Part 23

For an ordinary letter-- d. Under 1 ounce .382 Over 1 ounce, under 4 ounces .747 Over 4 ounces 1.404 For an average letter packet .457 For a postcard .353 For a halfpenny packet .432 For a newspaper packet 1.063 For a parcel 7.091

For the letter packets under 1 ounce in weight, for those between 1 ounce and 4 ounces in weight, for the halfpenny packets and for the postcards, the estimated average cost will be approximately the actual cost per packet; but in the case of letter packets over 4 ounces in weight and newspaper packets, the variations in weight and convenience of handling are considerable, and there will be an appreciable variation for individual packets above and below the estimated average cost. The cost will vary with the weight and size (but not proportionately), and the deviation will be greatest in the case of the heavier packets, since with both these classes the average weight of the great bulk of the packets is less than the general average. Of all letter packets, postcards, halfpenny packets and newspapers, the number exceeding 4 ounces in weight forms less than 10 per cent. With so small a proportion of heavy packets the result may be taken as almost exact in the case of the lighter packets. It is not in excess of the actual cost, because the calculation, taken as a whole, is biassed in favour of the heavier packets.

The resultant figures are figures of average cost. They represent the cost of those packets in each class in respect of which the average amount of service is performed, and not exceptional cases, as when packets travel over very long distances, or when a packet is redirected or returned to the sender, in which latter cases obviously double the normal service is performed.

The calculation is approximate in that at certain points it has been necessary to frame estimates on imperfect data. This is inevitable in dealing with a service conducted over a large area and under diverse conditions.[624] In general the manner in which the result is affected by the use of imperfect data has been indicated. These variations have been borne in mind throughout, and, as their effects are produced in varying directions, the combined effect is not such as to invalidate the results arrived at.

The result suggests the following conclusions:--

(1) That no class of packet sent at the letter rate of postage involves a loss to revenue;

(2) That there is a large profit on ordinary light letters;

(3) That in the case of packets of the weight of about 4 ounces the profit is less, but is still appreciable;

(4) That there is a considerable profit on postcards;

(5) That there is a profit on the halfpenny packets;

(6) That there is a heavy loss on the newspaper packets, averaging nearly 1/2d. per packet;

(7) That as regards packets other than parcels, the principle of uniformity of rate, irrespective of distance, is well founded. The cost of conveyance (.07d. per packet) is still, in the phrase of Sir Rowland Hill, "not expressible in the smallest coin";

(8) That as regards the cost of conveyance there is no case for a reduced rate of postage for local letters;

(9) That as between local letters and other letters there is appreciable difference in the cost of handling, but this difference would not be sufficient to justify a discrimination measurable in coin;

(10) That the parcel post is conducted at considerable loss. If the cost be taken, as shown in Table L, at 7.091d. per parcel, the loss is on the average almost 2-1/4d. per parcel, or nearly [L]1,250,000 on the total number of parcels dealt with in 1913-14. The matter is, however, complicated by the question whether a strictly mathematical proportion of the total expenses of the Post Office can fairly be charged against the parcel post.[625]

TABLE A

TOTAL NUMBERS DEALT WITH IN THE UNITED KINGDOM, 1913-14.

+-------------------+----------------------+ | Letters | 3,488,800,000[626] | | Postcards | 924,250,000[627] | | Halfpenny Packets | 1,211,400,000[628] | | Newspaper Packets | 207,100,000 | | Parcels | 133,663,000[629] | +-------------------+----------------------+ | Total | 5,965,213,000 | +-------------------+----------------------+

* * * * *

TABLE B

STATEMENT OF EXPENDITURE IN THE YEAR 1913-14 IN CONNECTION WITH THE POSTAL SERVICES, INCLUDING MONEY ORDER AND POSTAL ORDER BUSINESS, BUT EXCLUDING POST OFFICE SAVINGS BANK AND GOVERNMENT ANNUITY BUSINESS.

[L] (a) Salaries, Wages and Allowances 10,538,318 (b) Rent, Rates, Office Fittings, Water, Light and Heating 268,981 (c) Conveyance of Mails (excluding Payments to Foreign and Colonial Administrations):-- [L] [L] [L] By Rail-- Ordinary Postal Packets 1,292,460 Parcels 1,197,037 --------- 2,489,497 By Road 662,010 " Packet 890,530 --------- 4,042,037 _Less_-- Contributions received towards the cost of Packet and Mail services _130,335_ --------- 3,911,702 (d) Purchase of Stores and Uniform Clothing 452,065 (e) Manufacture of Stamps, etc. 128,000 (f) Travelling, Law Charges, and Incidental Expenses 180,527 (g) Estimated Rental Value of premises belonging to the Post Office used for Postal purposes 278,344 (h) Estimated Pension liability for the year 1,169,406 Amount expended by other Government Departments in respect of various services rendered, viz.:-- [L] (i) Maintenance and Repair of Buildings 160,200 (j) Rates on Government Property 95,676 (k) Issue of Postage Stamps 22,193 (l) Stationery, Printing, etc. 112,308 (m) Cost of Audit (Exchequer and Audit Department) 3,612 ------- 393,989 (n) Net Revenue contribution to the Exchequer for the year 6,143,459 ----------- [L]23,464,791 ===========

--_Annual Report of the Postmaster-General_, 1913-14, Appx. N, p. 92.

TABLE C

STATEMENT OF EXPENDITURE, SUMMARIZED AND ADJUSTED.

ITEMS IN TABLE B. NET COST. (a) and (h) STAFF, [L]11,707,724. _Deduct_-- [L] [L] (1) Officers in charge of Eastern Mails 1,000 (2) Post Office Agencies Abroad 17,000 (3) Cost of Services to other Departments} 516,789 (4) " Money Order Service }excluding 156,000 (5) " Postal Order Service } Postage 530,000 (6) " Registration and Insurance Service 264,000 (7) " Express Delivery Service 52,000 (8) " Private Boxes and Bags 41,000 (9) " Cash on Delivery Service, Reply Coupons, Certificates of Posting, Late Fee Services, etc. 50,000 --------- _Proportion allocated to Staff_ 1,444,264 10,263,460

(b), (g), (i), and (j) BUILDINGS, [L]803,201. _Deduct_-- In respect of (3), (4), (5), (6), (7), (8), and (9) above 96,587 706,614

(_c_) CONVEYANCE OF MAILS, [L]3,911,702. _Deduct_-- (1) Packet Services outside the United Kingdom 582,935 (2) Conveyance of Mails across Panama 2,931 (3) Receipts from Foreign Countries for Land Transit 51,000 -------- 636,866 3,274,836 (_d_), (_e_), (_k_), and (_l_) STORES, [L]714,566. _Deduct_-- In respect of (3), (4), (5), (6), (7), (8), and (9) above 86,938 627,628 (_f_) and (_m_) MISCELLANEOUS 184,139 ----------- Total [L]15,056,677 ===========

TABLE D

COST OF STAFF AND BUILDINGS.

In the examination of proposals for revisions of staff and accommodation at post offices, the whole work of the offices is reduced to a common denominator for each chief division of the work, and is stated in terms of that denominator.

Thus all indoor work is reduced to and expressed in terms of units representing the work in connection with 1,000 letters posted and delivered, the term "letter" in this connection covering all packets sent by post other than parcels. There are no ratios for the separate classes of "letters."

All outdoor work is reduced to and expressed in terms of a unit of 1,000 letters (posted and delivered), i.e. the complete service.

For office accommodation the unit is 1,000 letters posted or delivered, whichever is the greater number at the office in question.

Certain ratios are taken for the expression in terms of letters of the various divisions into which the work performed by the post office falls.

As between letters and parcels the ratios are as follow:--

UNITS RATIOS.

| VALUE IN LETTERS. +----------------------------------------- | Indoor | Outdoor | Office | Work. | Work. | Accommodation. --------------+--------+---------+----------------------- Letter posted | 3/5 | -- } | { 1 (whichever is the " delivered | 2/5 | 1 } | { greater traffic) " forwarded | 1/3 | -- | 1/2 " collected | -- | x | -- | | | Parcel posted | 6 | -- | 6 " delivered | 6 | 10 | 6 " forwarded | 4 | -- | 6 " collected | -- | 10x | -- --------------+--------+---------+-----------------------

1,000 letters (weekly) = 1 unit of postal work.

For each unit of work so determined there is a corresponding normal cost.

For indoor work the normal cost is approximately [L]15, for outdoor work [L]22 10s., and for office accommodation [L]2 10s., per annum.

Since the unit to which a certain normal cost is allowed is built upon calculations which give a parcel a definite relative value as compared with a letter, the ratios show the relative cost to the Post Office of a letter and of a parcel.

TABLE E

RELATIVE COST OF STAFF FOR LETTERS AND PARCELS.

It is estimated that on the average more than half the total number of letters are not sent forward direct to the post office of destination, but are forwarded from the office at which they are posted to an intermediate office; that is to say, more than half the total number of letters travel in two mails, and incur a handling at an intermediate office. The handling at that office is termed "forwarding." The letters are termed "forward letters."[630] Expressed in another way, the estimate is that all letters are forwarded, on the average, in 1.6 mails.

It is estimated that on the average a greater proportion of parcels travel in this way in two mails. The actual estimate is that a parcel travels in 1.8 mails.

Hence--

Total handling of 1 letter = 1 letter posted + 1 letter delivered + 0.6 letter forwarded.

Total handling of 1 parcel = 1 parcel posted + 1 parcel delivered + 0.8 parcel forwarded.

Now a letter forwarded = 1/3 letter posted and delivered (Table D).

And a parcel forwarded = 1/3 parcel posted and delivered (Table D).

Hence total handling of 1 letter = 1.2 letter posted and delivered.

And total handling of 1 parcel = 1.26 parcel posted and delivered.

The ratio between the total cost of handling (indoor) of 1 letter and the total cost of handling (indoor) of 1 parcel is therefore--

1.2 x 1 : 1.26 x 12 = 1 : 12.6.

The normal unit cost for indoor work is [L]15 (approximately).

For outdoor work the ratio is 1: 10, and the normal unit cost [L]22 10s.

The ratio for all indoor and outdoor services is therefore approximately 1: 11.

* * * * *

TABLE F

ACTUAL COST OF STAFF FOR LETTERS AND PARCELS.

The total cost of handling a parcel is 11 times the total cost of handling a packet other than a parcel (Table E).

In 1913-14 the total number of parcels dealt with was 133,663,000 (Table A).

The cost of handling these parcels was equivalent to the cost of handling 133,663,000 x 11 = 1,470,293,000 packets other than parcels.

In 1913-14 the total number of packets other than parcels dealt with was 5,831,550,000 (Table A).

And the total cost of staff engaged in dealing with all packets, including parcels, was [L]10,263,460 (Table C).

Hence the total cost of handling 133,663,000 parcels was

[L]10,263,460 x 1,470,293,000/7,301,843,000 = [L]2,066,642.

And the total cost of handling 5,831,550,000 packets other than parcels was [L]8,196,818.

TABLE G

ANALYSIS OF COST OF STAFF.

LETTER MAILS.

_Total Cost_, [L]8,196,818.

The handling of postal packets falls into the following groups of operations:--

(_a_) Collection and delivery,

(_b_) Facing, stamping, and sorting,

(_c_) Administration and accounting.

The cost of administration and accounting when reduced to the individual packet is extremely small. In general also it varies to some extent with the size of the packet. Thus the newspaper packets and the halfpenny packets, which are considerably heavier than the ordinary letters, notoriously involve more difficulty and expense in administration; and the postcard, the lightest postal packet, notoriously involves least difficulty and expense in administration. Parcels undoubtedly involve much more expense for accounting than any other class of packet; so that if the expense for administration and accounting be divided in the ratio adopted for sorting, stamping, collection, and delivery, which also depends largely on the weight of the packet, no appreciable error is introduced. No attempt is made, therefore, to isolate the expense for administration and accounting.

The total cost of collection and delivery is estimated to be double the total cost of facing, stamping, and sorting.

The cost of delivery is estimated to be four times the cost of collection.

The cost of sorting is estimated to be four times the cost of facing and stamping.

The total cost of handling packets other than parcels (excluding cost of conveyance) = [L]8,196,818.

Hence--

[L] Total cost of collection = 1,092,909 " " facing and stamping = 546,455 " " sorting = 2,185,818 " " delivery = 4,371,636 ---------- Total [L]8,196,818 ==========

TABLE H

RELATIVE RATES OF SORTING AND STAMPING.

|Relative Rate |Relative Rate | of Stamping. | of Sorting. ---------------------------------------+--------------+--------------- Ordinary Letter Packets-- | | (_a_) not exceeding 1 oz. | 1,000 | 100 (_b_) over 1 oz., not exceeding 4 oz.| 75 | 75 (_c_) over 4 oz. | 75 | 60 Postcards | 1,000 | 100 Halfpenny Packets | 750 | 90 Newspaper Packets | 80 | 70 ---------------------------------------+--------------+---------------

* * * * *

NOTE I. The rates both as regards stamping and as regards sorting are not actual but relative rates. In both cases the handling of an ordinary light letter is taken as the standard with which the rate of handling other articles is compared. The table is intended to indicate, e.g., that if in a given period of time 100 ordinary light letters would be sorted, only 75 letters weighing between 1 ounce and 4 ounces, or only 90 halfpenny packets, would be sorted in the same period; or if in a given period of time 1,000 ordinary light letters would be stamped, only 75 letters over 1 ounce in weight, or only 80 newspapers, would be stamped in the same period. All that is aimed at is the normal relative rate of sorting for each class of packet. It is not necessary to ascertain the normal absolute rate.

* * * * *

NOTE II. _Rates of Stamping._--In determining rates of stamping, a serious complication is introduced by the use of machines (both hand and power) at many offices for stamping certain classes of packets. In London, where approximately one-third of the total number of postal packets is posted, power machine-stamps are employed, except at a few of the sub-district sorting offices, at which hand machine-stamps are still employed. There are a few of the smaller offices at which all the stamping is done by hand, but the number of such offices and the number of packets so stamped is negligible. The power machine stamps at rates varying from 12 to 16 times as great as that of an officer stamping by hand; the hand machine stamps at a rate about ten times as great.

Power machine-stamps are in use in the provinces in towns in which approximately a quarter of the total number of postal packets is posted.

Hand machine-stamps are in use in other towns in the provinces where approximately one-twelfth of the total number of postal packets is posted.

In the remaining towns there is hand stamping only.

The foregoing estimates give an average rate of stamping throughout the kingdom for those classes of packets which are of a size and shape to pass through the machine-stamp, where available, of about ten times as great as that of an officer stamping by hand.

This figure must now be applied to the various classes of packets shown in the table, in conjunction with the rates of hand-stamping for such packets as cannot be passed through the machine-stamp.

(_a_) Practically all letters under 1 ounce can be passed through the machine-stamp if available. Hence the rate for this class is ten times the rate of hand-stamping.

(_b_) None of the second or third classes of packets can be passed through the machine. Further, these packets are of irregular shape and are therefore much less convenient to deal with than ordinary letters. The rate of hand-stamping is therefore only about three-fourths the rate for ordinary letters.

(_c_) All postcards can be passed through the machine-stamp if available. The rate is therefore ten times the rate of hand-stamping.

(_d_) A large proportion of halfpenny packets cannot, on account of their size and shape, be passed through the machine-stamp, and the figure for the machine-stamp must be considerably reduced for these packets. The nearest estimate that can be formed for these packets is 7.5 times the rate for hand-stamping.

(_e_) Newspapers cannot be passed through the machine-stamp, but in a number of cases the wrappers are taken to the post office before the newspapers are enclosed in them for cancellation of the postage stamps (in order to secure a prompt despatch when the newspapers are actually posted). The rate for such stamping is slightly greater than the rate of hand-stamping for ordinary letters. On the other hand, the rate of stamping newspaper packets is not more than two-thirds the rate of hand-stamping ordinary letters. The nearest estimate that can be formed for all newspapers is that the rate of stamping is four-fifths the rate of hand-stamping ordinary letters.

* * * * *

NOTE III. _Rates of Sorting._--(_a_) The average rate of sorting for ordinary letters is taken as the unit.

(_b_) The rate of sorting letters and the rate of sorting postcards may be taken as identical.

(_c_) Owing to the irregular shape of newspaper packets, and letter packets over 4 ounces in weight, the average normal rate of sorting must be taken as considerably less than that for letters.

Both classes are usually sorted at the packet tables and not at the ordinary letter frames.

(_d_) The letter packets between 1 ounce and 4 ounces in weight present some difficulty, since they include a considerable number of long letters, which are sorted at the ordinary letter frames at nearly the same rate as short letters, while the rest are sorted at the packet tables at about the same rate as the heavier packets. The figure should obviously be between (_a_) and (_c_).

(_e_) The halfpenny packets also fall into two classes: (1) those sorted as short letters, and (2) those sorted at the newspaper frames. A very large proportion fall into the second class, and the average normal rate of sorting, as in the case of the second class of letter packets, is intermediate between (_a_) and (_c_).

TABLE J

STAFF.

This table shows the relative cost per packet, based on the rates of work (Table H), the cost of an ordinary letter being taken as the unit.

| | Facing and | | Description of Packet. |Collection.| Stamping. | Storing. | Delivery. | | [631] | | [632] --------------------------+-----------+------------+----------+---------- Ordinary Letter Packets-- | | | | (a) not exceeding 1 oz. | 1 | 1 | 1 | 1 (b) over 1 oz., not | | | | exceeding 4 oz. | 1 | 6-2/3 | 1-1/3 | 1-1/3 (c) over 4 oz | 1 | 6-2/3 | 1-2/3 | 1-2/3 Postcards | 1 | 1 | 1 | 1 Halfpenny Packets | 1 | 1-1/4 | 1-1/9 | 1-1/9 Newspaper Packets | 1 | 6-1/4 | 1-3/7 | 1-3/7 --------------------------+-----------+------------+----------+----------

* * * * *

TABLE K

STAFF (RELATIVE COST).

This table shows the ratios in Table J weighted according to the number of packets in each class.