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, and4⁄10of 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 rôle thus played in the drama of the high cost of foodstuffs and the high cost of living generally is apparent. Equally apparent is the rôle 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 ofconstruction 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.
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.
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 possibleby 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.)
In the second place, it has been seen that each of the express companies of the United States concentrates its activities upon a certain section of the country. That is to say, on many occasions a package traveling a long distance may be handled by two or three, or sometimes even four express companies before it reaches its destination. The wastes and superfluous costs therein are evident. There is not only the direct cost of unloading, transferring, and re-loading parcels from one express company to another—and at many points express offices and yards are the width of an entire city apart. There is also the cost of the complicated bookkeeping necessary to determine for what part of the journey of a package each express company has been responsible and accordingly to what share of the express charge each is entitled. That this cost is no mere creature of a brain hell-bent upon Government ownership is proved by the fact that of a total operating expense of $113,721,057 in 1917, exactly $32,272,795 or 30% was paid to office employees. As it stands, this is the largest single item of expense in the express business, nor does this sum include the salaries of the officers and general superintendents and minor managers, nor the salaries of their clerks and subordinates directly engaged in the managing and superintending aspects of the express business. A consolidation of the express companies of the country into one agency would end that large proportion of office work attendant upon the calculation of the pro rata returns to separate express companies, and upon the issue of separate receipts, waybills, etc., and would hence result in still further reduction of express rates.
But, in the third place, there are also to be considered the expenses represented by the employees not in the offices—those on the vehicles, around the stables and garages, and on the trains. Consolidation of the express service with the postal service would result in a consolidation, not only of equipment, but also of personnel. If one truck does the work of two trucks, or four trucks of five, two truck employees can do the work of four, or eight of ten. Where one railway car does the work of two, one railway car crew can do the work of two crews. That such saving would have a not altogether inconsiderable effect upon the operating expenses and hence upon the rates of the express companies is evident from the fact that the wages of vehicle, stable, garage and train employees amounted in 1917 to $23,547,906, or 20% of the operating expenses of the express companies.
In the fourth place, there were in the United States in 1917 some 55,000 post offices. The number of express offices is not definitely known, but it is probably in the neighborhood of 40,000. The possibilities of saving by coöperation and consolidation here are again obvious, particularly when it is remembered that a large section of the activities of practically every post office is given over to handling packages mailed under the parcel-post. Especially in many smaller cities and towns, post offices could handle with little increased cost the business now requiring separate express offices in those localities. Where post office facilities are inadequate to handle the demand now being made upon them, the present express company offices might readily serve to save the cost of additional construction and facilities in the future. The amount of rental saved merely by the consolidation of many different express offices may be indicated by reference to the recent experience of the Railroad Administration in a parallel situation. Similarly, there is possible an extensive consolidation and economizing in stables and garages, office furniture and supplies.
In the fifth place, there is the saving represented in the very nature of the postage stamp itself, which can be sold and accepted for payment of charges only by the Post Office Department. Much of the expense of the express companies in issuing receipts, making statements, checking upon money received, etc., could be saved if the express parcels could proceed under a postage stamp.
Finally, there are the hosts of miscellaneous items of operating expenses in which we must be led to expect saving by all other experience in consolidating similar agencies performing similar services. Some of these expenses might even be eliminated entirely under Government ownership and control. Such are the cost of superintendence and auditing, insurance, the cost of securing traffic commissions, advertising and law expenses, to say nothing of the profits paid stockholders in normal years.
The amount of these savings can only be roughly surmised; but in 1912, Mr. David J. Lewis estimated that they would amount to at least 40% of the total operating expenses. In this connection, it may be remarked in passing that Mr. Lewis's qualifications for throwing light upon the express service problem include not only theoretical knowledge gained by years of study of the problem, both here and abroad; but also practical knowledge of ways and means, as attested by general belief that the establishment of a parcel-post in the United States was due to his analyses more than to the efforts of any other one man; and also by the fact that when the Government in 1918 assumed responsibility for the management of the telephone and telegraph systems of the land, Mr. Lewis was made, and at the time of writing is, the general manager in charge of those systems while under Government control. Certainly, in view of the economies enumerated above as inherent in Government ownership and control of the express companies, on the face of it Mr. Lewis's statement seems extremely reasonable.
So that, if Mr. Lewis's estimate were accurate, and remembering that the operating expenses of the express companies in 1917 represented one-half of the total charges made by the express companies for transportation, a reduction of 20% in the express rates should accompany the acquisition of theexpress companies by the Government, other things being equal. But other things are not equal. Lower rates mean increased business; and in an agency which has developed the field at its disposal so inadequately as have the express companies, each additional unit of business can be handled at a lower cost and hence at a greater profit than each previous unit. This consideration was the primary one advanced by the Interstate Commerce Commission in ordering 16% reduction in the express rates in 1914. So that, the lower amount of profit per parcel being counterbalanced by a greater number of parcels, the economy in a Government postal express should be represented by a lowering of express rates anywhere from 25% to 35% of the present rates.
But up to this point our calculations have assumed that under a Government postal express the railroads would continue to obtain their 50% of the charges on each package transported by express. This method of calculating the return due to the railroad is certainly ingenious in its simplicity and lack of scientific basis, but it is just as certainly unfair to the shipper of parcels by express. Let us consider, for example, two shipments of similar articles under similar conditions—one from New York City to Yonkers, New York, a distance of some 20 miles; the other from New York City to San Francisco, a distance of more than 3,000 miles. In each case, the express companies collect the parcel and deliver it to the railroad in New York City; and collect the parcel from the railroad and deliver it to the consignee, in the first case in Yonkers; and in the second case in San Francisco. In both cases, the services rendered by the express companies are about identical, aside from the different lengths of time during which space and protection in express cars must be afforded. But the services rendered by the railroad companies are far different in the two cases. In the first case, the parcel is carried for less than an hour; in the second place, for some days. Obviously, the share of the railroad in the entire service rendered in transporting the parcels is less in the first case than in the second, but in each case it gets the same share of the total express charge—namely, 50%.
Such a system in its very nature must thwart any attempt to make express rates reflect the value of express service. For, of course, the rates actually fixed endeavor to do justice to both the express companies and the railroads in each case considered above. In the first case, the rate must be high enough so that 50% of it will not be too glaringly little for the express companies to retain for theirrelativelymore important and more costly service of collecting a parcel in NewYork and delivering it in Yonkers. In the second case, the rate must be high enough so that 50% of it will not be too glaringly little to turn over to the railroad for theirrelativelymore important and more costly service of carrying the parcel across the continent. The railroad directors and express company directors cannot be expected to have reached a fair compromise after fighting for their own interests when the contracts were originally made, for, as has been seen, their interests are largely identical. It would seem, then, that only the shipper sending a parcel several hundred miles is charged a fee commensurate with the value of the service rendered him. It would seem that shippers sending parcels shorter distances must be charged too much and that shippers sending parcels longer distances must be charged too little. A glance at parcel post rates proves the validity of this surmise, for parcel post rates are lower than express rates for shorter distances and higher for longer distances. Under the present system of competition between the parcel post and the express companies, the nature of the contracts between the express companies and the railroads compels express rates which unfairly discriminate against the express companies at the shorter distances and unfairly discriminate against the parcel-post at the longer distances.
However, there is no evidence in all this that the express rates as actually levied may not strike a just and equitable average between the rates too low and the rates too high. Let us therefore compare for a moment the railroad costs of the express traffic with the railroad costs of the Postal System. It has been seen that in 1917 the express companies paid the railroads for transporting some 280,000,000 parcels the sum of $113,535,059. In the fiscal year ending June 30, 1917, the Post Office Department paid railroads and other transportation lines for services in transportingall postal matter, including almost 1,120,000,000 parcels, the sum of $63,358,997. (The basis for remuneration to the railroads for transporting postal matter is the size and the weight of the matter transported.) Of course, it must be remembered that for the postal service the railroads furnished the cars. It must be remembered also that the parcels of the express companies averaged heavier weights and travelled longer average distances than the parcels of the parcel-post. Nevertheless, the enormous discrepancy between the two figures cannot be thus entirely explained away. Some of the discrepancy, and obviously a considerable part of it, can be traced only to an unjustifiably high return paid the railroads by the express companies. (Note 4.)
Moreover, the amount thus obtained by the railroads in 1917 from its express traffic was equivalent to about 3½% of the total railroad revenues, although it represented 50% of the total express revenue. Accordingly, even a radical slashing of express rates, with its resulting beneficial stimulation to the express service of the country, could hardly disturb the well-being of the railroads to any serious extent.
Again, the various functions performed by the express companies as subsidiary to the express business proper are on the whole paralleled by similar functions of the Government or other agencies. Money orders, both domestic and international, are issued by the Post Office Department, and in 1917 were issued to the extent of $854,963,806 as against $145,934,982 of the express companies. Telegraph and cable transfers are readily issuable by the telegraph companies themselves. Similarly, the travelers' cheques issued by the express companies could without difficulty and with no less convenience be issued by our large banking institutions performing that service.
It is therefore respectfully submitted that any comprehensive consideration of the express service field in the United States can point only in one direction—toward the consolidation of the express service of the United States with the Postal System of the United States, under the control and management of the Post Office Department.
Many studies advocating Government ownership and management of public utilities find it necessary to hitch their program to one definite mode of procedure. In the case of the express service, however, no such necessity exists. Several modes of procedure are open, and if one of them seems preferable, none of them is impossible, inadequate or inefficient. The most desirable method now available of substituting a Government postal express for our express companies would seem to be a legal and constitutional confiscation of their property and rights, with adequate compensation. The adequacy of the compensation would naturally entail much discussion—on the one side would stand those insisting that the Government pay for only the contemporaneous value of the physical property taken over; and on the other side would stand those insisting that the contracts with the railroads, good will, and other intangible assets of the express companies possess true value despite their intangible nature and should accordingly be purchased. Supporting the first group would be the policy of the present Government which, as we shall see, has placed the capital of the express combination temporarily handling the express business of the country at $30,000,000, or approximately the value of the actual physical property represented by that combination. Supporting the second group is the Interstate Commerce Commission, through its representative, Franklin K. Lane, in its 1912 decision in the matter of the express rates.
A third method presents itself, but its adoption could be considered only as deplorable, even as reprehensible—namely, purchase of the express companies at their paper valuation. As we have seen, the capitalization of the express companies bears no relation to the value of their property, and chiefly represents, not money invested, but profits accumulated. As a matter of fact, the Supreme Court of the United States some years ago decided that capitalized excess profits may not be used as a basis of computing fair rates of dividends upon capital as against the state. Possibly Congress might find it wise to settle the whole problem in any bill providing for Government acquisition by abiding in the judgment of the Interstate Commerce Commission, leaving the Government or the express companies, or both, the right to appeal to the Supreme Court if dissatisfied.
The express service would represent too unimportant and too different an activity from railroad freight service to beefficiently handled now by the railroads. And mere regulation, as has been seen, affords no solution, for the profits and the equipment represent but an infinitesimal part of the operating expenses.
At this point, the Socialist or the socialist or the person who falls loosely into the category of "radical" or perhaps even the merely "liberal" advocate of the public ownership of public utilities will doubtless exclaim: "But why compensate at all? Isn't it bad enough to have so long permitted a group of entrepreneurs to grow rich by exploiting for their own gain a field which all experience outside the confines of North America proves a field of public endeavor? Why add insult to injury by actually paying them for rendering unto the people the things which belong to the people? Why shall not the Government establish its own express service, as it established the parcel-post, and leave the express companies, so long unchallenged in their activities, to meet Government competition as best they may? If they can meet it, well and good—if they can't, the essentially parasitic nature of their business is proved beyond cavil."
Very good, gentlemen; and if he may be permitted a personal reference, the writer of these lines is in perfect accord with you. The rates of the private express companies under your plan would still be under the control of the Interstate Commerce Commission, and accordingly these private agencies would be unable to compete unfairly with the new Government service by establishing along any of the more popular routes rates far below the cost of the service, in order to cripple the Government service along these routes and hence in its entirety. Moreover, there is every probability that the legislative grant to the Government of a monopoly of the express service of the United States would be upheld by the courts, for a good case could be made out for the essential nature of the express business as a part of the mail business in which the Government has been granted a monopoly. Indeed, monopoly was originally granted the Government mail service to prevent the competition which the Wells-Fargo Company soon after its organization was conducting in the business of carrying letters.
But, gentlemen, what are the chances that a sufficient number of your fellow-countrymen can be brought into accord with you—not merely in their intellectual convictions, but in convictions, intellectual and emotional, so strong that they can be transmuted into a sufficient number of votes in the ballot box to make our lawmakers at Washington give heed—at least in the immediate future? For the problem of the expresscompanies will come up for adjudication, temporary or long-enduring, within some months, or at least within a year or two. Obviously, the present status of the express companies, as described below, will end soon after the war. And Government ownership of the express service, as has been indicated, is so infinitely more advantageous than private ownership, that if Government ownership can be obtained only by your (and my) method, and if we divide our ranks by refusing to support any other method short of one vicious in both principle and practice, the country may return once more to the private express company method. As has been indicated, the whole problem concerns scarcely ten or twenty millions of dollars in a business whose operations amount to more than two hundred millions; and whatever method be adopted, it can hardly effect a difference of 5% one way or another in express rates. If the question were one similar to the Government ownership of railroads, it would indeed be worth delay to obtain a comprehensively adequate method of taking them over by the Government, for marked differences in rates would then result. But the differences in express rates involved in different methods of purchasing the companies would hardly recompense for the delay involved in the postal service's mastery of a new technique, in its assimilation of details which can be mastered only through experience, in tedious litigation, in political wirepulling and manipulation, and in determination of constitutionality, all of which features will accompany the establishment of a new Government postal express independent of the present express companies.
For, by the time that the dissolution of the American Railway Express Company (see below) will come up for final decision, new equipment and the materials for new equipment will still be scarce, very scarce, and very costly in the United States. It would be unfairly prejudicial to an infant Government postal express service if it were hampered by scarcity or high cost of equipment. Indeed, in the long run, in an industrial situation which for many months after peace will be unsettled as a result of the war, it might even be more economical to purchase the express companies outright. And if once the express service is released to its former owners, the difficulty of prying it loose again will involve far greater loss than the loss in adopting even the least justifiable method of consolidating it in the Postal Service.
As the United States more and more radically altered its industrial processes to correlate them with the needs impressed upon the national life by the Great War, the express companies more and more plainly gave evidence of membership in that group of public utilities which could not unaided weather the storm. Not so soon as in the case of the railways, but not any considerable length of time afterwards, Government intervention became thesine qua nonof a continuation of the express business of the United States on an efficient plane. On May 28, 1918, the United States Railroad Administration made public an arrangement with the express companies by which the express service of the country has since been conducted up to the time of writing. Of that arrangement, the salient features follow:
1. A new express company, known as the American Railway Express Company, was organized by the Adams, American, Southern and Wells-Fargo Express Companies.
2. The new company is capitalized only to the extent of the actual property and cash represented in its formation and activities—namely, $30,000,000, and capital stock has been issued for that amount and further stock will be sold at par.
3. With the American Railway Express Company the Railroad Administration made a contract for conducting the express business on all carriers included in the Railroad Administration.
4. Under that contract, the Railroad Administration receives 51¼% of the operating revenues.
5. The 49¾% remaining to the express companies must cover the operating expenses, taxes, profits and a dividend of 5% on the stock of the American Railway Express Company.
6. In any profits remaining, the first 2% is divided equally between the Railroad Administration and the American Railway Express Company; of the next 3%, the former receives two-thirds and the latter one-third; of all further profits, the former receives three-fourths and the latter one-fourth.
7. The amount of the express rates charged and control over the character of service supplied are vested in the Director-General of Railroads.
Subsequent changes in the arrangement of May 28, 1918, have been as follows:
8. In July, 1918, the Interstate Commerce Commission approved an increase of 10% in express rates, all of which was absorbed, however, according to both the Interstate Commerce Commission and the Director General of Railroads, in wage increases effective July 1, 1918.
9. On September 13, 1918, the Director General of Railroads requested of the Interstate Commerce Commission an opinion concerning a contemplated absolute increase in the express rates on each package, irrespective of weight and distance travelled. The proposed increase would be equivalent to possibly 9% on all traffic; but again, according to the Director General of Railroads, it would cover only increased wages. The Commission was asked only if the proposed increase would net the sum needed, and replied on October 22, 1918, in the affirmative. However, the Commission significantly called attention to the possibility of increasing express revenues by lowering the percentage on all express charges received by the railroads.
10. On November 18, 1918, President Wilson issued a proclamation specifically taking, through Secretary of War Baker, possession, control, operation and utilization of the American Railway Express Company, in order to make the Government's control over that agency indisputably clear. The powers assumed by the Government were delegated to the Director General of Railroads to be utilized according to the prior contract made between him and the American Railway Express Company.
11. On January 1, 1919, an increase of about 9% in express rates went into effect, making a total increase since the United States entered the European War of about 19%, this representing the only increase in express rates since the reduction of 16% ordered in 1912 and effective in 1914, and representing also a smaller increase in rates than was found necessary by the railroads in their freight traffic.
The advantages of this arrangement over its predecessor are undeniable. The consolidation of effort, the reduction in the number of separate express agencies, the minimizing of accounting, the simplification of management, the pooling of equipment and facilities,—these administrative reforms should result in a marked decrease in relative operating expenses. The transfer of control from a moneyed group—or rather from three moneyed groups—interested primarily in private profits to a public official seeking only service to the public, this similarly is a definite achievement. The limitation of the capital stock to the actual cash value of the property and the fixing of the dividends on that stock at a nominal rate, these again are as notable gains in the realm of the express service as the profit-sharing arrangement between the Government and the private companies.
As has been seen, the increases in express rates since the birth of the American Railway Express have been absorbed in wage increases. Now, in a statistical study, the phrase "wage increases" will connote a mere item of expense, but to the wage-worker it will connote happiness. It means more nourishing food; it means more wholesome dwelling conditions; it means more schooling for the children; it means more recreation; it means more medical care and less illness; it means especially less gnawing fear of what the morrow may hold. The example of the Railroad Administration indicates the widespread services in lessening want or even in increasing comforts which Government control brings in its wake—the raising of all wages to that level below which a decent standard of living cannot be maintained and the abolition of artificial and undemocratic special wage privileges of sex or color in favor of equal pay for equal work. A country which hitches its wagon to a world made safe for democracy can ill afford in any of its industrial activities underpaid workers, and least of all in any of its public utilities. If a Government Postal Express should be compelled to devote all its savings over the private express system only to wage increases among the thousands of men and women express employees, instead of being able to devote some or most of them to lowering the rates, the inauguration of a Governmental Postal Express would be still more than justified.
Nevertheless, the advantages of the present system over the old are not sufficient. A large majority of the 25,000,000 persons served by the rural postal delivery are still without express service. There is still little opportunity for the direct transmission of foodstuffs from the producer to the consumer which at the present time presents the most hopeful method of attacking the soaring cost of food. There is still much potential and helpful express business which has not been called into being, and there is accordingly a considerable lowering in the rates which has not yet been effected. There is still no possibility of coordinating postal facilities withexpress facilities. There is still no change in the method of remunerating the railroads, and hence in the unscientific and discriminating methods of fixing rates. In a word, if this study may be said to have proved anything, it has proved that the express service belongs to the Post Office Department, not to the Railroad Administration; indeed, one can hardly avoid the deduction that the present war-time express system could have been adopted only from considerations of either temporary political expediency or of transient personal efficiency; or else of inattention to the true nature of the problem presented.
But material gains may not be the summum bonum of the express business. The express service is much more than an important business undertaking, and it is much more even than a valuable agent in quickening the industrial activities of the United States—it is, or rather it can be, one of the most serviceable media for the development of an American culture as that culture expresses itself in the economic processes of the nation. The future of the nation's express service is basically a problem of national morale. In the decades before April 6, 1917, there was no United States esprit, no United States national life, no United States unity. There were only separatist esprits; there was only class life; there was only geographical unity. The war found us an unintegrated miscellany, and our Government a creature strangely and even desirably aloof from the thoughts and aspirations of our daily lives. And now, almost overnight, sacrifice in France and at home has welded us into one people. Shall we remain one, or shall we revert to factions, to factions either at loggerheads with one another, or else indifferent one to the other? Assuredly we shall soon re-degenerate into warring factions unless our still largely inchoate strivings for national unity can discover vehicles to carry them forward. A Government which has become truly a people's Government will long continue in the United States only as it draws unto itself and maintains both the material and the immaterial agencies which dive down to the depths of our national daily existence and bind us together. More powerfully than any other of these forces, our vast public utilities can, as an integral part of the Government, retain our Government as the hub of our universe. And although of all the public utilities the railroads undoubtedly present the most hopeful source of this re-vitalization of our national life, yet a Government express service can also helpin no small degree, both in itself and as a sharer in the entire general urge towards a democratically-socialized state, to preserve and even to invigorate the national morale.
And the future of the express service concerns not only national morale, but also individual morale. Aside from a few serviceable and hitherto usually unappreciated social servants, whether in private or in public bodies, success in America has lain along the lines of private enterprise for private gain. For the first time, a widespread summons for service to the people has been able during the nineteen months of war to supplant in the hearts of our most capable administrators the summons to exploitation of the people. For nineteen months they have subordinated self and enthroned society. Shall we send them back to the limbo of self-aggrandizement or shall we carve out new paths for the development of character in our American citizens? For obviously the decades immediately at hand are to witness also a direct growth of the control of the workers over their industry, whether it be private or public industry. Who can hope to measure the gain in individual morale when a man realizes that his own advancement depends upon the extent to which he can serve others, not upon the extent to which he can serve himself; when such a public utility as the express companies is in the hands of administrators who have turned their attention away from endeavors to derive as high rates as possible from the public to endeavors to charge the public as low a rate as possible? If we hope to keep unnarrowed, and even to broaden, the present fields in which opportunity is given our fellow-citizens to devote their lives primarily to their fellows' service rather than primarily to their own gain, any national activity as socially-necessary and as nationally-significant as the express companies must inevitably revert in ownership to the nation to whose needs it ministers, and the men and women within the machinery of its operation must serve owners who are not a handful of individuals, but the people, all the people who make up America.
The contracts made by express companies with railroads usually provide that the railroad must:
1—Furnish facilities for the prompt transportation of express matter, accompanied by express messengers, on passenger and mail trains; in baggage and combination cars; or on special trains made up of express cars only.
2—Turn over to the express company, i. e., give it a monopoly of, all merchandise offered for transportation on passenger trains, except personal baggage, dogs, corpses, etc.
3—Refuse any other express company facilities for the transportation of express matter.
4—Grant the express company, wherever possible, space in railroad stations, without charge where such grant causes no extra expense to the railroad.
5—Grant free transportation to officers and employees of the express company, and for its personal property and supplies.
6—Permit its employees at stations, etc., wherever possible, to be agents also of the express company.
On its side, the express company must:
1—Pay the railroad an agreed percentage (usually about 50%) of the charges levied and collected by the express company for its service of sending matter by express.
2—Throw open its books and tariffs to the scrutiny of the railroad and furnish the railroad whatever additional documents and records may be necessary to determine the correctness of the sums assigned the railroad by the express company.
3—Carry free of charge money and other matter concerned with the business of the railroad.
4—Be responsible for any damage to the expressed goods.
5—Make its charges at least 150% of the freight charge of the railroads for similar merchandise. (The present charges average about 300% of the freight charges.)
6—Furnish, heat, light and man the cars necessary for the transportation of express matter.
Note 1—This estimate is based on the following considerations. For the fiscal year ending June 30, 1911, the official report of the Interstate Commerce Commission gives the average charge per shipment of the Adams and the United States Express Companies on August 18, 1909, and December 22, 1909, respectively—namely, $.4962 and $.4999, or an average of $.4980½ per shipment in 1909. (Many shipments contain more than one parcel.) By dividing this sum into the known total amount of money collected by the express companies for the express services, we can obtain the total number of shipments for that year.
But with the establishment of the parcel post in 1913 the character of the express business underwent a radical change. The fact that the parcel-post limits its shipments to parcels under a certain weight and under a certain size is one factor of the situation tending to transfer to the parcel-post from the express companies a larger number of smaller packages than of larger packages, and hence to make the average charge per package of the express company in 1917 higher than in 1909. A second factor tending in the same direction is the fact that the parcel-post limits the amount of insurance which may be placed on a valuable package, while the express company has no such limit, thereby keeping with the express company most of the valuable packages on which the high insurance makes a high rate. A third factor tending similarly is the fact that for shorter distances the parcel-post rate is lower on the whole than the express rate, whereas for longer distances the express rate is lower on the whole than the parcel-post rate; and accordingly the express companies' average haul was longer and hence at a higher rate in 1917 than in 1909, although not so much longer as might be expected, as has been shown above. A fourth factor of similar effect is the railroad congestion in 1917, causing the expressage of many heavy shipments which had formerly been dispatched as freight, especially in the latter part of the year.
The chief factor moving in the opposite direction is that of the reduction of 16% in express rates effective in 1914; but there is every evidence that the effect of the first four factors outweighs to a considerable extent the effect of the last. So that we should not go far wrong if we assume that the average chargeper parcelof the express companies in 1917 was $.80. This estimate is supported by an investigation of the Interstate Commerce Commission for April, 1917, in which the average chargeper shipment(often including more than one parcel) was found to be $.85.
By dividing $.80 into the total transportation revenues of the express companies in 1917, we get 280,000,000 as the number of parcels carried by them in that year.
The accuracy of this estimate of the number of express parcels may be gauged from an investigation of the Interstate Commerce Commission for the number of parcels carried by express companies during the month of April, 1917. In that month, some 21,100,000 shipments were carried, from which a total of some 250,000,000shipmentsfor the whole year may be deduced. Remembering, however, that the freight congestion of last winter increased toward the end of the year the normal acceleration of the number of shipments dispatched, and remembering also that manyshipmentscontain more than oneparcel, there would seem to be little variation required from our first estimate of 280,000,000 parcels carried by the express companies in 1917.
Note 2—Many, if not most, shippers, especially in the smaller cities and towns, are able to transport their parcels to the parcel-post station without additional cost to themselves. The fee collected from them should therefore not cover also the cost of collecting packages from other shippers. This statement holds especially for the person who ships parcels only occasionally, not primarily as a business transaction, and who has little difficulty in taking or sending them to the dispatching station. On the other hand, without the pick-up feature of the express service, vehicles would be necessary to convey larger packages or a great number of smaller packages from other shippers; so that this feature of express service is as necessary for certain shippers as it is unnecessary for others and should hence not be included in the charges levied on the latter. Again, in theory there would seem to be little reason why the cost of collecting the express fee from the consignee on delivery should be distributed among the express fees on packages which are prepaid. This situation obtains in the present practice of the express companies, where the one fee includes all services except those of an especial nature. But in practice the present parcel-post method of charging a separate fee for collecting on delivery will have to be radically simplified and cheapened if a Government postal express is to follow this separate fee arrangement. For in 1917 less than 1% of the parcels sent by the parcel-post were dispatched C. O. D. The question is one of administrative efficiency, and in practice the present one-fee-for-normal services system of the express companies might prove more desirable than the theoretically more desirable separate C. O. D. fee of the present parcel-post.
In other countries, practises in this respect vary. In Austria, Italy, Rumania and Switzerland, a special fee is charged for collecting on delivery. Belgium renders this service free for packages upon which the postage is above ten cents and Denmark, when the weight of the package is above ten pounds. Germany collects free upon packages above ten pounds and renders the service at a fee upon packages under that amount.
Note 3—The possibility of economy in a postal express as contrasted with the express companies may be readily understood by a glance at the following table of the equipment required and utilized in 1917 by the express companies of the United States:
In 1917 there were about 1,800 railway postal cars in operation. These are furnished the Post Office Department by the railroads. As has been said, other corresponding equipment used by the Post Office Department is usually owned by private contractors who furnish transportation by wagon and by automobiles on contract, so that it is impossible to get accurate figures concerning it. Some idea of the equipment needed, however, may be gleaned from the postal operations within the cities of Chicago, Pittsburgh, Philadelphia, Detroit, Washington, St. Louis, Indianapolis and Nashville. In these cities all the transportation of mail between the railroad stations and the post offices as well as in the collection and delivery services is performed by automobiles owned by the Post Office Department itself. The number of automobiles required for the service in these citiesand operated in them in 1917 was 541. This method of conveying postal matter within the cities mentioned represents a departure from the contract system which the Postmaster-General asserts should be and will be extended. Accordingly, more and more the economies under this head in consolidating the express service in the Postal System would accrue to the Post Office Department directly rather than indirectly.
Note 4—The example of the United Kingdom substantiates the last surmise. For in the United Kingdom the railroads, all privately owned, are given 55% of the total charges on allparcel-post parcelscarried by them, irrespective of distance. (And there is evidence that this remuneration is expressly considered too generous in the United Kingdom.) Now, the parcel-post charges in the United Kingdom are considerably lower than the express charges in the United States not only absolutely, but also relatively to the different values of money in the two countries. But the railroads' service in carrying a parcel-post package, aside from furnishing mail cars, is no more expensive than their service of carrying an express package of the same weight. If the railroads of the United States were to carry parcels at 55% of theparcel-post chargesor at that percentage of the parcel-post charges in this country which, considering the difference of conditions in the two countries, would correspond to 55% of the parcel-post charges in the United States, they obviously would be receiving much less than 50% of thetotal express charges. Nor should the fact that express packages on the whole may travel farther and weigh more than parcel-post packages invalidate the argument, for the present contracts with the railroads have not been altered to any extent so as to meet any such condition due to the advent of the parcel-post—in the year before the parcel-post was established the railroads got 49% of the net express charges and in 1917, 51%. So that the question as to whether the railroads of the United States obtain on the whole too high a proportion of the express rates because of unduly high percentage clauses in the express company-railroad company contracts is, if not thus answered, at least illumined.
ADAMS EXPRESS COMPANY, et al—Response in Interstate Commerce Commission Docket No. 4198, opposing decrease in express rates (1911).
CENSUS BUREAU—
Census of 1890: Transportation in the United States.Census of 1890, Bulletin: Transportation Business in the United States (Part II), Transportation by Express Companies (1894).Express business in the United States (1907).
Census of 1890: Transportation in the United States.
Census of 1890, Bulletin: Transportation Business in the United States (Part II), Transportation by Express Companies (1894).
Express business in the United States (1907).
CHANDLER, WILLIAM H.—The Express Service and Rates (1914).
CONGRESSIONAL RECORD, 1911 AND 1912—Speeches, bills, etc., concerning the parcel-post and express service.
DEPARTMENT OF AGRICULTURE—
Annual Reports, Secretary of Agriculture, 1917 and 1918.Farmers' Bulletins Nos. 594, 688, 703, 922, 930 and others relating to marketing by parcel-post.
Annual Reports, Secretary of Agriculture, 1917 and 1918.
Farmers' Bulletins Nos. 594, 688, 703, 922, 930 and others relating to marketing by parcel-post.
FIELD, ARTHUR S.—Rates and Practises of Express Companies; and The Express Charges Prescribed by the Interstate Commerce Commission, American Economic Review, 1913, volume 3, pages 314 and 831.
INTERSTATE COMMERCE COMMISSION—
Annual Reports, Statistics of Express Companies, 1909-1918.Bulletin 13: Interpretations of Accounting Classifications ... in accordance with ... the Act to Regulate Commerce (1917).Classification of Expenditures for Real Property and Equipment of Express Companies (1908).Classification of Operating Revenues of Express Companies, etc. (1912).Dockets No. 4198, 1280, 1911, 1916, 2175, 2176, 2246, 4302. (In re Express Rates, Practises, Accounts and Revenues.) 1912.Brief on Behalf of Shippers (Fairchild). See also Adams Express Company, above.Report No. 1498: Hearing and Supplemental Order No. 15 (1915).Docket No. 9972 (Proposed Increase in Express Rates). June, 1918.Equity No. 4198 (In re Express Rates, Practises, Accounts and Revenues): Released rates (1917).Ex parte 64: In re Increase in Express Rates (October, 1918).Uniform System of Accounts ... in accordance with ... Act to Regulate Commerce (1914).
Annual Reports, Statistics of Express Companies, 1909-1918.
Bulletin 13: Interpretations of Accounting Classifications ... in accordance with ... the Act to Regulate Commerce (1917).
Classification of Expenditures for Real Property and Equipment of Express Companies (1908).
Classification of Operating Revenues of Express Companies, etc. (1912).
Dockets No. 4198, 1280, 1911, 1916, 2175, 2176, 2246, 4302. (In re Express Rates, Practises, Accounts and Revenues.) 1912.
Brief on Behalf of Shippers (Fairchild). See also Adams Express Company, above.
Report No. 1498: Hearing and Supplemental Order No. 15 (1915).
Docket No. 9972 (Proposed Increase in Express Rates). June, 1918.
Equity No. 4198 (In re Express Rates, Practises, Accounts and Revenues): Released rates (1917).
Ex parte 64: In re Increase in Express Rates (October, 1918).
Uniform System of Accounts ... in accordance with ... Act to Regulate Commerce (1914).
JOHNSON, E. R., and HUEBNER, G. G.—Railroad Traffic and Rates, Volume II (1911).
KIRKMAN, M. M.—The Science of Railways: Baggage, Express and Mail Business (1896).
LEWIS, DAVID J.—
A Bill to Take Over the Express Companies of the United States (1911).A Brief for a General Parcel Post (1913).Postal Express as a Solution of the Parcel Post and High Cost of Living Problems (1912).Study in Some Proposed Improvements to the Parcel-Post (1915).
A Bill to Take Over the Express Companies of the United States (1911).
A Brief for a General Parcel Post (1913).
Postal Express as a Solution of the Parcel Post and High Cost of Living Problems (1912).
Study in Some Proposed Improvements to the Parcel-Post (1915).
POST OFFICE DEPARTMENT—
Annual Reports, Postmaster General.Comparative Statements (Blue Prints) on Operations of Parcel-Post.
Annual Reports, Postmaster General.
Comparative Statements (Blue Prints) on Operations of Parcel-Post.
PRESIDENT OF THE UNITED STATES—A Proclamation (No. 1497) Taking Possession and Control of the American Railway Express Company (November 16, 1918).
STIMSON, A. L.—
History of the Express Companies (1858).History of the Express Business (1881).
History of the Express Companies (1858).
History of the Express Business (1881).
THOMPSON, SLASON—Postal Express vs. Parcel-Post, A Review of Congressman David J. Lewis's Bill Proposing that the Government Take Over the Express Business (1911).
TUCKER, T. W.—Waifs from the Way-bills of an Old Expressman (1872).
UNITED STATES OFFICIAL BULLETIN,October 31, 1918—Statement of Contract between the Railroad Administration and the Express Companies concerning the American Railway Express Company.
UNITED STATES SENATE COMMITTEE ON POST OFFICE AND POST ROADS—
Hearings before Sub-Committee on Parcel-Post, November 7, 1911-January 16, 1912.Parcel Post in Foreign Countries (1912).Table Showing Data concerning Parcel-Post Systems of ... World (1912).
Hearings before Sub-Committee on Parcel-Post, November 7, 1911-January 16, 1912.
Parcel Post in Foreign Countries (1912).
Table Showing Data concerning Parcel-Post Systems of ... World (1912).
WELLS, HENRY—Sketch of the Rise, Progress and Present Condition of the Express System (1864).