THE

72491

FINANCE OF CHEAP POSTAGE.

BY JOSHUA LEAVITT,

=

SECRETARY OF THE BOSTON CHEAP POSTAGE ASSOCIATION.

FROM

HUNT'S MERCHANTS' MAGAZINE,

FOR OBTOBER, 1849.

New York:

PRINTED BY GEORGE W. WOOD, NO. 15 SPRUCE STREET.

412 Filch p. R

1849.

THE FINANCE OF CHEAP POSTAGE.

WHILE the people of this country are beginning to inquire why they cannot enjoy that blessing of cheap postage, which, they are told, has now for ten years produced so many benefits in England, the statesman who is called to consider the subject in its details, and to be politically responsible for all its consequences, naturally raises the financial question-How will it pay! Having at hand a variety of statistical facts, which I have never seen brought together in one view, the idea occurred to me that a few tables could be prepared, which would be appropriate to the pages of the Merchants' Magazine, if you will give them place.

The British Cheap Postage Act went into operation at the beginning of the year 1840. Prior to that time, for twenty years, there had been no advance in the post-office, notwithstanding the great advance in population, trade, and general intelligence. During twenty years, ending with 1839, the highest amount of gross receipts was, in that year, £2,390,763; and the lowest was in 1821, £2,038,706; a difference of only £362,057. The average of the whole twenty years was £2,211,918; the average of the first five years was £2,081,036, which was £130,882 less, and of the last five years was £2,334,134, which was £132,216 more than the general average. This shows that under the old system the average was wholly unaffected by the general progress of the country. The average receipts had increased but 12 per cent in twenty years.

Of course

The expenditures, though somewhat more fluctuating in particular years, were equally immovable in their general average; the first five years giving yearly £640,049, and the last £709,898--an increase of only 124 per cent. The average expense of the twenty years was £686,616; the highest amount, £756,999, in 1839, and the lowest £615,981, in 1823. it is to be inferred that the general accommodation of the public, and the general use of the post-office were little varied. The operation of cheap postage will be shown by the following table, giving at one view the gross receipts, the cost of management, the net revenue, the number of letters, and the average cost per letter, for the year 1839, which was the last year of the old postage, and the succeeding nine years, showing the progress of cheap postage:

Years.

Gross receipts. Management.

Net revenue.

No. of letters.

Cost per letter.

1839.

£2,390,763

£756,999

£1,633,764

76,000,000

2 1.562

The falling off in the gross receipts, the first year of cheap postage, was 40 per cent; by the ninth year the receipts were but 4 per cent below those under the old postage. The increase of receipts in nine years after the introduction of cheap postage, was 61 per cent; showing a most vigorous growth, not yet exhausted.

The increase in the number of letters the first year of cheap postage was 122 per cent, and in nine years was 356 per cent above the number under the old postage. A corresponding increase in this country would give us the first year over 128,000,000 of letters, which, at two cents, would yield $2,560,000.

The increase in the cost of management in the first year of cheap postage, including the extra expense of introducing the new system, was less than 131 per cent; thus reducing the cost per letter 50 per cent. The subsequent increase in the expense of management is mostly to be charged to the cost of railway carriages, and many other increased accommodations which have been introduced.

If we average the increase of cost for the first year upon the increase in the number of letters, we shall find that each additional letter added just one farthing to the expenses of the department. A striking illustration of the accumulative power of small profits on large business.

The next table will show the amounts paid for government postage, the cost of conveyance of the mails by railroad, and the cost of the mail packet service. This latter is charged to the admiralty, and not to the post-office; also, the number of newspaper stamps, and the amount of duty paid into the Treasury; but to balance this, the post-office receives nothing for carrying newspapers.

The increase of government postage the first year after the abolition of the franking privilege was 105 per cent; increased the eighth year to 142 per cent. The government postage increased 33 per cent in seven years after the first year of cheap postage.

The cost of transporting the mails by railroad increased more than 519 per cent in eight years. The increase in one year, from 1847 to 1848, was 164 per cent.

The increase in the cost of packet service in seven years is 68 per cent, which is greater than the ratio of increase of the general cost of management. This confirms the idea that the increased expense is chiefly charge

The Finance of Cheap Postage.

5

able to increased accommodation. With cheap postage, the increase of public accommodation naturally becomes the characteristic or predominant policy of the department.

In the first introduction of cheap postage, Mr. Rowland Hill, the projector, was sanguine in the belief that he had discovered a scheme for recovering two millions sterling of annual revenue, which, he maintained, had been sacrificed by the high rates of postage. But the experienced statesmen who adopted the system, had no such expectations. Mr. Goulburn estimated the probable loss of revenue at £500,000 to £1,000,000. Lord Ashburton believed it would be equal to the whole net revenue from the post-office. Mr. Francis Baring, Chancellor of the Exchequer, in introducing the bill, admitted that the loss would be " very considerable indeed." Sir Robert Peel said they were risking the loss of a million and a half of revenue, but that "it was impossible to exaggerate its benefits;" and "great social and commercial advantages would arise from the change, independent of financial considerations."

The actual loss of net revenue was 68 per cent the first year. Last year's net revenue was £749,429. The great increase in the cost of management has kept the net revenue from increasing in proportion to the increase of gross receipts. It is now only equal to one-half the amount under the old system.

In 1790 there were 76 post-offices, and 1,875 miles of post roads; the receipts for postage were $37,935, and the expenses only $32,140.

In 1800 the post-offices were 903; miles of post roads, 25,315; receipts, $280,804.

In 1808, during the embargo, the receipts fell short of the expenses by $2,264.

In 1820 there were 4,500 offices, 67,586 miles of road; receipts $1,111,927; and for a second time the expenses were greater than the receipts. There have been only eight years since in which the receipts have exceeded the expenses.

In twenty years, from 1820 to 1840, the post-offices were increased threefold, the miles of roads more than doubled, and the receipts four-fold.

From 1840 to 1848, the post-offices have increased 20 per cent, and the miles of post-roads only 5 per cent-the routes to Oregon and California not being yet included in the last returns.

During fifty-nine years that the reports have been published, the receipts have been in excess thirty-eight years, and the expenditures in excess twentyone years. The total excess of receipts is $3,774,058, and the total excess of expenditures, $2,665,165; showing that the post-office has netted to the general treasury a balance of $1,108,893, besides supporting itself, even through all the difficulties of the last ten years.