Chapter I: Part 1

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THE EXPRESS COMPANIES
OF THE UNITED STATES

A Study of a Public Utility

By
BERT BENEDICT

Price 10 Cents

Published by
THE INTERCOLLEGIATE SOCIALIST SOCIETY
70 Fifth Avenue, New York City
1919

_FOREWORD_

The Intercollegiate Socialist Society takes pleasure in presenting to the public this careful monograph of Mr. Bertram Benedict on the important subject of "The Express Companies of the United States." The pamphlet is particularly timely in these days when the nation is endeavoring to formulate its policy regarding the future control of the express business.

It is, moreover, the first concise and scholarly analysis of the express service in America that has appeared in recent years and is a distinct contribution to the literature on the subject. The author herein presents a vivid, bird's-eye view of the development of the express companies from the days of the stage-driver up to the present time. He portrays the rapid consolidation of express systems, their integration with the great railroads, their remarkable enlargement of activities, the growing competition of the parcel post with the private express systems and the increasing governmental regulation over this utility.

This survey is followed by an analysis of the present status of the express companies, and a discussion of express profits. The relative service rendered by express and parcel-post is then dealt with, and the reader is treated to an illuminating discussion of the probable savings accruing from government ownership and management of the express industry, particularly as a result of consolidation of equipment, agencies, offices, etc.

In conclusion, Mr. Benedict deals with various methods whereby the government may take over the express companies, tells of the present status of the companies as a result of the war, and gives us a glimpse into future developments. The author reaches the conclusion that the express service should be a public agency and that it should be closely connected with the post office department rather than with the railroad administration. The pamphlet as well explains the manner in which European countries have handled this problem and presents a complete bibliography on the general topic. The author throughout gives a wealth of accurate information concerning the express system in all of its manifold relationships.

The pamphlet is one of a series planned by the Intercollegiate Socialist Society on various phases of public ownership and democratic management.

HARRY W. LAIDLER.

_INTRODUCTION_[A]

_THE CHARACTER OF EXPRESS SERVICE_

The express companies of the United States are unique organisms, and have no counterparts in any country outside of North America. In Europe, their services are performed by the parcel-posts or by the railroads themselves, often in conjunction with collecting and delivering companies.

The express company in the United States collects from the shipper the matter to be sent by express and delivers it to the consignee. The charge for expressage may be either paid by shipper or collected from the consignee. The transportation between different points is generally furnished by the railroads, although steamship and stage lines are also used to a slight extent; and the charge for this transportation, as well as the charges for collection and delivery, are included within the one fee levied by the express company. This one fee also automatically includes insurance up to fifty dollars, there being additional fees for additional insurance, to the amount of which there is practically no limit. The goods shipped are sent in express cars attached to passenger trains or on special express trains maintaining the speed of passenger trains. Because of the speedy transportation thus afforded, merchandise large enough to be sent as freight, such as machinery and live stock, is often forwarded by express; but by far the greater part of express traffic in normal times is composed of articles weighing less than one hundred pounds. The larger companies conduct their activities in foreign lands as well as in the United States; and in addition perform a number of subsidiary activities not connected directly with the transportation of merchandise.

[Footnote A: The author wishes to acknowledge his indebtedness to the studies of Mr. Davied J. Lewis, the one man in official public life in the United States during the last decade adequately to realize the need for investigation and agitation in the field of a Government express service.

B. B.
January 25, 1919.]

_ORIGIN AND DEVELOPMENT_

The development of the express business in the United States serves perhaps as admirably as the development of any other single public utility to hold up the mirror to the economic ideology which prevailed among the American people up to August 1, 1914.

The origin of the express business in this country is usually assigned to 1839, but the Davenport and Mason Company claims to trace its beginnings back to 1836. In July of that year, a railroad was opened between Boston and Taunton, Massachusetts, a distance of 36 miles; and with its opening Charles Davenport and N. S. Mason delivered valuables and small packages to customers at those two towns. Even before this time, however, the picturesque and half-legendary stage-driver had often called for, transported and delivered articles entrusted to him for persons living along or near his route. Similar service had been frequently rendered also by steamboat captains and even by the conductors on the first railroads, often, if not usually, as an unremunerated personal favor. A. L. Stimson, one of the early expressmen and the author of the most comprehensive history of the express business in the United States, states that the need for some form of transportation by express was so intense before 1840 that a person could hardly make a trip between two cities without being deluged with requests to deliver parcels, and that these requests would come not only from friends and acquaintances, but even from total strangers.

THE VENTURES OF HARNDEN, ADAMS, WELLS AND FARGO

The first reliable and extensive express service, however, does date from 1839. In that year, William F. Harnden grasped the need for, and chance of profit in, the delivery of valuable parcels between Boston and New York and to that end made a contract for his personal transportation on the Boston and Providence Railroad--the first express contract in the United States. Harnden made four trips weekly, by rail to Providence and thence to New York by boat; and carried the expressed articles in a hand satchel. But within several months the business outgrew that humble forerunner of the modern express car, and he was compelled to hire additional express messengers, to set up offices, and to arrange for special space on trains.

So successful was Harnden's venture and so serviceable that he soon found himself confronted by many imitators and competitors. In 1840, Alvin Adams entered the New England-New York field, thus becoming the founder of the present Adams Express Company; and later in the same year Harnden extended his business to Philadelphia. In the following year, Henry Wells and a partner established an express service between Albany and Buffalo. By 1845 express companies had sprung up on every hand. In the latter year Wells and William G. Fargo developed a company to cover territory, much of it railroadless, west of Buffalo; and very soon this service reached Chicago. Early in the fifties Wells and Fargo were delivering in California by the stage coach and pony express of song and story and motion picture, although it was not until 1869 that the first transcontinental railroad was completed. (The pre-occupation of the present Wells-Fargo Express Company with the western field is thus not fortuitous.) And by the early fifties also Adams and Company was beginning to tap the South.

EXPRESS COMBINATIONS

In 1850, Wells and Company, Livingston and Company, and Butterfield, Wasson and Company so far violated the contemporaneously sacrosanct belief in the greater efficiency of the competitive system and the contemporaneously pseudo-religious authority of the whole principle of competition as to combine into one large corporation, the American Express Company. Later, Wells, Fargo and Company organized as a joint stock company with a capital of $300,000. The year 1854 saw the consolidation of Adams and Company, Harnden and Company, Thompson and Company, and Kingsley and Company into the Adams Express Company, and in the same year the United States Express Company was organized. The origin of the Southern Express Company dates from 1886--it is controlled by and is recognized as a part of the Adams Express Company. These four express companies continued through the nineteenth century and into the twentieth as the four great branches of the express service system of the United States. It is true that there existed by their side a number of other companies, but the latter were subsidiary, local and comparatively unimportant. The fields of activities of these four great national systems were as follows: _Adams-Southern_--the East, middle West, and several western routes, and the South; _American_--the East, middle West and trans-Mississippi; _United States_--the East outside of New England and the middle West, with several western routes; and _Wells-Fargo_--the far West and the Southwest, with several eastern routes. But there have long been complete understanding and gentlemen's agreements among the separate companies; and for practical purposes they formed, not four units of competition for the express business of the country, but four branches of one organization. Several Canadian companies also do business in the United States.

LACK OF REGULATION

During the sixty years from the inception of these private express companies in the United States to the dawn of the twentieth century, the rendering of this express service, of vital significance to the economic needs of the United States and of vital potential significance to the social needs of the people of the United States, was relegated without whimper to unchecked private agencies. Although the last thirty years of the nineteenth century saw the development of the United States into a complex and extensively specialized industrial mechanism--with a growing dependence of each geographical division of the country upon every other geographical division and of each economic unit upon every other economic unit--the country seems never to have suspected that it might well claim authority over so important a link in its industrial integration as the transportation and delivery of all merchandise too small or too valuable to be transferred and delivered as freight. There sprang into being during this period only some futile and spasmodic attempts at state regulation. By 1871, Germany had developed its remarkable Government express service, which later was classified into passenger and fast freight divisions, with corresponding variation in costs. In Great Britain, agitation for developing the express business as a part of the postal system had resulted in the establishment of a Government parcel-post as early as 1883. By 1892, the French Government was conducting an express business, selling the transportation of parcels both large and small to the French people without yielding profit to any owners of stocks and bonds, but imposing charges just high enough to meet the cost of the system; and developed, like our own rural free delivery, with an eye primarily to the service of the people, not to the profit-and-loss balance-sheet. But who were these countries that the United States could learn anything from them? The United States was the land of opportunity, and if gentlemen of affairs had been skilful enough to corral under their control the express business of the land, we most emphatically refused to thwart their opportunity for making the most of their foresight. We suggested jail for the agitator who insisted that the country owed the poor man a living, but the keystone of our economic creed was a faith that we owed the rich man a living. We weren't interested in what was serviceable as such to the people as a whole--we believed in the divine right of private enterprise of the economically capable. Were the express companies enforcing exorbitant rates? _Private enterprise._ Did they discriminate against certain shippers? _Private enterprise._ Did express profits represent a small amount of traffic at a high profit instead of a large amount of traffic at a low profit? _The freedom of private enterprise._ Was the cost of expressing a package unduly high because of the costliness of frequently transferring it into the hands of five separate companies? _Private enterprise._ Could the Government do the business more satisfactorily, more cheaply and more extensively, and thus reduce the cost of many commodities to their consumers? _The holiness of and the necessity for the untramelled right of private enterprise._

Accordingly, it was not until 1890 that even any accurate and reliable figures of the quantity and quality of the express service of the country were available for purposes of mere study and investigation. Within the census of that year, the express companies happened to be included--a survey being made of their operations for the fiscal year ending June 30, 1890; and thus for the first time and after fifty years the American people were able to get some information on the operations of the private agencies to whom the express service of the land had been entrusted. It is true that the act of Congress authorizing the census of 1880 had contained a provision for the collection of statistics of the express companies, and that a schedule of inquiry directed toward that end had been formulated and distributed. Only two of the eighteen companies in existence, however, replied to it. The others maintained that the census law had no authority over their vested interests, and declined to make a report. The Census Office in 1880 actually reacted to this attitude by courteously abandoning its legally-authorized investigation, and contenting itself with publishing merely some information on the contracts between the express companies and the railroads. And, although the 1890 Census went so far as to publish the expenditures of the express companies, it very naively declined to report upon their receipts.

AUXILIARY FUNCTIONS OF EXPRESS COMPANIES

By 1890, moreover, the express companies had developed and at the present time are performing certain functions which are secondary to or even independent of the express business proper. These functions for the greater part parallel at the present time similar functions performed by the national government or by other agencies. These adjunct and independent functions are:

1--The issue of money orders, letters of credit, travelers' checks, etc., payable through express company agents and correspondents over well-nigh the entire civilized world.

2--The purchase for customers of goods in any locality in which an express office is located.

3--The sale for their customers of goods in any locality in which an express is located.

4--Miscellaneous services, such as filing legal documents, redeeming pawned articles, selling exchange, entering and clearing articles of import and export at customs houses, paying bills, and, in short, attending to any business which can be readily performed by an agent for a customer.

THE 1890 CENSUS

Remembering, then, these secondary as well as the primary aspects of the express business, the students of the 1890 Census on Express Companies would have learned the following facts:

Number of companies 18
Total mileage operated 174,535
Total on Railroads 160,122
Total on Water Lines 10,822
Total on Stage Lines 3,055
Value of Equipment and Fixtures $5,074,045
Expenditures $45,783,123
Receipts Not reported
Number of employees 45,718
Number of Money Orders Issued 4,598,567
Number of packages carried by Express 115,377,112
Paid to Railroads, Steamboats, and
Stage Lines for transportation $19,561,182

Of the total mileage operated, as shown below, 92.7% was operated by the five leading companies listed above and the Pacific Express Company. The latter, organized in 1879, was owned and directed by the Gould group of railroads (the Union Pacific, Missouri Pacific and Wabash Lines); its business was taken over in 1911 by the Wells-Fargo Company.

Total mileage operated 174,535
Adams Express Company 24,919
American Express Company 43,126
Pacific Express Company 21,332
Southern Express Company 21,714
United States Express Company 21,479
Wells-Fargo Express Company 29,098

These six companies also carried 92% of the parcels carried by express, as follows:

Total number of packages 115,377,112
Adams Express Company 26,456,382
American Express Company 23,871,251
Pacific Express Company 7,552,622
Southern Express Company 7,552,622
United States Express Company 17,039,844
Wells-Fargo Express Company 22,658,384

The unquestioning devotion of the American public of 1890 to the principles of private enterprise is attested by the fact that there was no further census, and hence no further reliable information about the express companies, until 1907. It is true that the express companies were included in a Census Report on Transportation in 1894, but this survey could hardly be considered comprehensive.

THE EXPRESS COMPANIES AND THE RAILROADS

Until the twentieth century, then, the express companies remained unchallenged and even uninvestigated in their control of the service of transporting packages and parcels weighing more than four pounds. (Packages and parcels up to four pounds in weight could be sent by mail.) In ownership and control as well as in the nature of their activities, they were linked with the great railroad systems; and there was in addition an extensive amount of interownership between the various express companies. When the 1907 (the second) Census report on express companies was published, it was found that of the $68,853,200 capitalization of the seventeen important express companies, $20,668,000, or 30%, was in the hands of the railroads as such. [The express companies as such had reciprocated by buying and holding the stock of railroad companies to the amount of $22,218,950 and railroad bonds to the amount of $12,324,000.] Moreover, of the $68,853,200 capitalization of the express companies, $11,618,125, or 17%, was held among the various express companies as such. How much of the remaining 53% of the capitalization of the express companies was held by individuals interested in the railroad holdings and control cannot be told, but may certainly be surmised.

It is therefore not surprising to find that in 1909 of the seven directors of the Adams Express Company, four were directors of railroad companies; of the nine directors of the American Express Company, three; of the seven of the Pacific Express Company, six; of the seven of the United States Express Company, two; and of the thirteen of the Wells-Fargo Company, ten. In 1918, more than half of the directors of the four large express companies were also directors of railroads. The explanation of the willingness of the railroad companies not to disturb the express companies in their exclusive exploitation of the express service field is hence not difficult to find. Even those few of the directors who were not directors in railway systems were nevertheless also of that group of controllers of industry which was responsible for the sinister connection between American politics and American big business which for so many years had prostituted the promise of American life. Furthermore, whatever few regulations could be applied generally to corporations as such had little effect upon the express companies; for the Wells-Fargo and the Southern were, and up to the present time are, the only large companies which have the corporation structure. The other three maintain their early status as limited partnerships of a fixed number of shares without fixed par value, although the Adams Express Company, on December 15, 1913, assigned a par value of $100 to each of its 120,000 shares outstanding, giving it a capitalization of $12,000,000.

Of no less wisdom than cynicism accordingly was the remark of a prominent American statesman when propaganda for the establishment of a parcel-post had finally begun to rear its defiant head: "There are four reasons why the parcel-post cannot be established in the United States," with the explanation, when pressed for details: "The four reasons are: (1) The Adams Express Company; (2) the Wells-Fargo Express Company; (3) The American Express Company; and (4) The United States Express Company."

REGULATION

By the twentieth century, however, the hypnotic spell of the private enterprise creed over at least the middle and lower economic classes was beginning to weaken. The American public was developing a sullen and by no means silent antipathy--in some sections seemingly congenital--to the great national corporations. The storm had burst first upon the railroads; and when in 1906 the Hepburn Act gave the Interstate Commerce Commission definitely increased powers over the railroads, with commendable logic the express companies were coupled with the railroads in the scope of the law. All express tariffs had to be filed with the Commission. No change could be made in a tariff except after thirty days' notice. A uniform system of accounts could be and soon was ordered by the Commission. The Commission was given access to all the books and records of the companies. And, of especial significance, upon complaint express rates could be fixed by the Commission, subject to review by Federal courts.

The Mann-Elkins Act of 1910 went even further. Among its other provisions, the burden of proof on rates was shifted to the express companies and the Commission was given power to initiate, of its own volition, express rate rulings which not much later became subject to review only by the Supreme Court of the United States. Power over the classification of express traffic was also specifically given to the Commission. The Commission immediately utilized its new powers to inaugurate a searching investigation of every aspect of the express business, with the result that on February 1, 1914, there went into effect a reduction in rates amounting to an average decrease of about 16%, together with a new system for calculating such rates, the country being divided for that purpose into five zones. The newly prescribed rates were stated and arranged after a fashion simple enough to be readily understood by any tyro. All direct and indirect rebates were abolished. Articles of food were to go at three-fourths the new rates. The classification of merchandise was radically simplified. (Already in 1913, a further act of Congress had made discrimination against shippers a criminal offense punishable by fine or imprisonment.)

PARCEL-POST

But the hardest blow to the express companies had been delivered on August 24, 1912. On that day, after years of agitation, a bill providing for a parcel-post in the United States became the law of the land; and the parcel-post system went into effect on January 1, 1913. Congressman David J. Lewis conducted a staunch campaign to have a postal express provision included in the new law, but unsuccessfully; and the weight limit of the parcels which could be sent through the post office was fixed at eleven pounds. Nevertheless, the United States Express Company saw the handwriting on the wall, and in that year decided to wind up its business, ceasing operations on June 30, 1914.

The detailed history of the development of the parcel-post in the United States, closely related as are the parcel-post and express problems, is not pertinent to this study. It is sufficient to point out that more and more the parcel-post has been broadened so as to include much of what was the express companies' field. At the present time, the weight limit is 70 lbs. for a distance up to 300 miles and 50 lbs. for greater distances. Packages may be sent collect on delivery up to $100, and they may be insured up to $100. There are separate fees for those two latter services up to ten cents, which amount covers both a collection on delivery of $100 and insurance of $100. A receipt is given for the uninsured pre-paid parcel for a fee of one cent. So that by January 1, 1918, the business of transporting goods too small or too valuable to be transported as freight was divided between two agencies in competition with each other--one of them governmental, one of them private.

_THE PRESENT ACTIVITIES OF EXPRESS COMPANIES_

Before considering the problem thus presented to the mind--nor would it be inexact to add, to the conscience of every keenly-scrutinizing student of political and industrial phenomena in the United States--a resume of the practically contemporaneous activities of the private express companies will be helpful. In the twelve months preceding January 1, 1918, the statistics of the eight express companies doing interstate business in the United States--the Adams, American, Canadian, Great Northern, Northern, Southern, Wells-Fargo and Western--were as follows:

Total Mileage 307,400

Railroad 257,408
Electric Line 8,802
Steamboat 39,995
Stage Line 1,195

Total Mileage 307,400

Adams Express Company 48,602
American Express Company 73,289
Southern Express Company 34,918
Wells-Fargo and Company 115,521
All others 35,070

Cost of Land, Buildings and
Equipment on January 1, 1918 $44,160,773
Land and Buildings 20,811,830
Equipment 23,348,943

Inventory Value of Equipment
owned on January 1, 1918 $13,735,058

Total Express Charges $222,860,373
Other Operating Revenue 6,594,815
------------
Total $229,455,188
Operating and Other Expenses $229,639,493
_Deficit from Operating_ 184,305
Other Income 4,471,292
Gross Income 4,286,987
Deductions from Gross Income 1,538,481
------------
Net Income $2,748,406
Dividends 2,508,044

Profit and Loss Balance $24,294,792
Total Investment, Including
Real Property and Equipment $123,484,515
Capital Stock $59,008,600
Funded Debt Unmatured 20,736,500

Money Orders Issued:
Number 16,035,002
Amount $145,934,982

C. O. D. Checks Issued:
Number 8,612,106
Amount $143,832,226

Limited and Unlimited Checks Issued:
Number 236,071
Amount $108,798,279

Telegraph and Cable Transfers:
Number 88,146
Amount $136,809,746

Travelers' Checks Issued:
Number 1,608,037
Amount $34,923,816

Letters of Credit Issued:[1]
Number 1,539
Amount $4,126,154

Revenue from the above six items and other
sources, other than Express Charges $6,594,815

Maintenance Expenses $6,527,766
Traffic Expenses 925,033
Transportation Expenses $98,583,724
(Employees' Wages) (55,820,701)
General Expenses 7,684,534
(Salaries and Personal Expenses) (4,161,299)

[Footnote 1: Including 569 Postal remittances to the amount of
$39,435, issued by the Canadian Express Company.]

NOTE:--Of the above figures the Adams, American, Southern and
Wells-Fargo Companies accounted for 89% of the mileage and for
94% of the total operating revenues.

One feature of the above figures stands out pre-eminent. With a capital stock of $59,000,000 and a funded debt of $21,000,000, the express companies performed express operations bringing in an annual revenue of $223,000,000. (Of this latter sum, one-half went to the railroad, steamship and stage lines for transporting the packages entrusted to their care by the express companies.) On January 1, 1918, the cost of the land and buildings owned by the express companies was slightly more than $20,000,000 and of the equipment slightly more than $23,000,000. It is therefore immediately evident that the most valuable asset of the express companies is to be found, not in their tangible property, but in their contracts with the various railroad companies giving them the exclusive right to have their packages transported by the railroads on passenger trains--in a sense, their charters.

PROFITS OF EXPRESS COMPANIES

Previously to the regulation of express rates by the Interstate Commerce Commission and to the beginning of the parcel-post in this country, the profits of the express companies were undeniably swollen. By just how much they were unreasonably large, it is practically impossible to determine; although the Interstate Commerce Commission did on several occasions officially assert unduly large profits in the case of the Wells-Fargo Company.

As described above, three of the five leading companies had issued no stock at a fixed par value, but had distributed a certain number of shares of ownership. They had started in business with a limited equipment (Franklin K. Lane declares that it had not exceeded $1,000,000 in value) and had purchased new equipment mostly from current profits. Some companies have capitalized their profits. Others have carried them along from year to year in a profit and loss account. By their contracts with the railroad companies, they have become practically a part of the railroad system, and hence whatever equipment and property they themselves possess have served up to the present time as little basis for determining their just profits. For instance, as the decision of the Interstate Commerce Commission's report of 1912 pointed out, some one company may invest money in certain equipment which another company hires. They both may make the same percentage of profit on the same amount of business, but in the first case the profit would loom small in comparison with the property of the company, whereas in the second case, it would loom unnaturally large. In other words, a charge on capital in the first case would be classified as an item of operating expense in the second.

And yet, despite all these considerations, the fact that from 1909 to 1912 the net profits of the companies were from 17% to 65% of the value of their properties, coupled with the common sense knowledge that in those years there was no inward or outward compulsion upon the directors of the companies to charge one cent less than the traffic would bear, makes it certain enough for practical purposes that the express companies' profits were unethically swollen.

Whatever the profits before 1913, however, they have sadly dwindled since, as the following figures of the Interstate Commerce Commission will indicate:

Fiscal Operating Operating Net Operating
Year Revenues Expenses Revenue

1909 $132,599,191 $120,305,182 $12,294,009 or 9%
1910 $146,116,316 $131,608,035 $14,508,281 or 10%
1911 $152,612,880 $141,025,251 $11,587,629 or 8%
1912 $160,121,933 $151,831,956 $8,289,977 or 5%
1913 $168,880,923 $163,088,205 $5,792,718 or 3%
1914 $158,891,327 $157,128,012 $1,763,255 or 1%
1915 $148,994,960 $145,037,555 $3,957,415 or 3%
1916 $179,206,649 $167,063,210 $12,143,439 or 6%

Calendar
Year

1916 $196,137,768 $185,523,071 $10,614,727 or 5%
1917 $229,455,188 $227,256,116 $2,199,072 or 1%
1918 ... ... $5,579,601 _Deficit_
(First five months)

NOTE:--In studying the above figures, it must be remembered
that approximately one-half of the operating revenues are paid
to the railroads for transportation, so that for practical
purposes the ratio of the total operating revenue to the net
operating revenue with respect to the direct business of the
express companies--the collection of packages for the railroads
and the delivery from the railroads--would be approximately
twice the percentages in the above table.

_GOVERNMENT POSTAL EXPRESS VS. PRIVATE EXPRESS COMPANIES_

At certain periods of each year, the Post Office Department takes a count of the packages mailed in the parcel-post, the postage collected on them, and their total weight. These periods of count are the first two weeks in April and the first two weeks in October. By multiplying their sum by 13, we can thus obtain a fairly accurate figure for the total number of parcels mailed within the year in 1917--roughly 1,120,000,000. On the other hand, the number of parcels carried in that year by the express companies may be put at 280,000,000. (Note 1.)

Accordingly in 1917 the number of parcels expressed in the United States was roughly as follows:

By Parcel-Post 1,120,000,000
By Express Companies 280,000,000

But in 1912, if the average express charge was the same as in 1909, and no reason is known why it should not have been, the number of parcels carried by the express companies was about 320,000,000. In that same year the number of parcels carried by the post office, under the four-pound limit, was 240,000,000. In other words, the effect of the entrance of the Government into what had been a field of private enterprise resulted within five years in an increase of more than 450% in the extent of the service rendered by the Government, whereas the express company's services to the public in that time actually decreased 12-1/2%, although the extent of the total services rendered by the two combined agencies increased 250%.

Nor can the increase in the parcel-post business be explained by the assertion that the Government performs this business at a great loss. The balance sheet of the Post Office Department since 1912 has been as follows:

1912 $1,781,435 _deficit_
1913 4,551,984 surplus
1914 4,390,796 surplus
1915 11,297,861 _deficit_
1916 5,853,655 surplus
1917 9,887,398 surplus

Now, it is obvious that the financial account of the entire Post Office Department is composed of too many divergent elements for the financial account of the parcel-post alone to have any conclusive bearing upon it. But it is equally obvious that if so extensive and particularly so expensive a function of the Postal System as the parcel-post had been conducted at a considerable loss, the fact would be reflected, to some extent, at least, in a growing deficit of the Department as the parcels conveyed grew in number from 240,000,000 in 1912 to 1,120,000,000 in 1917. Nor have the railroads made good before the courts or before the Interstate Commerce Commission their contention that their recompense for carrying parcels is unfairly low.

COMPARISON WITH OTHER COUNTRIES

Similar findings on the comparative value of the Government service and the private companies' service in the express fields may be obtained from another source. Up to January 1, 1913, outside of parcels weighing less than four pounds, the private express companies had unchallenged exploitation of the express service of the United States. How did the extent of our service in 1912 compare with the extent of the service in other lands in which our private express companies found no counterparts?

Obviously, there is no absolute basis for fruitful comparison. Greater distances, more sparsely settled territory, greater wealth, greater geographical specialization of function and hence greater need for integration between different sections, higher standards of living, more diversified demands--these are some of the features of the problem here as compared with the problem abroad which make an absolute comparison of express services valueless. But practically every feature of the express situation would affect also the freight traffic of the United States as compared with the freight traffic abroad. In other words, the express traffic of the United States before 1913 should have had the same ratio to the freight traffic of the United States as the express traffic of other lands to the freight traffic of other lands, in case the United States express companies were as efficient in comparison with foreign express agencies as the railroads of the United States in comparison with railroads.

In a hearing before a committee of Congress in 1912, Mr. David J. Lewis, then a congressman from Maryland, presented the evidence, which he had obtained from the original reports of the railways of the countries concerned:

_Pounds_ _Pounds_ _Ratio_
_Freight_ _Express_ _Express_
_Shipped_ _Shipped_ _Shipped to_
_Country_ _Date_ _Per Capita_ _Per Capita_ _Freight_
Argentina 1909 10,680 165.4 1 to 64
Austria 1908 11,260 116.6 1 to 97
Belgium 1909 16,320 199 1 to 82
Germany 1909 15,980 140.4 1 to 113
France 1908 7,480 140.6 1 to 53
Hungary 1908 5,540 67.8 1 to 84
United States 1909 16,300 99 1 to 165

In other words, the express facilities of the United States were used 50% less than in the country above showing the lowest development of express service and about 200% less than in the country showing the highest development of express service. When it is remembered that express is much quicker and more convenient than freight, although more expensive, and that the industrial processes of the United States have long been and still are characterized by a keener demand for speed and convenience, irrespective of cost, than the industrial processes of other countries, the above table becomes eloquent with significance.

With respect to the costs of the express service, the same basis for comparison may be used.

_Ratio_
_Average_ _Average_ _Freight_
_Freight_ _Express_ _Charges_
_Charge_ _Charge_ _to Express_
_Country_ _Date_ _Per Ton_ _Per Ton_ _Charges_
Argentina 1909 $1.95 $6.51 1 to 3.2
Austria 1908 .74 3.77 1 to 5
Belgium 1909 .53 4.92 1 to 9.3
France 1908 .95 6.88 1 to 7.2
Germany 1908 .76 3.80 1 to 5
Hungary 1908 .93 3.68 1 to 3.9
United States 1909 1.90 31.20 1 to 16.4

And yet the statesmen at Washington have disposed and doubtless will still endeavor to dispose of the proposal to have the Government own and manage the express service of the land by speeches on texts to the effect that the spirit of America demands individual freedom; that that is the best Government which governs the least; that incentive to productive endeavor is possible only in private establishments and completely disappears in the public service; to which will now doubtless be added the charge that such a proposal smacks of Socialism and that every red-blooded American understands that anything and everything Socialistic is undeniably un-American!

The implication of the above figures, however, is undeniable for the man who trusts thought as well as emotions. The Postal System has gone into the express field and, in competition with the express companies, by their respective showings, has in five years rendered to the American public far more valuable service than that rendered by the express companies. The opponents of Government ownership and management have been ruthlessly confuted. They predicted graft--there has been none. They prophesized inefficiency--the figures give them the lie. They foretold unwholesome political intrusions--whatever may be the unwholesome features of the present operations of our postal system, those operations are less unwholesomely attached to political influences than ever before. There is accordingly every reason _a priori_ to assume that the Government would render more valuable service than that rendered by the express companies in the remaining section of the express field unoccupied by it and still occupied only by the express companies.

But there is no necessity for relying upon _a priori_ reasoning. The results to be achieved by the consolidation of the express service of the land into the postal system of the land are definite and demonstrable.

EXPRESS SERVICE VS. PARCEL-POST

Before defining and demonstrating the advantages of a Government postal express, however, it may be necessary to discuss more fully the features which differentiate at present the parcel-post from the express service.

They fall into two classes, (a) Special forms of service, and (b) Rates.

Under (a):

_Express Company_ _Parcel Post_

1. Collects the parcel free of 1. ----
charge.

2. The fee includes insurance 2. Special fees for all
up to $50 without charge; insurance--insurance limit,
additional insurance up to $100.
any amount may be contracted
for by special fees.

3. All sizes and weights are 3. Weight limit--70 lbs. (300
accepted. miles), 50 lbs. (above 300
miles). Size limit--84
inches, length and girth
combined.

4. Collects fee from consignee 4. Collects fee from consignee
at destination free at destination at a fee.
of charge.

5. Collects cost of article itself 5. Collects cost of article up
to any amount. to $100.

6. Buys articles for customers 6. ----
at a fee.

7. Sells articles for customers 7. ----
at a fee.

It will be immediately realized that some of the features of the express service which are not rendered at present by the parcel-post could be and should be rendered by the parcel-post for one fee without separate charges. On the other hand, it will be realized that some of these features should be rendered by the parcel-post only as separate privileges for which separate fees should be charged, as, for instance, the service of collecting parcels from the shipper. (Note 2.)

For instance, there seems to be no good reason for limits upon the size and weight of the packages in the parcel-post. These limits have steadily been expanded in the parcel-post system from its inception, and the process has so strikingly demolished whatever arguments for size and weight limits may have previously been considered that they no longer seem valid.

In Austria, Belgium, Denmark, Germany, Hungary, Norway, Rumania, the old Russia and Switzerland, packages weighing up to 110 pounds may be sent by parcel-post (and after 100 pounds the freight service of the railroads is readily available in the United States as elsewhere). In 1915 France and Italy imposed weight limits of 22 pounds. In Belgium, Germany, Hungary, Norway, Rumania and Sweden there is no size limit, except that in certain cases special fees are charged for unusually large sizes. In Italy, the limit is 24 inches in any one dimension, although in certain cases packages 41 inches long are accepted. The limit in Denmark is 39 inches in any dimension. In France, the limit is 60 inches in any direction. With no limits upon weight and size, the parcel-post might handle the problem of especially cumbersome articles whose size is disproportionately large for their weight by following the example of the express companies, charging a special rate twice as large as the normal rate. And as to shipments so bulky that especial transportation facilities are needed for them another page might be taken from the books of the express companies, and special preliminary arrangements stipulated before such shipments are accepted.

Moreover, the experience of other countries proves that there is no insurmountable obstacle to removing the limit upon the amount for which a package may be insured. Merely, special provisions might be necessary, and perhaps an additional fee above the normal insurance fee charged, for articles such as jewelry, for which space in safes would have to be reserved, and for bullion, etc. The following countries seem to have no insurance limit: Austria, Denmark, Germany, Hungary, Portugal, Rumania, the old Russia, Sweden, Switzerland. The limit in France is $1,000; in Italy, $200. In addition, some countries give automatic indemnity without separate insurance fee, up to a small amount.

Similarly, now that the parcel-post experiments for small amounts have proved successful, the limit upon the amount collected from the consignee for the expressed article itself could be and should be either removed or greatly advanced, the fee for this service advancing with the amount collected. Nor does any cogent barrier present itself against a separate division in the parcel-post system to sell articles consigned to it, or even to buy them, the fee again synchronizing with the amount of the principal involved.

The features inherent in the express service and not now in the parcel-post, as the express service and the parcel-post now function, might be preserved by either of two methods. They might be added to the present parcel-post as separate features to be utilized only when especially desired and for which separate fees would be levied. Or else the Government postal express might be organized into two separate divisions--one for the services now rendered by the parcel-post, with possibly certain additional fees for certain secondary features, to be determined by experience in administration; and the other for the services now rendered by the express companies, except those proved by experience in administration to be homogeneous with the parcel post service proper, and hence properly adhering to the first division. Either the method of complete consolidation or the method of two divisions would meet the exigencies of the service--only the results of experience and experiment could award greater merit to one or the other.

The fact that these separate functions of the express service are of too great value and in too great demand to be eliminated is seen by a study of the relation of the express shipments and the parcel-post shipments to the express and the parcel-post rates, this constituting the second point of departure (b) between the public method and the private method of transporting parcels. The differences between the express rates and the parcel-post rates may be graphically realized from a comparative table. As will be seen, the differences between the two sets of rates may be roughly summarized in one sentence--as a rule, the parcel-post rates are lower than the express rates for the shorter distances and the smaller parcels.

Accordingly, if the value of the service rendered by the two systems were nearly identical, the express company's shipments would be almost entirely of larger parcels and for the greater distances. But as a matter of fact it is generally known that a large proportion, a very large proportion, of the shipments sent by express are at weights and for distances at which the parcel-post rates are lower than the express rates, often decidedly lower. Only the need to a shipper of all, some, or any one of the above-discussed features of express service not duplicated at present in the parcel-post system can explain this situation. It is therefore imperative that the Government make provision for all these features in establishing a Government postal express.

_COST OF LIVING_

A moment's reflection is sufficient to show that a Government postal express would make express facilities available to a far greater number of persons than are served at present by the express companies. For the Government postman and the Government post office cover the country as a whole--the express companies operate only along railroad, electric, steamboat and stage-lines. Moreover, of these four media, 83.7% of the mileage is by railroad and only 2.9% by electric line, 13% by steamboat line, and 4/10 of 1% by stage-line.

All in all, the mileage covered by the express companies totals 307,400. On the other hand, the mileage covered by the postal system is 1,374,056. Of this amount, 1,112,556 represents the mileage of the rural routes alone, and the number of persons served by the rural routes in 1917 was more than 27,000,000. Of course, it is certain that not all of the persons along these more than one and a quarter million miles were deprived of the benefits of an express service, but it is equally certain that many of them were, and it is probable that the majority of them were.

But it is the extension of the express facilities to just that element of the population living off the railroads and on the rural post routes in which lie the greatest potential benefits that an express service can render to the nation. For, speaking by and large, most of this population is engaged in farming; and, conversely, possibly the majority of the producers of foodstuffs in the country live off the railroads and on the rural post routes. Now, it is stated on reliable authority that of each dollar expended by the consumer for food in New York City, for instance, the farmer gets only from thirty-five to fifty cents. In other words, at least 40% of the cost of food is represented by the cost of getting the products of the farm to the ultimate purchaser. The role thus played in the drama of the high cost of foodstuffs and the high cost of living generally is apparent. Equally apparent is the role which a simplification of or a reduction in the processes of getting food from the farm directly to the dinner table could play in lowering the cost of living.

But such a simplification and reduction are possible only to a Government postal express. At present the rural free delivery does make provision for sending farm products directly from the farmer to the consumer, but its efforts in this direction are still largely embryonic. For the machinery of the process must be constructed anew and the task of construction is one of those tasks which cannot be hurried. On the other hand, the express companies have built up through the years an extensive and efficient machinery for "farm to table" transactions, but their services in this direction are hampered by the fact that the companies are limited on the whole to the territory adjacent to the railroad lines. The fertilization of the vast farming territory tapped by the post office by the express company facilities should give birth not many months after its consummation to the one most potent factor at present available to lower the retail cost of foodstuffs to an appreciable extent.

Under such an arrangement, a separate bureau would be established in the postal system, covering both the parcel-post and the postal express. This bureau would collect names of farmers--both those voluntarily resorting to it and those reached in its own canvasses--who would send their products collect on delivery to consumers. Similarly, lists of consumers desiring thus to be served would be collected. It would be no difficult matter for individuals on the two lists to get into touch with one another, and to deal directly through either the parcel-post or the postal express. Where they could not by their own arrangements get into touch with one another, the bureau's task would be to get them into touch. And where a farmer and a consumer could not even thus be brought into direct contact, the bureau would act as the agent for each--maintaining warehouses, if necessary, to which farmers would send goods to be sold at a stated minimum price and to which consumers would resort for their purchases. Since these functions are already performed to a slight extent by the express companies, there should be little question of the legality of such procedure by the Government. If necessary, additional legislation might be sought; nor after the activities of the Government during the Great War would there be much likelihood of such legislation being declared unconstitutional.

_ECONOMY IN OPERATION_

It has been seen that about 50% of the charges collected by the express companies for the transportation of packages go to the railroads, 50% remaining to the express companies. To be exact, in 1917 the sum of $222,860,373 represented the collection charges by the express companies, of which $113,535,059, or 51%, went to the railroads, leaving to the express companies from transportation, $109,325,314. Revenues of the express companies from operations other than transportation brought their total revenues up to $115,920,129. Their operating expenses were $113,721,057. In other words, for every 10% by which Government operation of the express service might decrease the operating expenses of the express service, even if the present contracts with the railroads are assumed by the Government, there should be a saving in the amount of express rates assessed the public of no less than 5%.

Such savings seem inevitable under a Government postal express. Vast as is the extent of the parcel-post operations, there is no evidence that all or even most of its ramifications have yet reached that point of magnitude where the addition of new business means an increasing instead of a decreasing cost per unit. Let it be remembered that the parcel-post carried in 1917 some 1,120,000,000 parcels and the express companies some 280,000,000; so that, taking into account the secondary features of the express service not performed at present by the post office, the inclusion of the express service in the parcel post would increase the latter's activities not much more than 25%. Certainly, it may be fairly assumed that any such services in which the law of increasing costs per unit might hold would be at least counter-balanced by services in which the law of diminishing costs per unit would hold; so that we may consider the economies of a Government postal express absolutely instead of relatively.

CONSOLIDATION OF EQUIPMENT

In the first place, the express companies require for their operations much the same kind of equipment as is required by the Post Office Department. Express cars and railway postal cars; horse-drawn express delivery wagons and horse-drawn post office delivery wagons; motor express trucks and motor post office trucks; express company horses and Post Office Department horses--all do similar work, along similar routes, in similar sections of similar cities at similar times of the day and under similar conditions. The economies possible by consolidation are lessened only slightly by the fact that on the main railroad trunk routes express traffic is often carried by trains composed entirely of express cars, in which there can obviously be little saving by consolidation of the express system and the parcel-post. In passing, it should be noted that the railway mail cars are furnished by the railroads, and in most cases the trucks and wagons and automobiles used in transporting mail through a city render that service by contracts of the Post Office Department with their owners; so that the savings in consolidation would accrue indirectly by lower contract rates rather than directly.

Especially in smaller communities and in the thinly settled outskirts of larger communities can one wagon or one motor truck often render the service now requiring one express wagon or motor truck and one post office wagon or motor truck. On less crowded routes and on less crowded trips, one railroad car can often render the service now requiring an express car and a railway post office car. And on the crowded routes and in the thickly-populated cities, if one vehicle of transportation cannot render the service now requiring two, at least in many cases four such vehicles can render the service now requiring five. (Note 3.)

CONSOLIDATION OF AGENCIES