Part 2

These two items of service rendered to the Government by the C. B. & Q. road are of the admitted value of $820,692 annually.

The railroad company has the same duty and legal responsibility towards these clerks as towards passengers.

* * * * *

Is there another fair way of testing this question?

In a letter dated March 2, 1910, from Hon. Frank H. Hitchcock, Postmaster-General, to Hon. John W. Weeks, Chairman of the Post Office Committee of the House, printed in full herewith, he states it is estimated that the average annual cost to the railroads of operating a post office car for the Government is $19,710, including $2,049 for lighting, heating, repairs, etc., and that the total average pay received for the car and its contents including post office car pay, is $16,638 per annum, showing a loss in this branch of the service of $3,073 per car. There are 1,111 full postal cars in actual service in the country, and the loss thereon, therefore, aggregates $3,414,103, to say nothing of the 231 postal cars in reserve.

But that is the smaller part of the loss. There were 3,116 apartment cars in actual use in 1909, averaging twenty feet in length, and the cost of operating each of these, according to Mr. Hitchcock's figures, would be one-third of $19,710, or $6,570.

The average haul of apartment cars is 48 miles, and the average load in a twenty-foot apartment car is officially stated as 607 pounds, making the rate per mile on routes carrying an average daily weight of only 607 pounds, $68.40 per annum, and the average earnings, therefore, $3,283 per year, an average loss of $3,287 per car and an actual loss per year from operating the 3,116 apartment cars of $10,642,292, to say nothing of the 639 apartment cars in reserve.

The C. B. & Q. has 76 full post office cars and 104 apartment cars, and applying to them the foregoing figures given in Mr. Hitchcock's letter, the loss from operating them in 1909 was $575,396, adding to which $634,713, the mail's proportion of taxes and interest, that must be included in estimating "cost," in which the Government's business should share, the estimated loss on the business was $1,210,109, compared with $1,002,168, arrived at by charging the Government business with 11.75 per cent of the passenger expense, that being its proportion of the space used in passenger trains.

The Government should be willing to pay fairly for what it exacts from the railroads, and it exacts from the C. B. & Q. 11.75 per cent of its passenger train facilities. If it had paid 11.75 per cent of the passenger train expenses of the road in 1909, it would have paid approximately a million dollars more than it did pay.

The Government which demands from the railroads that they build and transport daily over their roads for its benefit 5,100 traveling post offices as full postal cars and apartment cars should be willing to pay what the Postmaster-General estimates to be the actual cost of operating those cars, and a fair proportion of the taxes and interest.

If it had paid such cost in 1909, it would have paid to the C. B. & Q. approximately a million dollars more than it did pay.

RESULTS ON VARIOUS MAIL ROUTES.

The foregoing are statements of results on the Burlington System as a whole, showing earnings and expenses and facilities furnished to the Government mail service.

It may be of interest, and throw light on the situation, to show results for November upon several separate mail routes in the system, ranging from small routes carrying 200 pounds of mail daily, up, through routes carrying weights, respectively, of 1,300, and 8,000, and 20,000 pounds daily, to the heaviest route carrying 192,000 pounds, covering the fast mail service from Chicago to Omaha.

Weights of express packages are not kept on separate mail routes and statements therefore of express earnings for such separate mail routes are necessarily estimated, but, as given in the following tables, they are approximately correct and corroborate the comparative results for the Burlington system as a whole, which results are based upon exact figures for express as well as for mails and for passengers.

I.

Route 157,030, Kenesaw to Kearney (Nebraska), 24.68 miles. Average Daily Weight 216 Pounds.

_Percentage _Percentage _Should Earn _Did of Space of on Basis of Actually Occupied._ Earnings._ Space Used._ Earn._ Passenger 83.79 88.90 $1,238 $1,314 Mail 9.37 6.02 139 89 Express 6.84 5.08 101 75 ------ $1,478

The mail earnings on this route are $89 per month, or $3.44 daily. The service for the Government is performed in an apartment car fifteen feet long, and closed pouch service, four trains carrying mail daily, except Sunday, giving an actual return to the railroad of three and a half cents per mile run, or about one passenger fare at three cents per mile although the Government demands the use of a 15-foot car fitted up as a post office in which a postal clerk is carried free, and this car must be lighted, heated and kept in repair, and carried over the route each way daily, except Sunday.

On this branch the actual earnings on passengers per passenger car are 55 cents per car mile.

The post office apartment car equals one-quarter of a passenger car, and the mail should, on this basis, earn at least 14 cents per mile, but it does earn, for all the mail service, at the rate of 3-1/2 cents per mile, less the expense of delivering mail to and from post offices.

During the weighing period the mails are carried on 90 days and weighed on 90 days, but under the Cortelyou order, these aggregate weights are divided by 105 and the result is called the "average" and forms the basis of pay on this route for four years.

This mail service in a traveling post office on an expensive railroad is paid about one-third the rate per mile that the Government pays to a rural route carrier who carries an average of 25 pounds of mail.

II.

Route 157,028. Odell to Concordia, Kansas. 72 Miles. Average Daily Weight, 282 Pounds.

_Per cent _Per cent _Should Earn _Did Space_ Earnings_ on Space_ Earn._ Passenger 80.82 81.44 $2,482 $2,501 Mail 11.76 9.38 361 288 Express 7.42 9.18 228 282 ------ $3,071

Mail earnings $288 per month (26 days), or $11 per day.

This service demands a twenty-five-foot apartment car each way for which the pay amounts to 7.64 cents per car mile run, or about the fares of two passengers at three cents per mile who may occupy one seat.

The service is six days per week, but the aggregate weight carried in the six days is divided by seven to obtain the Cortelyou "average" on which the pay is based.

The payment for a twenty-five-foot traveling post office is a little over half the pay per mile for a rural route carrier.

III.

Route 135,012. Streator to Aurora (Ills.). 60 Miles. Average daily weight, 1,303 pounds.

_Per cent _Per cent _Should Earn _Did Space_ Earnings_ on Space_ Earn._ Passenger 72.84 85.64 $4,800 $5,643 Mail 17.38 7.51 1,145 495 Express 9.78 6.85 644 451 ------ $6,589

Mail earnings (26 days), $495 per month, or $19 per day.

Four trains on this road carry mail daily, two each way, two in a twenty-five-foot mail apartment and two in a thirty-foot mail apartment, an average earning rate of 7.88 cents per car mile.

The passenger cars on this branch carry an average of 24 passengers each, and earn 48 cents per car mile. The average mail apartment furnished is half a passenger coach.

These four apartment cars, at the same rate as the passenger cars (24 cents per mile), would earn $18,029 per year.

The passenger train earnings on the branch are $79,000 a year. The mails demand 17.38 per cent of the facilities, and on that basis should earn for the company $13,730.

The mail earnings were $5,940, this being the annual compensation after a reduction of nine and one-half per cent through the Cortelyou order, requiring the aggregate of 90 weighings to be divided by 105 to ascertain the "average."

IV.

Route 164,004. Edgemont to Billings (Wyoming). 366 Miles. Average Daily Weight, 8,087 Pounds.

_Per cent _Per cent _Should Earn _Did Space_ Earnings_ on Space_ Earn._ Passenger 85.79 89.22 $85,476 $88,895 Mail 10.43 6.18 10,392 6,156 Express 3.78 4.60 3,766 4,583 ------- $99,634

Two 60-foot postal cars are run daily each way.

The mail earnings are $6,156 per month, or $205 per day.

The total earnings of the passenger trains on this road are $1,195,000 a year, and the mails required 10.43 per cent of the passenger train facilities; on this basis they ought to pay $125,000 a year.

These post office cars are hauled 534,000 miles every year. The Postmaster-General estimates that the actual cost to the railroads of operating a sixty-foot postal car is 18 cents per mile. At this rate the Burlington Company should be paid $96,000 a year for the service of the postal cars only.

It is, in fact, paid for all the mail service on this road $73,872 annually.

V.

Route 135,010. Galesburg to Quincy (Ills.). 99.93 Miles. Average Daily Weight, 19,727 pounds.

_Per cent _Per cent _Should Earn _Did Space_ Earnings_ on Space_ Earn._ Passenger 69.45 79.44 $28,864 $33,015 Mail 19.70 8.45 8,187 3,511 Express 10.85 12.11 4,509 5,034 ------- $41,560

Mail earnings from all sources $3,511 per month, or $117 per day.

The service is performed in three 60-foot postal cars, two 16-foot apartments and one 27-foot apartment, each way daily; also one 44-foot postal car and one full storage car, daily except Sunday, in addition to some space furnished for closed pouches in ordinary baggage cars.

The car space provided for the mails on this route is equivalent to ten full sixty-foot cars daily, over the whole length of the route, or 365,000 car miles a year. At 18 cents per mile the pay would be $65,700, whereas the actual pay is only $42,132. If the Government paid for the service in proportion to the facilities it demands and receives, it would pay $98,244.

VI.

Route 135,007. Chicago to Burlington (205 Miles). Average Daily Weight, 192,540 pounds.

_Per cent _Per cent _Should Earn _Did Space_ Earnings_ on Space_ Earn._ Passenger 73.14 74.72 $210,134 $214,671 Mail 17.19 13.74 49,387 39,462 Express 9.67 11.54 27,782 33,170 -------- $287,303

On the basis of space used and facilities provided for the mails, the Burlington road is underpaid $119,000 a year on this route.

Two-thirds of the weight of mail is carried in special trains run at great speed and unusual expense, for which no extra allowance is made. The extension of the route to Omaha is across Iowa, where it is "Land Grant," and subject to land grant deductions.

The Government made a "gift" to the company in 1856 of lands amounting to 358,000 acres and then valued at $1.25 per acre, or $447,500.

The mail pay deductions to June 1, 1910, on account of this Iowa land grant aggregate $1,650,000, and still continue at the rate of $62,000 a year.

Neither in the foregoing six statements of results upon separate mail routes, nor in the general statement of results upon the Burlington Road has any allowance been made for the expense to the company of what is called the "Mail Messenger Service."

At all points where the post office is not over one-fourth of a mile from the railroad station the railroad company must have all the mails carried to and from the post office.

What an important item of expense this amounts to appears in the following extract from the Report of the Wolcott Commission, which states:

"Out of 27,000 stations supplied by messenger service 7,000 are paid for by the Department at a cost of between $1,000,000 and $1,100,000 per annum, leaving the other 20,000 stations to be supplied by and at the expense of the railroads."

Investigation has shown that on mail routes, where the average mail pay of the railroad company is $900 a year, the average cost of this mail messenger service is $400, calculating only $100 as the expense for each station where they are required to perform the service. There are instances where the company pays in cash each year, for delivering the mails between station and post office, considerably more than the Government pays for the entire mail service over its line of road. There is no such feature in the express service.

WHY DO RAILROADS CARRY THE MAILS WITHOUT PROFIT?

The question is sometimes asked why the railroads continue to carry the mails if there is no profit in the business. Carrying the mails is not the only traffic which railroads take upon terms that would bankrupt them if applied to all their business.

There is no profit in running passenger trains on most railroads; that is, the receipts from all the traffic carried on passenger trains are not sufficient to pay a train mileage or car mileage share of operating expenses and taxes and charges for the use of capital. But a large part of this cost of conducting the business of a railroad, such as taxes, interest, maintenance of roadway, general office expenses, and many others, would continue substantially the same if the passenger trains were discontinued. Having the railroad, and its taxes, and interest, and maintenance expenses to meet, anyhow, no railroad can afford to refuse any income from passenger trains that amounts to more than their train operating cost. On the same principle they accept low rates per mile as a share of through passenger fares which, if applied to all passenger fares, would show a loss. The road is there, the trains are running, and the cars only partially loaded; the addition of through passengers may not materially increase the expense, and the road is better off to accept the business at less than the average cost, rather than to reject it. But whatever the passenger trains lose must be made up by the freight trains if the road is to continue in business.

The constant aim of the managers of the railroad is to secure from each class of traffic not only the operating cost peculiar to that traffic, but a proportion of the general cost; but business is not necessarily rejected on which it is impossible to secure such proportion.

Many of the reasons which impel them to run passenger trains without profit apply to their acceptance of the Government mails. They facilitate the freight business; it is better to carry them at a loss than not to carry them at all.

But is that any reason why the Government should not pay fair value for what it receives? Is it good policy for the Government to force upon the companies the alternative of carrying the mails at a loss or refusing to carry them at all?

What are the mails?

They are the letters and packets that are conveyed from one post office to another under public authority.

Who conveys them? The railroads convey nine-tenths of them.

The railroads are the mail service of this country. The Post Office Department states that it receives from the people who use the mails eighty-four dollars on every one hundred pounds of letters and post cards. Who makes that money for them? The railroads. The railroads convey those letters and cards from post office to post office--not the Government.

For a service like that the Government can afford to pay.

What does it pay?

On the great bulk of the business the railroad companies which do the work and earn the money receive less than two dollars a hundred. On every pound of first-class mail the Government collects eighty-four dollars a hundred.

The fact that the Congress, for purposes of general education or other reasons, thinks it is good public policy to carry the magazines and other second-class matter at one dollar a hundred is something about which the railroads have nothing to do and nothing to say.

The mail pay of the railroads has been reduced in the past four years more than eight million dollars a year. Part of this was done by act of Congress, but the greater part came from the arbitrary and illegal Cortelyou order.

These reductions were made without any hearing being granted to the railroads. Hearings were refused by the Committee which reduced the pay three and a half millions, and no pretense of a hearing was made by Secretary Cortelyou when his autocratic order was issued reducing the mail pay approximately five million dollars a year. This order was an arbitrary and unwarranted and illegal exercise of executive power.

The last hearing allowed to the railroad companies on this subject was by the Wolcott Commission, 1897 to 1900, composed of eminent Senators and Representatives. They reported, after two years' investigation, that the mail pay was reasonable and should not be reduced. Upon the question whether railroads should be asked to carry the mails at a loss their report expressed the following views:

"It seems to the Commission that not only justice and good conscience, but also the efficiency of the postal service and the best interests of the country demand that the railway-mail pay shall be so clearly fair and reasonable that while, on the one hand, the Government shall receive a full _quid pro quo_ for its expenditures and the public treasury be not subjected to an improper drain upon its funds, yet, on the other hand, the Railway Mail Service shall bear its due proportion of the expenses incurred by the railroads in the maintenance of their organization and business as well as in the operations of their mail trains.

"The transaction between the Government and the railroads should be, and in the opinion of the Commission is, a relation of contract; but it is a contract between the sovereign and a subject as to which the latter has practically no choice but to accept the terms formulated and demanded by the former; and, therefore, it is incumbent upon the sovereign to see that it takes no undue advantage of the subject, nor imposes upon it an unrighteous burden, nor 'drives a hard bargain' with it. The Commission, therefore, believes that the determination whether the present railway mail pay is excessive or not should be reached, as near as may be, upon a business basis, and in accordance with the principles and considerations which control ordinary business transactions between private individuals."

THE POSTAL CAR PAY.

The wide credence which has been given to the statement that the Government is paying to the railroads an annual rent for postal cars equal to the cost of building them is remarkable.

The Government does not pay a rental for any car. The idea is an erroneous one, and is based upon ignorance regarding the payment of what is called "Post Office Car Pay."

Originally, the mail business on railroads was the transportation of mail bags, and was essentially a freight traffic. But its character has entirely changed.

The business now consists almost wholly in providing moving post offices, expensive to build and expensive to operate, in which the average weight for which pay is received is about two tons in full postal cars and six hundred pounds in apartment cars.

The Post Office Department weighed all the mails carried in all postal cars and apartment cars in the country during October, 1907, and the average weight of mail on the Burlington road loaded in a forty-foot postal car was found to be less than 2,000 pounds; in fifty-foot cars it was 2,500 pounds; and in sixty-foot cars it averaged less than 4,500 pounds; in apartment cars it was 607 pounds.

The average load carried in an ordinary freight car on the Burlington road is from 36,000 to 40,000 pounds. Railroads, as a rule, haul a ton of paying or productive freight for every ton of dead or unproductive load. In the Government mail business they carry nineteen tons of dead weight for each ton of paying weight.

These cars are fitted up as post offices and are used for distribution en route in order to expedite and facilitate the prompt transmission and delivery of mails. They largely take the place of very expensive distribution offices in cities.

The railroads provide cars for freight traffic, but refused to build, and maintain, and haul these moving post offices with their clerks and paraphernalia, without pay. That is the post office car pay of which so much is said.

The truth regarding this feature of the subject is clearly stated in the following recent letter from the Postmaster-General:

(_Congressional Record_, March 5, 1910, 61st Congress, Second Session, Vol. 45, No. 61, Page 2852.)

LETTER OF THE POSTMASTER-GENERAL RELATIVE TO THE COST OF FURNISHING AND OPERATING RAILWAY POST OFFICE CARS.

"OFFICE OF THE POSTMASTER-GENERAL, WASHINGTON, D.C., March 2, 1910.

"Hon. JOHN W. WEEKS, _Chairman Committee on Post Offices and Post Roads, House of Representatives_.

"MY DEAR SIR: In response to your inquiry made of the Second Assistant Postmaster-General in regard to the cost of maintaining and operating railway post office cars and its relation to the compensation received by railroad companies for the same and your reference to the speech delivered by Senator Vilas on the subject in the United States Senate, February 13, 1895, I have the honor to advise you as follows:

"The Department has not at this time sufficient information upon this point to give from its own records a reliable estimate. As you are aware, we have recently asked railroad companies to submit answers to inquiries with reference to the cost of operating the mail service, and it is believed that when these shall have been received we will be in a position to furnish such information. Inasmuch, however, as it may be of importance to you to have estimates made from time to time by others and such incomplete information as we have at present, I submit the following:

"The cost of operating a railway post office car has been variously estimated (but not officially by the Department) as from 15 to 30 cents a car mile. The average run per day of such a car is about 300 miles. Estimating the cost at 18 cents a car mile, the total cost of operating such car for one year would be $19,710.