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23 WIST MAIN STSIIT

WIBSTIR.N.Y. U5tO

(716) •72-4S03

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I'lisi' Okmck IM:p.vi!tmknt,

OTTA\v.^, 12ih Dc .-luhor, 1SH7.

Sii.',--Iii lii'' i'|)<)-i w lii'li 1 now have till' ho, or lo snhiint. ii> the
I'i'suli ol till' i).'rson;r: riMiiiirii's \\ hu Ji I wn'; ilcsind h\ you to niakt'
luio lln' workiiii; oi' till' iiriiish I'ovi OlHi'c, I ii,-i in •oiilonaiiy with
yoiir iii.s'rui tion.> in ■oiilminif my i''ii;uks to ilic liu.iiicial ailiuiiiistraiion
ol' tli!it Di'partini'iii

Wi'li till' «'X« ■■pfiou ol'.i ri'\v<l,iy- iiii|«loy,'(l sii visitinu' I'an,-^ and in
• orvspondt'iiic wiili th.' I"r. n^ li Drpa-t'in hi ri'siilliiiLi- m inodi-
iii ai iuii-< of tlii' n-'jiiliiuii- u"o\ 'ViiiiiL;- Moii. y ( 'idi-i- cxthaiitii; \\-\n tliat
roniiliy. \^ lii'li will h< ailvaiitai;'.'<nis to jxt^ou- in Canada rr.'civiiji;
riiriillaH' .•> iVoiii I''ran<i' !>y ni a'l^ "i Mon.-j Order, I di vofd tlireo
nionllis to a liosc. aiid, ,i^ lar as rii-(a,iistan''('s i>iTmiltc<l, i'xhan*.ti vt;
exainiinilon olth" 'nviiish sysii-m ol' llnanrial ai' 'ouuts Wliiji' hiohI oC
till- iiui' \va> sp.'u' 111 London, a small ;iortion was devoted lo a vi^ii lo
I'.iIimIiui L;li lor the jiurpose ol ■ xamininu Uv- niaiiau'i'Uiiiit wi tin- I'lo-
xiii'iai ('o-ial isialiiislinieni-. Tlie liish e-taliiishniejit Iteine on llio
-•line i'o.Miii: ,i> iliat in S,-ot lainK i visit to l'',Min wa'; uniii'irssary.

I 1 oiisnli'i ii my lust duty lo pui on r^vonl iherourle>y and ashisiaui v
( \i.iided i!i ni- l»y ail l!ie oliicers ol'lh' UvitisU Deiuirlnii'Ul wliain I had
oeeaisinn to nn' t

A »nl).->'iiU''ni ' i>i' to \\ :ishiim-!on nia<ie l>y your dii^'i tion, jiave
nn a'l op;>ori iini! V ol cxainmini:' tli' ineili'ids of linan>iai aeiounliug,
employed in III' I niied r>^ai.s i'ostal Ueparliueiil What I ol).ser\'ed
thi'v • c oiiliriiied, i;. n"rallv. i!ir -oiii'Iusion' 1 had i oiiir lo al'iiv a slvulv
ol the rin:;'li!<h ^y.-iem, At W a.-shiiiyton, .is elsewhere, evtry porisiblo
UHNihianee \\ as aiveii lo nie

Moarinc m luind ihai ih- Canadian l'o>i (»(liie i.s rnnniML; iii tuueh
tile siiiii'' lines as 111 til.' vear I ■>M , * when r-d'ased I'roin liapiTiaJ and
pliu 'd under i'ro\ iin ial •■oiitnd, whilst the British 1\».| • )|tiee, duriiif: the
lliirty-six years wlmh have elapsed, has made iinporiaiit ( li.ingi's ju tin.'
maimer of keepiiiLr its a' '■oimts. nr essit.iied not iin!\ iiy t \\f ra[)id expan-
sion ol th" jxisUil serviee iiseii. Ii!|i jiy lli.' vast iiildilioiis. priiieipaih in
rei eiil V. .u's, lo tin ranL;e oT ii8 alliliatod s.'n ii es. now i nibrai u^- Monoy
(h'ders. Savinus HaiiKs, \nnuitii.s. IJi'e Iiisuraiiee. (ioverament .Ntoek
luvusiiueiits. Pele^niphs, I'areel Tosl, I'oslal Ordrrs, ihe I'olloilioii of

• Tli.Ti' Wi-rt', iniiir ii lliiU vi'ii;, in Hrill^li .V.ii-lli .\iii' iril. livi- ^liaiiiol ltii|ii riiil I'lwt Otllci-
I'^tni'i. -ill"!' 'IN- '•'•• S'liVii ."><•, aiie .Nvw llriiiHnu k I'l-'iiCf ll.|«aril l,-l.ui.| liif 1 niU >! I'r.ivim ,.< ot
fpiM V anl l,iiWi'r Oiimel.. .111 1 llritish C0I11111I..H. i'licsi' miv iiuw (,!'"*•) nbsioi'lu'i! lu niu jy«U'm,
I'UibiM' iii; 'li* w ii-*!.' DniMi'io!!

The lloiiorabh^,

A VV Mi-Lklan,

I'ohtimihter Cii'inral,
^0. &o,,

dUtO.

cortiun brnin'hos of Inland Revenue, and paymeni of Army Pensions, I
rondmU'd my oxaininatiou of the British system with the object of see-
ing- in what ie8])e(ts the ('anadiau Post Office eould advantageously
adopt present British methods.

My examination extended to the linaniial relations of the Post OlFiec
towards i'arliaraent and the Treasury in respeet of both revenue and
expenditure, and to the manner of k-epiug the financial iurouuts both
general and of the prineipiil Branches named al)ove, for puri)o>«'K of
audit In what lollows J cunline myself strictly to points Avhich have
a practical V>t'aring on Canadian usage. The fact that my report, to be
intelligible, or useful hereafter (as I hope it may be) to other otficers of
the Depariment, and if, espei'ially, to be the framework for any moaturi'
of r.'conKtru''tion. must go very mu( h into detail. .';upplies vsullicicut
reason lor not burdening it with matters which, however interesting,
would be merely descriptive and not susceptible of any iiractical ap]iliia-
tioii iu Canada. 1 exchule also all references to the internal administra-
tion of the Money Order and Savings Bank Branches of the Department,
although my enr|uirie8 in those directions occupied several weeks with
results which, while valuable, concern mere details of mauagemcni and
can be applied without being specially reported on

It will be well perhaps that my report should deal as far iis po.ssible
with general principles, and, if necessary, in api>endix form, with sui h
matters of dotnil as may require fuller illustration. It will also be conve-
nient to treat the two qui'stions of receipts and expenditure as much as
possi bib apart, although there are between the two, as will be perceived
later, jjoints of contact in Knglish i)ractice which render them iu a
measure inseparable.

It may be as well to exidain iit the outset the diHtrence between
the two terms. Post Office "Receipts" and Post Office Reve-
nue." '• Revenue " is what the Post Office service earns for the
Treasury. " Receipts " iire what Postmasters have to account for to the
I'ostmaFter-Oeneral, embrai ing not only the revenue which they are
the agents for (ollectintr, but Money Order and Savings liunk moneys in
transit through their hands, also such further sum^ as may be supplied
them by the Department to enable them to carry on these hist mentioned
services For example, in Canada i lie IVst Office /?ere«wr is only !|2,.' 00,000,
while the llereifih amuniit to ^;i5, 830,000, and it is tins last sum for
which the Departnu'nt has to see that Postmasters account. The
inui^hinery for doing this has to go far h«>yond what would h«' necessary
were the collection of mere revenue the Bole object. Again there is a
difference between " Kevenuc " and "Net produce of the Revenue," a
dili'ereuce respected in Kimland, although no fix'd principle obtains in
Canada on the subject. I'his will be illustrated hereafter.

To make clear wherein lies the diflerencc lietwem Canadian and
British management of IN.stjil Keceipts, it becomes necessary to give au
outline of Canadian practice, and in so doing to refer !,> (vrtaiu of it»

imperfootir.ns, thus forcshadowiug the dil'lM•^ion^ in which improved
m<>thodN may be expected to Biisjgest themselves.
RECBIPTtt IN CANADA are-

1st. The proceedH of tlie sale ol' pcstiiii'e stainp^s, and receipts i'rom
postages preuerally, say ^i.oOO.OOO per suiiium. Accounts, confiued to
this source of roveime, are sent by all rostmasters in Canada, say 7,500
in number, direct to the Accountant's i^iuut h oi' the Dejiartmeut at
Ottawa, a few monthly, but the uiiijority quarterly. These receipts
(less compensation and allowances, whii ]i an' dedurted by those othces
not on the establishment) are remitted at the same intervals {i.e.. monthly
or qxiarterly) by these l/iOi) ]if)8lmasters to the nearest Bank agency
transacting Government business, — Drafts for tlie amounts in favor of the
Finance Department (Treasury) being therctipon sent by the Bank where
drpu.sited to tiie IWt Utfice Depaitment. Drafts, on receipt at the
Department, are re- orded for purpose of cduiparison later on with the
pos (masters' returns, and are then transmitted to the Finance Depart-
ment. Receipts from sale of i)o»t;)ge stamps pass, it will be seen, into
the Treasury and out of the control of the Post master-Creueral from the
moment when deposited in the various Banks by [wstmasters.

2nd. The receipts by HSO of the same oHices (being Money Order
Offices) for issue of Money Orders and for < ommission thereon, together
amounting to #10,8.'{0,000 per aniium^ -

8rd. Moneys sujjplied to the same '.iSO postma.sters (through credits
on Banks) to meet the requirements of Money Order and iSavings Bank
business, araountinir to $14,000,000 per iinnum

4th. The receipts by those oihces that are Savings Banks (nuuiljvr-
ing 450) frcun deposits in the I'ost Office Savings Bank, amounting to
|8,0(t0,000 per annua-.

The receipts from sources 2, ;^and 4, in all !j-!2,«3O,0()0 (less payments
of Money Orders and of Savings Bank withdrawals, principally by those
postmasters who, havinsr no bank credits, necessarily use a portion of
^eceipl^ are reniitti'd by them '/ail// to the nearest Bank agency, and
thence to the Money Order Bramh by draft in favor of the Finance
Department on Money Order account. Cfish Ac ( ounts, showing receipts,
l>ayments and reraittan.cs under heads 2, Maud 4, are sent iTomall>roney
Order (►fficc>8 in the Dominion direct to the Money Ovier Branch, Ottawa.
The larger offices (about l!0) send daily accounts, the remainder (H!lO)
weekly.

The latest measure' taken by the Dcq)artnient, and the only one then
needed to complete the c-entralizution at Ottawa of linauc^ial responsibil-
ity and book-keeping, took place two years ago, when the control of
British Columbia Money Ordi'v business was transferred from the In-
spector at Victoria to the De]>artment at Ottawa. This measure seemed
to commend itself at the time, in that it tended to imiformily andi)liiced
the financial mauagement of Money Order business in all the Provinces
on the same footing, but 1 may here say that 1 soon afterwards learned
to regard the change ati not in the direction of satisfactory control.

Then- aii> thus, it will i jotsn, in tho Cauudiaii Dopartmcut two
!«iparate sydtoms of fiuaujial account with postmabti^rs, one in reepet'tof
sale of Postagf stamps and of Postal revenue, and the other in riMspert of
Money Order and Savings l?iink busiiu>t<.s. These two systems have to
be rcciittuized by postninsters and the IJanks as entirely c'istinct from
each other, separate forms of account, of bank draft, and indeed of every
form ill use, being necessary Tlie postmasters themselves K)f those
ollices that are Money (Jrder Oltiees are, in u sense, and in effect, the
accounliug oHiceis of two distinct nepartments.

The treat.nent of the accounts rendered by postmasters under these
two separate systems diHVrs in the two Branches, the Accountant's and
the Money Order. Whilst in the Money Order liruiich is kept a ledger
account with each ()ostmasier, exliibitmg in Dr. and C'r. shape the busi-
ne.xs at his olhce, aiul the balance in hand (if any) dav by day or week
by week, for a year, in the Aceonntant's Office the practice of keeping
ledger accounts with postmasters was abandoned about thirty years a^o
— about 1857 — the po.-<tinasters' accounts in respe.'t of jwstal revenue
being simply traiL^cribed after exaraiiiaiioii into (luarterly summaries.
That this system of book-keeping, considered suHieient when the opera-
tions of the Post olhce were confined to the (hen small number of offices
(1,500) in what are now the Provinces of Ontario and Quebec, when
it was po.s; ible for perMinal vigilance on the i)art of superior officers
to do iiiucli towards checking the growth of balances in postunis-
ters' liaud^. and seeing that l.alan'cs due by retiring or defaulting
jx.stmasteis did not pass out of sight, is not the best adapted to the
Canadian se-vict^ thirty years later, is not rurprising Its chief defect
lies in its failure to |.rovid" a mei ns, or such a means as sound book-
keeping would approve, of keeping touch of overdue balances. In (he
Money Order Hranch. when a po.'nuuNter goes Oi.: of office, the con-
tinuous Dr. and i'r account u uI.t the heading of that office compels
.snine visible dis|tosiu<)n n> be made of balances overdue or in default.
The practice has been to transfer such balances to a " Suspense Account "
1.: 1 he oeneral ledger, there to remain subject to inspection from time
to time by t,he heatl of the Branch and l)ronght to ihe uoti.e of the
I'ostmHster-Geuoral iiiilil either paid up. or wiju'd out as losses. TJie
use of a Suspense A. vouut lor the al>sori)tiou of overdue balances I I„ive
always felt to •> objectionable, and F am glad to say that British practice
suggests a more sati.-,iactory nuithod of dealing with such item.^.

Another deteci in ihe system of .'olUvting Postal revawue, and one
of which the Depaitniem has been iii. reiwingly conscious with the
growth, year by year, in tlie volume of business, exists in the length of
the intervals at which I'oimiisters- lieturiis and remittances are made,
formerly fiiuirteriy from all offices, now monthly as reffards 2!»0 offices'
and quarterly in respe. t of 7,210, the remainder. Not only do public
money, to an excessive amount thus lie in I'ostraasters' hands, but such
'•'•" 'li«' l.ic,|,i,..H, i„,..par«b)e from a <iuarterly system of ac ountin- Ibr
evading pumnn renultance. that it caanot be doubted that the official

statoments of the rovenuf balances in Postmasters' hands, while rorrcot
enough at the date of compilation (IVom two to three mouths after the
elose of th^ quarter) fall far short of c'xhil)itinir the true balanceB held by
Postmasters at the date to which the re* urns relate.

I have described the first item of " Receipt > ' in the Canadian
Post Office, as vhe jiroceeds of the sale of postajre stamps Whilst this
is in a measure true, it obscures whai, in a postmaster's Monthly or
Quarterly Revenue IJeturn reiilly has to be checked or verifie \ by the
Accountant's Office, as the principal chiirg<' agaiuht the postmaster. A
postmaster's " Receipts," for whii-h It ■ is primarily responsible, are thr.
postage stamps su/iplied to liim hi/ the Le/iartment, and whilst he is called
upon to remit the value only of what he sells, the Dr. charge iti his
account ought to be the value of the stamps suppli(;d to him , at pre-
sent this is not so. it is true that the Accountant's Office is furnished by
the Stamp Branch with stiiteineiit.'; of po.stnge stamps supplied to post-
masters, and that against these, postmasters' own statements are checked,
but the cheek is a mere visuiil one, and, owing to the fact that the
Dr. entry in postimvsters' returns is, not the stamps received from the
Department, but the stamps sold, there is an absence ol that direct proof
which the quarterly summaries ought to alford, that postmasters in the
aggregate charge themselves witli all the stamps issued by the Stamp
Branch, and that counterchc( k on the* Stamp Hranch itself which otight
to be found in the final summaries in the Accountant's Ihancli is arrived
at by iucoui lusive methods.

This seems to be the proper place for inviting aitcnliou to what, in
Canada, makes the duty uf checkiug postmasters' remittances to the
Department most difficult to deal with. 1 speak with particular know-
ledge of remittau(;e8 to the Money Order Uranch, but what 1 say applies
equally to all past office remittances. This dilliculty lies in the fact that
postmasters' returns are unaccompanied by any deposit receipt from the
l]ank, or other voucher establishing that the alleged deposits or remit-
tances had been made. The Department depends on the Banks to send
the recessary drafts. Occasionally a Bank is dilatory ; it may happen
again that the remittance, consisting in part of an unendorsed cheque,
is in a shape which the Bank cannot accept; very frequently it
. transpires, on eucpiiry, that the remittances have not btH'n made on the
day named, owing (it may be alleged) to forgetfulness, and too"often it
happens that a postinaslci makes a deliberately false statement : this
is criminal under the Audit Act, but the intention is exceedingly difficult
to prove, and what is known to have been falsely alleged for tiie pur-
pose of cloaking default, has often to be condoiujd. The present method
uuqtiestiouhbly lends itself to and promotes irregularities. In this
absence of close relation between the accoituts under treatment day by
day and the bank drafts representing the remittances claimed in the

♦ Ills obvious, moroovor, timl to lir complete, ii yorilionllon of tlir iiiiLssuimI s1hiii|].., in Hiock in
tlie ,St«iiiM Bmnrli, aiich ns in now nindi- once a i|U»rt(M-, atioulil iiiclmli' >i iiul)jec|iii'iit conipHiisoti
hi'lwOTii tlip Sttt'.ciiii'iit olSaraps is.Hucil iis per .StHiii|' ctliei" reconl.s, iiiul iIm' Siatenifiil ut Stamps
Mk.nowk'ii|j^il by I'osliiiBBlcrs, ai taken from tlif .XoDtnilaiitH Quuitir!) .~>aiiiiiiftilca. .Siicb a coiu-
pariioii ia liuw impassible.

i«

t-^J! ^

accouii's, lies tho most troublt'somo featurf in llic iwlmiuistrutioii (»1" the
Money Ord»?r Bnuu'h, and lh»' ditli<ulti('i!i aiv uuignilii'd in no Hniall
dogivo wht.'n tlif ofHrt'H out'orued aru in distant ProviiueH Discrt-pan-
cit'K aiisin!; in this way iin- very numerous, tht»y arc beyond men'
merhaniial or rnutiui' trcatuiiMit, lor it is impossible lo know what \n
lu'hiiul, and the rcsulliug anxieties to the priueipul olFiiers are excessive,
and constiiule an undue ttix upon both energies and private hours, to
the prejudiee ol' duties of general supervision I have long i'elt that
present arranuem.nts, in regard to remittiiiii .-s, lould not 'ontinuo.
These dniwbaeks to piompt verili< ation oi remittances do not manilest
iheuiselves so muclj in the Accountant's Brau( h. where post masters'
accounts are rei cived and examined only monthly or «)uarterly, but that
is because there does not exist there the same lonironling ol' statement
with lacl whi' h necesNarily prmail.s in the Moin y Order Hranch, whose
postmaster's are required to remit daily.

In maiti'rs ol' iuspettiou o I Canadian I'osf < Mlices winch are Money
Order ()tli<es, the distim tiou maintained between Money Order and
rosiiil laveniie lunds. operates most disadvantageously. This I need
do no more than put on record, because it is well known to the principal
olHtst'rs oi the Department.

It will iie seen. Ironi the for^'going, what were some of the questions
oriinan<ial administration, whose solution if was my duty to seek, in a
study of Knglihh practice.

hi explaining the methods of the British Post Office in deal-
ing with Postmasters' Receipts, 1 >]iall conline myself to the same
I'oui heads used in illusiratiug the Canadian system, viz. : 1. Sale of
^Stamps , 2. Money Order luceipts ; :'., Casn l:'om Department ; 4. Crav-
ings liauk Deposits.

It may be well lo. say ihat m llie llniish Department, all cash
responsibility as betvvoi ii inistmasteis and the Department, rests
with the " l\ecciver aid Ai.ountani Ueiieial " of the Department,
under whom aic united the duties of tlie Accountant (as in Canada) in a
ineasu.'e the functions of the Ivcifiver CJenerai (as in Canada) and the
greater part ol' the responsibili'ie.: of the Superintendent of the Money
Order Branch, the Money ( )rde • Braudi itself falling into the same posi-
U'di th;it liie .s.iviiius Bank ("I upies in Knsfland and Canada alike, in
having iiu asli responsil)ility for ihe lollertion of receipts from post-
masters.

There are in tlie I uited Kingdom 17,41:) post olKces, distributed ae
I'ollows ; —

>I.U. an.l .-»v. U. \ul M.n. ur Sttv. Ii.

offices. UOicBi.

In Kinrland a.87o 6,040

1" '■^'"tliiid 87ti 1,02.5

111 Iri'Iaud 822 1,'(75

*H,57:{ _8,840

"iiiri 1 ' iln'sc nil lieiiil (.fhcc- ..II tlif vuteii <!^tHlili«limci\t.— .u what iii C»nadB.would be Urmad
Illy offiii's.

Thf k<7 uot»'» to th« British system ol linuucial acco\\uting may bo
said to be throe : —

Ist. The degrading, no to sp"ak, of all post oIRofs not Money Order
and Saviiij^s Hank Oliiros, and their entire and absolute removal from
staadinfr. as accounting offiocR

• 2nd. De-ventrnliznlion, — beiup the delegation to chief offices in Edin-
burgh ;ind I)ii1)lin of thciliUii's of receiving- a?id treating the Seoteh and
Irish Cash'* aiiouiits and ri'millauees, English easii accounts and remit-
tances only coming to London

3rd. A i>«(7/y Cash Aciounl and remit laucc from every j)08t olhce
being a Money Order Ollice, the account being ar.compuuied by its remit-
tance in coin or bank receipt.

It may be as well to say briefly, and then dismiss the subject for the
present, how the Postmasters of the ><,840 post offices not being Money
Order Offices — j.«. more than one-half thv total number of post ollices —
account for their reoipis. Not being Money Order or Savings Himk
officers their receipts are for sale of postage stamps only, and they buy their
stamps as they require them, paying for them in e;ish, at their reepective
heatl offices, or post towns. The postmasters at these 8,>'40 places are
thus, as far as colkntion of postal revenue goes, mere stamp vendors.
They are paid by salary, as will appear in the proper pla< e. On the es-
tablishment of an office of this olass.the postmaster is given a limited
supi . of stamps without payment. This constitutes his "'stock in trade,"
andvhet' renewals are necessary he has to send the money to his nearest'
head and pay for the stamps So long as he remains i)i office he

is ii ' upon to pay for his original stock ; jigaiust it the Depart-

ment hoiu- his bond, and loss from an office of this class is unknown.
For purposes of account, as well as of inspection m respect of accounts,
these 8,840 offices are virtually extinguished.

In reply to my inquiries regarding what I have described as "De-
centralization," also lis to the specinl reasons for the maintenance of ihief
olhces at lidinburgh and Dublin, and whether concession to local senti-
ment, or jealonsj' in matters of appointments, had anything to dp with
it, I was assured that while some such arguments would doubtless be
used against the discontinuance of the Edinburgh and Dublin establish-
ments were the post office to attempt a measure of iib.snhite centralization
at London, it was just as certain on the other hand that were the
abolition of the S<'otch and Irish head offices sugtrested from any
other soiirce, the Post Office authorities would be the first to oppose a
change, as under no other method of administration could the system ot

*lt IB iR'1'o..'jiiiry t(i etuplmsi?.,' tli.it it is llic briiigiiij? i)f Scotrh iiU'l lii.sli postiimsUTS iindi-r tlie
ininiodialc contiolnml supi ivision of tlir liiinl offietH at Ediiibuipli mid Diiblin, in ivjip'iH of Ihiir
eruA r millaiir *, wtjicli cniitilidilfs :i tniirlieil fi'iiliiio ot British prai^ii c. Tlu' .Sontili or Irish Mnncy
onlpr Rccoimtd Hi-e liliPWMc dialt with ut liilinbiuirh iind riiilpliii. whih' the fS.ivintr:' H:inl< iMiDiiut.s,
lp|i'({raph u'lounts. pontiil oniira urid nil iithir jiili..iiiliiiry iicrDieil'' tVoin iill llinn kiiijfilniii? nrediiilt
with at London. It is coiiviMiictui'. nuhii ilnin ilu' ri-ioRnition of uny principle, whiili lends to the
I'rovinciiil .Money Order nicouiils heinn tims evecplioimllv treated, the relatlre eheapnm nf otHco
neeoiiiniodfttion in Kdiiiburj.'h iihii Diildin 11.- eoiiipiired with London, huvitii: protmhly miuh to do
Willi it, and it might be shoHii ihai, (o .-uiiie extent, cone,! principjeu in this mutter are aairiliccd
to ezpedieniy.

daily lash aoconuts with {wstm asters, inul »ll'.'.'tu:il .oiitrol u.-norally.
t»f maintiiiiifd.

01' th.' f^J>'-'> oili>fs in tho Uiiiu-d tvuiii'doiii, uliidi i.-ndcr art nuilb,
l)einp tht> only ones which do so,—

6,875 ht'ud a daily cash accornt to I^udon,
878 do do Ediuburirh,

K22 du do Dublin.

The procchscs l)i"iiiti' aliko, it will ho sullicii'Ut, for jnirposos ol' illuistra-
tion, to liviil of the li."??") oliicfs in i'luuhmd only

Only owe Cash a<it>imt (not two as in Canada) is r.'iidi'n'd l>y the
po^stmast.-rs ol' thf-jo otU«Ts. It is a daily iv.-turn. and i'nibra<i>s as
chuv<,'es :— Tlio postai^c stamps (il' any) it'ccivcd that day Irom l^ondon,
cash rciiiittan>fs Irom London, and lh<' total Money Order and SaviiiEfs
Bank rfCfipts ol'lho day, as i>er separate iind d'etniled lieturns I'urnished
iudepeiideiitly to those two Branches.

The t'r. Items are the totals ol' Money Order and Savings Hank
payments (as per dk-iaiied lieturns and vouehev.s scut to those Branches)
aud remittaiiceh on that day to the Department. Then follows the
"Balance in hand, " and .Ids, it must be noted, is made to embrace not
only the cash in hand, but uusjld postage stamps as well, thus empha-
sizinir every day the 'ush liability of the"i'o8lma.ster in respect of stamps
in bis possession This lorm of account, and the shape which the
Department ledger Hikes, m following it, supplies that direct check as
between I'of t luusters and ilie Branch or Depavimeut issuing the stamps,
which has been reuiarked up(Hi as wanting in Canada.

Postmasters remittances take two shapes : —

Ist. If thi're is in the place the agency of any Bank having an oif.ce
in London, tiu' postmaster lodges the amount in the Bank to the credit
of the I'ostnuister-Gleueral, aud receives in return either an Accountable
Receipt in- a Draft nl seven, fourteen or twenty-one days. If there are
two lianks in the place, competition enables the Postmaster to deposit
to better advantage at one than the other Bills at twenty-one days are
now being discouraged, and no new arrangements are uow permitted
on those terms, so that seven or fourteen days' interest may bt^ said to
be the compensation to the Banks for services rendered. The Receipt
or Draft is sent l)y tlie Postmaster with his daily Cash Account.

2iid. From other places the remittances to I^ondon are in cash, j. p.
gold (silver and copper are not remitted) checjues, or Receiver and Account-
ant General's warrants*, and there seems to be a tacit em-ouragemeut to
I'ostmasters to send checiues rather than coin, on account of the loss on
light gold. The lofss from this source nevertheless amounts to about £:''JAU)
yearly. The practice of allowing Postmasters to substitute cheques fertile
actual money received from the public is not produttive of the excessive
friction which .ompels the adopiK.n of the very opposite rule in Canada,
In both countries the Postmaster is responsible for such paper if forming

■Wliat tlRii>' «arr»nl.< iirr, Hiul how llioy cnliT into the iimoiirit ili'positcd in the Bank o(
(vnt'liuiO ''.ail,v, wilt be ezpl&iiitij later

part of a rcmittaiiro. but in Kmrland wh.-ii a r-r. Haiic' or part of it has
to be rctunicd, th.' larts arn patom lo the olIir.M on^'aged iu checkinjf
the Postmast.M-'b lictum in wlii<h irtidit is claiiaed for llie romittanco.
Ill Cuiiadu, oil the other hau<l, tht; rt'j.i.tiou is by a bank iu somo distant
towu, pcriiaps many hundred, perhaps :i,000, milfs distant, and all that
tile Ottawa I ).'i)artni Mit knows is tiiat, whereas on iho one hand the
roslinasler elainis to have remitted "so much, " either no Bank Draft at
all comes to hund, or one tor a smaller amount, and no explauUion iu
(>ither case. Hence the anxieties inseparable from i)re8eut Canadian
practice, already dwelt upon, — pa^e 5.

The licmiltauces received at the l>ondon olftce each day are deposited
by the lieceivor and Accountant Creuiiral's iJepartment in the Uank of
England the same afternoon, to the C'r. of the Postmasler-Cxeneral.

in addition lo ihe matter of the channel through which liauk Drafts
reach the Department, two important ditlerences will have betu seen to
exist between English and Canadian methods in collection of " Receipts'."

1. In England all lieceipls, i'ostal, Money Order and Savings iJank,
are treated in one. Gash Aciount, not two as in Canada,

2. In England Receipts are deposited to the Or. of the Poslnuisler
General and not (as in Cauiida) to the Cr. of the Treasury direct.

The argument in favor of exacting daily ai;couut8 from all accounting
oilices is that, in view of the lontracted area of the iviugdom, and of the
I'ai'l that accounts from all ollit es can rea( h L<Midon tli" morning following
their date, default need never be allowed to go beyond, at most, two
days' operations. Further than this, so ciiormous is the sum whic^h the
Department has lo provide throughout the Kiugdom for payment of
Money Orders, lastal Notes, Mavings IJank Warrants, iScc, that, without
the knowledge close up to date, which a daily iteturn alibrds — of what
funds a Postmaster holds, v.hile the supplying of hinds to Provincial
Oilices would have to go on, there would be practical a()a)idonment of
checks against transmission of excessive amounts, and the rendering of
Accounts at less frequent intervals would thus, it is claimed, invite a
double risk

In case of the non-receipt of a postmaster's Cash Account at Loudon,
the telegraph is used, and, if necessary, the local Surveyor advised, or
possibly the Postmaster of the head office of t lie district. There are iu
England eleven Surveyors, each with a few clerks always engaged in
inspection duty, and ti^U Head I'osi masters, who, with their stall's. Jii;
also be used^advautageously if necessary. The average number of sul
offices and town-receiving olBces, grouped under the sitpervisiouof head
offices, is about ten. It will be seen, therefore, how numerous and hov*r
conveniently distributed are the agencies at command of the London
office if delinquencies be suspected at any point. Default, so far .tsit
arises from failure lo transmit accounts and balances, need not be per-
mitted to go, speaking generally, beyond the second day*.

•Fraud i< (lOHsible in Saving.-i Uaak liiiairie.49, o; io Money Order biisiaoss, by falsificiition of
irconia iir viiuolicra, jiut as in Cuiiiida. and lakvs. 1 liud on fni|iiiiy. nuicli the fi e sliBpe.s tliat tlie
Cauttdian iilBuo is lamiliar witti, but ttgamst Uelinqnencios of tliat iliaiaclfi, n^, system olaecouat
can t^uard.

Vor inspecfi.n of tho 680 head oftitvR therasolves, th^Snrvoyors and
thoir i-li'rks arc ivtiilal)lc. it often hvtpiviis that an expiTKHu-Hd <Ji'rk
from London is ■•ont on iiiRpoction dnty, and tho liort'ivfr and Aci^oun-
tant General h'rnself, or nnt; of his principal otHrers, from time to time,
makes test inspections of a few of the hirger olfi<es, »uih as [iiverpool
or Binri'.nirham. As resyards frequen<y of inspection, every accounting
otKcc is inul-rstood to be visited by a Surveyor or Snrveynr's clerk t\v'<e
a year, bnt as u niattt r of fact insfiections are not in aJi casi-eso Irequcnl.
It mnst be n member 'd, however, thut in Kntrland independent inspec-
tion of an oflice is not the valuable auxiliary lo Departmental checks
and vitifilance, which it is. or ought to be, in Canada, because the daily
acetmnt to London and the fact that the cash r-'mittance accompanies it,
make the London Department its own detective.

To return to the subject ol the ti.875 rash accounts received at Lon-
don (iaily, these ac(oun's form the basis of leda;cis containinir a sei)arale
led)>er accotiu; with each postmaster, much in the same shape as the
ledj?er accounts kept in thi' Money Order Branch at Ottawa, iu rcgjii'ct
ol' Caii.idian Money Order and Savini^s Bank business, and framed so as
to contain the Imsinessof on.M(Uiirtcr. In n-uard to the life of the ledi,'er,
I may her.' say that the duration of the Canadian Ledi^er, ior one year,
is accompanied by advantages which, except for sufficient reusou, it
Were better n'>t to forego.

in the Ledger in use in London, the piinci])al Dr, item is (as it is
ill the form of Daily Account itsell) the value of the Sfam/is rerrined
Irom l..(mdou, not, as iu the Canadian summaries ba.sed on Dost masters'
revenue acounts. the stamps sold. The advaiitaa-e of exhibitin^f this
Item 111 the shape in which it appears in ilie British accounts 1 liave
already spoken of. ill refcniiiji: lo what the present Cauadiau method
fails, cxeejit indirectly, to substantiate.

The eonlinuous record, day by day. of a postmaster's transactions,
which his ledp-r account prese-nts to thf r^e, reveals the stealthy growth of
uiiaulhorized l>alanre>. Th(^ absen.e ofsttch a record has been mentioned
in connection with t;>e present treatment of Postal h'cvenue .Vcconntsin
(.'anada. The trealmeut in Loiivlon, of balances due by postmasteis
goinj? out of olliee is at once sunple and elleeiivc. The hnal avicouul of
sueh a p(>stmasti'i i> Inuisferred lo a .^pe ■jal |;,lio. or spaee, in a supple-
mentary led^ei. Thi- ledirer is not treated as "dormant ' hut takes its
plat e amcii;^' the .>tfier ledgers for reuular ((uarterly summarizing, thi,'?
system ati'ording sudicient uuaranlee of balaiu es under this head not
being lost sight of Further, this i> niie.,fthe records which the otticers
of the .'\udilor Geiu'ial's Dejmrtment examine w lien applying their test
audit in the Postal Ueveuue A. counts, so thai no uncollected balance eun
either I'mHin in this ledger, or on the other hand he wiped out as a h)8s,
wilh'Mit the .Auditor Oeneral's knowledge, beciin.',e. in tiie lirst pla< e the
suppleiiieiiiarj ledger i.s iis already >ta!ed, examined 1)7 his olHcers, and,
Bucondly. anticipated losses beiuo' pn,vi(|..d for by Parliamentary {vote,

the fnnds to (^over any loss have to nnav. ont ol' • Expoudil'ire," tho cir-
cniustaimt' thus roining bclbvc the Auditor Gonerid in a riticoad shape.

To proceed Irom thf postmaster's individual accounts to the. General
Accountg of the Department in respect of receipts and revenue, these are
necessarily bnilt iipoii the iwstniaster's l<nlgers. All cash transiictions,
whether revenue (i. e sales of I'ostaii'e Stamps and commission on Money
Orders) or Money Order and Saving's liauk funds (the two last being
but trust funds in temporary transit through the I'ost Oih< e*. being
embodied in one general account, and the ])alances held by postmasters
t'onsisting of all tlwce sources of recci]>t. the question suggests itself, —
liow does the Department analyze the results at the end of the month or
quarter, and establish what portion of receipts is applicable to
" Revenue," (and as suih to be paid over to the Treasury), what to Money
Order and what to Savings Bank ? Nothing is more simple ; The same
operation is done in Canada every month in respect of the separation of
Savings Hank from Moucy Order receipts in the Money Order ledgers.
As for any attempt in Caiiada to pronoujKc how ranch of the Balances
retained by postmasters are Savings Bank moneys ajid how mu< h Money
Order, it would be impracticable. The balances are simply regarded ah
HO much li<'ld by postmasters on ac<'ount of the Money Order liraiich.
In liKe manner, in Eii'jlaiid, the |)ostal revenue is arrived at l)y dTOUcl-
ing from the total stamps supplied to rostmasters, the stamps remaining
iu their hands, the differene,' being the stamps sold This amount, plus
the Money Ord<^r commission and casual revenue, is paid over to the
Treasury every four or live days in even sums of 4^100,000, and a geiieral
account of each mouths revenue is furnished to the Treasury so soon as
the exact booked r, viiiue of the Departmeul is ascerto.ined, i. e., about
two months afterwards.

Whether posuaawlers pay in all then " revenue " or whether any
part of the balances they retain arises f'om sale of stamps or not, is loft
out of the qii •^tion, the b.'ilances iti ])ost masters' hands at th-' end of the
month are "so much," li'ld to meet Post Otlice requirements, no matter
what, and are regarded in that general souse, as accountable balances iu
the hands of the Poslmaxter-Oeneral. 1 go into this point here, because,
in considering alike amalgamation of cash accounts in regard to Canada,
a diflii uUy presen'.s itsell in tiie Canadian I'l'^t Olhce Art, .section 78,
j)a.ragra))h '2, under which the roslniasler-Oeneral's Iveport to Parlia-
ment is lequired to exhibit the balance of Rtreime remaining due bi/
Postmogters at the end of thi' lineal year. This clausi- would hav.' to be
amtJided.

Ilemittanc.es from postmasters, in the various shajies in which made
as already explained, ari' deposidd in the Hank of Ivigland eai h alter-
noon to the credit nf the I'DXlmunter GetiernI There is atwolute
agreement* between the morning's receipts and the a,t'ternoon's deposits.
Portion of tho 80-ealled cash receipts beiiiL"- in "Receiver and Accoun-

• Dutiirbfil mly liy itic iUsin ol' " iicPouatiit)lr fcci'ipij ' luut 7 hihI U ilayd' ilmfls. Imt that la
iiiaUci'ur dutAil and of ready ailjuitmcnt.atiddova nut ctmoi-rii ilio iiniin-iltate ol)j<H'tii nt riiiii|>iii'iioa.

■!

taut apncral's warrants," t. e , warrants for salaries, piail servi<-o, &o.,
• ashed by postmasttn's and sent in as i)art of their ri'inittauocs, th« total
ol'su.-h warrants is arrived at by suitable Ibrm of schedulo, and a single
choqno on the Bank of England against "Expenditure' is substituted
for purposes of deposit. These warrants will be referred lo again under
the head of " Expenditure.' so that the only point to be noticed here is
that Post Odiee receipts instead of pissing into th > Treasury at onee, a:»
hi Canada, are deposited in the Bank of England to t ho credit of the
Tostmaster tieneral, temporarily used for purposes of postal expenditure,
and so soon as the balance in the bank reaches J>100,000, transferred to
the Treasury. In explanation of the expression " temporarily i-^ed lor
expenditure' I niav here say that advances for expenditure are rei overed
from tlie Treasury out of rarliameutary vote, once a month, thus replac-
inj: the post otfice moneys and restoring them to the original Jiguri^s at
which they would have stood, had the cheques referred to not been
drawn.

In considering the applicability of English methods to Canada,
there would be no gain in stibsiitutiiig for the present direct deposit to
the credit of the Treasury (Finamc Department), a system ol deposit to
the credit of the Postmaster-General. In fact the Canadian system,
Itesides being perhaps preferable as a matter of principle, happens to lend
itself very couvenioitly to certain features in the English mode of
" Expenditure." to which I shall have to draw special attention under
that head, as suggesting desiral)le alterations in Canadian practice.

l""<>r purposes of illustrating a general principle, I have stated that
the i-ntire Post Office revenue is paid over to the Treasury. This is not
strictly the ca,s(v Before transfer to the Treasury certain payments are
made out of lieveuue, and thus ari-ses the dilference, mentioned at the
bcu-inning of this Report, between "lieveuue" and "Net produce of
the Kevenue." These i)ayments iive not on voted service or expendi-
tur count, and are treated and logically so it would seem, as " deduc-
tions from revenue."

The principal payments are : —

1. J'aymeni to Bank of England for losses on light ffold.

2. Tlie proportion nl' reciipts on Parcel Post business accruing to

the Iviulway Compauie.N
;?. The \alne 111 I'ostage Stamps sold by ihe Post Office l>iil used for

Inland Revenue purposes, and refnuded to Inland Revenue

l.)epartineiit.
4. The biilanee.s due to other countries lor ocean and transit i)ostajre.
.'i. Proportion ol fees on Money <Jrder busiuosb earned by other

countries.
H The value of Postage Stamps redeemed from the public.
7 Loss l)y Exdiiitige on Foreign or Colonial Money Order busincBH

iiiid remitliince)..
("\ While losses by default and Iraud are j)ui(l out of " Expendi-
• tu'c, ' mid ar • not treated as deductions from lieveuue.

Heads 1, 2 aud 3 arc not of proseut iuterost, but it is interesting to
note the practice in Canada, in respect ol" the remaining items.

4. Balances of transit rates due to other countries, — treated as

" Expenditure,'' and estimated ibr and voted on by Parlia-
ment, although not an expenditure for any "service," and an
item, it may be said, quite beyond Parliamentary control.

5. Proportion of Money Order fees earned by and accruing to other

countries, treated, as in England, as a " deduction from
revenue."

6. The value of Postage Stamps redeemed and destroyed treated as

" E.tiiemlUure" and estimated for among miscellaneous charges.

7. Loss by ICxchange on Foreign and t'olouial remittances, treated,

as in England, as a "deduction from revenue," while

(8). Jjosses by delimit, so scrupulously treated in England as Expen-
diture, and estimated for in that country, and reviewed by
the Auditor C-eneral, are treated in the three financial Branches
in Canada in as many different ways.

In the Savings Bank, losses are replaced by Parliamentary vote.

lu the Money Order Branch, losses appear once a year as "deduc-
tions from revenue."

In the Postal lievcnue, losses seem to be carried under the general
head of " Balances due by Postma.sters." In 1882 the sum of
)$'^4,2!tl 00 was written off and deducted from this item by
order of Parliament, but since then whatever losses have
u(,crued through del'ault, robbery or otherwise, do not appear
iu the public accounts.

The general view taken by the British Post Oltice of these "deduc-
tions from revenue " is this : — That, where losses arise which are in-
separable from the business, or from the handling of revenue, such as
from light aold, lluctuation in exchange with other countries, and where
the revenue taken in from the public is partly for the Post Oihce and
partly in trust for other parties, as, for example, the Parcel Post receipts,
65 per cent, of which is transferred to the railway companies, it would
be delusive to regard the amounts either as Kevemu^ on the one hand,
or as Expenditure on the other ; but that where the losses result from
fraud, robbery, default, or from causes which may suggest defective
management, I'arliamenl and tlie .\uditor General should have the
opportunity of expressing an oi)iinon upon them.

The Auditor General in JMiglaud does not audit the books of the
Money Order aud Savings Bank Depart ments. save in respect of the
totnh relaliun' to those services, as appearing in Postmasters' Cash Ac-
counts and the ledgers of the Hoceiver and At!coantaut G-eneral's Depart-
mout.

It is admitted that any Audit of Receipts miist merely bo in the
direction ol seeing that the system of accounts is generally satisfactory,
and that sullicient checks are applied. Much beyond this audit cannot
well go, and.what is done is this ; Oncotnery year at least, officers of the

Auditor Generiil's Department are appoiuted to visit the Gi'iu'ral Post
Office, and they, selecting a certain day's " Receipts ' a« the basis, then
require to be exhibited to them i-very account, dociimeul and ledger item
entering into that day's work, and going to make up those figures. I may
here quote the lew bricl' words in which the Auditor Creneral disposes of
this subject in the latest report to Parliament : " The Account in respect of
Postal Revenue has been subjected io a test examination with generally
satisfactory results, and the Lords of the Treasury and the Postmaster-
General have been informed accordingly."

Funds are supplied to Postmasters in England generally for
the same reasons as in Canada, via., to enable them to meet payments on
Money Order and Savings Hank account. Funds are further supplied, when
nece.s.xary, to the 630 head oliices for payment of the 8alarie« of the stall's
at those places, of postmasters of the neighbouring sub-offices, and of
rural postmen. Postmasters' requirements become known to the Re-
ceiver and Accountant Ueneral's Department by advice each forenoon
from the Savings Bank Department, oi' Savings Bank warrants about to
issue, by written requisitions from postmasters themseh'es and by tele-
graph. This is the proper place for saying that all postmasters are
allowed to retain a " Reserve Balance." This varies, according to the
business of the office, from illO to t;3,(IO0, and its object is that the pub-
lic may not sutler unduly from delay in cashing Money Orders. In the
language of the instructions, the " Vo tmaster is allowed to hold an olh-
"cial balance on hand solely to enable him to meet the requirements of
" the public service, and he must on no account apply any portion of it,
" for however short a period to his own private use." The use made of
the Banks in Canada in the payment of Money Orders iortunately ren-
ders any such provision unnecessary there, at any rate as regards the
principal and more active paying offices. In any case the plan would
not suit the methods of Canadian [KiNtmasters, nor indeed the ordinary
business customs of the country. The " Reserve Balance " might appear
regulaily on paper but it would rnrely be found in the official till.

To proceed with the subject ot Rtmittancesto postmasters: When
it is satisfa<'torily established i)y examination, if necessary, of the jwst-
master's Cash Account of the previous day, that over and above his
" OiUcial Reserve," the postmaster is in need of money, one of various
methods is adopted to supply his riMiuirements : —

He maybe instructed by telegniph to retain "so much" of the
present day's cash (the telegraph is freely used, free of cost of course).
The postmaster ol the nearest head ollice may be instructed by telegraph
to send the cash. The cash may be .sent direct from the Receiver and
Accountant (Jeueral's Ollice ; or if there is in the place a Bank having
an offi((' in London, a cheque on the Bank of Kngland for the amount
(or total amount if remittanoi-s have to b,. .mmU to a number of pl'\ces) is
sent to the London Itank, with a request that the country age"* be in-
structed to place the lunoiint at the disposal of tlu' postmaster. The
last-mentioned practice is much the .sinn' as that ..iigixested by myself

to the Auditor General iu Canada somo time ago as a substitute for the
present unsatifslactory method of supplying certain classes of postmasters
with funds, a method involving the intervention of the Finance Depart-
ment and Auditor Creneial, a duplication of work, and, generally speak-
ing, a most circuitous process, and one having at times results anything
but creditable to Departmental administration.

The issue of Postage Stamps is managed entirely by the oflicers
of the Inland Revenue Department on requisitions from postraasterK The
Inland Revenue Department has means of knowing what stock of
stamps each office is allowed to carry.

Daily statements are sent by the Inland Revenue Department to the
Receiver and Accountant General'.s Department of the post office, of
stamps supplied, and from these statements are checked the Dr. entries
in the postmaster's accounts of the following day. Check and counter-
check thus exist between tht; I'ost Office and the Inland Revenue Depart-
ment as regards the total issue of stamps for which postmasters have to
account.

Ordinary stamp vendors are appointed by the Inland Revenue
Department, on nomination by the Post Office, on the grounds of public
convenience, Just as in Canada. These vendors are supplied directly
from the Inland Rereuue Department on payment for the stamps in
advan( I', without discount. Vendors get no compensation whatever
beyond such indirect benelit as may accrue from customers being
attracted to their places of business.

The manner of securing correct returns of the postage on unpaid
and Insufflcientiy prepaid matter is so linked with the mode in
which the gcueriil mail service is carried on that anything said about it
cannot l)e taken as m> c than merely suggestive. It is just possible that
there might be found bume advantage in applying a like measure, within
certain limits, in Canada. In England, as in Canada, the proper accounting
for postage on unpaid matter posted at an office or received from abroad,
for immediate local delivery, depends entirely on the intij^iity of the post-
master of that ollice. The jilan by which charges under this item raised
against oilier offices are brought to iiicount, turns on the fact that all mail
matter passes through, or is billed on, one or another of 6 iO head offices*
which become the (-enlres for divtributiou in their districts. A W unpaid or
insufficiently prepaid matter is charged in letter bills against head offices.
These head offices send to the Department at London all the letter bills
received by them daily, with postage stamps affixed to the value ol the
unpaid postage charged against them. Chargcis raised by Head I'ost-
masters against sul)-olhces in mailing or re-.nailing such matter, are met
by a remittam^e of the amount in cash from the sub-office to the dospatch-
ijig head office.

There is in the London Department a stalf of four dcrks whose duty
it is to see that every Head I'ostma.slcr sends daily to London the letter

Till' iV'vr I'xot'iUiona »liicb txiataie roaUily uiadu tu lull uuilui' the Kcutiral truktiueat.

bills received at his office— ii is known how many bills should come IVom
each office,— and thepostajje stamps affixed to the letter bills are checked
against the unpaid charges. These tour clerks are suflicieui U estal)iish
that the postageouinsufficiently prepaid matter in the whole of iinghiud,
is duly accounted for. There are, it will be seen, no iiccoiints whatever.
The amount enters into the revi'uuc in tlie shape of the money paid for
the stiimps. The simplicity and int'xpeusiveuess of the process, with
the otiectual way in which it accomplishes its obj.'cts. ar • striking merits.

Having thus described the leading features of the British sysLom ot
Postal Accounts, in respect of receipts and revenue, it may be ri .j'lt that
1 should make some observations as to what Canada has to leuru from
liritish huancial practice. One thing i.o en(]uivies in Kngland were
ueided to demonstrate, and that is tae waste of force in Canada in main-
taining two separate cash accounts, and two separate systems of iinaucial
.supervision in respect of the postmasters of the 950 Money Order offices.
Four ledi-er clerks keep the ledger accounts of these 950 offices in the
Canadian Money Ord^-r Branch, and with six or seven others engaged in
general matters of account with tlie Banks, &,c., form the staff employed
ii'. account duties. With very little assistance, perhaps one additional
clerk (for the issue of stamps to these offices would have to pass through
the same ledgers), the revenue accov nts of the same 950 olUccs could be
kei)t in the Money Order Branch witi out trouble The postal revenue
of these 950 offices is $1,957,000 out of a total of $2,500,000, or nearly
I'our-lifths of the whole. The practical question becomes : What is the
most economical and eticctual mode of collecting the remaining $543,000
from the other 0,55(J offices f Three courses seem open : Either preserve
the present seemingly imperfect system of account in the Accountant's
Branch, which would be rehuively more expensive than at present, in
viev of the much smaller n-venue to l)e collected, improve it by reverting
to the plan discontinued 30 years ago, of keeping a ledger account with
each postmaster, which would make it far more costly than at present in
clerical force and books ; or lake the step suggested by English example
and " degrade " the li,550 non-Money Order olhces from their position as
accountihg offices altogether.

This last measure would so revolutio]iize the Department that the
proposition seems, when ilrst stated, almost too sweeping for acceptan<e.
Objection might be urged tc it on the score of principle, in that it might
be held to be the duly of the Department, no malter at what risk to the
revenue, to keep tountvy I'osl Offices supplied witli stam|>s for use of
the public. [)• iuiglaud no office of this class (.an be more than a very
few miles from the nearest Money Order office, /. e., its base of supplies.
In Ciniada, on the other hand, there ure many large and thriving places,
many mib s from the nearest Money Order othce, to which, for various
reasons, the Money Order system h.-.s not })een extended, where serious
iiicoineiiience to the public would result from the poMtinasti«r allowing
his stock ol'stami)s to hecome I'xhausled, This rea.souing, however, does

1*7

not take into account that a post inastor, unable, or not choosing, to send
money lor stamps, would ipso facto detlarc himself a public defaulter,
for the mont^y he would be expected to send would be, not his own, but
the proceeds of the sale of his " Stock in trade," previously supplied him
on credit by the Department. I am inclined to think that there would
be few difficulties in i arryiug out the scheme ; that, whereas now, if post
masters of country offices fail to remit their balances, their indebtedness to
the Department and the public in the abstract is only " so mu<h " larger,
the same othcers would then be conscious of responsibility to a commu-
nity nearer home, in the shape of their immediate neighbours, a public
for whose opinion they would be more likely to have respect, than for
unseen obligations hidden in the Department Ledgers at Ottawa. It
must be rememl)ered that the Departni.ut, in the case of the Branch
offices in cities, lias already admitted the principle of the abolition of
accounts, and of the purchase of stamps in advance by postmasters, and
in these instances has not even supplied the postmasters with a " stock
in trade " on credit.

Perhaps a middle course may suggest itself, and this would at all
events have the advantage of applying to the measure the test of experi-
ence, and that would he to retain a selected number of the larger offices
(not now Money Order Ollices) as accounting offices, add them to the
ledgt'rs, and abolish the remainder. The penalty of bonds generally
would be smaller, and the responsibilities of sureties more readily meas-
ured. \ need hardly add how much more frequent and thorough the
liuancial inspection of Money Order Offices might be, were Inspectors
released from all such duties in respect of the non accounting offices.

A measure of this character would result in the transfer of the Money
Order Ledgers and ten or eleven clerks to the control of the Accountant,
the ilacing of the Money Order Branch on a lower level of responsibility,
audi hi' severing of present hnancial relations between that Branch and
the Savings Bank. The Accountant's Branch would then do for both
those Branches, what the Money Order Branch now do»'s for the Savings
Bank. A general financial <outro! over the two last named Branches,
in order to harmonious working, would properly lest with the Account-
ant also, perhaps, some measure of administrative control in respect of
the clerical force.

I do not think it would be necessary to exact daily accounts from a
lar<>er number of Money Order offices than at present, but the daily
nuniltauce of surplus funds would have to be maintained, and the daily
remittances would embrace, it must be noticed, not only surplus Money
Order funds, as at present, but the proceeds of daily sales of postage
stamps, a very important object to attain.

This brings me to two suggestions which, while they cannot be
presented together, I should like to be considered together. They relate,
Ist to what I have termed " De-centralization," and 2nd, the serious
disabilities under which the liuancial branches of the Department now

f ti

labor, btit.-auwo of the chauaei through whirli bank drul'ts lor depoHits
reach tho Dwpartmeut.

I mentioned, iu a I'orraor part of this report, the disappointment I'elt
in the rt-sult of the step (then thought to be a progressiA'e one) of eaus-
in>.'' the Postmasters' Money Order Returns and Money Order eash
accrap'-o from British Columbia to lome direct to Ottawa. 1 think that
this poliiy should he partly reverMd, that the Money Order lieturus
(and Saving Hank Returns when Saving Bank business shall be estab-
lished in that Provime) should conunue to lome to t)ltawa, but that the
treatment of Postmasters' Cash Accounts in respect of all receipts
(Revenue, Money Order and iSaviiiirs Bank) should be restored to tLie
Inspector at Victoria. Xo addition to the Inspector's stafi'couldpo..si'>iy
be necessary (supposing his staff to be at ihe strength it vas two years
ago). There are only tweuiy-two Money Order Olliccs jm British
Columbia, and freed from all the details of Money Order business such
as formerly had to be cheeked, the duties would be extremely light, per-
haps one-quarter of what they were before. The visits to his Money
Order Othces, by an Inspector, armed with exact informatiom from the
ledgers iu his own olijce, of how Postmnjsters stand, would be immensely
more valuable and beuehcial than at present.

I would strongly recommend, and for the same rea«o -, that the
policy of de-centralization be carried further and that f,he sama measure
be applied to Manitoba (including the North-West) to the three Maritime
Provinces for whii h perhaps one olhce at St John would sullice, leaving
to the Department at Ottawa the immediate hnancial ( ontrol of offices
iu Ontario and Quebec only, and, of course, the chief supervision of the
Provincial sub«olhces. An objection may be made on the score of
exp! 'se, but without reason 1 have said that it requires four ledger
clerks and about six or seven others to mauige the cash accounts of 950
Money t)rder offices now, under conditions he most '^//.-favorable to
economiial and satisfactory check. Thi only question is this : To what
points can these eleven clerks be distributed to the best advantage, for
exercising the best possible control over the Mc aey Order Offices scattered
between the Atlantic and Paciiic. livery clerk placed on duty elsewhere
would simply mean one clerk loss at Ottawa, aud the relief at Ottawa
would be in even greater proportion, for it would be from the trouble-
some work aud anxieties involved in the distant errors and delinquencies.
The loss of power consequent ou breaking up an united l)ody engaged
in like duties, would l)c fully compen.saii'd for by the greater ease with
which the same, and better, results could be achieved. One clerk would
be ample for Manitoba aud the North-West. Two, or at most three,
would suffice at St, John, leaving seven or eight at Ottawa. I feel that,
in recouiLiendiug this measure, I disturb what I may call the unspoken
traditions of the Department. The ccu' ;alization ol all authority and
ttonliol at Ottawa, the result of successive accessions to Confederation,
has, it must be admitted, led to a <ongested condition of ati'airs at
Ottawa, and consequeni un a diminished sense of responsibility ou the

part of officers in thi' Outside Service, an impaired efficiency of the whole.
It (iaunot seriously bo claimed that faithful devotion to public duty, and
conBcieutious supervision of a trust, can be looked for only at Ottawa.
My own experience proves the coutrtvy. 1 need only point to the In-
ternational Money Order lixchange OlHce at Montreal, and to the fact
that whereas the work of that special department when done at Ottawa
was certainly a discredit to the country, the excellence of the work now
done at Montreal places Canada second to no country in point of credit-
able and accurate performance ot Foreign Money Order business. I
gathered satisfactory evidence of this in both London and Paris. The
measure which I submit will have even more to recommend it hereafter,
when the Department will be compelled to extend the Money Order
system in the North-West. The present reluctance to incur Money
Order responsibilities in that direction arises, in a great degree, from the
admitted impossibility of satisfactory financial control from Ottawa.

By retaiuiug at Ottawa the control of Money Order and Savings
Buaik Returns from the entire Dominion, also the issue of postage
stamps, book-keeping at 8t. John, Victoria and Winnipeg would have
absolute check in the independent records at Ottawa. There would be
no money responsibility whatever at those places.

The second of the two suggesi ions, referred to on page 17, relates
to the channel through which the Department now receives drafts for
deposit on i'ost Office account, and embraces three recommendations ; —

Ist. That the present form of Draft, which involves a " Receipt,
Draft, Duplicate and Triplicate," be modified in the direction of sim-
I)licity.

2nd. That postmasters at the 185 places where tliere an^ Banks used
by the Government, should ( ontinue to deposit there daily as at present,
that the receipt which they receive should be in the form of an account-
able receipt, that (whatever its form) it should aixompani/ the post-
master's cash account to the Department (i.e.. Ottawa, St. John, Winni-
peg or Victoria) as evidence of the deposit, and that this Accountable
Receipt should then be sent to the Receiver General, just as the Draft,
&c., are at present.

3rd. That the postmasters of the 765 smaller ofliv es, having no
Banks on the spot, should no longer remit to the nearest Jknk, a plan
shown to lend itself to evasion, and all those delinquencies terminating
in default, which, moreover, is the source of unceajsiug trouble and
anxiety, but should m all cases remit their surplus cash direct to the
Government Bank at Ottawa, St. .John, Winnipeg or Victoria, as the
case might be. These remittances to be in registen^d covers, for deposit
to the credit of the Receiver Gem*ral as at present. The Bank to fur-
nish daily to the Department (Ottawa or elsewhere, as before) an abstract
of all Postal remittaa«'es received, ollice by ollice, accompanied by one
Accountable Receipt lor thf whole, and an explanatory memorandum
aimiuHt the names of Offices whoso remittances had to be returned, iu

I «;

f'l

whole or in part. The Aicountabk' lifccipt for the !?ros8 amount to be
seat by the Post Oiricc to the lun-oiver G^ouoral, a.s Drafts uro at priisfiit.

There exists no doubt iu ray miud, that the postmaster wlio now
takes improper advantage! of the I'ael of his olficial depository bring
beyond easy reach of Ottawa, wouKl be quick to perceive the futility of
deception when misreprf . ;. • could no longer deceive. As regards
errors and discrepancies. .. ^jmittiuices, they would speak lor them-
selves, and enquiries, now so numerous, of postmasters and the Banks
concerned, would cease.

I have said that nothing is to be gained by disturbing the present
rule under which postmasters deposit Tost Olfice Receipts directly to the
credit of the Treasury (the Receiver General). 1 may here, however,
point out the single inconvenience resulting from the present system,
and again allude to the appreciable friction due to the i)resent method
of obtaining funds from the Treasury, to provide lor Moivy Order and
Savings Hank requirements, and to mei't Money Order obligations
abroad, and may urge the necessity for some "modus vivendi" being
arrived at. The joint concurrence of the Auditor General and the
Finance Department now necessary in order to enable the I'ostmaster-
Creneral to provide for obligations which he is by law, or International
Convention, bound to meet punctually, involves a concerted action at
times very diilicult to obtain, owing to the want of close touch between
those iJepaitments and the Tost Office. A partial remedy would be
found in aiviug to some principal otlicer in the Tost Office Department
an accountable credit at the Bank of Montreal, exactly as one is given
(to meet the very same objects) to every I'ost Office Inspector in the
Dominion. In respect of the general measure for supplying postmasters
with funds, little is to be learned from English practice. The geograph-
ical extent ol Canada will always compel the Department to maintain
some system by which funds t an be placed where required, without
previous requisition to Ottawa. For that reason, the present system of
Inspectors' and Postmasters' Bank credits cannot well be disturbed. It
should, however, be supplemented by a central credit at Ottawa.

The English method of collection of unpaid Postage is, in its en-
tiretv, inapplicable to Canada. As I'lsewhere stated, it might perhaps
be applied to certain classes of offices, including those served by travel-
ling Post Offices. Of the present Canadian .system, it may be said that,
while it falls short of absolute verilicntionof this item, it perhaps attains
as nearly to the truth us is, on the wlioie, possible, and what it does
a^ complish is done without expense. 1 do not lorget tliat in the measure
of the removal of all non-Money Order Offices from rank as accountin"-
offices, is involved loss of the account now rendered by those offices, of
postage on unpaid matter. This, however, could be had in another, and
as satisfactory a shape in connection with the Quarterly payments of
Salaries to those otfices.

It now becomes ni'cessary to refer to the manner in which, under
such a reorganization of aciounting methods, as has been sketched, the

Postal Revenue would bo detoriniiu'd. All Tostal Rfcoipts, including
Moiioy Older, Savings Biink iind Rovenuo I'unds, would pass into one
acfount in the Finance Department. Out of this would grow two others,
" Revenue " aud " Savings Bank." Tho present Money Order account
w ould disappear, Onee a month, about the third week of the following
month, the amount to be transferred to Savings Bank account would
bo advised to the Finance Department, as at present. In like manner
once a month, i)erhai)8 at end of second month from date, the amount of
I'oMlal Revenue earned, for sale of stamps, Money Order commission,
proht on Money Order exchange, as ascertained from Post Office summa-
ries, would bt! communicated to the Finance Department. The transfer
would involvt^ a mere book entry, the receipts, as a matter of fact, being
in the hands of the Receiver General from the outset, but held in sus-
pense, as it were, until apportionment.

In England the Post Office Receipts and Revenue for the year are
held to be those items as per the Books of the Treasury, and not the
booked Revenue as per the Post Office accounts. For example, while the
booked revenue of the Post Office, as per Post Office ledgers in 1886-87,
was ,£8,462,667, the payments into the Exchequer were i;8, 45 0,000, t. e.,
the sum total of the actual transfers to revenue during the year. This
principle applies to all Imperial revenue earned by the great Revenue
Departments, and is clearly illustrated in the Imperial Financial
accounts (Blue Book) where also the disposal of the dilference between
Booked Income and Income paid into the Treasury is fully brought out.

What 1 said in describing the treatment in England, of certain
items as " deductions from revenue," and the inconsistencies exhibited
in (Canadian practice in respect of similar items, will, no doubt, lead to
the adoption of a fixed principle in Canada. Should British precedent
be adopted, it must be borne in mind that the Post Otfice must then be
given authority to draw on the Treasury against " Receipts " (subject to
Auditor General's audit) in respect of the items decided on for treat-
ment as " Deductions from revenue."

The general subject of " Receipts " closes naturally with a reference
to audit. This can apparently go no further than it does in England ;
that is a test audit, accompanied by special examination of the ledgers
of postmasters out of offiic. It will be seen, however, how much fur-
ther than at present, audit could go under the proposed amalgamation
ui cash accounts. Whereas now the postal reveniie alone,— viz., $2,-
600,000, comes under review by the Auditor General, the entire Post
Office receipts amounting to $35,330,000, — would then be open for the
Auditor General's examination. It must be remembered, on the other
hand, that there is not in Canada that necessity for applying searching
audit to " Receipts " which there may possibly be in England. In
Canada the Post Office neither receives nor controls the Cash Receipts,
so that audit becomes necessarily a review of Books only.

EXPENDITURE.

The Hrfit aspt-it under which the subject of I'ost OlFii-c expenditure
should be exiimined is naturally in relation to the Parliamentary
Appropriation. The I'KtimateH take much the same shape as the Post
Office estimates in Canada have done in recent years (ex<-opt that they
include the salaries of what— to be understood — I may term the " Inside "
service, charges in Canada estimated for, not by the I'ost Olhce but by
the Finance Department as part of the vote for Civil Government) and
generally Kpi-aking, go more fully into detail For purposes of compari-
son I may say that the Post Office estimates in Fni^iand (exi'lusive of inside
service and telegraphs) an' prt>sented in volumes extendiuir to 2tl0 pages,
218 of whiih are devoted to the details of salaries and allowances for
the 015 T'ost OlHi-cs on the establishment, and their sub-offices. Tho
Canadian estimates including like details in regard to the 16 city or es-
tablishment offices, occupy 17 pages of the volume of estimates.

Turning to the Imperial expenditure, or apropriation , accounts, it
will be found that the volume presented to Parliament (iiuluding the
yVuditor (.reneral's report) in relation to the expenditure voted in 260
pages of estimates, extends to 2t) pages only, while, on the other hand,
the Canadian postal estimates of 17 pages grow into a volume of de-
tailed expenditure accounts, of 412 pages, to which may be added the
Auditor General's contribution of 50 pages more. Were English
methods adopted in Caiada, the expenditure statemenlt. of the Post
Oifa , of 4ti2 pages, would then ocrupy no more than 2.

Parliamentary Control, and following it. Treasury and Audit su-
pervision, are extremely rigid in matters of Post Office expenditiire. I
took pains to inform myself of the principles governing the usage which
results in such apparently meagre expenditure accounts being presented
to Parliament. There was, of course, nothing new in the information
that it is when con.sidering the Es/i males, thai Parliament has the fullest
exercise of, and the only real control, but thi.s may be emphasized as
giving the keynote to the practice which prevails. The Estimates are
therefore submitted to Parliament in very full detail, the various services
being groiiped under appropriate heads and sub-heads. The vote by
Parliament is held not cnly to give permission to pay the services and
salaries estimated for, but to be an absolute instruction to pay them, and
if not paid, the amount voted must be surrendered. Parliament having
voted the supplies, is satisfied when the Treasury Accounts, giving the
expenditure in no greater <letail than the totals of the various sub-
heads, are accompanied by the Comptroller and Auditor General's cer-
tiJicate that the detailed votes have been applied in accordance with the
wish of Parliament, and that votes not expended have been surrendered.

1 think it right to place on record the above feature of British prac-
tice, whicli differs so much from that followed in Canada. In regard to
the lengthy financial details given in Canadian Reports to Parliament,
they have a value over and aiiove the apparent object of publication, in
that the work of compilation brings out in permanent and convenient

shape much that might otherwinn remuiu iu disconneoted form. It ia
probable that, with a well considerfd systern oi" record iu the Account-
aut's Braiii'h, the value of the Aunuiil Report for purposes of Depart-
mental reference, would not be what it is now, and certainly in its
curtailment much expense would be saved, not only iu the item of
printing, but in the cost of clerical preparation.

I mentioned in u previous part of this Report, the reasons for the
introduction into the IJritish Postal Estimates, as a special sub-head, ol
an amount for " Losses by default, &c.," so that 1 need do no more here
than refer to the 'tern as one which sound practice suggests should be
given a place in future Canadian Postal Estimates.

An examination of the British Postal Estimates discloses a prac-
tice iu regard to postage of Uovernmeut iJepartmeuts, differing from that
prevailing in Canada, where every Government Department asks Parlia-
ment (under Miscellaneous) to vote its postages* — in all, about $10,000
— and the Post UiKcc receives the beneht in the shape of revenue This
is held iu England to be illogiial and contrary to sound Parliamentary
finance, ou two grounds : —

1. That Parliament should not be (tailed upon to vote; as expendi-
ture iu one Department, what will become revenue in another.

2. That Parliament should not be asked to vote the same amouut
twice over.

The lirst point requires no explanation. The second may be ex-
plained by illustration. For example : — Having already voted the sums
said by thi' Post Office to be necessary for all mail conveyance, Parlia-
ment, on cominu' to a vote, say in the Inland lievenue Estimates, for
postages (t. e., for provision for <;arrying the correspondence of the
Inland Revenue Department) would reply : " No ; Parliament has
already voted all that the Post Uihce asked for mail conveyance."

A maxim of universal application throughout the Imperial Govern-
mi'ut Departments and an enunciation, in another form, of the same
principl)! is this : that any servi<e which one Department can render
another, falling within the range of its ordinary functions, shall be given
free of charge. Thus no (iovernment Departm nt pays its domestic or
even its Ibreign postage, or domestic telegrsims The Post Office sells
Inland Revenue stamps lor the Inland Revenue Department, and pays
army pensions for the War OlHce, without compensation. On the other
hand the Inland Revenue Department serves the Post Office by taking
control of the issue of Postage stamps to postmasters.

By the amount which other Departments pay the Canadian Post
Office for postage, thtTi- is clearly so much that is delusive in the State-
ments of Dominion G-ross Revenue on the one hand and Gross Expendi-
ture on the other, t

t*.

• Not to cover p()9la|j;e on puioly domestic mail matter, whicli is carried free, but charges on
matter fornnd from other countries.

t The pnyment hv the Post Office of •yil't.non per iiiinum to the DepHrtment of Railways and
Canals for po'stiil aervice pBrformeii bv the liiterrolonial Unilwnj in like niiiMner contributes to a
deluaire showing of Dominion Gross tteneipts and Expenditure in the Public Accounts.

ith

Altliottgh tho British Tost OlFu-r carrifs all official Govcrnmont cor-
rospoudcuci' Iroi', ar.d no vote is aski'd ibr tho sorvici-, rarlianu'Ut is
nevertheless given an opportunity once :•. yiiu of expressini? an opinion
upon the principle, lor in the lilstiiuates is given in some detail the
value of the services which the Post Oliice expects to perform for other
Departments without charge.

Before leaving the subject of the Estimates, one more feature of
Britisli practice, and an important one, must he noticed and that is that
the tvhole expenditure is submitted to Parliamentary vote. In Canada,
ou the contrary, rarliament is not asked to vote the salaries and allow-
ances of country Postmasters. These services are met by Postmasters
retaining the amount, say !s;'>00,000, out of their revenue colleclions.
These payments, therefore, Parliament has no opjwrl unity of expressing
an opinion ou. But, there being many oltices who.--e receipts are insulli-
eicnt to pay the Postmasters' salaries, tho deficiency has to be provided,
and the amount of this deliciency only is submitted to Parliamentary
vote. As u is asked for in a round sum (say #4lt,000) and is merely to
supplement the amount, |500,000, which the Post Othce proposes to
expend without a vote, the item can hardly be said to be susceptible ol
intelligent Parliamentary criticism.

In Canada, moreover, while no vote is asked for compensation to
Postmasters for Mon»'y Order business (now paid out of receipts) a vote
is asked for like services on Savings Bank account. It will thus be seen
that there exist anomalies and inconsistencies in Canadian practice.

Of the two, ihc Ih'itish practice of asking a vote ibr all. expenditure
seems preferable, both as a measure of uniformity and as a matter of
principle.

BOOKS IN THE LONDON DEIWUT.MKNT HASED ON THE I'AlililA.MENTAKV

APl'BOPRIATION.

At the beginning of the financial year the particular branchi's of
the Kecciver and Accountant (^'uerals Department cjiarged with Ex-
penditure of Voted Services, prepare blank books, letli^red under the
respective heads and sul)-heuds of expenditure, and tbllowing in closest
detail the various voted services, it will be sufficient to say that, con-
taining all requisite information as to names, services, iVc., these l>ooks
t)ecome the basis on which issues every payment during the year, and
remain the record, ibr one year, of i)ayineiits made lor each individual
service.

(Changes in names of iiidividiiMls or in .scales of pay, all'ecting the
salaried establishment, or mail .service, are recorded in these books on
notification from |)roi)ev autliority, in lonvenient form.

I have referred to ihe lad ihat all expenditure i., estimated Ibr and
sul)mitted to Parliamentary voie. This will suggest (in remembering
that Canadian practice is to allow postmasters of nil but city offices to
deduet tlieir salaries and allowances from receipts) that il'llie salaries of
postmasters of all classes arei)aid out of vote, the Hritish method, iuvolv

ing, it might hi' siipposed, a system of pnymout of 12,f>00 postmasters
direct from Loudon, must n'lativi^ly be more laborious and costly than
the Canadian. What tlic method of paying postmasters' salaries is, is
really this : All payment? both of posUuasters, ])ost oliice clerks, rural
postmen, &c., art! made by the postmasters of the t>30 head offices, each
of whom pays the sub-postmasters, &c., in his own immediate neighbour-
hood, and having taken their receipts either on pay sheet or separate
Toucher, claims the total amount in hie Daily Cash Account with the
Department under the head " Voted Services I'aid." These services are
paid for by postmasters out of Postal Receipts, the temporary advances
out of" ll<;ceipts" being periodically replaced by demands on the Trea-
sury for covering draft. This plan of paying postmasters I may at once
say is inapplicable to Canada, and is possible in England only bet ause
of the large number of head (or establishment) offices, and the circum-
scribed area of the country.

It is the mode of paying oilier services, i.e., Surveyors (Inspectors)
and their stall's, mail contructors and all miscellaneous items, which
constitutes the feature in Euglisb practice from which Canada has most
to learn, and this feature can fortunately be applied to all services,
postmasters' salaries included, alike.

I have mentioned the Books or Hegistcrs which continixe for one
year and are the basis for issue of all payments. In respect of mail ser-
vice the Surveyors also send a Quarterly Schedule of payments to be
met. In this matter the practice resembles that in force in Canada.
" Here, however, resemblance ceases. In Canada, a i-heque o; ,he Bank
of Montreal for each si^parate service is prei>ared — a form of voucher is
alsolillcd up, i.e.,lvvo doiiiruentsin respect of eacli payment, and to these
must i).> added an envelope to cover cheque and voucher. The cheques
have necessarily to bear the signature and counter-signature of stall
officers The number of cheques is.sued in the Deparluient in a year is,
approximately, 'J,'), 000. This trebled represents the numl)er of ducumeuts
prepared in eonnediou with a year's payments on voti-d service account.
In the case of mail contractors, a fourth document, a letter of transmittal
covering the cheque and vouclier, is also prepared Oi' these there are
about 17,000 in a year.

in England all payments are made, not by cheque. l)u) by warrant
(a form .somewhat of the character of the Saving.s Bank withdrawal
(•he(iue used in Canada, itself called a " warrant " in England). This
warrant has proviBiou at the I'ool lor the di.s. harge of the person receiv-
ing the amount, so that a single ilo. ununt, it will be observed, takes the
place of at least three and m uost lases four, as in Canada. Further,
these warrants, not l)eing drawn upon a Kank but on liw l^<parL-
ment itself, require no written signature. Wiiiie some imiiortant ones
may bear a written signature, some carry a fac-similo (if the
Ueceiver and Accounlaiil-tleuerars signature, while those for small sums
bear a printed signature. Of the sulhciency of such warrants, when
drawn upon the same Department, there can be no questioji. II' proof

of Ihip were ufoossary the fact that nearly !|Y,000.000, Savinijs Bank
withdrawal.-', were paid in Canada last yfar on warmnts iniprt'ssed with
a fac-simile of th*- SuporinttMidtMit's signature supplies 11.=**" Beyond this
the practice must, heyond doubt, be consisttut \% ith all needful tinam-ial
checks and requirements, or it would not obtain in Eng^land. A war-
rant so issued is vrrtually payable anywhere in Enjrland. I'osf masters
lire p. ruiitted to ciish them, ii they know the persons preseutinsr them
Banks i ash ilicm, and for their own protection take the usual means of
identifying Hn- payees

The issue of a vvarraiU, while of course recorded, is not regarded as
the makintr of a payment The payment is held to be made on the day
that the ac(iuitted warrants come hack to the Kepartment. This they
do in one of tw o ways : —

1. With postmasters' Cash Accounts, as part of their cash remit-

tances.

2. Presented hy a Luudou banker, havini? been cafihed by the Bank,

or one of its Proviuria! agencies, or having been sent for
collection from another Bank.

1 have already .'xplained, when on the subject of remittances from post-
masters (paLV ^2), tliat warrants forming portion of postmasters' remit-
tance are ai once scheduled, a- « ording to the heads and sub-heads of the
service to whi( h tiiey relate, and that a single <heque against expenditure
or votcd-scrvice actonnl is issued t.i take their place.

Warrants presented by the Banks are treated in the same way, except
that instead ol ii separate cheque being given to each Bank, a single
che([ue is sent to tlie Bank of Eiiulaud, with inslru'-tions to" write dfl'"
so much to the credit ol the .several Banks concerned. The result is the
same

Tile cheques so drawn m sul)stitution for service-warrants are
airainst the Poslmaster-Cieiieral's aciouni in the Bank of England, i.e.,
ihc balance of un-traiisferred receipts. Once a month, as already men-
tioned, this temporary advaiic i'roin " Receipts " is replaced by a draft
tiom the Trcitsuvy on Voted Expenditure Account

.luft as Pnst Cfhce " Kevenne " is lieid to be the receipts as per
freasury, ant' not the Post Oltice, books, so " Expenditure " is held to be
the expenditure ;is ])ei ihi Trejisurv . not the P(i.><t Office l)Ooks. Expendi
ture, therefore, as reporli-d i.i Parliament in lingland, is the sum total
of the later covcrine- Treasury drafts, not of the Post Olhie Chetiues
Tims arises a want of en-iiK i<lencein date bet ween the Treasury und the
(he Post ( tltiee books und ii niiseiiuent ditl'erence III " P.xpenditure,"
which iiiis lo be explained in the Imperial Expenditure accounts.

• Tlir.v- wiirr»nls mimbrr HliiMit T.l,0(i(i Hriniiilly Tlin f«c-vlnillp itnrap In In the rinlo<1vnr»
<i ninr utlii i iMiint the rlnTlo in tiiKtc iiri' i( ..li ilmt ii i. .|iiiri'i jciiiil ivclioii on llii' null ot Coin oHlri'iH
I'l liDii' II « III mill. To >nilulrn<v « ..imd'iilllrir lioin .hillin oi ,aii|irr\ islnii I'm tlir iiiir|mni" ul Hi({nlnK

1 1. Mil .:il" li. ,'ii'ii « « ittiils 'I ijiiv « I mill l.i' A wa»li. iil lori i , hii'I wmilil m Iii|illitli im rlii'i'k w IiiiIovit

Ihlidt, umi' wniilil lint |ii'iiiiii iif lla l.'.iiiff (tiiiii'. Till' whuhiiih me not ri'iiilv lor KlxiiRlnri' until
iiliiiui.1 Ik'h ii'i,!"''l» il'iili, .mil ii wiiulil 111' iiiiri'iHiiiiiiliJi' ti) ki't'ii till- wliiilr itinH uiiiiliiK iiiiiil tlii'
«iiMiiini hii.| nlitiiliini il^. SiiiMTiiitiiili'in'H |n raonnj nlgnntnr*. Cimilltlotn of nigimluri' !<•»• livor-
ablc lo liili'lligi'iil fiiiliiliiiiliuii ciiiili] mil In- iiiiiigiiifil

2*7

Thavo stated that the issiio, not of a warrant, but of a Cheque, is
regarded as the oflicial act of ])aymont by the Post Office It will be
apparent that one or (wo cheques a day will cover many paid warrants.
The acquitted warrants, received each day, scheduled according to voted
heads of service, and accompanied by the schedule, are sent in that shape
to the (,'c7nptroller and Auditor General, as voiichers for the payments
made that 8am<^ day by means of the one or two coveriug cheques

I may say here, that this system could not posnibly be carried out
with the ea*!e and simplicity which iiiiirk it, had the Post Office eipendi«
tnre to be reported to Parliament in the detail now given in Canadian
reports. No classification of payments (or grouping with a view to futur*
publication) is attempted, beyond the heads or sub-heads voted in the
estimates, and this, covered by the (.'oinptroUer and Auditor General's
certificate, is all that Parliament asks. For mere Departmental record
and reference, the registers on which the issue of the warrants is based
are considered sufficient.

The Comptroller and Auditor General has no shan^ in the initiation
of payments, nor can he " reverse " expenditure. To the Treasury and
Parliament only is the Postmaster General responsible for the expendi-
ture of Parlianieiitary appropiatiou. The Auditor (ieneral merely
"reviews" expenditure and reports to the Treasury and to Parliament.*

I stated on page 12, in alluding to the present Canadian praci ice
under which Postal Receipts pass at oui e to the (outrol of the Treasury
(Finance Dcpartiiieiit) that the system would be found to possess marked
advantasres when . onsidcring the adoption in Canada of English
methods of Expenditure. The advantages would be these, that the
intervention ol n Hnnk a<i<i'int and the process of covering the paid
warrants daily by a cheque, as in lingland, could be altogether dispensed
with The same results could be accomplished by simple book entry in
the ledgers of the Finance Department. The warrant syst.'m could be
made to take the plac>> of the cheque system entirely. It wcnild be unne-
cessary for (he Post Office Depi.rtuKMil to nsk for a iredit at the Bank, or
(o create any Bank account at all, for expenditure purpose^.

Payment of voted services by ronrrnnt would introduce no novelty in.
Canadian practice. The lonipe'isalion to Postmasters of Savings l?ank
Olhces has lor many years been paid by warrant, the I'ostmasters retain-
ing the amounts out of "receipts;" the acquitied warrants being
covered at the end of the Quarter by a single cheque against "expendi-
ture." It is, thereCorf, not the principle. b\il its wider application and
its extension to all voted services which is recommended now.

The warrants paid !)y Postmasters and Iransinitted in their accounts
as . iwh. would be sent to the Auditor General daily, with u request that
the total amount might be (charged to "ExiHudilure," and credited

* Ihider IliK Amoriinn .tvatoin, till' I'oAlinitKler Qciiriul IihvIii|{ iio «<tnt In Oiingrriii, mid ticliig

liiili'l'i mlciit iif llml boilj-, irt'iiiil I'litMisli .1 willi iinriiiilrulli'd poMci.J of ('«|M':idiliirt3 At Wiialiiiid
ton. ilu'ii ruiT, |MiKt«l I'xpeiiditiM-o ii'i|iiiri'H ii ciiiii"i'loi1 tnitliiilv* mi tlio tiiirt. »( iho I'i):il Otitio mid

till' Ainliinr. Ill lliia Ui'imrl It in a.^aiiini'd llmt, iiiidi'i ri"i|iiiii,sildr (iiivnii iit, m I'.lioljini in

rKiiiiilii, III'- l'ii,<tnimiloi (iciii'iiil ij iiiveal' il Willi ii ri'S|iiiii3lMlil) wldrli Is his aloiic : llHM-eforc, tliat
kudil of VuiV ofllce cipoiiditiiie may not liik« ilic alittpu ul'a dliiiix' in ljiiIiuI.

to " Receipts. " WarrantR paid by the Banks wonUl likfiwise. ho sent
daily (o Ih" Auditor Ireneral with a request that the amounts might he
re-paid to the JJanks, and churp^ed to " Kxpenditnre '" (much as rei)aynientH
to. Banks for advaucet; on Money Order aceouut are now arranjyttd). There
would he no nnadjnssted expenditure account between the Finance
Department and the I'ost OIHce. and of course no unadjustnl liauk
;iii-()uul and no outstanding cheques. The Treasury expenditure and llie
Vot OiH'X' expenditure would he in absolute agreement day by day.

To illustrate what would be I lie application of the warrant mode oi'
payment to all voted services in Canada, including salaries olpostmasterB
at oihces ol' all classes, it may lir said, broadly, that there would he
eight classes of payments to he provided lor

Class 1. Large contrai tors, imluding Uailway and v?teamship Com-
panies.

2. Ordinary mail bervice.

3. Inspectors and their stall's.

4. Railway mail > lerks.

6. City Foblmasters and their stall's.

ti Salarii's and allowances of the '.150 Money Order offices, or
olhces reuderingUH counts.

7. Salaries and alluwames of the 6,560 uon-ac«.ouutiug otiicee.

8. Miscellaneous.

Payments would l)c as follows: —

Class 1. By'UV arrant, hut beina- for large amounts, i)ayablc only
through al Hank, the \V arrant would, in practice, be
deposited to thi' Conlractid's credit at his own IJank, and
be sent lor collection to the Bank of Montreal, Ottawa.

± By Warrants, sent separately to tiie Contractors at addresses
given in Inspector's Al)stracts. If for large amounts,
payable only through a liank.

13. By separate Warrants, enclosed lo the Inspeitor.

4. by separate Warrants, enclosed to the ltisj)ector, or direct
to the olii. ■,.!•, if resident elsewhere than at Inspector's
headquarters

.'). By I'ay-list (in duplicate) carrying impress of a form of
'tVarraiil, on the hist page, and payable only by a Bank.
The Hank would piovidc the money, on authority of the
Warrant, and would !)• rcoupcd on its presentation at
Ottawa.

tl. Exaitlv as Postmasters of t lie .same offices are paid now, /. r..
by Warrant, except thai the total of tlie Warrant would
then include salary and allowance for postal service.

7 ('/). To iKvn-accountinu' olh' es whose revenue exceeds salary
Miul allowanccN, hy Warrants, winch the rostmaslers could
ciihev ciish ai tile neaiest Money Order Office, or use as
cash when next remitliiiir to punhase stamps.

7 {/>) TT)non-a(T,onn(in|:>-oPicos,whoso salaries oxcepdrovouuo,
by Warr;uit« a« above, payable at tlu" noarest Money Order
' Offio...

8. J}y Warrant, payable through a Lank or otherwise, accord-
ing to amount.

It will be obvious that lUo payment oi' all Postal p]xpenditure by
•vairanf inst.-a.! of by rheciue on the liank ot Montreal, would absorb a
coHsidi'mbb.' portiou of the surplus receipts in I'ostraasters' hands. Thi;
ivsult of my enquiries lu I'^ng'laud (and later, in the United States) ha«
been to strength -n an opinion 1 have always held, that the policy of
utilisiiiu- public moneys in the ijustody of omcials of the outside service,
is correct in principle, m that jt diminishes ordinary risks, removes
tenii)tations, and tends to conserve honcviiy. To this I must add thai,
throughout this iteport, I have kept one lurther poi)\t in view, viz., tliat
the time is probably not distant wh> n the arrangements between the
Crovernment and tiie iJaiiks generally will have to be reconsidered. In
the j)roposed measures ia respect of both Receipts and Expenditure,
the employment of the Hanks is therefore minimized.

That surii a re-adjustment of the system of Accounts, in respect of
both Receipts and Expenditure, as 1 have sketched, would permit a re-
distri)>ution of liie general cleriiai force of the iinancial Briinches* of the
Department in the diri-ction of economy, is evident. There would be
little difficulty ni framing an estimate of what, after the accounts as now
kept are closed, would l)e the saving in clerical work and in Books and
printing, under reorganization, but it would be jn-emature to do this,
until it shall huvr' been decided to what extent re-construction of the
Account system shall take |)hice,

1 mentioned on [)uge|.'l that an amalgamation of i'.*sh accounts would
necessitate amendment oi the Post Ollice Act It must further be borne
in mind that any contemplated curtailraeut of the Annual Jleport to
Parliauieul, would also require I'arlmmentary sanction.

While far from desiring to exceed the prescribed scope of my
Report, I neveriheli'ss feel coustraimd to add thai uo mere sysitMU of
Departmental Ac<ounts, be it everso skilfully devih< d, and uo executive
ability or industry on the part oi olii<ers in charge of aiiount duties,
ought to be expci led to acl'ieve t lie impossible, iu otht^r words be expec-
ted to protect the revenue against lo.ss. or to check deliiKpiencics vinl'ss
supported, lirst, — by elhcient supervision of I'ostinaslers on the part of
luspeclors, ami, secondly, — by active and prcmipi co-operation on the
part of what I may callliie I'^xeeutive ol'thc Department, in bieli mattors
whether of pressing imj)ort,ance or of routrile, u.s from their nature I'ass
lieyond the means of treatment at conurand of a mere Aii cunt liranch.
] ha\e already pointed <iut how mu< n more tii(n-ougli Post Ollice insix'c-
tion would l)e, were there none but Money Order (or iKcountmg) olU.os

• Tli« AccounUut'i, Gaitiier'i, auU Moiisjr Urdoc Ilriuirhe*.

to be viwited. If by any I'urthiT means tlie duties or responsibilities of
Post Office Inspectors and their Assistants could bo so re-adjusted as l.o
make those officers in reality what they are in name, not only would
the results manifest themselvt^s in increased efficiency on the part of I'ost-
masters, but closer supervisioir would operate a.s a restraint against dis-
liouesty. As regards the sec oiul point, I Hinstsay that, unless some general
rules be laid down ibr the prompt Departmental treatment ol references
from, and irregularities brought to liarht by, the Ac<;ounting Branches, or
on the other hand a means provided by which t'loser contact may be had
between the respont:il)lo Head of such llranch or Branches and the higher
Executive, any measures of re-organization confined to the, Financ'ial
Bramhes of the Department would be a waiste of eHbrt. What I say on
this subject is merely suggestive. To bay more would be to exceed my
duty,— on the other hand tovsay le.ss would be to furnish a report want-
ing in losical conclusion

1 have tiie honor to bo, Sir,

Your most obedient servant,

J. 0. STEWART,
i^njwrinlendvnt ^luiicy Order awl Savinfcn Bank Branches.

'«■«