We do a business of $6,500,000 a year. To do a business of $6,500,000 and make a profit of only between $100,000 and $200,00 is a fairly narrow margin. It is around 4 or 5 cents out of a dollar that we can retain. When we bring the profit down to $100,000 on $6 million, it is less than 2 cents out of every dollar that we retain in profits.

(Mr. Hammond submitted the following charts :)

POPULAR SCIENCE MONTHLY and OUTDOOR LIFE

Our Business IS NOT Benefiting from Inflation. Our Costs Are UP:
Sales Are Down, and Profita Are Approaching the VANISHING POINT

Mr. HAMMOND. The magazines are responsible for the welfare of a great many more people than shows on the surface. The magazines are printed on paper; the paper starts with the man who cuts down the trees in the forest, then comes the pulp manufacturer, the paper manufacturer, the transportation of the paper to the printing plant, the compositors, printers, binder, shippers, and then it goes into distribution and reaches all parts of the country. So, anything that affects the prosperity of an industry such as the publishing business, with

all of its infinite ramifications in all of the States in the Union, I presume, or in most of them, is a serious thing from a national economic standpoint. It is not merely that Popular Science Monthly or Outdoor Life reaches the vanishing point, but there are literally thousands of people in our country not on the direct payroll that are affected by the fact that we take in $6,500,000 and pay out $6,300,000. That affects the wages in all branches of the industry.

Now, on the increase in prices, I have a chart here that shows very succinctly what has happened with us in the past, in 1948, 1949, 1950, and 1951 as we increased our page rates, and it shows how our advertising pages went down. On this side is Popular Science Monthly and on this side is Outdoor Life. The chart is not the same. It shows there is one magazine that has met with increased advertising resistance. Using 1948 as the point of departure, our advertising rates went up 22 percent, and as they went up our volume of advertising went down in the ratios as you see there. As we went up 22 percent in our rates in this 4-year period we went down 24 percent in the volume of advertising that we carried.

In Outdoor Life we had a similar experience. We went up 25 percent, and we went down about 18 percent in the volume of advertising that we carried. So, when we talk about increasing resistance, it is a very real thing; it is not just a dream with us.

Now, in the case of getting more money from the readers, both of our magazines sell for 25 cents a copy. We sell the subscription at $3 a year. In other words, you pay the same thing for a subscription as you do when you buy the magazine on the newsstand.

I was thinking over the week end, suppose I was sitting on the other side of the desk and I was faced with this problem, I would not be entirely satisfied with the statements I got unless there was some suggestion. I would not take the liberty of calling it a recommendation but a suggestion. It was particularly interesting in view of what Senator Carlson had to say in his opening remarks as you were getting the hearing under way.

In my presentation, I have confined myself to the disastrous effect on Popular Science Monthly and Outdoor Life of the proposed secondclass rate.

Speaking as a citizen as well as a publisher, I would like to make the following suggestions that may be of help to the Senate committee. I do not believe there should be more than a nominal increase in second-class rates until the Post Office Department has

1. Made full allowance in all their thinking for the cost of transporting and delivering mail for other departments of the Government. I believe this costs some $150 million. I know statistically the deficit is referred to usually as $550 million, but every time that is mentioned there is $150 million of that that is the expense of carrying the mail for other branches of the Government.

2. Explored all possibilities for saving money and has instituted all possible economies in the operation of the Department along the lines suggested by the Hoover Commission, which I understand indicates a possible saving of some $150 million annually.

3. Made a full examination of the possibilities of saving money in the cost of transportation and delivery methods.

4. Made due allowance for the fact that the Post Office Department is a service organization before it is a money-making operation. As

long as it has to serve all the people in all parts of the country equally efficiently, it can't possibly compete with, say, chain stores in economy of operation. So, in examining the postal deficit, allowance should be made for the fact that mail matter has to be delivered to the American citizen living in sparsely settled areas as well as to those who live in Washington or Chicago or New York or other large cities.

No type of retailing has found it profitable to operate 40,000 branch stores, or even 4,000. I think the Post Office Department is run as a big business if it is efficiently operated and achieving all possible economies in operation consistent with its purpose, but its purpose is not to make money, it is to serve the American public in an important item, the item of mass communications, which is emphasized more and more every day.

5. Recognize that the magazines and periodical press of this country perform a public welfare function that is essential to the unity and well being of this country.

If it is a justified function of the Government to support agriculture, with a department that costs some $2 billion, a Commerce Department that costs more than $1 billion, and an Interior Department that costs some billion dollars a year, then isn't the Government justified in providing the widespread dissemination of ideas through the Post Office Department at a cost of only several hundreds of millions.

If it is the function of the Government to contribute to the support of the education of men and women up to and through their college years, isn't it equally the function of the Government to support the adult education that is made available through the magazines and periodical press.

If it is the function of the Government to help in providing housing for the public, isn't it equally the function of the Government to support information on housing and better living as presented in the magazine and periodical press.

.If it is the function of the Government to support public health, isn't it equally the function of the Government to support the magazine and periodical press in supplying information that makes this a healthy nation.

If it is the function of the Government to support aviation, the merchant marine, the Bureau of Standards, and innumerable other activities, isn't it equally the function of the Government to support the magazine and periodical press that disseminate to the public information and adult education.

We believe the periodical press is the greatest single factor in carrying to the American public the news that the 331 departments, commissions, bureaus, and officers of the United States want to get to the 147 million people scattered over the 3 million square miles of the United States.

We believe that if second-class rates were needed in 1879 to knit the country together, now in these critical days of 1951, reasonable second-class postal rates are needed more than ever before. I underscore "reasonable," because some adjustment is evidently indicated. We suggest that the Senate and the House Committees on Post Office and Civil Service appoint a joint committee that would investigate the business methods, operation, rates and other charges of the Post Office Department.

Such a committee, besides a small group from the Senate and the House should include a staff of experts working full time who would first determine the value of the services rendered the Government and the citizens by the Post Office Department. I think until that definition is arrived at you can't very well establish rates that are equitable to all.

Having made this determination, then the committee would be in a position to decide on the rates that should be paid and could be absorbed by the various types of users of the postal services, because in business as well as in public service you have to fit your prices to the ability of the people you are selling your services to to absorb them.

The appointment of such a joint committee would, I believe, lead to a clarification of the postal deficit problem and its equitable solution.

I might add, after listening to this morning's testimony, I think such a committee, if there is such a committee, should not be composed only of experts in accounting and business, but it would also be highly desirable, if you have a joint committee, to bring into such committee public-spirited citizens of the very top rank who would work with you gentlemen to evaluate the importance to this country of magazines and newspapers and all other periodicals being made available to the whole public. If I were a Senator instead of a businessman that would be my approach to it, but I am not a Senator.

That is all.

Senator UNDERWOOD. Are there any questions?

The CHAIRMAN. No questions.

Senator UNDERWOOD. Thank you.

Mr. LATIMER. Mr. Chairman, may I at this time place in the record a statement of the American Farm Bureau Federation, 261 Constitution Avenue, Washington, D. C.

(The statement referred to is as follows:)

AMERICAN FARM BUREAU FEDERATION,
Washington, D. C., April 4, 1951.

Hon. OLIN D. JOHNSTON,

Chairman, Post Office and Civil Service Committee,
United States Senate, Washington, D. C.

DEAR CHAIRMAN JOHNSTON: The position of the American Farm Bureau Federation with regard to increased postal rates and the reduction of the size and weight limit of parcel-post packages was expressed before your committee during the Eighty-first Congress. S. 1046, now being considered by your committee, provides for postal rate increases in all classes of mail except fourth class (parcel post). We understand that the Interstate Commerce Commission will soon reach a decision with regard to this class of mail and that the recommendations of the Postmaster General to the ICC probably will be approved. This reduction of size and weight limit of parcel-post packages, coupled with the increase of rates, will work a hardship on farmers, because farmers in most areas are especially dependent on this service.

We are aware of the fact that the Post Office Department is now managed at a deficit of some $521 million annually. In our previous statement with regard to adjustment in postal rates, we recommended that more efficiency could be obtained in the operation of the Post Office Department and suggested that the recommendations contained in the Hoover Commission report be utilized in this connection. We still maintain that if the recommendations of the Hoover Commission were fully implemented a substantial part of this present deficit could be eliminated.

We know that many of the present postal rates have been in effect for a number of years, and have not kept pace with the increased cost of handling mail.