(a) The government would have to install urban delivery wagons at a cost its traffic might not justify.
(b) The express companies still in the field, the wastes of service would merely be increased by the entrance of the Postal Department, and the people would have to pay it all.
(c) The government, being a moral agent with the inelastic rate proposed, would be at the mercy of its unrestrained competitors.
(d) The express companies’ contracts with the railways permit them to reduce their compensation to the railways to the point of 150 per cent of the freight rate—i. e., from the present ratio of about 8 (7.80) to 1 of the freight rate to about 1½. Of course, they could not go to this extreme without destroying their own profits, but their contracts permit them to go as far as they might wish. Thus, while the government in the beginning might have to pay about three times as much to the railways for its parcels per pound, in a struggle the express companies could exaggerate this disparity to any point they wished for the purpose of destroying the postal department as a competitor.
Essential Elements of an Adequate System
For the sake of brevity we state these elements categorically:
(a) Fast service.
(b) Greatest economically feasible extension of delivery and collect service, necessitating coordination with both urban and rural free delivery systems.
(c) Express railway contracts to secure the relatively low railway rates.
(d) Cheap capital charges.