Part 12

To show how necessary this may be, permit me to inform you that the first batch of letters the government sent to Circle City, Alaska, though each was carried upon a 2c stamp, cost the department some $450 per letter. And it is solely due to the fact that the carriage of first-class mail is a monopoly that inheres in the government that, in spite of such expensive occasional service as this to Alaska just cited, a large part of the receipts from first-class mail are net profit.

Now, even at the low 1c per pound rate accorded to the monthly magazines and other periodicals, not all of their wares are sent by mail. There is you know no monopoly of carriage. The publisher can send packages of his magazine ahead of time by slow freight at less than the 1c per pound tariff, this freight service being used for the large lots going over main transportation lines between the great cities and without expensive changes of route. But upon the quarter hundreds and half dozens and single copies that go for long distances by expensive changes of route and to remote rural localities from back of Portland, Maine, to back of Portland, Oregon, from the upper peninsula of Michigan to the everglades of Florida, and to the crossroads and rural free delivery customers of Ohio, New York and other states of the Union, the government gets the losing job of carrying the periodicals.

I have endeavored in the explanation above to show that the difference in social condition, density of population, length of haul, ability to inaugurate a zone system, etc., will operate against our doing at a profit what may be attempted though even there unsuccessfully, in Great Britain, Germany, etc.

In Great Britain they pay for transportation but 55% of the charge, having thus automatically 45% left for other expenses, and if anybody can do the work at a profit they certainly are in position to attempt it.

Again the average pay of a British postman is only one-half what we give our carriers, which is another feature that must be reckoned with.

The first year they had this service in operation, it showed a heavy loss. They were keeping account of the business, so much in detail that if a man worked in two different branches they divided his salary. The eminent gentleman who fathered the system, then said: “Oh, well, you can’t expect that it should be profitable the first year. This year we will make it profitable.” The next year the loss was more than doubled. “Well,” said he, “bookkeeping is expensive, let us discard bookkeeping.” And since that time they have kept no expense account on the parcels post system.

Now let us examine what would result in the United States if we were to enact parcels post legislation and attempt to get it in successful operation.

I wish to make a quotation from the “Catholic World” of June, 1905, describing the operation of the parcels post system of Germany by a writer who favors its establishment here. He says:

“Anyone who has stood in a German post-office, and has seen the constant stream of men, women and children, pouring in through the doors with packages of all descriptions and sizes, and lining up in never-ending rows before half a dozen and more receiving officials; who has watched heavy wagons driving up to the doors and depositing hundreds of packages, and who has noticed the mountains of parcels heaped up in rear rooms of the post-office, cannot but have been forcibly struck with the magnitude of the parcels post system of transportation in Germany.”

Does it not occur to the most casual thinker that if a comparable service were enacted in this country the postal facilities of every city would be inadequate to the work? Why, you would have to have in New York city one hundred times as great an amount of space at your disposal as the Post Office Department has or can readily get at present. It would involve a thorough readjustment and enormous expansion of the post office facilities in every large and small city of the United States, involving an equipment expenditure which would run to hundreds of millions of dollars--this irrespective of the question whether it would produce a profit or a loss in operating expenses.

There are in the United States more than 50,000 fourth-class postmasters of these 50 per cent get $100 per annum or less, and 25 per cent of them get less than $50.00 per annum. How long would it be before they would demand an increase of salary to something like $75.00 per month or more?

The Vice-President of the J. F. Stevens Arms and Tool Co., told me that if such a service were inaugurated as that of Great Britain, it would change entirely the methods of distribution of his own house. They would be obliged to discontinue their present freight shipments of arms in carload lots to the Pacific Coast at a rate of $3.00 per hundred pounds upon a twenty-day time schedule for transportation, and take advantage of the pound rate that the government would give to them upon a six-day time schedule; that while it would involve increasing their office force from less than 50 to more than 500 to handle the work, the savings would be so large that they would have to do this and to inaugurate many other most radical and far-reaching changes in organization.

If this meant that the service was going to be reduced in cost, while at the same time shortening the time schedule by more than two-thirds, always an important factor in increasing rather than in diminishing expense account, we should all of us find it our duty to welcome the innovation, great a wrench as it might give to our business connections. But the costs of the service will not be changed, simply it will be a different set of people who pay them and no longer would all the costs be paid by the proper parties--the manufacturer and his customer, the consumer--but a large proportion by the public at large in some way or other.

Parcels Post. pp. 6-15.

John A. Ordway.

I question whether there is a man in this hall who actually believes that one cent of benefit will come to the farmer through reduction in his cost price of anything he buys because of postal delivery. Each one of us knows from practical experience that even should the method of distribution be shifted, still the expense of reaching the consumer would increase by the methods advocated, which combined with the profits of inevitable monopoly would cause the poor farmer to wonder whether this alluring vision of substantial comfort had vanished. Yet this sham shibboleth of benefit to the farmer has other advocates besides this small percentage of theorists. The most persistent, continuous, noisy clamor has proceeded from those whose selfish self-seeking is as plain to the searcher for motives as the printed types upon their pages. The editors of various magazines and newspapers not in touch with the cost and expenses of mercantile life have almost universally used their columns to create a public sentiment to accomplish this commercial revolution. Their solicitude for the farmer, their keen distress at what they term his unfortunate dilemma in being forced to supply his present needs through present channels, would wring the stoutest heart, were it not for the perhaps uncharitable suspicion that their tears were of the crocodile variety, and their anguish a thin disguise for rank cupidity. “The poor farmer,” more advertisements; “the unfortunate farmer,” for more advertisements; “we love and would protect the farmer,” still more advertisements; “we will organize and preach of deliverance,” for more advertisements; and so on and so forth shall be our cry until the jobbers’ percentage and the retailers’ narrow margin shall be diverted into “more advertisements,” has been the wailing but insistent note everywhere. “No matter if the actual cash loss of second class matter in 1909 did show a grand total of $64,128,000, what care we? Still shall our cry be, ‘Help the poor farmer.’” Shame on such transparent hypocrisy from a public press that should lead and inspire by truth untainted by the virus of debased commercialism.

_The Consumer Will Buy Goods No Cheaper_

I may be wrong, but I firmly believe that the development of the mail order house or the increased adoption of direct selling by manufacturers, aided by governmental postal delivery, would not confer one benefit on the consumer in cheapened prices, because of these facts. The change in the method of distribution would be merely the shifting of the final price from one shoulder to the other. The margin between the actual net cost of manufacture and the price paid by the ultimate consumer is at present divided in varying proportions into the profits of the maker, the percentage allowed the jobber for economical distribution, and the final profit of the retailer in completing this distribution, and in each case competition, that most effective friend of the consumer, has forced these margins down to a low general average. Assuming that the jobber and the retailer have been eliminated and that the manufacturer sells direct, is there any possible advantage that the consumer or the farmer would obtain? Decidedly not. The manufacturer would, of a necessity, be compelled to make and hold a stock of goods ready to respond to instant call. His cost of manufacture would immediately increase for the reason that his quantity would be wisely restricted, awaiting the edict of whimsical fashion, and his sole dependence for the sale of his product would be that obtained from extensive advertising. I do not believe there is a man here tonight who has any knowledge of the expense of an advertising campaign, but will admit that the usual profits of both jobbers and retailers combined would fall far short of the expense necessary to continuously maintain any general range of articles of fashion or utility by advertising alone, and every large advertiser, even if this stock be protected by trademark or patent, will bear testimony that not only does the expense of advertising continuously increase, but also that any cessation of publicity results in immediate suspension of sales.

The second argument or sham pretext for action is that advanced relating to express companies.

_The Interstate Commerce Commission Now Has Power to Adjust and Regulate Express Rates and Will Regulate Them_

I am aware, and expensively so, that this monopoly is a menace both to our pocketbooks and to the general prosperity of the community. Their course of action is guided by those who fully exemplify the modern greed and relentless clutch of soulless corporations. Personally, in their private homes, or in open contact in social gatherings, these organizers and executives of express companies are attractive as friends or companions, but officially, and as part of their corporations, their individuality is lost and the Golden Rule is locked away to be used only on Sunday or in the imminence of death.

The dangers that confront a free people when monopoly obtains a stronghold have been freely discussed during the past few years, and wise restrictions have been placed among our laws. At this very moment the rates and methods of express companies are being considered by the Interstate Commerce Commission, and from them we may expect the same fair-minded decision as recently shown in railroad matters. The laws are on our books. It is for us to urge, argue, even threaten that they be obeyed, but the appeal of the proponents of the parcels post bill that we punish the express companies by starting a government monopoly in opposition has about the same force to me as an invitation to jump from the frying-pan into the fire. The power is always ours to regulate by law, and the law is already ours. One-half of the same energy in letters, telegrams and petitions asking and insisting on the immediate action of the law, as has been shown in the propaganda for the novelty of the parcels post, would have produced results long ago. If this association, if the various boards of trade, or chambers of commerce, should manfully and persistently follow this line of action, results would follow, and thus avoid the dangerous expedient of increasing the already formidable list of government officials.

_Objections to Parcels Post_

Passing from the consideration of these elusive and mendacious appeals by self-seeking interests, I ask your attention to what in my judgment are positive objections to the parcels post, objections that are not based wholly on dollars and cents, but on the broader principles of humanity that are above the fleeting tribulations of our little hour, and whose laws of action create or destroy states or nations as they are applied wisely or unfortunately.

_Will Injure Country Communities_

John Stuart Mill, one of the strongest reasoners in political economy, stated in an incisive sentence that “The community that contains the greatest diversity of industries will always be the most prosperous and intelligent.” It would seem as if his vision were prophetic of our loved New England, where towns and villages contain within their borders the farmer, the manufacturer, the merchant, the teacher, living in useful harmony, and by their diversity of thought and action producing men equipped to accomplish the destiny of this wonderful land. Such environment, such healthy conditions, produce the character of Americans that the country needs, and the practical benefit from the New Englander reared in such communities is impressed upon all sections of this great land. It is to wither and destroy these safeguards of national security that the proponents of the parcels post intend. In their infinite wisdom they would sweep the village aside in their zeal for the mail order octopus and the magazine advertisements. A great city whose water supply is polluted is in serious danger; a great community that stems or hinders the growth and influx of healthful men is short-sighted, and decay will follow. Totally aside from personal gain, I believe we should steadfastly oppose any attempt, open or concealed, to sap the vitality of the New England town. Boston exists because of New England, and Boston should protect its own.

_It Will Increase the Horde of Government Employees_

Another objection to the parcels post is that its operation will add a tremendous force of government officials to the already swelling list. Excepting always that human hog who never votes, never reads, never thinks, but roots and grubs along, grunting out one single word, “Dollars,” which happily die with him, this objection should be considered by all thinking men. The stronger the intrenched force of the party in power, the more difficult will it be to effect needed reforms when stagnation in office produces disease.

_It Limits the Field of the Individual_

Another objection is that our government of free men was never intended to block or hinder the pathway of individual endeavor. Rather was its function to be that of aid or protection to insure equal opportunity under sane restriction. Following this connection and not to be lightly regarded, is the assumption that is clearly foreshadowed, that should the government engage in the transportation of merchandise the inevitable result would be the national ownership of the railroads, thereby still further increasing the centralization of power, which is diametrically opposed to the conception and scope of our general system of representative government.

_Extravagance Will Be Augmented_

Again a serious objection is that the transfer of conditions of transportation with its accompanying word paintings of alluring advertisements would tend to increase general extravagance, particularly in those sections where prudence is necessary for happiness, or precaution for old age. A distinguished writer has said that more discord and misery are caused in this country by our national extravagance than from any other source, not excepting the results from alcohol.

Still again, it is closely argued with logical coherence that the various monopolies that now practically control many branches of trade would welcome the development of large distributors at the expense of the present countless individuals, because of the greater ease of organizing in combination. The tremendous sales and enormous profits of one mail order house are the subject of daily comment, and should the government lend its aid to still further increase these figures, the time would not be distant when similar institutions would start into life in other sections. Backed by ample capital, and equipped with the experience regarding methods, their success would doubtless become immediate, until such time as competition among themselves endangered profits.

It is no fanciful assumption that when that point is reached combination or absorption will add another impregnable monopoly to the already threatening list.

The present monopolies have produced such colossal and unwieldy fortunes that the employment of their surplus is a constant thought, and so rich a plum would not escape.

Finally, for I have detained you gentlemen long enough, is the rank injustice of this proposed measure. If by taxation of the people as a whole, some permanent benefit be obtained, two blades of grass be grown where one existed, or even one section developed through the agency of the whole country’s help, no one would more eagerly advocate such action, for I realize that a healthful growth spreads its benefits everywhere. But this measure does nothing, creates nothing, carries with it no lifting of burdens, but simply takes from A to give to B, without assurance or guarantee of betterment of service or conditions. As all dry goods retailers know, not one article sold by mail order houses, in their line, but is daily and usually sold by them at the same or lower price, without any special fuss or feather about it, and all of us understand, without possibility of contradiction, that the advertised brand, in nine cases out of ten, does not depend on its intrinsic merit for its sales, but instead relies on the credulity of a thoughtless purchaser.

Again, what justice is there in any law that proposes government aid to the man whose product weighs eleven pounds, or measures within certain cubic inches, and denies the same relief to another citizen and taxpayer whose product necessarily exceeds these limits? If this is not special legislation bestowing subsidy or patronage on the few at the expense of the many, then what is it?

For these reasons, and many more, my friends, I oppose the parcels post as today presented. I believe it unwise and manifestly unfair. I believe its passage would cause tremendous initial loss, without subsequent compensating gain. I believe it is a move in the wrong direction as it affects the government. I believe that the people, through their representatives, and under the constitution, should have and should use the power to regulate the channels of trade, and I strongly deprecate any additional departure from the simplicity, the directness of our form of government, and especially if such action should hinder or usurp the zeal or ambition of any citizen in his wage earning capacity, conducted under the law. If an express company violates the law treat it under the law with the same justice as would be given a second story burglar, but no more consider the opening of governmental lines of express in opposition than you would consider the governmental employment of other second story burglars as punishment to law breakers.

The fewer that we have the better, but as self-respecting citizens let us strive to maintain their standard of even justice, regardless of special interests or our own personal discomfort.

Journal of Political Economy. 16: 417-35. July, 1908.

Shall the Scope of Governmental Functions Be Enlarged so as to Include the Express Business? Albert N. Merritt.

In the nature of things the local dealer cannot compete with the mail-order houses on equal terms. He cannot afford to issue the expensive catalogues, or to keep so large an assortment of goods. Moreover, the immense volume of business of the catalogue concerns enables them to quote cheaper prices on many commodities. Frequently they are able to secure, on private contracts with manufacturers, large stocks of goods at prices even lower than the jobber is required to pay. Furthermore, their expense of doing business is proportionately much lower, as practically their entire expense of distribution consists of the outlay in issuing the catalogues and in packing and shipping the goods when ordered. No experienced force of salesmen is required to display the goods and argue their merits. Moreover, it is often the case that the glowing terms in which goods are described in these catalogues cause the credulous to believe them superior to what they really are. Distance always seems to lend enchantment, and abundant opportunities are offered for deception as to the quality of the goods.

The local dealer, on the other hand, in order to fill orders promptly, must keep a stock of goods which, in proportion to the amount of business he does, is vastly greater than that of the catalogue houses. In order to purchase his goods to advantage, he must lay in a stock in the fall sufficient for six months or a year, while few, if any, of the larger mail-order houses would have at any time sufficient goods in stock to enable them to fill orders for a fortnight. Naturally, therefore, where the turnover of capital is slower, the percentage of profit upon individual transactions must be higher, and competition upon an equal basis becomes impossible.

But quite apart from a theoretical exposition of causes, the facts show that the local dealers are rapidly losing trade to the catalogue houses, and in many districts the local retail business has become so unprofitable that the number of retail stores is decreasing, and their volume of business less instead of greater as might be expected with the normal growth of population.

Not only do the mail-order houses excel in the volume of business, and in the greater assortment of goods, but they are able to effect the most efficient and economical management by the employment of the most able managers and department men, which is rarely or never the case in the ordinary country store, owing to the natural scarcity of men of that grade. In fact the business management of the ordinary country store is lamentably weak. From the economic standpoint, therefore, one is compelled to admit that, in accordance with the laws of competition and of the survival of the fittest, the catalogue houses have already demonstrated their superiority.

Admitting, therefore, that the economic position of the mail-order houses is stronger, are there not important social arguments against permitting the absorption of local business by the rapidly expanding catalogue concerns at our large trade centers?

In the first place, it should be noted that the rapid consolidation of our manufacturing industries makes it more difficult every day to conduct such enterprises in small communities in competition with the large plants in the large communities. The result has been that for a long time the proportion of the manufacturing business done in small communities has been growing smaller. With the gradual and necessary elimination of the manufacturing business in smaller communities, the mercantile business is about all that is left as an economic basis for the existence of such communities.

These forces tend to a rapid concentration of business in the large trade centers, and the resulting congestion of humanity at such points. In one generation the proportion of the population of the United States living in our large cities has more than doubled, and just at present is increasing more rapidly than ever before.