Corrupt America and Pure England. (1928)

From the October 1928 issue of the Socialist Standard

There is one thing for which we, as Britishers, can never be sufficiently grateful, and that is the white-souled purity of our political institutions. In this, of course, we are unique among nations. In the U.S.A. politics and graft have long been interchangeable terms. France, it is well known, is a seething hotch-potch of franc speculators, anti-clericals, Bourbonists and a score of others. Italy is in the grip of a tyranny worse than Nero’s, and Spain is making revolution a habit. Germany—bah, you can’t trust these Junkers ; and Russia (pause, for snarl and baring of teeth) has changed the knout and Siberia for the Cheka and sudden death. Only we, the fortunate dwellers in this little isle, set in a silver sea, remain as we have ever been, pure, unspotted, a pattern for the world. Was it not we who invented that institution now known as the Mother of Parliaments? Very well, then. Let us remain as we have endured down the ages— pure, unsullied, immaculate, above reproach ; the envy of a world filled with foreigners; a secret and holy joy to ourselves.

And what is this man Baker doing? Surely he must know all this ! Surely he will have weighed the wild and whirling words with which he besmirches the reputation of our Parliament House ! And yet the painful fact must be faced. Hansard, we cannot permit ourselves to doubt, else follows chaos and confusion. And that patient record of our rulers’ murmurings recounts that, on August 2nd of this present year, Mr. Walter Baker rose in his place in the House of Commons and delivered himself of the following scandals. He said the Government was proposing to transfer its Beam system of telegraphy to a private firm, and that the circumstances leading up to that decision were disgraceful and scandalous. He reminded them that he had previously stated that the merger between the cable companies and the Marconi Company was a calculated attempt to force the hands of the Government, and that it was accompanied by a treacherous threat to let the cables go derelict. He mentioned the enormous cash reserves, £14,000,000, which, with the aid of Government subsidies, the cable companies had built up; and then he turned to Marconi’s. After referring to continued serious charges made against the methods of the directors of that firm, he made the remarkable statement that the Marconi Company had been engaged in selling shares in the Spanish and General Corporation for about 1½d. each, shares which were now worth 38s. 6d. He asserted the latter firm had no assets of any value, and the tremendous jump in price was attributable to pure manipulation. What he wished to learn was why a certain newspaper persistently quoted these shares as “Spanish Marconi,” when the company had nothing to do with wireless; why the Marconi Company had found it necessary to sell them at l½d. each; and why the shares had experienced the tremendous rise to 38s. 6d. whilst the firm had no assets of any value. He further mentioned how uncomfortable he felt at finding an M.P. (the junior Member for Norwich) as one of the new directors of the Spanish and General Corporation. As for the Marconi Company, he recalled to the House the fact that this company had recently written down its capital by about 50 per cent. As a result of a powerful circular to the shareholders, the reduction was agreed to, and the shares had a sensational fall to 12s. The circular was signed by Sir William Plender, Sir Robert Kindersley, the Hon. Charles White, Dr. E. Ofenheim and the Earl of Leicester. It was not disclosed to the shareholders, he said, that Sir William Plender, in addition to being auditor for the cable companies, was the cable companies’ negotiator in the transactions between them and Marconi. Further, at the date on which Sir Robert Kindersley signed the circular, he was not the registered holder of a single share. But through the Cushion Trust, a subsidiary of Lazard Bros., he was acquiring thousands of shares at a low price during March and April, 1927. By October 25th, 1927, those shares were quoted at 38s., and on March 14th, 1928, they had reached 67s. 6d.

Civil servants will be glad to hear of a process which will render them independent of wage cuts based on fluctuations in the cost of living. Railwaymen will gather new hope when they discover how to more than compensate themselves for relinquishing 2½ per cent, of their earnings. Listen to this.

Mr. Baker next recounted that on December 31st, 1925, the Marconi Company held 1,238,658 shares in the Canadian Marconi Company. The Marconi directors wrote down the value of those shares to 2s. 1d. a share, and then sold the shares to Sir Robert Kindersley, that is, to the Cushion Trust, at 4s. 2d. a share. To-day they are quoted at about 30s. The Cushion Trust, the nominee company of Lazard Bros., who held 5,485 shares in the Marconi Company at the end of November, 1927, had increased their holding at the beginning of 1928 to 51,800 shares.

Mr. Baker then dealt with a few of the personalities involved and their associations. There was the hon. and gallant member for Ripon (Major Hills), who on a previous occasion had expressed his concern at the danger of the Government losing the taxpayer’s money by continuing its control of Beam wireless. Besides “other interests,” he was discovered to be a director of the group which controls the most important financial papers in the City of London. There was Viscount Wolmer, who, after three years as Assistant Postmaster-General, made an attack on the Post Office as a State enterprise. This attack curiously enough coincided with this campaign, and, equally curiously, with the publication of the Hardman Lever Report, a report which went beyond the terms of reference of the Committee and attacked State management of the telegraph services. The Chairman of this Committee is a director of the Daily Mail Trust, and the Daily Mail has hopes of becoming the greatest newspaper in the world, through the medium of wireless. The father of Viscount Wolmer, Lord Selborne, is Chairman of the Telegraph Construction and Maintenance Company, More than a third of the shares of this Company are owned by the Eastern and South African Telegraph Company and the Globe Telegraph and Trust Company, both members of the merger. Lord Selborne is a director of Lloyds Bank, which shares a director with the Marconi Wireless Telegraph Company, besides being a director of the Peninsular and Oriental Banking Corporation, another director of which sits on the board of the African Direct Telegraph Company and the Eastern Telegraph Company. Sir Robert Kindersley was formerly a director of the Eastern Telegraph Company. He is now one of the directors of the Bank of England and managing director of Lazard Bros., who purchased the shares of the Canadian Marconi Company.

With which interesting information we propose to close down just here and publish a further contribution next month. After all, the long winter evenings are approaching, and we hope we are performing a public service by providing something to fill the blank hour on Sundays when the sky pilots are groaning from 2LO. Perhaps some worker may be stirred into thinking that the forces of capital are by no means asleep; that they will not be fought by grudged shillings in a trade union box and occasional pence to a political party. Socialism, the alternative to Capitalism, will not ”come of itself.” Its achievement will require effort, hard unremitting effort. Sympathy is not enough. It is work that counts ; planned, disciplined work. Come in.

W. T. Hopley

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.