F.—s

2

If the traffic were increased by— £ 10 per cent, the Governments would have to make up ... ... 49,345 20 per cent. „ „ ... ... 43,324 25 per cent. „ „ ... ... 40,314 '"33 per cent. „ „ ... ... 35,295 50 per cent. „ „ ... ... 25,260 * 75 per cent. „ „ ... ... 10,206 92 per cent. „ „ ... ... Nil distributed as follows :—

It will bo seen that this proposal is much more favourable to the colonies than the former one, the companies taking one-half instead of one-fourth of the risk of the redaction, and the liability of the Governments being limited to one year instead of eleven years ; and I therefore trust that it will commend itself to your favourable consideration, and that you will be able to recommend it to your Governments for approval. I have, &c, The Agents-General of the Australasian Colonies. John Pendee, Chairman.

No. 2. The Chairman, Eastern Extension, Australasia, and China Telegraph Company (Limited), to the Agents-Genebal of the Austbalasian Colonies. Winchester House, 50, Old Broad Street, London, E.C., Gentlemen,— 25th May, 1890. Since our conference! yesterday, I have had a meeting with our allied companies, which leads me to believe that we shall be able to eventually come to an understanding with them, more particularly the Eastern and Indo-European Telegraph Companies. The Persian Gulf Department may be more difficult to deal with; but, as that Administration is practically the Indian Government, probably the influence of the colonies upon India may be effectual in bringing them also into the proposed arrangement. However, there is no time to be lost; and it is very important, while the Conferences are sitting in Adelaide and Paris, that the principle should be definitely settled. Therefore, believing that the present difficulties will be overcome, I am prepared to accept the ■Is. tariff, although it involves a very large additional loss in the first instance. Still, I believe that the lower rate will probably more quickly recoup the loss than the higher tariff; and as the 4s. rate was embodied in our first proposition to the colonial Governments, and has evidently made an impression on the minds of the colonists, we are the more anxious that whatever arrangement is made should command the approval and support of all parties concerned. The term for testing the effect of a cheap tariff will be for one year certain ; but if at the end of that period, as I have stated in my telegram to Adelaide, our loss is not a serious one we shall have no objection to extend the term to three years, at the end of which time, if it is found that the loss is likely to be recouped within a reasonable period, the arrangement shall be continued for the remainder of the term of our subsidy agreement with the colonies. It is understood that the reduced tariffs come into force on and from the Ist January next. This will give ample time for the financial arrangements with the different colonial Governments and Her Majesty's Government to be made, but these, of course, rest entirely with Governments themselves. I am, &c, John Pendee, Chairman. P.S. —I enclose a copy of the telegram lam to-day forwarding to our agent at Adelaide, giving the company's decision in regard to Mr. Derham's resolution.

Enclosure. Extension Company to Agent, Adelaide (Sunday, 25th May). Afteb further conferences with Agents-General, and rather than lose present favourable opportunity of settling matter, chairman willing to waive conditions specified in telegram to Todd, 23rd, and will agree to a 4s. tariff for ordinary, 3s. 6d. for Government, and Is. lOd. Press messages. Governments should remember that the half-rate is only given over the Extension lines in consideration of the subsidy which the Extension Company receive from the colonies, and therefore

Colony. Population (1888 Basis). 10 20 per Cent, j per Cent. 25 per Cent. 33 per Cent. 50 per Cent. 75 I 92 per Cent. Iper Cent, i Victoria ... New South Wales... New Zealand Queensland South Australia lasmania Western Australia... 1,090,869 1,085,740 607,380 387,463 318,308 146,149 42,137 £ £ 14,634 i 12,850 14,565 I 12,790 8,147 | 7,154 5,197 i 4,564 4,270 i 3,749 1,967 i 1,721 565 ! 496 & 11,957 11,901 6,658 4,246 3,490 1,601 461 & 10,468 10,417 5,832 3,718 3,054 1,402 404 £ 7,491 7.456 4,171 2,662 2,186 1,005 289 3,027 : Nil. 3,012 '■■ „ 1,686 i „ 1,076 | „ 884 ! „ 405 ! „ 116 i „ Totals 49,345 ; 43,324 40,314 35,295 25-^260 10,206 ! 3,678,046 •