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The salaries of operators are based generally on those paid by the Board, which, however, gives house accommodation in addition. The salary of the Board's Representative, and the officers in charge of the two stations have been taken at a low figure, with due regard to official salaries in Australia, and I think it is probable that house rent, or a house allowance, may be found necessary in addition, in some cases at least. Rents and miscellaneous charges are an estimate, it being borne in mind that the offices must be in the most central positions, and on 咁 the street level.

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The estimate for maps, &c., would include all Australia and New Zealand. This has frequently been strongly urged by the New Zealand Government.

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In proof of the costliness to the Pacific Cable Board of a vigorous competition with the Eastern Extension Telegraph Company I quote the following extract from the speech of the Chairman of the Extension Company at the general meeting of May, 1904-Referring to the competition of the Pacific Cable, he adds: This severe competition, however, haa, as before mentioned, entailed a considerable increased expenditure at all our Australian stations. result of the competition is that the Company's cable system in Australia is scarcely remunerative, the receipts at the present time barely covering the working expenses."

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also add that it was stated in the Commonwealth Senate that Mr. Warren, the Company's Representative in Australia, received £3,500 a year and £1,500 entertainment allow- ancé. These figures are probably exaggerated, but they indicate the position occupied by Mr. Warren in, Australia. He has a strong staff of efficient assistants in Perth, Adelaide, Melbourne, Sydney and New Zealand, and though the Board's arrangements will be on a smaller scale, they must be efficient and adequately financed.

C. H. REYNOLDS,

General Manager for the Pacific Cable Board.

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July 14, 1905.

APPENDIX No. 7.

MEMORANDUM ON POOLING BY SIR SPENCER WALPOLE.

I assume that the concessions granted to the Eastern Companies in Australia have deprived

the Pacific Cable of traffic worth £25,000 a year at the least.

I assume that, by an expenditure of about £8,000 a year and vigorous competition, we might recover this traffic.

Our position would then (quá the present traffic) be (£25,000 — £8,000, or) £17,000 a better than it now is.

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I consider, therefore, that if, by arrangement with the Eastern for pooling the traffic, we could recover, say, £20,000 a year and avoid the necessity of spending £8,000, we should be £3,000 a year better off than if we fought.

I take it for granted that, in any such pooling arrangement, future increases (or decreases)

of traffic would have to be divided in the same proportions as the original traffic; but, for the sake of simplicity. I do not go further into this point.

I take it also for granted that, if the arrangement were made, it would run for a fixed period of years.

Whether the Eastern Company would agree to such an arrangement is a question on which I offer no opinion. It is obvious that there would be no chance of them doing so unless they knew that the contributing Governments had authorised the most vigorous competition if they failed to do so.

But nothing can be lost by trying whether such terms as I have indicated can be secured; and there is a possibility, at any rate, that something may be gained.

I have reason for believing that the Eastern Company is anxious to arrive at an agreement.

July 14, 1905.

SPENCER WALPOLE.

PUBLIC RECORD OFFICE

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