The companies, being interested in making quick profits, naturally concentrated their services on the populous towns which yielded the bulk of the traffic, and left many of the smaller towns and most of the rural areas unprovided for. “In the largest towns the companies’ offices were grouped in the business centres in close proximity to each other, leaving the suburbs and outlying districts with no telegraph office within convenient distance ; while in the smaller towns the office was usually situated at the railway station, which in those days was often more than a mile from the centre of population.” (Murray, p. 68.)

Here was a situation where the desire of business men and of the Government and private users to have a national network of telegraphs, was contrary to the interest of the capitalists who had their money invested in the telegraph companies.

Among the bodies that urged the Government to solve the problem by nationalising the telegraph systems were the Edinburgh Chamber of Commerce and the Association of Chambers of Commerce of the United Kingdom.

“Some of the defects,” says Sir Evelyn Murray, “were the rest of competition rather than of private ownership and might have been met by amalgamation. But the political objections to conferring a monopoly of an important and growing public service upon a private corporation were recognised and nationalisation was generally accepted as the remedy. It was claimed that with a unified Government system, duplication of plant, offices and personnel could be eliminated and that the consequent savings would be available either for an extension of the system into unremunerative districts or for a reduction of the tariff or both” (p. 68).

As has already been mentioned, a Tory Government in 1868 decided to buy out the private interests and in 1869 Parliament gave the Post Office a telegraph monopoly. The Railway Companies and the Telegraph Companies having at first opposed nationalisation withdrew their opposition when very lucrative compensation terms were agreed, based upon 20 years’ purchase of the net profits in the preceding year.

Although, by a High Court decision in 1880, it was decided that a telephone is a telegraph for the purpose of the Acts, and therefore came under the Post Office monopoly, the British Government at the time was reluctant to take on the responsibility and decided instead to grant licences to telephone companies, but with the retention of trunk lines in the hands of the Post Office and with restrictions designed to protect the telegraphs.

Later on, owing to protests about the restrictions on the activities of the companies, they were allowed to construct their own trunk lines.

By 1891, when the principal telephone patents expired, one company, the National Telephone Company, had established a virtual monopoly by buying up or extinguishing its rivals.

In 1892, owing to dissatisfaction with the cost and quality of the National Telephone service, the Government decided to purchase the trunk lines, limit the Company’s licenses to specified districts, and to operate telephone services elsewhere under the Post Office monopoly.