Senator MCKELLAR. Would you mind explaining what it had to do with it?

Mr. GARTLAND. It will cost approximately $150,000,000 for the fiscal year.

Senator MCKELLAR. That is about the amount of your deficit, is it not? It is not far from it?

Mr. GARTLAND. Our deficit this year is about $55,000,000 thus far estimated.

Senator MCKELLAR. That is one-third of it?

Mr. GARTLAND. That is right.

Senator MCCARRAN. Is that computing the increased salary, the increased pay?

Mr. GARTLAND. That is right; yes, sir.

Senator MAYBANK. You said "thus far," do you mean to date? Mr. GARTLAND. That is our best estimate. We have the actual figures to February 1, 1946.

Senator MAYBANK. That is for the entire year?

Mr. GARTLAND. For the first 7 months that is, we have the actual figures.

Senator MCKELLAR. On that basis it will amount to $155,000,000? Mr. GARTLAND. No; that is $55,300,000 for the year which is an estimate based on the experience of the first 7 months.

MAIL FOR ARMED FORCES

Senator GREEN. The point I am trying to bring out is this, and you have not brought it out, and I think it is in your interest to do so. If this huge mail in relation to the armed forces had been paid for at current rates, you would have carried it at about cost, but since there is some $47,900,000 that is carried by frank, that would more than cover the deficit for the year, would it not?

Mr. GARTLAND. That is true, with this exception, Senator, now the forces are demobilizing and in 1946 there will be comparatively little. For 1945, that is true, for 1945 it would have amounted to a large amount of money.

Senator GREEN. I am trying to help you get it on the record that that would account for the deficit, and you will not say so. I do not know whether it is true or not. You know more about it than I do.

Mr. GARTLAND. For 1945, there was a surplus. We did not need the credit of $47,900,000 to help overcome a deficit. For 1946, however, the forces are demobilizing so rapidly that we have no estimate as to what revenues we might receive if postage were being paid on mail sent free by the armed forces.

ITEMS CONTRIBUTING TO DEFICIT

Senator MCCARRAN. Will you give us the items, or itemize what goes to make up what you term "deficits" for 1946? Tell us what items go in to make up this deficit?

Senator MCKELLAR. What are your big losses on?

LOSSES ON SECOND-CLASS MATTER

Mr. GARTLAND. Our losses are, our largest losses are, of course, on second-class matter.

Senator MCKELLAR. What is the amount of that?

Mr. GARTLAND. That is approximately $108,000,000 for 1944 and $117,000,000 for 1945.

Senator MCKELLAR. What is your next largest item?

LOSSES ON PENALTY MAIL

Mr. GARTLAND. We have penalty mail, and we would estimate on penalty mail the loss was $30,745,000 for 1944 and $28,629,000 for 1945. There were items amounting in 1944 to a total of $126,639,650, and slightly less in 1945, which would have brought that amount of revenues to the post office had postage been paid on them and which under the act of June 9, 1930, are "separately classified on the books of the Treasury and the General Accounting Office, respectively, in stating the expenditures made from the appropriation to supply the deficiency in the postal revenues."

Senator MCCARRAN. The penalty mail appears to be quite an item. Mr. GARTLAND. Yes, sir; it is a very heavy item. The postage on it would have been $124,549,269 in 1944, though the actual cost of handling it is estimated at $30,745,452.

Senator MCCARRAN. Running toward your losses?

Mr. GARTLAND. Yes, sir.

Senator MCCARRAN. Now my recollection is, Mr. Chairman, and I will be corrected in this, I hope, that we make appropriations here for the mailing from departments.

Senator MCKELLAR. That goes into the Treasury.

Senator MCCARRAN. It seems to me that that would reduce the penalty mail loss considerably.

Senator MCKELLAR. No; it is a matter of bookkeeping, it is entirely a matter of bookkeeping. Also, the losses are shown. They show big losses on the books.

EFFORTS BEING MADE TO REDUCE DEFICIT

What sort of chance have we during the coming year, in your judgment, to reduce the amount of the loss or of the deficit in the oncoming year?

Mr. GARTLAND. The Post Office Department is watching every single item that there is. The First Assistant has cut down, for instance, and also the Second Assistant and the Fourth Assistant, overtime which is paid for at the rate of time and a half; and that is exactly why they need more men in the Department in Washington, so that they can carefully go over the estimates made by the postmasters throughout the United States and cut wherever it is possible. These come in so rapidly, and the force is so small that they are just not able to do it.

UNDERSTAFFING OF CERTAIN OFFICES

Senator MCCARRAN. Now right in there, my very small observation is that in many post offices during the past year and at the present time, they are very much understaffed, and very short-handed. Now, certainly the staff will have to be augmented in the post offices

throughout the country, and I do not see how you can handle the work without augmenting the staff in every post office.

Senator MCKELLAR. I think where the staff seems to be underestimated are in those places that have grown up rapidly after the war, like Oak Ridge, Tenn. You have difficulty in keeping enough men there to do the work, as I recall. It is only memory from my part, but I imagine that that is where it is. You take the post offices throughout the country, where enormous works have been accomplished in ordnance plants and various other kinds of plants throughout the country, the war has brought that about.

Now, what I am driving at is, have you had an examination made or an estimate made as to what might happen during this next year? I am very much in hopes that we can reduce this deficit. Have you any such hopes?

INCREASE IN VOLUME OF SECOND CLASS AND PERMIT MAIL

Mr. GARTLAND. We do not see any just now, Senator, as long as economic conditions are as they appear to be throughout the country now. Our revenues are falling, although this is a most interesting thing. Our work keeps up in post offices, for instance, second-class mail has increased 25 percent, and permit mail, which is mostly advertising, has increased.

Senator MCKELLAR. We are losing money on that. It is unfortunate that that is increasing where we are losing the most money.

Mr. GARTLAND. That is true, and that is why it is commented upon when we ask for more help and our revenues are less, because the work keeps up. We have more pieces of mail, but we get less money for it.

SALARIES, FIRST ASSISTANT POSTMASTER GENERAL

Now, the First Assistant Postmaster General, Mr. Donaldson, is here, and on these matters which are under discussion now, he is able to explain in his bureau about these things, because in his bureau they spend approximately $840,000,000 of our entire appropriation.

Senator McKELLAR. I think that we had better talk to Mr. Donald

son.

What is it you have that you want to tell the committee? I will ask the committee to call on you for any information that they want. Mr. DONALDSON. Before I speak of the two items that are involved in the request for restoration, I would like to add to what Mr. Gartland has said with reference to our surplus for the fiscal year 1945, as compared with our deficit for the fiscal year 1946, and that is especially with reference to the question that you asked, Senator, concerning this military mail. During the peak of the war, when we had about 11,000,000 people in the military service, as Mr. Gartland has stated, there was about an average of six pieces of mail per week, or almost one piece per soldier per day going to the soldier. All of that mail had stamps on it. That was mail from the friends at home going to the soldier, and about 58 percent of that carried air-mail. stamps, 6-cent air-mail stamps.

f

AMOUNT OF MAIL HANDLED AT PEAK AND NOW IN NEW YORK CITY

At the peak, at New York City alone, there was about 6,000,000 pieces of mail going through that office daily, and at the present time there is only half a million pieces. That accounts for a great reduction in revenue, this year over 1945.

Senator MCKELLAR. When you are having 10,000,000 pieces of mail passing through the post office, that is, through New York on their way to soldiers in Europe and the Far East, you have a great many more employees. Now, did you reduce the employees when that condition changed?

Mr. DONALDSON. Yes, sir.

REDUCTION IN PERSONNEL IN NEW YORK

Senator MCKELLAR. How did you bring that reduction about? Mr. DONALDSON. The postmaster at New York had the largest task of any postmaster at the ports of embarkation. While normally that office employs about 25,000 people, including custodial service and all other postal activities, at one time he had on duty approximately 43,000 people there.

It is true that part of those people were part-time employees, but most of those people he took on were not efficiently equipped to do the work of an experienced postal person. As this mail is falling off, the postmaster is just reducing his force. Those people were what we call war-service employees, and the force has been reduced.

Senator MCKELLAR. You say that they went up from a normal of 25,000 to a peak of 43,000. That is a difference of 18,000 people. Now that is a lot of people and a big increase. How much have you decreased it since the work has reduced? Have you any figures on that?

Mr. DONALDSON. The decrease was very rapid by laying off as they usually express it, of these temporary employees, a great many of whom were women, and more or less recently the further reduction of that force has not been permissible due to the great amount of mail that is being handled in New York City for the liberated countries, and the taking over by the post offices duties formerly performed by the Army port of embarkation and the Navy fleet post office.

REVENUE FROM PARCEL POST PACKAGES TO LIBERATED COUNTRIES

On Monday of this week there were 157 carloads of parcel post mail in New York City for dispatch to liberated countries.

Senator MCKELLAR. Let me ask you another question. Do we make anything at all on that mail?

Mr. DONALDSON. Yes, sir.

Senator MCKELLAR. That brings in some income?

Mr. DONALDSON. That brings in some revenue.

Senator MCKELLAR. Not large, not proportionate, but you get some revenue from that?

Mr. DONALDSON. Yes, sir.

Senator MCKELLAR. All right, go ahead.

Mr. DONALDSON. So the force has been reduced in New York City and will be further reduced as fast as this international mail volume is decreased, and it will be reduced to normal. I think by the end of this fiscal year, perhaps in New York City the force will be slightly above its normal force, in normal years.

DISCONTINUANCE OF OVERTIME PAY

In other offices the same thing has happened. In addition to that we have ordered all postmasters to discontinue the paying of overtime for Saturday service. As you know, the law authorizes a shorter workweek for employees, which means that if any employee works on Saturday, he must be given compensatory time off for the work he performed on Saturady, during one of the five work days of the next week. During the war when we could not get manpower, Congress authorized us to pay overtime in lieu of granting compensatory time, at a straight-time rate.

Public Law 134, effective July 1, made it mandatory for us to pay them time and a half for Saturday's service, and any service performed on Saturday was paid at time and a half rate over and above their basic salary rate. We have instructed postmasters to go back to the 40-hour law on a 5-day week and grant compensatory time for work performed on Saturdays, wherever the manpower is sufficient.

Senator MCKELLAR. What kind of saving does that bring about? Mr. DONALDSON. It means that an employee working as a temporary employee, would get 84 cents to 94 cents an hour, while a regular employee would get about $1.80 an hour. It is about $1 an hour more for Saturday service than it would be for service during the 5 days of the week. That means, of course, when you grant compensatory time for Saturday's service that our forces must be built back up to be sufficient force in an office to permit these employees to be off for the work that they performed on Saturday. That will mean our forces will have to be built back up to where they were before the war.

MANPOWER SITUATION

Senator MCCARRAN. Can that be done now, Mr. Donaldson? Can we find the people to fill those places?

Mr. DONALDSON. With the exception, Senator, of a few places where the manpower situation is bad yet, most offices have gone on a 40-hour week. For instance, New York City has not paid anything for overtime on Saturday service since October 13, and Chicago is not paying anything for overtime for Saturday service, and most all of the large offices in the country are not paying it now.

Senator MCKELLAR. Where do they get those employees?

Mr. DONALDSON. They are returned veterans and employees released from industry, Senator. At one time, Chicago was having as high as 100 applications a day from veterans for temporary work.

Senator MCKELLAR. What does that pay? Now, suppose that I am a returning veteran, and I walk into the post office and make proper application, and I am put to work. What does that pay me?

Mr. DONALDSON. As a temporary employee, 84 cents an hour.