Stamp of Success

There is only one official U.S. function that a Government monopoly entrusts to a private monopoly. The company is Connecticut's Pitney-Bowes, Inc. P-B makes, sells, rents and services the postage metering machines* that print and postmark more than $1 billion worth of stamps on business mail every year. This not only saves millions in postal handling costs for the U.S., but it brings to P-B exceptionally high profits of 9-c- per revenue dollar. P-B announced this week that 1958 earnings rose 7% to $4.4 million on gross income of $51.3 million. P-B will split its stock three for one (current price: $92.50), boost the annual dividend rate from $1.60 to $1.80.

Ultimate in Automation. The postal metering machine, which stamps and seals up to 175 letters a minute, has fathered a new family of machines to automate the office. In one minute different P-B machines can stuff 100 envelopes, fold 300 sheets, open 700 letters, sort 750 checks (see cut), count and tabulate 1,000 dollar bills.

Another machine, now going into the U.S. postal system, shuffles a mountain of mail so that each stamp faces in the right direction, then postmarks and cancels 500 stamps a minute, double what a man can do. Next November the Post Office will get a 75-ft. long P-B mail sorter by which twelve operators each can sort 720 letters a minute--triple the manual rate. Each letter passes on a conveyor belt before the eyes of a postal worker, who pushes keys to direct it to one of 300 cubbyholes. Now P-B's scientists are tinkering with the ultimate in postal automation: a mechanical scanner to "read" the address and do the sorting automatically.

Years Ahead. P-B's success is tied to one man. President Walter Heber Wheeler. 61. Towering (6 ft. 4 in.) Walter Wheeler was an All-Eastern football tackle at Harvard in 1916, a subchaser skipper and Navy Cross winner in World War I, and a champion sailor. He joined the company in 1919, when it was a struggling small business directed by his stepfather, the late Walter H. Bowes. Bowes teamed with Inventor Arthur H. Pitney to develop the first crude postage meter. Wheeler went to Washington in 1920, presided over the demonstration of the machine that won federal approval for P-B to create what amounts to an auxiliary postal system. Soon after, young Walter Wheeler moved up to general manager, by 1938 was president.

Wheeler developed new machines and plugged them with ads such as "Flora May figured to save Paw's shirt" (because he always lost his shirt playing red dog with the boys around the post office, Flora May bought him a postage machine instead). He also made a name for himself as a liberal businessman.

No Strikes, No Unions. P-B instituted group life insurance in 1928, profit-sharing for all employees in 1936 (current share: 6 1/2%; of base pay), health insurance in 1941, noncontributory pensions in 1948. P-B has never had a strike, and the last attempt to unionize the company was snowed under 2 to 1 back in 1946. But Pitney-Bowes does have an elaborate parliament of workers, supervisors and brass who meet regularly and publicly discuss everything from the cafeteria's coffee (pretty good) to wages (above average).

So completely has the company sewed up the postage-meter business--more than 95% of it--that its only woes are with the trustbusters. All the competitors gave up because P-B outsold and outserviced them. Last month P-B signed a consent decree promising to create competition by sharing with all comers its current and future patents, and instructing them how to make, repair and service the postage meters. Wheeler accepted the decree with grace: "We believe in the antitrust legislation and what it has done for the country. We hope other companies do come in. We don't think competition will hurt us one bit."

*The machine has a detachable meter that can be set to stop printing at any point. The user takes the meter to the post office, buys the amount of postage he wants: the meter is set to stop after that amount is used, then is sealed.

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