Chapter XLI: Appendix: J

[See p. 279.]

_Conveyance of Mails by Railway. Memorandum thereon._

As doubts appear to exist as to the expediency of proceeding with the proposed Railway Bill, at least in the present comprehensive form, I have been induced to consider whether the object in view may not be attained by other means; and I am inclined to think that this may be done not only without the opposition, but even with the cordial co-operation of the railway companies; and that, concurrent with this, an important saving of revenue may be effected.

The means which I would suggest are that the Exchequer Loan Commissioners be authorised and required to advance loans, within certain limits, to such railway companies as can give ample security, on the following conditions:--

1st. The amount of loan in each case to be proportionate to the postal service performed by the company. If thought necessary it might also be limited to a certain percentage on the sum which the company is legally empowered to borrow.

2nd. The rate of interest to be the market rate at the time as determined by the terms on which the Government may actually raise the necessary loan. At the present time this would probably be about three and a quarter per cent.

3rd. The company to engage to carry the mails according to a fixed tariff of rates to be framed beforehand by the Post Office. Such tariff to include all possible varieties of service, whether by trains "under notice," or otherwise; and the rates to be calculated so as, under ordinary circumstances, to afford the companies a small profit.

4th. All the existing powers of the Postmaster-General to be maintained, and some additional powers to be secured, _e.g._, the right to demand trains exclusively devoted to the mail service. The right to levy certain fines for irregularity on condition of paying certain premiums for punctuality. The right to erect the apparatus for the exchange of bags.

5th. The engagement to be for three years certain, terminable afterwards by either party on twelve months' notice.

The following table exhibits the amount of debentures issued by the several companies enumerated, and the average rates of interest on such debentures, as shown by the last published accounts.[271] It also exhibits the sum which each company would save if the _whole_ of their loans were raised at three and a quarter per cent., and the amount, according to the latest award, payable by the Post Office for postal service. A comparison of the two last items shows that if the Government advanced the whole of the loans, the companies in question would be considerable gainers, even though they carried the mails for nothing. Such an arrangement, however, is not contemplated, and the comparison is made merely with a view of showing the capabilities of the plan.

The companies have been selected, not with a view of exhibiting the results in a favourable light, but simply because they have a large postal service.

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Railway Company. |Total amount|Average |Saving of the | Amount annually
|of Debenture|rate of | Companies | payable by the
| Loans. |Interest.| by | Post Office for
| | | paying only | Conveyance of
| | |3-1/4 per cent.| the Mails under
| | | |the latest awards
| | | | or agreements.
------------------+------------+---------+---------------+------------------
| £ |Per Cent.| £ | £
Caledonian | 2,262,426 | 4.5 | 28,280 | 23,710
Great Western | 10,083,710 | 4.57 | 133,104 | 18,252
London and North-}| 10,975,589 | 4.3 | 115,243 | 56,500
Western }| | | |
London and South-}| 2,400,416 | 4.31 | 25,444 | 14,780
Western }| | | |
Midland | 4,151,556 | 4.28 | 42,761 | 23,412
North-Eastern | 6,833,642 | 4.36 | 75,853 | 34,380
South-Eastern | 2,709,468 | 4.61 | 36,848 | 14,624
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The annual payments for the railway postal service amount to about £400,000. The general adoption of the above plan would (the service remaining the same) reduce this amount probably to about £150,000. To obtain the concurrence of the companies it would be necessary, probably, for the Government to advance gradually, as the existing bonds fall due, about £30,000,000 in the aggregate, or rather less than two-fifths of the present amount of railway debentures. This advance, taking the saving of the companies at only one per cent. on the average, would reduce their expenses by £300,000. And as their receipts from the Post Office would be reduced, say by £250,000, the balance would give a direct gain to the companies of £50,000 per annum. But I am assured by gentlemen well informed on the subject, that the companies would also be benefited indirectly as regards the terms on which they would be enabled to raise the remainder of their loans.

The question naturally arises, why, seeing that a larger advance (say of £45,000,000 instead of £30,000,000) would probably suffice to relieve the Post Office of _all_ payments for railway service, I have not proposed the larger amount? The reason is that I have not felt justified in asking Government to do more than is necessary to supply the defects of early legislation, by placing the Post Office in a position similar to that in which it would probably have stood, had its interests (and through it those of the public) received due attention from the legislature when railways were first established. It is unnecessary to add that, should Government feel disposed to extend the advances to railways beyond the limit I have proposed, the saving which would result from such extension might go to the further relief of the Post Office, or be carried direct to the credit of the general revenue of the state, as Government might determine. In arriving at this conclusion, I have not overlooked the importance of neutralising the unwillingness sometimes manifested by the companies now under agreement with the Post Office to afford additional service without additional pay. Against this inconvenience I consider the Post Office may be tolerably well secured by making the agreement terminable by the Government, without notice, in the event of the conditions not being fully performed by the company.

I may add that advances, such as those now suggested (except that they were unfortunately unaccompanied by any stipulations as to the postal service), have already been made to several of the Irish railway companies.

Should the above plan be adopted by Government, I have little doubt that almost every railway company would speedily avail itself of the advantages it affords; and, if so, while both parties would be saved the trouble, expense, delay, and uncertainty of arbitrations, the Postmaster-General would be enabled, more effectually even than by the proposed bill, to grant many important postal facilities earnestly desired by the public, which he is now obliged to withhold, a most acceptable boon would be conferred on the railway companies, and a large saving--estimated above at £250,000 a year--would be effected in the Post Office expenditure.

R. H.

6th January, 1857.