1835 Andrew Jackson - Post Office Department Versus the Railroads

In 1831, the Baltimore & Ohio’s Tom Thumb, America’s first steam locomotive, raced a horse and lost when its belt slipped off the blower pulley. It may have been an embarrassing moment, but later that year a new steam locomotive reached the unheard-of speed of 30 miles per hour. The age of rail was here, and it promised to revolutionize postal delivery. By November of 1832, railroads were carrying US mail from Philadelphia to West Chester, Pennsylvania. Within a few short years, tracks were being laid across the country, funded and operated by private companies.  This posed a particular problem for the federal Post Office Department as these railway companies could form monopolies with the power to charge exorbitant prices. President Andrew Jackson was faced with a dilemma, how could Congress fix the prices that railroads charged for carrying the mail without transcending their constitutional powers. It was one monopoly versus another - the Post Office Department versus the Railroads.  In his 1835 State of the Union Address, Jackson asked Congress to find a way to put price controls on the railroads and in the hands of the Postmaster General.

In the 1830s, the Railroad was not only the pride and joy of the federal government, but also its main source of political power. in 1831, three-fourths of all civilian federal employees worked for the Post office. Because of its monopoly power it brought in a lot of revenue that was then distributed to groups with political power. It was as Jefferson called it in 1802, a "source of boundless patronage to the executive, jobbing to members of Congress and their friends and a bottomless abyss of public money". Neither President Jackson, nor Congress wanted to see any challenge to this power. In 1835, the Postmaster-General reported that there was already a "spirit of monopoly" brewing among the railroads and there were claims of them charging the "most extravagant compensations". President Jackson shared the concerns of the Postmaster-General with Congress in his 1835 State of the Union Address and pondered if the railroads might use their monopoly power to "demand of an exorbitant price" or worse exclude the United States from delivering mail to certain sections of the country. In other words, it was a direct threat to the Post office Department's own monopoly. Jackson wanted Congress to "obviate, if possible" this problem "without transcending their constitutional powers".

"Particular attention is solicited to that portion of the report of the Postmaster-General which relates to the carriage of the mails of the United States upon railroads constructed by private corporations under the authority of the several States. The reliance which the General Government can place on those roads as a means of carrying on its operations and the principles on which the use of them is to be obtained can not too soon be considered and settled. Already does the spirit of monopoly begin to exhibit its natural propensities in attempts to exact from the public, for services which it supposes can not be obtained on other terms, the most extravagant compensation. If these claims be persisted in, the question may arise whether a combination of citizens, acting under charters of incorporation from the States, can, by a direct refusal or the demand of an exorbitant price, exclude the United States from the use of the established channels of communication between the different sections of the country, and whether the United States can not, without transcending their constitutional powers, secure to the Post-Office Department the use of those roads by an act of Congress which shall provide within itself some equitable mode of adjusting the amount of compensation. To obviate, if possible, the necessity of considering this question, it is suggested whether it be not expedient to fix by law the amounts which shall be offered to railroad companies for the conveyance of the mails, graduated according to their average weight, to be ascertained and declared by the Postmaster-General. It is probable that a liberal proposition of that sort would be accepted."

Congress responded, in 1838 they passed a law limiting the railways from charging no more than 25 percent above the charge of coaches offering similar service.

An Act to establish certain post routes and to discontinue others - Section 2

That each and every railroad within the limits of the United States which now is, or hereafter may be made and completed, shall be a post route, and the Postmaster General shall cause the mail to be transported thereon, provided he can have it done upon reasonable terms, and not paying therefor in any instance more than twenty-five per centum over and above what similar transportation would cost in post coaches."

References

Presidency.ucsb.edu. 2020. Seventh Annual Message | The American Presidency Project. [online] Available at: <https://www.presidency.ucsb.edu/documents/seventh-annual-message-2> [Accessed 11 December 2020].

2020. Statutes At Large: 25Th Congress. [online] Available at: <https://www.loc.gov/law/help/statutes-at-large/25th-congress/sesson-2/c25s2ch172.pdf> [Accessed 11 December 2020].

About.usps.com. 2020. The United Stated Postal Service: An American History. [online] Available at: <https://about.usps.com/publications/pub100.pdf> [Accessed 11 December 2020].

Cato.org. 2020. The Challenge To The U.S. Postal Monopoly. [online] Available at: <https://www.cato.org/sites/cato.org/files/serials/files/cato-journal/1995/5/cj15n1-1.pdf> [Accessed 11 December 2020].