TELEGRAPHIC CABLE RATES.

New Zealand Mail, Issue 761, 1 October 1886, Page 30

TELEGRAPHIC CABLE RATES.

We have received by telegraph from the Cable Superintendent of the Eastern Extension Australasian and China Telegraph Company, at Wakapuaka, the following communications : TO THU EDITOB. Sib, — I am instructed to communicate to you the accompanying copy of a telegram forwarded by the Chairman of the Eastern Extension Australasian and China Telegraph Company (Limited! to the Government of New Zealand, notifing that the tariff of the Sjdnev-Nelson cable for intercolonial telegrams will, on and after the first of October proximo, be 10s for 10 wordß, and Is for each additional word, instead of 6s for 10 words, and 7d for each additional word, as heretofore. The Company have delayed taking this step for the last eight moDthp, hoping that the necessity for it might be avoided ; but having, after prolonged negotiations, failed to obtain a renewal of the subsidy which expired last February and the receipts with the subsidy being insufficient, after ten years working, with a single iateruption during the whole of that period, to give, when amortization is deducted, at a net of 2 psr cent on the capital invested—they have no alternative but to raise the tariff to recoup the loss of the subsidy. The Government of New South Wales, as far back as June 1885, agreed to renew their 3hare of the subsidy for a further ten years, and in consideration of such concession the Company were preppred to reduce the tariff to 5s per ten words for ordinary and 3d for Press telegrams, but the Parliament of New Zealand would only agree to renew the Bubsidy for five years, on conditions unacceptable to the Company. Subsequently the Company offered to make the tariff any figure the Colonies pleased, provided the average of their receipts for the last three years were guaranteed. They would have given the Colonies full control over the tariff, and a cheaper rate coaid thus have been obtained than it would be po«-ib!e to establish by any other reasonable means, and if the opinion frequently expressed in the Colonies, that cheaper rates would lead to a corresponding growth of tariff, were borne out the amount of guarantee the Colonies would have to make up would be quite nominal. The proposal, however, was declined, and the New Zealand Government now withdraw the offer sanctioned by Parliament for a renewal of the subsidy for five years. Under these circumstances the Company is reluctantly compelled in the interests of their shareholders to raise the tariff as above announced, and the responsibility for this course must rest with Government of New Zealand, and not with the Company, a 3 the latter have exhausted all possible means of bringing abcut a satisfactory solution of the question. A complete copy of the correspondence relating to the negotiations between the Company and Governments of New Zealand and New South Wales will be received in a few days, when it will be forwarded to you for publication. I am, &c , A. Woolxough Bbowning, Superintendent, Cable Bay, Nelson.

Mr Woolnough sends by telegraph a copy of a message from the Chairman of the Company to the Colonial Treasurer. It is as follows :—London, 20th September. Sir, — On my return from abroad I was sorry to learn the decision of your Government, as communicated by your telegram of 24th ult.

The Company have done everything possible to conciliate your Goveratneat, and to meet the requirements of the telegraphic public, and if our guarantee proposal had been accepted it would have given the public a cheaper tariff than it is possible to obtain by any other means without entailing considerable expenditure on the Colony-. Under the circumstance q however, the Company hive nc» alternative but to raise the tariff for intercolonial telegrams, from the Ist of October, to 10s per ten wordq and Is f.:r every additional word, in order to recoup the loss c£ the sub-idy, and I think it desirable that the public should know why the Company are compelled to adopt this course. I have given instructions that the whole of the correspondsaoe on the sub ject is to be published. The Company will be prepared to reduce the tariff, as previously offered, to 5a for ten words for Government and ordinary messages aud to 3d per word for press telegrams whenever your Government ia ready to renew the subsidy. DEPUTATION TO THE GOVERNMENT. A deputation from the Chamber of Commerce waited on the Postmaster-General (Sir Juliua Vogel) in regard to tbe question of the cable rates. The deputation was composed of the following gentlemen : —Messrs W. T. L. Travers, T. K. Macdonald, J. It. George, D. T. Stuart, J. B. Harcourfc, and Duthie, Captain Rose, and Mr S. Carroll (Secretary to the Chamber). Mr Travers said the Chamber of Commerce asked for an interview with the PostmasterGeneral with reference to the threatened action of the Cable Company of raising the cable rates in consequence of tbe refusal of tbe Government to entertain tbe Compiny's proposals for a c jolicuance of subsidy. He believed the members cf the Chamber gene- / rally con marred with the Government in the action they had taken, and did not wish to press upon them any course of action which would prevent the establishment, if possible, of a second cable. At the same time, it was felt that an increase in the present cable rates would be a serious matter, more especially as the use of the cable had increased a good deal ; and they were anxious, therefore, to know what course the Government proposed to take with reference to the threatened increase of rates. The members of the Chamber had gone, of course, on what had been published in the papers, assuming that it was published with the sanction of the Government. They had been in communication with the Chambers in other parts of the Colony, and they found that the Canterbury Chamber had apparently been in communication with the Government on the subject, and concurred a great deal with the Wellington " Chamber with regard to the action proposed to be taken. The Wellington Chamber had passed a resolution as follows : “ That tbe Chamber communicate with the Chambers at Auckland, Christchurch, and Dunedin, asking their co-operatiou, and actual representation on a deputation to the Premier and Postmaster-General, to urge the temporary continuance of the subsidy to tbe Eastern Extension Telegraph Company, on condition that the rates be reduced from lOd to 6d for ordinary messages, aud to 3d for Press messages, aud that failing a reduction in rates on the basis suggested the Government be urged to take steps as early as possible to lay a duplicate cable between this Colony and Australia.” Tbe Chambers did not wish, he thought, to see any arrangement made for a long period of time. They considered an arrangement should be purely temporary, if made at all, for they conceived that tbe laying of. an additional cable would be attended with very great advantage to the Colony ; and they concurred in that respect with the views of the Government. They would like to know, therefore, whether there was any prospect of an additional cable being laid by the Government, or whether tha Government would entertain the proposals of the Company to reduce the rates oa a continuance of the subsidy. Sir Julius Vogel said he did not kaow whether he should be trespassing too much on the time of the deputation, but he thought the present opportunity was a very convenient one to go into the whole question. When the matter was before Parliament last session, as negotiations were then going on, it was not considered expedient to lay the papers before the House. They had, however, now arrived at a point where a good deal of information could be laid before the public, and if the deputation had the time to spare he would go fully into the matter, as regarded the correspondence with the Company, the contingencies which might arise, and the whole question of dealing with the cable. In the session of 1885 the Government asked Parliament for power to give a subsidy for five years. Before that time, in view of tbe subsidy coming to an end in February, 1883, the Company had pressed it upon the G ivernment to make some fresh arrangement, but the Government did not sea any emergency ia the matter, and did not fall in wir.h the suggestion. But during thesessiou of 1885 they asked Parliament for power to renew the subsidy for five years, conditionally on the cable rate for ordinary messages being reduced to 6d a word and 3d for Press messages, That was carried in the House after a great deal of discussion—and not very unanimously, he thought. Before then, and about the time when the Company was bringing the matter b ifore tha Government, tha Christchurch Chamber of Commerce—and he thought some others—contended that the rates were very high. He wrote to the Chamber giving them a comparison with the rates charged in other places, and showing them that the rates in this Colony were not higher, but on the contrary, were lower than in any other part of the world. At the same time, he did not mean to deny that, looking at the matter from an abstract point of view, the rates were very large. After Parliament had given the power he bad mentioned the Government communicated with the New South Wales Government, aud telling them what authority had been given, authorised them to negotiate with the Company within those powers. The Government of New South Wales regotsated with the Campauy, and the result was that the Company offered to give tbe reduced rates, but asked for a subsidy for ten years. The New Zealand Government had no power to go beyond five years. Thereupon the Company sent them something in the shape of an ultimatum. They offered, if aub-

sidised for ten years, to make the reductions, and to continue the present rates if subsidised for five years ; but if the five years' suh-idy was not given they would increase the rates at once. He (Sir Julius) at once telegraphed to the Agent-General to ascertain tbe cost of a new cable. Three tenders were received, and the lowest, after being amended by Mr Preece, engineer to the General Post Office at London, was about £170,000. The Company then re-opened negotiations wilh the Government, aud asked whether they would join with the Governments of other colonie l in sharing a cable subsidy of £32,400 per annum, aud extending the subsidy to tvveLty years instead of thirteen as it now stand t If so, they would fall into the Government’s views as to the New Zealand cable subsidy. Tue Government declined to enter iuto the agreement as to the extension of the existing subsidy to the European line, and also intimated that they were not prepared, then, to gay they would abide by the five years’ subsidy proposal for the Australian lines, since they found they could get a new cable oa such reasonable terms. Then came another proposal from tha Company, that the Governments shculd guarautte a revenue equivalent to the average revenue of the last three years, both with respect to the Australian and the European cables, or to deal with each line separately. If that was accepted, the Company would allow the Government to fix rates as it pleased. He (Sir Julius) was rather favorable to that, because be: thought some consideration was due to the Company. But the Government, after consideration, decliued the offer. Then there was an intimation made that the Company would be willing to fall back on the original five years’ proposal. Mr Travers asked whether the average rate was mentioned.

Sir Julius Vogel said yes ; the average guarantee asked for three years was £26,500.

Mr Travers : Bstween Australia and New Zealand ?

Sir Julius Vogel : Yes. The Government considered the last proposal, and came to the conclusion that it was not expedient to give the five years’ subsidy. They considered that the Company was not justified in raising the rates, and that the price to be paid for reducing the rates, with the contingency of it stopping action in the direction of a permanent reduction, was not a desirable one. The advantages to be gained by a temporary reduction were not to be compared with those of a permanent reduction. At last the Government received, a few days ago, a communication from the Company (of which an authentic copy had been published) that the rates would bs raised on the Ist October next. There was a remarkable question in connsction with this matter, and that was that by the terms of the conventuries that had been held at Berne, Berlin, St. Petersburg, and Loudon at various times, the International Office had to give fifteen days’ notice of any alteration in the tariff. The Government had not received any such notice and he did not see how, without violating the rule 3of the Convention, the Company could raise the rates as they threatened to do. The Government also considered clauses 8 and 13 of the contract with the Company. On the same evening they received a telegram from the New South Wales Government, suggesting attention to tbe same clauses. (Tneae telegrams, Sir Julius explained, he could not give the copies of.) These clauses dealt with the questions of terminal rates, and what was called accommodation. Now tha Government had dealt with the Company most generously. Clause 8 said that the Government was to give accommodation to the Company to the extent of allowing them to transmit messages in their (the Government’s) buildings, and that that was to continue while the subsidy was paid for ten yearp, or so long thereafter as tbe rates were not raised. He believed it was open to the ingenuity of lawyers to so twist that as to extend it, but tbe common-sense view of the matter was that the accommodation ended at tbe expiration of the ten years’ arrangement that was entered into. But apart from that, the accommodation provided for was very different from that given. The Company had not spent a sixpence on buildings or anything of the kind. They had houses and offices provided for them. As to clause 13, that was very clear. The Government were not to charge a terminal rate while the charges were not raised. The common-sense view of the matter there was that tbe Government had a right to raise those rates if the Company ceased to give accommodation to the public. He poiated oat that the Government had collected the rates and money for the Company, and did everything for them. These were the points involved. Whether they would lead to the Company raising the rates be could not say. There was no obligation on the part of the Government to collect rates ; in other parts of the world the compani -s collected their own. There was also the point he had alluded to, as to notice not being given, bo that it was quite possible that the increase might not bs made.

Mr Travers askel when the contract expind. Sir Julius Vogel said it expired in February last. As regarded the proposed increase, he might Bay that the Company had taken good care of themselves, because he found, as far as was possible from the figures in bis possession, that ia lieu of a subsidy of £7500 they had proposed an increase which would yield £11,900. Of course an allowance was to be made for the possible decrease of business. Aa regarded the Government yielding on thß matter, he might say that the Government was very firm in tbe opinion that the subsidies should not be given. They considered that one cable was not sufficient for tha use of the Colony—that if it was broken the Colony would suffer very great danger—and the view of the Gwernment was to be content with existing rates for the present ; but if there was an increase in the rates to lose no time after Parliament met in obtaining authority for a new cable to be laid. If it was agreed to by Parliament he believed it would be laid in twelve months afterwards. They ,the Government) thought that the Company, looking at the spirit and intention of the contract entered into, was not justified in raising the rates. Therefore they were justified in taking such action as they might consider necessary in frustrating the intention to raise the rates, It had evidently been calculated by the Company that the Chambers of Commerce and the Press would bring pressure to bear on the Government. There was a telegram published some time ago, in

fact, which as much a 3 suggested that. But !

he must say that the Press had behaved very well indeed ia the matter, and with a great deal of enlightenment, in not pressing for an immediate advantage which might be purchased at the sacrifice of much future convenience. He might say that anything he could do in the way of lightening the Press rates he would do, and he had recently communicated with the New South Wales Government as to reducing the rates along the land lines. He also thought that the English Government would not be content with these rates being charged to the Press. The question was that the Imperial Government had insisted that the advantages should be open to all the colonies—that all should participate. It might be that in the letter that was carried out, but he did not see that it was carried out in the spirit. For while the cost of Press messages to Adelaide wa3 2j Bd, the cost from Adelaide to New Zealand was Is 3d, and that, he thought, should be reduced. The cable got Is -of this, aud it hardly seemed to him that the English Government would think that was carrying out the spirit of the matter. He hoped the Postmaster-General of New South Wales would see his way to helping in this. As regarded the Chambers of Commerce, they also had acted with great moderation, and had been coutent to believe that the Government would do its best in the matter—that it would not be desirable to purchase temporary advantage at the cost of much future loss. Now, as to the general question. There was a proposal before the Government as to the Canadian route, and as to the Government taking the matter into tbtir own hands. But he should like to say that tbe point would almost coufront them, What consideration is due to the existing Companies ? The Companies had been the pioneers in the matter of cabling; they took it up at a very considerable risk when it was not known what would be the life of a cable, and risked the sacrifice of their whole capital. It seemed very hard, therefore, that the Government should crush them out of existence. No doubt the Companies were in a bad way—that was, what commercial gentlemen would no doubt call a bad way, since the capital was not represented by assets. In connection with that, he might say that Sir Jamis AndersoD, who was connected with many companies, had written an elaborate paper for the London Consolidated Chambers of Commerce upon the subject involved. Sir Jas. Anderson’s figures showed that the total capital of the cable companies, less the amount of reserve fund in hand, was represented by an amount of £31,000,000 ; and that, be believed, included all the principal cable companies, after deducting accrued reserve fund. The totaL mileage was 99,216 miles. That showed an average of £312 as the cost at which the cables stood in their books after deducting all reserve funds. When you come to consider that you had a very difficult line that could not be laid for £2OO a mile, it would be seen that there was not a very largo return for the money expended in the Eastern Extension Company. If the capital, after deducting reserve, was £8.086,00, and the total mileage 32,000 miles, then the cost per mile was £250. That was why he had been disposed to favorably consider tbe question of the guarantee, because he did not think the Government should go into the question with utter indifference as to the companies. Perhaps, from a commercial point of view it might be said that competition was fair, and that the weakest side should go to the wall; but he did not think they should overlook the fact that th 9 companies were the pioneers—that they had risked their money in giving accommodation to the Colony. Then came the question of the - xtent of that consideration. They were not willing to allow the Companies to raise the rates, nor were they willing to give them subsidies. If any plan could be made to definitely deal with the question it would atise whether the Companies interested could be left oat of consideration. Now, the Companies had lived on the idea—an idea which they had assiduously fostered—that the life of a cable was short, and that low rates did not briDg any increase of business. As regarded the danger (to the cables) with the facilities now at hand for raising cables, he did not see that the business was so dangerous; the nature of the risk was not wbat it used to be. They would be quite am?z?d when he told them wbat a cable was capable of in the way of transmitting messages. A cable’s ordinary capacity was ten words a minute, and with the duplex by which it was worked, it would give for 313 days of the year—that was leaving out Sundays—no less an amount than 18,000,000 words; but allowing for contingencies, amortization, etc., and putting down the word-capacity at nine millions, a through la 6d rate would yield a revenue of £650,000 without taking Into account any intermediate work for which the cable might be used. As to the second point, though a small reduction might not mean an increase of but-iness, a large reduction would considerably increase it Now with regard to the Canadian route. The Canadian Government proposed a route which should run from some point in Northern Australia to tbe North Cape iu New Zealand, and thence to Fiji, the Society Islands, Sandwich Islands and Vancouver Island. It was proposed that this line should be erected by subsidies from the various Governments for 25 years, and the amount put down was£loo,ooi) a year. It was proposed that of this amount the Imperial Government should contribute £50,000 ; New Zealand, Tasmania, and Western Australia, £IO.OOO ; and the other Governments £IO,OOO each. That would give them a line which would do the work, and also give them a second cable to Australia. However, it had not been taken up with eagerness, and he did not know that anything would come of it. He thought it was better than the one European cable. But it Beamed to him—though it might appear an expensive projest—that the Australian Colonies and Canada and Cape Colony should try and form two distinct lines through English territory, and take the risk of what he had pointed out, as to the return to be obtained. If there were to be two lines, he thought there should be one from Western Australia to the Mauritius, and Cape Colony and the English possessions on the coast of Africa—as far as possible, through English possessions entirely. Then the question was, whether arrangements should be made with the existing lines or with the Canadian Government. He thought the new line should be constructed within £5,000,000. If the Government bad taken the matter into their own hands the rates of

cabling would have to be immensely reduced. Toe question! then, arose, what benefit did the colonies derive from the reduced cost ? He pointed out the immense saving of time which was made by cabling to Australia and America, and said the cable was of far more use to the colonies than to the United States. The cable between England and America had led to an enormous increase of business, It had reduced the rate of interest in the United States, and had placed at common command the capital of ; the Old World and the New. In his opinion really cheap cabling communication between New Zealand and Australia would mean a great reduction in the rate of interest by making available the surplus capital of Grreat Britain, and it would also very largely increase business. He should say incalculable advantages were to be derived in this way. He would suggest that the Chambers of Commerce go seriously into this matter,.and try to arrive at some absolute figures as to what would be the advantage to the colonies, from a monetary point of view, of a large reduction. If there wa3 such an advatage, obviously it would be a justification of the Government in entering into the business. It would be better, he said in conclusion, that they should go on ' for a short time as at present ; hut the Post-masters-General of the Colonies should me. t and try and come to an arrangement —and he thought they would if it could be settled by the Chambers of Commerce. That was a field which the Chambers could take up, and see what they could do for the commercial and general interest of the Colony. Por the rest, the deputation would see that it was not desirable for the Government to shut out the prospects of a temporary arrangement. Mr Travers asked whether any information had been obtained as to the laying of the proposed Canadian route cable through the Coral Islands—had any investigation been made as to the durability of a cable laid in such a locality ? Sir Julius "Vogel said the idea seemed to be that in these coral deposits there were large valleys where a route .could be obtained. The difficulty, he undersood, was rather one ot depth. Mr Travers, on behalf of the Chamber oE Commerce, thanked the Postmaster-General for the information with which he had supplied the deputation. The Chamber, he said, would take the matter into consideration, with a view of further conference with Sir Julius, if necessary ; and they would also make his views known to the other Chambers with whom they had been in communication on the subject. The deputation then withdrew.

(REOTER’S TELEGRAM 3.) t’ • Sydney, September 2:7. The question of the increase of telegraphic rates on the cable between Sydaey and Nelson will shortly receive the attention of the Government.'