The Post Office was, however, not favourably disposed towards the idea. It was proposed to meet the agitation to some extent by reducing the rates of postage on the heavier letters, and thus to carry small parcels under the guise of letters. This proposal was not, however, carried through. In 1871 the rates for letters of medium weight were reduced, but those on letters above 12 ounces were retained at a height which could only be regarded as prohibitive.[406]
The public agitation in favour of a parcel post service continued; and when in 1878 a large number of the railway companies announced that they proposed to convey small parcels over any part of their lines at low uniform rates, attention was called to the fact in the public Press, and suggestions made that the Post Office should co-operate by undertaking the delivery of the parcels. The official view was now somewhat more favourable to the idea. An international parcel post service had been established in 1880 in connection with the Universal Postal Union, and this fact had strengthened public opinion in favour of a parcel post service in this country. It was recognized that such a service would afford undoubted advantages to the public, especially in rural districts. It would provide facilities which private
enterprise had not seen fit to undertake. It would provide a service reaching to all parts of the country, for which there was no other equally suitable machinery.
The Post Office could not, however, in establishing a parcel post service, act as freely as in its arrangements for the conduct of the letter service. The conveyance of the parcels from place to place was likely to prove a serious undertaking, and for such conveyance the Post Office was dependent on the railway companies. In the case of letter mails the cost for conveyance is a very minor part of the total expenses of the service, but when negotiations with the railway companies were begun it was soon found that such would not be the case with parcel mails. The companies, regarding the parcel traffic as to a large extent their own proper business,[407] were not disposed to agree to easy terms, and there was the further difficulty that numerous companies had to be satisfied, since it was desired to establish the system under an agreement which should include all the principal companies.[408] From the first, the question of the remuneration of the companies was approached from a point of view totally different from that in which their remuneration for the ordinary letter mails was regarded. Letter mails are conveyed as entities, and the company have never been concerned with the number of letters enclosed in the mail or the amount of postage paid. They arrange for the conveyance of a given number of mails,
and are remunerated accordingly. But with parcels the question was approached as one for the determination of just remuneration of the companies for conveying, not mails containing parcels, but single parcels. And the question to be settled was what proportion of the postage paid on the individual parcels should go to the companies. In view of the heavy expenses of every description which would be incurred and of the large number of heavy letters which would be transferred to the parcel post, causing a considerable reduction of revenue, the Post Office declined to accept less than half the total receipts, and after some demur the companies agreed. The rates of postage proposed were two in number—for parcels not exceeding 2 pounds in weight, 6d.; for parcels not exceeding 4 pounds in weight, 1s.
Difficulties arose subsequently as to the amount of freedom of action to be left to the Postmaster-General and the duration of the agreement. The first proposal was for an agreement in perpetuity, and the draft agreement gave the companies what was called a "partnership interest" in the parcel post business. It was, however, regarded as essential that the parcel post business should be no less under the control of the Postmaster-General than the existing letter post, and that, on the expiration of any agreement made with the railway companies, the statutes relating to the conveyance of letter mails by railway should apply to parcel mails.
After the failure of the first scheme, negotiations with the railway companies were suspended, but the public agitation for a parcel post was daily gathering strength, and in February 1882 the Postmaster-General again approached the companies. The new proposals were somewhat different from those originally made. A scale with four rates (3d. for 1 pound, rising to 1s. for 7 pounds) was now suggested by the Post Office, largely in deference to the strong disposition of the railway companies in favour of an increased number of rates. The low initial rate of 3d. for 1 pound was now proposed on the ground that a large proportion of the business to be done would be between the large towns and the rural districts. For the development of such business a low initial rate was essential; and as such parcels would not be likely to be to any large extent railway borne,
the Post Office would obtain almost the whole of the proceeds of the postage. It was, moreover, now taken into reckoning that a considerable increase in the number of letters would result, since numerous communications relative to parcels posted would pass, and the revenue would thus benefit indirectly. The letter service would benefit, too, in other ways: it would be relieved of heavy packages; and the existence of a parcel post service would justify the provision of more efficient services in rural districts. The rates proposed were in general very much higher than those at the time existing in Germany, France, Switzerland, and Belgium, and they were estimated to yield a profit.
In the further negotiations serious difficulty was encountered on two points only: (1) the proportion of postage to be paid to the companies, and (2) the length of time for which the agreement should be made. The earlier agreement had been for an equal division between the Post Office and the railway companies of the postage paid on all parcels. It was now decided that payment could only be made in respect of parcels actually conveyed by railway. The companies thereupon asked a higher proportion. They anticipated that parcel post traffic would be largely long-distance traffic, involving in many cases transfers on the journey; and although they expected to retain a good deal of the short-distance traffic, they could only achieve this by reducing their rates generally, especially the rates for small parcels. After some higgling, they agreed under protest to accept 55 per cent. of the postage on all such parcels as should be conveyed by railway. They also agreed to the limitation of the duration of the bargain, and the term was fixed at twenty-one years.
The agreement was embodied in the Post Office (Parcels) Act of 1882.[409] The companies parties to the arrangement undertook the service of conveying the post parcels from the vehicles of the Postmaster-General at the despatching railway station to the vehicles of the Postmaster-General at the station of destination—that is to say, they undertook all handling of parcel mails on railway stations and transfer to and from trains and from train to train where necessary—in consideration of payment of 55 per cent. of the postage paid