Some Problems of the British Post Office

Abstract

THE purpose of this article is to review, from the point of view of an industrial economist, some issues arising from the Report of the Post Office Review Committee, of which I was Chairman. (Cmnd. 6850, July I977: appendix volume of evidence, Cmnd. 6954, November I977.) The British Post Office dates back to about I509, as an agency of the Crown to convey letters; but for a long time the fee for conveyance depended on distance, and was paid by the recipient. The business was greatly changed by the simple but farreaching business invention of Rowland Hill in I837, an invention which was to be adopted throughout the world. He observed that it would be much easier if a standard fee could be collected from the sender in advance, by his purchase of an adhesive postage stamp. This made possible an expansion of the business which would have been held back if it had continued to carry the costs of individual assessment of the distance travelled by each inland letter, and of personal collection from the recipient. A 'letter' is not defined by statute, and presumably always included a small 'packet': the conveyance of parcels, up to certain weight limits, was added to the Post Office functions in I883. The conveyance inland of messages by the 'electric telegraph' became a Post Office function in I868, no doubt being regarded as a natural accompaniment of the post because it required a large network of local offices to receive messages and to arrange for their delivery. Consequently, when the telephone appeared, initially developed by local companies and then (from I889) by the National Telephone Company, the network had to be licensed by the Post Office under the Telegraph Act of I869. In I892 the Post Office itself took over the function of providing the trunk lines, and by 1899 it was thought desirable for the Post Office and local authorities to compete with the private telephone systems directly, so that steps were taken to provide a Post Office system in London. In I9II the National Telephone Company was purchased by the Post Office, which since then has effectively had a telephone monopoly, now with the single exception of the licensed municipal service in the city of Kingston upon Hull. A feature of the British system which distinguishes it from that in the United States and some other countries is the use, in addition to the main or 'Crown' post offices, of a large number of local shops as 'sub-offices' or agents for the Post Office. There is normally a sub-office in any considerable village, and at least one every two miles in the towns. The existence of this