Chapter D: M. Carr (4)

Much of the opposition to this measure has come from the country store-keeper, who very naturally dreads that such largely increased facilities for delivery by mail would simply extend the already wide domain of the department store and drive him completely out of business. But this objection has been met by the plan for a special postal service for the rural routes, which would be given at a much lower rate than that prevailing throughout the general system of parcel post. This special rate as advocated by Mr. Meyer would be five cents for the first pound and two cents for each successive pound up to the limit of eleven pounds, thus enabling any one along the line of rural route to use the mails for delivery of packages at a charge of twenty-five cents for the maximum weight, as opposed to one dollar and thirty-two cents for the same weight if sent at the regular rate of twelve cents a pound,--which regular rate would necessarily have to be used by department stores unless they should go to the trouble and expense of maintaining a large system of rural agencies throughout the country.

The result of such a system in bringing about the general dissemination of business throughout the country by fostering small individual enterprises is almost beyond calculation, especially as a secondary result would be the growth of small villages and settlements throughout the thinly settled farming districts. And these two changes in the present state of affairs would go far toward solving the whole problem of the possibility of turning the tide from the city back into the country. The hardships and discomforts of many of the conditions of city life, particularly among people of limited means, and the uncertainty of the wage-earner’s means of livelihood, are now endured chiefly because of the greater disadvantages that are attached to farming in remote parts of the country or to undertaking the responsibility of working independently of any large commercial or industrial organization. For months, the Craftsman has been urging the establishment of rural settlements and the introduction of handicrafts in connection with small farms. Nothing that is likely to be done in the way of legislation to this end seems to us to make so possible a general change for the better along these lines as the postal measures recommended by the Postmaster-General, supported by the President and now recognized by Republicans and Democrats alike as a reform that will not be downed, no matter how powerful are the interests opposing it. Given the postal savings bank as an encouragement to thrift, and transportation facilities that will not only bring all necessary merchandise within reach of the farmer, but also take the products of his own industry and a great part of the output of the village workshops to the nearest market at a reasonable rate, and the rest will follow almost as a matter of course. When a man has a fund of several hundred dollars, there is hardly any question as to what he will do with it if he has a chance. The desire to own a home and a little patch of land is universal with civilized mankind and when to the possibility of gratifying this desire is added facilities that render life in the country as interesting and as much abreast of the times as life in the city, the tenement question in cities will soon cease to be the serious problem it is now.

Independent. 70: 105-7. January 12, 1911.

Parcels Post Once More.

Proportional rural population is not diminishing. We do not know what the present census will say, but we do know that from 1890 to 1900 the country gained enormously on the city in its proportion of new settlers. The old record of 65 per cent. for the city tumbled down to a little over 30 per cent., and we know of no reversal of this tendency. Back to the country has become a universal cry. Lands are rising in value steadily, and deserted farms are a myth. At least, Governor Hughes in one of his speeches said that he should like to know where they were in New York State, for he could not find them. Country churches have often died, to be sure; but they were killed seventy-five years ago, and they do not note at all any decadence of farm prosperity. They went out when railroads began to be built. Crossroads stores have not been run to any extent for half a century, any more than crossroads taverns. They do not belong to advanced stages of country life, and are not needed.

Never was country life more progressive, better organized or more lifeful and hopeful. The crossroads has been displaced by the village store, and this village store must deliver its goods. It wants the parcels post. The trolley is reaching its fingers up into the valleys and touching the farmyards with its carrying capacity. The automobile is doing even more to reach the isolated farmhouse. We might as well forbid these forces and conveniences as to deny the farmer a parcels post. The same argument lies with intense force against rural free mail delivery in every form. It destroys many post offices; it keeps the farmer at home; it dissolves hamlet life: but it aids in the great movement of distributing the blessings of a complete life all over the country.

We are quite willing to face the frightful proposition which is offered us, of a community with no business institutions except the post office and the freight depot. We have seen the tens of thousands of district schoolhouses blotted out without a qualm, for we have seen the union schools gloriously taking up the work in their place. We have seen the little stores and taverns that used to be convenient for watering horses vanish, because we find a substitute in department stores, almost invariably within reach, by aid of the trolley and automobile. We are not worried at all when we contemplate a picture involving a more substantial country home, with its isolation abolished, hidden among the hills, but visited daily by the rural free delivery carrier, even tho he shall have in his automobile a ten-pound package for the housewife.

Without parley, we believe that the American people, almost without dissent, demand a parcels post service; and that if put to popular vote, this demand would be exprest by a majority of 90 to 1 the country over. The people are growing impatient over delay, and they are expressing this impatience very loudly. We believe that the coming Congress will hardly find it possible to ignore this desire. We quite agree with one of our contemporaries who says that the next step of social and economic progress in the United States is unquestionably bringing the producer and consumer closer together by reducing the cost of carrying small parcels.

People Demand a General Parcels Post. pp. 7-12.

William Sulzer.

Absence of a parcels-post law enables the railroad companies, through subsidiary companies called express companies, to eliminate all competition and prevent all regulation in one branch of transportation and to escape compliance with the laws that are being enforced against them in other branches of transportation by the several state commerce commissions and the Interstate Commerce Commission.

That the owners of the securities of these express companies have made enormous profits is a recognized fact. One hundred per cent, even 200 per cent, profit when an express company “cuts a melon” no longer excites surprise when found in the news columns of our evening paper.

No one objects to a fair profit for good service, but conditions seem to indicate that the transportation companies are not satisfied with the first and are not giving us the second, while developments before commerce commission hearings indicate that their backwardness in adopting economical and scientific business methods causes a tremendous unnecessary expense. This they are meeting by maintaining and even increasing already exorbitant rates for service that many believe are discriminatory, and that grave injury and injustice to business and to the general public results.

As an example, W. P. Dickinson, of the Burlington Railway, is quoted in the Railway Record as saying at a public hearing that the expenditures of the Burlington traffic department for printing and stationery in the fiscal year 1910 was $222,000. Assuming that they are typical for all the railways in the United States, the cost of printing railroad tariffs alone under present methods, is $6,000,000 to $10,000,000. In modern transportation methods, as, for instance, those in vogue in Germany, this expense is so trifling as to be scarcely worth considering. Freights move in Germany on a uniform tariff, based entirely upon bulk, weight, and distance, discrimination is impossible, and any shipper can learn in a moment, by referring to the table, the exact freight charge to any point, and can ship knowing that his competitors must pay the same price for the same service.

In the United States the shipper can not know all the tariffs that are published or how they affect rates. He is supplied with a few easily understood tables, but it is not within human possibility for him to even read, to say nothing of comprehending, the millions that are filed with the commission every year and how they affect the cost of the transportation he buys.

So it seems this extraordinary printing expense of millions, whatever its purpose may be, operates to keep the average shipper ignorant about rates. Ignorance is always dangerous, and particularly so in transportation matters.

Harrington Emerson, the expert, testified at the hearing before the Interstate Commerce Commission at Washington last November, that $300,000,000 annually in railroad operating expenses in this country would be saved if the railroads adopted better business methods of management.

To save for the consumers that enormous sum, no better beginning can be made than for the government to establish a satisfactory parcels post and adopt scientific business methods in its management.

That the interests that control our railroads also own and control the express companies and that their separate incorporation is merely a device to cover extortion and discrimination by complex contract relations is indicated by Senate Document No. 278, pages 53, 54, and 55:

Stock held by railways in express companies $20,668,000
Railway securities held by express companies 34,542,950
Holdings of express companies in the stock of express
companies 11,618,125
----------
Total intercorporate ownership express companies
June 20, 1906 66,829,075

_Express Company Rates Cause Loss to Shippers--Express Company Methods Cause Loss to the Postal Department_

The peculiar, graduated, increasing rate for small-weight parcels is absolutely prohibitive for express transportation except at an actual loss for a considerable proportion of business. Most express shipments are in small parcels. They therefore pay the higher scale. This increased rate is exacted for both terminal and haulage service and is as high as 37½ times the first-class freight charge.

The express companies take from the Post Office Department the profitable business and pocket millions of profits, but leave the unprofitable for the Post Office Department. The profits from a parcels post would stop the post-office deficit and give us a 1-cent letter rate. The annual surplus of the British post-office department about equals our annual postal deficit. The British have a serviceable parcels post.

The men in the mail service have a record of one error in 18,000 pieces handled. Compare that with your experience with the express companies.

_The Parcels Post Not Openly Opposed by the Beneficiaries of Present Methods_

The opposition to the parcels post at the late congressional hearing was made by persons who appeared in the name of American Hardware Manufacturers’ Association, Illinois Retail Merchants’ Association, National Association of Retail Druggists, National Association Retail Grocers, National Retail Hardware Association, National Federation of Retail Implement & Vehicle Dealers’ Associations, Wholesale Dry Goods Association, Paint Manufacturers’ Association of the United States.

There was no direct opposition by the express companies to the parcels post.

_Misdirected Energy Benefits Express Companies and Catalogue Houses_

Since the members of the above commercial associations can not to any important degree be beneficiaries of the present confiscatory and restrictive system that has a monopoly of the transportation of merchandise in packages of 4 pounds to 20 pounds, some other reason for their opposition to the parcels post must be found, and in that connection the testimony given by these gentlemen at the hearing is interesting.

The main objection to the parcels post was that it would build up catalogue houses to the injury of retail businesses.

In reply to questions by members of the congressional committee, however, some of their specific objections applied only to the rural free delivery now firmly established and which nobody dreams of abolishing.

The other objections advanced were also to conditions already in existence, some of which at least it would seem would be less objectionable if we had a serviceable parcels post.

For instance, the mailing of catalogues by the catalogue houses. That can be done now to the farmer’s door for one-half cent an ounce, but even that low rate does not always get the business. I have seen the catalogue of Sears, Roebuck & Co. and the Chicago House Wrecking Co. that were sent by each of these firms to addressees who did not specify how he wished them sent. They were received since the date of the hearing; both catalogues came by prepaid express.

Had we a parcels post competing with the express companies and reducing their extortionate charges the express companies would be less able to deprive the government of that revenue by underbidding the Post Office Department rate on catalogues.

_Catalogue Houses Don’t Need the Parcels Post, and Oppose It_

At the congressional hearing so much was said by the opponents of the parcels post about the catalogue houses, how they were behind the parcels post--that it was for their sole benefit, etc., etc.--that I went to Chicago and succeeded in getting an interview with Mr. Julius Rosenwald, president of Sears, Roebuck & Co. He declined to support the parcels post. He said they were very well satisfied with conditions as they are, under which they had built up their immense business, which was done entirely by catalogue and without salesmen or commission. He explained that only an insignificant amount of their sales went by mail, that what did was unprofitable, as it cost as much to make ready and handle such little sales as larger shipments, jewelry being the only exception, and even for that they advised express.

Evidence that catalogue houses do not want or need, and do oppose, the parcels post was not lacking at the hearing.

For example: Marcus M. Marks, of the Merchants’ Association of New York, after stating that the Merchants’ Association is not in favor of a general parcels post and has frequently placed itself in opposition thereto he quoted one of the large Chicago catalogue houses as in opposition, and for this reason: “The result would be that instead of shipping goods in large bulk it would tend to create a demand for small shipments, which would increase his expense of doing business.” Marshall Field & Co., one of the largest concerns in this country, were referred to by both J. G. Baker, president National Federation of Retail Implements, etc., and H. L. McNamary, of the Hardware Dealers’ Association, as opposed to the parcels post.

All the opponents of the parcels post at the hearing, mostly retailers in heavy-weight goods, were very insistent to impress upon the minds of the committee the great injury that is being done their business by the big catalogue houses, who, they claimed, are underselling them and are doing a very large and increasing percentage of the business that belongs to and should go to the retail dealer. But is it correct to charge to the parcels post this great loss of trade which has occurred while we have no parcels post and that has been brought about by conditions that can claim no assistance from a parcels post? Is it reasonable to say that a parcels post would produce such conditions when no such conditions do exist as above noted where the parcels post has been in operation for many years?

Hampton’s. 26: 261-4. February, 1911.

Let Us Have a Parcels Post.

There would be some shadow of excuse for refusing to accept so great a convenience as the parcels post if, in accepting it, we would destroy a large investment in the business of the express companies. But, in fact, we would not destroy any legitimate values in these companies. They own practically nothing on which they would lose a dollar. Most of their money is not in the business of transporting freight, but in banking and investment enterprises. These would not be interfered with. Their tangible property actually used in transportation would be required, and would undoubtedly be taken over at good figures by the government, when it established a parcels post business. Their investments in stocks, bonds and banking business would be undisturbed. The express companies would lose nothing except their graft--the privilege of charging outrageous rates for the service they render. In morals and equity that ought to be ended as soon as possible.

The truth is that it is not the political and financial influences of the express companies which keeps Congress from giving this nation a parcels post. It is the pathetic and benighted ignorance of a considerable section of our own people, who have been led to believe that the parcels post would injure them. It is well-nigh impossible to believe that there can still be millions of intelligent Americans who doubt that national prosperity must be promoted by every increase of the facilities and cheapening of the cost of transportation. Yet there is such a section of the American public. Misguided and ignorant, it has permitted itself to become the chief bulwark of protection to the express companies’ graft. It persists in believing, in the face of nearly a century of world experience to the contrary, that there is danger in too easy, too cheap and too universal transportation!

_Unwise Opposition of the Small Merchant_

Reference, of course, is had to the fears which the merchants of the country towns entertain as to the effect of the parcels post upon their business. The country merchant has come to accept on this point the sophistical, disingenuous and dishonest arguments of the express lobby, skillfully put out through agencies whose real purpose is concealed.

The argument that cheap transportation of parcels will injure the country towns is exactly as reasonable as the contention that London and New York, Hamburg and Liverpool, Seattle and Sidney, must be injured by the railways and steam-ships which, bringing all parts of the world into close and easy communication, would make it impossible for great and dominating centers of population, commerce and industry to exist. Everybody can see how absurd such an argument would be. The best possible transportation facilities constitute the first requisite to making a great city. Commercial centers are prosperous and important, in proportion as they have adequate, efficient and cheap transportation. This is as true of the country town with a single railroad line as it is of a continent’s metropolis with half a hundred great railroad systems pouring their tonnage into its terminals and with the ships of all the seven seas unloading their cargoes at its wharves.

It is an axiom that good, ample and cheap transportation actually makes commerce. The country town which has no railroad always wants one. The hamlet which has no post-office is forever riding the neck of its congressman until it gets one. Great cities vote millions to build artificial harbors, to provide wharfage, and to increase every possible facility for cheap and rapid transportation.

There are no communities which need improvement of transportation so much as the country towns which have been misled into opposing the parcels post. The country merchant has been made to believe that the parcels post would take his business away from him and give it to the mail-order house in the great city. It would do nothing of the kind. On the contrary, it would give the country merchant the one facility which he does not now have: it would place him on a parity with the merchant in a great city.

Quick, cheap transportation would enable him to buy better and cheaper. He could sell many articles from catalogues instead of having to carry them in stock. He could create a mail-order business of his own in his surrounding territory. The local merchant who conducts his business well has nothing to fear from the mail-order house. Farmers and citizens prefer dealing with the home man, and the parcels post will give him many advantages that will enable him to increase his trade to proportions which are now impossible.

Of course, this does not apply to the country merchant who buys his goods badly or at high prices, and who gives long credits and sells at long prices. Parcels post or not, his day is doomed. More alert men, with better business ideas, will soon occupy his place. The alert, hustling merchant will use the parcels post so effectively that the old sleepy head’s day will end just that much sooner.

The proof of the pudding is in the eating. Every enlightened country except the United States has a parcels post. No country would think of abandoning it, any more than it would think of disestablishing its letter postal service. In the experience of all the world the argument about injuring the country town is sweepingly and completely refuted. The small town would gain vastly more than the large town by this tremendous increase and improvement of its transportation facilities. The whole public would benefit, for precisely the same reason that it benefits by having fast steamships instead of sailing vessels, limited passenger trains instead of stage coaches, two-cent letter postage instead of five-cent.

_Part Played by the Express Companies_

The people who oppose the parcels post are the innocent and unwitting dupes of the express monopoly. This is the one point in the parcels post argument that cannot be too constantly emphasized. When the dupes are brought to understand their true interests, Congress will not dare stand for a single session as the protector of express graft.

Small wonder that the express companies are fighting with every resource against the parcels post. They constitute one of the greatest groups of financial power in the country. They are united firmly. Most of the companies are large stock-holders in the others. Thus the United States Express Company was shown by the report of the Public Service Commission of New York, issued in 1908, to be capitalized at $10,000,000. Of this, the Adams Express Company owned nearly $1,000,000, the American Express Company exactly $1,000,000, and the Southern Express Company, $70,000. How tremendously profitable the business of the United States Express Company has been is shown by the fact that whereas the company claimed an investment of only $2,042,000 in real estate and equipment, it had $7,464,000 in investments, $895,000 in cash holdings, and $2,000,000 in collateral and other loans! That is to say, while this company had very little more than $2,000,000 invested in its transportation business, it had more than $10,000,000, representing surplus and undivided profit, in general investments!

It has accumulated such vast profits because it has been for many years charging unconscionable and scandalous rates for its service.

The Adams Express Company is shown by the current number of Moody’s Manual to have $12,000,000 capital. After paying large regular dividends and numerous extra dividends for many years, the company in 1907 found itself with such a tremendous surplus that it actually paid a special dividend of 200 per cent in 4-per-cent bonds! Every holder of a one-hundred-share of stock was presented with two hundred dollars’ worth of 4-per-cent bonds! The present, of course, represented in part the excessive charges which the company had been permitted to collect from the public.

But the most startling statistics of express accumulations are the financial statements of Wells Fargo and Company. For many years this company’s capital stock was $8,000,000. Its most recent statement, as published in Moody’s Manual, listed these assets: Real property, $4,100,000; equipment used in transportation, $2,044,000; stocks owned as investments, $3,211,000; bonds owned as investment, $3,750,000; loans, $17,165,000; cash on hand and in the bank, $5,459,000.

Such were the accumulations of this company whose own statement admitted that the equipment actually used in its transportation business represented only $2,044,000. The company has always paid large dividends. Its star performance in this line was the payment, early in 1910, of a cash dividend of 300 per cent. Every holder of a one-hundred-dollar share of stock was given three hundred dollars cash!

This was not all. The stock of the company was worth in the market exceedingly high prices. In addition to giving this 300-per-cent cash dividend, the company increased its stock from $8,000,000 to $24,000,000, and gave the holders of the original $8,000,000 the right to subscribe at par for two shares of the new issue for each share of their previous holding.

_Enormous Profits of the Express Companies_

These figures suggest the profits express companies have been making. They have been making them because our government is the only government which permits such a monopoly. It is a monopoly which not only extorts millions upon millions every year from the people, but which enables railroad companies, through their intimate business and financial relations with the express companies, to conceal a very considerable part of their earnings. The express companies are large holders of one another’s stock, and also of railway stock; in turn, the men who control the great railway combinations are themselves big owners of express-company stocks and bonds. The express companies lease from the railroads the right to transport freight over the railroad lines. The terms of these leases represent, not a reasonable and fair charge for the service, but an elaborate project of covering up excessive earnings and extortionate charges in a maze of complicated intercorporation transactions.

The worst penalty that the American public pays in order that the express grafters may make these huge profits and conduct these manipulations, does not lie in the excessive charges. It lies rather in the stunting and depressing effect upon general business, which is a necessary and manifest result of a policy that denies the freest and cheapest transportation facilities to the entire community.

Good Housekeeping. 53: 2-10. July, 1911.

Housekeeping by Parcels Post.

Isabel G. Curtis.

What would a parcels post mean to the American housekeeper? The suburban or rural family could receive the bulk of its supplies by mail--clothing, food, even eggs and butter and fresh meat. And the country household that had something to sell could, by availing itself of the parcels post, eliminate the expensive middleman and ship direct to the consumer. Thus the city housekeeper could receive eggs, butter and other things by mail at much less than she pays now. In scores of ways the parcels post would tend greatly to decrease the cost of living, for it would revolutionize the present cumbrous and expensive methods of retail business.

The United States Postoffice authorities will accept a package of not more than twelve pounds in weight and not more than three and one-half feet wide by six feet long for delivery at any postoffice in England, Germany or in any one of the thirty-nine foreign countries blessed with the parcels-post system, at a rate of twelve cents a pound. But you are denied the privilege of sending the same package to any destination in your own country at any price. A four-pound package sent to a local point will cost the sender sixty-four cents while the same package can be sent to New Zealand or Costa Rica for forty-eight cents.

The parcels-post rates in foreign countries are very moderate. In Germany, for instance, weight and distance determine the amount of the charge. The distance charge is fixed by means of zones, the first zone having a radius of ten geographical miles from the sending point, the second twenty, etc. The charge for an eleven-pound parcel is six cents within the first zone and twelve cents for every greater distance. For parcels weighing more, the charge is the same for the first five kilograms, but varies proportionately for each additional kilogram. In Germany, the weight limit is one hundred pounds, in England eleven, in France twenty-two and in Belgium one hundred and thirty-two pounds. That there is no good economic reason why any civilized community cannot have a parcels post seems to be proved conclusively by the earnings of the postal departments of the governments that have tried it. The postoffice departments of Germany and France each has a yearly surplus of more than $14,000,000, and England enjoys a surplus of more than $20,000,000--a striking contrast to our own Postoffice Department, with its annual deficit of millions.

“Then why don’t we have a parcels post?” you ask. The answer given to this question many years ago by Mr. John Wanamaker, when he was Postmaster General, means just as much today as it did then.

“There are just four reasons against the establishment of a parcels post,” said he. “They are the American, the Adams, the United States, and the Wells Fargo Express Companies.”

It has been said by some congressmen and postoffice officials that there is no parcels post because the public has not demanded it. Why not demand it now? Let every woman write to her husband’s congressman and speak her mind!

As pointed out by an Englishman recently in New York, one of the great advantages of the parcels post is its celerity. “Before it came into vogue,” he said, “customers often had to wait days for their goods. Now, within the London radius, it is a case of only a few hours, for the parcels post makes several deliveries daily. By paying a small additional fee, ‘immediate delivery’ is secured.

“The great retail houses, in increasing numbers, employ the parcels post for sending home the purchases of customers, instead of using their own delivery wagons. They find the government does the work for them cheaper and better than they can do it for themselves. The price charged, which is paid, of course, in postage stamps, varies from two cents for a parcel weighing under two pounds to twenty-two cents for a parcel not exceeding eleven pounds. Many of the London laundries now send home the week’s washing by parcels post for the same reason that the big stores are taking to it. The service cost less than that which they had previously provided themselves.”

This gentlemen dwells upon the importance of the fact that goods thus conveyed by the government are virtually insured up to the value of most packages sent.

Housekeeper. 31: 11-35. August, 1908.

Parcels Post. George E. Miller.

Now what are the advantages and disadvantages of the parcel post? The advantages can perhaps best be illustrated by reference to the work done by the parcels post abroad. There, especially in Germany and Great Britain, this great modern convenience has been brought to the greatest perfection. And there it is worth studying.

In the first place, it has been demonstrated there that the parcels post is the greatest stimulant of domestic trade ever devised by man. In the next place, it has made life in the country, in both Germany and England as comfortable and convenient as in the city. And lastly, it has proven so great a blessing in the cities, towns and villages that in many instances merchants have disposed of their delivery wagons and they depend upon the parcels post exclusively for the delivery of merchandise to their customers, except in the matter of goods of too much weight or bulk to go through the mails.

In London the government runs motor wagons in all directions into the country for many miles for the delivery of parcels, and this service is being extended until presently it will cover the country. Parcels up to the weight of eleven pounds are carried through the British mails, while in some other countries the limit is much higher, Italy, Chile, Cuba, the Netherlands, and New Zealand are the only other countries holding the weight to the same maximum as Britain. In Germany and Austria packages weighing one hundred and ten pounds are received, and in Belgium the limit is one hundred and thirty-two pounds. In France it is thirty-two pounds. In the United States alone the limit is as low as four pounds while the rate with us is so high, sixteen cents a pound, as to make the service prohibitive for ordinary use. Abroad the rates vary, but they are always aimed to be not much above cost, and they are materially lower than the rate now charged here, and much lower even, than the rate proposed by the president, which is twelve cents a pound.

No more enticing tale is told by the traveler returned from abroad than that relating to the parcels post. In England, Germany, and some of the other countries, the housewife particularly luxuriates in the joint convenience of the telephone and the liberal mail service. Does she want a spool of thread of a certain color and texture, or a bottle of medicine, or a cake or loaf of bread from the bakery, or any one of a thousand small needs, the necessity for which may come with all too much suddenness, she simply steps to the phone and makes her request and by the next visit of the postman she receives that which she ordered. And yet, she may be ten or twenty miles from the nearest town.

The farmers of those countries likewise receive untold benefit from the same service. Not long ago a gentleman called at the post-office department in Washington to relate a circumstance coming under his observation.

“I saw a Yankee demonstrating an American potato digging device to a farmer in Germany,” he said. “Suddenly one of the parts of the machine broke. It looked like bad business for the Yankee, but he, with real American resourcefulness, sprang to the telephone and ordered a duplicate part from his repository in a village two miles away, and in twenty minutes the postman delivered it to him and the demonstration of the digger proceeded to a successful conclusion. Of course, this was an exceptional instance. Everything connected with it happened luckily for the man selling the digger. His agent in the repository happened to be right on the spot when the telephone message came, and the postman happened to be just on the point of starting in the right direction to make a speedy delivery. But it seemed to me to tell an eloquent story of the parcels post, and its effectiveness.”

A red-headed, freckled, vivacious manufacturer from Detroit was in Germany not long ago and he also brought back a fund of parcels post stories. But his most significant statement was in regard to the effect of the service upon the country merchant.

“No man,” he said, “can study this question abroad and retain the belief that the parcels post will ruin the country merchant. On the contrary, it has been the making of him. The country merchant of Germany is far more solid and substantial since the introduction of the parcels post than he ever was before. It has made him a permanent, fixed cog in the industrial scheme of that country and given him an opportunity which he never had before of making himself indispensable to the community in which he does business.

“How did this happen? By the natural evolution of events. Nothing else. The wholesale houses of Germany simply stepped into the field themselves and issued catalogues as fine as any the mail order houses could produce. And these they placed with the country merchants in every town and village in the empire. The result was that each merchant had several dozen catalogues upon his counters for the benefit of his customers. He was authorized to say to all who came: ‘Here I am. You all know me. You know whether I am responsible. If you give me your order and the goods do not prove to be exactly as represented, you need not take them and I will refund your money. If you want goods of the same grade as those sold by the mail order houses, I can sell them to you, and at the same price. And I also have better goods which will cost you more. But I can give you exactly what you want, and as cheaply as any one.’

“In the meantime the country merchants have been able to greatly reduce the stocks carried in their stores. This reduced the amount of capital tied up in their business. And yet, by means of the catalogues, their customers were able to select from as large an assortment as they could in the largest stores, in Berlin.

“And this latter fact is amply recognized by the people of Germany. They step into a store in the most remote village of the country, and make their selections and place their orders, securely confident that they have seen all they could have seen if they had made the journey to one of the large cities. And they are all satisfied. They regard their mercantile system as the very best on earth, and I think it is. I had occasion, while visiting at a house out in the country one hundred miles from Berlin to need a dress suit, and I didn’t have one on that side of the Atlantic. I rode to the nearest village one morning, stepped into a little store, was measured by the storekeeper, and by mail that afternoon received a very fair ready-made evening suit. I was both pleased and surprised but the circumstance was a matter of course to the people I was visiting.”

These are some of the advantages of the parcels post. Now, about the disadvantages. These would, in this country fall exclusively upon the express companies. These unaccommodating friends, who have been with us so long, and who deliver nothing at your door unless you chance to live in a large city, would doubtless suffer the fate of the German mail order houses if the government of the United States were to inaugurate a parcels post upon the same scale as that in Germany. They would have to go, for who would pay the higher price to have a parcel sent by the nondelivering express company when the mails would be both cheaper and would deliver the parcel at your door in city or country?

As for the country merchant, of course, he would demand the German system, and equally, of course, he would get it. Otherwise, he also might have to walk the plank and the wholesalers of the United States would never permit that. They could not afford to.

NEGATIVE DISCUSSION

Perils of Parcels Post Extension. pp. 13-31.

George H. Maxwell.

_A Heavy Deficit Inevitable_

The commercial advocates of larger bulk and lower rates by domestic parcels post for the shipment of merchandise by mail do not want either a distance rate or a system limited by territorial zones. They want the privilege of shipping from any factory or central store or warehouse, wherever located, anywhere in the United States, to any customer or consumer, at any postoffice, however remote or inaccessible, in any state or territory. The rate desired is a flat rate of so much per pound without regard to distance.

It is urged that the same rate should be charged by Uncle Sam for carrying merchandise by parcels post from a New England factory to the distant mountain mining camps in Idaho or Oregon, or to the prairie towns of Texas, as would be charged for delivering the same package from the same factory by local trolley car service to a nearby postoffice in the immediate suburbs of the New England city where the factory happened to be located.

_Government Bears the Burden_

The national government in each and every case would pay the full actual cost of transportation and delivery to the point of destination, whether it were by trolley, railroad, stage-coach, wagon, pack-horse, mule, sled or snowshoes. Of course it is not contended that the government could secure an average or flat rate for the cost to it of transporting merchandise by mail, the same to all points in the United States, as it is urged that it should charge. On every package mailed the government would of necessity pay the full cost of carrying it from the point of shipment by mail to the place of delivery to the consignee, no matter how great the distance or how costly the character of the transportation.

In other words, while the government is expected to and of course must itself pay the full distance cost of transportation and delivery in every case, and could not give the service unless it did so, it is expected to look for reimbursement wholly to an average flat rate, like the rate for letter postage, or the present rate of the existing domestic parcels post for small parcels--a rate that is the same everywhere, without regard to the distance from point of mailing to point of destination.

_Averages Are Misleading_

The argument of averages is relied on to meet this insuperable objection. It has been suggested that the average haul of all second-class matter (which comprises only regularly entered publications, periodicals and magazines) was 540 miles in 1907, as shown by the report of the Postoffice Department, and on that as a basis it was estimated that an average rate of 5½ cents per pound or $29.70 per ton for other transportation charges, and $165.00 for labor and supplies, a total of $212.00 a ton, would leave a profit to the government of $27.00 a ton from a general parcels post rate of 12 cents a pound, which would produce a revenue of $240 a ton.

The estimates given above were embodied in an address by the Postmaster General before the Union League Club at Philadelphia on October 26, 1907.

For reasons based on facts that are undeniable and unquestionable, these averages and the estimates based on them, would prove utterly delusive and misleading when put to the test of a practical application of the proposed extension of the domestic parcels post to include merchandise in larger bulk and at lower rates than those now authorized by the postal laws. It is not necessary that the proposed extensions should be actually tried to demonstrate the deceptiveness of these average estimates. The conditions are before us and arise from facts so clearly known and established that he who runs may read.

_The Average Haul_

The average haul of second-class mail matter, made up of printed reading matter, for every copy of which a regular subscription must be paid, is fixed by and is in proportion to the average density of the population.

To illustrate this, take the city of New York as a starting point. It is the leading publication center in the country, and a larger number of publications entered as second-class matter are issued from the city of New York than from any other one city of the country.

The population of New York state in 1906 was estimated to be 8,226,990. The population of the state of New York alone is as large as that of the whole western half of the United States, and yet that whole western half of our territorial area contains only about one-tenth of the entire population of the country.

The average number of subscribers receiving regular publications through the mails as second-class matter in proportion to population is as large in the one state of New York as in the entire western half of the United States. So the Postoffice Department would serve in New York state, within an area of 48,204 square miles of closely settled territory, as many subscribers for second-class mail matter as it would be compelled to serve over a sparsely settled region in the west covering 1,513,394 square miles, that being the area of the western half of the United States, not including Hawaii and Alaska.

_Second-Class Mail Matter_

An average length of haul of second-class mail matter now carried by the national government would be much greater if limited to the one state of New York and the western half of the United States, than if applied to the entire country; for the very simple reason that the vast sparsely settled area in the west would comprise one-half of the total number of subscribers served; whereas if the whole United States were included, then the western half with its sparse population would embrace only one-tenth of the whole number served, and nine-tenths would be located in the more closely settled eastern half of the United States.

In other words, in averaging the length of haul of second-class matter, nine-tenths of the people served are in closely settled territory, where they are reached by the short haul, and only one-tenth in the thinly settled western half of the country, to be served by the long haul, and oftentimes by the most difficult and expensive methods of transportation.

_Conditions That Control Are Reversed_

The principle that controls the average in estimating the length of the haul of second-class matter is that as the proportion of density of population increases the average length of the haul is decreased.

It is naturally assumed that the same principle would control in fixing the average haul of transporting merchandise by mail if the movement for an extension of the domestic parcels post should prevail; but strange as it may seem at first thought, the exact contrary would happen. The principle that controls the average haul in the case of second-class matter would be reversed in the case of parcels post extension. The greater the distance the more remote the territory, the more sparse the population the larger would be the proportion of merchandise shipments by mail as compared with the whole volume of such shipments.

The reasons for this are, first, because the express companies with their flexible distance rate system would practically surrender the distant territory and make a rate on nearby points so much lower than the government rate that the short haul service would go to them, leaving the long haul shipments for the government; and, second, because it is the distant market that merchants and manufacturers desiring to trade by mail wish to reach by the parcels post system of delivery and which they would exploit if the opportunity were created.

_Impossibility of Adjustment_

Every effort of the national government to readjust an average flat rate so as to meet this condition, and command for the parcels post the desired proportion of nearby business, would simply be to get out of the frying pan into the fire. To lower the average flat rate so as to compete with express companies in nearby territory and on the short hauls would stimulate the volume of long distance shipments and still keep the balance on the wrong side of the ledger. To raise the average flat rate, so as to secure a larger revenue from the long distance shipments, would widen the circle within which the express companies would be able to command the business by a lower rate and reduce the government revenue by taking away from it more of the short haul business.

It has been urged that one reason why the proposed extension of the domestic parcels post should be adopted is that it would lower the express rates. If that should occur the rates would, of course, be lowered in the territory, where by lowering their rates the express companies could command still more of the short haul business, and thereby increase the proportion of long haul business that the government would have to carry at a loss. Every time the express companies lowered their rates it would increase the annual deficit that would be incurred by the government. No business proposition could be more simple. The government would be in the position of having entered into a competitive business. It would have done this after adopting at the start a system that made it impossible for it to cope with its competitors. Whatever flat rate the government established would be met by a lower distance rate by the express companies that would take the short haul business from which the government could earn a profit, leaving to the government the long haul business that it could only conduct at a loss. Nothing that the government could do would prevent this, because it would make the conditions worse one way or the other every time it either lowered or raised its flat rate. If the flat rate were lowered, the proportion of long haul business would be increased, and the losses be as great as ever. If the flat rate were raised the proportion of short haul business would decrease, and the average cost would still create a heavy deficit.

_Act With Open Eyes_

The fact is, the United States government cannot carry merchandise by parcels post without having to meet an enormous annual deficit for conducting the service, and the service should not be undertaken by the government unless such a deficit is to be deliberately and knowingly created and assumed by the people at large. The government is asked to undertake an impossibility, if it is expected to make the service pay for itself, when it is asked to adopt the proposed extensions of the domestic parcels post.

A flat rate system of charge cannot, in the very nature of things, be operated in this country without loss. The only way to avoid such loss would be the adoption of a distance tariff by the government, just as is charged by the express companies. The proponents of domestic parcels post extensions do not advocate such a distance tariff system and it will be time enough to consider its merits if it ever comes before the people for serious consideration. The fatal defect in the reasoning of the advocates of the proposed parcels post extensions is that they disregard the fact that we live in a country as broad as a continent and extending for over three thousand miles from ocean to ocean, and that in all that vast territory we have a population of only something over eighty million people.

_A Subsidy to a Favored Class_

Should the mail trade have a government subsidy?

That is a very plain and simple question, and the answer to it will also answer the question whether the shipment and delivery of merchandise by mail should be facilitated and undertaken by the government as advocated by the proponents of domestic parcels post extension.

If there is any good reason why the mail trade should be encouraged by government subsidy, it has never been set forth by any advocate of parcels post extension.

And yet, that is exactly what the proposition amounts to in its practical application. It would not be a subsidy that would create new business where there was none before. If it would do that it might be an argument in its favor. Instead of doing so, it would take the trade from the merchants, both wholesale and retail, who are now doing it, and transfer it to new and wholly different agencies, who would be enabled to secure the trade because of a direct advantage given to the new agencies by the national government at the expense of the general public.

_Who Are the Favored Class?_

Whether the seller or the consumer, under this system of a government subsidy for the mail trade, were to be regarded as the favored class, the result would be the same. A favored class would be benefited at the expense of the people at large, and without any advantage to the general public that would warrant it.

For many reasons the consumer in the long run would be injured more than benefited by the establishment of such a system for doing the business of the country, and ought for this reason to be eliminated in defining the favored class. Temporarily, and considering only immediate cheapness of needed merchandise, the consumer might imagine himself benefited, and probably would, but that benefit would be involved and submerged in far greater indirect losses in the future.

So the favored class, in the last analysis, would be the great catalogue concerns, and manufacturers who desire to eliminate the jobber and the retailer and country merchant and sell direct to the consumer, using the mail as the agency of transportation and delivery to the purchaser.

Without regard to any of the many serious objections to this system of trading, based on social and economic reasons, there is no possible ground upon which a subsidy for the encouragement of this mail trade should be given out of the United States Treasury and at the expense of the people at large.

_Effect of a Subsidy_

And when the effect of that subsidy would be to break down long established commercial customs, and divert the trade from institutions now successfully and satisfactorily conducting it, there is no more justification for such a mail trade subsidy than there would be for the government to carry some new brand of flour cheaper than the old established brands--in order to enable the manufacturer of the new brand to introduce and sell the product of his mills.