Comparing rates under the proposals before this committee, a 1-ounce letter would be charged 5 cents and a 1-ounce circular a maximum of 31⁄2 cents. That amounts to a 30-percent concession in recognition of the premailing work performed by bulk mailers and in consideration of the deferred handling of circulars. For the same 32 cents an advertiser could send a 22-ounce circular or a 3ounce catalog. At first-class rates, postage would be 15 cents. That is a 77percent rate concession. At the proposed bulk-pound rates, up to 16 ounces of circulars could be mailed for only 21 cents. A similar quantity of first-class mail would be charged 80 cents. That amounts to a rate concession of 74 percent. Mr. Chairman, I firmly believe that any objective analysis would lead to the same conclusions. The Post Office Department's cost system is sound, both in concept and in execution. Similarly, the objective to secure full cost coverage from the third-class mail service is valid. I urge this committee to report favorably on a full cost coverage bill for third-class. It is an action long overdue. We owe it to the taxpayer to demonstrate that each dollar of public funds will be used in the greatest national interest. In these days of mounting international tension, I don't believe that interest is served best by continuing a longstanding and costly subsidy to a vigorous advertising medium. STATEMENT OF DAVID REICHBERG, ARCINCO, INC., PASSAIC, N.J. Mr. Chairman and members of the committee. My name is David Reichberg, manager of Arcinco, Inc., an advertising agency doing business in Passaic, N.J. We are an agency specializing mainly in direct mail advertising. Most of our clients are firms selling products and services through the mail. For these clients we perform various functions: writing and designing catalogs and other literature, purchasing and supervising the printing of literature, addressing and mailing millions of catalogs and letters each year, maintaining records of sales and response, and advising our clients on how to most effectively advertise through the mail. For our clients we are currently mailing 8 million third-class letters a year. The postal rate increase of 100 percent on third-class mail since 1952 has caused us to reduce the mailing for our clients from 12 million letters a year to 8 million letters a year-a decrease of 33 percent. We can attribute the 33 percent reduction in mailing to the 100 percent increase in third-class postal rate because we keep a very exact record of the cost and response of each mailing. Although the one-half percent increase in third-class mail seems like a little bit, it amounts to thousands of dollars when one is mailing millions of letters. The additional thousands of dollars cost has made some mailings unprofitable and has caused our clients to reduce their mailing. From the sales and response records that we keep for our clients, we know that the response to mailing varies from 2 to 8 percent. Obviously many people are interested in our clients' products and services. They are interested in the mail we send them. We know that they are more interested in our mail advertising than they are in our advertising in radio, television, magazines, and newspapers because we receive a much lower response from the other media than we receive from our third-class mailing. To us this means that direct-mail advertising is considered to be less an intrusion by public than is the other advertising media. We have done a considerable amount of market research to help us write and design more effective letters for our clients. From this research we know that many people enjoy receiving our letters, special offers and catalogs. In a recent market research study, performed by the Institute for Motivational Research for one of our clients, many women said that they like receiving letters from our clients because they were friendly and informative. In fact, many said that they looked forward to receiving the letters and special offers. From our market research we have learned that many people find it much easier and convenient to shop through the mail. Many people say they like to shop through the mail because they are too busy with business, too busy with their children, are shut-ins, or live in areas that are distant from major shopping areas. These people find mail order shopping a convenient service. The 33 percent reduction in the mailings of our client, resulting from the 100 percent increase in third-class rates, has caused a substantial reduction in our profits. This has resulted in reduced taxes to the Federal and State Governments. The reduced mailing has also caused us to discharge 22 employees. Our sup The 33 percent reduction in the mailings of our client has caused us to reduce our purchases from our suppliers. I have talked to almost all of them and they all tell me that they have had to make sharp reductions in their staff. pliers include printers, letter shop, list brokers, list owners, artists, engravers and photography studios. I know that Congress and the Federal Government are continually striving for national full employment. However, contrary to this policy, the postal rate increases have caused a considerable amount of unemployment. Like many other businesses, advertising agencies have to continually struggle to operate at a profit. Executives, writers and artists require considerable training to learn the procedures and problems of the client. Because of their training and skill, these people cannot be laid off and rehired as easily as the case in mass production industry. Therefore, advertising agencies have a rather rigid overhead. When volume and profit are reduced by 33 percent, the overhead constitutes a difficult, sometimes impossible burden. We cannot raise prices so our profits must go down when our volume is reduced. Some agencies have already ceased operation. If further postal rate increases are instituted, many other agencies will go out of business. This can only have a detrimental effect on our economy. There is one more area that I would like to discuss. Historically, third-class mail has been a deferred class mail and one that requires much less work from the Post Office Department. However, the Post Office Department recently released a "Survey of Postal Rates" that states that third-class mail should pay fully allocated cost. It would appear that the Post Office Department has abandoned its previous decisions of applying differential pricing techniques that were used in establishing rates for third-class mail. This is very important to us. In order to fulfill the requirements of third-class bulk rate, we perform many extra tasks. We stamp the envelope with an indicia. We short the mail by city and State. We bag the mail, weigh it and and deliver it in our trucks to the Post Office terminal where the trucks are backed up to the freight cars for immediate shipping by rail. This saves the Post Office considerable time and labor. For these savings, there should be a large differential between first-class and third-class mail rates. In addition, the postal manual states that third-class mail can be deferred. I know from our own operation that work that can be deferred until it can be done during slack periods costs us considerably less than when the same work must be done immediately. Therefore, third-class mail costs the Post Office less to handle. The third-class mail user should pay a lower rate because he is willing to have his mail delivered slower. I'd like to sum up by saying: 1. Third-class mail allows our firm and our clients to operate profitable businesses. It allows our clients to provide millions of people with useful services and products. 2. From our market research study, we know that many people enjoy and benefit from third-class mail advertising. The high response our clients receive from their mailings indicates that the market research findings are correct. 3. The third-class postal increase of 150 percent since 1952 has caused considerable unemployment in our industry. Not only in advertising agencies and mail-order firms but in the printing and allied industries. It has also caused some firms to discontinue operations. I urge this committee to hold the third-class postal rate at $20 per thousand. This rate is 100 percent greater than in 1952, an increase that has already caused great hardship in our industry. The 100 percent increase already instituted is enough. CALIFORNIA FARMER, Los Angeles, Calif., June 3, 1960. Hon. THOMAS MURRAY, HONORABLE SIRS: As a member of the Agricultural Publishers Association, 333 North Michigan Avenue, Chicago 1, comprising 33 farm papers from several of whom you have heard, including President Ray T. Kelsey, of Cleveland, Ohio, I wish to submit the following from California Farmer, a 106-year-old semi monthly, with second-class entry at San Francisco, in support of previous testimony opposing the proposed one-half cent per copy per issue rate increase on second-class postage. Such a large and sudden increase would cost California Farmer approximately $15,268 more than the postage on an ABC average of 117,519 paid and free circulation per issue in 1959 which as $21,580, making the cost $36,848. This is a 70.75-percent increase in postage cost. The farm producers of California numbering 123,075 (U.S. census of 1955) produced crops, livestock-in all farm production which amounted in dollars to $3,102,751,285. Economic studies have indicated that the net taxable income out of this was $933,800,000. California Farmer humbly suggests that as over 100,000 of these producers read California Farmer, many for many years, that this farm paper had considerable to do with this great taxable income in the publication, publishing information about best farming practices. Farm papers in general over the United States have helped to develop farm production to its present high producing state. California Farmer has spent money liberally for editors, writers, field men and for printing to put out a paper that is read and believed in. We show our appreciation of our Government's postal service by helping its farmer citizens. Added costs for so great and sudden a postage cost increase will work a hardship on the publishers and their employees. We earnestly urge your committee to reject the present one-half cent per copy per issue increase at this time, remembering that three increases of 10 percent each are still in effect. Respectfully, J. H. YETTER, Business Manager. Hon. ToM MURRAY, LITTLETON STAMP CO., Littleton, N.H., June 2, 1960. Chairman, House Post Office and Civil Service Committee, DEAR MR. MURRAY: Thank you for your letter of May 20. Since pressure of work involved in hearing witnesses on current postal rate legislation does not make it possible for me to appear before your committee, I'm accepting your suggestion that I submit a statement relating to my individual business. I am owner and general manager of this company which retails stamps and coins to collectors. I started the business (which is 100 percent mail order) in January 1946, after serving in the Army from September 1941 to October 1945. Several years ago we employed 96 people. Steadily increasing expenses have forced me to cut back the size of my operation year after year with the result we now employ 35 people. Postage has always been one of my biggest expense items. In the past few years the rate on third-class mail has increased 100 percent, while the cost of third-class bulk rate mail has increased 150 percent. This increase in postage rates is all out of proportion to increases I have had to absorb in other expenses. If H.R. 11365 goes into effect the third-class mail rate will have increased 170 percent since I started in business, and the bulk rate third-class mail will have increased 250 percent. Since postage increases in recent years have already been way out of proportion to increases in other operating expenses you can readily see that these additional proposed increases have me truly alarmed. Passage of H.R. 11365 will not put me out of business but, based on what has happened in the past, I know it would certainly head me in that direction. I would have to make a further reduction in the size of my business, which would once again reduce the number of people on the payroll. Each time expenses make a sharp increase a portion of my mailing list cannot be serviced profitably so I have no choice but to stop doing business with this part of my mailing list. I consider the conclusions of the McKinsey Co. report, which was submitted to your committee by the Post Office Department, to be irresponsible and unfounded. I'm not going into detail on this subject as it has been thoroughly covered by Mr. Harry J. Maginnis, executive manager of the Associated Third Class Mail Users. Sincerely, MAYNARD SUNDMAN. YANKEE, INC., Dublin, N.H., May 18, 1960. DEAR MR. MURRAY: The proposed postal rate increases now being requested by Mr. Summerfield-especially those of second class-do not take into account the additional disadvantage which will accrue from these to the small publisher. For example we are in New England but our subscription list is national. Life prints in Chicago so zones 1 and 2 applies to the Chicago area but here in New England the postal rate of course is higher for them. To overcome this they can afford to and are building a new multimillion-dollar plant in New England. Thus for them the zones 1 and 2 rate becomes available not only in New England but also Chicago. Other large publishers can truck their copies from the plant and mail them for an extra $10 postal entry fee so they pay only the zones 1 and 2 rates also. The smaller publishers just cannot do this. We are already, in view of our comparatively small runs (ours is 100,000), paying a penalty of 3 cents a pound on paper and as much as that if not more per copy because our runs are not large enough to use the high speed presses. Since I founded Yankee 25 years ago, some 30 or 40 publications in our field have either ceased publication or have gone on a subsidy basis. Only a handful of us remain in business as independent publishers. The unwillingness of Mr. Summerfield to recognize this state of affairs seems to us as flagrantly undemocratic. I would appreciate your acquainting your committee members with this situation. Respectfully yours, ROBB SAGENDORPH, Publisher. BURSTEIN-APPLEBEE Co., Kansas City, Mo., June 3, 1960. HOUSE POST OFFICE AND CIVIL SERVICE COMMITTEE, Washington, D.C. THE HONORABLE MEMBERS OF THE COMMITTEE: Chairman Tom Murray has requested witnesses who did not testify in person because of lack of committee time to supply a statement for the hearing record. Burstein-Applebee Co. of Kansas City, Mo., of which the undersigned is founder and president, has engaged in the mail order sale of electronic parts, supplies, and equipment via catalogs regularly published for the past 33 years. The great majority of our customers are located in medium and small communities or rural areas and do not have local access to any of the highly specialized electronic parts listed in our catalogs. It would be utterly impossible to reach the many thousands of these customers by any other advertising medium than our specially prepared catalogs having complete descriptions and illustrations of more than 25,000 items of electronic parts, supplies, and equipment carried in Kansas City stock for immediate shipment on orders received from our mail order customers. Our margin of profit on mail orders is at an all-time low due to the increased costs, including the increase to date of 150 percent in third-class postage rates. The proposed third-class increases would likely force us to serve only our larger customers. Many thousands of small customers would likely be deprived of one or more of our mailings each year, which consists of a 204-page general catalog issued each September and four supplementary 32-page or larger flier catalogs issued quarterly; the purposes of these fliers being to keep our customers up to the minute on new developments in the electronic and associated fields. Any reduction in the 1,500,000 catalogs mailed each year would result in an across-the-board reduction in all printing procedures, our own warehousing, purchasing, shipping, and general office activities. Our mail orders approximate 70 percent of our total sales and should the rates proposed be adopted for third-class mail, it is quite probable that a reduction in catalog activity of up to 50 percent would be immediately required. Our payroll reduction in such case would be from $50,000 to $100,000 a year minimum and easily could be in excess of $250,000. Research into electronics for national defense and space activities is conducted by a great many of our customers, including some who work in highly qualified research laboratories and the inquisitive young high school lad of 12 to 14 years of age. From the days of Marconi the romance of wireless com munication has gathered increasing numbers of followers beginning with boys barely in their teens. My company has always in the past and hopes to continue to serve the young high school experimenter for his needs in electronic supplies to encourage continued experimentation which, many times in the past, has resulted in startling improvements in the field of electronic communications. Our mail order electronic distribution service substantially contributes to the creation of future scientists so vitally necessary for our country to successfully compete in the electronic defense and space-age race. May I reiterate here the fact that the experimenter in electronics cannot go to the average store in the average community and find there the thousands of highly specialized electronic items he must have to further his hobby and perhaps his vocation. It is our firm opinion that present rates on third-class bulk mailings of catalogs are ample and just for the service rendered by the Post Office Department, bearing in mind that we perform a substantial portion of the mailing functions that the Department performs within its post offices for other classes of mail. Thank you, gentlemen, for your thoughtful consideration of the facts set forth in this statement. The more than 100 employees of our company engaged in our mail order operation join me in the hope that your committee will not approve any of the proposed third-class mail increases, thereby making it possible for us to continue serving tens of thousands of our customers who have no other means of obtaining their electronic needs and to whom we have no other means of approach than our regularly published catalogs presently mailed under third-class bulk mailing regulations and rates. Respectfully submitted. Hon. Toм MURRAY, M. W. APPLEBEE, President. INTERNATIONAL ALLIED PRINTING TRADES ASSOCIATION, Chairman, House Post Office and Civil Service Committee, House Office Building, Washington, D.C. DEAR MR. MURRAY: This letter is written in opposition to H.R. 11140, the current postal rate increase bill. It is written in behalf of the following international printing trades unions, all of which are affiliated with the AFL-CIO: International Printing Pressmen's Union International Brotherhood of Bookbinders International Photo Engravers Union International Stereotypers & Electrotypers Union We have made representations in the past when increased postal rates have been proposed in Congress. The printing trades unions here listed have consistently taken a stand against the notion that the postal deficit must be eliminated or virtually so for the mere purpose of making the Post Office Department self-supporting. We have sought to consider all aspects of the question and can find no great principle that demands elimination of the postal deficit. On a previous occasion we have said: “*** it appears to us as if a justification for a postal deficit can be found in the public benefits that are to be derived from a postal service conducted at as low a cost as possible in providing publications that serve the reading public in general and not merely a small segment; that help in universal education, in keeping the public in general informed and interested in the affairs of their cities, their States, their countries, and of the world as a whole, in keeping alive what is of value and precious in the practice of freedom of the press; in providing media of expression in the arts and sciences, open to all; and in the development of critical judgment in numerous fields of human endeavor. We added that "while we believe such a subsidy to be justified, we do not think that it should be open for the enrichment of purely commercial enterprises. What there is in the nature of a subsidy," we said, "should be dedicated to the ends just mentioned and those of a similar character." It will be seen from this that we do not regard the postal distribution system as representing exclusively public service. We do not say that all that enters the mails performs the kind of public service that would entitle it to a subsidy. Therefore, we do not say that the expenses of the postal service should be |