Three separate issues are involved here: First, the right of a press service to refuse to sell one of its features to those who do not subscribe to its news service; second, the right of a syndicate to deprive the publisher of a small daily of features in which he may well have built up an equity by carrying them and thereby creating an audience for them. The transfer of features from a small paper to a large one published in a nearby metropolis means that people who like to read the feature must switch papers. This loss is obviously a serious one for a small paper, whose territory is being covered by a giant paper circulating from a nearby city. With one stroke the small paper is deprived of a competitive asset, and the large paper gains one. Finally, there is the matter of preventing a small paper from buying the features of a certain syndicate, because they are carried in adjacent large cities. This may well be a matter for the Antitrust Division of the Department of Justice. DISTRIBUTION BY THE POST OFFICE DEPARTMENT One of the great stimuli to the growth of the newspapers and magazines of America has been the special rate which Congress has ordered the Post Office to set for their distribution. Each year a vast quantity of newspapers and periodicals flows through the 44,000 post offices in the country. Well over a billion pounds of second-class mail is carried each year for almost 25,000 publications. Table V gives the basic data on the number of users of publishers' second-class mail rate, the weight of mailings and the postage. The curve showing the number of publications which have entry to the second-class privilege follows that of general business conditions. War and depression have in less than 20 years slashed the number of publications which have the second-class privilege from almost 30,000 to less than 25,000. The largest declines came in 1918, 1919, 1933, and 1943. In each of those years there was a decrease of between 1,000 and 1,500 publications which had the right to the reduced secondclass rates. The number of applications for second-class rates filed and granted also follows this curve. But while the number of users has declined over the years, and the volume of mail has fluctuated with the economic tide, the swiftly expanding giant newspapers and mass magazines have been taking up a larger and larger proportion of second-class volume. (Table V, referred to in the foregoing, follows:) TABLE V.-Basic data on publishers' second-class mail, Division of Newspaper and Periodical Mail of the Post Office Department SECOND-CLASS RATES Appendix I describes the rate of postage on newspapers and other periodical publications. The Post Office Department has attempted to follow the principle of placing the largest burden on the largest back, by staggering the rates in terms of weight, distance carried, and proportion of space devoted to advertising. Second-class mail has, as a matter of public policy, probably been carried at a loss. The term "probably" is used because of the complicated and difficult cost ascertainment procedures used by the Department to apportion its expenditures among the various classes of mail. Since the same post offices and carriers and transportation vehicles handle all classes of mail, there is always an arbitrary element involved in saying exactly how much of the cost of operations goes to first-class letters, parcel post, newspapers and periodicals, etc. But the Department's cost ascertainment statistics show the loss on secondclass mail to be far above that of all other classes. For the fiscal year of 1945, a loss of $106,926,780 is reported for publications which paid either zone rates or the special rate for nonprofit groups. (Table VI.) An additional $8,438,221.00 loss is charged to the "free in county" service. This last is given to publications which circulate within their own counties, providing there are no city or village letter carrier services. (Table VI follows:) TABLE VI. Revenues, expenditures, allocated deficits publishers' second-class mail (from table 1, Cost Ascertainment Report, U. S. Post Office Department, 1945)、 According to the estimates of expenditures now used by the Post Office, only one-fifth of the cost of carrying revenue-producing secondclass mail was met by revenues in 1945. The greatest relative loss was in the carriage of "exempt" publications-nonprofit, religious, fraternal, labor, etc.-on which a 90 percent loss was suffered. But the greatest dollar loss was the 40 million dollar deficit in carrying daily papers, followed by almost 30 million dollars lost in carrying "nonnewspaper" publications the bulk of which are magazines. Papers which appeared less frequently than every day accounted for a 17 million dollar deficit, while the exempts accounted for 19 millions. Together, the daily papers and "all other publications" accounted for two-thirds of the estimated 106-million-dollar deficit. The following editorial from the Littletown (Colo.) Independent and Arapahoe Herald alleges that this benefit to small papers is frequently exaggerated. John S. Knight, publisher of the Chicago Daily News and other powerful newspapers, has undertaken to speak for the country papers of America. Writing to Senator James E. Murray, who is looking into the handicaps of small business, Mr. Knight said: "The small newspapers enjoy second-class postage rates with free delivery in the county of publication.' Mr. Knight's assertion has been printed in his Chicago paper and in other periodicals, and it has tended to set more firmly in the minds of big city publishers a false notion about the rural press. For the past 20 years, whenever we have seen such a statement in print, we have clipped the item and taken it to our post-office officials. We inquire as to why we are charged postage when the brains of the newspaper profession declare we are getting free-in-county delivery. Then, very patiently, the officials get out their big book of regulations and prove to us that we must pay postage. We get curious like this every few years, but the answer is always the same-we still have to pay postage on papers delivered in Arapahoe County or anywhere else. The free-delivery rumor got started, apparently, from a provision in the postal regulations that allows free mailing in the county of publication for those newspapers sent to an in-county post office where there is no city or rural carrier service. In our case, we mail no papers free, and in the case of most newspapers we suspect that few papers are mailed without postage. The only newspapers that get free delivery are in towns where the postmasters are as familiar with the regulations as Mr. Knight. THE ETHICAL ISSUE At the root of the special rate offered publications is the decision by Congress to stimulate the diffusion of knowledge, information, and opinion. It is certainly true that special post-office rates have been instrumental in fostering the growth of the media giants. It is also true that these special rates have enabled large papers to circulate over whole States or regions and to compete with local publications. The rationale for special rates for periodicals was given on July 7, 1942, by the Postmaster General in his appearance before the Committee on Ways and Means of the House of Representatives. There has long been a historic policy of encouraging by low postal rates the dissemination of news and information; and the extent to which this policy has proved successful must not be minimized. Most careful consideration should be given to any change in rates which would seriously hamper the circulation of useful information or which would tend to dislocate business and industry. The public has been afforded low postal service rates for the general benefit of the Nation, and the extent to which these rates for the classes of mail and the special postal services and special facilities such as registry, money order, and the like have contributed to the growth and comfort, the culture and influence of the Nation and its democratic processes must not be overlooked. In effect tax revenues contributed by the whole community are being used to pay part of the way for the distribution of newspapers and periodicals. Assuming that Congress is willing to continue this historical American policy of underwriting some loss on this class of mail, the issue becomes one of determining how much of a loss is to be permitted to publications of various sizes and degrees of prosperousness. From the standpoint of a small newspaper, confronted by the multitude of other problems described in this report, preferential postal rate is of primary importance. Some of the publishers who have written to the committee have said "we ought to pay our way." But the large majority have expressed themselves as definitely opposed to any increase in their rates. Some of them allege that "this would be the final blow to hundreds of weeklies." The Post Office Department does not report, as a regular matter, the extent of which the loss incurred in second class are accountable to the mail of large or small, national or local publications. At my request Joseph H. Lawler, Third Assistant Postmaster General, has provided information on the volume and cost of mail of 15 larger magazines. These figures are for the 3 months ending June 30, 1946. They indicate that between one-third and one-fourth of the volume of mail and the revenue received are provided by these 15 magazines. It should be kept in mind that these magazines are in most cases not the only ones published by the companies which own them. It should also be kept in mind that the rates as they now exist are to some slight degree staggered to assist smaller publications. It is, nevertheless, obvious that a few dozen mass magazines and nationally circulating newspapers (like the Chicago Tribune and the New York Times) provide a great share of the second-class mail, and an almost comparable share of the revenue. (Tables VII and VIII follow:) TABLE VII.-30 leading magazines of the United States Net paid average circulation 4, 110, 361 4, 090, 145 3, 538, 599 3, 466, 797 3, 462, 963 2,812, 381 2,654, 960 2, 591, 588 2, 426, 424 2, 422, 245 2, 343, 390 2, 224, 850 2, 104, 890 2,092, 032 2, 078, 609 1, 673, 975 1, 516, 246 Modern Screen__. American Legion. Time.. 1, 336, 614 Liberty (United States edition) 1, 327, 352 National Geographic magazine.. 1, 234, 145 Modern Romances_ 1, 228, 988 Photoplay... 1, 129, 737 Motion Picture_. True Romances_ Parent's Magazine. Newsweek... 1, 044, 579 917, 038 900, 692 799, 483 746, 964 731, 534 684, 326 672, 589 |