REDUCTION OF PRICE INCREASES CONSUMPTION.
Nothing is plainer, as a general rule, than that the reduction of price tends to increase of consumption. This is illustrated by a thousand instances. Thus, at one time in England the fall in the price of soap one eighth increased the consumption one third; the fall of tea one sixth increased consumption one half; the fall of silks one fifth doubled the consumption; the fall of coffee one fourth trebled it; and the fall of cotton goods one half quadrupled it.[83] The circulation of newspapers and the number of advertisements are governed by the same law. There is another English instance, not within the range of ordinary business, which is not without historic interest. Formerly the admission fee to the famous sights of the Tower of London was two shillings, at which rate there were, during the year ending April 30, 1838, 11,104 visitors, paying £1110 8s. The fee was then reduced to one shilling, and during the twelve months following (1838-9) there were 42,212 visitors, paying £2110 12s. On the first of May, 1839, the fee was again reduced to sixpence, and during the ensuing year (1839-40) there were 84,872 visitors, paying £2121 16s.,—and the next year (1840-41) 94,973 visitors, paying £2374 6s. 6d.[84] Thus at the Tower more people were gratified by the sights and more money was taken,—so that there was at the same time a larger accommodation and a larger revenue. A reduction of the fee in the ratio of four to one was followed by an increase of visitors in the ratio of more than eight to one. According to a familiar story in our own country, the exhibitor of a panorama reported to the proprietor that the proceeds at twenty-five cents a ticket did not pay expenses. “Put it down to ten cents,” was the reply. This was done, and immediately the receipts rose so as to give a profit of one hundred dollars a week.
Such instances as these occurring in business and in life led Rowland Hill to assert that “the increase in consumption is inversely as the squares of the prices”; and this rule justified the expectation, that, with the proposed reduction of letter postage from the average of sixpence to a penny, the number of letters would increase thirty-six fold.[85] If the number did not increase in this remarkable ratio, yet it was such as to disappoint the enemies of reform. It appears that the estimated number of chargeable letters delivered in the United Kingdom of England, Scotland, and Ireland in 1839, the year immediately preceding the first general reduction of postage, was 75,907,572, and in 1840, the first year of penny postage, 168,768,344, showing an increase in one year of more than 122 per cent. Since then this large number has dilated year by year, until in 1867 it amounted to 774,831,000.[86]
Postal facilities have from the beginning promoted correspondence, and this was recognized even before the appearance of Rowland Hill. An old account of the English Post-Office, after describing certain improvements, exults “that there is no considerable market-town but hath an easy and certain conveyance for the letters thereof to and from the Grand Office in the City of London, in the due course of the mails every post”; and then adds, that, “though the number of letters missive in England were not at all considerable in our ancestors’ days, yet it is now prodigiously great, since the meanest people have generally learnt to write.”[87] This is the language of another age; but it attests the stimulation which letters receive from opportunity, and illustrates the value of cheap postage.