People Demand a General Parcels Post. pp. 7-12.
William Sulzer.
Absence of a parcels-post law enables the railroad companies, through subsidiary companies called express companies, to eliminate all competition and prevent all regulation in one branch of transportation and to escape compliance with the laws that are being enforced against them in other branches of transportation by the several state commerce commissions and the Interstate Commerce Commission.
That the owners of the securities of these express companies have made enormous profits is a recognized fact. One hundred per cent, even 200 per cent, profit when an express company “cuts a melon” no longer excites surprise when found in the news columns of our evening paper.
No one objects to a fair profit for good service, but conditions seem to indicate that the transportation companies are not satisfied with the first and are not giving us the second, while developments before commerce commission hearings indicate that their backwardness in adopting economical and scientific business methods causes a tremendous unnecessary expense. This they are meeting by maintaining and even increasing already exorbitant rates for service that many believe are discriminatory, and that grave injury and injustice to business and to the general public results.
As an example, W. P. Dickinson, of the Burlington Railway, is quoted in the Railway Record as saying at a public hearing that the expenditures of the Burlington traffic department for printing and stationery in the fiscal year 1910 was $222,000. Assuming that they are typical for all the railways in the United States, the cost of printing railroad tariffs alone under present methods, is $6,000,000 to $10,000,000. In modern transportation methods, as, for instance, those in vogue in Germany, this expense is so trifling as to be scarcely worth considering. Freights move in Germany on a uniform tariff, based entirely upon bulk, weight, and distance, discrimination is impossible, and any shipper can learn in a moment, by referring to the table, the exact freight charge to any point, and can ship knowing that his competitors must pay the same price for the same service.
In the United States the shipper can not know all the tariffs that are published or how they affect rates. He is supplied with a few easily understood tables, but it is not within human possibility for him to even read, to say nothing of comprehending, the millions that are filed with the commission every year and how they affect the cost of the transportation he buys.
So it seems this extraordinary printing expense of millions, whatever its purpose may be, operates to keep the average shipper ignorant about rates. Ignorance is always dangerous, and particularly so in transportation matters.
Harrington Emerson, the expert, testified at the hearing before the Interstate Commerce Commission at Washington last November, that $300,000,000 annually in railroad operating expenses in this country would be saved if the railroads adopted better business methods of management.
To save for the consumers that enormous sum, no better beginning can be made than for the government to establish a satisfactory parcels post and adopt scientific business methods in its management.
That the interests that control our railroads also own and control the express companies and that their separate incorporation is merely a device to cover extortion and discrimination by complex contract relations is indicated by Senate Document No. 278, pages 53, 54, and 55:
| Stock held by railways in express companies | $20,668,000 |
| Railway securities held by express companies | 34,542,950 |
| Holdings of express companies in the stock of express companies | 11,618,125 |
| Total intercorporate ownership express companies June 20, 1906 | 66,829,075 |
Express Company Rates Cause Loss to Shippers—Express Company Methods Cause Loss to the Postal Department
The peculiar, graduated, increasing rate for small-weight parcels is absolutely prohibitive for express transportation except at an actual loss for a considerable proportion of business. Most express shipments are in small parcels. They therefore pay the higher scale. This increased rate is exacted for both terminal and haulage service and is as high as 37½ times the first-class freight charge.
The express companies take from the Post Office Department the profitable business and pocket millions of profits, but leave the unprofitable for the Post Office Department. The profits from a parcels post would stop the post-office deficit and give us a 1-cent letter rate. The annual surplus of the British post-office department about equals our annual postal deficit. The British have a serviceable parcels post.
The men in the mail service have a record of one error in 18,000 pieces handled. Compare that with your experience with the express companies.
The Parcels Post Not Openly Opposed by the Beneficiaries of Present Methods
The opposition to the parcels post at the late congressional hearing was made by persons who appeared in the name of American Hardware Manufacturers’ Association, Illinois Retail Merchants’ Association, National Association of Retail Druggists, National Association Retail Grocers, National Retail Hardware Association, National Federation of Retail Implement & Vehicle Dealers’ Associations, Wholesale Dry Goods Association, Paint Manufacturers’ Association of the United States.
There was no direct opposition by the express companies to the parcels post.
Misdirected Energy Benefits Express Companies and Catalogue Houses
Since the members of the above commercial associations can not to any important degree be beneficiaries of the present confiscatory and restrictive system that has a monopoly of the transportation of merchandise in packages of 4 pounds to 20 pounds, some other reason for their opposition to the parcels post must be found, and in that connection the testimony given by these gentlemen at the hearing is interesting.
The main objection to the parcels post was that it would build up catalogue houses to the injury of retail businesses.
In reply to questions by members of the congressional committee, however, some of their specific objections applied only to the rural free delivery now firmly established and which nobody dreams of abolishing.
The other objections advanced were also to conditions already in existence, some of which at least it would seem would be less objectionable if we had a serviceable parcels post.
For instance, the mailing of catalogues by the catalogue houses. That can be done now to the farmer’s door for one-half cent an ounce, but even that low rate does not always get the business. I have seen the catalogue of Sears, Roebuck & Co. and the Chicago House Wrecking Co. that were sent by each of these firms to addressees who did not specify how he wished them sent. They were received since the date of the hearing; both catalogues came by prepaid express.
Had we a parcels post competing with the express companies and reducing their extortionate charges the express companies would be less able to deprive the government of that revenue by underbidding the Post Office Department rate on catalogues.
Catalogue Houses Don’t Need the Parcels Post, and Oppose It
At the congressional hearing so much was said by the opponents of the parcels post about the catalogue houses, how they were behind the parcels post—that it was for their sole benefit, etc., etc.—that I went to Chicago and succeeded in getting an interview with Mr. Julius Rosenwald, president of Sears, Roebuck & Co. He declined to support the parcels post. He said they were very well satisfied with conditions as they are, under which they had built up their immense business, which was done entirely by catalogue and without salesmen or commission. He explained that only an insignificant amount of their sales went by mail, that what did was unprofitable, as it cost as much to make ready and handle such little sales as larger shipments, jewelry being the only exception, and even for that they advised express.
Evidence that catalogue houses do not want or need, and do oppose, the parcels post was not lacking at the hearing.
For example: Marcus M. Marks, of the Merchants’ Association of New York, after stating that the Merchants’ Association is not in favor of a general parcels post and has frequently placed itself in opposition thereto he quoted one of the large Chicago catalogue houses as in opposition, and for this reason: “The result would be that instead of shipping goods in large bulk it would tend to create a demand for small shipments, which would increase his expense of doing business.” Marshall Field & Co., one of the largest concerns in this country, were referred to by both J. G. Baker, president National Federation of Retail Implements, etc., and H. L. McNamary, of the Hardware Dealers’ Association, as opposed to the parcels post.
All the opponents of the parcels post at the hearing, mostly retailers in heavy-weight goods, were very insistent to impress upon the minds of the committee the great injury that is being done their business by the big catalogue houses, who, they claimed, are underselling them and are doing a very large and increasing percentage of the business that belongs to and should go to the retail dealer. But is it correct to charge to the parcels post this great loss of trade which has occurred while we have no parcels post and that has been brought about by conditions that can claim no assistance from a parcels post? Is it reasonable to say that a parcels post would produce such conditions when no such conditions do exist as above noted where the parcels post has been in operation for many years?