In 1878 an agreement for an international money order service was signed by a considerable number of countries ; and at the same time an insurance service, which provided for payment of com pensation for loss or damage of letters containing documents of value (paper money, etc.) was established. This was later ex tended to cover insured boxes containing valuables such as gold or jewellery. The amount insured varies with the fee paid, and the maximum varies in different countries. The highest value for which a letter or box can be insured as io,000 francs or £400.
A further considerable advance was made in 188o, when 19 countries concluded a parcel post agreement. The original agree ment was limited to parcels not exceeding three kilogrammes; it prescribed a simple procedure and fixed rates of payment both for terminal and for transit countries. The scope of the service has expanded considerably since 1880. Over 7o post offices now take part in the service ; it has been extended to include parcels up to To kg. (22 lb.) ; and it now provides both for an insurance and a cash-on-delivery service. The agreements above mentioned are not adopted universally throughout the union ; for example, neither Great Britain nor the United States have adhered to the parcel post and money order agreements ; but where separate agreements have to be concluded, they generally follow with only slight variations the principles sanctioned by the union.
From time to time other agreements, of minor importance, have been concluded between various members of the union for the ex tension to international traffic of certain functions performed by the post office in the internal service. These are the agreements relating to "recouvrements" (collection of bills, payment of cou pons, etc., through the post) "abonnements" (collection of sub scriptions to newspapers and their delivery at specially low rates) and postal cheques. The latter provides for the transfer of money between postal cheque accounts in different countries, as a supple ment to the ordinary money order service.
1890 the rate on a letter to Australia or New Zealand was 6d., to India 5d., and to South Africa 4d. By degrees, however, the idea of establishing preferential postage rates on political grounds began to develop; and a decision of the postal congress of Wash ington in 1897 that the Postal Union Convention permitted the establishment of rates below the standard postage, coinciding with the growth of imperial sentiment in the British empire, led to the summoning of a conference to consider the possibility of imperial penny postage. The result was that in 1899 the rate of id. per half ounce was established to Canada, India, South Africa and the Crown Colonies generally; it was extended to New Zealand in 1901 and to Australia in 1905. A few years later (1908) the United States were included in the scheme. Throughout the various changes in letter postage brought about by the war the principle of maintaining the initial imperial letter rate at the same point as the initial Inland rate has been uniformly observed. The adoption of preferential rates has not been limited to the British empire, and a number of "restricted unions" have been estab lished. For example, the French internal rates are applicable to all the French Colonies : Germany has reduced rates to Austria, Czechoslovakia and Hungary : and the United States has low letter and newspaper rates to Canada.
The most interesting experiment in this direction is the forma tion of the Pan-American Postal Union, founded at Madrid in 1920 and developed at the congress of Mexico in 1926. To this the Latin American States, the United States and Spain are parties. The main provisions of the Pan-American Convention are that the maximum rates to be charged between one member and another are the inland rates of the country of origin, and that each member conveys the transit mails of any other member free of charge. The development of this union, and the effect of its policy both on postal traffic and on the finances of the countries concerned will furnish an interesting study in postal history.