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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 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.


  CHAPTER IX
  THE POST OFFICE EMPLOYEES PRESS THE HOUSE OF COMMONS FOR INCREASES
  OF WAGES AND SALARIES                                            127

     British Government's policy as to wages and salaries for
     routine work, as distinguished from work requiring a high
     order of intelligence. The Fawcett revision of wages, 1881.
     Lord Frederick Cavendish, Financial Secretary to the Treasury,
     on pressure exerted on Members of Parliament by the telegraph
     employees. Sir S. A. Blackwood, Permanent Secretary to the
     Post Office, on the Fawcett revision of 1881. Evidence as to
     civil servants' pressure on Members of Parliament presented
     to the Royal Commission on Civil Establishments, 1888. The
     Raikes revision of 1890-91; based largely on the Report of the
     Committee on the Indoor Staff, which Committee had recommended
     increases in order "to end agitation." The Earl Compton,