CO885-(16-18) — Page 239

PUBLIC RECORD

། z། ཟ། 「

OFFICE

6

C.O

Reference :-

•885

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

17 PUBLIC RECORD OFFICE, LONDON

20

(5) Further, what Agreement would be necessary to make the Commonwealth Agreement terminate at a fixed specified date, for example, 31st October, 1913?

Answer: "In Clause 25 the words " and no longer " might be substituted after the date, 1913,' for all the words at present following that date."

The CHAIRMAN: Well, Sir William, what we have heard as the result of the informal conference seems to suggest, so far as you are concerned, a policy with which you would be satisfied.

Sir WILLIAM MULOCK: Well, as I observed at the commencement at the informal Committee. Canada feels, if it were at all possible, that it ought to support New Zealand, and I would not like the conditions to arise when we would take different views upon any question here. Sir Sandford Fleming, I think, desires some cablegrams setting forth views of his sent to the Commonwealth. He was good enough to send to me yesterday copies of these telegrams, and I think it would be helpful to him, and perhaps it might clear away obstructions to consideration of the situation, if he could get answers to his questions.

Mr. Johnson was good enough to call upon me yesterday morning and we dis- cussed the matter, and he also referred to Sir Sandford's questions that he desired submitted to the Commonwealth. I mentioned to him that if the sending of that cablegram and the answers would make it clearer to us, especially to-Sir Sandford, what the actual situation was, I thought it would be expedient if we had all those questions submitted to the Commonwealth by cable.

The CHAIRMAN: I see the questions that Sir Sandford has suggested--- I have a copy of them before me are two in number. The first is, Is it practicable to cancel the New South Wales Agreement with the Eastern Extension Company by compensating the Company or otherwise? If so, what amount of compensation would suffice? Then, second, If it be impracticable wholly to cancel the New South Wales Agreement would the Commonwealth Government in some other way put the Pacific cable on the same footing as the Eastern Extension Company, with a view to fairly dividing the telegraph business?

Sir SANDFORD FLEMING: If I may remark, Sir, the suggestion to send such communications as those you have just read, arose in my mind from the fact that I myself was asked to communicate with my Government asking them, in the event of such and such things being done, what would they do; thought it very much better to have certain things placed before the New Zealand Government than to suppose certain things occurring which may never occur.

The CHAIRMAN: Yes.

Sir SANDFORD FLEMING: May I be allowed to look at this letter. This is a letter to Mr. Johnson. I stated here "On receipt of replies I shall have something definite to communicate to New Zealand. At present I have nothing which has not practically been already answered; which is really the case." I gave reasons to the Sub-Committee why I thought that course advisable; if you think it is desirable to briefly go over the same reasons, I shall gladly do so.

The CHAIRMAN: Yes, if you would, please.

Sir SANDFORD FLEMING: At our first meeting I endeavoured to present the facts, as they had been furnished by the Cable Board, in a manner which would enable us to look at the whole matter with the view of reaching a speedy and satisfactory adjustment of the difficulty which has arisen. The facts thus presented seemed to point to one of two modes of settlement, a third was suggested by gentlemen present, viz., a pooling arrangement with the Eastern Extension Cable Company. The communications which I have received from the Government which I represent do not encourage me to think that the latter mode of settlement will be assented to by them. The New Zealand Government is strongly "opposed to any pooling, believing that in time the State cable will secure the bulk-certainly half the traffic. Moreover the contracting Governments having incurred such a heavy expenditure in laying the cable, which has brought about such substantial reductions in the cable rates, should hesitate to enter into any agreement with the Eastern Company for pooling receipts."

21

These are the exact words of the instructions sent me by the Government of New Zealand, so I must be governed by them.

In my remarks when the Conference last met I submitted for consideration two principles of adjustment. The first had reference to the responsibilities and obliga- tions assumed by each contracting Government when the partnership was entered into. Bearing on that point I received from Sir Edmund Barton, when Premier of the Commonwealth, a letter, dated July 31st, 1903. He enclosed a letter from the Premier of New Zealand, dated June 29th,* and his reply thereto. In these commu- nications both Premiers referred to the agreement made by New South Wales with the Eastern Extension Company, and Sir Edmund Barton explained how it came to be inherited by the Federal Government and that all the responsibilities connected with it now devolved on the Commonwealth.

I need not trouble you at length with the arguments of the two Premiers; I shall, however, place the letters themselves at your disposal, and they may be taken as explanatory of my own observations. I shall merely submit a few remarks on one point. It is claimed in these letters that the agreement of New South Wales with the Eastern Extension Company is now to be regarded as a legacy from a self- governing Colony, and that it is an act which cannot be repudiated.

We can fully appreciate the proper spirit and high sense of honour which this claim implies, but does it not suggest that something may be said on this very point on the other side? If the Commonwealth inherits this act of New South Wales it must not be forgotten that the Commonwealth has inherited another act of New South Wales of earlier date than the agreement with the Eastern Extension Company. The Pacific cable partnership is that earlier act, and it is equally a legacy to the Commonwealth with all the obligations it imposes.

To a non-legal mind nothing appeals with greater force than that the first act takes precedence of the second. The partnership act inherited from New South Wales cannot be superseded by an inherited subsequent agreement with another party. That may or may not be the legal position, but it is the commonsense view which as a layman I strongly hold, and I am satisfied that if this aspect of the matter be presented in a proper manner by this Conference to the Federal Autho- rities and people of Australía, their sense of right and honour will force them to accept it.

I do not for a moment suggest that the second inherited act of New South Wales should not be regarded with due consideration; it is an act which may have been committed with the very best intentions, and while it can never undo the first act it is entitled to be dealt with in a just and proper manner; but in my humble opinion the first act must stand unless and until all the six partners in the Pacific cable give their assent to the second act, and, in fact, each make it their own, and unless and until that assent is obtained, I respectfully hold that the first legacy to the Commonwealth must be held sacred.

As to the second legacy, there is one way, and as it seems to me one way only, in which it can be properly dealt with, and that is to arrange to suspend its operation and invoke the principle of compensation as a just means of settlement. That is to say, if the Eastern Extension Company can show that they suffer loss from the non-operation of the Agreement, in that event they may establish a claim and be entitled to reasonable compensation for their loss.

The Government I represent has always objected to the Agreement by which concessions were granted to the Eastern Extension Company and which the traffic returns have shown has affected so prejudicially the finances of the Pacific cable; New Zealand holds that the Eastern Extension Company should enjoy no advantage which is not equally enjoyed by the State-owned line. The New South Wales Agreement has been the means of giving the Company a distinct advantage, and the Commonwealth should be appealed to with the view of placing the Pacific cable on as good a footing as the Eastern Extension Company, in order that the telegraph traffic be fairly divided.

I anticipate that a question may arise respecting the amount of compensation and how it is to be paid; I regard this as secondary matter compared with effecting a just and satisfactory settlement.

• Printed in Commonwealth Parliamentary Paper, No. 39, 1903.