CO885-(16-18) — Page 259

PUBLIC RECORD OFFICE

Reference :-

C.O-885

17 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

60

competition at those places, we could secure something like the traffic which their own witnesses had anticipated in 1896 we should secure, or in other words rather more than half the traffic at those places. And for purposes of convenience in dis- cussion we placed that roughly at some 300,000 words a year. I pointed out to Sir John Wolfe Barry that I was not bound to these figures, because the figures came to rather more than 300,000 words, and we parted on that occasion with the intention that he should consider with his advisers whether they should enter into any arrange- ment with us, based on some such hypothesis as the transfer of some 300,000 At the end of last week Sir John Wolfe Barry words of traffic from them to us. wrote to me, and said that he was very anxious to see Sir Sandford Fleming and myself again, and Sir Sandford and I called on Sir John Wolfe Barry last Monday, and had a long interview with him. On that occasion Sir John Wolfe Barry brought forward an alternative proposition, which I am very anxious to put the Conference in possession of. He said that he was unable to agree to our proposal for transfer of so large a portion of traffic as 300,000 words from the Eastern Extension Telegraph Company to ourselves, but he said that he thought that if he could not give us, to use his own phrase, the meal, he might give us the malt, in other words he might give us the same result in another way, and the proposal that he made to us was this, that in a pooling arrangement he should transfer 150,000 words from the Eastern Com- panies to this Board,

Sir SANDFORD FLEMING: I think I must ask permission to interrupt the speaker for one moment. I was party to no proposal. I explained distinctly to you, Sir Spencer, and to Sir John Wolfe Barry, that as I was not in favour of pooling, I should take no part in a discussion on that subject.

:

Sir SPENCER WALPOLE: I was just going to say so, Sir Sandford, myself, but I thought that your observations, as far as my recollections went, were made after Sir John Wolfe Barry expounded his plan.

Sir SANDFORD FLEMING: Pardon me, they were made on both days very distinctly. When you went on speaking to Of course I have ventured to interrupt you now. Sir John Wolfe Barry I could not, with propriety, interrupt you until you were done. step over the bounds of propriety at present, in order that the Conference should not think that I was a party to any proposal made.

The CHAIRMAN: I think you will not be prejudiced in any way; we are only hearing what Sir John Wolfe Barry said.

Sir SPENCER WALPOLE: I was going to state Sir John Wolfe Barry's proposal, and I was trying to quote Sir John Wolfe Barry's words, and in no way whatever pledging myself or anyone else to these words.

Sir John Wolfe Barry proposed that he should transfer to the Pacific Cable Board 150,000 words of the traffic. That he should take over our repairing ship, that he should undertake for us any repairs which we required at an expense of either £200 or £150 a day, according as we employed his larger or smaller ship, and that we should both of us save the expense of opening offices in Victoria and New South Wales by their undertaking on their part to close their offices absolutely. Sir John Wolfe Barry went on to say that if some such arrangement were agreed upon, he would ensure that in the event of any interruption of the traffic, we should receive the whole receipts of the traffic without deduction for 12 months, and that we should receive, if our repairs were delayed beyond 12 months, half of those receipts during the ensuing 12 months.

Now let me, before I go into the pounds, shillings and pence results of that proposal, in justice to Sir Sandford Fleming, say, that at this point, if my recollection is right, Sir Sandford Fleming told Sir John Wolfe Barry that he, individually, and the Government which he represented, was opposed to any system of pooling, and that all he could agree to, so far as his instructions went, was a division of traffic, of Australian traffic between the Eastern and ourselves. For my part, I told Sir John Wolfe Barry that I had no power to enter into such an arrangement as he had con- templated, without further instructions from the gentlemen I was representing, and whom I should feel it my duty to consult. Now the rival merits of these two proposals, so far as pounds, shillings and pence are concerned, are as follows: Under my proposal the Pacific Cable.Board would have secured 300,000 words, which at 1s. 6d. per word

61

represents a sum of £22,500. Under Sir John Wolfe Barry's proposal we secure 150,000 words or £11,250, but then, on the other hand, we save the expense of main- taining our ship, which I think I am right in saying amounts to, roughly, £15,000 a year. On the other hand, we ought to deduct from that expense of maintenance any possible earnings the ship might gain by doing work for other people, and I place the maintenance therefore, not at £15,000 a year, but at £12,500 a year. In addition, if the ship was taken over by the Eastern Companies, I presume that they would pay us a sum of at least £50,000. I am wishing to take the sum very low indeed, and that would represent on the payment we are making to the Govern

year at 3 per ment for interest and sinking fund on our capital £1,750 cent., while also we should save the expense of setting aside a sum for renewals of the ship and the machinery which it contains, and those renewals and the sum which The gross gain to the Board, we are so setting aside exceed £3,500 a year. therefore, from Sir Wolfe Barry's proposal amounts to £29,000 a year. But against that gain we must set aside some sum for the future cost of repairs, for paying the Eastern Extension Telegraph Company for the cost of repairs. I am quite un- certain what sum we ought to set aside, but I put it at the liberal figure of £9,000 a year, which I think would be adequate, and that makes our nett gain under Sir John Wolfe Barry's proposal, £20,000 a year.

I should like to make one or two observations on those figures. First of all, I assume that Sir John Wolfe Barry in naming 150,000 words, named the minimum on which he was making a stand, and not the maximum which he would accept. In fact, as I was leaving the room I ventured, on rather an intimate acquaintance with him, after Sir Sandford had left, to say to him: "My dear Barry, I do not think we can take 150,000 words; I suppose you can spring that," and he said: "Well, I am very anxious for an Agreement." So I think we should probably be able to spring it a little.

I wish also to comment on the expense of repairs. It struck me, he was charging a large sum in charging £200 a day, or £150 a day, for the service of his ship, and I pointed out that his ship was stationed a very long distance from us, which would increase the cost of these repairs in the journey to and from the site of the repair, and he has agreed; he has written to me this morning to say that he thought that was a fair criticism, that he would calculate those distances from some reasonable point, and he suggested that point should be considered, not Singapore, where the ship is stationed, but Thursday Island, which is in the Torres Straits; he proposes

it should be calculated from there. If we were charged for her cost from Singapore, we should have to pay something like 1,500 to 2,000 miles useless steaming. By taking her as from Thursday Island, we start close to some sections of our cable. It is obviously a very important point; and he tells me that so far concerned, he thinks he can suggest some as the northern section of our cable

better plan; I do not know what that plan is, but I presume it is something in con- nection with the cable in which he has a direct interest between San Francisco and Honolulu. I presume they think of having a repairing ship somewhere there for that cable.

Well then, as to the sum, I should like to point out, while I think the £200 a day is a large sum to pay for a vessel, on the other hand you must recollect that in the event of an interruption. he is proposing to pay us on 750,000 words which he is carrying for us during that interruption, and he is, therefore, if he is charging £200 a day, giving us £150 a day for the traffic which we are not carrying; rather over £150 a day it works out.

I am utterly unable to say what the views of the gentlemen at this table may be on such an arrangement. If I were representing a body of shareholders, I should advise them at any rate to proceed to a negotiation, which has the great advantage that it insures our revenue against the consequences of all interruption during its continuance. But representing as I am great and powerful Governments, I can con- ceive that they may not like their cable to be dependent upon the ships of another company, and that they may think it essential to maintain a repairing ship them- selves. On that point, I think, I must ask the Conference to give me instructions. But I want, if I can, to answer Sir William Mulock's question as to the difference between a division of traffic and pooling. As I understand it, the gentlemen who were present at the last meeting I must apologise that I was not here; I am very sorry now that I was not here agreed that there should be a division of traffic, and they further limited it as a division of Australian ordinary traffic.