GOVERNMENT BUYING AND SELLING.
HE Select Committee appointed to look into the way in which the great Spending DepartmentA conduct their business has recently issued its final Report. Considering the clamour which was raised in certain quarters over the changes which Mr. Childers introduced at the Admiralty, and the blunders which it was hoped by some the Committee would expose, it is very satisfactory to find that this Report has only one word to say against them,—they do not go far enough. So far as Mr. Childers made changes, they were, in its opinion, decidedly for the better, and what is wanted is not retrogres- sion to the old, happy, muddling ways, bat further progress towards unity and interdependence amongst the Departments. Mr. Childers's notion was a very simple and intelligible one. The State, as everybody knows, carries on vast undertakings connected with the Army and Navy, involving the spend- ing of enormous sums of money annually. It purveys not merely for the food and clothing of its fighting men, but for innumerable wants of a miscellaneous kind for all the public Departments. It carries on vast factories, and is constantly in the markets of the world, seeking to have its wants supplied. Not only so, but it is, to a large extent, a seller as well as a buyer and consumer. In the rapid changes which are con- stantly taking place in the art and means of making war, it happens often that many things become obsolete,—guns, ships, rifles, materials of all kinds wear out or grow old- fashioned, and lie as lumber on the hands of the department, and, to be got out of the way, have to be disposed of by public sale. Thus the Government, on this side of it, is, in a sense, a great corporate business firm, and as such, it ought to buy and sell on simple commercial principles. If its ways are antiquated and cumbrous, they will also be wasteful ; if there be no unity and no proper control, it will be impossible to handle millions without purposeless extravagance. This, therefore, was the prin- ciple that Mr. Childers went upon :—He found the Admiralty commercially in a state of chaos, and he sought to make it orderly, and subject to the ordinary laws that rule ordinary trade. There were, for instance, some half-a-dozen Spending Departments in it, each under the guidance of a Naval Lord, and nominally subject to the First Lord, but without any true responsibility to him or to Parliament ; and he reduced them to two, or at most three, and placed them all directly under the Parliamentary Secretary to the Admiralty as the responsible financial head of the De- partment. In addition to this, he sought to simplify the processes of buying by sweeping away antiquated forms, and generally to bring the department into closer relation with the dictates of ordinary prudence in matters of trade. And so far the new system has been decidedly successful and productive of economy.
But there remains a great deal to be done even at the Admiralty, and as to the other Departments responsibility to Parliament, or even to the Treasury, is ahnost altogether wanting. Theoretically it is supposed that all the Departments must spend according to the will of the Chancellor of the Exchequer, but practically it is not so. His business is in the main con- fined to finding the means for fulfilling the demands that the Departments send in upon him. He may remonstrate, and if there be a cry to cut down the Estimates,' his remonstrance may be heard. But even when effectual, control of that kind does not go towards promoting economy. It may, on the contrary, promote waste, for without a real hold upon the fountains of ordinary outlay, it is impossible to make such a temporary cutting-down discriminating or wise. Too often it is some work that is stopped which it might be truer economy to finish. Fewer ships are laid down in the Dockyards, fewer experiments are tried, fewer guns made, lower wages are given, some arbi- trary change is made where expense can be easiest stopped, but there is otherwise no control of the Treasury over the outlay of the Departments that buy and sell. The Chancellor of the Exchequer, therefore, is somewhat in the position of the unhappy Controller of the Stationery Office. That gentleman, if we recollect aright, was sorely badgered by the Committee about the hours of his attendance at his office, and the amount of work he did, with a view' apparently, to show that had he taken more pains, he might have made his office more economical. But that was most unfair. The Controller of the Stationery Office can only obey orders, just as the Chancellor does. Orders come to him for this and that, from the various Departments, and he has virtually no discretion in the matter. What they want they must have' and all he
i can do is to see that what they get good of its kind. Even this, under the antiquated rules of the Departments, it may be but only partially in his power to do. Nominally, he is under the direct control of the Treasury, but both he and it are actually under the control of the Departments. The theoretical drder is practically reversed.
Now, so far as it goes, the remedy which Mr. Childers intro- duced at the Admiralty is a real one. If the Treasury has not got greater control thereby, Parliament decidedly has, and that is a distinct gain ; but it is not complete even there. Inde- pendent of the objections which the Committee, we think justly, make to its third Spending head—the Director of Works— there is the graver one still that between all three there is not that working unity which would be conducive to economy. It is not enough that the various Heads buy subject to the revision of the Financial Secretary; they should buy in intelligent co-operation with one another, just as the departmental buyers in a large commercial house would. The Committee dwell distinctly on this great defect as be- tween different Departments, which, from want of unity of action in this way, may actually be bidding against each other, and forcing up prices in the same market ; but it exists within each department just almost as much. And the remedy for it appears to us to be two-fold,—compulsory consultation with each other• amongst all Government buyers, and compulsory stock-taking. The first can only, it seems to us, be effectually carried out when the Departments are again brought fully under the grasp of the Treasury. The whole accounts of the Government ought to centre there, and the responsibility of the permanent Spend- ing staff of all the Departments should rest there as well. If it be left to the separate officers to secure co-operation, it can never be secured. Besides, without this we question whether the control of a Parliamentary Financial Secretary in the War and Navy Departments would answer the end sought at all effectually. Such an officer is changing often, and has little opportunity, perhaps, of mastering his department ere he is gone, so that under him abuses of all kinds might well creep in and remedies be slow to be applied. But the Treasury exists, if for any other purposes than compiling the Budget and collect- ing the taxes, as a centre of control, the permanent head of a number of Spending Departments, where all that concerns each should be found arranged, easily accessible, and enabling at once the Parliamentary chief to put his hand upon the thing or the man wanted, to control expenditure because knowing where it occurs, and to ensure economy because aware of the wants and the resources of every office. It is much the same with taking stock. Every department might be com- pelled to do so annually, but unless the Treasury were made the responsible office for seeing it done, and the whole operation controlled through the Chancellor of the Exchequer, nobody would be any the wiser for the process. It would be done as it is done now at the Stationery Office and the chances are that only a few underlings in the offices would know the facts, unless ferreted out now and again by some Member of Parliament un- usually inquisitive. It is amazing, when it is thought about, that the Government of England, spending its ten or twelve millions a year in stores, munitions, furniture of war of all kinds, and in supplying the working-gear of its many offices, should never take stock of its belongings. What would be thought of any business-house, large or small, that never did so l Stock- taking, regular and rigid, is of the essence of all economy. Without an intelligent knowledge of what one possesses one can never know what to get to make up deficiencies, or be sure that more is not bought than is wanted ; and hence, the wider the range of transactions the greater the probability of enormous waste, should this precaution be neglected. Not only that, but the Government ought to keep a strict account of its possessions in this way, in order to know what to sell. In the Navy particularly, the rapid changes which science is constantly introducing almost of necessity cause waste. Good materials of all kinds are day by day made old-fashioned, so far as war-purposes are concerned, and ought to be got rid of. But if these materials are not looked after, if their condition, quality, and position are but dimly known the chances are that no movement will be made to sell until the market is past. A wise merchant,_when he found a certain part of his stock being superseded, would endeavour to sell it, at a time when he would have the least loss, probably at once, before the tide of the new fashion set in, but the Admiralty has only too often kept its old materials till they were of next to no value at all. The Committee mention an instance of loss of this kind on timber, the amount of which in store has decreased a million sterling in value since 1866, and that is but one item. It is to be apprehended that the country loses more upon this score than on almost any other, and the reforms will not be complete until each department is rigidly controlled in each of these particulars by a permanent central authority, responsible to the Financial Chief of the Treasury. It is good, no doubt, to have a special Parliamentary Secretary at the Admiralty, and it would be well if the War Office were reorganised on a similar footing, rather than that, as now, the Surveyor-General of Ordnance should be independent of Parliament and Treasury both, save in the most indirect way ; but all that done, there still remains the necessity for unity,—that the State should behave all through its dealings like an individual trading organisation, not like a crowd of trade competitors.
There are several minor matters touched upon more or less fully in the Report to which, if we had space, we should like to refer, but we must limit ourselves to one other on which there appears to be room for reform. It is the method of Buying. Strictly speaking, there are three methods, but two of them only apply to special conditions ; direct buying appears, for instance, to be applicable only in the case of in- significant "sundries," and buying through brokers is used only when colonial produce is in question. By far the largest amount of materials is purchased by contract, either through open public, or more frequently, through limited tender. In many respects, to this there can be no serious objection, although if there were an absence of all foolish rules and vexatious provisos, it might be better managed than it is now ; but there is one danger to which the system is subject,—the danger of loss from making such contracts long. There may be loss in two ways from such a habit (and it is, we fear, more prevalent than is commonly supposed). Prices may change in the interval, so that the Government is buying dear what it • could buy as well cheap, or improvements may be introduced which make the article contracted for obsolete. Long contracts tend, in fact, on the one hand, to shut the Government out from the benefits of what Adam Smith calls the " higgling of the market ;" and on the other, to foster the absurd pedantry of the " goods-exactly-according-to-pattern " system, which the Departments appear to have carried to perfection. As a rule, the freer Government could buy, the cheaper, the more economically it would bur, and it ought never to act so that it shuts itself out from the power to secure a passing advan- tage. Contracts should, as a rule, be for quantity, there- fore, and not for time, except in relation to such quantity. When articles have to be made, the thing is, to some extent, different, but even then running contracts lasting for years are not always economical. In some cases, as in the instance of Hogarth's Meat contract at Deptford, there is unquestionably loss. So, also, in the ease of the Book contract. The discount, taken over all, which the Govern- ment gets is hardly so much as any person can obtain in almost any shop in the City, and there does not seem the remotest reason why an intelligent, capable head of that department should not deal with publishers severally, as any bookseller would, securing the best terms he could from each, and saving intermediary commissions. These must be consider- able on an outlay for books of some £26,000 a year, and if the head of a department cannot save them, of what use is he at all ? And as with these, so with many other things. The whole system wants to be brought nearer the level of every-day transactions in business, and to be brought under more efficient central and Parliamentary control, and we are glad to find that it is in this direction that the recommendations of the Com- mittee run. Their " conclusions " might, in some cases, have been put with less hesitancy, but on the whole, they are wise, and worthy of being acted upon. The sooner, too, the better, for we are not likely to be always or often embarrassed with surpluses of four or five millions, and we do not want further experience of that saving which is not thrift.
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