H is a standard carbon microphone. The electrical signal from it, produced by modulating the current from the battery, passes through a transformer marked P S and applied to the coils E-E, which vibrate the diaphragm M. This process is purely electrical.
This movement is communicated to the pillar N and the lever L, so that electrode A is wiggled about, modulating the resistance of the acidulated water stream between A and B and giving a variable impedance to ground. The pointy thing at the top is the aerial, and the coil in the connection to it is the secondary coil of an arc or Fessenden continuous-wave transmitter.
I do not have high hopes for the audio performance of this arrangement. Whoever drew it seems to have misunderstood the principle of operation; the liquid column is shown breaking up into separate droplets that would surely have created a horrendous noise far greater than the audio signal.
