THE JOHN E. WOLF CO., Oklahoma City, May 17, 1960. Hon. Toм MURRAY, Chairman, House Post Office and Civil Service Committee, DEAR SIR: It is our understanding that hearings are now being conducted in regard to further increases in postal rates. Please accept this letter as an application to attend these hearings as a witness in opposition of the rate increases. However, in the event that time does not allow my presentation to your committee, because of the many other witnesses being scheduled, please have this letter placed into the records. Over our strong protests, and the protests of many well-informed individuals throughout the country, third-class mail rates have increased in ill proportion to the other increases in postal rates. For instance, with the scheduled increase of one-half cent, due July 1, third class mail rates will have increased 150 percent in the last decade, while first class mail rates have increased 33% percent. We wish to approach this problem, as sound-minded individuals, who wish to pursue a practical course for our business planning. The subject of this correspondence comes under the immediate future for our company, its employees, and our many clients, who are small businessmen. When the 2-cent third class mail rate went into effect January 1, 1959, we immediately launched a very aggressive sales campaign, in order to bolster our company's business against this increased media cost. By the way, we are in the business of direct mail advertising, sold to small businessmen, to sell their services and products. Nevertheless, in spite of this sales campaign effort, our employment of Oklahoma personnel has been reduced by approximately 30 persons. This has been about 25 percent of our employment. Therefore, it's plain to see that postal rates have affected, directly, Oklahoma individuals, and the end is not in sight, it seems. However, it would seem that the report sent to your committee from an outside agency, which summarized the survey made by both the Department of Commerce and Small Business Administration, has been led to believe the "increase in third class bulk mail rates had no significant adverse effect on the competitive position or the economic status of small business." This statement is certainly not valid, from our experience with the 1,000 small businessmen whom we serve, and our own company, which is classified as a small business. It has affected our level of operation very severely, and the small businessmen have complained to us that their primary means of communication with their customers and to further their products to their limited market, has been stripped from them, due to increased media cost of third class mail rates. Therefore we offer to this committee a statement based on experience in the field, with 1,000 clients and our own business. Believe us, the increase in third class bulk mail rates, has had a very significant adverse effect on our competitive position and the economic status of the small businessmen whom we serve. If the impact studies conducted by the Department of Commerce and Small Business Administration indicate other than my statement, we feel that some error has been created in the sampling process. Any national statistics, in nonbiased periodicals (such as U.S. News & World Report, Advertising Age, etc.) have indicated that direct mail advertising volume declined in 1959 a total of over 2 percent, at the same time when other advertising media were up 10 percent, and the economy was booming. This decline in direct mail volume was the first in 50 years. Therefore we urge the committee to study the nonbiased periodicals to have this indication verified, of a decline in mail advertising volume, which is the primary media for the small businessmen. Many businessmen cannot afford to conduct advertising through mass media, since he has a very limited market which would create a waste in exposure by mass media advertising outlay. As a businessman, if we were running the postal department and had to cover our costs in some manner, we would have a choice of either (1) increasing our price to cover such expenses, or (2) to increase our volume to cover our large overhead and carrier routes. If the postal department was in a competitive position, the election of No. 1 would place them out of the market. No. 2 would have to be the sound business decision, particularly based on an expanding population and use of the mails. Regretfully, the postal department has elected No. 1. All informed direct mail people warned that postal revenue will openly show a decline in the expansion on which the postal system is based, or services. This decline was effective in 1959, and should be compounded by any further rate increases. Truthfully, with the extra one-half cent scheduled July 1 on third class mail rates, we expect our volume to dwindle to the point so that an additional 15 to 20 persons may be laid off and other belt-tightening procedures will be enacted by our company. In discussing this problem with other business personnel in our community, we have arrived at the arbitrary figure of 100,000 Oklahoma individuals being affected by the high postal rates. I'm not referring to the homeowner, etc. I'm referring to the people who are in the direct mail advertising business, whose jobs depend upon it; the envelope and paper manufacturers, and sales representatives, whose high standard of living depends upon supplying this industry, the many printing personnel, ink suppliers, and associated people whose prosperity all depend upon a high volume of direct mail material. This did not include the effect on our small businessmen clients, whose activity in merchandising their product, will be severely curtailed by this increased cost of media transmission. After seeing our company laying off 30 people, our profits narrowed considerably to the point that revenue to Oklahoma and also to the U.S. Government, is being affected severely in the form of income tax reductions, we have two pertinent objectives: (1) Cancel the 2-cent scheduled increase in third class bulk rates, set for July 1, 1960, if possible; (2) fight against any further postal rate increases in first and third class mailings. It is our understanding that Congress has passed into law that the Post Office will be conducted as a service and not as a pay-as-you-go plan. If the Post Office must be a profitable business, why not abolish the 38,000 post offices going into the red? Rural free delivery operates at a huge loss. Why not abolish it? The many other free services the Post Office conducts are labeled "deficit." The law of 1958 has labeled the Post Office as a public service, and has allocated a proper amount of charges for services conducted. Mr. Summerfield, as is my understanding, has not separated this amount from his figures, but a lesser amount. Therefore, we urge that consideration be given to following the Public Service Act of 1958, and that the committee may recommend a cancellation of any rate hikes proposed for the future. Please remember that the Federal Government is concerned with its overall budget and a means of meeting that budget by receipt of tax and other revenue. By curtailing the direct mail industry and small-businessmen's merchandising, through this media, right now, the income tax to be received from our employees, our own business, and the many suppliers and other businesses along our lines, will more than offset any additional revenues the Post Office may obtain through increased direct mail rates. Remember, that projecting a 1-cent increase or a 2-cent increase on a given amount of volume is not a valid assumption. Actually, even though we will resist a dwindling volume by continued concentrated sales efforts, we feel certain, from experience, that direct mail volume will dwindle. Please accept the aforementioned statements as our concern and recommendation to your committee. To give you an indication of our volume, we are now distributing approximately 12 million pieces of third-class material. We have testimonials from about 1,000 of our clients, indicating that our direct mail has been responsible for enhancing their service sales and product merchandising, We sincerely hope that your committee will undertake to vigorously resist this legislation, which, in our opinion, is aimed at "legislating" our industry out of existence. Again, may we request that this letter be entered into the records in the event that my appearance cannot be scheduled. Sincerely, THOMAS C. WOLF, Hon. Toм MURRAY, IDEALS PUBLISHING CO., Milwaukee, Wis., May 19, 1960. House of Representatives, Washington, D.C. GOOD MORNING, MR. MURRAY: As a member of the 25-man House committee now considering postal rates, I want to send this note directly to you for your sincere and deep consideration. May I say that in the 15 years in which the Ideals Publishing Co. has been in business, this is perhaps the first time that we have made a direct contact with our Representatives in order to help them become more aware of the relationships between postal rates and our own business. In order that you may know the caliber of the material that we publish and sell by direct mail, I enclose a copy of our current issue, "Hometown Ideals." The overwhelming majority of direct mail businesses, similarly, as we do, object very strongly to the tag of “junk mail' that some uninformed people associate with classifications of mail other than first class. I am sure it is very evident to you that the selling devices that we use in order to sell on a national basis our Ideals publications certainly cannot fit this vicious terminology. I have read with a great deal of interest the McKinsey report that was prepared for your consideration. I should like to say that this very comprehensive report has a great deal of merit. However, in many instances some of the facts are subject to becoming misconstrued. With the postal increase in third-class bulk rate, from a minimum of 2 to 22 cents per mailing piece, an increase of 25 percent, we are thoroughly convinced that our business as well as other direct mail businesses will be seriously affected. Do keep in mind that third-class bulk mail is a deferred service which does not enjoy rapid handling by the postal department, as first-class mail is given top priority. Deferred mail is processed only after all of the first class has been properly routed, regardless of whether this involves an hour's delay or delays that can be counted in weeks, dependent on the flow of first-class mail. Yes, we have concrete evidence that in some cases, third-class bulk-rate mailing pieces, even for short hauls, are not delivered in some cases until either 3, 4, or 5 weeks in exceptional delivery times. In addition, in our own operations at the Ideals Publishing Co., we have a large building which handles our individual mailings that can vary from 10 pieces to 10 million. It is really a small post office operation for which we bear the entire expense. Our own staff faces, sorts, identifies, and ties each packet of third-class mail according to very strict postal requirements. We sack all of this mail-the sacks being properly identified according to break bulk destination. We pay for the cost of delivering all of this mail to the local post office where it is ready for immediate shipment, simply by inspection of the tag on the bag for proper routing. The post office requirement is to sign a receipt and verify the weight. Obviously there is an absolute minimum of cost by the postal department involved in handling these large shipments of mail prior to the time that it is put on trucks, trains, or planes for delivery to the secondary postal point. Compare this with the first-class expense that the post office must bear. At postal expense the carrier picks up unsorted mail at letter boxes. Postal trucks carry the mail to central post offices. This unsorted mail floods into the post office where clerks must face them and feed them on conveyor belts. This is all at postal expense. Machines cancel the stamps-clerks remove the canceled mail from the machines and then begin the chore of sorting each piece of mail not only by address, but by the types of delivery. Postal clerks tie, sack, and weigh all of this mail ready for transport. Then the post office trucks carry the mail to trains, planes, and trucks. Yes, these are expensive operations. We third-class users are absorbing a tremendous cost that the postal department does not have with third-class mail but which are obviously very expensive in the handling of first-class mail. The McKinzie report makes this comment, "At 4.06 cents, the cost of the average piece of third-class mail (on an adjusted 1959 basis) was just slightly under the 4.09 cents for first-class mail." Obviously this survey was made with the counsel of people who are not familiar with what we in business experience every single day. Another comment by the McKinsey report: "Postal rate changes in the past have had no apparent effect on the competitive position of direct mail as an advertising medium. Furthermore the level of postal rates at which the competitive position of direct mail would be affected in relation to other media appears to be some point well above current rates." We in the publishing business at Ideals do not support this statement, simply because an increase in third-class bulk rates will limit very definitely the numbers of contacts that we can make to keep our dynamic growth at the present rate. We reach a point very quickly where the use of direct mail with its growing postage expenses prices us out of that market. This affects seriously the number of employees whose services we use constructively as our volume of sales diminishes. Another point by the Department of Commerce, dated March 30, 1960, Secretary Mueller stated: "These are that the rate increase has no appreciable effect on the economy as a whole and no significant impact on the users of third-class bulk mail generally." It is impossible to believe that that statement came after verification of these facts if a third-class-mail user had been contacted. In essence it contradicts every economic law with which we work each day. At the present time a new rate, 2 cents goes into effect on July 1, 1960. This third-class-mail classification is the lifeblood of literally thousands of organizations throughout the country who bring services and/or products to the entire Nation that in many cases would not be made available to them. It disseminates literature, educational materials, and other quality products that add so very much to the stability of employment and the earning power of the Nation. If this phase of our economy is constantly penalized by surveys that do not disclose the true factors of third-class-mail functions or by slanderous remarks as to the quality of the materials that are sold through the third-class mail, I am sure that the healthy climate of growth and prosperity of the third-class mail users will seriously affect our nation. In your investigations, please heed the remarks made by the Associated Third Class Mail Users simply because of the fact that we have always found their factual surveys and/or factual recommendations to be absolutely valid. If thirdclass rates continue their upward strides toward a comparable rate with firstclass mail, we are convinced that the postal department would be unable to handle any mail except on a deferred basis. You are fast approaching this point where third-class users will prefer not to set up these expensive postal departments in their own organization because the cost of these operations, plus the high third-class rate will begin to exceed the actual out-of-pocket costs of first class. We are confident that your committee will examine all of the true factors and keep the third-class rates at an economical rate based on true costs. Sincerely, JOHN H. HAFEMEISTER, LINCOLN LETTER SERVICE, INC., Hon. Toм MURRAY, Chairman, House Post Office Committee, DEAR MR. MURRAY: As a small businessman with approximately 100 employees I would like to state my views concerning our postal problems. At this time I won't take up your precious time by going into the inequities involved in postage increases as I am certain you must be familiar with them by now. However, I would like you to consider the repercussions that this postal hike will have on our precarious economy. Tens of thousands of workers are directly affected by the direct mail advertising and mail order industries. These two industries move billions of dollars worth of goods and purchase millions of dollars worth of supplies such as printing, paper, mailing services, etc. The printing industry alone is one of the largest, if not the largest, in our country. The backup of unemployment that this can cause is tremendous, in my opinion. For instance, one of our customers who is in the mail order business mails 20 million pieces each year which he divides among several competitors and myself. His average cost for mailing is about $75 per thousand. Therefore, aside from his postage cost of $20 per thousand, he spends $1,500,000 each year on purchasing paper, lists, printing, and mailing services. With the contemplated postal hike to $25 per thousand he will no longer afford to use marginal lists which won't bring him a decent return. He consequently estimates that this year he will mail one-half the amount and may spend the remainder of his budget in newspapers, radio, and TV. Therefore, this coming year he will purchase $750,000 less on paper, printing, mailing services, envelopes, etc., which will put at least 75 people out of work. In addition he will spend $450,000 less with the Post Office and I am willing to wager that they will have a bigger deficit next year as a result. This one example multiplied by thousands of others in various degrees will create a hole in our economy that no additional 10 billion of defense spending will fill. As for my firm, which is a mailing service organization, we have already suffered a 15 percent loss of business from the last third class postage increase. Our gross business has remained static since then although our prices have increased 15 percent due to higher labor and material costs. This has naturally resulted in layoffs and a cut in supply and new equipment purchasing. I am not trying to be hysterical. This business has been good to me and all our employees who belong to a recognized union and receive a decent wage. I organized this business a little more than 10 years ago and we have grown and prospered along with our country and our industry. These past 10 years have also seen an encouraging growth in our economy and as a result the direct mail advertising industry, which is an umbrella for so many other manufacturing and service businesses, has grown with it. Is this bad? To listen to our Postmaster General we would think we have been undermining our Government and robbing the Treasury. I'm trying to be realistic. I'm not claiming that this postage increase will put me out of business. It won't! I'll probably be forced to do some cutting at the expense of our employees and tighten my own belt at the same time. Now, am I prospering at the Post Office's expense? I don't think so. When we prepare mail for third class we do 11 of the 13 operations required to deliver a first class letter. Don't we deserve a considerable price differential? I'd wager my last dime that if a private business were to handle third class mail at the present price they would find it extremely profitable. Isn't it strange that there are profitmaking service organizations in the high labor market of New York City that can deliver circulars door to door for less than $15 per thousand? All in all, I strongly feel (and not for selfish motives either) that an increase in postage rates is most unfair especially third class which more than pays for itself, but more important the economic repercussions can be most severe. This form of advertising not only moves billions of dollars of goods but furthermore unlike other advertising mediums such as radio, TV, etc. is responsible for the employment of tens of thousands in many manufacturing and service industries. The "Soaring Sixties" may never get off the ground if the economics involved in postages increases is ignored. Also please consider that like any other business the Post Office in all its leased buildings throughout the country can become much more unprofitable if the volume isn't there to absorb their minimum overhead. Thank you for your courtesy in taking the time out to read this lengthy letter. However, the pressure of the times kept me from appearing at the hearings and I had to resort to this form of making my feelings felt. Very truly yours, NORMAN EISNER, President. THE TRUMBULL TIMES, Trumbull, Conn., May 16, 1960. Hon. DONALD J. IRWIN, Washington, D.C. DEAR DON: As a publisher of several small weekly publications I am writing you in regard to the proposed legislation which would substantially raise the second class mailing rates. |