As a large increase in mail tonnage means to the Postoffice Department about an equal increase in revenue with a decreased payment per ton to the railroads through lower rates, the avoidance of a deficit would seem not a difficult matter if other postal expenses were kept at least within sufficient control, so they would not increase faster than the increase in volume of mail handled.
The Postoffice Department enjoys this peculiar advantage of receiving with the growth of the country an increase in revenue directly in proportion to the increase in business handled. In disbursing this revenue, it must pay less to the railroads in proportion to the density of business, thus retaining to apply on other expenses a larger net revenue year by year. It is reasonable to suppose that the cost of many branches of the Department should not increase in the same ratio as tonnage of mail (for example, that expenses of individual postoffices and administrative and general expenses should not grow in this proportion). Yet, regardless of these favorable influences, expenditures in other directions have absorbed the great net revenues after paying the railroads, and it is in these directions that the cause of the postal deficit must be looked for.
The growth of these expenditures, which since 1900 has been much faster than the rise in mail tonnage, is shown in the following comparison of 1908 with 1898:
| 1908. | 1898. | Increase. | Pct. | |
| Ton mileage of mails handled by railroads | 484,683,135 | 272,714,017 | 211,969,118 | 78 |
| Postal revenues | $191,478,663 | $89,012,619 | $102,466,044 | 115 |
| Less paid to railroads | 48,155,379 | 34,379,227 | 13,776,152 | 40 |
| Net applicable to other expenditures | 143,323,284 | 54,633,392 | 88,689,892 | 162 |
| Other expenditures | 160,196,507 | 63,654,297 | 96,542,210 | 152 |
| Deficit | 16,873,223 | 9,020,905 | 7,852,318 | 87 |
| Per ton of mail handled by railroads (cents)— | ||||
| Postal revenues | 39.5 | 32.6 | +6.9 | |
| Paid to railroads | 9.9 | 12.6 | -2.7 | |
| —— | —— | —— | ||
| Net applicable to other items | 29.6 | 20.0 | +9.6 | |
| Other expenditures | 33.1 | 23.3 | +9.4 | |
| —— | —— | —— | ||
| Deficit | 3.5 | 3.3 | +0.2 | |
| Note.—The increase in gross postal revenue per unit of mail handled by railroads is no doubt due to increase in city mail not handled by railroads. | ||||
Chicago, Ill., March 1, 1909.
[THE DIMINISHED PURCHASING POWER OF RAILWAY EARNINGS]
By C. C. McCain.