§ MR. GRAYsaid, that in rising to arraign, as he desired to do, the policy of the Department over which the right hon. Gentleman the Postmaster General presided, so far as it related to the treatment extended to Telephone Companies, and that portion of the public interested 1053 in the development of the telephone system, he felt that he laboured under a serious disadvantage, inasmuch as he was connected in a prominent manner with the Irish Telephone Company. The House was naturally and properly intolerant of Members bringing before it matters in which they had a personal interest. But his personal interest in the question was of the slightest. He should not have brought forward the subject had he not thought it necessary to do so in the interest of the public. In 1869 the Post Office was given, by Act of Parliament, a complete monopoly of the telegraph business of the United Kingdom. At that time the telephone and the wonderful results obtainable by that mode of applying electricity were absolutely unknown; and Parliament certainly did not contemplate handing over to the Department an invention which was then non-existent. In 1876 the telephone came into considerable public use. When, in 1878, the Department promoted a Telegraphs Bill, some of its more astute advisers foresaw the possible results of that invention, and the Department introduced into the Bill, and succeeded in passing through the House of Lords, without attention being directed to it, a clause which gave them control over the telephonic system throughout the country. With the permission of the Committee, he would refer to the 3rd clause of the Bill, as it passed the House of Lords and came to that House; and to that clause he asked the particular attention of the Postmaster General, who, at the time the Bill was passed, was not at the head of the Department. The clause was to the effect that, in the construction of the Telegraphs Act of 1869 the term "telegraph" should, in addition to the meaning assigned to it by that Act, include "any apparatus for the transmission of messages by the aid of electricity, magnetism, or any other like agency." Now, that was inserted for the purpose of covering the telephone; he did not think that the right hon. Gentleman would venture to assert that it was not introduced deliberately for that purpose. The Bill came down from the Lords, and the clause was struck out in that House; the hon. Members who opposed the Bill saw the intention of the clause, and believed that by getting it struck out they had protected the invention from the 1054 control of the Department of which the right hon. Gentleman was the head. They struck out the clause deliberately; and, therefore, he maintained that the clear and distinct intention of Parliament was to leave the new invention free and open to public and private enterprize. But the Department subsequently sought to interpret the Act as covering the telephone. The telephone, which was originally the invention of Mr. Bell, and had been improved by various other inventors, became, as to its patent rights, vested in a Company about the year 1880, and that Company established in London and elsewhere Telephone Exchanges, with the nature and object of which hon. Members would be acquainted. Those exchanges were watched with the greatest anxiety and jealousy by the Department; but they took no action for some time, being in doubt, probably, in consequence of the striking out by the House of Commons of the clause he had cited. But, eventually, they raised the question as to their right to control the invention on an application for an injunction to restrain the Telephone Companies from making use of their telephones in the manner described. Judgment in the case was delivered by Mr. Justice Stephen, who held that the contention of the Department was correct, and that the words of the Telegraphs Act of 1869 were sufficiently wide to include the telephone, although the telephone at that time had not been dreamed of, or, at least, had no existence. But Mr. Justice Stephen went further, and said that the words of the Telegraphs Act of 1869 were so wide as to include, on the one hand, any system of signals, even by means of common bells, if those bells were operated upon by wires; and, on the other hand, any system of communication by means of electricity, even if such communication could be carried on without the aid of wires. That judgment, he (Mr. Gray) believed, included everything in the nature of communication, even that of a person pulling the bell at a hall door for the purpose of making a specific signal; at any rate, he had given the words of Mr. Justice Stephen. The net having been spread so wide by the Act of 1869, the Department found that the clause attempted to be inserted in the Bill of 1878 was unnecessary to enable them to control the telephonic system of the country, al- 1055 though Sir William Thompson had said that—
When the Telegraph Act was passed the telephone had not been invented, and no one concerned in that legislation had the slightest idea, nor had anyone living the slightest idea, that it would he possible so to extend the power of speech as to enable persons at a distance to converse with each other.Now, whether, in the face of these facts, the Department had any reason to be proud of availing themselves of powers which Parliament never intended to confer upon them in order to interfere with public and private rights in this matter, he would leave altogether to the conscience of the right hon. Gentleman and his Colleagues. The hon. and learned Gentleman the Attorney General, however, who represented and spoke on behalf of the Department, when judgment had been delivered, and when it was suggested that great inconvenience would result if the precise terms of the judgment restraining the Company from carrying on its business were acted upon, said he believed that it was merely a question of licence between the Companies and the Department. And there it rested. The Department, having asserted its control, granted to the Telephone Companies licences on certain conditions; the main condition being that 10 per cent of the gross receipts should, be paid to the former by way of royalty. The 10 per cent was, of course, a tax upon the public, and it had to be charged to them by the Companies. However, so enormous were the advantages and facilities offered by the invention, and so determined were those who had tried them not to abandon them, that the business of the Company spread with great rapidity, there being;3,000 or 4,000 subscribers to the Exchange in London alone, and large numbers to those in Dublin, Glasgow, Manchester, and other places. From this it would be seen that, although the Companies had considerable reason to complain of the petty vexation and annoyance to which they were subjected by the Department, they had been able to carry on their business. But recently the policy of the Post Office had changed. He distinctly charged it upon the Department that about two years ago they arrived at a determination, not openly, but indirectly, to strike at all future development of the telephonic 1056 system; and in order to sustain that, to his mind, serious charge, it was necessary to explain the precise relations between the United Telephone Company and others established in the United Kingdom. That Company had brought various actions for the purpose of restraining infringements of its patent rights; but, not wishing to work all the telephones in the Kingdom, they gave concessions to various subsidiary Companies in England, Scotland, and Ireland. The arrangements with those Companies were that the United Telephone Company should give them a user of its telephones for their districts, they contracting, on the one hand, to pay the United Telephone Company a certain rental per instrument, and that Company contracting, on the other hand, to give to the local Companies a monopoly of the use of the instruments in their respective districts, and not to sell or permit to be used therein any other telephones than those supplied to the Companies. As he had remarked, the Postmaster General, up to a certain date, had granted licences to Companies who paid him a royalty. Suddenly, however, the right hon. Gentleman changed his policy, and said he would grant no further licences unless the Companies entered into a contract to sell to him, on terms to be fixed by arbitration in default of agreement, as many telephones, to be used for any purposes, as he might think fit. Such a condition, he believed, had never before been imposed by a Public Department upon private enterprise; he would go further, and say that the condition was imposed by the right hon. Gentleman, or by those permanent officials in the Department whose action he had adopted, with a full knowledge that it was beyond the power of any of the Companies to consent to it, and that it was an absolute prohibition of the further development of the telephone system. If the chief Company had attempted to sell a single instrument, it would have thereby violated its contract with the subsidiary Companies, who would have obtained damages for breach of contract; if any one of the subsidiary Companies had attempted to sell instruments, it would not only have violated its contract with the chief Company, but would have committed robbery. Now, the 1057 right hon. Gentleman had a knowledge of these facts, because, prior to the granting of any licence, he had always insisted upon having in his possession the terms, in black and white, of the contract between the United Telephone Company and the subsidiary Company applying for the licence. He (Mr. Gray) had that day asked the right hon. Gentleman how many licences had been applied for, and how many had been granted since the new condition had been imposed; and he believed the reply was that eight licences had been granted, out of 78 applied for. In that way he had at last forced from the right hon. Gentleman practically this acknowledgment, that the terms of the new condition must be reconsidered, because they were manifestly unjust. In August, 1882, the Postmaster General made a speech in that House upon the Estimates, in which he said he wished to warn those connected with Telephone Companies against anything like the Utopian notion that the Government were going to buy their property in them. The inference from that was certainly that the Government would let the Companies alone; but the right hon. Gentleman went on to say that the Department had adopted the principle of free competition, not only between the Companies themselves, but between the Companies and the Department, and his statement was received with satisfaction by the Companies, and also by the House and the public. The public saw, in the announcement of the right hon. Gentleman, the best guarantee that they would be well served, and at the cheapest rate. At that time the right hon. Gentleman erroneously believed that another Company had succeeded in bringing out some instruments which evaded the patents of the United Company, and from which he believed the Post Office would derive some advantages. Since then, however, the former had been restrained from using the instruments, which the right hon. Gentleman thought he might be able to apply to his own purposes. Immediately after that, and as soon as the property of the United Telephone Company was confirmed to them, the right hon. Gentleman adopted the policy of strangulation he had described; at any rate, what he (Mr. Gray) called a policy of strangulation was adopted 1058 about two years ago. Not only had the various Companies applied in vain to the right hon. Gentleman for licences based on practicable conditions, but local authorities, Members of the House, and deputations from various towns had waited upon him, and, as in the case of the Companies, waited upon him in vain. He remembered reading that a deputation from Plymouth had waited upon him, a short time ago, doubtless with the object of ascertaining why they should be refused facilities which were granted in the case of Dublin, Newcastle, and Manchester. But the answer of the right hon. Gentleman was, in effect—"I have given certain concessions to certain towns, and the other parts of the Kingdom must remain out in' the cold." Now, he submitted that this was a position which the right hon. Gentleman ought not to have taken up; and in spite of the ability of the right hon. Gentleman, and in spite, of course, of the fact that if he (Mr. Gray) attempted to divide the House against his views, he should be put in a minority, he ventured to say that it was a position which would be found to be untenable, because the public would not tolerate action of the kind. He could understand the right hon. Gentleman saying—"Here is a dangerous rival to the telegraph system; I will strangle it. I do not mind the inconvenience to the public; I am going to keep that monopoly, and telephones I will not tolerate." He could understand that policy, and it might be that the House would adopt it; but he did not understand the right hon. Gentleman saying that Manchester and Dublin should have what was denied to Bristol and Cork. The right hon. Gentleman had taken up a position in this matter which he believed his sense of fair play would induce him to abandon before his perception of public opinion compelled him to do so. The principle upon which Parliament, in 1869, gave the monopoly of the Telegraph Service to the Government was that of securing uniform facilities and uniformity of charge throughout the Kingdom, as in the case of the Postal Service; and, in the face of that, what became of the condition imposed by the right hon. Gentleman—that Manchester and Dublin should have telephonic communication, and that Bristol and Cork should not? 1059 What had the inhabitants of the latter towns done that they should be permanently subject to this disability? Because certain individual Companies carrying on business in their own way did not think fit to make application to the right hon. Gentleman before a certain date, why should the towns referred to suffer? The right hon. Gentleman said he had acted in order to protect the public against monopoly. But he had put some Questions to the right hon. Gentleman with the view of ascertaining whether there was any necessity for the Department to retain this control over the telephone system; and he found that while the Post Office had been working the telephone during the last two or three years, they had only obtained 700 subscribers at their various Telephone Exchanges. He ascertained, also, that the Post Office had in its possession over 5,000 telephonic instruments for the use of that number of subscribers; and so far was the Department from being apprehensive of the supply of instruments running short, that they had been trading in them, and reselling, presumably at a profit, instruments which they had obtained by means, in his opinion, by no means creditable to those concerned. He had further ascertained that the Post Office, on a contract binding upon the United Telephone Company, had a right to call upon them to supply 15,000 more instruments—that was to say, they had under their control no less than 20,000 instruments at a time when their subscribers only numbered 700, and those being mostly in Newcastle. He did not think that the Postmaster General would venture to assert that he had any expectation of the Department being able to find use for all these instruments before the patent rights expired in six or seven years hence. What became, then, of the excuse of the right hon. Gentleman, that he was doing all this to protect the public against monopoly? The answer to that was that it was not to protect the public at all, but to destroy the property of the Telephone Companies. The Companies earned their profits by making their own instruments, and giving the use of them to their subscribers. The right hon. Gentleman the Postmaster General stepped in and said—"I may buy as many instruments as I like, and 1060 do what I please with them." The right hon. Gentleman demanded the right to buy and sell them at a cheap rate, and utterly destroy the patent right; in fact, in his zeal for the public service, he wanted to obtain the property of other people without paying for it. To come to another matter, what were known as trunk lines were an enormous convenience; but, owing to the action of the Post Office, their usefulness was not fully realized. It was perfectly practicable for persons in London to converse with others in Liverpool; in fact, people in Liverpool did now converse with people in Manchester, and people in Sunderland, since the hon. Member for Sunderland (Mr. Storey) called attention to the subject, were able to hold a conversation with people in Newcastle. One of the favourite tactics of the Department was to weary the Companies by long and unnecessary delays. After about two years' negotiations, the Postmaster General laid down the terms on which he would grant facilities for trunk lines between town and town. The right hon. Gentleman said—I will not permit the Companies themselves to run wires between town and town; but I will run them for them, the Companies paying to me a minimum annual rental of £10 per double wire, and giving to me one-half the revenue over that sum which they may derive, the Companies charging whatever rates they choose." Such were the conditions which the right hon. Gentleman laid down in a formal letter, dated April 18, 1883, and addressed to the Lancashire and Cheshire Company. Now, the Lancashire and Cheshire Company accepted this condition, although it was exceedingly onerous. In their letter accepting it, they stated that, in order to serve their customers, they intended to bear the whole expense of the trunk wires-—that they would not charge their customers anything, trusting to recoup themselves by a development of business. In other words, they intended to run the trunk communication between the towns they served free of any charge to their customers; but the right hon. Gentleman the Postmaster General said that, although that was, no doubt, what he stated, it was not what he intended they should do; and he forthwith imposed a new condition on the Company—a condition which was of a most extraordinary cha- 1061 racter. The right hon. Gentleman said —I will not permit you to serve your customers on these favourable terms; you must charge your customers a rate of 10s. per mile, whether you like it or not. Now, he (Mr. Gray) begged hon. Members to consider how such a condition worked out. A trunk wire could be established with great facility between London and Brighton, and if one were established, there were many gentlemen living in Brighton who would use it, and thus very often save themselves the trouble of coming up to town to transact business. Frequently, a few minutes' conversation over the wire would be all that was necessary for a business man living in Brighton to have with his correspondent in London. The convenience of such wires would thus be easily seen. But a charge of £25 to the subscribers to the Company for the mere occasional use of the wire would be very excessive; in fact, he doubted very much whether many gentlemen would be found to subscribe upon such terms; and, therefore, the action of the Department in compelling Companies to charge this excessive mileage was preposterous. It was, no doubt, intended to prevent the Company developing their business and giving to the public those facilities which were wanted. Not only were there these larger grounds of complaint against the Post Office, but the Telephonic Companies contended that every kind of annoyance which could by any possibility be devised by the Post Office was adopted for the purpose of wearying, impeding, and obstructing them in carrying on their business. Would it be believed by any Gentleman conversant with telephonic work that such a condition as he would now describe could be imposed by the Post Office? Supposing a man whom he would call Smith was a subscriber to a trunk wire, and he, being in Liverpool, wished to speak to Brown in Manchester, he could do so provided that Brown happened to be in his office at the moment, and could at once reply. But if Smith wished to ask a question which Brown could not answer on the instant, the right hon. Gentleman the Postmaster General laid it down that Brown should not be at liberty to reply to Smith, unless Brown himself was a subscriber to the trunk wire. That was a sample of the 1062 conditions laid down by the Post Office Department for the purpose of worrying and annoying the Telephonic Companies. As he had already said, one of the favourite tactics of the Department was delay. For instance, the Irish Company addressed a formal letter, on the 12th of December last, to the right hon. Gentleman the Postmaster General (Mr. Fawcett). Three or four weeks afterwards, a letter was received by the Company to the effect that the matter would have the most careful attention of the Department. As a matter of amusement, he had waited patiently to see how long it would take the Department to reply to the letter in detail. This was the 22nd of May, and they had not yet replied. He simply mentioned this circumstance as an instance of the deliberate intention of the Post Office to throw impediments in the way of everything concerning the development of telephonic communication. The policy of the Post Office was a policy of delay and procrastination. The proposal of the Dublin Company which the Department treated so indifferently was a very simple one. It was suggested that, in order to add to the public facilities, what were called talking stations, or call offices, should be set up, so that any member of the public could come in and speak to any subscriber to the Telephone Exchange, and obtain an immediate reply. It was suggested that a moderate charge should be made for this convenience; and the Company even went so far as to tell the right hon. Gentleman the Postmaster General that if he was apprehensive that the telegraphic business would be thereby interfered with, the Company, in order to serve the public, would give him a guarantee that if the revenue from telegraphs was diminished in consequence of the increased facilities given to the public by means of the telephone, they would make up the loss. One of the Directors of the United Telephone Company had written several letters to The Pall Mall Gazette and other papers, pointing out the marvellous facilities which could be given by these talking stations to the whole of the London public. There were some 3,000 or 4,000 houses connected with the Telephone Exchange; and the gentleman in question wrote to say that the Company would be willing to put up, in convenient parts of Lon- 1063 don, call stations where any number of the public could come in and hold a conversation with any one of the subscribers for a charge which he estimated at 1d. But the Post Office said—"You shall do nothing of the kind." They did say, in Manchester—"You may open these offices if you like; but whether you think it advantageous or not, you must charge the public 1s. The Director of the Telephone Company, to whom he (Mr. Gray) had before alluded, could not believe it possible that the Post Office, especially when it was presided over by a distinguished political economist of the liberal and enlightened views of the right hon. Gentleman (Mr. Pawcett), could think it to the interest of the public to obstruct the Public Service in the manner they did; and he wrote to the right hon. Gentleman the President of the Local Government Board (Sir Charles W. Dilke) to say he was desirous of establishing experimental call stations, for the purpose of seeing whether the public would avail themselves of them. The right hon. Baronet forwarded the letter to the right hon. Gentleman the Postmaster General, who replied that, on no conditions, would such stations be allowed, not even as an experiment. Did not these things show that the deliberate intention of the Post Office Department was to prevent the public reaping the advantages of the new discovery? The Department could not use the discovery themselves to any great advantage. They had tried to use it, and, except in one town, they had miserably failed to achieve any success. The right hon. Gentleman the Postmaster General was kind enough to give him a Return, a few days ago, of the number of telephones which he had himself in use in various towns. From that Return, he (Mr. Gray) noticed that there were only 10 telephones by the Post Office in use in Exeter, eight in Falmouth, six in Londonderry, 11 in Waterford, and so on. Indeed, if they took away Newcastle-on-Tyne, where there were 362 instruments in use, there were less than 400 distributed over the United Kingdom. In short, the telephonic business was one which the Post Office was incapable of carrying on, because it involved a great deal of individual labour, individual canvassing and explanation, which a Public Department could not carry on. 1064 In 1882 the Postmaster General said that when free competition showed whether the public were better served by the Post Office or private Companies, he would only be too delighted to allow the Companies to do the business if they did it better; but he had since changed his policy, because now he would be only too delighted if he could strangle the Telephone Companies. The right hon. Gentleman had fallen between two stools, because one day he said he wished to encourage the new invention, and another day it was evident he wished to destroy it. But the public had already sufficient knowledge of the advantages of the telephone not to permit the Department to strangle the Companies; and he trusted that, eventually, the right hon. Gentleman would be induced to reconsider his position; and, while taking reasonable precautions for the protection of the Public Revenue, would afford to the public reasonable facilities for being served by this new invention. When a discussion on the Post Office Vote was raised, some time ago, the right hon. Gentleman commenced his speech in reply by saying he would be sorry to consider that the only function of the Post Office was the earning of Revenue, because it had some higher object, meaning, he (Mr. Gray) supposed, the service of the public. A good many people were very doubtful as to the result of vesting the telegraphs in a Department of the Crown They feared, and he believed the result had more than justified their fear, that to give to the Department a monopoly would tend to restrict the introduction of improved methods of telegraphy. In a very remarkable address, delivered a few years ago, before one of the Scientific Societies, the late Sir William Siemens expressed the opinion that the result of the acquisition of the telegraphs by the Post Office Department had been to seriously interfere with the progress of scientific discovery and improvement in telegraphic apparatus, so far as the United Kingdom was concerned; and he asked how it was that so many great inventions in connection with telegraphy were perfected in England before the Post Office got hold of the telegraphs, and that subsequently all the great inventions, including the telephone, had been perfected in the United States, where the telegraphs were free? 1065 In an article in one of the Reviews by Mr. H. Spencer, the writer alluded to the observation of the late Sir William Siemens, who was probably the greatest authority on such a subject in the United Kingdom; and he pointed out that the Post Office was adopting precisely the same policy now in reference to the telephone—that was, they were endeavouring to prevent its development. He (Mr. Gray) feared he had occupied too much of the attention of the Committee already; but he was sure the right hon. Gentleman the Postmaster General would recognize that this was a very important question, and that it was very necessary the Department should lay down some clear and distinct line of action; that they should not be chopping and changing about; that every petty application of any one of the Telephone Companies should not be a subject of long and tedious negotiations; and that one set of conditions should not be conceded to one town to-day, and refused to another town to-morrow; while a modified set was made for a third town the day after to-morrow. He had contended that it was impossible for the different towns of the country to comply with the conditions laid down by the Post Office; but the right hon. Gentleman would, no doubt, in his reply, remind the Committee that Newcastle had already complied with the terms of the Department. Now, he maintained that the Newcastle contract was about the most immoral—of course he used the phrase in a political sense—of all the immoral transactions of which the Department had been guilty throughout this business. The right hon. Gentleman had official knowledge that the Newcastle Company did not own a single telephone; and yet he forced upon them a contract agreeing to sell to him instruments which they did not own. The Postmaster General knew that that contract could not be carried out, and he (Mr. Gray) challenged the right hon. Gentleman to attempt to carry it out; he challenged him to test, in a Court of Law, whether he could enforce his own contract; he challenged him to take the opinion of any Judge of the land as to the morality of the contract. The Postmaster General had instanced the Newcastle case as a justification for his refusal to grant licences which had been applied for by 78 other towns in the King- 1066 dom; and when it was asked the other day, in the name of the hon. Gentleman the Member for the City of Cork (Mr. Parnell), why Cork was refused facilities which were granted to Dublin, the right hon. Gentleman said—"I have merely imposed on Cork conditions similar to those which were imposed on other towns, and which were accepted by Newcastle - on - Tyne." In what way were the conditions accepted by New-castle-on-Tyne? What was the contract which the right hon. Gentleman had not dared to seek to enforce, and which he would not attempt to enforce even after his (Mr. Gray's) invitation? What was the contract which the right hon. Gentleman was not ashamed to enter into, and then plead it as an excuse for refusing proper and necessary telephonic facilities to other towns? How did the Department acquire control of the 20,000 instruments, which the right hon. Gentleman acknowledged he had now at command? He (Mr. Gray) would tell the right hon. Gentleman, if he did not know. The United Telephone Company, or its predecessors—he was not sure which—entered into a contract with certain individuals named Scott and Wooleston to sell to them 20,000 instruments at a price; but a condition was that the instruments should not be used for ordinary exchange or quasi-public purposes, but merely for private purposes. The Post Office were exceedingly anxious to get hold of telephone instruments; but they could not, because they happened to be the property of other people. A rather cute Yankee, who knew something about telephones, was over here, and he looked into the matter. He found that, on the one hand, the Post Office wanted to get instruments they could not get, and that, on the other hand, Scott and Wooleston had at call a lot of instruments, the use of which was restricted by certain conditions. Gower, for that was the Yankee's name, was skilled in Company-mongering; he constituted a Limited Liability Company—a Company consisting of seven persons, who each owned one share of £5—and this Company bought from Scott and Wooleston the rights over the 20,000 instruments they had purchased from the United Telephone Company. This bogus Company then sold their rights in the instruments to the Post Office, and the Post 1067 Office was not ashamed to enter into a contract with them. The result of the interposition between Scott and Wooleston, the original purchasers, and the Post Office, the ultimate receivers—he did not say of stolen goods, but of goods they were not morally entitled to—was, as the legal advisers of the Post Office advised the right hon. Gentleman (Mr. Fawcett), that the Post Office were not bound by the original conditions, because they had purchased from a second party. The right hon. Gentleman, or his Department, was not ashamed to get possession of instruments in that fashion, a fashion which was more characteristic of American log-rollers than of an English Department; the right hon. Gentleman was not ashamed to get possession of the instruments in this way, and then to use them for purposes for which the original contract prohibited their being used. He put it to the right hon. Gentleman himself whether, if he was acting in his private capacity, anything in the world would induce him to be connected with such a transaction? Was the right hon. Gentleman bound, when representing the Government of Great Britain, to stain himself with transactions which he would shrink from in his private capacity? He (Mr. Gray) ventured to say that the right hon. Gentleman was not called upon to do anything of the kind. It would be much better for the right hon. Gentleman to adopt a straightforward course. He ought to say at once that the Post Office was determined to put an end altogether, so far as it could, to the use of the telephone in the United Kingdom, or he ought to say frankly—"I will give any reasonable telephonic facilities; but I will protect the public by getting a royalty." Either of those courses would be a straightforward one, and the latter would not be an unreasonable one. He assured the right hon. Gentleman that public feeling on this matter had risen with greater rapidity than he thought; and although, of course, the right hon. Gentleman would succeed in defeating any attempt which he (Mr. Gray) made to force upon the Government a recognition of its duty, he would not succeed so easily in appeasing public opinion out-of-doors. As a private Member, he (Mr. Gray) was quite powerless in the matter. He was not to-night in a position by the Rules of 1068 the House to bring to a Division a specific Motion; but he appealed to the right hon. Gentleman, whose administration of the Post Office had been distinguished in many ways by a liberality and breadth of view, and by a desire to serve the public without too narrow ideas on the subject of preserving the Public Revenue, to extend the policy which had characterized his administration in other directions to the telephone, and not to punish the public because, under a technical judgment, he had obtained a right of control which never was contemplated by Parliament. It must be recollected that, in 1878, Parliament deliberately struck a clause out of a Bill then introduced, in order to free the Telephone Companies from the shackles which the right hon. Gentleman the Postmaster General had now succeeded, by technical possession, in imposing upon them.
§ MR. SLAGGsaid, the right hon. Gentleman the Postmaster General had certainly no warmer admirer than he (Mr. Slagg) in regard to the general administration of the Post Office; but he was bound to say that, in relation to the control which was exercised in the matter of telephones, the right hon. Gentleman's conduct did seem to be out of harmony with those traditions which had made him famous. The complaints on this subject in his (Mr. Slagg's) district were loud and frequent. It was a matter of extreme importance to the large commercial towns of Lancashire and Cheshire that they should have the very fullest facility, which they certainly had not at the present time, of availing themselves of telephonic communication. The hon. Gentleman (Mr. Gray) had gone so ably and so minutely into the subject, that it was hardly possible for him (Mr. Slagg) to add anything to the force of his arguments; he might, however, say that in regard to one or two points to which the hon. Gentleman had called attention, his (Mr. Slagg's) own constituents felt very special grievances. It had always surprised him that the Law Courts in this country should afford to the Post Office what really constituted a monopoly in regard to a great natural force. A monopoly in telephony was, unfortunately, allowed the Post Office, but on what principle of law it seemed impossible to 1069 understand, because, when the Telegraphs Act was passed, telephones were never even thought of. Surely, under the circumstances, they could consistently call on the right hon. Gentleman the Postmaster General to use the powers he had gained with moderation, and with the fullest measure of convenience to the commercial community. He was afraid there was ample evidence to show that was hardly done. He would refer, very briefly, to a case to which the hon. Gentleman had alluded. In Manchester it would be an enormous convenience if call offices existed. He believed that in a great number of Continental towns facilities were afforded to passers by in the street to call at certain offices and send telephonic messages at a very small cost. One would think that in a great commercial country like this, and in great commercial centres like Manchester, equal facilities for telephonic communication would exist; but as soon as a Company improved their service in that way, the Department came down and charged them 50 per cent upon their gross receipts. Well, then, there was the question of trunk lines. There were one or two very important centres of cotton manufacture—there was that, for instance, of Oldham, to which constant communication was most desirable from Manchester; but when the Company tried to establish trunk lines, they were met by restrictive regulations on the part of the Post Office. It was well known to all who were familiar with this subject that the radius allowed to Telephone Companies was four miles from the centres of such towns as Manchester and Liverpool; but a great number of the merchants lived much beyond that radius, and it would be a great convenience to them to be able to communicate between their business places and their homes. The Chancellor of the Exchequer said the Companies should not go beyond that distance without paying a tax; and the policy was to impose perpetually-increasing taxation on every attempt to subserve the convenience of the public. Of course, the Post Office had in its hands a very important business—that of the telegraphs—which it was bound to defend and safeguard in every way; and if it could be shown that the development of telephonic enterprize would interfere seriously with the telegraphs, he should 1070 be more willing to admit that restrictive action should be adopted; but that was not the case. As a matter of fact, he believed that if the telephonic interest was developed, there would be a large increase in the receipts for telegrams. He would take the case of America in this respect. In that country there was an application of telephonic power, in comparison with which the facilities existing in this country might be described as positively trifling; but, notwithstanding that development of telephonic communication, there was side by side with it a great increase in telegraphic communications; so that the Government need not have the slightest apprehension as to giving facilities to the Telephonic Companies. The commercial public were under great obligations to these Companies for having planted these lines in the country; and he thought the Post Office ought to treat them in a more liberal spirit. It was possible to conceive that it was the intention of the Government by this policy to gradually obtain possession of the telephone system; and if the right hon. Gentleman would only state that to-night, he would, no doubt, relieve the minds of a great number of persons who were in uncertainty as to the future. It might reasonably be urged that it was not desirable that the Government, when it came to acquire this great system, should have to pay such high premiums as they did in obtaining possession of the telegraphs. But, whatever might be the object or the policy of the Department in this matter, he claimed, on behalf of the public, more reasonable treatment of these Companies in the meantime; and he thought it was only fair to ask the right hon. Gentleman to fix some system of payment for royalties, by which the public might be relieved from these constant changes of taxation and policy.
§ MR. FAWCETTsaid, that, although strong observations had been made by the hon. Member for Carlow and the hon. Member for Manchester, he should not say anything that could for a moment separate himself from the permanent officials in his Department. He, and he alone, was responsible for everything that had been done; and he should greatly regret it if there should be any reason to suppose that any atom of blame for whatever had taken place would be 1071 transferred from himself to the shoulders of those whom he believed to be trustworthy and zealous. All sorts of charges were made against the officials of the Post Office, as if they had some private motive to serve. They had no motive except the interest of the Department, which in their view was the interest of the public. Now, he was bound to confess that in his official experience of all the many questions he had to deal with in connection with the administration of the Post Office, none, to his mind, had been beset with a tithe part of the difficulties which had had to be considered in connection with the telephone question. Of course, it would be idle now to go over the question which had been settled, and to enter into the controversy whether or not Parliament was wise or unwise in purchasing the telegraphs at an enormous price, and so establishing a monopoly. But that was done by Parliament; and it was not for him to express an opinion as to this or that Act. All he, or anyone else similarly placed at the Post Office, had to do was to faithfully administer the Acts which Parliament had passed; and, therefore, he had nothing to do with the policy of the telegraph monopoly. He found the telegraph monopoly created, and he was bound to administer it in the best way he could, not only in the interests of the Revenue, but in the interests of the public. When he went to the Post Office he found that this question as to whether or not the telephone was an infringement of the telegraph monopoly was about to be raised in the Law Courts. Of course, nothing would be more unwise on his part than to say a single word about the decision which was given in regard to the telephone. The case was heard before two able Judges; the case was argued with consummate ability on each side; there was an elaborate judgment; and that judgment left no doubt whatever that, in the opinion of the Judges, the telephone was a direct and a distinct infringement of the telegraph monopoly, in purchasing which Parliament or the Government had spent £10,000,000 of the taxpayers' money. In the course of that case it was particularly urged upon him, as representing the Post Office, that he should not deal harshly with the Telephone Companies; that he should not act on the assumption that they had 1072 consciously done an illegal act in the establishment of Telephone Exchanges; that, although the Court had distinctly announced that the Companies had committed an act of illegality in every instance in which they had established an exchange, he should not exercise his full rights and confiscate their property, but should deal with them in a generous and liberal spirit. All he could say was, that had been his object from the first. After giving the matter great consideration, he said that in any case where a private Company had established a Telephone Exchange, he would assume that that establishment was a bonâ fide transaction, and that it was not done with the knowledge that it was an act of illegality; that, consequently, nothing should be done that would interfere with their business, and he would enter into arrangements with them by which they would be able to carry on their business. Consequently, in all those towns in which, at the time of the decision, Telephone Exchanges were established, licences were immediately granted to them on certain conditions, upon which an agreement was come to between the Telephone Companies and himself. The hon. Member had again and again repeated that throughout all these affairs he (Mr Fawcett) had been actuated by an intention and a desire to strangle the Telephone Companies. Far from that being his desire, he had allowed them to establish businesses in almost every large town in England; and he could only repeat most positively the assertion he had already made, that nothing was further from his desire than to do anything that was unfair to, or severe upon, the Telephone Companies, or anything that was likely to strangle them. He was anxious that the public should obtain a supply of telephonic communication, either through private enterprize or through the Post Office, according to which could supply it to the public most efficiently and on the most reasonable terms. That had been his policy hitherto, and that was his policy at the present time. But in granting these licences to private Companies, he was, of course, bound to see that the arrangement made should not prejudicially affect the Revenue. The officials of the Department were often attacked as if they had some personal 1073 interest to serve. They had to administer a monopoly, bought by £10,000,000 of the taxpayers' money; and he was bound to see that this large investment was guarded with adequate precautions. His position was exactly that of a trustee. If a commercial man bought an invention or a patent, for, say, £100,000, and he appointed a manager to administer it for him, and suppose someone else made another invention, and it was decided by the Courts that that invention was an infringement of the patent which had been bought for £100,000, and that the use of it was equally an infringement of his patent, would not that manager be faithless, and not properly careful of his trust, if he did not see that the use of the second patent should only take place under conditions which would properly safeguard the interests of the man who employed him? That was exactly his position; he was nothing more than the trustee of the public. This policy of granting licences to all the towns in which Telephone Exchanges had been established went on until about two years ago. He was then met with another difficulty. He received numerous applications from other Companies, stating that if he did not extend the granting of licences to other Companies in other towns, he should be constituting a private monopoly. They said it was all very well for the Government to have a monopoly; but if they abused the monopoly, a Motion would be brought forward in the House of Commons. They said they would have the Government under their control; and if the monopoly was not properly used, it would be the fault of the people if they submitted to the misuse of the monopoly. He was pressed on all sides not to allow a private monopoly to grow up, and be vested in a private Company, which could not be controlled in the same way by Parliament. He therefore decided, two years ago, that he would, to a certain extent, change the policy which had been adopted, and would no longer confine the granting of licences to those towns which happened to have exchanges at the time when the legal decision was given; but would grant licences to all towns and to all applicants on certain conditions. These conditions he considered most carefully; he had considered the condition to which the hon. 1074 Member had referred; and his sole object in insisting upon that condition was that he thought it was of great importance that the Department should have some larger control than it then possessed over the use of all telephone instruments, in order to have the power of interposing, not primarily for the sake of making money, but in the interests of the public, if those interests required such an interference. That plan had gone on for a couple of years. After it came into operation, a decision was given in reference to certain patents which were claimed by a Company. That Company had obtained a licence, and the effect of the decision was adverse to that Company, and that Company had found the difficulty of carrying on its business greatly increased. He was free to confess, as he had stated that afternoon —and he should almost have thought that the statement he then made would have rendered it unnecessary to bring on the question now—that it had been shown by experience that the new condition which he had thought necessary in the interest of the public to impose two years ago had checked the development of private telephonic enterprize. He never intended that effect to be produced; and, having ascertained that that had been the effect, he had been considering for some months past—and it was a question beset with difficulties —whether he should modify that condition in such a way as to get over the difficulty, while, at the same time, properly guarding the interests of the public. He had now to state that he meant to adhere to that policy. Nothing was further from his intention than to unduly extend the functions of the Post Office. He thought that what the Post Office ought to do was to supply facilities where those facilities could not be so well supplied by private enterprize; but with regard to the particular case of telegraphs and telephones, the telegraph monopoly had been purchased at an enormous cost, and he should be guilty of faithlessness to his trust if he did not do all he could to safeguard the Telegraph Revenue. But in safeguarding that he had been, and should continue to be, most scrupulously careful not to throw any unnecessary impediment in the way of the development of private enterprize. This 1075 subject was engaging more of his attention than any other; and he hoped he might be able, without giving any positive pledge, soon to be in a position to announce that he could see his way to proposing some modification of the particular stipulation in these new telephone licences to which the hon. Member for Carlow (Mr. Gray) and the hon. Member for Manchester (Mr. Slagg) objected. Under those circumstances, he thought it would, perhaps, be better not to continue this discussion on the present occasion.
§ MR. GRAYsaid, he wished to thank the right hon. Gentleman for his courteous reply, and he would willingly adopt his suggestion as to not prolonging the discussion; but he wished to say a few words in reply to the observations of the right hon. Gentleman. He should not imagine that the right hon. Gentleman or any of the permanent officials of the Post Office had any personal interest or pecuniary interest, or any personal object to gain in connection with the policy which they adopted. That was the furthest thing from his thoughts; but permanent officials, and even officials who were not permanent, had a proper and laudable ambition to make their Department appear as favourably as possible; and there was a certain esprit de corps which could be pushed to extreme limits which constantly induced the permanent officials to adopt a principle or a policy that was contrary to the interests of the public, under the mistaken notion that their particular Department comprised the whole universe, and that everybody must be subject to their Department. It was in that sense alone that he characterized the action of the Department. The right hon. Gentleman now contended that he was bound to protect the Public Revenue of which he was the trustee, and talked about the large sum paid for the purchase of the telegraphs; but he was amazed that the right hon. Gentleman had made no allusion to the deliberate expression of opinion by Parliament in 1878 on that subject. The right hon. Gentleman did not venture to assert that when £10,000,000, or whatever was the sum, was paid, the purchasers contemplated the purchase of a thing which had no existence, like the telephone; nor did he deal with the most important matter to which he had alluded— 1076 that when the Department in 1878 inserted in the Bill a clause intended to give them control over telephones they then doubted the extent of their power, and that Parliament struck out or rejected the clause. Therefore, Parliament expressed the opinion that the Department ought not to have that power of control. The right hon. Gentleman had promised to look into the whole matter; and he was glad to see that the right hon. Gentleman not only promised to look into the matter upon which he had laid stress, but also into the subject touched upon by the hon. Member for Manchester — namely, the conditions under which trunk wires were dealt with. The right hon. Gentleman said the Post Office did not want to simply make money. It was already making £15,000 a-year by the telephones without any expense; and he hoped it would make more; but it seemed to think it a portion of its mission to insist on Companies making money in a certain fashion, and charging to the public sums which they did not desire to charge. Surely the right hon. Gentleman did not mean to say that it was to the interest of the public to tell a Company it must charge so much per mile which the Company did not wish to charge. He would ask the right hon. Gentleman to reconsider that matter, and the extremely objectionable course which the Post Office took with regard to the Company in minor matters. He also hoped the right hon. Gentleman would be able to announce his decision within a reasonably short time; because, although he was ready to accept the right hon. Gentleman's assurance, that he had not intended that the result of his action should be what it had been, still, the Companies and the Post Office being competitors for the public business, every day's delay in the announcement of his decision placed his own Department in a position of most unfair advantage over the private Companies. It was in this way that they had derived an advantage in Newcastle and other towns; and although the right hon. Gentleman desired to act fairly any delay would be unfair to the competitors of the Post Office.
§ MR. FAWCETTassured the hon. Member that, so far as he was concerned, not one hour would be lost 1077 in coming to a decision. He had mentioned that the particular point which had been for some time past and still was engaging his attention was the clause in the Telephone Exchange Licences which the hon. Member for Carlow had drawn his attention to— namely, a general user of the telephone instruments; but what he had said did not apply to the question raised by the hon. Member for Manchester—namely, that of trunk wires, because that question had been for the present settled between the Companies and the Post Office.