Conflict of Goals

Whatever happens to prices in the rest of the economy, postal rates seem to do nothing but zoom. Last week the financially troubled U.S. Postal Service formally applied to the Postal Rate Commission for a 26% across-the-board boost in rates. Though the commission will spend a year considering the proposal, the service will be allowed to lift rates on a "temporary" basis shortly after Christmas. The Postal Service noted that it is currently losing $2.6 billion a year, and even after the next increase it will lose "hundreds of millions of dollars" this fiscal year, which began July 1. Altogether, the new rate hikes will swell revenues by $2.4 billion a year.

Under the proposed increase, the cost of mailing a first-class letter weighing up to 1 oz. would, as expected, rise from 10-c- to 13-c-; each additional ounce would cost 11-c-. The lowly post card would go up from 7-c- to 10-c-. Under the new schedule, the cost of second-class mail used to ship newspapers and magazines will go up 22.1%. That jump comes on top of other second-class rate rises totaling 127% since 1971--and poses an economic threat for many publications. Third-rate bulk mail, under the new rate schedule, will climb 23.9%, and parcel post, 10.1%.

Large Subsidy. According to many experts, the Postal Service's chronic financial squeeze stems from a conflict of goals. Under the Postal Reorganization Act of 1970, the U.S.P.S. must operate as a public service, so postal authorities regard themselves as being obliged to continue performing many uneconomic operations, such as delivering mail door-to-door instead of at a central pickup point. Yet the law also insists that the Postal Service attempt to be selfsupporting. Postmaster General Benjamin F. Bailar is urging Congress to undertake a study to determine whether the U.S.P.S. needs an increase in the $920 million federal subsidy it now gets, the so-called public service payment. To hold down deficits and head off rate increases in the years ahead, Bailar also wants Congress to double the present subsidy during the two or three years that such a complicated study of the Postal Service is likely to take.

Union Threat. Meanwhile Bailar is working to cut the Postal Service's costs and improve efficiency. In Portland, Ore., a program to reduce wasted costs and effort by ensuring that all carriers handle an equal amount of mail has been tried. The powerful 245,000-member National Association of Letter Carriers is likely to fight Bailar's proposal on the ground that it is an illicit speedup. Bailar also plans to hold down new hiring by exercising more vigorously the Postal Service's right to move workers from one job to another.

Finally, postal authorities also will study ways to reduce the number of small post offices by combining districts where feasible. Only recently, the General Services Administration, Congress's financial watchdog, reported that up to 12,000 of the nation's 31,000 post offices could be eliminated at a saving of $100 million a year, with practically no loss in efficiency. Yet considering the demands made upon the nation's Postal Service, it may well be unrealistic to expect that even with improved efficiency it can ever be truly selfsupporting.

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