"Senator Vilas' argument was based upon the theory that the rates fixed for railroad transportation alone, based on the weights of the mails carried, are adequate compensation for all services rendered, including the operation of railway post office cars, and that, therefore, the railroad companies would be required to operate postal cars owned by the Post Office Department for the compensation allowed by law for the weight of mails alone, including apartment-car s.p.a.ce and facilities. Such theory is not justified by the facts, as will appear from the following:

"A careful perusal of the debates in both Houses of Congress which led to the enactment of the present law fixing the rate of pay for railroad transportation of the mails and for railway post office cars clearly indicates that the additional compensation for railway post office cars was intended to cover the additional expense imposed upon the railroad companies for building, maintaining, and hauling such cars. The companies at that time insisted that these cars, which were practically traveling post offices, did not carry a remunerative load, and that therefore the amount of pay, based on weight, did not compensate them for their operation. This led to the specific appropriation for railway post office cars. In this connection it should be borne in mind that the purpose of the railway post office car is to furnish ample s.p.a.ce and facilities for the handling and distribution of mails en route. Therefore, the s.p.a.ce required is much greater than would be required for merely hauling the same weight of mails.

"In regard to any proposal for Government ownership of postal cars, other facts as well as the above should be given consideration. Such cars must be overhauled, cleaned, and inspected daily. It would be necessary to either arrange with the railway companies for this service or for the Department to employ its own inspectors, repair men, and car cleaners at a large number of places throughout the country, which would probably be more expensive than the cost to the railway companies in that respect at present. It would hardly be feasible to establish a Government repair shop. Therefore, the Department would be compelled to use the shops of the several railway companies throughout the country. Without the closest supervision and attention of the Government's inspectors it could scarcely be expected that our cars would receive the same consideration in railroad shops as those owned by the railway companies. These shops are frequently congested, and it is probable that the railroad work would be given the preference.

"Yours very truly, "FRANK H. HITCHc.o.c.k, "_Postmaster-General_."

The Wolcott Commission carefully investigated the whole subject of Postal Car Pay and their conclusions regarding this form of compensation and its reasonableness are set forth in their report in the following language:

"Until a comparatively short time prior to 1873 the distribution of the mails in transitu was unknown. Prior to the late sixties the railroads simply transported the mails, which were delivered at the post offices and there distributed. Accordingly, 'weight'

as the basis of compensation was at the time of its adoption and long thereafter entirely adequate.

"For a few years, however, prior to 1873 the distribution of the mails in transitu had been practiced to a sufficient extent to satisfy the Post Office Department and Congress that it was a desirable innovation and a branch of the postal service that should be very much enlarged. But it was recognized that if the railroads were not only to transport the mail itself, but also to supply, equip, and haul post offices for the distribution of the mails, the compensation upon weight basis that had obtained up to that time was not entirely adequate and just, and therefore the law of 1873, as already indicated, contained a provision allowing additional compensation for railway post office cars. At first these cars were mostly not exceeding 40 or 45 feet in length and of light construction, similar to baggage and express cars.

"From the policy of the Department, however, of constantly demanding better and better facilities from the railroads and the introduction of every improvement that could be discovered, it has come to pa.s.s that, today, the railroad post office cars, with the exception of a few obsolete ones that are being discontinued as rapidly as practicable, are elaborate structures, weighing between 90,000 and 100,000 pounds; built as strongly and fitted up, so far as suitable to the purpose for which it is intended, as expensively as the best Pullman and parlor cars; costing from $5,200 to $6,500; maintained at a cost of $2,000 per year; traveling on an average of 100,000 miles per annum; provided with the very best appliances for light, heat, water, and other comforts and conveniences; placed in position for the use of the postal authorities from two and a half to seven hours before the departure of the train upon which they are to be hauled, and owing to the small s.p.a.ce allowed in them for the actual transportation of the mails, accompanied on the denser lines by storage cars for which no additional compensation is paid by the Government and on the less dense lines the larger bulk of mails is carried in the baggage cars without additional compensation for the car.

"These cars are constructed and fitted up by the railroads in accordance with plans and specifications furnished by the Department, and the amount of mail transported therein is determined exclusively by the postal authorities. From these two facts it results that the railroad must haul 100,000 pounds of car when the weight of the mail actually carried therein is only from 3,500 to 5,000 pounds--often very much less, and occasionally somewhat more.

"Taking in view all these facts, as disclosed by the testimony filed herewith, we are of opinion that the 'prices paid * * * as compensation for the postal-car service' are not excessive, and recommend that no reduction be made therein so long as the methods, conditions, and requirements of the postal service continue the same as at present."

MAIL RATES AND EXPRESS RATES.

No feature of this question has been more persistently misrepresented than the relative value to the railroads of the mail business and the express business.

As elsewhere shown, the express business is 52 per cent more valuable to the Burlington road than the Government mails on the mere basis of s.p.a.ce used and facilities furnished in pa.s.senger trains. There are many other considerations which increase this disparity of value in favor of the express, but reference to them is omitted in order to direct public attention to the following statements of the Postmaster-General in his recent letter upon the subject:

(_Congressional Record_, March 4, 1910, 61st Congress, Second Session, Vol. 45, No. 60, Page 2802.)

LETTER OF THE POSTMASTER-GENERAL RELATIVE TO THE SERVICE RENDERED BY THE RAILROAD COMPANIES IN CONNECTION WITH THE MAILS AND WITH EXPRESS.

"OFFICE OF THE POSTMASTER-GENERAL, "WASHINGTON, D.C., January 31, 1910.

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

"MY DEAR SIR: In response to your inquiry as to the difference between the service rendered the Post Office Department by railroad companies in the carriage and handling of the mails, and that rendered express companies, I would state that from such information as we have been able to obtain in regard to the service rendered to express companies, the difference is substantially as follows:

"The Post Office Department requires the railroad company to take the mail from the post office wherever the office is within 80 rods of the depot, and the company has an agent, and in many cases to perform the terminal service regardless of the distance between the post office and the station. Wherever the terminal service is taken up by the Department, by means of regulation or screen-wagon service, the contractor delivers the mail at a specified place at the depot, and from that point the railroad employees transport it to the cars, and if the amount is so great that it would impose a hardship upon the postal employees to load and store this mail, the railroad company is called upon to furnish porters to do the work. Where the mail messenger or contractor can drive direct to the cars, he does so. The express companies haul all of their matter to the railroad stations and put it in the cars, using their own employees and their own trucks.

"The cars furnished the Post Office Department and those furnished the express companies differ very materially. The former are built according to specifications furnished by the Department, and are fully equipped with letter cases, paper racks, drawers, and lockers for registered mail and supplies, and all of the equipment necessary for the distribution of mail en route. The cars furnished the express companies have very little, if any, interior furnishings, and are more like the cars used for the transportation of baggage. In both cases the cars used are owned by the railroad company.

"The number of employees transported for the Post Office Department is very much greater than for the express companies.

There are frequently five or six clerks in the postal cars, and on fast mail trains, where there are two or three working cars to a train, the number runs up as high as 23. The express seldom requires more than two men in a car.

"The Post Office Department claims as much s.p.a.ce at depots without specific payment therefor as may be required for the storing and handling of mail in transit. The express companies are required to pay the railroad companies for all s.p.a.ce used at depots.

"On smaller lines a separate apartment must be furnished for the mails other than baggage mails. The express matter is usually placed in the baggage car.

"Upon arrival at terminals the railroad company may be required to unload a mail car, if the quant.i.ty is such as to impose a hardship upon the clerks, and to see that it is loaded into the contractor's wagons; or, if the terminal service devolves upon the railroad company, that it is delivered into the post office.

The express company unloads and handles its own matter.

"The railroad and express companies frequently use a joint employee to handle baggage and express, thereby economizing in cost of help. That can very seldom be done in connection with the postal service.

"The railroad company has charge of all baggage mails in transit and receives them into and delivers them from the cars. It also handles other mails when necessary to transfer them between cars or trains. It is held responsible for reasonable care in their transportation. Deductions are made for failures to perform service according to contract, and fines are imposed for delinquencies. The company is required to keep a record of all pouch mails carried on trains in charge of their employees and handled at stations where more than one regular exchange pouch is involved and no mail transfer clerk is located, and to prepare and forward shortage slips when a pouch is due and not received. They are required to make monthly affidavits as to performance of service. It is understood that the company never a.s.sumes control of express matter. The Department is not informed as to the terms of contracts between railroad and express companies, and therefore can not state what responsibility is imposed as to transportation.

"Mail cranes for the exchange of mail at points where trains do not stop are erected and kept in repair by and at the expense of the railroad company, whose employees must hang the mail bag on the crane and adjust it for catching at points where the company provides side service. The mail catchers are also furnished by them. No service of this character is rendered express companies.

"A railroad company is required by law to carry the mails upon any train that may be run, when so ordered by the Postmaster-General, without extra charge therefor, and as a result the mails are carried on the fastest trains and with great frequency. Express matter is not as a rule carried on the fast limited pa.s.senger trains, nor with the frequency with which mails are carried.

"In this connection your attention is invited to pages 84 to 94, 516, 517, 860 to 863, part 1, and pages 687 to 696, part 2, of the testimony before the Congressional Commission which investigated the postal service in 1900--Wolcott-Loud Commission.

"Yours very truly, "F. H. HITCHc.o.c.k, "_Postmaster-General_."

The Government does not own any railroad, but, under the present system, the Post Office Department dictates to the railroad companies upon what pa.s.senger trains and in what kind of cars the mails shall be carried. It insists on such s.p.a.ce and facilities as it deems necessary for the mails being furnished on the fastest and most expensive trains and demands that these trains keep their fast schedules; this means that all other trains on the road are side-tracked and delayed whenever that is necessary in order to expedite the mails.

There are no such features in the express business.

Demanding a preference traffic, the Government ought to be willing to pay for it more than express rates. In fact, it pays much less than express rates.

The ablest and most competent witness who appeared before the Wolcott Commission on this subject was Henry S. Julier, Vice-President and General Manager of the American Express Company, who said: "Without question, the Government has the cheaper service by far."

Mr. Julier further stated that seven pounds is the average weight of packages sent by express, and the seven pound package is the typical express package, and therefore the earnings from carrying such packages are the true index of the rates actually received. Some railroads receive as their compensation fifty per cent of the express company's earnings; the C. B. & Q. receives fifty-seven and a half per cent.

Mr. Julier was asked by the Commission to file statements showing from the rates in force exactly the revenue received per hundred-weight by the railroad company from the express in comparison with the mail rates. He filed the following:

_Table Showing Rates Received by Railways Per Hundred-weight for Mails and Rates Received for Express Between Points Named._

EXPRESS.

50 per cent of MAIL. express companies'

Rate per 100 earnings on fourteen pounds allowed 7-pound packages railroad companies weighing in the under last aggregate 100 weighing, pounds, yields the including the pay railroad companies for post office the rate per 100 Distance. cars. pounds noted below.

New York to Buffalo 440 $1.58 $2.80 Chicago 980 3.57 4.55 Omaha 1,480 5.38 5.95 Indianapolis 906 3.27 4.55 Columbus 761 2.49 3.85 East St. Louis 1,171 4.38 4.90 Portland, Me. 347 1.33 2.80 Chicago to Milwaukee 85 .34 2.10 Minneapolis 421 1.83 3.85 New Orleans 922 5.27 5.95 Detroit 284 1.34 2.80 Cincinnati 306 1.20 3.15 Cincinnati to St. Louis 374 1.61 3.15 Chicago 306 1.20 3.15 Cleveland 263 1.26 2.80

Since the filing of these statistics, the rates paid to railroads for carrying the mails have been reduced almost a fifth.

The statements of the Postmaster-General and the statistics confirm the evidence of these returns that the express business is much more valuable to railroad companies than the Government mail business.

W.W. BALDWIN, _Vice-President_.

JOHN DEWITT, _General Mail Agent_.

MAY, 1910.

APPENDIX.