Chapter XIX: Section 181 (1)

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In previous pages of this volume the reader will find testimony of people and of firms that pay large carriage bills for second-class matter. Among this testimony are found statements (some of them under jurat), that the express companies carry periodicals in bulk of five to ten pounds and upward from New York to Chicago, and to other points equally distant from office of publication, at a rate materially below the cent-a-pound rate charged by the government for postal carriage.

In one instance, it is known that one express company has offered to contract to carry periodicals from New York to Chicago over a certain connecting railroad at a rate of _one-half cent a pound_.

What does that mean?

It means simply this:--The railroad handling such express business hauls express cars _en train_ with the United States mail, and the railroad handling such express consignments of periodical mail matter makes the New York-Chicago haul at somewhere around _one-fourth of a cent a pound_. That is, it is somewhere around one-fourth cent a pound unless the carrying road takes _more_ than half the express company’s contract charge.

“What more?”

The express company contracting such business and the railroad handling it are _criminals_ under that Section 181 of the federal statutes.

In this connection I wish to say that under a strict--yes, under a just--construction of that Section 181, I am not sure but that the publishers party to such contracts are not also parties to the crime.

From the _letter_ of that section, I confess an inability to see any other construction of it than that previously stated. The United States government, or at least its legislative department, in 1845, _intended_ that all such matter--letters (sealed matter), “packets,” or packages and parcels, should be turned over to the Postoffice Department for transportation, handling and delivery.

Why has not the intent of that law been carried out?

Why are the express companies permitted, and for years been permitted, so brazenly to perpetrate criminal violations of that postal statute? Why and how does it chance that they (the express companies), can violate the law for years and go unscathed--go unchastized for plain, open, brazen violation of that Section 181 of the federal statutes? Yes, _why_?

There is but one answer; there _can_ be but one answer.

Federal executives, federal legislators and federal judicial officials _have connived with private individuals and interests to nullify or make abortive that Section 181_.

Have you ever read any of Allan A. Benson’s writings? “No?” Then you have missed something you should never miss again, should opportunity perambulate around your way. Allan A. Benson says something when he writes--says it blunt, plain and _hard_--says it in language that guarantees its own truth--says it in an open, broad way in which no man, “even though a fool” or a joy-rider, can go astray. In both the February and the March, 1911, numbers of Pearson’s Magazine, Mr. Benson writes on the parcels post as a subject. I shall probably quote from him extendedly when I reach that division of our general subject in this volume. Mr. Benson _knows_ his subject. And what is didactically of more importance, _he makes the reader know he knows it_.

Well, even with a fear that I may here reprint from him some paragraphs for which I may have a greater need later, I cannot refrain from quoting him in answer to those several “whys” I have just written, anent the violations of that Section 181 of the postal statutes.

Following his quotation of that section of the federal statutes, Mr. Benson says:

The purpose of this law was to give the United States government
a monopoly of the mail-carrying privilege. The law was first
enacted in 1845, and, although the statutes have been revised
from time to time, it stands today in precisely the form herein
given.

On the face of the law the express companies are law-breakers.
But it is not enough to look at the face of a law. Everybody
except the government is prohibited from carrying letters and
packets--but what are “packets?” A letter is a letter; but what
is a packet?

Foolish question? Yes, it ought to be--but it isn’t. The whole
express business rests upon the answer to this question. When the
law was enacted, _there was no doubt_ about the meaning of the
word packet, because there were no express companies to raise the
question, and everybody knew that packet was a synonym, used more
frequently then than now, for “parcel.” Express companies did not
come along to raise the question until forty years ago.

Even the express companies, when they began business, had no
doubt about the meaning of the word “packet.” This is proved
by the fact that whenever they handled packets, they required
shippers to affix postage stamps. But recognition of the
government’s mail monopoly had a strong tendency to curtail
express business, and there came a time when the express
companies decided to evade the law, leave off the stamps and
openly compete with the government.

See how ridiculous the express companies have since made your
government. In 1883, a mail carrier who had stolen tea from a
packet, made the defense at his trial that since a packet of
tea was neither a letter nor a parcel, the law which prohibited
tampering with sealed letters or parcels could not be invoked
against him. United States Judge McCreary, who sat in the case,
was not so minded. He told the jury to disregard the prisoner’s
defense. In other words, a package was not only a parcel, but
presumably a packet. The judge split no hairs about definitions.
The mail carrier had stolen tea. That was enough. He was sent to
prison.

See how another judge, years later, construed “packet.” Nathan
B. Williams, of Fayetteville, Ark., brought suit in the
United States Circuit Court to prevent express companies from
carrying packets. When the last judge had had his guess about
the conundrum, Mr. Williams was judicially informed that the
government mail monopoly, so far as packets are concerned,
extends only to “packets _of letters_.” In other words, a packet
is a packet of letters; that and nothing more. Here are the
judge’s words:

“While Congress has full constitutional powers to reserve to
the postal department a monopoly of the business of receiving,
transporting and delivering mails, and, in the exercise of such
rights, may enact such laws, regulations and rules as will
effectively preserve its monopoly, yet this monopoly is intended
(see the Judge read the mind of the Congress of 1845), to extend
only to letters, packets of letters, and the like mailable
matter, and Congress has never attempted to extend this monopoly
to the transportation of merchandise in parcels weighing less
than four pounds, nor to prohibit express companies from making
regular trips over established post routes, or from engaging in
the business of carrying such parcels for hire.”

That is what the court says--and what the court says goes.
Here is what the present Attorney General of the United States
says--and what the Attorney General says does not go. The
Receivers’ and Shippers’ Association of Cincinnati asked the
Attorney General to join in Mr. Williams’ suit, which the
Attorney General declined to do for this reason:

“The department has made a very complete study of the proposition
and agrees with Mr. Williams upon the law, except as to the
one point, namely, that there has been an _administrative
construction against the proposition for over forty years_, and
the chances are that a suit will be defeated on that ground.”

In other words while the Attorney General believes the express
companies have been and are violating the law, the postoffice
department, for forty years, _has let them do it_, and it seems
useless to try to enforce the law.

Here, then, is the absurd situation with regard to packets
into which the express companies have forced the United States
government:

If a packet contains tea, and a mail carrier steals some of it,
it is a packet without doubt, and the mail carrier is sent to
prison.

If an express company carries a packet of tea, the packet is not
a packet, because a packet is only a packet of letters.

But a mail carrier will find out rather quickly, whether a packet
of tea weighing less than four pounds, is a packet or not, if he
carry the packet for his own profit instead of turning over to
the government the amount of the postage. Let the fact become
known to the government, and he will be arrested as quickly as an
officer can reach him.

Now: Is or is not this juggling with the law? If it is not
juggling with the law, what, in your opinion, would be juggling
with the law? If the foregoing decisions sound like good law to
you, perhaps you ought to be upon the federal bench. You might
shine as a judge. You don’t shine as a voter. You think, but you
don’t act. You don’t put your thought behind your ballot. You let
somebody else put his thought behind your ballot.

That is pretty plain talk--talk which should do us readers some good. It should, at least, enlighten us as to these facts.

First: The express companies have been _criminally_ trenching upon and into the service of the Postoffice Department for forty years or more--have been _raiding_ what were originally intended to be the legitimate and legally protected revenues of that department.

Second: Such raidings have been winked at by our federal legislators and condoned, and the raiders exonerated by juridic opinions which were so bald, bare, brazen and _cheap_ that they would make a practiced confidence or get-rich-quick man blush.

I intended to write further here about this raid of the express companies on postal revenues, but have concluded to defer much of what I intended to say in handling this phase of our general subject to the closing division of this volume--the parcels post. One reason for doing so is that today it is _not_ the express companies which command and direct the raidings that _express business_ is making, and for some years has made, into what rightly and _legally_ should be the field of postal revenue gathering. Twenty years ago, a trifle more or less, when John Wanamaker was Postmaster General, he stated to a committee or delegation calling on him, that there were four insuperable objections to the establishment of a parcels post at that time. He named the four objections. They were, if I remember rightly, “The Adams Express Company, the American Express Company, the Wells-Fargo Express Company and the United States Express Company.” It may be he named the Southern or some other express company instead of the United States Express Company. I cannot remember. At any rate he named _four_ express companies as the “insuperable objections” to the establishment of a parcels post.

Well, he was right for the period in which he spoke. But twenty years is a long time in a swift, governmentally aided get-rich-quick age or country like ours. There are some dozen or more express companies now--a dozen or more _on paper_--_quasi_-express companies.

The railroad companies and railroad officials _control the express companies and the express business of this country today_.

A departmental report of the government showed, as stated in the Saturday Evening Post of May 27, 1911, “that the four principal express companies have thirty-seven directors, of whom _thirty-two_ are residents of New York, _two_ are residents of Chicago and _three_ of San Francisco. _These express directors are also directors in twenty-five of the leading railroad systems of the United States._”

So, today, if Mr. Wanamaker were inclined to do so, he would probably revise his statement of twenty or more years ago. He would probably say that the _railroads of this country_ stood as the insuperable objection or obstruction to the establishment and operation of an efficient, cheap and serviceable parcels post--the failure or neglect to do which is running one of the greatest raids into postal revenues this or any other nation has ever known.

Mr. Albert W. Atwood in writing to this point under the general caption “The Great Express Companies,” in the American Magazine, February, 1911, issue, says:

Perhaps you have thought of all this before, but do you also know
that the six largest express companies are among our greatest
bankers? With them, in one year, the public has deposited
$352,590,814 and their transactions in money orders, travelers’
checks, letters of credit and bills of exchange rival those
of the most powerful banks. This business, unlike any other
form of banking is under no governmental jurisdiction and goes
untaxed. It is made possible only by using the machinery of
the regular banks, although to these the express companies pay
no revenue. In the money-order line, express companies compete
with the postoffice and do about one-third as much business
as the government. The American Express alone has handled
nearly 17,000,000 money orders in one year. That the public has
confidence in the safety of the express companies as banks admits
of no doubt, and it has been credibly reported that in the panic
of 1907 money was withdrawn from banks, which the people did not
trust, and invested in express money orders.

Transportation in a multitude of forms and branch banking do not
comprise the sum total of express activities. The surplus funds
of these huge institutions have grown large enough to require
constant investment, and the express companies form a close
second to the savings banks and insurance companies as the most
dependable, regular and important class of investors in railroad
securities. Diversified as the functions of the express companies
have become, success has more than kept pace with their extension
into varied fields, and a keen, wideawake public interest in
the express business is demanded, not alone by the public and
necessary character of the business itself, but still more by
the extraordinary return which the companies receive for service
performed.

Six companies control more than 90% of the country’s express
business, and of these the Adams is one of the oldest and most
powerful. Organized more than fifty-six years ago, its capital
stock had grown to $10,000,000 by 1866, in which year the members
of the association, as the shareholders are called, received a
stock dividend of $2,000,000. The $10,000,000 of stock itself did
not represent shares issued for cash. According to the company’s
own reports, no shares were ever issued for cash. The 100,000
shares were given to members of the association to represent each
member’s pro rata ownership in the assets which had accumulated
from earnings. As late as 1890, according to the census figures,
the company had an actual investment in property employed in its
business of but $1,128,195. Yet it had been paying 8% dividends
for many years, or 80% on the actual value of the property in
use. In 1898 it distributed $12,000,000 of its own bonds to
stockholders, these bonds to be secured by the deposit in trust
of the surplus funds not used in the express business. At this
time the company reduced its dividend rate to 4%, but as 4% was
also paid on the bonds, the stockholders did not suffer any loss
of income. By 1904 the dividend rate had mounted to 10%, the
bond interest remaining at 4%. In 1907, $24,000,000 additional
bonds were given to the stockholders, likewise secured by another
fat surplus, and like the first issue, paying 4% in interest.
Dividends on the stock have since been maintained at 12% and
there has grown up another surplus of nearly $25,000,000 which
must soon be disbursed. Meanwhile the property actually employed
for express purposes has grown to but something more than
$6,000,000.

Moreover, there is another large fund slowly but surely
accumulating in connection with the 1907 bond distribution. This
1907 gift to the shareholders was in the form of a bond issue
secured by the deposit of stocks and bonds of other corporations
formerly owned by the company itself. The deed of trust provides
that if the income from these stocks and bonds is more than
enough to pay interest of 4% a year on the $24,000,000 of Adams
Express bonds, the surplus shall accrue and be distributed in
1947 among the holders of the Adams Express bonds. As a matter
of fact there is a computed excess income derived in this way
of $151,517.50 a year and by 1947 this will have mounted up to
more than $6,000,000, not allowing for compound interest. Here is
a 50% extra dividend being nourished along toward maturity. If
there is any better example of being able to eat one’s cake and
have it too, I have yet to hear of it.

At the outbreak of the civil war the Adams Express Company turned
its routes in the Southern States, in which it had enjoyed a
complete monopoly, over to the Adams-_Southern_ Express Company,
_created by the Georgia courts for the purpose of assuming this
business_. The property of the association was to be represented
by 5,000 shares, of which 558 were then issued. The Adams Express
Company has held to the present day a dominant interest in this
association, which it created to facilitate business _during the
war_. After hostilities ceased, it resumed some of its Southern
routes by agreement with the Adams-_Southern_ Express Company,
whose name had meanwhile been changed to the _Southern Express
Co._ The two companies still work in common and use the same
wagons and offices in many places.

But close as the Southern Express is to its parent company, it
has a separate enough existence to justify a separate account
of its _money-making capabilities_. Referring to the original
558 shares of stock, the secretary and treasurer of the Southern
Express says: “_None of the original twenty-four stockholders
are living and there is no existing record to show how much was
realized from the distribution._” This does not help us much,
but in another report to the Interstate Commerce Commission
the company appears to know what these records showed, for it
says “_none of its stock was ever issued for real property_,
equipment, acquisition of securities, or for any other purpose
in the sense in which the issuance of stock is understood in
connection with corporations.” But we do find that in 1866 the
number of shares was increased to 30,000 and distributed to the
owners _as a stock dividend_. Plainly, the civil war did not
impoverish the express carriers. Then in 1886 enough more new
stock was created to give the owners five shares in place of
every three which they already held, so that there are now 50,000
shares.

Five hundred and fifty-eight shares of stock, the circumstances
of whose issue are known to no one living, have sprouted into
50,000 shares by the mere process of _paying stock dividends_.
Dividends of 8%, or $400,000 a year, are now paid upon the 50,000
shares, although the entire value of the company’s property, real
estate, buildings, equipment, furniture, etc., was only $944,179
_on June 30, 1909_. Here are dividends of 8% on $5,000,000 stock,
or more than 40% on the value of the property employed in the
business. And this is not all. The Southern Express Company owns
high-grade stocks and bonds valued at almost $4,000,000, which
may some fine day form the basis of another melon.

If the Adams Express Company and its Southern associate were the
only ones to shower their members with unheard-of profits we
might be inclined to think they had been visited with peculiar
and exceptional good fortune. Such is far from being the case.
Let us proceed alphabetically and see how the members of the
American Express Company have fared.

The Adams and American are easily the two most important of the
express companies, and control, or have controlled at various
times, all the other important companies with the exception of
the Pacific. Since 1868 the capital of the American has stood
at $18,000,000, this stock having been issued in exchange for
the shares of the original American Express Company and the
Merchants’ Union Express Company, under articles of merger and
association dated November 25, 1868. The company’s books show
that $5,300,000 _was the value_ of the assets taken over at that
time. There was $183,819 in cash; $1,261,023 in securities;
$2,200,300 in real estate, less a mortgage of $505,143; and
$1,260,000 in equipment; making a total of $4,400,000. New stock
was sold which realized $900,000 in cash, making a total of
$5,300,000 in assets for the $18,000,000 of stock. _No new stock
has been issued since 1868 and no further cash has been paid into
the treasury except from earnings._

From its own balance sheet we find the company now has less than
$10,000,000 in _real property and equipment_, all of which does
not represent property employed in the service, _because the
item “real property” includes real estate investments_.

With an original investment in cash and property of but one-third
the par value of its capital stock, the American Express Company
now pays dividends on this stock of 12% a year and for many years
paid 6, 8 and 10%. Moreover, it has accumulated from its earnings
a fund of _more than $20,000,000_ which is invested in readily
negotiable stocks and bonds, the yearly income on which amounted
to $1,178,000 in 1909. Among these securities are such high-grade
railroad stocks as Chicago and Northwestern, Northern Pacific,
New Haven, New York Central and Union Pacific.

Six years ago (1904-5), the substantial assets of the American
Express Company had grown from $5,300,000, the amount fixed in
the articles of association, to _six times that amount_. These
assets, let me repeat, did not represent new capital put into the
business, for _none whatever_ was put in, but were accumulations
of earnings over and above funds required to carry on the
business and pay dividends of 8% upon $18,000,000 of stock.
Even the association’s own shareholders failed to see the need
of such a treasure and in 1906 a committee representing them
addressed the officers of the company thus: “_It is evident the
management has faith in its ability to conserve the vast fund so
accumulated beyond the needs of the business, without wasting the
same or embarking it in new and dangerous ventures, and while
we personally neither criticise them nor express any want of
confidence in them, still it is our opinion, and that of many
representative holders of long standing, experience and means,
that this immense fund should not be further rapidly increased to
become a source of temptation to the possible weakness or a snare
to the possible inexperience of their successors._”

I would like to quote further from both Mr. Benson and Mr. Atwood. The former writes two articles which appeared in Pearson’s Magazine in February and March, 1911, clearly showing not only why we have no parcels post, but, to some extent, the raid which the express companies have made and are making on postal service revenues that rightfully and _legally_ should accrue to the government. The latter, Mr. Atwood, speaks in three splendid articles in the American Magazine (February, March and April), under the caption, “The Great Express Monopoly.” Each of the gentlemen handles his subject masterfully. Each of them set forth facts which every American citizen should know and, knowing, should _go after_ every public official who has ignorantly permitted or knowingly condoned, aided or cloaked the criminal raiding into the legitimate field of the postal service and revenues. Every one who can should get hold of and read the five articles referred to. I shall probably quote further from them in the closing division of this volume, but to appreciate them fully one should read them entire and connectedly.

Sufficient has here been said, however, to show any fair-minded reader that our express companies, or the railways which use the express companies merely as pinch-bars to pry into our postal revenues on the one hand and as cloaks for excessive rates to the general public for handling light or parcels freight on the other, are illegally taking _millions of dollars annually_ for a service which should be, and which was originally intended to be, rendered by the Postoffice Department.

I say that the express companies, or the railroads over which they operate and which, today, virtually own and control them, are doing an _illegal_ business--a business carried on in flat contravention and defiance of the _plain letter_ of the federal statutes.

I say further: The contravention of law which makes this vast lootage--_steal_--possible has no other basis for its past and present raiding of the field of postal revenues than _corrupted federal legislators_ and, either corrupted or loose screwed, juridic opinions which are permitted to stand in place of the plainly worded statute of 1845.

And there is a colossal irony in the brazen effrontery with which this raiding of the postal revenues by the express companies has been, and is, carried on.

On the one hand, we have public officials cackling about its costing the government 4 to 9 cents a pound to transport and handle second-class mail matter--rather, making voluble and voluminous _guesses_ that it costs from 4 to 9 cents a pound--while on the other hand, the express companies enter into contracts with publishers to carry and deliver at line stations that same second-class matter at _one-half cent a pound_.

When it is remembered that the express companies must “split” with the transporting railroad to the extent of 40 to 63 per cent of their gross haulage and delivery charge, the talk of its costing the government 4 to 9 cents to do what the express companies do for a half-cent--in some cases possibly, for less even than that--passes, from the domain of irony and becomes disgusting twaddle.

The postal rate for carrying merchandise parcels not exceeding four pounds is 16 cents a pound. That rate is, as previously stated, outrageously high and the maximum weight of four pounds is almost as outrageously low. Both the postal weight and rate have been held for years at the figures named, it has been numerously asserted and is _generally believed_, by the “influence” of express company and railroad lobbying in Congress. The result is that by far the larger portion of light or parcels shipments go by express instead of by mail, as it was clearly intended in the law of 1845 they should go.

To get this business, the express companies cut under the government charge of 16 cents a pound, as they can both easily and profitably do.

Nor do they hold the shipper to a maximum of four pounds for any single package or parcel. In fact, they set up practically no maximum parcels weight, and they deliver at any postoffice or station along their lines of service. In fact, again, the express companies now have, it is asserted, a sort of compensating agreement by which the company collecting the business can have another company make deliveries, each company taking its prorated share of the profit on the carriage and handling of the parcel or consignment.

Such arrangement, it will readily be seen, enables the express company to accept package consignments for delivery at almost any point in the country, if on a railroad, or for delivery at some rail point near the addressed destination of the parcel.

Then, too, as Mr. Benson points out, the railroads and railroad officials and owners are also controlling owners of the express companies. Being so, they do not hesitate virtually to “club” the public into shipping its parcels freight by express. They do this by fixing a minimum weight in their freight tariffs. That minimum is 100 pounds. That is, it will cost the shipper as _much to send a four or ten pound package to destination by fast freight as it would cost him to send 100 pounds_.

The foregoing is sufficient to show the reader that the express companies are _permitted_ to raid the legitimate business of the Postoffice Department--or what should be and, under the law, was _intended_ to be the business of the Postoffice Department.

The express companies, or their railroad control--which amounts to the same thing--also forage the field of third-class matter which, _by law_, was made a preserve of the Postoffice Department.

The postal rate for third-class mail matter is eight cents per pound. That rate is, of course, away too high. With The Man on the Ladder the conviction remains, as it has been a conviction for twenty or more years, that the postal rate of eight cents per pound for third-class matter is three times what that rate should be--easily double the charge that should be made to cover the _legitimate_ cost to the government for handling it, which cost is _all_ that the department should seek or be _permitted to_ collect.

Trusting that the reader will find excuse for me, I desire to repeat here what, in substance, I have written into an earlier page:

The postal service of the nation should not be made a revenue-producing service, any more than the War, Navy, Interior, Justice or other departments of the federal service should be made revenue-producers.

If the people pay--have paid and are willing to pay--the _actual_ cost of an efficient, honestly administered and managed postal service, that is all they should be asked or expected to pay.

But returning to the express companies’ raidings into the postoffice revenues, let me here assert what every observant citizen of intelligence knows: The express companies are today carrying _millions of pounds_ of books--leather, cloth and paper bound books--at a rate for carriage and delivery materially below the government’s excessive rate of eight cents a pound.

These same express companies are today carrying _thousands of tons_ of catalogues, pamphlets, business, political and other circulars, color prints of apparel fabrics, etc., etc., which the Postoffice Department ought to handle--and, under the law, _should_ handle, and, but for that extortionate rate of eight cents a pound _would_ handle.

It has been repeatedly asserted by persons who are familiar with carriage and handling costs, both in the postal and private service, that the postal rate of 8 cents a pound for third-class mail matter has been maintained--and _is_ maintained--by reason of corrupt and corrupting influences (the coat-pocket “dropped roll,” the “job” bribe, the “deposit slip,” etc., etc.), which express and railway interests have liberally exerted upon federal legislators and upon executive and judicial officeholders--exerted upon “public servants.”

However, that may be, the facts today are that the postal service rate of 8 cents a pound for third-class matter is so excessive--so conspicuously above the cost of the service rendered--that the express companies find no difficulty in under-cutting it--in many cases, _more_ than cutting it in half--and still reap _millions of profit_ from the handling of such matter.

If a publisher has an edition of five, ten or one hundred thousand of a book to be delivered in piece, or single copies, an express company representative will see him at once--often see him before the book is from the press. If the publisher is doing a large and general business in book publishing or the book trade, the express companies have already seen him, by representative, and a carriage and handling charge agreed upon, under which the contracting or agreeing express company will handle any or all the publisher’s books, both single copies and trade shipments, at a rate much below the government’s postage rate of eight cents a pound.

If a publisher brings out a book which weighs, when wrapped or jacketed for mailing, say one pound on which the mailing charge would be 8 cents, the express company tenders a rate of 7 cents. If the edition of the book is a large one the express company will tender a rate of 6 cents or even a rate as low as 5 cents or 4 cents.

In performing such service the express company is a violator of _law_--_a brazen outlaw_. Yet the government not only permits this outlawry, but, by maintaining that excessive rate of 8 cents a pound, the government virtually _invites_ it.

What I have above said applies with equal or even greater force to the transportation and distribution of mercantile and other catalogues, and of descriptive pamphlets, etc. However, I think sufficient has been said to cover the point raised.

The government _persists_ in charging a third-class rate which virtually drives _thousands of tons_ of third-class matter to the express companies. The express companies handle this vast tonnage at a cost charge to the sender or shipper, ranging from 16⅔ per cent to 50 per cent _below_ the government’s mail rate.

The express companies roll up millions--many millions--of profits every year, while at the higher rate, the government officials (some of them), slash up the ambient with rapier verbiage about “deficits” and make extension-ladder guesses at what it “actually costs” the Postoffice Department to carry and handle a pound of third, or some other, class of mail matter.

Another raid upon the postal revenues--and the raid is by the oldest gang of looters in the game--or graft--is the railroads.

For lo, these many years, the railroads have carried the mails at a carriage charge of $21.37 a ton per annum per line mile of haul.[9] That is $21.37 is allowed on “dense” traffic lines where the daily mail weight is above 5,000 pounds. On lines where the daily weight is 5,000 lbs., the rate is $171.00 per annum per line mile of haul. For mail weights less than 5,000 pounds the rate of pay varies, the ton-mile rate increasing from 21.37 cents for a weight above 5,000 pounds, to $1.17 per ton-mile for an average weight of 200 pounds.

Following are tabulations showing the scale of mail pay and also the postoffice car rental pay. I get them from the Wolcott Commission report made in 1901. The tables and accompanying paragraphs form part of the testimony of Mr. Marshall M. Kirkman, who at the time of the Wolcott Commission hearings was Second Vice-President of the Chicago and Northwestern Railway. The rates of pay may have been modified in some slight degree since 1901. If so, I have not learned of the fact. I am of the opinion that the figures given by Mr. Kirkman still govern as rates of mail pay and car rentals, and as Mr. Kirkman was speaking for the railroads the reader may depend upon it that the case of the railroads--especially of the Chicago and Northwestern, then a system of about 5,000 miles of trackage--was presented in as favorable a light as the governing facts would permit:

RATES BASED ON THE WEIGHT OF THE MAILS.[10]

-----------------------------------+--------+---------+---------
|Present |Present |Present
|pay per |rate per |rate per
Average daily weight of mails |mile per|ton per |hundred
over whole route. |annum. |mile.[11]|pounds
| | |per
| | |mile.[12]
-----------------------------------+--------+---------+---------
| | | _Cents_
200 pounds | $42.75 | $1.170 | 5.85
500 pounds | 64.12 | .700 | 3.50
1,000 pounds | 85.50 | .468 | 2.34
2,000 pounds | 128.25 | .351 | 1.75
4,000 pounds | 156.46 | .214 | 1.07
5,000 pounds | 171.00 | .187 | .96
Each 2,000 pounds in excess | | |
of 5,000 pounds | 21.37 | .058 | .29
-----------------------------------+--------+---------+---------

The most striking feature of this table is the rapid decline in
the rates paid with an increase of weight.

In addition to the above payments based upon weight there is
an additional allowance when full-sized postoffice cars are
provided, the Postoffice Department deciding when these are
necessary. The rates of pay for these cars are as follows:

RATES ALLOWABLE FOR FULL-SIZED POSTOFFICE CARS.[13]

The first column, which shows the rate paid per mile of track
per annum, is likely to be misunderstood. The compensation seems
very liberal, and it would be so in fact if it were as large as
it appears to be. To gain $25 per mile per annum a 40-foot car
must make a round trip over each mile of road per day. If it only
makes one trip over the road each day, it will earn but $12.50
per mile per annum, as it would be but half of what is known as a
line. The statute reads:

“That … pay may be allowed for every line comprising a daily trip
each way of railway postoffice cars, at a rate not exceeding
twenty-five dollars per mile per annum for cars forty feet in
length.…”

Let us here take note what the foregoing tabulated figures mean--figures which Mr. Kirkman argued, if I read his testimony correctly, are too low[14]. I have read the testimony of numerous other railroad representatives, testimony before the Loud Commission, 1898, the Wolcott Commission, 1901, the Penrose-Overstreet Commission, 1907, and before the Hughes Commission, whose report is not yet compiled for publication. Each and all of them, so far as I have read their testimony, argue eloquently that the present rates of railway mail-pay and car rentals are, if unfair at all, unfair to the railroads--that the rates of pay are too low.

In this connection a most peculiar, if not indeed a peculiarly suggestive, _harmony_ of opinion appears to have existed between the special pleaders for the railroads in this matter of railway mail-pay and government officials--both executive and legislative--who have had most to do with fixing railway pay rates. The government has spent millions of dollars for investigations by commissions, by Senate and House committees, by inspectors, special agents, etc. Each commission has heard numerously from the railways. Twenty-seven of them were in hearing before the Wolcott Commission. The testimony of Mr. Kirkman, from whom I quote the preceding tabulations, while varying in phase, phrase and verbiage from the other railroad representatives, has two essential features common to them all, or, I should say, three features common to them all.

1. The railroad representatives unanimously oppose any reduction in the rates for railway mail pay (weights pay), and mail car rentals--“space charge,” they call it.

2. They are a unit in declaring that the present rates are too low, but they as unitedly express a willingness to _continue business at the old rates_ rather than to contemplate the possibility of a reduction in them, or even _squarely_ to argue the justice and fairness of such a reduction.

3. When forced down to “tacks”--down to specific facts--by some interrogating member of the commission before which they are testifying, these railroad representatives again have a marked similarity as to “form.” Each comes eloquently forward with his _own_ set or sets of figures and proceeds to make his _own_ application of them. But when some commissioner asks for information and enlightenment as to “net cost,” “relative cost,” etc., of mail carriage as compared with the cost of express, freight or passenger handling, the railroad representatives, almost to a man, at once begin to display a dense denseness that is marvelously wondrous or wonderously marvelous, as the reader may choose to word it.

The peculiar or suggestive harmony between the opinions of these railway representatives and the _controlling_ executive and legislative officials of the Federal Government, is especially conspicuous under point 2 as numbered above. The railway people plead that the ruling rates are too low, but are willing to stand for them. However, they _do not want the rates lowered_.

The peculiar harmony of opinions just adverted to is ample evidence, or so it appears to The Man on the Ladder, of this one fact:

The present rates of pay for railway mail _weight_ carriage are the rates fixed by the act of 1879. Freight, express and passenger rates or tariffs have been changed--_have been lowered_. The railways did not want the mail rates lowered and the governmental powers that be, and have been, were apparently at least, quite willing to take their view of the matter, even if they did not concur in the numerous half-baked, threadbare arguments advanced by the railroad people in support.

_The rates of railway mail pay have remained the same for thirty-three years--until 1908._

Comment is unnecessary.

As evidence in support of points 1 and 3 as above numbered, points on which railroad representatives so uniformly agree in support of, or, with equal uniformity, display concurring lapses of memory or lack of knowledge relating to, I shall here quote further from Mr. Kirkman’s testimony before the Wolcott Commission. In electing to quote from Mr. Kirkman rather than from another to evidence points 1 and 3, I am influenced only by the fact that I have the report of the Wolcott Commission before me at the moment, and to the further fact that Mr. Kirkman’s testimony appears to me cogently illustrative of the points to which I have called the reader’s attention.

In closing his prepared or written testimony (page 208 of the report), Mr. Kirkman says:

In conclusion, it may be stated that the compensation afforded
this railroad for carrying the mail _is not now in excess of
what it should be_. It is not improper, therefore, for us to
beg, if rates can not be increased, _that no further reductions
may be made_; also, that the practice of fixing the compensation
paid for mail service on the basis of the weight carried at the
commencement of the four-year periods (instead of on the weights
carried in the middle of the periods), may be abandoned in favor
of a more equitable system.

From the above it will be seen that this witness states with confidence that the compensation his road (the Chicago and Northwestern) receives “is not now in excess of what it should be” and _begs_ that, “if the rates cannot be increased, that _no further reductions be made_.”

I shall now reprint a few pages from the report of Mr. Kirkman’s oral testimony as illustrative of point 3:

By Mr. CATCHINGS:

Q. What did you state were the gross receipts from your whole
system for carrying the mails?--A. About $800,000.

Q. Now, can you state to this commission what your net profit was
for carrying that amount over your system?--A. _I do not know._

Q. Can you make any estimate?--A. _No, sir._

Q. You heard the testimony of Mr. Simpson (representing the Flint
and Pere Marquette Railroad), did you not?--A. Yes, sir.

Q. He stated that his road carried the mails at a dead loss. What
that loss was _he was unable to give us_. I understand you to say
that you do make a profit out of carrying the mails?--A. I beg
your pardon. I said that, because we got approximately the same
rate per ton per mile for carrying the mails as for express (and
that the express rate had been a matter of careful negotiation
as between our company and the express company); I have reason
to believe that we would not have taken the express business
unless we derived a profit from it, and therefore I think it
is reasonable to suppose that we must derive a profit from the
postoffice business.

Q. Do you mean to tell me that you have no estimate as to the
cost of carrying this mail matter?--A. _Not to my knowledge. We
have taken what the Government gave us._ As I have shown you,
they have never pretended to remunerate us for many services
rendered.

Q. If you are unable to say what your profit was for carrying
this mail, how can you complain that you are not being properly
compensated for the service rendered?--A. Because we render so
many services today that we did not formerly when the rate was
fixed.

Q. I understand; but, so far as we know from your testimony,
you may be amply compensated for it.--A. We receive, as I said
before, a certain rate from the express company for analogous
service, and do not render them anything like the equivalent that
we render the Postoffice Department, so that we must derive a
great deal more profit from the express business than we do from
the postoffice.

Q. Still, it would not follow that you were not deriving proper
compensation for carrying the mail, would it?--A. It would not
follow that we do not derive some compensation from it.

Q. _Unless you are prepared to tell us what your profit is, or
your loss, as the case may be, of course you can not expect us
to know it, and, unless we know it, you can not expect us to
sympathize with the complaint._--A. _We are not making complaint
about the compensation we receive, but the threat held over our
heads that our compensation would be cut down._ When they cut us
down on the land-grant roads they did not make it a matter of
negotiation at all; they just simply took off 20 per cent.

Q. Do you not think that the best way to prove this complaint
would be to show that you are not receiving due compensation?--A.
If I was keeping a boarding house and you came to me and I
agreed to give you two meals a day, and you afterwards exacted
four, because you are mightier than I in forcing it, would it be
necessary for me to prove that I was giving you something that
you were not entitled to under your contract?

Q. You ought to show us what your net profits are.--A. _It is
impossible._

By the CHAIRMAN:

Q. General Catchings calls your attention to this: In your
direct examination I asked you if you had any suggestions to
make to this commission in the matter of changes of law. You
said you thought the law should be so changed as to increase
your compensation to an adequate sum. Now, in answer to General
Catchings, you say that it is remunerative; he asks you how
much you make, and you can not tell; then he asks you why you
recommend a change in the law if you will not tell the commission
what you are now making by it, and if you can tell what your
profits in carrying the mail are. That is what General Catchings
is anxious to have you tell.

By Mr. CATCHINGS:

Q. I would like very much to know if we are under-paying these
roads; we would like to pay them.--A. You ask a question that
there is nobody but Omniscience could answer, because there is no
possible method by which you can determine accurately what the
cost is of carrying traffic. The Government did pretend at one
time to divide the expense of operating as between passenger and
freight, but finally abandoned it. Now, if you can not determine
the cost between passenger and freight, how can you determine it
between mail and other kinds?

Q. There is one thing certain; if the roads can not determine it,
the Government can not.--A. Is it not true that, in matters of
this kind, no one would expect anything definite in the absence
of definite information?

Q. I do not see why you can not figure as well the cost of
carrying these mails as you can the cost of carrying the express
packages. I do not see why it ought to be more difficult for
you to determine that.--A. There is not any single thing that
a railroad carries, from a first class passenger to a cord of
stone, that it can tell accurately what the cost is. _Tariffs are
a matter of evolution._

Q. At least, your road is better off than the Flint and Pere
Marquette, for they carry at a loss and you carry at a profit--A.
I did not say we carry at a profit; but I say that is my
judgment, sir.

Q. I believe something has been said about the extraordinary
cost at which these railroads handle these postal cars. I would
like to have you help me reach a conclusion from that. How many
railway postal cars have you on your system?--A. I do not know
how many we do have.

By the CHAIRMAN:

Q. Does your statement show?--A. No, sir; it does not.

By Mr. CATCHINGS:

Q. How much do you receive from the government for the railway
postal cars?--A. We receive certain compensation for cars over a
given length.

Q. You stated, I believe, the gross revenue to you for these
cars?--A. We have a great many that we do not receive any revenue
from the government for their use.

Q. I want to know what your revenue is from the postal cars?--A.
I can not tell you.

Q. You can furnish that amount?--A. Yes, sir.

Q. I wish you would furnish this commission a statement showing
the gross revenue to your system of road derived from these
postal cars; and then I wish you would furnish a statement
showing what the cost to you is of maintaining those cars,
keeping them in repair, what the estimated cost to you is of
hauling them, and the number of cars?--A. I will give you all
that you desire so far as I can.

By Mr. LOUD:

Q. You stated, Mr Kirkman, that you were Vice-President of the
Chicago and Northwestern?--A. Yes, sir.

Q. Are you General Manager?--A. No, sir.

Q. What is your particular business in connection with the
railroad?--A. I have charge of the local finances and accounts of
the company.

Q. You are not prepared to answer technically, then, questions
that might be propounded to you, as has been developed in the
examination by Mr. Catchings, about the cost of the operation of
a car and the cost of the transportation of a ton of freight,
passengers, etc?--A. _I am as well prepared to answer the
question as anyone. There is no one, as I said before, who knows
what the cost is or can tell you definitely, simply for the
reason that it is utterly impossible to fix the cost as between
passengers and freight, for instance._

Q. What is the use of our investigation, then?--A. I am here
before this commission; my time here, perhaps, represents ten
dollars or ten cents. _What am I going to charge it to?_ In this
case perhaps to mail. In many expenses of railroads there are
questions impossible to determine as to what expenditures should
be charged to. You may make, as the General has, a comparison
between the Flint and Pere Marquette, what he thinks is an
approximate statement of cost; it may be more, and it may not.
For instance, the Government of the United States requires that
the mail shall be carried on fast trains--

Q You are going into quite an argument. You ought to be able to
tell what it cost to haul the mail.--A. _No, sir; I can not._

Q. You can not tell?--A. No, sir; nobody can tell.

Q. Could not your General Manager give us some information on
that subject?

Mr. CHANDLER. He can tell how much their gross receipts are
and what the gross expenditures are, and he can tell whether
their whole business is done at a profit or not; but I do not
understand that the railroads can subdivide their receipts and
expenditures so as to tell whether any particular branch of it
actually pays a profit or not. The previous witness undertook
to do it, and I noticed, as he went on, _that it was mere
guesswork_. Mr. Kirkman says he never has done it.

The WITNESS. I want to say, Mr. Loud, that this question of
division of cost has been up before railroads and experts
for forty years, and here is what the chief engineer of the
Pennsylvania says in regard to it. _He estimates that the cost,
for instance, of maintenance of track and machinery increases
with the square of the velocity._

By the CHAIRMAN:

Q. How much do you charge this maintenance of way?--A. What is
the wear and tear of machinery and track from the passage of a
particular train? _No one can tell nor guess approximately._
In an examination of this question I gave it, probably, the
most exhaustive study that I have given any subject in my life,
because so much depended on it--I searched all the records of
Scotland and England and of the United States to determine, but
unavailingly--

By Mr. LOUD:

Q. Could you not put a train of five cars on and run it from
Chicago to Council Bluffs and give approximately what that train
would cost to operate and the approximate cost of wear and tear
to your rails?--A. I can determine all those things that are
apparent; that is, the cost--

Q. That is all we expect; what is reasonable.--A. _But then there
is the question of interest and the wear and tear of machinery
and track._

Q. Let us discard the interest. You ought to be able to get at
the cost of operation.--A. That train so run has to receive the
_constant attention of station men, of track men, the whole
length_. If you will give it a moment’s reflection you will see
how _utterly impossible it is_ to determine it accurately enough
to state here to this commission.

Q. Approximately, it ought to be a perfectly easy matter. It
seems to be to other railroad men.--A. I do not think there is
any railroad man who has given it any more attention than I have
and no railroad man understanding the subject _will do more than
guess at it_.

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Postal Riders and RaidersChapter XIX: Section 181 (1)

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