HC Deb 17 March 1876 vol 228 cc172-224
MR. GOLDSMID

, in rising to call attention to the results of the purchase of the Telegraphs by the Government; and to move— That a Select Committee be appointed to inquire into the organization and management of the Telegraph Department of the Post Office, said: Mr. Speaker, in calling attention to the question of which I have given Notice, I wish it to be clearly understood that it is not my object to attack any individual Minister, or to say anything against the action of any particular Minister in the management of this department. I desire, as far as possible, to ask the House to consider for a few minutes the great questions of public policy which are involved in the management of the Telegraph department of the Post Office, and also to consider the results of the purchase of the telegraphs by the Government. I am also anxious that the House should understand that it is not my intention to discuss in any way the policy of the purchase in the original case. It is right that in a matter of this kind accomplished facts should be accepted, and that we should only consider what lies before us. In 1868 the question of the purchase of the telegraphs first arose. It was introduced under circumstances which I cannot but think were eminently remarkable. Late on a Wednesday afternoon, only a few minutes before the time fixed by the clock when no further opposed Business can be taken, the then Chancellor of the Exchequer asked for leave to introduce a Bill to enable the Government to treat for the purchase of the lines throughout the Kingdom. Sir, in a few observations which that right hon. Gentleman made on the occasion to which I am referring, he did not go into any financial arguments on the subject; he mainly discussed the principle with which, as I have said, I have nothing to do. In consequence of the lateness of the hour no remarks were made by anyone else. Now the Bill which that right hon. Gentleman then obtained leave to introduce did not provide for a monopoly. All that it did was to ask the House to empower the Government to treat with the various telegraph companies for the purchase of their lines. The Bill having been so introduced, it was discussed on the second reading, a few days later, and on that occasion the Chancellor of the Exchequer did give some few financial facts to the House. What I desire to ask the House to remember is this, that he did state on that occasion what he considered would be the cost of this purchase, although he stated it in a very indistinct manner. He said this— They anticipated"—I am quoting from the third volume of Hansard for 1868, p. 1305—"a surplus revenue of £210,000 a-year from that source, and that would enable the Government, if the proposal were adopted, to pay the interest of the debt, reckoned at the rate of 3½ per cent, and to clear off the debt itself in 29 years. If the House would excuse him he would rather not enter fully into details with respect to the purchase at present. But he would say that, speaking roughly, it would take something near £4,000,000 or at all events between £3,000,000 and £4,000,000 for the purchase and the necessary extension of the lines… According to the best calculations they had been able to make the whole debt would be wiped out by the surplus income from the undertaking in 29 years…. Of course, after the period he had specified, the Government would have a valuable property which would be of advantage for the further extension of the system or for the general revenue. This statement, though not precise in fixing the maximum of the cost of the telegraphs, is sufficiently precise to have indicated to the House the position which the Government then took up. They thought that they would make the purchase on reasonable terms and that it would be eminently remunerative. I think that the words I have quoted justify the conclusion which I draw from them. Now, Sir, the House will ask upon what evidence the Chancellor of the Exchequer based this statement. The right hon. Gentleman gave no authority on the matter; but from the evidence before the Committee which was subsequently appointed, and from the Papers which were laid on the Table of the House, it is apparent that the figures were entirely and absolutely furnished by Mr. Scudamore, then the second Secretary in the office of the Postmaster General, to whom was entrusted the whole management of this business. The statement of the right hon. Gentleman was commented upon from a critical point of view, especially by the right hon. Gentleman the Member for the City of London (MR. Goschen), and by my hon. Friend the Member for York (MR. Leeman); but in consequence of the little information contained in that speech these Gentlemen did not possess the materials which would have enabled them fairly to discuss the question. The result was, that what I must call an eminently unsatisfactory debate took place, and that the second reading of the Bill was accepted upon the lines laid down by the right hon. Gentleman. The Bill was shortly afterwards referred to a Select Committee. The second reading took place on the 18th of June, 1868, and on the 23rd of June the Committee was nominated. Now the first, as it was then thought, reliable information which was obtained on the subject was furnished to that Committee. It becomes my duty to ask hon. Members for a moment to consider the statements which were laid before it. Mr. Scudamore was the first, the last, and the principal witness examined by that Committee. He appears to me to have absorbed the whole knowledge on the question. Upon his statements I believe the Government acted, and on the information consequently given by the Government to Parliament the House of Commons and the country adopted the purchase of the telegraphs. What were those statements? At Question 1816, p. 125 of the evidence of the Committee of 1868, I find that Mr. Scudamore said that the then number of messages which he would take as the initial figure was 7,500,000. He went on to show, in a number of statements which he laid before the Committee, that these messages would be increased from 7,500,000 to 11,650,000 within a very short time, partly inconsequence of the increased business which would be induced by a uniform rate, and partly in consequence of the additional facilities which it was proposed to afford the public. He took as his basis those 11,650,000 messages in consequence of the increase which I have just mentioned, and stated to the Committee that they would produce a net income of £280,000. This was a clear and definite statement. This was the income which the Committee was informed would be produced under expected circumstances by the proposed purchase of the telegraphs. Now a word as to capital. What were the statements made with regard to capital? It appears that Mr. Scudamore's original estimate was that the lines could be purchased for £2,400,000. When he comes to be examined before the Select Committee, his statement varies, and I find that the figures have grown enormously since he prepared his first estimate. In answer to a Question which was put to him, he says— I do not think that the purchase of all the interests, including those even 'which are not represented in the estimate,' (note this), would amount to £6,000,000. The £2,400,000 of the original estimate, the £4,000,000 stated by the Chancellor of the Exchequer in his speech upon the second reading, had therefore grown by the time the Committee was sitting to £6,000,000. Upon that statement the right hon. Gentleman the Member for City of London, with an amount of prevision upon which I can only congratulate him, and say that it is unfortunate for the country that his views have been verified, asked— Do you think that under any circumstances whatever, the £2,400,000 of your original estimate can run up to £6,000,000?" MR. Scudamore—"Yes; I think it can." MR. Goschen—"The value of the property seems to have risen upon you from £2,400,000 to £6,000,000." MR. Scudamore—"My original estimate allowed nothing whatever for goodwill. In answer to the next Question, Mr. Scudamore stated, that at the time the Bill was sent to a Select Committee, he raised his estimate from £2,400,000, given in his original estimate, to £3,000,000, which was in addition to the sum which would be required for extension. After that he said that the 'outside' figure, including these extensions, at which the capital account of the telegraphs would stand was £6,000,000. He repeated over and over again, although he was tested severely by many Members of the Select Committee, that the outside figure would be £6,000,000. Upon this statement I believe that the whole action of the Government was taken, although I think some caution on their part might have been exercised in putting implicit confidence in Mr. Scudamore's calculations, as his figures grew so enormously in the course of a very short time. There was one other question which was put to Mr. Scudamore which elicited from him a very remarkable reply. He said— That this estimate of £6,000,000 was his deliberate opinion formed upon data, or, at all events, upon facts which carried conviction to his mind, and which he, as an important official of the Government, and a gentleman of considerable reputation, gave as the calculation, not hastily, but deliberately formed, upon which he risked his official character and reputation, and which he put as the outside, whilst the sum might be a good deal less. MR. Scudamore risked his official character and reputation upon the veracity and accuracy of this statement. It will become my duty to show what were the results under his own management of the capital account; but it is only fair to the hon. Member for Hull (MR. Norwood) to say that after this statement was made, he pointed out to Mr. Scudamore that the country would look to him if the telegraphs were purchased to verify his prophecy. I will ask the House to consider for a moment the way in which he did verify his prophecy. The Committee reported to the House in favour of allowing the Government to proceed upon the lines which Mr. Scudamore laid down. Upon the Motion that the Bill should be committed, the Chancellor of the Exchequer admitted that on a previous occasion he had said, that— Although he was unwilling to go into details of compensation, he believed that the expenditure required would be covered by £4,000,000. He proceeded to say that— MR. Scudamore had given considerable attention to this matter, and now believed that £6,000,000 would be the outside figure, and his calculation had been submitted to and approved by Mr. Forster, the principal financial officer of the Treasury. It should be remembered that the amount he had mentioned was an outside figure. Then he went on to say what the net results of the purchase would be—namely, that it would produce a net income of £358,000, and that this would be sufficient to pay, not only the interest on a capital of £6,000,000, but would be sufficient, even if the capital went up to £10,000,000, which he thought from the statement that was made was absolutely impossible. He wound up by saying— He confidently recommended this Bill to the House, not only as one which would confer great advantages on commercial interests and conduce to the comfort of private families, but as one which would bear a searching examina-nation in a financial point of view. Upon that recommendation the Bill passed; and from that day to this, although the question of the Telegraph capital account has certainly come before the House, we can hardly say that it has had a complete and searching examination. It is for this, amongst several other reasons which I shall have to mention to the House, that I think it is high time that the House should be asked to consider the results of the purchase. The result was that, believing as the House and the country had every right to do, that the statements upon which the Government recommended this important measure to the House were based upon accurate figures, and believing, I may say at once, that Mr. Scudamore was a public official on whom perfect reliance could be placed, the House passed the Bill, and the Government were allowed to treat for the purchase of the lines. We must now look at the other side of the question. What have been the results of the purchase, as far as the capital account is concerned? The Secretary to the Treasury the other night, in answer to a Question which I ventured to put to him upon a Bill which he introduced into the House for a further sum of £500,000 on account of Telegraph capital, said that up to the present time the monies which had been voted amounted to £9,200,000. They had been authorized in three different and separate figures of respectively £7,000,000, £1,000,000, and £1,200,000, and therefore, including the amount in the Bill which will immediately become law, the sum expended up to the present time on capital account, which was not to exceed £6,000,000, has already exceeded £9,500,000. The House will ask, and ask with good reason, "Will that close the capital account?" By no means; we are a long way from closing the capital account. I have shown that £9,700,000 have been authorized on account of capital; but much more remains to be paid for. I am not speaking of extensions which may arise as a matter of necessity. I am speaking of obligations which were undertaken on behalf of the House and country when this Bill was passed in 1868. One of these obligations was to purchase the lines which belonged to the railway companies. Have these been purchased and paid for? They have been taken over, and in some few cases have been paid for; but in the great majority of cases, not only have they not been paid for, but even up to the present day it has not been settled how much has to be paid to the great railway companies. The Secretary to the Treasury, with that accuracy which characterizes him, gave us a list of the companies which are still to be settled with—namely, the North Eastern, the Midland, the joint lines of the Great Western, and the London and North Western, the London and South Western, the Manchester and Sheffield, and other smaller companies. But it may be asked, are the sums to be paid to the railway companies insignificant? They are nothing of the sort. One company, we have recently learned, the Lancashire and Yorkshire, is to receive £169,000 out of this £500,000 which we have just been voting; and, if we are to go upon the basis of the claims, the £700,000 which was fixed by Mr. Scudamore as the total amount to be paid to the railway companies for purchasing their interest, will be a great deal more than doubled when you finally close the capital account. I believe that this figure is well within the mark. I am well aware that the noble Lord can say that it is right that I should not in any way prejudice the cases which are now pending in many instances before the arbitrators as to the amounts to be paid by the Government to the railway companies. It is for this reason that I do not go into the details and calculations which I have prepared; but I believe that the total amount which will have to be paid to the railway companies will double the original estimate of £700,000. Will that close the capital account? Certainly not. We have only to refer to the figures and statements of that most useful of all Committees—the Committee of Public Accounts. This Committee has on more than one occasion investigated the expenditure on the capital account of the telegraphs, and has also pointed out, I think on many occasions, that very remarkable inaccuracies have crept into these accounts; certainly, it has been shown that the capital account and the income account were not properly separated. But I shall make a slight reference to that matter in the course of a few minutes. There is another authority on this question—namely, the Comptroller and Auditor General, and he has pointed out that nothing has been allowed by the Telegraph department, when stating their capital account, for the expenditure incurred on new offices. Now, since the year 1873, whenever a site has been purchased for a new post and telegraph office, one-third of the amount expended upon that site has been put down to the telegraph capital account; but before that date, nothing was put down. And, Sir, one would have thought that, if something was properly charged to the Telegraph capital account in respect of the purchase of new sites, something would also have been put down on account of the building upon those sites; but nothing of the sort has been done; not a penny, so far as I can find up to the present time, has been put down in the Telegraph capital account for the buildings that have been erected, many of them in consequence of the extension of the telegraph system. Now, what grounds have I for saying that many of them have been erected in consequence of the extension of the telegraph system? I do not think it is right for me to mention the names of those public officials who have given me the private information, which they said I might use; but I believe it will be borne out by the most accurate investigation, that any hon. Member may choose to make into the facts—namely, that whereas, in very many cases, the existing offices would have been amply sufficient for many years to carry on the business of the Postal, Money Order, and Savings Bank Departments, those offices, in consequence of the introduction of telegraphic wires and instruments, have been found insufficient, and these additional requirements have led to the purchase of new sites, and to the erection of new buildings upon these sites, long before the time at which otherwise they would have been necessary. The consequence is, that a great portion of the out lay upon building, during the last few years, has been owing to the purchase of the telegraphs by the Government. But, in any case, something should be charged for these new buildings, when, even according to the admission of the Government, the telegraphs take up at least a third of the space; and I do, therefore, maintain that this capital account cannot be considered as complete until something is put down for the accommodation the new buildings afford to the Telegraph Department. I will give an instance bearing upon this point. Every hon. Member knows that, opposite the Old Post Office, in St. Martins-le-Grand, we have built a new General Post Office; and though I am admitted to no secrets, still I do state, without fear of contradiction, that a very large part of that new building is now occupied by the Telegraph department of the Post Office, and yet nothing on account of that new building, which cost £500,000, has been put down to the Telegraph capital account. Therefore, I hold that I am justified in saying that your capital account is not complete, and cannot be complete, until you have put down something on account of the buildings erected to accommodate both the Post Office and the Telegraph Departments. I have, consequently, shown that your capital of £9,700,000 is not sufficient—that you have to add an additional amount for the payments made to the railway companies—that you have to add something on account of the years up to 1873–4, during which sites were not charged for—and that you have to add something on account of the buildings erected for the purposes of the telegraph service up to the present time. The result of the calculation which I have made, shows, I think, that if you add £9,700,000, the amount already paid, to the moderate sum of £1,300,000, on account of the three branches not yet provided for, you will, before you have a chance of closing your Telegraph capital account, have invested £11,000,000 in a business which, according to the outside estimate of a great public official was only to cost £6,000,000. Therefore, I think, as far as the Telegraph capital account is concerned, I have shown that there is reason for investigation into this matter, and that the Motion which I have put on the Paper is fully justified. Of course, my opinion may have little weight with the Government. I will, however, quote the authority of a public official, whose character is above all suspicion, and whose opinion is most valuable on these matters of account—I refer to the Comptroller and Auditor General. What does he say upon the subject? I look at the Appendix to the Appropriation Accounts for the year 1874–5, and I find at Page 370 that he makes the following remark:— It seems to me somewhat of an animally to divide the expenditure for 'sites' and new works and alterations between the postal and telegraph services; but to make no similar division of the expenditure incurred in building new post offices, which, it is presumed, are intended to accommodate both Post Office and Telegraph employés. It is obvious that, unless the whole of the expenditure incurred since the date of the acquisition of the telegraphs by the State in the purchase of sites, the erection of new post offices, and in the alterations, maintenance, and repair of existing offices, is adjusted between the postal and telegraph services, the profit and loss accounts annually submitted to Parliament, must, to a certain extent, be incorrect. I have, therefore, the authority of this eminent public official for the statement I have submitted to the House. Now, Sir, I have shown the variation, I may say the extraordinary variation, between the outside estimates of this trusted public official, estimates made upon his official reputation, and the actual facts of the case; and perhaps the House will expect that I should just say why, in my opinion, this extraordinary variation has taken place. Sir, I attribute it to two principal causes. The first is, that Mr. Scudamore was most anxious to carry into effect the arrangements which he had in view, and consequently made agreements of so unbusiness like a character, that he launched into an expenditure which neither he himself, nor even the Chancellor of the Exchequer, ever contemplated; the Chancellor of the Exchequer thoroughly believing, as he did, the estimates of his subordinates. If I give any examples, I would remind the House of the celebrated case of Reuter's Telegraph Company, Everybody knows that this company received five or six times the real value of its business. Everybody knows, for it was a matter of common talk at the time, that, in order to conciliate opposition, Mr. Scudamore made an agreement based upon a very short period of the working of the company, and that working was, to a certain extent, fictitious, being created for the purpose of obtaining a large capital sum, when the company was purchased. There were other unbusiness like agreements—for instance, those with the railway companies, and the hon. Member for York (MR. Leeman), who appeared actively in the opposition to the scheme knows much on this point. It is a fact that one railway company was offered such an absurdly munificent figure, that its Chairman said they could not resist the temptation and withdrew its opposition. When you have a great public official making agreements of that sort, I do not think it is difficult for the House to see what the result of such agreements must be. I desire to speak with all respect of the Civil Service of this country, for it is a service which performs very great public duties, and often under very harrassing circumstances; and it is no doubt, a natural and proper feeling on the part of the Civil Service, to desire to expand the area of its operations as widely as possible. But I must say that the proposal in favour of the purchase of the telegraphs was fostered and promoted in every way by Mr. Scudamore, by many other public officials, and also by the Public Press. It was thought that a great variety of advantages would accrue from the adoption of such a proposal; and the result was, that the House was rather led into the approval of the purchase without carefully examining the data upon which the proposal was founded. For the House and the country had no reason then for disbelieving the statements of Mr. Scudamore, which were the only reliable information furnished to them. It is perfectly obvious to my mind, that agreements made in so unbusiness like a manner, could not but lead to the results which I have indicated. There would have been a proper method for making such a purchase, if it had been desired. Before the proposal was made to Parliament, the companies should have been approached in this way—"If you are inclined to sell your business on reasonable terms, the Government may be disposed to purchase it, but not otherwise. "I have authority for saying that, had that course been adopted, at least one company, which got a splendid price for its business, would have accepted 40 per cent less than the amount they actually received. But when the company found that money was being thrown about in this way, and that such a river Pactolus was set flowing, they willingly went in for a considerable share. Now, Sir, I think I have shown, under this most important head, that there is abundant reason for an inquiry. I now want to refer to the general mismanagement of the capital account. It appears from various Reports, and especially those of the Committee of Public Accounts in the year 1873, that it was impossible to obtain any Telegraph, capital account. That Committee reported that— The accounts under the head of the telegraph service had been much disturbed by their incomplete condition, as to separation of capital from current expenditure; and they were then informed," (that is to say, they were informed in 1872) "that a statement of capital expenditure was in course of preparation, and would be laid before Parliament during the Session of 1872. To the accounts now before them," the Committee went on to say, "the same observations apply, and the Committee are again informed by Mr. Scudamore, that the statement is still incomplete, that he hopes shortly to be able to show all that has been done down to the close of February, and to close the capital account on the 31st of March next (namely, 1873), except with reference to certain payments to the railway companies. Sir, I am quite sure that the capital account was not closed. Now, the Comptroller and Auditor General goes on to observe to the Committee, that £644,000 had been transferred from the Telegraph Vote to the capital amount. That irregularity was a very serious one. The Committee expressed its opinion as to the wholesale expenditure of the Post Office balances in anticipation of the Vote, and proceeded to say that— The Post Office would appear to have the uncontrolled power of dealing with balances, to the extent probably of £1,000,000 in excess of its legitimate requirements. They point out that the check of the Audit Office must be imperfect, if not nugatory: that the position of the Postmaster General is compromised, if the Secretary, in his office can carry on such enormous operations by means of moneys for which he as chief, is liable to account to the public, and that the control of the Treasury must be practically nil. In the Second Report of this Committee for the year 1873, after further investigation, they show that the unauthorized advances, thus made out of balances, had amounted to £890,000, and that these monies had been mainly drawn from three sources: (1), Money Order balances; (2), Post Office Savings Bank balances; and (3), revenue receipts proper. And the principal results of this investigation, on the part of the Committee of Public Accounts, was that a Motion was brought before the House on the 29th of July, 1873, by the right hon. Gentleman who now fills the office of Secretary of State for the Home Department. Sir, what were the terms of that Motion?— That this House, having considered the Reports of the Select Committee on Public Accounts, records its disapproval of the conduct of the Post Office in respect of the misappropriation of balances therein mentioned; and is of opinion that the control of the Treasury over the Post Office, as a revenue department, having proved inadequate for the earlier detection and rectification of such irregularities, requires to be more watchfully exercised. That Resolution contained very grave charges. To it was moved an Amendment, which I think contained very much the same. That Amendment came from the hon. Baronet the Member for Maidstone (Sir John Lubbock), and it ran thus— That this House regrets to find from the Reports of the Committee on Public Accounts, that the Post Office revenue and Savings Bank balances have been largely employed for the purposes of Telegraph capital expenditure, without the authority of Parliament, and is of opinion that it is the duty of the Government to take effectual measures to prevent the recurrence of such a proceeding. That Amendment was carried; but I think the House will see that the statement then made by Mr. Bernal Osborne, the Member for Waterford in those days, is a very true one—namely, that the difference between the original Resolution and the Amendment, was exactly the difference between "Tweedledum" and "Tweedledee. "Sir, it is rare for the House to pass such a reflection upon the management of any public Department of the State, and it is a matter of congratulation that it is so rare; but if there was one result beyond all others, which ought to have come from such a Resolution being adopted by the House, it should have been this—that Mr. Scudamore, who had the management of this department, and whose conduct of it was certainly reflected upon most severely in the Resolution, as well as in the statements of the hon. Gentlemen who addressed the House on that occasion, should have shown the greatest care in his subsequent management. But I am sorry to say, that I cannot find that that care was exercised in his subsequent management of the department; for, on turning to the Report of the Committee of Public Accounts for the following year—namely, 1874, I find it stated that there was a deficit in the Telegraph department of the Post Office of £204,900, showing that there had been no greater care exercised in the management of the department at any rate, with regard to the expenditure. The Committee state, with reference to the capital account, that Examination of the capital account, as well as of the Post Office Vote, presents in a stronger light the long course of irregularities on the part of the Post Office in its various branches. Your Committee can only express the hope that an era of greater regularity on the part of the Post Office, and of vigilance and strict supervision in other quarters has been initiated. Now, Sir, I have stated that, in the following year, there was a deficit of about £204,900, which was voted for the Telegraph department for the year ending March, 1874. It may be said that that is the usual course of business in this country; but I beg to assure the House—and I am happy to be able to say it—that it is not the usual course of business. I look at the Reports, with regard to other great public Departments of the State, and what do I find? I find that, for the Treasury Department—which is, perhaps, the most comprehensive of all public Departments—the very modest sum of £33 had been voted as the deficit of that year; that in the Board of Trade Department the deficit was £875; in the Diplomatic Service, £885; and in the Customs, £10,300; while, as I have said, in the Telegraph department, the deficit amounted to £204,900. Again, Sir, turning to the First Report of the Committee of Public Accounts, of the 19thof March, 1875, what do I find? Once more a large deficit for the telegraph service of £109,000, showing that the management—or, rather, the mismanagement—of the Telegraph department was conducted, more or less, in the same style as before. And you must remember that, all this time, Mr. Scudamore was the responsible officer. It is all very well to say, that the Treasury and that the Postmaster General must look after these things. So they ought, and I believe they have endeavoured to do so; but if you have a responsible public servant you cannot be always interfering with him; and Mr. Scudamore said, if he was constantly interfered with he would not be able to carry on the service. But I think I have shown that, at least, precautions ought to have been taken by Mr. Scudamore after the proceedings of 1873, to which I have called the attention of the House. I do not, however, find that any precautions were taken, and, therefore, I maintain there was wanting, in the management of the department, that system and order which constitute the life and soul of all business. So much for that point. The next matter, which comes under review, is of considerable importance—What were the estimates of receipts and expenditure which really induced the purchase? Now, the Committee of Public Accounts recommended more careful Treasury supervision. The Treasury—I wish to do that Department full justice—has endeavoured to do all in its power to carry that recommendation into effect. I believe one result of it was, that, in the year 1874, Mr. Blackwood, a very useful public servant was appointed Financial Secretary to the Post Office; but at the same time I do think that the light of public opinion, and still more the searching investiga- of a Parliamentary Committee, would do much not only to strengthen the Treasury, but also, I fully believe, to enable the Postmaster General to introduce necessary reforms into the administration of his Department. In the course of a very few minutes, I think I shall be able to show in what direction these reforms ought to be made. Before the Select Committee of 1868 a large number of witnesses were examined. One gentleman, Mr. Allan—a gentleman of very considerable reputation as a civil engineer—stated to the Committee this—That decidedly the Government could work the telegraph system "much more efficiently" and "much more cheaply" than any private company. Now, Sir, I do not want the House to go by Mr. Allan's testimony alone. In the course of this argument I have endeavoured to found all I have had to say on Mr. Scudamore's own words; because, if I am bringing charges against that gentleman, I think that his own testimony is the best evidence that I can adduce. What did Mr. Scudamore say? He said that he could affect an immediate saving of £130,000 a-year upon the working by the companies. He stated that he assumed his initial number of telegrams at 7,500,000, which would be almost immediately increased to 11,650,000, by reductions in rates and other causes; and he estimated that the total annual income would be £680,000 a-year. He went on to say, that he reduced the expenditure by £55,000 as the lowest amount he could save by amalgamation, and proceeded to show that, if his anticipations of increase of business were realized, "the net profit would be"£350,000. The statement is repeated, over and over again, that the net profit would be £350,000 upon an annual number of messages of 11,650,000. But, Sir, he did not wish to take that figure; he would take it at the worst; and taken at the worse, without increase, he said it would be £203,000, the mean between which figure and the £350,000 he takes as his profit—namely, £280,000, a sum which, of course, I need not tell the House would have paid interest on his capital of £6,000,000, the outside figure, and left a large margin. I have shown to the House the error made in his capital account; I will now point out the error in his profit account. Mr. Scudamore is asked (Question 1,900)— 'You hare made your calculations with a view to show the positive certainty of this experiment being a safe one?' 'Yes; I wanted the maximum estimate to be a moderate estimate. I think the minimum estimate is an impossible one.' The minimum estimate is £203,000. 'My object has been to convince the Committee that they may, with almost entire certainty, rely upon a net revenue of from £200,000 to £360,000, the mean of which is £280,000.' Then, directly afterwards, he is asked (Question 2,441)— 'You have a strong opinion that the amount will not be exceeded, and that you can go up to the number of 11,000,000 messages, and carry out your views as regards the increase of business without exceeding the annual expenditure of £379,000'—that being the figure he gave. His answer is, 'Yes, you may take it decidedly as my opinion, that the more business we get the less in proportion will be our expense.' And on being asked what the cost of increased business was (Question 1,867), Mr. Scudamore said— It is the experience of all people who have worked a large business of this kind that the cost does not by any means increase in proportion to the increase of business. In that view I entirely agree. Mr. Scudamore further says that he has shown that the Old Electric Telegraph Company did an increased business of 105 per cent at a cost of 33 per cent. But in order that his figures may be on the safe side he has taken that an increased business of 55 per cent would be done at an increased cost of 33 per cent. He, therefore, took it at about 100 per cent against himself as compared with, the old companies. Now, if I turn to the Budget Speech of 1875, I find that the amount received for telegrams for the year ending March, 1875, was £1,200,000; and on referring to the Appropriation Accounts for that year, I find that the expenditure was £1,075,000,which leaves a balance of £45,000 as the net profit of the year, without paying any interest at all on the enormous capital account. But how comes it that the expenditure so far exceeds the amount of £338,000, calculated by Mr. Scudamore as the cost of working 11,650,000 messages? The reason for an increase of cost is naturally the increase from 11,650,000 messages, which Mr. Scudamore had calculated for 1870, to about 19,000,000 messages. But if you take Mr. Scudamore's estimate of the cost of doing increased business—namely, 33 per cent for an increase of 55 per cent of business, we ought to add 33 per cent for the increase of business beyond 11,650,000 messages (namely, £160,000) to £380,000, which makes the proper cost according to the figures which "he took against himself" of doing a business of 19,000,000 messages, £550,000. That sum, according to his own calculation, is the proper cost of 19,000,000 messages, but the cost was £1,075,000, exactly double the amount which he calculated. I would remark, also, that the actual receipts of the telegraph service for the year (£1,120,000) ought to have given, according to Mr. Scudamore's figures, the magnificent profit of £580,000 to pay interest on capital, and profit on business generally. I therefore think I have shown that, in the general administration, there is something radically wrong in the system set on foot by the gentleman to whom I have been obliged to refer so often. I will shortly conclude the observations which I have to make, but this point is so important that I beg to call the attention of the House to it for a few moments. The causes of this state of things will naturally strike the House as proper matters for investigation and consideration. What are the causes? I hold that they are to be looked for in the faulty general administration. I find that on this question some valuable information was given before the Committee of 1868. In December, 1871, the Comptroller and Auditor General called for a list of all persons, who not being in the employment of the telegraph companies at the time of their transfer to the Government, had since been appointed to the Post Office telegraph service. The list was not furnished until June 1873. Even then it was incomplete. Subsequently, in August, some further lists were sent in. This shows that the business of the office was not in the best order. What do I find in those lists? I find that 2,186 persons had been appointed since the telegraphs were given over to the Government, and that of the number so appointed, only 53 held Civil Service certificates. [Report of Committee of Public Accounts, 1874, Paragraph 95.] Thus there was a double irregularity—the irregularity of making this very large number of appointments, which number was totally unnecessary—and the irregularity of making them, against the established rules of the Civil Service, only 53, as I have said, having been appointed in accordance with these rules. What were the data given by Mr. Scudarmore? He stated before the Committee of 1868, that the Post Office would employ only 1,528 clerks, and 1,283 messengers, to do a business of 11,000,000 of messages, where as I find from the Parliamentary Return of 1870—only six months after the time of the transfer—there were employed in the Telegraph branch no less than 4,913 clerks, and 3,116 messengers—more than double the number stated by Mr. Scudamore—so that the staff of the telegraph branch, as compared with that of the companies, was more than doubled in the course of six months. [See Report of Treasury Committee, Page 2.] This simple fact explains much of the enormous expenditure. But this was not all, for Mr. Scudamore had increased the salaries of nearly all the employés. He moreover pensioned some of the servants of the old companies, who were well able to attend to the work, and appointed others it their place. I do not wish any members of the Civil Service to think that I am taking exception to their having accepted appointments, for it would not be just to a great public service to do so. I am not attacking the Civil Service generally, but I am attacking the administration that has been carried on in this reckless manner, regardless of the public expenditure. The next statement which I am about to make, is fully borne out by the facts. The old companies had to work under the difficulty of competition. The Government by the Act of 1869 obtained a monopoly. Now a business carried on as a monopoly, ought to require less expenditure than a business that is open to competition. And if there had been any mistake in the calculations of Mr. Scudamore, it should have been rather in favour of than against economy. But I have shown that the expenditure has been double the amount at which Mr. Scudamore had put it. I have given as one cause of the increased expenditure, the employment of such an extraordinory number of persons. The hon. Member who is to second me, and many other hon. Members, will be able to speak as to the general maladministration of the department, and therefore I will not go more fully into it. But I wish to call attention to the question of maintenance. I dare say that a large number of the Members of the House know that a portion of the telegraph was worked by the Royal Engineers. Now, what do I find with respect to the cost of maintenance, the expenditure for which has been very heavy. I take the following statements from the Civil Service Estimates of 1875–6. The total mileage of postal telegraph wire maintained and under supervision was 111,500 miles. Of this the division maintained by the Royal Engineers contained 9,718 miles, or one-eleventh of the whole. The total cost of salaries and wages, excluding the chief engineer and factories, was £99,720. Of this sum the Royal Engineers received £4,259, or one-twenty-third. In other words the Royal Engineers maintained one-eleventh of the system at one-twenty-third of the cost. I do not know whether the noble Lord the Postmaster General will be able to contradict these figures. I find that the Committee appointed by the Treasury last Session to investigate the telegraph business, appears to have arrived at the conclusion that it has been a great mistake to establish this enormous staff for maintenance, when it could have been done at a much smaller cost by the Royal Engineers. In other branches of the work I could show that generally the expenditure was not regulated with that economy which is necessary in the management of a great public Department. The House may perhaps like to know what is the cost in other cases of doing telegraphic business. From figures which have been furnished to me from various companies, I find these facts. One company informs me that 470,000 messages were transmitted in one year at a cost of 40 per cent of the receipts, and that last year 1,400,000 were carried at a cost of 35 per cent of the receipts—that is to say, they trebled their business and decreased the percentage of cost by 5 per cent. I find that another company doubled its business at a cost of 31 per cent of its gross receipts, and that a third company works at a cost of 29 per cent. And I am informed that these companies can undertake to do a much larger business without practically adding to their working expenses. These facts show that there is something wrong in the Telegraph department, and that my allegation of want of organizing and administrative power, and of extravagance in general administration is fully borne out; and the more so if you compare the advantages of monopoly, as against the difficulty of carrying on a business in competition. The difficulty in which the department is placed is this—with a large capital, you have involved yourselves in a position from which you cannot retreat. I believe that the appointment of the Committee for which I ask will assist the department and the Postmaster General in getting out of the difficulty in which they now stand. There is one other subject to which, before I sit down, I wish to allude, and I am sure I am very grateful to hon. Members for the attention which they have paid to the statements I have submitted to the House. But I wish to ask what are the excuses offered by the department for the mismanagement and disorder which are admitted to exist both by Mr. Scudamore and the department. Mr. Scudamore is the authority to which I at once appeal. He points, over and over again, to the novelty of the service and to the extraordinary increase of business. About the novelty of the service there can be no doubt. But there must be a limit to the length of time during which that can be urged. Now is the increase of business a justifiable excuse? I say, certainly not; the only reason why the increase of business would be a justifiable excuse, would be if the increase had been far beyond Mr. Scudamore's calculation. But he took as his figures 11,600,000 messages, and calculated on an annual increase of 10 per cent, which he might fairly do, and the 19,000,000 messages last year correspond with the number he expected. I therefore say that the increase of business is not a fair excuse. In a letter written by Mr. Scudamore in June, 1871, to the Chancellor of the Exchequer, he says he has been looking in vain for such certain permanent data as would enable him to frame a scheme for a permanent establishment, but he goes on to say, "matters are now fast settling down." If, then, the novelty of the service and the want of reliable data were valid excuses in 1871, they are not excuses which could be offered in 1874 or 1875. Mr. Scudamore, on another occasion, when asked a Question on the subject, said that the result of the acquisition of the telegraphs by the Government, and the reduced tariff was— an immediate increase in the number of telegraphic messages, and in the demand for telegraphic accommodation of all kinds," and "the pressure of the two demands on the department was such that it must have broken down if it had even attempted to conform to routine. [2nd Report of Public Accounts Committee, 1873, Page 99.] This was an extraordinary phrase for a public official to make use of. Similar admissions are made by the Postmaster General in his Memorandum of last year. Thus he says— I will only add with regard to the remarks of the Committee upon the discrepancy between receipts and expenditure in the past, that I have every reason to hope that the difficulty inseparable from the first few years of a new service having now been surmounted, the recurrence of such discrepancies will be impossible. The statement, made by the Postmaster General in 1875, shows that the facts which I have brought forward are correct, and consequently that the increase of business is not sufficient to account for the irregularity which exists. But is the excuse of the extraordinary increase of business valid? I will show that it is not, as, since as I have pointed out before, Mr. Scudamore calculated on beginning with 11,650,000 messages in 1870—which number was not exceeded—and as the messages had increased to 14,000,000 in 1872, that gives only an increase of 10 per cent per annum, which was below the average increase of previous years, and the number of 19,000,000 carried last year only brings up the number to the same average increase of about 10 per cent per annum. I have pointed out that the real reason is the confusion of administration, the unnecessary number of new employés, and the want of the power of organization, and the irregularity of the department, the result of which was not only to cause confusion in the department itself, but also in the general administration of the Post Office. In 1873 the Committee of Public Accounts called attention to this matter, and said that— they desire to express their regret that they had found it their duty to make on this, as on a former occasion, unfavourable remarks on the administration of the Post Office, and on the proceedings of Mr. Scudamore in connection therewith. The Committee cannot blink or ignore the fact, that the financial operations by which the telegraph service has been carried on from the beginning, and especially during the last 12 months, are destructive to all control by Parliament or the executive Government over public expenditure, and would be of disastrous precedent if condoned or unmarked by this expression of disapproval. [2nd Report, 1873, Page 7.] In 1874, the same Committee say— They can only express a hope that an era of greater regularity on the part of the Post Office, and of vigilance and strict supervision in other quarters has been initiated. The Report of the Committee for 1875 contains a general statement, and shows that the same excuses are still offered for the continuance of many of the irregularities. Therefore I am justified in saying that the excuses are not sufficient, and that the irregularities are the real causes of the confusion. The Committee of the Treasury have pointed out many of these things, and the Postmaster General in his Report on the 23rd of December last, refers to the same subject. Another excuse given is the cost of superannuation of the servants of the old companies. But the estimates show that that is really a very small amount—namely, only a few thousands a-year. Now I should like to know who wrote this letter of the Postmaster General. It must almost have been impossible for the Postmaster General to investigate all these details himself, and I should imagine that the Report was prepared for him in the office, and submitted to him for his signature in the usual way. I should like to know who wrote it. Mr. Scudamore left the public service last year. I have heard various names suggested. Was it Mr. Patey? Now, I am informed that Mr. Patey is a young man of great ability, and well deserving of public confidence; but I should like to know whether his position and standing in the office justify such a responsibility being thrown upon him? I should also like to know whether the Telegraph department is going to have a permanent head under the Postmaster General, or who is to be considered the administrator. We cannot expect any official to attend to all kinds of business in the Post Office. As the Postmaster General has his duties to attend to in this House, and has the supervision of the Office, it is impossible for him to undertake the general administration of the Telegraph department. It is therefore important for us to know to whom we are to look for the general management of the department, and I hope we shall receive some information on the point, because I am sure that the Postmaster General with that generosity which always characterizes the heads of Departments will, if there is any fault in the matter, take the fault on his own shoulders, and not shield himself by any fault finding with others. I think I am justified in saying that the whole management and administration of the Telegraph department of the Post Office is one which interests the House and the country, especially when I show that the department is not carried on economically and carefully. The Committee of the Treasury have made certain recommendations. They admit many of the points to which I have called attention, and so does the Postmaster General. But there is another portion of their statement with which I cannot concur. The Committee suggest that, in order to increase the revenue, a number of non-paying offices should be abolished. I do not think this would be a wise policy. In 1872 the number was 728. In 1874 it was 449. In 1875 it had decreased to 228. The fact that the number is thus gradually diminishing is a most important one, and consequently I trust that this recommendation will not be adopted. The next point to which the Committee calls attention is the employment of the Royal Engineers in the maintenance of the telegraph system. They say— We would submit for consideration whether an economy might not be effected by extending the area of their duties. We have been very much struck by the advantages which this system appears to offer. At the request of the War Office the Eastern district was allotted by the Telegraph Board to the Royal Engineers, who, under Major Webber, have the entire management of the maintenance of the telegraph system in that district, and who have also been extensively employed in the construction of new works. The total pay and allowances of the Royal Engineers employed under the Post Office are calculated so as to be about equal to the salaries of civilians employed in the same positions in other districts, so that the Telegraph branch saves, as will be seen by the figures in the Estimates, that part of the pay which is provided in the War Office estimate. The Post Office gains other advantages by the employment of the Royal Engineers. 1. They are entitled to no pension from the department. 2. Men in any degree inefficient or unsuited for the service can be removed, whereas civilians must be retained until their inefficiency or misconduct are such as to justify their dismissal. 3. Men not required can at any time be sent back to barracks and recalled for any press of work. 4. The Royal Engineers being under military discipline, there is no possibility of a strike. Now the Postmaster General states that the allegation that there is greater economy in the employment of the Royal Engineers is incorrect, and that he proposes to discontinue their employment. Who is right in this matter? Next it is proposed by the Treasury Committee—and this is a matter of great public importance to the country—to "increase the tariff of the Press." I am sure the public would disapprove of the withdrawing of any facilities which have been granted to the Press for the public convenience. I think such a step would cause a great deal more harm and mischief than would be compensated for by any pecuniary gain that might accrue to the department. It has been suggested by some gentlemen having a thorough knowledge of the question that it might be right to charge for the cost of the extra clerks who do service at night in the sending of news. To that I do not think the newspapers would object. Then, Sir, there has been another proposal by the Committee—it is that you ought to withdraw free addresses; but I do not think that this House or the country would like that; for the chief arguments in favour of the transfer of the telegraphs to the State were the greater facilities that were to be afforded the public for the transmission of messages, and the greater uniformity of cost. It has also been proposed to charge 1d. a word; but that, too, is not popular with the country so far as I have been able to ascertain, as that would also involve a higher price being paid for telegrams. Again, it has been suggested that 6d. extra should be charged for messages dispatched between 8 in the evening and 8 in the morning, except Press messages, and 6d. on Sunday messages; but surely it would be very hard on the private and non-business portion of the community, who practically send the majority of these messages, to throw such an increased charge upon them. It would, in fact, be a step in a retrograde direction from the policy of 1868. Another suggestion has been to charge 3d. for every message handed in at the telegraph stations of a railway company. This, also, would be unfair, as in many a parish the only telegraph station is that at the railway, and the country round has been accustomed to the facilities which those stations afford. I take it, then, that no such proposal as that could be entertained. These are all wrong lines to work upon. You will not gain much money by the adoption of such retrograde proposals; and the little you do gain would be at the loss of popular favour. On the other hand, I have shown, I think, that the line on which the Treasury and the Post Office ought to work is to reduce the cost of administration and the expenditure of the department until the business is made profitable to the country. I am not one of those gloomy prophets who say that these errors can never be recovered. On the contrary, I wish to strengthen the hands of the Postmaster General in order to recover them; and I think, therefore, that a public investigation by a Committee of this House would be of very great service. The objection of the Postmaster General will probably be, that it will be inconvenient to have clerks waiting about to give evidence before the Committee; but his staff of employés is so abundant that I feel confident he will not miss the few gentlemen whose attendance will be required, and whilst the Committee is sitting it will relieve him of the difficulty of finding them something to do. But that is really a small objection when urged against a great public necessity; and I would venture to appeal to the patriotic feelings which I know animate the noble Lord the Postmaster General, and the right hon. Gentleman the Chancellor of the Exchequer, to rise above such considerations in a case where the public service is concerned. It appears to me that great good may be done by such an inquiry, because it will not only show the Government and the country how this difficulty may be got over; it will not only assist the Government in re-organizing a department which, in my opinion, eminently requires it; but, as I have shown, it will also guard and warn the country against accepting as perfectly accurate the estimates which are furnished them by public officials who desire to accomplish a particular object; those public officials, for instance, who are continually pressing the Government to enter into businesses that do not properly belong to the duties of government. I know I shall be told that I ought not to have said so much against Mr. Scudamore, seeing that he is out of the country at this moment; but I do not think that such a consideration as that ought to prevent a Member of the House of Commons, when he considers that the public service demands it, from exposing the evils which may exist in a great Department of the State; and if that Department happens to have been under the control and management of a man who has left the service, it is not my fault, or the fault of the Member who calls attention to the subject. It is for the very reason that Mr. Scudamore is absent that I have endeavoured to found my statements on this occasion, in every particular, upon the information given by that gentleman himself. If I had not done this, I might have laid myself fairly open to the charge that I suppose will be brought against me of assailing an absent man; under any circumstances, however, Mr. Scudamore could not have been here, in this House, to defend his administration. However, I will not say anything beyond this—that it appears to me to be a matter of great public importance that the country should know how far the results have justified the original calculations on which these purchases have been made; and these being the circumstances under which I have brought forward the Motion, I think the Government will be exercising a wise discretion, not only in the interest of the public service, but also with a view to the proposal of measures for the re-organization of the department, if they grant me the Committee for which I now venture to move.

COLONEL ALEXANDER

, in seconding the Motion, said: In making the few observations which I trust the House will permit me to do, it is not my intention to follow the hon. Member for Rochester over the ground which he has travelled with so much ability. Whatever the benefits arising to the public from the transfer of the telegraphs to the State—and I do not deny that some benefits have certainly arisen—it cannot be doubted, I think, that in its financial aspect the measure has totally failed, and has disappointed the expectations of those who originally prognosticated its success. For although Mr. Scudamore said in the year 1871—and it is not my intention to make an attack upon him— That he should be able to show that the financial results of the completed scheme would not be less favourable than those which he had always predicted, the noble Lord the Postmaster General, in the letter which he wrote in 1875, candidly admits "a lack of financial success." There is no doubt, I believe, that with the exception of the first two months after the transfer, there has been a deficit in every succeeding year, and that of a very serious character. And it is not difficult to understand how this excess of expenditure over revenue has arisen when, as has been pointed out by the hon. Gentleman opposite and by the Committee to which he has alluded, within six months of the transfer no less than three times the estimated number of clerks were employed by the Post Office Telegraph department, and two and a-half times the estimated number of messengers, and when we recollect that the cost of the single item of stationery, estimated at £26,000, amounted in one year to £49,000, we can easily understand from such facts as these how the proportion of working expenses to income was in 1874 and 1875 more than 96 per cent, according to the estimate of the Committee. But, passing from that part of the subject, which has already been so successfully treated by the hon. Member for Rochester, I would now say a few words with regard to the military part of the question, and in earnest deprecation of the withdrawal of the men of the Royal Engineers from the Telegraphic department of the Post Office. The divergence of views on that subject between the Committee to which I have referred and the noble Lord the Postmaster General is remarkable; for while the Committee advocate the extension of the area over which the Royal Engineers were employed, the noble Lord says he is compelled to advocate their total withdrawal, and, curiously enough, both base their conclusions upon financial grounds. While the Committee say that by the employment of the soldiers the Post Office saves that part of the pay which is accounted for and paid by the War Office, the noble Lord, on the other hand, says that he expects to save by the withdrawal of the Royal Engineers about £2,500 a-year; and he then proceeds to set forth the grounds on which his calculations are based. He states that the present engineering staff of the Telegraphic department of the Post Office is susceptible of reduction. It may be urged in behalf of the Post Office that at the time of the transfer they were obliged to take over the greater part of the staffs of the old Companies; but I believe I am within the mark when I state that since that time the number of civilians employed in this department has been more than doubled. Then the noble Lord goes on to say in this letter— The Royal Engineers can at any time return to the War Office; and as all that would be required to replace them would be a few additional line men, nearly two-thirds of their allowances, or about £2,500 a-year, would be saved. But I am entitled to ask the noble Lord why he did not have recourse to the Royal Engineers, who under the original arrangement were liable to be dismissed at one month's notice without compensation and without pension, instead of employing additional civilians, who form, as he himself admits, a permanent burden on the State? The noble Lord pointed out that they might be dismissed at anytime and sent back to the War Office, and that all that would be required to replace them were a few additional Line men. But the circumstances which have occurred during the last few days must, I think, have considerably helped to open the eyes of the Post Office authorities. The storms which have recently taken place in various parts of England have totally interrupted the telegraphic communication in many districts; and to whom did the Post Office look in the extremity of their distress? Not to their own superabundant engineering staff; not to the additional line men to whom the noble Lord refers in his letter; but to the despised Royal Engineers, who had to be brought in hot haste from Chatham, from Alder-shot, and other places to perform duties which this superabundant staff of the engineering department of the Post Office found themselves incompetent to perform. Well, Sir, I ask whether that circumstance, when taken in connection with the statement of the noble Lord that "the Royal Engineers can at any time return to the War Office, "proves the great elasticity of that force, and that it is capable, at a moment's notice, under various circumstances, of almost indefinite extension or contraction? Within a period of five years the number of Royal Engineers employed in the Post Office has fluctuated between a maximum of 167 and a minimum of 61, and some of that number have from time to time been transferred to the torpedo company or sent to Ashantee and to Persia for the purpose of laying cables there. On the other hand, they may be dismissed for inefficiency or misconduct, and to this point the Treasury Committee in their Report draw special attention. They say that whereas the Royal Engineer can be dismissed at a moment's notice, and especially for inefficiency or misconduct, it is necessary to retain the services of the civilians "until their inefficiency or misconduct are such as to justify their dismissal." They, then, in addition to the advantages which I have already enumerated, lay stress on the circumstance that the Royal Engineers can be dismissed without compensation or becoming entitled to a pension, and that being under military discipline there is no possibility of a strike on their part. Now, I would ask the noble Lord the Postmaster General to remember that, only a few years ago, an important strike took place among the Post Office officials, and that the difficulty was got over in great measure by having recourse to the Royal Engineers. But this is not a mere Post Office or departmental question. I regard it as, to a great extent, a military—I had almost said an Imperial—question; because we find in Mr. Scudamore's Report of 1871 that, when the arrangement was first made for the employment of the Royal Engineers in the telegraphic department of the Post Office, he stated that it was made expressly at the desire of the Secretary of State for War. In the Report of the Treasury Committee also, which sat last year and inquired into this subject, it is stated that it was at the request of the War Office that the eastern district was allotted by the telegraph branch to the Royal Engineers under Major Webber. Now these statements certainly appear to be strangely inconsistent with the paragraph in the noble Lord's letter, in which he says that he is confirmed in the opinion that no great benefit can be derived from the employment of so small a body of men of the Royal Engineers permanently on telegraphic engineering by the tenour of recent communications from the Secretary of State for War. I shall be curious to see what those communications can be which seem to be so strangely at variance with the opinions which have hitherto emanated from the War Office on the subject. I think, however, that to those who can read "between the lines" the apparent or seeming inconsistency of the War Office will at once disappear. I would ask whether the pith and essence of that sentence do not lie in the word "small?" Whether the objection does not point, not so much to the employment of soldiers as soldiers, as to the employment of so small a body of soldiers? Unless this system is extended; if it remains as it is, almost in its infancy, it is of no use at all; and if it is to do good, it is absolutely necessary that it should be largely extended, as the Committee recommended. I would also ask whether Lord Cardwell, when Secretary of State for War, did not express satisfaction at the results of the system so far as it had gone; and whether he did not likewise recommend the enlistment into the Royal Engineers of boys who had become too old to serve as messengers—a most important and useful suggestion? Of those boys, Mr. Scudamore says, in his Report of 1871, that the small amount of drill to which they had been subjected had greatly improved their mode of walking, made them more sharp and active, and that although they had sometimes amused themselves with putting mice in the pneumatic tubes, still their conduct on the whole was satisfactory. At a time when we hear so much about the difficulty of obtaining recruits and the advantage of drilling boys, I think we ought not to neglect so promising and valuable a material. The Committee of the Treasury go on to remark that— The desirability so strongly urged by the War Office of obtaining a certain number of soldiers trained to telegraph work in the event of war would render a more extensive employment of the Royal Engineers a measure greatly conducive to the public interest. The other day I read a prize essay on the Royal Engineers, written by Major Fraser in 1875, in which the author says— That the tactical use of the field telegraph as applied to a position is to keep a commander acquainted with the state of things all along the line, to enable him to direct his reserves and judge the moment for making a counter attack. And I think this advantage is too obvious to need dilating upon. Only let the House conceive for a moment what might ensue from the mistake of a single word omitted or misinterpreted by the employment of a person in the service who was incompetent or perhaps only moderately competent: why, it might result in the ruin of an Army. I will instance what I mean by an illustration which I have taken from the Report of Mr. Scudamore, who mentions the circumstance that on one occasion a gentleman in London telegraphed to his brother in the country to send a "hack" to meet him at a station. It appears that four dots represent the letter "h;" that the instrument only sent three, and that consequently when the gentleman arrived at the station he found waiting for him there not a "hack" but a sack; the three dots representing the letter "s." It must have been small consolation to that gentleman to be informed that the mistake could not have happened if he had asked for a horse instead of a hack, because the clerk could not have made anything else than horse out of the letters sorse. In another instance the message was "send rails 10 foot lengths;" it was translated into "in" foot lengths." In fact, Mr. Scudamore is forced to admit that the most annoying and irritating blunders are frequently committed; and I need hardly point out to the House the fact that blunders which, in time of peace, are not inaptly termed "irritating and annoying," may become in time of war ruinous or disastrous. But it may be said—"You have already a school of military engineering at Chatham, where our soldiers can be taught the theory of telegraphy." That is, no doubt, all very well, so far as it goes; but the art of telegraphy, like the art of conversing in a foreign language, can only be acquired by practical as well as theoretical instruction. The only real objection to the employment of the Royal Engineers in the Telegraphic department was raised by the War Office Committee; but it was raised by them only to be at once removed. The Committee of the Treasury say in their Report— It has been, urged as an objection that in time of war the telegraph service in England would find itself suddenly denuded of a large portion of its staff. But this we do not believe would he the case. It would he the policy of the War Office to be continually passing men through the Telegraph department, so as to have always in the ranks of the Royal Engineers a large proportion of men trained to the work, and though in time of war it might possibly be found that the men would he more quickly passed through the school, it would always be necessary for their own interest that the War Office should keep the telegraph district worked by the Royal Engineers in England in the highest state of efficiency, in order to serve as a depôt from which men would from time to time be drafted to the seat of war. After a few years there will also be a number of pensioned Royal Engineers who, having formerly served under the Post Office, would be acquainted with the work and could fill the places of those who might be ordered on foreign service or sent to the seat of war. In short, if the extension recommended by the Committee were to take place you might have a Reserve of telegraphists just as you have any other Reserve; and I think that the right hon. Gentleman the Secretary for War must acknowledge that such a Reserve is important. In spite of all these considerations, however, and in spite of the assertion of Mr. Scudamore that he sees no objection to, but rather encourages, the employment of the Royal Engineers in the Telegraphic department of the Post Office alike upon financial, commercial and Imperial grounds, we find the noble Lord, the Postmaster General writing in these terms— In the event, however, of its being considered desirable, upon grounds of Imperial policy, that the postal telegraph service should be used as a school of instruction in telegraphy for the Royal Engineers;"— as if there could be any doubt whatever on the point that men should be trained to do in time of peace what they would be certainly called upon to perform in time of war. Again, the noble Lord the Postmaster General speaks of its being wrong to expend so large a sum annually for an object so foreign to that for which the purchase of the telegraphs by the State was undertaken; and what I wish the House to say is, that they do not intend that this object shall be any longer foreign to the purposes for which the telegraphs were acquired by the State; that this question shall no longer be treated as a departmental, but as an Imperial one; and that the House will do all that lies in its power to dispel the prejudice which closes the doors and bars every branch of the public service against the soldier, and treats him as the outcast and pariah of society. If the strength of a chain is the strength of its weakest link, I would point out to the right hon. Gentleman the Secretary for War that, if this or any other link in the chain of our military system be weak, not even the admirable proposals which he has made this year for ameliorating the condition and increasing the efficiency of the Army will be successful, but rather, perforce, ineffectual. If, in conclusion, I might be allowed respectfully to address one word to the noble Lord, the Postmaster General, it would be to tell him that he may obtain for himself a name which no other Postmaster General has yet obtained, if he would for once emancipate himself from the routine and traditions of his Department, and heartily co-operate with the Secretary of State for War in bringing the excellent work in which that right hon. Gentleman is now engaged to a successful and prosperous issue.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "a Select Committee be appointed to inquire into the organisation and management of the Telegraph Department of the Post Office,"—(MR. Goldsmid,) —instead thereof.

Question proposed, "That the words proposed to be left out stand part of the Question."

MR. NORWOOD

said, that as he took considerable interest in the transfer of the telegraphs to the State, and served as a Member of the Committee of 1868, he was desirous of addressing the House. His hon. Friend the Member for Rochester (MR. Goldsmid) had detailed with great exactitude the history of the transaction, which he must admit had, from a financial point of view, been very disappointing. The Committee of 1868, which comprised several independent Members of the House, criticized closely the evidence laid before it upon the authority of Mr. Scudamore. He should not enter into the details of the excess of expenditure, which they all knew was great. There were several causes for the excess. He thought that the railways and the owners of the telegraphs were rapacious, and the Government went into the transaction very precipitately, and without sufficient business care. The matter was brought before the House late in the Session. The Committee sat until the middle of July before their Report was made. If they had not ceased their labours when they did it would have been impossible to have dealt with the matter during that Session at all. His hon. Friend had scarcely done justice to the other side of the question. It was quite true that the cost of our telegraphic system had been very excessive; in fact, nearly twice as much as they had any right to expect, from the information laid before them; but the argument comparing the expenditure of the Government in the management of their telegraph system at the present day to that of the private companies which possessed the telegraphs Before 1868, was not a correct or a fair one. The service performed by the Government was beyond comparison more important than ever performed by the private companies. Not only was the cost of the Government telegram much less than that of the private companies, but the Government had placed, in almost every village of importance, this inestimable boon of the telegraph, which certainly did not exist under the old régime. There could be no doubt that Mr. Scudamore was rash in his statements and his data; but it must be remembered that it was not a matter which strictly originated with Mr. Scudamore. It was a task which he had been requested to perform by his superiors, and he took it up with reluctance. Looking to the fact that he was unfortunately no longer in the public service or in this country, he thought that his hon. Friend laid too much stress upon the blame attaching to Mr. Scudamore. He (MR. Norwood) believed Mr. Scudamore to be a man of great ability, who certainly devoted himself to this question to the injury of his health and professional prospects, and he, for one, very much regretted, for the sake of the country and for the sake of Mr. Scudamore himself, that the financial results of the transaction had proved to be so unfortunate. Looking at the future, he did not think that with all the great excessive expenditure the country had much reason to find fault. If they placed to revenue those charges which ought to be borne by revenue, and not those which ought to be placed to capital, he thought that they would find that the dead loss to this country had not averaged £100,000 a-year. Looking at the benefit which every individual of this country had received, and which had been derived owing to the increased information obtained from the papers, which were now able to furnish twice as much telegraphic information, he did not think that all these advantages had been dearly purchased by the deficit which now existed. One cause of the excess of expenditure had been the immense advance which had taken place in the cost of material, for, from 1870 downwards, the price of metal, wood, and other articles, entering largely into the expenditure, had enormously increased, and beyond what any one could have anticipated. There had been a Report from the Treasury, and a criticism upon that Report from the Postmaster General. He read that criticism with great pleasure, finding that on the whole it took a very sensible view of the case. The remedy was not to be found in an increase of rates. The true course was that pointed out by his hon. Friend at the close of his speech. There must be a very close examination into the items of expenditure. Let them extend the area of consumption and reduce the cost of production and of distribution. He trusted that the Government would not look to an increase either in the cost of individual telegrams or to any very serious alteration in the rate for Press telegrams. It would be a radically wrong policy not only in the broad public view, but from a commercial point of view, if the Government attempted to make up the equilibrium by depriving the public at large of the great facilities which they now enjoyed. He thought that the improvement in the matter and manner of the Press within the last few years had been something wonderful. The Press had now reached a position in some of the provincial towns which fell little short of that occupied by the metropolitan Press. He would simply point out, in conclusion, that the great reform—the introduction of the penny post—resulted for several years in a loss of a very serious character. He pinned his faith on the Preamble of the Bill of 1868, which he was instrumental in passing. That Preamble said nothing whatever as to profit or revenue, but the great benefit which the measure would be to merchants, traders, and the public generally, and also to the fact that it would afford telegraphic facilities to many important places which at that time were totally without that advantage. He thought that his hon. Friend had made out a case for inquiry, and he hoped that the Government would yield to the demand. It could not do the Government any harm, and it might strengthen their hands.

DR. CAMERON

said, he did not rise to join in the condemnation of Mr. Scudamore, which formed so large a portion of the speech of the hon. Member for Rochester; and he was saved the necessity of entering into any vindication of that gentleman by the remarks which had been made by the hon. Member for Hull. He thought that Mr. Scudamore's greatest fault was over-zeal. Had it not been for that over-zeal the country might indeed have escaped some of the large expenditure in which it had been landed, but it would certainly not have obtained that perfect system of telegraph communication which it now possessed. Anybody who remembered the telegraphic system under the old companies, and would contrast it with the state of things which now existed, could not but admit that the change was well worth its cost to the country, especially when it was borne in mind that without a division the House had voted £4,000,000 of money for the purchase of the Suez Canal shares. Under these circumstances he thought the country could very well afford to pass over the cost of the acquisition of the telegraphs without hypercriticism, particularly when, if there had been any extravagance in the administration of the finances, the man who was responsible for it was no longer in the place where his over-zeal could do any further mischief. It was, too, a matter that must not be lost sight of, that the telegraphs had immensely increased in value to the country since they had been taken over by the Government. Every mechanism connected with the science of telegraphy had wonderfully improved, and there were appliances by which a single wire now could do as much work as formerly could be done by half-a-dozen. There was, however, one point which very few hon. Members would be aware of, and which he was surprised to learn the other day. It was this—that notwithstanding all the money that had been expended in the purchase of the telegraph monopoly, after all there existed in the country at least one company which had the right of erecting telegraphs and competing with the Government for the conveyance of telegraphic messages. He held in his hand an admission on the part of the solicitors of the Post Office that this was actually the case. He would, however, in the first instance, read an opinion of counsel, which the company had obtained on the subject. It was dated the 21st of June, 1871, and stated that the counsel (MR. Davey) was of opinion that the Orkney and Shetlands Islands Company (Limited) was a telegraph company existing on the 22nd of July, 1869, and therefore entitled to lay down any extension of their existing telegraph lines, or any new telegraph lines within the limits assigned by their memorandum of Association, and that the Postmaster General had no right or authority under the Acts of 1868 or 1869 to interfere with the company so doing, unless he chose to purchase their undertaking. If he attempted to do so, such an act would be unauthorized and unlawful. He (Dr. Cameron) had also in his hand the copy of a letter dated June 18, 1874, signed by Mr. Ashurst, the solicitor of the Post Office, in which the writer, referring to negotiations pending between the Treasury and the Orkney and Shetland Telegraph Company, said it was important to bear in mind that if the negotiations were concluded on the basis proposed, the Postmaster General would, for all practical purposes, become the purchaser of the lines and plant of the company only, and that when the purchase was completed it would still be competent for the company not only to construct other telegraphs between Orkney and the mainland, but also to construct telegraphs in competition with those of the Postmaster General in all parts of England and Scotland. He believed that the negotiations with this company, which had been pending for a long time, had not yet been concluded, and by way of bringing the Post Office to the scratch the Orkney and Shetland Telegraph Company was proceeding to erect new telegraph lines throughout the Kingdom. One had already been erected between Thurso and Scrabster, and the company had made contracts for establishing lines between Newcastle-on-Tyne and South Shields, and between Liverpool and Manchester. So that if the Government now proceeded to buy up the company it would have to do it with all the additional expense which these extensions would entail. He believed that on the Manchester and Liverpool and the Newcastle and South Shields lines the company proposed to compete with the Government by charging a 6d. rate; and if the scheme was successful, he understood that it was proposed to erect wires between the principal towns of England and the metropolis. Now the letter of the Postmaster General, which had been so often referred to, showed that three-fourths of the entire revenue from the telegraphs was derived from four or five towns, so that by tapping those towns and charging a sixpenny rate the company would be in a position to make a most effectual raid upon the present receipts of the Post Office. Not only was this the case, but the negotiations of the Orkney and Shetland Telegraph Company had brought to light another existing right which would probably have to be bought up—namely, that of the "way-leaves" of the different railway companies. They had been told that the Post Office had already paid twice over for these "way-leaves;" but it now turned out that there was still a residuum of way-leave remaining in the hands of the companies which might yet require to be bought up. For the Post Office, not dreaming of any possibility of opposition, had not in their bargain with the different railway companies considered it necessary to insist on a monopoly of the right of erecting wires along their lines. They simply bought the right to run their own wires along the lines of railway, not imagining that any other company would ever be in a position to enter into a competition with them. But when the Telegraph Company to which he had just referred started up and desired to treat for way-leave it was found that upon the part of almost every railway which they approached there was the greatest readiness to enter into negotiations upon the subject. This would have the effect of converting a dormant right of no appreciable value into a right which might have to be purchased at a considerable cost. He (Dr. Cameron) believed that the facts he had stated were known to very few hon. Members, and it was for that purpose that he had thought it proper to bring them under the notice of the House.

MR. GOSCHEN

said, that having had on this subject to play the somewhat ungrateful part of Cassandra, having criticized the purchase of the telegraphs, and having questioned the calculations of the right hon. Gentleman the present First Lord of the Admiralty (MR. Hunt) at the time of the purchase of the telegraphs, he hoped he might be permitted to make a few observations. He thought the hon. Member for Rochester (MR. Goldsmid) had only done his duty in calling the attention of the House to the matter, because it was to the interest of the proper administration of the finances of the country that when a great undertaking was initiated, with estimates such as had been mentioned, and which ended with results such as had been put before the House, that they should be submitted to the scrutiny of Parliament and of the country. The right hon. Gentleman the present First Lord of the Admiralty, in his speech upon the purchase of the telegraphs, delivered in introducing the Bill, in 1868, stated that the amount of capital required for the purchase and for the necessary extension of the telegraph lines would be about £4,000,000, and that the surplus revenue derived from working the lines would be £280,000 per annum, which would enable the interest on the capital to be paid, and the entire debt to be wiped out in 29 years; where as, in fact, the sum expended on capital account down to the present time was £10,000,000; instead of there having been a surplus revenue, there had been a deficiency, and there had been no attempt to wipe out the debt, or even to pay the interest, until the present year, when a net balance of receipts over expenditure of £40,000 had been available for that purpose for the first time. His hon. Friend the Member for Hull was appointed a Member of the Committee to examine into the contracts, but it was found that all he and the Committee had to do was to satisfy them. The House ought to have before them, in parallel columns, the original Estimates and the results, and all the circumstances which had led to those discrepancies. But how did it happen that we paid so great an amount for what was a bad bargain? It was because they proceeded in too great a hurry, though they were distinctly warned of everything that was taking place. He pointed out at the time that the Government were, through the course they pursued, paying £2,000,000 extra. The right hon. Gentleman opposite (MR. Hunt) pressed forward estimates involving an apparent expenditure of £4,000,000 in a very few days, without giving sufficient opportunity of investigating and verifying the calculations on which these Estimates were based. It was supposed that they included the purchase of the railway rights and other things not included in the Estimates. When the Committee was appointed, of which he (MR. Goschen) was a Member, no one was present to represent the public. On the one side there appeared the representatives of shrewd business men and the lawyers who had to advocate the interests of the companies. On the other they had the representatives of the Government, who were eager to conclude a purchase which no doubt they thought would be for the public good. As long as the case of the companies was before the Committee no opposition was offered. The right hon. Gentleman, then Chancellor of the Exchequer, who had his hand upon the lid of the Consolidated Fund chest, did not keep it down; but, on the contrary, with a ready hand, shovelled out the money as if it were for an election, the Government being anxious to pass the Bill at any cost, because they had undertaken to do so. The result was that the Committee voted whatever charges and contracts were brought before them, and had no chance either of refusing or protesting against the improvident and extra vagrant character of the bargain, but they were made more or less responsible with the Chancellor of the Exchequer in registering what was done. Let him refer to one or two of the points which the Committee had to deal with. The first was the question of monopoly; but with the single exception of himself, the Committee voted against the establishment of a monopoly, as likely to imperil the success of the Bill under which the purchase and transfer of the telegraphs were to be effected; but in the following year Parliament unanimously supported a proposal the effect of which had been to create an absolute monopoly. The Committee asked for returns from the companies for the last 15 or 16 years, but they failed to get any accurate data. In fact, they could not touch one single point in this contract, and they came back to the House with a Report which was based upon the representations of shrewd business men and lawyers, determined to promote private or corporate interests; and, on the other hand, a Government eager to get a Bill passed and to have the telegraphs in their own hands. He referred to these facts in order that such financial transactions should not be repeated in the future. Then came another important point. It was thought that in the contract the compensation to be paid included not only the claims of the telegraph companies, but of the railway companies also, and that the possibility of the latter putting the screw upon the former was provided for. But it was soon found that provision had only been made for the immediate object, and they were called upon to pay compensation by anticipation for any further application of the screw by the railway companies. It was now seen that the financial results were of a very disastrous character. Mr. Scudamore contended that the possession of the telegraphs would reduce the cost of administration in India. That had not been the case. The calculations on which the purchase was based by Mr. Scudamore included the purchase or capital account, the prospective revenue to be derived from the working of the telegraphs by the Government, and the prospective receipts. On the first two he was wrong. The capital required for the purchase was much greater. The expenditure to put and keep the telegraphs in working order was also greater. On the third point he (MR. Goschen) was wrong, and Mr. Scudamore was right, as to the returns. But the whole calculation was vitiated by the errors as to capital and expenditure. Instead of there being a surplus of £2,500,000, there had been an expenditure of £9,000,000, and what his hon. Friend the Member for Rochester wanted was a Committee to inquire into the whole subject. If the Government were not prepared to grant that Committee, he hoped they would at least present the House with a detailed statement which would enable them to ascertain the facts. The loss had arisen out of questions connected with the administration of the Department, more principally the cost of the extensions which had been found necessary from time to time. He should like to know what the extensions of the system had really cost. If the Government would investigate the matter they might readily arrive at a result which the Papers did not show—namely, in what direction the £9,000,000 had gone. The House had got lump sums before them, but what they wanted was details. He had seen it stated in the public Press that the Liberal Government which came in in 1869 was responsible for the terms given to the companies, because when they came into power they did not throw up the business and refuse to bring in the necessary Money Bill. But he believed that right hon. Gentlemen opposite would admit that when contracts had been made with different companies, when their shares had risen, when the arbitrations were in progress and the negotiations had arrived at a very advanced stage, it would be impossible for the incoming Government to reject all that had been done, knowing that the public had set its heart upon the acquisition of the telegraphs. Accordingly, his noble Friend (the Marquess of Hartington) brought in a Bill in which he gave effect to that which had been approved by the previous Government, stating at the same time that it was open to the House to reject it. The then Chancellor of the Exchequer (MR. Lowe) spoke of the "immense price the Government were called upon to pay, of which he at once washed his hands altogether; but the matter," he added, "was found in so complicated a state that it was impossible to recede." And in the debate which followed, the purchase was spoken of as a bad bargain. The present could not be regarded as a Party question, as both Governments were implicated in the management of the telegraphs. Some hon. Members might be of opinion that it was unadvisable to rake up past transactions, but that was not the feeling of the Members of the late Government, and if the Committee were granted they would be prepared for the investigation. For his part, he could not tell on what plea it could be refused, for he believed that a thorough investigation into the whole matter would strengthen the hands of the Postmaster General. It could not be said that the Government were averse from inquiry by Committee or Commission, although they, perhaps, preferred an inquiry which would relieve them from prospective difficulties to one which would merely deal with past transactions. The matter was one in which large financial and other interests were involved, and they were bound to satisfy the country that the enormous outlay which had been incurred could be justified.

LORD JOHN MANNERS

said, the right hon. Gentleman who had just sat down had stated most truly that neither this nor the preceding Government could claim immunity from criticism as to the purchase of the telegraphs or as to their subsequent management, and he quite assented to that statement of the case. The hon. Gentleman who introduced the Motion (MR. Goldsmid) devoted the greater part of his speech to an elaborate attack on Mr. Scudamore; but his Motion appeared to refer exclusively to the present system and organization of the Telegraph Department of the Post Office, and to any future changes which the Committee, if it were granted, might recommend. The hon. Gentleman's speech, however, referred to past transactions, and in the course of his observations he criticized with extreme if not unjust severity the language and conduct of Mr. Scudamore. Now, it had been remarked that there was something of unfairness in attacking a man who was absent from England and could not even attend the Committee were it granted to defend himself, and he owned that he shared in that feeling. As, however, Mr. Scudamore could not be heard, he thought it incumbent on him to refer to the principal charges brought against an eminent public servant. The hon. Gentleman began by giving them Mr. Scudamore's estimates in 1868, which were based on narrow grounds. Mr. Scudamore had estimated that for £3,000,000 the business of four companies—the Electric and International, the British and Irish Magnetic, the United Kingdom, and the London and Provincial—might be purchased. The Bill introduced by his right hon. Friend (Mr. Hunt) was, however, a permissive Bill. Reuter's Company was inserted in the Bill in Committee; but Mr. Scudamore never included it in the £3,000,000 which he had estimated. To his estimate £726,000 was added in the long run. Then, again, the Universal Private Telegraph Company was also inserted by the Committee, and involved an additional expenditure of £184,000. Thus £910,000 was added by those two companies alone to the original estimate of Mr. Scudamore. The right hon. Gentleman opposite (MR. Goschen) had referred to the view he took in the Committee as to the improper basis on which the estimates were made. But that did not apply to Mr. Scudamore. His original estimate of £3,000,000 was based on the companies' published accounts, and their Returns to the Board of Trade, and the Act no doubt gave the companies 20 years' purchase of their net profits. He now came to 1869, which was signalized by the purchase of certain undertakings, and when a strict monopoly of telegraphic communication was given. That entirely upset the original estimates on which the enterprize was submitted to his right hon. Friend, and by him to Parliament. But was that all? In the Estimates of 1869 were further included the purchase of two companies which were then in a moribund condition—the Bonelli Company, at an outlay of £23,000, and the Economic Telegraph, of £15,000. That made £948,000 altogether in excess of the original estimates submitted by Mr. Scudamore. It was not intended in 1868 to purchase the railway telegraph business. But when the monopoly clause became law it was absolutely necessary to acquire that business. The growth of the claims and charges of the railway companies exceeded his powers of description; but was Mr. Scudamore to be blamed for not having provided for these preposterous charges, and for the £4,000,000, exclusive of interest, claimed by the railway companies? To describe these claims it was necessary to go back to the word coined by Dr. Johnson on the death of Mr. Thrale, the great brewer, and to speak of the "potentiality" of railway profits at the end of 20 or 30 years. Mr. Scudamore had nothing whatever to do with it. Then again, by the Telegraph Act of 1870 the Postmaster General was compelled to purchase the Jersey and Guernsey Company at a cost of £57,350. The Isle of Man Telegraph Company cost £16,136; and altogether the figures were brought up to £1,021,426 of excess over Mr. Scudamore's estimate. However sanguine he might have been in his original estimates, Mr. Scudamore was not, therefore, to be blamed for the very great excess upon the capital account which had unfortunately arisen. The hon. Gentleman had adverted to the remarks made by the Postmaster General in reply to the Report of the Committee, and asked if his had been the hand that penned them. Now, he (Lord John Manners) had not signed that Report without due consultation with the officers of the Department, and was responsible for every syllable of it. Further than that he could not say, except that the hon. Gentleman had made a "bad shot" as to the authorship of the Report. He now came to 1872, when what was called the "Post Office scandal" arose. It gave rise to debates in that House, and he was not at all sure that the disclosures then made did not lead to changes in the composition of the Government itself. A solemn inquiry was instituted by the Committee of Public Accounts and afterwards by the Treasury, and blame was apportioned by the House and by the Treasury where it was thought to be deserved. When he succeeded the right hon. Gentleman opposite (MR. Lyon Playfair) the Post Office scandal of 1872 was a thing of the past, and to revive it now in 1876 for the purpose of exciting animosities against one of the principal performers in it was as useless and unnecessary as it was unfair. The hon. Gentleman complained that the accounts of the Post Office were still unsatisfactory, and that the capital account was wrong, as it did not show anything for the building of the new Post Office. When the State undertook the transfer of the telegraphs there was no idea either on the part of the Government or Parliament that any charge should be made for the portion of a post office which might be appropriated for the telegraph service. It was impossible to say at that time what additional space would be required for the instruments. It would be seen in the Estimates for the ensuing year, however, that a proper item would be included for the telegraph share of any new Post Office buildings of any considerable size. The hon. Gentleman had asked howit was that the Central Telegraph Galleries in St. Martin's-le-Grand were not charged to capital account. There was, however, something to be said on the opposite side. It was true a portion of that great building was occupied by the Telegraph Staff; but, on the other hand, the large building in Telegraph Street, which was the property of the Telegraph Department, was now in turn occupied by a portion of the Post Office Staff. The hon. Member for Rochester had referred to a small portion of the observations made in reply to the Treasury Committee that dealt with the employment of the Royal Engineers, and he was afterwards followed on the same subject by the hon. and gallant Gentleman the Member for South Ayrshire (Colonel Alexander). One portion of the question was undoubtedly a subject for discussion. There were some financial authorities who thought, for reasons they held to be good, that the employment of the Royal Engineers was an error; and there were others who thought that, in a financial point of view, it was economical. No one could deny—he was certainly the last person to deny—that the services of the Royal Engineers were satisfactory, that they performed their duties to the satisfaction of the Department and the country. It narrowed itself solely to the question of finance, and they had to ask themselves whether the work would be done more economically if they were not so employed. Having looked into the question and considered the arguments on both sides, he had come to the conclusion that, for reasons especially connected with the necessities of the telegraph service, it would be more economical if the whole of the telegraph lines for the Post Office were maintained by the Post Office staff proper, and not to a certain extent by the Royal Engineers. But, after all, what was the amount involved? He stated in his Report his belief that, if the Royal Engineers were relieved from the work, a sum of £2,500 would be saved annually, and it really came to be a matter of accounts. He had very little doubt that his right hon. Friend the Secretary of State for War and himself would be able before long to come to a satisfactory conclusion as to this £2,500. His hon. and gallant Friend the Member for South Ayrshire spoke as if he thought that he (Lord John Manners) entertained a doubt as to the excellence of the system, rather than as to the financial point of view; but he could assure him that he did not. He would admit, for the sake of argument, that the Royal Engineers ought to be instructed in the practical art of telegraphy, and he did not raise any objection, except on the score of the small element of cost, if they continued in that employment. Far greater military countries—France, for instance—did not accept our views upon this point. No one could doubt that the military authorities and statesmen of France considered that it was of vital importance that the Engineer Corps should be able to conduct telegraphic operations during war, but in spite of that they had a totally different system, and they did not suffer any of their military employés to be employed in telegraphy. He mentioned it because it might appear, on more mature consideration, that another system more adopted for military purposes might be suggested for the ensuing year. On looking into the Estimates, it would be found that for the ensuing year nearly the same sum that had been charged in former years was taken for the employment of the Engineers. Before doing anything in the way of change, he could assure the House that the question would have, as it had had, the utmost consideration on every matter of detail connected with it. The hon. Member said he proposed this Committee in no hostile spirit to the Government or the Department, and he was followed in the same spirit by the right hon. Gentleman opposite. It would be most ungracious not to accept such assurances; but he would like to throw out a hint that the Telegraph department was not in that state of impecuni- osity which was supposed. With regard to the finances of the present year, the estimated receipts were £1,200,000;and he had the pleasure of stating that the estimate would be more than realized, and that there would be, in all probability, at the end of the financial year £1,250,000 paid into the Exchequer from the Telegraph department. That, he ventured to think, was not an unsatisfactory result. He contended, however, that the success or non-success of the undertaking was not to be measured on merely commercial grounds. But, if this great Imperial transaction was to be treated on purely commercial grounds, it would be necessary to take out of the annual expenditure such items as extension, private wires, and superannuation. He (Lord John Manners) had stated that the year would close with what he trusted the House would regard as a satisfactory figure so far as the public were concerned. He estimated that the expenditure would amount to a sum not exceeding—and he had every reason to hope that it would be less than—that which was taken credit for at the beginning of the financial year. With respect to the future, he thought he might go so far as to say that he believed when his right hon. Friend the Chancellor of the Exchequer made his Financial Statement for the next financial year there would be nothing either in the estimated expenditure or income of the Telegraph department of the Post Office that would not be of a satisfactory character. The hon. Gentleman said that if this Committee were granted he hoped it might strengthen the hands of the Department in reducing the charges; but how such a Committee could help the Postmaster General to discharge people who had a lien upon the Government employment was not very apparent. Those connected with the Department were not insensible of the importance of a reduction of expenditure, and they had been constantly considering whether the Telegraph department and the Post Office could not be more closely welded together. The hon. Member had asked what was the character of the present system of the Telegraph department, and had spoken of Mr. Scudamore as still in some sense the head of that department. The head of the Telegraph department, however, was precisely the same as the head of the Post Office. Politically, he (Lord John Manners) was, of course, responsible for both; but the permanent secretary of the Post Office was now the secretary also of the Telegraph department. If the hon. Gentleman was only anxious that the proposed Committee should be the means of procuring the amalgamation of the different branches of the Post Office, that was already effected. The hon. Member spoke in his Resolution of calling the attention of the House to the results of the transference to the State of the telegraphs, but as he confined his observations entirely to the financial results, it might not be amiss to place before the House the general results to the public at large of that transference, which had been so much criticized. He agreed with the hon. Member for Hull that the public out-of-doors were far more interested in those results of which no mention was made in the speech of the hon. Member for Rochester, than in the minute investigation of the transaction as compared with the original Estimate of 1868. Those results were multiform and all-important as regarded the political, social, moral, domestic, and educational relations of the country at large; and he ventured to say that in every one of these important aspects the transference to the State of the telegraph business of the old companies had been an unmixed and ever increasing good. To show what had been done in the last five years he would state that in 1870 the number of miles of telegraph required was 48,000, while the number of offices was 2,488; whereas in 1875 the number of miles of wire had risen to 110,000 and the number of offices to 5,600. He thought he might, therefore, not unfairly quote some remarks made by his right hon. Friend the Home Secretary in speaking on the subject in 1873, when he said— The Post Office afforded the maximum of advantage to the public, and returned to the Chancellor of the Exchequer the maximum amount of money compatible with the duties it had to perform."—[3 Hansard, ccxvii. 1189.] He (Lord John Manners) believed that very shortly those observations made by his right hon. Friend in 1873 would be strictly applicable to the Post Office Department—say in 1877 or in 1878. To suppose that the present deficiency, now about £140,000 annually, could be made up in one or two years would, perhaps, be taking too sanguine a view; but knowing, as he did, the means by which economy might be studied in the Telegraph department, and seeing that the expense had already been checked, and that the receipts of the Telegraph department were developing enormously week by week and month by month, he did not hesitate to predict that in two or three years the most sanguine estimate that a reasonable man could have formed five or six years ago of the great enterprize under his charge would be realized. In the meantime, he had only to express the hope that the House would guard itself against any rash or ill-advised changes. Nothing, he believed, would be more fatal to the progressive and satisfactory development of the Department than any hasty and inconsiderate change either in the general terms imposed, on it by Act of Parliament or in its internal administration. Such changes as in the view of the Government were desirable had already been effected or were under consideration; and if it should be the pleasure of the House to appoint the Committee asked for, he trusted that its operations would be confined within reasonable and moderate limits, and that it would not break in upon and disturb the relations which now existed between the Department and the country, and which were satisfactory in the highest degree to the public at large.

MR. LYON PLAYFAIR

I ask to make a few remarks on the reply made by my noble Friend the Postmaster General, and they need be few, because the financial state of the telegraph system has already been amply discussed. I at once admit that I concur with the Postmaster General in the position which he has taken in regard to the Report of the Treasury Committee—that the mode of bringing income in proper relations to the capital expenditure is not by unduly reducing the facilities which the public now enjoy, but by economising the useless expenditure of working the system, and by guarding against unremunerative extensions. But he has sat down without indicating the action which the Government intend to take in regard to the Motion of my hon. Friend the Member for Rochester, that a Committee should be appointed to examine into the organization and management of the Telegraph department. Upon that subject the more inquiry and publicity there is, the better will it be for the department itself and for the Minister who is responsible for its administration. The work of that department, if it has not been conducted with all the economy which could be desired, has as to its ultimate ends been carried on with singular energy and efficiency. It has developed more largely as a Government department than the public telegraphs of any other country, but that efficiency has been accompanied with a very large expenditure. The amount of money paid for goodwill and for plant was doubtless excessive, and the amount of expenditure for putting that plant into efficient working order was great, and, if added to capital, would make our purchase of the original working telegraphs very onerous. Enough, however, has been said on this subject. But too little has been said, either by previous speakers or by the Postmaster General, on extensions made since the purchase, or upon the effects which they produce upon the expenditure. Whether the expenses of working amount to 96 per cent of the income, as the Treasury Committee contend, or to 86 per cent, as the Postmaster General argues, they have largely increased from 1871–2 to the present year. The main cause of this increase is not the extension of unremunerative extensions to unpaying districts. This was only a small cause of the expenditure at any time, and it is rapidly decreasing from the natural growth of such offices. It largely arises, as I suspect, from the desire of the Post Office to attain an ideal excellence all over the Kingdom, although it may only be essential to the more busy centres of industry. The ideal of the Post Office is, that no office should retain a telegram longer than 10 minutes before it is transmitted. At certain periods of the day there is a large rush of telegrams, and if the wires and clerks between the stations are insufficient to keep up this 10 minutes ideal, new wires and new clerks are incontinently added. Then, for the rest of the day, both the wires and clerks are comparatively idle. Now, this is no doubt necessary between important telegraphing stations. But it is not equally requisite to have all over the country a high pressure system to carry out a preconceived ideal of 10 minutes' despatch, when an occasional 10 minutes' delay would matter very little. I believe that an intelligent consideration of this question by a Committee might result in a large saving both in wages and in the incessant demands for new wires and instruments. And I further think that a Committee might suggest important economies in the administration of the department. I do not at all agree with the proposals of the Treasury Committee as to the manner in which telegraph engineers should be employed to do routine postal duties as a substitute for surveyors. But, on the other hand, I do agree with them generally that there might be a large and economical consolidation of the postal and telegraph systems. I do not think a Committee would find it very difficult to bring the postal surveyor and the telegraphic engineers into more harmonious connection, in a manner which would add largely both to efficiency and economy. But such reforms arise with great difficulty within an office. To effect them a full public inquiry is essential. There is a natural disposition of public servants to keep separate as sub-departments kinds of work which appear more distinct than they really are. The postal surveyor wishes to be responsible for the offices under his control, as regards their working and discipline, while the telegraph engineer exalts his technical profession by confining himself to works of maintenance. But a Committee would, I think, find that there is no need of a perpetual divorce between the working and maintenance of telegraphs, and that both might be united with economy and efficiency. I do not believe that my noble Friend will by himself succeed in carrying out sufficient organic changes to bring the telegraph system into a satisfactory condition as regards the revenues of the country. He is weighted with an enormous original expenditure on capital. He is pressed by a public always demanding increased facilities at a minimum rate of cost to themselves. He possesses, on the other hand, very efficient officers who desire to see the telegraphic system extended, and naturally estimate the popularity and efficiency of the system higher than its economical relations to public revenue. His hands would be greatly strengthened by the Report of a Select Committee, By its Report many of the prejudices of the public in regard to the administration of the telegraphs would be removed. The honesty and public spirit with which the whole department has been carried on from the original negotiations of Mr. Scudamore to the present time would become manifest. But the errors of over-zeal might be restrained, and the Committee could not fail to assist my noble Friend in his efforts to produce increased economy in the management. I therefore hope my right hon. Friend the Chancellor of the Exchequer will rise after me and announce that Her Majesty's Government will not object to give a Committee, not to rake up the errors of the past, but to economize and improve the system for the future.

THE CHANCELLOR OF THE EXCHEQUER

said, that as everybody agreed the Motion before the House would be useful and satisfactory the Government had no wish to stand in the way of any inquiry, though they could not approve the appointment of a Committee merely to open up old sores. Care should be taken, therefore, to limit the scope of the inquiry, so that it should not assemble for the purpose of criticizing the measures effected by a gentleman who was now absent from the country. The state of the Postal Department had engaged, and was still engaging, the attention of the Government. Some not unimportant improvements had already been made in it; and, as the Report of the Departmental Committee was under the consideration of the Treasury, other improvements would shortly follow. He quite admitted that some advantage might be derived from the appointment of a Committee, especially in the direction indicated by the right hon. Gentleman who had just sat down. What he would suggest to the hon. Member for Rochester was that he should withdraw his Motion, and put himself into communication with his noble Friend the Postmaster General in order to arrange the matter. Meanwhile, he could assure his hon. Friend that in conducting the inquiry he would have the assistance and cordial support of the Government.

MR. GOLDSMID

said, he would accept the suggestion of the right hon. Gentleman, and withdraw his Motion.

Amendment, by leave, withdrawn.