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No. 151. The Hon. the Peemiee, Sydney, to the Hon. the Peemiee, Wellington. (Telegram.) Sydney, 27th January, 1900. Youe telegram of 23rd: On twenty-fifth October last I cabled Agent-General to consult Mr. Chamberlain re Eastern Extension Company's proposals as bearing on prospects Pacific cable. Beply received third November that " Mr. Chamberlain sees no objection to acceptance Eastern Extension Company's proposals contained in your telegram twenty-fifth 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 all-British. No mention is made as to rates between South Africa and Australia, and, although this point does not directly concern Imperial Government or Mr. Chamberlain, of opinion you would do well to stipulate for fair maximum rate at least, if not for sliding scale as_ m 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. On seventeenth I forwarded to you and to Victoria and Queensland copy of minute of our PostmasterGeneral dealing fully with matter, and asking views of different Governments.

No. 152. . The Hon. the Postmastee - Geneeal, Brisbane, to the Hon. the Postmastee - Geneeal, Wellington. g IR _ Post and Telegraph Department, Brisbane, Ist February, 1900. I have the honour to draw your attention to the action now being taken by the Eastern Extension Telegraph Company with a view of inducing the Australasian Colonies to make a fresh agreement with them, and to point out that the acceptance of a new agreement on the terms proposed would have the effect of indefinitely postponing the construction of an all-British cable vid Vancouver, for the following reasons : — _ (1) Acceding to the proposal of the company to open their own offices for the collecting and distributing of messages in the colonies would give the company power to make their own terms with the general public, by privately canvassing for business, offering discounts or rebates below the recognised tariff, and thus enable them to practically control the greater part of the traffic. (2 ) As the tariff for the Pacific cable would be arranged by the Board m London, and no alteration therein could be made without the sanction of that Board, all the parties to the Pacifac cable would suffer great loss in competing for traffic with the company. (3.) And under these circumstances it is extremely probable that the Imperial Government and Canada would withdraw from the compact. . , Herewith I beg to hand you, for your information, copy of a report furnished by this department on the subject, and also a leading article which appeared in the Brisbane Courier of yesterday morning. I have, &c, ° James G. Deake, The Hon. the Postmaster-General, Wellington. Postmaster-General.

Enclosure 1 in No. 152. Bepoet re Peoposal of the Easteen Extension Company to lay a Cable between the Cape and Austealia. Feom the Sydney Morning Herald of the 9th instant it appears that the conference of the Postmasters-General of Victoria and New South Wales just held in Sydney has resulted 'in a general agreement being arrived at that the Governments of the two colonies represented would recognise the proposed Cape cable, upon the condition that no ' cutting rates were adopted as against the Pacific cable " ; and it is further stated that " an answer to a cable message despatched to England in the matter, and stating the result of the conference, is now being awaited by all Part The n prop S osaHw re the Cape cable, as given by Mr. J. E. Squier, Acting-Manager for the E.E.A. and C T Companv in Australasia, is : " The company will entirely waive renewal of subsidy and guarantee against'competition, and, in addition to providing a cable from the Cape all the way to Glenelg w« Perth, will at once reduce tariff to 4s. for the whole of Australia, and make further reductions on a sliding scale as traffic increases " until the reduction reaches 2s. _6d per word in 1903 "In return for the above, the company will only require the same privilege in Adelaide and Melbourne, as they have hitherto enjoyed in Great Britain, of directly distributing and collecting their international telegrams to and from the public. The Governments ol Western Australia and South Australia have notified their acceptance of the company s proposal. " With this right being conceded, the company had no fear of the competition of the Pacifac cable which would, of course, be under Government control." The result of such a concession would be to enable the company to make contracts with the chief cable users that would enable them to monopolise the large bulk of the business for a number of years.

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