Chapter D: M. Carr (5)

The growth of the mail trade, under its present limitations, has been stupendous, and multitudes of retail and country merchants have been injured, and many driven to the wall by it. But its future growth would sweep over the country with an irresistible force and wipe out of existence many thousands of now prosperous retail and general merchandise stores, if a subsidy were granted to the mail trade in the form of the proposed extensions of the parcels post.

There are many manufacturers who are doing business along the regularly established lines, selling goods to the jobber or the retailer, who are not now seeking or advocating any change in the channels of trade, but those manufacturers would change their system and enter the field of the mail trade if the advantages advocated by others were gained for it. If the avalanche of mail shipments that would follow the inauguration of such a mail trade system were ever once started no one could foresee the end or define the limits of the evils it would ultimately accomplish.

Independent. 70: 72-3. January 12, 1911.

Objections to the Parcels Post. Allan W. Clark.

There are probably a hundred really national organizations of dealers, and several thousand state and local organizations--generally affiliated with some of these national bodies. These embrace practically every line of retail merchandising and the ramifications of various interests among them. The individual, due paying membership in some of these larger organizations, like the National Association of Retail Grocers, the National Retail Hardware Association and the National Association of Retail Druggists, is from 50,000 to more than 100,000 each. I have never heard of any association of retail dealers that is not on record against the extension of the domestic parcels post in any form, especially the R. F. D. “entering wedge,” except the organized department stores in one or two cities (such as “The Merchants’ Association of New York”), who want this practical government subsidy for the benefit of their mail order departments and for cheaper local and suburban delivery.

I have mentioned only retailers’ organizations, whose resolutions on this subject, during the convention season, crowd the pages of all the trade journals. Nevertheless, practically all the organizations of wholesalers and manufacturers, besides many local commercial and civic associations, are opposed to the parcels post, and like the retailers, have been fighting it for years. Conspicuous among these is the Chicago Chamber of Commerce, the leading members of which, thru the “American League of Associations,” are pushing a national campaign “to assist the retail merchant and to co-operate with other associations in the protection and development of home trade, and (the italic emphasis is theirs), _specifically, this organization is now opposing the proposed parcels post legislation_.”

These dealers, jobbers, manufacturers and others interested in the maintenance and the improvement of the local stores and the local community, and who oppose any extension of the domestic parcels post, vie with its advocates in denunciation of the extortionate charges of the express companies. But they go further--their associations are fighting in many states to secure state regulation of express rates and classification; and they are making practical progress, with every prospect that their appeals for national regulation will be recognized by the Interstate Commerce Commission, which has just won its fight to regulate sleeping car charges. The opponents of parcels post want lower and equitable rates for the transportation of small packages of merchandise, but they believe that these rates, like those on the transportation of larger packages, should be investigated and regulated by the Interstate Commerce Commission, especially as various state railway boards have recently demonstrated the fact that the express companies are chiefly owned by the railroads and are merely vehicles to bring into the coffers of the railroads larger profits than can be secured thru government regulated freight rates.

That any one can find an example for the United States in the parcels post systems over government owned railways in European countries, the largest of which is smaller than Texas, is incomprehensible to the average business man who is not asking for a government subsidy to arbitrarily annihilate distance and the natural local advantages of thousands of local business communities in order to increase the present $200,000,000 mail order business; and this in a nation that maintains a high tariff wall that may or may not “protect” the American manufacturer, farmer and workman, but the chief effect of which, so far as the distributor, the dealer, is concerned is to place him between the upper and nether millstones--the butt of criticism, the subject of Congressional inquiry on the high cost of living!

The mail order houses want a general parcels post; the general business community is opposed to it. Suppose that both are actuated by selfish reasons, one to gain an arbitrary advantage and the other to prevent it--where do the people come in, those besides the mail order men and the million retailers and their families?

Further Thoughts on Parcels Post pp. 3-5.

Charles W. Burrows.

Postmaster-General Meyer in an address to the New England Postmasters’ Association, Boston, October, 1907, and elsewhere, made recommendations urging legislation giving to the Postal Department a greatly extended parcels carrying service. The recommendations made were mainly two.

First. That the present rate of sixteen cents per pound for the mail carriage of merchandise with a weight limit of four pounds per parcel as the maximum shall be changed, reducing the rate to twelve cents per pound (with fractions at rates from one cent up) and increasing the weight limit to eleven pounds. The recommendation was that this should be, like the letter charge, a flat rate to prevail anywhere within the United States and its possessions irrespective of distance or accessibility.

In support of this, his first proposition, he calls attention to certain inconsistencies now existing in the service. He states that an individual entering any post office in the country with a parcel weighing four pounds, addressed to New York city will be obliged to pay sixty-four cents for its carriage by post. If on the other hand it is to pass through New York city to any one of the thirty-three foreign countries with which we have postal conventions, the charge will be but forty-eight cents. Further, should the package weigh more than four pounds, it will be denied admission to the mails in this country while it will be accepted and forwarded to any of these foreign lands if it weighs up to four pounds six ounces, and in the case of some, twenty-four of the countries it will be accepted even if it weighs so much as eleven pounds, and it is on account of these inconsistencies that he urges his legislation.

Let us first examine this point. General Meyer is quite correct in his statement that it does cost more to send, for example, a pair of shoes weighing just four pounds from Brockton, Massachusetts, to New York city, than it would cost to send the same pair of shoes through New York city to any one of the thirty-three foreign countries with which we have postal conventions.

General Meyer, however, fails to state that while there is this large number of foreign countries with which we have postal conventions, yet not a single one of the twenty-four countries with which we have an eleven-pound convention is on the map of Europe. They are all of the nature of Jamaica, the Windward Isles, Venezuela, Barbados, Costa Rica, Danish West Indies, etc., countries with which we do not do any great volume of business.

It may further be stated that the weight limit with the remaining nine countries, most of which are European, is in reality intended to be the nearest approximation to our own domestic four-pound limit, that is, it is two kilograms--about four pounds six ounces--and the European countries all closely scrutinize this weight limit as the business is one that involves a loss in its operation. Germany, for example, for a number of years recognized an eleven-pound limit but changed to the two kilograms about three years ago.

It should be borne in mind, moreover, that the exchange of parcels between these countries and our own is made as a matter of comity or international courtesy, and is permitted because the amount involved is small. The work is done, too, in connection with the carriage of first-class mail which produces a large profit.

To illustrate this matter, Great Britain carried in her parcels post last year 104,819,000 parcels. Of these only 2,575,000 (less than 2½ per cent) went out of the country to all foreign countries, her own colonial dependencies included, and to the United States she sent only 61,000 and we sent to her 89,000 only. The difference which is after all what we make or lose upon, was some 28,000, and that was but a fraction of a tenth of 1 per cent of the whole business. With some of the other countries in question, we exchanged less than 1,000 parcels in the last fiscal year, and with one of them it was less than 100, while with all of them aggregated it was a total of but 330,000 parcels dispatched and 181,000 received; so when we examine this question of inconsistencies microscopically we find that it is truly of microscopic proportion only, and may be disregarded as having no important bearing upon the general question.

One Cent Letter Postage, Second Class Mail Rates, and Parcels Post. pp. 14-22.

Charles W. Burrows.

Paternalistic, socialistic legislation does not diminish the expense account, but simply transfers it from one person’s shoulders to those of others. It is with a people as with a person. If a father gives to his boy a pair of shoes, the shoes cost the lad nothing, they are to him as if they had descended from the skies, but the cost is a charge upon the father, unless he stole them, and even if acquired dishonestly the cost has simply been moved back upon the shoulders of the merchant. The compensation for the labor of producing the pair of shoes and of transporting them to the place where they are put to service is just as much a charge upon the community whether one individual pays for them or another. Similarly if the users of any governmental service do not pay a high enough tariff for that service somebody else must foot the bill.

Now to endeavor to demonstrate that whether the rates imposed for such service be high or low the government will inevitably be a loser and in large amount. To this end let us examine for a moment the parcels post systems of foreign countries.

In Germany a zone system prevails, but the tariff is always low. In England, a flat rate prevails, and this also is extremely moderate. And low rates prevail in other foreign countries.

But circumstances alter cases, and with other things we should bear in mind that the total area of Germany is but 208,000 square miles, while the area of the one state of Texas is 265,000; in other words, Germany is but four-fifths the size of Texas. The area of France is almost exactly that of Germany, again but four-fifths the size of Texas. The area of England is 50,000 square miles, less than one-fifth the size of Texas. We have 26 states, any of which is larger than England, and several many times larger. The area of Switzerland is just under 16,000 square miles, and you can put nearly seventeen Switzerlands into the one state of Texas. The area of Belgium is but 11,000 square miles; you can put 24 of it in the state of Texas. Again the density of population in England is over 550 to the square mile; that of Belgium, more than 600 to the square mile; of Germany nearly 300 to the square mile.

Moreover, no haul in England can be long and but few hauls in the United States would be short. You may perhaps be able to take 550 parcels from a central originating point like London, carry them for an average haul of 41 miles, which is the case in that country, and deliver them all within one square mile of territory at a small tariff per parcel without material loss, though even England is losing money upon this service with all conditions favoring.

But remember that the density of population of the United States by the last census was under 25 to the square mile, and that the parcels post service would not be mainly operative in densely populated Rhode Island and near the large cities like Boston, New York, Philadelphia, etc. If we imagine that 550 parcels are sent from New York city over a long haul of more than 1,500 miles to the state of Wyoming, where the density of population is one to the square mile, and have to be distributed to 550 distinct individuals resident in 550 separate square miles of territory, no sane business man can doubt that at any tariff likely to be imposed the government would be a heavy loser.

According to one expert’s estimate, it is possible to carry the second-class mail matter for short distances on dense traffic routes, and in quantity lots to one address, that of a news dealer, for example, as is done for the average daily paper for the part of its circulation that goes by mail, up to 45 miles with little loss even at this low 1c a pound rate, though first-class mail at the rate paid by it can be transported nearly 5,000 miles before the service shows a loss, and post cards over 11,000 miles.

Now let us suppose a parcels post statute to be enacted, and that the rate be put at anything you please from 5c per pound to 10c per pound. Even at the low rate of 5c per pound the express companies will do the nearby business. If the rate be 10c per pound, the government will have less to do, but it will still have much with the weight limit considerably increased over the present amount. And if the rate be put at 12c per pound, still the government will not make money, not on a single parcel that it carries. All service that can be rendered at a cost of less than the government charge will be handled by the express companies.

We cannot have as does Germany a zone system. But without the operation of a zone system, or a monopoly as on first-class matter, the government will get all of the losing business and none of the remunerative.

A friend of mine made a visit a few years ago to the state of Washington. First he took from Cleveland a 2,000 miles railroad ride. He then had a day and a half steamboat ride up the Columbia river, following that a two days’ stagecoach ride to the remote locality that he was visiting.

He remarked to me in connection with this trip that he should like to see the government handle a parcels post service for that country at a profit, even at a rate of 25c a pound, and added that every pound of anything that went in there would most assuredly be handled by the government were a parcels post service in operation, for it would be the cheapest method of getting things there.

Now, the only reason we can have a flat rate upon first-class mail is because the government makes that a monopoly, and you can send your letters in no other way than through the post office. Hundreds of millions of profitable short haul letters carried between the largest cities of the country where traffic is very dense take care of the proportionately small number of expensive long hauls.

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

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

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

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

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

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

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

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

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

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

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

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

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

Parcels Post. pp. 6-15.

John A. Ordway.

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

_The Consumer Will Buy Goods No Cheaper_

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

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

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

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

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

_Objections to Parcels Post_

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

_Will Injure Country Communities_

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

_It Will Increase the Horde of Government Employees_

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

_It Limits the Field of the Individual_

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

_Extravagance Will Be Augmented_

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It may well be doubted whether this tendency will ultimately be beneficial to the race. Vice, crime, and disease are rampant in the slums of our great cities. Human life, under such conditions, becomes cramped. The unfolding process is impossible. The exigencies of the situation cause sporadic and abnormal development. The moral and physical culture of the individual is almost wholly neglected, and the intellectual development resulting is nearly always one sided, and too frequently resolves itself into the attainment of solely those qualities which make for greater acquisitive power. The social superiority resulting under the questionable standards prevailing in such centers may be obtained only with the sacrifice of much that is higher and nobler in human nature.

A large proportion of the population is compelled to lead a sedentary life. It may well be asked whether the conditions prevailing in our large mail-order houses and department stores make for the good of humanity. From 8:00 a. m. till 6:00 p. m. the many children and young girls employed are kept at close, confining work, frequently straining every nerve far beyond the limit of safety and human endurance, in order to make themselves independent, and to meet the conditions which city life imposes upon them. During the fall rush these girls are often asked to remain at work till 9:00 or 10:00 p. m. They realize that it is necessary for them to acquiesce in such unreasonable and brutal demands or lose their positions during the dull season immediately following the holidays.

An eminent physician not long ago remarked that it was his personal opinion, based upon long practice, that less than 10 per cent. of the girls in our large cities are as strong and healthy as their mothers were at a corresponding age. This he plausibly explained by the fact that nearly all of the latter had come from the country where they lived close to nature, with plenty of fresh air and sunshine, and with plenty of hard work too, but of the kind which upbuilds and strengthens the health rather than destroys it.

Furthermore, the wages paid in such institutions are seldom high enough to enable the individual to live at the prevailing social standards, and only too frequently the female employees are compelled to piece out their salaries by questionable means. It is inevitable that the future generation of the city-bred population should be as much beneath the present, as the present is beneath the last, unless radical reforms take place. Such progressive degeneration must be regarded as a tremendous social calamity.

Without trespassing too far upon the field of the sociologist, it may safely be assumed that an increased concentration of industry and population is far from desirable. Why then should the government take active steps to promote it? Would it not be better to allow the mail-order houses and local retailers to fight out their own battle for trade supremacy upon equal terms, on the basis of the survival of the fittest? The retailer would then at least be able to cling tenaciously to the few natural advantages which he does possess, and would necessarily retain a considerable portion of the business. In establishing the parcels-post the government would be taking action to crush the local dealer, and would thus take away the last economic basis for the rural community, and accelerate the concentration of industry in great cities.

By the elimination of the smaller towns the easiest and most natural market is taken away from the farmer. His small produce would then have to be shipped to the large cities, where he would almost certainly become the prey of commission-house agents, whose methods of operation are well known. Legitimate competition which means the lowest prices in view of the quality of the goods offered would be eliminated. The only competition would then be that of advertising. The one capable of producing the most attractive advertisements would win in the end. The American public is so great and so credulous that the house which has once fooled the public can again under another name and perhaps with different customers work off the same class of worthless or inferior goods.

Furthermore, the nearby location of a small country town gives to the farmer and his family immense social, educational, and cultural advantages, which would be almost wholly inaccessible if it were not for the existence of such communities. Take away the business and economic support of such a community, and immediately it becomes stagnant. Its ambitious and progressive citizens immediately migrate to other fields, and the town is left to decay.

No parcels-post could be established which would be self-supporting. The innate desire of the people to get something, as it were, for nothing, would soon express itself in a demand for a reduction of rates. No administration could be popular and at the same time effectively resist such a demand. It has been proved over and over again in history, that wherever a democratic body politic has undertaken to conduct a commercial enterprise of a public-service character, the demand for rates far below the cost of doing the business has seldom or never been successfully resisted. If this has proved true of local governments, how much more is it likely to be true of the federal government which, nearly everybody seems to think, already has a revenue so great that the principal problem with regard to it is the determination of the best method of turning it back into the channels of trade. Even at present with a nominal postal deficit of from $11,000,000 to $14,000,000, but with an actual deficit as will be subsequently shown of much more than that amount, it seems that the demand for penny postage and for the increase of salaries of certain classes of postmasters and of almost the entire clerical force is too strong to be resisted effectively.

The real issue is, therefore, Can the government expect successfully to compete with the express companies, on a business basis? If it can be shown that the government would be utterly unable to compete it follows that the government should not undertake the service.

Mr. H. A. Castle, former auditor of the Postal Department of the United States, has shown in its true light the many defects of our present postal system, and how far it comes from being that which should be expected of a private enterprise of like character. Speaking upon this point he says:

The protracted postal investigations of 1893 revealed to
thinking men the disquieting fact that our national mail
system, which is now the greatest business enterprise in
the world, is entirely destitute of logical, coherent,
business-like organization.

Among many other striking defects, he points out that there is utter lack of business methods in the accounting department. Of the one billion and a quarter dollars of transactions represented in the accounts of the 70,000 postmasters all over the United States, less than 10 per cent. have the double audit required by law. Fraud, peculation, and embezzlement of third- and fourth-class postmasters have become common occurrences and are exceedingly difficult to detect. As the salary of these postal officials depends upon the number of cancellations at their respective offices, all sorts of fraudulent schemes are continually being practiced to swell the number of cancellations beyond the legitimate amount.

Furthermore, there is no method of auditing the number of cancellations, and the department must accept the word of the postmaster, which may or may not be true. Several cases have been unearthed where an agent of a manufacturer has secured a nominal position of postmaster at some out-of-the-way point, and by drawing a salary based upon the number of cancellations has practically been able to secure a rebate amounting to about 75 per cent. on all matter mailed, the mailable matter being shipped to said point by freight. Absolutely no account is kept or record made of the number of stamps issued by the Bureau of Printing and Engraving, and no one has any means of knowing how many disappear before official record of the stamps issued is made by the Postal Department.

The weighing of mail matter handled by the railroads takes place only at stated intervals of four years. As the payment of the railroads depends upon the average tonnage during the period in which the weighing goes on, it is charged that all sorts of fraudulent schemes are continually being practiced by the railroads to increase the weight of the mail during this period.

There is no auditing of railroad accounts. Forty million dollars is annually paid out by the department merely on the statement of the railroads that the service has been performed. There is no effort made to ascertain the truth or falsity of the allegations.

There is no method of accounting for the actual amount of cash received by postmasters in payment for second-class mail. The amount of cash turned in by the various postmasters may or may not bear any relation to the actual amount of such mail received at their respective offices. It is impossible to detect dishonest returns except in some of the most aggravated cases. The average mercantile house which should practice such methods would be forced out of business in less than six months.

The slowness of the Postal Department to adopt modern business methods is strikingly illustrated by the fact that till quite recently the only method of checking the money-order accounts of postmasters was by a hasty examination of the stubs of order books turned in. No account was made or reference taken to the actual receipted orders. Imagine a bank attempting to settle accounts with its customers by the examination of the stubs of their check-books, rather than by reference to the actual checks!

We are driven to the conclusion, therefore, that the Postal Department as now organized and operated would be utterly unable to compete with express companies upon purely a business basis.

Furthermore, it should not be expected that the express companies would quietly drop out of business. They would make a tremendous fight for existence, and would at all events retain such portions of the business as they are now doing at less than the lowest postal rates. The equipment for the express service would, therefore, have to be duplicated in every town and village of the United States. It is folly to presume that the public would not in the end be required to pay for the enormous loss which would be involved in such an uneconomical procedure.

Would it not, therefore, be better to place the proper safeguards around the existing organizations which are fitted to perform the transportation service by the best and most economical means, rather than that the government should undertake the impossible, i. e., competition with private companies upon a purely business basis?

Parcels Post Problem. p. 20.

Parcels Post in England.

One of the most concise and yet comprehensive reviews of the operation of the parcels post system in England is that of I. A. Fleming, taken from an exchange, and it is as follows:

“American friends of so-called ‘postal reforms’ point to the absence of express companies in the Kingdom of Great Britain as one of the good results that have been obtained, and say this is entirely due to the existing postal laws. But if there are no express companies in Great Britain, there are scores and hundreds of forwarding agents that perform the functions of our American express companies. The railroads are themselves engaged in the forwarding business, making low rates for service by fast express, exceeding in limit of weight and size of packages received by the limitations of the postal service by many pounds even by hundreds of pounds.

“Any attempt at comparison between carrying methods in Great Britain with those in vogue in the United States is useless, because of the very short distance between points in the former.

“I asked the managers of some of the leading stores in Ireland, Scotland and England if parcels post offered great opportunities for them to send business into the country, and without exception they admitted that the business by post was decreasing, while the express by rail and by forwarding agents looking for assignments was increasing.

“Eleven pound packages and under are but a small quantity of package shipments.

“From the best information at hand, it is evident that the big carriers have nullified parcels post in Great Britain, and what they have left the railroads have picked up. These carriers receive all manner of parcels, put hundreds in baskets, and thus get the very lowest rates of transportation. They give their patrons lower rates than they could otherwise obtain, and because of their concessions charge them four cents on each consignment, a ‘booking charge’ which gives the carrier a very fair return for his kindness to the shipper. Little packages go by parcels post as a rule, and many of the larger department stores use the mails for delivering goods to out of town customers.

“These rates but add to the burdens of the merchants of the interior. The independent retailer in the country has few friends. Cheap rates, co-operative stores, chain stores, mail-order houses by the thousand, fares paid entirely, special excursions (such as Harrods of London are now running to the sales) with fares paid and ‘tontine’ establishments tend but to make the independent merchant, be he a grocer or ‘draper’ as they call dry goods dealers, only a small potato of the kind that are many in the hill.

“Our mutual friends, the English general merchant, the independent grocer, and the small retailer, have been almost completely relegated to a parsimonious living by co-operation, mail-order retailing, the carrier or forwarding agent, and last but not least, by cheap excursions to the cities.

“That these same evils will, if they obtain a foothold in the United States accomplish the same results for the American general merchant and retailer I firmly believe.”

A. B. C. of Parcels Post. pp. 4-5.