The Postal Monopoly
MARCH 01, 1976 by BRIAN SUMMERS
Mr. Summers is a member of the staff of The Foundation for Economic Education.
In 1974 six children in New Jersey earned a few dollars by delivering Christmas cards for five cents each — half the United States Postal Service rate. They were breaking the law.’
In 1971 a private corporation, the Independent Postal System of America, offered to deliver Christmas cards for five cents each — three cents less than the U.S.P.S. rate. They were stopped by a court injunction.2
In 1966 the CF&I Steel Corporation, frustrated by the quality of postal service between their Denver headquarters and their plant in Pueblo, hired an armored-car service to deliver the mail. After five months of operation the service was halted by the Denver Post Office, and "at the Post Office’s suggestion" CF&I paid two thousand dollars toward back postage.³
These are examples of a monopoly at work. With a few minor exceptions, the United States Postal Service enjoys a legal monopoly in the delivery of letters. Under the Private Express Statutes, private letter carriers are subject to fines and/or imprisonment.
Why should the U.S.P.S. hold a legal monopoly? And, more to the point, why should the government be carrying mail at all?
Let us examine some of the arguments put forward by defenders of the monopoly. One argument is that the U.S.P.S. constitutes a "natural" monopoly. That is, it is contended, it would be impossible for competing private firms to provide efficient service. Thus, it is argued, we need a government-run monopoly.
This argument does not stand up in the light of history. In the past three hundred years, thousands of private carriers have provided efficient postal service in England and America.
Three such private carriers stand out in British history: William Dockwra, Charles Povey, and Peter Williamson.4 Each of these men was so efficient in providing postal service that the British General Post Office, after closing them down, adopted many of their methods.
William Dockwra established his London Penny Post in April 1680. Within a few months he had four hundred post offices, and was making ten daily deliveries and four to twelve daily collections. Thus, it was possible to send a letter and receive an answer the same day. The 1946 edition of the Encyclopedia Britannica reports:
The staff employed in London by Dockwra considerably exceeded that employed by the post office in the whole kingdom. This truly remarkable enterprise gave London a postal service which in some respects has never been equalled before or since.
For some time Dockwra struggled with serious financial difficulties; but no sooner had the penny post begun to show a profit than the duke of York, on whom the post office revenues were settled, asserted his monopoly. Dockwra was condemned to pay damages and his undertaking was incorporated in the General Post Office; but the London penny post long survived its creator and was maintained until 1801.
Charles Povey founded his Half-Penny Carriage in October 1709, serving parts of London, Westminster, and the borough of Southwark. His rates were less than the General Post Offrce. After seven months of operation he was fined and put out of business.
Peter Williamson established his Edinburgh Penny Post in 1776. He was so successful that his wife and father-in-law soon set up a competing penny post. After seventeen years his business was taken over by the General Post Office.
Following the lead of these three men, private penny posts sprung up all over the British Isles. According to one source, by 1800 there were over two thousand.5 Today, due to the vigorous enforcement of the British postal monopoly, there are none.
The American story is much the same. In the 19th century hundreds of private carriers successfully competed with the Post Office Department. Due to the enforcement of the Private Express Statutes, none have survived.
One of the earliest of these postal services was begun in 1835 by William F. Harnden of Boston. His success encouraged competition, and by 1843 Boston alone had at least twenty private postal operators, including Alvin Adams, father of the Adams Express Company.
Soon private post offices dotted the land. There were Hussey’s Post and Boyd’s City Express in New York City; Pomeroy’s Letter Express in eastern New York State; the Letter Express Company in western New York State, Chicago, and Detroit; Hale and Company in New York, New England, Philadelphia, and Baltimore; Lysander Spooner’s American Letter Mail Company; Blood’s New York Express (four deliveries and five collections daily); Wells and Company (later to become Wells-Fargo); Yankee Jim’s Loon Creek Express; Randall and Jones Canyon City Express — one stamp catalogue lists one hundred fifty private carriers. In 1845 private carriers transported an estimated one-third of the nation’s letters."
How efficient were the private carriers? Hunt’s Merchant Magazine reported: "Government enterprise is wholly unable, under its most advantageous promptings, to compare with private enterprise."’ Albert D. Richardson wrote that Wells-Fargo Express operations in the West "illustrate the superiority of private enterprise. Whenever the messengers run on the very steamer, or the same railway carriage, with those of the United States mail, three-fourths of the businessmen entrust them with their letters, which are invariably delivered in advance of government consignments… ."8
Of course, these developments were noted in Washington. In 1844 Senator James F. Simmons of Rhode Island declared: "The fact is notorious that, . . . on the express routes, twenty letters are sent outside the mail for the one that is carried by the mail."9 That same year Congressman John P. Hale of New Hampshire warned: "events are in progress of fatal tendency to the Post Office Department; and its decay has commenced."¹º The Philadelphia postmaster predicted that if the private carriers "be not put down, they will ere long put down the Post Office Department."¹¹
Unable to match the efficiency of the private carriers, the Post Office resorted to force. The Private Express Statutes were strengthened in 1845. William C. Wooldridge reports:
With a realistic appreciation of the underlying difficulties, the Senate Post Office Committee brought in a bill that would combine a drastic reduction in postage rates with stiffer restraints on private competition. Even then, however, the bill’s sponsor recognized the government’s congenital inability to compete successfully with the private expresses; he begged his colleagues "to keep in mind, what he had so repeatedly urged, that it was not by competition but by penal enactment" the private posts were to be destroyed.¹²
Those private carriers that weren’t frightened from the market were put out of business by criminal prosecution. The government’s postal monopoly was preserved, not by providing better service than the private carriers, but by threatening them with arrest.
There is nothing "natural" about the postal monopoly. If the monopoly were "natural," the government wouldn’t have to crush competition with threats and criminal indictments.
A second argument used by the monopolists is that private carriers wouldn’t charge uniform rates. They would charge less for low-cost routes (such as across town) than for high-cost routes (such as across the continent).
That sounds like a pretty fair system. People would pay for what they got. What we have now is across-town mailers being plundered to subsidize across-continent mailers. What is so noble about that?
And we should remember the words of Hunt’s Merchant Magazine: "Government enterprise is wholly unable, under its most advantageous promptings, to compare with private enterprise." Given a few years of free enterprise, all postage rates would probably be lower than they are now, including those now subsidized by the taxpayers. Of course, we will never know as long the U.S.P.S. has a monopoly.
A third argument used by the monopolists is that private letters wouldn’t be safe in the hands of private carriers. Private carriers might open the mail and read it.
This is precisely what the postal monopoly has been doing for years:
For 20 years the CIA routinely opened over 13,000 letters a year going to and from the U.S.S.R., and later extended this operation to include mail from North Vietnam, Cuba, and other (noncommunist) Latin American countries. Chief Postal Inspector William Cotter systematically lied about the existence of this operation until just this year.
Military counterintelligence groups routinely opened military mail, both within the U.S. and at overseas bases. The "flap and seal" operation was justified on the grounds of detecting spies, but according to columnist Jack Anderson, was used largely to spy on servicemen who had complained about the Vietnam War.
In just the past two years, Inspector Cotter admits there have been court orders for opening first class mail, and nearly 8600 approved mail covers [the recording of all return addresses on someone's incoming mail]. The latter have been at the behest of 41 Federal agencies, including the IRS, the Drug Enforcement Agency, the Interstate Commerce Commission, and the Departments of Agriculture and Interior, as well as state and local police and prosecutors.¹3
On July 13, 1855 the editor of Alta California, enraged by the prosecution of private carriers, declared: "The present Post Office system is the most outrageous tyranny ever imposed on a free people. It forbids us from sending letters by such means of conveyance as we may prefer, without paying an odious and onerous tax to the government.. . .,,¹4
Strong words. And still true.
1 New York Times, December 20, 1974 (New Jersey Edition).
2 John Haldi, Postal Monopoly (American Enterprise Institute, Washington, D.C., 1974) pp. 16-17.
³Wall Street Journal, June 5, 1967.
4 Rockford Fresnel, "Postmen Against the State," Innovator, June 1966.
5 Fresnel, Ibid.
6 William C. Wooldridge, Uncle Sam, The Monopoly Man (Arlington House, New Rochelle, N.Y. 1970) pp. 11-31.
7 Frank Chodorov, The Myth of the Post Office (Regnery, Hinsdale, Ill., 1948) p. 14.
8 Wooldridge, p. 21.
9 George L. Priest, "The History of the Postal Monopoly in the United States," Journal of Law & Economics, April 1975, p. 59.
10 Priest, p. 61.
11 Wooldridge, p. 22.
12 Wooldridge, p. 23.
13 Robert Poole, Jr., "Getting Big Brother Out of the Mailbox," Reason November 1975, p. 54.
¹4 Wooldridge, p. 31.