CHAPTER XXVIII.

PROGRESS AFTER 1859.

SAVINGS BANKS.

The plan of Post Office Savings Banks, already mentioned as having been brought before the public and the Government most prominently by Mr. Sikes, had, through the energetic efforts of Mr. Gladstone, been provided for, in the year 1860, by Act of Parliament. It was speedily brought into operation in England and Wales, and was extended early in the following year to Scotland and Ireland. As this new department was closely connected with the Money Order Office, its secretarial management devolved, in the ordinary course, on my brother; who, before proceeding to the work of organization, recommended that this should be based upon the contract system; a measure which would have been highly economical, but would obviously have involved the abandonment of patronage. This recommendation, however, did not find favour with the Postmaster-General, Lord Stanley of Alderley, and the department was soon afterwards transferred to Mr. Tilley. Together with this great measure of economy were rejected other means proposed by myself. In short, operation was made so expensive, that while a money order costs the department in issue or payment but three-halfpence, every transaction in the savings bank, whether of deposit or withdrawal, costs sevenpence.[220]

The full evil of such increase in current expense will appear when it is considered what, under strictly economical management, these savings' banks might become. Their chief avowed object is, and most assuredly should be, to give the largest justifiable encouragement to popular thrift; and to this, as I conceive, every other aim should be completely subordinated. To this end it is important to induce, by all reasonable means, the greatest amount of deposit, but incomparably less important, if indeed at all desirable, to give more than reasonable facility for withdrawal. Certainly there is no just ground for extending and multiplying such facility at the expense of the department; especially seeing that the necessary consequence is a reduction in that rate of interest whose amount constitutes a main inducement to depositors; so that the effect is to mulct the steady depositors for the convenience of the more changeable. Had the Post Office been able to offer the same rate of interest as the old savings banks, its absolute security, combined with a reasonable and inexpensive increase of facility for the transaction of business, would not only have soon brought to it the whole actual amount of the savings bank business, but in all probability would have so extended that increase in thrift, which, with all defects, it has actually produced, as to make it correspond with the hopes of the most zealous advocates of the new scheme, and in particular of the benevolent gentleman in whose earnest suggestion it took its rise. Before the arrangements were finally adopted, I urged my views as to excess of expense and consequent prejudice to revenue, in an elaborate letter to the Postmaster-General. Some small change for the better was made, but, high as the estimate still remained, it has been exceeded by the actual expense, though the Annual Reports would seem to show otherwise.[221]

With all drawbacks, however, the institution may safely be pronounced to be a great national benefit. The number of Post Office Savings Banks in the United Kingdom by the end of the year 1861 was nearly four-fold the maximum number of savings banks existing under the old system,[222] and is now (1869) as high as six-fold.[223] It is important also to observe that the number of small deposits is more than proportionately increased; a fact obviously tending to show that this important means of thrift has been made more available to that class in which economy is at once most difficult and yet most desirable.

"'This gratifying result,' says the eighth Annual Report, 'is doubtless attributable to the superior facilities given by the Post Office banks; and especially to the fact that they are open daily and for several hours, and that they are situated almost at the door of the depositor.'"[224]

The new institution also proves very convenient to friendly societies, charitable societies, and penny banks, which avail themselves of its benefits in considerable numbers.

Fear had been expressed during the progress of the bill through Parliament that the sub-postmasters would fail to carry out the details of the measure; but it was found that--

"The postmasters throughout the country have lent themselves cheerfully and readily to the work, and instead of merely carrying out their instructions perfunctorily, and in ordinary course, have exerted themselves to make known and to explain the advantages of the Post Office Savings Banks, and to facilitate, so far as lay in their power, the transactions of the poorer depositors."[225]

REGISTRATION.

In the year 1862 an important improvement was made in the matter of registration. It may be remembered that my urgent advocacy of the lowering of the fee from one shilling to sixpence, in opposition to the opinion of Lord Lowther, appeared to be the immediate cause of my dismissal from the Treasury by the Government of Sir Robert Peel.[226] I had easily succeeded in obtaining that important reduction after my appointment to the Post Office by the Government of Lord John Russell, and the change had been followed by a large increase in the number of registered letters, and a corresponding diminution in the amount of loss by dishonesty or negligence within the Office.[227] Of course, however, even the lower fee proved a stumbling-block to some persons, and, notwithstanding all remonstrance from the Post Office, the practice of sending coin in unregistered letters, though diminished, was by no means extinct; so that losses were still reported; and, what was far worse, sorters and letter-carriers were exposed to needless temptation, and individuals of their number occasionally subjected to undue suspicion. It was consequently resolved, with the sanction of the Treasury, to make the registration of coin-bearing letters compulsory; a double fee being charged where the duty was omitted by the sender; while, to give a compensatory advantage, the registration fee was reduced from sixpence to fourpence. Even with this mitigation, however, there was considerable anxiety in the Department as to the light in which compulsory registration would be viewed by the public; but Lord Stanley of Alderley, then Postmaster-General, being anything rather than deficient in courage, readily encountered the risk, and the result justified his boldness; the speedy consequence being a large increase in the number of registered letters, and a very great decrease in the number of alleged losses. It may be added that the near approach to absolute security obtained by registration was shown by the fact that out of about nine hundred thousand registered letters posted in the United Kingdom, whether for delivery at home or abroad, during the latter half of 1862, the whole number lost was only twelve.[228]

PATTERN POST.

In the last year of this period the pattern post was established. This was done at the express desire of the Postmaster-General. My own wish was to make it part of that more extensive arrangement which I have already mentioned under the name of Parcels Post; my chief objection to the more partial scheme being the difficulty sure to arise as to the definition of a pattern. As, however, I was not then in a state of health to surmount immediately the many obstacles to the more comprehensive scheme, and as Lord Stanley was impatient of delay, the more limited plan was adopted and carried into effect.

PACKET SERVICE.

_Transference from Admiralty._

The last improvements of which I shall speak here are those connected with the Packet Service. This service, it will be remembered, had, under the management of the Admiralty, become a source of very great expense; attributable partly to the fact of its extension, for political reasons, very far beyond the requirements of the Post Office. As this extension had ceased, it was desirable, as fast as possible, to bring the expense within such limits as would render the service self-supporting, and thereby relieve the British tax-payer from a needless burden. Opportunity was given for such improvement by the transference of the service from the Admiralty to the Post Office; a change made in the year 1860. Of course progress could be but slow, seeing that existing contracts had to be respected; but steps were promptly taken to put the department in readiness for availing itself of opportunities as they should occur. The secretarial charge of the department was from the first placed in the hands of my brother, who already had like charge of the foreign and colonial departments, and had previously performed such secretarial duties relative to this service as even then devolved on the Post Office.

_Improvement in Tenders._

His first move was, so to frame the tenders as, in effect, to analyze the charges hitherto made in the gross; to show how much was demanded for the main duty, and how much for its various adjuncts; and by this means to ascertain how far the various details of any particular service justified the expense of their additional maintenance. The value of such analysis may be exemplified by stating that by abandoning stipulations which were really of little or no practical utility, either to the Post Office or to the public at large, we were able to reduce the annual expense to the Home Government of conveying the mails to and from Honduras from £8,000 to £2,000; eventually, indeed, to £1,500.

_Discontinuance of Surveys._

A yet more important measure, however, as being even more general in its operation, was to relieve contractors from the admiralty surveys of the vessels, previously insisted upon, and to limit the demand to a stipulation--under adequate penalties--that the mail service should be regularly performed within a given time. It was not without much difficulty that the sanction of the Postmaster-General was obtained to so great an innovation. The measure, however, was in full accordance with the spirit of Lord Canning's Report on the packet service; and, before it was recommended, good assurance had been received that the alterations required by the Admiralty, though often attended with heavy expense, really tended to render the vessels employed less fit for the performance of their special service. In short, the measure was, practically speaking, carried into effect; and, so far as I can learn, has never given rise to a single complaint. Its pecuniary benefit was exemplified by a tender subsequently made for a particular service by Sir Edward Cunard; the effect being to reduce the annual charge, in this one contract alone, from £23,000 to £19,000, a rate of saving, which, when applied to the whole cost of the packet service, would amount to about £200,000 a year.

_Readjustment of Transmarine Rates._

Concurrently with these and other measures for reducing the cost of the service, my brother sought to do something towards meeting its inevitable expense by a moderate increase of postage in quarters where the charges for conveyance were proportionately the heaviest. Experience had shown that, where transmission necessarily occupies a long time, increase of correspondence depends far less on lowered rates than on increased speed and frequency of transmission. He felt, moreover that it could not be just to call upon the British tax-payers generally to pay exorbitantly for advantages specially appertaining to the comparatively few persons who were directly interested in foreign and colonial correspondence; that every branch of the postal service ought to be self-supporting, and the false principle of protection to particular interests entirely shut out. At the same time, to meet the convenience of those who required cheapness rather than speed, he proposed a concurrent reduction on all letters sent by ordinary trading vessels; a mode of conveyance involving very little expense. A change so doubtful of acceptance, though so sound in principle, Lord Stanley of Alderley had the courage to adopt; and it received the cordial approbation of Mr. Gladstone, then Chancellor of the Exchequer.

_Fiscal Benefits._

The effect of these combined measures is most strongly exemplified in the service to the Cape of Good Hope and Natal; the loss on which was reduced in six years from about £28,000 to about £5,400 per annum. In short, I believe that the large annual loss involved in the foreign and colonial packet service was actually reduced during the time that the department was in my brother's hands by more than £200,000; £100,000 being saved by reduced expenditure, and the like sum gained by increased yield from the correspondence; while the cost to the British taxpayer was further diminished by the extension of arrangements previously adopted for calling upon the colonies, once exempt from all expense of transmission, to bear their just share of the charge.

_Increased Punctuality._

Whilst thus successfully striving for increased economy, my brother also took measures for improving the service. By a system of exact accounts he obtained quarterly tables showing at a glance how each line of packets stood with respect to punctuality, together with the length of its quickest and of its slowest voyage; so as to have ground of comparison with subsequent performances. He also introduced into all new contracts a stipulation for penalties to be levied in cases of over time. Lastly, while the Annual Report was in his hands, he was careful that, whenever a service was performed with great credit, the Postmaster-General's Annual Report should contain due notice of the fact. The directors showed the value they attached to such recognitions by quoting them in their reports to the shareholders. To complete this matter, I may here state that so striking was the effect gradually produced by these various measures, that, in the last quarter during which the department was under my brother's superintendence, viz., that ending September 30th, 1867, there were, as I learn, only twenty instances of a packet arriving after its time; while those of arrival before time were no less than two hundred and twenty-seven.

_Large Expenditure Prevented._

The last great service performed by my brother in this department, which, for the sake of completing the subject, I mention here, consisted in the defeat of an attempt to draw the British Government into the adoption of such changes in the Australian service as, without any appreciable improvement in its efficiency, would have subjected the mother country to an increased annual expense of about £114,000. The proposal was drawn up with great art, and under show of certain advantages, really aimed at diverting the main burden of expense from certain of the colonies to the mother country. My brother, after a careful consideration of the whole subject, prepared a minute exposing the fallacies of the plan and justifying its rejection. This minute being approved by the Postmaster-General of the day (the Duke of Montrose), and confirmed by the Treasury, was sent out with but little change in its words to the colonies concerned, where it appears to have settled the question.

_Reward for Faithful Services._

This important minute was written in the year 1867, about three years after my resignation. While, however, my brother was quietly rejoicing at the success with which he had surmounted these serious difficulties, and dwelling, perhaps, with some natural gratification on two recent minutes in which the Duke of Montrose had recorded his satisfaction with the financial results of the packet service during the time it had been under his management, and with the state of perfection into which that service had been brought; while, moreover, he was taking measures for further improvements of great importance, for which opportunity was rapidly approaching, through the termination of existing contracts, a change was preparing which soon put all such thoughts to flight. Will it be believed that in the course of the same year, nay, within a few months from the date alike of the despatch to Australia and of the Postmaster-General's gratifying minutes, the whole packet service was withdrawn from my brother's charge and placed in other hands. The motive assigned by his Grace was that Mr. Frederic Hill's views were opposed to those of the Postmaster-General, Mr. Tilley, and the Treasury. No positive act of opposition was alleged or even hinted at, my brother's proceedings in the matter having been limited to statements and arguments set forth in minutes to his Grace; while, to judge by all his antecedents, he was ready, as indeed he was bound, to obey any injunction, and to carry out any announced wish of his official superior, however little these might be in accordance with his own opinion. The consequences of the change, it must be added, were far more speedy than satisfactory. Within a year, the cost of the service, which under his management had been gradually reduced by about £100,000, was augmented by little less than £300,000; and I may add that but for such interposition as for a short time he was still allowed to make, the increase, great as it was, would in all probability have been greater still.[229]