THE DEVELOPMENT OF THE 
 
 TELEPHONE IN EUROPE. :: :: 
 
 By 
 Herbert Laws Webb, M.I.E.E. 
 
 With an Introduction by 
 Harold Cox. 
 
 SUPPLEMENT NO. 28. 
 
 FOR 
 
 BRIEF OF ARGUMENTS 
 
 AGAINST 
 
 PUBLIC OWNERSHIP. 
 
I 
 
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Digitized by the Internet Archive 
 
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 Boston Library Consortium Member Libraries 
 
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The Development of the 
 Telephone in Europe . . 
 
 . . By . . 
 
 HERBERT LAWS WEBB, M.I.E.E. 
 
 Author of "A Practical Guide to the Testing of Insulated Wires 
 
 and Cables," '' The Telephone Handbook," " The Telephone Service 
 
 Its Past, Present and Future" etc. 
 
 WITH AN INTRODUCTION 
 
 BY 
 
 HAROLD COX, 
 
 Formerly Member for Preston. 
 
 BOSTON COLLEGE TIRRARY 
 OliES'JWU'i liiJLL, M A 88. 
 
 LONDON : 
 
 ELECTRICAL PRESS LIMITED, 
 
 37/38, STRAND, and 1, BUCKINGHAM STREET, W.C. 
 
f 
 
 <n 
 
 ARTICLES REPRINTED 
 
 FROM 
 
 " ELECTRICAL INDUSTRIES. 
 
 I 9IO. 
 
INTRODUCTION 
 
 OF all modern inventions there is none that has so 
 greatly facilitated rapid inter- communication as 
 the telephone. The writing of a letter takes time, and 
 the conveyance of the letter to its destination takes much 
 longer time. The telegraph is instantaneous so far as 
 the conveyance of the electric signal between point and 
 point is concerned, but it can only be used by expert 
 operators, and the original message must be written at 
 the dispatching end and transcribed afresh at the 
 receiving end. The telephone, on the contrary, is 
 instantaneous between individual and individual. The 
 expert operator is only required to effect the communica- 
 tion between the two individuals wishing to speak to 
 one another. The moment that has been done they can 
 talk together almost as easily as if they were in the 
 same room. There is no other means of communication 
 which confers advantages even approaching those given- 
 by the telephone. 
 
 One might, therefore, imagine that the Government 
 of a presumably intelligent country like Great Britain 
 would do all in its power to facilitate the use of this 
 important invention. In the following pages, Mr. Laws 
 Webb, who has devoted special attention to the study 
 of telephonic problems, lucidly tells the story of the 
 dealings of the Government with the telephone, and 
 shows how the public has been deprived of the full 
 benefit which it might have derived from this wonderful 
 .invention. The trouble began with the purchase of the 
 
4 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 telegraphs. In 1869, the Government decided to buy 
 up the telegraphic systems of the United Kingdom, and 
 an Act was passed which established a State monopoly 
 in electric signalling. This measure was advocated and 
 passed in the belief that the State would give a better 
 service than the private companies were giving, and 
 would, in addition, make a handsome profit for the 
 benefit of the taxpayer. It is impossible to test the 
 former assumption, because there is no means of know- 
 ing what improvements the telegraph companies would 
 have effected if they had been allowed to continue the 
 work which they had already advanced to such a high 
 state of efficiency. The second argument in favour of 
 State purchase can be more easily brought to a test. 
 It was anticipated by the advocates of State purchase 
 that the whole of the capital required to buy out the 
 companies would be paid off out of profits in some 
 fifteen years, and that the State would then be in 
 possession of a magnificent uncharged property. As a 
 matter of fact, after the first two years of State working 
 all profits ceased, and in most of the subsequent years 
 the Government has not even been able to pay interest 
 upon the original capital. In addition, the taxpayer has 
 constantly been called upon to spend large sums of 
 money on capital development, for which not a penny of 
 interest has ever been allowed. Finally, Parliament has 
 latterly had to vote, year after year, a considerable sum 
 of money to make up the deficiency in working expenses. 
 If allowance be made for unpaid interest, the net annual 
 loss on the working of the State telegraphs now exceeds 
 a million sterling. Including the original purchase 
 money of about ^10,800,000, the aggregate loss in the 
 forty years that have elapsed since the telegraphs were 
 taken over by the State exceeds ^35,000,000. As a 
 commercial venture the State purchase of telegraphs has 
 been a colossal failure. 
 
 That, however, is only one side of the loss inflicted 
 
INTRODUCTION. 5 
 
 upon the British public by the mistaken policy of 1869, 
 As soon as the Post Office had acquired the telegraphs 
 it became necessary for it to keep at arm's length any 
 possible invaders of its monopoly. The telephone was 
 not invented till four or five years later, and on its 
 appearance was treated by the officials of St. Martin's 
 le Grand as a scientific toy. The moment it became 
 evident that this toy could be used for commercial 
 purposes the Post Office applied for an injunction against 
 its use, and succeeded in the application. The result 
 was that the development of the telephone became 
 subject to the control of the Postmaster General, who, 
 for many years looked at this new invention solely as a 
 disagreeable rival to his telegraphic monopoly. The 
 companies which were licensed to work the telephone 
 were compelled to pay an exorbitant royalty of 10% 
 of their gross receipts, and it is interesting to observe 
 that down to the year before last the Postmaster General, 
 in his published accounts, treated his receipts from this 
 royalty as part of the revenue earned by him on working 
 the telegraphs. In spite of this heavy handicap, and in 
 spite of the unreasonable opposition of many local 
 authorities to the granting of underground wayleaves, 
 the telephone has made enormous progress, and the 
 National Telephone Company is able to pay regular 
 dividends on its invested capital. Next year that 
 company will cease to exist, and the whole telephone 
 system of the country will pass into the hands of the 
 Government. Unless the experience of the telegraphs 
 is totally reversed, we may expect in a few years' time 
 that the telephones, instead of yielding a substantial profit 
 to the investor, in addition to a heavy royalty paid to the 
 State, will be a cause of heavy loss to the British taxpayer. 
 Even if this loss were accompanied by some com- 
 pensating advantage to the users of the telephone it 
 would not be justified. The persons who pay taxes 
 and the persons who use telephones are not always 
 
6 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 the same people, and it is unjust that the millions of tax- 
 payers who do not make continuous use of the telephone 
 service should be compelled to pay for the convenience 
 of other persons — necessarily a minority — who do. The 
 same consideration applies, of course, to the telegraphs. 
 Only a minority of persons use the telegraph to any 
 appreciable extent, yet every telegram dispatched is 
 subsidised by the general body of taxpayers. There is, 
 moreover, no reason to believe that even with the aid 
 of the taxpayers' money the State will give a better 
 service than private companies are capable of giving 
 without State aid. In the United States, where both 
 telegraphs and telephones are entirely in the hands of 
 private enterprise, the service has reached the highest 
 state of efficiency, and under similar conditions of free- 
 dom British commercial enterprise is certainly capable 
 of attaining equally satisfactory results. 
 
 The root objection to State control of a telephonic 
 or telegraphic system, as Mr. Laws Webb so admirably 
 shows in the following pages, is that the State by its 
 organisation is ill-adapted for commercial enterprise. 
 Ministers and Parliaments necessarily look at all 
 problems from the political point of view, and no com- 
 mercial enterprise can be successfully managed if its 
 control is swayed by political influences. This con- 
 sideration applies not only to matters determined by 
 the higher authorities, such as questions of rates and 
 facilities, but also to the detailed conduct of the business. 
 For in a State undertaking every employee knows that 
 his position is controlled by political rather than by 
 commercial forces, and he therefore has not the 
 necessary motives to induce him to assist in making the 
 business a commercial success. 
 
 These general considerations are illustrated by 
 Mr. Laws Webb in detail. He shows, point by point, 
 how political control prevents commercial success, and 
 he shows how strikingly the extension of the telephone 
 
INTRODUCTION. 7 
 
 system in the United States contrasts with its relative 
 stagnation in this country and in Europe generally. 
 Such a work is peculiarly valuable at a moment when 
 the Government of Great Britain, in continuation of 
 the gigantic blunder made in 1869, proposes to make 
 an even more serious blunder, and to subject to the 
 benumbing influence of State management^ one of 
 the most marvellous inventions of the human mind, 
 
 Harold Cox. 
 London, January % 1911. 
 
ALL RIGHTS RESERVED. 
 
CONTENTS. 
 
 PAGE 
 
 Introduction ... ... ... ... ... ... 3 
 
 CHAPTER I. 
 The Rise of the Telephone ... ... ... ... 11 
 
 The rapid expansion of the Telephone in America, and its 
 slow growth in Europe. The universal need for Tele- 
 phone Service — the quickest means of communication. 
 The early history of the Telephone. The causes of 
 low telephone development in Europe. 
 
 CHAPTER II. 
 The Evolution of the Telephone Service ... ... 15 
 
 Great development and high efficiency of service attained in 
 America, under private enterprise, by efficient organisa- 
 tion and advanced technical and commercial practice. 
 The restriction of telephonic development and efficiency 
 in Europe by political control ; the repressive influence 
 of the policy of State monopoly. 
 
 CHAPTER III. 
 American and European Telephone Development 
 
 Compared ... ... ... ... ... 21 
 
 How European communities are deprived of the most rapid 
 means of communication. Wasted opportunities. Early 
 telephone work in Europe. The restrictions imposed by 
 short-sighted political authorities. 
 
 CHAPTER IV. 
 The Telephonic History of Great Britain ... ... 26 
 
 The repressive policy of the British Post Office. How the 
 existence of the State Telegraph Monopoly has resulted 
 in checking the development of the Telephone in Britian. 
 Post Office jealousy of telephonic progress. The 
 transfer of the trunk lines. 
 
 CHAPTER V. 
 The Telephonic History of Great Britian— {continued). ... 31 
 Incidents of the policy of official obstruction. The Glasgow 
 Inquiry of 1897 ; the Parliamentary Inquiry of 1898 ; the 
 Telegraph Act of 1899. The London Agreement of 1901. 
 How political schemes miscarried. Municipal competi- 
 tion in Telephony and its failure. The costly experiment 
 of the Glasgow Municipality. 
 
 CHAPTER VI. 
 The Telephonic History of Great Britain -{continued). ... 37 
 The problem of the expiry of the National Telephone Com- 
 pany's licence. The Agreement of 1905. The strangling 
 effect of the Agreement on present and future 
 telephone development. The Post Office telegraph 
 monopoly and its future telephone monopoly compared. 
 The Government's disregard of the essential characteris- 
 tics of the telephone business. 
 
IO CONTENTS. 
 
 CHAPTER VII. 
 
 PAGE 
 
 Some Reasons for Popular Prejudice Against the 
 
 Telephone ... ... ... ... ... 43 
 
 Unenterprising management in the early years of the business. 
 The direct use of the telephone by the public accentuates 
 difficulties. Telephone rates. The Education of the 
 public. General inefficiency of Government monopolies. 
 The causes of the low efficiency of the telephone service 
 in Europe. 
 
 CHAPTER VIII. 
 The Essential Features of Telephone Policy ... ... 49 
 
 Efficiency the prime requisite. Reasonable rates ensure 
 constant development. Development requires continu- 
 ous capital expenditure. British Post Office telegraph 
 and telephone finance. The present loss on the 
 telegraphs and probable future loss on the telephones. 
 The technical progress of British telephony. Reasons 
 for more rapid progress in America. A summary of the 
 development of the telephone service and of telephone 
 policy. 
 
 CHAPTER IX. 
 A Survey of Telephone Development on the Continent 
 
 of Europe ... ... ... ... ... 56 
 
 Spain, Portugal and the Near East. Switzerland. Belgium. 
 Holland. 
 
 CHAPTER X. 
 A Survey of Telephone Development on the Continent 
 
 OF EUROPE— {continued). ... ... ... 63 
 
 France and Germany. The effects of complete Government 
 monopoly. Refusal to learn from the experience of 
 others. Neglect of commercial principles and practice. 
 
 CHAPTER XI. 
 A Survey of Telephone Development on the Continent 
 
 of Europe.— (continued). ... ... ... 68 
 
 Austria-Hungary, Italy and Russia. 
 
 CHAPTER XII. 
 A Survey on Telephone Development on the Continent 
 
 of Europe— (continued). ... ... ... 73 
 
 Sweden, Denmark and Norway. The scope allowed to 
 private enterprise and the deferment of State monopoly 
 have permitted higher telephone development in the 
 Scandinavian countries than in the rest of Europe. 
 State competition with private enterprise in Stockholm. 
 Conclusion. The ineradicable defects of Government 
 monopoly. 
 
CHAPTER I. 
 
 THE RISE OF THE TELEPHONE. 
 
 The rapid expansion of the Telephone in America, 
 and its slow growth in Europe. The universal 
 need for Telephone Service— the quickest means of 
 communication. The early history of the Telephone. 
 The causes of low telephone development in Europe. 
 
 IT is now approaching thirty years since the telephone 
 service was established as a means of intercommunica- 
 tion, as the first telephone exchanges were built in the 
 early eighties in almost all the principal cities of the civilised 
 world. A statement of telephone statistics recently compiled 
 from official returns shows that at the beginning of 1910 the 
 whole of Europe contained in round figures 2,584,000 tele- 
 phones, equivalent, for the aggregate population of Europe 
 of 400,000,000, to 6*4 telephones per thousand of population. 
 In the United States there are about 24,000 telephone com- 
 panies or systems, having in round numbers a total of 
 7,000,000 telephones, equivalent, for a population of 80,000,000, 
 to over 87 telephones per thousand inhabitants. 
 
 It is well-known that there is no State monopoly in the 
 telegraph or telephone in the United States. Thus there is 
 practically " free trade " in telephony in America, and con- 
 sequently there is a large number of telephone companies 
 operating all over the country, in rural as well as in city 
 districts ; and in some of the large cities there are two 
 companies working independent services. But what is known 
 as the " Bell " system, comprising the original telephone 
 companies connected with the American Telephone and 
 Telegraph Company, the parent telephone concern of the 
 United States, contains a total of 5,142,692 telephones/ 
 scattered over the whole continent and interconnected by toll 
 lines and long distance lines so as to form a universal system 
 of telephonic intercommunication. Taking this general system 
 alone and eliminating the independent companies, which are 
 not connected with the general telephone system of the 
 
12 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 country, we find in America 64 telephones (of the type having 
 universal service) per thousand inhabitants, as against only 64 
 telephones per thousand inhabitants in the whole of Europe. 
 
 This comparison is so striking, the development of the 
 telephone in America is so greatly superior to that reached in 
 Europe, that it is a matter of serious interest to set out the 
 causes which have produced such widely different results. 
 
 The Essential Characteristics of the Telephone Service. 
 
 That telephone communication fills a universal need will 
 not be contested by any thinking man. The high develop- 
 ment of means of communication is an index of high civilisa- 
 tion, and the figures of railway, post office, and telegraph 
 traffic are customarily accepted as evidence of the commercial 
 and social activity of a country or a community. The tele- 
 phone service is the most rapid means of communication there 
 is, and it is difficult to estimate how much the efficiency of the 
 average business man is raised by the enormous facility for 
 communication placed at his disposal by a highly efficient and 
 highly developed telephonic service. In social as well as in 
 business affairs the telephone service saves time and abridges 
 distance in a manner approached by no other means of com- 
 munication. How much this is so can be realised when it is 
 considered that the work done by a telegram and reply is 
 done more effectively by telephone in about a thirtieth part 
 of the time. While many people do not realise these simple 
 facts until they are thoroughly explained and demonstrated, 
 it is fair to assume that had the general public of the principal 
 European countries had the same opportunities of availing 
 themselves of telephonic communication as have been offered 
 to the public of the United States, and had the telephone in 
 Europe been made as efficient as it has been made in America, 
 there would have been something approaching the same 
 development of the telephone in Europe as in America. 
 
 The actual telephone development in Europe is, as the 
 above figures show, only a tenth of that of the American Bell 
 system, in proportion to population, and only a fifteenth of 
 the whole telephone development of the United States. 
 Taking the European countries individually one finds that 
 there are only six which have a development of over ten 
 
THE RISE OF THE TELEPHONE. 1 3 
 
 telephones per thousand inhabitants. These are Great 
 Britain, Germany, Sweden, Switzerland, Denmark, and Nor- 
 way. France, Holland, and Belgium come a long way behind 
 the above-named countries ; and in the rest of Europe, in- 
 cluding such important countries as Russia and Austria- 
 Hungary, the development of the telephone is insignificant. 
 
 The Early History of the Telephone. 
 
 A brief sketch of the history of the telephone in Europe 
 will show the fundamental reasons why this most useful means 
 of communication has hitherto had such a stunted develop- 
 ment in the greater part of the European Continent. When 
 the telephone was first brought over from America there were 
 few, except the American enthusiasts who came over as 
 pioneers and a sprinkling of European business men, who 
 could see any commercial future in the wonderful invention 
 of Graham Bell. The scientific beauty of the invention was 
 everywhere enthusiastically acknowledged, but the practical 
 value of it was openly derided ; and the opinion that the 
 telephone was merely a scientific toy — a phrase given cur- 
 rency by telegraph officials — was very generally adopted. 
 
 Here we have an illustration, at the very beginning of the 
 history of the telephone, of one of the greatest difficulties 
 which has obstructed its development in Europe. It was 
 most naturally assumed at the beginning that the telephone 
 was an offshoot of the telegraph, and as the telegraph is 
 throughout Europe a State monopoly, it was to Government 
 telegraph officials that the telephone was first brought. 
 Government officials are not famed for being the most far- 
 sighted people, and in this case there was a pardonable touch 
 of human nature in their attitude of distrust and dislike to- 
 wards a competitor which might have in the future a serious 
 effect on the business in which they were engaged. 
 
 Although European telegraph officials at first derided the 
 possibility of the telephone being developed into a practical 
 means of general intercommunication, they were, in most 
 European countries, strongly opposed to any opportunity 
 being given for the commercial development of telephonic 
 communication. Broadly speaking, though there may have 
 been some differences of detail in different countries, the story 
 
14 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 of the beginning of the telephone in Europe was this : The 
 telephone was taken to the Government Telegraph Depart- 
 ments and offered for sale, but the Telegraph Departments 
 declined to take the risk of developing a totally new business. 
 At the same time, however, they assumed control over the 
 telephone and issued licences to companies formed to exploit 
 the new invention, these licences being generally for restricted 
 periods and surrounded by the most onerous conditions. 
 
 A little later, when practical experience had shown that 
 telephone communication was not only thoroughly practical 
 but filled a distinct public want, the jealousy of the State 
 Telegraph Departments asserted itself, and, with few excep- 
 tions, the telephone companies were absorbed by the State, 
 and the telephone became, like the telegraph, a rigid Govern- 
 ment monopoly. Thus, to-day the telephone is a State 
 monopoly in Germany, France, Austria-Hungary, Switzerland, 
 Belgium, Italy, Greece, Bulgaria, Servia, and Roumania ; and 
 it may be added that, with the exception of Germany and 
 Switzerland, the development of the telephone in all these 
 countries is extremely low. The exceptions to exclusive State 
 monopoly up to the present are Great Britain, Russia, Spain, 
 Portugal, Sweden, Norway, Denmark, and Holland, although 
 in these countries the State has assumed a very large measure 
 of control over the conduct of the telephone business, and will 
 no doubt eventually convert it into a State monopoly. 
 
 In the countries where the telephone has so far been 
 largely under commercial management the development of 
 the telephone is considerably higher than in those where for 
 a long time past it has been a State monopoly. Thus, in 
 Great Britain there are 2\ times as many telephones in pro- 
 portion to population as in France, where the telephone has 
 been a Government monopoly since 1889 ; and in the Scan- 
 dinavian countries, where private enterprise has had a large 
 measure of scope, and commercial methods have to a certain 
 extent impressed themselves even on Government Depart- 
 ments, the relative development of the telephone is very 
 largely superior to that of Belgium, France, Germany, Austria- 
 Hungary, and the remaining countries of Europe which are 
 afflicted with a State telephone monopoly. 
 
CHAPTER II. 
 
 THE EVOLUTION OF THE TELEPHONE 
 SERVICE. 
 
 Great development and high efficiency of service 
 attained in America, under private enterprise, by 
 efficient organisation and advanced technical and 
 commercial practice. The restriction of telephonic 
 development and efficiency in Europe by political 
 control ; the repressive influence of the policy of 
 State monopoly. 
 
 TO explain the reasons why the exercise of a Govern- 
 ment monopoly in the telephone and of excessive 
 Government regulation of the telephone, such as we 
 have had in this country, have so largely restricted the develop- 
 ment of the telephone service, it is necessary to describe 
 briefly the evolution of the telephone business. The evolution 
 of the telephone industry may be roughly divided into three 
 periods. First, there was an experimental period when the 
 whole business was entirely new, and when both apparatus 
 and commercial practice suitable to the conduct of the tele- 
 phone service had to be developed. Second, there came a 
 period when most of the principal difficulties involved in con- 
 structing and maintaining an efficient telephone system had 
 been conquered, and third, there came a period in which the 
 correct commercial methods of dealing with the telephone 
 service on a large scale and of giving it the greatest possible 
 development were arrived at. This is briefly the history of 
 the telephone in America, which is the only country where it 
 has been developed, or is in process of being developed, to 
 its utmost capacity. 
 
 For about ten years the service was extremely crude, and 
 the commercial practice was equally crude. Everything in a 
 totally new business had to be learned. Apparatus which 
 would work accurately and consistently had to be developed, 
 systems of line and cable construction which would satis- 
 
l6 DEVELOPMENT OE THE TELEPHONE IN EUROPE. 
 
 factorily transmit telephonic currents had to be designed, and 
 innumerable electrical and mechanical problems had to be 
 solved, largely by trial and error. During this period the 
 performance of the telephone very often failed to satisfy the 
 public ; and while the facilities for communication were so 
 great — when things worked well — as to cause a considerable 
 demand for telephone service, things so frequently worked 
 badly that the service was often abused in unqualified terms. 
 
 At the same time the commercial practice was almost as 
 crude as the technical part of the work. At the beginning 
 of the telephone exchange business it was considered that 
 a telephone was merely an instrument to be hired out for so 
 much a year, regardless of whether much or little use was 
 made of it, and the telephone and its connecting line were the 
 principal units on which the charge for service was based. 
 As in most towns only a single exchange was established, and 
 as the initial rate for service within a small radius of the 
 exchange was fixed at a high enough point to give what the 
 managers considered a safe average return, the price demanded 
 for the service was considered high by a large proportion of 
 the public and, owing to the mileage charges on long lines, 
 became actually very high in all parts of the towns far distant 
 from the central exchange, so that the telephone was con- 
 sidered a luxury, and the development in its use was propor- 
 tionately small. 
 
 This experimental period of inefficient service, relatively 
 high charges and low development, lasted in America for 
 about twelve or fifteen years after the establishment of tele- 
 phone exchanges, but by the end of that period sufficient 
 progress had been made with telephonic apparatus to insure 
 a much more rapid and reliable service, and sufficient ex- 
 perience of the commercial side of the telephone business had 
 been gained to enable a more practical tariff to be devised. 
 In the 'nineties very rapid advance was made both on the 
 technical and commercial side, and with the modifications 
 of the tariffs which brought the telephone service within reach 
 of much larger classes of the community than had hitherto 
 availed themselves of it, the ideas of telephone men as to the 
 future possibilities of the telephone became greatly enlarged 
 and an era of rapid development set in — to such an extent 
 
THE EVOLUTION OF THE TELEPHONE SERVICE. \-J 
 
 that within the past ten years the Bell system in America has 
 increased from 400,000 telephones to over 5,000,000. 
 
 The high pitch of efficiency and the high pitch of develop- 
 ment to which the telephone service has been brought in 
 America are very largely due to the spirit of organisation and 
 unity of purpose which has inspired the management of the 
 American Bell Companies. These companies, working under 
 a centralised management, have in reality been brigaded to- 
 gether as one great organisation with a single policy — the 
 technical and commercial advancement of the telephone ser- 
 vice. The impulse given to the industry by a dominating 
 policy, by uniformity of technical and commercial practice, is 
 perhaps the most effective element in producing the sound 
 and efficient development of a complicated and highly 
 specialised service. Without this centralised organisation and 
 persistent policy of improvement the advance of the telephone 
 in America could not have been so rapid or so effective as it 
 has been. 
 The Status of the Telephone in Europe. 
 
 Turning now to Europe, we find that to a large extent the 
 telephone in Europe, at least in many countries, has not 
 sensibly progressed beyond the first or experimental period ; 
 at any rate, it has not approached yet the period of high 
 efficiency of service, scientific tariffs and enlightened commer- 
 cial practice which began in American telephony from twelve 
 to fifteen years ago. 
 
 In most countries where the telephone is a rigid State 
 monopoly the telephone plant has not been brought up to 
 date, but still largely consists of apparatus of a type in use 
 fifteen or twenty years ago, and, of course, relatively inefficient. 
 The single exchange district, with relatively high rates for dis- 
 tant parts of the towns, is still the practice, the old flat rate 
 scheme of tariffs is still the practice, and the active commer- 
 cial policy of advertising the telephone service and catering to 
 the wants of all sections of the public, which has been so 
 largely the cause of the rapid development of the past ten 
 years in America, is entirely neglected. In the countries 
 where private enterprise is still largely responsible for the con- 
 duct of the telephone service, the principles which have had 
 such successful results in America have been adopted, and 
 
 J] 
 
1 8 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 this accounts to a large extent for the relatively higher 
 development of the telephone in these countries than in those 
 where a rigid State monopoly has existed since the early days 
 of the telephone. Even in these more enlightened countries, 
 however, the expansion of the telephone has been much 
 restricted by State regulation, and it has not been possible to 
 attain the same rate of increase as is shown by America. 
 
 Even when the technical work is well done and the service 
 is efficient and well maintained, and a tariff and other features 
 of commercial practice are adopted which make for sound pro- 
 gress, telephone development on a large scale must still always 
 be principally a matter of capital investment, and a free flow 
 of capital cannot be obtained for a business which is hedged 
 round by all sorts of regulations and restrictions, and is con- 
 ducted under a limited tenure. In the United Kingdom, for 
 example, a large proportion of the exchange systems are fully 
 as well equipped as those of the United States, are in fact of 
 identical type, while the tariff and general commercial practice 
 are fully as progressive as those of the American telephone 
 companies ; but the fact that the telephone company here has 
 been working under a limited licence, which terminates shortly, 
 and is to be terminated under conditions of uncertainty as 
 regards repayment of capital, has made it impossible to 
 develop the telephone system of the whole country on the 
 same broad scale as has been the policy of the American 
 telephone companies for years past. To develop efficiently a 
 city telephone system requires the constant expenditure of 
 capital years in advance of the actual requirements of the 
 moment, and it stands to reason that certainty as to the future 
 is one of the essential requirements to encourage this constant 
 flow of new capital. 
 
 Wherever the telephone business be closely investigated 
 it will be found that even when the plant is relatively efficient 
 and the organisation good, a low rate of development is prin- 
 cipally due to the lack of capital expenditure to provide 
 facilities for the constantly increasing public demand. This 
 is, of course, one of the most important causes of the low 
 development of State telephone monopolies. State telephone 
 monopolies are invariably operated as part of the Post Office 
 and telegraph departments, and as these departments through- 
 
THE EVOLUTION OF THE TELEPHONE SERVICE. 19 
 
 6 
 
 out Europe do not generally pay their way, notably the tele- 
 graph and telephone branch, capital for further development 
 of the telephone system is not easily forthcoming. Therefore, 
 in the case of a Government monopoly we have not only the 
 restricting effect of antiquated plant and technical methods 
 (and consequently inefficient service), the restricting effect of 
 a total absence of scientific tariff and of modern commercial 
 methods, but also the absolute brake on progress of lack of 
 capital for development. 
 
 It is not to be questioned that many of the engineers and 
 administrators in charge of European telephone systems are 
 enlightened telephone men, fully alive to the possibilities ot 
 wide development of the telephone service when operated on 
 commercial lines ; but their hands are tied by the routine 
 of a great Government administration and by the insuperable 
 difficulties of obtaining capital in sufficient quantity to recon- 
 struct antiquated plants and to build telephone systems on 
 the comprehensive scale required by modern ideas of the 
 telephone business. The curse which lies over the telephone 
 business throughout Europe is political control, which absorbs 
 an industry through mere jealousy of its possibilities as a 
 competitor of another State monopoly, only to throttle it and 
 to stunt its growth. 
 
 There are a few rare exceptions where the Government 
 officials who have had charge of the telephone have to a 
 certain extent realised its possibilities and developed it even 
 to a greater extent than their first love, the telegraph. This 
 is notably the case in Switzerland, which provides a brilliant 
 exception to the ordinary run of State telephone monopolies. 
 In Switzerland the telephone has been largely developed as a 
 substitute for the telegraph, and the telephone has become so 
 much more popular than the telegraph that in the past year 
 the receipts of the Swiss Administration from the telephone 
 were more than two and a half times as great as the receipts 
 from the telegraph. In Switzerland distances are relatively 
 short, and the low rates imposed on the telephone department 
 by the political authorities encourage a large short-line inter- 
 urban traffic, the telephone rate for short distances being 
 actually cheaper than the telegraph rate, though the service 
 rendered is greater and the plant used more expensive. 
 
 B 2 
 
20 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 General experience is that the telephone does not compete so 
 actively with the telegraph as the telegraph officials of most 
 countries at first feared it would. The telephone has created 
 new ways of doing business, and has created its own traffic ; 
 and telegraph and telephone traffic have grown side by side. 
 The direct competition occurs where short distances are con- 
 cerned, and is naturally favoured by artificial rates, fixed, as 
 generally occurs under Government control, without regard to 
 the real cost of conducting the business. 
 
 In Sweden, Denmark, and Norway, the political authorities 
 have had more enlightened views on the utility of telephone 
 development than have obtained in the larger European 
 countries, so that greater scope has been given to private 
 enterprise; while also it is fair to say that the Government 
 officials who have had direct charge of telephone work have 
 been more progressive in the Scandinavian countries than in 
 some other parts of Europe, so that in Scandinavia both the 
 company systems and the Government systems are better 
 developed than in the central and southern parts of Europe, 
 and the general efficiency and utility of the telephone service 
 are vastly superior. 
 
CHAPTER III. 
 
 AMERICAN AND EUROPEAN TELEPHONE 
 DEVELOPMENT COMPARED. 
 
 How European communities are deprived of the 
 most rapid means of communication. Wasted oppor- 
 tunities. Early telephone work in Europe. The 
 restrictions imposed by short-sighted political authori- 
 ties. 
 
 PERHAPS the most effective illustration of the much 
 more restricted progress made in Europe with the 
 telephone as compared with America is to show for 
 the different European countries the number of telephones 
 which would be in service if the rate of development in pro- 
 portion to population had been the same as in America. In 
 this comparison the figures relating to the Bell system will be 
 used, and not the figures of the total development of the tele- 
 phone in America, which include the statistics of the various 
 independent companies. In many cases the independent 
 telephones are duplicates of the Bell telephones, and as the 
 Bell system is a general system, giving universal service, the 
 fairest comparison is between that system and that of any 
 European country ; a comparison of the total telephone 
 development of America with the total development of every 
 European country would naturally give much more striking 
 results. 
 
 In Great Britain there were at the beginning of 1910 
 602,209 telephones in service. If the telephone system of 
 Great Britain were developed on the same scale as the Bell 
 system of America, there would now be about 2,670,000 
 telephones in service in Great Britain. 
 
 In the German Empire, including Bavaria and Wurtem- 
 bcrg, there were 940,966 telephones in service at the beginning 
 of 1910, but if the development were on the same scale as 
 that of the American Bell system there would now be 3,700,000 
 telephones in service in the German Empire. 
 
22 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 In France at the beginning of 1910 there were 211,728 
 telephones, whereas if the French telephone system were 
 developed on the same scale as the American Bell system 
 there would be over 2,500,000 telephones in service in France. 
 
 In Sweden at the beginning of 1910 there were 173,784 
 telephones in service. If the Swedish telephone system were 
 on the same scale as the American Bell system, there would 
 be 346,000 telephones in service in Sweden. Here it will be 
 noted that the difference is not so great, as, for the reasons 
 given above, the development of the telephone in Sweden is 
 exceptionally good among European countries ; the Swedish 
 results, which are relatively high for the country as a whole, 
 are somewhat aided by the very aggressive competition in 
 Stockholm between the State telephone department and the 
 Stockholm Telephone Company. These two have between 
 them 66,900 telephones in Stockholm alone, or more than a 
 third of the telephones in all Sweden. 
 
 Russia had, at the beginning of 1910, approximately 
 127,000 telephones in service. If the telephone development 
 of Russia were on the same scale as that of the American Bell 
 system, there would be more than 6,000,000 telephones in 
 Russia, instead of a little over 100,000. 
 
 Austria-Hungary had, at the beginning of 1910, 146,156 
 telephones. Telephoned to the same extent as the United 
 States, Austria- Hungary would have 2,950,000 telephones. 
 
 Switzerland, as already noted, one of the comparatively 
 well telephoned countries of Europe, had, at the beginning of 
 1910, 73,758 telephones. If, however, the telephone develop- 
 ment were on the same scale as that of the American Bell 
 system, Switzerland would have 225,000 telephones. 
 
 Denmark, another comparatively well telephoned country 
 according to European standards, had, at the beginning of 
 1910, 73,843 telephones. If the development were on the 
 same scale as that of the American Bell system there would 
 now be in Denmark 164,000 telephones 
 
 Norway, also high up in the scale for Europe, had, at the 
 beginning of 1910, 58,026 telephones, but telephoned on the 
 same scale as America, it would have 154,000 telephones. 
 
 Now we come to a group of far more backward countries, 
 and the figures will show what vast scope there is for telephone 
 
AMERICAN AND EUROPEAN DEVELOPMENT COMPARED. 23 
 
 development in several European countries having numerous 
 large towns and cities and a large industrial population. 
 
 Italy, at the beginning of 1910, had 62,266 telephones. If 
 the telephone development in Italy were on the same scale in 
 proportion to population as that of the United States, Italy 
 would have no fewer than 2,150,000 telephones. 
 
 Holland, at the beginning of 1910, had 51,421 telephones, 
 but if telephoned on the same scale as the United States, 
 would have 352,000 telephones. 
 
 Belgium, at the beginning of 19 10, had 42.540 telephones. 
 Telephoned on the same scale as the United States, Belgium 
 would have 450,000 telephones. 
 
 Spain, at the beginning of 19 10, had approximately 19,000 
 telephones. Telephoned on the same scale as the United 
 States, Spain would have about 1,800,000 telephones. 
 
 The comparison for the remaining small European 
 countries, such as Portugal, Greece, Servia, Bulgaria, and 
 Roumania, would work out in about the same proportions as 
 for Spain. Each of these countries has in proportion to popu- 
 lation about one telephone for over sixty in America. 
 
 If the whole of Europe were as well telephoned as America, 
 there would be about 25,000,000 telephones in Europe in place 
 of the 2,584,000 which actually exist. 
 
 It is quite true that in several countries of Europe the 
 nature of the population and the habits and requirements of 
 the people do not favour the rapid development of such a 
 means of communication as the telephone service, but this 
 qualification does not apply to the greater proportion of 
 European countries, and certainly it does not apply to the 
 larger and more highly civilised and industrial countries, such 
 as England, Germany, France, Russia, Austria-Hungary, 
 Belgium, Holland, and Italy. The inhabitants of most of 
 these countries would probably resent the imputation that 
 they were less highly civilised than those of America, that 
 their commerce and industry were less well organised, the 
 life of their cities and towns less active, and their general 
 capacity for taking advantage of improved means of com- 
 munication lower than that of the inhabitants of any other 
 country. And, indeed, they would be quite right, for it is an 
 axiom with all means of communication and public facilities 
 
24 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 of the kind, that the existence of the facilities creates the 
 demand. If an efficient and well-developed telephone service 
 is supplied, the inhabitants of any town or city on the face of 
 the earth will gladly use it and quickly come to rely upon it 
 in their daily life. There is little doubt that the inhabitants 
 of Rome, Madrid, Paris, or St. Petersburg, or even Constanti- 
 nople would use the telephone just as freely as those of Boston, 
 Philadelphia, or San Francisco do, if an efficient service were 
 supplied, and if the system were developed in the progressive 
 fashion typical of American telephone enterprise. 
 
 Indeed, although the peasant farmer of European countries 
 is usually supposed to be about the most conservative 
 individual on earth, it is highly probable that if the oppor- 
 tunity were put before him he would learn to use the telephone 
 almost as rapidly as the American farmer has learnt to use it 
 during recent years — so great is the value of telephonic 
 communication in rural and sparsely settled districts. It is 
 not to the lack of enterprise or of adaptability on the part of 
 the general public of European countries that the low develop- 
 ment of the telephone in Europe must be attributed, but 
 rather to the lack of enterprise and energy on the part of 
 those who have assumed control of the telephone in most 
 European countries. The field is there in every case, but in 
 most instances the tillers have stood still and let the plough 
 rust. 
 Early Telephone Work in Europe 
 
 If, then, we study the history of the telephone in the various 
 European countries, we find that with one exception the work 
 of establishing and developing telephonic communication was 
 at first taken up by commercial companies working under a 
 licence or concession from the Government. The exception 
 is Germany, where from the beginning the Imperial Post Office 
 refused to allow a telephone company to start business, but 
 arrogated to itself the right to supply telephone service to the 
 public. In Great Britain, France, Austria-Hungary, Belgium, 
 Holland, Switzerland, Russia, Denmark, Norway, and Sweden, 
 telephone companies were organised and started work in the 
 early 'eighties with the crude apparatus which was then 
 available. Even in Germany a beginning was made in 
 organising a telephone company, but the German Post Office 
 
AMERICAN AND EUROPEAN DEVELOPMENT COMPARED. 25 
 
 compensated the enterprising organisers and took over the 
 nucleus of the system before it was established as a business. 
 
 In most of the licences or concessions granted to the early 
 telephone companies the various Governments reserved the 
 right to buy out the companies at stated intervals, generally at 
 periods from five to seven years apart, and in almost all cases 
 the Government reserved to itself the privilege of building and 
 operating the trunk or long-distance lines between towns. In 
 a large proportion of cases the Government option to purchase 
 the telephone systems was exercised at a very early date, as 
 soon as it had become evident that the telephone service was a 
 practical and remunerative business, and the telephone became 
 a Government monopoly in France in 1889, in Belgium and 
 Switzerland about the same time, and in Austria and Hungary 
 a few years later. In other countries the misfortune of a 
 complete Government monopoly has not yet overtaken the 
 telephone business, but the strings of Government control have 
 been drawn tighter, and it has become increasingly difficult 
 for those telephone companies which still exist to develop their 
 business along normal lines. 
 
CHAPTER IV. 
 
 THE TELEPHONIC HISTORY OF GREAT 
 BRITAIN. 
 
 The repressive policy of the British Post Office. 
 Mow the existence of the State Telegraph Monopoly 
 has resulted in checking the development of the 
 Telephone in Britain. Post Office jealousy of tele- 
 phonic progress. The transfer of the trunk lines. 
 
 GREAT BRITAIN has had perhaps the most interest- 
 ing telephonic history of any European country, and 
 the vicissitudes of the telephone business in this 
 country well illustrate both the evils of excessive political 
 interference with a technical industry and the wonderful 
 vitality of the telephone business, which has enabled it to 
 develop on a relatively large scale in spite of continuous and 
 powerful efforts to hamper and restrict that development. 
 No sooner did the first telephone companies begin to do 
 business in England than suit was brought against them by 
 the Post Office for infringement of the Postmaster-General's 
 legal monopoly in telegraphy. 
 
 This monopoly was conferred on the Postmaster-General , 
 by the Telegraph Act of 1869, which empowered the Post 
 Office to buy up the various telegraph companies then exist- 
 ing, and to organise a Post Office telegraph service. The 
 desire for a legal monopoly in telegraphy had been expressly 
 disclaimed by the Post Office witnesses who appeared before 
 the Select Committee which examined the Telegraph Bill, 
 and the Select Committee reported against a monopoly being 
 granted, but the monopoly clause was inserted — for safety's 
 sake, no doubt — as the Bill was going through Parliament, 
 and became law. Ten years later it was used to assert 
 proprietorship over the telephone, and although the telephone 
 had not been invented until six years after the passage of the 
 Act, the definition of a telegraph was found to be so widely 
 drawn as to include the telephone or any other means of 
 sending and receiving electric signals, with or without wires. 
 
THE TELEPHONIC HISTORY OF GREAT BRITAIN. 2J 
 
 Consequently the decision went against the telephone, and an 
 arrangement was come to between the telephone companies 
 and the Postmaster-General under which the companies 
 agreed not to appeal against the decision, and the Postmaster- 
 General agreed to grant licences to the telephone companies 
 to continue their business, on certain terms. 
 
 These terms were sufficiently onerous, the licence being 
 limited to 31 years from the end of 1880, and the licencee 
 being obliged to pay the Post Office a royalty of 10 per cent, 
 of the gross receipts from the telephone exchange business. 
 At first licences were granted for certain small areas only, 
 but after some years the Postmaster-General, impelled by 
 strong criticism in Press and Parliament of the obstructive 
 attitude of the Post Office towards the telephone, changed 
 his policy, and granted licences for the whole Kingdom. 
 Later still it became the policy of the Post Office to grant no 
 further telephone licences, either for the whole country or for 
 restricted areas, until the passing of the Telegraph Act of 1899 
 gave the municipalities powers to establish telephone systems, 
 and the issue of licences to those municipalities which applied 
 for them became compulsory on the Post Office. 
 
 The relations between the Post Office and the telephone 
 companies having been settled by the licence of 1880, and the 
 Post Office having secured by the royalty clause a substantial 
 share of all future revenue from the telephone, it might have 
 been thought that the attitude of the Post Office and the 
 Government towards the telephone would have become one 
 of benevolent encouragement. But, unhappily, the Govern- 
 ment officials have never been able to regard the telephone 
 companies otherwise than as chartered infringers of the luck- 
 less telegraph monopoly of the Post Office, which, great 
 organisation as it is, has never paid its way, and to-day costs 
 the taxpayer about £1,000,000 a year to maintain. The Post 
 Office have watched the growth of the telephone with a sleep- 
 less jealousy, and all the forces of the bureaucracy — almost 
 irresistible forces, even in this free country — have been con- 
 tinuously used to harass and restrict the activities of the 
 telephone companies. 
 
 One of the most powerful hindrances to a sound telephone 
 development has been the refusal of statutory powers to the 
 
28 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 telephone companies to run their wires. In the early days 
 the telephone companies on various occasions promoted Bills 
 in Parliament to obtain these powers — which the Post Office 
 of course enjoys— but the whole influence of the Government 
 of the day was exerted against these Bills, and they naturally 
 failed to pass. Consequently the telephone companies have 
 been dependent on private wayleaves, and on private agree- 
 ments with the various local authorities which control the 
 streets, for powers to build their line plant. In some cases 
 the local authorities have pursued a policy of deliberate 
 obstruction and have refused to allow the construction of 
 modern underground systems of telephone distribution, there- 
 by hampering the development of the telephone and restrict- 
 ing the efficiency of the service — to the natural disadvantage 
 of the public. 
 
 Among the worst offenders in this respect have been the 
 London County Council and the City Corporation, which have 
 long obstructed the sound development of the telephone in 
 London by refusing to allow the telephone company to build 
 underground work. The inconsistency as well as the injustice 
 of such an attitude is evident when it is considered that the 
 moment the Post Office is empowered to build a telephone 
 service in London it takes up the streets in all directions 
 without saying with your leave, or by your leave. But the 
 municipalities naturally take their cue from the central 
 Government, and it having been the policy of the Government 
 from the first struggle with the early telephone companies 
 persistently to harass the telephone industry, many of the local 
 authorities have done their best along the same lines. 
 
 Even working under these very serious difficulties, how- 
 ever, the telephone made rapid progress in Great Britain, 
 though how much more rapid progress would have been, had 
 the conditions under which the industry was conducted been 
 as encouraging as they were discouraging, it is difficult to 
 estimate. Companies were formed to develop different sec- 
 tions of the country, and after a period of educating the 
 public in the value of the new means of communication (by 
 the simple expedient of supplying prominent business people 
 with free service for a time), the telephone service began to 
 take a firm hold on the business community. The Post 
 
THE TELEPHONIC HISTORY OF GREAT BRITAIN. 29 
 
 Office at first tried to compete with the telephone companies 
 in different places, but as a Government Department can 
 never compete successfully with a commercial concern these 
 attempts were failures, and the company systems grew while 
 those of the Post Office remained stagnant or disappeared. 
 The Post Office still maintains a few provincial telephone 
 systems, either relics of these early days of competition or 
 serving areas where there is no company service ; but, like the 
 Post Office telegraph service, these systems are conducted at 
 a substantial loss. 
 
 After some ten or twelve years of development under 
 diversified management, the various telephone interests amal- 
 gamated, between 1889 and 1892, into the National Telephone 
 Company, and numerous improvements in organisation and 
 in general methods resulted from this amalgamation. The 
 rates charged to the public were reduced in a number of 
 towns from £20 to £\o for fiat rate service, and plans were 
 made for adopting underground construction in place of over- 
 head in those towns where wayleaves for laying underground 
 cables could be obtained. About this time the expiry of the 
 original Bell telephone patent in England encouraged schemes 
 for starting competing telephone services in a few places. A 
 small company was organised in Manchester and installed a 
 crude telephone system on a very small scale, which gave ser- 
 vice for a few months and was then sold out to the established 
 company. A new telephone company on a larger scale was 
 organised by the late Duke of Marlborough to establish a 
 competing service in London, but this company also amal- 
 gamated with the National Telephone Company before begin- 
 ning active operations. 
 
 The Long-Distance Service : The Transfer of the Trunk 
 Lines. 
 
 In 1892, a fresh attack was made on the telephone business 
 by the Post Office. During the previous seven or eight years 
 the telephone companies had established trunk lines between' 
 various towns, and had built up quite a successful long-distance 
 telephone service, which was largely used by the business public. 
 The Post Office found that this long-distance telephone com- 
 munication had a certain effect on the telegraph traffic ; as the' 
 telegraph business of the Post Office had for many years been 
 
30 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 conducted at a loss, it might be considered that the Post 
 Office officials would be glad to see their telegraph traffic con- 
 tract rather than expand, and so reduce the loss ; but the 
 officials took the opposite view and raised an agitation for the 
 transfer of the trunk telephone lines to the Post Office.. An 
 agreement was eventually come to between the Post Office 
 and the National Telephone Company, involving the limita- 
 tion of the operations of the National Telephone Company to 
 certain defined areas and the transfer of all the trunk lines to the 
 Post Office. According to the view of the Telephone Com- 
 pany an important part of the understanding arrived at, 
 though not expressed in the agreement, was that the National 
 Telephone Company should be protected from competition in 
 the local service during the remainder of the licence ; but the 
 existence of this understanding was afterwards denied by 
 official witnesses at the Parliamentary Telephone Inquiry of 
 1898, and there the matter must be left. In giving up the 
 trunk lines, however, it is fairly clear that the Telephone 
 Company gave up that which would have made their position 
 in the future impregnable against any attempt at competition 
 in the local service, since for business purposes a purely local 
 telephone service — without long-distance facilities — has a 
 relatively small value. 
 
 The trunk telephone lines were finally transferred to the 
 Post Office in [896, and the Post Office adopted a new scale 
 of rates for trunk calls and put in hand the construction of a 
 number of lines to extend the trunk system to many new 
 places. Incidentally, it may be mentioned here that by mak- 
 ing rates for trunk telephone calls of 3d. for 25 miles, and 6d. for 
 50 miles, the Post Office officials introduced trunk telephone 
 rates which compete very powerfully with their own telegraph 
 rate, and in the hands of the Post Office the trunk telephone 
 service became definitely a cut-throat competitor of the tele- 
 graph service. The effect of the extremely low trunk 
 telephone charges for short distances is evident in the finan- 
 cial returns of the Post Office, which show that the average 
 value of a conversation on the trunk lines is only 5*9 pence. 
 As the minimum charge for a telegram is 6d., it is clear that 
 the trunk telephone service competes most effectively with 
 the telegraph service. 
 
CHAPTER V. 
 
 THE TELEPHONIC HISTORY OF GREAT 
 B RIT AI N— {continued). 
 
 Incidents of the policy of official obstruction. The 
 Glasgow Inquiry of 1897 ; the Parliamentary Inquiry 
 of 1898 ; the Telegraph Act of 1899. The London 
 Agreement of 1901. How political schemes miscarried. 
 Municipal competition in Telephony and its failure. 
 The costly experiment of the Glasgow Municipality. 
 
 THE opposition to the development of the telephone 
 which had been the steadfast policy in official circles 
 provoked a long-drawn-out Parliamentary Inquiry in 
 1895. Before this Select Committee the proposal to establish 
 competing municipal exchanges was exhaustively discussed, 
 and was condemned by all competent expert witnesses. 
 Owing to the dissolution of Parliament this Committee made 
 no report, but it has been stated that the draft report recom- 
 mended the purchase of the entire telephone system of the 
 country by the Government. 
 
 Municipal Telephony. 
 
 For some years past one or two of the municipalities, 
 notably that of Glasgow, had been agitating for permission to 
 establish municipal telephone systems. The persistent agita- 
 tion of the Glasgow Corporation finally resulted in the 
 Treasury Inquiry at Glasgow in 1897, to inquire into the 
 efficiency and adequacy of the telephone service supplied by 
 the National Telephone Company in Glasgow. This inquiry 
 lasted about ten days, and the desire of the Glasgow Corpora- 
 tion to establish a municipal telephone service was fully 
 ventilated. The report of the Commissioner appointed by the 
 Treasury to conduct the inquiry was entirely adverse to the 
 Glasgow Corporation and in favour of the Telephone Com- 
 pany. The Commissioner freely condemned the tactics of the 
 Corporation, and pointed out that the Company had been pre- 
 vented from improving the efficiency of its service by the 
 
32 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 refusal of the Corporation to allow the Company to put down 
 a modern underground plant in Glasgow. 
 
 This victory of common-sense over organised agitation 
 and obstruction was not permanent, however, as continued 
 agitation against the sound development of the telephone 
 resulted in a further Parliamentary Inquiry in 1898. The 
 Select Committee was presided over by the late Mr. R. W. 
 Hanbury, then Secretary to the Treasury, and the representa- 
 tive of the Post Office in the House of Commons (the then 
 Postmaster-General being the Duke of Norfolk), and the in- 
 quiry was conducted in a manner markedly hostile to the 
 telephone interests. The inquiry was a very extended one, 
 and expert witnesses both from the Post Office and from the 
 National Telephone Company were bullied and brow-beaten 
 in a manner quite unusual in Parliamentary Inquiries. The 
 result was a triumph for municipal and official obstruction, as 
 the Committee reported in favour of active competition in the 
 telephone business, and on the strength of the Committee's 
 report Mr. Hanbury introduced a Bill into Parliament which 
 became the Telegraph Act of 1899, and empowered the Post 
 Office to grant telephone licences to the municipalities, and 
 granted .£2,000,000 to the Post Office to establish a competing 
 telephone service in London. 
 
 The main object of this measure was to encourage such 
 active competition in telephony as would destroy, or at least 
 largely diminish the value of the National Telephone Com- 
 pany's undertaking against the time when the Post Office 
 would succeed to the telephone business at the expiry of the 
 original licence at the end of 191 1. In practice, however, 
 matters worked out differently. With the exception of Glas- 
 gow, where the Town Council had for several years nourished 
 a persistent agitation for the privilege of establishing a muni- 
 cipal telephone service, and of four or five other towns where 
 promoters and agitators succeeded in arousing the interest of 
 the Town Council in telephone competition, the Telegraph 
 Act of 1899 was practically disregarded by the municipalities. 
 A few obtained telephone licences from the Post Office, but 
 in the end only six municipal telephone systems were started, 
 and after a very short experience of the difficulties of the 
 telephone business, four municipalities were glad to sell their 
 
THE TELEPHONIC HISTORY OF GREAT BRITAIN. 33 
 
 systems to the Post Office and to the National Telephone 
 Company. Within six years after the passage of the Telegraph 
 Act of 1899 municipal telephony had lived and died ! 
 
 The Telephone Development of London. 
 
 With regard to the competition in London, Mr. Hanbury's 
 Act similarly miscarried. Mr. Hanbury had advocated a 
 strenuous competition between the Post Office and the 
 National Telephone Company in supplying telephone service 
 to Londoners ; but when the question was approached in a 
 practical way by practical men, the difficulties of starting a 
 new system in a great city to undermine, by means of com- 
 petitive rates, the position of a large and well-established 
 system, were considered to be too great to warrant the expen- 
 diture of public money on such a wasteful and unpractical 
 form of competition. In the end an agreement was come to 
 in 1 90 1, between the Post Office and the National Telephone 
 Company, under which the two concerns virtually agreed to 
 share the telephoning of London, to charge the same rates, 
 and to give an intercommunicating service. 
 
 When this agreement was made public, there was a great 
 hue and cry in the Press, as the politicians had planned for 
 and had promised a cut-throat competition which was to 
 annihilate the Telephone Company ; but experience has 
 proved that it was a sound and practical measure. Instead 
 of throwing away public money on a competition which 
 would certainly have been unsuccessful, and instead of in- 
 flicting on Londoners the annoyance and inconvenience of 
 two separate telephone systems, the Post Office has assisted 
 in the telephone development of London, and the expenditure 
 made on the Post Office London system has gone to increase 
 the facilities of the general telephone service, instead of being 
 spent on a separate and isolated system which would have 
 been of little practical value. 
 
 The combined systems of the National Telephone Com- 
 pany and Post Office in London now contain over 160,000 
 stations ; as far as the telephone-using public is concerned all 
 these telephones belong to one system, and so great has been 
 the increase in telephonic facilities, due to the agreement for 
 intercommunication, that it now seems ludicrous that in 1901 
 
 C 
 
34 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 the agreement should have been styled " The Telephone 
 Betrayal " by the hysterical section of the Press. If the large 
 capital expended by the Post Office in London had been 
 spent by the National Telephone Company in extending the 
 original system along uniform lines, the results would have 
 been still better and far more economical, as a certain amount 
 of duplication of plant and organisation would have been 
 avoided ; but the intercommunication agreement has been 
 fully justified both by the experience gained in London and 
 by that of Glasgow, where the opposite policy of cut-throat 
 competition was adopted by the municipality and quickly 
 ended in failure. 
 
 The value of intercommunication is also shown by the 
 case of the Hull municipal system, which is simply a small 
 annex of the National Company's Hull exchange. By the 
 threat of forcing the National Company to remove its under- 
 ground plant the Hull Town Council obtained free intercom- 
 munication, and the Hull municipal telephone system 
 virtually lives on the much larger and older-established 
 business of its neighbour. Without intercommunication it 
 would have died the death long ago, or, by a quiet political 
 deal, would have been sold to the Post Office. 
 
 The Glasgow Town Council spent over £360,000 between 
 1 90 1 and 1906 in building an opposition system to that of 
 the National Telephone Company in Glasgow, and then, 
 having got into both practical and financial difficulties, sold 
 the system to the Post Office for £305,000. The waste of 
 capital is not by any means measured by the amount lost 
 by the Glasgow Corporation, as a large amount of the plant 
 taken over by the Post Office was of such a character as to 
 require complete replacement by modern equipment, and the 
 duplication of plant at Glasgow caused by the strenuous 
 competition of four or five years was naturally on a large 
 scale. It is probable that the waste of capital through the 
 Glasgow telephone competition, due to duplication of facilities 
 and to the adoption, for the sake of cheapness, by the Glas- 
 gow Corporation of plant which was not up to the standards 
 of recognised telephone practice at the time, will amount 
 in the long run to not less than £250,000, probably to a 
 good deal more. 
 
THE TELEPHONIC HISTORY OF GREAT BRITAIN. 35 
 
 Municipal Telephone Difficulties. 
 
 The municipal telephone campaign was accompanied by 
 a great deal of noisy agitation, and as the municipalities 
 exert such powerful political influence, they first obtained full 
 scope to indulge in experiments in telephone competition, 
 and later were relieved, at the taxpayer's expense, of the 
 financial loss which those experiments involved. But the 
 municipal incursion into the telephone field had little effect 
 on the general development of the telephone in Great Britain, 
 and served only to demonstrate the wastefulness and futility 
 of competition in the telephone service. The telephone 
 service differs from other means of communication in that 
 the value of the service to each user depends on the scope 
 and uniformity of the system as a whole. Two competing 
 systems in the same district simply split the inhabitants of 
 that district into two isolated telephonic camps, so to speak. 
 
 This fundamental feature of the telephone service — that 
 its value to the user, the public, lies in the extent of the 
 facilities for general intercommunication — was ignored by the 
 promoters of municipal telephony. But the bearing of this 
 fundamental fact is that in a telephone competition the two 
 competitors engage in a life and death struggle to obtain, or 
 retain, the larger share of the public patronage, and so obtain 
 the more valuable system of the two and that which in the 
 long run must attract all important customers and become 
 the survivor. 
 
 It was in such a struggle, with a well-established and experi- 
 enced adversary, that the few municipalities which started 
 competitive telephone systems embarked, but the incapacity 
 of a municipal department to compete successfully with a well- 
 organised commercial concern made it impossible for any of 
 them to overtake the National Telephone Company or seri- 
 ously to shake its position ; the business public, not being 
 governed either by sentimental considerations or by political 
 influence, naturally clung to the system which gave the 
 greatest facilities and the most efficient service. 
 
 Therefore, within a very short period municipal telephony, 
 from which so much was expected by its political and other 
 sponsors, had shot its bolt and ceased to be a factor in the 
 active development of the telephone. Had a greater number 
 
 C2 
 
36 DEVELOPMENT OE THE TELEPHONE IN EUROPE. 
 
 of municipalities taken up the work than actually did, and had 
 the municipal telephone systems — notably that of Glasgow, 
 which was the pioneer and was generally looked to as an 
 example — been better organised and conducted more in 
 accordance with the technical requirements of the telephone 
 business, there might be a different story to tell. As it was, 
 municipal telephony in Great Britain was a failure, politically, 
 financially, and practically, and has become a mere passing 
 incident in British telephone history. 
 
CHAPTER VI. 
 
 THE TELEPHONIC HISTORY OF GREAT 
 B RIT AI N— {continued). 
 
 The problem of the expiry of the National Tele- 
 phone Company' s licence. The Agreement of 1905. 
 The strangling effect of the Agreement on present and 
 future telephone development. The Post Office tele- 
 graph monopoly and its future telephone monopoly 
 compared. The Government's disregard of the essen- 
 tial characteristics of the telephone business. 
 
 THE failure of the municipal telephone movement became 
 evident within a very few years after the passage of 
 the Telegraph Act of 1899. By 1904 it was clear that 
 effective competition on a general scale was not to be ex- 
 pected from the municipalities, and as Mr. Hanbury's sug- 
 gested active competition by the Post Office had been 
 negatived by the Post Office officials themselves, there re- 
 mained no further hope of destroying the National Telephone 
 Company's business, and it became incumbent on the poli- 
 ticians to find some solution of the problem of 191 1. 
 
 The problem is this : When the original licence was 
 drafted neither side to the transaction looked forward to the 
 time when it would expire, and no provision was made for the 
 continuance of the service after the expiry of the licence on 
 December 31st, 191 1. As matters stood, on that date the 
 Telephone Company would cease to have the right to conduct 
 the telephone business, and that was all. The politicians and 
 officials have aroused an unfriendly sentiment in Parliament 
 towards the Telephone Company, and although the great 
 majority of Members of Parliament are wholly unacquainted 
 with either the practical or the technical features of the tele- 
 phone business, and complacently ignore the deplorable 
 financial results of the Post Office telegraph monopoly, it is 
 understood that Parliament would not favour a renewal of the 
 licence, but prefers the conversion of the telephone business 
 into a Post Office monopoly. 
 
38 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 This, of course, has always been the natural desire of the 
 Post Office officials, and doubtless the transfer would have 
 taken place long ago had not the rapid expansion of the tele- 
 phone business caused the capital concerned to become so 
 quickly an imposing sum. Therefore the purchase of the 
 whole business, often contemplated, has always been post- 
 poned, in the hope of something turning up to the advantage 
 of the Post Office. The last hope was Mr. Hanbury's scheme 
 of ruthless competition, and this having signally failed, it 
 became necessary to consider in reasonable time the situation 
 which would arise after 191 1, when the whole telephone 
 service of the country would stop, unless the licence were re- 
 newed or the plant were purchased by the Post Office and 
 continued in operation. 
 
 Under the agreement of 1901 respecting the joint opera- 
 tion of the London service, the Post Office undertook to buy 
 the London plant of the National Telephone Company at the 
 end of the licence ; taking this agreement as a model, an 
 agreement was finally arrived at, in 1905, extending the scope 
 of the London agreement to the telephone plant of the whole 
 country. This agreement was referred to a Select Committee 
 which sat through the summer of 1905, and, with some modi- 
 fications, it was approved by Parliament in August of that 
 year. Strong efforts were made by the municipal politicians 
 to upset the agreement, and the proposal that the Post Office 
 should build duplicate telephone systems throughout the 
 country, so as to avoid the necessity of purchasing the 
 National Telephone Company's plant, was seriously argued 
 before the Select Committee. 
 
 It is this agreement which now governs the situation of 
 the telephone business of Great Britain, dooming it to become 
 a Government monopoly. The agreement is already exer- 
 cising a strangling effect on telephone development, and, by 
 checking plans and construction for future requirements, 
 creating a situation which will cause many difficulties in the 
 future. The governing feature of the agreement is that the 
 Post Office is to purchase the plant at its value as working 
 plant in situ, without allowance for goodwill or for past or 
 future profits. Regard is also to be had to the suitability of 
 the plant for the purposes of the telephone service of the Post 
 
THE TELEPHONIC HISTORY OF GREAT BRITAIN. 39 
 
 Office. Under these terms it is evident that the National 
 Telephone Company, which has built up a great business 
 under very difficult and discouraging conditions, and has 
 organised and developed a great public service to a high pitch 
 of scope and efficiency, is treated with discouraging harshness 
 and parsimony. The politicians and officials may be within 
 the letter of the licence and of the law in dictating such terms, 
 but such a policy towards those who have provided the capital 
 to develop a great technical industry does not encourage the 
 enterprise which is necessary for the development of new in- 
 dustries and is really the vital force of any industrial country. 
 
 The Telegraph Transfer of 1870 and the Proposed Telephone 
 Transfer Compared. 
 
 The great financial failure made by the Post Office with 
 the telegraph monopoly has always been a source of friction 
 between the Treasury and the Post Office, and doubtless the 
 political authorities were anxious that the results of the pro- 
 posed telephone transfer should be more favourable to the 
 Government than those of the purchase of the telegraph 
 systems ; so advantage was taken of the fixed termination of 
 the telephone licence to dictate the lowest possible terms for 
 the purchase of the telephone plant, and the Telephone Com- 
 pany, faced by a legal sentence of death due on a fixed date, 
 had no recourse but to accept the terms. 
 
 The conditions of the proposed telephone transfer and 
 those of the telegraph transfer of 1870 are widely different. 
 When the Post Office took over the telegraph companies tele- 
 graphy was in an early stage of development — still in its 
 experimental period — and several of the systems bought out 
 were poorly organised and equipped. Undoubtedly the tele- 
 graph companies received favourable terms — they were not 
 anxious to sell, and the Post Office officials were feverishly 
 anxious to buy and to silence opposition to the scheme for a 
 Government telegraph monopoly. But the price paid for the 
 telegraphs is not in any way the cause of the financial failure 
 of the Post Office telegraph monopoly. The Post Office has 
 never conducted the telegraph business on commercial lines ; 
 it keeps no telegraph capital account and pays no interest 
 even on the original purchase money. The telegraph capital 
 
40 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 account was closed in 1879, and the interest is paid out of the 
 Consolidated Fund, so that the original cost of the telegraphs 
 to the Post Office has no bearing whatever on current financial 
 results. The reason why the Post Office telegraphs lose 
 money is that a Government Department, subject to political 
 control, cannot conduct a technical business on commercial 
 lines. 
 
 In the case of the proposed telephone transfer we have an 
 industry which, unlike the telegraph in 1870, has long ago 
 emerged from its experimental period and has been developed 
 to a high pitch of organisation and efficiency. The principal 
 problems have all been solved ; we know what kind of plant 
 to use to give an efficient service, what tariffs to adopt to 
 secure a large development ; and the general organisation of 
 staff and the commercial management of the telephone service 
 have become highly specialised subjects. Therefore in taking 
 over the telephone system the Government will be taking 
 over a highly organised concern, working on lines that are 
 the result of experience gained from a long period of experi- 
 ment and development and conducting a thoroughly sound 
 and remunerative business. Moreover, given enterprise and 
 skill in the general management, the telephone business is 
 capable of almost indefinite expansion. This is clear from 
 the record of the telephone in America ; and it is only a ques- 
 tion of capital expenditure and administrative skill for the 
 development of the telephone in Great Britain to be increased 
 tenfold within a few years. 
 
 In view of these facts — that the telephone service is a 
 safe, profitable, and growing business, with, given adequate 
 management, a limitless future before it — the Government 
 could well afford to compensate reasonably those who have 
 risked their capital during the trying and obscure period 
 of experiment and early development. That the contrary 
 policy, of giving the minimum possible price for the plant 
 without any allowance for goodwill, has been followed in 
 framing the purchase agreement is relatively unjust, and 
 certainly illiberal ; and it is already producing results which 
 will seriously handicap both the efficiency and the develop- 
 ment of the service when it becomes a Government possession. 
 
 One of the essential features of sound telephone develop- 
 
THE TELEPHONIC HISTORY OF GREAT BRITAIN. 4 1 
 
 ment, and one of the essential requirements for high general 
 efficiency of the service, is constant provision of plant for the 
 future. It is a common mistake to regard a telephone system as 
 a plant having a fixed and limited capacity. On the contrary, 
 the telephone system of any town is (or should be) in a constant 
 state of change and growth. It is necessary to study for long 
 periods in advance what the telephonic requirements ot the 
 district will be, and to provide from time to time certain 
 sections of the plant — buildings, switchboards, conduits and 
 cables — on a scale considerably greater than the actual 
 requirements of the moment call for. Unless this is done 
 systematically there will arise congestion of the plant, lack of 
 facilities, and consequent loss of efficiency in the service. It 
 is not only to supply the wants of future subscribers that this 
 margin of spare facilities must be provided, but also to main- 
 tain the day-to-day efficiency of the service. Existing sub- 
 scribers frequently require changes in their telephone installa- 
 tions, increasing or altering their equipment, or because of 
 removal from place to place. The traffic tends constantly to 
 increase, and unless there is a certain elasticity in the plant 
 obtained by the systematic provision of spare facilities, incon- 
 venience and inefficiency are sure to result. The policy of 
 the Government towards the Telephone Company ignores this 
 important feature of telephone development, and the agree- 
 ment of 1905, by limiting the purchase terms to working plant 
 at its value as working plant, expressly discourages the con- 
 struction of plant with a large margin of spare capacity, and 
 so discourages work which is absolutely necessary for the 
 proper development of the telephone and for the maintenance 
 of a high standard of efficiency. 
 
 Under ordinary circumstances the Telephone Company 
 would now (1910) be spending capital in plant all over the 
 country, much of which would not come into use until long 
 after 191 1, and therefore would not be revenue earning 
 during the period of the licence. Under the terms of the 
 agreement the Post Office would be entitled to try, and un- 
 doubtedly would try, to buy this plant at less than its cost price ; 
 so clearly it is not business for the company to expend capital 
 on such future requirements. If the management of the tele- 
 phone system were to be continuous, or if the purchase terms 
 
42 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 had been drawn with a due regard to the real conditions of 
 the telephone business, this future plant would be constructed, 
 in accordance with regular practice, well in advance of the 
 requirements of the moment. But the harsh terms of the 
 purchase agreement necessarily put the brakes on advance 
 capital expenditure, and the normal development of the 
 telephone system all over the country undergoes a check for 
 several years. 
 
 Thus it is seen how the repressive policy of Government 
 monopoly casts its shadow before, and even long in advance 
 of its actual realisation exercises a strangling effect on a 
 business where active development and an enterprising policy 
 of providing for the future are essential factors for satisfactorily 
 meeting the requirements of the public. When the Post 
 Office succeeds to the telephone service it will succeed to a 
 congested plant, without proper facilities for expansion and 
 without proper development studies to govern plans for future 
 construction. The result will naturally be a long period of 
 embarrassment and bad service, and probably an expenditure, 
 to cope with the situation, much greater than would have been 
 involved had the situation been faced in an intelligent manner 
 beforehand and the purchase terms arranged in accordance 
 with the natural requirements of the telephone business. 
 
 It is at this point that the development of the telephone in 
 the United Kingdom stands at the moment of writing. While 
 there is yet time for some solution to be found which will 
 avert the overhanging evil of Government monopoly, it does 
 not seem likely, having regard to the apathy and prejudice 
 with which technical industrial questions are regarded in 
 political circles, that any endeavour will be made in that 
 direction. That a Government telephone monopoly, even in 
 England, will be progressive, efficient, and financially successful 
 nobody with any knowledge of the subject believes ; but, 
 equally, nobody with any knowledge of the subject believes 
 it possible to convert the political authorities to a sound view 
 of the evils of Government monopoly. 
 
CHAPTER VII. 
 
 SOME REASONS FOR POPULAR PREJUDICE 
 AGAINST THE TELEPHONE. 
 
 Unenterprising management in the early years of 
 the business. The direct use of the telephone by the 
 public accentuates difficulties. Telephone rates. 
 
 The education of the public. General inefficiency of 
 Government monopolies. The causes of the low 
 efficiency of the telephone service in Europe. 
 
 REVIEWING the history of the telephone service in 
 England, and in Europe generally, it must be candidly 
 admitted that the early telephone companies did not 
 appreciate the importance of their mission, and did not make 
 the most of their opportunities. The service was necessarily 
 bad in the early days, because the appliances were extremely 
 defective. But in America more reliable apparatus was 
 rapidly evolved, and the general organisation of the service 
 was studied and improved with greater effect than on this side 
 of the Atlantic. The European telephone companies in 
 general pursued a cautious and conservative policy, which 
 ill-accorded with the requirements of a business which in 
 America was soon found to be capable, under enterprising 
 management, of almost indefinite expansion. 
 
 Somewhat arbitrary methods of dealing with customers, 
 and a policy of extreme reticence — of avoiding the circulation 
 of any information regarding the difficulties and peculiarities 
 of the telephone business — added to the unpopularity which 
 the early telephone companies incurred. It is a curious fact 
 that telephone administrations are unpopular all the world 
 over, as far as unpopularity can be gauged from the flouts and 
 gibes of the newspapers, which are generally supposed to 
 represent public opinion. 
 
 This unpopularity partly arises, I am convinced, fromthe 
 exasperation caused by the failure of a telephone call, which 
 happens occasionally from one cause or another in the best 
 organised systems, and, being a direct personal experience of 
 
44 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 an individual, always causes a deep impression. In other 
 services a failure may occur — as for example, a lost letter- 
 unnoticed ; but the public uses the telephone personally, and 
 therefore every failure is immediately and directly felt by some 
 individual. This is a fundamental and ever-present reason 
 why the highest attainable efficiency is indispensable in the 
 telephone service ; and the failure to recognise this by 
 Government telephone administrations is the main cause of 
 general dissatisfaction with the telephone service throughout 
 Europe. 
 
 The rates charged for telephone service have also in the 
 past given rise to much public complaint. There was a 
 tendency in the early days of telephony to regard the tele- 
 phone as a luxury, and to charge for it accordingly, and 
 European telephone companies in general were slow to follow 
 the example of the American companies in adopting the 
 practical measured rate tariff, which gives low prices for small 
 users, charges each customer in proportion to service rendered 
 and has been a powerful factor in extending the development 
 of the telephone. Given all these difficulties — defective plant 
 and service, an unpractical tariff, somewhat arbitrary methods 
 of dealing with the public and a policy of extreme reticence — 
 it is not to be wondered at that the early telephone companies 
 achieved a substantial measure of unpopularity. 
 
 Of late years these methods have all been radically altered. 
 American experience has largely been availed of, and the 
 standard of equipment of the modern telephone system in 
 England is as high as that of America ; in fact, the plant 
 used is exactly similar. The tariff has been greatly revised, 
 and a system of measured rates introduced, and for a long 
 time past the National Telephone Company, by means of 
 trained commercial departments, have pursued an enlightened 
 policy of educating the public in the advantages of the tele- 
 phone service, and in its proper use. 
 
 The Evils of Government Monopoly. 
 
 If I were asked to summarise the progress of the tele- 
 phone in Europe in the past thirty years, I should say that the 
 telephone companies have learned their business, while the 
 Government telephone administrations have not. Moreover, 
 
SOME REASONS FOR POPULAR PREJUDICE. 45 
 
 it seems hopeless ever to expect Government administrations 
 really to learn the telephone business, because efficiency and 
 enterprise are the two essential features of telephone work. 
 Government officials are the first to admit that high efficiency 
 cannot be expected of the mass of Government employees, 
 owing to the permanency of their employment ; and it is 
 common knowledge that the efficiency of a Government 
 department is only about 50 per cent, of that of a well- 
 organised commercial concern. Enterprise is out of the 
 question in a Government department, especially in a Govern- 
 ment telephone department, which is merely an inferior 
 branch of the Post Office, which in turn, in most countries, is 
 a branch of some division of the great machine of State. 
 
 The whole tendency of Government methods and of the 
 routine of Government departments is to repress individual 
 initiative and to stamp out any willingness to take responsibility. 
 It is not to be imagined for a moment that the ordinary civil 
 servant, however intelligent and however scientifically accom- 
 plished he may be, can conduct a Government telephone 
 administration with the efficiency and progressiveness, or with 
 the economy, which would be required of the head of a com- 
 mercial organisation. Even if he had the will and the expert 
 knowledge to enable him to do so, he would not be allowed, 
 under Government methods, to exercise the necessary power 
 and responsibility. Therefore the fundamental characteristics 
 of Government management are all against a Government 
 telephone monopoly being either efficient or progressive, or 
 being conducted in accordance with commercial principles. 
 Linked to the unprogressive Government telegraph monopoly, 
 the telephone business, from being the highly specialised 
 industry which it really is, sinks to a mere sub-department of 
 the Government service. In this position, which it has long 
 occupied in many European States, it becomes relatively 
 stagnant, and both the real requirements of the telephone 
 service and its possibilities are unheeded and uncared for. 
 
 Apart from the fact that the Government telegraph 
 departments which have controlled the telephone have not 
 been willing — despite the wonderful development obtained in 
 America — to recognise the possibilities of telephone develop- 
 ment, they have always made the fundamental error of giving 
 
46 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 greater importance to a popular rate than to efficiency of 
 service. High efficiency is the whole story in telephony. As 
 has been said above, the public becomes temporarily a part of 
 the telephone system during every call, and feels directly and 
 resents acutely every difficulty, however small ; but there is 
 another point which insistently demands constant and ever- 
 increasing efficiency, which is that unless a telephone call can 
 be completed immediately its object and its purpose are often 
 gone, and the whole transaction becomes a failure. With a 
 written message, once written and dispatched, the sender has 
 to trust to luck whether it reaches its destination quickly or 
 slowly, mutilated or intact. But a telephone call is a spoken 
 message, and the reply is to be obtained on the spot ; the 
 speaker is waiting to speak it from the moment he reaches for 
 the telephone, and seconds seem like minutes when one is 
 waiting at the telephone ; moreover, if the seconds swell into 
 minutes, and the minutes into half-hours or hours (as happens 
 daily in every European long-distance service) the delay in 
 many cases entirely destroys the value of the call, and makes 
 it purposeless or useless. 
 
 The Causes of Telephonic Inefficiency in Europe. 
 
 It is generally admitted that a Government department 
 cannot obtain as high efficiency from its staff as a commercial 
 organisation, because the discipline and training of the staff in 
 Government employ cannot be as effective as with a com- 
 mercial concern. All the world over, Government employees 
 are wont to consider themselves superior persons, and in 
 no service do the manners and mannerisms of superior persons 
 create so much friction or so lower the general efficiency as 
 in the telephone service. But the Government telephone 
 administrations, in dealing with the long-distance service, have 
 entirely lost sight of the extreme rapidity which is the whole 
 value of telephone communication, and have made cheap rates, 
 without regard to the real financial requirements of the 
 business, and then have practically left the service to take care 
 of itself; with the result that in hardly a single European 
 country is there a long-distance telephone service worthy of 
 the name. In fairness it must be stated that this policy of 
 fixing uncommercial rates is generally due to the political 
 
SOME REASONS FOR POPULAR PREJUDICE. 47 
 
 authorities, and is often contrary to the views of their technical 
 subordinates. 
 
 In America the suburban and long-distance telephone 
 services always strike Europeans as phenomenally rapid. In 
 point of fact, the suburban service in America is almost as 
 rapid as the local service, and the delay in " getting through " 
 to points within a radius of 30 or 40 miles of the large cities is 
 always to be measured in seconds ; in the long-distance service 
 an average delay of a few minutes is the standard maintained, 
 and it is rare for a call between any two of the large cities to 
 be delayed over ten minutes. So accustomed is the American 
 public to this standard of service, that a delay of over ten 
 minutes in a call, say, from Boston to New York, or New 
 York to Philadelphia, Washington or Chicago, would give rise 
 to complaint. This is a real telephone service, and it is the 
 kind of service that the public of every country really demands, 
 because the public, in the long run, always puts efficiency first. 
 
 The Government telephone administrations, partly through 
 lack of understanding of the telephone business, partly through 
 political considerations, have put cheap rates first and efficiency 
 second. It is impossible to give a high-speed and reliable 
 long-distance telephone service at the rates currently in force 
 in Europe, and make the service pay its way, because the 
 American standard of service is only attainable by elaborate 
 organisation of plant and staff, and specially by keeping the 
 capacity of the plant in advance of the requirements of the 
 traffic. This is expensive work, the requirements of the traffic 
 being largely determined by the busiest hour of the day, and 
 the busiest hour represents a large proportion of the total 
 traffic of the 24 hours. In European telephone administrations 
 it is the general practice to let the traffic constantly over- 
 whelm the facilities, so that the usual daily condition of every 
 long-distance line is that there is a long list of people waiting 
 to use it, and some calls are delayed for hours. Even with 
 this habitual delay, the long-distance telephone service finds 
 many users, because the cheapness of the rates and the volume 
 of communication obtained in a three-minute telephone call 
 make the telephone compete favourably with the telegraph ; 
 but this does not constitute a real telephone service, and it 
 cannot be doubted that the business public would willingly 
 
48 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 pay higher rates were a standard of service maintained which 
 would enable the user always to rely on a long-distance call 
 being completed within a few minutes. 
 
 Although the long-distance telephone service is better 
 equipped in England than in most of the Continental countries, 
 the general efficiency of the service, due to defective organisa- 
 tion and lack of understanding of the real requirements of the 
 telephone service, is very inferior. With a " trunk call " in 
 Great Britain it is a pure matter of luck whether one obtains 
 a result in minutes or hours. Consequently the service is 
 not a tenth as useful to the business public as it would be if it 
 were organised and conducted according to the standards set 
 in America. 
 
 It is common knowledge among those familiar with the 
 subject that the great majority of complaints made by business 
 people in England against the telephone are due to the 
 inefficiency and unreliability of the trunk service. The Post 
 Office, in their trunk telephone business, have made the 
 common mistake of telegraph administrations of fixing too low 
 rates and leaving the service to take care of itself, or to be taken 
 care of by telegraph people, who do not as a rule understand 
 the telephone business ; the low average rate per trunk 
 telephone call in England — 5*9 pence — is clear evidence that 
 the chief public use of the trunk service is for the short 
 distances, where the price of a telephone call undercuts the 
 price of a telegram. For the average value of the call to be 
 5*9d. the great majority of calls must be 3d. and 6d. calls, 
 which are very much cheaper than sixpenny twelve-word 
 telegrams — so it is evident that the public puts up with the 
 relatively slow service for the sake of cheapness. 
 
CHAPTER VIII. 
 
 THE ESSENTIAL FEATURES OF 
 TELEPHONE POLICY. 
 
 Efficiency the prime requisite. Reasonable rates 
 ensure constant development. Development requires 
 continuous capital expenditure. British Post Office 
 telegraph and telephone finance. The present loss on 
 the telegraphs and probable future loss on the tele*- 
 phones. The technical progress of British telephony. 
 Reasons for more rapid progress in America. A 
 summary of the development of the telephone service 
 and of telephone policy. 
 
 THE essence of the telephone service is efficiency — and 
 here efficiency means rapidity combined with accuracy 
 and reliability. High efficiency is vastly more 
 important to the business public — indeed to all sections of the 
 public— than apparent cheapness, and low rates accompanied 
 by relative inefficiency are only apparently cheap. Until Gov- 
 ernment telephone administrators make this maxim their 
 guiding principle, and also succeed in sufficiently convincing 
 their high political chiefs of its soundness, so that the latter 
 shall have the courage of their convictions when defending the 
 telephone administration against agitation and political 
 pressure, there will be no hope of a Government telephone 
 service becoming the highly efficient public servant it is 
 capable of becoming. Reasonable rates, capable of yielding a 
 satisfactory return on the capital after providing adequately for 
 working expenses, are necessary for the proper development 
 of the telephone, because this development — to which no end 
 can be seen — -calls continuously for fresh capital expenditure. 
 Neither private enterprise nor Government can afford to 
 provide this constant flow of capital unless it is to be 
 remuneratively employed. 
 
 The indifference with which Parliament and public regard 
 the large annual loss on the Post Office telegraphs is altogether 
 indefensible in a business community. The hopeless condition 
 
 P 
 
50 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 of Post Office telegraph finance has led to the general adoption 
 of an unreasonable theory that the telegraph system ought to 
 be maintained by the taxpayer for the public convenience. 
 But there is no sound basis for this view, as most telegrams 
 are sent by those who can well afford to pay for them. 
 Moreover, it is a view absolutely inconsistent with the promises 
 of the Post Office when the telegraph monopoly was established, 
 which forecast great economies under Government working 
 and sufficient profits to pay off rapidly the purchase capital ; 
 and it is a view inconsistent with the general financial policy 
 of the Post Office, under which strenuous resistance is made 
 to every sacrifice of revenue demanded by reforms in postal 
 charges. To extend the unsound finance of the telegraph 
 monopoly to the telephone business and to teach the public 
 to regard the telephone as well as the telegraph as a system 
 to be maintained for the general convenience regardless of 
 commercial principles, would be a certain means of checking 
 the development of the telephone, because the large sums of 
 capital continually required would not be forthcoming if they 
 were to be unremuneratively employed. 
 
 The richest country could not afford to throw million after 
 million into a bottomless pit such as Government manage- 
 ment has made of the Post Office telegraphs. Therefore 
 commercial rates for telephone service are a necessary factor 
 in the sound development of the telephone ; and inadequate 
 study of the important question of telephone tariffs and lack 
 of conviction and courage in applying and maintaining correct 
 rates are contributory factors in the general failure of Govern- 
 ment monopolies to give the telephone service the development 
 and usefulness of which it is capable. 
 
 It should be said here that the British Post Office, thanks 
 to the discussion of their telegraph and telephone finance in 
 Parliament, have adopted a form of accounts for their telephone 
 systems which precludes the Post Office telephone work from 
 becoming such a financial bottomless pit as the telegraphs 
 have become. In the telephone accounts a capital account is 
 shown, and as the accounts are presented annually to Parlia- 
 ment and all new capital expenditure must be approved by 
 Parliament, there is little danger of telephone finance and 
 general management getting totally beyond control, as 
 
THE ESSENTIAL FEATURES OF TELEPHONE POLICY. 5 I 
 
 telegraph finance and general management did in the early 
 days of the telegraph monopoly. But these accounts show 
 very clearly how much more costly is Government manage- 
 ment than commercial management. It appears that whereas 
 the working expenses of the National Telephone Company are 
 only $&6 per cent, of the gross receipts, those of the Post 
 Office local telephone services are 73^5 per cent, of the gross 
 receipts. The Post Office accounts are favoured by the fact 
 that rates and taxes are not paid by the Post Office and rents 
 are not charged in respect of buildings occupied by telephone 
 services, whereas these charges, and doubtless others not 
 included in the Post Office accounts, have to be met by the 
 Telephone Company ; so that if a strictly accurate comparison 
 could be made the economy of commercial working would be 
 still more emphatically demonstrated. Even as they stand, 
 however, the Post Office telephone accounts are a serious 
 warning of the economic disadvantage of transferring the 
 whole telephone business of the country to Government 
 management. 
 
 The Technical Progress of British Telephony. 
 
 As regards the technical progress of telephony in Great 
 Britain, it may be said that the National Telephone Company 
 and the Post Office have for some years past been occupied in 
 transforming their plant from the old-fashioned magneto 
 system to the modern central battery system. This trans- 
 formation was effected on a general scale much earlier in 
 America, where central battery plant has been standard 
 practice for about ten years. Here again we have an 
 illustration of the evil effects of political interference and 
 obstruction on a technical industry. When the central battery 
 system was perfected, over ten years ago, the advantages it 
 gave in automatic signalling, increased accuracy and rapidity 
 of working, and more economical and stable maintenance 
 caused the existing magneto system at once to become 
 obsolete. The American telephone companies, having an 
 unlimited future before them, and having in all cases full 
 underground wayleaves, were able at once to undertake the 
 complete reconstruction of their plants, discarding the magneto 
 system and adopting uniform central battery plant. 
 
 D 2 
 
52 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 Such a wholesale reconstruction, for example, involving the 
 rebuilding of every exchange and the re-equipment of every 
 station, was carried out in New York in three years, and 
 completed in 1901. This measure naturally involved large 
 capital expenditure and heavy depreciation, since much 
 working plant was scrapped long before its natural period of 
 renewal ; but it put the telephone service on a new footing of 
 high efficiency and complete uniformity of working, and 
 therefore was a measure justified to those who were animated 
 by the single motive of sound development of the telephone 
 service and who were able to work untrammelled by external 
 influence. But the position of the National Telephone 
 Company has been very different ; the limited tenure, the 
 uncertain future of the business, the frequent changes of 
 Government telephone policy, the obstruction of the local 
 authorities with regard to underground work, have all been 
 restraining influences which rendered impossible the rapid and 
 wholesale reconstruction of plant which was so desirable, and 
 forced on the Company <' a more cautious policy of capital 
 expenditure than that followed under the freer conditions ot 
 the telephone business in America. 
 
 Consequently the technical progress of the telephone 
 service has been materially slower on this side of the Atlantic 
 than on the other, and this has naturally reacted on the 
 development of the system and on its general usefulness to the 
 public ; efficiency is the best possible advertiser, and high 
 efficiency in the telephone service is not practicable without a 
 uniform plant of modern type. If it had been possible to 
 complete at an earlier date the general reconstruction of the 
 telephone systems which is still in progress in the United 
 Kingdom, both the development of the British telephone 
 service and its usefulness to the public would have reached 
 long ago a much higher plane. 
 
 A Summary of Telephone Policy. 
 
 In the preceding sketch of the development of the telephone 
 in the United Kingdom, the general principles which govern 
 the sound development of the telephone service have been 
 referred to here and there, but in order to judge of the progress 
 made in the rest of Europe it will be as well here, before 
 
THE ESSENTIAL FEATURES OF TELEPHONE POLICY. 53 
 
 describing the telephone conditions in Continental Europe, to 
 recapitulate these general principles, as it is by them that 
 telephone progress in Europe must be measured. 
 
 The sound development of the telephone service requires a 
 combination of enlightened technical policy and enlightened 
 commercial policy. The former includes all engineering 
 matters, some of which in telephone work, notably the study 
 of telephonic transmission, are of a highly scientific nature. 
 The latter includes such questions as the adoption of correct 
 tariffs, the education of the general public in the advantages of 
 the telephone, and a constant study of the requirements of the 
 telephone-using public. The commercial policy of telephony 
 is almost as technical in its way as the engineering branch of 
 the industry and splits itself up into a variety of branches. To 
 secure rapid expansion of the telephone system, which simply 
 means to give the telephone service its greatest possible 
 usefulness to the public, it is necessary that the whole organi- 
 sation should be backed by adequate capital resources, and for 
 this flow of capital to be maintained the capital must be able 
 to earn its living. These are in brief the general principles by 
 which the development of the telephone is governed, and it is 
 by them that telephone progress in Europe must be judged. 
 
 The technical progress of telephony has been relatively 
 rapid when it is considered that when the telephone was 
 invented there were no appliances in existence by which 
 a telephone exchange service could be conducted. The 
 earliest exchanges were constructed by means of adapting to 
 the work crude appliances borrowed from the telegraph, but it 
 was necessary to devise the whole telephone exchange system 
 from the beginning. The early switchboard systems were 
 based on the use of electro-magnetic indicators for signals, 
 actuated by a magneto generator at the subscriber's instrument, 
 and this system is currently known as the " magneto system." 
 The lines were at first single wire with earth return. To over- 
 come the interference caused by induction, the single wire 
 line was later abandoned in favour of the metallic circuit ; and 
 with the introduction of metallic circuit working material 
 improvements were made in the switchboards. 
 
 A distinct step in advance was the branching switch- 
 board with self-restoring indicators ; this gave better electrical 
 
54 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 conditions and quicker operating. In 1898, or within twenty 
 years of the establishment of the first commercial telephone 
 exchanges, the central battery system of exchange working 
 was evolved, and this effected a revolution in telephone 
 exchange equipment. The central battery system abolished 
 the magneto generators and the local transmitter batteries 
 from the subscribers' stations and rendered the signalling 
 for calling and disconnection automatic operations, effected 
 simultaneously with the lifting and replacement of the 
 receiver ; this, by making the disconnection signal no longer 
 dependent on the memory of the subscriber, removed one 
 of the greatest sources of inaccuracy and inefficiency in the 
 working of the service. 
 
 The central battery system, with its central supply of 
 energy for operating signals automatically, has given rise to 
 a host of improvements making for more accurate and more 
 rapid working. This great advance in equipment has been 
 accompanied by a great improvement in traffic organisation ; 
 and this is a vital feature in telephone management, for just 
 as the efficiency of the battleship depends in the long run on 
 the efficiency of the man behind the gun, so does the efficiency 
 of the telephone system depend on the efficiency of the girl 
 behind the plug. On the selection, training and supervision 
 of telephone operators, a great amount of attention is now 
 concentrated ; and the traffic staff of a modern telephone 
 system is a highly organised body of special workers, 
 governed by the most careful instructions, checked and 
 supervised by the most minute and searching tests and 
 guided by the most elaborate statistics. 
 
 To the mind of the engineer it is perhaps a weak point in 
 the telephone system that in the long run the efficiency of the 
 entire expensive plant and elaborate organisation is dependent 
 on the young woman operator, but those who have given the 
 subject the closest study are convinced that the young woman 
 operator — that is, a human brain and set of fingers (and the 
 young woman is found to possess the best combination for 
 the purpose) — -is a necessary feature to cope with the great 
 range of selection required in the telephone service. The 
 automatic telephone exchange, of which several highly 
 ingenious varieties have been devised by different inventors, 
 
THE ESSENTIAL FEATURES OF TELEPHONE POLICY. 55 
 
 does not meet the conditions under which the telephone 
 service has to be operated to-day. The full automatic 
 exchange transfers the working of the service from the expert 
 operator, who can be trained and supervised, to the inexpert 
 member of the public who cannot be trained or supervised. 
 
 Moreover, in great city telephone systems there is such 
 an immense variety of calls made daily, many of which 
 for various reasons require special handling, that the auto- 
 matic system breaks down economically, as a large proportion 
 of the calls would in any case have to be handled by human 
 operators. It is for these reasons that the automatic exchange, 
 although technically practical and operative, has made little 
 headway and has been adopted only to a limited extent in 
 isolated systems. The present trend of technical progress is 
 in the direction of employing automatic apparatus for the 
 completion of the connection, a method which has the advan- 
 tage of retaining a simple telephone set in the hands of the 
 public, and of preserving oral communication between the 
 user and the operator. 
 
 Reverting for a moment to the commercial policy required 
 for sound telephone development, too much stress cannot be 
 laid on this factor. Good commercial policy in telephony 
 involves not only a correct rate scheme but proper education 
 of the public, so as to extend steadily the use of the telephone 
 and so as to ensure correct use of the service. The general 
 efficiency of the service is largely dependent on good com- 
 mercial organisation of the telephone administration. If 
 telephone subscribers are left to go their own way, a large 
 proportion of them will produce inefficient service for them- 
 selves and for others by misuse of their telephone equipment ; 
 and it is necessary continuously to educate subscribers so that 
 they shall both obtain themselves and give to others an 
 efficient service. The commercial policy of the telephone 
 administration thus largely influences the engineering work, 
 since the engineering work is necessarily affected by the 
 rate of development of the system and by the efficient or 
 inefficient use of the service by the public. 
 
CHAPTER IX. 
 
 A SURVEY OF TELEPHONE DEVELOPMENT 
 ON THE CONTINENT OF EUROPE. 
 
 Spain, Portugal and the Near East. Switzerland. 
 Belgium. Holland. 
 
 IN summarising the progress of the telephone in Con- 
 tinental Europe that progress has to be judged by the 
 standards and principles above referred to, and it is 
 unquestionably true that the development of the telephone 
 service, its efficiency, and its general usefulness to the public 
 are in the long run dependent on the application of the 
 principles of technical and commercial policy which the 
 experience gained in the development of the telephone in 
 America has proved to be correct. 
 
 Spain, Portugal, and the Near East. 
 
 Climatic conditions and the natural and political charac- 
 teristics of the people have assuredly their effect on the 
 development of any technical industry, and one would not 
 expect relatively backward countries like Spain, Portugal, 
 Greece, and the Balkan States to have done much with the 
 telephone ; and, as a matter of fact, those countries have done 
 practically nothing. Actual Government monopoly and 
 excessive Government restrictions have extinguished the 
 possibility of private enterprise undertaking any active 
 development. In Portugal an English company works a 
 small system in Lisbon and one in Oporto ; in Spain various 
 small French and Spanish companies and firms work, under 
 rigorous restrictions and excessive royalties, a handful of 
 small systems, of which the largest, in Barcelona, contains 
 about 3,000 stations. 
 
 In Greece, Servia, Bulgaria, and Roumania, the telephone 
 is a Government monopoly and is not developed at all. 
 Roumania, the most progressive of the Balkan countries, has 
 between 8,000 and 9,000 telephones for a population of 
 6,000,000. One or two of the exchanges in this group of 
 countries have recently been equipped with central battery 
 
A SURVEY OF DEVELOPMENT IN EUROPE. 57 
 
 switchboards, but with these exceptions the telephone plant 
 in these countries belongs entirely to the experimental period 
 of telephony, and the commercial policy is equally antiquated. 
 It is quite true that in these countries the public is not so 
 ready to take advantage of modern facilities as in the more 
 active industrial countries, but nevertheless, if private enter- 
 prise were allowed fair opportunities, the development of the 
 telephone in all of this group of countries might easily be 
 increased tenfold within a very short time. 
 
 Switzerland. 
 
 In the telephonic survey of Europe I should next take a 
 group of countries having some, although not too close a 
 resemblance in general conditions and population, namely, 
 Switzerland, Holland, and Belgium. Belgium and Holland 
 have the advantage over Switzerland in the possession of 
 great cities and in industrial wealth, but Switzerland has 
 achieved the greater telephone development, having 20 tele- 
 phones per thousand of population as against nine for 
 Holland and six for Belgium. The telephonic history of 
 Switzerland is interesting in several respects. The telephone 
 became a Government monopoly practically from the begin- 
 ning, as very little company work was done in Switzerland ; 
 but the Swiss Telegraph Department was fortunate in having 
 men at its head who took an intelligent interest in the scien- 
 tific side of telephony and realised the possibilities of the 
 telephone. 
 
 The late Dr. Wietlisbach, Chief Engineer of the Swiss 
 Telegraph Administration, was an accomplished student of 
 telephone problems, and his scientific work — unhappily cut 
 short by his early death — did much to give the telephone a 
 good start in Switzerland, and to awaken for it more sym- 
 pathetic attention from the Telegraph Administration as a 
 whole than it has received in most other Continental 
 countries. Unfortunately the telephone also attracted the 
 attention of the politicians during its early days in Switzer- 
 land, and the Swiss Parliament forced on the Telegraph 
 Administration telephone tariffs of such an unpractical 
 character as seriously to impair the earning capacity of the 
 telephone system. 
 
 In considering all European telephone tariffs it must be 
 
58 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 borne in mind that the rates originally fixed were adopted when 
 the telephone service was in its earliest stage of development, 
 and these rates were based on supplying single wire service to 
 very small groups of subscribers concentrated within a small 
 radius of the exchange. Since the number of subscribers was- 
 small the traffic was also small. With the development of 
 the telephone the circumstances have entirely changed. The 
 whole plant is much more complicated than the crude single 
 wire plants of the early days, the systems have spread out 
 over much greater areas, and the average use of the service 
 has greatly increased. The rates fixed in the early days of 
 the business are therefore no criterion by which to judge 
 telephone tariffs for the conditions of to-day. 
 
 In Switzerland the tariff was originally, as everywhere 
 else, a fiat rate tariff, but in 1889 a measured rate tariff, giving 
 800 free calls for the minimum rate, was introduced. At that 
 time there were only 9,000 subscribers in the whole of Switzer- 
 land. The effect of the measured rate tariff was to cause the 
 subscribers to cut down their use from an average of 1,310 
 calls a year to an average of 718, and a year later, when the 
 measured rate tariff was completely in force, the average 
 annual use of the service per subscriber fell to 546 calls. In 
 1896 a further drastic revision of the tariff was made and the 
 800 free calls were abolished, every call being charged for at 
 the rate of 5 centimes. The subscriber pays extremely low 
 maintenance rates, the first year of the contract the rate being 
 100 fr., the second year 70 fr., and the third and subsequent 
 years 40 fr. Although the total number of subscribers in the 
 Swiss local systems has risen from 20,000 to over 60,000 
 since this tariff was introduced, the average annual use per 
 subscriber has only risen to 610 calls a year, or an average of 
 about two a working day 
 
 The chief causes of the extremely low telephone traffic in 
 Switzerland are that there are no large cities in our sense of 
 the term, and that the Swiss are an extremely frugal people. 
 Distances are short, and the general conditions of life are 
 simple. The charge for each individual call causes under 
 these circumstances a greater check on the traffic than it 
 would in other places. It is interesting to note, as already 
 mentioned above, that the telephone has been developed in 
 
A SURVEY OF DEVELOPMENT IN EUROPE. 59 
 
 Switzerland to such an extent that the telephone traffic and 
 revenue now far exceed those of the telegraph. For the pastyear 
 the telephone revenue in Switzerland was over 8,800,000 fr., 
 as compared with 3,445,000 fr. from the telegraph ; and 
 whereas there were 1,572.000 internal telegrams there were 
 45,000,000 telephone calls, of which 8,000,000 were interurban 
 calls, so that the interurban calls alone were five times as 
 numerous as the telegrams. This is partly due to the fact that 
 the Swiss Government have made telephone rates which 
 compete with their own telegraph rates, as over 90 per cent, 
 of the interurban calls were for the short distances, where the 
 charge for a telephone call is less than that for a ten-word 
 telegram. 
 
 The rates charged for the telephone service in Switzerland 
 produce a revenue insufficient to permit the Administration to 
 adopt improved plant with great rapidity, and except those 
 of Berne and Geneva, recently converted to common battery, 
 the systems throughout Switzerland have magneto equipment, 
 and to a large extent single wire lines. The chief demand 
 upon the long distance service is for connections between 
 neighbouring places, and real long distance talking, of course, 
 does not occur in Switzerland, so that the interurban plant is 
 also comparatively simple. The fact that all the towns are 
 of small population and area enables them to be served by 
 single exchange systems, and the extremely low traffic makes 
 the working of the exchanges very simple, so that it is easy 
 to maintain a sufficiently high standard of service to satisfy 
 the very moderate requirements of the Swiss public. 
 
 Belgium. 
 
 In Belgium the telephone business was started in 1879-80 
 by companies, but only short term licences were granted and 
 almost all the company systems were taken over by the 
 Government in 1893. Since the establishment of a Govern- 
 ment monopoly the progress of the telephone in Belgium has 
 been very slow ; and as many old-fashioned features of tele- 
 phone practice, such as fiat rates, extra charges for metallic 
 circuits, and single-exchange systems with mileage charges 
 beyond a limited zone, have been retained, the utility and 
 general development of the telephone have been artificially 
 
60 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 restricted. In 1894 there were 8,500 subscribers in Belgium, 
 and by 19 10 the total has increased only to 42,540, whereas if 
 the telephone service were conducted according to modern 
 methods, Brussels or Antwerp alone would easily use as many 
 telephones as the whole country uses now. Of recent years 
 a number of local systems have been converted to common 
 battery working, and the overhead single lines have been re- 
 placed by metallic circuit cables, but these reforms have been 
 carried out very slowly, and antiquated plant has been retained 
 in service long after it had become obsolete. 
 
 As with all Government monopolies, there is a total 
 absence of commercial policy and of efforts to educate the 
 public or to accelerate the development of the system ; such 
 growth as occurs is the normal increase due to people finding 
 out for themselves that they want the telephone service. The 
 adoption of measured rates has been discussed for some years 
 in Belgium, but so far no active steps have been taken. This 
 is always one of the great difficulties of Government monopo- 
 lies — that proposals of the technical officials, who are versed 
 in the real needs of the industry, are subject to review by 
 politicians who have no expert knowledge whatever and are 
 more often influenced by " political " motives than by practical 
 and common sense reasons. It is well known that measured 
 rates make both for the development and efficiency of the 
 telephone service, but in all countries where flat rates have 
 been retained up to now there is a sufficient body of large 
 users (who consider they have a bargain in the flat rate) to 
 raise a noisy agitation against a measured rate tariff; and in 
 all countries politicians are more prone to be influenced by 
 agitation than by truthful and practical reasoning. 
 
 Holland. 
 
 In Holland the early telephone work, both local and long 
 distance, was undertaken by companies, principally by the 
 Netherlands Bell Telephone Company, which is still in 
 existence but on a much diminished scale. In later years 
 it became the policy of the Dutch Government to operate 
 the long distance service itself and to grant concessions 
 for operating the local service to companies or to the 
 municipalities. 
 
A SURVEY OF DEVELOPMENT IN EUROPE. 6 1 
 
 Holland offers an example of a feature of the history of 
 the telephone previously referred to. The early telephone 
 companies failed to realise their opportunities and did not 
 develop the business with sufficient activity and did not either 
 keep their plant up to date or adopt modern tariffs and 
 commercial policy. The result was that in the large cities 
 the concessions to the companies were cancelled at the end of 
 their original term and new concessions were granted to the 
 municipalities of Amsterdam, Rotterdam, and the Hague ; 
 the municipalities built new systems and started the tele- 
 phone business afresh, so to speak, in Amsterdam and Rotter- 
 dam in 1896, and in the Hague in 1902. 
 
 The Dutch Government has shown unusual liberality and 
 common sense in these concessions, as no royalty is exacted 
 from the telephone undertakings. Most other Governments 
 have taxed the use of the telephone heavily by exacting a 
 large contribution from the telephone undertaking in the 
 form of a stiff percentage of the gross receipts. As in the long 
 run this must be paid by the user of the service, the royalty 
 becomes a tax on telephonic communication. This was 
 apparently recognised in Holland, and no telephone royalty 
 was demanded by the Government. The concessions were 
 nevertheless surrounded by numerous regulations and restric- 
 tions, a most peculiar rule being that the area of each con- 
 cession is confined to a circle having a radius of five kilometres 
 (3-1 miles) from a point in the centre of the town. This 
 results in the telephone undertakings having to refuse service 
 to would-be subscribers situated in the outskirts of the towns. 
 
 Since the establishment of the new municipal systems the 
 development of the telephone in Holland has been more rapid 
 than previously, and the relative development is now substan- 
 tially higher than that of its nearest neighbour, Belgium, 
 being 9^3 telephones per thousand inhabitants for Holland, as 
 against &i per thousand inhabitants for Belgium. It is curious 
 to observe, however, that considerable differences of practice 
 occur in the three municipal systems of Amsterdam, Rotter- 
 dam, and the Hague in almost all respects — in technical 
 methods, in the tariffs, and in general practice — although the 
 three towns are only a short distance apart and must have a 
 constant interchange of population. This lack of uniformity 
 
62 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 in telephone practice is a serious inconvenience from the 
 public point of view, though it frequently is observed where 
 the general direction of the telephone service is not in expert 
 hands. Up to the present no measured rate tariff has been 
 introduced in Holland ; it has been strongly advocated, but 
 the semi-political control of municipal management favours 
 the retention of flat rates, which, superficially at any rate, 
 benefit the large user at the expense of the small. Of recent 
 years common battery working has been adopted in the three 
 large Dutch cities and the service has been materially 
 improved. In Rotterdam this change was made only a year 
 or so ago, and it was then found, so crudely had the original 
 magneto plant been constructed, that it was necessary entirely 
 to reconstruct the line plant, although the municipal system 
 had been at work only about ten years. 
 
 There is a steady growth of the telephone in Holland, 
 amounting to about 4,000 stations a year, or an annual 
 increase of nearly 10 per cent., but it cannot be doubted that 
 if the possibilities of the telephone were fully realised and if 
 modern commercial practice, as well as a higher standard 
 of technical practice, were adopted, a rich industrial country 
 like Holland would make a far greater use of the telephone 
 than it does at present. 
 
CHAPTER X, 
 
 A SURVEY OF TELEPHONE DEVELOPMENT 
 ON THE CONTINENT OF EUROPE -{continued). 
 
 France and Germany. The effects of complete 
 Government monopoly. Refusal to learn from the 
 experience of others. Neglect of commercial prin= 
 ciples and practice. 
 
 WE next come to the three great industrial countries 
 of Continental Europe, France, Germany, and 
 Austria-Hungary, and in each of them the telephone 
 has had a sad history, considering the enormous opportunities 
 these rich and largely populated countries, with their many 
 great cities, offer for telephone development. 
 
 In France telephony is a slough of despond. The French 
 bureaucracy, which, according to so keen an observer as Lord 
 Rosebery, is " strangling France," has effectively strangled the 
 French telephone service. The telephone was made a 
 Government monopoly in France in 1889, and twenty 
 years later it is described by most Frenchmen, and notably 
 by those who have investigated it the most closely, as a 
 national disgrace. The development is extremely low, the 
 plant is largely antiquated, or where it has been renewed its 
 efficiency is destroyed by bad organisation, the tariff is the 
 tariff of the eighties, and the commercial practice is the rigid 
 and cumbersome routine of the most bureaucratic of bureau- 
 cracies. The service, notably in Paris, which contains about a 
 third of all the telephones in France, is a by-word with all 
 Frenchmen. It is best to draw a charitable veil over the 
 deplorable state of telephony in France, because in every 
 respect telephone practice in France is the reverse of what it 
 should be. At the moment of writing this, an announcement 
 appears in the papers that the new Minister of Public Works 
 is preparing a complete scheme of reorganisation of the 
 French telephone service, which will be presented to Parlia- 
 ment next session, and it may be taken that progress with the 
 telephone in France is all in the future, as nothing short of a 
 complete reorganisation will place the telephone in France on 
 even a moderate footing of efficiency. 
 
64 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 Up to the present, France has been the most conspicuous 
 example of the evil results of Government monopoly of the 
 telephone service, because the country itself, with its many 
 great cities and its great industrial activity, offers one of the 
 finest fields in Europe, if not in the world, for the develop- 
 ment of the telephone service. If the telephone in France 
 were operated on commercial lines the present development 
 could easily be multiplied tenfold. Paris, by reason of its 
 peculiar area, and the wealth and activity of its population, 
 comes next to New York as a favourable field for the develop- 
 ment of the telephone. With a well-equipped and well- 
 organised system, operated on commercial lines, Paris might 
 easily have a system of from 200,000 to 300,000 telephones. 
 It would be difficult to calculate the financial loss which the 
 inhabitants of Paris daily suffer from the lack of adequate and 
 efficient telephonic facilities. 
 
 Germany. 
 
 In Germany the telephone has always been a Government 
 monopoly, and, as in other branches of industrial effort, the 
 German Government has encouraged the development of 
 the telephone on purely German lines without regard to the 
 experience of other countries and without relying on external 
 aid of any sort. The German Post Office has had its own 
 rate schemes and its own ideas of technical practice in 
 telephony, and has usually refused to adopt improvements 
 devised in other countries until German manufacturers have 
 been able to supply them, or imitations of them. 
 
 This tenacious adherence to purely domestic ideas and 
 methods has resulted in seriously restricting the technical pro- 
 gress of telephony in Germany, and consequently in restricting 
 the efficiency of the service. Single wire overhead line plant 
 was largely maintained in service in Germany long after 
 metallic circuit working and underground cable distribution 
 had been generally adopted in other countries. Even to-day 
 many of the German telephone systems consist largely of 
 single wire overhead plant. When underground cables were 
 introduced in some of the large cities they were constructed 
 single wire instead of metallic circuit, and numbers of cables 
 were laid in a mass in iron pipes of large section instead of 
 
A SURVEY OF DEVELOPMENT IN EUROPE. 65 
 
 each cable being laid in a separate duct, which is correctly the 
 standard practice of other countries. Technical mistakes of 
 an equally far-reaching character were made in switchboard 
 practice, and at the subscriber's end of the system a funda- 
 mental error was made in allowing subscribers themselves to 
 install extension stations of all kinds and connect them to the 
 exchange lines.' 
 
 These various errors in technical policy have naturally 
 resulted in a very low standard of efficiency in the German 
 telephone service, and have made it necessary, as modern 
 telephone practice has tardily penetrated into Germany, for 
 the Administration to reconstruct entirely the large city 
 telephone systems. It has been necessary not only to 
 substitute underground metallic circuit cables for the over- 
 head single wires, as was done in America and in England 
 many years ago, but in some cases to substitute conduit 
 systems and new metallic circuit cables for the old under- 
 ground systems of large iron pipes with their masses of single 
 wire cables. As magneto switchboards have gradually been 
 replaced by common battery switchboards it has been 
 necessary, of course, to remodel the subscribers' installations, 
 and enormous difficulties have arisen from the heterogeneous 
 collection of extension stations with which many subscribers 
 had provided themselves under the lax practice of the 
 Administration in allowing the public to attach their own 
 telephones to the exchange system. 
 
 This process of reconstruction is still in progress in the 
 large cities of Germany, and it will be many years before 
 the German telephone service is equipped with a uniform style 
 of plant, such as has for a long time existed in the United 
 States. Under these circumstances the standard of efficiency 
 of the telephone service in Germany is necessarily low, and 
 the telephone does not occupy nearly so important a place in 
 the business life of the country as it is capable of occupying. 
 
 In tariff questions and in general commercial policy the 
 practice of the German Post Office has not been notably 
 superior to its technical practice. For many years there was 
 a universal fiat rate, the same for the small village as for 
 Berlin or Hamburg. This was fixed in the early days, before 
 the growth of the telephone was foreseen, and being based 
 
 E 
 
66 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 on the crude conditions of the overhead single wire telephone 
 systems of the eighties, serving very small groups of sub- 
 scribers, it was fixed at a comparatively low price. The result 
 was that the service was very cheap in the large cities and 
 comparatively dear in the small places, and a large develop- 
 ment occurred in the cities, and, comparatively speaking, no 
 development at all in the small places. In the cities 
 the development was aided by the fact that no attention 
 was paid to providing public telephone stations, and every 
 shopkeeper and restaurant keeper was allowed to give his 
 customers free use of the telephone. A revision of the tariff 
 was made about ten years ago and a message rate tariff was 
 introduced, giving much more moderate rates for small places 
 and small users than had previously existed, and the fiat rate 
 was raised in some of the large cities. 
 
 Under this tariff considerable development took place in 
 the smaller towns throughout Germany ; but the German 
 Administration in time discovered a feature of commercial 
 telephony which has long been patent to all experienced 
 telephone men, namely, that a measured rate tariff and a 
 low flat rate tariff cannot be worked effectively side by side. 
 The inevitable result is to divide telephone users into two 
 classes, the extremely small users and people who want the 
 telephone mainly for receiving purposes, and the moderate and 
 large users. The former take the message rate and yield a 
 very small revenue, and the latter take the flat rate, because 
 it offers them a great bargain, and they do not yield a revenue 
 corresponding to their use of the service. After several years' 
 experience of the unsatisfactory results of a combined 
 message rate and flat rate tariff the German Post Office 
 finally resolved to abandon the flat rate altogether and to 
 introduce a message rate tariff throughout Germany. A Bill 
 was prepared to this effect and presented to Parliament, but 
 has aroused so much opposition from the large users of the 
 telephone service, who found themselves threatened with 
 the abolition of the great bargain they have enjoyed for so 
 many years under the flat rate, that it has not yet passed, and 
 its fate is still uncertain. 
 
 It is interesting to contrast the results of complete Govern- 
 ment monopoly of the telephone service in two such countries 
 
A SURVEY OF DEVELOPMENT IN EUROPE. 67 
 
 as France and Germany. In both countries the officials have 
 refused to avail themselves of the experience of those who 
 have most effectively developed the telephone both scientifi- 
 cally and commercially, namely, the Americans. From the 
 point of view of both American and British telephone practice 
 (the latter being largely modelled on the former) almost every 
 technical error of omission and commission has been made in 
 the telephone service of France and Germany ; but there is 
 this to be said for the German i\dministration, that from the 
 beginning they have made greater efforts to develop the tele- 
 phone and paid greater attention to its possibilities than the 
 French Administration, where the jealousy of the telegraph 
 officials and the greater natural apathy of a French Govern- 
 ment department have prevented serious and sustained efforts 
 to develop the telephone service on a broad scale. 
 
 The result of the two different policies is that the relative 
 development of the telephone in Germany in proportion to 
 population is nearly three times higher than that of France. 
 This is to some extent to be accounted for by the large num- 
 ber of private extension stations in the German systems 
 previously referred to, but even allowing for these, the Ger- 
 man telephone development is more than double that of 
 France. This superior development is chiefly due to the in- 
 troduction of measured rates in Germany, and to the much 
 larger capital provided by the German Post Office for tele- 
 phone development. In France the telephone system has 
 been starved of capital, whether through political reasons or 
 whether because, as is often publicly alleged, the French Cham- 
 ber has lost confidence in the administration of the Post Office, 
 it is not for an outside observer to determine. 
 
 In both countries the guiding principle of the telephone- 
 business — that high efficiency of service is the prime requisite 
 — has been completely lost sight of. In neither country is the 
 attention paid to telephone organisation, and especially to the 
 organisation of the traffic branch, which the subject requires. 
 As a result the efficiency of the service is naturally on a low 
 plane, and in the long distance service it is accepted as a 
 matter of course by the public that calls between important 
 towns should habitually require several hours to complete. 
 
 E2 
 
CHAPTER XI. 
 
 A SURVEY OF TELEPHONE DEVELOPMENT 
 
 ON THE CONTINENT OF EUROPE— {continued). 
 
 Austria* Hungary, Italy and Russia. 
 
 IN Austria-Hungary the development of the telephone is 
 even lower than in France, and a beginning has not yet 
 been made in the Dual Monarchy in supplying a modern 
 and well-developed telephone service. The difficulties which 
 have obstructed the telephone in Austria and Hungary, both 
 countries which offer a great field for the most rapid means of 
 communication, have been, as in other European countries, 
 those arising from political control. A beginning was made 
 by private companies, chiefly of English origin, but by 1896 
 the last of these had disappeared and the telephone service 
 had been converted into a complete Government monopoly. 
 Since then the antiquated tariffs adopted and the frequent 
 political deadlocks which arise in Austria-Hungary have pre- 
 vented any sound and rapid development of the telephone. 
 
 In Austria, for all places except Vienna, a tariff was adop- 
 ted under which the subscriber had to pay the whole cost of 
 building his line and then an annual rate for maintenance and 
 for service. This effectively checked development, and the 
 rgrowth of the systems in the various Austrian towns soon 
 .almost ceased. In Vienna, on the other hand, the flat rate 
 ^established in the early 'eighties, when the system was ex- 
 tremely small, was maintained long after it had become 
 -unprofitable ; but owing to Parliamentary deadlocks the 
 .State Telegraph Administration was unable to obtain capital 
 •with which to develop the telephone system, so that the in- 
 crease of subscribers which would naturally have occurred 
 under a low flat rate could not be dealt with, and the progress 
 of the Vienna system was extremely slow, the demand for ser- 
 vice far exceeding the available facilities. This is a situation 
 which frequently arises under Government monopolies ; the 
 telephone service is denied to a large portion of the public 
 owing to capital not being forthcoming to provide for the 
 
A SURVEY OF DEVELOPMENT IN EUROPE. 69 
 
 development of the telephone system even at a sufficient rate 
 to cope with the ordinary public demand, unstimulated by 
 any active commercial policy. 
 
 In recent years more enlightened efforts have been made to 
 develop the telephone in Austria by the adoption of graduated 
 rates and the abolition of the old practice of charging the sub- 
 scriber with the capital cost of his line. Arrangements have 
 also been made for the annual supply of a certain amount of 
 capital for new telephone construction. By these measures 
 the checks on the development of the telephone in Austria 
 have been somewhat lessened, and more rapid progress is now 
 being made ; but this is purely relative to the previous stag- 
 nation, and it will be many years before the telephone in 
 Austria reaches even a moderate degree of development. The 
 measured rate tariff proposed by the Austrian Administration 
 a few years ago was at first strenuously resisted by the Press 
 and by the section of the public which had so long enjoyed 
 bargain rates for unlimited use, but a measured rate tariff, 
 with -some modifications of the original scheme, was even- 
 tually adopted and has had a marked effect in increasing the 
 rate of development. 
 
 In technical practice the Austrian Administration has, like 
 most Government monopolies, lagged several steps behind 
 modern methods. When the Vienna system was rebuilt, a 
 little over ten years ago, the common battery system was 
 available, but was not adopted ; and although two spacious 
 new telephone buildings were constructed and a new under- 
 ground system on the drawing-in principle was laid down, the 
 magneto system of working was adhered to and the equip- 
 ment adopted for the exchanges was generally of an old- 
 fashioned type. During recent years the Austrian Adminis- 
 tration has been experimenting with the automatic telephone 
 exchange, and it is proposed that a number of small towns 
 shall be equipped with automatic apparatus, with the idea that 
 if these installations successfully meet the requirements of the 
 public the automatic system will eventually be adopted in the 
 larger cities and in Vienna itself. 
 
 Hungary has its separate telegraph Administration, and the 
 telephone branch has followed its own policy, and not imitated 
 that of Austria. Outside of Budapest there is little develop- 
 
70 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 merit of the telephone, and the development of the whole 
 country is somewhat lower than that of Austria, and only 
 slightly exceeds that of Italy, where the telephone is practi- 
 cally non-existent. In Budapest the telephone service was 
 originally started by a company, but the State purchased the 
 system after a few years and assumed the monopoly of tele- 
 phone work. The system was reconstructed in 1903, and a 
 large new telephone building put up, which is equipped with a 
 common battery plant of the best American type. The low 
 development and the slow progress of the telephone in Hun- 
 gary are principally due to lack of capital, absence of com- 
 mercial policy, and to the retention of the old flat rate tariff. 
 For many years efforts have been made by the telephone 
 officials to obtain the sanction of the Government to the adop- 
 tion of a measured rate tariff, but so far the proposal has 
 remained pigeon-holed. 
 
 Italy. 
 
 In Italy the telephone has hardly begun its career, there 
 being only 62,000 telephones among a population of 33,500,000. 
 The Italian Government has recently assumed an entire 
 monopoly of the service, and has organised a State Telephone 
 Department, separate from the Telegraph Administration — a 
 plan which might well be copied by other Government 
 monopolies, since the telephone industry undoubtedly suffers 
 greatly from being under the control of telegraph officials. 
 The telephone in Italy has its future all before it ; efforts are 
 being made to introduce modern technical practice and modern 
 rate practice, and the future will show whether the new Italian 
 State telephone department is capable of successfully develop- 
 ing the great field which undoubtedly exists for the telephone 
 service in the many large cities of Italy. 
 Russia. 
 
 Russia is the last of the great European countries where 
 the development of the telephone is extremely low, barely 
 reaching one telephone per 1,000 inhabitants. Of recent 
 years, however, very rapid progress has been made, notably 
 in the three great cities, Moscow, St. Petersburg, and Warsaw. 
 These three Russian cities offer another illustration of the 
 fact already noted, that many of the early European tele- 
 
A SURVEY OF DEVELOPMENT IN EUROPE. 7 1 
 
 phone companies failed to realise either their opportunities or 
 their responsibilities. Telephone companies were established 
 under licence from the Government in Moscow, St. Petersburg, 
 and Warsaw in the early days, but the progress made was 
 extremely slow, and as the end of the concession approached 
 it was realised in all three places that the telephone companies 
 had failed in their mission. The rates were high, the service 
 was bad, and the development low. So congested was the 
 •system in St. Petersburg, for example, that merchants were 
 willing to pay a high premium for the right to take over a 
 telephone line from a subscriber who was giving up the 
 •service. 
 
 These conditions may have arisen through onerous terms 
 •of the licences which prevented the companies from expending 
 capital for development as the expiry of the licence approached ; 
 but since such conditions existed in the late 'nineties, when the 
 possibilities of the telephone were well understood, and 
 telephone practice, both technical and commercial, had been 
 completely revolutionised, it looks as if the Russian companies 
 had really failed to realise both their opportunities and their 
 responsibilities towards the public. When the expiry of the 
 original licences approached, the Russian Government, with a 
 view to securing greater development, lower rates, and a higher 
 •efficiency of service, put up new concessions to competition, 
 the competition to hinge upon the offer of low rates and 
 of proper guarantees of an efficient service. In St. Petersburg 
 the concession was obtained by the municipality, and in 
 Moscow and Warsaw by companies organised by a group of 
 Swedish, Danish and Russian capitalists. 
 
 These new concessions were granted in 1901, and work 
 was begun in all three cities on the construction of entirely 
 modern telephone plants, the common battery system being 
 employed, with some modification in methods of operating due 
 to local ideas. In all three cities the new systems came into 
 operation between four and five years ago, and in each city 
 the number of subscribers has increased about five-fold since 
 the starting of the new services. Similar concessions were 
 granted for Riga and Odessa, and new systems were con- 
 structed in those cities. The Russian Government, while 
 hedging round these concessions with numerous restrictions 
 
72 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 and retaining the right to purchase the telephone systems at 
 the end of the licence, has adopted the broad-minded attitude 
 of encouraging the development of the telephone for the 
 benefit of the public and exacts from the concessionaires 
 a royalty of only three per cent, on the gross receipts, which 
 compares very favourably with the high royalties exacted by 
 some other Governments. 
 
 The long-distance service in Russia remains in the hands 
 of the Government, and is very undeveloped, Moscow and 
 St. Petersburg being practically the only great cities connected 
 by long-distance telephone lines. The distances between 
 cities in Russia are very great, and the maintenance of long 
 distance lines is admittedly very difficult, as the sparsely 
 inhabited character of the country is very favourable to the 
 operations of copper wire thieves ; the lines between Moscow 
 and St. Petersburg are interrupted with great frequency from 
 this cause. 
 
CHAPTER XII. 
 
 A SURVEY OF TELEPHONE DEVELOPMENT 
 ON THE CONTINENT OF EUROPE— (continued). 
 
 Sweden, Denmark and Norway. The scope allowed 
 to private enterprise and the deferment of State 
 monopoly have permitted higher telephone develop* 
 ment in the Scandinavian countries than in the rest of 
 Europe. State competition with private enterprise in 
 Stockholm. Conclusion. The ineradicable defects of 
 Government monopoly. 
 
 IT is in the Scandinavian countries that the telephone has 
 had the freest and most rapid development in Europe, 
 as already shown by the statistics given relating to 
 Sweden, Denmark and Norway. This special position of 
 the telephone in the three small Northern countries of 
 Europe is due to several causes, the principal being, perhaps, 
 that in those countries the Government had no legal monopoly 
 in the telegraph, and therefore was unable to exercise the 
 same amount of repressive control over private telephone 
 enterprise at the beginning as was exercised in less fortunate 
 lands. Private enterprise had freer scope than elsewhere, 
 notably in Sweden and Denmark, and the telephone became 
 well-established and its value thoroughly appreciated by the 
 public before new legislation was enacted to increase the 
 slender measure of control which the Government Telegraph 
 Administration at first possessed. 
 
 Sweden, Denmark and Norway have not been complete 
 exceptions to the usual story of political interference and 
 unsympathetic control which have so grievously restricted the 
 progress of the telephone throughout Europe, and the ten- 
 dency now in all three countries is either for the State to 
 obtain an actual monopoly, or so completely to regulate the 
 operations of the remaining telephone companies as to cause 
 them to become virtually State-managed concerns. In 
 Sweden the State now has a monopoly outside of Stockholm, 
 in Norway the State has acquired the company systems in 
 
74 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 the principal towns and is acquiring others, and in Denmark 
 the State, while leaving the active management still to the 
 ■companies, dictates rates and regulations to such an extent 
 that the companies have to adapt their policy to the exactions 
 of the Government rather than to the requirements of the 
 telephone business and of the public. 
 
 The comparative freedom from political control enjoyed 
 by the telephone in Scandinavia in the beginning enabled 
 many telephone companies, both large and small, to be started 
 in all three countries, and the telephone seems to have 
 u caught on " at once. Doubtless the simplicity and directness 
 of telephonic communication appealed to such a practical 
 people as the Scandinavians, while the relative scarcity of 
 other means of communication, and the general conditions, 
 such as small town areas, absence of other electrical construc- 
 tion and the cheapness of labour and material, were all factors 
 favourable to rapid telephone development. The rates for 
 telephone service in Scandinavia have always been cheap, 
 and necessarily so, since the value of money there is high, and 
 everything else is cheap when judged by English or American 
 standards. 
 
 Many of the early Scandinavian telephone companies were 
 small co-operative companies, in which the users were the 
 principal shareholders. Numerous co-operative companies 
 still exist in Norway and Denmark, but in Sweden they have 
 all been absorbed either by the State telephone system or its 
 great rival, the Stockholm Telephone Company. In the 
 co-operative systems it has been usual for the subscribers to 
 build and equip their own lines, generally using, for the sake 
 of cheapness, iron wire and second-hand instruments, and to 
 pay a small annual rate for exchange service and maintenance. 
 In this way an extremely cheap telephone service has been 
 obtained ; the benefits of telephonic communication have 
 been extended even to the most rural and sparsely settled 
 parts, and the " telephone habit " has entered into the life 
 of the Scandinavian peoples to an extent unapproached in 
 other Continental countries. 
 
 To a very large extent, however, Stockholm has set the 
 pace in matters telephonic for the whole of Scandinavia ; and 
 Stockholm owes its conspicuous place in the world of tele- 
 
A SURVEY OF DEVELOPMENT IN EUROPE. 75 
 
 phony to the unbounded enthusiasm and the organisi ng 
 genius of the late Henry Cedergren, whose early death 
 those who knew him are still lamenting. Mr. Cedergren 
 founded the Stockholm General Telephone Company in 
 1882, and remained at its head until his death, which occurred 
 in the spring of 1909. He was a telephone man of great 
 enterprise and foresight, and of unlimited energy, and after 
 having taken up telephone work he lived entirely for telephone 
 work. He periodically visited America, and constantly im- 
 ported into Sweden American telephone methods, and under 
 his management Stockholm has become the best telephoned 
 city of Europe. Had he been allowed free scope, Mr. Ceder- 
 gren would have developed the telephone throughout Sweden 
 in the same active and enlightened manner, but the State 
 Telegraph Department, jealous for ihe telegraph revenue, 
 •opposed his plans for building long distance lines, and obtained 
 from Parliament powers and money to enable this work to be 
 •done by the Telegraph Administration. 
 
 The Telegraph Administration has since gradually ac- 
 quired all the local telephone systems in Sweden except that 
 of the Stockholm General Telephone Company, and has 
 restricted the area of that Company to a circular district 
 having a radius of 42 miles from Stockholm. Within this 
 area there is strenuous competition between the State system, 
 started in 1889, and the Company, but the latter has by far, 
 the best of the struggle, as the subscribers to the Company 
 system outnumber those of the State system by more than 
 three to one. The State Telegraph Administration has 
 conducted a cut-throat competition, as it supplies service in 
 Stockholm at an admittedly artificial rate — a rate lower than 
 that which it charges in other smaller towns in Sweden — 
 but notwithstanding this the Company maintains its pre- 
 ponderating position and steadily obtains the larger share of 
 the new business. This active competition, which has now 
 lasted for twenty years, has of course greatly stimulated the 
 development of the telephone in Stockholm, and the extra- 
 ordinary prevalence of the telephone there strikes every 
 traveller as a distinct feature of that very attractive city. 
 Not only has one two telephones — one of each system — in 
 one's hotel bedroom, but one sees telephones literally every- 
 
j6 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 where, even down to the open-air refreshment stalls in public 
 squares and gardens, and the trestle-benches in the fish 
 market, which are in use for only a few hours each morning. 
 
 While the Stockholm competition has undoubtedly to a 
 certain extent produced an artificial development of the 
 telephone there — artificial for various reasons, but from the 
 public point of view because every business man would prefer 
 one uniform and well-developed system to two separate ones 
 —the high standard of service maintained by the Stockholm 
 General Telephone Company, its enlightened technical and 
 commercial policy and its thorough organisation, have set a 
 high standard of telephone work which is reflected throughout 
 Scandinavia and has had its effect even on the telephone 
 work of the various State Telegraph Administrations, which 
 is noticeably better organised and equipped than that of other 
 Continental countries. 
 Conclusion. 
 
 Whatever the reader's feeling may be, one cannot write 
 even this brief and imperfect sketch of the history of the 
 telephone in Europe without such a survey of wasted oppor- 
 tunities causing a sensation of the most poignant regret. It 
 has been my lot to observe at frequent intervals during the 
 past fifteen years the working of the telephone service in all 
 its aspects in every European country, and I have even spent 
 some time in arguing over " the telephone question " with the 
 high political authorities of a country where there is at present 
 no telephone service. All my observations and all my studies 
 of the subject, during a continuous connection with telephony 
 in America and in Europe, which now extends to over twenty 
 years, or two-thirds of the whole life of commercial telephony, 
 lead irresistibly to the one conclusion — that Government 
 monopoly has strangled the telephone in Europe, checked its 
 development, restrained its efficiency, limited its usefulness to 
 the people. Like the Angel of Death, to paraphrase John 
 Bright's famous speech on the Crimean war, the Government 
 telegraph monopoly has overshadowed telephone progress 
 throughout the length and breadth of Europe, and killed or 
 maimed every effort made to give the telephone the wide- 
 spread usefulness to the people of which we know it to be 
 capable. 
 
A SURVEY OF DEVELOPMENT IN EUROPE. JJ 
 
 To compute the loss which the peoples of Europe have 
 suffered, and still daily suffer, through being deprived of the 
 highest possible development of the most rapid means of 
 communication, would be impossible ; it is an immense, 
 incalculable loss, just as the gain in saving of time and 
 friction which the community blessed with an efficient and 
 highly-developed telephone service enjoys is immense and 
 incalculable. 
 
 From .the experience of America we know that an efficient 
 telephone service, in which the greatest possible rapidity and 
 certainty of communication over both short and long dis- 
 tances is made the governing principle, is capable of almost 
 indefinite expansion — so deeply does this instantaneous 
 means of communication enter into both business and social 
 life. It may be asked — Why should not similar results, 
 similar efficiency, and similar development be obtained under 
 Government management ? The best answer is the results 
 of Government management in Europe during the past thirty 
 years. The history of the telephone in Europe clearly shows 
 that the " vested interest " of the Governments in the tele- 
 graphs has been allowed to check the natural advance of the 
 telephone — the progress of the fittest has been artificially 
 restrained. The growth of the brilliant and healthy youngster 
 has been warped and stunted from mistaken regard for the 
 less capable and less efficient elder brother. . 
 
 Even if under Government ownership the management of 
 the telephone were entirely separated from that of the tele- 
 graph, so as to eliminate this repressive influence, those who 
 are familiar with the conduct of great Government depart- 
 ments, always necessarily subject to political control and ■ 
 political influence, would be the last to claim that a Govern- 
 ment department can be an efficient substitute for private 
 enterprise in the conduct of an industry where high efficiency, 
 enterprising commercial policy, advanced technical policy, 
 and sound and economical financial management are prime 
 requisites for success. These are all the very antitheses of 
 accepted Government methods ; and, above all, the outstand- 
 ing fact that under State management there is no man 
 responsible for financial success or otherwise is sufficient 
 always to prevent really successful and efficient working of a 
 
78 DEVELOPMENT OF THE TELEPHONE IN EUROPE. 
 
 commercial enterprise by Government management, financial 1 
 soundness in the end governs the whole thing — organisation, 
 efficiency, commercial and technical policy — and the differ- 
 ence between the Government official and the business man 
 is that the former need only produce accounts while the latter 
 must produce the money. In the world of affairs, of iron and 
 steel, brass and copper, steam and electricity, machinery, 
 organisation and effort, it is not love that makes the world go 
 round, but money. 
 
EVER5HED - 
 SPECIALITIES 
 
 For Telephone Men. 
 
 EVERSHED'S DUCTER for measurement of low resistances. Range 
 .ocooi to 5 ohms. A most remarkable novelty, completing 
 the Evershed seiies of instruments for rapid measurement 
 of any resistance by skilled or unskilled persons. 
 
 EVERSHED'S BRIDGE-MEGGER for measurement of resistances 
 from . i ohm to 40 megohms. Result in 15 seconds. The 
 only instrument of its kind used by the G.PO., the 
 National Telephone Co., and all Government Departments 
 in all parts of the world. 
 
 EVERSHED'S MEGGERS for insulation tests. In use all over the 
 world. The only instrument fitted with constant pressure 
 generator. Ranges up to 2000 megohms. Pressures to 
 
 icoo volts. 
 
 EVERSHED'S THERMOBIT supersedes all the older types of solder- 
 ing iron. Never b eaks down. Always at the right heat : 
 never burns the solder. Always ready for use in the most 
 awkward places. Nothing handier for telephone men has 
 ever been produced, and it is quite cheap. 
 
 CATALOGUES RELATING TO ANY OF THE ABOVE WILL 
 BE SENT FREE BY THE SOLE MAKERS. 
 
 Evershed & Vignoles, Ld., 
 
 ACTON LANG WORKS, CHISWICK, 
 LONDON, W., ENGLAND. 
 
 Or any of their Agents : 
 
 J. G. Biddle, 1114, Chestnut Street, Philadelphia, U.S.A. 
 Vandeleur & Nichols, 5, Dineen Building, Toronto, Canada. 
 H. Rowe and Co., 309, Collins Street, Melbourne, Victoria. 
 Buxton & Cassini, Suipacha 602, Buenos Aires, Argentina. 
 
Electrical Press Ltd., 
 
 37, 38, Strand, London, W.C., England. 
 
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 Post Free. 
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Antwerp Telephone & Electrical Works, 
 
 ANTWERP. 
 
 . . Manufacturers and Installers of . . 
 
 TELEPHONIC APPARATUS, 
 
 CENTRAL BATTERY AND MACNETO 
 
 TELEPHONE 
 
 SWITCHBOARDS & INSTRUMENTS 
 
 OF EVERY DESCRIPTION. 
 
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