Mr. Toм MURRAY, CONCORDIA MUTUAL LIFE ASSOCIATION, Chairman, House Post Office Committee, DEAR SIR: This correspondence is being addressed to you in urgent appeal to your committee to take into consideration associations such as ours, before making a definite decision relative Postmaster Summerfield's proposal of one-half cent per piece minimum charge over and above the regular rate on magazines. While we agree that there are many magazines or periodicals handled through the mail, many of which addressed only to the tenant of a certain address formulate a nuisance, and do not contribute to the general welfare of our people. On the other hand, we, as well as many other similar organizations contribute greatly to the general welfare, not only to our own members but to all citizens of the United States and the Government they represent. The entire cost with few exemptions of the enclosed copy is borne by our association, and the contemplated increase in mailing could well cause us and many other associations to discontinue their periodicals. We do not feel that it is your committe's intent to bring about such discontinuance, however, are in full accord with any action on your part which would help the discontinuance of such periodicals which are nonessential. We therefore hope that any act on your part will take into consideration the classification of periodicals, also if the publisher is a nonprofit organization. Thanking you for your kind consideration, remain, DEAR MR. CHAIRMAN: It has come to my attention that our Honorable Postmaster Summerfield proposes to present an increase of a half cent on all secondclass publications over and above the present rate. We want you to know that we firmly oppose this increase. We give you the following reasons: Our monthly 32-page publication, Faith Digest, with a circulation of almost a half million copies per month, is going into almost every country of the free world. We believe that this religious, missionary publication is meeting a specific need of our generation. Mr. Murray, you can readily see this will mean an increase in postage to our association of $30,000 to $40,000 per year. Without a question, our nonprofit, religious corporation would have to curtail our publication. Let me present these facts for your consideration with the hope that it will influence you to see the good will extended throughout the world. If we are successful in exerting an outstanding influence for good, just think of the friendship that results for our beloved United States of America. Especially at such a time as we are now faced with, our good will needs to be enlarged and strengthened instead of hindered because of postal increases. We are currently working with missionaries of 55 full gospel denominations in 70 foreign countries in the support of almost 2,500 full-time native missionaries. In addition, we have missionary films, sermon tapes, and publications in several different languages. You can realize the scope and importance of this great worldwide ministry. Honorable Chairman, I am enclosing a copy of our monthly publication, Faith Digest, in order to give you an opportunity to examine the contents to help further convince you of the importance of opposing this increase so that we may continue to expand our publication. Also, I would like to encourage the approval of the measure H.R. 9570, the bill to aid religious magazine mailings overseas. We are in perfect agreement with Representative Jeffery Cohelan (Democrat, California), who is seeking action for religious, educational, and other nonprofit organizations in the United States so that they will be able to send magazines overseas free of charge in packages not exceeding 20 pounds. If you could daily see our requests from these foreign countries literally begging for old magazines, books, booklets, and tracts and any type of Christian publication, I believe you could be convinced that these "magazines for friendship" are serving the purpose of doing a great amount of good will. I believe that the United States can afford to subsidize such gifts as part of its "people" program and that the privilege should be extended to all religious, educational, scientific, and nonprofit bodies. Also, let me point out this fact. The third-class bulk rates, effective July 1, 1960, increasing the rate from 1 cent to 14 cents for nonprofit organizations, are going to increase our postage by several thousand dollars per year. This increase will materially affect the expansion of our ministry. Thank you, Mr. Chairman, for this privilege of expressing ourselves. Please be assured of our continued prayers and interest for the welfare of our country. We appreciate the leadership and public service that you are rendering. Our supreme task is the evangelization of the world. Respectfully submitted. Hon. Toм MURRAY, Chairman, House Post Office Committee, T. L. OSBORN, President. WOMAN'S BENEFIT ASSOCIATION, DEAR SIR: It is our understanding that Postmaster General Summerfield is proposing that all magazines should be charged a half cent per piece minimum over and above the regular rate. Our association is a fraternal benefit society operated on a nonprofit basis for the benefit of its members. We have a magazine, issued 10 times per year, which is sent free of charge to our 200,000 members. This magazine not only gives news of fraternal activities carried on in our local lodges, but also suggestions on health, civic programs, etc. If Mr. Summerfield's proposal were to be enacted, the increase in mailing costs to our association would amount to approximately $655 per issue. This would work a definite hardship upon the association and its members in an area where we believe we are making a real contribution to our American way of life. Therefore, we would like to go on record as opposing this increase. AGNES E. KOOB, Supreme President. DOROTHY H. NEEDHAM, Supreme Secretary-Treasurer. STATEMENT OF WILLIAM P. MOSER My name is William P. Moser, and I am sales promotion manager of the Bron-Shoe Co. in Columbus, Ohio. I wish to thank the committee for giving me this opportunity to explain our views on the proposed postal rate increases. We are in the baby shoe bronzing business, whereby we preserve the baby's first shoes as keepsakes by electroplating them, and mount them on bookends, ashtrays, picture frames, etc. We have been in business for over 30 years, and are the folks who first introduced the idea in this country. I hope that many of you have our products in your homes. We are a typical small business employing about 90 people, operating in our own building of about 25,000 square feet. We are members of our local chamber of commerce and better business bureau, and from the president on down, we do our best to be useful members of our community. We have several channels of distribution, but for the past several years, over half of our business came to us as a result of direct mail. We are mailing over 1 million pieces of third-class bulk mail each year. During 1959, our postage bill for third-class mail alone amounted to $20,000, and in addition, our parcel post expenditures to get the orders back to the direct mail customers amounted to an additional $39,000. Also, we paid over $5,000 in postage on first-class business reply mail. At the present 2 cents postage rate, we budget approximately $20 to $24 gross profit per thousand pieces mailed. With our present mailing costs of approximately $65 per thousand pieces, we therefore have a gross profit margin of about 29 percent on our mailing investment, less of course our overhead charges. If you permit the 2 cents rate to go into effect as scheduled on this July 1, our gross profit margin will shrink by one-third, and our net profit by even more. If the rate is increased to 3 cents, our mailing costs will rise to $75 per thousand, and our margin will drop to between $10 and $14 per thousand, or approximately 16 percent in our investment. How can you pay overhead out of that, let alone make a profit? You can imagine where we would be if the 32 cents rate were put in. Frankly, if the rate goes to 3 cents, we cannot afford to risk mailings of the size we now send out. A gross margin of 16 percent, yet to be reduced by ever-growing overhead charges, does not justify the risk. If we run into a poor list, as does happen now and then, or some other unforeseeable event occurs, our rate of return could easily drop to the point where instead of having a small profit, we would have a substantial loss. What then will we do if postal rates are increased as proposed? Let me answer that by saying first that direct mail is perhaps the most scientific of all businesses, because everything you do can be tested and the results measured accurately in dollars and cents. Results come in fast, and within 60 to 90 days after you go into the mail, you have either made a profit or sustained a loss. The net result of further postal rate increases will be that we will be forced to cut down on our mailings, so that we mail only as many pieces as will bring us a profit. If the rate goes to 3 cents, our mailings will be reduced to approximately one-third to one-half of what we now mail. If we reduce the number of pieces we mail, we will get fewer orders, and it follows logically that we will need fewer people in our plant to produce these orders. Depending on the number of pieces we will be able to mail, it looks now like between 30 and 40 people will be laid off, and our total work force will be between 50 and 60 people instead of the present 90. This means we will have a payroll reduced by $75,000 to $100,000 per year, and of course, it means no spending power for the people without jobs. If we cut down our mailings, we cut down postal revenue. Instead of spending upwards of $60,000 per year with the post office, we would spend somewhere between $20,000 and $30,000. Would this help reduce the so-called postal deficit? If we cut down our mailings, many of our suppliers would be hard hit. We spend at the present time over $17,000 per year for printing alone for our direct mail. If we reduce this amount by two-thirds, someone at the printing plants that produce our work is going to lose his job. And so on right down the entire list of suppliers we have. If we do less business, we will make less money and pay less in taxes each year. The Treasury would lose some of those badly needed dollars. Would this be helpful to our already precariously balanced budget? It is possible that if the proposed postal rate increases are adopted, the socalled postal deficit would be reduced. I frankly do not understand how, because without any doubt, the higher rates will reduce the volume of mail. It will become impractical for many mailers to send out as much mail as they have in the past, and I am sure all of you know enough about business to understand that when volume declines, costs never decline in the same proportion. I would like to bring up the matter of cost ascertainment in the post office. I do not pretend to understand the system that is used, even though I have studied the testimony presented by postal officials on the subject. However, it doesn't seem reasonable to me that these figures can be accurate, if they arrive at a figure of 4.03 cents as the cost of handling a piece of first-class mail, and 3.99 cents as the cost of handling a piece of third-class mail. Third-class mailers (bulk mail) are required to sort their mail by State and city and tie it accordingly before delivering it to the post office. Third-class mail also does not have to be canceled at the post office. If the post office can perform all of these operations on first-class mail, picking it up at boxes scattered all over the cities, sorting it out, canceling it, etc., at a cost of only four onehundredths of a penny per piece, they certainly are to be commended, but I do not believe they can, and I am sure you don't either. If we assume that the average wage cost at the post office is $2 per hour, one man would have to perform all of these operations on 5,000 pieces of mail per hour, if the cost per piece would be only four one-hundredths of a penny. The figures presented during the 1957-58 postal rate hearings before the Senate committee show that there is no deficit on third-class mail. On Friday, August 16, 1957, Mr. Maurice Stans, then Deputy Postmaster General, stated that the total allocated budget expenditures for third-class mail ran $471 million, and that the estimated reallocation of cost for intangible factors amounted to $125 million, giving an "adjusted cost for revenue requirements" of $375 million after adding in the nonbudgetary items. The total revenue derived from third-class mail was $266 million. This left a deficiency in revenues of $108 million. On January 28, 1958, Mr. Irving I, Raines, Director of Division of Postal Rates said in answer to Senator Yarborough's question "How much additional revenue would be raised by an increase of third-class rates by increasing them 50 percent?" and Mr. Raines answered, "about $133 million." Third-class rates were increased by the 1958 Postal Act by 33 percent beginning January 1, 1959, and an additional 33 percent based on the original 11⁄2 cent rate, effective July 1, 1960, or a total of not 50 percent, but 66.7 percent. On this basis, if we are to believe the figures given us by the post office, thirdclass bulk mail is actually paying more than its share of the cost of mailing. You may say that the above figures are not up to date. Yet, on April 9, 1958, Mr. Hyde Gillette, Assistant Postmaster General, wrote a letter to Senator Dirksen which I quote: "This $108 million represents adjusted losses for fiscal 1956, the latest year for which complete data is available. However, postal costs have increased substantially by fiscal 1959, the year in which the new postal rates will become effective. To provide a realistic cost picture the Department added to thirdclass costs an additional sum to reflect a pro rata share of the higher costs of railway transportation and postal wages, contained in the President's budget for fiscal 1959. This would add not less than $25 million to third-class costs, leaving a remaining loss of $133 million which is approximately the amount of additional revenue which would be obtained from enactment of the postal rate bill." The Post Office asked for and got a 67-percent increase in third-class rates 2 years ago, which according to their own figures was sufficient to make third class pay it own share. (Maybe more, depending on whose figures you take, as Mr. Raines stated that a 50 percent increase would produce $133 million, while Mr. Gillette was talking about the actual 67 percent increase, which he said would also produce $133 million.) Now, they come back and ask for another increase of 20 to 40 percent. If the costs of post office operation have gone up by from 20 to 40 percent in just 2 short years, it would seem absolutely imperative that something be done about this immediately, but I don't really believe that there has been this much of an increase. Let me say in closing that we, as a user of third-class mail, are not asking for a subsidy. We are more than willing to pay our fair share of the cost of delivering the mail we send out. A small business like ours must in the face of such formidable opposition look to you, our Representatives, for protection against unrealistic and unfair taxation like these proposals, which can only serve to step by step, and stamp by stamp-put us out of business. We ask that you as a committee carefully consider the facts-not only those presented by the Post Office officials-but those presented by the users of the mail. Examine carefully the figures presented to you-and also examine the effect that the proposed increases will have both on the many small businesses that use third-class mail and their many employees-and on the economy as 2 whole. Then-I feel sure you will agree that no further increases are either justified or necessary at this time and that these proposed increases will most probably do more harm than good. STATEMENT OF CHARLES F. MYERS FOR BLAIR QUALITY PRODUCTS, DIVISION OF MORTON MANUFACTURING CORP., LYNCHBURG, VA. My name is Charles F. Myers. I am secretary-treasurer of Morton Manufacturing Corp., Lynchburg, Va. Our business was established over 40 years ago. We manufacture and sell a general line of toilet preparations, food specialties, flavorings, household products, medicinal products, and certain toiletry and medicinal specialties. Blair Quality Products, one of our trading divisions, distributes a general line of more than 200 products through dealers, trading on their own account, who sell to consumers through house-to-house cails. Our sales are predominantly promoted through the use of the postal service, largely through third-class mailings. We met with reverses in the formative years of our operations in attempting to sell Blair products to the wholesale and retail trade through salesmen and the use of newspaper and magazine advertising. We then turned to direct selling and to the use of the U.S. mail to recruit dealers and promote sales. From the very beginning, our entry into the direct selling business and promotion by mail was rewarded with increased sales. We pay sincere tribute to the postal system, operating for the benefit of all the people, that afforded us a service that played such an important part in the growth and development of our business through the years. The proposed increases in H.R. 11140 and 13 other companion bills would have a disastrous effect upon the growth and development of our business because of the importance of the third-class mail in recruiting new dealers. We believe the increased bulk third-class minimum charge of 22 cents, effective July 1, 1960, will have a very drastic effect on profitable operations and to be confronted with the additional proposed increase to be effective January 1, 1961, would make it almost impossible to continue successfully. These additional proposed third-class rate increases are considered to be prohibitive. We have been confronted with this problem of increased third-class rates for some time and frankly have been unable to find any other means of promotion that would satisfactorily replace the use of third-class mail. In fact, as you well know, there is no competing service available. If we are forced to reduce the quantity or to leave third-class mailings out of our operations due to the proposed increased rates, not only will we suffer through the loss of profits, there will be a corresponding reduction or complete elimination of our income-tax payments to the Federal Government. The postal revenue would also be proportionately reduced and should we be forced to drastically curtail our Blair operations, a large number of employees in Lynchburg and Memphis would have to be released. They, together with their families, would be seriously affected by it and it would result in a corresponding reduction in purchasing power. Last year our account with the Post Office was almost one-half million dollars. Under third-class mail we sent out approximately 5 million mailings at a postage cost of over $85,000. These third-class mailings, as dropped in the post office, were set aside for deferred handling until all first-class mail had been processed and, therefore, should logically take a much lower rate than first-class mail. The purpose of our third-class mailings is to promote sales and as a result we received under first-class mail over 190,000 applications for sales outfits, or a return of 3. 8 percent of prospective dealers who showed an interest in selling our products. These mailings produced approximately $35,000 in first-class postage to cover incoming letters and orders. Our outlay in third-class postage also resulted in our own further expenditure for other classifications and services of some $375,000. This amount does not include money order fees paid by our dealers for many thousands of money orders which we receive daily in large volume. You can see from the above that other postal revenue will be adversely affected, should we have to curtail or abandon the use of third-class mail. We know that the prevailing third-class mailings produce great postal volume for all other classes. They serve our business in its growth and because of this growth there is general economic improvement not only in our immediate areas but in all localities in which the dealers reside. The growth of our business will be severely retarded should the rate increases now scheduled for July 1st be followed by the proposed increase to be effective January 1, 1961. I sincerely believe that this applies with equal force to other businesses whose income depends primarily upon the use of postal service. Thank you. |