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diff --git a/old/52244.txt b/old/52244.txt deleted file mode 100644 index 349b53a..0000000 --- a/old/52244.txt +++ /dev/null @@ -1,2125 +0,0 @@ -The Project Gutenberg EBook of Mail Carrying Railways Underpaid, by -Committee on Railway Mail Pay - -This eBook is for the use of anyone anywhere in the United States and most -other parts of the world at no cost and with almost no restrictions -whatsoever. You may copy it, give it away or re-use it under the terms of -the Project Gutenberg License included with this eBook or online at -www.gutenberg.org. If you are not located in the United States, you'll have -to check the laws of the country where you are located before using this ebook. - -Title: Mail Carrying Railways Underpaid - -Author: Committee on Railway Mail Pay - -Release Date: June 6, 2016 [EBook #52244] - -Language: English - -Character set encoding: ASCII - -*** START OF THIS PROJECT GUTENBERG EBOOK MAIL CARRYING RAILWAYS UNDERPAID *** - - - - -Produced by Judith Wirawan, MWS, Adrian Mastronardi, The -Philatelic Digital Library Project at http://www.tpdlp.net -and the Online Distributed Proofreading Team at -http://www.pgdp.net (This file was produced from images -generously made available by The Internet Archive/American -Libraries.) - - - - - - - - - - -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. - - 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. NEWCOMB, 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. - - - - -TABLE OF CONTENTS. - - - Page - - I. Scope of this Pamphlet 3 - - II. Railway Mail Pay Is About to be Forced Still Further Below - the Level of Just Compensation, Unless Payments are Promptly - Readjusted, on Account of the Additional Volume of Mail that - will Result from the Inauguration, on January 1, 1913, of the - Parcels Post 3 - - III. 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 - - 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 6 - - V. 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 - - VI. 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 Reported 11 - - VII. The Month of November Is Not 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 - Calculations was So Unfavorable 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, - Between 1898 and 1901, Most Fully and Carefully Investigated - the Subject, Ascertained and Declared that Railway Mail Pay - was Not Then Excessive; Since Then there Have Been Many and - Extensive Reductions in Pay Accompanied by Substantial - Increases in the Cost and Value of the Services Rendered by - the Railways 14 - - IX. 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 - - X. The Continuous Refusal of the Post Office Department to Order - Reweighings 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 Compensation 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 Payment and Ought at Once to Be Remedied 18 - - XI. The Postmaster-General'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 20 - - - _Appendices._ - - A. Extracts from the Postal Laws and Regulations 23 - - B. Classification of Operating Expenses 27 - - C. Receipts from Passenger and Freight Traffic by Months 28 - - D. How Railway Wages Have Increased 29 - - E. How Railway Taxes Have Increased 30 - - F. Letter dated September 11, 1912, from Hon. Jonathan Bourne, - Jr., Chairman, Senate Committee on Post Offices and Post Roads 31 - - G. Reply made thereto by the Committee on Railway Mail Pay 32 - - - - -I. SCOPE OF THIS PAMPHLET. - - -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 -railways 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 Document 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 COMPENSATION, UNLESS PAYMENTS ARE PROMPTLY READJUSTED, -ON ACCOUNT OF THE ADDITIONAL VOLUME OF MAIL THAT WILL RESULT FROM THE -INAUGURATION, ON JANUARY 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 -accepted at the post-offices and by materially reducing the rates on -mailed merchandise, is expected enormously to increase the volume of -the shipments 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 WHATEVER. If the former practice -of the Post Office Department is followed, no new contracts will be -made until after the next quadrennial weighings in each 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 -injustice of the mail pay received in former years suggests even the -approximate 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 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. - - -The Postmaster-General assumed that the railways would be properly -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 -obtained 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 - compensation 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 -Postmaster-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 -employed in the service of the public. This omission is, of itself, -sufficient 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 - railways, 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 - Postmaster-General's plan $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 -improvements,[A] 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 - - [Footnote A: The necessity for providing, out of income, for - some kinds of improvements 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 construction - 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.] - -Plainly, the Postmaster-General's proposal is equivalent to an -assertion 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 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 -efficient transportation service, to say nothing of the consequences -to owners of railroad stock and bonds. Such a theory is not a theory -of compensation--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[B], from services rendered on passenger -trains during November, 1909, were as follows: - - From mail 3.23 mills - From other services 4.35 mills - - [Footnote B: A car-foot mile is a unit equal to moving one - foot in car length (regardless 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.] - -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 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 relatively -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 proportion 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 without compensation to the extent of -more than 50,000,000 passenger miles annually (this being, of course, -in addition to the railway mail clerks on duty), etc., etc. Extracts -from the "Postal Laws and Regulations" defining 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 -making a secondary apportionment of the passenger expenses between -mail and other kinds of traffic carried on passenger trains. This -method involves charging directly to each kind of traffic all expenses -pertaining exclusively thereto, and the apportionment, on some fair -basis, of those expenses which are common to more than one kind of -traffic. - -In accordance with the request of the Postmaster-General, the railways -estimated the cost of conducting the mail service in the manner just -explained and reported the results to the Postmaster-General. After -first charging to each service the expenses wholly due to it they -apportioned 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 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-General states (Document No. 105, page -281), that all the railways represented in the foregoing, and enough -others to increase the mileage represented to 194,978 miles, were paid -for the same month only $3,607,773.13. It thus appears that the pay -was far below the operating expenses, without making any allowance for -taxes or for a return upon the fair value of the property employed. - -While different methods are in use for ascertaining the cost of -passenger train service and the results produced by such methods may -show considerable variation, yet the mail pay is so far below -reasonable compensation, from the standpoint of the cost of the -service and a return upon the value of the property, that no method -can be reasonably urged which would not demonstrate the -non-compensatory character of the present mail pay. This is -illustrated by the method which the Postmaster-General himself -employed, as the character of that method is such that it necessarily -produces the very lowest estimate of cost for the passenger train -service. - - The Postmaster-General, by his method of - apportionment arrived at a cost of $2,676,503.75 - - But this must be increased (as will be shown - below, on account of his erroneous - apportionment of car space (page 10), by 800,802.00 - - And also on account of his refusal to assign - expenses directly incurred in the mail - service (page 12) 401,126.00[C] - - Total, according to the Postmaster-General's - method of apportioning costs between - passenger and freight traffic $3,878,431.75 - - [Footnote C: There may be some duplication in this item, but - to eliminate it would require an elaborate computation which, - in view of the broad margin of expenses over receipts, is - wholly superfluous. Whatever duplication exists must be small - in comparison with this margin.] - -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 over 50,000,000 passenger miles annually and, at the low -average rate 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, -substantially understates the cost of the passenger train services, -when figures derived from it are applied to an entire year. - -It thus becomes evident that any inquiry which takes into -consideration the necessary elements of the situation will demonstrate -that railway 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 approaching fair compensation. - - - - -V. 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. - - -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 -proportion to the train space required by each of the respective -services. The Postmaster-General obtained from the railways statements -which 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 passengers, express and mail, on the basis of -space occupied, was $37,074,172.[D] 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. - - [Footnote D: 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.] - -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 -railways 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 maximum 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[E] 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 Department 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. - - [Footnote E: Document No. 105, p. 53.] - -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. - - - - -VI. 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 REPORTED. - - -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 expenses, the omission unjustly reduced the estimates -of the cost to the 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 especially -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 exclusive - use of the mail service 37,258.93 - - Rental value of tracks occupied daily for advance - distribution of the mail 47,029.12 - - Average monthly cost of light and heat for postal - cars placed daily for advance distribution of 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 $401,126.00[F] - - [Footnote F: This total includes $9,993.19 reported by four - companies which gave totals for these items, but did not - report the items separately.] - -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 -transportation, 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 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. THE MONTH OF NOVEMBER IS NOT 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 CALCULATIONS WAS SO UNFAVORABLE -TO THE RAILWAYS AS TO DEPRIVE THE RESULTS OF ANY VALUE EVEN IF IN ALL -OTHER RESPECTS HIS METHODS WERE BEYOND CRITICISM. - - -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 -November, 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 standards of maintenance than would -otherwise be necessary. Consequently 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 -passenger 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 abnormal 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 seriously 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 THAT RAILWAY MAIL PAY WAS NOT THEN EXCESSIVE; -SINCE THEN THERE HAVE BEEN MANY AND EXTENSIVE REDUCTIONS IN PAY -ACCOMPANIED BY SUBSTANTIAL INCREASES IN THE COST AND VALUE OF THE -SERVICES RENDERED BY THE RAILWAYS. - - -The Congressional Joint Commission to Investigate the Postal Service, -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 -California; Representative W. H. Moody, of Massachusetts, and -Representative 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 companies for the - transportation of the mails' are not excessive, 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 -necessary 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 -increased with the rapidly augmenting exactions of State and local -governments and the imposition of an entirely new Federal corporation -tax.[G] 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 subjected 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 $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 - - [Footnote G: Data indicating some of the increases in wages - and taxes are given in Appendices D and E.] - -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 -administrative 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, superseding 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 substantial increases would be necessary, -but they are given below as representing 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 characterized by these reductions the railways have -been called upon continually 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 any intermediate year, and are doing so at -greatly increased cost to themselves. - -In view of these thoroughly substantiated facts the drastic reductions -of recent years afford unanswerable proof that railway mail pay is now -too low. - - - - -IX. 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. - - -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 - railway 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 railway mail pay, the heavy reduction in that respect -exceeding by 3.2 points the very substantial increase in the ratio of -all other expenses. - -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 -receipts (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 receipts). 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 reference 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 extensive -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 supplies. 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 REFUSAL OF THE POST OFFICE DEPARTMENT TO ORDER -REWEIGHINGS 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 -COMPENSATION 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 PAYMENT -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 -operating 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 expense 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 determined, -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 -Interstate Commerce law. The terms of the mail contracts are -substantially 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 payment 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 requirements in particular cases is largely subject to the will -of the Department and this produces unreasonable uncertainties as to -what may be demanded 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 -allowance for apartment cars ought to be made. - - - - -XI. THE POSTMASTER-GENERAL'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 upon the basis of returning to them the operating expenses and -taxes, as ascertained by the Post Office Department, attributable to -the carriage 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 Postmaster-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 decrease 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 common to the -freight and passenger traffic and can only be approximately -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 -interest 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 -unsuccessfully 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 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 railways 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 oppression. 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 employed, -will provide suitable and sufficient rooms for handling and storing -the mails, and without specific charge therefor. These rooms will be -lighted, heated, furnished, supplied with ice water, and kept in order -by the railroad company." 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 -dispatched, except that no record need be kept of a single pouch from -a train or station to the post office or from the post office to a -train or station which, in regular course, is the only pouch in the -custody of the company's employees at that point while it is being -handled by them. This is not to be construed as relieving railroad -companies from having employees on trains keep and properly check a -record of all closed pouches handled by them, without 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 -Service." 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. - -"Train pouch records will be kept on file at the headquarters of -division superintendents of railroad companies for at least one year -immediately following the date the mail covered by them was handled, -and shall be accessible there to post office inspectors and other -agents of the Post Office Department. Station pouch records will be -kept on file at the station to which they apply for at least one year -immediately following the date the mail covered by them was handled, -and shall be accessible there to post office inspectors and other -agents of the Post Office Department." 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 company -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 service, 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. - -"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 -devolves 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 company -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." Section 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 dispatched -by such train, the division superintendent of Railway Mail Service -will, where mail is taken from and delivered into the post office by -the railroad company, request the company, or where a mail messenger -or carrier is employed by the Post Office Department, will direct him, -to take the mail to the railroad station at such time as will best -serve the interest of the mail service. Such mail will be taken charge -of by the agent or other representative of the railroad company, who -will be required to keep it in some secure place until the 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 properly 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. - -"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 -receipt 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, without -specific charge therefor, all mail bags, post office blanks, -stationery, supplies, and all duly accredited agents of the Post -Office Department and post office Inspectors upon the exhibition of -their credentials." Section 1184. - - - - -APPENDIX B. - -CLASSIFICATION OF OPERATING EXPENSES. - - -(Data from Reports of the Interstate Commerce Commission.) - - --------------------------------------------------------------------------- - Average cost per mile of line. - ------------------+-----------------+-------------------+------------------ - | | | Monthly average - | Fiscal year 1910| November, 1909 | for the other - | | | eleven months of - | | | the fiscal year - +---------+-------+-------+-----------+-------+---------- - | | | | Per cent.| |Per cent. - | |Monthly| | of monthly| |of 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| 327.78| 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 - | mile of line | mile of line | passenger - |-------+-------+---------+-------+-------+---------+ receipts to - | | |Per cent.| | |Per cent.| receipts - Month | Total | Daily |of daily | Total | Daily |of daily | from both - | |Average|average | |Average|average | passengers - | | |for year | | |for year | and 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| 203.84| 6.79 | 93.78 | 658.93| 21.96 | 98.96 | 23.63 - May | 218.47| 7.05 | 97.38 | 682.96| 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 - ----------+-------+-------+---------+-------+-------+---------+------------ - - - - -APPENDIX D. - -HOW RAILWAY WAGES HAVE INCREASED. - - -In the year 1901 the railways reporting to the Interstate Commerce -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 Commerce -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 - --------------------------------------+-------+-------+---------- - - - - -APPENDIX E. - -HOW RAILWAY TAXES HAVE INCREASED. - - -(Data from Reports of the Interstate Commerce Commission.) - - ----------+-------------+---------------+------------- - Year | Amount paid | Average per | Per cent. of - | | 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 - 1903 | 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 | 8.8 - 1907 | 80,312,375 | 353.09 | 8.9 - 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. - - - - -APPENDIX F. - -UNITED 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 desire -to secure immediately such information as may be available for -submission to the Committee at its first meeting. I will ask you, -therefore, 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 respects and -as to what classes of railroads is it inequitable? - -(2) Is the underlying principle of the plan embodied in the inclosed -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. - - - - -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 operating -over 214,275 miles of road, has been investigating the subject of mail -compensation for about three years, or since the Post Office -Department, in 1909, sent out a series of questions regarding the -space furnished 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 interest to you to receive from it an answer to -the questions propounded by your letter of September 11, 1912, -addressed to the officers of railroads throughout the country. - -A response to House Document No. 105 is now in course of preparation, -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-- - - (a) For the Repeal of the Act of March 2, 1907. - - Notwithstanding the large increase in every other item - connected with the administration of the Post Office - Department, the railroads' pay has been singled out as the - one element in these operations 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 - _maximum_ 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 - establishing the Parcels Post, effective January 1, 1913, - which will result 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 - compensate 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." - - (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 expense 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 expenditures made by it for the purpose of decreasing -its operating cost, because the more it decreased its operating cost -the more it would decrease 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 -approximately 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. - -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 -service 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 -compensating 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 -suggested in the answer to Question 1, and fairly and impartially -administered 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_. - - - - -Transcriber's Notes: - - -Words surrounded by _ are italicized. - -Small capitals are presented as all capitals in this e-text. - -Apparent printer errors are retained. - - - - - -End of the Project Gutenberg EBook of Mail Carrying Railways Underpaid, by -Committee on Railway Mail Pay - -*** END OF THIS PROJECT GUTENBERG EBOOK MAIL CARRYING RAILWAYS UNDERPAID *** - -***** This file should be named 52244.txt or 52244.zip ***** -This and all associated files of various formats will be found in: - http://www.gutenberg.org/5/2/2/4/52244/ - -Produced by Judith Wirawan, MWS, Adrian Mastronardi, The -Philatelic Digital Library Project at http://www.tpdlp.net -and the Online Distributed Proofreading Team at -http://www.pgdp.net (This file was produced from images -generously made available by The Internet Archive/American -Libraries.) - -Updated editions will replace the previous one--the old editions will -be renamed. - -Creating the works from print editions not protected by U.S. copyright -law means that no one owns a United States copyright in these works, -so the Foundation (and you!) can copy and distribute it in the United -States without permission and without paying copyright -royalties. 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