Financial History 141 Spring 2022 - Page 9

EDUCATORS ’ PERSPECTIVE

Postcards and the Post Office Surplus of 1911

By Brian Grinder and Dan Cooper
The United States Post Office ( USPS ) has always been in an impossible position . President Harry Truman , addressing the National Association of Postmasters in 1951 , described the Post Office aptly when he posited that , “ The postal service is not only big business , it is public business .” As a business , it is expected to pay for itself , but as a public business , it is beholden to the dictates of the legislative branch . In the same speech , Truman noted that the Post Office was “ being run at a deficit of more than $ 500 million a year .” Deficits at the Post Office have been the rule rather than the exception .
According to Reuters , “ USPS has reported net losses of nearly $ 100 billion since 2007 . That stems in part from 2006 legislation that required that the agency pre-fund more than $ 120 billion in retiree healthcare and pension liabilities , a requirement that labor unions have called an unfair burden not shared by other businesses .” How can such an institution ever pay its way in the face of the federal government ’ s unyielding demands ? To make matters worse , technological innovations such as e-mail , Twitter , Facebook and other social media platforms have taken so much business away from the Post Office that it is nigh well impossible for it to break even , much less operate profitably .
But there was a time when innovations benefited the Post Office ’ s bottom line . One of the most surprising innovations to benefit the Post Office was the picture postcard .
According to postcard chronicler Lydia Pyne , the Golden Age of Postcards in the United States began in 1905 and ended in 1920 . In 1909 , roughly four years into this Golden Age , the Post Office experienced record losses with no hope for a recovery any time soon . However , the 1911 Annual Report of the Postmaster General reported a surprising gain :
For the first time since 1883 the annual financial statement of the Post Office Department shows a surplus instead of a deficit . The revenues for the fiscal
year ended June 30 , 1911 , amounted to $ 237,879,823.60 and the expenditures to $ 237,660,705.48 , leaving a surplus of $ 219,118.12 . At the beginning of the present administration in 1909 the postal service was in arrears to the extent of $ 17,470,770.47 , which was decidedly the largest deficit on record . 1 In the brief space of two years this deficit has been changed into a substantial surplus .
Frank H . Hitchcock , the Postmaster General , was at a complete loss to explain the turnaround . “ Postal Cards ” are only mentioned once in the Postmaster General ’ s 1911 report with revenues generated from postcards simply lumped together with revenues from the sale of stamps , stamped envelopes and newspaper wrappers . Opinions on the turnaround ran from deceptive accounting procedures to denials that the record-breaking 1909 deficit ever existed .
The sources of the deficit were easy to locate . According to Hitchcock ’ s 1909 annual report , the culprits were losses generated by second-class mail , which totaled
Rural postal carrier and wagon , circa 1900 .
$ 64 million by 1909 , and losses from Rural Free Delivery ( RFD ), which was established as a permanent nationwide postal service in 1902 and had piled up losses of almost $ 28 million by 1909 . The problem with second-class mail , primarily magazines and newspapers , was that the Post Office was not willing or able to increase second-class postage to a level that would make it profitable because of political pressure from Washington , DC . RFD expanded regular free mail delivery and collection to rural Americans regardless of the remoteness of their homes . While politically popular , especially among the nation ’ s farmers and ranchers , delivering the mail directly to homes in areas of the country that were sparsely populated proved to be enormously expensive .
The most common explanation for the surplus invoked cost-cutting efforts and the consolidation of operations . Although it was an incomplete answer at best , the matter of the 1911 Post Office surplus receded into history while annual deficits quietly returned . It would take serious historical sleuthing over 100 years later by Daniel Gifford , an historian at the
National Postal Museum www . MoAF . org | Spring 2022 | FINANCIAL HISTORY 7