BIG MERGER

Evening Post, Volume CXI, Issue 71, 25 March 1931, Page 18

BIG MERGER

-MILWAYS AKD TELEGRAPH

CANADIAN PROPOSALS

Amalgamation in a fifty million dollar corporation or. the respective commercial telegraph systems of the Canadian Pacific Railway .and tho Canadian National Railway is being considered by tho two parties, says the "Manitoba Free Press.'' The Canadian Press understands tho proposal has also been put before the Dominion. Government at Ottawa. This is tho much larger idea behind tho statement in Ottawa of Sir Basil Blackctt, chairman of Imperial and International Communications, Limited, "that the Canadian Pacific and Canadian National shall benoino partners with tho 1.1.C. in forming a, Canadian Overseas Communication Company which shall include the Canadian Marconi Company." , Tho suggested amalgamation presents obvious advantages and not loss obvious disadvantages. Economically' there would be tho saving in tho present duplication from coast to coast in equipment and personnel, but oven more important would be tho advantages oi' a strong, all-Canadian corporation, able to meet competition and hold its own against all-comers. For neither of tho two Canadian commercial telegraph companies is really independent becauso each ia necessarily allied and moro or less dependent upon one or other oi: Hie rival United States communication groups, the Western Union and the Postal, which again results in tho bulk of overseas business going through foreign rather than British channels.

AT LOWER COST,

This strong corporation could operate at a much lower cost and therefore at lower rates to the permanent advantage of the Canadian public. At the present time eight commercial telegraph zones are strung across the Canadian continent, and a message to pass from one to another and beyond means an increasingly higher rate, constituting'a heavy toll on the economic life of the country. It is probable that sucl/an amalgamation would permit of the cutting clown of these eight zones to only three—eastern zone, central zone, western zone. In other words, commercial telegraphic -traffic would have to bump over only two cost summits as from coast to coast instead of over seven, while the great area of Eastern Canada would enjoy a flat rate. .Tho first difficulty is the danger of creating a monopoly, which tho people oj: Canada have said over n,nd over ag;;:n they do not want in their transportation. But tho telegraph business isa quite different matter because tho relative duplication of service is much greater, while the danger of slackening in pioneer development is correspondingly less. The danger disappears entirely, of course, if the amalgamated corporation were to be owned by the public, as is tho Canadian National Baihvay itself. But, considering that a superficial glance shows the companies to be about equal in economic and physical strength, an amalgamation of that, kind is not perhaps likely. Much moro probable is a fifty-fifty division of voting control as between the two existing companies. Telegraph rates arc set.by the railway commission, and this might bo fortified by a Government Advisory Committeo sur;li <is in London supervises the 1.1.C. .

FUSION PROBLEM,

Another difficulty would bo ip disentangle the existing fusion of railway and ' commercial telegraph business to bo found in each company. Obviously the railways need wires to carry on their operations, but the bulk of the wires strung along railway rights-of-way arc used for commercial and not railway purpose. The problem is not insuperable. In fact, whatever way one looks at it a great deal of work will have to be clone by the respective operating legal and audit departments before the way is cleared for physical amalgamation. And. back of all is the Dominion Government, trustee for the people of Canada, and in a very special sense trustee for the' Canadian National Eailway, which must be convinced the amalgamation is in tho public interest. Away back in 1002 Sir Sanford Fleming found his dream of an all-red cable materialise in the Pacific cable in which Britain, Canada, Australia, and New Zealand 'were partners. the Imperial Conference of 1928 this cable, together with the Halifax, and Bermuda cable, was merged by purchase in the Imperial and International Com•municatious, Ltd. Into that organisation the Eastern Telegraph Company brought the great strength of its network of cable communications from London via Suez throughout the Orient, and to this was added the British. Marconi wireless syetem, leased to the 1.1.'C. for a term of years by the British Post Office. Thus in the eastern hemisphere the 1.1.C. could meet all competition.

WEAK LINK IN CHAIN.

But in the western hemisphere' the situation was different. The 1.1.C. did not take in the Canadian Marconi, which continued its business relations with the British Post Office, then ; and still a formidable competitor, of the IJ.C. All the 1.1.C. got for transAtlantic business was two out-of-dnte cables, one being salvaged from the Germans during the war. Add to this the strong connections of both the Canadian Commercial Telegraph Companies with United States corporations and it is evident the 1.1.C. was crippled and even paralysed in- trans-Atlantic business.

Canada, -therefore, has been a weak link in the chain an'cl the purchase oi! Canadian Marconi now being negotiated by Sir Basil Blackett is the first step to strengthen it. If that can be followed by an amalgamation of the Canadian land wires the Canadian link with Australia, New Zealand, and the Orient from London will begin to compare more , ffavourably with the link from London via Suez.

Oriental business will resume its natural flow through Canadian channels and thus incidentally stimulate Canadian trade with the Orient.

It would be promaturo to say this proposal for the amalgamation of the two Canadian telegraph systems has reached a stage beyond that of examination by tho two Canadian railway companies. The final word rests with the Dominion Government and Parliament.