In asking that a complete inquiry should be made into the working and practical effect of the licenses and agreements now being acted upon by the Treasury, the Post Office, and the National Telephone Company, and the desirability of suspending further transactions or negotiations between those Departments and the Company in reference thereto, until such enquiry has been completed, and its results considered by His Majesty's Government, I would wish to divest this matter of all party feeling. It is entirely a business question, and, as such, I venture to say the request I make is quite reasonable, and should be readily acceded to by the Government. It is nothing more than a prudent business man or firm would expect to be rendered when the original basis upon which a transaction has to be entered into appears to be so entirely at variance with the practical results of the negotiations. The Amendment standing in my name is the outcome of the deliberations of a conference, convened in Guildhall. The conference was attended by delegates from all the municipalities and local authorities within the Telephone area, which comprises some 634 square miles, contains a population of six millions, and has a rateable value of nearly fifty millions sterlings. The deliberations of this great and important conference were carried on without the slightest party bias. It was rather with feelings of amazement and disappointment that the agreement between the Post Office and the National Telephone Company was received—an agreement so much to the advantage of the Company and so much the reverse to the public. The delegates were astonished that after such statements had been made by a responsible Minister when bringing in the Telephone Bills of 1899, such arrangements should have been made, and made, too, without consultation with the local authorities. This great Congress—representing not only the City and the richer parts of the Metropolis, but the poorer parts especially—deputed me by resolution to bring this matter before Parliament, and hence the Amendment standing in my name to-day. I would call the attention of hon. Members to the recommendation of the Select Committee on Telephones of August 9th, 1889, which runs as follows—

On reviewing the whole of the evidence your Committee is strongly of opinion that general, immediate, and effective competition by either the Post Office or the local authority is necessary, and consider that a really efficient Post Office service affords the best means of securing such competition. We further consider that when in an existing area in which there is an exchange the local authority demands a competing service, the Post Office ought either to start an efficient telephone system itself, or grant a licence to the local authority to do so."

Again it goes on—

Your Committee in thus recommending a Post Office service assume that it will constitute a real and active competition, and that concessions to the company not required by the company under their agreement will cease. Such competition should in their opinion be carried on by a separate branch of the department, and in future conducted under strictly business-like conditions, and by a staff specially qualified for such a duty."

Acting upon this recommendation of a committee composed of men of all shades of political opinion, and among whom were some second to none for business capacity, the then Financial Secretary to the Treasurer (Mr. Hanbury) moved on the 6th of March, 1899, for £2,000 000 for

"improvements in the system of telephonic communication, and to enable local authorities to raise or apply money for telephonic purposes."

Let us see what in the way of immediate and effective competition was promised us. When the House was in committee on the motion the right hon. Gentleman said:

"The company has bought up all the other existing companies, it has done its best to defeat the policy of competition, but is that any reason why competition should cease forthwith? It does not in any way have the effect of preventing the Postmaster-General from exercising his full right to grant fresh or new licences."

And further on in his speech he said—

"I hope I have shown to the satisfaction of the Committee, that we are free both legally and morally to compete."

Speaking with regard to the sort of competition, the right hon. Gentleman said, referring to the Post Office—

"I hope that in the future—with its own exchanges, it will do its work as any business firm would do it, and that the competition will be a real and gennine competition."

And again he declared—

"We mean to popularise the system and throw it open to the whole country, to rich and poor alike, and I am bound to say that when we have got the double currents it will not only tend to popularise the system, it will prevent any unfair competition with the National Telephone Company."

Upon the faith of these and many more such inducements the Resolution was agreed to without a division. On June 20th, 1899, the Financial Secretary to the Treasury moved the second reading of the Telephone Bill. In doing so he said—

"The time that has elapsed since I introduced this Bill—a delay for which I am myself personally responsible—has had one result, it has shown complete unanimity on one point, viz., that the present system cannot possibly go on. There has not been a single resolution from a local authority, a memorial from a trading association, or, that I have seen, one single article in the newspapers supporting the existing system."

The right hon. Gentleman then went on to say:—

"The service ought to be thrown open to the whole country, not only to the large traders, but to the small tradesmen as well." And again, "It surely is a very proper request to make that the service should be efficient, certain, and to all should be served alike on equal terms."

If these words, and many more I could quote, meant anything, they meant that immediate and effective competition was necessary, and that the Government intended immediately to carry out such competition if Parliament granted the money, and gave the local authorities the requisite powers so to do. Upon these statements a bill involving an expenditure of £2,000 was passed. It was upon these statements the authorities submitted to their streets being broken up, the consequent dislocation of trade, and a condition of things under which London remained month after month, and even now remains to some extent seeming more like a Metropolis in a state of siege than the first city of the Empire, inhabited by a law-loving, law-abiding people. The exact reverse of our anticipations has, however, happened. We find the changes for telephonic communication practically unaltered, with the small exceptions of the penny in the slot system and new subscribers. I believe the annual subscriber can get his telephone for £17, whereas the unfortunate subscriber whose contract has yet to run out at £20 is held to his bargain. A firm of considerable standing writes to me as follows:

"The public naturally expected to get some reduction in the rates, but where a firm, like my own, has a telephone at the office and at their private house the present rate is £17 and £10, making together £27, whereas the rates now proposed to be changed are £17 and £14, making £31."

A letter from a clergyman at Reigate says:

"Tradesmen, fly proprietors, doctors and others here find their telephones a good deal less useful because the local charge at public call offices here has been suddenly raised by the agreement from 1d. to 2d. It was 1d. locally, 3d. to London. It is now 2d. all over the London District, but the public call offices in a place like this are almost wholly used for local calls."

In one more of the many letters I have received another firm writes:—

"We were in the hahit of paying the National Telephone Company for each pedestal extension instrument used by us the annual sum of 25s. Since the arrangement made by the Post Office, the National Telephone Company have increased their charge for each instrument to 30s.

It would, therefore, appear that there is much for enquiry, for the competition seems to be little more than nominal, and as the Post Office receives 10 per cent. upon the gross earnings of the company, it would seem to be not entirely a matter of indifference what profits are made. I must refer to one or two matters in a letter from the Post Office, addressed to the Chairmau of the Guildhall Conference, and dated January 10th last. Among other things it states, speaking of the Post Office, that the Department has to keep in view the interests of (1) the general body of the taxpayers of the United Kingdom, who have to find the money for the London Telephone Service, in which, for the most part, they are very remotely interested; and (2) the users, present and prospective, of the telephone in the London area. As to the first point I would ask, are not the views of six millions of the inhabitants of the Metropolis an item to be considered as a portion of the general body of taxpayers; and do not many throughout the length and breadth of the Kingdom who never themselves use the telephone, benefit by the system, from the fact that their bankers, merchants, market or trade matters, doctors and so forth, are in contact continually with the great centres? We might as well say that because most of us are not arrested by the police, therefore we should be exempt from the police rate. As to the second interest referred to, whatever may be the advantages which may accrue to prospective users—and that time alone can show—it would appear that the present users are practically no better off, indeed, in some cases worse. I could, if I wished, give many other instances of the difference between the theoretical bases upon which the Bill of 1899 came into existence, and the practical results of this arrangement, or, I might almost say, partnership between Post Office and the Telephone Company. However, I think I have given sufficient to show that even if in the future the arrangement should prove to be less disastrous to the user than it at present appears, it is right that an impartial Committee should investigate and report. The letter to which I have already referred goes on to regret that the arrangements on the part of His Majesty's Government for the Post Office Telephone Service in London have not met with the approval of the local authorities—

"Dependent as the Post Office is on the good will of such authorities for the smooth working of the system in some important respects."

And the Financial Secretary referred to this matter in 1899 in these terms.

On what, after all, does the efficiency of a service like this mainly depend? It mainly depends, of course, on way leaves, and way leaves this Company has not got, and will not be able to get in the future to the extent it wishes. And why has it not got them? It has applied to Parliament time after time, but Parliament is not going to override the local authorities, to impose everywhere and in every locality in the country a company on these local authorities without their permission, and so, backed up by Parliament; the municipalities are refusing to grant these way leaves, and if they are not granted you cannot have a sufficient service. The Post Office sees municipalities refusing these way leaves, and naturally hesitates to use its own powers to take them. If it did the House of Commons would be the first to protest against it."

Why, this is just what the Post Office is using its power as a Government Department to give the Company. It is hardly creditable, but it is a fact, that while the Post Office and the company must have been in constant communications during the progress of these negotiations, the only intimation the local bodies received was by printed circular, and that only to inform them that the whole matter was an accomplished fact, I am fully aware that the agreement does not require the ratification of Parliament. I can imagine it may be said that the time the agreement has been working is insufficient to make any enquiry of any value. I can imagine it may be said that the bargain is a good one. The proposal I make, however, is not touched by any of these arguments. The difference between promises and performances is so great that I think it is only reasonable that some enquiry and report should give us the state of affairs up to date, and that pending the result of the enquiry, no new engagements should be entered into. If the Government have a good case they should court inquiry. If, on the other hand they have made a bad bargain, it will be far better for us—to use a business term—to know the worst, and cut our loss before the extension of this agreement. I beg to move the Amendment standing in my name.

In rising to second the Amendment, I do not think a Chief Magistrate of the City of London ever performed a duty which would be more welcome to his vast constituency than that which, the right hon. Gentleman who has just sat down has now discharged. It must have been distasteful to him sitting on that side of the House to move an Amendment to the Address, but at the same time it is an example to the vast body of Conservative Members who sit with him. We who sit upon this side of the House cannot do anything without the assistance of the Conservative Members, and I appeal to them not to allow Party considerations to abate their zeal for prosecuting this question. Many hon. Members of this House may not be aware of the long struggle that the people of London have had, and that we have had in this House, to promote the reform we are now striving to effect. For ten years the Metropolis has been trying to improve the telephone service. If the House would bear with me I could make this matter perfectly clear by recapitulating some of the steps that have been taken during the last ten years. Just ten years ago the right hon. Gentleman whom I see opposite was Postmaster General. He left that office in June, but just before he retired he signed an agreement with the Telephone Company, and shortly after he left he connected himself with that Company. In 1893 the City Corporation and the London County Council became aware that another agreement was meditated, and they sent a deputation to the then Postmaster General, and got the completion of that agreement postponed. Mr. Benn, then a Member of this House, commenced an agitation in the House in 1894 to get a Committee apointed in this matter, and in 1895 a Liberal Government consented to the appointment of that Committee; unfortunately it had not finished its labours before that Government was turned out of office, and its successor would not reappoint the Committee. The London agitation kept on through 1896 and 1897, and in 1898 another Committee was appointed. As my right hon. friend says, the Report of that Committee may be summed up in three words, that "com- plete, immediate and effective competition by the Post Office or by the local authority is necessary." This Report was so clear and concise, and the volume of evidence on which it was built so convincing, that the right hon. Gentleman only waited until the following March to take action on the Report which had been presented. Now, the speech of the right hon. Gentleman which has already been referred to, delivered in the House on 6th March, stands in an extraordinary relation to what has since taken place. The Bill on which the right hon. Gentleman was speaking was a Money Bill, and his speech was the speech in which the terms were stated upon which a large amount of money was asked. Therefore the conditions upon which the Government claimed the money for this purpose were in the nature of a bargain with this House, and the House ought to know whether the bargain was carried out. That speech was the Charter of the Telephone users of the country. In that speech the right hon. Gentleman dealt with every question raised in this important matter. He dealt first with the question of co-operation. He said—

"Co-operation, no doubt, is a very pretty word."

Thus the right hon. Gentleman pushed aside co-operation with contempt. He referred to competition, and said that:

"legally and morally we are free to compete with the Company."

He then went on to say—

"Are we free and not to compete? I am not so sure. The service is neither efficient or sufficient. The first place to which our operations shall extend will be London itself. In that large area the Post Office is resolved to compete at once."

He then referred to the question of prices, and said—

"I believe the subscription for London will be about £3 a year, and after that you will pay a small sum for every message, as you do for every telegram. We are going to establish a system by which the Post Office will arrange, by means of express letters and otherwise, to work more harmoniously with the telephone system."

He then compared the plan on which telephones are worked with the system of the telegraph, and said—

"It is as if no one could send a telegraph message without paying £10 or £15, and when he had paid that sum could send as many messages as he pleased."

"It is an absurd system."

"We mean to popularise the system, and throw it open to rich and poor alike."

We have now to ask whether or not the agreement which has been entered into fulfils these pledges. What is the first fault we find with the agreement? That it absolutely disregards all these pledges, and establishes for another nine years the monopoly of the company. I wish to avoid figures as much as possible, but we cannot altogether ignore the question of price. The charge for an instrument which has been in use on an unlimited user for over five years was £17 10s., but three years ago it was reduced to £17 5s. That is under an annual agreement, determinable at three months notice. Under the Post Office system we have a reduction of 5s., and £17 is established as the price.

I did not promise any reduction there. On the contrary, the Committee distinctly stated that the charges for unlimited service were not unreasonable.

I was about to deal with that expression in the Committee's Report. The exact expression is "that the charge for unlimited users was not unduly high." That is a very mild phrase. But the answer to that is that London does not accept the opinion of the Committee. There has been too much reference to the Committee. The Committee did its work as a part of this House. The House has legislated on the subject, and we have the promises of the right hon. Gentleman. With regard to the question of price, he stated that the capital cost of supplying a telephonic service would be, on an average, £40 for each subscriber. That figure is practically the same as the estimate of the London County Council with regard to the capital cost of supplying unlimited users. But the County Council came to the conclusion that with a capital cost of £40 per subscriber only £8, or, at the outside, £10, need be charged in London for unlimited used. Does the right hon. Gentleman contradict that?

I do. That charge is for the London County Council area, which is one-fifth of the area we are about to supply.

The district to which the estimate applied was the most expensive part of the area. In the outskirts of the area it would have been much easier to do the work—as the right hon. Gentleman himself admitted—than in London. He admitted that generally over the country the cost would be £30. In Glasgow it is only £19. These figures prove that at almost one half the price the Government have fixed under this unfortunate agreement unlimited used of the telephone might be supplied. I now pass to the second tariff. The right hon. Gentleman will not deny that he said there would be a message rate starting at about £3. Under the agreement it is fixed at £6 10s., and for that only one message per day can be sent. Who would have a telephone in his house for the sake of sending a message a day? Therefore the second tariff is not what the right hon. Gentleman led us to expect.

said his remark applied to service on a party line, and the charge for that was not £3 but £2.

Really these are unfair interruptions. I was not speaking of party lines. A party line is one used by several people. I was speaking of a moderate user desiring a single instrument in his private house or office, and the lowest price at which he can have it is £6 10s., whereas the right hon. Gentleman led us to expect the price would be £3. I have a letter here from a doctor at Wimbledon, referring to the third tariff—the price of a private wire, probably connecting this man's surgery with his private house. At present he is paying the United Telephone Company £8 5s., which he thinks is a great deal too much for the short distance. He wrote to the Post Office to ask what they would charge for it and the Post Office replied, £11 5s. a year. "In that case, instead of there being a reduction the price is raised by £3. I have also a letter from a constituent, who has a five years agreement. He tried to take advantage of the new tariff, but was reminded by the Post Office that until his five years agreement expired he could not do so. If the Post Office were trying to make a good bargain, they should have arranged, in return for the advantage they gave the Company, for the abrogation of all these agreements, so that everybody might start afresh with a yearly agreement on the same level as the new customers of the Post Office. On the question of price, I may sum up by saying that no reduction whatever has been secured, but that, on the contrary, when the whole tariff is viewed, rather higher prices are charged, and a great deal higher than the Government promised. The second defect is that the agreement greatly interferes with the streets of the Metropolis, and raises a very difficult question which, if this House does not decide it, is certain to lead to much more trouble in the future than we have had even in the past. The new Borough Councils are very jealous of the control of the streets. On this subject the right hon. Gentleman gave us a most specific pledge. He said—

"Parliament will not override the local authorities' right to give permission to open the streets. We only give these way-leaves when the company can work hand in hand with the local authorities."

That was the pledge on which the right hon. Gentleman got his money. Does he pretend that the company is working hand in hand with the local authorities? No. The local authorities are all up in arms against the company, and if they had their way this agreement would be immediately torn up and put in the waste paper basket. The third objection to the agreement—and it is an exceedingly grave objection—has not been so much discussed, because it does not directly affect the telephone user. A great constitutional principle is concerned. Anyone who looks at Clause 7 of the agreement will see that the Post Office have given to this trading company the user of all their wires through the streets of London, and have bound themselves to put down any further wires that the company may reasonably require The meaning of that is that the £2,000,000 which this House granted for the purpose of establishing competition, has practically gone into the exhausted coffers of the company, to take the place of capital which they themselves ought to provide. This seems to me a most extraordinary proceeding on the part of the Government. If it be legal for the Post Office to give over to this trading company wires laid down with public money, it seems to me it would also be legal for the Postmaster General to make an agreement with any individual to carry out in any area, any branch of Post Office work. Under Clause 11 of the agreement the Post Office allow this company to go on the lines of railway and canal companies, and in many of the places from which they have been excluded hitherto. In short, every right which the Government possessed has, under this preposterous agreement, been transferred to the company. The agreement ought certainly to be very carefully examined by lawyers in the House—who are more competent to do it than I am—and I believe they would declare it to be the most extraordinary agreement ever sanctioned by any Government. My duty, however, is rather to express the annoyance of the people of London with regard to the matter. The question, from the London standpoint, is not so much one of tariff as of efficiency. The 30,000 or 40,000 telephone users in the Metropolis are the greatest business community in the world, and, under the monopoly of the Telephone Company, they have suffered more worry and loss by delay than probably any other business community ever suffered in the same way. But they were led by the proceedings in this House to hope that that annoyance was coming to an end. The streets were torn up; wires were stretched from the house-tops, without any rent being paid by the company, and these people, when they wondered at such things going on, were told that, at any rate, as a result they would soon be enjoying an excellent telephonic service. But what is the result? The result is that all their hopes are disappointed and they find themselves thrown back on the bad old system with all its faults. The telephonic service of London is worse than that of any other great city in the world. In Berlin there is one telephone for every 82 of the population; in Vienna one for every 132; in London one for every 433. If we take the country generally, the contrast is even worse. In Switzerland there is one telephone for every 100 of the population; in Sweden and Norway, one for every 145; in Germany, one for every 450; and in this country one for every 636. Now, instead of any reform such as we fondly hoped we had secured in 1899, there is to be a perpetuation of this bad system until the company's licence finally expires. We need not go abroad for facts. Experiments have been made in this country with results as striking as those to which I have referred. For instance, the Committee reported that competition should take place on the part either of the Post Office or of the local authorities. Some licences have been given to local authorities. Glasgow obtained one, and what is the result? In Glasgow there is an unlimited use for five guineas. The experiment has been absolutely justified, and that community is enjoying an excellent service. There has been an even more interesting experiment in the South of England, at Tunbridge Wells. There the company stated that the lowest price at which they could furnish an unlimited use was £10. The municipality went into competition, with a rate of £5. The company immediately reduced their price to £5, and I believe that both the company and the municipality are doing an extremely profitable little business at that rate in Tunbridge Wells. If the Post Office or the County Council had been allowed to go into real competition, I have not the slightest doubt that to-day in London the price for every form of telephonic service would have been reduced one half, and that everybody would be more than paid by the result. I am sorry, Sir, that we cannot deal with this question without dealing with the great difficulties we have had in prosecuting this struggle for an improved telephone service. I remember when the agreement was signed that the right hon. Gentleman opposite was connected with the company. Now that the new agreement has been signed another right hon. Gentleman on this side of the House has become Chairman of the company. I cannot help feeling that the good bargain which this company gets out of the Government is not a little influenced by the strong supporters which the company has in the House. [Ministerial cries of "Oh, oh," and "No."]

I cannot allow that statement to pass unchallenged. Does the hon. Member mean to suggest that either my right hon. friend behind me, or the right hon. Gentleman who sits on the Front Bench opposite has in any way attempted to bring any kind of political or improper influence to bear upon the Treasury in this matter? There is not the slightest foundation for that statement.

I have not the slightest objection to the challenge, and I will make good everything I have said. On the 6th of March 1899 I remember the shock of surprise with which I saw the right hon. Gentleman get up to answer the Secretary to the Treasury. What were his first words? He said:

"As a Director of the Company I think it is right to make a reply."

We do not want directors of companies here when we are dealing with the corporations with which they are connected. It is not for me to dictate to the House, but I would suggest that the proper place for directors of companies is in the Board room of the company, and when we are discussing any matter which affects any particular corporation with which they are connected, it should be left entirely, both in the debate and the division, to the general body of hon. Members, who are animated by purely public motives. It does not seem to me that the reputation of this house is so bad that any hon. Member should be afraid to trust the affairs of such Corporations to its hands. Whatever this house does, it should act on general principles, and not in obedience to any argument from men who have private financial interests. I hope we shall not hear the voice of any director or of any interested person in the course of this debate. I hope the division will not be affected by undue persuasion, and I trust that no pressure will be brought to bear upon the Government by the supporters of the company in this House.

I flatly contradict the statement which the hon. Gentleman has made.

I have only expressed the opinion which everybody is expressing outside.

The hon. Member has no right to make that charge.

Why was this debate not taken on Wednesday last? What member of the Ministry spoke to the right hon. Gentleman about postponing the debate? Why did the statement appear in The Times that in consequence of assurances that had been given the right hon. Gentleman would not propose his resolution? Both statements were false, and why were they circulated, unless it was because The Times newspaper was trying to bring pressure to bear upon hon. Members of the House in defence of this agreement. If the Press can be influenced in that way, it is all the more important that this House should be allowed to deliberate upon the subject freely. There is one other argument. This matter has been discussed in the Corporation of the City of London for the last ten years, and it has been discussed in the London County Council for ten years. It is now being discussed in every Metropolitan Borough Council. Upon every one of these public bodies this rich and adroit company has been unable to influence a single member in favour of the company, and I hope that the standard of honour here in this House will not be less than on any local body. It has been said that this matter has now been finished and nothing can be done. I say that much can be done. The Amendment asks that a Committee shall be appointed, and this can be done. It also suggests that this agreement should be inquired into, and this can also be done. I have been told by one of the two Ministers concerned in the agreement that the only thing we can do is to dismiss them. I urge the House, if it is of opinion that a bad bargain has been made for London, to remember that many a true word has been spoken in jest; and if there is a feeling that the pledges made in March, 1899, have not been kept, then it would be well to maintain the dignity and utility of this House, and to make the Ministers who are responsible for this bad agreement feel what they have done. I know what pressure will be brought to bear with re- gard to this Amendment. The supporters of the Government will be told that this is an Amendment to the Address, and that they cannot vote against this question on the Address. Let me tell hon. Members a bit of experience which we Liberals have gone through on this point. Under a former Liberal Government we were told the same thing, but we defeated our own Government on the Address. That Government had only a small majority, and what happened? Did the Government fall? No, simply the Address was withdrawn and a new one substituted. This can be done again to-day, and therefore I cannot see why hon. Members opposite should be restrained from expressing their opinions. The Prime Minister has written a letter on this point, in which he has asked Conservative Members to express their views. I suggest to hon. Members opposite that they will serve the interests of their constituents much better by listening to what the Prime Minister said, instead of paying too much attention to this argument of the Whips.

The hon. Member who has just sat down paid a compliment to my right hon. friend who moved this Amendment, such as we do not often hear addressed to the Lord Mayor of the City of London from the opposite side of the House. He spoke of him as the Chief Magistrate of London and the representative of a vast constituency included in greater London I venture to say, sir, that in that double capacity my right hon. friend has raised this question—which is of so great interest to those for whom he speaks, and of so much importance to the development of London—in a way to which no exception can be taken, and he has based it upon grounds upon which the House ought to consider it. My right hon. friend's speech, in its single-minded desire to serve the interests of the local authorities on whose behalf he speaks, contrasted very favourably with the speech which we have just listened to from the hon. Gentleman opposite. He has thought fit, without any provocation, to scatter innuendoes and allegations which, although he undertook to prove, he left without a shadow of proof. [A laugh.] Evidently the right hon. Gentleman the Leader of the Opposition thinks this is a fit subject to laugh at.

Not at all. Surely the right hon. Gentleman will allow me to smile.

I beg the right hon. Gentleman's pardon. I misunderstood his smile, but he will pardon me for saying that it was certainly of the audible kind. The hon. Gentleman opposite has thought fit to cast these aspersions in general terms upon distinguished Members of this House, and he has also thought fit to suggest that there have been improper influences brought to bear by them upon the representatives of the Government.

I did not use the word "improper." I said "influence," and I meant financial influence.

The hon. Member now explains that he meant financial influence, and I do not think that makes his case any better. I say that it does not serve the honour of the House, and it does not redound to the credit of the hon. Member himself, that he should make these charges against hon. Members of this House without an atom of attempt to prove them. I shall not pursue the subject any further; but I will devote myself to the merits of this agreement, and to the objections which were raised to it. Since I am speaking so early in the debate, I must anticipate what will be said by later speakers, and I hope the House will pardon me if I go somewhat beyond that, and answer other objections not perhaps mentioned in this debate, but which have played a most important part in the discussions outside. I take it that the principal objection to the agreement which we have made may be summed up in the following terms: There is the position that no agreement with the company ought to have been come to at all, and that in making an agreement we were acting inconsistently with the recommendations of the Committee which has recommended unlimited competition between the Post Office and the company. Then, it has been said outside, although I do think that this argument has been repeated in the House, that if we made an agreement at all, its ratification should have been reserved until it had been laid before Parliament. It has been said in the third place and repeated again here to-night, that this agreement is a one-sided agreement, in which the company has had all the advantage and the Post Office has simply filled the rôle of dupe. In the last place it is said that the tariff which we have agreed to as an experimental tariff to last till 1905, is in itself an unreasonable thing. I think I have stated the principal objections taken to the agreement fairly, and with the permission of the House I will proceed to deal with them in their order. It is said in the first place that no agreement should have been made. Some people talk as if it should have been the first duty of the Post Office to crush this Company out of existence, or, at any rate, to drive it out of the London area. That is not our conception of our duty. It is not in accordance with the treatment which Parliament has always recognised should be applied to undertakings in which much money has been invested on the faith of a public Act, and it would be a particularly peculiar position when the competition was between a licensor and its own licensee. But, then, putting aside the morality of such an attempt to crush the company, and putting aside the question whether it would have been in harmony or not with what has been the general policy of this House in such matters to crush them out, I ask the House to consider for one moment whether it would have served the interest of the taxpayers of this country, to who, my right hon. friend says, must be considered, or of those for whom he more immediately speaks—the telephone users in this great metropolitan area. In the first place, if we had entered into no agreement with the company, what inducement should we have had to offer through our canvassers when they went to people to ask them to join the Post Office system? When our canvassers went to them they would have asked—How many people would you put us in free communication with? and we should have been obliged to say, "For the present a hundred or a few hundreds only. We have great hopes that that numbers will grow, but that remains to be seen. We can make no definite promise." Of course intending subscribers would say, "I shall go to the National Telephone Company, who have already 40,000 people with whom I shall be able to communicate the day after I join their system." Then it will be said by some gentlemen, "The inducement you would have been able to offer could have been lower rates, and therefore people would have gladly joined your system." But of course if we had adopted lower rates, the National Telephone Company, for the purpose of obtaining any new subscribers, would have had to lower their rates also, and we should have entered into a cut-throat competition of rates. That might be an admirable prospect for the telephone users of the metropolis of London, but what about the taxpayers of the country? We should have been sacrificing the interest of the 40,000,000 taxpayers outside of London to the interest of the 6,000,000 inside. No, not even that—the case is stronger. We should have been sacrificing the interests of the taxpayers inside and outside of London, to what after all is a small proportion—those who under any circumstances will be telephone users; and I venture to say that at a time like the present, when there is so great a strain on the National finances for purposes which, whatever hon. Gentlemen may think of the importance of the telephone service in London, all must admit are far more important—at such a time it would have been the height of folly, it would have been criminal, for the Post Office or the Treasury to consent to a reckless cut-throat competition of rates at the expense of the general taxpayers of the country. Well, suppose we had got over these difficulties—

By purchasing.

The hon. Baronet suggests that there was a third way out. He suggests that we might have got over this difficulty by purchasing the company at once.

Or by and by.

At once.

The hon. Baronet who interrupted me first suggested that our proper course was to buy the company at once, that that would be perfectly right, and that it would be the only way for meeting this difficulty. Sir, would you be surprised to learn that the Committee that sat and investigated this question said that it might be taken for granted that no Government would be foolish enough to buy out the company before the expiration of their license, with the liability of an additional payment for compulsory purchase, compensation for goodwill, and everything else which would then be involved? The suggestion made by my hon. friend was condemned beforehand by the Telephone Committee of this House as one which no Government, however foolish, was likely to assent to. I say if we had got over these difficulties and had induced subscribers to join our system, what would have been their position? Of all enterprises in which competition is possible, I suppose that hon. Gentlemen who will give a thought to it will admit that the telephone service is the one which is the least suitable for competition. In most undertakings there is room for two entirely independent systems, and the public is only the better served because it can go to the one or the other. But that is not so with the telephone service. Suppose we had got our subscribers, suppose we had even been so successful as to get as many as the National Telephone Company have in London, which I believe is 40,000, you would have had these two bodies of 40,000, but between the two a great gulf would have been fixed. There would have been no communication between the one and the other, or communication could only have taken place subject to the payment of a special fee for the time one wished to correspond with somebody on the other system. Such a state of things would have exactly halved the usefulness of the telephone system in London, and I venture to say that to have got rid of the difficulty is in itself so great an advantage that we might be well content to give the company something in exchange for it. One final remark, and I think I shall have done with that part of the subject. If we had entered upon this competition in its most extreme form, as it is recommended to us, we should have had to withdraw from the company the way-leaves which they enjoy from the Post Office. It is evident that if we had gone the length of a rate-cutting competition of an extreme character, we must have refused the company any facilities in the matter of way-leaves which it was in our power to withdraw. Every time the wires of the National Telephone Company cross the wires of one of the many railways which cut up London it is done by a way-leave from the Postmaster General. Were we to have terminated all these way-leaves at short notice, what would have been the result? Great inconvenience would have been caused to the telephone users in London if we had done such a thing. We should have brought such telephone service as has hitherto existed in London to a deadlock, and reduced the whole thing to chaos and confusion, and London would have been deprived of the facilities, such as they are, which it at present enjoys. But that was not the view—and to this I would venture to ask the attention of my right hon. friend—taken by the Committee of this House, which was presided over by my right hon. friend the President of the Board of Agriculture. It was not their object to crush the National Telephone Company in London or elsewhere. Their object was to remove from the existing system the abuses which were inherent in it, and to extend and to promote the efficiency of the service as a whole, and for that purpose they recommended competition, either by the Post Office or by the municipal authority. But they specially made provision for working agreements being arrived at between the two. In their Report, after making provision of this kind, they say:

"Having thus provided for equality of treatment, so far as is possible, in the event of either competition or agreement your Committee would leave the two parties to take which course they prefer, believing that much must depend on the size of the area and the other special circumstances of different localities."

What the Committee wanted was, not the extermination of the company, but the removal of abuses. It was not the extinction of the company but the regulation and restriction of the monopoly which they had hitherto enjoyed. Now may I ask the House to consider for a moment what were the abuses which the Telephone Committee found to exist and to be inherent in the National Telephone Company's system. They are set out at the bottom of page 7 of the Report:—

"We think that a service already so essential to commercial men and so well calculated under other conditions to benefit directly or indirectly all classes of the community, ought no longer to be treated as the practical monopoly of a private company, a course for which no legal or moral necessity appears to exist, and especially ought not to be worked on a system and under conditions which confine its benefits to a limited class in selected areas, permit preferential rates to be charged, and allow a private licensee of a public monopoly to refuse the use of a business necessity to one tradesman, and grant it to his competitor under similar circumstances, impose no limitation of charges, and leave the public at large dependent on a service which is in its turn wholly dependent upon innumerable way-leaves held upon very precarious tenure, and nearly all liable to be terminated after six or twelve months notice."

Lastly, the Committee stated in another part of their Report that it left the Government and the Post Office under the necessity of either starting a competing system of its own some years before the license of the National Telephone Company expired, or else of buying them out at a monopoly price. I ask this House as men of business to consider those objections, and judge of our agreement by that test. You will find every one of those objections have been removed. The telephone in London is no longer the monopoly of a single company, and the rates which are fixed are such as will no longer cause its benefits to be confined to one class—the richest class—in the community. The company is no longer allowed to charge any preferential rates, or to give a service to one man and refuse it to his neighbour under exactly similar circumstances. The charges are limited, and the danger of all the way-leaves being withdrawn, at short notice, is averted. And, lastly, fair purchase terms have been arranged by the State, which will prevent us from ever having to pay a monopoly price for what we have to buy. I venture to say then, that, judged by the standard which the Committee laid down—that Committee to whose decision my right hon. friend appealed—this agreement is a fair and reasonable agreement. It meets all the objections which he sees in the existing system, and when it is contended that it makes our competition a farce, I venture to ask, does anyone pretend that there is no competition between the great railway companies running to the North? They are in exactly the same position. They agree on their rates to the principal places. There is hardly any difference in their rates. It is a competition of speed, suitability, and efficiency of service. That is the kind of competition that we are going to have in the Post Office with the National Telephone Company. Having started with the very best plant, and the very latest and most efficient instruments, I venture to think that Londoners who join our service will have a service unequalled, certainly unsurpassed, in the world, for swiftness, simplicity, and security. Then, it is said that this agreement ought to have been laid before Parliament before ratification. That was one of the objections cheered from the other side of the House, and a word or two in reply to it may not be out of place. There is really no foundation for that contention, either in substance or in fact. The Standing Orders of the House provide that two kinds of contracts, and two only, made by the Postmaster General, are to be laid before this House for ratification, and are not to be ratified before the approval of the House has been received. All other contracts, many of them involving large payments of money extending over several years, the Postmaster General is free to make, and has habitually made, without laying these contracts before Parliament at all. Then if you look at the Municipal licenses, it will be found that this agreement with the National Telephone Company is exactly on all-fours with those granted to the great city of Glasgow, to Tunbridge Wells, and to other municipalities; and it has never been suggested that there was anything to take exception to in these licenses, or that there was any reason why they should be ratified by Parliament. Having regard to the fact that—as I have already pointed out—this agreement follows closely the recommendation of the Committee of this House, which exhausted the whole subject, I say there is even less ground for the contention in this case than there might have been in the case of an agreement raising new principles not within the cognisance of Parliament, or previously approved by Parliament. I come to a more important point: the suggestion that in this agreement we have been befooled by the company; that the Postmaster General and the Treasury, who are poor, simple-minded people, unaccustomed to business principles, were hoodwinked and misled by an astute and powerful Company which is peculiarly gifted with the quality of "slimness." Well, that is arguable. But let us look at the terms of the agreement, and see how far they carry out that taunt. There are two principles, two provisions—the fixing of rates, and the abolition of terminal dues—which may be said to be equally favourable to both the National Telephone Company and the Post Office. The abolition of terminable dues demanded hitherto from subscribers desiring to correspond with subscribers of other systems in the provinces and vice versa, is a provision which is equally favourable to the company and the Post Office. The fixing of the rates is equally favourable to both of us. There is no doubt that the purse of the State is longer than the purse of a company, and that if we were prepared to spend the taxpayers' money in ruining a company we could hold out the longest. But I maintain that to fix rates by agreement, provided they are fair rates is equally favourable to the Company and ourselves. Then there are two provisions in the agreement which, it is argued, are wholly in favour of the company. They are the purchase clause, and the clause dealing with the leasing of wires. There has been an extraordinary misconception as to what the purchase clause is. The deputation which came to wait on the Postmaster General in the first week in December represented that if the tramway terms had been agreed to, they would have had nothing to complain of, but that the Post Office had involved itself in payments far exceeding anything understood by the tramway terms, and had made a very bad bargain. Now, the purchase terms in this agreement are exactly the same terms which have been put into every municipal license, and they are the terms which were foreshadowed by the Report of the Committee of this House, and which were contemplated and approved of by the Telephone Act, and which were embodied in the terms of the Treasury Minute on which the Act is founded and which have been carried out. They are the terms which the company can have in every case where a Municipality competes with it, on fulfilling certain conditions laid down by the Act. Is it to be contended that the Government of this country could insist upon certain terms being given to the National Telephone Company as in the case of competition with municipalities, and that we, ourselves, should refuse the same terms when it was we who carried on the competition? I do not think that any such contention could be made. What are the terms? They are the tramway terms. It is specially provided, in the words of the Treasury Minute, that no addition shall be made to the value of the plant in respect of compulsory purchase, or for goodwill, or for profits that might have been made by the company from the use of such plant. Again, the recommendation of the Treasury Minute specially provided that no plant should be purchased under any circumstances by the Postmaster General, which was not at the time suitable for the then requirements of the Post Office. I venture to say these are fair terms. They are not unfair to the company, they are not unfair to the service, and not unfair to the purchaser. There is one difference in the wording of the purchase clause, by the addition of the proviso in sub-section 2 of Clause 9, which has given rise to some misunderstanding? I think it best to say at once that the proviso was necessary, in order to fit the terms arranged for Glasgow, while the system of purchase was still infuturo to the existing system. It does not pledge us to buy anything which is not suitable for the purpose of the Post Office in 1911. It only admits the plant previously put down to consideration, as to whether it was suitable or not at that time. What is the alternative to a purchase agreement of this kind? It was contended by my right hon. friend that with compulsory purchase at the present time, with all the liabilities for heavy compensation of loss of future profits, for goodwill and for compulsory purchase, we should have had to prepare three or four years before the expiration of the company's license for duplicating the whole of the company's plant in London, so as to take over their subscribers when their license came to an end. The course we have followed is a much more businesslike course, and merits the consideration of my right hon. friend, who said that this matter should be treated as a business matter by business men. Take the question of the leasing of the wires. A great deal of feeling has been expressed that we have come under any obligation whatever—even a carefully guarded one—to lease wires from the company; but that is a condition quite as favourable to ourselves as to the company. We are bound to take account of future possibilities and extensions. We cannot be always opening the streets in order to increase our plant. The Post Office was therefore bound to put down a great deal more plant than was immediately necessary for its requirements. But by this agreement we secure an immediate return on a great deal of our capital, which would otherwise have lain idle for a long time. We have secured, in the second place, that any wires put down for the company, and leased to the company, shall be in accordance with the requirements of an efficient telephone service. And we lessen the disturbance of the roads that would be required if the two systems were worked independently, and if both the Post Office and the company were to be opening the roads side by side. But that is not all. If hon. Members will look at the Report of the Committee of this House, they will see that this is our Magna Charta on this question, and that our constant object has been to carry out what the Committee laid down after full and exhaustive inquiry. If they will look at page 11 of the Committee's Report they will find that the Committee said that in the case of competition the National Telephone Company was to surrender certain privileges that it had—the Committee referred to competition between Municipalities and the National Telephone Company—and that the Municipalities should then allow to the National Telephone Company equal underground way-leave facilities with itself, and in order to avoid difficulties as to disturbance of streets these way leave facilities should be afforded to both by the Postmaster General under his statutory powers. That was enforced on the recommendation of the Committee, in the case of the Corporation of Glasgow and in the case of Tunbridge Wells. Are we to refuse to come under the same terms when we are competing in the same manner? If those terms are fair for those great Corporations, they are fair for the Post Office when it undertakes competition. Then it has been urged that in this matter we have gone behind the back of the County Council and other local authorities. It has been asserted that we have used the County Council and then thrown it aside; that we have made an agreement behind their back which destroys their rights. The position in London is peculiar. The National Telephone Company cannot undertake any underground work without a licence from the Postmaster General, and when they have got a licence from the Postmaster General they still cannot undertake underground work without the permission of the road authority, which is not the County Council; even then, having obtained the permission of the road authority, they cannot begin any underground work without having first obtained the permission of the County Council. Now, between the County Council and the National Telephone Company there were prolonged negotiations as to the terms upon which the County Council would grant their permission for underground work. They began in 1890 and went on for some years, and at different times the terms which the County Council desired to secure were considerably modified and altered. First of all I believe the County Council only desired to protect their own area; then they tried to impose way leave rents with a maximum scale of charges, but early in September, 1899, they abandoned all their conditions, and stipulated only that the conditions, price, and terms of the National Telephone Company's service should be the same as those of the service which was to be instituted by the Postmaster General, and that there should be free intercommunication between the subscribers of the two systems. The National Telephone Company refused to accept those terms, and in December, 1899, the negotiations were abandoned. We have got from the National Telephone Company all the conditions that the County Council asked for, and have obtained them without any such sacrifices as the County Council was prepared to make. I think the County Council might allow us some credit for not allowing them to barter away their rights, which remain exactly what they were before the agreement was signed. The National Telephone Company after the signature of the agreement are no more competent to undertake underground work without the sanction of the County Council than they were before. I now pass on to the other principal provisions. It is provided that there shall be free intercommunication between the subscribers of both lines from the moment our system is opened; that all favour and preference shall be abolished. It will no longer be in the power of the National Telephone Company to exact from a would-be subscriber onerous conditions as to way-leave powers over his property as a condition of giving him service. These three conditions are wholly in favour of the Post Office, or, if not of Post Office, of the telephone users, and the public whom it is our business to serve. Looking at the seven conditions as a whole, with the explanations I have put before the House, can it be said that the agreement is a one-sided agreement, or that we have not got a quid pro quo? Just test the value of one of these items alone by the terms of the Act of 1899. Take free intercommunication. Under the Act of 1899, where competition was set up by local authorities inside the area of the National Telephone Company's lines, intercommunication was made co-terminous were the licence granted to the Local Authority, if that extension was not less than eight years. Only in such cases was the National Telephone Company bound to give intercommunication. And not even then were they bound to give free intercommunication at once, because it was provided that, until the subscribers of the new system bore a certain proportion to the subscribers of the old system, the Company could make a charge varying from 1d. to 1½d. for every call from the municipal system to its own. So I may fairly say, judging from the agreement of 1899, the value of free intercommunication was the value of an eight years extension of licence to the Company. We have succeeded however in securing free intercommunication from the day our system opens, without any extension of licence or any condition as to any payment for calls. There is one other test that I will take, not one—I admit—which would have suggested itself to me, but one which was adopted at a meeting of the County Council by Mr. Benn. Mr. Benn said on September 19th that the cat was coming out of the bag, and that the shares of the National Telephone Company stood at 3¾, and on the 23rd of September had risen to 4¼. He went on to say that as the scheme came out the value of the shares of the Company had appreciated to the value of £366,000, and that that amounted to a present made to the Company by the bungling of the Government. Mr. Benn was good enough to suggest that we were fools; it was left to a rev. gentleman who followed him to suggest, that we were not only fools but knaves, and that although he did not like to suggest felony, our conduct appeared to him very like it. I am not prepared to say that the test of a Stock Exchange quotation is always a fair test of value; there have been many proofs that that is not always the case, but if such a testis to be taken, let it at least be administered with some degree of firmness. The full terms of the agreement were not before the public until the 1st of December. By the second week in December the shares had fallen again to 3½; that is to say, when the full terms of the agreement came to be known, the shares were lower than they were after the Report of the Committee; lower than they were in 1899 when competition was officially announced; lower than they were in 1900 when the condition of the streets showed to everybody that the Post Office was actively prosecuting its scheme; and lower than they were in August last when the chairman of the Company first announced that a satisfactory agreement had been come to. Whatever we have done, we have not appreciated the shares of the National Telephone Company; the agreement lends no colour to that charge. I apologise to the House for the length of time I have taken, but hon. Members will realise that this is a rather complicated subject, and I am anxious that they should have the facts before them as fully as possible. What is really the crux of the whole question is the tariff. Is the tariff a reasonable one? I venture to assert that if hon. Gentlemen opposite were satisfied with the tariff we should have heard very little of the other complaints. The hon. Gentleman the Member for West Islington quoted from evidence given before the Committee and from the speech of my right hon. friend to show that London could be telephoned at a capital cost of £40 per subscriber, and upon that he based the argument that our charges were unreasonable and that we could afford to reduce them.

I said the County Council had made the same estimate, and upon that estimate the County Council were willing to make a charge of ten guineas.

I think I stated the hon. Gentleman's contention correctly, and I accept his statement, but the County Council based their estimate upon the area of inner London only, and on a basis of 50,000 subscribers. But putting aside that altogether, I am bound to say, in the light of later experience, although we originally formed the same estimate, we know now that the estimate is too low. That estimate was put forward several years ago, and although it was always felt that London would be very difficult to telephone, I do not think anybody realised how great would be the difficulty until the streets were opened. I am informed that under the streets of the City of London there is a network of wires and pipes of every description. There are disused gas pipes, water pipes, and sewage pipes of which there is no record, and of which you are told nothing until you come across them in the course of your excavations. All these have to be removed out of the way before you can complete the work. There have been discovered considerable underground cellars of which very little was known, and all these things have largely increased the cost of wiring the streets. Under these circumstances we consider it impossible to work it out at £40 per subscriber, and the capital cost has turned out at something over £50.

For how many subscribers?

That calculation was made on the basis of 30,000 subscribers.

Does the hon. Member mean that £50 has been spent for each of the 30,000 subscribers?

I scarcely understand what the hon. Member means.

I wish to know whether the £50 which the hon. Member has just referred to was based upon the actual number provided for now, or upon the whole 30,000 subscribers he has mentioned.

It is based on the provision for 30,000. I am not prepared, however, to say that the whole of that provision is absolutely finished, but I know that the first section is.

Does my hon. friend mean to suggest that £1,500,000 has already been spent?

No, I do not think the whole of it has been spent up to the present, but what we are actually making is provision for 30,000 subscribers, and we estimate that that will work out at an average cost of something over £50 a subscriber. I must point out, of course, that, after all, the capital cost of the telephone installation, or the interest upon the capital cost of the telephone installation, is only a very small part of the actual cost of the work, and to base a calculation upon what you can telephone London for at the capital cost of installation alone, is to leave out by far the biggest factor in the calculation. I may mention that in the County Council estimate there was no provision for any wires ever being unused. As far as I can gather it must be apparent that a very considerable proportion of unused wires must always be bringing in no return—waiting for development to take place.

I wish to say that a large sum was left over for that purpose by the County Council; I think it was £12,000.

They must have put that £12,000 in for other contingencies which certainly have arisen. Take another item in the estimate submitted to the House of Commons Committee by the County Council. I am trying to show the actual cost to the Post Office, but I do not want to weary the House by going into too many figures. The hon. Member opposite and other hon. Members have asked, why cannot you do in London what is done in other towns. They ask us to look at the rates in Glasgow, Edinburgh, Tunbridge Wells, and other large provincial towns, and they wish to know why we cannot have a service equally cheap in London. The objection to that argument is that you are not comparing like with like. There is no such telephone area in the world as that of this Greater London, which is covered by the National Telephone Company. The nearest example we can find is in New York, but even there the telephone area comprises a population of 2½ millions, whereas in London we have to deal with a population of six millions. The mileage area of New York is 20 square miles, but that of London is over 600 square miles. Yet the rate in New York is £48, whereas in London it is £17. That is the nearest approach we can get, comparing like with like. I do not know whether the House quite realises the importance of these figures in regard to the size of the areas and the population. The telephone business is different from most businesses in that it is subject to what economists commonly call the law of diminishing returns, and the profits to be made from it do not increase in proportion to the increase of the business. The expenses always grow faster than the business. Allow me to give two of the simplest examples I can to illustrate my meaning to the House. Assume, in the first place an exchange of 5,000 subscribers, communicating only with each other. The working expenses would average £1 9s. 5d. per head. If that exchange instead of having 5,000 had 15,000 subscribers communicating only with one another, the working expenses would be raised to £1 12s. 5d. per head. Take a different case. Suppose 60 per cent. of the messages which those people wished to send did not end with their own exchange, but were junction messages, and had to be transferred to another exchange, the cost instead of being £1 9s. 5d. would then become £1 16s. 5d. In London from 60 to 70 per cent. of the messages are junction messages, passing over more than one exchange. They are really trunk messages, and ought to be dealt with by a special trunk staff. An hon. Member in this House told me the other day that what his constituents wanted was to be treated in their own borough like a provincial town, perfectly distinct from the rest, and paying £5 5s. per annum as in Glasgow. We should be glad to take over all his constituents on those terms, for they are less favourable than the terms we offer. I stated just now that from 60 to 70 per cent. of the messages in London were junction messages, but I will take the lower figure, and put it at 60 per cent. Now, if the hon. Member's constituency sent one message a day, under the system he suggests they would have to pay £7 2s. 6d. per annum, as against the £6 12s. on our system. That is to say, our system is 10s. 6d. better than that which the hon. Member proposes. If there is a greater number of messages than one, then our offer becomes more and more favourable by comparison. Now I come to the rates. There are two rates, and a great deal too much attention is, in my opinion paid to the flat rate, and too little attention to the toll rate and the variations to which it is subject. There has been expressed both outside and inside the House very great disappointment that we have not reduced the flat rate to £17. I must remind the House in the first place that the £17 rate only applied to those who were bound by the five years agreement. We have now made that £17 rate applicable to anyone who takes a one year agreement, and we ask of him no greater charge than has been hitherto asked of the man who was willing to bind himself for a term of years. There were 4,100 subscribers on the National Telephone Company's London system paying £20 under one year agreements, and to every one of those 4,100 subscribers our agreement saves £3 per annum, representing a loss of £12,300 to the Company, which sum has been saved to the users of the telephone. That is something which my right hon. friend must not lose sight of. [An HON. MEMBER: Does that embrace new subscribers?] They are all put on the same basis, and we have said there shall be no preference, and there must be equal treatment for all. As to the new subscribers, if there was an expectation that the Post Office was going to lower the flat rate for the universal user, I do not know how that expectation could be justified. There was no justification for it in the Report of the Committee of this House. There is absolutely no justification for it in anything that the President of the Board of Agriculture has ever said on this subject. That Committee distinctly and clearly stated that

"For the class of subscribers who have a right of unlimited use and whom almost alone the Company serves, the rates cannot be considered unduly high."

In another part they speak of the toll system, and they say—

"The toll system would of course be opposed by the subscribers on the existing system, who at present almost monopolise the service, and pay a small price for the large number of messages they send."

How can we go behind the declaration of that Committee? I venture to say that no Gentleman who sat on that Committee, the Report of which was unanimous, has the slightest idea that we should reduce the flat rate. On the contrary, the only criticism that I have heard from the members of the Committee, who had all the evidence before them, is that we ought to have refused any flat rate at all and to have made it one of toll. Under these circumstances, I say that there was no case for revising the flat rate, and in this we have behind us the Report of the Committee declaring that it is not an unreasonable charge for an unlimited user. I venture to say that when you consider the use which is made of a telephone, shall I say by a stock broker in the City of London, whose telephone is going all day, or shall I say by a great railway company, where the telephone is in constant use; when you remember that in many of these cases a subscriber gladly pays a clerk £80 a year merely for the purpose of attending to the telephone, then I say that a subscription of £17 a year for the telephone itself is not an extravagant charge. Now I come to the toll rate. My right hon. friend the Member for the City of London quoted several passages from speeches of my right hon. friend the President of the Board of Agriculture. I do not know whether he noticed it, but my right hon. friend and I cheered all the sentiments to which he referred. We are in entire agreement with them, and if they represent what he wants, they are our policy to-day, just as they were the policy of my right hon. friend when he made those speeches. My right hon. friend then said, as the Committee said, that the rates were not unduly high, but he felt that, at those rates, the service was of necessity the monopoly of the rich or of the large users, and that our object should and would be to make a place in the telephone system for the little man—to admit the masses to the advantages which have hitherto been the monopoly of the classes. Now, have we done that? In the first place, before I express any opinion of my own, let me call attention to the opinion of a gentleman whose view will be treated with respect by hon. Gentlemen opposite, and especially by Members from Glasgow—I mean Mr. Bennett. He is one of the advisers of the County Council, and he was the adviser of two other corporations that I have mentioned. Writing in the Electrical Times on the 9th of this month, he said—

"The Post Office rates, however, bring the telephones within reach of the London masses for the first time. For £5 and £1 10s. guaranteed calls—£6 10s. in all—telephones will be obtainable in the future."

I would call particular attention to these following words—

"This is a great fact, and one which it would be the height of unfairness to conceal or depreciate."

Mr. Bennett has never been unduly favourable to the enterprise of the Post Office; he has been a severe critic of many of its works and ways. I think, therefore, that praise from him may be taken as praise indeed, and that I have a right to feel a certain amount of satisfaction when I am able to show that he, with his great experience, not only in London, but in so many other places, considers that by our rates we have admitted the small users to the advantages of the telephone. Then let me say, in this connection—though I must not dwell on the different variations which are possible under the schedule of rates—that I do think the arrangements with regard to party lines and extension lines are not worthy of the attention of the House and of intending users of the telephone. An hon. friend of mine said to me in the House the other day that he was very dissatisfied with our agreement. (The case is somewhat similar to one already quoted.) He said he had in his house a telephone from the National Telephone Company at a rental of £10 a year. When the agreement was signed, he was on the verge of having another telephone put into his stables at a cost of £8 a year. "But under your agreement," he said, "the Company say they cannot do that." I said, "That is perfectly true." Then he said, "Ah, but we have done you in the eye, we have been too clever for you. The Company are going to give me an extension line, and I shall get it at £5." But he had not "done us in the eye," he had done exactly what he ought to have done, and what would at once have occurred to him if he had looked at the rates which we have provided. It was just a case in which an extension line would be suitable, and personally, instead of the hon. Member being so anxious to "do us in the eye," I would suggest that he should look carefully into the distance between his stables and his house, and see whether he has got the full benefit of the rates and charges laid down in the agreement. I quote that case merely because it is an illustration of the way in which some gentlemen have approached this question. If they had discovered any defect in the agreement it is our fault, if they had gained anything under the agreement it is their own sharpness, and we did not know what we were doing! You must take the agreement and judge it as a whole, with its advantages and disadvantages. These toll rates of course, are experimental rates. From the very first the Postmaster General has laid it down in the clearest possible way that these rates are experimental. We have no data on which to judge of the uses that will be made of the toll rates. I know the rates are not prohibitive, because, of the subscribers who are now coming on to the Post Office system, there are twelve at the toll rates for every one at the flat rate. But what will be the user no man can tell, and there is no evidence on which we can form at judgment. All that we know, with such little experience as we have been able to get in the provinces, is that a man, when he pays toll on each message, is apt to be extraordinarily economical in sending messages. There is the same difference as between writing a letter and writing a telegram. When people who have been in the habit of sending many messages go on the toll rate system, they find that their necessities are met with a very much smaller number of messages. In justice to the taxpayer at large, and in justice to the revenue—which is, after all, only another name for the taxpayer—we could not, for experimental rates, put, the figures so low, in the first instance, that there was likely to be a loss. We were bound to err, if we erred at all, on the side of caution and security. But I do not think the House knows what is likely to be the result, even of such rates as we have embodied in our agreement. The hon. Gentleman opposite said that on the estimate which the County Council presented to the Committee, they reckoned to be able to supply telephones in London only at an annual charge of £10.

£8 12s.

An annual subscription of £10, of which £1 would be the Post Office royalty—therefore, at £9, to cover themselves and make no profit. That was for a single rate. There would be no lower rates. There would be no toll rate. It was one single tariff. Of course, you cannot have the same flat rate when there is an alternative in toll charges which will be taken by all the small users, and when the flat rate would be no longer used by anybody except the biggest users. Under our combined flat and toll rates, the best opinion the Post Office can form is that the average payment throughout the London area per subscriber per annum will not be more than £8 a year. That therefore is a lower average rate than that at which the County Council thought they could telephone London for. If we have not been sufficiently sanguine, if we make more per subscriber than we have expected, we should be the first to desire and the most willing to revise the toll charges to the small men, but unless the House clearly expresses an opinion contrary to all that has been laid down by this Committee and by itself in the past, we do not think the flat rate ought to be lower to the unlimited user. My right hon. friend brought this matter before the House as a business man. He asked for an inquiry into the whole question of rates "as a matter of business." I put to him whether, with all the uncertainty attaching to this great experiment—which my noble friend the Postmaster General has called "a leap in the dark"—of the toll rate system, if he had been in our place he would have felt justified, at the risk of the general taxpayer, in lowering the rates for what is, after all, the richest city in the world. He wants an inquiry into these rates. I venture to submit to him that an immediate inquiry must be profitless. If he were making such an inquiry, I am quite certain that, as a business man, the first, evidence he would require for the purposes of his inquiry would be information which is not at present available to the Post Office any more than to himself. We must have some experience of the working of the system. We must have some idea of the proportion between flat rate users and toll rate users. We must have some idea of the amount of use that each toll rate subscriber will, on an average, make of his telephone. When this system has been in force long enough for us to have any data on these subjects, we not only will yield an inquiry, but we ourselves from the first have decided that there must be an inquiry at the very earliest moment when such information is available, and that we must reconsider, and, if need be, revise, our rates in the light of experience. That inquiry will take place under any circumstances. From year to year the Postmaster General will report to Parliament on the working of the system, and the House will get information as to its results as rapidly as we get it ourselves. Such an inquiry, as soon as there is sufficient information upon which to work, will be most useful and desirable, aye, and most necessary, but it would be useless to set out on it at the present time, while all the facts on which a judgment could be formed are more or less matters of guesswork, and when such a Committee of inquiry would be unable to find any trustworthy information with which to form a judgment. I hope hon. Gentlemen on both sides of the House will see from what I have said that the agreement which the Post Office, with the sanction of the Treasury, has made, is not such a one-sided agreement as it has been considered; and that we have got very large and substantial advantages in return for the concessions we have made. I hope it will be felt, particularly by my right hon. friend who moved the Amendment, after what I have said, that we have not been unmindful of the interests of those for whom he speaks, and that in the measure of our responsibility to the taxpayers at large—whom he would be the last to suggest should pay in order to provide telephones at a lower price to London—we have given the most favour able terms to the users that our present information would justify, that as soon as we have fresh facts before us we shall have an inquiry to see whether these rates can be reduced, and that, if we find it possible to reduce them without loss to the taxpayers, none will be so glad as the Postmaster General and myself.

I have listened with much interest to the statement of the hon. Gentleman who is responsible for the Post Office in this House. I think that throughout this debate there has been no sign of violent enthusiasm in favour of this agreement. The hon. Gentleman says that the object of the Government was the restriction and the regulation of the telephone monopoly, and assent was given to that remark by a cheer on the part of the right hon. Gentleman the President of the Board of Agriculture. All I can say is that if the right hon. Gentleman opposite, when he was Secretary to the Treasury, had said that his policy was one merely for the restriction and the regulation of the telephone monopoly he would not have got the assent of Parliament to the £2,000,000 given to him under the firm belief that the Government were going to enter into real competition with the National Telephone Company. We are told at the very outset by the defenders of this new arrangement that the existing charge of £17 for each instrument is not an excessive charge for each instrument. If that had been told us two years ago we should have assumed a very different attitude when the right hon. gentleman came before us and assured us that this was an iniquitous monopoly, and that he and the Government would put it in such a position that the subscribers would have benefits which they had not before enjoyed. There are two important questions which we have to consider. In the first place, have the Government carried out their promise to the House—or, at all events, what was understood to be the promise—that they would enter into real competition with the National Telephone Company? The second point is, should we be better off if we had this real competition? The hon. Member who last spoke said that the telephone business was one which did not lend itself so much to competition, and that, had they entered into the class of competition which the House desired and desires now, the result evidently would have been cut-throat rates, the taxpayers' money would have been squandered, and so on. I can only say that the Government elected to take up this business themselves. They have denied to the Local Authorities the power of taking up the business for themselves, which they could have done just as well at probably about one-half the cost. I think the Government are making an unfair use of the feelings of the ratepayers, when they say that by establishing competition they would have been squandering the taxpayers' money, and Parliament would have resented that. The hon. Gentleman said that competition would not be a good thing, but I desire to ask hon. Members to allow me to put before them, at all events, what competition has done elsewhere for the consumer. The hon. Gentleman has pointed out that competition between the Post Office and the Company would have necessitated a double subscription, and so on. But competition of that kind does exist at the present time in this country. We have heard of the telephone business at Tunbridge Wells, where it is in competition with the National Telephone Company, and where the rates have been reduced in consequence. The hon. Gentleman has called attention to the only comparison which he thought fit to make, and that was between London and New York. He says that there is no telephone area comparable to London, and the nearest approach is that of New York. He has mentioned also that the rates there are as high as £40. That is true, but I do not desire that that statement should go forward without making some comments upon it. What is the state of things in America with relation to the telephone service? Chicago and New York are the happy hunting ground of the telephone monoply. The American Telephone Company have got a system whereby they get the controlling interest in all the companies which use the Bell telephone. As that is the one most cheaply in vogue, they have succeeded in getting an absolute monopoly of the telephone, and to-day their monopoly stands unchallenged. But I would point out that the telephone monopoly is not unchallenged in other places, and I will show the effect on a monopoly where real competition exists. The hon. Member is right in saying that the charges in New York are high, and this arises because the telephone is under the thumb of a monopolist company. Not only this, but it is considered a defective service in New York, although we might consider it magificent here. Now what has happened where real competition has been brought to bear? In the city of Pittsburg the American Telephone Company had, at one time, an absolute monopoly, but the great manufacturers determined, come what might, that they would dethrone this monopoly. At the time that they started their second competing company, the American Telephone Company had 6,000 subscribers, each paying £25 per year for the unlimited use of a single instrument. The Pittsburg people decided to fight the monopoly, and they formed a company starting with 7,000 subscribers, all unlimited users, and the cost in Pittsburg was reduced at once to £10 per annum, or an immediate reduction when they came into competition with an independent company. Those advantages were not solely confined to those areas, but they were extended to long-distance users by reason of other outside districts coming into the organisation, and in this particular case—and this is only one of many cases which I would quote, and I could give a dozen more great cities—there is to such thing as measured or toll service whatsoever. In most of these independent companies, with scarcely an exception, they have what we want here, a cheap unlimited service. [Ministerial cheers.] Hon. Gentlemen opposite cheer that statement, but, to use Lord Salisbury's phrase, I am afraid we are putting our money on the wrong horse. This system of real competition is spreading over America. We were misled into believing that we were going to have in this country also a real competitive system, and I for one will never believe that the telephone is not as amenable to competition as any other commercial enterprise. What we want is to render the telephone service as cheap and available as it is in other countries with whom we have to compete. We desire that there shall be an out and out rate for unlimited service, which is the only real and effective system. The measured or toll system can be shown to be very cheap in one sense.. You may give a man the telephone, and if he uses it once a day it will come as a very cheap investment, but what is the good of saying that it is very cheap provided you do not use it too much? That is the serious defect in the toll system as laid down by the Government. If we are to have the advantage of this great invention, it is necessary that the telephone shall be available to the business man at every point, and that the charges shall be moderate. I was much struck when I was in the United States recently at seeing the universal use of the telephone, not only in business establishments but also in private houses. In an ordinary business house of some standing it would not be difficult to find half a dozen in use. I saw in a large business house in America, in the office alone, 120 telephones in use, and every man had one on his desk. I do not see why that should not be possible in this country. With these high charges of the National Telephone Company, which are now supported by the Government, we shall never get that free use of the telephone which will make it a great advantage to business men. Therefore, I will not attempt to criticise in detail the elaborate material that has been put before us by the Secretary to the Treasury, but, I say, speaking for myself, that we are not satisfied with the arrangement, and we feel that the Government have misled us altogether. We accepted the assurance of the right hon. Gentleman the President of the Board of Agriculture, for we had an idea that he was a more businesslike man than many of his colleagues and when we were assured by him that he was fully alive to the desirability of getting rid of this monopoly, we thoroughly believed him. And now the President of the Board of Agriculture comes here and takes a delight in supporting the hon. Gentleman who has succeeded him. We either want a real competition, or else we must get rid of the National Telephone Company altogether. The agreement expires in 1911, and in the few years that intervene the Government ought to get rid of the agreement altogether. To business men who wish to use the telephone freely, no system will be of the slightest service unless it gives cheap end unlimited use. In this respect the Government have failed, and I am not satisfied with the assurances which have been given in regard to some future time. The Government have entered into a bad agreement, and we are to be the victims of it. We shall, however, keep the matter alive, and I think the Government will find that at no very distant date there will be an open rupture between the people who wish to use the telephone system properly and His Majesty's Government.

:said the hon. Member for West Islington seemed to think that every one who disagreed with him did so from an improper motive. He was not in any way connected with the National Telephone Company, nor was he a user of the telephone. The hon. Gentleman who had just sat down did not approve of the toll rate, but was anxious that a cheaper rate should be given. Speaking as a London Member and a taxpayer, and in view of the statement in the Report of the Committee that unlimited users would receive full value for their money, he did not want to see his constituents or the taxpayers generally taxed in order that gentlemen who were unlimited users—because it suited them and paid them to do so—should be charged a very low price for what was a very useful thing to them. He did not think that it was at all necessary, after the very able speech of the Financial Secretary to the Treasury, to go into the question whether the agreement was good or not, and, therefore, he would not endeavour to say anything of the advantages which the Post Office would obtain from this agreement, but he wished to say one or two words about the argument on the other side. He had not heard a single argument of value advanced against the agreement. The hon. Gentleman who had just spoken thought that the charge for the unlimited user should be reduced, the unlimited user being the rich user. He had before him the report of the conference at the Mansion House, which he presumed was sent to every London Member. The arguments advanced at the conference were intended to show that the agreement entered into was a bad agreement. What were these? The chairman of the conference was Mr. Morton, who was some years ago a Member of this House, and sat on the other side. That gentleman said that the pulling up of the streets by the Post Office would be a very great nuisance, and the result would be that the telephone users would get no benefit. But, if it was found in three years that the rates were larger than were necessary to safeguard the interests of the taxpayers, they could be reduced. Mr. Morton went on to give an illustration in the city, how competition would result in no benefit to the consumer. He instanced an Electric Lighting Company. He (Mr. Banbury) was a user of electric light, and he paid 8d. per unit, and that was the highest rate allowed by the Board of Trade. Three years ago there was a slight reduction, but under what Mr. Morton called effective competition, his charges had been raised and not decreased. The hon. Gentleman who seconded the Amendment, and who desired to have an inquiry, said that there was no use alluding to the Select Committee of this House, and that too much had been made of what they had reported. What was the use of another Select Committee? Because if that reported against what the hon. Member wished, he would not be guided by its Report. Mr. Morton said at the conference that they did not wish to make this a Party or a political matter. The other great mover in this matter was Mr. Benn. He admired their astuteness in asking the Lord Mayor to move the Amendment to the Address, because they probably hoped to get up a more effective opposition to the Government on the question of the telephone agreement, and to receive a better vote than on the Amendment to the Address which was moved a few nights ago on the subject of South Africa. He should like to know what view the Radical papers would take if they were to do such a thing. It would be said that the Government had been defeated on a serious charge. The country might be placed in the awkward position of having a Government placed in office the members of which were unable to agree on the important question of the hour. He hoped that that every London Member would go into the lobby in support of the Government. He believed if they did so their constituents would agree with them that they had taken the proper course.

I was sorry to hear the tone of the hon. Member for Peckham. No one on this of side the House has any intention to make this, in any sense, a Party question. I think the hon. Gentleman paid a very poor compliment to the Lord Mayor, when he assumed that he could be made a cat's-paw by Mr. Morton or any other Gentleman. I think we can deal with this as a business transaction. The hon. Gentleman the Secretary of the Treasury promised the House that there would be, so far as he was concerned, an inquiry if at some future time something of that nature became necessary; and he seemed to think that was practically what we are now asking, and that therefore his proposal ought to practically meet the views of hon. Members of the House with regard to the Amendment. I certainly did not gather that that was the point of the Lord Mayor in the speech he made. I think that what the House desires, and what we are entitled to demand, is not an inquiry at some future time in regard to the charges, rates, and so on, but what we want to know is on what basis the Postmaster General came to this agreement with the Telephone Company, and why in doing so he did not consult the Local Authorities of London. That is the point on which the Amendment turns, and I think the Secretary to the Treasury in his very lucid speech put before the House he basis on which the Postmaster General had acted. He said he had no data to give to a Committee with regard to the question of rates. In making the bargain, the Postmaster General had some experience and data which he could quite well place before a Committee of the House of Commons, and what we want to have proved to us on evidence is that he Postmaster General and the hon. Gentleman, as representing the Treasury, have not made a bad bargain, either from he point of view of the taxpayer or the point of view of the users of the telephone, That is what, in our opinion, ought to have been the course taken some time go—namely, that the whole thing should have been talked over and considered by he Local Authorities in conjunction with he Treasury and the Post Office. The hon. Gentleman, in his speech, went into the matter in great detail and in an interesting and lucid way. He seemed to think that it turned largely on the question of the quid pro quo received by the Government from the Telephone Company. I think there is something more than this in regard to the position of Members of the House of Commons on the question. So far as we were concerned, the Report of the Committee of the House of Commons did give the impression and the understanding that they were reporting in favour of active and efficient competition. That the hon. Gentleman has practically given the go-bye to. I think also that Members of the House were of opinion, from the speeches of the right hon. Gentleman the President of the Board of Agriculture, when he represented the Post Office in regard to this matter, that by inference he gave practically pledges to the House that there would be effective competition, and that we should be able to have telephones put down at such a price to the consumer as would be satisfactory to the public. I would say further, it was on the strength of the Report of the Committee and the speeches of the right hon. Gentleman that this House granted the Post Office £2,000,000 to begin with the telephone work. The point we have to decide this afternoon is, whether these proposals of the Government will give an efficient, adequate and reasonable telephone service, and whether there will be anything in the nature of proper competition between the Post Office and the Company. The hon. Gentleman said there were certain alternatives to this policy. There are three alternatives. One is, that the Post Office should take over the whole of the service by purchase, or by starting a new system; the second is that of allowing the local bodies, the County Councils and others, to carry it out; and there is the proposal we have before us this after noon. The hon. Gentleman was mistaken in thinking that any Gentleman in this House desired to crush out the National Telephone Company by interfering with competition. I think that was answered fairly by the hon. Gentleman sitting below the gangway. The Secretary of the Treasury said that it would be an expensive process—that is the matter of price and bargaining. What I contend in regard to this matter is, that the Government, having considered the position in reference to the Telephone Company, have made a bargain which has not really represented the position they might have taken up, and which they had it in their hands to do in regard to this bargain. In connection with the question of way-leaves there was a weapon which the Government might have used to bring the Company to proper and reasonable terms. Apart from the improvements provided for by the agreement, and which are no disadvantage to the company itself, I say that the upshot of the whole matter is that the company have been largely benefited by the agreement which has been made, and that the user of the telephone has been injured by the bargain the Government have made. The Telephone Company for the next eleven years are practically secure from anything like effective competition. Practically, the scale of the charges of the Company will be almost as great in the future as in the past. In fact there will be no substantial reduction in the rates. They will have the full power of using the Post Office lines, and the full power—to which I strongly object—of using our streets in such a way as they choose, under the authority of the Post Office itself. The hon. Gentleman went into some details in regard to the question of charges. Not being a user of the telephone myself, I am bound to say I was not able to follow him and check his figures, or to say whether substantially to the small user there will be a benefit. But I do not think he met the point made by previous speakers in regard to the general user, and I would like to hear his answer to this. It was put to him that at the present moment the general consumer has one telephone at £17, and another at £10, or £27 in all. Under the new arrangement the charge for the second telephone is to be £14.

If the user on one set of premises has two telephones on separate wires, because his business is so large that he cannot carry it on on one wire, the charge to the unlimited user is £17 for the first, and £14 for the second or subsequent wires. But if he has one telephone in his office and another in his private house, the charge for the office telephone will be £17, and that for the house telephone will be £5, with 1d. toll charged on every message sent. If he requires two telephones in the same house, he will get the benefit of a reduction dependent on the distance—the lowest charge for the second telephone being 30s.

If there were five or six telephones, what would the charge be?

I cannot say in a single word what the charge would be if anyone required five or six telephones, until I know under what conditions he required them. If he required them on a single wire, the subsequent telephones after the first would only cost 30s. each.

I am quite certain that the explanation of the hon. Gentlemen is absolutely illusory. At any rate, I am in a greater fog than I was. That is an argument for something in the nature of an inquiry by a Committee to see how these charges are going to work out. In reference to the charges themselves I will leave it to experts to decide; but I entirely agree with the hon. Gentleman's proposition that the charges ought to be fixed at such a rate as to pay the expense of the service and the interest on the capital outlay, and that there should not be anything like the present muddle with the Post Office telegraphs. The hon. Gentleman said that this business is speculative at present, and that the Post Office must fix the charges high. To that I do not object. But what I object to is, that the rates are fixed in order to pay the expenses and high dividends on the excessive capital of the National Telephone Company. Supposing that a Post Office telephone service was being started at the present moment, does the hon. Gentleman mean to say that he would have to charge these high prices?

Undoubtedly that is the view—as to the rates to be charged in the first in-instance—until we have had greater experience. Undoubtedly the Post Office and the Treasury would have fixed the same rates had there been no question of the National Telephone Company.

Then I do not understand the figures which the hon. Gentleman gave, because, as my hon. friend behind me pointed out, the London County Council made an estimate of £38, while the right hon. Gentleman, the President of the Board of Agriculture, two years ago, made an estimate of £40. The hon. Gentleman, it is true, urged that in the interval prices had gone up; but, at the same time, the utmost estimate he could make was £50 for each line, and the engineer of the National Telephone Company put the maximum amount at £60. The right hon. Gentleman the President of the Board of Agriculture, when discussing this matter some time ago, pointed out that the capital of the National Telephone Company was six millions, and that, so far as that capital represented effective service, it could be replaced for two and a half millions. The Chairman of the company, Mr. Forbes, in his evidence before the Committee, admitted that a million and a quarter or a million and a half represented an excessive purchase money in order to buy out a monopoly. My argument is, that if the National Telephone Company are able to pay dividends on their admittedly excessive capital, by means of their charges, and if the Post Office is able to put down a plant at a much cheaper rate, the Post Office ought to be able to pay sufficient interest on their capital, with much lower charges than at present. When the Lord Mayor quoted the figures charged in Paris, Glasgow, and elsewhere, the hon. Gentleman said, with perfect truth, that you must compare like with like. But even if we allow every disadvantage to London which can be held over a city like Glasgow, I cannot believe that while a telephone service can be given in Glasgow for £5 or £6, the same service should be in London more than £7 or £8. The hon. Gentleman spoke of New York, but I say the charges in New York cannot be compared with those in London. We know that the value of money is very much less here than in America, and that in every way the charges in America are higher than here. The hon. Gentleman said that the charge for telephones in New York is something like double what it is in London. I do not know whether he is aware that the tramway charges in New York are two or three times higher than those charged by the London County Council. I do not think that a proper comparison can be made between the charges in London and New York. In reference to what the hon. Gentleman said about competition, I confess I do not think he gave the House quite the impression which the Report of the Committee made on the minds of hon. Members of this House, and which the speech of the right hon. the President of the Board of Agriculture made. The Committee reported that after hearing the whole of the evidence they were strongly of opinion that without effective competition the service would be most unsatisfactory, and they recommended that the Post Office service should be a real and effective competition. The Postmaster General said that the rates had been practically fixed, that the company had the right of using the Post Office lines, and that they would throw on the Post Office the onus of raising the streets; that in all other respects there would be open competition, but that there was no other form of competition real and effective if these matters were taken away. I am quite sure that when the Committee reported they intended that there should be fair and effective competition, and that the company should not be constituted in any sense a monopoly. I am in favour of something in the nature of an inquiry being held before the door is entirely closed, and I maintain that the speech of the Financial Secretary to the Treasury has shown that such an inquiry is needed.

As the Report of the Committee of which I was Chairman has been frequently referred to, perhaps I ought to say a few words in the course of the debate. I think the hon. Gentleman who has just sat down was perhaps a little too ingenuous. He said that he was discussing this question without any Party motive whatever—on an Amendment to the Address! An hon. Member on that side of the House had a very important Amendment down on the Paper with reference to General Buller. Why did he withdraw that? I do not know quite why he did, but the reason he gave was that it was quite impossible on an Amendment to the Address to debate such a question with- out any Party bias. That argument would be equally applicable to this Amendment.

My argument was that as the Motion came from a right hon. Gentleman on that side of the House it could be discussed without Party animus.

After all, this is an Amendment to the Address, and if carried it will be a vote of censure on the Government. Now, Sir, one of the principal complaints of hon. Members is that the municipalities have not been consulted. One of the great difficulties in dealing with this matter is the enormous area of the London telephone system. I am bound to say that that was one of the great faults of the the original system. I do not think that the Post Office ought ever to have allowed the National Telephone Company to have such an enormous area, but that being the case we have to deal with it as a fact. Would it be possible for the Post Office to consult every one of the authorities in this large area of 640 square miles? What would be the purpose of doing it? These municipalities, after all, are not in the position of an ordinary municipality such as that of Glasgow or Birmingham. In Glasgow or Birmingham the municipality controls the streets, and has no check whatever, but there is no one authority in London with power to grant way-leaves to any company or person. We must have the double assent of the London County Council and the municipality. Therefore there is no comparison whatever between a municipality in London and the municipality of Birmingham or Glasgow. Then we have the suggestion made that, instead of dealing with this subject as it has been dealt with, we should have bought up the company at once. That was the suggestion of my hon. friend the Member for Dulwich, who especially wants the company bought up. Surely my hon. friend does not recollect the conditions of the telephone service at the present moment. Nearly the whole of it consists of overhead wires and this system is perhaps the worst of any town in this country, and yet my hon. friend suggests that we should buy up, even on the cheapest possible terms, a lot of old rubbish which the Post Office would never be able to use. Of all methods of dealing with this question, that would be the most extravagant and the worst.

Does the right hon Gentleman think that the Telephone Company has made such a bad arrangement that it will not be able to get back its capital sum by the time the lease expires?

That is not the point. My hon. friend wants us to buy up the plant of the company in London, and I say that it is not worth buying, and that if the Post Office were to buy it I do not think the public would over allow them to use it. I pass from that, and I now wish to ask what was the main object which the Committee of which I was Chairman had in view. What had it to deal with? We had a precarious service; a great deal of the way-leaves of the company might be terminated at six months notice, and we had by no means a permanent service. It entirely depended on the way-leaves granted by the persons over whose houses the wires went, and there was hardly one which six months notice to terminate would not put an end to. Then again, we had an overhead system, which was thoroughly inefficient. We had further the fact that it was an insufficient service. There is no great city in the whole of Europe which has so few subscribers to the telephone service in proportion to its population as London. At present, out of a population of six millions there are only between 30,000 and 40,000 subscribers. Then, it was a preferential service, which the company could refuse to one tradesman while giving it to his competitor. That was a thing which the Committee utterly condemned. Again, we had the fact that the company could charge, different rates to various subscribers. That in the case of a public service ought to be put an end to. Then we had what was the great complaint of the Committee, that it was a service almost entirely for the rich, and that it was impossible for persons who did not use the service to any great extent to pay a large sum for it, or indeed to be telephone sub- scribers at all. All these things are put an end to now. Under this system we have got a permanent service, with permanent way-leaves; preferences are done away with; and, above all, we have got a service which is adapted to the requirements of the various people who might use the telephone. We have got a flat rate for large users and a toll rate for small users, and also a joint service rate for users who want to have it at a still cheaper rate, and there will be a large number of offices where anyone, whether a subscriber or not, can send a message for two pence. Surely that is a very great advantage. But there is another great advantage which I think this agreement has rendered, and it is this. Until the enormous area of London, 640 square miles, with a population of 6,000,000, in the very heart of the Empire and the centre of our commerce, was dealt with, it was quite possible for the National Telephone Company to say either that they must raise their rates or that they must stop the service altogether, as they could not afford to continue it. The result would be that popular pressure would have been brought to bear on the Government to purchase this system at an extravagant price. That was a great danger which the Committee had to guard against, and which is guarded against most effectually by one of the very provisions in this agreement which has been most complained of, and that is the provision under which the Post Office lets out its wires to the National Telephone Company. What is the great advantage of that? If the National Telephone Company had to lay these wires themselves, we should be open in the future to exactly the same danger as I have described. Now, these wires being the property of the Post Office and being only hired to the National Telephone Company, if the company were unable to carry on its work, it would be possible for the Post Office, having by that means an alternative service, to at once step in and take the place of the Telephone Company. It is said that, with all these advantages, with the fact that we have got an efficient and sufficient service, and the fact that we have got everything the Committee said we ought to get without competition instead of with competition, the rates are too high. What rates? Is it the flat rate or the toll rate? Nearly the whole of this discussion has dealt with the unpopular service, viz., with the flat rate. That rate is, however, that which a rich man pays for almost unlimited user. I am bound to say that the system is a thoroughly wrong one. If you apply it to the sending of telegrams or letters, if you contract with the Post Office to send an unlimited number of letters or telegrams for a given sum, you will see at once the absurdity of the system. We have a further disadvantage under this system of unlimited service. Although the service is supposed to be limited to the particular firm who pay the subscription, undoubtedly it is greatly abused, and we find people who have no right taking advantage of this unlimited user for which a man pays £17, and the rest of the subscriber are to that extent cheated of their rights. I want, however, to point out to the House that it is round the rich man's rate that practically the whole battle is raging to-day. We have the proposed service of the London County Council quoted against us, but that was entirely for unlimited user: there was no arrangement for the small user and no toll rate. We had from the hon. Member for Devonport just now a distinct statement that he himself wanted nothing but unlimited user. I can understand my right hon. friend the Lord Mayor, representing a constituency of City men, stockbrokers and others, who use the telephone service to an enormous extent, taking up the position he has. He is doing justice to his constituents, but I doubt very much whether the hon. Member for Devonport in fighting for this rich man's service is representing the interests of his constituents. Let me show what this service is. In the first place it is a service under which a man, having paid £17, can send and receive any number of messages he likes, and we had evidence before us, not in one case or two, but in several cases, of a man using the telephone 200 times a day, in which case he got value to the extent of £300 for £17. We had also evidence that considerably over 50 per cent. of the users of the telephone did not use the service more than a thousand times in a year. Is it not, therefore, perfectly monstrous that a man who only uses the telephone a thousand times a year should pay exactly the same rate as a man who uses it 200 times a day? It is all very well for the rich man who pays £17 to try and get as much as he possibly can, but that is got at the cost of the small subscriber. He not only monopolises the exchanges in London itself, but he frequently monopolises the trunk wires as well. At certain times of the day, say between 11 a.m. and 3 p.m., it is almost impossible for an ordinary subscriber to get on the trunk wires. The hon. Member is not, unfortunately, an extraordinary subscriber. He is one of the men who pays £17 and gets this extraordinary use. What sort of a case have these people who come before the House on this question? They asked for a fresh enquiry and they had a fresh enquiry. The Committee have reported that the rate is not too high. In fact they get more than they ought to have, but they are not satisfied. It was when they had an insufficient service that it was said they were not paying enough, and now, when they have a thoroughly efficient service, perhaps the best service in the whole world, these men have the audacity to cavil at the recommendation of the Committee, which said that the price was by no means too high, and ask to have the service at a lower rate. I go further than that, and say it is quite impossible, if you are going to have a lower flat rate, to have a popular service at all. There is a great deal of difference between flat and toll rates. The flat rate means absolute service, and if there is any reduction in the flat rate it will be impossible to give the users a toll rate. One of the charges against us is that the Government have not thrown the service open to rich and poor alike. That is exactly what we have done. [A laugh.] The hon. Member may laugh, but that is the fact, and that being so I wish some one would go into the constitutency of the hon. Member for West Islington and explain to his constituents that their democratic Member in this House, when it was known that these men were getting more service for their money than they ought, supported an Amendment, the very purpose of which was to prevent the poor people in this constituency having a telephone service. Then it was said that I suggested a lower rate. I drew up the Report of the Committee, and in the Report it was distinctly stated that the charges were not too high. Then how can hon. Members suppose that these flat rates should be lowered?

"Not unduly high."

But we go further, we say that the rates are so cheap that we have fulfilled exactly the recommendations of the Committee. Then it was quoted against me that I put £40 as the constructive cost. I did! I based that estimate upon good evidence. I based it principally on the evidence of Mr. Benn, and upon the evidence of Sir Alfred Binney, the Chief Engineer of the London County Council, and at that time the estimate was perfectly sound. At the same time, I must make this proviso. It is utterly impossible to reckon the cost of construction at "per yard." The great element of expense is not the cost of construction but the cost paid to operators. It is the cost of manipulation rather than construction that governs the rate, and I am quite convinced that in the Post Office service we are paying for this class of labour a great deal more than we have any necessity to pay. When I was at the Treasury we were compelled to pay these operators 40 per cent. more than they were paid by the National Telephone Company, and that will necessarily make a large difference. With regard to a good many of the wages paid to operators of this kind, it is difficult for the Department to make any change, but I am quite certain that if this matter were taken up by the House, the House would insist on these men being paid on a much more businesslike footing than they are now. We have in the civil service a scale by which a man gets an increase in his pay every year, because it is assumed that every year his services become more valuable, and with regard to many kinds of work the assumption is correct, and we have actually carried out that principle in this case, putting all our telegraphists and telephonists on that scale, whereas in this respect they differ from every other servant of the State, because in the case of the telephone the operators service is no better after ten years practice than it is after they have first learned their business; but, on the contrary, is rather worse because they fall off. Well, I say I made an estimate of £40 per subscriber for constructing the service in London and I adhere to that, but that was made in 1899—three years ago—and since then we have had two very exceptional years; they have been years of war, and of course the price of labour has been very high, and the price of material has gone up; and, above all, there is a great difficulty in extending the service over London. It is a fact, as my hon. friend said, that the streets of London are more difficult to lay wires under than the streets of any other city in the world, asphalte and wood paving; being much more difficult and expensive to take up than any kind of stone, and we must know how much paving has extended in London of late years. In addition to that, we had the further fact that, in order to compete with the National Telephone Company, the work was hurried on and done by day and by night, a large amount of overtime was charged, and everybody knows under those conditions the cost of construction must be much higher. But after all, what is the result when all this is taken into consideration? The cost per subscriber is only £53 as compared with £40. Next it has been said, "Why do not you give as cheap a service as the County Council were prepared to give us, a service of £10." Well, there are many things to be considered. Take the cost of construction per subscriber according to Sir Alfred Binney. According to Sir Alfred Binney the cost of construction is £38, and the rate of unlimited service is £10. On the figures of the County Council themselves, if the rate was to be £10 on a cost of construction of £38, then £14 would be the charge on a cost of £53. That brings the cost of service to £14. But three things have to be considered. I mentioned the any of operators, but there are two other things that cannot be left out of consideration. The first is that the area with which we are dealing is five times as large as the area over which the London County Council was going to give a service, and we all know the cost of the service is proportionate to the growth of the area. The second is that the London County Council was only going to serve 10,000 subscribers, whilst the Post Office service will be supplied to a minimum of 30,000 subscribers, and it will be in co-operation with the National Telephone Company, which already has 40,000 subscribers. Of course that would account for very much more than the difference between £14 and £10, but I should like to take it in another way. We are told of the great advantages that great municipalities like Glasgow and Tunbridge Wells have got, and the great facilities they give to their subscribers. Well, I hope their example will be followed by many other municipalities when they see what they have done. But take Glasgow, and the House will see that the London service is cheaper than Glasgow. In Glasgow the cost to the first subscribers is £18 15s., and the rate is £5 5s. The cost of construction for London is three times as great as that of Glasgow, so that, if you multiplied the rate by three, you would get 15 guineas, whereas here it is £17.

In all these estimates the right hon. Gentleman is assuming only an increase of capital cost, but an increase of cost does not necessarily mean any increase in the cost of labour, and that is the chief item.

I do not quite know what the hon. Member means, but I say that the cost in London for construction is three times that in Glasgow, and the cost of the Post Office service in London is a great deal higher than anything in Glasgow. ["Not three times."] The area, too, is very much larger, and the people who pay proportionately fifteen guineas in Glasgow do not get anything like the service; they are not put in communication with anything like the same number of subscribers as those of the Post Office system in London. I now pass to another rate, to which I attach very much importance, which, I confess, I do want to see as low as possible, and which I hope in three years, when this promised inquiry takes place, it will be found possible to reduce. I attach the greatest importance to the popular service at a toll rate. It is the one I believe to be the most paying rate; it is the only fair rate. Surely the proper system, and the only system on which you can conduct a service of this kind, is one under which a man should pay according to the use he makes of the service. It has been said that I promised a £3 toll service in London. I certainly did offer an obiter dictum for which, on looking through the evidence, I cannot find any authority. Sir Wm. Preece, the representative of the Post Office, mentioned £4. But I am perfectly prepared to stand by even my own estimate of £3. If prices had not risen, if the cost of construction had not been very much higher than was anticipated, viz., one-third higher, my estimate of £3 would actually have been above the mark, because £3, considering the service has increased in cost by one-third, represents £4, and Sir Wm. Preece's £4 would now represent £5 6s. 8d. We have to recollect that even in Glasgow, with its very limited area, the toll charge is £3 10s., and, at the present moment, in 520 out of the 640 miles which constitute the London area, the rate is exactly the sum I mentioned—£4. My £3 became £4 on account of the extra cost of the service. Therefore, for the whole of London, the rate which I mentioned has actually been carried into execution, and over the whole of the London area it is considerably less than anything mentioned by the Post Office official. So that when it is said that breaches of faith have been committed, and "promises" are spoken of, I say that—although they were not promises, but mere estimates—they have been carried out almost to the letter. Not only that, but even under this toll system we are giving a service much cheaper than anything I promised. Under the party line system it is possible for a man who has only one other subscriber on a party line to get a service for £3, even after the cost of construction has been so greatly increased, while if that small tradesman, working with seven or eight other tradesmen, or even with only two or three, is content to have a party line with those others, he can actually get his service for £2, which is, I believe, a cheaper rate than is to be found on the continent of Europe. I say that these party lines are a very great advantage, that they are cheaper than anything I contemplated when I brought in the Bill, and that if the service is fairly and properly worked, as it will be through the Post Office, it should bring within the reach of all but the very humblest the advantages of the telephone service, and make its use almost as popular as the telegraphs or the penny post. Then it is said that I promised competition. It is on this point that the main charge against me is brought. What was that competition? It was of two kinds. There was general competition—competition in other places than London—the competition in municipalities, to break down the monopoly of the National Telephone Company. That was the great object of the Committee of which I was Chairman—that there should be at work all over the country other services than that of the National Telephone Company. That service was a monopoly, a dangerous monopoly, and one that had been abused, By the Bill I introduced we did start competition all over the country where the municipalities chose to take advantage of the measure, and I am glad to say that every day they are taking more advantage of it. We broke down the monopoly of the National Telephone Company, and the general competition that we promised has become an actual fact.