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something like $2,000 or $3,000 per issue for an indefinite period. I telegraphed to our Congressman, who happened to be on the other side of the political fence from me, and in two or three hours he wired me that he needed my opposition in the next campaign and had fixed the matter. I was never investigated. I have been like the driver who did not try to go near the edge of the hill, and so I have never had any trouble; but I speak of this to illustrate the possibility of the post-office oflicials going after the rascals, even though they have committed their offense months before. Is not that a practical fact, Mr. Madden?
Mr. MADDEX. No, sir.
Mr. Collins. Then why did they hold me up for twenty-four hours and scare me out of a year's growth?
Mr. MaddEx. Mr. Collins gives a good illustration of about what the publishers expect of the Department. He wanted to buy out a publication, but he wanted us to find out all about it first, so he could have a safe venture. We have not a force at hand to administer this law as it should be administered. As I said, if you will give me five or six hundred more men, and turn me loose, untie my hands, I will reduce the deficit; but I think it is better to have a new statute on this subject.
Representative OVERSTREET. Mr. Madden, to what extent is there an increase in these publications entitled to the second-class privilege? Ilow rapidly do they apply? Mr. Madden. Offhand, I should say we had 20 applications a day. Representative OVERSTREET. For new publications?
Mr. MADDEN. For new publications; yes. Here is one for illustration. It applies for entry with 500, 600, or perhaps 1,000 copies printed, and claims 500 subscribers, which will let it in under the rule that 50 per cent may be circulated as samples. Well, it gets entry, and then it branches out. The publisher goes after subscribers of all kinds. Somebody pays for 500, somebody for 10,000, somebody for 50,000, and the publisher goes down in his pocket and pays for 100,000 himself. Now he has a big circulation and gets high prices for advertising space. What is it? From his standpoint it is devoted to literary and educational purposes, but it is nothing but a combination circular, with not one in ten of the alleged subscribers actually a reader.
Mr. GREEN. Mr. Madden, what is the percentage of second-class matter? Has it increased very materially, according to your figures, in the last ten years?
Mr. Madden. It is shown in my annual reports. Do you want me to read it?
Mr. Green. It has not, according to the reports of the PostmasterGeneral, increased in proportion with the rest. It stands in about the same proportion to the rest of the mail as it has stood for fourteen years.
Mr. Maddex. I explained that as fast as we kill one abuse another bobs up perhaps in another place. It just about balances. The figures as to the actual increase in the weight of the second-class matter is given in the report of the Postmaster-General, and anybody can consult it.
Mr. Green. The percentage of increase is not stated there?
. Mr. GREEN. When you say the second class has increased so much you should say, if I may suggest it, that the rest of the mail has increased at the same rate. The ratio of second class to the rest of the mail has not varied a half of 1 per cent in ten years. I think your own reports will justify me in that statement. Mr. MADDEN. s". I stated that in 1901 the report of the Postmaster-General showed that second-class matter was about 60 per cent, and the report I have read here to-day was 67 per cent. Mr. GREEN. The percentage remains the same. Mr. Madden, might I ask you if you consider that the second class has any effect upon revenue received from the first class? Mr. MADDEN. I would answer that question with this statement. I realize that advertising bringe returns of first-class matter, but it does not make any difference at what rate the advertising is carried out in the mails. There would be just as much return from firstclass matter, no matter what rate is charged on the advertising. It is not necessarily advertisements carried at a cent a pound that produce first-class revenue. It does not make any difference whether they go at 1 cent or 16 cents a pound. The argument is made that if it were not for second-class matter there would hardly be any firstclass matter at all. I say that the business houses of the country which advertise now, if they can not advertise at a cent a pound, will pay whatever the rate may be and advertise and do business just the same and will get just as much first-class matter. Mr. GREEN. I think you are right, provided the rate is not prohibitive. Mr. GLAsgow. Permit me to ask you one other question. You suggested an increase to 4 cents a pound. Why do you fix that sum ? Mr. KRAckowizer. You are losing 3 cents all the time. Mr. MADDEN. I think my statement is that the third-class matter was only about 14 per cent of the bulk of the mail, and a reduction on 14 per cent of the mail and an increase on 67 per cent would be pretty nearly in favor of the Government on the rate question. I can not tell you just why I fixed 4 cents, but I believe that these questions that we have to consider and determine, such as I have described. ought not to enter into the questions of classification and rates at all; that it should be a question that a postmaster can decide offhand, whether it is a letter or whether it is a piece of printed matter or a piece of merchandise. Mr. GLAsgow. I understand that perfectly well, and I am trying to get information. I understand you think there should be no difficulties of classification. What I want to understand is why you fix 4 cents as the rate instead of 2 or 1 or 3 or 6 or 7 or 10? What is the reason that induces you to put it at 4? Mr. MADDEN. Because I believe that would fairly compensate the Government for the handling of the matter and asking no questions as to whether it is primarily designed for advertising or whether it has subscribers or whether it is educational or whatever it is, save that it is printed matter. Mr. GIAsgow. Is that a guess? Mr. MADDEN. Yes: a good deal of a guess. Mr. Colli Ns. It would still be a subsidy on the printed matter, would it not? Mr. KRAckowizer. Three cents’ worth.
Mr. MADDEN. It would be a subsidy on all printed matter, though, if it costs more than that to handle it. Mr. GLAsgow. Is that based on any calculations or any figures you have? I want to get some definite information that will enable us to know where we stand. Mr. MADDEN. That is based on calculations, yes; but the basis for the calculation I can not give you now, because it was made some time ago, and I do not have it in mind. Mr. GREEN. Was it not your basis at that time that increasing the rate to 4 cents would cover the deficit at the time you made that estimate, which was about a year ago, was it not? Mr. MADDEN. No, sir; it was a long time ago. Mr. GREEN. I think the statement was that if the rate had been 4 cents, it would have quadrupled the income on second class and it would have about covered the deficit. Mr. MADDEN. Perhaps so. Mr. GLAsgow. Is it your idea that the 4 cents will cover the deficit or that the 4 cents is the cost of the Government? Mr. MADDEN. It is pretty nearly to the approximate cost. Our figures are probably high, because we can not get exactly at the true cost. That is the difficulty. Mr. GLAsgow. Your idea is that the 4 cents, taking into consideration the other classes of mail, would be about the cost of transportation and handling it? Mr. MADDEN. I do not say it would pay the cost, but it would come so much nearer that we would not need to ask these questions. Senator CARTER. Mr. Madden, when computing the cost of carriage do you include the cost of maintaining the star routes? Mr. MADDEN. All costs. Senator CARTER. All costs of transportation, whether by dog team in Alaska or express train in New York? Mr. MADDEN. Yes, sir. Mr. GLAsgow. As I understand the matter, and I want to come to that question, if the other Departments of the Government paid you for the service you rendered to them, the present revenues to the o Department would pay the cost of transportation and andling? Mr. Moors. You mean to say that we would have the balance of accounts? Mr. GLAsgow. Yes. Mr. MADDEN. Yes; something like that. Mr. GLAsgow. If the Departments of the Government paid you for what you did for them, your revenues to the Post-Office Department would pay the cost of handling the mails as a whole : Mr. MADDEN. I say, if the other Departments paid for the transportation of their mail matter as the public pays, we would have no deficit; but I do not think that has anything to do with the question of determining what is second-class matter or what shall be charged for handling it. Mr. GLAsgow. Of course we will argue the question afterwards. I am trying now to get the facts on the record. The CHAIRMAN. That is a fact. Mr. GLAsgow. That is what I want to know. Then the Department to-day is self-sustaining as a whole?
Mr. Madden. I did not say so.
Mr. Glasgow. I just took the sense of the statement made by the chairman.
The CHAIRMAN. The Department would have no deficit if the other Departments were paying for their carriage of the mail.
Mr. Glasgow. Then if you did not give away service it is now selfsustaining?
Mr. MADDEN. But we give to another branch of the Government.
Mr. GLASGOW. I understand that. It does not make any difference whom you would give it to. If you would take up one branch and say the second-class matter does not pay, that there is a loss on that, then there must be somewhere a tremendous profit to take care of that loss. Where is that profit?
Mr. MADDEN. On first-class matter, third-class matter, fourth-class matter.
Mr. Glasgow. Then, so far as the question of deficit is concerned in this case, at present, if you take the whole post-office system, and look at it as a whole, without giving any of your service to any other Department free, it is a self-sustaining institution as it stands?
Nr. MADDEN. I believe so.
Representative OVERSTREET. Mr. Chairman, this is not the first time that some question or answer has appeared to give the impression that the deficit has something to do with this investigation, or this investigation something to do with the deficit. I think it is well enough, in view of that, to state at least my understanding of the province of this Commission. I do not understand that the question of the deficit has anything whatever to do with the inquiry of this Commission, nor whether there is any deficit or not. That is a matter of bookkeeping.
Mr. Glasgow. I was using the first clause I see here in the announcement of the Commission:
Whether the revenue from the second class of mail matter should not be made commensurate with the actual cost of the service rendered in handling it, and whether its classification should not accordingly be grounded upon practical rather than ideal distinction?
Representative OVERSTREET. I do not think the Commission has anything to do with the question whether there is a deficit or whether there is not a deficit, nor with what the relation of the loss of revenue may be to the deficit. We are dealing with one phase of the postal service, the second-class matter, and its relative proportion both of receipts and expenditures, to the other branches of the service. So that as an independent matter, even if we did not pay anything for transportation and if we collected full postage from the other, Departments of the Government, there would still be room for inquiry relative to the second-class matter of mail. That is my understanding of the Commission's work.
Senator CARTER. In further illustration of that, Mr. Madden, it would be your contention, as I understand, that if the Government paid nothing at all for the transportation of mail we would still lose 1 cent per pound on second-class matter, on the mere handling of it?
Mr. MADDEN. Senator, I did not get your question correctly, Senator CARTER. As I understand your contention, it is that if
the Government paid nothing at all for transporting mail, inasmuch as it costs 2 cents a pound to handle the second-class mail matter, the Government would lose 1 cent a pound on the mere handling, entirely independent of the question of transportation? Mr. MADDEN. Yes, sir; according to the figures given. Mr. GLAsgow. Mr. Chairman, the point of my inquiry, was addressed to the first clause here, which I have just read. I will read it again: The Commission deems it advisable to direct its inquiries especially along the following lines: 1. Whether the revenue from the second class of mail matter should not be made commensurate with the actual cost of the service rendered in handling it, and whether its classification should not accordingly be grounded upon practical rather than ideal distinction?
The CHAIRMAN. That eliminates the question of transportation. Mr. GLAsgow. I understand that, but I wanted to see if the question of deficit could not be entirely eliminated from this investigation as far as cutting any particular figure in it is concerned. Now, I want to ask Mr. Madden one other question. You say if you take the second-class matter and entirely eliminate the transportation, there is a loss of a cent a pound on the handling. Mr. MADDEN. I read from the report of the Postmaster-General Mr. GLAsgow. That is what I understood your answer to be. My question is this: Do you mean to say that the cost of handling secondclass matter is anything like the cost of handling first-class matter? Mr. MADDEN. I do not think it is as much as handling first-class Imatter. Mr. GLAsgow. Is not an enormous amount of money, running up into the millions, paid for handling first-class mail in which the second-class mail does not participate at all? Mr. MADDEN. I do not get you question clearly. Mr. GLAsgow. Are not millions of dollars paid every year by the Department for handling first-class mail for the service of men who do not handle second-class at all? Mr. MADDEN. I can not answer that question exactly. There is no segregation of the classes for any particular number of people or post-offices. Mr. GLAsgow. I want you to tell me how you can work it out that there is a loss of 1 cent a pound on handling second-class mail outside of the railroad charges. Mr. MADDEN. The Postmaster-General reported that it cost at least 2 cents a pound to handle it, and I took his calculation. I said if we receive 1 cent and it costs 2 we lose 1. Mr. GLAsgow. Yes; but you know it is more expensive to handle first class than second class. Representative OverstREET. The administration of transportation does not come under your bureau, I believe, Mr. Madden : Mr. MADDEN. No, sir. Representative Qvens.TREET. Those questions would perhaps be more properly addressed to the Second Assistant Postmaster-General, who is more familiar with matters of transportation. Mr. GLAsgow. Very well, sir. I was struck with the answer to the Senator's question, as that seems to me an important matter.