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value of whose whole capital before the Government scheme was broached (as shown by the Share List) was 170,0001. only. This booty the Report recommends to be dealt with hy allotting to each 25). shareholder 771. in cash, and also an 81. paid-up share in the continuing Company-handing to the senior counsel a bonus of 1,0001., and to the solicitor one of 2,0001.; to the secretary, 7501.; 5,0001. to Mr. Reuter; 4,0001. to the directors; and it is further recommended that • 2,0001. be placed at their (the directors') disposal for distri* bution among certain other persons whose services had been - of value in reference to the concession and in promotion of • the interests of the Company.' It would be interesting to know who these persons were and what were their services. An amusing proof of the high good fortune of a small telegraph company was afforded by a Chancery suit in which a person who had been employed to negotiate for the company with the Post Office sued his principals for remuneration. It appeared that he had bargained for a commission upon the amount to be got out of Government, which was to advance in a sort of geometric ratio. The minimum price he was authorised to accept was 5,0001., whereas he managed to obtain 25,0001. ; and the commission he claimed, and which was decreed to him by the Court, amounted to more than the whole of the minimum price which he was permitted to accept !
The recklessness displayed in the conduct of the negotiation seems to have been continued by the Post Office--as we gather from the reports of inquiries named at the head of this article -in its subsequent dealings with the companies, which really recall the favourite maxim of East Indians under the old régime -John Company has a strong back.' Indeed the back of John Post Office must be of Sampsonian capacity to bear the loads laid upon it. Excessive charges of all sorts have been submitted to, and in nıarly every dispute the Post Office has given way; indeed the extreme vagueness of the agreements of 1868, under which the c claims were made, perhaps rendered it unsafe to contest them.
Although the late Second Secretary informed the Parliamentary Committee in 1868 that the compensation to servants of the companies was to be paid by those bodies, it turned out that, under the agreements, this burden also had to be borne by the Post Office, thus further swelling the cost of the acquisition. Many of these persons have not only received handsome compensation for the loss of their places, but are employed by Government at wages far higher than they had ever obtained before. But prodigality and pinching are usually found together, and thus, with all this lavishness, some of the employés of the Department have been dealt with in a spirit of cruel parsimony, not receiving for their telegraphic work enough even to cover the disbursements occasioned by it.
The upshot of the whole business is that the purchase and extension of the telegraphs—which was originally estimated by Mr. Scudamore to cost 2,500,0001. (though after the agreements were made he calculated the purchase-money at 6,000,0001.), and although the portions purchased, had they been erected anew, could not have amounted to one million * ---has already cost the country nearly ten millions, while important claims of railway companies still remain to be met!
The estimates of working expenses and profits proved to be as untrustworthy as that of purchase. Thus, in 1869, the Postmaster-General told the House of Commons that if 4 per cent. interest was charged against the Post Office for the capital sunk in purchases and extensions, the net profits, after paying working expenses and interest, would be 44,0001. yearly, and if 3 per cent, only were debited, then 78,0001. would be realised. Now in the year ended March last, the excess of income over working expenses which went to meet the interest of capital-nearly 300,0001.—was 36,725l. only, leaving a deficit of about 260,0001. In June 1869 Mr. Scudamore presented to the Postmaster-General an estimate of the annual cost of working the telegraphic service, which amounted to 359,4841., whereas the Treasury Committee calculates the working expenses of 1875-6 at (exclusive of 293,7061. interest of capital) 1,191,1801.! Moreover, it was estimated that the additional officers needed for the telegraphic service would be 1,528 clerks and 1,283 messengers, while, even so early as 1870,
* The aggregate mileage of telegraphs bought by Government was 16,5884 (Return · Electric Telegraphs,' 1868, No. 202) only; and it was given in evidence to the Committee of 1868 that the cost of erecting a telegraph was from 271. to 301. a mile, which, however, probably did not include instruments and stations. Making every allowance for the expense of these and also for the value of a few marine cables which were included in the Government purchase, the cost of making anew what would be equivalent to all that was bought from the companies could not amount to 1,000,0001., particularly when we recollect that those bodies were rival concerns whose lines often duplicated each other. By making anew, too, the Post Office would have had the advantage of new plant of the most modern construction. Of course we do not maintain that it would have been just to take such a course without having first offered to the companies to purchase their concerns on fair and liberal terms.
4,913 of the former and 3,116 of the latter were employed; and it was deemed necessary to pay these persons far more highly than the companies had done. Much economy, too, was looked for from the unity of management of the Post Office; but it has turned out that, even under this head, the Department spends much more than did the companies. Under their arrangements with the telegraphic companies the railways carried materials for repair gratis, or at a very low rate; but now they exact full charges from the Post Office.
Our readers will not have forgotten the Post Office scandal, as it was called, of 1873, which was followed by the resignation of the Postmaster-General and the translation of Mr. Lowe from the Exchequer to the Home Office. We are far from desiring to rake up the details of a matter of which the public has already heard so much. And, indeed, the reports of the investigating committees are by no means agreeable reading, showing as they do a state of things such as has been unheard of for many years—on this side of the Atlantic, at least, and which we trust never to hear of again—when the Post Office authorities were compelled to admit that the Act of Parliament requiring the full receipts of the telegraphic service (as of the other revenue departments) to be paid without deduction into the Exchequer, had not only been violated, during the first difficulties attending the transfer of the telegraphs, to the extent of 812,8001.—to recoup the Consolidated Fund for which a Bill had to be carried through Parliament in 1871– but had been systematically set at nought during a long period subsequent to that transaction, and to the extent of some 800,0001. more without even the excuse, such as it was, of initial embarrassments. The cross-examination brought out that the Post Office accounts had been falsified in various ways -as by withdrawing large amounts of the Savings Banks' deposits----by placing to the Capital account numerous items which properly belonged to Revenue, including, indeed, such matters as coals, gas, winding up of clocks, wages of charwomen, &c. ; and this was persisted in even after it had drawn forth strong remarks from the Auditor-General.
Such doings might not be very surprising in the case of the companies whose prospectuses we receive every morning (and which, if we are wise, we throw straightway into the waste-paper basket), but are melancholy indeed on the part of a public department which until recently had for many years been held in the highest estimation for regularity and straightforwardness.
Sad, however, as is this retrospect, we shall prove that the full depth of the mischief has not even yet been plumbed.
The foregoing table, which includes the whole period from the beginning of the Post Office Telegraph Service to the end of 1874, shows that, in the five years ended December 31st of that year, the gross revenue of the Post Office, exclusive of telegraphic earnings, amounted to 26,057, 6211.; but instead of paying this sum into the Exchequer, as required by the Act of Parliament, the Department handed over 24,830,0001. only, leaving 1,227,6211. of postal revenue unaccounted for, although in the preceding five years we find that the aggregates of postal revenue (as shown by the Postmaster-General's Report) and of payments into the Exchequer balanced within 27,0001. At the investigation of 1873, the Second Secretary admitted that 652,0001. of the Post Office revenue had been employed to pay the expenses of the Telegraph Department; but this still leaves 575,6211. unaccounted for. As this money must have been paid into the Exchequer in some shape or other, and as the revenue of the Telegraph Service is the only item in which it could be included, it would appear that, in the five years in question, that service has been credited with upwards of 500,0001. (after allowing for any possible difference in receipts, balances, &c.), which it has never earned. This would
In the Annual Finance Accounts and in the daily newspapers on the first day of each quarter.
† The amount actually paid into the Exchequer in this year was 5,532,0001., but of this sum 652,0001. was not Post Office revenue of that year, but monies repaid from the Telegraph Loan of 1873 to replace those improperly applied in previous years to Telegraphs. The real amount of Post Office revenue accounted for in 1873 was therefore only 4,880,0001.
explain the otherwise inexplicable fact that the Telegraph Department, though now doing a business double what it did in 1870, appears to be less profitable, the truth no doubt being that the telegraph accounts of the earlier years are altogether untrustworthy, the revenue being overstated and the expenses understated; while, so far from any profit having been realised, the Department must have been worked at a heavy loss. And this view is strongly confirmed by the fact that, in the financial year ended March 31st, 1874, the payments into the Exchequer made by the Telegraph Department (which by law must be done weekly), amounted to 1,210,0001. ; while in the year ended March 31st, 1875, 1,120,0001. only was paid in—90,0001
. less—although the number of telegrams had, as we shall see, increased from 17,821,530 to 19,253,120. Now, whatever may be the case with regard to net revenue, the coincidence of an increase of telegrams with a diminution of gross earnings (the minor sources of telegraphic income having also grown), is simply an impossibility.
So great an unexplained discrepancy in the accounts of a public department is a matter of such serious moment that it is the bounden duty of Government to have it thoroughly investigated, even had it not an important bearing upon the prospective telegraph revenue.
The Report of the Committee appointed by the Treasury, which proves--as indeed does the evidence of the officers of the Post Office—that the accounts of the Telegraphic Service are but little to be relied on, is a document well worthy of study, as containing a succinct history of the management of the Telegraphic Service from its inception by the Post Office, and an impartial exposure of its errors and the state of its accounts. But the conclusions (if this document seem in some respects to be erroneous, and its suggestions not all of them wise. It states that the increasing number of messages trans
mitted through the Telegraphic Branch, and the falling off of * the net receipts, from the commencement to the 31st March last, are shown in the following table :
31 March 1871
1872 1873 1874 1875
9,850,177 12,473,796 15,535,780 17,821,530 19,253,120
da 303,456 13 5 159,834 12 103,120 2 90,033 6 11 36,725 0 0