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the Department of those stocks as they were purchased, and it does not bother itself with what is after all a hypothetical question, i.e., what would it cost to buy these stocks at to-day's market price.

455. You are taking the average price throughout the year, and you are paying no regard to what the price may be at the date at which the theoretical stocktaking occurs ?-That is so. The differ

ence, as pointed out in the memorandum introductory to these accounts is that these stocks are not merchandise; they are not trading stocks; they are stocks purchased for use in works.

Sir Robert Hamilton.

456. What is the nature of the stationery and printing referred to in the telephone service account on page 20. That seems to represent rather a large proportion of the total amount?-The telephone directory is the largest item. Then there are subscribers' accounts, and various forms, tickets, and things of that sort.

Sir Assheton Pownall.

457. There is, I suppose, a physical stocktaking as well as the valuation which you have just explained?-The stocktaking is continuous. It is not an annual stocktaking.

458. There is a physical stocktaking with regard to articles which are actually in stock, as well as this figure valuation? -Yes. Stock is taken over the whole of the stocks at a certain period.

Mr. Ellis.

459. It is checked against the ledgers? -Yes, it is checked against the ledgers.

Mr. Briggs.

460. In such a serious item as this of stationery and printing for the telephone service, amounting to £236,392, the question whether you take the stock in at the actual value to-day, or whether, as you suggest it is done, at the price at which it was brought, might make a very material difference in the balance sheet results?-I agree it would make a difference. What we maintain is that it is irrelevant in an undertaking of this character to re-value stocks according to current buying price, because they are not merchandise. I think it would be found that all large utility undertakings


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464. The Continental telephone vices account on page 32 shows a very big surplus of £90,000 on an income of £160,000. Does not that rather indicate that those rates might be reduced?—That matter is under the Postmaster-General's consideration at the present time. Perhaps I ought to add that it would be dangerous to reduce the rates to a level which attracted more traffic than the existing circuits could conveniently carry. It depends not only on ourselves, but also on the continental countries.

465. In the year 1924, I think the surplus was £76,000 on an income of £141,000, which is well over 50 per cent. It seems that the continental telephone user is a little hardly used. Is it that there would be difficulty in regard to getting fresh wires if you were to increase your traffic?-It varies. We have three routes to the Continent through France, Belgium and Holland. Until recently our Dutch circuits across the Channel into Holland were distinctly overloaded. Two new cables within the last two years have been put down. With regard to France I think the difficulty is rather in France than in the Channel. The French Government, I think under pressure from the British Post Office. have

10 March, 1927.]

Sir HENRY Bunbury, K.C.B.

been laying down a number of new underground routes from the French coast to Paris and beyond, but there are not enough circuits yet to justify attracting any more traffic.

466. This service would seem brilliantly profitable on these figures?-It is at the moment because you have all these circuits very heavily loaded. If you had a normal traffic load, the ratio of profit would not be quite so high.

Sir Robert Hamilton.

467. Under the head of wireless services, what does the item "land lines " refer to? It is only a small amount, I see? That is the rent of land lines between the wireless stations and the operating stations.

468. Has there been any increase during the year in new stations for local transmission of wireless over short distances? I am not aware of any.

469. There are one or two stations existing at present? I am not quite sure what sort of stations the honourable Member refers to.

470. I have in my mind one between two islands in my constituency-a prewar station?-That is not included in this account. It is treated ordinary telegraph service.

as an

471. Why would that not be included in the wireless services?-I am afraid I do not know off-hand, but presumably because it is not paid for as such by the public. It makes no difference to the public whether these communications are carried by the Post Office by wireless or by wired channels; it is treated as part of the ordinary inland telegraph service. The wireless services here are entirely with foreign countries.

472. There is no separate account for local home wireless. That would go into the telegraph account?-That There is very little of it.

is So.

473. There is very little of it. I was going to ask whether the Post Office contemplated any increase?-I am not in a position to answer that.

Mr. Gillett.

474. With regard to the account of the Blackfriars Power Station on pages 34 and 35, can you tell me where the substation is that is going to be retained? -At Mount Pleasant, I think.


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479. Then what is the advantage of keeping the sub-station?—The sub. station is required in any case, whether current is taken from the Blackfriars station or from the Charing Cross Electric Supply Company's station. i am not an electrician, but I assume that the sub-station is required to reduce the voltage.

480. Do you mean to say that the substation lights the Mount Pleasant post office and all the buildings there?—Yes, and works all the plant at Mount Pleasant.

481. For the whole of that building?— Yes. Presumably the energy is delivered at a high voltage, and is transformed at the sub-station to a lower voltage.

482. Then what was the Blackfriars power station doing besides supplying Mount Pleasant?-It supplied the headquarters buildings at St. Martins-leGrand, and the King Edward building, and, possibly, others; but I have no definite knowledge.

483. Do you know how it came into existence ? Was it before the days of the electric lighting companies?—It was brought into use about 1910, presumably as a measure of economy.

484. Now, of course, it is found better to do it by taking it from the larger suppliers? Now you have the superstation it has altered the complexion of things entirely. I have no doubt in those it days meant considerable economy.

485. Have you a contract with these companies which will cover you for a number of years, or are you likely to have the price increased?-We have a long term contract.+

Mr. Briggs.] On Tuesday, when we had before us the Revenue Department's accounts, there was a paragraph in the Report of the Comptroller and Auditor General, paragraph 10, which we began

+ See Appendix 59.

10 March, 1927.]


to discuss, and we were told it could be dealt with better when we came to the Commercial Accounts.

Chairman.] You refer to the sale of the Tenter Street site by the Post Office. Mr. Briggs.] Yes.


486. I think it would be in order to take that now, Sir Malcolm, would it not? (Sir Malcolm Ramsay.) I have not yet seen the proof of the evidence given, but what I should have said, if I did not say it then, was that this was a Disposal Board question which concerned the Surplus Stores Liquidation Commission and could best be dealt with when the representative of that body attends.

Chairman.] There is also a paragraph on page 9 which refers to the Disposal Board, and it is perfectly clear, apart from other considerations, that they would best reply to your question on this matter.

Mr. Briggs.

487. Could they reply to this point: whether or not in this transaction in particular the Post Office were free agents, or whether they were under the direction or control of the Office of Works? (Sir Henry Bunbury.) With regard to the disposal of the Tenter Street site?

488. With regard to the whole matter. With regard to the purchase, in the first instance, were the Post Office free agents in the purchase; or was the purchase agreed by the Office of Works and passed on to the Post Office at the price they had given without the Post Office being consulted?-The Post Office were free agents subject to an obligation to consult the Office of Works in certain matters, and subject, later on, to an instruction, I think, to hand over to the Disposal Board the business of disposing of the site.

489. It will make it rather difficult to consider the point if we have to discuss with Sir Henry the purchase and with somebody else the sale.

Chairman.] On this particular point I rather think a solution will be found by having some representative of the Post Office reply about the matter, and I think we might get Sir Daniel Neylan to reply upon it, and then the ground


will be adequately covered in that way. Mr. Briggs.] We can take that as assured?

Chairman.] Yes, certainly.†

Sir Fredric Wise.

490. With regard to the Rugby masts, where do they come in the accounts?— Rugby station is not included in the accounts this year.

491. Why is that?-It began operations, I think, in March, 1926. The capital cost is brought in when the revenue begins to come in.

492. It will appear for the first time in the accounts of 1926-27. But there is not much revenue, is there?—I think there is a fair amount; not as much as we should like, but a fair amount.

493. Why does not the capital cost come in here? That is what I do not understand? We do not bring in the cost of wireless stations until the station is completed. We do not bring in works under construction until they open for traffic.

494. Do you not think there should be a special account for this ?-For works under construction?

495. Either for works under construction, or even for the Rugby station?—I think an account for Rugby station would be difficult, because Rugby station is linked up with the other wireless stations. Traffic is transferred from one to the other according to exigencies.

496. The capital cost is very great? Admittedly.

497. And the revenue is not very much considering the capital cost ?-I have rot seen the first year's accounts yet, us Rugby station was not completed, of course, but I should expect to find there is a fairly heavy loss.

498. A tremendous loss. Would you consider having some account for, shall I say, such stations as Rugby, because they do not appear at all in these accounts?-They appear in the general account of the wireless services on pages 28 and 29, and I would rather deprecate any further sub-division.

499. What is the capital cost? There is no capital cost shown here?-The capital liability is shown as £500,000, and the assets £360,000 plus £139,000 for depreciation.

+ See Qs. 7067-7106.

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500. But I understand that does not include Rugby?-That does not include Rugby, but it includes all the other wireless stations which were then open.

501. Those are bringing in a revenue? -Yes, but they are not paying.

502. My point is that here we are discussing the commercial accounts of the Post Office, and one of your largest items in the wireless services is not mentioned in the accounts at all.-Because it was not working in the year under review.

503. But you had a capital cost? Chairman.] I view the question very largely as one of date. I understand from you that this only started in March, 1926, and probably late in that month, in which case you would not have it in this account?-I beg pardon. I should have said January, 1926, and not March, 1926.

504. Then you do not in this account show anything at all with regard to it, although probably you had it in fact in operation for about three months?— Something less than three months, and probably more or less experimentally. There is a foot-note at page 28 which explains the matter. The foot-note says: "Expenditure in respect of new stations contemplated or in course of construction is not included."

505. You begin to include that expenditure when the stations are open for commercial working?-Yes.

Sir Frederic Wise.] I should like to suggest that we should have something more specific in regard to such stations as Rugby.


Chairman.] Yes. That clearly is point that you would desire to note in order to put it to the Committee later for the Report.

Sir Frederic Wise.] Yes.

Major Salmon.

506. Might I return to the question of the Blackfriars Power Station? I observe from the Accounts that we have a property here with regard to which it is stated that the unexpired value at 31st March, 1925, is in round figures £232,000. It is rather strange that we should not know exactly what it originally cost, and how much up to now has been written off for depreciation; because it is perfectly obvious that we shall not get, though we might hope for it, anything like the figure at which it stands in the books. My point is, are we really depreciating at a sufficient rate



to meet emergencies of this kind. suppose one might say that we are not always getting rid of a power station, but, on the other hand, it seems to me we ought to know at what rate we are writing off-what percentage-being given the figures for the land, buildings, and plant and machinery, separately? That is explained in the General Summary on page 6; but, of course, the lives are not given. There is a very long string of lives.

507. I see on page 34 there is a note which says that the depreciation has been calculated on the straight-line method. The life of the buildings has been taken at 100 years. We have had this place for 17 years, and we have taken the life of it as 100 years. How much capital loss are we going to make on these buildings?-I should prefer not to express any opinion, because they are being put up for sale, but I must admit that the form of this account is not very satisfactory. It is the only account in this volume of accounts which is kept in this form. The form was adopted on the advice of a Chartered Accountant of repute who was called in to advise the Post Office when the power station account was started, but personally I do not like it. I prefer the standard form as in the other accounts, because it shows the prime cost and the relation of depreciation to prime cost.

508. I should also like to have a memorandum put in, if we might have it, showing what amount of money has been spent on the original buildings, and on the land, and on plant and machinery, and whether that money that has been spent under those three heads has been added to the capital value. When you say you are going to keep it for 100 years it means you are not going to depreciate it? I do not know why 100 years was taken. If I may say so, it was clearly wrong.

509. Being the Accountant Officer one would have thought you would have called attention to it.-Well, this station has been moribund for three or four years; otherwise I think something would have been done about it.


510. Will you lodge that statement with the Committee?-I will.+ There are one

+ See Appendix 59.


10 March, 1927.]


or two matters which I promised to look into, and I can give the information about those matters now if the Committee would care to have it. I was asked what was the Post Office staff in 1914, and at the latest date for which the figures are available. Having looked into the matter, I find the figures are these. Excluding the staff employed in what is now the Irish Free State, the number at 1st August, 1914, was 220,389, and the number at 1st January, 1927, was 224,065. The 1914 number excludes industrial staff employed in Northern Ireland, which is not ascertainable now, but that would be a very small figure. The increase is more than accounted for by additional work which has been undertaken by the Post Office since 1914. I need not waste the time of the Committee with details. There are a good many new services which we now carry out, and, in addition, there has been a large development of the telephone ser


Major Salmon.

511. Do I understand that you have only increased your staff during the last 13 years by 4,000?-That is so. At the same time I must say, if I did not say it on the last occasion, that the figures have been affected by the reduction in the number of boy messengers, and by the reduced use of part time labour. It is not a straightforward comparison.

512. The figures are not comparable?— Not entirely comparable. You have to make certain adjustments. I was asked by Sir Robert Hamilton about the mail services to Orkney and Shetland. The position at the Post Office with regard to any non-performance of voyages was explained in a letter sent by the Postmaster-General to Sir Robert a short while ago.

Sir Robert Hamilton.

513. The only point I wanted to raise particularly was whether any recovery was made in respect of work not being carried out by the steamship company? -The answer is no.

514. I understand that under the contract as it exists there is difficulty in making the recovery?—There is difficulty in the position as between the company and the Postmaster-General in enforcing a recovery. May I make one further statement with regard to non-competitive

contracts? I think the Committee were anxious for some figures which I now have. The number of contracts placed without competition in the last two years is as follows:-In the first half of 1925 the amount was £490,000; in the second half of 1925, £633,000; in the first half of 1926, £606,000; and in the second half of 1926, £410,000.


515. That is rather more than £1,000,000 in each year?-Yes, rather more than £1,000,000; but the amount which it is necessary to place without competition is now diminishing and will probably diminish still further. There will always be a substantial amount of telephone exchange equipment, however, which has to be ordered without competition.

Major Salmon.

516. Arising out of that question I should like to ask what is the total value of the contracts that you place altogether? -I am afraid I have not the figure in my mind. It would be many millions of pounds.

517. What I was trying to arrive at was the ratio of non-competitive contracts to competitive contracts?-When I say the total amount of the contracts reaches many millions of pounds, I mean it would not be less than £5,000,000, and I should say not more than £10,000,000-somewhere between those limits. That is in regard to engineering contracts. Then, in addition to that, there are stores contracts which are practically all competitive. I was asked about the proportion of supervising staff to telegraphists in the telegraph service. I have figures here, but unfortunately they include telegraph messengers as well as telegraph operators. The figures are these. The operating staff, including messengers, is 93 per cent., and the supervising staff, including supervision. of telegraph messengers, is 7 per cent.


518. But if you reduced the telegraph messengers it would increase the percentage of the supervisory staff, presumably? -That would be so. I have no doubt there is more supervision over telegrapists than over messengers, and to that extent the figure is not quite satisfactory from your point of view.

519. The point I would like to get at is the actual percentage. If you are not in a position to give it now, I suppose you have in your department some means

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