POSTAL RATE REVISION THURSDAY, MAY 19, 1960 HOUSE OF REPRESENTATIVES, COMMITTEE ON POST OFFICE AND CIVIL SERVICE, Washington, D.C. The committee met, pursuant to recess, at 10:15 a.m., in room 215, House Office Building, Hon. Tom Murray (chairman of the committee) presiding. The CHAIRMAN. The committee will be in order. The hearings will be resumed on postal rate legislation. I first recognize our colleague, Congressman Oliver, of Maine. Mr. OLIVER. Could I ask permission to insert in the record at this point, Mr. Chairman, some statements from constituents of mine who are opposed to increases in postal rates on third class? The CHAIRMAN. Very well. (The information referred to follows:) WESTERN MAINE FOREST NURSERY CO., Hon. JAMES C. OLIVER, House Office Building, Washington, D.C. DEAR MR. OLIVER: Some time ago I wrote you in regard to the parcel post increase, which supposedly is to become effective February 1. You certainly have taken a great interest in this matter and I do appreciate it. I hesitate to write you again, but it has recently been brought to my attention that it is very possible that a request will be made in the coming Congress for an additional rate in third-class mail. It is inferred that the increase may be as high as 50 percent of the current rates. This, as you know, does materially affect people in the mail-order business and anything that you can do to forestall such an increase will be very much appreciated. It seems to me that the Post Office Department is asking for too many increased rates too rapidly. If the Department wishes to put a lot of mail-order concerns out of business, it surely is accomplishing that purpose. There are a great many things which have been thrown onto the Post Office Department to process, for which they get no recompense. It seems to me that the Department could in some way reduce some of its expenses so that an increase every 6 months or so would not be necessary. Sincerely yours, HARRY EASTMAN. WESTERN AUTO ASSOCIATE STORE, Hon. JAMES C. OLIVER, Washington, D.C. DEAR SIR: It just came to my attention this morning that Postmaster General Summerfield wants to increase the postage on third-class mail, and that there are several bills introduced that, if passed, would work an undue hardship, if not prevent entirely, our use of direct mail advertising in our locality. Because of this I am writing to ask if you will study this measure, and take into consideration our points of view on the matter. We have, at the present time, a finely developed and effective service available through Western Auto Supply Co. which gives us the opportunity to purchase very attractive and highly colorful catalogs for distribution by mail. These circulars describe the merchandise we handle in such a complete manner of detail and extent that it would be virtually impossible for me, at least, to duplicate its impressiveness in any other way. By no stretch of the imagination could I even begin to let the public know all about so many of the values we have available either through the newspaper, radio, or TV, to say nothing of the cost. As a result, if the mailing of these circulars becomes prohibitive because of postage cost it will hinder me from using the very best medium of advertising which I now have available. Now, the distribution of these circulars has one other attribute which I believe should be considered. When we send them out the response is very noticeable in that the public receiving them never fail to comment on the fact that it helps them in their search for products they need. It is true then, if perhaps surprising, that I believe these circulars to hold a place as a public service which should not be dispensed with. In closing I would like to add that I hope you will consider this of the utmost importance. Small business, and in Maine we are certainly no exception, needs to retain every ounce of strength it can. You will understand then, I know, when I ask for your vote against these measures which will increase postage rates on third class mail. Thanking you in advance for any effort you will make to straighten out this problem, I am, Respectfully yours, Representative JAMES C. OLIVER, House Office Building, Washington, D.C. ARTHUR T. JACK. SOUTH WINDHAM, MAINE, May 5, 1960. DEAR SIR: The writer has noted with some apprehension the possibility of an additional increase in minimum rate on third class postage. It is believed that this could be extremely prejudicial to certain forms of advertising at the expense of certain other types and should be entered into only if it can be clearly established that it is justified. I would personally like to go on record as being opposed to any further increase in third-class postage at this time. Yours very truly, Hon. JAMES C. OLIVER, Old House Office Building, Washington, D.C. L. C. ANDREW. RICHMOND, MAINE, April 28, 1960. DEAR SIR: I am taking the privilege of contacting you regarding your efforts on the Committee for Postal Rates. Since 1953 we have had, here in Richmond, Maine, the Charles A. Eaton Co., manufacturers of shoes, who employ 200 people with a $500,000 yearly payroll. This company has established a successful sales program which enables them to reach their consumers through approximately 15,000 part-time salesmen. This sales force is continually changing with new recruits being added. The Eaton Co. depends upon third-class mail, for both recruiting new salesmen and for disseminating product information, prices, brochures, etc., to this sales force. Therefore, this third-class mail is an integral part of their business. Any substantial increase in rates of third-class mail would affect the Eaton Co. and the town of Richmond. This is a respectful request to exert your influence to hold the present rates. If there are any other pertinent facts that would be helpful to you on this important matter, kindly let me know. Yours truly, HAROLD W. BATES, Selectman, Town of Richmond. Hon. JAMES C. OLIVER, Old House Office Building, Washington, D.C.: RICHMOND, MAINE, May 9, 1960. We urgently request bill to increase postal rates on third-class mail be defeated due to adverse effect on Charles A. Eaton Co., local shoe manufacturer. DEAR SIR: The purpose of this letter is to register with you and with the Committee on Post Office and Civil Service my objection to H.R. 11140 by Mr. Murray, chairman of the House committee. The reasons that I am particularly opposed to this bill are as follows. Our shoe manufacturing business employing approximately 100 people in Brockton, Mass., and 200 people in Richmond, Maine, is highly dependent on the use of the third-class mail. We sell most of our shoes through independent agents directly to the consumer. These agents live throughout the whole country and vary between 10,000 and 20,000 in number. We maintain the size of this sales force by recruiting through the thirdclass mail people who have previously demonstrated an interest in part-time work to supplement their present income. To maintain a sales force of the size necessary to keep our home office and factory organization fully employed requires mailing at least 2 million letters by third-class mail a year. These letters are partly for the purpose of recruiting new sales people and partly for the purpose of keeping in contact with the thousands of active agents for such purposes as sending them order books, supplies of many sorts and our special sales bulletins. In addition to this use of third-class mail, we are also heavy users of parcel post to ship our individual packages of shoes to our customers. The substantial increases that in recent years have been put into effect on postal rates have already put a very heavy burden on this important part of our cost structure. To raise the rate further is obviously going to inflate our costs, making it much more difficult to keep our factory fully employed. I particularly object to the suggested drastic increases in the third-class mail for these reasons. Our third-class mail does not seem to me to come into the category sometimes referred to as "junk" mail. Ours is mail that has as its purposes the selling of an honest product made by an 80-year-old firm through agents who have demonstrated that they want to make additional income and are willing to work distributing shoes in their locality to make the extra income. Our business has been built up our sales organization has been established; our hundred employees at our home office in Brockton, Mass., and our 200 employees at our factory in Richmond, Maine, have all been hired and trained with the basic supposition that our company could depend on the services vital to us that have been and are now being offered by the Post Office Department. It seems entirely wrong to me for us to build a solid business such as ours and to then have postal rates on which our business is based as sharply increased as the pending legislation would do. The total increased cost of postage to our company recommended in H.R. 11140 would be approximately $20,000. This exceeds our total net profit before taxes in 1959 by $6,000. If the postage rates are raised as this bill recommends it, we will undoubtedly be forced to cut back our direct selling business. This would mean a reduction in employment in both our Brockton, Mass., headquarters and our manufacturing plant at Richmond, Maine. I would certainly not attempt to say what the difference in mail rates should be between first-class mail and third-class mail. I am familiar enough with time study work in our own factory to realize that it is difficult to generalize without having careful studies made by competent time study engineers. I do know, however, that in third-class mail we hire employees to do a considerable part of the work that the post office itself does on firstclass mail. We sort this mail and tie together the envelopes going to each locality. These letters do not then have to be handled individually at the post office and the bundles can go directly to the proper area. In addition, we work very carefully with the post office as to when we deliver to them our volume of third-class mail so that it can be handled at the slack periods, thereby greatly helping to even out their workload. At the delivery point third-class mail is also handled at a time when they have spare capacity. Certainly these differences in the service for third-class mail should justify a different standard for computing post office overhead and labor cost than what applies to first-class mail. For these reasons it would seem to me that third-class mail should be handled very substantially under first-class rates. I strongly urge you to oppose the legislation to increase the cost of postal service, particularly in the area of third-class mail. Sincerely, CHARLES C. EATON, Jr., President. Representative JAMES C. OLIVER, House Office Building, Washington, D.C. SWARTHMORE COLLEGE, Swarthmore, Pa., May 19, 1960. DEAR MR. OLIVER: As I have not yet been notified of the possibility of appearing before the House Post Office and Civil Service Committee, I am sending you my testimony to be inserted into the record if you would be so kind. I want to thank you very much for the trouble you have taken to try to arrange for my appearance, and also for the most helpful materials which you have sent me. In my testimony, I have tried to remain as specific to my father's firm as possible, rather than dealing with the generalities involved. If you will bear with my inarticulateness which you have already encountered in my previous letters, I would like to pursue two lines of thought which I did not mention in my testimony. The first is an inconsistency in the reasoning of the post office officials. Both Mr. Summerfield and Mr. Gillette point out, and rightly so, that firstclass mail should pay above cost due to its preferential treatment. Later on, they both maintain that other classes, including third-class, should eventually pay their way in full. There seems to be a lack of conception of the fact that if first-class returns a profit and the other classes break even, the Post Office will return a profit. Given even present first-class rates, the other classes do not have to pay cost in order to have a balanced bubget. A more major point to be brought up concerns the entire philosophy of democracy. In democracies, there is no intrinsic moral good about enforcing the will of the majority. The majority opinion is morally correct only when it does not have serious consequences for the minority involved. It is because of this distinction that we guarantee individual rights, rights of religious sects, and rights of minority races. McKinsey & Co. came up with some nice charts to "prove" that the proposed increased rates would not hurt the volume of third-class mail and moreover wouldn't hurt the small businesses. Now, I am not a fancy advertising company from Chicago, but I do know what effects these rate changes have had and will have upon my father's business. It seems fairly plain to me that a lot of other small businesses are in the same spot. Small businesses are usually specialized and can't afford great networks of salesmen to cover the country selling lots of different lines. Low cost direct mail is the only way these small firms can compete with the giant corporations, and the rise in rates drastically damages their economic position. Why, one might ask, do we want the small firms anyway? Admittedly, they are not as efficient as the giants. However, one of the chief advantages of our country is the fluidity of a person's economic status in the society. The small business is a vital link in bridging the gap between employee and employer, and |