3

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It is found that in ordinary cases the breakages are apt to take place within a comparatively few years after the cables are laid, and that once properly repaired faults are not likely to recur. The opinion is gaining ground that the life of a cable, as now made, instead of being ten or twelve years, is more likely to be double that period. As the conductors and insulating materials employed are practically indestructible, it is difficult to conceive that a cable, after lying twenty or twenty-five years at the bottom of the ocean, performing its functions satisfactorily, will not continue to be serviceable for an indefinite period. I mention these views to show that there docs not appear to be any sufficient reason for burdening an enterprise at its inception by providing a large sinking fund for restoration at a very early date. Be that as it may, the soundness of the principles I have laid down in the memorandum cannot be gainsaid. We are aiming to establish a work which will result in all future years in a great saving to each colony. It is suggested that each colony, in proportion to the saving effected, should set aside a small portion of the money so saved to keep the work which effects the economy in an efficient condition. For every £100 saved £10, or perhaps eventually £5 or loss, is proposed to bo funded to cover possible contingencies. With regard to the probable earnings for revenue purposes, it will bo seen, on reference to the memorandum of the 6th April, that the foreign business of the Australian Colonies for the year 1889 is estimated to be 85,000 messages, or about 850,000 words. It is not to be expected that the whole traffic will come to the new line, for the existing telegraph company will undoubtedly reduce its charges in order to retain a share of the business. Let us assume that the business will be equally divided, and that the new company will only have half of the 850,000 words; this will give 425,000 words, and we may reckon this business at 4s. per word, as the terms made with the Canada Pacific Railway Company will admit of " through " messages being sent at that rate. 425,000 words at 4s. ... ... ... ... ... £85,000 Less cost of working and land service, say ... ... ... 40,000 Giving a balance of ... ... ... ... £45,000 equal to 4 J per cent, on £1,000,000. This estimate is for the first year the line can be in operation. On careful examination it will be seen that the estimate is an exceedingly moderate one, no allowance having been made for the great impulse which will undoubtedly be given to telegraphy and general business by the large reduction in charges.* There cannot be a doubt that the earnings will go on greatly increasing, while the working expenses will increase but little. It would not be at all a high estimate to double the net earnings in a very few years. This would give 9 per cent. on the whole share-capital, and it may be assumed as certain that the increase would continue year by year. I have explained that a subsidy is needed for the purpose of securing £1,500,000 at a low rate of interest. If the Government subsidies bo sufficient to provide a sinking fund to pay off the £1,500,000 in twenty-five years, it would be proper to carry all excess of revenue over a given dividend, say over 7 or 8 per cent., to the Restoration Sinking Fund. It will be noted, as one of the proposed conditions, that not only will the charges on messages be reduced to less than half the present rates, but that messages sent by any Government shall be transmitted free to the full amount of its subsidy. This feature will place it in the power of each contributing Government to receive directly back each and every year its full proportion of the subsidy contributed. I respectfully submit that the scheme above outlined is perfectly practicable. It will no doubt find warm and active hostility on the part of those pecuniarily connected with the existing telegraph company—those whose policy has been to maintain high rates in order to secure large profits. Such objections as they may offer should have little weight in view of the great Imperial and colonial advantages which the new undertaking will secure. The better policy for the companies to adopt will be to lower charges on messages and derive profits from the greatly augmented business which will certainly follow. I The terms and conditions which I have indicated would undoubtedly command the organization of a substantial and energetic company to carry out this new and important undertaking in the most satisfactory manner. Sir Charles Tupper, G.C.M.G., C.8., I have, &c, High Commissioner for Canada. Sandfoed Fleming.

Telegraph between Australia, Canada, and Great Britain. — Memorandum by Sandford Fleming. Batt's Hotel, Dover Street, London, Ist July, 1886. 1. It is proposed that a company be formed for the purpose of establishing telegraphic communication between Australasia and Great Britain by a new and independent line. This new telegraph is projected to traverse lands and seas beyond the control of any Power likely to prove hostile to the British Empire. 2. It is proposed that a chain of electric cables be laid across the Pacific Ocean, to connect the Australian group of colonies with Vancouver, the western terminus of the Canadian Pacific Railway. The cables to land at such intermediate islands as may be found suitable for mid-stations.

'Referring to the recent great reduction in charges between London and New York, the report of the directors of the Direct United States Cahlo Company for the six months ending the 30th June last states : " So far the reduction has resulted in more than doubling the volume of traffic, and the directors are not without hope that with a revival of trade it may be still farther increased." The report of the Anglo-American Telegraph Company also states that the traffic has increased over 110 per cent, since the rates were reduced. t Since the date of this letter the reports of the Associated Atlantic Cable Companies for the past half-year have been published. They generally favour this new policy. The low tariff introduced has resulted in a very much larger augmentation of traffic than was anticipated as a first result. " The unexpected increase in the volume of traffic immediately upon the introduction of the sixpenny tariff has induced the directors to consider the expediency of adopting permanently a system of low rates. ... It is obviously their interest to encourage a very large traffic at low rates." — Report A. A. Tel. Company.