HC Deb 26 July 1869 vol 198 cc746-73

(The Marquess of Hartington, Mr. Chancellor of the Exchequer, Mr. Ayrton.)


Order for Committee read.

Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."


said, he rose to call attention to the terms of the agreements made with the telegraph companies, and to the sums proposed to be given to the companies in pursuance of those agreements. The noble Marquess the Postmaster General thought this a more convenient opportunity than the second reading to go into the agreements, and that was the reason why he made no observations on the occasion of the second reading. As the House knew, by the Act of last Session, it was left with Parliament in this Session to vote or not vote the money required to purchase the telegraphs. On this point it was worth while reading a section of the Preamble of the present Bill, which was as follows:— And whereas by the said Act it is provided that in case no Act be passed in that or the next Session of Parliament, putting at the disposal of the Postmaster General such monies as may be requisite for carrying into effect the objects and purposes of the said Act, the provisions contained therein or in the agreements thereby confirmed relating to the arrangements with railways and telegraph companies, and all proceedings there under, should become void; and the Postmaster General is required in that event to pay to the several companies therein mentioned all reasonable costs and expenses incurred by them in relation to any proceedings under the said Act. He therefore maintained that there would be no breach of the contract with the telegraph companies or the railway companies if the House came to the conclusion that it would not vote any money on this occasion. He objected to the arrangements made, because the basis of the agreements with the telegraph companies was a wrong and improvident one, that basis being that the Government was to give the companies twenty years' purchase for their business; and he was able to quote the authority of Members of the Government for that proposition. Last year the right hon. Gentleman the Member for the City of London (Mr. Goschen) said— Putting aside the admission of the proprietors themselves—that telegraph property was liable to constant depreciation—there was not a business of any kind in the country yielding a profit of 15 per cent that was worth twenty years' purchase. A business that yielded only 5 or 6 per cent might command twenty-five years' purchase; but to give twenty years' purchase for a business that yielded 15 per cent was most improvident."—[3 Hansard, exciii. 1575.] And the right hon. Gentleman now at the head of the Admiralty (Mr. Childers) said last year— There really was no evidence that twenty years' purchase was a fair price, and the mode in which the price had been fixed in this case would be a bad precedent. The Government should not have fixed upon any number of years' purchase, but should have inserted in the Bill the usual compensation clause, and allowed the price to be fixed as it was in all analogous cases,"— [Ibid. 1597.] The right hon. Gentleman the President of the Poor Law Board also said last year— He would ask, was it a proper way to go about the purchase—that they were content to give any amount that could be afforded without actual loss irrespective of the actual value? He knew it might be said that the property was worth holding, and that if we got what we wanted we need not mind the terms. Why should we begrudge the giving a handsome sum to the telegraph companies, if we were to do so without loss to the country? But, he would ask, was that the proper thing for Parliament to do?"—[Ibid. 1574.] He would answer that it was not; and, if it was not a proper thing for Parliament to do, two things would naturally happen—we should find that the sums to be given to the companies in arbitration, on the basis fixed by the Act of last year, would appear to be very large, having regard to the paid capital of those companies, and we should also find that the shares would rise in the market to an extent unprecedented in the history of any ordinary speculation. He was prepared to show that both these things had happened. The amounts awarded were so preposterously large, and the rise in the value of the shares had been so enormous, that the House would allow him to quote the figures. In January, 1867, the £100 shares of the Electric and International Telegraph Company stood at 132; in January, 1868, they were worth 153; the intentions of the Government were known in November, 1867, the agreement was signed in July, 1868, and in July, 1869, the shares had risen to 255. In January, 867, the £5 shares of the United Kingdom Company stood at 1½ in January, 1868, they were at 2¾ and in July, 1869, they were quoted at 6½ to 7. At the same periods the £5 shares of the London and Provincial Telegraph Company were quoted at l½ 2¼ and 3¼and the £100 shares of the British and Irish Magnetic Company had risen from 90 to 115 and upwards. The most remarkable instance of all was furnished by Reuter's Telegraph Company. In April, 1868, £25 shares were at 9 to 7 dis count; in July, 1868, at the time of the agreement, they stood at 5 to 6 premium; after the agreement was signed they were at 31 premium; and in July, 1869, they were at 45 premium, so that £25 shares had risen from being worth £16 to he worth £70. These figures showed that the market value of shares had risen in a most remarkable manner. What was the effect upon the valuations arrived at by arbitration? The Electric and International Company was to receive £2,900,000, although the whole amount of the capital and debenture debt of the company was £ 1,240,000. The capital of the British and Irish Magnetic Company was £534,000, and it was to receive £1,243,000. The capital of Reuter's Company was £266,000, and it was to receive £726,000. The capital of the United Kingdom Company was £350,000, and it was to receive £562,000; and the unfortunate London and Provincial Company was to receive £60,000 for £65,000. These figures in. themselves furnished sufficient reason for bringing the matter before the House. He did not say they were conclusive; but they called for some explanation from the Government. As a loyal supporter of the Government, he wished to vote for the Bill if he could; but he must ask the House whether the agreements were such that they should be allowed to become precedents. The Water Supply Commission suggested that the Government would have to buy up all the water companies; and, if so, the companies would be anxious to use this case as a precedent. Therefore, it was important the House should express an opinion as to these improvident agreements. He did not concur with those who objected to monopoly, for he thought the Government might rightly perform a function; but they ought not to enter into business, and, therefore, it was right and proper they should have full control as they had in the case of letters. It did not follow from that that it was right to give anything that anybody chose to ask. He understood the Electric Company had not power to pay more than 10 per cent without reducing its charges, and he could not conceive how a concern could be entitled to twenty years' purchase, when there was an actual limit to the amount of dividend which it could divide. The noble Marquess had stated that he had settled with the railway companies; but he understood on good authority that there were large bills in reserve. Some of the most important agreements were short in duration; that with the Midland Company would expire in five years, and it was said that at the end of the five years all the posts and wires on the line of the Midland Company would be the property of that company. Therefore, for what the House knew there might be contingent liabilities for hundreds of thousands or millions more. What would it have cost to have started with a bran-new set of wires and posts? The right hon. Member for the City of London cross-examined the witnesses on the subject last year; and as the result he said in the debate— The witnesses estimated their assets at £2,200,000, and it was admitted that if the Government were able to start fair, and begin the system for themselves, the wires could be constructed for less than £2,000,000. They were, therefore, about to pay £4,000,000 more for the good-will, for the buying-up of interests, and he might say, for the eagerness to do the thing in a hurry. That was the language of one of Her Majesty's Ministers, and he hoped, therefore, that the House would pause before taking what might justly be called "a leap in the dark." He admitted that, with fairer terms of purchase, the Government had facilities for conducting this business, but, as it was, he had far rather that the whole thing should come to an end than make such a bargain as was proposed. No doubt the present Government were placed in a difficult position by the conditional arrangement entered into by their predecessors in Office, and if the late Government had made it known that they would only give what the business was worth they might have made a better bargain. If a railway company wanted to take a piece of land, they took it at its market value, with 10 or 20 per cent added for compulsory purchase; and it was upon that basis that the business of the telegraph companies should have been valued. Now, what was the business of such a company worth? An hon. Member on the opposite side told him he should be glad to sell his business at five years' purchase; the hon. Member for Bristol (Mr. Morley) said he should be glad to sell his for ten years' purchase; and the firm with which he (Mr. W. Fowler) was connected would be glad to get ten years' purchase. A telegraphic business was peculiarly hazardous and speculative and he did not believe it was worth more than ten years' purchase. With 25 per cent added for compulsory sale this would make 12½ years' purchase, and, therefore, the country was losing 7½ years' purchase, or £2,000,000 upon the bargain made. Why should this amount be taken out of the pockets of tax-payers to enrich people who were well able to take care of themselves? He hoped the House would not give the extravagant and outrageous amount which was proposed in the Bill, but even supposing that the Bill passed, it should not be regarded as a precedent for future legislation.


said, he thought that the Bill should be referred back to the Select Committee, whose Report had only been published that morning. That might be regarded as tantamount to the rejection of the Bill, and he was prepared to accept that position, feeling that it was better to reject the Bill than squander so much public money. Should the Bill fall to the ground a large sum must, no doubt, be paid to the companies with which contracts had been made; but this compensation could not, upon any reasonable estimate, exceed £500,000, and it would be better to suffer this loss than give £3,000,000 or £4,000,000 at the outset and incur a heavy annual loss besides, as he felt sure would be the result of this measure. It must be remembered that when the subject was introduced late last Session, it was on the distinct understanding that the question was to be left wholly open for the future consideration of Parliament. The Government were not pledged, and no person was in any way, either legally or morally, fettered in dealing with the question. Now, the original estimate of Mr. Scudamore was that the plant and good-will of the telegraphs could be purchased, at the outside, for £2,400,000, and he proposed that another £100,000 should be laid out in extensions, making the total £2,500,000. His calculation of profits, even upon that fair and reasonable outlay, was based on the supposition that 11,200,000 telegrams would be annually sent. But how did he arrive at that supposition? By taking the example of Belgium and Switzerland, and arguing that the proportion existing in those countries between the number of letters and telegrams annually sent might be made to exist here. In England the postage was a Id., and the proposed rate for telegrams Is., so that as 2 were to 5 in Belgium, I was to 12 in England. That was the method by which the number of 11,000,000 telegrams to produce 11,000,000 shillings was arrived at. The estimate, however, both with regard to income and expenditure, was altogether untenable, and other calculations had been made which would bear the test of examination even less. Mr. Scudamore estimated the cost of maintaining and repairing the lines at £130,000 a year, and the expense of management at £326,000 a year. The £130,000 a year would give about 3d. for each telegram, and with 7d. for management, the total would amount to 10d., which added to 6d. for the proportion of interest on the £7,000,000 which each telegram would have to bear, made 1s. 4d. Mr. Scudamore, in the more favourable estimates which he brought forward, gave a profit of £100,000 a year to the Government; but it must be remembered that instead of £2,500,000 being paid for the good-will and plant of the telegraph and railway companies, £6,000,000 odd was to be paid, and the total amount to be raised for the expenditure was £7,000,000, instead of the £3,000,000 originally proposed. It was now estimated that instead, of 11,000,000 telegrams there would be only 8,000,000, so that while the expenditure had been trebled, the source of income had been diminished by one-fourth; and still the noble Marquess (the Postmaster General) estimated the Government profit at £82,000 a year, or only £20,000 a year less than was given by Mr. Scudamore's calculation. The estimates, which were so contradictory as to be absolutely irreconcilable, ought to be investigated by a Select Committee before Parliament was called upon to sanction so great an outlay. Mr. Scudamore stated that the £130,000 for the maintenance and repair of the lines was not an estimate at all, but the actual cost incurred by the four companies which it was first proposed to buy up. Now, however, there were not four but six companies to be bought up, and yet the estimate for maintenance and repairs was reduced to £103,000. That might be easily accounted for by the fact that the companies, expecting to be bought up, had lately abstained from making any such outlay, and they would have a strong inducement to apply to capital what ought to have been taken out of income to keep the lines in proper order. Previous to the prospect of being bought up, four companies spent £130,000 a year in maintenance and repairs; but since the prospect had arisen, six companies had only paid at the rate of £103,000 a year. It was said that the estimate of income and expenditure had been verified by the experience of the Electric and International Company; but it was not taken into consideration that the Electric and International Company had not reduced their charges to Is., and had not extended their lines into unprofitable districts as the Government proposed to do, in order to give the best accommodation to the public. Then there were some great omissions from the items of expenditure as now set forth. In the Act of last Session there was an extraordinary clause, which provided that compensation in the shape of pension or retiring allowance should be paid to all the servants of the companies. Mr. Scudamore stated very distinctly that the compensation to be paid to officers of the company should not be made by the buyers, but by the sellers; but in this Bill it was provided that that compensation should not be paid by those who got these enormous sums out of the public purse, but by the Government, and the additional charge created in that way had not been taken into account by the noble Marquess. The working expenses put down by Mr. Scudamore at 7d. for each telegram, were put down by the noble Marquess at £191,000 on 8,800,000 telegrams, or at 5d. on each; but when it was considered that the cost of each Savings Bank transaction was exactly 7d., it was not unreasonable to suppose that Mr. Scudamore's calculation was much nearer the mark than that of the noble Marquess. But the estimate of 8,800,000 telegrams would not bear any examination whatever. The estimate was arrived at in this way—It was said that, according to the rate at which the telegraphic business had been increasing for the last few years, the number of telegrams, by the time the Government took up the business, would amount to 6,240,000 and an increase of 40 per cent was then added to that, on the ground of the extra accommodation which would be afforded to the public, and on the ground of the increased cheapness in the price of the message. But on examination it would be found that the 6d. messages in the metropolitan district would be raised to Is., or just doubled in price, and that a falling off of only 25 per cent was allowed for it, while the 1s. 6d. messages would be lowered to 1s., or reduced by only one-third in price, and that an increase of 30 per cent was estimated upon that. He believed that the most sanguine calculations that could be made in this matter would be that 7,000,000 telegrams, at the very outside, might be anticipated at the uniform rate of Is., involving a charge of 8d. on each telegram. The working expenses being 7d., and the cost of maintenance 4d., the whole would be 1s.7d.; but it was proposed to work for 1s. 2d. There would, therefore, certainly be a loss on each telegram of 5d., instead of a gain to meet contingencies. If he did not fear to weary the House he could show many more cases in which the estimate was entirely erroneous. He would only mention that there was an item in the accounts relating to the Atlantic and European Telegraph passing through this country. That charge was 1s. 6d., and it was proposed to reduce it to Is., although the French cable would be brought into competition, and would cut off a source of the present revenue. He regretted that he could not afford the Government his support in this measure. He hoped that the whole subject would be referred to the Select 'Committee. ["Move!"] Well, he would move that the Bill be referred back to the Committee, with a view to the further examination of the Estimates.


seconded the Amendment.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "the Bill be referred back to the Select Committee, to examine and take evidence upon the Contracts entered into with the several Telegraphic, Railway, and Canal Companies, with a view to determine whether they are of the character of fraudulent or of improvident Contracts contemplated in the Resolution of this House of the 24th day of July 1860; and to examine the calculations upon which the Estimates of Receipt and Expenditure, as set forth in the Reports of Mr. Scudamore and in the Statement of the Postmaster General when submitting Resolutions upon this subject, are based, with a view to determine whether there is any reasonable prospect that said Estimates may be realized," — (Mr. Robert Torrens,) —instead thereof.


did not propose to follow the hon. Gentleman who had just sat down into the various statements he had made; but being a director of one of the telegraph companies he could give some information to the House on the subject of telegraphs which it was desirable hon. Members should possess. In 1868 the companies were by no means desirous to part with their property, but the question whether the Government should be in possession of the telegraphs having been forced on their consideration, the three principal companies very reluctantly came to an arrangement with the Government of the day. He did not wish to express any opinion on the bargain which had been made, and would only say for himself and those with whom he was associated that they very deeply regretted to be obliged to part with property which had been profitable, and which they had great pleasure in managing. In 1862 the net earnings or profit of the Electric and International Telegraph Company were £67,363; in 1863, £89,630; in 1864, £102,906; in 1865, £127,075; in 1866, £133,502; in 1867, £145,725; and in 1868, £171,843. In consequence of the increase of revenue the Government would only pay sixteen instead of twenty years' purchase. He had only, therefore, to repeat that so far as his company were concerned they were extremely sorry to part with their property, which had been so productive, and which they had reason to believe had been conducted with some advantage to the public. Exception had been taken to the figures of the Postmaster General as to the expenditure of telegraph companies. The present receipts of the three principal companies amounted to £585,127, and their expenditure to £343,260, leaving a net profit of £240,000. By amalgamation there would be an economy of at least 40 per cent on the actual working expenses of the companies, so that of the present expenditure, £343,260, for maintenance and cost of clerks, it would not be an excessive estimate to say that the Post Office would save £137,000. No doubt there must be some deductions from this on account of wires carried into places where they did not now exist; but still there would be great economy from the fact that the Post Office and. the Post Office clerks would in these cases be used. He wished to express no opinion on the general subject; he only wished to state to the House facts which it was well they should know with regard to the value of the large property in question.


said, he did not wish to interpose for any long time between the House and the Bill, but as the bargain made by the late Government had been criticized it might be considered hardly respectful to the House if he did not say a few words. The question of the bargain made had been very fully discussed last year, but the two hon. Gentlemen who had to-night spoken against the Bill were not then Members of the House, and he was only afraid he might repeat what he then said. The hon. Member below the Gangway (Mr. R. Torrens) had stated that the Bill of last year was brought in at a late period of the Session; but that was not an accurate statement. The Bill had been introduced on the 1st of April. It was true it had not been discussed till a late period of the Session but it was laid on the table to give Members a full opportunity of making up their minds and also on account of the negotiations which were going on a long time with the different telegraphic companies. Subsequently, when the discussion came on, great obstruction was made to the passing of the Bill—not on account of any strong objection to the principle of the Bill, but because Members then on the Opposition side of the House were not desirous that the late Government should pass it. ["No, no!"] He believed that this was the state of the case, but he, for one, was willing to let bygones be bygones. Objection was now taken to the term of twenty years' purchase being adopted as the basis of the agreement, and it was said that this was extravagant. By the Act of 1844, which gave the Government the option of purchasing the railways after a certain interval, it was provided that the Government should give them twenty five years' purchase of the profits. So that the agreement of last year with the telegraph, companies gave them five years' purchase less than the sum which Parliament thought fit to provide should be given by the Government for the railways. The question then was, whether the terms should be left to arbitration or whether they should be based on so many years' purchase of the property. The original proposal was by arbitration, and as soon as that was known the shares began to rise immediately. It was not difficult to account for this rise in price. In the first place, this was the first time the business of the telegraph companies had been subject to Government investigation, and after this investigation the holders of shares became more satisfied in regard to the values of their property, and therefore the price to purchasers was considerably enhanced. In the next place the proposal was to buy up the whole of these undertakings, and this raised the price far more than if a few haphazard purchasers had gone into the market to buy only a few shares. It was not until very late in the Session that the late Government agreed to purchase the telegraphs on the terms then agreed upon. The first calculation of the Government was that they ought to take eighteen years' profits as the basis of purchase. The companies, on the other hand, stood out for twenty-five years; but eventually a compromise was come to, and it was agreed to take twenty years. The hon. Member for Cambridge (Mr. W. Fowler) said that he should be glad to sell his business for ten years' purchase of profits; but in this case the Government bought the plant of the companies as well as their good-will, and he did not know whether there was any great value in the hon. Member's plant. The companies not only sold their business, but they gave up the hope of carrying it on in any other form or direction. The late Government had to consider whether the companies were not carrying on business at an increasing rate of profit. The time of the year was one considerable element in the calculation, because it was clear that if the Government and the companies did not come to an agreement the Bill must be dropped for the Session. It was said —"Well, let it drop, and if a satisfactory arrangement is come to another Bill can be carried next Session." The Government had to consider whether it was more economical to agree to the terms proposed or to drop the Bill. He came to the conclusion, for which he was responsible, that if the Bill were postponed the Government would have to give this Session a far larger sum than that which they would give on the then basis of twenty years. This view of the question was confirmed by the noble Marquess the other night, when he said that although the Government agreed to give twenty years' purchase last year, they were now really buying the telegraphs at seventeen and a-half years' purchase, on account of the increase in the profits during the last year. This probability was brought under his consideration, and had very considerably influenced him in the course he adopted. He admitted that the Government were about to give very liberal terms to the companies, but they were bound to do so. The sale was a compulsory one. The companies did not want to part with their property, while the Government and the public very much desired to buy it. He believed that the undertaking would answer in the hands of the Government, and they now heard that the telegraphs would bring in a net profit of £77,000 a year to the Post Office—a sum which would be largely increased every year, according to the increase of business. Last year the Government made the best bargain they could for the public, being convinced from what was said, both in the Press and in Parliament, that it was desired the telegraphs should be transferred to the Post Office. He believed that if the House now assented to the agreement they would be making a very good investment on the part of the public.


denied that Members sitting on his side of the House, who had opposed the arrangement last year, had been actuated by any feeling of jealousy. The late Government should have the credit of carrying the measure. He had not the good fortune to be a shareholder in any of the telegraph companies, but the hon. Member for Westminster (Mr. W. H. Smith) had given the House some useful information in regard to the company with which he was honourably connected as a director, and if they had been supplied with similar information from each of the other companies the House would have been in a better position to form an accurate judgment on this subject. The magnitude of the sums to be given for profit had hardly been fully realized. The Electric and International were to receive as profit £1,200,827; the British and Irish Magnetic, £277,596; and the United Kingdom, £370,000— the profit being calculated as the difference between the sum given by the Government and the shares and stock valued at the market prices of June, 1868. But the sum given to Renter's Company as profits far exceeded these. The capital of that company was £250,000, and the shares of £25 each, upon which £24 had been paid, were quoted at £22 10s. The sum given to that company as profit was £501,000, or 200 per cent., and he found it impossible to understand the process by which that sum was arrived at. The matter was referred for arbitration to the Recorder of London, in whom he felt the greatest confidence, nor did he doubt that the right hon. Gentleman had done justice between the parties. He confessed the terms now proposed to be given to the companies were, in his opinion, exorbitant and preposterous beyond all reason. Still he thought that the House was bound by its bargain. Parliament undertook last year to pay these companies twenty years' purchase, and if it could be shown that the profits amounted to the sum set down the House could not help itself without breaking faith with the companies. He thought the bargain a very bad one, but he was afraid it must be carried out.


said, that however interesting might be the subject raised by the hon. Members for Cambridge (Mr. W. Fowler and Mr. R. Torrens) he should not be justified in going very largely into it, seeing that it was not exactly a practical question. At the same time he did not know that he could quite go the length of his hon. Friend the Member for the City of London (Mr. Crawford), who said that they were bound by the bargain of last year, and that to depart from it would be a breach of good faith. He thought, on the contrary, that the House were quite competent to repudiate the bargain if they thought it a bad one. The House, no doubt, did decide last year to acquire possession of this property. They thought that its acquisition would be a great public convenience and advantage, and there was no reason to think other- wise now. The question was, if the House still thought it desirable to acquire this property at all, whether the sum now proposed to be given for it was too much. He did not think he need go into the vexed question of whether twenty years' purchase was too large an amount or not. The right hon. Gentleman opposite (Mr. Hunt) as, indeed, was his duty, had defended the course which he thought it right last year to take upon that subject; and he himself was, in fairness, bound to repeat what he had said on the last occasion when this subject was under discussion, that, although twenty years was the term fixed for the purchase of the profits up to June of last year, the business which the Government was going to buy was not up to June of last year, but up to next January. Hence, upon that calculation, the business would not be taken at twenty years purchase, but considerably under seventeen. The hon. Member for Pontefract (Mr. Childers), in the discussion which was held last year, insisted that seventeen years' purchase would have been the proper price to pay; hence, the difference was reduced to something very small indeed. Having given the subject his best consideration, he must say, without expressing any opinion as to the terms of the bargain, that if they were to begin afresh he did not think they could get the property on better terms. The question was not whether lower terms might have been had last year, but whether the House were justified in giving this price now. The hon. Member for Cambridge (Mr. R. Torrens) had impugned the estimate laid upon the table of the House, and he felt bound to answer one or two of the remarks which had been made. The hon. Member compared, as it was very easy to do, the estimate made by Mr. Scudamore last year and the year before with that made by the same gentleman in the present year, and it was not extraordinary that he had been able to find out some discrepancies arising from the additional information which had been acquired. Estimates, at first, were necessarily vague; they subsequently became more precise, and must, of course, show some variation in detail. The hon. Member, however, could not complain that the recent estimate of revenue to be expected was unduly magnified to meet the emergency; for the estimate laid be- fore the House the other day was much more moderate than the one previously presented. At first, Mr. Scudamore had before him only the information which could be obtained with regard to certain foreign countries, whereas the estimate presented the other day was based entirely on the experience of our own country, upon the number of telegrams sent last year, and upon an anticipated increase corresponding to the increase which had been found in practice to follow the reductions of tariff similar to that which the Government were about to make. Nothing, he believed, could be more moderate than that estimate of probable revenue, and he should be very much disappointed if it were not considerably exceeded. The hon. Member had also passed some criticisms upon the last estimate of expenditure compared with the former estimate made by Mr. Scudamore. As he had explained to the House the other day, the last estimate of expenditure was made upon a careful computation and consideration of the actual number of posts and wires that would have to be maintained, of the number of electric machines that would be in operation, of the staff at each electric station; in fact, upon a detailed estimate of the whole expenditure. This was obviously very different from the former estimates, which could only be prepared on general data. The hon. Member had also criticized some minor points; he said, for instance, that the item of compensation was entirely omitted. In that he was quite mistaken—it was not considered desirable to put down every separate item, as the exact amount which would have to be paid by way of compensation, as that might have excited undue expectation in particular quarters, as well as have raised up claims that it might be inconvenient to deal with. But in the item of £191,000 for salaries, &c, a sum had been inserted which would be quite sufficient to cover everything required for compensation. The hon. Member also compared the estimate given of 7d. as the expenditure for each message with this item of £191,000. But the estimate of 7d. a message had reference to a great many other items besides this £191,000, as he could show if time permitted. With a view of showing that the estimates were inaccurate, the hon. Member had asserted that the Government only allowed for a reduction of 25 per cent in the number of messages, the tariff of which would be raised from 6d. to Is. The Government began by estimating that these messages would be reduced 50 per cent, but against this they held that they were entitled to set off the 15 per cent general increase which was looked for all over the country on account of the increased facilities for telegraphic communication which would be afforded. Deducting the 15 from the 50 per cent, there remained a balance of 35 per cent, which the Government recognized as the probable loss on this class of messages. As to the Motion of the hon. Member for Cambridge, he sincerely hoped it would not be pressed. The hon. Member, no doubt, entertained a strong opinion upon the question; but it was certainly remarkable that he should have postponed his Motion till after the Bill had been considered by the Select Committee, and by them reported to the House. Even if the Bill could now be re-committed to the same Committee, the House would see that the object which the hon. Member contemplated would not be accomplished. As to the Resolution of the 20th July, 1860, to which he referred, that was altogether a misconception on the part of the hon. Member. In the first place, that Resolution no longer existed, for upon his own Motion, the other day, that Resolution had been repealed and another substituted for it. It related, moreover, to quite a different sort of contract from those now under consideration—that was to say, to contracts entered into by the Government on their own responsibility, and which, till the passing of that Resolution, had never been submitted to the House in any shape. Here, on the contrary, contracts had not only been submitted to the House, but embodied in a Bill, which, after consideration by a Select Committee and by the House in all its stages, received the sanction of the House and became law. What possible analogy could there be between contracts such as these, and contracts entered into by the Government on their own responsibility, which very properly were required to be submitted for the consideration of the House? Had there been time he should have been delighted to submit the estimates that had been laid upon the table for examination by a Select Committee; but the House would perceive that a period of the Session had now arrived when the re-committal of the Bill and the submission of the estimates to a Committee would be tantamount to the rejection of the Bill. It was for the House to consider whether the terms proposed to be given, high as they undoubtedly were, were so high as to justify the setting aside of what he believed to be the almost unanimous desire of the country that the Government should go on with this undertaking, and whether they would accept the responsibility of postponing this measure for several years, with the risk meanwhile—for there was a risk—that ultitimately they might have to pay a much larger sum for the purchase than was at present proposed. He hoped the hon. Member would not press his Amendment.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided:—Ayes 148; Noes 23: Majority 125.

Main Question, "That Mr. Speaker do now leave the Chair," put, and agreed to.

Bill considered in Committee.

(In the Committee.)

Clauses 1 and 2, agreed to.

Clause 3 (Interpretation of terms).


said, he wished to draw attention to the extension of the definition of the word "telegraph" under this clause, which defined that word as including all modes of sending messages by means of signals, while a subsequent clause proposed to give the Government a monopoly of all telegraphic business. The Bill as it stood, therefore, would prevent any private person from conveying messages by signals of whatever nature they might be, and would have the effect, therefore, of putting a stop to all projects for improving the existing system of carrying messages by signal. In the Act of 1863 the word "telegraph" was defined as meaning wires used for the purpose of telegraphic communication, and that appeared to him to be amply sufficient for the purpose of the Government. During the last two or three years a very ingenious system of conveying messages by means of flashing lights had been invented, and the clause as it stood would prevent any extension of that system.


said, he thought the Committee would do well to give their attention to the remarks which had fallen from his right hon. Friend (Mr. Bouverie). The subject was one to which he had intended to direct the notice of the Committee himself. It was a very serious thing to propose that the Government should have a monopoly not only in the existing process, but also in any process which might be hereafter discovered. If the Committee examined the clause they would find that it would give the Government a monopoly of every means of communicating by signals. The words of the clause were sufficiently wide to embrace speaking by the fingers, and it appeared to him that spirit-rapping might also be held to be included, because, according to what its professors stated, spirit-rapping was a system of transmitting messages by means of signals. The monopoly enjoyed by the Post Office was something of a totally different character from that which the Government were going to claim under this Bill. The monopoly of the Post Office gave that Department the exclusive right of conveying letters and messages by means of railways, mail-coaches, dog-carts, and so forth; but the monoply which the Government were going to claim under this Bill would give them the exclusive right of conveying messages of an incorporeal character, not only by wires, but by any other means which the ingenuity of mankind might hereafter devise. In the Report of the evidence taken before the Committee it was said that somebody had taken out a patent for transmitting messages without the medium of a wire. That notion seemed to be ridiculous, but it was 300 years old. Hon. Members would find in the Spectator reference made to an account given by an Italian author, 300 years ago, of an imaginary mode of correspondence, which, with the exception of the wire, exactly corresponded to the telegraph of the present day. There was no wire, but the dial plate and the characters were accurately described. If the Government were to have a monopoly it ought to be limited to the existing process. Certainly they ought not to have a monopoly of a science which was now only in its infancy and of which we could not foresee the future development.


said, he had an Amendment on the Paper before "signals" to insert the word "telegraphic."


said, he would suggest that the words '' magnetic, electric, and voltaic "should be inserted before the word "signals."


thought that the word "electric" would be sufficient.


said he had no objection to the insertion of the words proposed by the hon. Member for Liverpool (Mr. Graves) or of the word "electric" only.

Amendment moved, before "signals" to insert "telegraphic."—(Mr. Macfie.)

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clause 4 (The Postmaster General to have exclusive privilege of sending messages, with certain exceptions).


rose to move an Amendment. He said that in the opinion of the Government it was necessary to give the Government a monopoly. By the clause as it stood a monopoly would only be given to them for seven years, but if it were given at all there was no reason why it should not be given permanently. The reasons in favour of a monopoly were so obvious that had such a proposal not been summarily rejected by the Committee of last year he should hardly have thought it necessary to bring forward any arguments to show its necessity. The taking up of the telegraphs would cost the Government £7,000,000. A complete system could be constructed for less than that; but Parliament—and he thought very wisely—would never have consented to any attempt on the part of the Government to supplant the existing companies without paying them. At the same time if the Government took up the telegraphs with the object of developing the system for the benefit of the public at large, it would never do to allow them to be opposed in particular places where messages would pay at a very cheap rate. For instance, he had no doubt that between the Stock Exchanges of some of our great towns it might be found profitable to send messages for 6d. or some such sum. If an opposition of that kind were commenced against a company they would meet it by reducing the scale of charge in the particular places where the opposition was offered, but the Government could not do so. They must have a uniform tariff, and if they reduced it to 6d. or 3d. in one place they must reduce it over the whole country. He thought, therefore, a monopoly was necessary. If it were not a proper thing to grant, it ought not to be granted, but if it were he thought it ought to be granted permanently. Of course Parliament would always have power to take it away again. Of course, as far as the Post Office was concerned, he highly approved the proviso proposed by the right hon. Gentleman (Mr. Hunt), limiting the monopoly therein to seven years. It certainly made the clause more innocuous than it otherwise would be. But he would ask whether the proviso, after all, was a right one. If any company or individual was entitled to compensation, was it right to debar him from the opportunity of being heard in support of his claim? If he was not entitled to compensation, was it likely that he would succeed in getting it? He would therefore move, in lines 13 and 14, to leave out the words "for the period of seven years and until the end of the then next Session of Parliament."

Amendment proposed, in page 3, lines 13 and 14, to leave out the words "for the period of seven years and until the end of the then next Session of Parliament."—(The Marquess of Hartington.)


said, that the Committee by whom this subject was considered last year came to the conclusion, on a division by 6 to 1, that no monopoly ought to be granted to the Government at all, and the Bill of last year was, he believed, adopted with so much readiness by the House chiefly on that account. The change of Government occurred, and in the Select Committee to which the Bill was referred this year, a decided preference was evinced for restricted as against complete monopoly. These two facts he therefore maintained were sufficient to show that the Bill ought not now to be lightly disturbed. The evidence given before the Committee last year went to show that as long as they conducted their business properly the Post Office would have a practical monopoly, if not a legal one, for Parliament no doubt would readily assent to a renewal of the monopoly. But it was, in his opinion, most important that Parliament should keep a check in its hands over the working of this system, so that new inventions might be taken advantage of, and the public should have the power, under favourable circumstances, of demanding a reduction of rates. He thought that the clause in its present state, which was a sort of compromise between the advocates and the opponents of monopoly, should be allowed to remain.


observed that the arguments advanced by the noble Marquess the Postmaster General had not been answered. The country was buying not merely the plant connected with these telegraphs, but the whole of the business, and why were they not to get that for which they paid? They paid, and dearly too, for the whole of the business, and those engaged in it now ought not to be allowed at any future time to re-commence operations. If the monopoly was not to be given, the money ought not to be paid; if the money ought to be paid, the monopoly ought to be granted. The proviso advocated by the right hon. Gentleman opposite (Mr. Hunt) contemplated the possibility of the Post Office losing the monopoly at some future time. The result of that would be that the Post Office would have a complete monopoly over those districts where there was a loss, and be exposed to a ruinous competition when there was any success. If the House thought they were not to be trusted, it would be better not to accede to the proposal before the House; but unless they had this monopoly the purchase of these telegraphs would be a waste of money at the immense price the Government was called upon to pay —a price of which he, at all events, washed his hands altogether. The right hon. Gentleman opposite (Mr. Hunt) had accused them of appropriating the honour of this measure. He had not the slightest desire to contest the point with the right hon. Gentleman, who was welcome to it all. The matter was found by the present Government in so complicated a state that it was impossible for them to recede; but unless the House was prepared to grant them that without which they believed it would be impossible to carry on the business effectively, it would be better that they should reject the Bill altogether.


said, he had always felt that if the messages were delivered at a low rate they would be exposed to a loss, and if at a high rate they would be exposed to unpopularity, and he certainly agreed with the right hon. Gentleman that it would be better not to carry the Bill unless the Government obtained a monopoly. He was reminded of an old observation that there were always people to be found who were getting in the way merely for the purpose of being paid to get out of it.


said, he thought it was a most unreasonable thing to ask the Government to give the telegraph companies seventeen years' purchase for their property, and to only take a monopoly for seven years. He wished, however, to have some information as to the accommodation which the public were to receive. It might, for instance, be desirable to have two telegraphs to a town, and that it should not be excluded from telegraphic communication on a Sunday.


said, he thought that the Chancellor of the Exchequer seemed in his speech to lose sight of the fact that the present transaction, though a costly one, still must be regarded simply in the light of an experiment. The Government were about to undertake an entirely new service for the public. The Committee must not forget that a service might be dear and yet be bad, and he, for one, was of opinion that the proposal of the right hon. Gentleman opposite (Mr. Hunt) to afford Parliament, after a certain number of years' experience of the system, an opportunity of inquiring into the working of the monopoly was very fair. The effect of that proposal would, not necessarily be, as was argued, to terminate the monopoly at the end of seven years. The way in which it would operate would probably be that at the expiration of five or six years an inquiry would be instituted into the working of the Act, when, if there were any complaints made of the badness or the dearness of the service, some means of meeting them might be devised. For his own part, he looked upon the proposal as by no means unreasonable.


said, it was quite clear from the speech of the Chancellor of the Exchequer, as well as from other speeches which had been addressed to the Committee, that the monopoly clauses were regarded by some hon. Members as a kind of compensation for a bad bargain. Now, no mention Was made in that House of monopoly last year, and the first inkling of it was contained in a speech delivered by the Chancellor of the Exchequer during the elections. But whatever other arguments there might be—and that there were arguments he did not mean to deny — in favour of giving the Government a monopoly in telegraphic communication, he did not think the argument of his right hon. Friend was a valid one. If the Government had made a bad bargain with the telegraph companies, that was no good reason why they should saddle the country with all the disadvantages of a monopoly system for eternity. "But," said the right hon. Gentleman, "we paid for these rights, and why should we not have them?" The Government, however, could not have purchased, that which the companies had no power to sell. The companies did not possess a monopoly, and how, under those circumstances, was it open to the Government to come down to that House and lay claim to it on the ground that they had paid a high price for the business of those companies? There was, he might add, a great distinction between the Post Office monopoly and that of the telegraph. The Post Office monopoly conferred on the Post Office the exclusive right of carrying parcels and letters by the ordinary means of conveyance; but anybody else might make use of those modes of conveyance. In the case of the telegraph, however, the public could not have a second string to their bow, for the Government claimed not only the exclusive right of sending telegraphic messages, but exclusive control over the instrument by which they were sent. The two cases were therefore by no means parallel. He should like to read to the Committee what was the opinion on the subject of some of the really working men of the Post Office, especially of Mr. Scudamore, who, having been asked whether he thought a monopoly necessary, replied— We neither ask for it, nor do I think we ought to ask for it. Again, he said— As long as we do the work well, with such an organization as we have, we can defy competition. He added— There is no protection given in the ease of the Money Order Office. Anybody could set one up to compete with us. … On the whole, I am inclined to think that a legal monopoly would be a disadvantage instead of an advantage to us, because it would compel all inventors and patentees to look to us only for the use of their inventions, and would often compel us to try worthless ones. Professor Jevons said— I should be against a legal monopoly; I think there is no need for it, and there are many reasons against it. The practical monopoly which the Government will enjoy will only arise from their doing the work better and cheaper than private companies. He could only find one witness who was in favour of giving the Government a monopoly, and that gentleman, he had been informed, was not a very successful inventor in connection with the electric telegraph himself. The title which the Post Office had to a monopoly depended, he might add, on its cheapness and regularity, and not on any legal power. The Government, too, had bought the way leaves of the existing railway companies, and how, under these circumstances, he should like to know, was any telegraph company to set up in opposition to them, except along the turnpike roads? And how was it to get the turnpike roads? For his own part he was of opinion that the House ought not to tie its hands in the matter, so that it should be free to act in the event of the Government not performing the work satisfactorily.


said, he thought that Parliament would always have the right and the power of preventing the continuance of an improper exercise of the monopoly.


said, that before he heard the speech of the Chancellor of the Exchequer he was inclined to think favourably of the Amendment of his Colleague the noble Marquess who sat beside him. That speech, however, disclosed such an uneasy state of mind as to the price which had been paid to the telegraph companies that he was afraid the public would be made to suffer severely if the monopoly asked for were granted.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: — Ayes 27; Noes 123: Majority 96.

Clause, as amended, agreed to.

Clause 5 (Exceptions).


said, this clause enacted that private messages might be sent by private lines of telegraph. There was some uncertainty, however, whether the clause would extend to private lines of telegraph which might be constructed after the Bill became law. He hoped the noble Marquess would explain the matter.


wished to know whether the telegraph offices would be open on Sundays?


said, he believed there could be no doubt that the clause would be applicable to telegraphs hereafter to be established, as well as to those already existing. There would be no diminution of the accommodation now afforded to the public. On the contrary, the various offices, when placed under the control of the Government, would be open a greater number of hours day and night than they now were. On Sundays the telegraph offices would be open, at all events, wherever they were now.


moved the insertion of words to exempt from the operation of the Bill telegrams transmitted by telegraphs maintained by corporations, companies, or persons, when such telegrams were not transmitted for any valuable consideration.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 6 to 11, inclusive, agreed to.

Clause 12 (Postmaster General must transmit foreign messages).


proposed to insert the word "may" instead of "shall."


objected to the Amendment, on the ground that it would give the Government a power of choosing what foreign Government or company should communicate with America or other nations through our system. What would happen in case of two companies in Russia should wish to communicate with America by joining a submarine cable with our system? "Would the Government exercise a power of choice as between the two?


said, that no such consideration influenced the Government in framing this clause.


also thought that the power should be compulsory.


asked if messages could be passed through in cypher if required?


said, they could be so passed if required.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 13 to 19, inclusive, agreed to.

Clause 20 (Annual accounts to be laid before Parliament).


expressed a hope that telegrams would be sent at such a price that the poor would have the advantage which was now confined to the rich.


said, as soon as the tariff could be reduced below Is. with safety to the Revenue and convenience to the Post Office, it would be.

Clause agreed to.

Clauses 21 to 23, inclusive, agreed to.

Clause 24 (Messages to be deemed post letters).


asked whether a telegram sent during election times would be regarded as a post letter, and be incapable of being produced as evidence in a court of justice?


said, this Bill would make no difference whatever, as he understood the matter, in the existing law in regard to the inviolability of telegrams.


said, this was an important question, and he would like to know whether the information which may come into the possession of the Government would be liable to be used in a court of law?


said, as he understood it, a telegram was just as much privileged as a letter. It would be producible as evidence in a court of justice, according to a principle of law that was acted upon every day. Nothing would be more pernicious than to make the Government the recipient of confidential messages which must remain in its hands. A letter was not privileged against production, and neither should a telegram be.


entirely agreed with his right hon. and learned. Friend, who, he believed, had correctly stated the law; and it would be very in expedient that it should be altered. At present the telegraph company could be compelled under the rules of a court of justice to produce the papers placed in their hands containing the messages to be transmitted by them.

Clause, as amended, agreed to.

House resumed.

Bill reported; as amended, to be considered To-morrow, at Two of the clock.