This was originally posted on Live Oaks on October 28, 2010. Comments have not been migrated.
We are often told that government must provide certain vital services, such as education, roads, and mail delivery. If such services were left in the hands of private companies, service would be poor or nonexistent. But history provides a very different lesson.
Prior to the Civil War private letter carriers flourished throughout the United States. In sparsely settled areas of the country about 300 “western expresses” provided mail delivery.[1] The best known of these companies was the Pony Express. In the more densely populated northeast, two types of delivery companies emerged—“locals” and “eastern expresses”.
The locals were based in the major eastern cities and primarily served local businesses. One of the largest of the locals was Boyd’s City Post in Philadelphia, which employed 45 carriers and delivered up to 15,000 letters a day.[2] The eastern expresses mostly operated between the larger eastern cities, such as Boston, New York, and Philadelphia. Both the locals and the expresses offered their service for considerably lower rates than the postal service.
As one example, in 1844 Lysander Spooner founded the American Letter Mail Company. Spooner believed that he could deliver mail anywhere in the country for five cents per letter, versus the 12 cents charged by the postal service. Not surprisingly, the public loved Spooner’s company and the revenues of the postal service plummeted. Congressmen, who often rewarded political supporters with an appointment as the local postmaster, were incensed and responded by lowering postal rates. Spooner was not to be outdone, and lowered his rates further. Finally, in 1851 Congress strengthened the postal service’s monopoly and forced Spooner out of business.[3]
It wasn’t poor service or outrageous prices that closed Spooner’s business, but literally an act of Congress.
The popularity of the private services was so great that one United States Senator estimated that at least half of the letters mailed in the country were being delivered by private carriers.[4] The success of the private mail companies prompted one economist to write in the New York Review in 1841 that, even though postal services in all western nations were a branch of the government, “we might easily imagine it to be carried on by a private association, without its changing in any degree its essential character.”[5]
However, this would have meant the end of an important tool for political patronage. When confronted with the possibility that the postal service might be abolished, Selah Hobbie, the first assistant postmaster general at the time, allegedly cried, “Zounds, sir, it would throw 16,000 postmasters out of office.”[6] This would not have been politically popular, and we are paying the consequences today.
It wasn’t market forces–the free and voluntary choices of consumers–that led to the demise of the private letter carriers. It was government coercion that literally made it illegal for them to offer a service that consumers willingly paid for.
The lesson from the private letter carriers goes far beyond mail delivery. The same arguments used to justify the postal monopoly–universal service, affordable rates, etc.–are used to justify government monopolies in roads, education, water and sanitation, and now health care. In each instance the private sector is either prohibited from offering such services, or severely restricted by government regulations, i.e., coercion. And in each instance the results are the same as with the postal service–poor service, fewer choices, and higher costs.
While the primary argument in favor of abolishing the postal service is moral–the moral right of each individual to act according to his own rational judgment–there is abundant evidence that private mail delivery is also practical. When individuals are free to pursue their own values without interference from others, they will find ways to attain those values. It was true of private mail delivery, and it is true of every other value as well.
Footnotes
[1] Richard R. John, Jr., “Private Mail Delivery in the United States during the Nineteenth Century: A Sketch”, p. 138, http://www.h-net.org/~business/bhcweb/publications/BEHprint/v015/p0135-p0148.pdf
[2] Ibid.
[3] Lucille J. Goodyear, “Spooner vs. U.S. Postal System”, American Legion Magazine, January 1981, http://www.lysanderspooner.org/STAMP3.htm
[4] John, p. 141.
[5] John., p. 143.
[6] John, p. 144.