The Difference Between Market and Government Swindles
What’s going on in the markets?
Well, a gloriously strong chávena de café at one of this city’s many colorful, street side vendors (not Starbucks) will set you back one Brazilian real, or around fifty cents. In other words, pretty cheap. A Caipirinha on the deck of what is surely the most unique hotel bar your editor has recently visited, however, will cost you the equivalent of maybe forty chávenas de café — about twenty dollars. Still, you pay for the view…and for the city skyline in the background.
As for those other markets — the kind with ticker symbols and stock charts — they’re a bit harder to get a handle on. The little arrows have been almost exclusively red this month…and the little squiggly lines tracking index performance have been trending almost exclusively south. In fact, the Dow achieved its so-far high for May at 1pm on the very first day. Since then it’s been down…down…down…
Gold is lower too…down another $15 an ounce overnight. The Midas metal is back to where it began the year, at about $1,565. But how could that be? Aren’t central banks around the world working furiously to debase their flimsy fiat notes? And aren’t the Chinese buying the stuff hand over fist? As Eric Fry showed last week (in his essay “China Buys Gold…No Matter Who’s Selling”), the squiggly line representing the Middle Kingdom’s monthly gold imports from Hong Kong is trending almost exclusively upward.
Yes, Fellow Reckoner, it’s tough to know quite what’s going on in those other markets. Government-caused distortions abound. Price fixing — including for the price of money itself! — sends strange signals to buyers and sellers, convincing them to do things they ordinarily wouldn’t do. Like buy a house they could never afford or speculate in the stock market instead of save their hard-earned for a rainy day. Thus are false booms fueled…and real corrections avoided. For a time…
At least when we pay outrageous prices for a cocktail at a tourist trap we know we’re being taken for a ride. But it’s a ride we’re willing to pay for. Conversely, when the state takes us for a ride, we don’t have any choice. That’s why we have to look for alternative investments…market workarounds…contrarian viewpoints…
Speaking of which, we received the following “letter” from a Fellow Reckoner in response to our Lysander Spooner vs. the USPS musing last week. Writes our friend David S…
Glad to have an excuse to write to you about my own area of research — postal history. We talked a little about postal history near the end of the Rancho Santana Sessions in March.
The Wikipedia article that you cited is inaccurate in part. The United States Post Office did not have a 12-cent stamp in 1844 when Spooner started his American Letter Mail Company; in fact it had yet to issue any stamps. A few local postmasters were permitted to experiment with stamps in 1845; the first national postage stamps in the United States were issued in 1847. In 1844, when Spooner started his company the letter rates in the US were based upon distance and the number of sheets of paper, ranging from 6 cents under 30 miles to 25 cents over 400 miles for a single sheet of paper. And, none of the rates were 12 cents. Since envelopes counted as a second sheet of paper, they were not generally used.
The Post Office Act of 1845, besides strengthening the monopoly on letter mail, reduced the postage rates to 5 cents per half ounce under 300 miles and 10 cents per half ounce over 300 miles. By matching the rates of the private mail companies (there were others besides Spooner) it was easier for the government to force them out of business.
By the time the 3-cent letter rate was established in 1851, Spooner had sold his mail business and moved on to other things. That rate reduction was not so much in response to Spooner as to other reformers. And, the 3-cent rate was not short-lived, but in fact rates were reduced even more. The 3-cent letter rate continued until 1883 when it was reduced to 2 cents; the rate was essentially halved in 1885 when the weight step was raised from half an ounce to a full ounce. The 2-cent per ounce rate lasted from 1885 until 1932 except for a couple years during World War I when the letter rate was 3 cents to raise money for the war effort.
All of this is simply factual background on postal operations in the 1840s — it does not change the essential points about Spooner’s argument against the Post Office Department (as it was known then, the USPS dates to 1971) or refute your conclusions about private business. I just like to see the story accurately told.
There is however, one additional point to consider when seeking to understand Spooner. He was an abolitionist and cheap postage was a major focus of that movement until the 1851 3-cent rate. They needed cheaper rates of postage for mailing anti-slavery tracts. So in many respects the cheap postage reformers of the 1840s were more interested in their other agendas than just in reforming the Post Office. For more on this perspective, you might read my paper, “Cheap Postage: A Tool for Social Reform” published by the Smithsonian two years ago in their postal history anthology. Mine is the final paper in the volume.
I enjoy your columns and I am always happy to discuss postal history.
Thanks for the corrections, David. We’re always happy to discover new and more accurate information…especially when it comes from our Fellow Reckoners.