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The Postal Service is in trouble, by Alisdair Roberts.
The Postal Service has faced difficult times in the past, including an 1844 economic crisis that tested its survival.
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BOSTON--The U.S. Postal Service is in trouble, and there's no telling whether it will survive. It's been battered by the Internet and a dragging economy, besieged by commercial competitors, and stymied in its efforts to trim a costly web of post offices and delivery routes. On Aug. 1, it defaulted on a $5.5 billion payment to the U.S. Treasury for future retiree health benefits.
Some think that it's time to privatize the service, bringing an end to one of our oldest federal institutions. The outlook is grim, though the crisis is not unprecedented.
Roll the clock back to 1842. The United States was in the fifth year of an economic crisis that began with the collapse of a speculative bubble in 1836. The financial sector was in ruins. One-third of state governments had defaulted on payments to foreign lenders. The Treasury, once stuffed with cash, was empty. Politics in Washington were toxic. Politicians indulged in "paltry disputes and vile harangues," one newspaper complained, while "measures of the greatest importance are all contemptuously passed over with neglect."
The Post Office Department was caught in the downward spiral. Before the crisis, it had been the pride of the nation. Flush from profits in a booming economy, it had rapidly expanded its delivery network. Between 1836 and 1840, postal routes grew as much as they had in the previous two decades. Almost 3,000 new branches were established. Americans regarded the Post Office's growth as evidence of the country's vitality.
As the economy declined, though, postal revenues stagnated. In 1842, the Post Office produced its fifth consecutive deficit, the largest in its history. Nobody in Washington wanted to make politically unpopular cuts to mail service. But legislators also balked at the subsidies that were now needed to pay the Post Office's bills.
Its woes were aggravated by competition from private carriers, which, unburdened by rural and frontier routes, offered better rates to customers on the urbanized East Coast. In theory, the Post Office had a statutory monopoly over mail delivery. But when the government tried to enforce the law in the early 1840s, the courts effectively gutted the ban on competition, and customers flocked to private carriers.