Section 1198._Mail Carrying Railways Underpaid

"A mail train must not pull out and leave mails which are in process

of being loaded on the car or which the conductor or trainman has

information are being trucked from wagons or some part of the station

to the cars." Section 1199.

"At all points at which trains do not stop where the Post Office

Department deems the exchange of mails necessary, a device for the

receipt and delivery of mails satisfactory to the Department must be

erected and maintained; and pending the erection of such device the

speed of trains must be slackened so as to permit the exchange to be

made with safety." Section 1200, first paragraph.

"In all cases where the Department deems it necessary to the safe

exchange of the mails the railroad company will be required to reduce

the speed or stop the train." Section 1200, second paragraph.

"When night mails are caught from a crane the railroad company must

furnish the lantern or light to be attached to the crane and keep the

same in proper condition, regularly placed and lighted; but if the

company has no agent or employee at such station, the company must

furnish the light, and the care and placing of same will devolve upon

the Department's carrier." Section 1200, third paragraph.

"The engineer of a train shall give timely notice, by whistle or other

signal, of its approach to a mail crane." Section 1200, fourth

paragraph.

"Railroad companies are required to convey upon any train, without

specific charge therefor, all mail bags, post office blanks,

stationery, supplies, and all duly accredited agents of the Post

Office Department and post office Inspectors upon the exhibition of

their credentials." Section 1184.

APPENDIX B.

CLASSIFICATION OF OPERATING EXPENSES.

(Data from Reports of the Interstate Commerce Commission.)

---------------------------------------------------------------------------

Average cost per mile of line.

------------------+-----------------+-------------------+------------------

| | | Monthly average

| Fiscal year 1910| November, 1909 | for the other

| | | eleven months of

| | | the fiscal year

+---------+-------+-------+-----------+-------+----------

------------------+---------+-------+-------+-----------+-------+----------

and structures |$1,562.88|$130.24|$124.04| 95.24 |$130.80| 100.43

equipment | 1,746.00| 145.50| 148.44| 102.02 | 145.23| 99.82

Traffic expenses | 220.61| 18.38| 18.85| 102.56 | 18.34| 99.78

expenses | 2,893.71| 324.48| 327.78| 101.02 | 324.18| 99.91

General expenses | 287.71| 23.98| 23.10| 96.33 | 24.06| 100.33

------------------+---------+-------+-------+-----------+-------+----------

Total |$7,710.91|$642.58|$642.21| 99.94 |$642.61| 100.00

------------------+---------+-------+-------+-----------+-------+----------

APPENDIX C.

RECEIPTS FROM PASSENGER AND FREIGHT TRAFFIC BY MONTHS.

(Data from Reports of the Interstate Commerce Commission.)

----------+-------------------------+-------------------------+------------

| Passenger receipts per | Freight receipts per |Per cent. of

| mile of line | mile of line | passenger

|-------+-------+---------+-------+-------+---------+ receipts to

----------+-------+-------+---------+-------+-------+---------+------------

1909,July |$251.66| $8.12 | 112.15 |$608.67|$19.63 | 88.46 | 29.25

Aug. | 269.70| 8.70 | 120.17 | 653.97| 21.10 | 95.09 | 29.20

Sept.| 254.95| 8.50 | 117.40 | 704.51| 23.48 | 105.81 | 26.57

Oct. | 231.80| 7.48 | 103.31 | 781.91| 25.22 | 113.65 | 22.87

----------+-------+-------+---------+-------+-------+---------+------------

Nov. | 206.69| 6.89 | 95.17 | 752.69| 25.09 | 113.07 | 21.54

----------+-------+-------+---------+-------+-------+---------+------------

Dec. | 211.55| 6.82 | 94.20 | 640.59| 20.66 | 93.11 | 24.83

1910,Jan. | 187.42| 6.05 | 83.56 | 618.06| 19.94 | 89.86 | 23.27

Feb. | 171.92| 6.14 | 84.81 | 603.76| 21.56 | 97.16 | 22.16

March| 202.61| 6.54 | 90.33 | 716.76| 23.12 | 104.19 | 22.04

April| 203.84| 6.79 | 93.78 | 658.93| 21.96 | 98.96 | 23.63

May | 218.47| 7.05 | 97.38 | 682.96| 22.03 | 99.28 | 24.24

June | 233.25| 7.78 | 107.46 | 674.97| 22.50 | 101.40 | 25.68

----------+-------+-------+---------+-------+-------+---------+------------

Average |$220.32| $7.24 | 100.00 |$674.81|$22.19 | 100.00 | 24.61

----------+-------+-------+---------+-------+-------+---------+------------

APPENDIX D.

HOW RAILWAY WAGES HAVE INCREASED.

In the year 1901 the railways reporting to the Interstate Commerce

Commission received, in gross from operating sources, the sum of

$1,588,526,037.00 and expended in wages and salaries the sum

of $610,713,701.00; in 1910 the corresponding totals were

$2,750,667,435.00 and $1,143,725,306.00. Computations from these

totals show that in 1901 the railways expended in wages and salaries

$38.45 out of each $100.00 of gross operating receipts, while in 1910

the proportion had increased to $41.58 a difference of $3.13 in each

$100.00 of gross receipts. This difference does not seem small but it

is hardly realized, except when the calculation is made, that on the

basis of the gross receipts of 1910 it would amount, as it does, to an

additional expense of $86,095,890.72. It is to be borne in mind that

this largely increased payment to labor is in spite of the fact that a

part of the increase in wage rates has been offset by higher

efficiency in method and facilities. Comparisons of rates of wages,

from the annual statistical reports of the Interstate Commerce

Commission, follow:

-----------------------------------------------------------------

| Average wages per day

+-------+-------+----------

Class of Employees | | | Increase,

| 1901 | 1910 | per cent.

--------------------------------------+-------+-------+----------

General office clerks | $2.19 | $2.45 | 11.87

Station agents | 1.77 | 2.14 | 20.90

Other station men | 1.59 | 1.91 | 20.13

Enginemen | 3.78 | 4.34 | 14.81

Firemen | 2.16 | 2.57 | 18.98

Conductors | 3.17 | 3.73 | 17.67

Other trainmen | 2.00 | 2.72 | 36.00

Machinists | 2.32 | 3.03 | 30.60

Carpenters | 2.06 | 2.39 | 16.02

Other shop men | 1.75 | 2.20 | 25.71

Section foremen | 1.71 | 1.99 | 16.37

Other trackmen | 1.23 | 1.57 | 27.64

Telegraph operators and dispatchers | 1.98 | 2.16 | 9.09

Employees, account floating equipment | 1.97 | 2.10 | 6.60

All other employees and laborers | 1.69 | 1.96 | 15.98

--------------------------------------+-------+-------+----------

APPENDIX E.

HOW RAILWAY TAXES HAVE INCREASED.

(Data from Reports of the Interstate Commerce Commission.)

----------+-------------+---------------+-------------

Year | Amount paid | Average per | Per cent. of

| | mile operated | net receipts

----------+-------------+---------------+-------------

1900 | $48,332,273 | $251.00 | 8.7

1901 | 50,944,372 | 260.50 | 8.6

1902 | 54,465,437 | 272.12 | 8.3

1903 | 57,849,569 | 281.76 | 8.4

1904 | 61,696,354 | 290.69 | 9.0

1905 | 63,474,679 | 292.55 | 8.5

1906 | 74,785,615 | 336.36 | 8.8

1907 | 80,312,375 | 353.09 | 8.9

1908 (1) | 84,555,146 | 366.84 | 10.7

1909 (1) | 90,529,014 | 384.57 | 10.1

1910 (1) | 103,795,701 | 430.99 | 10.3

----------+-------------+---------------+-------------

(1) Not including terminal and switching companies.

APPENDIX F.

UNITED STATES SENATE

COMMITTEE ON POST OFFICES AND POST ROADS

September 11, 1912.

My dear Sir:

I hand you herewith a copy of Senate Bill No. 7371, introduced by me

by direction of the Senate Committee on Post Offices and Post Roads,

embodying a plan recommended by the Post Office Department for

determining the compensation to be paid to railroad companies for

transportation of the mails. This general subject has been referred to

a joint Committee of Congress. The Committee has not yet organized and

probably will not do so for several weeks, but as a member of that

Committee and as Chairman of the Senate Committee on Post Offices and

Post Roads and under authority of Senate Resolution No. 56, I desire

to secure immediately such information as may be available for

submission to the Committee at its first meeting. I will ask you,

therefore, to answer the following questions:

(1) Do you deem the present plan of compensation an equitable one as

between the Government and the railroads? If not, in what respects and

as to what classes of railroads is it inequitable?

(2) Is the underlying principle of the plan embodied in the inclosed

bill a proper basis for compensation? If not, wherein is it improper,

and why?

(3) What, in your opinion, is a desirable plan for compensating

railroad companies for transporting the mails?

I desire an early reply to these inquiries relating to the general

plan, and, if you are not ready to do so now, shall be glad to have

you submit later a detailed discussion of this bill and of House

Document No. 105, 62d Congress, 1st Session, with which, I assume, you

are familiar.

Yours very truly,

(Sgd.) JONATHAN BOURNE, JR.

Chairman Senate Com. on Post Offices and Post Roads.

APPENDIX G.

COMMITTEE ON RAILWAY MAIL PAY

October 3, 1912.

Hon. Jonathan Bourne, Jr.,

Chairman, Senate Committee on Post Offices and Post Roads,

Washington, D. C.

My dear Sir:--

The Committee on Railway Mail Pay, representing 268 roads operating

over 214,275 miles of road, has been investigating the subject of mail

compensation for about three years, or since the Post Office

Department, in 1909, sent out a series of questions regarding the

space furnished for mails in passenger trains, and the cost to

railroad companies of the service which they perform for the

Government in the carriage of the mails. Therefore the Committee has

thought it would be of interest to you to receive from it an answer to

the questions propounded by your letter of September 11, 1912,

addressed to the officers of railroads throughout the country.

A response to House Document No. 105 is now in course of preparation,

and will be submitted at an early date. In the meantime, our committee

desires to submit the following replies to your inquiries:

_Question 1._--Do you deem the present plan of compensation an

equitable one as between the Government and the railroads? If not, in

what respects and as to what classes of railroads is it inequitable?

_Answer._--The existing law has never worked to the disadvantage of

the Government, but has failed to do justice to the railways by reason

of infrequent weighing; absence of pay for nearly 40 per cent. of the

space occupied as travelling post offices; the performance, without

pay, of side and terminal messenger service, and the unjustifiable

reduction in pay by the Act of Congress dated March 2, 1907,

supplemented by Order No. 412 of the Postmaster General, changing the

divisor.

The present law is based upon correct principles, but should be so

amended as to provide--

(a) For the Repeal of the Act of March 2, 1907.

Notwithstanding the large increase in every other item

connected with the administration of the Post Office

Department, the railroads' pay has been singled out as the

one element in these operations for concentration of

economies. This too, in the face of the fact that the

operating expenses of the railroads have been greatly

augmented by the requirements of the law with reference to

steel equipment, and a general increase in cost

characteristic of all business operations.

(b) For annual weighings, and a definite and just method for

ascertaining daily average weights.

Under the quadrennial weighing all increased weight of mail

during the next succeeding four years is carried by the

railroads without any compensation whatever, which is

manifestly unfair.

The railroads must provide car space and facilities for the

_maximum_ weight offered at _any_ time, yet they are paid

only for the _average_ weight carried. The Postmaster

General's order covering the divisor has unfairly reduced

this _average_.

This provision is essentially necessary in view of the bill

establishing the Parcels Post, effective January 1, 1913,

which will result in taking from the express service traffic

for which the railroad companies now receive compensation

and transferring it to the mail service; the bill referred

to containing no provision for payment to the railroad

companies for the increased tonnage to be handled in mail

cars, although such provision was made for the star routes

and the city wagon service.

compensate for the service.

That the Postmaster General has himself recognized the

justice of such a change, is indicated in the following

quotation from page 3 of House Document No. 105:--

"* * * an additional amount may be allowed for railway post

office cars when the space for distribution purposes

occupies 40 feet or more of the car length. No additional

compensation is allowed for space for distribution purposes

occupying less than 40 feet of the car length. This

distinction is a purely arbitrary one and without any

logical reason for its existence."

(d) For a fair allowance to the railroads for the side and

terminal messenger service which they perform for the Post

Office Department, according to the value of this service to

the Post Office Department.

The necessity for this is also emphasized by the

establishment of the Parcels Post which will undoubtedly add

greatly to the expense of the service.

(e) That all rates of pay should be definite and not subject

to the discretion of the officers of the Post Office

Department.

Other inequities exist under the present law, but are due to

the administrative methods rather than to the law itself.

_Question 2._--Is the underlying principle of the plan embodied in the

enclosed bill a proper basis for compensation? If not, wherein is it

improper, and why?

_Answer._--The underlying principle of the plan embodied in Senate

Bill No. 7371 is not correct. Any plan of compensation based upon

operating cost and taxes, plus six per cent. for profit, is

fundamentally wrong, because it makes no allowance for return upon the

property employed.

Furthermore, such plan is not correct, because it involves paying the

highest rates to the railroad that by reason of physical disabilities

or inefficient methods is most expensively operated, and the lowest

rates to the railroad whose operations are most efficient and whose

service is most satisfactory and valuable to the Post Office

Department. Under the plan proposed, a railroad would be penalized for

all the capital expenditures made by it for the purpose of decreasing

its operating cost, because the more it decreased its operating cost

the more it would decrease its mail pay, although by making this

improvement in operating cost it would have incurred an additional

capital charge upon which it would have to pay dividends or interest.

The ascertainment of the cost to a railroad of conducting the mail

service is necessarily very largely a matter of judgment and opinion,

because a large proportion of the total operating expenses are

expenses common to the freight and passenger traffic and can only be

approximately apportioned and there are various formulas existing for

such apportionment. It would not be right or proper to entrust to the

Post Office Department the discretion of selecting the formulas by

which to ascertain these costs, because the Post Office Department has

an obvious interest at stake, its object always being to reduce the

railroad pay to a minimum.

The estimated cost of a specific service is not a proper basis for

fixing rates for transportation of any commodity. The railroads are

entitled to receive a full and fair return for the value of the

service performed, and the ascertainment of cost of such service is

principally of value as a protection against the establishment of

confiscatory rates.

_Question 3._--What, in your opinion, is a desirable plan for

compensating railroad companies for transporting the mails?

_Answer_.--The existing law has been in effect for nearly forty years,

and those who have worked under it are more or less familiar with its

operations. If it were amended to correct serious inequities, as

suggested in the answer to Question 1, and fairly and impartially

administered by the Post Office Department, it would be preferable to

any untried or theoretical plan that could be proposed.

Very respectfully yours,

COMMITTEE ON RAILWAY MAIL PAY,

(Signed) RALPH PETERS,

_Acting Chairman_.

Transcriber's Notes:

Words surrounded by _ are italicized.

Small capitals are presented as all capitals in this e-text.

Apparent printer errors are retained.