ployees of the United States. Personnel, other than those employed at canteens, warehouses, and storage depots, shall be employed and paid from Veterans' Administration appropriations for salaries and expenses as normal Veterans' Administration employees and assigned, detailed, or soaned to the Service without reimbursement by the Service.

(f) To make all necessary contracts or agreements to purchase or sell merchandise, fixtures, equipment, supplies, and services, without regard to section 3709 of the Revised Statutes of the United States (41 U. S. C. 5), and to do all things necessary to carry out such contracts or agreements, including the making of necessary adjustments and compromising of claims in connection therewith.

(g) To fix the prices of merchandise and services in canteens so as to carry out the purposes of this Act.

(h) To accept gifts and donations of merchandise, fixtures, equipment, and supplies for the use and benefit of the Service.

(i) To make such rules and regulations, not inconsistent with the provisions of this Act, as he considers necessary or appropriate to effectuate its purposes.

(j) To delegate such duties and powers to employees as he considers necessary or appropriate, whose official acts performed within the scope of the delegated authority shall have the same force and effect as though performed by the Administrator.

(k) To authorize the use of funds of the Service when available, subject to such regulations as he may deem appropriate, and without regard to the provisions of sections 3639 and 3651, Revised Statutes of the United States, as amended (31 U. S. Č. 521, 543), for the purpose of cashing checks, money orders, and similar instruments in nominal amounts for the payment of money presented by veterans hospitalized or domiciled at hospitals and homes of the Veterans' Administration, and by other persons authorized by section 3 of this Act to make purchases_at_canteens. checks, money orders, and other similar instruments may be cashed outright or may be accepted, subject to strict administrative controls, in payment for merchandise or services, and the difference between the amount of the purchase and the amount of the tendered instrument refunded in cash.

Such

Section 4 of Public Law 636, Seventy-ninth Congress, is amended to read as follows:

SEC. 4. To finance the establishment, maintenance, and operation of the Service there is hereby authorized to be appropriated from time to time such amounts as are necessary to provide for (a) the acquisition of necessary furniture, furnishings, fixtures, and equipment for the establishment, maintenance, and operation of canteens, warehouses, and storage depots; (b) stocks of merchandise and supplies for canteens and reserve stocks of same in warehouses and storage depots; (c) salaries, wages, and expenses of all employees; (d) administrative and operation expenses and premiums on fidelity bonds of employees; and (e) adequate working capital for each canteen and for the Service as a whole. Amounts heretofore or hereafter appropriated under the authority contained in this Act, as amended, and all income from canteen operations become and will be administered as a revolving fund to effectuate the provisions of this Act, as amended.

O

SURVEY AND STUDY OF THE POSTAL SERVICE (UTILIZATION OF RAILWAY MAIL CARS AND STORAGE CARS ON THE RETURN MOVEMENT)

MAY 5, 1949.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. REES, from the Committee on Post Office and Civil Service, submitted the following

REPORT

(Pursuant to H. Res. 176-80th Cong.]

Pursuant to authority contained in House Resolution 176, approved June 5, 1947, the Committee on Post Office and Civil Service made a survey and study of the postal service. The purpose of the survey and study was to determine where savings may be made in order to reduce the $500,000,000 deficit facing the Post Office Department this year. The Post Office and Civil Service Committee requested the Comptroller General to make a study of methods which might be used in order to reduce the amount of space on railway mail cars for which the Post Office Department, under tariff's established by the Interstate Commerce Commission, is required to pay but does not use. The letter of the chairman of the committee requesting this study follows:

HOUSE OF REPRESENTATIVES,

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,
Washington, D. C., December 26, 1947.

Hon. LINDSAY C. WARREN,

Comptroller General, General Accounting Office, Washington, D. C. DEAR GENERAL WARREN: During the course of our survey and study of the postal service our attention has been directed to the practice of deadheading railway mail cars. Under the tariffs authorized by the Interstate Commerce Commission for the carrying of mail, the railroads receive the same amount per car-mile for empty railway mail equipment as though such equipment were completely utilized.

At times the Post Office Department itself uses this empty space to transport ace and other equipment of the postal service. The railroads, however, do not use this space since if they do they receive less than if it were deadheaded. I am sure that the Government is paying many thousands of dollars in transportation charges to move, under Government bills of lading, material and equipment

for Government departments other than the Post Office over the same routes that this empty equipment is moving.

In discussing the matter with one of the Commissioners of the Interstate Commerce Commission, he voiced the opinion that there should be no objections to using this empty space to move Government supplies and equipment.

I am writing you with the thought that some procedure can be worked out wherein this space may be utilized for Government shipments with a resulting saving to the Government.

Sincerely yours.

EDWARD H. REES, Chairman.

The Comptroller General, in his letter transmitting the report, points out that the Post Office Department, under present Interstate Commerce Commission rates, pursuant to existing law, pays approximately 100 percent higher for returning an empty mail car from the west coast to the Atlantic seaboard than the commercial rate for full car shipments by freight and states:

To correct this condition and at the same time effect a considerable savings to the Government it would appear advisable to amend the existing law in such manner that the responsibility for returning equipment would be that of the carrier, and to provide for an adjustment of rates to compensate somewhat for the loss of revenue to the carriers. Justification for such revision seems fully apparent in view of the reported substitution by the railroads of different equipment for the return trip in a deadhead status and the use of the space, originally paid for, to any service in the carriers' interests. Such practice would tend to offer the opportunity to the carriers to use the return trip for the transfer of unserviceable equipment to repair points at Government expense and generally appear to operate to the advantage of the carriers only.

The Comptroller General also recommends procedures which could be carried out under present law which would result in a savings to the Government as follows:

(1) All mailable matter of the Government agencies which could use space now deadheaded should be sent through the Post Office Department.

(2) Many Government departments are sending shipments through Railway Express at a much higher cost because they do not have facilities for transporting it to the post office. The Post Office Department should extend a pick-up service to Government Departments in such cases.

(3) Government departments should pay the post service at the regular postal rates, arranging for the interchange of funds through the use of postage stamps.

The report of the Comptroller General and his letter of transmittal follows:

Hon. EDWARD H. REES,

GENERAL ACCOUNTING OFFICE,
Washington, September 17, 1948.

Chairman, Committee on Post Office and Civil Service,

House of Representatives.

MY DEAR MR. CHAIRMAN: Further reference is made to your letter which was received in this Office on December 29, 1947, acknowledgment of which was made by Office letter dated January 5, 1948, wherein you were advised that the matter of utilization of deadhead railway mail space for the transportation of Government shipments would be made the subject of investigation and study and that you would be further advised with respect thereto when report thereon had been completed.

The matter has been made the subject of study and investigation and the report thereon, prepared by representatives of this Office, is transmitted herewith for the information of your committee.

Examination of the report and accompanying exhibits and attachments indicates certain apparent obstacles to the complete utilization of deadhead space by departments of the Government other than the Post Office Department. In this connection it may be pointed out that the only specific legislation appearing on the matter is found in section 5 of the act of July 28, 1916, 39 Stat. 429 (39 U. S. C. 523, 529, 539, 560, and 561), wherein provision is made for the free transportation of personnel, equipment, and supplies of the Post Office Department and the postal service, and the Department consistently has held that no authority exists for the extension of such like service to other departments or agencies of the Government. However, there would appear to be no restriction on the use of available deadhead space should the Post Office Department have need therefor to meet the requirements of the service in the form of mailable matter presented by other agencies of the Government for shipment, and while it is not indicated that the Department has encouraged such use by other departments, it has been brought out that the railway mail service is using space in such deadhead return mail storage cars to the fullest possible extent in the regular course of operations. To the extent that such deadhead space is availed of by the Department there would appear to be no restriction, and further use thereof would not appear to affect the settlements with the railroads therefor in any manner.

In view of the present restrictions which appear to require that mailable matter only may be transported by the postal service, with the exceptions above noted, justification for the holding by the Department in the matter is apparent, and the cure would seem to lie in the revision of the statutory restrictions to provide for a greater use of the space in question. It is indicated in the attached report that many agencies do not avail themselves of the parcel post service and the lower rates provided thereby, while others have directed the use thereof. In this connection it may be emphasized that it is primarily the duty and responsibility of the administrative offices to determine which method of shipment will in any given case best serve the interests and requirements of the Government. In the few instances where this Office is required to make shipment of goods it is generally the policy to ship by parcel post where the cost is less than by express. In the matter of charges now applicable to deadhead return storage cars and other units of space which reportedly exceed $15,000,000 annually, it is noted that considerable space is paid for under existing law and regulations in excess of that actually used which suggests the necessity for a revision thereof whereby the Government would be called upon to pay on the basis of the exact amount of space used rather than upon the present basis. Such condition is found in the so-called 50-percent rule, applicable in all instances wherein a full car is furnished by the carrier although the part thereof used to meet the requirements of the service exceeds 50 percent of the total space but slightly.

A further economy is suggested by the study recently made which involves the unusually high rates imposed upon the service by existing statutory enactments. I have reference to the provisions of section 5 of the act of July 28, 1916 (39 Stat. 427), under which the space allowed for round-trip car runs for storage cars, full railway-post-office cars, and apartment railway-post-office cars is the space allowed and paid for in either direction unless such space is occupied by the railroad for its own use. In allowing the full rates set by the Interstate Commerce Commission for the return empty space the Government is required to pay for in excess of the commercial rates the railroads would receive for like space were the return of such space required to be made at the expense of the carriers. For instance, the cost of returning a deadhead car from the west coast to the Atlantic seaboard is approximately 100 percent higher than the commercial rate for full carload shipments by freight. Also, in view of the reported shortage of railway rolling stock the full use of such equipment would greatly alleviate the condition. It is apparent that so long as the carriers receive the rates now in effect no attempt will be made to put such space into needed service.

To correct this condition and at the same time effect a considerable savings to the Government it would appear advisable to amend the existing law in such manner that the responsibility for returning equipment would be that of the carrier, and to provide for an adjustment of rates to compensate somewhat for the loss of revenue to the carriers. Justification for such revision seems fully apparent in view of the reported substitution by the railroads of different equipment for the return trip in a deadhead status and the use of the space, originally paid for, to any service in the carriers' interests. Such practice would tend to offer the opportunity to the carriers to use the return trip for the transfer of unserviceable equipment to repair points at Government expense and generally appears to operate to the advantage of the carriers only. As indicated in the

detailed reports attached hereto, a considerable number of cars are used by the carriers which are classified as box cars, express cars, refrigerator cars, and others, for which the commercial rates on return trips would be considerably less than the postal rates now received therefor. Accordingly, it is recommended that any contemplated revision of existing statutory enactments relating to the return movement of equipment include a provision to the effect that the rates allowed the carriers for returning such equipment be not greater than the commercial rates provided under existing tariffs for empty, less carload, or carload shipments, according to the space involved therein.

This Office will be pleased to furnish any further assistance to your committee which may be desired.

Sincerely yours,

LINDSAY C. WARREN, Comptroller General of the United States.

GENERAL ACCounting OFFICE REPORT ON STUDY MADE of Deadhead Space, RAILWAY MAIL SERVICE, AND THE UTILIZATION THEREOF for TranspoRTATION OF GOVERNMENT SHIPMENTS

The Committee on Post Office and Civil Service by letter received in this Office December 29, 1947, suggested that some procedure might be worked out whereby deadhead space resulting from railway mail-service operations would be utilized for other Government shipments with a savings to the Government.

A study of the legislation, hearings thereon, and reports and orders of the Interstate Commerce Commission affecting the transportation of the mails discloses that a large amount of paid-for empty space moves throughout the United States in the form of freight, refrigerator, and baggage cars for which the Government, until February 1, 1948, was paying an average of 44.12 cents a mile with the only benefit accruing therefrom to the carriers.

Pursuant to the provisions of the Railway Pay Act of 1916, 39 Stat. 425, the Interstate Commerce Commission, under date of December 23, 1919, by Order No. 9200, section 4, established the rates to be paid the railroads for the transportation of mail. The said act provided in connection with full storage cars, as follows:

"In computing the miles of service of a storage car or lesser unit, the maximum space authorized in either direction of a round-trip car run shall be regarded as the space to be computed in both directions unless any part of the car containing such unit be used by the railroad company in the return movement."

Under the above ruling the Post Office Department is required to pay the full rate for return deadhead space as it pays for the outgoing full-load storage-type

cars.

Under date of December 4, 1947, the Interstate Commerce Commission ordered as follows (Order No. 9200):

"(1) That the fair and reasonable compensation for the transportation of mail matter, and the service connected therewith, by the applicant railway common carriers on and after the dates they filed their applications herein for reexamination, to and including January 31, 1948, be, and it is hereby, established as 25 percent in addition to the compensation paid or accrued for such transportation and service at the established rates in effect during the said periods;

"(2) That the fair and reasonable rates of pay to be received for transportation of mail matter, and the service connected therewith, on and after February 1, 1948, until the further order or orders of the Commission herein, by the applicant railway common carriers, be, and they are hereby, established by increasing by 25 percent the rates established and in effect immediately prior to the said date; provided that the present minimum payment established and in effect on any mail route, over any part of which mail is transported not less than six days a week, shall also be increased by 25 percent.

The above order covers the interim period between the date of the filing of the application for an increase in rates by the carriers and the date of further order or orders by the Commission on the request for an increase of 35 percent by the carriers. The matter of final order by the Commission has been continued pending the preparation of a further and complete report by the Post Office Department.

As a result of the 25 percent increase in railway pestel ratca the Department will be required to pay in excess of 50 cents a mile for such deadhead space retroactively, effective as of February 19, 1947, date of application by the railroads.