§ 35. Mr. STEWARTasked whether, in the event of the establishment of an Imperial wireless chain station at Hong Kong, messages transmitted from the United States, viâ either Honolulu or Manila, by either a private or American Government undertaking, would under our Government monopoly be received and handled; whether His Majesty's postal authorities would arrange to transmit wireless messages to stations under American control; and whether there will be a wireless station at Weihaiwei?
§ Mr. HERBERT SAMUELThe question of erecting a long-range wireless station at Hong Kong has not yet been decided, and no conclusion has been reached as to the area of communication should such a station be established. So far as I am aware, the establishment of a commercial station at Weihaiwei has not been considered.
§ 36. Mr. BARNSTONasked the Postmaster-General whether, as it is always a matter of difficulty to take away from a contractor his lights under a contract, he will consider the desirability of making the first contract for the erection and equipment of stations for the Imperial wireless service one for three stations only, thus ensuring perfect liberty of action for the Government in regard to succeeding stations; and what is the nature of the conditions under which he proposes to transfer the erection of the second three wireless stations for the Imperial service from the original contractors to any others whose systems may be proved to be more efficient or more economical?
§ Mr. HERBERT SAMUELBy arranging a contract covering six stations in- 38 stead of three, it has been possible to negotiate the terms under more favourable conditions than if a smaller number were included. In addition, much delay would be avoided in the erection of the second three stations if it is finally decided to proceed with them on the same lines as the first three. The second part of the question can only be adequately answered by reference to the terms of the contract itself.
37. Mr. PIKE PEASEasked whether it is possible for any foreign country, desiring to do so, to deliberately interfere with the working of the Imperial wireless service by the continuous emission of powerful signals of the same wave length as that employed by the Imperial service; whether this destroys the strategic value of such service; and whether it is impossible to avoid such undesirable interference so long as a spark system is employed?
§ Mr. HERBERT SAMUELI am informed that deliberate interference is possible; but it can be overcome to such an extent—whether a spark system or some other system is employed—that the strategic value of the service remains practically intact.
§ Sir H. VERNEYI beg to ask the Postmaster-General whether he has any statement to make relating to the Marconi Contract?
§ Mr. HERBERT SAMUELI anticipated it would have been possible to lay Papers in the beginning or in the middle of last week, but a number of minor points remained for settlement, and one point of very considerable importance has been, the subject of further negotiations with the company. Perhaps I may be allowed, by leave, to explain to the House the alteration which it is proposed to make in the terms of the contract, as I explained them to the House some days ago. As hon. Members who are interested in the matter may be aware, the royalty payable to the Marconi Company under the new contract was to be in respect of each station in the chain of wireless stations in which Marconi patents are still being used and not in respect of the chain as a whole, as was proposed in the original contract. To that the company agreed, and I made the announcement some time ago to the House, but the company found on further inquiry that in respect to the British East Africa Protectorate their inventions were 39 not protected by patents. In East Africa it is proposed to erect the largest of all the stations, capable of communicating and receiving messages to and from Egypt, South Africa, and India, with a vast installation which-will have no fewer than six separate aerials. The company represented that they could not be expected to erect this station for the sum. payable and receive no royalty whatever in respect of the use of their inventions there, and that they were not prepared to do so, but they asked that they should receive such payment as was originally contemplated. I replied that I was not prepared to make this concession to the company unless they were willing to meet my wishes, which I had formerly expressed, with respect to the royalty payments themselves, not only in East Africa but throughout the chain. As hon. Members may be aware, it was proposed that if another system was employed other than the Marconi system, which was free of the Marconi patents, the Marconi system should be discarded completely and no royalty payment would remain, or if the essential Marconi patents expired no royalty would be payable. But it has been represented that it might be desirable to use still some Marconi patents in one portion of the installation while discarding the use of the Marconi system in other portions, and I have made proposals to the company repeatedly with a view to assessing the royalty payments on that basis.
It is not practicable, for reasons on which this is not the occasion to enter, to schedule each patent separately and attach a payment to it, if only for the reason that the contract gives us, not the obligation but the right to use not only all existing patents, but any future patent which may be taken out by Mr. Marconi or which the Marconi Company may have a right to use, without any additional royalty payment whatever—a very favourable clause in the contract. But I have proposed to the company that the royalty, instead of being in respect of the stations as a whole, should be divisible, and that portions of it should be payable in respect to different portions of the installation. I pressed that three times upon the company, and three times the company declined to accede. I only proceeded with the contract after that refusal because of the great difficulty, expense, and delay of the only alternative which was 40 open, the creation of an inexperienced and new staff of Government engineers to carry out this most difficult task. I am glad, however, to be able now to say that in consideration of the concession with regard to East Africa for which the company have pressed, they have now agreed to my proposal with respect to the division of the royalties. The contract will provide that, instead of a 10 per cent. royalty being payable in respect of a station as a single unit, 4 per cent. will be payable in respect of the internal transmitting apparatus—the most important part—2 per cent. in respect of the internal receiving apparatus, 2 per cent. in respect of the external transmitting apparatus, and 2 per cent. in respect of the external receiving apparatus, so that there will be full liberty to discard the Marconi apparatus in respect of one part of a station while retaining it in others, and securing a proportionate reduction of the royalty by so doing. This, of course, is an alteration very favourable indeed to the Government, and I hope that Papers may now be laid in the course of a day or two. My right hon. Friend the Prime Minister has authorised me to say that, as the Papers are not available to the House, it will be obviously impossible to take the Debate on Friday of this week as was intended. It is intended that on an early day the Government will make a Motion for the ratification of the contract in its amended form.
§ Mr. BONAR LAWI presume that I am correct that the royalty will still be on the gross receipts, irrespective of whether any profits arc made?
§ Mr. HERBERT SAMUELYes, Sir, the royalty will be on gross receipts.
§ Mr. JOHN O'CONNORMay I ask the right hon. Gentleman whether he can give any good reason for driving such a hard bargain on the part of the Government with a company which has given such good value to the nation?
§ Mr. HERBERT SAMUELI confess that I have done my best to drive a hard bargain, and I think I have succeeded.
§ Dr. CHAPPLEAre we to understand that the royalty will go out pari passu with the dropping out of patents, or will the royalty be payable, even although only one patent remains?
§ Mr. HERBERT SAMUELI thought I made it plain that the stations will be 41 divided into four parts, and if any Marconi patent was used in one of these parts, then the royalty will be payable in respect of that part. But if the patent was unimportant and not essential then it would be discarded rather than pay a large royalty, and some other apparatus would be used in place of it. If, on the other hand, the patent was essential to the station, and that portion of the installation could not be worked without it, then the company claim, and I think in the circumstances not unreasonably, that they are entitled to their royalty.