The express companies of the United States

by Bertram Benedict

EXPRESS CONTRACTS

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.

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NOTES

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 charge per parcel of 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 charge per 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 250,000,000 shipments for 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 many shipments contain more than one parcel, 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:

Cars	256
Horses	19,986
Automobiles	2,886
Wagons	14,907
Sleighs and Buggies	3,563
Trucks	56,9243

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 cities and 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 all parcel-post parcels carried 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 the parcel-post charges or 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 the total 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.

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BIBLIOGRAPHY

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).

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.

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).

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).

POST OFFICE DEPARTMENT—

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).

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).

WELLS, HENRY—Sketch of the Rise, Progress and Present Condition of the Express System (1864).