Mr. KIRBY. I would say that the greater use is of third-class mail, although I will say that one particular company informed me that our position on this first-class mail would cost them $447,000 a year, and they were not happy about it at all. Mr. DAVIS. Would you say that it is close to 50 percent, evenly divided? Mr. KIRBY. NO; I would say the preponderance of postage would be on third-class mail. Mr. DAVIS. Something like two-thirds or three-fourths? Mr. KIRBY. Some place between a half and two-thirds, probably. I am sorry I cannot give you a better answer. Mr. DAVIS. Thank you. The CHAIRMAN. Mr. Rees? Mr. REES. I see you are willing to let Interstate Commerce Commission or a similar organization fix the rates on fourth-class mail, but you do not want to do it for third-class mail. The CHAIRMAN. I thought he objected to that. Mr. REES. Oh, you objected to it? Mr. KIRBY. I thought I said I would prefer that the rates on fourthclass mail be set by this committee. I thought I did. Mr. REES. Then, I misunderstood you. The CHAIRMAN. That is what you said. Mr. REES. You want this committee to fix them all? Mr. KIRBY. Yes, I think that the rates on all classes of mail should be considered at one time. There is a relationship-with which you are much more familiar than I-between the classes of mail. You have to keep them in balance in order that mail will not move from one classification to another. Mr. REES. I thought you testified before this committee that you supported the fourth-class mail being handled elsewhere, for Sears, Roebuck. Mr. KIRBY. No, sir, I was employed by Montgomery Ward for 30 years. Mr. REES. Montgomery Ward; I beg your pardon. Mr. KIRBY. I do not believe I did. We testified before this committee in objection to Public Law 199, and in support of legislation which would repeal 199. Mr. GROSS. Mr. Chairman? The CHAIRMAN. Mr. Gross? Mr. GROSS. Mr. Kirby, you are perfectly willing to load first-class mail up to 130 or 140 percent; is that correct? Mr. KIRBY. Historically, it has carried that. Mr. KIRBY. It is. But the Post Office Department's committee on cost allocation, in its report of January 27, 1954, recommended adjustments for intangible ratemaking factors such as preferred service in distribution, dispatch, and delivery; and it was built into your 1956 cost ascertainment report, and it carries the statement: This procedure is in accordance with the policy statement in title 2 of this bill. That was H.R. 5836, was it not? Mr. GROSS. Do you also approve an increase in the airmail rate? Mr. KIRBY. I would say you have to retain some ratio or relationship between your first-class mail and your airmail. Yes, I would say So. I would like to repeat that our recommendation on.first-class mail was 5 cents for the first ounce and 4 cents for each additional ounce with no increase on postcards or postal cards. Mr. GROSS. Yes, I understand you are not for 5 cents for each additional ounce. But I am a little surprised that you would advocate loading up first-class mail as you do here. The CHAIRMAN. As you know, this committee has proposed a 9 percent increase for postal employees. If such legislation should become the law and materially increase the cost of operation of the Post Office Department, would that change your statement in any respect? Mr. KIRBY. I would prefer not to give you an answer on that right at the moment, Mr. Murray. The CHAIRMAN. All right. Mr. PORTER. Mr. Chairman ? Mr. PORTER. I want to say I think Mr. Kirby's statement was very factual and an excellent contribution to this problem. I wonder if Mr. Kirby has seen the Department of Commerce's report. Mr. KIRBY. On the 21/2-cent impact? Yes, I have seen it, and I am very disappointed that they would make a recommendation that an increase to 212 cents would have little or no effect when they had nothing to support that statement. Mr. PORTER. I was interested in your testimony on page 6, where you said that the council would have no objection. to proposed increases in second-class rates, pointing out the difference between what the third-class people pay under the Postmaster General's figures and what second-class people pay. You say: "The council believes that there should be a close relationship between rates on the adver tising portion of second-class matter and advertising matter in catalogs mailed at the third-class or fourth-class rates." In other words, there is a situation of unfair competition at the present time, because they can mail out their advertising matter at a much smaller rate, proportionately, than you can. Mr. KIRBY. That is true. The rate for the advertising portion of second class in the third or fourth zone will run 3 or 4 cents per pound, whereas in third class it would run 10 or 16 cents a pound. Mr. PORTER. This is what you were talking about a moment ago, that there should be a better relationship between different classes. Mr. KIRBY. That is right. We believe the entire control of postage rates should rest with this committee, so that the rates on all classes of mail would be reviewed and the relationship maintained. The CHAIRMAN. Thank you very much, Mr. Kirby. The next witness is Mr. Donald Ledbetter, secretary of the National Association of Postal Supervisors. STATEMENT OF DANIEL JASPAN, LEGISLATIVE REPRESENTATIVE OF THE NATIONAL ASSOCIATION OF POSTAL SUPERVISORS, PRESENTED BY DONALD LEDBETTER, SECRETARY OF THE NATIONAL ASSOCIATION OF POSTAL SUPERVISORS Mr. LEDBETTER. Mr. Chairman and members of this committee, my name is Donald Ledbetter. I am the secretary of the National Association of Postal Supervisors, representing 24,000 supervisors in the postal field service. For many years, postal deficits have been the rule rather than the exception. This fact, however, does not mean that such a condition should be allowed to continue. Postal supervisors, who are proud to be considered part of management in the postal service, have passed resolutions at their national conventions for many years deploring the constantly increasing postal deficits and have asked that steps be taken to eliminate the deficit. As part of management, we are subject to criticism by the public inasmuch as we, the postal supervisors, are directly responsible for the efficient and economical movement of the mails. The fact that the constantly increasing volume of mail has been moved with increased efficiency but with the increase in manpower well below the increase in volume, due to increased productivity, shows that the supervisors and other employees have met the challenge. Despite the increased productivity and the efficient mail handling, the postal deficit has continued to grow. This means that we should look elsewhere for the cause. As management, we are concerned with the criticism and implication of inefficiency as reflected by the deficts each year. As citizens, we are greatly concerned with the mounting deficit, which has increased our national debt by billions of dollars, and which will continue to do so as long as the various postal services are not self-supporting. The only way they can be self-supporting is by rate increases. Our members feel that the users of the various classes of mail should pay more of the costs involved in moving the mails. As the members of this committee know, the postal service has undergone considerable modernization. Methods that have proved successful in the business world have been applied and practically all the tools known to modern management have been used. But even with the increased mechanization and improved modern methods, the deficit has continued to increase. There can be only one reason left: The rates charged for various classes of mail are not sufficient to pay for the handling of that mail. We, as supervisors, do not like any implication that we are not doing the necessary job, and that the deficit is caused by inefficiency. We feel that we have helped make the postal service as efficient as is humanly possible. A rate adjustment that will eliminate the deficit will eliminate the charges of inefficiency. Naturally, there is resistance to increased prices for any product. We know that there is resistance to increases in the rate for first-class mail. We hear that first-class mail is paying its costs. Historically, first-class mail has more than paid its own way. It has been traditional for first-class mail, on account of its preferential treatment, to carry some of the costs of other classes of mail. An increase in first-class rates is the primary answer to the huge deficit. own way. This does not mean that our association favors increases in rates for first-class mail only. We are on record as favoring increases in other rates so that, as soon as feasible, all classes will pay their If the Congress decides that some classes of mail should pay less than full coverage, it is our opinion that these losses in revenue should be classed as subsidies, which they are, and not be counted as part of the postal deficit. The Congress should appropriate the money necessary to subsidize any classes of mail it feels should not pay its own way. Most of the opposition to rate adjustments appears to be well organized. The average user of the mails will not find that his costs have increased substantially with an increase of 1 cent per ounce in first-class mail. This increase would probably amount to less than the amount he now pays in taxes on account of the huge deficit. In our opinion, there is no reason for second class to be carried at such a tremendous loss. We realize, however, that the adjustment in the rate for this class must be effected more slowly, since subscriptions are entered for long periods of time. It is also our opinion that third-class mail should pay its own way. The fact remains that costs of processing the mails have increased much faster than the revenue and, paradoxically, the more business we do, the more money we lose. To us, the only answer appears to be that a greater share of the costs be borne by the users of the mails and not by the taxpayers of the Nation. We hope that this Congress will act soon to place the postal service on a self-sustaining basis. Mr. Chairman, I wish to thank you for the opportunity of expressing the views of our association before your committee. The CHAIRMAN. Are there any questions of Mr. Ledbetter? Mr. LESINSKI. Mr. Chairman? The CHAIRMAN. Mr. Lesinsiki? Mr. LESINSKI. I am glad to hear the statement you have made. In the third paragraph you say: Our members feel that the users of the various classes of mail should pay more of the costs in moving the mails. You also mention an increase in first-class mail. Would that not simply further hide the actual losses in the other classes of mail, by increasing first-class? Mr. LEDBETTER. We are not suggesting that first-class be raised to take the place of the deficit that is created because of the losses in the other classes, Mr. Lesinski. As has been mentioned by several witnesses before this committee, it has been true for many years that first-class pays a little more than its own way. We are not proposing that that not be done. We are proposing that the losses in the other classes be made up. Mr. LESINSKI. And any further loss would be made up from appropriations? Mr. LEDBETTER. Yes, sir. Mr. LESINSKI. Thank you. The CHAIRMAN. Mr. Porter? Mr. PORTER. I noticed, Mr. Ledbetter, that you referred to the deficit here. What do you say to the argument that the Post Office recovers 85 percent of its costs, and that there is a large measure of public service involved in what the Post Office does, and that other departments do not recover nearly that much? Mr. LEDBETTER. I did not understand the question, Mr. Porter. Mr. PORTER. We do not talk about the Agricultural Department recovering its costs, or the Defense Department, and it has been asserted that we have 85 percent of the costs recovered in postal revenues. If that is true-and the bookkeeping is very hard to figure outthen why should there not be some percentage, 15 percent or more, of public service in the Post Office? Mr. LEDBETTER. It is certainly a service institution, there is no question of that, as are other agencies of the Government. But I do not find many articles in the press that continually point up deficits in other agencies. There are other agencies where it is all a deficit, I suppose. Mr. PORTER. Yes, but they do not express that through their public relations people the way the Postmaster General does, I would say. Mr. LEDBETTER. Well, the Postmaster General, I would say, does a very fine job trying to offset some of this unfavorable publicity about the deficit. Mr. PORTER. I am sure he calls attention to the deficit. Mr. LEDBETTER. And members of our association do, too. I had letters last week from members across the country who have clipped editorials from newpapers which are criticizing the Post Office, and when they do, they criticize me and the Postmaster General and every employee, and it is unfair, because there are implications that inefficiency is causing this deficit. Mr. PORTER. I am sure that every one of us would like to see the user pay his fair share, except as Congress decides he should not, for some very good reason. But the question is, do we have enough confidence in these statistics the Postmaster General gives us about deficits? I do not suppose you can answer that one, can you? Mr. LEDBETTER. I will say that the only place the Postmaster General has to get these statistics is from postal employees, and I represent 24,000 supervisors, and we do the very best we can to give him the proper figures. Mr. PORTER. You have seen this pamphlet that we got from the Associated Third-Class Mail Users. On page 5 it has a chart talking about the slack hours in the post office. This chart was prepared by Mr. North, the postmaster here at the time, I see. It makes the point that deferred mail keeps people busy in the times when they are not working on first-class mail, too; as a supervisor, you certainly recognize the importance of spreading the work out, I would think. Mr. LEDBETTER. Yes, I certainly do, and I know the value of having some third class that you can work when you run out of first class. |