The editor isn't happy - the previous picture of EB Pengra was published with his 1899 biography.
Evidently the USPS instituted new parcel post rules that caused a surge in mail traffic and a financial loss to the railroads. E.B. Pengra testified before a Senate committee, as well as representatives from the McCloud River, Nevada Central and Uintah. I know the railroads provided railway postal apartments in various lengths, but did standardize on 15, 30 and 60 foot apartments. I'm not sure if they paid by exact weight or not. The huge increase in mail without compensation caused the railroads problems.
RAILWAY MAIL PAY- SHORT LINES
HEARINGS BEFORE THE COMMITTEE ON POST OFFICES AND POST ROADS
UNITED STATES SENATE - SIXTY-FOURTH CONGRESS - FIRST SESSION
ON BILLS RELATING TO RAILWAY MAIL PAY
MARCH 22 AND 23, 1916
STATEMENT OF MR. E. B. PENGRA, GENERAL MANAGER OF
THE SUMPTER VALLEY RAILWAY CO., BAKER, OREG.
Mr. Pengra. Mr. Chairman, the question was brought up with the gentleman preceding me as to whether he represented a logging road, and before presenting my paper I would like to say that I do represent what is called a logging road in the western part of the country, namely, the Sumpter Valley Railway Co., of Oregon. And in presenting these statements, while I perhaps go into details a little bit, and it may seem unnecessarily, yet it is for the express purpose of showing you the actual operating conditions that we are confronting in the western part of the country.
This road extends from Baker, Oreg, to Prairie, Oreg., a distance of 80 miles, through a very rough and mountainous country. It is a narrow-gauge road, and through the greater part traverses a country that could not be followed by a standard gauge line on account of heavy grades and curvature. We have a ruling grade of 4 per cent, with 18° to 24° curvature, over three summits in a distance of 50 miles, elevation of these summits ranging from 5,100 feet to 5,200 feet, with our minimum elevation of 3,420 feet.
Our principal traffic is lumber and logs, and is all eastbound, which results in our west-bound movement being nonrevenue, as it is made up almost entirely of empty-car movement. One of the conditions of this lumber traffic is that we must keep the mills supplied with empties or they would have to close down, thereby causing heavy loss to the operators, the employees, and to the railroad. The reason for this is that the lumber is loaded directly from the saw onto the cars and shipped to Baker, there to go through the dry kiln and the planers. They have no storage room at the mills whatever.
Our west-bound freight traffic is, on the other hand, of such a nature that it requires box cars for loading, and these box cars can not be used in their return movement for lumber and log shipments, so must necessarily be returned empty, and this you can readily see results in a continuous cross-haul of empty cars, which of course has a great tendency to increase operating expenses and reduce the earnings.
This road penetrates a very sparsely settled country, and were it not for the lumber traffic it could not exist; yet this country is gradually being developed, along agricultural and other lines, and the future prospects are very bright, provided we can continue to operate and serve the community. Were it not for the railroad the people of this interior country, their mail, and their supplies, would still be transported by the old-fashioned stage lines — in fact, it is only within the past two years that the mail contract for the last 20 miles of the railroad was taken over by the railroad in lieu of the old star-route contract.
The Sumpter Valley Railway indirectly furnishes employment to hundreds of men, besides taking care of the biggest industry of eastern Oregon, namely, the lumber industry. We handle the output of six large sawmill of from 60,000 feet to 150,000 feet of lumber per day, and were it not for this little road these industries would not be able to exist, as they would have no way of getting their output to market.
I would say in connection with that, that the mills are located a distance of from 40 to 60 miles away from the initial point and the main line of the old W. R. & N., with which we connect.
We run one passenger train each way daily, on which we handle United States mail. For the calendar year ending December 31, 1915, our freight revenue was 80 per cent, passenger revenue 13 per cent, and our mail revenue 3.4 per cent of total revenue.
The space required for handling this mail represents 30 per cent of the entire train. The ratio of mail revenue to total passenger-train revenue is only 19 per cent. This is based on a 17-foot apartment car and does not include the extra space we have had to furnish on the many numerous occasions.
These facts are given you, gentlemen, that you may more readily understand the conditions surrounding the short-line railroads of the West — for the Sumpter Valley Railway is only one of many other short lines operating under practically the same conditions, and is not as Judge Moon has said," an isolated case" — and that you may see why we are so very deeply interested in the question of railway-mail pay, I would now like to give you a few figures relative to railway-mail pay as effective on the Sumpter Valley Railway in the past few years.
An incomplete record kept in 1910 shows the total amount of mail handled in February, 9,000 pounds; March, 11,810 pounds; April, 22,555 pounds; May, 22,825 pounds; a gradual increase through the four months, and a daily average, taken for the heaviest month, which was May, of 760 pounds per day. In 1913, the daily average was 2,296 pounds, or an increase of 1,536 pounds daily in three years.
In 1914 the quadrennial mail-weighing period from the 1st of February for 105 days gave a daily average of 2,955 pounds or an increase of 659 pounds per day in one year. For some reason unknown the 50-pound limit on parcel-post packages in this particular district was not being used, and we did not handle any 50-pound packages until during the last three days of the weighing period a few scattering shipments were handled. But immediately afterwards the people began to take advantage of the parcel-post rates and our daily average of mail matter handled at once began to increase by leaps and bounds, and in less than 30 days we were handling over 4,000 pounds of mail per day on an average, and this condition has existed ever since, though we are receiving pay for only 2,955 pounds per day, at a rate of $143.82 per mile per annum, when we should at the present time be receiving $174.64 per mile per annum on an average of 4,000 pounds per day, and which would be a very low estimate on the daily average as compared with the gradual increase in the past four years. Our present pay for this mail service amounts to $11,505.66 per annum, and, according to figures compiled by Second Assistant Postmaster General Otto Praeger in January, this year, our remuneration under the proposed bill No. 10484 would be $8,439.53, an annual reduction of $3,066.13. But this is not all; under the proposed bill the Post Office Department would continue to confiscate the legitimate freight traffic of the railroad and force us to haul it at a rate that would be impossible to compete with.
As an example of this application. A partial check made on parcel-post shipments consisting of flour, sugar, salt, groceries, canned goods, potatoes, mill stuns, etc., for the months of July and August, 1915, moving from Baker to Prairie for interior points and not including the regular first and second class mail nor did it include any shipments for intermediate points, resulted in the following: In July we handled 28,600 pounds and in August 29,650 pounds of parcel-post shipments such as above mentioned. These shipments represent commodities that have heretofore been handled as freight, and rightfully belong to the railroads as freight traffic. Taking our fourth-class rate for this same distance, 55 cents per 100 pounds, and applying it to the above-mentioned shipments and we have sustained a direct loss of $320.37 in revenue for the two months, besides having to haul the same by our best and most expensive means of transportation for no compensation whatever.
I could cite you many more cases of similar application, but do not wish to burden you with what may seem to be personal grievances, and I am firmly of the opinion that when all of the testimony of the short-line railroads is in, you will have reached the conclusion that they are none of them "isolated cases."
As a remedy and solution to the whole situation we would respectfully refer you to the bill 4175, introduced by Congressman Raker in the House of Representatives January 27, 1916.
This bill provides for the rate of pay as in effect in 1873 — for annual instead of Quadrennial weighing for relief from side and terminal service, and for reference to Interstate Commerce Commission by either the railroads or the Postmaster General any question in regard to unjust rate of pay or discriminatory action.
I will not go into details to analyze this particular bill as it has been and will be more thoroughly discussed in other papers. However, permit me to say in regard to the clause covering abolishment of side and terminal service and in answer to a question that has been asked as to how much this side and terminal service costs the railroads, that on the Sumpter Valley Railway of 80 miles it costs us
$900 per annum in addition to our regular employees handling mail, a very considerable item in comparison to revenue derived therefrom.
The question has been asked if space for mail service could not be taken from a general average of mail handled. I do not believe this applicable to any road. Taking my own road for illustration we have found it necessary in many instances in the past year to pick up an extra car out of our initial station to handle the overflow mail, and I can show where on numerous occasions this overflow has run as high as 18,000 pounds to 20,000 pounds. In every instance this would come up at the last moment, and could in no way be foreseen and prepared for. Under the space plan this mail would naturally have to be left over until the department could be notified, and an authorization for additional space allowed. This would naturally result in continually delayed mail service, and cause an unlimited amount of complaint from the patrons of the railroad.
It has been said that only a limited number of railroads of the United States are opposed to the space-basis plan, but such is not the case, they are opposed to it the short lines as well as the trunk lines.
We object to the space basis because it opens up a new and complex plan for handling our business, a new system of accounting and adjustment of earnings and expenditures.
Our whole transportation structure is based on weight. On movements of mail, of freight, of passengers, and express, all elements of cost are figured on weight basis. Under this weight plan the mail is handled at present, and the amount handled day by day, month by month, or year by year, can be ascertained the same as for freight or express.
We feel that it is both unnecessary and unwise to make any radical changes in a system that is in accordance with the present method of accounting, and is world-wide in its application to all other rates as applied to railroad transportation, especially when it is not detrimental to the Government.
All postage rates are based on weight of articles transported. Therefore, rate of pay from the Government to the railroads should be based on the same plan.
We oppose the space plan for the reason that an attempt is made to give the Postmaster General the power to determine and fix both the amount of space to be utilized and the amount he will pay therefor, also to take from the railroads their freight — their highest class freight traffic — and transport it by their best and most expensive transportation facilities at a postage rate that can not possibly be met by the railroads, and paying therefor a rate that is not remunerative to the railroads.
We do not believe that grain, flour, sugar, salt, potatoes, nails, groceries, and many other such commodities have any right for classification as mail, but we do believe such items belong to the railroads as freight traffic.
These railroads were built for the purpose of conducting a transportation business for profit. In dealing with our patrons we are supposed to receive compensation based on cost of service, the interest on investment plus a reasonable profit. The rights of the railroads to earn profits have been and are now being limited by the fixing of rates and other adverse legislation, both State and National, and this, coupled with local operating conditions, has made it almost impossible for any of them to make a legitimate profit on the business handled; in fact, few of the short-line roads are able to earn enough to pay interest on their bonds.
The requirements of the Post Office Department for the equipment to be furnished for transporting these mails is beyond reason as compared with equipment furnished for passenger or freight train purposes, yet they do not pay a legitimate freight rate for the service and require the railroads to handle their employees free of charge besides furnishing many employees for this class of service. There is no other department of the Government that requires free transportation for its employees.
A few years of extreme legislation against the railroads and it is felt by all the country served by those roads. They quit buying, quit building and expanding into new territory, and naturally the development of your country is stopped.
The closeness of the railroads to the community they serve, the upbuilding of the country, the extension of new lines into new country, and the location of settlers in that new country, and the ultimate success of such movements all bespeak the necessity for careful legislation. Cripple the railroads and you cripple your country. We try to serve the people of our community by giving them the best we have. We are jealous of the mail service, not because we are reaping a harvest from it, but because we feel that through it we can best serve the people and thereby build up our sparsely settled communities. Especially is this true of the West where the difficulties of operation are so great and the settlements so few.
We would respectfully refer you, gentlemen, to the appeals of our different State public utilities commissioners, in the form of letters to our different Senators; copies of these letters will be filed with the committee to be made a part of the record.
In closing I would like to add that if no consideration can be given to Senator Phelan's bill, S. 4175, the short-line roads of the West — and I say for myself particularly –
Senator Hardwick (interposing). That is Senator Phelan's bill, is it not?
Mr. Pengra. No; I think Mr. Raker presented it.
Senator Hardwick. Mr. Raker presented the same bill in the House?
Mr. Pengra. Yes, sir. It is Senator Phelan's bill in the Senate — that we are perfectly satisfied — in other words, we would be glad to have the whole matter turned over to the Interstate Commerce Commission. We feel that they are a body of men that are thoroughly capable of taking care of this question. They have devoted a great many years to the study of the rates. They fix all the rates in regard to freight traffic, passenger, and express and should be taken into consideration in regard to this matter.
Senator Martine. You, in common with the rest of your friends, insist upon a yearly weighing as being an equitable weighing?
Mr. Pengra. Yes, sir.
Senator Martine. And you would be perfectly willing to lend your aid and to weigh the mail practically, in the presence of a properly authorized officer of the Government, if you were relieved from the transportation of the mails from the depot to the post offices?
Mr. Pengra. I would be willing to do so, yet I would like to say, Senator, that I do not think it would be fair to ask us to do it.
Senator Martine. To weigh the mails, you mean?
Mr. Pengra. Yes, sir.
Senator Martine. You weigh your own commodities — the freight you transport. Why not do the same thing for the Government?
Mr. Pengra. I would be perfectly satisfied to do that in case the basis of pay is so adjusted that it would compensate us for the extra trouble.
Senator Catron. You would want the weighing annually, would you not?
Mr. Pengra. Yes, sir.
Senator Martine. And you would be willing to perform the service if you were relieved from the necessity of transporting the mail from the depot to the post office?
Mr. Pengra. Yes; we would be very glad to do it.
Senator Hardwick. You weigh the freight for your freight customer, every customer you have, do you not?
Mr. Pengra. Yes, sir.
Senator Hardwick. Then why not do the same thing for the Government?
Mr. Pengra. You understand that there is quite a difference in the freight rates and the Government rate. In other words, we are paid high enough rates for the transportation of our freight to take care of the extra cost to the railroads in weighing.
Senator Hardwick. The same employees could weigh it, could they not?
Mr. Pengra. Well, certainly.
Senator Hardwick. Then that is the answer. It doesn't cost you anything extra to do it.
Mr. Pengra. Yes; all that time is figured and charged up to the different accounts.
Senator Hardwick. I know, but they work eight hours a day anyhow, don't they?
Mr. Pengra. They work eight hours, but you understand in connection with that that it would possibly be necessary to get our trains down to the terminals at an earlier period.
Senator Hardwick. And that might involve some extra expense?
Mr. Pengra. Yes.
Senator Hardwick. But the expense would not be large?
Mr. Pengra. No; it would not be large, and I would say that the expense that would be cut up by cutting out the side and terminal facilities would more than compensate us for that expense.
Senator Hardwick. In a growing community, where there is more to get the advantage from year to year, I should think it would pay every one of you to have the weighing done right along by your employees!
Mr. Pengra. I would say so. I would be perfectly willing to do it.
Senator Martine. Most of your predecessors that have appeared here have acceded to that thought.
The Chairman. Are you through, Mr. Pengra?
Mr. Pengra. Yes, sir.
Mr. Oddie. Mr. Cooley, of Colorado, is the last one who will represent the western short-line roads, and if it would be more agreeable to the committee, he would prefer to appear in the morning.
The Chairman. Very well; we will adjourn until half past 10 o'clock in the morning.
(Thereupon, at 4.45 p. m., the committee adjourned until Thursday, March 23, at 10.30 o'clock a. m.)
