Stamp Act

I read this piece on a proposed 10 percent (37 cent to 41 cent) first-class postage increase in the Wall Street Journal that had a quite editorial statement in the second paragraph:

Such a rise would push the price of a first-class stamp to at least 41 cents -- and hurt consumers and businesses that already have shouldered three rounds of rate increases in the past few years.

The article also notes that First-class stamps have jumped 12% since early 2001. The rate won't take effect until 2006 if they get through the various hoops. The USPS says it's for inflation plus a pension contribution issue.

But I went and found historical postage prices and graphed them against inflation. In fact, in 2003 dollars, a 41-cent stamp will cost less than any time since 1974. Real dollar postage increase took place during the Depression amid inflation, when an increase in postage in 1932 doubled its actual cost. But that rate stayed in place until 1958, when an increase was still far below the 1932 dollar value of the previous postage rate. From 1958 to 1978, rates increased, fed partly by a privatization in the early 1970s. But rates have dropped and stayed in a narrow band since then.

The chart below shows postage value in the denominated dollars at the bottom. The Postal rate (blue) is that value in the bar chart. Red is the value adjusted for inflation at the end of the period during which the blue rate was charged. (Note this increases only from 1919 to 1932 because of deflation.) The yellow bar shows what the postage rate would have to be in current dollars to keep pace with inflation at the end of the period. The 2003 pace value is the 2003 dollar adjusted figure for the denominated value. So three cents in 1932 is 40 cents in 2003.