HL Deb 24 July 1868 vol 193 cc1692-701

Order of the Day for the Second Reading read.


, in moving that the Bill be now read the second time, said, its object was to place the telegraphic communication of this country under the Government and in the hands of the Post Office. When that proposal was first brought forward there certainly was a great expression of feeling on the part of many persons that the arrangement was a very undesirable one, being very contrary to our general habits, which left almost every- thing to private enterprize and the operation of free trade. The objections at first taken to the scheme, however, on being sifted passed away. The proposal, moreover, was not so novel as it at first sight appeared. In 1858 Mr. Ricardo, the founder, and then the Chairman of the Electric Telegraph Company, brought the subject under the attention of the Government, and in a letter to Mr. Gladstone urged his reasons for thinking it desirable that the telegraphs of this country should be placed in the hands of the State, Again, Mr. Allen, a distinguished civil engineer, and a man of great experience in regard to telegraphic communication, urged the adoption of the same course, In 1861 the Edinburgh Chamber of Commerce also took up the question, and memoralized the Government upon it; and since then there had been a very general expression of opinion by various public bodies and other persons in favour of such a measure. Petitions had been presented to that effect from thirty-two Chambers of Commerce, from sixty-four Town Councils and Corporations; from the general public there were twenty-four, and from persons connected with the newspapers, and more especially the provincial Press, there were 297 petitions. The petitioners concurred in thinking that the existing charges for the transmission of telegraphic messages in this country were too high; that many places were unprovided with facilities for telegraphic communication; that in the great majority of places provided with such facilities the telegraph office was inconveniently remote from the centre of business and of population, and open for too small a portion of the day; that in countries in which the telegraphs were under the control of the State lower rates and a more widely spread system prevailed; that in such countries correspondence by telegraph was more general and more popular, as it were, than in England; and that like results to those produced in other countries in those respects would follow in this country the adoption of the like means. In Belgium and in Switzerland telegraphic communication was in the hands of the Post Office; and in most other European countries it was also in the hands of the State. In Belgium there was one telegraphic message sent for every thirty-seven letters; in Switzerland one message to sixty-nine letters; and in England only one message to 103 letters; thus showing that the telegraph was not at all made use of here as it was in other countries. It was stated by those who were examined before the Committee, and who were perfectly well acquainted with, the working of the telegraphs, that the persons who chiefly used them in England were stock-brokers, mining agents, and persons engaged in other speculative businesses, but not the general public; whereas in Switzerland all classes of the community availed themselves of telegraphic communication for their private correspondence, in respect to which, indeed, it to a great degree took the place of the post. In Belgium 59 per cent of the telegraphic messages sent related to private, not to commercial affairs. The rates charged there were of course lower than in this country; and it was expected that through the present Bill the rates would be very much diminished. In France the cost of sending a message 600 miles—a greater distance than in this country—was 1s. 8d.; in England it cost 2s.; in Prussia the charge for sending a message 500 miles was 1s. 6d.; in England it was 2s.; in Belgium the cost of sending a message 160 miles was only 5d.; while in England it was 1s. 6d.; in Switzerland a message was sent 100 miles for 5d., and in England for 1s. 6d. The reductions in the rates had produced a great increase in the number of messages. In 1863 in Belgium a reduction of 33 per cent in the rates produced an immediate increase of 80 per cent in the number of messages and in 1866 a reduction of 50 per cent in the rates caused an increase of 85 per cent in the number of messages. In Prussia in 1867 a reduction of 33 per cent in the rates was followed by an increase in the first month of 70 per cent in the number of messages. In France, in 1862, a reduction of 35 per cent in the rates was followed by an increase of 64 per cent in the number of messages. But Switzerland afforded the most striking example of all. The inland rate was reduced 50 per cent in the early part of this year, and the number of inland messages increased 90 per cent over those of the corresponding three months of the previous year. It was remarkable that the increase in the number of messages followed immediately the reduction of the rates. In England there had, indeed, been an increase from the growth of population and the extension of business, but not a very large increase. Under those circumstances the Chambers of Commerce adverted, as he had stated, to the want of accommodation in this country, and the high rates charged; and they believed that a reduction of the rates, together with improved facilities, like that in other countries, would be followed in England also by a very great augmentation in the number of messages transmitted. It was proposed to place the telegraphs in the hands of the Post Office, because that Department had great advantages which no telegraph company could possess. It had agents in every town and village in the country, and persons whom it could employ at a very small cost; and, according to the arrangement that was proposed, almost every Post Office would be made a telegraph office as well. That would be the case not only in the large towns, but in country places also. A map had been prepared, marked by 2,056 dots, representing the places at which Money Order Offices were opened, and to which the electric wires were carried. Of these, there were 567 places; at which the telegraph accommodation was very imperfect, only 648 where it was; perfect, and 850 where there was no telegraph at all. In Scotland there were 196 Money Order Offices, and in Ireland 369, at which towns there was no telegraph, In England there were 1,300 out of 2,000 towns and villages which had now no telegraph within the town. A circumstance which had prevented the full development of the railway system was that the telegraph offices were generally in or near the railway stations, which were frequently three-quarters of a mile or a mile from the town itself. Out of 622 places supplied by one railway company with telegraphic communication about 223 were only worked at the railway stations. The distance of the office from the town naturally led to a very considerable payment being demanded for porterage; and the saving in this respect would greatly diminish the charge for telegrams. The cost of the telegraphic message was now comparatively little, but the cost of porterage was great. The usual charge was 1s. a mile, and in a very large number of cases 1s. was charged for porterage. But the Post Office was usually in the centre of the population, and the distance to be carried would therefore be very much smaller. As the telegrams would go through the Post Office delivery, it was proposed that they should be delivered free of charge, which would of itself involve a considerable saving. In many large towns where it might be thought considerable facilities would have been given by the telegraph companies they had one head office and no more. In Edinburgh there were three telegraph companies; but their offices were all within 100 yards of each other and in. the centre of the town, leaving a large portion of the city unprovided with telegraphic communication. In Manchester and Liverpool there was a head office in each town, but no district offices, and all the telegrams had to be sent out by messengers. It was proposed that there should not only be telegraphic communication with the head offices but with the minor offices. The district offices would be made separate head offices, and when messages came to them they would be delivered at much less cost and with greater speed than at present. A good deal had been said about a 6d. rate; but it only nominally existed in some towns. It would be a great convenience, but in reality the 6d. rate was quite a delusion. A charge was usually made of 1s., or 1s. 6d. for porterage, and what was called a 6d. rate was in reality more expensive than the proposed 1s. rate under the new system. If any one attempted to send a telegraphic message five or six miles from London it often took three or four hours to reach its destination. Some experimental messages had been sent to places like Highbury and Hampstead, which were not delivered for three or four hours. In one case a messenger was employed to take a telegram to the office in London. He then walked to the railway station, took a return ticket by the train, which cost 8d., and got there before the message, for which 1s. was paid. It was thus cheaper and quicker to send the message by the railway. Under these circumstances it was not wonderful that mercantile men and Chambers of Commerce were of opinion that there was a great want of additional telegraphic accommodation, and that the work would be much better done. Another convenience under the new system would be the facilities offered by the Post Office for the transmission of messages at night. In many towns it was necessary to give attendance at the Post Office during the whole night, and the clerks, being more or less occupied with other work, could attend to the telegrams at an hour when the telegraphic offices were now shut up. At present in many towns there was practically very little accommodation except in the middle of the day. Great objections were at first made to the Bill by different persons, but they had been entirely removed in the course of the discussions in the House of Commons, and before the Select Committee. A dislike was expressed by some to put the telegraphs in the hands of the State, and it was suggested that the Government might detain some messages and send others on. He thought it was much less likely that such practices should occur in a Government office, when the matter would be open to the animadversion of Members of both Houses, than in the office of a public company. The telegraph companies had had, indeed, such a complete monopoly that complaints had never been listened to at all. It was said that the Government would not be liable for the non-delivery of messages; but the telegraph companies were equally above control; they protected themselves by very stringent conditions; and the consequence was that, although many persons had been injured by mistakes and delays in the transmission of messages, there was no instance of any one ever obtaining redress. One mistake involving the buying or selling of 3,000 instead of 300 shares had caused the absolute ruin of one individual, but he never got 1s. from the company. The public would therefore be just as well off in the hands of the State as of a public company. Another objection was that the secret contained in these telegraphic messages would be divulged. He did not believe that the companies had always been free from these imputations. The proof, however, that the Post Office would be likely to keep these secrets was supplied by the Post Office itself. It was known to their Lordships that an enormous number of letters were posted without any address at all, while the persons to whom others were sent could not be found. The number of letters that went through the "Dead Letter" office was stated at 3,000,000 a year; but though these were often letters of great importance, and sometimes contained large sums of money, he had never heard the slightest imputation against the Post Office that the secrets contained in these letters were divulged, and tills objection might be regarded as sufficiently answered. It was at first impossible to make satisfactory arrangements with the telegraph companies; but all objections had been overcome. The companies had asked for provisions about arbi- tration which they had obtained, and it was agreed that they should receive twenty years' purchase of the net telegraphic profits of the company, deducting the working expenses. The next objection which had been offered was that the railway companies had arrangements for the use of the wires along their lines, and that the public safety would be endangered if they were deprived of those advantages. This, however, had been met by allowing them facilities of communication by their own wires, the wires of the Post Office being used independently of them. With regard to the Press, it would, of course, be impossible for the Post Office to procure information, as some of the telegraph companies had been doing; but the Press would choose what intelligence they wished to be transmitted, and such messages would be forwarded at a reduced rate. With this arrangement the Press were quite satisfied, and were strongly in favour of the Bill. The objections originally entertained to the measure had thus been completely removed. Another objection, remained, which had referencee to secresy in connection with very important messages; but with reference to these, it had been proved that cipher could be used with great facility, mercantile transactions being now, indeed, carried on in this way. A slight penalty now existed with regard to breach of confidence, and to allay any apprehensions on the subject a clause had been inserted constituting it a misdemeanour, punishable by imprisonment, for any person to make a telegraphic communication public; and this, he thought, would give perfect security. With respect to a monopoly of telegraphic communication, some had objected to it, while others had urged that if, after the Post Office had paid a large sum of money for these undertakings, other persons competed with it, the result might be a considerable loss to the State. It had not been thought right, however, to sanction a monopoly, and thereby, perhaps, prevent a fair trial of new inventions; though he believed that if all the existing undertakings came into the hands of the Post Office there would be no prospect of competition arising, so that a monopoly would practically exist. As to the financial part of the question, their Lordships would probably not wish him to enter into details, but would like to know what the cost was likely to be, and whether the arrangement would be remunerative. Now, calculations had been made, based on the returns of receipts and expenditure furnished by the telegraph companies. The maximum estimate assumed an increase of revenue from an increased number of messages; and as such an increase had been going on for years, and would be likely, with reduced rates and greater accommodation, to go on in a still greater ratio, this presumption appeared a reasonable one. According to this estimate there would be 7,500,000 of messages, increasing 10 per cent yearly, and producing an annual revenue of £680,000; while the expenditure, judging from the companies' experience, would be £378,000, thus leaving a balance of £301,000. The minimum estimate, founded on the present number of messages and the present expenditure, gave a gross revenue of £437,000, the net proceeds being £203,000. It was exceedingly unlikely that no increase would arise, and £280,000 might perhaps be taken as the probable surplus. As to the cost of purchasing the telegraphs, an estimate was presented in the first instance very much lower than that which was now offered, it being based on the purchase of only one or two of the undertakings. Negotiations had been since carried on for the acquisition of the other undertakings; and it had been found necessary to take some of the submarine cables. The undertakings it was now proposed to purchase were the Electric and International, the British and Irish Magnetic, the United Kingdom, the London District (a very small concern), and the Universal Private Companies, as also Reuter's cable and privileges. In addition to these there were some railway companies which had telegraphic communication entirely in their own hands and carried on the business of telegraph companies. A great saving to the public would result from the purchase of these rights; for at present, while for a message between Manchester and London there was a certain rate, a message between Manchester and Dover would cost considerably more, a charge being made by two distinct companies. It would, therefore, be necessary to purchase the telegraphic rights of the South-Eastern, London and Brighton, Chatham and Dover, and North British Railway Companies, and also of the Caledonian Company, north of Perth. The purchase of all these undertakings would probably cost £5,000,000. Now, taking the minimum net revenue of £200,000, this would meet a loan at 3½ per cent of £6,000,000, so that there would be no fear as to providing the interest of the money. If, on the other I hand, the net revenue amounted to £300,000, the Government would be able to raise nearly £10,000,000. It was evident, therefore, that there would be a sufficient margin; and since in all probability it would be unnecessary to raise so large a sum, there was no fear of loss to the State, which would, in fact, be borrowing money at 3½ per cent and be receiving 5 per cent. The mode of raising the money would rest with the Chancellor of the Exchequer, and a great part of it might probably be obtained from the surplus lying in the Post Office Savings Banks, or it might be raised in other ways which would present no difficulties. He thought he had now sufficiently shown that this measure would lead to greatly increased accommodation, that it would involve no cost to the State, that the work was likely to be very much better done, and that public opinion was in favour of the change. The Bill had passed the other House without a division and he believed that Lord Stanley of Alderley, the late Postmaster General, was strongly in its favour, he having, indeed, moved in the matter some three years ago. He should have been glad had the noble Lord been present to give his testimony to the value of the measure.

Moved, "That the Bill be now read 2a."—(The Duke of Montrose.)


said, he hoped the S measure would work successfully; but he should like an explanation as to the basis on which the Government had calculated the purchase money. Twenty years' purchase on the profits seemed to be excessive.


said, it should be recollected that the Electric Telegraph Company paid a dividend of 10 per cent, and they had been making a great deal more, which they were not allowed to divide, but which went to form a reserved fund and to maintain their cable. As far as he could learn they had kept their telegraph in excellent order and much of their surplus profits had gone to keep up the cable, which more than anything else was liable to interruption. There was a great increase every year in the business done and the profits made; but the Government had taken into account merely the present profits, and had not made their calculations with reference to any probable increase in future years. The arbitrator would have full power to examine the books and accounts.

Motion agreed to.

Bill read 2a, and committed to a Committee of the Whole House on Monday next.