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THIRTY-FOURTH DAY
Chicago, Illinois,
Monday, April 12, 1943,
9 o'clock, a. m.
PRESENT:
All members of the Board.

APPEARANCES:
As heretofore noted.

PROCEEDINGS

THE CHAIRMAN: We are ready to proceed, Mr. Hartung.

MR. HARTUNG: Mr. Chairman, I hand you an exhibit consisting of 25 pages “Results of Operation and Payroll Statistics,” which I ask to be identified as Carriers' Exhibit 92.

THE CHAIRMAN: This exhibit will be received in evidence as Carriers' Exhibit No. 92.

(Thereupon the document was marked Carriers' Exhibit 92 and received in evidence.)

(Page 4621)

W. A. BENSON

recalled as a witness on behalf of the Carriers and testified as follows:

DIRECT EXAMINATION (Continued)

BY MR. HARTUNG:

Will you proceed to discuss that exhibit, Mr. Benson. . The first sheet of this exhibit is a table of contents. Page No. 1 is similar to page 25 in Employees' Exhibit 82, introduced by Witness Speer, and shows the various items of revenue and income, operating expenses, taxes and other deductions for the years 1929 to 1942 inclusive. In Employees' Exhibit 82 the figures for 1942 were taken from the Agency's Monthly Reports to the

Q. Mr. Benson, before you proceed to discuss the exhibit, was this prepared under your direction?
A. It was.

Q. And you are prepared to vouch for its correctness?

A. I am.

Q.

A

(Page 4622)

Interstate Commerce Commission and were therefore incomplete as to certain income and profit and loss
accounts which were not shown in the monthly reports. The figures in this exhibit, on this page, have been
taken from the Annual Report to the Interstate Commerce Commission, and therefore the figures for 1942 are
complete.
THE CHAIRMAN: But there is no difference in the actual figures?
THE WITNEss: There is no difference in the net results; the net is the same.
The account titles shown are those prescribed by the Interstate Commerce Commission in the uniform
system of accounts for Express Companies, issue of 1914.
These results of operation are a consolidation of figures reported to the Interstate Commerce Commission
for the respective years 1929 to 1942, subject to exceptions indicated in notes 4 and 5.

(Page 4623)

For the seven years, 1911 and 1917, the Express companies having operating contracts with the railroads paid 51.16 per cent of “Express-Domestic” revenue to the carriers for such service, the lowest percentage being 49.86 per cent in 1911 and the highest 53.50 per cent in 1916.

The Director General of Railroads fixed 50.25 per cent as the measure to be paid by the express company for express privileges during the Federal Control period. For the last five years the express privileges ratios, shown on this page, were:

1938, 32.71 per cent;

1939, 35.09 per cent;

1940, 33.98 per cent;

1941, 32.91 per cent;

1942, 42.22 per cent.

The increase in our wage payments due to higher rates of pay, shorter hours, and changes in the rules agreements directly affect the portion of express revenues paid to rail and other carriers for express privileges.

Express taxes also have an important bearing on express privileges. Line 15 shows that express taxes have

(Page 4624)

increased from a yearly average of about $1,500,000 during the seven years 1929 to 1935 to more than $9,700,000 in 1942. This increase is due principally to taxes paid under the Carriers' Taxing Act of 1937 (Railroad Retirement) and under the Railroad Unemployment Insurance Act, which payments for 1942 aggregated $7,336,516.

In 1937, Express Agency's voluntary pension payments were transferred to the Railroad Retirement Board, under the Railroad Retirement Act of 1937, which resulted in saving about a million dollars yearly to Express Agency in operating expenses, as an offset to the increase in taxes.

Page 2 shows for a period of fourteen years from 1929 to 1942, inclusive:

Number of Express shipments;

Express-Domestic revenue;

Express privileges;

Total operating expense with segregation as to,

Pay of employees, and other operating expenses;

Express taxes, and the average per shipment for each of these items.

An explanation of the use of the number of shipments and development of averages per shipment may be

(Page 4625)

appropriate at this time. In the railroad service, statistics are developed to reflect the effort and results of operations by relating those elements to tonnage and haulage statistics in freight service as well as to the number of passengers and passenger miles for passenger service. There are no such statistics in connection with traffic handled in express service. The unit to which costs, productivity and results are related is the number of shipments handled. It is for that reason that revenues, express privileges, pay of employees, other operating expenses, and express taxes are related on this page to the number of shipments.

During 1929, the number of shipments handled aggregated 182,852,645—which figure is the first one shown in the second column on the sheet.

MR. MULHoLLAND: You read it incorrectly.

THE WITNESS: How?

MR. MULHoLLAND: I think you read it wrong.

THE WITNEss: 182,582,645.

MR. MULHoLLAND: That is right.
THE WITNEss: During the years 1930 to 1933, what might be referred to as the depression years, there

(Page 4626)

was a consistent decrease in the number of shipments until during 1933 only 96,537,319 were handled. With improved business conditions, coupled with an intensive solicitation program to attract various classes of traffic to the express service, there was a gradual, but not constant, improvement in the number of shipments handled in the years subsequent to 1933 until during 1941, 172,615,839 shipments were handled. During 1942, 165,024,682 shipments were handled, a reduction from 1941 of approximately seven and a half million shipments.

“Express-Domestic” is the account prescribed by the Interstate Commerce Commission in its classification of accounts for the inclusion of express revenue from the transportation of goods, money and valuables upon basis of authorized tariff rates. In 1929, it amounted to $291,307,135. For the years 1930 to 1933, inclusive, Express-Domestic decreased substantially in line with the decrease in the number of shipments. It increased during the years, 1934 to 1941, somewhat in line with the number of shipments. In 1933, Express-Domestic

(Page 4627)

revenue amounted to $122,596,185, and in 1941 aggregated $191,790,802. The average express charge per shipment in 1929 was 159.55 cents or about $1.595. Not only did Express-Domestic revenue decrease during the years from 1929 to 1933, inclusive, but the average express charge per shipment decreased substantially, until, during 1933, it was only 126.99 cents or approximately $1.27. Notwithstanding the gradual, but not constant, increase in Express-Domestic revenue from 1933 to 1941, the average express charge per shipment continued to decrease until, during 1940, it was but 108.11 cents or slightly over $1.08. The constant decrease in the average express charge per shipment from 1929 to 1940, inclusive, resulted from a reduction in the average weight per shipment, which in part resulted from the intensive solicitation program to attract additional business to the express service. Much of the business procured was of relatively low weight and low average charge per shipment. During 1941, when war effort traffic moved in increasing volume, and during which year the total Express-Domestic revenue reached the sum of approximately $192,000,000, the average express charge per shipment increased from 108.11 cents in 1940 to 111.11 cents. This increase in the average charge

(Page 4628)

per shipment was due to the higher average weight of shipments handled in the war effort, including many carload shipments. During 1942 the volume of traffic handled in express service because of the war effort, and the higher average weight of such shipments, as well as the greatly increased number of carload shipments, resulted in an increase in total Express-Domestic revenue from approximately $192,000,000 in 1941, with an average charge per shipment of 111.11 cents, or $1.11, to $254,370,898 in 1942, with an average charge per shipment of 154.14 cents, or $1.54 plus per shipment. The increase in Express-Domestic revenue for 1942 over that for 1941 was due partly to the greatly increased volume of traffic handled for the United States Government, principally the War and Navy Departments. The bills which the Express Company rendered against the government in 1942 aggregated $28,307,191, compared with $3,830,065 billed in 1941—an increase of approximately $24,500,000. These sums include only express charges billed against the government and do not include the very substantial amount of express charges on materials used in the war effort by industries and contractors who paid the express charges directly to the

(Page 4629) Express Company. Part of the increase in Express-Domestic revenue in 1942 over 1941 was also due to the additional revenue accruing from the application of the ten-cent emergency charge applied tol. c. l. express shipments as authorized by the Interstate Commerce Commission as to interstate traffic, in part on January 20th, 1942, and in part on October 1st, 1942.

(Page 4630)

MR. HARTUNG: Mr. Chairman, I hand you copy of an opinion of the Interstate Commerce Commission in I. & S. Docket No. 5100, Express Less Than Carload Emergency Charge, 253 I.C.C., 339, and ask that it be received in evidence as Carriers' Exhibit No. 93.

THE CHAIRMAN: This will be received in evidence as Carriers' Exhibit No. 93.

(Thereupon, the document was marked Carriers' Exhibit 93 and received in evidence.) By MR. HARTUNG: Q. You may proceed, Mr. Benson. A. You will see from this report that the Express Agency filed the tariff on December 19th, 1941, to become effective January 20th, 1942. The Commission permitted the emergency charge of 10 cents per shipment to

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