CO885-(7-8) — Page 141

PUBLIC RECORD OFFICE

Reference -

TLPHIC.O.885

PUBLIC RECORD OFFICE, LONDON

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

6

A

in the proportion of about 3 and 8 per cent. respectively of the whole traffic. reduction of rates over the Pacific cable to 18. 67, and 18. respectively in these cases would represent roughly a diminution in receipts of £4,500. Press business, however, is particularly responsive to any reduction of rates, and we are therefore of opinion that the preceding estimates of the deficit are not materially affected by the question of these special rates.

We have so far considered the subject on the basis of existing facts. Recently. however, the prospects of the case have been seriously affected by an offer made by the Easter Companies to the Australian Colonies, We gather from correspondence received from the Colonial Office that the Companies propose to lay a cable from South Africa to Western Australia, and to reduce immediately the rates to and from this country to 48. a word on ordinary, 3×, on Government and Is. 6d. on press nfessages; further, if their receipts from Australasian traffic at a 4s, tariff in [sas, 1899 and 1900 average £350,000, to reduce the rate to 3s, 67, in 1991 ; and to reduce it further to 38. and 28. 67, if the same average is maintained in the three years 1899-1901 and, 1900–1902 respectively; but should the average receipts not keep up to £350,000, any one of the above reductions would be postponed until the receipts average that figure for three consecutive years.

If the reductions contemplated by this offer were carried out, it is clear that the Pacific charges would have to be reduced puri pussi and it will be obvious from the figures given above that if the through rates were to fall below 3s, the prospect of the cable becoming self-supporting would be seriously affected. It is proper to observe, however, that if the Pacific cable obtained anything approaching a third of the whole traffic, the conditions on which the progressive decrease to 28, 677, rests would never be obtained and may practically he disregarded. Other causes would no doubt operate towards a reduction of the present rate of 4s. 97, and it must probably be contemplated that a higher rate than 3s. could not be permanently maintained.

The consideration which the Companies require for these terms is that they should be allowed to open offices in certain chief towns in Australia in order to receive and deliver "international telegrams from and to the public direct. Such a concession might hereafter raise a question of compensation in the event of the Australian Government desiring to acquire the Company's property, but we do not regard this consideration as being within the terms of our references. We are of opinion that these facilities would enable them to obtain a larger portion of the traffic than they would otherwise get, and so far as the interests of the Pacific cable are concernell, we should accordingly deprecate their being given. In ordinary circumstances the Australian Colonies would of course be free in every sense to deal with the matter as they thought fit; but the concession at this time affects the other Governments who would be partners in the Pacific cable.

The monopoly, however, of collecting stations by the Australasian Governments was not made a condition of the calculation of the previous Committee, nor has it been relied upon in the preceding estimate of trattic, which is based upon a consideration of the proportions which the public of each colony would contribute in accordance with local interest and convenience.

In conclusion, we should recommend a rate of 28. a word for ordinary messages over the Pacific cable, representing a through rate of 3s. or 38. G., nccording to the Atlantic- American charge. This, as above stated, would mean a deficit at the outset of £54,000. We have already, in estimating the number of words transmitted, taken into consideration the influence of a reduction in the rate, and we would now observe that if the through rate were reduced to 38, or 3x. 6/7, this influence must greatly strengthen the conditions operating towards an expansion of the traffic. Secondly, the above calculations have had reference only to the traffic between Europe and Australasia: this was stated by the representatives of the Eastern Companies in 1896 to include a traffic with Canada and the United States of £10,000 or £12,000 a year; and it seems safe to say that the Pacific cable would secure the whole of this traffic, and that the great reduction of the rate (from 68. 3d, to 28. in the case of San Francisco, which is the centre of the bulk of the trade between the United States and Australasia) would tend to a considerable increase, especially as the trade between the North American continent and Australasia is rapidly growing. Then there is the local Pacific trade to which not only the Colony of Fiji, but also the Samoan Islands and other places in the Pacific would contribute. We think that a substantial and progressive traffic would be obtained from these sources, and that it may reasonably be hoped, in view of these two considerations, that in the course of some years the deficit would disappear.

7

286

The commercial object of the project is the reduction of the rate, and it is hardly necessary for us to refer to the influence of low telegraphic charges in encouraging communication between the United Kingdom and its Colònies, The saving to the public from a reduction of the rate from As, td, to 3s, would be about £200,000 a year on the present traffic. We conclude accordingly that the Pacific cable should only charge 28. a word on ordinary messages, as has been urged in several Colonial representations, even if it is worked for a time at a loss.

III. The steps which should be taken in order to secure that all messages between this country and Australasia should be sent solely through British territory, or through cables owned and worked by British Companies,

We have referred under the previous heal to the situation caused by the relations between the Commercial Cable Company and the Canadian Pacific Railway Company on the one hand, and the Anglo-American and the Direct United States Companies and the Western Union Company on the other. We have entered into communication with the three British Companies with the view of ascertaining whether it would be possible to make arrangements for the transmission of the Pacific Cable business across the Atlantic Ocean and the American Continent by lines which are owned and worked by British Companies. This correspondence is not yet concluded, and we can only say at present that, if it is found that such arrangements cannot be made it will be necessary to use either the Commercial Cable Company's lines across the Atlantic or those of the Western Union Company in America, The Commercial Cable Company is, properly speaking, a United States Company, as it was incorporated there, but it has stated the following circumstances as showing its British character :—

Ist. The Company exists in Canada by an Act of the Dominion Parliament. 2nd. A large number of its shares and a large amount of its bonds and debenture

stock are owned in Great Britain and Canada.

3rd. All its Trans-Atlantic cables land on British and British Colonial soil, and are

thus under British control.

4th. Five of its Directors and almost all its employés are British subjects.

5th. The Company's repairing steamer is a British ship and flies the Brifish

flag.

6th. Messages transmitted by the Company between Great Britain and Trejand

and Canada never leave British territory.

The 3rd, 5th and 6th of these points show that the cables of this Company would be practically under British control whenever necessary, and this is the material requirement. IV. The framing of a scheme for the permanent administration and working of the cable when laid.

We consider that the administration of the cable should be vested in a permanent Board sitting in London, and that the most convenient arrangement as to the composition of such a Board would be that it should consist of eight persons, to be appointed as follows:--

Three by Great Britain, including the chairman with a casting as well as a

deliberative vote.

Two by Canada.

Two by the Government of the Australian Commonwealth.

One by New Zealand.

Each member to hold his appointment at the pleasure of his Goverment.

The Board should meet not less than once a month, and would control the policy and management of the cable, and conduct or approve all negotiations or discussions with Governments, Companies, and persons, subject to informing the Imperial Government in all cases of negotiations with Foreign Governments, and following any

directions they might receive with regard to them.

It is not contemplated that the members of the Board should receive remuneration, There should be a salaried Manager, responsible to the Beard, who should conduct the business and supervise the staff of the cable subject to the general control of the Board.

The Board should have the power of removing the Manager or any member of the staff at any time, but subject in the case of the higher officials to the confirmation of Her Majesty's Government, to be conveyed by the Chancellor of the Exchequer.