Postmaster General Hitchcock opened for the department. He said his study of the postage rate problem had led him to believe that certain fundamental principles of administration, almost new to the Postoffice Department at present, should be closely adhered to. These included the operation of the service on a self-supporting basis, maintained by imposing such charges as would yield an income equal to the expenses. They included, also, he said, such an adjustment of the postage charges as would make each class of mail matter pay for its own handling, and no more. He would further have the levying of postage rates made on the basis of the average cost of handling and carriage for the country as a whole, and, finally, postal laws should be enacted so definite in character as to be easy of interpretation and susceptible of uniform enforcement.
Mr. Hitchcock stated in this connection that when the books for the fiscal year of 1911 are closed they will show for the first time in many years a surplus of postal funds, and he hoped that this condition would become permanent. Mr. Hitchcock opposed any new classification of mail matter at this time, saying the present classification could be made to include all matter now admissible, and he doubted the expediency of attempting a revision. He then sought to set forth the large share second-class matter has in the burdens of the department, and the small percentage it pays of the total cost or even of its own cost.
“During 1910,” he said, “there were carried in the mail 8,310,164,623 pieces of first-class mail, consisting of letters, other sealed matter, and postal cards. This mail averaged in weight 0.35 of an ounce a piece, making 45.1 pieces to the pound. The cost of handling and carriage for this mail was $86,792,511.35, an average of 47 cents a pound, while the postage charge was $154,796,668.08, leaving a clear profit of $68,004,156.73.
“During the same year there were carried 4,336,259,864 pieces of second-class matter, newspapers and other periodical publications, averaging 3.33 ounces a piece, or 4.8 pieces to the pound. The cost of handling and carriage was $80,791,615.03, or a little less than 9 cents a pound, while the postage return was only $10,607,271.02, leaving a total loss of $70,184,344.01.
“From a review of the rates provided for the several classes of mail, it will be observed that in comparison with the cent-a-pound charge for second-class matter the rate on third-class matter is 700 per cent. higher; that on fourth-class matter 1,500 per cent. higher, and that on letter and other first-class matter 3,100 per cent. higher. While it is true that the expense of handling and carrying second-class mail is less than for any other class, due to the size and weight of single pieces, to relief from the cancellation of stamps, and to the fact that a considerable part of the bagging, sorting, and labeling in the offices of origin is done by the publishers, nevertheless a charge of 1 cent a pound covers but a small fraction of the actual cost.[6]
“The present self-supporting condition of the service is made possible only by the fact that other classes of mail, particularly the first-class, are excessively taxed to make up the loss caused by the inadequate charge on the second-class. This will be better understood when it is noted that although first-class matter comprised during the fiscal year 1910 only 13.4 per cent. of all the revenue-producing domestic mail, it yielded a net profit of $68,004,156.73, while second-class matter, comprising 65.6 per cent. of all the revenue-producing domestic mail, yielded but $10,607,271.02, leaving the tremendous loss of $70,184,344.01. Thus the deficit caused by the heavy loss on the handling and carriage of second-class matter was greater than the profit obtained from first-class matter.”
Mr. Hitchcock here made a plea for equalization of the rate on second-class matter on the ground that it would at once make possible the reduction of letter postage from 2 cents to 1 cent an ounce. This reduction would come about from the fact, he said, that the present profit in handling first-class matter was approximately equal to the loss sustained in the transportation of second-class mail.
Mr. Hitchcock said, however, that he did not believe that the rate for second-class mail should be at once advanced to where it would cover the cost of handling and carriage, although that should be the ultimate end in view.
“For the present,” said he, “an increase of only one cent a pound is recommended, thus making a flat rate of 2 cents a pound, which should be regarded as merely tentative, however, leaving for future determination such additional increase as may be found necessary to meet the cost.”
The Postmaster General served notice on the commission that if by any chance it should see fit to recommend the continuance of the present rate—a “merely nominal postage rate,” he called it—his department could not consistently do otherwise than renew its recommendation for a higher rate of postage on the advertising portions of magazines.