Part 15

The Post Office could not, however, in establishing a parcel post service, act as freely as in its arrangements for the conduct of the letter service. The conveyance of the parcels from place to place was likely to prove a serious undertaking, and for such conveyance the Post Office was dependent on the railway companies. In the case of letter mails the cost for conveyance is a very minor part of the total expenses of the service, but when negotiations with the railway companies were begun it was soon found that such would not be the case with parcel mails. The companies, regarding the parcel traffic as to a large extent their own proper business,[407] were not disposed to agree to easy terms, and there was the further difficulty that numerous companies had to be satisfied, since it was desired to establish the system under an agreement which should include all the principal companies.[408] From the first, the question of the remuneration of the companies was approached from a point of view totally different from that in which their remuneration for the ordinary letter mails was regarded. Letter mails are conveyed as entities, and the company have never been concerned with the number of letters enclosed in the mail or the amount of postage paid. They arrange for the conveyance of a given number of mails, and are remunerated accordingly. But with parcels the question was approached as one for the determination of just remuneration of the companies for conveying, not mails containing parcels, but single parcels. And the question to be settled was what proportion of the postage paid on the individual parcels should go to the companies. In view of the heavy expenses of every description which would be incurred and of the large number of heavy letters which would be transferred to the parcel post, causing a considerable reduction of revenue, the Post Office declined to accept less than half the total receipts, and after some demur the companies agreed. The rates of postage proposed were two in number--for parcels not exceeding 2 pounds in weight, 6d.; for parcels not exceeding 4 pounds in weight, 1s.

Difficulties arose subsequently as to the amount of freedom of action to be left to the Postmaster-General and the duration of the agreement. The first proposal was for an agreement in perpetuity, and the draft agreement gave the companies what was called a "partnership interest" in the parcel post business. It was, however, regarded as essential that the parcel post business should be no less under the control of the Postmaster-General than the existing letter post, and that, on the expiration of any agreement made with the railway companies, the statutes relating to the conveyance of letter mails by railway should apply to parcel mails.

After the failure of the first scheme, negotiations with the railway companies were suspended, but the public agitation for a parcel post was daily gathering strength, and in February 1882 the Postmaster-General again approached the companies. The new proposals were somewhat different from those originally made. A scale with four rates (3d. for 1 pound, rising to 1s. for 7 pounds) was now suggested by the Post Office, largely in deference to the strong disposition of the railway companies in favour of an increased number of rates. The low initial rate of 3d. for 1 pound was now proposed on the ground that a large proportion of the business to be done would be between the large towns and the rural districts. For the development of such business a low initial rate was essential; and as such parcels would not be likely to be to any large extent railway borne, the Post Office would obtain almost the whole of the proceeds of the postage. It was, moreover, now taken into reckoning that a considerable increase in the number of letters would result, since numerous communications relative to parcels posted would pass, and the revenue would thus benefit indirectly. The letter service would benefit, too, in other ways: it would be relieved of heavy packages; and the existence of a parcel post service would justify the provision of more efficient services in rural districts. The rates proposed were in general very much higher than those at the time existing in Germany, France, Switzerland, and Belgium, and they were estimated to yield a profit.

In the further negotiations serious difficulty was encountered on two points only: (1) the proportion of postage to be paid to the companies, and (2) the length of time for which the agreement should be made. The earlier agreement had been for an equal division between the Post Office and the railway companies of the postage paid on all parcels. It was now decided that payment could only be made in respect of parcels actually conveyed by railway. The companies thereupon asked a higher proportion. They anticipated that parcel post traffic would be largely long-distance traffic, involving in many cases transfers on the journey; and although they expected to retain a good deal of the short-distance traffic, they could only achieve this by reducing their rates generally, especially the rates for small parcels. After some higgling, they agreed under protest to accept 55 per cent. of the postage on all such parcels as should be conveyed by railway. They also agreed to the limitation of the duration of the bargain, and the term was fixed at twenty-one years.

The agreement was embodied in the Post Office (Parcels) Act of 1882.[409] The companies parties to the arrangement undertook the service of conveying the post parcels from the vehicles of the Postmaster-General at the despatching railway station to the vehicles of the Postmaster-General at the station of destination--that is to say, they undertook all handling of parcel mails on railway stations and transfer to and from trains and from train to train where necessary--in consideration of payment of 55 per cent. of the postage paid on all parcels conveyed by railway for the whole or part of their journey, the Post Office being required to keep a record of the amount of postage paid on every such parcel. The remuneration was to be paid to the Railway Clearing Committee in London, by whom it would be distributed between the various companies. The agreement was to continue for twenty-one years, and thereafter until terminated by either party. The Postmaster-General retained the power of revising the rates of postage, but in the event of such revision the companies might claim revision of the terms of their remuneration (even during the first twenty-one years). In any case, on the termination of the agreement, the statutes governing the conditions under which ordinary mails are conveyed by railway, and the determination of the remuneration of railway companies in respect of such conveyance, were to apply equally to the conveyance of parcel mails by railway.

The Postmaster-General has twice exercised his right of revising the rates of postage, and in each case the rates were lowered. The companies have not exercised their right to ask for a revision of the terms of their remuneration, and the provisions of the Act therefore continue in operation. In the first complete year of the service (1884-5) the number of parcels conveyed was some 23 millions. The increase in the traffic has been large and constant. In 1912-13 the total number of parcels exceeded 130 millions.

The service affords a great public convenience, and the simplicity of its rates is an undoubted boon. The uniform rate has, however, proved unsatisfactory in some respects. At all points at which the traffic would be profitable, the Post Office is open to the competition of private enterprise; but for that part of the traffic for which the uniform rate must inevitably be unprofitable (unless it be fixed so high as to be exorbitant for short-distance and average-distance traffic) there will naturally be no competition. The number of local, or short-distance, parcels is consequently small, and the number of parcels sent for long distances, to remote places, is comparatively large. No great use is, however, made of the post for the transmission of parcels of agricultural produce from rural districts. There is a moderate traffic in butter and eggs from Ireland to England, and in cream from the West of England. Proposals for the introduction of a specially low rate for agricultural products have frequently been considered, but there are obvious objections to the establishment of a special rate for a special class of traffic. Moreover, for parcels from country districts the present uniform rate is often ludicrously low. The cost of preparing and packing each separate small consignment for transmission by post is, however, considerable, and only the affluent are able to indulge in that method of obtaining food supplies.[410] The exceptional character of the Post Office traffic in parcels, and the small degree in which the rates of charge measure the utility of the service of transportation which they cover, are well illustrated by the statistics of the traffic, which indicate that the total numbers are unaffected by fluctuations in general trade, and that the reductions of the rates which have been made since the establishment of the service have had no appreciable effect on the volume of traffic.[411] The actual rates for the heavier parcels are probably more profitable than the rates for light parcels, since the principle of degression is not much recognized in the scale of rates. This view is confirmed by the fact that the post is little used for heavy parcels, the average weight of a post parcel being no more than 2.8 pounds. It is, as a matter of fact, not improbable that the parcel post service as a whole is conducted at heavy loss.[412]

NOTE.--As a war measure the rates were increased on 1st November 1915 by 1d. at each step in the scale, and are now as follow:--

Parcels not exceeding 1 lb 4d. Exceeding 1 lb., not exceeding 2 lb. 5d. " 2 " " 3 " 6d. " 3 " " 5 " 7d. " 5 " " 7 " 8d. " 7 " " 8 " 9d. " 8 " " 9 " 10d. " 9 " " 10 " 11d. " 10 " " 11 " 1s.

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PARCEL POST IN THE UNITED STATES OF AMERICA

Several causes operated to prevent the early establishment in the United States of a parcel post system. The two factors of extent of territory and sparsity of population, which had from the first so greatly influenced the policy of the Government towards the Post Office, were of much greater importance in regard to a parcel post system. The weight of the individual letter is very small, and as the cost of transportation depends in most cases entirely on weight, the system of uniform rates which had been introduced in England had not been found impossible of adoption in the United States. But with parcels, cost of transportation is an appreciable item for every parcel, and in a country of vast distances there must be an appreciable variation in the actual cost for each parcel. Consequently, any uniform rate which would render the service self-supporting must be measurably above the rate which would suffice for local and short-distance traffic, and measurably below the rate which would be necessary for long-distance traffic. Private agencies would therefore cut such a rate and absorb all the short-distance traffic, while the long-distance traffic would be left to the Post Office, and would be carried at a loss. This had been found to be the case with second-class matter, where weight is an important factor, and also with the fourth-class matter. The establishment of a parcel post system, therefore, would involve a reconsideration of the fundamental principles on which the rates of postage were in general based.

The creation, in 1863, of a third class of miscellaneous mail matter[413] was virtually the establishment of a limited parcel post. The rate, for third-class matter, 2 cents for each 4 ounces or fraction thereof, was increased in 1879 to 1 cent an ounce. These rates were comparatively high; and as the limit of weight was 4 pounds, the traffic naturally never assumed large proportions. With the establishment in 1880 of an international parcel post in which the United States participated, although having no real internal parcel post, it was inevitable that the question of establishing a system equal in scope to those of other countries should arise. For forty years there was a demand, becoming more general and insistent, for the establishment of such a general parcel post.

Active official support was first given to the proposals for a parcel post in 1890 and 1891 by Postmaster-General Wanamaker, who explained that although the demand for such a system was widespread, the greatest pressure came from "interior places," which were, in fact, really most in need of it, because they had no facilities for obtaining small packages of merchandise from the towns.[414] Opposition to any sort of parcel post came then, as always, from the express companies, who, although not able or not desirous of affording a service to all parts, were much concerned at the prospect of losing traffic. Mr. Wanamaker proposed to propitiate them by transferring to them a considerable amount of traffic deemed by him to belong properly to the express companies, viz., traffic carried by the Post Office for the other Executive departments free of charge, under "penalty frank,"[415] and comprising many packages of considerable weight and bulk. Mr. Wanamaker also desired to put a stop to the transmission, as second-class matter, of periodicals which were really ordinary books, by transferring such traffic to the express companies. Although in favour of a full parcel post system, and recognizing that there was a strong desire in the country for the boon, Mr. Wanamaker was not prepared to advocate its immediate establishment. He thought other reforms should take precedence; such as free-delivery extension, postal telegraph, postal telephone, and 1 cent postage on land and sea, all of which, except the extension of free delivery, are still waiting adoption.

A number of postmasters criticized the suggestions of the Postmaster-General in 1890 regarding parcel post, but most of them had, by 1891, expressed themselves in favour of a full parcel post system, and according to Mr. Wanamaker the remainder were "probably interested express agents." The situation was in some respects unsatisfactory. It was a common practice for business firms to contract with express companies to carry large quantities of small packages at a rate per package just below the rate of postage. The express companies took such of the packages as they thought fit to handle, and left the Post Office to carry the remainder, all long-distance traffic, and unprofitable both to the express companies and to the Post Office. But the companies were secured by their profit in the short distances. Naturally, therefore, they offered strenuous opposition to the establishment of a parcel post.[416]

With the establishment of rural mail delivery there arose a new demand for a parcel post. Persons living on the rural routes desired to take advantage of the new service for the delivery of small parcels of merchandise of all kinds, food-stuffs, tobacco, dry goods, etc., which they would order from the local store-keeper by post or by telephone. The rate then payable on such parcels was the general rate for fourth-class matter, viz. 16 cents a pound, which for parcels of goods of small intrinsic value was prohibitive. In response to this demand, the first definite proposals for a parcel post[417] were put forward by the department in 1904, when the establishment of a special rate of 3 cents a pound was suggested, with a maximum limit of weight of 5 pounds, for parcels from any distributing office for rural routes to any patron on the routes from that office. Such a rate "would be a great convenience to the patrons and become a source of revenue to the department." The rate of 3 cents was estimated to be ample remuneration in such cases, because there would be no expense for railway transportation, and as it would be merely employing a system already established, there would be no additional expense for delivery: the rural carriers could easily perform the service.[418] They had at first been allowed to carry express packages, but the privilege had been subsequently withdrawn. They were, however, still authorized by law to carry merchandise for hire, on behalf of patrons of the rural routes, and to carry passengers. In general, their work for the Post Office only employed them to the extent of 30 percent, of their full capacity, and a large unutilized margin therefore existed.

The proposal was again advanced in following years. Postmaster-General Meyer interested himself in the question, and advocated in speeches in various parts of the country the immediate adoption of a parcel post system. In 1907 he suggested the introduction of a local parcel post service experimentally. He made at this time numerous treaties with foreign countries for parcel post services between those countries and the United States, at a general rate of 12 cents a pound. The result was that parcels could be posted at any town in the United States for transmission to places in, say, Europe or Australia, at the rate of 12 cents a pound, but could only be posted for transmission to another town in the United States on payment of a rate of 16 cents a pound. When this situation was realized, there was naturally a good deal of irritation, and the existence of such an anomaly was made an argument for a domestic service.[419]

The preferential rate obtained by parcels going abroad continued to be a strong argument in favour of a general parcel post, and members of Congress constantly referred to it in the discussions on the subject.

There was, moreover, and still is, an important body of opinion which goes much further than the advocacy of a parcel post system. In that view, the express companies are the enemy or, at any rate, the oppressive character of the express rates is viewed so seriously that no solution of the present difficulties of the country, and especially of the "high cost of living" problem, is thought possible short of a complete express service run by the general Government. Relief will only be found under some system which will bring the producer of the necessaries of life into direct relationship with the consumer,[420] in order that the enormous middleman's charges be eliminated and the consumer obtain the produce at a price not greatly above the actual cost of production. The railways refuse to handle shipments less than 100 pounds, and their minimum charge is 25 cents. The ordinary consumer who requires consignments of much less than 100 pounds' weight has no use for such a service. For shipments of less weight, the only service available is the express service, the minimum rate for which, in general 25 cents, is too great for farm products, which are usually of low value and could not bear a rate of 25 cents. The express service, which is restricted to the railway system, has, moreover, no means of reaching that vast body of the people, estimated at some 40,000,000, who are living on the farms, and who alone are able to supply the desired traffic in food-stuffs. The Government has in recent years, at heavy expense, extended to some 20 millions of people the benefits of free mail delivery, and the intention of the advocates of a Government express service, a "postal express," is that the State should take over the express companies, paying them fair compensation for their property, and work their service in conjunction with the rural mail delivery. By this means an extensive service could be provided at reasonable rates of charge.[421]

In February 1908 Bills were introduced in the Senate to increase the limit of weight of fourth-class matter, and to provide a rural delivery parcel post for merchandise and other articles mailed on rural delivery routes. Legislation did not, however, result.

Meantime, the feeling in favour of a parcel post was spreading, more especially in the farming districts. In November 1911 a Sub-Committee of the Senate Committee on Post Offices and Post Roads was appointed to examine the practicability of establishing a parcel post system. The Sub-Committee was appointed on a resolution of the Senate, moved by Senator Jonathan Bourne, Jr., the Chairman of the Senate Committee on Post Offices and Post Roads, and there is indication that the adoption of the system had already been practically decided upon, the real question before the Sub-Committee being that of its practicability as an immediate proposition. The Post Office representatives advocated a limited experimental introduction of parcel post on rural routes and in the city delivery offices. They were impressed with the radical differences between the United States and most other countries where parcel post was in operation, and hesitated to recommend the introduction of a general service. But the members of the Sub-Committee had in mind to introduce as soon as practicable a complete system by the method of enlarging the scope of the fourth-class regulations and reducing the rates of postage. Numerous witnesses appeared before the Sub-Committee, representing general societies of business men, such as the National Dairy Union, the Associated Retailers of St. Louis, Me., and the Retail Dry Goods Association of New York; educational or social societies, such as the American Library Association, the Postal Progress League, and the Knights of Labour; farmers' societies, such as the State Granges and the Farmers' Educational and Co-operative Union of America. Several farmers, lawyers, and other gentlemen appeared to give their own personal views. The chief opposition to the parcel-post came from the representatives of the retailers, who stand in constant fear of losing their business to the mail-order or catalogue houses. The business of these houses is very large, amounting in the aggregate to nearly $200,000,000 per annum, and there is perhaps some reason for the local merchants' apprehensions. The bulk of the mail-order traffic is, however, distributed as freight. But the country merchants were much alarmed, and there were doleful prophecies of the results of a parcel post. The local merchant was represented as the mainstay of the country-side. He it was who sustained the country town, which afforded so valuable a local market for the farmer. He it was to whom alone that same farmer could look for credit to tide him over bad times. He it was who made the country town a social centre where the farmer might come into touch with civilization and refinement. And on the continuance of the prosperity of the country merchant depended the continuance of the army of travelling salesmen, without whose patronage railroads would be driven to reduce the number of trains, hotels would go out of business, and throughout the country accommodation for travellers would be found extremely poor. In short, parcel post would reduce the country merchant to the same condition as the small shopkeeper in Europe; and the country towns would become mere hamlets and deserted villages.[422]