O’Brien had not been a wily political operator for presidents John Kennedy and Lyndon Johnson for nothing, and his vision for a new kind of post was soon shared at the White House. At a time when LBJ was paying for the Vietnam War and sending a man to the moon, he must have regarded the post’s deficit of $1.3 billion as a real burden. The president swiftly appointed the prestigious Commission on Postal Reorganization to analyze the department’s role in a rapidly changing world and make recommendations for its future.
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THE PRESIDENT’S blue-ribbon, ten-member commission faced a formidable task, if only because of the post’s sheer size. Some seven hundred thousand employees handled more than seventy-nine billion pieces of mail a year in its huge network of physical facilities. The department’s annual costs were $6.2 billion and its revenues, $5.1 billion—back then, enormous sums. In the private sector, only AT&T could compare with the enterprise, and it was no accident that Frederick Kappel, the former head of that company, was the postal commission’s chairman. Most of its other members, including the dean of the Harvard Business School and CEOs of major corporations, shared his business-oriented perspective. The group took its responsibility seriously, and in July 1968, it issued Towards Postal Excellence, its 212-page report, to much fanfare.
The so-called Kappel Commission’s crucial conclusion was existential in nature and a stunning reversal of historical policy that had been reaffirmed just a decade before: “Today the Post Office is a business.” (This assertion was partly based on the sophistical grounds that the post was no longer “a major policy arm of the Government,” because other federal departments had sharply reduced their use of it. However, these agencies had only done so when Summerfield had insisted that they pay for such services, which accounted for a hefty chunk of the post’s deficit.) The report stated that like any other business, the new “government-owned corporation” should be market-driven and supported by revenue from its customers, not taxpayers.
The commission offered many recommendations regarding the details of the new postal business. It should be freed from the spoils system and depoliticized but not actually privatized—at least not yet—primarily because only the federal government could handle finances on such a scale. It should be run by a board of directors that would set postage rates in consultation with a panel of independent experts. Its employees should receive the right of collective bargaining but not to strike. Importantly, this new post should balance its budget while continuing to provide universal mail service to every American everywhere for the same low price.
Not everyone rejoiced at the prospect of turning one of the federal government’s oldest institutions into a mere business. As usual, some self-interested members of Congress were in no hurry to relinquish the waning spoils system’s last perquisites. Others were genuinely alarmed by the threat of cutting a public service in the name of efficiency, particularly in the rural South and West, where small, unprofitable post offices and routes abounded. Postal workers may have resented being underpaid by a penny-pinching Congress, yet many feared worse treatment from a new, even less sympathetic boss that would be more inclined to cut employment costs by mechanizing. Moreover, the Kappel Commission had glided over the fact, revealed by a Roper survey cited in its own report, that 76 percent of all Americans were “completely satisfied” with the post, and only 1 percent were “completely dissatisfied.”
However, anyone who needed more convincing that something had to be done about the post found good reason in March 1970, when postal employees staged the first major strike by federal workers in American history and stopped much of the nation’s mail. Their morale had been low and turnover rate high even before the urban meltdowns in the 1960s, primarily because of low wages. The average letter carrier, for example, started at barely $6,000 per year, which was significantly less than the national median income of about $7,500, and after twenty-one years made only $8,000; the poor salaries were a particular hardship in big cities, where the cost of living was higher. Then, too, although about 90 percent of the workers belonged to one of five postal unions, each of which could lobby Congress and the post, the groups couldn’t bargain collectively.
Labor-management tensions peaked in the spring of 1970, when word leaked out that members of Congress were poised to give postal employees a 5.4 percent raise, contrasted to a 41 percent hike for themselves. On March 17 in New York City, Branch 36 of the National Association of Letter Carriers, fed up with low pay and worried by the looming prospect of the post’s reorganization as a business, decided to take action. (Their nationwide organization of some 175,000 members, which had been founded in 1889, had grown more powerful in 1962, when Executive Order 10988 gave partial collective bargaining rights to government employee unions that did not segregate or discriminate based on race.) The New York City group broke with its parent organization to mount a wildcat strike, which quickly spread to involve perhaps a third of the post’s workers in cities across the nation. Almost seven hundred post offices were shut down, including nine of the ten biggest.
The strike’s devastating consequences, particularly on the business sector, shocked Americans into realizing how much the post that they took for granted actually mattered. In New York City, the stock market lurched and the draft board was unable to send notices informing nine thousand men that they had a temporary reprieve from military service. In Washington, census officials panicked over mailing their 1970 questionnaires on schedule, and declaring a national emergency, President Nixon ordered the military to deliver the mail. Postmaster General Winton Blount agreed to negotiate with the unions if their members returned to work, which they did. In exchange for a significant salary increase and other perks, labor dropped its opposition to the momentous transformation of the post proposed by the Kappel Commission.
Considering the post’s long, slow, physical and philosophical erosion, proposing a radical strategy for its revival was perhaps not surprising. However, the Kappel report’s central conclusion was a stunning reversal of the one given by another commission of experts gathered to assess the post’s worst crisis, back in 1844. That group had concluded that, despite the post’s terrible problems, it was indeed an essential public service that was necessary for creating an informed citizenry and even “elevating our people in the scale of civilization and bringing them together in patriotic affection.” The days of the sweeping public service that had helped to forge American culture for almost two centuries seemed numbered, as the “true non-electric wire of government” was poised to become a “government-owned corporation.”
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THE U.S. POSTAL SERVICE
IN AUGUST 1970, an enthusiastic President Richard Nixon signed the Postal Reorganization Act, which was the most important such legislation since 1792. Loosely based on the Kappel Commission’s recommendations, the law turned the founders’ Post Office Department into the United States Postal Service (USPS). To mark the historic transition, the department’s old-fashioned insignia of a post rider, often mistaken for a Pony Express courier, was updated to a sleekly minimalist American eagle.
This new federal agency was oddly designated as an “independent establishment of the executive branch,” allegedly in order to avoid calling it a “government-owned corporation,” as the Kappel report had. Remarking on the policy reversal that put a balanced budget ahead of public service, the historian Wayne Fuller wrote, “No longer was the Post Office to be the people’s homespun Post Office, to be used as an instrument of government policy for whatever purposes Americans desired. Rather, it was to be a business like any other great American business.”
Critics on the left and right soon zeroed in on the USPS’s greatest flaw: the strange government-business hybrid incorporated disadvantages from both the public and private domains. This new post was expected to run as an independent company supported by revenue from its customers, but it was also hobbled by constraints that only AT&T and a very few other huge
businesses would accept. The most onerous were the obligations to submit to congressional oversight of its affairs and to provide universal service regardless of the price tag—a requirement sure to highlight the differences in cost efficiency between well-off areas, which generate lots of mail, and poor ones, which don’t.
The post’s reformulation as a kind of government-business jackalope would remain problematic, but the Postal Reorganization Act also effected some much-needed improvements. First on the list was the elimination of the scandalous spoils system, which had long compromised the post’s efficiency and sullied its reputation. Since 1829, the postmaster general had been not only a cabinet member and the manager of one of the government’s largest institutions but also, in most cases, the president’s political crony and conduit for their party’s patronage. The act ended this long, tarnished tradition by downgrading the department to an agency and removing the postmaster general from the cabinet. The USPS would be run by a board of governors, nominated by the president and confirmed by the Senate (later, with the Senate’s advice and consent), which would appoint a qualified professional to serve as postmaster general and chief executive. Instead of including a legion of appointees hired and fired on the basis of partisan loyalty, the huge workforce would consist of civil service employees selected and retained on the basis of their merit.
The spoils system was already on the wane, but few politicians could relish eliminating it altogether when their own party occupied the White House. (Postmaster General J. Edward Day, a Washington neophyte when appointed by President John F. Kennedy in 1961, was amazed when Robert Kennedy, his brother’s political operator, who served as attorney general rather than as postmaster general, nevertheless phoned him three times during a single afternoon about a job for one letter carrier in rural Mississippi.) However, Nixon and his postmaster general, Winton Blount, a wealthy businessman and a political appointee himself, welcomed the act’s institutional reforms and were determined to turn the patronage-ridden, tax-supported Post Office Department into a normal, revenue-supported business. They believed that depoliticizing the post was practical as well as right, partly because it would stabilize the organization and ensure that promising professionals could have a secure, long-term career.
The new USPS was no longer a federal department, but the president and Congress still retained ultimate authority over it, and it was soon apparent that the act’s efforts to curb the latter’s untoward interference fell short of the goal. Previously, the department had generally run at an annual average deficit of 20 percent, and congressional appropriations had made up the shortfall. Both the House and Senate had very powerful, patronage-minded committees that controlled this vital funding, as well as the department’s policies, rates, wages, job appointments, transportation, pay raises, labor-management relations, and other matters, right down to the operation and fate of tiny rural post offices.
The act attempted to limit this egregious congressional meddling in several ways. Postal affairs were transferred to less powerful committees (now the Senate Committee on Homeland Security and Governmental Affairs and the House Subcommittee on Government Operations, which is part of the House Committee on Oversight and Government Reform). Postal revenues were now automatically appropriated to a new Postal Service Fund, which the USPS could use as needed without asking Congress. Moreover, the post would now propose necessary changes in postage and mail classifications to a five-member Postal Rate Commission, appointed by the president and confirmed by the Senate. This body presided over “omnibus rate case” meetings, which were formal public proceedings held to ensure transparency; the various groups that attended—big mailers such as Time Inc., smaller mailers, unions, the USPS’s competitors, as well as the occasional citizen gadfly—had the opportunity to argue for favorable postage for themselves, often at the expense of other special interests. Following these complex hearings, the commission would make pricing recommendations for the board of governors’ approval.
Such attempts to blunt Congress’s unseemly influence gave the USPS more control over its affairs and limited legislative micromanagement on a daily basis but left it still vulnerable to political interference. The legislature remained in charge of the funding for services such as free postage on materials for the blind and overseas voters that amount to less than 0.1 percent of the budget (about $70 million in 2014). Nevertheless, Congress used this seeming loophole to control the entire post in substantive ways, from deciding which new services it could offer to which post offices it could close.
The act that at least diluted the relationship between politicians and the post also reformed its relationship to its workforce—a contentious matter that had led to the strike that had jeopardized the law’s enactment. Congress, management, and labor had resolved that crisis by agreeing that employees would receive a wage increase of 8 percent, on top of a 6 percent hike for all federal employees, and would be able to reach the top of their pay grade in eight years. Now, the act also gave unions the right to bargain collectively on wages, benefits, and working conditions, although not the right to strike. (Postal salaries have continued to rise significantly, dividing public opinion along the lines foreseen by Clyde Kelly, who wrote that if the post were to become a business, the workforce “must be regarded as the devourer of revenues and every effort made to keep labor costs within the bounds of the amount derived from postage stamps.”)
Finally, the Postal Reorganization Act authorized the USPS to borrow the money required to bring its buildings and equipment into the twentieth century. Within a decade, even critics would begin to acknowledge the post’s technological transformation. The design and construction of the necessary buildings and machines took time, however, and throughout the 1970s, the struggling post had to deal with the exploding mail volume despite its inadequate facilities. One of its efforts to cope during this difficult period turned into a major advance in mail processing: a collaborative public-private process that’s now called “work sharing.”
The basic idea was not new. In 1943, the post had established a system in big cities that required bulk mailers of second- and third-class periodicals and advertising to sort their mail by zones according to the proper sequence for delivery. This policy greatly reduced the post’s workload by producing what was in effect presorted mail. The introduction of the ZIP code in 1962 and affordable corporate computers that could sort mailing lists automatically in the mid-1970s laid the groundwork for even more promising cooperative efforts.
Most of America’s mail is produced by businesses, and they naturally wanted to make the most of the new cost-effective, labor-saving procedures and technology. Reader’s Digest, then a publishing behemoth, offered to presort its mail and hand it over to the post ready for delivery in exchange for a favorable “first-class bulk rate”—a classification that didn’t exist then. The very notion of letting the hitherto sacrosanct first-class rates reflect the mailers’ work seemed heretical at first, but Robert Cohen and some other postal executives went further, proposing that the rates of first-, second-, and third-class mail should all reflect the extent of presorting. Strong-willed, forward-looking William Bolger, a former mail clerk who worked his way up to the postmaster general’s office in 1978 and served till 1985, agreed. To him, the controversial policy was a means both to increase mail volume and reduce the underequipped post’s workload, as well as its outlay for machines, buildings, and labor. Before long, the major publishers and the rest of the USPS’s management, if not the unions, embraced the policy of work sharing, which kept service affordable, helped to double mail volume, and tacitly semiprivatized mail processing—an important yet under-remarked change that highlighted the post’s role as a delivery system.
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THE POSTAL REORGANIZATION ACT had addressed a crisis long avoided, but the USPS’s start-up was predictably bumpy. It was not expected to become self-sufficient right away, and it got some public funding for its early years. Its defic
its soared, however, and its service was dodgy, particularly regarding parcels, which gave the previously limited United Parcel Service its big breakthrough. Some impatient legislators even called for a return to the old Post Office Department, on the grounds that the public service had been more responsive to the people’s needs—to say nothing of the fact that, as such, it would be back under the congressional thumb. As always, the postal reforms were more popular in the big cities, where public dissatisfaction was highest and service was most cost-effective, than in rural areas, where service was unprofitable, but people were more dependent on and happier with the post. Indeed, these historical regional tensions had nearly prevented Congress from passing the act in the first place. Texas senator Ralph Yarborough had led the opposition, evoking Old Hickory by thundering against substituting a “money corporation” for a public service that was “still the most efficient of any type of service in America.” The bill arguably became law only because it was framed as a “positive” bipartisan cause during the “negative” era of Vietnam and urban riots—and because legislators, whether cheerfully or not, had finally reconciled themselves to the end of the old spoils system.
Despite dissatisfaction in some quarters, in 1977, the blue-ribbon Commission on Postal Service, a group of business, labor, and civic leaders, reported that although the USPS needed more time to become self-sufficient, it was doing a pretty good job of delivering the mail for a fair price and didn’t need to be overhauled again. The group’s forward-looking recommendations for improving service included cutting mail delivery to five days a week, allowing small post offices to be closed if their postmasters had relinquished their positions, appropriating $625 million to eliminate the USPS’s outstanding debt from previous deficits, and allowing private carriers such as FedEx and UPS to expedite delivery of urgent letters in places where the post couldn’t. In a particularly prescient, woefully overlooked observation, the commission emphasized that electronic communication was poised to decimate the volume of first-class mail on which the institution depended, and that the post must either join the digital revolution or be annihilated by it.
How the Post Office Created America Page 27