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words were carried by the Eastern route, only 317,155 words found their way by the Pacific Cable.

These facts are most remarkable and give grounds for the disappointment and dissatisfaction which undoubtedly exist. The statistics obtained prove that in the year mentioned, 1904, New Zealand succeeded in directing to the Pacific Cable, not 50 per cent., but 78.3 per cent. of all the traffic between that State and the United Kingdom, while the Commonwealth gave, not 50 per cent., the expected minimum, but only 21.7 per cent. of the whole Commonwealth telegraph business.

I shall now, with permission, say a word as to the expectations formed respecting the division of the traffic.

Turning to the papers relating to telegraph cables presented to the General Assembly of New Zealand by command of His Excellency, I find ample evidence to establish that the general expectation was that not less than one-half the whole traffic would be carried by the Pacific Cable. This view was held by those representing Canada when they visited Australia in 1893. A communication from Sir Mackenzie Bowell, then a member of the Canadian Government, was sent from Sydney, October 12th, 1893, to the Government of New Zealand and to each one of the Governments of the Colonies which now constitute the Commonwealth of Australia.

The Canadian Minister directed special attention to a document which he enclosed dealing with the probable revenue of the projected cable across the Pacific, concluding in these words "it is fair to assume that on the establishment of the Pacific Cable, rates and all other things being equal, the business will be equally divided between the two lines." No exception was then taken or has since then been taken on behalf of any of the Australasian Governments to the views then expressed re- specting the division of the traffic into halves.

The same year, 1893, being in Melbourne, I had an opportunity of addressing a large assemblage on the whole subject of the Pacific Cable. If my memory serves me, the Prime Minister of Victoria, Hon. Mr. Paterson, and other Ministers were present. My address was afterwards printed for circulation by the Chamber of Commerce of Melbourne. In a copy before me I find it clearly stated (page 9) that the Pacific Cable would obtain one-half of the business whatever it might be. The views then expressed were accepted as correct by the Government and people of Victoria. No adverse opinions were heard from any quarter, then nor since.

In the New Zealand Telegraph Cable papers (F. 8) for 1895 will be found a memorandum, dated December 1st, 1894, which at page 31 refers to the subject of revenue and furnishes letters from the Dominion Statistician to the Canadian Government, from the Deputy Finance Minister, Ottawa, and from Mr. Mercer of the Colonial Office, London, all confirming the view taken that half the whole traffic must become tributary to the Pacific Cable.

At page 37 of the last-mentioned New Zealand Telegraph Cable papers will be found a letter, dated December 28th, 1894, addressed to the Minister of Trade and Commerce, Ottawa, which bears so directly on the question that, with permission, I shall read it,

and

"DEAR SIR,

·REFERRING to our conversation this morning on the subject of the Pacific cable, and

Ottawa, December 28, 1894. more especially on the question of probable revenue:—

The point which you rightly considered of importance relates to the sources of revenue, you asked

upon what grounds I assumed in my estimates that the Pacific cable would obtain one-half the telegraph business between Australasia and Europe. You suggested as a possibility, from the fact that the existing lines of telegraph had been long established, that there would be business relations between the Eastern Extension Telegraph Company and the owners of the Australasian land lines, perhaps an understanding or agreement, of such a character as would give the existing cable company exclusive control of European traffic collected throughout the colonies.

"In answer to this, I have only to say that the land telegraphs in each one of the seven Australasian Colonies are owned and operated by the Governments, under the Departments of Posts and Telegraphs. There cannot be any agreement of the kind referred to at present existing, and there is no probability of one being entered into. cable be established as proposed, through the co-operation of the Australasian Governments, On the contrary, if the Pacific

with Canada and Great Britain, the colonies would have a direct interest in the success of the new line, and every telegraph and post office throughout Australia and New Zealand would practically become offices or agencies of the Pacific cable. It is easy to be seen, therefore, that there would be a tendency to send European telegraph traffic collected at these offices (unless specially directed otherwise) by way of the Pacific cable in preference to the old route. There can be no doubt whatever that with the Pacific cable established as proposed, on the principle of State ownership, the several Governments at the sources of traffic would have it in their power to direct telegraph business over the new line as they may desire. It does not follow that the power in the hands of the Governments would be unduly exercised to the injury of the Eastern Extension Company. No doubt a division of the traffic would for a time diminish the profits of that company, but the establishment of the new route would stimulate telegraphy above its normal growth, and in very few years the volume of business would be doubled, so that an equal division would restore to that company as much business as it now controls.

"For these reasons, and the additional reason that the Pacific cable will unquestionably command all the telegraph traffic between North America and Australasia, I feel more than warranted in basing the estimates of revenue on half the European Australian traffic. quite satisfied that, the more the question is looked into, my estimates will be found moderate I feel and considerably on the safe side. For my own part, I feel perfectly assured that, if the cable be laid as a Government work the estimates of revenue will be borne out by actual results as fully as estimates of cost have been verified by the tenders received.

"Honourable W. B. Ives,

"Minister of Trade and, Commerce."

"Yours, &c.,

" (Signed)

SANDFORD FLEMING,

New Zealand was not the only Government to receive official copies of these and other communications on the subject. Every Government concerned received the same documents and as far as I know the statements made have never been contro- verted by any Government or individual in Australasia.

It is quite true that those connected with the Eastern Extension Company tried to leave a different impression on the Imperial Cable Committee which met in London in 1896. But any impression made was fully neutralized by the opinions of inde- pendent men engaged in Australasian trade. On that occasion the Agents-General of the several Colonies, resident in London, were waited upon; a list of the most influential Australian merchants and others was thus obtained and correspondence opened with each. A series of questions was placed in their hands requesting the favour of written replies. As a result of this enquiry 15 firms or 75 per cent. of the whole gave it as their belief that the new cable would obtain one-half the total business. Some of those consulted thought that the projected new cable across the Pacific would command more than half the business. One of the gentlemen con- sulted the late Sir Julias Vogel, at one time Postmaster-General of New Zealand, and who was perfectly familiar with the whole subject, did not hesitate to say that the rate for messages between Australasia, New Zealand and the United Kingdom should at once be reduced from 4s. 9d. to 2s. per word. He gave it as his opinion that at 2s. per word the revenue would be much larger than at 3s., because at the lower rate the Pacific Cable would command the bulk of the business.

This brief statement of facts explains how the matter stood when the six Govern- ments, on December 31st, 1900, formally entered into partnership and agreed to establish the Pacific Cable as a State-owned joint undertaking. Notwithstanding all that had been said to the contrary the six partners were satisfied that the electric cable across the Pacific could be established and would be of great Imperial service; that its completion would lead to a reduction in telegraph charges and benefit trade; that the gross cable traffic between Australasia and the United Kingdom would be increased and that it would approximately be split into equal parts, one being directed for transmission by the new State undertaking, the other part to follow the old route. All these anticipations have been realized except the last.

(1) The cable has been successfully laid.

(2) Telegraph charges have been reduced from 4s. 9d. to 3s. per word.

(3) Cable traffic has increased 20 per cent.

But for some reason the traffic has not been equally divided. However, I am sure this matter is quite capable of rectification, if the proper course be taken.