stands the fact that the Congress authorized the permit privilege without designating the character of the machine that must be used and if it be true that there is some slight saving or advantage to the department that saving or advantage is at the expense of the patrons of the service, for the use of each meter involves the expenditure of $10 per month and in the case of a user, particularly one who must have several meters, this becomes a very considerable item of expense in the course of a year.

As we have stated, we do not wish to insist that the department has no discretion whatever in limiting permit mailings. It may be that the department is justified in placing a minimum of 100, it possibly would be justified in placing a minimum of 200, and may have felt justified in placing a minimum of 300 at one time. We are not complaining about a reasonable minimum. Our complaint is to the discrimination as between machines, a discrimination which the maker of the machine favored by the regulations is quick to take advantage of, and, having a virtual monopoly of the field, can utilize to his great financial advantage.

It was undoubtedly the desire of the Congress to afford the widest possible and reasonable opportunity to use the first-class permit privilege. Unquestionably the granting of a permit privilege to first-class mail has increased postal revenues. Those who desire to and can afford to pay the monthly rental of a meter will, of course, continue to do so, but the discrimination as between mailings discourages the users who may not feel justified in paying monthly rentals from availing themselves of the permit privilege.

May we again emphasize the fact that our protest is not against the exercise of reasonable discretion within the authority of the statute. We protest against discrimination which tends to create a monopoly. As to the minimum number of pieces which may be mailed under the permit privilege relating to first-class matter, we should, of course, abide by the judgment of the department. It occurs to us, however, that a minimum of 300 pieces is unreasonably high. It amounts to a postal revenue of $6.

There is now before the House H. R. 9296, one paragraph of which provide s that 20 pounds of third-class matter subject to pound rates of postage may be accepted without postage stamps affixed. This, of course, is not as yet law, but it contemplates a minimum mailing weighing 20 pounds on which the postage would be, we understand, $1.60. If a minimum of 200 pieces were fixed by the regulations for first-class mail, the postage would amount to $4 for 5 pounds. With a minimum of 100 pieces which is now allowed for metered mail, the postage would be $2 for 21⁄2 pounds, which is 40 cents more than is now contemplated for the new third-class privilege. We do not presume to say whether the minimum for first-class permit mail should be 100 or 200 pieces. What we do insist is that it shall be uniform for both metered and nonmetered mail.

We have not attempted in this letter to present all of the arguments that may be made in support of our contention. We have tried to present, as briefly as possible, arguments which we believe are quite sufficient to support our view that the regulations should be amended to restore the uniformity of treatment which was undoubtedly contemplated by the Congress and which was provided for by the regulations as first adopted and again in 1924.

F. W. MONDELL, C. BASCOM SLEMP, Attorneys for the Standard Mailing Machines Co. The CHAIRMAN. I wish you would summarize the letter to the committee in the course of your statement.

Mr. MONDALL. I shall:

Before writing that letter we had discussed the matter with the Third Assistant Postmaster General and with Mr. Wood, who is at the head of the classification division of the Third Assistant Postmaster General's office. We found that they were apparently settled and confirmed and convinced of the righteousness of their decision. We were told that we had passed from the age of the lumber wagon, from the day of the ox cart, although we still deliver mail with an ox cart sometimes, and only pay 2 cents postage. We were told that we had gone on through the various forms of improved transportation from the Ford to the Rolls Royce, and now to the flying

machine; and that it was not only the privilege but the duty of the Post Office Department to carefully examine as to the difference in the trouble to the employees of the service in handling one class of mail as compared with another, and to differentiate as between these different mailings under the same classification and to give preferred and preferential treatment and encouragement to those whose deliveries, in their opinion, under their practice, were a little more convenient for them to handle than other classes of deliveries; that it was the privilege of the department and it was the duty of the department to encourage these new improved services, as they called them.

We called their attention to the fact that this alleged improved service was a service which came from mailings from one machine, one patented machine, the meterhead of which was never sold; that the cost per month of the use of the meter was so great that a small mailer could not afford to use it, and that even the great mailers did not care to be charged with this excessive cost of mailing. We argued all these points, and some of them are referred to in the letter to Mr. Regar. In the meantime the Postmaster General had recovered somewhat, and he was good enough to give me an interview. After my talk with him I wrote his a letter on March 16, which I will put into the record.

The CHAIRMAN. That may be done.

(The letter referred to is as follows:)

Hon. HARRY S. NEW,

Postmaster General, Washington, D. C.

MARCH 16, 1928.

MY DEAR MR. POSTMASTER GENERAL: We are availing ourselves of the opportunity offered by your personal suggestion of a few days since, of presenting, in writing, certain views with regard to the regulations relative to the use of the permit privilege for first-class mail. As you suggested, this matter has been very thoroughly discussed and presented in oral and written argument, but we are of the opinion that there are certain features of the situation which have not been given full consideration by your department and in our opinion in that regard is our excuse for this further communication. We are also inclosing herewith a copy of a letter addressed to the Third Assistant Postmaster General on February 9, 1928.

The act of April 24, 1920, provides:

"The Postmaster General, under such regulations as he may prescribe for the collection of such postage, is hereby authorized to accept for delivery and deliver, without postage stamps affixed thereto, mail matter of the first class on which the postage has been fully prepaid at the rate provided by law."

It is interesting to note that the only discretion granted the Postmaster General in this legislation is contained in the words "under such regulations as he may prescribe for the collection of such postage." The first regulations under this statute, adopted May 10, 16 days after the enactment of the statute, prescribed a minimum of 300 pieces to a mailing regardless of the device used for printing the indicia. At various times thereafter the regulations with regard to these permit mailings were modified, and on March 11, 1927, new regulations were issued reducing the minimum of mailings from metered machines to 100 pieces to a mailing while retaining the requirement of 300 pieces to a mailing from nonmetered machines.

There are other features of the regulations differentiating between mailings from metered and nonmetered machines which are objectionable but the regulation above referred to granting preferencial treatment in the number of pieces to a mailing from metered machines is so manifestly discriminatory as between citizens availing themselves of the privileges of the statute, that this argument will, in the main, be confined to that provision of the regulations and to its effect.

If the enjoyment of the privilege of permit mailings of first-class matter rested wholly in the discretion of the Postmaster General and it was an established rule of his department, sanctioned by Congress, that preferential treatment should

be accorded to patrons of the mails in proportion to the departmental view or estimate of the relative convenience to the department of one character of delivery, receipt or use of the mails as compared with another, and if the Congress had authorized the department to grant preferential treatment and special privileges in the use of the mails even to the point of aiding in the establishment of a monopoly in the enjoyment of a mailing privilege, then we could understand the attitude of the department in this matter as evidenced by regulation and practice.

But we do not understand that the Congress has in the granting of the mailing privilege now referred to or in any other matter or manner, authorized diserimination as between those utilizing a mailing privilege granted by the Congress, and we are loath to believe that the department assumes that it possesses the authority or that it has the disposition, to discourage the exercise of a mailing privilege, granted by the Congress, through the use of a particular machine or method, or to encourage to the point of establishing a monopoly the use of another maIchine or method. We are rather inclined to the opinion that the regulations and the attitude of the department under them, of which we complain, were adopted, quite naturally perhaps, from a purely bureau viewpoint as to the most agreeable and satisfactory form for the exercise of this permit privilege and, by inadvertence, without full consideration of the rights and interests of the users of the mails.

Our understanding is that from the department's viewpoint, it is argued that the use of a machine carrying meter set by the officials of the department is in the interest of economy. Assuming for the purpose of the argument that it is true that the use of such a metered machine saves the department some trouble and expense as compared with the handling of permit mail run through a different class of machine, that fact alone could not justify the perferential treatment accorded the so-called metered machine in the regulations and administration of the department.

It seems scarcely necessary to suggest that if preferential treatment, varied in kind and character, was to be accorded patrons utilizing mailing privileges of various kinds, on the theory of slight administrative advantage the department would soon find itself in a maze of difficulties and subjected to the severest criticism. No two classes of users of the mail utilizes the facilities of the department in exactly the same way. Utilization of mailing privileges presents a wide range of difference in relative convenience and cost to the department and any attempt to unduly differentiate in the regulations or practices of the Government with a view of discouraging, to the point of prohibition, any lawful use of the mails, is contrary to the spirit of the postal laws and would lead to endless confusion and complaint.

The Congress has, of course, authority to establish whatever rules with regard to the use of mail privileges it sees fit to do but the consistent policy of the Congress has been to afford equal and uniform opportunity to all those utilizing the various facilities of the department and to accord similar treatment, consistent with their situation, to all who avail themselves of the privileges of the mails.

With regard to the matter of relative economy, it is true that those outside of the department can not, in the nature of things, have intimate knowledge of the relative convenience and economy to the department in the handling of so-called metered and nonmetered first-class permit mail, but one may very well doubt whether there is necessarily the difference in trouble and expense that has been claimed. No machine made by the hand of man is free from the danger of malfunctioning. No such machine is either fool or rogue proof, as the records of the department testify. There is, furthermore, the ever-present possibility of a material overweight of metered mail, a possibility which the makers of the only "department set" metering machine in general use have themselves suggested to their customers, present and prospective, in their advertisements. These facts not only suggest but render essential a frequent inspection of the so-called metered mail. In fact, if the inspection contemplated by the regulations is had, there can be no very great difference between the work of handling metered and nonmetered mail. It is our understanding that a considerable part of the claimed additional cost of handling nonmetered as compared with metered mail is due to the practice of the department in the sale and handling of stamps. If there be any considerable additional trouble or expense in this regard it could easily be obviated by the adoption of a uniform practice for the prepayment of postage by all permit users.

There is unquestionably a great saving to the Government in the use of the permit privilege for first-class mail. A questionnaire recently sent to the users of the Standard mailing machine indicates that the use of such machines saves the department an average of $48.90 per year on the manufacturing cost of postage stamps alone for each machine. Assuming the use of 600 of these machines, the saving to the department through the use of this machine, on the cost of the manufacture of postage stamps is $29,340 per year.

It may be the theory of the department that any loss to the postal revenues through the discouragement of the use of these machines by discriminatory regulations and practices, will eventually be made up by the use of other machines instead, but we insist that the department is not justified in impairing postal revenues in that way or in assuming that all users of the permit privilege can be persuaded to use the same machine, particularly when the use of such machine involves additional expense.

In granting the permit privilege for first-class mail the Congress never contemplated the establishment of a monopoly in a private corporation, never intended to compel, persuade, influence, or incline the users of that privilege to avail themselves of the privilege through the use of a single patented device. The Congress undoubtedly intended that the privilege should be exercised through the use of any machine or device that would prepare and present the mail to the post offices of the country in a reasonably satisfactory way, and as we have pointed out the only discretion the Postmaster General may exercise in the matter is through regulations insuring the collection of the postage.

It is our contention that the matter of the use of the permit privilege should not and can not lawfully be viewed and regulated wholly from the viewpoint of the accommodation of the bureaus of the Post Office Department, or wholly from the standpoint of some slight economy to the department. The privilege was granted for the benefit and accommodation of the users of the mail and in the belief that it would increase the use of the mails. That it has greatly increased the use of the mails, there can be no question and this increase will continue unless and except it is discouraged by regulations and practices which render it difficult and unduly expensive to the people to exercise the privilege.

The Standard mailing and like machines manufactured for the purpose of enabling patrons of the post office to avail themselves of the permit privilege are sold outright and the purchaser has no further expense in connection with the machine except the cost of maintenance and operation. On the contrary, the manufacturers of machines carrying a metering device to be set by the postmaster do not sell their meters, and the users of such machines are subject to a monthly rental of $10 per meter. A user who desires to mail for each denomination and thus any possible saving to the department through the use of a so-called metered machine is at the expense of the patron. This additional expense is so considerable that many of those who desire to avail themselves of the permit privilege would not find it economical to do so if compelled to pay monthly rental on meters. By reason of that fact any regulation or policy which discourages the use of the nonmetered machine not only limits and restricts the privilege which the Congress granted but tends to a reduction of the postal revenues.

We realize that the Postmaster General under the discretion granted him to promulgate "such regulations as he may prescribe for the collection of such postage" is justified in fixing a limit on the minimum number of pieces to a mailing but we insist that the minimum so fixed shall be uniform, shall be the same for all patrons of the post office without regard to the character of the machine which they use in preparing the mail for posting, providing the machine prints the indicia clearly and satisfactorily and the mail is presented in proper form and

manner.

We do not pretend to say what this minimum should be. In the legislation providing for a permit privilege for other classes of mail the Congress has fixed the minimum. Possibly it would have been wise to have done that in the case of first-class mail. Perhaps it should be done now. Had that been done the department would have been free from the importunings and annoyances of manufacturers who seek special treatment and privilege for the users of their machines. There would have been an absence of the exploitation of the theory, which so far as we know has been applied to this class of mailing alone, that the department is warranted and justified in discriminating between users of the mails because of some slight real or fancied advantage or saving to the department by one method of mailing as compared with another. The practice would have been uniform, the department would have been saved the trouble and expense of hearings and committee sessions resulting in the modification of the regulations

with regard to this privilege some seven times since the privilege was granted by the Congress.

It may be urged by some that we are making much ado about a comparatively small matter, that after all the difference in the minimum of mailings is a matter of no great moment particularly to large users of the privilege. No such argument can honestly be made by anyone familiar with the situation either in or outside the department. Each and every user of this permit privilege, large or small, occasionally has small mailings, and under the present regulations and practices of the department even the most extensive users of the nonmetered machine are held rigidly to the letter of the regulations, the limit of tolerance being at the most one mailing a week.

The Third Assistant Postmaster General's office has been particularly active in the rigid enforcement of this regulation in the recent past. Postmasters are instructed to, and do frequently, notify the users of nonmetered machines of the regulations. Whether any effort is made to hold the users of the metered machines to their minimum requirement of 100 pieces we do not know.

Our complaint, however, is not directed to the establishment of a minimum but to the difference in the minimum. The manufacturers of metered machines quite naturally take advantage of this difference in treatment to extend the use of their machines, to discourage the users of the nonmetered machines, and to bring to their attention and to that of prospective purchasers the preferential treatment which their mailings receive. This preferential treatment has a twofold effect: (1) It enables the owners of what is practically a monopoly in metered machines to utilize the attitude of the Post Office Department as an effective advertisement and sales argument, and (2), on the other hand, it discourages some who would like to avail themselves of the permit privilege, but who can not afford to pay meter rentals, from continuing, or from proceeding, to avail themselves of the privilege.

The department places itself in the unenviable position of aiding in the estab lishment of a monopoly in the use of the first-class permit privilege and of discouraging the enjoyment of that privilege by those who can not afford to pay the monopoly price for that privilege. The attitude of the department inevitably tends to make local postal officials advocates and indorsers of the privileged machines.

In conclusion may we emphasize our contention that this matter can never be settled so long as it is considered wholly or primarily from the standpoint of administrative preference or of slight economies under present bureau methods. Settlement of the questions involved exclusively or primarily from these viewpoints is not in harmony with the fundamental principles and policies of the Postal Service. The Congress has granted the permit privilege for first-class mails and that privilege should be accorded under uniform rules and practices to those who desire to avail themselves of it.

Very respectfully yours,

F. W. MONDELL,
C. BASCOM SLEMP,

Attorneys of Standard Mailing Machines Co., Everett, Mass. Mr. MONDELL. We sent this letter, giving the reasons why, in our opinion, the Department was not justified in granting preferential treatment to the manufacturers of this machine, because, let it be remembered, no user in America has ever asked that preferential treatment should be granted to him because of the character of the machine which he used for the stamping of the indicia. Nowhere in any record can be found anyone who has made any such demand. The demand for preferential treatment comes only from the makers of the metered machine; preferential treatment to the point where it would absolutely establish their monopoly, from which they get over $250,000 per annum from meter rentals alone, would establish it as a monopoly which must be utilized if one is going to avail himself of this postal privilege, except under conditions that make it so difficult and exasperating to comply with the conditions that one would not be disposed to use the privilege.