NEW YORK (CNN/Money) -
Imagine a country where citizens pay just 3 cents for a postage stamp and mail gets delivered twice a day -- with letters commonly arriving at their destinations overnight.
Leonore Levine, 79, of Newtown, Pa., has been there and remembers it well.
But if you'd like to live there, you're too late. That was the United States in 1932, in the midst of the Great Depression. You won't get that kind of service for anything close to 3 cents today. In fact, effective June 30, the price of a stamp is increasing to 37 cents from 34 cents.
First-class stamps cost 3 cents from 1917 to 1919, during World War I. The price then dropped back down to 2 cents from 1919 to 1932, when it was again raised to 3 cents. It remained at 3 cents from 1932 to 1958, when it was raised to 4 cents.
Until 1971, the Postal Service was heavily subsidized by tax dollars and Congress set all stamp prices, explained Monica Hand, a spokesperson for the U.S. Postal Service. That added funding, plus Congress' unwillingness to raise rates, helped stamps stay at the 3-cent price for a whopping 26 years.
Inflationary tendencies
When Levine was a little girl, the world was a different place.
"A woman I knew when I was a little girl would give me a quarter and send me down the street to get her a pack of cigarettes," she added. "They cost 20 cents, and the nickel was mine to buy an ice-cream cone."
Inflation -- the general increase in prices reflected across the entire economy -- is mostly responsible for the vast increase in prices since Levine was in knee socks. Inflation isn't necessarily a bad thing; after all, incomes inflate (most of the time, anyway) along with everything else. For example, when Levine was 17, her first job paid $1,080 a year. But lunch, including a sandwich, dessert and coffee, cost her 35 cents.
To put these things in perspective, you need to work out what yesterday's dollars would be worth today after accounting for the overall change in prices over time.
Say you went shopping for a few things to make breakfast in 1932. A pound of butter would have cost you 28 cents. Sounds like a bargain, but that's $3.44 in today's dollars. Today, butter actually costs $3.28, according the Bureau of Labor Statistics. Bacon retailed for 25 cents a pound, or $3.10 a pound in inflation-adjusted dollars. Today, the real price of bacon is about $3.32. A little higher, but not too bad.
You can use our "30 years of Money" inflation calculator to see what's happened to other prices over the years. Our preset screens are set to compare 1972 prices to today's prices, since 1972 was the year Money magazine began publication. You can select any year you want, though. Just type in an amount, select a year, and see what that amount would be worth in today's dollars.
Postal pressures
According to our inflation calculator, the 3-cent cost of a postage stamp in 1932 translates to 37 cents today. As it happens, that's exactly what the price of a stamp is about to increase to effective June 30.
Mind you, a 3-cent postage stamp in 1958 translates to 19 cents today -- about half of today's price.
For that 37 cents, our mail gets delivered just once a day, six days a week. Sometimes, letters still arrive overnight, but you have to pay dearly to guarantee it: Express Mail for up to an 8-ounce envelope costs $12.45, with guaranteed delivery by noon the next day.
It's not just inflation driving up postal rates, though. The recent decline in mail volume -- the first since the U.S. Postal Service became an independent entity that runs without tax funding in 1971 -- means there's less money to fund operations. Because the Postal Service receives no money from taxes, products and services must generate enough to cover its operations.
U.S. Postal Service spokesman Gerry Kreienkamp attributes the recent decline in mail volume to the recession's effects on the advertising mail market, the after-effects of terrorism, and some diversion to e-mail as well.
"The Postal Service also has a universal service obligation," he explained. "We're supposed to deliver to every address, and the number of addresses grows by 5,000 a day or so. That means new routes are added, so fixed costs rise even as mail volume declines."
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