Cyclopædia of Political Science, Political Economy, and the Political History of the United States

Edited by: Lalor, John J.
(?-1899)
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Editor/Trans.
First Pub. Date
1881
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New York: Maynard, Merrill, and Co.
Pub. Date
1899
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Includes articles by Frédéric Bastiat, Gustave de Molinari, Henry George, J. B. Say, Francis A. Walker, and more.
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POSTOFFICE

III.77.1

POSTOFFICE. History. The first extensively organized postal service was the cursus publicus of the Roman empire. It was developed in connection with the system of Roman roads, and, like them, was primarily intended to subserve military and administrative purposes. It amounted to nothing more than a fully equipped set of relay stations for the rapid forwarding of official correspondence, not for the use of the general public. Traces of it survived the fall of the old Roman empire, and lasted well on into the middle ages; but not as an institution with which modern postage can be shown to have any historical connection.

III.77.2

—The postal systems which sprang up in the middle ages were, as might be expected, not centralized, but in the hands of local organizations: commercial cities, universities, or orders of knights. The city postoffices were the earliest organized, and in the time of prosperity of the Hanseatic league attained a high stage of development. Originally intended for purposes of trade communication between the guilds and merchants of Westphalia and those on the seacoast, they became an important convenience to the general public of northern Germany. The postal arrangements of the universities were developed in a similar way. First intended as a channel of communication between scholars and their homes, the same facilities were soon afforded to others who lived where they could avail themselves of them. The most important example of the third class was the postal service of the knights of the Teutonic order, extending over the northeast of Germany almost as widely as that of the Hanse towns over the northwest.

III.77.3

—At the end of the fifteenth century, as centralizing governments grew up and supplanted the feudal system, national postal service was attempted, and ultimately prevailed. In this, as in all other similar matters, France took the lead. The first steps were taken by Louis XI., and they were followed up by Charles VIII. The wars of the sixteenth century checked this development; but it was resumed under Louis XIII.; and in 1681 was so far advanced that letter carrying was made a government monopoly, though largely controlled by private hands till the legislation of 1790. In England there are traces of a postal service and postal regulations going back to a very early time; but the organized business of letter carrying seems to date from the reign of James I. It made a government monopoly by the legislation of 1649 and 1657, although the business was farmed out until 1709.

III.77.4

—In the countries ruled by the house of Austria an international postal system was started, under the administration of the Taxis family. At the beginning of the sixteenth century they established regular communication between Brussels and Vienna; soon a line was added to Milan and beyond, and not long after a further line to Madrid. In 1595 Leonard von Taxis received the office of postmaster general of the empire; and in 1615 this dignity was made hereditary. It was much harder to establish a monopoly here than in France or England, owing to the extent of ground to be covered, the full development of special postal services, and the weakness of the imperial authority. The nominal rights granted by the investiture could only be carried into effect by treaties with the individual states; and many of these preferred to maintain postal systems of their own. This was the case in Austria on the one hand, and in Brandenburg (and thus eventually Prussia), as well as many less important states of North Germany, on the other. The postal service of the Taxis family was thus chiefly exercised in the smaller states of middle and southern Germany, where it survived the fall of the empire, and lasted till 1866.

III.77.5

—A long time elapsed after the governments took control of the postal service before they made it efficient. The usefulness of the English postoffice dates from the year 1784, when measures of reform were introduced by Palmer, the postmaster general, with the warm support of Pitt. Previous to his time the mail conveyance had been infrequent, slow, irregular, and utterly unsafe. In the eight years of his tenure of office he doubled the frequency and speed of conveyance, and secured a reasonable degree of regularity and safety, chiefly by the substitution of coaches for single riders as a means of carriage. But, though the service was much improved, the rates continued exorbitant; so much so that a vast deal of private letter conveyance was done, in defiance of government rights. In the years 1830-35 the pressure in favor of low rates began to make itself felt; and the movement in this direction was ably headed by Rowland Hill, whose work on "Postal Reform, its Importance and Practicability," appeared in 1837. His proposal to reduce inland postage to about one-tenth of its former figure was so sweeping as to cause a great sensation and not a little opposition; but the idea was carried out in 1840, and the example thus set by England was soon followed by the other civilized nations; though generally with gradual instead of sudden reduction.

III.77.6

—The bill which established penny postage also introduced the use of postage stamps. The idea was not a new one; abortive attempts to carry it out had been made in France in 1653 and 1738, in Spain in 1716, in Sardinia in 1819-36. But in connection with the reduced postage and increased correspondence which followed it, stamps proved of indispensable service; and the example of England in introducing them was, within ten years, followed by nearly all prominent states. In the years 1869-74 came the still further reduction in price effected by the use of postal cards, originating in Austria.

III.77.7

—The postal system of the United States dates from colonial times, being specially provided for in the postal act of Queen Anne's reign; and its character was not very distinctly changed by the separation, or by any causes other than the natural growth of the country. Before the passage of the act of 1845, inland rates varied from six to twenty-five cents a sheet. The act of 1845 provided for rates of five and ten cents, according to distance; and in 1847 stamps of these denominations were introduced. In 1851 postage for nearly all home letters was reduced to three cents.

III.77.8

—The detailed history of postal development in different countries offers so few peculiarities that it is unnecessary to treat them separately. Everywhere we have, first, gradual improvement of service; then, simultaneously, lowering of rates, equalization for different distances, introduction of postage stamps; abandonment of the sheet as the unit of charge, and substitution of a unit of weight, at first almost always somewhat below the present half ounce (15 grm.) standard By the year 1851 the postal legislation and policy of civilized nations, as far as concerns home correspondence, had approached near to its present shape.

III.77.9

—Not so with foreign correspondence. For a long time nothing was done to encourage that, even by those administrations that were anxious to extend home facilities. It was not until 1833 that a daily mail was established between London and Paris; and even then there was communication but twice a week with other parts of the continent. There were discriminating rates against foreign correspondence, which were sometimes almost prohibitory. The rate for a letter from London to Dover was 8d., but if it was to be forwarded to France, the charge for the same part of the route in 1834 was 1s. 2d.; if intended for Germany, 1s. 8d.; for Italy, 1s. 11d. The ship charge for carrying a letter to the United States was six cents, or 3d.; the rate charged by the British postoffice for delivering such a letter to the ship was 2s. 2d. For letters directed to Spain, it was the same; for those to Brazil the inland rate was actually 3s. 6d. The rates of other countries indicated a similar policy. As international correspondence increased, and with it the demand for more favorable terms, these high charges could not well be reduced without common action on the part of the two nations concerned. Hence resulted a number of postal treaties, among which may be mentioned, as leading ones, the system of treaties (1840-50) between Austria, Prussia, and the smaller German states—many of the latter still represented by the heir of the Taxis family; also the series between France and England. Not the least important and delicate matter in some of these treaties was the provision concerning charges for letters in transit, to be delivered in some third country beyond. By means of these treaties the rates between the different nations of Europe were gradually reduced. Not so successful was the attempt to reduce them between Europe and America. The foreign postage policy of the United States had been for a long time exceedingly liberal, and it was only the conservatism of England that had prevented cheap postage between the two countries. Then at the time when England was making her postal reforms at home, steamships were taking the place of sailing vessels; and the subsidies which England wished to pay the steamship lines made her statesmen unwilling to reduce a postage rate which seemed to furnish such a suitable means of defraying the expense. Then came the adoption of the same system on the part of France, and attempts in the same direction in America; and every effort to support a subsidized steamship line lessened the strength of the demand for cheap transmarine postage. The United States rate for a considerable time was twenty cents, except where special arrangements provided otherwise; and these arrangements were apt to mean higher instead of lower rates. But with the abandonment of the Collins line of steamers, the United States again took strong ground in favor of lower rates; and, at its suggestion, a conference was held at Paris in 1863, relative to common action in the matter of international postage. This conference was only deliberative; it did not do away with the necessity of special treaties, though there was a continued lowering of rates in these. A similar conference, to be invested with greater powers, was invited to meet at Bern, in 1873; but as France, on the ground of financial embarrassments, declined to take part, it was postponed, and reconvened in September, 1874, when the leading nations were satisfactorily represented. In spite of some moderate opposition from France, which was hampered by its subsidy system of mail contracts, and in spite of great lukewarmness on the part of England, public feeling in favor of cheap postage was so strong that, on Oct. 9, a postal union was formed on a general basis of five cents per half ounce letter postage, to go into effect, with some few exceptions, July 1, 1875. Even France agreed that it would ultimately acquiesce in this rate. Other nations, not at first included, joined the postal union in rapid succession, and in 1878 a second congress was held at Bern, which carried out the ideas of the first into the shape of a postal union treaty, embracing the following points: 1, harmonious arrangement of lines for international connection, transit, etc.; 2, avoidance of international competition; 3, proper distribution of expenses, and, if necessary, pooling of receipts; 4, international equality of treatment; 5, equality of standards of weight, etc. These postal treaties have now been agreed to by all Europe, and most of the other countries of the world. The postal union has a permanent organization at Bern, with its regularly published series of reports.

III.77.10

—For dealing with all this business a body of officials and of official regulations has become necessary, almost involving a special department of administrative law. Two points of this deserve mention in a history of the subject: first, the franking privilege, or right of public officers to send letters free of charge, a survival of the time when the object of the postoffice was to transact government business, but one which has maintained itself almost everywhere; and second, the wide application of the principle of sacredness of epistolary correspondence.

III.77.11

—In this historical account, attention has been confined to the letter post as the most important part of the system. The postoffice has at different times and places attempted the conveyance of newspapers, unsealed packages, money, persons and telegrams; not to speak of matters like postal savings banks, being quite aside from its main function. In almost all cases it has done so in more or less direct competition with private enterprise: though the English government had, up to the year 1840, a virtual monopoly of newspaper carriage; while in many parts of the continent of Europe the actual competition in forwarding small parcels is not to-day noticeable. The conveyance of money has generally been effected under a form like a registered letter; but in England the habitual use of cheques led to the early development (1838) of the postoffice money order, which was slow in making its way into other countries. The rapid conveyance of persons from place to place by government posting arrangements, was at one time almost as important, at least in the eyes of the authorities as the conveyance of letters; but it of course nearly fell away with the introduction of railways, except in the few countries, like Norway, which combine considerable demand for communication with the impracticability of railways. On the other hand, postal telegraphy seems destined to grow in importance. In many countries of Europe the telegraph was from the beginning developed in connection with the postoffice; while in England it was brought under its control in 1869.

III.77.12

Principles of Administration. The question whether the state should control the postoffice need not be seriously discussed as an open one. Our experience with railroads has shown what we may expect from private management in affairs of this kind—unsteadiness and discrimination of rates, and development of competing and favored points at the expense of all others. When it is impossible to avoid this in transportation, unless by combinations and monopolies no less dangerous than the evil itself, it can hardly be seriously proposed to introduce it into the system of postal communication. On the other hand, the question as to how far the postoffice should extend its activity to the conveyance of parcels, telegrams, etc., can not be adequately treated here; partly because the necessity changes so entirely with varying local conditions, partly because special technical reasons are involved, to which justice can be done only in separate articles.

III.77.13

—Setting these points aside, we have two distinct series of questions to deal with: first, as to the financial or administrative aims with which the postoffice should be conducted; second, as to the means to be employed for securing those aims. Of the two, the first is more difficult, and at the same time of more general importance and interest.

III.77.14

—We see in the history of the institution that the postoffice was taken up by governments far more with a view of strengthening their own position than for the convenience of their subjects. This was equally the case whether they used it exclusively for their own business, as in Rome, or for the sake of getting administrative control into their hands, as in France. This carelessness of public interest led to its management under systems of lease or investiture, whatever means would secure money or influence with the least trouble. That state of things was outgrown in the last century, and men attained to the conception (though not always to the reality) of the postal service as a public interest, to be managed directly by the state for the public advantage. But the particular form of public advantage to be aimed at was not yet settled. The postoffice might be managed in any one of four ways: 1, as a tax; 2, to yield good business profit; 3, to pay expenses; 4, to best accommodate the public. On the whole, the third of these principles is tending to prevail, but there has been, and is still, much deviation from it.

III.77.15

—1. The use of the postoffice as a means of taxation was an idea belonging distinctly to the earlier period, now outgrown. Yet, in practice the lowering of rates was so slow that the government monopoly at the charges ruling previous to 1840 had all the characteristics of a tax, and of one placed at the highest limit the business would bear; making itself felt not so much by the amount of money collected as by the means adopted to evade payment, by keeping correspondence within narrow limits or forwarding it by illegal agencies. The discriminating rates against foreign postage were still more obviously of the nature of a tax, and were felt to be so when connected with the subsidy system; so that the abandonment of the principle of managing the postoffice as a tax can not be said to have been complete till the final lowering of rates by France and Italy subsequent to the postal congress of 1878.

III.77.16

—2. The idea of managing the postoffice to obtain business profits is much more plausible, and in those branches of the postal service which come into competition with private agencies, such as express companies. is probably sound. But in letter carrying, where there is a government monopoly, it is liable to misapplication in two ways. First, the absence of competition leaves the decision as to what constitutes a good business profit in the hands of the postoffice authorities, who, in the uncertain conditions and bases of calculation, have every motive to aim too high, and thus give the result the character of a tax; and, second, the absence of outside control of rates makes it natural for the authorities to secure the required excess of income over expenditure by doing a small business at high charges, instead of a large business at low charges. As a matter of fact, business profits under a government monopoly are not clearly distinguishable from taxes. Compare the arguments used (1835-50) against lowering postal rates with the results which actually followed such lowering. The most marked instance of reduction and its consequences may be taken from Rowland Hill's reform, by which postage was reduced to one-tenth its former figure. The financial showing did not quite realize Hill's anticipations, partly on account of a change in the legislation respecting newspapers; nevertheless, the department continued to do much more than pay expenses; its gross income reached its former figure in ten years, its net income in about thirty years; and in the last case the department was serving the public by carrying fourteen times as many letters as in 1839. The system of business profits is, however, in large measure maintained both in England and in France. (See figures below.)

III.77.17

—3. The idea of managing the postoffice simply to pay expenses gained hold in connection with the reforms of 1840. Even those writers who, from a financial standpoint, criticise the suddenness of Hill's change, and prefer the continental and American policy of gradual reduction, do so on account of the evils of suddenly shifting the burdens of taxation rather than from any objection to the principle itself. Yet, while their theorists hold this view, in practice most European states so far keep to the older policy as to secure a slight excess of income over expenditure in this department, perhaps, in general, not more than would meet interest on the cost of buildings. (See figures below.) The disadvantages of the profits principle have been already set forth; the corresponding advantages of the cost principle are, first, that it takes away the uncertainty as to the result to be striven for, and, second, that it furnishes a tangible basis on which the rates are likely to be computed, with due regard to the public interest.

III.77.18

—4. To carry letters without paying expenses (that is to say, below cost) is to tax the general public for the sake of a special service; usually a thing to be avoided. Yet, there are considerations which sometimes make it necessary to proceed on this principle. In countries like the United States or Russia, there are strong social and administrative reasons for establishing long routes over sparsely populated districts. These involve a large increase in expense, with no corresponding increase in revenue, whatever rate of postage is charged upon them. They have often caused a postal deficit in Russia, and almost always in the United States. If the expense of these routes causes a deficit in the whole department when the rates of postage are moderate, the additional income which could be obtained by higher postal rates would not be likely to cover it, because higher postal rates mean fewer letters. Thus the government must be prepared to meet the deficit. But—to take another consideration—suppose that the deficit could be met by higher rates. Suppose that in America by such rates a surplus could be obtained in the already self-sustaining east, sufficient to meet deficits in the south and west, or that such surplus could be obtained upon the main routes as to meet deficits upon the minor ones. What then? Such a proceeding would be a tax upon the correspondence of one section for the benefit of another. The interests subserved by such routes are not the postal interests. They are the general interests of the country; and to force the postage returns of other sections to pay for this service is to intensify the unfairness of taxation which it is intended to avoid. Thus the principle now generally favored is, that the postoffice should aim to pay expenses; but the traditional practice of European administrations is to make it do somewhat more; and the special circumstances of the United States have justified the practice of allowing it to do somewhat less.

III.77.19

—How shall the rates be adjusted in accordance with the financial principle chosen? is the second question. Under the older systems of taxation or profit, the rate was carried as high as the business would bear, and often higher, with the result of causing much smuggling. On those principles they of course charged much more for long routes than for short ones. Until 1845 the United States minimum charges were as follows: Under 30 miles, 6 cents; under 80 miles, 10 cents; under 150 miles, 12½ cents; under 400 miles, 18¾ cents; over 400 miles, 25 cents. Yet, even at this time, before the development of railways to any extent, it was computed that the cost of transmission of letters constituted less than two-sevenths of the whole, and the cost of collection and delivery more than five-sevenths. Compared with what it would cost the sender to evade payment, the differential rates were just; compared with what it cost to perform the service, they were absurd. And, as time went on, the absurdity increased. Improved means of communication rendered the whole cost of transmission a less important element; rapid increase of communication between distant places still further reduced differences in the cost of transmission. And with the rising feeling in favor of a system based on expense, not on profit—"freight, not tax," in the words of the day—a gradual equalization of rates for different distances was inevitable. On the continent of Europe. there was, for like reasons, a similar tendency, partially carried out, to do away with weight as an element in letter postage. This idea never took much hold in America, unless we regard the treatment of books and newspapers as an instance of it. There is no inherent reason why the postoffice should prefer to carry printed matter rather than written matter of the same weight. But printed matter, being habitually sent in large parcels, was, weight for weight, far easier to handle; especially so in the case of papers which went from day to day on the same routes in about equal quantities. Moreover, monopoly rates had never taken firm root here, owing to the competition of private agencies in the delivery of unsealed matter. All these reasons combined to produce the lower rates on these classes of goods.

III.77.20

—These practical ideas are followed out in the inland postage of almost all civilized countries, whether the results are such as to more than cover or slightly less than cover the expense. In international postage it is sometimes difficult to carry them out with fairness. The five-cent rate was based on a rough average of transmission expenditures; and countries unfortunately situated or organized may be unable to meet their foreign postal expenses on this rate. The general advantages of belonging to the postal union are a sufficient compensation for such of these inequalities as can not be satisfactorily arranged.

III.77.21

—We present herewith statistics of postoffices of the different countries named, for the year 1880:

Table.  Click to enlarge in new window.

III.77.22

—So much for the economic principles governing the postal service. Its economic effects it is impossible to discuss to advantage, for the very reason that it has become an essential part of our modern life. Our whole economic, social and political system has become so dependent upon free and secure postal communication, that the attempt to measure its specific effects can be little else than a waste of words.

ARTHUR T. HADLEY.

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