35

R—2

3. Tour telegram and letters divide themselves into three main features : (1) An assertion of the benefits your company has rendered ; (2) the excellent intentions your company has to render still further services; and (3) your opinions unfavourable to a company proposing to construct a Pacific cable. 4. I do not undervalue the services your company has hitherto rendered, and, although the business of the company has been conducted on commercial principles, with a view to profit, I am far from thinking that up to a certain extent it has not claims on the colonies to which it has rendered services. At the same time lam strongly of opinion that the business should not continue in the hands of one company, that a monoply is undesirable, and that either the Governments should take into their own hands the whole charge of cabling or encourage competition. This answers the two first points. 5. As regards the third, the company proposing to lay the Pacific cable have not submitted sufficiently definite propositions to enable this Government or any of the other Governments to pronounce in its favour, or to indicate as yet an intention of supporting it. But, with regard to the attack you make on it, I may point out to you that the questions you principally raise affect the company itself, not the Governments. I gather from what you say that you do not think the company will be a success. If the Governments enter into any arrangement with it, I suppose they will assume that it is as able to take care of itself and of its shareholders as other companies have been. As regards the mode in which the Governments may be affected, you exaggerate the amounts asked of them, and you do not, I think, realize that the company's offer is that, up to the extent of its subsidy, each Government shall enjoy free cabling. I am at a loss to understand how you arrive at the conclusion that the users of the cable will be injuriously affected by competition. To me it appears quite the contrary. On the Atlantic side all the benefits have sprung from competition, and the public have suffered greatly by every successful effort to suppress it. In the present case I take it that the offers you have made, and which you consider so liberal, are consequent upon the threatened opposition. The history of the last seventeen years has proved to the Australasian public how little reduction of rates they are likely to obtain in the absence of competition. I have, &c, The Chairman, Eastern Extension Company. Julius Vogel.

No. 160. The Postmasteb-Geneeal, New South Wales, to the Postmasteb-Geneeal, New Zealand. 'Sib, — General Post Office, Sydney, 16th February, 1887. I have the honour to acknowledge the receipt of your letter dated the 20th ultimo, covering copy of a letter addressed by you to the Postmaster-General of Victoria, relative to the New Zealand cable negotiations, and expressing surprise that a minute of the Superintendent ©f Telegraphs of this colony, embodied in a telegram sent by the Sydney agent to the Eastern Extension Cable Company, London, of which you also send a copy, should have been published; and in reply I beg to forward to you herewith a copy of portion of a report which has been furnished by Mr. Cracknell in explanation of the matter. I have to express regret that a copy of the minute above referred to was allowed to be seen by the Cable Company's representative here. As regards the suggestion in the last portion of your letter, I quite concur with you that a code should be established, and shall bo glad if you will be so good as to have a suitable code prepared. I have, &c, Chaeles J. Eobebts, Postmaster-General. The Hon. Sir J. Vogel, K.C.M.G., Waiwera, New Zealand.

Enclosure in No. 160. Extract from Beport dated 9th February, 1887, by Mr. E. C. Grachnell, Superintendent of Telegraphs, Sydney. It is difficult for me, at this time, to explain precisely how it happened that a copy of my minute of 30th September, marked 811956, got into the hands of the agent of the Eastern Extension Company, but it is possible that Mr. Squier, who throughout these negotiations was generally kept au courant with regard to certain portions of the correspondence, was informed by myself of the minute upon which the Postmaster-General's telegram to New Zealand was based.

No. 161. The Postmasteb-Geneeal, New Zealand, to the Postmasteb-Geneeal, New South Wales. Sib,— Wellington, 7th March, 1787. I have the honor to acknowledge the receipt of your letter of the 16th February, and to thank you for the action you have taken. ' Until officers of the various Governments are careful not to give information without authority to the officers of the companies, the Governments are at a great disadvantage in exchanging their views. I have no doubt Mr. Cracknel! will in future use more discretion. I will have the code prepared in accordance with your wish, and send you a copy. I am, &c, Julius Vogel. The Postmaster-General, New South Wales. Postmaster-General.