Postage Due?

Postage Due? The U.S. Post Office has lost money for most of its 157 years. Recently, politicians have been laying much of the blame on the costs of carrying second-class mail, which includes magazines and newspapers. Last week President Truman himself teed off on magazine and newspaper publishers before an audience of postmasters, most of them political appointees. Harry Truman, who has joined Congress in asking raises for the mailmen despite the $500 million-a-year postal deficit, laid the "biggest part of the deficit" on the low rates on newspapers, magazines and advertising matter, a subsidy "to the tune of several hundred million dollars a year." Opposition to raising rates has come from "the slick-magazine publishers," said Truman, "and I mean that word in two ways . . . They have the nerve to complain about the high cost of government."

In the Hole. Last March, Postmaster General Jesse Donaldson told Congress that the cost of handling the mail has increased by a billion dollars since 1945, and that rates would have to go up. He proposed to raise $271,320,000 by increasing most rates, and doubling the rate for second-class mail. When the Senate passed a postal bill three weeks ago, it shaved these increases, boosting newspaper rates by 10% a year for three years, magazines by 20% a year for three years, or 60% altogether.

Many publishers, both large & small, protested. They were willing to bear their fair share of increased costs, they said, but they pointed out that, on the Post Office's own figures, the cost of handling magazines and newspapers has increased not 60% but about 30%. A 60% boost would put many small publications out of business. And why should they have to take twice as great a rate increase as newspapers?

Elusive Figures. Actually, no one knows how much the Post Office really loses--or makes--on carrying publications. Its own figures show a $192,500,000 loss in 1950 on second-class mail. Only a little more than half was due to daily and weekly newspapers and more than i ,000 general magazines. But the huge loss is based on the Post Office's intricate system of "cost ascertainment," which charges off many other services to second-class mail costs. Example: in 1949, a third of the cost of operating Rural Free Delivery was charged off to second-class, though 20% more first-class than second-class mail is carried on R.F.D. routes. The publishers pointed out, too, that the Post Office had always been intended to be a public service. No one had expected all its services could pay their own way.

An outside accounting firm, Manhattan's Price, Waterhouse & Co., found a far different picture. After it separated the actual costs of carrying paid second-class mail from all other costs included in second-class, Price, Waterhouse reported that the Government actually made a $7,000,000 profit on newspapers and magazines.

Farmers' Friend. Last week, when the House took up the postal bill, the press found many friends. North Carolina's Harold Cooley wasn't "particularly interested in the postage paid by such magazines as LIFE and FORTUNE and the Saturday Evening Post and all the other big magazines, but I am definitely interested in the welfare and continued publication of such magazines as the Progressive Farmer, the Capper's Farmer . . . whose major editorial program is the dissemination of information . . . regarding the work and the interests of the farmer . . . They cannot possibly pay the 20% increase per year for the next three years."

Missouri's O. K. Armstrong put his finger on the big flaw in Truman's case against the press. Said Armstrong: "If we should take the whole amount of the 60% increase on the second-class group, it would only be $24 million. Stack that up against the total deficit of $550 million."* The House ended up with a bill calling for a 30% increase in second-class rates (spread over three years) on both newspapers and magazines, must now confer with the Senate. Most newspapermen and magazine men agreed that this increase was fair enough.

*Included in 1950's losses: on third-class, $135,872,341; domestic air mail, $35,501,861; fourth-class (books, parcel post, etc.), $77,138,987; foreign mail, $84,684,189; money orders, $23,305,124; Government official mail, $37,265,145; non-postal services, $21,317,281; retroactive payments to railroads, $40,000,000.

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