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 THE BRITISH STATE
 TELEGRAPHS




[Illustration: MacMillan Company logo]

 THE BRITISH STATE
 TELEGRAPHS

 A STUDY OF THE PROBLEM OF A LARGE BODY OF
 CIVIL SERVANTS IN A DEMOCRACY

 BY

 HUGO RICHARD MEYER

 SOMETIME ASSISTANT PROFESSOR OF POLITICAL ECONOMY IN THE
 UNIVERSITY OF CHICAGO, AUTHOR OF "GOVERNMENT
 REGULATION OF RAILWAY RATES;" "MUNICIPAL
 OWNERSHIP IN GREAT BRITAIN"

 New York

 THE MACMILLAN COMPANY

 LONDON: MACMILLAN & CO., LTD.

 1907

 _All right reserved_


 COPYRIGHT, 1907

 BY THE MACMILLAN COMPANY

 Set up and electrotyped. Published October 1907

 THE MASON-HENRY PRESS
 SYRACUSE, NEW YORK


TO MY BROTHER




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