Based on the publishers’ statement of 650,000 circulation, the gross income of Everybody’s would be about $1,550,000 annually, divided as follows:
| 200,000 subscriptions, at $1 (net) | $200,000 |
| 450,000 news-stand sales, at $1 (net) | 450,000 |
| 150 pages of advertising per month, at $500 per page | 900,000 |
| Grand total | $1,550,000 |
Since the publishers state that the magazine makes each year for its stockholders only about $100,000, the approximate cost of publication reaches the surprisingly high figure of $1,450,000. Using their own statement showing a circulation of 650,000, it appears that Everybody’s issues 7,800,000 single copies annually. If their total net profits are only $100,000, it is evident that it must cost the publishers approximately 19 cents to place a copy of the magazine in the hands of a reader who can secure it on the news stand for 15 cents.
Before your committee reported the bill providing for the increased rate on second-class matter, the publishers of Everybody’s Magazine announced that on and after March 6, 1911, their rates for ordinary advertising would be advanced from $500 to $600 a page. On the extremely conservative estimate that the magazine carries a monthly average of 150 advertising pages, this advance will produce an additional income of $150,000 per annum. As the proposed increase of postage during a like period will amount to approximately $43,500, it is evident that out of the increase of revenue alone the magazine will be able to pay the additional postage and still retain a considerable surplus for its stockholders.
Yours, very truly,
Frank H. Hitchcock,
Postmaster General
Investigations recently made by the Postoffice Department show that large numbers of periodical publications already entered as second-class matter are in reality nothing more than trade catalogues, which, under the law, ought to be treated as third-class matter and subjected to a postage charge of 8 cents a pound, which is the rate for catalogues. By inserting a few pages of reading matter, these publications succeeded in being classed as magazines and thus secured admission at the cent-a-pound rate. Among publications of this kind is one containing 140 pages, 99 per cent of which are devoted to advertisements; another containing 562 pages, 97 per cent of which are devoted to advertisements; another containing 238 pages, 93 per cent of which are devoted to advertisements; and another containing 268 pages, 89 per cent of which are devoted to advertisements. Almost the entire space in these publications is devoted to the carrying of commercial advertisements, and this in defiance of the statute specifically excluding from the second-class privileges “publications designed primarily for advertising purposes.”
By the proposed law, magazines, in so far as they provide public information, are left exactly on a par with newspapers and the smaller periodicals, for the increase of rate of 3 cents a pound attaches only to such portions of the magazines as are devoted to advertising purposes.
The stock argument of magazine publishers that the profit to the government on first-class matter induced by the advertisements in their publications offsets any loss incurred by reason of the low postage rate on second-class matter is disproved by the fact that the government’s entire profit on first-class matter is less than the total loss on second-class mail matter.
During the fiscal year 1910 over 800,000,000 pounds of second-class matter were carried through the mails at a loss to the government of $62,000,000. The profits on all other classes of mail matter were more than swallowed up by this tremendous loss, leaving a postal deficit for the year of about $6,000,000. It is estimated that the annual saving to the government through the proposed increase in postage will amount to about $6,000,000, or enough to wipe out what remains of the deficit.