CHAPTER VII MONEY ORDERS
Previous to 1880 the Money Order system of India was managed by the Government Treasuries. Bills of Exchange (Hundis) current for twelve months were issued by one treasury payable upon another, and as there were only 283 offices of issue and payment in the country the money order was not a popular means of remittance—in fact, it failed altogether to compete with the remittance of currency notes by post.
In 1878 Mr. Monteath, Director-General of the Post Office, proposed to Government to take over the money order business from the treasuries. He argued that, with the small number of treasuries and the trouble involved in reaching one of these every time a money order had to be sent or paid, the existing system could never become popular. The Post Office was able to provide 5500 offices of issue and payment, and the number of these would be always increasing and becoming more accessible to the people. Mr. Monteath's proposal was strongly opposed by the Comptroller-General, but was accepted by Government and sanctioned by the Secretary of State on the 27th November, 1879.
On the 1st January, 1880, the Post Office took over the whole management of issue and payment of money orders, and the audit was performed by the Compiler of Post Office Accounts. For the purposes of money order work post offices were classified under four heads:
(1) Offices of issue.
(2) Offices of preparation.
(3) Offices of delivery.
(4) Offices of payment.
The office of preparation was always the head office of the district in which the addressee resided, and its duty was to prepare the money order in the name of the payee upon receipt of the intimation from the office of issue. The procedure was as follows: An application for a money order was made at the office of issue and, on payment of the amount with commission, a receipt was given to the remitter and the application was sent to the head office of the district in which the payee resided. This office was called the office of preparation, and if the payee resided in its delivery area it would also be both the office of delivery and payment. If, however, the payee resided at a sub or branch office, the office of preparation made out a money order for delivery at such sub or branch office and for payment at the post office named by the remitter in his application. It was not necessary for the office of delivery to be the office of payment; the remitter could name any office authorized to pay money orders as the office of payment. Upon receipt of the money order by the payee an acknowledgment signed by him was sent to the remitter, and the payee had to make his own arrangements for cashing his money order at the proper office of payment.
The commission charged on money orders was accounted for by postage stamps affixed to the back of the application by the office of issue, and the rates were as follows:
| Rs. | A. | P. | ||||
| Not exceeding | Rs. 10 | 0 | 2 | 0 | ||
| Exceeding | Rs. 10, | but not exceeding | Rs. 25 | 0 | 4 | 0 |
| " | Rs. 25 | " " | Rs. 50 | 0 | 8 | 0 |
| " | Rs. 50 | " " | Rs. 75 | 0 | 12 | 0 |
| " | Rs. 75 | " " | Rs. 100 | 1 | 0 | 0 |
| " | Rs. 100 | " " | Rs. 125 | 1 | 4 | 0 |
| " | Rs. 125 | " " | Rs. 150 | 1 | 8 | 0 |
Rs.150 was the maximum amount of a money order. Redirection was permissible, but such redirection did not affect the original office of payment, and this could only be altered by the payee signing the order and sending it to the office of preparation with an application for the issue of a new order payable to himself or anyone named by him at some specified office. A new order was issued, but a second commission was charged for this service. Money orders lapsed at the end of the month following that of issue, but were still payable for two months after lapsing if a second commission was paid; upon the expiry of that period they were forfeited to Government.
Certain special conditions with respect to money orders were (1) that not more than four could be issued to the same person by the same remitter in one day, except under special permission from the Compiler of Post Office Accounts, and (2) that under special orders the issue of money orders could be refused by any post office. Foreign money orders were granted on the United Kingdom, Canada, Germany, Belgium, Luxemburg, Heligoland, the Netherlands, Switzerland, Denmark and Italy. The maximum amount was £10, and the rates of commission were:
| Rs. | A. | P. | ||||
| Not exceeding | £2 | 0 | 8 | 0 | ||
| Exceeding | £2 | but not exceeding | £5 | 1 | 0 | 0 |
| " | £5 | " " | £7 | 1 | 8 | 0 |
| " | £7 | " " | £10 | 2 | 0 | 0 |
For Canada the rates of commission were doubled.
In 1884 the Telegraphic Money Order system was introduced, with a charge of Rs.2 for the telegram exclusive of the money order commission upon the amount to be remitted. The charge was so high that it was thought safe to allow a money order up to Rs.600 in value to be sent by this means. The anomaly thus existed of having Rs.150 as the limit of an ordinary money order and Rs.600 as the limit of a telegraphic money order. The rule prohibiting more than four money orders daily being sent by the same remitter to the same payee, besides being quite unnecessary, proved no safeguard whatsoever. In actual practice the name of the remitter was not entered in the money order receipt, so that the post office of issue had no means of knowing how many money orders were sent by the same remitter, unless they were all presented at the same time. There was really no necessity to fix a low limit to the amount of a money order, as the whole procedure was quite different from that previously followed by the treasuries. The old treasury rule was that the amount of money orders issued in favour of one person in a district treasury must not exceed Rs.500 in one day, but then the money order was like a cheque payable to bearer and the paying treasury had no knowledge of the time at which it would be presented. The Post Office, on the other hand, carried its own money orders and, if the office of payment was short of funds, it could hold back the money order until funds were obtained, and do so without the knowledge of the payee. These arguments prevailed, and in 1889 the restrictions were removed. The maximum value of an ordinary money order was raised to Rs.600, and no limit was placed upon the number which could be issued in favour of any one person. At the same time the rates were modified as follows:—
| Rs. | A. | P. | |
| Not exceeding Rs.10 | 0 | 2 | 0 |
| Exceeding Rs.10, but not exceeding Rs.25 | 0 | 4 | 0 |
| Exceeding Rs.25—4 annas for each | |||
| complete sum of 25 and 4 annas | |||
| for the remainder, provided that, | |||
| if the remainder did not exceed | |||
| Rs.10, the charge would be 2 annas. |
On the 1st April, 1902, after a great deal of pressure from all classes of the community, Government reduced the commission upon a money order not exceeding Rs.5 to 1 anna.
The extension of the money order system to the payment of land revenue was first tried in the Benares Division of the North-West Provinces at the suggestion of Rai Bahadur Salig Ram, Postmaster-General, in the year 1884, and proved an immediate success. In eleven months, 13,914 land revenue money orders were sent, the gross value of which amounted to Rs.3,35,904. The system was a great advantage to small proprietors who lived at a distance from the Government Collecting Stations. They found that the use of the ordinary money order for payment of revenue dues was not acceptable to the subordinate revenue officials, who suffered the loss of considerable perquisites thereby. Such remittances were generally refused on some pretext or other, either because they did not contain the correct amount due or else because the exact particulars required by the Land Revenue Department were not given on the money order form. To meet this difficulty a special form of money order was devised and the co-operation of District Collectors was invited. In 1886 the system was extended to the whole North-West Provinces except Kumaon, and a beginning was also made in ten districts of Bengal. The action of the Post Office was fully justified by results, and revenue money orders were quickly introduced into the Punjab, Central Provinces and Madras. In Madras they proved a failure, and were discontinued in 1892 after a three years' trial. The system was again introduced in 1906, but it still does not show any great signs of popularity, the figures for 1917-18 being 10,293 revenue money orders for Rs.1,29,400.
Rent money orders were first tried in the North-West Provinces in March, 1886; an experiment was also made in Bengal in October, 1886, and the system was extended to the Central Provinces in 1891. Except in parts of Bengal and the North-West Provinces, now known as the United Provinces, the payment of rent by money orders has never been popular, and the reason is not far to seek. Rent in India is usually in arrears and, whenever a tenant pays money to a zemindar (landholder), the latter can credit it against any portion of the arrears that he thinks fit. With a rent money order, the case is different, the money order itself and the receipt which has to be signed by the zemindar indicate exactly the period for which rent is being paid, and to that period it must be devoted. This is the ordinary ruling of the rent courts and does not at all meet the wishes of zemindars who want to have their tenants in their power. Besides this important factor, there is the rooted objection of all subordinates, whether they be government servants or zemindars' agents, to be deprived of the time-honoured offerings which all self-respecting tenants should make to the landlord's servants at the time of paying their rents, and the appearance of a postman with a sheaf of money orders, however punctual the payments may be, is hardly an adequate substitute for the actual attendance of the tenants themselves.
In 1886 the plan of paying money orders at the houses of payees was adopted and proved very satisfactory. India was indebted to Germany for the idea, which not only conferred a great boon on the public but tended to reduce the accumulations of cash at post offices and to accelerate the closure of money order accounts.
In Appendix "E" is given the number and value of inland money orders issued in India from 1880-81 to 1917-18, and the steady increase from year to year is a certain sign of the great public need which the Indian money order system satisfies, and of the confidence that is placed in it.
On the 1st October, 1884, the public was given the opportunity of employing the telegraph for the transmission of inland money orders, and during the first six months of the scheme 5788 money orders for Rs.3,75,000 were issued. The cost of Rs.2 for the telegram and ½ per cent for money order commission was a decided bar to the popularity of the telegraphic money order, which at first was chiefly used in Burma and Madras owing to the isolated positions of those provinces. In 1887 the Post Office relinquished its commission on orders for sums not exceeding Rs.10, and the telegraph charge was reduced to R.1. This led to an immediate increase of traffic, the number of such orders in 1887-88 being 45,417 compared with 18,540 in the previous year, more than half of which were issued from Burma. In 1917-18 the total number of telegraphic money orders issued was 875,000 and the value Rs.6,22,00,000 of which about three-fifths came from Burma. With the improvements in railway communication in India which are continually taking place, the pre-eminence of Burma in the matter of telegraphic money orders is likely to continue owing to her isolation and the largely expanding trade of Rangoon.
The ubiquitous swindler was not long in taking advantage of the telegraphic money order to ply a profitable trade. His chief resorts are Benares, Rameswaram, Tripati and the other great places of pilgrimage in India; his victim is generally some unfortunate pilgrim, who is only too anxious to meet an obliging friend willing to act as a guide and adviser in one of the sacred cities, and the procedure adopted is always the same. The swindler acts the part of the kind stranger and finds out all the details of the pilgrim's family. He then goes to the local post office, represents himself to be the pilgrim and sends a telegram to his victim's relations to say that he has lost his money and wants a certain sum at once. So confiding are the people of India that it is very seldom that a request of this kind does not meet with an immediate response, and the swindler, by waiting a couple of days during which he takes good care to ingratiate himself with the post office officials, walks off the richer by a considerable amount. The earlier reports of the Post Office on the telegraphic money order system abound in cases of the kind, and very stringent measures were adopted to put a stop to the practice. Identification of payees by well-known residents of the neighbourhood was insisted upon, and a payee of a telegraphic money order had to prove his claim and give satisfactory evidence of his permanent address. Despite all precautions, the telegraphic money order swindler is still common enough and manages to get away with large sums from time to time.
Probably in no country in the world is the poor man so dependent upon the Post Office for the transmission of small sums of money as in India. The average value of an inland money order in 1917-18 was Rs.18, and it is not infrequent for amounts as small as Rs.5 to be sent by telegraphic money order. The reason undoubtedly is the facility with which payment is made and the absolute confidence which the Indian villager places in the Post Office. An Indian coolie in Burma, who has saved a few hundred rupees and wants to return to his village, seldom carries the money on his person, and he has a strange mistrust for banks; they are much too grand places for him to enter. He usually goes to a post office and sends to himself a money order addressed to the post office nearest his own home and then he is satisfied. It may be months before he turns up to claim the money, as he frequently gets a job on the way back or spends some time at a place of pilgrimage, but he knows that his money is safe enough and he is quite content to use the Post Office as a temporary bank to the great inconvenience of the Audit Office. It is not too much to say that the money order system of India is part and parcel of the life of the people. They use it to assist their friends and defy their enemies. They have in that magic slip of paper, the money order acknowledgment, what they never had before, that which no number of lying witnesses can disprove, namely, an indisputable proof of payment.
