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CHAPTER 9: THE EVILS OF STATE TRADING AS ILLUSTRATED BY THE POST OFFICE BY FREDERICK MILLAR - Thomas Mackay, A Plea for Liberty: An Argument against Socialism and Socialistic Legislation (LF ed.) 
A Plea for Liberty: An Argument against Socialism and Socialistic Legislation, consisting of an Introduction by Herbert Spencer and Essays by Various Writers, edited by Thomas Mackay (Indianapolis: Liberty Fund, 1981). Foreword by Jeffrey Paul.
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THE EVILS OF STATE TRADING AS ILLUSTRATED BY THE POST OFFICE
Out of the multiplicity of affairs with which the State busies itself, not one can be instanced in which it has been thoroughly successful. The reason of this is not far to seek. Years ago Mr. Herbert Spencer pointed out the positive and negative evils consequent upon the State frittering away its time and energies in schemes with which it should have no concern. Admittedly the main duty of the State is the defence of citizens against aggression; it is manifest that this duty must be ill-discharged if the State undertakes other functions. ‘It is in the very nature of things that an agency employed for two purposes must fulfil both imperfectly; partly because while fulfilling the one it cannot be fulfilling the other, and partly because its adaptation to both ends implies incomplete fitness to either.’1 It is therefore quite natural to find that when the State undertakes to do those things which it ought not to do, it does them badly; and that its conduct of affairs which are foreign, as well as those which are germane, to the discharge of its primary duty, is characterised by bungling, extravagance, and inefficiency.
Although most people admit the superiority of private enterprise and administration to State-ownership and control, an exception is generally made in favour of one particular department in which it is contended the State has succeeded as a trader. That department is the Post Office, and socialists, who advocate State-ownership and control of everything, instance that department as showing what the State can do when it takes the place of private enterprise, and they contend that it could undertake the distribution of goods, clothing, food, etc., just as well as it undertakes the distribution of correspondence. Mrs. Besant’s advice to ‘anyone who thinks such distribution impossible’ is to ‘study the postal system now existing.’2 From the Individualist point of view nothing could be better. If people would make themselves acquainted with the facts connected with the general working of this socialist ideal, the Post Office, the socialist bubble would soon burst. To afford them an opportunity of acting upon Mrs. Besant’s advice is the object of the present essay, the writer being persuaded that the best refutation of the specious theories of Socialism lies in the fact of their utter and disastrous failure whenever and wherever they have been put into practice.
If the State had originated and developed the present postal system one could readily understand the unlimited praise which is frequently bestowed upon it by the average member of the community, who looks merely at the surface of things, and who, when he contemplates this colossal concern, with its facilities for the collection, distribution, and delivery of letters and telegrams and parcels, is filled with wondering awe. But when we consider that not one of the many benefits connected with the system originated with the State, but that all have been forced upon it from without, and generally after long years of agitation and pressure, and that even now the most important part of the work, that of conveying the mails, is done by private enterprise, there is no apparent reason why we should feel indebted to the State for whatever advantages we happen to enjoy. Indeed, we have reason to complain that in consequence of State monopoly we have not a more perfect system than the one in existence. Over two hundred years ago private enterprise had established a penny post in London. ‘To facilitate correspondence between one part of London and another,’ says Macaulay, ‘was not originally one of the objects of the Post Office. But in the reign of Charles the Second, an enterprising citizen of London, William Dockwray, set up, at great expense, a penny post, which delivered letters and parcels six or eight times a day in the busy and crowded streets near the Exchange, and four times a day in the outskirts of the capital. The improvement was, as usual, strenuously resisted. . . . The utility of the enterprise was, however, so great and obvious that all opposition proved fruitless. As soon as it became clear that the speculation would be lucrative, the Duke of York complained of it as an infraction of his monopoly,3 and the courts of law decided in his favour.’4 Mr. Herbert Spencer, commenting upon this fact, says that if we judge by what has happened in other cases with private enterprises that had small beginnings, we may infer that the system thus commenced would have developed throughout the kingdom as fast as the needs pressed and the possibilities allowed.5
The very monopoly enjoyed by the State in the carrying of letters is in itself a tacit acknowledgment of its inability to contend with private enterprise. By the Act 1 Vic. cap. 33, the Post Office acquired the exclusive privilege of conveying from one place to another all letters, and of performing all the incidental services of receiving, collecting, sending, despatching, and delivering the same. Certain exemptions from this exclusive privilege are made. For instance, a person may send a letter by one private friend to another, or by a messenger on purpose, concerning the private affairs of the sender or receiver thereof; letters of merchants, etc., may be sent out by vessels of merchandise; or letters concerning goods or merchandise, sent by common known carriers to be delivered with the goods which such letters concern, may be sent, provided neither hire, nor reward, nor other profit, nor advantage be received for receiving and delivering such letters. Excepting these exemptions from the exclusive privilege of the Post Office, it was enacted by 1 Vic. cap. 36, that—
Every person who shall convey otherwise than by the post a letter . . . shall for every letter forfeit £5, and every person who shall be in the practice of so conveying letters . . . shall for every week during which the practice shall be continued forfeit £100; and every person who shall perform otherwise than by the post any services incidental to conveying letters from place to place, whether by receiving or by taking up or by collecting or by ordering or by despatching or by carrying or by recarrying or by delivery, a letter . . . shall forfeit for every letter £5, and every person who shall be in the practice of so performing any such incidental services shall for every week during which the practice shall be continued forfeit £100; and every person who shall send a letter . . . otherwise than by the post, or shall cause a letter . . . to be sent or conveyed otherwise than by the post, or shall either tender or deliver a letter in order to be sent otherwise than by the post shall forfeit for every letter £5; and every person who shall be in the practice of committing any of the acts last mentioned shall for every week during which the practice shall be continued forfeit £100; and every person who shall make a collection of exempted letters for the purpose of conveying them or sending them otherwise than by the post, or by the post, shall forfeit for every letter £5; and every person who shall be in the practice of making a collection of exempted letters for either of these purposes shall forfeit for every week during which such practice shall be continued £100; . . . and the above penalties shall be incurred whether the letter shall be sent singly or with anything else, or such incidental service shall be performed in respect to a letter either sent, or to be sent, singly or together with some other letter or thing; and in any prosecution by action or otherwise for the recovery of any such penalty the onus shall lie upon the party prosecuted to prove that the act in respect of which the penalty is alleged to have been incurred was done in conformity of the Post Office laws.
It will be seen that under such restrictions and prohibitions any attempt on the part of private enterprise to compete with the State in the carrying and delivery of letters is out of the question. Some time ago the Postmaster-General discovered that certain of the public, dissatisfied with the facilities offered by the Post Office, were forwarding letters as parcels by the various railway companies. Many small provincial newspapers, whose proprietors could not afford to pay for press telegrams, were receiving ‘copy’ from their London correspondents and agents in this way. Immediately the matter came to the knowledge of the Postmaster-General he addressed a letter, dated April 1st, 1887, to the various railway companies, pointing out to them that they were infringing upon his exclusive privilege, and requesting them to discontinue the practice, which, he stated, was imperilling ‘the privileges conferred upon him by law for the benefit of the public,’ and endangering the public revenue.
It is difficult to get people to realise that a thing which for the most part only costs a penny is yet much dearer than it need be. But such is undoubtedly the fact. It was calculated by Sir Rowland Hill that the cost of conveying a letter from one point in the United Kingdom to any other was 1/36 of a penny. Suppose, then, we assume that the cost of collecting, stamping, conveying, and delivering a letter posted in London and addressed to Glasgow to be one-sixth of a penny, it will be seen that an enterprising postal agency would be able to carry a letter for which we now pay the State a penny for a halfpenny, and even for a farthing, and realise a handsome profit. We do not argue that a penny postage is a colossal grievance, for many people have been heard to exclaim that a reduction of the rate of postage and a consequent increase of correspondence are a prospect which they cannot regard with equanimity. This of course is the reason of the long-suffering of the public in this matter. But our object is to point out that a Government monopoly charges at least double what would be charged under an open system, and to ask the reader to believe that the effect of enlarging the sphere of Government monopoly would be to double the cost of living all along the line. As to our foreign and colonial letters, Mr. Henniker Heaton, M.P., has shown that, assuming one-sixth of a penny to represent the cost of conveying an ordinary letter from London to Southampton, the total cost of conveying a letter from London to New Zealand would be a farthing, one-twelfth of a penny being allowed to cover the cost of carrying from Southampton to destination, which is more than twelve times the highest rate for the most precious goods. Yet for this service, which could be performed at a handsome profit at a penny per letter, the State has all along been charging sixpence; and it was only during the last session of Parliament that the Goverment, in response to a strong and indignant feeling in the country aroused by the member for Canterbury, whose exposures of Post Office extravagance, bungling, and inefficiency have attracted so much attention, virtually confessed that the public had been overcharged all along, and that henceforth a uniform rate of two-pence-halfpenny for letters would be instituted between England and her colonies. The average citizen will doubltess bless the Post Office for the reduction, unconscious of the fact that he has been overcharged throughout the past, and that the overcharge will continue at the rate of three-halfpence per letter until the postage is reduced to a penny. Merchants, newspaper proprietors, and others who have been aware of this, have evaded payment by posting their letters in France or Germany, whence the rate to nearly all parts of the world is 100 per cent cheaper than it is from England; and it has been stated that one London firm alone saves £1300 per annum by posting its letters in France for India and China, where the rate is twopence-halfpenny as against fivepence charged in England. When it is considered that a letter posted in New York for Singapore, and carried there via England, in one of our mail steamers, costs twopence-halfpenny, whereas a letter posted in England for Singapore is charged fivepence; that the cost of letters from England to Shanghai, if sent through the French or German Post Office there is twopence-halfpenny, but if through the English Post Office at the same place the charge is fivepence per letter, and that the same is the case in Zanzibar and other places; that millions of samples of English merchandise are still being sent from London to be posted in Belgium back to every town in England at half the rates which are charged if posted in England;6 and that these and other facts stated above are merely samples, taken at random, of the multitudinous anomalies of our State postal system, some idea may be formed of the enormous saving to the community, especially the commercial section, to whom this matter is of serious consideration, were the present State monopoly abolished and replaced by private enterprise.
We do not share Mr. Henniker Heaton’s opinion that the Post Office will ever prove an efficient machine while under State management. The Postmaster-General, however, has confessed to the justice of his complaint, and has yielded to criticism in Parliament a reduction of rates which would long ago have reached the public under a system of private enterprise.
What a public misfortune it would be if we were dependent for all reductions of price in articles of daily consumption on the successful badgering by private members of the minister in charge. The present plan seems to be to put up the rate of postage and lower the rate of telegrams quite irrespective of cost price, and merely according to the whim of some hard-pressed Postmaster-General.
The principles upon which this State monopoly is conducted are of anything but a business character, and are such as if adopted by any private firm or company would result in speedy ruin. Its periodical accounts, says Mr. Henniker Heaton, are of such a nature that no one can find out what the gross receipts and net profits are within three-quarters of a million of money; and it has been stated that they are never properly audited. Its revenue is hundreds of thousands more than is represented in the estimates, the amounts being paid away in contracts with foreign Governments which have never been submitted to or sanctioned by the House of Commons. For the use of the Brindisi route it has been frequently pointed out that it ought not to pay more than £31,200, yet it actually pays £84,000, or £52,800 more than is fair and necessary. Its stationery contract with Messrs. De la Rue and Co. lost the country from £60,000 to £70,000 a year, making a total loss to the British public of £500,000 on the ten years’ contract; yet the Postmaster-General repeatedly stated in answer to questions in the House of Commons that ‘the contract was a positive boon to England.’ In a letter published in the Times on September 11th, 1889, Mr. Henniker Heaton says:
The extraordinary method is pursued of paying out of the current revenue of the Post Office the cost of land and buildings required for Post Office purposes, and through this means the Postmaster-General owns already land to the value of more than two and a quarter millions in London alone. No business man in the world would conduct his affairs in this manner—taking no account of the money he expends in landed property and buildings. Yet this very department, that trifles with hundreds of thousands of pounds, refuses to allow a local postmaster in my constituency to expend 1s. 6d. in mending a lock of a door, but insists on despatching an officer from the Board of Works to the scene at a cost of £3 10s. This I proved before the Select Committee.
From what other cause than a systematic looseness in appointing its officials is it due that the abstraction of postal orders is of almost daily occurrence? During the year 1887 the Postmaster-General stated that the abstraction of these orders ‘reached portentous dimensions.’ During 1889, 325 dishonest letter-carriers were found guilty and dismissed for irregularities, and on an average more than three officials per week were convicted and sentenced to long terms of imprisonment for stealing letters, and a large number cautioned for suspicious conduct or carelessness.7
Who has not suffered under the discourtesy of the officials, both male and female, employed by the Post Office to attend to the wants of its customers? Who, residing in a suburb in which the Post Office is inside an ordinary baker’s, grocer’s, or chemist’s shop, has not been annoyed when the shopkeeper, after blandly asking them what they required, and being told it was a penny stamp, abruptly turned to wait upon their own customers first, keeping the State’s customers waiting until they had time to serve them? During the middle of the present year (1890) the relations between the young ladies of the Ludgate Circus Post Office and the general public became so strained that the Postmaster-General was compelled to remove the whole staff and replace it by one of males. One does not find such a state of affairs existing in any private establishment. A customer enters a draper’s, tailor’s, or other shop, and meets with courtesy and pleasantness, and is served with promptitude. A spirit of discourtesy in such places would drive customers away. But in the Post Office it is different: the customer has no remedy; he cannot go elsewhere to get his postal wants supplied. The officials know this, hence their attitude towards the helpless public. Let the shopping public contemplate what shopping would be under socialism, when every article would have to be purchased in establishments conducted in the same discourteous manner as the Post Office, and their bias will be anything but socialist.
The arbitrary and frequently impudent manner in which the Post Office treats its customers forms the subject of hundreds of letters which annually appear in the public press. The victims of what Mr. Herbert Spencer calls ‘the stupidity, the slowness, the perversity, the dishonesty of officialism’ in the Post Office, finding they have no remedy for the wrongs that they have been subjected to, give vent to their well-founded indignation in the columns of The Times and other papers. Thus we read of a firm of merchants in Edinburgh complaining that through the admitted carelessness of a Post Office telegraphist a telegram addressed to them was never delivered, and they sustained a loss of £100. When they sent in a claim to the postal authorities they were told that ‘the department is not legally responsible for the delay complained of,’ but that it would refund to them the sum of 7-1/2d., being the amount paid for the transmission of the telegram! Commercial men and others lose thousands of pounds every year by delay and wrong delivery of letters and telegrams. Valuable goods are damaged, lost, or stolen when sent through the parcels post, and the complaining owners receive nothing but a stereotyped expression of regret from the officials, and a disclaimer of all responsibility. In the case of the parcels post the public have only themselves to blame. If parcels sent by private carriers—who, as will be presently shown, carry them quicker and cheaper than does the State—are damaged, lost, or stolen, or even delayed, the owner receives full satisfaction for any loss sustained. So that if people are foolish enough to ‘slight the good and faithful servant, and promote the unprofitable one,’ they must put up with the consequences. We find other victims complaining that while the Post Office imposes a fine in the event of the face of a postcard bearing any words in addition to the address, it almost invariably disregards its own part of the contract and defaces the letter on the back of a postcard by affixing its official stamp upon it. During last August, the writer, whilst staying in a little town on the Norfolk coast, received four postcards in three days, and each card was defaced in the manner described, several words in two of them being completely obliterated. A protest against this breach of contract elicited from the Secretary the consoling reply that he regretted the cause of complaint, and that the special attention of the postal officials at C—— had been called to the matter. If a private firm repudiated responsibility for its blunders and carelessness, we should regard the fact as disentitling it to our custom. Can the systematic repudiation by the State be regarded in any other light? Again, others write to protest against what they justly term ‘the contemptible trick,’ ‘a breach of trust and confidence’—the opening of letters by the Post Office. What could be more contemptible than the trick recently performed by the Post Office upon the Postmen’s Union. At eleven o’clock on the morning of Saturday, August 16th, 1890, one of the officials of the Union posted in the Finsbury district several postcards addressed to clubs in the immediate neighbourhood, asking them to get volunteers to carry collection-boxes on the following day (Sunday) at the dockers’ demonstration, on behalf of the postmen dismissed during the recent postmen’s strike. These postcards should have been delivered before 6 p.m. on the same day at the latest, but they were kept back by the Post Office officials and not delivered till the Monday, too late for the purpose they were intended for.
With regard to the recent strikes among the postmen, it would be well that the working classes to whom the specious doctrines of socialism are being preached should realise the change for the worse that would take place in their position as workers in the event of the present industrial system being replaced by one of a socialist character. With the ‘New Unionism’ which seeks to enslave the labourer under a new form of tyranny, we have no sympathy whatever. At the same time it must be borne in mind that the right of voluntary combination for the legitimate purpose of mitigating by lawful means some of the evils of competition is one of the most cherished privileges of the English working class. It is true that in asking its servants to forego this privilege the Post Office offers pensions and other advantages which to some might seem an adequate substitute. This, however, rightly or wrongly, is not the view of many Post Office servants. And even though it may be reasonable to ask the labourers in one or two industries to contract themselves out of their right of combination, it is quite unreasonable to propose that the whole of the working class should abdicate their liberty of action in the way required by the Post Office officials. But this is really the proposal of the socialists. It is very probable that Mrs. Besant is right in thinking that the Post Office officials have a comfortable berth, but the fact does not reconcile them to the restraints imposed upon their liberty, and we are not disposed to blame them. The socialist organisers of the strike spared no effort of rhetoric in enlarging on the servile condition, as they termed it, of the State servants, and the secretary of the Union described the Postmaster-General ‘as a task-master worse than the vilest East End sweater.’ Yet this is the institution which Mrs. Besant quite correctly puts forward as the most nearly successful example of State socialism which the world has ever seen.
We pronounce no judgment on the merits of the quarrel between the Postmaster-General and his servants. We point out, however, the anomaly that when a labourer takes service in a State monopoly he is called on to surrender his right of combination with his fellows. There is, of course, justice in this: the Post Office has prevented competition, and is bound to protect the public against a cessation of the letter-carrying service. This it can only do by introducing a species of military law, a condition characteristic of all socialist institutions, which workmen should bear in mind.
Attention will now be called to a few facts in connection with certain attempts on the part of the Post Office to compete with private enterprise.
The Parcel Post. This department of the Post Office was established a few years ago with the object of the State becoming exclusive carrier of small parcels. This attempt to compete with railway companies and other common carriers has been financially a signal failure. In the matter of rates we find those charged by the railway companies and carriers about 50 per cent less than those charged by the Post Office, the former collecting and delivering the parcels within ordinary limits without additional charge. Instead of a person carrying his parcels to a Post Office, where he has to wait and get them weighed, and where he is compelled to prepay the carriage before they are received, a railway company collects them without charge, and it is optional whether the carriage is paid by the sender or the consignee. If parcels are handed over to the Post Office they are sent by certain trains only during the day, whereas if handed to a railway company they are despatched by the first passenger-train after receipt. The Post Office receives parcels up to a limited time only, whereas the railway companies receive and despatch them by the latest transit, including midnight service, thus ensuring a very speedy delivery next morning without any extra expense. In the case of parcels handed to a railway or carrying company being damaged or lost the owner is entitled to full compensation without having to pay any charge beyond the ordinary carriage, whereas if they are handed to the Post Office ‘The Postmaster-General will (not in consequence of any legal liability, but voluntarily and as an act of grace) . . . give compensation for loss and damage of inland parcels’ not exceeding £1 where no extra fee is paid, not exceeding £5 where an insurance fee of a penny is paid, and not exceeding £10 where an insurance fee of twopence is paid. ‘In no case will a larger amount of compensation than £10 be paid.’8
Savings Bank. The Post Office Savings Bank was established for the encouragement of thrift among the working classes. With its abundant facilities for the receipt and payment of money one would imagine that the Post Office would be certain to meet all the banking requirements of the working classes, and make it almost impossible for private enterprise to compete with it in this particular field of industry. Such, however, is not the case. Not only does the Post Office fail to meet those requirements, but its business as working-class banker is conducted with that lack of enterprise which is characteristic of all Government departments, and in point of convenience and advantage to customers it compares very unfavourably with working-class banks conducted by private enterprise.
The Post Office Savings Bank receives deposits of one shilling, or any number of shillings, but a person is not allowed to deposit more than £30 in one year, or £150 in all, exclusive of the interest of 2½ per cent per annum for each complete pound. The hours during which offices are open for the receipt and payment of money are the very hours during which the working classes are engaged at their work, and during which the Post Office clerks are busily engaged in discharging their ordinary duties. There are, however, certain offices open on Friday and Saturday evenings till 7 p.m. or 8 p.m., but only for receiving deposits. When a depositor wishes to make a withdrawal from his account he is compelled to call at a Post Office and obtain a notice of withdrawal form, which he must fill up and post to the office of the Savings Bank Department, from which he will in the course of a day or two receive a warrant from his local Post Office to pay him the sum required. He has then to pay another visit to the Post Office, and after presenting his pass-book and signing his name to the warrant in the presence of the postmaster or other Post Office official and satisfying the said postmaster or other official that he is really and truly the person in whose favour it is made, he succeeds in obtaining a withdrawal from his account. If a depositor is sick or abroad, or by any cause prevented from presenting the warrant in person, payment is made to ‘the bearer of an order under his hand, signed in the presence of any officer of the Post Office other than the paying officer, a minister of any religious denomination, a justice of the peace, a commissioner to administer oaths, or, in case of sickness, the medical attendant. If the depositor be resident abroad, the signature must be verified by some constituted authority of the place in which he resides, or a notary public.’9
It is obvious that these absurd regulations are most inconvenient to working-class depositors, and a source of considerable annoyance and irritation. Many accounts have been wholly withdrawn, or transferred elsewhere in consequence.
If we compare the general working of the Post Office Savings Bank with that of a banking business conducted by private enterprise, the comparison will be very unfavourable to the latter. Take the National Penny Bank for example. This was established in 1875, having for its objects to promote thrift by affording facilities for the exercise of thrift, to establish a permanent Penny Bank, open every evening, and to make such Penny Bank absolutely safe, self-supporting, and on a commercial basis. It has a head office at Westminster, a city office, and branch offices in various parts of the metropolis and the London suburbs. These offices are open during each evening to receive deposits from one penny upwards to any amount, and to pay withdrawals on demand. Interest is paid at the rate of 3 per cent per annum on complete pounds left in the Bank for complete calendar months. Depositors may withdraw money by post by simply sending a written application accompanied by pass-book, and, if the depositor so desires, an amount will be sent by cheque to any person named by him. The Bank also advances money to working men to enable them to purchase their own houses, charging interest at 5 per cent per annum.
The growth of this National Penny Bank is most encouraging, and its success depends on the facilities which it offers to its customers. We could wish that the directors could find it possible to overcome the obvious difficulty of expense, and to imitate the collecting insurance companies, so that these advantages and opportunities for saving could be brought to the door of every working man. The Bank is now paying a dividend, and has proved that working-class banking can be made a profitable industry. There can be little doubt that banks of this sort will soon supersede the Post Office.
Insurance Department. The above is no mere assumption: for in the allied industry of insurance the business done by private enterprise far surpasses that done by the Post Office, aided though it is by its ubiquity and the undeniable nature of its security. The following table will give an apt comparison of the business of the Post Office, as against the business of one company, viz. the Prudential Assurance Company as shown by the latest returns:
Telegraphs. When the possibility of conveying intelligence instantaneously for long distances was demonstrated, and when Cooke and Wheatstone patented their magnetic needle telegraph in 1837, the State did not avail itself of the invention, but remained satisfied with the old semaphore. The new invention was worked by private enterprise for thirty-three years, and ‘during this period,’ said Sir Charles Bright in his address to the Society of Telegraph Engineers and Electricians in 1887, ‘those engaged in the undertaking had provided the capital, incurred all the risk, and developed the telegraphic system into a highly lucrative business, from which the profits were steadily increasing, so much so that the net earnings of the two largest companies ranged from 14 to 18 per cent per annum.’ When the State realised that the business was a financial success, it took steps to acquire all the telegraphic undertakings in the kingdom, and in 1868 an Act was passed entitling it to do this, and in the following year a further Act was passed which gave to the Post Office the monopoly of telegraphic communication. From that time till now the telegraphs in the hands of the State, while they have remained very stationary in respect of public utility, have been a financial failure, the annual deficit frequently exceeding half a million, as was the case in 1886-87, when the deficit for the year was £540,527. Yet the Submarine Telegraph Company has been conducting the communication between England and the continent under the Channel with great efficiency, and at moderate rates, and has deservedly been reaping a profit for its usefulness, and paying a dividend of 15-1/2 per cent. The telegraphs’ deficit is made up of various items, the principal representing interest on capital, the outcome of the bad bargain the State, with characteristic stupidity and shortsightedness, made at the outset with the private companies, and the rest representing unprofitable management of the business, and squandering of money in large salaries to useless officials. If a private company conducted its business in such a loose manner it would be classed as a dead failure, and would speedily terminate its existence in bankruptcy proceedings. But as the business is a State monopoly the taxpayers are compelled to give it a whitewashing to the tune of half a million per annum, and to allow it to pursue its career of wasteful inefficiency.
For the purpose of comparison it may be stated that the various railway companies in the kingdom annually receive, transmit, and deliver over their own respective systems hundreds of thousands of their own private telegrams at a cost of a mere fraction of a penny per telegram; while the State experiences a loss upon every telegram that passes through its hands, although the minimum charge for sending a telegram is sixpence. The following figures, published during January, 1887, speak for themselves. The Post Office within an area of twelve miles from the General Post Office sends a weekly average of 290,027 telegraphic messages over its wires at an average cost of eightpence per message. The United (now the National) Telephone Company, within area of five miles from the same centre, in one week of December, 1886, transmitted 449,696 telephonic messages at an average cost of three farthings each. It may be added that while the Post Office has an annual deficit of about half a million, the National Telephone Company at its meeting in July last declared a dividend of 6 per cent, and reported an increase in the gross revenue, a decrease in the working expenses, and a large addition to the reserve fund.
The only branch of the postal service which is a financial success is that of letter-carrying. As already shown, the actual cost of an ordinary inland letter is 1/36 of a penny: all the rest is clear profit. The heavy losses sustained in every other branch of the postal service have to be covered by the profits realised by the penny post. It will perhaps be as well to hear what the Postmaster-General has to say in reference to these matters. Replying to a deputation from the Wolverhampton Chamber of Commerce, which waited upon him on January 27th, 1888, to call attention to several anomalies connected with the postal and telegraph regulations, and to complain that orders, invoices, shipping instructions, bills of lading, etc. post were charged letter-rate if any note was added, and to request that documents of a commercial character—orders, invoices, shipping instructions, bills of lading, &c.—should go through the halfpenny post, and to seek some reduction in the charges for sending telegrams from Post Offices through the telephone to their destination, and to point out that private firms were producing and selling postcards at 6½d. per dozen, while the Post Office charged 8d. per dozen, the Postmaster-General said,
That to make arrangements for matter not enclosed to be carried for 1/2d. instead of 1d. could not be done. It would have an effect upon the revenue which could not be contemplated without horror. The penny postage earned an income which had to be expended on other branches of the service. Telegraphs were a losing business, and the deficiency was paid by the penny postage. The carriage of newspapers also involved considerable loss, and the halfpenny post was rather a losing than a paying concern. Anything which largely shifted correspondence from the penny to the halfpenny rate might actually disturb the equilibrium of the revenue; therefore anything that struck at the penny post could not be entertained. . . . As to postcards, when they were sold at 8d. per dozen and private firms could produce them for 6-1/2d. there must be some unsatisfactory practice. He had information on that subject which he hoped to utilize for the public benefit.10 Respecting telephones it was unsatisfactory that the Government had to compete with private firms, and before long the system must be taken up by the Government and telephones placed on the same footing as telegraphs, and be controlled altogether by the Government.11
Socialists will agree with their friend, the Postmaster-General, that it is unsatisfactory that the State has to compete with private enterprise. If the State could suppress private enterprise, if it could eliminate the factors of human progress, commercial success, and national greatness, it would enable socialism to take the place of civilisation; but while private enterprise enjoys its present freedom, which will be as long as men value liberty, socialism has no chance of success.
Whether or not it is the intention of the State to take over the telephone, it should not be forgotten that it did its best to obstruct its introduction, and prevent the use of that ingenious and novel invention in this country. Although the telephone was not invented and brought to this country till 1877, it was found to be embraced by the widemeaning terms of the Telegraphs Act of 1869. The Post Office declined to use it or to allow private enterprise to do so. The State having become a trader in the conveyance of intelligence electrically, was afraid that by allowing private enterprise to use the telephone the telegraph monopoly would be seriously interfered with. But this dog-in-the-manger policy was of short duration. The public, fully alive to the advantages to be derived by such a cheap and handy means of communication as the telephone would afford, demanded that some concession should be made by the Post Office. This was eventually done, the telephone companies being permitted to establish communication in certain places, provided they handed over to the Post Office one-tenth of their gross receipts. Thus the National Telephone Company supplies a customer with a telephone for the use of which it charges £20 per annum, £2 of this going to the Post Office, ‘simply as blackmail,’ says Sir Frederick Bramwell, and the public are kept out of the use of this important means of communication unless they submit to this monstrous tax.
It is, indeed, sad to reflect that in this England of ours, which boasts of its freedom, a Government department should be permitted to restrain and hamper the development of this cheap means of communication, which has really become one of the necessities of commercial life. The fact that we have the present limited means of telephonic communication (the number of instruments under rental in England being 99,000, while in America at the beginning of the present year there were 222,430, being an increase of 16,675 over the number in 1889) is due entirely to the bulldog pertinacity, the watchful care, and the courageous energy of the telephone companies in resisting the Post Office in its endeavours to uphold its retrograde position.
Upon the occasion referred to above, the Postmaster-General said that he ‘should be glad of any suggestions which would assist in placing the whole system of telephoning in this country on a satisfactory basis.’ But there is really one way in which the State could assist in doing this, and that is, by removing all the restrictions which it has placed upon the development and extension of telephonic communication in this country, in order that the public may enjoy the full benefit of the telephone, which has been well referred to as one of the most ingenious inventions that ever was made.
Notwithstanding the very profitable nature of the letter-carrying monopoly, it cannot be said that, at times of great press of business, the public is served with that absence of fuss and effort which ought to characterise a great and wealthy corporation. At Christmas-time the Post Office is completely disorganised. Its customers are pitifully implored not to pay exclusive regard to their own convenience, and to despatch their packages and letters according to a timetable drawn up by the Post Office to suit its own convenience. But despite these precautions, the deliveries turn out irregular or break down altogether; and although the same disorganisation reappears each succeeding year, just as if the stress of business which causes the breakdown had never occurred before and was quite outside the field of human prevision. This disorganisation and breakdown commences a week or ten days in advance of Christmas, and even on the 15th of December the block and muddle have been so well developed that it has taken a letter two days to travel between the S.W. and E.C. districts; a book posted in London for Paris has occupied four days in transit; and within the metropolitan district telegrams have laboured along at the rate of one mile in twenty minutes. For a few days previous to Christmas the first delivery of letters falls two hours in arrear, and by the 24th it has been known to break down altogether. It may be said that private trading companies sometimes break down under a foreseen stress of business, and that the railway companies at Christmas allow their train-system to get disorganised. This, no doubt, is true; but we are searching (in vain it may be) for some point in which the State monopoly shows its superiority. It may, however, be pointed out that private carriers do not cry to be let off, but rise to the requirements of the occasion, provide additional facilities, and all the time by prodigal advertisement solicit rather than deprecate the patronage of the public. It should, moreover, be borne in mind that the services most liable to break down at times of pressure partake more or less of the nature of monopolies. The Post Office and the railway system are liable to break down, but the ordinary services which are bought and sold in the open market do not break down. The moral is obvious. Let us have no more monopolies than are absolutely necessary. Let human ingenuity do its best to make free exchange of service everywhere the rule. It is difficult to see why this rule should not apply to the Post Office.
Again, the cessation of postal deliveries during the recent strike among the postmen furnishes a lesson to the commercial world which should act as a warning to the public not to encourage a State monopoly in the means of carrying everything. Today, with the various private carriers and railway companies, a strike among the servants of any particular company is fraught with comparatively small inconvenience to the public. All our large commercial and industrial centres are supplied by several distinct railways, each competing with the others for public favour and patronage. So that in the event of a strike taking place among the servants of one railway company running between Manchester and London, goods and passengers would simply be carried by the others. But if all the means of communication were in the hands of the State, and its underpaid and overworked servants came out on strike, the trade and commerce of the country would be paralysed, and wholesale disaster and ruin would ensue before the stupidity and wooden-headedness of State officialism could be brought to realise the situation and devise a remedy.
It is not in the Post Office alone that State-trading stands self-condemned. Evils, direct and indirect, must result from the State undertaking functions which can only be properly performed under ever-varying conditions by a free initiative, whose very existence depends on its ability to provide constant and adequate satisfaction of public wants. And if those persons who demand the municipalisation of this industry, and the nationalisation of that, would only direct their attention to the State monopolies with which we are pestered at present, they would have demonstrated to them the inherent rottenness of the principles which they so loudly advocate, and would discover that after all private enterprise, stimulated by the necessity and advantage of mutual service, was the principle which alone could make for improvement, success, and progress, to all of which State-trading is essentially prohibitive.
[1 ] Essay on ‘Over-legislation.’
[2 ]Modern Socialism, pp. 29-30.
[3 ] At the Restoration the proceeds of the Post Office (‘a rude and imperfect establishment of posts for the conveyance of letters’ set up by Charles I, swept away by the Civil War, and resumed under the Commonwealth), after all expenses had been paid, were settled on the Duke of York.
[4 ]History of England, vol. i. pp. 385-6, 7th edition.
[5 ] Essay on ‘Specialised Administration.’
[6 ] Mr. Henniker Heaton’s Postal Reform, and his letter in The Times, Sept. 11th, 1889.
[7 ] Mr. Henniker Heaton’s Postal Reform, p. 14.
[8 ]Postal Guide.
[9 ]Post Office Guide, p. 390.
[10 ] The manner in which the Postmaster-General has utilised his ‘information’ ‘for the public benefit’ is worthy of notice. He has caused the Post Office to issue postcards of a similar quality to those hitherto produced and sold at a profit by private firms for 6-1/2d. per dozen at 6d. for ten, and in order to prevent private firms selling at a lower rate than the Post Office he has increased the rate for stamping private postcards from 1s. 6d. to 2s. 6d. per quire, thus imposing a fee of 200 per cent above the price at which any printer would execute the work! See Mr. Henniker Heaton’s Postal Reform, pp. 12, 13.
[11 ]St. James’s Gazette, June 27th, 1888.