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The Science of Finance

THE SCIENCE OF FINANCE.

In England the minimum rate,' which had been fixed at one penny in 1765, was raised in 1783 to two pence, 1797 to three pence, 1804 to five. pence (for greater distances within the country to 12-14 pence). In France the fanaticism of the Revolution sought to make use of the postage rates also as a means of taxing the luxury of the rich. The French postage rates had, in 1763, been fixed at five sous for the greatest dis tance; in 1795 it was increased to twenty-five sous (for the shortest distance ten instead of two sous as before). But 'as the receipts decreased, the postage was increased in 1796 to a rate of 2.50-10 francs (according to the distance)! Thereupon corres pondence ceased, and a new change was made during the same year to a rate of 6-18 sous. The practice remained the same in principle throughout the period of the Empire. The Finance Minister of the Kingdom of Westphalia states, in his report for 1809, that the receipts from the Post are decreasing in spite of the fact that the rates of postage have been doubled and trebled. At the same time the newspapers relate that the Westphalian subjects begged their correspondents to abstain from letter writing, as the postage was more than they could afford to pay.

In Prussia, on the reorganization of the national finances, the remark was made by the postal administration that improvement and extension of the means of communication were the only true means of increasing the postal revenues ; but the decisive word uttered was that it would be necessary to draw more heavily on the Post as a source of national revenue than had hitherto been the case. On the director general of the post office was imposed the task of bringing the surplus revenues (which had risen during the year 1797-1806 from 462,000 thalers to 667,000 thalers,' and had afterward increased to 700,000-800,000 thalers) up to 1,200,000 The postage regulation of December 18, 1824, increased the rates, on an average, by one-fifth. A letter within the limits of Prussia, for the greatest distance, then cost very nearly one thaler.

§ 295. The great reform in the direction of simplicity and a lower postage,' which for England, and for the rest of the world as well, is intimately connected with the name of Rowland does not go the length of the radical propositions for postal reform which had long before that time declared in favor of relinquishing all surplus revenue from the Post. Hill is an enthusiastic advocate of the theory of the harmony of interests, in virtue of which it is as well to retain a surplus revenue from the Post because a very low rate will lead to such an increase of correspondence as will very considerably decrease the relative cost of the postal service. Since the whole matter hereby comes to depend on the question as to how low the rate shall be fixed, and as there is some danger that the enthusiasm for what afterward came to be known in England as the free-trade prin ciple may depress the rate below the limits of prudent manage ment, the belief in a harmony of interests may readily act to the detriment of the finances. But the radical programme, making a virtue of necessity, is apt to defend this breach by resuscitating the fertile declaration of the era of the iclaircissement that the postal monopoly cannot legitimately be used as a means of obtaining a surplus revenue. Rowland Hill's language too, seemed to incline to this view of the matter.

In England a great revival of trade and industry had taken place after the war, but the net revenue from the Post had not increased during the twenty-four years (1815, £1,619,000; 1838, £1,576,000; 1839, £1,649,000). The reason for this was sup posed to be the high rate of Hill says in his plan of reform : "What I have endeavored to show is that it is highly probable that the Post will show no con siderable deficit, and it is quite possible that there will be no deficit at all. But if a serious deficit should in fact result, the productive power of the country would receive such an impulse from the cheapening of correspondence as to produce so much the greater a revenue from the other branches of the administration." In point of fact, the net receipts declined from £1,649,088 in 1839 to in 1840, and £564,407 in 1841. And it was only very gradually that the net income rose again to the level of 1839 (1872, £1,622,000); a result which was of course in large measure due to the growth of population, industry and wealth. The result was therefore a very considerable loss to the finances, both absolutely and relatively, which could have been avoided by greater moderation in the reform of 1839, at the same time that the substantial advantages of the reform might have been secured.

But what would considerations of this sort count for when running counter to the free-trade enthusiasm of that time, when the English newspapers were in the habit of dating the era of universal peace from the introduction of the penny post ? In the meantime, it is to be noticed, the net receipts of the English postoffice have gone on increasing (1886-87, £8,462,567 gross receipts, with an expenditure of 45,403,408 ; there being on the other hand a deficit of some 4100,00o in the telegraph service).

§ 296. In Prussia and Germany there was more hesitation about following the example of the English reform. There was

at that time (the middle of the century) but a gradual approach attempted toward the consummation which seemed in the end to be inevitable for every country and for the whole world.

The gradual unification of the German postal systems within the German Confederation went hand in hand with the lowering of the rates of postage. The main impulse to this came from the movement of 1848. The German-Austrian Postal Union was estab lished on the 6th of April, 1850; on 'December 21, 1849, the law went into effect which established for Prussia a three-grade postage with a maximum rate of three silver-groschen, which was also to be the maximum rate for Germany and Austria. The net receipts of the Prussian postoffice were, in 1856, 1,756,948 thalers, in 1862, 2,210,609 thalers. The results which followed the radical reform of the English postal service had been suc cessfully avoided.

The latest phase of the development appeared with the estab lishment of the unity of the Empire. It coincided with the high-strung free-trade movement whose demands upon the postal administration were expressed by the standing committee of the German Chamber of Commerce : abolition of the postal mon opoly, abandonment of the " purely fiscal " administration of the post office, reorganization of the postal service as a means of communication on "business principles," adoption of a uniform rate of one silver-groschen, lowering of the registration fee to one silver-groschen, etc., the establishment of postal communication with foreign countries by the concerted adoption of schedules as cheap and uniform as practicable, especially for the letter post. At the German postal conference at Karlsruhe, in 1865, Prussia; in contrast with Austria, Bavaria and Baden, showed herself disinclined to enter on this path of postal reform. After the establishment of the North German Union the tendency seemed irresistible. Commissioner of the Postoffice, Stephan, had declared himself in favor of the uniform rate of one groschen as early as 1859. But until the abolition of the postal monopoly nothing was done to gratify the free-trade aspirations on this head. The law of November 2, 1867, dealing with the postal system of the North German Union, was in substance based on the Prussian postal legislation of June 5, 1852, but the scope of the postal monopoly was somewhat limited.' The transfer of the management of the postoffice from the different states to the Union went into effect January 1, 1868. The postage law of November 4, 1867, established a uniform rate of one groschen, as well as a uniform schedule for the conveyance of parcels and money and for newspapers ; it also abolished a great number of incidental fees. The two imperial laws on the postoffice dated October 28, 1871, closely followed the legislation of the North German Union. Bavaria and Wurtemburg alone retained an independent administration so far as concerned their own internal postal service.

By the law of October 28, 1871, the conveyance of passen gers was left entirely free to private enterprise ; whereas the conveyance of all sealed letters, as well as of all political peri odicals issued oftener than once a week, from places having a postoffice to other places having a postoffice, was reserved exclusively to the Imperial Post.

Of importance to the financial management of the German Imperial Post is the provision contained in the Railway Postoffice Law of December 20, 1875 (based on the Prussian Railway Law of November 3', 1838). This law (Art. 2) provides that with every train included in its regular service the road is required, on request of the postoffice management, to convey, free of charge, one mail-car supplied by the latter. This gratuitous conveyance comprises letter-post matter, newspapers, money, bullion and other postal matter in parcels not exceeding ten kilograms, together with the persons required for the postal service.

With the increase in the postoffice business which has been witnessed of late years, especially in the carriage of parcels and printed matter, this gratuitous conveyance has become an item of ever-increasing importance. And without a thorough-going investigation of the economic scope of this gratuitous conveyance with which the railways (of late for the most state railways) are burdened, nothing can be determined as to how far the net receipts of the Imperial Post above expenditures. are really net earnings of the postoffice and not simply a donation from the railway department.' It may be remarked that in England, under the law of August 18, 1882, there was paid in 1885, for the con veyance of the parcels-post alone, a sum of £291,967 out of a gross revenue from the parcels-post of £577,958, that is to say, more than one-half the gross According to this we should have to deduct from the net revenue of the German Imperial Post, for railway service, 17,000,000 marks on account of the parcels-post alone.

This brings us face to face with questions which are not (as is often supposed) already disposed of, but require further dis cussion. This matter will be taken up in its proper place later on.

postal, post, rate, postoffice and postage