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PUBLIC RECORD OFFICE

Reference -

1111C.O. 885

6

ALLY, WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC.

COPYRIGHT PHOTOGRAPH-NOT TO

PUBLIC RECORD OFFICE, LONDON

1 December 1896.]

Mr. Jones- continued.

Mr. CARSON.

2623. Would a cable made to-day, under new conditions, have the same fate: would it not stand greater pressure?—It might stand for this reason, that now to-day you cover the iron wires with thin gutta-percha, which would prevent them touching the bottom and becoming oxidised; that is where the greatest improvement comes in. We introduced it in our 1880 cable.

Chairman.

2626. There has been a great improvement in cable construction?-To that extent. When we laid the 1880 cable, we put gutta-percha round the iron wires as an experiment. The result is that we have only had four interruptions since That cable at the present 1880, 16 years. moment is broken, and I have instructed our ship to see how that new style of cable looks. It is the first time it was ever tried. There is that improvement, certainly.

cables

2627. And what kind of bottom do your go over?-All kinds. Sometimes we get them in, ooze, sometimes on rock. If you lay a cable which has a plain galvanized iron wire covered with tape on rock, the tape rubs off and the iron begins to oxidise immediately, therefore you quite understand that the cable will not come

up.

2628. Most of your breakings have been on the rock-On the rock. It is so always.

2629. Always? If you can get your cable into white chalky ooze the cable would last for But you do not know how long you have ever. that kind of bottom.

Sir Donald Smith.

[Continued.

2630. As the result of your experience with regard to cables, would you consider a test of three years sufficient; that is, if a guarantee were given by a contractor to maintain a cable for three years, would you consider it satisfactory? -No; all my figures show to the contrary.

2631. So that a test of three years you would not consider a sufficient guarantee r-No. You take the 1865 cable; it did not break for three years; and the 1866 cable, it broke, certainly. but it was only broken 99, 69, and 93 days each of the years 1867, 1868, 1869; but in the follow- ing years it was broken 153 and 154 days. The 1869 cable for the first three years was not broken at all, therefore you would be paying contractor so much extra for maintenance while he had the whole strength of the cable to work against. All the interruptions on the 1869 cable took place after the third year, and in the 1973 cable they all took place after the sixth year; the 1874 cable, after the seventh year no interrup- tions on the first three years; the 1880 cable, after the third year.

Mr. Gillies.

2632. But you had more than one cable, had you not ?-We have four cables; we have laid eight.

2633. In the same direction?They all go in the same direction. We have laid eight we are Of the seven Atlantic cables maintaining four. belonging to the Associated Companies, Anglo, Direct, and Western Union Companies, as many as four have been broken at one and the same time.

The Witness withdrew.

Mr. ROBERT KAYE GRAY, called in ; and Examined.

Chairman.

2634. I THINK you are the Managing Director of the Silvertown firm? Well, my position is rather a peculiar one, but I will tell you what it is. I have been engineer-in-chief since 1975. and to-day I am engineer-in-chief; but I net sometimes as managing director, and I am quite capable of saying anything that is necessary on the part of the company.

Before 1875 I was

chief electrician to the company for three years, and before that I was a servant in the usual way from 1869.

2635. Your brother has already given evidence before this Committee.-I believe 80.

2636. And there was a certain point which he was not able to answer, and we have asked you kindly to come and answer on that specific point alone. Your firm in response to an ad- vertisement of the Dominion Government sent in tenders for "Form A.," all routes for a cable from Vancouver to Australia. They also sent in an estimate, not a tender-an estimate for "Form C." "Form C." was the cable to be

Chairman continued.

owned, maintained, and worked by a company under a Government guarantee. You distinctly stated that you did not make a firm offer in re- gard to "Form C."?—That is 8o.

2637. But merely presented an estimate as an indication of the kind of tender you would make if that form was eventually chosen?-Quite so

-yea.

2638. Therefore, of course, I cannot expect you to be extremely definite in your accounting for the figures which you put forward. So far

as

you can, this Committee would be glad to know on what was based your estimate of a guarantee of 226,0001, worth of gross business for Route 1, that is from Vancouver vid Fanning Island to Australia ?-£226,000 per annum.

2639. Per annum?—Yes.

2640. Now, first of all, can you tell us how that 226,0007 was composed ?—Yes. In the first case I have taken 1,517,000, as the cost, which you will notice is the same figure as our cash tender. I considered, then, that it was

1 December 1896.]

Mr. R. K. GRAY.

Chairman -continued. necessary, if money was to be found by a financial combination, to look upon that sam as 90 per cent. of the capital that would be required tu be raised. Adding, therefore, one-ninth to 1,517,000. would be 1,685,0007, Then as the work would take probably two years to do, and it would be necessary for your contractors to have advances during the work, I estimated that the interest on those advances would probably amount to 65,000. That brings the total sum to 1,750,000/ A cable security. I suppose, is looked at as a 5 per cent. security, and it would be necessary that the capital should be repaid in a certain term of years. Well, you will notice in the information we gave about it that we said 25 years guaranteed payment; but I thought that from a prudent business point of view it would be well to take a 5 per cent, security, repayable in 23 years, In order to do that the annual charge would be 7:42 per cent., and I think that if you multiply 1,750,0007, by 742 per cent. you will find 130,000 a year. Then to the 130,000 a year I added what we consider the expenses for maintaining and work- ing the line. This amounts to 96,000. per annum, 2641. That includes maintenance and repairs? --Yes.

2642. Can you distinguish between the main- tenance and repairs and the working expenses? -I will try to do so. Of course, it is very difficult to give an absolute figure, it is so much a matter of personal opinion, but my opinion of it is this: You would require two repairing shipe; I have estimated that those ships will cost 20,000Z. a year each, that is to say, 40,000. for the two ships. So far as staff is concerned, working staff, I think that would cost 26,000 per annum. Then as to the cable to be used in repairing, I have taken it at 30,000% per annum. This represents, roughly, about 150 miles per annum.

2643. Did you make any calculation as to the probabilities of revenue-That again is diffi- cult; but I have some figures here. It is a very indirect way to get at it, but still it is all I can do. It might be about two-thirds of the total traffic whatever that may be. I think, pro- bably to-day it would be about 175,0007.

2644. £175,000. actual tariff.

2645. Of 4. 9d. a word? Yes. 2646. Have you reckoned at all how many words you would get through-I have not worked it out,

2647. The total number of words, roughly speaking, last year that were telegraphed to and from Australia was 2,000,000, what proportion of that would you reckon? I think the public return by the company stated that the traffic amounted to 360,000/ If I sny 175,000, 1 mean 175,0001. for the Pacific line.

2648. Out of?- And I believe the other was 360,0007.

At what tariff?-At the

2649. That is nearly half?-Nearly half. 2650. Did you arrive at that basis of half by any process of your own, or did you adopt that figure from other people's calculations? Well, I arrived at it in this way. I supposed that if the

[Continued.

Chairman-continued. Pacific cable is Inid the traffic of West Australia and the traffic of South Australia will go by the existing lines, but the traffic of Victoria, the traffic of New South Wales, the traffic of Queensland, and the traffic of New Zealand will go by the Pacific cable. The only modification of that would be the routed traffic. The question of routed traffic is a very wide one, and a very difficult one to deal with; but I know of a case of a company with which I have had a good deal to do, in fact, I may say I am practically managing director of that company. Their lines extend from Spain to Brazil, about 4,000 miles long, Our line works directly in connection with the Brazilian Government, with the Spanish Government, and with the French Government, the result being that we get practically all their traffic. I cannot give you the proportion that the routing takes away from us. but it is not very large. On the other hand the Brazilian Submarine Company are a competitor. They own a line from Lisbon to Pernambuco parallel to our line. On this side Lisbon is connected with Great Britain by the Eastern Telegraph Company. On the other side Pernambuco is connected with certain Brazilian stations and with the Argentine by the Western and Brazilian Telegraph Company. The Eastern Telegraph Company has a private. arrangement with the Brazilian Submarine for the interchange of traffic at Lisbon. The Western Brazilian Company has a joint purse with the Brazilian Submarine. The result of this working is that we, a competing line, get no traffic from Great Britain to Brazil. We get no traffic from the stations of the Western Brazilian Company to Great Britain or the Continent. We get traffic from the Argentine, but that is for other reasons. My family happen to be considerable owners in a small line of telegraph that "us across the River Plate between Buenos Ayres nd Monte Video, and there is also a con... ing line there, and therefore are able to practically have collecting offices in Buenos Ayres. The object of my going into this long story is to give you an experience of the great importance of collecting offices; that is to say, that having collecting offices you can almost send the whole traffic by the route that those collecting offices select. Well, in connection with the Pacific scheme, that is a very big question, because we have New South Wales, Victoria, Queensland and New Zealand probably interested in the Pacific cable. They control the collecting stations, and will therefore, I suppose, use their own line. Now if the experience I have given you of the South American traffic is of any use it would certainly point out that these four Colonies in Australia would give practically all their work to the Pacific line. Turning to Great Britain, the Eastern Company would be the sole collector here for the existing route. All the Transatlantic companies would be anxious to have the traffic, and would be collectors for the Pacific route, The number of stations that these lines respec- tively have, I find, are, the Anglo-American Telegraph Company, 14 stations, the Commercial

we

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