approaching the Post Office Department with any constructive suggestions. We agree very strongly with the Postmaster General that mutual discussions of this complicated subject would be helpful, and we are prepared at any time, if it would be of assistance to him to do so, to sit down with the Post Office Department and with representatives of this and other committees, to review the actual cost problem and to try to reach agreement on a revision of the second-class structure. Senator NEELY. That is an encouraging statement. The chairman of this subcommittee expects to invite some of you and the Postmaster General to meet here, and endeavor to agree on a solution of the deficit problem.

Mr. BRADFORD. Thank you, Mr. Chairman.

Senator NEELY. The Postmaster General stated that he never had received any suggestions from publishers, except when hearings, such as this one, are conducted or proposed. I deduced from what he said that he thought there was interest in postal rates only when an effort to increase them was on foot.

Mr. BRADFORD. We would like to encourage some discussions in advance of these hearings. Of course, it is true that when the Postmaster General proposes a bill like this one, our attention is focused on what would happen if it went through, more than on what the longrange problem is.

That is all that I had.

Senator NEELY. Thank you very much.

The next witness is Mr. Richard White, of the American Association of Nurserymen, Inc.

STATEMENT OF RICHARD P. WHITE, EXECUTIVE SECRETARY OF THE AMERICAN ASSOCIATION OF NURSERYMEN, INC., WASHINGTON, D. C.

Mr. WHITE. Mr. Chairman, with your permission I would like to relinquish my time, if I can put in a brief statement in the record, to two businessmen in the mail-order business in our industry, who would like to testify, and I assure you that they will not take more time than I would have taken.

Senator NEELY. You may proceed in your own way.

(Mr. White's statement is as follows:)

Mr. Chairman, members of the committee, my name is Richard P. White. I am executive secretary of the American Association of Nurserymen, Inc., with headquarters in Washington, D. C. The membership of this association is approximately 1,200 firms located in 45 of the 48 States.

This association of small business firms is governed by a board of directors which adopted the following statement at its annual meeting in Milwaukee, Wis., on July 20, 1948. It is on the basis of this declaration of policy that I wish to enter our opposition to the increase in third- and fourth-class rates proposed in H. R. 2945.

The statement approved by the board of governors of 116 members is as follows: "(1) Since the postal service is a public service, there is as much justification for the appropriation of public funds for its operation as for any other department of Government.

"(2) Since there is no justification for requiring one class of mail to be selfsupporting while allowing Government subsidies to other classes of mail, it shall be the policy of the AAN to seek amendment to the present postal laws for the purpose of removing the requirement for self-support of fourth-class mail.

"(3) It will also be the policy of the AAN to seek amendments to present postal laws so that 'seeds, cuttings, bulbs, roots, scoins, and plants weighing more

than 8 ounces but not exceeding 10 pounds shall be subject to the same rates now granted to catalogs and similar printed advertising matter in bound form weighing over 8 ounces but not exceeding 10 pounds, thus bringing fourth-class rates for these commodities within the weight limitations specified, into the same pattern as for third-class packages of the same commodities."

As an industry we mail approximately 40,000,000 catalogs and fliers annually to prospective customers. These catalogs in 1948, produced approximately 6,800,000 orders for nursery stock that was delivered by fourth-class mail. Our postage bill for mailing catalogs in 1948 was approximately $700,000 and our postage bill resulting from fourth-class-mail usage was approximately $2,000,000. This third- and fourth-class business also creates a volume of first-class mail approximating $250,000 in 1948 and special services revenues which we have been unable to estimate.

The increases proposed by H. R. 2945 in third- and fourth-class rates will work a financial hardship upon those nursery firms doing a mail-order business or those making deliveries of nursery stock via parcel post, the orders for which resulted from magazine or newspaper advertising.

The Kellogg Nursery Co., Three Rivers, Mich., for example, provides data on the actual postage paid by this company in 1948, and the postage that would have been paid under the proposed increases in third- and fourth-class rates, as follows:

It is stated in a letter to Hon. Tom Murray, chairman of the House Committee on Post Office and Civil Service, dated March 21, 1949, that "You can see that this would mean an additional expense to us of $16,575. Actually, we do not make that much in a year, on the average."

It is my belief that this firm is not unique in this position and that many other firms in the nursery mail-order business will find themselves in the same situation. Public Law 900, Eightieth Congress, increased our catalog bulk rate from 8 to 10 cents per pound or 25 percent. It is now proposed to do away with the third-class bulk rate entirely, which will bring our catalogs under 8 ounces in weight into the only third-class rate available, namely, 2 cents for the first 2 ounces, 1 cent for each additional ounce. The majority of nursery catalogs weigh 7 and a fraction ounces. Instead of a charge per 8-ounce catalog of 5 cents, under the current bulk rate of 10 cents per pound, an 8-ounce catalog will cost 9 cents or an increase of 80 percent. For fliers which now are mailed for the minimum 1 cent under the third-class bulk rate, the new cost, as proposed in H. R. 2945, will be 2 cents or a 100-percent increase.

The inevitable result of these increases will be to force catalog users to reduce their mailings which will, of course, have its inevitable economic repercussions in the print shop and in the paper industry Reduction in catalog mailing will reduce the volume of fourth-class mail, as well as the revenue created in first class and special services.

The association, itself, makes about 30 third-class mailings to its membership per year, using third-class mailing privileges and the 1-cent-per-piece minimum. The postage on this mail is doubled, and we will be forced to reduce these mailings to meet our budgeted postal expense.

When using third-class bulk mailing privileges, as we do for our catalog mailings, the nurseries sort the catalogs by States, bundle by States, and use precanceled postage. This work is done in their own buildings and at their own expense. In addition to these operations, they also generally haul these catalogs direct to the mail cars, so that much of this bulk mailing never enters the local post office. The only local expense connected with these mailings is the expense of a postal clerk sent to the nursery to supervise the weighing.

The savings of third-class bulk handled under these conditions represents a tremendous cost savings to the postal department when compared with regular

third-class mail. Under the proposed elimination of third-class bulk rates, there is no incentive for nursery concerns to State, bundle, precancel, or to haul their mail. This burden will be transferred to the Post Office Department.

We urgently recommend that third-class bulk rates be included in H. R. 2945 on the basis as now written in law, namely, 10 cents per pound with a minimum charge of 1 cent per piece.

Nursery catalogs contain considerable volume of educational matter in regard to fruits and plants, available elsewhere only at considerable trouble and expense. As an example, I wish to call the committee's attention to the following nursery catalogs as typical examples:

W. W. Wilmore Nurseries, Denver, Colo.: Pages on Insect Pests Common to Evergreens, How To Plant and Trim Roses, How To Plant Evergreens, Fall or Winter Care of Trees, Proper Planting and Trimming of Privet Hedges, Shrub Planting Instructions, Planting Instructions for Trees and Fruit Trees. Westminster Nurseries, Westminster, Md.: Orchard and Small Fruit Planting Suggestions, Plants for Various Specialized Uses of Specialized Locations.

Vick's Wildgardens, Narberth, Pa.: Textbook of Plant Materials-Drawings and Descriptions of Wild Plants.

Tuttle Bros. Nurseries, Pasadena, Calif.: When, How, and What To Plant (four pages), Pest Control-Irrigation-Fertilization.

Kelly Bros. Nurseries, Dansville, N. Y.: Answers to 39 Questions-Dr. H. B. Tukey, head, department of horticulture, Michigan State College, East Lansing, Mich.; For Better Fruits and Larger Crops-Prof. George L. Slate, New York State Experiment Station; Shrubs for Special Purposes.

In view of the educational nature of nursery catalogs, disseminating information on how to grow home fruits and how to use trees and shrubs properly not only for the proper design of the home, thus increasing its value, but for special purposes and special locations, to approximately 40,000,000 addresses annually, a large percentage to farmers who do not receive this information from other sources, we feel that our catalogs are more than just a medium in which nursery stock is pictured and prices quoted. I understand that they are used to supplement textbooks in some college horticultural classes. We feel that every description of a fruit, including its hardiness, its bearing date, its qualities as to shipping, freezing, etc., is educational in nature and is not in the strict interpretation of the word "advertising." Surely, all the space devoted to insect and pest control, how and when and where to plant, how to prune, and how to care for plants, is strictly educational and is a part of the service the nurseryman renders to the readers of his catalogs.

On this basis the average nursery catalog is composed of less than 50 percent advertising matter and many of them less than 25 percent advertising matter. Illustrations and written descriptions of the fruit that nursery stock will produce, illustrations and descriptions of the ornamental plants we offer in our catalogs as to how they grow, where they grow best, and how they should be used, is educational material in our opinion.

We believe consideration should be given to such catalogs as we issue from this viewpoint. We feel we are already paying too much for the dissemination of this educational material and that we should be receiving a reduction in rates of postage rather than an increase. We believe our catalogs, in general, are more educational in nature than much of the material carried by the post office under the classification of second class at 2 cents, 8 cents per pound-or as proposed, 2 cents, 9 cents per pound with a minimum of 1 cent per piece.

Nursery and seed catalogs are kept and read. The information in them is based on research of our great land-grant colleges and experiment stations, as well as our own practical experience. We believe that the information is of more lasting value than the day-to-day recording of current events, important as that is, or the fictional type of education matter that travels second class, is read today and is discarded to the paper salvage of tomorrow.

We believe we should enjoy a postal rate comparable to that granted to other educational material such as newspapers and magazines.

Four-class rate-increase proposals will work a hardship not only on our members, but also on our consumers as well, and we believe will not result in the increased revenue anticipated.

In the first place, a vicious circle will be set up in the mail-order business as it pertains to nurseries. This business has turned the corner, and ways and means of cutting operating costs are being sought. One means is by increasing the effectiveness of our catalogs by reducing our mailing list to those better prospects. Increased rates will mean a further decreased number of catalogs. Just because

we cannot afford to expend a greater volume of gross income on “business creating" effort in face of a declining market we are forced to become more selective in our mailing. This will inevitably mean a decrease in the number of orders which in turn will decrease gross income, decrease our taxes, increase unemployment, and increase the deflationary factors of our economy. This deflationary cycle in the mail-order nursery business had us worried even before H. R. 2945 was introduced.

We believe that increases in third- and fourth-class rates now, that is, increases in rates on those classes of mail that business uses directly to create sales and to deliver the goods to the consumer, might lead to disastrous economic results. When individual businesses suffer as we believe they will, the sum total of them all cannot help but have a deterrent effect on business generally, which will result in less business, and lower tax revenue to the Government, and less use of the mails for business purposes. This loss of business mail would not at the same time result in any appreciable reduction in post-office personnel or overhead charges.

As this industry uses parcel post, we perform many services for the Post Office Department that the Department has to do for individual mailers. For example, all the packages are weighed and stamped by the nursery in their own buildings and at their expense, hauled at nursery expense direct to the mail cars. The Post Office Department supplies a clerk to supervise sorting for proper mail shipments. The handling we do at our expense that the Post Office Department is forced to do for others represents a considerable saving to them compared to the ordinary parcel-post package.

I would also like to point out that up to 90 percent of the nursery stock parcelpost packages of some firms, are delivered to farmers and strictly rural persons. The percentage by firms will vary, but the average is certainly 60 percent or more. One large mail-order company responsible for several hundred thousand shipments annually, by actual count, reports that 32.2 percent are delivered to R. F. D. addresses, that 15 percent are delivered to addresses in towns of 500 population or less and that an additional 17 percent are delivered to addresses in towns of 500 to 2.000 population. This accounts for 64 percent of its shipments. These R. F. D. deliveries cannot be made by any other means except parcel post and the R. F. D. system. It is our belief that in many of the small towns of 2,000 population or less delivery services other than that provided by the postal system do not exist.

We do not subscribe to the view that the postal department is in the freight business. We believe the postal department through its parcel-post system is performing an essential service to the rural population of this country, the needs of which our mail order seedsmen and nurserymen are meeting through the mails and the needs of which cannot be adequately met in any other way. To increase parcel-post rates is to increase the bill to the farmer and rural consumer of many commodities, including nursery stock.

The cost of delivery is in some cases directly and separately charged to the consumer. If it is not directly and separately charged to the consumer, then it is included in the delivered price quoted in the catalog. The nurserymen cannot absorb any more of the delivery costs. They might have been able and willing to do so on the inflationary market of the past few years, but in face of the turn of events it would be suicidal for him to even attempt to absorb the increased parcel-post rates proposed in H. R. 2945. He has, therefore, only one alternative if he wants to stay in business and that is to pass on any increase in delivery charges to the consumer. Naturally, in order to protect the good will these companies enjoy they will have to announce the change of policy that many of them will be forced into; namely, of requiring consumers to enclose delivery postage with their order.

The consumer and to a large extent, the rural consumer and farmer who buys via the nursery catalog and who accepts delivery by parcel post, wiH pay the postage bill. He will not benefit by any such proposals as are now before the committee.

Public Law 900, Eightieth Congress, increased our parcel-post bill by approximately 40 percent. H. R. 2945 would increase these rates for us by approximately 20 percent more on the average, which will mean a 68-percent increase in parcelpost rates over what they were less than a year ago before Public Law 900 was enacted.

No business enterprise can absorb such increased costs. They will be forced to increase prices to the consumer just when the consumer was hoping for a reduction in his expenses. We fear such increased costs will discourage the purchaser to a point where the purchase will be put off.

We view this increase in rates as the spark that might put our industry into a real tailspin.

Con equently, we respectfully urge the committee to consider carefully, as we know they will, all possible aspects of this problem. It is not only a question of raising revenue for the Post Office Department; it is likewise a question of how much the camel will bear before its back is broken.

We recommend

(1) Removal of the costs of rural free delivery service from the expenses of the Post Office Department and direct appropriations by Congress to cover this service. It is supposed to be a rural free delivery service. It is not free if the farmers and others on rural routes pay for the service.

(2) Removal of all direct subsidies for mail haulage, such as those granted air lines, from the expenses of the Post Office Department and direct congressional appropriations to cover such subsidies.

(3) Direct congressional appropriations for costs of handling all Government mail.

(4) Enactment of a rate structure which will encourage greater use of mails by business in seeking customers and in supplying them with their needs, rather than a rate structure which discourages business from expanding its direct-tothe-consumer business-creating efforts. This is particularly important right now, in our opinion, when our business at least is hesitant about expenditures for expansion of sales efforts.

Mr. WHITE. I would like to introduce Clifford R. Emlong, owner of the Emlong Nurseries of Stevensville, Mich., for a brief statement. STATEMENT OF CLIFFORD R. EMLONG, PRESIDENT OF EMLONG NURSERIES, STEVENSVILLE, MICH.

Mr. EMLONG. My name is Clifford R. Emlong, Emlong Nurseries, Inc., Stevensville, Mich.

Our postal service has enabled millions of people unable to get certain goods locally, to ship by mail. It has helped in the development of business, without which our present standard of living could never have been reached. Many small businesses have been developed because they use the mails to promote their sales, and I, as a small-businessman, am thankful that our Government made it possible.

However, it is apparent that the Post Office Department is faced with a deficit this year, due to the cost of the service they are rendering. We all recognize this fact, but is it fair to penalize users of third- and fourth-class mail for the deficit that is caused by the secondclass mail? We, as users of third- and fourth-class mail, had an increase in rates last year that amounted to 25 to 50 percent, and the proposed bill, Senate bill No. 1103, will cause increases of 100 percent in

some cases.

The second-class-rate bracket is predominately periodical material. For many years periodicals contained a minimum of space devoted to advertising; however, since 1939, the space devoted to advertising in periodicals has been increased from 38.4 percent of space to 50.7 percent in 1947, and, in general, periodicals now receive more revenue from advertising than from subscription sales. Periodical advertising has become a profit-making commercial enterprise, yet secondclass postal rates on such advertising matter are less than third- and fourth-class rates on direct mail and catalog advertising.

In 1947, third- and fourth-class mail together produced eight times as much revenue as second class, yet their combined weight was only three times as great. It is apparent that users of third- and fourth