Those are the two points I would particularly like to make.

The CHAIRMAN. Thank you, sir, for your comments. I would have to say in fairness for the record that objectivity is a case of judgment, too. Whoever agrees with me is objective; whoever disagrees is unfair. That is generally the way we record those things, but I would submit that the Rate Commission is objective in its own lights, given the task that it has at hand.

It does not have in hand the responsibility for making policy judgments, however, over the longer pull.

I think it was historian Carl Becker at Cornell who once said: "Facts are important, but facts are an enemy. They do not speak for themselves; they have to be spoken for."

We are trying to get facts but we then have to speak for the facts, and which facts are selected, and what relationship to other facts constitutes judgment, and thus subjectivity is not always possible to eliminate. It has to be a matter of judgment.

This committee will do the best it can to strive to assess the dimensions of the problem in relation to the public interest. We are very mindful of the role of newspapers and, given the context of the committee membership as you examine it, starting with the State of North Dakota and including Utah and South Carolina and West Virginia and Wyoming, Hawaii and so on down the line, it is doubly sensitive to the importance of no area being penalized because of geography or isolation by the absence of newspapers, either dailies or weeklies.

So you have a receptive audience but you have an audience also that would like to think it is responsible as it arrives at a judgment. We will do the very best we can.

Mr. FAVOR. Mr. Chairman, I might say when I spoke of objectivitysubjectivity, I had in mind that you gave them seven criteria as to base rates, and it was my feeling that they were much more impressed with item No. 3 than with any of the others.

The CHAIRMAN. Yes, I understand that.

I have no further questions. As I say, we have been through this so many times we simply thought it was important that we have this spread on the record again because it belongs in the balance.

Mr. PRENDERGAST. Mr. Chairman, I have no prepared statement, but if you or any members of your committee think that ANPA can supply any further information to you, we would be only too happy to work it up and submit it to you.

The CHAIRMAN. We appreciate your offering that possibility, and we will have to judge it after we get the total composite of material in to see where the gaps may be or where rebuttals might require additional information. We will certainly keep that in mind, and thank you for it.

The next witness is Mr. Bob Myers, publisher of the New Republic, representing the Committee for the Diversity of the Press.

STATEMENT OF ROBERT MYERS, PUBLISHER OF THE
NEW REPUBLIC

Mr. MYERS. Mr. Chairman, I would like to introduce my testimony into the record.

The CHAIRMAN. It will be placed in the record in its entirety.

Mr. MYERS. I think that the interesting thing about the group that I am representing before this committee for the Diversity of the Press is that last week before the House committee I was representing 15 publications, and today, only a week later, it is 28.

I can assure you I have not gone out and proselytized or recruited anybody, but I have gotten a lot of phone calls and mail, and people are beginning to understand the postal rate impact, more of a cloud on the horizon, and I think anybody reading thoughtfully the Barber report will see that we may be dealing with the tip of the iceberg.

At the House hearings our committee supported the Udall bill, and I am here of course to day to support the Kennedy-Goldwater bill. They made a more eloquent case this morning than my testimony.

The thing is in supporting those bills the small publications are particularly interested in the feature that provides two-thirds rate relief on the first 250,000 mailed, and this means that over the next 10 years the rate for second-class mailing in our class will be raised over 100 percent, which is obviously over 10 percent a year.

We feel this is reasonable and responsible, and we are trying to do that. It is just these other increases, the magnitude that we discussed today, that makes you wonder how you can keep the small publications that are interested in ideas, going in the face of this kind of cost.

I would like to make three general observations about the Postal Service and the Postal Rate Commission, and I would like to talk about those as they are interrelated under the heading of competence, control and common sense.

Under the first point, on competence, the Postal Service reminds me very much of a train running out of control down the track. It has gone past the switch that says better service; it is going into a tunnel marked cost cutting, presumably it will come out the other end. It might come out on another higher level of service and costs, or it might be another Penn Central case.

If the Postal Service is worried about congressional interference in policy and what is happening in the post office today, as you gentlemen all know, if they do not do a good job, you will be right back into the postal business on a much larger scale than you ever bargained for in the past.

In regard to competence, many of these people have had very distinguished careers, and I am not in any way denigrating their ability in their chosen field, but there is a very strong input in the Postal Service and the Rate Commission from the American Can Co. and the public utility companies; telephone, electricity, and gas.

What this means to me is you generally have a group of fairly insensitive neople in terms of anything other than traditional dollars and cents. You have a group of pseudobusinessman. By that I mean people in the utility business, if things do not go well, do two things: They cut off servicing areas where they cannot seem to make enough money, or they got hat in hand, to the rate commission that they control usually, and get a rate increase.

In other words, they require a fixed return on investment. In the case of the phone company I think it is something like 15 percent. If you are not making 15 percent, raise the rates, get it approved.

This philosophy applied to the Postal Service as it relates to the magazine business I think, as the MPA's case shows, is a real disaster.

Another aspect of competence. I have talked to people in the Postal Service who allege that I am a valued customer. We spend over $200,000 a year on postage on the one hand; on the other you hear magazines stepped on by the same people as to whether it is in the national interest to disseminate information cheaply and widely. This is a decision that really it not theirs, this demonstrates their weakness in terms of public relations, in terms of running a so-called business.

On the question of control I think we have even a more serious problem. The Postmaster General has stated repeatedly that he is doing a bad job, that the Postal Service made some very serious policy decision mistakes, they concentrated too much on cost cutting and not enough on service. Apparently that kind of decision was approved by the board of governors which again has a heavy business utility input. I have not seen any of those people taking credit for how things have been going in the last few years or denying responsibility. I really do not know what they do or why these mistakes could not be repeated. I just do not see how this meshes into any responsibility. These people have $4 billion worth of public assets at least. They control 600,000 people and their families in direct employment. What they do impinges on our personal mail, business mail and so on. It affects our livelihood.

This is an enormous responsibility. Apparently so far they come up to a committee every now and then and say that things are going bad. I feel that there ought to be some way of overseeing this so there should be some feeling that somebody is running the Postal Service. I do not have that impression either from their testimony or from my own experience.

The third point on common sense is these same quasi-businessmen are sitting here telling us that the fact that 10 percent of our costs are going up 30 percent a year is a minimal thing. This makes us wonder what kind of mentality is running the Postal Service.

Do they look at their own costs that way? In other words, I do not see how you can make a statement like that, and I thought Senator Kennedy's analogy with food going up 2.5 percent a month or 30 percent a year resulting in boycotts and what not is right to the point. I just wonder about their general perception of the world they are working in, or whether they feel they have grabbed this $4 billion worth of assets and are going to run it their own way, pay themselves as much salary as they want, hire any number of Assistant Postmaster Generals, manage their own expense accounts in any way they feel appropriate.

I do not feel it is well run. As we pay more postage, I would like to think our money is well spent. I think their self-serving pleading is even worse than my own in the case of how they are approaching this particular difficult and very important problem.

Thank you.

The CHAIRMAN. I want to thank you for your comments. I would only append to your statement the reflection that we are all a lot smarter than we were a year ago or 2 years ago, and we can each look back in hindsight and wonder why certain decisions were made.

Fortunately we have the advantage of hindsight from which the trust can be shown, if we have trust at all in this business, that we will all have learned and gained by this time next year.

I am persuaded that the mistakes that have been made were honest mistakes. Educating an industrial leader or a corporate executive is no less a task than educating somebody else, and no more. But it is a problem with education, and to make a discovery as very candily admitting now that they have made, that running a business is no great parallel to running a national monopoly in public service in which service is a high criterion-it takes time to learn that.

A lot of us who could have told them that at the beginning, and tried to, probably would have flunked the test of good management, and it is a question of trying to work out the balance which we hope we may be doing, because what we seek is good service and equity in the public interest, not in a special interest or somebody else's interest, but equity in the public interest, that becomes public policy, clearly the province of this committee.

So with your help, the help of all who are contributing to these hearings, we hope to be wiser too.

We have a long way to go, and if you fellows can conceive of some new formula which will help us to win more patience, particularly among our colleagues, each of whom knows more about it than any of the members of the committee-they are all instant PMG's and they get letters from home and telephone calls from you. It does take a little time, but we hope that we are not caught making the same mistakes over again.

That is the inexcusable thing.

Mr. MYERS. This is part of the burden of what I am trying to say. We should not keep doing the same wrong thing.

The CHAIRMAN. We appreciate your input here. Your full comments will be a part of the record.

Thank you very much.

[Prepared statement of Robert J. Myers follows:]

PREPARED STATEMENT OF ROBERT J. MYERS, REPRESENTING THE COMMITTEE FOR THE DIVERSITY OF THE PRESS BEFORE THE MCGEE SENATE POSTAL SERVICE COMMITTEE, APRIL 3, 1973

I am Robert J. Myers, publisher of The New Republic magazine and representing 29 publication-American Report, Armed Forces Journal, The Center, Change, Commentary, Creem, Dissent, Environmental Quality Magazine, Guardian, The Humanist, (More) Journalism Review, The Mother Earth News, The Nation. New Priorities/War Peace Report, The New Republic, The New York Review of Books, Popular Psychology, The Progressive, Ramparts, The Right Report, Rolling Stone, Society, Southern Regional Conference, Sundance, The Texas Observer, TVBE—A Television Review, and the Washington Monthly.

All of these publications, ranging in size from 200.000 to 20,000 share the problem of the economies of scale in general, and specifically the burden of the precipitous rise in second class postage costs. They represent the whole spectrum of political opinion. I am here to support the Kennedy-Goldwater bill, which basically is the Udall bill of the House.

For many of these magazines—and I will supply the figures from the New Republic-second class postage costs are about 10% of total costs, or $100,000 per year. The next increase is scheduled for July 6 of about 30% or $30,000.

The Postal Service minimizes this fact on the grounds that postage costs are only 10% of costs. Most people in this room do not spend 10% of their income on food, yet some complaints have been heard over the 2.5% per month rise in food prices, which if they continue at this rate would be 30% per year, or the same magnitude as the second class postage rate rise.

The Postal Service butresses its arguments by citing economic prosperity of the magazine industry from propaganda statements by magazine spokesmen who can hardly go to Wall Street or Madison Avenue and say they are hurting.

No one in our Committee has said things are great or that second class increases won't hurt. The July 6 increase, if allowed to go into effect, will have a wider effect than anyone now anticipates. This is a good deal of money, every week in our case, and there is no credit arrangement with the Postal Service. The policy for the Postal Service in the Reorganization Act of 1970 is as follows:

"The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States, authorized by the Constitution, created by Act of Congress, and supported by the people. The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities. The costs of establishing and maintaining the Postal Service shall not be apportioned to impair the overall value of such service to the people."

This is what we rely on for your continuing support of magazine postal subsidies. This is not to say we don't expect to pay more. The feature in the KennedyGoldwater bill that is most helpful to small publications-all but say 50 out of 10,000-is the granting of a special rate to every magazine in America for the first 250,000 copies mailed. This would mean that over the next 10 years, our second class postage costs would go up 5.8% per year to 13.5% per year, bringing in our case the cost of mailing a copy from 1.6 to 3.48 cents.

To paraphrase the Postmaster General, our committee really gives a damn about how this committee and the Congress feels about the Kennedy-Goldwater bill. We are concerned that the Postal Service, bolstered by the Postal Rate Commission, is playing fast and loose with rates, eyeing only the costs and not the service, and ignoring postal policy in the meantime. The Postmaster General stated that he has concentrated on cost reduction to the detriment of service. What is to prevent that from happening again? Why is no one here from the so-called Board of Governors to say how they look at the Postal Service and whether they really are overseeing this $10 billion semi-public operation, or are they simply a rubber stamp? These are public interest questions and the public should know about what is going on.

Without the protection of new oversight legislation, such as the KennedyGoldwater bill, there is really no guarantee to the public or to magazine publishers that the whole magazine press could not be wiped out overnight, inadvertently or by design, through a combination of Postal Service judgments and acts, and Postal Rate Commission rulings. If this happens, it should be with the prior consent of the Congress and with an opportunity first for the public to be heard. Thank you.

The CHAIRMAN. The next witness is Mr. James Milholland, chairman of the board, American Business Press Association.

Mr. Milholland, we have your prepared statement. If there is any portion of this that you would like not to read, it is up to you. We have a little box over here in which we put "brownie" points for those who highlight their testimony, but you address yourself to it as you prefer.

STATEMENT OF JAMES MILHOLLAND, CHAIRMAN, AMERICAN BUSINESS PRESS

Mr. MILHOLLAND. We have timed this, Senator. It takes 8 minutes. The CHAIRMAN. Very good.

Mr. MILHOLLAND. Mr. Chairman and members of the committee. My name is James S. Milholland, Jr. I am chairman of the American Business Press, which includes in its membership approximately 500 specialized business publications mailed at either second-class or controlled-circulation rates. I am also senior vice president of Harcourt, Brace, Jovanovich. My company publishes business publications, books, and agricultural publications. With me is Mr. Robert Saltzstein