to the tune of some thousands of dollars but the real disaster to our delicate financial position would be caused by any increases in the third-class rate, due to our necessarily large mailings in that class.

As I am certain you already know, the Disabled American Veterans restricts its membership to war veterans who sustained wounds, injuries, or suffered disease, in line of duty, in the Armed Forces. The DAV has at least one, and in the larger VA offices several, national service officers in each regional office of the Veterans' Administration to assist veterans and their families with their claims.

No fee is charged for this service and our assistance is freely given to all who seek it regardless of the fact that the veterans may not be members of the DAV. To pay the salaries of our national service officers and to defray other organizational costs the Disabled American Veterans relies largely upon the results of vast periodic mailings of Idento-Tags (miniature license plates).

This activity constitutes the very lifeblood of the DAV from the standpoint of raising vitally essential funds, and hundreds of thousands of automobile owners throughout the entire United States can attest to the value of the service responsible for the return to the proper owners of large numbers of lost auto keys. The Idento-Tags are mailed third-class and, in view of the vast mailing operation involved, an increase in the postal rate, as it would affect us, of even onequarter cent would cost our organization approximately $100,000 more annually.

The CHAIRMAN. Your statement was prepared before the Postmaster General made his statement that there would be no increase in rates for nonprofit organizations?

Mr. FREUDENBERGER. Yes, sir. We are delighted to hear that. The next paragraph refers to the history of the last compromise bill and its effect upon us. I will skip that.

The present proposals for greater increases, if adopted, will amount to an intolerable financial burden and one which will jeopardize our very existence as a national force for good. Our efforts to serve nationally the war disabled, their widows and orphans would be drastically impaired.

The Disabled American Veterans, a patriotic congressionally chartered veterans' organization, certainly does not desire to be placed in the role of obstructionist, but we do not accept the theory advanced and so strenuously argued by proponents of postal increases that the Post Office Department should be considered to be a business and should be operated as such with income balancing expenses. Witnesses who have appeared before your committee in opposition to the increases in postal rates have effectively disposed of that untenable doctrine, we think, and have demonstrated the fallacy of the arguments favoring such an unrealistic approach.

The Post Office is indeed "a public service" and I feel certain that the overwhelming majority of Americans view it in that proper light, and not on the basis of a profit and loss business venture.

I will conclude by stating that the DAV has confidence in your committee and we believe that you will do the correct thing-the right thing to protect the vital interests of those like ourselves who are so dependent upon the existence of reasonable rates in conducting our organizational mailing operations, the very lifeblood of the Disabled

American Veterans service to the wartime disabled, their widows and dependents.

We have been honored on many occasions by Members of the Congress placing in your Congressional Record detailed accounts of our humanitarian activities in the field of veterans' service. A curtailment of that service would be a tragedy. Help us keep the faith in maintaining our standards. Thank you very much for your kind

attention.

The CHAIRMAN. Thank you very much.

Any questions?

Mr. LESINSKI. Mr. Freudenberger, how do you suggest we should approach the problem regarding the difference that exists due to the fact that you pay less than the cost? How do you suggest we should make up the difference?

Mr. FREUDENBERGER. The only way I see to do that is

Mr. REES. The only place is the U.S. Treasury.

Mr. FREUDENBERGER. Yes, sir; that is what I was about to say. Mr. LESINSKI. Well, how should this be handled? Is it a question of appropriations?

Mr. ADAMS. I have been listening to these gentlemen here and it would seem to me they are on the right track on their cost and all size of this situation. We have not made any studies of what it actually costs to handle a piece of our mail because we have no funds. It would seem until these other factors are straightened out that we can't judge this.

Mr. LESINSKI. We want to help you folks but in addition we do not want to kill the goose that lays the golden egg.

Mr. ADAMS. I am sure, after all these, years that the Post Office Department has operated out of the general fund that until such time as these studies are made it will have to continue to do so. I see no other answer to it.

Mr. BROYHILL. Mr. Chairman.

The CHAIRMAN. Mr. Broyhill.

Mr. BROYHILL. I am the recipient of one of the auto tags you referred to. How many of these do you send out each year? I believe its very useful.

Mr. FREDENBERGER. I think its a little over a total of 40 million.
Mr. BROYHILL. How many responses do you get?

Mr. ADAMS. I think some of the figures I got a couple of weeks ago would show about a 38 percent return on a trial mailing under a new plan, to one large State, but the return on our regular mailings run about 15 percent.

Mr. BROYHILL. You ask for contributions? You have no fixed fee? How much do you get?

Mr. FREUDENBERGER. If anyone wants to keep the miniature tag, that is all right. There is nothing to return to us. As to those who do respond the average contribution is well under $1.

Mr. BROYHILL. But you get 38 percent that do respond.

Mr. ADAMS. Under the new plan being tried, we are now using, in mailing out some Idento-Tags, maybe yours included, a return envelope is enclosed with four 1-cent stamps on it. We have been getting a greater return by doing that than by sending the envelopes out without any postage on them.

Mr. BROYHILL. Can you use business reply?

Mr. ADAMS. We can but there is something about this four 1-centstamp envelope that appeals to the public.

Mr. FREUDENBERGER. A matter of psychology.

Mr. BROYHILL. How much do you average?

Mr. ADAMS. I do not have that exact information, but, as Mr. Freudenberger stated, the average receipt is considerably under $1. Mr. BROYHILL. I notice it says postage will be paid if found. Put in my mail box. You pay the postage. What kind of rate do you pay? Mr. ADAMS. We pay straight rate.

Mr. FREUDENBERGER. I understand that between 200,000 and 300,000 annually are found and put in the mail box and we return them to the owners.

Mr. BROYHILL. When you get them you pay the regular rate for the keys coming to you?

Mr. ADAMS. That is right. First-class rate. And when we mail the keys to the owner we pay full rate. I think this return-key operation costs us in the neighborhood of over $40,000 a year, to return these keys to these people.

Mr. BROYHILL. Now one more question.

Do you charge the owners of the keys that postage when you return the keys?

Mr. ADAMS. No, sir.

Mr. FREUDENBERGER. No, sir; that is a free service.

Mr. BROYHILL. The person who uses this and has not sent you the contribution to start with is really a freeloader?

Mr. FREUDENBERGER. Yes, sir.

The CHAIRMAN. Thank you very much, sir. That concludes the list of witnesses at this point. We have received several statements which will be inserted at this point in the record.

(The statements referred to follow :)

LYONS-CLYDE-SAVANNAH SHOPPING GUIDE,
Lyons, N.Y., May 26, 1960.

Congresswoman JESSICA WEIS,
Washington, D.C.

DEAR MRS. WEIS: We have a small publishing and printing business employing at least 11 people (some times more part time).

We publish a third-class weekly shopping guide covering the areas of Lyons, Clyde, Savannah, and Rose areas.

We service about 100 small retailers weekly in our immediate area. Originally, our mailing fee was 12 cents per addressed mailing piece. We are now paying 2 cents and the 1st of July 1960, will pay 2

cents.

Now Postmaster General Summerfield is asking for another raise effective January 1961 and again in July 1961. This raises our mailing cost per piece to a prohibitive 31⁄2 cents per addressed copy.

We are protesting these two proposed raises for they will make it extremely difficult for us to continue our publication at a profit and if we increase our rates to meet this added expense, our merchants (also operating at a small profit) will be forced to curtail or in some cases discontinue their advertising (an unhealthy situation for all concerned).

In reviewing past postal increases it seems that the shoppers have had to burden more than their share.

Practically all shoppers (of which there are several hundred in the United States) use an addressing system that keeps their papers in perfect postal route order. This eliminates any need or cost for sorting the papers after they reach the post offices (we use three). When the postman stops at the house that particular paper is on top of his pile.

We know of no other direct mail (if there are any they are few) that go to their own expense to curtail post office expense in their mailing. Our own local

postmasters state that our publication is the easiest to handle with less work and least expense than any other advertising or news media that comes to them. We ask your serious consideraion in this matter that is our livelihood and ask vehemently that you vote no on the third class proposed postal rate increase. My sincere appreciation is extended to you for your time and thought in our behalf.

Very truly yours,

ARTHUR WEEKS, Jr.

STATEMENT OF HON. EDWARD J. DERWINSKI, MEMBER OF CONGRESS

Mr. Chairman and members of the committee, my purpose in appearing here today is to give you my views on H.R. 11542, a bill to raise third-class postal rates to a level approximating full costs.

Year after year, the Congress has tacitly endorsed a postal rate structure which, in the aggregate, has cost our taxpayers nearly $7 billion since the end of World War II.

Each year, the Congress has given its implied consent to a multitude of subsidies in the postal service. Each of these subsidies taken alone, on an annual basis, is not overly impressive. But when we bring them all together and tally their costs to the taxpayer over the years, the result is so shocking as to offend one's sense of justice and propriety.

I find it difficult to see why any mail cost should be paid by anyone except the user of postal services. There are valid exceptions, of course, as in the case of free mail for the blind. But I cannot see that anyone but the publishers and advertisers are served by perpetuating the huge annual deficits we now incur for second- and third-class mail.

The 82d Congress laid down a policy in Public Law 137 which requires users of Government services to pay for identifiable services. That policy has not been implemented in full to this date, but we are moving rapidly in that direction.

The policy of the executive branch in the matter of user charges for identifiable services is clearly set forth by the Bureau of the Budget in Bulletin No. 58-3 of November 13, 1957. That bulletin outlined the President's program of action which would accomplish the following results in pricing identifiable Government services:

1. Recover full costs for Government services which provide a special benefit; and

2. Obtain a fair market value for Government-owned resources or properties sold or leased.

The Postal Policy Act of 1958 endorses essentially the same pricing philosophy.

In view of the great public benefit which flows from the widespread circulation of newspapers and magazines, I believe there is some justification for continuing a below-cost mail service for second class. I do not believe, however, that our publishers are now carrying a fair share of postal expenses when revenues as a whole meet only a fourth of costs.

In the case of third-class mail, which consists of advertising circulars to a very large extent, I can see no valid reason for continuing to operate with annual subsidies of $200 million to $300 million.

It is only that the Federal Government is the agent for supplying delivery services for advertisers that the issue of subsidy arises. If delivery was arranged through private carriers, there would be no thought of asking the Government to defray a portion of the advertiser's distribution costs.

There has been much testimony by protagonists and opponents of third-class rate increases. But, in the final analysis, these are the facts which weigh most heavily in my conclusion that third-class rates should be raised above their current levels.

1. Third-class mail is largely a delivery service provided to business patrons for circulars, catalogs, and small parcels. The fact that the Government provides that delivery service should not affect the obligation of patrons to pay the cost of that service. If they were purchasing a commercial service, they would expect to pay costs plus a reasonable profit.

2. Third-class bulk-mail users perform numerous valuable services in preparing their mail. If they did not do so, the cost of handling their mail by the Post Office would be greater. It seems quite clear that any rate proposal which

has cost recovery as its goal automatically credits the direct mailers for the work they do.

3. The need for increased postal rates stems mainly from the higher costs of operating the postal service, particularly since the end of World War II. Advertisers have had to absorb increased costs as they arose for labor, paper, and printing. Why should delivery costs be the exception?

4. The question of ability to pay has been explored more fully than at any previous time in the history of the postal service. Both studies of the Commerce Department and the Small Business Administration proved conclusively that the last rate increase produced no significant adverse effects. The study by McKinsey & Co., a nationally known and outstanding management consulting firm, contains persuasive evidence that moderately higher postage rates would produce no injurious effects.

5. The appeal for special rate considerations on the basis of deferred service has been greatly overplayed by the direct mail users. Most circulars are available for dispatch by mailers long before any critical delivery date. Third-class mail patrons can, and do, anticipate delivery lag time. The time required for postal delivery does not detract from the value of service provided for advertising mail.

6. The rate proposals I have offered give adequate consideration to the fact that third-class matter is sorted and prepared by bulk mailers and that it is given nonpreferential handling. Bulk third-class rates would be lower than single piece third-class rates. Moreover, the rates proposed for bulk third class are substantially below the rates proposed for first class.

Somebody has to pay for postal service. Those who get the benefits should bear the cost instead of passing it along to the general taxpayer. It is high time the Congress relieved the general citizenry of this constant burden which is reflected in profits of business firms.

It may interest you to know that I recently conducted a poll of my constituents in which I posed the following question: Do you favor raising postal rates to cut present postal deficit?

The replies to my question were 55.2 percent, "Yes"; 43.2 percent, "No"; 1.6 percent, "No opinion." However, a fascinating fact that emerged from the replies was the repeated comments by people who objected to the huge volume of third-class mail they were receiving and who stated frankly they felt that an increase in third-class rates would be justified and a practical means to cure the postal deficit. Certainly, in all our acts our ultimate goal is to serve the people we represent. In my considered judgment the taxpayers of the United States would be served by an increase in third-class postal rates. The recipients of mail would certainly have no objections, and I am positive that the bulkmailing industry could practically absorb the cost involved.

STATEMENT OF MR. DONALD WATSON, MADE ON BEHALF OF THE NEW ENGLAND HOMESTEAD OF SPRINGFIELD, MASS. (IN BEHALF OF THE OFFICERS OF THE CORPORATION)

The New England Homestead is classed as a State or regional agricultural publication serving 140,000 rural families in New England and New York State. Our circulation is paid and is distributed entirely through the mails, with the exception of approximately 50 copies sold through a local outlet.

Our editorial content is devoted exclusively to the betterment of and service to the farmers and rural families of the Northeast. We are in our 105th year of continuous publication.

Farmers of the area which we serve have for more than a century come to depend upon the New England Homestead for the latest information on local, regional and national agricultural developments. It is our hope to be able to continue to provide this information for many years to come. Studies made by the University of Vermont, Cornell University and others have provided facts which show that over 70 percent of the agricultural information obtained by farmers comes from publications such as ours.

We strongly feel that we are performing an invaluable service to the agricultural population of the Northeast. Speaking for the officers of the New England Homestead, we wish to stated that we are strongly against the enactment of H.R. 11140 in its present form.