31. (5) Miscellaneous Salaries and Wages and Incidentals (7) Rents, Rental values, etc. ... £64,200 ... £109,372 The sum of £64,200 covers the wages of Cleaners, Firemen, Liftmen, etc. The sum of £109,372 covers such items as uniform clothing, bicycles, stationery, printing, postal stores, travelling (except engineering staff) and law charges. The sum of £282,140 covers the rental values of buildings, rates, heating, lighting, water, etc. These charges, except special stores, are apportioned. The Committee have not investigated them in detail and express no opinion on the figures. 32. (8) Railway Companies and others for services in connection with telegrams £46,290 Under the arrangements made at the transfer in 1870 the Railway Companies undertook to receive as agents of the Postmaster General public messages for transmission by telegraph and to transmit them to their destination or to a convenient handing over point, the remuneration being fixed by agreement or by arbitration. The rates of commission vary according to the services rendered, and from time to time form the subject of negotiation. ... ... £166,101 33. (9) Maintenance of plant The Engineering Department is responsible for the construction and maintenance of telephone, telegraph and other Post Office engineering plant; the maintenance costs are apportioned. It was stated in evidence that expenditure was kept under very careful supervision and therefore no appreciable savings on the engineering side could be effected. The Committee are not in a position to deal with this evidence in detail; nevertheless they feel confident that the services of a first-class engineer with administrative experience would be of advantage to the Department. 34. (10) Services rendered by Telephone System £94,250 The Post Office provides for telephone subscribers dictating telegrams by telephone. During the ordinary hours of telegraph business a subscriber is connected for this purpose to a suitable office, normally not more than 20 miles from his local exchange, and is charged the local telephone fee (1d.) irrespective of distance in addition to the cost of the telegram. When a subscriber telephones a telegram outside the normal hours of telegraph business he is generally connected to the nearest telegraph office still open and charged the normal telephone fee for a call to that office. The cost of the telegram is charged in the subscriber's telephone account. Telephone acceptance on the whole is profitable because one or more telegraphic transmissions are usually eliminated. About 9 million telegrams a year are now accepted from the public by telephone. 35. For many years past telephones have been used for the delivery of telegrams. No charge is made for delivery by telephone during the normal hours of telegraph business. The cost of delivery is offset by the savings in delivery fees and telegraphic transmissions. In London and the larger Provincial towns telephonic delivery is restricted during the day to telegrams bearing registered or telephonic addresses, and is effected from the Head Office. In other places all telegrams are offered to subscribers by telephone unless specific objection is raised to this form of delivery. Outside the normal hours of business any telegram of which the addressee is found to be a telephone subscriber is delivered by telephone from the nearest telegraph office which is open on payment of the appropriate trunk fee, but telegrams are not so offered after 11 p.m. unless the text denotes urgency. After delivery of a telegram by telephone, a confirmatory copy is sent to the addressee. About 7 million telegrams a year are now delivered by telephone. 36. The telephone system is also largely used for the transmission of telegrams. Many smaller Post Offices-about 9,000 in all-conduct their telegraph business entirely by telephone, either over separate circuits or over circuits used jointly for telegraph and telephone purposes, according to the amount of traffic. In addition telephone circuits are extensively used up to a distance of about 20 miles for the direct transmission of telegrams between telegraph offices in order to save telegraphic transmissions. 37. The credit to the Telephone Service £94,250 for services rendered can be divided as follows: Telephone plant and staff used for delivery of telegrams by telephone to subscribers switching staff at telephone exchanges in ... £9.250 £2,500 £82,500 For the latter services the charges are calculated at public rates. The Committee think that economies would result from a freer use of the Telephone Trunk circuits for the disposal of telegrams during the less busy hours, and consider that the Telegraph Service should be debited only with the operating charges in cases where existing Trunk circuits can carry the additional traffic without serious inconvenience. 38. (11) Pension Liability ... £326,474. The Pension liability is charged on an actuarial basis and is slightly heavier than the actual pension payments at present. A quinquennial valuation is made by the Government Actuary to assess the liability. The figures are based on apportionment, and the Committee have no comment to make on them. Depreciation is calculated on the " straight line" basis, viz., a uniform annual percentage on prime cost, or in the case of plant renewed since 1914 on renewal cost, so fixed as to write off the first cost less residual value, if any, at the end of the anticipated working life of each class of plant. The Committee consider that the annual depreciation charge is reasonable for the type of business. 40. (13) Interest ... ... ... £152,112. As the great bulk of the capital assets was acquired before the War, the book value is substantially below the level of current reproduction cost; on this relatively low valne interest is charged at an average rate of 3 per cent. 41. The principal types of apparatus used in the Inland Telegraph Service are: Multiplex (Baudot, Western Electric and Murray). Morse Keys and Sounders. Concentrators. 42. The apparatus speeds vary; with a 4-arm manual multiplex circuit with a Baudot transmitter the speed is 30 words per minute for each arm in each direction, with type-keyboard apparatus the speed is raised to 35 words per minute, or 40 words per minute if column printing is used. With start-stop apparatus the speed may be as high as 65 words per minute in each direction. The operator outputs differ, the staffing standards varying from 36 unit telegrams an hour on a direct Morse circuit to as much as 62 unit telegrams an hour with multiplex or start-stop working. The policy of the Post Office is to introduce start-stop machines as widely as possible, in substitution both for Morse working and, except on the busiest routes, for multiplex working. Over 130 start-stop machines are working at present, and probably about 200 more could be substituted for Morse within the next year or two, leading to a saving of about £50,000 a year in staff costs. Start-stop apparatus has the advantage over Morse in simplicity of operation, and it is less complicated and difficult to maintain than multiplex apparatus. In its present stage of development, however, it appears to require a good deal of attention from the engineers, and the possibility should be carefully considered of overcoming this barrier to its wider use. 43. While Morse working is being superseded on the busier circuits by start-stop, it is also being replaced on the more lightly loaded routes by telephonic transmission. Post Office policy envisages the possibility of the gradual supersession of Morse working, but has not hitherto regarded its complete abolition as likely within a measurable distance of time. The Committee think that a definite speeding-up of the process would be advantageous. A lengthy training is necessary before a learner becomes proficient in Morse working, whereas training for start-stop or multiplex type-keyboard working is comparatively simple. 44. The Committee noted many different types of apparatus in daily use. They cannot help thinking that concentration on fewer types would increase the efficiency of the service. Improvements of existing types or new types of apparatus should be thoroughly tested out by the Engineers and Traffic experts in the laboratory before they are introduced into the instrument rooms to deal with live messages. If experience with live traffic is essential to the test, it should be restricted within narrow limits. 45. With the introduction of multiplex telegraph systems, which increase the traffic carrying capacity of a circuit by affording facilities for eight to ten operators at each office to make use of the same wire simultaneously, working at high speed, there is a tendency to concentrate traffic on main trunk routes equipped with multiplex apparatus and to eliminate cross-country circuits worked by Morse sounder. Of recent years about 80 direct cross-country circuits have been withdrawn and the traffic concentrated on main circuits. Detailed traffic study of the route is necessary before it can be ascertained whether staff savings will result from the abolition of direct working, and investigations in this direction should be steadily pursued, but due weight must be given to the importance of avoiding delay. 46. Dealing now with the question of revenue, a deficit would probably remain under the present tariff even under business management if the Inland Telegraph Service is considered by itself, and under Post Office management, hampered by Civil Service conditions with an established staff, the deficit must be substantial. 47. In the last pre-war year, 1913-14, there were about 69,700,000 inland telegrams, excluding telegrams to, from or within the Irish Free State. During the war the traffic fell, but after the armistice it rose steadily with trade revival and demobilisation, a total of about 77,000,000 being reached in 1919-20. In January, 1920, the Press tariff was raised by 25 per cent., and in September, 1920, the ordinary tariff was raised to the present rate of 1s. for 12 words. Demobilisation work was coming to an end, and since then the number of telegrams has steadily declined, until in 1926-27 there were only 47,400,000 telegrams, the annual decrease varying between 2 and 23 millions in recent years. The increase in tariff in 1920 cannot be held responsible for the continuous decline since 1921 to the present day. The explanation is to be found partly in trade depression, but mainly in the competition of the Telephone Service, which tends to kill the shortdistance telegraph traffic. During the period 1919 to 1926 the number of inland trunk telephone calls rose from 51,300,000 to 92,700,000, an increase of 80 per cent. The average distance of the inland telegram has steadily risen, and it now stands at about 160 miles. The Committee consider that with the growth to be expected in the telephone habit, which should be encouraged, this decline will continue. 48. Various systems of tariffs have been considered by the Committee. Such systems fall broadly into three divisions : (a) Special rates for " urgent" telegrams. (b) Zone or distance tariffs. (c) Flat-rate tariffs. 49. The Committee do not consider that there is any scope for & special service of "urgent" telegrams in this country. Such & service would be mainly used on special occasions when the ordinary traffic was congested, and the additional staff and plant necessary to provide an immediate service would largely wipe out the profit. An appreciable amount of traffic would be diverted to an urgent service only through deterioration of the ordinary service; and the principle of the worse the service the greater the revenue is not wholesome. 50. Neither can the Committee recommend a tariff based on zone or distance charges. The cost of a telegram is not entirely dependent on the distance; a telegram from London to Manchester or Glasgow may cost less than a telegram from London to a village in Kent. The work at the counter would be slowed down by the need for consulting various books of reference owing to the complications of a distance tariff, and at busy offices the consequent delay would provoke intense resentment from a long-suffering public. Competition from the Telephone Service has already killed the short-distance telegram; and in practice, if a considerable portion of the traffic which remains were not to be diverted to the telephone, a distance charge would amount simply to discrimination against Scotland and Northern Ireland. 51. In the Committee's opinion the flat-rate basis of charge is the only satisfactory tariff for British conditions and habits. 52. The Committee have given very careful thought to the obvious suggestion that the present rates should be varied to aid in meeting the large deficit. 53. They have considered a reduction in the present rates. It is argued that a return to the 6d. telegram would increase the volume of business to such an extent that there would be a net increase in revenue. The Committee cannot accept this view. The |