To double the postage bill would be to wipe out most of the profit and put many a small publication "in the red." Eventually it would mean the collapse of many a business paper, with consequent loss to the subscribers, many of whom are also small-business men for whom the business paper serves the same purpose as the research departments conducted by their bigger competitors. The fact is that business papers are indispensable to the efficiency of our industries and trades. Mr. Charles E. Wilson, Director of Defense Mobilization, recognized it recently when he said: During the war days, if it had not been for the help of the business press, I don't know what we would have done. The business press created miracles or production during the war years by their efforts. I will ever be grateful for the business press. Why jeopardize the existence of the business press by such a drastic increase in an important item of their costs as this bill would involve? We submit (1) that whatever increase may be imposed should be staggered over 2 or 3 years, as is indeed proposed in the present bill; and (2) that the total increase should not exceed 30 percent above the present rates. That, we believe, is the maximum many of our publications could stand. We realize that the additional revenue thus produced would not be enough to wipe out the deficit which now exists, whatever may be the cause of it. But why, we ask should the Post Office Department be singled out as the one governmental department to be self-supporting? We don't require the Department of Agriculture to be self-supporting, or the Department of Commerce, or the Department of the Interior, or, indeed, any of the other departments. On the contrary, we recognize that since we all share the benefits of the work of these Depart ments, we should share their cost, and so we support them out of the Public Treasury. And yet what is there about any of these services which does not apply with equal force to the postal service-a service which contributes as much as any of them to the Nation's progress and prosperity? We submit, in conclusion, that if the present postal revenue, plus such reasonable increases as may be decided upon, is not enough to pay the cost of an adequate and efficient postal service, the deficitrepresenting as it does less than 1 percent of the total public revenueshould be regarded as a small price to pay for a service so indispensable to the national welfare. I thank you. The CHAIRMAN. Are there any questions? Senator DIRKSEN. What do you deem a small price to pay for this service? Mr. LEBHAR. Around $300,000,000. Senator DIRKSEN. It is in excess of $500,000,000 at the present time. Mr. LEBHAR. Senator, it is not really in excess of $500,000,000. After all, that sum includes franking privileges and many other services which no one admits are legitimate and necessary to be included in the deficit. As far as the real deficit is concerned, it is around $300,000,000, although we do not know whether the cost ascertainment basis is sound or not. The CHAIRMAN. The Post Office, I believe, estimates it would be $361,000,000, after deducting the services for which there is no rev enue. Senator BUTLER. The net deficit is $321,000,000, isn't it? Senator DIRKSEN. Mr. Chairman, I just want to satisfy myself on the viewpoint that has been expressed here. Is it the contention of the witness that since this involves some diffusion of culture and business knowledge, that that segment of the business press should, therefore, be entitled to a subsidy? Isn't that what you are contending for? Mr. LEBHAR. No, sir. We believe whatever element of subsidy there is in this postal deficit is a subsidy that goes to the population in general. The people that get the benefit of these publications are not necessarily the publishers. Senator DIRKSEN. Of course the publishers are in business for private profit. I am just wondering, in expanding out logically the theme that you just advanced here, whether that should be the basis for that kind of a subsidy in the interest of diffusion of general knowledge. If you are dealing with a nonprofit organization, that is another thing. Mr. LEBHAR. We do not apologize for making a profit. I think that is in the interest of the economy of the country. One of the previous witnesses said there should be no distinction between nonprofit publications and profit publications, so far as this particular question is concerned. If that type of service serves a useful purpose, the fact it makes no profit is commendable, but certainly we ought to be allowed to make it. There should not be a generalization. Senator DIRKSEN. I fancy if we tried to put every governmental service on that basis we would have a permanent unbalanced budget. The CHAIRMAN. I think what we are trying to do here is follow the pattern, more or less, that has been set up in previous years, where we have tried to balance the budget here after deducting a lot of these things that are charged up to the Post Office. As far as increasing the rates, I think it is almost imperative that the rates be increased somewhat to meet the advance in cost of doing that service that has been done in the past and we hope to do in the future with the same degree of efficiency. We are going to have to have the money from somewhere to give the same degree of efficiency, even with no improvement, and we certainly hope we will have improvement in the Post Office like we have in other departments. That is what we are facing. Mr. LEBHAR. Of course one of the troubles with the Post Office Department is that in certain phases of the service, parcel post, and things of that kind, it is deliberately competing with private enterprise, which could do it better, more efficiently at less cost, and yet they are taking up the slack on that which they are taking away from private business, which could do it much better. Senator BUTLER. And also other departments of the Government are sending out millions of magazines at the total expense of the taxpayers. The CHAIRMAN. Not only the cost of sending it through the mails, but getting up the information, printing it and handling it, and all the other costs. Senator BUTLER. That is right, not only the cost of mailing but gathering the information and everything else. Mr. LEBHAR. Mr. Chairman, may I make myself clear. I was not suggesting that the service of the Post Office Department should be free to all, the same as the Department of Agriculture and the other departments to which I referred. I say if after paying a reasonable cost, according to the pattern which has been followed, there does remain a relatively small deficit, that is not anything we should grieve about too much, since the service is so important and everybody shares in it. In other words, the taxpayer gets back something for the taxes he pays to the Post Office, to the extent it is not paid for by the users of the postal service. The CHAIRMAN. What Senator Butler said is true. Where we are in competition with private industry we have to keep in line somewhat with the prices charged by private industry. If we do not, we put that private industry entirely out of business. Mr. LATIMER. Mr. Chairman, for the record, may I answer the question that the witness propounded earlier in his testimony with reference to the one-eighth-cent minimum in second-class. That was arrived at by the Post Office Department simply requiring that regardless of how small a piece is, since the rate is on a pound basis, that there would be something derived from it. For instance, there are pieces of mail that go through second class that are considerably less than 2 ounces. You can readily see this one-eighth cent would render those pieces at a very fraction of a cent, not as high as one-eighth, so it was somewhat of an abritrary figure to set up a minimum, so when the letter carrier walks to a house with one piece of mail at least there will be a charge of one-eighth of a cent as a minimum. There might be one exception stated to that, and that is the one exception in second class, where a piece of second-class mail would be delivered without any revenue whatever, and that is the free in county newspaper. It is interesting to note that the newspapers that have spoken on this at all have spoken in opposition to the free in county, which is not to imply that all newspapers are opposed to the free in county. Mr. LEBHAR. I might say I suppose the committee is familiar with that principle. That principle is recognized with regard to thirdclass postage where you have a minimum of 1 percent per piece in the same bill. The CHAIRMAN. Are there any other questions? Senator DUFF. Is there any testimony anywhere, or any statement by the Post Office Department as to what the cost is as compared with what they receive on the basis of the present rates and, if so, what is it? Mr. LATIMER. The statement, Senator Duff, is this-and these are approximate figures, depending on volume-the approximate cost, according to the cost ascertainment system, to the Post Office Department of handling second class today is $240 million annually. Their approximate revenue is $40 million, or actually $41 million. So the difference, call it what you please, the difference between the cost of handling second class and the revenue derived from second class. again according to the Post Office Department cost-ascertainment method, is $200 million annually. Does that answer your question? Senator DUFF. That is it exactly. The CHAIRMAN. The second class is more out of line then than any other of the other classes. Mr. LATIMER. It is the heaviest contributor to the deficit. Senator DUFF. That is what I was trying to develop. It is out of this category that your heaviest deficit occurs. Mr. LATIMER. On the percentage basis, because the volume of second class is less, we will say, than some of the other classes. Senator DUFF. You have answered my question. Senator BUTLER. Would it be possible to have in this record an accurate description of all pieces of mail falling within second class? The CHAIRMAN. Yes. Senator BUTLER. Because I don't know what they are. Mr. LATIMER. I think Mr. Bouton could answer the question at this time. Mr. BOUTON. I could just state generally there are three acts of Congress which provide for this second-class privilege, the 1879 act, the 1900 act, and the 1912 act. The CHAIRMAN. Would you mind getting those acts and putting them in the record at this point? Senator BUTLER. Either that, or a summary of what they contemplate. I would like to know what second-class mail is. Mr. BOUTON. There are 25,000 publications throughout the country entered on that class of mail. Of course, it does constitute a big volume of mail, over 2 billion pounds annually. The CHAIRMAN. Since you raised the question, I think it would be good for the information of the Senate for someone to break down in general terms what is in second class, what is in third class, what is in first class, and what is in fourth class. Senator BUTLER. I would like to know more in detail exactly what each class contains, because it may be necessary, during these hearings, in order to get at some equitable solution of this problem, to reclassify the mail. The CHAIRMAN. We may want to take some of it from third class and put it in second class, or from fourth class and put it in third class. (The information requested is as follows:) First class (limit 70 pounds): Letters and written and sealed matter. Postal cards and post cards. Second class (no limit of weight): Newspapers, magazines, and other periodieal publications which have been admitted to the second class of mail matter under the provisions of 39 U. S. C. 224, 227, 229, and 230. There are at present 25,000 publications admitted to this class of mail. Third class (limit 8 ounces): Circulars and other miscellaneous printed matter, also merchandise. Books (including catalogs), seeds, cuttings, bulbs, roots, scions, and plants. Fourth class (over 8 ounces): Limit of weight, 70 pounds. Merchandise, books, printed matter, and all other mailable matter not in first or second class. The CHAIRMAN. Mr. Bogin. STATEMENT OF BENJAMIN BOGIN, VICE PRESIDENT, THE CONDE NAST PUBLICATIONS, INC., GREENWICH, CONN. Mr. BOGIN. I am Benjamin Bogin, vice president of the Conde Nast Publications, Inc. STATEMENT OF THE CONDE NAST PUBLICATIONS, INC. This statement is submitted by the Conde Nast Publications, Inc., in connection with the consideration of the proposed bill S. 1046 and more particularly in connection with those sections of the bill establishing a new schedule of rates for second-class mail. free to all, the same as the Department of Agric The CHAIRMAN. What Senator Butler said in competition with private industry we ha what with the prices charged by private ind put that private industry entirely out of bus Mr. LATIMER. Mr. Chairman, for the reco tion that the witness propounded earlier in ence to the one-eighth-cent minimum in rived at by the Post Office Department sim less of how small a piece is, since the rate there would be something derived from i pieces of mail that go through second clathan 2 ounces. You can readily see this e those pieces at a very fraction of a cent, it was somewhat of an abritrary figure 1 the letter carrier walks to a house with will be a charge of one-eighth of a cent There might be one exception stated ception in second class, where a piece delivered without any revenue wha county newspaper. It is interesting t have spoken on this at all have spo county, which is not to imply that a free in county. Mr. LEBHAR. I might say I suppo that principle. That principle is class postage where you have a mi same bill. The CHAIRMAN. Are there any Senator DUFF. Is there any tes by the Post Office Department as what they receive on the basis of t Mr. LATIMER. The statement. approximate figures, dependin according to the cost ascertain ment of handling second class approximate revenue is $40 1 difference, call it what you pl handling second class and: again according to the Pomethod, is $200 million ann Senator DUFF. That is it. The CHAIRMAN. The seco other of the other classes. Mr. LATIMER. It is the h Senator DUFF. That is y this category that your he Cody . after wn to, had any ake in dedvertising, at least pay 1 prove that ggest what I ers in general. way in which our paper bills, |