The CHAIRMAN. You have already got them paying 100 percent Mr. Cox. Sir, you wrote into the law that the impact-the effect of rate increases on business mail users, et cetera, is a matter that will be taken into account. If I remember correctly the history of that part of the law, it was intended that the need to ease sudden imposition of the full load of trying to put Postal Service on a self-sustaining basis, as that load rests on each of the different classes and categories of mail, would be taken into account in these proceedings.

The CHAIRMAN. You are saying then that if this case were to arise, it is loaded onto first-class mailers, third-class mailers, the other special services; is that it?

Mr. Cox. Sir, I am saying that just as in the first Rate Commission proceeding, where they set the rate in terms of coverage of attributable costs on second-class mail a great deal lower than on any other class of mail-just as they did that in that first proceeding, they could do it again in subsequent proceedings and possibly proportionately still lower.

The CHAIRMAN. And that would be still more that you would take from the first-class mail users or third class

Mr. Cox. Yes. To turn the thing around, if Congress saw fit to appropriate substantial additional subsidies and directed them specifically to lighten the load on second-class mailers, then there would be that much less load to place on the other

The CHAIRMAN. That is why we are here.

Mr. Cox. I understand that. I hope that you understand, sir, that to some extent the Rate Commission can take these matters into account.

Senator FONG. One more question. Is $345 million the right amount or $50 million the right amount or $100 million the right amount? We are asking that this be phased out in 10 years, from 5 to 10. What will it do to the profit picture? Is that sufficient or is that too much? These problems are problems which I will not be able to answer until I have expertise help. I do not think I can get it in this committee. Mr. Cox. We understand that point of view, sir.

The CHAIRMAN. Hopefully we will get it from these experts.

We must proceed. I want to thank you very much for going through this tortuous process with us because we have got to refine this in the best way that we can, and we are very grateful to you, General Klassen, for enduring this. You will be back, I am sure, because as we go through the various problem areas we will need the best judgment we can obtain.

We want to thank each of you in turn for your contribution here this morning.

Thank you very much.

Senator FONG. I am sorry I did not hear your statement, General Klassen, but I will read it.

Mr. KLASSEN. I want to thank you, Mr. Chairman, and members of the committee for the privilege of being here this morning.

The CHAIRMAN. Senator Nelson, I appreciate your patience here, and likewise appreciate that fact that you may have other commitments. Please proceed in whatever way you wish to expedite your appearance to your advantage.

STATEMENT OF HON. GAYLORD NELSON, A U.S. SENATOR FROM THE STATE OF WISCONSIN

Senator NELSON. That is the phrase which I use when witnesses appear late before my hearings.

Mr. Chairman, I appreciate the opportunity to appear this morning before the Senate Post Office and Civil Service Committee to discuss the various issues and legislative proposals relating to postal rates for second-class publications.

The second step of the permanent postal rate increases for secondclass mail announced last year by the Board of Governors of the U.S. Postal Service will become effective on July 6, 1973. This second step will represent another significant increase in postal rates for newspapers, magazines and important journals of information and opinion in this country since the Postal Reorganization Act of 1970.

In February 1971, the newly formed independent U.S. Postal Service requested rate increases for second-class mail that would have averaged 143 percent over a 5-year period. When this proposal was instituted on a temporary basis in May of 1971, I became concerned that this dramatic increase would be such a financial burden that it would effectively silence some of the most independent journals and publications in this Nation, and stifle the free flow of ideas and information throughout the country.

For 178 years, Congress provided direct legislative support for the wide dissemination of printed publications through the mail, and set lower postal rates for this matter. In creating an independent U.S. Postal Service, I do not think that Congress intended to reverse this historic policy, nor put aside its concern for the basic educational and informational services, which this self-governing Nation requires, and which the U.S. mail uniquely provides.

On June 28, 1972, I introduced legislation (S. 3758) in the 92d Congress to reemphasize the 178 years of direct congressional support for the dissemination of news, opinion, scientific, cultural, and educational matter through the mails.

On June 29, 1972, the Board of Governors of the U.S. Postal Service announced that so-called "permanent" postal rates would be placed in effect. Two days after last year's Independence Day celebration, second-class postal rates were "permanently" increased an average of 127 percent over a 5-year period.

With the second step of these "permanent" increases facing secondclass publications this summer, we must be particularly concerned about the impact of these increased rates upon the smaller, more specialized and less profitable newspapers and magazines which fuel the national competition of ideas with new thoughts, divergent opinions, and singular points of view. It is these voices-the little press, the controversial, the opinion press-which serve the specialized interests of some Americans and the basic interest of all America. Their voices may not be heard or acknowledged in the corporate boardroom of the U.S. Postal Service, where the singular preoccupation appears to be efficiency and size, but I do hope that the case of the small but vital independent voice of journalism will be heard and appreciated in Congress.

The proposition that a healthy free country depends upon the wide distribution of diverse information and opinions by newspapers and periodicals circulated through the mail is just as valid in 1973 as it was in 1792 when Congress first put this principle into law. Accordingly, I reintroduced legislation on January 31, 1973, which would reaffirm the historical principle of congressional support for the wide dissemination of a diversity of thought and opinion through printed publications circulated by mail. This bill, S. 630, is co-sponsored by 21 Senators and is one of the measures before the committee for hearings today.

First of all, S. 630 would amend the policy section of the Postal Reorganization Act of 1970 to make it expressly clear that the Postal Service has an "obligation" to provide postal services at rates which will encourage and assist the wide publishing and circulation of information and differing points of view on all issues of interest to the country.

Second, this bill would set the second-class postal rates at the level of June 1, 1972 for the first 250,000 issues of newspapers and magazines sent through the mails. These rates include the approximately 33% percent increase in rates that were put into effect on a temporary basis in May 1971. This provision would be of particular support to the smaller, almost non-profit independent journals of opinion that already exist. It would also encourage the entry of new publications of this type, and provide continuing outlets for divergent views and fresh ideas.

Any future increases in second-class rates for issues over the 250,000 ceiling would be phased in during a 10-year period under S. 630. This 10-year period would apply only to increases on editorial content: any increases for advertising material would be implemented during 5 years, as is presently the law for both categories.

Finally, and perhaps most important for many small publications S. 630 would expressly write into law longstanding congressional policy against per-piece surcharges on individual issues of secondclass publications. Under the present rate structure, these per-pie ce sur-charges are particularly damaging to the smaller journals.

While the impact of charges based strictly on weight may sometimes be offset by publications turning to a reduced format or lighter weight paper, a set charge for each copy wipes out this advantage and discriminates against the smaller publication which has done everything it possibly could to reduce mailing costs. These per-piece surcharges may increase postal costs hundreds of percent for some publications, particularly endangering those newspapers and journals sent in the mail which are virtually non-profit and unable to shift the burden of the increases to either subscribers or non-existent advertisers.

There is no doubt that the interests of the larger profit making publications are seriously affected by increased second-class postal rates and deserve some attention in any legislation which is to be considered by the Congress. It cannot be emphasized too strongly, however, that it is the threat to the very existence of the small independent voices that is posed by the excessive rates which bases the case for any legislative relief, and not the guarantee of profits for larger publications. This is the main premise of S. 630. Any legislative proposals dealing with second-class postal rates must recognize that the public interest in the wide circulation of diverse sources of opinion

and information comes before the private interest in the financial success of any one publication.

The case for congressional action to insure that a wide and diverse spectrum of published voices is heard in this Nation is imperative; it is also historic and based in the philosophy of democratic self-government.

Vigorous public discussion of politics, business, science, education, literature and other matters of national importance has always been an important indicator of a healthy, pluralistic democratic society. When all viewpoints are heard, when all information is being freely exchanged, and when all ideas are openly examined and challengedthen self-government is at work.

The search for a wide range of information, and unfettered inquiry and discussion, have been the methods of seeking moral and political truth since the time of the Greeks and the Socratic dialogs. As explained by Aristotle:

The ability to raise searching difficulties on both sides of a subject will make us detect more easily the truth and error about the several points that arise.

In a democratic society such as the United States, the necessity for an active pursuit of information and opinion is perhaps best explained by Walter Lippman in a passage from "The Indispensable Opposition" published in The Atlantic Monthly in 1939:

The unexamined life, said Socrates, is unfit to be lived by man. This is the virtue of liberty, and the ground on which we may best justify our belief in it, that it tolerates error in order to serve the truth. When men are brought face to face with their opponents, forced to listen and learn and mend their ideas, they cease to be children and savages and begin to live like civilized men. Then only is freedom a reality, when men may voice their opinions because they must examine their opinions.

From the earliest days of this country, our national leaders have recognized that the essential service of keeping the American people informed about a diverse range of ideas and opinions is best performed by the widest possible distribution of newspapers, periodicals, and journals of opinion.

For 178 years, Congress provided very specific and precise encouragement and assistance for the national distribution and wide. dissemination of newspapers and magazines. Historically, the Congress of the United States has provided these publications with the benefits of favorable rates in the use of the U.S. mail. Since 1792, the low postal rates which have been set by Congress for distribution of printed publications through the mails have been recognized as a form of national subsidy justified by the educational function and contribution to the self-governing aspects of citizenship.

The act of February 20, 1972, 1 Stat. 232, gave newspapers a preferential charge of "one cent, for any distance not more than one hundred miles, and one cent and a half for any greater distance" while single letters were to be charged from 6 cents to 25 cents depending upon the mileage. Two years later, this preferred treatment was extended to magazines and pamphlets in the act of May 8, 1794, 1 Stat. 354, 362.

Subsequent actions of Congress expanded the preferential postal rates given to newspapers and magazines, and in the Classification Act of 1879, newspapers and magazines were placed in the second-class.

In describing the Classification Act of 1879 on the House floor, Congressman-and later Sentor-Hernando DeSoto Money of Mississippi explained that the legislation merely carried out the historic policy of Congress:

We know the reason for which papers are allowed to go to a low rate of postage amounting almost to the franking privilege, is because they are the most efficient educators of our people. It is because they go into general circulation and are intended for the dissemination of useful knowledge such as will promote the prosperity and the best interest of the people all over the country.

This basis for the reduced rates set by Congress for the mailing of newspapers and periodical magazines was reiterated in Postmaster General Charles E. Smith's annual report for 1901:

Our free institutions rest on popular intelligence, and it has from the beginning our fixed and enlightened policy to foster and promote the general diffusion of public information. Congress has wisely framed the postal laws with this just and liberal conception. It has uniformly sought to encourage intercommunication and the exchange of intelligence.

Forty five years later, Justice Douglas emphasized the basis of a policy of reduced rates in Hannen v. Esquire, Inc., 327 U.S. 146 (1946):

The policy of Congress has been clear. It has been to encourage the distribution of periodicals which disseminated "information of a public character" or which were devoted to "literature, the sciences, arts, or some special industry", because it was thought that those publications as a class contributed to the public good.

At an early time in our nation's history, the vast changes that would occur in this country, and particularly, the developments in the methods of mass communications which have revolutionized modern society, could surely have not been foreseen. The validity of policies which are concerned with assuring sources of popular and diverse information and opinion in this country, however, are even more compelling at a time when the electronic media can report to a nationwide audience of millions the news of an event which occurred only a fraction of a second previously.

There is no doubt that the electronic media can speed a news message to a vast national audience with an immediacy which cannot be equaled in print. However, by using the public airwaves, the electronic media are dependent upon Government licenses for their very existence. As current controversy pointedly demonstrates, governmental pressures for "balance"-or some such judgment-is a constant overriding threat. And with the need to appeal to great numbers of people to pay for the expensive costs of production, it is no wonder that the electronic broadcast industry is not well equipped to present a multiplicity of opinions and divergent ideas.

The only place where controversy, dissent, criticism, and minority points of view can be effectively expressed and widely disseminated is in the printed media, particularly in the independent journals of opinion. Here, fresh ideas often see their first public exposure. It is here that traditional thoughts and established norms are challenged with uncommon vigor. In our smaller magazines and newspapers, a broad span of issues may be argued in greater depth and with a partisan passion. Complex matters can be discussed and developed over a greater period of time and transmitted to varied audiences.

While the mass media serve to efficiently communicate the common experience to the majority of the Nation, it is the little press that performs the crucial function of providing public access to new and