Mr. KEATING. Except one thing. Of course this budget business has complicated things. They start estimating 5 years ahead and have to figure 2 years ahead how much money they will require. It is a difficult thing to do. They had a policy until recently that if the Post Office Department did not have enough to operate they would come back and seek a deficiency. I do not think there is anything that prevents them from coming back and seeking a deficiency now, but in the last few years officials have not come back for a deficiency and I think it is their fault.

Mr. DANIELS. My point is that the Postmaster General is in charge of the Post Office Department and can exercise his good judgment as to what is the best manner in which to operate the Post Office Department in an efficient, economical manner and what is the best manner of giving service to the public. If he is wrong in the exercise of that judgment, as he he may very well be by your testimony given here today-and, as pointed out, either he is right or you are right; the testimony is directly contradictory, so one of you is wrong. Assuming the Postmaster General is wrong, what do you recommend as a remedy to correct the situation?

Mr. KEATING. I think Congress should pass legislation to restore these services, to provide the services on Saturday.

One thing I did not mention, we live in a different type of community now. The people who work in a city like Washington or any large city move to the suburbs, that is where they live. The banks now are opening offices in the suburbs because people can't get to the banks during the week, and they keep those banks open on Saturday. But we are doing the opposite and closing the post offices on Saturday. People are tied up during the week and I think the Post Office Department should be instructed to modernize their thinking in this manner. Mr. DANIELS. Can that be done by legislation?

Mr. KEATING. You can do it by legislation.

Mr. DANIELS. What other method do you recommend to correct the situation?

Mr. KEATING. I think the best way to do it is by legislation. You can recommend it to the Postmaster General but of course he is not required to follow a recommendation. He is required to follow the law.

Mr. CUNNINGHAM. One further thing. Yesterday the Postmaster General said that if any of these local postmasters found the order was causing great difficulty he would be delighted to review it, and he suggested perhaps he would modify the order in individual post offices. I asked him whether or not, if the local postmaster asked for modification of the order, whether it came to the Postmaster General, after he made this statement, and he said, "No, it went to the regional office." I said in that case if there were some hardships and changes were desirable they probably would never be implemented, certainly not in my experience with the Post Office Department.

If you make a study I would be hopeful you would see fit to comment on the regional setup, something I have always opposed. I think it is a very bad setup as far as we in Congress are concerned. I do not know what your feelings are and will not ask you to comment at this time.

Mr. KEATING. I could not express the pros and cons of the regional setup in a few words. But I do not think solely solving individual complaints is the proper way to make corrections. I do not believe the people who complain to their Congressman and the Congressman makes a complaint and then we have the service adjusted, I do not think that is proper. This may take care of 1 or 2 percent of the people, but that is not sufficient. They all ought to be taken care of and given good service. Too often the Department will take care of those that holler the loudest but the others are neglected. The person who does not complain may just move out on you. I do not think that is the way the situation should be taken care of. It is far too inadequate.

Mr. DULSKI. We will be glad to hear from the vice president of the association, if he has anything to add.

Mr. RADEMACHER. We all compliment the chairman and all this group who have sat through these 2 days of hearings. For one, I would hope there would be more hearings until the entire deterioration of the Post Office Department was disclosed. But I would like to give one example of the false economy. I was talking to a letter carrier from New Jersey, in Mr. Daniels' district. Normally he will complete his assignment each day. That is one of the rare instances of being able to clean up daily. But in this particular case his day off was Tuesday. On that day it is necessary to employ a substitute to deliver the relays, and this takes a couple hours. In addition the substitute carrier, on the nondelivery day, had to deliver the first-class mail, the airmail, and the perishable mail. This took 5 hours. The next day the regular carrier had the previously curtailed mail. He came back and brought what he could not handle and the substitute had another 5 hours. In addition, some of these people suffered late mail delivery the next day and some came to their door at 7 o'clock at night to receive a parcel they should have received the day before.

This is not an isolated case. You will find this whole program is false economy. It is costing more money to operate the parcel post delivery than ever before.

And once again, Mr. Chairman, you personally are to be complimented for your-I don't want to call it courage but that is what it is-in holding these hearings and we all join in thanking you for this opportunity to appear today.

Mr. DULSKI. Thank you very much.

We will insert in the record at this point a statement by James W. Hulfish, director of information, National Audio-Visual Association, Inc.

(The statement follows:)

STATEMENT BY JAMES W. HULFISH, DIRECTOR OF INFORMATION, NATIONAL AUDIOVISUAL ASSOCIATION, INC., FAIRFAX, Va.

Mr. Chairman and members of the subcommittee, my name is James W. Hulfish and I am the director of information of the National Audio-Visual Association, with offices in Fairfax, Va. The organization I represent is the national trade organization of companies which distribute, sell, and produce educational and religious films, filmstrips, recordings, and various other types of audiovisual materials for use in schools, churches, and businesses, together with the equipment necessary to project or reproduce such audiovisual materials. We are a nonprofit corporation and we represent 669 companies, including about 449 audiovisual dealers and film libraries. These businesses have been grievously hurt by the recent cuts in postal service.

Although some of our members, primarily equipment manufacturers, are major corporations, the vast majority of the audiovisual industry may be classed as small businesses.

Training and educational films and other presentations are expensive to produce. Average production costs for a 30-minute, black and white film is $20,000. A color film of the same length will run $30,000. Duplicate black and white prints cost about $160 and about $300 in color.

Since these productions are used only once in a course per year, the audiovisual industry has established film libraries to rent them at a reasonable fee to the user for the time he needs them. Obviously the success of such a system depends on rapid and dependable transportation facilities. Each film library must carry an inventory of each item which is large enough to meet the demands of current users, and his return on his investment is directly dependent upon the frequency with which he can schedule showings.

Since an average film with its protective packing case weighs about 5 pounds the only feasible distribution method that permits keeping user costs within bounds is parcel post. Most film libraries service an area of several States though some specialized libraries ship on a national scale. Many customers are located in small and remote locations where parcel post is the only established communications link (see attached letters for exhibit).

The recent cut in parcel post service from 6 to 5 days a week represents a 161⁄2 percent reduction. Actually our members report that the net result is closer to a 25-percent cut in service, apparently due to backlogs that accumulate on the off day, increasing delivery time in some cases to 2 or more days rather than 1.

This means that film library operators must increase inventories by onefourth-at least on their more active items-to furnish the same quality of service that existed before the cut or suffer a corresponding loss of business and wanted service to educational and religious users.

Audiovisual materials-films, slides, tapes, etc.-are fragile, and must be returned to the film librarian rapidly after each use so that he can check their arrangement, cleanliness, and good condition before they go on to the next customer. The cut places upon dealers the burden of paying overtime wages to perform these services. One typical film library in Washington, an active business enterprise, gets an average of 50 films returned per day, each of which must be inspected before rescheduling. Following the parcel post "off" day, these returns number over 100.

The great bulk of audiovisual customers are educational, religious, civic, and other nonprofit public service agencies. As a result of the Post Office Department action, these organizations will have to bear increased costs from modest budgets or do without valuable audiovisual services (see attached letters for example).

A careful analysis of the Post Office Deepartment's action raises serious questions concerning the Department's management policies and some question about the information it presents to the public.

In a press release dated March 10, 1964, the Department announces that the parcel post cut will save $3,714,000 and 697 jobs. With a Post Office Department budget of over $5 billion, this 161⁄2-percent cut in a vital service to the American public results in a monetary saving of less than one-tenth of 1 percent. Using the Department's own announced manpower figure of 594,354, the personnel saving is slightly over one-tenth of 1 percent. Consequently the loss in service is 160 times greater than the so-called economy. It is also worth noting that just a month before the cut in service was instituted, parcel post rates were increased by 20 percent.

Parcel post service has been singled out to produce revenues within 4 percent of costs. There is presently a moratorium on this requirement until June 30, 1966, to give the Congress-according to Public Law 88-51-a chance to "conduct a thorough and painstaking review of the entire parcel post operation." We should like to call attention here, on behalf of our members and other business organizations throughout the country, to the difference between parcel post and bulk mail-the latter a notorious money loser for the Post Office Department. Bulk mail is widely used for direct-mail advertising and solicitation-unrequested and usually unwanted by the recipient. If it is dated, it must be delivered on a first-class basis if necessary.

Parcel post, on the other hand, involves shipment of items that have been requested by the recipient and are wanted as expeditiously as possible. It vitally affects the entire distribution system in our economy, and if this Nation is to advance, parcel post service should improve with technological progress rather than retrogress. The radical, arbitrary cut imposed by the Department disrupts a key link in the commercial communications complex of this country and is a distinct disservice to all segments of the taxpaying public.

The information furnished the public by the Department regarding the cut is notable for a distressing degree of confusion concerning the economies involved. Its press release of March 10 begins: "The cut of an additional 3,100 postal jobs during the fiscal year starting July 1 (1964) will result in limited adjustments in some postal services without impairment of any that are essential * This implies that parcel post is a nonessential service in the Department's eyes. The same release, on the same page, mentions "personnel reductions announced earlier that will cut staff during the second half of the current 1964 fiscal year (by June 30, 1964) from 595,000 to 590,000."

Ths adds up to a total cut of 8,100 jobs, or about 11⁄2 percent. Ths would be a saving of sorts, but would still hardly justify a 161⁄2-percent cut in parcel post service, which in fiscal year 1963 processed 1,075,850,000 pieces of mail out of a total of 67,852,738,000-about 11⁄2 percent of the items handled.

When another fact is considered another view emerges however, the cut of 3,100 spaces is not from the June 30 total of 590,000. It is from a requested figure for the 1965 fiscal year of 597,454. The actual "cut" then is from 595,000 to 594,354, or 646 spaces rather than 8,100-a little over one-tenth of 1 percent. But apparently there is still an additional figure; on May 31, Mr. Jerry Klutz, writing in the Washington Post, states that while most Federal agencies are receiving personnel cuts for fiscal year 1965, the Post Office Department is unique in getting a 5,000-man increase. We cannot determine exactly which

figure this 5,000 should be added to.

It appears there is no personnel cut whatever: there is probably an increase. And if you add the announced 8,100-man cut to the actual 5,000-person increase, it's very tempting to view the figures as deceptive at best.

Opportunities for significant economies without reduction in service are apparent to most observers of our postal system. Recently the Flying Tigers, a leading all-cargo airline, published open letters to Postmaster General Gronouski, President Johnson, and the Congress in the form of full-page advertisements in the Washington Post. In essence, Flying Tigers charge that the Post Office Department should cut its airmail payments to American and foreign "combination airlines" (those who provide both cargo and passenger service on a scheduled basis) by 50 percent. Flying Tigers offers to carry airmail at the reduced rate and make a profit without taxpayer subsidy.

The Civil Aeronautics Board is looking into this, and even the combination carriers themselves reluctantly admit that, with the increased efficiency of modern jet aircraft, some reduction is probably in order. Since current airmail payments by the Department are over $140 million a year, even a 10-percent reduction in this one item would more than offset all the financial savings promised by the total "reduction in service package" arbitrarily instituted by the Department. This "package" includes-in addition to the parcel post cut--reduction in window services, closing of some small post offices, and other actions which enforce unnecessary hardships upon the using public.

The implementation of the parcel post cut has been left up to local postmasters, with the "suggestion" that it occur on a Tuesday, Wednesday, or Thursday-the middle of the business week. Different areas of the same city may be deprived of service on different days. This adds the insult of confusion to the injury of poor service and makes it impossible for any shipper to plan intelligently.

Federal agencies were created to insure uniform and equal services beyond the capabilities of local governments or private commercial institutions. This "localized policy" suggests a reluctance on the part of the Postal Department to assume the responsibilities of its charter and force the blame for inadequate service to be shared by the local postmasters.

Open to logical question was the announcement by the Department, concurrently with the curtailment of services notice, that it was forming a study group to "delve in depth" into ways and means to offer better parcel post service. We Wish to suggest that good management practice would have called for the formation of the group and a thorough study of its finding before imposing the cut.

One of our members recently requested information and assistance from his Congressman about getting the postal cut rescinded since he had already felt the adverse effects of it in his business. His Congressman requested information from the Postmaster General on which to base his reply and received the attached letter in reply from Assistant Postmaster General McMillan. In his reply, Mr. McMillan furnished information which is extraneous or which our member was already aware of through a newsletter we publish. He justifies the eut, which was the subject of the original letter, by saying that some department stores only deliver once a week and at the most five times a week, and that he hopes the cut, the sole reason for our client's letter, won't cause inconvenience. He adds that no regular postal employees will be fired. But he does introduce an implication that the Post Office Department looks to department stores to set its parcel post standards. This merits comment:

In most areas, if a customer dislikes the delivery service one store offers, he can turn to a competitor. Some department stores deliver daily. Additionally taxis and parcel delivery services are available to a local customer, or he can pick up his parcel at the store. Most department stores are open 6 days a week, some of them until late in the evening. In any case a number of alternatives are available, and frequently the whole operation can be negotiated locally by telephone.

We think Mr. McMillan's example is most inept, however his bringing private, competitive enterprise into the picture may have some merit. The department has suggested that by sending parcel post items "special delivery" or "special handling"-excellent service can still be assured. Some of our dealers have discovered that commercial, nonsubsidized, parcel delivery companies offer better service at a lower cost (in the limited areas where their services are available). The National Audio-Visual Association represents an industry that is contributing dramatically to training and retraining in all fields of education, helping to solve social, economic, and scientific problems ranging from preparation of astronauts to giving retarded children some hope for a useful life.

Our society is in the throes of rapid, technological change. Such change threatens potentially dangerous economic and social side effects unless informational and educational techniques can keep our growing population abreast of these new developments. The contribution of audiovisuals to the acceleration of learning, especially in technical fields, is universally recognized.

The significance of this is emphasized by the prediction of one authority on automation that to remain employable-most workers in this generation have retrained or will have to retrain at least one time. The next generation may have to retrain two or three times.

To help solve the domestic and international problems of our era, our Government is spending billions of dollars of tax income on the Small Business Administration, the farm price support program, the Area Redevelopment Administration, urban redevelopment, national defense, social security, anti-poverty, etc. Approximately $3.5 billion are currently programed for foreign aid-in some cases to countries that have better postal services than our own.

The audiovisual industry, although its growth in terms of gross national product has been great and will undoubtedly continue to be, can never hope to be a highly profitable operation for most of the people engaged in it. Unlike petroleum products or electric power-where technology reduces costs of production of a constant product while consumer demand rises-our main commodity is new information. Today's training film is obsolete tomorrow because of new developments in scientific, educational, or industrial techniques. The same is true to a lesser degree of the equipment used.

We are therefore highly dependent upon reliable, fast, and relatively economical transportation networks in orer to survive, pay taxes, and contribute to the advancement of this Nation.

It is with considerable regret that we in NAVA are forced to make this strong a statement. We enjoy pleasant relationships with individuals in the Post Office Department, who we feel are dedicated people. However, on behalf of our members we feel that we must protest most emphatically these recent Department actions, and the whole downward trend of postal service such actions suggest. The Post Office Department in its "Annual Report of the Postmaster General, 1963" devotes over 70 pages to the following subjects: "Improving Post Office Operations and Services," "Advances in Research and Engineering," "Modern Transportation Policies and Methods," "Providing Modern Financial and Related Services," "Progressive Personnel Management," "Planning for Better Manage