Mail Carrying Railways Underpaid

In Short

This document is a formal, technical argument presented by a collective of American railway executives in 1912. It serves as a rebuttal to the Postmaster-General’s assertions that the government was overpaying railroads for mail service. The authors contend that the Post Office Department used flawed accounting—specifically ignoring the return on invested capital—to justify payment cuts. It remains a valuable record of early 20th-century industrial economics, detailing how a massive private infrastructure interacted with a rapidly expanding federal bureaucracy during the dawn of the Parcels Post.

The Story

The narrative arc follows the Committee on Railway Mail Pay as they attempt to dismantle the government’s economic justifications for reducing railway compensation. The conflict begins with the Postmaster-General’s claim in 1909 that railroads were overpaid by nine million dollars. The Committee, representing hundreds of railway companies, views this assertion as a dangerous misconception. They argue that the government has consistently ignored the "fair value" of the property—the tracks, stations, and specialized mail cars—required to facilitate the postal service.

As the argument unfolds, the Committee identifies several points of contention. They highlight the "Divisor" order of 1907, which they claim was an administrative maneuver designed to slash payments without reducing the labor required of the railroads. They also point to the impending launch of the "Parcels Post" on January 1, 1913, as a major looming threat; the Committee fears this will flood the trains with volume while the government simultaneously seeks to drive down the rates of payment.

The middle of the argument focuses on the technical failure of the government’s accounting. The Committee meticulously catalogs the "extra" services provided by railroads: the heating, lighting, and cleaning of mail rooms; the use of railway tracks for "advance distribution" of mail; and the provision of free transportation to postal inspectors and agents, totaling over 50 million passenger miles annually. They argue that if these hidden costs were factored in, the current payments would be revealed as insufficient.

The climax of the argument involves a critique of the government’s reliance on data from a single month, November, to establish annual trends. The Committee asserts that November is an atypically slow month for passenger traffic, making it a "dishonest" baseline for calculating the cost of mail service, which shares space with passenger operations.

The resolution, or rather the lack thereof, is found in the Committee's final plea to Congress. They reject the Postmaster-General’s proposed model, which would limit railway pay to operating costs plus a six percent return. They warn that this model would punish efficient railroads and reward those with poor management, effectively discouraging investment in better equipment. The Committee ends by stating that the Post Office Department acts as both judge and jury, and they appeal to Congress to strip the Department of the power to fix rates, advocating instead for a neutral, third-party arbitration to restore fair compensation.

How It Unfolds

The assertion of grievance The Committee opens by declaring that current mail payments fail to cover operating expenses, let alone provide a return on property. They argue that the government’s math deliberately suppresses the real costs of service.

The looming shadow of expansion The authors turn their attention to the upcoming Parcels Post, warning that the sudden increase in volume will exacerbate existing financial losses. They argue that unless the government adjusts its compensation structure, the railways will face systemic bankruptcy.

The fallacy of the November baseline The Committee systematically dismantles the Postmaster-General’s methodology, focusing on his reliance on November data. They demonstrate that because November traffic patterns are abnormal, calculations based on that month are inherently misleading.

The hidden costs of service The text details the uncompensated burdens placed upon the rails, such as the maintenance of mail cranes and the requirement to transport postal officials for free. These sections underscore the "exacting" nature of the service beyond mere transport.

The demand for legislative protection The final section calls for an end to the Postmaster-General’s arbitrary control over rates. The Committee concludes that the government cannot be an impartial arbiter of its own bills and demands that Congress intervene to prevent further cuts.

The People

The text is driven by the collective voice of the Committee on Railway Mail Pay, a group of high-ranking executives from major lines like the Union Pacific, Pennsylvania Railroad, and the Long Island Railroad. These figures, including Chairman J. Kruttschnitt and Vice-Chairman Ralph Peters, represent the interests of capital investment. They view the railways as private property providing a vital public service, and they want that service properly valued as a business transaction rather than a government subsidy.

Standing across from them is the Postmaster-General, who serves as the antagonist. In this narrative, he is a bureaucratic entity—a figure of shifting political tenure—whose primary objective is to trim departmental costs. The Committee views him as a man who hides behind flawed formulas to shift the financial burdens of the federal government onto the backs of private corporations. The members of Congress, such as Senator Jonathan Bourne, Jr., serve as the ultimate audience. The Committee writes to them with a mix of deference and urgent warning, hoping to persuade these legislators that the current, adversarial relationship between the Post Office and the railways is unsustainable and fundamentally unjust.

In Its Own Voice

The Postmaster-General ignored this universally accepted principle and adopted a theory which, if applied to the general business of the companies, would render substantially every mile of railway in the United States immediately and hopelessly bankrupt.

(The Committee argues that failing to account for a return on capital is a recipe for economic ruin.)

It is, of course, understood that the respective expenses of the passenger and freight services must move upward and downward with the fluctuations in the volume of each sort of traffic.

(The Committee explains why a single month's data is insufficient to represent a full year of operating costs.)

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.

(The Committee expresses a preference for reforming existing laws rather than adopting the Postmaster-General’s "theoretical" new plan.)

What It's Really About

At its core, this is a debate about the nature of a public-private contract. The question is: when a government mandates that a private entity provide a service, who bears the risk of that service's growth? The Committee argues that the mail service has become a "bureaucratic" instrument used to force economies onto the railroads, effectively turning the mail into a tax on the railway system. The text probes the difficulty of separating "joint costs"—the shared expenses of moving passengers and mail on the same train. The central argument is that when costs are ambiguous, the government, as the sovereign power, will inevitably define those costs in a way that serves its own budget, leaving the private partner to absorb the loss.

Why Read It Today

Readers interested in the history of American infrastructure or the evolution of federal regulation will find this book a fascinating primary source. It captures the specific, turn-of-the-century tension between the burgeoning federal state and the powerful, private railroad corporations that once defined the American landscape.

The prose is dry, precise, and intensely argumentative. It does not read like a story, but rather like a legal brief, filled with tables, appendices, and rigid, formal logic. Modern readers may find the relentless focus on "car-foot miles" and "operating expenses" dense, but there is a clear, rhythmic quality to the indignation here. It is a glimpse into a time when the efficiency of a nation’s mail depended entirely on the physical space provided in a steel rail car.

The book is an honest look at a period of corporate lobbying. You are seeing the railroads argue for their survival, but you are also seeing them struggle with the reality of being "public utilities" that were not yet fully under state control. It stays with you as a reminder of how the language of "fairness" is often just a mask for competing economic interests—a debate that remains as vital today as it was in 1912.