Hampton’s. 26: 261-4. February, 1911.
Let Us Have a Parcels Post.
There would be some shadow of excuse for refusing to accept so great a convenience as the parcels post if, in accepting it, we would destroy a large investment in the business of the express companies. But, in fact, we would not destroy any legitimate values in these companies. They own practically nothing on which they would lose a dollar. Most of their money is not in the business of transporting freight, but in banking and investment enterprises. These would not be interfered with. Their tangible property actually used in transportation would be required, and would undoubtedly be taken over at good figures by the government, when it established a parcels post business. Their investments in stocks, bonds and banking business would be undisturbed. The express companies would lose nothing except their graft—the privilege of charging outrageous rates for the service they render. In morals and equity that ought to be ended as soon as possible.
The truth is that it is not the political and financial influences of the express companies which keeps Congress from giving this nation a parcels post. It is the pathetic and benighted ignorance of a considerable section of our own people, who have been led to believe that the parcels post would injure them. It is well-nigh impossible to believe that there can still be millions of intelligent Americans who doubt that national prosperity must be promoted by every increase of the facilities and cheapening of the cost of transportation. Yet there is such a section of the American public. Misguided and ignorant, it has permitted itself to become the chief bulwark of protection to the express companies’ graft. It persists in believing, in the face of nearly a century of world experience to the contrary, that there is danger in too easy, too cheap and too universal transportation!
Unwise Opposition of the Small Merchant
Reference, of course, is had to the fears which the merchants of the country towns entertain as to the effect of the parcels post upon their business. The country merchant has come to accept on this point the sophistical, disingenuous and dishonest arguments of the express lobby, skillfully put out through agencies whose real purpose is concealed.
The argument that cheap transportation of parcels will injure the country towns is exactly as reasonable as the contention that London and New York, Hamburg and Liverpool, Seattle and Sidney, must be injured by the railways and steam-ships which, bringing all parts of the world into close and easy communication, would make it impossible for great and dominating centers of population, commerce and industry to exist. Everybody can see how absurd such an argument would be. The best possible transportation facilities constitute the first requisite to making a great city. Commercial centers are prosperous and important, in proportion as they have adequate, efficient and cheap transportation. This is as true of the country town with a single railroad line as it is of a continent’s metropolis with half a hundred great railroad systems pouring their tonnage into its terminals and with the ships of all the seven seas unloading their cargoes at its wharves.
It is an axiom that good, ample and cheap transportation actually makes commerce. The country town which has no railroad always wants one. The hamlet which has no post-office is forever riding the neck of its congressman until it gets one. Great cities vote millions to build artificial harbors, to provide wharfage, and to increase every possible facility for cheap and rapid transportation.
There are no communities which need improvement of transportation so much as the country towns which have been misled into opposing the parcels post. The country merchant has been made to believe that the parcels post would take his business away from him and give it to the mail-order house in the great city. It would do nothing of the kind. On the contrary, it would give the country merchant the one facility which he does not now have: it would place him on a parity with the merchant in a great city.
Quick, cheap transportation would enable him to buy better and cheaper. He could sell many articles from catalogues instead of having to carry them in stock. He could create a mail-order business of his own in his surrounding territory. The local merchant who conducts his business well has nothing to fear from the mail-order house. Farmers and citizens prefer dealing with the home man, and the parcels post will give him many advantages that will enable him to increase his trade to proportions which are now impossible.
Of course, this does not apply to the country merchant who buys his goods badly or at high prices, and who gives long credits and sells at long prices. Parcels post or not, his day is doomed. More alert men, with better business ideas, will soon occupy his place. The alert, hustling merchant will use the parcels post so effectively that the old sleepy head’s day will end just that much sooner.
The proof of the pudding is in the eating. Every enlightened country except the United States has a parcels post. No country would think of abandoning it, any more than it would think of disestablishing its letter postal service. In the experience of all the world the argument about injuring the country town is sweepingly and completely refuted. The small town would gain vastly more than the large town by this tremendous increase and improvement of its transportation facilities. The whole public would benefit, for precisely the same reason that it benefits by having fast steamships instead of sailing vessels, limited passenger trains instead of stage coaches, two-cent letter postage instead of five-cent.
Part Played by the Express Companies
The people who oppose the parcels post are the innocent and unwitting dupes of the express monopoly. This is the one point in the parcels post argument that cannot be too constantly emphasized. When the dupes are brought to understand their true interests, Congress will not dare stand for a single session as the protector of express graft.
Small wonder that the express companies are fighting with every resource against the parcels post. They constitute one of the greatest groups of financial power in the country. They are united firmly. Most of the companies are large stock-holders in the others. Thus the United States Express Company was shown by the report of the Public Service Commission of New York, issued in 1908, to be capitalized at $10,000,000. Of this, the Adams Express Company owned nearly $1,000,000, the American Express Company exactly $1,000,000, and the Southern Express Company, $70,000. How tremendously profitable the business of the United States Express Company has been is shown by the fact that whereas the company claimed an investment of only $2,042,000 in real estate and equipment, it had $7,464,000 in investments, $895,000 in cash holdings, and $2,000,000 in collateral and other loans! That is to say, while this company had very little more than $2,000,000 invested in its transportation business, it had more than $10,000,000, representing surplus and undivided profit, in general investments!
It has accumulated such vast profits because it has been for many years charging unconscionable and scandalous rates for its service.
The Adams Express Company is shown by the current number of Moody’s Manual to have $12,000,000 capital. After paying large regular dividends and numerous extra dividends for many years, the company in 1907 found itself with such a tremendous surplus that it actually paid a special dividend of 200 per cent in 4-per-cent bonds! Every holder of a one-hundred-share of stock was presented with two hundred dollars’ worth of 4-per-cent bonds! The present, of course, represented in part the excessive charges which the company had been permitted to collect from the public.
But the most startling statistics of express accumulations are the financial statements of Wells Fargo and Company. For many years this company’s capital stock was $8,000,000. Its most recent statement, as published in Moody’s Manual, listed these assets: Real property, $4,100,000; equipment used in transportation, $2,044,000; stocks owned as investments, $3,211,000; bonds owned as investment, $3,750,000; loans, $17,165,000; cash on hand and in the bank, $5,459,000.
Such were the accumulations of this company whose own statement admitted that the equipment actually used in its transportation business represented only $2,044,000. The company has always paid large dividends. Its star performance in this line was the payment, early in 1910, of a cash dividend of 300 per cent. Every holder of a one-hundred-dollar share of stock was given three hundred dollars cash!
This was not all. The stock of the company was worth in the market exceedingly high prices. In addition to giving this 300-per-cent cash dividend, the company increased its stock from $8,000,000 to $24,000,000, and gave the holders of the original $8,000,000 the right to subscribe at par for two shares of the new issue for each share of their previous holding.
Enormous Profits of the Express Companies
These figures suggest the profits express companies have been making. They have been making them because our government is the only government which permits such a monopoly. It is a monopoly which not only extorts millions upon millions every year from the people, but which enables railroad companies, through their intimate business and financial relations with the express companies, to conceal a very considerable part of their earnings. The express companies are large holders of one another’s stock, and also of railway stock; in turn, the men who control the great railway combinations are themselves big owners of express-company stocks and bonds. The express companies lease from the railroads the right to transport freight over the railroad lines. The terms of these leases represent, not a reasonable and fair charge for the service, but an elaborate project of covering up excessive earnings and extortionate charges in a maze of complicated intercorporation transactions.
The worst penalty that the American public pays in order that the express grafters may make these huge profits and conduct these manipulations, does not lie in the excessive charges. It lies rather in the stunting and depressing effect upon general business, which is a necessary and manifest result of a policy that denies the freest and cheapest transportation facilities to the entire community.