the vast mass of publications which crowd its cars and impede its letter service; the car space required would be reduced enormously, and the large post-offices would not require acres of floor space and miles of racks to distribute publications mailed at the second-class rate of postage. As this suggestion is in line with the present trend of newspaper transportation it might be possible to carry it into effect with very little disturbance of existing conditions.

SECTION III.—INCREASED RATES OF POSTAGE.

If, however, it is not considered prudent at this stage to urge a self-sustaining rate of postage, or a rate commensurate with the cost of handling and transporting second-class matter; or, if it is felt to be inexpedient to attempt to shift the burden of handling and transporting newspapers and magazines in bulk from the Department to the publisher, as suggested in the previous section, then recourse must be had to an increase in the present rates of second-class postage, and such changes in the treatment of this mail in the post-office as will cheapen its cost to the Government.

A. Under this head, therefore, I recommend a flat increase in the rate of postage on second-class matter mailed in bulk by publishers to news agents, and by news agents to other news agents, from 1 cent to 2 cents a pound, and from 1 to 3 cents a pound on all copies of separately addressed publications mailed by publishers or news agents to actual subscribers, advertisers, or exchanges.

B. I would also recommend the abolition of the sample-copy privilege, but would remove the restrictions which prevent a publisher from printing more than a specified number of copies of his publication, and I would allow him to print as many copies as he pleases, all copies, however, other than those enumerated in paragraph A, should pay postage at the rate of 1 cent for each 2 ounces or fraction thereof.

C. I would also recommend the abolition of the transient rate on second-class matter-1 cent for each 4 ounces or fraction thereofand would fix the rate on newspapers and periodicals mailed by the public at the ordinary third-class rate of postage.

D. I would also recommend the enactment of a law making it obligatory on publishers and news agents to route all second-class matter according to schemes furnished by the Department and to deliver it to such places in the city of publication as may be determined by the proper postal officials.

E. I would also oblige each publisher to file a statement with every mailing showing the number of copies mailed, specifically stating in this statement to whom the copies were going, whether to subscribers, advertisers, or exchanges.

F. To render it difficult, if not dangerous, for publishers or news agents to mail sample copies under the guise of copies to subscribers, I would also recommend an amendment to the act on which section 1593, Postal Laws and Regulations, is based, which would empower the courts to imprison as well as fine persons guilty of violating the laws relating to second-class matter; I would make the law so stringent as to give the Post-Office Department no option to prosecute those who are guilty of submitting false evidence or who persistently mailed copies of their publications at the pound rate to persons who are not legitimate subscribers, etc.

The recommendation contained in paragraph A would materially simplify our present complicated rates of postage on second-class matter. At present we have six separate and distinct rates. It is proposed in paragraph A to reduce these six to two--the rate to news agents and publishers and the rate to subscribers, etc., the latter including delivery service wherever it exists.

We now have free county matter, which has been interpreted to mean free delivery on rural routes; then there is the 1 cent a pound rate, which included free delivery service at post-offices outside of the post-office of origin; the 1 cent a pound rate on weeklies, which includes free delivery service within the post-office of origin; the 1 cent a copy rate on newspapers other than weeklies for delivery by letter carriers within the office of origin; the 1 and 2 cent rate for periodicals, according to weight, mailed for delivery within the office of origin, and finally the transient rate of 1 cent for each 4 ounces or fraction thereof on matter mailed by the public.

The simplification of this complicated system would be a decided advantage to the postal service and would remove a source of endless annoyance to the business public.

Advancing the rates as suggested in paragraph A would more than double the receipts of the Department from the second-class matter. For the fiscal year ended June 30, 1906, the weight of second-class matter mailed at the Chicago post-office was 70.891.462 pounds. Of this. 34.891 pounds was free county matter, 3.388,739 pounds sample copies, 30.217.841 pounds single copies, mainly intended for subscribers, and 37,249.991 pounds bulk matter for agents and dealers. The two latter items are approximations, no actual statistics being kept on these points.

On the basis of the proposed rates, eliminating sample copies entirely, the revenue from second-class matter in Chicago would be equal to two and one-half times the revenue received last year, which was $708.914.62. Eliminating sample copies would decrease the cost of handling the mail, and would correspondingly increase the efficiency of the post-office in other directions. It would also reduce the annual appropriation for clerk hire; or if it did not accomplish this result directly, owing to sample copies being mailed at the third-class rate, it would largely add to the revenues of the Department.

If it is worth 5 cents to handle and transport 1 pound of secondclass matter, then the cost of 618,664,754 pounds, mailed during the past fiscal year, was $30,933.237.70, but for which the Department received in postage only $6,186,647.54 at the 1 cent a pound rate. The rates proposed in paragraph A would have yielded approximately $15,466,618.85, or $9,279,971.31 more than was actually received, though it would still have left a loss of $15,466,618.85 on the real cost of handling and transporting second-class matter. The increase of $9,279,971.31 would, however, have reduced the last annual postal deficit by two-thirds, a matter of great importance to the PostOffice Department.

My recommendation in paragraph A to fix the rate to publishers and news agents at 2 cents a pound is based on the fact that bulk matter is the least expensive of all second-class matter to handle. For the most part it is routed in the offices of the publishers, and the services given to it by the post-office consists only of transportation and the handling which takes place in the cars of the railway-mail

service. A calculation recently made shows that we received in March, 1906, a daily average of 161,070 pounds of tagged or fully routed second-class bulk mail, and that the cost of handling this quantity in the Chicago post-office was the small sum of $64.61 a day, approximately 4 cents a hundred pounds. Of course the cost includes labor only, no calculation having been made as to the cost of machinery, furniture, supplies, rent, fuel, light, etc.

My second recommendation in paragraph A, that second-class matter to subscribers should pay 3 cents a pound, is based on the fact that this class of matter is more expensive to handle than the former. Calculations made here show that the daily average of second-class mail for subscribers, etc.-mainly unseparated, unrouted matter-was 55,263 pounds, and the average cost per day to handle it was $227.08, approximately 41 cents a hundred pounds. The initial expenditure was half the amount received for postage, and when the cost of mailmessenger service, railway-mail service, transportation, handling, and carrier delivery is added it is apparent at a glance that this class of matter costs very much more to handle than that which goes in bulk. The latter mail incurs no expense whatever for the carrier delivery, and scarcely anything for messenger service.

The expense attached to the carrier delivery to subscribers' papers warrants the collection of a higher rate of postage. They are given service of as complete character as letter mail, which pays 32 times as much postage. When undeliverable, the publisher is notified by a special publishers' notice, and he is also furnished with all the changes in the addresses of his subscribers. In the Chicago postoffice the average co-t a year of labor for writing and sending out publishers' notices is $6,100. Last year almost half a million such notices were sent. A prominent publisher told me recently that he was amazed at the amount of minute careful labor the post-office expends on notices to publishers. No doubt when the postage at the pound rate was fixed by Congress the labor involved in this phase of the work or the cost of the material used was never given thought. much less calculated.

When, however, we come to consider the expense of the clerical force engaged in handling second-class matter in the Chicago postoffice we see the need of charging a higher rate of postage for secondclass matter delivered by carriers.

A careful computation shows that the time of 149 clerks and 329 carriers is consumed in handling the second-class matter at the Chicago post-office and its stations. The time thus used is equivalent to the service of 478 men, who receive salaries in the course of the year amounting to $449,744. Now, if to this were added the cost of handling the same mail in the office of origin, the cost of messenger service at both ends of the line, the cost of railway-mail service, the cost of transportation, the cost of supplies, furniture, rent, fuel, and light, I am inclined to think that this one item alone would exceed by five times the regular postage received when the mail thus handled was originally placed in the post-office.

Another advantage which would follow the institution of the 3cents-a-pound rate for the subscribers' copies would be that it would destroy the habit many publishers have of removing the main office of their publications from the place in which it naturally belongs. These removals are for the purpose mainly of securing the 1-cent-a

pound rate on matter intended for delivery through the carrier offices where their greatest circulation exists.

The recommendation, if adopted, would also remove the inequalities which are found in respect to the rates of postage on the local delivery of second-class matter.

The abolition of the sample-copy privilege, recommended in paragraph B. would be a long step toward rectifying one of the worst abuses of the second-class privileges. It is difficult to estimate the number of sample copies mailed under the guise of copies to regular subscribers, but the number is exceedingly large. By abolishing sample copies and rigidly enforcing the law relating to regular subscribers and defining a regular subscriber as a person who has actually ordered and paid for a magazine or newspaper himself, and not through the agency of anyone else, an economy in the handling and transportation of second-class mail would be brought about. It might be possible too, under such conditions, to relax somewhat the present rigid examination of publications made to ascertain whether or not they are primarily intended for advertising purposes. But I am not sure that it would be safe to modify the regulations on this point while newspapers are carried for less than the actual cost of handling and transportation. So long as the Government offers a bounty on the printing of second-class matter the temptation to secure it will remain a force to be reckoned with. The only means the Department has of defending the revenues of the Government lie in the right to examine lists of subscribers and to determine by an examination of the contents whether or not a publication is originated for the dissemination of intelligence or for the profits to be derived from advertising.

I am inclined to think that the lines should be drawn tighter in both respects, and I believe to give up either of these means of protecting the revenue would, under existing conditions, be very much as if you had decided to admit every and any sort of publication to the privilege of second-class matter.

Paragraph C recommends the abolition of the transient rate on second-class matter. There is no good reason for this rate, for it is an anomaly, and a disagreeable one at that. In its practical operation it delays the work of the post-office, causing annoyance to the public and the Department. Furthermore, it is a standing temptation to publishers to violate the law which requires those who have extra copies to mail to pay the copy rate, but who employ the transient rate to evade the payment of legal postage at letter-carrier offices.

In paragraph D an amendment to the law is suggested, making it obligatory on publishers to route their mail and deliver it to specified places. Two advantages would be derived from the suggested amendment to the law-the cost of handling all second-class matter at post-offices would be reduced from 41 cents to 4 cents a hundred pounds, and the space required at post-offices in which to handle. second-class matter could be reduced to a minimum.

The SECRETARY. I take it that that means the cost of handling at the office of origin?

Mr. HUBBARD. That is it.

There would also be an incidental saving in furniture, supplies, and the cost of mail-messenger service at the office of origin.

The recommendations in paragraphs E and F are self-explanatory. That in paragraph E would assist the post-office materially in preventing the mailing of matter not eligible to the second-class rate of postage, and in case of violation of the law the statement filed with each mailing would fix the responsibility on the mailer.

That in paragraph F, if rigidly enforced, would make it clear to those who use the second-class mails that the laws are meant to be obeyed, and a few convictions under its provisions would powerfully aid the Department in its efforts to safeguard the postal revenues.

In dealing with the general question of increasing the rates of postage, as suggested in the foregoing pages, it is important that full consideration should be given its numerous phases. Even though we reject the principle which admits newspapers and periodicals to the second-class rate of postage on the score of certain “ideal characteristics" they are thought to possess, we still have to admit their claims for consideration in any project which seeks to abolish or modify a privilege which they have enjoyed in one form or another since 1782. The possession of the privilege of mailing second-class matter at the rate of 1 cent a pound undoubtedly shapes the entire business arrangements of publishers, and as this rate has been in existence for twenty-one years they naturally dread the result of an increase in the cost of mailing their publications.

But publishers must be aware that within two years after the rate was changed, in 1885, and because of the interpretations given to the statutes, abuses had crept in which seriously affected the revenues of the Department. They also know that almost without exception every Postmaster-General since then has denounced these abuses and has demanded legislation to cure them, but that through the influence exerted by publishers no action has ever been taken by Congress. It is within their knowledge, too, that, in despair of securing positive legal enactments curtailing abuses, the Department at length took the matter in its own hands and, through decisions of the Supreme Court, was enabled to remove such of them as bore most heavily on the revenues of the post-office. Publishers must know, furthermore, that in spite of these latter changes and because of the great increase in the volume of the publications mailed the deficit is still a reality, and that now, quite as much as ever before in the history of the service, an urgent need exists for a modification at least of the terms on which second-class matter shall be admitted to the mails. It seems only fair that publishers should endeavor to consider the question from a broad public point of view and make such concessions to the logic of the situation as will relieve the Department and the community from the embarrassment of a large annual postal deficit.

Admitting, for the sake of argument, the right of publishers to exceptional treatment at the hands of the State, it is perfectly clear that the rate of 1 cent a pound, established by law in 1885, is a very much lower rate than the same rate is in 1906. When that rate was instituted there was no such wide extension of the free-delivery serv ice as exists to-day. There was no rural free delivery then, and the Railway Mail Service distribution was comparatively restricted, and not nearly as thorough and expensive as it has since become. As a matter of fact, the 1-cent-a-pound rate of 1885 was based quite