Middle West Supply Co. at Dayton is certainly well regulated, and seems to be a very prosperous business. They are apparently doing very good work and very satisfactory work.

The Post Office Department, at the hearing on this same bill, or a similar bill at the last session, I think it was, made the statement that the Post Office Department was making quite a substantial profit under the present regulations by letting the contract for the printing of these stamped envelopes and the return cards to other companies. Undoubtedly the company that has this contract is making a good profit. It seems to me that the Government might just as well do that work and make that additional profit, and that the profit that would be made in that way would go a long way toward overcoming the deficit in the Post Office Department that we always have.

I do not think there is any good logical reason why the Government should not do this work of printing these stamped envelopes and return cards. I think there is a general demand, especially from business all over the country that uses a great many envelopes, and it seems to me that there is no excuse for this bill, no good reason for the passage of this bill; but in my estimation the Government should do this work itself. Whether or not these men are brought in as witnesses, as Senator McKellar states, makes no particular difference to me. I am satisfied, from what investigations I have made, that the best way out of the whole situation would be for the Government to do that work instead of letting it out to private concerns.

The CHAIRMAN. Are there any persons present who wish to be heard in favor of the bill?

Senator KENDRICK. I should like to make a short statement.

STATEMENT OF HON. JOHN B. KENDRICK, A UNITED STATES SENATOR FROM THE STATE OF WYOMING

Senator KENDRICK. Mr. Chairman, I would prefer to listen to the hearings, ordinarily, and to have a word to say later, but for the fact that I am due at one or two other committees right away, and if this committee will indulge me just a moment to express an opinion in favor of the bill I would appreciate it.

I do not agree, even in the slightest way, with the conclusion reached by my friend from North Dakota, Senator Frazier. I, too, have had a number of letters from people in my State asking me to protest against this legislation. Business firms and men whom I know and whose judgment I ordinarily respect, have appealed to me to prevent if I could, and use such influence as I had by my vote and otherwise against this bill, in the interest of economical purchases of envelopes and other stationery. I have answered invariably that I could not follow their line of reasoning, and I would not oppose the legislation, but proposed to do everything I could in its favor.

Mr. Chairman, I see no more reason why the Government should proceed to occupy this field of endeavor than for it to go into any other line of legitimate business, and I see less reason for it than going into the ordinary lines of business, for reasons which I shall point out to you.

Every person around this table has occasion to know that the country newspaper to-day is very largely dependent upon and supported by job printing, of which this is an essential part. Every one

who is familiar with conditions in country communities knows that in proportion to the investment in the newspaper, both in capital and labor, the country newspaper contributes more to the welfare and benefit and development of the community than any other activity in that community.

The country newspapers protest against the present practice because it is an interference with their legitimate line of business, and on that ground I agree with them fully.

I point out to you that during the recent war you could not have floated your bonds; you could not have carried on the activities of the war, without the unquestioned and unfailing help and assistance of these country newspapers. Every single move made in the interest of our country communities is first sanctioned and given publicity by our newspapers, and in almost every single instance without any remuneration whatsoever. In most cases it may be stated as a fact that the man who gives his time and his effort to the publication of one of those country newspapers could profit more largely in almost any other field of endeavor, with a given amount of energy and a given amount of intelligence and business ability. They do not, as a rule, receive unusual compensation for the service rendered, and they do, as I have already expressed, contribute more to the benefit and welfare of the community, and receive less for it than any other activity in the community of which I have any information. Looking at it from that viewpoint, I am compelled to believe that if the Government proposes to go into business activities, this is one field, at least, that it should eliminate from its list.

The job printers in nearly every case of which I have any information, are the editors of the country papers, and they require this particular line of compensation to help defray the cost of publication. There are certain lines in which, perhaps, the Government can participate to advantage and can probably function better than any other, because of its resources and its corps of trained and efficient men. One of these with which we of the West are familiar, because it is the most important governmental activity within the borders of a western State, is reclamation. I point out to you here that reclamation is not, in a sense, a business venture. It is an illustration of the Government taking from its own to develop its own. It is taking from the royalties and the resources and the returns on public lands and developing lands that are otherwise unsuited to development, and in that way it is fulfilling a function that can not be met any other way. It is entirely consistent, and it is in line with the high purpose of the Government to settle these lands.

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Again, we have recently had the question raised as to the Government's departure in the field of power development. I want to say here that I agree with those who hold that so long as legitimate business can be induced to conduct this particular activity, it is entirely consistent and proper for it to do so, because it provides the exact measure of a standard under which the business should be done, in a thorough and entirely consistent way. Whenever the Government puts its money into these ventures without taxes and without other expenses that must arise in ordinary business, it becomes an unfair competitor with those who are trying to do business in a perfectly legitimate way and meet the obligations of Government as they must meet them.

Therefore, Mr. Chairman, I want to ask the indulgence of the committee to say that I am in favor of this bill on what I believe to be principles not only of justice and equity but even of common decency.

Senator PHIPPS. Mr. Chairman, may I ask the Senator a question? Senator KENDRICK. I shall be glad to have you.

Senator PHIPPS. First, I would like to make a statement in just a very few words.

I do not believe that any Senator is more interested in doing what can properly be done to help the local newspaper publishers and the job printers. In traveling around in my own State I have often wondered how they managed to make both ends meet, but here, it seems to me, we have a practical question that we are up against. Senator, is it your belief that if this bill is adopted and the Government ceases to furnish stamped envelopes with return cards on them that printing will go largely to the newspaper publishers and the job printers in your State?

Senator KENDRICK. Senator Phipps, I can only speak from past experience. Up to this time I think that the country newspapers have occupied that field almost exclusively, and there is no more reason for the Government interfering here and entering that form of competition than there would be for the Government to enter into and develop and carry on or conduct a department store in every community in the country.

Senator PHIPPS. Now, Senator

Senator KENDRICK. If I may say a word further there, we have found from experience along that line in the economic life of our communities that the department store is not always the best thing for the community. There is the concentration; there is the absence of the specialization in lines; and there are a good many drawbacks But I am constrained to believe, as I have already stated here, that on general principles it would be more unfair for the Government to compete with this particular line of business than almost any with which I am acquainted. I hope it will be unnecessary for me to explain that I do not own a dollar in a newspaper in the world.

Senator PHIPPS. That would not make any difference, whether you did or not.

Senator KENDRICK. I thank you, Senator.

Senator PHIPPS. This is really an interesting question, and I think it is an intricate one. The fact is that to-day these local printers may print envelopes with return cards which will include advertising matter, which is excluded on the envelopes now furnished by the Government. In setting up that return card with advertising matter, that can be done at approximately the same cost as the simple return card printing, but the local job printer, to do that work, must necessarily charge the customer very much more than he now pays through the Post Office Department, on account of mass production. I think our people are very much misled in believing that if this bill is adopted and becomes law this job printing will come to them. In my opinion they would get a very small proportion of it. I do not believe they would get 10 per cent of it. The people would be immediately approached by the large envelope companies, at least three or four of which can print almost as cheaply, if not

quite as cheaply, as the Dayton concern. They will have their agents and, by advertising, will seek this business of printing return card envelopes. The mail-order houses will go into the same line, because they already have machinery and equipment to do this work on a mass production basis, and I do not believe it is possible for the job printers and the newspaper publisher in the small town to compete. I believe that their price is necessarily so much greater than they now pay that the users of those return card envelopes will either buy from the large envelope houses or the mail-order houses or simply refuse to use a return card envelope. They will not pay the price unless they can do it by reason of the advertising value of the return card itself, which they can not get to-day through the Post Office Department.

Senator KENDRICK. If I understand your statement it is, in effect, that the economies effected by the purchase of the larger producers would drive the smaller men and local men out of this business of job printing.

Senator PHIPPS. Absolutely. That is my belief.

Senator KENDRICK. Senator Phipps, anyone who has observed the encroachment of the stores referred to a while ago, the department stores, and anyone who has observed the constant encroachment of the mail-order houses and has witnessed and has been a part of the protest of every community against that sort of thing, will hesitate to believe that will occur. These very men who are having this printing done for local use in their own community are the most seriously affected by the mail-order houses, and they ought to hesitate, from the standpoint of an example, to go elsewhere to have their work done, when they are asking the people around them to patronize their own business.

Senator FRAZIER. That same argument is possible now.

Senator KENDRICK. So that I do not believe this rule will apply in this particular case.

Senator PHIPPS. Senator, that is ideal; but it is not human nature. The CHAIRMAN. Senator, the remedy for the condition which your are describing is to abolish the parcel post and rural-free delivery? Senator KENDRICK. Senator Moses, there are two questions involved there, it seems to me. I have never regarded our parcel-post rates as high. I have known all the stages in which one needs to observe economy, and I have been a party to it. I have never regarded those rates as high, and I do not think any capable business man will declare, in any community, that the cost of his job printing it high, either. I have had occasion to pay for that, and I have had occasion to pay plenty for postage, but I have never thought that that was any reason why, if necessary, we should not increase our parcel-post rates to take care of the cost of that department. But I do not believe that we have a right, with the facilities of this Government and the resources behind it, and the opportunity to put any and every competitor out of business, to engage in a plan under which the competition is unquestionably unfair.

Senator BROOKHART. The Senator is in favor of Government reclamation for private parties?

Senator KENDRICK. Not for private parties. I will not subscribe to that, Senator.

Senator BROOKHART. You do not expect the Government to operate firms and the things it reclaims?

Senator KENDRICK. No.

Senator BROOKHART. But here, in this business, we have the printing of the Government's own stamps. It seems to me that is more particularly a Government function than anything the Senator has mentioned.

Senator KENDRICK. That is entirely all right. The printing of the stamp and the return proposition is all right, but when you go further than that you are, from my viewpoint, trespassing on the domain of private business.

Senator MCKELLAR. May I make this suggestion to the Senator from Wyoming. It is not direct Government competition with the private manufacturers, but under this plan, under this contract, the Government singles out a corporation and gives to that individual corporation an exclusive monopoly of all this business.

Senator KENDRICK. Yes.

Senator MCKELLAR. The Government is not making a profit out of it.

Senator KENDRICK. In that connection, may I say

Senator MCKELLAR. But the individual monopoly created by the Government is making a profit out of it.

Senator KENDRICK. In that connection you might very well make inquiry as to what this monopoly does for the community in which this particular product is used.

Senator MCKELLAR. May I call your attention to the fact that there has just been received

Senator KENDRICK. On the one hand, we have an agency that is giving its all to the development of that community and to the welfare of the people of that community

Senator MCKELLAR. I call your attention to this fact. We have invited, as we have invited other people to come before the committee, the manager of this plant to come before the committee; and he treats us with perfect contempt. He thanks us for the courtesy, and says that he will not be present. He declined to answer questions that were asked him. He was asked what dividends this Government monopoly was making. He declined to answer the question.

Senator PHIPPS. I did not propound that question and I did not favor it. I did not think it was the province of this committee to ask the man how much he had invested, how much his earnings were, and how much he distributed in dividends.

Senator MCKELLAR. We will see whether it is before we get through with it or not.

Senator PHIPPS. He holds a contract for the Government that he acquired through competitive bidding.

Senator MCKELLAR. Oh, no. He bought it. He bought out his competitor. He did not get it through competitive bidding. Senator PHIPPS. Certainly, there were competitive bids.

Senator MCKELLAR. The other man underbid him, and he bought this man out.

Senator PHIPPS. Your information may be correct, but it does not come to me that way.