• on Aug 20th, 2012 in Pricing & Rates | 5 comments
    Since the beginning of the Post Office and the Postal Act of 1792, certain types of mail have qualified for lower postage through preferred rates. It was assumed that these types of mailings yield social benefits for senders, recipients, and more importantly, a large nation. Preferred rates’ roots trace to the first federal postal policy, which recognized that disseminating newspapers at below-cost postage would advance the important social goal of educating the electorate. Soon after, magazines received special rates. For its first 50 years, the Post Office was predominantly a newspaper circulation service, because of the high cost of sending letter mail. (Sending a one-sheet letter 500 miles cost 25 cents, while sending a newspaper that distance cost only 1½ cents.) As the Post Office evolved over the next century, so too did the rates it charged for various types of mail. Regular letter mail rates were lowered to be more in line with the newspaper rate. Still, Congress considered a preferred rate for socially important mail to be so crucial it extended eligibility to more types of mail. A class structure was introduced to organize the types of mail. In 1894, Congress allowed nonprofit organizations to send their publications at second-class rates, the rates for newspapers and magazines. That statutory language evolved to create the nonprofit subclass in Second Class, a class now known as Periodicals. In the late 1920s, Congress added Library Mail as a preferred rate for mail sent to or from libraries. In the 1930s, President Roosevelt created a preferred rate for all books that is now known as Media Mail. In 1951, after 2 years of deliberation and strong appeals by charities and philanthropic groups, Congress created a nonprofit subclass in Third Class, today’s Standard Mail. When all of these preferred rates were established, congressional appropriations funded the Postal Service’s operations. And even until 1993, Congress appropriated funds to reimburse the Postal Service for revenues it lost by providing below-cost rates for certain types of preferred mail. Today, the Postal Service receives only a small appropriation for free mail for the blind and overseas voting. All other costs are borne by mailers. At times, Congress has reconsidered the public policy benefits of preferred mail in light of the potential for abuse and in consideration of the Postal Service’s financial condition. As we again dive into reform of the Postal Service, is it time to reconsider the modern application of preferred postage rates? Since the Postal Service uses revenues from postage to fund operations, can it afford to offer some types of mailings reduced postage through preferred rates? Or, does the nation continue to benefit when certain types of mail qualify for preferred rates? How should preferred categories be selected? Do you agree with the current categories or should other types of mail qualify for preferred rates?