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Department, on the other hand, has made the contention that the increase of 156 actually is between 1928 and the present time. Can you throw any light on that apparent contradiction as to fact?

Mr. MAGINNIS. I made one mistake in my testimony, but I think it improves on what I had to say. I wish you would refer to the chart in the middle of my blue folder, Mr. Johansen. That may clarify it.

The percentage increases we are talking about in the consumer price index and in the letter mail unit costs were really 1932–59. I said 1946, as I recall, in my prepared testimony. That is in error. So if you care, the increase in the bulk third-class rate, even going back to 1932, you will find that the increase in the minimum piece rate has been 150 percent.

Mr. JOHANSEN. I may be slow on the uptake, but has there been an increase in the rate of 150 percent between 1952 and 1960?

Mr. MAGINNIS. That is when the total increase occurred, in a short period of 8 years. The 150 percent started in 1952. There was a half-cent increase. Then we absorbed one in January of last year, and another one is still to go into effect on July 1 of this year. So that makes a total of 150 percent, $10 a thousand versus $25 a thousand.

Mr. JOHANSEN. Then, what has been the increase since 1928?
Mr. MAGINNIS. This same amount. You are correct.
Mr. JOHANSEN. Was there no increase between 1928 and 1952?

Mr. MAGINNIS. No, sir; there were no increases in any categories of mail during that period, I do not believe. In fact, I have the historical chart, you will recall, in my testimony, which shows the cost recovery for all of the years from 1928 through 1960, in fact.

Mr. JOHANSEN. Is the reason for my misunderstanding simply the fact that the rate in 1928 was the same as in 1952?

Mr. MaginNIS. You are correct; the rate was the same.
Mr. JOHANSEN. So that they were both the same.
Mr. JOHANSEN. And there was no increase from 1928 to 1952?

Mr. MAGINNIS. Yes. In other words, the answer to your question is that these rate increases have occurred in an 8-year period, mainly under the present administration.

Mr. JOHANSEN. That is correct. But there is still only a 150percent increase since 1928.

Mr. MAGINNIS. That is right, sir.

Mr. JOHANSEN. My point is that if you were to average out the rate of increase and you took only the 8-year period that you referred to, the rate of increase per year would be, of course, substantially higher than if you averaged it out as against 1928.

Mr. MAGINNIS. Well, I can only say that the rate on first-class mail was 3 cents in 1932, and it has increased 33% percent.

Mr. JOHANSEN. I am well aware of that, and I think it ought to have increased more. I am not arguing the point. I am trying to clarify what seems to be the confusion.

One of the problems we have here is that there are all kinds of figures floating around, and it is easy to get lost and confused in them. But the Department, then, is correct that while the increase has occurred within the 8-year period, it is the only increase that has occurred since 1928?

Mr. VAGINNIS. In the minimum case rate, sir. There was an increase in 1949, but it had to do with the pound rates, and so forth.

Mr. JOHANSEN. Yes. I think the figure of 150 percent applies to the identical type of mailing.

Mr. MAGINNIS. That is right, sir. Mr. JOHANSEN. Which may raise the debatable question as to whether there ought not to have been some increase between 1928 and 1952.

Mr. MAGINNIS. The Postmaster General says this, Vír. Johansen, that the Post Office showed a profit in all the years up through 1946. It was only after the year of 1946, when the war was over, that deficits began to occur. So, perforce, you must assume that both first-class, third-class, and the other categories were paying their way in that period. That was his admission, that it was a profitable postal operation.

Of course, your whole method of operation is colored somewhat by the fact that during the war years all of the first-class mail, or the great burden of it, went to the San Francisco APO or the New York APO, and the Department showed an extreme cost recovery in the war period.

Mr. JOHANSEN. We hope we will not have occasion to experience that same kind of recovery for that same kind of reason.


The CHAIRMAN. There will be inserted at this point in the record a statement by Mr. Marshall J. Mantler, on behalf of the Bureau of Salesman's National Associations.

(The statement follows:)


SALESMEN'S NATIONAL ASSOCIATIONS Mr. Chairman and members of the committee, my name is Marshall J. Mantler, I appear before you today on behalf of the Bureau of Salesmen's National Associations, a joint service organization maintained by four nationwide salesmen's groups in many industries- National Association of Men's Apparel Clubs, National Shoe Travelers' Association, National Association of Women's and Children's Apparel Salesmen, and National Council of Salesmen's Organizations. The combined membership of all the groups exceeds 40,000 individuals.

The traveling salesmen's group, while not having the economic publicity attendant upon heavy industries, such as steel and automobiles, is one of the backbones of the distribution system in this country These men, traveling to the remotest corners of the United States, make it possible for the products and improvements of American industry to gain an extensive market area. If the postal rates pending before this committee today are increased, the additional burden imposed upon American manufacturers will make it necessary for them to find a source for the absorption of the extra costs resulting from higher postal rates. In those cases where the major sales method is accomplished through traveling salesmen-and this is the fact with most of the soft-goods industries—these selfsame traveling salesmen will be made to shoulder the brunt of increased taxes.

Most commercial travelers are independent contractors employed on a commission basis. It is a simple matter to reduce the rate of commissions by as little as one percentage point and effect a major change in the income of these travelers. These men do not have the protection of a strong union structure, nor does their job have the glamour of the management and advertising professions, to name just two, which are attracting most of America's talented young

A further weakening of the income potential of the traveling salesmen's profession will make it that much more dillicult to infuse new blood into the profession and thus will weaken the marketing system in this country. Where in ihe past it was the job of the traveling salesman to expand the imerican inarket in a geographic sense, it is now his job to expand the American market in a quality



At the same time, however, that these men are faced with a downward pressure on commissions from the increased postal rate, that very same rate will increase their own expenses as independent contractors. This, which may at first blush look like a small burden, is imposed from two directions at once. The traveling salesman is in the middle.

These statements are made with the full realization and in support of our national policy of a balanced budget. The membership of the organizations I represent wish to do nothing less than to pay their share of postal services to which they subscribe. They are not in favor of a postal deficit incurred through their nonpayment of postal expenses attributable to their use of the mails. However, insofar as the deficit is composed of expenses incurred for the common good of all, it is neither fair nor economically wise to ask these men to shoulder more than their share of the load.

I am sure other witnesses appearing before this committee will make clear the doubt that exists as to how much of postal deficit, upon which a rate increase is based, is attributable to the use of the mails and how much is attributable to services for the national welfare. In the interests of national economic stability, the Bureau of Salesmen’s National Associations earnestly urges caution upon this committee, that all doubt as to the necessity of a postal-rate increase be resolved before such action is approved.

Thank you for allowing me to appear before you today.

The CHAIRMAN. The House is now in session. We will have to recess at this time. The hearing will be resumed tomorrow morning at 10 o'clock.

(Whereupon, at 12:10 p.m., the hearing recessed, to reconvene at 10 a.m., May 18, 1960.)




Washington, D.C. The committee met at 10:10 a.m., pursuant to recess, in room 215, House Office Building, Hon. Tom Murray (chairman of the comınittee) presiding.

The CHAIRMAN. The committee will be in order. The hearings will be resumed on postal rate legislation.

We will continue consideration of that section of the bill pertaining to increases in third-class mail rates.

I believe Mr. John Tillotson II, of Modern Handcraft, Inc., will be the first witness this morning. Mr. Tillotson.



Mr. Tillotsox. Mr. Chairman and members of the committee, my name is John E. Tillotson. I am president of Modern Handcraft, Inc., Kansas City, Mo. Modern Handcraft has been in business for quite a few years. It was started during the depression as a partnership and was incorporated in 1946.

The CHAIRMAN. I believe we have had the pleasure of having your father here. Was that your father?

Mr. Tillotsox. Yes, sir.
The CHAIRMAX. I remember him quite pleasantly.
Mr. TILLOTSON. Thank you, sir.

Today we are in the specialty magazine publishing business, but we have not always been.

Several years ago we operated a specialty mail order business; principally we carried needlework materials such as floss, yarns, crochet thread, stamped materials for embroidery, and thousands and thousands of yards of materials. This business was started a good inany years ago as a sideline; in fact, the business got its start in a home on a kitchen table with the addressing of postcards. One thousand postcards were addressed and sent.

From this the business grew. The growth was quite slow, naturally, since it had to grow from the “plowing back” of profits in those years when there were profits. Our business was secured by sending catalogs and fliers to our customers and former customers. We occasionally rented mailing lists of qualified or identified buyers, and new customers were added to the list by advertising special offers. Over a period of years the active customer list was built to approximately 300,000 to 400,000 buyers. The business at its peak did about three-quarters of a million dollars a year, gross volume.

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