It is true that there has been a large increase in the gross revenue of the railroads in the last ten years, but this has accrued from traffic other than carriage of the mails and has been accompanied by great increase in operating expenses. In fact, were it not for the economies of the carriers, effected by the use of more powerful locomotives and larger freight cars, the increase in operating expenses would, without doubt, have fully neutralized the growth in revenue. In the months preceding the panic of October, 1907, the railroads were quite generally showing decreases in net earnings in face of the largest gross earnings in their history. It was costing them much more than a dollar to handle every dollar increase in gross earnings.
Since the hasty enactment of ill-considered legislation reducing mail pay, the revenues of the roads have been seriously affected by a change in business conditions which has reduced traffic without reducing prices of materials and labor. At the same time, legislation has increased labor costs by reducing hours of service.
In 1898 rates for transporting the mails were too low to cover the cost of service, they are much too low now, and the losses on the mail service as a whole—there are some routes that pay—are borne by freight traffic entirely.
RECEIPTS FROM MAIL AND OTHER RAILROAD TRAFFIC.
The latest statistics of operations of all railroads of the United States are for the year ending June 30, 1907, issued by the Interstate Commerce Commission, July 9, 1908. From them we compile the following exhibit comparing results of 1907 with 1898—when a Commission of Congress, after complete investigation of the subject, recommended that mail rates be not reduced.
| Pct. | Pct. | |||
| Year ending June 30th— | 1907. | 1898. | Inc. | Dec. |
| Earnings from passengers | $ 564,606,343 | $266,970,490 | 111 | — |
| Earnings from express | $ 57,332,931 | $ 25,908,075 | 121 | — |
| Earnings from mails | $ 50,378,964 | $ 34,608,352 | 46 | — |
| Earnings from freight | $1,823,651,998 | $876,727,719 | 108 | — |
| Operating expenses | $1,748,515,814 | $817,973,276 | 114 | — |
| Passenger train mileage | 541,439,176(a) | 341,526,769 | 58 | — |
| Freight train mileage | 662,106,857(a) | 503,766,258 | 31 | — |
| (a) Including mixed trains. | ||||
| Earnings per passenger train mile (cents): | ||||
| Pct. | Pct. | |||
| 1907. | 1898 | Inc. | Dec. | |
| From passengers | 105.7 | 79.4 | 31 | — |
| From express | 10.7 | 7.7 | 38 | — |
| From mails | 9.4 | 10.3 | 10 | |
| —— | —— | — | — | |
| Total | 125.8 | 97.4 | 29 | — |
| Number passengers carried per train | 51 | 39 | 31 | — |
| Tons of mail carried per train | .86 | .80 | 7 | — |
| Earnings per freight train mile (cents): | ||||
| Earned from freight | 274.0 | 173.1 | 58 | — |
| Tons of freight carried per train | 357.35 | 226.45 | 58 | — |
| Operating expenses per total train mile (cents) | 147.0 | 95.6 | 54 | — |
| Net earnings per train mile (cents): | ||||
| Passenger trains | 21.2 | (Loss) 1.8 | ||
| Freight | 127.0 | 77.5 | 64 | — |
| Passenger earnings per passenger mile (cents) | 2.014 | 1.973 | 2 | — |
| Mail earnings per mail ton mile (cents) | 10.66 | 12.57 | — | 15 |
| Freight earnings per freight ton mile (cents) | 0.759 | 0.753 | 1 | — |
Note.—Bear in mind these figures do not, of course, show effect of cut of $8,500,000 in mail pay effective July 1, 1907, or losses in net revenue through depression in business conditions commencing in latter part of 1907. As an index of the latter, the Commercial and Financial Chronicle of September 5, 1908, showed that 141 roads, aggregating 168,839 miles or 70 per cent. of all roads in the country, had suffered a loss of $63,484,902, or 24.97 per cent., in net earnings in the first half of the calendar year 1908, as compared with same period of previous year.
The foregoing statement clearly shows the difference between the revenue obtained from passenger trains as compared with freight trains. The control of the former is largely out of the hands of railroad operating officers, as to meet competitive and traffic conditions, heavier and more luxurious passenger cars must constantly be furnished, which, of course, means largely increased expense with very little increase in the paying train load. In fact, as to the mails, notwithstanding an increase in tonnage carried on the average train, the mail earnings per passenger train mile were actually less in 1907 than in 1898, due largely to the automatic reduction of railway mail pay per ton mile. Considering the freight train mile, the composition of which is almost entirely within the control of the railroads, which institute methods for reducing cost of transportation, it will be observed that by such methods the railroads have been enabled to place 58 per cent. more tonnage in a train, bring them 58 per cent. more earnings, which can be applied as an offset to the increase of 54 per cent. in the cost of running a train one mile.
This increase in operating expenses per train mile last referred to has been brought about largely because of the increased cost of labor and materials, which, as is well known, has been general throughout the country.