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The following diagrams illustrate the method: Les cartes ou les planches trop grandes pour Atra reproduites en un seul ciichA sont filmAes A partir de Tangle supArieure gauche, de gauche A droite et de haut en bas, en prenant le nombre d'images n6cessaire. Le diagramma suivant illustre la mithoda : 1 2 3 1 2 3 4 5 6 ! I /v'^ ADDRESS OF MR. SANDFORD FLEMING. fl ! Mr. President — You have been good enough to invite me to iiddress the Charal)er of Commerce of Melbourne on the subject of an alternative submarine telegraph between Australia and England. It is therefore with no little satisfaction that I submit the following brief remarks for your consideration. It is scarcely necessary to say that a tlirect line of telegraph across the Pacitic, to connect these Colonies with England by way of Canada, ha.s long been advocated as a work designed to be of great commercial value, and, moreover, as I believe, destined to be of the highest national importance to the Empire as a whole. It is not unknown to members of this Chamber tliat at the Colonial Conference held in London six years ago the matter was discussed at considerable length, and that at vaiious times since then the establishment of a Pacific cable has been warmly advpcated on both sides of the ocean. The time is evidently now ripe for something more than mere advocacy. As far as I am able to judge, we have reached a stage when some practical step should be taken to unite Australia and Canada telegraphi- cally, and I feel satisfied that this Chamber of Commerce, representing the intelligence and business activity of Melbourne, one of the greatest, if not the greatest, commercial centres in the southern hemisphere, can materially advance an undertaking so much to be desired. The members of this body are no doubt perfectly familiar with all the circumstances connected with the laying of a cable to New Caledonia from the Australian Continent, assisted by the Govern- ments of Queensland and New South Wales. I have no doubt that these Governments had excellent reasons for granting assist- ance at the time it was offered ; and, in their anxiety to have telegraphic connection with North America, the possibility of this short cable forming a link in the main line had perhaps some weight; but, apart altogether from the Pacific cable, they considered that there were strong local reasons for having a telegraph to New Caledonia. If, however, it was ever thought that the New Caledonia cable might form a section of the Pacific cable, I believe I am warranted in saying that that idea has been entirely dispelled ; and it has been dispelled mainly, I believe, by the 244433 red into by the Cortpany with the Government of France. The agreement entered into by the Company with the Colonial (tovernnients is dated early in 1892; that with France nearly a year later ; and the latter agreement has the effect of placing the New Cale n » f> )l » » G Various efforts have been made during the past ten years to have the Pacitic Cabh? established by a subsidised company, but no company has offered to carry out the undertaking for a less subsidy than i£75,000 a year, (continued for a period of twenty- five years. Tt can be indisputably shown that under the plan of Government ownership, a much less annual payment, for a very much shorter period, will suffice. Moreover, when estaljlished, the cable will be public property, controlled by Government for the public benefit. The proposal then is that Australia, New Zealand, Fiji, and Canada, should be Joint owners of the Pacific Cable, and that it should be established and worked jvs a public undertaking for the common good. There is one difficulty to be met at the outset. Certain of the Australian Governments are under obligations to pay an annual subsidy of £32,400 to the Eastern Extension Company until May, 1899, and, in consequence, they may not consider themselves in a position to co-operate on equal terms with the other Governments concerned in establishing the new line. This difficulty is not, however, insuperable, and in my judgment it can most readily be overcome by providing out of capital an annuity to meet the subsidy as it annually becomes due. By this arrangement the liability of New South Wales, Victoria, South Australia, and Western Australia to the Eastern Extension Telegraph Company would be practically removed, and these colonies would be free to enter with Queensland, New Zealand, Fiji, and Canjula into a joint agreement to accomplish the establishment of the Trans-Pacific telegraph. As will here- after be seen, the annuity so provided to extinguish the subsidy of £32,400 a year would be met by profits accruing from the new cable. Meanwhile, all liability incurred in the raising of capital would be borne in equitable proportions, to be mutually agreed upon, by all the co-operating Governments. To illustrate the proposal set forth, let us assume that the cable itself, say on route No. 2, requires an expenditure of — £1,000,000 To this capital add the sum needed to purchase an annuity to meet the annual subsidy of £32,400 from May, 1894, to May, 1899— five years ... ... ... ... 145,000 Total ... .., ... £1,745,000 A This total capital raised on the joint guarantee of the Australian Colonies, New Zealand, and Canada, could be placed at the low rate of 3 per cent., making a total charge of £52,350 per annum. HI This interest charge is less than the lowest subsidy asked by any company, and I shall establish, by the strongest possible evidence, that unlike a subsidy for a fixed period of twenty-tive years, long before the expiry of that period the whole inteivst will Im; met by surplus revenue. COST OF WORKING. I have obtained estimates, from the best authorities, of the cost of working the Pacific cable under Governjuent. These estimates range from £45,000 to £60,000 per annum, and include the salaries of superintendents, electricians, and operators, two steamers for current repairs, and all necessary expense at terminal and mid-ocean stations. As it is desirable to nuike adequate allowances for every service, it is expedient to base our calculations on the highest estimate (£60,000) as the total cost of working the cable. £60,000 will accordingly be a first charge on the revenue, and it will remain a constant charge whatever the volume of business, whether five million words per annum or half a million only. RENEWAL FUND. Next to working expenses there should be an annual charge on revenue, for renewals. It is proposed, therefore, to place to a cumulative reserve, the sum of £32,000 a year, equal to 2 per cent, on the entire cost of the cable. This provision is considered ample until the earning qualities of the cable come to be thoroughly establishetl. REVENUE. In many cases it is difficult, owing to the lack of information, to form estimates of the probable revenue of a projected under- taking. In this instance, however, the best data is available for our guidance. We have the published statistics of telegraph business by the existing line between Australia and Europe for a number of years, and it is fair to assume that on the establish- ment of the Pacific cable, rates and all other things being equal, the business will be equally divided between the two lines. I am unable to ascertain the business for the past year, but I gather from the published returns that the number of words transmitted in the year ending May 1st, 1892, was 1,275,191. t> 8 If we divide this into equal parts, we have 637, HOD words a& a basis for estimating the revenue of the Pacific cable. In examining the returns for previous yeai-s some striking p(?culiarities are apf)arent. J)uring tlni eight years from 1882 to 1890 the leh'graph business l)etw(u'n the Australian C>(»l(>nies and (ireat liritain increjised <»n an averag«> 51,141 words each year, e(}ual to 14 pei- cent, per annum. This may be viewed as the normal increase under a high taritt', inasmuch as thi'oughout these eight years tlie charges (tn ordinary messages were uevei- l(!ss than 9s. 4d. pel' word. On May 1st, 1S91, the ratnj 9s. 4d. to 4s. per word, and within the twelve following moii s the business increased by 448,913 words — an increase of 54 per cent, on thes business of the previous year, and 831 jtcr cent, over the normal annual increase during the preceding eight years. The further expansion of business will no doubt foi' the present bo disturbed iind retarded by an inci-ease in the chai'ges on messages on the 1st Januaiy last ; but there remains the cxpei-ience of the year 1891-2 to establish the renuirkable ellect of a low tarill" in stimulating telegraphy. In that single year the inciease in the number of words transmitted under a 4s. rate was greater than the growth of the business during the whole of tht, preceding eight years under a 9s. 4d. rate. One of the direct benefits to the public from the Government ownership of the Pacific cal)le will be the reduction in charges for transmitting messages. I have already mentit)ned that with a full and efficient staff, such as the estimate for working expenses provides for, it will cost no more to do a large business than a snuill one. There will, therefore, be no reason for preventing the freest expansion of telegraphy by the new line by lowering the charges. In my humble opinion, ihe rates across the Pacific should be lowered to 2s. per wor.l innnediately on the cable being laid, in order that the public may have the advantage of cheaper connnunication at the earliest moment. The proposed rate of 2s. per word for transmitting messages across the Pacific would reduce charges between Australia and England to 3s. .3d. in place of 4s. 9d. as at' present. Moreover, messages from Australia recei\ed at Vancouver would be for- warded to all parts of Canada and the United States for an average charge not exceeding 2s. 5d. per word in place of Gs. — the present charge. I wish to avoid extravagant statements or too sanguine esti- mates. I would, in submitting my ideas, particularly desire to keep strictly within reasonable probabilities. If we base esti- mates on the existing volume of business merely, we must i; anticipate that there will be no great advance over the business of 18*Jl-2 for a few years, if the chargeH on uieHHages are again raiHed as they already have been to some extent. In the calculations which follow, I shall, therefore, assume the business to be at a standstill for three years; that is to say, I shall Jissume that the business in 181) t will not be greater in volunie than it was in 1891-2, and that thenceforth the normal increase of not more than 14 per cent, per annum shall apply. The number of words transinitt<;d in 1891-2 was 1,275,191. It is assumed that the Pacific cable would, if in operation in 1894, obtain tme-half of this business. Year. Nuinhvr of words per aiinuui. Kariiiii)f8 of the '^atilu at 28. |icr word. Year. Niiinbcrof wonN pur annum. h^rnintjn of the culile ut 2s. per word. 1894 1895 1896 1897 1898 1899 637,595 726,858 816,122 905,386 994,649 1,083,913 £ 63,759 72,686 81,612 90,539 99,465 108,391 1900 1901 1902 1903 1904 1.173,176 1,262,439 1,351,703 1,440,967 1,530,230 £ 117,318 126,244 135,170 144,097 153,023 It is scarcely likely that the Pacific cable will be established before the year 1896. The above estimate shows that in the year following (1897) the revenue from the cable would be ^90,539, a sum equal to the whole working expenses, together with .£30,539 for the renewal fund. In the five following years, the revenue, in addition to paying working expenses and providing for grmlually reducing the interest charges, would finally in 1903, within about .seven years after the completion of the undertaking, be sufficient to meet every current charge, and the contributing Governments would practically be relieved from further liability. Not only would all fixed charges be then met, but in succeeding years the productive capacity of the undertaking would yield an annually increasing surplus, to be dealt with as the co-operating Govern- ments may determine. If instead of a 2s. rate we reckon the same business for each year at an additional 6d. per word, or 2s. 6d. in all, a charge on messages across the Pacific which would still be considered comparatively low, we have as follows: — 10 The fixed CharKca, hicludini; workiriK expenses, renewal fund, and interest, IxiinK in all ^Hi,'dbO Year. KarniniTfi of the cable at per annum. 2a. Od. i>er word. Deflcienc". Surplus. £ £ £ 1897 113,173 31,177 — 3898 124,331 20,019 — 1«99 135,489 8,861 — 1900 146,647 — 2,297 i9:a 157,805 — 13,455 1902 168,963 — 24,613 1903 180,121 — 35,771 1904 191,279 — 46,929 1905 202,437 — 68,087 1906 213,595 — 69,246 This last estimate gives the result for the first ten years' operation of the cable based on a 2s. 6d. rate and a low normal increase. It shows that the revenue for the first year would be insufficient to pay the whole interest on capital in addition to working expenses and provision for renewal fund, and that the co-operating Governments would together require to pay £31,177 to make up interest. In the following year the deficiency to be made good would be £20,019 ; in the third year, £8,861. A small surplus would result in the fourth year, and at the end of ten years there would be an accumulated surplus of over' £250,000 after meeting interest on cost and every other charge. COMPARISON WITH PRESENT SUBSIDY. If we compare these estimated results witti the sums now paid in the form of subsidy and guarantee for the temporary use of the existing telegraph, we shall fii?d everything in favour of an independent cable owned and controlled by Government. There is first a fixed annual subsidy of £32,400 paid to the Eastern Extension Cable Company by five of the colonies. In addition to this annual payment I find in the Postmaster-General's (N.S.W.) report for 1892 (page 25) that further sum have been paid to the same Company for the past two years to obtain a reduction in charges from 9s. 4d. U) 4s. and 48. 9d. Under the heading "Cable Guarantee," I find that £27,520 was paid *or the year 1891-2, and £21,778 for the year 1892-3. If W3 ada this 11 guaranteed payment to the subsidy, we find the payments in each case to have been j£59,920 and £53,363, paid lus follow : — Colony. Subsidy and Qiuurantee ^ For year 1801-2 For year 1892-f By Victoria „ New South Wales „ South Australia . . „ Tasmania ,, Western Australia Total sums paid . . £ £ 25,730 23,787 7,966 1,447 990 59,920 £ 23,048 21,126 7,213 1,102 874 53,363* * NOTR.— This (Iocs not include £815 paid by New Zealand. These figures, obtained from the official return.s, make it clear — (1) That the five colonies mentioned have paid, in each of the past two years, to the Eastern Extension Cable Company (£59,920 and £53,363), .sums in excess of the interest (£52,350) on the whole capital required to estat)lish the Pacific cable, together with the purchase of an annuity to extinguish the subsidy obligation.s of these five colonies. Moreover, the liability for int/Crest would not be confined to the five colonies referred to; the intention is that it shall be borne in equitable proportions by all, including New Zealand, Queensland, Fiji, and Canada, and in consequence would fall lightly on each. (2) That while at no time would the interest charge, distributed over nine Governments, exceed £52,350, so soon as the cable goes into open'^tion the payments on interest account would gradually be reduced, and in a very few years would be wholly covered by surplus revenue. (3) That this Colony (Victoria) alone paid in the last two years in subsidy and guarantee the sums of £25,730 and £23,048, while the estimate shows that under a 2s. 6d. rate across the Pacific, the whole nine Governments would have £20,019 only to pay in the seoond year after the completion of the new line. Two years later no payment whatever would be required. It is quite true that the guarantee now 'u force may cease any year by giving notice, and the obligation resting on five colonies to pay the annual subsidy of £32,400 will in any event tenninate in 1899 ; but, without an alternative line under Government control, will not the Eastern Extension Company be in a position to make new demands and raise charges to the old high rates unless an extension of the subsidy be granted them? WB^^^ss^SMus^:^s^is^iss^sss^i;s:s'ss^iSj^ ittiiiiiiiaiiiliiiiiifi 12 CONCLUSION. In connection with the estimates of revenue I have pointed out from statistical returns two elements of increase of business — (1) a nonual increase under an exceedingly high tariff; (2) a very much greater increase under a lower tariff. There will l)e a third increase, which will be due to the development of traffic with Canada and in bringing the Australian Colonies into direct telegraphic touch with the whole telegraph system of North America. At present telegraphic intercourse is insignificant, but with a 2s. or 2s. 6d. rate across the Pacific, in place of c G.s. rate by a circuitous route, the circumstances will be favourable to the grovth of telegraph business between the two continents, and, in consequence, the revenue to the Pacific cable from this source will rapidly develop to large prctportions. In the foregoing estimates of revenue I have reckoned only the nonnal increase under a high tariff, and taken no account of the greater increase which certainly will result from the charges being lowered, as proposed. I have likewise added nothing for the Australasia-North American business, the whole of which would flow to the Pacific cable. I am quite warranted, therefore, in expressing the opinion that the estimates of revenue I have presented are not exaggerated or unreasonable, and that the Pacific cable established by Government in the manner proposed would effect very important results. It would practically extinguish all subsidies now paid, and render guarantees unneces- sary. It would permanently establish low rates for ocean telegraphy. It would yield a revenue which, after paying working expenses and providing for maintenance and renewals, would make good all interest charges on the whole cost of the undertiiking from the laeginning, and in a very few years would furnish large surplus earnings. I venture to think, then, that if the resolution passed by the Postal and Telegraph Conference in INIarch last* be generally a.ssented to in these colonies, the Governments need not hesitate in incurring the comparatively small, almost nominal, liability necessary to secure a telegraph connection across the Pacific, which every British subject will recognise to be of the greatest national and commercial value. Having pointed out that there is a choice of routes for a British cable across the Pacific — that it can be established with- out difficulty in a way which would actually relieve this colony and other colonies from payments they are now under obligations • lieHolution. — " That, in the opinion of this Conference, the time has arrived when a second cable route should be established I'ia the Pacific to Vancouver, toucliing at such places en route as may hereafter be agreed upon." 18 to make — I beg leave to refei-, in a few words, to the antagonism which exists to a Pacific cable. The opposition to the under- taking takes its origin with the Eastern and Eastern Extension Telegraph Company. This powerful organisation enjoys a monopoly of telegraph business, at highly remunerative rates between this quarter of the globe and London ; its great aim if to prevent the profitable monopoly being interfered with. What although there is a vital necessity for binding Australia, Canadii, and Great Britain together ? — the maintenance of profits is the primary consideration with this Company ; the interests of the public are of little account ; even the protection and integrity of the empire are entirely secondary. The Eastern and Eastern Extension Company has great influence in high quarters, and the evidence goes to show that its representatives and agents have left nothing undone, ever since the first inception of a Pacific cable, to cast doubt on its practicability, to undervalue its advan- tages, and to thwart every effort to promote its establishment. I deeply regret to be driven to the conclusion tiiat at this very moment the hostile influence of this great organisation is employed in directions least expected, and that we must not be .surprised if we find its agents and advocates continuing to exaggerate difficulties, even to create difficulties where none are known to exist. Br' it would trespass on your time much too long to enter into explai. ' .)n on this point. I must content myself by giving a note of warning as to what we may still expect from the same quarter. I had the honour, Mr. President, to transmit to you last year a paper on Imperial telegraphic communications. It was an address prepared for the Second Congress of Chambers of Commerce and Boards of Tnule of the Empire, held in London in July, 1892. In that paper I referred to the extraordinary effect telegraphy had in the development of trade, and I directed attention to its application to the defence of trade and shipping, especially in the case of countries geographically situated as these colonies are. I pointed out that we could not have ocean telegraphy by too many routes, and that it would be the height of folly to rely in a critical moment on one route. In that paper I ventured to set forth the means which would in any national emergency give to Australian shipping on the high seas almost complete immunity from attack. I do not propose to trespass by repeating the arguments then employed, I ask your permission, however, to quote the last few words as a fit conclusion to the imperfect remarks which I have been privileged to make to-day. *' These considerations lead me to think it a matter of supreme importance to trade and shipping, to the expansion and support of British interests, that the telegraph should as speedily as 14 possible be extended across Ihe Pacific Ocean. The day is not far distant when the Pacific will be traveraed, as the Atlantic is, by many cables, but we must take one step at a time, and the first step which circumstances demand is undoubtedly that which will give Australia an alternative line of telegraphic connection with England. In. my hunjble judgment this step is of vital importance to the Tilmpire as a whole, and I appeal to every British merchant at home and abroad, I appeal to every Chamber of Commerce within Her Majesty's dominions, to urge upon their Governments that the establislunent of this cable should not be long delayed." There is no section of the globe's surface where a telegraph is more needed; nowhere within the influence of the Empire would it serve purposes more important. The spanning of the Pacilic Ocean by the electric wire will be of immense advantage \o British shipping; it will stimulate the development of new trade; it will strengthen the attachment of the great sister Dominions in both hemispheres to the motherland ; it will effectively pro- mote that Britannic union of trade and commerce so earnestly desired by all. Mason, Firth & M'Cutoheon, Printers, Melbourne.