HC Deb 26 June 1882 vol 271 cc421-33
DR. CAMERON

, in rising to move the following Amendment:— That the working of the Postal Telegraph Service, with a view to the realisation of profit, involves a Tax upon the use of Telegrams; that any such Tax is inexpedient, and that the profit derived from the service is now such that the charges for Inland Telegrams should he reduced, said, that, under ordinary circumstances, he should have felt considerable hesitation in proceeding with this Notice on the Paper, inasmuch as he was aware there were many questions of more urgency. If he thought it would in any way facilitate the despatch of Government Business, he would readily postpone his Amendment; but there were so many other Notices standing in the way of Supply, that if he gave way others would occupy the time. They ranged over a variety of topics, and it appeared to him that the House would be better occupied in the discussion of this practical question; moreover, it might prevent an inopportune discussion on the affairs of Egypt which some hon. Gentleman wished to bring on. He intended his remarks to be brief, and in asking for cheap telegrams he should treat it simply as a question of political economy. He should rely upon axioms which the Postmaster General had himself laid down about two years ago. A deputation from the Society of Arts waited upon the right hon. Gentleman to urge the adoption of a cheaper charge for inland telegrams; and they naturally referred to the recommendations of the Select Committee of 1876, and pointed to the various anomalies connected with the present rate. Whilst the minimum charge for an inland telegram was 1s. for 20 words, in foreign telegrams the word rate was adopted. A telegram could be sent to France or Belgium for 2½d per word, so that it was possible to send a telegram to either of those countries for a less sum than was charged for a message from one part of London to another. They pointed out also that, previous to the assumption of the telegraph system by the Government, 6d. telegrams existed in London; and although he did not lay special stress upon that point, and though he was perfectly aware that concurrently with the increase of charge great advantages had been given to the public in London, that was a fact which should not be lost sight of. The deputation also referred to the advantages in connection with telegraphy in Continental capitals, where by means of pneumatic tubes written messages, unlimited as to the number of words, were sent for half a franc. A noted statistician on the deputation entered into a calculation as to the amount of loss the Post Office would incur by reducing the charge for telegrams. He urged that the loss of revenue would be very slight; and what he said was borne out by the Report of the Select Committee, which stated that the way to increase the income was to reduce the charge at the proper time. However, the deputation did not venture to recommend in detail what the Post Office should do, and neither would he (Dr. Cameron) do so. In a lengthy reply to the deputation, the Postmaster General laid down two important principles, upon which he (Dr. Cameron) now based his case. They were—First, that if the price charged for a telegram was not sufficient to make it commercially remunerative, the deficit must be made good out of the general taxes of the country. The general taxpayers must be fined in order to enable telegrams to be forwarded under market price. Secondly, if the price charged was more than sufficient to make the Service commercially remunerative, then the difference was really so much taxation imposed upon telegrams, as much as if the tax-gatherer stood over the sender of the telegram, and levied upon him a tax at the moment it was sent. Having stated these principles, the Postmaster General went on to explain the financial position in which the Post Office stood with relation to the Telegraph Service. The right hon. Gentleman started from the year 1876, when the Committee on Postal Telegrams reported, and when Mr. R. Blackwood, one of the chief officers of the Department, introduced an important improvement in the shape of a balance-sheet, drawn up in a commercial form, and setting out the amount which, if the State telegraphs were an ordinary commercial undertaking, they would pay. For the year ended March 31, 1876, after making provision for everything that could properly be charged against revenue, there was a net profit on the Telegraph Service of £197,000, or what would have sufficed to pay a dividend of 2 per cent on the capital invested. In 1880, according to the financial statement of the right hon. Gentleman the Postmaster General, the net profit had risen to £354,000, or 3½ per cent; and in 1881, according to a recent Return, the net profit was £440,000. In the five years between 1876 and 1881, the profit had increased by £243,000, or about £50,000 per annum; and if, as he saw no reason to doubt, the same rate was maintained up to the close of the current year, there would be a net profit of £540,000, which, after paying 3 per cent upon the capital invested, would leave £220,000 to the good. It was against the confiscation of that amount to general purposes of taxation that he protested. He was aware that last year a reorganization scheme was adopted, the cost of which, so far as the telegraphs were concerned, was to commence at £38,000 a-year; but even deducting that, there was still a net profit of £180,000, and, applying the dictum of the Postmaster General to that amount, it must be regarded as £180,000 of taxation upon telegrams. The right hon. Gentleman very properly said that it was not for his Department to determine how taxation could best be raised—that was a question for the Treasury; but if the Treasury were willing to allow him to act as he thought proper, he had a plan cut and dried which would be a great boon to the telegraphing public, and would do away with this abuse of levying taxation upon telegrams. The plan which the Postmaster General proposed was a 6d. telegram for 12 words, with a ½d. word rate for all additional words. Various other suggestions had been made; but that was the proposal which the Post Office had considered seriously. They had done so for this reason, that a word rate had been adopted in other countries. The word rate, as adopted in Belgium, had many advantages, one of which was that the charge made by the Department was exactly proportionate to the work done, and that it freed the Post Office from a large amount of un-remunerative business. Under the present system in this country many people unnecessarily extended their telegrams, especially in the addresses, which were not charged for. The Postmaster General had informed the deputation that waited upon him that he had seriously considered this matter, and had instructed Mr. Patey, one of the ablest and most trusted officers in the Post Office, to enter into calculations and prepare a scheme. Having made the calcu- lations, Mr. Patey had arrived at the conclusion that the adoption of a 6d. rate would involve an immediate reduction in the net revenue by the amount of £167,000 per annum. This calculation the Postmaster General told them had been made with great caution and with great skill. Many specialists considered this estimate of loss too great; but he (Dr. Cameron) proposed to take the official figures. He had shown that by the end of the year the clear revenue from the Telegraph Service—after allowing for all expenses, and 3½ per cent for all the capital involved—would be about £180,000; and he maintained that the time had now arrived when, with that revenue, they could try an experiment which would be of the greatest convenience and service to the commercial community, and which would involve a loss of only £167,000; so that there would still be a margin of profit. Whenever the plan of 6d. telegrams was adopted, whatever might be the immediate effect on the revenue, the business would progress at a rate hitherto unknown. For a year or two there would be a certain loss of profits; but in a short time the Service would have so extended itself, and the use of telegrams would have become so general, that the Post Office would be amply recouped. As to the abstract question of putting a tax on telegrams, he did not think that there could be a second opinion; and at the present moment, when they were just on the turning-point, when the sum in the shape of profit was not so great as to constitute an irresistible temptation to officials connected with the Treasury, they had arrived at the best possible time for considering the matter. He claimed that there was nothing on which £167,000 could be better expended than on the introduction of 6d. telegrams; but this was a case where the net profits more than represented that sum. A tax on telegrams was a direct tax on intercourse and commerce, and was calculated more than any other tax to check the general development of business throughout the country. He therefore asked the House to pronounce that tax inexpedient, and to affirm his Resolution, so as to allow the Post Office to introduce a reform for which it had made every preparation, and which the Postmaster General had informed the public he could carry out with the most perfect certainty of success, and which could be carried out without, he believed, the necessity for any legislation in that House. The hon. Gentleman concluded by moving the Resolution of which he had given Notice.

MR. MONK

said, he had great pleasure in seconding the Resolution. On several occasions within the past few months he had been in communication with the right hon. Gentleman with regard to a reduction in the rate, not only of inland, but also of foreign telegrams; and the replies of the right hon. Gentleman had, on the whole, been of a very encouraging nature. The subject was one in which the various Chambers of Commerce throughout the country had taken a very great interest, and it was felt that a reduction in the cost of telegrams would be a very great boon to the commercial community. In these circumstances, he hoped that no great opposition would be offered by Her Majesty's Government to a proposal for an early reduction in the charge for telegrams, if not to 6d., at least to 9d.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "the working of the Postal Telegraph Service with a view to the realisation of profit involves a Tax upon the use of Telegrams; that any such Tax is inexpedient, and that the profit derived from the service is now such that the charges for Inland Telegrams should be reduced,"—(Dr. Cameron,) —instead thereof.

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

MR. FAWCETT

said, he would endeavour to deal very frankly with this very important question. He fully admitted that the arguments in favour of a reduction in the charge for telegrams were very strong. It was undoubtedly the case at the present time that, under the international rates which had been lately settled, it was possible to send a short telegram from any part of England to any part of Belgium, or from any part of the United Kingdom to any part of France, at a less cost than was incurred in sending a telegraphic message from one part of London or of Liverpool to the other. The reason for that was that, under the special rate agreed upon between England and Belgium, telegraphic messages were sent at the rate of 2d. a word, and under that agreed upon between England and France they were sent at the rate of 2½d. a word. If the address was registered, it was not unusual for a telegram sent under those scales to consist of an address of three words and a single word, such as "better," "come," or "worse," and such a message could be sent from the extreme North of Scotland to a remote corner of Belgium for 8d., and to any part of France for 10d. He was also free to confess that, in view of the number of telegraph stations in the United Kingdom, which, at the present time, amounts to between 5,000 and 6,000, the number of messages sent was not as large as might have been expected. He had caused a calculation to be made, and he found, excluding Press telegrams and foreign telegrams, that the number of inland telegrams sent each year was about 25,000,000. That gave a weekly average of about 480,000, and a daily average of about 80,000. Considering that there were 5,000 stations, he did not think that 80,000 was a large amount per day, and there was no other conclusion to arrive at than that the present 1s. charge was virtually prohibitory, not only to the working classes, but to many of the middle classes also. He hoped the House would think that he had stated the case in favour of a reduction in the price of telegrams clearly and unreservedly. He was further prepared to admit that if the price of telegrams were reduced, there would probably be a large increase in the amount of business. But his hon. Friend had thrown out a suggestion with which he could not quite agree, that if they had not money enough to bear the implied loss at once, which the reduction in price would involve, they should do it by bits. The hon. Member, he understood, would approve of a reduction being confined to certain local districts, and they should continue the 1s. telegram for long distances, and have the 6d. telegram for local districts. He could not help thinking that it would be a most serious thing if they were to impinge upon the great principle which regulated Post Office administration—namely, uniformity of charge independent of distance. There was a simplicity and advantage about this uniformity which ought not to be lightly sacrificed. Another suggestion was sometimes made. In France, and, he believed, in other Continental coun- tries, they had what was known as a system of express telegrams. By payment of an extra fee they could have a telegram "expressed," and sent on before the telegrams which did not pay this extra fee; consequently, all the more important telegrams in France, or, at any rate, a great number of them, were made "express" by the payment of the extra fee, and the price of the important telegrams thus came to be nearly as high as telegrams were in England. As regarded that system, he could only say that as long as he had anything to do with the administration of the Post Office he would strenuously oppose its introduction. He attributed as much importance to this as he did to the maintenance of uniformity of charge; and it seemed to him if they once gave to the person to whom an extra sixpence or shilling would be of no consequence the privilege of having his telegrams sent on before the telegrams of the poor man, they would spread far and wide the sense of partiality and unfairness—and nothing could be more undesirable. Therefore, he hoped they should always maintain the principle of uniformity, and the principle that telegrams were to be sent strictly in the order in which they were received, whether they were handed in by rich or poor. Although he was perfectly willing to agree to many of the abstract principles laid down by his hon. Friend, unfortunately he could not accept the Motion as it stood, because it was based upon facts which he greatly regretted to say did not exist at the present time. He agreed that any profit beyond what was necessary for the maintenance of the charges connected with the Telegraph Service, including interest on the outlay involved in their purchase, must be regarded as taxation; and when the day came when they secured this profit, it would be a question eminently deserving the consideration of the Chancellor of the Exchequer whether a tax on telegrams was a desirable means of obtaining revenue, especially when taxation involved the maintenance of so exceptionally high a rate per telegram as 1s. But his hon. Friend had assumed that, at the present time, a profit was being made beyond the amount necessary to defray the expenses and meet the outlay on capital. It would be his painful duty to show that the conclusion at which his hon. Friend had arrived was not applicable to the present state of things. So far as the hon. Member's figures were actual figures they were strictly correct. From figures which were in the hon. Member's possession the hon. Member drew a certain conclusion. The hon. Member, dealing with the telegraph revenue on commercial principles, said it had shown a regular growth since 1876 up to the year 1880–1, when telegraph revenue was £440,000, the usual increase in the previous four years having been at the rate of about 20 per cent. The hon. Member said, that being the case, the same growth must necessarily be shown in 1881–2, when the telegraph revenue would have risen to £520,000. On that assumption the hon. Member arrived at the gratifying conclusion that it would be possible to introduce the 6d. telegram and still leave a telegraph surplus. No doubt this would be so if the telegraph revenue in 1881–2 was £520,000; but the fact was that, in 1881–2, not only had there been no increase of revenue, but it was estimated there would be a considerable diminution. If hon. Members should express any surprise as to the cause of this decrease of revenue, they would soon discover that the explanation was to be found, which seemed to be frequently forgotten, and it was that it was impossible to create wealth out of nothing. If they spent more public money in any way whatever, whether in increasing the pay of public servants or in any other way, that public money must come out of some source, while proportionately diminishing the revenue from which it was taken. The House would remember how, last Session, he was pressed by hon. Members on both sides of the House to increase the pay of the telegraph employés. He was sometimes described as being very dilatory, and at other times as being very hardhearted. He looked into the subject very carefully, and the House would now appreciate the importance of looking into it carefully, because not only was it a serious thing to spend public money unnecessarily, but he knew, at the same time, that the amount of money that might be decided as necessary to give to the telegraph employés would have an important effect in determining the time when this great boon to the public of a reduction in the price of telegrams could be introduced. Well, after giving the matter careful consideration, he came to the conclusion, in order to satisfy the just and reasonable claims of the telegraph employés, certain changes were necessary, and that those would cost during the present year at least £80,000. This £80,000 had to be provided somewhere; it represented so much more added to the expense of carrying on the Telegraph Service. It swept away the whole of the increase in the telegraph revenue which his hon. Friend calculated on, and it landed them in this result—that whereas in 1880–1 they had a net revenue of £440,000, the net telegraph revenue of 1881–2, instead of being £520,000, would not, it was estimated, be anything more than £400,000. No one could doubt that what was done last year to improve the position of the telegraph employés had placed the financial position of the Telegraph Service in a very different light. He thought it was well to state this, because, in spite of all that was done for the telegraph employés, he noticed they were constantly holding meetings, and they were constantly saying that what they received was worse than nothing. All he could say was that if £80,000 a-year out of the public funds was worse than nothing, he, for one, deeply regretted that that sacrifice of public money was ever made. Well, it appeared that the telegraph revenue of 1881–2 would be about £400,000. The estimated financial effect of reducing the price of telegrams to a minimum charge of 6d. would be to diminish the net revenue by about £177,000. He was prepared to stand to that estimate, with the slight addition which had been rendered necessary in consequence of the increased expense of carrying on the Service. Those were the figures he had previously given, and he was prepared to abide by them. He would show the House how that sum was arrived at. The average amount now received from each telegram was 1s. 0½d. The cost was about 9d. The profit was thus about 3½d.; and 25,000,000 telegrams at 3½d. amounted to £364,000. The gentleman who was at the head of the Telegraphic Department of the Post Office had informed him that if telegrams were reduced to ½d. per word, with a minimum charge of 6d., each telegram would be charged, on the ave- rage, 10d., and the cost would be 8½d. This gentleman had calculated that there would probably be 30,000,000 of telegrams instead of 25,000,000. Each telegram would then bring a profit of 1½d., and the net revenue would be £187,000, showing an immediate net loss of £177,000. On the other hand, he was bound to admit that there were many high authorities who did not estimate that the loss would be so great as he had just said. But it was extremely difficult to foresee what would be the number of telegrams sent under the 6d. rate, and it was also extremely difficult to see what would be the average amount received on each telegram sent. It was well to remember that the greatest of all postal reforms—the introduction of the penny postage—was not, in its first results, by any means a financial success. Experienced officials had carefully looked into the question and informed him that it was more than 16 years after the introduction of the penny postage before the revenue reached its former amount. Great, therefore, as might be the after financial results, and the advantage conferred immediately upon the public, it by no means followed that loss would not be incurred by the adoption of such a reform as was advocated by his hon. Friend. The result arrived at was that the revenue from inland messages would be reducedby£177,000. If the present net revenue was taken at £400,000, the future revenue would be £223,000. The capital expended in the Telegraphic Service was about £10,500,000. Interest on that sum at 3 per cent would be about £.320,000. Thus, instead of the telegraph bringing large profits, as his hon. Friend had said, there would be a deficit of £100,000. Besides, he had taken the interest at the lowest amount—3 per cent. But the result would be still less satisfactory if the interest were reckoned at 3¼ per cent. It was, however, desirable to state that, although that would be the immediate financial result, he believed that with 6d. telegrams the Revenue would steadily improve. Mr. Patey, the head of the Telegraph Department, had come to the conclusion that at the end of four years the revenue from the telegraphs would have regained its present position. The question, therefore, to be considered by the Chancellor of the Exchequer, that House, and the country was, whether, for the sake of the great advantages which he believed would result to the community from the lowering of the price of telegrams, it was worth while to sacrifice for the first year £177,000, for the second year it might be £140,000, the third year perhaps £100,000, and at the end of the fourth year, perhaps nothing at all. He hoped he had stated the case fairly. It was often asked by the public Press and by Chambers of Commerce why the Postmaster General did not introduce 6d. telegrams? His asnwer was—"Where is the money to come from?" On the other hand, he was often asked to raise the wages of telegraph employés. But he would ask hon. Members to remember that they could not eat their cake and have it. He could only say that the best way for hon. Members on both sides of the House to bring about 6d. telegrams was to strengthen the hands of the Government in carrying out a policy of economy. As for himself, nothing would give him greater pleasure than to receive a message from the Chancellor of the Exchequer that the finances of the country were in a condition to admit of the change proposed. He hoped that his hon. Friend, after this explanation, would withdraw his Resolution.

MR. R. BIDDULPH MARTIN

said, he hoped that the Government would take into account the important bearing upon the question of telephonic communication, which in large towns was tending to supersede the telegraph.

DR. CAMERON

said, that if the Chancellor of the Exchequer would give some assurance in support of the abstract principle of the inexpediency of taxing telegrams, he should be happy to withdraw the Amendment. Otherwise he should go to a division.

THE CHANCELLOR OF THE EXCHEQUER (Mr. GLADSTONE)

Sir, I think the statement of my right hon. Friend was a very complete, a very clear, and a very ingenious statement, and it indicated no bias on his part adverse to the principle of the reduction of the price of telegrams. He laid down a principle which was, I think, very liberally stated by him in favour of the general views of my hon. Friend (Dr. Cameron). He stated that, as soon as the net revenue of the telegraphic system reached a point at which, it met the interest on the expenditure, he was disposed to view every excess above that as taxation upon telegrams. I do not feel quite certain that I could go quite so far with respect to the settlement of the point at which money from telegrams would become available for the reduction of the price; but, undoubtedly, whatever the point may be, I am very much disposed to admit that no remission of taxation has been more advantageous to the public than the remission of taxation upon telegraphic communication. When we have reached the point when the telegraphic system shows the funds to be disposed of, or when, it may be, the country shows a Revenue in a state so active and so nourishing that there are considerable funds to be disposed of, in my opinion the question of the charge upon telegrams will have a very fair claim indeed for consideration and comparison with other claims. That, I think, is all that can be justly said at the present moment, and I hope my hon. Friend will be disposed not to press his Resolution.

MR. JAMES HOWARD

said, that the present Postmaster General had introduced several beneficial changes since his accession to Office; and he hoped that the right hon. Gentleman would ere long signalize his reign of Office by the introduction of a 6d. telegram.

DR. CAMERON

said, that he was quite willing to withdraw his Resolution if the House would permit him; but if not, he would go to a division on it.

Question put.

The House divided:—Ayes 148; Noes 77: Majority 71.—(Div. List, No. 177.)

Main Question proposed, "That Mr. Speaker do now leave the Chair."