CHAPTER VIII

THE STATE TELEGRAPHS SUBSIDIZE THE NEWSPAPER PRESS

Why the newspaper press demanded nationalization. Mr. Scudamore gives the newspaper press a tariff which he deems unprofitable. Estimates of the loss involved in transmitting press messages, made by responsible persons in the period from 1876 to 1900. The State telegraphs subsidize betting on horse races.

Before proceeding with the further discussion of the intervention of the House of Commons in the details of the administration of the State telegraphs, it is necessary to review briefly the tariff on messages for the newspaper press.

Before the telegraphs had been acquired by the State, the telegraph companies maintained a press bureau which supplied the newspapers with reports of the debates in Parliament, foreign news, general news, a certain amount of London financial and commercial intelligence, and the more important sporting news. While Parliament was in session, the messages in question averaged about 6,000 words a day; during the remainder of the year they averaged about 4,000 words daily. The annual subscription charges for the aforesaid services ranged from $750 to $1,250. Before the Select Committee of 1868, the representatives of the newspapers asserted that those subscription charges yielded the telegraph companies, on an average, 8 cents per 100 words. They further asserted that the telegraph companies ascribed 62.5 per cent. of the cost of the press bureau to the transmission of the news; and 37.5 per cent. to the collecting and editing of the news.[98] But neither the representatives of the press, nor the Select Committee itself, called any representatives of the telegraph companies to testify upon these latter points.

The subscribers to the companies' press bureau service also were allowed to send messages at one-half the rate charged to the general public; and in case the same newspaper message was sent to several newspapers in the same town, the charge for each address after the first one was 25 per cent. of the sum charged the first addressee. By coöperation, therefore, the newspapers in the larger towns were able to obtain considerable reductions from the initial charge, which, as already stated, was 50 per cent. of the tariff charged the general public.[99] Apparently, however, little use was made of these privileges. In 1868, for instance, the subscriptions to the press bureau aggregated $150,000, whereas the sums paid for messages to individual newspapers aggregated only $10,000.[100]

[Sidenote: _The Newspapers' Grievance_]

The newspaper proprietors admitted that the charges for the press bureau service were entirely reasonable; but they desired to organize their own press bureaux on the ground that they were the better judges of what news the public wanted. Since the telegraph companies would not give up their press bureau, the newspaper proprietors joined in the agitation for the nationalization of the telegraphs.[101]

As soon as the Government began to negotiate with the telegraph companies for the purchase of their plants, the newspaper proprietors organized a committee to protect their interests and to represent them before the Select Committee to which had been referred the Electric Telegraphs Bill of 1868. That Bill had said that the tariff was to be uniform, irrespective of distance, and was not to exceed 24 cents for 20 words, address not to be counted. It had said nothing on the subject of the tariff to be charged to the newspaper press.

On May 15, 1868, Mr. Scudamore had written the Committee of the newspaper proprietors: "As a matter of course the Post Office would not undertake to collect news any more than it would undertake to write letters for the public, but the news being collected, it could, and I submit, ought, to transmit it at rates at least as low as those now charged, and which though they are unquestionably low, are still believed to yield the companies a considerable profit.... It seems to me, indeed, that the transmission of news to the press throughout the United Kingdom should be regarded as a matter of national importance and that the charge of such transmission should include no greater margin of profit than would suffice to make the service fairly self-supporting."[102]

Thereupon the newspaper proprietors demanded: "That the maximum rate for the transmission of telegraphic messages [for newspapers] should not exceed that which is now paid by each individual proprietor [as a subscriber to the companies' press bureau], which is, for transmission, exclusive of the cost of collection, 4 cents per 100 words."[103] This demand assumed that the companies' charge of 8 cents per 100 words was remunerative; that it was made up of two separable parts: a charge for transmission, and a charge for collecting and editing; and that the charge ascribed to transmission still would remain remunerative even after the charge ascribed to collecting and editing had been withdrawn. Upon none of these several points were the officers of the telegraph companies asked to testify, the statements of the newspaper proprietors being allowed to stand unsupported.

[Sidenote: _Mr. Scudamore yields to the newspapers_]

In order to insure the payment of an average sum of 4 cents or 5 cents per 100 words, the newspaper proprietors proposed that messages be transmitted for the newspapers "at rates not exceeding 24 cents for every 100 words transmitted at night, and at rates not exceeding 24 cents for every 75 words transmitted by day, to a single address, with an additional charge of 4 cents for every 100 words, or for every 75 words, as the case may be, of the same telegram so transmitted to every additional address." By way of compromise, Mr. Scudamore proposed a charge of 24 cents for 75 words or 100 words for each separate town to which each message might be sent, and the limitation of the 4 cent copy rate to copies delivered by hand in the same town. Mr. Scudamore, however, withdrew that proposal, and accepted the proposition of the newspaper proprietors, which became the law. It is needless to add that the opposition of the newspaper press to the Bill of 1868 would have delayed the passage of that Bill even more than any opposition on the part of the telegraph companies and railway companies could have done. Indeed, it is probable, that the newspaper press could have defeated the Bill.

In 1875 the Treasury appointed a "_Committee to investigate the Causes of the Increased Cost of the Telegraphic Service since the Acquisition of the Telegraphs by the State_." That committee consisted of three prominent officers taken from the Post Office Department and other departments of State. Upon the newspaper tariff fixed by the Act of 1868, the Committee reported: "The consequences of such a system must be obvious to every one. Even at ordinary times the wires are always largely occupied with press work, and at extraordinary times they are absolutely flooded with this most unremunerative traffic, which not only fills the wires unduly to the exclusion of better paying matter, but necessitates a much larger staff than would be necessary with a more reasonable system [of charges].[104] After very careful consideration of these points, Mr. Weaver [one of the members of the committee, and the former Secretary of the Electric and International Telegraph Company], has no hesitation in expressing his opinion that the principle of the stipulations of the tariff authorized by the Telegraph Act, 1868, both as regards messages transmitted for the public, and those forwarded for the press, is essentially unsound, and has been the main cause of the large percentage of expenditure as compared with the gross revenue. In order to provide for the prompt and efficient transmission of the vast amount of matter produced by such a system, a considerable extension of plant was necessary, involving a large original cost, besides a regular yearly outlay for maintenance and renewal, and not only so, but a large and constantly increasing staff had to be provided to work lines, which, if taken separately, would not be found to produce anything approaching to the cost entailed for erecting, working, and maintaining them. It will be obvious, therefore, that, unless a retrograde step be taken in order to amend the principles upon which the stipulations of the tariff are made up, it would be unreasonable to expect that the revenue derived for telegraph messages under the present system can ever be made to cover the expenses of working, the interest upon capital, and the ultimate extinction of the debt."[105]

In May, 1876, Mr. C. H. B. Patey, Principal Clerk in the Post Office Department, testified that the Post Office was losing $100,000 a year by transmitting 220,000,000 words for the newspaper press at an average price of 8 cents per 100 words. Mr. Patey said 180,000,000 words were being carried at the rate of 4 cents per 100 words, or for $74,180 in the aggregate; and 40,000,000 were being transmitted at the rate of 24 cents per 100 words, or, for $109,795 in the aggregate.[106] Mr. Patey submitted no calculations in support of his statement that there had been a loss of $100,000 on newspaper messages yielding $183,975. But he cited two illustrations from Hull and the Nottingham-Sheffield-Leeds-Bradford group of towns. He stated that the Post Office received $1,600 a year for messages transmitted to six newspapers in Hull, and spent $5,275 on the transmission of those messages. He added that the service supplied to nineteen towns included in the Nottingham-Sheffield-Leeds-Bradford group of towns yielded $21,760, and cost the Post Office $38,270.[107]

In 1876, the Postmaster General, through Mr. S. A. Blackwood, Financial Secretary to the Post Office,[108] asked the Select Committee on the Post Office (Telegraph Department) to recommend to Parliament that the tariff on newspaper press messages be made "24 cents for 75 words or 100 words for each separate town to which each message may be sent, and that the 4 cent copy rate be limited to copies delivered by hand in the same town." That, it will be remembered, was the proposal made and withdrawn in 1868 by Mr. Scudamore. The Select Committee recommended that the amount of the loss on the newspaper press messages be clearly ascertained, and that the copy rates be raised sufficiently to cover that loss. But Parliament failed to act on the recommendation.

Mr. Patey had supported Mr. Blackwood's request with the statement, based upon inquiry of postmasters throughout the United Kingdom, that "in a very large number of towns only a small part of the telegraphic news transmitted was inserted in the newspapers. In many cases, on inquiry of the proprietors, it was stated that it was not inserted inasmuch as it was not of interest to the readers. In other cases, because the amount of local news was more than would admit of the special telegraphic news being inserted." Mr. Patey also had quoted from a recent issue of the _Glasgow Herald_ the statement, that "there was not a leading provincial paper in the Kingdom, the sub-editorial room of which was not littered in the small hours of the morning ankle deep with rejected telegraph flimsy;" and from a recent issue of the _Freeman's Journal_: "The fact is, that the Post Office, and the better class of papers as well, are both over-pressed with these cheap duplicate telegrams. We suppose we pay for about ten times as many as we print. Though we get them, and pay for them, so as to insure having the best news from every quarter, we regard them rather as a nuisance, and would be glad to have them reduced in quantity." And finally, Mr. Patey had argued that the newspaper press was able to pay much more than it did pay, "inasmuch as there had been a tendency on the part of the papers generally, not confined only to the large papers," to get their news by special messages prepared by their own agents and not sent in duplicate to any extent.[109]

Before the _Select Committee on the Revenue Departments Estimates_, 1888, Mr. C. H. B. Patey, Third Secretary to the Post Office, stated: "We believe that the tariff under which the press messages are sent in this country causes a loss amounting to nearly $1,000,000 a year."[110] In August, 1888, in the House of Commons, Mr. Cochrane-Baillie asked the Postmaster General "whether in view of the _Report of the Committee on the Revenue Departments Estimates_, he could state that the Government would bring in further legislation to relieve the country from the loss incurred by the present arrangement in connection with press telegrams?" The Postmaster General replied that "he was quite in accord with the Committee on Revenue Departments but he feared it would be difficult to effect any change, since the newspaper press tariff was fixed by the Act of 1868, and had been in force for upward of eighteen years."[111]

[Sidenote: _Annual loss on Newspaper Messages estimated at $1,500,000_]

In November, 1893, Mr. Arnold Morley, Postmaster General, stated in the House of Commons that "the best estimate that can be formed by the officials at the Post Office points to the loss on the newspaper press telegrams being at least $1,500,000 a year; and it probably is still more."[112] In April, 1895, Mr. Arnold Morley, Postmaster General, repeated the foregoing statement, and "maintained it in spite of various statements to the contrary in the newspapers." He added: "and I should be quite willing to arrange for an impartial investigation such as is suggested by the Right Honorable Gentleman, if I were to receive satisfactory assurances that the press would abide by the result of an inquiry, and would undertake not to oppose the passage of the necessary legislation for a corresponding revision in the charges, if it should be shown that they are insufficient to provide for the cost of the service."[113] The assurances were not forthcoming; and the newspaper press tariff remained unchanged.

In April, 1900, Mr. R. W. Hanbury, Financial Secretary to the Treasury, and representative in the House of Commons of the Postmaster General, a member of the House of Lords, said: "The penny postage realizes an enormous revenue and brings in a profit, but every other part of the Post Office work is carried on at a loss. The whole profit is on the penny letter."[114]

* * * * *

[Sidenote: _Betting on Horse Races subsidized_]

The Telegraph Act of 1868 provided that newspaper rates should be given to "the proprietor or occupier of any news room, club, or exchange room."[115] The clubs or exchange rooms in question are largely what we should term "pool-rooms," places maintained for the purpose of affording the public facilities for betting on horse races.[116] In 1876 Mr. Saunders, proprietor of the Central News Press Association, testified that his association would send in the course of a day to the same list of addressees the results of a number of races.

The words in the several messages might not aggregate 75 words, and thus his association would be charged for the transmission of one message only. In that way a number of messages would be transmitted "gratuitously." Mr. Saunders added that, in 1875, the Post Office had transmitted gratuitously for his association 446,000 sporting messages. Mr. Patey, Third Clerk in the Post Office, added that while the Post Office received 4 cents for transmitting from 8 to 10 sporting messages, it had to make 8 to 10 separate deliveries, by messenger boy, on account of those messages which were counted as one; and that each such delivery cost the Post Office on an average two cents. Thus, on a recent date, the Post Office had delivered the results of the Lichfield races to 205 addressees by means of 1,640 separate deliveries, and had received for the service, on an average, one-half a cent per separate message.[117]

In January, 1876, the Post Office discontinued the "continuous counting" of sporting messages.[118] It took the Department six years to summon the courage to make this change whereby was effected some diminution of the burden cast upon the general body of taxpayers for the benefit of the sporting element among the voters of the United Kingdom.

It would seem, however, that the practice of "continuous counting" had been resumed at some subsequent date. For, in March, 1906, in reply to a question from Mr. Sloan, M. P., the Postmaster General, Mr. Sydney Buxton, said: "Clubs are, under section 16 of the Telegraph Act of 1868, entitled to the benefit of the very low telegraph rates accorded to press messages; and I have no power to discriminate against a legitimate club because it is used for betting purposes. I propose to consider whether the section ought not to be amended in certain respects."[119]

On December 31, 1875, the Post Office discontinued entirely the practice--voluntarily assumed--of transmitting sporting messages to so-called hotels, in reality saloons. The waste of the public funds that the Post Office had incurred in response to pressure from the publicans, is illustrated in Mr. Patey's statement that the Post Office had received from a certain Liverpool hotel $0.82 a week for messages which had entailed a weekly expenditure of $2.50 for messenger service alone.

FOOTNOTES:

[98] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876, J. E. Taylor, Proprietor of the _Manchester Guardian_; q. 3,835 to 3,849, and 1,246; and C. H. B. Patey, Principal Clerk in the Post Office Department; q. 3,452 and following, 3,845, 3,377, and 3,383; and _Report by Mr. Scudamore on the Re-organization of the Telegraph System of the United Kingdom_, 1871, pp. 31 and 32.

[99] _Special Report from the Select Committee on the Electric Telegraphs Bill_, 1868; Dr. Cameron, Editor and Manager of the _North British Daily Mail_; q. 1,430 and following.

[100] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876, C. H. B. Patey, Principal Clerk in the Post Office Department; q. 4,900 and 4,901.

[101] _Special Report from the Select Committee on the Electric Telegraphs Bill_, 1868; J. E. Taylor, Proprietor of the _Manchester Guardian_; Wm. Saunders, Proprietor of the _Western Morning News_; Dr. Cameron, Proprietor of the _North British Daily Mail_; and F. D. Finlay, Proprietor of the _Northern Whig_.

[102] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876; J. E. Taylor, Proprietor of the _Manchester Guardian_; q. 3,854 to 3,862.

[103] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876; G. Harper, Editor _Huddersfield Chronicle_, and representative of the Provincial Newspaper Society, which embraced about 300 newspapers.

[104] Compare: _Report by Mr. Scudamore on the Re-organization of the Telegraph System of the United Kingdom_, 1871, pp. 31 and 32.

Daily number of words transmitted for the newspapers:

Parliament Parliament in session not in session 1868 6,000 4,000 1870 20,000 15,000

[105] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876; J. E. Taylor, Proprietor of the _Manchester Guardian_; q. 3,854 and 3,900; and G. Harper, Editor _Huddersfield Daily Chronicle_, and Representative of the Provincial Newspaper Society; q. 4,157 to 4,162.

[106] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876; q. 5,057 to 5,074, 3,360, 3,377, 3,383, and 4,934 to 4,942; and Jno. Lovell, Manager of The Press Association; q. 3,979 to 3,986.

[107] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876; q. 5,122 to 5,129.

[108] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876; q. 5,278.

[109] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876; q. 3,385 and following, 4,926, 4,927, 3,371, and 3,372.

Receipts from messages sent to individual newspapers, and not duplicated to any extent:

$ 1870 29,000 1871 41,000 1872 60,000 1873 78,000 1874 85,000 1875 91,000

[110] Questions 2,007 and 2,167.

[111] _Hansard's Parliamentary Debates_, August 30, 1888, p. 305.

[112] _Hansard's Parliamentary Debates_, November 27, 1893, p. 1,789. Compare also June 19, 1893, p. 1,316.

[113] _Hansard's Parliamentary Debates_, April 4, 1895, p. 919.

[114] _Hansard's Parliamentary Debates_, April 27, 1900, p. 136.

[115] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876; q. 3,360 to 3,370, 3,423, 4,917 to 4,923, and 5,147 to 5,149.

[116] _Report by Mr. Scudamore on the Re-organization of the Telegraph System of the United Kingdom_, 1871, pp. 31 and 32; and _Report from the Select Committee on Revenue Departments Estimates_, 1888; Mr. C. H. B. Patey, Third Secretary to the Post Office, in Appendix No. 14.

=======+=======+========+============+===========+============= | | News- | Newsrooms | Messages | Words | Towns | papers | and Clubs | Delivered | Delivered | | |(pool-rooms)| | -------+-------+--------+------------+-----------+------------- 1869 | 144 | 173 | 133 | ? | ? 1871 | 365 | 467 | 639 | ? | 21,702,000 1881 | 326 | 525 | 278 | 2,735,042 | 327,707,400 1885 | 371 | 578 | 397 | 3,616,653 | 421,362,579 1887 | 286 | 499 | 289 | 4,289,986 | 481,796,400 =======+=======+========+============+===========+=============

[117] _Report from the Select Committee on the Post Office_ (_Telegraph Department_), 1876; q. 4,047 to 4,051, 4,889, 4,890 and 3,343.

[118] _Parliamentary Paper_, No. 196, Session of 1877; Copy _of the Regulations Relating to Press Telegraph Messages issued by the Postmaster General_ in 1876.

[119] _Hansard's Parliamentary Debates_, March 12, 1906, p. 867.