HC Deb 28 June 1907 vol 177 cc212-42

Order read, for resuming Adjourned Debate on Amendment to Question [21st June], "That the Bill be now read a second time."

Which Amendment was— To leave out from the word 'That,' to the end of the Question, and add the words 'it is undesirable to authorise further capital expenditure upon telegraphs or telephones until a full statement has been presented to Parliament, showing the financial results of the past working of the Post Office telegraphs and telephones judged from the standpoint of an ordinary commercial undertaking;"—(Mr. Harold Cox.)—instead thereof.

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

SIR F. BANBURY (City of London)

said that when the debate was adjourned last week he was pointing out the large amount of capital which might be spent upon the postal telegraphs and telephone services, if this Bill became law without the Amendment of the hon. Member for preston being accepted. As far as he could gather, the actual amount spent on telegraphs and telephones was about £15,000,000 sterling. It was now proposed to spend another £6,000,000, and in the year 1911, when the National. Telephone Company was taken over at the capital value of £10,000,000, there would be £31,000.000 invested in the postal telegraph and telephone service. Up to the present time no allowance had been made for depreciation in the accounts kept by the Post Office for telegraphs and telephones. A large sum of money ought to be set aside for that purpose every year, the plant being likely to deteriorate very quickly. It was self-evident that wires exposed to all kinds of weather must deteriorate very much. The hon. Member for Brighton who had had considerable experience on these matters had asked the Postmaster-General whether the Government were going to issue this £6,000,000 all at once, and the right hon. Gentleman had replied that they were going to issue about £1,500,000 each year and spread the whole amount over four years.


said the amount would be issued from time to time in small sums and would not go on the public loans account at all. In no one year probably would the amount exceed £1,500,000, and it would not go on the public market at all.


said that meant that money which would be used for other purposes in other Departments would be taken for telegraphs, and although there was no direct issue there was practically the same thing, because money would be absorbed which would be used under other circumstances for other purposes. The hon. Member for Brighton was a stalwart Radical, and a man with considerable financial experience, and therefore his opinion ought to have weight with the Postmaster-General. He did not think they ought to do anything which would depreciate the money market, and the only way to prevent that was to stop these issues. The best course to take would be to carry this Amendment, especially in view of the fact that the right hon. Gentleman considered that for the present year £1,500,000 would be sufficient. The Amendment simply asked that business methods should be applied to the Post Office. He realised the difficult position of the Postmaster-General. On the one hand, the public demanded telegrams and telephones for as little as possible, and on the other hand the postal employees demanded better conditions of employment. Both these demands were difficult to resist, and consequently there was a very great loss to the State. He was very glad that the hon. Member for Preston had brought this Amendment before the House, because it gave an opportunity of impressing upon the people of the country that they could not give all these benefits to employees in the public service at the same time and cheap telegraphs and telephones without causing a loss to the State. The hon. Member for Bradford had said he would oppose the Amendment because, in his opinion, the only way in which a business could be properly managed was that it should be under the control of the State. He disagreed with that argument, and the hon. Member had given a very bad illustration. At the present moment the National Telephone Company was paying a dividend, while the Post Office telegraphs and telephones were paying nothing at all.


The telephones are paying.


said that at any rate the telegraphs were not paying. The receipts from Post Office telegrams were supposed to pay the interest on the capital and leave a surplus, but it was now admitted by the Postmaster-General that the telegraph service was being carried on at a loss. He thought it would be a wise thing to accept the Amendment, because it would show whether the right hon. Gentleman was correct in saying that the telephone service was being carried on at a profit. He hoped the House would make quite certain before passing the Bill that there was a real necessity for spending such a large sum of money. For the reasons he had given he should support the Amendment.

MR. CHIOZZA MONEY (Paddington, N.)

said the hon. Baronet opposite had asked the Postmaster-General to treat this matter from a business point of view. Whatever the right hon. Gentleman did in the matter he trusted that he would have regard to the true principle upon which a Government Department should always be conducted, and that was that it should be carried on from a national point of view. The hon. Member for Preston, who represented the dying creed of individualism in this House, invited them to agree to an Amendment calling upon the Post Office to present a statement drawn up from the standpoint of an ordinary commercial undertaking. Now what was that standpoint He would give an instance: Occasionally he had to use a tube railway which used to be called the Two-penny Tube, but he understood that they were now going to charge three-pence. Why were they going to do that? Because the shareholders were not content to accept profits which provided them with 4 per cent. interest.


said it was not a case of the shareholders being discontented with the 4 per cent. dividend. The fact was that the company were afraid that they would not be able to maintain a 4 per cent. dividend.


said that surely it was not contended that such a charge ought to be made for telegrams as would yield a profit of 4 per cent. in relief of Imperial taxation. If the Postmaster-General was guided by the principle on which railway companies conducted their undertakings, he would not only refrain from charging to revenue the cost of sites for new buildings and the cost of extensions, but he would charge such things as tarpaulin covers to capital account. The figures given for last year showed a deficit of £754,000. Of that sum £742,000 was represented by capital expenditure charged against revenue, in connection with which the Government Departments concerned did not come to Parliament for power to raise money by loans as would have been done in the case of a railway company. That meant a net loss of £12,000. The total loss on telegrams was put down at £290,000. Taking the amount at £300,000, it meant a loss of about three farthings on each telegram. In other words, it meant that the public were getting a seven-penny telegram for sixpence. Every time they used a telegraph form they got something rather under the cost price which had to be made up from other accounts. It should not be forgotten that a good deal of profitable business was conducted by means of telegrams, and therefore it was clear that they were making up for this loss in another way. What would an ordinary commercial undertaking do in these circumstances? In the case of the Two-penny Tube the company said, "Our railway will no longer pay at 2d., and we will charge 3d." A sixpenny telegram would not pay. In fact a telegram at that price would never have been reached at all if the business had been conducted on ordinary commercial lines, and telegrams instead of being 6d. would have been more like 9d. or 1s. It would certainly mean £2,250,000 more for telegrams, reckoning the commercial charge as sixpence more, because business telegrams were an absolute necessity, and if a monopoly were granted to a com- pany for telegrams the commercial community would have to pay the charge whether they cared to do so or not. It came to this, that if the telegraph business were in private hands, the public would lose £2,000,000 a year as compared with the present position. The telegraph system should be regarded from a national, and not from the purely commercial point of view. If it was regarded from the national point of view the loss entirely disappeared. There were other gains resulting from the telegraphs being a national service. The workers connected with the telegraph or the Post Office had at anyrate security that when their health left them after they had given good service to the State they would not be left penniless in their declining years. There was no happier feature of the Returns published year after year than the pages which recorded the payments made to male and female servants who, after having worked for the State for a greater or lesser number of years were provided for by the State in this way. Even his hon. friend the Member for Preston, whose courage was undeniable, had not the courage to say that the telegraph should be handed back to a private undertaking. If the hon. Member and his supporters had not the courage to make that proposal he thought they should withdraw their Amendment.

MR. C. E. PRICE (Edinburgh, Central)

said the right hon. Gentleman, when stating in reply to a Question that no arrangement had been come to with the Corporation of Edinburgh in regard to the underground system in that city, had asked him to use his influence with the city council with a view to authority being granted to use Princes Street. He did not think that any influence he could use would have any effect in that direction, because the placing of underground wires under Princes Street would destroy what was regarded as one of the finest streets in the world. Several other routes had been suggested, some of which were very wide of the mark. The proposal to take the wires through the North British tunnel was, he understood, the latest. Another suggestion was that they should be laid in George Street. He thought that was a feasible suggestion, and he hoped the right, hon. Gentleman would assent to it. George Street was parallel with Princes Street, to which it was very much nearer than the Thames Embankment was to Parliament Street in Westminster. That would involve very little deviation from the course which the Post-Office authorities wanted to take. He was anxious that the matter should be pressed forward without delay, for in Scotland they suffered in some parts from snow storms which cut off towns from any communication with the outside world for three days. He was anxious that the underground system of telegraphs should be carried even further north than was at the present time contemplated. He hoped the right hon. Gentleman would be able to give a satisfactory answer.

MR. NOLAN (Louth, S.)

said he was in favour of the theory that the Post Office and the telegraph system ought to be looked upon as institutions carried on for the public convenience, rather than as business undertakings carried on for profit. At the same time he was glad of the opportunity afforded by the mover of the Amendment of drawing public attention to a matter which had already been privately brought under the notice of the Postmaster-General without effect. He held that there was something radically wrong in spending large sums or money in the erection of post-office and telegraph-office buildings and in paying employees, and then impairing their utility by closing those offices against the public at the very time they were likely to prove of the greatest importance. The case to which he wished to draw particular attention was that of Drogheda, the chief town in his constituency. Drogheda was a town with a tidal port, the trade of which had been injured by a private monopoly in the shape of a railway company to which statutory powers had been granted. That railway company had used those powers to divert a large portion of the traffic which naturally belonged to Drogheda to other ports, and placed it at a serious disadvantage. While Drogheda was handicapped in this way, the Department of which the right hon. Gentleman was the head stepped in last year and closed the local post office at 8 p.m., instead of 10 p.m., as had been the case. That was done without consultation with the people of Drogheda or their representatives. When notice of the change was given the Mayor of Drogheda, the Corporation, the Harbour Commissioners, and all the other local bodies protested against it. But all to no purpose. The office was closed at 8 p.m. on some frivolous pretext, rather than on solid grounds, on the advice of a few officials whose opinion seemed to weigh more with the Department than the opinions of all the local representatives put together; and this disadvantage was added to those under which the town was already struggling. He wished to illustrate his meaning. Drogheda was a port from which large numbers of cattle were shipped. The men engaged in that trade were well known as honest, intelligent, industrious men who led a strenuous life in a very critical, uncertain business. One of those men might have to turn out at four or five o'clock in the morning, and spend the whole day in selecting, judging, and buying his cattle, and getting them by rail and road to the boat. The port of Drogheda was, as he had said, a tidal port, and the trader could not tell how he stood till he got his lot on board. If he could not do this before eight o'clock he could not wire his instructions, under the new rule, to his customers in, say, Liverpool, Manchester, or other markets except at an additional cost of 2s. per message for being after hours. In other words, a man who had been working hard for possibly sixteen or seventeen hours at a laborious and anxious business in which his own money, and perhaps borrowed money, was invested must, if he had half-a-dozen messages to send, pay 10s. or 12s. more than he had paid under the old system. Hon. Members might perhaps think that a small matter. But it was no small matter to the traders—men who after all their hard work and after risking their money did not know till their sales were effected whether they were going to come out at a profit or a loss. He thought it was a monstrous thing that a man under these circumstances should be forced to pay even 10s. a time at the caprice of the officials of a great public Department. Then, to add to the absurdity of the whole thing, it appeared that of three ports—Newry, Dundalk, and Drogheda—under similar conditions, which were all threatened with this treatment, an exception was made of Newry. He had no objection to any favour bestowed upon Newry, but why should the distinction be made? Unless justice was done in this matter he would feel bound to make his protest against the Department of the right hon. Gentleman on every available occasion.

MR. BOWLES (Lambeth, Norwood)

said he had waited with great interest for some sign of any real reply to the argument of the hon. Member for Preston in support of the Amendment. In his opinion that argument was unanswerable. The hon. Member said that they were being invited to invest £6,000,000 in a concern which ever since it had first begun had been worked at a loss, and an increasing loss; and that when a demand was made on the House of Commons for such a large sum it was not too much to ask that they should be informed as to the real character and nature of the position. The Postmaster-General and the hon. Member for North Paddington had expressed extremely novel views in regard to the business of working the telegraphs and telephones. They said that it ought not to be regarded from a sordid but from a national point of view. They were here dealing with a real loss of £1,000,000 per annum, and the hon. Member for Paddington said that so long as the loss fell on the country as a whole it was not a loss but a gain.


said he did not say it was a gain. He recognised that there was a loss, but it was a loss incurred in the interests of the community.


said that, although the loss of one million golden sovereigns fell on the whole community, it did not make any difference to the fact that it was an absolute loss. It was perfectly true that telegrams were carried at a loss, but there was also no doubt that the gain was to those who sent them, who were mainly wealthy people or commercial firms who were perfectly able to pay full value for the services rendered to them. Persons in that position got more than the value to which they were entitled at the expense of the poorer classes of the community. The theory of the hon. Member for Paddington was fantastic. To come to the Bill itself, he was hound to say that it contained every defect which it was possible for a Money Bill to have. If it were true of any Bill it was particularly true of a Money Bill that it ought to be definite. It was impossible to tell from this Bill the amount of money which was required, the time within which the money would be spent, or the purpose to which it was to be devoted. It was true that the amount to be raised was limited by the Bill to £6,000,000, and that the Postmaster-General had stated that he proposed to spend it before 1911 on the telephones. Why was not that stated in the Bill? As the Bill stood the money might be taken out within half an hour of the Bill becoming law, and there was no security in the Bill that it might not be spent on telegraphs as well as on telephones. If the right hon. Gentleman meant that he was going to take £1,500,000 every year for four years, why did he not say so in the Bill? In fact, what the right hon. Gentleman asked the House to give him was a blank cheque for £6,000,000. That was a very dangerous proposal to lay before the House of Commons. There were not many matters on which he had the advantage of agreeing with hon. Gentlemen opposite; but there were two principles which were on the forefront of their political creed in which lie was in complete agreement with them. Hon. Gentlemen opposite boasted of being the patrons, if not the inventors, of economy and the sworn foes of every form of privilege and monopoly. Now, if ever there was a Bill which violated those principles directly, it was the Bill under discussion. From the point of view of economy this £6,000,000 of capital expenditure was to be voted on a Friday afternoon, and afterwards to be absolutely withdrawn from discussion. The £6,000,000 was to be raised by the purchase of terminable annuities, which were to be paid off every year by moneys voted by Parliament; but it would be perfectly impossible to discuss the matter effectively because the liability would have been entered into and would have to be met. The money would perpetuate what he believed to be one of the most mischievous, most useless, and most dangerous of monopolies. A private monopoly was bad enough, but a State monopoly was very much worse, especially one which was run not at a profit, but at an increasing loss. The Postmaster-General said that he was only going to apply the money to telephones. The dealing with the telephones in this country was one of the most extraordinary chapters in our commercial history. They were able to institute an absolute and real comparison between State ownership and management and private ownership and management of telephones, and the facts were illuminating. On the one hand, there was the State with a full command of State privileges and powers, running a telephone system for years, and producing accounts which did not in the least represent the true state of the case, mixed up as they were with the telegraph and postal accounts. But they knew that they involved the loss of £1,000,000 to the country. On the other hand, they had a private company engaged in exactly the same business, relying not on State credit, but on their own, and it was found that that private company presented accounts on a commercial basis which showed the real position of affairs and that, at any rate, there was a profit to the shareholders, and that the service which they rendered to the community was at least equally as good as that rendered by the Postmaster-General. Whatever profit the right hon. Gentleman was entitled to, it was quite obvious that he was not entitled to count as profit money which he received from the National Telephone Company, whose rival he was. He did not see how the counting of money received from the Telephone Company as profit could be defended. The right hon. Gentleman, as representing the Post Office, no doubt had a monopoly. Personally he objected to all monopolies and thought they were bad and mischievous, but he could understand a monopoly being defended which through the profits it earned gave some relief to the people in regard to taxation; but what he could not understand was a State monopoly which involved the people in a standing, heavy, and increasing loss. That surely was a fantastic course which the House of Commons ought not to encourage. The right hon. Gentleman said in effect that he and his predecessors had raised some £5,750,000 of capital to spend on telephones, and he now asked the House for £6,000,000 more, a sum greater than the amount spent on the telephone system up to date, and an amount greater than had ever been asked for in a single Bill; and he asked it at a time when the proofs seemed to show clearly that no Government, with the best will in the world—and that their will was good, and that their energy was great he did not desire to deny—was inherently capable of conducting a vast commercial concern without inflicting injury and mischief upon the commercial community of the country. If this Bill was to be persisted in, he thought it was absolutely essential that they should be given a clear, definite, and commercial account of the working of the system. It was surely not too much to ask that they should know where they stood. The charge against the right hon. Gentleman was that without giving them any proper account he was asking the people of the country to give £6,000,000 to an enterprise which was not doing well. It was not fair to ask them to embark such an amount of capital in a business which was not doing well, and therefore he hoped that the House would accept the Amendment.

MR. FIELD (Dublin, St. Patrick)

remarked that the hon. Gentleman who had just spoken stood forth as a champion of private monopoly and complained that the Postmaster-General sought to obtain a monopoly of the telephones and telegraphs in connection with the Post Office. From his point of view, however, he took it that these services should be public services, and in his opinion no private individual should have been allowed to begin to conduct either the telephone or the telegraph service. The hon. Member seemed to labour under a delusion that all private companies were the best managed companies in the world, and that those who dealt with them had no complaint to make. His experience, however, was in exactly the contrary direction. His experience was that up to a certain date, and until there seemed to be a chance of the State taking them over, the telephone companies did exactly what they liked. Even if there was a shower of rain in some cases he had known the service to be stopped, and the companies charged what they liked. In Ireland things could not be worse than they were under the private companies, and it was obvious if anyone would analyse the matter why that was the case. In his judgment the work ought to be done much better by the Government, at a lesser capital outlay, and with less expenditure than it could be done by a private company. In the United States it was quite true that the system was one of private companies, but in Denmark, Norway, and other countries the system was not dependent upon private enterprise, and the results were much better than anything which we obtained in this country. On that point he agreed that they were entitled to some further explanation as to how this money was to be expended and to the details of expenditure and income. But he did not agree with the hon. Member that the telephone service was always going to be a losing concern, because he thought that with increased facilities they would have an increased business up to a certain point. He believed it was essential that the telegraphs and telephones should be in the hands of the Government, even if up to a certain point there was a loss upon them. These facilities should be provided for the commercial community at large in these days of keen competition to enable them to carry on their businesses. An hon. Member had alluded to the condition of affairs in regard to telephones in Dundalk and Drogheda, and he agreed with what he said because he knew the district, and, having heard the complaints over and over again, he had special knowledge of the subject. In his opinion the cost of telegraphing and telephoning ought to be reduced, and the State ought to give more facilities to the commercial community than they did. He appealed to the House to pass this Bill after an explanation from the right hon. Gentleman, provided that the explanation was fairly satisfactory, because he held as a democratic principle that all these public utilities ought to be worked in the interests of the public by the State, and that all so-called monopolies like railways, the Post Office, the telegraphs, and the telephones ought to be conducted in the interests of the State and the community at large. He was therefore prepared to vote with the right hon. Gentleman provided he promised a certain amount of facilities. The hon. Member for Norwood, he thought, was a member of the Public Accounts Committee, and in his capacity as a member of that Committee he would have an opportunity of revising the various expenditures made under the Bill. He agreed with the hon. Member that all these public accounts certainly did not receive the attention in the House which they deserved, and which they ought to have. It was quite true the Government very often invited them to rush into expenditure which they did not think was proper, and that anyone who made the slightest objection was called an obstructionist. In his view the House, having the power of the purse, ought, either through Ministers or the Public Accounts Committee, to have control over the money they voted, and they had a right to examine every proposal for expenditure which came before them. Under these circumstances he asked the right hon. Gentleman when he replied to give them the fullest information in regard to the accounts that he could.

MR. J. D. WHITE (Dumbartonshire)

also considered that they were entitled to have a little more information. He wished to know how far the money was to be allocated to telegraphs and how far to telephones. That was a very important distinction, as he understood that in the case of telegraphs no allowance was made for interest on capital, but that in the case of telephones such a charge was included in the accounts. He therefore thought it important that the House should know how the money was to be allocated as between the telegraph and telephone services.


said he had explained exactly how the money was to be spent. It was to be spent on telephones.


said he was glad to have that explanation, but it would have been advantageous if they had seen it expressed in the Bill.


, in reply to the hon. Member for Edinburgh, said that he had been in communication with the town council in regard to underground wires. He thought the council ought to have given way on the question, but they thought they ought not, and there the matter remained. In reply to the hon. Member for Louth with regard to the post offices in Ireland which had been closed at eight instead of at ten, he had made inquiries as to the amount of business done between eight and ten in the towns referred to, and it was so infinitesimal that he did not see how any substantial injury could be said to be done to the towns in question. If the hon. Member desired it, however, as he gathered he did, he would look into the matter again, although he was afraid he could not hold out any hope of altering his decision.


asked whether the right hon. Gentleman would not take into account the local representations which had been made on the subject. In regard to the inconvenience of closing the telegraph office at the earlier hour he was informed it inflicted a large amount of injury on a deserving class of the people.


said that of course he had taken those representations into consideration, but he had also taken into account the receipts at the post offices between eight and ten, and the amount of those receipts was so infinitesimal that he could not conceive that the closing of the offices at the earlier hour could cause any serious damage to the locality. However, he would lock into the matter again, and if the hon. Gentleman could furnish him with any further facts and figures he would give them attention.

They had had considerable debate in regard to this Bill, and he ventured to say at once, as representing the Post Office, that he welcomed the debate and he welcomed the light which had been thrown upon the position which hon. Members wished to take up in regard to the work of a public Department such as the Post Office. In regard to the question of accounts and figures, he would like to say they had nothing to conceal, and he would be glad to accede to the suggestion that the accounts placed before the House should be put in a more clear and lucid way than they were at present, so that he "who runs may read." Especially he would like hon. Members to be able to see the two things which he had always desired to separate, the telephone and telegraph services separately set out, because he was sure that, while the accounts as to the telegraph would show a loss, the accounts as to the telephones would show that they were being run at a fair profit. He would, therefore, ask the House to allow him to consider the question of accounts when he had a little leisure, and he would promise to do his best to see that in a subsequent account presented to Parliament a distinction was made between the different branches of the service to the extent, at all events. that the figures should be separate. The hon. Member for Norwood was probably not aware that there were already accounts in the Postmaster - General's Report which did attempt to show the accounts of the telephone service apart from the telegraphs.

He welcomed this debate also for the reason that the House had supported the Postmaster - General against the Committee of the Whole House. Nearly all the speeches made on this and on the previous occasions were speeches in favour of economy, and had an additional zest in that they were attacking a public Department. Having been present on both occasions, he could not help contrasting the mood of the House now with what it was a few weeks ago on his Estimates. Then the whole of the speeches were in favour of a reduction in the postal charges or in favour of additional expenditure in these various branches. There was an instance just now in the speech of the hon. Member for Edinburgh, who had urged him strongly to extend the underground wire to various parts of the west of Scotland. That, no doubt, was a good thing, but it was also an expensive thing; it might be even a necessary expenditure, but it was not remunerative expenditure. Then there was a suggestion from the hon. Member for Canterbury for cheaper telegrams. In these matters the Postmaster-General was between two fires. On the present occasion hon. Members attacked the Post Office for want of economy and for unbusinesslike habits, and on the Estimates because it was niggardly in its expenditure, and carried on its work too much on business lines. He was not sure whether some hon. Members who took part in this debate did not attack him on both grounds. He was, therefore, glad to have the support of the House on this occasion. In connection with the whole question of postal and telegraph expenditure, he agreed with the hon. Member for Paddington that these matters would be regarded from two points of view. It had to be regarded not only from the business point of view, but also from the point of view of public convenience. The business view had sometimes to give way to public convenience. But none the less he did not think any of these large services ought to be carried on at a loss.

He thought the hon. Member who moved the Amendment, and also the hon. Member for Norwood, had somewhat obscured the issue before the House by discussing at considerable length and mixing up the position of the telegraph and telephone question. He did not think the position of the telegraph system was relevant to the Bill.

He had admitted when moving the Bill that the telegraph service had been carried on at a loss, and the hon. Member who moved the Amendment, and the hon. Member for Norwood, attacked him very strongly on that ground, and argued that a large business of this kind ought to be carried on under different conditions. That being so it was only fair to examine the ground on which that charge was made, and to see whether the Postmaster General and the Post Office were responsible. When the charge was made against the Post Office of carrying on the telegraph service at a loss his withers were unwrung. The thing was done before he took over office. But he was deeply concerned in the reputation of the great office over which he presided, and he proposed to give the House to the best of his ability an answer to the charges which had been brought against the Post Office as a business concern. The blame with regard to the telegraph service should really fall on the shoulders of the House of Commons, to whom he would say, if he could address it as an individual, "Thou art the man!" It was the House itself that rendered it impossible for the Post Office to carry on the telegraph system at a profit. The original capital expenditure was excessive, owing to the purchase of the telegraphs being effected on terms in accordance with a Report of the House.


asked whether the terms were not originally proposed by the Post Office.


said the terms asked were, after considerable negotiation, submitted to a Committee, which inquired into them and recommended their acceptance.


said that those terms were proposed by the Post Office in order to buy off the opposition of the telegraph companies.


said that a Committee of the House of Commons confirmed the opinion of the Post Office and the Treasury, and agreed to the terms. Apart from the capital the three main items on which there was loss were the reduction of telegrams to 6d., free delivery of telegrams, and the cheap rate given to the Press. The loss involved in the cheap rate to the Press was disputed by those representing the Press, but the Post Office believed that the estimated loss of £250,000 was a fair and accurate one. The particular concession of repeated telegrams to different addresses in every part of the Kingdom at the 2d. rate was given by Act of Parliament and was not in accordance with the views of the Post Office then. The 6d. telegrams were forced on the Post Office in 1883, at a time when, in the opinion of the Telegraph Department, its financial position was not sufficiently strong to bear the loss involved. It was resisted by the Postmaster-General and the Chancellor of the Exchequer of the day, but the House defeated the Government on the matter and insisted upon having 6d. telegrams, which had also been a very great element in the unfortunate financial position in which the Telegraph System found itself. Not only did it involve an actual loss, but it also involved an immediate additional expenditure of £500,000 for further wires, increased staff, and so on. It would probably be of interest to the House to know that, while at that time each telegram produced a revenue of about 1s. 1d., at the present moment each telegram produced a revenue of 7½d. only. Free delivery, too, had increased from originally free delivery for a mile, to three miles. All this had involved a very considerable reduction in the receipts of the Post Office, and was largely due to the pressure brought to bear by the House on the Postmaster-General of the time. Then there was the question of expenditure. Wages at the Post Office had largely increased of late years. He did not regret that, because he thought the Post Office ought to be a good employer, but he would point out that there had never been any pressure by the House in the opposite direction, while the increases which had been given were largely the result of the pressure of the House of Commons.

He thought it was only fair to the Post Office, and it might be rather advantageous to the House, that they should know who was the real culprit. It was not the Post Office, but the House of Commons. Unfortunately there it stood. The telegraph service was not a financial success, but he did not think the Post Office could be blamed for that, when they were handed over a service bought at an inflated price, when their revenue had, from time to time, and against their wish, been seriously curtailed, and when their expenditure had risen very largely. But he ventured to say that, if they put aside the telegraph service, the rest of the postal service was carried out on business lines, efficiently, speedily, and well. He believed it was carried out, on the whole, to the satisfaction of the country, and as well as any private company could do the work.

With regard to the Bill actually before them, he had to repeat that it followed, word for word, two previous Bills dealing with the same matter. It was merely a continuation Bill, the object of which was to raise a further sum to carry them on to 1911, when it would be the duty of the Government of the day to purchase the National Telephone Company's system. It was true, as had been said, that they had, when they sat on the other side of the House, always opposed the system of loans; but he would remind his hon. friend that this particular telephone capital was always excluded from the animadversions which were made on loans for Army and Navy purposes. His hon. friend the Member for Brighton seemed to be under an apprehension that they were going to raise the £6,000,000 by one loan. They were not. It would be raised over a period of four years, in small portions at a time, by short term annuities of fifteen years, and it would be taken by Public Departments.

MR. RIDSDALE (Brighton)

asked whether the right hon. Gentleman meant the Post Office Savings Bank.


Yes, chiefly. It was impossible to anticipate, in regard to such a service as the telephone service, what was the actual amount that they would want in any one year, and that was one reason why the sum was not put on the Estimates. The mover of the Amendment had animadverted on the fact that they were putting too many years life on the various plant; but he would point out that the life of the machinery of which he spoke was only put at twelve years and that nearly the whole of the plant in London was underground, which of course increased its average life. The estimate they had placed on it was not excessive.

A comparison had been made between the position of the Postal Telephone System and that of the National Telephone Company. But he believed—and he thought the figures went to show—that they were earning interest on the capital, and they were providing a very substantial depreciation as well as a fair balance. It was perfectly true that the National Telephone Company were earning a larger interest than they were, but it must always be remembered that the National were the first in the field and that they took the cream of the business. They absorbed practically all the important users in London and had a monopoly in most of the large provincial towns, and the Post Office were left with the remaining and less profitable business, especially in the provinces. Still, though they had had to work under very disadvantageous circumstances, he was glad to say that, on the whole, they showed a substantial profit. It was their business, as a Public Department, to meet the convenience of the public in this matter, and they extended their telephone system not always, for the moment, on a paying basis, but with an eye to the future.


asked whether the telephone charges to France were to be reduced.


said he thought his hon. friend knew that they were working to reduce them, and the foreign telephone system was being conducted so that a reduction might be made, and they hoped to get increased business which would continue to return them a profit.


As long as we know that the rates are to be reduced.


said there was one point in connection with the National Telephone Company, and it was this. They got their revenue from the rates charged, which were paid in advance. The revenue amounted to something like a million of money, of which the Company had the handling for carrying on their business at a profit. This enormously helped them. But the unfortunate Post Office's revenue was immediately intercepted by the Treasury, and they were not allowed the handling of it like the Telephone Company. He doubted if the Treasury were entitled to have the money, but the point clearly showed the advantage which the Company had in earning profit.

He desired to say emphatically, however, that he wished, and the Post Office wished, to carry on the telephone system at a reasonable profit. In the first place, he thought a Public Department ought to be carried on at a reasonable profit but not at an unreasonable profit. He would be very sorry to agree with his hon. friend the Member for Preston that they should pay dividends such as the National Telephone Company paid. If they paid interest and the sinking fund and made an additional profit on the working, he thought they would be doing enough as a Public Department, and he would be very. sorry if the proposition of his hon. friend were carried out and they were put on the same business basis as the National Telephone Company. But as far as he was concerned, and as far as the Post Office was concerned, if the House would support them, they were desirous of carrying on the telephone system on the basis he had already stated. He was glad, therefore, in regard to the whole matter, that they should have had this discussion, because it would enormously strengthen his hands and the hands of his successors in the conduct of these matters. He had lately been revising and adjusting the rates, and the advantage given to the small user must, to some extent, be at the expense of the larger users. When the rates became known there was sure to be an outcry on the part of the larger users. If and when that occurred, he hoped that hon. Members, remembering that day's debate, would, when they received memorials and suggestions for lower rates for the larger users of the telephones, refrain from pressing them upon him, but recollect, as they had affirmed that day, that the telephone system ought to be kept as a profit-earning undertaking, and not trouble the Postmaster-General. He asked the House to allow the continuance of the annual expenditure on the telephone service, and he could assure them that, as far as he was concerned, his only desire was that it should be so worked that there should be a proper and reasonable development of public revenue.

MR. AUSTEN CHAMBERLAIN (Worcestershire, E.)

said he was in substantial agreement with the Postmaster-General, and did not rise to offer any opposition to the Bill; he desired rather, if he might, to contribute something to the very interesting discussion on the Amendment. Certain hon. Members had spoken of what should be the limits of activity of a Government Department, and what should be the principle applied to the management of its business. He thought he held a somewhat middle position on the question. He was not prepared to say, with some of his hon. friends behind him, that no public body, Government Department or otherwise, ought ever to be made a business undertaking; he was certainly still less prepared to say that when it was made a business undertaking it ought to be managed only on business principles. The hon. Member for Paddington had delivered an attack on the hon. Member for Preston, but he thought that the hon. Gentleman was forgetting what the Amendment was. It was not a demand that the business of the telephones and the telegraphs should be carried on by the State exactly as it would be by a company working for profit. Whatever their opinion was as to the lines on which these undertakings should be managed, whether by the Government, or by municipalities, they must all desire that the accounts should be accurately kept so as to show the state of affairs to the managing body, in this case the House of Commons. They should be in a position to know what they were talking about, whether they were making a profit or a loss, and be able to trace to its source the loss or profit, if they desired to do so. He was very glad to hear what the right hon. Gentleman had said as to his willingness to give further consideration to this matter, and to see whether, by consultation with others outside his Department, or with his advisers in the Department, he could arrive at a more satisfactory statement of the accounts. He confessed that he was only a bird of passage at the Post Office; he only stayed there a year and a half. In the course of that time he looked into the question, and he admitted that it puzzled him how the right hon. Gentleman could state the accounts in reference to the telegraphs, having regard to all that had gone before. It was quite true that an enormous amount had been paid out of revenue on the telegraphs, which in the ease of an ordinary company would have to appear in capital account until profits were made upon it and it was written off. Having regard to the way in which these accounts had been treated in the past, and to the fact that the long purse of the taxpayer had boon behind the undertaking, he thought it would be very difficult to trace out all that had happened so as to present a balance sheet for the current year with a capital account attached to it, such as a decently managed company would necessarily produce every year of its existence. But in any case ho thought that the Postmaster-General would be successful in regard to the telephones. They were likely to become a very big concern indeed, but their history at present was happily a brief one, and he thought that it would be of the utmost advantage to the Postmaster-General and to the House—and not merely to the right hon. Gentleman, but to his successors—if, in the early days of the undertaking, an effort were made to give an actual and businesslike statement of the accounts. There were some great undertakings of the nature of monopolies which, if they could assume that they would have good, honest, skilful, and courageous management, would be better carried out by a public authority than by any private company, and if there was one undertaking more conspicuously than another coming within that class, it was the telephones. The hon. Member for Norwood and others had said that they were not in favour of State management even in this ease, though the hon. Member for Norwood very properly said that his speech was not in favour of monopoly; he was against monopoly, whether in the hands of the State or any public authority or anybody else. But what was the alternative? It was competition. That was the idea on which the telephone first came into being. Competition, however, might produce hopeless confusion. If they had six different companies within the area of London, each with 10,000 subscribers, but without any moans of communication between the subscribers of those different companies, they would be much worse oil' than if they had a monopoly with only 30,000 subscribers all of whom could communicate one with another. But that was not all. A gentleman, whom he hoped ho might call a friend of his, had told him that in his earlier days he had been manager of one of the small telephone companies in London. They were very short of money, as was not unusual with companies in the early stages of their development, when the public were not quite certain whether the enterprise would be remunerative. His friend set to work to study what could be done in London, and ho rapidly arrived at the conclusion that there were certain strategic points, and that the people who got the way leaves over those strategic points commanded the development of the great areas of London. Accordingly he devoted what resources his company had to acquiring those strategic points, and then he went to his directors and said—"Now I am in a position to carry out a large and lucrative development if you will provide me with the resources; but there are only two courses open to you, and you must either raise so much more capital or you must sell, and I will put you in a good position to do either. "The directors decided to sell. What did that mean? It meant that the value of their property was not in the wires but in the way leaves which they had got, and which gave them the command of the traffic. In the case of certain districts of London, the National Telephone Company now represented all those companies which they had bought out, by paying through the nose, in order to extinguish a com- petition which was useless as a service to the people of London, but which perhaps in some cases, where it was astutely managed, as it was in this instance, by the gentleman he had spoken of, might have proved very lucrative to the promoters who disposed of their property in those early days. It had been often said that the companies were formed for no other purpose but to be bought out, and with no prospect of success; and when it was alleged that the National Telephone Company's capital had been unduly watered hon. Members ought to remember that the policy of the House of Commons in setting up this open competition had boon largely responsible for the inflated price that had to be paid before a single system could be made. This, then, was essentially a subject-matter for monopoly, and he thought that the Government was the only suitable body to hold it. But he did not think that when it undertook a commercial business it should run it at a loss, and he could not see why in matters of this kind the taxpayer should be expected to provide a service for the minority who used it without exacting in return some reward beyond the bare interest or sinking fund of the capital There were monopolies like the water supply. He had spent most of his life in Birmingham, and in matters of this kind he was an advocate of the Birmingham principle. Water was one of the necessities of life, and it ought to be supplied at the cost price, but the moment they touched electricity, elecric lighting, or gas, then he thought they ought not to be content with barely paying expenses, and they ought to secure for the municipality in return for the risk of capital and cost of management a contribution in aid of the general taxation or rating of the community concerned. He would apply that principle to the whole of the postal service. He did not think the argument of the hon. Member for Paddington that they should continue losing a penny on each telegram would bear examination for a moment.


said he did not defend the low price of telegrams. On the contrary, he would like to see telegrams charged at a higher rate than they were. He was only concerned to show that the alleged loss was not an actual loss to the community as a whole, and to protest against the gross exaggeration which had been used in regard to the financial position of the service.


said he was glad to hear that admission from the hon. Member. He was inclined to think that when he came to consider the arguments he had used he would feel that he would like to modify some of them. In one sense it might be said that there was no loss to the community, but there was a gain to the individual at the expense of the community. He did not see why they should be expected to incur that loss for the benefit of the individual. Having regard, therefore, to the way in which the telephone service was used, he thought that there was a certain obvious unfairness in giving that service below cost price to those who could afford to pay for it, at the expense of the taxpayers who were less able to pay. This loss, however, was not the fault of the Post Office officials. It had been due to the steady pressure of the House to lessen the cost of the charge to the public while increasing the remuneration given to the employees and increasing the services rendered to the public. As long as the House of Commons pursued this tendency unchecked they would prevent the Government from earning a revenue. Ho made one qualification, however, of his general statement that these services should pay. One of the reasons for giving the Post Office and the telephones to the charge of the Postmaster-General was to afford a better service to the poorer districts, where it could not in all probability be remunerative. Private enterprise picked up the plums of a business and left the poorer districts without a service. The Postmaster-General had in the main, therefore, to come in and do the work in the matter of telephones which the National Telephone Company had left undone as being unremunerative or less remunerative. It was true that the telegraph system must remain unremunerative unless the House of Commons was willing to abolish some of the privileges which it had forced the Postmaster-General to concede. It was also true that the development of the telephone had a detrimental effect on the revenue from the telegram. As the Postmaster-General was the owner of both, he thought that in calculating his charges from the telephone the right hon. Gentleman must take into account the extra loss which he was incurring on telegrams by reason of his own competition with himself. He did not intend, however, to oppose the Bill; but the right hon. Gentleman was mistaken in supposing that the Opposition had always drawn a distinction between telephone and telegraph expenditure and naval and military works. The distinction was illusory. Great defensive works were as much a proper subject for expenditure of capital us any work of the Post Office. The construction of barracks were the provision of an asset with a life as long as the telephone wires, He entered upon these criticisms not as opposing the Bill, but by way of recognition that the principles of the Government were less rigid now than they had been in Opposition. He congratulated the right hon. Gentleman on the modification of these principles to what he believed in this case were the public wants.

*MR. MEYSEY-THOMPSON (Staffordshire, Handsworth)

said that he wished to add a word in appreciation of the very able and lucid explanation which had just been given by the Postmaster-General. He thought that the thanks of everyone interested in economy with regard to public expenditure were due to the right hon. Gentleman for his support of the Amendment. He did not know whether the right hon. Gentleman was aware that almost every argument he had used told in favour of the Amendment. Did the right hon. Gentleman really anticipate that the same pressure would not be brought to bear with regard to telephones as he had explained had already been the case with regard to telegraphs? If so, he was certainly not so sanguine as the Postmaster-General. It was perfectly clear from the statement of the right hon. Gentleman that a Government service such as the telephones, telegraph, etc., owing to Parliamentary pressure in favour of increasing the cost and decreasing the profits of such services, never had paid, did not now pay, and never could pay. He should therefore support the Amendment.

MR. FORSTER (Kent, Sevenoaks)

said that he would not have intervened in the debate, but for one observation which fell from the Postmaster-General. He said that the rates had been lately under revision. That was a subject which interested him, because during the tenure of office of the late Government he had acted as the Chairman of a Departmental Committee which consisted of representatives of the Post Office and the Treasury appointed to consider the question of telephone rates, and had been irresistibly driven to the conclusion that in the interests of the telephone service the days of the Hat-rate system were doomed. It did not require any detailed examination of the problem to discover that the flat-rate, whilst it might confer great advantages upon those who used the telephone to a very large extent, could not be defended from the business point of view by the Postmaster-General. He hoped that when pressure was brought to bear upon the House of Commons by those who were now enjoying the advantage, hon. Members would stiffen their backs, and in the interests of the public service maintain a proper attitude. He was pleased with the answer which had been given by the Postmaster-General on this point.


said that, the Postmaster-General having met him handsomely on the question of accounts, he would ask leave to withdraw his Amendment.

Amendment, by leave, withdrawn.

VISCOUNT TURNOUR (Sussex, Horsham)

said there were one or two points upon which he wished to question the Postmaster-General. The right hon. Gentleman had gone very much into detail as to how the money was going to be spent, but they had not had a very full account of the method adopted to make the telephones under the Post Office a financial success. Was the system going to be extended to the rural districts? A most instructive comparison could be drawn between those countries where telephones were under State control and our own. Probably the Postmaster-General would be prepared to admit that the French system, which was under State control, was very inefficient, and complaints had been made even during the present year in the French Chamber. Probably there was no better telephone system than that in the United States, and in New York in particular. It was very efficient and punctual, and in every way an admirable system.

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


continuing his speech, said there was a point to which he desired to call attention in connection with the telephone system of the State of New York. On more than one occasion the question whether the State of New York should take the telephone system into its own possession had engaged the attention of the Legislature of that State, and it had always been decided in the negative, from the fear of having to add between 50,000 and 100,000 to the State employees. He was glad to say that the fear under that head was nothing like so great in this country as in the State of New York, but at the same time it was a matter which should be considered before the House rushed through a Bill of this kind. It was a question which opened up vast possibilities. Ho had no objection in principle to State telephones, but ho was opposed to anything which would encourage the extravagance and the evil results which had followed from the system of State telegrams in this country, and if he thought this Bill was going to lead to more extravagance and inefficiency than in the past he would certainly vote against it. What were the conditions on which the Post Office would allow telephones to be started in the rural districts? What guarantee would be asked from localities before the telephone service was provided? Had the Postmaster-General taken any steps to find out whether telephones could be made to pay in the rural districts? From the Consular Report on the trade of Germany for 1906, he found that the increase in the telephone facilities there during the last five years had been enormous. In the Imperial telephone area in 1901 there were 2,157 local telephone exchanges, while in 1906 there were 4,062, or an increase of 88.3 per cent. On 31st March, 1906, there were 510,831 telephone stations, being an increase of 106.2 per cent. on the number at the corresponding date in 1901. He believed it was the fact that those responsible for the management of the telephone system in Germany had shown more enterprise than had been shown by our post office. They had shown a disposition to provide the facilities first, and rely on development following. They had not been so niggardly in granting telephone facilities to country districts as the British Post Office had been. It had been pointed out in the course of the debate that telephones generally were more for the convenience of the wealthy and the well-to-do, and of corporations and institutions, than for the convenience of the poorer classes. He thought it would be wrong for the House to pass any Bill which would make it harder in the future for rural districts to get telephones than it had been hitherto. He was sorry it was ever decided to take over the telephones. Unless things mended very considerably, he was not at all sure that they would not find in the future that the whole of the Post Office receipts would be swallowed up by the deficits in the telephone and telegraph systems The question whether they were justified in taking over the telephones was one which could not be gone into at present, but the right hon. Gentleman could be asked to give some guarantee that when there was need of it the telephone should be extended in country districts, if it was likely to prove a financial success.

Loud BALCARRES (Lancashire, Chorley)

called attention to a case near his own home in Scotland, in which the cost of digging a trench for telephone purposes was three and a half times that of a similar trench dug by private enterprise. That happened on an estate where time sheets were carefully kept, and it was known exactly how many men were employed and how much money was expended. If Post Office work was to be done in that way all over the country the sum of £6,000,000 would represent a much smaller amount in effective work than it ought to do. Ho hoped the Postmaster-General would be able to give an assurance that the maximum care would be taken to see that the money was not wasted.

Mr. T. L. CORBETT (Down, N.)

said it seemed a very serious thing that on a Friday afternoon a practically empty House of Commons should be prepared to vote away the enormous sum of £6,000,000 for this purpose. The Liberal Party wore constantly talking about the great need of money for social reforms, and yet they were prepared recklessly to vote away £6,000,000 on telephones. He had all his life strongly objected to telephones. He believed they were a perfect nuisance. He believed that more impropriety of language was engendered by the use of the telephone than by any other instrument ever invented. He admitted there were differences of opinion as to the use of the telephone. In his constituency one district was very anxious to obtain the use of the telephone, and he had appealed over and over again to the Postmaster-General in the matter. He asked the right hon. Gentleman what part of the £6,000,000 would go for the provision of the telephone for Ireland, and he further appealed to him to give a pledge that Donaghadee would not be forgotten.


said he would look into the case mentioned by the noble Lord. If the facts were as stated it was obvious that there had been considerable neglect. He could not promise the hon. Member for North Down that a complete telephone system would be provided in his own district, but he undertook that Ireland should have its fair share of the money spent on telephones. In regard to the extension of telephones in rural districts, he expressed approval of the view that the system should be considered as a whole. He had laid down the proposition, to which he thought the House assented, that a fair profit should be paid on the system considered in its entirety. The more populous and richer districts ought to pay for the smaller traffic and receipts in rural districts. The Post Office had been extending the system a good deal in the rural districts, and the guarantee required had been reduced from a half to one-third.


Will the right hon. Gentleman say how much will be spent in placing the wires underground?


I am afraid I cannot say off hand.

Main Question put and agreed to.

Bill read a second time, and committed to a Standing Committee.