Whenever it is suggested that postal service would be more efficient if handled privately, someone responds: "Postal service must be provided by the State because private enterprise couldn't do the job." This objection does not stand up in the light of history. In the past 300 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. These men were so efficient that the British General Post Office, after closing down their businesses, adopted many of their methods.
William Dockwra established his London Penny Post in April 1680. Within a few months he had 400 post offices and was making 10 daily deliveries and 4 to 10 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 and served parts of London, Westminster, and the borough of Southwark. Using bell ringers to collect letters and charging lower rates than the General Post Office, he quickly won public acceptance. After seven months of operation he was fined and put out of business, but his system of bell ringers was adopted by the General Post Office and continued in use until as late as 1846.
Peter Williamson established his Edinburgh Penny Post in 1776. According to his advertisements, he delivered anything "not exceeding three pounds in weight, to any place within an English mile to the east, south and west of the cross of Edinburgh, and as far as South and North Leith, every hour through the day, for one penny each letter or bundle."
Williamson's outfit was so successful that his wife and father-in-law set up a competing penny post. He outlasted them, but after 17 years his business was taken over by the General Post Office.
Following the lead of these three men, private penny posts sprang up all over the British Isles. According to one source, by 1800 there were over 2,000. Today, due to vigorous enforcement of the British postal monopoly, there are none.
A GOOD START
The American story is much the same. In the 18th and 19th centuries, hundreds of private letter carriers successfully competed with the Post Office. Due to the enforcement of the American postal monopoly—codified by the Private Express Statutes—none has survived.
The United States has had restrictions of one form or another against private postal service since 1692, when William and Mary granted Thomas Neale a franchise to provide postal service in the colonies. In 1707 the franchise was purchased by the Crown and placed under control of the Postmaster General. Fortunately, the franchise was loosely enforced, and it became common for travelers to carry letters for relatives, friends, and even strangers. The resulting anemia in the government mails was noted by British authorities, and in 1773 Hugh Finley, a Canadian postal inspector, was sent to investigate. Finley reported finding widespread competition with the Post Office. For instance, in Newport, Rhode Island, he found "two post offices, the king's and Peter Mumford's."
In 1775 the Continental Congress officially put an end to the king's postal operations in America, but only after a private carrier, William Goddard, had cleared the way. Carl H. Scheele, Curator of Postal History, Smithsonian Institution, writes:
After royal authorities barred William Goddard's newspaper from the mail, the journalist hired riders in August 1774 to carry his papers from Baltimore to New York via Philadelphia. By May 1775, he had inaugurated successful routes from Portsmouth, New Hampshire, to Williamsburg, Virginia. Gradually, the royal posts were driven from the roads or ceased to function. Goddard's system served the colonists until September 1775, when the Continental Congress took over control of postal operations.
The Articles of Confederation gave Congress "the sole and exclusive right and power of…establishing and regulating post offices from one State to another, throughout all the United States, and exacting such postage on the papers passing through the same as may be requisite to defray the expenses of the said office.…" In 1782 the Continental Congress passed a postal law providing for a monopoly with the exception of special messengers, an exception that has persisted to the present day.
The Constitution gives Congress the power "to establish post offices and post roads" (article 1, section 8). Significantly, the words "sole and exclusive," which appeared in the Articles of Confederation, were eliminated.
Since 1789 Congress has passed numerous Private Express Statutes. Of particular interest are the statutes of 1825 and 1827. The 1825 law provided that no vehicle regularly traveling on or parallel to a post road could carry letters, except letters related to cargo. The 1827 law prohibited the establishment of private foot or horse posts for the conveyance of letters on a post road. These laws had two loopholes that private carriers were quick to exploit: The 1827 law did not apply to railroads, and courts weren't willing to hold the owner of a vehicle responsible for letters carried by a passenger.
BESTING THE STATE
The first person to openly exploit these loopholes was William F. Harnden, a former conductor on the Boston & Lowell Railroad. On February 23, 1839, he placed an advertisement in the Boston newspapers, addressed to "merchants, booksellers, and all businessmen," announcing that he would
run a car through from Boston to New York and vice versa four times a week, commencing on Monday, the 4th of March. He will accompany the car himself for the purpose of collecting drafts, notes and bills. Orders of all kinds promptly attended to. He will take charge of all small packages of goods, bundles, etc., that may be entrusted to his care, and see them safely delivered, and attend to forwarding merchandise of all descriptions.
Harnden's success attracted competition, and by 1843 Boston alone had at least 20 private carriers, including Alvin Adams, founder 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 catalog lists 150 private carriers. By 1845 private carriers were transporting 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.…" Carl H. Scheele reports: "Letters were picked up by company carriers and delivered to the doors of addresses in distant cities in less time and for less money than required for U.S. Mail."
GOV'T DOESN'T GO OUT OF BUSINESS
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." 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." The Philadelphia postmaster predicted that if the private carriers "be not put down, they will ere long put down the Post Office Department."
Unable to match the efficiency of the private carriers, the Post Office resorted to force. In 1845 the Private Express Statutes were strengthened to prohibit any private conveyance of letters by regular trips, or at stated intervals, between cities regularly served by the U.S. Post Office. Penalties were also increased. Those intercity carriers that weren't frightened from the market were prosecuted.
The 1845 law did not, however, prohibit intracity carriage. Scheele reports:
Private collection and delivery services remained in operation within cities. In fact, it was the City Despatch Post, established by Alexander M. Greig and Henry T. Thomas to carry letters within New York, that issued the first adhesive postage stamp in the United States on 1 February 1842. Boxes for depositing letters were put in public places. Registry service was available, at 3 cents plus postage, for letters with valuable contents—another service not offered by the Post Office Department. The stamps, especially useful for prepaying postage on letters deposited in the boxes, were sold at 3 cents each or $2.50 per hundred. This local post flourished, and by July 1842 was handling about 450 letters per day, in contrast to the 250 handled by government carriers at the New York Post Office. The government bought Greig's post, estimating that the combined service would produce an annual revenue of about $2,400; the postage stamps continued in use. In 1844, however, John T. Boyd opened a rival local system with improved delivery schedules and soon offered better service for less money, charging 2 cents per letter. The United States City Despatch Post of New York, the government's first important effort at city delivery service, gave way to private competition and ceased operation on 28 November 1846.…
In 1872 Congress legislated an end to the loophole permitting intracity carriage. Under this law, in 1883 the conveyance of letters over the streets of New York City was held to be illegal. This put an end to the intracity carriers.
The United States Postal Service continues to hold a legal monopoly over the conveyance of letters (first-class mail) with a few minor exceptions, such as special messages and interoffice mail carried by employees. The USPS, however, is experiencing increasing competition in other classes of mail, not covered by the Private Express Statutes, and even has some competition in the delivery of letters.
PEOPLE PREFER PRIVATE
Private carriers, chiefly United Parcel Service, now convey well over half the nation's parcels. And little wonder. United Parcel is generally faster, cheaper, and has one-fifth the breakage rate of the USPS. In March 1976 the USPS announced that it had 3.7 million damaged articles, mostly books, stored in Chicago. Undelivered mail has also been uncovered in the Washington and Memphis dumps. A private enterpriser who performed such feats would soon be driven from the market and hauled into court.
A growing number of magazines are being privately distributed, as publishers use newsstands, supermarkets, milkmen, and private carriers such as National Postal Service and Inland Carriers. National Postal Service delivers 15,000 copies of Reader's Digest and about 7,500 copies of McCall's and Better Homes to subscribers in northern California. Inland Carriers, based in Riverside, California, delivers 125,000 copies of the Wall Street Journal, 10,000 copies of Reader's Digest, and 4,000 copies of Time, Newsweek, and U. S. News.
Private carriers are also delivering an increasing number of advertising circulars—labeled "junk mail" by the USPS. Carrier Boys of America serves six million households in New Jersey, New York, Pennsylvania, Delaware and California. The Mississippi Postal Service employs up to 600 carriers in three parts of the state. National Postal Service is delivering 400,000 circulars each month for the Treasury Store chain, an affiliate of J.C. Penney. And newspapers are carrying a growing amount of advertising that previously went through the government mails.
The Private Express Statutes do not prohibit firms from delivering their own bills. Peoples Gas of Chicago delivers its bills for slightly more than nine cents each. The Georgia Power Company estimates it will save $400,000 a year by delivering its bills to 400,000 customers.
As postal rates have risen, the USPS has experienced a small decline in the volume of first-class mail, some of it due to competition from the telephone, electronic transference of funds, and electronic facsimile transmission. But the most significant competition, from the standpoint of libertarians, is coming from Alternate Systems, a Pittsburg, Kansas, carrier that is directly challenging the Private Express Statutes.
TO THE COURTS AND CONGRESS
Since March 1976, Alternate Systems has been providing same-day letter delivery for one-half the USPS rates. This is in direct violation of the Private Express Statutes, and as of April 1976 the U.S. Attorney is preparing to prosecute. Holding that the Private Express Statutes are unconstitutional, Robert E. Black, founder of Alternate Systems, has vowed to fight in court.
While Robert Black has been challenging the legality of the Private Express Statutes, there have been recent moves in Washington toward repealing them. In January 1976 the Council on Wage and Price Stability issued one of its pro-competition reports, this time concluding that competition in first-class mail delivery would slow or turn around the drastic climb in postal rates. In Congress, Representatives Philip Crane and Steve Symms, along with 20 cosponsors, have introduced HR-1085, a bill that would repeal the Private Express Statutes.
Unfortunately, most of those coming around to the idea of postal competition have swallowed the assumption that postal service is a proper function of government—the USPS just needs a little competition to make it more efficient. With this prevailing mentality, what will happen if the Private Express Statutes are repealed and the USPS consequently faces collapse? Would there be increased subsidies? Would the ICC put the squeeze on the private carriers? Would the NLRB throw in a monkey wrench? Would the IRS close down the carriers? Or would new statutes be imposed?
As is demonstrated by the laws of 1845 and 1872, previous attempts to establish private mail service while trying to maintain government mail service resulted in the political destruction of the private carriers. Those who are dismayed with the current postal non-service and see hope in the turning toward competition should be forewarned: only one battle will thus have been won unless there are strong safeguards against the USPS being hooked up to some artificial life-support system.
Mr. Summers is a member of the staff of the Foundation for Economic Education, Irvington-on-Hudson, New York. He is a frequent contributor to the Foundation's monthly publication, The Freeman.