December 2, 1891, was entitled to a hearing under the statute, and the inspectors recommended that it be given a hearing.

As to the charge that the inspectors furnished any portion of the report of their findings in relation to the Woman's Magazine and the Woman's Farm Journal to the St. Louis Post-Dispatch, your committee is informed that such reports are, under departmental instructions, privileged against disclosures to the public, and all postoffice inspectors and other officers are enjoined to preserve their

confidential relations.

It is a fact, however, as I am informed, that certain portions of an official report, not relating particularly to the Woman's Magazine and the Woman's Farm Journal, but containing the findings of the same inspectors in relation to the Peoples United States Bank, which also contained some matters in respect to the two publications mentioned, were in some unaccountable way obtained by the St. Louis PostDispatch, for which each of the inspectors disclaimed any responsibility. I attach hereto (Exhibits D and D-1) the affidavits of Inspectors Fulton and Stice, Inspector Sullivan having since died, it being understood that he disclaimed under oath any knowledge of or connection with the obtaining by the newspaper of any portion of the official report on the bank.

ALLEGATION III.

That, although the summary action recommended by the post-office inspectors in the report upon the said "exhaustive inquiry" was not taken by the department, the company was nevertheless cited to appear and did appear at the Post Office Department on June 17, 1905, to answer and show cause why its two publications, the Woman's Magazine and the Woman's Farm Journal, should not be cut off from the second-class rates, without which the company's business would be suppressed; That the hearing was before the Third Assistant Postmaster General; that officer did decide and did report on July 8, 1905, to the Postmaster General that the two publications were free from wrong; that there was no cause to disturb their status in the mails; that the post-office inspectors' report to the Postmaster General on the socalled "exhaustive inquiry" was without proper cause, irregular, and improper; and It is charged and complained that this citation and hearing, like the inquiry so called and the publication in the newspaper were extraordinary; that they were unnecessary; that they would not have occurred in due course of administration; that they were in violation of orderly procedure and practices in the department; that they were uncalled for under any circumstances in due and proper course of the administration of the postal service; and that these matters, because of the public knowledge thereof, and of the reflections upon the company's integrity, greatly damaged its commercial credit, public good will, and prestige.

The citations (Exhibits E and E-1) issued June 5, 1905, to the publishers of the Woman's Magazine and the Woman's Farm Journal to show cause why the second-class mail privilege should not be withdrawn from their publications, were issued by Edwin C. Madden, then Third Assistant Postmaster General, now representative of the Lewis Publishing Co., and the author of the complaint filed on behalf of the company. The issuance of these citations was the result of Mr. Madden's own determination, as shown by the memorandum addressed by him to the Postmaster General on June 8, 1905. (Exhibit E-2.) The hearings were the result of his own official acts. It is a noteworthy fact, however, that the citations issued at that time named only the prohibitions of the statute, to wit, primary design for advertising purposes, for free circulation, or for circulation at nominal rates, while one of the grounds on which the second-class mail privilege was afterwards withdrawn, to wit, default of a "legitimate list

of subscribers," was not at that time inquired into, and Mr. Madden's report to the Postmaster General of July 8, 1905, in which he exonerates the Lewis Publishing Co. from blame in relation to their publications, was devoted to a treatment of three phases of the case only. But even if the citations, which it is reasonable to assume were not issued in bad faith, had been issued upon an improper understanding of the facts and no substantial grounds were found for withdrawing the second-class rates from the publications, the proceeding could not be considered as improper on the part of the department, as questions of this nature can not be fully determined otherwise than by a careful investigation into their several phases, including the hearing accorded to those whose conduct is made the subject of accusation. The letter of Mr. Madden, dated July 8, 1905, above referred to, appears in full on page 29 of the copy of the report (Exhibit F) transmitted by me on January 23, 1911, to the Committee on Claims, House of Representatives, in relation to "A bill for the relief of the Lewis Publishing Co.," and I ask that this report be printed as a part of the answer to the complaint of that company now under consideration by your committee.

Not only does there appear to have been no failure of orderly procedure in the hearings of June 17, 1905, but the publishers were even accorded more than the law contemplated, since, in the case of the Woman's Magazine, which had never been fully admitted to the second-class mail privilege, there was no legal right to a hearing, but upon the assumption that the publication had been constructively admitted the publishers were heard in relation to it and permitted to present testimony and to make argument the same as in the case of the Woman's Farm Journal, concerning which they were entitled to a formal hearing, it having been previously admitted to the use of the mails as second-class matter.

ALLEGATION IV.

That, notwithstanding the findings and the report of the Third Assistant Postmaster General upon the hearing of June 17, 1905, these same post-office inspectors, acting on behalf of the Postmaster Gemeral and persistent in their purpose, instituted a second inquiry into the business affairs of the company; that this inquiry, like the first, was ostensibly for the purpose of determining whether the Woman's Magazine and the Woman's Farm Journal were entitled to be mailed as matter of the second class, which right if taken away would destroy the company's business; that this inquiry, like the first, was undertaken and conducted without the knowledge of the Classification Division of the department having jurisdiction in all such matters;

That this second inquiry was conducted also in direct violation of an express agreement of the Postmaster General, dated July 19, 1905, to issue for the information and guidance of all publishers the rules of the department in determining whether a publication complied with the requirements of the statutes in relation to second-class mail matter; that it was also in violation of his agreement to provide that after the publication of said rules and before their taking effect ample time should be allowed publishers to adjust their publications to the requirements if, when the rules were published, they were not already in conformity therewith;

That this second inquiry was undertaken and conducted at the very time the rules aforesaid were formed but yet unpublished; that the rules were published December 16 following, and provided that publishers should be allowed until April following to adjust any irregularities in their publications to be in conformity with the rules;

That from 20 to 50 postal officials were engaged in this second inquiry; that during the time they had possession of the company's records and files the company was greatly embarrassed and at much disadvantage in the transaction of its business with its patrons; that when leaving the company's buildings at night the postal officials sealed up the entrance doors to the offices so that the officers or employees of the com pany could not have access to its files and records; that when the files and records

were restored to the company they were in such a state of disorder that it was two months before the company was able to transact its business with its customary dispatch and attention and with satisfaction to the needs of its patrons; and

It is charged and complained that this investigation or inquiry, begun on October 12, 1905, would not have been instituted in due course of administration; that it was undertaken and conducted in violation of the postal regulations; that it was not required in good faith for any proper purpose; that the expenditure of the public money for services in that connection was unauthorized and unlawful; and that, like the previous "inquiry," was greatly damaging, because of the public knowledge thereof, to the company's public standing and credit.

The further inquiries by the post-office inspectors into the relation of the Lewis Publishing Co. to the Post Office Department, conducted in October, 1905, alleged in the complaint to be another and new investigation, appear from the record to have been only a continuation of the former inquiries of the Postmaster General as to whether the so-called lists of subscribers to the two publications were in fact legitimate lists of subscribers as required by law. As already stated, the first inquiries, and the hearings resulting from them, related to the prohibitions of the statute, namely, the question of whether the publications were "designed primarily for advertising purposes, or for free circulation, or for circulation at nominal rates, and not to the determination of the character of the alleged subscription lists. It appears from the record that this continuation of the investigation was for the purpose of making a lawful inquiry into this aspect of the cases. It appears to have been conducted in an orderly manner, and to have been warranted by the facts, as was shown by the disclosures, the officers conducting it so as not to cause any material inconvenience or hindrance to the publishers, and, notwithstanding the fact that from 20 to 50 officers of the postal service were engaged in the inquiry, all files and records given the examiners for inspection were restored to the publishers in the order and manner in which they were submitted. The number of postal employees engaged in the work of this investigation was governed by due consideration to a proper dispatch of the work. The locking at night of the room containing the files aad records being examined by the department's representatives was, as I am informed, done to prevent a repetition of interference with the records and files, the locking being done with the publishers' knowledge and consent, and not in disregard of their rights.

It

The statement by Mr. Madden that there was an understanding between him and the incumbent Postmaster General to the effect that there should be a suspension of the enforcement of the law in relation to the second-class mail privilege until rules for the government of its procedure could be made and published is only qualifiedly justified by the record. The law on the subject (act of Mar. 3, 1879) had at that time been in force 26 years, and Mr. Madden had been the Third Assistant Postmaster General for a period of six years, during which time he had been administering this statute. does not appear that there was any understanding, or could be any, between the Postmaster General and the Third Assistant Postmaster General that any violation of the law should go unnoticed, and it was specifically stated in the proposed change of rules of July 19, 1905 (Exhibit "G"), that the suggested amendments of procedure did not contemplate any noninquiry into serious violations of the law, such as were afterwards thought to exist in the case of the publications of the Lewis Publishing Co. The existing law had long been in force

and had been frequently construed, both by public officers and by the courts, and there appears to have been no justification for any delay or suspension of its needed application pending the promulgation of new rules of procedure.

ALLEGATION V.

That the aforesaid post-office inspectors, the St. Louis postmaster, and the Postmaster General, and othe public officers cooperating with them, did, in October, 1905, secretly seize and confiscate 300,000 copies (three carloads) of one of the company's magazines, namely, the Woman's Farm Journal; that this seizure took place after the company had deposited the copies in the mails and had paid the lawful postage thereon; that neither the postage paid nor the copies themselves were returned to the company; that the seizure was discovered weeks after; that from the distress of this seizure, covering half of an entire edition, and the company being in ignorance of the names and addresses on the copies seized, there could be no relief in starting the presses again and printing an additional 300,000 copies to send in their places; that this seizure forced the company into the position of defaulting upon a great number of its subscription contracts and advertising contracts; and that these circumstances greatly added to the damage already done the company's business; and

It is charged and complained that this secret seizure was in direct violation of law; that it was in violation of the postal regulations; that it was unwarranted by any circumstance; that it would not have occurred in due course of orderly administration; that it was not in good faith for any lawful or proper purpose; that the statute made such a seizure a penal offense; and that the company was helpless to prosecute the offenders because the administration thereof was in the hands of the guilty parties themselves.

The allegation that the Postmaster General, the postmaster at St. Louis, and other officers of the postal service secretly seized and confiscated, at the post office at St. Louis, Mo., 300,000 copies of the Woman's Farm Journal is not supported by the records, but I am informed that 300,727 copies of the October issue of the publication were offered for mailing at the post office at St. Louis, not being sent to subscribers, nor as permissible sample copies, under which condition they were not properly mailable at the cent-a-pound rates of postage, this rate only having been offered and paid on the copies in question in an advance deposit by the publisher. The postmaster, finding that they were not being sent to subscribers, nor as bona fide sample copies within the limits prescribed by the Postal Laws and Regulations, determined that they were chargeable at the transient second-class rate of postage, namely, 1 cent for each 4 ounces or fractional part thereof, and, as I am informed, made demand on the publishers on November 11, 1905, for postage at this rate, which demand was refused, the company contending that the copies of the publication in question were properly mailable at the cent-a-pound rate. At the time referred to, paragraph 6, section 456, of the Postal Laws and Regulations, read as follows:

The mailing by a publisher as sample copies, of a larger number of copies than actually subscribed for in order to maintain a given circulation, or the continuous mailing of sample copies in excess of 100 per cent of the number issued to regular subscribers, or of such copies continuously to the same persons, will be deemed evidence that the publication is primarily designed for advertising or free circulation (see sec. 428), and the sample copies should be detained until the facts can be ascertained. The postmaster will promptly report the case to the Third Assistant Postmaster General.

The publishers having declined to pay the legal rate of postage on these copies of the October, 1905, issue of the Woman's Farm Journal, the postmaster could not transmit them in the mails. While in an accounting between the Lewis Publishing Co. and the Post Office Department the publishers would be entitled to a credit of $657.24,

the postage paid at the pound rate on the copies of the issue in question, the default of mailing appears to have been due to the fact that the publishers refused payment of the full postage ascertained to be due. Although there appears to have been some delay on the part of the postmaster in notifying the publishers, it does not appear that there was any secrecy in relation to the matter, but, on the contrary, that the act complained of was performed in an open manner, Mr. E. G. Lewis having been informed in respect to the matter on November 11, 1905, and furthermore, that Mr. Madden, then Third Assistant Postmaster General, advised that such copies were chargeable at the rate of 1 cent for each 4 ounces or fraction thereof, as will appear appear from his official letter attached hereto and marked Exhibit H. It is not shown by the records that the Lewis Publishing Co. has made demand for the refund of the $657.24 paid at the pound rate of postage on these copies.

ALLEGATION VI.

That between March, 1905, and the date of this statement the Postmaster General, his assistants, and the officials under them have on numerous occasions prevented the company in one way or another from exercising its lawful privilege to mail copies of its several publications at publishers' second-class rates; that those officials have assessed against many hundreds of thousands of the company's publications unauthorized and prohibitive nonpublishers' rates; that by this process many thousands of dollars have been wrongfully extorted from the company as alleged postage; that in so far as those rates were prohibitive and the company was unable to pay them the effect of the assessment thereof was to force the company to default upon its subscription and advertising contracts; and

It is charged and complained that all such assessments of other than publishers' rates on copies sent by the publisher and from the office of publication was unwarranted; that it was in violation of law; that it was not done in good faith and in due and orderly course of proper administration; and that it occasioned great material damage to the company and great injury to its public faith and credit.

The provisions of the act of Congress fixing the rates of postage referred to in this item of complaint are as follows:

All publications of the second class, except as provided in section twenty-five of said act (act of Mar. 3, 1879), when sent by the publisher thereof, and from the office of publication, including sample copies, or when sent from a news agency to actual subscribers therto or to other news agents shall, on and after July first, eighteen hundred and eighty-five, be entitled to transmission through the mails at one cent a pound or fraction thereof, such postage to be prepaid as now provided by law. (Act of Mar. 3, 1885; 23 Stat. L., 387.)

That the rate of postage on newspaper and periodical publications of the second class, when sent by others than the publisher or news agents, shall be 1 cent for each 4 ounces or fractional part thereof, and it shall be fully prepaid by postage stamps affixed to said matter. (Act June 9, 1884; 23 Stat. L., 40.)

In connection with the foregoing statutes the following regulations have been made and published for guidance in their construction: Copies of each issue of a publication admitted to the second class of mail matter may be mailed by the publisher at the pound rate of postage as follows: (a) To all legitimate subscribers.

(b) An equal number of sample copies, but no more, to persons who are not subscribers for the purpose of inducing them to subscribe for, advertise in, or become agents for the publication, and for such purposes only; provided each sample copy is plainly marked "sample copy" on the exposed face of the publication or its wrapper, or on the wrapper of the package which may contain a bulk number of sample copies. Sample copies must not be inclosed in the same package with copies intended for subscribers.

If sample copies in excess of the number hereinbefore specified be presented for mailing, they are not entitled to the pound rate of postage. They are chargeable with the transient second-class rate of 1 cent for each 4 ounces or fraction thereof,