized as sound; such modifications to be
an annual weighing of the mails, pay-
ment for the use and haulage of apart-
ment post office cars, relief from the mes-
senger Service, and other reforms.
We have no means of knowing what
the report of the Joint Congressional
, Committee will be, nor what basis of mail
pay it will recommend, but we feel that
we can nevertheless consistently urge that
no action upon this very important sub-
THEY ARE BECOMING MORE AND
ject, involving such radical departures
gº tº gº tº
g ... •º
from existing law and practice, be taken
without at least having the complete tes-
timony giving the reasons for the position
taken by the railroads, as well as the con-
clusions of your Joint Committee laid be-
fore Congress.
Knowing that Congress appreciates the
fact that the railroads are a vital and
necessary part of the life and prosperity
of the country, and, therefore, entitled to
fair treatment and full compensation for
the valuable and indispensable services
they perform for the people, we, the op-
erating men, who are responsible for the
daily workings of these great arteries of
traffic, respectfully ask that you consider
their side of the question, as well as that
of the Post Office Department, before you
reach your conclusions. The people are
fair, and we believe their representatives
desire to be so.
:}; :: :k :k
HOUSE, BILL No. 17042 IS NOT FAIR.
Respectfully,
COMMITTTEE ON RAILWAY MAIL PAY,
Representing 264 railroads operating 218,000
miles of line in the United States.
By R ALPH PETERS,
Chairman.

becoming evident.”
“It has been too much the fashion in the past to
assume that whatever was required of a railroad cost
nobody anything. The error of that notion is fast
—HON. CHARLES A. PROUTY, Director of Valuation, Interstate
Commerce Commission, in Address at Convention of National
Railway Commissioners, Washington, D. C., November 18, 1914.
Shipping Gold by Parcel Post
at the Expense of the
Railroads
Since the outbreak of war in Europe the Government has shipped
nearly 200 tons of gold, worth about $99,000,000, from Philadelphia to
New York without cost for railroad transportation.
This was accomplished by sending the gold as parcel post.
Rail-
way mail pay provides compensation only for carrying the ordinary
mail and includes no specific allowance for such extraordinary service
as handling gold transfers for the Treasury Department.
The postal officials nevertheless took the
ground that the gold must be carried, with-
out additional payment, under the four-
year contract for transporting the regular
mails.
This contract, in the case of the railroad
over which the Post Office Department
routed the gold, called for fixed rates of
pay, based on the mail carried in the
Spring of 1913, when the parcel post was
in its infancy and gold shipments had
never been thought of as coming within
its legitimate scope.
The gold was packed in canvas sacks,
each containing $5000 and weighing a
trifle under 19 pounds. Nineteen thou-
sand eight hundred such sacks were carried
between the two cities. The postage
required, at the ordinary parcel post rates,
of funds from one Department of the
Government to another.
Had the gold been shipped by express,
as has been the practice heretofore, the
railroad would have participated in the
payments made for the service.
The largest single transfer of the gold
consisted of $50,000,000 in double eagles
from the Philadelphia Mint. It
divided into three installments, sent on as
W 3 S
many successive days.
To convey these 100 tons of treasure 91
miles to New York, the railroad furnished,
altogether, four special cars.
precaution, requested by the postal author-
ities, the cars were detached from the
regular trains some miles from destination
and hauled the remainder of the way by
special locomotives.
As an extra
was $4554, but this was merely a shifting
Round trip transportation was provided
for more than 100 postal clerks and inspec-
tors who accompanied the gold as guards
and for each of whom the railway Com-
pany was obliged to assume the same
liability as for a passenger paying full fare.
All of this was done without any com—
pensation to the railroad beyond the regu-
lar monthly payment for the routine mail
service.
* +
Six subsequent gold shipments over the
same route amounted to $49,000,000. In
similar manner, $5,000,000 was sent from
New York to Boston and $840,000 from
New York to Ottawa, bringing the total
gold shipped by the Government through
the parcel post, and carried at the railroads'
expense, to $104,840,000.
* *
A Practical Example of Railroad Loss
Through Misuse of the Parcel Post
The general merchant of a West Vir-
ginia village, who happened also to be a
fourth-class postmaster, recently received
an order for four barrels of flour from a
customer living 26 miles away.
Being a keen business man, the merchant
sold himself $11.69 worth of postage stamps,
loaded the flour into 32 sacks and shipped
it by parcel post. Then, having a claim on
the Government for the face value of
stamps cancelled through his office—such
being the method of paying fourth-class
postmasters—he refunded to himself, as
storekeeper, the money he had paid him-
self, as postmaster, and so was out nothing
for delivery costs.
The interesting question arises, who paid
for the transportation of the flour
The answer is that no one did. The
railroad by which the flour was shipped lost
the freight revenue it would otherwise have
earned and was obliged to haul the 32 sacks
as mail, without supplementary payment,
% +
under its four-year contract, made in 1913,
for carrying the ordinary mails.
The Government lost nothing by the
transaction because it paid nothing for the
additional service.
It is recorded that in unloading the flour
at destination the train was delayed ten
minutes, for which it may well be imagined
that the passengers, not understanding the
cause, blamed the railroad.
It would have been preferable, as far as
the railroad and its patrons were concerned,
to have hauled the flour in a freight train
and cancelled the charges, but the law would
not permit this. The flour having been
( (. º y y *
mailed,” there was no choice but to carry
it, like other mail, in a passenger train.
There are 50,000 fourth-class postmas-
ters in the United States, many of them
country storekeepers. Each of them, it
would appear, possesses the equivalent of a
frank for freight or express service via the
parcel post.
+ +

for hauling the mails.
after month.
It ought to be apparent to anyone that there is much truth
in the arguments of the railways respecting the matter of pay
The immense volume of traffic imposed
by the introduction of the parcel post ought to be paid for. No
private business would tolerate for twenty-four hours a
condition which the Federal Government ignores month
—Rochester, N. Y., Herald, November 26, 1914
One Case Where the Parcel Post Was
Carried at a Profit
y
Many of the “star route contractors’
—private individuals carrying the mails on
routes not covered by rail or steamboat
service—have been overwhelmed by the
parcel post, which they, like the railroads,
have been obliged to carry under their old
contracts without additional payment. In-
stances of bankruptcy have been reported,
resulting from the expense of motor cars
and extra teams required to handle the
great increase in the volume of heavy mail.
Some, however, were lucky enough to
have contracts calling for payment by
actual weight, and the ingenious among
them have turned the situation to good
a CCOunt.
Out in Arizona one of these carriers
started a grain shipping business over his
own mail route, which extends from a rail-
road station to a town 30 miles distant.
% +
He began with a venture in barley, pur-
chasing 10,000 pounds at a point 340 miles
up the railroad and shipping it by parcel
post to the town at the end of his route, a
total distance of 370 miles. The price of
the barley, per 100 pounds, was 95 cents
and the postage $1.08, making the gross
cost, delivered, $2.03.
But, for the 30-mile stretch over which
the grain shipper, himself, carried the
mail, the Government paid him $2.25 per
100 pounds, so that at destination each
hundredweight of barley stood him, net, 22
cents less than nothing. He recouped
the first cost of the entire 10,000 pounds,
with a bonus of $22.
* * * *
The railroad which carried the grain
340 out of the 370 miles received nothing
beyond its fixed mail pay.
% +
Does the Government Owe the Railroads
Observance of the Golden Rule?
From the Norfolk, Va., Virginian-Pilot, November 25, 1914
Not only are they [the railroads] denied
reasonably adequate compensation for the
handling of the increased and increasing
volume of mail matter which they are
called upon to carry by reason of parcel
post introduction and extension, but they
lose a comparatively large revenue from
the express companies which they would
otherwise be drawing.
Obviously this is unfair and altogether
unworthy of a great Government, one of
whose chief functions and duties is to see
to it that the balances are held evenly
among all classes of the citizenship, arti-
ficial as well as natural.
The Virginian-Pilot holds no brief for
mental authorities ought to recognize, in
dealing with the country's agencies of
transportation, what must be apparent to
anybody and everybody who stops to
think—that the interests of the railroads
and the public interest are so interwoven
that the former cannot be injured without
the latter also, and consequently suffering.
And surely a Government which under-
takes, and properly so, to compel the rail-
roads to deal justly with the public should
not itself set the example of dealing unfairly
and unjustly with the railroads.
The authority to compel proper service
carries with it the obligation to allow
the railroads, but certainly the Govern-
proper compensation for service rendered.
“Government Injustice”
From the Washington, D. C., Post, December 3, 1914
How is it possible for the United States
Government to expect a high standard of
business ethics from private or semi-public
corporations when the Government itself
engages in a policy which is palpably un-
just 2
Under the system of weighing the mails
and readjusting railway mail pay only at
four-year intervals, every railroad is re-
quired to carry the increase in the mail ton-
nage for four years without compensation.
At the time the parcel post was estab-
lished, on January 1, 1913, no provision
was made to pay for its transportation by
the railroads. The railroads had to trans-
port the entire volume of parcel post pack-
ages for six months without a penny of
Compensation.
Such a practice, if engaged in by a big
corporation toward a weaker one, would
The Wrong Kind of Economy
Bridgeport, Conn., Standard, Nov. 23, 1914
There is not the slightest doubt that
the parcel post has come to stay. It does
not, however, necessarily follow by any
means that the methods by which this
department of the activities of the Post
Office are being developed are not in some
respects open to legitimate criticism.
In its effects upon the railroads the
parcel post has been particularly oppressive.
At a time when the Interstate Com-
merce Commission is reading homilies to
railroad presidents on the necessity of
making every form of traffic pay its own
way, it is particularly inconsistent for one
Department of the Government to attempt
to make a showing by denying to the
railroads fair compensation for services
rendered.
result in prosecution by the United States
Government.
Nearly two years have elapsed since the
establishment of the service, yet approxi-
mately half the parcel post is today being
carried by the railroads without payment.
In the present year alone it is estimated
that the railroads will lose $8,000,000 by
reason of this unjust practice.
In the collapse of two of the express
companies, and the impairment of the busi-
ness of all the others, the railroads lost con-
siderable business that was profitable. They
are compelled to carry the Government's
express business at a much lower rate. Per-
haps there is justification for this, but
certainly there is no excuse for taking
$8,000,000 out of the pockets of the
railroads each year.
* *
Unfair to the Railroads
Fall River, Mass., Globe, Nov. 9, 1974
The Federal Government is insistent in
its demands that the railroads shall conform
to the requirements that it has laid down
to be observed by them in conducting their
business and in rendering service to the
That is as it should be.
At the same time, however, the Govern-
ment ought to recognize its obligation to
accord the roads a square deal when they
are rendering it a service. It obliges them
to exact equitable rates from all doing
public.
business with them with a single exception
—and the itself.
This is unjust and inconsistent.
that is Government
Ever since the advent of the parcel post,
most, if not all, these transportation com-
panies have been carrying the mails at a loss.

price for what it gets.
The Government, like the individual, should pay an honest
—Albany, N. Y., Knickerbocker Press, November 22, 1914
º}
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.
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} 4. & 8 & g * ſº • 2 *
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. . . ' ' © *e
“The profits of the parcel post, in fact, come out of the pockets of the
railways, which are transporting mail matter of this sort at ruinous rates.”
—Philadelphia, Pa., Public Ledger, November 19, 1914.
How the Parcel Post Has Forced Unpaid
Service from the Railroads
When the parcel post was established
on January 1, 1913, no provision was
made to pay for its transportation. As a
result, the railroads carried the entire
parcel post for the first six months with-
out any payment whatever.
Meanwhile, the mails were weighed on
the railroads in the Middle Atlantic States,
and on July 1, 1913, the mail pay of
those railroads was increased to compen-
sate them for the weight of parcel post
then being carried.
Six weeks later, the weight limit per
parcel post package was raised by the
Postmaster General from 11 to 20 pounds,
and on January 1, 1914, to 50 pounds.
The postage rates were lowered. For the
additional traffic created, the Middle States
railroads have not been paid and are
carrying for nothing all packages above 11
pounds weight.
Last spring the mails were weighed in
the far West and the increased pay found
to be due was awarded to the railroads of
that section, beginning July 1, 1914.
These are the only railroads in the country
now being fairly paid for carrying the
parcel post.
In densely populated New England and
the Middle West, and in all the Southeast,
the railroads are still carrying the parcel
post without pay, save for certain arbitrary
allowances, in no case exceeding a 5 per
cent. increase in mail pay and ranging
down to a fraction of 1 per cent., which
Congress permitted the Postmaster General
to make at his discretion.
Actual weighing of the mains elsewhere
showed that proper increases would have
been 20 to 25 per cent.
Nearly two years have now elapsed
since the establishment of the service, yet
approximately half the parcel post is today
being carried by the railroads without pay-
ment. Results shown in the cases where
the increased weight of mail has been
properly ascertained indicate that in the
the railroads, as a
present year, alone,
whole, will thus lose upward of $8,000,000.
For this injustice the cause lies in the
Post Office Department's practice of weigh-
ing the mails and readjusting railway mail
pay only at four-year intervals, one of the
four “ mail contract sections " into which
the country is divided being covered each
Every railroad, after receiving an
this
year.
adjustment of pay, is required by
system to carry the increase in the mail ton-
nage for four years without compensation.
In an appeal for fair play, the railroads,
through the Committee on Railway Mail
Pay, have joined in asking Congress to
require by law that the mails shall be
weighed throughout the country at least
once a year, and the railroads paid for the
annual increase in the weight of
Simple justice long ago required
mail
carried.
this reform. The parcel post has made the
need doubly urgent.

of mail transportation.”
“A square deal is required by the Government in the transactions of
citizens or corporations doing business with it, but for years it has been per-
sistently regardless of its obligation to be fair with the railroads in the matter
Pittsburgh, Pa., Gazette-Times, November 11, 1914.
Ex-President Taft Says Railroads
Are Not Properly Paid for
Carrying Parcel Post

Mr. Taft, in whose term as President the parcel post was
established, sent to Mr. Frank E. Noyes, Manager of the “Parcel
Post News,” Marinette, Wis., a letter of which this is a fac-simile.
W LLIAM H. TAFT
N Ew HAVEN, con N
October 2nd, l914 •
My dear Mr. Noye B :
I have yourg of September 25th. I regard the Parcels
Post as one of the things which was initiated in my administration,
and which I am sure will bo regarded as a great step ſorward in
methods of cheap transportation for the poople . e machinery for
A

the post or 1 ice it has been demonstrated offers peculiar facilities
for the conveyance of parcels . This was shown in Europe before we
adopted the system and has been shown by its practice here since
its adoption. There iB one thing connected with the Parcels Post
that ought not to meet the approval of anybody, and that is that we
have not given to tho railroad 8 appropriate compensation for the
additional burden that they have to carry by reason of the Parcels
Post, but after a time Congre S G will see its duty and make repara-
tion in this regard I hope . The Po 9tal Savings Banks and the
Parcels Post have been long coming becau Ge of the opposition of
both interested and ai Binterested persong, but they are here now
and it will be most interesting to watch their usefulness grow.
Sincerely you re,
Mr. Frank E. Noyes,
Manager Parcel Post News,
Marinette, Wisconsin.
The underscoring was not in the original, but was inserted for purpose of publication

“The laborer is worthy of his hire ‘’ no less when that
laborer is a railroad corporation than when he is an individual.
The great profit of the parcel post business to the Govern-
ment cannot decently or honestly be swollen inordinately by
making the railroads carry the parcels for pay that no one
pretends to believe is adequate or fair.
–Philadelphia, Pa., Press, December 28, 1914 .
Should a Postal Surplus Be
Claimed While Railroads
Are Underpaid P
The Postmaster General's report shows a surplus of $3,600,000
for the last fiscal year, but the railroads lost more than that sum through
underpayment for carrying the parcel post.
Congress can correct this situation, so far as the railroads are con-
cerned, by providing for :
1. Weighing the mails at least once a year and pay-
ing the railroads for the annual increase in the tonnage
carried.
2. Relieving the railroads from carrying the mails to
and from post Offices along the lines, or else paying them
fairly for this extra service.
3. Paying the railroads at just rates for the traveling
post offices in more than 4100 combination cars, which
have been equipped for the exclusive use of the Post
Office Department.
Y. * g. .**-
º -ºr **
Public opinion throughout the country, as reflected in the daily
press, is practically unanimous in urging that Congress now grant
the railroads that fair payment for carrying the mails which has been
So long withheld. Some of the recent comments of the newspapers
on this subject are reprinted, in the following pages, by the Committee
on Railway Mail Pay.
- - RALPH PETERS, Chairman.
New York, January 12, 1915

easy to believe him.
Mr. Burleson says that the Post Office
Department now has a surplus.
roads of this country, at least, will find it
—Philadelphia, Pa., Public Ledger, December 17, 1914
The rail-
The “Pound Of Flesh”
New York, N. Y., Commercial,
December 15, 1914
Postmaster General Burleson is entitled
to credit for making progress, but when he
claims that the books of his Department
show a surplus for the second consecutive
year of his administration, he does no
more than prove that the books are Wrong
and that such a system of bookkeeping
would disrupt any business man or private
corporation.
Added to these old bookkeeping sins we
now have the existing robbery of the rail-
roads of the country. One of the chief
features of this report is the enormous
growth of the parcel post service, and it
appears to have been run at a profit. But
how has this profit been earned P. The
railroads answer Sadly that it has come
out of their treasuries. They have been
compelled to carry all this great increase
in mail matter without adequate compen-
sation.
The Post Office Department has exacted
its pound of flesh by making the railroads
carry the additional mail matter for prac-
tically the money which they agreed to
accept for carrying the mails before the
parcel post service was established.
The railroads also lost the revenues they
formerly got from the express companies
for carrying Small parcels that now go by
post; so they are underpaid for what they
do and lose what they formerly received
at the same time.
+ 3 + k
A “Square Deal?” Now in Order
Philadelphia, Pa., Record, December 22, 1914
The Interstate Commerce Commission
in its first rate decision declared that the
railroads should make every department
of their business contribute proportion-
ately to their earnings, and counsel for
the Government in their argument of the
case granted that the transportation of the
mails by the railroads was “unremunera-
tive.”
The Postmaster General has advanced
the proposition that such transportation
being distinctly a public service, the rail-
roads should not expect to make a profit
out of it; but there is no obligation, legal
or moral, that the railroads should con-
duct this branch of their business at a
tremendous annual loss—a loss which is
steadily increasing, moreover, through the
growth in volume of parcel post matter.
The reform proposed in the postal ap-
propriations bill may not provide adequate
relief; but amendments will be in order
So that it will be possible for the railroads
to get a square deal.
* } + X-
No Cause for Boasting
Baltimore, Md., Sun, December 15, 1914
Mr. Burleson himself admits that the
Government has not been paying the rail-
roads a fair rate for carrying the mails,
and recommends a change in the basis of
compensation, and it is conceded on all
sides also that they have been imposed
upon in connection with the additional
duties required of them under the parcel
post system.
Whether Mr. Burleson's surplus would
disappear if he paid properly for this
work we do not undertake to say, but it
would certainly be very considerably re-
duced.
A surplus that is obtained by making other
people lose money is not the kind of a sur-
plus to brag of, and we hope that Mr. Burle-
son will get very strongly behind measures
which will remove this injustice, whether it
brings him into debt or not.
It is just as dishonest for the Govern-
the accomplishment with just pride, and
the public to view it with general gratifi-
cation; if the latter, then exactly the con-
trary is the case.
Leaving altogether out of account the
question of justice and fair dealing, which
should be sufficiently compelling in itself,
and considering the matter from the stand-
point of economy alone, the taxpayers of
the country are obviously immeasurably
more concerned that transportation fa-
cilities shall be kept up to that degree of
ment to cheat the railroads as to cheat an
adequacy necessary to the proper promo-
individual.
+ k + º-
What the Taxpayers Want
Norfolk, Va., Virginian-Pilot,
December 18, 1914
Postmaster General Burleson, in his an-
nual report, declares that, “for the first
time since Benjamin Franklin organized
the postal service under the Continental
Congress, the Post Office Department has
been securely placed upon a self-sustaining
basis.”
Taken at its face value, this statement
is both gratifying and encouraging; but
is it altogether certain that it is entitled
to be so accepted P
Has the result effected been brought
about with due regard for, or at the ex-
pense of justice to, the railroads in the
matter of proper remuneration for carry-
ing the mails, which have largely and
steadily increased in bulk since the in-
auguration of the parcel post?
If the former, then Postmaster Gen-
eral Burleson has every right to point to
tion of progress and prosperity than that
a few million dollars a year should be
saved to the public treasury.
% + + +
History Repeating Itself
New Haven, Comm., Journal-Cowrier,
December 15, 1914
It is not easy to read good naturedly
the part of the [Post Office Department]
report which states specifically that the
Department shows a surplus of $3,600,-
000 for the fiscal year.
When we came to examine the equally
jubilant report made of a surplus account
in the Post Office Department by former
Postmaster General Hitchcock, we found
it a fanciful entry. It is the same with
this report of General Burleson’s.
Just exactly what the figures would be
if the Post Office Department paid the
railroads of the country a fair price for
the services given in carrying the mails,
we do not know. We do know, however,
that in the case of the New Haven system
the loss to that company netted $600,000.

not pay its bills.
Offices rent free.
they carry the mails at a loss.
Most people will reject the claim that the Post Office
Department is a model, that it is self-sustaining and that it
renders a maximum of service at a minimum cost.
contrary, it is wasteful, and in many cases inefficient.
In the more important cities it has expensive
The railroads contend that in many cases
On the
It does
—New York, N. Y., World, December 15, 1914

A PREDICTION THAT CAME TRUE
The volume of parcel post matter is increasing without
a cent of extra pay for the roads.
gained by such means will be a poor advertisement indeed.
A Department surplus
–Brockton, Mass., Times, October 9, 1914
It does not take a very large knowledge
of post office statistics to imagine what the
report would have been had these items,
as they affect all of the railroads of the
country, been included in the report. We
should have had gloom in place of joy.
+ + k +
“The Railway’s Christmas”
New York, N. Y., Times, December 27, 1974
The Pennsylvania Railway handled
5,500,000 Christmas postal parcels in this
city and 3,500,000 in Philadelphia. Con-
ditions were similar throughout the coun-
try, the postal parcel business being heavier
by half than a year ago.
This is altogether welcome and admir-
able, so far as it reflects conditions among
the senders. and receivers. To the Post
Office it is a welcome addition to the sur-
plus. But to the railways it is a dubious
dividend, something to be entered to
debit rather than credit, for work certainly
done and certainly not paid for.
The Post Office revenues
creased 16 per cent. since the establish-
ment of the postal parcel business. The
railways’ mail pay has increased 2 per
cent. The difference is profit to the Post
Office. The annual report says so.
It seems that everybody who received a
postal parcel which the Government had
not paid the railways for carrying Ought
to feel a little mean. It seems that those
whose income or wages through the rail-
ways was reduced must be not a little mad.
Whether such a policy of the Govern-
ment toward the railways is conceived in
the President’s “spirit of candor and jus-
tice” toward business enterprise may be
left to anybody with a conscience, regard-
less of his personal profit or loss.
have in-
Weigh the Mails Annually
Waynesboro, Pa., Herald, December 17, 1914
Postmaster General Burleson in his an-
nual report exults in the fact that the
Department shows a surplus for last year
of more than three and one-half millions.
This being the case, it would be only just
that the railroads should have a more ade-
quate allowance for the vast increase of
mail matter they are compelled to haul
under their contracts.
The people of this country are not en-
titled to nor do they wish to get anything
for nothing. They can afford to pay for
any service rendered them.
Let the mails be weighed annually and
the contracts renewed on that basis.
-K- *
A Plea for Justice
Lymm, Mass., News, December 15, 1914
The United States Government has added
thousands of tons of mail matter to its ser-
* +
vice without compensating the roads one
cent for the increased service.
This is not even common fairness such
as would obtain between individuals doing
business with each other, and the Gov-
ernment, in its power, ought not to be
guilty of doing an unfair thing, even
against a railroad.
That added compensation for the roads
has the endorsement of eminent authority
is shown by a recent utterance of ex-Presi-
dent Taft, during whose administration
the parcel post was initiated.
He says that “there is one thing in con-
nection with the parcel post which Ought
not to meet the approval of anybody, and
that is that we have not given to the rail-
roads appropriate compensation for the
additional burden they have to carry by
reason of the parcel post, but after a
time Congress will see its duty and make
reparation in this regard, I hope.”
The words of the ex-President have
significance. He is a fair man and wants
the railroads of the country treated fairly.
+& X. X. X:
“Unpaid Mail Bills'’
Watertown, N. Y., Standard, December 23, 1914
Although the railroads are hauling par-
cel post mail at a loss of $8,000,000 a year,
the Administration has asked Congress to
compel the railroads to carry a part of that
matter at rates lower than shippers pay for
ordinary freight.
It takes some nerve for a Postmaster
General to report a profit in the admin-
istration of his Department when he pays
half rates for transportation.
The Government is great on the morals
of private enterprise. What do the people
think of the Administration’s business
ethics 2
:k ::: ::: :k
“Candor and Justice ’’
New York, N. Y., Wall Street Journal,
December 15, 1914
It is the simplest thing in the world to
make a splendid exhibit of saving, for the
shipper or for the Government, by com-
paring parcel post with express rates, so
long as the railroads are paid for their
part in the transaction not what the serv-
ice is worth, but what Congress and the
Post Office Department choose to pay,
which may even be nothing at all.
If individuals were in a position to buy
what they need at their own prices, the
cost of living would come tumbling down,
like Lucifer, “from morn till noon, from
noon till dewy eve.” But to those who
produce the means of keeping the human
machine going it would seem, in the light
of the new day, that both candor and jus-
tice were off the market.
:}; :k :}; :}:
A Clear Case
Johnstown, Pa., Democrat, December 16, 1914
If the railroads have demonstrated one
fact it is that they are underpaid for hand-
ling the parcel post business.
The Post Office Department shows a
surplus for the fiscal year. If this surplus
has been acquired at the expense of the
railroads it has been dishonestly acquired.
For the Government to rob a railroad is
not a bit more reputable than for a rail-
road to rob the Government.
:: :: ::: :::
Efficiency First
Boston, Mass., Christian Science Monitor,
December 17, 1914
Morally, the United States Government
cannot afford to pay the railroads less than
they are entitled to for the carriage of
mails, simply because it has the power to
do so.
We regard it as a mistaken belief, com-
mon in some quarters, that the keeping
down of expenses is the first and great
desideratum in the conduct of this branch
of the public service.

to purge itself.
THE INJUSTICE OF RAILWAY MAIL PAY
The wrong done is flagrant.
that the Government is undertaking to call all large business
to the bar under accusation, and to expose, correct and punish
its alleged wrong doing and unfair dealing ; yet this very
Government comes forward with unclean hands and refuses
What is almost worse is
—New York, N. Y., Financial Chronicle, November 28, 1914

the parcel post.
We must remember, however, that the financial showing
of the Department would not have been so good if under the
existing contracts the railroads were adequately compensated
for their transportation of the bulky merchandise admitted to
—Syracuse, N. Y., Herald, December 15, 1914
It appears to us that the most important
point to keep in view is the Department’s
general efficiency, and it goes without say-
ing that its general efficiency is very
largely dependent upon the quality of
service it may justly claim at the hands of
the railway companies.
How the Record Was Made
Newburyport, Mass., News, December 16, 1914
The Postmaster General now declares
that there is in his Department a surplus
of more than three million and a half dol-
lars.
One is inclined to ask how this mar-
velous record is made. And no sooner is
the question asked, than the eye lights
upon the receipts credited to the parcel
post, and then again upon the amounts
paid to the railroads for the carrying of
this and other mail matter. Very possibly
the explanation of our new riches is found
in these two items. ~g
There is more sympathy with railroads
than there used to be. We all know that it
has been necessary, actually necessary, for
them to raise passenger and freight rates.
Is the Government imposing upon them
an undue burden which should be light-
ened? -
We would like to have the postal service
self-sustaining. But we are equally anxious
that the Government shall deal fairly with
the roads.
Where the “Square Deal?” Failed
Springfield, Mass., Republican,
December 14, 1914
The Postmaster General reports a sur-
plus of about $3,600,000 for the last
fiscal year in his Department, but people
who understand the postal service’s real
cost to the Government smile when sur-
pluses are mentioned.
There would still be a deficit but for
|parcel post, which has brought with it an
enormous business, for carrying which the
railroads are underpaid. The Postmaster
General does not deny they are underpaid.
One thing not altogether creditable to
the Department is its obvious failure to
give the railroads a square deal.
It seems too much like politicians seek-
ing to crowd the railroad companies for
the ultimate benefit of the politicians who
hold the Offices and mismanage a vast en-
terprise.
>k >}: :k >k
No Excuse for Underpay
Williamsport, Pa., Gazette and Bulletin,
December 14, 1914
With the showing of which the Post-
master General now boasts in his annual
report, Congress will now have no excuse
to longer ignore the appeal of the railroads
for fair play.
The square deal is required in the trans-
actions of citizens or corporations doing
business with the Government, and for
that reason the Government ought to deal
squarely with the railroads in the matter
of transporting parcel post matter.
A Protest that is Fully Justified
Brooklyn, N. Y., Standard-Union,
December 14, 1914
There has been a great protest since this
division of the postal service [the parcel
post] was instituted because it imposed a

9 3
transportation,
Cabinet officials.
In shipping 200 tons of gold, worth $99,000,000, by parcel
post from Philadelphia to New York “without cost for railroad
the Government has effected One of those
“economies of operation ” which are the congenial boasts of
—New York, N. Y., World, January 5, 1915
new and wholly unexpected burden upon
the roads by requiring them to carry a
large increase in mail matter for no ad-
ditional compensation.
It is a wrong which should not be per-
mitted to exist a day longer than neces-
Sary.
:}; :: >< :k
Entitled to Fair Play
Nashville, Tenn., American, December 26, 1914
The railroads are entitled to fair play.
It is strongly to the public interest that
they suffer no injury. The Government
is able to pay just rates for transporting
the mails and the railroads are entitled
to fair compensation for the Service they
perform in carrying them.
:: :: :: ::
Taking Unfair Advantage
Des Moines, Iowa, Capital, December 29, 1914
The Government has been fully aware
that when the mails were weighed the
last time the parcel post had not been
introduced, but the Government appears
to be willing to make money off the rail-
roads by taking advantage of an old con-
tract.
If this work were done by an individual
it would be called “crookedness.” Yet the
Post Office Department has the nerve to
boast that the Department is On a paying
basis :
We do not believe any Government is
justified in treating any corporation or
corporations the way the Post Office De-
partment has and is treating the rail-
roads.
:: ::: :k ::
“A False Showing of Profit”
Peekskill, N. Y., Evening News, Dec. 31, 1914
We do not believe that the American
people stand for injustice or unjustice to
anybody, and one thing they would like
to see is the establishment of the parcel
post system on a fair business basis.
So far the PostOffice Department has been
able to make a false showing of profit largely
because the railroads are not paid for car-
rying the extra weight of parcels involved
in the parcel post.
Attempts are being made in Congress
to readjust railway mail pay, but they ap-
pear to be dictated by a spirit of petty
politics rather than fairness. The latest
effort has been made through a rider on
the Post Office Appropriation bill, which
is not the place for legislation of that
kind. Riders on appropriation bills
Ought not to be allowed.
:: :: >}: :};
An Imposition of Years
Wilmington, Del., Every Evening, December
- 39, 1914
There is reason to believe Congress
will not longer countenance the surpris-
ing imposition that has been carried on
for years in respect of carriage of mails
by the railroads.
Our Government cannot afford to be
dishonest, especially in respect of a busi-
ness from which it derives profit. No rail-
road should be compelled to carry the
mails at a financial loss. -

transportation ?
Is a department of Government worthy of congratulation
that derives a large part of its income by compelling the rail-
roads to carry parcels at a rate below the actual cost of
–Philadelphia, Pa., Evening Ledger, December 15, 1914
Press Briefs on the Postal Surplus
and Railway Mail Pay
If the parcel post had not forced un-
paid service from the railroads, the bal-
ance of which Mr. Burleson boasts would
not be possible.—W arren, Pa., Mirror,
JDecember 15, 191}.
Is it fair to a third of the people in
the nation who own the railroads to tax
them in order that a good showing may
be made by Postmaster General Burleson 2
—Philadelphia, Pa., Public Ledger, De-
cember 19, 1911.
It is just as wrong that the Government
should rob the railroads as that the rail-
roads should rob the Government.—Day-
lon, Ohio, Evening News, December 23,
1911.
It was by “skinning” the railroads that
the Post Office Department made its extra
fine showing for last year.—Waldosta,
Ga., Times, December 17, 191}.
There is no obligation, legal or moral,
that the railroads should conduct this
branch of their business at a tremendous
annual loss.-Philadelphia, Pa., Record,
December 22, 191}.
The “self-supporting” Post Office De-
partment can sponge and does sponge on
the railroads.—New York, N. Y., Press,
December 17, 191}.
Mr. Burleson himself admits that the
Government has not been paying the rail-
roads a fair rate for carrying the mails.-
Ballimore, Md., Sun, December 15, 191}.
A surplus created by the income from
the parcel post, for carrying which the
railroads are paid less than adequate rates,
is hardly a thing for this nation to be
proud of.-Cumberland, Md., Daily
News, December 17, 191}.
It is immeasurably more important that
the Government should itself set the ex-
ample of doing the railroads equity than
that a deficit in the administration of a
Governmental department should be con-
verted into a surplus.-Norfolk, Va.,
Virginian-Pilot, December 18, 191}.
The people of this country are not en-
titled to nor do they wish to get anything
for nothing.—Waynesboro, Pa., Herald,
December 17, 191}.
If this surplus has been acquired at the
expense of the railroads it has been dis-
honestly acquired. — Johnstown, Pa.,
Democrat, December 16, 191}.
Despite the illusory surplus about which
Mr. Burleson boasts, and which really con-
sists of money filched from the railroad
companies, its activities are carried on at
a loss.-Philadelphia, Pa., Inquirer, De-
cember 15, 1914.
It takes some nerve for a Postmaster
General to report a profit in the admin-
istration of his Department when he pays
half rates for transportation. — Waler-
town, N. Y., Standard, December 23,
1914.

are just made public.
The express companies were still operating at a loss, in
competition with the parcel post, in August, for which reports
The trouble is that they have to pay
the railroads a reasonable sum for service.
–Philadelphia, Pa., Evening Bulletin, December 29, 1914

*—t - • * *
“When we enact such laws as the Full Crew Bill, because
we are down on the railroads, we are positively unfair; but
when we establish a Parcel Post, a good measure in itself, and
make the railroads carry all the business that we can get, with-
out adequate compensation, we’re stealing from the railroads,
that’s what we are doing.”
—Ex-President Taft, at Annual Dinner of Hartford, Conn.,
Business Men’s Association, February 4, 1915
Failure of the Plan to Make
the Railroads Carry the
Parcel Post Gratis

(From the New York Evening Sun, March 8, 1915)
Washington dispatches printed in the
Sunday newspapers brought the good news
that a strong effort will be made in the
new Congress to replace Representative
Moon of Tennessee as Chairman of the
Committee on Post Offices and Post Roads
by a member who has some elementary
Mr.
notions of honesty and fair play.
Moon has shown himself throughout the
Congress just expired totally unfit for the
position.
For two years he fought all orderly
attempts to readjust the compensation of
the railroads for carrying the mails. His
latest endeavor was to attach a rider to
the Post Office appropriation bill giving
the Postmaster General arbitrary power to
set the figure for the pay of railroads. Mr.
Moon admits the plan was to make the
companies do the parcel post work gratis.
He has asserted that the railroads receive
$10,000,000 too much annually, and appar-
ently the idea was to cut their pay by that
amount in the coming year.
The outrageousness of the proposition
The
business sense will grasp the general injus-
tice of the parcel post situation. Those
who have watched the long struggle of
the roads for a little financial relief through
the Interstate Commerce Commission will
appreciate the truculence of an attempt to
rob them of a good fraction of the relief
will be evident to all fair minds.
through Governmental injustice.
But the general anger and contempt for
Mr. Moon's position seems to have reached
its climax over the letter which he has
that
railroad influences defeated his rider, so
written to Mr. Burleson alleging
that he and his clique decided to burke the
appropriation bill altogether. The general
testimony is that no underhand influence
of any sort was used to beat the rider. It
went down on its demerits, and any repre-
sentation made by the railroads was not
only within their rights, but their duty to
save themselves from looting.
Issued March 23, 1915, by the COMMITTEE ON RAIL WAY MAIL PAY, 75 Church St., New York
City, Ralph Peters, President of the Long Island Railroad Company, Chairman; W. F. Allen, Secretary.

The Post Office Department would like to report that the
Department is self-sustaining, but that is no reason why rail-
roads should be required to carry mails at a loss.
—Savannah, Ga., News, February 26, 1915
Still “Agin” the Railroads
(New York, N. Y., Tribune, March 9, 1915)
There is a fine flavor of ancient bigotry in
Representative Moon's fulminations against the
influences in Congress which frustrated his raid on
the allowances made to the railroads for carrying
the mails.
He induced the House of Representatives to
approve his project for reducing the pay of the
railroads, although the latter have recently been
saddled with the task of transporting, without
additional compensation, a vastly
volume of parcel post matter.
increased
The carriers are now underpaid about
$8,000,000 for this service. Yet Mr. Moon
feels.that they ought to face that loss cheer-
fully, besides accepting a cut in the rates
for other mail.
Fortunately the Senate disagreed with him and
killed the Post Office appropriation bill. He now
threatens to renew his war on railway pay next
winter. But with signs multiplying on every
side of a disposition to treat the railroads fairly,
even the most rooted of the starvation stand-
patters may relent.
At the next session Judge Moon may find him-
self about the only old-fashioned railroad scalper
left on the Congressional reservation.
* }{ }{ %
A Wrong Congress Should Right
(Wilmington, Del., Every Evening,
February 22, 1915)
There is not a citizen in the country who
would not, if called on by the Government to
perform a certain amount of administrative work
daily without pay, make a vigorous protest.
Every day in the year the railroads of this
country are required to perform a large service
for the Government in the conveyance of parcel
post matter, for which they receive not a cent of
compensation.
IT IS MOST SURPRISING THAT CON-
GRESS SHOULD PERMIT SUCH INJUS-
TICE TO PREVAIL,
Where Mail Delays Trains
(Ogden City, Utah, Standard, February 2, 1915)
No one trouble of the railroads is more per-
plexing than that of the parcel post. The mail
trains are being delayed while postmasters super-
vise the loading of this new mail matter, and cars
are being added to those trains without extra
compensation, and, as a result, the superintendents,
train masters and every one connected with the
transportation are developing a grouch and are
beginning to complain about life's misfortunes.
Over at Wells, Nev., the agent of the South-
ern Pacific, without wishing any one bad luck,
is hoping the warehouse burns down where eighty
tons of grain are held for shipment, sack by sack,
through the parcel post.
A day last week a fast mail train was de-
layed by the loading of two tons of wheat
as parcel post, and early in the same week a
carload of potatoes was mailed from Deeth
to Halleck.
The Southern Pacific and the rural mail car-
riers have our sympathy. At present we prefer
the newspaper business to either operating a mail
train or driving on a star route.
-Y& X + X:
A Reasonable Request
(Augusta, Ga., Chronicle, February 17, 1915)
In all justice it would seem that the request of
the transportation companies for a continuation
of the weight basis of railway mail pay and more
frequent weighings than once in four years is but
reasonable, especially in view of the tremendous
increase of the parcel post, stated by the Post-
master General in his report in November, 1914,
to amount to 800,000,000 packages per year.
Numerous commercial bodies throughout the
country have gone on record as opposed to the
Moon amendment and asking for fair play for
the railroads.
The Chronicle is firmly of the opinion that it
is the duty of Southern commercial bodies to
adopt similar for, certainly, the
South has seen enough of the evil effects of
‘‘ railroad baiting.''
resolutions,
A Business Venture in the Dark
(Wilmington, Del., News, March 4, 1915)
A Joint Committee of Congress which has
been investigating the parcel post declares that
it is impossible to determine the cost of the
service or the revenue derived from it. A
strange reflection this is upon the Government's
manner of doing business. Here is a very im-
portant branch of the Federal service, yet the
authorities are utterly at sea as to the actual
expense of operating and the receipts.
The report of the investigating committee of
Congress is another and a strong argument against
extending the functions of the Government to
business.
* * * *
Railroads Asking No Favors
(Rochester, N.Y., Post Express, February 17, 1915)
The railroads ask no favors in the matter of
They have filed no petition for
They do ask, however, that
they be paid for all the mail carried and for all
their special services to the Government.
mail pay rates.
higher charges.
This reasonable request should be granted
in the interest of common honesty.
The Government has been guilty of sharp
practice in its dealings with the carriers. The
sooner this reproach is removed the better.
* * * *
Where a Mistake Was Made
(Syracuse, N. Y., Herald, February II, 1915)
If anything were needed to show that the
parcel post, in its present stage of evolution, is
an expensive luxury, it can be found in the report
that the Post Office deficit for the current fiscal
year is estimated at $14,000,000. And this in
spite of the fact that the railroads are shamefully
underpaid for their share in the new Government
system of merchandise transportation.
As the Herald has repeatedly contended,
the parcel post was a commendable and desirable
public service when confined to small packages;
but when its scope was extended so as to include
bulky merchandise, it became, to that additional
extent, a convenience for the few at the expense
of the many.
The truth is that the parcel post service has
been overdone. It has been foolishly extended
to an unreasonable extreme in disregard of the
principle of the greatest good to the greatest
number. The few derive all the benefit from
this short-sighted amplification of the service,
while the many are taxed, in one way or another
to meet the resulting deficit.
+ 3 + 3%
Is It a Fact?
(Detroit, Mich., Free Press, February 18, 1915)
A railroad publicity agency in New York is
sending out a circular which presents a statement
that should be either confirmed or denied by
authoritative officials. It asserts that the Gov-
ernment of the United States is paying $2.77 for
each ton of mail carried one mile by the Panama
Railroad, while it pays only ten cents for each ton
of mail that the railroads of this country carry
one mile.
If this allegation is true, it has an important
bearing on a subject of current discussion. The
Panama Railroad is owned by the Government,
and its claimed success has been freely used as an
in favor of Government
argument ownership
generally.
If, now, it is a fact that this Government-
owned road is receiving twenty-eight times as
much for the same service as privately owned
railroads are receiving, the value of the Isthmian
exhibit in the case is sadly discredited.
If it is true that the Panama Railroad is
getting $2.77 per ton-mile for its mail transpor-
tation, while the other railroads are getting only
ten cents per ton-mile for the same service, it
would further appear that either the American
Government is exceedingly generous to itself or
is exceedingly unfair to its citizens.
(NOTE–The statements of fact referred to
above by the Detroit Free Press are baſed wholly
on public records.—Committee on Railway Mail
Pay.)

Nothing is to be gained by robbing the railroads.
them means robbing the citizens who have invested in their
stocks and bonds. The railroads ask for nothing more than fair
treatment, and they should have nothing less.
Robbing
—Brooklyn, N. Y., Eagle, February 26, 1915
“The Post Office Bungle”
(Washington, D. C., Herald, March 13, 1915)
We are so bold as to say that while
men's views may differ as to the wisdom
or unwisdom of the dealings of President
Wilson's administration with many matters,
there is one as to which the popular voice
will speak without any discord whatever.
This is the indignation and condem-
nation that has been and will be visited
upon the wretched botch that has been
made of the handling of the Post Office
Department. Congress was forced to close
its doors last week facing the certainty that
the financial affairs of the national Post
Office will stand at a large deficit for the
present fiscal year. With efforts to make
good this deficit unavailing, Congress was
forced to leave the matter for the time
being with a temporary reappropriation of
the money's voted last year for Post Office
expense. w
No amount of juggling and special
pleading, no shifting of figures or sicken-
ing attempts at popular wheedling, can
disguise from the people the shameful fact
that the deficiency in the Post Office reve-
nues was due to the Government's efforts
to put through a costly and needless scheme
of carrying heavy parcels by mail supple-
mented by an attempt to make the rail-
roads of the country shoulder the greater
portion of the expense of this undertaking:
It will be idle to address a proclamation
to the people that in all this the Govern-
ment has been only seeking to cut down
the swollen profits, so called, of the express
companies. If the express companies were
making too much money, the proper remedy
was a reduction of their charges by the
Interstate Commerce Commission, which
did not involve any necessity for the
entrance by the Government upon the
parcel post venture.
The inauguration of the parcel post was
for the mere purpose of performing for
the people a service that they themselves
in their individual capacity should have
been willing to pay for.
It was a heavily losing venture from a
business point of view, and the attempt to
throw the expense of the job upon the rail-
road companies has represented one of the
most outrageous schemes of confiscation
ever undertaken in a civilized land.
The people see through all this game
from top to bottom. The miserable effort
to curry their favor by doing something
for them which they know perfectly well
they ought to do for themselves and ought
not to ask either the Government or any
private corporation to do, has ended as all
such demagogic efforts have ended in the
past, in humiliation for the originators and
abettors of it.
which we shall have much to say before
It is a matter concerning
Congress meets again.

the parcel post.
As the Government requires railroads to obey a number of
regulations for the public safety, and also fixes freight and pas-
senger rates of those railroads engaged in interstate commerce,
the Government should be fair to the railroads.
be a weighing of railway mail matter oftener than once a year,
and it is unfair to require the railroads to carry the burden of
—Providence, R. I., News, March 2, 1915
There should
FE8 is isis

" …
* A. *.
/*~~ ,-2-tra e2e. / 2-6-2-2-2 are - 4% Sº
Why the Postal Appropriation
Bill Failed—An Attempt at
Railroad Confiscation
New York, March 17, 1915
To the Rai/roads Carrying the United States Mai/ and the
Parce/ Posz.
The Senate of the United States acted most wisely
and justly in declining to pass the Post Office Appropri-
ation Bill carrying Representative Moon's railway mail
pay “rider,” which provided a new system of rates on the
so-called “space basis” of payment.
The stand of the Senate against this measure was simply a
stand againstan almost undisguised effort at confiscation, such
as was never before attempted in the Congress of the
United States.
+ + + º-
The enactment of the Moon
“rider” would have clothed the
Postmaster General with auto-
cratic and unbridled power to
reduce railway mail pay at will;
to fix rates even lower than those
which were called “absolutely
confiscatory '' by a Joint Com-
mittee of Congress; and finally, to
compel the carriage of the mails
and the parcel post, at such rates,
by means of a new law that would
fine any railroad company $5000
per day for a refusal to perform
Service on the terms and condi-
tions named by the Postmaster
General.
In his official capacity as Chair-
man of the House of Represent-
atives Post Office Committee,
Congressman Moon publicly said
that the Post Office Department
proposed to utilize this power
by compelling the railroads to
carry the parcel post for practically
nothing, thus reducing their com-
pensation $8,000,000 to $10,000,-
000 per year, and so averting an
impending Post Office deficit.
The injustice of such a plan to
saddle the postal deficit upon the
railroads is emphasized by the fact
that the Joint Committee of
Congress, especially appointed to
Issued by the COMMITTEE ON RAILWAY MAIL PAY, 75 Church Street, New York City,
Ralph Peters, President of the Long Island Railroad Company, Chairman ; W. F. Allen, Secretary.
investigate the question of rail-
way mail pay, reported only last
Summer, after two years of study,
that in all fairness the compen-
sation of the railroads should be
increased and not diminished.
* * * *
That the Post Office bill—the
most important of all the appro-
priation measures, carrying $325,-
000,000—failed of passage, thus
necessitating emergency legisla-
tion in the last moments of the
session, is due solely to the re-
fusal of Representative Moon and
his associates to permit the with-
drawal of the “rider” after it had
become perfectly clear that the
Senate would not be a party to
confiscation.
In consequence of Chairman
Moon's unyielding attitude, a
situation has been created which
has not been paralleled in a gen-
eration and which may unfortu-
nately hamper the operations of
the Post Office Department in
the coming fiscal year.
Two Unwarranted Statements
Answered
Since the failure of the postal
appropriation bill and the adjourn–
ment of Congress, Chairman
Moon has made two public as-
sertions that should not go
unanswered.
1. Chairman Moon is quoted
in a newspaper interview as Say-
ing that it cost the Government
$600,000 to obtain the information
upon which his “rider” was based.
The facts are, as the Second
Assistant Postmaster General,
Mr. Joseph Stewart, testified under
oath in the hearings before the
Joint Congressional Committee
on Railway Mail Pay, that the
Post Office Department spent
$19,423.20, out of an appropriation
of $20,000, in obtaining the infor-
mation referred to by Mr. Moon.
In addition, the Congressional
Committee, itself, spent $6560.50
out of an appropriation of $25,000.
Thus the total cost to the
Government of this entire in-
quiry, of which the Moon
“rider ’’ was only one of several
results, was $25,983.70, instead of
$600,000, as Mr. Moon declared.
* }{ }{ }{-
The labor of compiling the
information, as a matter of fact,
fell almost entirely upon the rail-
roads. The statistical and clerical
work necessary to furnish the fig-
ures which the Post Office Depart-
ment called for was enormous.
The expense to the railroads
approximated a quarter of a mil-
lion dollars, or about ten times
what the inquiry cost the Govern-
Ine Int.
Mail and Express Earnings
Compared
2. In his letter to Postmaster
General Burleson, regarding the
failure of the Post Office Appro-
priation bill, Chairman Moon
said:
“The railroads are charging the
Government twice as much as
they charge the express com-
panies.” -
This extravagant and many-
times refuted assertion was made
in the face of the Joint Congres-
sional Committee's authoritative
finding on the subject.
The Committee, in its report to
Congress, found that “the express
service undoubtedly costs the rail-
roads less than the mail per car
mile,” and that the complete evi-
dence showed the mail earnings
of the railroads to be “decidedly
lower than from express on a car
mile basis, which is the best basis
}
for comparison we have.’
The Committee said:
“We are compelled to reject
the Post Office Department’s
attempt to show higher relative
earnings from mail as reckless and
misleading.”
Later, the report added:
“Certainly there is no warrant
in the oft-repeated assertion that
the Government is being robbed in
its mail payments by comparison
with what the express companies
pay. There has been an amazing
amount of reckless assertion on this
subject.”
+ X. X. X:
It seems but just to say that
the Joint Congressional Com-
mittee on Railway Mail Pay,
throughout its entire inquiry,
gave the railroads, as well as the
Post Office Department, full and
fair opportunity to be heard, and
that the Senate Post Office Com-
mittee accorded the railroads an
Hearing Denied by Moon
Committee
The judicial attitude of these
two committees stands out in
sharp contrast to that of the
House Post Office Committee,
which, under the chairmanship of
Representative Moon, refused to
hear the railroads at all.
Chairman Moon's committee
even tried to rush its measure
through Congress before the
Joint Congressional Committee
had time to report.
% X # *
In the hearings before the
Senate Post Office Committee
ample proof was given that pas-
sage of the Moon bill would force
all of the railroads to carry the
mails at a heavy loss, and that in
the case of some of the smaller
roads it would mean financial
ruin.
The public has given every
indication that such an outcome
would be received with anything
but enthusiasm.
Press and Public Support
Railroads'
The press of the country has
with practical unanimity advo-
cated fair play for the railroads
in the matter of compensation for
carrying the mails, especially since
the parcel post has so greatly
increased their burdens.
The American people, it is
quite evident, like to pay their
just debts, and resent being shown
equally impartial hearing.
how to repudiate them. This
sentiment has been reflected with
remarkable clearness in the atti-
...tude Qf the newspapers toward the
railway mail pay controversy.
Many Boards of Trade, Cham-
bers of Commerce and other or-
ganizations of business men
throughout the country have,
after most careful study of the
subject, condemned the Moon
bill, or “rider,’’ as unjust, arbitrary
and confiscatory, and have urged
Congress not only to reject that
* * *
measure, but to take affirmative
action toward remedying the long-
standing underpayment of the
railroads for carrying the mails
and the parcel post.
-X: º X. X-
Despite the outcome of his re-
cent efforts, resulting in the failure
of the postal appropriation bill,
Chairman Moon has announced
that he intends to introduce his
railway mail pay measure again, in
the next Congress.
%.
We stand by our original recommendations, namely:
1. That the present law be retained, but rein-
forced by requiring an annual and simultaneous weigh-
ing of the mail on all railroads for a period of not less
than 35 days, with readjustment of the pay accordingly.
2. That the apartment post office cars be paid for
on a pro rata basis of the payments for the full post
office cars.
3. That the Post Office Department be required to
carry the mails between railroad stations and post
offices—a service which is no part of the duty of rail-
road transportation.
* *
-X +
The Committee on Railway Mail Pay, therefore, asks
all railroad officers to co-operate with it in bringing these
views before the members
of the next Congress, and
others interested in fair dealing, to the end that a proper
and permanent settlement of the question of railway mail
pay may be obtained.
The Committee will continue its efforts to this end
until the matter has been fairly adjusted.
COMMITTEE ON RAILWAY MAIL PAY
By R ALPH PETERS, Chairman
F£4.2 1910 6478
tº a s :- , - |&
Five Opinions on Railway Mail
Pay for the Public to
Consider and Compare
1. The Wolcott-Loud Congressional Commission
in 1901 said: “We are of the 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.”
2. Dr. M. O. Lorenz, Associate Statistician of the
Interstate Commerce Commission, calculated in 1913 that
the railroads were underpaid certainly more than $5,000,—
000 per year for carrying the mails.
3. Mr. Louis D. Brandeis, Counsel to the Interstate
Commerce Commission in the Advance Freight Rate Case,
said in May, 1914: “It seems clear that the railway mail
service is at present unremunerative to the carriers.”
4. The Bourne Joint Bi-Partisan Commission of
Congress, in August, 1914, held the railroads entitled to an
increase of at least $3,000,000 per year for mail transporta-
tion, with relief from burdensome incidental services they
are now required to perform without pay.
5. But Postmaster Genera/ Bur/eson, in his public
statement of March 22, 1915, asks the American people to
accept his assertion that not on/y are the railroads paid too
much for carrying the mai/s, but that they actua//y “/oot the
posta/ revenues.”

X: * * *
The railroads are content to let the people judge
between the carefully weighed conclusions of two
Commissions of Congress and two officers of the
Interstate Commerce Commission, On the One side,
and the dictum of Mr. Burleson, made under the
sting of legislative defeat, on the other.
Issued April 4, 1915, by the COMMITTEE ON RAILWAY MAIL PAY, 75 Church St., New York
City. Ralph Peters, President ºf the Long Island Railroad Company, Chairman ; W. F. Allen, Secretary.
l
§
FEB 2 1918
W tº $ tº
United States Senator Weeks Refutes
the Postmaster General's Charges
In the morning newspapers of March 22, 1915, Postmaster General
Burleson charged that the railroads, through lobbying and public mis-
representations of fact, were responsible for the failure of the Senate to
reach a vote on the annual Post Office appropriation bill, carrying as
a rider the railway mail pay legislation commonly known as the Moon
bill. He asserted that the protests of the railroads against the Moon
bill, on the score of its unfairness, were not made in good faith, but
in an effort to perpetuate a system of pay whereby they now “loot the
postal revenues.”
United States Senator John W. Weeks, of Massachusetts, a member
of the Senate Post Office Committee, in an interview given to the
Boston Evening Transcript of March 22, 1915, made the following reply
to Mr. Burleson’s accusations, telling in detail why the Post Office
appropriation bill failed of passage :
“I have read in this morning's paper the statement which has just been issued by
the Post Office Department relating to the compensation which should be paid to rail-
roads for transporting the mail. I am astonished that the Department is willing to be
responsible for instituting such a propaganda.
“This whole question of railway mail pay has recently been very carefully con-
sidered by a Commission authorized by Congress, consisting of three Senators and three
-Representatives, three of whom were Democrats and three Republicans.
ha.
“This Commission made a unanimous report providing for payment to railroads for
transporting the mail on a space basis rather than the weight basis, the method of deter-
mining payment which has obtained in the past. The Department accepted the report
as far as the method to be followed is concerned; but, without, in my judgment, suitable
reasons, it has changed the rates which should be paid for this service.
“The figures and comparisons which are made in the statement I have read this
morning are so unreliable that the railroads or any other class of citizens would be
justified in combining to try to inform the public of their position. Indeed, it would
appear necessary for citizens to do this in order to protect themselves from their own
Government.
“I shall not debate the subject now, because space forbids, and, further, I presume
that the whole matter will come up next winter, as the Department's statement intimates.
It will then be carefully considered and I hope properly adjusted. But I do want to
make an accurate statement of the reasons for the failure of passage of the Post Office
appropriation bill.
Issued for the information of the Public, March 25, 1915, by the COMMITTEE ON RAILWAY MAIL PAY, 75 Church
Street, New York City ; Ralph Peters, President of the Long 1sland Railroad, Chairman ; W. F. Allen, Secretary.
“There would have been no question about its passage, and any inconvenience which
may be caused by the necessity of reappropriating the amounts appropriated last year
could have been obviated had not the Department insisted, in the hurried closing days
of the session, upon including in the appropriation bill the Department's own conclusions
on the important subject of the railway mail pay.
“It is obvious to almost everyone that no such important change as is contemplated
in this proposal should be made without Congress being fully informed on the subject.
It should be so thoroughly and fairly debated that those who have not had the oppor-
tunity to become familiar with it may be able to act wisely and judiciously.
“The subject was not suitably debated in the House and there was absolutely no
time for debate in the Senate.
“The Department's proposition, in addition to the question of the method to be
pursued and the rates to be paid, contained a provision which contributed one of the
principal reasons for the failure of the Post Office bill: This provided that Congress
should make rates for carrying the mails and that the rates ‘should not exceed those
authorized by Congress, but that they might be modified to any degree by the Depart-
ment itself.
“I maintain that a principle of so great importance is involved in that proposition,
that no thoughtful, foresighted man can favor it. In a word, the proposed plan would
be similar to the fixing of rates by the Interstate Commerce Commission not to exceed
the amount fixed, but allowing the shipper to modify those rates at his own option.
“The Government should show an example of fairness and equity to its citizens and
should not attempt to force upon them a proposition which contains neither of those
Qualities.
“I notice the suggestion is made that the Post Office bill failed because of the
activities of a lobby' maintained by the railroads. This is a repetition of the old hack.
neyed cry which may have been effective in prejudicing opinion at one time, but which
seldom should be given credence and certainly has no merit in this case.
“While the contention of the railroads may or may not be fair and reasonable, it had
nothing whatever to do with the failure of the bill. That failure was the result of the
insistence of members of the Senate that this important question should be settled only
after proper deliberation and on its merits rather than through pressure exerted at a time
when the great supply bills for the maintenance of the Government were being hastily
passed without suitable consideration. This consideration in itself would supply reason
enough for the elimination of general legislation of the first importance.”
The Railroads' Reply to Mr. Burleson's
Charges of Looting and
Misrepresentation
Mr. Ralph Peters, President of the Long Island Railroad and Chairman
of the Committee on Railway Mail Pay, representing the railroads of the
country, on March 22, 1915, made the following public answer to the
Postmaster General’s charges against the railroads carrying the United
States mail and the parcel post:
“In a statement published in the papers this morning, Postmaster General Burleson
says that under the system whereby the railroads are now paid for carrying the mails,
‘the postal authorities are compelled to stand helplessly by while the railroads loot the
postal revenues.’
“This is a very serious charge. It means, if it means anything, that a member of
the Cabinet of the President of the United States charges the managements of the chief
industry in this country with being in a conspiracy to rob the Government of the
United States.
“Congress appointed a bi-partisan Commission to investigate the whole subject. That
commission, of which Ex-Senator Jonathan Bourne, Jr., was Chairman, recently recom-
mended, as the result of its inquiry, the passage of a bill which would have increased the
pay of the railroads. Was Senator Bourne's Committee duped by the roads, or did his
Committee become a party to the conspiracy to steal?
. . . “It may be possible for a demagogic politician to make a charge like this in the
heat of a political campaign, but to inject into a statement issued under the aegis of the
Government of the United States such language as that by which the Postmaster General
now seeks to express his spleen against the railroads is unworthy of the great office of
which he is the incumbent.
“The fact is that Mr. Burleson, through lack of understanding of the postal service
and through reliance upon advisers who were accused by the joint bi-partisan Commis-
sion of Congress of ignorance of their duties and greed for arbitrary power, is himself
permitting the Government of the United States to rob the railroads of at least half
what is due them for carrying the parcel post.
“The railroads defy the Postmaster General to point to a single act of their Railway
Mail Pay Committee, in its efforts to present the facts in this case to the people, which
has not been absolutely legitimate.
“The American people when informed are fair. We believe they will repudiate
demagogy in every form. All the railroads ask is fair play. The Postmaster General is
evidently determined they shall not have it. The railroads therefore appeal to the people
and they intend to present their case as aggressively as they know how, in every Con-
gressional District in the United States, believing that when the next Congress meets the
people will voice their determination that the railroads shall receive the justice which
is due them.”
#d 2 loit
Wh e s ---

The railroads accuse the Post. Office Department of at-
tempting to rob them, while Postmaster General Burleson says
the roads want to loot the postal funds. Senator Weeks exon-
erates the railroads, but no one rises to explain the justice of
post shipments without pay.
the Department's demand that the railroads transport the parcel
– Washington, D. C., Herald, March 23, 1915
How the Newspapers Received
Mr. Burleson's Attack
On the Railroads
“Mr. Burleson, First of All, Should Take
Jonathan Bourne in Hand”
(From the New York, N. Y., Times, March 23, 1915)
The Postmaster General has but to con-
vince the people that he speaks by the book
when he says that the railroads are overpaid.
They will all back him up and they will
welcome a complete exposure of the shock-
ing and inordinate greed of the railroad
corporations. We hope he will show them
no mercy. -
Let him begin at the beginning by con-
vincing Jonathan Bourne, Jr., who was
Chairman of the "Joint Committee on Post-
age on Second Class Mail Matter and
Compensation for Transportation of Mail,”
which presented its report on August 31st
last.
+ * * *
In passing we may remark that Mr.
Bourne is incredulous about the comparison
of express and mail service. The Bourne
report points out that there are so many
differences between the conditions of mail
and express transportation, the express ser-
vice being in many ways less burdensome
* { { g
and expensive, ’’ that a comparison of rates
without comparison of service rendered is
lacking in sincerity.”
We wish Mr. Bourne had not said that.
The Postmaster General, of course, is sin-
cere in everything—even when he says that
the parcel post service “is being performed
at a slight margin of profit to the Govern-
ment,” although in the report of the Joint
Committee of Congress to investigate the
parcel post, the committee of which Sena-
tor Bristow, of Kansas, was Chairman, it
is declared to be “impossible to determine
the cost of the parcel post service or the
revenue that is derived from it. Any esti-
mate is mere guess.” That report was
presented on December 1, 1914.
But it is important that Senator Bourne,
who, as Chairman, we suppose prepared
the report of his committee, should be
brought over promptly to the belief that
the railroads are overpaid for carrying the
Iſsued March 30, 1915, by the COMMITTEE ON RAILWAY MAIL PAY, 75 Church St., New York
City.
Ralph Peters, President ãf the Long Island Railroad Company, Chairman; W.F. Allen, Secretary,
tºº
mails. In presenting its conclusions Sena-
tor Bourne's committee said in its report:
That there should be an increase in rail-
way mail pay need not be surprising; in fact,
it must be expected. *
No reasonable man can expect that the
Government can increase its postal revenues
at an average rate of $13,000,000 per year
without increasing its expenses in practically
all departments of the service, though per-
haps at a smaller ratio.
In this connection it is pertinent to remark
that, although the postal revenues doubled in
that ten-year period, the railway mail compen-
sation increased only 20 per cent.
In an address delivered in this city on
December 4, 1914, Mr. Bourne said :
“Are not the railroads entitled to some
credit for safe and expeditious transporta-
tion all over the country, especially when
public opinion compels them to carry the
mail, and at rates which I am satisfied,
after two years' special study of the sub-
ject, are too low : ''
Senator Bourne made this statement
three months after the date of his report
made to Congress. In that report the
substitution of payment by Space for pay-
ment by weight was advocated, a change
which the railroads opposed. The Bourne
rcport, opposing the contention of the De-
partment that mail rates should be less
than the rates for commercial business,
declared that “we believe that railroads
are entitled to be paid for mail transporta-
tion on a commercial basis.”
The railroads will probably have some
comments to make upon Mr. Burleson's
statements. He says they are looting the
postal revenues, he says they are overpaid
for carrying the mails.
sisted that the Post Office Department was
looting them and that they are underpaid
for carrying the mails. An impartial world
will judge between these disputants.
Mr. Burleson's statement is both an at-
tack and a challenge. It is very direct, and
it is publicly made. Let the facts be made
known.
But they have in-
But we believe that Mr Burleson first of
all should take Jonathan Bourne in hand.
* * * *
Why the Postal Appropriation
Bill Failed
Boston Mass., Evening Transcript, March 22, 1915
Postmaster Burleson's charge that cer-
tain railroads brought about the defeat of
the Post Office appropriation bill in the last
Congress, because of hostility to a provision
it contained changing the railway mail pay
from a weight to a space basis, unfortu-
nately for the soundness of his theory, is not
substantiated by the press reports widely
published at the time.
According to these accounts, the bill
failed of passage because Congressman John
A. Moon, of Tennessee, a man of recog-
nized integrity in the House of Represent-
atives, and Chairman of the Post Office
Committee, lost or mislaid the sole per-
fected copy of the great supply bill over
the construction of which he had presided.
By the time he had recovered it the
hour of adjournment was so close at hand
that, recognizing the impossibility of acting
upon the bill, the House leaders hastily
adopted a resolution continuing the appro-
priations of the previous year.
The undignified scramble which char-
acterized the closing hours of the last session
of the Sixty-third Congress, the frenzied
haste in which half-baked legislation pro-
viding for the expenditure of millions of the
people's money was crowded through with
insufficient or no discussion, adequately ex-
plains why the postal bill was caught in the
crush and strangled.
We shall be surprised if Chairman Moon
does not have something very much to the
point to say in reply to Mr. Burleson's be-
lated allegation, which, if permitted to go
unchallenged, might be taken as a reflec-
tion upon himself and his fellow committee
members.
What Mr. Burleson Does Not Want
Brooklyn, N. Y., Eagle, March 22, 1915
In a statement made public this morn-
ing the Postmaster General asserts that the
carrying corporations have been adequately
paid for carrying the mails, and arraigns
them for misleading the country and grossly
misrepresenting his Department. He adds
that they are trying to impose upon the
Government the expense of certain special
services now performed by them.
The companies complain that they are
compelled to accept rates in fixing which
they have no voice. They protest that the
power to determine the frequency and
measurement of mail service should be
statutory, or at least subject to appeal, and
that they are at the mercy of an official
whose word is law. -
It is certain that had the Moon bill be-
come a law, it would have been within the
power of the Postmaster General to have
subjected the companies to an added ex-
pense of a total estimated at $10,000,000.
It is also certain that this power, had it
been conferred, would have been exer-
cised.
That the carriers are so situated as to be
equal to the task of bearing any such extra
burden cannot be shown even by the most
dexterous jugglers of arithmetic. Last year
their gross earnings diminished by more than
$208,000,000, while their net profits fell
off to the extent of about $76,000,000.
Mr. Burleson should explain what he
means when he says he has every reason
to believe that a majority of the Senate
favored granting to him the authority
alluded to.
He is right in declaring that the “oppor-
tunity to dispose of this vitally important
subject was foreclosed not only at the cost
of the defeat of this legislation, but of the
entire Post Office appropriation bill,”
but he knows it miscarried because a ma-
jority of the Senators objected to the “rider”
enabling him to reduce his deficit by $10,-
000,000 at the ex p ense of the carriers.
Whatever legislation is enacted should in
dicate, both by its terms and by the circum-
stances of its adoption, an unmistakable pur-
pose on the part of Congress to deal fairly
and justly with the railroads.
This is or appears to be precisely what
Mr. Burleson does not want and will not
have if he can help it. The questions in-
volved are those of fact. Either the rail-
roads are paid enough, less than enough or
more than enough for carrying the mails.
They say their compensation is inadequate,
and the Postmaster General declares it to
be “liberal and equitable.” When contro-
versies such as these arise, it is customary
to submit the facts to disinterested experts
and to look to them for judgment.
ONLY THOSE WHO FEAR THE
OUTCOM E ARE LIKELY TO OB-
JECT.
..}{ }{ }{ X:
“Mr. Burleson's Surprising
Statement''
Philadelphia, Pa., Inquirer, March 24, 1915
A great many people will be surprised
to learn from Postmaster General Burle-
son that instead of being underpaid for
carrying the mails the railroad companies
are getting about twice as much as would
be a fair compensation.
This interesting fact, if it be a fact, is
set forth in a statement upon the subject
which has just been issued by the Post
Office Department, from which it appears
that the railroads, which have complained
so bitterly of the shabby way in which
the Government has treated them, and
which have actually begun suit to recover
the substantial sum of $36,000,000 from
the United States Treasury upon the ground
that they have been underpaid for their
services to that extent, have actually been
engaged in looting—that is the word used
—the postal revenues.
Assuming such to be the case, one won-
ders why the postal authorities should
have so patiently and, until now, unpro-
testingly submitted to such an extortion.
They ask that :
They have a remedy at hand. They could
at any time have invoked the assistance of
the Interstate Commerce Commission,
and it is a safe guess that they would have
succeeded in securing a speedy relief.
There is, however, room for some skep-
ticism as to the absolute accuracy of the
charge which Postmaster Burleson has
entered, and it may be doubted whether
he would be willing to have the truth of
it put to the test.
One of the first things which Mr. Burle-
son did after assuming his present office
was to place the Government in competi-
tion with the express companies by greatly
enlarging the scope of the parcel post.
By reducing the rates and raising the
weight limit he succeeded so well in pop-
ularizing that service as enormously to in-
crease its volume, and it has always been
understood and has never been denied
that no addition was made on account of
this increase in the pay for carrying the
mails which the railroads had previously
been receiving.
Their remuneration has been fixed by
means of quadrennial weighings, and as
they have received no more under Mr.
Burleson's administration than before, there
is reason and justice in their plea that the
excess parcels transported by them on be-
half of the Government have practically
been carried free.
That is what they have all along con-
tended, and important evidence in support
of their position can be found in the report
presented last August 31st by Mr. Jonathan
Bourne, author of the original parcel post
bill, as chairman of the "Joint Committee
on Second Class Mail Matter and Com-
pensation for Transportation of Mail.”
Proceeding upon the assumption that the
American people did not desire the mails
to be carried by the railroads or any one
else for less than a reasonable compensa-
tion, this report pointed out that while in
the ten-year period from 1903 to 1913 the
postal revenues had doubled, the pay of
the railroads had only advanced 20 per
cent., and it recommended a revised plan
of compensation which its signatories
firmly believed would
creased postal expenditures of more than
$3,000,000 over the actual appropriations
carried in the last Post Office appropria-
{ { º •
not result in in-
tion bill for railway pay.”
Evidently the Bourne committee was
blissfully ignorant of the 50 per cent, extor-
tion which Mr. Burleson has just discovered.
•){ }{ }{ %
Why Mr. Burleson Is Displeased
New York, N. Y., Evening Sun, March 23, 1915
Postmaster General Burleson approaches
the question of the railroads' pay for carry-
ing the mails from the wrong angle and in
the wrong way.
The issue is not political except in so
far as he and Representative Moon try to
drag it into politics. It is not a subject for

angle.
The claims of Postmaster General Burleson today in re-
gard to railway mail pay may be disputed from almost every
Since the Supreme Court decided in the Norfolk and
Western passenger rate case and in the North Dakota coal case
that unprofitable business need not be hauled by the railroads, it
has been the opinion of railroad lawyers that the court might
sustain the carriers in a case emphasizing the lack of compen-
sation for the railway mail service.
—New York, N. Y., Evening Mail, March 22, 1915
denunciatory rhetoric. It is a pure matter
of business.
The railroads perform a certain service
for the Government; they carry the mails.
Even Mr. Burleson and Mr. Moon admit
in theory that they must be paid for this
work.
If you could ever corner men of their
peculiarities of mind they would admit that
the pay must be remunerative. Perhaps
they might be induced to concede that the
pay was the railroads' affair as much as the
Government's, and that the companies
should have some voice in the bargain
when it is fixed.
Now, what Mr. Burleson and Mr. Moon
want in the first place is to exclude the
railroads from all share in the deal.
The rider which caused the defeat of the
Post Office appropriation bill in the last
of the last Congress
effectually gave to Mr. Burleson despotic
power to fix the pay for carrying the mails.
hours session of
Mr. Burleson wails frantically because this
outrageous power was not granted to hini.
But, further, behind the grab at despotic
power by Mr. Burleson there was a resolve
to cut the present pay of the railroads.
He did not approach the question with an
open mind ; his was no spirit of inquiry.
In his latest tirade, epitomized in the
Sun of yesterday, he bitterly insists that
the pay should be reduced. Estimates have
been made of the result to the railroads of
the system of pay which he proposes; it
appears that the loss would be from $10,-
000,000 to $11,000,000 a year.
But, already, the railroads insist that they
are underpaid by about $15,000,000 for
the service rendered. This sum, at least,
they say is necessary to make the service
profitable.
In his final argument on the 5 per cent.
freight rate increase, Mr. Louis Brandeis
pronounced the carriage of the mails at the
existing rate a losing game.
The burden imposed by the parcel post
has, in fact, made the situation intolerable.
So here we have a business issue joined.
What the railroads ask is fair treatment
—that the Government should do business
in the same spirit of honesty as a private
citizen.
They ask annual weighing of the mails
and readjustment of their compensation.
They ask a method of pay which will
not permit the Government to secure by
mere trickery extra accommodation with-
O ult eXt T2 CO St.
They ask to be freed from the arbitrary
dictates of postal officials. *
Against these demands Mr. Burleson
bitterly inveighs. His climatic grievance is
that the railroads have taken their case to
the people and made their grievances gen-
erally known.
Mr. Burleson
advance any arguments. He simply scolds.
does not condescend to
He shows deep pain over a prospective
postal deficit. Apparently he thinks it is
the duty of the railroads to shoulder the loss
and enable his administration to make a fine
showing.
Perhaps if he gave some attention to the
abuses in the postal activities in this city
and vicinity, which are being pretty well
shown up nowadays by the Merchants'
Association, he might find another way of
reducing the deficit than by putting the
Government in the very unhandsome posi-
tion of trying to extort service that it is
unwilling to pay for.
-X \{ }{ }{
Answering Facts with Rhetoric
New York, N. Y., Evening Globe, March 22, 1975
Postmaster General Burleson, taking ad-
vantage of the Monday morning “leave to
print ’’ that is possible because of the pau-
city of Sunday news, develops an attack on
the railroads because Congress at the re-
cent session failed to pass a bill which
gave the Postmaster General discretionary
power to reduce the pay of railways for
carrying mail.
Mr. Burleson denounces as false the as-
sertion that the railways are not being ade-
quately paid for transporting the mail, and
p
says that the railways have misled the
public by a misstatement of the facts.
But, unfortunately, Mr. Burleson, com-
plaining of figures which apparently show
that the railroads, in a period of advancing
railway wages and of higher costs for rail-
way supplies, have not received an increase
of compensation proportionate to the in-
crease in the weight since the institution
of the parcel post, does not give any figures
himself. He merely indulges in general
State IIT entS. -
When specific allegations are met with
indefinite rhetorical denials it is common
to assume that there is more likely to be
error in the denials than in the allegations.
Mr. Burleson, instead of wasting space by
verbal discharges, might well have employed
the space to give the public the correct
figures.
The weighing on which mail compensa-
tion is now based occurs Only once in four
years. It would seem obvious that such a
system, with the volume of mail greatly in-
creasing, is not fair to the carrier.
The carrier finds himself for one, two,
or three years paid on a basis below the
quantity of his actual service. It is not
easy to see why the Department objects to
Yet Mr. Burleson
implies that it is wicked for the railroads
the annual weighings.
to ask for such annual weighings.
Equally non-convincing is the attempt
of Mr. Burleson to make it appear that an
effort to get the Government to increase
railway mail pay is born of a desire to
throttle the parcel post.
tion obviously approaches close to childish-
Such argumenta-
n & S.S.
That the railroads should object to lodg-
ing discretionary power in the hands of
Mr. Burleson is understandable and legiti-
mate in view of his lack of fairness and
his apparent willingness to be indifferent
to the size of railway deficits provided he
can avoid a postal deficit.
Objection to Annual Weighing
a Mystery
New York, N. Y., Evening Post, March 22, 1915
Those ravening railways, with their
monstrous desire for more pay in carrying
the mails and for an annual determination
of mail weights, are scarcely vanquished by
the logic of Postmaster General Burleson's
last outburst.
He returns to his old contention that,
measured by express rates, the roads are
really overpaid. The express rate on 100
pounds from Boston to Chicago is $2.50,
of which the railroad gets for transportation
just one-half, or $1.25. The average rail-
way mail pay for 100 pounds between
these cities is $2.81, or twice as much.
Could proof of Government liberality be
more triumphant
But even the ordinary observer is struck
by the fact that 100 pounds of express
matter will cost a good deal over $2.50 if
mailed in twenty separate packages, and that
100 pounds of mail represents hundreds of
units, occupying a space vastly larger than
one bulky parcel.
The Postmaster General, again, points
out that the Government pays the railways
$1.20 on a 20-pound package sent by
parcel post from New York to Chicago,
while the express companies pay the roads
$0.64 on such a package.
But the express companies have just
been granted a hearing by the Interstate
Commerce Commission with a view to
increased rates, they having shown that in
1914 their operations resulted in a deficit
of $2,000,000. It is apparently a necessity
that they receive more from their patrons
and pay the railways more.
WHY MR. BURLESON SHOULD
OBJECT TO THE OBVIOUSLY
FAIR PROPOSAL TO SUBSTITUTE
ANNUAL FOR QUAD RENNIAL
WEIGHINGS IS A MYSTERY.
The country, as he admits, was pretty
well convinced by the railway “propa-
ganda" that the bills just defeated in Con-
gress did not give enough to the roads;
it has not yet had reason to change its
mind.
“A Unique Discovery ''
Philadelphia, Pa., Ledger, March 23, 1915
Postmaster General Burleson has made
He finds that the
Government made a small profit on the
800,000,000 parcels handled in the mails
last year, but that a reduction of rates is
a unique discovery.
prevented by the cold-blooded attitude of
the railroads, which refuse to haul the
parcel post for nothing.
If only the roads would carry these 800,-
000,000 packages for the mere fun of filling
up their cars and wearing out their tracks and
burning up coal in their locomotives and
without expecting any pay, why everybody
could soon ship everything from a thimble
to a load of hay by mail. -
That seems to be the halcyon day Mr.
Burleson dreams about. However, the
Postmaster General asserts that the rail-
roads were paid $4,300,000 extra for car-
rying the parcel post, which was $1,600,-
000 more than the service cost them.
Evidently the postal arithmeticians are
swifter workers in thus being able to de-
termine the exact cost of an intricate rail-
road service than are the ordinary mail
handlers in Philadelphia, where speed is an
ingredient which too infrequently appears
in their own service.
But if Mr.
railroads make more than a 50 per cent.
Burleson knows that the
profit by carrying the parcel post, why does
he not invoke the Interstate Commerce
Commission or the Supreme Court There
is no such profit made on any other traffic,
so that Uncle Sam has a clear case of dis-
crimination upon which to base his case.
The Postmaster General should be glad of
“This Proves Nothing and Con-
vinces Nobody”
New York, N. Y., Journal of Commerce,
March 23, 1915 -
The statement on the subject issued by
Postmaster General Burleson in accusing
the Railway Pay Committee of defeating the
Post Office appropriation bill is wholly
one-sided and unnecessarily violent in its
language. It is full of sweeping allegations,
with no supporting facts.
Surely, the railroads were entitled to
present their case and seek to defend what
they considered their rights without being
denounced as
Washington,
keeping "emissaries” at
maintaining an expensive
“press bureau” and flooding the country
with a propaganda in which the Depart-
ment is “grossly misrepresented.” This
proves nothing and convinces nobody."
Let us have the facts fairly presented
on each side and not a volume of vituper-
ation. Then the public may be able to
judge of the merits of the controversy.
Mr. Burleson denies that the railway
pay is inadequate and declares that the
rates proposed and the compensation by
space instead of weight would be more
equitable and insure a better compensation.
He speaks of the proposal as a result of
a “patient and thorough investigation,”
which shows it to be "just and reasonable
to the railroads and the Post Office De-
- * { {
partment,” and as an "effort to end a sys-
tem under which the postal authorities are
compelled to stand helplessly by while the
railroads loot the postal revenues.”
The comparison of the long distance ser-
vice with that of the express companies,
which receive a lower rate, proves nothing
as to the general question.
Neither does the dispute about the cause
of the postal deficit or characterizing its
attribution to the parcel post as an “absurd
falsehood" clearly “fabricated with the
foolish purpose of arousing a public sen-
timent in favor of restricting or withdraw-
ing the parcel post facilities.” -
a chance to prove his contention.
Why should the Postmaster General and

The Postmaster General will hurt and not help his
cause by this sort of accusation. -
—Baltimore, Md., Sun, March 23, 1915
the “mail pay committee" of the railroads
be in such violent antagonism f Here is
a simple business proposition of rendering
a certain service in transportation for the
benefit of the public and being properly
paid for it.
The railroads have a right to expect fair
treatment and ought to know whether
they are getting it or not. The public
should be willing and we believe are wil-
ling they should have it. Why should the
Postmaster General get so hot over it
Let us have the real facts fairly stated and
get a disinterested judgment.
THIS FIER CE BAITING OF
RAILROADS IS NO LONG ER
WORTH WHILE.
* * * *
Senator Weeks' Statement Found
º . Convincing
ſºdianapolis, Ind., News, March 23, 1915
** is a serious matter when the Post-
master General of the United States makes
tº: deliberate statement that the railroads
&aused the defeat of the last Post Office
appropriation bill.
A railway mail committee, representing
“ certain railroads,” according to the Post-
{ { *
master General, endeavored to " mislead
and wrongfully influence the public mind .
into an attitude of antagonism to the De-
partment.” Senator Weeks, of Massa-
chusetts, has issued a reply to Mr. Burleson.
When the two statements are compared,
that of the Senator will be found convincing.
The legislative facts, as given by Mr.
Weeks, are assumed to be correct. The
last. Congress officially went into the whole
subject of railway mail pay, when a bi-
partisan commission of three Senators and
three Representatives considered the tech-
nical side of the case, -
of weight.
A unanimous report was returned, pro-
viding for pay on the basis of space instead
This report was accepted by
the Post Office Department, “but,” says
Senator Weeks, “without, in my judgment,
suitable reasons,” the Department “changed
the rates which should be paid for this
service.”
It was not, then, “insidious railroad
which caused the defeat of the
bill in the closing hours of the session, but
rather the endeavor of the Department to
write into the measure its own opinions
y y
influence
concerning railway pay.
Several weeks ago Mr. Moon, who, as
a member of the House committee having
the subject in charge, had opportunity to
hear of lobbying, warned the Department
not to incur a deficit contrary to the law.
The statement indicated a belief that rail-
road influence was not lacking, but its main
object seemed to be to justify Mr. Burle-
son's attitude when a lack of funds ham-
pered the service.
But Mr. Moon and Mr. Burleson to—
gether cannot dispose of the question in
this summary fashion. There is something
to be said on both sides. The present
system of remuneration for the carriage of
the mails is not just.
Mr. Burleson justifies his position as
follows: “It was and is a determined,
well-considered effort to end a system
under which postal authorities are com-
pelled to stand helplessly by while the
railways loot the postal revenues.”
In other words, the Department is the
one to determine what the railroads shall
get for their service. -
THIS IS ANALOGOUS, AS SEN-
ATOR WEEKS SAYS, TO THE
S H I P P E R E S T A B L IS H IN G
FREIGHT RATES. IS IT JUST
29 , , , , * 2 1918

4. **** * * - *. A 2' & -
£ t. i.e. * : - , * : A A 2 .." * * : * /
- * * * * * rº + .* * , . " * * ** gs f
** º * * ‘,- 22.3% wº 2. / ...) tº . . . 2 13, 2 -"A f sº. 4-7, § 4
A'
The Post Office Department should deal, as should
all Departments of the Government, fairly with all citi-
zens, and the Post Office Department in using the trains
and locomotives of a railroad is really using the property
of the citizens who own the stock of the railroad.
—Providence, R. I., News-Democrat, July 7, 1915.
Shipping U. S. Treasury Funds
by Mail at the Expense
of the Railroads
The Treasury Department, acting in concert with the Post Office
Department, has issued an order which became effective August 16th,
directing that all public moneys and securities transported between the
Treasury, the Sub-Treasuries and the banks shall hereafter be carried
by registered mail, instead of by express. This order involves results
to the railroads concerning which the public should be fully informed.
The express companies have hitherto earned about a half-million
dollars yearly by the performance of this service. Approximately 50
per cent. of this sum, or $250,000 annually, was paid by them to the
railroad companies for the facilities of transportation.
Both the railroads and express companies will be deprived of these
revenues, but the railroads, unlike the express companies, will by no
means be relieved of the service, since it is obvious that whether the
public moneys and securities are sent by express or by mail, the facili-
ties of the railroads must be used in either case.
::: :::
For carrying the public moneys and se– quate, by comparison with the unusual
curities as mail the railroads will receive
no compensation whatever until the Gov-
ernment again weighs the mails to ascer-
tain the tonnage being carried. This is
done only once in four years. Even then,
the rates the railroads will receive for trans-
porting the funds will be so utterly inade-
value of such shipments and the fair worth
of the service to the Government, as to
amount practically to nothing.
The rates paid the railroads for carrying
the mails are based upon the service of
transporting such things as letters, printed
small merchandise. These
matter and
Issued August 21, 1915, by the COMMITTEE ON RAILWAY MAIL PAY, 75 Church St., New York
City.
Ralph Peterſ, President of the Long Island Railroad Company, Chairman; W. F. Allen, Secretary.
make up the great bulk of the mails, and
with few exceptions are of relatively small
intrinsic value.
Rates commensurate with service of this
character cannot, by any recognized eco-
nomic principles, be held commensurate
with the service of carrying enormous sums
in money and negotiable securities, the
shipments of which by the Government
probably exceed two billions of dollars
annually.
* }{ %
A Claim of Saving Analyzed
The new arrangement has enabled the
Treasury Department to claim that a saving
the
amount hitherto paid to the express com-
will be made equivalent to entire
panies, because the Treasury is to receive
from the Post Office Department the
privileges of free postage and free registra-
tion upon all shipments of currency and
securities.
It would be a great error, however, to
suppose that the revenue loss to the carrier
companies will be a real saving to the
Government. The Treasury expense, it
is true, may be somewhat decreased, but
Post Office expenses will n e c e s s a rily
be materially increased.
This will inevitably result from the fact
that there is to be imposed upon the Post
Office Department the performance of
important new duties hitherto regarded as
lying wholly outside the proper scope of
the postal service.
% + x; };
Moreover, the cost of insuring public
moneys and securities in transit has hith-
erto been borne by the express companies
and included by them in their charges.
This expense must now be assumed by the
Treasury Department and will be an offset
to the gain exhibited by avoidance of
the express charges. The Treasury De-
partment will naturally be obliged to make
arrangements for insurance through other
agencies, presumably the corporations
which are engaged in general commercial
insurance.
The net results of the change, therefore,
seem to be :
1. To oblige the railroads to ren-
der for practically nothing the actual
transportation service required in
effecting transfers of the public
funds.
2. To separate the risk of insur-
ance in transit from the general
transportation duty and turn this
business Over to new interests, at
rates not as yet disclosed.
3. To transfer from the express
companies to the Post Office De-
partment the duties involved in the
actual handling, collection, delivery
and custody of thousands of ex-
tremely valuable packages not
hitherto carried in the mails.
* * * *
IN THIS ANALYSIS IT WOULD AP-
PEAR THAT THE ONLY REAL AND
TANGIBLE, SAVING OF EXPENSE TO
THE GOVERNMENT LIES IN THE
SUBSTANTIAL ELIMINATION OF
PAYMENT TO THE RAILROADS FOR
THE TRANSPORTATION SERVICE.
In other respects nothing but a change
in agencies is effected, which is as likely
to increase as to decrease costs.
This must be held true unless the Post
Office Department is to be credited with
the ability to operate more efficiently, and
at lower labor costs, than the express com-
panies, or unless the Treasury Depart-
ment is enabled to obtain abnormally low
premium rates from the insurance com-
panies, by reducing the risk in transit at
the expense of the railroads.
+ k + +
Safeguarding in Transit
For instance, insurance premiums are
naturally based upon the opinions enter-
tained as to the risk, and the risk assumed,
in the case of money shipments, certainly
depends largely upon the degree of physi-
cal protection afforded. It is in every way
probable that the new interests which are
to be awarded the business of insuring the
Government funds in transit will insist
upon unusual forms of protection, as part
of the bargain, especially in the case of the
very large individual sums that are quite
commonly transported in the financial
operations of the Government.
It may well be anticipated, therefore,
that the railroads will be called upon, from
time to time, to carry not only the Govern-
ment's money, but also to carry, free, armed
guards, as “agents in charge of the mails,”
or even to furnish special cars without
additional compensation.
For precedent upon these points, it may
be recalled that when the Treasury Depart-
ment, last summer, shipped $100,000,000
in gold from Philadelphia to New York,
as “parcel post,” the Post Office Depart-
ment required four special cars, for which
no additional payment was made, and also
the transportation for the round trip of 100
guards without payment of fare.
* }{ }{ %
Cost Will Fall on Railroads
If by exacting such forms of special
service, and insisting upon the free trans-
portation of armed guards, as postal agents,
the Treasury Department is enabled to
obtain abnormally low rates of insurance,
the saving will quite evidently be effected
at the expense of the railroads.
Under the practice heretofore of ship-
ping the Governmental funds by express,
e?
t
the express companies furnished the guards,
supplied the safes in which the moneys
were carried and paid the railroads for the
use of their facilities and for the transporta-
tion of the money, the safes and the guards.
+ + + 3%
Proper Scope of the Mails
The laws of this country limit the Post
Office Department to the payment of an
indemnity “ not to exceed $100 for any
registered piece.” The indemnity on the
parcel post, upon payment of an extra
insurance charge, is limited to $50 per
package. In the International Postal Union
mails the indemnity limit is 50 francs per
piece, or about $9.35.
Does it not seem apparent, from the
small amount of indemnity permitted by
law, that Congress has never intended that
the mails should go beyond a service of or—
dinary convenience to the general public
If the Treasury Department can use the
Post Office Department, and consequently
the railroads, in the manner contemplated
by the order respecting the shipment of
public moneys, what is to prevent the
War and Navy Departments from shipping
their supplies by mail, with United States
troops and marines as armed guards, to be
carried free by the railroads as “agents in
charge of the mails " ?
:::
Action by Congress Pending
The entire subject of readjusting the compensation to the rail-
roads for carrying the mails is still in the hands of Congress. Until
some adequate steps are taken by the legislative branch of the Govern-
ment to insure that hereafter the payments shall be upon a fair basis
for service rendered, it would appear that both propriety and justice
require the Executive Departments of the Government to refrain from
imposing additional burdens upon the railroads.
The occasion would seem to be appropriate for recalling the con-
fidence expressed by President Wilson in his letter to Secretary
McAdoo, on the opening of the Federal Reserve Banks last fall,
when he said :
“No doubt, in the light of the new day, with its new understandings,
the problems of the railroads will be met and dealt with in a spirit of
candor and justice.”

there be a deficit.
deficit.
“WE OUGHT TO DO THE FAIR THING
BY THE RAILROADS.”
“The Postmaster General is responsible for the deficit, if
He is naturally very anxious not to have a
He is very anxious to make a good showing.
“But we ought to do the fair thing by the railroads.
easy enough to make a statement showing the profitable
operation of the parcel post if you do not pay anything for the
carriage and do not charge Overhead expenses.”
—Ex-President William H. Taft, at Twenty-first Annual
Convention, Pennsylvania Bankers' Association,
May, N. J., June 17, 1915.
It is
Cape
The Government Should Set the Example
in Fair Dealing
From the Chicago Tribune, July 19, 1915
When the United States Government
engages the second industry of the land
in a pitiless war over the proper pay for a
railroad hauling a pound of mail, some
It is
reserved for Americans alone to see how-
sort of surprise is not out of order.
itzers taken up to settle a question of
accounting.
The railroads claim that the Govern-
ment is not paying them sufficiently for
carrying the mails, and the Government is
just as loud in its denials and counter
assertions that the railroads are overpaid.
Incidentally no railway mail pay legislation
was enacted at the last session of Congress
as a result, and now both sides are prepar-
ing for a display at the December session
of Congress.
Chairman Moon of the Congressional
Committee seems to be imbued with the
spirit of driving a good bargain and “sav-
ing millions for the Government.” But
the public, who must support the railroads
through the passenger, freight, express and
mail tolls, certainly expects the Govern-
ment to bear its fair share. A million
clipped off the mail pay will mean a mil-
lion added somewhere else.
One Congressional Committee has al-
ready submitted a report favoring more
liberal compensation, and Congress should
either accept its finding or be in a position
to prove its falsity. The railroads have
suggested that the matter be left to the
Interstate Commerce Commission.
But more important than all other con-
siderations is the question of ethics.
The Government has the power to com-
pel the railroads to carry the mails at a loss,
possibly, but its power should not be so
misused. A Government that demands frank
and honest dealing between the business
men of the nation should take every oppor-
tunity to set an example.
/ 6.9%
A Reply
by the Railroads
to the Statement of
The Post Office Department
on the Adequacy
and Method of Pay
to the Railroads
for Carrying the
Presented to the Senate Com- Mails and Parcel Post
mittee on Post Offices and Post
Roads March 20, 1916.
Committee on Railway Mail Pay
75 Church Street, New York City
[I am
RALPH PETERS (Chairman)
President, Long Island Railroad
CHARLES A, VVICKERSHAM
President and General Manager, Western Railway of Alabama
W. W. BALDWIN
Vice-President, Chicago, Burlington & Quincy Railroad
VV. VV. ATTEREURY
Vice-President, Pennsylvania Railroad
E. J. PEARSON
First; Vice-President, Texas and 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
Vice-President and Assistant to Chairman,
Southern Pacific Company
EDWARD CHAMBERS
Vice-President, Atchison, Topeka & Santa Fé Railway
J. E. FAIRBANKS, Secretary
roads on January 24th, 25th and 26th, 1916, by the
House of Representatives Post Office Committee, the
Post Office Department issued a pamphlet defending the
Moon Railway Mail Pay bill and the so-called “space
plan” of pay for mail transportation.
Sº before the hearings granted to the Rail-
The Department also endeavored, in its pamphlet, to
justify the attempt to obtain enactment of the Moon bill
by making it a “rider” on the Post Office appropri-
ation bill.
The Department’s defense throughout was based
upon a series of assertions, unaccompanied by proof.
Z
A careful examination of these assertions, the Rail-
roads believe, will show that they are not sustained by fact.
>}: :}; >{: :};
In the following pages, the principal claims and
assertions made by the Department are reprinted. The
actual facts bearing upon the same are stated in parallel
columns, in the form of answers.
This has been done chiefly for the information of the
Senate Post Office Committee, but also in order that all
interested persons may judge for themselves of the ade-
quacy or inadequacy of the Department’s defense of the
Moon bill, the “space plan '' of pay for carrying the mails
and the resort to “rider” legislation.
For convenience, the Department’s claims have been
grouped under appropriate heads. Page numbers are also
given indicating where the various extracts may be found
in the Department’s pamphlet.
3
The Attempt of the Post Office Department to Rep-
resent the “Space Plan” of Pay for Mail
Transportation as Being More Scien-
tific than the Weight-and-
Distance Basis
WEHAT THE DEPARTMENT SAYS
In addition to the pay for weights [of
mail actually carried] the present law
authorizes additional pay for railway
post office cars, 40 feet and more in
length, at specified rates. This consti-
tutes partial recognition of the space
principle as a proper factor in making
mail transportation rates. (Page 2.)
WELAT THE DEPARTMENT SAYS
The weighings [of the mails] are costly
and annoying, and interfere seriously
with the operation of the service in the
field. (Page 2.)
THE ANSWER
This ADDITIONAL pay for rail-
way post office cars constitutes recog-
nition simply of the fact that IN AD-
DITION TO CARRYING THE
MAILS, the railroads are required to
furnish the Department special facili-
ties for conducting post office work—
that is, sorting the mails—in moving
trains.
Why should not those special facili-
ties be paid for when demanded, and
in what manner can payment for them
relieve the Department of payment for
the principal service, WHICH IS THE
ACTUAL CARRYING OF THE
POl] NDS OR TONS OF MAIL
SHIPPED P
The anomaly and injustice of the
present law is that it provides pay for
such traveling post offices only when
occupying full cars of the length of 40
feet or more. The railroads are com-
pelled to furnish the Department with
about 4300 apartment car post offices,
less than 40 feet long, which are not
paid for at all.
THE ANSWER
Only because the Department's prac-
tice makes them so. The railroads be-
lieve that the cost of the weighings
could be reduced 75 to 90 per cent., and
all trouble to the Department prac-
tic a l l y eliminated. Congressman
Lloyd's bill, now pending, H. R. 4812,
provides such a remedy.
WHAT THE DEPARTMENT SAYS
Compensation thus determined [i. e.,
on the weight-and-distance basis] is not
fairly distributed according to service
rendered. (Page 2.)
WHAT THE DEPARTMENT SAYS
The system [of payment on the weight-
and-distance basis] lacks the elasticity to
meet changing conditions and fluctua-
tions of traffic, that, with the growth of
the parcel post, have been frequent and
far-reaching. (Page 2.)
WHAT THE DEPARTMENT SAYS
Computation of pay under the old law
with its several amendments [i. e., under
the weight-and-distance basis] is a com-
plex process, little understood, and pro-
ductive of endless and vexatious dis-
putes. (Page 2.)
WHAT THE DEPARTMENT SAYS
The whole plan [of payment for mail
transportation by weight-and-distance] is
wnscientific, inequitable in results, and
needlessly comple+. (Page 2.)
WHAT THE DEPARTMENT SAYS
The desirability of a revision of the
laws governing railway mail pay has been
recognized by postal administrations for
many years. (Page 5.)
THE ANSWER
This assertion cannot be sustained.
Payment on the weight plan, that is,
for the weight of mail carried and the
distance it is transported, is, in the
strictest possible sense, payment “ac-
cording to service rendered,” and if the
plan were administered properly by
the Department, that is, if the mails
were weighed with sufficient fre-
quency, it would with mathematical
certainty result in the payments being
“fairly distributed.”
THE ANSWER
Only because the Department re-
fuses to weigh the mails oftener than
once in four years to determine the
weights of mail carried by the rail-
roads and to be paid for by the De-
partment.
THE ANSWER
The principle—which is the ton-
mile—is simplicity itself. The arith-
metic, largely due to the Department’s
methods, is somewhat lengthy, but
could easily be simplified.
THE ANSWER
It is the precise plan upon which the
Department, itself, charges all shippers
by parcel post.
It is the plan upon which the Inter-
state Commerce Commission regulates
freight and express rates in this coun-
try.
It is the plan upon which freight
rates everywhere are based.
THE ANSWER
The railroads heartily concur. The
laws and Departmental practices
should, without further delay, be re-
formed to provide for annual weigh-
ings of the mails, pay for apartment
post office cars and pay for or relief
from the now gratuitous service, ex-
acted from the railroads, of hauling the
mails back and forth between post of-
fices and railroad stations.
II
The Attempt to Make the Moon Bill and Its “Space
Plan” of Pay for Mail Transportation Ap-
pear Fair to the Railroads
WHAT THE DEPARTMENT SAYS
The plan [of payment on the “space
basis,” specified in the Moon bill] pro-
vided for a scale of pay exceedingly
liberal in the light of every factor that
justly enters into the question of firing
reasonable compensation for carrying the
mails, and assured the railroads a some-
what larger revenue per car-mile for
carrying the mails than they are now re-
ceiving. (Page 6.)
THE ANSWER
THE MOON BILL’S PLAN DOES
NOT ASSURE THE RAILROADS
ANY DEFINITE R E V E N U E
WHATEVER FOR MAIL TRANS-
PORTATION. On the contrary, it
specifically provides that for every
form of service which it enumerates,
the Postmaster General “MAY” pay
the railroads “NOT EXCEEDING”
certain specified rates. Nowhere does
it say that he MUST pay them any-
thing.
Moreover, even the highest rates
named in the bill, far from being “lib-
eral,” would result in serious injustice.
For carrying a carload of parcel post,
IN A PASSENGER TRAIN, these
rates would yield a railroad less than
1% cents per ton per mile; whereas the
Interstate Commerce Commission al-
lows, for carrying first-class freight
IN FREIGHT TRAINS, ordinarily
from two to seven cents per ton per
mile, and much more in some sections
of the country.
Nor would it be necessary for the
Post Office Department to make car-
load shipments of parcel post in order
to exact service from the railroads at
unjustly low rates. Actual trial has
shown that in the smallest unit of
space the Moon bill would authorize—
three linear feet in a baggage car—it is
practicable to load sufficient parcel
post or mail to bring the return to the
railroad, at the Moon bill rates, down
to 1% cents per ton per mile, AND
STILL LEAVE AMPLE AISLE
ROOM IN THE CAR.
WHAT THE DEPARTMENT SAYS
Passenger Revenue Less Io Per Cent.
Is Basis of [the Moon bill] Rates.
(Page 7.)
WHAT THE DEPARTMENT SAYS
The total mail pay upon the present
basis, including both pay for weight and
pay for space, for the fiscal year of 1915,
was more than fifty-nine million dollars.
The rates carried in the proposed law
[the Moon bill] would have resulted in
a payment for that year of about sixty-
two million dollars, estimated on the
basis of the service in operation. (Page 8.)
THE ANSWER
This is a “head-line” assertion in the
Department's pamphlet that needs no
elaboration. The Interstate Commerce
Commission, in recent decisions, has
held the passenger revenues of the rail-
roads to be inadequate. Can it be fairly
contended that the mail pay, per car-
mile, should be made 10 per cent. lower
still?
THE ANSWER
Chairman Moon, of the House of
Representatives Post Office Commit-
tee, in advocating the bill, informed the
House, on December 19, 1914, that its
passage would “SAVE MANY MIL-
LIONS ANNUALLY” out of the rail-
roads’ pay, because under its terms
they could be compelled to CARRY
ALL THE PARCEL POST “PROB-
ABLY WITHOUT ANY ADDI-
TIONAL COMPENSATION.” In
the same speech he said that the “sav-
ing” thus to be achieved would be $8,-
000,000 per year.
As a matter of fact the discretionary
powers which the Moon bill would
vest in the Postmaster General would
enable him to reduce the railroads’ pay
to any extent that he might desire,
either by directly lowering the rates or
by curtailing the frequency of despatch
of the mails, or both.
A new amendment incorporated in
the measure by the House of Repre-
sentatives empowers the Postmaster
General to RAISE the rates as well as
lower them. As the Moon bill “rider”
now stands, the rates named therein
are totally devoid of binding force and
the measure is simply a complete dele-
gation of the rate-making power to the
Postmaster General.
III
The Post Office Department's Excuse for Resorting
to the “Rider” Method in Attempting to
Force the Passage of the Moon Bill
WHAT THE DEPARTMENT SAYS
Because of the congestion of legisla-
tion during the short session [of the last
Congress], it became apparent that the
Moon bill could not be enacted, and,
hence, the mail pay section of the Moon
bill was incorporated in the annual post-
office appropriation bill. (Page 6.)
THE ANSWER
If the Moon bill was, and is, as ob-
viously fair, just, scientific and in all
respects meritorious as the Depart-
ment contends, Congress would surely
have no hesitation in enacting it as a
separate measure.
What reason is assigned for making
it a “rider” on THE NOW PEND-
ING appropriation bill, in the present
LONG SESSION of Congress?
IV
The Department's Persistence in Its Old Claim of
Overpay to the Railroads for Mail
Transportation
WHAT THE DEPARTMENT SAYS
Although the facts would warrant a
reduction of railway mail compensation,
the Post Office Department has not advo-
cated this action. (Page 8.)
THE ANSWER
The FACTS are these :
In 1901, the Wolcott-Loud Congres-
sional Commission reported that the
railroads were not THEN overpaid
and recommended against any reduc-
tion in rates. Congress afterward
twice reduced the rates by law and the
Department made a third reduction by
an executive order.
In 1913 Dr. M. O. Lorenz, Associ-
ate Statistician of the Interstate Com-
merce Commission, estimated that the
railroads were underpaid certainly
more than $5,000,000 per year.
In May, 1914, Louis D. Brandeis re-
ported to the Interstate Commerce
Commission that mail transportation
was “clearly unremunerative.”
In August, 1914, the Joint Congres-
sional Committee on Railway Mail
Pay recommended an ADVANCE of
$3,000,000 per year in the railroads'
pay, with relief from the messenger
services.
The Department says it does not
now advocate a reduction in pay; but
the Department DOES advocate the
Moon bill, and the sponsor of that bill
has said in Congress that its purpose
was to effect a large further reduction
in the pay of the railroads.
V
The Attempt to Disguise the Grant of the Rate-
Making Power to the Postmaster General
WHAT THE DEPARTMENT SAYS
The proposed law [the Moon bill]
authorizes the Postmaster General to
pay not exceeding the rates specified in
it. (Page 8.)
In every law enacted by Congress on
the subject of railway mail pay, since
Congress first legislated seventy-seven
years ago in regard to the carriage of
mails on railroads (July 7, 1838), the
Postmaster General has been given free
and full power to contract with a rail-
road for the carriage of mails at any rate
within the maximum rates named in the
several laws if he should be able to do so.
(Page 9.) - -
THE ANSWER
The present law, it is quite true, au-
thorizes the Postmaster General to
CONTRACT with the railroads for
the transportation of the mails, and
limits the amounts he may OFFER
TO PAY by the use of the words “not
exceeding” in connection with the va-
rious rates specified.
The Moon bill, however, would
COMPEL the railroads, under penalty
of $5000 fine per day for each refusal,
to carry the mails AT THE RATES
FIXED BY THE POSTMASTER
named in the bill.
GENERAL, “not exceeding” those
This is in no way
similar to the present law, which
DOES NOT COMPEL the railroads
to accept the Postmaster General’s
terms. If the service is to be made
compulsory by law, instead of a mat-
ter of free contract, a disinterested
branch of the Government should, in
fairness, fix the rates. No one would
defend a law empowering the Post-
master General to COMPEL manu-
facturers to sell his Department sup-
plies for whatever prices he might
choose to pay.
10
VI
The Attempt to Justify the Grant of the Rate-
Making Power to the Postmaster General
WHAT THE DEPARTMENT SAYS
The history of the [postal] service for
the last forty years sufficiently refutes the
charge that the inclusion of the words
not exceeding will give the Postmaster
General power that he would use in an
autocratic or unfair manner. (Page 9.)
WHAT THE DEPARTMENT SAYS
If rates [for railway mail transporta-
tion] were absolutely fixed, the Govern-
ment would be compelled to use the short
line between the large mailing centers
and could not give the competing roads
having longer lines the privilege, as is
done now, of hauling a part of the mails
at the rate for the short line. (Page 9.)
WHAT THE DEPARTMENT SAYS
Also, if the rates [for railway mail
transportation] were inflexible there
would be innumerable instances in the
conduct of the service involving disputes
between the railroad companies and the
Department as to the precise amount due
for service. (Page 9.)
THE ANSWER
The railroads have never asserted
that the present Postmaster General
—or any Postmaster General—in-
tended to use in an autocratic or un-
fair manner the powers which the
Moon bill would confer. But they
have many times asserted, and here
reiterate, that these powers COULD
be so used, and if they are not to be
so used, no reason exists why the De-
partment should seek them or why
Congress should grant them.
THE ANSWER
This is a very trivial matter. It ap-
plies only to 21 mail routes out of a
total of 2484. The amount saved to
the Government is only one-half of one
per cent. of the total railway mail pay.
The Joint Congressional Committee on
Railway Mail Pay in its bill, which
proposed FIXED rates, included, in
Section 1, a provision for equalization
between common points where one
railway line was shorter than another.
If the Postmaster General wishes to
continue the system of free contract,
he should advocate retention of the
present law, which amply provides
for it.
THE ANSWER
The meaning of this statement is
very obscure. If the rates were defi-
nitely fixed, there could be no dispute
as to what was due the railroads for
any given service. On the contrary,
if the rates were left discretionary with
one of the parties to the transaction,
there would be unlimited differences
and disputes, and possibly legal pro-
ceedings.
11
VII
The Post Office Department’s Attempt to Make the
Railroads Appear Better Paid for Mail
than for Express Transportation
WHAT THE DEPARTMENT SAYS
This tremendous burden of service
[the parcel post, estimated by the De-
partment at 1,000,000,000 parcels per
year] has been successfully assumed by
the postal establishment and is being per-
formed at a margin of profit for the
Government, notwithstanding the inordi-
mately heavy transportation costs—at
times amounting to double the transpor-
tation costs borne by the express compa-
nies upon a great part of their traffic.
(Page Io.)
WHAT THE DEPARTMENT SAYS
Upon the majority of these great mail
routes, mail and express transportation
conditions are practically identical. The
cost to the railroads of the incidental
services rendered in transporting the
mails on these routes is inconsiderable as
compared with the great disparity in the
returns from the two services. (Page 10.)
TELE ANSWER
The entire question of the earnings
of the railroads from mail and express
transportation was investigated by the
Joint Congressional Committee on
Railway Mail Pay, which reached this
conclusion:
“WE ARE COMPELLED TO RE-
JECT THE DEPARTMENT'S AT-
TEMPT TO SHOW HIGHER REL-
ATIVE RAILROAD EARNINGS
FROM MAIL AS RECKLESS AND
MISLEADING.” (Report of August
31, 1914, page 93.)
In 1914, the last year for which com-
plete figures are obtainable, the rail-
roads received $55,000,000 for carrying
mail and $75,500,000 for carrying ex-
press traffic.
THE ANSWER
The Joint Congressional Committee
on Railway Mail Pay said:
“The express service undoubtedly
costs the railroads less than the mail
per car-mile.
“Express matter is handled at all
times by express employes. A railroad
company not only handles the mail at
and in stations, but in a great many in-
stances bears the expense of transport-
ing mail between the station and the
post office.
“Mail must be carried on all trains,
including the fast trains, while express
matter is limited in frequency and
speed of service.
“Express cars are of simple construc-
tion, with practically no furnishing and
require little lighting. Mail cars must
be of special construction, must be fit-
12
WHAT THE DEPARTMENT SAYS
The railroads are receiving from the
Government amounts which, for hauls of
any considerable length, exceed by about
two to one the amounts they receive from
the express companies for like and simi-
lar service. (Page 10.)
WHAT THE DEPARTMENT SAYS
The Department is authorized by law
to ship by mail from November 15th to
January 15th empty mail bags ordinarily
sent by freight.
During the recent holiday period it was
found that shipments could be made by
express at a lower rate than by mail be-
tween many points and the express serv-
ice was utilized to a considerable extent.
(Page 14.)
ted with racks for holding mail bags
and cases for distribution of letters en
route. The best practicable lighting is
also required.
“Postal employes are carried free on
railroads while on official business,
whether connected with railroad mail
service or not. Transportation of ex-
press employes is reciprocated by free
services rendered by the express com-
panies for the railroads.
“There are other differences which
make the express service less burden-
some or expensive to the railroads
than the mail service. The foregoing
enumeration is sufficient, however, to
show justification for the statement
that a comparison of rates without a
comparison of service rendered is lack-
ing in sincerity.” (Report of August
31, 1914, pages 90 and 91.)
THE ANSWER
On ALL hauls of moderate length,
over which the great bulk of the mails
are carried, the rates received by the
railroads from mail transportation are
lower than those they receive for car-
rying express traffic. The express
companies pay the railroads 50 per
cent. of their gross receipts. The Post
Office Department pays only 20 per
cent.
The assertion that mail and express
transportation are “like and similar” is
refuted by the findings of the Joint
Congressional Committee quoted
above.
THE ANSWER
The Department fails to explain that
during the recent holiday period large
quantities of postal equipment were
shipped by mail, either to obtain a
lower rate or a better service than ex-
press afforded. The Department has
asked Congress to extend the period
during which this may be done. (Re-
port of 1915, page 135.)
13
VIII
The Department's Claim that the “Space Plan” of Pay
for Mail Transportation Could Accurately
Measure and Pay for the Service Rendered
WHAT THE DEPARTMENT SAYS
Under the space basis of payment pro-
vided in the Moon Bill and in the appro-
priation bill, and agreed to by the Con-
ference Committee on the latter, fluctua-
tions in service would be promptly recog-
nized and compensated. (Page II.)
It is the belief of the Department
officials, and of many railroad officials as
well, that the space plan would enable
all service furnished according to the
needs to be properly compensated; in
other words, the Department would pay
for what it receives, and the railroads
would receive pay for all service fur-
nished. (Page 11.)
THE ANSWER
It would be hard to express in more
precise language what the “space
plan” would NOT do.
Under the space plan, one railroad
would carry one ton, another ten tons
and another twenty tons of mail, the
same distance, for the same pay. On
many routes, it would be possible for
the Department to double, treble or
quadruple the mail tonnage which the
railroads would be required to haul,
WITHOUT PAYING ONE ADDI-
TIONAL CENT FOR THE EXTRA
SERVICE.
The assertion that many railroad
officers believe in the equity of the
space plan is directly refuted by the
unanimity of the railroads in protest-
ing against its injustice before the
Committees of Congress and the
public.
14
IX
The Five “Merits” of the “Space Basis” of Pay for
Railway Mail Transportation with Which
the Department's Pamphlet Closes
WHAT THE DEPARTMENT SAYS
[The space basis] Eliminates trouble-
some and expensive weighing. (Page 16.)
WHAT THE DEPARTMENT SAYS
[The space basis] Provides a system
of rates definite and understandable.
(Page 16.)
WHAT THE DEPARTMENT SAYS
[The space basis] Utilizes facilities
paid for to maximum capacity. (Page 16.)
TBDE ANSWER
It would eliminate NECESSARY
weighing, and would thus destroy all
check upon the disbursements made by
the Department for service rendered.
Aside from that, the Department
cannot justly refuse to pay the rail-
roads accurately for their services on
the ground that it is troublesome and
expensive to do so.
THE ANSWER
The proposed “space plan” consists
of “LINE RATES” for full cars, half
cars, quarter cars and for seven linear
feet and three feet of space, respec-
tively, in baggage cars, plus various
“INITIAL rates” and “TERMINAL
rates” applicable to each, and all vari-
able at the will of the Postmaster Gen-
eral. Is this easily understandable?
The railroads want the weight basis
—payment for the pounds or tons they
carry.
THE ANSWER
This statement should be corrected
to read as follows: “Utilizes facilities
ONLY PARTLY paid for to their
MAXIMUM capacity.” The car mile
rate in the Moon bill is based on the
present average loading of about 2 1/3
tons per car. This would not be a fair
rate for carrying 10 tons or 20 tons in
a Ca1ſ.
15
WHAT THE DEPARTMENT SAYS
[The space basis] Pays for service ac-
tually rendered and for space furnished.
(Page 16.)
WHAT THE DEPARTMENT SAYS
[The space basis] Will enable the De-
partment to proceed with its plans for
the expansion of the parcel post.
(Page 16.)
THE ANSWER
It does not pay at all for service ren-
dered, AS IT IS NOT BASED UPON
SERVICE RENDERED, which is the
weight of mail carried and the distance
it is carried.
Car space is not service. It is a fa-
cility for rendering service. It is per-
fectly proper for the Department to
require the railroads to furnish it
EXTRA car space for its own special
purposes, such as for traveling post
offices—provided, of course, it pays the
railroads fairly for such extra facili-
ties. -
But it is NOT proper for the De-
partment to requisition car space in
the railroads’ trains at inadequate
rates and then use that space for carry-
ing on a commercial transportation
business, through the heavy parcel
post, in competition with the railroads.
THE ANSWER
The railroads have always been dis-
posed to do everything in their power
to assist the Government in making
the parcel post of the highest possible
utility to the public.
But they most earnestly believe that
they are entitled to be fairly paid for
the service they render, or, in other
words, FOR WHAT THEY CARRY.
They would not be so paid under the
terms of the Moon bill, or under the
“space plan” of pay, which absolutely
ignores the weight of the traffic car-
ried.