Mr. HALL. We are paying our own way, sir.

Mr. REES. Are you paying too much?

Mr. HALL. We certainly feel we are paying at the present time the full cost of service rendered.

Mr. REES. But not more than you should be paying?

Mr. HALL. That is very difficult to say.

Mr. REES. You have not told me how much it costs you to send that big book through the mail.

Mr. HALL. No; I will have to give that information to you later. I apologize for not knowing.

(The information follows:)

Hon. EDWARD H. REES,

House of Representatives,
Washington, D.C.

MY DEAR MR. REES: Wednesday when I testified before the Post Office and Civil Service Committee, you inquired as to the postage that we pay on our books. These books are, of course, many sizes and many weights, but I am happy to provide you with a figure which is in direct response to your question. The books that I was holding up were our ring-bound Better Homes and Gardens cookbook, decorating book, handyman's book, and garden book. They are the largest of our books and on an average we fall into the fifth zone book rate which averages a postage cost of 25 cents per unit.

In other words in response to the question you asked me, it costs us 25 cents on an average to mail each one of these books. You may wish to enter this into the record.

Very truly yours,

PAYSON HALL, Executive Vice President.

Mr. REES. And the magazine costs about 4 cents to mail?

Mr. HALL. Yes.

Of course, Congressman Rees, it costs us to produce Better Homes and Gardens, which includes all the paper that goes in it, and the tremendous manpower that goes back of producing the paper, the ink, the editorial costs, and creativity, on an average of 25 cents a copy. It costs us 4 cents to deliver it.

Mr. REES. What share of your business cost is postage?

Mr. HALL. Between 12 and 15 percent.

Mr. REES. Of your total cost of operating?

Mr. HALL. Yes.

Mr. REES. I do not see how it could be so.

Mr. HALL. On a unit basis, I just said that it costs us approximately 25 cents for all other costs.

Mr. REES. But it costs 4 cents to send that magazine through the mail?

Mr. HALL. Yes.

Mr. REES. Well, to produce the magazine costs more than 4 cents; does it not?

Mr. HALL. The cost is 25 cents, approximately.

The Chairman. Are there any other questions?

If there are no other questions, thank you very much for your very fine statement, Mr. Hall.

Mr. HALL. Thank you, sir.

The Chairman. Without objection, there will be made a part of the record at this point the statement of Mr. Edward Lustig, president, Circulation Associates, Inc., of New York City.

(The statement referred to follows:)

STATEMENT BY EDWARD LUSTIG, PRESIDENT, CIRCULATION ASSOCIATES, INC., NEW YORK, N.Y.

Mr. Chairman and distinguished members of the Post Office and Civil Service Committee, my name is Edward Lustig. I am president of the advertising production and mailing firm of Circulation Associates, Inc., 226 West 56th Street, New York City; vice president of the nonprofit Business Mail Foundation, which makes its headquarters at 130 East 59th Street, New York; and a member of the board of directors of the Mail Advertising Service Association International, the mail production industry organization headquartered at 18120 James Couzens Highway, Detroit, Mich. I live at 172 Devon Road, Tenafly, N.J., just across the Hudson River from New York in suburban Bergen County.

I cite this personal information because I would like to give you some facts about just how important stable postage rates are to many people with whom I am associated: first, where I work in Metropolitan New York; second, where I live in suburban New Jersey; and, third, throughout the Nation where I am active in many affairs of my industry.

I would like to make just a brief, passing reference to the recent Commerce Department "impact" study, because I sincerely believed that while the survey was a noble gesture, the postage rate debate has long been clouded in a preponderance of statistical, analytical surveys and mathematical research that, regardless of figure tabulation, can only tell half the story. There has been the Price, Waterhouse cost ascertainment. There has been Mr. Summerfield's own detailed financial statistics. There has been the "impact" study. And more recently, there has been the McKinsey & Co. analysis of supposedly what extent third-class rates determine the success or failure of direct mail business.

All of this research, and I am sure there has been even more, has focused entirely on the fiscal budget of operating the Post Office Establishment, the dollars and cents activity of those who use it, and the pros and cons of many strictly monetary considerations in between.

But while financial and economic facts are being amassed by both sides, I believe we are all obscuring one of the most important and vital considerations of all, which simply can't be measured in any accountant's ledger book, either by the Post Office Department or the direct mail industry.

This consideration is the extent to which all classes of mail contribute to the basic public service policy of a department of Federal Government established to benefit all the people.

This consideration is my major testimony today.

I am not going to give you a ledger report on how drastically my own business has been or will be affected by postage increases. I'm not going to complain that it's a matter of life or death, as the gentleman from the Census Bureau said we always do. But I am going to try and point out a few things in my day-today experience with mail that I believe will never show up in any strictly economic

surveys.

These things are simply what mail-all kinds of mail-mean to people over and above any dollars and cents or profit and loss connected with it. This is not the impact it may have on our dollars and cents economy as a whole, or the impact it has on the profit or loss of its users. The impact I would like to tell you about, gentlemen, is that of education, information, and inspiration, at a time when our country as well as the entire world need it desperately.

Now I cannot presume to speak for anyone in the country, let alone the world, except those with whom I am associated. But I would like to tell you a little something about these people I do know. And I'd like to tell you from the human side rather than reciting cold statistical facts about how much they mail and how much they have to pay for it. I'd like to show you instead that in their mailbags there is more to be considered than the poind rate of material and what it's costing to move it to its destination. I'd like you to know just what is in these mail bags in terms of commercial mail communication that is contributing greatly to public information and education in all walks of life.

And even though the examples I cite are in just a few areas of widespread national direct mail activity, I hope you will realize they may be just as typical as 63,000 permit holders surveyed out of a much larger total of 250,000.

First is my own firm, Circulation Associates, Inc., which began in 1935 as a one-room "lettershop" with one multilith machine and one addressing machine. In those days we were a nonprofit institution, even though we never intended to be. And during 25 years of slow business growth, there have been many other times I could have said the same.

Today, Circulation Associates employs 250 people who perform 20 diversified direct mail production and mailing services from printing to delivery of material to the post office. In the course of a year we handle a whale of a lot of mail. And every time we do, for either a large or small firm, we cannot help but see that no matter what their mailing is intended to do, it does bring new information, education, and, yes, perhaps even inspiration, to someone.

I believe that in our fast-paced, ultramodern society today, both government and industry are so preoccupied with technical and economic problems that we tend to completely forget the important human fact realized so well by the outstanding American who started this whole thing in the first place. Mr. Benjamin Franklin knew only too well-and we should, too-that ever since type and paper were invented the printed word in any form has brought enlightenment to mankind, regardless of how it was distributed. And through his civic foresight, a government system was established to extend this enlightenment to all Americans. Today, through human dedication as well as technological progress, this system is bringing millions of Americans information, education, and inspiration, commercial and otherwise, as broad in subject matter as any public library. Forgetting for a moment what this mail may or may not "sell" in relation to what "costs," it is bringing information, education, or inspiration to someone. Not to everyone, but to someone it is bringing a new fact, anew idea, or a new personal benefit that may not have been there before. Regardless of whether or not its initial purpose is commercial or economic, it brings new informational enlightenment in a form expected and accepted in our free, competitive society. It may or may not be read. It may or may not be acted upon. But the important thing is that it is readily available for the interest or rejection of its recipients, who are all Americans. And in the face of what is happening to the freedom of ideas, information, and education elsewhere in the world today, I maintain that this ready availability-which puts all conceivable forms of enlightenment in the hands of the public for their personal choice of acceptance or rejection-is most important in the postage rate debate.

We should not only consider the impact of modern day dollars and cents. We should also seriously consider the far greater proven impact of the printed word in all its forms. For if one of its most widely disseminated forms is priced out of the mailbox, the biggest loser will not be the direct mail production industry, nor the direct mail creator, nor the direct mail user. The real loser will be a public denied all kinds of new information, education, and inspiration, formerly made possible only by a free enterprise system using a communication system long based upon public service.

Just what is this "public service"? Well, if you looked into Circulation Associates' outgoing mail bags you would see a great deal of it. Perhaps, for example, you would find mailings for insurance companies such as Mutual of New York. From a purely economic impact standpoint, chances are you could determine insurance policy sales which result from prospect leads obtained by these mailings. And surely, insurance has a well-recognized impact on our Nation's economy. But how could you measure the vast public service benefits from other types of insurance mailings that are institutional in scope, those which promote better health and safety throughout our population?

A look into another mailbag at our firm might reveal an industrial mailing for Radio Corp. of America. Strictly business. Or is it? Is RCA's educational as well as technical contribution to such things as the missile program strictly business, or is there some measure of public service in this scientific progress as well as defense that benefits all Americans? I believe it is the latter. And, while you undoubtedly won't find any RCA missile information in our mailbags, you might discover that they are distributing other technical education and information that will be widely used to benefit U.S. consumers everywhere.

And what public service benefits are contained in America's building and construction boom? What about the progress of new housing, new schools, new hospitals, new factories, not to mention our highway construction program. Does the Government consider all this activity an effort instrumental to our Nation's human progress, or only the result of capital investment for a profit return? In our free enterprise system, I am sure it is rightly considered both. But the question may irase, "What has direct mail got to do with this construction progress?" One answer can easily be found in our mailbags labeled "F. W. Dodge Corp." Here, you will find a leading service organization dependent upon the medium of mail to desseminate their vital, timely information that has become invaluable to construction progress. With our Nation's urgent need for private, civic, and industrial dwellings of all kinds, this information provides a major contribution to construction expedience, definitely in the public interest.

A wide range of information and education also abounds in the business, consumer, educational, and religious publications for which our firm handles fulfillment as well as new and renewal subscription mailings. Currently our organization is mailing magaines, and/or the subscription efforts that bring them to the public's attention, for 50 publishers whose mailings to selective different audiences reach approximately 5 million people per year.

Among them are broad-interest consumer magazines such as Curtis Publishing Co.'s American Home, whose editorial features and ideas inspire better homemaking throughout America, and several titles from Fawcett Publications, whose literary output also contributes heavily to a better informed public.

Trade magazines ranging from Bakers' Weekly to Architectural Record keep many businessmen informed on their industry's affairs, while external company publications such as Steelways and Esso Marketers spread the new of news industrial methods, innovations, and technical progress to the entire business community.

You will also find us mailing such publications as Christian Heritage and the International Journal of Religious Education, which are creating a finer religious knowledge, understanding, as well as more active participation in the respective faiths they represent. In the educational field, there are publications like the Music Journal, with an instructive, educational content that helps both teachers and professional musicians alike add greater perfection to their art.

Also adding to the education of both children and adults are a myriad of books, encyclopedias, and phonograph records, much of the educational content of which are also sampled in promotional mailings we handle for publishers such as Greystone Press, Childrens' Record Guild, and Living Language Courses. Whether prospects buy the books and records or not, they are often given a brief synopsis or digest of them in promotional mailings they receive-free, concise educational facts and information they might never have known before.

While the range of diversified publications and books we handle is both large and small, perhaps most typical of the average publishing dependency on direct mail is the well-known public affairs magazine The Nation. This oldest American

journal of opinion currently mails about 30,000 copies per week to all parts of the country. To maintain this circulation, they must also mail 500,000 renewal and new subscription pieces per year. Operating on a low profit margin, continued mail activity by The Nation is their only method of distributing their current event facts, information, and editorial analysis which is widely used in schools, colleges, and libraries throughout the country. Just how important this activity is toward helping create better informed citizens can be seen in the typical daily mail this publication receives from its direct mail subscribers:

"The Nation has helped me prove to the students of my course that intelligent scholarship, current events, and good writing can be fused to provide provocative and informative reading."-Owen Thomas, Jr., Department of English, UCLA. "The Nation has an important place in my political secience classes. I know of no more useful device for providing stimulating discussion and serious thinking about contemporary issues."-Dr. Norman L. Parks, chairman of social science, Tennessee State College.

"I find that the students always comment on the forthright editorials and the clear, informative articles in it."-Dr. D. Flemming, Department of Political Science, Vanderbilt University.

"I have found The Nation useful for supplementary classroom use. Its articles stimulate intelligent interest in contemporary issues.”—G. K. Romoser, Department of Political Sciences, Ohio State University.

"We feel the magazine is indispensable in our life, particularly on a college campus."-Mark Wyman, editor, University of Wisconsin.

Here is valid testimony in just one of many areas on how direct mail activity such as The Nation's is playing an important part in information and education. Any curtailment of this mail activity would seriously affect not only this educational role of The Nation, but countless other magazine and book publishers who are also contributing greatly to a better informed public in all walks of life.

And while we're talking about information as well an "impact" on economy, I would like you to see some of the consumer mailings we handle for the New York Stock Exchange. I think they would speak for themselves as to their public service value in informing the public just what makes American business and industry tick-this very "national economy" we've been talking about, which also has international importance.

This type of informational stock exchange advertising has already made a very significant impression on one group of foreign visitors who are certainly not prone to accept it. It happened just last summer when a group of cultural

Russian Communists got a close look at American capitalist advertising in action at Monogram Art Studios in New York, with which my firm does a good deal of business.

Among the Russians were Andri Gouber, Russian chief of western art and curator of Moscow's Pushkin Museum; Yury Schvedov of the Moscow University faculty of journalism; and Stephen Churakov, well-known Russian oil painter and printer. As guides in the art an cultural section of the U.S.S.R. exhibition on display at New York's Coliseum, they were invited to tour behind the scenes at Monogram, one of America's largest creators of commercial "selling" art, located at 515 Madison Avenue.

Particularly interesting to the Russians was a full consumer campaign being illustrated by Monogram for the New York Stock Exchange. The ads were getting a humorous cartoon treatment which seemed to puzzle the Communists. "How can you be so funny about such a serious matter as your big Wall Street corporations?" asked one of the Russians.

"Easy," replied the Monogram artist working on the series. "Because the millions of Americans who own and profit from stocks of these corporations are Wall Street. And furthermore, whether Americans own stocks or not, they all love cartoons, particularly if they're about Wall Street, mothers-in-law, or, best of all, our Government."

To me this answer seems to have somewhat of a significance to exactly what we're talking about here today. Because while these Russians got a firsthand view of all types of modern American advertising being created in a free enterprise system, they were closely followed by reporters from all the New York newspapers, who questioned the Communists on their reactions to this Madison Avenue activity.

Their answers reflected a tremendously important reason why we must maintain a public service post office, with postage rates economical enough for even the smallest American business or institution to use. For as the New York Herald Tribune quoted Yury Schvedov, leader of the Russian Communist group: "In Russia we do not have need for advertising and selling such as yours. But since we have been in America we have found your advertising fascinating particularly how your companies even use the post office to advertise by business mail."

Perhaps to the Russian Communist such a system is But there is certainly more than "fascination" that attracts organizations and institutions to the use of business mail. more than commercial advertising and selling, too.

indeed "fascinating." all types of American And it is often much

Among the most important users of business mail at Circulation Associates are charities, public health, welfare and conservation organizations, and other nonprofit institutions. Their far-reaching public service in many areas of our lives cannot be denied, because each and every piece of their direct mail is 100 percent in the public interest. There are the National Audubon Society and Junior Natural History, who are both promoting a greater appreciation of the vital need for conservation of our natural resources. There is the American Jewish Committee, whose mail does a large informational as well as charitable fundraising job. And there is the American Bible Society, whose well-known work in promoting widespread readership of the world's most important book is done largely through direct mail.

These, gentlemen, are some of the many areas of public service in direct mail I wish you could see as I do every day. These are some of the people who own the more than 10 million addressing plates we maintain for all types of mailings. And if you could talk to these people as I do, see their material as I do, and work with their lists as I do, perhaps you would realize that we are not dealing with just advertising and addressing plates alone. The 10 million names to which this mail is sent are a part of the American public-a public which is receiving the "impact" of information, education, and inspiration along with advertising of "economic" value.

And it will be this "impact" on public service information, education, and inspiration not the advertising that would suffer most under prohibitive postage rate increases.

The institutional, the strictly educational, the unnecessary but desirable information for a better informed public, would by necessity have to be cut from many direct mail operations. And, as a result, I believe that the names of 10 million people entrusted to me to get this information and education would suffer a considerable, if not tangibly recognized, loss.

Postage rate increases in an already high inflation period would also start a wave of drastic "economy" list cutbacks which would greatly reduce the 10 million