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PUBLIC RECORD OFFICE

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C.O. 885

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PUBLIC RECORD OFFICE, LONDON

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

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PACIFIC CABLE COMMITTEE:

the evidence bearing on the subject, and feeling that they must in such a matter be actuated by extreme caution, select 750,000 words (which are between a third and a half) as a basis of calculation for the year 1896. They further consider that the estimate may In 1876 the amount assume an annual increase of this traffic at a rate of 10 per cent. of the Australasian telegraphic traffic was 235,160 words; in 1885 this had risen to 537,355 words; and in 1895 to 1,860,423 words. Thus the estimated rate of increase is considerably below the ascertained average increase of recent years; but special caution is advisable in drawing an inference from this, as the increase has lately been out of proportion to the increase of business so far as shown by imports and exports, thus probably indicating a change of habit in transacting commercial business which must have some limit, and further, the rather special circumstances of the Western Australi

There are no materials for estimating gold discoveries must be taken into account. the probable increase in the American-Australasian traffic, which is at present very smali, but it is likely that with a Pacific cable it would substantially develope. A little local traffic in the Pacific may also be counted upon.

65. These circumstances appear to the Committee to show the moderation of their estimate, but they have not failed to bear in mind the fact that the Eastern Telegraph Companies possess an old-established business, with wide connections, and that if any injury might (in the Pacific cable, great a prolonged break-down occurred on

On the other hand, the absence of a duplicate cable) be inflicted on its business. Atlantic Cable Companies in England would be interested in collecting traffic for a Pacific cable.

66. The amount of the through rate would depend on the terms made with the trans-Atlantic Companies and the American land-lines, but the Committee have been informed that a shilling rate could be obtained from Great Britain to Vancouver.

67. Taking, however, the existing rate to Australia of 4s. 9d, a word as a basis, and assuming that the existing rate of Is. 6d. from Loudon to Vancouver is maintained, a On an estimated traffic of 750,000 Pacific cable would be able to secure 3s, 3d, a word.

If the tariff were reduced so as to words in 1896, this would amount to 121,8754. admit of a Pacific cable retaining 2s. a word, the revenue would be 75,0007; and at 1s. 6d. a word, 56,2501. This calculation is based on the assumption that each No reduction is made for Government or Press telegrams, word pays the full rate. because allowance for this consideration has been made by the Committee in arriving at the above estimate of the total traffic, and after reckoning that similar proportions of press and Government telegrams would be carried by a Pacific cable, and at similarly According to the returns reduced rates to those now transmitted by the Eastern route.

of the Eastern Extension Telegraph Company for 1895, the press words were about 10

per cent. per cent. of the whole, and the Government words about 2

68. The Committee have only to add, with reference to the financial question, that the cable would be a competitive line and would have to be managed accordingly. While they have felt themselves bound, as they have remarked, to show extreme caution in their estimates, they consider that the question of expenditure, and still more the question whether a business approximating more to the capacity of the cable could be obtained, would largely depend, as would similar questions in all industrial enterprises, on the energy and care shown by the management.

69. The evidence has clearly shown that the best management and the adoption of the most improved methods can get much more paying work out of a cable than inferior management and the use of older methods.

Recommendation and Summary.-70. In consideration of the traffic estimated for the cable, and of the opinion expressed below, that a duplicate cable should be laid at the earliest possible moment, the Committee have arrived at the conclusion that a core over the long section from Vancouver to Fanning Island of 552 lbs. copper and On the assumption that this recom- 368 lbs. gutta-perchia will be sufficient.

at 144,8871. mendation is adopted, and taking the total annual expenditure and the increase of business at 10 per cent. per annum on 750,000 words in 1896, a Pacific cable would, if it came into actual work on the 1st of January 1900, earn 178,4371. in its first year of working if the rate obtained by it per word were 38. 3d., thus leaving a credit balance on the first year's working of 33,5501. If the rate per earn 109,807/.; in 1901, word were reduced to 2s., in the year 1900 it would 120,788.; in 1902, 132,8677., and in 1903, 146,1537.; it would thus become a paying concern during the fourth year of working.

REPORT.

V. OWNERSHIP.

71. The Committee are of opinion that the cable should be owned and worked by the Governments interested.

72. In arriving at this conclusion, they do not underrate the importance of allowing all commercial undertakings to be carried out, whenever possible, by private enterprise unassisted by Government. But in the present case there seems to be no probability that private capital will be forthcoming for the purpose of laying a Pacific cable without a larger subsidy than the Governments interested in the project would be prepared to grant.

73. If Government assistance, in some form or other, is necessary, the Committee think that a scheme under which the cable would be constructed and owned by the Govern- ments interested is much to be preferred to a private company working under a Govern- ment subsidy.

VI. MANAGEMENT.

74. The Committee are of opinion that the general direction should be in the hands of a manager in London, under the control of a small board, on which the associated Governments would be represented. The manager would be in communication with the telegraph authorities of the respective Governments with regard to matters of local administration. The details could be arranged without difficulty by the Governments interested.

VII. CONTRACT.

75. The contract would in the main follow the ordinary forms, specimens of Provision should be made for a preliminary which are shown in the Appendix.

officer appointed by the Governments, and survey under the supervision of an for the maintenance of the cable by the contractor for six months, as recommended above. The cable in shallow waters should be protected by brass tapeing against marine insects. The details of the specification would present no difficulty when the type for the long section has been fixed upon, as there is not much difference between the present modes of constructing submarine cables.

Duplication.—76. The Committee have only to add that it would in their opinion be necessary to lay a duplicate cable, and that, if a deviation from an all British route were permissible in the case of a duplicate cable, and if the circumstances of the time permitted of it, such a cable might advantageously follow a somewhat different route, vid Honolulu. Most cables on important routes have been duplicated, but generally in the first instance they have been laid singly, and the duplication has followed when the success of the undertaking warranted a fresh outlay of capital.

77. There can be no doubt, however, that the duplication should be effected at the earliest convenient opportunity. Cables have usually been duplicated to protect and preserve their business in case of interruptions, even when there have been no competing lines ready to profit by their breakdowns. Duplication would be, therefore, the more in the case of a new line, which would be laid in competition with an existing undertaking.

necessary

78. If a second cable were laid along the same route as the first, the annual expenditure entailed by it might be reckoned at 37,000 less than that of the first, as the additional working expenses would certainly not exceed 15,000%., and there would be no If a second cable were laid vid additional standing charges for repairing ships. Honolulu, not only would there be the above-mentioned reduction in annual expenditure of 37,000, but also a very material reduction in the charges for interest and sinking fund, as the capital required would be less.

79. In the event, therefore, of a second cable being lid along the route recommended for the first, and on the assumption that the tariff were reduced to 2s. a word, and that such a reduction brought no increase of business beyond the 10 per cent. per annum already estimated, the total annual receip's from the two cables would exceed the total annual expenditure upon them in the tenth year from the commencement of the work of the first cable in 1900. If a second cable were laid along the cheaper route, or if the tariff were not reduced to 2s. a word, or if the annual increase of business exceeded 10 per cent., the period during which the total annual expenditure exceeded the total annual receipts would be proportionately shortened.

80. Moreover, the financial position of the cables would be a very strong one.

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