F.—Ba.

Enclosure in No. 144, Minute.— ln re Proposals of the Eastern Extension Telegraph Company (Limited). In regard to the present position of this matter, I think it expedient, in view of the recent Ministerial changes in some of the colonies, that the Victorian, Queensland, and New Zealand Governments should be communicated with to the following effect, namely : On the 25th of October, 1899, it was considered desirable by the Government of this colony to ask its AgentGeneral, by cable, to take the following action :— " Wish you to consult Mr. Chamberlain re proposals of Eastern Extension Company as bearing on prospects Pacific cable. Our contract with company expires 31st instant. We desire accept their proposals if Imperial Government see no objection, having in view prospects of Pacific cable. Company entirely waive renewal subsidy, £32,400, and guarantee against competition; and, in addition to providing cable all way to Glenelg, vid Perth, agree at once reduce tariff to 4s. (present rate 4s. 9d.), Government rate 35., Press rate Is. 6d. per word, and make further reductions on sliding scale as traffic increases. Sliding scale as follows: 'The amount now guaranteed by Australian Governments is £227,000, which, with £123,000 for the estimated yearly expenses of the new Cape line, forms a minimum of £350,000, or £15,000 less than present actual receipts of associated companies. If receipts for years 1898, 1899, and 1900 average £350,000, the 4s. tariff would be reduced in 1901 to 3s. 6d. If they are maintained at £350,000 for the years 1899, 1900, and 1901, tariff would be reduced to 3s. in 1902. If average receipts maintained 1900, 1901, and 1902, tariff would be reduced 1903 to half-a-crown a word. Beceipts must average £350,000 for three consecutive years before the next reduction of 6d. per word is made.' "In return, company require same privilege in Perth, Adelaide, Melbourne, and Sydney as now enjoy Great Britain, of directly delivering and collecting their international telegrams to and from public. Privilege mentioned as enjoyed in Great Britain is that companies pay British Post Office £5 yearly per mile for each wire, and work both ends by their own operators, collecting and delivering traffic direct with the public. All telegrams to places other than those where the companies have offices are dealt with by Post Office, who are paid their ordinary inland tariff. If the company's terms are accepted, the whole line might be in working-order within two years. . " Company further agrees whilst they enjoy this privilege not to increase tariff as it stands in 1902 or 1903, whichever year is the lower; this agreement obtained in order prevent increase rates should it happen that from any cause Pacific cable be delayed. Cable reply." In reply, the Agent-General despatched the following two messages :— ° " 2nd November, 1899. (1.) " Eeferring to your telegram of the 25th ultimo re Eastern Extension Company's proposal, am communicating with Mr. Chamberlain, and hope to report result in a few days. " 3rd November, 1899. (2.) " In continuation telegram second, Mr. Chamberlain sees no objection to acceptance Extension Company's proposals contained in your telegram 25th ultimo. He points out, however, it is not expressly stated that company is not in any case to increase its rates, and phrase at end telegram appears imply power reserved increase rate up to 1903 if revenue falls below amount fixed. Mr. Chamberlain would suggest you stipulate that, once reduction made, it must stand though traffic falls off. He also thinks you should insist on South Africa to Australia cable being made allBritish. No mention is made as to rates between South Africa and Australia ; and although this point does not directly concern Imperial Parliament or Mr. Chamberlain, of opinion you would do well to stipulate for fair maximum rate, least, if not for sliding scale, as in other case. Finally, Mr. Chamberlain of opinion that arrangement should be made by which points where new cable landed would be settled in consultation with military authorities, with view insuring they shall be landed where shore ends can be protected by fixed defences." It was suggested by the late Postmaster-General of Victoria (Mr. Duffy) that the proposals of the Eastern Extension Company should be submitted to the Advisory Board in England; but this Government did not consent to the adoption of that course, as it was not considered to be any part of the Board's duty to deal with those proposals, and on being so advised Mr. Duffy forwarded, through the Premier of Victoria, a memorandum, dated 24th November, of which the following is " I regret Mr. Lyne's action. The suggested reference is not to the Advisory Board on Pacific Cable, but to the three Australasian representatives. The suggestion is made because— " (1.) The matter of agreement with Eastern Extension Company is one that should be decided by colonies interested after discussion. '.'. (2.) It has been found impossible up to the present time to assemble representatives of these colonies in Australia. , " (3.) The directors of the Eastern Extension Company are on the spot in London, and can be dealt with direct. The agent here has no powers. " (4.) The Australasian members of the Pacific Cable Board are in the best position to ascertain the opinions of the Imperial and Canadian authorities, our partners in the Pacific scheme, as to the proposed concessions ; and _ " (5.) To see that any concession given to the company will not unduly prejudice the .facmc('fl nl P S Cxi SID. 6 " I presume the Government of New South Wales will not act in the matter without giving us notice confidentially beforehand of what is proposed to be done. " We are drifting into a most unfortunate position in this affair, owing to the fact that the question has never been properly discussed by the colonies interested. The future of the Pacificcable scheme is involved, and if we are not careful we will play into the hands of the worst enemies of that scheme.

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