“ 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. ”

“ 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 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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 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 [2] 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. ”

“ 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. ”

“ 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. ”

“ The statements of the Postmaster-General and the statistics confirm the evidence of these returns that the [39] express business is much more valuable to railroad companies than the Government mail business. ”

“ 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. ”

“ 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 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. ”