In accordance with the foregoing recommendation Parliament, in 1859, enacted that the Treasury might give "abolition terms" to persons whose offices should be abolished in consequence of the "reorganization" of their department, or branch of service. Under that Act, inefficient persons who are "reorganized out of the service" are given "pro rata" pensions, plus an allowance for "abolition of their office." For example, a man aged 50, with 30 years of service, who would become entitled to a pension at the age of 60, will be retired at 50 years, with a pro rata pension on the basis of 30 years' service, plus an allowance of 7 or 10 years' service for abolition of his office.[270] [Sidenote: _Cost of Pensions to the Incompetent_] In 1873, before the Select Committee on Civil Services Expenditure, Sir William H. Stephenson, Chairman of the Commissioners of Inland Revenue, illustrated the working of this system with the statement that in 1873-74, the salaries paid in the Inland Revenue Department would aggregate $4,808,580. An additional $683,160 would be required for pensions; and a further $234,175 would be required on account of the abolition terms given to men who had been reorganized out of the Inland Revenue Department. Thus the "non-effective," or non-revenue producing, charges of the department were equivalent to 19 per cent. of the effective, or revenue producing, charges.[271] In 1888 the Royal Commission appointed to inquire into the Civil Establishments reported that the burden on the State for pensions was equivalent to 12 per cent. to 15 per cent. of the working salaries, and that the payment of the abolition terms raised the percentage in question to 20 per cent. of the working salaries. Sir Reginald E. Welby, Secretary to the Treasury, stated before the Commission, that even the past liberal expenditure on account of pro rata pensions with abolition terms, had not enabled the State to get rid of "inefficient and incapable men." The Chairman of the Royal Commission spoke of the abolition terms as amounting "almost to a scandal." Sir R. E. Welby and Lord Lingen, a former Secretary to the Treasury, contrasted the State's system of pensions with the system of the London and North Western Railway. The Railway's pension system was maintained out of a fund raised by a 2.5 per cent. reduction from the salaries of the employees, and a 2.5 per cent. contribution from the treasury of the railway.