The comparison on express receipts is made with 1926, a high record year, whereas the comparison on parcel post is with the very poor showing made by it in 1926. Furthermore, the peculiar method of payment of express revenues to the railroads makes it necessary to revise downward the figure 0.37 per cent, if an index to the true loss in express business is desired.

The accepted index of general business activity devised by Carl Snyder of the New York Federal Reserve Bank, and inserted by me in the Post Office Committee hearings on February 15, shows a very decided increase for the fiscal year 1927. The same thing is shown also by the index of "total volume of trade," as prepared by the Federal Reserve Board.

The fact of the matter is that the business depression did not set in until about the last month of the fiscal year 1927 and will no doubt make its presence felt in your report for 1928.

In view of the above facts, therefore, we can not dismiss this decline in parcel post as a mere accompaniment of a temporary business decline. We are convinced that parcel post is headed in exactly the wrong direction and feel certain that unless definite constructive efforts are made to change this trend that the system will rapidly go down hill and eventually deprive farmers of the type of service they require.

Now, as to the remedy. We must have presented our ideas to you very lamely, because we find little difficulty in convincing Members of Congress, and even officials of the Post Office Department, of the desirability and value of establishing a director of parcel post.

What would you think of a commercial concern that had no one in it whose business it was to know whether competitors were taking business away from it; and if so, why? Naturally you would expect that concern to lose out in the competitive contest.

Yet in the recent hearings before the House Post Office Committee, we find the following colloquy relative to the handling of the parcel-post business.

"Mr. RAMSEYER. Before you go to that, you mentioned the truck_business, among other things, as causing the decrease in parcel-post business. Have you observed any increase on the part of the express company in business that the post office formerly handled, that is, packages and parcels, either in beating you in rates or the kind of service rendered?

"Mr. STEWART. I will say that the express company is always very wideawake and active in any competition with the parcel post. To answer your question specifically, yes; we have noticed that situation particularly with reference to baby chicks.

"Mr. RAMSEYER. Well, have you heard of it or observed it along other lines or in respect to other commodities?

"Mr. STEWART. It would not come to our attention, except in that case, because in that case we were supposed to be in a position to remedy the difficulty * * *""

The above well illustrates our point. Parcel post is in active competition not only with express but with trucks, bus lines, and private delivery companies. The Post Office Department may be justified is assuming something of the takeit-or-leave-it attitude on those classes of mail in which it has a monopoly. But on parcel post its competitors will naturally keep taking the profitable business away from the Post Office and leave it to carry the unprofitable business unless something is done (1) to meet competition and (2) to develop new lines and increased volume of business.

For carrying on the routine that makes up the great bulk of the Post Office Department's work-handling complaints and determining general policiesthe present organization and arrangement is no doubt admirably devised. But when it comes to holding its own in a competitive field there is something further needed. We believe that a director of parcel post with suitable assistants and working in full cooperation with other divisions of the Post Office Department, could be of great value along two general lines, namely:

(1) To locate business houses that are not now making the optimum use of parcel post and work out adjustments in delivery schedules, obstructive regulations, and various details of service better to meet the needs of special clases of shippers.

(2) To cooperate with farm organizations, the farm press, groups of city consumers, and others in encouraging and facilitating the shipment of food package from farm to city.

Other lines of useful work would suggest themselves as the campaign progressed. Specific examples applying the above principles to present needs, could be cited if space permitted.

We again urge you to consider plans and methods of establishing a director of parcel post. It has been suggested that such a position could be created by your order without the necessity of legislative action. I should like very much to have your opinion on this latter matter.

Anticipating further word from you in this connection, I remain,

Very truly yours,

AMERICAN FARM BUREAU FEDERATION,
CHESTER H. GRAY,

Washington Representative.

In conclusion, we urge your committee to remove the 2-cent service charge from parcel post and to add as an amendment to the postal bill the following amendment providing for a director of parcel post.

There shall be established in the Post Office Department a special assistant to the Postmaster General to be known as director of parcel post, whose chief duty shall be to encourage the use of parcel post and who shall have the authority to initiate and to carry into effect, subject only to the approval of the Postmaster General, adjustments and modifications of service, regulations, and policies affecting parcel post, not inconsistent with existing statutes.

STATEMENT OF ELISHA HANSON, WASHINGTON, D. C., REPRESENTING THE AMERICAN NEWSPAPER PUBLISHERS' ASSOCIATION

Mr. HANSON. I do not intend to ask the indulgence of the committee to make any statement, and shall try to confine myself to half a minute. As a farmer, I do not want to get into an argument with my friends of the American Farm Bureau Federation, but I do think it is important just to remind the members of the committee, who have not had the same experience as the chairman, in following this legislation for a number of years, that it is quite unfair to the publishers of daily newspapers to compare the increases that were made in the 1925 rates with the relief that is proposed in this pending measure. The newspaper increases were made in the 1917 war revenue act, and ranged all the way from 50 per cent to 900 per cent. During the same time that those increases were going into effect, by changes in size of bundles and other regulations, the parcel-post rates were decreased, so what we are asking now is relief from rates which were increased, as I say, from 50 per cent on reading matter to as much as 900 per cent on the advertising sections of newspapers, and put into effect by the 1917 law. We want the committee to keep that point in mind, that our raises were far out of proportion to those put on even in the emergency measure of 1925 and in other mail services.

Likewise we do not want to draw a comparison. We think that each class of mail should be put on its own footing and the service considered on that basis and rates charged on that basis, on the basis of cost to the Post Office Department and whatever policy the Congress in its wisdom may see fit to impose.

Mr. KILE. Our contention on that point is this, that in 1925 the rates as between the various classes of mail had assumed a certain level, which, since Congress had set it, we must assume was the proper level. Then the proposal came along to raise additional revenue for the Post Office Department. At that time Congress in its wisdom saw fit to raise parcel-post rates, second-class rates, and various other rates, and we must again assume that that was done

equitably. We protested at the time that it was not, that it was too much of a raise on parcel post, but we waive that point at this time. So, if they were on the level set up by Congress in 1925, and certain raises made above that point to meet certain needs for new revenue, then it is certainly only logical, it seems to us, when the time comes to reduce those rates that they be reduced in the same proportions. That is our only contention on that point. We have no quarrel with second-class rates. We do not object to the figures in secondclass rates. All we ask for is that parcel post be given the same consideration and the proportionate decreases as we come down from that higher level of rates.

The CHAIRMAN. Mr. Young, you will give your name for the record.

STATEMENT OF S. ROBERT YOUNG, Jr., ATTORNEY AT LAW, WASHINGTON, D. C., REPRESENTING THE NATIONAL LETTER POSTAGE ASSOCIATION

Mr. YOUNG. I simply desire to submit a request to the committee, at the suggestion of the secretary of the National Letter Postage Association, for permission to submit a brief of two or three pages with reference to postage on first-class mail.

To the Committee on Post Offices and Post Roads, United States Senate:

The National Letter Postage Association is an organization which has for its object the obtaining of lower rates on first-class mail, a type of relief which will benefit every individual and business establishment wherever and however engaged, without regard to their affiliation with this association, and not confined to a particular few or a certain class. This association is composed of approximately 50,000 members, individuals and business establishments, from every State in the Union, who fairly represent the American citizen and his business. Such are the users of first-class mail.

No favors are sought and no arguments are made respecting any public-policy rule, and the only appeal addressed to the Congress is that this class of mail users be relieved of all burdens except its own in the general revision of postal rates on all classes of mail.

To-day first-class mail produces 48.6 per cent of the total revenues of the post-office establishment. The profit per pound is 18.85 cents. Second-class matter produces but 4.9 per cent of the total revenues and for each pound of its enormous volume and weight the Government suffers a loss of 5.34 cents. Third and fourth class mail is also carried at a loss by the Government, but this loss is not nearly so great in proportion as is that of second class. First-class mail not only pays all the cost of the service rendered for that class but in addition yields enough revenue to almost cover the entire deficit created by the other classes.

The post-office establishment of the United States is a nonprofit making institution, to maintain a simple, sure and fair agency of communication as a fundamental matter of public policy and national expediency.

The basis for rate making is therefore the cost of service to each class of mail. The classifications segregate mail matter into groups according to the nature of the matter and the service required in order that rates may be more exactly determined and applied.

The duty of the post office is direct and primary, according to the classification of the mail matter and the service required, and if Congress to further any national expediencies desires to alter this rule as regards rate making so that any class does not pay for its service, then, we submit, that any deficit thereby created should be charged to the Public Treasury and not placed upon the users of first-class mail as it is at the present time.

The application of a fair and just rate-making rule, based on cost of service, will result in a reduction of the rates on first-class mail, especially in the case of local delivery or drop letters, and it is for a provision in this bill which recognizes its merits and corrects this injustice that we ask.

A user of first-class mail to-day is compelled to pay the same rate on a letter to be delivered locally as he is for one to be delivered 3,000 miles away. On its face such a rate is indefensible.

We do not advocate raising the rates on other classes of mail, but we do ask that the first-class users pay only for what they get, and a 1-cent rate on local letters, while still leaving a large burden on first-class users, when revenue derived is compared with cost of service for this class, it would at least to this extent afford some relief to the only class of mail users who have since the very inauguration of the postal establishment paid a profit, while other classes create deficits. The Postal Service is not maintained primarily for one class, with the other classes incidental, as some presume. The duties and obligations of the service to first-class users as compared to other users, in ratio to the rate charge, is entirely out of proportion in favor of the other classes and against first class. If Congress desires to subsidize second, third, and fourth class mail users, let it do so from the Treasury Department and begin the reduction on first-class mail by inaugurating a 1-cent rate on local delivery letters.

Because of its importance to your committee, we have filed with the clerk a list of 3,000 names of members of this association who have been active in their efforts to secure this 1-cent drop letter rate. These names represent individuals and business establishments in every State, and engaged in every kind of business. Over 40,000 other individuals and business firms join our plea, and we believe in justice to the users of first-class mail that a 1-cent rate on local letters should be provided for in the present bill. Respectfully submitted.

NATIONAL LETTER POSTAGE ASSOCIATION, By S. ROBERT YOUNG,

Washington Representative.

(The list of names is on file with the committee.) The CHAIRMAN. That may be done. Now, Mr. Stewart, I believe you wished to say a word further.

Mr. STEWART. I gather from Mr. Kile's statement that Mr. Gray will put in the record here practically a repetition of what he put in before the House committee. In that connection I wish, of course, inasmuch as he is insisting again upon those propositions, to commend for your consideration the department's answer as made to the House committee and as found in the record of the House committee hearings.

I also gather that Mr. Gray will file a new brief, and that he will treat on matters that have come up before the Post Office Department since the hearings held on the House side, particularly in regard to his proposal that there be established the office of director of parcel post. There is no objection so far as we are concerned to his presenting those arguments to this committee, but I shall ask Mr. Gray to incorporate in his statement the letter from the Postmaster General showing the correspondence we have had since the hearings on the House side.

Mr. KILE. Thank you, Mr. Stewart. May we also incorporate Mr. Gray's reply to the Postmaster General?

Mr. STEWART. I have not seen it.

Mr. KILE. It is in the mails under date of April 14. Following the request made by Mr. Stewart, Mr. Chairman, I will ask leave to incorporate the entire correspondence, consisting of three letters, two addressed to the Postmaster General, and one from the Postmaster General to Mr. Grav.

The CHAIRMAN. It will be much more orderly to put them in in connection with Mr. Gray's written statement that he is to file. Mr. KILE. I think that is so.

The CHAIRMAN. Very well, you may hold that correspondence until Mr. Gray's statement is presented. Are there any others who wish to be heard? [A pause, without response.] Does anyone wish to be heard under section 8, special delivery and special handling? [A pause, without response.] No one seems to desire to be heard. That concludes the hearing on this subject, and the committee. will stand adjourned for the day and will meet later to go over the bill.

(Thereupon at 12.35 p. m., Tuesday, April 17, 1928, the committee adjourned.)