Chapter I: Preface

In order to keep within reasonable limits the size of this volume, the author has been obliged to reserve for a separate volume the story of the Telephone in Great Britain. The series of books promised in the Preface to the author's _Municipal Ownership in Great Britain_ will, therefore, number not four, but five.

CONTENTS

CHAPTER I
INTRODUCTION 3

Scope of the inquiry.

CHAPTER II
THE ARGUMENT FOR THE NATIONALIZATION OF THE TELEGRAPHS 13

The indictment of the telegraph companies. The argument
from foreign experience. The promise of reduced tariffs
and increased facilities. The alleged financial success of
foreign State telegraphs: Belgium, Switzerland and France. The
argument from English company experience.

CHAPTER III
THE ALLEGED BREAK-DOWN OF LAISSEZ-FAIRE 36

Early history of telegraphy in Great Britain. The adequacy of
private enterprise. Mr. Scudamore's loose use of statistics.
Mr. Scudamore's test of adequacy of facilities. Telegraphic
charges and growth of traffic in Great Britain. The alleged
wastefulness of competition. The telegraph companies' proposal.

CHAPTER IV
THE PURCHASE OF THE TELEGRAPHS 57

Upon inadequate consideration the Disraeli Ministry estimates
at $15,000,000 to $20,000,000 the cost of nationalization.
Political expediency responsible for Government's inadequate
investigation. The Government raises its estimate to
$30,000,000; adding that it could afford to pay $40,000,000
to $50,000,000. Mr. Goschen, M. P., and Mr. Leeman, M. P.,
warn the House of Commons against the Government's estimates,
which had been prepared by Mr. Scudamore. The Gladstone
Ministry, relying on Mr. Scudamore, estimates at $3,500,000
the "reversionary rights" of the railway companies, for which
rights the State ultimately paid $10,000,000 to $11,000,000.

CHAPTER V
NONE OF MR. SCUDAMORE'S FINANCIAL FORECASTS WERE REALIZED 77

The completion of the telegraph system costs $8,500,000;
Mr. Scudamore's successive estimates had been respectively
$1,000,000 and $1,500,000. Mr. Scudamore's brilliant forecast
of the increase of traffic under public ownership. Mr.
Scudamore's appalling blunder in predicting that the State
telegraphs would be self-supporting. Operating expenses on the
average exceed 92.5% of the gross earnings, in contrast to
Mr. Scudamore's estimate of 51% to 56%. The annual telegraph
deficits aggregate 26.5% of the capital invested in the plant.
The financial failure of the State telegraphs is not due to
the large price paid to the telegraph companies and railway
companies. The disillusionment of an eminent advocate of
nationalization, Mr. W. Stanley Jevons.

CHAPTER VI
THE PARTY LEADERS IGNORE THEIR FEAR OF AN ORGANIZED CIVIL
SERVICE 94

Mr. Disraeli, Chancellor of the Exchequer, opposes the
enfranchisement of the civil servants. Mr. Gladstone, Leader
of the Opposition, assents to enfranchisement, but expresses
grave apprehensions of evil results.

CHAPTER VII
THE HOUSE OF COMMONS IS RESPONSIBLE FOR THE FINANCIAL FAILURE OF
THE STATE TELEGRAPHS 99

Sir S. Northcote, Chancellor of the Exchequer in Mr.
Disraeli's Ministry of 1874 to 1880, is disillusioned. The
State telegraphs become self-supporting in 1879-80. The House
of Commons, under the leadership of Dr. Cameron, M. P., for
Glasgow, overrides the Ministry and cuts the tariff almost in
two. In 1890-91 the State telegraphs would again have become
self-supporting, had not the House of Commons, under pressure
from the civil service unions, increased wages and salaries.
The necessity of making money is the only effective incentive
to sound management.

CHAPTER VIII
THE STATE TELEGRAPHS SUBSIDIZE THE NEWSPAPER PRESS 113

Why the newspaper press demanded nationalization. Mr.
Scudamore gives the newspaper press a tariff which he deems
unprofitable. Estimates of the loss involved in transmitting
press messages, made by responsible persons in the period from
1876 to 1900. The State telegraphs subsidize betting on horse
races.