1.—7

11

In Estimate No. 1 it is assumed that of the 1,918,369 words transmitted in 1895 the share of the Pacific cable would be 750,000 words, or 38J per cent, of the whole, and that there would be an increase of traffic averaging 10 per cent, each year. Estimate No. 1. Year. Gross Earnings. Annual Charges. Defioienoy. Surplus. £ £ £ £ 1900 120,788 145,000 24,212 1901 ... ... 132,866 145,000 12,134 1902 ... ... 146,153 145,000 ... 1,153 1903 160,768 145,000 ... 15,768 1904 ... ... 176,845 145,000 ... 31,845 1905 ... ... 194,529 145,000 ... 49,529 Totals ... ... ... .. 36,346 98,295 Net surplus by end of 1905 ... ... 61,949 In Estimate No. 2 it is assumed that of the whole number of words transmitted in 1895 (1,948,639) the share of the Pacific cable would be 811,932 words, or about 41 -J- per cent., being the mean between one-third and one-half of the traffic, and that the annual increase will average 12£ per cent., the mean between 10 per cent, and 15 per cent. Estimate No. 2. Year. Gross Earnings. Annual Charges. Surplus. £ £ £ 1900 146,414 145,000 1,414 1901 ... ... ... ... 164,715 145,000 19,715 1902 ... ... ... ... 185,304 145,000 40,304 1903 ... ... ... ... 208,470 145,000 63,470 1904 234,725 145,000 89,725 1905 264,066 145,000 119,066 Net surplus by end of 1905 ... ... ... 333,694 When in London I deemed it important to obtain from leading Australians information bearing on the question of revenue. The steps taken are set forth in my note of the 16th December, and the information obtained is given in the appended paper, in which also will be found a list of the gentlemen who were good enough to favour me with their opinions. The following estimate (No. 3) is based on the opinions generally expressed, namely, that the Pacific cable will obtain 50 per cent, of the whole business, and that telegraph traffic will increase annually at the average rate of 15 per cent. Estimate No. 3. Year. Gross Earnings. Annual Charges. Surplus. £ £ £ 1900 .. ... ... ... 195,960 145,000 50,960 1901 ... ... ... ... 225,354 145,000 80,354 1902 ... ... ... ... 259,157 145,000 114,157 1903 ... ... ... ... 298,031 145,000 153,031 1904 342,735 145,000 197,735 1905 ... ... ... ... 394,144 145,000 249,144 Net surplus by end of 1905 ... ... ... 845,381 The calculations are made on the assumption that the cable will be completed and in operation by the beginning of 1900. Each of the three estimates shows a net surplus by the end of 1905 as follows: Estimate No. 1, net surplus earning by end of 1905, £61,949; Estimate No. 2, net surplus earning by end of 1905, £333,694 ; Estimate No. 3, net surplus earning by end of 1905, £845,381. The data on which No. 1 is based have been taken with excessive caution, and I feel warranted in saying that the estimate itself may be regarded as a minimum estimate. No. 2 must be held to be an extremely moderate estimate. No. 3is based on the general opinion of many gentlemen of high standing, the heads of great mercantile firms, and others familiar with Australasian trade and prospects. Such opinions must undoubtedly carry with them great weight. According to Estimates Nos. 2 and 3 the earnings of the Pacific cable for transmitting European-Australasian telegraph traffic would yield a surplus from the first year of its operation. In addition to a share of the Australasian-European business, the Pacific cable will be in a position to obtain all the traffic between Australasia, Canada, and the United States. There are no data to admit of any proper estimate being formed of the trans-Pacific new traffic, but it is not improbable that with a direct cable and low rates it will rapidly develop, and in a few years assume substantial proportions. In concluding this summary of the results of the recent investigation, I feel fully justified in saying that the estimates of revenue establish beyond all doubt that the Pacific cable, if laid as a national undertaking under Government control, will be more than self-supporting. The sums which form a charge on gross earnings in each case provide, it may be said, for a double replacement of capital. The allowance for maintenance insures the complete renewal of the cable in addition to meeting the cost of current expenses, and the sinking fund provides for the.