Supposing this had been a private company, what would have been the position? I take it that the company would appear to-day with a capital of £4,700,000; roughly, £5,000,000 would have been their capital. On the other hand, they would have been steadily putting away money to pay off that capital, a point which the honorable member ignored in his slip-shod statement, and that is why I charged him with being so careless; he had overlooked the fact that they were paying off capital all the time. During all this discussion of public and private finance honorable members are overlooking the difference between a private company and the method by which we financed this. A private company puts its money to reserves; a government concern writes off its capital. That is the position. As far as I can gather, £4,700,000 was spent in putting down these cables, and the honorable member tells us to-day that there is still a debt of £1,000,000. What has happened to the rest? Presumably it has been paid off, either by sinking payments, paying off a definite amount each year, or, as I gather, the profits of certain years which were rather large were used in order to put down this second cable. Now, the honorable member is going to hand his cables, on which a debt of £3,000,000 has been paid off, to the new company in return for the sum of £1,200,000 to pay off the remainder of the debt, plus the sum of £500,000.

I wish to ask the honorable member whether it is not the case that the second cable was laid down only two or three years ago? It cost nearly £2,700.000. The amount written off a cable each year is one-fortieth of the capital expenditure. Even after taking off one-fortieth a year for those two or three years, the value of this one cable alone must be somewhere in the neighborhood of more than £2,000,000, but the honorable member is not going to get even £2,000,000 for it, and is giving the second cable as well. These are the figures which I want the honorable member to explain. It does not seem to me that he gave us an explanation which made it clear as to why he had arrived at the figure he quoted. He said "I will now explain why we have arrived at the figure of £570,000," but went on with his speech without, as far as I remember, making any reference whatever to it.

Mr. A. M. SAMUEL. We appointed two extremely competent men to advise the conference. One was Sir Otto Niemeyer and the other was Sir William McLintock, both held in high esteem in their profession. I will not say that I formed any opinion, because the honorable member has said that I am a man of slipshed methods. The capital value of a possession is what rental or profit it will bring. The two expert persons provided to advise the conference what the capital value of this cable was came to the conclusion that it would, in future, earn sufficient money to justify a capitalization of £517,000 after the loan debt of £1,233,000 had been provided for. That is the whole thing in a nutshell.

Mr. GILLETT. We do not specially know who these gentlemen are, and what I am complaining of is the extraordinary contrast between this and a privately owned concern. If this cable is only worth this figure, why is it that the private cable companies are bringing into being a merger company with this enormous increase in capital, and why is there all this rise in share values? Look at the Marconi Co. The face value of their capital is somewhere about £2,000,000 të £3,000,000, but in the merger they have been given shares to the face value of something like £17,000,000. I quite agree with the Postmaster General that that has nothing to do with the subject before us-except this, that the whole crux of the problem is why the communications company require £30,000,000. What I do say is that all this movement of shares on the stock exchange proves what people are thinking is going to be the worth of these things, while at the same time the honorable member has nothing to tell us except the opinions of one or two experts and some figures.

I am a little doubtful about their experts, because although we had from the postmaster general a very glowing description of Professor Eccles, strange to say his name does not appear among the list of witnesses who appeared before the conference. It would be interesting to know, also, whether the people who gave this expert opinion were qualified to do so, and why it was that Professor Eccles was not called to give evidence. It seems to me that the defense of the honorable member is a very poor one. I do not wish him to think that I regard him, speak ing generally, as being slipshod, and I did not say so. It is because I think so highly of him that I feel that on this occasion he was very slipshod. I should have thought nothing of it if certain honorable members had made the statement, but I know the honorable member is an authority on finance, and, therefore, I could not forgive him for it when it is so vital to the case.

Mr. WARDLAW-MILNE. In regard to what the honorable member for Finsbury, (Mr. Gillett), has said, it is interesting for the committee to know that in his opinion, at any rate, the fact that certain movements take place in certain shares which are quoted on the stock exchange shows that those who take part in those operations possess some knowledge of affairs which is concealed from the rest of the world, and are better able to forecast values than other people. To many of us who have some connection with these matters quoted on the stock exchange prove noting at all; in very many cases prices are merely manipulated for the purpose of gulling some very gullible people. It does not appeal to me, therefore, as a strong agrument against the price fixed in this contract to say that there have been certain operations on the stock exchange in the last few months in connection with cable company's shares. On the general question, the honorable member for Finsbury appeared to base his argument in favor of a price of £5,000,000 upon the fact that that was what the cables originally cost. In other words, he appears to want to charge £5,000,000 because that was the amount paid for the cables in the first place, quite ignoring the fact that not only has there been considerable depreciation since they were laid down but also ignoring the fact that the earning value of these cables has materilly declined. The whole basis of the proposals which we are now discussing is that the earning power of the cables has decreased so much that a merger is necessary. If that be so, surely he must see that the case for charging £5,000,000, because that was the cost of the cables when they were laid down, goes by the board. Apart from the fact that this valuation has been arrived at by experts in the manner which has been described to us by the financial secretary to the treasury, it surely is clear that in arriving at their value to-day we must take into consideration what is their earning capacity and what competition, if this merger were not carried through, they would likely have to face.

Mr. MALONE. I feel we must press for a reply to one point on which the financial sectetary has omitted to say anything. I thank him for his reply, but there was one question which I put to which he would not be able to make a reply. I saw the secretary of state for Scotland there, and thought he might answer. It was a point which was raised by myself earlier in the debate, and by my honorable friend the member for Finsbury, (Mr. Gillett), just now. The question is why no technical witnesses were called before this conference. We have heard about these two learned financiers Sir Otto Niemeyer and Sir William McLintock, but by no conceivable stretch of the imagination can they be regarded as technical officers and I want to know why eminent independent men like Professor Eccles were not called as witnesses, and why some of the engineers of the post office were not consulted about the scheme. I suppose the postmaster general has got on his staff cable and radio engineers second to none in the world. Why were they not called as witnesses before the conference? Six groups of witnesses gave evidence, but every one of those groups represented a private liability company, with vested interests in the result which has been produced; and I want to know why other independent advice from outside, or from the postmaster general's own staff, was not sought. If we could be assured that such witnesses were called, we should have much greater confidence in approving the regulation.

Sir W. MITCHELL-THOMSON. The problems arising of a technical nature were not such as to require the evidence and the advice of technical experts on their own technical ground. Had those problems presented themselves I do not hesitate to say the conference would undoubtedly have asked for technical advice. They were aware in general terms of the various aspects of the problem, because they had expert advice from the post office and the treasury, and from any other necessary departments, but actual technical advice on matters of radio machinery and radio telegraphy was not necessary, because the conference did not require it.

Mr. MALONE. Does the right honorable gentleman tell us that the coordination of the beam service with the cables is not a technical matter?

Sir W. MITCHELL-THOMSON. It is a matter of administration.

(Question put, "That the words proposed to be left out stand part of the clause.")

The committee divided: Ayes, 212; noes, 128.

AYES

Monsell, Eyres, Com. Right Hon. B. M. Stuart, Crichton-, Lord C.

Tellers for the ayes: Captain Wallace and Captain Bowyer.

Tellers for the noes: Mr. A. Barnes and Mr. Whiteley.

Mr. W. BAKER. I beg to move, in page 3, line 24, after the word "may, insert the words: "at a price to be approved by a resolution of the Hou Commons."

(Question put, "That those words be there inserted.") The committee divided: Ayes, 128; noes, 213.