CIVIL SERVICE ESTIMATES.

HC Deb 01 April 1898 vol 55 cc1671-737

TELEPHONE SERVICE.

On Motion, That Mr. Speaker do now leave the Chair,

MR. JAMES CALDWELL (Lanark, Mid)

I beg to move— That the continued refusal of the Post Office to grant licences to and allow municipal corporations and other responsible bodies to compete with the National Telephone Company is contrary to the Treasury Minute of 23rd May, 1892; is inconsistent with the letter and spirit of the agreement entered into with the telephone companies when the Post Office took over the trunk lines; and is calculated to prevent the establishment of a cheap, adequate, and efficient telephone service in the United Kingdom of Great Britain and Ireland, and to increase the difficulties and costliness of any arrangement for the assumption by the State of the whole telephone systems should that step ultimately be considered desirable. Having been successful in obtaining the first place for the Motion on going into Committee of Supply, I have given the benefit in a subject of pressing national and local interest and importance, and a subject which is altogether outside of Party politics. I may also mention that I move this Motion purely from the standpoint of public interest; that I am not a director, and have no intention of being a director of any company telephone, or otherwise, nor, I might add, even a shareholder. The telephone was brought to this country by Lord Kelvin in 1876, but only in a very crude form. The first practical telephone came from America in 1878, in which year two companies were formed in London, the one to work Ball's patents, and the other to work Edison's patents. These two companies having announced their intention of establishing telephone exchanges, the Post Office, in November and December, 1879, filed an injunction in the High Court of Justice in England. In June, 1880, the two companies amalgamated under the title of the United Telephone Company, Limited, and on 20th December of the same year the High Court decided that telephones were included under telegraphs, and were a monopoly of the Post Office under the Telegraph Act, 1869. The State having thus the sole right to telephones, the Postmaster General, in virtue of the powers, under Section 4, of the Telegraph Act, 1869, offered licences to the public upon payment of a royalty. The telephone was then in its infancy, and the Post Office, apparently, did not see their way, in the first instance, at all events, themselves to establish and work all the telephone exchanges of the country, although they all along have had some. Bell's patents expired on 9th December, 1890, and Edison's on 30th July, 1891; and now there are no telephone patents interfering with the service. In April, 1881—that is, four months after the judgment of the High Court—the Post Office granted a licence to the United Telephone Company, authorising them to establish and work telephone exchanges in London, within a radius of five miles from a central point to be fixed by the company. The royalty charged was, in all cases, 10 per cent. of the gross earnings. The United Telephone Company confined its own exchange operations to London, but if allowed its patent apparatus to be used in other parts of the country by subsidiary companies. These subsidiary companies were left to negotiate with the Post Office for a licence. The licences granted were all made to expire on 31st December, 1911; so that on 31st December, 1911, all telephone licences in this country will lapse, and the State will then be free to assume the sole right of working the telephone. In 1882 a new company was formed to carry on exchange business in London, called the London and Globe Telephone Company, and it was granted a licence, notwithstanding that the United Telephone Company urged reasons why there should be no competition. In the same year the Post Office granted licences to establish exchanges even in towns where the Post Office were themselves carrying on exchange business, as, for example, in New-castle-on-Tyne, the policy of the Post Office being to increase licences and to encourage competition. In 1884 the London and Globe Company was absorbed by the United Telephone Company. Up till this time telephone licences were restricted to towns and to areas within a certain distance of a town. The Post Office offered to supply trunk wires connecting towns, on condition that the parties using the same should pay the Department direct. This offer was not accepted; but in a few cases, as, for example, between London and Brighton, trunk wires were provided by the Department for the use of telephone companies at a fixed annual rent. In all, about 23 licences had been granted for telephone use in restricted areas. In 1884—when Mr. Fawcett was Postmaster General—a new departure was made. Licences, instead of being limited to a restricted area, were made to apply to every part of the United Kingdom, and included the right to erect and work trunk lines. The new licences were granted to the original holders, and a Mr. Taskar—a private individual—who held a licence for Sheffield and also for Rotherham, was given a licence for the United Kingdom; and all the new licences were granted in similar terms. Whilst the policy of the Post Office was to increase the number of licences and to encourage competition, the policy of the larger telephone companies was to buy up the competing companies at almost any price, with the view of establishing a private monopoly. The amalgamations of telephone companies, which were then taking place, and their probable effect, had not escaped the attention of the Postmaster General. Mr. Fawcett stated, 22nd May, 1884— He was pressed on all sides not to allow a private monopoly to grow up and be vested in a private company. And again— If there is to be a monopoly in telephone communication, or any other communication, it had better be in the hands of the Government, which can be controlled, and which is directly amenable to public opinion, rather than that a monopoly should be vested in a private company. The policy of Mr. Fawcett continued to be the policy of his successors, and Mr. Raikes—who was then Postmaster-General—on 4th June, 1889, wrote to the telephone company on the occasion of an amalgamation of the United Telephone Company, the National Telephone Company, and another— That the amalgamation of the companies was net contemplated when the licences were issued, and that any assurances outside the licences which the companies may conceive themselves to have received from the then Postmaster General cannot be regarded as applicable to the state of things likely to result from the proposed amalgamation. Every one of the Postmasters General seems to have experienced this difficulty, that, whilst they might give new licences in order to encourage competition, these licences simply came, in course of time, to be bought up by the larger telephone companies, who were aiming at establishing a private monopoly. Accordingly, and without meaning any limitation on the granting of licences in the future, the Treasury Minute of 23rd May, 1892, restricted the granting of licences to responsible companies, who had the consent of the municipal authority, and who were not so likely to be applying for a licence merely in order to sell it to the National or other telephone company. The Treasury Minute of 1892 was not a reversal or retraction of the policy of giving an increased number of licences, and of encouraging competition, but was intended rather to meet the difficulty of licencees trading in licences without any bonâ fide intention of serving the wants of the public. The interposition of the consent of the municipal authority to an application for a licence is, however, only a very limited safeguard, and will not, unless the licence is carefully restricted, prevent the National Telephone Company from afterwards buying up shares. The only effectual safeguard seems to be to give licences to such municipal authorities as are willing, with Parliamentary sanction if need be, to establish and work telephone exchanges in the public interest. In the same year, 1892, the Post Office found it necessary to revert to the original policy of restricting licences to the limited area to which the licence applied, and of keeping in the hands of the Post Office all the trunk lines connecting the towns. The Post Office appear to have had a twofold object in this: in the first place, to protect, in some measure, the telegraph revenue, which was being in seriously affected where telephoning was in use; and in the next place to make it easier for the State assuming the whole telephone system on the expiry of the licences on 31st December, 1911. The telephone companies were amply compensated for this change of policy, some of the Post Office charges being largely reduced. The limitation of licences to particular towns and local areas necessarily increases the interest of the inhabitants in the particular licence, and makes the licence a matter of purely local concern. It is not a matter which the Post Office can look at from an Imperial point of view, apart from the locality which is to be served by the licence. The sole interest centres in the locality and in the locality alone. In asking that municipal authorities ought to be granted the licence in the public interest, it has to be borne in mind that the licence asked for, is a licence to use that which is the property of the State, and which all parties seem to be agreed ought not to be in private hands, but ought to be worked in the public interest. I notice an Amendment on the Paper in the name of the hon. Member for St. Rollox to the effect that the State ought now to purchase the telephone system. I cannot, of course, anticipate the discussion on an Amendment which has not been readied, but I claim the appearance of that Amendment on the Paper as an admission that the telephone ought to be worked in the interest of the public, and not for private profit—whether immediately or in 1911 being a matter of detail. If the telephone ought to be worked for the public behalf, and if the Post Office is not prepared immediately to work the local telephone as part of an Imperial system, then my contention is that municipal authorities are the natural representatives of the inhabitants, to whom the licence ought to be granted. I do not know that it is necessary for me to anticipate an objection which may be made, that telephoning is not a proper business for a, municipal authority to undertake; that it only concerns the users of the telephone, and not the citizens as a whole. I will only say generally that the present British policy in the Far East and in Western Africa is based on the assumption that the foreign trade of the country (although immediately affecting the shippers of goods) is, nevertheless, considered a matter of concern to the nation as a whole. In like manner telephoning has become, and is daily more and more becoming, a matter of necessity for business men and manufacturers, in order to enable them to communicate rapidly with each other, with other cities, and with London as the leading centre of all. Everyone who has any knowledge of the relationship of a business in London with the provinces knows the value of dispatch in securing orders, and that the orders so obtained (although, no doubt, immediately benefiting a particular business or trade in a locality), nevertheless tend to the general advantage. Parliament has been gradually extending the variety of schemes which municipal authorities might undertake, and wisely undertake, in the public interest. Their powers have been extended to gas, to water, to electricity, and to tramways—to purposes all of which, although for the general good, are, nevertheless, more or less of a commercial nature, and compete more or less with private enterprise. But in this matter of telephones, we are dealing with what is the property of the State and a State monopoly; with what all parties are agreed ought not to be the subject of private profit, and which ought to be dealt with with the ultimate object in view, that if in 1911 it is resolved that the State should take over the whole telephone system there will be no vested private interest, in so far, at least, as municipal telephones are concerned. Seeing that telephone licences are now limited to local exchanges, it is obvious that the municipal authorities ought to know best the wants of the locality, and are the best fitted to undertake the necessary work; and that, if there be any loss in the construction or working, it ought to fall on the locality, and not on the Imperial taxpayer. In laying the wires underground the streets are under the charge of the municipal authorities, and it would be their duty, and interest, in opening them up, to inconvenience the public as little as possible. In all municipal undertakings there is usually the bogey cry of a charge upon the rates. It was raised in the case of the Glasgow Corporation Tramways. All experience, however, shows that such enterprises become self-supporting, whilst the ratepayer may well be trusted to see that no charge falls upon the rates. If telephone licences were to be granted now for the first time, it is hardly possible to conceive what municipal authorities should not have the first offer. But it may be asked, and not unfairly, what is the position of those cities where the National Telephone Company already have exchanges? As has been pointed out, the Post Office has always reserved to itself the right to grant additional and competing licences to any person in any area; and in point of fact the Post Office did grant licences to different companies in the same area. Not only in the agreement with the telephone companies and in the Treasury Minute of 1892 is this right clearly reserved, but the reservation is set out in every licence which was granted. The Post Office officials who were examined by the Select Committee on telephones which sat in 1895 were not only absolutely clear and strong that there was, and could be, no breach, of faith or honour in granting competing licences in the same area, but we have even Mr. Forbes, the General Manager of the National Telephone Company, stating, in answer to Question 4,644, that— The Post Office are absolutely free. I will go a little further and say that in all the negotiations, which were prolonged, there never was the slightest suggestion, directly or indirectly, of any such cession on the part of the Post Office of a promise or pledge to lock up their own discretion. On the contrary, from the very beginning to the end it was strictly reserved. Therefore they are quite free. This reserved power to grant competitive licences is all-important, as it is the only weapon which the Postmaster General, or the State, has to prevent the wholesale plunder of the public who are compelled by business exigencies to use the telephone. Unlike any other company which receives a State privilege, the telephone company is under no restriction whatever. It is unlimited as regards the profit which it may earn and divide; it may buy out any competitive licence at; whatever price it can arrange; and it may charge whatever tariff it can exact. It is even under no restriction or control regarding the efficiency of the service which it may render. In every other case where Parliament gives statutory permission, be it for gas, for water, for electric light, for a railway or harbour, or for anything else, there is always some limitation, control, or reservation in the matter of dividend which may be earned, or in the maximum rates that may be charged. But, in this matter of telephone licences the telephone company may water its capital to any extent it pleases, it may charge what, rates it pleases, and it may turn up the market value of its shares as much as it can, in the prospect and hope that, enjoying a monopoly in 1911, it will be able to compel the Government to purchase their undertaking at as ruinous a cost to the taxpayers as was the case of the purchase of the telegraph. The only protection which those using, or desirous of using, the telephone have of obtaining an efficient service at a moderate tariff, or which the State may have if it comes to assume telephones in 1911, lies in the use which is made of this power to grant competitive licences. The universal effect of competitive licences being granted in the past has been, in the first instance, at all events, to reduce the telephone tariff, and, if the tariff has been raised when the competing company has been bought up, the new tariff has generally been much less than the original. A striking case is that of Dundee, the evidence concerning which was given to the Committee of 1895 by my hon. Friend the Member for Dundee. A telephone company (which was subsequently absorbed by the National Telephone Company) charged £20. A local company was started, which charged only £10. The original telephone, company reduced the charge to £5, and the local company followed, not quite to £5, but to £5 10s. The competition went on for some years. The local company, which paid throughout a dividend of nine per cent., was eventually bought up by the original telephone company at a premium of 40 per cent. The subscribers to the telephone, when the tariff was £20, were only 30, but when the tariff was reduced the number, taking the two companies together, rose to over 1,000. After the local company was bought up the tariff was raised to £10. The subscribers thereupon fell off by some hundreds. In 1895 they had again risen to close on 1,000, a striking corroboration of a statement made by Mr. Forbes, and which seems to enter into the policy of the company, that when the benefits of the telephone company have been felly experienced, a business man will pay almost any price for the privilege. It was brought out before the Committee in 1895, on the part of the telephone companies, that beyond a certain limit—say 5,000 subscribers, the cost of maintenance becomes increasingly great; and that it might not be profitable to encourage telephoning in any area beyond that extent, at least without a high tariff. The benefit of telephonic communication, so far as the community is concerned, necessarily depends upon the number of subscribers; and the lower the tariff the larger the members who will use the telephone, and the consequent greater benefit to the public. In the hands of a municipal authority the service would be certain to be extended to its fullest capacity; and, whilst self-supporting, the smaller tradesmen and business men would, no doubt, see that they got the full benefit at a reasonable charge. On the other hand, a private telephone company is mainly interested in earning dividend and in raising the market value of the stock. The Glasgow Corporation has been asking for a licence since 1893, and it has only just received its answer—a refusal. Glasgow is a city especially suitable for making a beginning. We were told only last night that, in the present inquiry before the Treasury Commissioner, Glasgow, following its usual habit of economy, employed only one counsel as against four leading Queen's counsel employed by the telephone company. In the past, as we have seen, competitive licences have been granted to private companies who have sold them for private profit. Is it unreasonable to ask that, at this time of the day, at least one competitive licence should be granted as a trial to a municipality which undertakes to use the same solely in the public interest? It is not for me at this stage to go into the question of cost or probable efficiency. That is a matter which concerns the locality, and the locality alone will have to bear the whole responsibility. In the case of Glasgow the telephone company has reached its maximum of remunerative subscribers—5,000, and the pecuniary interest of the company seems to be in keeping up the present high tariff of £10, and not encouraging additional subscribers by making a reduction. Their pecuniary interests seem to be not in placing their tariff at £10, and thus not encouraging additional subscribers by making a reduction: the interest of the citizens of Glasgow lies in having an efficient service, as adequate as possible, and a tariff as moderate as possible The Corporation of Glasgow, who are all business men, possessing the entire confidence of the community and citizens, think that an efficient telephone service can be supplied at £5 a year and that the present number of subscribers would be doubled if the price were so reduced. The Corporation undertook to perform the service—they have the citizens at their back. Why should the Post Office refuse to such a Corporation a competitive licence which they granted so freely formerly to private companies, and who merely use them for the purpose of making profits? In what interests of the State can the Post Office refuse these licences? Surely, if the municipal authorities and the local ratepayers are to be trusted at all, they ought to be trusted in this matter in utilising the telephones, which are the property of the. State, and the community should not be left to be entirely in the hands of a private monopoly, if the licences were granted, and turned out to be a failure, the loss would be local and not Imperial, whilst the expediency of granting such licences will be put to the test. It is not difficult to see why Post Office officials should be opposed to granting competitive licences to a, municipal authority. At present, and for many years back, the Pest Office has had telephone exchanges in several towns in England. What has been the result? Notwithstanding all the advantages which the Post Office possess over private enterprise in a mailer of this kind, the Post Office telephone system has been a complete failure. How is it possible for them to view with, anything like satisfaction the possibility of the success of others in that enterprise? But more than that, the Post Office officials stated before the Committee of 1895 that competition was impracticable. If that be so, and if no competitive licences are to be granted, as mine at the present moment are being granted, then I ask what weapon has the Post Office or the State to enable them to protect the present users of telephones against the insufficient service and extortionate tariff; and what weapon has the State against the growing nil of a huge monopoly which may have to be reckoned with in 1911? Are we, in 1898, with 12 years of the licences to run, to leave the entire telephone interests of this country in the hands of a private monopoly? I have mentioned the case of Glasgow as being a Corporation which is willing to make the experiment and lead the way, but my Motion applies to all municipal authorities who may be willing to undertake the obligations, either themselves or through the medium of a private company. If Parliamentary powers be required in order to give practical effect to a licence, then by all means let Parliamentary powers be obtained. What we are dealing with in the meantime is these licences, which it is in the power of the Post Office to grant without Parliamentary authority. Let it be given, if necessary, conditional upon Parliamentary powers being obtained to work the same; but what we do want is an expression of opinion of this House upon this Motion, that, subject to any Parliamentary sanction, licences ought to be granted to municipal authorities, or to private companies, which have the assent of the authorities. Mr. Speaker, I beg to move the Motion which stands in my name.

*MR. GRIFFITH BOSCAWEN (Kent, Tonbridge)

I rise to second this Motion, and in doing so I wish to make it clear at once that I am animated by no hostile feelings to the National Telephone Company. I fully admit that that great corporation has, in some instances, given satisfaction; in other instances it has not given satisfaction. But my quarrel is not so much with the National Telephone Company—which has a monopoly, and which would scarcely be human if it did not make use of that monopoly—as it is with the Post Office, which has allowed the monopoly to grow up. The Post Office, which has always had perfectly full powers to stop this monopoly, under the Treasury Minute of 1892, has, notwithstanding that Minute, allowed this monopoly to grow, and has allowed no competition whatever, excepting those few telephone exchanges of its own, as to which I can only say that anybody who knows anything at all about their working knows that they are useless, and the result has been that the Post Office has allowed to grow up throughout England what is regarded with the greatest disapproval—namely, the great monopoly which is very much to the detriment of the country. The result of that monopoly has been this: that this country, which has always prided itself on being in the van in all matters of physical science, has, in the matter of the telephone, fallen behind the greater part of the world. The result is a very serious one. We hear a great deal about foreign competition in our markets, and we are told that it is due to a variety of causes. I do not doubt, of course, that such things as technical education, have much to do with it, but I say that the fact that our telephone system lags behind that of foreign countries, has something to do with it also; and I think that this monopoly, which has been the cause of that, has been a very unfortunate thing for the trading community as a whole, and the Post Office must bear the blame for it. Now, Sir, I have travelled a great deal in foreign countries. I have also studied the statistics upon this question. If you go to America, you will find that the telephone is almost of universal application. Then, in the third principal town of Norway one person in every 37 is connected with the telephone. What is the case in London? Only one in every 1,000, and that is the case with the greater number of towns in this country; and you have only got to look as far as Douglas, in the Isle of Man, where they are not under the control of the National Telephone Company, and there you will find one man in 60 is connected with the telephone which I think is fairly clear proof that the telephone has been so little used in England, is due to the monopoly of the National Telephone Company. What have been the causes on the part of the National Telephone Company which have led to this result? These causes are these: in the first place, the system had often been inefficient. In Glasgow, it has just been declared to have been inefficient. I am quite prepared to give the National Telephone Company full credit for anything on their side. I am quite willing to say that, the Glasgow Corporation did not give the National Telephone Company the necessary facilities to enable them to make it thoroughly efficient. But I will take other towns. I will take one of the towns I have the honour of representing in this House—Tunbridge Wells. At Tunbridge Wells, two years ago, the service was absolutely inefficient; so inefficient as to be absolutely ridiculous, and, one by one, all the subscriptions were dropping off, and the effect of that state of things has been a great agitation, in consequence of which the service has been rendered more efficient than it used to be, though still it is not so efficient as it ought to be. There is a still more important cause than inefficiency, which has resulted in people not using the telephone in England so much as they might do, and that is the cost of the system. The rates imposed by the National Telephone Company, acting under the protection of their monopoly, have been such as to make the telephone prohibitive for the great bulk of the English people. Let us look at what these charges are. In London the charge for subscribers for a year is £20. In most towns in England it varies from £8 to £12. Now compare that with Norway.

*SIR JAMES FERGUSSON (Manchester, N.E.)

It is not correct to say it is £20 a year for London, it is only £10.

*MR. GRIFFITH BOSCAWEN

I understood that the figure given in the evidence the other day was that it was £20, but I am quite prepared to accept the right hon. Baronet's figure.

MR. ALEXANDER CROSS (Glasgow, Camlachie)

I think we ought to know, Sir, whether the rate is £10 or not in London.

*MR. GRIFFITH BOSCAWEN

I can put the matter perfectly straight. The charge for a public firm is £20, and in other towns it varies from £8 to £10 per year. I will make a comparison. In Norway for a public firm the charge varies from £1 7s. to £3 10s.; in Switzerland the charge is £3 10s., and in New Zealand to a public firm the charge is £5. I venture to say, Sir, that it is my firm conviction, that in England the telephone service can be worked at a good profit with a charge of £5 a year to a public firm. In support of that statement I have only to allude to the fact that other, companies have existed in England which did the work at a much lower figure than the National Telephone Company. For instance, take the case of the Dundee and District Telephone Company. There the fee was £5 10s. for any distance, and it paid on an average nine per cent. interest during the four years of its existence. I will take Sheffield, In the case of Sheffield they paid good dividends for many years on a charge of £7 per annum. I think it is quite clear that if we had the charges of the National Telephone Company reduced to those I have quoted the result would be that the telephones would be much more made use of in England than they are at the present moment. But, Sir, we have a great difficulty in this matter. I do not entirely blame the National Telephone Company for making these high charges. They have had the chance of imposing them, and from the point of view of their shareholders they were quite right to impose them. But there is this further difficulty, that owing to the enormous size of their capital, I do not see how they could reduce these subscription charges. I do not want to say anything unpleasant, but I will merely quote the words of Mr. Forbes, the Chairman of the National Telephone Company, in giving evidence before the Committee of Inquiry in 1895. With reference to a question put to him by one of the Members with regard to what is called "watering the capital," he used these words: "What some people are pleased to call the watered value is £1,292,000." Now, I do not pretend to understand what "watered value" is; but I imagine that it does not actually go into the construction of the works, and I am told that the "watered value" of the National Telephone Company has been put by other people at a very much higher figure than £1,292,000. And yet, Sir, on this enormous capital they pay a dividend of six per cent., and I think, therefore, it follows that the general public are called upon to pay a great deal more for their telephone service in order that a high interest may be paid upon capital that never went into the construction of the telephone at all. I will prove it, I think, in this way. Taking Mr. Forbes' figures, the "watered capital" is £1,292,000. Now, the number of the telephone lines in the country belonging to the National Telephone Company is 73,338; therefore to each line there is a sum of £17 11s. in "water." Now, the Dundee and District lines only cost £15 each, and the Mutual Telephone Company's lines, with a double system, cost £16 16s. each; therefore the actual capital of the National Telephone Company is about double the construction of the lines; so that, were it not for the presence of this most obnoxious liquid in the capital at the present moment, the National Telephone Company might reduce their rates to one-half, and confer a very great benefit upon all users, or would-be users, of the telephone. One more point, Sir, has tended to make the National Telephone Company in this country unsuccessful. They seem to insist upon the system that what is required is that everybody should be able to communicate with everybody else all over England. In London, they do the same. I understand their plan is to have one telephonic exchange for the whole of London. What I want to impress upon the House is this, that, what the people most desire is local service, and I think it would be a very much better plan if they were to differentiate the rates, so that if I wanted to speak, say, to Glasgow or Tunbridge Wells I could do so by paying a higher rate, but that within a certain area you should have, what they have in many inland towns abroad, a very low rental on a purely local service, which I think would be very much made use of. That is a very important point, because we are told, if you establish local companies, or corporations, they would not have the right to enable people to converse with other people at a distance. But the local service is the most important, and therefore, you would meet a very largely felt want if you establish local exchanges at a low rate of rental. These are simply the facts that I wanted to bring before the House. I do not want to detain the House, and I do not want to anticipate what my right hon. Friend will say; but, taking these facts into consideration, I hope that steps will be taken at once to put an end to the monopoly of the National Telephone Company. So far they have done absolutely nothing, and the monopoly has been growing stronger every day. That is not a matter merely of local interest, it is a matter of national concern, because I would ask my right hon. Friend what he thinks is going to happen in the year 1911, when the monopoly will have grown still more strong and the licence of the National Telephone Company expires. I know this matter has been brought before the attention of the Government on a previous occasion, because I have the words which my right hon. Friend used in this House in April last year, when he said this— At the same time they"—[the Government]—"must be prepared for the expiry of the present licence to the Telephone Company in 1911, for they would be in a very considerable dilemma and be bound to buy the National Telephone Company at any price, unless they had established a considerable alternative system. That was an evil and danger they did not mean to incur. I ask, therefore, that the Government should take steps to avert that considerable danger which they do not wish to incur. I do not care how it is done. I do not care whether it is by Post Office competition—though I think probably that is the worst kind of competition—I do not care whether it is by companies, or whether it is by corporations, though probably corporations are the best, because companies are always under the temptation of being bought up by the National Telephone Company, and, as that would add to the "watering" of capital, it might do more harm than good. I do, however, ask that something should be done to enable corporations to work their own telephonic schemes. That was distinctly contemplated in the Treasury Minute, because Clause 21 of that Minute said this— In conclusion, it may be stated that the intention is to meet, as far as possible, the views of municipal authorities. You have municipal authorities all over the country asking that they may be allowed to establish telephonic exchanges. I believe there is some legal difficulty in their doing so, that they cannot do so now without coming to the House of Commons, and without obtaining powers by a Parliamentary Bill. That is a difficulty which, of course, must be got over; but I do not see why that difficulty should prevent the Post Office from granting licences and allowing these municipalities to come here afterwards. If there is any possible means of getting over that difficulty, I think that would be a very good and reasonable way of proceeding. I only desire to say that I wish to see some competition established, and I think the Government would be doing what would be acceptable to the great bulk of the inhabitants of this country if they allowed competition to spring up in some form or other.

*MR. FAITHFULL BEGG (Glasgow, St. Rollox)

I think we must all of us have been very much interested by the speeches made already in connection with this Motion. I do not entirely agree—in fact, I almost entirely disagree—with my hon. Friend the Member for Lanarkshire, not with regard to many of the things which he has said on the subject of telephones, but with regard to the line of policy which he proposes to urge upon the Government at the present juncture. He has pointed out a very important matter in connection with the telephone question—namely, the anomalous position which the Telephone Company occupies in respect to the nature of the tenure which it holds—that is to say, it is not under those statutory obligations with regard to tariff and prohibitions which other undertakings, similar in many respects, have been put under by this House. But the reason for that is not difficult to find, because those who go back in this telephonic controversy as long as I do know that at the time the licences were granted there was practically no knowledge in this country, and very little expectation, of the developments which would take place within a very short period in telephonic enterprise. Therefore it was not considered necessary to safeguard the licences in the directions pointed out by my hon. Friend, but there is no doubt we are faced with the fact that there is this state of affairs. It amounts to this, that having granted, in the earlier stages, licences to these—I can hardly call them enterprising persons (I was one of them myself)—but having granted these licences to those more or less enterprising persons, it is now necessary to find some means out of a very great and growing difficulty, which is manifest and which cannot be ignored. I observed with some satisfaction, that my hon. Friend had restricted his Motion to the question of granting licences to municipal corporations and other responsible bodies, because that narrows the issue very much. But I observed that the seconder of the Motion went a good deal farther than my hon. Friend, because he advocated that licences should be granted to private companies also.

*MR. GRIFFITH BOSCAWEN

I said I preferred competition by corporations, but I like to see competition in any form.

*MR. FAITHFULL BEGG

Then I correctly understood my Friend's position, and what I would advocate is that no such licences should be granted at all, but that the Government should face the difficulty, the true solution of which is once and for all to acquire the telephonic system, and combine it with the Post Office Department for the benefit of the community at large. Sir, it was in 1879 that I first began to study the telephone question, and here I should like to make a personal explanation. I am supposed, I believe at least by some, to be largely interested in telephonic enterprise, and to be nothing more nor less than the mouthpiece of the National Telephone Company. I was for a good many years, in the earlier stages of the telephone, connected with that company I was instrumental in selling to that company a business which had come into existence before the company itself was formed; but for a great many years I have had no pecuniary interest in it, and I hope I am taking an unbiassed view of the situation and giving the information which I possess upon this matter from an impartial standpoint. The latest information we have with regard to the telephone enterprise is contained in the report of the Glasgow inquiry which was held in connection with the matter. I regret that it has not been possible to put into our possession the full minutes of the evidence which was given during that inquiry until this morning. But the report of Mr. Sheriff Jameson is sufficiently exhaustive to put before us the main facts of that inquiry; and everything that I have read, and the study I have given to that report, only leads me to feel more strongly that the opinion I have enunciated this afternoon is the right view. Now there is one remark I wish to make. I have said I am not the advocate of the National Telephone Company, but there is one point in the speech of the hon. Member for Tonbridge Division which bears upon the position of that company which I should like to allude to. He pointed out that a large portion of the capital of the company consisted of what is called "water." Now, there is a great deal more than water in that compound. There are "brains" in that compound. There are "patent rights" in that compound, the whole of which, is put down as "water," but for which a certain amount of credit should be given to the company.

*MR. A. D. PROVAND (Glasgow, Blackfriars)

Will the hon. Gentleman tell us when the Bell and other patents expired? They were the only patents worth anything.

*MR. FAITHFULL BEGG

My hon. Friend is perfectly rigid, but the lifetime of a patent in connection with the efficacy of it does not expire with the death of the patent itself, and we have the best illustration of that fact in the position which the company now holds. Hon. Gentlemen may call this compound what they please, but I say it is not altogether "water," a fact which cannot be neglected in the calculation of the value of the property. There was an extraordinary deduction made by my hon. Friend when, asserting that one-half of the capital in the company was water, he said that the capital could be reduced by one-half, and then the stone dividend could be paid. But he had forgotten that the standing charges would remain the same. That argument is manifestly fallacious. However, I pass from that. It is impossible, it seems to me, to judge what the result will be if corporation licences are granted. I think you will probably find that the result will be that one or two experiments will be made—to which I myself, personally, would not object—based on the faith of certain calculations with regard to cost of construction and cost of carrying on the system. These, in my judgment, are absolutely fallacious, and the consequence will be that the ratepayers' money will be wasted, and in the end the Corporation Telephone Exchanges be starved out. Or we shall find that the company will bring its resources to bear to carry on opposition at a loss, and a fight will arise which will waste a considerable amount of money, which must come out of the pockets of the public, who in the end will be the sufferers. The case, however, with regard to municipalities may be open, but I should like to dismiss the question, once and for all, of granting licences to private companies with the object of reducing the tariff by ordinary competition. What has been the result since the beginning? The result has been in every case that the competing companies have been absorbed. You cannot prevent future licences being absorbed also. You may make restrictions in various ways, and endeavour to prevent combination, but in the end the last state will be worse than the first. We had a most striking illustration of that in the case of what was called the New Telephone Company. No company was ever formed with such a clear determination to compete, and what happened to that company? By purchasing shares and nominations on the board that business was what the Americans call "corralled" by the National Telephone Company. Depend upon it, competition by private companies must prove futile so far as benefit to the public is concerned. You only produce fresh gambling in telephone shares, and spend and waste more money in extravagance. You will have to pay heavily for it. It is a curious feature in the telephone business that a company, trading on the basis of a licence, having only a limited period to run, has not only to provide dividends on its capital, but also a redemption fund, whereby the capital may be handed back to the shareholders of the company at the end of the period; therefore the amount put away each year must be very much larger than the amount required to be put away by any other company. Competition only ends in one result. I need not further emphasise that point, but I should like to quote Mr. Lamb's evidence, as given in 1895— I believe"—[he said]—"there is absolutely no difference among experts but that a competitive system within any area must result in inconvenience to the public and the want of efficiency. As a matter of fact, there was never any doubt about that. I remember, in the early days of telephone enterprise, meeting a man largely connected with that industry. He stated the same opinion as a fundamental fact, and his prophecy has proved absolutely true. He also made another statement, which bears upon the position of affairs in Glasgow at the present moment. The exchange has risen to a point when the subscribers are 5,000, and it appears that the company do not encourage any extension or reduce the rental. He said that it was a curious fact that in the working of telephones it cost more to carry on an exchange business in a wholesale manner than it did, so to speak, retail. That is to say, in proportion to the subscribers the cost per head must be larger, there being more people to talk to, and the system being more generally active the complication in the central office becomes much greater. The instruments in the central station, which are of a very costly nature, have over and over again to be replaced at enormous expense, and in that, way the telephone, as a business, costs more to carry on wholesale than retail. As regards municipalities, I have said that I should not object to an experiment. I will go farther. I will say this: if my right hon. Friend, who represents the Post Office, is not prepared to act or to move in the direction which I think is the right one, I do not believe that he or the Government will be able to resist the pressure which will come from the municipalities. However wrong they may be, they are undoubtedly making up their minds to demand these licences, and the Government will not be able to resist them; and I shall support their demands unless the Government adopt the plan which I suggest of buying up the telephones and settling the question once and for all. Last year there was a very great opportunity for the purchase of the telephones, but that opportunity was allowed to pass away.

*MR. SPEAKER

Order, order! The hon. Member must not discuss the desirability of the Government having the power to purchase the telephones. He is not in order in discussing questions which can only be dealt with by legislation.

*MR. FAITHFULL BEGG

I am much obliged to you, Sir, for pointing out the limits of the discussion, and I will pass from that point, except with regard to the question of cost. I have made a calculation, and assuming a purchase the system at the full existing market value, if the interest on the cost is worked out on the basis of the rate at which the Treasury could borrow the money, I think it will be found that long before the licences had expired the operation would show a profit. I will not pursue that line of argument, because I should fear to be again, out of order. Let me now refer to a point which has not been dealt with by either of the speakers who have preceded me—namely, that there is in the minds of many, a belief that on the expiry of the licences the country can say to the company, "You have had your number of years, and now you can go." By 1911 the telephone system of this country will have developed to a very large extent indeed; there will be a system too vast to duplicate in advance. I am very anxious in regard to the policy of the Government in this matter, because I am one of those who think, that every departure which the Government has taken in the past has been wrong. I am not referring to individuals. No doubt they have all acted according to their best lights and I am particularly not referring to my right hon. Friend on the Front Bench. I know the difficulties of the telephone problem, but, speaking generally, the policy of the Post Office in the past has tended, not to develop, but to crush and to hamper the industry to the sacrifice of the interests of the public. The first great blunder was committed when the verdict in the telephone case was obtained, and it was authoritatively decided that a telephone was a telegraph. It was clear that the purchase of the whole telephone interest there and then was the best plan. It was recognised then by experts that rival exchanges could not exist, and that the public interest could never be served satisfactorily by rival exchanges, though the public believed that competition would reduce the rates. All people of importance must subscribe to both, and experience has shown that this view was sound. The Government granted numerous licences to promote competition, and announced a system of their own which was a miserable failure from the first, and continues so to be. The Government exchanges to-day are practically non-existent, in spite of an organised staff, the use of the pre-existing Post Office facilities, and a ten per cent. royalty, all of which were in their favour. The second blunder was the giving up of trunk wire rights to the companies. Mr. Fawcett's policy was so far liberal and progressive. The result was, however, that the companies at once covered the country with trunk wires, which the Government has now had to buy back, giving full value accompanied with concessions as regards working facilities. In fact the National Telephone Company has now become practically an adjunct of the Post Office, without being amenable to public opinion or Parliamentary control. And it is bound, in view of the public attitude, to make till the money it can in order to provide for the worst in 1911. The more it is attacked the more it will so act. A third great blunder will be committed if this new departure is entered into of granting fresh licences, especially to private companies. The very Corporations which demand licences say that they only do so because the Government does not or cannot do the work itself. Allusion has been made to the question of the Government's position in this matter. The Government is perfectly free to grant those licences if it chouses. Nothing can be clearer than that the Government has pledged itself to grant licences to properly qualified applicants, and the demand for such licences cannot be much longer resisted if persisted in. In regard to the Government pledges. Sir James Fergusson, who was then Postmaster General, said in the House of Commons on the 22nd March, 1898— When the local authorities are satisfied that a telephone exchange is desirable in their area, and the Government is satisfied that the licensees are in a position to carry out the undertaking, and that It is in the public interest desirable that they should have a licence, then it will be granted a licence for that area. The only thing I am endeavouring to show is that the policy of granting them would be entirely wrong. Nothing is simpler than to theorise about telephone working, but it is very difficult in practice. It is a science. I have some very curious evidence in connection with that. There are two matters in the Report I have referred to, to which I will call the attention of the House, showing the reason wiry you have exceptional difficulties in Glasgow with regard to the telephone. It is clear that the Glasgow Corporation are very much to blame for the evils that exist at the present moment. At the Glasgow Telephone Inquiry evidence was given to this effect; that the continued inefficiency of the present telephone exchange service in Glasgow is in a great measure due to the refusal of facilities to the National Telephone Company by the Corporation of Glasgow for constructing an underground metallic circuit system. Again, Bailie Chisholm, a member of a deputation to the Postmaster General on the 11th February, 1895, said, with regard to the conduct of subscribers— I know of another case in which the man was so irritated by this persistent and insufferable nuisance that he smashed the whole instrument down with a hammer and threw it into the street. We all sympathise with that man. It is also staled in the Glasgow Telephone Inquiry that subscribers frequently make it impossible for the operator properly to attend to her business by bawling along the call-wire at the same time with other subscribers, and using the call-wire for abusing the operators, and frequently using very violent and brutal language to them; so much so that, at times, they have driven them into hysterics. The calculations circulated regarding the cost, etc., are quite fallacious. Sheriff Jameson, in his Report, quotes the rates current in Glasgow and district and says the rates are not unreasonable. And further on, speaking of Stockholm, which is the pet illustration of reformers, he says— I can hardly imagine two places more dissimilar in almost every conceivable respect than Stockholm and Glasgow. Still, comparing the actual rates in the two places, he shows that in Stockholm the rate of £10 4s. 2d. actually comes up against £10 in Glasgow. So much for the rental. On the point of construction Sheriff Jameson is equally emphatic. The cases relied upon are those of the Mutual Telephone Company of Manchester, and the Telephone Company of Dundee. I know all about the Telephone Company of Dundee, because I was a Director of a company in active competition with the Dundee Company. It is true that ultimately we bought them up, not because they were working at a profit, but to get them out of the way. Here is the evidence of the Chairman of that company, ex-Provost Moncur— If they had gone on at the £5 10s. rate, they would not have been able to pay anything at all. I would like to say a word in regard to economy of construction; and, here again, I quote the evidence of the Glasgow Commission. Sheriff Jameson says— The evidence before him shows that that company was being financed in such a way as to have inevitably led to bankruptcy upon the £5 rate, and was never really in a position to pay a dividend. The plant was of the cheapest and most flimsy description. This point might be almost indefinitely enlarged. Corporations, therefore, if licences are granted to them, acting upon the faith of such estimates, or such examples as have been given, will inevitably waste the ratepayers' money. Private companies' profits may be a matter of no concern, but the confusion resulting from numerous systems is a serious point. I hope that under no circumstances will any licences be granted to private companies, because that will be a very pernicious experiment. Moreover, the local service is only a small portion of the problem. There must be trunk wire communication, and communication outside the municipal boundary. For trunk wire communication, the National Telephone Company has the right to make terminal charges, but it need not make such a charge to its own subscribers. It will certainly do so to subscribers to other exchanges. Thus it will have a great advantage over its rivals. There is no power to compel intercommunication within local areas. In the end there will be duplication of systems everywhere, double rental to pay, and huge waste of the ratepayers' money. Everybody agrees that State purchase is the only ultimate result. It ought to come now. All discussion and pressure for new licences would cease, and the present system could be consolidated and developed on definite lines. It has been asked, how can you expect that the Government will carry on the work satisfactorily in the future when it has been so weak in the past? The answer is, that experience has been pained, that there is a trained staff ready to take over with the work, and I am certain that it would be cheaper, and more efficient, and more to the public advantage, if this were done.

*MR. T. LOUGH (Islington, W.)

I think it would be proper that before any such course as the hon. Member has recommended is adopted, the position of the National Telephone Company should be more carefully and accurately defined than at present. Now, Sir, in that remarkable speech to which we have listened, there was scarcely a single argument given in support of the main proposal that the Government should buy up the telephones. In fact, the arguments of the hon. Member led in quite an opposite direction. I think great benefits will arise from the experiments of those municipalities that are gaining experience at the present time. I think that granting licences to municipalities would be a most excellent plan for the Government to adopt. I cannot help saying that the position of the right hon. Gentleman, as one who helped to make the arrangements with the National Telephone Company, is an exceedingly delicate one. Both of the hon. Members who have spoken represent constituencies outside of London; and I believe London suffers more from the hands of the Telephone Company than any other place in the world. The charges are extremely high. I think it has been made clear that the general charge is £20 for a machine. By making a contract for five years you can get a machine for £20. Therefore I think the point is good that we pay a higher price in London titan is paid anywhere else. I believe the highest price paid in any place in Great Britain is £10. Not only is the price extremely high in London, but I think the service we get is extremely bad. We have here an actual illustration of this. The Telephone Company try to do as well for the Houses of Parliament as it is possible to do; yet Members sometimes go down to the four or six machines on the floor of this House and find it quite impossible to get on at any hour of the day. I think no one who has had experience of this will deny that the service is extremely bad. It is sometimes said that the expenses that the Telephone Company have to deal with in London, are greater than in any other place. I think, however, there is another side to that argument, for the great population of London gives such a very ample space to work upon. It is a very serious question whether this service in London might not be rendered as cheap as in any other place. Perhaps we are the most important unit in any part of the United Kingdom, and we have a great deal to complain of in the Telephone service. One other point I wish to make is this: there is no sanction for this monopoly that has grown up. I daresay the right hon. Gentleman trusts to his knowledge and ingenuity to get him out of the difficulty in which he is placed. What the people of London are looking for is that somebody should extricate them from the difficulties in which they find themselves at present. The thing is gelling worse and we want somebody on the Treasury Bench to extricate us from this position.

*SIR JAMES FERGUSSON

It was not my intention to take any part in this Debate. But because I demurred to a statement of fact by the Member for Ton-bridge, which was misleading, the hon. Member who has just sat down took upon himself to tell me that my position in regard to this matter was delicate. It is not for the hon. Member to instruct me as to my position. It is true I am interested in the National Telephone Company, but I do not in the least admit that I stand in a delicate position. It is quite true that I was Postmaster General, and am also a Director of the National Telephone Company, but I may remind the House that I was the principal author of the agreement of 1892, whereby it has been said that the Post Office have the power of opening exchanges and granting new licences wherever they thought fit. My hon. Friend stated that the subscription in London is £20. Now, the fact is that while it is £20 for places of business for a single year, it is £17 if taken for five years; for a private house it is £12, if for only one year, and £10 if for five years. My hon. Friend said, that there were 75,000 subscribers in the United Kingdom. There are 110,000 as a matter of fact. It is only material because he based an argument upon it. The question lies between the Post Office and Parliament and I have no desire whatever to interfere.

*MR. LOUGH

I understood this was a point of order; I had not finished my remarks.

*MR. SPEAKER

The hon. Member sat down, as I understood, and thereupon the right hon. Gentleman rose. He did not make any suggestion that he was speaking to a point of order.

*MR. LOUGH

I can assure you I turned to get a book to prove my statements that no monopoly exists for this company, and the right hon. Gentleman did not say a single word in answer to the very simple remarks I made.

*MR. SPEAKER

I regret the misunderstanding, but I do not see how I can allow you to speak again.

*SIR JAMES FERGUSSON

I beg to explain that I thought the hon. Gentleman had finished his speech, and had sat down.

*MR. E. H. PICKERSGILL (Bethnal Green)

The speech of the hon. Gentleman was a very able speech, but I venture to think that it was unduly coloured by his former connection with the Telephone Company. I think the hon. Member for St. Rollox himself thought that he was really leading a forlorn hope. There was one part of the speech I heard with great interest. As I understood the hon. Member, although he is strongly opposed to the Government granting licences to any private companies, he has no objection to licences being given to municipalities. I welcome with peculiar pleasure this new convert to the principle of municipalisation from that quarter of the House. The hon. Member referred to the cost of the telephone service, and the estimates that have been made. I should like, in connection with that part of the case, to draw attention to the evidence given by Mr. Bennett before the inquiry held in Glasgow. Mr. Bennett, who has had almost unrivalled experience in these matters, said, when he submitted this estimate, that he would be able to supply the same number of subscribers as the National Telephone Company now supplies in Glasgow, and give an efficient underground circuit with all the most modern appliances at the cost of £5 5s. per subscriber. The Company know exactly what it costs to construct. The Company have in their own books full information as to the cost of making such an installation in Manchester, and various cities throughout the country, where they have constructed an underground system; and if Mr. Bennett's estimate was wrong, by far the strongest criticism they could possibly have brought to bear upon his estimates would simply have been to produce their own books and show what the cost had been of the systems they had carried out. Why don't they do it? I submit that the reason is that the actual cost in their own experience has been less than the estimate which Mr. Bennett gave. If that is not the reason, why don't they produce their books? Now, Sir, the fact that this Amendment has been moved by my hon. Friend the Member for Lanarkshire, and seconded by the hon. Member for Tunbridge Wells, shows very clearly that this is not a Party question. It is a sufficient indication that great interest has been aroused in the present position of the telephone question; and also, I think I may add, that considerable indignation has been directed, not against the Telephone Company, because the Telephone Company is only acting in this matter after its kind. The indignation of the public is directed against the Post Office, which is at the bottom of all this, and which is rapidly incurring considerable public odium for the extraordinary manner in which it has conspired with these monopolies. Why, Sir, only a few months ago the Post Office played off a gross deception upon the City of London Corporation. The Corporation declined to give the Company the use of its streets without receiving some quid pro quo. What happened then? The Company sent in its application through the Post Office unknown to the Corporation. The Corporation thought that they were dealing with the Post Office, whereas it was really the Post Office allowing itself to be used as a catspaw by the National Telephone Company. Subsequently, the Corporation learned how they had been treated, and they resented these peculiar transactions on the part of the Post Office. Now, Sir, I know that technically it has been decided that the law is on the side of the Post Office in this matter. I think, however, that public opinion will certainly support the Corporation. Now, my hon. Friend the Member for Lanark shire naturally looked at this question not as a national question, but from the point of view of Glasgow. Although fully recognising its wide national character, I regard it from the point of view of London, and, as the Member for St. Rollox admitted, London has been worse treated by the Telephone Company than Glasgow itself. When London has asked for an inquiry that inquiry has been refused, but there has been an inquiry in Glasgow, and I ask the House to infer from what has been proved, in the case of Glasgow, what is the case in London. With regard to this Glasgow inquiry, let me say that application was made to the Post Office for the inquiry, and the Post Office has always declined an inquiry. Then Glasgow went to the Treasury, the Treasury granted an inquiry, and the results of that inquiry are now before us. Now, Sir, there is one remark I should like to make at the outset with regard to that inquiry. In looking through the first page of this report and reading the names of the counsel I myself was astounded to find among the counsel briefed for the National Telephone Company the name of the Solicitor General for Scotland—a law officer taking sides in a Government inquiry; and, so far as I know, there is no precedent for that being done, that a law officer should accept a brief in the case of a Government inquiry. I do not know how—

*MR. SPEAKER

Order, order! That question might be in order on the main question, but it is out of order at this moment.

*MR. PICKERSGILL

Very well, Sir, I will not pursue that point. So far as I know, it is quite contrary to precedent for a law officer of the Crown to accept a brief in an inquiry of this kind. ["Order, order!"] Then I will go on to state that the Company, so far as Glasgow is concerned, stands absolutely condemned, even out of the mouths of its own witnesses. Lord Overtoun was a most influential witness who appeared before the Commission in support of the case for the Company. I think that will be admitted. And, Sir, I have seldom seen a more complete, and I may say a more amusing effect, produced than the cross-examination by Mr. Ure of Lord Overtoun. The learned counsel actually held in his hand whole sheets of letters of complaints which had been addressed by Lord Overtoun's own firm to the Telephone Company, and, therefore, Lord Overtoun—a witness, be it remembered for the Company—was obliged to admit that the charges were unreasonable, that the service was unsatisfactory, and that his firm had made almost daily complaints about the service, and the learned Commissioner himself admits that the case against the Company was fairly established. His opinion is as follows— The company did not attempt to meet the written complaints specifically, or to defend them with a view to showing to what causes they could attribute them. It does seem to me, having read this Report and the greater part of the evidence, that there were some observations made by the Commissioner which were not altogether judicial, and perhaps a little overdrawn. I refer especially to the comments with which the Commissioner interrupted the speech of Mr. Silverston, the counsel for the Corporation. The counsel for the Corporation pointing out, and I think it is a very appropriate argument, that where you find a high rate exacted you have a very limited use of the telephone. I should think that was a very strong reason why the rate, if possible, should be reduced so as to extend this boon to a larger circle of subscribers. How did the commissioner meet it? He said— Is not that an advantage, to have a limited number? Except for people who require it, is it worth having at all? Well, that is a truism which I confess I do not quite appreciate. And then he says— I would consider it a perfect curse to have a telephone in one's private house. One would be rung up for consultation at all hours of the day and night. And then he says— Is it not a species of communication exceedingly useful to a business man in a large way of business, but to the general public it is not a thing which they require? But the learned counsel's reply was: "I say, give the public a chance." And that is the reply in substance which this House of Commons will be disposed to give: "Give the public a chance." I object altogether, if I may respectfully say so, to the line of argument which this learned Commissioner was adopting, as if it was sufficient to supply a telephone service at high rates which could be used only by people in a large way of business. We ought to have regard to small as well as wholesale dealers, the latter of whom have already far too many advantages on their side. We ought to have regard to small traders and small shopkeepers, who could send their orders to wholesale dealers and to the markets if the rates were reduced to a reasonable sum. I say that these small people would be in a great deal better position, and better able to hold their own, probably, in competition with the larger dealers, if they could obtain an efficient telephone service at a reasonable rate. Well, Sir, just to return for a moment to the London case. What has London been doing? The other day there was a conference of local authorities held at the Guildhall, at the invitation of the Lord Mayor. At that conference three resolutions were passed. The first was that the telephone service in London is both inefficient and costly. Well, anybody who knows anything about the facts knows that that is perfectly true. The second resolution was that an inquiry be held by the Treasury. London was then pressing for an inquiry similar, I suppose, to that which has just been held in Glasgow. Whether, after the Glasgow inquiry, it would be worth while to hold another similar inquiry on the same lines in London, I confess I am in doubt, because it may be fairly claimed that all those points which have been proved against the Glasgow Company might be proved in the case of London. The third resolution was this, that permission to use the streets should not be given until the interests of the public were duly secured. Now, Sir, I take it that what London really wants is what Glasgow wants—namely, that the municipality should have the opportunity, at all events, of obtaining the licence to instal a telephone system. And, Sir, I alluded a moment ago to what the right hon. Gentleman the Secretary to the Treasury said last year. I think that what he said last year was eminently satisfactory, and if he adheres—and I have no doubt he will adhere—to what he said, then he must, without any hesitation, give Glasgow what they are asking for, because what did the right hon. Gentleman say last year? He said this— In case of an alleged grievance, the Post Office instituted a public inquiry. Well, that is not true. The Post Office did not do it. But in this case the Treasury did what the Post Office declined under strong pressure. [Mr. HANBURY: The Post Office did not decline.] If I am not mistaken, there is clear evidence in the Blue Book in connection with the inquiry at Glasgow that the Post Office did decline, and when after that the Glasgow authorities still pressed their desire the Treasury eventually granted the request. Besides, I think my view is reasonably established, because it was not the Post Office which instructed the Commissioner, but it was a letter from Sir R. Mouat. The Post Office declined the inquiry, and the Treasury, under pressure, granted it. But to continue what the right hon. Gentleman said— If the result was unsatisfactory and the service was either too costly or inefficient, they would feel called upon to exercise their right and introduce a rival service, either by another licence to the local authority, or by the Post Office. So that I think, as the result of the inquiry in Glasgow, the right hon. Gentleman is bound, by the statement which he made last year, to provide a rival service in Glasgow. The last words of what I have read would suggest an alternative scheme, either by the Post Office itself providing such a service, or by giving to the Glasgow Corporation a licence to provide that service. I do hope, in conclusion, that the right hon. Gentleman will speak as strongly and as decisively as he spoke last year, that there may be no longer delay in giving to Glasgow this licence which Glasgow desires, and which, in my judgment, Glasgow is amply entitled to have.

MR. A. CROSS

In attempting to make a few observations on this important commercial question, I will not follow the lines which have been adopted by previous speakers. After all, the question which this House is called upon to consider is a very serious one. It affects our communication by telephone; the telephone is essentially a necessity of outage. If I put the Post Office first and the telegraph second, the telephone has now come to be a legitimate and necessary thing to carry on our business communications. It may be said that this House ought not to interfere with telephones, because they are a luxury, but I think the analogy of the action of this House in regard to telegraphs quite justifies what I have said in placing telephones in the third position. At all events, the point alluded to might be made that these telephones are used only by a certain class. I make my first position thus. The telephones are now as essential as the Post Office, or as the telegraph, to the carrying out of the business of this country. Now, Mr. Speaker, the position in which the management of these telephones has fallen is only to be described in very strong language; it is an awful muddle. I give the right hon. Member for Manchester the credit to which he is entitled for his agreement of 1892. But if I give him that credit for the conditions made under that agreement, I must pass by the treatment which took place, not only under his control, but under the control of the late Postmaster General. I am not going into detail. The broad point is this, that our Postmaster General has led us into a serious bargain, by which we are bound to a national telephone monopoly till the year 1911. [Mr. HANBURY: Not at all.] Then I have totally misread this arrangement made by the Home Office. I maintain, as I read this arrangement, that as things are now we practically are in the clutches of the telephone monopoly, and that will last till the year 1911. I do not think that was intended, but that comes from placing men who are capital speakers in such high positions, but who have no business capacity. We have been out-generalled and out-witted by the officials of the National Telephone Company, and if any official in any private business had acted in this way he would have been dealt very-severely with. We have got now into the position of being in the hands of this monopoly, though I do not think it was intended. Other licences were given, but there was no such bargain. The National Telephone Company bought up the other licences almost before the ink was dry on the signature. The Post Office should have seen all this, and not have lent themselves to a process by which they were effectually led on to make concessions to this monopoly, which are now in the hands of the National Telephone Company. I will not labour the point any longer. The question is, What is to be done? There is one proposition I will venture to lay down, and I think the House will agree that in the matter of telephones, we cannot do things by halves. We must either have the whole system or have none of the system. Now, inasmuch as there are two complete descriptions of telephones, and two separate systems—I mean the local telephones and the trunk system—and inasmuch as the Government have prevented us up to the present from purchasing these telephones, I need not go any farther, beyond saying that we are committed by that action. This bargain is almost too absurd to be characterised in ordinary language; utter incapacity, utter stupidity, utter want of forethought are the terms to be applied to it. I want to speak plainly, and I am here to speak plainly, and unless this House awakens to-night to the real situation we shall require to pay not merely thousands of pounds, but millions, to the National Telephone Company. We are committed to the purchase of the Telephone Company. I am now arguing that we are bound to buy them, because we have bought the trunk lines already. We have got the trunk lines, but we do not possess the line at the termini, which are still in the hands of this company. We are bound to buy these telephones, and I want us to consider how it is best to do it. Are we to buy the telephones in the open market? If we are to do that where shall we be? Now, Sir, I see the Stock Exchange list occasionally, and there I see the price of the National Telephone Company stock. Now, if this House were to resolve to-night to buy up those telephones, the price of those stocks would go up by leaps and bounds, and before we could place our hands on them they would go up in price some millions, sums which would not represent any real asset, but which would go in payment to buy out somebody else. It would require an enormous sum of money. But, Sir, we should buy up not only these shares, but we should have to take all their own plant. Now, Sir, the plant which the Telephone Company are now operating with has been in use for a great many years. Even in the city of Glasgow it is of the most inferior description, and it is almost impossible to value it accurately, because they have a stock of old instruments, and they are determined to have them worn out thoroughly before they get new ones. It would not do for the nation to buy old and worn-out stock, and pay a sum not represented by the assets, but the sum which the Telephone Company paid in order to acquire the various licences that were issued from time to time by the Post Office, and which were brought up by this Telephone Company. There is another point. No one can tell what the development of the telephone may be. Why are we to charge ourselves with the present plant when it is probable that in a short time we will have a more complete and less expensive means of communication by telephone? And, therefore, I argue, it is not wise and proper to consider purchase, inasmuch as purchase would be the purchase of old plant which might be obsolete, but would nevertheless cost a very large sum. If we do not contemplate purchase of the telephone company now, what will be our position in 1911? If we do not purchase now, we have two alternatives. What position shall we be in if we do not purchase until 1911? This great monopoly has a big service already, and the House may take it from me that the revenue of this company is going on by leaps and bounds, and the figures are so large—my hon. Friend on the other side has them at his finger ends—that they would startle the House. If they be large in 1898, what may they be expected to be in 1911? The monopoly which is great now will be even in a stronger position then. My right hon. Friend on the Front Bench says that then we will have the company in our hands. I do not think so. He must consult business men, like myself, engaged in trade. Are we to lose the advantages of the telephone until he sets up a new service of his own? Will not the monopolist company be in command of the situation? The demands of business men are so strong that at whatever cost it would be cheaper to buy up the monopoly. Then, again, the monopoly which has us by the throat now will have us doubly in its grasp in 1911. I therefore cannot contemplate either purchase now, or leaving the company alone until 1911. If we dismiss the idea of not purchasing now, and if we dismiss the idea of not going on to 1911, as at present, the only possible course is that which has been mentioned in the proposal before the House. The hon. Member mentioned that there were certain rights reserved under the agreement of 1892. They are most valuable rights; they are the only rights this House possesses in this matter. Let the House use them. These rights empower the Post Office either to erect exchanges of its own or to grant concessions to municipalities to erect them. The question is whether that is desirable. In my opinion, if we shut this door we are driven into the hands of the telephone company either by purchase now or in 1911. Why not go on now? If the Post Office concedes the right to municipalities of great commercial centres to erect their own exchanges, they will at last have a decent service. It is notorious that we have the most wretched service, putting money out of the question. Nothing can be worse than the system in this country. I will not speak of Sweden or Norway, but I do not understand why we should not be able to speak with Copenhagen with as much facility as with Glasgow. Any man who has had experience of the system which exists in foreign countries in telephoning will maintain that our system is wretched in the beginning, wretched in the middle, and abominable in the end. Mr. Speaker, I speak strongly; but I am not one of those who would smash the instrument. I have resisted that temptation. We see in the proposal before the House to-day a way out of our difficulties. Am I to go back to my bad telephone in Glasgow, and, when business is stopped and people are enraged, am I to say that the House of Commons is responsible? If I do, I shall be compelled to say that when the case was pleaded in the House of Commons, it was said that the National Telephone Company was the company to be protected, that the Postmaster General did it, and that the House of Commons, yielding to its officials, paid no attention to the claims of the public. I feel strongly in the matter. If you give us this right we shall now secure a new service on the best lines. I will make this strong point to the House. In the place of having to deal with this octopus company in 1911, I undertake—I am entitled to undertake on behalf of Glasgow—that we will transfer to the Government the plant we shall erect at cost price. We only wish to protect ourselves, and to break up the present system in the interests of the nation. We have no other wish. When our licence expires we shall hand over our plant to the nation at cost price, or, at all events, at a figure about which there shall be no difficulty. We are accused of not allowing proper facilities to this company, but the House will perceive that if we permitted this company to lay their mains in our streets we should be destroying all chance of further competition. The essence of a fine service is that the trunk wires should be laid beneath our public streets. Should we part with that right, we would effectually prevent the establishment of any opposition. I do not wish to trouble the House. The points I make are simply these: telephones are essential for the conduct of modern business; to-night there is an opportunity of considering whether we should buy the telephone now or in 1911. I have tried to show that buying them now is not to be recommended; and, certainly, if we wait until 1911, we shall only have placed ourselves more in the hands of this monopolist company. I have come to the conclusion that our only issue, and the proper course, is to grant facilities now asked for by Glasgow and by other enterprising commercial centres in the country, to erect exchanges of their own, and so build up a proper competition which will have the effect of giving a good service—competition with the Telephone Company, and an improvement in the service, which they have hitherto given.

*MR. PROVAND

Mr. Speaker, the hon. Member who has just spoken has described the telephone system in Glasgow as being very bad. That is not accurate. It is the very worst telephone service in any city of any considerable size in the world. The hon. Member, before he sat down, alluded to the demand the company had made for the use of the streets in Glasgow. The right hon. Member for North-east Manchester took credit for having secured to the Government conditions which will, at any time, permit the Post Office either to establish exchanges of its own or to grant licences to others to establish exchanges. He took the credit to himself for something which was in existence before. The Government never gave away that right. The right was preserved by Mr. Fawcett, and it has always been retained. There is another thing the right hon. Gentleman did for us. He did not, in this case, preserve any right, but he gave the company a right which they did not possess before. Under Clause 10 of the Minute to which reference has been made he gave the right to the Post Office to open up the streets, and to connect the company's exchanges in the same telephone area, or with the Post Office exchanges, in order to use the trunk wires. That was handing over to a private company the right to use our streets in our cities—the right which, in the case of Glasgow, was bought up at an enormous sacrifice years ago. This House was not aware what was intended when this was done, or it would not have permitted any such extension of the law. When the Telegraph Bill of 1878 was before this House, the Post Office inserted in it a clause to give them greater powers in connection with telegraphs. That was the word made use of, which, of course, included telephones. They asked for greater powers than they had in the previous Act, but the House rejected that clause. However, the right hon. Gentleman the Member for Manchester has enlarged the powers of this monopolist company by putting in a clause in the Treasury Minute of 1892 which enabled the Post Office to open up the streets and hand the use of them to the National Company. Now, Sir, I think we have heard already—the hon. Member for the St. Rollox Division has said it—that it is necessary to go under the streets in order to have an efficient service. Something to that effect may be gathered from various remarks in the report which resulted from the recent inquiry in Glasgow. There is no necessity whatever to go under the streets. As a matter of fact, less efficiency is gained under the streets than if the wires were overhead. That is common knowledge. It is not only true in this country, it is true in every country. I have only to quote the general manager of the National Telephone Company himself to show that the statement that they required to go under our streets in order to obtain efficiency was only a pretence in order to get possession of the streets. There was a Committee of this House in 1893; it was in connection with electric lighting powers and arranging some necessary clauses. The managing director of the company was asked whether greater efficiency was obtained' by wires overhead or underneath, and this was his reply— As a matter of pounds, shillings, and pence, I should prefer to go underground, but I am bound to say that, it does not give such an efficient service as overhead wires. There is nothing so perfect telephonically as wires insulated in the open air. They want to put their wires underground in London because it would save them money and give them a monopoly of certain districts. If the wires are put underground, any other company is less likely to raise the streets to put down other wires. That is the principal reason why they want to go underground. There have been letters and statements repeatedly made on behalf of the National Telephone Company that efficiency was obtained by going underground. I feel satisfied that the House will see that there is no foundation for that statement. There are some other matters mentioned by the hon. Member for the St. Rollox Division, to which I should like to refer. He has deliberately recommended the right hon. Gentlemen the Secretary to the Treasury and the Chancellor of the Exchequer to expend the ratepayers' money in buying up this monopoly. There was talk of buying up this monopoly in 1884, in Mr. Fawcett's time, and again and again since. I think I say what is correct when I tell the House that this question has been repeatedly gone into by the Treasury officials, perhaps by Chancellors of the Exchequer themselves, from that time down to last year; and the moment they saw how the facts were, the moment they grasped the situation before them, they have again and again said that it was impossible to purchase this monopoly. Now the National Telephone Company has issued about four millions sterling in shares—very nearly that amount—and debentures to the amount of one million three hundred thousand odd. Allusion has been made to what would happen to that capital, and one Gentleman quoted a statement of the chairman of the company given in evidence before the Committee. The hon. Member for the St. Rollox Division has also alluded to it. I state distinctly that out of that four millions of ordinary capital issued by the National Telephone Company there are between two and three millions water capital, not a penny of which went into the purchase of a yard of wire or of an instrument, or paid for one day's labour of any man. Does the right hon. Member for the St. Rollox Division challenge that? It has been set out in the companies' prospectuses, and the public know it. It is necessary we should know what the country would get for their money if they accept the prices the hon. Member has given to the House. The market value of these shares is about seven and a half millions to-day.

*MR. FAITHFULL BEGG

May I correct my hon. Friend? I made the calculation yesterday, and it comes out less than six and a half millions.

*MR. PROVAND

I think there is a mistake in my Friend's figures. I took them myself while the inquiry was being held, and they came out, I think, £7,600,000. But recent war scares have depressed everything on the Stock Exchange, and they may have become somewhat lower lately, but I do not think they are so low as that. [Mr. FAITHFULL BEGG: They have not been affected materially.] Well, whatever they may have come down to under recent circumstances which have depressed and influenced everything, they would very soon jump up that, and a good deal more, if it was believed that the Government had the remotest intention to buy. Now, these seven millions, if the Government is going to buy, would very probably become ten millions, because the Government can only buy in a certain way. They must either negotiate with the company and pay the price they ask, or they must, under two clauses in the licence, go to arbitration; and under those two clauses the Government would know nothing whatever of how much they would have to pay until the arbitration was over, and I venture to say no Chancellor of the Exchequer would come into this House and ask for the money he would have to pay to buy up that monopoly under these two clauses. The market price of shares would be taken into account when the arbitration came to decide. The hon. Gentleman says the Government could borrow money very cheaply to do it, and he thought they would make a profit. I think I know that if the Chancellor of the Exchequer bought the National Telephone monopoly it would cost him at least ten millions, more than eight millions of which would be absolutely wasted money. The hon. Gentleman spoke of patents. The National Telephone Company have not any patents that are worth anything whatever. I asked him to name a single one, and my hon. Friend could not give it to me. Every valuable patent expired years ago, in 1890 and 1891. Any patent used now has no value whatever to speak of, and does not affect the question in the slightest. The monopoly is upheld entirely by the fact that the Post Office will grant no licences. There is no other reason whatever for it. How long would they have a monopoly in Glasgow if you gave the Municipality a licence? Not one moment longer than the time in which that Municipality could erect a telephone system. The monopoly would cease from that very moment. Their patents have nothing to do with it; it is simply that the Department, which is controlling and managing the telephone service, has since 1892 been nothing but an annex of the National Telephone Company—that is all it has been. Those in charge have kept up the language, and taken credit for saying, "Oh, we have the right to do this, and the right to do that." Have they ever done it? How have they treated every application which has been made to them for a licence? Glasgow's reply did not come for nearly four years after the letter was written to the Post Office. Deputation after deputation came to the Post Office. How were they treated? Shamefully, I say. Why do you have a monopoly? It is because the Post Office has granted no licences whatever. We hope that that state of things will shortly come to an end. Now, Sir, the hon. Member opposite alluded to the Report of the recent inquiry held in Glasgow, and one of the findings he quoted was that the service was not efficient. I differ entirely from nearly every finding in this Report. I have not yet had time to read the evidence, but I have glanced over the Report, and there is hardly a finding in it with which I agree, except two. It says that the service in Glasgow is not efficient, and, in order to emphasise this, the Sheriff in his Report puts it in large type. And in the very last paragraph of the Report he says in substance— If you don't like to do what I recommend, then by all means grant the Glasgow Municipality a licence, and let them complete their exchange and enter into competition with all comers. Those two recommendations are the only parts of that Report which I believe any person will accept as being reasonable. Then, my hon. Friend the Member for the St. Rollox Division alluded to a matter which is personal to myself. He spoke of the evidence given at the inquiry in reference to the Mutual Telephone Company of Manchester. Now, I obtained the licence to establish that Mutual Company from Mr. Raikes, the late Postmaster General, and I found friends in Manchester, where my business is situated, to join in obtaining capital to establish a competing exchange with that of the National Telephone Company. I had been agitating the telephone question since 1882. I obtained the licence in 1889. I had, therefore, been struggling for some time to do what I could to enable the community of that city to enjoy what every second and third rate town on the Continent enjoys—a good service at reasonable prices. We established our exchange, and as soon as the National Company knew that we had received a licence they reduced their rates one half—or, first, from £20 to £15, and then, when they saw our exchange beginning to be erected, they reduced their rates another £5. That is to say, they reduced rates all over that district from £20 to £10, and then they found they had to reduce them all over the country. The effect of the establishment of the Mutual Telephone Company in Manchester in that year was to compel the National Company to reduce its rates by half, which took away £55,000 from their revenue. The Chairman slated that fact, at meetings of the company. That is a lesson in the value of competition. The hon. Gentleman alluded to materials which had been used at the Manchester Exchange, and he said the Sheriff had found they were cheap and bad—I think that is what he said Well, Sir, the materials were bought from the very best makers in this country; we paid the highest prices for them, and nothing better could be procured in their way, because we were not restricted from buying anything we required by any patents. Patents only applied to the transmitter at the time we commenced our exchange, and they only lasted a little while, so that we had Bell receivers and materials of every kind of the best description. More than that, we had a double wire exchange, a metallic circuit exchange. Now, Sir, the evidence about this Mutual Company of Manchester was given on the very list day of the hearing of the inquiry, and the Sheriff refused to allow any rebutting testimony to be given. To the statement made at the Glasgow inquiry about the quality of the material used by the Mutual Company being bad, I give the most absolute denial. The invoices for the goods can be referred to; the manufacturers are well-known, and the statement that we bought cheap materials is untrue. There were also statements made on the evidence of the liquidator, in reference to what it has cost to erect our exchange. Now, who was the liquidator? We sold our exchange to the New Telephone Company, and the New Telephone Company amalgamated with the National Telephone Company, and consequently the Mutual Company fell under the control and the possession of the National Company. They appointed their own secretary to be liquidator. I am going to allude to his calculations. That was tainted evidence from the very beginning. He said it cost £30 to erect our wires. It cost actually £16 16s. That account can still be referred to. Then he said this: he counted up that if we had allowed a sufficient sum to meet renewals we could not possibly have paid any dividends at all; in fact, we should have been bankrupt. To arrive a that calculation he took for a sinking fund 3 per cent. and renewals 15 per cent; this is 18 per cent. Now, supposing we apply these figures to the National Telephone Company itself, how will they work out? The National Telephone Company's total income is about £1,000,000. Their capital is £5,350,000, and 18 per cent. on that capital would come to more than £950,000. Their whole income would be nearly swallowed up at the rate taken by this liquidator, their Secretary. These are the figures that my hon. Friend asked me to deal with. I have dealt with them. In regard to the statements respecting materials, I give them the most categorical denial. Our accounts have been audited by one of the leading firms of auditors in the country, and every fact and figure is cheeked. I hope we shall have this promised inquiry in London, when it will be conducted in a very different way indeed to what it was in Glasgow. My hon. Friend the Member for Bethnal Green alluded to the Company have engaged three or four counsels against the one junior, I think, engaged by the Corporation of Glasgow. Well, the Company had all the leaders of the Scotch Bar, and, notwithstanding that, while I was present, it seemed to me the Commissioner frequently thought they had one counsel too few—that was the impression left on my mind, and on the minds of everyone I spoke to. We hope to have an inquiry in London, and then get to the truth of this question. There was a remark made also by the hon. Member for the St. Rollox Division about Stockholm. He said the Commissioner could see no connection between Stockholm and Glasgow. I think it is right that the House should know something as to what the rates of Stockholm are as compared with London, and I think the Member for St. Rollox said that those rates were reasonable. In Stockholm—

*MR. FAITHFULL BEGG

I did not make the statement that the prices were reasonable there. I said the Sheriff had stated that they were not unreasonable.

*MR. PROVAND

In quoting the Sheriff's statement I understood my hon. Friend to support it. Does he say they are not reasonable? [Mr. FAITHFULL BEGG: I agree with the Sheriff, but that is not what my hon. Friend said.] Well, I will tell the House how Stockholm stands as compared with Glasgow and London. The figures are taken from a recent return made to the Foreign Office, prepared by our own Consul there, and they came ever here only a few weeks ago. There are two companies in Stockholm, and in competition with them there is a State telephone service. The State charge is £2 15s. 6d. a year, but they charge an entrance fee of £2 15s. 6d. also. If you divide that over live years, you only get a rate of a little over £3. Then, again, one of the companies charge only £2 10s., and they charge an entrance fee of 11s. 1d. The other company, which is a very large one indeed—the two companies work in harmony—charges £4 8s. 10d. for a full service, night and day, at all times, with entrance fee, £2 15s. 6d. Now, this £2 15s. 6d. is estimated by Mr. Hultmann, the engineer to the State telephone service in Stockholm, as being the approximate cost of a wire within the municipal area. That is what it cost to send out a wire from the office, from the exchange in Stockholm, to any person within their municipal area. But they have lower rates than that. They have a £2 10s. rate, with a limited number of calls, and they have another service with a still more limited number of calls per annum. But what is the radius of Stockholm? It is 41½ miles from the centre of the city. Stockholm is 83 miles in diameter, with a telephone area of 6,000 square miles, and the Glasgow telephone area is only one thirty-seventh that of the Stockholm area. I am taking the figures from the Report. I was in Stockholm myself last September, and in the British Consul's Office I spoke through various instruments, and I found a great, difference as compared with anything in this country. There are difficulties no doubt in London to be overcome, but my chief objection to the London service is its uncertainty. This is what the Consul at Stockholm writes— Foreigners who have come to Stockholm and used the telephone system have been greatly pleased with the excellent quality of the service, and the rapidity with which answers are returned from the exchange. Would any man visiting this country say that he was pleased with the London or the Glasgow services? Is there the smallest chance of his saying anything of the kind? Stockholm has 22,000 users of the telephone, although the city has a small population of 260,000, I think. Glasgow, with a population of 960,000 within the telephone area, has about 6,000 users. Well, Sir, the Stockholm people, I have seen it said, do not make money. Why, they pay 8 per cent. per annum, and, more than that, they have reconstructed their exchange twice over. It was first a single wire exchange, then it was a, double wire exchange overhead. They have recently reconstructed it into a double wire underground exchange, and it is now in final form. Notwithstanding all these numerous reconstructions of the system, they pay now 8 per cent. per annum dividend. The State will not allow them to pay more than 8 per cent., hence they have to carry their profits to a reserve fund, which amounts to more than £100,000. The hon. Member has also said something about the cost of erecting the exchanges, as if the cost was heavy. It has been so in the case of the Post Office. I understand it has cost them £128 for every wire; but that is considerably more than was necessary. I will give the capital outlay per user which I have taken from the official Reports. In Bergen the outlay per user was £14; in Christiania and Stockholm it is about the same. Indeed, all the exchanges in these countries cost about the same sum. Some of them only cost £12. The German Government own all the telephones, and the capital outlay in Berlin is £22 per user, and in Hamburg £19 12s.; in Frankfort it is £22 18s., and in Leipzic £19 2s. Now it will be noticed how closely these sums agree. No doubt there are more difficulties in some cities than in others, but that is the capital outlay, so far as the German Government is concerned. The corporation estimates for Glasgow, which have been prepared from advice obtained from the best experts in this country, show that to construct the best system of double-wire telephone exchange will cost about £20 per user. Contractors have agreed to undertake the work at this price, and are under penalties to do it within a certain time. I will give the cost of works done in our own country quite recently. We all know that Huddersfield has attempted to obtain a licence from the Post Office, and some of us know that they have received a letter in the usual way, stating that the matter will be considered. I suppose it is still being considered by the Post Office. The Huddersfield municipality erected a small exchange for their own use at a total cost of under £700. The cost works out at £21 12s., so you see how closely these figures approximate to those which I have already read out for the Continent. The aggregate length of all the lines is more than 25 miles, and one extends seven miles from the town hall. Well, the total cost of maintenance per annum—and this covers the heavy charges for wages, interest on capital, etc.—is £3 4s. 6d. Before the municipality erected this exchange the National Telephone Company was asked to supply the service, and they offered to contract at £10 per annum for the first wire, and £8 10s. for the others. Therefore you have to compare this figure with the £3 4s. 6d. which it actually costs the municipality. The Post Office, in dealing with this matter, have always used language in this House as if they were anxious to promote the telephone service. The right hon. Gentleman the Member for North-east Manchester, when he made the arrangements in 1892, and the Minute was issued, said that all his predecessors counselled commercial freedom. There was no doubt they did; Mr. Fawcett, Mr. Raikes, and other Postmasters General who preceded the right hon. Gentleman, have certainly expressed the opinion that commercial freedom was what we required in the telephone service. I hope the right hon. Gentleman will tell us to-night that he intends we shall have it. Mr. Arnold Morley, when Postmaster General, said he was as strongly opposed as any Member of the House to the granting of a monopoly to the National Telephone Company or to any other company, and he would resist any attempt which might be made to secure that end; but he maintained the monopoly. Having this monopoly, let us glance at the result. Excessive charges and also inadequate service belong to every monopoly. Monopolies would not gain all the profit they do if that were not so. In the case of this company, the charges are not understood by the public generally. The charge is £17 in London, but you have to buy it wholesale to get it at that price. The cost is £20 for one year only. In Glasgow they pay up to £25. I rented two small table instruments from the National Telephone Company, the cost of which was £6 per annum. These instruments are manufactured at Stockholm, and can be bought by anybody in this country. They only cost £6, and I was charged £6 per annum for the use of them. We sometimes hear statements in this House about the extortion of landlords, but I challenge any Member to tell this House of a greater extortion than charging for the annual rent of these instruments the whole of their cost. They last for years, and will be as good at the end as at the beginning. I do not blame the company for that; I blame the Post Office. The company have only the interests of its shareholders to consider, and not the public. If the directors did not make these exorbitant charges to keep their dividends the shareholders would get other directors who would. the chairman of the company has asked for statutory powers—he is always deploring the fact that the company exists on sufferance; but they exercise powers more than any company which has statutory powers. No gas or water company can do what this National Telephone Company does. It refuses service except on its own conditions. It is a pity that statutory powers were not insisted upon at the beginning, and that statutory limitations, the same as apply to other companies, should also have been imposed. I will give another instance of the present extortionate charges. For some reason, which I cannot explain, the Channel Islands are not within the United Kingdom for certain purposes. Guernsey refused to take the service of the National Telephone Company or of the Post Office, and got a licence to supply its own. The correspondence which took place is well worth reading, if hon. Members desire to know what the Post Office wishes to do. Now that the Guernsey people have got their licence and have commenced work, the rate in Jersey was reduced from £10 to £8, and when they are in possession of a working exchange the price is to be reduced to £6 10s. The hon. Member for St. Rollox said that if you granted licences they would be bought up. Who has bought them up? The National Telephone Company. No licences have been bought by anybody else. There is another thing to be noted in that respect, and it is that, although many of these competitors were poor struggling concerns, with very little capital, and living from hand to mouth, yet the National Telephone Company never defeated one of them, it did not force one of them out of the field, but bought up every one. I ask hon. Members to read the Returns laid upon the Table of the House, and they will then see the history of the Post Office telephone exchange. They started before the National Telephone Company—they had every advantage in their favour, and what has been the result? Their exchange is either dead or dying; wherever they meet the National Telephone Company the National Telephone Company goes ahead and gets lots of subscribers, and the Post Office exchange loses its subscribers. Five of their exchanges in business towns are shut up already, and there are others in business towns which will soon shut up. The Returns contain a sorry account indeed of what the Post Office will do for us, and it is the Post Office which the hon. Member for St. Rollox says ought to buy up this service and supply the country. If the Post Office had the supplying of it, I am sure we should indeed be in Darkest Africa in regard to telephonic communication. The Treasury have taken this matter, I believe, under their own care; they are responsible for questions of this kind; they have now an opportunity of freeing this country from the position in which it is at the present moment. We cannot look abroad, not even to second or third rate towns on the Continent, without finding a much better telephone service than we have got. In Germany the rate is still £7 10s. per annum, but the State accounts show, I believe, and I am speaking on good authority, that they make 14 per cent. profit, and they have been considering the advisability of reducing the rate in consequence. It will, therefore, soon have a rate far below anything which exists at present. I therefore ask the right hon. Gentleman to step in and free us from the terrible state of things that we are enduring in this country, where business men are handicapped in every way, so far as telephonic communication is concerned, when compared with those of other countries.

SIR H. BULLARD (Norwich)

Mr. Speaker, I should not have intervened in this Debate on this subject had it not great interest for the city which I have the honour to represent. I have been in conference on several occasions with the hon. Member who has just spoken, and he has left me very little to say; but I wish, on behalf of my own city, to inform the House that we have had large meetings to consider this matter, and have unanimously passed resolutions in favour of having municipal telephones. I may say, the corporation, after discussing the subject very freely, came to the same conclusion by a large majority. Unlike other cathedral cities, we have been increasing year by year, until we are now a city of some magnitude, claiming to be the metropolis of the eastern counties. We hold that the telephone should be applicable to, and be able to be used by, those who are in humbler spheres of life. We have not the number of call offices necessary for the transaction of our business. The fact is, we are under the rule of this National Telephone Company, which, wise in their generation, elected certain members to their board, and in Norwich they elected the two leaders of the County Council, Conservative and Liberal—a very discreet action on their part. In Norwich we are seeking for an interview with the Postmaster General in order to obtain a licence, and I hope this Debate may lead to some result, and that we may have better fortune than Glasgow.

THE FINANCIAL SECRETARY TO THE TREASURY (Mr. R. W. HANBURY,) Preston

The Amendment before the House asks us to allow certain municipalities to enter into competition with the existing licences of the Government in the same area. At first sight that may seem undoubtedly a rather strong suggestion, especially when it is borne in mind that, with regard to the telephone business generally, there are great difficulties with reference to competing companies in the same area. I think, therefore, the first question this House should ask itself is, "Is it fair that we should allow this competition to take place?" and, in the next place, if it is fair, whether municipalities are the best form of competition. The present position has grown so entirely out of what happened some 17 or 18 years ago that the House will, perhaps, allow me to carry them back to the time of Mr. Fawcett. In the very early days of telephone enterprise, when very little was known about them—that was. I think, in the year 1880, when the telephone had only been in use four years—the Postmaster General had to arrive at a decision as to what course the Government should take with regard to the new system. In those days Mr. Fawcett was anxious that the telephone service should be carried on entirely by the Government, and I am not quite sure whether, if that could have been done, it might not have been the best solution of the difficulty. But the Treasury, rightly or wrongly, ruled otherwise, and imposed upon the working of the telephone by the Post Office certain conditions which I admit at once did make competition possible and the working of the telephones by the Post Office very difficult. The result was that Mr. Fawcett, finding he could not work the telephones efficiently through the Post Office as a Government monopoly, instead of granting local licences—as he had done for about three years up to 1884, and limiting those companies to definite areas—instituted a system of entirely free competition. In August,1884, he announced in this House that he would grant licences freely to every company that applied, and licences which would extend over the whole country, so that any company wits at liberty to set up exchanges in different parts of the country. His idea was that, if the monopoly could not be in the hands of the Government, he would take such steps as seemed to him best to prevent the monopoly falling into the hands of any private company. The results have shown that Mr. Fawcett undoubtedly made a grave miscalculation. In the first place he omitted to recollect the fact that, even in those days, one company—the United Telephone Company—had a great advantage, because it owned patents, and therefore it was not possible for companies generally to get patents except under the rules and regulations of the United Telephone Company. There were a few other patents, independent of this patent, and the smaller companies which were started to work these other patents, were soon bought up, so that there was a series of companies entirely under the control of the United Telephone Company. Some of these companies did become more strong and more formidable to the mother company, and in 1889 the United Telephone Company bought up the two last survivors—the Lancashire and Cheshire Company, and the National Company—and all three amalgamated; the amalgamated Company becoming the National Telephone Company. In 1891 the patents expired, and it was then possible for other companies to come into competition, totally independent of the company which owned the patents. Two companies were started—the Mutual and the New Company; but the New Company very soon bought up the Mutual, and then we had the National Telephone Company and the New Company face to face. That was the position in 1892, when the Treasury Minute was drawn up, and it is undoubtedly the fact that that Treasury Minute of 1892 was drawn up with the distinct recognition of competition as against monopoly. That Treasury Minute and the Agreement upon which it was based recognised that there would be competition and that there would be no monopoly. Unfortunately, very soon after the Treasury Minute was drawn up, a very vigorous flirtation took place between these two companies, and they were all but amalgamated, even at the time the agreement was initialled in August, 1892: at any rate, there is this fact, that one company had bought up the other, and it was practically an amalgamation before the agreement was formally signed. We have, therefore, this result: that Mr. Faweett's anticipations were falsified, and the very means he tool to produce free trade and free competition resulted in an actual monopoly. It is also beyond doubt that this monopoly had defects. It would have been, and was, a very reasonable arrangement for Mr. Fawcett when there were a large number of those small companies in competition with one another confined to local areas. There was no necessity for imposing stringent conditions, but now that this company has swallowed up all the other companies, undoubtedly you have a very remarkable state of things. You have a monopoly, the only one so far as I know of this extent, which is not put under strict control and very stringent regulations. Our railway companies, water companies, gas companies, electric lighting companies, are all placed by Parliament under strict limitations with regard to their capital, their dividend, their rates, and especially with regard to preferences, and in all of these points this telephone company is absolutely unfettered. I think this is a very exceptional state of affairs. Another result which has also followed from the way in which this company has grown up is that its rates must depend upon its capital. Without entering into minute calculations as to the actual value of the plant of this company, I am able to say that, while I believe its capital stands at the present moment at a value of something like £6,000,000, the Post Office calculation is that that could entirely be replaced with a metallic circuit in every exchange at a cost of very little over £2,500,000 of capital. Then we have the further point which has resulted from this want of competition. When I look at the little competition there has been I cannot blame the company for its defects. I am rather astonished that it is as good as it is, because, undoubtedly, the tendency of this want of competition must be towards an inefficient service. But in a good many parts of the country there is a service about which, so far as I know, there is no great complaint. At the same time we have to recognise the fact that in several large and important towns in this country, even in the metropolis itself, and in Glasgow and other Scotch towns, there have been complaints made of inefficient service. In the case of Glasgow that complaint has been proved to be true by our own Commissioner, and in London Mr. Forbes has admitted very grave defects in the service. Without going into minute details with regard to the number of subscribers to the population, or the number of exchanges, and without comparing the service with that of foreign countries, I know that it is most important that this country should not be behind other countries in the telephone service. There is, however, the undoubted fact that, at the present moment, the number of subscribers in London, for instance, does not compare with the number of subscribers to telephones in Berlin or Paris, and, of course, there is no comparison with the smaller exchanges in Scandinavia. We have also to recollect that the service at the present moment is only confined to the more populous portions of this country and to the large towns. Very little has been done by the country districts, and even in populous towns the service is rather for the rich and the commercial classes than for the poorer classes. I think also that there are not the number of call offices or exchanges which there ought to be for the benefit of the smaller tradesmen who cannot subscribe to the service. I do not blame the National Telephone Company for this. They have done everything with perfect fairness; they have simply taken advantage of what I think was a grave error committed about 1883 by the Post Office and the Treasury. Therefore what we have to do is to accept the facts as they are, and do what we can to make the best of a bad bargain. My hon. Friend the Member for the St. Rollox Division of Glasgow suggested that we should purchase this company. I think I have already given figures to show that we should make a very bad bargain if we purchased at anything like the market value of this company at the present moment. There is one thing that has been decided by two Governments in succession; that is, that, although it was possible in 1897 to give notice to the company of purchase by arbitration, in both of those years the option has not been acted upon, and for intelligible reasons. Is it likely we are going to put our case into the hands of arbitrators who are generally not too favourable either to Governments or municipalities, and run the risk of paying this enormous price to the company, and probably 10 per cent. interest besides? A further consideration is the fact that these licences will not be extended beyond the year 1911; I think that is a fact which it will be well for the country and the companies to consider, because that is a matter upon which the Government has already given a decision. In 1892 a Select Committee of this House sat, of which the present First Lord of the Admiralty was Chairman, and the Postmaster General and the hon. Member for Manchester and Mr. Shaw-Lefevre were Members. That Committee drew up a Report which was accepted by all parties on the Committee. A remarkable feature of that Report was that, although the Committee was appointed to deal with the whole question as to how the Treasury Minute should be acted upon, they said they were willing to leave everything else to the Government, but they must make this one recommendation, that the licences should not go beyond 1911. I admit the important fact that these licences are not to run beyond 1911. It is impossible to bind our successors; but, assuming they are men of ordinary common sense, they will not allow the licence to go beyond that year. That being so, we have to face this difficulty. The National Telephone Company is in possession of the field at the present moment. It is a company that is extending very rapidly, and I do not hesitate to say it is becoming more formidable every year. How are we to meet this difficulty? If it is known that the licences will expire in 1911, and if the Government of that day does not agree to purchase by notice or by arbitration the plant of the company and its assets generally, and, it may be, its goodwill, and those many wayleaves which the Government has conceded to it, and which the Government, having conceded, will have to buy up again—it is possible that, if that notice is not given, and the company sees there is only another seven years to run, it may, and not unfairly, take the opportunity of trying to put the Post Office and the Treasury in a difficulty. The company probably would, and I do not think we could blame them. What is the danger we have to guard against? It is this: I cannot suppose that anybody would buy by arbitration in 1911. I will not say it may not be wise to make a bargain with the company and give them the actual value of the plant. Even if we could come to a bargain in 1903 or 1904 to buy, the plant would not be delivered seven years in advance, and the company would have control of it during those years. But it is possible that the company would not sell their plant to us by any bargain of that kind. What would happen then would be that, unless we have started ourselves very early, about 1903 or 1904, with entirely new plant of our own, the company would be unwilling to sell to us. They have a Parliamentary power to raise their rates; they would probably raise their rates, and might run down the service, and the result would be that the country would get so disheartened with the telephone service, which is a service of great importance to the commercial world, that there would be a great outery throughout the country, and we might have to buy this company up at its own price. I am, of course, aware that this is a possible contingency; but I think it is a contingency which the Post Office and the Treasury should keep in view, and, if possible, endeavour to take every precaution to guard against its occurrence. There is one remedy which we are able to take at once—one means by which we may avoid this evil to a limited extent, and that is by competition. Then the question arises, how far are we free to deal with our own licencees? It will be grossly unfair to do anything whatever which in one single degree trenches upon our agreements with the company. We are bound to stand loyally and faithfully by every agreement to the word and letter that we have ever made with the company. But in these agreements it has been distinctly re served over and over again—and it has been admitted, I think, most distinctly by the chairman of the company, Mr. Forbes, in the evidence that he gave before a Select Committee in 1895—that not only legally are we entirely free to start any competition that we like, as against the company within its own areas, but that neither in honour nor in faith are we bound to take any other course. We are, therefore, absolutely free to enter upon competition. Now comes the question as to what is the best form that that competition may take. I do not believe that the competition by companies would be by any means a proper course to adopt. The whole history of the competition hitherto has shown that the companies can be bought up at a premium, and the result is that the public are charged higher rates for the service in order to recover that high price paid, and I cannot conceive that any company would be able, during the short period which these licences would run—for, of course, we should never permit licences to go beyond 1911—to make a sufficient profit. I do not suppose it is possible that any company would start with the knowledge that during these 14 years it would have a sufficient surplus of income to pay both interest and redemption fund during that period. If, as I think, companies are practically impossible, then I come to the competition by the Post Office itself. I am perfectly willing to admit that some of the criticisms that have been passed upon the work of the Post Office exchanges have been to a certain extent justified. I perfectly admit that the Post Office exchanges have not been worked hitherto as vigorously as I certainly think they ought to be. It does seem to me perfectly absurd that, having granted licences to the National Telephone Company, when we had exchanges of our own already in existence, we should have been so utterly foolish as to allow the National Telephone Company to invade our own areas and to compete against us. But we have done so, and we are committed to that arrangement, and all that we have got to do is to make the best use of it. Still, I think partly the reason that the Post Office has not competed within its own exchanges as vigorously as it might have done is because of the idea that it was to work harmoniously with the National Telephone Company, and I perfectly admit that with regard to the greater portion of the area of this company, especially at the time when the negotiations were going on with regard to the trunk wares, it was necessary to work in amicable relations with this company; but I do not think amicable relations need be carried on when we find that the National Telephone Company has invaded our own exchanges and tried to drive us out of them. I think, therefore, we are entitled to do our best to see that these exchanges are worked in active competition with those of the National Telephone Company. But things have hitherto militated against our doing so. The Treasury regulations, which were confirmed in 1882, and which caused Mr. Fawcett to throw the whole of this valuable service open to competition, I am sorry to say, are still in existence, but we propose to abolish them. We propose to abolish these regulations and restrictions, and we further propose to enable the Post Office to try and compete, to canvass for work, just in the same way as would be open to be done by its rivals. But I am afraid that even when we have done that there is a difficulty which faces us, and which has militated against the success of the Post. Office exchanges in the past even more than the Treasury restrictions, and it is this: I have said already that the Telephone Company has got certain privileges unrestricted which, so far as I know, are enjoyed by no other body. It has got the privilege of granting preferences to particular subscribers, and it is by means of giving either free wires or reduced rates to large firms, who would, bring it a large amount of business—by doing this which the Post Office exchanges could not do, because they cannot give preferences to anybody—that it has been able to drive the Post Office either altogether out of its exchanges or to make it not so profitable a working concern as it might have been. That is a privilege that we cannot take from them; they must go on exercising that, and probably they may exercise it in competition with us or with anybody else. But if that is the case—although I do not think it is public policy that it should be done—I think it is quite clear that the Post Office, if it is to be done at all, should, on its side, use its privilege, and if the company is to compete in its ex changes with the Post Office it must not in future expect from the Post Office a great number of privileges which the Post Office, outside its bargains and agreements, has hitherto given. We must insist upon having fair competition in these matters. I ought to say, too, that with regard to Post Office competition the promise has been given by Post masters General in this House, and I think I gave it on behalf of the Government, and I repeated it last Session, that in any case where there was an unreason able service and no competition it would be the duty of the Post Office itself to enter into the field. There is the less objection to doing so because, although the Post Office may be blamed for not having worked its exchanges as vigorously as it might do, yet it is entitled to this merit, that in spite of the difficulties in its way, in spite of the competition of the National Telephone Company, especially with regard to these preferences, the Post Office exchanges have paid the Post Office a very large interest on the money spent. Therefore, from a financial point of view, there is very little reason, so far as I can see, why the Post Office should not, where necessary, extend its exchanges, and if this is so, of course it will gradually and slowly prepare for the day when the whole of the telephone service will fall into its hands. Then we come to another class of competition which has hitherto not been dealt with. Hitherto, till the year 1892, the municipalities were about the only bodies that could not well enter into competition with the National Telephone Company, because there were general licences granted to that company all over the country to include the right to work trunk lines in the municipalities whose action must necessarily be con fined within their own boundaries. They were, therefore, by that fact, and by the fact of the preferences, shut out from competition. Now, it has been submitted today that the municipalities should be allowed to enter into competition, and from some points of view I admit that there is a great deal to be said for the municipalities being allowed to do so. In the first place, I have said I do not think that any companies would be willing to start with the additional knowledge that these licences would come to an end in 1911. The municipalities—or, rather, I should say, the local authorities—are perfectly willing, as I understand, to undertake the licences, to work them on condition that in the year 1911 they absolutely surrender them. That is undoubtedly one argument in favour of the local authority. Another argument, I think, is that they certainly would not be bought out as a public company would be. Another argument is the fact that they have way-leaves, and they would be able, therefore, to lay a most efficient underground service, and I confess there is a great deal to be said on behalf of the municipalities, who say that while they are perfectly willing to allow the streets to be taken up for their own exchanges they do not wish them to be at the mercy of anybody who chooses to come there, and I think there is a great deal of justice in that contention of the municipalities. But, then, we come to the further fact that under the Treasury Minute of 1892 the municipalities have an absolute control over any new company. No new company can work within the area of any local authority unless it gets the permission of that local authority. Therefore, if we are not going to allow municipalities or local authorities to compete, undoubtedly I do not quite see what chance of competition there is from other sources. But, on the other hand, we are met by the serious difficulty—and it is a difficulty which has arisen out of the inquiry in Glasgow—a difficulty which has got to be faced, a difficulty which a Department cannot properly deal with, and a difficulty involving questions of policy which Parliament itself ought to decide. Now, what is this difficulty? It is this: take the case of Glasgow. Even if we were to grant the licence to the Corporation of Glasgow, which it asks us to give it to-morrow, although altogether within its own area, and notwithstanding that Glasgow has got a Common Fund, differing in that respect from English Corporations, Glasgow would not be able to exercise that licence, and, therefore, there is no use in giving a licence when there is no power to use it. And there are certain questions of policy which, undoubtedly, do arise when the question of granting licences to municipalities is under consideration, and those questions of policy are these: hitherto, undoubtedly, as I said before, the telephones in England, at all events, are regarded as more or less a luxury of the rich. I look at other countries, and I find there that the telephones are not confined to the rich people. At any rate, one question which the Select Committee we propose to appoint on this question will have to decide will be this: whether the telephone service is a matter of sufficient general convenience to the community living within the area of the corporation or local authority to justify the local authority in using public funds for the purpose of starting telephones within that area. That, I think, is a question which a Department ought not to decide, but which ought to be left to this House of Parliament to decide. Then there is this further peculiarity with regard to the telephone service, that then must be, even with regard to the larger municipalities, areas outside those municipalities which it would be for the public convenience, and which are so closely allied to the municipalities themselves, that if you are going to have a municipal exchange at all it would be desirable that the exchange should also include a certain proportion of the area around that local authority. I am afraid that by some means or other certain areas have already been assigned to the National Telephone Company which even the larger municipalities could not possibly embrace within their boundaries. The area of the exchange of London alone, I am told, is 750 square miles, a great deal larger than anything the London County Council could possibly claim to work, and I should have thought that certainly, even with a large body like the National Telephone Company, with the licences granted to it, it ought to be contented with its own area. Take the case of Glasgow. There are outside its own boundaries certain suburbs where gentlemen in trade in the city may reside, and which, at any rate, are so bound up with Glasgow that they ought not to be separated from it so far as telephonic communication is concerned. What we propose, therefore, to do is to appoint a Select Committee of this House which shall confine its attention to these legal points, and see whether any change in the law would be expedient or desirable which would, by the removal of restrictions, make it possible for a municipality to engage in such an undertaking. Then, of course, there is the further question which ought to be considered, and which was considered in 1892, and that is: how far the extension of the telephone system in the hands of persons other than the Post Office is likely to damage our revenue. That, again, is a subject into which the Treasury has gone very carefully with the Post Office, and, undoubtedly, a great deal of the danger in regard to our telegraph revenue diminishing was removed when the Government bought the trunk wires, and there is a feeling now at the Post Office, which I myself think there is some amount of justification for that, after all, if the telephone service is properly worked, especially as it is now, so closely in communication with the Post Office, and generally with our postal telegram system—considering that you can send a telephone message which can be sent on by the Post Office by express messenger or even sent on by telegram—the connection between the telephone service and the Post Office may be so closely allied that the telephone, so far from damaging the telegram system, may actually assist it. I am bound to say there is another consideration. We must treat the companies with fairness, and we must consider the telegraphic revenue. I do not think either of these will suffer under the suggestion which I have made. We have also to consider this important fact, that this is a new agency of communication Which other countries have availed themselves of to a much greater extent than this country has done; that it is a means of communication which need not necessarily be limited, as it is in England, to the richer classes, but which may become of very great service to much smaller trades people and other classes than use it now. Although we are at the present, moment somewhat behind other nations in this respect, I think it is incumbent upon us, in the face of the keen commercial competition existing, to see that this country does not fall behind any other countries in the use of an agency so important to everyone as this is.

*SIR CHARLES CAMERON (Glasgow, Bridgeton)

The House has listened with very great pleasure to the announcement of the night hon. Gentleman. It proves, at all events, that there is one great advantage in having upon the Treasury Bench a gentleman who represents both the Treasury and Post Office. The right hon. Gentleman has always, for many years past, announced that he is in favour of a forward policy in this matter. In fact, I am rather surprised that he did not go further even than he has done to-night. So far as the position of Glasgow is concerned, it is a great advantage, although, at the same time, I think it is rather hard that the city should have been subjected to such lengthy delays and such a long period of uncertainty before this decision was taken by the Treasury. I have no doubt Whatever that, if Glasgow were to come to this House for a private Bill, as has been indicated, a licence would be granted to her; but it certainly would be a much better plan, a much sounder policy, to allow the whole matter on general lines to be threshed out by a Committee upstairs—I presume that legislation would follow—than to compel each municipality to come before this House to seek powers by private Bill. I am rather disappointed that the right hon. Gentleman took such a strong opposition to the granting of licences to companies. It may be quite true that many companies would not agree to come forward, at this late period of the era of telephone monopoly, for a licence which they would lose in 1911; but, on the other hand, there are other companies, and at the present moment there is before the public a company which proposes to start in Manchester which has secured the sanction of the municipal authorities of Manchester and the surrounding districts. Under these circumstances, I think it is rather hard that, after the distinct announcement of the continuous and consistent policy on the part of the Post Office and the Treasury, at this late period they should be told that they must remain out in the cold. The right hon. Gentleman alluded to another fact. He alluded to the fact that in the country districts there has been no development whatever of telephonic communication. Now, I trust, after what he has said, that he will remedy that defect, that the Post Office will see to the remedy itself, or else that it will, in the case of thickly-populated districts, give every encouragement by the granting of licences to any parties who are willing to occupy a field which is at present totally unoccupied. There is another point to which. I would direct the right hon. Gentleman's attention also for a moment. In the City of London, as he is aware, an action has just been decided against the Commissioners of Sewers, and the municipal authorities and representatives of London generally are complaining bitterly that the Post Office is stepping out of its way to hand over the way leaves to which it has a right to the National Telephone Company.

MR. HANBURY

So far as I understand, what happened was this: the Post Office undoubtedly was under an agreement to lay the wires between the two exchanges of the company within any one area, but in this case the Post Office undertook, I think, to lay a wire between the exchange and its own post office, which is distinctly in the interests of the Post Office.

*SIR C. CAMERON

I do not suggest for one moment that the Post Office should resile from its engagements, but I know it has been strongly contended on the part of the municipal authorities in London that the Post Office has gone out of its way to make use of its privileges in order to make a present to the Telephone Company. I ask him, at all events, to see that nothing will be done to extend the privileges of the National Telephone Company, as against municipal authorities, while this subject is under consideration. I am certain that the announcement which has been made by the right hon. Gentleman with regard to the new policy that has been adopted will be received with great satisfaction in the country, and in no place more than in Glasgow, where the right hon. Gentleman knows the service has been officially declared to be defective, and where he is aware that for many years a struggle has been made for the boon of which the appointment of this Committee promises to be the inauguration.

MR. CALDWELL

After the satisfactory answer from the Secretary to the Treasury I think we might agree to withdraw the Motion. [Cries of "Negative it!"]

*MR. SPEAKER

Does the House allow the Motion to be withdrawn? ["No!"] The question is, "That the words proposed to be left out stand part of the question."

Amendment negatived.

On the return of MR. SPEAKER, after the usual interval,