MONEY ORDERS
Previous to 1880 the Money Order system of India was managed by the
Government Treasuries. Bills of Exchange (Hundis) current for twelve
months were issued by one treasury payable upon another, and as there
were only 283 offices of issue and payment in the country the money
order was not a popular means of remittance--in fact, it failed
altogether to compete with the remittance of currency notes by post.
In 1878 Mr. Monteath, Director-General of the Post Office, proposed to
Government to take over the money order business from the treasuries.
He argued that, with the small number of treasuries and the trouble
involved in reaching one of these every time a money order had to be
sent or paid, the existing system could never become popular. The Post
Office was able to provide 5500 offices of issue and payment, and the
number of these would be always increasing and becoming more accessible
to the people. Mr. Monteath's proposal was strongly opposed by the
Comptroller-General, but was accepted by Government and sanctioned by
the Secretary of State on the 27th November, 1879.
On the 1st January, 1880, the Post Office took over the whole
management of issue and payment of money orders, and the audit was
performed by the Compiler of Post Office Accounts. For the purposes of
money order work post offices were classified under four heads:
(1) Offices of issue.
(2) Offices of preparation.
(3) Offices of delivery.
(4) Offices of payment.
The office of preparation was always the head office of the district
in which the addressee resided, and its duty was to prepare the money
order in the name of the payee upon receipt of the intimation from
the office of issue. The procedure was as follows: An application for
a money order was made at the office of issue and, on payment of the
amount with commission, a receipt was given to the remitter and the
application was sent to the head office of the district in which the
payee resided. This office was called the office of preparation, and
if the payee resided in its delivery area it would also be both the
office of delivery and payment. If, however, the payee resided at a
sub or branch office, the office of preparation made out a money order
for delivery at such sub or branch office and for payment at the post
office named by the remitter in his application. It was not necessary
for the office of delivery to be the office of payment; the remitter
could name any office authorized to pay money orders as the office of
payment. Upon receipt of the money order by the payee an acknowledgment
signed by him was sent to the remitter, and the payee had to make his
own arrangements for cashing his money order at the proper office of
payment.
The commission charged on money orders was accounted for by postage
stamps affixed to the back of the application by the office of issue,
and the rates were as follows:
Rs. A. P.
Not exceeding Rs. 10 0 2 0
Exceeding Rs. 10, but not exceeding Rs. 25 0 4 0
" Rs. 25 " " Rs. 50 0 8 0
" Rs. 50 " " Rs. 75 0 12 0
" Rs. 75 " " Rs. 100 1 0 0
" Rs. 100 " " Rs. 125 1 4 0
" Rs. 125 " " Rs. 150 1 8 0
Rs.150 was the maximum amount of a money order. Redirection was
permissible, but such redirection did not affect the original office of
payment, and this could only be altered by the payee signing the order
and sending it to the office of preparation with an application for the
issue of a new order payable to himself or anyone named by him at some
specified office. A new order was issued, but a second commission was
charged for this service. Money orders lapsed at the end of the month
following that of issue, but were still payable for two months after
lapsing if a second commission was paid; upon the expiry of that period
they were forfeited to Government.
Certain special conditions with respect to money orders were (1) that
not more than four could be issued to the same person by the same
remitter in one day, except under special permission from the Compiler
of Post Office Accounts, and (2) that under special orders the issue
of money orders could be refused by any post office. Foreign money
orders were granted on the United Kingdom, Canada, Germany, Belgium,
Luxemburg, Heligoland, the Netherlands, Switzerland, Denmark and
Italy. The maximum amount was £10, and the rates of commission were:
Rs. A. P.
Not exceeding £2 0 8 0
Exceeding £2, but not exceeding £5 1 0 0
" £5, " " £7 1 8 0
Exceeding £7, " " £10 2 0 0
For Canada the rates of commission were doubled.
In 1884 the Telegraphic Money Order system was introduced, with a
charge of Rs.2 for the telegram exclusive of the money order commission
upon the amount to be remitted. The charge was so high that it was
thought safe to allow a money order up to Rs.600 in value to be sent
by this means. The anomaly thus existed of having Rs.150 as the limit
of an ordinary money order and Rs.600 as the limit of a telegraphic
money order. The rule prohibiting more than four money orders daily
being sent by the same remitter to the same payee, besides being quite
unnecessary, proved no safeguard whatsoever. In actual practice the
name of the remitter was not entered in the money order receipt, so
that the post office of issue had no means of knowing how many money
orders were sent by the same remitter, unless they were all presented
at the same time. There was really no necessity to fix a low limit to
the amount of a money order, as the whole procedure was quite different
from that previously followed by the treasuries. The old treasury rule
was that the amount of money orders issued in favour of one person in
a district treasury must not exceed Rs.500 in one day, but then the
money order was like a cheque payable to bearer and the paying treasury
had no knowledge of the time at which it would be presented. The Post
Office, on the other hand, carried its own money orders and, if the
office of payment was short of funds, it could hold back the money
order until funds were obtained, and do so without the knowledge of the
payee. These arguments prevailed, and in 1889 the restrictions were
removed. The maximum value of an ordinary money order was raised to
Rs.600, and no limit was placed upon the number which could be issued
in favour of any one person. At the same time the rates were modified
as follows:--
Rs. A. P.
Not exceeding Rs.10 0 2 0
Exceeding Rs.10, but not exceeding
Rs.25 0 4 0
Exceeding Rs.25--4 annas for each
complete sum of 25 and 4 annas
for the remainder, provided that,
if the remainder did not exceed
Rs.10, the charge would be 2 annas.
On the 1st April, 1902, after a great deal of pressure from all classes
of the community, Government reduced the commission upon a money order
not exceeding Rs.5 to 1 anna.
The extension of the money order system to the payment of land revenue
was first tried in the Benares Division of the North-West Provinces at
the suggestion of Rai Bahadur Salig Ram, Postmaster-General, in the
year 1884, and proved an immediate success. In eleven months, 13,914
land revenue money orders were sent, the gross value of which amounted
to Rs.3,35,904. The system was a great advantage to small proprietors
who lived at a distance from the Government Collecting Stations. They
found that the use of the ordinary money order for payment of revenue
dues was not acceptable to the subordinate revenue officials, who
suffered the loss of considerable perquisites thereby. Such remittances
were generally refused on some pretext or other, either because they
did not contain the correct amount due or else because the exact
particulars required by the Land Revenue Department were not given
on the money order form. To meet this difficulty a special form of
money order was devised and the co-operation of District Collectors
was invited. In 1886 the system was extended to the whole North-West
Provinces except Kumaon, and a beginning was also made in ten districts
of Bengal. The action of the Post Office was fully justified by
results, and revenue money orders were quickly introduced into the
Punjab, Central Provinces and Madras. In Madras they proved a failure,
and were discontinued in 1892 after a three years' trial. The system
was again introduced in 1906, but it still does not show any great
signs of popularity, the figures for 1917-18 being 10,293 revenue money
orders for Rs.1,29,400.
Rent money orders were first tried in the North-West Provinces in
March, 1886; an experiment was also made in Bengal in October, 1886,
and the system was extended to the Central Provinces in 1891. Except
in parts of Bengal and the North-West Provinces, now known as the
United Provinces, the payment of rent by money orders has never been
popular, and the reason is not far to seek. Rent in India is usually in
arrears and, whenever a tenant pays money to a zemindar (landholder),
the latter can credit it against any portion of the arrears that he
thinks fit. With a rent money order, the case is different, the money
order itself and the receipt which has to be signed by the zemindar
indicate exactly the period for which rent is being paid, and to that
period it must be devoted. This is the ordinary ruling of the rent
courts and does not at all meet the wishes of zemindars who want to
have their tenants in their power. Besides this important factor,
there is the rooted objection of all subordinates, whether they be
government servants or zemindars' agents, to be deprived of the
time-honoured offerings which all self-respecting tenants should make
to the landlord's servants at the time of paying their rents, and the
appearance of a postman with a sheaf of money orders, however punctual
the payments may be, is hardly an adequate substitute for the actual
attendance of the tenants themselves.
In 1886 the plan of paying money orders at the houses of payees was
adopted and proved very satisfactory. India was indebted to Germany
for the idea, which not only conferred a great boon on the public but
tended to reduce the accumulations of cash at post offices and to
accelerate the closure of money order accounts.
In Appendix "E" is given the number and value of inland money orders
issued in India from 1880-81 to 1917-18, and the steady increase from
year to year is a certain sign of the great public need which the
Indian money order system satisfies, and of the confidence that is
placed in it.
On the 1st October, 1884, the public was given the opportunity of
employing the telegraph for the transmission of inland money orders,
and during the first six months of the scheme 5788 money orders for
Rs.3,75,000 were issued. The cost of Rs.2 for the telegram and ½ per
cent for money order commission was a decided bar to the popularity
of the telegraphic money order, which at first was chiefly used in
Burma and Madras owing to the isolated positions of those provinces.
In 1887 the Post Office relinquished its commission on orders for sums
not exceeding Rs.10, and the telegraph charge was reduced to R.1. This
led to an immediate increase of traffic, the number of such orders
in 1887-88 being 45,417 compared with 18,540 in the previous year,
more than half of which were issued from Burma. In 1917-18 the total
number of telegraphic money orders issued was 875,000 and the value
Rs.6,22,00,000 of which about three-fifths came from Burma. With the
improvements in railway communication in India which are continually
taking place, the pre-eminence of Burma in the matter of telegraphic
money orders is likely to continue owing to her isolation and the
largely expanding trade of Rangoon.
The ubiquitous swindler was not long in taking advantage of the
telegraphic money order to ply a profitable trade. His chief resorts
are Benares, Rameswaram, Tripati and the other great places of
pilgrimage in India; his victim is generally some unfortunate pilgrim,
who is only too anxious to meet an obliging friend willing to act as
a guide and adviser in one of the sacred cities, and the procedure
adopted is always the same. The swindler acts the part of the kind
stranger and finds out all the details of the pilgrim's family. He then
goes to the local post office, represents himself to be the pilgrim
and sends a telegram to his victim's relations to say that he has
lost his money and wants a certain sum at once. So confiding are the
people of India that it is very seldom that a request of this kind does
not meet with an immediate response, and the swindler, by waiting a
couple of days during which he takes good care to ingratiate himself
with the post office officials, walks off the richer by a considerable
amount. The earlier reports of the Post Office on the telegraphic
money order system abound in cases of the kind, and very stringent
measures were adopted to put a stop to the practice. Identification
of payees by well-known residents of the neighbourhood was insisted
upon, and a payee of a telegraphic money order had to prove his claim
and give satisfactory evidence of his permanent address. Despite all
precautions, the telegraphic money order swindler is still common
enough and manages to get away with large sums from time to time.
Probably in no country in the world is the poor man so dependent upon
the Post Office for the transmission of small sums of money as in
India. The average value of an inland money order in 1917-18 was Rs.18,
and it is not infrequent for amounts as small as Rs.5 to be sent by
telegraphic money order. The reason undoubtedly is the facility with
which payment is made and the absolute confidence which the Indian
villager places in the Post Office. An Indian coolie in Burma, who has
saved a few hundred rupees and wants to return to his village, seldom
carries the money on his person, and he has a strange mistrust for
banks; they are much too grand places for him to enter. He usually goes
to a post office and sends to himself a money order addressed to the
post office nearest his own home and then he is satisfied. It may be
months before he turns up to claim the money, as he frequently gets a
job on the way back or spends some time at a place of pilgrimage, but
he knows that his money is safe enough and he is quite content to use
the Post Office as a temporary bank to the great inconvenience of the
Audit Office. It is not too much to say that the money order system
of India is part and parcel of the life of the people. They use it to
assist their friends and defy their enemies. They have in that magic
slip of paper, the money order acknowledgment, what they never had
before, that which no number of lying witnesses can disprove, namely,
an indisputable proof of payment.