9

F.-4.

Without knowing how far your Government may be committed to this scheme, I have thought it right, in justice to the large body of shareholders of this Company, and the large sum of money they have invested, to point out to you that the traffic, as at present developed, does not promise a sufficient return for the support of two cables, with the large outlay they involve. It may be interesting to you to know that the total traffic between Australia and all parts of the world does not exceed an average of from twenty to twenty-two messages daily, so that a second cable is in no way called for to provide for this traffic, nor does its construction hold out any prospect of financial success. I would further beg to urge that this Company, without subsidy or assistance of any kind, in the hope that it might meet a fair return for its expenditure, came forward and provided a communication which the Australian colonies had long felt the want of, and which, in spite of several endeavours, they had been unable to obtain; and I cannot but think it very hard, when no necessity exists, and when this company has not reaped that benefit it had a right to expect, that several of the Colonial Governments should combine for the purpose of supporting a scheme which offers very doubtful chances of success in itself, to the detriment of the Company I represent. I trust I may be pardoned in bringing forward the case of the Imperial Government, which, when purchasing the telegraphic lines in the United Kingdom, refused to entertain the question at all unless the whole of the companies then in existence were absorbed; one of the chief reasons of this action being that it was unwilling to enter into competition with private companies, as the weight of the Government on the one side would be so injurious and detrimental to private enterprise on the other. The cases appear to me very similar, and I therefore quote the action of the Imperial Government as embodying a principle applicable to all Governments under the Crown. The arguments employed in favour of a second cable are, I believe, that it is for the benefit of the public, insomuch that competition will lead to a reduction of the present tariff; and that two lines will ensure a certainty of communication in case of one or the other of the cables being temporarily interrupted at any time. With regard to these arguments, I would merely observe that, if the traffic does not suffice for the support of the two lines, they will prove so unremunerative that, in case of serious accident to either, it may become a question with the shareholders whether it is worth while to repair their line at the certainty of a considerable immediate outlay for the protection of a property that already does not pay them. In this case, you will see that the objects sought to be obtained by a second cable will be defeated, and the colonies will again be reduced to a single cable, with its apprehended attendant evils of monopoly. lam aware that it is argued that a reduction of tariff will lead to such an increase of traffic that it will suffice for at least the moderate support of two lines. But, unfortunately, in telegraphic experience, it is not found to be the case that a reduction of charge leads to a proportionate increase of traffic : that is to say, that with half charges the number of messages is not doubled ; but, even if it were, it merely results that the amount of work and cost of establishment is largely increased while the gross returns remain the same. While on the subject of tariff, it may be well to remember that the working capacity of a cable is limited, so that a simple calculation will determine the tariff at which the amount of traffic can be carried with a fair return on the capital invested. Moreover, it must be recollected that cables are perishable property, and that, therefore, a considerably greater return on their cost is required than if the property were of a more permanent nature. The time they will last is not yet fairly ascertained, as it is dependent on so many circumstances as to position and the nature of the seas they traverse ; but to make the property fairly safe, the profits ought to allow of a considerable percentage on the capital invested being laid by annually, as a reserve for the renewal of the lines. lam sorry to say the profits of none of the Eastern telegraph companies have yet allowed of this being done on a sufficient scale. In countries so widely separated as Australia and England, where the modes of life and individual interests are so different, it is found that telegrams of a private or social character are seldom exchanged, nor do I think the practice would spring up even if the tariff were comparatively nominal. The principal point, therefore, to consider is the tariff on commercial messages, which are those which almost exclusively pass over our lines. lam aware that great objections are made to tariffs generally, and that we are told that the number of messages would greatly increase if the cost were less, and the facilities offered were greater. Where these facilities have been tried on the American and Eastern lines this has not proved to be the case ; but it has been found that those engaged in commerce will not send one message more than the exigences of their business require, and, as almost each message refers to some transaction which will prove remunerative to the sender, it seems but fair that those who have supplied that facility should have a fair return for it, especially when it is considered that this charge forms but a very small item in the profits of the transaction. It must, moreover, be borne in mind that the public have taken very efficient means for their own protection by the use they make of codes, which enable them by the employment of a single word to convey the meaning of an entire sentence. They also, by employing packing agencies, are enabled to send as few as two or three words, so that they are able to limit their expense at pleasure, while the information they transmit is only limited by the intelligence with which their code is compiled. As far, therefore, as the public is concerned, Ido not think there is much cause for Government interference. It may perhaps be urged that in its own interest the Government desires a reduction of charges; to which I can only reply that it is a simple calculation whether it is cheaper to pay a somewhat enhanced charge for infrequent messages, or to pay a sum of £50,000 per annum for its reduction by one-half. Should the object of the several Governments concerned have been to obtain a more direct communication between the eastern colonies and the terminus of the present cable than that which now exists, I think no difficulty would have been found in arranging terms for a cable between Normanton and the mouth of the Uoper River, and for a land line thence to Port Darwin. The plan might have been accomplished in concert with the South Australian Government and this Company, and would have been much less expensive than that now sought to be carried out. I have entered somewhat fully into these questions, and I trust I may not have troubled you by 2—F. 4.

II. —As to the proposed two Cables. i i I i i i i i \ i I L [ I I