The Development of Rates of Postage: An Historical and Analytical Study

Part 44

Chapter 443,945 wordsPublic domain

[700] "The advantage of Imperial unity, which was held in 1898 to justify the sacrifice of revenue incidental to a measure calculated to bind together the United Kingdom and her possessions beyond the seas, cannot, of course, be urged as a plea in favour of universal penny postage; but apart from all other arguments for and against the proposal, the decisive consideration is that the British Government are not at present in a position to bear the very heavy loss that would be involved in the reduction of foreign postage from 2-1/2d. to 1d."--_Papers laid before the Colonial Conference_, 1907; _Memorandum by General Post Office_ (Cd. 3524), p. 500.

[701] H. von Stephan, _Geschichte der preussischen Post_, Berlin, 1859, p. 3.

[702] "Kommt es doch vor, dass ein Bote eines deutschen Reichsf[:u]rsten ausser dem Botenlohn noch eine besondere Verg[:u]tung beansprucht, weil er auf dem Botengange gleichzeitig einige Schweine f[:u]r die Herrschaft nach dem Bestimmungsort hat treiben m[:u]ssen. Da diese Begleitung auf kein besonders lebhaftes Gangtempo schliessen l[:a]sst, so d[:u]rfen wir es dem Garzonus nicht verdenken, wenn er die deutschen Boten zum Wetteifer mit ihren Collegen im alten Persien ermahnt, deren Geschwindigkeit Xenophon in der Kyrop[:a]die mit dem Fluge der Kraniche vergleicht."--Ibid., p. 15.

[703] Ibid., p. 4.

[704] B. E. Crole, _Geschichte der deutschen Post_, Eisenach, 1889, p. 214.

[705] "Die Vereinigung Oesterreichs mit den Burgundischen Niederlanden ruft die erste Reichspost, die Vereinigung von Brandenburg, Preussen, Cleve und Hinterpommern unter einem Scepter die erste Brandenburgische Staatspost hervor."--H. von Stephan, op. cit., p. 5.

[706] F. Ohmann, _Die Anf[:a]nge des Postwesens_, Leipzig, 1909, pp. 49, 86, and 92.

[707] "(1) Die Unterhaltung solcher Boten lange Jahre vor Errichtung der Posten [:u]blich gewesen; (2) dem Taxis w[:a]re nur das Post-, nicht das Botenwesen zu Lehen gegeben; (3) es w[:u]rden ihnen (den Boten n[:a]mlich) viele Waren und Kostbarkeiten anvertraut, welche sie [:u]berliefern und daf[:u]r stehen, welches wieder der Postillone Werk nicht sei; (4) die Posten dienten wohl zu Briefen, nicht aber zu Bestellung anderer Sachen, also k[:o]nnten Posten und Boten wohl nebeneinander bestehen."--Imperial Rescript of 1686, given by Beust, Teil 1, s. 149 ff; cited F. Haass, _Die Post und der Charakter ihrer Eink[:u]nfte_, Stuttgart, 1890, p. 93.

[708] "For very good and potent reasons, especially on account of the troublesome war, as also for the purpose of obtaining good and reliable information about the Turks, the hereditary enemies of the whole of Christendom, and other potentates, adjacent to the Empire, in order that the Emperor, the King, and other potentates may exchange their correspondence."--Dr. Joseph R[:u]bsam, _L'Union postale_, 1892, p. 126.

[709] "Es lag allweg 5 Meil wegs ein Post von den andern, einer war zu Kempten, einer zu Bless, einer an der Bruck zu Elchingen und also fortan imerdar 5 Meil wegs von einander und must allweg ein Pot des andern warten, und so bald der ander zu ihm ritt, so bliess er ein h[:o]rnlin, das h[:o]rt ein bott der in der Herberg lag und must gleich auf sein. Einer musste all Stand ein Meil, das ist 2 Stund (wohl f[:u]r den Fussg[:a]nger berechnet) weit reiten, oder es ist ihm am Lohn abzogen, und musten sie reiten Tag und Nacht."--"Memminger Chronicle," cited F. Ohmann, _Die Anf[:a]nge des Postwesens_, Leipzig, 1909, p. 102.

[710] Dr. Joseph R[:u]bsam, ibid., p. 157.

[711] Ibid., p. 127.

[712] "Contrary to what was usually the case with the postal arrangements in antiquity and the Middle Ages, the institution founded by Francis von Taxis, though chiefly intended to serve the purposes of the State, assumed from its very beginning a character of public utility and political economy, for it was at the disposal of anybody wanting a rapid, cheap, and safe means of conveyance for his letters."--Dr. Joseph R[:u]bsam, ibid., p. 128.

[713] Ibid., p. 130.

[714] Von Beust, cited H. von Stephan, op. cit., p. 6.

[715] B. E. Crole, _Geschichte der deutschen Post_, Eisenach, 1889, p. 201; H. von Stephan, Geschichte der preussischen Post, Berlin, 1859, pp. 6-10.

[716] Proclamation of 6th November 1597; B. E. Crole, op. cit., p. 205.

[717] An account of the struggles between the Taxis family and the princes is given in Crole's _Geschichte der deutschen Post_ (Part III, chaps. iv. and v.).

[718] "Trotz der Ausdehnung der Taxis'schen Posten im 'Reich' h[:o]rte das Botenwesen in den einzelnen L[:a]ndern und in den Reichsst[:a]dten keineswegs auf sondern entwickelte sich fort und fort und hatte seine Botenmeister, auch Postmeister und andere Bedienstete."--B. E. Crole, op. cit., p. 213.

[719] Ibid., p. 231.

[720] E. Gallois, _La Poste et les Moyens de Communication des Peuples [a'] travers les Si[e']cles_, Paris, 1894, p. 94.

[721] B. E. Crole, op. cit., p. 247.

[722] The territory of the Taxis posts shrank between the years 1790 and 1811 from 3,922 square (German) miles to 745 square (German) miles, and a number of territorial posts took the place of the Imperial posts. In 1810 there were no less than 43 of these territorial posts.--_Die Brieftaxe in Deutschland_, Freiburg im Breisgau, 1862, p. 4; C. F. M[:u]ller, _Die F[:u]rstlich Thurn und Taxis'schen Poster und Posttaxen_, Jena, 1845, p. 7.

[723] Oskar Grosse, _Die Beseitigung des Thurn und Taxis'schen Postwesens in Deutschland_, Minden in Westf., 1898, p. 33.

[724] C. F. M[:u]ller, op. cit., p. 13.

[725] The rates for a letter weighing 1 loth (1/2 ounce) were:--

D: Rates established 18th December 1824.

E: Rates established 1st October 1844.--Ibid., pp. 9 and 39.

[726] K. A. H. Schmid, _Zur Geschichte der Briefporto-Reform in Deutschland_, Jena, 1864, p. 36.

[727] Oskar Grosse, _Die Beseitigung des Thurn und Taxis'schen Postwesens in Deutschland_, pp. 98-9.

[728] Ibid., p. 47.

[729] Ibid., p. 66.

[730] The conditions were in many respects similar to those obtaining in the United States. _Vide supra_, p. 191.

[731] "In England you have thickly congested rural districts, large towns every few miles, and tremendous cities: in Canada you have a population of less than 8,000,000 spread over a vast area, with few cities or large towns, and with vast spaces that must be traversed where no population exists.... We are giving, as compared with England, a flat rate in an area twice as great as Britain gives parcel post, and where all the conditions are much less favourable."--Hon. L. Pelletier, _Parl. Debates, Canada_ (_Commons_), 4th June 1913.

[732] _Canada Official Postal Guide_, 1917, pp. 27-8.

[733] Such improvements as the introduction of letter-cards, reply-paid postcards, etc., afford conveniences to the public, but they have little bearing on general questions of rates of charge. The number of such articles passing by post is insignificant in comparison with the total postal traffic.

[734] Thus, in the United Kingdom, the number of letters registered in 1913-14 was .68 per cent. of the total number posted. The total cost of the supplemental services, including registration, insurance, and express delivery, was in 1913-14 only about a million, out of a total cost for all postal services of over [L]17,000,000 (_Annual Report of the Postmaster-General_, 1913-14, p. 92).

[735] "In the present century the Post Office has assumed three new functions--the transmission of money, and telegrams, and the custody of savings. These are alike only in requiring a widespread system of branch offices."--A. M. Ogilvie's article on "The Post Office" in R. H. Inglis Palgrave's _Dict. Political Economy_, London, 1899, vol. iii. p. 175.

"The so-called 'Post Office' is in fact a collection of different, though connected, industries."--C. F. Bastable, _Public Finance_, London, 1903, p. 206.

[736] See H. R. Meyer, _Public Ownership and the Telephone in Great Britain_, New York, 1907.

[737] "To-day, State ownership is the general rule over Europe, and only in America is there private ownership on a large scale. It is significant that the first seizure of this monopoly of the State was in France, on the simple ground that it was not safe to allow so important a device to be in other than the hands of the State. In 1837 a law was passed making every kind of telegraph a State monopoly. This was due to Napoleonic influence. It was not until 1870 that the British Government claimed the monopoly."--John Lee, _Economics of Telegraphs and Telephones_, London, 1913, p. 2.

[738] "No man can feel a more intimate conviction than I do that, whatever our financial difficulties may be, we must not take measures to meet them which should bear upon the comforts of the labouring classes.... Well, then, I must, with my sense of public duty, abandon the idea of raising a revenue from the Post Office."--Sir R. Peel, 11th March 1842, _Parl. Debates_ (_Commons_), vol. lxi. col. 434.

"If, therefore, it should also happen that it (the penny) is the best rate adapted ultimately to produce the largest amount of money profit, such a coincidence would be the result of _accident, not of design_."--_Report from Select Committee on Postage_, 1843; evidence of Sir Rowland Hill, Answer 74.

"The Post Office, and, since the fall in silver, the Mint, both produce in England a net revenue, but the yield of revenue ought to be considered as purely incidental if not accidental."--J. Shield Nicholson, _Principles of Political Economy_, London, 1901, vol. iii. p. 372.

As a war measure the United Kingdom has now increased the rate on letters over one ounce in weight. Such letters are, however, only a small proportion of the total number of letters posted (_vide supra_, p. 33). Canada has imposed a war tax of one cent on all letters, and on postcards (_supra_, p. 57).

[739] _Vide_ Alfred Marshall, _Principles of Economics_, London, 1907, vol. i. p. 124.

"If I put a letter in the pillar-box rather than walk half a mile to deliver it by hand, it is clear that I value the service at one penny at least, and if its true value is to be taken at less than a penny, it must be assumed that some one would have carried the letter for less than a penny if the Post Office monopoly had been absent. But to deal thoroughly with this question it would be necessary to enter on a discussion of the Austrian theory of value and Marshall's conception of 'consumer's rent.'"--E. Cannan (_Memoranda on Classification and Incidence_, p. 163).

[740] "Notre syst[e']me fiscal demande aux imp[^o]ts indirects la plus grande partie de nos recettes budg['e]taires. Les allumettes sont lourdement tax['e]es. ['E]crire une lettre est, malgr['e] tout, moins indispensable [a'] l'homme qu'allumer du feu. Tant que les objets de premi[e']re necessit['e] sont frapp['e]s, il n'y a pas raison d['e]cisive pour refuser de laisser pr['e]lever sur les correspondances de toutes sortes un imp[^o]t indirect, qui appara[^i]t, dans les ['e]critures budg['e]taires, comme un exc['e]dent de recettes des Postes, T['e]l['e]graphes, et T['e]l['e]phones sur leurs d['e]penses.

"Si l['e]gitimes que soient en principe les b['e]n['e]fices de l'['E]tat-postier, tenons pour certain que le public, [a'] moins de quelque catastrophe impr['e]vue, ne permettra pas de les accro[^i]tre beaucoup, et que les Ministres de Finances de demain auront beaucoup de peine [a'] conserver le peu qui leur en reste."--_Rapport portant fixation du Budget g['e]n['e]ral_, Chambre des D['e]put['e]s, Session 1909, No. 2767.

[741] "The widest division of public revenue is into (1) that obtained by the State in its various functions as a great corporation or 'juristic person,' operating under the ordinary conditions that govern individuals or private companies, and (2) that taken from the revenues of the society by the power of the sovereign."--C. F. Bastable, _Public Finance_, London, 1903, p. 158. Of. C. C. Plehn, _Introduction to Public Finance_, New York, 1909, p. 79; E. B. A. Seligman, _Essays in Taxation_, New York, 1913, p. 400, et seq.; see also Bastable, op. cit., p. 156.

[742] E.g. "The common mode of levying a tax on the conveyance of letters is by making the Government the sole authorized carrier of them, and demanding a monopoly price. When this price is so moderate as it is in this country under the uniform penny postage, scarcely if at all exceeding what would be charged under the freest competition by any private company, it can hardly be considered as taxation, but rather as the profits of a business; whatever excess there is above the ordinary profits of stock being a fair result of the saving of expense, caused by having only one establishment and one set of arrangements for the whole country, instead of many competing ones."--J. S. Mill, _Principles of Political Economy_, London, 1871, vol. ii. p. 461.

[743] _Vide_ note 2, opposite.

[744] "Wherever the benefit to the individual can be even approximately estimated there is a strong presumption in favour of levying the cost incurred from him and converting the tax into a 'fee.'"--C. F. Bastable, op. cit., p. 267.

"To be properly remunerative to the State, as to a private individual, the price at which a commodity is sold must be sufficient to pay interest on the capital invested in the business, that is to say, to pay for the use of the property which must be used in producing the commodity, as well as to pay the more immediate cost of its production in wages and materials. There is no ground at all for the theory sometimes put forward that the State should deliberately abstain from making a profit from the working of an institution like the Post Office. Taxpayers are indeed nearly all users of the Post Office, and users of the Post Office are nearly all taxpayers, but there is nothing to show that people are taxed in the same proportion as they use the Post Office--the largest taxpayers are not necessarily the largest users of the Post Office. Consequently it is not a matter of complete indifference whether the State, which in this case means the taxpayers, makes a profit on the business or not. The only question difficult to decide is how much interest on the capital invested the State ought to obtain, in order to make the business remunerative but not a source of taxation. When the State has no monopoly, or only a monopoly secured by driving out all competitors in fair commercial rivalry (if such a case has ever occurred), it may charge what it can get for the commodity sold without making the business a source of taxation. But when the State has conferred on itself a monopoly of a business, it is evident that to charge the price which would bring in the largest profit would often be simply equivalent to laying a tax on the commodity. In this case, the price charged should only be such as would produce a rate of interest which would satisfy private individuals or joint-stock companies, supposing there were no monopoly. The rate of interest should be reckoned in relation to the actual market value of the property used, not in relation to what it may have originally cost the State. When the State makes a bad investment the loss should be written off once for all as soon as it is discovered. If, for instance, a State has bought telegraph apparatus for far more than it is worth, there can be no reason why the senders of telegrams, and not the whole body of taxpayers, should pay for the mistake."--Edwin Cannan, _Elementary Political Economy_, London, 1903, pp. 130-1.

The cost which ought in strictness to be taken is the cost of the most economical private commercial undertaking which would provide an equal service if the monopoly of the Post Office were withdrawn:--

"I do not regard the greater part of the Post Office revenue as a tax at all. If all of it were earned by doing for the public on a large scale work that no private company could do as cheaply, because it would have to do it on a small scale, then I should say that none of the Post Office revenue was a tax. That part, however, of its revenue which it gets by prohibiting others from performing services for the public is a tax."--Alfred Marshall, _The Times_, 6th April 1891.

[745] The terms "Mixed Taxes" and "Quasi-Taxes" have been applied to charges of this character. "Mixed Taxes, or Quasi-Taxes, naturally arise when a governing body makes demands for payments, and gives something in return, but without any pretence of equivalence between individual payments and individual returns."--R. Jones, _The Nature and First Principle of Taxation_, London, 1914, p. 7.

[746] E.g. "Many definitions of the word 'tax' have been proposed, but I know of none which would include just so much of the Post Office revenue as happens to be in excess of the amount expended in the year and no more.

"I believe that the desire to reckon this amount and no more as a tax, arises from a somewhat dim impression that it is the sum which the State exacts in excess of what a private company, without any legal or natural monopoly, would have to be satisfied with for performing the same services. But it is not. In the first place, such a private company would expect and receive about 3 per cent. on its capital in addition to the mere working expenses. We do not know what the capital of the Post Office is, but it must be very great, seeing that all the more important offices are owned in fee simple. Secondly, a company would raise new capital for new buildings and the purchase of more land, instead of defraying the expense as if it were current working expenditure. Thirdly, a company would not 'encourage thrift' by giving away upwards of [L]700,000 a year to the depositors in the savings bank, by paying 2-1/2 per cent. Fourthly, in all sorts of ways the Post Office is not conducted as a commercial enterprise would be. For example, it spends more than a company would do in the less profitable districts.

"The only argument I know of in favour of treating the so-called 'net revenue' alone as a tax, thus breaks down. If any part of the gross revenue is a tax, the whole must be."--E. Cannan (_Memoranda on Classification and Incidence_, p. 163).

[747] "The payment for the same service may be a price in one State, a fee in a second, or a tax in a third.... The controlling consideration in the classification of public revenues is not so much the conditions attending the action of government or the kinds of businesses conducted by the government, as the economic relations existing between the individual and the government."--E. R. A. Seligman, _Essays in Taxation_, p. 423.

[748] This has been held a justification for regarding the letter rate as a whole as a pure tax:--

"A special service is no doubt rendered to each contributor of the tax, as well as a general service to the whole community, by means of the facilities of communication always available; but the charge is what is technically known as a tax, and the fact that a particular, as well as a general, service is rendered, does not alter the tax nature of the charge. Apart from the theory it has also to be considered that the productive portion of the Post Office revenue is derived from charges where the cost is very little--from letters, for instance, in the metropolitan district, or in and between great centres of population, where the cost of conveyance and delivery does not exceed, probably, one-tenth of a penny per letter, and the surplus of nine-tenths is spent on other services of the Post Office on which there is a deficit."--Sir Robert Giffen, K.C.B. (_Memoranda on Classification and Incidence_, p. 94).

The argument is that in large towns the cost of the service is infinitesimal, and the charge is therefore tax. Obviously this has no application to country services.

Plehn does not take this view:--

"_Postal surplus not the result of taxation._"

"There are some writers who regard any surplus acquired in this way as practically the result of taxation, and class any charge for the public service, above the cost thereof, as a special tax. This classification presupposes that the service is, by nature, of a public character, an assumption contrary to the fact, for no function except that of governing itself, in the narrowest possible sense, is _by nature_ of a public character, nor, on the other hand, _by nature_ of a private character. On this consideration, therefore, it is better to class these gains, not as taxes, but as the earnings of a public industry."--C. C. Plehn, _Introduction to Public Finance_, p. 358.

[749] "On the purely financial side the gain from the service must generally be a small one; the return for capital employed is little, and the only remaining element would be the economy that results from the application of monopoly, and the consequent unity of the service. Any further charge is really a form of taxation."--C. F. Bastable, _Public Finance_, London, 1903, p. 209.

"When we come to look more closely into the essential character of this 'public utility' in respect of its economic and financial value, it will appear that in this case an important administrative function has attached to it, as it were involuntarily, an effective contrivance for the levying of a tax, such as to require that the Post Office be taken up in connection with the theory of taxation."--G. Cohn, _Science of Finance_, translated by T. B. Veblen, Chicago, 1895, p. 126.

[750] The rates for postcards, printed matter, and samples roughly correspond with the cost of service and are perhaps to some extent prices.

[751] The suggested classification, if satisfactory from the speculative point of view, does, however, give rise to practical difficulties. In public financial statements it is, of course, impossible to show the actual nature of the revenue on such a basis. The only practicable course is to classify as a whole the gross revenue and the net revenue for the entire service. There is difference of opinion even as to this apparently simple problem. The common-sense solution would seem to be that recommended by Sir Edward Hamilton, viz. to reckon the net revenue as a tax and the balance of gross revenue as payment for services rendered; although in view of the complications resulting from the existence of unremunerative services, and the failure to make proper allowance in respect of the capital employed in the service, such a course is unscientific and misleading.