Mr. BOGIN. I should be quite happy to come back at a later date, Mr. Chairman. The CHAIRMAN. Mr. Irwin. Mr. IRWIN. I would like to commend Mr. Bogin for being here. He is with a very, very wonderful company in my district. And I also thank you for your kindness in allowing him to testify after the bell had rung. The CHAIRMAN. Thank you, sir. We regret we cannot hear further from you at this time. Mr. BOGIN. Yes, there were a number of other points I would have liked to make. While we are not typical of the magazine publishing industry The CHAIRMAN. You may insert a statement in the record if you desire to elaborate further on those points. Mr. BOGIN. I might do that. Let me think about it, Mr. Murray. The CHAIRMAN. Without objection, there will be inserted in the record at this point the following statements which have been presented for the record: A statement by Representative Donald L. Jackson, our colleague from California, and a statement by Senator Gordon Allott of Colorado. Also statements and letters from organizations and business firms will be included in the record at this point. (The statements and letters referred to follow :) STATEMENT BY CONGRESSMAN DONALD L. JACKSON, OF CALIFORNIA Mr. Chairman, I wish to thank you and the members of this committee for giving me this opportunity to present my views on postal rate matters. My proposals to raise rates for second- and third-class mail and for controlled circulation publications are contained in H.R. 11603. I will not burden you with details, for in these mail categories my bill contains the same proposals as those advanced by the chairman of this committee in H.R. 11140. First, let me give you my views on second-class rates. I should like to do so by quoting very briefly some highly revealing information published during the past 2 months. On April 16, 1960, the following report appeared in the Editor & Publisher magazine: "Magazines show record-breaking circulation increase: Last 6 months of 1959 show record-breaking 5 percent circulation increase for ABC magazines. Subscription sales were up 6.8 percent; single-copy sales jumped 3.7 percent." More recently on May 14, 1960, the same publication reported as follows: "Magazines report biggest first quarter: Biggest first quarter revenue in magazine advertising history is reported by 83 farm and consumer magazines measured by Publishers Information Bureau, Magazine Advertising Bureau of Magazine Publishers Association, Inc. Revenue figure of $192,127,622 also represented a $25,471,806 gain over first quarter of 1959, largest dollar gain in any first quarter in magazine history. Percentage increase was 15.3 percent." And now, Mr. Chairman, may I ask you to contrast these glowing reports with the following information from the "Survey of Postal Rates" submitted to Congress by the Postmaster General on April 15, 1960: "In the case of the second-class mail service for newspapers, magazines, and other publications, the maximum rates presently authorized still leave an annual revenue deficiency of about $280 million. Total second-class revenues cover only about 26 percent of costs, and much of the mail is being handled free or at nominal rates of postage. * * * After giving full effect to all of the recently authorized rate increases, the revenue deficiency averages nearly 4 cents per piece of second-class mail." Mr. Chairman, I could go on at length expounding my views on the inequities which result from second-class postage rates. But if you and the members of this committee will examine these statements, I think you will find that the contrasts they present are the most persuasive arguments for substantial increases in second-class rates. I must say, in all frankness, that I believe a fair level of postage rates for second-class mail would be somewhat higher than the rates I am not advocating. I recognize, however, that there are many publishers whose finances will not permit them to absorb substantial increases quickly. In deference to these publishers, I offer the current proposals as an interim measure. Mr. Chairman, in the case of third-class rates what I propose is a plan to phase successive postage rate increases over a 3-year period so that ultimately the Post Office Department's costs will be paid in full. I have examined this proposal from many angles, and I am convinced that it is sound in its structure and in its objectives. Most importantly, it shifts the full cost of the service where it belongs to the postal patron. For too long now this cost has been shared in large part with the taxpayer. Third class has been censured by many as nuisance mail. I do not share that view. But at the same time I cannot condone further drawings on the Federal till for the purpose of subsidizing this mail service. I recognize that the matter of third-class rates has become enmeshed in numerous issues and arguments, including out-of-pocket costs, priority of service, nonpostal services, public services, and so on. But let's recognize these issues for what they are. They are raised, not in the interest of objective analysis and decision, but simply to confuse and delay. Each day that a fair tariff for third-class mail is pushed into the future, the taxpayers of this Nation add another half million dollars and more to the coffers of those who use this service. Stripped of all contrived issues, the third-class rate problem can be reduced to these alternatives: 1. Should users of third class pay in full for the service they receive; or 2. Should the Congress continue a rate structure which requires a tax supplement to meet the full costs of third-class mail? Mr. Chairman, I am sure that if this rate matter can be viewed in these terms, as it should be, there can be no indecision as to the proper course of action. STATEMENT BY SENATOR GORDON ALLOTT OF COLORADO Mr. Chairman, I deeply appreciate this opportunity to express my thoughts to your committee on this continuing problem of the appropriate rates for our postal operations. Surely no program to contend with a balanced budget can ignore the oppressive deficits being piled up by our postal service. Since 1947 we have required the Post Office Department to operate with annual losses ranging from $200 million to $900 million. For the 13 years through 1959 these losses total $6.8 billion. This is nearly half the increase in our national debt over that period. We are currently paying more than $200 million each year on interest charges for this postal debt alone. In an economy as vigorous as ours, it is not unreasonable to ask users of the mails to pay the costs for the services they receive. First class mail does pay its own way, although the premium paid for expedited handling, for collection service, for safety and secrecy, and for forwarding and return privileges is far less than it has been in the past. Other classes of mail do not pay their way. Here is where Congress should make a start in eliminating the postal deficit. The constituents with whom I have talked are willing to pay for the cost of sending letters and of receiving their magazines and newspapers by mail. They are not willing to continue this endorsement of an unbalanced Federal budget by underwriting higher and higher interest charges on a larger and larger national debt while subsidizing commercial mail uses. People in general are sick and tired of being bombarded with junk mail and unsolicited advertising offers subsidized with their own tax dollars. We must pay more than one cent in taxes on each piece of third class mail. The total annual postal loss in this one commercial class is nearly $200 million. There is neither economic nor practical justification for continuing this subsidy to a vigorous, profitable advertising industry. Direct mail advertising represents sales promotion for profit. There is nothing wrong in this, but there is something wrong in subsidizing its continued expansion by overcharg ing on other mail classes or by drawing on the general funds of the Treasury, It is my hope that your committee will give priority and approval to proposed legislation to bring third class rates up to third class costs. A second commercial use of the mails which is incurring a deficit is that of some 26,000 publications mailed second class. When the 1958 rate increases become fully effective, this class still will be paying only about one-fourth its cost. The handling deficit here will total $280 million-or about 4 cents on each piece handled. The administration has recommended changes in second class rates to produce an additional $46 million. There is no doubt in my mind that some adjustments must be made in second class rates. One easy target might be the in-county rates of the typical hometown newspaper, and yet I hope the committee would proceed in this direction with great deliberation, if at all. As you know, the policy of free or greatly reduced rates for in-county mailings goes back traditionally to 1879. This policy, basically designed to aid the small weekly in disseminating civic and community information, has played an important part in the development of our Nation. Today these small weeklies typically are handled by the editor-publisher himself with little help. They struggle along on a nominal profit, if any. Before any in-county increase is recommended, let us be sure we are not courting economic disaster for these people who so often are the backbone of their communities. In summary, I urge the committee to approve bills which will provide full cost payments for third class mail and will bring second class mail closer toward full reimbursement without causing undue economic hardship. These are reasonable, necessary, and possible steps toward wiping out the postal deficit. STATEMENT OF WILFRED E. MCHUGH, CHILTON GREETINGS Co., BOSTON, MASS. My name is Wilfred E. McHugh. I am vice president of the Chilton Greetings Co., with principal offices in Boston, Mass. The Chilton Greetings Co. publishes greeting cards. Approximately half of the production is sold by mail at wholesale prices to individuals and organizations who, in turn, sell them to the consumer, thereby raising funds for their individual or organizational uses. The other half of the production is sold on a jobbing basis to other companies, most of whom also sell through the mail. Thus, in the final analysis, at least 90 to 95 percent of this production is distributed on a mail order basis. An overage of 200 people are employed by the Chilton Greetings Co. in the design, manufacture, and the shipping of these cards, plus the supporting clerical functions. The majority of these people are employed in Boston; the rest of them are located in Chicago. Like any other established business, our most reliable, our most profitable, and in fact our most important business comes from our old customers. Unfortunately the theory of the better mousetrap does not apply. Customers will not beat a path to our door. We must beat a path to their door and since they are located in all 50 States, plus Puerto Rico, and since their average annual purchases are less than $50 there is no other way to beat this path other than through the mail. If we are to grow, obviously we must solicit new customers. In fact we must do this anyway, just to replace the normal mortality among our old customers. There is more than one way in which these new customers can be solicited. The most efficient method of solicitation is through the mail. This efficiency comes about from the fact that there are available lists of people known to be interested in making spare time money, and lists of organizations known to be interested in raising money for one requirement or another. Thus we are able to direct our message directly to these people. You might say that thereby we have a select audience. Every time I hear the term "junk mail," I shudder. I think of the care with which our mailing pieces are prepared. I think of the money that is spent for superior paper and superior printing and then I think of the number of people that reply and the amount of business with which they favor us. Certainly these people don't think it is junk mail. This mailing operation in the past year brought us 32 percent of our sales. Without this 32 percent we could not exist, thus we see the jobs of 200 people are 559066027 dependent on this mail selling and that does not include the indirect effect, such as the paper we consume, the envelopes, the boxes, the cartons, and the printing that we buy. All of this amounts to jobs-jobs that are directly or indirectly dependent upon mail selling. This mail selling is done by third-class, bulk mail. Since 1952 the cost of this has gone up 100 percent and with the scheduled increase of July 1 it will have then gone up 150 percent since 1952. Any further increase in these third-class rates will have a very definite effect. The least possible effect will be a reduction in profits and therefore a reduction in taxes that we pay. I would like to think this would be the only effect. It is more likely, however, that further increases will force us to reduce our promotional efforts and thus reduce our sales which will, of course, be reflected in reduced job opportunities that we have to offer. I should at this time warn against the narrowing of the differential between first-class rates and minimum third-class piece bulk rates. Perhaps we are not as efficient as we should be, but it costs us in excess of a half cent a piece to perform the operations required for third-class bulk mailing that are not required for first class. These include geographic sorting, facing, tying, and bagging. When this extra cost is coupled with the delayed service given third-class mail, it is obvious that the economy in postage must be enough to pay for this work and recompense for the delayed handling. For us this differential lies somewhere between 1 and 2 cents. Should the differential become less than this, I am sure that our mailings would be severely reduced and all would be confined to first class. For the good of the Post Office Department, for the good of the economic health of the country and for our own survival, it is mandatory that third-class postage rates not be increased over their present level. RESOLUTION PRESENTED BY THOMAS M. SCHMID, EXECUTIVE SECRETARY, THE ASSOCIATION OF AMERICAN UNIVERSITY PRESSES, NEW YORK CITY Whereas the Congress of the United States has recognized in the Postal Policy Act of 1958 that the distribution of books and other educational materials is a public service function of the Post Office Department; and Whereas the House of Representatives and the Senate have already approved a public service appropriation to reimburse the Post Office Department for any loss on the carriage of educational materials in the fiscal year beginning July 1, 1960; and Whereas reading matter in books is already paying a postal rate more than twice as high as reading matter in magazines and newspapers; and Whereas it is in the national interest to continue to encourage the distribution of books and other educational materials through the mails: Therefore be it Resolved by the Association of American University Presses meeting in Pittsburgh, Pa., on this 24th day of May 1960, That the Congress of the United States be requested not to increase the present educational materials and library materials postal rates as proposed by the Post Office Department and incorporated in H.R. 11140 and S. 3192 and other similar bills; and be it further Resolved, That copies of this resolution be sent to the chairman and members of the Committees on Post Office and Civil Service of the House of Representatives and the Senate of the United States of America and that the chairmen of these two committees be requested to incorporate this resolution in the record of the public hearings on the current bills to increase postal rates. Hon. Toм MURRAY, S. O. S. CINEMA SUPPLY CORP., New York, N.Y., May 25, 1960. Chairman, Committee on Post Office and Civil Service, House of Representatives, Washington, D.C.: Thanks, Congressman, for your courteous response to our letter of April 29 in which you describe the impracticability of appearing before your committee for a hearing. We appreciate the opportunity of expressing our views which we hope will be made part of the record. Our business is now in its 34th year, and we employ approximately 30 persons and do a volume of slightly over $1 million annually. Between our New York and Hollywood offices, I daresay 80 percent of our business is done through the mails, by means of a triannual catalog and hundreds of bulletins sent every We render a service otherwise unobtainable to the following month of the year. classes of trade: Motion picture theaters Motion picture producers Film laboratories Advertising agencies Film animation studios Industrial firms who make inplant movies Educational institutions, principally colleges and universities Nontheatrical organizations City, State, Federal and foreign governments Items such as we sell are not generally available in the average photographic store, as there are only a few such concerns as ours in the United States of America. It does not pay individual stores to stock this sort of apparatus, therefore the one and only way we can present our products is through the mails. If third-class mail is eliminated by establishing new, higher rates, we shall have to use first-class mail. This will hurt us badly, especially if first-class rates are raised another 2 cents or 3 cents. Besides the increase in parcel post will sadly cripple us on our smaller shipments. It formerly was worth while shipping by parcel post but now express rates are almost the same and these increases are just too much to bear. I stated our volume as being around $1 million dollars annually-our net profit has averaged less than 2 percent before taxes for the past 5 years, and these impending postal increases will have the effect of putting us out of business, I am afraid. I know, Congressman Murray, you are in sympathy with small business. There must be many others in our category selling other lines who will be affected the same way. We feel we have a right to exist and the increased rates will be plain poison, to put it bluntly. Thanks again for your courtesy and your offer to let us be heard in this way. J. A. TANNEY, President. POSTAL CHURCH SERVICE, INC., Hon. Toм MURRAY, Chairman, Committee on Post Office and Civil Service, House of Representatives, Washington, D.C. DEAR MR. MURRAY: Thank you very much for your letter of May 20. From the way you have described it, I believe you have selected a representative cross section of persons to represent mail users who will be affected by the proposed postal rate increase. Please, Mr. Murray, do give every consideration to the churches whose income depends almost solely upon the use of church envelopes. It is true, regardless of the amount of postage your committee sees fit to impose upon the mailers of church offering envelopes, they still will mail them, but probably react adversely to what we have come to consider an unhappy trend in postal rates. Sincerely yours, Hon. Toм MURRAY, J. STANLEY PROBST, TRANSO ENVELOPE CO., Chairman, House Post Office and Civil Service Committee, DEAR REPRESENTATIVE MURRAY: Your letter of May 20, 1960, concerning my request to appear and testify is appreciated. It is also appreciated to know of the great number of requests you have had for such appearance to give testimony of the facts. |