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About the U.S. Postal Service

A Very "Business-like" Semi-governmental Agency

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Early History of the U.S. Postal Service
The United States Postal Service first began moving the mail on July 26, 1775, when the Second Continental Congress named Benjamin Franklin as the nation's first Postmaster General. In accepting the position, Franklin dedicated his efforts to fulfilling George Washington's vision. Washington, who championed a free flow of information between citizens and their government as a cornerstone of freedom, often spoke of a nation bound together by a system of postal roads and post offices.

Publisher William Goddard (1740-1817) first suggested the idea of an organized U.S. postal service in 1774, as a way to pass the latest news past the prying eyes of colonial British postal inspectors.

Goddard formally proposed a postal service to Congress nearly two years before adoption of the Declaration of Independence. Congress took no action on Goddard's plan until after the battles of Lexington and Concord in the spring of 1775. On July 16, 1775, with revolution brewing, Congress enacted the "Constitutional Post" as a way to ensure communication between the general populace and the patriots preparing to fight for America's independence. Goddard was reported to have been deeply disappointed when Congress chose Franklin as Postmaster General.

The Postal Act of 1792 further defined the role of the Postal Service. Under the act, newspapers were allowed in the mails at low rates to promote the spread of information across the states. To ensure the sanctity and privacy of the mails, postal officials were forbidden to open any letters in their charge unless they were undeliverable.

For a complete history of the early Postal Service, visit the USPS Postal History web site.

The Modern Postal Service: Agency or Business?
Until adoption of the Postal Reorganization Act of 1970, the U.S. Postal Service functioned as a regular, tax-supported, agency of the federal government.

According to the laws under which it now operates, the U.S. Postal Service is a semi-independent federal agency, mandated to be revenue-neutral. That is, it is supposed to break even, not make a profit.

In 1982, U.S. postage stamps became "postal products," rather than a form of taxation. Since then, the bulk of the cost of operating the postal system has been paid for by customers through the sale of "postal products" and services rather than taxes.

Each class of mail is also expected to cover its share of the costs, a requirement that causes the percentage rate adjustments to vary in different classes of mail, according the costs associated with the processing and delivery characteristics of each class.

According to the costs of operations, U.S. Postal Service rates are set by the Postal Regulatory Commission according to the recommendations of the Postal Board of Governors.

Look, the USPS is an Agency!
The USPS is created as a government agency under Title 39, Section 101.1 of the United States Code which states, in part:

(a) The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States, authorized by the Constitution, created by Act of Congress, and supported by the people. The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities. The costs of establishing and maintaining the Postal Service shall not be apportioned to impair the overall value of such service to the people.

Under paragraph (d) of Title 39, Section 101.1, "Postal rates shall be established to apportion the costs of all postal operations to all users of the mail on a fair and equitable basis."

No, the USPS is a Business!
the Postal Service takes on some several very non-governmental attributes via the powers granted to it under Title 39, Section 401, which include:

  • power to sue (and be sued) under its own name;
  • power to adopt, amend and repeal its own regulations;
  • power to "enter into and perform contracts, execute instruments, and determine the character of, and necessity for, its expenditures";
  • power to buy, sell and lease private property; and,
  • power to build, operate, lease and maintain buildings and facilities.

All of which are typical functions and powers of a private business. However, unlike other private businesses, the Postal Service is exempt from paying federal taxes. USPS can borrow money at discounted rates, and can condemn and acquire private property under governmental rights of eminent domain.

The USPS does get some taxpayer support. Around $96 million is budgeted annually by Congress for the "Postal Service Fund." These funds are used to compensate USPS for postage-free mailing for all legally blind persons and for mail-in election ballots sent from US citizens living overseas. A portion of the funds also pays USPS for providing address information to state and local child support enforcement agencies.

Under federal law, only the Postal Service can handle or charge postage for handling letters. Despite this virtual monopoly worth some $45 billion a year, the law merely requires the Postal Service to remain "revenue-neutral," neither making a profit or suffering a loss.

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