STATEMENT BY THE POSTMASTER-GENERAL. (Hansard, 4 July 1913)

§ The POSTMASTER-GENERAL (Mr. Herbert Samuel)
I desire to make a brief statement to the House as to the course which the Government have decided to pursue in order to secure the erection of the Stations of the Imperial Wireless Chain. Hon. Members may perhaps be aware it has been stated on behalf of the Government before the Select Committee on the Marconi Contract that the Government are advised that they cannot enforce the performance of the contract entered into by the Marconi Company last July by any action-at-law, and that they are not likely to recover damages of any amount which is worth suing for. And, therefore, in view of the fact that the company have formally repudiated the contract on account of the long delay that has elapsed since its signature, the Government have no alternative but to abandon that contract. We had then to consider what steps should be taken in order to secure the erection of the Stations which are, I think, generally agreed to be necessary in the strategic and also commercial interests of the Empire. We hold the view, as we held the view a year ago, that we ought not to ask Parliament to take the risks of inviting open tenders for the erection of these Stations, in view of the fact that we are advised that no firm that could enter into competition with the Marconi Company could be relied upon to erect Stations of a thoroughly satisfactory character. And that view which was held by the Government a year ago——

§ Mr. HERBERT SAMUEL
(continuing): That view which the Government have 2429 held, and still hold, was confirmed, as the House is aware by the Report of the Advisory Committee, over which Lord Parker was good enough to preside. That Report declared:— The Marconi system is at present the only system of which it can be said with any certainty that it is capable of fulfilling the requirements of the Imperial wireless chain. We have considered again whether the erection of stations on that system should be by a staff of engineers in the employment of the Government and using the powers of the Patents Act or whether we should endeavour to arrange a fresh agreement with the Marconi Company. It is clear that the Post Office itself is not in a position to undertake the erection of those stations, for we have no staff which could by any possibility accomplish that task. in respect to the Admiralty, the Board of Admiralty were again consulted on the matter, and I received from them, on 7th June this year, the following letter:— Adverting to Admiralty letter of the 13th January last, which stated that my Lords Commissioners of the Admiralty were unwilling, and in fact unable without prejudice to naval interests, to undertake the work of erecting or of working the Imperial wireless chain, I am commanded by their Lordships to request that you will inform the Postmaster-General that they have again' carefully considered this matter, and must, definitely adhere to the opinion already expressed. The staff of the Admiralty are fully employed on naval business, and cannot be diverted to the task of erecting those stations without serious detriment to its interests. The only remaining alternative to a contract with the Marconi Company is the creation of a new staff and the employment of some engineer of distinction and capacity who should supervise the erection of these stations. That is a possible course, but it is a course which is attended by many serious disadvantages. In the first place, I am advised that there is no one in this country outside the Admiralty and the Marconi Company who has had any actual experience either of the erection or working of long-range wireless stations—not even the members of the Advisory Committee. If an engineer without that experience were chosen he would have to collect together a staff as best he could; he would have to prepare fresh designs, and he and his staff would have to gain experience in this most difficult undertaking as they went along. It might be expected that the Marconi Company would be unwilling to supply the apparatus necessary to work the stations, and steps would have to be taken to manufacture that 2430 apparatus specially. The history of wireless telegraphy is strewn with so many failures and disappointments that the Government would be taking, indeed, a grave risk if they were to proceed upon the lines which I have described. Further, it is likely that the estimated cost now before us would be exceeded. And it must not be thought that by the use of the Patents Act the Government would be free from the payment of royalties to the Marconi Company. That is not so. If the power of the Crown to use patents without the agreement of the patentee is exercised, the patentee has to receive a royalty payment fixed by the Treasury; the Treasury would necessarily obtain the opinion of some Commissioner upon this point. The Patents Act only extends to this country, and that would involve obtaining an adjudication upon the royalty payments for each country upon each piece of Marconi apparatus under the various laws of all the six countries where the stations of the wireless chain are situated. Further, we are of opinion that to adopt this course would necessarily involve very considerable delay compared with the erection of the stations by the Marconi Company, who have their designs ready and their engineers available and who could set to work immediately. As the House is aware, it is now two years since a sub-Committee of the Committee of Imperial Defence appointed to consider this very question, reported that on strategic grounds it was a matter of real urgency and should be taken in hand at once, and the Select Committee of this House, which has been considering the matter, in their Special Report of January last, began by saying:— The Committee have heard a number of witnesses from the Government Departments, and have arrived at the conclusion that it is a matter of urgency that a chain of Imperial stations should be established. That Report was arrived at with welcome unanimity by the Select Committee on the Marconi Contract. In view of the importance of the strategic interests involved the Government is loathe to incur the risk of the long delay that might be and probably would be involved by the selection of an engineer who had not first hand experience of what is required and the enlistment of a special staff. But these disadvantages, although they are great, we hold might have to be incurred if we did not succeed in coming to terms with the Marconi Company on reasonable conditions. If the Marconi Company asked 2431 unreasonable terms we should have had to fall back on this other alternative with all its disadvantages. Therefore at the request of the Government I undertook to ascertain on what terms a new contract could be entered into with the Marconi Company. I should like to make it clear that any new contract, like the old contract, would provide only that the company should erect the stations. After they were erected they would become the absolute property of the Governments concerned to do with as they wished, and they would be worked not by the Marconi Company, but by an operating staff employed by the Governments concerned. The company asked as a condition of entering into a new contract, first, that an allowance should be made for any increase in the prices of material which has taken place since last July, when the previous contract was entered into. They said that prices have risen very considerably in the interval, and they could not undertake to erect stations now at the same price as then, and they made the proposal that whatever should be ascertained by agreement, or, failing agreement, by arbitration, to be the actual increase in the cost of materials needed for the stations during the interval between the signing of the old contract and the ratification of the new contract, should be added to the purchase price of the stations. If there were no increase in prices, nothing more should be paid; if there were a diminution of price, the sum payable should be diminished; and if the prices had neither increased nor diminished, the sum payable should be the same. They ascertained that the additional cost which would be the consequence of the lapse of time would be about £6,500 per station. It may be hoped that that figure may be reduced to smaller proportions than that. Secondly, they asked in view of the expense to which they had been put by keeping a staff of engineers ready to erect the wireless chain, who have not been employed for that purpose, they should be paid a sum of £4,000. Thirdly, as money is now dearer than it was a year ago, they asked that the arrangement should be revised under which they were to receive nothing until the stations were completed. They asked that ordinary contractor's terms should be paid to them, namely, 30 per cent. of the purchase money with the contract, 30 per cent. on the delivery of the materials, 30 2432 per cent. on the completion of the work, and the remaining 10 per cent. after it had been tried.
With respect to these conditions, I could not but feel that the request with regard to the variation of prices according to the ascertained variation in the cost of materials was a reasonable request and could not be denied. With regard to the expenses to which the company said they had been put of £4,000 by retaining a staff of engineers, I resisted that, and under pressure the company gave way on that and that is agreed to be waived. With respect to the request that they should be paid on contractor's terms, I attached the greatest importance, and still attach the greatest importance, to the provision in the contract that the Marconi Company should be paid nothing at all until the stations had been erected and completed, and it had been proved that they were able to work for the required distances. I was unwilling to give up that condition but, in order to meet the not unreasonable request of the company, who say that in order to finance the scheme they will be out of pocket for many months while the stations are being erected, I was willing to pay them interest at 2 per cent.—which might be taken to be the difference between what they would have had to pay then and what they will have to pay now on borrowing—on 30 per cent. of the purchase money from the date of the contract, on 30 per cent. from a period nine months after, and on the remaining 30 per cent. from the date of the completion of the stations until the final accounts are paid. They made two other requests, one that the contract should not be binding on them for a period longer than the 31st August this year, and in view of all the circumstances, that I am sure the House would agree, was a reasonable proposal. Lastly, a provision is to be inserted in the contract which was asked for by the company in March last year, when we were negotiating with them, but which, through an oversight on their part, was omitted in the contract. It was mentioned on two occasions to the Committee by Sir Alexander King, the Secretary of the Post Office. They say that, while they guarantee to work under all conditions a speed of twenty words per minute, they could not guarantee automatic work at high speed during such temporary periods as the atmosphere might be affected by serious electrical disturbances. 2433 In the present state of the art of wireless telegraphy, they could not guarantee that automatic work could be carried through under those circumstances. I should make it clear that they guarantee hand working at all times. That was agreed in March of last year, and we could not refuse to insert it now as it was well understood that was a condition of the tender. The terms having been reopened by the company, I naturally took the opportunity to press again for the conditions which we had urged upon the company a year ago, and which they had then refused.
I regret that owing to the interruption of business by the necessity of this House attending upon the House of Peers, it will not be possible now, as I had hoped, to explain how far my wishes have been met in this regard. They have not been met in one of the most important particulars, the question of the 10 per cent. royalty. The company made it plain that they would prefer to have no contract than to give up that provision, although I proposed various alternatives. On a number of minor points the proposals which, on behalf of the Government, I have made have been met, and if the House will allow me I will, without any disrespect to the House, make a statement which can be published in order that it may be read by those interested to-morrow morning.

§ Mr. BONAR LAW
Surely the right hon. Gentleman must realise that the statement he has made is so important that there ought to be some discussion in this House before it goes forward, and a written statement would not serve the purpose. Surely it is not asking too much that it should be put down as an Order of the day.

§ Mr. HERBERT SAMUEL
Of course there will be an opportunity as soon as the new contract is laid for the House to consider it. I have made a statement tonight on the Adjournment merely because I was unable to make a statement before the Committee, and because I thought the House was anxious to know. I should like to say that all the sites have already been obtained by the Government for the six stations.