The Principles of Political Economy

Henry Sidgwick

Book III

Chapter IV

Section 4

§4. The Post-Office, &c. The conveyance of letters is the department in which the advantages and success of governmental interference are most generally admitted---with the exception, perhaps, of coinage. The reason is that, while the business is in the main of a routine kind, adapted to governmental agency, both the gain in convenience and the saving of labour secured by unity of management is specially great: since the cost of carrying letters from office to office is but slightly increased by any increase in their number, while the reduction in the ratio of labour to utility in the work of distribution, obtained by the monopoly of it within each area of distribution, is very considerable. The saving through unity of management is less in the case of bulky or heavy parcels, since each additional parcel tends materially to increase the aggregate of carriage; but when a national machinery exists for the distribution of letters and light parcels, there seems a clear advantage in using it also for the distribution of larger parcels.

Before I pass to consider the other department of what I have called the machinery of transfer---viz. exchange---it may be convenient to notice a case of governmental interference which does not come under this head, but which in other respects has important economic affinities to the case of railways: I mean the provision of light and water. The analogy consists in the fact that these commodities have to be brought to the consumers by means of a special kind of path (pipes, wires), which can only be constructed by obtaining the partial use of long strips of land; these must either (1) be public roads (as is ordinarily the case), or (2) be obtained by compulsory sale: so that in either case some degree of governmental interference would be indispensable. Further, the expense of constructing any such special paths of conveyance, in a town or any thickly inhabited district, would be to a great extent the same whether the consumers supplied by it were all the inhabitants of the district in question or only a scattered portion of them; hence the saving of cost obtained by keeping the whole supply of a certain area under one management is so great as to render a practical monopoly manifestly the most economic arrangement. On these grounds it is generally agreed that unrestricted competition, though it may be transiently useful, is not to be regarded as the normal condition of these branches of production: the issue is rather between governmental regulation and governmental management, and is to be decided, I conceive, in much the same way as the similar issue in the case of railways.

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