WIRELESS AND CABLE SERVICES.

HC Deb 21 May 1928 vol 217 cc1527-77

Motion made, and Question proposed, "That this House do now adjourn."—[Commander Eyres Monsell.]

Mr. WALTER BAKER

The statement which I have been asked to make to the House is a very difficult one to make, and I fear that it will be a very long one. I therefore ask that hon. Members will be as patient as they can be with me in my endeavour to place the position with regard to the beam and cable services before them in as simple a fashion as possible. At the outset I would say that this discussion is being taken to-day because we fear that a very dangerous situation, so far as the nation and the Empire are concerned, is about to arise, if it has not already arisen, and the fears that it is my duty to express this afternoon are fears which it is not possible entirely to prove or to provide with a complete foundation. If it should happen that the Government are able to prove that my fears and the fears of my friends are groundless, I need hardly say that none will be more relieved than ourselves. The tragic history of British wireless policy, or perhaps it should be lack of policy, will, I understand, be very fully and completely covered by my right hon. Friend the Member for Ogmore (Mr. Hartshorn), who was Postmaster-General in the last Administration. But I want, in passing, to remind the House that the Cabinet in 1923, speaking through the Prime Minister, stated: It is necessary, in the interests of the national security, that there should be a wireless station in this country capable of communicating with the Dominions, and owned and operated by the State. There can be no doubt that the statement was accurate in 1923, and I respectfully submit that it is equally true in 1928. From the date of the Norman Committee, which reported in 1920, there has been a lack of consistent policy on the question of the ownership and control of wireless and cable services. The Norman Committee recommended that services with foreign countries outside Europe should be left to private companies, but that the existing policy, whereby Anglo-Continental services were owned and controlled by the State, should be continued. The remarkable thing is that, despite that most emphatic declaration on the part of the Norman Committee, the Postmaster-General of that day, 1921, announced that private companies would be allowed to develop the service to foreign countries, more especially to the Continent of Europe, and he decided to grant licences to the Marconi Company for several European countries. My information is that the decision of the Postmaster-General in 1921 has been responsible for a considerable loss to the public revenue, and it has certainly had the effect of greatly entrenching the position of the private wireless interests.

In contrast with the vacillation of other Governments, perhaps I may be forgiven if I congratulate and compliment my right hon. Friend the Member for Ogmore not only on the promptitude with which he dealt with this problem, but also on the decision that he reached. I understand that immediately he took office he appointed the Donald Committee, and that the Donald Committee conducted its investigations with such despatch that within one month of the date on which the Labour Government took office, the Report was available and was immediately adopted. It is specially significant that Sir Robert Donald, who was an advocate of private enterprise, has since confessed that the information placed before him whilst on that Committee convinced him of the need for the State ownership and control of Imperial wireless communications. Having seen the conversion of Sir Robert Donald, we almost ventured to hope that the State had reached a settled policy with regard to this problem, but we had a great shock in the early months of this year, and from that shock we have not yet recovered.

The first meeting of the Imperial Wireless and Cable Conference took place, I believe, on 16th January, 1928, and on 15th March last we were alarmed by a statement in the London "Evening News," which was confirmed—if confirmed be the right word—by the "Daily Mail" on the following morning, the statement being to the effect that it was proposed to transfer Post Office cables and beam stations to private enterprise. As a result of that announcement, four questions appeared on the Order Paper for 22nd March, in the names of three Members of my party and one Member of the Liberal party, and the Prime Minister, replying to the four questions together, said: His Majesty's Government and the Imperial Wireless and Cable Conference had no previous knowledge of the details of and have no responsibility for any financial arrangements for the merger of the Eastern Telegraph and Marconi Companies. As regards the general question, I can make no statement in advance of reports from the Imperial Conference, which only on Monday received a proposal from the two companies; but, since hon. Members have specifically inquired as to the attitude of His Majesty's Government in Great Britain, I think it right to say that the Government, while it is prepared to join in discussing measures for a working arrangement, is not committed even in principle, and reserves freedom of action in regard to any proposals for tranfer of the operation and control of the Imperial wireless services at present administered by His Majesty's Government."—[OFFICIAL REPORT, 22nd March, 1928; col. 557, Vol. 215.] On 29th March a further question was put to the Prime Minister as to the existence of adequate safeguards and to that he replied: The question whether any safeguards are necessary will be considered when the Report of the Imperial Wireless and Cable Conference has been received."—[OFFICIAL REPORT, 29th March, 1928; col. 1340, Vol. 215.] On 1st May, in response to a further question, the Prime Minister said: No Report has as yet been submitted by the Wireless and Cable Conference. It is not, therefore, possible for me to say anything with regard to its publication. No offer has been made direct to His Majesty's Government in Great Britain in regard to the purchase of the whole means of Imperial telegraphic communication. I understand that certain suggestions in this connection have been laid before the Conference, and are still under consideration by that body. Until the Report of the Comference is available it is obviously impossible for me to make any statement."—[OFFICIAL REPORT, 1st May, 1928; col. 1513, Vol. 216.] Yet another question was put on 14th May, when the Prime Minister replied: I understand that the deliberations of the Conference will riot be concluded for some little time. As soon as I am in a position to do so I will make a statement." [OFFICIAL REPORT, 14th May, 1928; col. 663, Vol. 217.] Arising out of that reply, I put a supplementary question asking the Prime Minister whether he was aware that one member of the Imperial Conference had sailed for home on 4th May. The Prime Minister, after consultation with the Secretary of State for Scotland, informed the House that the gentleman in question was no more than a technical adviser. I asked the Prime Minister whether I was to understand that Mr. Lenton, the Postmaster-General of South Africa, was no more than a technical adviser and the Prime Minister then said that he would require notice of that question. It is important to notice that the "Times" on 17th January gave a list of the members of the Conference and the expert advisers to the Conference. In every case except that of South Africa, the Dominions, Colonies and Protectorates had each two or more representatives—that is a member and an expert adviser—but, in the case of South Africa, Mr. H. J. Lenton was the sole representative of that Dominion. On 17th May, I received a letter from the Prime Minister's private secretary as follows: The Prime Minister regrets that a misunderstanding arose in regard to the Supplementary Question which you put to him, arising out of your question of 14th May, on the subject of the Report of the Imperial Conference on Cable and Wireless Services. He was under the impression that you were referring to the departure of one of the technical advisers, three of whom have left for home at various times, and not to Mr. Lenton. Mr. Lenton was, of course, the representative of the Union of South Africa and did sail on 4th inst., his place having been taken for the time being by Mr. Eales. The Prime Minister hopes that this will serve to clear up the misunderstanding. If I may say so, there was no misunderstanding as far as we were concerned. The whole difficulty arose because the Prime Minister was not fully informed by his right hon. colleague. On 17th May, there was yet a further statement in which the Prime Minister, having consented to this day being taken for this discussion, said: I think I ought to remind them (the Opposition) of what has, I understand, been conveyed to them already—that, so far as the discussions of the Imperial Conference are concerned, we cannot make any statement about that until they have concluded their deliberations. I have made inquiries, and it may be another month."—[OFFICIAL REPORT, 17th May, 1928; col. 1222, Vol. 217.] I find it difficult to believe—and I make the statement with all respect to the Prime Minister—that Mr. Lenton has returned to South Africa and that three technical advisers have left the Conference without a decision having been reached. My difficulty is increased by the specific statement of the Prime Minister that he hopes that the Report will be available in a month. Mr. Lenton has gone home to South Africa and this is much too important a matter to be decided in the absence of a responsible Minister from that Dominion. If a decision has not already been reached, I quite fail to see how South Africa is to have any part or lot in it. Our great fear is that a recommendation has been agreed to by the Imperial Wireless and Cable Conference, that that recommendation, based on a provisional decision, has been submitted to the Dominion Governments and that when the Dominion Governments have signified their acquiescence in it, then—not for the first time—we in this country will find that a bargain has been concluded and that our hands are tied.

I ask the House to note that the Prime Minister, in his reply of 22nd March, said that he had no previous knowledge of and no responsibility for the financial merger or any of its financial details. I understand that that merger was a definite, calculated attempt to force the hands of the Government. I understand further that that calculated attempt to force the hands of the Government was accompanied by a treacherous threat on the part of the cable companies to which I propose to refer in a few moments. Part of my object in raising this matter to-day is to ventilate the facts. As I said earlier, we cannot prove that our fears are well-founded, but I think we can place facts before this House of which the Prime Minister has been ignorant up to this moment. I believe that the Prime Minister is unaware of the strength of the forces which are arrayed against the national interests. From the nature of his replies to questions, particularly his replies to Supplementary questions, I fear he has no idea of the nature of this problem as far as the nation and the Empire are concerned, and if this discussion does nothing else but bring out the facts of the case, I think it will have served a very useful purpose.

Why is it that there is such an extraordinary anxiety to possess the Post Office beam service? It is the stock-in-trade of our opponents that Government Departments are inefficient and that private enterprise can do things very much better, but the Marconi Company is not actuated by any motives of that sort it is not anxious to take over the Post Office beam service because it feels that it can do it better than is being done by the existing organisation. The fact is that the Marconi Company is on the inside of this thing, and it knows how great are the potential profits of the Government beam service. I understand that the Post Office beam service, while yet in its infancy, is already showing a very handsome profit. I understand—and the PostmasterGeneral will be able, I hope, to confirm that understanding—that the estimated profit from the beans service in this country is put at £500,000 for the current year. While I cannot give absolutely official information, I am quite prepared to accept the opinion of the right hon. Frederick Kellaway as to the inside of the Marconi Company. At the twenty-eighth ordinary general meeting of the Marconi International Marine Communication Company, which was held on 30th March last and reported in the "Times" on the following day, Mr. Kellaway said: Our shareholding in Amalgamated Wireless (Australia), Limited, promises to he a sound investment. For the year ended 30th June last, the company showed a profit of £25,149, or more than double the profit of the previous year, although the accounts did not include the profits from the beam service. That rosy picture was confirmed by the Australian Prime Minister, who said that the beam service had taken 46 per cent. of the traffic which was previously handled by one of the big cable companies. I submit that that is sufficient to explain the Marconi interest.

What about the cable companies? The cable companies are frankly afraid of the success of the Post Office beam service, and they entered into the financial merger because they saw no other way of escaping from that competition. Quite apart from the loss of traffic due to the very successful competition of the Government beam service, that competition had compelled the cable companies to reduce their rates by, I believe, an average of 4d. a word, and despite those reductions the beam service rates remain at about 4d. a word less than those of any of their competitors. The parties to this financial merger hope to take over the Post Office wireless and cable systems and to control all independent wireless and cable companies in the Dominions, and they are quite definitely to be grouped under two heads—the Marconi Wireless Telegraph Company and the Eastern and Associated Cable Companies.

What is the record of the Marconi Company? The Marconi Company last year was reconstructed, assets to the extent of £6,000,000 being written off. The "Times" of 16th March, 1927, in an editorial, characterised the record of the company as one of "reckless mismanagement." It said: Over a period of years substantial profits were reported, inordinately large fees were paid to certain directors, and shareholders were lulled into a false sense of security by receiving appreciable dividends. Yet all the time, as it now turns out, the company was in fact suffering heavy losses by unwise investments (several of which had nothing whatever to do with the company's business), by advances to subsidiary companies which turned out to be bad debts, and by foolish speculation in foreign currencies. The cable companies and the newspapers which support them affect to be opposed on principle—and all such opposition is based on principle—to State intervention, but in this case they are concerned because a, system of competition—that competition which they are always pleased to applaud, but in this case the competition of a Government Department—has been amazingly successful in limiting their profits and in reducing their rates. I want to show, however, that while they are opposed to State intervention, they have no objection to receiving State subsidies and assistance. I cannot possibly hope to give the whole of the facts, because even as it is I am afraid that I shall weary the House with the length of my statement, but I want, on this question of subsidies, to give four instances of the way in which the cable companies have been put upon their legs by Government assistance.

A sum of £32,400 a year for 20 years was paid by the Government to the Eastern Extension Telegraph Company to promote communications with Australia; £55,000 a year for 20 years was paid to the Eastern and South African Telegraph Company to promote the building of East African cables, because dependence on private profit would not give the development needed for future commercial requirements and national security; from 1885 the African Direct Telegraph Company received annual subsidies of £19,000 for 20 years towards cables. down the West Coast of Africa; and for 20 years from 1893 the Eastern and South African Company, which has already been referred to in another connection, received £28,000 towards cables between Zanzibar and Mauritius. Yet these same cable companies, which have received such generous State assistance in the past, went to the International Wireless and Cable Conference complaining of their inability to compete with the successful Government competition of the beam service, and it is reported—and this is the part which I regard most seriously—that they threatened to pay out their shareholders, to cease operations, and to let their cables go derelict.

4.0 p.m.

If that threat actually was made—and I have every reason to believe that it was—I think it is a remarkable illustration of the patriotism of private enterprise. To receive—I hope I am not exaggerating if I say millions—at any rate vast sums of money from the State in order to build up your business, and then, when it does not look like being particularly profitable, because of a new invention successfully operated by a Government Department, to have no regard to any national or Empire interests, whatever, and to threaten to scrap the whole of the business, which has been built up by the people as much as by anybody, is, in my view, an act which is worthy of the strongest possible condemnation. But the story does not end there. These cable companies are not poor companies. It was necessary that they should have subsidies in order that their business might be put on a sound basis, but they certainly have done very well since. They have built up enormous reserves, because in the absence of effective competition they were able to charge excessive rates. With a total capital, including debentures, of less than £18,000,000, I understand that the Eastern, Eastern Extension and Western Cable Companies have reserves in cash of over £11,000,000. These are the people who are preparing to scrap their system rather than come to a reasonable arrangement with the Government in the national interest. The £11,000,000 cash reserves of the cable companies is remarkable enough, but the "Times," on 23rd March, puts the cash assets of the financial merger between the wireless and cable companies at £20,000,000. The proper course for the cable companies to have taken would have been to endeavour to reduce their profits in order that the commercial users might have had the best possible service at the lowest possible price. That is not the course they have chosen. They have chosen to get together with the Marconi Company in the hope that they will be able to continue to exploit the commercial and industrial user.

I want to draw the attention of the House to another remarkable feature about this business. As a rule, it is the unsuccessful competitor which goes out of business. Not so in this case. Marconis are anxious to secure the profits made by the Government themselves. If my information is right, Marconis get 6¼ per cent. of the total and the Post Office gets the rest. Marconis see rather a rich field, and they want it for themselves. That is understandable. The cable companies say that they cannot stand up against the beam competition at all, it is too much for them, and these two groups come together, and, if my information is correct, they approach the Government with the proposal that they, the unsuccessful people, should be given the profitable Government services in order that they may have no competitors, in order that they may exploit the world, and in order that the British people may lose a very substantial source of revenue. During the whole of these discussions, we had a tremendous number of warnings, a great deal of friendly advice from the Press which supports these cable companies' interests, and they tell us that it is really extraordinarily important that we should be careful to regard this offer favourably, because there is, and has been, a very great danger that this service might be secured by American financial interests. In fact, Mr. Kellaway recently said that American commercial interests had offered to take over the whole internal and external telegraph and telephone services of the United Kingdom. A few days earlier it was reported that an American cable and telegraph group proposed to apply for a licence to operate a London station on a new shortwave system in rivalry with Marconi; and, finally, when announcing the merger of the cable and wireless interests, the "Daily Mail" on 16th March, assured us: The public would be astonished to know how nearly control passed into American hands, the result being a saving for the British Empire of the inter-Empire communications. The importance of this is incalculable. Well, it may be that the importance of retaining the control of the means of communication by telegraph between ourselves, the Dominions and the Colonies is as high in value as the "Daily Mail" puts it, but Marconis are not the people who are going to safeguard us against any such danger. As I understand it, they have entered into financial and working arrangements not only with American interests but with German interests. In actual fact, their net is spread in the widest possible manner. Marconis in 1922 entered into association with three great world wireless companies, one American, one French and one German, and the object of that arrangement was to parcel out the world into spheres of exploitation. The American company—I would ask the House to observe the name—is known as the Radio Corporation of America, and that is one of the groups from which our friends of the "Daily Mail" are so extremely anxious to save us. I would ask the spokesman for the Government to give us certain information, and the first piece of information I would like to have is a statement giving the whole of Marconi's financial and other commitments, because I believe that when we get down to the financial springs of this business it will be really enlightening not only to the Government but to ourselves. I understand that even shareholders in the Marconi Company are unable to obtain that information. In 1924, Sir Robert Donald made a statement in the "Manchester Guardian" of 21st May as follows: The fact that the Marconi company is in a world combination of wireless, in which the predominant partner is an American trust, is another factor which makes State ownership desirable, if not inevitable. Only last year the majority of the shares of the Canadian Marconi Company were purchased by the Canmar Company, which is a combination between the Radio Corporation of America and the British Marconi Company. The Radio Corporation are the largest shareholders, and, incidentally, made a direct financial gain as a result of the market movements which have been taking place in London arising out of the discussions in the Imperial Wireless and Cable Conference. I want to emphasise the fact that we are being asked to hand over our Imperial telegraphic communications to two groups, one of which has a record of scandalous mismanagement and widespread international combination, and the other of which came to the Imperial Wireless and Cable Conference to state that they could not stand up against the Post Office competition, and which threatened to scrap its plant.

I want to say a few words in regard to the immense sums of money which have been made upon the Stock Exchange both here and in America during the sittings of this Imperial Conference. When the first announcement was made with regard to the possibility of a fusion between the wireless and the Canadian interests, Radio Corporation stock boomed in America, but as it is more difficult for me to get information from America than in this country, I propose to confine myself in the main to the movement in the shares which are quoted in this country. The shares of the cable group had been falling at the end of 1927 and the beginning of 1928. The highest point reached by the Eastern Telegraphs ordinary shares in 1927 was 183. At the end of December they had fallen to 140. They opened the year 1928 at 136. On the fusion announcement of 14th March, they reached 141. As a result of an "Evening News" announcement of 15th March, they went to 160, and the following day they reached 200. On 4th May the "Daily Mail" announced that the Government had reached a decision. On that day the price went to 220. That was a Friday. On the Monday the price had gone up to 238, on the Tuesday it was 241 and on the Wednesday 242. If the price at the beginning of the year was 136 and on 9th May 242, I think we have a very interesting illustration of the very great value of inside information. In the three days, 14th, 15th and 16th March, the value of the cable group shares increased to the extent of £6,000,000. I regret to say I have not worked out the total gain for the whole period, but I think the £6,000,000 for the three days is quite sufficient to go on with.

Now look at Marconis. In 1927, Marconis fell as low as 13s., and on the prospect of beam profits they rose to, 39s. 6d. early in 1928. On the 13th March, they reached 60s. 3d., on 14th March 67s. 6d. and so it goes on. I do not want to weary the House with the whole list of prices, but every figure from 13th to 26th March is over 60s., on 30th April 62s. 9d. and on 8th May 71s. I am told that in the City of London to-day the confident tip is to buy Marconis, because of the immense field which is there to be exploited when the Government decision comes into operation. Now Canadian Marconis—and this is the last thing of this sort with which I shall trouble the House—on 13th March were 16s., on 16th March 31s., on 30th April 28s. 6d., and, after fluctuating, on 14th May they finished at 30s. Even if they do not stand at the highest price at the moment, they show a very definite increase from 16s. to over 30s., and it is important to notice that the principal rise takes place in the first instance when the "Evening News" makes the announcement as to possibilities, and, in the second place, when that other independent newspaper the "Daily Mail" makes a similar announcement.

I want to submit to this House quite calmly and quietly that Marconi, the name of the most illustrious inventor of our time, the man who has brought science to a wonderful point as far as telegraphy and telephony are concerned, stands in this country quite definitely for scandal and corruption. I regard it as a most lamentable thing that a scientific inventor should have his name abused in this way, but the fact remains. I do not want to be so unkind as to delve into the history associated with the word "Marconi." It would be enlightening if we could get the whole of the facts, and I am certain that a number of important persons would be extraordinarily disturbed as a result. There are, however, certain facts which must come out in a discussion of this sort. It is well known that a Postmaster-General went from the Post Office to the Wireless Company. I am not going to say anything about the right hon. Gentleman. Every Member of this House must make his own comment. I know nothing about the gentleman; all I know is that he went from the Post Office to the Wireless Company. I make no comment. It is not equally well known that other persons have gone from the Post Office service to the Marconi companies and to the cable companies. A very important director of the Marconi International Marine Communication Company started life as I started it. He put in a great deal of valuable work with the Post Office, and he then went to the Marconi Company.

Captain FRASER

Why did they not offer the hon. Member a job?

Mr. BAKER

It is not for me to reply to a question of that sort, but I certainly claim no distinction such as is attached to the gentleman about whom I am talking; he is an exceedingly distinguished telegraph engineer.

Captain FRASER

Why should he not go there?

Mr. BAKER

I am coming to that. I want it to be clearly understood that I do not suggest that this gentleman did anything dishonourable, according to present standards, in leaving the Post Office and baking his experience to the Marconi Company. I understand that gentlemen on the Government side are in the habit of defending this sort of thing; is it any wonder that Government enterprise does not pay, when the whole of the knowledge and experience which is built up on the Government side is transferred, at a price, to private interests? Is it any wonder, when men go from the Treasury to become directors of newspapers, that the Government cannot keep level with private interests? I have never heard of the reverse process operating, of a man from the Marconi board going to the Post Office and taking with him Marconi secrets and technical information. I demand a new policy from this Government; I demand that it shall become a regulation that no Minister or member of the Civil Service shall ever be permitted to enter the service of a company or combine with which he has had official negotiations. It is not immoral to-day, but it requires a great deal of indelicacy to do it, in my opinion. Not only is the gentleman to whom I have referred an important director of the Marconi International Marine Communication Company, but in the Directory of Directors he is given as occupying another position in the wireless world. I do not quote that, because I fear that there may be a possibility that the Directory of Directors has made a mistake; in that work of reference, however, he is mentioned as occupying that second position.

These are not the only cases. There is yet a third case within my own knowledge. An ex-assistant secretary of the Post Office, who was in charge of the wireless and cable service of the Post Office, with whom I have negotiated in relation to such matters, and who was, I understand, to a considerable extent responsible for negotiations concerning wireless matters with the Marconi Company, is to-day a director of the International Cable Companies Association and a director of the Indo-European Telegraph Company; he will, I assume—I may be wrong—come within the limit of this financial merger between the wireless and cable companies. Frankly, I do not like it. It may be all right, but I do not like it, and I very much fear that these three are not the only cases. It is not every work of reference that gives the whole of this information. In "Who's Who" every man does not include his directorates under the heading of his name. I quite seriously ask that the Government will issue a statement giving the names and ranks of all persons who have been connected in any capacity with the Government service, and who have transferred their services to the Marconi Companies, to the cable companies, and to their subsidiaries or connections. I hope that it will not be regarded as an unreasonable request. Not only has this group been extraordinarily successful in attracting to their service persons with inside knowledge of the Government service, but I believe that the home Government's difficulties are almost entirely due to the financial operations of Marconi in the Dominions. I do not want to be specific. I wish I could be, because I understand that one Dominion has a remarkably clean record in regard to this matter. The gravest possible charges are made in regard to Marconi operations in the Dominions, and distinguished Members of this House have told me in private certain things which I would not dare to repeat, unless I were able to prove them, and I must ask to be allowed to leave the matter at that point.

If there be any doubt about the Marconi Company and its methods, let us look at the record of a case tried in 1924. In an action by a Mr. Malcolm against the Marconi Company in 1924, it was agreed by plaintiffs and defendants that, in negotiating with the Chinese Government about contracts, "presents to officials, euphemistically called rebates," had to be introduced. These rebates ran into tens of thousands of pounds. Perhaps we can leave it here. It may be that the Marconi Company, having found it successful in China, tried it elsewhere. I should also like to ask the Government to supply us with a complete list of the insurance companies and other bodies and persons who hold large blocks of shares in the Marconi Company, in the cable companies, and in their subsidiaries. Provided that a decision has been reached—and I am bound, until a statement is made from the Government side, to believe that a decision has been reached—the Government have adopted a course which is fatal to the national interest, which lacks the safeguards which are so necessary to our national well-being; and the chief result of the Imperial Wireless and Cable Conference has been to enrich the share manipulators and similar persons. Will the Government take us into their confidence as to the original of this Imperial Conference? Who suggested that it should be called? How came the suggestion to be made? No doubt there is a perfectly adequate answer, but I do not happen to know it. Why was the Secretary of State for Scotland selected to look after our interests in this matter? I cannot see that it is a matter specially for Scotland; the Secretary of State for Scotland is conspicuous for his geniality and courtesy, but geniality and courtesy are not weapons with which to meet an international gang like this. I would say respectfully, and with no wish to say anything against the right hon. Gentleman, that he was possibly the last member of the Government who should have been chosen for this task.

Mr. MacLAREN

They should have put up the Secretary of State for the Dominions.

Mr. BAKER

It would be invidious to make distinctions in that way, but I would like to ask why the Postmaster-General was not chosen? His Department was primarily concerned; he has a good deal of knowledge of this subject, and he has had contact with it for a considerable time. I suggest, without being in any way in the confidence of the Postmaster-General, that he and his Department regard this business as a scandalous ramp, and are not prepared to be parties to it. I hope I shall be forgiven for taking up so much time, but it really is important to cover the whole of this ground, if it can be covered. The next point I want to submit is that Imperial communication is of first-class importance in relation to possible future war. I should like to feel that we shall never again be faced with international warfare, but I see no reason to suppose that that state of security has been reached. Our experience in the last War was that for the first two years the Government censorship was not effective, because certain cables were privately owned, and were not under the full control of the Government. I do not want to give chapter and verse for that, but anyone who wishes to know anything about it can go to the War Office records and look up the Enemy Trade Index, and he will find a lot of information as to why it was that the War dragged on to such an extent. Our failure to control this particular form of international communication was one of the serious difficulties which confronted us at that time. I am told that the cable companies' interest was to maintain their volume of business and their profits. That may be perfectly natural, but that was not the national need at that time, and there must inevitably be a clash between the desire of the individual corporation to secure profits and the national desire for something which is much higher and more important. I hope the question of the great importance of these means of communication to our national life will be very carefully considered by every member of the Government.

Not only is it necessary that we should have the most complete control over these means of communication during wartime, but it is important that we should have the cheapest, the most reliable and the most speedy means of communication in peace time. Without stop- ping to argue the matter I suggest that the lowest possible rate and the best possible service can be attained only by State ownership and control, and that the enormous success of the Post Office with the beam service must be accepted as an earnest of what they are capable of doing. Whilst the Marconi Company have been representing that it is absolutely essential that we should have a co-ordinated wireless and beam service, their actions in the Dominions have been almost entirely responsible for the number of authorities which have been set up. The right hon. F. G. Kellaway, speaking at the 28th annual general meeting, on 31st March, said: As the proceedings of that Conference"— that is, the Imperial Wireless and Cable Conference— are confidential in the highest degree, I cannot. refer to any of the proceedings before it, nor can I even indicate, since I do not know, what recommendation the Conference is likely to make, but there are certain broad considerations to which I am entitled to refer. They are considerations which in my judgment make it an imperative Imperial necessity that the external telegraph services of the United Kingdom should be operated as one telegraph unit. As things are now the external telegraph services of the United Kingdom are in the hands of at least six different authorities. Yon will at once see how wasteful and expensive such a system is bound to be, the cost of which has, of course, to be carried by the telegraph-using public; six different companies maintaining six different organisations for the collection and distribution of traffic, six different administrative staffs, and as many research and technical departments. But what makes the situation even worse is that there is no single authority charged with the duty of securing a common and coherent policy for the development of the telegraph services of the Empire, both cable and wireless. In these circumstances it is not surprising that there is a real danger of the British Empire falling behind in the struggle which is going on in the world's telegraphic and telephonic communications outside the British Empire. In my view, the impudence of that statement would be difficult to beat. As I have already submitted to the House, the existence of divided control so far as wireless is concerned, is entirely the result of the friction which has been set up by the Marconi Company and its interests. I am informed that the parties to the merger are acting as though the transfer of the Post Office beam and cable services was a fait accompli. I sincerely hope that we are misinformed. I sincerely trust that when the right hon. Gentleman speaks at the conclusion of this Debate on behalf of the Labour party he will ask for an assurance that if a decision has not been reached, it will not be taken until the whole of the available facts with regard to the whole of these interests have been laid before the country, and, further, that if the decision has been reached, the earliest possible opportunity will be taken to reverse it, and to cancel the advantage which has been improperly secured. I am extremely sorry to have been so long, but I regard this matter as being of very great importance, not only because of the facts surrounding this particular combination of financial, wireless and cable forces, but because it is indicative of much the gravest evil with which our national life is likely to be confronted in the future, and I do hope, whatever may be the outcome of this discussion, that we shall at least have secured a plain statement from the Government which will reassure us and disabuse our minds of the fears which have been in them for so many days.

Sir HAMAR GREENWOOD

I have followed the hon. Member who opened this discussion with great interest, and with much of what he has said I find myself in full agreement. He raises certain questions as to the moral probity of Ministers on retirement taking directorships in concerns with which they have had official communications and with regard to which they have possibly had to take official action. That is an old-standing question which might well be inquired into again, and a decision on the highest moral ground arrived at. I also agree with him that the fluctuations on the stock exchange, not limited to England, but on the stock exchanges of the world, form one of the most embarrassing factors in so far as actual serious industry is concerned. Put it is beyond the power of the British Government, acting alone, to deal with that problem of modern materialism. With the hon. Member's conclusions I disagree. He is in favour of the State ownership of cables and wireless; I am not, for reasons which I hope to set out very briefly and, I am sure, as courteously as in the example which the hon. Member has set me. I remember when the question of laying the first Pacific cable was raised nearly 30 years ago. The pioneer in that movement was a distinguished countryman of my own, Sir Sanford Fleming, who started in life a typically poor Scottish boy and became the chief engineer of the Canadian Pacific Railway. The Pacific cable system was brought into being largely because of the forceful personality of the late Mr. Joseph Chamberlain, who considered it to be necessary in order to link up the Western Coast of Canada with Australia and New Zealand. It was a great experiment and I can testify personally and with knowledge to the zeal with which it was carried out by the Pacific Cable Board, representing the Home country, Canada, Australia and New Zealand, and by the officers and staff who operate the system.

The main argument for setting up this system in place of private enterprise was this. In those days Governments were rich, comparatively, and individuals were poor, and it was regarded as being beyond the power of individuals to spend the amount of money required to establish this great experiment in inter-Imperial communications. Things have changed now. Governments are poor, individuals and groups of individuals, corporations and companies, are rich, and growing richer. This Government of ours has reached the very maximum of the taxable capacity of the country, and I believe the Pacific cable system is retarded in its development by the inevitable and necessary meanness of the Treasury, which must refuse to advance any capital for its further development, I take the view that State ownership of this cable system or of wireless in any form makes for under-development and not adequate development. The hon. Member raised the question of why the Secretary of State for Scotland was Chairman of the Imperial Cable and Wireless Conference. He did not make clear why that. Conference is sitting. The Pacific Cable Board, which has been operating for nearly 30 years, found that the Post Office beam system was able to send messages to Australia and to the East at a much cheaper rate than they could be sent by the Government-owned Pacific cable system. Naturally the Dominions, who were parties to the construction of that cable, and are parties to its operation, and are liable for the losses wanted to know where they stood. The position was that the Post Office in England was competing with the English Government plus the Governments of the three Dominions. I know nothing more amazing. It is quite Gilbertian to see one department of His Majesty's Government cutting rates with another department of His Majesty's Government which is interested in a joint partnership with British Dominions.

Naturally the position had to be inquired into, and the conference has been assembled and has been carrying on for months. This vast conference, represents all parts of the Empire, and has, I suppose, 12 or 20 senior civil servants and experts. It is a most complex question, as is shown by the numbers of Ministers representing different interests who are at present on the Treasury Bench. My view is that the great experiment of State-owned cables and of the Beam system has been justified, but that the time has now come when the work should be transferred to private enterprise, and continued by private persons, the Government being thereby freed from their liabilities. I am certain that business interests, overseas and in the home country, would be gratified to see that brought about. Like the hon. Member who has spoken I am in the dark as to what the Imperial Cable and Wireless Conference has done, and as to what His Majesty's Government have done, but, speaking from some experience, I can quite understand the reasons for the prolonged negotiations. The conference meets, questions are submitted to His Majesty's Government, the Cabinet appoints a Committee, the Committee reports to the Cabinet, all the Dominions and all the Colonies interested in this vast network of Imperial- or British-owned cables must be communicated with. It must take a long time to come to a conclusion.

The experience of the last few months confirms me in my view that neither the Post Office, however efficient, nor any Government Department is in these modern days the proper person or persons to construct or to operate cables or wireless systems. I say that for another reason. There is no doubt that at. the moment this conflict between the beam system, which is owned by the British Post Office, and the Pacific Cable Board, which is jointly owned by the three Dominions and the Home country, must lead to a certain amount of irritation. I differ absolutely from the hon. Member who talked about a menace to the British Empire. He is putting it too high. The Empire is too firmly united to be threatened by any question as to who is to operate wireless or cables; but it is a cause of irritation. I am for removing causes of irritation, and I believe that until these systems are transferred to private persons we shall always have irritation, and possibly a growing irritation. Therefore, I am in favour of transfer on the ground that it will make for inter-Imperial good will. I believe such a transfer would mean the immediate development of a more efficient service or services. I believe, further, that such a transfer would command the support of the business communities of the whole Empire.

I have no interest in the Eastern Telegraph Company or the Marconi Company. I know the history of the Marconi Company as every other hon. Member knows it, and it is not a history in all matters that anybody need be proud of. Signor Marconi is one who has been a loyal and beneficent factor in the development of this country and the British Empire and as far as he is concerned we all agree that he has not in any way been connected with anything questionable in the history of the affairs of the company. In dealing with this inter-Imperial communication system it must be remembered that the Eastern Telegraph Company and the Marconi Company are not the only people who may be prepared to buy the assets of the Government in cables and wireless. I agree that those assets are most valuable.

I have no doubt that the Financial Secretary to the Treasury may tell us that the Government have not made up their minds on this subject, but I am doing my best to help them to make up their minds. If the Government do decide to dispose of these assets I ask them to realise that they are most. valuable and that they are growing in value. When dealing with the Eastern Telegraph Company or the Marconi Company I am sure the Financial Secretary will have a wonderful opportunity of exercising his best peremptory manner. I agree with the hon. Member that this is not a case for any undue sentiment but it is an opportunity to make a good bargain on what I should call a rising market to discharge a heavy liability of the Imperial and Dominion Governments. It is an opportunity for giving an impetus to Imperial communications and trade generally which must follow, and it is an opportunity for separating from the State the ownership of this industry. If what I have suggested is carried out, I am sure we shall be able to carry with us the approval of the business men, and I hope also of the Governments of the Dominions concerned, and I believe this would make for inter-Imperial good will and, I hope, would meet with the approval of the House of Commons.

Mr. AMMON

I desire to add a few words to the discussion which has already taken place in order to complete the case put by my hon. Friend the Member for East Bristol (Mr. W. Baker). I take this opportunity, first of all, of saying that I associate myself unreservedly with the statement that there is no reflection upon Signor Marconi himself, and it is a matter for regret that the Marconi Company itself has not gained the very best reputation since it began to operate. I understand that the Government are not in a position to make any definite statement in regard to what is taking place. at the Imperial Conference, but it was thought worth while that this discussion should take place in order that, as far as possible, it might be intimated that a close eye is being kept on the discussions which are taking place on this subject, that the history of this question is being kept in mind, and that when the Report of the Imperial Conference is issued we may consider that Report in the light of this discussion in order to see that everything is fair and above board.

The last speaker has argued in favour of wireless and cable communication being kept under the control and ownership of private companies. Let me examine that argument for a moment or two. As a matter of fact, until the operation of the invention of wireless the cable companies had badly let down the whole of their stock and communications, and had practically done nothing for a number of years after the invention with the exception of making some technical improvements, such as duplexing, amplifiers, printing and the regenerator. It was not until they realised that the Government had entered into competition with them that the loaded cable was invented which has given a very much better return. This indicated all too clearly that if the cable companies had, as they hoped, a distinct and clear monopoly they were not prepared to give any better service to the country than they were compelled to do. From some returns which have been furnished by the Postmaster-General, it has been shown that the work of the cable companies and the volume of business done has improved since the wireless has been in operation for the simple reason that they had been forced to lower their rates to meet competition.

I wish to ask hon. Members to give some consideration to another side of the history of this movement, as compared with that side which has been dealt with by my hon. Friend the Member for East Bristol. It is not too much to say that there seems to be an atmosphere of corruption about wireless communication and the cable companies without parallel in the history of any commercial movement. During the sittings of the Imperial Conference we have seen what we have seen on two or three other occasions when Imperial Conferences have been sitting, that is a raging, tearing Press campaign intended to depreciate the Government services, and to boost up the Marconi Company and the cable companies. That kind of thing has been repeated on more than one occasion, and it appears to have been something very much in the nature of a ramp to get possession of the wireless service and force up prices.

We have had more than one Imperial Conference on this question at which the British Government have declared themselves in favour of a certain line of control and direction. More than once the Imperial Conference has approved by definite statement that the wireless service should he State-owned and worked by the State. The British Government have agreed to that, and have given expression to it in formal resolutions. Notwithstanding these decisions, there have been at work somewhere behind the scenes powerful influences which have prevented those decisions from being put into operation. The Imperial Conference of 1911 passed a resolution, and it was a specific and definite decision in favour of a State-owned wireless service. In 1913, a Committee was appointed under the chairmanship of Lord Parker, and that Committee came to a similar conclusion and recommended that this service, in the interests of commerce and the Empire, should be under the control of the State. In 1920, there was the Imperial Wireless Telegraphy Committee set up under the chairmanship of Sir Henry Norman. That Committee was composed of authorities possessing the highest commercial and technical qualifications, and in May of that year they decided in favour of a State-owned wireless service. In August of the same year the Cabinet accepted the Report of that Committee, but, apparently some powerful influences got to work, and we find that in 1921 the matter was referred to the Imperial Communications Committee which considered the matter afresh, after it had been considered by the various bodies to which I have referred. On the 3rd of June, 1921, the Imperial Communications Committee passed the following resolution: That it would be undesirable under existing conditions to modify the decision of the Cabinet by which the recommendations of the Imperial Wireless Telegraphy Committee were accepted and that the scheme recommended by that Committee be adhered to. That decision has again and again been confirmed, in unequivocal language, by British Ministers and Government Departments. Since then there have been resolutions signed by representatives of the Admiralty, the Colonial Office, the Treasury, and other Government Departments all confirming that decision, and stating that in the interests of the State and the Empire it is desirable that the control of wireless and its ownership should be in the hands of the Government itself, and yet, in spite of all that, any attempt to give effect to those recommendations was delayed from 1911 to the year 1923, when the Imperial Conference met again. In that year, we had another newspaper campaign, and agitations stirred up in favour of private interests in this matter. I took some part in the newspaper controversy at that time, and the question was discussed in the House of Commons in 1923 on the Vote for the Postmaster-General's salary. On that occasion it was again confirmed that it was in the interests of the State that this service should be State-owned and controlled. The same influences were again set to work and that decision was set aside. A modified system was put forward in its place, and the Postmaster-General at that time—the present Secretary of State for War—announced in this House, in July, 1923, that the Government were going to give a certain number of licences to private enterprise. On that occasion, Sir Henry Norman stated that the decision announced by the Government had been arrived at without fully consulting Parliament, and he contended that it did not satisfy the decisions of he Imperial Conferences and the decisions of those Committees to which I have referred. Those decisions to a large extent were carried out later by the Government of 1924. It is well to note that the Post Office, up to that time, had borne the burden and expenditure of all these experiments, and had carried them to a successful conclusion. At the Polytechnic on the 13th of this month one of the gentlemen referred to by my hon. Friend, who was a former official of the Post Office, and who has since accepted service with one of the Cable Companies, gave a lecture upon "The Relations of Cables and Wireless," and he said: In July, 1924, Mr. MacDonald's Government, acting in general conformity with the recommendations of a Committee over which Sir Robert Donald presided in February, 1924, conducted a contract with the Marconi Company for the erection of four beam transmitting and receiving units in this country, for communication with Canada, South Africa, India, and Australia, respectively—the stations in this country to be owned and worked by the Post Office. 5.0 p.m.

That is the position at the present time, and this agitation which is now being set on foot is to get control of the cable companies at this end. Through the ownership by the Post Office of the wireless communications at this end, there is a check on the private companies, and it helps to keep down prices. That, however, does not suit the interests of the private companies; hence the present agitation, not only for the purpose of getting control, but for the purpose of forc- ing up prices. If there be any doubt about that, let me quote again from the lecture to which I have referred. The lecturer said: The trouble—if I may use such a word—is that the Post Office charges are materially less than those of the wire services, except in the case of the Anglo-Canadian service. That is the secret of the agitation that is now going on. What has happened is that a price-cutting war has developed between the Government wireless and the Eastern Associated and other companies. They are awaiting the Report of the Imperial Conference, and pressure is being brought to bear on them in order to get control of these particular services. Speaking on this matter, the lecturer, who has now gone over to these companies, said: Meanwhile the rate differential continues, and the Report of the Conference is still being awaited. … In the interval the companies concerned have got together and have produced a scheme, for the merger of their interests … contingent on suitable arrangements being made with the British and Dominion Governments; and they have let it be understood twat it is part of these proposals that the Government beam and cable services should be transferred to the merged companies, so that the whole of the Empire services may be worked as a single organisation—subject to suitable financial provisions as between the Governments and the companies; subject also to adequate protection for the public in regard to charges. … There we have a specific and definite statement that the whole aim and object of the merger is to get possession of the whole of the wireless and cable communications—to get possession of those which are already in the hands of the State. We are threatened, too, by interference from America, the Radio Company of America having stated in very definite terms that they are prepared to take a hand in this if things do not go their way. In connection with that, the lecturer says this: The simplest and best arrangement, other things being equal, is obviously a general fusion of the two systems"— that is to say, the American Radio and the English companies— under common management and operation. In this way each system can be employed for these classes of services to which it is best adapted; administrative and operating economies can be effected; and—the sending and receiving arrangements being under a single control—those difficulties of service which are so apt to spring from divided management can be avoided. … Without inclusion of the Post Office beam stations, which, as we have seen, are the source of all the difficulty which the State-owned and private cables are experiencing, the proposed merger would be of practically no value so far as Empire communications are concerned. That is a pretty plain and pretty frank statement that it is only the competition of the State-owned wireless service that will prevent the merger from getting a complete monopoly and working its will with regard to these communications. Further, in the "Wireless World" of the 11th April, there appeared this statement: Both of the American organisations have extensive cable systems, and both own important wireless patents, and have expressed their intention of establishing trans-oceanic short-wave telegraph and telephone services as an adjunct to their cable systems. Mr. Clarence Mackay, the President of the Mackay Companies, has stated very emphatically that the American merger is not to be regarded as in any sense a reply to the British proposals. It had been under consideration for some time, and its consummation has taken place entirely without reference to the British merger. But the American merger must undoubtedly be considered in conjunction with the British merger. if the Government should put any sort of obstacle in the way of the latter it will be open to the British cable interests to dispose of a large part of their shares to the American Corporation—not perhaps their Empire cables, but other cables which are of hardly less importance from an Imperial point of view; and in any case, if the British companies are to speak on equal terms with their American friends, it is necessary that they should be comparable in standing and resources. Now we are beginning to see some of the pressure that is being brought to bear on the Government and, indeed, upon the Imperial Conference which is now sitting. Here we have a threat that, if the Government do not come to heel, the American companies and the British merger will come together and will seek to wage war against the British interests in order to get a complete monopoly and control, and it is for that reason that we are asking that a clear statement may be made to the House of the exact position of the British Government in this respect. My hon. Friend has already given some indication of the interests involved, and it seems that a certain amount of rigging of the financial market has taken place. There must be some explanation for the fact that again and again the decisions of the Imperial Conferences and of the Government have been thwarted in regard to putting into full operation State-owned wireless communications, and now we have this threat of the English merger and the American merger to bring this further pressure to bear.

The other point that I want to raise is as to why it is that always a different point of view is taken by certain Members of this House with regard to the law of competition when the Government is concerned and when private interests are concerned. There are in this House representatives of large multiple firms and monopolies which have attained the position they occupy by carrying on a ruthless competitive warfare against small concerns outside, and which, by reason of great amalgamations of capital, have been able to overthrow smaller tradesmen without any sort of compensation or any regard whatever to their feelings in the matter. The moment, however, that these people find the Government entering into competition with them for the advantage of the community, so that they themselves begin to feel the pressure, they come and ask that the Government should stand off, and that the people themselves, who pay for these services, should allow them to have a free hand to exploit them.

The cable companies should be left either to fight the matter out with the Government or to enter into competition with wireless, as they have done hitherto. The Postmaster-General, in reply to a question which I put to him on the 6th March last, indicated that, since the establishment of the first beam service, the cable rates had been reduced, to Australia from 2s. 6d. to 2s. a word, to South Africa from 2s. to 1s. 8d., and to India from 1s. 8d. to 1s. 5d., and that corresponding reductions had been made in other services. In reply to another question, as to the volume of traffic that had been carried by the beam wireless, he gave certain figures which indicated the extent to which it had been increased, and he further said that he understood that in the case of the cable companies also there had been a corresponding increase of business. That simply meant that, as a result of the keen competition between the State and the cable companies, the cable companies had been forced to lower their prices, which was an advantage to the community, and there had been a greater volume of business, not only for the beam wireless service, but for the cable companies themselves. Now they are proposing again that they should have a free hand in this respect, in order that they may further exploit the community.

The House, surely, has a right to know and to be assured that, before any agreement is arrived at arising out of the decisions of the Imperial Conference, they will be reported to this House, and ample time will be given to discuss and consider them in all their bearings and ramifications. If there is to be any question of handing over to private enterprise that which is the property of the State and which ought to be used for the advantage of the State and the Empire, let it be fought out on ordinary competitive lines as it would be in ordinary business. These companies now find themselves in precisely the same position in which smaller businesses have teen placed against which this kind of competitive warfare has been carried on. I hope that the right hon. Gentleman will be able to give some satisfaction to the House in regard to this matter, and will be able to assure us that there is not the ramp that there appears to be, and that the pressure of these great financial interests is not going to intimidate the Government and give rise to anything that may savour of corruption.

Major HILLS

The hon. Member for North Camberwell (Mr. Ammon) has talked of influences at work behind the scenes, and of pressure brought to bear upon the Government. I know nothing about any such influences, and, in view of the atmosphere of suspicion in which the two speakers from the Opposition Benches have involved this subject, I want to say quite clearly that I have no interest in any cable company and no interest in the Marconi Company, and do not speak on behalf of either. I look at this matter as involving two very big questions of public importance, upon which I hold certain definite views, and which I want to put before the House. The first question is, ought all telegraphic communications, whether by cable or by wireless, to be amalgamated, or should the two remain separate and in competition with one another; and the second is, if they are to be merged, ought they to be operated and owned by the State or by some private interest? I approach this matter entirely from the point of view of the public interest.

On the first question, as to whether there should be co-operation or co-ordination, the case for co-operation is that it increases the incentive to improve the outfit, while competition, it is said, keeps down the prices. I would, however, put it to the two hon. Gentlemen who have spoken from the other side, that we have passed out of the competitive era. Competition was a very valuable incentive at one time, and did things which co-ordination could not have done; but in the modern world, and as things are at present, it is more valuable to get co-ordination, and the reduction of costs that comes from co-ordination, than to have competition. It is hardly necessary to quote what has happened in the case of the railways. There we have gone a long way to eliminate competition, and we have not yet suffered from it.

Perhaps, however, the greatest argument against competition is that, if unrestricted fighting between wireless and cables be allowed, the cables will be destroyed. I believe that that is common ground, for a subsidy to the cables is really out of the question, and, indeed the hon. Member for East Bristol (Mr. W. Baker) spoke very strongly and emphatically about the evils of a subsidy. Without a subsidy, I do not believe the cables could live against the wireless, and yet the cables are essential, as all the world agrees, because they have certain properties that wireless has not. In the first place, there is the difficulty of what is known as fading. and then there are all the advantages of cables as compared with wireless for commercial communications, while, in addition, there is the advantage in war, because, in war, communication by cable both ends of which are owned by the Empire is a valuable thing which no wireless can replace.

The two speakers have both said that if some merger does not take place there is a danger that cables will pass under foreign control. I have no knowledge of that at all. The last speaker said that the cable companies had used this possibility as a means of bringing pressure to bear upon the Government. Of that, again, I am naturally ignorant. Still I envisage the possibility that if something is not done it may be that the cables will become so unprofitable that they will have to pass into other control. This competition ultimately costs more, and all the cost must fall upon the consumer. I could say a good deal as to what competition costs the railway passengers and people who send goods, for undoubtedly in the competitive era certain things were done by railways that were not economic, and the cost must ultimately fall upon the person who uses the railway. I submit that the public is best served by co-ordination. I know it can be cheaper, and I believe it can be more efficient. Here you have a very similar case to what is happening now with the railways and the roads, two systems which have to work together and which it is most profitable to work in partnership and not in competition with each other. In fact, I believe there is an overwhelming case for combination of some sort. I do not think the speakers opposite would deny that. The hon. Member for East Bristol, who started the discussion, was not very clear about that. I am not sure whether he did not want cables to go out of existence. I believe the majority of Members of the House, including Members of the Opposition, agree that the case for some sort of merger is overwhelming. The economic side is very strong and the operational side is very strong. A merger of some sort there ought to be.

That brings me to my second question. Should the merger be under public ownership or under private enterprise? I do not altogether agree with my right hon. Friend the Member for East Walthamstow (Sir H. Greenwood). I agree that some sort of non-Government ownership is best, but he apparently pleaded for quite unrestricted private ownership. I do not think that would be best. There are two or three objections to private ownership. In the first place, we are told if you have a merger in private hands progress is stopped, the operation becomes a monopoly, and costs are raised. I do not think the charge that progress is stopped is very valid, but I see a real fear that costs may be raised. That is a far more serious charge than that progress and development will be stopped. I have always held that every public utility company ought to be under some sort of public control and not allowed the unrestricted use of a valuable monopoly. If you impose that control, and if it is efficient, I believe that far the best way of working these great monopolies. It is an immense service, it is increasing every year, and a decision upon the future of it is a matter of very great importance indeed. I do not know whether the hon. Member for East Bristol included Senatore Marconi in the charges he made against the Marconi Company.

Mr. W. BAKER indicated dissent.

Major HILLS

I am very glad to hear it. I spent some time with Senatore Marconi many years ago, and the impression I formed was that he was out, to give the benefits of science to the public, and I believe his name will go down to posterity as a very great benefactor. It did not strike me that he was a man who had any wish for money or power or fame, except the fame that attends the creator of a very great invention. I suggest that the merger should take the form of a public utility company. What are the points in which the State should exercise control? First of all, it should, directly or indirectly, supervise rates charged by the company, as in the case of the railways. Secondly, I should like to see a limitation of the dividends, the profits not to go to the State but to development. If you look at the history of the Post Office—here I think I shall have the assent of both hon. Members opposite—you cannot fail to be aware that development has been stopped because of the exigencies of the Chancellor of the Exchequer. If more of the profits had been allowed to go back into the business, we should now have a better and a more profitable service. The third point is that certainly in the event of War, the Government ought to step in and operate the whole system. I think that is common ground with all of us.

Lastly we come to this. Attacks have been made on the Marconi Company. I only know what every public man knows about the Marconi Company. There are some elements in its history which would not commend themselves to a man who observed financial rectitude. I will put it mildly. There are some things in the history of the Company of which we cannot approve. And so it ought to be a term of any grant to a public utility company that there should be a company, respectable and responsible, managed by people in whom the public has confidence and possessed of adequate financial powers. If that were so I should be in favour of the beam service being transferred to such a company and the whole of the wireless and cable operations of the Empire being worked as a single whole. By controlled operations such as I have outlined, you would get the cheapest and the most efficient service.

May I take the opposite side of the case and meet a few of the objections which I think would be made to Government ownership. First of all, there is the difficulty of finding the money. It is a very real difficulty. Even more than that, there is the risk of finding the money. If you look at the history of public enterprises, you will see that a lot of money has been lost. A great deal of the expenditure on tramways has been lost, and that is the ratepayers. If a private individual or company chooses to run a tramway and lose its money, no one cares except the people who have lost the money, but it is a very different thing to lose the money of the ratepayers, and are we quite certain that money will not be lost here? It is only yesterday that we heard about the beam system. Who knows that something else may not supervene? I do not want the State to embark its millions in transactions which may be risky. For these two reasons I am very strongly in favour of a controlled public utility company. Lastly I would ask hon. Members' careful attention to this. If you admit that unity is the thing to aim at, it means that the cable and the wireless must be operated by a single party. If it is to be the Government, the Government must take over the cables. Do hon. Members opposite really mean that? My right hon. Friend below me talked about wireless being a rising market. I do not think he would say the same about cable shares. Unless you can control the cable as well as the wireless you cannot get a unified system. I hope the right hon. Gentleman the Member for Ogmore (Mr. Hartshorn), will tell us whether his party are in favour of a unified system and, if they are, how they mean to deal with the question of cables.

I am not here to defend the Marconi Company. To my thinking, the decision of this question does not rest on the deeds or misdeeds of the Marconi Company. It is a very big question of public interest, and the effect of it will be felt for a long time to come. It does not turn at all on Marconi's record. It does not turn on the fact, if it is a fact, that certain speculators have either gained or guessed information and that shares in certain companies have risen. Nor does it depend on the fact that the operation will be profitable for the public utility company that I suggest. I am not afraid of private profit if the public interest is served thereby. It is my very clear belief that if the State had made motor cars they could not have made cars as cheap as Mr. Morris makes them, and, in spite of making them cheaply, Mr. Morris has made a fortune. But if the fact that a fortune can be made brings those sort of trades into operation there ought to be some public benefit. I am not afraid if I am told that there will be a profit in this undertaking. I suggest that the profit should be limited. The real thing that I want is an efficient service that gives us cheap and good communication, and that, I believe, you will get by combining all the telegraphic means of communication into one single company.

Mr. OTHO NICHOLSON

The hon. Member for East Bristol (Mr. W. Baker) who opened the Debate stated that there were six separate authorities dealing with the telegraphic and telephonic communications of the British Empire. I believe that there are really eight, and there is no single authority responsible for the co-ordination and the development of these various services to make them of the greatest commercial, strategic and political advantage to the Empire. The need for some such authority is absolute. First of all, because Empire unity depends on rapid and efficient communication between the home Government and the Dominion Governments and between the United Kingdom and our Dominions. Secondly, because there are other countries and particularly the United States of America, who are developing telephonic and telegraphic communications to such an extent that I believe they are a. danger to this country if we wish to maintain control of these communications. And, thirdly, because so rapid and ex- tensive have been these developments that the future outlook is so unstabilised that we shall be left behind unless we have unified control. We must have some unified control that is strong enough and courageous enough, should the circumstances arise to scrap the old system and introduce the new. Empire unity demands prompt and efficient telegraphic service. I believe that that is an accepted fact. We cannot regard the Dominions as vast lands thinly populated merely separated from us by thousands of miles of sea. Whether they like it or not, they are drawn into world politics, and the home Government cannot ignore them and must consult with them in all questions of international politics. To do so with promptitude and dispatch, they must have the latest and most efficient form of communication. This applies more particularly to this country than to any other country owing to the great distances which separate the home Government and the Governments of our Colonies. Therefore, I say there is not only great need for a single controlling authority but a very pressing one.

As regards the question of other countries developing wireless telegraphic communications, the most active of which is the United States, recently concessions have been obtained for a wireless service between the Argentine and Spain by an American company, and again an American company proposes to establish a service between the Pacific and Japan and the Far East. That same company has purchased the Sayville Wireless Station, which until lately belonged to the American Government, in order to set up communication with European countries. The American company has also obtained control of the telegraph communications between America and Spain, and I believe I am right in saying that American financiers to a very large extent control the radio and telegraph companies of Germany. These developments have the approval and the support of the American Government. The American Government have set up a Federal Radio Commission for the purpose of allotting short wave lengths to American companies, to the naval and military authorities, and to others who are interested in America. Already, a very large number of these short wave lengths have been allotted, and the beam system is a system which is worked on comparatively short wave lengths. There are not more than 500 or 600 wave lengths available for the whole of the world communication and one American company has already had allotted to it, has applied for, and states that it requires at least 225 of these wave lengths. The deduction to be drawn from these facts is that we have to be very careful indeed to see that we get our proper proportion of those wave lengths.

In view of the importance of telegraphic communications to the Empire, it ought not to be left to the individual action of eight different authorities to obtain and maintain an efficient service. This responsibility should be in the hands of a single controlling organisation of the whole Empire. In the minds of the past generation, the submarine cable was considered to be the last word in scientific invention. Only three years ago we thought that the large high-powered wireless stations were equally the last word in scientific invention, but we made a mistake. Hardly before these stations had become stabilised they were superseded by this new system known as the beam, and the beam system, I believe, will be used entirely in the future for all communications of any distance from this country. The beam system has already passed the experimental stage. It is in operation as far as the Empire is concerned between this country and Canada, South Africa, Australia and India, and these four beam circuits are carrying 30,000,000 words per year, and are capable of carrying five times that amount.

The beam system has many advantages over the cables and the long-wave wireless stations. First of all, let us take the question of costs. Every hon. Member knows what a costly thing it is to lay down a submarine cable. We all know what an enormous amount of money the large Post Office station at Rugby costs the taxpayers of this country—a matter of £500,000. On the other hand, these beam stations can be erected for a matter of £100,000. As regards the speed, the cable is only capable of transmitting messages at a rate of approximately 45 words a minute. The large long-wave wireless stations are also limited in the speed with which they can transmit messages, probably somewhere between 20 and 30 words a minute, largely owing to the enormous current with which they have to deal. The beam system, which is dealing with a comparatively small amount of energy, is able to transmit messages at the rate of 200 words per minute, and under the most adverse conditions can keep up an average speed of 100 words per minute for the whole 24 hours. I understand that very shortly these beam stations will he capable of increasing their speed to probably something like 600 words a minute.

One right hon. Member has already given the House the rates compared with the cables and wireless. In three cases, the rates of the beam wireless are 4d. a word less than those of the cable. It is only in regard to a Canadian service where the two rates remain the same. With regard to the question of efficiency—cables versus wireless—cables sometimes develop faults, and, when they do, it is an extremely costly business to send a ship out, first of all, to drag for the cable, and then to mend it. The normal sort of breakdown which one gets in a wireless station is one which is comparatively easy to repair—probably a burnt-out valve. If it is something larger, such as a burnt-out armature, there is probably a spare one which can quickly be put into commission. The question of secrecy is one which is always held un on behalf of the cables as opposed to wireless, and it is one with which I do not agree. We must remember that these beam stations can transmit at the present moment, as I have already said, at the rate of 200 words a minute. That in itself makes it an extremely difficult thing for anybody to intercept. There is a new invention known, I believe, as the cryptograph which automatically codes and decodes any message and is capable of altering that code every sentence—if you like, every word; if you like still more, every alternate letter. That is going to make it practically impossible for any person to decode these messages.

There is the question of the narrowness of the beam. Unless you happen to be in the path of the beam, it is very nearly impossible to intercept these messages. May I give the House an illustration of what I mean? A little time ago messages were being sent by the beam wireless stations from South America to London, as the focus point. Messages were received in London strong enough to be automatically recorded, but those same messages were only audible on earphones to the German station which was listening for them. They were not strong enough to work the automatic machinery. With a slight adjustment of the aerial in order to widen the beam those messages were capable of being automatically recorded both in London and Berlin. No doubt in future it will be possible considerably to narrow the beam and, by doing so, increase the secrecy.

As regards the future development of the beam, I believe that if the stations were in the hands of private enterprise, we should find that they would develop very much more quickly than they will in the hands of the State. It is possible at the present time to turn these beam stations into wireless telephony stations, and at the same time as you are sending messages on the Morse code it is possible to superimpose the human voice on the same wave. We have the same thing going on at the Post Office Rugby station, and they charge us £5 a minute for communication with America.

The ASSISTANT POSTMASTER-GENERAL (Viscount Wolmer)

The charge is now £3.

Mr. NICHOLSON

The Assistant Postmaster-General informs me that the charge has been reduced to £3 It is time that it was reduced still further. It is possible to introduce telephony to beam stations and to work it at a handsome profit £1 per minute. There is a new invention which I hope will be introduced into the beam system—an invention for the transmitting of photographs. Perhaps that does not appeal to hon. Members unless I explain that messages themselves can be photographed and facsimile messages can be sent over the wireless. In a comparatively short time we may be reading that the full 24 page issue of the "Daily Mail." complete with picture page at the end, will be published every day simultaneously in every capital of our Dominions

Mr. DUNCAN

What about the "Daily Herald"?

Mr. NICHOLSON

The "Daily Herald" will have the same possibilities if only the Government will give facilities to their beam stations. For the purpose of development, and of watching the development of experimenting, particularly, one unified control authority is essential, on account (1) of the importance of Imperial communications, (2) of the competition for world control of wireless telegraphy communications, and (3) of the rapid development and instability of the wireless telegraph companies, at any rate, at the present time. The question which arises is whether the Post Office should be that body, and I ask myself, does the Post Office record in relation to inland telegraphs inspire confidence? One has only to read the Hardman Lever Committee's Report where it refers to: The atmosphere of inertia and the lack of resiliency of the telegraph service, and the unsuitability of Civil Service conditions to apply to a business undertaking, to realise that, in their opinion, the Post Office are not a fit and proper body to undertake this work.

Does the Post Office inspire confidence with regard to wireless telegraphy? I would refer the House to the history of their Rugby Station—a monument of lack of foresight on the part of the Post Office engineers. That station was put up for the express purpose, as I understood it, of communication with our Colonies at any time when we wished to do so. What do we find this station doing at the present time? Whenever I have listened to it, I have never heard it doing anything other than sending messages to ships at sea, most of them Press messages. The service which at one time it had established with Cairo has now been taken over by the beam station. Not long ago, the Post Office told us that the only way to create efficient wireless telegraph communication with the Empire was by a series of short steps, or relay stations.

I do not believe that the Post Office has the necessary vision. One has only to refer to the question of the Pacific cable. The Pacific Cable Board is composed entirely of the representatives of Governments. They laid down a cable which cost £2,750,000, and every Government agreed to it except the Government of Canada. Not one of them except perhaps the Government of Canada realised the possibilities of the beam system. One hon. Member in this House, during the Debate on the Pacific Cable Board, referred to the Pacific cable as a very valuable asset. I think the right hon. Member for Seaham (Mr. Webb) referred to it as "the most successsful social enterprise that could possibly be imagined," and yet to-day we are taking steps to consider what we can do to save this successful Socialistic enterprise from private enterprise competition.

Mr. AMMON

Surely, the hon. Member is mistaken. It is from Post Office competition or public competition that we are seeking to save it. The wireless system belongs to the Post Office.

Mr. NICHOLSON

I think I am right in saying that the Post Office are not the only people who own beam stations from which competition may come. I think the Marconi Company have stations, and I think the Americans are setting up short-wave stations. The Secretary of the Post Office Workers' Union, speaking the other day at Weston-super-Mare, said that the beam service was the most astounding verdict in favour of State control as against private control. I think that is a most astounding claim. Who experimented with the beam? Was it the Government? No. It was a private individual. Who made the beam a practical service? Was it the State? No. It was a private company. Who installed the beam stations? Was it a Government Department? No. It was a private company. Who put these stations in order? Again, it was a private company, and not the Government. The State did not take any interest in the matter until it was conclusively proved that the stations were capable of carrying on an efficient service. It was then that they took them over. The beam telegraph system is a triumph of private enterprise. Finally, as against Government control and interference, I would point out that every other country has deliberately allowed the beam system to remain in the hands of private enterprise. Why should this country be handicapped by allowing these systems of communication to be taken over by the State?

Mr. PILCHER

After the authoritative and comprehensive speech to which we have just listened I am very reluctant to participate in the Debate, but there is one point, not very difficult or involved, which I should like to put to my right hon. Friend. It relates wholly to the position of the consumer. Up to the present time we seem to have been discussing only the Government and the companies concerned. Surely, the essence of a successful beam system is the economy and the cheapness at which communications can be purveyed to the public overseas and in this country. I gather from Sir Evelyn Murray's book that the cost of each of the four beam stations was about £60,000. Less than £250,000 has been spent on the four beam wireless stations. I have been trying to work out, from statistics which the Postmaster-General gave to the House, the amount of work that the four stations are doing at the present time. In the week ending 26th February the number of messages sent out of this country by beam was returned at 35,000. On an average of, say, 20 words per message and 52 weeks a year, I come to the conclusion that something like 35,000,000 words are being sent out of this country through these four beam stations every year.

I am told that the actual operative costs of the four beam stations may not be very much more than another £250,000. The economy thus resulting to the overseas consumer already is quite prodigious. Of the 35,000 messages that went out during the week mentioned, 15,000 went to India. Working on that basis for a whole year, I calculate that something like 15,000,000 are being sent to India by beam. If only 20 per cent. of these messages were sent at the full rates of 1s. 8d., which used to prevail before the beam system began, instead of the rate of 1s. 1d. which now prevails, there is a, saving to the Indian consumer alone for the last eight months—the service to India only started last September—of something like £100,000. Obviously, this invention is only at its beginning. The figures of the expansion in the use of the cable which followed on the inauguration of the Pacific cable in 1902 were prodigious, and if the beam system results in anything like the same progressive expansion the ultimate economy, particularly if the cost of sending beam messages is going to come down, as I hope it will, will play a very considerable part in the recovery of our economic position generally.

6.0 p.m.

It is from great inventions of this kind and from radio activity and the advantage that the public get from these scientific discoveries that we are going to recover our economic position during the coming years, in the same way that Europe in the nineteenth century recovered after the tragedy of the Peninsular Wars and Waterloo. I do not see how on the basis of the capitalisation which has been published in the newspapers, a matter of £54,000,000 as the total capital of the merger group, anything like real economic rates for beam dispatch are to be maintained. As far as I can make out, this capitalisation is based on the idea of safeguarding in perpetuity the Eastern Telegraph group and the Marconi Company a minimum, not a maximum, by way of a dividend of £2,800,000. This project seems to aim at the stabilisation of a dividend return on the capital of the group at the position in 1926–27, before this competition had actually begun. If that is the case, then a very great hindrance to beam development is inevitable. I should be very glad indeed if any hon. Member can give me some explanation as to how we are to get out of this quandary. Let me add this rider. I myself have not the faintest sympathy with national management. We have been reminded in the Hardman Lever Report of its effect on the existing telephone system, and the fact that the Telephone Department has made a cumulative loss of £20,000,000 during the last 15 years. I am not in favour of State management, but I do not think this system would be much better managed in private hands. I hope we shall get an assurance from the Government that before this proposal is ultimately ratified and accepted they will make absolutely certain that the consumer of cables, that is the sender and the recipient, will be the ultimate beneficiaries of the great advantages which this system seems to hold out.

Captain FRASER

If I understand the hon. Member for Penryn and Falmouth (Mr. Filcher) correctly, he seems to fear that the necessity for maintaining dividends upon the immense capital invested in cables might cripple at its inception any unified scheme, whether it is under State control or in the hands of a private company. He fears this because cables are beginning to lose their traffic. He has ignored, I think, the fact that one of the great advantages of the merger between wireless and cables at the present time is that the cable companies not only own plant and machinery which convey messages across great distances, but own also an extraordinary complicated human machine, as well as buildings and an organisation, which enable them to collect and handle messages. Their tradition and their length of life have made it possible for them to build up machinery which is an extremely valuable asset from the point of view of the collection and handling of news and messages. The wireless companies, being younger, have not the same asset. From the point of view of the wireless companies there is something to be gained by the merger because of these facilities owned by the cable companies. It is a marriage of two entities, one of which owns the best method of transmitting over vast distances, and the other the best method of collecting and handling messages. It is not a one-sided bargain.

I plead with hon. Members on the Labour benches not to allow their prejudices and their political views on the question of State or private ownership to enter too much into the consideration of this question. I believe that their political beliefs sometimes outweigh their business judgment. They are interested at all times in teaching the electorate to believe in nationalisation. Their desire to do something in this direction is a stronger motive with them than any other. By pressing, as they so persistently do, for every enterprise to be nationalised they are serving a political doctrine rather than the needs of the country, and I plead with them to take, if it is possible, as reasonable a view of this proposition of placing cables and wireless service in private hands as some of us adopted with regard to broad- casting. In that case there were extreme difficulties in the way of conducting it by private enterprise, but some of us on this side, including His Majesty's Government, quite frankly adopted the line which, having regard to the special circumstances of the case, appeared to be the only possible line. We were met with the argument, both here and in the country, that we were abandoning our belief in private enterprise, but we were quite prepared to do what we thought was right.

I hope, when the whole facts of this matter are debated later on, that hon. Members of the Labour benches will take as open-minded a view on this matter as we did on that occasion. They may say that, having put broadcasting under some form of public control, we must be logical and do the same in this case, but there is this essential difference. Broadcasting can only get its revenue by one of two methods. First, by letting out its time according to an hourly schedule to advertisers, a procedure against which we all revolted as it would be most undesirable, or to use the machinery of the State for the collection of a tax. None of these arguments applies in this case. The Companies, however controlled, will obtain their revenue not by means of a State machinery for the collection of a tax, but by charges on the individual when they want to use the services. I hope the Government, while safeguarding the public interest in the matter of rates and giving the commercial and business community every hope that the creation of a monopoly will not lead to an increase but to a decrease in tariffs, will place no obstacle in the way of a merger, convenient and profitable to both parties, and which will ultimately be in the best interests of the country and the Empire.

One last word on the general subject of nationalisation. The hon. Member for East Bristol (Mr. W. Baker), in a rather scathing kind of way, suggested that we were going to hand an enterprise belonging to the State over to people to make profits out of it, and he said that the interest of the shareholders was going to be considered rather than the national interest. I do not pretend to be quoting his words, but his attitude of mind was something on these lines. He is not pre- pared to allow anybody to make profits, and if anybody does make profits then it must be against the public interest. Quite possibly he believes this, but, if that is the case, it shows to what a lamentable state of affairs we have reached. In my opinion it is of the utmost advantage to the country that the utmost profits should be made in every enterprise. When they are made there is ample field for taxation, there is a resilient revenue, money coming for investment, and also for development. These are the conditions under which we get development, and it is under a system by which profits are made, as in the case of these communications, that you can expect a large amount of research, initiative and progress.

The hon. Member for East Bristol by omission suggested that we were proposing to take away from the Post Office this beam system which was so profitable, and was going to be so much more profitable in the future. He did not explain to the House that it would be possible for the Government, when negotiating for the disposal of the beam system, to negotiate also for certain cables on which they were losing money; that it might be possible for the State to make an arrangement by which in parting with a thing it likes it might also part with a thing which will become more and more a millstone round its neck. Our best interests will be served if the merger takes place. Not only has the business community in this country been impressed with the advantages of private enterprise, but in Germany, which is the home of Socialism, there has been a strong tendency during the past seven or eight years for railways and other services, which have been State-controlled, to be placed as far as possible under private management.

The evidence we have had in the Hardman Lever Report, and the very interesting speech by the hon. Member for West-minister (Mr. O. Nicholson), shows that Government management, however well-intentioned it may be, is very slow, does not provide the same initiative, the same desire for progress, and the same willingness to take risks as private enterprise. The most extraordinary developments which have been made in the beam system have not arisen from Post Office laboratories. No great development in technique, in telegraphs or telephones, has arisen in Post Office laboratories. It is only by allowing private enterprise to make profits, by recognising that profit making is not a curse but is a national advantage, by appreciating that the general wealth of the community and better wages are associated with profit making, and by dropping the view that anyone who makes a profit is doing something that is anti-social, that we shall ever get near to a sane view of this matter.

I have but one concluding remark to make, and that is in relation to the Post Office staff. Many will be in agreement with the remark of the hon. Gentleman who opened this Debate, that it is undesirable, perhaps, that highly-placed persons should take posts in companies with which they have possibly been associated; but I think very few will agree with the suggestion that the liberty of the civil servant should be so interfered with that no matter how humble his position may have been in the Post Office he is not to take a job in any outside company with which he has had any dealings whatever. My own view is that the civil servant should be free, as is every other individual, to take whatever job is offered to him and, if I may say so without offence, I think there is a lot of cant and hypocrisy in the suggestion that other people would not do exactly the same thing if they had the opportunity. I hope that the Government will not make the fatal error of submitting to the clamour of a very few persons whose principal interest in this matter is political, by denying to these great companies, whose record of service to the community in peace and war for one or two generations has been a splendid one, whatever blots there may have been upon their financial arrangements—I hope that the Government will not stand in the way of the merger and the creation of some organism, upon which Governments can be represented, which will manage and control these vast services with the freedom and the possibility of progress which I think are associated only with private enterprise.

The SECRETARY of STATE for SCOTLAND (Sir John Gilmour)

The House must have listened to this Debate with no little interest. I find myself answering in my position as Chairman of the Conference which has been called to deal with this problem. As to why I should be the Chairman of that Conference, I can only say that as a Member of the Cabinet I was told off to do the job and, being well disciplined, I undertook it. The Conference has been sitting now for some time. The origin of the Conference, as the House knows, was the fact that a certain situation had arisen in the communications of the Empire because of the competition between the cable and wireless. Its origin was also due to the fact that the Governments of Canada and Australia recognised that there was a problem which must be solved, and, anxious as we are and have always been in this country that these common problems should be solved after careful discussion by all the Governments concerned, that was in itself a reason for calling the Conference. The terms of reference to the Conference were: To examine the situation which has arisen as a result of the competition of the beam wireless and cable services, to report thereon and to make recommendations with a view to a common policy being adopted by the various Governments concerned. Let me say a word at this point as to the personnel. The hon. Member for East Bristol (Mr. W. Baker), who opened the Debate, drew attention to the fact that the Prime Minister, in answering a Supplementary Question after reference to myself when sitting on the Front Bench, gave an answer which appeared to be contradictory. I take the fullest responsibility for having at a moment's notice said to the Prime Minister that Mr. Lenton was a technical adviser. I regret having said that. But in fact Mr. Lenton was, in the main, a technical adviser to his Government, because he is the Postmaster-General and Secretary of the Department of Posts and Telegraphs. It is true, of course, that he was not a Minister but was representing the Government of the Union of South Africa. Mr. Lenton left for South Africa on 4th May, and Mr. Eales was nominated in his place. Then with regard to other members who attended the Conference, Mr. L. J. Gaboury left for Canada on 10th February and Commander Edwards left on 13th April. I can assure the hon. Gentleman that there is nothing peculiar in the changes that have taken place and that in fact the Conference continues to operate.

The first meeting of the Conference was held on 16th January, and so far there have been 30 meetings of the full Conference. I can assure the House that the Conference is still in being. A word as to the procedure which we set up in order to deal with this matter. The Conference had to obtain the fullest information possible as to the various factors bearing upon the problem—financial, commercial, economic and strategic. To this end 79 memoranda have been circulated. Many of these are exhaustive in character and naturally require very careful consideration. They contain many intricate facts, figures and details as to relationships between the various bodies concerned. The Conference also invited parties interested in the conduct of communications, both wireless and cable, to make such representations as they wished, and the Conference heard evidence from 11 witnesses, representing the following undertakings: The Eastern and Associated Telegraph Company, the Indo-European Telegraph Company, the Marconi Wireless Telegraph Company, the Canadian Marconi Company, the Wireless Telegraph Company of South Africa and the Indian Radio Telegraph Company. The Directors of the Amalgamated Wireless, Australasia, Limited, considered that for proper representation to be made on their behalf it would be necessary that someone thoroughly acquainted with their affairs in Australia should come to this country, but this apparently could not be done within four months and, of course, the Conference was unable to suspend its deliberations for this purpose. The Conference also received deputa- tions from the Empire Press Union and the Federation of British Industries, and the London Chamber of Commerce submitted resolutions relating to the problem before the Conference.

The House will see that during the period that the Conference has been sitting it has not been idle. The problem before the Conference is admittedly not an easy one to unravel. It has involved considerable research and much concentrated study on the part of all the representatives of the Dominions. This work has entailed the consideration not only of how the affairs of this country will be affected, but what repercussions there are likely to be in Australia or Canada or India or elsewhere, not leaving out the Colonies. One has seen, of course, that during the sitting of the Conference there was announced the merger between the Eastern Telegraph Company and the Marconi Company. I would like to emphasise the fact that for this proposed merger the Government had no responsibility and have no responsibility at the present time. This merger was made subject to satisfactory arrangements being made with the British Government and the Governments of the Dominions and India. The possible reactions of this merger on the problem referred to the Conference have, of course, to he examined in great detail, and that has necessarily been the subject of conversations between the representatives of the Conference and the companies concerned.

Now as to the future. The hon. Member for East Bristol desired at the outset to have certain fears relieved. He thought that certain conclusive resolutions had been reached by the Conference and that the House was being deprived of the opportunity of considering this problem before the solution had become a fait accompli. These communications are still proceeding, and I am unable to say at the present time when they may be brought to a conclusion. I think it will be appreciated that the Conference is empowered only to make recommendations to the Governments concerned, and that the Conference cannot of itself come to operative conclusions. It will be for the Governments concerned—this Government and the Dominion Governments and the Government of India—to decide what they are going to do and what action shall be taken upon any recommendations which the Conference may make to them. In these circumstances it is quite impossible to say how soon or when decisions may be made. But I would say quite plainly that before any definitive action is taken the matter will be brought before this House. That, I hope, will reassure any of those who may have doubts upon the matter. So far as I, as Chairman of the Conference, am concerned—and I am sure I am speaking for all the members of the Conference—I say that our only desire is to come to a conclusion as soon as we can properly do so, with due regard to the intricacy of the subject we have to consider.

Mr. HARTSHORN

I understand it is desired to proceed with other business and I shall not detain the House long on this subject. We are pleased to have an undertaking from the right hon. Gentleman that nothing of a definite character will be done in connection with this matter until it has been brought before the House. That being the case, anything I have to say can be deferred until that occasion arises. There is only one aspect of the subject to which I would call attention, because it has been referred to by so many different speakers. The Labour party have been urged by speaker after speaker in this Debate not to allow their political prejudices to interfere with their business judgment, and not to press this question of the State ownership of the beam system to the detriment of business considerations. All I want to say on that point is that the beam system was introduced and the contract was entered into when the Labour party were in office. For 14 years prior to that time successive Governments had been dealing with the question of Imperial wireless. During those 14 years various Committees and Commissions sat, and there were many discussions in Imperial Conferences on the matter. All the Governments concerned, all the Committees and Commissions and the Imperial Conferences laid it down that this great Imperial service, as far as home stations were concerned, should be in the hands of the State. That was what was laid down all along, with the exception of a few months during the Government of Mr. Bonar Law, when an attempt was made to compromise with the Marconi people on another basis.

Apart from that, Parliament has laid it down from beginning to end, that this service should be in the hands of the State. When we took the matter in hand, we only pursued the policy and followed the line adopted by previous Governments, at least on that question. I do not want to go into the question that has been raised as to the success or nonsuccess of State enterprise. It is sufficient to say that this Debate has revealed one fact at any rate, namely, that the whole question of this merger, the whole subject of this Debate and the reason why we cannot have a definite reply from the Government yet all arise from the fact that the beam service has been so successful that the other people cannot compete with it. That is the real trouble, and I congratulate the Postmaster-General and his staff on the very successful business they have made of it. In any case, as far as we are concerned, we sincerely hope that the facts and figures submitted during this Debate will be taken very seriously into consideration by the Conference which, I understand, is still deliberating before they come to a conclusion and before the matter is again brought up in this House. I think it would be a great pity if, as a result of these negotiations, the impression were allowed to get abroad that this Government, when there is a clash between the national interests and the interests of private enterprise, are on the side of the capitalists instead of on the side of the nation and the Empire. We have been fearful that that was likely to happen, but I hope, as a result of this Debate and the further consideration which will be given to the matter when it is again brought before the House of Commons, it will appear that the suspicions entertained on this side of the House are not well-founded, but ill-founded.

Motion, by leave, withdrawn.