HC Deb 01 August 1924 vol 176 cc2470-85

I beg to move, That the Indenture made the twenty-eighth day of July, one thousand nine hundred and twenty-four, between Marconi's Wireless Telegraph Company, Limited, whose registered office is situate at Marconi House, Strand, in the county of London (hereinafter called the Company), of the one part, and the right honourable Vernon Hartshorn, O.B.E., M.P., His Majesty's Postmaster-General (hereinafter called the Postmaster-General), on behalf of His Majesty, of the other part, with reference to the construction of a Wireless Telegraph Station on the Beam System, be approved. The question of an Empire wireless system has engaged the attention of Governments during the past 14 years, and, I think everybody must admit, with very indifferent results. I do not think it is necessary for me this afternoon to say anything in support of the contention that such a scheme of wireless service is a real necessity and ought to be brought into existence at the earliest possible moment. Since it was first mooted in 1910 its importance strategically, politically and commercially has been recognised in all quarters. I have been recently in conversation with representatives from the Dominions, and they told me that whenever they get out to sea, whether from Africa, Australia or India they immediately find themselves supplied with news from France, Germany or other foreign sources, which is coloured by its origin. As a matter of fact, foreign countries are to-day able to send from their wireless stations news to receiving stations on land and sea to the uttermost parts of the earth. This fact was noted and commented upon by Admiral Field in his recent visit to the Antipodes, and very strong pressure has been brought to bear upon successive Governments by the Dominions to bring about such a scheme as is contemplated in this agreement.

Whatever anxiety there may be in this country to set up an Imperial wireless system, the anxiety for such a scheme is even more intense in the Dominions. Unfortunately, as years have gone by the Dominions and ourselves have developed somewhat different ideas and methods of solving this problem. When it came into my hands I discovered that the Marconi Company and the Governments of the different Dominions had made arrangements to enter into commitments which made it necessary for continuous discussion to take place between myself, the Marconi Company and the Dominions before any definite arrangement could be entered into. Having regard to the complicated nature of the problem which presented itself, when I first endeavoured to make myself conversant with the facts, I came to the conclusion that it would be a good policy to set up a Committee. I was fortunate in having as Chairman of that Committee Sir Robert Donald, whose unflagging interest in Imperial wireless is universally recognised. I also had his very valuable assistance in a personal capacity in connection with this proposal. The Committee was set tip with these terms of reference: To consider and advise upon the policy to be adopted as regards an Imperial wireless service so as to protect and facilitate public interest. It was impressed upon the Committee that the matter was urgent, and it will be within the knowledge of the House that the Committee issued their report in record time. Their main recommendations were two-fold in character; first, that it should be the policy of the Government to insist that all the stations in this country used for communication with any part of the Empire should be in the hands of the State, and, secondly, that the Post Office should operate directly, under an improved business organisation, all the Empire stations in Great Britain. The Committee suggested the kind of station that should be erected in order to complete the Empire scheme.

At the time the Committee was considering this matter, it had not been made known that the experiments which had been conducted during a year or two previously by Marconi in connection with the short-wave directional system, known as the beam system, had reached such results as were afterwards made known. When we attempted to adopt the kind of high-power station for this purpose which had been recommended by the Committee, we found that the Marconi people were placing before us the results of their experiments on the beam system. They pointed out that it would be possible to get a service under this system of wireless communication at a very much lower cost than would be possible under a high-power station. We made known to the Dominions what had been placed before us by Marconi as to the merits of the new beam system, and informed the Dominions that if they cared to adopt this system we would be prepared to have corresponding stations in this country.

During the discussions we had with the representatives of the Marconi Company that company agreed to co-operate with the Government in whatever policy was decided upon. Naturally, they did not care for the policy of having all the stations owned in this country by the Government, but they said that if that was the Government's decision they would accept it and loyally co-operate with us. They also agreed to carry out any decision that the Dominions might reach in relation to the kind of stations that they would have if the Dominions preferred to go in for high-power stations, the company said they would erect them in accordance with the arrangements made out there. If the Dominions said that they wanted the beam system the company said they would erect beam stations also.

As the House will be aware from the statement I have already made, Canada has definitely decided, and arrangements are being made there for the erection of a station on the beam system. I understand now that the same arrangement is being made with Australia and South Africa. It is only right to say that nothing in the beam system in any way suggests that it can effectually take the place of high-power stations either in communicating over long distances at any time or for long distance communications in all directions simultaneously. The Government are convinced that, notwithstanding the fact that we propose to give this beam system a fair trial, it is essential that we should go on and complete the high-power Rugby station which our predecessors began.

Members of this House have I assume in their hands the agreement entered into which this Resolution proposes to ratify. The agreement has attached to it a summary of its provisions, but it may assist hon. Members if I briefly recapitulate the principal provisions. The agreement provides for erection by the Marconi Company, as contractors to the Post Office, of a beam station for communicating with a corresponding station in Canada, with provision for its extension so as to provide similar communication with corresponding stations in South Africa, India and Australia. It becomes the business of the Post Office to provide sites for the company upon which to erect these stations. The agreement provides that the company shall complete the station communicating with Canada within 26 weeks from the date on which the sites for the sending and receiving stations are placed at their disposal, and they also undertake to have a similar station available in Canada for communicating with this country within the same period. It is provided that the English station is to be constructed of the best materials and in a manner satisfactory to the engineer-in-chief of the Post Office, who is to be consulted as to the lay out of the buildings and plant. The station is to be capable of communicating at a speed of 100 words per minute each way during 18 hours per day. That would be the average over the year.

When that station has been completed there is to be a demonstration. The company are to demonstrate by actual working that the guarantees which they give are complied with in the actual working. If the Government's engineer-in-chief is satisfied after a seven days' test of that kind that the station does comply with and fulfil the guarantees given by the company, then the company will receive 50 per cent. of the cost of the station. The station will then be handed over to the Government and the Post Office will work it. If after six months it is found that the station is working satisfactorily, and in accordance with the guarantees, the company will then receive a further 25 per cent. of the cost. There will be a further period of six months' working, to see if the system is working throughout all the seasons, and if at the end of a complete year the engineer-in-chief is satisfied that the guarantees in the contract are really embodied in the service, then the company will be paid the remaining amount of the cost if the station does not satisfactorily comply with the test at any of the stations any time, before we have had the 12 months' test completed, or if the company fail to establish a corresponding station in Canada, it is open to the Postmaster-General to reject the English station altogether, and in that event the company would be under an obligation to return any money which had been paid to them in respect of the stations.

The consideration to be paid to the company for the station is the actual cost, 5 per cent. being allowed for establishment charges, plus 10 per cent. for contractors' profits. Various safeguards are imposed to prevent any excessive charges, and it is provided that the maximum cost-exclusive of the percentages shall not be greater than £44,920 if a public electricity supply is available, or £50,420 if a public supply of electricity is not available. We have further provided that if South Africa or Australia decides to go in for the beam system, and the Government give the Marconi Company an order for an additional unit, that additional unit, which will be capable of communicating with either Dominion, must be completed within six months. If we give an order for two units for communicating with two Dominions that order must be completed within nine months. I have already said that the guarantee in connection with Canada is a speed of 100 words per minute each way for 18 hours a day, as an average throughout the year. The guarantee in connection with the other Dominions is the same as to speed, but the guarantee as to hours is as follows: Between England and South Africa there would be 11 hours per day, between England and India 12 hours per day, and between England and Australia seven hours per day. The Post Office is to pay a royalty of 6¼ per cent. of the gross receipts of the beam stations.

Lieut. - Colonel MOORE-BRABAZON

How much does the right hon. Gentleman anticipate that that will bring in?


I am afraid that it is not possible to give anything approaching an estimate, because it is not yet known what type of business will be attracted to this station or what the actual volume will be. The Marconi Company is to be paid a royalty of 6¼ per cent. so long as any Marconi Company patents essential for the working of this station are employed therein. After taking over the station the Postmaster-General may, if he feels so disposed, or if he see fit to do so, discard the Marconi patents, and if so the royalty ceases. The company undertake that any telegrams for this country which come under the control of the affiliated companies in the Dominions shall be forwarded to a Government station in this country, and they also give a similar undertaking in regard to any telegrams for the Continent of Europe which are not ordered by the senders for transmission by some other route. There is an arbitration clause in the agreement which is limited to any dispute arising as to the cost of the station. The agreement has been signed on behalf of the directors and the Government, but it is not binding unless and until it has been approved by Resolution of this House. It is for the purpose of securing such approval that this Resolution has been put down, and I hope that this House will now see its way to adopt the Resolution.


It is always a pleasure to listen to a statement on the work of the Post Office, because it is seldom that we have an opportunity of hearing the Postmaster-General tell us the story of what is going on in his Department. Frankly, I have great admiration for the Post Office. It does not show that dead hand which so many Government Departments are rather liable to show. But one of the troubles at the Post Office during the last few years is that there have been too many Postmaster - Generals. Although from a private point of view I would like to see the present occupant of the office there for many years, yet I feel that from a political point of view I must qualify that good wish. When I see the result of the Boston Election coming in, it suggests the swallow which is the sign of the coming summer. One of the difficulties of the Postmaster-General in regard to wireless is that he has to negotiate with the Marconi Company, and anybody who has negotiated with that company must have a very long spoon indeed. Consequently, in looking at this agreement one has to look at it in some detail to see if one can find any holes in it. The Postmaster-General told us of the recommendations of the last Committee on Imperial Wireless. I wonder if every hon. Member present has read the former recommendations of the Committees on Wireless? Perhaps the best of the lot is that known as the Norman Committee. That recommended practically the same as the right hon. Member told us was recommended by the last Committee. That was that Empire wireless should be operated by the State. The recommendations of the Norman Committee were most unjustifiably reversed, and I am happy to see that the last Committee has gone back practically to the original recommendation of the Norman Committee.

We have it laid down that the policy in future in this country, with regard to Empire wireless, is that the stations should be controlled by the State. With that I cordially agree. But let us remember that the Marconi Company have manœuvred us into a very difficult position. They have control of the other end. In all the Colonies and throughout the world we are not free to transmit and receive messages from another Government or another Dominion station, but always at the other end we have to communicate with the Marconi Company. I am not free who says that private enterprise is not better than State control, but this is not a question of private competition against the Government. The question which we have to bear in mind always is whether the Government or a pure monopoly should run it. I would rather that the Government ran it. One of the difficulties in the last negotiations was that the Marconi Company refused to allow the Post Office to run a station erected by themselves. On that the negotiations broke down. I am surprised to see that in the operation of this more complex system the Marconi Company are allowing the State full control, whereas with the simpler higher-power stations they "kicked" at the last minute and broke down the negotiations. I do not think that the Postmaster-General made clear to the House what is happening with the very high-power station at Rugby. I quite see that when an enterprising body like the Post Office fathers the hope of communicating long distance by a short-wave system, one should take advantage of it. But we are, at the same time, going on with the building of a high-power station, 500 kilowatts or more, at Rugby, with masts over 800 feet high.

In this Agreement the hours guaranteed by the system are laid down. They show that the short-wave, beam system is practically a night system of transmission; it does not attempt to penetrate the difficulties of ether during the day. I have never been able to get any data as to whether one can, with a high-power station, transmit during the day. The difficulty of transmitting to India, with all the thunderstorms between, and to South Africa, are very nearly as bad with the high-power station as with the beam station. I doubt whether this particular system is going to be better than the One originally thought of, because if the modern system cannot deal with atmospherics, as is clearly shown in this memorandum. I cannot see where the great advantage comes in, except perhaps from the point of view of interruptions to other wireless. On one or two points in this Agreement I wish for information. I see that the company are to receive 6¼ per cent. gross on the receipts. That is all right if everything goes well. On the other hand, it may mean that the Government are making a dead loss upon the whole scheme, and yet the Marconi Company are making a dead profit. That wants to be modified by some provision dealing with the question whether the enterprise as a whole is a success or not. It seems preposterous that the Government should lose money and that a private company should make it during operations of that kind. This is a very new business. We do not know what is going to happen to wireless to-morrow. Yet I see on page 13 of the Agreement the following paragraph: Any patent which the company may purchase or become entitled to use after the date at which the apparatus covered thereby is installed in the Beam system, shall not be regarded as a Marconi patent for the purposes of this Clause. Frankly, that seems a very dangerous thing to put in the Agreement. It may be that we shall be able to get over our difficulties only by a new invention. Con- sequently the whole thing would fail or be a success by the employment of a new invention. By this Agreement, whoever has that invention has the Government in his hands. That is the great danger. H the company own or get into their possession patents which would improve the Beam system, before we sign this Agreement we ought to know on what terms we are going to have the use of any further patent. I hope the right hon. Gentleman will be able to answer those two simple questions before we proceed to vote upon this matter. Apart from these few remarks I am very glad to observe the outlook of the Post Office in this respect, and I only hope that the small power wireless will be a success.


I am very glad to note the attitude taken by the hon. and gallant Member for Chatham (Lieut.-Colonel Moore-Brabazon) towards this proposal because, having regard to the past history of negotiations between the Marconi Company and the Government, we must look at it carefully and critically. I am given to understand by experts that the Beam system is immature and has not been successfully demonstrated by results. I am not in a position to say whether that is the case or not, but the first step to be taken, before this contract is definitely signed, is to call upon Senator Marconi to demonstrate the success of his Beam experiments before the Wireless Telegraphy Commission, the Wireless Board and the engineering advisers of the Government. If we can be given these safeguards I shall have no fear with regard to this contract, but if this contract is to be signed without these safeguards I have the gravest fears to the future. I am altogether at a loss to understand why the Beam system should have been introduced into the discussion at this particular point. Again I am speaking, not from personal knowledge, but from information received. Our experience as a nation in relation to this problem appears to differ entirely from the experience of the French nation. I gather that the high-power station outside Paris is able to communicate with the whole of the French colonies and that the French Government are quite satisfied with that system. As the possibilities of high-power stations are so well known and appreciated, it seems difficult to understand why at this point the Marconi Company should endeavour to persuade the Government to embark on something which is untried and unknown, but I submit there is a good reason why we should be asked to undertake a connection with these experiments at this particular moment. In my view, the basis of the whole move is the fact that the advantage of the Marconi Company lies in delay. Everything which would produce delay has been resorted to in the past, and the whole of the public propaganda has been designed to prove that the Post Office is utterly unfit and unsuitable to undertake this work, and that the nation would be well advised in permitting the Marconi Company to perform this service for it. We are told we are amply safeguarded in this agreement. We may be safeguarded with regard to nonessentials. It may be we are safeguarded with regard to the price, although on that point I am far from being satisfied. It would surely be better to have a definite specification for the station to be erected and definite public tenders for that work in order that we might be satisfied that a fair price is being paid for the station. Quite apart from that point, I am inclined to think that the desire for delay lies at the root of the problem because in the event of the Postmaster-General not being satisfied with the station and declaring that it did not meet the terms of this Memorandum, the Marconi Company would be in the favourable position of having the station erected under its control and it would be backed by public opinion, still further inflamed by the delay which had taken place, and it would then be able successfully to demand a licence to operate the system between this country and the Dominions. I regard that as a particularly serious and important matter. I fear it is useless for me to ask the Postmaster-General to postpone the vote on this particular question until consultations have taken place and experiments have been carried out to demonstrate the system in the way I have suggested, but I am glad to have an opportunity of pointing out what I regard as dangers in this connection.


As one who has been for a good many years in this House a fairly constant critic of the delay in the development of the Empire wireless chain, I sincerely hope the agreement outlined by the Postmaster-General will be allowed to go through. This is, at last, a definite step. We have for many years awaited a definite step in regard to what is almost the most important feature of Empire communication. I wholeheartedly endorse the Postmaster-General's reference to Sir Robert Donald, whose excellent work in this matter as Chairman of the Empire Press Union, I have known since 1909. He has worked sincerely in this connection and the Committee which met under his Chairmanship gave a splendid example of celerity in arriving at results. As a long-distance critic in these matters, I should like to say that I think the Postmaster-General has dealt with this question in a spirit of fairness and with sole regard to the interests of the British Empire.


I am not going to stop this agreement from going through, and, as far as that is concerned, I support the hon. Member for Acton (Sir H. Brittain), but I agree with what has been said by the hon. Member for East Bristol (Mr. Baker) as to the need for being certain that this agreement is for the benefit of the public. Such agreements in the past have not always been to the benefit of the public, and I remember taking a deputation to the Postmaster-General's predecessor in regard to an agreement which was afterwards altered. I draw the attention of the Postmaster-General to page 3 of the memorandum, with regard to the consideration to be paid to the company for the station. The consideration is to be the actual coat, plus 5 per cent. for the establishment charges and 10 per cent. for contractor's profits. I do not think that is a reasonable agreement. If I were in business I would not agree to having the establishment charges and the contractor's profit beyond the contract price. I think the various safeguards are rather misleading. The memorandum states that the various safeguards are imposed to prevent any excessive charges, and a provision has been made as to the maximum cost. If this is to be put out to tender, as I conclude it will the Postmaster-General must realise that a contractor would go very near the maximum cost. To-day, with the rings there are, naturally there would be some arrangement between contractors, and there would not be the opportunity of getting a reasonable contract at, perhaps, a reduced price when the maximum cost is stated in the Agreement. Also, I should like to ask why is there this difference of £5,500 between the maximum cost if a public electrical supply be available, and if a public electrical supply be not available. It seems to me it is a large amount, and that there will be rather a large profit. Also, I would like to mention what was brought forward by the hon. and gallant Member for Chatham (Lieut.-Colonel Moore-Brabazon) with regard to the 6¼ per cent. on the gross receipts. That is not reasonable. You find a few lines lower down it is stated, "on the gross revenue." There is a big difference between gross receipts and gross revenue. I think, certainly, it should be on the gross revenue.


What is the difference between gross receipts and gross revenue?


One is a revenue, and the other is not necessarily a revenue. It is a very big difference. Anybody who has had anything to do with figures must, realise that receipts and revenue are very different matters. Then I should like to ask the Postmaster-General a question with regard to the Canadian Marconi Company. What is the arrangement with regard to this Agreement and the Canadian Marconi? It is a very important point when you are dealing with a monopoly such as this Agreement is giving. I feel that if the Postmaster-General will answer these questions with regard, especially, to the Agreement, which I do not think is all satisfactory so far as the public is concerned, I will not altogether oppose the Agreement.


I shall be very pleased to give what, I think, will be very satisfactory replies to the questions that have been raised. First, I would like to reply to the question raised by the hon. and gallant Member for Chatham (Lieut.-Colonel Moore-Brabazon) with reference to patents. The matter is dealt with in Sub section(6) of Clause 16 of the Agreement: Any patent which the company may purchase or become entitled to use after the date at which the apparatus covered thereby is installed in the Beam Station shall not be regarded as a Marconi patent for the purposes of this Clause. The object of the provision is this: The Agreement provides that we may at any time take out of the station any Marconi patents, but, so long as we use any of them, we pay a royalty on them. It is quite possible, if we took their patents out, and used other patents, if they were entitled to purchase these, and call them their own, we might then be charged a royalty on such patents. We have put this in as a safeguard against any possibility of the Marconi people purchasing something we have put in in place of their patents, and calling them their patents, and getting royalty payment thereon. With regard to the suggestion of my hon. Friend that he would like to have this thing demonstrated before sanctioning the Agreement, I do not know whether he has read the Agreement, but I do not know what more complete demonstration can be given of any system than is provided by the Agreement. The company have to erect the station at their own cost, and they have to give a seven-day test of its actual working. If during that period they comply with the guarantee, they get half the cost. It has to be tested again over another six months, and if, during that period, it proves satisfactory, they get another quarter of the cost. Then the demonstration goes on for a complete year, and if at the end I certify that it must be rejected, that decision is final, and they must refund any money they have already received.


Is the right hon. Gentleman aware that there is a, precedent for such demonstrations? When the Marconi Company undertook to work point-to-point demonstrations, they gave two demonstrations working between Stonehaven and Newcastle before the contract was signed. I am afraid the Postmaster-General did not hear my reference to the position that would arise if he would not give a certificate.


I do not know what obtained in the case to which the hon. Gentleman refers, but I do know what is in this Agreement, and it was felt desirable that we should have, for the purpose of this new system, not merely short tests, but tests during the whole year, summer and winter, so as to get all atmospheric conditions. That is why we have adopted this method rather than a short method. It has been sug- gested that the royalty of 6¼ per cent. is not a fair royalty. I can only say that in 1912 or 1913 contracts were entered into on behalf of the Government under which the Marconi Company agreed to erect six stations, and the royalty provided for in those agreements was 10 per cent., and not 6¼ per cent.




Yes. It has been suggested that we make this 6¼ per cent. while it is a losing concern. All I can say is, that if at the expiration of the 12 months' test we take over a service which complies with the guarantees provided here, if we have got a station handed over to us that will give an 18 hours' service at 100 words a minute each way, it seems to me we have got a substantial and profitable business to take over at the end of the year.


Will the right hon. Gentleman alter the words to "gross revenue" instead of "gross receipts"?


This Agreement has been signed, and it must be ratified or rejected as it stands. I do not think anything could be altered in the Agreement in this discussion. A great deal has been said about the Marconi Company. I hold no brief for them, but I want to be fair, and we must keep this fact in mind, that the Marconi people have done an immense amount of pioneer work. They have built up a business between this country and Canada. They have been on the top for 15 years. We are taking the whole of that business from them and transferring it from their stations to our stations, and I think, having regard to the provisions of this Agreement, it must be admitted that the Marconi people have met the Government fairly in this matter, and have nothing in this Agreement except that to which they are fairly entitled. My hon. Friend opposite (Sir F. Wise) called attention to the fact that there is the cost plus overhead charges. If my bon. Friend will look at the provisions in Clause 11 on page 10 of the White Paper he will see that it is only the actual cost of each item of manufacture that is taken into account. Instead of including overhead charges in that cost, and ascertaining just what proportion of the overhead charges should be allocated to each particular item of work, we have agreed to an overall overhead figure of 5 per cent.


Fifteen per cent. in all.


It is 15 per cent.; but you must allow for the overhead charges in any statement of cost. A further objection is raised that as we have indicated a maximum the contractors will get as near the maximum as possible. If my hon. Friend will read this Agreement he will find that is quite impossible. Time books are to be kept, sheets are to be kept with accounts of the actual work done, the time spent, the wages paid. There is to be an account of everything in connection with the purchase of material—any allowance made to the company; all that is to be accounted for. Only the actual cost is taken into account, and whether the amount is the maximum, or half the maximum, that is what they will be paid. If you look carefully through the provisions of this Agreement I think you will see that is very carefully safeguarded in all respects.


What is the position with regard to the Canadian Marconi Company


Under this Agreement the Marconi Company in this country, with whom we are dealing, and who are parties to this Agreement, undertake as part of this contract to provide a station in Canada by the time this one is ready in this country, and if they do not do it they have broken this contract.


What about the receipts and revenue?


The position in relation to that will be this: they must send through their stations to our stations all business that arises in the Dominions. As is customary in these transactions, whatever is received for the messages will be evenly divided as between the receiving and the sending stations, after deducting terminal charges. I think that is the usual thing in these cases.


If this Agreement is entered into, can we take it that the work is to be put in hand immediately, and that there will be no further delay of any kind?


The position is that until we have provided a site the work cannot proceed, but when we provide the site for the receiving and the transmitting station the station must be completed within six months. The engineers of the Post Office and the Marconi Company are at present considering the suitability of certain sites which have been suggested, and I am hoping that almost immediately on the ratification of this Agreement work is will be proceeded with.

Question put, and agreed, to.

Resolved, That the Indenture made the twenty-eighth day of July, one thousand nine hundred and twenty-four, between Marconi's Wireless Telegraph Company, Limited, whose registered office is situate at Marconi House, Strand, in the county of London (hereinafter called the Company), of the one part, and the right honourable Vernon Hartshorn, O.B.E., M.P., His Majesty's Postmaster-General (hereinafter called the Postmaster-General), on behalf of His Majesty, of the other part, with reference to the construction of a Wireless Telegraph Station on the Beam System, be approved.