The estimated cost of a specific service is not a proper basis for fixing rates for transportation of any commodity. The railroads are entitled to receive a full and fair return for the value of the service performed, and the ascertainment of cost of such service is principally of value as a protection against the establishment of confiscatory rates.
Question 3.—What, in your opinion, is a desirable plan for compensating railroad companies for transporting the mails?
Answer.—The existing law has been in effect for nearly forty years, and those who have worked under it are more or less familiar with its operations. If it were amended to correct serious inequities, as suggested in the answer to Question 1, and fairly and impartially administered by the Post Office Department, it would be preferable to any untried or theoretical plan that could be proposed.
Very respectfully yours,
COMMITTEE ON RAILWAY MAIL PAY,
By
(Signed) Ralph Peters,
Acting Chairman.
FOOTNOTES:
[A] The necessity for providing, out of income, for some kinds of improvements is commonly admitted. The public constantly demands greater comfort and convenience which can be supplied only by improvements in property and equipment that bring in no additional income. A present example in the mail service, itself, is the great expense which the railways are now undergoing in substituting steel mail cars for those formerly in use. The old cars, which thus become a total loss were fully up to the most advanced standards of construction when built and they could continue for a long time to serve the purposes of the service except for the public demand for stronger cars.
[B] A car-foot mile is a unit equal to moving one foot in car length (regardless of width or height) one mile. Thus to move a car sixty feet long one mile results in sixty car-foot miles; to move the same car three miles results in 180 car-foot miles, etc.
[C] There may be some duplication in this item, but to eliminate it would require an elaborate computation which, in view of the broad margin of expenses over receipts, is wholly superfluous. Whatever duplication exists must be small in comparison with this margin.