The same consideration which makes the uniform rate irrespective of distance economically just in the case of ordinary letters, takes away any ground on the score of cost of service for a special rate for local letters lower than the general uniform rate. On the other hand, the considerations which make for monopoly and unified control in the case of a general service, do not apply with the same force in the case of a service limited to a small area. In the latter case, competition can much more easily be set up; and as the uniform penny rate is much higher than the cost of service even in the case of long-distance letters, competing agencies, which can leave aside unprofitable districts, such as the rural districts, can secure a profit on a local service while charging much lower rates. The maintenance of a local rate for letters side by side with a uniform rate 100 per cent. greater for all distances outside the local area, as in Canada, is nevertheless inconsistent from the economic standpoint.
The postcard, which may be regarded as a development of the letter post, is, in effect, an admission that the letter rate is much higher than the cost of service. The difference in cost of service in the case respectively of a light letter and
a postcard is negligible. Indeed, in some respects light letters are more easily and more rapidly handled than postcards. From that standpoint, therefore, there is nothing to justify the difference of 100 per cent. in the rate of charge, and the lower rate is an arbitrary concession. The logical ground for its existence is rather to be looked for in the familiar and generally accepted principle applied to the determination of transportation rates by railway, by road, or by sea, viz. charging "what the traffic will bear," or the variation of the rates according to the intrinsic value of the goods transported.[640] Many messages are sent on postcards which otherwise would be sent as closed letters. But, at the same time, many messages are sent on postcards which otherwise would not be sent at all. This has been especially the case since the introduction of the picture postcard.
These remarks apply equally to the lower rate which has been conceded to circular letters. Both rates represent a great concession relatively to the letter rate, and under them a large traffic has grown up.[641] They closely approximate to the actual cost of service, and probably yield a small profit. They are of great importance in the general scheme of rates, because they provide a cheap means for the transmission of a very large proportion of ordinary personal and commercial messages, and thus indirectly strengthen the position of the profitable penny rate for ordinary letters.
The picture postcard has strengthened the position of the letter rate in another way, viz. by raising the cost of sending a postcard, so that in many cases it is now greater than that of a letter. A common charge for a picture
postcard is a penny; the cost of sending a communication on such a card by post is then three-halfpence, whereas the cost of a letter is only a penny plus the very slight cost of the paper and envelope.