1 The expenses of this joint committee were not taken from the statement given by Mr. Kram, but from the records of the joint committee. PROGRESS OF THE WORK OF THIS JOINT COMMITTEE. On August 26, 1912, two days after the passage of the act creating the present committee, Congress adjourned sine die, and immediately almost all the Members of Congress departed for their homes. Owing to the press of legislative business of the last two days of the session, there was not time for organization of the joint committee and the formulation of a plan of procedure. The organization was delayed after the convening of Congress in December by the absence of several Members. On January 6, 1913, the committee was finally organized, but no time had been lost by the delay in its organization. Hon. Jonathan Bourne, jr., then chairman of the Senate Committee on Post Offices and Post Roads, had, on September 11, 1912, sent a copy of S. 7371 to the executive officers of all the railroads carrying the mails, 795 in number, the purpose being to save time and secure an expression of opinion on the plan recommended by the Post Office Department as embodied in the bill introduced and known as Senate bill 7371 so that the joint committee might have before it the briefs of both parties in interest. The replies to the chairman's circular letter submitting the bill to the railroads clearly indicated that they were united in opposition to its provisions. During the Christmas holidays the chairman arranged for a conference, at which the following gentlemen were present: The Hon. Joseph Stewart, Second Assistant Postmaster General; Mr. Ralph Peters, chairman of a committee on railway mail pay, representing the railroads; Mr. W. A. Worthington, assistant director of maintenance and operation, Union Pacific and Southern Pacific systems; and Mr. V. J. Bradley, general supervisor of mail traffic, Pennsylvania Railroad Co. DEPARTMENT PLAN MODIFIED. This conference developed that the main objections of the railroads to the department's bill, aside from their general objection to the space basis, were that the Postmaster General was authorized to make the primary separation between passenger and freight services; that it made no provision for crediting the railroad companies with a reasonable return on the capital employed in the Railway Mail Service; and that in the matter of car space it did not 59382-S. Doc. 569, 63-2- -3 credit the railroads with the maximum space in both directions. The Postmaster General stated through his Second Assistant Postmaster General, the Hon. Joseph Stewart, and directly by telephone, that he was willing to make the concessions to the railroads in the respects indicated. Shortly after the informal conference referred to, namely, January 6, 1913, the committee organized, and the chairman, after calling the committee's attention to the foregoing modifications in the departmental plan, was authorized to formulate a letter to Postmaster General Hitchcock, asking him to indicate in writing his recommendations, with his reasons therefor. This letter was as follows: Hon. FRANK H. HITCHCOCK, Postmaster General, Washington, D. C. JANUARY 6, 1913. MY DEAR GENERAL: Referring to telephonic conversation had with you several days ago, in which you stated that the department was willing to make certain concessions to the railroad companies in the matter of railway mail pay by modifying the position taken by it in House Document No. 105 and as expressed in the pending bill, S. 7371. As I understand it, while approving in general the plan outlined in House Document No. 105, you are now prepared to recommend certain modifications of that plan in these particulars, to wit: First. That the Interstate Commerce Commission instead of the Postmaster General be authorized to make the primary separation between passenger and freight business. Second. That in the matter of car space the railroad companies be credited with the maximum space in both directions. Third. That in addition to a compensation of 6 per cent of the operating expenses the railroad companies, after an apportionment, be credited with a reasonable percentage of the capital employed in and relating to the Railway Mail Service. The joint committee organized this morning and is anxious to have you indicate in writing, at the earliest possible date, your recommendations modifying the plan as outlined in House Document No. 105, with your reasons therefor. As prompt a response as the nature of this request will permit is desired. Yours, very truly, JONATHAN BOURNE, Jr., Chairman Joint Committee on Postage on Second-class Mail In reply the Postmaster General sent the following telegram: Hon. JONATHAN BOURNE, Jr., United States Senate, Washington, D. C.: WASHINGTON, D. C., January 8, 1913. Your letter of to-day is accurate in its statement of the modifications I favor. FRANK H. HITCHCOCK. His formal reply to the chairman's letter of January 6 reads as follows: POST OFFICE DEPARTMENT, Hon. JONATHAN BOURNE, Jr., First. That the Interstate Commerce Commission, instead of the Postmaster General, be authorized to make the separation of operating expenses between passenger and freight services. Second. That in computing the car-foot miles the mail service shall be charged in both directions for a line of railway post-office cars with the maximum space authorized in either direction. Third. That, in addition to the operating expenses and taxes apportionable to the mail service and 6 per cent thereof, companies may be allowed such additional amounts, if any be necessary, as shall render the whole a proper proportion of a fair and reasonable return on the value of the property necessarily employed in connection with the mail service. Such modifications of the phraseology of the proposed law as may be necessary to effect these changes will be prepared as early as practicable. Yours, very truly, "DEAD SPACE." FRANK H. HITCHCOCK, Later it developed that the modification relating to car-foot miles was no modification at all, the Post Office Department claiming that under the rules set forth in Document No. 105, it had already given full credit to the railroads in its space figures contained in that document, so far as a line of full railway post-office cars were concerned, for the maximum space authorized in either direction. This was brought out early in the hearings by Mr. V. J. Bradley, supervisor of mail traffic, Pennsylvania Railroad Co. (Hearings, pp. 435 and 436) in response to a question of the chairman as to what effect the concession made in Postmaster General Hitchcock's letter of January 9, 1913, with reference to car-miles would have on the disallowance by the Post Office Department of 26,155,391 car-miles reported by his company. His answer was as follows: That is simply a restatement by the former Postmaster General of the practice which the Post Office Department claimed to have pursued in preparing Document No. 105 in regard to recognition of space in full railway post-office care. It is therefore not regarded as a modification. Then the following colloquy occurred between the chairman and Mr. Bradley (Hearings, pp. 436-437): The CHAIRMAN. Read my letter to the Postmaster General, on page 96, dated January 6, 1913, and kindly inform me if acquiescence of the department or by law in the terms of such letter would, if in effect, have wiped out this difference of twentysix-odd millions?. Mr. BRADLEY. If the Post Office Department had given a plain affirmation to your second paragraph, reading, "In the matter of car space the railroad companies be credited with the maximum space in both directions," I would say that would have entirely settled the question at issue as regards dead mail space. The CHAIRMAN. I have a telegram from the then Postmaster General, Mr. Hitchcock, referring to my letter of January 6, 1913, reading as follows: "Your letter of to-day is accurate in its statement of the modifications I favor." That telegram, you take it, is contradictory, taken in conjunction with my letter and the letter of Mr. Hitchcock of January 9, which you have read. Mr. BRADLEY. It seems to me that the letter of the former Postmaster General particularly limits the modification he is willing to make to the full railway post-office car, regarding which, in the case of the Pennsylvania Railroad Co., we had a difference with the Post Office Department of only 6 per cent, and that it does not propose or consent to any modification in regard to the other classes of mail-car space, storage cars, apartment cars, and closed-pouch space, which together represent 21,000,000 car-foot miles out of 26,000,000 disallowed. Therefore, the modification, as I understand it, is only a very slight approach toward an adjustment of the differences. The CHAIRMAN. But all this difference of twenty-six odd million car-foot miles would be dissipated by the allowance of car space by crediting the railroad company with maximum space in both directions in the matter of car space. Mr. BRADLEY. Yes; and that would be, as I say, a simple recognition of the space that was actually and necessarily operated for the mails during the month selected for the test-November, 1909. The CHAIRMAN. Such an allowance, by law or by the department, namely, crediting railroad companies with maximum space in both directions for all car space used, would rectify the discrepancy between yourself and the department as represented by the nonallowance for 13,546,378 car-foot miles on empty storage cars running, would it not? Mr. BRADLEY. I believe so. The CHAIRMAN. So that really the main difference between you and the department in the results obtained on the information contained in Document 105 is the difference in allowance or nonallowance for maximum amount of space for the round trip? Mr. BRADLEY. So far as the space is concerned; yes, sir. As to this, Second Assistant Postmaster General Stewart (Hearings, pp. 1014-15) makes the following statement: The cases covered by Postmaster General Hitchcock's letter are not such cases as are involved in the difference between the results reached by the railroads' committee and the officers of the Post Office Department. * * * This referred to cases where, because of a difference in the authorization of railway post-office cars in the two directions, a doubt had arisen as to whether under the new plan proposed the railroad companies would receive credit in both directions for the maximum space authorized in either direction. Its purpose was to remove all doubt upon this point and to agree that the rule should be written in the statute in order that it could not be questioned. It was not an admission that the allowances made in Document 105 had been erroneous in such cases. The claim of the railroads was that the Post Office Department, in compiling its space figures contained in Document No. 105, provided for only the minimum necessities of the postal service, refusing to credit the mail service with much of the space thus required by the department, although his figures for the other passenger-train services allowed fully for all such space required by them. In fact, in many cases such space actually required by the mails, and so reported by the railways, was taken from the total mail space, and, without reason, assigned to the passenger service. (Preliminary report, p. 13.) The Post Office Department just as positively asserts "that the railroads companies generally reported the space at the maximum of operating conditions, whether warranted by the needs of the mail service or not." (Hearings p. 1017.) What the Post Office Department did is described from the railroads' viewpoint by Mr. Bradley (Hearings, pp. 405-406) as follows: The car space devoted to the mails, which the Post Office Department had refused to recognize or accept, had been deliberately transferred to the car space credited to the passenger service, thus changing the relative ratios of one to the other. The explanation of the Postmaster General was based upon a discrimination between car space directly used by the mails, and deemed absolutely necessary, and car space incidentally required in connection with the mails, the latter being denominated "dead space, " and thus transferred to the passenger service. The fact is, that it is not dead space, but just as active as any other car space in the trains, and is just as much an attendant feature of the mail service as similar unoccupied space in the passenger or express cars is to those services, and which the railroad companies, of course, charge to either of those services. What the Post Office Department did, from its viewpoint, may be gathered from the definition of "dead" and "deadhead" space given by Second Assistant Postmaster General Stewart (Hearings, p. 1380), which was as follows: Speaking generally, and I will say that the record is more specific, dead space as it appears in Document 105, and as the subject of discussion here, is that space in cars reported by the railroad companies and charged to the mail service which the department determined was operated for the convenience of the railroad company without a necessary connection with the mail service, or space operated in excess of the authorization made by the department and operated for the convenience of the railroad company, or operated for some reason for which the department is not responsible. In some cases it consisted of the operation of a full 60-foot car where the department asked for only 30 feet of space. Sometimes it represented the operation of a car beyond the terminus of an authorized line. In other cases, it represented the operation of a car over a rail line, where no mail service was authorized to be performed, and sometimes it was the operation of an apartment car over a line on Sunday where no railway post-office service was performed on Sunday, although performed on week days. Those cases the department determined were not properly chargeable to the mail service, and the space involved was designated as dead space and charged to the passenger service. Deadhead space is space which was operated by the companies in excess of the immediate needs of the service, but which the department believed the mail service was properly chargeable with as being incidental to the operation of the authorized service, as, for instance, where a 60-foot car was authorized in one direction and a 40-foot car in the opposite direction. If that necessitated the operation of a 60-foot car in each direction, it was thought that the mail service should be charged with the entire space both ways; therefore the additional 20 feet in the return movement was designated as deadhead space and charged to the mail service; that is combined with the mail space but set out separately so that Congress might know what the deadhead space amounted to in its relation to the rest of the service. In connection with car-foot-mile concessions it may be well to refer to another aspect of the above-mentioned difference between the Post Office Department and the railroads. The department asserted that the railroads were receiving from their mail service a revenue of 4.14 mills per car-foot mile, and from their passenger service 4.16 mills. The railroads claimed that they were receiving 3.23 mills per car-foot mile from mail, and 4.35 mills from their passenger service. (Preliminary report, p. 11.) This discrepancy indicated to the railroads that the Post Office Department had excluded from the mailservice and charged to the passenger service so-called dead space, which had no proper application to the latter service. They claimed in effect that if the dead space was to be excluded at all it should have been excluded from both services, so that the relative percentages of cost and revenue would not have been affected. The result of these differences was the creation of a departmental and railroad committee to ascertain whether same could be adjusted. By reference to page 324, of the Hearings, will be found a joint letter signed by the representatives of the respective interests, addressed to the chairman of this joint committee, wherein the earnings per car-foot mile in mail service are stated to be 3.37 mills, and in passenger service 4.34 mills, when dead space was counted as the railroads contended. This letter reads as follows: Hon. JONATHAN BOURNE, Jr., MARCH 15, 1913. Chairman Joint Committee on Postage on Second-Class Mail MY DEAR MR. CHAIRMAN: In response to the direction of the joint committee at its session February 12, 1913, the undersigned committees were designated by the Second Assistant Postmaster General and Mr. Ralph Peters, chairman committee on railway mail pay, to represent the Post Office Department and the railroads. respectively, to consider the differences in the statements of revenue per car-foot mile received by the railroads from the mail service and from other passenger train services, as computed by the department and the committee on railway mail pay. The earnings per car-foot mile from the mail service and other passenger services as stated by the committee on railway mail pay were 3.23 mills for the mail service and 4.25 mills from other passenger services. These figures were computed from the data as reported by the companies represented by the railway mail pay committee and covered 178,716 miles of service. The earnings per car-foot mile, as stated by the Post Office Department in its memorandum dated January 17, 1913, in reply to the statement of the railroads entitled "Mail carrying railroads underpaid," were 4.14 mills for mail service and 4.16 mills |