A period of great development ensued, especially in the Maritime Provinces. Under the stimulus of the reduction of the rate to the new uniform charge of 5 cents per ½ ounce, in place of a charge graduated by distance which had averaged over 8d. a letter, the number of letters increased so rapidly that in four years the gross revenue had recovered its former level.[126] But in both Nova Scotia and New Brunswick the account regularly showed a heavy deficit, in partial explanation of which there was the fact that both Governments carried newspapers in the mails free of charge. In Canada, with a larger number of commercial communities, the results were somewhat better. But even there the accounts showed a deficit until 1859. From that year there was an annual surplus until 1865, when the heavy charges for conveyance of the mails by railway began to tell.
These conditions continued until the confederation of the British North American Colonies in 1867. The control of the Post Office was within the powers assigned to the new Dominion Government. The Government was desirous of not falling behind other countries in the provision of Post Office services, and it was necessary for political reasons to take advantage of every available means for facilitating intercommunication between the different parts of the Dominion. Shortly after confederation, therefore, a Bill to establish and regulate a Federal Dominion Post Office was brought before the Dominion Parliament.
A reduction of the letter rate of postage from 5 cents to
3 cents per ½ ounce was proposed, and a rate of postage on newspapers. In some of the provinces newspapers had previously been carried by the posts free of charge; and the establishment of a rate of postage for them was to some extent bound up with the reduction of the letter rate, since with the lower rate for letters the free transmission of newspapers would have proved so great a strain on the revenue, that either the Government would have been compelled to make larger grants in aid, or services would have to be withheld in districts where it was desirable they should be provided. Some members were disposed to think the better course would have been to retain the old rate for letters and to allow newspapers to pass free, as had long been the practice in the Lower Provinces; and the imposition of a rate on newspapers was characterized as a tax on the dissemination of public intelligence and a retrogressive step towards old and exploded abuses.[127]
Other members desired to follow the English example and reduce the letter rate to 2 cents, the equivalent of a penny; but this was deemed impracticable on account of the different conditions under which the Post Office was conducted in Canada, where the mails were carried very long distances through a sparse population.[128] In the United States, where the circumstances were more nearly comparable, the rate was still 3 cents. With a rate of 3 cents in Canada, as proposed, it was anticipated that there would be a considerable deficit, but that the deficit would soon disappear.[129] It was alleged that there was no demand for a reduction and that everybody was willing to pay 5 cents; but the real objection was not to a reduction in the letter rate per se. The objection arose from the assumption, fairly well grounded, that the reduction was only possible if accompanied by the establishment of a postage on newspapers, to which a number of
members were strongly opposed. The rate of 3 cents for ½-ounce letters was, however, adopted. In three years the yield of postage at 3 cents surpassed the former yield at 5 cents.[130]
In 1898 a Bill for modifying rates of postage was introduced. The main propositions of the Bill were (1) to reduce the letter rate to 2 cents per ounce, and (2) to impose a postage on newspapers. Since 1867 there had been several changes in newspaper postage, and for about nineteen years newspapers had been passing through the post in Canada free of any charge for postage.[131] The postal service was at this time being carried on at some loss to the general Dominion revenue, and, as in 1867, the proposal to charge postage on newspapers was made to counterbalance any loss of revenue which might result from the reduction in the letter rate of postage. It was hoped that with this counterbalance any such loss would soon be made good, and that, indeed, the Post Office would become a self-sustaining department.[132]
The arguments in Parliament were almost identical with those of 1867, when the previous similar proposals as regards the letter and newspaper rates were before it. Stress was, however, now laid on the contention that letter-writing was the pursuit of the wealthy, and of business and commercial men, who were well able to pay for their correspondence, while the newspapers were sent mainly to the farmers of the country, who wrote few letters. The Government were proposing at this time to raise a million dollars by a tax on sugar, a course denounced as an imposition by the Government on the poorer classes, to whom sugar is a necessity, while the reduction of postage would present the wealthier classes with some $650,000 a year.[133]
The reduction was carried, and the 2-cent rate has proved successful. The gross revenue recovered within four years.[134] The number of letters has largely increased, especially in
recent years, largely, no doubt, in consequence of the growing commercial prosperity. The total number, which in 1876 was some 41 millions, had in 1913 increased to 633 millions. The financial result has also proved satisfactory. The Post Office service in Canada as a whole in 1913 showed a profit of some $1,200,000, and there is no doubt that the greater part of this profit was derived from letters.