6 Telephone Systems of the Continent of Europe 



The author did not undertake a foreign tour for the purpose 

 of convincing himself of the feasibility of low rates, but in order 

 to obtain authoritative evidence to help him to convince others of 

 the fact. Personally, he required no convincing, as his experience 

 in Scotland and Manchester rendered any further evidence unneces- 

 sary. The author knows that many of the National Telephone 

 Company's exchanges absorb less than 50 per cent, of the sub- 

 scriptions collected in them for upkeep and contingencies, so that 

 a municipality or company putting into the business only the capital 

 actually required for establishment could earn a fair profit on 

 not more than half the present rates. 



That it must be so is evident from a consideration of the 

 National Company's capital and regular 5 per cent, dividend. It 

 has been stated frequently in print, and at public meetings, in the 

 presence of the company's directors and officials ; ! and so far as 

 the author is aware never seriously contradicted that the amount 

 of ' water ' to paid-up capital is as two or three to one ; that is to 

 say, that out of a capital of four millions for which dividends must 

 be found, only one million, or at most one and a third millions, 

 have been put into the business. To pay 5 per cent, on four 

 millions this one million must earn 20 per cent. 



That it actually does so is unquestionable : in fact, telephony 

 in the United Kingdom is really conducted to-day as cheaply as 

 on the Continent, the only difference being that each sovereign 

 invested has to find interest for two or more unproductive com- 

 panions. Actual experience affords this assertion ample con- 

 firmation. 



From 1880 to 1885 the National Telephone Company was 

 opposed in Dundee and its vicinity by the Dundee and District Tele- 

 phonic Company, Limited, which company had commenced business 

 with a rate of io/. designed to oppose the rate of 2o/. which the 

 National Company had established in the same town. Finding 

 that it could not hold its own, the National determined to ruin 

 the opposition by a war of rates, and suddenly came down from 

 2o/. to 5/. per annum at one swoop. The Dundee and District 

 replied with a reduction to 57. 105-., below which they considered 



1 Truth, August 21, 1890, and March io, 1892. Councillor Southern's speech 

 to the Manchester Town Council, Manchester Guardian, March 8, 1894. 



