Commons Sitting of 21 May 1889

EAST INDIA (FACTORY ACT).
Ordered—
"Address for copies of further correspondence relating to the amendment of the India Factories Act of 1881 (in continuation of Parliamentary Paper, No. 124, of Session 1889)."—(Mr. James Maclean).

ORDERS OF THE DAY.
  NATIONAL DEBT BILL. (No. 219.)

    THIRD READING.
    Order for Third Reading read.
    SIR W. HARCOURTBefore this Bill passes I wish to make one or two remarks upon it. The Chancellor of the Exchequer objected the other day to my describing his financial operations as a disparagement and impeachment of the Sinking Fund. I do not quite understand the ground on which he based his objection. The first clause of this Bill states that the amount of the permanent annual charge for the National Debt during the current
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    and every subsequent financial year shall be the sum of £25,000,000, and that £25,000,000 shall be substituted for £26,000,000 in Section 1 of the Sinking Fund Act of 1875, as amended by Section 2 of the National Debt and Local Loans Act, 1887. Consequently, on the face of it, it is a modification of the Sinking Funds Acts of 1875 and 1887, and a reduction of the amount applicable under those Acts to the liquidation of the National Debt. Many members will remember the production of the plan for the reduction of the National Debt by Sir Stafford Northcote in 1875. It was considered one of the great achievements of the Conservative Party to have established for ever a fund of £28,000,000 for the purpose of the reduction of the National Debt. The way in which it was to operate was this. As everybody knows, the actual interest due upon the Debt is less than £28,000,000. The amount due upon the interest of the Debt, and of course I include that upon the terminal annuities, is considerably less than £28,000,000. Therefore the difference between £28,000,000 and the sum necessary to discharge the public liabilities under the Debt was to be the Sinking Fund for the future reduction of the Debt. Sir Stafford Northcote established the margin between this sum of £28,000,000 and the interest due on the debt as a perpetual Sinking Fund; and in the Act of 1875 it was provided that during every financial year £28,000,000 should be set aside for that purpose. Now of course the extent of the Sinking Fund, varied according to the amount of interest which had to be paid on the Debt. The plan of Sir S. Northcote was not that a particular sum should be annually set aside, but that the actual sum of £28,000,000 should be appropriated, so that as the interest on the Debt from time to time became less, so the margin constituting the Sinking Fund should become greater. The Chancellor of the Exchequer told us the other day that this was a question only of the interest to be paid. With great submission I maintain that that is not so at all. Sir S. Northcote did not mean that as the Debt was diminished the Sinking Fund. should also be lessened; he meant that if in his day the necessary interest on the Debt was £23,000,000, the Sinking

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    Fund should be £5,000,000; that if, by the reduction of the Debt, the necessary interest on the Debt became £20,000,000, then the Sinking Fund should be £8,000,000; and that if it became £18,000,000 the Sinking Fund should be £10,000,000. That was the plan contemplated by Sir S. Northcote, and there were great rejoicings in the Conservative Party that this permanent and ever-increasing Sinking Fund was to go up proportionately with the reduction of the National Debt. I remember it was remarked at the time that it was produced at a period when it was incapable of being immediately applied, but in subsequent years it did come into operation. Later, in 1885 and 1886, no doubt it was necessary temporarily to suspend its operation in consequence of great financial pressure; but this will not be a temporary suspension. It has happened to the present Chancellor of the Exchequer twice permanently to break down the plan of Sir S. Northcote. In the Act of 1887 the right hon. Gentleman permanently altered the figure of £28,000,000 to £26,000,000. That was at a time when he had a surplus revenue, and when there was no financial pressure at all. Now he has again come forward and proposes to write £25,000,000 in the place of Sir S. Northcote's £28,000,000. The other day I had a letter from a very experienced financier, Sir Thomas Farrer, whose connection with Sir Stafford Northcote was well known, and he says:—
    "I confess I do feel very bitterly that the present Chancellor of the Exchequer should have destroyed the two great works of Sir S. Northcote's financial life—first, his institution of cheap sugar; and, secondly, the Sinking Fund."
    THE CHANCELLOR OF THE EXCHEQUERNot the cheap sugar.
    SIR W. HARCOURTThe right hon. Gentleman has not done it yet, and I hope he will not succeed, but he has done his best. The right hon. gentleman is an accomplice in the one case and a principal in the other. I will not, however, dispute that point with him; it is not now under consideration. He will not of course deny that he has cut down the 28 millions to 25 millions. I do not know whether he has
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    in his pocket some of his favourite tu quoque arguments on this subject. I am not going to argue it on that basis. I am going to argue that the scheme propounded in 1875 was a scheme which was to be permanently applicable to the reduction of the National Debt, and that under it as the margin increased so the sum applicable to the reduction of the principal would increase. This great scheme which was so much extolled in the year 1875, has been pared down to the extent of three millions. But it is not only that; there is also a question of principle involved, and the Chancellor of the Exchequer has established a principle that as you go on diminishing the National Debt, so you may diminish the Sinking Fund. If you are to do that, the whole value of the principle on which the scheme is founded is destroyed. I do not know whether the Chancellor of the Exchequer thinks that warnings of this kind are dictated merely by partisan hostility to his financial measures; but if he does so I would advise him to look at the Economist—a paper by no means hostile to the Government or its Members—and he will see there what is said of his finance and the principles on which it is founded. There was some justification for suspending the operation of the scheme when it was first propounded, but that is a totally different thing from permanently reducing it. The Chancellor of the Exchequer does not intend to meet an exceptional demand at a particular period by a temporary suspension of the Sinking Fund, but he proposes by this Bill and by his previous Bill of 1887 permanently to reduce the figure of the Sinking Fund, and consequently to deprive the financial system of this country of what was considered a great resource. After all, we are not doing so very much to reduce the National Debt as compared with the efforts of America in that direction. We think it a great thing if we set aside six or seven millions a year for the reduction of the Debt, but after all the amount now devoted to the service of the Debt is lower than it has ever stood for the last 20 years. I am not saying that the amount applicable for the reduction of the Debt is lower, but the sum devoted to the payment of principal is less, and the total amount set apart for National Debt purposes is to be 25 mil-

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    lions instead of 28. I look upon this as a retrograde financial operation, and I think we should not have been justified in allowing the Bill to pass its Third Reading without calling attention to the matter.
    MR. BARTLEY (Islington, N.)I should like to say one word on this subject. I quite agree with the right hon. Gentleman opposite that the principle of the reduction of the National Debt is a matter of enormous importance, and I must say that I regret that we have departed from the rule laid down by Sir S. Northcote that £28,000,000 should be the amount set apart annually for the interest on and the extinction of the Debt. Doubtless it is attractive to reduce the Sinking Fund because the rate of interest is reduced, and we all know that pressure was put on the Chancellor of the Exchequer to do this. In my opinion, however, the right hon. Gentleman would have acted more wisely if he had remained firm on that subject, and many on this side of the House would have supported him. I think it is not satisfactory that this country should allow the enormous incubus of the National Debt to remain. Looking to what is going on around us, and especially to the possibility of America becoming a Free Trade Nation, it is quite probable that future generations of our countrymen may find themselves, perhaps earlier than is imagined, severely handicapped in the competition of the world, and the fact of our not having paid off more rapidly this enormous Debt during periods of prosperity may very much retard our future progress. Under Sir S. Northcote's plan it was calculated that the Debt would be paid off in 60 or 70 years, and I much regret that that plan has been departed from. I hope it will be distinctly laid down, somehow or other, that the Sinking Fund shall not again be disturbed.
    SIR G. CAMPBELLI have been a good deal surprised that this Bill has gone through so many stages without more being said about it by the great financial authorities on the Front Opposition Bench. Now that the great authority on that Bench has spoken, I will say that I did view with great dislike and distrust the decrease of our efforts to diminish the National Debt. It is sometimes said that the
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    National Debt has been very much decreased, but I may point out that there has been a great increase of local debt.
    MR. HANDEL COSSHAMI should like to endorse the remarks of the hon. Member opposite. America will soon enter the field against us nearly free from debt, while we shall be handicapped in the commercial competition with a heavy debt and a heavy expenditure. So long as America retains her present Protective policy we are safe; but when she enters on a Free Trade policy then the danger to us will arise. It is not the Navies of the world we have to fear, but it is the competition of a Free Trade America.
    MR. GOSCHENThe hon. Member for North Islington says the House would have supported me if I had maintained the Sinking Fund at its original level. I think it is possible, provided this would not have invited raising money elsewhere, but I do not think I should have been supported if the maintenance of the Sinking Fund had involved, as it would have done, the imposition of additional taxation. My hon. Friend seems to suppose that under the present arrangement the Debt will not be paid off in 60 or 70 years as Sir S. Northcote calculated it would be by maintaining the Sinking Fund at the level of 25 millions, but in that the hon. Member is mistaken. At the reduced rate of interest the whole Debt will be paid off in less than 60 years, and, therefore, so far as the spirit of Sir S. Northcote's proposal is concerned, we stand very much where we were in 1875. I would ask the right hon. Gentleman to draw a distinction between the several ways in which the burden of interest on the Debt may be reduced. The right hon. Gentleman has rather confused two different points. We may reduce interest by paying off Debt, or we may reduce interest by reducing the rate of interest. Now, Sir, S. Northcote's whole scheme is based on a reduction of the capital of the Debt, and thereby of the interest chargeable on that capital, but he did not contemplate, and no one contemplated at that time, that it would be possible to reduce the rate of interest, first, by one-twelfth, and then by one-sixth, and the reduction of the rate of interest to that extent

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    has practically put the country in this position, that a much smaller permanent payment will have the same effect as the large payment contemplated by Sir S. Northcote. The right hon. Gentleman said the Sinking Fund was a growing fund. So it will continue to be a growing fund, and let it be distinctly understood that, by the operation of this Bill, I do not retard by one single day the result which was in the view of Sir S. Northcote. Therefore, the charge of the right hon. Gentleman, or that of Sir T. Farrer in the same direction, I look upon as utterly unfounded. Perhaps Sir T. Farrer was thinking of the operation of two years ago, but if he meant to touch by his remarks the operation of this year, he was as much in error in saying that the Government are upsetting the scheme of Sir S. Northcote, as he would be in saying they propose to destroy the cheapness of sugar as secured by Sir S. Northcote. Generally, however, I consider the remarks made in the discussion as perfectly fair and legitimate criticism, and that it is right to call the attention of the country to the very important subject of the diminution of the Debt. I am glad to find the right hon. Gentleman so orthodox upon that subject, for I think I remember certain passages in his history when he declared that he considered it was not detrimental to the interests of the country to have a large National Debt, and that a great deal too much fuss was made with regard to the reduction of the Debt. I should be extremely sorry if I have in any way disparaged by what I have done the great merits of what Sir S. Northcote was able to accomplish in this direction. I may also point out that when Sir Stafford Northcote propounded his scheme for the payment of 28 millions annually, the income tax stood at 2d. in the —, whereas at present it is 6d. Sir Stafford Northcote himself said that if the income tax stood at a much higher level, the Chancellor of the Exchequer might possibly see fit to make some change in the Sinking Fund. Sir Stafford Northcote therefore did not intend that his system should be such a cast-iron system that it would be perfectly out of the question for any future Chancellor of the Exchequer to touch it. I believe myself that standing at £25,000,000 this fund is safer than
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    when it stood at £28,000,000. When the Sinking Fund is so large it offers a peculiarly strong temptation in case of emergencies. As it stands at present, the arrangement provides for a certain payment of more than £5,000,000 a year, increased by nearly half a million next year, and subject to a further steady, though small, increase in each successive year, and I think it cannot be held that this is a niggardly arrangement for the repayment of the National Debt. During the last two years we have been able to pay off more Debt than has been paid off during any two previous years except on one occasion. The right hon. Gentleman argues that I am reducing the Sinking Fund. As a matter of fact I am merely reducing the charge by the reduction of the interest of the National Debt. The amount of capital annually paid off will not be reduced. Besides that you will have an additional £500,000 next year, and if you look at my present financial arrangements as a whole you will find that so far from diminishing the payment of capital I shall have added to the means of paying off the Debt.
    MR. H. H. FOWLERI do not agree with the views expressed by the right hon. Gentleman as to the action of Sir Stafford Northcote. The principle of Sir S. Northcote's scheme, was that this country in time of peace could afford an annual charge of £28,000,000 out of which to pay the interest of the Debt and the surplus to go to the reduction of the Debt itself. It is not a question between the Sinking Fund and interest, but whether in 1889 £25,000,000 is an adequate sum for this country to bear in respect of the National Debt, having regard to its amount, and with reference to what the country has hitherto borne. Sir S. Northcote, in a time differing from the present, thought that £28,000,000 was a moderate sum for this country to bear. But several years after this Sir S. Northcote came upon evil times. The Government was involved in several wars, a very considerable deficit had accumulated year after year, and Sir S. Northcote had just before him a General Election, and must, therefore, have been tempted to deal with the Sinking Fund in order to produce a popular Budget. No one can doubt that finance played a

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    very material part in the controvery of 1879. Sir S. Northcote, however, instead of reducing the charge, positively increased it to £28,800,000, the £800,000 being put on in order to pay off the deficit that had accumulated. I think Sir Thomas Farrer is a much more accurate exponent of Sir S. Northcote's intentions than the Chancellor of the Exchequer. I think that the House ought to ask whether, in a time of profound peace, of unparalleled prosperity, with national investments accumulating, this country ought not to bear an annual burden of £28,000,000. This is the lowest figure at which the National Debt charge has stood within the present century. When the Queen came to the throne in 1837, the annual charge for the National Debt was largely in excess of £28,000,000. To-day we are not prepared to pay £28,000,000, or even £26,000,000, but are asked to put our hands upon what the Chancellor of the Exchequer calls this unforeseen windfall. Our local debt is now increasing at very rapid strides. I am aware that a portion of that Debt represents a remunerative expenditure, but nevertheless, so far as the National Balance Sheet is concerned, we are increasing our National indebtedness year after year, if you put together the National Debt and the Local Debt. I think this was not a year to have selected for the reduction of the charge for the National Debt by another million. I quite admit that an exceptional period might arise, such as a war or an unusual depression of trade, when we should be justified in suspending payment of Debt for a year or two. The Chancellor of the Exchequer would have been supported on both sides of the House if he had firmly held to the principle of not tampering with the fund set apart for the liquidation of the National Debt.
    MR. BIGGAR (Cavan, W.)What I protest against is that a Government belonging to the same Party as Sir Stafford Northcote should, within less than 15 years, make two attacks upon the principle involved in the scheme he drew up. I do think that in a time of profound peace, progress, and prosperity, the Government, instead of making a further attack upon the payment off of the National Debt, should have, in accordance with Sir Stafford Northcote's
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    scheme, tried to make a very large reduction in the Debt.
    MR. LABOUCHEREThis is a financial and not a political question, and I rather go beyond the notions of the Chancellor of the Exchequer. I never could understand why we should pay off one shilling of the National Debt. My own impression is that if we were to pay off the Debt we should at once say, "We can afford to go to war; we can afford to meddle with matters which do not concern us, and run up a fresh debt" 'The right hon. Gentleman the Member for Wolverhampton (Mr. H. H. Fowler) has said the Debt is increasing because the Local Debt is increasing. But the Local Debt is represented in the main by property. The Debt is not increasing when you get remunerative property. We have to pay our way. Not only have we to pay interest on the debts incurred, but we have to pay them off. I shall support any Chancellor of the Exchequer who is prepared to take off a certain amount of the taxation that now presses on the community and reduce the amount that we annually pay off towards the National Debt. That I regard as sound finance. The real extent of debt is relative to the property that the person owing it has. Suppose that 50 years ago we had entered into these wild notions about paying off the National Debt. We should have paid really three times as much as now, because the income tax yields much more at present, and the burden of debt is not half as great as it was then. In 50 years' time, with the increase of wealth, the existing Debt will relatively be much less, and the burden of it will be much less than it is at present. My only regret is, that the Chancellor of the Exchequer has laid hold of the windfall which came into his hands, owing to a reduction of the interest on the Debt, in order to expend it in warlike preparations. I should like to have seen him take off more of the tax, but, at any rate, I am thankful for a small mercy.
    MR. STOREYMy hon. Friend (Mr. Labouchere) is no doubt sincere in his exposition of his views of sound finance, but I myself do not see the difference in this matter between the nation and individual. If a family find themselves heavily burdened, they feel it is

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    just and fair to themselves, and to them own home, and to the future interest of posterity, to do their share towards reducing the Debt. And so it is in my view with nations, even if there were no more serious reasons to be urged in favour of it. I therefore always fell grateful to the Conservative party, led by Sir Stafford Northcote, for its efforts towards the reduction of the National Debt. I do not think the precise procedure was a particularly wise one. Sinking Funds are very apt to be seized upon by some impecunious Minister, or some popularity hunting Minister. A sound method of reducing the Debt, which I hope both Parties in the House will be willing to adopt, is to keep the Estimates low, to exercise due economy, to be sufficiently liberal with the Estimates, to have surpluses, and then to let the surpluses go to the reduction of the Debt year by year. That seems to have been the old and wise Liberal policy, and I wish it were adopted by our Conservative friends. I must say I view with considerable surprise the proceedings of the present Chancellor of the Exchequer, who has been recently introduced into the Conservative Party, and who seizes upon one of the wisest things that Party ever attempted to do to meet his financial exigencies. He has deliberately taken a considerable portion of the money set aside for the reduction of Debt by the Conservative Party, and insists all the time that he has done no such thing. I felt ashamed when I saw him do it two years ago. Instead of keeping the income tax at the figure it was and boldly sticking to the guns which had been left him to serve, he reduced the income tax by seizing upon £2,000,000 a year. And now, having a second opportunity of getting an annual sum towards reducing the Debt, he takes advantage of his position and secures another million sterling a year, so that we are in the position of applying only 25 millions instead of 28 millions sterling to the extinction of Debt. My hon. Friend the Member for Northampton (Mr. Labouchere) says we ought to be thankful for small mercies. I do not see what the special mercy he is referring to is, but the special mercy I should be thankful for would be that the Conservative Government who are now in power, and who, according to all appearances, are likely to be in power
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    for some time to come, should, instead of increasing the charges of the country, exercise economy, and having obtained sums in that way should boldly apply the saving to the reduction of the Debt.
    SIR J. McKENNA (Monaghan, S.)My hon. Friend who has just spoken has pointed his argument by saying that the Government ought to act for the country as a private individual should act—that is, to pay off their debts as rapidly as possible, and that therefore we should not now reduce our annual payments of 28 millions to 26, but rather pay off the National Debt still more rapidly than we have been doing. I must point out the defect in this reasoning. The National Debt is a charge in the whole inheritance of the country, whilst the taxes to pay the interest, and to reduce the principal, as we have been and are doing, are levied on the life estate, and out of that still more precarious life estate, the earnings of the people, who have no other estate of any kind. The heavily taxed population of Great Britain, and the still more heavily taxed population of Ireland, are paying off the National Debt in a manner and at a rate most unjust to them. I feel bound to complain of the injustice involved in the fashion in which the Irish people are called upon to contribute to the payment of the National Debt. In 1853 there was a solemn engagement made to Ireland upon the question of the income tax. Ireland was to pay additional amounts in Customs and Excise, Duties, and the income tax was not to be renewed, however, and in the first 25 years after the new taxation came into force between 70 and 80 millions of the National Debt were paid off, of which Ireland paid more than 60 millions by means of the additional exactions. My complaint is not that the Chancellor of the Exchequer provides too little for the reduction of the principal, but too much. I am only sorry that the right hon. Gentleman did not see his way to give more relief to the taxpayer. The debt took several hundred years to pile up, and at the present rate it would be paid off in 50 years, or say in the lifetime of a man of twenty.
    MR. J. M. MACLEANI think the burden of the National Debt is a very light one in comparison with

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    the advantages which we have obtained through having the Debt. It is really the very best investment the country ever made. It represents the cost of a great war in which we engaged, but the result of that war was to give us our naval supremacy and that unparalleled extension of commerce from which we now derive such overflowing wealth. Ought not this generation, which has reaped the fruits of the exertions of former generations, do something out of its wealth to clear off the Debt? It is a bad sign that the principal supporter of the Chancellor of the Exchequer in reducing the amount available every year towards paying off Debt is the hon. Member for Northampton (Mr. Labouchere), who avows that his object is that if we should be engaged in any war hereafter we should not have the means of carrying on that war successfully.
    MR. LABOUCHEREI did not say that. What I said was that we should not be as anxious for war if we knew we had a considerable amount to pay for interest on the National Debt.
    MR. J. M. MACLEANThat is only another way of putting the same thing. The hon. Member is anxious we should have this burden of Debt so heavy upon us, that if it is incumbent on the nation to go to war for the protection of its honour or interest, we should have to think, not once, but twice, before we go to war. I certainly do not think the Chancellor of the Exchequer in his ingenious speech disposed of the point raised on the other side and enforced by the hon. Member for North Islington (Mr. Bartley). The right hon. Gentleman's argument rather surprised me. He said, that when Sir Stafford Northcote applied 28 millions sterling a year towards the reduction of the burden of the Debt, the income tax was only 2d. in the pound, and therefore the burden on the taxpayers was not so severe as now when the tax amounts to 6d. in the pound. Surely, that argument cuts the other way. If we could afford to give 28 millions sterling out of the annual revenue towards the reduction of Debt when the income tax was 2d. in the pound, we certainly ought to be able to devote that amount, or even more, when the income tax is 6d. in the pound. Then the Chancellor of the Exchequer contents himself by
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    saying that although he is not putting so much aside towards the reduction of the principal of the Debt, he has done a great deal by reducing the rate of interest, and that practically we are now in the same position as we were in when Sir Stafford Northcote set aside 28 millions sterling, and that the 25 or 26 millions sterling will have the same effect. But I do not think that is a satisfactory state of things, for it appears that after all this reduction of the rate of interest on the Debt by one-twelfth, and afterwards by one-sixth, the country will only be in the very position in which it was placed by Sir Stafford Northcote, when he established this plan of the Sinking Fund, because, in proportion to the amount gained by the reduction of the annual interest, we have a diminution of the sum set apart for reducing the Debt. I certainly do not think it is very heroic finance if we, after all this great conversion of interest, are only to be placed in the same position as that in which Sir S. Northcote left us. Surely with all the advantages flowing into the country, with reviving trade, with wealth increasing in an unprecedented way, we ought to be able to do a great deal more than Sir Stafford Northcote did, and if the time should come, as we are told it is likely to come, when we may be engaged in a serious struggle, in which all the resources of the nation will be required to maintain our interests and the greatness of the Empire, now is the time to diminish the burdens upon our population, and to take care that we shall be prepared to meet any enemies hereafter with whom we may have to contend. If we do not do that, when the time of trouble comes we shall have serious cause to regret our neglect and want of thrift in more prosperous times.
    Bill read a third time, and passed.

  SUPPLY [20TH MAY].
  Resolution reported.
  CIVIL SERVICES.

    CLASS II.
    "That a sum, not exceeding £22,347, be granted to Her Majesty to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March 1890, for the Salaries and Expenses of the office of Her Majesty's Woods, Forests, and Land Revenues, and of the office of Land Revenue Records and Inrolments."
    Resolution agreed to.

  SUPPLY.
  Considered in Committee.
  (In the Committee.)

  SUPPLY.

    REVENUE DEPARTMENTS.
    Motion made, and Question proposed,
    "That a Supplementary sum, not exceeding £67,163, be granted to Her Majesty to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1890, for the Expenses connected with the Acquisition of the Submarine Telegraph Company's Property required for the Post Office Telegraph Service."
    THE POSTMASTER GENERALAs the subject matter of this Vote has provoked a certain amount of discussion out of doors, and of question in the House, perhaps the Committee will expect, or at any rate excuse, a few observations from me by way of introduction to this Vote which has been put from the Chair. The question was touched upon in March last, when a portion of the staff was taken into the public service in consequence of the abrogation of the concession formerly enjoyed by the Submarine Telegraph Company, but the Committee then very considerately agreed to postpone further inquiry until the Government were in a position to put before them the Estimate now in our hands. The Estimate does not require a very long explanation. The Committee will see there are five subheads which go to make up the total sum now asked for in connection with the acquisition of this undertaking, and a note at the bottom of the first page shows how the sum of £28,300 is made up. Two cables have been purchased between England and Belgium, at a cost of £9,900, and four cables between England and France, together with a short land connection, for £18,400. As these purchases have been made, as the Committee are aware, in conjunction with the Governments of Belgium and France respectively, who become partners with us in the new undertaking, half of the sum will be recovered by the appropriation of the amounts in aid shown at the end of the Estimates now before the Committee, that is to say, that, of the £28,300 for the purchase of the cables, £14,150 may be expected from the Governments of France and Belgium. I should, perhaps, point out that the
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    price given for the cables was arrived at after long and very careful consideration. I take the Belgian cable first. The Belgian Government sent over here financial delegates, who in conjunction with experts from the Post Office, arrived at the conclusion that £9,900 was the fair value of the two cables as they stand. As there was no difficulty between the two Governments on the point, this matter may be dismissed from further consideration. Both Governments agreed that this sum fairly represented the value, and so there was an end of that part of the transaction. The cables of France led to a good deal more consideration, and a considerable divergence of view manifested itself between the French and the English calculation, the French calculation being at the utmost something in excess of £10,000, and the English calculation being something above £17,000. The natural outcome was, as might have been expected, that a sum representing a compromise between the two figures was adopted, a sun of something over £14,000, and to this was added 10 per cent. as representing the sum the Company might fairly expect from the termination of their business, and the compulsory expropriation of their property. But it appeared to the Government on the earnest representations of the Submarine Telegraph Company, that the estimate so arrived at really represented less than the material value of the cables, and the Chancellor of the Exchequer called in the services of an expert as a valuer to cheek the value arrived at previously by the two Governments and the experts of those Governments. The result of this further valuation by Mr. Latimer Clark was that the English calculation represented a just but a severe valuation of the cables, that is to say, that our Commissioners in fixing the selling price at something over £17,000 did not go beyond what the Company had a right to expect as the purchase price. This of course was a good deal more than in the first instance we had reason to believe the French Government would be willing to pay, and I have gone so far into details to bear tribute to the handsome, generous spirit manifested by the French Government in dealing with this part of the question; for no sooner was it communicated to them

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    that the Government here, though recognising their right to fix the price at the sum I have mentioned, £14,000 plus 10 per cent. for compulsory purchase, although the English Government recognised the right of the French Government to treat the matter from that point of view, we had satisfied ourselves that the cables were really worth £17,000 as they stand, and were agreed that that sum ought to be paid, and were prepared and come to Parliament to ask for an arrangement to be made to enable that price to be given, even though the French Government held to the bargain at the lower figure—no sooner was this communicated to the French Government, than they at once acceded to the Chancellor of the Exchequer's request, and expressed their willingness to accept the valuation at the higher figure, although it was £3,000 in excess of the amount arrived at in the communications between the two Departments. That being so, the result appears in the Estimate before the Committee £18,400, and of that sum we anticipate the receipt of one-half from the French Government. The next largest item in the Estimate is that relating to the acquisition of buildings, cable-ship, instruments, and stores, including fees to valuers, no less than £46,763, the sum being made up, as hon. Members will see by looking at the next page, of various sub-items, the most important of which is the purchase of the office in London, the stores, instruments, and furniture there amounting in all to £24,679. This may seem a large amount, but when it is remembered that it represents an enormous amount of very valuable telegraphic appointments, and also the lease of 80 years of the Company's premises in Throgmorton Avenue, capable of accommodating a staff of 300, I think it will be acknowledged we have made a good bargain. The premises are well adapted for the business, and in the very heart of the City; they were built nine years since, and they are in perfect repair. There are some small buildings at Dover and at St. Margaret's Bay that hardly require comment, but I may mention £9,542 as having been paid for the purchase of a gas engine, pneumatic tube, instruments and stores, and £19,570
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    for the cable-ship Lady Carmichael. This vessel has been for some ten or fifteen years employed as the cable-ship of the Submarine Telegraph Company, but she has been entirely re fitted, provided with new boilers, and made as good as new, and is now, I understand, classed A 1 at Lloyd's. As an illustration of the large sum that has formerly been paid for a cable-ship, I may mention that at the present time the Post Office cable-ship, a larger ship, employed in the distant and stormy seas of Ireland, and laying cables to Orkney and Shetland—this vessel, three times as large as the Lady Carmichael, cost when purchased by the Government £40,000, so the price of £9,570 for the Lady Carmichael is not excessive. I may say that these matters were arrived at after careful valuation. The next item relates to the bonuses to be given to the officers of the Company who are not taken into the service of the State, £5,500. The Committee, of course, are familiar with the fact that when upon the termination of an undertaking by the action of the Government certain persons are not considered suitable for various reasons for the service of the Government, a claim for a certain amount is allowed as compensation for the summary dispensation with their services. The number of gentlemen in this position is not large, and the sum is not large, and I do not think anybody will be disposed to quarrel with this part of the Estimate. The interest on the purchase money I need only refer to as accruing through the delay in completing the transaction. So far in explanation of the Estimate itself. I do not wish to delay the Committee at length in dealing with the general question, but I think I may say a word or two with regard to the reasons that led the Government to acquire this property, and the result the Government believe they are justified in anticipating from the acquisition. There has been a steady pressure brought to bear during the last few years by the mercantile community in this country on the Government, urging that as soon as opportunity offered the Government should terminate the intermediary position occupied by the Submarine Telegraph Company. I do not think there have been any exceptions to that opinion. All the numerous bodies which represent commerce and the mer-

    673
    cantile community, have continually memorialized the Post Office and the Treasury with a view to the Telegraphs becoming the property of the State, in conjunction with the other States with whose territory the cables communicate, so that a more direct and efficient service might be established. I am happy to believe that this result has now been arrived at. Hon. Members who have seen the proceedings at the Liverpool Chamber of Commerce, which has been foremost in pressing the question of acquisition on the Government, will see that immense satisfaction has already been expressed by the merchants of Liverpool at the result of the transfer. One of these in his speech in the Chamber of Commerce mentioned, that, whereas until a month or two ago, it took four hours to get a telegram transmitted to Hamburg, it is now received, allowing for the difference in time, a quarter of an hour before the date of despatch, that is to say, if you allow three quarters of an hour for the difference of time, the transmission of a telegram between London and Hamburg, is almost instantaneous. There have been earnestly pressed on the Government the advantages of a direct communication between Liverpool and Havre, and I hope this will be in operation within three months from the present time, and no doubt this will be a great advantage to both places, and especially to those engaged in commerce between the two ports. I dare say some Members of the Committee will be aware that the French Government at the time when the concession to the Submarine Telegraph Company was running out, in the latter part of last year, were not unfavourably disposed towards a renewal of that concession, and I believe, though I am not able to speak with certainty, that the Submarine Company were able to offer substantial inducements for a renewal of the concession. We, on this side of the water were anxious that the concession should terminate, and we had to bring to bear all the friendly pressure in our power to induce the French Government to adopt our views. I refer to this in order to show how in this instance also the French Government have shown themselves extremely willing and anxious to act in co-operation with Her Majesty's Government, and were prepared to make what to them appeared con-
    674
    siderable sacrifices towards that end, and to put this business on a satisfactory basis for the future. So much for that part of the subject. But I am in a position to make a statement in reference to that part of the subject upon which I briefly touched some months ago. It was on the 4th of March this year that I announced to the House the main results of the arrangements at that time nearly completed with Germany, Holland, Belgium, and France, as to the rate at which words should be charged in each telegram for the future. On March 4th I made a statement as to the probable result in answer to the hon. Member for the City of London. No special discussion or comment in the House or in the Press appeared to follow that announcement, but still, I believe that at the time we were right in supposing there was something like a unanimous approbation of the main outlines of our plan. I believed, and I still believe, the public will be very glad to see the conclusion of an arrangement so long the object of desire by those principally concerned, and recommending itself on grounds of efficiency and economy. I do not think that any disposition is likely to be shown to cavil at the price paid for the objects I have enumerated. I confess myself that, if there is one part of the scheme that will be more attractive than another, I believe it will be the substantial reduction which the Government have been able to effect in the word rate for telegrams to foreign countries. So long as the Submarine Company had its intermediary rights, the price per word to Germany and Holland was threepence, to Belgium twopence, and to France twopence halfpenny. We have succeeded after a great deal of negotiation in bringing down the price per word in each case to twopence, that is to say, there is no reduction in the price to Belgium, in the cases of Germany and Holland there has been a reduction of 33 per cent, and to France of 20 per cent. I think, if the Committee will bear with me, I can show how very substantial that reduction is with regard to these particular services. Take the case of France, where hitherto the word rate between the two countries has been twopence halfpenny. I may take that as equivalent to 25 centimes. Of those 25 centimes the French Government were entitled to receive 11,

    675
    and 14 were divided between England and the Submarine Company, and the division was made upon a principle which practically amounted to something like an equal distribution, that is to say, the Submarine Company received about 7 centimes and the English Government about the same amount. The arrangements for the future, and fixed for five years, leave France 11 centimes, but France at the same time is called upon to undertake all the expenses on that side of the water, which hitherto have been borne by the Submarine Company, and I believe also France gives up a sum of something like 60,000 francs annually which the Company paid the Government for the use of offices. France then has accepted certainly a not inconsiderable addition to the working expenses, and may fairly &aim the same amount of payment per word. Whereas England and the Submarine Company used to receive 14 centimes per word, England in future will receive 9 centimes, that is to say, the 7 centimes per word, which went to make up the large dividends of the Submarine Company, is transferred to the English Government, and there remain two centimes, with which the English Government carry on the work which hitherto has cost 7 centimes. So far as the position of the Submarine Company is concerned, and with this alone we have to do, the Government undertake to do for 2 centimes what the Company did for 7 centimes, and the public get the benefit of the bargain by the saving of 5 centimes on every word transmitted, and I venture to think the public could hardly expect a better bargain. But it has been made the subject of question and attack, because some very ignorant or very captious persons say, "Why do you charge twopence between England and France when you only charge a halfpenny a word from any part of England to the most distant parts of Scotland or Ireland or to the Channel Island?" Well, I should have thought the answer is sufficiently obvious. Messages are sent to Scotland, Ireland or Jersey, as part of the system that obtains for the whole of the country, and the cost of sending a message a long distance is balanced by the much less cost of short messages sent from one point to another
    676
    in all our great towns, these last making up for the loss on the longer distances. But even so, it will be remembered that for years back the telegraphic business has been carried on at an annual loss. This year, for the first time for about ten years, the work of the telegraphic system of the British Isles will show a balance on the right side, and that presumably a very small one. I believe that the profits we may anticipate from the acquisition of the submarine telegraphs may be put down at between —15,000 and —20,000 a year. The Times about a month ago thought proper to make a violent attack on me with reference to this question. It wound up an article which, I am sorry to say, was very little more than a tissue of misrepresentations, by asking whether the Postmaster-General would justify the bargain which he had made on international, postal, or financial grounds. My answer is very plain. I justify it expressly on all three. I justify it on international grounds, because this arrangement will secure the greatest possible advantage for international communication. It is a great blessing, not only to our own mercantile community, but also to the mercantile communities abroad, and it is of enormous benefit generally, that an efficient service should be conducted. I justify it upon postal grounds, because I have already explained that the argument derived from the existing tariffs in the British Isles is really no argument at all. I justify it on financial grounds, because it is an arrangement which, while of enormous advantage to the public who send telegrams, by largely reducing the cost of telegraphic communication, it also shows a modest balance in favour of the British taxpayer. It is not an arrangement in which Her Majesty's Government have been absolutely able to fix their own terms. They have had to come to an understanding with foreign Powers, and I think as far as they have gone, foreign Powers have met the Government in a liberal and free spirit. It is said, however, that this arrangement has been made for ten years. But every arrangement made with a foreign Power has to be made for a certain term; and there is, this advantage in this arrangement, that eventually England and France will become partners on fair and equal

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    terms. But it is always open to the Government to review their position, and if it should happen in the course of those ten years that the French Government should modify their view, it will be open to my successors to negotiate with France, and see whether this Convention can be amended in any way acceptable to both countries. The subject has created a good deal of interest, but I believe the Committee will approve of the arrangement generally, and that it will accept it even in detail. I am confident we have made an arrangement which is extremely beneficial to the country, from an international, a postal, and a financial point of view, that it will largely extend the present facilities of commerce, and will do so upon a basis which at all events should be the basis of all sound finance.
    SIR G. CAMPBELLI think we shall all join in congratulating the right hon. Gentleman the Postmaster General on having made an arrangement which has put a stop to the monopoly that formerly existed, and has established a Government tariff for foreign telegrams. The question divides itself into two entirely separate branches, the first being the sum we have to pay for the acquisition of the rights of the Submarine Company, and the second the rate charged by the Government to the public for foreign telegrams. As regards the sum proposed to be paid, I admit that the Postmaster General seems to have made out a pretty good case. I cannot assent, however, to the doctrine of the Chancellor of the Exchequer with reference to compulsory expropriation of the company. There was no compulsory expropriation at all, because the monopoly came to an end by effluxion of time. The right hon. Gentleman has not told the Committee how the valuations were arrived at. We all know that in these valuations the Post Office is very apt to be "done," and the valuations are apt to be excessive.
    MR. RAIKESThe valuations were by experienced and competent valuers.
    SIR G. CAMPBELLExperienced and competent valuers, as we know too much to our cost in regard to the acquisition of the telegraphs in this country, are very apt to make Reports which are very unfavourable to the general public. I take it, however, on the authority of the Postmaster General,
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    that he has gone thoroughly into the question. I do not see, however, why we should pay for the winding up of a company which came to an end by effluxion of time, which made an enormous profit, and which did not do its work as well as it is being done now. It was owing to the French concession that the company was able to make enormous profits, and one would have thought that it was the French Government, and not the British taxpayer, who should pay the compensation, if any was given at all. I was very glad, indeed, to hear the Postmaster General say that the French Government has dealt with the matter in such an excellent spirit, but I find that that Government has taken advantage of its position to get a very unreasonable share of the telegraph rates for the next five years to come. I do think that in this respect the French Government have driven a somewhat unreasonably hard bargain. That brings me to the question of the rates charged to the public. I believe that the rates are based upon the statement that the cost of telegraphing does not exceed ½ a word. If so, why do you charge 2d. in regard to telegrams to Belgium? It may not be so important to Belgium, which is a small country, but what is the case as regards countries beyond? What is the arrangement as to Italy and Germany, and Switzerland, and further off countries? The Postmaster General has made out a case only with regard to France, and has not explained why there is to be so heavy a charge in regard to other countries immediately adjoining or those of the third degree.
    MR. HENNIKER HEATONI have to join in the complaint that this Vote has been sprung upon the Committee, and that the first intimation of its coming on was given by the Votes distributed this morning. Inquiries have been repeatedly made during the past four years whether the Government have entered into arrangements to complete the purchase of these cables so as to give us direct communication with France independently of the Submarine Company, and the House has been repeatedly told that the matter was in progress. Now, it is known that the bargain which has been made with the French Government is not of a

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    character to commend it to the people of this country. In the first place, we say that the amount to be paid to the Submarine Company is altogether too high. Then we say there is no reason why we should give bonuses to the servants of that company; and we say that the Government are going to pay far too much for old buildings which need not necessarily be included in the purchase. First, as to the rates between the two countries, I may point out in a few simple words the nature of the transaction. Hitherto, throughout France the telegraphic charge has been at the rate of ½d. a word, and that has also been the charge throughout England and across the Irish Channel to the extreme part of Ireland. It would, therefore, be natural to suppose that in any arrangement between France and England the charge for the transmission of messages would be 1d. a word—that is adding the ½d. charged in England to the ½d. charged in France—and I may add that the maintenance cost of the cable between Dover and Calais is infinitesimal—little more than that of a land line. The Postmaster General endeavoured to raise a false issue by saying it was ridiculous to contend that it should be a ½d. word rate, as we were losing on that rate in England; but in the next breath he said that this year he would be able to announce that the ½d. rate was paying throughout the country.
    MR. RAIKESI said I anticipated that we should be on the right side in the working of the telegraphs, but that there would still be a deficit on the capital originally invested.
    MR. HENNIKER HEATONI listened to what the right hon. Gentleman said, and gathered from him that this year there will be a profit on the ½d. telegrams. He now refers to the bad bargain we made years ago by paying more than we ought to have done for the telegraphs. But that, I say, has no more right than the Crimean War Fund to be charged to the general expenses of the country. At the rate between England and France that is proposed, the Government will be enabled to provide profits double those which have enabled the company to declare dividends of from 12 to 19 per cent. The Postmaster General is jubilant because the Liverpool Chamber of Com-
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    merce has endorsed his action; but it has been condemned by the more directly interested Paris Chamber of Commerce; and, as to the constitution of the Liverpool Chamber of Commerce, a leading Liverpool merchant, who has been for nearly 20 years a member of the Liverpool Exchange, has written me a letter questioning the competence of the Liverpool Chamber to speak with authority on the question. In 1862 the charge for telegraphic messages between England and France was 1½d. a word, and now there is to be a reduction of only ½d. a word on 2½d. Then, investigation proves that the bargain is a bad one for this country, because France is to get 11e., while this country gets only 9c. The only explanation the Postmaster General can give of this is that France has taken over some of the old offices of the Submarine Telegraph Company. But when the history of this company comes to be written it will be seen that a more glorious monopoly has never been heard of. This monopoly, which for 30 years has been dividing between 12 and 22 per cent, having sold old ships and stores at a good price, and obtained 10 per cent over the value, has the consummate impudence to ask for £5,500 as a bonus for those servants who are not taken over by the State. I trust the Committee will not tolerate for an instant the bad bargain that has been made for it, and to enable it to express its opinion I move the reduction of the Vote by the sum of £28,300, the amount of the two items for the cables.
    Motion made, and Question proposed,
    "That a sum, not exceeding £38,863 be granted for the said Service:"—(Mr. Henniker Heaton.)
    MR. SHAW LEFEVREI join with the hon. Gentleman behind me in congratulating the Postmaster General on the conclusion of the negotiations with the company and the termination of its monopoly, but I am bound to say there are some points of detail which are not satisfactory. I agree with the hon. Gentleman who has just spoken and cannot understand why 10 per cent should be given to the company over and above the value of its cables. The Postmaster General spoke of this as compensation given for compulsory pur-

    681
    chase, but I do not understand that there has been anything in the nature of compulsion in the arrangement between the Government and the Company. The Government was under no specific or actual obligation to take over the cables at all, but might have allowed them to remain where they were. There was no Act of Parliament which gave the Company a vested right, or which gave Parliament power to take over the property by compulsion. As to the compensation to be given to the officers in the service of the Company, I cannot understand why, if this compensation is to be given, it should not be given by the Company which has had the benefit of their services. I am glad to hear that, on the whole, the French Government have entered into the negotiations in a good spirit. We all know that they were not anxious to bring about the new arrangement, and could have obtained a considerable sum for the continuance of the concession. I can, therefore, well understand the great difficulty the right hon. Gentleman has had in the negotiation. I can only express the hope that, now the concession has come to an end, and it is a matter of arrangement between the two countries in the future, it will not be impossible, at some distant day, to effect a further reduction of the charge for messages between the two countries. Considering that ½d. per word is the charge in this country, and something less than ½d. in France, 2d., as between the two countries, does seem to me to be a very heavy charge. I am glad to hear, at all events, that at the end of five years the rate will be divided between the two Governments. That appears to me to be a very wise arrangement, and I cannot but hope that it will facilitate ultimately a further reduction. I should like to ask the Postmaster General when he spoke of a profit of £15,000 a year, he meant only in respect of the two centimes, which I understand will be the difference to this Government between the present and future charge. I understood him to say that the proportion paid to the English Government was seven centimes, whereas in the future it will be nine; and I wish to know whether he is taking that difference of two centimes, or he is considering the whole payment of the English
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    Government? At any rate, I hope the time will not be far distant when negotiations may be opened with the French Government for a further reduction; I think this service should be kept separate, and not mixed up with the whole of our telegraph services, so that we may know the whole of the circumstances and learn when it has turned the corner and is likely to make a profit. I think that the prospects of the coming year are, on the whole, extremely satisfactory. They are very much more satisfactory than I anticipated four or five years ago, when the reduction was made, and I think a very considerable profit will be derived from the telegraph services at no distant date. But looking at the present service between England and France alone, I cannot but regard the present charge as high. The discussion of this Vote, I may add, has come upon us as a surprise. It was only this morning I saw the announcement of it in the Papers, and we have heard for the first time a full explanation of it, and I do not think I should be quite prepared to enter so fully into the matter as I might have otherwise done. The right hon. Gentleman must not be surprised if there is some renewed discussion on this most important matter.
    SIR JULIAN GOLDSMID (St. Pancras)I am sorry the right hon. Gentleman has thought it right to refer to the former proprietors of the Submarine Telegraph Company and that he considers they have received too favourable terms in the six months' purchase of the cables. The proprietors hold that they are paid too little, and as far as concerns the rest of the property the Government are buying value. They are buying a valuable house and a steamer and other property, and altogether I think the shareholders in the Submarine Telegraph Company have some reason for saying that they have not been very handsomely treated, and the right hon. Gentleman was not justified in the observations he made.
    MR. LABOUCHEREI do think we ought to have a little further notice, and that these Votes should not be sprung upon us. I was not aware until this morning that this Vote was going to he taken. Now, I certainly do think that the hon. Gentleman opposite has moved too

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    large a reduction, though I think there are one or two items in this Return which we ought to look upon with suspicion. One is the 10 per cent upon the value of the cables, and I gather from the Postmaster General that it is in excess of the price that has been paid. Am I to understand that the cables are worthless at the present time, and that new cables could not be laid for a less amount than this 10 per cent? I should have thought they could be laid for considerably less. The cables are very thin; they are not like the Atlantic cables. Then, as regards compensation. Is this £5,000 to be given to the officials of the company? This was an exceedingly wealthy company; it has paid enormous dividends upon its capital. It has had the concession for 30 years, and it must have known that at the end of that period it would come to an end. I suppose they have put by a reserve fund; I should like to know the amount of it. And out of that reserve fund they could certainly give a bonus to their servants. I cannot understand for a moment why we are called upon to pay it. I should like to ask my hon. Friend the Chairman of the Company whether it will be divided among the Directors? [SIR JULIAN GOLDSMID: "No."] Is it to be entirely given to the officers, or to aged officers, or to any officers, or what? We are giving them this £5,000, and we are also giving them what I imagine is a very large and full sum for these buildings in the City. I should think if the hon. Gentleman opposite moved a reduction of, say this £10 per cent and the £5,000, he would get a Vote.
    SIR JULIAN GOLDSMIDPerhaps, Sir, you will allow me to answer the very interesting question of the hon. Gentleman on the subject of the cables. The cables, as you are aware, are laid in the Channel. They have constantly been broken by the fishing boats, and they have to be re-spliced, and new portions have sometimes to be substituted for that which was damaged. In any case, I can tell him the valuation of the company was made by the most competent authorities, and their valuation was far above what the Government have paid us, even with the 10 per cent in addition. Under the circumstances, we had to accept the Govern-
    684
    ment proposal, but I repeat the observation I have made that it is not more than about six months' purchase of the net income of the cables. The hon. Gentleman has been good enough to say that he could put down new cables for the money. If that is so, the Government should be in a hurry to contract with him; but under ordinary circumstances, I know that new cables could not be put down for four times the amount. With regard to the payment of officers, perhaps the hon. Member may not be aware that Lord John Manners made an agreement with the Submarine Telegraph Company to extend their contract with the Post Office for ten years longer, and in consequence of that we applied to the French for a renewal of the concession, and at that time the French Government declined to give it; but since then they offered to renew it for 15 years. Then the English Government intervened and prevented the concession being signed. Under the circumstances, I do not think six months' purchase of the net income of the cables is an excessive price. As I have stated the Government have bought a house and a steamer, and they have paid their value. All I can say is that the Government have looked to the interests of the taxpayers, and they will obtain an ample return, notwithstanding the reduction in the charge for messages, and a very considerable profit, in fact—something like 20 per cent, or perhaps 30 per cent.. Consequently, I think the hon. Member opposite need not complain of this small payment.
    MR. RAIKESI gratefully recognize the general feeling of the Committee as to the desirability of the arrangement which has been arrived at by the Government. But there are one or two points which I ought to notice. The hon. Member for Kirkcaldy and other speakers have alluded to the 10 per cent, and the term "compulsory expropriation" has been commented upon. That is not an exact term, but it appeared to me that it was the best I could use to represent the argument I wished to impress upon the House. It is quite true that the company were not obliged to sell their cables and establishments to the Government. They were, however, practically obliged to sell them to the Government because they would

    685
    have got nothing for them if they had sold them to anyone else, as the Government could, by using its influence with the French Government, prevent the company or anyone else from carrying on the business. Although the company could not be said to have a legal claim upon the Government similar to a claim which a person would have whose business was compulsorily taken under the Lands Clauses Act, or any Act of that description, yet the Government, having by its own action terminated their business and made their property absolutely valueless unless they took it over, the company had a right, morally, to a fair and equitable consideration. The hon. Baronet the chairman of the company (Sir J. Goldsmid) has stated that the price given only represents six months' earnings, therefore I do not think it can be said that the Government have erred too much on the side of generosity. The 10 per cent was given in consequence of the compulsory expropriation. As to the bonus, to which objection has been taken, that bonus was given to the English employés of the company. We pay nothing to the French employés, and I ask would it have been creditable to the Government of this country if, after taking possession of the business of the company and having made a selection from among the employés, those whose services were not required were turned out into the world without any consideration? We might, of course, have declined to accept any of the employés of the company, and if we had done so I think the case for compensation would have been weaker than it now is. We deprived the servants of the company of their livelihood by terminating the business of the company, and then by discarding their personal services; and I think that a great country like this would have been inclined to find fault with the Government if they had not made the moderate provision they have with regard to the employés. The Government had to make the best terms they could with France, and the French Government has met them on several points in a liberal and handsome manner. Having arrived at an arrangement, which we believe is a good one for the country and a satisfactory arrangement for all parties concerned, no doubt Her
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    Majesty's Government have been obliged in their turn to make some concessions to France. I am glad to see that the right hon. Gentleman opposite took notice of the provision that after a period of five years the rates are to be equal. In this matter we have, I think, established a principle which may be capable of considerable development. I do not say that it may not bear fruit even before the period of five years is reached. With regard to the Belgian rate of 2d. a word, Belgium would take no less. That country will get half the rate. We have succeeded in getting a penny off the rate hitherto payable for Germany and Holland; and substantial as I believe the reduction in the case of France to be, the reduction in the case of Germany and Holland is even more. The Government will of course be glad if France can at any time be persuaded to reduce her rates; but that is a matter within the competence of France and not of this country. The proposition of the hon. Member for Canterbury that we should leave out of consideration the interest on the purchase money for the telegraphs when dealing with telegraph revenue is an extraordinary one. The hon. Gentleman says the interest of £325,000, a year, which is interest on capital, has, no more to do with the question of telegraph revenue than all sorts of things which he mentioned.
    MR. HENNIKER HEATONI said we paid an exorbitant rate for the property 19 years ago, and spent five millions more than we ought to have expended, and that in consequence we have to pay this large interest of over £300,000 per annum which we have no right to be called upon to pay.
    MR. RAIKESThat is exactly what I wished to convey to the Committee—namely, that the hon. Gentleman is of opinion that we have no right to take into consideration one of the most expensive items in the whole telegraph system. As I have before said there is so much improvement in the working of the telegraphs that there is, I trust, a prospect of a fair excess of revenue over expenditure during the year. But in spite of that, the whole position of the telegraph revenue is one of a very large loss, representing nearly the whole of the interest on the original purchase. The hon. Member for Canterbury has

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    referred to a statement made by the Times on the subject of the Submarine Telegraph arrangement. The Times went out of its way to state that the profits which the Government were going to make out of the new arrangement would be twice the amount made by the Submarine Company. But the Times omitted to point out that one country received 11 centimes and the other 7 centimes.
    MR. HENNIKER HEATONThe right hon. Gentleman says the Times omitted to state that one country received 11 centimes and the other 7 centimes. I say that that statement is distinctly made in the Times.
    MR. RAIKESI do not know how far the hon. Gentleman is responsible for what has appeared in the Times, but I am alluding to a point in his statement in which he referred to this matter. The fact is that the service hitherto paid for at the rate of 7 centimes for England will hereafter be conducted for 9 centimes, and I am at a loss to see how, at that rate, the Government is going to make double the profit which has been made by the company. With regard to the speech of the right hon. Gentleman opposite (Mr. Shaw Lefevre), I do not understand that the right hon. Gentleman has seriously impugned any part of the arrangement, but he asks a question which certainly deserves an answer as to whether the profit which I have ventured to show is the result of the 7c. or the outcome of the 9c. My answer is that it is the outcome of the 9c. On that point I may refer to some figures which will be interesting to the Committee. The annual earnings of the Post Office during the tenure of the Submarine Company out of the 7c. were during the last year £154,800.
    MR. SHAW LEFEVREFor one year?
    MR. RAIKESYes, for one year. The receipts from out of the new arrangement, assuming that the increase of service recoups the Department for the loss we are making by the reduction of the charge—that is to say, if the income is the same although the rate is diminished—will be —222,100; and the difference between those two figures—namely, £67,300—represents the increase of profit minus
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    the working expenses entailed upon the Department by the new arrangement. The working expenses may be put at something exceeding £50,000, and from that I arrived at the figure of £15,000 profit which I have given. The hon. Member for Northampton thinks the Government could have got new cables cheaper. I wish we could do so; but I am assured by those most competent to deal with the matter that new cables could not be got for less than £115,000 to £120,000. I thank the Committee for the way in which the proposals of the Government have been received. I hope hon. Members will believe that the Department will not lose sight of the points raised in the discussion, and that as regards the future we shall be very glad to make a still further reduction in the rates which we now feel it our duty to exact.
    SIR G. CAMPBELLThe hon. Baronet the Member for St. Pancras (Sir J. Goldsmid) has taken up a somewhat peculiar position. He argues that, as the Government are taking over cables which will require a good deal of patching up, therefore it is necessary to pay a high price for them. I should have thought that it ought to have been the other way. I entirely deny that that company, which has for so long enjoyed a monopoly, has any moral right to anything more than the actual value of the business. As regards the servants of the company, I wish my hon. Friend had told the Committee where the large sum for compensation is to go to, because I remember a case in which the Government of India were induced to buy up a very unpaying concern, and to give £50,000 as compensation to its servants, and it was aferwards discovered that of that sum £40,000 had been appropriated by the secretary of the company, the gentleman who had written the polemical letters which induced the Indian Government to buy out the company. While the Submarine Company had a monopoly, the rates were very high to some countries, and I hope there will be a general reduction. I had occasion some years ago to send a telegram to Switzerland, and I was certainly startled at the large amount of the charge. Have we any reason to expect a difference between

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    the charge of the monopolist company and the new charge?
    MR. SHAW LEFEVREI do not quite understand the proposal of the Postmaster General. As I understand, the receipts of last year amounted to £154,800, and the right hon. Gentleman estimates that the receipts next year will amount to £222,100. Then he says that the Government are also taking over an expenditure of £67,000 a year.
    MR. RAIKESNo, £67,000 is the difference between £154,800 and £222,100.
    MR. SHAW LEFEVREThen what is the profit that is now made? I take it to be rather more than £16,000. Does the hon. Gentleman expect to make that amount of profit in future? If there are larger receipts, I presume there are larger receipts, I presume there will also be a larger expenditure, and the question is not altogether an unimportant one.
    MR. RAIKESI am not in a position to answer that question. What I want to point out is, that the acquisition of the property will put us in a position to make a profit of about £15,000. That is the amount of the difference between the Revenue under the old system and under the new, after deducting the working expenses. In reply to the hon. Member for Kirkcaldy, I may point out that the International Convention allows neighbouring countries, such as France and England, to make special arrangements between the time of one Convention and the meeting of the next, but that other countries are bound by the regulations made at the last International Convention until they next meet.
    MR. SHAW LEFEVREI quite understand that there will be a profit of £16,000 or £17,000 a year, but it appears to me that there must be a much larger profit at present.
    MR. RAIKESI quite understand what the right hon. Gentleman means, but I should not like to commit myself as to what amount of profit, if any, there may be more than at present.
    SIR G. CAMPBELLAre we to have the whole of the enormous profit which my hon. Friend the Member for St. Pancras has told us is reaped by the Submarine Company?
    MR. RAIKESThe whole profit that will be made out of the transaction is included in the figures I have given. The reduction in the rate will, of course, very largely reduce the profit.
    MR. HENNIKER HEATONI do not think that a sufficiently satisfactory explanation has been given as to the amount of the bonus—£5,500—given to the Submarine Company. The monopoly has lasted for 30 years, and there is a reserve fund of £20,000. I, therefore, think the company should provide for the pensioning of their servants out of the high dividends they have for many years been receiving. In reply to the observations of the Postmaster General upon the article in the Times newspaper, I wish to point out that in that article it is distinctly stated that though the charge for a telegram was at that time 25c, the company only received 7c, the remainder going to the Post Offices of both countries. How then could the Postmaster General make the statement with regard to the Times which we just heard? I still think the right hon. Gentleman has not given any explanation why, in the division of profits, France should have 11c and England only 9c.
    Motion, by leave, withdrawn.
    Original Question again proposed.
    MR. HENNIKER HEATONmoved to reduce the Vote by £5,500, being the amount of the bonus to be paid for those officers of the Company who have not been taken into the service of the State.
    Motion made, and Question proposed, "That a sum, not exceeding £61,663, be granted for the said Service"—(Mr. Henniker Heaton.)
    SIR J. GOLDSMIDI would appeal to the hon. Member not to press this Amendment. As far as I am aware, we had a staff as capable of doing its work as any that could be found; but the Post Office, having regard to their own staff and for various other reasons, have decided not to employ a certain number. These have a right to compensation for loss of office. A renewal of the concession for 15 years had been obtained from the French Government, but the English Government, stopped all arrangements. I hope the hon. Member

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    for Canterbury, who is usually of a generous turn of mind, will not be so mean as to deny to the men the compensation to which they are justly entitled.
    MR. LABOUCHEREI am sure that my hon. Friend himself would not be so mean as to deprive these men of their bonus. The question, however, is not whether the officials should be deprived of compensation, but whether the shareholders of the company or the Government shall pay it. My hon. Friend the Chairman of the company -says that the French Government would have renewed the concession for a further term of years.
    SIR J. GOLDSMIDThere was a promise to that effect.
    MR. LABOUCHEREWhether the French Government agreed to make a further concession or not, what has that to do with the bonus? The company has assets worth £66,000; they have enjoyed a monopoly for 30 years. During the whole of that period they have paid a dividend of 9 per cent.
    SIR GOLDSMIDNo, it has averaged 6 per cent.
    MR. LABOUCHEREMy hon Friend says their dividend has averaged 6 per cent, an uncommonly good thing. They have further put by a sum of £120,000 as a reserve fund, which, with their assets, makes a total of £186,000. I cannot believe that a company, of which my hon. Friend is Chairman, would be so mean while they are so rich as not to indemnify the officials, who are represented as being the best and noblest of mankind. It appears that the officials of the company are both French and English, and the Postmaster General has declared in a "Rule Britannia" sort of spirit, that the French officials would receive no compensation from the English Government. "We do not give to Frenchmen, but to Englishmen." Why make such a distinction? If justice entitles the English officials to compensation, their French colleagues have an equally just claim. Justice is justice. It is not a question of particular men, but whether a present is to be made to the fortunate share-
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    holders of the company of £5,500. A short time ago I had a dispute with my water company. I generally have one of the company's servants to wait on me, and he said that he would have to pay the money if I did not. I told him that I believed he was specially kept by the company for an emergency of that kind, and that I did not believe a word he said. In point of fact he was kept on by the company merely to go round and endeavour to get money illegally out of their customers. In the same way my hon. Friend is pleading the cause of his company. The fact is that the hon. Baronet is not pleading for the unfortunate officials, but for himself as a shareholder. I certainly think that we ought to vote against this £5,500, because I look upon the principle as utterly unsound, and believe that we are simply making a present of the money to the shareholders.
    The Committee divided:—Ayes 128; Noes, 221.—(Div. List No. 122.)
    Original Question put, and agreed to.

  CIVIL SERVICE ESTIMATES.

    Class II.
    Motion made, and Question proposed, "That a sum, not exceeding £42,250, be granted to Her Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1890, for the Salaries and Expenses of the Office of the Commissioner of Her Majesty's Works and Public Buildings."
    DR. CAMERONAs a matter of form, Sir, I have to renew the Motion for a reduction which I made last night. I propose that this Vote be reduced by £100, and I intend briefly to recapitulate the reasons which lead me to do this. The right hon. Gentleman the Chief Commissioner of Works, for whom I have the highest personal respect, has handed over the charge of Dunblane Cathedral to the Board of Manufactures. Now, this ruin is one of great historical interest and antiquity, and I contend the right hon. Gentleman in handing it over to that Board has acted without the smallest constitutional right, and, further than that, the Board is utterly

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    unfitted to be custodians of national property like this. I intend mainly to base my case upon the impropriety of this alienation of national property, and I therefore invite the House to reduce the Vote. The right hon. Gentleman stated that when he wished to hand over Dunblane Cathedral to a public body he cast his eyes upon the Board of Manufactures, and it was recommended to him by a deputation which included the hon. Member for Dumbartonshire and the hon. Member for Haddingtonshire, and as those hon. Gentlemen concurred in the choice of this body, he thought he could not be far wrong in following their advice. But I venture to say that neither of these hon. Gentlemen can be taken by the widest stretch of imagination to represent the concensus of Scotch opinion. The right hon. Gentleman said he had been in consultation with the Secretary for Scotland, who agreed in the selection of the Board of Manufactures. Now I have always contended that if the right hon. Gentleman wished to transfer this national property in Scotland, he should have handed it over to the Secretary for Scotland, not because I have any particular confidence in the present holder of that office, but because the office is always held by a Minister who is at all events theoretically responsible to this House. The right hon. Gentleman said he chose the Board of Manufactures because it was a non-political body, and such property, in his opinion, should be vested in non-political bodies. But the right hon. Gentleman himself is a Minister holding office, and he is a member of a political body, as also will be his successors, and yet there has never been the smallest objection to vesting national property in Ministers who are political personages. The right hon. Gentleman says that the Board of Manufactures is a well-known body which has a very ancient charter, and that formerly it was known as the Board of Manufactures and Fisheries, and he said this as if Fisheries made it a more proper body for taking charge of the ruins of Dunblane Cathedral. As a matter of fact, when the question of fisheries came to be discussed,
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    this Board was considered to be so incompetent that it was taken out of their hands and intrusted to a Board of less aristocratic pretensions, and probably not possessing in an extraordinary degree the confidence of the Scotch people, yet it was still a great improvement on the Board of Manufactures and Fisheries. Sir, in order to bring home to the House what the right hon. Gentleman has done, I may say that it is precisely as if he had taken Furness Abbey and handed it over to the Worshipful Company of Fishmongers, which is certainly a more ancient body than the Board of Manufactures, and which numbers among its members names even more illustrious than those on the other Board. But I doubt if any Member would make such an absurd proposition, and if he did certainly the House would meet it with reprobation. I may take another illustration. It is as if the right hon. Gentleman were to take that sacred ground of Rotten Row, which is one of the most precious charges of the right hon. Gentleman, and handed it over to the Worshipful Company of Spectacle Makers for the purpose of making a high road of it. Yet what he has done with regard to Dunblane Cathedral is not less defensible than if he had pursued either of the courses which I have suggested. Now, Sir, the right hon. Gentleman has always shown himself to be a reasonable man, and I ask him to see how the Scotch Members vote on this subject, and to be guided by their opinion to alter the course he intends to take, and to withdraw from the proposed act of vandalism.
    Motion made, and Question proposed, "That Item A, Salaries, &c., be reduced by £100, part of the Salary of the First Commissioner."—(Dr. Cameron.)
    MR. G. A. CAVENDISH BENTINCKI wish in a very few words to give the reasons why I think it is my duty to support the Amendment of the hon. Member for Glasgow. Sir, I had the pleasure of hearing a portion of the speech made by my right hon. Friend last night in defence of his policy. The right hon. Gentleman cited facts to show that the restoration is being carried on in a proper way. I do not intend

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    to deal with that branch of the subject at all. I have never had the pleasure of seeing Dunblane Cathedral, and am therefore not competent to give an opinion on the point. The restoration project may be good and it may be bad; in my view in all probability it will be bad. But the point I wish to bring before the House is this—In my opinion the Government ought not to part with their control over a public monument. We know the inconvenience that results from St. Paul's and Westminster Abbey not being under the control of Parliament. It has been suggested more than once that the control of national monuments should be handed over to a public body like the trustees of the British Museum, but although I am a trustee of the British Museum, I do not think that is a body what ought to be intrusted with the care of public monuments. Nor do I recognize the special fitness of the lawyers and men of science who form the so-called Board of Manufactures. I do not know whether they are specially fitted to manufacture cathedrals; probably they think they are. I wish particularly to ask the Chief Commissioner of Works if he has parted with all control over this building, or whether he has reserved to himself any power to retrace the steps taken and once more place the cathedral under the control of the Government.
    MR. R. B. HALDANEAs my name has been introduced into this discussion, I wish to say a word or two upon the subject. I think the question is one of considerably greater difficulty than is supposed by the hon. Member for the College Division of Glasgow, because if the walls of this cathedral are not attended to by some authority which will preserve them more effectually than is likely under the present system they will fall. But, speaking from local knowledge, and as the result of recent inquiries, I must say I do not think it is desirable in the public interest, that these walls should be used as the walls of what is practically a new church. I have no special objection to the Board of Manufactures; it may be it is a very good body for the purpose of preserving cathedrals, but the question is, what is going to be done with this ruin? Now, having formed one of a deputation to
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    the First Commissioner in support of something very like what is proposed to be done, it may be necessary that I should do penance in a white sheet, seeing that I find it incumbent on me now to object to the scheme. While approving of steps being taken to preserve the cathedral and maintain its walls intact, I do not think that restoration should be carried to the extent of constructing what is practically a new church. It is proposed, I understand, to frame and glaze, and. otherwise change the character of an oriel window, which is a special object of interest, and has been written about by Ruskin. It is also proposed to bore holes in the west wall for the purpose of inserting new windows. The effect of these changes would be to completely alter the structure of the building. In the absence of any assurance that such things will not be done, I cannot oppose the reduction of the Vote.
    SIR JOHN KINLOCH (Perth, E.)I wish to protest against any interference whatever with Dunblane Cathedral. I object, in the first place, to its being handed over to a particular church. In the second place, I wish to say that restoration is all very well in its place, but what would be said if it were proposed to restore Melrose Abbey or Fountains Abbey? You are proposing to restore one of our most magnificent ruins, and I say the projected restoration of Dunblane Cathedral would be a work of vandalism.
    MR. FRASER-MACKINTOSHI shall—support the Amendment because I think it was not right to transfer Dunblane Cathedral to the Board of Manufactures; but at the same time I must say it is not a ruin in the sense that the abbeys just named are ruins. It would be very wrong to interfere with the character and main features of a building which is undoubtedly of great historical interest, though I do not gather that the proposed repairs will in any way interfere with its characteristics.
    THE FIRST COMMISSIONER OF WORKS (Mr. PLUNKET)The objec-

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    tion raised by hon. Members this evening seems to be solely confined to the transfer of this ancient ruin to the Board of Manufactures. I referred last night to the fact that although the Board was originally called a Board of Trustees for the Manufactures of Scotland, it really is now more an artistic body than anything else, and I assert again it would be impossible to find in Scotland or anywhere else a Board better suited for the purpose for which it is now being taken advantage of. The Board consists of the leading men of both political parties who have been asked to join it as I understand not only as useful members of the Board, but also to some extent as an honour to themselves. But my right hon. Friend the Member for Whitehaven objects to the transfer of any ruins or architectural objects of interest that are under the control of the Government to any other body whatever. There is, no doubt, a great deal to be said for that as a general principle. Though I do not go so far as my right hon. Friend in that direction, and I certainly do not agree with him in one part of his argument. I understand him to say that if you transfer an architectural structure of this kind to a body like the Board of Manufactures or even, as he said, to the British Museum you will have differences of opinion, and then those persons who are really authorities on the subject of art will very likely be outvoted, and he thinks, therefore, that the custodians should be responsible to Parliament and that the vote should be taken in the House of Commons. My right hon. Friend considers himself, and no doubt he is, a very excellent authority on questions of art, but I should like to ask him to search his memory and to tell me how many times he has been outvoted in this House on artistic questions. He never fails to express his views fully and positively, and no doubt they are very sound, but so far as I know they have never on any one occasion been very successfully put forward by him—never! What has happened in the present case is
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    this:—There came to me an influential deputation representing the heritors of the district and other persons interested in the locality, and they urged very strongly upon me that this beautiful old ruin was going to decay, and that the best way to restore and maintain it for all time and to preserve its beauty would be to roof in the nave and otherwise render it fit to be used as a parish church. I must say the action of my hon. and learned Friend the Member for Haddingtonshire (Mr. Haldane) to-day was the most melancholy exhibition of the backing of a friend that I have ever listened to in the House of Commons. My hon. Friend made to me a very eloquent speech as a member of that deputation, in which he urged the general propriety of the scheme, and the particular advantage of putting a roof on the walls of the cathedral with a view of preserving the ruin. I have in my hand a memorial which was presented by the hon. and learned Gentleman. It is as follows:—
    "Your memorialists consider the fittest and wisest means of providing the extra accommodation required—"
    that is to say, for the congregation—
    "Is to utilize the ancient and beautiful nave of the cathedral. To do so involves the entire restoration of that part of the building, including the re-roofing of the nave. This cannot be accomplished without the consent of the Crown."
    And then the memorialists go on to refer to the report of a very eminent Scotch architect whose Report was annexed to the memorial. In that report the architect said
    "I am of opinion that the walls are strong enough to carry a new roof and that the decay, although considerable, is only superficial."
    My hon. and learned Friend presented the memorial to me, supported as it was by the architect's view I have read. I can only say of the hon. and learned Gentleman
    "Never more be officer of mine."
    MR. HALDANEI am sure my right hon. Friend will remember that there wore modest members of the deputation who remained perfectly silent. I was one of them. What we waited upon him for was to get something done to put Dunblane Cathe-

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    dral in a condition which would maintain its walls, and not to carry out any particular plan. I admit the force of the charge so far as possibly criminal negligence on my part is concerned, and I certainly shall not vote against the right hon. Gentleman's salary, for I do not intend to vote at all.
    MR. PLUNKETThe accents of the hon. and learned Gentleman when he supported the memorial are still lingering in my ear. But I will pass that by. There was then a seeming unanimity in favour of the prayer of the memorialists, and there is still, as I showed last night, when we debated this question, an overwhelming preponderance of architectural authority in favour of what I have done. No opposition whatever was raised to the course which is now being taken until at the beginning of this year the hon. Member for the College Division asked me a question on the subject.
    SIR G. TREVELYANWe are certainly in an unfortunate position in being obliged to raise this question in the odious form of reducing the salary of a Minister, and of such a Minister as the right hon. Gentleman. The good faith and good feeling of the right hon. Gentleman are conspicuous in every word he speaks, but we are face to face with a very serious principle indeed, which was raised by the right hon. Gentleman the Member for Whitehaven (Mr. Cavendish Bentinck), that is to say, whether an ancient and beautiful ruin ought to be left as an ancient and beautiful ruin, or converted into a modern church. The right hon. Gentleman (Mr. Plunket) truly says, he has very large architectural authority in favour of this change. Of course the architects of this day are bound to think that they build better than the architects of old, but we do not think so, and we prefer the relics of old to the best new edifices which can be made out of them. I see two or three Members who are connected with Yorkshire, and I ask them what they would think if Bolton Abbey and Fountains Abbey and Riveaulx Abbey were converted into modern
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    churches, even if the work could be done by the late Mr. Steel or Mr. Pugin, or any other architect you like to name. I think it would be considered an absolute disaster to the whole county. But however important great ruins may be to Yorkshire, they are far more important to Scotland, because whereas in Yorkshire and other counties we have our glorious cathedrals—cathedrals which were, perhaps, improved by the Reformation, it may be said that the only opportunity the Scotch people have of experiencing that peculiar form of artistic and poetic enjoyment which is obtained by seeing a perfectly beautiful ecclesiastical building, is that afforded by these ruins. The right hon. Gentleman talked of the eloquent speech of my hon. Friend. No speech could be so eloquent as photographs of Dunblane Cathedral, which my hon. Friend has been showing on these Benches. It is quite clear from these photographs that Dunblane Cathedral has something of the beauty of Melrose, of Tintern, and of Glastonbury. Is it conceivable we should allow Melrose, Tintern, and Glastonbury to be altered into parish churches? Recollect that once this is done it cannot be undone. I will not enter into the constitutional question. I am sure the Board of Manufactures deserves the confidence the right hon. Gentleman reposes in it, but on the broad principle of preserving Dunblane Cathedral as it is, I think we should do well, although with great reluctance, to vote against the salary of the right hon. Gentleman.
    The Committee divided:—Ayes 108, Noes 179.—(Division List, No. 123).
    Original Question again proposed.
    It being after ten minutes to seven of the clock, the Chairman left the Chair to make his report to the House.
    Resolution to be reported To-morrow.
    Committee also report progress; to sit again to-morrow.
    Notice taken that 40 Members were not present; House counted, and 40 Members not being present,—
    House adjourned at five minutes after nine o'clock