packets, postcards, halfpenny packets, and newspaper packets are, in all
cases, taken out for delivery by the same postman, and it is not
possible, therefore, as with stamping and sorting, to ascertain the
rates of work for the various classes of packets. But the features in
the different packets which lead to differences in the rate of sorting,
viz. weight and irregularity of shape and size, lead also to differences
in the time taken for delivery. In practice the postman makes a division
of the packets; and the time occupied in the delivery of the bulky and
irregular packets is greater proportionately, as compared with the time
occupied in the delivery of ordinary letters, than is the time occupied
in sorting. It is not possible, however, to estimate with any degree of
exactness the relative amount of time actually occupied in delivering
packets of the various classes, and for the division of the cost of
delivery (Table J) the rates adopted for the division of the cost of
sorting are taken. This method favours the bulky and irregular-shaped
packets.
CONVEYANCE
The cost of conveyance of letter mails by railway forms by far the
greater part of the whole cost of conveyance. The cost of conveyance of
letter mails by road and sea, estimated on such data as are available,
is shown in Table M. As the total cost of the conveyance of mails is
known, the total cost of the conveyance of parcel mails can be
ascertained (Table M). The best basis for division of this cost is the
gross weight of the various classes of packets. Payment is made purely
on a weight basis in respect of the conveyance of a very large
proportion of the mails, and, so far, division on the basis of weight is
correct. But payment for the conveyance of a proportion of the mails is
made on the basis of the cost of providing for the conveyance, and more
or less independently of the weight carried. This applies in the case of
mail-carts, motor-vans, or special trains which do not carry a full
load. The amount paid in such cases is a single sum, calculated, so far
as letter mails are concerned, without reference to the fact that postal
packets of different classes are to be conveyed--without indeed, in some
cases, much reference to the fact that any given quantity of mails is to
be conveyed. In the absence of an assigned basis of payment which can be
used to divide such sums, the division between the various classes of
packets is made in proportion to the total weight of each class. In
Table N is shown the division of the whole cost of conveyance of letter
mails between the various classes on this basis.
GENERAL CHARGES
Separate statistics are obtainable (Table B) in regard to (_a_)
buildings and office fittings, and (_b_) stores, but no exact estimate
can be made of the cost of administration and accounting.
The cost for buildings and office fittings is divided as between parcels
and other packets on the basis defined in Table D; and as between the
various classes of packets other than parcels, on the basis of the gross
weight of the packets (Table O).
The cost for stores, including the small sum under the heading
"Miscellaneous Expenditure," is similarly divided as between parcels and
other packets. As between the various classes of packets other than
parcels, the cost is divided on the basis of simple numbers (Table P).
The cost for administration and accounting, which is comparatively
small,[623] cannot be stated exactly. It is contained in the total cost
of staff (Table C), and is consequently divided between the various
classes in the same proportion as the cost of the manipulative staff.
Tables A to Q show the complete calculation.
Table Q shows the final result, which is that the average total cost of
dealing with postal packets is as follows:--
For an ordinary letter-- d.
Under 1 ounce .382
Over 1 ounce, under 4 ounces .747
Over 4 ounces 1.404
For an average letter packet .457
For a postcard .353
For a halfpenny packet .432
For a newspaper packet 1.063
For a parcel 7.091
For the letter packets under 1 ounce in weight, for those between 1
ounce and 4 ounces in weight, for the halfpenny packets and for the
postcards, the estimated average cost will be approximately the actual
cost per packet; but in the case of letter packets over 4 ounces in
weight and newspaper packets, the variations in weight and convenience
of handling are considerable, and there will be an appreciable
variation for individual packets above and below the estimated average
cost. The cost will vary with the weight and size (but not
proportionately), and the deviation will be greatest in the case of the
heavier packets, since with both these classes the average weight of the
great bulk of the packets is less than the general average. Of all
letter packets, postcards, halfpenny packets and newspapers, the number
exceeding 4 ounces in weight forms less than 10 per cent. With so small
a proportion of heavy packets the result may be taken as almost exact in
the case of the lighter packets. It is not in excess of the actual cost,
because the calculation, taken as a whole, is biassed in favour of the
heavier packets.
The resultant figures are figures of average cost. They represent the
cost of those packets in each class in respect of which the average
amount of service is performed, and not exceptional cases, as when
packets travel over very long distances, or when a packet is redirected
or returned to the sender, in which latter cases obviously double the
normal service is performed.
The calculation is approximate in that at certain points it has been
necessary to frame estimates on imperfect data. This is inevitable in
dealing with a service conducted over a large area and under diverse
conditions.[624] In general the manner in which the result is affected
by the use of imperfect data has been indicated. These variations have
been borne in mind throughout, and, as their effects are produced in
varying directions, the combined effect is not such as to invalidate the
results arrived at.
The result suggests the following conclusions:--
(1) That no class of packet sent at the letter rate of postage
involves a loss to revenue;
(2) That there is a large profit on ordinary light letters;
(3) That in the case of packets of the weight of about 4 ounces the
profit is less, but is still appreciable;
(4) That there is a considerable profit on postcards;
(5) That there is a profit on the halfpenny packets;
(6) That there is a heavy loss on the newspaper packets, averaging
nearly 1/2d. per packet;
(7) That as regards packets other than parcels, the principle of
uniformity of rate, irrespective of distance, is well founded. The
cost of conveyance (.07d. per packet) is still, in the phrase of
Sir Rowland Hill, "not expressible in the smallest coin";
(8) That as regards the cost of conveyance there is no case for a
reduced rate of postage for local letters;
(9) That as between local letters and other letters there is
appreciable difference in the cost of handling, but this difference
would not be sufficient to justify a discrimination measurable in
coin;
(10) That the parcel post is conducted at considerable loss. If the
cost be taken, as shown in Table L, at 7.091d. per parcel, the loss
is on the average almost 2-1/4d. per parcel, or nearly [L]1,250,000
on the total number of parcels dealt with in 1913-14. The matter
is, however, complicated by the question whether a strictly
mathematical proportion of the total expenses of the Post Office
can fairly be charged against the parcel post.[625]
TABLE A
TOTAL NUMBERS DEALT WITH IN THE UNITED KINGDOM, 1913-14.
+-------------------+----------------------+
| Letters | 3,488,800,000[626] |
| Postcards | 924,250,000[627] |
| Halfpenny Packets | 1,211,400,000[628] |
| Newspaper Packets | 207,100,000 |
| Parcels | 133,663,000[629] |
+-------------------+----------------------+
| Total | 5,965,213,000 |
+-------------------+----------------------+
* * * * *
TABLE B
STATEMENT OF EXPENDITURE IN THE YEAR 1913-14 IN CONNECTION WITH THE
POSTAL SERVICES, INCLUDING MONEY ORDER AND POSTAL ORDER BUSINESS, BUT
EXCLUDING POST OFFICE SAVINGS BANK AND GOVERNMENT ANNUITY BUSINESS.
[L]
(a) Salaries, Wages and Allowances 10,538,318
(b) Rent, Rates, Office Fittings, Water, Light and Heating 268,981
(c) Conveyance of Mails (excluding Payments to Foreign and
Colonial Administrations):--
[L] [L] [L]
By Rail--
Ordinary Postal Packets 1,292,460
Parcels 1,197,037
--------- 2,489,497
By Road 662,010
" Packet 890,530
--------- 4,042,037
_Less_--
Contributions received towards the cost of Packet
and Mail services _130,335_
--------- 3,911,702
(d) Purchase of Stores and Uniform Clothing 452,065
(e) Manufacture of Stamps, etc. 128,000
(f) Travelling, Law Charges, and Incidental Expenses 180,527
(g) Estimated Rental Value of premises belonging to
the Post Office used for Postal purposes 278,344
(h) Estimated Pension liability for the year 1,169,406
Amount expended by other Government Departments in
respect of various services rendered, viz.:--
[L]
(i) Maintenance and Repair of Buildings 160,200
(j) Rates on Government Property 95,676
(k) Issue of Postage Stamps 22,193
(l) Stationery, Printing, etc. 112,308
(m) Cost of Audit (Exchequer and Audit Department) 3,612
------- 393,989
(n) Net Revenue contribution to the Exchequer
for the year 6,143,459
-----------
[L]23,464,791
===========
--_Annual Report of the Postmaster-General_, 1913-14, Appx. N, p. 92.
TABLE C
STATEMENT OF EXPENDITURE, SUMMARIZED AND ADJUSTED.
ITEMS IN TABLE B. NET COST.
(a) and (h) STAFF, [L]11,707,724.
_Deduct_-- [L] [L]
(1) Officers in charge of Eastern Mails 1,000
(2) Post Office Agencies Abroad 17,000
(3) Cost of Services to other Departments} 516,789
(4) " Money Order Service }excluding 156,000
(5) " Postal Order Service } Postage 530,000
(6) " Registration and Insurance Service 264,000
(7) " Express Delivery Service 52,000
(8) " Private Boxes and Bags 41,000
(9) " Cash on Delivery Service, Reply Coupons,
Certificates of Posting, Late Fee
Services, etc. 50,000
---------
_Proportion allocated to Staff_ 1,444,264 10,263,460
(b), (g), (i), and (j) BUILDINGS, [L]803,201.
_Deduct_--
In respect of (3), (4), (5), (6), (7), (8),
and (9) above 96,587 706,614
(_c_) CONVEYANCE OF MAILS, [L]3,911,702.
_Deduct_--
(1) Packet Services outside the United Kingdom 582,935
(2) Conveyance of Mails across Panama 2,931
(3) Receipts from Foreign Countries for
Land Transit 51,000
--------
636,866 3,274,836
(_d_), (_e_), (_k_), and (_l_) STORES, [L]714,566.
_Deduct_--
In respect of (3), (4), (5), (6), (7), (8),
and (9) above 86,938 627,628
(_f_) and (_m_) MISCELLANEOUS 184,139
-----------
Total [L]15,056,677
===========
TABLE D
COST OF STAFF AND BUILDINGS.
In the examination of proposals for revisions of staff and accommodation
at post offices, the whole work of the offices is reduced to a common
denominator for each chief division of the work, and is stated in terms
of that denominator.
Thus all indoor work is reduced to and expressed in terms of units
representing the work in connection with 1,000 letters posted and
delivered, the term "letter" in this connection covering all packets
sent by post other than parcels. There are no ratios for the separate
classes of "letters."
All outdoor work is reduced to and expressed in terms of a unit of 1,000
letters (posted and delivered), i.e. the complete service.
For office accommodation the unit is 1,000 letters posted or delivered,
whichever is the greater number at the office in question.
Certain ratios are taken for the expression in terms of letters of the
various divisions into which the work performed by the post office
falls.
As between letters and parcels the ratios are as follow:--
UNITS RATIOS.
--------------------------------------------------------
| VALUE IN LETTERS.
+-----------------------------------------
| Indoor | Outdoor | Office
| Work. | Work. | Accommodation.
--------------+--------+---------+-----------------------
Letter posted | 3/5 | -- } | { 1 (whichever is the
" delivered | 2/5 | 1 } | { greater traffic)
" forwarded | 1/3 | -- | 1/2
" collected | -- | x | --
| | |
Parcel posted | 6 | -- | 6
" delivered | 6 | 10 | 6
" forwarded | 4 | -- | 6
" collected | -- | 10x | --
--------------+--------+---------+-----------------------
1,000 letters (weekly) = 1 unit of postal work.
For each unit of work so determined there is a corresponding normal
cost.
For indoor work the normal cost is approximately [L]15, for outdoor work
[L]22 10s., and for office accommodation [L]2 10s., per annum.
Since the unit to which a certain normal cost is allowed is built upon
calculations which give a parcel a definite relative value as compared
with a letter, the ratios show the relative cost to the Post Office of a
letter and of a parcel.
TABLE E
RELATIVE COST OF STAFF FOR LETTERS AND PARCELS.
It is estimated that on the average more than half the total number of
letters are not sent forward direct to the post office of destination,
but are forwarded from the office at which they are posted to an
intermediate office; that is to say, more than half the total number of
letters travel in two mails, and incur a handling at an intermediate
office. The handling at that office is termed "forwarding." The letters
are termed "forward letters."[630] Expressed in another way, the
estimate is that all letters are forwarded, on the average, in 1.6
mails.
It is estimated that on the average a greater proportion of parcels
travel in this way in two mails. The actual estimate is that a parcel
travels in 1.8 mails.
Hence--
Total handling of 1 letter = 1 letter posted + 1 letter delivered + 0.6
letter forwarded.
Total handling of 1 parcel = 1 parcel posted + 1 parcel delivered + 0.8
parcel forwarded.
Now a letter forwarded = 1/3 letter posted and delivered (Table D).
And a parcel forwarded = 1/3 parcel posted and delivered (Table D).
Hence total handling of 1 letter = 1.2 letter posted and delivered.
And total handling of 1 parcel = 1.26 parcel posted and delivered.
The ratio between the total cost of handling (indoor) of 1 letter and
the total cost of handling (indoor) of 1 parcel is therefore--
1.2 x 1 : 1.26 x 12 = 1 : 12.6.
The normal unit cost for indoor work is [L]15 (approximately).
For outdoor work the ratio is 1: 10, and the normal unit cost [L]22 10s.
The ratio for all indoor and outdoor services is therefore approximately
1: 11.
* * * * *
TABLE F
ACTUAL COST OF STAFF FOR LETTERS AND PARCELS.
The total cost of handling a parcel is 11 times the total cost of
handling a packet other than a parcel (Table E).
In 1913-14 the total number of parcels dealt with was 133,663,000 (Table
A).
The cost of handling these parcels was equivalent to the cost of
handling 133,663,000 x 11 = 1,470,293,000 packets other than parcels.
In 1913-14 the total number of packets other than parcels dealt with was
5,831,550,000 (Table A).
And the total cost of staff engaged in dealing with all packets,
including parcels, was [L]10,263,460 (Table C).
Hence the total cost of handling 133,663,000 parcels was
[L]10,263,460 x 1,470,293,000/7,301,843,000 = [L]2,066,642.
And the total cost of handling 5,831,550,000 packets other than parcels
was [L]8,196,818.
TABLE G
ANALYSIS OF COST OF STAFF.
LETTER MAILS.
_Total Cost_, [L]8,196,818.
The handling of postal packets falls into the following groups of
operations:--
(_a_) Collection and delivery,
(_b_) Facing, stamping, and sorting,
(_c_) Administration and accounting.
The cost of administration and accounting when reduced to the individual
packet is extremely small. In general also it varies to some extent with
the size of the packet. Thus the newspaper packets and the halfpenny
packets, which are considerably heavier than the ordinary letters,
notoriously involve more difficulty and expense in administration; and
the postcard, the lightest postal packet, notoriously involves least
difficulty and expense in administration. Parcels undoubtedly involve
much more expense for accounting than any other class of packet; so that
if the expense for administration and accounting be divided in the ratio
adopted for sorting, stamping, collection, and delivery, which also
depends largely on the weight of the packet, no appreciable error is
introduced. No attempt is made, therefore, to isolate the expense for
administration and accounting.
The total cost of collection and delivery is estimated to be double the
total cost of facing, stamping, and sorting.
The cost of delivery is estimated to be four times the cost of
collection.
The cost of sorting is estimated to be four times the cost of facing and
stamping.
The total cost of handling packets other than parcels (excluding cost of
conveyance) = [L]8,196,818.
Hence--
[L]
Total cost of collection = 1,092,909
" " facing and stamping = 546,455
" " sorting = 2,185,818
" " delivery = 4,371,636
----------
Total [L]8,196,818
==========
TABLE H
RELATIVE RATES OF SORTING AND STAMPING.
----------------------------------------------------------------------
|Relative Rate |Relative Rate
| of Stamping. | of Sorting.
---------------------------------------+--------------+---------------
Ordinary Letter Packets-- | |
(_a_) not exceeding 1 oz. | 1,000 | 100
(_b_) over 1 oz., not exceeding 4 oz.| 75 | 75
(_c_) over 4 oz. | 75 | 60
Postcards | 1,000 | 100
Halfpenny Packets | 750 | 90
Newspaper Packets | 80 | 70
---------------------------------------+--------------+---------------
* * * * *
NOTE I. The rates both as regards stamping and as regards sorting are
not actual but relative rates. In both cases the handling of an ordinary
light letter is taken as the standard with which the rate of handling
other articles is compared. The table is intended to indicate, e.g.,
that if in a given period of time 100 ordinary light letters would be
sorted, only 75 letters weighing between 1 ounce and 4 ounces, or only
90 halfpenny packets, would be sorted in the same period; or if in a
given period of time 1,000 ordinary light letters would be stamped, only
75 letters over 1 ounce in weight, or only 80 newspapers, would be
stamped in the same period. All that is aimed at is the normal relative
rate of sorting for each class of packet. It is not necessary to
ascertain the normal absolute rate.
* * * * *
NOTE II. _Rates of Stamping._--In determining rates of stamping, a
serious complication is introduced by the use of machines (both hand and
power) at many offices for stamping certain classes of packets. In
London, where approximately one-third of the total number of postal
packets is posted, power machine-stamps are employed, except at a few of
the sub-district sorting offices, at which hand machine-stamps are still
employed. There are a few of the smaller offices at which all the
stamping is done by hand, but the number of such offices and the number
of packets so stamped is negligible. The power machine stamps at rates
varying from 12 to 16 times as great as that of an officer stamping by
hand; the hand machine stamps at a rate about ten times as great.
Power machine-stamps are in use in the provinces in towns in which
approximately a quarter of the total number of postal packets is posted.
Hand machine-stamps are in use in other towns in the provinces where
approximately one-twelfth of the total number of postal packets is
posted.
In the remaining towns there is hand stamping only.
The foregoing estimates give an average rate of stamping throughout the
kingdom for those classes of packets which are of a size and shape to
pass through the machine-stamp, where available, of about ten times as
great as that of an officer stamping by hand.
This figure must now be applied to the various classes of packets shown
in the table, in conjunction with the rates of hand-stamping for such
packets as cannot be passed through the machine-stamp.
(_a_) Practically all letters under 1 ounce can be passed through the
machine-stamp if available. Hence the rate for this class is ten times
the rate of hand-stamping.
(_b_) None of the second or third classes of packets can be passed
through the machine. Further, these packets are of irregular shape and
are therefore much less convenient to deal with than ordinary letters.
The rate of hand-stamping is therefore only about three-fourths the rate
for ordinary letters.
(_c_) All postcards can be passed through the machine-stamp if
available. The rate is therefore ten times the rate of hand-stamping.
(_d_) A large proportion of halfpenny packets cannot, on account of
their size and shape, be passed through the machine-stamp, and the
figure for the machine-stamp must be considerably reduced for these
packets. The nearest estimate that can be formed for these packets is
7.5 times the rate for hand-stamping.
(_e_) Newspapers cannot be passed through the machine-stamp, but in a
number of cases the wrappers are taken to the post office before the
newspapers are enclosed in them for cancellation of the postage stamps
(in order to secure a prompt despatch when the newspapers are actually
posted). The rate for such stamping is slightly greater than the rate of
hand-stamping for ordinary letters. On the other hand, the rate of
stamping newspaper packets is not more than two-thirds the rate of
hand-stamping ordinary letters. The nearest estimate that can be formed
for all newspapers is that the rate of stamping is four-fifths the rate
of hand-stamping ordinary letters.
* * * * *
NOTE III. _Rates of Sorting._--(_a_) The average rate of sorting for
ordinary letters is taken as the unit.
(_b_) The rate of sorting letters and the rate of sorting postcards may
be taken as identical.
(_c_) Owing to the irregular shape of newspaper packets, and letter
packets over 4 ounces in weight, the average normal rate of sorting must
be taken as considerably less than that for letters.
Both classes are usually sorted at the packet tables and not at the
ordinary letter frames.
(_d_) The letter packets between 1 ounce and 4 ounces in weight present
some difficulty, since they include a considerable number of long
letters, which are sorted at the ordinary letter frames at nearly the
same rate as short letters, while the rest are sorted at the packet
tables at about the same rate as the heavier packets. The figure should
obviously be between (_a_) and (_c_).
(_e_) The halfpenny packets also fall into two classes: (1) those sorted
as short letters, and (2) those sorted at the newspaper frames. A very
large proportion fall into the second class, and the average normal rate
of sorting, as in the case of the second class of letter packets, is
intermediate between (_a_) and (_c_).
TABLE J
STAFF.
This table shows the relative cost per packet, based on the rates of
work (Table H), the cost of an ordinary letter being taken as the unit.
-------------------------------------------------------------------------
| | Facing and | |
Description of Packet. |Collection.| Stamping. | Storing. | Delivery.
| | [631] | | [632]
--------------------------+-----------+------------+----------+----------
Ordinary Letter Packets-- | | | |
(a) not exceeding 1 oz. | 1 | 1 | 1 | 1
(b) over 1 oz., not | | | |
exceeding 4 oz. | 1 | 6-2/3 | 1-1/3 | 1-1/3
(c) over 4 oz | 1 | 6-2/3 | 1-2/3 | 1-2/3
Postcards | 1 | 1 | 1 | 1
Halfpenny Packets | 1 | 1-1/4 | 1-1/9 | 1-1/9
Newspaper Packets | 1 | 6-1/4 | 1-3/7 | 1-3/7
--------------------------+-----------+------------+----------+----------
* * * * *
TABLE K
STAFF (RELATIVE COST).
This table shows the ratios in Table J weighted according to the number
of packets in each class.
---------------------------------------------------------------------------
| | Facing and | |
Description of Packet. |Collection. | Stamping. | Storing. | Delivery.
--------------------------+------------+------------+----------+-----------
Ordinary Letter Packets-- | | | |
(a) not exceeding 1 oz. | 1 | 1 | 1 | 1
(b) over 1 oz., not | | | |
exceeding 4 oz. | 0.113 | 0.755 | 0.151 | 0.151
(c) over 4 oz. | 0.045 | 0.299 | 0.075 | 0.075
Postcards | 0.306 | 0.306 | 0.306 | 0.306
Halfpenny Packets | 0.402 | 0.503 | 0.447 | 0.447
Newspaper Packets | 0.069 | 0.430 | 0.098 | 0.098
--------------------------+------------+------------+----------+-----------
TABLE L
STAFF (ACTUAL COST).
This table shows the ratios given in Table K applied to the total cost
(Tables F and G).