PROFITS OF EXPRESS COMPANIES
Previously to the regulation of express rates by the Interstate Commerce Commission and to the beginning of the parcel-post in this country, the profits of the express companies were undeniably swollen. By just how much they were unreasonably large, it is practically impossible to determine; although the Interstate Commerce Commission did on several occasions officially assert unduly large profits in the case of the Wells-Fargo Company.
As described above, three of the five leading companies had issued no stock at a fixed par value, but had distributed a certain number of shares of ownership. They had started in business with a limited equipment (Franklin K. Lane declares that it had not exceeded $1,000,000 in value) and had purchased new equipment mostly from current profits. Some companies have capitalized their profits. Others have carried them along from year to year in a profit and loss account. By their contracts with the railroad companies, they have become practically a part of the railroad system, and hence whatever equipment and property they themselves possess have served up to the present time as little basis for determining their just profits. For instance, as the decision of the Interstate Commerce Commission's report of 1912 pointed out, some one company may invest money in certain equipment which another company hires. They both may make the same percentage of profit on the same amount of business, but in the first case the profit would loom small in comparison with the property of the company, whereas in the second case, it would loom unnaturally large. In other words, a charge on capital in the first case would be classified as an item of operating expense in the second.
And yet, despite all these considerations, the fact that from 1909 to 1912 the net profits of the companies were from 17% to 65% of the value of their properties, coupled with the common sense knowledge that in those years there was no inward or outward compulsion upon the directors of the companies to charge one cent less than the traffic would bear, makes it certain enough for practical purposes that the express companies' profits were unethically swollen.
Whatever the profits before 1913, however, they have sadly dwindled since, as the following figures of the Interstate Commerce Commission will indicate:
Note:—In studying the above figures, it must be remembered that approximately one-half of the operating revenues are paid to the railroads for transportation, so that for practical purposes the ratio of the total operating revenue to the net operating revenue with respect to the direct business of the express companies—the collection of packages for the railroads and the delivery from the railroads—would be approximately twice the percentages in the above table.
GOVERNMENT POSTAL EXPRESS VS. PRIVATE EXPRESS COMPANIES
At certain periods of each year, the Post Office Department takes a count of the packages mailed in the parcel-post, the postage collected on them, and their total weight. These periods of count are the first two weeks in April and the first two weeks in October. By multiplying their sum by 13, we can thus obtain a fairly accurate figure for the total number of parcels mailed within the year in 1917—roughly 1,120,000,000. On the other hand, the number of parcels carried in that year by the express companies may be put at 280,000,000. ([Note 1].)
Accordingly in 1917 the number of parcels expressed in the United States was roughly as follows:
| By Parcel-Post | 1,120,000,000 |
| By Express Companies | 280,000,000 |
But in 1912, if the average express charge was the same as in 1909, and no reason is known why it should not have been, the number of parcels carried by the express companies was about 320,000,000. In that same year the number of parcels carried by the post office, under the four-pound limit, was 240,000,000. In other words, the effect of the entrance of the Government into what had been a field of private enterprise resulted within five years in an increase of more than 450% in the extent of the service rendered by the Government, whereas the express company's services to the public in that time actually decreased 12½%, although the extent of the total services rendered by the two combined agencies increased 250%.
Nor can the increase in the parcel-post business be explained by the assertion that the Government performs this business at a great loss. The balance sheet of the Post Office Department since 1912 has been as follows:
| 1912 | $1,781,435 deficit |
| 1913 | 4,551,984 surplus |
| 1914 | 4,390,796 surplus |
| 1915 | 11,297,861 deficit |
| 1916 | 5,853,655 surplus |
| 1917 | 9,887,398 surplus |
Now, it is obvious that the financial account of the entire Post Office Department is composed of too many divergent elements for the financial account of the parcel-post alone to have any conclusive bearing upon it. But it is equally obvious that if so extensive and particularly so expensive a function of the Postal System as the parcel-post had been conducted at a considerable loss, the fact would be reflected, to some extent, at least, in a growing deficit of the Department as the parcels conveyed grew in number from 240,000,000 in 1912 to 1,120,000,000 in 1917. Nor have the railroads made good before the courts or before the Interstate Commerce Commission their contention that their recompense for carrying parcels is unfairly low.