Editorial: The Nationalisation of Cables and Wireless (1946)

Editorial from the January 1946 issue of the Socialist Standard

Within a few years of the opening of the first inland telegraph service in Great Britain (in 1846) attempts were being made, not at first with success, to carry the lines across the Channel by undersea cable. The next development was the long-distance cable across the Atlantic which, after early failure, was opened in 1866. By this time, however, business and commercial interests as a whole had found that their need for a nation-wide telegraph service was not being met by the private companies, which concentrated on the most populous—and therefore most profitable—centres. Disraeli’s Conservative Government decided in 1868 to nationalise the telegraphs and in 1870 the Post Office acquired, along with the inland service, the cross-Channel cables. The latter were at first leased to private companies, but in 1889 the Post Office took over and operated them itself.

Millions of pounds were now being invested in long distance undersea cables, and a period was opening up of big profits for the cable companies which had not yet been threatened by the rival system of wireless telegraphy. At this stage, however, the imperial and war-time needs of the capitalist Powers made their influence felt. The Governments of the Empire were concerned about having cables laid on routes that would serve Empire needs and be safe during war, and they paid huge subsidies to the Cable companies to secure the laying of cables on the desired routes. One of these subsidies was the payment of £28,000 a year for 20 years, from 1893, to the Eastern and South African Telegraph Co., for a cable from Zanzibar to Mauritius. While precise figures are not known, some estimates place the total subsidies at £4,000,000 or more.

In the meantime wireless, first used in an elementary form in the nineties and developed in a different and greatly improved form by Marconi with the help of the British Post Office, entered the field.

The position after the world-war 1914-1918 was that the cable companies, owing to greater reliability and lower over-all costs of cables, were more than able to hold their own in competition until the invention of the "beam" short-wave wireless system. "Beam" stations built by Marconi's for the Post Office opened up in 1926 and 1927, and were immediately able to operate profitably at charges far below those of the cable companies, and the latter saw their profits disappearing.

Now, according to the theories propounded by the capitalist text-books on economics, the cable companies should have set about discovering ways and means of improving cable transmission so that they could compete. Instead, suddenly forgetting how they had argued that the cables must be retained in British and Empire control for reasons of patriotism and Imperial defence, they threatened to go into liquidation and distribute to their shareholders the enormous reserves accumulated out of past profits (with the help of Government subsidies); with, of course, the possibility of selling the cables to foreign companies known to be willing to buy them. The cable companies were then able, in 1928, along with Marconi's, to get consent to a merger of cable and wireless companies and to the transfer to them from the British Post Office of the "beam" wireless telegraphs and Atlantic cables, and from the Empire Governments as a whole, of the State-owned Pacific cable system. Cables and Wireless, Ltd., and their associated Dominion companies, thus came to a position of dominance throughout the British Empire, though in Britain wireless telephony and certain subsidiary cable and wireless services remained with the Post Office. For a time the property and profits of the investors in cable companies were saved, but the war 1939-45 introduced or accentuated factors which have led the Labour Government to adopt its recently announced policy of nationalising the Cable and Wireless telegraph services operating from this country. This move is not the result of the application of Labour Party theory on the question of nationalisation but is dictated by events outside their control, including growing American competition. The inquiry into nationalisation of communications was going on long before the Labour Government came to power and, as the Times says, "their Coalition and Conservative predecessors, though reluctant to decide on acceptance, were almost bound to accept the same conclusion. Pressure from the Dominions, especially from Australia and New Zealand, in favour of this solution has for a long time been strong. Its motives are mixed. In part it has proceeded from the simple desire of the Dominions to have full sovereignty over communications in their own country. In part it has been due to concrete disagreements with Cable and Wireless over rates, service and policy; and these disagreements were, perhaps, accentuated by one or two specific instances in which the American companies which installed and operated new services in Australasia during the war were able to suggest rates and terms with which Cable and Wireless felt itself unable to compete." (Times, November 2nd, 1945.)

The precise terms of nationalisation are yet to be announced, but the Labour Government will follow their settled policy of compensating the investors either with a lump sum payment or Government Bonds, and intends to set up a public utility organisation to run the services.

One development of Labour Party theory is of interest. When the Capitalists had only to consider internal services such as telegraphs and telephones, and when capitalist opposition to private monopoly was strong, the solution applied by Liberals and Tories alike was to institute State ownership and State operation. The Labour Party took over this policy of State capitalism, called it Socialism, and made it the main plank in the Labour programme. Later on the capitalists developed the so-called public utility form of monopoly organisation in the Port of London Authority, the Central Electricity Board, etc., in which the State exercises control, but less directly, and in which operation is not by a State Department but by a Public Board working under restrictions imposed by law. Bereft of any basic principle of their own to guide them and able only to tag along at the heels of capitalist development, the Labour Party promptly discovered that its former favourite, the Post Office, was no longer the apple of its eye. An important additional motive influencing the trade union and Labour Party leaders, with their eyes on the problems of Labour Party administration of capitalism, was that public utilities would, they thought, free them from direct Governmental responsibility for wage disputes with the workers. They wanted the workers' votes, but did not want to appear directly responsible for their wages as employees of a Labour Government.

Of course none of these problems of capitalism have any bearing on the issue of Socialism, which is the issue of dispossessing the capitalist class the world over, and making the means of production and distribution, including communications, for the first time the common property of the whole community, operated not for profit and the needs of capitalism's wars, but for the good of all.