TELEGRAPHS (TELEPHONIC COMMUNICATION, &c.) BILL.

HC Deb 20 June 1899 vol 73 cc103-58

[SECOND READING.]

Order for Second Reading read.

THE FINANCIAL SECRETARY TO THE TREASURY (MR. HANBURY,) Pres- 104 ton

The time that has elapsed since I introduced this Bill—a delay for which I am myself personally responsible—has had one result. It has shown complete unanimity on one point, viz., that the present system cannot possibly go on. There has not been a single resolution from a local authority, a memorial from a trading association, or, that I have seen, one single article in the newspapers supporting the existing system. The House will have noticed that the company itself has introduced Bills, which makes it as plain as possible that without fresh powers the present system cannot go on, and I am sure that the House is not prepared to grant fresh powers to a company, already with very large powers beyond those afforded to any other company, and which is absolutely uncontrolled. On that point even the City of Liverpool, which to a certain extent is opposing this Bill, is absolutely agreed, and the City Council has, I understand, requested the Members for the City to oppose any extension of the powers of the company, and a resolution has been unanimously passed by the Association of Municipal Corporations to the same effect. And surely there is every reason for a step of that kind being taken, because the figures with regard to the state of the telephonic communication in this country are positively alarming. I will compare England with other countries., In Switzerland there is one telephone in use for every 100 of the population, and in Norway one for every 144; in Sweden one for every 147; in the United States one for every 132. And I notice in all these cases there is practically no State system, but one which is worked by local bodies or general competition. Taking the principal countries where there is State control and no competition, in Germany there is only one telephone for every 149 inhabitants, in France 1 for every 432, in Austria 1 for every 640. England, even as compared with Germany, is very far behind; for in this country we have only one telephone for every 636 of the population. I pass from the countries themselves to the principal towns, and I find that in Stockholm, where there are actually three systems in competition with one another—which is a considerable argument against those who say competition is impossible in this matter—the number of telephone users is greater than in any other town—1 in every 14 of the population. In Geneva the number is 1 in every 23; Berne, 1 in every 27; San Francisco, 1 in 27; Hamburg, 1 in 56; Berlin, 1 in 82; Vienna, 1 in 132; and London, 1 in 433.

SIR JAMES FERGUSSON (Manchester, N.E.)

Where did the right hon. Gentleman get these figures?

MR. HANBURY

I got the figures from the chief electrician of the Post Office, and they were made up to date only yesterday. But it is not necessary to go beyond our own country for examples. The National Telephone Company has had a service established in Jersey for seven or eight years. The population of Jersey is 54,000, and I am informed that there are 80 users of the telephone, or 1 in 650 of the population. But when we come to Guernsey, which is one of the places where the Post Office has granted licences to the local authority, the number of users, instead of 1 in 650, as in Jersey, is 1 in 84, although the system was only started about two years ago; and the number of subscribers is growing rapidly every day. I think, therefore, that the first essay in the direction of municipal telephones has not been very unsatisfactory. I want to say frankly in regard to the National Telephone Company that it has undoubtedly done good work, and a great deal to encourage the use of the telephone in this country; and I should be the last one not to recognise the service it has rendered in this regard. I will go further, and say that I would be very sorry, wherever the National Telephone Company has got way-leaves, and can give an efficient service, serving all alike on equal terms, and can give the public a certain service, to see that service discontinued. But it surely is a very proper request to make that the service should be efficient, certain, and that all should be served alike on equal terms. But the evidence given before the Select Committee tells a very different story. Now, what is the position at the present moment? It is one partly due to the fault of the National Telephone Company, but also to a considerable extent not to the fault of the company. What we want in this country is a general service which will extend itself over the whole country; but the National Telephone Company picked out the most densely populated parts of the country, and you could not blame them for that. Being a private company they naturally consulted their own interests. We have been told by the chairman of the company that they would not extend their service beyond 1904, and that it could riot be expected that a private company should extend telephones over the whole kingdom. Even if they could, I maintain we ought not to allow a private company to have a monopoly of this kind; for we want not only a general service, but an efficient service. I will do the National Telephone Company the justice to say that wherever they do get the opportunity they give a physically effective service—that is to say, where they can get underground way-leaves and a double circuit system. But there are a large number of municipalities who will not give these underground way-leaves, who say, "We will not allow our streets to be taken up by any private company." Surely that is a very reasonable ground for the municipalities to take up, since they desire to have control over their own streets; and Parliament will never force the municipalities to grant these way-leaves. Bill after Bill has been brought into Parliament to compel the granting of the way-leaves, and the municipalities of the country with one voice have been opposed to them, and Parliament has invariably refused them. I say, therefore, that in these towns the National Company cannot give an efficient service. But it does not follow because the company cannot get way-leaves that the people of this country are to go without an efficient telephonic service, which is so important to trade and commerce. Again, we want a public service—a service that will be offered to all alike; we want a popular service which shall not be limited to a particular class of subscribers only; but, above all, we want a certain service not depending on way-leaves. Five-sixths of the present way-leaves granted to the National Company could be terminated, by those who granted them, within six or 12 months from the present day; and it cannot be permitted that a national ser- vice should exist on such a precarious footing as that. Well, of course, these things being so, and these being the requirements, a good many persons have jumped to the conclusion, on the analogy of the Post Office and Telegraph Service, that State telephones would be the only solution of the difficulty. It is not surprising that the ingenious and ingenuous directors of the company should hack up those people in that view; for if the idea succeeds it means paying an enormous price to the company for their undertaking; and, on the other hand, if it merely delays the contemplated reforms, to a certain extent their interest would be served. I am bound to say that there is one other thing that impresses me very much Os to the necessity of regulating, at any rate, a monopoly like this. The in direct influence which a big company like this can bring to bear, and is bringing to bear, is enormous; and it is difficult to say where public policy begins and private interest ends when all kinds of preferences and trusteeships can be put into men's hands. I say, this constitutes one of the greatest arguments against such an enormous monopoly as this, which has such direct and indirect power. Well, is nationalisation the only solution of the difficulty, or is there any other practical remedy? I fully admit that one control is necessary, and that the control of the whole of the telephonic service must be in the hands of the State. That is necessary for uniformity, and under this Bill, for the first time, we shall be able to get that uniformity. We shall be able, in dealing with the municipalities and new licensees, to be able to insist, as we cannot do with the National Company, on that uniformity; and also, when we come to deal with the trunk lines, we shall be able to resist the imposition of terminals, which we cannot insist on in the case of the National Company. I believe that for national efficiency the State should have complete control, and that we should do the work on the trunk lines; but why should we, in addition to supervising, undertake work which can be just as well done by the local people on the spot? Something like 98 per cent. of the whole messages in the exchanges never leave the locality, never come on the trunk wires at all; and that is essentially work which there is no necessity for the State to undertake. I have been told that that state of things is temporary and peculiar to England. But there is even a higher percentage than that in every country in Europe and America. The only place where that percentage is not exceeded is Switzerland, but, of course, that country is very small. Then, our trunk lines are the best and cheapest in Europe; and in addition, hitherto the service has practically been a monopoly of the larger traders, who are naturally the people who use the trunk wires. Then, I am told that if the exchanges are in different hands the communications between the exchanges will be more difficult. Well, I consulted the engineer of the Post Office particularly on the point, and he said it was a complete delusion; that the same switching would have to take place whether the exchanges were in the hands of companies or the Government. If that be so, and if there are no practical or technial advantages in State management, I ask, Why should we incur a great risk and an enormous and unnecessary increase in the staff of the Post Office, and the corresponding increase in wages? The staff of the Post Office is already 160,000 strong. The Postmaster-General is, I believe, already the greatest employer of labour in the world, and the staff is growing year by year. The staff of the Telephone Company is already 10,000, but, judging by the figures I have given and the extent to which we are lamentably behind other countries, the new staff ought to be increased by 10,000 or 20,000 more. Therefore it is not only the increase to the staff that we would have to look to, but the increase in the wages. It came out very clearly in evidence before the Select Committee, of which I was Chairman, that the wages of the company's operatives are excessively low. We found that out from experience, also, when we took over the operators on the trunk wires, and we had to raise their wages by over 40 per cent. We should have to do the same thing if we took over this enormous additional staff, besides providing for pensions and promotion. More than that, the telephone operators would endeavour to put themselves on the same footing as the telegraphists, and we know that the wages of the telegraphists are enormously above those of the telephonists, and yet the former are not satisfied with their conditions of service. After all, what does this cry for nationali- sation of the telephones mean? It means immediate purchase, a certain burden thrown on the Post Office, and great disturbance of trade. It means purchase, at accommodation price, of a monopoly which ought never to have been allowed to grow up. It means that we would have to buy, as a going concern, a monopoly which will fall into our laps in 1911. While I am most anxious to treat the National Company with absolute fairness, I think that to ask us to buy up the monopoly as a going concern is to ask far too much. But what else does it mean if we are going to buy the company up? It means buying up a great deal of good work, as at Liverpool and Nottingham, I admit. The Town Clerk of Nottingham says that in that city "the telephonic communication is as nearly perfect as it can be made"; while in Liverpool they say that, whatever complaints have been made elsewhere, they were getting there a very excellent service. But in those places where the work is so good why should we unnecessarily replace it? We might leave the company to continue to do what it has hitherto done efficiently. What I object to is, that in order to buy up the good we should be compelled to buy up the bad also. Why should we have to buy up 25 per cent. of the company's system, which consists of single wires, which 10 years ago we decided that no other company should be allowed to put up? Why should we buy 25 per cent. of wires which we ourselves would never be allowed to use? Take again the overhead wires. The company's system in London consists practically of overhead wires, and the same may be said of a large number of provincial towns; and overhead wires are absolutely of no use to the State. We have no rights over overhead wires beyond that of ordinary citizens; but we have powers for underground wires, and we would always use these in preference, partly because we have these rights, and partly because the underground wires give a more efficient service. Why should we buy up wires, then, from which we could get no benefit, the tenure of which is precarious, and which do not give an efficient service? I am bound to say that, in addition to that, these wires are of very poor material, such as the State will not allow other companies to use. Moreover, a great number of these wires are called dead wires, which belong to subscribers who have ceased to exist, and are of no use. Then there are a large number of private wires between men's houses and their places of business, which are outside the scope of State operations altogether, and if we were to buy them there is nothing to prevent the National Telephone Company competing with us for such wires to-morrow. Mr. Gale estimated that these private wires were worth £400,000 to £500,000. Again, there are places, like Liverpool, where the original overhead wires have been taken down, and underground wires laid at a cost of £150,000. Is the State to pay the expense of the first setting up of the wires in Liverpool, and then replacing them at a cost of £150,000? And that is going on in many other large provincial towns. Again, why should we buy up watered capital to the tune of a million and a quarter? It may be, said we are not asked to buy all this up; but I maintain we are, because in the scheme started by Mr. Ray, of Liverpool, and embodied in pamphlets which have been so industriously circulated by the National Telephone Company, that is exactly what he proposes. It is one of the wildest schemes ever put forward by a business man. He suggests that we should buy up everything I have mentioned; and, in the next place, that we should give a million and a quarter beyond the market price; and that we should pledge our credit in order to buy up the undertaking at that price. Then he assumes that we have not only to buy it at this enormous price, but that it would repay us well to do so, because, forsooth, we are to make no deductions in the present charges, which are to remain as they are. He further assumes that the expense of working the system will be, under the State, something the same as under the company. I have already shown that the rise in wages alone would be at least 40 per cent. Well, if the taxpayers' money is to be spent, I would like to get value for it; and I should like, in the next place, to see it expended in acquiring a new and serviceable plant—not in replacing or supplementing the company's system, and more especially as we are so much below the level of other countries. I do not think nationalisation is a feasible project. Now, what is the next suggestion? It is that made by the President of the Council of Associated Stockbrokers—and the stockbrokers have taken a very prominent part in this question, I do not know why. They say, "We believe that either the Government should assume sole control or enable those at present working the telephones to obtain full power to develop the same, subject, of course, to control." Well, I have already explained that that could not be done in places where the National Company have no way-leaves, and these are the very places where we want the service extended. Parliament would never allow these municipalities to be compelled to grant the way-leaves to a private company; and when it is suggested that the Post Office should go through the form of calling the company its agent and then use its own powers over the heads of the municipalities in order to give the company the way-leaves, that is an absurdity. Having shown the practical impossibility of a State system, and having shown that the National Company could, under no circumstances, supply places where there are no proper way-leaves, we are thrown back on only two other sources of supply. The one is the local authorities, which I propose should not be merely limited to municipalities of 50,000 inhabitants, but should include the sanitary district authorities. The effect of this would be to cover the greater part, almost every part, of the country, and it would also allow local companies to be introduced, if they could get way-leaves from the authorities. I think it is quite possible that while a corporation may be unwilling to grant way-leaves to a rich and powerful company, they might be willing to grant them to small local companies over which they would have more control. What would be the effect of that? In the first place, both the corporations themselves and the small companies would be new licensees, and we would be able to impose conditions on them, which, unfortunately, we are not able to impose on the National Company; we should guard against preferences or against a refusal of the service to all persons alike upon equal terms, and we should require that it should be a popular service. Of course, it must be clear that we should be able to extend the service all over the country, and the question of way-leaves would fall to the ground, because the local authorities have their own way-leaves, and if they do not choose to work the service themselves they can give it and their way-leaves to a local company. In fact, by this means, I believe we would give as good a service as the State could possibly give, and in some respects, in regard to these way-leaves, a better service. Because I believe that there might be a good deal of friction with the municipalities if the State went into the streets and broke them up under their undoubted powers. In fact, there have been complaints already where the State has done that. Thus it would be a great advantage if the Government could supplement the service in a great number of areas. More than that, it might have the result of wakening up the National Company to give a better service where the municipality or other local companies could compete; because both municipalities and the local capitalists would say to the National Company, "If you do not give us a better service, we will devise a system of our own." I am one of the first to object that it is not sufficient that this service should be efficient, but we must also require that it should be thoroughly fair to the company; and from first to last I have endeavoured to act in strict fairness to the company, because I do admit that they have done great and useful work. What is the position of these two proposed alterations with regard to the company? It has been admitted from the first that there is no unfairness in starting against the National Company—that will be admitted by my right hon. friend. It has never been a question that it was perfectly fair to start new companies in opposition. Then conies the question of municipalities, and the company no doubt did raise very grave objections to the municipalities, because the Government in this Bill have recognised that to a certain extent the granting of licences to municipalities does place them in a different position to companies, because the whole constituency of a Corporation has a direct interest in encouraging it. We have tried to balance the advantages and disadvantages, and we have made this offer to tire company and have embodied it in a Treasury Minute. First of all, when fair competition is brought into play, we will purchase in 1911 all the existing plant of the company which is fit and suitable for the work. We shall not decide the point of suitability—that will have to be decided by an independent expert. Considering that in 1911 we are under no obligation to buy any of the company's plant, I think that is a very fair and large offer. In addition to that, where the National Telephone Company is absolutely free from control, we are going to impose certain stringent conditions on the municipalities which we cannot impose on the National Telephone Company. We have also made a further offer, that if they will at the limit of their extensions connect their exchanges with the extensions of the corporations, we will not only- purchase in 1911 all their plant which is not obsolete, but all the future plant they may have erected, and that I consider is a very large offer. If I were a large shareholder in this company—and it applies to the shareholders rather than the directors—I should say, "Are we wise in opposing such an arrangement and opposing this Bill?" I do not think the conditions are likely to change very much in twelve years. The Government now is against nationalisation, and I think the Government twelve years hence will also be against it. If we do not nationalise, these municipal exchanges must go On and have the National Telephones with these conditions. All we want is an efficient service, and it does not matter to us how it is given. It is only where the National Telephone Company cannot or will not give an efficient service that we offer to put these other persons in their place. That, I think, answers the criticisms which were made in a memorial of the Bristol stockbrokers, who the day after the Bill was brought in passed this resolution, that the Government "are attempting improperly to depreciate the value of the share capital so as to prepare for the ultimate purchase of the company's undertaking on confiscatory terms." But we do not want to purchase at all. Nothing would put us in a better position than we already are; and as to any idea of depreciating the value of the shares in order that we may purchase at a low price, that seems to me to be very wide of the mark when we need not purchase at all. What are the objections to this Bill, and who are the objectors? In the first place, the main objectors are the large traders and tradesmen of this country, and it is remarkable with what unanimity, what sameness of language, all these resolutions have been passed; no matter from what part they come, the language is almost identical. In addition to the resolution of the Bristol stockbrokers, we have those of the various chambers of commerce, who again represent the large traders of the country. But these chambers of commerce are not opposed to this Bill. Only 22 out of 96 oppose it. Why do the large traders object? Because at the present moment they get uncommonly good value for their money for a subscription of £15 in London, and £10 in the provinces; they have an unlimited right to send messages, they monopolise the exchanges. Compare this with the telegraph. Suppose we were to say that nobody should send a message unless he paid £15 a year, and nobody should use the telegraph unless he were a subscriber. Naturally, those in that favoured position would not want to be disturbed. What does the telephone service say with regard to this? Before the Committee the case was pointed out of a man who sent 200 messages a clay in return for a subscription of £18, getting £300 worth of messages, calculated at the rate of a penny a call. The National Telephone Company want to make their service a popular one, and we want to also, and it is these very men who are opposing our popular service. Such a state of things exists here as exists in no place abroad. The service ought to be thrown open to the whole country; not only to the large traders, but to the small tradesmen as well. It is perfectly possible to retain the subscription system side by side with the other, and the Post Office has worked it out and finds that a man who sends 3,000 messages a year will be able to get 5,000 for a smaller amount. But the opponents of this Bill have in one respect turned round. They say now that at the present moment the trunk lines are crowded at certain hours of the day, and if more subscribers come forward they will lie still more crowded. But we shall meet that objection by laying a larger number of trunk lines, and if that is done the last objection will be gone. The other opponents we have are a few of the largest towns, and they again are ill a minority, as shown by the resolution passed by the Municipal Corporations Association last year—that in the event of the Postmaster-General not taking over the telephone service it should be competent for municipal and other local authorities to undertake such service within areas composed of their own dis- tricts, or a combination of such districts. All the opposition comes from Liverpool and Nottingham, and it so happens that those two places are exceptionally well off. They have made a very good bargain with the National Telephone Company, and have a good service; but that is no reason why they should stand in the way of smaller corporations not so well able to fight their own battles. What are the real complaints that these men make? Take the Town Clerks of Liverpool and Nottingham. The only objection which the Town Clerk of Nottingham makes is that no other system but a national system could supply a service to the country districts at such a distance. I do not believe that. I believe a company could supply it just as well as the State.

AN HON. MEMBER

Better.

MR. HANBURY

The Town Clerk of Liverpool admitted that he had no objection whatever to municipal enterprise in telephones where there was no service at the present moment, and no competition with the National Telephone Company. But only consider what that area is. Consider where there are telephones and where there are not. According to the Town Clerk of Liverpool those are the places where municipal telephones may clearly start, though he opposes it on the ground of the limited use of the telephone, and that it does not extend to the bulk of the population. It does not do so now, and never will, unless our system comes in. There are a great number of places where there is no competition. But if the toll system were introduced there is no reason whatever why in a great number of our towns there should not be just as large a proportion of telephone users as in Stockholm, or Geneva, or Berlin. Take Guernsey. The information sent to me only a couple of days ago as to Guernsey furnishes a remarkable illustration of what municipal enterprise would do. The States of Guernsey only started the telephone two years ago, and they have already one telephone to every 84 of the population, and a tariff which meets every class of subscriber. They pay £5 13s. 4d. for 4,000 calls, or over five calls for one penny, and £2 10s. for 1,250 calls, and a penny for five calls after. The result is that they are paying interest on their capital, a Government royalty of 10 per cent., and are also building up a sinking fund. Local authorities are, after all, the best judges of their own interests. They need not start a service if they do not want it or if they think it is not to the interest of their ratepayers, especially now that we are giving them three alternatives after the arrangement with the National Telephone Company. In Stockholm, where there are more telephone users per population than in any place in the world, they have three systems working side by side in opposition to one another. There is the State system and two companies. We have in this country our own Post Office exchanges, but I am bound to say that, owing to Treasury regulations, they are not worked as they ought to be. That I perfectly admit, but even so we have been paying a large interest on the capital; and, although our exchanges are not so flourishing as they might be, they have been giving a handsome return for the expenditure. An intelligent Treasury has now abolished those regulations. It is true that the National Company is, to a certain extent, at a disadvantage in that it did not get underground lines. But in Manchester they had; and yet there, though the National Company is giving an efficient service, a new company applied for a licence, with the support, I believe, of the Corporation. That does not look as if competition within the same area is such a dangerous thing for the municipality. Then there is another alternative. The local authority may buy up the National Company in any area, or—and I think this is much the more likely course—it may connect the service of the company and that of the municipality. We are offering them every inducement to do that. We have said if they will do it we will buy up their new plant. It is said that the National Telephone Company would never connect with the exchange of another company or Corporation, but that is not the opinion of the very able manager, who said in the Committee that he did not think there would be any practical difficulty in carrying out such an arrangement. I believe, too, that the company would find it to its own interest to adopt such a course, and effect such a combination. It has been objected that Corporations would not give a popular service. Corporations will have to please their constituents, and if their constituents wanted this service and did not get it, they would turn out the Corporation who refused it and put in one who would give it. What are the inducements to a popular service? Well, in America, within the last three years, since the service has been made a toll one, it has grown by leaps and bounds, and only yesterday I read a statement in the paper to the effect that Germany has also introduced the toll system, and is popularising its service, not only in Berlin, but throughout the country, and the system is working well. I have only one other remark to make with regard to the question which has been raised as to the sinking fund. It has been urged that we do not give Corporations sufficient time to recoup their expenditure. I think that even 12 years is a considerable time for that purpose. When we recollect the conditions we are offering, they would only have to redeem 50 per cent. of their capital by 1911. We do not regard it as by any means a certainty that 1911 will see the end of the licences of the new licensees. If nationalisation is as unpopular with the Government of that day as it is with the present Government, municipalities will retain the service long after 1911. I hope I have made the case perfectly clear. I hope there is no impression that we are anxious in any way to take an unfair advantage of the National Company. On the contrary, I think I have shown the House that, if our proposals are accepted, that company will be in a better position than they have ever been before—they will, at least, be in a much more certain position. Not only that, but they will get a popular service, and a service not dependent on a precarious tenure as it is now. I hope the House, looking at the emergency of the case, and to the fact that the United Kingdom lags far behind other countries in the matter of telephonic communication, which is so essential to our trade and commerce, will agree to the Second Heading of the Bill, and pass it through its other stages without any unnecessary delay.

Motion made and Question proposed, "That the Bill be now read a second time."—(Mr. Hanbury.)

SIR J. JOICEY (Durham, Chester-le-Street)

I feel some hesitation in rising to address the House immediately after the right hon. Gentleman has moved the Second Heading of the Bill. But as I was one of the Members of the Committee, and paid great attention to the evidence which was given before that Committee, I thought it my duty to state my views, if they do not altogether coincide with those of the right hon. Gentleman, as early as possible. No one recognises more than I do the efforts made by the right hon. Gentleman to elicit all the facts of the case during the proceedings in Committee, and I am bound to say that we could not have had a Chairman who was more anxious to be impartial, and to bring the Committee to a satisfactory decision on the subject before them. But, Sir, in the course of those proceedings I am bound to say that the evidence which was elicited bears out to a very considerable extent the statements which were made by the right hon. Gentleman in the course of his speech. I can confirm his statement that the National Telephone Company has done good service; that service, like that of all public companies, has been to some extent insufficient and inadequate.

Attention called to the fact that forty Members were not present; House counted, and, forty Members being found present,

SIR J. JOICEY (continuing)

I was, saying that I agreed with the right hon. Gentleman that the service of the National Telephone Company was inefficient and certainly inadequate. But I am bound to recognise the difficulties that any public company has to contend with in developing a new service. Many of the patents were untried, and a good deal of the work was new to those who had to produce it, and under these circumstances some allowance should be made for any great company which is doing public work or public service as the National Telephone Company has been doing. Now, Sir, I have not the slightest interest in the National Telephone Company, either directly or indirectly, for had that been the case I certainly would not have been a Member of the Committee. Whilst I attended the sittings I, like every other Member, so far as I know, and particularly like the right hon. Gentleman who was the Chairman, endeavoured to give impartial consideration to every question brought before the Committee. But, Sir, whilst I was in that position I was prejudiced neither in favour of the Post Office nor the National Telephone Company. My object was to render such service to the community as I was able to. Now, Sir, I am bound to say that the National Telephone service, if you look round and see the ground that it occupies, which forms a very small proportion of the whole country, certainly is inadequate. I must say, as a member of the Committee, that I was somewhat astonished at the policy which had been pursued by the Post Office. I was certainly under the impression that if the Post Office believed competition to be a good thing, they, having the power both to compete themselves and to compete by means of other licensees, ought to have developed competition. But, instead of developing competition, so far as I was able to gather from the evidence, they rather discouraged it; nay, they encouraged the National Telephone Company to get rid of its old competitors. Well, what was the object of that? They believed ultimately that there would have to be a national system, and they encouraged the National Telephone Company to get rid of its competitors, so that in the event of the adoption of a national system there would be only one system to purchase. That was the impression which I got from the evidence, but I cannot say what impression other members of the Committee received. There is no doubt whatever that there was great necessity for competition so long as the service was in the hands of one company, call it an Imperial company, or call it what you like. Had it been, like the Post Office, in the hands of a Department of the State, it could have developed the system perfectly, so far as perfection can be got by a State Department, and then, I think, competition would not have been necessary. But what did the National Telephone Company do? The National Telephone Company did what every other company composed of private individuals would do. It selected, first, those localities where it thought it could develop a system with the greatest advantage to itself. Well, I do not blame the National Telephone Company for doing that. It is just what any other public company would do; a railway company, for instance, or a gas-works company, or a water company, naturally develops those sources which it thinks it can develop with the greatest advantage to itself. Well, I must say that there are many disadvantages in connection with having more than one supply, so that I can appreciate to a certain extent the action of the Post Office. I happen to live at Newcastle-on-Tyne, where we have a dual service—a service by the National Telephone Company and a service by the Post Office—and I must say that while I believe in that city we have perhaps one of the best services that the Post Office gives in any part of the country, yet I do think that it would be more conducive to the interests of the users of the telephone if these undertakings were in one hand. Why is that? Every tradesman, every manufacturer, who finds it necessary to have the telephone, instead of having one telephone, always has to have two, in order to communicate with the whole of the subscribers. Of course, if there were a communication between the two authorities, the necessity for this would to a large extent disappear; but I am one of those who believe, notwithstanding all my right hon. friend has said, that it would be very much better to have one service. Well, I must say that there are many disadvantages in the course which was recommended by the Bill of the right hon. Gentleman. I certainly think it would be very much more to the interests of the community if we had a national system of telephones worked on the same principle as the Post Office and the telegraph system. Why I object to my right hon. friend's Bill is this. We had a Committee which went into the whole question, and, so far as I am able to gather from the Bill of my right hon. friend, I cannot see that the Bill is based on the Report of the Committee. In the first place, the Report goes into the question as to whether the Post Office have the right of being just and equitable to the National Telephone Company by allowing competition. Well, that point is perfectly cleared up to my satisfaction, and I consider, as the Report states, there is little doubt, in my mind, that the postal authorities have full power to give such competition. But then there is another reason why competition is desirable, and what did the Committee say that reason was? On page 10 of the Report it is stated: Competition appears to be both expedient and necessary—first, to extend and popularise the service, and next to avoid a danger which is by no means remote if no alternative system is in operation—the purchase of the company's undertaking at a price forced upon the Government of the day. There are two distinct objects which the Committee had in recommending competition. One was that it should extend and popularise the service, and everyone who really knows what the service is in other parts of the world—in America, for instance, and in Berlin—will agree with me that there is much to be done in this country yet before the telephone service is developed as it should be. So far as Berlin is concerned, I believe, with a very much smaller population than in London, there are nearly twice as many subscribers to the telephone as there are in London. But I am glad to say that while Berlin is greatly ahead of London, when you take the whole of Germany into consideration, and compare it with the whole of England, the Post Office authorities who have been sent over have stated that undoubtedly England was ahead.

SEVERAL HON. MEMBERS

NO, no!

SIR J. JOICEY

I am quite prepared to substantiate what I have stated. However, let us take the other part of the Report. There is always a doubt in the Report as to whether licences should be given to municipal authorities or not. Your Committee would recommend that if licences be granted to local authorities the precedent of the Electric Light Act of 1882 should be followed. If—there is always a doubt. Then, further— So far, therefore, as the legal or equitable rights of the company, or licensee, or other interests of the locality are concerned, your Committee see no reason why licences should not be granted to local authorities. I want to make this plain, because it will be recognised that it is very important. Let us look at what is stated at the end of the Report. I was very much astonished at my right hon. friend not alluding to this Report in his very excellent and able speech. I certainly thought that if the Bill was to carry out the recommendations of the Committee he would have referred to the Report. But what does it state? On reviewing the whole of the evidence, your Committee is strongly of opinion that general, immediate, and effective competition by either the Post Office or the local authority is necessary, and consider that a really efficient Post Office service affords the best means for securing this competition. If that is not a strong recommendation for Her Majesty's Government to take over the control of, or compete with, telephones in connection with this important system, I do not know what is. Then again: Your Committee, in thus recommending Post Office service, assume it will constitute a real and active competition, and that concessions to the company not required by them will cease; such competition should, in their hands, be carried on by a distinct and separate branch of the Department. and in future be conducted under strictly businesslike conditions by a staff specially for such a duty. On looking through the Bill brought in by the right hon. Gentleman, I am bound to say that it does not carry out the recommendations of the Committee. Here is a distinct recommendation that the Post Office is the best authority to compete with the National Telephone Company, and that they ought to establish a separate Department in order to do it satisfactorily.

MR. HANBURY

I think the recommendation of the Committee there was that it should be a separate department of the Post Office, to deal with the National Telephone Company and other telephone services.

SIR J. JOICEY

I will leave the House to judge of the words without the right hon. Gentleman's explanation. Let us see what the words are— On reviewing the whole of the evidence, your Committee is strongly of opinion that general, immediate, and effective competition, by either the Post Office or local authority, is necessary, and consider that a really efficient Post Office service affords the best means of securing such competition.

MR. HANBURY

Read on.

SIR J. JOICEY

We further consider that when in an existing area in which there is an exchange the local authority demands a complete service, the Post Office ought either to start an efficient telephone system itself"—of course, that is our recommendation—"or grant a licence to the local authority. Yes, but what does it say before? "We consider that a really efficient Post Office service affords the best means of securing such competition." It is perfectly clear that it is the intention of the Committee that the competition should be by the Post Office, and by the Post Office alone. Your Committee, in thus recommending a Post Office service, assume it will constitute a real and active competition, that concessions to the company not required by them will cease. Such competition should in their hands be carried on by a distinct and separate branch of the Department"—that is, by the Post Office—"and in future be conducted under strictly business-like conditions by a staff specially qualified for such a duty. Of course, the "staff" alluded to is the staff employed under the Post Office in connection with the Telephone Department, which the Committee recommend. It is perfectly clear that the Bill does not carry out these recommendations. The right hon. Gentleman, in the course of his speech, stated that the National Telephone Company picked the plums of the different areas. I am not surprised at that. But if the service is not effective, the Post Office, in order to carry out the recommendations of the Committee, is bound to compete with the National Telephone Company in those particular areas, and to establish a telephone system in areas where the National Telephone Company does not exist. Then the right hon. Gentleman went on to show the difficulties in connection with giving other licensees powers to establish a telephone system. I am not in favour of giving other licensees such powers. The Post Office should have no other competitor than the National Telephone Company, because I look forward to the time when it will be absolutely necessary that the whole telephone system should be conducted by the Post Office Department, and on that ground it would be very much better indeed if the Post Office Department practically covered the ground where telephones do not now exist. Then with regard to way-leaves, he said the pulling up of the streets would be a difficulty; that you could not expect municipal authorities to give power to any licensees other than the Post Office to pull up streets. I doubt whether the right hon. Gentleman's judgment is accurate in that. No doubt there might be one or two municipalities who would object. There are municipalities who object to everything where the public convenience is concerned. As a rule, municipalities look after the interests of the ratepayers in their own localities excellently, but wherever the public interest clashes with their own, they support their own as against that of the public. The difficulties as to the way-leave question are more imaginary than real. The Post Office would bring such power to bear on local authorities that they would not have much difficulty in getting the necessary way-leaves. I was surprised to hear the right hon. Gentleman express the belief that it was quite possible that the National Telephone Company would have its licence extended, and that it is quite possible that the municipalities if they adopt the telephone system would have their licences extended beyond 1911. I was under the impression that the Committee recommended distinctly that no licences should extend beyond 1911. Possibly the right hon. Gentleman sees difficulties in the way, and that is why he made that statement; because what would happen, supposing this Bill were passed, and under it a large number of municipalities were to get the power of establishing telephones in their own areas? The licences would all expire in 1911. The same thing would occur as the chairman of the National Telephone Company said would happen. After 1904, in all probability, all capital expenditure would cease. Possibly some arrangement would be come to that that capital expenditure should be made under the surveillance of the Post Office authorities. But supposing a number of municipalities carried out this telephone system with licences expiring in 1911, and that certain arrangements were made that their plant should be taken over by the Post Office? What I am afraid of is that where these municipal authorities start telephones some of them may make it a very profitable business. Does anybody in this House believe that a Government could be found to stand against the municipal interest of this country, and to say that they would refuse to extend the licences? The pressure which would be brought to bear upon any Government by the municipal representatives in this House would compel them to yield. If you took them over what would be the result? You would have to give enormous compensation. Every municipal authority that was making these profits would have a heavy vested interest, and the vested interests to be dealt with in 1911 in connection with the municipal authorities would be a hundred times as great as those we have to deal with now in connection with the National Telephone Company. That is why I think it would be disastrous to allow municipal authorities to have licences to work the telephone system. Suppose you applied the same rule to the Post Office system, and allowed all municipal authorities to deliver the letters in their own localities. The principle is exactly the same. I wonder what would become of the poor outlying country districts that now do not pay their expenses. How do you expect to get the outlying country districts brought into connection with the telephone centres if you are to allow the profits realised from the service in our large cities to be swallowed up by the municipalities? All the profits realised in these large towns ought to go to the purse of the Post Office to be used in developing the system in the outlying districts. I challenge any Member who represents an agricultural county to vote for this Bill, which is in direct opposition to the interests of all who live in agricultural districts. There are some Members who are very anxious for municipal authorities to practically control all the telephone system in their own localities; there are some people who really, when the word "municipality" is mentioned, seem to grovel at it, and are prepared to give it any powers whatever. No one recognises more than I do the splendid services municipalities have rendered to the country, but there are some municipalities which are not fit for these powers, and whose localities would be better attended to by the Department. I cannot support this Bill without further consideration. If this Bill represents the only conclusion the Government can come to, I think they have been rather hasty in deciding this most important question, which will affect not only the present generation, but the next also. I hope the Government may be induced to withdraw this measure, or, at all events, to give further consideration to the question, so that we may not enter upon an important scheme like this, affecting every part of the country, without having looked fairly at all sides of the matter.

MR. GRIFFITH BOSCAWEN (Kent, Tunbridge)

I confess I am at a loss to understand the speech of the hon. Gentleman who has just spoken. When I understood from the beginning of his speech that he intended to oppose this Bill, I thought it was because he did not approve of the Report of the Committee of which he was a member. But we are given to understand that he does not in the least disapprove of the Report, but he complains that this Bill does not carry out its recommendations. I would ask anyone who has read the Report in what respects it differs from the Bill. The Report is a practically unanimous one; it was carried by a large Committee with only five Divisions, and after the most careful consideration the Committee recommended "general, immediate, and effective competition," either by the Post Office or by local authorities. What does this Bill do? It asks for powers to be given for "general, immediate, and effective competition" with the National Telephone Company, either by the Post Office or by local authorities. Can any man, comparing the Report with the Bill, say that there is any discrepancy what-over? I thought we had come to a very sensible Report, and that the Government had taken very immediate steps to carry it out, and the very last thing I expected was for a member of the Committee to get up and tell us that the Bill did not do what the Committee recommended. If the Committee did not recommend competition by these two methods, what did it recommend? The hon. Gentleman appears to think that it recommended nationalisation. He talked a good deal about the State acquiring the telephone and working it all by itself. But, in that case, where is the competition? The word "competition" clearly contemplates that there must be two people, each working, in some sense, in opposition to the other. To pretend, therefore, that when we use the word "competition" we mean "nationalisation" is to make a pretence which the words of the Report cannot possibly support. The hon. Baronet also tries to throw discredit draw this measure, or, at all events, to upon the statements of my right hon. friend by saying that some expert, whose name I did not gather, who was sent over to Germany, told us that England was far in advance of Germany in the matter of the telephone. If that is so, that is not the opinion of so eminent an authority as Mr. Preece, the Engineer of the Post Office, and by no means an enemy of the National Telephone Company or a friend of the system of municipalisation, for in answer to Question 5171, which I put to him myself—the question being, "Comparing Germany with England"—he said, "Well, there is no doubt they are very much in advance of us," and he evidently held that the system which prevails in Germany, which is not an unregulated monopoly in the hands of a company such as we have here, was infinitely superior, and had developed the telephone there to an extent to which it has not been developed here.

SIR J. JOICEY

Do I understand the hon. Member to controvert my statement that while Berlin is ahead of London, yet Germany is behind England as a whole so far as subscribers are concerned?

MR. GRIFFITH-BOSCAWEN

Yes, certainly. That statement was made by Mr. Preece. In cross-examination he modified it. He said, "Well, there is no doubt they are very much in advance of us." I cannot attempt to explain any discrepancy, but that was the modification of his original statement, and I give it to the House for what it is worth.

SIR J. JOICEY

May I read question 5100? "Then as far as London and Berlin goes, London is behind Germany, is it not?" This is what Mr. Preece said:—"London is behind Berlin, but England is in advance of Germany."

MR. GRIFFITH-BOSCAWEN

I do not wish to weary the House by going into this question in detail, but I will now quote question 5170: That, I think, there is no doubt about. Speaking of Germany as a whole, do you think Germany is very much behind us? Rave you any figures for the whole of Germany as compared with the whole of England? He answered, "No. I think as a rule the telephone in Germany is more advanced than in Scandinavia." I asked him, "Yes, but I am comparing it with England." He replied, "Well, with England; there is no doubt in Germany they are much in advance of us." I pressed it home. "They are in advance of us?" "There is no doubt at all about it." I do not think I can go beyond that; but if anything more is really wanted, all I can do is to quote the figures that have been already given by my right hon. friend, in which he shows that, whereas in England one person in 636 possesses the telephone——

SIR JAMES FERGUSSON

Ridiculous!

MR. GRIFFITH-BOSCAWEN

I am afraid I cannot accept my right hon. friend's view that these figures are ridiculous seeing they are official statements, put in in evidence, and not my own. My right hon. friend who introduced the Bill has stated that they are taken from a return that he received quite recently. I know perfectly well how my right hon. friend arrives at the idea that these figures are ridiculous. It is because the National Telephone Company has got a very clever plan of including with exchange telephones the private wires. Mr. Forbes did that in giving his evidence, and when cross-examined by me he had to admit that it included private wires. Private wires do not benefit the general bulk of the community in the least. They are mere private machines for the private use of private individuals. If you compare the number of exchange telephones plus private wires in England with the number of exchange telephones without private wires in Germany you will institute a perfectly unfair comparison. That is exactly what the National Telephone Company in a great many instances have done, and that no doubt is the cause of the discrepancy which appears ridiculous to my right hon. friend. The fact remains absolutely proved—it has never been disproved—that while this country is far in advance of most foreign countries in regard to nearly every mechanical appliance, we lag behind the rest of the world in regard to telephones. The figures have never been contradicted, that in Norway one person in 144 was on the telephone; in Sweden one in 147; in Luxembourg one in 160; in Switzerland one in 172.

AN HON. MEMBER

Will the hon. Member tell us whether they are under State agency or under private agency?

Mr. GRIFFITH-BOSCAWEN

In the case of Norway and Sweden you have State agency, local companies, and also municipal telephones. In Stockholm you have local companies and also State agency. In a great many places in Sweden you have local companies. In Luxembourg and Switzerland it is State agency. In Germany, which has a State system, one person in 410 is on the telephone. That is a step worse than the system of local companies and municipalities combined that prevails in Sweden; but when you come to the United kingdom, you get a step still further worse—one in 636. That is the result of an unregulated monopoly, and the object of this Bill is to break down as quickly as possible this most unfortunate monopoly, which the Post Office has allowed to grow up. Are we prepared to acquiesce in a state of affairs in which we lag so far behind the rest of the world? Are we willing for our trade to be handicapped the fact that our telephone system is run not for the benefit of the public, but for the benefit of the shareholders of the National Telephone Company? What is the prime cause which makes us lag so far behind other countries? What precisely is it that places us under this disadvantage? It is the excessive cost of the telephone in this country. Compare London with Berlin. I will quote Mr. Forbes, who says that "the mean cost of the telephone in London is about £14, while in Berlin it is £7 10s." What possible reason can there be why we should pay twice as much in London for the use of the telephone as they do in Berlin? Take the cage of a country where the telephone has been extended, not merely as in England to the larger towns, but, practically, to every small country place, i.e., Jutland, in Denmark. In Jutland there are no less than 300 exchanges, and the subscription rate varies from £3 10s. to £4 3s. per annum. I venture to think that in this country we might develop the telephone to a very large extent in our country districts just as they have in Jutland. Why do we not do it? Because we are in the hands of the National Telephone Company, who do not see an immediate prospect of a large return, and who, therefore, will not go to the country districts; and because, if they did go, they would impose a rate which is altogether beyond the reach of the people living in the country. We are constantly told that the thing cannot be done in this country at a lower rate, and Mr. Forbes talks about the "relative values," and all the rest of it, and that labour is cheaper in Germany, and, therefore, the telephone is cheaper. I am quite prepared to admit that; but, even so, I deny that if we had a proper system the telephone would be so much dearer in England than it actually is, and for this reason. Attempts have been made, not successfully so far, because the policy of the Government has been against it, to introduce a different system of telephony in this country. In Glasgow, for instance, an estimate was got out for setting up a complete system of exchanges. What was the rate to be? Was it £14, as under the National Telephone Company in London, or £8 or £10, as is charged by the company in a great many country towns? No, the charge suggested was five guineas. It was proved conclusively at the inquiry in Glasgow that the telephone might be made to pay exceedingly well in the hands of the Corporation at that rate. Then there is the extraordinary instance of Guernsey, where a local system has been set up. Already one in about 86 of the population has gone on to the system, as compared with one in about 600 in the neighbouring island of Jersey, which is in the hands of the National Telephone Company; and the rate charged is Guernsey is infinitely cheaper than the rate which is now being charged in Jersey, even after a very large reduction has been made. There are two reasons why these high rates are charged. The first is because the company, having a monopoly, is doing what everybody else with a monopoly would do—it is making as much as it possibly can; and the second is that the company is bound to pay interest upon a capital which is altogether too large. We have heard a great deal about the capital of the National Telephone Company. It has been said that it is very unfair to talk about "water" with the National Telephone Company. I will quote the words of Mr. Forbes, and the House will see what the chairman of the company admits is the extra amount of capital upon which this interest has to be paid. Mr. Forbes, in the 1895 inquiry, Question 4787, said: The total amount of money spent on the actual construction of the thing was £1,813,000; the amalgamation value and purchase value (those are the figures I read to you) was £3,105,100. The difference (what some people are pleased to call the water value) was £1,292,000. Therefore the people of this country have to pay extra rates in order to provide the National Telephone Company with the interest upon this £1,292,000. Whatever may be the position of the National Telephone Company, is it right, is it fair, is it in the interest of the general public that they should be left in the enjoyment of that monopoly, and that our telephone rates should be determined, not by the actual cost of the service, but by the amount of "water" the company have to pay interest upon? It has been said that we are dealing unfairly with the National Telephone Company by bringing in this Bill. In the conversation which has been going on in the Lobby—and there has been a great deal of conversation in the Lobby in the last two days—I have heard the statement over and over again that nothing more scandalous was ever clone, especially by a Conservative Government, than to ask the Post Office to compete with what they are pleased to call "their own partner." If there was any suggestion of unfairness in this competition, I should be the very last to advocate it, and the right hon. Gentleman would have been the last person to bring in a Bill which did any injustice to the National Telephone Company, or any other company working under a licence from the Crown. What is the fact? The fact is that throughout the whole of this business the Post Office has always retained to itself an absolute right of competition, and has laid down emphatically times out of number that no company would have any cause of complaint if competition were started. The Treasury Minute of 1892, which has been so often quoted, after laying down that no new licences would be granted for the whole country says: But although this is the policy which commends itself to Her Majesty's Government, it must be distinctly understood that should licences hereafter lie granted on other principles, no company now or hereafter to be licensed will have any ground to complain of breach of contract or want of good faith on the part of the Postmaster-General. Let us take the licence under which the National Telephone Company works at the present moment. Their licence was granted, I think, in 1884, and confirmed by a subsequent licence in 1892, and contains these words: Nothing in these presents contained shall prejudice or affect the right of the Post- master-General from time to time to establish, extend, maintain and work any system or systems of telegraphic communication (whether of a like nature to the aforesaid business of the company or otherwise) in such manner as he shall in his discretion think fit. Lastly, Mr. Forbes is asked by the Committee which sat in 1895 (Question 4614) whether he agreed with Mr. Lamb that "there is not even an honourable engagement on the part of the Post Office not to grant competing services," and he answered, "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, or a promise or pledge to lock up their discretion." It is proved up to the hilt by documents that anybody can inspect that there is no question that the Post Office has an absolute right to compete with the National Telephone Company, either by itself or by licensing other companies, or by licensing municipalities; and the suggestion that in so doing they will be acting in had faith will not hold water for a single instant. I know perfectly-well that my right hon. friend says such a suggestion has never been made. Mr. Forbes came before the Committee last year, and suggested that we should be acting in had faith, or that there would be some breach of an understanding—an understanding going behind a legal document—if any sort of competition were started. Mr. Forbes was confronted with the evidence that he himself gave in 1895; and what happened subsequently? All the Postmaster-Generals and Chancellors of the Exchequer who have linen in office while these negotiations were pending, one after the other, came before the Committee, and said there had been no such understanding at all, and they alleged, one after another, in perfectly clear terms, that the Post Office were absolutely free to compete with the National Telephone Company themselves or by any of their nominees. There is no doubt that the opposition to this Bill has come from the statement which has been sedulously circulated by the agents and friends of the National Telephone Company that we are acting in an unfair spirit in asking for competition. It is only fair that the House should know that there is not the slightest troth in the suggestion. What is the real opposition to this Bill? It comes from a variety of sources. There are some persons who hold that municipal trading is a bad thing. It is rather late in the day to suggest that, because a great many municipalities now are responsible for their own gas, water, and electric light, and my limited experience goes to show that, as a rule, they do these things very well indeed. But this is not even municipal trading, because it has been laid down in the Report of the Select Committee, and confirmed in it Treasury Minute, that the telephone is not to be worked by the municipalities at a profit. I do not understand what sort of trading there call be when the idea of profit is absolutely wiped out. Other persons object to competition, and say it would be much better that the telephone should be in the hands of any one authority. Probably one unified system for the telephone would be the best plan if we could get it. No doubt that is what ought to have been done when the telephone was started sonic years ago. But that was not done, and are we to waste the ratepayers' money in buying up a large amount of obsolete plant at an inflated price in order to obtain what theoretically might be the best system? When people talk about the evils of competition, I am doubtful whether they have considered what competition has existed in the case of the telephone, and what the result has been. It has been admitted by all who have studied the question that the best town in the world, so far as the telephone service goes, is Stockholm, and yet in Stockholm you have three competitors working together and competing with each other. The hon. Baronet opposite said that was all very well, but in Stockholm the telephone does not pay. At all events, the chairman of the largest company in Stockholm stated before the Glasgow inquiry that they paid a dividend of 8 per cent. and were only precluded from paying more because 8 per cent was the limit allowed by their articles of association. Therefore the Stockholm Company under competition pays better than the National Telephone Company does with a system of monopoly; and I venture to think that the stimulus of competition might have a good effect even on the National Telephone Company. Other people object to this proposal because they think the local authorities are not the proper bodies to develop the system in the country districts, I do not know that local authori- ties would be likely to develop the system very largely in the country districts, but if you allow the large municipalities to develop the system in their own localities you leave the Post Office free to go into the country districts and develop the system there, where the telephone has never been introduced at all. Therefore the provisions of this Bill will allow not merely local authorities to establish telephone services, but also enable the Post Office to do so in order to supplement the admittedly inadequate service which exists now, and then I think you will cover the country with the telephone in a manner which has never been done hitherto. I apologise for detaining the House so long, and I do not wish to occupy the time of the House longer, but I do urge the Government most strongly to persevere in this matter. The present system is admittedly wrong and inadequate. The telephone service in many places is bad, and even where it is good, as my right hon. friend pointed out, it only touches the upper classes, and it does not provide the telephone for the masses. There is an extraordinary absence of call offices everywhere, which does not conduce to make the telephone popular, and it does not go to the smaller places. The company appear to have only picked out the plums and taken the telephone there. Not only is the telephone system defective now, but it is likely to be more defective in the future. Mr. Forbes has said that in the year 1904 the National Telephone Company would be probably obliged to refuse all new subscribers; therefore I ask what is to be done? Can we allow a system which is defective now to continue, especially when it is likely to become more defective in the future? Can we contemplate with equanimity the suggestion that five years hence no new subscribers are to be allowed to go on the telephone, and that no further development of the telephone system is to take place in any part of the country? It appears to me clear that something must be done, and must be done quickly, and the question is what is to be done? The Government propose that the system of the National Telephone Company should be supplemented by competition, and by giving to places where the National Telephone Company now does not exist power to establish a system partly by the Post Office find partly by the local authorities. Tome that seems to be a reasonable and prac- tical suggestion. The only other alternative is that the companies should be bought out now, in which case you will be buying a lot of plant which is on the single-wire system, which has now become obsolete, and you would pay a price for it altogether too big, and just about twice the amount for which the whole plant of the National Telephone Company could be replaced. That is the alternative, and I understand that the Government have not the slightest intention, as a national policy, of buying up the National Telephone Company. Something must be done, and I urge the Government to pass this Bill, which has been already well considered. I understand that there is a suggestion to refer this Bill to a Select Committee. That is the most transparent device for delay that I ever heard in the House of Commons, and there is nothing which the National Telephone Company desires more than that this measure should be referred to a Select Committee. We have had Select Committees on this question, and last year we went into the subject as fully as any Select Committee could possibly do. I say that this suggestion for a Committee is a mere device for delay, and I hope the Government will persevere in their intention, and that they will pass this Bill through its Second Reading to-night, or as soon as possible, and that they will certainly refuse the suggestion to refer the measure to a Select Committee.

* SIR JOHN LUBBOCK (London University)

The Secretary to the Treasury has made a very able speech, but a great deal of it was against one of the principal proposals in his own Bill. He has shown the grave and indeed conclusive reasons against the telephone service being undertaken by Government, and yet he proposes that Government should undertake it throughout the metropolitan area. The Government have promised an enquiry into the whole question of municipal trading, and yet they themselves propose a great extension of the system. Is any Bill really needed? Is the telephone system generally inefficient? It is much more recent than telegraphy, and yet, last year, while there were only 80,00,000 telegrams there were over 540,000,000 messages sent through the telephone. It is idle, therefore, to talk of it as inefficient. It the telephone system is inefficient, how shall we characterise the failure of the telegraph system? But then it is said that the service here is more expensive. The comparison is very difficult. In Germany and Sweden Sir W. H. Preece believes that the State works the telephone at a loss, though there seem to be no accounts which show the result clearly. Moreover, in this country the company has to pay 10 per cent. of its gross receipts to the Government; and if the railway companies had had to pay 10 per cent. of their gross receipts to Government, does anyone suppose that our railway system would have been as good as it is? But when comparing our telephone system with that of other countries we must remember that the company here has also to pay way-leaves. These items amount to some £3, which must be allowed for in comparison. Again, in Germany a night service is not given. Lastly, Under existing conditions the English company has to amortize its stock by the year 1911. On the whole, therefore, it is almost impossible to make any exact comparison. But are we behind other countries? Here I will quote a very high authority, Sir W. H. Preece, the engineer in chief and electrician to the Post Office, He said in his evidence given before last year's Committee (p. 277): It is a most astonishing thing that, in the Press and all you read, they speak of the telephone system in England being so backward—so much behind other countries: as a matter of fact we are before Germany. The condition of telephones in this country is very advanced and it is a most unjust thing to have it constantly appearing in the Press and other places that the telephone in England is far behind the age. Many of the complaints of the telephone rise from inexperience in, its use. Sir W. H. Preece pointed this out to the Committee of last year, and expressed his opinion that: If one-quarter of the intelligence (no doubt he meant the practice) of the operator were transferred to the subscriber, 99 per cent, of the complaints would cease. I come now to the clauses which authorise and encourage municipalities to engage it, the telephone business. Sir, our manufacturers and chambers of commerce view with much alarm the tendency of municipalities to engage in trading transactions. Some 200 petitions have been presented to the House this year by manufacturers and others, protesting against this tendency of the day. In the first place it will inevitably lead to an increase of rates. Business is not the plain sailing which some persons suppose. All those who have had to do with patents know how risky they are. For one patent which gives a profit, 10 leave a loss. I am not going to argue against the management of gas and water by municipalities. In some cases, at any rate, this may be desirable. There is, however, no member of the Government whose opinion on such a matter is entitled to greater weight than the Attorney-General. As Chairman of the Council of the Society of Arts he has had exceptional opportunities of studying the question, and he has told us: Whatever—might be said as to the profit made out of undertakings such as gas or tramways worked by corporations, his belief Wits that if the matter were thrashed out it would be found that the burden on the ordinary ratepayer was less where no such risks were undertaken. Mr. Acworth, who has made a special study of this subject, has said: Anybody who knew the working of a corporation, as distinguished from a private trading holly, knew that if a corporation had not an absolute monopoly it was bound to go to the wall. He further says: That workmen invariably do less work for a municipality than for a private owner; he did not know why they should, but experience proved that it was so. Here, again, I may quote the very able Government Commissioner in the Glasgow inquiry. He gives his reason for thinking that the municipality have not considered the cost: All this shows that the Corporation have not really faced the question of finance, and, considering that the Corporation have a loan of £8,000,000, it seems to me that, from a ratepayers' point of view, it is a somewhat hazardous proposal that the Corporation should construct an entirely new telephone system … upon expectations which depend mainly on theoretical estimates and opinions; especially when it is remembered that the members of the Corporation have little or no personal knowledge of the construction and management of a telephone system. My next reason for objecting to municipalities undertaking these new duties is the immense amount of debt which it will involve. Already that debt is enormous, is increasing, and must in any case increase. But if we put on them these new duties it will become something portentous. Moreover, you will alter the whole character of these municipal loans. Now they are safe, because municipalities do not engage in risky operations; but if they are to compete with building societies, to run tramways and omnibuses, carry out gas and electric lighting, work the telephones, and become manufacturers of the appliances used in these trades, the result will be that some municipalities, at any rate, will lose large sums, and municipal stocks will fluctuate according to their success or failure like those of other manufacturing concerns. Some municipalities will inevitably ruin themselves. The next objection is the amount of work which it will throw on these local bodies. There are many men who will give much of their time to public duties; but if they have to devote the whole they will not do so, and cannot be expected to do so, without payment. Yon will make it quite a big business. Surely the condition of New York ought to be a warning to us. Another result of this policy will be the enormous multiplication of municipal employees. The councillors will have to settle the wages of the electors. The results are easy to foresee. We have had some experience of that already. Victoria has lost £8,000,000 by its railways. And why? The Government appointed a Commission to inquire into the circumstances, and they reported that the railways were over-manned, and that the staff were overpaid. There were two persons to do the work of one. They proposed numerous economies, but in the words of the Economist: It is already clear that these proposals will meet with the strenuous opposition of the employees, who, unlike the Department itself, which is described as 'disorganised, if not demoralised,' are closely organised. The Board report in connection with this matter that there are seven associations established amongst the employees, the avowed object of the members of all being to protect their rights and privileges. The secretary of the association (an engine-driver), in the course of a long speech, denounced the report of the Board in unmeasured terms, calling its statements 'lies,' that a principal and valuable witness Was a 'cast-off expert in another colony,' That the Board had proved 'an abor- tion and a sham;' and so on. All this stuff was punctuated by loud and prolonged cheering,' etc. The Speaker of the Legislative Assembly assured the audience that, as ever, the working classes of the colony had his full sympathy'; and other Members of Parliament talked ambiguously, one inciting the men to prepare for 'the ordeal that would be sure to come.' The Society of Arts have expressed themselves strongly on the subject. They urged the Government to appoint a Royal Commission to enquire into it, and added: They venture to submit that until such Royal Commission has investigated the subject and reported thereon, no further powers for trading purposes ought to be granted to such bodies. The municipalities themselves have not asked for it. The Government have shown that they consider the question of municipal trading as a very grave question by themselves proposing not merely a Committee of this House, but a Joint Committee with the House of Lords on the question. Surely they ought not to prejudge it. This Bill proposes a great extension of municipal trading. Surely the Council of the London Chamber of Commerce were logical when they unanimously resolved: To urge on the Government that it is undesirable that the Postmaster-General should license the councils or county boroughs to provide systems of public telephonic communication, pending the Report of the Joint Committee about to be appointed by the two Houses to consider the whole question of municipal trading, and to urge upon the Government that, pending the report of the Joint committee to be appointed by the two Houses on municipal trading, the Telegraphs (Telephonic Communication, &c.) Bill should be postponed, Now, Sir, I come to the second part of the Bill—the proposal of the Government to institute a telephone service in London, and ultimately to work the whole system. This is open to most of the objections against municipalisation, told sonic others. There is the risk, I was going to say the certainty, of loss, which will fall on the taxpayers generally for the benefit of the few. There is the objection to increasing the number of employees. There is also the objection that it will check private enterprise and stop the progress of applied science. The right hon. Gentleman in his speech gave conclusive reasons against the nationalisation of the telephone, and yet he proposes to do in London exactly what he has himself denounced. If it be right in London, why is it wrong in other places? We have seen in various parts of the world the benumbing influence of the Government undertaking work of this kind. Take the case of railways in India. There is a great desire to invest English capital in China. Many English railway companies are working in other foreign countries. Why are no new companies being started in India? Because the Government make railways themselves, and naturally invests will not compete under such circumstances. A very interesting paper was read last April at the Society of Arts by Mr. Bell, who has made a special study of railways and written a standard work on the subject. Mr. Bell was at first very much in favour of the management of railways by the Government, but the result of his experience had been to convince him that the only means of introducing a new and vigorous life into Indian railways is by inducing a free and unrestricted now of private capital to India, and that this implies the gradual, but eventually complete, abandonment of State administration. He says: I have laid stress on what I should call the pernicious element in the present policy of the Government, i.e., the retention of the idea that, the State must continue to exercise direct action in both the construction and working of railways. I have that this cannot co-exist with really vigorous life in private enterprise, and that it is the latter to which we should look as the ultimate and sole agency for such operations. Sir Julian Danvers, who has beers connected with Indian railways from their commencement, and acted as Government director, so that he speaks with, perhaps, unrivalled experience, in the course of the discussion, expressed his opinion that the agency of companies was, upon the whole, the most satisfactory nude of carrying out railway enterprise. That seemed to be now the opinion of the Government. Railways, being commercial concerns, were better in the hands of those who could manage then t on commercial principles. If the choice was between a State and a company, the latter was on the whole most desirable. I do not ask the House to accept any opinion of mine, but I may cite the very highest authority on such a question—the Society of Electrical Engineers. The society has passed the following resolution: That in the opinion of this Committee it is desirable, from the point of view of the progress of electrical engineering, for the purely local telephone industry throughout the country to be held as a monopoly; or that legislation on the future of telephony in these kingdoms should discourage the limier-taking of exchange systems within telephone areas by independent enterprise. I really could not myself put the case against the nationalisation of the telephone more strongly than it was put by my right hon. friend the Secretary to the Treasury in reply to a deputation. What has happened in the case of the telegraphs? Soon after they were purchased it was found that £1,000,000 had been spent, not only without the authority of Parliament, but actually without the head of the Department having the least idea that this had been done. Fortunately, the money was honestly spent, but it might have been otherwise. A few years later it was found that we were losing money by the telegraphs. It is often said t hat this is because we gave too much for them, but that is not the reason. In 1875, the Government appointed a Committee to inquire into the reason of the loss incurred by the telegraphs, and the Committee accounted for it by pointing out that the wages and salaries paid for the subordinate work had all been greatly raised. Since then the loss has been still further increased by the lowering of the charge for messages. The total loss, according to the last return, was £7,000,000. The loss last year was over £600,000, and according to the return the interest on the capital was £298,000; so that, even if nothing whatever had been given for the system, the actual loss on the working would have been over £300,000, and it is a loss which is increasing every year. Since the Bill was introduced a number of important bodies have passed resolutions with reference to it, and in moving the rejection I am not expressing merely my own opinion. The Corporation of Liverpool have resolved that they record their great dissatisfaction with the Government scheme for dealing with the telephone, and that they protest against the proposals embodied in the Telephone Bill. Resolutions condemning it have also been passed by the Liverpool Dock Board, and all the principal Liverpool associations, by the Changers of Commerce of London, Liverpool, Birmingham, Bristol, Cardiff, Plymouth, Glasgow, Aberdeen, Edinburgh, Belfast, Dublin, Nottingham, Sunderland, and some twenty others of our principal Chambers of Commerce; as well as many Stock Exchanges—for instance, those of Glasgow, Liverpool, and Manchester. This is surely a very remarkable consensus of Opinion, and it is, moreover, the opinion of those whom the measure most concerns. I hardly remember any case in which such remarkable opposition was shown to a Bill. The right hon. Gentleman referred to the fact that the Associated Chambers of Commerce met and did not say a word about this measure. What happened? The Associated Chambers met after the Bill was introduced, and a very strong resolution was proposed condemning the Bill, but the London Chamber of Commerce thought that it would not be desirable that an opinion should be expressed on the Bill until there had been more ample opportunity for considering it. I was present, and in fact I myself seconded the previous question, on the ground—a very wise ground—that the Associated Chambers should not hastily pass such a resolution, For my part, I maintain that the telephone is nationalised already. The State receives one-tenth of the gross receipts. It gains £100,000 a year by the telephone and loses £600,000 a year by the telegraphs. Moreover, the gain by the telephone is increasing, and the loss by the telegraph is increasing. Surely the wise course is obvious. But we are asked by this Bill to do exactly the opposite. We are asked to abandon the system by which we profit, and replace it by the system under which we lose. I confess I doubt whether the Government have considered fully the course on which they are inviting us to embark in this and other similar Bills. The hon. Member for Battersea knows his own mind, and has the courage of his opinions. Lord Wemyss said, at the Society of Arts, he should like to ask Mr. Burns whether it was his view that all private property—what he called instruments of production—should be in the hands of the State or the municipalities. Mr. Barns at once answered "Yes." This is, indeed, the logical conclusion from the proposals contained in the Bill. The hon. Member for Battersea wishes that all the instruments of production in the country should be in the hands of municipalities or of the Government; but I do not think he can see the end of the road he is taking. No doubt there often seems a temporary and specious advantage in a proposal that any given business should be undertaken by Government or municipalities. Why begin with the telephone? There are other things more important. Take the case of bread. Bread is more necessary than the telephone. Why should not the Government supply Londoners with bread? The profits of bakers are much larger than the dividends of the Telephone Company. The Government might largely reduce the number of shops and the expenses of distribution. Everyone admits it would Le a mistake, but it seems to me that there is more to be said for taking up the business of bakers than that of telephones. The hon. Member for Battersea and his friends do not shrink from the proposal, and they are at least logical. I have shown that this Bill is opposed by the Society of Arts and Manufactures, by the Society of Electrical Engineers, by the great Chambers of Commerce, and by several of the Stock Exchanges—all, in fact, who have expressed any opinion on the subject. We contend that the commercial operations of the State and municipalities should be confined as strictly as possible. If a business is of great utility and cannot be carried on by private enterprise, there is do doubt a ease for State intervention; but where, as in this case, the business can be and is conducted by able and responsible companies, the intrusion of the Government and municipalities is unwise injurious, and contrary to public policy. I believe the State will lose, and lose heavily, by the telephone, as they have by the telegraph, but I would rather base toy ease on the broad ground that it is unwise, and contrary to the public interests that Government should undertake business for profit. That is not the true function of Government. I submit that the proposals in this Bill are unwise and impolitic; that they will lead to a heavy loss, and cheek both private enterprise and scientific progress. Committee of last year only inquired into one part of the subject, and being therefore convinced that the subject requires further study and inquiry, I propose after the Second Reading to move that it be referred to a Select Committee. No doubt the result will be to postpone the matter for the present year, but it is of comparatively little importance to settle the question this year. What is of import- ance is that when we settle it, we should do so wisely.

* SIR J. T. WOODHOUSE (Huddersfield)

No one has greater respect for the right bon. Baronet than I have, but fail to see that there is really very much in his speech that was relevant to the Bill before the House, and I should like to bring the attention of the House back to the Bill which has keen moved a second time to-night. The measure is certainly not the least important of the measures introduced into this House he the Government. Indeed, I would venture to say, if I did not see the state of the front Opposition Benches, that it is the most important measure yet introduced by the Government. All classes of the community are deeply concerned in this Bill, because all classes are interested in the development of the trade and Commerce of the country; and it is precisely because the aim and object of this Bill, as reflect in the opinion of the Select Committee of which I had the honour to be a menthol, is to develop that trade and commerce, that I venture humbly to support it. We are every day hearing from chandlers of commerce and other bodies that our commerce has to sustain an intense and cumulative competition, and anything that would remove the obstacles to lair trade and facilitate its progress surely deserves the earnest consideration and approval of this House. The Times not long ago said that the telephone was not only a modern adjunct to our trade and commerce, but a most essential adjunct to our commercial life. The expansion of our telephone system is called for by public opinion and by the necessities of our commercial life. What is it stands in the way? Notwithstanding what has been said by the right hon. Baronet, the present service is insufficient and inadequate. The right hon. Baronet quoted the opinion of Sir William Preece with great approval, but in his official report made in 1896, Sir William Preece stated: The British public floes not care for the telephone. It is unpopular because it has been badly managed in the past. I think that is an answer to the right hon. Baronet when he said that there was no ground of complaint regarding insufficient or inadequate service. Sir William Preece says further, that a perfect service and a moderate and equitable tariff would be as popular here as in Berlin or Stockholm. The high charges exacted is another great obstruction in the way of the expansion of the telephone system. The object of this Bill is to give effect to the recommendations of the Select Committee. The Committee came to two conclusions—one, that the present telephone system could not be of general benefit to the country; and, secondly, that the monopoly of this private trading company could only be remedied by competition. The Committee recommended that the competition should be in two forms—State competition and competition by the local authorities. It did not say that competition was to be entirely by the State or by the local authorities; but it did say that where the State could more efficiently give competition there the State should come and that where a local authority could more efficiently give competition there it should come in. It was established before the Committee that the National Telephone Company obtained a monopoly which it was never intended it should obtain; it is a monopoly of an exceptional and aggravated character, which benefited the shareholders, but which has been really most disastrous to the public interests. It is a monopoly which has no analogy in our public service. We have given monopolies to railway companies, gas companies, and water Companies, electric lighting companies, and tramway companies, but with regard to all those companies we have imposed stringent restrictions; and conditions in the public interest; but we can find none in regard to the monopoly exercised by the National Telephone Company. It is a monopoly unrestricted, for instance, as to its charges, unrestricted as to its dividends, as to the capital it can create, and as to the conditions of issue of that capital, and unrestricted in the method of preferring one trader to another, and the manner in which it will serve one and not another. There were practical illustrations given before the Committee of evils resulting from this unrestricted monopoly, and the result has been to stifle instead of stimulate telephonic enterprise. What are the interests involved? They are threefold: the interests of the public, of the Postmaster-General, and the National Telephone Company. The Postmaster-General has absolutely and exclusively the right to grant licences, and it is his duty to exercise the right in the interests of the public; and by the licence which was granted to the company in 1884 it was believed that that duty was being exercised in the public interest, and, of course, competition was not to be excluded. At that time there were no less than fourteen competing companies; but, one by one, the National Telephone Company bought them up and absorbed them, and what was a competitive system was turned into a monopoly. Monopoly was never intended for another reason. By the terms of the licence the rights of the Postmaster-General to conduct a telephone service himself were specially reserved, and he also reserved the right to grant similar licences to others. The public never expected that there would be this monopoly, for everyone expected that when the National Telephone Company's patents expired in 1891 competition would increase. I think the right hon. Gentleman has made it very in his speech tonight that the result has been to retard the development of telephonic enterprise in the country. I am not going to repeat the figures, but the fact exists that, owing to the National Telephone Company having this monopoly, the United Kingdom is only tenth on the list of European countries with regard to telephonic enterprise. I may point out that even in our own colony of New Zealand we have an example which puts us to shame in this matter. It is a thinly populated country, but it has 5,443 subscribers. In Wellington, there is one to every 37; in Auckland, one to every 33; in Dunedin, one to every 25; and in Christchurch, one to every 18. At the same time there were in the metropolitan district only 10,848 subscribers, or one to every 519 inhabitants. We are put to shame in this matter by Berlin, where, with its million and a-half of inhabitants, there are more subscribers than in the London district, with its six millions of population, and this is principally due to the fact that the rate is there only £7 10s. a year. Such has been the effect of the monopoly of the National Telephone Company. What is the remedy? It is that prescribed by the Bill—competition, the effect of which will be, first, to reduce charges; and, second, to improve the service, which is inadequate at the present time. The issue before the House is whether that remedy, prescribed by the Select Committee and embodied in the Government Bill, is sound, or whether the remedy suggested by the right hon. Baronet opposite, of nationalisation, should be adopted.

SIR JOHN LUBBOCK

My remedy is true competition by companies.

* SIR J. WOODHOUSE

I undestand that the position of the right hon. Baronet is true competition, and I gather from the right hon. the Secretary to the Treasury he is prepared to meet the right hon. Baronet to a large extent on that ground. But the first point which the Government and the Committee want to ensure is the breaking down of the monopoly of the National Company, and I am bound to say I have heard very little from the right hon. Baronet as to the breakdown of that monopoly. I say that when we get this Bill we will have reduced charges and a more efficient service. According to the report of Dr. Von Stephan, when the charges in Berlin Were reduced from £10 to £7 10s. per annum the effect was, in one year, an increase of 100 per cent. in the local exchanges, 68 per cent in the subscribers, and 118 per cent. in the number of connections. We believe that competition and lower charges would produce the same result in this country, and the only issue between us is as to what the nature of that competition should be. I think that the best competition that could be introduced, at any rate in the case of the great municipalities of the country, is municipal competition. I have good authority for that. Sir Spencer Walpole, the late Secretary to the Post Office, said to the Committee: I do not think a Government Department is likely to prove a very active competitor. The question was put to him: Therefore your opinion is that municipal competition would be the more vigorous of the two? And he replied: I think so; it is obvious that the National Telephone Company are more afraid of municipal competition than of Die competition of the Post Office. I do not think that one who was so long in the service of the Post Office should be regarded as a Mean authority. Why should we be alarmed, as the right hon. Baronet seems to be, at the introduction of municipal competition? The only argument against it is that it would alarm the merchants and manufacturers of the country. We have heard of that bogey before, when it was proposed to confer power on the municipalities to work tramways, the water supply, electric lighting, gas, etc. There can be no more difficulty in a municipality, working telephones locally and within the area prescribed than in their supplying water, gas, electric light, and working tramways, all of which, it is admitted, they have done with great advantage to the community. The right hon. Baronet shakes his head but let him go to Sheffield and inquire whether the tramways have not been worked by the municipality with great success, or go to Glasgow, where they have reduced the fares to one halfpenny for every man, woman, and child, and made a large profit. Anyone who studies the matter knows that municipalities can do it without being open to the reproach of the right hon. Baronet, that evil results would follow as they did from Tammany in New York. A municipal telephone service has been established within the last few years ill Amsterdam and Rotterdam, Holland. In Rotterdam, according to the report for last year, after providing for every expenditure—and they are very liberal to their employees—they made a profit of £5,500, which enables them to pay interest mill the sinking fund to pay off the capital in 25 years. With examples of this kind before us I cannot understand the objection to a municipal service. We had before the Committee representatives from Glasgow and Edinburgh—two of the most enlightened municipalities in the country—and they said that their municipalities were prepared to establish municipal exchanges, and that they had already lists of subscribers who were prepared to support them. We have an illustration as to the effect of local exchanges in Guernsey, the only place where the Postmaster-General has in recent years issued a licence as against the National Company. In Jersey there is a population of 54,000, and the National Company charged a rate of £10, which was reduced at the threat of competition to £6 10s. but the ratio of subscribers was only one to 650 of the population. But in Guernsey, under the licence of the Postmaster-General, there was a telephone to one in every 84 inhabitants, with a cheap system of 30s. subscription and 1d. for every call. That is not imagination, but fact, and an object lesson as to what would take place throughout the country if this Bill were passed into law. I cannot understand the objections to a municipal service raised by hon. Members who profess to be acting solely in the public interest. I can understand the fight which the National Company are making in this matter. There is no doubt they are moving heaven and earth to prevent this Bill being passed into law. It is common knowledge that they are using the great interest which the representatives on their board have in this house, and the enormous interest of their clientèle; on the Stock Exchange, to prevent this Bill passing into law. I would ask any hon. Member whether he was ever so deluged before with resolutions of the Stock Exchange; but I would ask them to disregard these resolutions and the interests of a private trading company, and regard only those great public interests which we are here to represent, and, at the same time, to do justice to the interest of the existing company which the right hon. Gentleman has under his care. Municipalities, in working a telephonic service, would have sole regard to public interests they would conduct operations under the public eye, they would have no paid board of directors, but would have a large stall which could supply a cheaper service and extend the telephone system as the trade of the country demanded it should be extended.

MR. CHARLES MCARTHUR (Liverpool, Exchange)

The hon. Member who has just sat down, and those who preceded him on the same side, seem to think that there is no alternative but their own pet municipal system, and that all those who oppose the Government scheme are the advocates of the National Telephone Company. I assure the House that that is not the case, and in proof of that I appeal to the unanimous opinion of the community of which I am one of the representatives. Their opinion is perfectly solid on this question. Those who know the Parliamentary representatives of Liverpool know that they have no want of sympathy with the general views of the Government, but I venture to say that there is an equal unanimity on the part of the people of Liverpool in their objection to the Bill now before the House. That objection does not proceed from one quarter alone, but from the Chamber of Commerce, the mercantile body, the Corporation, the Dock Board, the shipowners, the Steamship Owners' Association, and even from professional bodies. All those sections of the community have joined together in expressing their desire that the Government Bill should be withdrawn, and that the Government should endeavour to formulate some Bill on the principle of nationalisation. Now, some remarks have been made as to the character of the deputation which waited upon the right hon. Gentleman the Secretary of the Treasury a few weeks ago, and which I introduced to the right hon. Gentleman, and some endeavours have been made to disparage the composition of the body. I would only say that the deputation was of a most weighty character, and although it has been said that it did not include all the Chambers of Commerce in the country, I believe that no Chamber Of Commerce in the country has expressly adopted the views of the Government, except that of Tunbridge Wells, which can hardly be regarded as a great commercial centre. I want to state the reasons why we take the step, with great regret, of opposing this Bill. I am sorry to find that the Secretary to the Treasury has imputed interested motives to the objectors to this Bill, and that line of argument was followed by the hon. Member who has just sat down. But I assure the House that I would not have addressed it on the subject had I had any interest, direct or indirect, in the National Telephone Company. The deputation which waited upon the right hon. Gentleman at their preliminary meeting inquired whether any one of the proposed speakers at the interview had an interest in the Company, and the result was that it was found that not one of them had any such interest. It has been argued by the right hon. Gentleman that this is a movement in behalf of the large and wealthier traders in the country, in order to keep to themselves the monopoly of the telephone which they have now got. That is altogether a mistake, because wholesale and large traders are not so narrow-minded as not to know that what would benefit small traders would also benefit them. As the right hon. Baronet the Member for London University has said, all that the Chambers of Commerce have desired is that some steps should be taken to popularise telephones throughout the country. I think we all admit that a man who is an unlimited user of the telephones ought to pay more than the man who is a limited user. The right hon. Gentleman referred to the German system on this subject, but that is a State system. I think we are all agreed that the present system cannot continue. I do not want to make any charge against the National Telephone Company, and I think t hat the House should not deal unfairly or ungenerously with them, for we have to remember that they were the pioneers of the telephone enterprise in this country. They pushed it, spent large sums of money upon it, and developed it when it was coldly and doubtfully, regarded by the Government. The result is that the company have now 883 exchanges and 542 millions of calls per annum. One other reason why the present arrangement cannot continue is that the dual control involved is most unsatisfactory in in the working. Although the trunk wire conversations are not more numerous than 4 per cent., great delays now occur, and it is impossible to locate through whose fault these occur—whether it is the fault of the National Telephone Company or of the Government trunk wire service. We should, therefore, consider very seriously and carefully what ought to be the system in the future. Any system, to be a success, must have these essential characteristics—single central control, uniformity of system, communion between the users of the telephone, and control over the way-leaves. Now, the Bill before the House contains two main features. It asks for power to borrow two millions sterling, with which the Post Office should enter into more energetic competition with the National Telephone Company in London. I object to the word competition in the matter of this service, believing, as I do, that it is a mistake altogether. Competition is all very well with respect to trade, but it is not desirable in a national service, where it is essential that there should be complete co-operation between all parts of the undertaking. It is the essence of competition that one system should attempt to displace any others that compete with it, and that is not desirable here. Another objec- tionable feature of the Government proposal is that it involves a large unnecessary expenditure of capital; for it means two or more systems working side by side where one ought to suffice; two exchanges for one, and two sets of wires along the streets instead of one. The second section of the Bill is even more objectionable, where it proposes the municipalisation of the telephone. At present the United Kingdom is mapped out into 471 telephone areas, of which 336 are in England, 86 in Scotland, and 52 in Ireland. It the proposals of the right hon. Gentleman were carried out, the result would lie that each of these areas would be a separate authority, with separate systems, competing with each other. The general effect would be a multiplicity of systems which would involve the business of the country in the utmost confusion. But that is not all. Each of these areas includes a large mint-her of local authorities. Take Liverpool, for instance. In that area there are 158 square miles, partly in Lancashire and partly in Cheshire. In it are included the boroughs of Liverpool, Birkenhead, and Bootle, 17 urban districts, and two county councils. If this Bill is adopted by each of these local authorities, and if each sets up its own separate telephone system, confined to its own particular area, how can inter-communication he arranged between them all? Junction wires would be required; and at whose expense are these to be provided? The adoption of the Bill in this respect would be going back, not to the days of the Heptrarchy, but to the days of village communities—I might even say, to the Patriarchal age; and confusion would be worse confounded. May I look at the matter for a moment from a municipal point of view? There are already 114 municipal boroughs in England, the local authorities of which have entered into agreements with the National Telephone Company, 13 in Scotland and 103 urban districts in Ireland. These agreements have to a large extent obviated the objections made to the present system, for they require the company to provide a twin wire system, to lay the wires underground on a payment of, I think, 5s to the local authority for each wire, not to increase the present charges, and to give the service to every citizen who will pay the changes and enter into an agreement with the company. I submit to the House that the true remedy for the settlement of the question is the nationalisation of the telephones. An hon. Member has said that the Government would have to buy the "water" and pay an exaggerated price for the undertaking of the National Telephone Company. Surely, if no agreement has been come to, have we any reason to doubt but that a fair result would be arrived at by arbitration? The labour difficulty has been mentioned, and it has been said that the Post Office employs 160,000 persons, and that it is undesirable to increase the staff. I will put before the House a practical suggestion—that the Government should take over the control of the telephones, leaving the company to work out their system until 1911, the company, charging sufficient to pay interest and provide a sinking fund. Now, Sir, I support the suggestion of the right hon. Baronet the Member for London University that the Bill should be referred to a Select Committee. It may be said that we have had a Select Committee already. But it has never considered the question of nationalisation, and therefore the inquiry has been incomplete. Moreover, since this Bill has been introduced an important change has been made which demands serious consideration. There is no occasion for urgency; it is of far more importance that we should not take a false step. Having regard to all the circumstances, we had better delay our imprimatur to the Bill until the whole of the various points I have mentioned have been thoroughly dealt with.

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

Before asking the House to listen to one or two observations upon the main question, I should like to refer in a single sentence to what has already assumed the aspect of a personal question. My right hon. friend, in making his motion this evening, made reference in his speech to stockbrokers, and on the other side of the House, in a speech which we have just listened to, a very pointed allusion was made to the effect that stockbrokers and the Stock Exchange had had a great deal to do with this question. Well, Sir, for my sins I have had to follow the profession of a stockbroker, but I should like to ask the House to accept my assurance that in any line I have taken with regard to this Bill I have been actuated purely by public motives. If I were to look at this matter from a personal point of view I could see in the proposal of my right hon. friend this evening—a proposal for the establishment of an unlimited number of companies—a bountiful field for my own energies in relation to my own particular business. But that consideration does not enter into my mind in the slightest in considering this problem. If I may be allowed at this somewhat late hour, I should like to offer a few remarks upon the general question. This Bill, which has been brought in by my right hon. friend the Secretary for the Treasury, proposes to carry out the recommendation of a Committee of this House which examined the subject and repotted last year. I need not refer to the provisions of the measure itself or to the Treasury Minute which has been published in explanation of the Bill, beyond saying that it is necessary, in order to understand the precise proposals of the Government, to read these two documents together mid to treat them as a whole. That is the only way in which a proper understanding of the question as it presents itself to this House can be come to. Well, Sir, the first remark which I desire to make is that the Bill is not justified by the Deport of the Select Committee. That criticism has already been made this evening by an hon. Baronet opposite (Sir James Joicey) who had the privilege of sitting upon that Committee but what I wish to point out also is that the Bill goes further than the reference. The reference to that Committee was substantial and precise. It was to inquire and report whether the telephone service was, or was calculated to become, of such general benefit as to justify its being undertaken by municipal and other local authorities. The reference is confined exclusively to the question of whether or not a municipality should be permitted to take up this enterprise. In the Report we find that the Committee travelled outside that reference, and in their Report they recommend that competition should take place, either by the Post Office—by the Post Office preferentially—or by municipalities; and they go on to say that a really efficient Post Office service is the best means of obtaining competition. But this Bill does not provide for an efficient Post Office competition. This Bill provides that two millions of money should be drawn from the general taxation of the country in Order that that money may be spent in the area of London. I very much doubt whether, when that comes to be understood, the people throughout the country generally mill be satisfied that such a large sum of money should be drawn from such a source and should be devoted exclusively to the development of the telephone service in London. The metropolis, of course, is an exceedingly important place as well as being the capital, but, after all, it was not, I venture to think, in the minds of the Committee when they made these recommendations, the only place where an efficient postal service should be in angurated. Well, Sir, there is another point which I desire to state in connection with this matter. In the Report of the Committee we do not find a Report which gives to the House a complete indication of the evidence which the Committee had before them when they considered the question. For instance, one omission in this Report I should like to draw special attention to. It has been referred to previously this evening, but it will bear pointing out once more. In the evidence—I have not the evidence, here, and it would not be fair to trouble the House with it—most important witnesses were called on behalf of the Government. Those witnesses were high officials of the Post Office, and gentlemen who had been accustomed for years to handle the telephone question in all its phases. What was the evidence those gentlemen gave? The evidence those gentlemen gave was that in their judgment the telephone was a national service. It was a service which should be undertaken by the Government, and they even went so far as to say that it had always been the intention of the Department that it should ultimately become a Government service. Well, Sir, I say that that evidence was very important evidence, and I complain that whereas matters have been brought into this Report—I am making no reflection on the Committee—which have not been points upon which reference was made to the Committee, we are not provided with guidance where we had reason to expect it, but have been left to wade through the very voluminous evidence to which I have referred till we come to the evidence of the Government's own witnesses, in order to discover that they were most emphatic in the view that the telephone service should be a national service. Well, Sir, we have had to-night from the right hon. Gentleman a further proposal which was not contained in the reference to the Committee, and which was not contained in the recommendation's of the Committee, and that proposal is that there should be granted an indefinite number of licences to private companies to undertake this business. Well, before I speak of the question of inaugurating these various and conflicting services, I should like to say one word with regard to the opposition which has been offered since this Bill was brought into this I House. I will not go in detail into the arguments as to the validity or importance of that opposition. I venture, however, to say, that no more remarkable series of resolutions have ever been passed with regard to any measure having a commercial bearing than the series of resolutions which have been passed by Chambers of Commerce, by Stock Exchanges, by Corporations, and by other large bodies interested in commerce and finance throughout the country. There is one point, however. I desire to note. My right hon. friend said that practically the only corporations which had moved in this matter were the Corporations of Liverpool noel Nottingham. But I find that there have been a large number of resolutions from other corporate bodies, and in particular I find a resolution which was passed by the Council of the Association of Municipal Corporations on 12th January, 1899. This resolution was to the effect that the Municipal Corporations Association strongly protested against the powers of the National Telephone Company being extended, and against any Act being passed which might tend to delay or interfere with the Government undertaking the telephone service of the country. Now, Sir, the fact that this Bill has been brought in cannot alter that opinion. But other bodies have taken the same view. I find that at a meeting of the Convention of Scotch Burghs, in which all burghs of importance are represented, a resolution was passed urging the Government to undertake the management and control of all telephones throughout the country, and memorialising the Government accordingly. I know also that individual corporations in Scotland have done the same. I do not profess to have followed the movement so closely in England as I have done in regard to Scotland, but I think it is minimising the importance of the position as regards corporations to say that practically only Liverpool and Nottingham Corporations have acted in the matter. But, Sir, the main question to be considered is the question of how far the Government scheme meets the difficulties of the case. I should like to say as to that that nothing could exceed, to my mind, the absolute absurdity of contemplating that there should be in large centres, in existence at the same time and competing with each other, a series of different bodies endeavouring to serve the public in the matter of telephones. It appears to me that there is a root fallacy lying at the bottom of the whole question, and that fallacy is to assume that when you have provided a man with a telephone you have given him telephonic communication. You have done nothing of the kind. What a man wants, if he wishes to have the telephone, is to be put into communication with all those who also have the telephone, in order to carry out his business without the loss of time involved in calling personally. I ask the House to consider what will be the result of the competing systems established under the Bill. The immediate effect will be to cause great expense, owing to the competition to obtain the services of the limited number of skilled operators and experts available. The proper telephone service in the future must be a Government service under the control of some central authority like the Post Office, established on a uniform system, and made as cheap as possible in the interest of the public. But the proposal of the Government is no remedy for the state of affairs which exists, while the whole policy embodied in the Bill is a new departure on behalf of the Government. There is no way out of the muddle into which the Government has got except by a policy of purchase.

* MR. W. F. LAWRENCE[speaking amid cries of "Divide!"] (Liverpool, Abercromby)

It is all very well for hon. Members to wish to divide the House at this stage, but this is a question of such very great magnitude that it ought not to be hurriedly passed over. The question is whether our telephone system is in future to be worked by Private companies by municipal bodies, or by the State. I am one of those who believe that the private companies are properly ruled out of the question, inasmuch as we cannot expect the streets of a municipality can be placed at their disposal; but I am also of opinion that Municipal systems are out of the question. I think my hon. friend and colleague in the representation of Liverpool, who has just spoken, has shown clearly to everybody who has been lucky enough to hear his very lucid and short speech, that a municipal system in a large area with separate exchanges is perfectly unworkable. I am quite certain that the business community which I have the honour to represent would repudiate such a proposal. A previous speaker has alleged our action is taken merely in the interests of the National Telephone Company. With the permission of the House I will read one or two lines of the resolution passed by the Liverpool City Council on the 6th of February. It is to the effect that the Council strongly protest against the powers of the National Telephone Company being extended, or to anything being done which would tend to delay or interfere with the Government undertaking the telephone service. I submit that, the action of Liverpool——

It being midnight, the Debate stood adjourned.

Debate to be resumed to-morrow.