For the purposes, however, of ascertaining what increase of traffic will be required to produce (_a_) the same net revenue as under the present system of railways, and (_b_) a sufficient revenue to purchase the present system, I have taken no account of the decrease of Postal expenses nor of the normal increase of the Postal Revenue. I also am assuming that notwithstanding all the economies referred to, the working expenses of railways will remain the same, or even increase, owing to higher prices of goods and materials and higher wages, to the round sum of £85,000,000. It will thus be apparent that ample margin has been allowed for any increase in working expenses that is likely to take place, and that allowance has been made for the whole of the existing staffs to be retained, whether now employed in services which may then be discarded or not. P.S.--While revising the final proofs of this pamphlet during the Christmas Holidays, I have noticed in the “Daily Telegraph,” of 24th December, 1913, a long letter signed “G.P.O.,” referring to an article in the same well-known newspaper of the previous day. The letter is printed in prominent type under the following heading:-- “PREHISTORIC METHODS OF POST OFFICE FINANCE--TELEGRAPH SERVICE ‘LOSS.’” The correspondent, who evidently has expert knowledge of the subject, refers to the “alleged great loss” of the telegraph service as “a polite fiction.” His letter completely confirms the views expressed above as to the folly of attempting to apportion expenses of one branch of the service, and he places the cost of the accounts at “hundreds of thousands of pounds a year!” CHAPTER VII. TERMS OF PURCHASE. If the railway system be purchased by the nation it will be in contemplation as =a business proposition= to repay the capital expended in the purchase, and this means, therefore, that if this scheme is a practicable one =the shareholders and stockholders of the present companies will be able to receive back their capital=, although, under existing conditions, this appears absolutely hopeless. It is therefore now proposed to consider upon what terms the railways can be purchased and how the purchase money can be provided. 1. By the Railway Act of 1844 the Government is empowered to purchase every railway company formed after that date. The price fixed is the equivalent of 25 years’ purchase of the average annual divisible profits for three years before such purchase, subject to the proviso that any company whose divisible profits are less than 10 per cent. on its capital is at liberty to have the terms of purchase fixed by arbitration. At the date of this Act most of the Trunk lines, to the extent of about 2,300 miles had already been constructed and are not therefore subject to the provisions of this Act, but as the total length of lines open in 1911 was 23,417 miles, it will be observed that the Act applies to 90 per cent. of the whole railway system.