This proposed legislation would increase mailing costs 300 to 800 percent for most weekly newspapers. In the case of my 2 newspapers, which both average 12 standard pages weekly, the increase would be approximately 600 percent. The present formula for determining mailing costs in the county is at the rate of 1 cent a pound regardless of the number of pieces involved. As a 12page paper weighs one sixth of a pound, the weekly cost per copy in the county is one-sixth of a cent.

The proposed rate change calls for a minimum charge of 1 cent per piece, thus boosting my mailing cost far in excess of the 40 percent estimated by the Postmaster General.

I think there are several alternatives which can be considered without so severely penalizing the small weekly publisher who, in most cases, can ill afford such a sharp increase.

The cost per pound in county could be raised to 11⁄2 cents per pound which would affect all newspapers equally, according to their size. At the same time, a one-quarter of a cent per piece minimum could be set.

It is important to realize that the large daily newspapers are only slightly affected by the proposed legislation. The percentage of their circulation in county being mailed is, with few exceptions, negligible. Also, most large dailies weigh close to a pound and the proposed 1-cent minimum would have little effect on their present rate.

In this day and age, when competitive newspapers are rapidly being replaced by monopoly situations, the weekly newspaper is helping to preserve a free press here in America.

Sincerely yours,

RICHARD M. DIAMOND,

Publisher.

STATEMENT BY JUNE CLEment Brown, RANDOLPH R. CLEMENT Co., SAN

FRANCISCO, CALIF.

It is with regret that I am unable to appear before the House committee in person to protest drastic increases in third class postal rates.

I am the owner of a direct mail company who did employ up to 20 full time employees. As a result of the last increase in postal rates, we now employ 16our customers have cut down their number of mailings considerably. The 22 cent rate going into effect July 1 is going to be a serious threat to our continued business. Should it be raised even more, what will happen I can only guess.

In this shop we maintain approximately 700,000 names on lists belonging to our customers. Among these are credit cardholders of several large hotels, who wish to hear of new events, innovations and facilities; large national real estate clearinghouses who notify brokers of new available properties; numerous clubs and organizations who send out regular meeting notices to members; fruit and vegetable advisory boards who notify growers of news, new rules and regulations; and many other such accounts. No one who receives materials sent from here considers it "junk mail"; in fact, they write in and complain if mailings are not received.

As you know, we are required to prepare third class mail and deliver it to the post office sorted as to city and State and separate local mail. It still receives deferred treatment although the rate is almost equal to that of first class mail, which the post office must pick up all over the city and from there on do all the sorting and handling that we do for third class mail. It just does not make sense that third class mail should be accused of being the major cause of Post Office deficits. I can only think that powerful competitors in the advertising field opposed to direct mail and nonunderstanding politicians are attempting to curtail its use.

Not only are we in the direct mail field going to suffer but all the suppliers to our business-envelope and paper houses, artists, typographers, business machine, and ink companies, lithographers, printers, etc. Here again think of the number of employees who will be out of work and therefore on unemployment benefits at Government expense.

I sincerely hope all sides to this very serious matter will be heard. We must rely on our farseeing and fairminded representatives in Congress to help our cause by voting down unfair new increases in postal rates.

MILLER STOCKMAN SUPPLY CO.
Denver, Colo., May 16, 1960.

Hon. Toм MURRAY,

Chairman, House Post Office and Civil Service Committee,
Washington, D.C.

DEAR MR. MURRAY: Although we cannot send a representative to testify on the proposed rate increases on third class mail, we want to go on record that such an increase will pose a real hardship to our firm.

We mail about 1 million mail order catalogs a year, throughout the country, to customers who purchase western wearing apparel and allied merchandise. If there is a rate increase for third-class bulk mail, we will have to seriously curtail our mailings. Depending upon the extent of this possible increase will determine whether we can continue to sell merchandise profitably by mail.

Very truly yours,

JAY STEINER,

Vice President.

DOWNS & Co.

Evanston, Ill., May 9, 1960.

Hon. MARGUERITE STITT CHURCH,
House Office Building,

Washington, D.C.

DEAR MRS. CHURCH: We refer to your kind letter of April 12, and this is the statement which we would like to have you present for us, in our enforced absence from Washington.

In April 1949, while my son was convalescing from polio, he started a mailorder business in his home in an effort to support his family of four. Starting from scratch, he has put heart and soul into this enterprise to the point of suffering a stroke in October 1958. Although partially disabled, he still puts in more than full time at his office. The business has outgrown his home and three commercial locations. It is just now moving into still larger space. We sell small gift and household convenience items to individuals. Principal selling effort is by catalogs. Delivery is by parcel post. We discount all bills. Personnel fluctuated last year, seasonally, from 9 to 23. Most of the key people have been with the company up to 9 years.

Now, we have attempted to determine the effect of the proposed third-class rate by applying it to our last fiscal year of operation. This resulted in changing what was a modest profit (before taxes) into a substantial loss. The same calculation, applied to the current 10-month fiscal period, produces the same resulta definite loss. All foreseeable possibility of profit would be wiped out by adoption of the proposed third-class rates. My son would be without employment, after 11 years of hard work under severe physical handicap.

Health prevents either of us from appearance in Washington. We do indeed appreciate your willingness to present this statement to your colleagues on the Post Office and Civil Service Committee.

Sincerely,

ARTHUR E. KIMBALL.

The CHAIRMAN. The hearings will now be recessed until 10 o'clock tomorrow morning.

(Whereupon, at 11:50 a.m., the committee recessed, to be reconvened at 10 a.m., Wednesday, May 25, 1960.)

POSTAL RATE REVISION

WEDNESDAY, MAY 25, 1960

HOUSE OF REPRESENTATIVES,

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

Washington, D.C. The committee met, pursuant to recess, at 10:10 a.m., in room 215, House Office Building, Hon. Tom Murray (chairman of the committee) presiding.

The CHAIRMAN. The committee will be in order.

Before we proceed with the first witness this morning, I would like to place in the record, without objection, a statement by our colleague, Congressman Utt, who is unable to be here this morning.

(The statement referred to follows:)

STATEMENT BY CONGRESSMAN JAMES B. UTT, oF CALIFORNIA

Mr. Chairman and committee members, I am very pleased to have the opportunity to speak to you very briefly on behalf of my postal rate bill, H.R. 11707.

Before I touch on the purpose of that bill, I would like to leave this one thought with you.

Postmaster General Summerfield pointed out that our postal deficits totaled $6.8 billion in the 13-year period from 1947 to 1959. He then demonstrated that if these deficits had not occurred an equivalent sum would have been. available to pay for schools, hospitals, highways, or homes. And I understand the suggestion was made by one member of this committee that we might even have enjoyed some tax reduction.

Now that Mr. Khrushchev has caused the cold war thermometer to plunge. to subzero depths, it might be well for us to think in terms of how these postal deficit funds might be used to strengthen our defenses.

The postal deficit for this year is estimated at $656 million. Unless this Congress acts very quickly, we will be financing another deficit of $603 million. is fiscal 1961. In these 2 years alone, more than $1.2 billion of Treasury funds will be drawn away from other essential programs.

Now, if the public funds used to defray the postal deficits in these 2 years could be diverted to defense needs, how far would they go? They would pay for: 600 Atlas intercontinental missiles, or 24 atomic submarines, or 4 nuclear aircraft carriers.

The bill I submitted covers third-class rates only. My intention, most certainly, is not to limit postal action to that class. But I feel strongly that rates for third class should be raised beyond the levels proposed by the administration. I cannot condone or support any rate proposal for third class which falls short of achieving full cost coverage.

Complaints on mail rates arise from my constituents with increasing frequency and intensity. Most of these people are prepared to accept a 5-cent letter rate in the interest of fiscal responsibility. But they protest bitterly any effort to raise first-class rates while advertising circulars go through the mails at knockdown rates.

I am sure every member of this committee has had this same experience on numerous occasions. Many of my constituents accumulate their circular mail and then send it to me, unopened. "Look," they say, "it cost me 64 cents to send this pound of advertising mail to you at first-class rates but this stuff comes to me with postage prepaid at only 16 cents a pound. Now the Govern

ment wants to raise postage on my letters to 5 cents. Let's make this advertising mail pay its way," they say, "before you attempt to raise letter rates again."

Incidentally, Mr. Chairman, the letter I just paraphrased is free of the epithets and invective which usually color these complaints. My term "advertising mail" is a euphuism for some other terms which the direct mail industry rightly resents.

My bill, in short, is designed to accomplish precisely what these taxpayers and letter mail patrons propose: to get third-class mail to pay its full cost to the postal service.

I am well aware that the direct mail users and their voluble spokesmen have attempted to cloud the postal rate issue by discrediting the Post Office Department's cost figures. Bulk mail, they maintain, is a "fill-in" mail, and conse quently all but out-of-pocket costs should be loaded on to the backs of first-class mail patrons. To my mind there is something absurd in the contention that the second largest mail service is a "fill-in" mail. This is very much as if all the direct mail advertisers approached their printers with a demand for reduced rates since other printing customers must be serviced anyway. I am sure that no advertiser would have the temerity to conceive such a plan, much less persist in promoting it year after year. But apparently where the Government is the supplier of services, a different standard of ethics prevails among advertisers. Let's face the facts squarely. If the direct mail advertisers would take their distribution business to delivery firms, as they so often threaten to do, they would pay full costs plus a reasonable markup. Can any member of this committee conceive of a delivery firm agreeing to handle a coast-to-coast dispatch for as little as 2 cents? Of course not!

I sincerely trust that this Congress has not become so indifferent to the value of the taxpayer's dollar that it would be willing to perpetuate a $200 million annual subsidy to the direct mail advertisers. If we swallow the "fill-in" portion that the direct mail industry has so expertly concocted, I fear that our judgment may become so warped that even that decision would be possible.

I believe that where the third-class mail service is concerned, it is time for the Congress to adopt the same objective criteria that the direct mail industry would follow in its own business actions. Direct mail is nothing less than sales promotion for profit. It is neither good government nor good business for the mail service to serve as the agent for doling out the taxpayers' dollars to self-serving advertisers.

The CHAIRMAN. The first witness this morning on the postal rate legislation is Mr. Robert K. Farrand, vice president of the Curtis Publishing Co. of Philadelphia, Pa.

Mr. Farrand?

STATEMENT OF ROBERT K. FARRAND, VICE PRESIDENT, CURTIS PUBLISHING CO., PHILADELPHIA, PA.; ACCOMPANIED BY PHILIP HALL, TRAFFIC MANAGER; AND PAUL KEATS, WASHINGTON OFFICE

The CHAIRMAN. We will be glad to hear from you, Mr. Farrand. Mr. FARRAND. Thank you, Mr. Chairman.

My name is Robert K. Farrand. I am vice president and director of public relations for the Curtis Publishing Co. Our company publishes the Saturday Evening Post, Ladies' Home Journal, Holiday, Jack and Jill, and American Home, magazines having a total circulation of over 18 million copies per issue, of which over 70 percent are distributed through the mails.

May I introduce, Mr. Chairman, the two men who are with me? The CHAIRMAN. Very well, sir.

Mr. FARRAND. On my left is Mr. Philip Hall, head of our transportation department in Philadelphia; and on my right is Mr. Paul Keats, who is in our office here in Washington.

I appreciate your courtesy in giving me the opportunity to appear here today to present my views on the proposal to increase postage rates within the various categories of mail as recommended in H.R. 11140, now under consideration by your committee.

Obviously, the Curtis organization and its nearly 12,000 employees have considerable interest in any legislation or proposal that could impair the company's already low earnings. In 1959 the mailing costs on our magazines amounted to over $7 million. The provisions in H.R. 11140 for second-class mailing rates and privileges, as applied to our publications, would impose unwarranted increases in our postage charges of approximately $4 million annually, for a total of over $11 million a year, and could indeed prove injurious. I must therefore oppose its enactment.

The Curtis Publishing Co. has been consistent in its position that second-class postage rates should be maintained at a level sufficient for the Post Office Department to recover its properly calculated outof-pocket costs.

In February of 1958, during postal rate hearings by the Senate Post Office and Civil Service Committee, Robert E. MacNeal, president and chief executive officer of the Curtis Publishing Co., stated that there existed at that time a pressing need for additional postal revenues, to the point where increases might not properly be deferred, and recommended that Congress make appropriate amendments to the

rate structure.

During prior years of rate-hearing testimony, Walter D. Fuller, Mr. MacNeal's predecessor as president of the Company, appeared before both House and Senate postal committees to advocate congressional action in properly adjusting the rates on second-class mail. Our company has always been and is now, not only willing, but desirous of carrying its full share of postal cost. However, we also contend, and with equal vigor, that we should not be required to assume the fiscal burden of higher postal charges that may be imposed to offset the cost of mail service and Post Office Department functions we neither incur, nor which in any way result from our magazine mailing operations.

Mr. LESINSKI. Mr. Chairman?

The CHAIRMAN. Mr. Lesinski.

Mr. LESINSKI. At that point, could you state for the record what they are, these additional costs over and above what your costs are? Mr. FARRAND. Our costs or the Post Office's cost?

Mr. LESINSKI. No, no. You mention that you are paying your way, and that the mail should pay its full way. Could you specify at that point what the costs are?

Mr. FARRAND. This is in the testimony; it is covered later, sir.
Mr. LESINSKI. All right; thank you.

All right, Mr. Chairman.

The CHAIRMAN. You may proceed.

Mr. FARRAND. Mr. Chairman, I respectfully submit that our company is paying its full share of postage costs, in the sense that under the provisions of the rate increases enacted into law in 1958, by the 85th Congress, our publications can be distributed through the mails without producing an out-of-pocket loss to the Post Office Department; that any further increase in our second-class mailing rates at this time is unjustified.