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offering publications at the value of 25 cents a year with a premium. Perhaps no value is fixed upon the latter, but a picture of it is published, and it is shown in such a seductive way that the recipient seeing the article of merchandise which he desires, and what he believes to be a low price for it alone, “ subscribes” for the publication, for that premium can not be bought apart from the publication. So it came to be a common practice that practically all the subscription price in millions of cases was returned to the alleged subscriber. As à matter of fact, the publication was thrown in with an article of merchandise, but on paper the transaction appeared as a subscription, and the subscriber, if asked by the Department, would say that he was a subscriber. By this process thousands upon thousands of alleged lists of subscribers were made up.
In his report for the year 1905 Postmaster-General Cortelyou dealt with this subject. He denounced, as have his predecessors, the bad laws in relation to this class of mail matter. He said that it was estimated to cost the Government between 5 and 8 cents a pound to handle all mail matter, but wishing to be safely within the facts as to that of the second class, he said:
If it cost the Government as much as 5 cents a pound to handle this matter in the mails, it will be seen that the amount paid out was $33,155,356.40. The actual revenue was $6,186,647.54.
The situation now and for some time past with regard to the publishers of bona fide newspapers and periodicals and to the public itself is wholly different from that at the time the law was enacted. Whether it is sound public policy to continue the present rates and conditions for this class of matter so liable to abuses is a subject well worthy the most serious consideration. No person who has given it even casual thought but admits the desirability-even the necessityof a change. Any change, however, is certain to be resisted by those whose interests are benefited by the present conditions.
He spoke of the reform which had been in progress since 1901, and said that while its effect upon the whole service could not be stated, it was learned from reports of the postmasters at Chicago and New York that at their offices it had reduced the quantity of matter mailed at the second-class rates, due solely to the elimination of the book abuses, by approximately 4,000,000 pounds annually; and that additional data from New York alone showed the reduction of 16,000,000 pounds of matter that would have been mailed there at the secondclass rates. He gave some illustration of the perplexing questions which are necessary to be solved in the administration of these laws. It was, he said, a prolific field for arguments and disputes between publishers and the Department.
He recommended the review of the whole subject by Congress and the enactment of a statute to take the place of those existing which would render unnecessary, in determining the class to which any mail matter belonged, a consideration of such questions as now must be decided. A flat rate chargeable upon the material thing itself was what was needed. There should be, he said, provision for special treatment of newspapers and periodicals as distinct from ordinary printed matter; būt urged strongly the simplification of the tests of classification.
This is all a part of the constant endeavor of the Department to present such a case to Congress as would cause the subject to be reviewed, the evils and the losses due to existing laws discovered, and the remedy applied. The appointment of this honorable Com
mission is the first tangible effect of the fifteen years of effort. It is unnecessary here to discuss whether the failure heretofore was due to influence, conditions, or a failure to understand the problem. Up to this time nothing has been done. The hope of the country, of the postal service, and the publishers of bona fide newspapers and periodicals is that this Commission will be able to place upon the statute books a real and effective remedy for the conditions which have so long weighed down the service, hampered progress, and blocked improvement.
REFORM OF THE ABUSES.
So far the efforts to secure legislative reform have not borne fruit, but the head of the Department some time ago found in these laws sufficient authority for ridding the second class at least of the more flagrant abuses which had so long been complained of. To him a book was a book and no mask concealed its character. If it were a book it was not entitled to periodical rates.
He believed that if the law did not permit a publisher to get back his unsold copies at a cent a pound that the purpose of Congress was not to be defeated by the mere addressing of the matter to a news agent located in the same city with the publisher, news agents having under the law the privilege of sending second-class matter one to another at the same rates that the publisher may send the matter out in the first place.
IIe believed that as the law prohibited the admission of a publication to the second class when primarily designed for free circulation, a publication came within that prohibition when it circulated more sample, or free, copies than subscribers' copies.
He believed that as the law accorded the second-class privilege without having any subscribers, and with no limitation whatever as to the circulation of periodicals published by incorporated institutions of learning maintained by the public, it was not intended that such an extraordinary privilege should be construed to cover private business colleges, correspondence schools, and similar institutions organized for private gain.
There were other practices which were abuses, and which he believed the law gave ample authority to eliminate if the Department assumed and exercised the power which was vested in it. So after a very full consideration, not only of what really constituted abuses of the privilege, but of what powers there were to remedy them, a decision was made to undertake an administrative reform. Necessarily it would consume a great deal of time. Indeed, it would be a never-ending task, and the action was sure to be resisted at every turn. There would be many fights to a finish. It was certain that those who had so long profited by lax administration would not relinquish their hold without a struggle.
The scheme contemplated both the preventing of new abuses and the getting rid of existing ones. The Department must, of course, keep squarely within the four corners of the law. To overstep would be fatal. Nothing is to be more roundly condemned or is of greater menace to our Government than that an executive officer should assume and exercise an authority unwarranted by law. If there were authority for the work proposed, that was one thing; but
it was quite another thing to determine whether we could in good morals put out of the second-class publications which, though regarded as abuses, had so long continued in that class as to seem to have a vested right therein. There was something to be said on both sides, but the Administration took the view that there could be no legal or moral right in an unlawful practice, no matter how long continued. The United States Supreme Court subsequently decided the same way. The reform was begun under Postmaster-General Smith. On July 17, 1901, three orders were published. Their purpose was to give the Department a new starting point. It was not thereafter to be bound by the precedents. It would, as far as possible, administer the statutes according to what was believed to be their plain intent. So that we may say that these laws were administered in two distinct epochs, the first beginning with the act of 1879 and ending July 17, 1901, and the second beginning at the latter date and still continuing. The result is that at present there are in this class no books masquerading as periodicals. Dead matter, such of it as is returned by mail to a publisher, is no longer carried at a cent a pound. No business college, correspondence school, or similar institution organized for private gain, is drawing upon the public treasury for the expense of distributing its advertising matter. No publisher is conducting advertising schemes by means of an unlimited sample-copy privilege. These four things have been accomplished—worked out to a finality. The rulings in three of them have been contested before the judiciary. They were sustained. The rule prohibiting the return of dead matter was not contested. The correction of these four chief abuses represents but a part of the reform work. There have been many less grave abuses corrected. They will appear more plainly later and need only be referred to here. There have been some forty contests before the judiciary. They occasioned long, tedious delay, but in the end all the Department's rulings except one were upheld. Some idea of what the Government has lost by the book abuse alone may be gained from the statement that in one case alone, brought to test, the difference in ostage in favor of the Government while that case was pending before the courts was $6,870.86. The publication had been .# in the mails as a periodical improperly some seventeen years. It is unnecessary to devote any time to a discussion of the obstacles which were placed in the path of the reform. They did no more than halt and delay progress. For that fact credit is due to the Postmaster-General and the President of the United States, both of whom have resisted the influences direct and indirect to encompass the defeat of the reform. The appointment of this Commission has had the effect of staying progress while it is considering the subject, but nothing gained has been relinquished. The reform orders published July 17, 1901, had two effects: (1) Publications of a certain character would not thereafter be admitted to the second class, and (2) those in would be excluded. Under the act of March 3, 1901, the privilege of no publisher, no matter how grave the abuse he is conducting, can be cut off without giving him an opportunity to be heard. That involved delay and corresponding loss, but, of course, it was done in each case. A great number of cases have been handled. Thousands of publications have
been denied entry, and thousands have been excluded. Later on I shall give an illustration of just what is involved in the handling of a single case, either of an application for entry or of the exclusion of a publication already in. From these illustrations some conception of the work involved in an honest and real enforcement of these laws may be gained. ws, regulations, and rulings do not enforce themselves. It is one thing to proclaim and another to put the proclamation into effect. If a proclamation would do the work the whole thing would be easy. There is a vast work yet to be done before the limits of administrative authority are reached. The chief defect of existing statutes is that not only what has been accomplished by this reform may be undone, but that as fast as one abuse is cured another takes root, so great is the opportunity. A publication offered for entry may comply with every requirement of the statute, and no sooner is the privilege secured than it develops into an abuse. Then, owing to the limited force at the command of the Department, the extent of the field, and the length of time required in the handling of a single case, the abuse may not be discovered and corrected for years. The example it sets is followed by others. The difference between the rate for printed matter in general and that for matter of the second class is a constant inspiration to construct out of everything in print the semblance of a newspaper or periodical which can secure the second-class privilege. If circulars are to be sent out in large quantities, it is much cheaper to combine them and throw over them the mask of a newspaper or periodical, and thereby pay only a cent a pound. Many alleged publishers are nothing more or less than advertisement circular distributing agents with special privileges as to postage rates for their combination circulars or catalogues issued regularly as periodical publications. The special privilege of the publisher is maintained by a tax on the people, and the advertiser finds it good business to buy a place in the catalogue because mail distribution is much more costly if he deals directly with the Government. An illustration or two of how the law and the administration are defied or circumvented will at this point be interesting. Among the many libraries of books ruled out ..} the second class were some published by Street & Smith, of New York. Subsequently a member of that firm wrote the Department as follows: I am glad to say that the effect of your ruling covering the exclusion of libraries from the second-class rate has resulted in the creation of three magazines from our house—Ainslee's Magazine, Popular Magazine, and more re
cently Smith's Magazine. We have an average circulation of 700,000 copies a Tuonth.
In that form [indicating] they were put out as books (Exhibit 1a). Each contained a single story. In this form [indicating] they were admitted back (Eji 1b). The only difference is that these are made up of a variety of what appears in those books as a single story, so that the books are back again in another ". -
In the case of sample copies, a limit was placed on the privilege, allowing one sample for every subscriber, so that a publisher having 100,000 subscribers may mail 200,000 copies, half of them as samples. If he mails more than that of free copies, it is held that the publica
tion comes within the prohibitory clause as designed primarily for free circulation. Now, this rule is defeated by the process of construing as entering into the legitimate list of subscribers all manner of pretext subscriptions which are not such in fact. The result is that a publisher who keeps up a 200,000 circulation for advertising purposes finds that to do so he must have at least 100,000 subscribers. As he has but 25,000 or 30,000, he proceeds to inflate the list to the number necessary. Now, the question is whether he is exceeding his sample-copy privilege by indirection or whether his list of subscribers is, as a matter of fact, legitimate. It amounts to one and the same thing in the end-it beats the Government.
How many or whether all of the abuses which have been corrected can in some other form get back I am not able to say, but I pay deference to the ingenuity of the modern publisher. Again I say that it is one thing to proclaim a reform, it is another thing to work it out, and still another thing to keep it worked out. The exhibits to be submitted later will make this plainer than words. In the Department the situation is that the man in charge is pitted against the field of ingenuity. While much has been done, and much more can and will be done, all may go for naught under a lax administration, and practically the old conditions, concerning which there has been so much complaint and under which so many frauds have been committed, may be revived if the laws are not changed.
THE LAWS AND QUESTIONS UNDER THEM.
We have three laws under which publications are admitted to the nails as matter of the second class. There is the act of 1879, the act of 1894, and the act of 1900. The act of 1879, so far as it affects the admission of publications, is as follows:
Mailable matter of the second class shall embrace all newspapers and other periodical publications which are issued at stated intervals, and as frequently as four times a year, and are within the conditions named in sections 12 and 14.
The conditions upon which a publication shall be admitted to the second class are as follows:
1. It must regularly be issued at stated intervals, as frequently as four times a year, and bear a date of issue, and be numbered consecutively.
2. It must be issued from a known office of publication.
3. It must be formed of printed paper sheets, without board, cloth, leather, or other substantial binding, such as distinguished printed books for preservation from periodical publications.
4. It must be originated and published for the dissemination of information of a public character, or devoted to literature, the sciences, arts, or some spe cial industry, and having a legitimate list of subscribers: Provided, however, That nothing herein contained shall be so construed as to admit to the secondclass rate regular publications designed primarily for advertising purposes, or for free circulation, or for circulation at nominal rates. (Act of March 3, 1879, sec. 14, 20 Stats., 359.)
That is the general act under which newspapers and periodicals are admitted. It deals with the thing to be mailed, its character, and its circulation, to determine whether or not it is of that class. Under that act the privilege does not at all depend upon who the mailer (the publisher) may be.
The acts of 1894 and 1900 are different. They have very many less restrictions; but under them the privilege depends upon who the