NEGATIVE DISCUSSION

Perils of Parcels Post Extension. pp. 13-31.

George H. Maxwell.

A Heavy Deficit Inevitable

The commercial advocates of larger bulk and lower rates by domestic parcels post for the shipment of merchandise by mail do not want either a distance rate or a system limited by territorial zones. They want the privilege of shipping from any factory or central store or warehouse, wherever located, anywhere in the United States, to any customer or consumer, at any postoffice, however remote or inaccessible, in any state or territory. The rate desired is a flat rate of so much per pound without regard to distance.

It is urged that the same rate should be charged by Uncle Sam for carrying merchandise by parcels post from a New England factory to the distant mountain mining camps in Idaho or Oregon, or to the prairie towns of Texas, as would be charged for delivering the same package from the same factory by local trolley car service to a nearby postoffice in the immediate suburbs of the New England city where the factory happened to be located.

Government Bears the Burden

The national government in each and every case would pay the full actual cost of transportation and delivery to the point of destination, whether it were by trolley, railroad, stage-coach, wagon, pack-horse, mule, sled or snowshoes. Of course it is not contended that the government could secure an average or flat rate for the cost to it of transporting merchandise by mail, the same to all points in the United States, as it is urged that it should charge. On every package mailed the government would of necessity pay the full cost of carrying it from the point of shipment by mail to the place of delivery to the consignee, no matter how great the distance or how costly the character of the transportation.

In other words, while the government is expected to and of course must itself pay the full distance cost of transportation and delivery in every case, and could not give the service unless it did so, it is expected to look for reimbursement wholly to an average flat rate, like the rate for letter postage, or the present rate of the existing domestic parcels post for small parcels—a rate that is the same everywhere, without regard to the distance from point of mailing to point of destination.

Averages Are Misleading

The argument of averages is relied on to meet this insuperable objection. It has been suggested that the average haul of all second-class matter (which comprises only regularly entered publications, periodicals and magazines) was 540 miles in 1907, as shown by the report of the Postoffice Department, and on that as a basis it was estimated that an average rate of 5½ cents per pound or $29.70 per ton for other transportation charges, and $165.00 for labor and supplies, a total of $212.00 a ton, would leave a profit to the government of $27.00 a ton from a general parcels post rate of 12 cents a pound, which would produce a revenue of $240 a ton.

The estimates given above were embodied in an address by the Postmaster General before the Union League Club at Philadelphia on October 26, 1907.

For reasons based on facts that are undeniable and unquestionable, these averages and the estimates based on them, would prove utterly delusive and misleading when put to the test of a practical application of the proposed extension of the domestic parcels post to include merchandise in larger bulk and at lower rates than those now authorized by the postal laws. It is not necessary that the proposed extensions should be actually tried to demonstrate the deceptiveness of these average estimates. The conditions are before us and arise from facts so clearly known and established that he who runs may read.

The Average Haul

The average haul of second-class mail matter, made up of printed reading matter, for every copy of which a regular subscription must be paid, is fixed by and is in proportion to the average density of the population.

To illustrate this, take the city of New York as a starting point. It is the leading publication center in the country, and a larger number of publications entered as second-class matter are issued from the city of New York than from any other one city of the country.

The population of New York state in 1906 was estimated to be 8,226,990. The population of the state of New York alone is as large as that of the whole western half of the United States, and yet that whole western half of our territorial area contains only about one-tenth of the entire population of the country.

The average number of subscribers receiving regular publications through the mails as second-class matter in proportion to population is as large in the one state of New York as in the entire western half of the United States. So the Postoffice Department would serve in New York state, within an area of 48,204 square miles of closely settled territory, as many subscribers for second-class mail matter as it would be compelled to serve over a sparsely settled region in the west covering 1,513,394 square miles, that being the area of the western half of the United States, not including Hawaii and Alaska.

Second-Class Mail Matter

An average length of haul of second-class mail matter now carried by the national government would be much greater if limited to the one state of New York and the western half of the United States, than if applied to the entire country; for the very simple reason that the vast sparsely settled area in the west would comprise one-half of the total number of subscribers served; whereas if the whole United States were included, then the western half with its sparse population would embrace only one-tenth of the whole number served, and nine-tenths would be located in the more closely settled eastern half of the United States.

In other words, in averaging the length of haul of second-class matter, nine-tenths of the people served are in closely settled territory, where they are reached by the short haul, and only one-tenth in the thinly settled western half of the country, to be served by the long haul, and oftentimes by the most difficult and expensive methods of transportation.

Conditions That Control Are Reversed

The principle that controls the average in estimating the length of the haul of second-class matter is that as the proportion of density of population increases the average length of the haul is decreased.

It is naturally assumed that the same principle would control in fixing the average haul of transporting merchandise by mail if the movement for an extension of the domestic parcels post should prevail; but strange as it may seem at first thought, the exact contrary would happen. The principle that controls the average haul in the case of second-class matter would be reversed in the case of parcels post extension. The greater the distance the more remote the territory, the more sparse the population the larger would be the proportion of merchandise shipments by mail as compared with the whole volume of such shipments.

The reasons for this are, first, because the express companies with their flexible distance rate system would practically surrender the distant territory and make a rate on nearby points so much lower than the government rate that the short haul service would go to them, leaving the long haul shipments for the government; and, second, because it is the distant market that merchants and manufacturers desiring to trade by mail wish to reach by the parcels post system of delivery and which they would exploit if the opportunity were created.

Impossibility of Adjustment

Every effort of the national government to readjust an average flat rate so as to meet this condition, and command for the parcels post the desired proportion of nearby business, would simply be to get out of the frying pan into the fire. To lower the average flat rate so as to compete with express companies in nearby territory and on the short hauls would stimulate the volume of long distance shipments and still keep the balance on the wrong side of the ledger. To raise the average flat rate, so as to secure a larger revenue from the long distance shipments, would widen the circle within which the express companies would be able to command the business by a lower rate and reduce the government revenue by taking away from it more of the short haul business.

It has been urged that one reason why the proposed extension of the domestic parcels post should be adopted is that it would lower the express rates. If that should occur the rates would, of course, be lowered in the territory, where by lowering their rates the express companies could command still more of the short haul business, and thereby increase the proportion of long haul business that the government would have to carry at a loss. Every time the express companies lowered their rates it would increase the annual deficit that would be incurred by the government. No business proposition could be more simple. The government would be in the position of having entered into a competitive business. It would have done this after adopting at the start a system that made it impossible for it to cope with its competitors. Whatever flat rate the government established would be met by a lower distance rate by the express companies that would take the short haul business from which the government could earn a profit, leaving to the government the long haul business that it could only conduct at a loss. Nothing that the government could do would prevent this, because it would make the conditions worse one way or the other every time it either lowered or raised its flat rate. If the flat rate were lowered, the proportion of long haul business would be increased, and the losses be as great as ever. If the flat rate were raised the proportion of short haul business would decrease, and the average cost would still create a heavy deficit.

Act With Open Eyes

The fact is, the United States government cannot carry merchandise by parcels post without having to meet an enormous annual deficit for conducting the service, and the service should not be undertaken by the government unless such a deficit is to be deliberately and knowingly created and assumed by the people at large. The government is asked to undertake an impossibility, if it is expected to make the service pay for itself, when it is asked to adopt the proposed extensions of the domestic parcels post.

A flat rate system of charge cannot, in the very nature of things, be operated in this country without loss. The only way to avoid such loss would be the adoption of a distance tariff by the government, just as is charged by the express companies. The proponents of domestic parcels post extensions do not advocate such a distance tariff system and it will be time enough to consider its merits if it ever comes before the people for serious consideration. The fatal defect in the reasoning of the advocates of the proposed parcels post extensions is that they disregard the fact that we live in a country as broad as a continent and extending for over three thousand miles from ocean to ocean, and that in all that vast territory we have a population of only something over eighty million people.

A Subsidy to a Favored Class

Should the mail trade have a government subsidy?

That is a very plain and simple question, and the answer to it will also answer the question whether the shipment and delivery of merchandise by mail should be facilitated and undertaken by the government as advocated by the proponents of domestic parcels post extension.

If there is any good reason why the mail trade should be encouraged by government subsidy, it has never been set forth by any advocate of parcels post extension.

And yet, that is exactly what the proposition amounts to in its practical application. It would not be a subsidy that would create new business where there was none before. If it would do that it might be an argument in its favor. Instead of doing so, it would take the trade from the merchants, both wholesale and retail, who are now doing it, and transfer it to new and wholly different agencies, who would be enabled to secure the trade because of a direct advantage given to the new agencies by the national government at the expense of the general public.

Who Are the Favored Class?

Whether the seller or the consumer, under this system of a government subsidy for the mail trade, were to be regarded as the favored class, the result would be the same. A favored class would be benefited at the expense of the people at large, and without any advantage to the general public that would warrant it.

For many reasons the consumer in the long run would be injured more than benefited by the establishment of such a system for doing the business of the country, and ought for this reason to be eliminated in defining the favored class. Temporarily, and considering only immediate cheapness of needed merchandise, the consumer might imagine himself benefited, and probably would, but that benefit would be involved and submerged in far greater indirect losses in the future.

So the favored class, in the last analysis, would be the great catalogue concerns, and manufacturers who desire to eliminate the jobber and the retailer and country merchant and sell direct to the consumer, using the mail as the agency of transportation and delivery to the purchaser.

Without regard to any of the many serious objections to this system of trading, based on social and economic reasons, there is no possible ground upon which a subsidy for the encouragement of this mail trade should be given out of the United States Treasury and at the expense of the people at large.

Effect of a Subsidy

And when the effect of that subsidy would be to break down long established commercial customs, and divert the trade from institutions now successfully and satisfactorily conducting it, there is no more justification for such a mail trade subsidy than there would be for the government to carry some new brand of flour cheaper than the old established brands—in order to enable the manufacturer of the new brand to introduce and sell the product of his mills.

The growth of the mail trade, under its present limitations, has been stupendous, and multitudes of retail and country merchants have been injured, and many driven to the wall by it. But its future growth would sweep over the country with an irresistible force and wipe out of existence many thousands of now prosperous retail and general merchandise stores, if a subsidy were granted to the mail trade in the form of the proposed extensions of the parcels post.

There are many manufacturers who are doing business along the regularly established lines, selling goods to the jobber or the retailer, who are not now seeking or advocating any change in the channels of trade, but those manufacturers would change their system and enter the field of the mail trade if the advantages advocated by others were gained for it. If the avalanche of mail shipments that would follow the inauguration of such a mail trade system were ever once started no one could foresee the end or define the limits of the evils it would ultimately accomplish.

Independent. 70: 72-3. January 12, 1911.

Objections to the Parcels Post. Allan W. Clark.

There are probably a hundred really national organizations of dealers, and several thousand state and local organizations—generally affiliated with some of these national bodies. These embrace practically every line of retail merchandising and the ramifications of various interests among them. The individual, due paying membership in some of these larger organizations, like the National Association of Retail Grocers, the National Retail Hardware Association and the National Association of Retail Druggists, is from 50,000 to more than 100,000 each. I have never heard of any association of retail dealers that is not on record against the extension of the domestic parcels post in any form, especially the R. F. D. “entering wedge,” except the organized department stores in one or two cities (such as “The Merchants’ Association of New York”), who want this practical government subsidy for the benefit of their mail order departments and for cheaper local and suburban delivery.

I have mentioned only retailers’ organizations, whose resolutions on this subject, during the convention season, crowd the pages of all the trade journals. Nevertheless, practically all the organizations of wholesalers and manufacturers, besides many local commercial and civic associations, are opposed to the parcels post, and like the retailers, have been fighting it for years. Conspicuous among these is the Chicago Chamber of Commerce, the leading members of which, thru the “American League of Associations,” are pushing a national campaign “to assist the retail merchant and to co-operate with other associations in the protection and development of home trade, and (the italic emphasis is theirs), specifically, this organization is now opposing the proposed parcels post legislation.”

These dealers, jobbers, manufacturers and others interested in the maintenance and the improvement of the local stores and the local community, and who oppose any extension of the domestic parcels post, vie with its advocates in denunciation of the extortionate charges of the express companies. But they go further—their associations are fighting in many states to secure state regulation of express rates and classification; and they are making practical progress, with every prospect that their appeals for national regulation will be recognized by the Interstate Commerce Commission, which has just won its fight to regulate sleeping car charges. The opponents of parcels post want lower and equitable rates for the transportation of small packages of merchandise, but they believe that these rates, like those on the transportation of larger packages, should be investigated and regulated by the Interstate Commerce Commission, especially as various state railway boards have recently demonstrated the fact that the express companies are chiefly owned by the railroads and are merely vehicles to bring into the coffers of the railroads larger profits than can be secured thru government regulated freight rates.

That any one can find an example for the United States in the parcels post systems over government owned railways in European countries, the largest of which is smaller than Texas, is incomprehensible to the average business man who is not asking for a government subsidy to arbitrarily annihilate distance and the natural local advantages of thousands of local business communities in order to increase the present $200,000,000 mail order business; and this in a nation that maintains a high tariff wall that may or may not “protect” the American manufacturer, farmer and workman, but the chief effect of which, so far as the distributor, the dealer, is concerned is to place him between the upper and nether millstones—the butt of criticism, the subject of Congressional inquiry on the high cost of living!

The mail order houses want a general parcels post; the general business community is opposed to it. Suppose that both are actuated by selfish reasons, one to gain an arbitrary advantage and the other to prevent it—where do the people come in, those besides the mail order men and the million retailers and their families?

Further Thoughts on Parcels Post pp. 3-5.

Charles W. Burrows.

Postmaster-General Meyer in an address to the New England Postmasters’ Association, Boston, October, 1907, and elsewhere, made recommendations urging legislation giving to the Postal Department a greatly extended parcels carrying service. The recommendations made were mainly two.

First. That the present rate of sixteen cents per pound for the mail carriage of merchandise with a weight limit of four pounds per parcel as the maximum shall be changed, reducing the rate to twelve cents per pound (with fractions at rates from one cent up) and increasing the weight limit to eleven pounds. The recommendation was that this should be, like the letter charge, a flat rate to prevail anywhere within the United States and its possessions irrespective of distance or accessibility.

In support of this, his first proposition, he calls attention to certain inconsistencies now existing in the service. He states that an individual entering any post office in the country with a parcel weighing four pounds, addressed to New York city will be obliged to pay sixty-four cents for its carriage by post. If on the other hand it is to pass through New York city to any one of the thirty-three foreign countries with which we have postal conventions, the charge will be but forty-eight cents. Further, should the package weigh more than four pounds, it will be denied admission to the mails in this country while it will be accepted and forwarded to any of these foreign lands if it weighs up to four pounds six ounces, and in the case of some, twenty-four of the countries it will be accepted even if it weighs so much as eleven pounds, and it is on account of these inconsistencies that he urges his legislation.

Let us first examine this point. General Meyer is quite correct in his statement that it does cost more to send, for example, a pair of shoes weighing just four pounds from Brockton, Massachusetts, to New York city, than it would cost to send the same pair of shoes through New York city to any one of the thirty-three foreign countries with which we have postal conventions.

General Meyer, however, fails to state that while there is this large number of foreign countries with which we have postal conventions, yet not a single one of the twenty-four countries with which we have an eleven-pound convention is on the map of Europe. They are all of the nature of Jamaica, the Windward Isles, Venezuela, Barbados, Costa Rica, Danish West Indies, etc., countries with which we do not do any great volume of business.

It may further be stated that the weight limit with the remaining nine countries, most of which are European, is in reality intended to be the nearest approximation to our own domestic four-pound limit, that is, it is two kilograms—about four pounds six ounces—and the European countries all closely scrutinize this weight limit as the business is one that involves a loss in its operation. Germany, for example, for a number of years recognized an eleven-pound limit but changed to the two kilograms about three years ago.

It should be borne in mind, moreover, that the exchange of parcels between these countries and our own is made as a matter of comity or international courtesy, and is permitted because the amount involved is small. The work is done, too, in connection with the carriage of first-class mail which produces a large profit.

To illustrate this matter, Great Britain carried in her parcels post last year 104,819,000 parcels. Of these only 2,575,000 (less than 2½ per cent) went out of the country to all foreign countries, her own colonial dependencies included, and to the United States she sent only 61,000 and we sent to her 89,000 only. The difference which is after all what we make or lose upon, was some 28,000, and that was but a fraction of a tenth of 1 per cent of the whole business. With some of the other countries in question, we exchanged less than 1,000 parcels in the last fiscal year, and with one of them it was less than 100, while with all of them aggregated it was a total of but 330,000 parcels dispatched and 181,000 received; so when we examine this question of inconsistencies microscopically we find that it is truly of microscopic proportion only, and may be disregarded as having no important bearing upon the general question.

One Cent Letter Postage, Second Class Mail Rates, and Parcels Post. pp. 14-22.

Charles W. Burrows.

Paternalistic, socialistic legislation does not diminish the expense account, but simply transfers it from one person’s shoulders to those of others. It is with a people as with a person. If a father gives to his boy a pair of shoes, the shoes cost the lad nothing, they are to him as if they had descended from the skies, but the cost is a charge upon the father, unless he stole them, and even if acquired dishonestly the cost has simply been moved back upon the shoulders of the merchant. The compensation for the labor of producing the pair of shoes and of transporting them to the place where they are put to service is just as much a charge upon the community whether one individual pays for them or another. Similarly if the users of any governmental service do not pay a high enough tariff for that service somebody else must foot the bill.

Now to endeavor to demonstrate that whether the rates imposed for such service be high or low the government will inevitably be a loser and in large amount. To this end let us examine for a moment the parcels post systems of foreign countries.

In Germany a zone system prevails, but the tariff is always low. In England, a flat rate prevails, and this also is extremely moderate. And low rates prevail in other foreign countries.

But circumstances alter cases, and with other things we should bear in mind that the total area of Germany is but 208,000 square miles, while the area of the one state of Texas is 265,000; in other words, Germany is but four-fifths the size of Texas. The area of France is almost exactly that of Germany, again but four-fifths the size of Texas. The area of England is 50,000 square miles, less than one-fifth the size of Texas. We have 26 states, any of which is larger than England, and several many times larger. The area of Switzerland is just under 16,000 square miles, and you can put nearly seventeen Switzerlands into the one state of Texas. The area of Belgium is but 11,000 square miles; you can put 24 of it in the state of Texas. Again the density of population in England is over 550 to the square mile; that of Belgium, more than 600 to the square mile; of Germany nearly 300 to the square mile.

Moreover, no haul in England can be long and but few hauls in the United States would be short. You may perhaps be able to take 550 parcels from a central originating point like London, carry them for an average haul of 41 miles, which is the case in that country, and deliver them all within one square mile of territory at a small tariff per parcel without material loss, though even England is losing money upon this service with all conditions favoring.

But remember that the density of population of the United States by the last census was under 25 to the square mile, and that the parcels post service would not be mainly operative in densely populated Rhode Island and near the large cities like Boston, New York, Philadelphia, etc. If we imagine that 550 parcels are sent from New York city over a long haul of more than 1,500 miles to the state of Wyoming, where the density of population is one to the square mile, and have to be distributed to 550 distinct individuals resident in 550 separate square miles of territory, no sane business man can doubt that at any tariff likely to be imposed the government would be a heavy loser.

According to one expert’s estimate, it is possible to carry the second-class mail matter for short distances on dense traffic routes, and in quantity lots to one address, that of a news dealer, for example, as is done for the average daily paper for the part of its circulation that goes by mail, up to 45 miles with little loss even at this low 1c a pound rate, though first-class mail at the rate paid by it can be transported nearly 5,000 miles before the service shows a loss, and post cards over 11,000 miles.

Now let us suppose a parcels post statute to be enacted, and that the rate be put at anything you please from 5c per pound to 10c per pound. Even at the low rate of 5c per pound the express companies will do the nearby business. If the rate be 10c per pound, the government will have less to do, but it will still have much with the weight limit considerably increased over the present amount. And if the rate be put at 12c per pound, still the government will not make money, not on a single parcel that it carries. All service that can be rendered at a cost of less than the government charge will be handled by the express companies.

We cannot have as does Germany a zone system. But without the operation of a zone system, or a monopoly as on first-class matter, the government will get all of the losing business and none of the remunerative.

A friend of mine made a visit a few years ago to the state of Washington. First he took from Cleveland a 2,000 miles railroad ride. He then had a day and a half steamboat ride up the Columbia river, following that a two days’ stagecoach ride to the remote locality that he was visiting.

He remarked to me in connection with this trip that he should like to see the government handle a parcels post service for that country at a profit, even at a rate of 25c a pound, and added that every pound of anything that went in there would most assuredly be handled by the government were a parcels post service in operation, for it would be the cheapest method of getting things there.

Now, the only reason we can have a flat rate upon first-class mail is because the government makes that a monopoly, and you can send your letters in no other way than through the post office. Hundreds of millions of profitable short haul letters carried between the largest cities of the country where traffic is very dense take care of the proportionately small number of expensive long hauls.

To show how necessary this may be, permit me to inform you that the first batch of letters the government sent to Circle City, Alaska, though each was carried upon a 2c stamp, cost the department some $450 per letter. And it is solely due to the fact that the carriage of first-class mail is a monopoly that inheres in the government that, in spite of such expensive occasional service as this to Alaska just cited, a large part of the receipts from first-class mail are net profit.

Now, even at the low 1c per pound rate accorded to the monthly magazines and other periodicals, not all of their wares are sent by mail. There is you know no monopoly of carriage. The publisher can send packages of his magazine ahead of time by slow freight at less than the 1c per pound tariff, this freight service being used for the large lots going over main transportation lines between the great cities and without expensive changes of route. But upon the quarter hundreds and half dozens and single copies that go for long distances by expensive changes of route and to remote rural localities from back of Portland, Maine, to back of Portland, Oregon, from the upper peninsula of Michigan to the everglades of Florida, and to the crossroads and rural free delivery customers of Ohio, New York and other states of the Union, the government gets the losing job of carrying the periodicals.

I have endeavored in the explanation above to show that the difference in social condition, density of population, length of haul, ability to inaugurate a zone system, etc., will operate against our doing at a profit what may be attempted though even there unsuccessfully, in Great Britain, Germany, etc.

In Great Britain they pay for transportation but 55% of the charge, having thus automatically 45% left for other expenses, and if anybody can do the work at a profit they certainly are in position to attempt it.

Again the average pay of a British postman is only one-half what we give our carriers, which is another feature that must be reckoned with.

The first year they had this service in operation, it showed a heavy loss. They were keeping account of the business, so much in detail that if a man worked in two different branches they divided his salary. The eminent gentleman who fathered the system, then said: “Oh, well, you can’t expect that it should be profitable the first year. This year we will make it profitable.” The next year the loss was more than doubled. “Well,” said he, “bookkeeping is expensive, let us discard bookkeeping.” And since that time they have kept no expense account on the parcels post system.

Now let us examine what would result in the United States if we were to enact parcels post legislation and attempt to get it in successful operation.

I wish to make a quotation from the “Catholic World” of June, 1905, describing the operation of the parcels post system of Germany by a writer who favors its establishment here. He says:

“Anyone who has stood in a German post-office, and has seen the constant stream of men, women and children, pouring in through the doors with packages of all descriptions and sizes, and lining up in never-ending rows before half a dozen and more receiving officials; who has watched heavy wagons driving up to the doors and depositing hundreds of packages, and who has noticed the mountains of parcels heaped up in rear rooms of the post-office, cannot but have been forcibly struck with the magnitude of the parcels post system of transportation in Germany.”

Does it not occur to the most casual thinker that if a comparable service were enacted in this country the postal facilities of every city would be inadequate to the work? Why, you would have to have in New York city one hundred times as great an amount of space at your disposal as the Post Office Department has or can readily get at present. It would involve a thorough readjustment and enormous expansion of the post office facilities in every large and small city of the United States, involving an equipment expenditure which would run to hundreds of millions of dollars—this irrespective of the question whether it would produce a profit or a loss in operating expenses.

There are in the United States more than 50,000 fourth-class postmasters of these 50 per cent get $100 per annum or less, and 25 per cent of them get less than $50.00 per annum. How long would it be before they would demand an increase of salary to something like $75.00 per month or more?

The Vice-President of the J. F. Stevens Arms and Tool Co., told me that if such a service were inaugurated as that of Great Britain, it would change entirely the methods of distribution of his own house. They would be obliged to discontinue their present freight shipments of arms in carload lots to the Pacific Coast at a rate of $3.00 per hundred pounds upon a twenty-day time schedule for transportation, and take advantage of the pound rate that the government would give to them upon a six-day time schedule; that while it would involve increasing their office force from less than 50 to more than 500 to handle the work, the savings would be so large that they would have to do this and to inaugurate many other most radical and far-reaching changes in organization.

If this meant that the service was going to be reduced in cost, while at the same time shortening the time schedule by more than two-thirds, always an important factor in increasing rather than in diminishing expense account, we should all of us find it our duty to welcome the innovation, great a wrench as it might give to our business connections. But the costs of the service will not be changed, simply it will be a different set of people who pay them and no longer would all the costs be paid by the proper parties—the manufacturer and his customer, the consumer—but a large proportion by the public at large in some way or other.

Parcels Post. pp. 6-15.

John A. Ordway.

I question whether there is a man in this hall who actually believes that one cent of benefit will come to the farmer through reduction in his cost price of anything he buys because of postal delivery. Each one of us knows from practical experience that even should the method of distribution be shifted, still the expense of reaching the consumer would increase by the methods advocated, which combined with the profits of inevitable monopoly would cause the poor farmer to wonder whether this alluring vision of substantial comfort had vanished. Yet this sham shibboleth of benefit to the farmer has other advocates besides this small percentage of theorists. The most persistent, continuous, noisy clamor has proceeded from those whose selfish self-seeking is as plain to the searcher for motives as the printed types upon their pages. The editors of various magazines and newspapers not in touch with the cost and expenses of mercantile life have almost universally used their columns to create a public sentiment to accomplish this commercial revolution. Their solicitude for the farmer, their keen distress at what they term his unfortunate dilemma in being forced to supply his present needs through present channels, would wring the stoutest heart, were it not for the perhaps uncharitable suspicion that their tears were of the crocodile variety, and their anguish a thin disguise for rank cupidity. “The poor farmer,” more advertisements; “the unfortunate farmer,” for more advertisements; “we love and would protect the farmer,” still more advertisements; “we will organize and preach of deliverance,” for more advertisements; and so on and so forth shall be our cry until the jobbers’ percentage and the retailers’ narrow margin shall be diverted into “more advertisements,” has been the wailing but insistent note everywhere. “No matter if the actual cash loss of second class matter in 1909 did show a grand total of $64,128,000, what care we? Still shall our cry be, ‘Help the poor farmer.’” Shame on such transparent hypocrisy from a public press that should lead and inspire by truth untainted by the virus of debased commercialism.

The Consumer Will Buy Goods No Cheaper

I may be wrong, but I firmly believe that the development of the mail order house or the increased adoption of direct selling by manufacturers, aided by governmental postal delivery, would not confer one benefit on the consumer in cheapened prices, because of these facts. The change in the method of distribution would be merely the shifting of the final price from one shoulder to the other. The margin between the actual net cost of manufacture and the price paid by the ultimate consumer is at present divided in varying proportions into the profits of the maker, the percentage allowed the jobber for economical distribution, and the final profit of the retailer in completing this distribution, and in each case competition, that most effective friend of the consumer, has forced these margins down to a low general average. Assuming that the jobber and the retailer have been eliminated and that the manufacturer sells direct, is there any possible advantage that the consumer or the farmer would obtain? Decidedly not. The manufacturer would, of a necessity, be compelled to make and hold a stock of goods ready to respond to instant call. His cost of manufacture would immediately increase for the reason that his quantity would be wisely restricted, awaiting the edict of whimsical fashion, and his sole dependence for the sale of his product would be that obtained from extensive advertising. I do not believe there is a man here tonight who has any knowledge of the expense of an advertising campaign, but will admit that the usual profits of both jobbers and retailers combined would fall far short of the expense necessary to continuously maintain any general range of articles of fashion or utility by advertising alone, and every large advertiser, even if this stock be protected by trademark or patent, will bear testimony that not only does the expense of advertising continuously increase, but also that any cessation of publicity results in immediate suspension of sales.

The second argument or sham pretext for action is that advanced relating to express companies.

The Interstate Commerce Commission Now Has Power to Adjust and Regulate Express Rates and Will Regulate Them

I am aware, and expensively so, that this monopoly is a menace both to our pocketbooks and to the general prosperity of the community. Their course of action is guided by those who fully exemplify the modern greed and relentless clutch of soulless corporations. Personally, in their private homes, or in open contact in social gatherings, these organizers and executives of express companies are attractive as friends or companions, but officially, and as part of their corporations, their individuality is lost and the Golden Rule is locked away to be used only on Sunday or in the imminence of death.

The dangers that confront a free people when monopoly obtains a stronghold have been freely discussed during the past few years, and wise restrictions have been placed among our laws. At this very moment the rates and methods of express companies are being considered by the Interstate Commerce Commission, and from them we may expect the same fair-minded decision as recently shown in railroad matters. The laws are on our books. It is for us to urge, argue, even threaten that they be obeyed, but the appeal of the proponents of the parcels post bill that we punish the express companies by starting a government monopoly in opposition has about the same force to me as an invitation to jump from the frying-pan into the fire. The power is always ours to regulate by law, and the law is already ours. One-half of the same energy in letters, telegrams and petitions asking and insisting on the immediate action of the law, as has been shown in the propaganda for the novelty of the parcels post, would have produced results long ago. If this association, if the various boards of trade, or chambers of commerce, should manfully and persistently follow this line of action, results would follow, and thus avoid the dangerous expedient of increasing the already formidable list of government officials.

Objections to Parcels Post

Passing from the consideration of these elusive and mendacious appeals by self-seeking interests, I ask your attention to what in my judgment are positive objections to the parcels post, objections that are not based wholly on dollars and cents, but on the broader principles of humanity that are above the fleeting tribulations of our little hour, and whose laws of action create or destroy states or nations as they are applied wisely or unfortunately.

Will Injure Country Communities

John Stuart Mill, one of the strongest reasoners in political economy, stated in an incisive sentence that “The community that contains the greatest diversity of industries will always be the most prosperous and intelligent.” It would seem as if his vision were prophetic of our loved New England, where towns and villages contain within their borders the farmer, the manufacturer, the merchant, the teacher, living in useful harmony, and by their diversity of thought and action producing men equipped to accomplish the destiny of this wonderful land. Such environment, such healthy conditions, produce the character of Americans that the country needs, and the practical benefit from the New Englander reared in such communities is impressed upon all sections of this great land. It is to wither and destroy these safeguards of national security that the proponents of the parcels post intend. In their infinite wisdom they would sweep the village aside in their zeal for the mail order octopus and the magazine advertisements. A great city whose water supply is polluted is in serious danger; a great community that stems or hinders the growth and influx of healthful men is short-sighted, and decay will follow. Totally aside from personal gain, I believe we should steadfastly oppose any attempt, open or concealed, to sap the vitality of the New England town. Boston exists because of New England, and Boston should protect its own.

It Will Increase the Horde of Government Employees

Another objection to the parcels post is that its operation will add a tremendous force of government officials to the already swelling list. Excepting always that human hog who never votes, never reads, never thinks, but roots and grubs along, grunting out one single word, “Dollars,” which happily die with him, this objection should be considered by all thinking men. The stronger the intrenched force of the party in power, the more difficult will it be to effect needed reforms when stagnation in office produces disease.

It Limits the Field of the Individual

Another objection is that our government of free men was never intended to block or hinder the pathway of individual endeavor. Rather was its function to be that of aid or protection to insure equal opportunity under sane restriction. Following this connection and not to be lightly regarded, is the assumption that is clearly foreshadowed, that should the government engage in the transportation of merchandise the inevitable result would be the national ownership of the railroads, thereby still further increasing the centralization of power, which is diametrically opposed to the conception and scope of our general system of representative government.

Extravagance Will Be Augmented

Again a serious objection is that the transfer of conditions of transportation with its accompanying word paintings of alluring advertisements would tend to increase general extravagance, particularly in those sections where prudence is necessary for happiness, or precaution for old age. A distinguished writer has said that more discord and misery are caused in this country by our national extravagance than from any other source, not excepting the results from alcohol.

Still again, it is closely argued with logical coherence that the various monopolies that now practically control many branches of trade would welcome the development of large distributors at the expense of the present countless individuals, because of the greater ease of organizing in combination. The tremendous sales and enormous profits of one mail order house are the subject of daily comment, and should the government lend its aid to still further increase these figures, the time would not be distant when similar institutions would start into life in other sections. Backed by ample capital, and equipped with the experience regarding methods, their success would doubtless become immediate, until such time as competition among themselves endangered profits.

It is no fanciful assumption that when that point is reached combination or absorption will add another impregnable monopoly to the already threatening list.

The present monopolies have produced such colossal and unwieldy fortunes that the employment of their surplus is a constant thought, and so rich a plum would not escape.

Finally, for I have detained you gentlemen long enough, is the rank injustice of this proposed measure. If by taxation of the people as a whole, some permanent benefit be obtained, two blades of grass be grown where one existed, or even one section developed through the agency of the whole country’s help, no one would more eagerly advocate such action, for I realize that a healthful growth spreads its benefits everywhere. But this measure does nothing, creates nothing, carries with it no lifting of burdens, but simply takes from A to give to B, without assurance or guarantee of betterment of service or conditions. As all dry goods retailers know, not one article sold by mail order houses, in their line, but is daily and usually sold by them at the same or lower price, without any special fuss or feather about it, and all of us understand, without possibility of contradiction, that the advertised brand, in nine cases out of ten, does not depend on its intrinsic merit for its sales, but instead relies on the credulity of a thoughtless purchaser.

Again, what justice is there in any law that proposes government aid to the man whose product weighs eleven pounds, or measures within certain cubic inches, and denies the same relief to another citizen and taxpayer whose product necessarily exceeds these limits? If this is not special legislation bestowing subsidy or patronage on the few at the expense of the many, then what is it?

For these reasons, and many more, my friends, I oppose the parcels post as today presented. I believe it unwise and manifestly unfair. I believe its passage would cause tremendous initial loss, without subsequent compensating gain. I believe it is a move in the wrong direction as it affects the government. I believe that the people, through their representatives, and under the constitution, should have and should use the power to regulate the channels of trade, and I strongly deprecate any additional departure from the simplicity, the directness of our form of government, and especially if such action should hinder or usurp the zeal or ambition of any citizen in his wage earning capacity, conducted under the law. If an express company violates the law treat it under the law with the same justice as would be given a second story burglar, but no more consider the opening of governmental lines of express in opposition than you would consider the governmental employment of other second story burglars as punishment to law breakers.

The fewer that we have the better, but as self-respecting citizens let us strive to maintain their standard of even justice, regardless of special interests or our own personal discomfort.

Journal of Political Economy. 16: 417-35. July, 1908.

Shall the Scope of Governmental Functions Be Enlarged so as to Include the Express Business?

Albert N. Merritt.

In the nature of things the local dealer cannot compete with the mail-order houses on equal terms. He cannot afford to issue the expensive catalogues, or to keep so large an assortment of goods. Moreover, the immense volume of business of the catalogue concerns enables them to quote cheaper prices on many commodities. Frequently they are able to secure, on private contracts with manufacturers, large stocks of goods at prices even lower than the jobber is required to pay. Furthermore, their expense of doing business is proportionately much lower, as practically their entire expense of distribution consists of the outlay in issuing the catalogues and in packing and shipping the goods when ordered. No experienced force of salesmen is required to display the goods and argue their merits. Moreover, it is often the case that the glowing terms in which goods are described in these catalogues cause the credulous to believe them superior to what they really are. Distance always seems to lend enchantment, and abundant opportunities are offered for deception as to the quality of the goods.

The local dealer, on the other hand, in order to fill orders promptly, must keep a stock of goods which, in proportion to the amount of business he does, is vastly greater than that of the catalogue houses. In order to purchase his goods to advantage, he must lay in a stock in the fall sufficient for six months or a year, while few, if any, of the larger mail-order houses would have at any time sufficient goods in stock to enable them to fill orders for a fortnight. Naturally, therefore, where the turnover of capital is slower, the percentage of profit upon individual transactions must be higher, and competition upon an equal basis becomes impossible.

But quite apart from a theoretical exposition of causes, the facts show that the local dealers are rapidly losing trade to the catalogue houses, and in many districts the local retail business has become so unprofitable that the number of retail stores is decreasing, and their volume of business less instead of greater as might be expected with the normal growth of population.

Not only do the mail-order houses excel in the volume of business, and in the greater assortment of goods, but they are able to effect the most efficient and economical management by the employment of the most able managers and department men, which is rarely or never the case in the ordinary country store, owing to the natural scarcity of men of that grade. In fact the business management of the ordinary country store is lamentably weak. From the economic standpoint, therefore, one is compelled to admit that, in accordance with the laws of competition and of the survival of the fittest, the catalogue houses have already demonstrated their superiority.

Admitting, therefore, that the economic position of the mail-order houses is stronger, are there not important social arguments against permitting the absorption of local business by the rapidly expanding catalogue concerns at our large trade centers?

In the first place, it should be noted that the rapid consolidation of our manufacturing industries makes it more difficult every day to conduct such enterprises in small communities in competition with the large plants in the large communities. The result has been that for a long time the proportion of the manufacturing business done in small communities has been growing smaller. With the gradual and necessary elimination of the manufacturing business in smaller communities, the mercantile business is about all that is left as an economic basis for the existence of such communities.

These forces tend to a rapid concentration of business in the large trade centers, and the resulting congestion of humanity at such points. In one generation the proportion of the population of the United States living in our large cities has more than doubled, and just at present is increasing more rapidly than ever before.

It may well be doubted whether this tendency will ultimately be beneficial to the race. Vice, crime, and disease are rampant in the slums of our great cities. Human life, under such conditions, becomes cramped. The unfolding process is impossible. The exigencies of the situation cause sporadic and abnormal development. The moral and physical culture of the individual is almost wholly neglected, and the intellectual development resulting is nearly always one sided, and too frequently resolves itself into the attainment of solely those qualities which make for greater acquisitive power. The social superiority resulting under the questionable standards prevailing in such centers may be obtained only with the sacrifice of much that is higher and nobler in human nature.

A large proportion of the population is compelled to lead a sedentary life. It may well be asked whether the conditions prevailing in our large mail-order houses and department stores make for the good of humanity. From 8:00 a. m. till 6:00 p. m. the many children and young girls employed are kept at close, confining work, frequently straining every nerve far beyond the limit of safety and human endurance, in order to make themselves independent, and to meet the conditions which city life imposes upon them. During the fall rush these girls are often asked to remain at work till 9:00 or 10:00 p. m. They realize that it is necessary for them to acquiesce in such unreasonable and brutal demands or lose their positions during the dull season immediately following the holidays.

An eminent physician not long ago remarked that it was his personal opinion, based upon long practice, that less than 10 per cent. of the girls in our large cities are as strong and healthy as their mothers were at a corresponding age. This he plausibly explained by the fact that nearly all of the latter had come from the country where they lived close to nature, with plenty of fresh air and sunshine, and with plenty of hard work too, but of the kind which upbuilds and strengthens the health rather than destroys it.

Furthermore, the wages paid in such institutions are seldom high enough to enable the individual to live at the prevailing social standards, and only too frequently the female employees are compelled to piece out their salaries by questionable means. It is inevitable that the future generation of the city-bred population should be as much beneath the present, as the present is beneath the last, unless radical reforms take place. Such progressive degeneration must be regarded as a tremendous social calamity.

Without trespassing too far upon the field of the sociologist, it may safely be assumed that an increased concentration of industry and population is far from desirable. Why then should the government take active steps to promote it? Would it not be better to allow the mail-order houses and local retailers to fight out their own battle for trade supremacy upon equal terms, on the basis of the survival of the fittest? The retailer would then at least be able to cling tenaciously to the few natural advantages which he does possess, and would necessarily retain a considerable portion of the business. In establishing the parcels-post the government would be taking action to crush the local dealer, and would thus take away the last economic basis for the rural community, and accelerate the concentration of industry in great cities.

By the elimination of the smaller towns the easiest and most natural market is taken away from the farmer. His small produce would then have to be shipped to the large cities, where he would almost certainly become the prey of commission-house agents, whose methods of operation are well known. Legitimate competition which means the lowest prices in view of the quality of the goods offered would be eliminated. The only competition would then be that of advertising. The one capable of producing the most attractive advertisements would win in the end. The American public is so great and so credulous that the house which has once fooled the public can again under another name and perhaps with different customers work off the same class of worthless or inferior goods.

Furthermore, the nearby location of a small country town gives to the farmer and his family immense social, educational, and cultural advantages, which would be almost wholly inaccessible if it were not for the existence of such communities. Take away the business and economic support of such a community, and immediately it becomes stagnant. Its ambitious and progressive citizens immediately migrate to other fields, and the town is left to decay.

No parcels-post could be established which would be self-supporting. The innate desire of the people to get something, as it were, for nothing, would soon express itself in a demand for a reduction of rates. No administration could be popular and at the same time effectively resist such a demand. It has been proved over and over again in history, that wherever a democratic body politic has undertaken to conduct a commercial enterprise of a public-service character, the demand for rates far below the cost of doing the business has seldom or never been successfully resisted. If this has proved true of local governments, how much more is it likely to be true of the federal government which, nearly everybody seems to think, already has a revenue so great that the principal problem with regard to it is the determination of the best method of turning it back into the channels of trade. Even at present with a nominal postal deficit of from $11,000,000 to $14,000,000, but with an actual deficit as will be subsequently shown of much more than that amount, it seems that the demand for penny postage and for the increase of salaries of certain classes of postmasters and of almost the entire clerical force is too strong to be resisted effectively.

The real issue is, therefore, Can the government expect successfully to compete with the express companies, on a business basis? If it can be shown that the government would be utterly unable to compete it follows that the government should not undertake the service.

Mr. H. A. Castle, former auditor of the Postal Department of the United States, has shown in its true light the many defects of our present postal system, and how far it comes from being that which should be expected of a private enterprise of like character. Speaking upon this point he says:

The protracted postal investigations of 1893 revealed to thinking men the disquieting fact that our national mail system, which is now the greatest business enterprise in the world, is entirely destitute of logical, coherent, business-like organization.

Among many other striking defects, he points out that there is utter lack of business methods in the accounting department. Of the one billion and a quarter dollars of transactions represented in the accounts of the 70,000 postmasters all over the United States, less than 10 per cent. have the double audit required by law. Fraud, peculation, and embezzlement of third- and fourth-class postmasters have become common occurrences and are exceedingly difficult to detect. As the salary of these postal officials depends upon the number of cancellations at their respective offices, all sorts of fraudulent schemes are continually being practiced to swell the number of cancellations beyond the legitimate amount.

Furthermore, there is no method of auditing the number of cancellations, and the department must accept the word of the postmaster, which may or may not be true. Several cases have been unearthed where an agent of a manufacturer has secured a nominal position of postmaster at some out-of-the-way point, and by drawing a salary based upon the number of cancellations has practically been able to secure a rebate amounting to about 75 per cent. on all matter mailed, the mailable matter being shipped to said point by freight. Absolutely no account is kept or record made of the number of stamps issued by the Bureau of Printing and Engraving, and no one has any means of knowing how many disappear before official record of the stamps issued is made by the Postal Department.

The weighing of mail matter handled by the railroads takes place only at stated intervals of four years. As the payment of the railroads depends upon the average tonnage during the period in which the weighing goes on, it is charged that all sorts of fraudulent schemes are continually being practiced by the railroads to increase the weight of the mail during this period.

There is no auditing of railroad accounts. Forty million dollars is annually paid out by the department merely on the statement of the railroads that the service has been performed. There is no effort made to ascertain the truth or falsity of the allegations.

There is no method of accounting for the actual amount of cash received by postmasters in payment for second-class mail. The amount of cash turned in by the various postmasters may or may not bear any relation to the actual amount of such mail received at their respective offices. It is impossible to detect dishonest returns except in some of the most aggravated cases. The average mercantile house which should practice such methods would be forced out of business in less than six months.

The slowness of the Postal Department to adopt modern business methods is strikingly illustrated by the fact that till quite recently the only method of checking the money-order accounts of postmasters was by a hasty examination of the stubs of order books turned in. No account was made or reference taken to the actual receipted orders. Imagine a bank attempting to settle accounts with its customers by the examination of the stubs of their check-books, rather than by reference to the actual checks!

We are driven to the conclusion, therefore, that the Postal Department as now organized and operated would be utterly unable to compete with express companies upon purely a business basis.

Furthermore, it should not be expected that the express companies would quietly drop out of business. They would make a tremendous fight for existence, and would at all events retain such portions of the business as they are now doing at less than the lowest postal rates. The equipment for the express service would, therefore, have to be duplicated in every town and village of the United States. It is folly to presume that the public would not in the end be required to pay for the enormous loss which would be involved in such an uneconomical procedure.

Would it not, therefore, be better to place the proper safeguards around the existing organizations which are fitted to perform the transportation service by the best and most economical means, rather than that the government should undertake the impossible, i. e., competition with private companies upon a purely business basis?

Parcels Post Problem. p. 20.

Parcels Post in England.

One of the most concise and yet comprehensive reviews of the operation of the parcels post system in England is that of I. A. Fleming, taken from an exchange, and it is as follows:

“American friends of so-called ‘postal reforms’ point to the absence of express companies in the Kingdom of Great Britain as one of the good results that have been obtained, and say this is entirely due to the existing postal laws. But if there are no express companies in Great Britain, there are scores and hundreds of forwarding agents that perform the functions of our American express companies. The railroads are themselves engaged in the forwarding business, making low rates for service by fast express, exceeding in limit of weight and size of packages received by the limitations of the postal service by many pounds even by hundreds of pounds.

“Any attempt at comparison between carrying methods in Great Britain with those in vogue in the United States is useless, because of the very short distance between points in the former.

“I asked the managers of some of the leading stores in Ireland, Scotland and England if parcels post offered great opportunities for them to send business into the country, and without exception they admitted that the business by post was decreasing, while the express by rail and by forwarding agents looking for assignments was increasing.

“Eleven pound packages and under are but a small quantity of package shipments.

“From the best information at hand, it is evident that the big carriers have nullified parcels post in Great Britain, and what they have left the railroads have picked up. These carriers receive all manner of parcels, put hundreds in baskets, and thus get the very lowest rates of transportation. They give their patrons lower rates than they could otherwise obtain, and because of their concessions charge them four cents on each consignment, a ‘booking charge’ which gives the carrier a very fair return for his kindness to the shipper. Little packages go by parcels post as a rule, and many of the larger department stores use the mails for delivering goods to out of town customers.

“These rates but add to the burdens of the merchants of the interior. The independent retailer in the country has few friends. Cheap rates, co-operative stores, chain stores, mail-order houses by the thousand, fares paid entirely, special excursions (such as Harrods of London are now running to the sales) with fares paid and ‘tontine’ establishments tend but to make the independent merchant, be he a grocer or ‘draper’ as they call dry goods dealers, only a small potato of the kind that are many in the hill.

“Our mutual friends, the English general merchant, the independent grocer, and the small retailer, have been almost completely relegated to a parsimonious living by co-operation, mail-order retailing, the carrier or forwarding agent, and last but not least, by cheap excursions to the cities.

“That these same evils will, if they obtain a foothold in the United States accomplish the same results for the American general merchant and retailer I firmly believe.”

A. B. C. of Parcels Post. pp. 4-5.

C. W. Spofford.

Q. What is the plan of the rural parcels-post proposed by Postmaster-General Meyer?

A. It proposes to carry packages originating at a local office of a rural route for 5 cents for the first pound and 2 cents for each additional pound, with a limit of 11 pounds. Thus, an 11-pound package would be carried to any point on a rural route for 25 cents. It is significant that the rates are the same as those proposed by advocates of a parcels-post applicable to distances within the United States and its insular possessions. This proposal seems to be but an entering wedge for general parcels-post.

Q. Why was rural parcels-post proposed?

A. It was proposed by the Postmaster General as a special favor to country merchants.

Q. Have country merchants asked for any such special favor?

A. No. On the contrary, they are opposed to it on the following grounds:

1. They do not seek class legislation.

2. The plan would be impracticable in its operations.

3. It would discriminate between towns, favoring the town with the greatest number of rural routes, regardless of its trading advantages.

Q. Would rural parcels-post be of any benefit to the farmer?

A. No. For the following reasons:

1. The farmer can now arrange with the rural carrier for the delivery of packages over 4 pounds at rates mutually satisfactory.

2. The proposed rates would be prohibitive on groceries, machinery repairs and on the bulky merchandise most likely to be delivered under this new arrangement.

3. To secure the rural parcels-post service, the farmer would be compelled to buy his goods at the particular town where he gets his mail, when he might prefer to buy elsewhere.

Parcels Post. pp. 3-9.

F. E. French.

I have the distinguished and pleasing honor of being here today upon your invitation as a representative of the American League of Associations, which includes representative wholesalers in nearly every important city in the United States. The creation of this League has for its object the development and advancement of the general welfare and mercantile interest of retail merchants in the smaller communities. The relations of its members to all retail merchants are intimate and personal. The retailers desire to buy merchandise from the wholesaler. The wholesaler desires to sell merchandise to the retailer. In short, whatever conserves, promotes and advances the merchandising ability and success of the former, is a direct proportionate benefit to the latter. Whatever relaxes the intimacy between these interests, deprives the retailers of their truest and best facilities as merchants and money makers. The thoughtful and progressive wholesaler and retailer believe that any rural parcels post bill will unmistakably impair, curtail and finally dissolve this relationship, which in reality is a partnership between the wholesaler and the retailer. The proposed parcels post legislation will gradually eliminate the country store and the very heart and pulse of country life. Believing this to be absolutely and unmistakably true, we should stand as a unit in opposition to any extension of the parcels post system, upon rural routes, even upon an experimental basis. If the country merchants will co-operate with the wholesalers in an unyielding resistance to any congressional action that would in any way interfere with the present system of rural deliveries, the proposed legislation will be defeated.

In official words, it is contended that rural parcels post will enable local merchants to hold and increase their trade. On the contrary, the well informed wholesaler, manufacturer and retailer contend, and the entire orthodox system of trade distribution replies, that any parcels post, whether it be a general parcels post law or a rural parcels post law, although intended to be of benefit to the retailers and a boon to the rural population, would, in reality, be a great detriment to both.

Mark well how the camel enters the tent: First his head, next his neck, and last his huge and unwelcome body. First on a few routes only and in experiment only, a local parcels post; next a complete rural parcels post; and finally a general parcels post. Let us beware of the beginning lest in the end we be overcome. During the inauguration of the first and experimental stage, those interests most to be profited by this perilous innovation will remain silent, while from the experiment no safe deductions could perhaps be made which would indicate the effect of parcels post extension upon your prosperity and posterity. Finally you will discover that the currents of trade are running past your door rather than through it, and in that day your elimination becomes a certainty. In that day also every wholesaler who has so long found in the country merchants a sure and steady outlet will know even better than he knows now that rural parcels post, and, much more, the general parcels post is a dangerous blow to country life.

At the risk of telling you much that you know, let me state some of the factors of this great problem so that we may think as one man over its solution.

The mail order houses, some of the farmers, and various other people who reason narrowly, even with generous intent are sustaining the government in its purpose to go into business in behalf of a class of the American people at the expense of the whole American people, and through a bill in Congress they ask all of the people to sanction a trial of this new species of government aid in certain selected places. Our government reasons that if it is made more practicable for rural free delivery routes to become shipping lines between their own termini, everybody depending for income and outgo on such routes will profit by this enlarged service. On the contrary, the American League of Associations holds that everybody will eventually suffer.

The great problem about which we are all trying to think clearly and think together, has been summarized so effectually by a retail merchants’ paper in the central west, that I do not hesitate here to quote its protest against parcels post, endorsed by thousands of retail merchants in every section of America. The protest reads as follows:

“Parcels post is wholly unnecessary, since rural delivery carriers are authorized to carry parcels weighing over 4 pounds, and the matter of compensation is decided by carrier and merchant or by carrier and farmer. Merchants and farmers generally have not availed themselves of this service, for the very good reason that there is no need for it.

“If adopted, parcels post will be immediately seized upon as a delivery outlet by mail order houses which would ship orders by freight or express in bulk lots to local agents for deposit in the post office to be forwarded by the rural deliveries. The catalogue houses have already many of these agents selected, and they have been busily engaged in distributing catalogues for weeks past. As soon as a rural parcels delivery became effective, these agents would become active in the solicitation of business in unfair competition with home merchants, as these agents would have no taxes, no rent, no salaries, etc., to pay.

“Rural parcels post is admittedly merely an entering wedge for extension along European lines. That would mean severe demoralization of our country towns which are dependent almost wholly upon the farmer trade for existence, and which afford the farmer a good home market for every dollar’s worth of products he has to sell. If he does not buy his supplies where he sells his products, he not only demoralizes the business of his home town, but he also deprives himself of his home market. If his home market town dwindles into insignificance through the gradual loss of trade, necessitating the closing of stores and the emigration of merchants and clerks, then the income will shrink so seriously that there will be insufficient funds to provide for schools, churches, libraries, hospitals, good roads, etc.

“Every farming community and its market center are interdependent. It is impossible to injure one without injuring the other. The parcels post would injure both farmers and country merchants. We protest against it as being designed to further the formation of a mail order trust that could eventually control all important channels of distribution and thus levy upon the people any desired tribute.”

Today the people’s problem is to conserve our natural resources and keep the farmer on the farm. Will the gradual impoverishing of the village storekeeper keep the farmer on the farm? Will the decline of the social center, the decline of the schools and the decline of the church facilities keep the farmer on the farm? Will long distance shopping do more for isolated communities than the sight of real goods and the warm touch of living people? Will the picture catalogue or the hearty salesman do more to keep vital the currents between seller and buyer? Would a heavily laden parcels post messenger, running between a mail order agency and a distant farm, often through a foot or two of mud or snow, compensate for the disappearance of the mart and congress of our country’s rural life—the independent, thriving, hospitable store?

Fellow merchants, it is our duty to sustain that store, and to do it now. That store is imperiled by pending legislation, whether by the institution of a local or a general parcels post. If this new service be established by the government, even with the best of motives, we must admit that:

The postal deficit will be increased,

The country’s commercial system revolutionized,

The delivery of legitimate mail delayed,

The population of rural communities depleted, and their progress retarded.

And that the government will promote class legislation, for in seeking to favor the farmer who needs no such preferment, it will subsidize a commercial interest whose basic business principle is hostility to the best trade distribution.

Every thinking individual agrees that rural free delivery has been of great benefit, but the masses of the people do not agree that a financially unprofitable service shall be put upon its feet at the cost of the man who has been the mainstay of the farmer in season and out of season—the country storekeeper.

Why Parcels Post Is Not a Good Thing for This Country. pp. 1-5.

W. P. Bogardus.

Parcels post is a scheme in which it is proposed to utilize the post office facilities to carry merchandise. Packages under the proposed bills up to 11 pounds are to be carried in the mails for that sum varying according to weight, from 2c to 25c. It is claimed by the friends of parcels post that by adopting the measure the deficit in the Post Office Department will be wiped out, and a handsome surplus will result. Claims are easily made. But facts have more value in a discussion like this. We are cited to the results in Germany as a substantial proof that post parcels is a paying proposition. They forget to mention that in Germany there are 340 people to the mile and an average haul of mail of but 41 miles, while in this country the average haul of mail is 540 miles and there are less than 23 people to the mile, and they ignore the difference of conditions in the two countries.

But let us look at the report from the German budget. For the year ending March 31st, 1910, the income, in round numbers, from the Post Office Department was $168,000,000 and that included the revenue from the telegraph business. The expenditures were $148,000,000. This on the face shows a surplus of $20,000,000, but in the statement of expenditures there is no account taken of the cost for transportation, on the ground that the government owns the railroads. In this country it costs 20 per cent. to transport the mails. That is, one-fifth of the cost of the Post Office Department is for transporting the mails. Now add 20 per cent to the expenditures and you have $177,600,000, or a deficit of $9,000,000. In England, the friends of parcel post claim that there is a surplus of $24,000,000 in the Post Office Department. But that includes the receipts from the telegraph messages. In England the average charge for packages is 9.8c per pound. In this country it is proposed to send parcels post packages over a territory 30 times larger than England at an average of not quite 3c per pound to a population only about twice as large as there is in England.

When the blind Postmaster General of England first introduced post parcels he reported the results of the measure, but found that there was an increasing deficit each year, and the reports were discontinued. It does not seem possible to get exact figures as to the cost of the system in England, but the presumption is that if there was a large profit in the plan they would parade the fact. As it is, can we expect to make parcels post in this country a profitable scheme? With an average haul of 540 miles to a population of but 23 to the mile, is it possible to carry goods at less than 3c per pound at a profit, if it cannot be done in those thickly settled countries at a much higher rate?

If it cannot be done at a profit, why should the government undertake a scheme that will result in a loss? Rural free delivery is costing the country $28,000,000 more than it is getting for the service, and only about one half of the rural population is supplied with the service.

If the government enters into the plan, it must needs have a monopoly, if successful, of the carriage of packages up to the limit of 11 lbs., else the express companies will take all the short haul packages and leave the long haul packages for the government to carry. Such conditions prevail at present. The express companies take all the short haul packages for less than the government charges and leave the long haul packages for the government to carry, with the result that there is no profit in the business to the government.

If there is a monopoly established on packages up to 11 pounds, what is to hinder the government raising the limit of weight?

Are we prepared to let our government enter into competition with private enterprise? Is it a function of the government to transport freight? Is it a province of the government to correct abuses of private corporations, in transportation and other lines, by entering into competition with them, and using the power the entire people has given it, to force corporations to be less greedy? It would seem that the recent decisions by the Supreme Court would justify us in believing that there is power enough in the laws of the land to protect the people’s rights.

Perhaps in Australia the government enters into more radical schemes than in any other country. And this fact is being developed. That the extension of the control of industry and business, and the activities in every field of production and distribution is but an incentive for a greater demand on the government for further movements in the same direction. The outcome of such policies is a final ending up in complete socialism. Do we want our government to be a paternal one? Are we ready to look to it for our transportation facilities? If we are is there any reason to feel that the government will stop at transportation? Will there not be other avenues of commercial enterprise taken over by the government? One of the great dangers to us, as a people, is the tendency to a centralization of power in the government at Washington and a willingness of a great many people to lean on the government for a solution of many problems that they should solve without the aid of the government.

Parcels Post and Postal Savings Banks, pp. 1-2.

Gilbert N. Haugen.

Mr. Chairman: I want to direct attention to the suggestions made in a very able and interesting address delivered by Mr. Meyer, Postmaster-General, at a banquet of the New England Postmasters’ Association, Boston, Mass., October 12, 1907, a part of which I will read:

To illustrate the incongruities that exist: Any individual entering the post-office here in Boston or in any other city or town in the country, with two parcels, each weighing 4 pounds, can send one parcel to New York for 64 cents, while for the other parcel, which is addressed to some one in a foreign land and goes via New York, he will have to pay but 48 cents, for the reason that the rate to foreign countries is 12 cents a pound, while the rate to our own people is 16 cents a pound.... Therefore I assume that our Representatives in Congress will realize that they can not afford to stand for a policy that compels our own people to pay 4 cents more on packages to people living in the United States.

This statement is indeed misleading: not that I charge the Postmaster-General with any intent to deceive or mislead, for I regard him as a gentleman of integrity, intelligence, ability, and actuated with the highest motives and with a determination to do justice to all, and I am not questioning his motives, but will endeavor to present the facts in the light that I see them. When we have all of the facts, I will venture to assume that Representatives in Congress will realize that they can afford to stand for a policy that compels people living in foreign lands to pay more than people living in our own country. The Postmaster-General’s statement as to the sending of two pieces, each weighing 4 ounces, is correct in some cases, and the domestic rate in some cases is higher than the foreign; but in the majority of cases foreign rates are the highest. In his excellent address to enlighten members of the New England Postmasters’ Association and the country, he might have gone further by saying: “To illustrate the incongruities that exist, any individual entering the post-office here in Boston, or in any other city or town in the country, with two parcels, each weighing 1 ounce, can send one parcel to New York for 1 cent, while for the other parcel, which is addressed to somebody in foreign lands via New York, he will have to pay 12 cents, for the reason that the rate to foreign countries is 12 cents per pound or fraction thereof, while the rate to our own people is only 1 cent per ounce. Therefore the rate on the parcel addressed to somebody in foreign lands is 12 times as great as is the rate on the parcel addressed to New York.” And he might have referred to the report of the Second Assistant for the year ending June 30, 1907, pages 25 and 26:

Or he might have said: “If the two parcels referred to, weighing 4 pounds each, or 64 ounces each, or 128 ounces for the two, had been divided into parcels of 1 ounce each, and one-half of them directed to parties in New York, the rate on the sixty-four parcels would have been 64 cents to New York, and the postage on the sixty-four parcels addressed to London would be $7.68.” According to the Second Assistant’s report, rates on parcels addressed to foreign countries are not uniform. The rate to Bermuda is 12 cents per pound, and the rate to Ecuador is 20 cents per pound. The rate to Sweden, Peru, and Denmark is 20 cents per pound or fraction of a pound for parcels which require the use of the expensive transit across the Isthmus of Panama, and 12 cents per pound or fraction of a pound for parcels which do not use that expensive transit. So we find that rates on parcels weighing 1 ounce addressed to Sweden, Peru, or Denmark which require the use of the expensive transit across the Isthmus of Panama is 20 cents, or twenty times as high as the rate on parcels weighing 1 ounce addressed to New York. Why this incongruity in rates? Rates on mail matter between the United States, Canada, Cuba, Mexico, and Panama are fixed by treaty with each country and with all other countries by conventions of the Universal Postal Union. The last convention was held at Rome, 1906, and took effect October 1, 1907. The acts of these conventions are binding on these countries, but have nothing to do with domestic rates, they being fixed by Congress and the Department. The conventions are simply agreements as to international mail matter. The rate on parcels post is fixed with each country, or in thirty-five parcels-post conventions. The rate is generally 12 cents per pound or fraction thereof, the pound being the unit of weight. The rate is 1 cent per ounce. The rate on 5 ounces to the Philippine Islands is 5 cents and to London 12 cents.

Parcels Post. pp. 8-11.

S. C. Smith.

In Foreign Countries

The sentiment in favor of this new governmental service has been built up in this country chiefly by holding up to view more or less highly painted pictures of what is being done along a similar line in the countries of Europe. Any fair comparison of the postal service in those countries and in ours must take into consideration density of population, expanse of country or length of transportation routes, and the ownership of the means of transportation. The density of population and the relative size of the United States and of the principal countries of Europe having a cheap parcels post are shown by the following table:

Country. Area. Ratio of size. Population. Population per square mile.

Sq. miles.

United States3,602,99010084,154,00923.35

Great Britain121,3913.3641,976,827345.79

Germany208,8605.7960,641,278290.34

France207,0545.7438,961,945139.87

Belgium11,373.317,074,970622.08

Italy110,5503.0632,475,253293.76

Switzerland15,976.443,315,443207.73

These figures are extremely interesting and important in connection with this subject. We constantly lose sight of the immensity of this country and its “magnificent distances,” as compared with the nations of Europe; but in considering a question of transportation, distances and density of population stand in the foreground. Let it be observed, for instance, that while our country is over 300 times as large as Belgium, the latter has a population of 622 people to the square mile, while we have but a fraction over 23. Yet we will hear it argued that “Belgium carries 132-pound parcels by mail; why can not we?” or, “If Switzerland can carry 110 pound parcels, why not the United States?” entirely ignoring or forgetting the fact that our country is 250 times as large as Switzerland and has about one-tenth the population in a given area. Postal authorities have estimated that the average distance traveled by a piece of mail, including letters, papers, and parcels, is 40 miles in Great Britain, 42 miles in Germany, and 540 miles in the United States. Of course it is still less in the smaller countries of Europe. The admission of paper mail to this calculation greatly reduces the average, since newspapers circulate chiefly in the vicinity of the city of their publication. Parcels of merchandise or produce would certainly move much farther on an average, because they would chiefly flow to and from the great cities. If one is going to trade by mail, and the cost of delivery is the same, why not go to “headquarters,” which, in the popular mind, means one of the larger cities in the country?

The maximum parcel carried by the principal nations is as follows:

Pounds.

United States4

Great Britain11

Germany110

France22

Belgium132

Switzerland110

Italy11

Austria110

Railroad Ownership

Another factor of equal importance is the nature of ownership of the means of transportation. In this country all routes are privately owned and operated. The railroads—the chief means of transporting the mails—have been constructed for the most part by private capital, without the aid of the government, and the government, like individuals, must pay a rate for its service which will yield a fair return to the owners. The roads in the foreign countries used in this comparison are largely owned by the governments, in which case it matters little whether merchandise and produce move by mail or by freight. In some of the countries, as in France, the government guarantees the interest on the capital invested in the roads, and in return has its mails carried free or at a nominal rate.

The English writer above referred to says of the mail-carrying situation in Germany:

The German post has no occasion to enforce heavy rates. It can impose its own terms on the railway companies. By law these have to carry free all parcels under eleven pounds in weight. Thus the mistake which has crippled the activity of the British parcels post has been avoided.

Of course there can be no just comparison between a service carried on under such conditions and ours, for the basic conditions are so fundamentally dissimilar.

The matter of railroad ownership lies at the very foundation of this question. If this government owned the roads and operated them, it would matter little what went forward as mail and what under another designation. But that is not the case now and it is to be hoped never will be. From this standpoint, as well as from those hereinbefore mentioned, it is manifestly unfair to argue that because other countries do so and so in their mail service, therefore we should do the same.

It is significant that no country giving a large service of the kind under consideration undertakes to say that its receipts equal the cost of the service. I have not been able to find any report showing the cost of the parcels department. It is stated by some pretty high authority that the general belief among these nations is that they are rendering it at a loss. It is hard to reconcile that condition of the business with any idea of fairness. We may properly carry on the educational feature of the mail service, in part, out of the general revenue of the government; but who will say that we may fairly carry the individual’s produce to market or his merchandise home for him at public expense in whole or in part? Why should all the people be taxed to pay a postal deficit created by moving freight for the people at less than cost of service? Is there any reason why this branch of pure business should be conducted at public expense which would not justify the performance by the government of any other department of business?