Читать книгу The British State Telegraphs - Hugo Richard Meyer - Страница 7

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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.

Upon the foregoing evidence, taken from the experience of the State telegraphs of Belgium, Switzerland, and France, and from the experience of the telegraph companies of the United Kingdom, Mr. Scudamore reached the conclusion that in telegraphy, in the United Kingdom, private enterprise had broken down. He stated his conclusion in these words: “It is clearly shown, I think, … that the cardinal distinction between the telegraph system of the United Kingdom and the systems of Belgium and Switzerland is this: that the latter have been framed and maintained solely with a view to the accommodation of the public, whilst the former has been devised and maintained mainly with a view to the interests of shareholders, and only indirectly for the benefit of the public.” These words were intended to convey, and they did convey, the meaning that the policy of laissez-faire had broken down. That policy rests on the assumption that in the long run, and upon the whole, the public interest is conserved and promoted by the activities of the individual citizens who are seeking to promote their personal fortunes—by the activities of “the mere speculator and dividend seeker”—to employ the phrase that came into common use in 1866 to 1869, and ever since, has been made to do yeoman service.

Let us test by the evidence—of which a large part is to be found tucked away in the appendices to Mr. Scudamore’s reports—this conclusion that in telegraphy, in the United Kingdom, private enterprise had broken down, and the policy of laissez-faire had been discredited.

The first thing to note in this connection is, that in the case of telegraphy, as in the case of so many other British industries, public ownership has been a parasite. It has been unwilling to assume the risk and burden of establishing the industry, and has contented itself with purchasing “ready-made” the industry after it had been developed by private enterprise. When Mr. Ronalds attempted to interest the British Government in telegraphy, he was told “that the telegraph was of no use in times of peace, and that the semaphore in time of war answered all the required purposes.”17

In 1837, British individuals and companies began to stake their money upon the telegraph in Great Britain; and in 1854 they even carried the telegraph industry to continental Europe, notably to Belgium. In 1850 and 1851, the Governments of France, Belgium and Switzerland, profiting by the losses suffered, and the technical advances made, by British individuals and companies, appropriated, so far as their countries were concerned, the new industry.

History of British Telegraphy

The Electric and International Telegraph Company was formed in 1846, out of the reorganization of properties, that in 1837 had embarked in telegraphy in England, and in 1845 had carried the telegraph industry to Belgium.18 At this time the use of the telegraph was confined almost exclusively to railway purposes, such as train signalling. The possibility of use for commercial purposes was so little appreciated by the public, that the Electric and International Company, after purchasing, in 1846, Messrs. Cooke and Wheatstone’s inventions, was looked upon as a complete commercial failure. The shares of the company for several years were almost valueless; the chief source of revenue then being contracts obtained from railway companies for the construction and maintenance of railway telegraphs.

Between 1846 and 1851 great improvements were made in telegraphy, and the public gradually learned to use the telegraph. In 1849 the Electric and International declared its first dividend, mainly the result of the contracts with the railway companies. In November, 1851, a cable was laid between Dover and Calais; for the first time the prices of the stock exchange securities in Paris were known the same day within business hours on the London stock exchange; and the financial and trading interests became convinced of the value of the telegraph.19

The Electric and International Company began in 1846 with a capital, paid in, of $700,000, which had been increased, by the close of 1868, to $5,849,375. The company grew steadily, and in 1867 it had 10,000 miles of line, and 49,600 miles of wire. In March, 1856, when the company had a record of five years for dividends ranging from 6 to 6.5 per cent. on the capital paid in, the stock of the company was selling at 80, which showed that the investing public deemed the returns inadequate, considering the risks attaching to the business. In January, 1863, when the company had a record of three years as a 7 per cent. company, the stock still stood under par—at 99.5. In 1864 the company paid 8 per cent., in 1865 it paid 9 per cent., and in 1866 to 1868 it paid 10 per cent.20

The British and Irish Magnetic Telegraph Company was formed in 1857 by amalgamation of the Magnetic Telegraph Company, organized in 1851, and the British Telegraph Company, organized in 1852. In March, 1856, the Magnetic had a paid up capital of $1,500,000, which was worth 60 cents on the dollar; and the British Company had a paid up capital of $1,170,000, which was worth 47.5 cents on the dollar. In January, 1864, the amalgamated company was paying 4.5 per cent., and its shares were worth 62.5. In 1865 the British and Irish raised the dividend to 5 per cent.; in 1866 to 6 per cent., and in 1867 to 7.5 per cent. In 1866 the stock sold at 78 to 90; and in 1867 at 90 to 97. In 1867 the company had 4,696 miles of line, and 18,964 miles of wire.

The United Kingdom Telegraph Company was organized in 1860, and began operations in 1861. In November, 1867, its shares were worth from 25 cents to 35 cents on the dollar. At that time the company had 1,692 miles of line, and about 9,827 miles of wire.

The London District Telegraph Company, which subsequently became the London and Provincial, began business in 1860 with 52 offices in Metropolitan London. In 1862 it increased the number of its offices to 84; and at the time of its sale to the State, it had 95 offices. The company never earned operating expenses. It began by charging 8 cents for 10 words; later on it charged 12 cents for 15 words; and in 1866 it raised its charge to 24 cents.

Very little new capital was invested by the telegraph companies after 1865, because of “the very natural reluctance of the companies to extend the systems under their control so long as the proposal of the acquisition of those systems by the State was under consideration,” to use the words of Mr. Scudamore.

Adequate Results of Private Enterprise

The foregoing facts show that private enterprise was ready throughout the period beginning with 1838 to incur considerable risks in establishing the new industry of telegraphy, and in giving to the public facilities for the use of that industry. Private enterprise did not at any time adopt the policy of exploiting the public by confining itself to operations involving little or no risk, while paying well. It is true that once a company had reached the position of paying 5, 6, 7, 8, or more, per cent., it tried to maintain that position, and refrained from making extensions at such a rate as to cause a decrease in the dividend. But that fact does not warrant the charge that the companies neglected their duty to the public. Until the threat of purchase by the State arrested extensions, and the dividends rose unusually rapidly, the earnings of the companies were moderate; and finally, though the companies tried to maintain whatever rate of dividend had once been attained, the investing public never believed that even the Electric and International would maintain indefinitely the 10 per cent. rate. That is shown by the fact that until the public began to speculate on the strength of the prospect of the State paying a big price for the property of the Electric and International, the stock of that company never sold for more than 14 years’ purchase.21 Had the public believed that the 10 per cent. dividend would be maintained indefinitely, the stock would have risen to 25 years’ purchase, the price of the best railway shares.

Mr. Scudamore’s Statistics

In order to show that the people of the United Kingdom suffered from a lack of telegraphic facilities, when compared with the people of Belgium and Switzerland, Mr. Scudamore stated in his reports of 1865 and 1866, that there were: in Belgium, 17.75 miles of telegraph line to every 100 square miles; in Switzerland, 13.7; and in the United Kingdom, 11.3. He stated, also, that there were in Belgium 6.33 telegraph offices to every 100,000 people; in Switzerland, 9.9; and in the United Kingdom, 5.6.

Mr. Scudamore obtained the figures with regard to the United Kingdom from the Board of Trade returns.22 For 1865 to 1867, those returns were very incomplete; but in 1868 they became very full. Mr. Scudamore’s reports of 1865 and 1868 were not ordered, by the House of Commons, to be printed, until April, 1868, when the completed Board of Trade returns were available. But neither in the reports as laid before Parliament, nor in the testimony given before the Select Committee of Parliament in 1868, did Mr. Scudamore draw attention to the fact that the statement that the United Kingdom had only 11.3 miles of telegraph line to every 100 square miles of area, and 5.6 telegraph offices to every 100,000 people, was based on incomplete returns.

The Board of Trade return for 1868 stated that the Lancashire and Yorkshire Railway Company had 432 miles of telegraph lines and that various other companies not enumerated in 1865, had, in 1868, 3,665 miles of line. If it be assumed that in the period from 1865 to 1868 the Lancashire and the other railway companies not enumerated in 1865, increased their net at the same rate as did the three railway companies that were enumerated in 1865, namely, 11 per cent., there must have been, in 1865, not less than 3,825 miles of telegraph line of which Mr. Scudamore took no account in fixing the total mileage at 16,066 miles. If it be further assumed that one-third of the 3,825 miles in question paralleled telegraph lines of the telegraph companies, there were left out of account in 1865 by Mr. Scudamore 2,550 miles of telegraph line, the equivalent of 2.1 miles per 100 square miles of area. On the foregoing assumptions the mileage that should have been assigned to the United Kingdom in 1865 was not 11.3, but 13.4.

Considerations similar to the foregoing ones, when applied to Mr. Scudamore’s statement that there were, in 1865, 2,040 telegraph stations, show that there probably were 2,680 telegraph stations in 1865, a full allowance being made for duplication. The last named figure would have been equivalent to 8.9 telegraph offices for every 100,000 people as against 5.6 reported by Mr. Scudamore.

The foregoing corrections probably err in the direction of understating the telegraph facilities existent in the United Kingdom in 1865. These corrected results show that in the matter of telegraph line per 100 square miles of area, the United Kingdom was abreast of Switzerland in 1865, though considerably behind Belgium; and that, in the matter of telegraph offices per 100,000 people, it was almost abreast of Switzerland, and considerably in advance of Belgium.

In this connection it is helpful to note that in 1875, after the British Government had spent about $12,500,000 in rearranging and extending the telegraph lines, as against Mr. Scudamore’s estimate of 1868 that $1,500,000 would suffice for all rearrangements and extensions, the number of miles of telegraph line per 100 square miles of area was, 20 in the United Kingdom, and 27.4 in Belgium.23