HC Deb 29 March 1892 vol 3 cc166-99
* DR. CAMERON (Glasgow, College)

On the last occasion on which I called attention to a matter connected with the subject, an hon. Member came to me afterwards and asked what interest I had in the telegraph system. I may, therefore, at the outset explain that I have no earthly interest as a private individual in the Telephone Company whatever. My interest in the whole question of telegraphy and telephony arises from the fact that many years ago I was instrumental in getting this House to accept the Resolution which led to the adoption of sixpenny telegrams. The Post Office of this country acquired the telegraph system when the telephone had not been invented. In 1876, when a Committee sat to consider the question of postal telegraphs, the invention had attracted some attention, but no mention was made of the telephone as a possible adjunct of the telegraph. In 1878 telephonic communication was being developed, and the system was so far perfected that the Post Office saw it was likely to grow into a serious competitor with the postal telegraphs, and accordingly in a Bill which was introduced in 1878—a Telegraph Bill—the Government endeavoured to extend the monopoly of the telegraphs, which they had purchased, to the monopoly of telephonic communication, which they certainly had not purchased. And in the Telegraph Bill of 1878, as it came down from the House of Lords to this House, Clause 3 read as follows:— The term telegraph in addition to the meaning assigned to it by that Act shall include any apparatus for transmitting messages or other communications with the aid of electricity, magnetism, or any other like agency. That was evidently intended to confer on the Post Office a monopoly of telephonic communication without any proposal to compensate the inventor for his invention in this country. That appeared to me and some of my friends a dishonest proposal, and we opposed the Bill on that ground until the Government consented to drop that clause. The Bill went through with that clause knocked out, but the Post Office saw the danger to their monopoly of the telegraphs which would arise from the development of the telephone, and they set to work and tried to obtain a monopoly in another fashion. Under another clause of the Telegraphs Acts they brought an action, and on the 21st December, 1880, Mr. Justice Stephen delivered judgment in their favour, declaring that the telephone was, for the purposes of the Telegraphs Acts, a telegraph. I do not blame the Post Office for their anxiety to secure a monopoly of telephonic communication. They had expended at this time a sum of £10,000,000 of public money in acquiring the telegraph system, the postal telegraphs were barely paying their working expenses, and it was certain if the competition of the telephone was brought to bear against the telegraph system the result would be a heavy loss to the Post Office. I do not find fault with them, therefore, for endeavouring to extend the monopoly as a protection against that loss. And I say if they had followed up the advantage they had gained in a more business-like manner, they would have been enabled to acquire, on very reasonable terms indeed, all the equitable rights of the inventor of the telephone; they would have been in a position to arrest any attempt to plunder them, as was done in the case of the telegraphs, and in the telephone in this country they would have acquired a most valuable addition to our telegraphic service, which they could have worked in a way such as no private company could have done. The Post Office had the telegraphs in its own hands, it had the highest technical skill in its own department, a monopoly of buildings and offices all over the country, and a network of telephonic communication could have been established with which no private company could ever hope to have competed in point of efficiency and cheapness. And the telephone in that way would have been an admirable feeder of the telegraph service. The Government when they acquired the telegraph service did not, as I think they should have done, afford some equitable compensation to the inventors of the telephone. Instead of doing that, they proposed to attempt to set up some telephonic service for themselves. They did it, however, in a very feeble way, and they defended themselves rather by levying a very heavy tax, a crushing tax, upon such Telephone Companies as were in existence. They levied upon those Companies a tax of some ten per cent. upon their gross earnings. If their intention was to crush out this competition the invention was too valuable to be crushed out, and it improved and extended notwithstanding the heavy taxation. By-and-bye the public conscience began to feel touched. Mr. Fawcett, a gentleman with a very high sense of what was just and who was in intimate touch with public opinion in all matters connected with his Department, saw that the position of the Post Office was untenable, and proposed a new arrangement with the Telephone Companies. In some respects his arrangement did not go far enough; it might with advantage have further reduced the royalties proposed to be levied; but it also went too far, as it placed the trunk lines of the country at the disposal of the Telephone Companies, or promised to give them licences over the trunk lines for communication between the great towns. When the Post Office acquired the telegraphs, an argument put forward in favour of monopoly was perfectly sound. It was that if competing companies were allowed they would tap the large towns which were profitable and leave the smaller and unprofitable towns to the Post Office. The Postmaster General said that in those places where the trunk system has been most largely developed the postal revenue was suffering, and that to such an extent as to make it imperative to consider the question of taking back these trunk lines. By these lines London, Birmingham, Liverpool, Manchester, Leeds, Brighton, and other large towns are in communication, and all the large Scotch towns are similarly connected, while it is promised that, at an early date, all the large towns throughout England and Scotland shall be in communication. Long distance telephony can be made perfectly satisfactory, as is proved by the line between Paris and London, and by the long-distance Continental lines; but in this country it has not yet been developed to such an extent as to be a dangerous rival to the Post Office. When, however, we have the double wire system, with the best instruments, it will prove a formidable rival to the Government telegraphic department. A crisis has now arisen in consequence of the companies asking for powers which it would be right for them to seek if they were proprietors instead of being merely licensees, and the Government oppose these powers. The right hon. Gentleman is too fair-minded not to know that it is impossible to check the growth of the telephone system in this country, and he comes forward to propose as a new modus vivendi that the Government should take back their right to the trunk lines, and in return should lay inter-exchange cables, and allow the use of the post offices as public call offices to the Telephone Exchanges. Mr. Fawcett hoped through competition to secure a cheap and efficient public service. There were, at the time of his arrangement, 13 Telephone Companies licensed to set up wires throughout the Kingdom, but there was nothing like free trade among them. I know of a number of instances where licences were refused when they ought to have been granted. There is the case of a Mr. Symmington, in my own constituency, who, before the introduction of the telephone, created an ABC Telegraph Exchange, and secured a number of subscribers, who had ABC telegraph instruments. He, therefore, first introduced the system of telegraphic exchanges to this country, but he was refused a telephone licence. In another case a gentleman, at the approach of the period for the expiration of the Bell patent, brought over some loud-speaking telephones and sought a licence, which was refused him. In December, 1890, I asked a question on the subject, and was told that it was under consideration. In June, 1891, I received the same reply, and a few weeks ago the Postmaster General told me that it was still under con- sideration. Meanwhile, the competing companies have come to a nice comfortable arrangement between themselves; they have practically united in one single company, and so constituted a great monopoly. The consequence is, that the present price of the telephone service is greater than anywhere else in the world. The rent in London is £20, and the service is not such as to give satisfaction. A deputation from the Chamber of Commerce waited on the right hon. Gentleman the other day, and one member spoke of the London service as being the dearest and most inefficient in the world, and another represented some thousands of telephone users, united in a Telephone Subscribers' Protection Society, whose object was to get a better service from the National Company. Mr. Raikes opposed the amalgamation of the National and the United Telephone Companies, and threatened official pains and penalties, but nothing has been done in the matter. Now, the right hon. Gentleman proposes another policy which, so far as I can see, will consolidate and perpetuate the telephone monopoly which at present exists. He proposes a system of greater restriction, and tells us that new licences shall only be given under conditions of increased stringency. He also proposes to give the post offices as public call offices, and that will practically give the company using them a monopoly, or, at any rate, an advantage over the other companies. If the Government charge for the inter-exchange cables it will be an addition to the royalty, and the companies will then probably add to their charge, and certainly not lower them. As I do not wish to be unfair to the Post Office, I may mention another reason for the unsatisfactory, condition of the telephone service. The paper Electricity says— It is not the Post Office which has stood in the way of telephonic progress. Like electric lighting, telephony has been artificially kept up by iniquitous financial speculation, and, as for instance in London, by the ignorance and bungling of an inexperienced staff of employés." I cannot speak about the speculation and inexperienced employés, but that something beyond the Post Office is to blame for the high charges is evident from the fact that in those districts where dissatisfaction has given rise to competition—as in Manchester—the rent has been reduced to £6 a year, instead of £10 or £12 a year as in other provincial towns. That proves that high charges and unsatisfactory service deter the public from using the telephone. The Manchester Company, which is a new one, put down the double wire system, and within three months of starting had 800 subscribers, the total number of subscribers in London being only five times as many. This incontestably proves that there is something beyond the royalty which is responsible for the strangulation of the telephone business in this country. The policy of the Post Office has utterly failed to bring about competition; it has led to monopoly and high charges; and has kept out improved instruments and an improved system of wires. If we had free competition new companies would come in and spend their capital to greater advantage, and the public would be better served. But between the practical monopoly which the Government has allowed the National Telephone Company to obtain and the inflated capitalisation of the Company, the old system, which was good enough at the commencement of telephonic enterprise in this country, is still considered good enough in London, and practically good enough for all the country except where competition has induced the Company to lower its rates. The result has been to cripple the system. The right hon. Gentleman mentioned the other, day that the City of Berlin, although it has not one fourth of the population of London, and although it has much greater postal facilities than London—for it has a tube post by which you can every five minutes send a card or a letter to any part of the town—and although Germany is a very much poorer country, yet in spite of these disadvantages Berlin has four times the number of telephone subscribers that London has.


What I said was that the proportion of telephones was four times greater than in London. I mean that while the number of telephone subscribers in London may be one per 1,000, in Berlin it is four per 1,000.


However that may be, the telephone subscribers in Berlin number 17,000, and the fact remains that the Government work the telephones. In France the Government recently took over the telephones, and in 18 months from the time of taking over the number of subscribers in Paris was nearly doubled. Between September, 1889, and January, 1892, the number of subscribers had been increased by 3,475, and the annual income had been augmented by £40,000. This shows how powerful is the natural growth of telephonic communication when once restrictions have been removed and an efficient service provided. It has often been said that telephones are the luxury of the rich. They have been the luxury of the rich in this country in consequence of the high charges and the heavy imposts placed upon them by the Post Office. In Switzerland the Government charge 80 francs (64s.) a year as a fundamental tax for 800 messages, and over that number a charge is made of five centimes (½d.) A similar tariff has been adopted in Norway and Sweden, and I maintain that when once the service is in the hands of the Post Office, and when there is a call box in every post office, there will be no reason why the telephone should not be as generally used as the telegraph, and it will be most useful to the poorer classes of the community who cannot compress their words to meet the necessities and charges of the telegraph. Of this I am certain—that if the Post Office will give the facilities which they propose to do in connection with the Post Office to Telephone Companies, and if the Telephone Companies, driven by public opinion and the force of competition, double their wires and improve their system, the Post Office will find that in urban districts also the telephone system will rise up as a formidable competitor to the Post Office telegraphs. The Post Office will, sooner or later, in self-protection, have to acquire the telephone system, and every year the sum they will have to pay for it increases. If they had acquired it in 1880 they might have secured it for a few hundred thousands: now the sum has grown to millions. But for the impression which the heavy cost of the acquisition of the telegraphs has made upon the country I am certain that the Post Office would not hesitate to purchase the telephone system; but it must be remembered that the Post Office is in a totally different position with respect to the acquisition of the telephones from that it was in at the time of the purchase of the telegraphs. When it proposed to purchase the telegraph system, it proposed to purchase an undertaking over which it had no control, and for the management of which it had no special facilities. After completing the purchase on the best terms it could make it had to buy its experience, and that at a very costly rate. The telephone stands in quite a different position. It possesses already the monopoly of telephone communication, and it can refuse licences or can grant licenses to competing companies. I have no desire to see anything like a confiscation of existing rights, but the Post Office must see that it is in a position to insure that it should not be called upon to pay more than a fair and equitable sum for the acquisition of the system. Already it has a large margin of profit in its royalties, so that if it were to forego altogether the dividends which the Telephone Companies pay, and to forego any prospective increase which the companies will have to pay on their inflations of capital, the development of the system would rapidly increase the revenue which the Government derives from that source. There is a most intimate connection between the telephone and the telegraph. Already it has been shown that simultaneously you can have telephonic and telegraphic messages transmitted along the same wire. Already in Germany the telephone has been made use of as a means of communicating to outlying districts with most satisfactory results. The Government has undertaken the business of telephonic communication with Paris, and, doubtless, that experiment will be followed by the extension of the telephone cables to other European countries. The Post Office is now proposing to take over the trunk lines, and to take over the construction and charge of inter-exchange cables. To safeguard their telegraphic business they will find that they are bound to go a step further and to take over the whole of the business into their hands, Up to the present the Post Office has only appeared in connection with the telephone as the proprietor of rights for which it has never paid; as a levier of blackmail on the users of the telephone, and as a taxer of that speedy communication between the citizens of the country, and especially between business people, which has done so much to accelerate and to stimulate business in this country. Under the Post Office system of dual control, and in spite of the avowed policy of the Office, a monopoly has grown up under which the public groan and the telephone languishes; and in asking the House to support the Resolution which I have put on the Paper, I ask the House to affirm the principle that the Post Office should do something to justify its monopoly, and that it should relieve us of this system of dual control, which has been fraught with so much mischief.

(3.21.) MR. HENNIKER HEATON (Canterbury)

I think it is a matter for regret that more notice was not given of a question of the importance of this one. It is of the greatest importance that this House should strengthen the hands of the Postmaster General by insisting that the whole system of telephonic communication should be taken over by the country. At the same time, I cannot agree with the hon. Member (Dr. Cameron) that it would have been better if the telephones had been taken over ten years ago, because a great number of the concessions are falling in, and there is now a better opportunity for the Postmaster General to acquire the whole system on advantageous terms than at any previous period. It has been clearly pointed out that the right hon. Gentleman has not yet gone far enough, but I hope that the discussion to-day will enable him to go further, and take over the whole telephonic connection. I was not a very great advocate for telephonic communication until I had seen the marvellous progress, the splendid instruments, and the system of work in foreign countries. I had no notion of the great future of telephonic communication until I had witnessed the system in Australia, and had read an article, which has no doubt been brought under the notice of the Postmaster General, by the Duke of Marlborough on "The Future of Telephonic Communication." No one who has read that article could fail to come to the conclusion that it is absolutely necessary for the State to take over the telephonic system, and to introduce some system such as is in force in Melbourne, a city with only a third of a million of inhabitants. I trust that this will not be made a Party question, but will receive the support of the entire House, and I have pleasure in supporting the Resolution.

Amendment proposed, To leave out from the word "That," to the end of the Question, in order to add the words "the Post Office system of granting licences to private telephone companies having resulted in the restriction of telephonic communication in this country and a costly and inefficient service, this House is of opinion that, alike in the interest of the postal telegraph and the telephone service, the telephonic monopoly possessed by the Post Office should be worked directly and in connection with the Postal Telegraph Department,"—(Dr. Cameron,) —instead thereof.

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

*(3.26.) SIR A. ROLLIT (Islington, S.)

I agree most cordially with the hon. Gentleman (Mr. H. Heaton) in expressing regret that more general notice was not given of this Debate, for I am certain that there is no question in which the commercial community just now takes more interest than in that of telephonic communication. I have had the opportunity, as Chairman of the Council of the London Chambe of Commerce, of ascertaining the wishes of the business part of the community with regard to this matter, and I do not hesitate to say that the general feeling is that in the matter of telephonic communication we are much behind other countries. Experience has conclusively proved that the telephone is a great commercial advantage, and, in fact, that in these days commerce cannot be successfully carried on unless the system of communications is as perfect as it can possibly be made. Despatch is now one of the chief elements of profit, and unless commerce has at its service the latest and best appliances of science it cannot be conducted advantageously or properly. I believe, with the first speaker (Dr. Cameron), that the telephones could have been very profitably bought some years ago, and that every year adds to the sum we shall have to pay for them. For my own part, I value at its full rate the advantages which this country has derived from private enterprise, but I think there is now some danger of estimating too highly the service of private enterprise and of underrating the power and organisation of the State. The principle of action which I venture to suggest on this point is that the State ought, as a general rule, to do for the community those things which it can do cheaper and better than the individuals themselves; and this principle is, in my opinion, applicable both in the State and in the Municipalities, not only to subjects of primary necessity, in which it has been largely adopted, but also to our system of communication and the like. And, as regards communications, it is a matter of some urgency that the State should bring to the aid of the individuals greater power than the can themselves apply. Then I think there can be no doubt of this,—that other countries are taking every means to avail themselves of that power and organisation on the part of the community. Let us contrast for a moment the want of development of the telephone compared, in the hands of private companies, with what has been done by the State in regard to the telegraphs, and even the telephone itself. I had an opportunity of experiencing the other day the great facility with which communication could take place from the London General Post Office with so distant a place as Marseilles. That is no longer an experiment; it is a most admirable success as between London and the south of France. I have also some experience of such matters in America, where numbers of towns practically become one, and where an admirable system of intercommunication exists. And judging of the application of the telephone in this country I have no hesitation in saying that when conducted by the Post Office it is decidedly better than in the case of the application by the chief private company. So far as I have had an opportunity of comparing their relative merits, I believe the system introduced by the State under the admirable direction of Mr. Preece has been attended with great practical advantages in this country. It may not be cheaper, but, whether due to a complete metallic circuit and so to the limitation of induction (as I think essential), or to other causes, it is certainly much better because more audible. That being so, I think we ought to persevere in the same direction. The great obstacle, possibly, to the development of the telephonic system may be the fact that it may be made to contribute too much to revenue, I think, in the case of the Post Office that has been carried too far, and that the commercial community has been practically and unduly taxed for the benefit of others, thereas the community ought not to be taxed for classe or classes for the community. In the event of acquiring the telephonic system, therefore the House should protest against the Treasury regarding the system mainly or chiefly for revenue purposes. What the country wants, if it is to keep pace with competing nations, is the best and the cheapest forms of inter-communication.

(3.35.) MR. LABOUCHERE (Northampton)

I entirely agree with my hon. Friend, and it seems to me to be essentially a question whether in this particular monopoly the State ought to impose conditions on private companies, or do the work itself. The hon. Gentleman opposite has elaborated a very interesting and valuable Socialistic view of the duties of the State. I very much agree with him, speaking generally; but on this particular subject I would point out that this is essentially a luxury for the rich. ("No, no.") Well, you say "No"; my hon. Friend says "No" behind me. It depends upon who my hon. Friend considers a rich man. There is no doubt that if telephonic communication is introduced into houses generally, it will be at a charge of at least £6 per house. (Dr. CAMERON: No, £4.) Well, £4. I will split the difference, and say £5. Anyhow, as a matter of fact, it will cost about £40 to connect any particular house with the telephone. You have got to pay interest on that; besides that, you have to pay for the expenditure of the central office—the people employed on the thing—and I think if anybody calculates it, he will see that I am not very far wrong in saying that the minimum cost in cities, like London would certainly be over £5 for the privilege of being connected with the telephone. Therefore, I should not say that this is essentially a poor man's question, and I should rather say that it is a question for not a very rich man like my hon. Friend behind me, but for that man who has certainly a larger amount of wealth than the mass of the community. I remember talking to the late Mr. Fawcett when he was Postmaster General upon this very question, and at that time I urged him to take the patents up at the expense of the State, because I thought the telephone would compete in private hands with the telegraphs and injuriously affect the Revenue. The difficulty then was this: the patents were not in the hands of the original patentee, the patents had got into the hands of the promoters of companies and such like persons. It would, consequently, involve a charge of an immense sum of money for these patents more than they were worth, considering that the patents would be out after the lapse of about 14 years. That was the reason why Mr. Fawcett did not take up the cables. I remember putting the matter to the late Mr. Raikes when he was Postmaster General, and he pointed out to me that he himself personally was in favour of taking over the whole thing, but he said the Treasury were not in favour of it, looking at the very great expenditure. The expenditure would be very great indeed. It would amount to about £8,000,000, and certainly it is a matter seriously to be considered, not whether this would add to the Revenue but whether this would pay its expenditure, before we undertake it. Now, my hon. Friend behind me has complained of the essential monopolies involved in the present system of licences; but as I understand the Government plan, that is not intended. As a matter of fact, I believe that almost all the persons who have acquired licences have acquired them simply with the object of re-selling them to some particular company. In fact, their object has been a blackmailing one. Therefore, I think the Government ought to be very careful in giving these licences. I think that when the right hon. Gentleman (the Postmaster General) arranges the system in a new Bill he ought to do something like what has been done in regard to the Gas Companies, but with more care for the public interest. He ought to estimate himself, about what the fair price ought to be, and he ought not to allow a company to charge above a certain tariff; and he ought not to allow a company to pay above a certain dividend, providing for a reduction in price under certain circumstances. If this were done, I very much doubt whether there would be any considerable objection to this matter being carried out by public companies. Now we have a National Telephone Company in London. My hon. Friend has most properly complained of that company. That company is a financing company. It had got a capital—speaking in round numbers—of about £3,000,000 sterling. A very large portion of this amount has been expended on what is called buying from the patentees; in point of fact buying patents from middlemen, and Heaven knows who has participated in the spoil. Practically speaking all the important patents have lapsed already, or will lapse in the present year; and therefore we may conceive that the amount of capital which was paid for them is absolutely dead. But these gentlemen have also been perpetually amalgamating with other companies. I think it would have been infinitely better if the Post Office had interfered with these amalgamations. As regards this telephonic system, not only is the service expensive, but the service is exceedingly bad. This may be the consequence of not having this entire metallic circuit. I confess, from the outline of the Bill of the right hon. Gentleman the Postmaster General, I certainly do think, with certain further provisions which I have suggested, it would be better for the public and better for themselves if they carried out this system which is to absorb all the trunk lines, and to make these trunk lines intercommunicate between town and town. I think there is at the present moment a trunk line between Paris and London, and I think I am right in saying that it does not pay.


That is not one of the trunk lines that is going to be taken up. The Government has that, and with the exception of that trunk line it would start discharged of the trunk lines that do not pay.


Certainly; and we will only take over those that do pay. I am very anxious to see the Bill of the right hon. Gentleman, but I am bound to say that from the general statement that he made the other day I thought the Bill met this very difficult question very fairly. Like my hon. Friend behind me, I have not, and never had, any financial interest in this matter; but I have always taken an interest in this matter. I thought we were thoroughly behindhand in proportion to the advance other countries have made in telephonic communication; and I do hope that not only in London, but in all the other great towns, we shall have, not only a good telephonic system, but a good, cheap, telegraph system of communication.

*(3.50.) MR. QUILTER (Suffolk, Sudbury)

I did not intend to say one single word in this Debate, but as I happen to be so largely interested in the institution which has been so much alluded to by hon. Members who have spoken, I have thought it my duty to draw some slight attention to the matter before the Postmaster General makes his statement. I think I may fairly pass by the statements of my hon. Friend the senior Member for Northampton, who has just sat down. Members of this House must be pretty well familiar with them by this time. I myself have read them, or something very much like them, in the journal with which the hon. Member is connected; and each time they have appeared, I must say I have regarded them with less and less apprehension. I had hoped to have heard from the hon. Member something fresh to-day. It is wonderful that any Company could have developed to such an extent as that with which I am connected, with the hindrances and the disadvantages with which it has had to contend, and the utter absence of any power of communication from place to place, and having to do all its business on sufferance. The hon. Member for the College Division of Glasgow has talked about "costly and inefficient service." I should like to state that over 160,000,000 messages have been transmitted at the cost of under ¾d. a message over the wires of the National Telephone Company, which, with the answers incidental, and which, Sir, you know as "arising out of," represent nearer 200,000,000. On the question that the trunk wires are inefficient I may state that on one day we sent 40,000 messages between Liverpool and Manchester districts. One more instance to show that we are not so inefficient: in Leicester, Her Majesty's Post Office Telephone had 130 subscribers in July, 1890, when the Company's Office was opened. The Government Office has now only 100, while the National Company have 275, and yet our subscribers have not the same privileges of those of Her Majesty's Post Office. I cannot understand how it is that in a free country like this the licences of the Government are not entitled to the same privileges as the Government subscribers themselves. In spite, however, of this dead weight, the Company has made marvellous way in all parts of the country. I will also say that if it had the requisite and proper powers it has the means, it has the intelligence, and it has the staff, to meet the requirements of its subscribers in London also; and it would be perfectly able to do the work if the Postmaster General would delegate to it those powers for which it contends. I trust it will not be considered that I am holding a brief for the National Company; and that the House will excuse me for desiring to show that it has made very considerable progress, and done much towards the cheapening of communication in this country.

(3.56.) MR. CUNINGHAME GRAHAM (Lanark, N.W.)

Both the hon. Member for Northampton and the hon. Gentleman who has just sat down have failed to show us any reason why the telephonic system should not be taken over by the State. I do not regard the acquisition of it by the State as a mere commercial act. I believe it would be more to the benefit of the community if it were worked by the State than by private companies. Let me take the case of the Small Arms Factory at Enfield. I hold that it would have been impossible, had that factory been in the hands of a private company, to have attracted so much attention to what has occurred there, and to have obtained such favourable answers from Ministers with regard to it. I deplore the loss of the profits which might have been made had the State taken over the railway system of the country. Telephone communication will undoubtedly progress in the same ratio as the railways have progressed, and it will be another source of regret if the profits which will arise from it are enjoyed by private companies instead of by the community at large. There was one statement which fell from the hon. Member for the College Division of Glasgow, from which I must entirely dissociate myself. If there is one profession in the world which requires the services of a skilled operator it is that which is connected with the telephone. Personally, I have never been able to understand what anyone says to me through it, and I doubt whether those who have been the recipients of my confidences by its means have made out what I have said myself. Therefore, I take it that the telephonic trade is a highly skilled trade. I hope that the House will adopt the Resolution of the hon. Member for the College Division of Glasgow.

(4.3.) MR. ESSLEMONT (Aberdeen, E.)

It has been stated that the telephonic communication in London would have been more satisfactory had the Company had sufficient powers to work upon. I quite believe that that is true; but I say that no Government can wisely give to a private company the powers that are necessary to conduct an undertaking of this kind. Private rights are so large that no company could be permitted to make profit out of a concession made to the public. The whole benefit of the concession ought to be in the hands of the public, and it ought to be worked for their benefit. My hon. Friend the Member for Northumberland has stated that this is not an undertaking that would benefit the poor. I agree with him entirely. The postal and telegraphic systems do not only benefit the poor; they have been of most advantage to capitalists and people of large means. The same thing is exactly true as regards telephonic communication. It is taken advantage of more by the capitalists than the poorer classes of the community. Therefore, I agree that, in order to make it of some benefit to the general public, it should be taken over by the Post Office and the Government. Every day it is delayed it will be a source of inconvenience to the public. It is the Government alone who can obtain for the poorer classes the benefits which they ought to derive from it. I shall have much pleasure in supporting the Motion.


The Motion of the hon. Member for the College Division of Glasgow should not, I think, be regretted, for it relates to a question which ought to be fully understood, and in the statement I had the honour to make a week ago I said that I desired to take the House fully into our confidence by explaining thoroughly the scheme which we have in view. I do not think anybody will imagine that the interest taken in the country in this matter is to be measured by the attendance at a Morning Sitting. The discussions in the Press during the last week show that it has far reaching interests, and the more the matter is discussed the more it will be seen that it will, if properly handled, contribute to the wealth and the convenience of the country. The discussion has already taken a considerably wider scope than is given in the terms of the Motion of the hon. Member for Glasgow. Therefore, Sir, I do not think the House will consider I am wrong in following the lines of those who preceded me. Sir, the course previously taken by the Post Office in successive Administrations in regard to this matter may or may not have been the best. It may fairly be considered that this great enterprise of the telephones might have been con- veniently conducted along with the telegraph, of which it really forms part, or at any rate to which it is closely akin. But, Sir, that course was not taken, and we have to deal with the matter under existing circumstances, admittedly involving considerable inconvenience from the fact that on the one hand a considerable property has grown up in the hands of licencees of the Post Office, and on the other hand that the system has failed to produce so extensive a use of this most useful invention as was anticipated by the Government who gave licences, or as now obtains in other countries. It would be altogether incorrect and unjust to allege that the object of the Post Office is to stifle this invention. That never was the object of the Post Office—it certainly was not the object of my enlightened and lamented predecessor Mr. Fawcett. I am quite sure there was no man more disposed than he was to encourage invention and to embrace any reform that seemed likely to benefit the country. Now, Sir, the object that we have at heart is the development of the Telephone system, and it is very likely that in my desire not to prolong discussion last Tuesday, my explanations were insufficient. Undoubtedly in the comments that have been made upon the discussion of last Tuesday, several misapprehensions have been disclosed which I am very glad to have the opportunity of removing. It is not correct to say as the hon. Gentleman the Member for the College Division of Glasgow has said that the Post Office set up the telephones in a feeble way whilst they plundered at once the companies and the inventors. In fact, the inventors had in the first instance sold their interests to the companies, and the companies employed them for their own advantage. They did so by the institution of exchanges, which were found by a judicial decision to be against the law because they carried on a business which was part of the Crown monopoly.


I did refer to that.


Yes, the hon. Gentleman did refer to the clause proposed in the Bill of 1878. There was considerable difference of opinion as to that clause. The authors of it deemed it necessary in order to protect the interests of the public. Other lawyers held that those interests were sufficiently protected by the existing law, and a decision of the High Court showed that they were right. But those who introduced the clause, and those who thought it unnecessary, held that the telephones were within the functions of the State. The hon. Gentleman the Member for Glasgow says the Post Office capriciously refused certain applicants grants of licences whereas they were granted in other directions. Well, Sir, no doubt there have been different policies prevailing at different times, and applications were dealt with according to the policy prevailing at the time of their receipt. I am informed that in the case to which the hon. Member referred the application was refused; but if the applicant had applied later, when a more liberal system of licences had developed, he would undoubtedly have been granted a licence. It cannot be said that licences were too sparingly granted, because to 13 companies licences were granted authorising them to establish telephones all over the country; in fact the system was taken up with greater boldness than the railway system in the earlier days of that enterprise, when a great Minister thought it would be the best policy to make the great trunk railways under the control of the State. It is because these companies have amalgamated and because they make no competition worthy of the name, that the establishment of a different system has become necessary; and the Government have intervened to secure the development of the system of exchanges, and their connection with the trunk lines. An hon. Member has referred to an expression I used last week that it is not proposed to continue to grant licences in a wholesale way. Licences will not be granted to companies that are not in a position to carry out what they propose to undertake. We should not encourage competition if we granted licences to persons who could not carry out their undertakings, and who might sell their right and prevent competition being established. Nothing could be more contrary to the fact or more irrational to say that the decision of the Government to obtain control of the trunk lines will discourage competition. It is the very way to encourage competition. The hon. Member has referred to the Company promoted in Manchester by the hon. Gentleman the Member for the Black friars Division of Glasgow. That Company established an exchange in Manchester on liberal terms to subscribers. Well, Sir, I think that the decision of the Government to acquire the trunk lines will enable the Government to connect all such exchanges with local exchanges all over the country, so that subscribers in one part of the country may be put into communication with subscribers in every other part. That will be the means of healthy development. Whilst the Government propose that companies should be assisted by becoming connected with the Post Office to acquire a new development of their industry, we only propose to grant the concessions to companies that are ready to join in that system of free and unrestricted communication which it is the intention and the desire of the Government to bring about. The hon. Gentleman the Member for the College Division said the companies ascribed the high rates they charged to the excessive royalties they had to pay, and he argued from that that the possession by the Government of the trunk lines would either oblige still higher rates to be charged or involve the giving away of public money for the benefit of the companies. I cannot admit that the ten per cent. royalty has prevented the large development of the telephonic system. I understand the amount paid as royalties has never exceeded £46,000, whereas I am told the National Telephone Company is paying a dividend of six per cent. both on its debentures and its ordinary shares, on a capital of about £1,800,000.


The dividend paid by the National Telephone Company was 4½ per cent. on the debentures and 6 per cent. on the share capital.


My figures must have been wrong, but my point remains unaffected that it is not the royalties which have been a hindrance to telephonic development. Now, Sir, the hon. Member has referred to the great development of telephonic communication in Paris. That is, of course, a Government system, and it is exactly that system that we desire to follow in the scheme we have stated to the House—a system which imposes no restriction upon free communication with the Post Office. Having acquired the trunk lines and the mains the Post Office would be able to promote free communication and the commercial development of telephones. The hon. Gentleman opposite says that this appears to be only levying of blackmail.


I never made use of that expression in relation to the acquisition of the trunk lines and mains.


The hon. Gentleman used the term in connection with the Post Office. The main reason why the Government desire to get the trunk lines into their hands is to see that whatever revenue arises from the telephones a portion shall go to the public. In the second place they desire to promote that development which has been frustrated in the way that has been mentioned. But there is a third way in which the possession of these trunk lines will be of value—it was the way which was alluded to by the hon. Gentleman the Member for Northampton. We are, at this moment, in possession of a telephone between London and Paris, which has attracted so much custom that we have been obliged to make a second circuit. The last report I had was that the number of conversations over that wire was about 120 per day—the charge is eight shillings for three minutes—so that I have no doubt when the Government are in possession of the main trunk lines, and have completed their system, there will similarly be constant conversation between all the large towns in the Kingdom. Persons will be enabled to converse between London and the large towns in the same way as they can do with Paris at the present moment. That will be perfectly independent of the local exchanges. Now, Sir, there is another thing. The Post Office at present possesses the right of laying down underground wires; and having the means, the Post Office will be quite ready to lay down wires and to let them out to the Telephone Companies within these areas for the connection of the exchanges and for the convenience of the public. It is only because we have greater facilities that we propose to undertake this work. Again, we have no desire to restrict unduly the operations of the companies, which we hope will conduce to the public service, and, therefore, we are willing to place a liberal interpretation upon the definition of exchange as far as the areas within which the companies may lay their main wires are concerned. The hon. Member for Canterbury has expressed a desire that the Government themselves should take over the telephones, and, following the example that had been set with respect to the telegraphs, make them national undertakings. I am afraid, however, that such a proposal will be very far-reaching. I do not suppose that in order to carry out the telephone system anything like the large capital that has been invested in the telegraph system would be required, but, at the same time, the House will hesitate before it authorises the Government to increase so largely the duties of the Post Office, or the number of people in its employment. I think it undesirable that there should be a direct employment by the State of a great number of employés, because it is not unknown that complaints have been made in the House with regard to public servants which would never have been heard of had those persons been servants of private companies, who are able to go into the labour market and obtain their servants at the rate of wages which is regulated by the law of supply and demand. Under such a system the employés obtain the best price for their labour, and the companies get the work done as cheaply as they possibly can. But a different element altogether is introduced when the State becomes the employer, and the amount of salaries to be paid for a given quantity of work is no longer fixed by the market price. In these circumstances, I submit that the Government have acted prudently in endeavouring to restrict the number of persons in their employment as long as the Public Service is efficiently pro- vided for. It is admitted that as the telephone is developed a great many more persons must be employed in its Service, and the result would be that in a few years as many persons will be employed in the telephone service as are now employed in the telegraph service. In these circumstances, the Government have resolved not to acquire the business of the companies, but to permit them to continue to carry on the service under their licences. Another point presents itself. It is quite evident that there would be calls for an extension of the telephone in districts where it would not pay. It is much more difficult for the Government to resist such calls for extension than it would be for private companies to do so. Of course, if it were desired that the telegraph and telephone systems should be carried on by the Post Office, irrespective of the amount of profit revenue to be derived from them, that would be a different matter, and the public want could be easily provided for. The hon. Member for Canterbury says in certain of the Australian Colonies the Government have taken over the telephones and telegraphs and are working them with great liberality. So they have taken over the railways, which are almost entirely the property of the Government; and in these countries, as in India, the undeveloped state of the country rendered it necessary that the Government should undertake many matters which can be better managed in this country by private companies. But it is very difficult for the Government to work such undertakings at so cheap a rate as can be done by companies. I know that the Government in India has undertaken necessarily many enterprises which here are left to private agency; but my own recollection of the Australian Government is not favourable to the financial success of such undertakings. Only the other day we heard that the Government of Victoria were increasing the rate of postage and reducing the number of trains, because they were not remunerative. It is for these reasons that Her Majesty's Government have not thought it prudent to undertake this great additional service, and have decided to leave the working of it to private companies. Her Majesty's Government, in these circumstances, feel bound to oppose the Motion of the hon. Member. With regard to the profit of the revenue that is likely to be derived from supplying the public demand for a telephonic service, it is a remarkable thing that an extension of the service beyond a certain point involves a reduced profit. A Director of two American Telephone Companies has informed me that it sometimes takes two or three years of the amount of subscription to pay for a fresh installation, and it is not until the lapse of that period that any profit begins to be derived from the particular subscriber. Those things ought to operate as some excuse for the companies not having brought the cost of their service within what some would call reasonable bounds. We will, however, try to improve the system; and I make bold to say that, in a short time, telephone communication will proceed at a rate hitherto unknown. There are one or two points upon which there is some misapprehension which it is desirable should be removed, and if I oppose the Motion of the hon. Gentleman I think it right to show that the offer of the Government is not illusory, and that we have the same object as the hon. Gentleman has at heart. We propose that trunk communication shall be established as widely as possible between one part of the country and another. There is no reason why new companies should not be formed to create new exchanges. I have not the least doubt that in a very short time we shall hear of the establishment of new companies and new exchanges, although the existing companies could establish new exchanges with special advantages; and behind the companies, if they fail, is the power of the Government to erect exchanges of their own. We desire that telephone communication should be established as widely as possible between one part of the country and another. I have pointed out that there is no reason why new companies should not be formed to create new exchanges; I know of two or three which are only waiting for the settlement of this policy to start. New companies would commence with special advantages, for they would avoid the mistakes and imperfections of the earlier experiments. Undoubtedly, if people desire to have an exchange in their town, and cannot conveniently establish a company of their own or are not efficiently supplied by an existing company, the Post Office will come in, as in the case of Newcastle and Hull, and supply telephone exchanges, and perfect the system. The safeguard of the taxpayer will be our possession of the trunk wires and the fact that a proportion of any profits arising from the increased transactions of the companies will accrue to the Post Office and go to the direct benefit of the Revenue.

MR. SUMMERS (Huddersfield)

Is there to be a metallic return?


Yes, in all cases under our control. I now desire to point out that no part of this policy requires the sanction of an Act of Parliament, it is all within our existing powers. The Bill is only to extend the facilities for the construction of telephones and telegraphs, I hope with due regard to the rights of Local Authorities and private individuals. I have been describing a new development of the policy to be pursued by the Post Office under the authority of Her Majesty's Government. Undoubtedly the House of Commons will have to be consulted as to the Vote for carrying out this policy as regards trunk and main lines, which will require a considerable expenditure of capital, and will increase the Post Office vote ad hoc, so that Parliament will then be asked to endorse the action which is proposed. We propose to relieve the companies of the burden which has hitherto rested on them in the heavy charge for way leaves, 20s. a a mile, where the Post Office has a monopoly, and practically to give them permission to use the post offices as public call offices. I hope that the result of the competition will not be to diminish the profits of the companies, but that they will share in the extension of this scheme which is so much desired, and is calculated, as I believe, to place this country in as full possession of telephonic convenience as any country in the world.

*(4.55.) MR. PROVAND (Glasgow, Blackfriars)

We have heard a great deal in the way of complaint against the telephone service, mostly by those outside the House who are users, but some of the statistics given by the right hon. Gentleman will give a better idea of how inadequately London is supplied as compared with the third rate towns in America. He said that in one town there was a telephone to every 80 inhabitants; and in another one to every 120; in London the supply is one to every 750 inhabitants. That is to say, that London, the largest and richest city in the world, the greatest business city in the world, has only one telephone to 7, 8, 9 or 10 in the second and third rate cities of America. Some hon. Members have spoken as if this Motion meant that the Government were to buy up the Telephone Companies, but there is nothing to that effect in the Motion; it merely says that the telephone monopoly should be worked in direct connection with the Telegraphic Department of the Post Office. It was at one time the monopoly of the Post Office, but the Post Office granted licences to 13 companies, though only three or four of them are in use at the present time. These licences have yet 20 years to run, and meanwhile the Government have the option every seven years of buying the companies up, the next opportunity being in six years time. It has been said that at present telephones are a luxury of the rich; in London they are not a luxury of any kind, but a painful necessity at all times to those who have to use them. It seems to be suggested that the Government should take over the telephones because they would do the work better than the private companies but they have not done so in the places where it has been tried. In Leicester the number of Government telephone subscribers has remained stationary while those of the National Company have considerably increased. In Manchester the Mutual Telephone Company got a large number of subscribers in a very short time. I understand that the inter-town service which the Government intends to take over and work is profitable, and that in some districts it pays enormously. The hon. Member who is connected with the National Company said that the number of messages in one day between Liverpool and Manchester was 47,000, a number which appears extraordinary. I have been told that the lines between Glasgow, Edinburgh, Leith, and other large towns in Scotland pay good profits as do also the lines round Birmingham and in the manufacturing districts of Yorkshire. If the Post Office will take over and properly works these lines, they may do it with a very good return on capital expenditure. I am sorry that the right hon. Gentleman has not told us more as to what is to be in the Bill, which is not yet laid on the Table of the House, though the matter has been under consideration for 18 months, and I hope there will not be such delay in its production as will cause any risk of its not passing this Session. I fear I cannot vote for this Motion, because if it means that the Post Office is to start exchanges in opposition to the licensed companies that would be inequitable, the more so that they pay to the Post Office ten per cent. of their earnings. Of course, the Post Office can establish them where licensed companies do not exist. If it means that the Post Office is to buy up the companies and the price is to be settled by arbitration on the basis of the returns, I shall vote against the Post Office doing any such thing. If the Chancellor of the Exchequer were to bring in a Bill asking the House for the money to buy the telephone businesses of this country, and were severely examined as to what property he would get for the money, the House would refuse to give it. If the Motion proposes to purchase without saying on what terms, I am afraid I am unable to vote for the Motion of my hon. Friend.

*(5.5.) THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN,) St. George's, Hanover Square

This matter so deeply concerns the finances of the country that, perhaps, the House will not object if I should say a few words on the subject, not with standing the speech of my right hon. Friend the Postmaster General. I think the Executive Government, if I may say so in no Party spirit, and the Civil Service, may congratulate themselves on the fact of the readiness with which the House seems disposed to entrust a vast new business to a Public Department. One would have thought during some of the Sessions that have elapsed that so many complaints have been made as regards the Post Office administration, that any proposal asking for power to extend the business of that Department would have been very severely criticised by the House. But I take it from the general expression of opinion, so far as one could gather it, that not with standing the complaints that may have been brought against that Department, the House still has considerable confidence in it, and is not afraid to in trust it with new and increasing duties. While accepting that confidence, I think it is a principle which should not be pushed too far, and I am not prepared to accept to an indefinite degree the growing disposition of the public to place new duties on the State. The Postmaster General is, I think, at present at the head of an army of 100,000 persons, and the relations which he has to establish and maintain between the heads of Departments and this mass of employés is of growing importance, and we must not look forward with any light heart to the number of Government servants increasing in such vast numbers as they do now from year to year. I know the hon. Member for Lanarkshire takes an entirely different view on that matter, and I, perhaps, differ from him just for the reasons which make him assent to the proposals. I do not think it wise in the interests of the country generally that the Government should be continually extending its functions. I wish the House to be extremely careful, and especially in such a case as this, before they ask the Government to put its hand to new work of these dimensions. I think I may fairly say that my late right hon. Friend, Mr. W. H. Smith, who had as much experience as any man of Public Departments and of private business, took the strongest view on this matter, and was entirely a party to the view which the Cabinet took on this matter, namely, that they would not undertake to buy up the whole of the telephone business of the country. We wish the House to know how far we are prepared to go in order to meet the case, and we are not prepared if it can be avoided—and I think it can be avoided—to take up the whole of the business of the Telephone Companies. The hon. Member who has just sat down (Mr. Provand) put two very pertinent questions to the hon. Member for Glasgow, who introduced this matter. He asked whether it was the intention of the hon. Member that we should buy up the whole of the Telephone Companies, or that the Government should compete freely without any compensation against the companies. On the point of buying up the companies, if the House were determined that that is the best way of proceeding, it would be found that an enormous expense would be incurred. With respect to the other matter, of course it would be impossible for the companies to compete, and it would be necessary to take some steps in the nature of money payments to the companies. I remember perfectly well what happened when the Telegraph Companies were bought up, and I shudder at the recollection of the enormous price which the Government had to pay under those circumstances when the private companies stood on their various rights. The public at that time were determined that the telegraphs should be taken over, and the cost was immensely greater than it would have been if the matter had been approached with greater caution. I do not wish the Government to be placed in a similar position with regard to these telephones, and we have, on the other hand, to submit to the House a plan which I think combines the simplicity of Government control with the expansion which we may expect from private enterprise. My right hon. Friend has explained how the trunk lines would be taken in hand by the Government, leaving to the localities the working of the local exchanges. If this is done I believe the public will be better served than if the Government took over the whole business, because there would be competition in the localities to serve the public as well as it could be served; and the attitude we should take up towards the Local Authorities will ensure that when we are assured that a town is badly served, competition should be introduced by another company, but where a town is sufficiently served there should not be all the inconvenience of multiplying wires, taking up the streets, and useless machinery which is inevitably attendant on the establishment of competing companies. It has been suggested during the course of this discussion that the Local Authorities might be willing to undertake the telephone business themselves. I see nothing contrary to the Government policy in such a proposal. If in any particular town the telephone system is not established, there is no reason why they should not undertake it, and communication be established with the rest of the country through the trunk lines which would be in the hands of the State. But though I have spoken strongly against the Government taking more into its hands than is necessary, I think the time has come when it is absolutely indispensable for the Government to have the trunk lines in its hands, because, unless the Government have these trunk lines, we cannot have the competition which is desired by the country. If the companies retain these trunk lines it would be impossible that there should be fair competition. Why has the National Company got a practical monopoly over the other companies? Because they have the trunk lines in their hands, and any telephonic circle which is established is only half useful unless it can be put into telephonic communication with the whole of the rest of the country. The consequence is that if any particular locality is not connected with the trunk lines it is only half-served, and does not get the full benefit of the telephone. And so, in one sense, the Government by taking the trunk lines into their own hands can secure free trade in the localities. On the other hand, we wish the Local Authorities to exercise supervision. I do not know whether the House is aware of the powers which the Government possess in this matter, but there are powers under which they can act, and which render it unnecessary that any fresh Bill should be introduced. In the licence granted by the Government are these words— Nothing in these presents contained shall prejudice or affect the right of the Postmaster General from time to time to establish, extend, maintain, and work any system or systems of telegraphic communication.

Several hon. MEMBERS

Yes; telegraphic communication.


That covers telephonic communication. I am not sorry for the interruption, because it gives me an opportunity of explaining here that telephones are practically telegraphs, and it has been held that the same powers which the Government possess with respect to telegraphs they can apply to telephones. But I will read again this extract from the license:— Nothing in these presents contained shall prejudice or affect the right of the Postmaster General from time to time to establish extend maintain and work any system or systems of telegraphic communication (whether of a like nature to the aforesaid business of the Company or otherwise) in such manner as he shall in his discretion think fit neither shall anything herein contained prejudice or affect the right of the Postmaster General from time to time to enter into agreements for or to grant licences relative to the working and user of Telegraphs (whether of a like nature to those worked and used by the Company or otherwise) or the transmission of telegrams in any part of the United Kingdom with or to any Company person or persons whomsoever upon such terms as he shall in his discretion think fit. Therefore all the licensees have been warned that the Government has retained the power in their hands, and it will not be against either the spirit or the letter of the licence if we establish trunk lines; but I do think that it would be against the spirit of the licence if we were to take the local arrangements entirely into our hands during the continuance of that licence, to the detriment of those who on the faith of that licence have been extending their system up to the present moment. I hope the House will consider these fair terms, and I venture to hope that they will not pronounce against the Government, in the sense of asking that the Government should take over the whole of this undertaking. We have gone a long way in this direction, and we have confidence that we shall be able to work tins system with great elasticity, though I am fearful as to the effect of the telephone on the telegraphic revenue. But we have come to the conclusion that financial considerations ought not to prevail against the extension of the telephonic system, in what is considered by the public to be a convenient and sufficient form. We do not wish the arrangements of the Treasury to interfere with the development of the telephonic system. This discussion has been a very useful one, and has shown the various points on which the public convenience ought to be considered, and I think the House will admit that the policy which the Government asks it to follow is sound and just.

*(5.20.) MR. ROBY (Lancashire, S.E., Eccles)

I think this is a time when the telephone system may be extended with great advantage, and I trust that this Resolution will be pressed to a Division. I cannot help thinking that the Government, even if their present plan is adopted, will find in the long run that they are compelled to go a step further, and the only effect of putting off that step is that they will have to pay very much more for the telephones, when they do purchase, than they would have to pay at present. I am not disposed to advocate any inequitable dealing with the Telephone Companies, but it is one thing to deal equitably, and another to deal on the basis of extreme rights. The Government will find at some time that they will be compelled to take the whole system, and I think the wiser course would be to face the matter at once. I cannot agree with the argument of the Postmaster General that an increase in business means a corresponding increase in expenditure, because the cost of extending machinery or plant is not so great as laying it down in the first instance. And we find in all works that while certain extensions lead to an increase for the moment of the cost of the product, increased business after a while largely reduces the cost.


The hon. Member does not properly estimate what is meant by the extension. New subscribers mean new wires and new instruments, and these cost as much as the wires and instruments in the first instance.


I cannot deal with the matter from my own personal knowledge, but I think the view I suggested is not without reason. But I want to suggest, further, that increased facilities for extension must be placed in the hands of those who are working the Post Office. At present the Government secure all they can out of the Post Office telegraphs, whereas the Exchequer ought to be content with a fixed sum in the way of profit, and to allow the excess to be used by the Postmaster General for the prosecution of experiments or extensions in order that all possible advantages and facilities should be given to the public. The Department should be worked to some extent for the benefit of the public as well as for profit. There should be more elasticity in the arrangements which exist between the Postmaster General and the Chancellor of the Exchequer. If the business is carried on by private companies, the profits go to the shareholders, and the public get little of the benefit, whereas if the Government had stepped in and bought the telephones, any profit that is made would be devoted to the reduction of taxes in someway, direct or indirect, and the public would be eased in that matter. Whether it would not be possible to work some part of the system by arrangement with the Local Authorities is a suggestion well worth considering; but as the telephones are competing with the telegraphs, I think it would be right to make a good mouthful of the business, and for the Government to take the whole matter into its own hands.

Question put.

The House divided:—Ayes 205; Noes 147.—(Div. List, No. 57.)

Main Question proposed, "That Mr. Speaker do now leave the Chair."