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The VICE-CHAIRMAN (Representative OVERSTREET). Before the secretary begins reading your written statement, may I ask you what is your present official position?
Mr. HUBBARD. I am the assistant postmaster at Chicago..
The VICE-CHAIRMAN. Had you any experience in postal affairs prior to that?
Mr. HUBBARD. I had. I was appointed as clerk in the Chicago post-office in 1871. I went into the mailing division of that office and there learned schemes of distribution. From there I was transferred to the registry division. Afterwards, in a year or so, I was appointed to be the correspondence clerk of the office and later I was transferred and appointed superintendent of delivery, remaining in the service from 1871 until 1881, returning to the service May 1, 1889, and in continuous service since that time.
The VICE-CHAIRMAN. Now, Mr. Glassie, you may read Mr. Hubbard's statement.
The SECRETARY. Mr. Chairman and gentlemen of the Commission, I regret very much that Mr. Hubbard can not read this himself, to bring out the points more distinctly, but I shall do my best. The paper is divided into sections, and is as follows (reading):
SECTION 1.—THE SELF-SUSTAINING RATE OF POSTAGE.
Reduced to a practical proposition, the question of second-class matter is a question of revenue.
True, we have been accustomed for years to the idea that, as a matter of principle, it is part of the duty of Congress financially to assist in the dissemination of information of a public character. When the practice which followed the application of this principle was first begun, the main intent of Congress, as I understand it, was to aid in the dissemination of intelligence--that is, news, in the restricted meaning of the work formerly current—by carrying newspapers in the mails at a reduced rate of postage. But the practice has since been extended so as to include periodicals and publications issued by educational and fraternal associations. We are realizing to-day, however, that it has gone too far, and that it is seriously crippling the resources of the Post-Office Department. We are obliged to admit that a practice which once commended itself to the best minds of the country needs modification when its operation is shown injuriously to affect the community by decreasing the efficiency of the post-office, the great business Department of the Government.
Therefore your commission is very properly met to consider means for relieving the Department and the country from the financial burdens which the present situation entails.
No one acquainted with the facts but must concede that such a situation now exists in the Post-Office Department to a greater extent than ever before; and I am pretty well convinced that unless come thoroughgoing legislation is enacted by Congress it will soon grow worse, because it is apparent that the Post-Office Department has exhausted its power further to diminish the abuses inseparable
from existing conditions by means of the regulative authority vested in the Postmaster-General. And perhaps I have a right to observe here that I consider—and my opinion is shared by those conversant with the facts--that what has been accomplished by the Department in the last five years, through a sane and sensible interpretation of existing statutes, has been of extraordinary benefit to the service and to the country at large.
Still even the reforms successfully introduced by the Department, useful and beneficial as they have been, are quite powerless to stay the annual deficit in the postal revenues, for the saving effected by these reforms, as well as the large profits from the postage on firstclass matter, have been absorbed by the losses which followed the rapid increase in the circulation of newspapers and periodicals admitted to the mails at the pound rate of postage.
With the present low price of paper, compared with what it formerly was, and the small cost of composition, made possible by the invention of type-setting machines, there is absolutely nothing to check the growth in number and in circulation of publications legally entitled to the second-class rates of postage. In ten years I predict the circulation of newspapers and periodicals will be 50 per cent greater in proportion to the population than it is to-day. We are at the beginning of a period in which the use of printed matter for all sorts of purposes will be on a scale undreamed of even a decade ago; and, as a matter of course, the burden and the cost of distributing the bulk of this output will have to be borne by the revenue of the PostOffice Department and the money which Congress may appropriate to meet the annual deficiency.
I am not sanguine of producing a lasting improvement in the situation by anything short of a radical change in the intent and purpose of the classification law. Still I deem it possible to modify existing conditions so as to provide an increased revenue from second-class matter, or, at least, to effect an economy in the cost of handling such matter, which would practically amount to the same thing.
This subject I shall deal with more fully later on, and for the present confine myself to the inquiry marked - No. 1” in the Commission's announcement.
To ascertain the exact cost of handling and transporting secondclass matter ought not to be a difficult problem, and then to fix the postage at a rate equal to the expense of the transactions would be a simple and complete solution of the question; but, on the other hand, it would involve a complete change in the view held by Congress from the earliest period of our history, and it would bring about a legal revolution in the business methods of the publishers of our newspapers and periodicals. In this event, one of two things would have to be done by the publishers, they would either have to increase their advertising rates or else increase the cost of their papers to the public. This phase of the matter is an important one, for as Congress is responsible for the original grant to the publishers of the second-class privilege, it is in honor bound to weigh well the results which might follow its abrogation.
Were the practical considerations as to transportation and delivery alone to be considered, then there is no sound reason why second-class matter should be carried at a loss any more than there would be a sound reason for carrying other classes of matter largely
at the expense of the public. That is not a new view of the situation, I gather from a paragraph in the report of Postmaster-General Miles, who said, as long ago as 1840:
The low rates of postage on newspapers and other printed matter originated in consideration of public policy and were designed to promote the general dissemination of intelligence among the people. But the reasons for this policy, if admitted ever to have been just, have in great measure ceased to exist. When the mail establishment was first organized printing was confined to the large cities, and there were few other channels for conveying newspapers but the mail. Now there are printing establishments in almost every village, and railroads, steamboats, and other lines of communication afford cheap and convenient channels for conveying newspapers and other publications, the greater portion of which are distributed among the people without the agency of the mail.
If this language could be used sixty years ago, it could be used with greater force now, for there appears to be no valid reason why the Department should be called upon to give up a portion of its revenue to disseminate intelligence among the public through newspapers and periodicals. There may have been a time when, owing to conditions, bona fide newspapers and periodicals depended to some extent on the postage privilege granted by C'ongress; but it is pretty well conceded in these days that newspapers and publications which really disseminate intelligence among the public are self-supporting, are even sources of considerable profit to their owners, and in case the rate of postage on second-class matter was increased to a selfsustaining basis they could readily adjust their business to the new conditions without being too seriously embarrassed by the withdrawal of the assistance at present authorized by law.
Under modern conditions of publication, newspapers or periodicals—no matter what the motive is for their establishment-have to yield a profit or else their existence is soon cut short. But it is a fact beyond contradiction that a large portion of a certain sort of publications entered at the post-office derive their profits, if not the cost of their maintenance, from the deliberate evasion of the provisions of the second-class law, and the consequent improper use of the mails for the circulation of their publication at a cost much below the real cost of handling and transportation.
Should Congress decide to increase the rate of postage on secondclass matter to a self-sustaining rate, it would wipe out the annual postal deficit, it would create a surplus available for improving and extending the service, it would be in a position to raise the pay of employees who are now working for less than what they are honestly entitled to, and it would do away once and for all with the abuses with which the entry of many publications at the second-class rate are incontestably connected.
The other advantages to the Post-Office Department from the establishment of a self-sustaining fate of postage on second-class matter scarcely need enumeration here. There would be no longer any occasion for maintaining a special bureau of classification in the Department or at our large post-offices. The much decried censorship of the press would be a thing of the past, except in so far as violations of the criminal law were concerned, and publishers would be absolutely free to print what advertisements they pleased and to mail what copies of their publications they pleased without fear of objection from the post-office. There would then be no question of
the legitimacy of lists of subscribers and there would be no rulings on technical points to harass the publishers. The press would be freer than ever before, and the Department would be relieved of a subject which has troubled it since it was first established. o conclude this portion of the subject, I would say unqualifiedly that from the practical business point of view, from the view the publishers themselves take in dealing with their advertisers and subscribers, there is no reason or excuse for carrying second-class matter at a loss, and that the only permanent cure for existing bad conditions is a prompt change in the law which will require the mailers of this class . matter to pay a rate of postage equivalent to the cost of its handling and transportation.
SECTION II.-TRANsportATION OF BULK MAIL BY RAILROADS.
I3efore suggesting modifications or changes based on existing laws, I would like to present a plan which appears to me to possess the advantages of simplicity and economy, and which might pave the way for the solution of the question your Commission is investigating. When Congress passed the first pound-rate law, in 1874, it was probably as much influenced by a desire to abolish the complicated system of newspaper postage then in force, as it was by the belief it had in the principle of disseminating intelligence among the public at a relatively small cost. It could not look into the future and see the immense burden the simplification of the rates on second-class postage was to add to the financial system of the post-office. The circulation of all classes of publications was still comparatively small (it was even small in 1885 when the 1-cent rate was established). The system of mailing papers and periodicals in bulk to news agents was yet in its infancy. Under the new system the subscribers were relieved of the trouble connected with the payment of postage on ublications directed to them. The changes o about by the |. of 1874 improved this branch of the service. Everyone felt assured that the problem had been solved and successive PostmastersGeneral congratulated the country on the increase of revenue from second-class matter. Members of Congress felt that the pound-rate plan was a good one, and they kept on making reductions until the last, and the one that did the mischief we are trying to repair, which was made in 1885. The result of passing a law o, the economic mistake of doing something for nothing, of carrying mails at a rate far below the rea cost of transportation, was soon apparent. There was a rush of individuals into the favored business, and thousands of periodicals were established which under natural unforced conditions would not have been established at all. The system of bounties led to the overproduction of second-class matter until at present we have more sorts of newspapers, and more sorts of magazines, in proportion to our population, than all the rest of the world put together. At first a large part of the circulation of newspapers and periodicals was directly to subscribers. But, as time went on, the conditions were changed, and the bulk of the mailings became the mailings from publishers to news agents, and from news agents to other news agents. In the large centers publishers soon adopted the practice of routing their own mail, and of delivering it to the postal officials
stationed at the railway depots. From the depots it is conveyed in the cars of the Railway Mail Service to its destination, incidently receiving additional distribution on its way. At its destination it is delivered to the news agents who arrange for its delivery through their own local carriers.
The extent and ramifications of this phase of newspaper and periodical transportation is not generally appreciated as yet. It is stated on excellent authority that 50 per cent of the issues of secondclass publications is sent as railroad or express mail.
The SECRETARY. That means not mail at all, but matter carried by railroads or express companies.
Mr. GLASGOW. Is that the explanation?
The SECRETARY. Yes. You will learn by that what follows. That is a phrase used in the postal service, - railway or express mail,” because it is matter carried by express which would otherwise be carried by mail.
The VICE-CHAIRMAN. It is a matter not under the control of the Government, but under the control of the railway or express companies.
The SECRETARY. That is a phrase which may be misleading.
Mr. GLASGOW. Do I understand that 50 per cent of second-class publications is carried outside of the control of the Department?
The SECRETARY. As I understand the purport of this paper, that is it. It is based largely on the experience of a metropolitan office, like Chicago.
The rates vary from 17 cents to 50 cents a hundred pounds to points within a radius of 150 miles from the office of publication. For $1 a hundred the express companies carry newspapers to the most distant points, but of course they do not give as good service as the post-office, and this rate is little used as yet.
For all practical purposes, therefore, the main service performed by the post-office might be equally well performed by the express and railroad companies.
In view of these conditions I would recommend to the consideration of the Commission an amendment to the law limiting the pound rate of postage to single copies of regularly entered publications addressed and mailed for delivery to bona fide subscribers, exchanges, and advertisers by publishers or their authorized news agents.
It needs no elaboration to see what the effect would be of such a sweeping change in our system. It would oblige publishers and news agents to make arrangements with the railroad and express companies for the transportation of bulk packages of their publications. It would relieve the Post-Office Department of the necessity of providing for the distribution and transportation of a mass of matter which at present is handled at an absolute loss.
That it would result in an extraordinary increase to publishers of the rates for carrying their publications I do not believe, for I am tolerably certain that they could obtain from the railroad and express companies rates very much less than what the Department now pays to these companies. It would of course prove a great advantage tage to the Post-Office Department. In railroad charges alone there would be a large decrease in expenses from the decreased tonnage carried by the roads; the railway mail service would be freed from