TELEGRAPHIC COMMUNICATION BETWEEN GREAT BRITAIN AND AUSTRALASIAN COLONIES, VIA PACIFIC CABLE, VANCOUVER ISLAND, CANADIAN LAND LINE ROUTE, AND ATLANTIC CABLE (FURTHER PAPERS RELATING TO). [In Continuation of F.-3, Sess. II., 1887.]

Appendix to the Journals of the House of Representatives, 1887 Session II, F-03a

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Sess. 11.—1887. NEW ZEALAND.

TELEGRAPHIC COMMUNICATION BETWEEN GREAT BRITAIN AND AUSTRALASIAN COLONIES, VIA PACIFIC CABLE, VANCOUVER ISLAND, CANADIAN LAND LINE ROUTE, AND ATLANTIC CABLE (FURTHER PAPERS RELATING TO). [In Continuation of F.-3, Sess. II., 1887.]

Presented to both Houses of the General Assembly by Command of His Excellency.

No. 1. Mr. Sandford Fleming to the Colonial Secretary, New Zealand. q ir Ottawa, Canada, 26th September, 1887. I have the honour to address you on the subject of the proposed telegraph to connect the Australian Colonies with England by way of Canada. I beg leave, in the first place, to refer to the following correspondence which it became my duty to transmit to you before I left London in June last, viz.,— _ 1 Letter 16th May, 1887, to Sir Henry Holland, Secretary of State for the Colonies, from the delegates to the Colonial Conference on behalf of the Governments they represented, requesting that Her Majesty's Government will cause an exhaustive survey to he made without delay m order to set at rest all doubts raised as to the practicability of establishing a telegraph cable across the Pacific Ocean between Canada and the Australian Colonies. 2. Letter, 16th May, 1887, to Mr. Baillie Hamilton, Secretary of the Conference on the same 3. Letter, 3rd June, 1887, from the Colonial Office, covering correspondence with the Admiralty on the same subject. .-,.., 4 Letter, 23rd May, 1887, from the Colonial Office to the Admiralty. 5. Letter' 28th May, 1887, from the Admiralty to the Colonial Office, stating that the Lords Commissioners are not prepared to make a special survey. _ _ 6. Letter, Bth June, 1887, to the Colonial Office from myself, submitting reasons, why the application of the delegates should be reconsidered. _ These communications were subsequent to the discussions on the subject of the Cofomaf Conference and the published proceedings of the Conference will show that during the discussions testimony was brought forward, by officers of the Government and the Eastern Telegraph Company, to raise doubts as to the practicability of establishing telegraphic connection across the Pacific. In consequence of these doubts it was deemed expedient by the delegates that a proper survey should he made as soon as possible. With that object in view, Her Majesty's Government was specially appealed to but the reply of the Lords Commissioners of the Admiralty, by whose authority it was hoped the survey would be made, was unsatisfactory. The correspondence was transmitted to me, whereupon I ventured to submit reasons why the application of the delegates should be reconsidered, hut up to this date I have not learned that anything further has been decided. I beg leave secondly, to invite the attention of your Government to the accompanying memorandum ■ and I may mention that, while on the one hand, doubts have been raised as to the practicability of submerging an electric cable across the Pacific, on the other hand information of an important character has been obtained at and since the Conference. By the light which has thus been thrown on the whole subject this memorandum has been prepared. Assuming that the survey will establish that there are no insuperable obstacles to the laying of a submarine cable, this memorandum will make it obvious that at no distant day Canada and Australasia can be connected telegraphically on terms which would be just and fair to all concerned, and, I venture to think, in a manner which would be extremely advantageous to the Australian Colonies, as well as to Canada and the Mother-country. As the matter presents itself to my mind, the question of a nautical survey becomes of increased importance and I have taken some trouble to ascertain how it can he accomplished m the event of the Lords Commissioners of the Admiralty remaining unable to see their way to have it earned out. I have learned that, provided the Governments of the Australian Colonies and New Zealand are willing to co-operate, a proper nautical examination may he secured without difficulty or delay, and at comparatively little cost to any one of the colonies. _ _ The Government of Canada controls a suitable steamship for such a service, and has also m its employment scientific men and officers of the Royal navy, in every respect qualified to carry out the

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survey. I have, therefore, taken upon myself to submit a proposition asking if the Canadian Government will be prepared to furnish the ship and officers, provided the Australasian Governments are willing to co-operate in defraying the expenses to be incurred for coaling, victualling, and crew. My object in now addressing you is to request you to submit the proposition to your Government. In doing so I have authority to state that the matter has been discussed in the Canadian Privy Council, and that a favourable view is taken of the proposition. The naval officer consulted is of opinion that the work of soundings may he satisfactorily completed within twelve months, and he also estimates that, with the ship and officers furnished by Canada, a joint contribution of £6,000 by the Australian Colonies and New Zealand would suffice. I feel warranted in expressing my belief that, if the co-operation of your Government with the Governments of the other colonies in the manner suggested be secured without loss of time, the practicability of connecting Australia and Canada telegraphically will be authoritatively set at rest before the end of next year, and with the information resulting from the survey the establishment of the cable eventually will be materially facilitated. I have the honour to mention that I have addressed a similar communication, with the accompanying memorandum, to the Governments of the other colonies. I have, &c, The Colonial Secretary, New Zealand. Sandford Fleming.

Enclosure in No. 1. Memorandum respecting the proposed Telegraph to connect India and Australasia with England by the Canadian Route. At the Conference recently called by Her Majesty's Government to consider matters of common interest to all portions of the Empire, attention was directed to the question of connecting Australasia and Asia with England by a postal and telegraph route through Canada. The discussion was renewed from time to time, and the more the question was considered the more deeply all present at the Conference became impressed with the vast significance of the issues which the new line of communication involve for England herself, as well as for the Australian Colonies, India, Canada, and the whole outer Empire of Great Britain. On the last day of the Conference the following resolutions were entered in the proceedings : — First. "That the connection recently formed through Canada from the Atlantic to the Pacific, by railway and telegraph, opens a new alternative line of Imperial communication over the high seas and through British possessions, which promises to be of great value alike in naval, military, commercial, and political aspects." Second. " That the connection of Canada with Australasia by direct submarine telegraph across the Pacific is a project of high importance to the Empire; and every doubt as to its practicabilty should without delay be set at rest by a thorough and exhaustive survey." These resolutions expressed the united voice of the Conference after the strenuous efforts of gentlemen acting on behalf of the Eastern Extension Telegraph Company to impress the delegates with the idea that a direct telegraphic connection between Australia and Canada was unnecessary and impracticable. The lines of the Eastern Extension Telegraph Company extend from India easterly to China, and southerly to Australia, and they form the only existing telegraph connection between the Australian Colonies and Europe. This company has for years enjoyed a monopoly of all telegraph business, and, naturally solicitous for the future, its representatives left nothing undone to advance views adverse to the projected new line. Day by day Mr. John Pender, the chairman of the company, was in attendance. He was allowed to address the Conference, and to circulate documents of various kinds among the delegates, and in every way he used his influence against the project in the private interests of the company he represents. Notwithstanding these efforts the above resolutions were adopted, and it is not a little remarkable that they are the only resolutions which were formally submitted and unanimously assented to at the Conference. The arguments offered on behalf of the company were combatted on public grounds by some of the delegates, and during the discussion the Postmaster-General, Mr. Raikes, stated very forcibly that it would be absolutely impossible for the English people or for Her Majesty's Government to recognise the monoply which the company seemed to claim. He, however, pointed out that, while the position assumed by Mr. Pender for his company was one which could never be accepted either by the colonies or by the British Parliament, it was a matter of extreme difficulty for the English Government to assist in carrying out the new scheme in such a way as to constitute itself a competitor with the existing company. While he pointed out that difficulty, the Postmaster-General gave expresssion to his warm sympathy with those who were seeking to promote what he termed "the most beneficial change of any of the changes which can come out of the Conference." In the proceedings of the Conference of the 27th April and 6th May will be found recorded the general principles of a scheme which would completely obviate the difficulty mentioned by Mr. Raikes. The scheme has much in common with one propounded by the Postmaster-General of New Zealand, Sir Julius Vogel. The proposal is to combine the several telegraph systems of the Australian Colonies under one management, to include the submergence of a cable across the Pacific from Australia to Canada, and to provide for taking over at a valuation, whenever the company may desire, all the cables of the Eastern Extension Company. While this proposal assumes that a change is demanded by public expediency, it also recognises that the existing company, as the pioneer of a system of communication which has materially assisted in developing Australian trade, is entitled to just and reasonable consideration. If the new

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Pacific line will destroy the monopoly of the company and put an end to the profits which the shareholders have hitherto enjoyed, the proposal carried into effect would return to them the full value of the property which would be rendered no longer profitable to them. Moreover, although it would scarcely be reasonable for the proprietors to expect compensation for unearned profits, they may fairly claim and be allowed all the profits obtainable until the new line be in operation. A question will arise as to the value of the cables of the Eastern Extension Company. The testimony of Mr. Pender at the Conference shows that they were laid at an average cost of £184 per mile. They have however been laid a number of years, and have depreciated in value according to the length of time submerged. Mr. Pender estimates the life of a cable at twenty years, and the published official statements of the company furnish full information as to the length and age of the cables it controls. With this data it is an easy matter for an actuary to prepare an estimate of the value, at any given year, of the whole system of cables owned by the company. Appended hereto will be found such an estimate, by which it appears that all the cables of the Eastern Extension Company are valued as follows : — In 1887, total value ... ... ... ... ... ... £960,195 In 1888, total value ... ... ... ... ... ... 849,473 In 1889, total value ... ... ... ... ... ... 738,751 In 1890, total value ... ... ... ... ... ... 689,685 If we add the cost of the new line across the Pacific, reckoning it at the same rate per mile as the cables of the company when first laid, we shall be enabled to form a tolerably correct idea of the new capital required to carry out the general scheme. According to the scheme submitted to the Colonial Conference, new capital would not be required for the land lines handed over by the Australian Colonies. These would be worked in common with all the cables under one management, each colony retaining an interest in revenue in proportion to the value of the lines handed over. It may be assumed that the Eastern Extension Company will not desire to hand over their property so long as it can be worked at the old scale of profits, that is, until the new line be ready for business. As in all probability much time will be spent in negotiations, preliminary arrangements, and surveys, the new line can scarcely be in operation before 1890. Accordingly we may take into consideration the estimated value of the company's cables for that year as under : — Estimate of New Capital. 1. Valuation of the cables of the Eastern Extension Company in the year 1890 ... ... ... ... ... ... £630,000 Cost of new cables to connect Australia with Canada, 7,600 miles, at £184 per mile ... ... ... ... ... 1,400,000 £2,030,000 The total new capital, then, required to carry out this comprehensive scheme designed to bring under one harmonious management all the telegraphs within the Australian Colonies, and all the cables existing or projected from Australia to India and to Canada, appears to be little over £2,000,000 sterling. The sum is very much less than that spoken of at the Conference, but it is impossible to impugn the estimate without calling in question the accuracy of the data which is supplied by the Eastern Telegraph Company itself. £2,030,000, on a joint Government guarantee (Imperial and Colonial), could be raised at a very low rate of interest. At 3 per cent it would come to £60,900 per annum, a sum which is almost equalled by the subsidies now being paid or available, as the following table will show: — British subsidies— 1. Paid by New South Wales ... ... ... ... £12,617 2. Paid by Victoria ... ... ... ... ... 14,479 3. Paid by South Australia ... ... ... ... 4,805 4. Paid by Western Australia ... ... ... ... 499 5. Paid by Tasmania ... ... ... ... ... 4,200 - .— 36,600 Foreign subsidies— 1. Paid by Malacca ... ... ... ... ... 1,000 2. Paid by Manilla ... ... ... ... ... 8,000 3. Paid by Tonquin ... ... ... ... ... 10,600 4. Paid by Macao ... ... ... ... ... 500 5. Offered by Hawaii 4,000 24,100 Total subsidies ... ... ... ...£60,700 In this list of subsidies it will be noticed that only five British colonies contribute, while ten British Governments in all are more or less directly and specially interested in the establishment of the new line of telegraph. It would manifestly be unfair to these five colonies if they were left to bear the whole burden. It seems proper that the other five British Governments should bear an equitable share of the cost. The available foreign subsidies amount in all to £24,100 per annum. If we deduct this annual asset from the cost per annum of the new capital (£60,900), there remains £36,800 to be met in equitable proportions by the ten British Governments concerned in the scheme. Let us assume suggestively that half this annual charge be borne by the five contributing Governments, and the other half by the five Governments not now contributing, the account will stand thus:—

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Payable by— 1. New South Wales ... ... ... ... ... N 2. Victoria 3. South Australia ... ... ... ... ... V £18,400 4. Western Australia 5. Tasmania ... ... ... ... ... • •• . 6. The United Kingdom ... ... ... ... ... N 7. India 8. Canada V 18,400 9. New Zealand 10. Queensland ... ... ... ... ... ••• . £36,800 The exact proportions payable by each Government can only be determined by negotiations and mutual agreement, but the above sets forth generally the features of a scheme which seems well calculated to accomplish the desired object. Five of the Australian Colonies are bound by agreement to contribute until the end of the present century a subsidy of £36,600 per annum ; according to the above division these colonies would have their liability reduced to £18,400 per annum, scarcely more than half what they now pay. Their direct gain would be £18,200 per annum, while their indirect gains resulting from reduced charges and facility of intercourse would be infinitely greater. In view of the important advantages in which all would participate, it cannot be urged that the other Governments not now contributing would be greatly burdened by the joint payment of £18,400 per annum. It will not be overlooked that, when the foreign subsidies expire, a further charge of £34,100 per annum will have to be met from some source. Even if it be required to be borne by the ten Governments in equitable proportions, it could not weigh heavily on any of them; but it is anticipated that, when all the subsidies run out, the revenue from the telegraphs will be amply sufficient to meet interest and every other charge. The new Pacific telegraph system as a Government work will be established with capital secured at a very low interest, making it possible for a profitable business to be done at exceedingly low schedule rates. The great reduction in rates thus rendered possible would give a wonderful impetus to telegraphy, and, as a consequence, the business, it is believed, would so greatly increase as to admit of revenue meeting fully every proper charge against it. This will be the more apparent when it is considered that at no time would revenue he chargeable with dividends or bonuses which the shareholders of all private companies mainly look for. After the discussion at the Conference it can no longer be held that the existence of the Eastern Extension Company must preclude the establishment of the new line of communication across ihe Pacific; a line demanded not simply by colonial growth and general commercial progress, but in a still greater degree by the exigencies of the Empire. That it is vitally expedient to secure the new line as a measure of defence can be judged by the magnitude of the consequences which at any time may result from neglect in establishing it. This has been emphatically recognised by the highest authorities in England, and likewise acknowledged by members of Her Majesty's Government and by the representatives of all the colonies at the Conference. It is claimed that the scheme set forth meets all the objections which have been raised, and goes far to harmonise every interest. It would undoubtedly establish the new line of communication at the least possible cost, and enable the principal self-governing colonies to co-operate with the Home Government in carrying out a project of very great Imperial importance. Ottawa, 26th September, 1887. Sandford Fleming.

Appendix, to Memorandum, 26th September, 1887. Estimated value of the cables of the Eastern Extension Telegraph Company, calculated on the data furnished by Mr. John Pender, chairman of the company, viz.: Original cost per mile, £184; and life of a cable, twenty years. The lengths of the cable laid are taken from the official documents of the company:— Miles laid. When laid. Years submerged. Value in 1887. 180 1869 18 £3,312 2,409 ... ... 1870 .... ... 17 ... ... 66,488 2,721 1871 16 100,248 1,283 1876 11 106,232 864 1877 10 79,488 2,444 1879 ... ... 8 269,818 529 1880 7 63,269 920 1883 4 163,024 502 1884 3 78,513 180 1885 2 29,803 12,032 £960,195 Similarly, the value of the property in the three following years has been ascertained to be as follows: — 12,035 miles of cable, value in 1888 ... ... ... ... £849,473 12,035 miles of cable, value in 1889 ... ... ... ... 738,751 11,855 miles of cable, value in 1890 ... ... ... ... 629,685 [Approximate Cost of Paper.— Preparation, nil; printing (1,800 copies), £2 lis.]

Authority : Geobge Didsbuby, Government Printer, Wellington.—lBB7.