POST OFFICE.

HC Deb 30 May 1912 vol 38 cc1572-647

Motion made, and Question proposed, "That a sum, not exceeding £13,808,950, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1913, for the Salaries and Expenses of the Post Office, including Telegraphs and Telephones." [£10,000,000 has been voted on account.]

The POSTMASTER-GENERAL (Mr. Herbert Samuel)

The Estimates which I have to ask the Committee to sanction this year show a large increase of expenditure by the Post Office, as compared with the preceding twelve months. This increase has been partly due to the normal growth of the work which arises as the consequence of our expanding population and growing commerce, and partly due also-to the fact that this year's Estimates provide for a full twelvemonth's expenditure upon the National Telephone Company's system which has now been transferred to the State. Last year's Estimates included only a quarter of a year's expenditure on that service. The consequence is that the Estimates which the Committee are asked to sanction show an increase over last year of no less than £3,079,000. On the other side of the account we are in the fortunate position of being able to budget for an increase of revenue of the Post Office of £3,475,000. The profits, therefore, will show a considerable increase on last year's profits. To the sum included in the Post Office Vote itself there must be added each year certain sums which are spent by other Departments on allied services—the Office of Works on buildings of Post Offices, the Stationery Department on printing, the Treasury on rates paid on Post Office buildings—which total each year about £1,000,000. On the other side of the account must be included payments made by Departments to us for services which are rendered. The net profit of the working of the Post Office during the last two years and this year, will be as follows:—For 1910–11, the Post Office returned to the Exchequer a sum of £4,242,000; for 1911–12, the profit was increased to £4,365,000, and we anticipate that in this financial year it will be £4,816,000. In earning this profit for the benefit of the Exchequer, I must confess that the Post Office receives very little assistance from this House. We, of course, are ready and willing to undertake expenditure, if that expenditure is likely to be remunerative directly or indirectly, or if it is needed in order to secure a proper standard of living for our employés. I am one of those who regard indiscriminate economy as almost, though not quite, as bad as indiscriminate expenditure, but if I were to accept all the suggestions made inside the House of Commons and outside it, for additional services and added remuneration, the existing Post Office profit would melt like snow in the sun. [HON. MEMBERS: "Quite right,"] And the Chancellor of the Exchequer would find it necessary to provide the sum of £4,800,000 which now comes to him from the Post Office either by adding twopence to the Income Tax, which would be the amount needed, or fourpence to the Tea Duty, or imposing some fresh burden of taxation upon one class of the community or another. There was a distinguished Parliamentarian of a by-gone day, who said of the House of Commons, "If a Minister wishes to earn certain applause from the House let him deplore the increase in national expenditure and emphasise the necessity of husbanding the nation's resources, but if a Minister wishes to court certain defeat, let him propose any particular economy." I have had an analysis made of the suggestions made by lion. Members in last year's Debate on the Post Office Estimates. I find that they were nineteen in number, and every one of them involved an increase in the Post Office expenditure. I shall be interested to observe in the course of today's Debate how many suggestions will be made for diminishing that national expenditure which the House of Commons is always ready and properly ready to deplore, and how many suggestions will be made on the other hand for adding to the expenditure of this Department.

During the past year the postal side of the Department's work, which, of course, was its original business, and is still its most important, shows a continual growth. The growth in London is so great that we are contemplating making a tube railway of our own running East and West in order to carry the mails and parcels which we consider will be a remunerative investment as the expenditure upon it will be far more than met by the savings of existing expenditure. The Committee may be interested to know the result of reducing the price of postcards to their face value, for it is a subject which caused some agitation at the time and a number of hon. Members opposite criticised my action and defended the interests of the stationery trade, who prophesied, as all trades do whenever their interests are touched, certain and immediate ruin. The consequence is that the number of postcards, so far as I can estimate, sold by the trade and privately manufactured, has fallen by 2 per cent., from 753,000,000 to 738,000,000 per annum, a diminution which will be very soon recouped. On the other hand, the sale of official cards has increased from 85,000,000 to 105,000,000, and I trust that that increase will continue. In consequence of selling the little books of stamps, with which hon. Members are acquainted, at their full value, without deduction—that is to say a 2s. book of stamps will contain 2s. in stamps instead of 1s. 11½d. worth as they used to—the sale of those books has gone up from 1,000,000 a year to 3,000,000. I much regret that considerable delay has occurred in issuing the higher denominations of the Georgian postage stamps. I should explain that in this matter the Postmaster-General has exceedingly limited control over the manufacture and issue of postage stamps; he has no control except over the design, which has to be submitted for his approval. The statutory authority which controls the manufacture and issue of postage stamps and ordinary revenue stamps is the Board of Inland Revenue. Recent experience has shown that considerable inconvenience arises from the Post Office not having the direct control and responsibility for the issue of postage stamps. The Government therefore inserted a Clause in last year's Finance Bill enabling a transfer to be effected from the Board of Inland Revenue to the Post Office.

That Clause was passed by this House, and although I cannot speak with authority it is possible that this innocent and subordinate Clause in the Finance Bill may be responsible for that Bill not having been certified by Mr. Speaker to be a Money Bill within the meaning of the terms of the Parliament Act. A Departmental Committee is now sitting to make arrangements for the transfer of the issue and control of stamps from the Board of Inland Revenue to the Post Office. Delay has occurred through the necessity of providing better plates for the penny and halfpenny stamps, and having to re-engrave the head, which at first was not very satisfactory, and further delay has occurred through the pressure upon the Department concerned due to the issue of new stamps for the purposes of the National Insurance Act; but I have every reason to hope that the Board of Inland Revenue will be able to obtain from the Mint the necessary plates and that we shall have the prints of some of the new higher denominations within the next few weeks. I have arranged with them also for the sale of stamps in rolls in order to facilitate the use of stamping machines, which firms with a large posting business are likely to find very useful, as I understand they save labour and also are a safeguard against the possibility of theft. These rolls of stamps will shortly be placed on sale, containing a thousand or five hundred penny or halfpenny stamps, and a small charge will be made for the cost of manufacture. The whole matter is in the hands of the Board of Inland Revenue, but it will be transferred with the rest of the control of the stamp arrangements under the new proposal. The gumming was at first defective, but that is now remedied, and we have received practically no complaints with regard to the gumming of the new issue, of stamps, and there are no complaints of the perforations, which have been improved. Within the next few weeks also we hope to effect the reduction, which I promised the House some time ago, in the postage rates for parcels sent abroad. Many details have had to be worked out and some negotiations undertaken which prevented these rates being reduced, except in the case of the United States, with regard to which I was able to effect a considerable reduction in the cost of parcel rates shortly before Christmas.

4.0 P.M.

The telegraph business of the Post Office has received a very great deal of attention during the last year, and many improvements in organisation have been effected both in the Central Telegraph Office and throughout the country. The use of high-speed apparatus has been greatly extended, and there is every reason to think that the telegraphic service has been much improved during the last year, and the complaints of delay which some time ago came from the Press and other customers of the Post Office are no longer received. I propose to effect very shortly two reforms in the telegraph service which I trust the Committee will approve of; one is of considerable importance, and the other of minor importance. A short time ago, as an experiment, I introduced a system of what are called in the United States "night lettergrams"—that is to say, telegrams at very cheap rates which are dispatched during the hours of the night when the telegraph wires are not busy and the staff on duty are only partially employed, and which are delivered next morning as part of the morning postal delivery. These telegrams can be handled at a very low cost, because they are what we may call a sort of by-product of the telegraph system. The plant and staff may be employed at a time when they are not otherwise engaged, and the cost of delivery is practically nil. The charge made for the experimental service between London on the one hand, and Aberdeen and Belfast on the other, places chosen on account of their distance from London, is three words for a halfpenny, with a minimum charge of 6d. for thirty-six words; in other words, the telegrams go at one-third the ordinary rate. This experiment has been successful. It has been found that although the telegrams have not been very numerous—there have been 500 within the last three months—they are to a great extent new traffic which has been attracted to the Post Office by these additional facilities. I believe that the service, if widely extended and generally known, would be found to be a convenience to the public and a source of additional revenue to the Post Office. Therefore, I propose, on and after the 1st June, to extend it generally throughout the country to offices where night staffs are employed. It must be understood that these very cheap telegraph rates cannot be extended to places where night staffs are not employed in the ordinary course of our telegraph business.

The other and smaller reform which I desire to effect will remove what has long been a source of irritation to members of the public. The reply-paid telegraph forms are available only during a period of two months, and if the careless recipient allows the two months to pass, and then takes the telegraph form to the Post Office, he finds to his annoyance that it is rejected by the clerk at the counter. Although this period of two months is as generous an allowance as is given in any ether country, and although it was considered necessary for the prevention of the possibility of fraud, I thought it advisable, having found the means to secure an adequate check, to extend the period of the validity of these forms from two months to twelve months. In these days there are many telephone subscribers who are accustomed to dictate their telegrams through the telephone. Such persons, when they receive reply-paid telegraph forms, will not know what to do with them, but they may use them by presenting them to the Post Office in payment, or part payment, of small accounts sent to them from time to time for telephone fees of one kind or another. I shall be able shortly to announce detailed regulations for enabling telegrams to be sent to the telephone addresses of subscribers; that is to say, to enable telephone numbers to be used as telegraphic addresses. There have been some complaints of delay, especially from my hon. Friends who represent the islands of Scotland, in regard to repairing cables which are interrupted in the seas round our coast. The Post Office has two cable ships—one of them is somewhat antiquated, about forty years old—and I have included in this year's Estimate a sum for the provision of a new cable ship. Tenders will shortly be invited for the construction of this ship, and when this is provided it will enable repairs to be effected far more promptly than hitherto. There is another branch of the Post Office activities which is of the greatest importance—the maintenance of an adequate and cheap system of telegraphic communications between these islands and other parts of the world, and particularly between the Mother-country and the outlying Dominions of the Empire.

This country has by far the largest commerce of any country in the world in proportion to its population. It is an Empire that consists of dominions more widely scattered over the globe than has been the case of any Empire known in history, and speedy and cheap communications, over and under the seas are as important to us from the commercial and strategical point of view as is adequate defence upon the seas. I am glad to be able to tell the Committee that the large reductions in telegraph rates lately effected have been widely used, These rates have been mainly for what are called deferred telegrams—telegrams in plain language, or Press telegrams, which are not of an urgent character, which can be delayed without detriment to their utility, and which can be handled by the Cable Company at those times of the day when their cables are not fully employed. During the first three months of this year over the Atlantic cables, of Press messages nearly 20 per cent, were sent at the deferred rate, so that the Press is making active use of the new rate. Out of 1,408,000 words sent over the Atlantic cables, Eastward and Westward, by the Press 255,000 words were sent at the deferred rate. Of ordinary telegrams, sent at the half-rate, 520,000 words were sent; and of what are called cable letters 677,000 words were sent over the Atlantic cables, so that a total of 1,197,000 words of non-urgent plain language messages were cabled over the Atlantic during those three months again, a proportion of about 20 per cent, of the whole traffic, which consists of 6,716,000 words over the Pacific cable, one-half of the whole Press traffic is being sent at the deferred rate. On routes other than the-North Atlantic 14,300 deferred telegrams, in plain language were sent at the half-rate, comprising 170,000 words.

Sir GEORGE DOUGHTY

How has it affected the ordinary service? Has it been reduced, or is this an extra portion of business?

Mr. HERBERT SAMUEL

These are not Government cables. The figures are supplied by the companies, and do not enable an exact statistical comparison to be made, but I understand that the managers of the cable companies are of opinion that a considerable part of it is new traffic, but it is impossible to say precisely how much. The reduction of rates has certainly stimulated the growth of traffic. Some hon. Members opposite, on the occasion of a recent Debate, complained that the Government had not paid adequate attention to the resolutions passed by the Imperial Conference. Three specific resolutions were passed relating to the Post Office and its administration. One dealt with the question of the reduction of cable rates, and I told the Conference of the reductions which I anticipated would take place, and they were satisfied with them, and the reductions have since been effected. The second resolution was as to Imperial wireless telegraphy, which we now have in hand. The only specific resolution passed by the Imperial Conference dealing with postal or telegraphic matters which has not been carried into effect is one which depends for its application upon the action not of this Government, but of the Governments of Australia and Canada. It is that a system of Imperial postal orders initiated by my Department, and which is in successful operation in New Zealand, South Africa, India, and the Crown Colonies, as well as in this country, should be extended also to Australia and Canada in order to provide a useful facility for transmitting small sums between various parts of the Empire. The Imperial Conference passed that resolution with the sanction of the Prime Ministers of Australia and Canada, but I much regret to say that the Australian and Canadian Government still do not see their way to adopt this useful system of interchange of postal orders. I say so much in answer to the criticism made with regard to the resolutions passed by the Imperial Conference. The more I consider the proposals, made in this House and elsewhere, for a State-owned Atlantic cable the more I am convinced it would be an unwise policy for the Government to adopt, and the House to sanction. It is not the case as has been stated in various quarters that while in opposition I was one of the advocates of such a proposal. That statement has been based on a misunderstanding of some words used by my hon. Friend the Member for Gravesend (Sir G. Parker) in a recent Debate. I have never advocated a State-owned Atlantic cable. That is a proposal which the Postmaster-General of Canada in a recent Debate in the Canadian Parliament himself declared was unnecessary. It is a proposal which whenever it has been fully discussed has always been rejected. It was proposed in the Imperial Conference and after a full discussion the resolution was withdrawn. It was discussed recently by the Association of Chambers of Commerce in this country, and after the objections, financial and others, had been stated by my hon. Friend the Member for Hawick Burghs on my behalf, that resolution was withdrawn also.

Mr. CROFT

Does the right hon. Gentleman suggest that he is satisfied with the present rates?

Mr. HERBERT SAMUEL

No; none of us are satisfied with the present rates. We should like to see the rate reduced, and I am gradually getting control of the rates through the landing licences as those landing licences are renewed. But the reduction of rates is one thing, and the spending of half a million on terms which I am convinced would be unremunerative in all the circumstances is a very different proposal. I trust the Committee will not press for this unnecessary and unremunerative expenditure of public money. But it is not only cheapness which is needed in our cable communications, for the commercial community attaches as much weight to speed in cabling as to cheapness. We have been enabled to effect during the last year several improvements in the cable service between this country and the Continent. A new cable is proposed to be laid between here and Germany which we trust may improve the telegraph service with Germany and other parts of the Continent. I am contemplating a new departure in our Continental cable service which I should like to explain to the House. The International Telegraph Convention, which we and all the other great countries have signed, makes provision for the establishment of a special rate for urgent telegrams at three times the ordinary rate, which may be prepaid and may be given priority over other telegrams. All the countries on the Continent have adopted this system, and we are the only European country which has not yet adopted it. I think it is unsuited for our inland service, because we aim at giving a no-delay service to all telegrams, and there will be considerable danger if we charge the higher rate for urgent telegrams, of slowing down the ordinary service. But I have had many representations from organisations representing the commercial community and the business community, from Stock Exchanges and so forth, that they would welcome the opportunity of being allowed to communicate with the Continent at express speed, if I may use the term, on the payment of a higher rate. Our business men are at a disadvantage compared with their competitors on the Continent, because the Continental firms are able to enjoy the benefit of this priority on the Continental lines by payment of the triple rate, while our business men, even though they be willing to pay, cannot enjoy that priority. Although their telegrams may be sent with all speed over our lines and cables, as soon as they reach the Continental telegraph system and are on their way to Berlin or Vienna or Rome, or wherever it may be, they have to take their place with the slow traffic, and cannot have the precedence which their Continental competitors are able to enjoy.

Therefore, I am considering the introduction of a system of urgent telegrams at triple rates between this country and the Continent of Europe, but I am anxious not to move in advance of public opinion, and before introducing the scheme I would prefer to await the expressions of the views of Members of this House, of Chambers of Commerce, of the Stock Exchanges, and other bodies which are directly interested in the matter. I had hoped before this to have been able to effect a reduction of 50 per cent, in the telephone charges for conversations between England and France. A reduction such as that would necessarily bring an immediate and large increase in traffic. Before doing so, it is necessary to lay new cables and provide communication with those cables. The British cable was laid some time ago. It is of an improved type, and provides greater facilities for hearing between London and Paris. The French cable, which was also to be laid, has been completed some few months ago, but the land lines for joining that cable with Paris have not yet been completed. When I was in Paris last October I urged upon my colleague, M. Chaumet, the necessity of providing those land lines as soon as possible, and when he was in London recently, and we were very glad to welcome him here, the matter was again urged upon his attention. As soon as those land lines are provided between the landing place of the cable and Paris, I shall be able to effect a 50 per cent, reduction on the telephone charges between this country and Paris. Active steps are being taken to extend telephonic communication to Switzerland, Holland, and to parts of Germany. It-may take some little time before those extensions become effective. The engineering problems are not easy to solve, but there is every reason to hope that at no very distant date we shall be able to speak, and speak distinctly, to correspondents in Berlin, and other distant cities.

Communication by wireless telegraphy has also received much attention from the public and also from the Department during the last year. The disaster to the "Titanic," which has brought bereavement to so many hundreds of homes, has caused loss to the Post Office also. Two of our sorting clerks, Mr. Jago Smith and Mr. Williamson went down in the "Titanic," and the accounts which have been received show that during their last hours, with their three American colleagues, they were doing their best to secure the safety of the mails in case succour should come. Their conduct was worthy of the best traditions of the British Civil Service. The question whether wireless installations should be made compulsory on ships, and how far continuous attention to the receivers can be secured, is at this moment engaging the closest attention of my right hon. Friend the President of the Board of Trade and myself. The matter of course lies chiefly in his province; he takes the closest personal interest in it, but the Post Office is also concerned, because those equipments are held on licences from the Postmaster-General, and those licences can impose conditions upon the use of the apparatus. It is likely that this and other matters will be considered by the International Conference on Wireless Telegraphy which will meet in London next month. The wireless coast service round these islands which, as the House knows, is in the hands of the Post Office, has been greatly improved during the last few months. Its revenue shows a steady expansion; it gives a day and night service round the whole of our coasts, and is in constant touch with the coast communication service which has been extended by the Post Office at a cost of £75,000 all round our coasts, for the purpose mainly of life saving.

The Imperial Wireless Scheme, as the House has been informed, has made much progress. In March, 1910, the Marconi Company made application for licences for eighteen stations in various parts of the Empire which were to be erected and worked by them, but on full consideration the Government thought it advisable, in view especially of the great strategic importance of those stations, that they should be State-owned. The Committee of Imperial Defence was consulted on the matter, and they were of the same view. Last year at the Imperial Conference a resolution was moved by Sir Joseph Ward, on behalf of New Zealand, in favour of the establishment of a State-owned chain of wireless stations in various parts of the Empire, and, on behalf of the Home Government, I supported that resolution, and it was carried unanimously. Prior to that the matter had already engaged the attention of the Government, but subsequently to the meeting of the Imperial Conference a Commitee was formed, over which I had the honour to preside, which included also other representatives of the Post Office, and representatives of the India Office, the Colonial Office, the Treasury, the Admiralty, the War Office, and the High Commissioners of Australia, South Africa, and New Zealand. That Committee made exhaustive inquiry into the conditions of the problem, with the assistance of experts who were members of the Committee, and gave the closest examination to the proposals of the Marconi Company, and also considered other possible systems of wireless telegraphy. After prolonged negotiations with the Marconi Company a preliminary agreement was signed some weeks ago accepting their tender for the erection of stations to be purchased and worked by the Government, and subject, of course, to the approval of Parliament. It is proposed in the first instance six stations shall be erected, the first in England, the second and third on sites which are not yet definitely decided, but which may perhaps be in Egypt and in British East Africa, and at all events in two places on the road to India. [An HON. MEMBER: "Whereabouts in England?"] That is not definitely decided. The fourth station will be in India, and the fifth at Singapore. The Australian Government have decided to erect their own station, which is not part of this contract, for communicating with the others. The sixth station will be erected within the territories of the South Africa, Union. Other stations are contemplated, in future, but no definite provision is made with regard to them. We think it advisable to proceed cautiously at first to see how far those first stations will fulfil our expectations.

Mr. HOLT

Do you know where the stations in Australia will be placed?

Mr. HERBERT SAMUEL

No, that also is not decided. The Marconi Company give a guarantee that the stations will be adequate to cover the long distances involved, 2,000 miles, and more in some cases. They guarantee also a speed of twenty words per minute, duplex, that is to say, the stations will be able to send messages in one direction, and simultaneously to receive message; from two directions. They also guarantee a speed of fifty words per minute by automatic apparatus simplex, after allowing for repetitions, and the service is to be continuous day and night. The contract also provides for duplicate engines in case of breakdown. There are many other provisions in the contract with regard to patents and royalties and so forth, but the whole of them will be submitted to the House formally before long, as soon as the details of the contract and specifications have been completed.

Sir F. BANBURY

Can the right hon. Gentleman say what the cost will be?

Mr. HERBERT SAMUEL

The cost in round figures per station, excluding sites and buildings, will be £60,000. There are also provisions with regard to a royalty of 10 per cent, on the gross receipts during a certain period and that we may have the use of the present and all future Marconi inventions and apparatus.

Major ARCHER-SHEE

Is that for each station?

Mr. HERBERT SAMUEL

Yes. The Indian Government will pay for the station in India. The other stations will be paid for by the Imperial Government and the revenue derived from those stations will accrue of course to the Government which owns the station.

Mr. AMERY

Will the Imperial Government own the South Africa station?

Mr. HERBERT SAMUEL

No, the South African Government will own their own station. I was thinking of the chain between here and Australia.

Mr. CHIOZZA MONEY

Is there any guarantee as to the time of transmission on the chain?

Mr. HERBERT SAMUEL

No. Of course wireless telegraphy like other telegraphy is practically instantaneous, and the method and rate of transmission must depend on the actual working of the station by the operators, and the way in which the traffic is handled. The contractors will supply the stations, but they will not be really responsible for this; it will be the administration which will be concerned with the working of them. The whole of these matters may perhaps be more usefully discussed, though I do not deprecate discussion to-day, when all the facts are in black and white before the House, as they must be before the approval of the House is obtained for the contract.

The chief event of the year, of course, from the point of view of the Post Office has been the transfer of the National Telephone Company's system to the State. On 1st Janauary over half a million telephones and all the equipment which belongs to them were transferred to the Government, and that has involved a vast expansion of work and responsibility on the Department. Some suggestions have been made that the Post Office ought to learn more than it has learned from foreign experience in the matter of telephones. I believe we are guilty of no dereliction of duty in that regard. So far as the United States is concerned leading officers of my Department have made prolonged and careful study of the United States telephone system in 1893, in 1899, in 1905, in 1910, and in 1911; in fact almost all the chief administrators of the Department concerned in telephony have visited and studied the American system. I have now two engineers with travelling scholarships living in the United States for the purpose of studying the methods, manufacture and use of telephonic plant. Last year officers visited Sweden, Denmark, Holland, and Germany. The late chief engineer of the Post Office, who found himself, for reasons of health unable to continue the very heavy duties of his office, has not retired from the Department, but is now engaged on the Continent in making a prolonged study for some months of the Swedish and other systems of telephony. One outcome of those studies has been the introduction of the system of automatic exchanges into England. Two days ago the first British automatic exchange was opened at Epsom, another will shortly be opened at Caterham, and a third in the central offices of the Post Office. Other large automatic exchanges are in contemplation at other places. The introduction of the new system can necessarily only be gradual, and the staff have no reason to fear that any of them will be displaced by their duties being absorbed by mechanical appliances.

The purchase price of the company's plant, as the House knows, has not yet been determined. As contemplated by the Agreement of 1905 and the Telephone Transfer Act of last year the matter is the subject of arbitration before the Railway and Canal Commission. The proceedings will begin on 10th June, and the Committee may rely that every effort will be made, by the employment of the best legal and expert advisers to assist the Commission, to arrive at a figure which, while equitable to the company, shall not be unjust to the State. In the meantime there can be no change in the rates charged for telephones, except in regard to certain telephones which were supplied by the company on preferential terms below their ordinary rates in consideration of the grant of way leaves and other reasons. These cannot be continued, because a Government Department is precluded by Statute and by legal decisions from giving favour or preference to anyone. With that exception, all the previous charges have been left as they were until we know how much we have to pay for the plant. It will then be necessary to revise the rates, which now in many cases are unequal. When the Post Office has been able to ascertain what it has to pay for the company's plant, it will be able to frame a new tariff, but that tariff will not be brought into operation unless it is generally acceptable—it is perhaps too optimistic to hope that it will be generally acceptable, whatever it is—until an inquiry has been held either by a Committee of this House or by some outside Committee representing the interests concerned. However careful the preparations may have been for so vast a change as that which was effected on 1st January, it could hardly be expected to take place without some difficulty. The company very naturally during the last few years of their licence had been unwilling to make any capital outlay which was not of a necessary character. It is true that a good deal of plant was provided at the cost of the Post Office. In the year 1911–12 the Post Office spent out of capital on the London telephone system alone a sum of £530,000. Still, when the company's system was transferred to us we found that its existing equipment was very heavily loaded. There was very little room indeed for the expansion, which is proceeding with extreme rapidity. It was necessary to provide in London—this had been partly foreseen, and it was recognised hat it would be necessary—several new exchanges. Two were opened soon after the transfer—the Avenue Exchange and the Victoria Exchange. It was necessary to provide those immediately, because the company's system in those districts was out of date and the leases of their premises were expiring.

But the transfer to new exchanges worked on a different system caused some trouble at the time, particularly in regard to the service of those subscribers who had private switchboards. Frequently the private operators were not able to adapt themselves to the requirements of the new system, and a good deal of interruption to the service was caused on that account. While the staff wore doing their best to Cope with these difficulties there came early in January, a few days after the transfer, a severe snowstorm, which broke down a considerable proportion of the overhead telephone wires which we had just taken over from the company, and a large part of the engineering staff had immediately to be concentrated on the repairs of the broken communications. In the provinces outside London little disturbance has been caused to the telephone service by the transfer; but in London I should not be candid with the Committee if I denied that the service has for a time fallen below the high standard which we should desire to see it attain. The officers of my Department fully recognise this. They are by no means wrapped up in an atmosphere of official optimism and complacency, and all grades of the staff are now and have been for some time doing their utmost to remedy the defects of the telephone service.

As I know that this matter will be debated to-day, perhaps the Committee will allow me to tell them the steps that are now being taken to remedy such defects as exist. The operators have all been emphatically told that in all cases they must repeat distinctly the numbers which are given them by the subscribers. That is one of the best means of avoiding the annoyance caused by wrong numbers being connected. The operators have also been told that under no circumstances must they give the engaged signal until they are quite sure that the number asked for is in fact engaged. New methods are being devised for recording against the operators at fault such irregularities as they may commit. I should mention to the Committee that for every eight operators in a telephone exchange there is one supervisor continually moving behind them watching the service and detecting any irregularities or cases of neglect which may occur. There is also at the Controller's Office, at the central office, a staff continually engaged without the knowledge of the operators, in observing and timing calls at all the different exchanges in London. We have found through that test that the speed of the service is really good. During the last four months, since 1st January, over 30,000 calls have been observed and timed in this way without the knowledge of the operators. The average time of answering a call is 4.8 seconds, less than five seconds, which I think will be recognised as an exceedingly good speed. The average time of making the connection asked for is 28.7 seconds, or less than half a minute, which also I think is very satisfactory. I wish the maximum were the same as the average. That, unfortunately, cannot be secured, but these average speeds may be regarded as not by any means unsatisfactory. It is necessary that not only the operators should use the plant intelligently and carefully, but that the subscribers should do the same. We have a considerable staff at work instructing the operators at private switchboards on subscribers' premises in the best way of operating their own switchboards. That is resulting in a very great improvement in the service.

I propose to issue very shortly a circular to the subscribers to the London telephone service impressing upon them also the necessity of giving distinctly the number of the telephone they desire to call up, because very frequently the wrong numbers which are given and which cause so much annoyance are the fault of the subscriber himself in not clearly enunciating the number he wishes. Further, I propose to inform subscribers of the methods of making complaints when complaints are necessary, because it is only by the cooperation of the public in making complaints where complaints are justified that the controllers of the service can detect such faults and irregularities as occur and remedy the deficiencies that may be revealed. I am glad to say that during the last few weeks the complaints received with regard to the London service have been very rapidly diminishing, and I feel quite confident that the staff will be able to overcome the difficulties that we have experienced, and will raise the service to the high standard which public opinion rightly demands. We are now adding to the London telephone service new telephone subscribers at the rate of about a hundred a day. In order to cope with this expansion it is necessary to provide a large number of new exchanges, which are being built, and extensions of our own and the ex-company's exchanges. In the provinces during the last year new telephone exchanges have been added at the rate of three a week, or 156 during the course of the year. There has been a capital expenditure of £339,000. I am glad to have been able to extend the telephone service to several districts in Ireland, where it was very greatly desired. The system of cheap farmers' telephones, which I outlined to the House last year, did not at first meet with success, because the conditions were found to be unduly restrictive. But I felt sure that these cheap party line telephones would be found in this country, as they have been found elsewhere, to meet a real need. I therefore revised the conditions, and the new conditions have proved to be suitable to the case. Some hundreds of agreements are now being signed with farmers and other residents in rural districts for the extension to them of cheap party-line telephones. The contract officers of the Department are busily at work securing new subscribers on these terms. The President of the Board of Agriculture is assisting through his Department, and representatives of the Board will attend agricultural shows and other gatherings of farmers this year in order to secure support for this new system of telephonic communication.

I think the capacity of the Post Office to deal with telephones can best be judged by its handling of the trunk telephone system. When the trunk telephones were taken over in 1896, they cost £460,000. Since then we have spent £5,000,000 on extending trunk wires and equipment. The extension has proved to be remunerative, although the rates charged here for trunk calls are between one-half and one-fourth of those charged in the United States. Last year there were 33,000,000 conversations over the telephone trunk wires, leading to a State revenue of £855,000, an increase of 11 per cent. both in use and revenue on the previous year. Last year we spent £260,000 in the development of the trunk system. This year I am proposing to spend nearly £1,000,000 on the trunk system, including a large underground programme. Altogether, in the coming financial year, on the London telephone service, on the provincial telephone service, and on the trunk service, I am proposing to spend out of capital £2,600,000, in addition to the purchase price to be paid to the company, and I feel sure that both traffic and revenue will respond to this increased expenditure.

Sir F. BANBURY

How will it affect telegraph revenue?

Mr. HERBERT SAMUEL

The telegraph revenue is stationary, but in any case I do not think we ought to hold back telephone development with any idea of protecting the telegraph revenue. I shall be exceedingly glad if Members of this House and the public outside will cooperate with the Department in making the telephone service as closely adapted to the needs of the community as it can be made. Some time ago I publicly invited chambers of commerce and other bodies to form local committees to get into touch with the local officers of the Post Office, who have large powers in this matter, in order to see that the special needs and requirements of localities were met by the telephone service. Unfortunately that invitation, although it was generally approved, has not yet been acted upon in any district, but I hope that before long it will be. A voluntary Committee was formed in this House, under the chairmanship of the hon. Member for Falmouth (Mr. Goldman). I hoped I should be able to get, and I still hope to receive, useful suggestions from Members of that Committee. I at once gave the Committee a cordial invitation to visit any of the Post Office telephone exchanges and to study the working of those exchanges. I offered that the head of the telephone service in this country should attend a meeting of the Committee, and make a statement as to the Post Office methods and plans, and answer any questions that might be addressed to him. Neither of these invitations, I regret to say, have been availed of. I think that is somewhat unfortunate, because I feel sure that their criticism, which I should welcome, would be more useful if the Committee had made itself more closely acquainted with what is being done by the Post Office. But I must hurry to the conclusion of my statement. The year has also been marked by the Jubilee of the Post Office Savings Bank, and has been well signalised by an increase in the sums credited to depositors of no less than £7,600,000 during the year. This is the greatest increase during the last fourteen years. The Jubilee has also been celebrated by the conversion of the deficit which has existed in the Post Office Savings Bank account for many years past into a surplus, which is partly due to the better yield of our investments—the silver lining to the cloud of the fall in the price of Consols—and partly due, I think I may claim, to good administration. The hon. Baronet (Sir F. Banbury) may be interested to know that investments in Government stocks of small amounts through the Post Office increased last year by one and three-quarter millions, and no less than £25,000,000 of Government securities are now held in small amounts by the public throughout the country through the agency of the Savings Bank.

The Savings Bank is perhaps in closer touch with the life of the people than any other branch of the Post Office or any Government Department. The coal strike was reflected in a diminution to the extent of a quarter of a million in the deposits that might have been anticipated by the Post Office. Through the correspondence of the Comptroller of the Savings Bank one gets from time to time many sidelights on the human nature of depositors. One depositor had closed his account. Nevertheless, after the account was closed, he appealed to the Comptroller to send him back his Savings Bank account book, for, he said, it cheered him in his poverty to Fee how much his deposit once had been. Recently a claim was received by a depositor against the Department, which read:—"Although a Welshman and a veteran Radical, I am respectably connected, and well-known for my integrity." Not long ago a claim was made by a woman for a sum which stood in the name of her son, who had died. She was asked to fill up the necessary form. One of the questions was as to whether or not she had a husband living. She filled up this space by saying: "Living, but insignificant." So that from time to time the Post Office in its routine business is cheered by little flashes of humour communicated to it through the Savings Bank. The home safes which were issued in the course of the year have been welcomed by the public. About 25,000 have already been issued. I think they are assured of a steady sale.

Many improvements have been made during the year in the organisation of the Department. When a member of the public posts a letter or sends a telegram, he knows with fair certainty that it will arrive at its destination, but he very seldom thinks of the infinite complexity of the machinery which enables that to be accomplished. Year by year we do our best to improve the vast organisation of the Department. In order to avoid delay in dealing with correspondence sent to the Department, I have adopted a scheme of decentralisation which enables many matters to be dealt with by local officers which were previously dealt with at headquarters. The Factories Department has often been a source of question and Debate in this House. Frequently the men employed have complained that they were working on short time, and there have been discharges owing to slackness of work. I appointed a Departmental Committee, presided by my hon. Friend the Assistant Postmaster-General, which made thorough inquiries into this branch of Post Office organisation. They reported. That Report has been adopted, and the factories are now devoting themselves entirely to repairs, and have been placed under the control of the Stores Department. I think the men in question will be now able to secure far more regular employment than they had previously.

The staff now numbers over 230,000. Great numbers of questions year by year need attention, but no doubt to-day the-Debate will be devoted less than usual to questions of the staff, because the House has appointed a Select Committee to review the decisions of the Hobhouse Committee and to enter into many matters which the many branches of the staff desire to receive attention. That Committee, under the chairmanship of my hon. Friend the Member for Hexham (Mr. Holt), has taken upon itself an arduous but a most useful task. When the Hobhouse Committee reported there was some friction within the Department owing to differences in the interpretation of various of the paragraphs of that Committee's report. I am anxious that no friction should occur after this Committee has reported. I shall propose, if substantial differences of opinion arise between the Department on the one hand, and the associations of the staff on the other, as to the proper interpretation of the Committee's report, that, as nearly as possible, the same Committee should be re-appointed in the subsequent Session, with a reference limited to the interpretation of such paragraphs of its report as may have gieven rise to disagreement. I do not know whether it is a proof of the better spirit that now prevails between the staff and the head of the Department, but I find one of the associations engaged in advocating a higher salary for the Postmaster-General. The proposal is one which I have observed with much gratification, but in the interests of economy I must sternly resist it. However, I confess that during the recent coal strike I had some feeling of regret that the perquisites which were enjoyed by my predecessors in the seventeenth and eighteenth centuries, of "free coals, candles, and tinware," are no longer enjoyed by the Postmaster-General.

The Post Office is not, after all, such a bad employer of labour. I think that is evidenced by the improvement in the condition of the Telephone Company's employés who have been transferred to the Post Office. It is rare that we have the opportunity of making an exact comparison between the conditions in State employment and the conditions in similar outside employment. We have that opportunity in this case. The employés of the National Telephone Company numbered 19,000. On transfer to the Post Office they enjoy the same conditions of Post Office servants of the same grade doing the same work. The consequence has been that in wages alone that staff are now receiving £175,000 per year more than they received from the company. Owing to the shortening of the hours of work, too, and the increase of holidays granted, I have had to employ a larger staff, involving an increase in the wage bill of £32,000 per year. The pension rights granted to the company's employés involve an increase to the extent of £201,000 per year when the pensions mature. So that altogether these 19,000 telephone employés will receive from the State in money or in money's worth £408,000 per year, a sum of over £20 per person, or 8s. per week. Many improvements in detail have been effected in the conditions of employment of the various branches of the Post Office staff, with the co-operation, and sometimes on the suggestion, of the heads of the Post Office Department. I should like to take this opportunity of emphatically declaring that I find that the able men who are at the head of the Post Office in the Civil Service are always most ready to welcome proposals for the improvement of the conditions of the staff, and indeed are themselves continually initiating improvements. The Committee for dealing with telegraphists' cramp, presided over by my hon. Friend the Member for Hawick Burghs (Sir John Barran) has lately reported. Their recommendations are being adopted by the Department. I trust they will result in a diminution of that painful disease.

The solution of the boy messenger problem is rapidly proceeding. In 1909–10 we had at the age of sixteen to dismiss 4,470 boys. New schemes have been adopted enabling that number to be reduced in 1910–11 to 3,628, and last year to 1,207. I hope that next year the number will be reduced to 400, and that at no very long interval the boy messenger problem will be altogether solved. It has been necessary to stop open competition for a number of classes in the Post Office and to limit the competitors to boy messengers in order to secure for them opportunities for employment, but we are sure that in giving a better assurance of permanent employment we shall get a good class of boys to enter the Post Office service. The Juvenile Advisory Committees throughout the country are advising us in our selection of boy messengers on entry, and we shall take every step to secure that the educational standard of the service shall in no way be lowered by the cessation of the open competition. I have established also with the assistance of the Education Department a system of compulsory evening educational classes for the boy messenger class. The Committee will see that the year has been one of strenuous activity. The transfer of the Telephone Company's system with all that it involves in the way of the amalgamation of staff, the preparation of the inventory and the preparation for the arbitration proceedings alone have imposed upon the Department a very heavy burden. In addition to that, we have had many problems to deal with arising from the passage of the National Insurance Act, both as to its effect upon our own staff and also as to the co-operation of the Post Office in the work of the administration of the Act. Several Departmental Committees have been continually at work throughout the year; and I feel sure that the Committee will allow me to express their appreciation and thanks for the unsparing labour of the officers of my Department to maintain the efficiency and to develop the activities and usefulness of this great Department of the State.

Mr. GOLDMAN

I beg to move "That Subhead A (Salary of the Postmaster-General) be reduced by £100."

5.0 P.M.

After the very important, very businesslike, and very frank speech to which we have just listened, it may appear somewhat ungenerous that I should move the reduction of the Postmaster-General's salary. I take the first opportunity of saying, as he has addressed remarks to the Committee, of acknowledging in the fullest manner the courtesy he had shown in asking the Committee on telephones to cooperate with him in the work he has undertaken. After consultation it was decided not to have a meeting in view of the fact that the attendance would be very small. In proposing this reduction I also wish to assure the right hon. Gentleman that I am not moving it in a spirit of parsimony. Indeed, paradoxical though it may appear, I would for more reasons than one favour an increase in the salary of the Postmaster-General, which he said he sternly resists. I do so, because I believe that his salary is that which forms the high-water mark from which the salaries of the other officials drain downwards. I believe it does not necessarily follow that it is good economy and may not be remunerative to lay down the maximum now laid down by the Post Office. I make these remarks and I refer to the Postmaster-General's salary largely from the point of view of comparison with a salary received by some of the officials under him. Let me compare, for instance, the salary of the third Secretary or the Engineer-in-Chief, who has great technical work to perform, must show great business devolving upon him. I think it is quite capacity, and has great responsibilities plain and clear that you are not command- ing the best men at such salary, for the simple reason that the best men cannot be attracted by such remuneration as you offer, or else, if you do succeed in attracting the best type, they are attracted by the magnetism of the State Department, and you are paying these men salaries, not at a maximum, but at a minimum rate, and not a rate which estimates their true value and their full value. These men are therefore suffering under an injustice, and are receiving underpayment and are denied the stimulus and encouragement that should be shown to those who are working and acting at the primary nerve centre of a great commercial community. It may be held that salary alone does not attract a man of ability unless it be accompanied with wide discretionary powers, and that a man of initiative may not be so necessary in the Post Office service. That cannot equally apply to the telephone service, whose success and development depend upon alert commercial ingenuity, and, above all, an initiative, and these requirements necessitate a man with a keen intellect and with discretionary powers, which must be given to persons in charge of the telephone system in this country.

Having dealt with that point of view and stated that you require the best man that you can obtain, I would like to address myself for a few moments to that portion of the right hon. Gentleman's speech which referred to the transfer of the telephone system. The Committee will remember that the Postmaster-General told us that the transfer was effected on the 1st January this year, but he knew a long time ahead that this change was to be effected, and I think every precautionary measure should have been taken so that when the change was effected nothing should interfere with the continuity of the working of the system. We know what happened on the 1st January. Any man of business experience which have made sure in the first instance that the organisation he was taking over was working satisfactorily and he would not have made any change in that organisation until he was satisfied he could safely make such change. The consideration that should have entered into the subject in my opinion was this: whether the plant that was in use was in normal condition at the time being and whether any change should be made to impair the working machinery of the organisation unless and until this change could be effected without the slightest disturbance.

The right hon. Gentleman very frankly conveyed to the House that there was much confusion on the taking over of the transfer, and dislocation due to the two exchanges, one at Westminster and the other the Avenue Exchange. These two exchanges were transferred at the same time, and early in the year the question arose as to whether it would not have been better to continue with the organisation and with the plant until preparations were made so that nothing might interfere or impair the work. I think we are entitled to ask the Postmaster-General whether he has taken such precautionary measures as will in future prevent the recurrence of these disturbances. I make these remarks because in the past there have been no less than seventeen transfers of similar exchanges in London, and they have been accompanied without anything like the disturbance or trouble that occurred in this instance, and indeed if we looked at the United States we see that the whole system of New York was transferred in two years, and we are told that that took place without causing any disturbance to the transferred. I should also like to point out that so far as I can gather there was no compulsion to change. In answer to a question I raised, the right hon. Gentleman conveyed to me that the transfers were necessary, because the equipment was not of a modern type and that the lease of the premises were about to expire. So far as the model type is concerned, it seems to be unnecessary to affect a change, but it did take place because the old exchange is worked on the magnetic needle. As regards the premises, I might point out that so far as I have been able to understand, there was no necessity to evacuate them when it was decided to do so. The lease of the Avenue Exchange only expires in 1923, although the option was to be declared early in January. So far as these premises are concerned the Post Office is still in possession of them, and so far as the Westminster Exchange is concerned, I am told that the owner of these premises actually approached the Post Office and asked them whether they desired to continue them or not.

I am putting these instances forward not in any spirit of antagonism to the right hon. Gentleman. I recognise he is as anxious as I am, perhaps more so, to develop this system and make it highly efficient. I only make these points because it shows this organisation is not as businesslike as it might be. The Postmaster-General also told us that a good deal of leeway had to be made up. Again I would like to remind the House that this-was known as far back as five years ago, when the telephone agreement was entered into. That agreement specifically stipulated that no provisions are made for the requirements of the service after 1911. That being so, one naturally asks to what extent has the Post Office met the necessary requirements for improvements taking place immediately after the transfer to the State, and what foresight was shown to meet the necessary requirements, because it stands to reason that when a company is under sentence of death it is not going out of its way to spend vast sums of money on plant and machinery only to be taken at scrap valuation. The Postmaster-General told us what was done in the case of London. Let me remind the Committee that what he was doing then was only as a competitor, for he was then in competition with the National Telephone Company. I ask how much the Department spent in anticipation of the requirements which would fall due in other parts of the country in view of the extent to which the whole system has been starved by the National Telephone Company. I am informed it has spent not more than £50,000 for that period or in anticipation of the growing service and the service that should have been developed. Take the case of the United States. One of those companies have spent 20,000,000 dollars last year on engineering alone, and they are now making preparations for plans by which they are to spend 100,000,000 dollars in anticipation. In my opinion the Post Office utterly failed to display the necessary foresight of increased expansion.

If we only consult the figures of the National Telephone Company we see how little they were spending on the future development of their service. In 1907 the National Telephone Company spent £1,129,000 in anticipation of future requirements. Gradually this sum was decreased. In 1909 they spent £568,000, in 1910, £421,000, and last year they only spent £361,000. What is the result? The result is that there must be a great congestion of traffic which you do find in the Exchanges. The Victoria Exchange is congested, so we hear is the Gerrard Exchange. I believe the Postmaster-General is under some promise to give an Auxiliary Exchange to London in the direction of the British Museum or that neighbourhood but has not fulfilled his promise.

As an instance of the backwardness in the development of the telephone system in this country, let me give an illustration. Some very interesting figures are given in the Annual Report of the United States American Telephone Company just published. Here is a table showing the distribution of communication in Europe, England, and the United States. It is shown that in the United States 58 per cent, of the communication is on the lines of the telephone; in Europe 25.9 per cent, and in England only 15.5 per cent. First-class mail matters consume in America only 40 per cent., while in England they consume 82 per cent.; telegrams only.4 per cent, in the United States and 1.9 per cent, in England, while telephone conversations show 58.7 in America and 15.5 in this country. In other words, Europe has 50 per cent, more communications over the telephone than England, and the United States four times as much, which shows how backward this system is in a country which has always been known as a great business community. I will now leave the question of these two Exchanges and deal with the general dissatisfaction of the service which has manifested itself in so many directions during the last few months. I will deal in particular with the trunk lines. I was very pleased indeed to hear that the Post-moster-General intends to spend a considerable amount of money on increasing that service. No doubt that service has been suffering from an insufficient number of junction lines. The right hon. Gentleman stated with some pride that the charge for trunk fees in this country was considerably lower than in the United States. Against that I should like to point out that the charge for the trunk system in this country is very much higher than the trunk system in Germany. You can telephone in Germany a distance of 300 miles for one shilling, and for the same distance in this country it costs 2s. 6d. Although the system may be more expensive in this country than in Germany, I do not believe that people mind spending more money if the system is satisfactory, but they object to paying these high rates for an unsatisfactory system, because no one can be satisfied when they have to wait half an hour or even an hour before they can get a connection.

Mr. HERBERT SAMUEL

The hon. Member has quoted the German rates for the slow service. For the quick service they have to pay a much higher price in Germany.

Mr. GOLDMAN

The book I have here states that the rates for one hundred to five hundred kilometres are one mark.

Mr. HERBERT SAMUEL

There is a quick rate and a slow one in Germany.

Mr. GOLDMAN

I do not know what the right hon. Gentleman means by the quick and the slow rate. I know if you want to get a very urgent message through you have to pay a higher rate. I am only speaking of the ordinary system, and under that system the payment is one shilling for 300 miles as against 2s. 6d. in this country. I also raised by a question in this House the inadvisability of the interrupted service in this country, and I asked the Postmaster-General whether he would discontinue in future this service, and adopt the system which was universally applied by the National Telephone Company, that is to give a continuous service day and night on all occasions to anybody wishing to be put in touch with anybody on the telephone. The reply which the right hon. Gentleman gave was that— Wherever our exchanges are similar in character to those of the Company, there will be a similar service, but there are one or two villages with only one or two subscribers where it is not possible to give, without an extra charge, an all night service. I should like to ask whether the right hon. Gentleman considers Truro a village for these particular services. In Truro the telephone office closes at nine o'clock at night, and the office at Liskeard is open from 4 a.m. to 9.45 p.m. At Middlesbrough it is always open except on Sundays, when it is closed during the hours of 12.30 p.m. to 4.30 p.m. and 6.30 to midnight The same applies to Stockton-on-Tees and other towns. The company gave continuous services to villages in such places as Rownham, Aylesford, Crosshills, Waterlooville, and Wollaston. There you have villages with only a few subscribers installed by the National Telephone Company giving an all-night service. The question of areas has also been raised, and this is a question which has been occupying the attention of the Associated Chambers of Commerce for a very considerable time, and they have urged the doing away with the area system in this country. If the area system had been introduced for any particular business object there might be some reason for continuing that particular system, but it was only introduced because there were two owners of telephones in this country, and the two had to be kept apart. Seeing that those two ownerships have now been merged into one, there seems to be no reason for continuing this particular system, which inflicts a great hardship upon many people living close to each other, because they have to pay higher fees the moment they want to speak across the imaginary boundary line.

Mr. HERBERT SAMUEL

I do not quite understand what the hon. Member proposes with regard to areas. Does he mean that the whole country should be one area?

Mr. GOLDMAN

What I mean is that every man should pay according to the distance he is talking. If a man wants to speak from London to Glasgow he has to pay for that distance, but there are other cases in which a great hardship arises. Take, for example, Barnet, in the Metropolitan area, and Potter's Bar, in the Hertford area. There is a distance of three miles between these exchanges, and in the case of a call from Barnet the subscriber has to go viâ London to Ware and then to Potter's Bar, a distance of forty-three miles, and this costs 3d. for the trunk, in addition to local fees, and probably takes about thirty minutes. This is in consequence of having to pay junction calls on account of this area system; and if the Postmaster-General can see his way to do away with this system it would not materially interfere with the Post Office revenue, and it would preserve the idea that a man should only pay for what he receives. Perhaps the most controversial point in connection with telephones is that which refers to rates. This question has also been the subject of much discussion. The Postmaster-General will remember that only last year he received a big deputation from over one hundred municipalities in England urging him to deal with this question of the rates. I admit that this rate is an extremely difficult and controversial subject, because half the subscribers are on the unlimited service and half are not. I know it would be difficult to induce those having the advantages of an unlimited service to forego those advantages and-pay for the amount of calls they are having.

Again, this question brooks of no delay. The Postmaster-General told us that he cannot decide on fixing a tariff of rates unless and until a settlement has taken place with the National Telephone Company. I cannot see how the question of the settlement of any disputed amount between the National Telephone Company and the State can affect the question of the rates. I will explain what I mean. At present the Government know what their telephones cost, and they also know the amount of the anticipated claim that has been settled between the Post Office and the company. Whether the amount still to be paid is ten millions or one million more or less can, in my opinion, have no bearing whatever on the question of rates, because the rates must depend on your future development. If you are going to have a considerable development in this country and a large outlay of capital, much depends on what you are going to do in future. Let us assume that the telephone system costs you nothing. That would not induce you to say you would have very low rates, because you have to provide for future plant, and that is how the question of the rates has to be settled. Another question I should like to raise is the cost of the administration of the service conducted by the Post Office as compared with the same service conducted by the National Telephone Company. A very interesting paper appeared a little while ago by Mr. Harold Begbie. It was read before the Chambers of Commerce, and in it he shows that the percentage of working expenses to gross revenue of the National Telephone Company was 58 per cent. In other words, the net annual revenue and capital expenditure in the case of the National Telephone Company was 8.9 per cent., whilst in the case of the Post Office the ratio of working expenses to gross revenue was 74 per cent, and the net annual revenue, as compared with capital expenditure, is only 3.5 per cent. I think the House and the country is entitled to know why we have this relatively high cost in conducting the Post Office telephones as compared with the National Telephone Company.

Sir F. BANBURY

They increased wages by £500,000 a year.

Mr. GOLDMAN

The hon. Baronet says it may be due to the question of wages. I have no objection to increasing the amount of wages provided you get a more efficient service for it. If you get the efficiency you will get an extension of business, and your general revenue will be increased. Let me point out the results in connection with the National Telephone Company. During the existence of this company they contributed no less than £3,500,000 to the Post Office revenue. They paid a regular dividend averaging about 6 per cent., and then they had a watered capital of one million; they accumulated £3,500,000 in their reserve fund, and they had to acquire their finance at a higher rate of interest than the Post Office. The National Telephone Company were in the regular habit of paying dividends. Compare this result with the financial administration of the Post Office. According to the figures issued in the Annual Report, instead of there being a surplus there is actually a loss. I should like to refer the right hon. Gentleman to the figures for 1911. The commercial accounts show a net deficiency of £41,830 on the year's working of the telephones. That raises the whole question of the accounts. I asked on one occasion whether it would not be possible to present the accounts in a more commercial form, which the ordinary business man could understand. It is extremely difficult to see from these figures the details of the working of the organisation. On one page the Report shows a deficiency of £41,000, and on another page it shows a surplus. The surplus is largely wiped out by paying off Treasury advances that have been made. That again raises a very important issue, because it has a very important bearing upon the whole question of the rates. The accounts as presented show these peculiar features. Take the accounts for the year ending March, 1911. There is the item "rents, rates, fuel, and light," and below it says:— No rent is charged in respect of premises owned by the Post Office and used for the purposes of the telephone business. In other words, you have not charged the telephone system a sufficient amount for the use and hire of the premises it occupies. Again, you have got the item "renewal of plant, salaries, wages, and incidental expenses, £184,000." Does that cover more than mere replacement? If it does, the excess amount should be put to capital account, and to that extent the revenue should be increased. The most important feature is the question of the terminable annuities. The Postmaster-General, in one of the earlier Reports, gives the depreciation of the plant, and estimates the life of the plant at thirty-four years. On the other hand, the advances obtained by terminable annuities are for periods of twelve, fourteen, seventeen, and twenty years. The revenue of the telephone system is being used to wipe off as rapidly as possible these terminable annuities, while the Postmaster-General in his Report himself states that the life of the plant should be estimated at thirty-four years. You are therefore paying for posterity.

Mr. HERBERT SAMUEL

Would the hon. Member give me the reference to the thirty-four years?

Mr. GOLDMAN

The Report for 1905, issued in 1906. If the average life of the plant is estimated at thirty-four years, why should you distribute the repayment of the annuities over fourteen years only? You are using a large portion of your revenue to meet capital charges, and to that extent you are injuring the subscribers, because if you spread the repayment over a greater number of years you would be able to improve the whole service. Finally, I should like to say a few words with regard to the automatic system. I am sure everybody in the House appreciates the attempts which have been made by the Post Office to make experiments in connection with the automatic system which is being introduced on a fairly large scale in the United States and on a particularly large scale in Germany. I happened to visit one of the big exchanges in Munich quite recently, and I have a letter from the Postmaster-Stegman who says:— The initial cost is greater than that of the manual system, but this is compensated for by the great savings that are achieved. According to our experience faults and defects in the automatic system are in no way more difficult to remedy than in the manual system. We can maintain as much control in the automatic system as in the manual. We can, for instance, cut off connections between persons if one or the other has not paid his subscriptions due. The Munich installation is a long way beyond the experimental stage. We have two central exchanges with 4,000 connections and 5,200 telephones, and further exchange of 2,000 is about available. Our subscribers on the automatic certainly prefer the new to the old system. The process of rapid connection transpires without a hitch. The only trouble we experienced in the beginning was between the automatic and manual exchanges. I observe that the tests now being made in this country are not in self-contained areas. The test of whether a system works satisfactorily or not lies in the satisfaction it gives to the subscribers. If, instead of taking Epsom, which is connected with London, you had taken Hastings, a self-contained area, the test would have been made without the difficulties which arise at Epsom. The majority of the calls at Epsom are not within a self-contained area, but with London, and you come into touch with the manual system. It is therefore impossible, or extremely difficult to really ascertain whether the automatic system is successful in working, because it so largely depends upon contact with the manual system. I would also like to say one word with regard to the many interruptions that take place. If I originate a call I am rung up soon afterwards by the second exchange and asked what call I want. The explanation must be that the first operator is not attentive. The second operator finds she cannot get in touch with the first operator, and she switches back to the originator of the call and asks him what call he requires. That shows greater attention is wanted on the part of the operators. There is also the question of the flash signals. Under the instructions of the National Telephone Company, if you finish a call and want a second call, or if you do not get a satisfactory answer, all you have to do is to give a flash signal with your instrument, moving it up and down and causing flashes in the exchange. According to the latest instructions, all you are required to do is simply to put the ear drum on to the receiver and then ring up again. That is the information the operator has, and she naturally acts on that particular system, while you still have the instructions of the National Telephone Company giving a totally different system. There are no instructions in the National Telephone Company's book telling you what to do with the magneto system. You still have it largely employed in England, and you have it in London, and I think an explanation ought to be provided how to use the system. We are far ahead of other countries in the matter of the transportation of goods, and I do not see why we should not be so in the matter of the transportation of thought. It conduces to make life much more amenable, and it helps largely in business, and for these reasons I hope the telephone system will be developed on the largest possible scale with due regard to maintaining it as a business enterprise.

Mr. WILES

I am sure every Member will congratulate the right hon. Gentleman on the very brilliant success which he has been able to show in his statement this afternoon. The year's working of the Post Office has been one of great activity. I am sorry we cannot congratulate the Postmaster-General on having an increase in his salary. I have always failed to see why the Postmaster-General should have a smaller salary than other Ministers who seem to have much less work falling upon their shoulders. I must, however, say that I am disappointed with the statement of the right hon. Gentleman in that he has foreshadowed no great postal reform for the coming year. Last year he had the amalgamation of the telephone service, and he foreshadowed many other reforms; but from his speech I am afraid that he has not much to tell us about the coming year. It is perfectly true he is going to give us ten months reply-paid telegrams. I think that reform has been long overdue. Then he said something about speeding up cablegrams to the Colonies. He also told us that people who desire to send cables to the Continent will be able to pay an additional fee and get them sent through more rapidly. I do not quite see as a commercial man what advantage that is going to be. It means everybody will pay the higher fee in order to get their cables through quickly and that the fee for cabling is therefore going to be raised. I had hoped we were going to have some announcement with regard to a penny postage to France after the conference that we saw took place the other day between the Postmaster-General and the French Postmaster-General. I believe they had some little difference of opinion as to what it would cost. The French Postmaster-General said it would cost £100,000 or something like that.

Mr. HERBERT SAMUEL

It was not the French Postmaster-General.

Mr. WILES

The French representative, anyhow, said the cost would be £100,000, but the Postmaster-General said it would be £300,000. It seems to me, having regard to the tremendous value it would be in the expansion of our commerce, we could easily afford it. I do not know whether it would be £300,000 for us to pay or whether we should lose £150,000 and the French Treasury £150,000.

Mr. HERBERT SAMUEL

We should lose £300,000.

Mr. WILES

Having regard to the great financial balance which the Postmaster-General has, I am sorry he has not to-day been able to foreshadow for this year penny postage to France. I had quite hoped when I read of his conversation with the Ambassador from France in the papers that something was leaking out which we were going to be told about today. I notice that in his Report he states that the penny post to the United States means 8,000,000 more letters going through, and I hope that, seeing during his term of office he has done so much and has been so energetic, the right hon. Gentleman will study the question of a European post and will be able to induce other countries in Europe to adopt a system which must be of great value to themselves as well as to us.

He has not told us anything about stamps. Last year he informed us that he was introducing the sale of stamps in rolls. Cannot he give us some statistics as to the number of people who have bought stamps in rolls, and the number of rolls sold? I think I may congratulate him on the better sticking capacity of his stamps, but, having regard to the number of postage stamps that will have to be issued for the insurance premium, I would suggest that he might introduce some special stamp with a pleasing aroma which the ladies might use for affixing stamps to the cards of their domestics. With reference to the books of stamps which the Postmaster-General began to issue last year, I should like to hear what has been the result and what proportion of the stamps sold are disposed of in these 2s. books. Last year it was suggested that advertisements should be placed in these books in order to pay the cost of issuing them. When I bought a 2s. book of stamps to-day I found that the stamps were smothered in advertisements, and I begin to suspect that the right hon. Gentleman, I am rather afraid at my instigation, is trying to make money out of the advertisements which are put into these stamp books. It seems to me rather a pity that these books do not advertise postal information. We are told nothing therein of the advantages to the family of the Home Savings Bank. We are not informed how cheaply the telephone can be laid on. We are not told anything about the parcels post. Perhaps it will be agreed that so long as the cost of these books is paid, so long as they involve no expenditure to the Post Office, it would be well that they should be utilised for the dissemination of such information as I have indicated. I would press upon the right hon. Gentleman one other innovation. The books are now only issued in a 2s. form. Why not have 1s. books? Indeed. I would suggest that we should have 1s., 2s. 6d., 5s. and at intervals up to 20s. I am sure they would be very popular. It would save a great deal of work in the offices to issue stamps in this convenient manner. I hope the right hon. Gentleman in his reply will hold out some prospect of a change in this direction.

The hon. Member who last spoke made a great many complaints about the telephone service. I do not think he quite realised the great difficulty there is in taking over his service from a private body in a large place like London. He quoted other places—smaller places—where the service had been taken over and where the complaints had been smaller. But although there has been a good deal of suffering in this respect, although there has been a good deal to put up with, I feel sure it was largely due to the conditions under which the work was taken over, and I hope that the Postmaster-General next year will be able to report that under his system the work is being done more easily and more successfully than in the past. There has no doubt been a great deal of delay on the trunk calls. I know that that is a difficult service; it was thought that by the junction with the National Telephone Company some of the difficulties of the trunk service would be done away with. Take the case of the service to Ireland. We constantly saw notices on the Baltic Exchange of delay, and they were more frequent in the case of Ireland than in the case of any other part. It may have been due to the lack of sufficient cable, but I would ask the right hon. Gentleman cannot he see his way to have something done to lessen these delays.

We have heard a good deal in the speech of the Postmaster-General last year as to the advantage which was going to accrue from farmers' telephones. It seemed to me that the proposal which he made was an excellent one, that the arrangement to provide facilities for bringing farmers into touch with their friends and with the commercial community would be quickly taken advantage of and to a very large extent. But I came across two farmers the other day who were living in an area in which they had been trying to link up. I asked them how long ago they applied and they told me it was six weeks ago. I suggested that that was a reasonable time, but what they complained was that they had not even had an acknowledgment of their application from the Department. I am quite willing to supply the right hon. Gentleman with their names and addresses. What I wish to urge is that this is a service which was put forward as one which would be of great advantage to farmers, it would be as well if facilities were given to agriculturists so that they might take advantage of it. I wish to say one word with reference to the telephone operator. I notice that in some small towns the Postmaster-General is trying to make arrangements for an all-night service. Of course that means adjusting the service. I understand that officials of the Post Office have written to certain employés asking them on what terms they would agree to become all-night attendants. That seems a rather extraordinary procedure. It looks as if the Postmaster-General were putting these jobs up to a sort of Dutch auction, and I think, if he will consider the matter, he will agree that it was hardly the proper way for the State to deal with such a question.

Next, I wish to ask with reference to the case of the female assistant clerks. There was an announcement by the Post Office in December, 1911, of the introduction of lower grade clerks to supersede women clerks in the Money Order Departments. The Postmaster-General was asked if he would hold over that scheme in view of the early appointment of a Select Committee, and it was urged that the recommendations of the Hobhouse Committee were being set aside by the institution of a cheaper grade of plant. When the question was asked in the House last February, the suggestion was thrown out that nothing would be done until this Select Committee had reported on the matter. But I understand that something like thirty new appointments in the new grade were made on 29th April last, that thirty women sorters had already been transferred, and that arrangements had been made for the transfer of forty more. The Postmaster-General told the House of Commons that women clerks would not be called upon to do higher work than that which was justified by the scale of pay recommended by the Hobhouse Committee, but, notwithstanding this statement, eleven higher duties in the Money Order Department have been handed over to clerks of a lower grade. I hope the Postmaster-General will be good enough to hold his hand in this matter until the clerks have had an opportunity of putting their case before the Select Committee which is now sitting.

There is only one other matter on which I propose to detain the Committee, and that is with regard to those officers who lost their lives on the "Titanic." I am sure everybody will admire the courage with which these officers dealt with the mail bags at the time the vessel was sinking, and I want to know what compensation is to be given to their relatives. I understand that the United States Government has already made a monetary grant to the wives and children of the three American operators who lost their lives, and I would make an earnest appeal to the right hon. Gentleman to give a special allowance to his own employés. I do not know whether or not they were married men, but I do think that the relatives should be compensated in some way for the serious loss they have sustained.

6.0 P.M.

Sir G. DOUGHTY

lam sure the Committee are very much indebted to the right hon. Gentleman for the very lucid speech he delivered this afternoon, and the valuable contribution on all matters affecting the postal service he has given to the country as a whole. It must be very gratifying to him to be the head of a great Department in a cycle of prosperity, and to be able to report year by year that his Department is not only commercially, but financially, a very great success. He has told us today that in the coming year he anticipates an increase of £450,000 in the profit of that Department, and that he anticipates that it will be not less than £4,830,000 to the good for the benefit of the revenue of the State. That is a very agreeable statement to make from the standpoint of a right hon. Gentleman who is at the head of that Department, but I am not certain that I look upon it with any great favour. A State Department should not be run with a view to making large profits for the State, which is not making for greater efficiency in every section of the Department. There is one thing the right hon. Gentleman will not be able to plead before the House. So far as the postal services are concerned, with such a credit balance as this, there ought to be no labour unrest in the very near future. I think, seeing that the profit is so large, that the public have a right to ask that the Department will do much more for them in certain directions, such as providing better facilities for post offices in various parts of the country. They should be the property of the Post Office entirely, rather than merely rented buildings, where people have to do their post office work among bacon and other goods that are sold.

There is one question which has for a long while exercised the minds of many postal reformers, and to which the right hon. Gentleman referred. I cannot for the life of me understand why the Postmaster-General is opposed to establishing a penny postal service with France. It is a small matter when we look at the whole of the great business of the British Post Office and its work. Year after year this desire for a universal penny postal service with France has been pressed upon this House. We know from what has taken place recently, that the French postal authorities would be exceedingly pleased to enter into arrangements with the right hon. Gentleman for discussing the question, and I understood from a speech of the French Ambassador the other day that he would be very glad to co-operate with a view to the establishment of a penny postage between the two countries. This is a matter affecting 80,000,000 people. If we can carry mails 11,000 miles and distribute them in our Dominions and throughout the United States for a penny, surely we ought to be in a position to carry and distribute them 200 miles away in France for a penny. There appears to be some discrepancy in the statements as to what the loss would be, and I would like the Postmaster-General to kindly clear this matter up. I understand that in 1909, when this question was under discussion, the loss was estimated to be from £80,000 to £100,000. The right hon. Gentleman is reported to have said the other night that the loss would be £300,000.

Mr. HERBERT SAMUEL

You cannot in my opinion have penny postage with France alone. If other countries on the Continent near at hand ask us to have the same arrangements with them as we have with France, I doubt if you could for long resist such a request. If you had penny postage not only with France, but with other neighbours that would involve us in a loss of £300,000.

Mr. WILLIAM REDMOND

What would be the loss on penny postage with France?

Mr. HERBERT SAMUEL

A little over £100,000.

Sir G. DOUGHTY

I do not see why, if we were to extend the penny postage service to France, that should necessarily involve us in a loss, unless we chose to extend it to Holland and to Germany. Surely we are masters of our own house and have a right to do what we please in matters of this kind. I am quite willing to take the right hon. Gentleman on his own figure of £300,000. Why should not a rich country like this, with its enormous revenue, grant a concession of this kind, which would be an enormous advantage not only to people in France, but to people in Germany and Holland also. Let us have a penny postage service with all these countries if they are desirous of having it and are willing to reciprocate. As to the suggested loss of £300,000, everyone knows from past experience that so soon as you extend the penny postage service to any country you greatly multiply the mail, consequently it would not be a great distance of time before you overtook the whole amount of the loss.

Mr. HERBERT SAMUEL indicated dissent.

Sir G. DOUGHTY

The right hon. Gentleman shakes his head. Suppose we did lose for three or four years £150,000 or £200,000 a year, I should like to know whether in the £300,000 the right hon. Gentleman included any calculation as to what profit he would get from these foreign services. I think that, if you take into account the profit from those services you will lose nothing like £300,000. Even granting that you will lose that sum, if the Department are afraid of their revenue suffering through carrying out a great reform of this kind, then let the Department establish a loan account, say for twenty-one years, and debit all the loss that occurs for two or three years, and credit it with the profits on the services, and I venture to say you will hardly know that you have established a great reform. Why, one should have to say that to the British Government, which makes £4,800,000 from this very Department, seems to me rather surprising. I ask the right hon. Gentleman to reconsider what he has said on this question. He has a great opportunity of bestowing a great boon upon millions of people which will be enormously appreciated, and I am sure he will do a public service for which the commercial interests of Great Britain, as well as those of France and Germany, will thank him very much. The right hon. Gentleman has said something on the cable question. I regret one of the remarks which he made—that is, if he means that he does not desire to see State-owned cables connecting the British Empire. I understood him to suggest that he was against what is known as the "All-Red" cable between Canada and Great Britain. [SIR F. BANBURY: "Hear, hear."] The hon. Baronet only said "Hear, hear," because the right hon. Gentleman says it means spending £500,000. I do not say that that particular scheme should be carried out, but I do say that the policy of this country and the policy of the cable department of the Post Office should be in the long run to establish a universal system of cables throughout the whole of the British Dominions, at from a penny to twopence or threepence per word for a considerable number of words. It may seem impossible to do it, but it seemed impossible, at one time of day, that we should ever have a penny postal service. It is just as possible, within the next ten years if this question were faced prudently by men who would consider the matter from the public standpoint alone, to have a cable service which should apply to Australia, Africa, Canada, and India, at a reasonable rate. As to the remarks the right hon. Gentleman made with respect to the day-letter cable service and the night cable service, I think it most remarkable that in one year there should have been such an enormous amount of business done on these two services. I do not think I can give the right hon. Gentleman much credit for this business of the day-letter cable service. I think the people who have benefited are the cable companies. They have benefited enormously. The change which was made by the Government, and which is good as far as it goes, has put into their pockets thousands of pounds of revenue. They have no more cable to find, or people to find. Only one-third of the cable service with Australia, Canada, and Africa is in daily use. If you get a chart you will find that only about one-third of the cables is fully employed during the twenty-four hours, and they have been able, by the arrangements we have made to put upon the other portion of their cable, the night cable, hundreds of thousands of extra words, and draw a very handsome revenue. I submit that the Government ought to watch these matters carefully in the public interest and not in the cable owners' interest, because if ever we are to have a cheap cable service between our Dominions and this country, it will only be by first of all establishing the night use of the cables. I ask the right hon. Gentleman to take these questions into consideration carefully, and to press them home upon the cable companies. We ought to be able on the forty-eight hours cable with Canada or the United States to send at least twenty words for 2s. I am certain it would pay well to-day if they were to adopt that principle, especially as we know that the Canadian Pacific Railway and the Grand Trunk services will be open to distribute telegrams all over Canada.

While you have established a day letter cable service with Canada you have done nothing to help Australia. Australia today has to pay 1s. 6d. per word. That is over the night cable. I think that is a scandal to which this House ought at once to take steps to put an end. Why should we not have a day letter cable service with Australia, say at 6d. per word or twenty words for 10s. That would be a great reform, which would link together our people in that vast Dominion so far away. It would be of great service to them, and a great source of strength, and it would be a great blessing to many of the poorer-people who live there, who occasionally want to communicate with their friends and relatives at home, but who cannot do so in less than six weeks. It might be done by such an arrangement as I have referred to. The points I have raised with regard to cable questions are very important matters. They affect very many millions of people, and I would urge upon the Postmaster-General that he should not allow himself to be too easily moved by these cable companies, and that he should not commit his Department to anything so far as they are concerned unless he gets from them his pound of flesh. People who know anything about the history of the cable companies for the past twenty years are well aware how the public have been served by them. No reduction has been made except through pressure from the Post Office Department, and unless the Post Office Department will continue to press them we shall have very little change for the good for some years to come. Such has been the success of the effort which they were induced to take last year, and such is the return, the extra money and the advantage they have got that now is the time to go to them and say, "You could establish a penny telegraph night service on the day letter principle with Canada for thirty words for half-a-crown," and you could, in my judgment, meet the Australian people as well as the African people by a day letter service for a very much reduced price.

I listened with very great interest to the right hon. Gentleman's statement respecting the telephone service. I know it is very bad, and it requires very great changes before it might be called decently comparable with either the United States or Canada; but I am not prepared to blame the right hon. Gentleman yet for this. We must be reasonable, and remember that he only took it over on 1st January, and he must have a fair time to look into such a great question, as that undoubtedly is. I am only desirous that this new work which has come to this Department shall be treated on business lines entirely. I hope it will not be mixed up with telegraphic work at all. This great business should be run as a separate business, with business men at the head of it, and the State should have the best advantage for the money that the subscribers pay. Last year the Telephone Company paid £330,000 in royalties. Those royalties went to swell the revenue of the Chancellor of the Exchequer, but it comes out of the pockets of those who use the telephone, and has been coming out of their pockets all these years. If we are to have a better and a cheaper telephone service—and the telephone service will never be popular until you make it cheaper—it will only be by using all the income from the telephone service for the benefit of those who contribute very largely and for the staff which has to work it. That is a very important matter, and I am certain that if the Department starts with that object in view, namely, of giving the very best service possible to the public at the cheapest possible price, the telephone service will be a very great blessing, and we shall have, instead of 650,000 telephones, some millions of telephones before very long. In the United States they have over eight million telephones in constant use, and they can do it on the very best lines owing to their long experience and their method of working. As this is a new department, the Postmaster-General has the right to have time to look round and see where it can be reformed, but I should like him to understand that we shall certainly in the future, when the Vote comes up again, inquire carefully into the whole system of telephones, and we shall endeavour to complain, if complaint is possible, in regard to its general working.

Mr. WARDLE

I should like to support the last speaker in the view that it would be very greatly to the interest of the Post Office, and certainly of the people of the various countries, if the rate of postage to the Continent could be reduced at the earliest possible moment. I am quite sure his contention is perfectly sound that business will come back to the Post Office in such an increased way as to make up for any loss which might be incurred at the outset. But I rose principally to make some remarks with regard to the question of the female assistant clerks. As a member of the Hobhouse Committee, I think, if we leave out of account the question of the telephone service for a moment, the attempt to introduce, in place of women clerks, the new grade of female assistant clerks was distinctly opposed to that Committee's recommendation, and not only so but the Post Office should not have lent itself to the creation of a new-grade under such circumstances. With regard to the telephone part of it, even there I am not convinced by the answers which have been given to various questions that there was any necessity whatever to create this new grade in the telephone service. One of the replies from the Postmaster-General suggests that one reason for the creation of this new class is that they desire to put girl clerks in the same position that the boy messenger problem has got into. They are compelled to absorb girl clerks within two years in the service, and, therefore, there will be too many girl clerks for the vacancies amongst the women clerks. Here, at any rate, that excuse does not apply, for in this particular instance they could have swallowed up the girl clerks they were creating because here is a great expansion in the National Telephone Service which would have found outlets for them. I am strongly of opinion that when a Committee of this House has decided that certain grades are to receive certain salaries it is going behind the back of the Committee and the House to create a new grade at a lower rate of pay than the previous one was assigned.

I have a much stronger objection to the new regulations with regard to these female assistant clerks. I strongly deprecate on the part of the Post Office any increase in the hours of labour of any class or of any grade. I think eight hours a day for women in the Post Office service, in an office, is too long, and that the 42-hour week should certainly be observed. In most offices, even where men are employed, the 42-hour week is the regular custom. There is scarcely an office in London—a bank or insurance office, or an office of any large kind, even a railway office, where forty-two hours a week is not the standard set for clerks. Therefore, to make that standard forty-eight for women in the Post Office is a thing which we ought not to permit. I strongly deprecate that they should have a nominal 48-hour week, even though the Postmaster-General says they only work, as a rule, forty-five, but though they only work forty-five they can be called upon at any time to work forty-eight, and that is far too long for females to be employed either in the telephone service or in the Money Order Department. I also strongly deprecate that in bringing in this new grade there should have been an attempt to alter the amount of holidays. To reduce the time from three weeks to fourteen days in the early period and from a month to twenty-one days after five years' service is not altogether creditable to the Post Office. The Postmaster-General has come down to-day with a glowing statement of the increased profits of this Department and it seems to me that to deal with these women in this fashion is one of the meanest forms of economy I have ever seen applied to any great public Department, and I hope that, as it is only a matter of a very few thousands of pounds he will reconsider the whole question and not attempt to put his economy into practice simply with regard to this most defenceless class in his employment.

I want to make an appeal to the right hon. Gentleman with regard to the question of trade union recognition. The Postmaster-General and his predecessor have undoubtedly taken large steps forward in this matter, but I will ask them to carry it a little further. I do not think there can be any real reason why, if the trade unions are recognised, they should not be recognised completely and fully. There are two points on which I wish to make a suggestion. One is that when requisitions are made from the trade union to the Postal Department, they should be dealt with a little more promptly than they are at present. The delay that has taken place in regard to many of the representations which have been made has been very great indeed and, while I do not want to say it is all due to red tape, I want to press upon the Postmaster-General that it would conduce very much to more harmonious relations if a more prompt reply were sent to these representations. The Postmaster-General knows very well that when you are dealing with representations from the men the question of the spirit in which you deal with them is practically everything, and I think if a little more cordiality were thrown into the relationship, a little more friendliness established and less of the red tape which, whatever me may say, binds large State Departments, if more of the human and less of the official were brought into it, there would be a great improvement in the relationship between the employés and the Post Office. I cannot quite understand the reason for complaints which have been made with regard to the great change that took place on 1st January, the taking over of the telephones. That that change has been brought about with so little disturbance is really a great tribute to the Post Office, and while I should like to see, as I hope all hon. Members would like to see, the telephone service increased by leaps and bounds, and I should like to see it become a much more used institution than it is, I think we must give credit to the Postmaster-General and his Department for having managed to make the transfer with so little friction and complaint. I only hope that they will press on with the work and will make the National Telephone system as great a success as the national service with regard to the Post Office has been, and then I am quite sure before long we shall want to have a few more national services as well.

Mr. CROFT

I also gave notice of an Amendment to reduce the Vote for the Postmaster-General's salary by £100. I did so for no party reason, but solely on Imperial grounds with respect to the desirability of a British Atlantic cable. I regret to say that the Postmaster-General today rather emphatically declared himself more convinced than ever against a British Atlantic cable, although he did not give any good reasons for his growing belief in that direction. I think I may say that those interested in this question, despite any arguments yet advanced by the Postmaster-General, are more than, ever convinced that an Atlantic cable is desirable between this country and Canada to join up the Pacific cable to Australasia. It is an extraordinary fact that almost every citizen of the overseas dominions one is brought into contact with holds this same view, and I would suggest, with the greatest respect, that the Postmaster-General would do well to consider the view so frequently expressed, not by members of one party or another or by the Press of one party, but by practically the united Press of the Empire in regard to this question. The Postmaster- General has laid down certain reasons why he does not think an Atlantic cable is necessary. We have before now pointed out in this House that, in our opinion, without a British Atlantic cable there is a great danger that for strategic reasons, as also for trade reasons, we may suffer in consequence of our cable arrangements being entirely in the hands of a foreign company. We cannot overlook the fact that we can only communicate through the United States with Canada, and that messages going in that way may become known. It is no use saying that strategic secrets are safe. I believe there is no expert who will hold that view. It is well known to most people that, provided a sufficient number of words are passing, any cipher yet invented can be discovered. I think that is a bad reason for the Postmaster-General to put forward.

The right hon. Gentleman says there is another reason why there is no fear from the strategic point of view, and that is because the cables land on British territory. I think when that reason is examined it cannot be described as at all sound. You cannot when there are strained relations or when the question of neutrality comes in seize the stations, and seize the American operators. This would immediately be an act of war. We all hope that such a situation will never occur, but supposing there were strained relations between this country and the United States, how are we going to communicate with Canada? It is strange that this matter should be placed in the hands practically of a monopoly to which the Postmaster-General has given his blessing. The mere fact that he could obtain control of the landing stations in time of war has little to do with the matter. It is obvious that the Postmaster-General has not another staff on the spot with which the means of communication could be maintained, and we should find our cable communications absolutely disturbed. Again we have been told by the Postmaster-General that we cannot do anything in the matter because the existing cable companies control the land lines in Canada. I venture to think that that is not an argument to which any weight can be given. I believe the Dominion Government have absolute power to alter that state of affairs under the Railway Commission. I think also the House will agree it is hardly complimentary to various Postmasters-General who have held office in Canada, and to the Dominion, to suggest, when they have been pressing all the time that that cable could be carried across Canada, that all those brilliant Statesmen in the Dominions have been advising us to go upon a wild goose chase. I do not think that is any reason to prevent all this coming about.

I now come to what is the chief question of all, and that is, the cost. I believe it is estimated it would cost £500,000. Mr. Charles Bright and others have arrived at a figure about that amount. I think I am right in saying that the wireless system is going to cost £500,000 or more, with very uncertain results. I am not sure that the Postmaster-General still upholds his view as to the wireless system. Here we have what is an experiment and an immediate expenditure of an enormous sum of money for an arrangement binding for many years when we could have a cable, knowing what its powers are, for a similar sum of money at a small annual cost. It is extraordinary that we should be told that we must not look so much to the question of cables, because there; are various new inventions. I would point out the German Government evidently think it is vital for their trade interests to have ample cable communication. We find that while a British Atlantic cable would have a total annual cost of hardly more than £25,000 a year, only a portion of which this country would pay, because the Dominions have already been coming to an arrangement, Germany pays in support of two lines £85,500 until 1944, and £75,000 towards the German Dutch cable for the next twenty years. It is evident therefore that our keenest trade rivals think that cables must be encouraged, and that they are the best means of establishing greater trade between great communities. I believe France and Italy are of the same opinion, and are doing everything they can to encourage their cable arrangements. We all admit the Postmaster-General's business qualities, and yet he cannot continue the control of the telegraph system covering Great Britain and Ireland. Is it he alone of all the Postmasters-General in the world who is on the right lines on this subject? I think the mere fact that every other country is still maintaining that cable communication is a desirable thing to encourage should make him pause before banishing for ever the idea that a British Atlantic cable, which is so much asked for, should not be provided.

When we remember the vast amount of internal commerce resulting from the development of our telegraph system, surely we must think that the best means of developing trade overseas is to develop cable communication with Canada. Surely we must see that the only way to hold our great trade position in Canada is by increasing our facilities for communication, especially when we know the extraordinary facilities which exist for cheap communication between the Dominion and the United States owing to cheap telegraphy. That must drive us to the conclusion that it is desirable in the interests of our trade and our workers that we should adopt this policy. I believe the Dominions will share the cost of the upkeep of such a cable. I believe, on the basis of the Pacific cable, it is probable we should find our share would not come to more than £10,000 a year. Cheap cable communication will bring trade and wages to this country, to the exclusion of other countries, if we adopt this policy. When we remember what a vast change has been brought about by the reduction of cable rates, and how greater business has resulted, surely we must see that it is in the interest of business of this country that there should be a State Atlantic cable in competition with what is practically an American monopoly in order to keep the price down. I think it would be an immense advantage to the trading community if we could, by laying a State cable, bring down to a cheap rate the whole of the Atlantic cable lines, and even if it were not a paying concern we should get back an enormous amount of trade compared with what we would lose in the cost of the cable.

I will not deal with the wireless question, except by saying it does appear, after recent events, it is absurd to suggest that it can take all the responsibility of the strategic arrangements of the British Empire. We might just as well stop building "Dreadnoughts" because we believe that there might some day be battleships in the air as cut off our cable communications and put all our money into the wireless system. This is a non-party question. It is purely a business question. I would call attention to the resolutions of the Press Union Conferences. We find there a consensus of opinion among the Pressmen of the Empire that it is desirable there should be a better understanding between the various parts of the Empire, and that any- thing we can do in that direction must tend to cement the union of the British Empire. The most ardent Free Trader will, I think, agree with that. I think it is desirable to do everything in our power to advance this most desirable end. When it is remembered that the Canadian coast is now nearer to Great Britain than Newfoundland is to Vancouver, there is no reason why we should not act quickly in this respect. The whole of British Imperialists have pressed for an Atlantic cable with the view of linking up with Australasia, and everybody will admit that while reduced rates have been of certain advantage, they are not enough. I believe the best way to bring down the rates that at present exist would be to have an independent State line in order to cause competition. There is nothing so bad in a case of this kind as to have no competition. The present system does amount to this, that competition is for the time being ended, and, therefore, I think it is all the more desirable to have an Atlantic cable. The Prime Minister has paid a tribute to the usefulness of Imperial cables, and I do not believe there is any weakening in the Imperial feeling with regard to this system. It is interesting to note what the previous Postmaster-General in Canada (Mr. Lemieux) said on the 29th February, when a Motion on the subject was introduced, declaring— that in the opinion of this House steps should be taken by the Postmaster-General with a view to obtaining a further reduction in cable rates between Canada and Great Britain. Speaking on that Motion, he said he considered that the present reductions were absolutely insufficient, and he claimed that the cable rate could to-day at least revert to 6d. a word, and that for Press messages the rate could be reduced to 3d. a word. Mr. Lemieux went on to point out that the present reductions were of little advantage to Canadian users of the cables. He was followed by the present Postmaster-General (Mr. Pelletier)—and I think the Postmaster-General in this House rather tries to persuade us that the Postmaster-General in Canada is of his view—but I do not think this is so. I think that the Postmaster-General in Canada, if he could get a very great reduction in rates, would be then of opinion that an Atlantic cable was not necessary; but I do not think that the Postmaster-General has correctly understood his views. I would remind the House that in that same Debate Monsieur Pelletier said:— I have no very great encouragement to give the country to-night as to a reduction in cable rates. I do not wish to say anything in criticism of the Postmaster-General in England, but I am bound to give the facts to this House. I am in almost constant correspondence with the Right Hon. Mr. Samuel, and I regret to say that he feels that we should not go any further at present in the direction indicated in the correspondence, repeat my expression of regret at the attitude taken by Mr. Samuel. Then, later on, he says:— I trust that the Postmaster-General in England will before long be able to see eye to eye with us in this matter. We desire, as I have said, to trade with the Mother-country. In order to carry on that trade with facility, we must have cable communication at the cheapest cost possible. We want the Government of England and its Postmaster-General to help the trade of this country. I see no reason why there should not be one cable owned by a company of British subjects. It is clear that the present Postmaster-General in Canada is not satisfied with the reductions. When we come to figure out the cost of what a British Atlantic cable would be, when we have heard the millions which the Postmaster-General told us this afternoon he has been spending, if we really value that great trade with the Dominion of Canada, and wish to hold it, we should consider this question a little more deeply. The First Lord of the Admiralty during the last day or two made a non-party speech appealing to the Dominion for co-operation with the Fleet. That means many millions in the future, and I believe that the Dominions would readily undertake that great duty; but I am sure, when we hear in this country the suggestion to the Dominions that they should provide the money for battleships, when we see that this question would only come to a paltry £10,000 a year, or something of that kind, and that the laying down of the State cable would only cost half the cost of an armoured cruiser, then I say that if we are going to do our part to encourage Imperial union it is our duty to do what we can in this direction.

Mr. GODFREY COLLINS

I trust that the Postmaster-General will not lay down the cable which has been referred to until he is satisfied that he can do so on an economic basis. I desire to draw the attention of the Postmaster-General to three points on his estimate. The first is the misleading profit shown by the Post Office. The second is the large and growing loss on the telegraph service; and the third is the danger that the telephone service may show a loss to the public in future years; According to the House of Commons Paper No. 96, the profit on the Post Office is £5,153,000. Naturally, the House and the public think that is the true profit; but when we come to analyse these figures more closely, we find that the Post Office do not charge themselves with the cost of works and buildings, amounting to £569,000, nor with rates and taxes, amounting to £126,000, nor even with stationery and printing, amounting to £196,000. In other words, the profit is a fictitious profit to the extent of 20 per cent., and the figures which I have mentioned include these and other charges amounting to £890,000. So therefore the profit made was positively some 20 per cent, less than the statement issued by the Postmaster-General led us to anticipate. One very obvious advantage in placing these accounts on a proper basis is that it would then be more easy to resist demands from any portion of the House if the profit is not so large as the House anticipated. The second point to which I wish to draw attention is the large and growing loss on the telegraph service. The Postmaster-General in reply to a question the other day stated that the loss on the telegraph service during the past ten years has amounted to the sum of £10,000,000. Reading through the Debates for the last few years and listening to the speakers this afternoon I notice that this loss had hardly been referred to by a single speaker.

Sir F. BANBURY

I did last year.

Mr. G. COLLINS

I hope that the hon. Baronet will support me in the suggestion which I am going to make to raise rates and so wipe out this loss. No doubt it is pleasant for Members to press claims on the Postmaster-General and pleasant for the Postmaster-General to refer to concessions made to the public, but in this House we should bear in mind that we have to consider the interests of the taxpayer who has to find £1,186,000 to wipe out the loss on the telegraph service. On page 9 of his Annual Statement the Postmaster-General refers to the absence of capital account, and goes on to state that a complete account cannot be furnished. It seems to me that the Postmaster-General should take stock of his financial position so as to reveal to the House and the public his true position by examining in what way the money has been spent on the telegraph service, for that by that means we will be forearmed and forewarned in future. The total revenue from the telegraph service was £3,164,000. If we have to wipe out the loss charges would have to be increased by from 33 per cent, to 50 per cent. There are two points in connection with the charges made for telegraph service. The first is the low rates charged for Press telegrams. At present the Press can send 100 words between 6 p.m. and 9 a.m. for a shilling, and they can send duplicate messages at a cost of something like 2d. for every hundred words. As far back as the eighties a Committee investigated these charges, and reported some thirty years ago that the' Press rates for telegrams involved a loss to the Treasury of some £300,000 a year. What that loss is to-day I do not know. I have endeavoured to elicit from the Postmaster-General certain figures which might have enabled me to argue this case before him this afternoon, but I understand that the figures which he gave me were found to be not quite correct, and therefore it is impossible for me to follow this further. But I fall back upon the Report of this Committee, and it seems to me that it really is a public scandal that the money of the taxpayer should be spent so as to allow the Press to pay for their telegrams a long way below cost price. It is an abuse of the public service. No doubt increased charges would be unpopular, but I think that the Postmaster-General may take consolation from the fact that the Press generally are opposed to us on this side of the House, and it makes very little difference to us as a political party.

Probably that is the reason why it excites so little interest, but I cannot help thinking that if the true position of the charges for telegrams were placed fairly and fully before the Press they would see the justice of raising rates and so placing the burden upon the proper shoulders. The loss is a growing one. To-day, according to the Chancellor of the Exchequer, 43 per cent, of the revenue is raised by indirect taxation. The total loss to the State through telegraph service amounts to £1,185,000, and therefore the indirect taxpayers are paying £450,000 per year in taxes to allow the shareholders of newspaper companies to have larger profits. I trust that the Postmaster-General will investigate this matter, and I appeal for the support of the House in asking him to place these charges on a sound basis. We have now the State having the monopoly of sending messages whether along the telegraph or the telephone wires. I trust that the Postmaster-General will so arrange his rates that in whatever way the public, or any section of the public, send their messages no burden will fall upon the general body of taxpayers. The other portion of the telegraph service mostly consists of the sixpenny telegram. Here, again, I am afraid my suggestion will not meet with any support, but I may remind hon. Members that the public will pay sixpence and a copper just as readily as sixpence. It is just because I am a Scotchman that I am taking exception to the State losing the money on the telegraph, service. The policy of the Post Office, according to the Postmaster-General, is efficiency combined with economy, but I think that the true policy of the Post Office should be efficiency combined with economy, including a profit to the State, and when you have the Post Office services at present bringing in a profit of £4,000,000 a year to the State, you admit the principle that these services should be carried on not only in the interests of the public, but in the interest of the revenue of the State as well. I hope that the Postmaster-General will endeavour to find out some method whereby the loss of the Telegraph service could be wiped out in future. There is a growing demand, and a right demand, for better conditions of Post Office service. This can only be met if the charges are placed on a satisfactory and business basis, so that these sixpenny telegrams and the Press messages will not continue to be carried below cost price.

7.0 P.M.

Another point is the taking over of the telephone service. When the State took over the telegraphs service forty years ago they little thought that there would be a loss of a million sterling a year through the taking over of the telegraphs. Perhaps now that the State has taken over the telephone service, unless the Postmaster-General is very careful in fixing his rates, the telephone service may land the State in a heavy deficit in future. He told us this afternoon that the trunk lines are to show a sound and handsome profit. It is very difficult from the meagre information supplied in the Annual Report to investigate the true position of the trunk lines correctly. From the figures I have prepared, so far as I can judge, the trunk lines are really being run at a loss, and not at a profit. The Postmaster-General shakes his head. If he will allow me to say so, the reason why I make that statement is this: I have allowed 6 per cent. of depreciation on the capital account spent on the trunk lines—I do not know if that is right or not—but it seems to me to be a moderate depreciation to allow. If you allow 6 per cent. depreciation it shows on the working of the trunk lines an actual loss. I think I am correct in saying, as I have already said, that unless particular care is taken in fixing the rates to start with, there may be a large and a growing loss in future. I think the State has a right to expect, when it is investing a large sum of money on the telegraph or telephone service, a small profit on the capital invested in those undertakings. Instead of a loss on the telephone service—I make it a small loss—there should be a large and growing profit in the place of losses. I fear the House does not thoroughly appreciate that the loss on these services has to be found by the indirect taxpayers; in other words, it is a shifting of the burden from one pocket to another. I hope the Postmaster-General will excuse a young Member for criticising his Estimates, and I trust that he will endeavour to cut his loss in some way or other, either by raising the rates or by some other method, and so put the telegraph and telephone services on a sound and satisfactory basis in future.

Major ARCHER-SHEE

I heartily agree with the remarks of the hon. Member who has just sat down. He made a very interesting speech, and I think that this question of the telegraph rates is one that certainly ought to be borne in mind by the Postmaster-General when he refuses to spend £10,000 a year to help us to establish a State-owned Atlantic cable. If he is going to follow up the suggestion of the hon. Member, and if he does alter the rates at all, I suggest that he should make the rates for telegrams and letters to Scotland more expensive than they are at present, and let us, at any rate, continue at the old rates. As regards the questions of cable communication and Imperial wireless communication, which were mentioned by the right hon. Gentleman in his speech, I would like to point out that these subjects were brought first of all before the Imperial Conference, and then before the Associated Chambers of Commerce the other day. As regards the Imperial Conference, the Prime Ministers concerned agreed to his proposal under pressure, that the resolutions which they brought forward should be altered, and that a subsidiary conference should be held, unless considerable reductions were carried out in the cable rates. The Postmaster-General says that those reductions have been carried out, and he would lead us to suppose that the Dominions are satisfied with the reductions. I find no trace of that satisfaction in Canada. In both the discussions at Ottawa there was a very strong feeling, and the Postmaster-General in Canada has shown most clearly that he is not satisfied with the present reductions. On the last occasion when this question was raised, I quoted the statement of Sir Joseph Ward, in which he said that New Zealand was strongly in favour of a State-owned Atlantic cable, and, further, I have a letter in which he said that he was glad to hear that the question of a State-owned Atlantic cable was being pushed on.

The Postmaster-General thinks that a State-owned cable is not necessary, either from the strategic or from the commercial point of view. From the strategic point of view, he says that we could take possession of the cable in the event of war. He mentioned that especially in answer to a criticism that we might possibly be involved in war with the United States. War with the United States, as we all agree, is a very unlikely event, but it is not impossbile. Certain unpleasant relations with the United States are quite likely to happen within the next few years as they have done in the past. In 1895 we were on the verge of war with the United States. The people of this country did not realise that, but anyone who knows America knows that at that time there was an intense war feeling over the question of Venezuela, and if it had not been diplomatically treated there was certainly a very dangerous situation. Such a situation might arise again, and if war was ever declared we should have to carry on very delicate negotiations and conversations with Canada, Australia, and New Zealand. It certainly would not be a pleasant situation to find that all the cables which connected us with those countries, with the exception of the Eastern cable—that all the cables running through Canada, at any rate, were under the control of two American companies. We have no control over the operators, and the whole of the cable communication is in private hands. From the strategic point of view, I cannot see that any comparison at all can be made between the advantage of having a State-owned cable, which would be under the control of the two Governments of Canada and England, and the thirteen cables at present in existence, which are controlled by different companies.

The Pacific cable was laid by the four Governments of Canada, Australia, New Zealand, and England for the purpose of connecting those Dominions with us and of cheapening the rates. The rates have been made cheaper, and the only link that is missing is the Atlantic link. The rates that are paid to the Atlantic Company are very far in excess of the rates which are charged by the Pacific Cable Company, and that shows very clearly, if the Atlantic cable were laid, the rates would probably go down for cable messages across the Atlantic. The Postmaster-General says that the loss of £25,000 a year is too great, and therefore this cable cannot be laid. If that £25,000 were divided between the four Governments, our share of it would be only about £10,000 a year. At the very time that the Postmaster-General states that we are losing over £1,000,000 a year on telegraphic rates in this country, we are actually spending in subsidies to telegraph companies and cable companies all over the world nearly £50,000 a year. We are spending £28,000 a year for the cable between Zanzibar. Seychelles, and Mauritius, and that goes on until 1913. We are spending £4,000 a year for the Eastern and South African cable, £4,500 for the Ascension and Sierra Leone, £4,000 for the Wei-hai-Wei, and £8,000 for the Bermuda to Jamaica line;—about £50,000 a year that is being spent by the Treasury of this country to pay for small cables between outlying portions of the Empire. I am not criticising in the very least these facts, but I simply mention them to show how weak is the argument used by the Postmaster-General when he says that we cannot afford £10,000 a year for what is really the main artery of Imperial communication—a cable across the Atlantic Ocean. The other matter which is mentioned by the Postmaster-General is the Imperial wireless scheme. I do not want to go into that very deeply, because I believe we are to have an opportunity to Debate it later on. Personally, I think everybody is in favour of an Interimperial wireless scheme being established.

I suggest that when the Postmaster-General brings forward as an argument for not having a State-owned Atlantic cable, that the strategic requirements of the Empire will be served best by having a wireless scheme running to the East over five or six stations, I think we have a right to look more closely into that scheme and see whether the military requirements of the Empire can possibly be served by it. I suggest that in time of crisis this chain of wireless stations will be of very little use indeed. The first station is at Cyprus, and the direct line from Cyprus I passes over two countries of the Triple Alliance. The other day in a supplementary question which I put on this subject I was under the strong compulsion of the Speaker's eye, and I could not develop it at any length, and the right hon. Gentleman said it was a matter of argument. I would like, if the right hon. Gentleman could find time this evening to give an answer to this particular question. The line of Cyprus passes through Germany, Austria, and Turkey, and back by Belgium. We saw only the other day, in the "Titanic" tragedy, that the wireless message sent from the "Carpathia" and to the "Carpathia" by ships and shore stations were immensely interfered with by a very large number of wireless stations. The United States ships "Salem" and "Chester," the two cruisers, communicated with the "Carpathia," and they reported to Washington that shore stations and other vessels continually interrupted the Government ships and high-power shore stations in their efforts to obtain news from the "Carpathia" for themselves. If low-power stations and ship stations which are also of low power can interfere with the high-power stations in the United States, is it not more likely that high-power stations on the Continent could very easily interfere with one of the high-power stations which was going to communicate with Cyprus. All they have to do is to get the same wave - level, and by that means, if they so desire, make-communication most difficult. I suggest that were we on the verge of war with some Continental nation to-day, their high-power stations would use every endeavour to confuse and prevent our communication with Cyprus. There is another way also in which it might be dangerous from a strategic point of view.

Every message sent from our high-power station in England to Cyprus could be read by every low-power station on the Continent, and by the high - power stations as well, while if you sent code and cipher messages by cable, the messages could only be given away by the action of some traitor amongst the small staff at either end of the cable. In the case of wireless telegraphy, you are giving your code message to the world, and everybody can read it. The right, hon. Gentleman pins his faith as to secrecy on codes and the secrecy of ciphers. He said so in answer to a question I asked him the other day. As regards codes, it has been stated, and I believe it is the fact, that during the American-Spanish war, the Key West cable was kept open for the express purpose of reading the code messages which were being sent over that cable to Havanna. They derived a lot of information from that, as they were able to read the code. Then, again, the more messages that are read by the enemy or hostile Lands, the more likely it is that your code will be de-coded, which increases the danger by a hundredfold. Ciphers, too, can be very easily deciphered. I can give the right hon. Gentleman an experience which I vouch for from personal knowledge. In South Africa, during the war, a column of about 3,000 men received a cipher message from Lord Kitchener, towards the end of the war, ordering them to march to a certain place; and this column, which had been away from the line for a considerable time, was not in possession of the key word of that cipher which was altered every month for the whole of South Africa. Three staff officers put their heads together, and in three-quarters of an hour worked out the cipher and deciphered that message. That shows how dangerous it is to rely solely or even principally on ciphers. Surely in this case on which vital interests and the prestige of the whole Empire might depend, we ought to take the utmost pains and every means to keep our communications secret between the different Governments and the Empire. The best way in which you can do that is by a cable across the Atlantic. I cannot regard the argument as to a loss of £10,000 per year to this country as a serious one. After all, it must be a diminshing loss. The Pacific Cable did better business by £11,000 last year than it did the year before, and it is getting better every year with less loss to the public. An Atlantic cable would be exactly the same, and as trade developed the loss would get less and less. Even if the loss were £25,000 on the four Governments, of which our share would be about £10,000, I maintain that that is not an argument against laying it in view of the fact that we are spending nearly £50,000 on other subsidies at the present time, and that this is the most important part of the whole Imperial system.

Mr. HASTINGS DUNCAN

I desire to call the attention of the Committee away for a moment from high Imperial policy to a question which affects our constituencies, it seems to me, very nearly. I have had some communication with the Postmaster-General in regard to the site for a new post office in my Constituency. The question of the post office at Ilkley was brought forward quite unexpectedly, without the knowledge of the district council. When they heard of the site that was proposed they called a town meeting, which at once, and almost unanimously, objected to the site chosen as a proper site. I had the honour of bringing the matter before the Postmaster-General, and, while he was quite willing to receive all representations, he found himself in the position that he was not able to alter the decision. The matter had come before the Treasury, and he found himself unable to alter it.

Mr. HERBERT SAMUEL

It was not the Treasury, but it was that we had accepted the site and entered into an agreement.

Mr. H. DUNCAN

I understood that it had been brought before the Treasury. It appears to me that it is a very great mistake on a question of this kind that the opinion of the locality should never be considered at all. The question of this site was sprung on the town, and when it was brought before the town it was universally condemned. Everybody knows that the Post Office is taking more and more a large position in the social life of our towns. It is not merely a question of the collection and distribution of letters; it is now the centre of the Post Office system with the Post Office Savings Bank, and it is the place where old people have to go to receive their old age pensions, and it is the place where we shall all have to go to get stamps to carry out the purposes of the Insurance Act. More and more, therefore, it seems to me to be desirable that the question of a post office site should be one that should be brought before the local authorities in order to be considered. It is quite easy to get a cheap site for a post office if you take any out-of-the-way place, but while recommending and encouraging economy, as we shall all do, in the administration of this public service, I think the question of public interests and public suitability should be the first matter to be considered. That raises the other and much larger question, which I think this Committee would do well to consider, and that is whether in our small towns it is a right policy that the post office should not be owned by the Post Office at all, but should merely be a rented building. I think the hon. Member for Grimsby casually referred to that, and said that it was appropriate that some of the large surplus should be devoted to the provision of publicly owned post offices. I cannot think, as a business man, that it is wise that we should merely rent buildings of this kind. If a man is going to lay out a sum of money in the purchase of a site and in the erection of a building with special facilities for post office work, it is very evident he must require a substantial amount of interest. It appears to me that it would be far better that a great public service like the Post Office should, at any rate, in the smaller towns, buy sites in proper positions which would suit the convenience of the public, and I think it would be a much more satisfactory and economical way of dealing with the matter.

Mr. AMERY

I wish to endorse the appeal which has been made to the Postmaster-General by several of my hon. Friends to reconsider the decision he has so far given on this question of the construction of an Atlantic cable. The amount he mentioned is surely infinitesimal when we consider the vital importance of the results to the Empire as a whole. After all the very first essentials of strategic success and of naval success is to have an efficient system of communication under your exclusive control. Wireless telegraphy is very valuable in many ways I readily admit, and I am glad to find the Postmaster-General is taking the steps he has mentioned, but it is not exclusive, and the messages can be collected by all the world. As my hon. Friend (Major Archer-Shee) pointed out just now in a most interesting instance a code is not sufficient protection. I should like to cap that incident by another instance from the South African war. The day after the Boer forces surrendered I was discussing the length of their resistance with General Smuts, and he informed me that one of the things that helped them most was the fact that they habitually tapped our telegraph wires and decoded our messages. He said that it did not take more than three or four hours or their telegraphists to find them out It is perfectly obvious a code is not sufficient protection in time of war. In another sense wireless is not exclusive because the recipient of a wireless message cannot tell who he is receiving from. If an opponent is in possession of our code he may be in the position to mislead our troops or our officials or our ships, which would be most dangerous. The only secure system is to have a cable both ends of which you will control and the personnel of which you will control. I do not think anybody would for a moment tolerate the position of having the cable between England and Ireland owned by a German company. Yet exactly the same applies to the Imperial situation. The Postmaster-General said that in an emergency or in time of war we could seize the cable. That is quite true, but from the point of view of Imperial strategy the most critical moment is not after war has broken out, but in the weeks that precede it. That I know from my own experience of the weeks preceding the South African War. Suppose the American Government imposed a censorship upon our messages and ordered that every message should be sent to Washington, could we interfere? If we did we would be precipitating the very danger we wished to avoid.

It is just in times of good relations and of peace that you protect yourself against something which it is impossible to avoid if you let matters drift to the very eve of war. The same thing applies to being at war with another foreign country, and if our relations were not altogether satisfactory with the United States. In that case we might suspect that our messages were being sent through the United States to our opponents, and yet if we took any action it might enormously increase the danger of driving the United States on to the side of our enemy. I do think that a State-owned cable is a vital point of strategy, not only with regard to Canada, but also with regard to the West Indies, which are entirely cut off by a foreign cable system, and which are going to be of ever-increasing strategic importance. There is also the general question of strengthening our Imperial relations. In a speech which the right hon. Gentleman, the Postmaster-General, made during the Easter Adjournment, he said that the cable service had done more than anything else to cement Imperial Unity. Every conference, the Press Conference, the Imperial Conference, and the Chambers of Commerce, have been pressing for this cable just as they pressed for years for the Pacific cable. I admit that the Postmaster-General has secured reductions in rates, but I consider that those reductions do not go far enough. That he has secured them is, I think, because of the threat of the Atlantic cable hanging over their heads. In 1890 the rate to Australia was 9s. 6d. When the Pacific cable became a live project that rate was reduced to 4s. 11d. to stop the Pacific cable, and when the Pacific cable was carried out the rate came down to 3s. I suggest that if you carry out the proposal as suggested you will bring down the whole of the Atlantic rates. I may point out that whereas the Australian rates have come down from 9s. 6d. to 3s. since 1890 there has been no reduction in the shilling rate to Canada and the United States. The Postmaster-General has referred to the deferred Press rate, a very valuable concession; but while there is a 4½d. deferred Press rate to Australia, there is still a 2½d. rate to Canada. There is a 2½d. rate for the three thousand miles across the Atlantic, and another 2d. for the three thousand miles across the Continent and the nearly eight thousand miles beyond. If you can carry the message eleven thousand miles for 2d. I think you might do the remaining three thousand miles for 1d. Another point is, that as long as you have this cable service in American hands, even if you do get further reductions, they will not be preferential reductions. These companies are interested in the American, not the Canadian traffic. They will certainly not give a preference to Canadian trade as against American trade. But that is the one form of preference upon which every Government in the Empire is united. The principle has been conceded by every party. We have had Imperial penny postage, and we have had preference in cable rates. But I may say in passing that I would not associate myself with my hon. Friend who presses for a penny rate to France. I am against a penny rate to any foreign country unless the rate to other parts of the Empire can be lowered below a penny.

I wish to say a word on the question of the actual loss that would be involved in the proposed cable. At the outside it would be £10,000; and that is on the basis of the Postmaster-General's argument that the only traffic that this line would carry is the traffic for the Pacific cable, of 1,250,000 words per year. I am perfectly certain that the reduction of rates on this side of the Atlantic would largely increase the actual traffic to Australia. I may point out that against the one and a quarter million words from here to Australia there are a whole million across the Pacific from Canada. Surely that is relatively an extremely high proportion, and it is due simply to the low rate between Canada and Australia. It has caused the Press service between Australia and Canada to-day to be relatively much better than the service of English news. I am convinced that on Pacific cablegrams alone you would get a largely increased return. The Postmaster-General has given more than one instance this afternoon, especially in connection with the trunk telephones, showing how a bold policy brings its fruits in a large revenue. I think it would be the same in this cable question. But that is not the only thing. We have to-day an extraordinarily costly cable service to the West Indies. We have to pay 3s. to Jamaica as against 1s. 8d. to Cuba, and 1s. 3d. to Alabama as against 7s. to British Guiana. The proposed cable could be used as a means of cheapening the cable rates to the West Indies, thereby adding extra traffic to the line, and also conferring immense benefit on those Colonies which are seriously handicapped as compared with their competitors on the American Continent and in the Southern States. As to the actual traffic in Canada itself, the Postmaster-General suggests that because the Canadian Pacific and the North-Western Company are bound to the Western Union we could get no traffic worth speaking of in Canada itself. My hon. Friend has already reminded him that the Canadian Railway Commission would have the right to interfere with the Canadian Pacific or the North-Western Company if they ventured to discriminate against messages sent over the all-British cable. Apart from that, the Canadian Government own 7,000 miles of telegraph wires on the Inter-colonial and other railways. The Grand Trunk and the Canadian Northern, together with the Inter-colonial railway, cover, or will shortly cover, every single town in Canada of more than 10,000 people. As far as Press messages and commercial messages are concerned, the Canadian Northern and Grand Trunk, with its affiliated lines and the Government Inter-colonial railways, cover the whole of Canada.

These really are the main points with regard to the business argument. I am confident that, as a business proposition, from the Canadian traffic, the West Indian traffic, and the increase of Australian1 traffic, the scheme would more than pay its way. But even if it cost £200,000 a year, I should still believe it was well worth doing. If, however, the Postmaster-General considers that even a problematical risk of £10,000 a year is too great a risk to run, I should like to make a concrete proposal to him. He knows very well that Lord Selborne's Committee, on the strength of whose Report the Pacific cable was carried out—and carried out in spite of objections on the part of the postal authorities of exactly the same character as those now raised, such as over-estimated cost, the difficulty of laying the line, and the need for duplication, which duplication has never been wanted, because the line has never broken down, for a single day—laid aside a very large amount of money out of the yield of that cable, not only for replacing the cable itself for deterioration, but also for duplication, for the subsequent laying of a new cable. I believe that more than a quarter of a million, something like £300,000, has already been accumulated for laying a second Pacific cable to Australia. I suggest that the wireless scheme which the right hon. Gentleman is carrying out to West Australia might be a useful duplicate in case of emergency in the event of the Pacific cable or the Eastern Telegraph Company's cable failing, and that the right hon. Gentleman should approach the other Governments who take part in the Pacific Cable Board with a view to utilising the reserve of £250,000 or more, now accumulated for duplicating the Pacific cable, in order to complete the all British line to Australia across the Atlantic. There you have more than half the cost in a single item. I do not believe that the other Governments would demur to that use of the money, especially in view of what the right hon. Gentleman is so actively doing in the matter of wireless telegraphy. That would reduce the money to be found for the Atlantic cable to a quarter of a million or less, and it would reduce the possible loss to the Post Office of this country to £4,000 or £5,000—an insignificant sum compared with the loss already involved in the telegraph service, and the subsidies given to other telegraph lines, and the immense Imperial importance of securing an imperially controlled cable service right across the world.

Mr. PIKE PEASE

I am reluctant to turn from Imperial topics to local affairs, but I wish to bring before the Postmaster-General a question concerning the members of the United Kingdom Postal Clerks Association at Darlington. I have had considerable correspondence with the right hon. Gentleman in reference to the matter, but although he always treats with great courtesy every representation put before him, I am sorry to say he has not given entire satisfaction. The complaints which my Constituents make are comparatively simple, and are in reference to the work done by sorting clerks and postmen. They say that when about one and a quarter years ago they sent a petition to the Postmaster-General in reference to their grievances it was a year or more before it was acknowledged. I am told that this is a mistake, but they are not aware of any acknowledgment having been received. Their grievances are chiefly in reference to the Hobhouse Committee's report, the recommendations of which they say have not been carried out. I think it is quite plain that, in regard to certain pay for certain work performed, by transferring work to lower paid clerks, the findings of the Committee have been ignored. The right hon. Gentleman has written me several letters in regard to the matter. On 5th February he wrote:— Owing to the numerous inquiries which have been necessary in this connection, it has not yet been possible to give a definite reply to the memorial, but I hope to be in a position shortly to lay proposals before the Treasury for an increased staff which will admit of the duties being performed by the proper officials. But up to the present no arrangements have been made to satisfy my constituents in this matter, and they press very much for an alteration in their work. In the preface to the circular sent out by the Postmaster-General it is stated that the recommendations of the Parliamentary Committee must be regarded as an award of a fully accredited impartial tribunal. Under the circumstances I would press him on this occasion to see if he cannot possibly do something to help those who are anxious to give their best services to the State. We often hear nowadays about the nationalisation of industries, but our experience in connection with the Post Office and the telephone service do not lead me to desire the nationalisation of industries, because whilst very great attention is given to their needs, there are more complaints from the Post Office and telephone services than from any other class in the State. I have not gone into detail, as the right hon. Gentleman is well aware of the points which have been put before him. The only other matter to which I wish to refer is in regard to advertisements of alcoholic liquors in the telephone book. It is really rather a small matter. I am very strongly in favour of temperance on all occasions, but it is scarcely possible to think that any man will drink any the less because these advertisements do not appear in a circular or book of this kind. I hope therefore the right hon. Gentleman will reconsider his decision in this matter.

Major GUEST

I wish to bring to the attention of the Postmaster-General a question affecting a small class of men included in the engineering staff of the Post Office. They are called relay clerks; they number about thirty-one, and they are employed in the different cable offices in the transmitting stations round the Kingdom. These men originally joined the commercial branch of the telegraph department, but in connection with the reorganisation in 1903 their promotion in that branch was stopped. Ever since that time they have been trying to get back to the old scale of promotion. The scheme eventually brought in was that they should take their promotion in the commercial branch of the telegraph department, instead of in the engineering branch. This meant a considerable loss of status, and also a reduction in their financial prospects, because in the engineering branch the salaries ranged from a maximum of £700 a year down to about £230. The scheme put forward by the Post Office was not felt by the men to be an adequate return or an adequate settlement of the question. In fact no man who was over forty years of age was going to be allowed to be promoted in the engineering branch. As the majority of these men were over forty years of age that settlement did not satisfy them. A new scheme was brought in by the Post Office, which was to take effect on the 1st April this year. The men asked permission to send a deputation to the Postmaster-General, which the Postmaster-General allowed them to do. He was not able apparently to see his way to produce a better scheme in regard to their promotion. I would ask the Postmaster-General when he replies to give some indication of what he proposes to do for these men. Their promotion was stopped eight years ago. They have been agitating under this grievance ever since. This question of how far their promotion is to be settled is still undecided; though I recognise that the Postmaster-General is making efforts to settle this question to the satisfaction of both the men and his own Department. I shall be glad if he will tell us that an early settlement will be arrived at, and give us some indication as to the view he will take in regard to the matters I have put forward.

Mr. NEWMAN

I should like to say a, few words on the position of the Post Office factories. They were alluded to only briefly—far too briefly I think—by the Postmaster-General, considering the importance of the subject. I quite admit that dealing with a Department which employs many thousands of men, and has an annual revenue of £23,000,000, the position of these factories is perhaps a small item. At the same time their position is of vital interest at the present moment to Government factories up and down the Kingdom. At Woolwich there are thousands of men; at Enfield there are hundreds. The Government factories to which I refer are not employing more than 700 men, I think really nearer 500; still as I say, there is a vital principle involved. To put the matter quite shortly, the Post Office have two departments, so I understand from the Postmaster-General, and from this Report which I hold in my hand, and they have determined to cease altogether to figure as producers or manufacturers. They are no longer going to manufacture the goods they require. I dare say the Committee know there are two Post Office factories, one situated at Holloway, and the other at Mount Pleasant, in Rosebery Avenue and Farringdon Road. The minimum establishment was fixed in 1906. They employ now something about 600 men. They are divided into two distinct departments, and rightly so, the Stores Department and the Manufacturing Department. As the result of a Departmental Committee which investigated and reported, all constructive work is to be abandoned. Certain repair work is to be undertaken at Holloway, with an extended depot at Birmingham; while there are subsidiary repair depots at Dublin and Edinbugh. Mount Pleasant itself, as I understand it, is to be abandoned. As a result of this abandonment of manufacturing at Mount Pleasant thousands of pounds worth of machinery will have to be scrapped. I do not suppose that many Members of this Committee have read this Departmental Committee's Report on the factories, or have noted the recommendations of the Committee. But if there is any hon. Gentleman here who is of a Socialist way of thinking this Report ought to make him weep. It is a confession of utter failure by a great Government Department—failure to compete against private effort on remotely successful terms. It will lead, or has led, to dismissal of hands, the lowering of wages, short time, and general discontent. Last Session we had a Debate on the complaints that were raised by men employed in the Post Office factories. May I just take a few points considered in this Report. The Committee dealing with the value of Mount Pleasant and other factories state:— In general during recent years the successes of the factories in competition have been partial and intermittent, while the cases of non-success have been Furious and frequent. In broad outline, it is clear that their lack of success is due partly to the fact that it was not found possible to reduce the indirect expenditure parri Passu with the shrinkage in the number of hands employed, and partly to the fact that outside prices have shown marked reductions, notably as regards woodwork, and as regards telephone instruments (for the construction of which large factories have recently been established in this country). The manufacturing side of Mount Pleasant has been burdened by this indirect expenditure. All sorts of salaries and charges not properly part of the manufacturing department have been put on. The result, of course, has been that it has been absolutely unable to tender successfully against private firms in anything like fair competition. The result is that constructive work has to cease. If Mount Pleasant Post Office is abandoned as regards constructive work it obviously involves a great many real dangers. First of all you have the danger that a ring of manufacturers will get together and combine to put up prices as against the Post Office. We have heard of the armour ring in connection with the Navy. We have heard of other rings as against Government Departments. Another point: There will be no adequate practical staff left to conduct official examinations or draw up specifications for tenders. As regards tenders, the Report to which I have alluded makes a rather interesting suggestion. It says:— There is a section of the Engineer-in-Chief's office solely concerned with questions of design; experimental construction is carried on in the factories under the instructions of the designs sections; and, when necessary, a number of firms are invited to submit patterns, and the best features of each design are embodied in a specification to which all the firms are invited to tender. Moreover, the incentive to outside manufacturers to improve designs is very real, since their success may depend upon their securing an improvement not possessed by a rival firm. I do not know that that is altogether playing cricket. What does that suggestion mean? It means that outside firms are invited by the Post Office to submit tenders for certain things. The best points are taken from them, and put together, and the combined tender sent out for other firms to tender for. Surely it is not absolutely fair to take designs from firms—to steal them—and to use them to get a good tender from other firms! There is another point which I have already alluded to, valuable machinery will have to be scrapped; machinery estimated in this Report at something like £12,000 worth. These factories, too, it must not be forgotten, meant that a certain number of boys, youths, and young men, after they had ceased their work as boys in the Post Office, could be drafted into them and provided with a livelihood for the rest of their lives. This is one way, one open door, out of those blind-alley employments of which a good deal has been said in this House recently. This door will be closed if these factories are done away with. Against all this what are the advantages? Against all the disadvantages I have enumerated, there is set the advantage of saving the paltry sum of £12,000 a year! The Post Office is making a huge profit yearly. We might keep these factories going and our hands employed. Why should there be these heavy indirect charges, which amount to something like 15 per cent.? Why does not the Postmaster-General turn over a new leaf, and before absolutely abandoning Mount Pleasant take away these charges which rightly should belong to the stores department and not to the manufacturing department, and become a model employer of labour with a model factory, model conditions of labour, and model men?

8.0 P.M.

Mr. C. BATHURST

When the Postmaster-General addressed the House exactly a year ago in a very interesting speech, the most interesting announcements that he made was that he intended to make provision for what he described as rural party-line telephones; for giving to farmers similar telephones to those provided in the United States. I think the House must have been rather surprised that he has not made any definite state-men this afternoon as to the success of this new departure. I, for one, should like to ask him whether any progress has been made amongst the farming community with regard to these new party-line telephones. When the right hon. Gentleman made his announcement on this subject a year ago he mentioned that there would have to be a minimum of five subscribers in order for such a system to be inaugurated in any country district. He did not qualify—so far as I can discover from the report of his speech, and I have refreshed my memory on it—in any way the announcement that that would be the only important condition subject to which this system would be provided. Since that date, on the 11th March in this year, in a reply that the right hon. Gentleman gave to the hon. Member for West Cumberland, he announced that the scheme had been somewhat altered. He told the House that he had the authority of the Treasury for a revised scheme of party-line telephones, under which there was to be not less than three subscribers, in lieu of the minimum of five, that he had previously mentioned. In every case—I think he went on to say in answer to a supplementary question—there would have to be at least three subscribers to a mile of route before the terms of £3 per subscriber could be enjoyed by any one subscriber. He also announced at the same time—and this is the main burden of my grievance—that no potential subscriber would enjoy this benefit if he happened to live within half a mile of an existing exchange. I may perhaps remind the right hon. Gentleman and also the Committee that in certain purely rural districts—I do not know a better example than my own Constituency in South Wiltshire, which embraces a very large part of Salisbury Plain—a large majority of the farmers live in or near villages. They have very large farms composed to a large extent of poor down-land. In such districts it means that this new revised condition rules out the possibility of installing such a system as this for the benefit of the farmer. The right hon. Gentleman rather surprised me last week when I put a question upon this subject by informing me that these telephones were now intended, and were intended a year ago, to be for the benefit of the dwellers in agricultural districts generally, and not specifically for the benefit of the farmers. In the United States and Canada the farmers who make use of these telephones are the same clase of farmers as those who have most need in this country to use them, especially in connection with farmers' co-operative stores, largely existing at the present time in every part of the country, and to which naturally they want from time to time to give their orders. I am sure that the right hon. Gentleman means to make this only a rural telephonic service, but I am quite sure that in revising the conditions he has not improved upon the scheme he announced last year. He is not going to establish this system in many parts of purely rural England. I have been in the last twelve months to a considerable number of farmers' gatherings, at which this question has been the chief subject of discussion, and in everyone of these, and particularly in the last few weeks since they have had the opportunity of studying the revised conditions in the localities, there has been a very strong feeling amongst those concerned that the new conditions are not such as they can avail themselves of in large numbers. I ask the right hon. Gentleman to withdraw the half-mile limit, which rules out a very large number of farmers who would otherwise take advantage of this scheme. It is difficult to see why a farmer who lives within half a mile should have to pay £7 or £10 for the use of a telephone, whereas his neighbour, who lives another half-mile away, is able to get off, if he joins with others, for £3, and to have the full benefit of the telephoneic system. I do not think that is an equitable system, and I do not feel that it is an acceptable or practical system for farmers.

I would ask the right hon. Gentleman also if he could not do something to meet a very old grievance to the farming community, and this applies particularly to the smallholders, of which I am glad to see there are so many more now than in the past. This grievance is felt by those who produce small agricultural produce, and who desire to send it in small quantities to their consumers—I refer to the parcel post system under which it is necessary to pay 4d. for the initial pound. There are a large number of persons who produce and send away small quantities of butter or cream, and this applies very largely to what is vulgarly called Devonshire cream (but which I prefer to call scald cream, because it is not confined to Devonshire) and it applies to fruit and vegetables to a small extent, and some cheeses. These are articles sold by the pound, and there is a large trade by direct supply to the provincial towns as well as to London. Many of the producers of these articles would like to send them direct to consumers if the terms, were favourable, and they were in a position to have to pay no more than 4d. for the actual pound of produce, but because the article has to be wrapped up in paper or put into a cardboard box they have to pay more than the amount chargeable upon the actual weight of the produce they supply. This is a very genuine grievance brought to the attention of the Post Office more than once, and if the right hon. Gentleman who is genuinely interested, as I believe he is, in the small agricultural producer would make some concession which would increase this business to the agricultural producer or the horticultural producer it would be of great advantage. I forgot to mention honey. A very large amount of honey is sent from Scotland, the New Forest, and elsewhere, in quantities of a pound at a time, to those who enjoy these luxuries in the towns.

There is one other matter to which I desire to refer, and that is the possibility of providing some system by which the value of agricultural produce sent by parcel post is collected by the postal officials from the recipient of the parcel. I own that it is a system entirely strange to this country, but it exists all over France, and would be an enormous advantage to the agricultural community in this country. I believe in such cases declaration is made by the consignor at the Post Office as to the value of the article and some evidence is adduced to the Post Office, of the existence of a contract between the producer and the consumer. It works admirably in France, and I see no reason why it should not be introduced into this country. If it was introduced it would be of great advantage not only to the small producers, but also to the large producers, who want a full margin of profit on the article they produce, instead of its going into the hands of the middleman, whose tendency is to retain so much of the profit, thereby rendering agricultural industry in this country sometimes extremely unprofitable.

Mr. MORTON

I should like, in the first place, to say that I entirely agree with what was said by an hon. Gentleman opposite earlier in the evening, namely, that we ought not to carry on the Post Office business simply for the purpose of making money out of it. Our first object, and our main object, ought to be to efficiently supply the wants of the people in every way. I should like to join with those who desire that we should have a penny post established, especially with France and a great many other countries. I understand the right hon. Gentleman said to-day that what he called a loss of £300,000 would be involved not in connection with France alone, but Germany, Belgium, and other countries are also entitled to this concession. I never believe we lose at all on the penny postage. I know that was the opinion of Sir John Henniker Heaton when he was amongst us carrying on the great work of postal reform to which he devoted himself so ably. If you take the gross receipts of the Post Office for the last ten or eleven years, and the net receipts, you will find they have increased every year, and that penny postage, so far as we have adopted it with our Colonies and with the United States, has been carried on at a profit and not at a loss. I have not the slightest doubt if we could induce the Post Office to arrange for a penny postal system with France and the other countries mentioned it would be no loss to us at all, even in money, and in many other ways we should find it to the advantage of the people both as regards business and social arrangements, and it would promote good will and friendship amongst the nations. I should have been very pleased if the right hon. Gentleman could have announced to us today that he was going to do something in that direction. I do not know how it may be at the present moment, but we do know that a few years back the French Government were quite willing to enter into negotiation and to carry out penny postage if we were agreed. We were not able, unfortunately, to get the Postmaster-General or the Government to agree to it then, and I think it is time now that something was done, and I hope this House, without regard to party, will insist upon the Government doing something in this direction.

A good deal has been said about telephones. I do not want to criticise the Government in regard to telephones, because we know they have not yet completed the purchase, and have had hardly time to take over this business, and we hope that things will be better in the future. There is no doubt that there is a good many complaints as to the service, and as to the way in which the accounts are made up and as to the prices charged. One cannot press that too much now, because the Postmaster - General has announced it will probably take this year to complete the transfer of the telephone service from the National Telephone Company, and I understand that there is to be a Committee of this House appointed to consider the whole question. I am aware personally that in London there is a considerable demand that there should be reduced prices, and I am also aware that it is the intention of the local authorities, representing six or seven millions of people in the London telephone area, to meet and consider this question. We have put off these conferences with the local authorities of London at the present time, after the statement of the Postmaster-General that he cannot very well consider anything about prices until he knows exactly what he is to pay for taking over the system.

I want to impress upon the Postmaster-General that we have not forgotten that, and that we have only postponed the conferences until the proper time has arrived, and until a Committee has been appointed which the right hon. Gentleman has mentioned. I want to mention a particular telephone applied for, namely, that there shall be a trunk telephone from Tain, in Ross-shire, to Wigan, in Caithness. I understand from information received that the Postmaster-General has so far refused to carry out this. I have written to the Postmaster-General on the matter, and I want to ask him if he will not reconsider the question. It has been brought to my attention. I do not know whether it has been brought to the attention of other hon. Members representing Scotland before it was sent to the Postmaster-General and refused by him. What I want to ask is that the right hon. Gentleman should consider the matter, because it appears to me that Ross-shire, Sutherlandshire, and Caithness are concerned.

And, it being a Quarter-past Eight of the clock, and there being Private Business set down by direction of the Chairman of Ways and Means, under Standing Order No. 8, further proceeding was postponed without Question put.