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As compared to many of the farm periodicals throughout the Nation, we are classed as a small publication. Though small, we consider ourselves one of the better publications. Our costs, like those of all other segments of the business world, have risen tremendously during the post decade. Not the least of these increased costs have come through the last two bills which dealt with second class postal rates. When the cost of any single business operation increases by 60 percent, you can easily realize that this is a matter of serious proportionseven in a small business operation. If enacted, H.R. 11140 would have a disastrous effect on our business,

We feel that the postal service was originally provided as just that—a service to the population. We do not expect to have a free ride. This is not the democratic process.

Since postal revenues pay approximately 85 percent of the entire cost of the post office and only 15 percent is charged to the general welfare, this would seem to be the lowest cost service the people receive from the Government and that further increase in postal rates is not justifiable.

Speaking only for our own publication—but realizing that the same conditions exist with other similar publications—the enactment of this bill would seriously threaten our very existence. The rates which agricultural publications have and need to perform their services tend to serve our rural population even more than the publications themselves. The dissemination of information to this segment of our population has proved effective in campaigns to eliminate live stock and poultry disease problems, the furtherance of the grassland farming program which has become so valuable in grain deficient areas, the development and practical use of farm machinery and the vital programs for the marketing of agricultural products. As you know, farm publications do not engage directly in the field of politics.

Additional increases in mailing costs would normally force increases in advertising rates for most publications. Farm publications are not in position to absorb another increase. They are unable to pass additional costs to subscribers and advertisers. Any increase in fixed costs, at this time, might easily wipe out the net revenue earned by farm papers and magazines. The nature of our business, unlike some others, clearly points out the fact that profit in relation to the volume of business is small.

One of the selling factors of farm magazines over the years has been the extremely low subscription rate made possible by the second class mailing rate. It would prove to be a near fatal error on the part of agricultural publications to raise the subscription rate. This leaves only the advertising rate. We would expect to lose some of our major advertisers should we be forced to raise the advertising rates again. We most certainly would have a reduced total linage as a result. We could expect the loss of many of our smaller local advertisers who depend upon us almost exclusively for the dissemination of their advertising messages to our farmers.

We would, therefore, not only be burdened by an exorbitant increase in mailing costs, should this bill pass, bu would lose substantially in advertising volume a double financial burden. In the event of the passage of this bill our position would become tenuous. Our net income would be drastically reduced and our ability to serve our rural subscribers curtailed.

We do not feel that H.R. 11140 would benefit the Nation as a whole. We do feel, and strongly, that the Post Office Department should be considered as a service department to the public and not operated as an independent business organization expected to operate at a break even level.

We cannot register too strongly our opposition to this bill.

STATEMENT OF THE CENTRAL ASSOCIATION OF THE MIRACULOUS MEDAL, PHILA

DELPHIA, PA., SUBMITTED BY Rev. JAMES D. COLLINS, ASSISTANT DIRECTOR

The Central Association of the Miraculous Medal is an unincorporated nonprofit organization established in 1915 by the Congregation of the Mission of St. Vincent de Paul in Germantown, Philadelphia, Pa. The central association proposes to do three things: (1) To promote devotion to the Blessed Virgin Mary, (2) to assist in the education of young men for the priesthood, (3) to relieve the poor.

1. To promote devotion to the Blessed Virgin Mary: The central association has built and sponsors a national shrine in Germantown—the Shrine of Our

Lady of the Miraculous Medal. Each Monday since 1930, approximately 10,000 people attend the religious services at the shrine. Their spiritual needs are attended by approximately 25 priests. In this, we feel that we have contributed and are contributing to the spiritual welfare and moral health, particularly of the city of Philadelphia, and in general, to various cities and States throughout the country.

2. To assist in the education of young men for the priesthood : The central association has built and finances completely three seminaries :

1. St. Joseph's College, Princeton, N.J.
2. St. Vincent de Paul Novitate, Ridgefield, Conn.

3. Mary Immaculate Seminary, Northampton, Pa. In these seminaries, over 400 priests have been prepared to go out and to work for the salvation of souls throughout the eastern section of the United States and in foreign countries. The good work that these zealous priests carry on is due almost entirely to the financial assistance given by the central association.

3. To relieve the poor : The central association was established by the congregation of the Mission of St. Vincent de Paul. In the history of the church, St. Vincent de Paul was so outstanding in his life of almost every known form of poverty that he is given the name, "Father of the Poor” and “Patron of Charity.” The central association, established by his sons, is bringing his relief of the poor into our modern society. Since 1915, vast amounts of money have been given for the relief of the poor here in Philadelphia, in our home missions of Greensboro, N.C., Opelika, Phoenix City, Auburn, Lanett, Alexander City, Tallassee, all in Alabama. Then there are our missions in the Canal Zones-Cristobal and Balboa-our missions in the Republic of Panama-Almirante, Bocas del Toro, Changuinola, David, Conception, and Puerto Armuelles. Finally, in the missions of China, from 1921 until 1953, when our missions were closed, many of our priests labored year after year among the poverty-stricken people of China. The central association has contributed substantially to the support of our missions and the establishment of churches and schools, hospitals, orphan asylums, etc. The central association awaits anxiously the day when it will be able to take up once again the relief of the poor in China.

POSTAGE

The three purposes of the Central Association are made possible through the contributions of money given by good people throughout the United States particularly, and also in Canada and foreign countries. Our moneys are realized chiefly from three sources : Membership fees, the sale of cards, and miscellaneous offerings (offerings for masses, votive lights, and burses). Our expenses might be classified under the heading "Payroll, supplies, and postage." It is the item of postage particularly that we would like to call to your attention. Postage is one of the tools of our trade, since we appeal almost entirely for assistance through the mail. Thus, when postal increases are voted, it isn't merely a case of paying an additional cent for a stamp. A postal increase affects us in terms of thousands of dollars. When the final increase of the latest postage bill goes into effect on July 1, 1960, the postage bill of the Central Association will be increased by about $30,000 per year. It is difficult for us to pass on to our customers this increase in expense. We rely on them for giving offerings, and thus an increase of this nature must be absorbed by the association in some way or other. As we see it, the chief effect of this drastic increase is less money available for the various forms of charity which I have outlined for you.

EMPLOYEES

Let me call to your attention the fact that the Central Association employes about 160 men and women. They are residents of the city of Philadelphia, pay their taxes in Philadelphia, in the State of Pennsylvania, and to the U.S. Govern. ment. Increases of postage, which have been indicated, are bound to have their effect upon the number of employees. Thus, these men and women who work for us are vitally concerned about the continued effort to raise postage even higher than it now is.

JUNK MAIL I trust that it is not out of place for me to speak about the term "junk mail,” which is frequently read in our papers and has many times been on the lips of our people in Congress. The indiscriminate use of this term has been harmful

to the work of the Central Association from time to time, and while I feel that the term is used because the work of our organization is not entirely understood, I think it was unfortunate that it is so used. Let me assure you that the litera. ture, the various appeals, that are sent out from here are carefully prepared, and no item of expense is spared to make them more presentable. Our cards are artistic. Our various appeals are carefully designed, and so is our literature. The various prayer cards and other religious literature that we distribute are edifying and helpful to the people who receive them. We feel that it is unfortunate that such items should be termed as "junk.” Perhaps a better understanding of the type of literature that we send will correct this unfor. tunate mistake.

In conclusion, let me express the gratitude of the Central Association for this opportunity of presenting our thoughts on postage and postal increases. Our relationship with the Post Office Department has been, in general, pleasant. The Post Office Department has contributed greatly to the success of our work. We rely almost entirely on direct mail advertising to bring our problems to the people and to bring their donations to us. I'm sure that with a better understanding of our problem that this pleasant relationship with the Post Office Department will continue

HOUSE OF REPRESENTATIVES,

Washington, D.C., May 27, 1960. Hon. Tom MURRAY, Chairman, Committee on Post Office and Civil Service.

DEAR MR. CHAIRMAN: The enclosed telegram has been received concerning the current hearings on increases in postal rates, and it would be greatly appreciated if it could be made a part of the record as requested.

I join in objecting to the administration's proposals for increasing postal rates at this time, and certainly hope that they will be rejected. With best personal regards. Sincerely yours,

WILLIAM H. MEYER,

Member of Congress.

MONTPELIER, VT., May 24, 1960. Congressman W. H. MEYER, House Office Building, Washington, D.C.:

Proposed postage rate hikes now being discussed before the House committee disastrous for third-class mailers, would destroy valued public service, and have adverse effect on postal revenues—fourth class as well as third. Crossroads a small mailer but as many as 30,000 people a year ask for our catalog. Our business sponsored by Montpelier and Vermont development associations. Increase in our postage bill this year, disregarding any further raises, 80 percent of our 1958 net profit. Urge you bring this to attention Tom Murray, chairman, and request this wire be made part of record. See Wednesday Post for additional facts. Hoped to see you Saturday, but couldn't make it.

MILTON SUNDERLAND, Vermont Crossroads Store.

STATEMENT OF BORIS LEAVITT, PRESIDENT OF LANA LOBELL, Inc., HANOVER, PA.

Ours is the Lana Lobell mail order business. In 10 years' time, from mid1950 to mid-1960, we and our affiliates have grown from a small retail store business to a farflung national and international selling operation, chiefly in the women's ready-to-wear fashions field. Our catalogs— "Lana Lobell” and “Grace Smart”—issued four times a year, give a wide selection of up-to-theminute fashions at popular prices in dresses, sportswear, and lingerie. The response to our catalogs has been favorable enough to cause us to print over 16 million copies in 1959 alone, these being mailed to every one of the 50 States and many countries in the free world from our hometown of Hanover, Pa. (consider this fact with relation to the continuing demands for decentralization of industry). Our business is, we believe, an outstanding example of the opportunity that still has existed in the United States, and almost exclusively there. The present scope of the business is best indicated by various figures for our last fiscal year ended January 1, 1960, which follow:

We paid out over $1 million in catalog preparation and printing costs, and nearly $300,000 to mail these 16 million catalogs in 1959. An additional $325,000

was paid in parcel post and first-class postage fees, or together a total of over $600,000 to the U.S. Post Office, which would not have been paid if we had been forced out of business. Our employee payroll amounted to $570,000 for the year; and so far as we can determine, the equivalent in wages would not have been available to these families from any other source in this community if we had been forced out of business. Our gross volume was over $8 million, but the profit before taxes on this volume was only $100,000, or less than 144 percent. Income taxes, of course, had their own special impact and left a small return, indeed, for the volume of business done and the attendant risk connected therewith.

In 10 years of operation it may be interesting to note that we have printed 100 million catalogs at a cost of $733 million, paid total postage expenses of $544 million, paid our workers $3,800,000 on a total volume of over $63 million, and incurred $347,000 in Federal income taxes.

The McKinsey report implies, among other things, that increasing the pound rate from 10 to 14 cents (a 40-percent increase) and the minimum piece rate from 2 to 3 cents (a 50-percent increase) within a 6-months period of time, and the latter being a 150-percent increase since 1952, is a "moderate" increase and that postage costs, while “* * * a factor in fixing the cost per sale of mailing * * * are not the critical factor.” They imply it is only necessary to increase the response rate by greater accuracy of lists and more effective mailing pieces, as if these approaches are not even now being used to the limit in every conceivable way. They also state "The postal rate * * * is not the make or break factor in this business." It may not be the "make" factor, but it can surely be the "break” factor for a small mail-order business. The suggested raises to go into effect on January 1, 1961, if applied to our 1959 operations, would cause an increase in postage expense of $125,000 per year, or more than our profit before income taxes by the substantial amount of $25,000.

There has, as yet, been little impact from the postage increases on catalogs in our business, because most of our catalogs are mailed under bulk mailing permits and have been large enough to go at the 10 cents per pound rate, which has not been changed, yet. As our catalogs usually weigh a little over 3 ounces each, we will be affected by the new 242-cent minimum piece rate on July 1, 1960, to the extent of approximately $40,000 per year. However, this year we have also been burdened by parcel post increases costing us an additional $65,000 per year, which is a severe increase of about 25 percent. The impact of the 1960 increases just mentioned are enough to put us close to the breakeven point and remove the profit previously expected in this business, which profit as a ratio to sales has never been exorbitant in the first place. If, in addition, the proposed increases for January 1, 1961, are put into effect, only Providence can long keep us in business.

Without going into the general arguments as to the correctness of the post office's cost ascertainment procedures and the value to them of this deferred treatment category of mail, we can at least detail the special obligations the post office entails upon us: We furnish a complete room for postal operations and for post office personnel at our plant at a nominal cost to the post office of $1 per year. Also, we sort catalogs by direct and indirect destination cate gories, bundle and tie them, place them in mailbags, weigh each mailbag, and load them on the post office mail trucks. And, of course, delivery is very slow compared to first-class mail.

In short, our argument is that the proposed increases are not "moderate" increases, nor will their effect be negligible as indicated by our own business. We cannot help but feel that, instead of cutting costs for the Post Office Department, the possible resultant loss of revenue may increase the postal deficit, and not remedy it. If concerns such as ours are to be forced out of business by postal rate increases, there will be corresponding decreases in the payment of income taxes, both from business and employees, and a blow of at least some substance to the printing industry. We believe the most important point of all is that increases such as this will force ourselves and many other small businesses out of existence and thereby increase concentration of business in the big companies and in the largest cities. Actions such as this tend to mock the Government pronouncements that have been made concerning the desirability and encouragement of small business. As part of small business in general, we feel we are being treated as a pawn by the Post Office Department in its continuous efforts to win rate increases.

We thank this committee for the opportunity of presenting this testimony for its fair-minded consideration.

55906—60_33

STATEMENT SUBMITTED BY Josh S. WESTON, CONTROLLER, POPULAR MERCHANDISE

Co., Inc., PASSAIC, N.J. Many a more eloquent and better informed person than myself will undoubtedly appear before this committee. And in all probability, nothing I say will alter the outcome of these hearings. But as a representative of some 500 people in my company who derive their salaries from a mail-order business and who think that their efforts are of some value to their fellow citizens, I feel obliged to voice our thoughts on the subject of third-class postal rates. My comments can be divided into three sections :

(a) What special service third-class mail performs for the Nation and why Congress should be interested in the welfare of third-class mail.

(6) What effects the proposed rate increases will have on third-class mail. (c) Some thoughts on cost accounting and statistics.

THIRD-CLASS MAIL PERFORMS A VALUABLE SERVICE Persons opposed to the concept of third-class mail (for whatever reason) fre quently cite this mail as "junk mail" which is painfully imposed on unwilling addressees who universally detest this form of advertising.

Undoubtedly there are many people who don't care to order by mail. There are, however, millions of people who for health, family, and other reasons need or prefer to shop leisurely in the convenience of their own home. About 70 percent of our 2,090,000 customers are “home bound" mothers of young children who find it difficult to travel to shopping centers for their needs. Our company alone has furnished many millions of needed products and services to these people that they might otherwise get only through a less convenient method of shopping. Third-class mail is the means by which mail-order firms enable millions of people to purchase many billions of dollars of their needs by mail each year. The true measure of the value of third-class mail is the number of people who respond annually to its message.

The typical third-class advertisement will effect a sale from 1 out of every 50 pieces mailed. I'm quite confident that very few radio, TV, or newspaper advertisements will bring a similar level of consumer response. The fact that the percent of response to a third-class mailing piece is higher than the response percent to most other advertising media is significant proof of how useful the consumer finds third-class mail in the retail distribution of this Nation's output.

There has been some talk that third-class mail invades the privacy of the home and should be eliminated for that reason. Allow me to draw an analogy from the newspapers which use second-class mail, and the broadcasting media which use our national airwaves.

Since it is commonly presumed that the uninterested reader or viewer can ignore ads that don't interest him, nobody proposes that paid commercials be banned from the second-class mails used by publications or from the Nation's airwaves. Well, this same uninterested reader can ignore any piece of thirdclass advertising that doesn't appeal to him. His privacy hasn't been offended. What reason is there to consider depriving the millions of shoppers and employees who depend on third-class mail? The tremendous volume of business in this field is the public vote of confidence in mail-order advertising.

THE PROBABLE EFFECTS OF A RATE INCREASE

I have attempted to develop the theme that third-class mail serves a useful purpose to many millions of people, and that it should be viewed as a wholesome part of our economy. In that context, here's what the proposed rate of increase to 212 cents or a 3-cent minimum will do.

A few of our competitors will be forced to give up operation. The greater majority will be forced to curtail their operations to smaller geographic areas and fewer households.

During the past year we have had to eliminate most of Virginia, West Virginia, North Carolina, and Michigan from the area in which we solicit business because of the recent postal increases. The July 1, 1960, increase from 2 to 242 cents per piece has forced us to cancel most of our mailing plans to Maine and Ohio. When one mails hundreds of thousands of pieces, the seemingly slight difference of one-half cent each becomes many thousands of dollars and can make the difference between soliciting or not soliciting business in borderline areas.

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