Why Can't You Start Your Own Post Office?

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As more and more Americans embrace email and other communication technologies, the U.S. Postal Service has absorbed the hit. The agency lost an estimated $10 billion in 2011 and expects to top that this year, leaving many analysts to wonder how long it can hold on. So, what’s keeping you from starting a competing service?

Well, the law.

Back in 1792, Congress passed a series of reforms known as the Private Express Statutes, which make it difficult for Mom and Pop to start their own Pony Express. The restrictions used fines to discourage anyone from privately carrying letters for compensation.

How do those rascals at FedEx get away with it? There are a few loopholes. Congress allows letters that are “extremely urgent” to be transported privately. That’s how carriers like DHL get to run their businesses. Additionally, the USPS is perfectly happy to let private carriers transport letters, as long as the packages bear official postage that’s been properly canceled. (In other words, you can deliver the mail in place of the Postal Service as long as the USPS gets the money for the stamps.)

Has Anybody Tried?

They sure have. Political radical and reformer Lysander Spooner did just that in 1844 by opening the American Letter Mail Company. Spooner felt that the postal monopoly was unconstitutional since the Constitution only gave Congress “the power to establish post offices and post roads” without mentioning any sort of exclusivity. Furthermore, Spooner was pretty sure he could beat the USPS on price; he aimed to cut the price of a stamp from 12 cents to a nickel.

Spooner was primarily interesting in making a political point about the government’s anticompetitive behavior, but the American Letter Mail Company had quite a bit of early success. Spooner opened offices in major East Coast cities and used both ships and railroads to deliver letters in a timely, inexpensive fashion. Customers obviously loved the cut-rate prices and faster delivery times, and Spooner quickly became a worthy rival for the USPS.

Of course, the government didn’t make things easier for him. It tried to punish railroad owners who transported Spooner’s messengers, and Spooner even received threats of jail time for circumventing the government’s monopoly. He kept delivering mail, though, and eventually the USPS had to slash its own prices to keep up. The price of a stamp dropped all the way down to a nickel.

Spooner wasn’t finished, though. He lowered his rates again and kept mailing letters. By 1851 Congress finally had to intervene with new laws to protect the postal monopoly and another rate cut, this one down to three cents per stamp. The new measures finally put Spooner out of business, but his upstart postal service had helped reduce the price of stamps by 75 percent. In the meantime, other private carriers had been able to quietly pull in big profits of their own while Spooner had diverted the government’s attention.

This article originally appeared in 2010.

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