PUBLIC RECORD OFFICE
Reference :-
C.O. 885
6
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
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PACIFIC CABLE COMMITTEE:
With this modification the price would presumably be varied in approximately the following manner :--
£ 1,517,000
-
Deduct cost of maintenance for three years; this was put at 40,000l. a year for the two ships, and 30,000l. a year for the cable used
210,000
£. 1,307,000
35,000
80,000
£. 1,422,000
Add for maintenance for six months at the same rate Add for purchase of two repairing ships
or in round numbers, and leaving a margin of 78,0001. for miscellaneous expenses payable out of capital, 1,500,0001.
46. It seems probable that another firm would offer similar terms.
47. As regards the probable cost of a cable of the second of the above types, the information laid before the Committee is to the following effect :-
48. The Telegraph Construction and Maintenance Company estimated that the price for such a cable from Vancouver to New Zealand vid Honolulu would be 1,870,000Z.; This distance this sum including the cost of five stations, estimated at 37,000/. (without slack) would be 6,352 nautical miles, and the longest span (Vancouver to Honolulu) 2,325. The route recommended is (without slack) 7,186, and the long section is about 3,200. The price of this type, therefore, on the basis of the above estimate, would considerably exceed 2,000,0007.
49. The India Rubber, Gutta Percha, and Telegraph Works Company stated, in reply per minute to a question from the Canadian Government, that their price for a 15 word cable would be 1,672,000l.; and for 18 words 1,880,0007.; but specifications for the-e cables have not been given.
50. The representatives of the Eastern Extension Telegraph Company estimated the cost of the cable, with a core of 650 lbs. of copper and 400 lbs. of gutta-percla between Vancouver and Fanning Island, allowing 15 per cent. or more for slack, and including the cost of erecting stations and supplying apparatus, at about 1,650,0007. The Henley Telegraph Works Company tendered for a cable of this type, with completely equipped and furnished stations and cable huts, for 1,492,000l.
51. Mr. Preece also estimated that a cable, of a heavier core over the section to Fanning Island (800 lbs. copper and 550 lbs. guita-percha), would cost a little over 2,000,000l. It seems therefore possible that a cable of the dimensions under consideration might be had for 1,800,000l. It would not be prudent to put the whole capital required for such a cable at less.
Working Expenses. -52. The annual working expenses at the stations on the line may, the Committee consider, be put at 17,000/., having due regard to their position and the cost of living.
53. For the central management 5,000l. is allowed, making a total for annual working expenses of 22,000l.
Maintenance and Repairs.-54. With regard to maintenance and repairs, it is of course impossible to forecast what interruptions would occur in any year and what expendi- ture would be incurred in restoring communication. It may, however, be remarked that repairs of a cable are the substitution of new material for old; so that in course of time the whole of the cable might be replaced; and this circumstance affords some guide as to the annual sum which should be set apart, on the principle of providing, not merely for the cost of annual repairs in case of interruption, but for the entire replacement of the cable, so far as might be found necessary, within some definite period. Thus the replacement of the cable would be completed in 40 years by laying 200 miles of cable a year; and taking the cost of cable, in round figures, at 2007. a mile, this process would, on that basis, be effected by devoting 40,000l. a year to this purpose. It is not suggested that it would be necessary to replace every part of the cable in such a period, or that such a sum
REPORT.
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would be expended each year on repairs; but the fact that the sum named would not only meet current repairs but would in 40 years be equivalent to the replacement of the whole cable, indicates, in the opinion of the Committee, that it is as great a provision as need be made under this head. To it, however, should be added the fixed expenses of two repairing vessels, which may be put at 30,000%, making 70,000 in all.
55. It should be added that the evidence clearly shows that the great depth of the Pacific will be a favourable factor in determining the life of the cable, while it will be an unfavourable influence on the facility aud cost of the necessary repairs.
56. The provision suggested would therefore, it is estimated, in the shape partly of new cable and partly of unexpended balances, perpetually maintain the value of the cable as an asset.
Total Annual Charge.-57. To the expenses of working and maintaining the eible must be added the annual charge for interest, and provision for replacing the capital at the end of a certain period.
58. Having regard to the character of the work, the Committee think that a period of 50 years might reasonably be allowed for the latter purpose.
59. The rate of interest to be assumed must depend to a great extent on the conditions under which the capital is raised; and the Committee have therefore thought it better to append four estimates of the total annual charge which must be provided tor, varying according to the type of cable selected and the rate of interest.
60. In each case the sinking fund is calculated to replace the capital in 50 years.
Interest
Sinking Fund
Working Expenses
Maintenance
With a Capital of 1,600,000/
Interest at
2 per cent.
Interest at
21 per cent.
With a capital of 1,800,000Z.
Interest at
Interest at 22 per cent.
24 per cent.
£.
£.
£.
£.
41,250
37,500
49,500
45,000
14,311
16,387
17,173
18,484
22,000
22,000
22,000
22,000
$0,000
70,000
70,000
70,000
144,887
158,673
155,484
TOTAL
£.
147,501
61. The Agent General for South Australia, under instructions from his Government, placed before the Committee the claim of that Government to be compensated for the loss which they will sustain by the diversion of traffic from the line of telegraph which they erected across the continent of Australia, and over which a considerable proportion of the traffic now passes.
62. A somewhat similar claim may be put forward by the Eastern Extension Telegraph Company in the event of a cable being laid across the Pacific with Government assistance. No question of compensation has been referred to the Committee, and they therefore abstain from expressing any opinion upon the equity of any such claim.
63. The Government of India, whose position is in many respects similar to that of South Australia, have intimated that they do not propose to make any such claim.
IV. REVENUE.
64. The revenue depends on the amount of traffic obtained, and there are no certain data by which this can be calculated. The representatives of the Eastern Extension Telegraph Company and Mr. Lamb, of the General Post Office, estimated that on the total traffic of 1895 the amount which would be diverted to the new cable would be 672,297 and 620,000 words respectively. Mr. Sandford Fleming, for the reasons given in his evidence, put it at one-half the existing traffic. The Committee having considered all
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