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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 Fould 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 classificd 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 tariiis 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 committe which may be desired. Sincerely yours,

LINDSAY C. WAIJEN,

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 or GOVSRNMENT 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, es 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

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 pestol ratca the Department will be required to pay in excess of 50 cents a mile for cuch deadhead space retroactively, effective as of February 19, 1947, date of application by the railroads.

cars,

During a conference with Mr. J. D. Hardy, Deputy Second Assistant Postmaster General in Charge of Surface Posial Transport, it was stated by Mr. Hardy that every effort was being made by the Post Office Department to ship all Department supplies, materials, and equipment in available deadhead space but that only mailable matter could be so shipped. However, in many instances heavy postal service equipment is so transported.

When asked whether other Government shipments could be transported in deadhead space Mr. Hardy stated it would have to be mailable matter before it could be so shipped.

The Bureau of Federal Supply requires considerable shipping space for movement of supplies both from contractor shipping points to storage warehouses, and for deliveries from storage warehouses to the various Government agencies. Mr. S. A. Snyder, Deputy Director in Charge of Warehousing for the Bureau, stated that shortage of freight cars has caused considerable delay in shipments of canned goods from contractors' plants to Government storage warehouses in various sections of the country. "When advised that empty freight cars were often available because of deadheading such cars from the west coast to eastern points, he stated the Bureau would be glad to make use thereof. He further stated his Bureau would be glad to cooperate in any plan whereby shipments would be made available to meet a schedule in which deadhead cars were moving and could be used, which would result in a savings to the Government.

Mr. Snyder suggested that there might be some difficulty in arranging shipments to meet train schedules and so forth, but stated it was his opinion that a coordinating office or organization to clear available shipments and available deadhead space could take care of the situation. He is ready to cooperate in every way with any procedure which may be established.

The question of the Government making use of the deadhead space was taken up with Col. J. M. Johnson, Director, Office of Defense Transportation, and upon being informed that the Post Office Department was paying an average of 41.12 cents per mile to deadhead freight, refrigerator, and baggage cars, he expressed surprise that such a condition existed in view of the shortage of railroad rolling stock of every description, but blamed the Government departments and not the railroads for the condition.

The significant fact brought out during the conference was that the agency of the Government set up to coordinate the efforts of all concerned with the transportation of things did not have knowledge of the existence of available empty space moving east and north over a long period of years, while during the same period this same agency was deadheading empty cars to such points to care for the heavy demands of the Government for equipment to move defense and war supplies and materials.

Upon being advised of the conditions Colonel Johnson arranged a meeting of officials of the Post Office Department, Interstate Commerce Commission, and at least one railroad, on that same date. Colonel Johnson, after admitting to the assembled group that he had just that day learned of the tremendous amount of deadhead space which was going to waste for which the Government was paying millions of dollars annually and receiving no benefits therefrom, stated that a part of this huge expenditure could be saved by the use of such space for the transportation of Government supplies, etc., and requested that plans be presented for the use of the space.

Mr. J. D. Hardy, Deputy Second Assistant Postmaster General in Charge of Surface Postal Transport, was requested to furnish a record of car numbers involved in recent deadhead movements and the railroads involved.

With such specific information Colonel Johnson stated he could better approach the problem of determining the procedure for using such space. He was positive in his statement that he would order the space used under powers existing in his office.

During the discussion, Colonel Johnson suggested that inasmuch as under existing law the railroads were entitled to payment for empty return mileage on storage car shipments of mail matter, other departments in making use of this empty space would be required to pay the regular tariff rates for the classifications of freight shipped, which ordinarily would be lower than the postal rates, and the cost to the Post Office Department would, therefore, be the difference due the carriers to insure their full recovery of earnings on the return movement.

While there would be no direct savings to the departments using the deadhead space under such a plan, the result would be to relieve the pressure on rollingstock requirements at western and southern points.

Mr. Delaney, Solicitor for the Post Office Department, stated that in his opinion the Post Office Department could work under such an arrangement without legal difficulty.

The monetary savings to be effected would be in the use of Post Office appropriations, which would be reduced by the cost to other departments for transporting their shipments, and would be the amount paid by such departments for the deadhead space.

It was developed during the meeting that the railroads are allowed to substitute other cars in the deadhead return movement for cars used in shipment of mail. This is done for the convenience of the railroads only, since they may have use for a specific car, or type of car, at the point of mail destination and in such cases will substitute some other car on the return trip. There would appear to be some question as to the legality thereof since the space in a specific car would seem to be contemplated in a round-trip payment. The railroads have 60 days in which to return the equipment involved in a round-trip movement of mail and it was stated such cars could be put to other use by the carrier if & substitution was made.

Paragraph 5 of the act of July 28, 1916 (39 Stat. 427) (39 U. S. C. 535), would appear to prohibit such substitution, as follows:

"In computing the car-miles of storage cars, 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 the car to be used by the company in the return movement, or otherwise mutually agreed upon.” (Italics supplied.)

The restriction would therefore appear to apply to the particular car or unit, and by resorting to the substitution of other cars in order to make use of particular space the railroads are able to realize a greater income from such equipment than would otherwise be possible.

A study of the return deadhead cars has been made and the indications are that cars carrying full pay loads out do not return immediately but are diverted to other use en route or from destination points, with substitutions being made in many instances for return movements.

No apparent attempt is made by the railroads to cover up the practice of billing for full deadhead movements allowable under the law; however, it has been noted in some cases that deadhead was not claimed. This of course is permissible as there is no requirement that the railroads bill for deadhead and payment therefor is not made in the absence of billing. Such cases are very rare and it has been found that the railroads, with few exceptions, are very exact in billing for all service and make special note when deadhead is not claimed.

A special study has been made of the volume of deadhead space moving daily between various points and a survey was conducted in several of the larger cities to determine the volume of eligible mail matter and other shipments of Government property, supplies, and equipment, routed by the various governmental agencies therein over the routes and to the points of deadhead return or destination.

This study revealed a very large movement of Government shipments which could logically be transported in available deadhead storage cars or space. In other words, it was found that the Government ships by means of express, parcel post, motor, or railway freight, at regular commercial or postal rates, a considerable quantity of property, supplies, and equipment which could move in returning empty railway mail storage cars.

For detailed information on the above there are attached reports covering surveys made in the larger cities from which the greatest number of deadhead cars emanates, as follows: Report No.

Report No. 1. Atlanta, Ga.

7. Los Angeles, Calif. 2. Chicago, Ill.

8. Denver, Colo. 3. Seattle, Wash.

9. Boston, Mass. 4. Dallas and Fort Worth, Tex. 10. San Francisco, Calif. 5. New Orleans, La.

11. St. Paul, Minn. 6. Portland, Oreg.

12. St. Louis, Mo. In discussions with officials of the Post Office Department as to the possible use of empty storage space (deadhead) for the movement of Government property (supplies or equipment), the authority to return to the mails certain equipment, supplies, empty mail bags, etc., of the postal service was cited as the only existing authorization for such use.

The Department has recognized the provisions of paragraph 5 of the abovecited act (39 U. S. C. 523, 529, 539, 560, and 561) as covering the specific use of empty storage or other car space and contends that any other use thereof is unauthorized. Under such holding, shipments by other Federal agencies, even though meeting the weight and size requirements for parcel post, could not be transported free of cost in deadhead return space. While not prohibited by law, such shipments are not specifically authorized by existing law, and for that reason are not considered by the Post Office Department as eligible shipments, under the said act.

An indication of the use of deadhead space returning to Washington, D. C.; is reported in letter and accompanying statement of the superintendent, maií traffic, Baltimore & Ohio Railroad, dated June 11, 1948, which is attached as exhibit No. 7, covering the shipment of defective mail bags destined for the mailequipment shops in that city. See also statement of N. G. Maxson, general superintendent, railway mail service, Washington, D. C., attached hereto as exhibit No. 8.

That efforts have been made by other Federal agencies from time to time to make use of available deadhead space for the shipment of other than mailable matter is indicated by the reported action on the part of the Department of Agriculture to secure the use of deadhead space to ship a cubical freezing chamber from Seattle, Wash., to Washington, D. C., and the reply of the Post Office Department 'denying the use of such empty storage space in part as follows:

such articles do not conform to the regulations governing the size and weight of mail matter and are, therefore, not admissible to the mails.

""Storage cars are paid for in both the outward and return movements for the transportation of the United States mails only. Articles such as the one described cannot be considered as entitled to free transportation as United States mail as its use is entirely foreign to anything having to do with the United States mails or the Post Office Department.

"The Department cannot ask the railroad company to handle matter of this kind under the rules and regulations describing the duties of the carrier in their relation to the transportation of the United States mails.”

See report of Special Investigation of Deadhead Cars and Unused Space, Eighth Division, Railway Mail Service, Post Office Department, San Francisco, Calif., dated June 16, 1948, prepared by representatives of the General Accounting Office, copy attached as report No. 10.

Some effort appears to have been made by the Department as shown in the Comprehensive Plan of the Postmaster General for Transportation of the United States Mail, exhibit No. 1, filed with the Interstate Commerce Commission on July 2, 1948, to take effect on August 1, 1948, to provide for the use of deadhead space to the benefit of the Government. It is provided therein in part as follows:

"The Department shall control the return movement of all railway post office cars, railway post office apartments, and storage cars. When it can be foretold with reasonable accuracy that the return movement will be needed for the Postal Service, such return movement will be authorized at the time the initial movement is authorized. Except as hereinafter provided, the same car used in the out-bound movement shall be used for the return movement. A return movement not previously authorized by the Post Office Department shall commence at such time not later than 48 hours after the arrival of the initial movement as the Post Office Department shall designate, unless a longer period is agreed on

* When the same car used in the initial or out-bound movement is not available for prompt return

the Post Office Department will permit the return of another car of the same type and practically the same dimensions and weight capacity as the car used in the initial movement, provided the substitute car is needed by the Department and is made available for use not later than 48 hours after arrival of the initial movement.”

The return of substituted cars of lesser length than authorized on the outbound movement is covered in the following provision of the said plan:

"No claim shall be allowed for the return movement of railway-post-office cars, railway-post-office apartments, and full storage cars of lesser length than the standard, unless such cars are used in the return direction for the transportation of mail, in which case claim shall be allowed on the basis of the space furnished and used, prorated over the rates applicable to the cars and apartments of the standard length authorized.” (See exhibit No. 1.)

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