Hidden History: Post Office sues Cub Scouts to maintain monopoly

“The Postal Service has faced repeated challenges from more competent private companies and has responded with one legal counterattack after another.

In 1971, a federal district court prohibited a private firm from carrying Christmas cards in Oklahoma on the basis that the plaintiffs, a postal employees union, suffered ‘significant loss of work time, overtime, employment benefits. . and morale.’ The court concluded that private delivery of Christmas cards would be a ‘widespread public nuisance.’ The result was that the public suffered slower service and higher costs to support postal workers’ ‘morale.’

In 1976 in New York, a pack of Cub Scouts tried to raise money by delivering Christmas cards: Postal Service lawyers ordered them to stop, and threatened the ten-year-olds with a $76,500 fine. A New York Times editorial regretted that the Postal Service’s carriers were not as fast as its lawyers.

In 1978, the P.H. Brennan Hand Delivery Service offered same-day delivery of mail in Rochester, New York, for 10� a piece; the Postal Service could not guarantee overnight delivery even for 15�. The Brennan Service operated during snowstorms (when the Postal Service did not even try to deliver), never lost a letter, and never had a complaint. When U.S.P.S. attorneys closed in on the Brennans, Rochester lawyers provided them with a free legal defense. But the Postal Service persuaded a judge to issue a ‘cease and desist’ order on account of the ‘threat to postal revenues.’

For 200 years, the Postal Service has been playing a game of catch-up with its illegal competition. Throughout its history, U.S.P.S. has upgraded service or cut rates only after some private company came along and did a better job. Were it not for its competition, the Postal Service might still be charging by the page and requiring citizens to come to the post office to send and pick up mail.” (Read more from cato.org)

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Government is not our protector from monopolies, they are the creators and enforcers of monopolies. Businessmen, whom we so readily blame for all our problems, survive by providing goods and services we want at affordable prices.

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“The U.S. Post Office [1839-1851] returned almost no revenue to the general fund. It usually reported losses. Large profits were being earned, but they were distributed internally. Giving out the postage revenues to groups with political power became the Post Office’s second function. Measured monetarily, it was the Post Office’s primary function. Thomas Jefferson, suspicious of the Post Office, had written:

I view [the Post Office] as a source of boundless patronage to the executive, jobbing to members of Congress and their friends and a bottomless abyss of public money. You will begin by only appropriating the surplus of the post-office revenues; but other revenues will soon be called in to their aid and it will be a source of eternal scramble among the members, who can get the most money wasted in their states; and they will always get most who are meanest [Jefferson 1892-99: IX, 324-25].

“In the first half of the 19th century, the federal government’s legal monopoly over the mail was a monopoly over all intercity communication. Informal and illegal channels of communication had always existed, but their inconvenience and limited scope allowed the Post Office to earn huge monopoly profits. The government’s policy of running the Post Office on a ‘nonprofit’ basis simply channeled the rents (profits) to powerful political groups who were in a position to draw directly from the Post Office coffers. Those profits gathered from the U.S. Post Office were of the same magnitude as the profits earned more openly by the British postal service.

The transportation revolution lowered the cost of intercity transportation and communication in the 1830s and 1840s. Private companies met the change by offering low-cost transportation and communication. The Post Office, facing no formal competition, at first kept its prices fixed. As costs dropped, monopoly profits increased. The profits became large enough to draw competitors despite the legal risk. That competition, and pressure from consumer groups, caused the Post Office to lower its rates in 1845 and 1851 by 79 percent.

The effect of private competition went beyond the drop in postage rates. An equally important effect was the introduction of new techniques into the U.S. market. The most important innovations were prepayment with stamps and intracity pickup and delivery. The Post Office showed no sign of adopting such innovations until they were successfully used by private companies.” (Read more from cato.org)