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He dwelt upon the so-called book abuse and asked why they should be permitted to enjoy second-class privileges. He gave his own answer to the effect that years previous, in the case of a questionable publication having some of the features of a periodical, the Attorney-General of the United States gave an opinion which opened the doors to the admission of other publications still more questionable, until little by little precedents were established under which the entire class under consideration was let in. He stated again that this abuse was a wrong to the Government, a wrong to the publishers of legitimate newspapers and periodicals, and a wrong to the publishers of other books; and he said, “a sort of debaseInent of the nation's literature.” In that report the PostmasterGeneral dealt also with the house-organ and sample-copy abuses. In the report for 1896 the subject was taken up by PostmasterGeneral Wilson. He pointed out that for years the attention of Congress and of the people had been called to the gross and growing abuses of this privilege, and that legislation had been asked to protect the postal service from the waste of its revenues and to protect the taxpayers from the burden imposed on them. The efforts of the beneficiaries of the abuse, however, had parried all appeals and the mass of proof sustaining them. He said it was disheartening for the responsible head of a department to see the waste of its earnings with its resulting impairment of the efficiency of the postal service and disruption of the fruits of good management and of careful economy. He said further that but for the hope that Congress would take the matter in hand he should have taken the responsibility to modify and reverse the successive rulings through which this inroad had been effected, and to exclude from the benefit of the second-class rates publications not within the policy of the law, even if within the letter of its rather loose phraseology. The interpretations, he pointed out, were a virtual concession of a franking privilege to the publishers of serial libraries, of sample editions for advertising purposes, to news agents for the return of unsold copies, to fraternal societies for circulating publications of a mere advertising character, to house organs and other advertising sheets, to publishers acting as agents .#. or purchasers in sending to addresses furnished by the latter, and to similar private enterprises. This, he said, could be defended on no ground of public policy and was nothing short of a perversion of a public service to private interests. . He then proposed that a bill be enacted excluding alleged periodicals which are in fact books or reprints of books, correcting the sample-copy abuse, and excluding from the benefits of the pound rate unsold matter returned to the publisher through news agents, placing a limit upon the circulation of periodical publications of benevolent and fraternal societies, trade unions, or orders organized under the lodge system, etc., and to require a rate of 1 cent for each 4 ounces on all extra copies of second-class publications sent by the publisher acting as the agent of an advertiser or purchaser to addresses furnished by the latter. In his report for 1897 Postmaster-General Gary dwelt upon this subject. He believed that an injustice was being inflicted both upon the postal revenue and the people by existing laws regulating the carrying of second-class mail matter. He stated that it had been represented to Congress in reports for ten years past with cumulative force but without effecting remedial legislation. By the existing statutes, he said, a privileged class had been created. They were entitled to the use of the United States mail service either free of charge or at a cost far below the price the Government was compelled to pay the railroad companies for the transportation alone of the matter thus carried. This privilege, he said, was bestowed upon persons engaged in private enterprises, and it inured simply to their emolument without any appreciable benefit to the public at large.
He said that the loss to the service amounted to more than twentysix millions a year, and that it was defrayed out of the proceeds of taxation drawn from all classes of people. He did not find so much fault with the law so long as it applied to what he regarded as legitimate newspapers and periodicals, but the paper-covered novels and reprints of books then being circulated as “periodicals” or as supplements to periodicals he regarded as a flagrant abuse of the privilege. He found that so-called newspapers, house organs, etc., were issued
rimarily for advertising purposes for the benefit of business firms.
In 1899 the subject was again taken up. Postmaster-General Smith began his denunciation of the frauds with this forceful statement:
The most urgent need of the postal service is the rectification of the enormous wrongs which have grown up in the perversion and abuse of the privilege accorded by law to second-class matter. This reform is paramount to all others. There are many improvements and advances awaiting development and application; there are opportunities for speedier transmission and delivery: there are fields for broadening the scope of the mail service in bringing it closer home to the people; there are possibilities of reduced postage; but above and beneath and beyond all of these measures of progress, which experience and intelligence are working out, is the redemption of the special concession which Congress granted for a distinct and justifiable public object from the fungous growths and the flagrant evils that have fastened upon it. For this costly abuse, which drags on the Department and weighs down the service, trammels its power and means of effective advancement in every direction.
He was more modest than his predecessors in his desire to be safely within the facts, but he asserted that this abuse involves a sheer wanton waste of twenty millions or upward a year. He described it as a deadly burden upon the mails which must be removed before the Department could hopefully enter upon a systematic policy of enlarged and progressive service, with the assurance that sound business management and increased facilities would bring commensurate returns which would not be swallowed up in the maw of private interests without any public advantage.
He enumerated the various abuses of the privilege. In speaking of the paper-covered books put out under the pretense of being periodical publications, he said their consecutive numbering is a travesty; their issuance at stated intervals a parody; their subscription lists a fiction; their claim of being published for the dissemination of information of a public character a burlesque. He spoke not only of the abuse of these books being mailed as periodicals, but of the same books being remailed time and again from various agencies to which they were shipped from the publishing house, and upon each mailing the Government, he said, lost 7 cents a pound. He spoke of the houseorgan abuse, the so-called trade journal made up of a collection of advertisements strung together with a little scissored matter to give it the guise of a periodical publication. He dwelt upon the sample-copy abuse, which he said was the life of the house organ and the spurious trade journal. He brought out with great emphasis that publishers
of legitimate newspapers and periodicals had a direct interest in the extirpation of these wrongs upon the service, which, if left uncorrected, would inevitably provoke a sweeping condemnation and warfare involving alike those that are justly and those that are unjustly included.
The Department, he said, was powerless alone to remedy the evils. They violated the policy and purpose of the law, yet were shielded by the law's want of precision respecting subtleties and devices which could not have been anticipated by the constructions which then restricted freedom of administrative action. For those reasons, he said, the difficulty must be cured by the lawmaking power.
In 1900 the subject was again brought forward and PostmasterGeneral Smith once more urged the necessity of remedial legislation. He said that the whole net cost of extending rural free delivery throughout the country would be saved in stopping the second-class abuse. The subject, he said, is one which should not be permitted to drop until the vital reform was accomplished. There should be no abatement whatever of the protest against the perpetuation of evils which have insidiously grown up. They were a heavy public burden. He said that a reform naturally encounters the strenuous hostility of the limited special interests, the expenses of whose private business were largely paid by the Government instead of by themselves, but this antagonism alone was not sufficient to defeat it. There was opposition of a different character. It rested on a misconception. It was founded on a fear that the remedy proposed was aimed in part at some legitimate publications of the second class and that it would deprive them of the privileges which the existing law intended they should possess.
This, he said, was a complete misapprehension. It was not sought to change the policy of the existing law or to abridge the privileges it conferred upon regular and legitimate publications for the dissemination of public intelligence. It was only sought to cut off abuses which the law never contemplated and which had crept in through the ambiguity of its provisions or other doubtful interpretations that had opened a wide door for wrongful entries. In this report, as in others, the abuses were enumerated. He said there was no objection to this matter going through the mails, but there was no reason why the Government should carry it at a cent a pound, involving a dead loss of millions of dollars every year, when other articles of the same kind rightfully paid the third-class rate.
He said the need of the service was a simple act which would leave no ground for misunderstanding or misconception and that the effective remedy must come from the lawmaking power. He gave notice of an administrative reform, and he said that whatever power was within the authority of the Department would be resolutely applied, but that whatever might be done by administrative action the extirpation of those abuses could be thoroughly and successfully accomplished only by a reform of the law. That was needed in the interest of postal progress, which the want of it had blocked in many ways.
In the same year the Third Assistant Postmaster-General reported upon the efforts that were being made to hold down the abuses--that is to say, not to allow them to increase or multiply. This was prior to the failure of the so-called "Loud bill ” and before a definite policy of administrative reform had been determined upon and undertaken.
In 1901 Postmaster-General Smith again flayed and laid bare the abuses in all their iniquity. Time and experience, he said, only emphasize the urgent need of a rectification of these wrongs. " It is the most urgent need, because it aims at the one great overshadowing evil of the service and because it underlies and overtops all other reform and advance.". In that report he told of the formation of a definite plan of operation to correct, as far as administrative authority permitted, the abuses which so long weighed down the service and upon which so much effort had been spent in an endeavor to secure a legislative reform. I recommend to this honorable Commission a perusal of that part of the report of 1901 in which the PostmasterGeneral dealt with this subject.
Second-class matter in that year was estimated to constitute about 60 per cent of the weight of the entire mail of the country, and yet while the postal revenue for the fiscal year was $111,000,000, secondclass matter paid only a little over $4,000,000; that is to say, that while making three-fifths of the whole mail matter it furnished only one twenty-eighth part of the revenue.
He said it was difficult to determine accurately the exact ratio which the cost of handling and carrying second-class matter bore to the aggregate cost of handling and carrying all mail matter. Though three-fifths in weight, it manifestly could not be fairly charged with the same proportionate cost of the service. Much of it was handled in bulk. On the other side, the cost in time, space, and labor in handling individual pieces of second-class matter is greater than that of first-class matter. The result of his calculations was that there was for the year a net loss of $17.277,783 on transportation alone.
He dwelt upon the public policy, and explained how some of the abuses came about and how they were able to exist. The intent of the law, he thought, was clear, but, however convinced we were of the intent of the statute, it was quite another thing to enforce the intent, and especially if without regard to the intent the practice had been for years to admit doubtful publications and those plainly in contravention of the law. This was true, also, when publications applying for entry were fairly to be considered within the intent and purpose of the law, but which after admission changed their character so as to be in violation of the intent. The inducements to evasion of the law and to pervert the privilege to profit were very great. He said that in the production of many publications the cardinal factors were cheap paper and nominal postage charge for distribution. All other matters entering into their composition were incidental and not material.
He showed how the price of white paper had declined from 6 cents a pound to 2 cents, and that due to that condition and the cheap postage charge there was a great uprising of thousands of so-called periodicals which were established primarily for advertising purposes. They had few or no legitimate subscribers, and made up their lists either by procuring names and sending the publications for nothing or by offering premiums substantially equal in value to the subscription price, and so they circulated at a nominal rate in spite of the prohibition of the law against nominal rates. He showed that they obtained advertising on the basis of this illegitimate circulation, and that it becomes a profitable business to be a publisher of one of these sheets, for the chief expense of the undertaking falls upon the Government. He went on and explained the complicity of the Gov
ernment in such purely private enterprises and said: “Wherever the publisher spends $1,000 in his venture, the Government spends not less than $2,000 in carrying on the business, and wherever he puts $100,000 into its running expenses the Government puts not less than S200,000."
These publications have no news service. Their editorial staff consists of a single head, the main equipment of which is the scissors and the paste pot. The composition and presswork, reduced to a single copy or pound, is infinitesimal. On the other hand, or the Government's side, the expense comprises two items. In the matter of transportation the Government pays not less than 5 cents a pound, while it gets back only 1 cent. Then there was the handling. This was not less than 2 cents a pound. The publications then under consideration, unlike the newspapers, which are largely distributed by private carriers in the cities of their publication, every copy of them went into the mails. In all this multitude of businesses the Gov. ernment was the senior partner on the debit side. It furnishes the greater part of the capital, but all the receipts go to the other partner. This was only one of the abuses. There were many others, varying in a degree as to their flagrancy. It was difficult, he said, to believe that the proportion-namely, an amount estimated to be fully 50 per cent of the matter carried as second class—was wrongly so classed.
The Postmaster-General wrote upon this subject with great force. He pointed out many of the questions which are plain and of easy adjustment once the determination had been reached that such things were not of the second class. “But,” he said, “it is a work of more delicacy and labor to determine whether many weekly and monthly periodicals are inside or outside of the prescribed distinguishing requisites for admission to the second class. It requires a special examination in every case. The law was framed with obvious intent of limiting the pound rate to what were understood and recognized as regular newspapers and periodicals serving a distinct public end. When a periodical has not 'a legitimate list of subscribers’ the law treats it as evidence that there is no public call for it and that it is not entitled to the privilege. When it is ' devoted primarily to advertising purposes' that is held to be a private nature which has no claim to special consideration. When it is issued mainly for free circulation or for circulation at normal rates that question is taken as putting it outside of the limit for free circulation, means that the public and not the publisher determines the issue, and the law is made in the interest of the public."
In that discourse upon the purposes and intent of the law the learned Postmaster-General gave the general conception of the requirement of a legitimate list of subscribers, and a few instances of how this requirement of law is complied with, or, rather, not complied with, by many of the publications which are commonly regarded as not within the intent and purposes of the statute. The one telling test is the list of subscribers. All other requirements are easy of fulfillment. The publishers of questionable sheets, ones which can not show a real public call for them on their merits, as evidenced by the lists of subscribers, found a device or devices for manufacturing the lists.
Advertisements were circulated in newspapers and in various ways