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THE MAIL PAY ON THE
BURLINGTON RAILROAD

Statements of Car Space and all Facilities Furnished
for the Government Mails and for Express and
Passengers in all Passenger Trains on
the Chicago, Burlington and
Quincy Railroad




Prepared in accordance with requests of the Post-Office Dept.




THE MAIL PAY

ON THE

Chicago, Burlington & Quincy Railroad


The present system under which the Government employs railroads to
carry the mails was established in 1873, thirty-seven years ago. Under
this system, the Post Office Department designates between what named
towns upon each railroad in the country a so-called "mail route" shall
be established. Congress prescribes a scale of rates for payment per
mile of such mail route per year, based upon the average weight of
mails transported over the route daily, "with due frequency and
speed," and under "regulations" promulgated from time to time by the
Post Office Department. To this is added a certain allowance for the
haulage and use of post office cars built and run exclusively for the
mails, based upon their length. The annual rate of expenditure to all
railroads for mail service on all routes in operation June 30, 1909,
was $44,885,395.29 for weight of mail, and for post office cars
$4,721,044.87, the "car pay," so-called, being nine and five-tenths
per cent of the total pay. The payment by weight is, therefore, the
real basis of the compensation to railroads. The rate itself, however,
varies upon different mail routes to a degree that is neither
scientific nor entirely reasonable. The rate per ton or per hundred
pounds upon a route carrying a small weight is twenty times greater
than is paid over a route carrying the heaviest weight. The Government
thus appropriates to its own advantage an extreme application of the
wholesale principle and demands a low rate for large shipments, which
principle it denounces as unjust discrimination if practiced in favor
of private shippers by wholesale. The effect of the application of
this principle has been to greatly reduce the average mail rate year
by year as the business increases. This constant rate reduction was
described by Hon. Wm. H. Moody (now Mr. Justice Moody of the United
States Supreme Court) in his separate report as a member of the
Wolcott Commission in the following language:

    "The existing law prescribing railway mail pay automatically
    lowers the rate on any given route as the volume of traffic
    increases. Mr. Adams shows that by the normal effect of this law
    the rate per ton mile is $1.17, when the average daily weight of
    mail is 200 pounds, and, decreasing with the increase of volume,
    it becomes 6.073 cents when the average daily weight is 300,000
    pounds."

NOTE.--Since 1907 the railroads have been paid at much reduced rates.
On the heavy routes the pay is now 5.54 cents per ton per mile.

Post Office Department officials have announced, as their conclusion
from the results of the special weighing in 1907, that the average
length of haul of all mail is 620 miles.

The bulk of the mail is now carried on the heavy routes at 5.54 cents
per ton per mile, or $34.34 per ton for the average haul, that is, for
one and seven-tenths cents per pound.

The railroads, therefore, receive less than one and three-fourths
cents per pound for carrying the greater part of the mails.

       *       *       *       *       *

But the rate reduction for wholesale quantities has not had the effect
of reducing the actual remuneration of the railroads for carrying the
mails to nearly so great an extent as the increasing requirements for
excessive space for distributing mails en route. This feature was
likewise discussed by Judge Moody in his report in the following
language:

    "The rule of transportation invoked is based upon the assumption
    that the increase of traffic permits the introduction of
    increased economy, notably, the economy which results in so
    loading cars that the ratio of dead weight to paying freight is
    decreased. Yet this economy is precisely what our method of
    transporting mail denies to the railroads. Instead of permitting
    the mail cars, whether apartment or full postal cars, to be
    loaded to their full capacity, the Government demands that the
    cars shall be lightly loaded so that there may be ample space
    for the sorting and distribution of mail en route. In other
    words, instead of a freight car, a traveling post office."

An illustration of the extent to which the reductions have been
carried, as shown upon one railroad system, is set forth in the letter
of January 21, 1909, addressed to the Committee on Post Offices and
Post Roads of the House of Representatives by Mr. Ralph Peters,
President of the Long Island Railroad, who states that the actual cost
to his company of carrying the United States mail for the year was
$122,169, while the total compensation for that service paid by the
Government was $41,196. Mr. Peters says:

    "The Long Island Company received from the Government for mail
    service performed in expensive passenger trains one-half the
    rate received by it per car mile for average class freight in
    slow-moving freight trains."

The Long Island Company notified the Government that it would decline
to carry the mails by the present expensive methods, unless Congress
makes some provision for a more adequate compensation. A notification
of similar import has been given by The New York, New Haven & Hartford
Railroad Company, the principal carrier in New England. Their position
in this matter will undoubtedly be taken by other roads, because the
same condition of inadequate compensation prevails upon hundreds of
small railroads and mail routes, especially in the Southern and
Western States.

Notwithstanding these facts, a powerful interest, which commands the
public ear and derives great profit from the one-cent-per-pound rate
of postage, has, in order to divert public attention from itself, for
years industriously and systematically circulated false statistics and
false statements among the people regarding the railroad mail pay, and
is now circulating them.

The extent to which the public is being deceived regarding the
railroad mail pay is disclosed daily. In a recent hearing before the
Senate Committee on Post offices and Post-Roads, Senator Carter of
Montana said:

    "We are all getting letters on this subject. I received the
    other day a letter from a very intelligent lady in Montana
    claiming that the Government is paying to the Northern Pacific
    Railway on that branch line for carrying the mail $97,000 per
    year. On inquiring at the Post Office Department, I find that
    the total compensation of the Northern Pacific Company for mail
    service on that line is $3,070 per year."

This state of things was a sufficient reason for the Post Office
Department to institute the present series of inquiries tending to
show the space in passenger trains upon the railroads demanded and
used by the Government for the mails in comparison with the space
devoted to express and passenger service, and the relative rates of
compensation in each class of service and the extent to which the
roads are receiving for carrying the mails the cost to them of
performing the service. In order to give these facts fair
consideration, it is not necessary to admit that "space" is, or is
not, a better and more workable basis for determining what is
reasonable mail pay than "weight," nor to admit that the companies are
only entitled to be paid by the Government for the service rendered to
it the bare cost of rendering that service, that is, to receive back
the train operating cost. Questions of speed and facilities furnished,
and the preference character of the traffic and the exceptional value
of the service, and other elements, must be considered as well as
space and cost, but that is no reason why the relative proportion of
space used and the relation of compensation to cost should not be
ascertained and given due weight, in the consideration of the
important question of what is adequate mail pay to the railroads.

The following pages are based upon answers to the interrogatories of
the Post Office Department and contain a statement of the mail service
performed by the Chicago, Burlington and Quincy Railroad Company, a
system extending westward from Chicago into eleven different States
and embracing approximately ten thousand miles of main and branch
lines.

The two principal tables of interrogatories were sent out under date
of September 28, 1909, by the Post Office Department as the basis for
this investigation.

These tables indicate the minute and thorough manner which the
Department employed in making this inquiry.

Some questions having arisen regarding the meaning and scope of the
word "authorized" in connection with the returns of space occupied and
used for the mails in Post Office cars and apartment cars, and in
certain other features, the Department, under date October 23, 1909,
issued an important supplementary letter of instructions.

Pursuant to these interrogatories, instructions and requests the
Burlington Company has filed with the Department the exact and
detailed statements, train by train and car by car, of the mail
service upon each of the one hundred and two mail routes on its
system, large and small, for the month of November, 1909, which were
thus called for. These answers state the facts and state them in the
manner prescribed wherever possible. Every inch of space on passenger
trains and cars which in these tables is shown to be occupied or used
for mail or express or for passengers is set down from actual
measurements made, car by car, and not upon any "estimate" or
"consist" basis.

In the appendix will be found four tables prepared under the direction
and supervision of Mr. DeWitt which contain the results of this
investigation into the mail service upon the Burlington, as disclosed
in these statements.

Exhibit A is a statement of the car facilities or space used in every
car in service on the road during the month of November for mail, and
for express or occupied by passengers based upon replies to questions
prescribed in Form 2601.

Exhibit B is a statement of the station facilities, furnished for the
mail, prepared on Form 2602.

Exhibit C is a statement of Revenues and Expenses and of train and car
mileage, prepared on Form 2603.

Exhibit D is a statement of the number, and cost, and present value of
Post Office cars and Apartment cars, prepared on Form 2605.


THE INTEGRITY OF THE RETURNS.

In November, 1909, all the service rendered in all passenger trains
and cars of the Burlington system, reduced to a common basis of car
foot miles (that is, each foot of linear space that was carried one
mile), amounted to 529,936,590 car foot miles, divided as follows:

   In Passenger
     Service.        Mails.       Express.
   428,164,920     62,246,130    39,525,540
     (80.8%)        (11.75%)      (7.45%)

The original circular of the Post Office Department contained certain
"notes," to the effect that in reporting the length of postal cars and
apartment cars, and the space therein used for mails, the railroad
companies should only report the length or space "authorized" by the
officials of the Department; also that in reporting space used in cars
for what is known as the "Closed Pouch Service," the railroads should
make an arbitrary allowance of six linear inches across the car for
the first 200 pounds or less of average daily weight of pouch mail and
three linear inches for each additional 100 pounds.

These directions were modified by the subsequent circular letter of
the Department, dated October 23, 1909.

This letter, among other things, directs the company to take credit
for "surplus" space in post office cars and apartment cars, if
actually used for the storage of mails.

The practical difficulties attending the measurement and proper
allotment of the space used for the mails in postal and other cars run
on a passenger train will be better understood when it is known that
such space is or may be described in at least eight different ways,
and is actually used on the Burlington road as follows, namely:

1. Space in post office cars specially "authorized" (43.03%).

2. Space in apartment cars specifically "ordered" (20.69%).

3. Space ordered in post office cars operated in lieu of apartment
cars (4.3%).

4. Additional space actually used for storage of mails when the
railroad company operates larger post office or apartment cars than
the authorization calls for (1.5%).

5. Space in storage cars actually used for mails (12.87%).

6. Space in baggage cars used for closed pouch mails (4.06%).

7. The return deadhead movement of space ordered and required in one
direction only (8.35%).

(Ninety-five per cent of all the "space" shown in these returns for
the Burlington, as used for the mails, comes within the foregoing
seven classes, as properly authorized space about which no question
can arise.)

8. "Surplus" space; that is, space furnished to the Government in post
office and apartment cars in excess of actual requirements (5.2%).

This five per cent is the only portion of the space claimed as used
for mails regarding which any question can be raised, affecting the
integrity of these returns.

What is the correct view as to this five per cent?

It is manifestly against the interest of the railroad company to
furnish space for mails that is not required, and it will never
furnish such space if it can be avoided. But the "requirements" of the
Post Office Department are not fixed and certain quantities, by any
means. It is entirely impracticable for any railroad company to keep
on hand at all times a supply of cars of all lengths in order to meet
exactly the requirements of the Department officials.

These statistics have been called for by the Post Office Department to
enable it to make accurate comparisons between the space used and the
facilities furnished on passenger trains for the three classes of
service performed, that is, for express companies, for the Government
in mail carriage, and for passengers. The point of the whole inquiry
is this:

Does the Government contribute to the cost of the passenger train
service upon the railroads of the country its fair share, that is, in
proportion to the space and facilities it demands and requires the
companies to furnish for the mails?

In making the comparison all the car space in all passenger trains
must be measured and tabulated and has been measured and tabulated in
the tables here submitted.

A passenger car may have seats to accommodate eighty persons; the
average load it carries may be fifteen persons. But in making up these
returns of "space," all the empty space in that car is credited as
passenger space. That car may likewise be loaded only one way and
returned "dead head," but these returns have credited such return
movement as passenger space.

The same is true of the express service in these returns. All space in
all baggage and express cars set aside for the express company's use
is, in these tables of statistics, credited to express, whether in
fact loaded or "surplus," or "dead head" space.

How is a comparison possible, unless the space credited to the mails
is recorded in the same way? As stated above, only five per cent of
the whole space is involved in the question of "surplus" space, and if
that five per cent should be entirely thrown out, the percentage
results would not be materially changed.


RESULTS UPON THE BURLINGTON ROAD.

The Government cannot justly ask a railroad company to carry the mails
without profit.

The passenger business on the Burlington road is conducted without
profit if it is charged with the expenses assignable to passenger
traffic, and a proper proportion of the expenses not thus specifically
assignable, and a fair share of the taxes and the charges for capital
in the form of interest on bonds and dividends on stock. The profit in
the business comes from the freight.

This fact gives force to the present inquiry of the Post Office
Department to determine whether the Government, in proportion to the
service and facilities it requires from the roads on passenger trains,
is contributing a fair proportion of the passenger train earnings. If
the passenger train business, as a whole, is carried on at a loss, the
Government ought, in fairness, to stand at least its share of the
loss.

The earnings of the Burlington Company from all passenger train
service in November were $2,242,099.

The following table shows the earnings from passengers, from mail and
express, and the space used in passenger trains by the three classes
of traffic and the proportion of earnings contributed for facilities
so used:

                   _Earnings._         _Car Foot Miles._
  Passengers   $1,859,839 (82.95%)    428,164,920 (80.80%)
  Express         187,825 ( 8.38%)     39,525,540 ( 7.45%)
  Mails           194,435 ( 8.67%)     62,246,130 (11.75%)
               ----------             -----------
    Total      $2,242,099             529,936,590

This table shows that for each one thousand feet of space used in
passenger trains the three classes of passenger traffic contributed in
earnings as follows:

  Passengers         $4.34      139.1%
  Express            $4.75      152.2%
  Mails              $3.12      100%

In proportion to the space occupied and facilities used on passenger
trains, the Burlington road receives from passengers 39 per cent more
than the Government pays for mail transportation, and from the Adams
Express Company 52 per cent more; that is, the express business pays
the railroad company better than the Government pays for carrying the
mails by 52 per cent.

If the Government had paid to the railroad company as much as the
express company for each foot of space required and used on passenger
trains, it would, for November, have paid $101,233 more than it did
pay, or an increase in annual mail pay of more than a million dollars.

       *       *       *       *       *

It may be of interest to note that the returns for the Pennsylvania
System just being filed show the following:

                 _Earnings._   _Car Foot Miles._
  Passengers       79.8%            76.2%
  Express          12.6%            13.7%
  Mails             7.6%            10.1%

For each 1,000 feet of passenger train space used on the Pennsylvania
the traffic contributed in earnings as follows:

  Passengers     $4.45    139%
  Express         3.91    122%
  Mails           3.20    100%

On the Pennsylvania the passenger business is worth to that company 39
per cent more than the Government mail business, and the express
business is worth 22 per cent more than the mails, indicating that
express rates are relatively higher in the West than the East, but
that neither in the East nor in the West is it a paying business to
carry the mails at present rates.




IS THE GOVERNMENT PAYING THE RAILROADS FOR CARRYING THE MAILS THE COST
OF DOING THE WORK?


No. The Government paid the C. B. & Q. for carrying the mails in
November $194,435, or at the rate of $2,333,220 annually.

The total operating expenses of the road for that month were
$5,452,830.

The items of passenger train operating expense strictly assignable
were as follows:

  Transportation Expense                            $454,208
      Fuel passenger engines              $132,709
      Salaries passenger engineers         100,511
      Salaries passenger trainmen           87,557
      Train supplies, etc.                  55,664
      Injuries to persons                   19,904
      Station employees                     17,160
      Joint yards and terminals             15,610
      Miscellaneous                         25,093
                                          --------
  Maintenance of Equipment                          $107,626
      Repairs, passenger cars              $67,650
      Depreciation, passenger cars          39,639
      Miscellaneous                            337
                                           -------
  Traffic Expense                                    $48,971
      Advertising                          $17,249
      Outside agencies                      16,673
      Superintendence                       10,272
      Miscellaneous                          4,777
                                           -------
  Maintenance of Way, etc.                           $12,970
      Buildings and grounds                 $7,053
      Joint tracks, etc.                     4,440
      Miscellaneous                          1,477
                                            ------
  General Expense                                    $13,580
      Salaries, clerks, etc.                $8,994
      Insurance                              2,478
      Legal expense                          1,153
      Miscellaneous                            955
                                            ------   --------
              Total                                  $637,355

  Proportion operating expense not assignable      $1,278,016
                                                   ----------
          Total                                    $1,915,371

A large part of the operating expenses of every railroad, such as
maintenance of roadway, station expense, general office expense and
the like, are common to both the freight and passenger service, and it
seems impossible to assign all of them specifically. The Post Office
Department, in the circular under which the roads are reporting,
recognizes this condition and calls for the "proportion" of the
expense "not directly assignable and the basis of such apportionment."

The apportionment of non-assignable expense on the Burlington has been
made on the basis of train mileage.

In the month of November the mileage of passenger trains was
forty-five and four-tenths per cent of the total train mileage, and
the foregoing sum ($1,278,016) of non-assignable expense is forty-five
and four-tenths per cent of the operating expenses for that month,
common to both kinds of traffic, and therefore incapable of specific
assignment to either.

These two classes of passenger expense (assignable and non-assignable)
aggregate $1,915,371 monthly, or at the rate of $22,984,452 per year,
and 11.75 per cent of this sum, or $2,700,675, is the annual operating
cost to the Burlington Company of transporting the Government mails.

  Cost of carrying the mails         $2,700,675
  Earnings from carrying the mails    2,333,220
                                     ----------
      Loss                             $367,455

These figures show that, in proportion to the service rendered, the
Government paid to that company $367,455 less than the actual cost of
doing the work, not including anything for taxes, nor for interest
paid by the company upon its funded debt, which was necessary to be
paid, in order to preserve the property, to say nothing of a return
upon the capital represented by the capital stock.

The correct mail's proportion of taxes and interest for the year is
$634,713, which added to the $367,455 loss above operating expenses,
shows a loss of $1,002,168:

  Loss, operating expenses over revenue        $367,455
  11.75% of taxes and interest                  634,713
                                             ----------
      Annual loss on mails                   $1,002,168

This takes no account of the annual value at two cents per mile of the
transportation of inspectors and postal employees, other than clerks
in charge of the mails ($74,352), nor of clerks in charge of the mails
($746,340).

These two items of service rendered to the Government by the C. B. &
Q. road are of the admitted value of $820,692 annually.

The railroad company has the same duty and legal responsibility
towards these clerks as towards passengers.

       *       *       *       *       *

Is there another fair way of testing this question?

In a letter dated March 2, 1910, from Hon. Frank H. Hitchcock,
Postmaster-General, to Hon. John W. Weeks, Chairman of the Post Office
Committee of the House, printed in full herewith, he states it is
estimated that the average annual cost to the railroads of operating a
post office car for the Government is $19,710, including $2,049 for
lighting, heating, repairs, etc., and that the total average pay
received for the car and its contents including post office car pay,
is $16,638 per annum, showing a loss in this branch of the service of
$3,073 per car. There are 1,111 full postal cars in actual service in
the country, and the loss thereon, therefore, aggregates $3,414,103,
to say nothing of the 231 postal cars in reserve.

But that is the smaller part of the loss. There were 3,116 apartment
cars in actual use in 1909, averaging twenty feet in length, and the
cost of operating each of these, according to Mr. Hitchcock's figures,
would be one-third of $19,710, or $6,570.

The average haul of apartment cars is 48 miles, and the average load
in a twenty-foot apartment car is officially stated as 607 pounds,
making the rate per mile on routes carrying an average daily weight of
only 607 pounds, $68.40 per annum, and the average earnings,
therefore, $3,283 per year, an average loss of $3,287 per car and an
actual loss per year from operating the 3,116 apartment cars of
$10,642,292, to say nothing of the 639 apartment cars in reserve.

The C. B. & Q. has 76 full post office cars and 104 apartment cars,
and applying to them the foregoing figures given in Mr. Hitchcock's
letter, the loss from operating them in 1909 was $575,396, adding to
which $634,713, the mail's proportion of taxes and interest, that
must be included in estimating "cost," in which the Government's
business should share, the estimated loss on the business was
$1,210,109, compared with $1,002,168, arrived at by charging the
Government business with 11.75 per cent of the passenger expense, that
being its proportion of the space used in passenger trains.

The Government should be willing to pay fairly for what it exacts from
the railroads, and it exacts from the C. B. & Q. 11.75 per cent of its
passenger train facilities. If it had paid 11.75 per cent of the
passenger train expenses of the road in 1909, it would have paid
approximately a million dollars more than it did pay.

The Government which demands from the railroads that they build and
transport daily over their roads for its benefit 5,100 traveling post
offices as full postal cars and apartment cars should be willing to
pay what the Postmaster-General estimates to be the actual cost of
operating those cars, and a fair proportion of the taxes and interest.

If it had paid such cost in 1909, it would have paid to the C. B. & Q.
approximately a million dollars more than it did pay.


RESULTS ON VARIOUS MAIL ROUTES.

The foregoing are statements of results on the Burlington System as a
whole, showing earnings and expenses and facilities furnished to the
Government mail service.

It may be of interest, and throw light on the situation, to show
results for November upon several separate mail routes in the system,
ranging from small routes carrying 200 pounds of mail daily, up,
through routes carrying weights, respectively, of 1,300, and 8,000,
and 20,000 pounds daily, to the heaviest route carrying 192,000
pounds, covering the fast mail service from Chicago to Omaha.

Weights of express packages are not kept on separate mail routes and
statements therefore of express earnings for such separate mail routes
are necessarily estimated, but, as given in the following tables, they
are approximately correct and corroborate the comparative results for
the Burlington system as a whole, which results are based upon exact
figures for express as well as for mails and for passengers.


I.

Route 157,030, Kenesaw to Kearney (Nebraska), 24.68 miles. Average
Daily Weight 216 Pounds.

               _Percentage    _Percentage    _Should Earn      _Did
               of Space           of          on Basis of    Actually
               Occupied._     Earnings._     Space Used._     Earn._
  Passenger       83.79          88.90          $1,238        $1,314
  Mail             9.37           6.02             139            89
  Express          6.84           5.08             101            75
                                                              ------
                                                              $1,478

The mail earnings on this route are $89 per month, or $3.44 daily. The
service for the Government is performed in an apartment car fifteen
feet long, and closed pouch service, four trains carrying mail daily,
except Sunday, giving an actual return to the railroad of three and a
half cents per mile run, or about one passenger fare at three cents
per mile although the Government demands the use of a 15-foot car
fitted up as a post office in which a postal clerk is carried free,
and this car must be lighted, heated and kept in repair, and carried
over the route each way daily, except Sunday.

On this branch the actual earnings on passengers per passenger car are
55 cents per car mile.

The post office apartment car equals one-quarter of a passenger car,
and the mail should, on this basis, earn at least 14 cents per mile,
but it does earn, for all the mail service, at the rate of 3-½ cents
per mile, less the expense of delivering mail to and from post
offices.

During the weighing period the mails are carried on 90 days and
weighed on 90 days, but under the Cortelyou order, these aggregate
weights are divided by 105 and the result is called the "average" and
forms the basis of pay on this route for four years.

This mail service in a traveling post office on an expensive railroad
is paid about one-third the rate per mile that the Government pays to
a rural route carrier who carries an average of 25 pounds of mail.


II.

Route 157,028. Odell to Concordia, Kansas. 72 Miles. Average Daily
Weight, 282 Pounds.

               _Per cent    _Per cent    _Should Earn    _Did
                Space_      Earnings_      on Space_     Earn._
  Passenger      80.82        81.44         $2,482       $2,501
  Mail           11.76         9.38            361          288
  Express         7.42         9.18            228          282
                                                         ------
                                                         $3,071

Mail earnings $288 per month (26 days), or $11 per day.

This service demands a twenty-five-foot apartment car each way for
which the pay amounts to 7.64 cents per car mile run, or about the
fares of two passengers at three cents per mile who may occupy one
seat.

The service is six days per week, but the aggregate weight carried in
the six days is divided by seven to obtain the Cortelyou "average" on
which the pay is based.

The payment for a twenty-five-foot traveling post office is a little
over half the pay per mile for a rural route carrier.


III.

Route 135,012. Streator to Aurora (Ills.). 60 Miles. Average daily
weight, 1,303 pounds.

               _Per cent    _Per cent    _Should Earn    _Did
                Space_      Earnings_      on Space_     Earn._
  Passenger     72.84         85.64         $4,800       $5,643
  Mail          17.38          7.51          1,145          495
  Express        9.78          6.85            644          451
                                                         ------
                                                         $6,589

Mail earnings (26 days), $495 per month, or $19 per day.

Four trains on this road carry mail daily, two each way, two in a
twenty-five-foot mail apartment and two in a thirty-foot mail
apartment, an average earning rate of 7.88 cents per car mile.

The passenger cars on this branch carry an average of 24 passengers
each, and earn 48 cents per car mile. The average mail apartment
furnished is half a passenger coach.

These four apartment cars, at the same rate as the passenger cars (24
cents per mile), would earn $18,029 per year.

The passenger train earnings on the branch are $79,000 a year. The
mails demand 17.38 per cent of the facilities, and on that basis
should earn for the company $13,730.

The mail earnings were $5,940, this being the annual compensation
after a reduction of nine and one-half per cent through the Cortelyou
order, requiring the aggregate of 90 weighings to be divided by 105 to
ascertain the "average."


IV.

Route 164,004. Edgemont to Billings (Wyoming). 366 Miles. Average
Daily Weight, 8,087 Pounds.

               _Per cent    _Per cent    _Should Earn     _Did
                Space_      Earnings_      on Space_      Earn._
  Passenger     85.79         89.22         $85,476      $88,895
  Mail          10.43          6.18          10,392        6,156
  Express        3.78          4.60           3,766        4,583
                                                         -------
                                                         $99,634

Two 60-foot postal cars are run daily each way.

The mail earnings are $6,156 per month, or $205 per day.

The total earnings of the passenger trains on this road are $1,195,000
a year, and the mails required 10.43 per cent of the passenger train
facilities; on this basis they ought to pay $125,000 a year.

These post office cars are hauled 534,000 miles every year. The
Postmaster-General estimates that the actual cost to the railroads of
operating a sixty-foot postal car is 18 cents per mile. At this rate
the Burlington Company should be paid $96,000 a year for the service
of the postal cars only.

It is, in fact, paid for all the mail service on this road $73,872
annually.


V.

Route 135,010. Galesburg to Quincy (Ills.). 99.93 Miles. Average Daily
Weight, 19,727 pounds.

               _Per cent    _Per cent    _Should Earn     _Did
                Space_      Earnings_      on Space_      Earn._
  Passenger      69.45        79.44        $28,864       $33,015
  Mail           19.70         8.45          8,187         3,511
  Express        10.85        12.11          4,509         5,034
                                                          -------
                                                          $41,560

Mail earnings from all sources $3,511 per month, or $117 per day.

The service is performed in three 60-foot postal cars, two 16-foot
apartments and one 27-foot apartment, each way daily; also one 44-foot
postal car and one full storage car, daily except Sunday, in addition
to some space furnished for closed pouches in ordinary baggage cars.

The car space provided for the mails on this route is equivalent to
ten full sixty-foot cars daily, over the whole length of the route, or
365,000 car miles a year. At 18 cents per mile the pay would be
$65,700, whereas the actual pay is only $42,132. If the Government
paid for the service in proportion to the facilities it demands and
receives, it would pay $98,244.


VI.

Route 135,007. Chicago to Burlington (205 Miles). Average Daily
Weight, 192,540 pounds.

              _Per cent    _Per cent    _Should Earn     _Did
               Space_      Earnings_      on Space_      Earn._
  Passenger     73.14        74.72        $210,134      $214,671
  Mail          17.19        13.74          49,387        39,462
  Express        9.67        11.54          27,782        33,170
                                                        --------
                                                        $287,303

On the basis of space 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 passenger trains on most railroads; that
is, the receipts from all the traffic carried on passenger 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
passenger 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 passenger 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 passenger fares
which, if applied to all passenger fares, would show a loss. The road
is there, the trains are running, and the cars only partially loaded;
the addition of through passengers 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
passenger 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 class 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 passenger 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-class 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-class 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 incumbent 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
    Assistant 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 constitute 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 brasses, $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.

    "Senator Vilas' argument was based upon the theory that the
    rates fixed for railroad transportation alone, based on the
    weights of the mails carried, are adequate compensation for all
    services rendered, including the operation of railway post
    office cars, and that, therefore, the railroad companies would
    be required to operate postal cars owned by the Post Office
    Department for the compensation allowed by law for the weight of
    mails alone, including apartment-car space and facilities. Such
    theory is not justified by the facts, as will appear from the
    following:

    "A careful perusal of the debates in both Houses of Congress
    which led to the enactment of the present law fixing the rate of
    pay for railroad transportation of the mails and for railway
    post office cars clearly indicates that the additional
    compensation for railway post office cars was intended to cover
    the additional expense imposed upon the railroad companies for
    building, maintaining, and hauling such cars. The companies at
    that time insisted that these cars, which were practically
    traveling post offices, did not carry a remunerative load, and
    that therefore the amount of pay, based on weight, did not
    compensate them for their operation. This led to the specific
    appropriation for railway post office cars. In this connection
    it should be borne in mind that the purpose of the railway post
    office car is to furnish ample space and facilities for the
    handling and distribution of mails en route. Therefore, the
    space required is much greater than would be required for merely
    hauling the same weight of mails.

    "In regard to any proposal for Government ownership of postal
    cars, other facts as well as the above should be given
    consideration. Such cars must be overhauled, cleaned, and
    inspected daily. It would be necessary to either arrange with
    the railway companies for this service or for the Department to
    employ its own inspectors, repair men, and car cleaners at a
    large number of places throughout the country, which would
    probably be more expensive than the cost to the railway
    companies in that respect at present. It would hardly be
    feasible to establish a Government repair shop. Therefore, the
    Department would be compelled to use the shops of the several
    railway companies throughout the country. Without the closest
    supervision and attention of the Government's inspectors it
    could scarcely be expected that our cars would receive the same
    consideration in railroad shops as those owned by the railway
    companies. These shops are frequently congested, and it is
    probable that the railroad work would be given the preference.

                    "Yours very truly,
                                         "FRANK H. HITCHCOCK,
                                          "_Postmaster-General_."

The Wolcott Commission carefully investigated the whole subject of
Postal Car Pay and their conclusions regarding this form of
compensation and its reasonableness are set forth in their report in
the following language:

    "Until a comparatively short time prior to 1873 the distribution
    of the mails in transitu was unknown. Prior to the late sixties
    the railroads simply transported the mails, which were delivered
    at the post offices and there distributed. Accordingly, 'weight'
    as the basis of compensation was at the time of its adoption and
    long thereafter entirely adequate.

    "For a few years, however, prior to 1873 the distribution of the
    mails in transitu had been practiced to a sufficient extent to
    satisfy the Post Office Department and Congress that it was a
    desirable innovation and a branch of the postal service that
    should be very much enlarged. But it was recognized that if the
    railroads were not only to transport the mail itself, but also
    to supply, equip, and haul post offices for the distribution of
    the mails, the compensation upon weight basis that had obtained
    up to that time was not entirely adequate and just, and
    therefore the law of 1873, as already indicated, contained a
    provision allowing additional compensation for railway post
    office cars. At first these cars were mostly not exceeding 40 or
    45 feet in length and of light construction, similar to baggage
    and express cars.

    "From the policy of the Department, however, of constantly
    demanding better and better facilities from the railroads and
    the introduction of every improvement that could be discovered,
    it has come to pass that, today, the railroad post office cars,
    with the exception of a few obsolete ones that are being
    discontinued as rapidly as practicable, are elaborate
    structures, weighing between 90,000 and 100,000 pounds; built as
    strongly and fitted up, so far as suitable to the purpose for
    which it is intended, as expensively as the best Pullman and
    parlor cars; costing from $5,200 to $6,500; maintained at a cost
    of $2,000 per year; traveling on an average of 100,000 miles per
    annum; provided with the very best appliances for light, heat,
    water, and other comforts and conveniences; placed in position
    for the use of the postal authorities from two and a half to
    seven hours before the departure of the train upon which they
    are to be hauled, and owing to the small space allowed in them
    for the actual transportation of the mails, accompanied on the
    denser lines by storage cars for which no additional
    compensation is paid by the Government and on the less dense
    lines the larger bulk of mails is carried in the baggage cars
    without additional compensation for the car.

    "These cars are constructed and fitted up by the railroads in
    accordance with plans and specifications furnished by the
    Department, and the amount of mail transported therein is
    determined exclusively by the postal authorities. From these two
    facts it results that the railroad must haul 100,000 pounds of
    car when the weight of the mail actually carried therein is only
    from 3,500 to 5,000 pounds--often very much less, and
    occasionally somewhat more.

    "Taking in view all these facts, as disclosed by the testimony
    filed herewith, we are of opinion that the 'prices paid * * * as
    compensation for the postal-car service' are not excessive, and
    recommend that no reduction be made therein so long as the
    methods, conditions, and requirements of the postal service
    continue the same as at present."


MAIL RATES AND EXPRESS RATES.

No feature of this question has been more persistently misrepresented
than the relative value to the railroads of the mail business and the
express business.

As elsewhere shown, the express business is 52 per cent more valuable
to the Burlington road than the Government mails on the mere basis of
space used and facilities furnished in passenger trains. There are
many other considerations which increase this disparity of value in
favor of the express, but reference to them is omitted in order to
direct public attention to the following statements of the
Postmaster-General in his recent letter upon the subject:


(_Congressional Record_, March 4, 1910, 61st Congress, Second Session,
Vol. 45, No. 60, Page 2802.)

    LETTER OF THE POSTMASTER-GENERAL RELATIVE TO THE SERVICE
    RENDERED BY THE RAILROAD COMPANIES IN CONNECTION WITH THE MAILS
    AND WITH EXPRESS.

                           "OFFICE OF THE POSTMASTER-GENERAL,
                             "WASHINGTON, D.C., January 31, 1910.

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

    "MY DEAR SIR: In response to your inquiry as to the difference
    between the service rendered the Post Office Department by
    railroad companies in the carriage and handling of the mails, and
    that rendered express companies, I would state that from such
    information as we have been able to obtain in regard to the
    service rendered to express companies, the difference is
    substantially as follows:

    "The Post Office Department requires the railroad company to
    take the mail from the post office wherever the office is within
    80 rods of the depot, and the company has an agent, and in many
    cases to perform the terminal service regardless of the distance
    between the post office and the station. Wherever the terminal
    service is taken up by the Department, by means of regulation or
    screen-wagon service, the contractor delivers the mail at a
    specified place at the depot, and from that point the railroad
    employees transport it to the cars, and if the amount is so
    great that it would impose a hardship upon the postal employees
    to load and store this mail, the railroad company is called upon
    to furnish porters to do the work. Where the mail messenger or
    contractor can drive direct to the cars, he does so. The express
    companies haul all of their matter to the railroad stations and
    put it in the cars, using their own employees and their own
    trucks.

    "The cars furnished the Post Office Department and those
    furnished the express companies differ very materially. The
    former are built according to specifications furnished by the
    Department, and are fully equipped with letter cases, paper
    racks, drawers, and lockers for registered mail and supplies,
    and all of the equipment necessary for the distribution of mail
    en route. The cars furnished the express companies have very
    little, if any, interior furnishings, and are more like the cars
    used for the transportation of baggage. In both cases the cars
    used are owned by the railroad company.

    "The number of employees transported for the Post Office
    Department is very much greater than for the express companies.
    There are frequently five or six clerks in the postal cars, and
    on fast mail trains, where there are two or three working cars
    to a train, the number runs up as high as 23. The express seldom
    requires more than two men in a car.

    "The Post Office Department claims as much space at depots
    without specific payment therefor as may be required for the
    storing and handling of mail in transit. The express companies
    are required to pay the railroad companies for all space used at
    depots.

    "On smaller lines a separate apartment must be furnished for the
    mails other than baggage mails. The express matter is usually
    placed in the baggage car.

    "Upon arrival at terminals the railroad company may be required
    to unload a mail car, if the quantity is such as to impose a
    hardship upon the clerks, and to see that it is loaded into the
    contractor's wagons; or, if the terminal service devolves upon
    the railroad company, that it is delivered into the post office.
    The express company unloads and handles its own matter.

    "The railroad and express companies frequently use a joint
    employee to handle baggage and express, thereby economizing in
    cost of help. That can very seldom be done in connection with
    the postal service.

    "The railroad company has charge of all baggage mails in transit
    and receives them into and delivers them from the cars. It also
    handles other mails when necessary to transfer them between cars
    or trains. It is held responsible for reasonable care in their
    transportation. Deductions are made for failures to perform
    service according to contract, and fines are imposed for
    delinquencies. The company is required to keep a record of all
    pouch mails carried on trains in charge of their employees and
    handled at stations where more than one regular exchange pouch
    is involved and no mail transfer clerk is located, and to
    prepare and forward shortage slips when a pouch is due and not
    received. They are required to make monthly affidavits as to
    performance of service. It is understood that the company never
    assumes control of express matter. The Department is not
    informed as to the terms of contracts between railroad and
    express companies, and therefore can not state what
    responsibility is imposed as to transportation.

    "Mail cranes for the exchange of mail at points where trains do
    not stop are erected and kept in repair by and at the expense of
    the railroad company, whose employees must hang the mail bag on
    the crane and adjust it for catching at points where the
    company provides side service. The mail catchers are also
    furnished by them. No service of this character is rendered
    express companies.

    "A railroad company is required by law to carry the mails upon
    any train that may be run, when so ordered by the
    Postmaster-General, without extra charge therefor, and as a
    result the mails are carried on the fastest trains and with
    great frequency. Express matter is not as a rule carried on the
    fast limited passenger trains, nor with the frequency with which
    mails are carried.

    "In this connection your attention is invited to pages 84 to 94,
    516, 517, 860 to 863, part 1, and pages 687 to 696, part 2, of
    the testimony before the Congressional Commission which
    investigated the postal service in 1900--Wolcott-Loud
    Commission.

                    "Yours very truly,
                                            "F. H. HITCHCOCK,
                                          "_Postmaster-General_."

The Government does not own any railroad, but, under the present
system, the Post Office Department dictates to the railroad companies
upon what passenger trains and in what kind of cars the mails shall be
carried. It insists on such space and facilities as it deems necessary
for the mails being furnished on the fastest and most expensive trains
and demands that these trains keep their fast schedules; this means
that all other trains on the road are side-tracked and delayed
whenever that is necessary in order to expedite the mails.

There are no such features in the express business.

Demanding a preference traffic, the Government ought to be willing to
pay for it more than express rates. In fact, it pays much less than
express rates.

The ablest and most competent witness who appeared before the Wolcott
Commission on this subject was Henry S. Julier, Vice-President and
General Manager of the American Express Company, who said: "Without
question, the Government has the cheaper service by far."

Mr. Julier further stated that seven pounds is the average weight of
packages sent by express, and the seven pound package is the typical
express package, and therefore the earnings from carrying such
packages are the true index of the rates actually received. Some
railroads receive as their compensation fifty per cent of the express
company's earnings; the C. B. & Q. receives fifty-seven and a half per
cent.

Mr. Julier was asked by the Commission to file statements showing from
the rates in force exactly the revenue received per hundred-weight by
the railroad company from the express in comparison with the mail
rates. He filed the following:

_Table Showing Rates Received by Railways Per Hundred-weight for Mails
and Rates Received for Express Between Points Named._

                                                      EXPRESS.
                                                    50 per cent of
                                   MAIL.            express companies'
                               Rate per 100         earnings on fourteen
                               pounds allowed       7-pound packages
                               railroad companies   weighing in the
                               under last           aggregate 100
                               weighing,            pounds, yields the
                               including the pay    railroad companies
                               for post office      the rate per 100
                   Distance.   cars.                pounds noted below.

  New York to
   Buffalo             440          $1.58                  $2.80
   Chicago             980           3.57                   4.55
   Omaha             1,480           5.38                   5.95
   Indianapolis        906           3.27                   4.55
   Columbus            761           2.49                   3.85
   East St. Louis    1,171           4.38                   4.90
   Portland, Me.       347           1.33                   2.80
  Chicago to
   Milwaukee            85            .34                   2.10
   Minneapolis         421           1.83                   3.85
   New Orleans         922           5.27                   5.95
   Detroit             284           1.34                   2.80
   Cincinnati          306           1.20                   3.15
  Cincinnati to
   St. Louis           374           1.61                   3.15
   Chicago             306           1.20                   3.15
   Cleveland           263           1.26                   2.80

    Since the filing of these statistics, the rates paid to
    railroads for carrying the mails have been reduced almost a
    fifth.

    The statements of the Postmaster-General and the statistics
    confirm the evidence of these returns that the express business
    is much more valuable to railroad companies than the Government
    mail business.

                                                 W.W. BALDWIN,
                                                _Vice-President_.

    JOHN DEWITT,
      _General Mail Agent_.

    MAY, 1910.




APPENDIX.


_Exhibit A._

[Form 2601.]

There are on file in the Post Office Department one hundred and two
separate statements showing, for the month of November as to each mail
route on the Burlington system, the space occupied and used for mail
and for express and for passengers.

In order to make a comparison it was, of course, necessary to reduce
each item of space used in each car to a common basis of feet, and the
following table shows what are the actual facilities furnished in
passenger trains for the three classes of traffic reduced to linear
car-foot space:


_Car Foot Mileage._

     _Mail._      _Passengers._   _Express._
    62,246,130     428,164,920    39,525,540
     (11.75%)        (80.8%)        (7.45%)


_Exhibit B._

[Form 2602.]

_Station Facilities Furnished for the Mails and Express and the Value
of Other Items of Service Rendered._

_Mail Expense._

  Monthly Cost of Handling Mail at Stations,
    labor, etc.                                            $14,241.67
  Monthly rental value of mail rooms in stations             1,008.61
  Monthly rental value of tracks occupied by mail cars
    for advance distribution                                   157.69
  Cost of lighting and heating mail cars for advance
    distribution                                               114.25
  Value of 309,827 miles of free transportation to post
    office employees, not including postal clerks in
    charge of mail                                           6,196.54
  Switching mail cars for advance distribution               2,795.80
                                                           ----------
    Total for November                                     $24,514.56

The foregoing does not include the rental value of space furnished by
the railroad company to the Government for handling mails and mail
trucks on station platforms, and for storing the mails on platforms at
large terminals. This is a large item, but statistics of such space
used were not called for. At Chicago Station platform space to the
amount of over 6,500 square feet is devoted exclusively to mails
handled by the Burlington and Pennsylvania.

In addition to the foregoing, the Burlington Company transported on
its trains during November postal clerks in charge of mail for the
Government a distance of 3,109,747 miles in the aggregate.

If the Government had paid their fare at two cents per mile the amount
paid would have been $62,174.94.

These items of station facilities and other service rendered to the
Government for the mails amounted to $86,689 for November, or at the
rate of more than one million dollars annually.

_Express Expense._

  Rental value of space in station buildings used for
    express, for which no rent is paid                         $488.68
  Rental value of tracks used for advance loading
    of express                                                  191.11
  Value of 42,298 miles of free transportation to
    Express Company officials and employees at two
    cents per mile.                                             885.96
                                                             ---------
                                                             $1,565.75

In addition to the foregoing, the agents and employees of the railroad
company in the month of November rendered service at stations in
handling express and in other ways for the Express Company to the
amount of $10,274, but the Express Company paid to the same persons
$14,538 in commissions.

The Express Company also shared in the salaries paid to certain
baggage men and other joint train employees in November to the amount
of $7,480, in addition to the payment of commissions, as aforesaid.

All the items of expense to the railroad company on account of the
express in the way of space furnished and free transportation to
employees, and services of station agents, amount to $11,840, while
the cash payments by the Express Company to the railroad Company
indirectly, through payments in commissions to station agents and the
salaries of baggage men amounts to $22,018, a pecuniary gain or income
from express of $10,178 per month, or at the rate of $124,136
annually, compared with a large outgo annually on account of the mails
as shown in the foregoing items.


_Exhibit C._

[Form 2603.]

_Revenues and Expenses and Train and Car Mileage._

_Revenues._

  Receipts in November from all passenger traffic
    (not including Mail and Express)                   $1,859,839
  Receipts from Express                                   187,825
  Receipts from Mails                                     194,435
                                                       ----------
  Total                                                $2,242,099

_Expenses._

  Total Operating Expenses of the road for November    $5,452,830
  Passenger Operating Expenses, and one-twelfth
    of the taxes and one-twelfth of the interest
    on the funded debt                                 $2,365,521

The passenger operating expenses are distributed as follows:

_Assignable Expenses._

  Transportation Expense                            $454,208
    Fuel passenger engines               $132,709
    Salaries passenger engineers          100,511
    Salaries passenger trainmen            87,557
    Train supplies, etc.                   55,664
    Injuries to persons                    19,904
    Station employees                      17,160
    Joint yards and terminals              15,610
    Miscellaneous                          25,093
                                         --------
  Maintenance of Equipment                          $107,626
    Repairs, passenger cars               $67,650
    Depreciation, passenger cars           39,639
    Miscellaneous                             337
                                         --------
  Traffic Expense                                    $48,971
    Advertising                           $17,249
    Outside agencies                       16,673
    Superintendence                        10,272
    Miscellaneous                           4,777
                                         --------
  Maintenance of Way, etc.                           $12,970
    Buildings and grounds                  $7,053
    Joint tracks, etc.                      4,440
    Miscellaneous                           1,477
                                         --------
  General Expense                                    $13,580
    Salaries, clerks, etc                  $8,994
    Insurance                               2,478
    Legal expense                           1,153
    Miscellaneous                             955
                                         --------   --------
      Total                                         $637,355

_Proportion of Non-Assignable Expenses._

  Operating Expenses          $1,278,016
  Taxes and Interest             450,150
                              ----------
                                           $1,728,166
                                        -------------
    Total                                  $2,365,521

Exhibit A shows that the entire space in all cars run on passenger
trains on the Burlington in November was divided as follows:

  Passengers occupied         80.8 % of the space.
  Mail                        11.75% of the space.
  Express                      7.45% of the space.

If each of these three classes of traffic had contributed earnings and
paid expenses in proportion to the space occupied by it, the result in
comparative profit or loss to the company would have been as follows:

_Comparative Profit and Loss._

                 _Earnings._     _Expenses._    _Profit._    _Loss._
  Passengers     $1,859,839      $1,911,341                  $51,502
  Mail              194,435         277,949                   83,514
  Express           187,825         176,231      $11,594
                 ----------      ----------
                 $2,242,099      $2,365,521

If the Government had paid to the Burlington Company for carrying the
mails 11.75% of the actual cost of doing the work, and a proportion of
the taxes and interest on the funded debt, it would, for November,
have paid $83,514 more than was paid, indicating that for the year the
Government is paying $1,002,168 less than the actual fair cost of the
service it is receiving.


_Exhibit D._

[Form 2605.]

_Statement of Mail Cars and Apartment Cars._

_Postal Cars._

                                             _Original     _Present
                                  _Number     Average       Average
    _Kind of Car_                  Owned_      Cost_         Value_
  60 feet or more in length          49      $5,176.00     $4,669.84
  50 to 59 feet in length            10       4,116.00      2,595.70
  Less than 50 feet in length        17       2,555.00      2,094.41
                                     --      ---------     ---------
  Total                              76      $4,451.00     $3,820.84

_Apartment Cars._

                                              _Original     _Present
                                     _Number    Average       Average
    _Kind of Car_                     Owned_     Cost_         Value_
  Cars with mail apartments 30 feet
    or more in length                  27      $3,888.00     $2,112.78
  Cars with mail apartments 25 to
    29 feet in length                  21       3,660.00      2,004.95
  Cars with mail apartments 20 to
    24 feet in length                  22       3,292.00      1,810.50
  Cars with mail apartments less
    than 20 feet in length             31       3,106.00      1,729.35
                                      ---      ---------     ---------
    Total                             104      $3,460.00     $1,901.71

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