The post office and its story an interesting account of the activities of a great government department

Public opinion would not have allowed the Post Office to act the dog in the manger over the business, even if it desired to do so, and it proceeded to grant licences to the telephone companies to work within certain areas. In 1883 the Post Office did in fact propose to engage in active competition with the companies, but the Treasury opposed the policy on the ground that the State should at most be ready to supplement and not to supersede private enterprise. The various telephone companies united in 1889 under the name of the National Telephone Company, but their work was carried on under many restrictions. They were not allowed to lay wires underground, and for a long time they were not permitted to establish trunk lines. The Post Office was perhaps still inspired too much with the idea that it was a profit-making institution, and it was making a fight for the telegraph, with which the telephone was now in serious competition. Another opportunity for the Post Office to step in and buy out the companies happened in 1890, but it was not taken. But in 1892 the Post Office compelled the company to sell their trunk lines to the Government, leaving the local exchanges in the hands of the company. So things went on until 1898, when a Select Committee was appointed by Parliament to consider whether the telephone service is calculated to become of such general benefit as to justify its being undertaken by municipal and other local authorities, and if so, under what conditions. The decision of the Committee was that so long as the telephone service was not likely to become of general benefit the present practical monopoly in the hands of a private company should continue. The telephone, we see, was still considered only a luxury for the few, and although certain foreign countries were making great strides in the direction of a general use of the system, Parliament was not yet prepared to sacrifice the private speculator. The committee, however, recommended competition by the Post Office and local authorities, and in pursuance of this policy the Post Office in 1899 decided to establish a telephone system in London in competition with the company.