HC Deb 26 March 1930 vol 237 cc439-502

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a Second time."


This Motion provides the first convenient opportunity for calling attention to a matter of public interest affecting in a very vital way the strategic, political and economic interests, not only of this country, but of the Empire as a, whole. I refer to the express decision of the Government and the determination of the Post Office to develop our oversea wireless telephonic system, of communications without cooperation with the existing Communications Company. The magnitude of the issue needs little emphasis. The most characteristic feature of our State, compared with any other State, is its scattered nature, and its most vital interest is communications. An interesting feature of the present day is the extraordinary speed of evolution of means of communication. Wireless telegraphy has followed swiftly upon cables, and wireless telephony is now following swiftly upon telegraphy. In the near future wireless telephonic communication will be the most practical and most important method of communication between all the scattered parts of the Empire.

Two years ago, in 1928, as a result of the Imperial Wireless and Cable Conference—which was called together because of the growing competition between wireless and cables as means of communication—a great public utility corporation was formed in this country to co-ordinate and rationalise the cable and the wireless systems of oversea communications. It was a matter of political controversy at the time, but we are not concerned with that political controversy to-day. We are concerned, simply, with making the best of the existing state of affairs. Now that this great company has come into existence, the important fact for us to realise to-day is that the company possesses an existing establishment of beam stations which provide means of carrying on various wireless telegraphic communication. These communications are tested, efficient and practical. As regards telegraphy, they represent a going concern in the communications system of the day.

In connection with the existing system, the Communications Company by long experiment, and by the brilliant inventive genius of its experts—in particular the celebrated name of Marconi has been associated with these experiments—has developed a system of oversea wireless telephony which has been tested by practical experiments with Canada, Autralia and other parts of the world. It is in existence, under practical conditions. Having brought these tests up to the point of practicability, this public utility company, founded by the State, offered to the Post Office its system, its plant and its staff, as a means of securing immediately for the country a practical system of oversea wireless telephony. That offer was in accordance with the expectations and the intentions which were formed on the institution of the Company. It is clear, beyond the possibility of contradiction, that at the time of the institution of the Communications Company, it was contemplated that it should, on behalf of the Post Office, carry on oversea telephonic communication, as well as oversea telegraphic communication. The eighth recommendation in the report of the Imperial Wireless and Cable Conference is as follows: The Post Office in London will reserve the right to conduct the external telephonic services of Great Britain, hut will agree with the Company the terms on which it will have the right to use the Company's wireless stations, or portions thereof for telephonic purposes.


If they wanted to.


Quite clearly that recommendation does not imply any absolute obligation on the Post Office to make use of the Communications Company's system or outfit. That is agreed; but I think it must also he admitted, that the perfectly clear meaning of the Conference's recommendation is that the Post Office should, at any rate, give an opportunity to the Communications Company to act as its agent in the business. The complaint to-day is not that the Post Office has denied the company a right, but that it has refused even to approach the matter by way of negotiations and that it will not even give the Communications Company an opportunity to make good its offer. That offer, is to this effect—that if the Post Office will but give the Company the opportunity, the Company will, as soon as it has had time to construct the necessary apparatus, give us an immediately practical commercial service of direct communications with the great Dominions, Australia, Canada, and South Africa, and with India. The complaint is that that offer has received no response, that it has been rejected, and that the Communications Company has not been given any opportunity of establishing the value of its proposed services.

Let me pause, at this moment, to clear away a misapprehension it is urgently to be desired that this matter should be decided on the sole issue of national interest, without reference to confusing issues of party politics which belong to an altogether different sphere. There is here no question whatever of the vexed issued between public and private ownership. There is no question whatever of depriving the Post Office of full control and monopoly in oversea wireless communication, telephonic as well as telegraphic. That is admitted. The proposal which we have to discuss is that the Post Office, while retaining control and monopoly, should use this public utility company as its agent, and take advantage of its system; that it should art least consent to negotiations, to see whether it is not possible to arrive at some reasonable basis on which it might use the company as its agent. Hon. Members opposite seem disposed to raise an issue between nationalisation and private enterprise on this matter. We are prepared to debate that issue on the appropriate occasion, but it does not arise in this case. The Post Office and the Communications Company are, almost in equal measure, public bodies. The Communications Company is controlled in its profits and in its rates. It is subject to the supervision of an advisory committee which is an official body. It performs public duties as regards the maintenance of strategic cables; and its chairman is in substance appointed by the Government. In all essentials, the issue here is between two public bodies and not between a public and a private body.

One can best make clear the gravity of the position by putting the issue between the Post Office and the Communications Company in the following manner. The Post Office, as we understand from the pronouncements of the Postmaster-General, refuse to enter into negotiations with Communications Company, because they desire to establish their own system of oversea telephonic communication concentrated at Rugby and Baldock. Let us accept for the moment this alternative, between the Post Office co-operating with the Communications Company, and the Post Office acting entirely alone. I think I can show that there are other and wider issues involved, but let us take it, for the moment, that it is an issue simply between a service conducted jointly by the Post Office and the Communications Company as one alternative, and a service conducted by the Post Office, unassisted. Even in that case, without any profound acquaintance with the subject, anybody who studies the public documents which are available, must be convinced that there is a strong prima facie case that the service would be conducted more economically and efficiently by the Post Office taking the Communications Company into co-operation and using that company as its agent.

The issues involved include technical considerations so intricate that I am quite unqualified to deal with them, and. if I may say so, perhaps even the House generally would find very great difficulty in doing so. I shall not find it necessary, however, to put any of these technical issues before the House. All that is claimed on behalf of the Communications Company is not an immediate decision by this House or by the Postmaster-General but merely that this question should receive, what it has never yet received, impartial consideration by some tribunal capable of giving an impartial decision. There is a prima facie case for an inquiry by an impartial tribunal. The first issue that arises is on 4.0 p.m. the question of the promptitude and readiness of a service. The Communications Company tells us that it can give us at once a service of oversea telephony with all the great Dominions. That is worth having. That is the next long step that we eagerly await in binding the Empire together by the links of communication. What has the Post Office to offer, on its own supposition of an unsupported Post Office service, in return? Nothing immediately. It has hopes; it believes that it can do something some day. But the something it believes it may do some day is no more than to erect at Rugby and Baldock an imitation of the system already being conducted by the Communications Company. It does not seem a very alluring practical alternative. The second issue, and one to which this House will pay particular attention, is not the efficiency of the services, but the economy, and, first of all, the question of capital economy. Which is going to be the cheaper service of the two? We want a good service first, hut we want a cheap service hardly less.

As regards capital economy, how can there be a doubt as between the offer of the Communications Company and the suggestion of the Post Office? The Communications Company has the beam wireless station already in existence, by which, as it tells us, it can conduct an efficient oversea telephonic system. No fresh capital outlay to speak of is required. The House will understand that on one of the systems, at any rate, proposed by the company, by the same apparatus already existing, the Marconi beam wireless, immediate oversea telephonic communication can be provided. On the other. hand the Post Office would need to have some capital outlay, at any rate, in order to develop new stations, merely indeed to duplicating the stations of the Communications Company, at Rugby and Baldock. There is controversy as to what that amount is put at. It is put as high as £120,000. The Postmaster-General tells us it is not so much. That is one of the things we want to see inquired into by an impartial tribunal.

The question as to running costs of the two alternative systems has been so confused that it leads us to suppose that really the Postmaster-General and his advisers have not got to the bottom of the matter. We were told in the first statement that the running costs at Rugby would mean an economy of £17,000 upon the system suggested by the Communications Company. That seemed to be worth serious consideration, but when I asked the Postmaster-General a question the other day in the House, to which he was courteous enough to reply, as to the actual cost based upon inclusive estimates, including overhead charges as well as running costs, it appears that the Post Office system is not going to cost £17,000 less than the estimates of the company, but £3,000 more. The very short space of time which elapsed between the original estimate, which was favourable to the Postmaster-General, and the revised estimate, which was unfavourable, leaves one in considerable doubt whether the matter has been thought out with sufficient care by the right hon. Gentleman's advisers.

Let me pass from the tedious but essential financial aspect to one which comes nearer the essence of the matter. The Communications Company, this public utility body of ours, is in control of all our other oversea communications. It has control of the cables and the wireless telegraphy. Does it need any expert knowledge to realise that the new method of communication by wireless telephony can be managed in a more businesslike way by those who are already managing all the other systems of oversea communications? Is there any meaning in the words "co-ordination" and "rationalisation," or is there not? Obviously, it must be more advantageous that one body should have general control of all methods of communication. I will give a single instance by which it can be realised, without deep technical knowledge, the enormous advantage which would come from co-ordination in the hands of this single authority. The Communications Company has control of wireless beam stations all over the Empire; the Postmaster-General has not. The Communications Company can relay its messages all over the Empire; the Post master-General has got prima facie no facilities for doing so at al. The most striking instance, I think, is Australia. The difficulty in sending a message to Australia is that it has to go half-way, as it were, in the dark, and half-way in the light. You want different conditions of transmission for the two sets of circumstances. The Company that controls the aerial stations in India can thus change the conditions for the dark and the light part of the journey at the appro- priate place. It can relay. The Post Office has no such facilities, and cannot give so efficient a system.

There is a strong prima facie reason to suppose that the Communications Company can give a better service over longer hours of a more practical sort, cheaper than the Post Office can do it. The matter comes to a head in a technical controversy about the size of the aerials. That underlies a great deal of the reluctance of the Post Office to meet the Communications Company in the matter. They take a different view on this technical question. I only say in regard to the controversy as to whether the bigger or the smaller aerial is better, that the Post Office engineers are on one side of the case and the Marchese Marconi is on the other. On a previous occasion, when there was that division of forces, the question was whether for the development of wireless telegraphy we should use the long or the short wave. On that occasion the Marchese Marconi turned out to be right. When we come, therefore, to another issue on a technical question with the same distribution of forces, recalling the previous occasion we must feel a good deal of anxiety as to the outcome of the present controversy.

The House will appreciate that it is impossible to establish a case one way or the other to-day. One can only give reasons for questioning the recent decision. The question has not been properly considered or decided. We have had to consider it in the first place, a Cabinet Committee. On the Cabinet Committee the Postmaster-General sat himself; it can hardly therefore be looked upon as an impartial tribunal, or one which could consider such a question as I have put before the House without suspicion that it had a particular affection for one system more than another. The right hon. Gentleman will not think that I cast any reflection on him: it is impossible for anyone in his position to be placed in a situation of the sort to which I have referred, and be perfectly sure that he can bring to the consideration of the question, so intimately connected with the interests of his own Department, an absolutely impartial mind.

In the second place, we had a reference to a couple of experts. I have the greatest appreciation of the careful attention and brilliant talents brought by the experts to the discharge of their task, but their task was an impossible one. They were asked to decide upon a case stated in a dispute between the Post Office and the Communications Company. Under what conditions? It was a case stated by the Post Office without any reference to the Communications Company at all. What is the value of an opinion given in a case stated under those conditions? It offends against the elementary idea of what is businesslike and fair. The result was precisely what we should expect. One cannot read the questions submitted by the Postmaster-General to the experts without seeing that the questions are heavily weighted in favour of the case for the Post Office. The Communications Company had no opportunity of putting their case or of considering what the issues presented to the experts were to be. The first and most notable thing in the answers of the experts is that on the whole they think one system as good as the other. That is a remarkable result considering the conditions under which they were consulted.

In the second place, they say in effect, in the last sentence of Their report, that they consider the issues submitted to them are really meaningless. It is not to be wondered at, considering the conditions submitted, that they should not be able to find any real issue at all. By reading a little more between the lines, I venture to say that the whole effect of the expert's report was a strong recommendation to the Postmaster-General to be sensible and co-operate with the Communications Company, because, as far as they are informed, there is really nothing to choose between the systems, and both will lose much by failure to cooperate. That leads me to the conclusion that there can be no satisfaction that justice has been done to national interests by the method with which this matter has been dealt hitherto, and that we are entitled to demand, for the sake of the public welfare in so big a question, that there shall be a decision by an impartial tribunal.

There is a bigger issue still involved than that I have put so far, as to which is the better plan, the co-operation of the Communications Company with the Post Office, or the Post Office acting alone. In fact, if the Post Office do not co-operate with the company, they cannot act alone. They will have to rely upon somebody else. They are, in fact, already relying upon somebody else, and the somebody else upon whom they are relying is no British interest at all but American interests. Does this not show that we are, indeed, confronted with a grave issue? I will give examples to prove this very grave allegation, that the Postmaster-General and the Post Office are preferring to rely in this matter upon foreign interests, owing to their inexplicable determination not to co-operate with the appropriate British interests. The Communications Company offer us a direct service with the great Dominions. With Canada at the present time there is no direct service. To secure a service with Canada the Post Office has to rely on American interests. Is that satisfactory? Is it not humiliating both to us and to our fellow-subjects in the Dominion of Canada?

There is another instance. The Communications Company tell us that they can give us at once a direct service with the Argentine. At the present time the Post Office, who really seem willing to rely upon anybody rather than upon British interests, are providing a service for the Argentine through Berlin. They are going into the corners of the world to find some means to carry on without employing British interests with the result that the service is inferior and the profits are made by the German company. The Postmaster-General may say that this is only temporary, and that he hopes in the course of time to be able to get a direct service. That is problematical. It may be so, or it may not. At any rate, we know for certain that the Communications Company can give us a service at once, and even if it be temporary, it is an important indication of the manner in which the Postmaster-General rejects the appropriate British support in order to rely upon foreign interests.

There is another and more important consideration. It is not operations, if I may say so, that are so important with regard to the future. What is of vital importance with regard to the future is that the oversea telephone system made use of by ourselves and our Dominions and Colonies should be developed as a British affair, by British brains, and British research, and British methods, and that we should not in these natters have to rely upon American enterprise. That last will be the result of the Post master-General's action. If he will not cooperate with the Communications Company it is not possible for him to employ anybody else but Americana. What is already going on? The machinery which is employed at Rugby is to it, very large extent supplied by the British subsidiary of the American interests, the Standard Telegraph and Cable Company. I believe that there are American engineers and servants of that company actually at Rugby. We might ask the Postmaster-General how many American engineers and servants of this American subsidiary company are at the present time in the employment of the Post Office or working at Baldock and Rugby. It is a question of some interest.

Refusing the assistance of the British corporation, the Postmaster-General is driven to make use of American support. From that, two serious consequences follow. The first is that as regards our own international communications with the British Empire overseas. we shall be in the hands of the Americans with regard to methods, and to some extent with regard to operation. Surely anybody might pause there and think they had pointed out a grave enough danger to our national system, but there is a danger graver still, an interest wider than that. At the present time the world is developing its system of oversea wireless telephony. All over the world it is being instituted. It is a new affair. Nations and Dominions of our own are mapping out their wireless telephonic future. There is a keen competition for that future between the British nation and the American nation. It is at the point, on a wide front of competition now between the two nations, where the competition is perhaps keenest and of most political significance. In that competition, to make the oversea telephonic system of the world, as it were, based upon British brains and British capital, and not upon American brains and American capital, what is the position of the British interest when it is neglected and cold-shouldered by its own Government? Here is the gravity of the position. The Postmaster-General, at this critical point for the future of the world's communications, is doing his utmost, by this inexplicable policy, to make that future an American future and not a British future. At the present moment, for instance, Egypt desires to establish a system of oversea wireless telephony. One would expect it to be developed by British brains and capital, and to become, as it were, harmonious with our own system here. But the effort to make it so is held up because the Americans can boast at the present time, as the leader of the American interests has boasted, in giving public evidence before an inquiry in the United States, that he holds the British communications in the hollow of his hand.

It was the intention of the Conference that instituted the system, and, 1 think, of this House, that we should give an example of businesslike rationalisation in the interests of the country as a whole. That I find expressed in the Report of the Imperial Wireless and Cable Conference, where it says: The full benefits of the scheme "— that is, of co-ordination of communications— can only he secured by the whole-hearted co-operation on the part of all the Governments concerned and of the undertakings conducting telegraphic communications throughout the Empire. The establishment"— and let me ask the House to note these words— or authorisation of services within the Empire, which work in opposition to, or indeed out of harmony with, the above scheme would deprive it of much of its, value and would militate against the objects which we have endeavoured to attain. It is a tragic thing—some of us may think a humiliating thing—that after that aspiration has been so clearly expressed on behalf of all parts of the Empire the first defection, the bad example, should come from the Imperial Government. It is nothing less that they are doing than seeking to erect a new part of the Imperial communications system, in the words of this reference, "out of harmony with" the system which it was the object of the Conference to erect. I would make an appeal to the Postmaster-General not to close his ears on this subject. He will understand that the plea is not on behalf of any corporation or any interest, however public the posi- tion it may occupy. It is a plea inspired by apprehension lest, in a matter of such vital moment to the nation, we should be less than ourselves, and should be prepared to depend upon the strenuous forces across the Atlantic.

I would ask him two things—and I trust he will understand that there is great moderation in the demand which is put at the end of an argument so deeply felt by many on this side. In the first place, I would ask this, that in order to enable us to judge where we do stand, in order to allay the suspicion that arises when we see a British Government Department preferring foreign to national interests, he will now publish all the documents which were before the Cabinet Committee, that he will give us an opportunity of judging the whole evidence, and of seeing exactly upon what basis his decision was come to—when we have done that, we ask that he should take the only course which we believe can possibly be open to him in order to allay the fears caused by his action—that he should recognise that neither a Cabinet Committee nor the experts whose opportunities were so limited can possibly set this matter at rest, that he will set it at rest in the only manner in which the public mind can be set at ease, by reference to such an impartial tribunal as a. Select Committee of this House, which will judge it in no interest except that. of the nation.


I think it will be for the convenience of the House if I speak now, because the only explanation of the reasons for the Government action has been in answer to a few questions, and I think that probably this matter can be better debated if the full circumstances which the Government had to take into account are stated early in the Debate. I certainly have no complaint to make of the manner in which this subject has been introduced, and I hope to be able to show to the House that the decision of the Government has not been taken on account of any political doctrine, but has been reached on a consideration of national interests. If I can show that, I hope that this subject may become one of general acceptance, and that the Post Office can proceed with its work in the matter The right hon. Gentleman the Member for Sevenoaks (Sir H. Young), who opened the subject, explained how this issue has arisen. The late Government leased the beam stations for wireless telegraphy to the Communications Company under conditions and circumstances which he described, but they reserved the future of wireless telephony, and, in spite of what he said, I think I shall be able to show a little later that the late Government and the Imperial Conference deliberately refused to give any undertaking that it would use the beam stations for future telephonic development.

That was the position which I found when I came into office, and, after I had been in office only a few weeks—I think it was in August—I received a letter from the Communications Company, from the chairman, followed up, I think, by other communications from Mr. Kellaway and Sir John Pender, suggesting that now the Government should discuss the question of using the beam stations, on payment of a rent, for the development of telephonic services to Canada, Australia, India and South Africa in the first instance, of course to be followed later by general development to the world as a whole. I think it may put the House in possession of the facts in the best way if I tell them what were the considerations which were before my mind at that time, as a layman, without any of the material which has since been accumulated, by which 1 had to try at any rate to come to some preliminary conclusions on the subject.

There were two alternatives, and one has been put by the right hon. Gentleman very graphically this afternoon. The first alternative was to use the beam stations, and their advantages are broadly as he has described them. They have the equipment, they have the receivers, they have the transmitters, they have the aerials, and therefore it seems obvious that by combining telegraphy and telephony in, so to speak, one set of apparatus, the most economical results can be achieved. That is what the right hon. Gentleman has pointed out. That is the side of the picture that he has seen, the side that he has seen very much more clearly than the other side, which very soon revealed itself to me. The other side was this—and it was not reached lightly or carelessly. I visited the great wireless station at Rugby—and I shall be very pleased if any Members of this House will themselves make such a visit—and there I found that there was a great wireless telephone service already in existence, the greatest commercial oversea telephone service in the world, which the Post Office engineers had added to the telegraphic service which was originally initiated there.

The question arises as to whether the advantage of combination in one instrument on the one side would not be outweighed by the advantage of concentration on one site at Rugby with its receiving station at Baldock. What do you find there? There, you have the aerial system pointing to the United States; walk a few yards, and there is the ground plotted out on which there will be an aerial system pointing to Canada; walk a few yards in the other direction, and you have your system pointing to South Africa, a few more yards to India, and a few more yards to Australia. You find already plotted out the whole system by which, in the course of a walk. you can cut across all the lines of conversation from Rugby to every part of the world. That is what the right hon. Gentleman did not so clearly explain to the House.

The question, therefore, before us was whether, with the reductions in overhead charges and so on, what might be called rationalisation at Rugby did not give greater advantages than combination in a single instrument at the beam station. In deciding this issue, one had to decide which was the more efficient of the two alternatives offered to the Government, and which was the more economical. On the question of efficiency, an issue arose to which the right hon. Gentleman has referred. The stations of the Marconi Communications Company have developed a system of aerials with very high masts running to about 280 feet in height. The Rugby engineers so far—as the right hon. Gentleman said—from duplicating the beam stations, have repudiated what is the main feature of the beam station. The Rugby engineers have, on the contrary, preferred the comparatively low masts, and have developed their telephonic aerials on masts 4 between 120 and 150 feet.

We were met with this claim. The Marchese Marconi and the representatives of the Communications Company argued that there was such an overwhelming superiority in the system of aerials with high masts that no other system would stand by its side. On the other hand, the Post Office engineers advised us that they had deliberately rejected the high mast system on the grounds of expense, and that the high mast aerial system costs roughly about £34,000, but the low mast aerial array costs about £3,500. Although there was a certain loss of power with the low aerial, they had made up for it by developing a very powerful transmitter, so that, taking transmitter and aerial together, the Rugby system gave as much power and, I think, more power than the Marconi aerial array. These were highly technical considerations, and the Government did what I think was the natural and proper thing to do.

We are asked to have yet another inquiry, but I say that no Government has ever inquired into a subject like this more carefully than we have done. There was, first, the Post Office inquiry by their own engineers, and the matter was referred at my request to a Cabinet Committee. The Government are greatly indebted to Lord Thomson, to my hon. Friend the Financial Secretary to the Treasury, and to my hon. Friend the Secretary to the Overseas Trade Department, who, with me, sat on that Cabinet Committee. I am bound to say, when the right hon. Gentleman complained that I had sat as a member of a Cabinet Committee which was to advise the Government on this matter, that his doctrine is not only highly improper, but highly unconstitutional. If the right hon. Gentleman believes that the Postmaster-General, who is the adviser of the Government on telephone matters, is to be forbidden, because the Post Office is attacked by an outside corporation and in the Press, to be even one member of a Cabinet Committee whose decisions were ultimately to be ratified by the Government as a whole, I say that the right hon. Gentleman is reducing the Postmaster-General to a position which no Minister ought to be called upon to occupy.

The matter, then, was referred to the Cabinet Committee, who decided to refer the matter to these two experts, whose authority on this subject has not been challenged since their names were known, and has not been challenged, and will not be challenged in this House to-day. We referred this matter separately to the two experts. We told each of them that we were referring it to the other,, and, when they had given their independent reports, it was found that they were in such complete agreement, that they finally sent in a joint report to the Cabinet Committee. That gives their views even more weight than they otherwise would have had. The House has the report of the experts in their possession, but, in order to explain exactly the meaning of the questions put, perhaps I may tell the House what was the nature of the evidence and counter-evidence which was put before them. The Post Office engineers, first of all, argued that their system was cheaper; they then argued that, because their system was cheaper—because the low mast aerial system was about £30,000 cheaper than the other—it possessed a greater degree of adaptability to new inventions than the Marconi system. As they pointed out, wireless telephony changes every month, and you must be ready to take advantage of new adaptations. If you have a cheap aerial system, you can scrap it as new developments occur. If you have an expensive aerial system, you have liabilities which tie you to the old methods.

They further pointed this out—and this is a point of very great importance in connection with the question of hours and guaranteed service for the different Dominions. The Post Office engineers argued that, if you are to guarantee hours of service, and if you are to get a reliable service all over the world, you must have more than one wave-length, because, owing to climatic and electrical disturbances, a wave-length which fades at one period of the day can have its place taken by another. Therefore, they argued, three wave-lengths are necessary for a reliable service. A new wave-length means a new aerial; with a cheap aerial you get a cheap wave-length, and for that reason the Post Office system would give three wave-lengths to each of the Dominions, whereas the Marconi system, with its expensive aerials and expensive wave-lengths, will give only two to most of the Dominions, and to Australia, to which the right hon. Gentleman most frequently referred, it will give only one. These are the questions which were put to the experts. I will read three or four sentences which are most important from their Report: A brief answer to the first question is, therefore, that apart from future development both systems are probably equally capable of providing satisfactory telephonic communication between two points for a given number of hours per day.… As regards future developments we think that the adoption of the more elastic aerial system, namely, that with the lower masts"— that is the Rugby system— would be advantageous since equally satisfactory results could be attained with a smaller expenditure of money. They also say: There appears to be no reason for supposing that an effective aerial array would need masts over 180 feet in height, and there is no doubt that the cost of masts increases very rapidly when they are over 200 feet in height. The Marconi Company were pioneers in beam development and the Marconi beam stations already erected are handicapped somewhat by this fact. The Post Office system of aerial arrays being carried on lower masts could, therefore, probably be made more effective than the Marconi array at a lower capital cost. Then, with regard to the question of the number of wave-lengths, they say: A difficulty frequently arises from the varying attenuation of different wavelengths, and to meet this it is often found desirable to change the wave-length in use according to the time of day. Provision for such choice of wave-lengths is likely to be more cheaply made with a relatively low mast system. On that Report, the Government felt justified, and were justified, in concluding that there was no such overwhelming superiority on the part of the Marconi system as had been claimed, that, to use very moderate language, the Rugby system was at least us efficient, and that, therefore, we were entitled to proceed to base our conclusions upon financial and general considerations.

I come to the question of economy. On the question of figures and finance, whereas the right hon. Gentleman accused me of a certain confusion, the very remarks which he made show him to be suffering from the greatest confusion himself. We come to the question of which has been the more economical system. It will perhaps be best if I give the House the pros and cons of that inquiry, in the same way that I did with regard to the inquiry into efficiency. The advantages of the Marconi system, and the economy arising from combination in one instrument I have already referred to and explained, and they have also been explained by the right hon. Gentleman. On the other hand, the Rugby system gives great economies. There is economy in the overhead changes and in combining the new services with the service to America and others that may be created; there are economies where all the services are concentrated in one spot, due to our being able to economies in transmitters and to use one transmitter for more than one service. Transmitters are very expensive parts of the equipment.

Finally—and this is the explanation of the mistake the right hon. Gentleman really made—the most striking economy comes from the system of land lines. In order to operate the wireless system there must be a system of land lines from a central trunk exchange in London to the wireless stations, in order that the messages can be taken from London to the wireless stations and there switched into the air. Those land lines are very expensive. By concentrating; all your services on one site you save a great many land lines, and, in addition, Rugby and Baldock are a great deal nearer to London than Grimsby, Skegness, Bodmin or Bridgwater, where the beam stations are situated. The beam stations require 4,192 miles of land line circuit, and Rugby and Baldock require 780.

Those are the broad advantages of the two systems. In order to test them by results, it was necessary, first of all, to make an estimate of what the Rugby system would cost, and then ask the Communications Company what rent they would charge, and compare the one with the other. The Rugby system costs, all told, both for the stations and for the land lines, £43,000 a year. The company made an offer containing three alternative proposals. The Post Office—for reasons which I will not enter into—thought the second was, on the whole, the best from their point ail view. The second proposal by the company was that they would take a minimum rental of £40,000, plus 10 per cent. of the gross receipts in excess of a certain figure. That is where the right hon. Gentleman's calculations stop, and that is why he came to the conclusion that the Post Office system was £3,000 more expensive than the company's—£43,000 the Post Office, and £40,000 the company. The right hon. Gentleman had not taken into account the fact that in addition to the rental which we were to pay to the Communications Company we had to provide our own land lines, and the annual cost of those would be £20,800. That would make a total of £61,000. If we compare that with the £43,000 which the Post Office system would need, there is a saving of £17,000 or £18,000. But there are greater savings than that, because if tile gross receipts amounted to more than a certain figure the company asked for 10 per cent. of them. If the system belongs to Rugby, that comes back to ourselves.

I have said the cost would be £43,000 a year, but I have made no calculation as to savings on overhead charges. If we take into account that we share our site, our plant, much of our service and our labour, with the American service, the £43,000 is reduced to £39,000, giving another £4,000 advantage; and we must further take into account the fact that when we have developed that Canadian service which the right hon. Gentleman referred to, and the Australian and the Argentine services, then, owing to the economy in transmitters to which I have referred, the saving will be increased by several more thousand pounds, and the average cost of each service will be about £36,000. Adding all these things together, the financial advantage of the Rugby system is somewhere between £20,000 and £30,000.

It was because our inquiries into the relative efficiency of the two systems and their comparative costs showed these results—those were the main considerations: there are others to which I am coming—that we came to the preliminary conclusion that we should be justified in declining the offer of the Communications Company and developing our system by concentration at Rugby and with the receiving station at Baldock. The right hon. Gentleman introduced a number of other considerations which I shall deal with, but I ask any hon. Member who has followed these calculations what other conclusion we could have reached? If I had been standing at this Box and had asked the House to take into their hands the report of the experts, with its verdict as to the relative efficiency of the two systems; had told them, futher, that the Rugby system would save between £20,000 and £30,000 of the taxpayers' money, and then had told them that it was the conclusion of the Government that they ought to allow these services to be leased by the Communications Company, I think I should have been open to the charge that I was sacrificing the national interest to the financial needs of a great commercial corporation.

I will come to the main arguments outside the sphere of economy and efficiency, to which the right hon. Gentleman appeared to pay very little attention. Most of his speech was concerned with other matters. He claimed that there is some sort of moral obligation on the part of the Post Office to use the beam stations, or to give them a trial. I refer to it because he quoted two passages from the Report of the Imperial Wireless and Cable Conference. He quoted Recommendation VIII. That recommendation gives a right, but it imposes no obligation on the Government, to use the beam stations. That recommendation, I may explain, was put it on the recommendation of the Post Office, in order that if we did wish to use the beam stations we should be saved from the danger of having to pay some monopolistic charge. As to the other quotation he gave, a general quotation, he will see if he reads it again that it refers merely to the telegraphic services which were to be handed over, and has no reference to the telephonic services, which are now under debate. Beyond that I will say that if he will look at the Report of the Imperial Wireless and Cable Conference he will see that this matter was brought before them. It was reported to them that the Communications Company were asking for a guarantee that the beam stations should be used, and they said they were disappointed that the guarantee was being refused, but that they understood the position. That is actually in the Report of the Conference itself. I am very sorry that the late Postmaster-General is not here, owing to illness, because I am satisfied that if he were present he would not contradict what I say.

May I now come to another argument of the right hon. Gentleman? A good many of the facts with which he has been supplied are not correct. He said we refused to provide a service to Canada. The position of the Post Office in that matter has been perfectly frank. We have told the Canadian Government that we think that if they want a good commercial service—if that is all they are thinking of—they will get the best commercial service via New York. It has four alternative wave-lengths, and it gives communication to all parts. We have pointed out that if they have a direct service they will lose these four alternative wave-lengths, and will not be able to get to the west of Canada without going through American territory. But we have said that if, in spite of that, they would like a direct service, on account of imperial reasons, or national reasons, that we are willing to provide that direct service. In the last few days we have received a reply which indicates they will ask for that direct service, and it will be provided by the Post Office, as it would be provided by the Marconi Company.

With regard to the Argentine, we are willing to open a service to the Argentine. We are accused of working through Berlin and Paris. The right hon. Gentleman does not understand that we are awaiting the authority of this House; when we have got the authority of this House, we will open a service to the Argentine within a few weeks. With regard to Egypt, the position there is that there are three companies wishing to obtain concessions in Egypt, and the Egyptian Marconi Company is one of them. We had a letter a few weeks ago saying they were hoping to come to terms, that they were making satisfactory progress with their negotiations with the Egyptian Government. Their managing director called upon us last week and we told him that, subject to the approval of the Egyptian Government, the Post Office would be very happy to open a service with them. Now I come to the argument 5.0 p.m. used by the right hon. Gentleman the Member for Seven-oaks with regard to America and the United States. I may say, in answer to the specific question which was put to me, that the suggestion that American engineers are employed at Baldock and Rugby is entirely incorrect, because there is not a single one of them employed at either of those stations.


My question was with regard to American engineers in the service of the Standard Cable and Telegraphs Company. I am sorry to interrupt the hon. Gentleman, but he has not got the question quite right.


I will now come to the question of American machinery, and ask what the Douse wishes the Government to do. This is the position. Every Government Department gives a preference to British goods, and the Post Office gives that preference as much as anybody else. British goods are deemed to mean goods produced in this country by British labour. In the contracts for the apparatus which the Post Office requires there are only two companies tendering, namely, the Marconi Company and the Standard Company, to which the right hon. Gentleman the Member for Seven-oaks has referred. The Standard Company is a company financed with American capital. Its works are at New Southgate, Hendon and Woolwich, and it employs several thousand British workmen. The practice of every Government Department and every Government has been not to exclude from their tenders any private company which has a factory in this country and which employs British workers. Is it the policy of the Opposition to exclude from our tenders all those companies which are financed. by American capital? Must no orders be given to the Greater London and Counties Trust, Ltd.?

I would point out that the Standard Company is one of our largest tenderers, and it does £1,000,000 worth of work for us every year in competition with companies like the General Electric Company, and Siemens and Ericsson. What is the position Why should not the Post Office follow the same practice as other Departments, and why, when the Standard Company get orders which might have gone to the General Electric Company, or Siemens, do they pass without comment, and when the Standard Company get an order for £20,000 which might have gone to the Marconi Company is made the subject of comment and questions in this House? The Noble Lord the Member for Aldershot (Viscount Wolmer) will remember that he put some questions to me about the Marconi Company. We have not given many orders recently, but there have been four orders during the last two years, and two were given to the Standard Company, and that seems to be what the main complaint is about.

Viscount WOLMER

That was before the Imperial and International Communications Company offered to provide the same service to the British Government.


Not at all. Those orders were given under circumstances in which the Marconi Company and the Standard Company both tendered together. At the time when the Noble Lord was at the Post Office either he or his superior officer deliberately, and rightly in my opinion, preferred to give the orders to the Standard Company, because their prices were lower and their quality was higher.

Viscount WOLMER

The hon. Gentleman has not contradicted my statement. I say that those orders were placed by the right hon. Gentleman the Member for South Croydon (Sir W. Mitchell-Thomson) before the Imperial and International Communications Company were in a position to offer the services which they are now offering to the Government, and that cannot be denied.


Those orders were placed at a time when the Marconi Company were in a position to offer those services, and, in fact, did offer them. Since I have been at the Post Office, I have only had one small order to give, and I gave that to the Marconi Company. In order to make the matter clear, I would like to say that I am prepared, in fact I have made arrangements by which, in the future, before these orders are given, the specification for them shall be discussed with the Marconi Company, and any other company that tenders, in order that the difficulties of the past may not occur again in the future. That being so, I hope that we shall cease to have this pressure put upon us, because it is not in the interests of economy or efficiency, and the only result is that articles appear in the newspapers.

What would be the result if the Government gave way to a Press agita- tion? There are only two tenderers for this particular class of work, and if, as a result of agitation, we cut out the Standard Company, we should give a monopoly to the Marconi Company, and the oversea services would have no alternative source of supply. The right hon. Gentleman the Member for Sevenoaks has told us that the Communications Company has undertaken special obligations. An advisory committee has been set up, there are obligations with regard to strategic cables, and it is said that for these reasons, among others, we ought to hand over this service to the beam stations. I would like to point out that the Communications Company accepted those obligations at the time in return for most valuable financial rights, which indeed turned out to be so valuable that when it was known that they were to have these obligations there was a boom in their shares on the Stock Exchange. Now that the contract has been made, I entirely repudiate that it is my duty to hand over other financial rights which formed no part of the original arrangement and which can only be handed over at the expense of the nation as a whole.

The right hon. Gentleman the Member for Sevenoaks made a good many remarks about the Post Office, and he re-echoed what has happened in the Press during the last nine months. Ever since I have been Postmaster-General there has been a steady stream of attacks and criticisms of the Post Office, in which the Marconi Company has taken a very considerable share. Now this great issue has been brought before the House and we find that the same interests and the same newspapers that have been attacking the Post Office for the last nine months are urging that the Post Office should hand over these great national services to this company, that has led the way in this attack. Let the House remember the task which the Post Office has to perform. The Post Office is a great State Department, and I repudiate the notion that it should be placed on an equality with the Communications Company, because that is a most improper and unconstitutional doctrine.


I did not put the Company on an equality with the Post Office, but I pointed out matters of similarity.


The right hon. Gentleman dealt with it as a public utility company, but there are many kinds of companies. The Communications Company is not like the British Broadcasting Corporation or the Port of London Authority which make no profit at all. It is not that sort of public utility; it is a company in which profits play a very important part, and its shares are an active counter on the Stock Exchange. The Post Office is a great State Department which is represented in this House, and, as the faithful representative of this House, it has to enter into negotiation with great and powerful financial interests, and consequently it is bound to creat hostilities and antagonism if it faithfully discharges its duty. I do not ask for any favours, but I think the hands of the Post Office are weakened in defence of the public interest if when it creates those hostilities its action is to be received with hostile criticism in the Press. The Post Office cannot defend the public interest unless it gets some sympathy and understanding, if not from the Press at any rate as a last resort in this House.

During the last three of four days there was put into my private door a letter written by Sir Ambrose Fleming, long associated with the Marconi Company, and that letter which was supported by a leading article in the "Times" contained abuse of Post Office engineers, and stated that the Post Office engineers suffered from ineptitude, sterility, and stagnation. Stagnation indeed, when the very reason that we are holding this Debate is that the Post Office engineers have developed at Rugby the greatest commercial telephone service in the world, a service which carries 100 messages per day, a service which carries more commercial messages than all the other oversea, telephone services put together, a service which makes thousands of pounds a year profit, and which, by linking America to Europe, enables the subscribers to get into communication with 90 per cent. of the telephone users in the world. Stagnation indeed! The Post Office engineers have built at Rugby a service which independent experts pronounce to be the equal to-day of their competitors, and likely in the future to drive their rivals off the field. I should like to take this opportunity—it is not very often that I get the oppor- tunity—of expressing my thanks to and my appreciation of the staff of the Post Office for the inventiveness and initiative that they have shown; and I ask the House, by authorising this new development this afternoon, to show their appreciation by now giving them the power to go forward with the ordered and full development of this great new national service which their patriotism and their enterprise has provided for the State.


I do not think that either the eloquent peroration to which we have just listened, or the technical and financial exposition which we heard earlier, has in the least traversed the main argument brought forward by my right hon. Friend the Member for Seven-oaks (Sir H. Young) as to tie methods by which the Government have arrived at their decision. In the first instance I wish to draw the attention of the House to the question of the policy pursued by the Government, and the way in which they have conducted their investigation, because the only question before the House is whether that investigation has been impartial and adequate, and whether there ought or ought not to be, as my right hon. Friend suggested, a fuller, more adequate, and more impartial investigation. Let me remind the House, to begin with, that this is not an issue between the State and a private corporation. I need not again go into the facts on which my right hon. Friend pointed out that this body—taking first the Imperial and International Communications Company by itself—is a body subject to a number of limitations and obligations to the State. Its revenue is definitely limited to a certain standard revenue, after which part of the profits are to go directly to the public, while beyond that there is the further fact that the whole system with which we are dealing includes, not only the company, but the advisory committee or council set up by all the Governments of the Empire to supervise this great business in the interest of the Empire as a whole.

The Postmaster-General spoke with great indignation of the idea that a company could be compared in status to the Post Office. From one aspect, as a company, its status may not, at any rate in the eyes of the bureaucrat, be that of a Department. But from another point of view this whole organisation is an organisation representative, not of one Government in the Empire, but of all the Governments of the Empire, and from that point of view the organisation as a whole, of which the company is only a part, is, I venture to say, on at least an equal footing with the Post Office itself. That organisation took over the beam service, and it may, perhaps, be worth while to go back into the history of the beam; for, when one talks of exploitation by outside corporations, it is worth while to remember that the beam was taken over by the right hon. Gentlemen opposite, when they were last in office, from the Marconi Company at a cost of £161,000 for the erection of the stations, and those stations, for telegraph purposes alone, are now being leased to the company for £250,000 a year plus 12 per cent. of any profits that may be made above the standard revenue. On the first item alone, in the 25 years of the lease, the Post Office will get £6,250,000 for that for which it paid £161,000. I do not know where the grasping corporation comes in.

When, however, we come to the question of the telephone, it is perfectly true, as the Postmaster-General has pointed out, that the Post Office was reluctant to hand over the telephone service to the new organisation, and the new organisation accepted that position. What was the reason for that? It had nothing to do with efficiency of working. I am quite certain that, as far as that aspect of the question was concerned, the Imperial Conference would naturally have included the telephone with the telegraphs as part of one system. The reason why the Post Office wished to retain the telephones was perfectly simple and perfectly natural from its point of view. It pointed out that this was an entirely new experimental development, which might increase beyond all present calculations, and that, therefore, it was impossible to set a present value upon it. It was for financial and not for operative and technical reasons, mainly, that the telephone was reserved to the Post Office. But it was never contemplated that the Post Office should not afterwards try to arrive at that method of operation which—not from the point of view of the Post Office, considered narrowly in its own interest, but from the point of view of the public of this country and from the point of view of the Empire—was the most efficient method. I must remind the House, when the Postmaster-General talks about economies arising from rationalisation at Rugby, that there are equally economies arising from rationalisation at the stations of the Imperial and International Communications Company, and that those economies, in so far as they hasten the attainment of the standard revenue, equally innure to the public in reduced rates and better services.

I need not quote again the passages referring to the need for whole-hearted co-operation. Although those passages themselves referred to the telegraphic services, the whole conception of the new organisation was a great Imperial system which would not only give us efficient Empire communications but would put us beyond the reach of external competition, and, indeed, enable our Empire system to extend to our advantage—to the advantage of our trade, the advantage of British science, and the advantage of our influence in the world—into other countries. From that point of view, obviously, it was not the duty of the Post Office to use the company's stations, but it was the duty of the Government to consider at once with the company whether it could or could not co-operate. The whole record of what has happened shows quite clearly that the Post Office itself was determined to avoid co-operation with the company and to disregard the company's offers of co-operation.

As far back as February, 1929, when the arrangements for handing over were complete, the Post Office assured the company that it would not place any orders for apparatus for Dominion services for at least six months without consulting the company, and it undertook to co-operate with the company with a view to the development of the most useful apparatus. On that, one might have supposed that negotiations and discussions would begin, but nothing happened, although, as early as July of last year, the Post Office, without informing the company—who, after all, ought to be its partner in this Imperial business, and not an enemy to be kept at arm's length—wrote to the Indian Radio-Telegraph Department saying that it was very desirable to have a system of communications independent of the Communications Company. Obviously, their whole atti- tude was to try to get away from the company, and the offer of the company to make an immediate opening of services with Canada and other Dominions, instead of being met by a request to come round and discuss and consider the matter at once, received no answer whatever except a formal acknowledgment. As far as the Post Office was concerned, we do not know when any answer would have been received by the company. It was only when the company appealed direct to the Chancellor of the Exchequer, protesting against the attitude of the Post Office, that something at last happened. These protests were made at the end of September, and again on the 1st October, when the company felt bound to inform the Chancellor of the Exchequer that the company's telephonic communication at its station at Bridgwater had been cut by the Post Office, and had been taken up by the Post Office without even the courtesy of a warning or intimation, thus making it impossible for the company even to carry on experimental trials in order to show foreign visitors what it could do. The whole attitude was one of deliberately preventing the company not only from carrying on a commercial service, but even from carrying on experiments in this country.

Then came the inquiry. That inquiry raised both technical and financial questions. I certainly agree that the right method of proceeding was to consult the Government's technical experts, and certainly no experts stand higher than Mr. F. E. Smith and his colleague in this investigation; but they ought to have consulted them properly. They ought to have consulted them under conditions where they could hear every side of the case, where they could be cross-questioned, where mistakes could he rectified. Instead of that, they were consulted by means of a set questionnaire, and it was a very extraordinary questionnaire. It was composed not only—


I should have stated in my speech, but perhaps I omitted it, that, of course, when we decided to consult the experts, all the relevant evidence which the Government received from the company was placed before them.


That may he so, but it is not the same thing as a full inquiry in which the experts could have investigated the matter face to face with the experts of the Company, obtaining all the relevant evidence. They were asked to answer what my right hon. Friend has very truly called a weighted questionnaire. It was a questionnaire consisting of certain leading questions, and, I might venture to add, misleading questions. It begins by pointing out that there are two systems. The one it describes as the Marconi system, with high aerials, "which are obviously an item of considerable expense"; and the other it describes as the Post Office system, consisting of "lower ae[...]ials, which, as regards capital cost, are very much cheaper." That may be so, but the questionnaire omitted to state that the one set of aerials were already in existence, and that no cost would be involved by using them, whole, as regards the others, whether they were cheaper Or not, they had still to be constructed. The whole of that first part of the questionnaire is to that extent misleading. It also omitted to state that, in regard to the company's stations, corresponding stations at the other end existed, in some parts of the Empire at any rate, and that no cost would be involved there, whereas, obviously, the carrying out of the Post Office system would involve the Dominions, at any rate, if not this country, in very considerable expense, and, because it would involve them in expense, it would be likely to involve considerable delay.

Turning to the next part of the questionnaire—and I hope the House will forgive me for touching, even for a moment, on these technical questions, with which, after all, we are not very capable of dealing—I would point out that the second paragraph in the questionnaire treats the Marconi system as practically identical with the multiplex system, and asks the experts, practically, to say that the multiplex system is not so good as others—for instance, the single band. The Marconi Company did not, as a matter of fact, lay any stress on the multiplex system. They only mentioned it as the cheapest. The system they themselves advocate, arid the only one which the Post Office has taken into serious consideration, is one involving separate transmission. I have read as carefully as a layman can the reply of the experts, and it is clear that on technical grounds the best that can be stated for the Post Office system is that it can do equally satisfactorily. Their whole answer is based on the assumption of greater cheapness, which again depends on the misleading statement of the question, namely, the actual cost that would be involved in erecting high aerials, which is not the fact. They point out that the Post Office system of lower masts could probably be made more effective at a lower capital cost. "The choice between the two methods is purely economic."

The strongest passage they used is that the adoption of the more elastic aerial system with lower masts would be advantageous, as equally satisfactory results could be obtained with a smaller expenditure of money. That means only that one system is as good as the other, but that, if it costs more money to erect the company's masts, the other system is cheaper. On 26th February, the Postmaster-General, in his answer pointing out that the two questions of efficiency and cost arise, said that the experts had decided on grounds of efficiency in favour of the Post Office system, because the Rugby system was the more elastic, and, therefore, in this respect—I presume elasticity—offered decided advantages. That is a very considerable perversion of what the experts actually said. You cannot from first to last in their Report find a single sentence which on purely technical grounds gives a preference to the Post Office system. The whole of the recommendations of the experts are based on the assumption that there is greater cost involved in making aerials, and, as that is not the case, as the aerials already exist, the whole argument based on the experts' Report falls to the ground. A good many other technical points were not submitted to the experts' decision. I understand, for instance, that the whole question of receiving aerials was not put to them at all. That is clearly not a question on which we in this House can come to a conclusion. All I am suggesting is that it strengthens the case my right hon. Friend made for the publication in full of all the evidence and all the documents and for the constitution of some impartial body like a Select Committee of the House.

Now we come to the question of cost. The Postmaster-General repeated to-day what he said on 26th February, that concentration at Rugby admits of economies in many directions, and particularly in the land line connections to the London Trunk Exchange. Are there no trunk lines already in existence within a very close distance of the company's station I Is it not a fact that there was actual communication between Bridgwater and the main trunk line, which the Post Office deliberately severed as part of their policy of discouraging the company? When we come to the other figures, there is one aspect of the matter that I must point out. The Postmaster-General, when he came to the question of cost, said "the minimum rental asked by the company for the use of the beam telegraph stations, excluding a cheaper scheme which is open to objection on other grounds, was £45,000 per annum." You would obviously assume there that this other scheme, which is open to objection on other grounds, hardly came into consideration. But that other scheme is the very one which in the questionnaire to the technical experts is treated as if it were the only Marconi system. it seems to me that the whole treatment of the question, both in the questionnaire addressed to the experts and in the answers given in the House, has been disingenuous in the extreme. Obviously, I am not in a position to go into all the detailed figures the right hon. Gentleman gave of savings here and savings there. I would only remind the House that, as far as the public interest is concerned, economies in working, whether they are economies achieved by the Post Office or whether they are economies achieved by this great corporation, will inure to the benefit of the public in reduced rates and a better service.

When talking of economies we have to consider the position not only here but in the Empire as a whole. The Postmaster-General's new aerials may be cheaper or not, but they have to be erected. The company's aerials are already in existence, and aerials are equally in existence in the other great Dominions. In South Africa it is conceivable that new aerials may he needed at Johannesburg in addition to the existing ones at Cape Town, but to carry out an Imperial system through the Post Office, ignoring the company, would not only involve this country but the rest of the Empire in capital charges which may easily run into £300,000, £400,000 or £500,000. That, clearly, is not the way to carry out the recommendations of the Imperial Conference that all the Governments of the Empire should endeavour to work whole-heartedly with the company. This is, after all, an Imperial issue. We set up, believing it was to the vital interest of the whole Empire, an Imperial system of communications, and anything that affects beneficially or prejudicially the efficiency of that system of communications is of interest to every Government in the Empire.

By preventing this corporation which the Governments of the Empire set up from developing telephone services, we are undoubtedly reducing its capacity to render service to the Empire. We are reducing its efficiency. That, it seems to me, is a matter that concerns the other Governments of the Empire. Have any of them been consulted? As a matter of fact, the other Governments of the Empire and ourselves have set up an advisory committee, not in any sense subject to the company, but subject to the Governments and under the orders of the Governments, to watch over the company, to see that it renders the right kind of service and gives the best kind of rates. That body ought, obviously, to be taken into consultation before the Government here decided that, even with a small margin of profit to one of its Departments, it should ignore the whole spirit of the Imperial Conference Report. Was the advisory committee consulted? I gather not. I should like very much to know why, in connection with a matter affecting the whole Empire, affecting the success of this Imperial system that we have set up, the Imperial Advisory Committee was not consulted.

Then we come to the whole question of services with other countries. The Postmaster-General the other day gave an answer which, again, it seems to me did not altogether err in the direction of candour: We do not intend to enter into any connection or partnership with American or foreign companies although, of course, the House will understand that at the other end of the service, which of course is in foreign countries, we are bound to make some arrangement."—[OFFICIAL REPORT, 26th February; col. 2259, Vol. 235.] Quite true, but with whom? Are we going to make it with some body that is more or less a part of the great Imperial institution that is being set up, or with some body which is more or less a part of the great rival American institution? That is one of the great issues with which we are confronted. It seems to me that there, again, the Postmaster-General is making no attempt to answer the case. Instead of trying to work all over the world with a system which is Imperial, and to strengthen the. position of the British Empire in other countries, he is everywhere, by trying to avoid it, inevitably committing himself to the only other alternative, namely, the great American Radio Corporation.

When we come to the question of apparatus and equipment, the Postmaster-General entirely misunderstood my right hon. Friend's point. Of course, in this country we naturally consider that the benefits of any preference that the Departments give should be given to goods made by British labour, whether those goods are originally of American type, or whether the capital is partly American or came from any other foreign source. That is a general rule to which neither my right hon. Friend nor myself take any exception. What he was concerned with is that in a great; matter of scientific development, where the success of one type in one place naturally leads to its extension all over the world, it should put the seal of Post Office approval and support upon the foreign type rather than the British type, and that it does so, I dare say, not only on grounds of cheapness and efficiency, but also because it fits in more easily with the fact that at the other end of the Atlantic it is working directly with a foreign corporation rather than endeavouring to work with a British corporation in Canada. They seem entirely to ignore from first to last the whole of the broader Imperial implications of the scheme.

The same applies to the question of research. We are dealing with a subject which is in a state of constant evolution. No one knows from year to year, or month to month almost, what new discoveries may not be made. What may be the possibilities of television, what may be the possibilities of power transmission we do not know, but anyone who is not even a technical expert can say that opportunities for practical research are enormously increased when every aspect of the matter is being worked together—telegraphy, telephony and wireless telegraphy—and this deliberate separating of the operation of wireless telephony from wireless telegraphy must cripple and hamper the progress of British research. It is not a question of Post Office ownership or of the Post Office getting the profits. The company, after all, only asks to be allowed to operate and to get one-tenth of the revenue, leaving 90 per cent. to the Post Office, though everywhere else in the world the proportion given to the land lines as compared with pans-oceanic transmission is infinitely less. Let the Post Office screw every penny it can, but do not let it stand in the way of the most effective and fullest development of research in these matters.

This is really the conclusion to which I wish to draw attention. This is not an issue between the Government and what the Postmaster-General calls outside corporations. It is an issue between two functions of our British Governmental system, and in that issue it seems to me that the processes of inter-Departmental warfare have been carried on with quite unnecessary vehemence and with dubious fairness and impartiality by one Department of the State, and the public, which is interested in the most efficient cooperation of both these organisations, wants to know the facts. It seems to me, on the face of the facts as far as they have come out at present—and I am perfectly prepared to revise my conclusions if fuller facts are brought out—that the Post Office has been pursuing a vendetta against the company, and that in the course of that vendetta it has shown itself indifferent to all wider national interests. I believe that the whole thing would really be incredible if one did not know the depth to which inter-Departmental warfare descends. We in this House are not concerned with one side or the other in a quarrel of this sort, but we are vitally concerned in having the whole facts before us. Therefore, I ask the House not to prejudge the issue one way or the other, and not to take the argu- ments which I have produced in any sense as conclusive arguments any more than the technical or financial arguments which the Postmaster-General has adduced. Let us have the whole of the facts and the whole of the evidence, and let them be judged by somebody who is competent to deal with them.


I intervene in this Debate with considerable diffidence, because if it is based on the subject on which it was ostensibly to be based, the question is far too technical to discuss in this House. If there is no other consideration than the technical question, I cannot understand the wisdom of raising the matter here. I have spent most of my life as an electrical engineer, and I am bound to confess that the subject in its higher reaches is certainly too profound for me. I admired the courage and determination of the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) in putting over so much technical information with so much emphasis. Hon. Members will be well-advised to keep off the technical side of this subject until they are quite sure that it is on a technical question that this case has been put forward. Hon. Members should not worry themselves about high aerials or low aerials. I cannot understand why, when one department takes a departmental decision to place a contract in a certain direction, it is the subject of half a day's debate in this House, while when nearly every other Department makes a decision as to where a contract shall be placed such decision is accepted by the contractors and nothing more is heard of it.

What is the real issue? The right hon. Gentleman the Member for Sevenoaks (Sir H. Young) in his speech maintained a very high note. I felt a little nervous about following him as he laid down the dangers for the Empire in the course which the Postmaster-General proposed to take. I consider that the Postmaster-General very kindly and equally courteously demolished those arguments, and reassured the right hon. Member for Sevenoaks that now we can treat this matter as a matter of business. What has really happened? Somebody wanted to sell something to the Postmaster-General, and he replied, "I thank you, but I think that I can do it better my- self." That is an answer which I have often heard in business. My only regret is that when, in the old days, I lost a contract from the Government, I was unable to secure such excellent publicity and such persuasive advocacy. The truth is that the Debate is not a technical Debate at all. There are always two ways of doing everything. What the technical report of the experts says is, that of the two ways offered to the Government, and of which the Postmaster-General has the choice of alternative, both, or either, of them will do the job. I think that those who have brought the name of Marconi into the discussion do him an injustice. It would be a very grudging House of Commons which did not accord to that great scientist a full meed of gratitude for what he has done in developing this great science from its very beginning. He ranks alongside Stephenson and James Watt. But in the days of Stephenson and James Watt inventions were not floated for millions of money, and consequently the Postmaster-General, or whoever would be placing a contract before Parliament at that time, would not find himself confronted with the difficulty of having to give up all development on his own account because he had handed that development over to somebody else.

I am not attacking the Marconi Company or the International Communications. I am sorry in a way that it has not been possible for this business to have gone to the Marconi Company, but I refuse to allow questions of Empire, introduced quite illogically, to intrude in what is nothing more than a straight business proposition. I consider that the Postmaster-General acted with unusual care. I cannot see the First Lord of the Admiralty acting with the same care when he decides to adopt a gun-mounting or a fuse and refuses to have it developed by Vickers-Armstrong. The Postmaster-General appointed two experts. Their report is as clear to the ordinary man-in-the-street as any report of so highly technical a nature could be. He then put that report before the Cabinet. The Cabinet approved that report. I cannot imagine how the placing of any contract or any concession, after assessing it in that manner and after it has received the full support of the Government, can be questioned, unless you wish to question the entire integrity of the Government.

Why should not the Post Office develop this system? The Post Office engineers in the past have had a great record of service of invention and of enterprise. Those of us who know anything of the Post Office realise that many devices which are, in the first instance, invented by somebody outside, are improved by somebody inside the Post Office, and it is very difficult to assess what is done by the Post Office and what is done by somebody else. I should be very sorry if there was a feeling in this House that the Post Office were not entitled to a research staff equal to the work which they would have to undertake. I consider the mere fact that there are masts erected in one part of the country by the Marconi Company and other masts erected by somebody else really does not matter one bit. In ten years' time, possibly, there will not be one mast of either type. The fact is that the whole business, the whole art, is in the same stage of development as the Rocket and the subsequent steam engines were. Having supported the Government in their view that they should carry out telephonic communication with wireless in this manner, I should like to plead that if they intend to set up a Department under the Government they should develop alongside Marconi interests and other progressive interests in order to get the best for the country. I hope that in asking for the best brains for Government service they will, a t any rate, reward them reasonably and at a fair rate. The greatest weak less of the present Government is in securing for the State proper research for that Department. The chief engineer of the Post Office is rated, I think, at a basic salary of £1,500 a year and his Department hand over £8,000,000 to the State. This sort of thing will not help in the proper development of research by the Government.

I hope that the Postmaster-General will proceed calmly and serenely on his way to do what he feels is best for the country, and that he will not allow himself to be disturbed or his staff diverted from their object by attacks from one side or the other. I trust that if that chance is given to them, the quarrel between the opposing interests may yet die down, and that we shall find the British Government marching side by side with the Marconi Company, as they should do, and every- body getting the best out of research. I have pleasure in supporting the Postmaster-General.


I would like to support the hon. Member for Harwich (Mr. Pybus) in the claim which he has made on behalf of the Post Office and at the same time suggest an end be put to this somewhat distressing quarrel between two great corporations, one possessing the whole backing of the State, and the other a private corporation, which had the support of the State through the late Postmaster-General ending in an agreement finally arrived at between the company and the present Postmaster-General. I deplore, as I expect most Members of this House deplore, the curious way in which the Communications Company advanced their claim to submit this matter of telephonic rights in trans-oceanic telephonic communication to an impartial inquiry. I can imagine no impartial inquiry into such a matter which does not contain experts on its committee, and I can imagine no experts appointed to such a committee who would not either be in the employ of the Communications Company or in the employ, directly or indirectly, of the State. I am not impugning for a moment their good faith in the matter. I am only pointing out how difficult it would be to convince anybody among the general public of the complete impartiality of the experts on either side. I should also like to point out the difficulty which any of us laymen, or any laymen sitting on such a committee, would have in reaching unanimity with regard to the rival claims, or the rival opinions, if there were rival opinions, of the so called impartial experts.

If you take the development of the wireless transmission services in this country, it is obvious that it is based on the work done by the Marchese Marconi and other scientists. In recent years the whole of the developments have been in the hands of the Marconi Company, and two or three departments of the State. I refer to the Post Office, the Admiralty and the Air Force. The experts of these various services, including those of the Marconi Company, have been gathered together on a Radio Research Board. It has been suggested in the Press during the past few weeks that the Post Office and the Government as a whole have not at their command the services of men such as are at the command of the Marconi Company, or, shall I say, of the Imperial Communications Company. If hon. Members make any reference to any work on 6.0 p.m. wireless or to recent radio research work, they will find that the Government experts are in the van of progress. It is true, as the hon. Member for Harwich said, that they are not remunerated in proportion to their intrinsic worth to the State. That is a matter which he and his fellow commissioners on the Royal Commission will probably be able to put right. One has only to refer to the work of the Post Office in recent years to realise how great a prejudice there must be in the minds of certain outside interests which may, rightly or wrongly, be in opposition to the Post Office experts. For example, there was a letter in the Press the other day from Sir Ambrose Fleming, a great inventor. I hesitate to accuse him of prejudice, or to impute motives to him, but it is a fact worth recording that the prolongation of his patent for the thermionic valve was successfully opposed by the Post Office. It is difficult not to regard as suspect letters from people who regard themselves as penalised by the advice given by Government experts on such matters.

Right hon. and hon. Members who have taken the trouble to visit Rugby—I am one of them—have probably been surprised at the amazing progress that has been made in a very few years with regard to wireless telephony. I am credibly informed, shall I say authoritatively informed, that when the possibility of wireless telephony was before an Inter-Departmental Committee eight or nine years ago, the experts of the Marconi Company expressed the opinion that there was not the slightest possibility of that service ever being developed. It is true that experts change their opinions, but here is the fact that eight or nine years ago the opinion of the Marconi experts was that there was no future for wireless telephony, based on the knowledge existing at that time. The Post Office showed a considerable degree of foresight in the matter, foresight for which our Post Office engineers have not been given that full glare of publicity which almost invariably attaches to ex- perts employed, and not always employed for the best of motives, by private companies. Eight or nine years ago the Marconi Company's experts definitely said that there was no future for long distance wireless telephony, but the Post Office went forward. It is true that when the Imperial Communications Committee were considering the future of imperial communications, they reserved to the nation, through the Post Office, the right to develop these services, and it is equally true that the Imperial Communications Company wished to have the privilege of working the services, but at that time they were not in operation; they were in a purely experimental stage. What is the position at the present time? We have a transmission station at Rugby, with a receiving station at Cupar and another receiving station at Baldock, the station at Cupar being used for long-wave reception and that at Baldock for short-wave reception. With the two stations we are able to maintain wireless telephonic communication with America for the whole 24 hours of every day in the year. It is not claimed—certainly I have not heard that it is claimed—by the Imperial Communications Company that they can operate their system for 24 hours in the day. That is one very essential factor, and that is done by a combination of the long-wave system and the short-wave system. As the Postmaster-General has said, the short-wave system has this advantage, as operated by the Post Office at Rugby, the choice of three wavelengths, 15, 24 and 32 metres. One wave-length may be better for one period during the day, during a certain state of the atmosphere, and another wave-length may be more suitable for another period of the day. The fact remains that we have a 24 hours' service, and it happens to be a very lucrative business.

I was informed, and I believe that it is an under-estimate, that the number of messages per month, according to the average for the last three or four months, has been 1,200, with an average duration of six minutes for each message. In other words, we have a revenue, assuming that that average can be maintained throughout the year, and apparently it is on the increase, based upon £9 for six minutes—that is half the total revenue, because the total revenue will be £18, half of which will have to go to the company on the other side—of something approaching £130,000 for a capital expenditure on the station—and this is worth remembering—of £500,000. It is quite conceivable, indeed, it is fairly Obvious. that in the not very distant future when we have developed the beam service to Australia—and that is in the immediate realm of probability—and to India and other countries, that with a very small additional expenditure the State will derive a very considerable revenue from its wireless telephony services.

I am reminded that when the wireless telegraph services were handed over to the Imperial Communications Company, a system which cost the Post Office £160,000 to develop was actually receiving each year £160,000 in revenue; in other words, the revenue from the system was practically equal to the capital expenditure. This was not because the Post Office wished to keep up their prices, but because of an agreement arrived at between the Post. Office and certain cable companies that the former should not unduly lower their prices for overseas transmission. As a going concern the wireless telegraph services have been handed over to the merger company. It is sometimes suggested that the Post Office is very much behindhand. The charge was made by Sir Ambrose Fleming in his letter to the "Times" that the Post Office when they had the cables, or certain portions of the cable system, under their control, did not introduce the new permalloy system. That system had tot been in existence very long then. If that system is what it claims to be, and I understand that you can send messages over it at about ten times the rate, and even more, than over the existing Atlantic cables or over any other submarine cable, one wonders what the merger company, the Imperial Communications Company, has been doing all this time in continuing to use cables which are completely obsolescent. We need more cables.

I should like to ask the Postmaster-General in regard to the development of international wireless telephonic services, whether the agreement with the Imperial Communications Company in regard to telephonic services gives to that company the right in respect of all messages transmitted over submarine cables, or is that right still reserved to the nation? If not, I can see a tremendous future for the Imperial Communications Company if they will only take a bold step and lay some of the new cables, which can be manufactured in this country and certainly should be manufactured in this country. Perm-alloy is an American invention. Perm-alloy has its counterpart in a new alloy discovered in this country possessing the same properties. It is within the realm of possibility that we shall be able over these new cables to send seven or more messages simultaneously—not telegraphic messages but telephonic messages. We shall be able to use one cable for transmitting seven telephone communications at the same time. That would conceivably make a tremendous difference to the development of wireless telephonic services.

The advance of science, as the hon. Member for Harwich said, in this particular field of research cannot be gauged to any degree of nicety at the present time. We are discovering new things every day. Our Government scientists, under-paid though they are, apply themselves with tremendous energy and enthusiasm to the task of keeping alight the lamp of research. They have made a number of remarkable contributions to the growth of this particular science. Some of them are employed by the Post Office. No Government scientist gets the same amount of publicity as the scientists outside, and there is a tendency on the part of the general public, because there is not constant advertisement by the State of their servants, to get the impression that the Government scientist is somewhat inferior to the scientist employed outside. That is an entire misconception. We have men in the Government telephone service who stand high among their fellows, and the State has every reason to be proud of the service it maintains, whether by the Post Office, the Admiralty or any other Department. One need not enumerate the many contributions made by Post Office engineers to the advancement, particularly of the technical side, of wireless telephony in the past few years. The results they have achieved are well known throughout the technical and scientific world. But I want to say this in regard to the Post Office Engineering Depart- ment: it is not a scientific research Department.

Under the Haldane Report a definite line of demarcation was laid down between fundamental and applied research. It is the business of the Post Office engineers to apply the researches made in universities and laboratories throughout the world; to keep abreast of all modern achievements in science and to apply them. Their primary function is not to make discoveries for themselves, and any sneer or suggestion that they are lacking in competence is entirely unfair. They are performing their functions only too well for some of the outside interests. They are keeping themselves so well abreast of modern developments, that, apparently, this country is leading the world in the question of trans-continental telephonic service. Anyone who has been to Rugby or has taken the trouble to realise how delicate a machine there is in being, how complicated is the machinery, and how easily it can be put out of order, not only by faulty operation but by faulty engineering work, will realise the tremendous strides forward that have been made by the Post Office in comparatively few years.

There is an essential difference between telephone and telegraph. When you hand a telegram over the counter for overseas or this country, there is no question of getting in touch immediately with someone at the other end of the wire. In dealing with telephones you have a different proposition, and one of the reasons why I wish the Imperial wireless telephone service and cable telephone service to be kept in the hands of the Post Office is that such a policy would ensure an absence of friction. If you have two entirely different concerns, one an outside concern, existing in the interests of its shareholders and operating through the Post Office, as is suggested, and anything goes wrong with the service, the blame will be put on the Communications Company by the Post Office and by the Communications Company on the Post Office. It is much better, when you are dealing with telephones and the possibility of a breakdown due to the personal factor—and we know that breakdowns of that kind are not infrequent—that you should have control centralised in one institution, which has built upon a scientific foundation a great telephone service not only for this country but for the whole world.

Viscount WOLMER

The Debate this afternoon reinforces the desirability that the Post Office and everything connected with it should be taken out, of the arena of party politics. I am very sorry that so much of the party spirit has been imported into this Debate. It has not been done by us. The right hon. Member for Sevenoaks (Sir H. Young), as the Postmaster-General himself admitted, dealt with it purely as a business proposition, and it is entirely from that point of view that we desire to approach this question. The hon. Member for Harwich (Mr. Pybus) and the Postmaster-General himself took this line. They said, "Why all this fuss? Surely the Post Office has the right to give a contract to the firm it thinks best without the matter being raised in the Press and on the Floor of the House of Commons." They appeared to insinuate that there was some deep-laid plan behind the criticisms this afternoon. The reason why critics of the Government attach so much more importance to this matter than they do to an ordinary contract is because this contract is going to settle the whole future of inter-Imperial wireless telephony and govern the future of Empire communications for many years to come. Therefore, it is ridiculous and absurd to pretend that this is not a matter of the very greatest importance.

The reason why we are somewhat disquieted is that we cannot help remembering that the Imperial and International Communications Company was brought into being in the face of violent opposition by hon. and right hon. Members opposite, and we feel that the Company has never had fair-play from this Government. What are the facts? As long ago as last August the Government were offered an inter-Imperial wireless telephone service at three or four weeks' notice from the placing of the order. They were offered a service in which a certain number of hours, I think 13 hours a day, was guaranteed just as in the previous beam contract. The Government made no response to that offer. Since then they have been searching for some alternative system, and they have been searching in the dark. They have had a packed Cabinet Committee. Evidence has been given—

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence)

I must ask the Noble Lord to withdraw the charge that it was a packed Cabinet Committee.

Viscount WOLMER

It was highly improper, where there was a dispute between the Post Office arid the Communications Company, that the Postmaster-General himself should be one of the judges in that dispute. That is what I meant by the remark, and I think it is a perfectly legitimate criticism. Let me remind hon. Members that in the previous Administration, when there was a question at issue in which the Post Office was an interested party, e late Postmaster-General never sat as one of the arbitrators on the question. I think we are entitled to comment on this fact, especially as none of the evidence tendered before that committee has been published or, as I understand from the speech of the hon. Gentleman this afternoon, will be published. Therefore. we are entitled to be somewhat disquieted by the feeling that political prejudice has been allowed an undue place in the consideration of this matter, and that this great Communications Company has not been given fair play. It has not been given fair play this afternoon in the speeches of hon. Members opposite. The Postmaster-Genera himself repudiated the idea—I do not think I urn misrepresenting him—that the Communications Company was in any sense a partner with the Government in the problem of Imperial Communications. I shall be glad to know if I have misunderstood the hon. Gentleman.


The actual words I used were that I repudiated the idea that they were on an equality with the Post Office.

Viscount WOLMER

The hon. Gentleman in another passage of his speech also repudiated the idea that the Communications Company was a public utility service in the ordinary sense of the term, and that is a point which I desire to press upon the House of Commons at the moment. It is absurd to regard the Communications Company as a kind of monopoly which is going to filch something valuable from the taxpayers of this country. What are the facts? This Government is in partnership with the Communications Company. The taxpayers of the country have an interest in all the profits that are made by the Communications Company. After the standard rate is paid they are divided on the basis of equality. There is no conflict of interests at all; and therefore we come down to the question, what is the commonsense plan which ought to be adopted? When you are offered a system where you already have four beam stations fulfilling every single thing that was said for them, and more than fulfilling them, is it wise or prudent to disregard that offer in the way the Government have disregarded it?

The hon. Gentleman the Postmaster-General also laid great stress on the fact that the aerial he proposed to erect at Rugby differed materially in design from the aerials of the beam stations. He claimed that the Post Office engineers repudiated the idea that a high aerial of 280 feet was necessary for the best service. I must remind the House of two facts, first, that the Marchese Marconi has staked his scientific reputation that an aerial of this pattern is necessary for the greatest measure of efficiency; secondly, that the prophecies of the Post Office engineers about the Marconi short-wave invention have not been uniformly happy in the past. The Postmaster-General knows perfectly well that the technical advisers of the Post Office were entirely wrong about the beam system from the beginning.


The Noble Lord says that I know that perfectly well. I entirely deny his statement. It is a myth and a legend.

Viscount WOLMER

Then I must refer to some quotations which I have here. They are quotations from the technical experts of the Post Office in 1924, and again in 1926, on the value of short-wave telephony. I have here the presidential address to the wireless section of the Institute of Electrical Engineers, as reported in the institute's journal of December, 1924. The Postmaster-General is pushing his technical advisers as against the authority of the Marchese Marconi.


The expert referred to was not one of the technical advisers who advised the Cabinet Committee, as the Noble Lord knows. he was an ordinary member of the Post Office staff.

Viscount WOLMER

The hon. Gentleman said that the Post Office engineer thought that aerials of 150 feet were quite as efficient for this purpose as aerials of 280 feet. That is the opinion of the technical staff of the Post Office. My comment on that is that, in view of what happened in 1924, 1925 and 1926, 1 do not think we can be satisfied with that opinion, seeing that we have the unequalled authority of men like Sir Ambrose Fleming and the Marchese Marconi, who say exactly the opposite. Then we come to the finance. The hon. Gentleman gave no details. He said that he was going to save money by concentrating all the telephone plant at Rugby. He did not tell us how much these new aerials are to cost. He has the aerials waiting for him at the beam stations, but he is going to spend, I venture to say, scores of thousands of pounds, possibly hundreds of thousands of pounds, in erecting new aerials for this service.


I did give a figure; I said £3,500 per aerial erected.

Viscount WOLMER

Per aerial erected—well, I must say that I am very much surprised to learn that it is as cheap. I shall be very glad to see the further details on which the hon. Gentleman makes that estimate. He went on to talk about the financial side of the question of land lines. His case is entirely disputed by the advisers of the Communications Company. The hon. Gentleman said in his statement that to use the beam stations it would be necessary to have over 4,000 miles of telephone circuits. That estimate is entirely disputed by the Communications Company, who say that the total would be considerably less than half that amount. It is no use the hon. Gentleman pretending that long telephone circuits are the difficulty in this matter. Telephone circuits are all there; it is simply a question of using the existing circuits. The Post Office has made telephone circuits up to the middle of Scotland in order to carry on this transatlantic telephony. The Rugby service has attached to it telephone circuits which are a great deal longer than the circuits that would be required to work the beam. Therefore, that is a very small point indeed. We cannot help feeling that this matter has been judged from a small and partisan point of view, and that hon. Gentlemen opposite have not appreciated the very great issues which are involved. There is one point in particular that I would mention. That is in regard to the effect on employment. The whole of this plant that the hon. Gentleman proposes to order is going to be made by the American company in subsidiary works in England, and the hon. Gentleman asks therefore: How are we injuring British trade and employment? The point is this: There are two great alternative systems of wireless telephony. There is the system put forward by the Marconi Company and the Imperial Communications Company on the one hand, and there is the system put forward by the American Company, the Standard Telephone Company on the other. It is not only a question of what is happening in this country. The question is what is happening in other countries of the world. In South American and Rumania the governments have yet to decide whether they are to use the Marconi system or the American system, If they decide to use the Marconi system we know that the whole of the work will go to the people of this country, because the works are in this country. But does the Postmaster-General mean to say that if the people of Rumania or South America or China employ the American system the plant is going to be made at Woolwich in the works of the Standard Telephone Company? Of course not; it will be made in America.

The Government are doing two things. They are giving a vast advertisement to the American article as opposed to the British article. Secondly, they are preventing the Communications Company from giving a demonstration to inquirers from other parts of the world as to the efficiency of the system which they have evolved at home. Therefore the Government are doing their utmost to thwart this company, and are putting a spoke in the wheels of British trade and prosperity.



Viscount WOLMER

Can the hon. Gentleman deny a word of what I have said? I should be glad to hear in what respect that statement is false. That is why the company feels particularly sore about it. They are being degraded in the eyes of their competitors in the face of the whole world. They are being denied the opportunity of demonstrating the efficiency of their system to foreign countries. We say that such a grave decision ought not to be taken in a hole-and-corner manner. We ask that the evidence and the whole evidence on which the Government have come to their decision should be published and that the estimates which they have accepted should also be published. We further demand that the facts should be examined by an impartial Committee of inquiry and not by a body on which the Postmaster-General himself sits.


This question is not a party question because it has been made so by hon. Members on this side of the House. If there is a party spirit in it the party opposite must accept responsibility, be cause the foundation of any trouble that arises in this connection was laid by the late Government when it transferred the beam wireless service to a company. Now that hon. Members opposite find that the bargain is not working out quite as satisfactorily as they anticipated, I do not see that they have any cause for complaint against the Post Office. It is an amazing thing to me to see the ex-Assistant Postmaster-Genera rise in this House and attack the very State Department over which he had some control a few years ago, for looking after its own business. He says that the Post Office has denied to the Imperial Communications Company the right to a demonstration. Does he suggest that the Post Office has not the right to a demonstration too? It seems to me that if the Post Office has the power to decide as to the means by which certain work shall be done, the Post Office should at least try out its own strength before calling in someone else. If the Company's offer were accepted, what would the noble Lord suggest in regard to the scrapping of Rugby? That is what his policy certainly envisages.

I would like to compliment the Postmaster-General on his brilliant speech, which was one of the finest defences of the British Post Office that I have ever heard. It will stand to the credit of the Labour Government on this occasion that it can stand up for the British Post Office when other people choose to attack it. It is something for which we have been waiting for many years. We are accustomed to being told by Ministers of the opposite party that Departments of the State are almost sacrosanct. But the Post Office has always appeared to be the black sheep, and we have never had any real defence of it at all up to now. Therefore, I welcome the speech of the Postmaster-General on this subject. I do not presume to deal with the technical questions before the House, but I am very much concerned with the suggestion that was made by the right hon. Member for Sparkbrook (Mr. Amery), when he accused the Postmaster-General of disingenuousness and lack of candour.

Without presuming to offend anyone let me say that the whole basis of the attack upon this policy is a lack of candour. The whole basis is the fact that the scheme for the transfer of Post Office services went a little bit wrong. It was said to be all right when power was sufficient to take away from the Post Office a very paying proposition, and to give it to a commercial company, a so-called public utility company, even with restricted profits, and opportunities for making profits. But I think that this mistake was made. It was not anticipated that wireless telephony would be such an immediate success as it has become. It was not expected, when the subject of beam wireless was being considered, that telephony was worth bothering about at all. The telephone services, and particularly the trans-Atlantic telephone service, were being run at a loss at that time, but to-day the trans-Atlantic telephone service is being run at a profit approximating to £45,000 a year. Is there any connection between that profit and the claim that the service should be taken over by the Communications Company?

It has been suggested from the opposite side of the House that the inquiry made by the Cabinet was a secret and unfair inquiry, and one speaker asked, why was not the Communications Company called into this discussion. Let me answer that question by asking another. Why was not the Post Office called in when the question of Imperial wireless was being considered [HON. MEMBERS: "It was!"] According to the report there were witnesses from the Eastern Telegraph Company, from the Marconi Company, from the Canadian Marconi Company—in short, out of 11 witnesses, seven represented these merger concerns—but not one name of a witness for the Post Office appears in that report. In the circumstances there is no real complaint against the Post Office or the Cabinet for not consulting the Imperial Communications Company on this occasion and it seems to me that the Post Office would deserve attack and censure if it failed to arouse itself to a sense of its responsibility in this matter, and if it was not able to come to this House and say, as a State Department, that it could guarantee to give as good a service as that which has been outlined.

There is another point. The Post Office, according to the admirable statement of the Postmaster-General, bases its case upon efficiency and economy, and, as a matter of public interest, that is deserving of appreciation. I do not wish to push this next point too far, but I would draw the attention of the House to the fact that when the general manager of the Imperial Communications Company addressed a letter to the Prime Minister on 28th February, which was reproduced in the "Times" on 29th February, he prefaced his remarks with these words: In justice to the 3.5,000 shareholders. He went on to mention, as a secondary consideration, that the interest of the efficiency of Imperial communications should be taken into account, but the first proposition was that justice must be done to 35,000 shareholders. The Post Office engineers do not need any defence from me, because their work, over many years, speaks for itself. Reference has been made to a letter written by Sir Ambrose Fleming, but I think it can be said, with every due respect to him as an authority, that his view cannot be unbiased, seeing that for years he was consultative engineer to the Marconi Company. It might be worth while, however, remembering that the right hon. Gentleman who was Postmaster-General in the last Government, signed the Second Report of the Wireless Telegraphy Commission of 1926, which contained a statement to the effect that the develop- ment of multiplex working at the Rugby station could be confidently left in the hands of the Post Office wireless engineers. The Noble Lord had not much to say in favour of the Post Office engineers, but the right hon. Gentleman, who was his chief under the late Government, distinctly uttered a word of praise which is, I suggest, worthy of the Noble Lord's consideration.

That Report was also signed by Mr. W. H. Eccles, vice-president of the Institution of Electrical Engineers and vice-president of the International Union of Radio-Telegraphic Science—a very authoritative person who is able to speak, I believe, with knowledge on the subject. If he can praise the Post Office engineers no amount of speech-making from laymen on the opposite side of the House will do the Post Office engineers much harm. They have been consistent in their efforts in research; they have applied their minds, as the Noble Lord knows, strongly and loyally to the work of developing all sides of science in connection with Post Office telegraphy and telephony and, had they been given a little more opportunity in the past, I am sure the results of their work would be even greater than they are to-day. By the enterprise and technical ability of the Post Office very satisfactory experiments have been made which have established a direct radio-telegraphic service with Australia. That is now working every day, I am informed, and should very soon be utilised by commercial undertaking.

My last point N in continuance of the references which I have just made. The Post Office has been accused in this Debate of flirting with American interests to the neglect of British interests. It is the first time I have heard it suggested that the Post Office must confine itself to the shores of this country and pay little or no regard to anybody outside. If you set up direct communication with America. how can you help taking into account that the American people will have something to say to it? Is it to be suggested that, if you have telephonic communication with America or submarine cable communication, or any kind of communication that America is to be left out of account? In this connection may I say that the trans-Atlantic radio- telephone circuit is one of the finest of recent achievements for which the Post Office can claim a good deal of responsibility. It is an indication of their technical ability that their engineers have made this circuit a complete success. They have done something more than that. They can guarantee a call to America at almost any time of the day or night, By that means, practically the whole of Europe is in communication with America, through the British Post Office stations at Rugby and Baldock, and 50 per cent. of the work done is from Continental countries. London is therefore, through the British Post Office, made the centre of international radio-telephony.

No one is going to accuse the Post Office of being backward in that connection but it is an unfortunate thing that the first love of hon. Members opposite is now being neglected. I am sure if it had been anticipated that wireless telephony would have been made so successful, technically and administratively, in so short a time, hon. Gentlemen opposite would have had no hesitation in passing it into the hands of the Imperial Communications Company along with wireless telegraphy. They would have given it away in the same manner; and now that it has become a commercial proposition, the State Department for which we must all stand, Government and Opposition, is being maligned in this House because it is doing something for the protection of public interests. I hope the House will support the Postmaster-General in what I conceive to be the enterprising decision which he has taken in connection with this matter.


The Debate on this very important issue has lasted for a considerable time, but very few arguments have been raised in addition to those which were stated quite temperately by the right hon. Gentleman the Member for Sevenoaks (Sir H. Young) at the opening of the Debate. When he spoke, those who were present, and who were unaware of the facts, were perfectly entitled to consider that he had made out a very good case; but I think it will be the general admission of those who have heard the Debate with unbiased minds, that his case was demolished in the admirable speech of my right hon. Friend the Postmaster-General, who showed that the statements which apparently justified the attitude of the right hon. Gentleman the Member for Sevenoaks were without foundation. In spite of that fact, we have had two speeches from the Front Opposition Bench, not bringing forward much fresh argument, but reiterating the arguments of the right hon. Gentleman the Member for Sevenoaks. We heard the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) speaking with his accustomed vigour and power, and the Noble Lord the Member for Aldershot (Viscount Wolmer) speaking with that violent partisanship which we have become accustomed to hear from him when he endeavours to foul his recent nest. The right hon. Gentleman the Member for Sparkbrook accused us, as he said, not so much of what we had done, as of the way in which we had done it. We had not dealt with the matter, he said, impartially; and the Noble Lord went so far as to accuse us of having packed a sub-committee of the Cabinet. I should imagine that every committee of the Cabinet, if the Noble Lord's view is to be accepted, must be regarded as packed because it contains members of the Cabinet and of the Government and must be prepared to recommend a decision to the Government of the day.

What are the facts? The late Government handed over the wireless telegraphy services to the Communications Company. I am not going to express any opinion on that. It is an accomplished fact and I take it as such. But the late Government expressly reserved the telephone service and did not hand it over to the Communications Company and we are perfectly entitled to assume that when they reserved that service, they did so with the intention of reserving to any Government which had to decide the issue, the right either to hand the service over to the Communications Company, or to use the Communications Company in any way which it thought fit, or to deal with the service through its own machinery. The present Government came to no hurried decision on this matter. It went into the question fully. It appointed a committee and, on the technical issues involved, it took the trouble to invite the views of experts. I cannot see what more it could have done.

I think it was the right hon. Gentleman the Member for Sevenoaks who said that the Government ought to have appointed a Select Committee of the House. Surely it would have been an entirely incorrect procedure for the Government of the day, on a, straightforward issue regarding one of the Services of the country, to appoint a Select Committee in order to make up its own mind. The right hon. Gentleman the Member for Sparkbrook says that one of his objections is that we did not consult the Advisory Committee, and I observe that the Noble Lord shares that view. I wonder whether either the right hon. Member for Sparkbrook or the Noble Lord realises what the Advisory Committee is, on what principle it came into existence, and what are its 7.0 p.m. functions. The Advisory Committee is a body appointed not to advise the Government of the day but to advise the company. The Advisory Committee represents the Governments of the Empire and its business has nothing to do with telephony at all and nothing to do with the large issue of high politics. Its business is to advise the company on telegraph rates and the disposal of any surplus profits that may arise, and why on earth the Government should be expected to invite and be upbraided for not inviting the opinion of this Advisory Committee on this question, I am utterly unable to understand.

From all the right hon. Gentlemen who have attacked the Government on this question there has been a kind of veiled suggestion that we cooked the questionnaire. That is a charge which I entirely repudiate. So far as I know, the only attempt to justify it was made by the right hon. Member for Sparkbrook. He said that we cooked the questionnaire because we had introduced into technical questions an economic issue. That charge is wholly without foundation. The sole question on which we asked the opinion of the Advisory Committee was on technical matters. We said, "It is perfectly evident that these wireless services can obviously be conducted more cheaply by lower aerials but it is alleged by the Communications Company and by Marconi himself that from a technical point of view the higher masts are very much better."


I pointed out that the questionnaire implied that a greater expense would be involved in the erection of higher masts than lower ones when, as a matter of fact, the higher masts are already in existence and no extra expenditure could be involved. I also pointed out that the experts in their reply made no difference on the question of efficiency but, misled by the questions in the questionnaire, suggested that the Post Office system would be the cheaper under the impression that high masts would have to be erected, which was not the case.


The right hon. Gentleman need not have interrupted me because I was going to deal with those points. The point I was making was that the experts were not asked for an opinion on matters of expenditure. They were asked on pure matters of technicality and scientific knowledge whether, in their opinion, there was a technical scientific advantage in the higher aerial, and on that they gave an opinion that a system of low masts with powerful transmitters was at least as efficient as the Marconi system with the higher aerials. What they did further say was that, if there were going to be further development and further experiments, naturally the low masts system would be very much cheaper, and would then prove more efficacious, because it would enable experiments and further extensions of the scheme to be carried out with less expenditure. The financial question was not the question which we submitted to them. We neither submitted it nor were we influenced by their view on that matter at all. That was a matter for the Committee to decide on the information which was presented to them.

What was the information? We had before us what is called the offer of the Imperial Communications Company. The offer, as it is called, was a proposal that they would give us certain services at a price. They were perfectly entitled to do that. We had to consider whether that price was worth paying. As against the Communications Company offer that they should render certain services at one figure, we had the possibility of carrying out the services by the Government machinery through the Rugby and the Baldock stations which were already in existence. On the purely financial question we did not need the opinion of the experts, and we did not ask for it or get it. What we did was to work out the figures for ourselves. When the right hon. Gentleman suggests or implies that, in doing so, we did not take into account the capital charge, he is, of course, entirely mistaken. In comparing two sets of methods of doing the same thing it was our business to compare like with like.

Viscount WOLMER

Will you publish the figures?


We have published the results of the investigation in figures, and we have told the House the principle on which those figures were based.

Viscount WOLMER

The full figures?


Those are the full figures. The Noble Lord knows the way figures are dealt with in this House. The facts are perfectly straight-forward. The facts are that we have a figure which, according to the Communications Company, will be the cost of working their scheme. We have estimates of the cost, taking into account the erection of the necessary aerials, allowing for interest and depreciation on that capital cost, and for creating such land lines as will be necessary for working the service at Rugby and Baldock, and the net result is that there is a difference of anything from £17,000 to £22,000, according to the way matters are worked out between those two systems. It was our business, looking at the purely financial aspect, to recommend the cheaper system. So far as that was concerned, there was no doubt whatever, allowing for the fact that we had to make our own aerials in order to extend the existing telephone system to the other parts to which it is proposed to extend it, that there is this great saving in connection with the Rugby system

The right hon. Member for Sparkbrook says there may, perhaps, be a saving in this country, but it is going to cost the Dominions hundreds of thousands of pounds. That is entirely fantastic. In the first place, even if they had to erect new aerials in order to get into telephonic communication with our stations at Rugby and Baldock, the figure of several hundreds of thousands of pounds is altogether beyond the fact. But the real truth is that they will not have to spend money in that way at all, because they are perfectly capable, with their existing machinery, of getting into touch with the telephonic services which will be started at Rugby.

I have dealt with the real questions which are properly pertinent to the issue as to whether the telephone service should be conducted by the Post Office itself through its existing stations, or whether we should accept the tender of the Communications Company to run it through their system, which is concerned primarily with telegraphy. There has, however, been imported into this Debate an entirely separate issue, and in a few words I propose to deal with that. It has been stated that, quite apart from the advantages of using one system of telephony against the other, we are deliberately cold-shoudering the Communications Company, that, as it is a statutory company and a British company, it ought to receive every support but that, instead of that, we are not giving it orders but are creating a system which will mean it will be entirely pushed out of the way and an American company substituted.

Let us see what the facts are. The right hon. Gentlemen who spoke on the opposite side of the House spoke as if the Communications Company was a company that fulfilled orders, to which orders could be given and by which orders could be executed. That is entirely incorrect. There are two entirely separate companies. The Communications Company is a company to which this House in the last Parliament delegated wireless and cable telegraphy. The company which executes the orders is not the Communications Company at all. It is an entirely separate body, the Marconi Company, and it is really rather disgraceful that the right hon. Gentlemen opposite, who must know this, have attempted to confuse the issue by speaking as though those two concerns were one and the same. The Communications Company, which is concerned with international telegraphy, is a statutory company, a public utility company subject to the limitations which have been described. But the company which gets orders is not this Communications Company at all; it is the Marconi Company, which is an entirely different proposition.

I am not going to say one word against the Marconi Company. We respect the genius and the wisdom of the Marchese Marconi. I am not going to say a word against the Communications Company. I will only say that the Communications Company through one of its officials has been attacking the Post Office in many of the papers of this country and the Noble Lord and his friends see no objection in that. If the Post Office in this House shows why its own methods are superior, then right hon. Gentlemen opposite come down and say, "This is a most disgraceful thing to set one part of His Majesty's Service against another." With regard to the Marconi Company, the Noble Lord challenged me on these facts. He said, "You must admit that the effect of your decision will be to take away from a British company orders, and that it would mean that the apparatus which is required, instead of being made by a British company, will in future be all made by an American company." There is not a shadow of fact in that assertion. In the first place, as I have already pointed out, the Noble Lord has confused the Communications Company with the Marconi Company, which is an entirely separate thing.


Does the hon. Gentleman really say there is no connection between the Marconi Company and the Communications Company?


I did not say there was no connection. But the whole argument of the right hon. Gentleman opposite was that this company which executed orders ought to be especially favoured, because it was a statutory company and its profits were regulated in a certain way. That is not correct. I was coming to the second point, which is that it is untrue to suggest that because the international telephone service will work through Rugby and Baldock, therefore the Marconi Company cannot get any share of the orders. The only order which my right hon. Friend the Postmaster-General has had to give during his term of office has been given to the Marconi Company, and he has already stated in his speech that, as there appears to have been in times past some slight misunderstanding about orders, he has arranged that an opportunity will be provided to the Marconi Company to discuss the specifications before they are issued, in order that the Marconi Company may have a perfectly equal chance with its American rivals of tendering for and securing contracts, so that there is not a tittle of ground for the statement which the right hon. Gentleman and the Noble Lord made.

In the first place, the Marconi Company must be entirely separated as a profit-making body from the Communications Company. In the second place, the Marconi Company itself will, under the system which the Government propose, have a perfectly equal chance of tendering for and making any apparatus that may be required. The idea, which the Noble Lord endeavoured to put over, that there was one complete set of apparatus that belonged to the American organisation, and an entirely separate apparatus which belonged to the Marconi system, is absurd. It is not so at all. There will be every opportunity and every facility for the Marconi Company to make the aparatus and the profit, and to give employment to British labour through its channels, just as there will be opportunities to the American company to make profits and to give employment to its subsidiary company here in this country.

Viscount WOLMER

I admit that all the stuff to be made for our own use will be made in this country—whether by the Marconi Company or the Standard Company does not matter—but what is going to happen with regard to foreign countries which are ordering this stuff?


How can I be expected to know how foreign countries which are ordering telephone apparatus will deal with the matter? I cannot judge. The only point that is relevant is this, that the fact that we use one particular type of aerial and that we work a telephone system from Rugby and Baldock instead of going to the stations of the Marconi Company has nothing to do with securing contracts for the Marconi Company from different Governments other than our own. But these issues take us a very long way from the main issue of this discussion. I claim that the Government were perfectly justified in taking the steps that they did. They considered the matter from a scientific point of view, from a financial point of view, and from a general point of view, and they took the right steps in each case to come to a right decision. The Opposition have endeavoured to show that we failed in our duty, but I am confident that the House will agree with me that we took the only course, in view of all the facts, that, could have been taken.


Before the right hon. Gentleman sits down, will he answer one question, which has been put to him from this side, and say whether he proposes to publish the whole of the evidence and the documents submitted to the Cabinet Committee?


Certainly not. It would be quite without precedent and quite unusual for a Cabinet Committee to publish the whole of its proceedings. I am perfectly certain that the right hon. Member for Sparkbrook, who has been a distinguished Cabinet Minister in previous Administrations, could not possibly suggest that that has been the practice in the past.


The late Assistant Postmaster-General, in his opening remarks, regretted that the Post Office had once again come into the arena of party politics. That is a point of view we should naturally have expected from him, because it is not so very long ago since he not only suggested that the Post Office should be excluded from party politics, but that it had better be landed over to a private concern and out of the hands of the State altogether. The present proposal, that we should merely give up the wireless telephone system of the Post Office, is very moderate in comparison with that. He claimed that the Communications Company had not had fair play, and further in his speech we gathered that he meant by fair play that it was to be put upon an equality with the Post Office, which is the greatest Department in the State. A mere private company, a limited company, a company, it is true, which will share certain profits with the State—after it has paid a very fine rate of interest on a very inflated capital, it will hand over one-half of its excess profits to the State—but what is essentially a profit-making concern, the party opposite propose to put on an equality with the Post. Office, and demand that if the Post Office refuse to give them what they require, the Post Office shall be compelled to go to arbitration.

We have heard a good many technical details during this Debate, but, so far as I am concerned, this is not a technical question. It is a question of high moral policy. The whole question of the purity of our political life is involved. For months we have had a steady pressure in the Press, we have had insidious attacks upon the Post Office, we have had an attempt to crab the Post Office, we have had all kinds of backstairs methods used to bring influence, in order to compel the Government to hand over a valuable property to private interests. That sort of thing, I understand, goes on in America, but it is essential that we should set our faces like flint against the same spirit developing here. There has been an attempt to develop it, and the party opposite have lent themselves to it, but this party, I am certain, will never do that.

Reference has been made to the Marchese Marconi. He is a great man, and he has rendered great service to science, but Marconi the scientist is not the same person, the same body, as, Marconi, Limited. The name "Marconi," so far as public finance is concerned, has come up in this country's history before now. The Marconi Company are fighting, and fighting unscrupulously, for a world monopoly. An enormous amount of the progress and advancement made in wireless has not come either from the Marconi Company or from the Marchese Marconi himself. Inventions are bought up, and the whole policy of the company is to establish a world-wide monopoly, and that is why at the present moment there is a steady attack upon the Post Office, because the Post Office is developing, with wonderful ingenuity, fertility and invention, a parallel and competing system to the Marconi system. The Communications Company received, and, I suppose, received thankfully, the whole of the wireless telegraph system of the Post Office from the late Government. They have tasted blood, and now that the Post Office, having been shorn of its wireless telegraphy, is developing, through its own innate energy, a magnificent wireless telephone system, the demand is put forward that that also shall go into the maw of this great private interest. I am convinced that the Communications Company will not receive the wireless telephone system of the Post Office, for one very good reason. It is not a technical reason, but a political reason, and that reason is that the party in power to-day has some recognition of public interest as against private.


I want to confess at the outset that I am biased entirely in favour of the public operation and control of essential public services. The Noble Lord the Member for Aldershot (Viscount Wolmer) is biased, in my opinion, just as strongly in favour of private interests. I have been struck by the similarity between the campaign which has been going on in this House in the last few months and what happened before the present Government came into office. The Post Office, thanks to the influence of the Labour Government in 1924, developed the beam wireless service, and then, not the Marchese Marconi, but the Marconi Company and the cable companies, found a reason for acquiring control of the beam service. It was not until August of last year, as the Noble Lord has admitted, that the Communications Company wrote to the Post Office on this particular subject of wireless telephony. As soon as the Post Office had demonstrated, after three years' hard work, that the beam wireless service was going to be a commercial success, then this company comes in and wants to secure it on favourable conditions. I understand that I cannot go on beyond half-past seven—

It being Half-past Seven of the Clock, and there being Private Business set down by direction of the CHAIRMAN OF WAYS AND MEANS under Standing Order No. 8, further Proceeding was postponed, without Question put.