The Development of Rates of Postage Part 28

In 1512 the Emperor Maximilian conferred on Francis von Taxis, and on several others of his family, t.i.tles of hereditary n.o.bility in the Empire and in the Austrian and Burgundian dominions, together with the dignity of Count Palsgrave.[713] In 1516 the Taxis posts were extended to Verona, Rome, and Naples, and were improved and accelerated. In 1615 the office of Imperial Postmaster-General was conferred on Lamoral von Taxis and his descendants as an hereditary fief.

The actual development of the posts was of a twofold character. At first the Taxis family were able to establish their posts in various parts of the Empire without opposition; the princes were themselves satisfied with their messenger systems, and were indisposed to establish posts on account of the heavy cost. But after a time, when the profitable character of the Taxis posts became apparent,[714] the princes questioned the right of the Imperial Postmaster-General to lay posts within their territories, and claimed that they alone possessed that right.[715] In 1597 the posts were proclaimed an Imperial reservation,[716] but this theory was never accepted by the princes.[717] The Taxis posts, therefore, never became general throughout the Empire. Eights were obtained in certain States, so that they became an important system reaching many parts of the Empire; but they did not altogether supplant the territorial services.[718]

In the early part of the seventeenth century the struggle against the monopoly of the Imperial posts developed. The States were jealous of the growing power of Austria, and political affinities were weakening. There was, moreover, some feeling against such an office being held by an alien family.[719] The Palatinate, Wurtemberg, Saxony, Brandenburg, and Mecklenburg established posts within their respective territories.[720]

The whole question became involved with the disputes which led up to the Thirty Years' War, and the princes found their position indirectly strengthened by the Peace of Westphalia, which contained no settlement of the disputes regarding the posts, but merely referred the question to the next Reichstag. Attempts were made to extend the Imperial posts, but much opposition was encountered. Nevertheless, the system continued to expand and attained considerable dimensions. The family held the exclusive right of carrying pa.s.sengers as well as letters; and it was estimated that during the eighteenth century the house of Thurn and Taxis received a gross sum of 20,000 livres per day, and a net profit of four millions a year. Some 20,000 men, and a greater number of horses, were employed in the service.[721]

The Revolutionary Wars were disastrous to the system. The Taxis posts were in many instances replaced by territorial posts,[722] and by the Peace of Luneville (1801), which made the Rhine the boundary between France and Germany, the family lost control of all their posts to the west of the Rhine. They were, however, compensated for the loss of the revenues of those posts by a grant of territory (Reichs-Deputationshauptschluss of 25 February 1803).

In the following years the Prince of Taxis strengthened his position by a series of agreements with the German States, but with the establishment in 1806 of the Confederation of the Rhine and the abdication of the Emperor, the Holy Roman Empire and the Imperial posts fell together. In 1814 Prince Charles Anselm of Thurn and Taxis attempted unsuccessfully to regain possession of the posts in the Low Countries. The territorial posts were not, however, altogether satisfactory, and the rights of the Taxis family were restored by the Agreement of 1815, establis.h.i.+ng the German Confederation; in pursuance of which the family recovered the posts in Electoral Hesse in 1816, in Schwarzburg-Rudolstadt, Oldenburg, and Saxe-Coburg in 1817, Hesse-Darmstadt in 1818, and Wurtemberg in 1819. The posts in other States were recovered in subsequent years, and in 1848 the Taxis posts comprised an area of 2,675 square (German) miles, with a yearly income of a million Marks.[723] In most cases a rent was paid to the State for the privilege of conducting the posts. Thus, Wurtemberg received a yearly payment of 70,000 florins, the Grand Duchy of Hesse of 25,000 florins, and Electoral Hesse of 40,000 thalers.[724] In addition, the Governments of the respective States were given considerable privileges in regard to free transmission of State correspondence, etc. The rates of postage charged compared favourably with those charged in the States in which territorial posts were established.[725] In 1850 the rates were simplified by the introduction of a scale based on three distance zones: not exceeding 15 miles, 4 kr. (1 sgr.); from 15 to 30 miles, 7 kr. (2 sgr.); and for distances exceeding 30 miles, 10 kr. (3 sgr.). In 1861 these rates were reduced to 3, 6, and 9 kr. respectively for the three zones.[726] In addition there was a local rate of 2 kr. (1/2 sgr.) for letters delivered within a distance of 3 miles. In some of the towns a still lower local rate, 1 kr. (1/4 sgr.) was in operation.[727]

The Taxis posts were, however, still regarded with a good deal of jealousy, although it was recognized that in some ways the system was advantageous in providing a unified postal service for a large part of Germany at a time when it would have been difficult to arrange directly between the various States for the maintenance of a common service.

The situation was materially changed when, after the events of 1864-6, Prussia absorbed the duchies of the Elbe, Hanover, Electoral Hesse, the Grand Duchy of Hesse, Na.s.sau and Frankfort. Prussia, of course, desired to a.s.sume control of the posts in these territories, which formed a large part of the whole Taxis system. After some discussion of the rights of the Taxis family, as a result of which it appeared that legally the system was well grounded, and could not be taken, therefore, from the Taxis family without compensation, the Prussian Government decided to buy up the rights of the family in the new Prussian territory.[728] The taking over of these posts would have left so small a system in the hands of the Taxis family that they preferred to negotiate for the transfer of the whole system to Prussia. The compensation to be paid was based mainly on consideration of the net revenue of the Taxis posts.

During the years 1855-65 this had been as follows:--

Florins.

1855-6 405,582 1856-7 579,218 1857-8 692,884 1858-9 500,412 1859-60 638,801 1860-1 648,519 1861-2 464,751 1862-3 583,409 1863-4 753,917 1864-5 724,405[729]

The amount of compensation was agreed at three million Marks. The sum was voted by the Prussian Parliament without debate, and on the 1st July 1867 Prussia a.s.sumed the control of the entire Taxis system of posts.

The administration was amalgamated with that of the ordinary Prussian posts.

IV. PARCEL POST IN CANADA

Difficulties arising from the circ.u.mstances of the country made the early establishment of a parcel post system impracticable.[730]

For many years, however, a strong feeling in favour of a parcel post system existed, especially among the farmers of the West; and with the establishment of a service in the United States in 1913 it became impossible to withhold a similar service from Canada. The question was discussed in Parliament in January 1913, and, as the immediate adoption of a system was obviously desired, the Government undertook to give the matter fullest consideration, with the view of submitting a scheme at an early date. The matter was really of some urgency since, under an existing Convention, although no internal parcel post service was in operation, Canada was called upon to carry throughout her territory parcels originating in the United States; and in June 1913, when the success of the service in the United States was seen to be a.s.sured, a Bill was introduced authorizing the establishment of a parcel post in Canada.

There could be no question of applying a flat rate in a country of such vast territories and scattered population;[731] and the Canadian system, like the American, is based on zones of distance. The limits of the zones correspond with the provincial boundaries. Each province forms a zone, with a flat rate within its borders; a rate as for an additional zone is charged on parcels crossing into an adjoining province; and a rate as for a third zone on parcels crossing an intermediate province to a third province; and so on. The three maritime provinces are grouped together as one zone, and a special local zone rate is given for parcels delivered within 20 miles of the place of posting. This local rate is independent of the provincial boundaries. It is a concession to the storekeepers of the smaller towns, given chiefly for their protection against the compet.i.tion of the great departmental stores of Montreal, Toronto, and Winnipeg.

The determination of the actual amount of the rates was left to the Post Office department, with the proviso that they must be such as would make the service self-supporting.

The service was introduced in April 1914, with the following rates of charge:--

(_a_) Five cents for the first pound and 1 cent for each additional pound or fraction thereof, up to four pounds, and 2 cents for each subsequent pound up to eleven pounds within a radius of 20 miles from the place of mailing, irrespective of provincial boundaries.

(_b_) Ten cents for the first pound and 4 cents for each subsequent pound or fraction thereof, for all points in the province in which a parcel is posted, outside of the 20-mile radius.

(_c_) Ten cents for the first pound and 6 cents for each additional pound or fraction thereof, for all points outside the province in which a parcel is posted, and beyond the 20-mile radius, with an additional charge of 2 cents a pound for each province that has to be crossed to the destination of the parcel, not including the province in which it is to be delivered, up to a maximum of 12 cents a pound.[732]

An additional charge to meet the extra cost of transportation is made on parcels addressed to or posted at offices in certain outlying districts when the parcels have to be conveyed on stage routes over 100 miles in length.

Statistics of the number of parcels dealt with are not taken by the Canada Post Office.

V. THE SUPPLEMENTAL SERVICES

In connection with the transmission of postal packets, other services, which are supplemental, and in some cases complementary, have been added, e.g. registration and insurance, in order that senders may protect themselves against loss or damage of packets in the post.[733]

Closely allied to the transmission of ordinary letters is the transmission of money from place to place, and from early times the Post Office has also undertaken this function for appropriate fees. This is the money order and postal order business. These services apply only to a very small proportion of the total number of packets posted, and may in general be regarded as exceptional.[734]

In addition to these supplemental functions, the Post Office has usually been called upon to undertake services which have little or no relation to the transmission of letters from place to place. Thus, the British Post Office conducts a Savings Bank, undertakes the issue of certain local taxation licences (gun and dog licences, etc.) on behalf of the Inland Revenue Department and local authorities, pays Old Age Pensions, sells stamps on behalf of the National Health and Unemployment Insurance Commissioners, exhibits certain Government notices in the windows of post offices, and, in general, stands ready to perform any service to which, by reason of its ramifications reaching to the remotest part of the kingdom, it may be specially well adapted.[735] In many countries the Post Office has a.s.sumed the control of the telegraph or telephone systems, or both--this, of course, largely in consideration of the close affinity between the essential character of those services--transmission from place to place of information and intelligence--and the primary function of the Post Office; and in consideration of the tendency of those services, like the letter service, to develop on monopolistic lines.[736] In continental countries the Government control of the telegraphs has been regarded as a military necessity.[737] The a.s.sumption of these functions has no necessary relation to the rates charged for the transmission of packets, but the circ.u.mstances under which the services are conducted, whether at a profit or at a loss, may indirectly affect the rates.

VI. POST OFFICE REVENUE

In England, Germany, and France the Post Office has, almost from the first, been a source of revenue to the State. What has happened has been that since the reform the Governments have been glad to take whatever net revenue a penny rate would yield, but, in general, they have not been prepared to raise that rate in order to obtain a greater revenue.[738] The only one of the five countries which does not make, and on principle does not wish to make, a revenue out of the Post Office is the United States of America.

The penny letter rate is not by any means as low as the cost of the service. It is, however, not a burdensome charge in any circ.u.mstances, and, although so much greater than the cost, represents in a large number of instances much less than the full measure of benefit which the provision of the service confers on the beneficiary. This is, of course, the ordinary case of the purchaser of a commodity securing a "consumer's surplus."[739] Rates which yield a profit of 50 per cent. (pp. 76 and 311) must, however, be admitted to contain some element of taxation. In France particularly the Post Office occupies a definite place in the fiscal system.[740] There is, however, considerable diversity of opinion among economists with regard to the theoretical character of this revenue. Indeed, the general cla.s.sification of public revenues is itself not yet agreed upon.[741] Under any cla.s.sification there is difficulty in a.s.signing a place for the Post Office revenue. With the simplest and most fundamental division it has been regarded as falling under one or other heading, according to the notion of the writer, or in accordance with certain changes of conception based on variations in attendant circ.u.mstances.[742]

The difficulty of cla.s.sification arises from the fact that of the total amount of the postage charges actually levied, only a portion can in any case be regarded as taxation. A person who purchases a commodity from the State, but in purchasing it is charged something more than its actual value, is not taxed to the extent of the whole of the amount which he is charged. There can be no taxation in that part of the amount for which he receives equivalent value in the commodity purchased. It is easy to say of the gross postal revenue that so much is tax (i.e. the net revenue), and so much is cost of service (i.e. the actual expenses), though it may not be easy to justify even this distinction;[743] but what principle is to be followed in determining whether a particular postage charge (e.g. the letter rate or the parcel rate), or any part of it, is taxation?

Taxes are reckoned according to the rate of charge. Thus, the income tax is 2s. 3d. in the pound on earned incomes; but approached in this way postage is not a tax. If the charge only covers the cost of the service, there can be no tax.[744] And when there is a surplus (above normal commercial profit) it cannot be argued that the whole charge becomes a tax. The solution seems to be that in such a case it is neither tax nor industrial price. It contains elements of both, and cannot be cla.s.sed wholly under either.[745]

The differing a.n.a.lyses of Post Office revenue result largely from their being based on consideration of the balance-sheet of the Post Office, as indicating whether postal charges are to be regarded as taxes.[746] The character of postal charges should not, however, be determined by reference solely to the amount of the surplus revenue. The true cla.s.sification rests on the conception that the character of public revenue (including Post Office revenue) varies with varying circ.u.mstances.[747]

The penny letter rate is a source of very considerable profit, and is therefore not a pure price. Nor can it be said that this penny rate, although it is the source of practically all the profit, is a pure tax.

In the case of a large number of letters there is no surplus beyond the cost of the service, and often the cost is greater than the yield of the postage on the particular letters dealt with. In such cases the rate does not contain any element of tax. In other cases the proportion of surplus over cost which the rate yields is exceedingly large.[748] But in all cases it contains some element of remuneration for service rendered. That part of it which is appropriated to cover the cost of conducting the service is of the nature of a price for a service rendered. The remaining part (when found), after allowance has been made for the element of monopoly, is a tax.[749] But it does not exist in all cases. Three categories of letters are therefore found; and the letter rate in general may, according to the circ.u.mstances under which the service is rendered, be (1) of composite character, partly price and partly tax, (2) a pure price, (3) a mere fee.

The other rates (excepting for the moment the parcel rate) have all for some specific purpose of State been fixed at a lower level than the letter rate; but, for the most part, without any nice adjustment to the cost of service. Consequently these subsidiary rates are not prices, and do not contain any element of taxation.[750] They are, however, charges made to individuals in respect of certain services performed by the State, and fall, therefore, under the heading of fees.

The parcel rates in England and Germany may be put under the same heading. In both cases the service is conducted at a loss, and the charges cannot therefore be regarded as prices. In the United States and in Canada the law provides that the rates for parcels must in all cases be such as to yield a revenue sufficient to cover the cost of the service, and the presumption is therefore that in those countries the rates will partake of the nature of prices.[751]

Although there has been diversity of opinion regarding the nature of Post Office revenue, there has been remarkable unanimity as to the propriety of raising a net revenue for the State on the service for the transmission of letters. In the days of high rates and relatively high revenue it was not challenged.[752] Sir Rowland Hill's reform took away any sort of feeling that the revenue obtained from the Post Office lay as a burdensome tax, but the amount of surplus revenue was still so considerable that it could fairly be regarded as containing an element of tax.[753] It has, moreover, steadily increased, and its existence been made the justification for claims for further reductions of rate.[754]

The use of the Post Office for the purpose of taxation, that is, the refusal to give away in improvements of service, or by reduction of rates, the net surplus of revenue, is accepted by economists as justifiable[755] and the public acquiesces. The surplus is obtained with the minimum of sacrifice on the part of those who pay, and it would be difficult to discover a tax in subst.i.tution which would fall as lightly. Apart from the fact that rates higher than would be necessary for defraying the actual cost of the service must of necessity operate to some extent to the disadvantage of trade and commerce,[756] there is little to urge against the raising of revenue from the Post Office, especially as it is obtained from such popular charges as a penny and a halfpenny, which are well within the reach of the poorest. Payment is, moreover, in a large degree voluntary. The number of letters which a private individual must write, and cannot avoid writing, in the course of a year is very small. If he has anything of importance to write, he does not think a penny an excessive sum to pay for its transmission. If he has nothing to write, there is no law to compel him to pay postage.

The profits of postage are, however, large; and the existence of the State monopoly, and the essentially fiscal character of the rates charged, should not be overlooked.[757]

VII. GRAPHS

[Ill.u.s.tration: UNITED KINGDOM _INLAND RATES OF POSTAGE 1914, AND NEW RATES INTRODUCED 1^ST NOVEMBER 1915._]

[Ill.u.s.tration: UNITED KINGDOM (1725-1851)]

[Ill.u.s.tration: UNITED KINGDOM (1820-1914)]

[Ill.u.s.tration: UNITED KINGDOM]

[Ill.u.s.tration: UNITED KINGDOM

_MOVEMENT OF STATISTICS OF POSTAL TRAFFIC 1870-1914_]