THE TELEGRAPH SYSTEM AS A BRANCH OF THE POSTAL DEPARTMENT

Previous to the acquisition of the telegraphs by the state, the different telegraphic companies carried on their business in comparative harmony, a harmony which was occasionally disturbed by the entrance into the field of competition of new claimants for the confidence of the public. By far the most important of these companies in 1855 were the Electric and International, and the British and Irish Magnetic, controlling between them about 8500 miles of line and having 600 stations open to the public. During the succeeding ten years, by the growth of the old companies and an increase in the number of the new, the number of miles of line increased to 16,000, of telegraph stations to 2040. The number of public messages sent in 1855 was a little more than one million, in 1860 nearly two millions, and in 1865 over four millions and a half. The rates for a message of twenty words varied from 1s. for a distance under fifty miles, plus 1s. for each additional fifty miles, to 4s. for a distance over 150 miles and 5s. to Dublin, including free delivery within half a mile from the telegraph office.[797]

In 1860 a competing company, the London District Telegraph Company, started operations in the Metropolitan District, and offered a low rate of 6d. a message. In the following year a far more dangerous rival, the United Kingdom Telegraph Company, announced that henceforth it would charge a uniform shilling rate irrespective of distance. Four years later both of these companies fell into line, forced according to some by the unfair tactics of their competitors, according to others by the utter impossibility of making both ends meet, while charging a uniform rate irrespective of distance. The tariff agreed to in 1865 was as follows:—

In some cases these rates applied only to wires of a single company, and, where a message was transmitted over the wires of two or more companies, an additional charge was made. Special rates were offered for press messages, the news being supplied by the agency of the intelligence department of the telegraph companies.[798]

The earliest proposal for government ownership of the telegraphs seems to have originated with Thomas Allan, the same Allan who was later instrumental in establishing the United Kingdom Telegraph Company. In 1854 he submitted arguments to the government through Sir Rowland Hill in favour of the change, arguments which met with the approval of Lord Stanley, the President of the Board of Trade, and Mr. Ricardo, formerly Chairman of the International Electric Telegraph Company, and ex-member for Stoke. Two years later Mr. Barnes, an official in the Post Office Department, submitted to my Lords a plan "for the establishment in connection with the Post Office of a comprehensive scheme of electric telegraphs throughout the kingdom." In 1866, Lord Stanley, as Postmaster-General, in a letter to the Lords of the Treasury called their attention to the fact that the question of the propriety of the assumption by the government of the telegraphic systems of the Kingdom had been revived in the previous year by the Edinburgh Chamber of Commerce, and still more recently the proposition had been embodied in a petition from the Association of Chambers of Commerce of the United Kingdom. As he himself had for many years been in favour of such a change and found his opinion shared by more than one important body of public men, he directed Mr. Scudamore[799] to report whether, in his opinion, the telegraphs could be successfully operated by the Post Office, whether such operation would result in any advantages to the public over the present system by means of private companies, and whether it would entail upon the department any large expenditure beyond the purchase of existing rights. [800]

The report presented by Mr. Scudamore was strongly in favour of the control of the telegraphs by the Post Office, and is especially interesting in furnishing an abstract of the evils which the people considered that the companies were inflicting upon them. The most important of these evils, real or imaginary, were as follows:—

Exorbitant charges and a resulting failure to expand on the part of the system.

Delay and inaccuracy in the transmission of messages.

Failure to serve many important towns and communities.

Inconvenient situation, in many places, of the telegraph office, it being often at a considerable distance from the business centre of the town, especially when in the railway station.

Inconveniently short periods that offices are open in many places.

Wasteful competition between the companies.

The strongest argument against the existing condition was rather a result of competition than private ownership. In the more populous centres the companies very often had their telegraph offices at a very short distance from each other, being so situated as to compete for the public patronage, while other and more outlying portions of the town were quite unserved. The latter were thus made to suffer in order that favoured portions might enjoy the somewhat doubtful boon of competition. In order to show the failure to extend telegraphic facilities, Mr. Scudamore compiled a list of towns in England and Wales having an individual population of two thousand or more. In his own words "So far as telegraphic accommodation is concerned, while thirty per cent of the whole number of places named ... are well served, forty per cent are indifferently served, twelve per cent badly served, and eighteen per cent, having an aggregate population of more than half a million persons, not served at all." By combining the telegraphic business with the postal service, there seemed every reason to suppose that its advantages could be more widely extended, the hours of attendance increased, charges reduced, and facilities given for the transmission of money orders by telegraph.

Mr. Scudamore proposed to open telegraph offices in all places which had a population of 2000 and upwards and which already had money-order offices. All other post offices were empowered to receive telegrams, which were to be sent by post to the nearest telegraph office for transmission. The charge was to be made uniform at 1s. for twenty words and 6d. for each additional ten words, or part thereof. He judged that the whole of the property and rights of the telegraph companies might be purchased for a sum within £2,400,000, and £100,000 more would have to be spent in the extension of the service. His estimate for gross annual product was £676,000; annual charge, £81,250; working expenses, £456,000; surplus, £138,750.[801] Finally, his reply to Lord Stanley's question was in effect that the telegraph system might be beneficially worked by the Post Office, that there would be advantages thus obtained over any system of private ownership, and that the Post Office would have to bear no expense not amply covered by the revenue.[802] In fairness to Mr. Scudamore, it should be remembered that his original low estimate of the probable cost of the telegraph companies did not include Reuter's and other important companies. In addition, the strict monopoly conferred in 1869, with the necessary accompaniment of the purchase of all inland telegraph companies, entirely upset his original estimates. Finally, the decision to include the public telegraph business of the railways and the excessive price paid to the railway and telegraph companies should not be forgotten in contrasting the estimated price with that eventually paid for the acquisition of the telegraph systems in the United Kingdom.[803] Mr. Grimston, the Chairman of the Electric and International Telegraph Company, contended that the extension of telegraphic facilities to any considerable number of small towns and villages would involve a loss to the state by greatly increasing working expenses, that village postmasters and postmistresses were totally unable to work the telegraphs, and that consolidation could be effected more advantageously by the companies themselves.[804]

In 1868, the Postmaster-General was given authority by act of Parliament to purchase the undertakings of the telegraph companies and also the interests of the railways in the conveyance of public messages, together with a perpetual way-leave for telegraphic purposes over the properties of the railway companies. Any telegraph company, with the authority of two thirds of the votes of its shareholders, was empowered to sell to the Postmaster-General all or any portion of its undertaking. When the Postmaster-General had acquired the property of any telegraph company, he must also, upon the request of any other company, purchase its undertaking, this privilege being extended also to the railways so far as telegraphs operated by them for transmitting public messages were concerned. The price paid for the Electric and International, the British and Irish Magnetic, and the United Kingdom Telegraph Companies was fixed at twenty years' purchase of their net profits for the year ending 30th June, 1868. In the case of the United Kingdom Telegraph Company additional sums were to be paid for the Hughes type-printing patent, for the estimated aggregate value of its ordinary share capital as determined by its highest quotation on any day between the 1st and 25th days of June, 1868, for compensation for the loss of prospective profits on its ordinary shares, and any sum that might be determined as loss for its attempt to establish a uniform shilling rate. Every officer or clerk of the companies who had been in receipt of a salary for not less than five years or of remuneration amounting to not less than £50 a year for not less than seven years, if he received no offer from the Postmaster-General of an appointment in the telegraphic department of the Post Office equal in the opinion of an arbitrator to his former position, was entitled to receive an annuity equal to two thirds of his annual emolument if he had been in service twenty years, such annuity to be diminished by one twentieth for every year less than twenty. Those entering the service of the Postmaster-General were entitled to count their past continuous years of service with the companies as years in the service of the Crown.

For the most part all the telegraph apparatus belonging to the railway companies and all belonging to the telegraph companies on the railway lines necessary for the private business of the railways were handed over to the railways by the Postmaster-General free of charge. He was given the use, from telegraph stations not on the railway lines, of all the wires of the telegraph companies on the lines employed exclusively in the public telegraph business. The railways might affix wires to the posts of the Postmaster-General on the line, and in like manner he might require the railways to affix wires to their own posts for the use of the Post Office or erect new posts and wires. Finally the railways were required to act as agents of the Postmaster-General, if required, for receiving and transmitting messages. The railways as a rule succeeded in driving a very sharp bargain with the Government for the purchase of their interests in the public telegraph business. The price paid was twenty years' purchase of the net receipts from public telegrams reckoned for the year ending 30th June, 1868, plus twenty times the increase in net receipts for the three preceding years or for such shorter period as the business of transmitting public telegrams had been undertaken. In addition, compensation was made for the rents, etc., payable to the railways by the telegraph companies, for the unexpired period of their respective agreements, for the right of way obtained by the Postmaster-General over the lands of the railways, for the loss of power on the part of the railways to grant way-leaves, for the value of the railways' reversionary interests (if any) in the transmission of public messages on the expiration of the agreements with the telegraph companies, and for any loss the railways might suffer in working their telegraph business as a separate concern. Finally the Postmaster-General was required to convey free of charge to any part of the United Kingdom all messages of the railways relating to their own private business.[805] The act empowering the Postmaster-General to purchase the undertakings of the telegraph companies did not confer upon the Post Office a monopoly in the transmission of telegrams, Mr. Scudamore himself declaring that such a monopoly was neither desirable nor did the Post Office wish it. The second act, however, declared that no telegraphic messages, except those sent from or to any place outside of the United Kingdom, should be transmitted by any telegraphic company for gain unless the company was in existence on the 22d of June, 1869, and was not for the time being acquired by the Postmaster-General, who should be required to purchase its undertaking upon demand.[806]

Mr. Scudamore's original estimate of the cost of acquisition of the telegraphs fell far short of the final expenditure; although it must be remembered that, when he proposed £2,500,000 as sufficient, he did not anticipate items of expense which later vastly increased the cost. Before the committee which reported in 1868 he advanced his original estimate to £6,000,000, and in the following year to £6,750,000, of which he considered about two thirds to be of the nature of good-will. The telegraph companies when first approached asked for twenty-five years' purchase of their prospective profits, and the Government offered to buy at the highest price realized on the Stock Exchange up to the 25th of May, with an addition of from 10 to 15 per cent for compulsory sale. The cost of the leading companies, based upon twenty years' purchase of the net profits for the year ending 30th June, 1868, was as follows: For the Electric and International, £2,933,826; for the British and Irish Magnetic, £1,243,536; for Reuter's, £726,000; for the United Kingdom Electric, £562,000; and for the Universal Private, £184,421,—a total of £5,650,047. Separate bargains followed with many smaller companies. The acts of 1868 and 1869 granted £8,000,000, for the purpose of purchasing the undertakings of the companies and the interests of the railways; £6,640,000 were spent in purchases, and £1,560,000 in renewals and extensions between 1868 and 1872.[807] The claims for compensation on the part of some of the railways were very excessive. The Lancashire and Yorkshire Railway asked for £1,129,814, with interest, and £1 per wire per mile a year for all wires erected upon its right of way by or for the Post Office. By the terms of the award they obtained £169,197 and 1s. per mile per wire. The Great Eastern Railway presented a claim for £412,608, with interest, and £1 per mile per wire. Their claim was reduced to £73,315 and an annual payment of £200 for way-leave. In all, the capital sum of £10,880,571 was expended by the Government, necessitating an annual interest payment of £326,417, charged, not on the Post Office vote, but on the Consolidated Fund.[808]

When the Post Office acquired the telegraphs, a uniform rate was introduced of 1s. for twenty words or part thereof and 3d. for each additional five words or part thereof, exclusive of the names and addresses of sender and receiver, which were transmitted free. Delivery was free within a radius of one mile from the terminal telegraphic office, or within the limit of the town postal delivery when it contained a head office and the postal delivery extended more than a mile from it. Beyond the above limits the charge did not exceed 6d. per double mile or part thereof. When special delivery was not required beyond the free delivery, the message was sent free by the next ordinary postal delivery. The newspapers succeeded in having incorporated within the act a clause prohibiting a higher charge for press messages than 1s. for every one hundred words transmitted between 6 P.M. and 9 A.M., or 1s. for every seventy-five words between 9 A.M. and 6 P.M. when sent to a single address, the charge for the transmission of the same telegram to each additional address to be not greater than 2d.[809] On the day of transfer the Post Office was able to open about a thousand postal telegraph offices and nineteen hundred offices at railway stations where the railways dealt with the public messages as agents of the Postmaster-General. On the 31st of March, 1872, the system comprised more than five thousand offices (including nineteen hundred at railway stations), twenty-two thousand miles of line, with an aggregate of eighty-three thousand miles of wire, and more than six thousand instruments. A decided increase in the number of messages was the result. During the first year after the transfer there were nearly ten millions of messages, the second year twelve millions, and the third year fifteen millions, or more than double the number transmitted in 1869. The period from 1872 to the adoption of a sixpenny tariff in 1885 was one of steady progress. The number of new offices opened was not numerous, the increase having been only one thousand, but the improvements in existing connections were marked and the number of messages transmitted had increased to thirty-three millions. The new tariff rate was 6d. for twelve words or less, with a halfpenny for each additional word, but the old system of free addresses was abolished. Under the old tariff each figure was charged at a single rate. Under the new schedule five figures were counted as one word. A large proportion of telegrams were brought within the minimum sixpenny rate, while the average charge, which had been 1s. 1d. in 1885, was reduced to 8d. in 1886. The number of messages increased from thirty-three millions in 1884-85 to fifty millions in 1886-87. Four cables between France and England and one between France and the Jersey Isles were purchased by the governments of the two countries, two by the Belgian and English governments, two between Holland and England, and one between Germany and England, by the governments of the countries interested.[810]

Following the adoption of a uniform sixpenny rate the department has granted other facilities to the public, which, though popular enough, have undoubtedly tended to place the working of the telegraphs upon a less secure financial basis. In 1889, the issue of telegraphic money orders was begun as an experiment, and in the same year was extended to all head and branch post offices in the United Kingdom.[811] Two years later the Post Office ceased to require the repayment of the capital outlay on telegraph extensions made under guarantee, and the rural sanitary authorities were empowered to defray the cost of such extensions in places within their districts.[812] For the six preceding years the average annual number of guaranteed telegraph offices was seventy-seven, and during the next five years the average annual number increased to 167. As part of the Jubilee concessions in 1897, the guarantors were required to pay only one half of the deficiency, with the result that during the following two years the average annual number of guaranteed telegraphic offices increased to 290. At the same time the free delivery limit was extended to three miles and a reduction was granted in the porterage charges beyond that distance. Finally, in 1905, the guarantee was reduced to one third of the loss incurred, the delivery charge being fixed at 3d. a mile for the distance beyond the three-mile limit, instead of the distance from the office of delivery.[813]

In 1896, the main routes from London having become crowded, especially by the telephone trunk lines, the principle of underground lines between the most important centres was sanctioned by the department. London and Birmingham were first connected, and the line was ultimately extended through Stafford to Warrington, where it joined existing underground wires between Manchester, Liverpool, and Chester. By 1905, underground wires were laid as far north as Glasgow through Carlisle, to be extended later to Edinburgh. At Manchester a junction was effected with a line passing through Bradford to Leeds. During the same year underground lines were completed from London to Chatham and from London westward toward Bristol, with the intention of extending it into Cornwall in order to secure communication with the Atlantic and Mediterranean cables.[814]

In 1875, England joined the other important European powers in a telegraphic agreement which went into effect in January of the following year. By this agreement each of the contracting parties agreed to devote special wires to international service, government telegrams to have precedence in transmission and to be forwarded in code if desired. Private telegrams could also be sent in code between those countries which allowed them, and the signatory powers agreed to pass them in transit, but each country reserved to itself the privilege of stopping any private telegram. For the purpose of making charges, any country might be divided into not more than two zones, and each of the signatory powers owed to the others an account of charges collected.[815] So far as foreign telegrams were concerned, the use of manufactured expressions in place of real words gave rise to considerable trouble in view of the fact that such combinations were difficult to transmit. In 1879, the languages which might be used for code words were reduced by common consent to English, French, German, Italian, Spanish, Portuguese, Dutch, and Latin. At the same time the use of proper names as code words was prohibited. This did not remove the evil, as the roots of words in one language with terminations in another were used. An official vocabulary was compiled by the International Telegraph Bureau, to become obligatory in 1898, but its publication in 1894 aroused considerable opposition, as many of the words were dangerously alike, and in 1896 the decision of the Paris Conference of 1890, by which the official vocabulary was to become compulsory for European telegrams in 1898, was rescinded. It was also decided that an enlarged vocabulary should be published by the International Bureau, but, owing to the action of the English delegates, the official vocabulary was not made compulsory at the meeting of the International Telegraph Conference in 1903, although artificial words were allowed if pronounceable in accordance with the usages of any one of the eight languages from which the ordinary code words might be selected. It was also decided to admit letter cipher at the rate of five letters to a word, and several countries agreed to lower their charges for the transmission of extra-European telegrams, the English delegates contending that the rates for such telegrams should be made the same as the rates for European telegrams.[816] In 1878, negotiations with the German and Netherland Telegraph Administrations resulted in a charge of 4d. a word being fixed as the rate between the United Kingdom and Germany and 3d. a word between the United Kingdom and the Netherlands.

In 1885, the following reductions in rates were announced:—

To Russia from 9d. to 6½d. a word.
Spain 6d. 4½d.
Italy 5d. 4½d.
India 4s. 7d. 4s.

to be followed six years later by still greater reductions:—

To Austria from 4½d. to 3d. a word.
Hungary 4½d. 3d.
Italy 4½d. 3d.
Russia 6½d. 5½d.
Portugal 5½d. 4½d.
Sweden 5d. 4d.
Spain 4½d. 4d.
Canary Isles 1s. 7½d. 10d.

the minimum charge for a telegram being 10d. in all cases. The transmission of foreign money orders by telegraph was inaugurated in 1898 by the opening of an exchange with Germany and its extension shortly afterward to the other important European countries.[817]

In 1892, an attempt was made, curiously suggestive of Marconi's discovery, to transmit telegraph messages without a direct wire. The experiment was conducted between the island of Flat Holm in the Bristol Channel and the mainland, a distance of three miles. A wire was erected on the mainland parallel with one on the island, and, by means of strong vibratory currents sent through the former, signals were transmitted and messages exchanged. Three years later and before the practical value of the Flat Holm experiment had been substantiated, Mr. Marconi arrived in England to submit his plans to the Post Office. A private wire from Poldhu to Falmouth was provided for him on the usual rental terms, and it was announced that the Post Office would act as his agent for collecting messages to be transmitted by wireless telegraphy when he had proved the feasibility of his project. At the international congress on wireless telegraphy held in Berlin in 1903 it was recommended that shore stations equipped with wireless apparatus should be bound to exchange messages with ships at sea without regard to the system of wireless telegraphy employed by the latter, that the rate of charge for the shore station should be subject to the approval of the state where it was situated, the rate of the ship to the approval of the state whose flag it carried, and that the working of wireless stations should be regulated so as to interfere with other stations as little as possible. In order to enable the Government to carry out the decision of the congress and to place wireless telegraphy under its control for strategic purposes, an act was passed in 1904 making it illegal to instal or work wireless telegraphic apparatus in the United Kingdom or on board a British ship in territorial waters without the licence of the Postmaster-General. The act was to be operative for two years only, but before its expiration, was extended until the 31st of December, 1909, before which it might again be renewed. Arrangements were also made for the collection and delivery of the telegrams of the Marconi Company by the post offices throughout the country. The company charges its usual rate, 6d.. a word, and the Post Office in addition charges the ordinary inland rate.[818] The international agreement providing for compulsory communication between shore stations and ships was signed in 1906 in spite of the protests of the Marconi Company, Sir Edward Sassoon, and others, who contended that the agreement was unfair to the company and a mistake on the part of the Kingdom, "which was thus giving up advantages obtained by the possession of the best system of wireless telegraphy in the world." The majority of the countries represented were also in favour of compulsory communication between ship and ship, but this was successfully negatived by Great Britain and Japan. In 1908, Mr. Buxton was able to announce in the House that the relations between the Post Office and the Marconi Company "are now of the most friendly kind," and that they have accepted and adopted the principle of intercommunication. In the preceding year two experimental stations were started by the Government which will enable the department to extend its operations quite independently of the companies.[819]

From a financial point of view, government ownership and control of the telegraphs in the United Kingdom has not been a success. In addition, the Telegraph Department, for some time previous to 1874, had been drawing upon the balance in the possession of the Post Office, a balance which was required to be invested for other purposes and whose expenditure for the use of the telegraphs had not been authorized by Parliament. Mr. Goldsmid, in introducing a motion for the appointment of a committee of enquiry, alluded to this error on the part of the department, to the excessive price paid for the telegraphs, and complained that the telegraph system was not being operated on a paying basis. His motion was withdrawn, but an agreement was reached with the department by the appointment of a committee, with Mr. Playfair as chairman, "to inquire into the organization and financial system of the Telegraph Department of the Post Office." The committee in their report commented unfavourably upon the unnecessarily large force, the cumbrous organization, and the far from economical management of some of the divisions of the department, advised that an attempt be made to remedy these faults, and that press messages be charged a minimum rate of 1s. each, and not at the rate of 1s. for each seventy-five or one hundred words obtained by adding together separate messages requiring separate transmission. This suggestion with reference to press messages was adopted, promises were made at the same time to diminish the force, and a scheme was submitted for the reorganization of the department.[820]

The number of telegrams for the year ending 31st March, 1887, the year following the sixpenny reduction, was 50,243,639; for the year 1891-92 it had increased to 69,685,480. In 1896-97 the number was 79,423,556 and in 1899-1900 the total was 90,415,123. During the next three years there was a reduction, followed in 1902-03 by an increase to 92,471,000. Since 1902-03 the number has again fallen off, the figures for 1906-07 being only 89,493,000.[821] It is rather difficult to make definite statements about the telegraph finances on account of the lack of uniformity in presenting the accounts since 1870. Under gross revenue is now included the value of services done for other departments, but this was not always the rule. The expenditure of other departments for the telegraph service may or may not be included under ordinary telegraphic expenditure. Net revenue may also be increased or a deficit changed to a surplus by deducting the expenditure for sites, buildings, and extensions from ordinary expenditure. Finally, the interest on capital is not charged on the Telegraph Vote, and so is not included under expenditure. In 1871, 1880, and 1881 there seem to have been surpluses over all expenditure, including interest on capital. Excluding interest from expenditure, the net revenue decreased from £303,457 in 1871 to £59,732 in 1875, when the pensions to officials of the telegraph companies were first charged to the Telegraph Vote. With an increased net revenue of £245,116 in 1876, following the report of the committee of investigation, the department did very well from a financial point of view, until 1884, when the net revenue fell to £51,255, and in 1887 there was a deficit of £84,078, due to the fact that expenses were increasing at a greater rate than receipts. The sixpenny reduction seems to have made but little change in the financial situation, the gross revenue increasing from £1,755,118 in 1884-85 to £1,855,686 in 1886-87, the expenditure for the same years being £1,731,040 and £1,939,734. The net revenue began to recover in 1888-89, and averaged about £150,000 a year during the four years ending March 31, 1892. During the fiscal years 1894 and 1895 there were deficits, then a slight recovery from 1896 to 1900 and a succession of deficits from 1901 to 1905. The interest on stock, £214,500 in 1870, increased steadily to £326,417 in 1880, at which figure it remained until 1889, when a reduction in the rate of interest from 3 per cent to 2-3/4 per cent lowered the amount payable to £299,216. In 1903, there was a further reduction to £278,483.[822]

The financial loss experienced by the Government in operating the telegraphs has naturally produced considerable interest in this phase of the question. Mr. Blackwood, the Financial Secretary of the Post Office, in his evidence before the committee, considered that the financial control and oversight of the department were inadequate and that the department was over-manned. On the other hand, he was of the opinion that many expenses were met by revenue expenditure which should have been charged to capital. Mr. Baines, the Surveyor-General, among other causes of the financial deficiency, called attention to the shorter hours and longer annual leave of the telegraph staff as government employees, the higher standard of efficiency established by the Post Office, and the prevalence of much overtime work as a result of the maintenance by the companies, just before the transfer, of an inadequate staff.[823] The fact that the yearly increase in messages continued to diminish after 1879 is commented on by the Postmaster-General in 1884 as due to the stagnation of trade, the competition of the telephones, and the rapidity of the letter post. Mr. Raikes called attention to the large number of telegrams on the business of the railways which were transmitted for nothing. By an agreement with several of the railway companies to send, as a right instead of a privilege, a fixed number of messages containing a fixed number of words, this increase was checked. In 1892, the following comment is found in the Postmaster-General's Report: "This stagnation of business, viewed in connection with an increased cost in working expenses, is a matter for serious consideration, and necessarily directs attention to that part of the business which is conducted at a loss," the reference being to the increased number of press messages transmitted at a nominal charge. When in 1868 the newspaper proprietors succeeded in obtaining the insertion in the Telegraph Act of special rates for the transmission of press messages, no condition was laid down that copies, in order that they might be sent at the very low charges there enumerated, should be transmitted to the same place as the original telegram. The newspapers combined to receive messages from news associations in identical terms, and, by dividing the cost, obtained a rate equal on the average to 4½ d. per hundred words. Under the arrangements adopted for the transmission of news messages the number of words so sent did not necessitate a corresponding amount of work, but it is an interesting fact that in 1895 the number of words dealt with for the press formed two fifths of the total number. In that year the loss on these telegrams was estimated at about £300,000 a year. The high price paid as purchase money is another of the factors to be considered, only in so far, however, as the Telegraphic Department has failed to meet the interest on the debt so incurred. The telegraph companies were very liberally treated, and in certain cases excessive prices were undoubtedly paid. Probably the most important reason for the financial failure of the telegraphs under government ownership and control has been the influence of forces productive of good in themselves, but quite different from those which had previously been dominant when the telegraphs were under private control and during the early years of government management. The effect of these forces is clearly seen in the reduction of the tariff in 1885, the extension of facilities under inadequate guarantee, and the increase in the pay of the staff.[824] Mr. Buxton is of the opinion that the worst feature of the postal business is the telegraph service. "It has never been profitable and now the telephone system has so largely taken its place that the revenue is falling off," while the "Economist" considers that "it is obvious that both in the Savings Bank and the Telegraph branches reforms are urgently needed in order to place matters on a sound financial basis."[825]