Introduction
On May 1st, 1840, the Post Office introduced a new flat rate on letter postage, after years of high and complicated pricing. The idea for the Uniform Penny Post came to Rowland Hill, a former schoolmaster, from talking to his father about free-market economics. Both had noticed how the national tax revenue had jumped just when the Government had cut taxes and regulations on foreign trade.
I HAVE already mentioned that our opinion was from first to last, and without reserve or exception, in favour of free trade. Such being our views, we had welcomed with joy the gradual relaxation of the protective system, which, commencing under Mr Huskisson, never absolutely stopped until protection was no more.*
We had remarked, with satisfaction, that the lowering of the tariff [on foreign trade] had not produced a corresponding reduction in the public revenue; and we indulged in sanguine hopes that, even where reduction appeared in a particular department, it either would be temporary or would be made up in some other. The year 1835 having brought a large surplus in the general revenue, we naturally speculated as to its application in the reduction of duties;* and it was then [1836] that my thoughts first turned earnestly to the Post Office.
I now examined more in detail the result of the late financial reforms: and I found (as subsequently stated in my pamphlet) that in the reductions hitherto made, the relation between the relief to the public and the loss to the revenue had varied greatly; so that, while in the instance of leather and soap the reduction of one half of the duty had eventually caused to the revenue a loss of one third, in that of coffee the same reduction had actually produced a gain of one half.*
* William Huskisson (1770-1830) was appointed President of the Board of Trade in 1823, and colonial secretary in 1827. In both roles, he worked tirelessly to reduce Government interference in and taxes on international trade. The prevailing wisdom was that overseas competition harmed British interests; but Huskisson realised that by removing taxes, regulations and mutual suspicion in international trade, everyone benefited. He was killed by a train at the opening of The Liverpool and Manchester Railway in 1830. The mantle of his free trade campaign was picked up by Richard Cobden.
* That is, the rising tax revenues in an era of increasing free trade made Hill suspect that there was indeed a link between tax cuts and higher tax revenue. The observation that in many cases there is a ‘sweet spot’ for taxes, so that an increase may be as damaging to the revenue as a decrease, is nowadays referred to as the Laffer Curve, after US economist Arthur Laffer (1940-).
* If the tax on soap and shoes goes up, we still have to buy soap and shoes, so we grumble and pay the tax; but if the tax on coffee goes up, we switch to tea, and the Treasury grumbles because tax revenue goes down. That does not mean that taxing essentials like soap and shoes makes sound fiscal sense. Money spent buying soap and shoes for more than they are worth is money we can’t spend on anything else, so the economy takes a hit and overall tax revenue decreases. See Frédéric Bastiat on The Broken Window. As for the fond belief that tax revenues go to help the poor, see William Cobbett on Hard Rain and Sidney Smith on War is Such a Taxing Business.
Précis
In 1836, former schoolmaster Rowland Hill turned his mind to the exorbitant costs and heavy regulation in the Post Office. He had noticed how William Huskisson’s free trade policies cut taxes while raising tax revenue, and although Hill recognised that not all taxes behaved this way, some clearly did, and he guessed postage might be another. (56 / 60 words)
In 1836, former schoolmaster Rowland Hill turned his mind to the exorbitant costs and heavy regulation in the Post Office. He had noticed how William Huskisson’s free trade policies cut taxes while raising tax revenue, and although Hill recognised that not all taxes behaved this way, some clearly did, and he guessed postage might be another.
Variations: 1.increase the length of this precis to exactly 60 words. 2.reduce the length of this precis to exactly 50 words. 3.introduce one of the following words into the precis: about, because, despite, if, since, unless, whereas, who.
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