Chapter XIV: Conclusion

In relation to the rate of postage, the traffic of the Post Office falls into two main groups: on the one hand light letters and packets approximating to that type, and on the other the heavier packets and parcels. This division corresponds with an important difference in the practical working of the Post Office service, the task of providing for the transmission of ordinary letters, hundreds of which can be conveyed by foot-messenger without difficulty, being one entirely different from that of providing for the transmission of larger packets, a few scores of which would render necessary the use of a vehicle.

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As to the transmission of letters, Sir Rowland Hill first perceived the significance of the fact that with objects of light weight the cost of conveyance, even over great distances, is small, and in his scheme of reform he consciously applied this fact to the determination of the rate of letter postage. This consideration remains; and as regards the ordinary letters of business or private communication--the average weight of which is less than half an ounce--the principle of uniformity of rate irrespective of distance, which is now the characteristic of letter postage, is well founded. Of the whole expense of conducting the postal services, the expense of the actual conveyance of a letter from place to place is not only small as compared with the cost of the terminal services of collection and delivery, but is actually so small in amount that no monetary system provides a coin of sufficiently small value to make its collection a practical possibility. The uniform rate, by making practicable the system of prepayment of postage by means of adhesive labels, has, moreover, effected great economy in the working of the service, and its simplicity is a boon to the public, the more so as it has been possible to fit the common rate to a popular coin. A low uniform rate is, however, only made possible from the financial standpoint by the Post Office monopoly of the carriage of letters, although that monopoly is justified on other grounds. With a uniform rate, owing to the varying conditions under which the service is conducted in different districts, there is inevitably a variation in the amount of profit. In certain cases, the rate is actually unprofitable; and were private undertakings permitted to compete for the more profitable traffic, such as the local traffic in large centres of population, the profits of the Post Office would be reduced to vanishing-point.

Improvements in the means of communication have naturally had considerable effect on the development of the Post Office. The introduction of the stage-coach in the eighteenth century, and of railways and steamboats in the nineteenth, in turn revolutionized the methods of general transportation. By these improvements the capacity of the Post Office was largely increased, and regularity, rapidity, and increased frequency of service made possible. But such general improvements, while of the utmost importance as regards the capacity and character of the Post Office service, can affect the rates of postage only so far as they affect the cost of transportation of the mails, or, by largely increasing traffic, enable economies of business on a large scale to be secured. The stage-coach cheapened the cost of transportation, but, in England, had no effect on the rates of postage, because at the time of its introduction the charges were of a purely fiscal character, and the benefit of cheaper transportation was not passed on to the users of the Post Office. The effect of the introduction of the railway has, at any rate as regards letter postage, not been much greater. Sir Rowland Hill's reform, which standardized letter postage, was based on the ascertained cost of conveyance of mails by stage-coach.[634] He found the cost of such conveyance too small to be taken into account; and the introduction of the railway could not, of course, improve such a situation.[635]

The ordinary light letter, weighing on the average considerably less than an ounce, comprises the overwhelming bulk of Post Office traffic, and the heavier letters occupy a quite subsidiary place. With the growth of Post Office traffic, and the consequent economies resulting from business on a large scale, the profits of the Post Office have gradually increased, but not to such an extent as to admit of the reduction of Sir Rowland Hill's penny rate without destroying the net revenue. Any reduction has been limited to the heavier letters.

The penny rate for the ordinary letter, though so moderate, is considerably in excess of the average cost even of long-distance letters.[636] Its maintenance, therefore, depends not on economic, but on general political and financial considerations. The question is, what general considerations shall be allowed to govern the rate? Shall it be fixed on the simple basis of cost and revenue, or shall it be fixed at such a level as to yield a surplus revenue? In other words, is it thought that the general public advantages which would result from a reduction of postage to the cost basis would counterbalance the disadvantages which would result from the loss of public revenue? This question will, of course, be answered in accordance with the varying circumstances in the different countries and at different times.[637]

An important consideration in relation to any proposal for reduction or increase of the letter rate, or, indeed, of any rate of postage, is, of course, the probable effect on the volume of traffic. Sir Rowland Hill, when he put forward his plan, laid stress on the increase in the number of letters which he anticipated would follow the adoption of his proposal. Since that time it has become almost an axiom that a reduction of rate will naturally and inevitably be followed by an increase of the traffic, more or less considerable, according as the reduction is large or small. Indeed, some writers have thought that the new postal system was based on a law of fixed relative proportions between a reduction of rate and the corresponding result on traffic. In point of fact, Sir Rowland Hill's estimates were based only partially on the probable effect of the reduction in stimulating traffic, and rather on the anticipation that, with a rate reasonably low, all that vast letter traffic which it was well known was being unlawfully dealt with outside the Post Office would be attracted to the lawful service. It is probable that a point of approximate satiety can be reached in the reduction of postage rates no less than in the reduction of the price of other commodities. A reduction would then result in only slightly increased consumption of the commodity--that is, in the case of letters, increase of the number posted. _Per contra_, a moderate increase of rate would result in a comparatively small reduction of the number of letters.[638] But moderate variations of postage on ordinary letters are difficult to make, since popular charges, such as a penny or halfpenny, while they offer obvious advantages from many points of view, are not susceptible of slight modifications.

The variation of rate according to the weight of the packet is a point which has received insufficient attention. There can be no doubt that the cost to the Post Office of performing the service it affords in respect of packets of any kind entrusted to it increases with the increase of the weight and size. But it does not increase proportionately. A letter of 8 ounces does not cost twice as much to collect, transmit, and deliver as a letter of 4 ounces. The operations of stamping, sorting, and making up for despatch occupy more time and cause more inconvenience in the case of the larger packet, but the difference is slight when compared with the difference in size and weight. Nor does the cost of conveyance vary directly with the weight. In any system of rates, therefore, which are accurately adjusted to the cost of the service, the rate of charge must increase considerably less rapidly than the increase in weight, that is to say, the rate would be degressive. Of modern postage rates very few are constructed on this principle, and to that extent they are uneconomic. In the case of letters, since the weight of the packet is normally unimportant, and simplicity of charge very important, this factor has been for the most part ignored.[639]

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The same consideration which makes the uniform rate irrespective of distance economically just in the case of ordinary letters, takes away any ground on the score of cost of service for a special rate for local letters lower than the general uniform rate. On the other hand, the considerations which make for monopoly and unified control in the case of a general service, do not apply with the same force in the case of a service limited to a small area. In the latter case, competition can much more easily be set up; and as the uniform penny rate is much higher than the cost of service even in the case of long-distance letters, competing agencies, which can leave aside unprofitable districts, such as the rural districts, can secure a profit on a local service while charging much lower rates. The maintenance of a local rate for letters side by side with a uniform rate 100 per cent. greater for all distances outside the local area, as in Canada, is nevertheless inconsistent from the economic standpoint.

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The postcard, which may be regarded as a development of the letter post, is, in effect, an admission that the letter rate is much higher than the cost of service. The difference in cost of service in the case respectively of a light letter and a postcard is negligible. Indeed, in some respects light letters are more easily and more rapidly handled than postcards. From that standpoint, therefore, there is nothing to justify the difference of 100 per cent. in the rate of charge, and the lower rate is an arbitrary concession. The logical ground for its existence is rather to be looked for in the familiar and generally accepted principle applied to the determination of transportation rates by railway, by road, or by sea, viz. charging "what the traffic will bear," or the variation of the rates according to the intrinsic value of the goods transported.[640] Many messages are sent on postcards which otherwise would be sent as closed letters. But, at the same time, many messages are sent on postcards which otherwise would not be sent at all. This has been especially the case since the introduction of the picture postcard.

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These remarks apply equally to the lower rate which has been conceded to circular letters. Both rates represent a great concession relatively to the letter rate, and under them a large traffic has grown up.[641] They closely approximate to the actual cost of service, and probably yield a small profit. They are of great importance in the general scheme of rates, because they provide a cheap means for the transmission of a very large proportion of ordinary personal and commercial messages, and thus indirectly strengthen the position of the profitable penny rate for ordinary letters.

The picture postcard has strengthened the position of the letter rate in another way, viz. by raising the cost of sending a postcard, so that in many cases it is now greater than that of a letter. A common charge for a picture postcard is a penny; the cost of sending a communication on such a card by post is then three-halfpence, whereas the cost of a letter is only a penny plus the very slight cost of the paper and envelope.

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The newspaper rate involves some new considerations. The original aim of the posts was the distribution of a certain form of intelligence. They had by the seventeenth century developed into an instrument whose main function was the distribution of letters. The first postal traffic in packets which were not letters was that in newspapers. The early newspapers were, however, in fact as well as in some cases in name also, merely news "letters," and it would have been surprising, therefore, had the posts not been made use of for their distribution. For newspapers, however, the charges have from the first been of a fundamentally different character from those for letters, and the traffic in newspapers, so far from being a source of profit, has in general resulted in heavy loss. There are certain general considerations which render the application of the rates of postage charged on letters inappropriate. The bulk and weight of a single newspaper is usually much greater than the bulk of a single letter; and if the newspaper were charged at the same rate and on the same basis as the letter, viz. by weight, it must in general be charged several times the rate for an ordinary letter. Such a charge would be unjust, because, as already pointed out, the cost of performing the services of transportation and delivery does not increase in direct proportion, or anything approaching direct proportion, to the increase of weight. If a newspaper is regarded as a very heavy letter, the importance of the factor of weight is at once perceived. Weight charges levied on newspapers should at least be on a degressive scale. But any system of charge by weight proportioned to letter postage must lead to a higher charge than that for a single letter. How much higher is of little consequence, because even the rate for single letters would be almost prohibitive for ordinary newspapers. The papers would either be excluded from the mails and despatched by private agencies, where such agencies exist, or, in countries where the Post Office holds the monopoly of the carriage of newspapers, the traffic would be greatly restricted.

A lower rate for newspapers is also justified on the principle of charging "what the traffic will bear." But the chief reason is that it has usually been considered desirable to encourage the distribution of newspapers for the benefit of the public; and in its origin, the special rate for newspapers seems to rest rather on the two general considerations of the expediency of providing for the easy distribution of intelligence, and the impossibility of charging newspapers with the same rate as letters.

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Merchants' and manufacturers' samples are not, of course, strictly speaking, of the nature of correspondence, and their conveyance by post represents in some aspects an expansion of function. The main function of the Post Office is the distribution of letters, or, as it may be expressed generally, the distribution of any species of communication between persons, reduced to material form, whether as manuscript letters, postcards or circular letters, printed or written, or even in the form of newspapers. For samples of merchandise some relationship to ordinary communications may perhaps be claimed. They are themselves often the necessary complement of letters of business and are forwarded in order to convey a precise notion of the commodities with which the business is concerned, a purpose served much more effectively by the small sample than by the descriptive letter, which would be the only alternative. So far, then, as the Post Office is intended to assist the transmission of information of whatever sort, the carriage of merchants' samples is perhaps a legitimate part of its function, especially as the encouragement of trade is no small part of its main function. The transmission of small packets not inconvenient to handle and transport, although essentially different in make-up from letters, was therefore a natural development when advantage to commerce would result.

The impracticability of charging the ordinary letter rate, since such a charge would have been prohibitory, which has influenced the newspaper rate, is equally applicable to samples. The case for a lower rate was strengthened by the consideration that commerce would benefit, and the general considerations of the justice of a lower weight-rate for moderately heavy packets and for packets of less intrinsic value, applied to sample packets, no less than to newspapers, although this point of view was not perhaps consciously adopted. Based on these considerations, a special rate was given to samples, fixed more or less arbitrarily, and without examination into the question of what rate would be the lowest profitable rate for the business.

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The basis of the book rate is only to a slight degree economic, that is to say, related to the cost of providing the service. The justification for a low rate rests for the most part on the same considerations as the privileged rate for newspapers: the desirability of assisting the education of the people and the utility of books for the purpose, the comparatively low intrinsic value, and the impossibility of charging the scale of rates applied to letters--even less possible in the case of books than in the case of newspapers.

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The exceptionally low rate for printed matter for the blind has been given as a measure of philanthropy. By its means, although at some loss to postal revenue, the effect of the disadvantage of bulk and weight in such printed matter, which results from the affliction, is in a large degree removed.[642]

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The question of the rate to be applied to parcels is one of considerable difficulty. While considerations of public utility would probably make it undesirable for the State to derive a profit from the business, they would hardly extend to the point of conducting a large transportation business at a loss, and the results in England and Germany show how important and difficult is the problem of fixing remunerative rates. The rates for newspapers, samples, ordinary printed matter, etc., have been accorded not solely with reference to the cost of the service, but on grounds more or less political and social as regards the fact of granting a privileged rate, and more or less empirical as regards the fixing of the actual amount of the charge. For the most part this method has answered sufficiently well, the reason being that the cost per packet is comparatively small, and the privileged traffic has not generally assumed large proportions relative to the letter traffic. These empirical methods cannot, however, be applied in the case of parcels. The expense of the service performed by the Post Office is not, as with a letter, actually small, and confined to that of collection at one end and delivery at the other end of the journey, with a negligible cost (per packet) for transmission between the points of origin and destination. Cost of transportation itself becomes an appreciable item in respect of every parcel. For this transportation the Post Office is in the main dependent on the railways, and in the determination of its cost the principles determining ordinary railway rates must necessarily apply.

Those principles are complex and to a large degree indeterminate. On the problem of railway and other transport rates many volumes have been written, and many more will yet be written before a solution is arrived at.[643] Railways, like the Post Office, are unable to allocate the actual working costs with any degree of precision between the various kinds of service they perform. Like the Post Office, they have one general set of expenses, although they have diverse sources of revenue.[644] Even if the cost of service could in each case be definitely ascertained, its adoption as the sole basis of the rates would prove unsatisfactory.[645] For the most part the principles on which the rates are actually fixed resolve themselves into a consideration of "what the traffic will bear," that is to say, the test by actual observation and computation, strengthened, if need be, by actual experiment, of the rates which will yield the maximum advantage to the railway company.

The advantage to the railway conducted under private management may be defined to be the excess of receipts from the traffic over the out-of-pocket expenses actually incurred in handling the traffic. To obtain this maximum it has been found necessary to vary the charge according to the nature of the goods. Elaborate, detailed classifications of goods have been arranged with distinct scales of rates for each class, devised on the basis of charging each kind of goods with the rate likely to yield to the railway the maximum of advantage as defined above.[646] Although somewhat crude and a little empirical, certainly largely arbitrary, this method has been almost universally adopted for the determination of railway charges.[647]

A characteristic feature of such charges is that account is invariably taken of the distance over which the goods are transported. In contrast with this, the principle of uniformity of rate irrespective of distance has been universally adopted in regard to all postal packets other than parcels, and to some extent for parcels. The application of the principle to parcels rests, however, on other grounds than its application to letters. Sir Rowland Hill himself never contemplated that the principle was necessarily applicable to all matter which might be sent by post.[648] The circumstances under which he made his discovery, and the facts on which he relied, make it plain that, in the absence of other overpowering considerations, the grounds advanced in the case of light letters will not justify uniformity of rate irrespective of distance for packets of considerable weight, which necessarily involve appreciable cost for transportation. From the financial point of view, the uniform rate is, moreover, inapplicable to any class of traffic not secured to the Post Office by monopoly, since private undertakings will always step in and take away the profitable sections.

For heavy parcels a uniform rate cannot be justified. There are, however, certain considerations not purely economic which may be held to justify a uniform rate for small parcels, especially if it be held that the State may conduct such a business for the advantage of the public, and abandon to some extent ordinary commercial balancing of cost and revenue.

Simplicity, afforded in a high degree by the uniform rate, facilitates the administration and practical conduct of Post Office business, and is, therefore, desirable, even if a little unjust. Complicated rates are an unfailing source of irritation to the public as well as a source of embarrassment to the staff, and there is not much doubt that one feature of the parcel post which commends it to the public favour is the simplicity of its rates.[649] There is, moreover, to be considered the view that it is no part of the duty of the Post Office to provide services in towns or districts for which private industry gives adequate services, but rather to cover the whole country, so that the public may always have ready to hand a means of forwarding small packages of goods to friends or relatives, or traders to customers, in other parts of the country. Such a service has many features which distinguish it from business undertakings of the ordinary type. In this way uniform rates may prove justified; since if in regard to any local service, or the service between any two points, the uniform rate, which must necessarily in certain cases yield considerable profit, is found burdensome, it is in all such cases open to private industry to provide the remedy. In the case of light parcels the cost of the services of collection and delivery is much greater than that of conveyance; and the variation of the total cost with distance of transmission is small proportionately. The uniform rate can therefore be fixed near the level of the cost. But even for such parcels it is economically unsound. It cannot be fixed at a really low level, because it is to be applicable to a parcel sent across the whole territory of a postal administration; and with such a parcel, even if weighing only 1 pound, the cost of transportation is an appreciable item.

The uniform rate for parcels is an expedient for smooth working rather than a scientific rate, and against the acceptance of uniformity of rate as a principle must be placed the fact that railway companies have not adopted it. The actual results of the uniform rate have not been altogether satisfactory. The small use of the post for the transmission of the heavier parcels appears to indicate that the rate for such parcels is, in general, too high.[650] For local traffic in small towns, where cost of conveyance is negligible, it is almost prohibitive,[651] and is much higher than the rates charged by competing agencies.

The considerations in favour of a degressive rate apply with greater force to parcels of moderate weight than to the comparatively light packets which pass at the letter rate, and this feature should receive fuller recognition in the determination of parcel rates than has hitherto been the case.

To sum up: there are important differences between the letter and parcel traffic: (1) the letter traffic is a monopoly in which the more profitable business belongs to the State as well as the unprofitable, while the parcel business is not a monopoly, and any traffic which proves profitable may at once attract private competition; (2) in the letter traffic the cost of transmission for a given distance is negligible, and in the parcel traffic it is important; (3) the social arguments which make it desirable for the State to secure as wide as possible a diffusion of letters containing information, of newspapers, books, and samples, do not apply in the same way, or to the same degree, to the traffic in parcels containing goods.

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In essentials the case of international rates differs little from that of inland rates. The work in connection with a letter falls into three main divisions: (1) at the place of posting; (2) transmission from place of posting to place of delivery; and (3) at the place of delivery. In the case of inland letters, the first and third factors preponderate to such a degree that their cost alone need be taken into consideration in fixing the rate. The factor of transmission can be ignored. In the case of letters from one country to another, the services at the offices of posting and delivery are performed under different, instead of under the same, administrations, but for all practical purposes are otherwise unaffected. The only factor seriously affected is that of transportation.

The variation in the cost for transportation[652] depends largely on distance, and in that respect various countries are affected in varying degrees, not only as regards the actual distances over which their letters for or from places abroad are sent, but in the way in which those distances compare with the distances over which letters in the inland service are conveyed; and the question therefore wears a different aspect in the different countries. Thus a very large proportion of letters in the British service are forwarded over greater distances than letters in the inland service. The same thing is probably true of France and Germany. Distances in the inland services of the United States and Canada are, however, comparable with the distances in the international services in Europe, and in many cases with distances in their own international services. If, therefore, mere distance of transmission were the only consideration, there would obviously be little to urge against the application of the ordinary penny letter rate for inland transmission, at least to the traffic of the whole of Europe, just as it has been applied to the traffic of the whole of the United States and Canada.[653]

But it is doubtful whether inland distances are really comparable with international distances. The cost of maintaining lines of communication between distant countries is often altogether out of proportion to the quantity of mails conveyed; and the sums paid, although ostensibly payments for the conveyance of mails, are often really subsidies, paid sometimes in order to assist the shipping or other industry, sometimes for political purposes.[654] They cannot, therefore, be used as a basis for calculating the amount of postage which should be charged on private letters.

This was particularly the case in earlier times.[655] With the expansion of commerce and the establishment for commercial purposes of regular lines of steamers between the principal countries of the world, the task of the Post Office has been much simplified, and, notwithstanding the growth of mails, the cost actually reduced.[656] It is, however, still heavy, and in some cases the payments include an element of subsidy. The cost of transmission by sea of a foreign letter in the British service is on the average 1/4d. Foreign rates are not, however, fixed on a simple cost basis. The reduction to a penny of the letter rate between Great Britain and all parts of the British Empire; between Great Britain, Egypt, and the United States; and between the United States and Germany and France, has been made from considerations of general advantage, political or otherwise, rather than from considerations of immediate profit or loss on the postal service.

The international parcel post has always been regarded as primarily commercial,[657] and the service has been deliberately restricted to small parcels on the ground that the conduct of an ordinary transportation undertaking is not a postal function, and that the admission of heavy parcels would render impossible the maintenance of the postal principle of uniformity of rate. Parcel mails are in the international service frequently denied the privilege of rapid transmission accorded to letter mails.[658] The developments of the present war have emphasized the essential distinction to be drawn between communications on the one hand, and packages of goods sent by parcel post on the other.

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The general basis of postal rates is naturally affected in some degree by the fact that the Post Office is a State undertaking, and the propriety of Government control deserves consideration. Adam Smith, with his individualistic leaning, was bound to touch on the question of a State Post Office. He thought there was no objection to the conduct of the Post Office by the Government,[659] and economists since his day have generally followed his view.[660] This acceptance of State control as theoretically justifiable has probably been induced by the logic of facts rather than by the recognition of any peculiar characteristics tending to that view discoverable in the postal service as an industrial organization.[661]

The transmission and delivery of letters for private individuals may have some affinity to the transmission of official despatches, but in theory such affinity is slight, especially in regard to the transmission and delivery of local letters. Because the Government had found it essential for its own purposes to establish a system of posts, it did not necessarily follow that the Government must assume also the function of conveying letters for private individuals. But the Post Office is one of those organizations in the case of which the normal influence of economic forces tends to exclude competition. Its operations are spread over large areas, and duplication of services over large areas would result in waste of effort and increase of expenses. Competing postal establishments would exhibit the same glaring economic waste as competing arrangements for the supply of gas, water, or electricity. The service thus almost certainly becomes a monopoly; and its nature makes the assumption of its management by the State advantageous. In times of war, State monopoly of the means of communication (postal, telegraph, telephone, and wireless) is essential. Even if these services were in private hands at the outbreak of war, the first action of the Government would undoubtedly be to assume control.

A further reason justifying the conduct of the postal service by the Government rather than by private enterprise is that it is a necessity for the State to provide a means for the regular transmission of intelligence by letter of script throughout its territory. If the working of the service were left to private enterprise, it would be certainly confined to such routes as were found profitable, and those parts of the country in which profitable routes could not be established would be left unserved. The State alone can secure the establishment of a complete service, in which regard must not be confined to considerations of mere profit.[662] There are also minor features which render State management peculiarly applicable to the postal service. The actual operations are simple. As Adam Smith said: "There is no mystery in the business."[663] The work is for the most part of a routine character, and calls for no special skill or knowledge. That is not to say that in the performance of the actual duties there is no room for the acquirement of considerable manipulative skill. It means that in principle the chief operations are simple, and may be reduced to routine processes. There is the further important consideration that the operations of the Post Office are intimately connected with the daily life of the people, and are constantly subject to public observation and criticism.

Assuming a State parcel service, there is to be considered the question whether that service should be attached to the letter post or whether it would be more economical to set up a separate service. It might appear at first sight that this question has been determined by the practice. But as the financial scheme of the letter post rests on the fact that the actual transportation of the letters occupies, as regards expense, a quite subsidiary place,[664] it is difficult to discover any special relation between the letter post and a business which is really part of the general transport industry. It may in some instances be advantageous to utilize for parcels the service provided for the transmission and delivery of letters. An organization reaching to all parts of the country is ready to hand, and one which, in rural districts especially, is often not employed to its full capacity. It may therefore in some cases manifestly be economical to give additional work to the service; but, at the same time, the provision of a service for parcels may in other cases add unduly to the cost of the general service--as, for example, when it becomes necessary to make special arrangements on account of occasional variations in the numbers of parcels.[665]

In any case, a postal service should be limited to parcels of moderate size and weight, because the Post Office, as at present organized, is for the most part adapted to the handling of packets which can be delivered by foot-messengers. In rural districts this is almost universally the rule.[666] It is frequently necessary in the towns to separate entirely the parcel post traffic from the ordinary light letter post traffic (except in those parts of the service where the parcel post traffic is very restricted), to provide a separate staff, and to furnish different equipment.[667] In effect, two establishments are maintained. A separate parcel staff could, of course, collect and deliver traffic of any dimensions or character. But difficulties would arise in regard to the transportation from town to town of heavy parcels,[668] and in rural districts their distribution could not be undertaken without a reorganization of the general arrangements of the mail service. Any sort of regular house-to-house delivery would be enormously expensive. To a large extent--in the United Kingdom at any rate--such a service would be a duplication of services already provided by railway companies, and consequently economically wasteful.

The transportation of parcels is, indeed, in many aspects a service more appropriate to the railways than to the Post Office. The Post Office, for example, is handicapped as compared with the railways by the fact that, while the larger part of its traffic in parcels must under present conditions necessarily be conveyed by railway for some part of the journey, the actual points of despatch and receipt of the parcels by the Post Office are not in the large majority of cases adjacent to the railway stations from or at which the traffic is despatched or received by railway.[669] It is, in consequence, necessary in such cases for the Post Office to provide a service between the respective railway stations and post offices.[670] If the railway companies provided adequate collection and delivery services there would be no need for division of the function with the Post Office. In many districts, however, the railway companies would find the provision of any sort of regular and universal service unremunerative, and this is probably the ultimate reason why the State has found it necessary to intervene. In the United States the introduction of a parcel post, and its extension to heavier parcels, was avowedly in a large degree due to the fact that in many parts of the country the railways, which are in private hands, did not provide any service for parcels. Where a service was provided by the railways, the rates and conditions were not satisfactory, and the establishment of a parcel post represents an attempt to prevent the full application of the principle of charging "what the traffic will bear."

The Post Office, moreover, as a public undertaking, cannot bargain freely for special facilities or terms with individuals or firms having large numbers of parcels for delivery within a limited area. Without such specialization the Post Office must often be unable to offer the most economical service, and private carrying agencies secure the business. In those countries where a parcel post is in operation, the Post Office does not rank as a transportation agency comparable with those of the commercial world. The traffic which it secures is private and personal rather than commercial, to a large degree exceptional traffic which the machinery of the ordinary commercial transportation agencies cannot, or at any rate in general does not, deal with--traffic for remote and isolated residences, spasmodic in character, and, compared with the total traffic in parcels, small in amount.[671] The uniform rate favours such traffic, but the expense to the Post Office is disproportionate to the revenue. From the broader standpoint this is perhaps not altogether loss to the State, since by this means local industries are often brought in touch with markets which could not otherwise be reached, and the rural population is enabled to obtain from the towns many amenities not otherwise procurable.

Viewed in the light of these considerations, and especially of the fact that it is open to competition at all points where its rates would prove profitable, it will not appear extraordinary that the parcel post is less successful financially than the letter post.[672] The conditions under which postal business is conducted render it impossible to earmark the expenses properly chargeable to the parcel post, since expenses are for the most part incurred jointly. But the parcel post is to a large extent a secondary service engrafted on the letter post, and is perhaps not properly chargeable with a mathematical proportion of the total cost of the two services based on the relative cost of handling individual letters and individual parcels. Theoretical estimates of the cost of the parcel post must, therefore, be accepted with reserve. But a proved moderate loss on the parcel post would not be conclusive against the propriety of its maintenance. Postal rates are simple, definite, and generally known; and every post office is a receiving agency. It is convenient to use the post, which offers the further advantages of quick transmission, and the greater degree of security attaching to a State institution. The line on which a postal service for small parcels can best be justified is that by the utilization of existing machinery for the disposal of additional traffic, not so large as to overburden or disorganize the practical arrangements, a useful public advantage can be secured without inordinate cost. Nevertheless, the parcel post service is not a true postal service, but rather a commercial undertaking.[673] The question of the legitimacy of State control, which in the case of the letter post is of academic interest only, is therefore of real importance in the case of a parcel service, and those who have a distrust of all State interference in industry may legitimately argue that it should stand aside from the parcel business.

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APPENDIXES

APPENDIX A