On the basis of s.p.a.ce used and facilities provided for the mails, the Burlington road is underpaid $119,000 a year on this route.

Two-thirds of the weight of mail is carried in special trains run at great speed and unusual expense, for which no extra allowance is made.

The extension of the route to Omaha is across Iowa, where it is "Land Grant," and subject to land grant deductions.

The Government made a "gift" to the company in 1856 of lands amounting to 358,000 acres and then valued at $1.25 per acre, or $447,500.

The mail pay deductions to June 1, 1910, on account of this Iowa land grant aggregate $1,650,000, and still continue at the rate of $62,000 a year.

Neither in the foregoing six statements of results upon separate mail routes, nor in the general statement of results upon the Burlington Road has any allowance been made for the expense to the company of what is called the "Mail Messenger Service."

At all points where the post office is not over one-fourth of a mile from the railroad station the railroad company must have all the mails carried to and from the post office.

What an important item of expense this amounts to appears in the following extract from the Report of the Wolcott Commission, which states:

"Out of 27,000 stations supplied by messenger service 7,000 are paid for by the Department at a cost of between $1,000,000 and $1,100,000 per annum, leaving the other 20,000 stations to be supplied by and at the expense of the railroads."

Investigation has shown that on mail routes, where the average mail pay of the railroad company is $900 a year, the average cost of this mail messenger service is $400, calculating only $100 as the expense for each station where they are required to perform the service.

There are instances where the company pays in cash each year, for delivering the mails between station and post office, considerably more than the Government pays for the entire mail service over its line of road. There is no such feature in the express service.

WHY DO RAILROADS CARRY THE MAILS WITHOUT PROFIT?

The question is sometimes asked why the railroads continue to carry the mails if there is no profit in the business. Carrying the mails is not the only traffic which railroads take upon terms that would bankrupt them if applied to all their business.

There is no profit in running pa.s.senger trains on most railroads; that is, the receipts from all the traffic carried on pa.s.senger trains are not sufficient to pay a train mileage or car mileage share of operating expenses and taxes and charges for the use of capital. But a large part of this cost of conducting the business of a railroad, such as taxes, interest, maintenance of roadway, general office expenses, and many others, would continue substantially the same if the pa.s.senger trains were discontinued. Having the railroad, and its taxes, and interest, and maintenance expenses to meet, anyhow, no railroad can afford to refuse any income from pa.s.senger trains that amounts to more than their train operating cost. On the same principle they accept low rates per mile as a share of through pa.s.senger fares which, if applied to all pa.s.senger fares, would show a loss. The road is there, the trains are running, and the cars only partially loaded; the addition of through pa.s.sengers may not materially increase the expense, and the road is better off to accept the business at less than the average cost, rather than to reject it. But whatever the pa.s.senger trains lose must be made up by the freight trains if the road is to continue in business.

The constant aim of the managers of the railroad is to secure from each cla.s.s of traffic not only the operating cost peculiar to that traffic, but a proportion of the general cost; but business is not necessarily rejected on which it is impossible to secure such proportion.

Many of the reasons which impel them to run pa.s.senger trains without profit apply to their acceptance of the Government mails. They facilitate the freight business; it is better to carry them at a loss than not to carry them at all.

But is that any reason why the Government should not pay fair value for what it receives? Is it good policy for the Government to force upon the companies the alternative of carrying the mails at a loss or refusing to carry them at all?

What are the mails?

They are the letters and packets that are conveyed from one post office to another under public authority.

Who conveys them? The railroads convey nine-tenths of them.

The railroads are the mail service of this country. The Post Office Department states that it receives from the people who use the mails eighty-four dollars on every one hundred pounds of letters and post cards. Who makes that money for them? The railroads. The railroads convey those letters and cards from post office to post office--not the Government.

For a service like that the Government can afford to pay.

What does it pay?

On the great bulk of the business the railroad companies which do the work and earn the money receive less than two dollars a hundred. On every pound of first-cla.s.s mail the Government collects eighty-four dollars a hundred.

The fact that the Congress, for purposes of general education or other reasons, thinks it is good public policy to carry the magazines and other second-cla.s.s matter at one dollar a hundred is something about which the railroads have nothing to do and nothing to say.

The mail pay of the railroads has been reduced in the past four years more than eight million dollars a year. Part of this was done by act of Congress, but the greater part came from the arbitrary and illegal Cortelyou order.

These reductions were made without any hearing being granted to the railroads. Hearings were refused by the Committee which reduced the pay three and a half millions, and no pretense of a hearing was made by Secretary Cortelyou when his autocratic order was issued reducing the mail pay approximately five million dollars a year. This order was an arbitrary and unwarranted and illegal exercise of executive power.

The last hearing allowed to the railroad companies on this subject was by the Wolcott Commission, 1897 to 1900, composed of eminent Senators and Representatives. They reported, after two years' investigation, that the mail pay was reasonable and should not be reduced. Upon the question whether railroads should be asked to carry the mails at a loss their report expressed the following views:

"It seems to the Commission that not only justice and good conscience, but also the efficiency of the postal service and the best interests of the country demand that the railway-mail pay shall be so clearly fair and reasonable that while, on the one hand, the Government shall receive a full _quid pro quo_ for its expenditures and the public treasury be not subjected to an improper drain upon its funds, yet, on the other hand, the Railway Mail Service shall bear its due proportion of the expenses incurred by the railroads in the maintenance of their organization and business as well as in the operations of their mail trains.

"The transaction between the Government and the railroads should be, and in the opinion of the Commission is, a relation of contract; but it is a contract between the sovereign and a subject as to which the latter has practically no choice but to accept the terms formulated and demanded by the former; and, therefore, it is inc.u.mbent upon the sovereign to see that it takes no undue advantage of the subject, nor imposes upon it an unrighteous burden, nor 'drives a hard bargain' with it. The Commission, therefore, believes that the determination whether the present railway mail pay is excessive or not should be reached, as near as may be, upon a business basis, and in accordance with the principles and considerations which control ordinary business transactions between private individuals."

THE POSTAL CAR PAY.

The wide credence which has been given to the statement that the Government is paying to the railroads an annual rent for postal cars equal to the cost of building them is remarkable.

The Government does not pay a rental for any car. The idea is an erroneous one, and is based upon ignorance regarding the payment of what is called "Post Office Car Pay."

Originally, the mail business on railroads was the transportation of mail bags, and was essentially a freight traffic. But its character has entirely changed.

The business now consists almost wholly in providing moving post offices, expensive to build and expensive to operate, in which the average weight for which pay is received is about two tons in full postal cars and six hundred pounds in apartment cars.

The Post Office Department weighed all the mails carried in all postal cars and apartment cars in the country during October, 1907, and the average weight of mail on the Burlington road loaded in a forty-foot postal car was found to be less than 2,000 pounds; in fifty-foot cars it was 2,500 pounds; and in sixty-foot cars it averaged less than 4,500 pounds; in apartment cars it was 607 pounds.

The average load carried in an ordinary freight car on the Burlington road is from 36,000 to 40,000 pounds. Railroads, as a rule, haul a ton of paying or productive freight for every ton of dead or unproductive load. In the Government mail business they carry nineteen tons of dead weight for each ton of paying weight.

These cars are fitted up as post offices and are used for distribution en route in order to expedite and facilitate the prompt transmission and delivery of mails. They largely take the place of very expensive distribution offices in cities.

The railroads provide cars for freight traffic, but refused to build, and maintain, and haul these moving post offices with their clerks and paraphernalia, without pay. That is the post office car pay of which so much is said.

The truth regarding this feature of the subject is clearly stated in the following recent letter from the Postmaster-General:

(_Congressional Record_, March 5, 1910, 61st Congress, Second Session, Vol. 45, No. 61, Page 2852.)

LETTER OF THE POSTMASTER-GENERAL RELATIVE TO THE COST OF FURNISHING AND OPERATING RAILWAY POST OFFICE CARS.

"OFFICE OF THE POSTMASTER-GENERAL, WASHINGTON, D.C., March 2, 1910.

"Hon. JOHN W. WEEKS, _Chairman Committee on Post Offices and Post Roads, House of Representatives_.

"MY DEAR SIR: In response to your inquiry made of the Second a.s.sistant Postmaster-General in regard to the cost of maintaining and operating railway post office cars and its relation to the compensation received by railroad companies for the same and your reference to the speech delivered by Senator Vilas on the subject in the United States Senate, February 13, 1895, I have the honor to advise you as follows:

"The Department has not at this time sufficient information upon this point to give from its own records a reliable estimate. As you are aware, we have recently asked railroad companies to submit answers to inquiries with reference to the cost of operating the mail service, and it is believed that when these shall have been received we will be in a position to furnish such information. Inasmuch, however, as it may be of importance to you to have estimates made from time to time by others and such incomplete information as we have at present, I submit the following:

"The cost of operating a railway post office car has been variously estimated (but not officially by the Department) as from 15 to 30 cents a car mile. The average run per day of such a car is about 300 miles. Estimating the cost at 18 cents a car mile, the total cost of operating such car for one year would be $19,710.

"The specific items which const.i.tute this total cost are not definitely known to the Department. However, as to the cost of lighting, cleaning, repairs, etc., the General Superintendent of Railway Mail Service furnished the following estimates before the Commission to investigate the postal service in 1899, viz.: Lighting, $276; heating, $365; cleaning, water, ice, oil, etc., $365; repairs, $350; proportion of original cost of car (estimating the life of a car at fifteen years and the original cost at $6,000), $400; total, $1,756. Recent inquiry gives the following as the approximate cost of maintaining a car at the present time: Lighting (electric), $444; heating, $150; cleaning, $360; repairs, $300; oil and bra.s.ses, $120; interest on cost of car (at $7,500), $300; annual deterioration (estimating the life of a car at twenty years), $375; total, $2,049. These figures give the cost of a car built according to the Department's standard specifications. The cost of modern steel cars being built by some of the railroad companies is from $14,000 to $15,000.

"The compensation received by a railroad company for operating a car and carrying the mails in it would be approximately as follows:

"The pay for a 60-foot car at $40 a track mile per annum, for a track mileage of 150 miles, would be $6,000. The average load of a 60-foot car, according to statistics obtained recently, is 2.83 tons. The rate per ton of an average daily weight of 50,000 pounds carried over the route is $25.06. At this rate the company would receive $10,637.97 per annum for the average load of mail hauled in the car. This sum added to the specific rate for the railway post office car ($6,000), makes the total pay for the car and its average load $16,637.97 per annum.