If

Congress to assist small business. The RFC should immediately reconsider its policy, and make its regulations for small papers and stations consistent with what they are for other businesses. veterans cannot have small loans to start small papers underwritten as provided in the GI bill of rights, that policy should be changed.

ADVERTISING

The crucial economic role of the small newspaper is as the highway to the market place for millions of local merchants and other businessmen throughout the country. As small papers die, small business generally will be choked out of the market place because of the loss of his "best show window." Most small business is in the distribution of consumer goods. It is precisely here that advertisers in the local paper are the greatest aid; when merchants, for example, are confronted with a competitive challenge of chain stores, advertising frequently becomes a competitive weapon. Chain-store advertising is apparently placed on a national, regional, or State basis-magazines, radio networks, or in giant dailies. The independent merchant cannot possibly afford to advertise in these media, but he can more than hold his own if it is a local newspaper with reasonable advertising rates available to him. The publisher of a Kansas weekly puts it this way:

Now, as I see it, the threat is not so much to the small weekly newspaper business directly, as it is to the towns we serve, although the high cost of paper, repairs, and labor are a serious threat in a direct way to our businesses.

The chain stores and large corporations which are taking the retail business away from the small towns rob the small-town newspaper of its advertisers, and without advertisers the small or large newspaper cannot exist. We have operated a newspaper in our town for over 38 years, and in that time we have seen three department stores, two clothing stores, two farm-implement stores, and other places fold up while large towns gobbled up their trade. A few places of business have opened up to take the place of these blanked-out business places, but the small towns have had a terrible set-back, and what is true of our town I know is true of literally thousands of towns across the Nation. Our town has stayed up about as good as any of them.

Some say this is the trend of the times. Maybe it is and nothing can be done about it. But when a chain store gets the business that formerly went to the independent family-operated store, I consider it a serious threat to our American way of life.

I don't know whether there can be legislation to remedy the situation or not. However, I feel sure the great chains have an advantage over the small independent retail outlet.

Here is just an example: I can save a dollar a ream on Hammermill bond paper by buying six reams at a time instead of one ream. I could afford to and would be willing to pay a few cents extra a ream for the extra cost of packing, bookkeeping, etc., but I feel sure a dollar difference on a ream of 20 pounds is all out of reason. And no doubt there are thousands of items on the retailer's shelves that are handled in the same manner. I think the independent retailer should be able to buy in small quantities just as cheap as the big concern can buy in large quantities, with only enough extra to pay for packing and bookkeeping. When we give the big corporations all the advantage, we are gnawing into our free independent American structure. I have always contended there should be some way of providing the same price for the small merchant as for the chain; and if such laws could be passed, and so constructed that they could not be violated, I believe it would be a great help to small business of all kinds.

Even if prosperous small businesses were a little more expensive, it would be better than to eliminate the small businessman. After all, the American way of life should mean more than piling up profits. If the little block-or-two-long Main Streets in America could be humming with activity it would mean much to America. Eliminate these little Main Streets, and the people who are operating on them would have to turn to somebody for employment, and the whole trend

of society would drift to big corporations on the one hand and wage earners on the other.

In the days past, independent business and farmers have contributed much to American society. That contribution is now being threatened by big business.

Thus the maintenance of small competitive papers and the maintenance of small business generally become one and the same problem. Considerable volume of criticism has been leveled by small publishers themselves as well as by advertisers and trade associations with respect to the alleged lack of skill on the part of small papers in soliciting advertising, both locally and nationally. The Department of Commerce might consider the desirability of a service program through its field representatives directed at building more and better local advertising by retailers. Efforts should also be made to provide publishers of small papers with the kind of local market studies which will be of most use to them.

Low cost, high volume local advertising is obviously of benefit to every business community. One interesting fact about combinations of local monopolies is that whatever alleged savings and efficiencies have been effected are not always passed on to the advertisers in the form of reduced rates. Thus, Dr. Nixon (Journalism Quarterly op. cit.) reports that "of 97 noncompetitive combinations formed between 1927 and 1942” no financial benefits resulted to the advertisers in 54, or more than one-half of the cases. As a matter of fact, in 23 cases the "combined rate of the 2 papers was lower than the sum of the old individual rates."

Dr. Nixon further reports a study of this problem by the American Association of Advertising Agencies. The advertising rates for 1,334 independently sold newspapers were compared with the rates charged by 211 papers sold "in enforced combination." "Enforced combination" means that advertisers who wish to buy space in one or two jointly owned papers must take space in both in order to get into the one. The prevalence of enforced combinations is such that 21 pairs of 50 two-paper ownership in 135 cities with 100,000 or more circulation had enforced combination rates for both national and local advertising. Another 21 pairs had such rates for national but not local advertising. Seven pairs had optional combination rates and one pair had no combination rate.

The comparison of the 211 pairs of papers sold in enforced combination show that they average higher in every city-size group than the 1,334 independents.

These data apply to dailies. Following is a quotation on the significance of competition for the advertising local and weeklies:

The greatest problem weekly newspapers have in respect to national advertising is that so many weeklies are the only papers in their town, Richard P. Holland, treasurer of Harold Cabot & Co., Inc., national advertising agency of Boston and Portland, recently told the annual convention of the New Hampshire Weekly Publishers Association.

"We know it is true of good local weekly newspapers that they have a phenomenally high degree of readership," he said. You hear it said they are read by every member of the family. You hear it said that the average life of an edition is 4 to 6 days. It is true that those who read them are now better off financially than they ever were before.

Why, then, are they so far behind in national space? * * * Do you realize that the greatest problem you have is that so many of you are monopolies? You are so often a monopoly in your community. You have no competition. As to national advertising, you say, if it's coming to my town, I'll get it-why must I maintain good relations with agencies; why should I have representation?

About one-half of the income of small dailies and weeklies comes from local advertising, about 15 percent from national advertising. The national advertising dollar has in the past 15 years shifted away from newspapers to other media, chiefly magazine and radio. National advertising is highly concentrated in the hands of a few agencies in large cities. Advertising Age reported recently that 26 agencies billed $630,000,000 in 1945. Another 33 middle-sized agencies billed $230,000,000, making a total of $860,000,000. According to some of the letters sent to the committee, these agencies show preference for national or State-wide media, since the administrative cost of placing a copy and billing a few large units is less than that for dealing with many small ones. The recent change in the Post Office rules which require weekly publishers to submit circulation data annually will probably help small papers in their relations with advertising agencies and advertisers by eliminating exaggerated circulation claims.

The recent formation of a national network of giant papers which will jointly discount their rates to advertisers who buy space in the whole network bears watching. Such networks, formed primarily to fight radio competition, might, in time, come to represent a serious threat to the national advertising revenues of many large- and mediumsized, as well as small papers. No competing papers are included in the networks. If a national advertiser can be prevailed upon to buy the whole network exclusively, it will deprive the competing papers in those cities of any chance to fight for the advertising. One proposal, which might be considered, has been for the application of the Robinson-Patman principle to ban such special discounts and rate differentials.

A new threat to the local advertising revenue of the small paper is embodied in Frequency Modulation radio broadcasting. FM stations are designed to operate at the community level. They will certainly offer great rivalry for local advertising. The answer to the support of both stations and papers is in the increased prosperity of small business, and in added skill which will enable more independent merchants to make greater use of local advertising opportunities.

A scattered few small papers registered complaints about the failure of Government agencies which place advertising to include small papers in their budgets. The following from a Florida weekly is typical:

The War Assets Administration is spending hundreds of thousands of dollars advertising surplus Government property for sale.

Newman, Lynde & Associates, War Assets Administration advertising agency, states it has instructions from War Assets Administration heads that this advertising shall appear only in daily newspapers.

Our paper rates sufficiently to be on the United States Army schedule, placed by N. W. Ayers & Sons, Philadelphia, Pa., world's largest agency.

Purpose of this letter is to submit this information to you for such action as you and your committee shall see fit to take in behalf of the newspaper "small business" herein overlooked-the small weekly newspapers.

In providing for the disposal of surplus war property Congress provided certain priority arrangements for veterans and for small businesses. How the War Assets Administration has carried out this mandate is discussed in another of the committee's reports, Disposal of Government Industrial Plants. Small papers are vitally important advertising media if the fullest opportunities are to be given to local businesses and veterans who live in smaller communities

to acquire surplus property. Certainly not all of the surplus property is made up of great factories. Much of it can be used to stimulate the founding of new small businesses by veterans; much of it can be used to strengthen existing small businesses. The War Assets Administration should advertise surplus goods appropriate to these purposes in the Nation's smaller papers.

LABOR

All of the factors contributing to newspaper mortality affect not only the publishers and the business community, they affect the hundreds of thousands of printing trades and editorial employees. A number of letters from small publishers voice complaints about the policies and practices of typographical and press unions. The criticisms can be summarized under these headings:

1. The supply of skilled labor-too few apprentices are recruited to provide an adequate labor force; apprenticeship is unduly long. 2. Conditions of work and wage scales are negotiated with large publishers and then enforced nationally on smaller ones.

3. Inefficiency is produced by union rules which require that simple tasks be performed by highly skilled workers; which require the reproduction of material received on mats even though the reproduced matter is then discarded; tendency for journeyman printers to stretch out work by holding down on the amount produced; opposition to the introduction of labor-saving mechanical improvements.

These are the major complaints made by publishers. Because of the cancellation of hearings the committee has heard no systematic, extensive reply by the unions. The printing trades unions are among the oldest and most respected in the American labor movement. They have been noted for their sense of responsibility. Whether all of their policies and practices are defensible and in the public interest or not cannot be determined without full and complete congressional hearings, such as were planned by me as chairman of the Senate Small Business Committee.

All of the above matters must, however, be evaluated against the impending technological revolution in this industry. It is natural for these unions to try to find as much security for their members as possible, in the face of constantly threatening technological unemployment. Efforts to hold back the tide by opposing labor-saving devices may be ill-advised, but they are understandable. Smaller papers complain about having to pay wage scales comparable to those paid by big-city publishers. At the same time they inadvertently recognize the necessity for such scales when they talk of the constant flow of skilled workers toward the big cities. Efforts to restrict the number of new employees trained may similarly be designed to cushion the shock of industry-wide firings, if and when there is a widespread machine displacement.

It is easy to be glib on either side; easy to become irate over an apparently antisocial union practice; equally easy to become irate over apparently unfeeling management. There is simply no easy answer. One of the immediate needs of small publishers, as we have said elsewhere in this report, is reduced operating cost. The immediate needs of the hundreds of thousands of workers in the printing-trade industry

are measures safeguarding their economic well-being, if and when some job-displacing equipment like facsimile becomes common. Pious hopes will not help the situation, nor will pretending that it does not exist. Responsible leaders of the unions and employees involved must begin now to plan together a program which will permit change-over in equipment at a rate which will not cause distress and unemployment among these highly skilled and highly valuable workers. A program looking toward retirement and pension security for older workers and multiple-skill training of younger workers would hold much promise.

Without the most extensive study and hearings, it would be foolhardy to go beyond this admittedly inadequate suggestion. The issue is extremely important to both management and labor. It was situations of this kind which led to the President's proposal for far-reaching congressional commission research on the sources of industrial conflict. I have before and will again support this approach in the United States Senate, reintroducing my proposal for the establishment of a Commission on Labor-Management Relations.