Rowland Hill has pointed out that from 1815 to 1835 the population had increased from 19,552,000 to 25,605,000 while the net revenue from the Post Office had remained practically stationary. He said nothing, however, about the industrial depression of the country during that period nor of the political and economic crisis through which England was passing. He referred to the great increase in the postal revenue of the United States during the same period; on the one hand, a nation with immense natural resources and a population doubling itself every generation, and on the other hand, a people inhabiting two small islands, making heroic efforts to recover from a most burdensome war.
With the introduction of penny postage the gross revenue of the Post Office fell from £2,390,763 in 1840 to £1,359,466 in 1841, and did not fully recover from the decreased postage rates for twelve years. The cost of management, on the other hand, increased onlyfrom £756,999 in 1840 to £858,677 in 1841. But the financial loss is shown most plainly in the falling off in net revenue from £1,633,764 to £500,789. If we exclude packet expenses, and such was the practice until 1858, the net revenue did not again reach the maximum figure of high postage days until 1862. Including packet expenses we find that the net revenue did not fully recover until the early seventies. The average yearly gross revenue for the period from 1841-45 was £1,658,214, expenditure £1,001,405, and the net revenue £656,809. These all increased steadily and on the whole proportionately until 1860, the average yearly figures for the preceding five years being £3,135,587, £1,785,911, and £1,349,676. In 1858 the packet expenses are included under cost of management and their enormous increase from the beginning of the century sadly depleted the net revenue. It seems more advisable, however, not to include them until 1860 when the packets passed from the control of the Admiralty to that of the Post Office. The average gross revenue for the years 1861 to 1865 was £4,016,750, expenditure (including packets) £3,013,389, and net revenue £1,003,341. During the next quarter of a century these increased to £6,326,141, £4,019,423, and £2,306,718 respectively, exclusive of telegraph receipts and expenditures. For the five years ending 31st March, 1906, the average gross revenue was £15,926,905, expenditure £11,156,292, and net revenue £4,770,613.[730]
THE QUESTION OF MONOPOLY
The question of the state's monopoly and the opposing efforts of the interlopers to break this monopoly resolves itself into a consideration of the way in which private letters were carried, for the public letters were entirely at the disposal of the state to be dealt with as it saw fit. From the sixteenth century there were several ways in which private letters might be conveyed. Within the kingdom they might be sent by the common carriers, friends, special messengers, or the Royal Posts. Letters sent abroad were carried by the Royal Posts, the Merchant Adventurers' Posts, the Strangers' Posts, and the Merchants' Posts while they lasted. The fact that private letters were conveyed by the Royal Posts is generally expressed in rather indefinite terms or by references to proclamations, but that they were actually so conveyed is entirely beyond doubt.[731]In 1585 a certain Mr. Lewkenor informed Walsingham that the post just landed had brought many letters directed to merchants, besides those for the Court and Government. He asked whether he might open those letters which were directed to suspected merchants.[732]This reference is of course to letters coming from abroad. The same holds true of inland letters, for in 1583 Randolph, the Postmaster-General, wrote to Walsingham, enclosing the names of those "who charge the posts with their private letters and commissions at a penny the mile."[733]
In 1591 the first proclamation affirming the government monopoly in the foreign posts was issued. All persons except the Postmaster-General and his deputies were forbidden "directly or indirectly to gather up, receive, bring in or carry out of this realm any letters or packets," the only exceptions being in the case of thedespatches of the principal Secretaries of State, of Ambassadors, and others sufficiently authorized. An appendix to the same proclamation commanded all mayors, bailiffs, sheriffs, justices, etc., and especially all searchers to be on the watch for men coming into or going out of the realm with packets or letters. In this last part of the proclamation we can see why it was thought necessary to restrict the carriage of letters to and from foreign countries to the Royal Posts. It was done that the Government might be able to discover any treasonable or seditious correspondence. This did not always remain the object of the state in restricting competition but was succeeded later by other and different motives. In order that there might be no doubt about the whole question, the Postmaster-General received word from the Council to inform the London merchants, foreigners as well as British subjects and all others whom it might concern, that they should no longer employ any others to carry their letters than those legally appointed in accordance with the terms of the proclamation.[734]
In 1602 the first order concerning the despatch of private letters within the kingdom was issued to the Royal Posts. "The Posts for the Queen's immediate service"[735]were allowed to carry only state despatches, directed by members of the council, the Postmaster-General and certain officials. Such despatches when sent by the regular posts were to be forwarded immediately. The letters of all other persons allowed to write by post must wait for the regular departure of the postmen. In the orders to the posts issued in 1609, the first article reads as follows: "No pacquets or letters shall be sent by the Posts or bind any Post to ride therewith but those on Our special affairs."[736]The first part of this is certainly strong but it is modified by the succeeding clause "nor bind any Post to ride therewith." Evidently he might if he wished, and he would probably hesitate longer over a state packet for the conveyance of which he was never assured of anything than over a private letter for which he was certain of his pay.
It was the custom after 1609 to follow the appointment of everynew Postmaster-General with a proclamation assigning him and his deputies the sole privilege of carrying all letters and reading anathema upon all interlopers.[737]Thus King James favoured Stanhope, his Postmaster-General, with a grant of monopoly.[738]On de Quester's appointment as Foreign Postmaster-General a proclamation was issued, forbidding any but his agents from having anything to do with foreign letters.[739]In spite of the improvements which he inaugurated, we find him asking the King a few years later to renew his patent of monopoly and his request was granted.[740]He was evidently suffering from competition. But the Merchant Adventurers' Posts were not yet dead and their Postmaster, Billingsley, abetted by the House of Commons,[741]gave de Quester so much trouble that he was imprisoned by the Council's order.[742]
In the meantime the postmen on the London-Plymouth road had petitioned the Council that they alone should carry the letters and despatches of the merchants over their road. They said they had so improved the service between London and Plymouth that letters were now despatched between the two cities in three days and an answer might be received within one week from the time of first writing. Their complaint was against a certain Samuel Jude, who had undertaken the conveyance of the London merchants' letters. Jude himself acknowledged this, but said that he had never meddled with the "through" post by which he meant the travellers' post.[743]
So long as the Royal Posts did not give satisfaction, competition was inevitable. Under Witherings they had improved so much that what competition there was, received no support from the London merchants. In 1633 they addressed a petition to the King, praying that he would protect Witherings from some strangers in London,who had set up posts of their own. They pointed out how he, acting with some foreign postmasters, had set up packet posts, travelling day and night. By means of these, letters were conveyed between London and Antwerp in three days, while the messengers needed from eight to fourteen days to travel the same distance.[744]The common carriers were giving trouble in the despatch of inland letters at the same time that competition in the foreign posts was attracting attention.[745]It was their custom to send their carts on ahead while they lingered to collect letters. After the collection they hastened on, leaving their carts behind, and delivered the letters on the way. It was provided that no carrier should stay longer than eight hours in a place after his cart had left it, or arrive in any place eight hours ahead of it.[746]As long as their speed was governed by that of their lumbering carts over the wretched roads, no fear was felt that their competition would prove troublesome.
With the growing strength of Parliament, more and more opposition was made to the grants of monopoly and their enforcement. In 1642 the House of Commons passed a resolution "affirming that the taking of the letters from the several carriers and the several restraints and imprisonments of Grover, Chapman, Cotton, and Mackerill are against the law." The House proceeded to state that these several persons should have reparation and damages from Coke, Windebank, and Witherings.[747]Four years later a report was made by Justices Pheasant and Rolls on Witherings' patent.[748]They held that the clause of restraint in the grant to Witherings was void.[749]This decision was quite in accordance with the views of Parliament when they opposed the King and all his works. But after Parliament had obtained control of the Posts, "the President and Governors of the Poor of the City of London" proposed to the Common Council that the City should establish a postal system in order to raise money for the relief of the poor in London. A committee was appointed to inform Warwick, Prideaux, and Witheringsof their intention. At the same time an attempt to lay a petition before Parliament on the question failed. Counsel's advice was sought and obtained in favour of the undertaking and in 1650 the Committee received orders to settle the stages. At the end of six weeks they had established postal communications with Scotland and other places. Complaint was made to Parliament, and the Commons passed a resolution "that the office of Postmaster, inland and foreign, is and ought to be in the sole power and disposal of the Parliament." The same year the city posts were suppressed.[750]
Oxenbridge and his friends who had set up posts of their own gave Prideaux and Manley the hardest fight that any Postmaster-General ever had to encounter from interlopers. Joyce says that Oxenbridge had acted as Prideaux' deputy.[751]If this is so, he was soon up in arms against his superior. In accordance with the judicial decision that the clause in Witherings' patent giving him a monopoly of the carriage of letters was void, Oxenbridge, Blackwall, Thomson, and Malyn had undertaken the private conveyance of letters and had set up posts of their own. Prideaux had charged 6d.for each letter and had organized weekly posts from and to London. Oxenbridge charged only 3d.and his posts went from and to London three times a week. Prideaux then did the same and set up posters announcing that the interlopers' posts would be stopped. His agents assaulted Oxenbridge's servants and killed one of them. He also stopped his rival's mails on Sundays but allowed his own to proceed as on other days. In addition to his regular tri-weekly mails, Oxenbridge provided packet boats for Ireland and intended to settle stages between London and Yarmouth and the other places named by the Council of State.[752]To proceed in Oxenbridge's own words: "Suddenly contracts were called for. We offered £9100 a year through Ben Andrews, £800 more than was offered by Manley, yet Colonel Rich allowed Manley to take advantage of an offer made by Kendall then absent and not privy to it for £10,000 a year. Consideration had been offered by Council, but Manley had broken into our offices, taken letters, and had forbidden us fromhaving anything to do with the post." An order of the Council of State, bearing the same date as the grant to Manley, was sent to Oxenbridge and his friends, informing them that Manley had been given the sole right to the inland and foreign letter offices.[753]This did not end the controversy, for six months later we find Oxenbridge and Thomson complaining that a monopoly in carrying letters had been given to Manley. They claimed that all who wished should be allowed to carry letters at the ordinary rates.[754]
Of all the interlopers up to the middle of the seventeenth century, Oxenbridge had proved himself by far the ablest. From the point of view of the legal decision of 1646 and the position of Parliament before 1640, his position was unassailable. With the present policy of the Post Office in view, his actions will probably be condemned by the majority. But in 1650 conditions were entirely different. Before 1635 the state had either tacitly allowed the carriage of private letters to the profit of the postmen or had officially taken over such carriage; but in this case it was largely for the purpose of keeping in touch with the plots of the times. For 200 years after 1635 the idea was to make money from the conveyance of private letters. The effects of Oxenbridge's efforts were certainly beneficial if we are to believe his own story. Prideaux had been forced to cut his rates in half in order to meet competition. The credit for this must lie with the interloper rather than with the monopolist.
At the same time that Oxenbridge was giving so much trouble, letters were being carried by private hands in Bury, Dover, and Norwich. The offenders were summoned before the council for contempt and severely reprimanded.[755]Petitions came from Thetford and Norwich complaining that their messenger had been summoned to present himself before the Council within twenty-four hours and had to travel 100 miles within that time, an impossibility in the opinion of the petitioners.[756]As late as 1635, Prideaux, the Attorney-General, gave his opinion that Parliament's monopolistic resolution of that year affected only the office of Postmaster-General and not the carrying of letters.[757]Perhaps this was only a bit of spite on his part after Manley had succeeded to his old position.
The usual monopolistic powers, hitherto granted by proclamation, were embodied in the first act of Parliament, establishing the postal system for England, Ireland, and Scotland in 1657. The Postmaster-General was given the sole power to take up, carry and convey all letters and packets from and to all parts of the Commonwealth and to any place beyond the seas where he might establish posts. He alone was to employ foot posts, horse posts, and packet boats. Some exceptions were made to these general rules. Letters were allowed to be conveyed by carriers so long as they were carried in their carts or on their pack-horses. The other exceptions were in the case of letters of advice sent by merchants in their ships and proceeding no farther than the ships themselves, and also in the case of a letter sent by a special messenger on the affairs of the sender, and in the case of a letter sent by a friend. Penalties were attached for disobedience to this part of the act, one half of the fine to go to the informer.[758]The same provisions were enacted almost word for word in the act of 1660, with the addition that letters might be carried by any one between any place and the nearest post road for delivery to the postman.[759]
After the restoration and for some months before the act of 1660 was passed, Bishop had acted as farmer of the posts. In the absence of any law on the subject, the King's proclamation granting a monopoly[760]to Bishop was freely disregarded.[761]Competing posts to and from London sprang up, lessening the receipts which he would otherwise have obtained from the carriage of letters. It was calculated that during the three months before these interlopers could be suppressed Bishop lost £500 through them, and orders were given to allow him an abatement in his rent to that amount.[762]
In 1663 a certain Thomas Ibson attempted to come to an agreement with the postmasters on the Holyhead road. He wished tohave the privilege of horsing travellers and made an offer to the postmasters to take charge of the post houses if they would allow him to proceed. He told them that they should make an attempt to have their salaries restored to their old value by Bishop, who had raised so much from them by fines and lowering their salaries. The Postmaster-General told his deputies that if they dared to treat with the "would-be" interloper he would dismiss them, and the whole thing fell through.[763]At the same time a warrant was issued by the Council to mayors and other officials to search for and apprehend all persons carrying letters for hire, without licence from the Postmaster-General.[764]Nevertheless interloping did not cease, as is shown by the complaints from the postmasters.[765]
In the proclamation following the appointment of O'Neale as Postmaster-General in 1663, it was ordered that no one should dare to detain or open a letter not addressed to himself unless under a warrant from one of the Secretaries of State. An exception was made in the case of letters carried by unauthorized persons. Such letters should be seized and sent to the Privy Council. In later proclamations it was provided that they might be sent also to one of the Secretaries of State in order that the persons sending or conveying them might be punished.[766]
After Lord Arlington's appointment as Postmaster-General, he addressed a petition to the Duke of York complaining "that carriers, proprietors of stage coaches and others take upon themselves to collect letters to an incredible number and on some stages double what the post brings." On account of this he pointed out to His Royal Highness that a considerable part of his revenue was lost. This was quite true since the Post Office had ceased to be farmed and the whole net revenue went to the Duke.[767]This was followed the same year by a proclamation forbidding any one to collect or carry letters without the authority of the Postmasters-General. Carriers were forbidden to convey any letters which were not on matters relating to goods in their carts. Shipmasters must carry no letters beyond the first stage after their arrival in England with theexception of the letters of merchants and owners. Searchers were appointed to see that the proclamation was enforced.[768]It was even proposed to suppress all hackney coaches, the principal reason given being that they decreased the value of the Duke's monopoly by carrying multitudes of letters.[769]
It is a curious and interesting fact that for a short time London had a Half Penny Post, established in 1708 by a Mr. Povey in opposition to the regular Penny Post. The idea was much the same as that of Dockwra's although Povey seems to have been a far more belligerent individual than his forerunner in the work. The Postmasters-General tried to come to some compromise with him but he would not listen to them. Finally legal action was brought against him, based on the monopoly granted by the act of 1660. Povey lost the suit and his project fell through.[770]His was the last attempt to organize a regular system of competing posts. During the remainder of the eighteenth century, improvements in postal communications disarmed much of the former opposition. Considerable damage was received from the superior speed with which letters might be sent by coaches but, after they were adopted by the Post Office, matters naturally adjusted themselves. Private vessels continued to convey letters which had not paid the rates prescribed in such cases by the act of 1711, but this breach of the law was tolerated by the Post Office.[771]
Before the nineteenth century, opposition to the government monopoly had taken the form of competing systems of communication, started primarily for the sake of making money and at the same time vindicating the principle of competition. During the first forty years of the nineteenth century there was no opposition to the Post Office as a monopoly. The widespread dissatisfaction was due to the exorbitant rates of postage and this dissatisfaction expressed itself in attempts to evade these rates but, with the exception of individual messengers and carriers, there was no competing system of postal communication established. Opposition took the form of evasion of postage payments by legal and illegal means. The various exceptions to the government monopoly continuedunchanged[772]until still further modified in 1837. The additional modifications were in the case of commissions and returns, affidavits, writs and legal proceedings, and letters sent out of the United Kingdom by private vessels.[773]The penalty for infringing upon the postal monopoly was placed at £5 for every offence or £100 a week if the offence was continued.[774]
During the official postal year from July 1831 to July 1832, there were 133 successful prosecutions for illegally sending and conveying letters. The fines collected amounted to £1635, the costs paid by defendants to £1085. The prosecutions were generally for a few letters only and the great majority of the cases were brought in Manchester. In the case of forty-one additional actions, the Postmaster-General did not enforce the penalties, certain explanations having been given.[775]Rowland Hill thought that the conveyance of letters by private and unauthorized people was very widespread and the Solicitor of the Post Office agreed with him.[776]
The reports of the Committee appointed to enquire into the condition of the Post Office and to hear the opinions of officials and the public concerning the introduction of Penny Postage disclosed an amazing state of affairs. The opinion that evasion of postage was more or less general had been held by the public for some time as well as by a few of the Post Office officials[777]but, after the evidence upon the question was published, there was no longer any doubt that the views of the public were correct. Some difficulty had been anticipated that men who had violated the law of the land would prefer not to confess their misdeeds before a Parliamentary Committee. They were accordingly assured that any evidence given would not be used against them, and the names of some were expressed by letters only, when the reports were published.
The means by which postage rates were evaded may be conveniently grouped under two main heads, legal and illegal. The mostcommon methods of evading postage in whole or in part by legal means were:—
By the use of Parliamentary and Official franks.[778]By enclosing invoices and other communications in goods.[779]By the use of codes and signals expressed by sendingparticular newspapers or, when something in the natureof news or reports was to be communicated to many, anadvertisement or report was printed in a newspaper andthe newspapers were sent.[780]By means of a letter or package sent to a mercantile housewith many letters on one sheet of paper for other people.These were delivered by messengers. Money was sometimessent in the same way.[781]
Many factors in Ireland had circulars printed, which went free, as newspapers. Their correspondents were distinguished by numbers and opposite the numbers were printed the communications for each particular person.[782]
The majority of letters which paid no postage or only partial postage were sent illegally, most of them by carriers. "A. B." said that in 1836 his mercantile house sent 2068 letters by post and 5861 by other means, principally by carriers, for one penny each.[783]"C. D." testified that carriers called once or twice a day at his house and that they received from 100 to 150 letters a week from him. Sometimes the carriers delivered the letters on foot, sometimes they went by coach.[784]"E. F.'s" letters were carried by newsmen, who distributed the local newspaper.[785]"G. H.," a carrier from Scotland, said that there were six others working with him and that they delivered about 700 letters and parcels a day, for which they received 1d.or 2d.each.[786]Letters were also illegally conveyed:—
By "free-packets," containing the patterns and correspondence of merchants, which the coachmen carried free except for the booking fee of 4d.[787]
In warehousemen's bales and parcels.[788]
In weavers' bags, especially near Glasgow. These were bags containing work for the weavers, sent by and returned to the manufacturers.[789]
By "family-boxes." Students at college in Glasgow and Edinburgh were accustomed to receive boxes of provisions, etc., from home. The neighbours made use of them to carry letters.[790]
By coachmen, guards, travellers and private individuals.[791]
By vans, railways, stage-coaches, steamboats, and every conceivable means.[792]
By writing in newspapers, sometimes with invisible ink or by enclosing accounts or letters in them.[793]
About half of the letters and parcels sent to the seaports for transmission to foreign parts by private ships did not go through the Post Office,[794]and this practice was more or less winked at by the authorities.[795]The letters from Liverpool for the United States numbered 122,000 a year, but only 69,000 of these passed through the Post Office.[796]
Since the Post Office has adopted the policy of charging low uniform rates of postage there has been no concerted attempt to infringe upon its monopoly. The dissatisfied do not now attempt to establish competing posts nor to evade the payment of the legal rates. Any pressure which may be brought to remedy real or supposed grievances takes the form of an attempt to influence the department itself. It is true that a private messenger service was established for the delivery of letters, but the promoters of that service seem to have been unaware of the fact that they were acting in violation of the law, and a satisfactory agreement with the department was soon concluded. As a matter of fact, it is a questionwhether succeeding governments have not been too subservient in granting the demands of certain sections of the people, notably in connection with the telegraph and telephone systems and the question of guarantees. The position of a government which has abandoned the principle that any extension of services or change in postal policy shall be based upon present or anticipated financial success must necessarily be a difficult one.
THE TELEGRAPH SYSTEM AS A BRANCH OF THE POSTAL DEPARTMENT
Previous to the acquisition of the telegraphs by the state, the different telegraphic companies carried on their business in comparative harmony, a harmony which was occasionally disturbed by the entrance into the field of competition of new claimants for the confidence of the public. By far the most important of these companies in 1855 were the Electric and International, and the British and Irish Magnetic, controlling between them about 8500 miles of line and having 600 stations open to the public. During the succeeding ten years, by the growth of the old companies and an increase in the number of the new, the number of miles of line increased to 16,000, of telegraph stations to 2040. The number of public messages sent in 1855 was a little more than one million, in 1860 nearly two millions, and in 1865 over four millions and a half. The rates for a message of twenty words varied from 1s.for a distance under fifty miles, plus 1s.for each additional fifty miles, to 4s.for a distance over 150 miles and 5s.to Dublin, including free delivery within half a mile from the telegraph office.[797]
In 1860 a competing company, the London District Telegraph Company, started operations in the Metropolitan District, and offered a low rate of 6d.a message. In the following year a far more dangerous rival, the United Kingdom Telegraph Company, announced that henceforth it would charge a uniform shilling rate irrespective of distance. Four years later both of these companies fell into line, forced according to some by the unfair tactics of their competitors, according to others by the utter impossibility of making both ends meet, while charging a uniform rate irrespective of distance. The tariff agreed to in 1865 was as follows:—
In some cases these rates applied only to wires of a single company, and, where a message was transmitted over the wires of two or more companies, an additional charge was made. Special rates were offered for press messages, the news being supplied by the agency of the intelligence department of the telegraph companies.[798]
The earliest proposal for government ownership of the telegraphs seems to have originated with Thomas Allan, the same Allan who was later instrumental in establishing the United Kingdom Telegraph Company. In 1854 he submitted arguments to the government through Sir Rowland Hill in favour of the change, arguments which met with the approval of Lord Stanley, the President of the Board of Trade, and Mr. Ricardo, formerly Chairman of the International Electric Telegraph Company, and ex-member for Stoke. Two years later Mr. Barnes, an official in the Post Office Department, submitted to my Lords a plan "for the establishment in connection with the Post Office of a comprehensive scheme of electric telegraphs throughout the kingdom." In 1866, Lord Stanley, as Postmaster-General, in a letter to the Lords of the Treasury called their attention to the fact that the question of the propriety of the assumption by the government of the telegraphic systems of the Kingdom had been revived in the previous year by the Edinburgh Chamber of Commerce, and still more recently the proposition had been embodied in a petition from the Association of Chambers of Commerce of the United Kingdom. As he himself had for many years been in favour of such a change and found his opinion shared by more than one important body of public men, he directed Mr. Scudamore[799]to report whether, in his opinion, the telegraphs could be successfully operated by the Post Office, whether such operation would result in any advantages to thepublic over the present system by means of private companies, and whether it would entail upon the department any large expenditure beyond the purchase of existing rights.[800]
The report presented by Mr. Scudamore was strongly in favour of the control of the telegraphs by the Post Office, and is especially interesting in furnishing an abstract of the evils which the people considered that the companies were inflicting upon them. The most important of these evils, real or imaginary, were as follows:—
Exorbitant charges and a resulting failure to expand on the part of the system.
Delay and inaccuracy in the transmission of messages.
Failure to serve many important towns and communities.
Inconvenient situation, in many places, of the telegraph office, it being often at a considerable distance from the business centre of the town, especially when in the railway station.
Inconveniently short periods that offices are open in many places.
Wasteful competition between the companies.
The strongest argument against the existing condition was rather a result of competition than private ownership. In the more populous centres the companies very often had their telegraph offices at a very short distance from each other, being so situated as to compete for the public patronage, while other and more outlying portions of the town were quite unserved. The latter were thus made to suffer in order that favoured portions might enjoy the somewhat doubtful boon of competition. In order to show the failure to extend telegraphic facilities, Mr. Scudamore compiled a list of towns in England and Wales having an individual population of two thousand or more. In his own words "So far as telegraphic accommodation is concerned, while thirty per cent of the whole number of places named ... are well served, forty per cent are indifferently served, twelve per cent badly served, and eighteen per cent, having an aggregate population of more than half a million persons, not served at all." By combining the telegraphic business with the postal service, there seemed every reason to suppose that its advantages could be more widely extended, the hoursof attendance increased, charges reduced, and facilities given for the transmission of money orders by telegraph.
Mr. Scudamore proposed to open telegraph offices in all places which had a population of 2000 and upwards and which already had money-order offices. All other post offices were empowered to receive telegrams, which were to be sent by post to the nearest telegraph office for transmission. The charge was to be made uniform at 1s.for twenty words and 6d.for each additional ten words, or part thereof. He judged that the whole of the property and rights of the telegraph companies might be purchased for a sum within £2,400,000, and £100,000 more would have to be spent in the extension of the service. His estimate for gross annual product was £676,000; annual charge, £81,250; working expenses, £456,000; surplus, £138,750.[801]Finally, his reply to Lord Stanley's question was in effect that the telegraph system might be beneficially worked by the Post Office, that there would be advantages thus obtained over any system of private ownership, and that the Post Office would have to bear no expense not amply covered by the revenue.[802]In fairness to Mr. Scudamore, it should be remembered that his original low estimate of the probable cost of the telegraph companies did not include Reuter's and other important companies. In addition, the strict monopoly conferred in 1869, with the necessary accompaniment of the purchase of all inland telegraph companies, entirely upset his original estimates. Finally, the decision to include the public telegraph business of the railways and the excessive price paid to the railway and telegraph companies should not be forgotten in contrasting the estimated price with that eventually paid for the acquisition of the telegraph systems in the United Kingdom.[803]Mr. Grimston, the Chairman of the Electric and International Telegraph Company, contended that the extension of telegraphic facilities to any considerable number of small towns and villages would involve a loss to the state by greatly increasing working expenses, that village postmastersand postmistresses were totally unable to work the telegraphs, and that consolidation could be effected more advantageously by the companies themselves.[804]
In 1868, the Postmaster-General was given authority by act of Parliament to purchase the undertakings of the telegraph companies and also the interests of the railways in the conveyance of public messages, together with a perpetual way-leave for telegraphic purposes over the properties of the railway companies. Any telegraph company, with the authority of two thirds of the votes of its shareholders, was empowered to sell to the Postmaster-General all or any portion of its undertaking. When the Postmaster-General had acquired the property of any telegraph company, he must also, upon the request of any other company, purchase its undertaking, this privilege being extended also to the railways so far as telegraphs operated by them for transmitting public messages were concerned. The price paid for the Electric and International, the British and Irish Magnetic, and the United Kingdom Telegraph Companies was fixed at twenty years' purchase of their net profits for the year ending 30th June, 1868. In the case of the United Kingdom Telegraph Company additional sums were to be paid for the Hughes type-printing patent, for the estimated aggregate value of its ordinary share capital as determined by its highest quotation on any day between the 1st and 25th days of June, 1868, for compensation for the loss of prospective profits on its ordinary shares, and any sum that might be determined as loss for its attempt to establish a uniform shilling rate. Every officer or clerk of the companies who had been in receipt of a salary for not less than five years or of remuneration amounting to not less than £50 a year for not less than seven years, if he received no offer from the Postmaster-General of an appointment in the telegraphic department of the Post Office equal in the opinion of an arbitrator to his former position, was entitled to receive an annuity equal to two thirds of his annual emolument if he had been in service twenty years, such annuity to be diminished by one twentieth for every year less than twenty. Those entering the service of the Postmaster-General were entitled tocount their past continuous years of service with the companies as years in the service of the Crown.
For the most part all the telegraph apparatus belonging to the railway companies and all belonging to the telegraph companies on the railway lines necessary for the private business of the railways were handed over to the railways by the Postmaster-General free of charge. He was given the use, from telegraph stations not on the railway lines, of all the wires of the telegraph companies on the lines employed exclusively in the public telegraph business. The railways might affix wires to the posts of the Postmaster-General on the line, and in like manner he might require the railways to affix wires to their own posts for the use of the Post Office or erect new posts and wires. Finally the railways were required to act as agents of the Postmaster-General, if required, for receiving and transmitting messages. The railways as a rule succeeded in driving a very sharp bargain with the Government for the purchase of their interests in the public telegraph business. The price paid was twenty years' purchase of the net receipts from public telegrams reckoned for the year ending 30th June, 1868, plus twenty times the increase in net receipts for the three preceding years or for such shorter period as the business of transmitting public telegrams had been undertaken. In addition, compensation was made for the rents, etc., payable to the railways by the telegraph companies, for the unexpired period of their respective agreements, for the right of way obtained by the Postmaster-General over the lands of the railways, for the loss of power on the part of the railways to grant way-leaves, for the value of the railways' reversionary interests (if any) in the transmission of public messages on the expiration of the agreements with the telegraph companies, and for any loss the railways might suffer in working their telegraph business as a separate concern. Finally the Postmaster-General was required to convey free of charge to any part of the United Kingdom all messages of the railways relating to their own private business.[805]The act empowering the Postmaster-General to purchase the undertakings of the telegraph companies did not confer upon the Post Office a monopoly in the transmissionof telegrams, Mr. Scudamore himself declaring that such a monopoly was neither desirable nor did the Post Office wish it. The second act, however, declared that no telegraphic messages, except those sent from or to any place outside of the United Kingdom, should be transmitted by any telegraphic company for gain unless the company was in existence on the 22d of June, 1869, and was not for the time being acquired by the Postmaster-General, who should be required to purchase its undertaking upon demand.[806]
Mr. Scudamore's original estimate of the cost of acquisition of the telegraphs fell far short of the final expenditure; although it must be remembered that, when he proposed £2,500,000 as sufficient, he did not anticipate items of expense which later vastly increased the cost. Before the committee which reported in 1868 he advanced his original estimate to £6,000,000, and in the following year to £6,750,000, of which he considered about two thirds to be of the nature of good-will. The telegraph companies when first approached asked for twenty-five years' purchase of their prospective profits, and the Government offered to buy at the highest price realized on the Stock Exchange up to the 25th of May, with an addition of from 10 to 15 per cent for compulsory sale. The cost of the leading companies, based upon twenty years' purchase of the net profits for the year ending 30th June, 1868, was as follows: For the Electric and International, £2,933,826; for the British and Irish Magnetic, £1,243,536; for Reuter's, £726,000; for the United Kingdom Electric, £562,000; and for the Universal Private, £184,421,—a total of £5,650,047. Separate bargains followed with many smaller companies. The acts of 1868 and 1869 granted £8,000,000, for the purpose of purchasing the undertakings of the companies and the interests of the railways; £6,640,000 were spent in purchases, and £1,560,000 in renewals and extensions between 1868 and 1872.[807]The claims for compensation on the part of someof the railways were very excessive. The Lancashire and Yorkshire Railway asked for £1,129,814, with interest, and £1 per wire per mile a year for all wires erected upon its right of way by or for the Post Office. By the terms of the award they obtained £169,197 and 1s.per mile per wire. The Great Eastern Railway presented a claim for £412,608, with interest, and £1 per mile per wire. Their claim was reduced to £73,315 and an annual payment of £200 for way-leave. In all, the capital sum of £10,880,571 was expended by the Government, necessitating an annual interest payment of £326,417, charged, not on the Post Office vote, but on the Consolidated Fund.[808]
When the Post Office acquired the telegraphs, a uniform rate was introduced of 1s.for twenty words or part thereof and 3d.for each additional five words or part thereof, exclusive of the names and addresses of sender and receiver, which were transmitted free. Delivery was free within a radius of one mile from the terminal telegraphic office, or within the limit of the town postal delivery when it contained a head office and the postal delivery extended more than a mile from it. Beyond the above limits the charge did not exceed 6d.per double mile or part thereof. When special delivery was not required beyond the free delivery, the message was sent free by the next ordinary postal delivery. The newspapers succeeded in having incorporated within the act a clause prohibiting a higher charge for press messages than 1s.for every one hundred words transmitted between 6P.M.and 9A.M., or 1s.for every seventy-five words between 9A.M.and 6P.M.when sent to a single address, the charge for the transmission of the same telegram to each additional address to be not greater than 2d.[809]On the day of transfer the Post Office was able to open about a thousand postal telegraph offices and nineteen hundred offices at railway stations where the railways dealt with the public messages as agents of the Postmaster-General. On the 31st of March, 1872, the system comprised more than five thousand offices (including nineteen hundredat railway stations), twenty-two thousand miles of line, with an aggregate of eighty-three thousand miles of wire, and more than six thousand instruments. A decided increase in the number of messages was the result. During the first year after the transfer there were nearly ten millions of messages, the second year twelve millions, and the third year fifteen millions, or more than double the number transmitted in 1869. The period from 1872 to the adoption of a sixpenny tariff in 1885 was one of steady progress. The number of new offices opened was not numerous, the increase having been only one thousand, but the improvements in existing connections were marked and the number of messages transmitted had increased to thirty-three millions. The new tariff rate was 6d.for twelve words or less, with a halfpenny for each additional word, but the old system of free addresses was abolished. Under the old tariff each figure was charged at a single rate. Under the new schedule five figures were counted as one word. A large proportion of telegrams were brought within the minimum sixpenny rate, while the average charge, which had been 1s.1d.in 1885, was reduced to 8d.in 1886. The number of messages increased from thirty-three millions in 1884-85 to fifty millions in 1886-87. Four cables between France and England and one between France and the Jersey Isles were purchased by the governments of the two countries, two by the Belgian and English governments, two between Holland and England, and one between Germany and England, by the governments of the countries interested.[810]
Following the adoption of a uniform sixpenny rate the department has granted other facilities to the public, which, though popular enough, have undoubtedly tended to place the working of the telegraphs upon a less secure financial basis. In 1889, the issue of telegraphic money orders was begun as an experiment, and in the same year was extended to all head and branch post offices in the United Kingdom.[811]Two years later the Post Office ceased to require the repayment of the capital outlay on telegraph extensions made under guarantee, and the rural sanitary authorities were empowered to defray the cost of such extensions in places withintheir districts.[812]For the six preceding years the average annual number of guaranteed telegraph offices was seventy-seven, and during the next five years the average annual number increased to 167. As part of the Jubilee concessions in 1897, the guarantors were required to pay only one half of the deficiency, with the result that during the following two years the average annual number of guaranteed telegraphic offices increased to 290. At the same time the free delivery limit was extended to three miles and a reduction was granted in the porterage charges beyond that distance. Finally, in 1905, the guarantee was reduced to one third of the loss incurred, the delivery charge being fixed at 3d.a mile for the distance beyond the three-mile limit, instead of the distance from the office of delivery.[813]
In 1896, the main routes from London having become crowded, especially by the telephone trunk lines, the principle of underground lines between the most important centres was sanctioned by the department. London and Birmingham were first connected, and the line was ultimately extended through Stafford to Warrington, where it joined existing underground wires between Manchester, Liverpool, and Chester. By 1905, underground wires were laid as far north as Glasgow through Carlisle, to be extended later to Edinburgh. At Manchester a junction was effected with a line passing through Bradford to Leeds. During the same year underground lines were completed from London to Chatham and from London westward toward Bristol, with the intention of extending it into Cornwall in order to secure communication with the Atlantic and Mediterranean cables.[814]
In 1875, England joined the other important European powers in a telegraphic agreement which went into effect in January of the following year. By this agreement each of the contracting parties agreed to devote special wires to international service, government telegrams to have precedence in transmission and to be forwarded in code if desired. Private telegrams could also be sent in code between those countries which allowed them, and thesignatory powers agreed to pass them in transit, but each country reserved to itself the privilege of stopping any private telegram. For the purpose of making charges, any country might be divided into not more than two zones, and each of the signatory powers owed to the others an account of charges collected.[815]So far as foreign telegrams were concerned, the use of manufactured expressions in place of real words gave rise to considerable trouble in view of the fact that such combinations were difficult to transmit. In 1879, the languages which might be used for code words were reduced by common consent to English, French, German, Italian, Spanish, Portuguese, Dutch, and Latin. At the same time the use of proper names as code words was prohibited. This did not remove the evil, as the roots of words in one language with terminations in another were used. An official vocabulary was compiled by the International Telegraph Bureau, to become obligatory in 1898, but its publication in 1894 aroused considerable opposition, as many of the words were dangerously alike, and in 1896 the decision of the Paris Conference of 1890, by which the official vocabulary was to become compulsory for European telegrams in 1898, was rescinded. It was also decided that an enlarged vocabulary should be published by the International Bureau, but, owing to the action of the English delegates, the official vocabulary was not made compulsory at the meeting of the International Telegraph Conference in 1903, although artificial words were allowed if pronounceable in accordance with the usages of any one of the eight languages from which the ordinary code words might be selected. It was also decided to admit letter cipher at the rate of five letters to a word, and several countries agreed to lower their charges for the transmission of extra-European telegrams, the English delegates contending that the rates for such telegrams should be made the same as the rates for European telegrams.[816]In 1878, negotiations with the German and Netherland Telegraph Administrations resulted in a charge of 4d.a word being fixed as the rate between the United Kingdom and Germany and 3d.a word between the United Kingdom and the Netherlands.
In 1885, the following reductions in rates were announced:—
To Russia from 9d.to 6½d.a word.Spain 6d.4½d.Italy 5d.4½d.India 4s.7d.4s.
to be followed six years later by still greater reductions:—
To Austria from 4½d.to 3d.a word.Hungary 4½d.3d.Italy 4½d.3d.Russia 6½d.5½d.Portugal 5½d.4½d.Sweden 5d.4d.Spain 4½d.4d.Canary Isles 1s.7½d.10d.
the minimum charge for a telegram being 10d.in all cases. The transmission of foreign money orders by telegraph was inaugurated in 1898 by the opening of an exchange with Germany and its extension shortly afterward to the other important European countries.[817]
In 1892, an attempt was made, curiously suggestive of Marconi's discovery, to transmit telegraph messages without a direct wire. The experiment was conducted between the island of Flat Holm in the Bristol Channel and the mainland, a distance of three miles. A wire was erected on the mainland parallel with one on the island, and, by means of strong vibratory currents sent through the former, signals were transmitted and messages exchanged. Three years later and before the practical value of the Flat Holm experiment had been substantiated, Mr. Marconi arrived in England to submit his plans to the Post Office. A private wire from Poldhu to Falmouth was provided for him on the usual rental terms, and it was announced that the Post Office would act as his agent for collecting messages to be transmitted by wireless telegraphy when he had proved the feasibility of his project. At the international congresson wireless telegraphy held in Berlin in 1903 it was recommended that shore stations equipped with wireless apparatus should be bound to exchange messages with ships at sea without regard to the system of wireless telegraphy employed by the latter, that the rate of charge for the shore station should be subject to the approval of the state where it was situated, the rate of the ship to the approval of the state whose flag it carried, and that the working of wireless stations should be regulated so as to interfere with other stations as little as possible. In order to enable the Government to carry out the decision of the congress and to place wireless telegraphy under its control for strategic purposes, an act was passed in 1904 making it illegal to instal or work wireless telegraphic apparatus in the United Kingdom or on board a British ship in territorial waters without the licence of the Postmaster-General. The act was to be operative for two years only, but before its expiration, was extended until the 31st of December, 1909, before which it might again be renewed. Arrangements were also made for the collection and delivery of the telegrams of the Marconi Company by the post offices throughout the country. The company charges its usual rate, 6d.. a word, and the Post Office in addition charges the ordinary inland rate.[818]The international agreement providing for compulsory communication between shore stations and ships was signed in 1906 in spite of the protests of the Marconi Company, Sir Edward Sassoon, and others, who contended that the agreement was unfair to the company and a mistake on the part of the Kingdom, "which was thus giving up advantages obtained by the possession of the best system of wireless telegraphy in the world." The majority of the countries represented were also in favour of compulsory communication between ship and ship, but this was successfully negatived by Great Britain and Japan. In 1908, Mr. Buxton was able to announce in the House that the relations between the Post Office and the Marconi Company "are now of the most friendly kind," and that they have accepted and adopted the principle of intercommunication. In the preceding year two experimental stations were started by theGovernment which will enable the department to extend its operations quite independently of the companies.[819]
From a financial point of view, government ownership and control of the telegraphs in the United Kingdom has not been a success. In addition, the Telegraph Department, for some time previous to 1874, had been drawing upon the balance in the possession of the Post Office, a balance which was required to be invested for other purposes and whose expenditure for the use of the telegraphs had not been authorized by Parliament. Mr. Goldsmid, in introducing a motion for the appointment of a committee of enquiry, alluded to this error on the part of the department, to the excessive price paid for the telegraphs, and complained that the telegraph system was not being operated on a paying basis. His motion was withdrawn, but an agreement was reached with the department by the appointment of a committee, with Mr. Playfair as chairman, "to inquire into the organization and financial system of the Telegraph Department of the Post Office." The committee in their report commented unfavourably upon the unnecessarily large force, the cumbrous organization, and the far from economical management of some of the divisions of the department, advised that an attempt be made to remedy these faults, and that press messages be charged a minimum rate of 1s.each, and not at the rate of 1s.for each seventy-five or one hundred words obtained by adding together separate messages requiring separate transmission. This suggestion with reference to press messages was adopted, promises were made at the same time to diminish the force, and a scheme was submitted for the reorganization of the department.[820]
The number of telegrams for the year ending 31st March, 1887, the year following the sixpenny reduction, was 50,243,639; for the year 1891-92 it had increased to 69,685,480. In 1896-97 the number was 79,423,556 and in 1899-1900 the total was 90,415,123. During the next three years there was a reduction, followed in1902-03 by an increase to 92,471,000. Since 1902-03 the number has again fallen off, the figures for 1906-07 being only 89,493,000.[821]It is rather difficult to make definite statements about the telegraph finances on account of the lack of uniformity in presenting the accounts since 1870. Under gross revenue is now included the value of services done for other departments, but this was not always the rule. The expenditure of other departments for the telegraph service may or may not be included under ordinary telegraphic expenditure. Net revenue may also be increased or a deficit changed to a surplus by deducting the expenditure for sites, buildings, and extensions from ordinary expenditure. Finally, the interest on capital is not charged on the Telegraph Vote, and so is not included under expenditure. In 1871, 1880, and 1881 there seem to have been surpluses over all expenditure, including interest on capital. Excluding interest from expenditure, the net revenue decreased from £303,457 in 1871 to £59,732 in 1875, when the pensions to officials of the telegraph companies were first charged to the Telegraph Vote. With an increased net revenue of £245,116 in 1876, following the report of the committee of investigation, the department did very well from a financial point of view, until 1884, when the net revenue fell to £51,255, and in 1887 there was a deficit of £84,078, due to the fact that expenses were increasing at a greater rate than receipts. The sixpenny reduction seems to have made but little change in the financial situation, the gross revenue increasing from £1,755,118 in 1884-85 to £1,855,686 in 1886-87, the expenditure for the same years being £1,731,040 and £1,939,734. The net revenue began to recover in 1888-89, and averaged about £150,000 a year during the four years ending March 31, 1892. During the fiscal years 1894 and 1895 there were deficits, then a slight recovery from 1896 to 1900 and a succession of deficits from 1901 to 1905. The interest on stock, £214,500 in 1870, increased steadily to £326,417 in 1880, at which figure it remained until 1889, when a reduction in the rate of interest from 3 per cent to 2-3/4 per cent lowered the amount payable to £299,216. In 1903, there was a further reduction to £278,483.[822]
The financial loss experienced by the Government in operating the telegraphs has naturally produced considerable interest in this phase of the question. Mr. Blackwood, the Financial Secretary of the Post Office, in his evidence before the committee, considered that the financial control and oversight of the department were inadequate and that the department was over-manned. On the other hand, he was of the opinion that many expenses were met by revenue expenditure which should have been charged to capital. Mr. Baines, the Surveyor-General, among other causes of the financial deficiency, called attention to the shorter hours and longer annual leave of the telegraph staff as government employees, the higher standard of efficiency established by the Post Office, and the prevalence of much overtime work as a result of the maintenance by the companies, just before the transfer, of an inadequate staff.[823]The fact that the yearly increase in messages continued to diminish after 1879 is commented on by the Postmaster-General in 1884 as due to the stagnation of trade, the competition of the telephones, and the rapidity of the letter post. Mr. Raikes called attention to the large number of telegrams on the business of the railways which were transmitted for nothing. By an agreement with several of the railway companies to send, as a right instead of a privilege, a fixed number of messages containing a fixed number of words, this increase was checked. In 1892, the following comment is found in the Postmaster-General's Report: "This stagnation of business, viewed in connection with an increased cost in working expenses, is a matter for serious consideration, and necessarily directs attention to that part of the business which is conducted at a loss," the reference being to the increased number of press messages transmitted at a nominal charge. When in 1868 the newspaper proprietors succeeded in obtaining the insertion in the Telegraph Act of special rates for the transmission of press messages, no condition was laid down that copies, in order that they might be sent at the very low charges there enumerated, should be transmitted to thesame place as the original telegram. The newspapers combined to receive messages from news associations in identical terms, and, by dividing the cost, obtained a rate equal on the average to 4½d.per hundred words. Under the arrangements adopted for the transmission of news messages the number of words so sent did not necessitate a corresponding amount of work, but it is an interesting fact that in 1895 the number of words dealt with for the press formed two fifths of the total number. In that year the loss on these telegrams was estimated at about £300,000 a year. The high price paid as purchase money is another of the factors to be considered, only in so far, however, as the Telegraphic Department has failed to meet the interest on the debt so incurred. The telegraph companies were very liberally treated, and in certain cases excessive prices were undoubtedly paid. Probably the most important reason for the financial failure of the telegraphs under government ownership and control has been the influence of forces productive of good in themselves, but quite different from those which had previously been dominant when the telegraphs were under private control and during the early years of government management. The effect of these forces is clearly seen in the reduction of the tariff in 1885, the extension of facilities under inadequate guarantee, and the increase in the pay of the staff.[824]Mr. Buxton is of the opinion that the worst feature of the postal business is the telegraph service. "It has never been profitable and now the telephone system has so largely taken its place that the revenue is falling off," while the "Economist" considers that "it is obvious that both in the Savings Bank and the Telegraph branches reforms are urgently needed in order to place matters on a sound financial basis."[825]