Rowland Hill was a former schoolmaster, whose only experience of the Post Office in the 1830s was as a disgruntled user.

Nobody had asked him to come up with detailed proposals for completely revamping it. He did the research in his spare time, wrote up his analysis, and sent it off privately to the chancellor of the exchequer, naively confident that "a right understanding of my plan must secure its adoption". //

What were the problems Hill identified? Back then, you did not pay to send a letter. You paid to receive one. The pricing formula was complicated and usually prohibitively expensive.

Hill's solution was a bold two-step reform.

Senders, not recipients, would be asked to pay for postage; and it would be cheap - one penny, regardless of distance, for letters of up to half an ounce, 14g.

Hill thought it would be worth running the post at a loss, to stimulate what he called "the productive power of the country".

But he made the case that profits would actually go up, because if letters were cheaper to send, people would send more of them.

A few years ago the Indian-born economist CK Prahalad argued that there was a fortune to be made by catering to what he called "the bottom of the pyramid", the poor and lower-middle class of the developing world.

They did not have a lot of money as individuals, but they had a lot of money when you put them all together.

Hill was more than 150 years ahead of him.

In 1840, the first year of Penny Post, the number of letters sent more than doubled. Within 10 years, it had doubled again.

It took only three years for postage stamps to be introduced in Switzerland and Brazil, a little longer in America, and by 1860, they were in 90 countries. Hill had shown that the fortune at the bottom of the pyramid was there to be mined.

Half a century on from Hill's Penny Post, deliveries in London were as frequent as hourly, and replies were expected by "return of post".

But did the Penny Post also diffuse useful knowledge, and stimulate productive power?

A group of economists recently came up with an ingenious test of this idea in the United States. They gathered data on the spread of post offices in the 19th Century, and the number of applications for patents from different parts of the country.

New post offices did indeed predict more inventiveness, just as Hill would have expected.