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postage rates. With these proposed modest increases in rates, it would still be by far the cheapest mode of communication in America.

Rates on second- and third-class mail should be substantially increased to reduce the huge deficit in handling this type of mail. The revenue deficiency in handling second- and third-class mail has risen to the appalling figure of $469 million. This includes the full effect of the postage rate increase of 1958. Since the bulk of the second- and third-class mail users are commercial firms, it does not seem fair that the taxpayers should be required to subsidize those who use the mail for profit.

Mr. Chairman and members of the committee, I appreciate the opportunity of appearing before the committee on behalf of the National League of Postmasters of the United States in support of an increase in postage rates. I sincerely hope the committee will give earnest and careful consideration to this matter.

The CHAIRMAN. Thank you.
Any questions?
Mr. REES. How many postmasters do you represent?

Mr. RALEY. Congressman Rees, I could not give you the exact figures. I have only been with the National League of Postmasters a couple of months. I have been very busy with other things, and we have a lady who takes care of the membership. I would say approximately 15,000.

Mr. REES. That is a pretty good sized share of them.
Mr. Raley. Yes, sir. There are about 35,000 or slightly over.
The CHAIRMAN. Mr. Gross?

Mr. Gross. Mr. Raley, unless there is an exception written into this bill, some of your postmasters, if not all of them, would get a pay increase as the result of a rate increase, would they not?

Mr. RALEY. Well, I do not feel that the rate increase and the pay increase should be tied together, Congressman.

Mr. Gross. Then you are for an exception in the bill to provide that this shall not result in a pay increase for postmasters?

Mr. RALEY. Well, I would hope it would result in a pay increase.

Mr. Gross. Now we are getting down to the nub of this thing. Are you for or against an exception in the bill?

Mr. Raley. We feel the rate increase and the pay increase should be entirely separate. I think the Congressman feels that if Government employees are entitled to a pay raise, they should be given a

pay raise.

Mr. Gross. But you understand postmasters' salaries go up as the revenues increase?

Mr. RALEY. Yes, sir. That is right.

Mr. Gross. So you are still not saying whether you would support an exception in the bill to exclude postmasters from the benefits of a rate increase?

Mr. Raley. No, I would not want to do that, sir.
The CHAIRMAN. Any other questions?
If not, thank you very much, Mr. Raley.

There are various statements to be inserted in the record at this point, those of Hon. Karl E. Mundt, U.S. Senator from South Dakota; Hon. Wint Smith, Member of Congress from Kansas; Hon. Lawrence Brock, Member of Congress from Nebraska; Hon. A. S. J.

Carnahan, Member of Congress from Missouri; Hon. Frank E. Smith, Member of Congress from Mississippi; and then representatives of different publishing concerns. They will all be inserted in the record at this point.

(The statements referred to follow :)

STATEMENT OF SENATOR KARL E. MUNDT OF SOUTH DAKOTA

Mr. Chairman, I am pleased to have this opportunity to appear before this committee and offer my views on H.R. 11140.

I note that our postal deficits totaled $6.8 billion in the last 13 years. And I believe that Postmaster General Summerfield has performed an important service in bringing to the attention of this Congress the fact that those deficits have been a major cause of our mounting public debt.

I cannot envisage any program for fiscal stability which does not contain as one of its ultimate goals provisions for the eradication of unnecessary large scale postal losses.

As I examine the facts and background material assembled by the Post Office Department, however, it seems to me that Congress must block out an order of priority as a basis for acting on the administration's rate proposals.

I believe the areas in which the Congress should move initially are in secondand third-class mails. It is inconceivable that these services, which accounted for the bulk of the $6.8 billion deficit, should be permitted to operate with the losses which are currently projected.

Direct mail is but one of numerous advertising alternatives. Those who choose this particular medium cannot reasonably expect Government subsidies any more than they can expect them for radio, television, or billboard advertising. Third-class mail should pay its way in full and I urge this committee to report favorably on this portion of H.R. 11140. The several impact studies which are now available to Members of Congress give us adequate assurance that these proposals will not cause any serious dislocation to business or to the mail service.

Second-class mail has a projected deficit of $280 million after giving effect to all of the 1958 rate increases. Revenues, moveover, will cover only about one. fourth of allocated costs.

We cannot continue to look with indifference on a mail service which has piled up deficit after deficit for a total of $3 billion in 13 postwar years. It is only fair and reasonable that the large publishers who employ this service should bear a larger share of total costs.

I would caution this committee, however, to act on the matter of second-class within-county rates only after long and careful study. The Post Office Department has done a thorough job of reviewing the history, finances and operating statistics in this service. The arguments for abandoning free-in-county and other within-county rates are persuasive. But there is another side to this problem which cries out against hasty and precipitate action.

I know of no industry more marked by contrasts than the publishing industry. On the one hand, the publication of magazines and big-city newspapers is concentrated largely among a few publishing giants. On the other hand, the publication of rural and hometown news is centered in hundreds of small-circulation papers which depend for their survival on the frugal efforts of a country publisher and his small staff. Very often this country publisher is also editor, printer, business manager, and circulation manager.

Despite the comparatively moderate increases proposed for rural newspapers, I am concerned that the added costs may spell economic disaster for many marginal hometown newspapers. Hundreds of these papers now operate on a thin line between survival and bankruptcy.

I do not deny that retention of within-county rates means the continuation of a longstanding subsidy. But I would prefer to err on the side of using public funds for this worthwhile purpose than to undermine an institution that has played so important a part in our cultural heritage.

I do not advocate that we should arbitrarily dismiss the administration's proposals to revise within-county rates. I ask only that any action in this area be taken with due consideration to the ability of our local newspapers to absorb whatever increases, if any, are finally approved. I believe it would be both prudent and proper to defer any rate increases in this area of within-county

rates until more evidence is available on what impact they would have on a great and vital American institution—the so-called smalltown or country newspaper serving our rural communities and our nonurban communities.

STATEMENT BY HON. WINT SMITH OF KANSAS Mr. Chairman, I requested an opportunity to appear before this committee in order that I might speak to you on behalf of my proposal, H.R. 11417.

The cumulative deficit in third-class mail since 1926 was $2.7 billion. Of that amount, $2.3 billion stemmed from operations in the postwar years alone.

H.R. 11417 has as its aim the eradication of the current deficit in third-class mail. Adoption of this proposal would produce full cost coverage. This would be accomplished by raising, in stages, each of the third-class rates.

When the rates proposed are fully effective, the single piece rates would be 4 cents for 2 ounces; pound rates for the two catogories of bulk material would increase to 18 cents and 21 cents, respectively; the minimum piece rate would be 342 cents for commercial mailings and 134 cents for authorized nonprofit mailings; the minimum for odd-size pieces would rise to 412 cents.

I understand that these increases have been protested by the users of the bulk mail service on the grounds that they represent a 200 to 250 percent increase. I would like, first, to place these percentages in their proper perspective.

In the case of the bulk pound rate proposals which I have advanced, the increases are substantially less than 250 percent, or even 200 percent.

In 1928, when bulk rates were first approved for third class, the pound charges were 12 cents for circulars, and 8 cents for books, catalogs, and plants. The proposed rates are 21 cents and 18 cents, respectively, to be effective in 1962. These represent increases of 75 percent for the first category and 125 percent for the second. And these increases cover a span of 34 years. I am sure this committee will recognize that these percentage increases are well within the general increases in business costs since 1928.

The higher percentage increase in pound rates for books, catalogs, and plants is necessary to equalize cost coverage within third class. On the basis of the rates enacted in 1958, cost coverage in the handling of these preferred-rate materials is only 47 percent.

Now, let's take the minimum-per-piece charge, which is of particular importance in the mailing of advertising circulars. The direct mail industry has protested that the proposed increases are inequitable compared to the increases in first-class rates.

Looking back to 1928, we had a 2-cent letter rate and a 1-cent minimum for circulars—a rate differential of 1 cent to reflect the preferential service for first class. At the 1-cent minimum rate, advertisers could mail a circular weighing up to 1.3 ounces.

Now, let's look at the proposals before this committee. The rate proposed for first class is 5 cents per ounce. The minimum-per-piece rate proposed for third class is 342 cents. So, the 1-cent rate concession granted to third class in 1928 would actually increase to 142 cents. Moreover, while advertisers could mail only a 1.3-ounce piece at the minimum rate in 1928, they would be able to mail more than 242 ounces at the rate proposed for 1962.

In somewhat different terms, direct mail firms will be able to get delivery service to any point in the country for a 2142-ounce circular or catalog for only 342 cents. If we had no bulk third-class rates, they would pay 8 cents for this service at the proposed single piece rate, or 15 cents at the proposed first-class rates.

It seems to me that these substantial rate concessions give adequate recognition to any claims that third-class mail users may advance on behalf of a "deferred" or "fill-in" service.

Percentages aside, I believe these facts demonstrate that third-class mail users would be relatively far better off under the proposed rates than they were when bulk rates were first established in 1928.

As for ability to pay the proposed increases, I think there cannot be the slightest doubt for those who examine the facts. Direct mail does get results for its users. It is an effective and highly profitable medium. How else would we explain a fourfold increase in third-class mail since 1928. If it did not get effective results, surely its growth in the postwar years would not have exceeded all other advertising media except television.

Direct mail is more than paying its way in terms of the sales profits it produces. It is surely regrettable that it does not pay its way in the postal service as well.

HOUSE OF REPRESENTATIVES,

Washington, D.O., May 9, 1960. Hon. Tom MURRAY, Chairman, Committee on Post Office and Civil Service, House of Representatives,

Washington, D.C. DEAR MR. CHAIRMAN: The pending legislation proposed by this administration to increase postage rates gives me deep concern.

My concern extended to personally canvassing the newspapers in the Third Congressional District in Nebraska, to ascertain just how much impact would Occur.

The results astounded me.

In my district we have 4 dailies but a preponderance of small weeklies, 77 in number.

The results of this canvass, checked by the various local postmasters, indicated that the average mailing cost increase to these small weekly newspapers amounted to about 350 percent. This increase, in effect, will destroy many of these small weekly papers.

When a small community loses its newspaper, there is not much left for the common thought. Newspapers, large or small, make communities. They are an instrument to progress and part of our early heritage.

Without the printed word in our early building of this Nation, we would have failed in our destiny and purpose.

Let us not destroy the community newspaper to balance a deficit in the Post Office Department.

We should remember the Post Office Department was created about 200 years ago as a service and convenience to the taxpaying public, not as a source of Government revenue.

Mr. Summerfield, in his earnest desire for public service, has apparently overlooked this fact.

The community newspaper can be well compared to the family doctor. They rightfully belong as institutions, both dedicated to the public interest. I am unalterably opposed to any increase in first class mail.

The average taxpayer, the principal beneficiary of first class postage, is carrying a sufficient load at this time.

I will also oppose any increase in postage rates that will be detrimental to the best interests of the community newspaper. Editors of newspapers in Nebraska's Third District have advised me that should this increase become effective, it will be necessary to pass on such increase to the subscribers, in order to survive.

Because of the depressed condition of the economy in my congressional district at the present time, this would be an additional burden for my constituents to bear.

May I respectfully urge, Mr. Chairman, that your committee, in your foresight and wisdom, not look with favor upon the pending legislation to increase first and second class postage rates. Yours sincerely,

LARRY BROCK, Member of Congress.

HOUSE OF REPRESENTATIVES,

Washington, D.C., May 10, 1960. Hon. TOM MURRAY, Chairman, Post Office and Civil Service Committee, House of Representatives,

Washington, D.C. DEAR COLLEAGUE: This letter is prompted by the hearings which your committee began today on H.R. 11140a proposal to raise second class rates on mail. I wish to go on record as opposing any heavy percentage increases in these postage rates. Especially do I oppose any increases in postage rates for local weekly newspapers.

There are within the 19 counties that comprise my Eighth Congressional District of Missouri more than 50 small weekly and other types of newspapers which will be affected if this proposal is enacted into law.

I do feel rather keenly that when a publisher takes on the job of putting out a newspaper, providing himself with the necessary buildings and equipment plus the personnel required to publish a paper that he may be assured that his Government will not greatly alter the pattern of postal rates to such an extent that his business will be adversely affected.

I am in favor, Mr. Chairman, of retaining the provision for "free in-county mailing" which has been on our statute books since 1872. As I understand this statute it came about as a result of the Federal Government's desire at that time to try and help in the location of at least one printing press in each county. This was good and it has immeasurably assisted our counties as well as these publishers. Today when publishers, like everyone else, are struggling to maintain their fiscal balances and meet the rising costs of production, I feel that this provision for free in-county mailing should be retained.

I feel confident that you will understand my acute interest in this matter since there are so many of these small publishers in the large geographical area that comprises the Eighth Missouri District. Sincerely yours,

A. S. J. CARNAHAN,

Member of Congre88.

STATEMENT BY CONGRESSMAN FRANK E. SMITH OF MISSISSIPPI

users.

Mr. Chairman, I am very pleased to be able to speak to you and the members of this committee on postal rates.

On March 28 I introduced H.R. 11416, a bill to raise third-class postal rates in successive stages over a 3-year period. When fully effective, this bill would place the third-class mail service on a self-supporting basis.

In the postwar years, the deficits in the third-class mail service have ranged in excess of $300 million annually. And despite the increases enacted in 1958, this annual deficit is still close to $200 million. There is neither logic nor justification in continuing these huge annual subsidies to third-class mail. I urge this committee to take quick action to halt these oppressive deficits which have contributed so substantially to the $6.8 billion of postal deficts during the last 13 years. I urge this committee to take action for the following reasons:

1. Third-class mail is primarily business mail and postal delivery costs should be paid just as all other business costs must be paid.

2. Any deficit in third-class mail must be paid ultimately by the taxpayer or other users of the mail. This is directly contrary to the Postal Policy Act, which declared it to be an unfair burden on any users of the mail to compel them to bear the expenses incurred by reason of special rate concessions to other users of the mail. 3. Direct-mail advertising yields profits far in excess of its costs to its

There can be no question concerning ability to pay moderately higher postage charges.

4. Higher postal operating costs, which stem mainly from the action of Congress, must be met by equivalent increases in postal rates. On this last point I should like to point out that since 1953 the Department's annual operating costs have increased more than $900 million, for reasons other than expanding volume. The largest share of this increase occurred as a direct result of higher wage costs and fringe benefits enacted by the Congress. Rate changes, reimbursements for penalty mail, and the elimination of airline subsidies improved the Department's revenue position to about the same extent as the cost increases enacted by Congress. Improved efficiency and modernization in the Department have absorbed much of the higher costs attributable to greater volume.

But the net effect of these changes has been to leave the postal service with about the same deficit it had in 1953. At that time the Post Office Department carried a loss of $2 million each working day. It still loses about $2 million each working day.

I have been struck lately by the recurrence of a completely fallacious argument regarding the Post Office. Since this argument has a direct bearing on this hearing, I should like to answer it.

The argument is to the effect that all other agencies of Government show a deficit which is met by taxation, therefore why should the Post Office be unique among Government agencies in seeking to break even?

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