I quoted from Senator Owen on a previous page when discussing the unconstitutionality of Senate revenue-originating amendments. Under his leave to print Senator Owen embodied in his remarks on February 25, 1911, the arguments presented by some of the publishers in reply to Mr. Hitchcock’s statements. They point out in particular his peculiar method of figuring by which he reaches results so at variance with the facts as, at times, to be far more amusing than informative. I shall here quote some of them.
I have previously adverted to the promptitude of Senators Owen, Bristow, Bourne, Cummings and others in getting onto the firing line. Their combined resistance soon forced Mr. Hitchcock to unmask his guns. He was ready, it would seem, to do or concede almost anything provided, always and of course, he could give a few of those pestiferous, independent magazines a jar that would so agitate their several bank accounts as to influence them to print what they were told to print.
But when the General found that he was flanked, and his position being shot up, he began to display parley and peace signals. “The country newspapers would not be affected”—they would still be carried and distributed free—55,000,000 pounds of them or more each and every calendar year.
The “poor farmer” needs special government aid, you know. Or, if the farmer should not be personally in need of government assistance, as now it frequently and numerously chances, why, well—oh, well, we desire to show our friendly “leanin’s toward him.” He may remember it at the next Presidential election—just when we may be needing a few farmer votes. So, as one evidence of our kindly consideration for the farmer, we will not trench upon his special privilege. He shall still have delivered him—free—fifty-five to seventy million pounds of “patent insides” and other partisan dope sheets, printed in his own county and published and edited by regularly indentured, branded and tagged political fence-builders—guaranteed “safe” under the pure food laws, etc.
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Then Postmaster General Hitchcock also let it be generally known that it was remote from his intentions to add a mail-rate penalty to any religious, educational, fraternal or scientific periodical. Some of these—not including the Sunday School leaflets, of course—circulate in vast editions ranging from 500 to 5,000 copies a month. They, too, were such “powerful educational instruments,” he or some of his assistants assured doubting Thomases in both the upper and the lower branches of federal legislation.
Next, he back-stepped a little to assure trade journals that it was not his purpose to hand them any advance over the cent-a-pound mail rate, or so at least, Washington correspondents reported. Finally it is said, a statement generously borne out by the wording of his jockeyed “rider,” that newspapers—all newspapers—would be fanned through the mail service at the old cent-a-pound rate.
It would appear that the anxious interest of our Postmaster General was willing to let almost any old thing in the shape of a “periodical” switch through and along at the old rate, if he could only ham-string a few—a score or less—of monthly and weekly periodicals which persisted in printing the unlaundered truth about looters, both in and out of office.
Now, we will present a few figures and statements of the publishers, presented in answer to Mr. Hitchcock’s voluminous, likewise varied and variegated, utterances, both verbal and in print, to support his lurid guess that it costs the government 9.23 cents a pound to transport and handle second-class mail matter.
Before quoting the publishers, however, I desire to say two things:
1. The periodical publishers must necessarily know, I take it, more about the business of printing and distributing periodicals than Mr. Hitchcock has been able to learn about that business in the two politically swift years he has been on his present job.
2. The publishers in replying—in presenting the facts—are entirely too dignified. Of course, dignity is a fine thing—an elegant decoration for our advanced and super-polished civilization. But when some human animal deliberately and industriously tries to shunt on to your siding a carload or more of “deficits” and other partisan and “vested interest” junk, and tells you its price is so much and that you have to pay the price—well, at about that point in the[131] progress of our splendid civilization, I think it both the part of justice and of thrift to lay dignity on the parlor couch and walk out on your own trackage, making as you loiter along a few plain and easily understood remarks. That is just what I believe these publishers should have done when Mr. Hitchcock covertly tried to deliver to them, charges collect, his several large consignments of talk about “deficits,” “cost of carriage and handling second-class matter,” “publisher’s profits” and other subjects about which he was either equally ill-informed or ill-advised.
Yes, there are occasions when it is quite proper to hang one’s dignity on that nail behind the kitchen door and sally forth in shirt sleeves with top-piece full of rapid-fire conversation.
With these suggestions, from which it is hoped the publishers may take a few hints for future guidance when Presidents and Postmaster Generals undertake to deliver to them a cargo of cold-storage stuff that was “off color” before it left the farm, I will proceed to do what I have several times started to do—quote the publisher on Mr. Hitchcock’s ring-around-a-rosy method of figuring.
In quoting from the publishers’ “exhibits” it is due to Senator Owen that we reprint a few paragraphs from his foreword. In speaking to “the merits of the case,” the Senator said:
Separate and apart from the fact that this proposed amendment violates the Constitution of the United States and the rules of the Senate, I regard such method of legislation as unwise, if not reprehensible, for the reason that, in effect, it is a denial of the right to be heard by those who are deeply interested in it. Over a year ago the periodical publishers affected desired to be heard in this matter, and were not given a proper hearing on this vital question. Indeed, they appear to have been left under the impression that nothing would be done in regard to the matter; or, at all events, they seem to have been under this impression. When the matter came before the House of Representatives and the committee having the matter in charge, no discussion of this matter took place. No report on it was made. No opportunity to be heard was afforded. Neither was the matter discussed on the floor of the House. When the postoffice appropriation bill came to the Senate, no hearing was afforded, but at the last minute, after the committee had practically concluded every item on the appropriation bill, this item was presented, not only giving the periodical publishers no opportunity to be heard, but giving the members of the committee no opportunity to study this matter and to digest it. I regard it as grossly unfair, and at the time in the committee I reserved the right to oppose this amendment on the floor of the Senate.
In the affairs affecting our internal administration I am strongly opposed to any secrecy.
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In my judgment, the claim made by the Postoffice Department is erroneous on its face, for the obvious reason that it is conceded that these magazines are brought by express and distributed in Washington, D. C., over 250 miles from New York, at less than 1 cent a pound for cost of transportation and distribution. The Postoffice Department declares that it costs 9 cents a pound. This is a mere juggling of figures.
I have no doubt that if a proper weighing of the mails was observed, and if the railways were to carry the mails at a reasonable rate, this distribution could be made at a cost approximately that which I have named, as illustrated by the cost of distribution in Washington City, which is an undisputed fact.
After presenting the publishers’ “Exhibit A,” in which they refute Mr. Hitchcock’s unfounded assertions of colossal profits in the magazine publishing business—a subject which I treat elsewhere—the Senator presents their “Exhibit B,” which counters the Postmaster General’s claim that the proposed increase in rate would yield a large revenue to the government. “Exhibit B” reads as follows:—
It has been shown from the original books of account of the five most prominent magazines that the proposed measure charging 4 cents a pound postage on all sheets of magazines on which advertising is printed would tax these magazines, the most powerful group, best able to meet such a shock, nearly the whole of their entire net income. This means that the new postal rate could not be paid. There is not money enough in the magazine business to pay it. Magazines would simply be debarred from the United States mails.
But assume, for the sake of argument, that this would not be the case, and that the money could be found to pay the new postage bills, what, theoretically, would be the increased revenue of the Postoffice Department, for the sake of which it is proposed to take more than all the profits of the industry that has been built up since 1879?
The Postmaster General, in his statement given to the Associated Press, and published in the newspapers Tuesday morning, February 14, claims that the proposed postal increase on periodical advertising would amount to less than 1 cent flat on the weight of the whole periodical. This is not the way the ambiguously worded amendment works out literally; but, accepting the Postmaster General’s figures and applying them to the weights, given in his annual report, of the second-class mail classifications affected by the increase, let us pin the Postoffice Department down to what it hopes to gain from a measure that would confiscate the earnings of an industry.
Mr. Hitchcock in his statement gives 800,000,000 pounds as the total weight of second-class matter. In his report for 1909 he gives the percentage of this weight of the classifications that could possibly be affected by this proposed increase as 20.23 per cent for magazines, 6.4 per cent for educational publications, 5.91 per cent for religious periodicals, 4.94 per cent for trade journals, and 5 per cent for agricultural periodicals, making 42.97 per cent altogether of the 800,000,000 pounds that might be affected by the proposed increase, or[133] 343,760,000 pounds. Of course, this includes the periodicals publishing less than 4,000 pounds weight per issue, and exempted by the amendment.
But, making no deduction whatsoever for these exemptions, and none for the great expense of administering this complex measure, with its effect of conferring despotic power, certain to be disputed, the Postmaster General claims that this figures out only 1 cent increased revenue on 343,760,000 pounds, or a gross theoretical gain to the Postoffice Department of $3,437,600. These are the Postmaster General’s figures, not the publishers’.
But from this figure of 343,760,000 pounds the Postmaster General would have to subtract the weight of all the periodicals exempted, and also subtract all the new expense involved for a large force of clerks.
There will also be a great increase of work for inspectors, as the proposed measure puts a premium on dishonesty. There will be constant temptation for unscrupulous people, who try to take the place of the present reputable publishers, to publish advertising in the guise of legitimate reading matter. There will be extra legal expenses for the disputes that arise between publishers and the Postoffice Department over matters in which the publishers may believe the department is using the despotic power given by this measure to confiscate the property of publishers. In the hearings before the Weeks committee, it was frankly admitted by members of the House Committee on Postoffices and Postroads that the government postoffice service could never be run with the economy and efficiency of a private concern.
With all the expense of this new scheme subtracted from such a small possible gain as is claimed by Mr. Hitchcock, what revenue would remain to justify the wiping out of an industry built up in good faith through thirty-two years of an established fundamental postoffice rate?
If the department succeeded in saving $2,000,000, after deducting the exempted publications and all the new expense involved for a great force of clerks, this would amount to less than 1 per cent of its revenues for 1910. It would amount to less than one-eighth of the postoffice deficit in 1909. It would amount to less than one-fourteenth of the loss on rural free delivery alone in that year.
But even this gain would be only theoretical; for, as shown before (Exhibit A), many of the comparatively small groups of periodicals left to be published, after the favored ones were exempted, would find that it required more than all their income to pay their share of the new rate.
You can not take away from a person more than 100 per cent of all that he has—even from a publisher. It is not there.
These figures of increased revenue to the government are based on the department’s own statements. They are mathematically accurate.
They must not be interpreted, however, as measuring the extent of publishers’ losses. They take no account of the increases, certain to follow the enactment of this legislation, in the rates of other lines of distribution from which the government derives no revenue. They take no account of the loss in circulation volume, that is certain to follow an attempt to raise the price of magazines[134] to the public. They take no account of the loss in advertising revenue that is certain to follow a loss in circulation.
Neither are these figures a complete record of the effect on the government revenue. They take no account of the certain destruction of publishing properties, and the consequent destruction of postal revenue on the profitable first-class matter their advertising once created.
“Postscript: Since this calculation was made and a flood of telegrams from agricultural publications has come to Congress, the afternoon newspapers of Tuesday, February 14, reported that at a cabinet meeting on that day it was decided by the Administration and announced by Postmaster General Hitchcock that agricultural periodicals will be exempted from the increased postal rate. The owners and other representatives of agricultural periodicals gathered in Washington to oppose the amendment to the postoffice appropriation bill at once left Washington for their homes. It was reported at the same time that the religious periodicals had also been assured that a paternal Administration would take care of them.
“This leaves the situation in such shape that the Administration has at last got down to the comparatively small group of popular magazines.
“These magazines proper, the Postmaster General says, constitute 20.23 per cent of second-class matter, or only 162,000,000 pounds, out of the 800,000,000 pounds of second-class mail.
“As the Postmaster General says, as explained above, that the proposed increase would only mean 1 cent a pound more on the whole periodical, he could only figure out a theoretical gross gain of $1,620,000. But his figures are, as usual, all wrong.
“From this $1,620,000, that his figures come to, he would have to deduct, of course, the exempted periodicals and also all expenses of administering the proposed new measure.
“The pretense of raising second-class rates to do away with the postoffice deficit therefore disappears.
“A few popular magazines are to be punished.
“The absurdly unjust discrimination involved in the proposed increase of postal rates on certain subclasses of second-class mail, leaving the larger subclasses, more costly to the postoffice, untouched, is shown in Exhibit C.”
But how about this new development, in which the Postmaster General apparently decides from day to day and hour to hour as to[135] whether one class of periodicals or another shall be allowed to live or made to die?
Has there ever before been in America, or in Russia, or in China, a censor with this power? If the institutions of this country are to be so changed as to give this despotic censorship to one man, ought that man to be the official in charge of the political machinery, as patronage broker, of the Administration?
Now, we come to weights, and here the publishers begin to talk back a little. In introducing the publishers’ “Exhibit C” Senator Owen said:
“It is insisted by the Postoffice Department that it is entirely just to increase the cost on advertisements in the magazines. I submit their answer:”
Why should the Administration have gone to a small 20 per cent portion of the second-class mail to increase postal rates? The Postmaster General gives the magazine weight as 20 per cent of the whole second-class mail, and newspapers as 55.73 per cent. Why leave out the largest classification entirely and concentrate all the new tax on a little 20 per cent classification, which in profit-making and tax-bearing capacity is vastly smaller than even the figures of 20 per cent and 55.73 per cent indicate?
The real reason why the Administration concentrated its fire on the magazines is well known.
But let us look at the reasons given by the Administration—given hurriedly and weakly, and almost absurdly easy to disprove.
Why are newspapers exempt and magazines punished to the point of confiscation?
The Administration says (a) magazines carry more advertising than newspapers; (b) they cost the Postoffice Department more than newspapers, because they are hauled farther.
(a) It is not true that magazines carry more advertising than newspapers. By careful measuring the entire superficial area and the advertising contents, respectively, of each of 36 daily newspapers and each of 54 periodicals—the chief advertising mediums of the country—it is found that magazines averaged 34.4 per cent advertising, newspapers averaged 38.08 per cent advertising.
(b) The statement that magazines cost the Postoffice Department more per pound than newspapers is easily susceptible of final disproof from the department’s own figures—the most extreme figures it has been able to bring forward in its attempts to prove a case against the magazines.
The Postoffice Department states that owing to the different average lengths of haul, it costs 5 cents to transport a pound of magazines and 2 cents to transport a pound of newspapers.
Admit that these figures, often repeated in the department’s reports, are[136] correct. Let us see how the final cost of service for a pound of magazines looks beside the final cost of service to a pound of newspapers.
Besides the cost of transporting mail, figured of course by weight and length of haul, there are three huge factors of cost, apportioned according to the number of pieces of mail—rural free delivery, railway-mail service, and postoffice service (Postoffice Department pamphlet, “Cost of transporting and hauling the several classes of mail matter,” 1910).
TRANSPORTATION COST OF MAGAZINES AND NEWSPAPERS.
By weighing carefully the representative magazine, every copy of a year’s issue of 64 leading magazines, and by weighing 60 different classes of newspapers, daily and Sunday, the postal committee of the Periodical Publishers’ Association has found that the magazine weighs, on the average, 12.3 ounces and the newspaper 3.92 ounces.
The Postmaster General’s report for 1909 furnishes the total pounds of second class mail—764,801,370—and the proportion of newspapers and magazines in this weight—55.73 per cent and 20.23 per cent, respectively.
This gives 154,719,317 pounds of magazines in the mails and 426,223,803 pounds of newspapers.
The cost of transporting these, by the Postoffice Department’s figures, is 5 cents a pound for transporting magazines and 2 cents a pound for transporting newspapers, making $7,735,965.85 for hauling magazines and $8,524,476.06 for hauling newspapers.
THE HANDLING COST.
But the department says specifically, in the pamphlet referred to above, that the handling cost it apportions according to the number of pieces, in three classifications of expense—the railway mail service, rural free delivery, and postoffice service. The total cost of these items charged against second-class matter is (Postmaster General’s report, 1909), $39,818,583.86.
The total number of pieces of second-class mail handled was 3,695,594,448 (H. Doc. 910, “Weighing of the Mails.”)
Newspapers, averaging 3.92 ounces each, and weighing in the mails altogether 426,223,803 pounds, furnished 1,740,000,000 pieces to handle (taking round millions, which would not affect the percentages), or 47.17 per cent of all second-class pieces.
The 154,719,317 pounds of magazines, weighing 12.3 ounces each, furnished 201,260,000 pieces to handle, or 5.44 per cent of all second-class pieces.
Figuring these piece percentages on $39,818,583.86, the expense which the department says should be apportioned according to the number of pieces, and which it does so apportion, we have the handling cost on the 154,719,317 pounds of magazines $2,166,139.96, or 1.4 cents per pound.
The newspaper-handling cost would be 55.73 per cent of $39,818,583.86, or $28,782,425.10, which, divided by the total of newspaper pounds, gives us the handling cost of a pound of newspapers 6.75 cents.
THE NET RESULT.
So, using the department’s own figures and methods of figuring, we have the[137] cost of hauling and handling magazines, 5 cents plus 1.4 cents, or 6.4 cents; the cost of hauling and handling newspapers, 2 cents plus 6.75 cents, or 8.75 cents.
This shows that without going into the miscellaneous expenditures at all, which would slightly further increase the cost of newspapers as compared with magazines, the department’s own figures show that it is losing on the fundamental operations of hauling and handling 7.75 cents a pound on 426,223,803 pounds of newspapers, or $33,032,844.73, as against losing 5.4 cents a pound on 154,719,317 pounds of magazines, or $8,354,843.11.
With a loss, according to its own figures, over 400 per cent as great on newspapers as on magazines, the department goes to the magazines, of scarcely one-third the weight of newspapers, and with not one-twentieth the financial ability to pay such a new tax, to meet the whole burden of its futile and confiscatory attempt to reduce the deficit.
Furthermore, the advertising in magazines, which the department proposes to tax out of existence, is the very national mail-order advertising that produces the profitable revenue, as against the local announcements in the newspapers of the class of page department-store advertisements, etc., which do not call for answers through the mails under first-class postage (see Exhibit F).
And, still further, the modern newspaper of large circulation is more of a magazine, as distinguished from a paper chiefly devoted to disseminating news and intelligence and discussion of public affairs, than the modern magazine. Compare the “magazine sections” of the large newspapers (and most of the balance of their Sunday issues), with publications like the Review of Reviews, World’s Work, Current Literature, Literary Digest, Collier’s Weekly, or even with Everybody’s, the American, the Cosmopolitan and McClure’s, to see the obvious truth of this statement.
I have marked the fourth from last paragraph of the publishers’ “Exhibit C” to be set in italics. I did so for fear the hurried reader might gather a wrong impression from its wording. The publishers do not mean to say that it costs the government 7.75 cents a pound to carry and handle newspapers, nor 5.4 cents a pound to carry and handle magazines. It is a known fact that both the newspapers and the magazines can be carried and handled by the government at a profit at $20.00 a ton—at the cent-a-pound rate. Mr. Hitchcock asserted in the official brochure to which the publishers are here making reply, I take it, that second-class mail hauling and handling costs 9.23 cents a pound. In this “Exhibit C,” the publishers are proving that, even if his absurd claim as to cost were true, his method of apportioning that cost between newspapers and other periodicals is grossly unfair, as well as ridiculously wrong mathematically.
Then Mr. Hitchcock, or his department, suggests that the magazines meet the added charge put upon them for haul and handling by[138] increasing their sale price. That is, let the five, ten or fifteen-cent weeklies ring up five cents more per copy on subscribed and news stand prices—make the readers pay it. Let the monthlies do likewise.
That suggestion carries a sort of familiar resonance. “Make the rate (tariff) what the traffic will stand.”
Ever hear of it? If you have not, then you must have arrived as a mission child in the Chinese or Hindoostanese “field of effort,” and have lived there until the week before last.
Ring up the revenues and make the dear people pay it in added purchase price!
The people have a few dollars stored away in savings accounts or stockings, and if they want a thing they will broach their hoardings. They have the money. We want it.
One of the surest and easiest ways to get it is to make them pay more for what they consider essentials to their subsistence, to the comforts and the pleasures of their lives. They have been buying some splendid monthly periodicals at twelve and a half cents to fifteen cents. If they want them, why not make ’em pay twenty or twenty-five cents?
Yes, why not? It’s the people, and—well—
“To hell with the people.”
For four decades or more of our history, that “official” opinion of the “dear people” has delivered the goods. The Congress, or certain “fixed” members of it, told us that we needed, in order to be entirely prosperous and happy, a tariff on “raw” wool, “raw” cotton, “raw” hides, “raw” sugar and several other “raws,” assuring us that such action would greatly inure to our benefit.
They lied, of course. But it took us fool people a generation or more to find out that fact. In that generation, the liars gathered multiplied millions of unearned wealth and passed it into the hands of “innocent holders,” most of whom, if our court news columns are correct, have been spending it to get away from the trousered or the skirted heirs they married.
The point, however, I desire to make here is that while this varied and various “raw” talk was being ladled to us—and most of us ordering a second serving—our patriotic friends in positions of legislative authority, and our commercial and business “friends” who[139] steered the “raw” talk, had “cornered” all the home-grown raw and were selling us the manufactured product at two prices.
But this is aside. I inject it here merely to illustrate how easily and continuously we fool people are fooled.
Postmaster General Hitchcock’s prattle about the publishers recouping themselves by lifting the price on us is of a kind with all the other “raw” talk which has looted us for forty or more years.
We buy a better periodical—say a monthly—for fifteen cents today than we got for fifty cents thirty years ago.
Not only that: The fifteen-center tells us of our wrongs, of how we were and are wronged and of how we may right the wrongs. The fifty-center of thirty years ago told us largely of things which entertained us—things historically, geographically, geologically, astronomically, psychically or similarly informative and instructive. They told us little or nothing of how we were misgoverned—of how misgovernment saps and loots and degenerates a people. That function of periodical education was left largely to the five, ten and fifteen-centers of the present day—periodicals of price within reach of limited means and of a large, rapidly growing desire to know.
See the point? “No”? Well, then don’t go to arguing.
If you do not see the point, just sit up and shake yourself loose a little.
“A little wisdom is a dangerous thing”; “For much wisdom is much grief,” and similar old saws which truth-perverters glossed into sacred or classic texts. The people are gathering “wisdom” from these low-priced, carefully-written, independent periodicals—periodicals which tell the “raw” truth. It is dangerous. They will hurt themselves. We vested-interests people and “innocent holders” must set up some hurdles; must keep the dear, earning people from learning too much—from learning what we know. Their chief source of enlightenment are the cheap, attractive, instructive, independent periodicals. Our first act should be to cut down—or cut out—this source of supply.
Then the dear people will come back and read what we hire written for them, and then—
Well, then the dear earners of dollars for us will not “learn wisdom” enough to hurt them or—us.
But, getting back to Mr. Hitchcock’s reported suggestion, in[140] effect, to advance the subscription or selling price of the magazines and others of the “few” periodicals that would be affected by his proposed “rider” legislation. I shall call attention to but one basic fact which his suggestion covers—intendedly or not, I know not.
To me, it appears better to do this by a few direct statements.
1. An advance of two or five cents a pound on the people’s subsistence supplies—meats, vegetables, etc.—or on a yard of textile fabric they must have to cover or shelter their nakedness, will be met by them as long as they can dig up, or dig out, the funds to buy.
2. A corresponding advance in the price of some desired, or even needed, article which is not absolutely necessary to subsist, clothe or shelter them will induce them to hesitate before purchasing—will often lead to an exercise of self-denial which refuses to make the purchase—refuses, not because they do not want the article, but because they cannot afford it by reason of pressing subsistence needs.
That these rules of domestic economy apply to the sale and circulation of periodicals was quite conclusively shown to Mr. Hitchcock by the publishers. Senator Owens adverts to this point as follows:
“It has been suggested that the magazines could collect the additional cost imposed on them by raising the price of their magazines.”
He then quotes “Exhibit D” of the publishers in reply:
It has been shown (Exhibit A) from the original books of account of the chief magazine properties that the measure providing for a new postal rate of 4 cents a pound on all magazine sheets on which advertising is printed would wipe out the magazine industry—would require more money than the publishers make.
Could not the burden be passed on to advertisers or subscribers, or to both?
WHY ADVERTISERS WOULD NOT TAKE THE BURDEN.
Magazine advertisers buy space at so much a thousand circulation. The magazine is required to state its circulation and show that the rate charged per line is fair. Some advertisers go so far as to insist on contracts which provide that if the circulation during the life of the contract falls below the guaranteed figures they will receive a pro rata rebate from the publisher.
In view of the small net profits of the industry—it is shown in Exhibit A that the combined final profits of the five leading standard magazines of America are less than one-tenth of their total advertising income—it is clear that the publisher must be trying always to get as large a rate as possible for the advertising space he sells, and it is absolutely true that he has already got this rate up to the very maximum the traffic will bear.
Advertisers would not think of paying more than they are now paying for[141] the same service. Some of them would use circulars under the third-class postal rate, which the Postmaster General says is unprofitable to his department. Most advertisers would simply find this market for their wares gone, and the thousands of people—artists, clerks, traveling men—engaged in the business of magazine advertising would lose their means of livelihood.
There is no possible hope that the advertiser will pay the bill.
WOULD THE SUBSCRIBER PAY THE INCREASED POSTAL RATE?
The 4 cents a pound rate on advertising would require an advance of approximately 50 per cent in subscription prices if the publisher is to recoup himself by raising the cost of living to the public in its consumption of magazines.
Would the public pay 50 per cent more for the same article?
The question is answered eloquently and finally by the subscription records of the magazines that were forced to increase their rates on Canadian subscriptions when Canada enforced a 4-cent rate on American periodicals. As the discriminatory rate was later withdrawn in certain cases, we have a complete cycle of record and proof. First, the Canadian subscription list before the increase; second, the Canadian subscription list after the increased postal rate and increased subscription price to the Canadian public; third, the Canadian subscription list after the postal rate and the subscription price to the public had been restored to the original status.
HERE IS THE RECORD OF THE REVIEW OF REVIEWS.
In June, 1907, the Review of Reviews began to pay 4 cents a pound postage on Canadian subscriptions, instead of 1 cent, and was forced to raise its Canadian subscription price from $3 to $3.50 a year.
Its Canadian yearly subscribers in July, 1907, numbered 2,973.
At once the subscription list began to fall off, and continued to do so steadily until in January, 1910, it had come down to 904 names.
Early in 1910 the Review of Reviews was readmitted into the Canadian postoffice at 1 cent a pound, its subscription was reduced to the old figure of $3, and the Canadian list quickly “came back,” having reached already in February, 1911, the figure of 2,690 annual subscribers.
Below follows the detailed record, eloquent of what would happen if the prices of popular American magazines were increased 50 per cent to the public. In this Canadian incident the price of the Review of Reviews was increased only 16? per cent and the circulation fell off 69 per cent.
REVIEW OF REVIEWS—CANADIAN SUBSCRIBERS.
June, 1907, began to pay extra postage 2,840
July, 1907 2,973
August, 1907 2,921
September, 1907 2,875
October, 1907 2,761
November, 1907 2,604
December, 1907 2,260
January, 1908 1,536
February, 1908 1,330
March, 1908 1,170
April, 1908 1,350
May, 1908 1,300
June, 1908 1,363
July, 1908 1,360
[142]August, 1908 1,407
September, 1908 1,348
October, 1908 1,357
November, 1908 1,381
December, 1908 1,299
January, 1909 1,095
February, 1909 1,163
March, 1909 1,263
April, 1909 1,321
May, 1909 1,355
June, 1909 1,353
July, 1909 1,369
August, 1909 1,371
September, 1909 1,382
October, 1909 1,237
November, 1909 1,278
December, 1909 1,227
January, 1910 904
February, 1910 974
March, 1910 1,129
February, 1911 2,690
The next exhibit (“Exhibit E”) of the publishers shows quite conclusively “that it would be ruinous to them to raise the rates in the manner proposed,” and Senator Owen presents their plea.
I am going to reprint here their plea as presented in “Exhibit E,” but in doing so The Man on the Ladder desires to remark that the argument, as it has been megaphoned into our ears for the past three or four decades, that an increase of tax rate (whatever the nature of the tax), or a reduction of the tariff or selling rate would be “ruinous,” does not cut much kindling in his intellectual woodshed. It has been entirely a too common yodle either to interest or to instruct any intelligent man who has been watching the play and listening to the concert for forty years. This “ruinous” talk has been out of the cut glass, Louis XVI, Dore, Dolesche and other high-art classes ever since Mrs. Vanderbilt, as was alleged, discovered that Chauncey M. Depew was merely her husband’s servant, just as was her coachman.
If there is a congressional murmur or a legislative growl about cutting down a rail rate, the rail men immediately set the welkin a-ring with a howl about “ruin.” If someone rises with vocal noise enough to be heard in protest against paying 29 cents a pound for Belteschazzar’s “nut-fed,” “sugar-cured,” “embalmed” hams and insists that they should be on the market everywhere at not to exceed 23 cents, Bel. and his cohorts will immediately curdle all the milk in the country with a noise about ruin! ruin! RUIN!
If some statesman rises in his place and offers an amendment reducing the tariff on “K,” or cotton, or sugar; or providing that the government shall build two instead of four “first-class” battleships, the bugles are all turned loose tooting “ruin” for the “wool,” the “cotton,” the “shipbuilding” or other industry affected, as the case may be, and “ruin” will be spread and splattered in printers’ ink all[143] over the country. No, your Man on the Ladder does not have much respect for this “ruin” talk, as it is usually “stumped” and “space-written” for us commoners in the industrial walks of life and in its marts of trade. But when he hears that warning sounded by men engaged in a business industry with which he himself is fairly familiar—a business he himself has several times had to put forth strenuous effort to “lighter” over financial shoals or “spar-off” monetary reefs—when it comes to talk of “ruin” among men engaged in the business of publishing periodical literature in this country, why, then, he gets down off the ladder and listens.
There are two special and specific reasons why every commoner—every earner—should listen to the publishers’ arguments in proof that Mr. Hitchcock’s proposal means ruin to many of them—some of even the strongest and best.
1. An increase of three hundred per cent, as the Postmaster General sought in his “rider” (though somewhat covertly), in the carriage cost and delivery (rail or other) of its product would ruin almost any established business there is in this country, if such increase was forced in the limited time named in that “rider.” A suddenly enforced increase of even one hundred per cent in the haulage and delivery cost of product would put hundreds of our most serviceable industries on the financial rocks.
2. A business man or a business industry that has been giving us thirty cents in manufacturing cost for our fifteen cents in cash is certainly deserving not only of a hearing but of a vigorous, robust, militant support.
That the periodical publishers of this country are doing just that thing—have been doing it for the past twelve to twenty years—no honest periodical reader who is at all familiar with the cost of production will attempt to deny.
That is sufficient reason for presenting here the “Exhibit E” of the publishers:
We point to the history of deficits in the Postoffice Department since 1879, when the pound rate of payment was established for second-class matter. The question at the head of this exhibit is answered by the successive changes in the size of the deficit, compared with coincident changes in the volume of second-class mail.
It will be seen that the largest percentage of deficit in the past 40 years occurred before the pound rate of 2 cents was, in 1879, established for second-class[144] matter; that the percentage of deficit decreased with great rapidity as soon as second-class matter, under the stimulus of the new pound rate, began to increase rapidly; that this decrease in the deficit was accelerated after the second-class rate was lowered, in 1885, to the present rate of 1 cent a pound, and after second-class matter had increased beyond any figure hitherto dreamed of; that the decrease in percentage of deficit continued, coincidently with the increase in volume of second-class mail, until 1902, when large appropriations began for rural free delivery service. Then deficits began to grow as the specified loss on rural free delivery grew. In the last fiscal year, 1910, when the rural free delivery loss remained nearly stationary, as against 1909, the deficit decreased by approximately $11,500,000 to the lowest percentage but one in 27 years, although in this same year second-class matter made the largest absolute gain ever known, amounting to 98,000,000 pounds more than in 1909.
We submit that so many coincidences, taken over a whole generation, and observed in relation to the enormous production of profitable first-class postage through magazine advertising, raise the strongest presumption that the larger the volume of second-class mail becomes the more fully the postoffice plant is worked to its capacity in carrying newspapers and periodicals and the first and third class mail their advertising engenders, and the smaller becomes the deficit, other things being equal.
The other thing that is not equal is the new expenditures, unprofitable in the postoffice balance sheets for rural free delivery. According to the Postmaster General’s report there is in 1910 a surplus of over $23,000,000 outside the specific loss on rural free delivery. A chief reason why the Postoffice Department has this $29,000,000 to lose on rural free delivery is that periodical advertising, and the enormous postal business it generates, has long ago extinguished the deficit and given the huge surplus to spend for a beneficent but financially unprofitable purpose.
But one thing is proved beyond any shadow of doubt by this history of decreasing postoffice deficits and coincident increases in second-class mail, and that is, that the deficit can be reduced with an ever-increasing body of second-class mail, carried at one cent a pound. It can be, because the record shows it was.
Below is a fuller history of postoffice deficits and second-class increases:
THE FACTS AS TO DEFICITS AND SECOND-CLASS MATTER.
The annual reports of the Postmaster General are the authority for the following figures:
In the year 1870 there was a deficit in the operations of the United States Postoffice Department of 21.4 per cent of its turnover.
In 1879 there was passed the act that put second-class matter on a pound-payment basis. An immediate increase in second-class matter began.
In 1880 there was a deficit in the postoffice operations of only 9.6 per cent of its business.
In 1885 was passed the law that made the rate for second-class matter 1 cent a pound, which still further increased second-class mail. It trebled in the decade preceding 1890.
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In 1890 the deficit in the operations of the Postoffice Department was 8.8 per cent.
The next decade brought a much larger increase in second-class matter than any previous 10 years—from 174,053,910 pounds in 1890 to 382,538,999 pounds in 1900.
The deficit in the postoffice operations in the year 1900 was 5.2 per cent of its business.
In the prosperous years following 1900 the increase of second-class matter was stupendous; from 382,538,999 pounds in 1900 to 488,246,903 pounds in 1902, only two years. The increase of advertising in the magazines was even greater than the increase in second-class matter. These years brought the great forward movement in the production of low priced but well edited magazines, made possible by large advertising incomes, and also in the increase in circulation by extensive combination book offers, and so-called “clubbing” arrangements, by which the subscriber could purchase three or more magazines together at a lower price than the aggregate of their list prices.
In 1901 there was a deficit in the postoffice operations of only 3.5 per cent of its business.
In 1902 the deficit for the postoffice operations was 2.4 per cent, the smallest percentage of deficit in 18 years and the smallest but two in 40 years.
RURAL FREE DELIVERY STEPS IN.
But in this year is seen for the first time, in important proportions, a new item of expense, $4,000,000 for rural free delivery. Our government had wisely and beneficently extended the service of the postoffice to farmers in isolated communities, regardless of the expense of so doing. The report of the Postmaster General for 1902 says: “It will be seen that had it not been for the large expenditure on account of rural free delivery, the receipts would have exceeded the expenditures by upward of $1,000,000.”
It will be clear, from these figures, which are taken from the reports of the Postmaster General, that beginning with the advent of the second-class pound-rate system, the deficit of the postoffice has steadily declined, the rate of decrease being always coincident with the expansion of circulation and advertising of periodicals, until in 1902 there was a substantial surplus, which the government wisely saw fit to use for a purpose not related to the needs of magazines and periodicals or to their expansion.
A REAL SURPLUS OF OVER $74,000,000 IN NINE YEARS.
Since 1902 there has always been a surplus in the operations of the Postoffice Department, outside of the money the Government has seen fit to expend for rural free delivery, (wisely, and otherwise wastefully.) In the present year, 1910, the report of the Postmaster General shows a surplus of over $23,000,000 outside the loss on the rural free delivery service of $29,000,000. The years 1902 to 1910 have each shown a surplus in the postoffice profit and loss account, the nine years aggregating over $74,000,000, outside the actual loss on the rural free delivery system.
How enormously second-class mail aids the department’s finances by originating[146] profitable first-class postage can be appreciated by referring to the specific examples in Exhibit F.
It should be borne in mind that the turning of large deficits into actual surpluses, which has come coincidently with the expansion of second-class mail, of circulation pushing, and of advertising, has come in spite of an enormous expansion in governmental mail, carried free, and Congressional mail, franked, which has not been credited to the postoffice at all in calculating the actual surplus shown above.
Next the publishers come forward with “Exhibit F.” Their “Exhibit F” is not merely an “exhibit.” It is an exhibition, with a three-ring circus, a menagerie and moving pictures as a “side.” Candidly, I am of the opinion that it was this “Exhibit F” of the publishers which induced our friend, the Postmaster General, to loosen the clutch on his mental gear.
Of course, it is possible Mr. Hitchcock did not, nor has not, read this “F” of the publishers. If such a misfortune has cast its shadow across his promising career, I regret it.
“Why?”
Well, to anyone anxiously interested in dissipating, or removing, the federal postoffice “deficit,” the reading of the publishers’ “F” should be most entertaining.
That F of the publishers most certainly presents some facts which any man, unless he is a fool, as some descriptive artist has appropriately put it, in an “elaborate, broad, beautiful and comprehensive sense,” must appreciate.
Senator Owen introduced “Exhibit F” of the publishers in necessarily, and of course, dignified form—a form in keeping with the exalted position he holds and worthily fills. Your uncle on the ladder, however, is not, as you may possibly have already discovered, restrained by any code de luxe as to his forms of speech or as to their edge.
The publishers in their Exhibit “F” show and, as I have said, show conclusively, that the advertising pages in periodicals (newspapers or other), are the pages which support—which pay the bills—of the Postoffice Department of these United States.
I would ask the reader to keep that last statement in mind, for, in spite of the Postmaster General’s voluminous, cushion-tired conversation and automatic comptometer figuring, the publishers furnish ample evidence in proof that the statement just made is safe and away inside the truth.
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Oh, yes, of course, I remember that Solomon or some other wise man of ancient times has said “all men are liars.” That was possibly, even probably, true of the men of his day. It may also be admitted without prejudice, I trust, to either party to this case, that there is a numerous body of trousered liars scattered in and along the various walks of life even at this late date. So, there appears to be no valid reason nor grounds to question the veracity of Solomon, or whoever the ancient witness was, when he testified, to the best of his knowledge and belief, that all men are prevaricators. However, I desire in this connection to have the reader understand that The Man on the Ladder is of the opinion there are a few men on earth now, whatever the condition and proclivities of their remote ancestors may have been, who have an ingrown desire or predisposition to tell the truth.
This view of the genus homo is warranted, if indeed not supported, by the plainly and frequently observed fact that in almost every recorded instance where the truth serves a purpose better than a lie, the truth gets into the testimony.
The Man on the Ladder also believes there are men—bunches of men—in this our day who will tell us the truth whether they can afford to do so or not.
I have given this “aside,” if the reader will kindly so consider it, to the end of calling to his attention two points, namely:
First, There are probably just as many truth tellers, likewise liars, in the world today as there were in olden times.
Second, There is probably just as high a moral code—just as high a standard and practice of veracity—among the periodical publishers of this country as there is among officials of the Federal Postoffice Department.
I am of opinion that few, indeed, among my readers will be found to question the fairness of that statement. Especially will they not question it when they take into consideration the fact that pages of the publishers’ testimony were under oath, or jurat.