Monday, 30 April 2012

Soaring stamp prices

Why does it cost so much more to post a letter now, than it did when the penny post was invented by the great Rowland Hill in 1840?

One old penny, or 1d, in 1840 is the equivalent of of 34.8p at current prices.*

So the new First Class rate of 60p is 72% higher. Even 2nd Class is 44% higher, both in real terms.

The United Kingdom was different then, more like a developing country. Wages were low, so were many other costs.

And there was no competition from email.

On the other hand, today we have all the advantages of the latest technology, 21st Century transport and huge economies of scale.

In 1840, letters were sorted by hand and transported around the country by steam train. There were still some mail coaches, so horses played a part as well.

The Penny Post was a a revolution. Beforehand there were various high prices for delivery, and often the addressee had to pay on receipt. Mail wasn't user-friendly.

In came a standard price, for a uniform service, paid for by the sender in advance. Quick and slick.

And there was the Penny Black, followed by the Penny Red - all totally new.

Rowland Hill's project was a risky undertaking. Letter volumes soared, but, initially, revenues plummeted.

Yet the service still washed its faced: net revenues stayed positive.*

Now some streets have deliveries from several different companies, the service is fragmenting and prices are rising sharply in real terms.

Are we going back in time?

*Look at Bank of England inflation calculator
ONS Composite Price Index
Postal Heritage statistics

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